Massachusetts Auto Dealer September 2017 by Massachusetts State Automobile Dealers Association, Inc

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

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September 2017 • Vol. 29 No. 9

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

Grassroots

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

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S ta f f D i r e c t o r y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Jean Harris Administrative Assistant/ Membership Coordinator jharris@msada.org Auto Dealer MAgazine Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to MSADA by e-mail: jbernal@msada.org. Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.

Ad Directory Blum Shapiro 21 Boston Herald 32 Ethos Group 2 Leader Auto Resources 20 Lynnway Auto Auction 23 Nancy Phillips Associates 21 O’Connor & Drew, P.C. 31 Southern Auto Auction 22 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

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 5 6 9 10 11

From the President: A New Hope ASSOCIATE MEMBER DIRECTORY THE ROUNDUP: Dealers Convene in Nation’s Capital legislative scorecard TROUBLESHOOTNG: Data Security Breach Notification LEGAL: What Do You Owe Departing Employees, and When Do You Owe It?

12 AUTO OUTLOOK 14 ACCOUNTING: It is Never Too Early for Tax Planning 15 DEALER SERVICES: Leading High Performers 16 Cover Story: Grassroots Powered

20 24 27

NEWS From Around the Horn nada Market Beat TRUCK CORNER: Back to School and Back to Business

SOUND OFF: Sun Powered Relief for Your Dealership’s Fixed Expenses

nada update: Helping Dealers Recover Join us on Twitter at @MassAutoDealers www.msada.org

Massachusetts Auto Dealer SEPTEMBER 2017

From the President

MSADA

A New Hope

Our annual Capitol Hill gathering reminds lawmakers to not ignore Main Street

By Chris Connolly, MSADA President Every year, when your MSADA delegation makes the trek down to Washington, D.C. as part of NADA’s annual conference, much has changed about the backdrop. There is always some new bill, or some other new threat, that our businesses must advocate against. Nevertheless, as the saying goes, the more things change, the more they stay the same. Congressional gridlock has become a cliché, and the inability of our elected leaders to move past partisan differences can make these advocacy efforts feel Sisyphean. It is important, however, that we dealers keep per“It is important spective about the capacity for our government that we dealers keep to change. The past election may have offered a fresh start, but these wheels turn slowly. perspective about There was some optimism from a number of Representatives and their staff about the meetthe capacity for ings President Trump had with Rep. Nancy Peloour government to si and Sen. Chuck Schumer. Our representatives change.” told us that they were hoping – perhaps -- this is an olive branch to try to broker some discussions about real tax reform, infrastructure funding, and other key issues. Time will tell. An important thing to keep in mind for those of us who might want to simply stop paying attention, especially given how much is already on our plates, is that our opponents would welcome decreased effort from NADA and ourselves. The grass roots capacity we have built is much stronger than many realize – but out legislators will always remember how deep our presence is. Five hundred auto dealers descending on Capitol Hill is a sight that turns heads, and we need to keep these numbers strong in order to show that Congress is debating issues relating to Main Street, not their own chambers. I would like to thank MSADA Board Member Jay Dillon, Immediate Past President Scott Dube, Next Gen representative Emily Dube, and ATD Board Member Kevin Holmes for making this Capitol Hill trek with me and our dedicated MSADA staff this year. We appreciate our Representatives Lynch, Keating, Capuano, McGovern, and Kennedy for meeting with us, as well as the staff for Sen. Markey, Rep. Tsongas, Rep. Moulton, and Rep. Clark for taking the time to see us as well. While this is not a hot button election year, I encourage you to keep your ear to the ground for what is happening on both Capitol Hill and in Massachusetts with respect to our industry. Building relationships with our legislators in Washington and in our hometowns is critical to ensuring the viability of the franchise dealership model, and it will take more than one conference a year to do that work. If you have any questions about how to go about inviting your representative to your dealership, please reach out to me or MSADA Executive Vice President Robert O’Koniewski, and we will be happy to help. t SEPTEMBER 2017

Massachusetts Auto Dealer www.msada.org

Msada Board Barnstable County

Brad Tracy, Tracy Volkswagen

Berkshire County

Brian Bedard, Bedard Brothers Auto Sales

Bristol County

Richard Mastria, Mastria Auto Group

Essex County

William DeLuca III, Woodworth Motors John Hartman, Ira Motor Group

Franklin County

Jay Dillon, Dillon Chevrolet

Hampden County

Jeb Balise, Balise Auto Group

Hampshire County

Bryan Burke, Burke Chevrolet

Middlesex County

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

NADA Director

Don Sudbay, Jr., Sudbay Motors

Officers

President, Chris Connolly, Jr. Vice President, Charles Tufankjian Treasurer, Jack Madden, Jr. Clerk, Steve Sewell

Associate Members

MSADA A ssociate M ember D irectory ACV Auctions Will Morris (860) 670-7867 ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Dan Clements (616) 450-1871 American Tire Distributors Pamela LaFleur (774) 307-0707 Armatus Dealer Uplift Joe Jankowski (410) 391-5701 AutoAlert Jessica Gates (816) 506-0515 Auto Auction of New England Steven DeLuca (603) 437-5700 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000 BMO Harris Bank Chris Peck (508) 314-1283 Boston Globe Mary Kelly and Tom Drislane (617) 929-8373 Broadway Equipment Company Fred Bauer (860) 798-5869 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Capital Automotive Real Estate Services Willie Beck (703) 394-1323 Catalogs.com David Solar (954) 908-7122 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cox Automotive Ernest Lattimer (516) 547-2242 CVR John Alviggi (267) 419-3261 Dealer Creative Mike Otis (315) 382-3675 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Jane Webb (800) 304-3341 Downey & Company Paul McGovern (781) 849-3100 EasyCare New England Greg Gomer (617) 967-0303

Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gatehouse Auto Jay Pelland (508) 626-4334 Gulf State Financial Services Bob Lowery (713) 302-5547 GW Marketing Services Gordon Wisbach (857) 404-0226 Harbor First Ron Scolamiero (617) 500-4080 Hireology Kevin Baumgart (773) 220-6035 Huntington National Bank John J. Marchand (781) 326-0823 Independent Power Systems Mariana Seabra/Ryan Ferrero (978) 998-4079 Todd Stratford, (617) 777-0365 JM&A Group Jose Ruiz (617) 259-0527 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 Key Bank Mark Flibotte (617) 385-6232 KPA Tim Whelan (303) 802-3019 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

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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 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Reflex Lighting Daryl Swanson (617) 269-4510 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Mike O’Connor (860) 462-7958 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Santander Bank Richard Anderson (401) 432-0749 Schlossberg & Associates, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Southern Auto Auction Tom Munson (860) 292-7500 SPIFFIT Sean Ugrin (303) 862-8655 Sprague Energy Claude Peyrot (603) 430-7254 SunPower Christie McCarthy, (408) 457-2357 SunTrust Bank Michael Walsh (617) 345-6567 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance Marc Gerhart (781) 697-1525 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Stephen Janetz (215) 986-8498 Zurich American Insurance Company Steven Megee (774) 210-0092

Massachusetts Auto Dealer

SEPTEMBER 2017

The Roundup

Dealers Convene in Nation’s Capital By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter - @MassAutoDealers

For at least the past seven years Congressional Republicans have run for election and re-election on the promise of repealing Obamacare, passing tax cuts and tax reform, promoting a pro-economic growth legislative agenda, and generally making sure economy debilitating regulations and judges will not see the light of day. During that time we suffered through all the accusations that hyper-partisanship has to offer in the verbal Kabuki grappling of GOP versus the Democrats. The by-product of all this skirmishing in the sand box? Complete gridlock continues, leading to the most anemic stretch of relatively low economic growth in a non-recession era. For years we were told things would be different once the GOP could gain control of the House, the Senate, and the White House. Well, now that the dog finally caught the car, what we have is – more hyper-partisanship as the Democrats refuse to participate in anything that could be a win for the Trump White House, more gridlock as Republican infighting, arcane Senate rules about super-majorities, and other legislative intransigence prevent any substantive matters from being taken up collectively and collaboratively by the two parties as well as the two legislative chambers. It was into this scenario we stepped when we travelled on the 16th anniversary of the horrific September 11, 2001, attacks which many of us witnessed firsthand while attending Washington Conference that year, the Pentagon a short drive away, smoking from one plane crash, the White House, rumored to be targeted that day, a city-block away from our meeting, the Capitol, also a rumored target, the site SEPTEMBER 2017

Massachusetts Auto Dealer www.msada.org

of our meetings beginning that morning. Since that infamous day, the political atmosphere seems to have devolved into a perpetual gripe session where juice and cookies and nap time have been withheld from our elected officials – and it does not seem to have an end in sight. This year your MSADA delegation, along with 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 42nd annual Washington Conference. This year’s MSADA delegation included MSADA President Chris Connolly (Herb Connolly Motor Group); MSADA Immediate Past President Scott Dube (Bill Dube Hyundai) along with his daughter Emily Dube, our NextGen representative; MSADA Board Member from Franklin County Jay Dillon (Dillon Chevrolet); ATD Board member Kevin Holmes (Tri State Truck Center); Marvin Marcell of Group One/The Ira Stores; 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, in addition to

MSADA policy briefings and other NADA related presentations, 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 Sen. Lindsey Graham (R-South Carolina), who provided us a preview of the Obamacare replacement he would be putting forth the following week; Rep. Sean Duffy (R-Wisconsin), who sits on the House Financial Services Committee, where legislation affecting CFPB and other matters of dealer interest reside; Rep. Don Beyer (D-Virginia), one of six franchised dealers currently in Congress; Elaine Chao, Secretary of the U.S. Department of Transportation; and political commentator Tucker Carlson. Once on Capitol Hill, we engaged our Congressional members in dealer dialogue on such issues as the treatment of open recalls on used vehicles; issues tied into tax reform proposals, such as LIFO, the deductibility of advertising costs and interest, and the estate tax; and autonomous vehicle legislation, which the House just passed with state franchise law protections and the Senate is currently drafting. During our two days of meetings in DC we conferred with Rep. Stephen Lynch (D-South Boston), Rep. William Keating (D-Bourne), Rep. Michael Capuano (D-Somerville), Rep. Jim McGovern (D-Worcester), and Rep. Joseph Kennedy III (D-Brookline), and staff for Rep. Katherine Clark (D-Melrose), Rep. Niki Tsongas (D-Lowell), Rep. Seth Moulton (D-Salem), and Sen. Ed Markey (D-Malden). 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, there are no allusions of Diogenes as we engage in the political process. 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 60 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 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. We seem to be past the days of the previous administration, supported by its Congressional party members and anonymous bureaucrats squirreled away in a myriad of executive agencies, seemingly taking great joy in continually rolling out more anti-business proposals that made it increasingly difficult for small businesses, just like your dealerships, to succeed in a challenging economy. Even with a more pro-Main Street, small business attitude as put forth by a ruling Republican Party, there exists a great need to go before our elected officials and inform them of our concerns and desires. Without our input, our members of Congress, if left to their own devices, could find a way to pour more gasoline on the fire.

Connolly on Retail Task Force This Summer the Massachusetts Senate agreed to create a Task Force on Strengthening Massachusetts’ Local Retail Economy to consist of senators and representatives of the small business community. The task force is charged with identifying www.msada.org

ways to help local retailers become more competitive, and it is taking shape as retail sector leaders mull a ballot question to reduce the 6.25 percent sales tax to either 5 percent or 4.5 percent. On September 13 Senate President Stan Rosenberg (D-Amherst) and Senate Minority Leader Bruce Tarr (R-Gloucester) announced their appointees. Senators on the task force include Michael Rodrigues (D-Westport), who will chair the task force, Michael Barrett (D-Lexington), Julian Cyr (D-Truro), Jason Lewis (D-Winchester), Kathleen O’Connor Ives (D-Newburyport), Vinny deMacedo (R-Plymouth), and Don Humason (R-Westfield). In addition to a number of retailers appointed by Sen. Rosenberg, Sen. Tarr appointed MSADA president Chris Connolly to serve on the task force. The task force is charged with reporting its recommendations by June 1, 2018.

U.S. House Passes AV bill On September 6 the U.S. House unanimously approved a sweeping proposal to speed the deployment of self-driving cars without human controls by putting federal regulators in the driver’s seat and barring states from blocking autonomous vehicles. The House measure, the first significant federal legislation aimed at speeding self-driving cars to market, would allow automakers to obtain exemptions to deploy up to 25,000 vehicles without meeting existing auto safety standards in the first year. The cap would rise over three years to 100,000 vehicles annually. An earlier version of the House SELF DRIVE Act would have preempted state franchise laws as applied to AVs. After an outpouring of opposition by NADA’s grassroots, bipartisan language to clarify that state vehicle franchise laws would not be preempted was added to the bill in committee. Your MSADA was in contact with House Energy & Commerce committee member Rep. Joseph Kennedy to provide information regarding the detrimental impact of

Massachusetts Auto Dealer SEPTEMBER 2017

The Roundup the pro-factory, anti-franchise dealer language in the bill and to advocate for the state franchise law protections. The bill ultimately passed the committee unanimously with the franchise law fix. We appreciate Rep. Kennedy’s work in the committee on behalf of our Massachusetts dealers. NADA has been working with Sens. John Thune (R-South Dakota), Gary Peters (D-Michigan), and Bill Nelson (D-Florida), who will soon introduce a draft Senate version of this legislation. As the Senate considers AV legislation, your association will continue to reach out to our Senators Elizabeth Warren and Ed Markey to discuss these issues. At the Washington Conference, Sen Markey’s staff was very open to our concerns with any potential anti-franchise law provisions. This bill is likely to be considered this fall by the Senate Commerce, Science and Transportation Committee, on which Sen. Markey sits. We will continue our dialogue with the Senator about the need to include strong, clear language to ensure state vehicle licensing/franchise laws are not preempted in the Senate self-driving vehicle bill.

MSADA Bills Move Out of Committees Recently the Joint Committee on Transportation reported out favorably three bills that would create a process administered by the Registry of Motor Vehicles to allow franchised dealers, who have been shut out from the current roll of licensed motor vehicle inspection stations, to obtain a license to conduct such inspections. The bills – S.1911 (sponsored by Sen. deMacedo), H.2736 (Rep. John Howitt), and H.3433 (Rep. Chris Markey) now move to their respective House and Senate Committees on Ways and Means. Also this month the Joint Committee on Financial Services reported out favorably service contracts related legislation that contains a provision to help protect dealers from their factories’ attempts to prevent dealers from selling non-OEM third party service contracts to their customers. S.570, sponsored by Sen. O’Connor Ives, now SEPTEMBER 2017

moves to the Senate Committee on Ways and Means for further consideration.

Sen. McGee Wins Mayoral Primary On September 12 a key state senator topped the preliminary election for mayor in his home town, inching him closer to an exit from the State House. Lynn Democrat Sen. Tom McGee, the Senate chairman of the Joint Committee on Transportation, which has oversight on dealer-related issues, overwhelmed incumbent Mayor Judith Flanagan Kennedy with 72 percent of the vote in the preliminary mayoral election. The two candidates will square off again in the November final.

Sen. L’Italien Explores Run for Congress Several weeks ago Third District Congresswoman Niki Tsongas (D-Lowell) announced she would not be running for re-election next year. As the field begins to take shape, state Sen. Barbara L’Italien (D-Andover), the Senate chair of the Joint Committee on Consumer Protection, before which we have several key pieces of legislation, including our franchise law amendments bill, announced she will be setting up an exploratory committee to begin raising money for the race. Sen. L’Italien is the first elected official to begin to put her seat on the line for a chance at the open congressional seat. She is also the first woman to get into the race. Sen. L’Italien, age 56, resides in Andover, and her senate seat consists of that town plus Lawrence, Dracut and Tewksbury. Democrat Dan Koh, former chief of staff to Boston Mayor Marty Walsh, is already in the race, and former Democrat lieutenant governor nominee Steve Kerrigan is also considering a run. The lone Republican to announce thus far is Rick Green, a GOP activist from Pepperell who owns an auto parts company.

Columbus Day Work Rules The Columbus Day holiday, celebrated this year on Monday, October 9, is consid-

Massachusetts Auto Dealer www.msada.org

ered a restricted holiday and has certain permit and premium pay rules. First, a dealership that operates on Columbus Day is required to pay most employees other than “executive”, “administrative” and “professional” employees as described in MSADA’s Guide to Wage and Hour Compliance for Massachusetts Dealers (March 2016), “holiday premium pay” equal to one and one-half times their regular rate if they work on the holiday. Second, an employer may not require an employee to work on the holiday nor may it punish or penalize an employee for choosing not to work. Further, under Massachusetts law, certain retail businesses are required to obtain a permit in order to be open for business on certain holidays. If your dealership is going to open prior to 12 Noon on Columbus Day, you will need a permit issued by the local authorities. If you will be opening at a time after those stated above, no permit is needed. Finally, Massachusetts law does not recognize “paid holidays.” In other words, if an employee does not work on a legal holiday, there is no requirement that he or she be paid for the holiday. If, however, an employee does work on certain legal holidays, Massachusetts law requires that the employee be paid at least time and one-half his or her regular rate. In addition to complying with the Massachusetts holiday laws, a dealer must also comply with his or her own policies. If your Employee Handbook or past practice says that the day is a “paid holiday,” then you are required to pay employees for that day even if it is not a regularly scheduled workday. Further, if an employee works on one of these days, the employee would be entitled to holiday pay for the day plus the additional premium pay for the hours worked on the holiday, or another day off with pay, if the handbook so provides. As a result, dealers are urged to review their holiday pay policies carefully to ensure that they accurately reflect their actual practices. t

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Massachusetts Auto Dealer SEPTEMBER 2017

Troubleshooting

MSADA

Data Security Breach Notification By Peter Brennan, Esq.

MSADA Staff Attorney With the massive Equifax data breach in the news recently, now is a good time to review your data security practices and brush up on the Massachusetts law regarding data security and what to do in case of a data breach. The state and federal regulations in the area of data security are robust and impossible to cover within the space limitations of this column. Consequently, you should visit https://www. ftc.gov/tips-advice/business-center/privacy-and-security/data-security for information on relevant Federal requirements. In 2007, Massachusetts enacted M.G.L. Chapter 93H, the Commonwealth’s Data Breach Notification Law. Chapter 93H requires that, in the event of a data security breach to a business that owns or licenses the personal information (PI) of Massachusetts residents, the business must notify the following: (i) the affected resident; (ii) the Massachusetts Attorney General’s Office, and (iii) the Massachusetts Office of Consumer Affairs and Business Regulation (OCABR). Arguably more importantly, the law required OCABR to promulgate regulations that require companies that own or license the PI of Massachusetts residents to take steps to ensure the protection of that data. Those regulations, codified at 201 CMR 17.00, list the specific precautions that companies must take to protect the PI of Massachusetts residents. The regulations took effect in 2010, so if your dealership has not implemented all of the following, you should do so immediately. SEPTEMBER 2017

Of primary importance, your dealership must have a comprehensive Written Information Security Program (WISP) that applies to all records owned or licensed by the dealership that contain personal information about a Massachusetts resident. This might be obvious from the name, but the WISP must be in writing and should be stored securely in electronic or paper format at the dealership. In the event of a breach, the first thing that the Attorney General’s Office will want to see is the WISP, and it is essential that you have something to provide. Please note that the regulations define “personal information” as “a Massachusetts resident’s first name and last name or first initial and last name in combination with any one or more of the following data elements that relate to such resident: (a) Social Security number; (b) driver’s license number or state-issued identification card number; or (c) financial account number, or credit or debit card number, with or without any required security code, access code, personal identification number or password, that would permit access to a resident’s financial account.” (21 CMR 17.02). Publicly available information such as a resident’s address or birthday is not considered PI. Importantly, this applies not only to customer PI held at the dealership but also to employee PI and any additional PI that the dealership has received and maintains in its records. The WISP should be detailed and include all administrative, technical, and physical safeguards that the dealership has in place to protect the PI that it holds. However, it is not a “one-size-fits-all” requirement, and it can be tailored to each businesses specifications and capabilities. Additionally, one lucky employee must be designated as the keeper of the WISP. For a full WISP compliance checklist, please use the following link to the OCABR website: http://www.mass.gov/ocabr/ docs/idtheft/compliance-checklist.pdf. Dealers must also be aware of the technical aspects of the Massachusetts data

Massachusetts Auto Dealer www.msada.org

protection standards, which are amongst the most stringent in the nation. All PI records and files that are transmitted across public networks or transmitted wirelessly must be encrypted where technically feasible. Any records containing PI that are held on a laptop or other portable device must likewise be encrypted. The regulations define “encrypted” as “transformation of data into a form in which meaning cannot be assigned without the use of a confidential process or key”, and merely password-protecting the PI is considered insufficient. Dealers are also responsible under the regulations for a breach by any third-party service provider or vendor with whom the dealership shares the PI of Massachusetts residents. This provision of Massachusetts law is modeled after the FTC’s Safeguards Rule, and dealers should revisit NADA’s Guide to Dealer Data. Should a breach occur, the dealership, within a reasonable amount of time after the discovery of the breach, must notify the OCABR and the Massachusetts Attorney General’s Office and provide details on the circumstances of the breach, including the number of Massachusetts residents affected and the steps taken since the incident occurred. Non-compliance with the law can result in an action by the Attorney General. While each case is judged according to the individual circumstances, the law allows for a $5,000 fine per infraction (record), and the AG is unlikely to provide any quarter for a company that has failed to maintain a WISP or provide notification of a breach in accordance with the law. t If you require any additional information on Massachusetts data security regulations 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.

Legal

MSADA

By Joseph W. Ambash and Jeffrey A. Fritz

What Do You Owe Departing Employees, and When Do You Owe It? Employment terminations, for whatever reason, are a common occurrence in the workplace. When they occur, however, employers need to know what “wages” they owe to the terminated employee, when they are due, and the rights and obligations of both parties. Missteps in this regard can result in litigation and be very costly. One would think the Massachusetts Wage Act clearly spells out what constitutes “wages” due to employees and what does not. While the Act makes clear that holiday and vacation pay—as well as commissions that are “definitely determined” and “due and payable”—are “wages,” it provides little further guidance, save to refer to such compensation paid on a weekly or bi-weekly basis. Whether compensation is due departing employees, of course, will depend on whether such compensation qualifies as “wages” under the Act. Generally speaking, when “wages” are due to departing employees will depend on the manner in which the employee departs. If an employee voluntarily quits his or her job, earned wages will be due on the following regular pay day or, in the absence of a regular pay day, on the following Saturday. If an employee is involuntarily terminated from his or her job, however, earned wages will be due in full on the day of discharge. You should be mindful of this requirement and ensure you have a terminated employee’s final paycheck ready to go that day. If not, you should consider placing the employee on a paid or unpaid administrative leave until it can be processed and delivered. The final paycheck should include (1) the employee’s earned hourly pay or salary, if any; (2) commissions that are “definitely determined” and “due and payable” at the time of termination; and (3) any earned holiday or vacation pay. Earned PTO also may be owed, at least in part, depending on what your policy says, and whether, and to what extent, it is deemed

to constitute holiday or vacation pay. The Massachusetts Earned Sick Leave Law makes clear, however, that earned but unused sick leave pay is not “wages” under the Act and, accordingly, need not be paid out at termination. As indicated above, commissions are considered “wages” if they are “definitely determined” and “due and payable.” In order for a commission to be “definitely determined,” it must be “arithmetically determinable.” In other words, the amount of the commission is calculable in accordance with some type of mathematical formula: for example, 20% of adjusted gross profit (as specifically defined) on each vehicle delivered, or (for commissions based on monthly performance) 2.5% of adjusted gross profit as set forth at line 38A of page 5 of your monthly financial statement. Commissions are “due and payable,” in essence, when any contingencies relating to their entitlement have occurred. Such contingencies should be spelled out clearly in your pay plans. You can include in your pay plans any (of course, legal) contingencies you deem appropriate, but such contingencies should be reasonably related to the work at issue. Contingencies not reasonably related to such work (such as requiring the employee to be employed when the dealership decides to pay them) are likely to be deemed ineffective, and the commission is likely to be deemed to have been earned upon sale, delivery, or some other aspect of the work at issue. For example, let’s assume a dealer’s pay plan says a salesperson earns a commission on the sale of each car upon delivery, but must be employed on the 10th of the following month to be entitled to the commission. Let’s further assume the employee sold and delivered seven cars in the month at issue and was involuntarily terminated toward the end of the month. Because, at the time of termination, the www.msada.org

commissions on the seven cars can be calculated, and all contingencies related to the sale and delivery have been met, such commissions are likely to be deemed “wages” and should be paid to the employee upon termination, even though the dealership, in the normal course, would not have paid them until the 10th. Contrast that, for example, with commissions based on monthly performance. Because such commissions are not “arithmetically calculable” until the end of the month, if an employee is involuntarily terminated prior to the end of the month (and accordingly, has not completed the work associated with the commissions), they are not likely to be deemed “wages” and, therefore should not be due upon termination. While an employee likely would not be deemed entitled to a pro rata portion of the commission, a dealer would be wellserved to spell that out clearly in its pay plan. What about deductions to final paychecks? Does the employee owe you on an advance? Did the employee damage company property? The laws governing wage deductions are nuanced and strict, so you should consult legal counsel before making them, or risk a wage violation penalty and treble damages. t

Joe Ambash is the Managing Partner and Jeff Fritz is a partner at Fisher Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They can be reached at (617) 722-0044.

Massachusetts Auto Dealer SEPTEMBER 2017

AUTO OUTLOOK

SEPTEMBER 2017

Massachusetts Auto Dealer www.msada.org

MSADA

www.msada.org

Massachusetts Auto Dealer SEPTEMBER 2017

MSADA

ACCOUNTING

It is Never Too Early for Tax Planning By Jeff Caruso

CPA, O’Connor & Drew, P.C Jeffrey joined O’Connor & Drew, P.C. in 2002. In 2005, he left O’Connor & Drew, P.C. to join a consulting firm that provides finance and accounting support to various

Fortune 500 companies. In 2008, Jeffrey reO’Connor & Drew, P.C. to continue his career in public accounting. Jeffrey has joined

experience in auditing commercial accounts as well as in auditing not-for-profit organizations and higher education.

Contact

him

at jcaruso@ocd.com.

Yes, we do have a new federal administration, but will the tax rules change before December 31, 2017? It is really anyone’s guess, but it is never too early to start tax planning. Here are some basic, albeit crucial, tax planning topics that you should start to think about today rather than at the end of December.

Basis The IRS will not allow a deduction of S-corporation and/or Partnership losses unless the shareholder/partner has adequate basis in the company and is “at-risk”. If you are anticipating losses in an S-corporation or Partnership, an analysis should be done to determine if you have sufficient basis to deduct the loss on this year’s personal income tax return. This analysis should include the treatment of loans made by owners to the company, losses previously deducted against those loans, as well as the impact of repayment of those loans.

Self-rentals The IRS grouping rules may allow you to offset rental losses with dealership profits. A comprehensive review of all net SEPTEMBER 2017

rental income and loss activity should be projected, because the passive loss rules are complicated and could prohibit the benefit of losses from one property offsetting the income from another.

LIFO What the government will eventually do with LIFO reserves remains unclear. For those dealers that are currently on LIFO, projecting new inventory balances as of December 31 is critical as the level and mix of inventory, in part, will factor into whether there is a current year LIFO pick up (expense) or recapture (income). Dealers currently on LIFO who are considering a sale of assets should review the cash flow impact of recapturing the entire reserve at the time of sale. Dealers who have a sale in mind should consider putting some cash away each year to help “pay” for the tax due on the LIFO recapture. Dealers that are considering coming off LIFO voluntarily must make the election in January of the year that they would like to recapture the reserve. Currently, the IRS allows for a four-year “pay back” to recapture the reserve. Dealers should also be reminded that an estimate of the current year LIFO change should be included on the 12-month factory financial statement provided to the manufacturer.

Used-vehicle write-downs If you are carrying used vehicle inventory at the lower of cost or market basis for inventory valuation, the IRS does allow a reasonable write-down of used vehicle inventory. These market value adjustments should be based upon industry guides.

Parts Inventory For those dealers that are conducting a parts inventory by an outside company every year and reconciling that count to the general ledger, we commend you. The next step is to adjust the books and dispose of the obsolete parts. The parts

Massachusetts Auto Dealer www.msada.org

then must be disposed of in order to take a tax deduction.

Section 179 and bonus depreciation Current federal law allows for the direct expensing of up to $500,000 of “new” and “used” fixed asset purchases with lives of 15 years or less. This amount is capped with purchases up to $2,000,000. Purchases above $2,000,000 phase out the $500,000 deduction dollar for dollar. The IRS also allows for a 50% first year (“Bonus”) deprecation for new items purchased with useful lives of 15 years or less. You may decide during the planning process not to utilize the 50% first year depreciation on a class of assets. If this is the case, you must make an election on your tax return to elect out of bonus depreciation.

Meals and Entertainment There are some meals and entertainment expenses that are 100% deductible. These include the following: • meal and entertainment expenses for a company picnic or holiday party; • free coffee, bottled water, donuts, etc. provided to employees at the place of business; • free food or beverages provided to the public for promotional purposes; • meals provided at the place of business to more than half of the employees as an enticement for working after hours, weekends, or holidays; and • cost of meals included on employee W-2 forms as taxable compensation. We also see office managers lumping travel and lodging into these accounts. These are also 100% deductible (if business related). As you can see, there is a lot we can do today to prepare ourselves for the upcoming year regardless of potential rule changes. Early planning can help to get dealerships in the best position possible to address any of the rule changes that may occur before December 31, 2017. t

MSADA

DEALER SERVICES

Leading High Performers By Nate Blevins Ethos Group

Nate Blevins

is an industry leader and rep-

resentative of

Ethos Group,

a consulting

service company that provides franchised automotive dealerships across the nation with an integrated program of results-driven income-development

services,

comprehensive

training, robust recruiting and innovative products.

Is there truly a talent shortage in the automotive industry today? Why do some dealerships consistently attract top-level talent, while other dealerships have trouble finding even average people to staff their business? At Ethos Group, through decades of experience, we know there are fundamental differences between high performing organizations and those performing at or below average in the industry. Building a high performance culture starts with the leaders and the vision they create to attract the right people who can execute their plan at the highest level. Creating a culture that fosters the growth of high performers is a crucial component of taking any organization from simply competing to dominating their market. High performers have an uncanny ability to generate new business, create income, exceed sales goals, attract new clients, attract new employees, inspire their peers, and thereby help the organization succeed. In the case of high performers, what separates them from their peers is the fact that they are self-motivated and have high levels of personal accountability. What high performers need most from leadership is to remove obstacles that decrease productivity, demotivate them, and, when left unchecked, cause them to exit the organization. If your organization

is serious about hiring and retaining the very best, here are five of the most common mistakes you need to avoid.

Unclear Vision High performers want to be part of something bigger than themselves. They need to connect with the greater purpose of the organization and want to feel they have a personal connection to the company’s vision and core values. Leadership needs to provide high performers with a compelling vision of “why” they would want to work in the organization and how their work will contribute to the fulfillment of that vision. Most ambitious employees want to work for leaders and companies that have a strong vision of what they want to achieve and find value in the commitment to making it happen. When high performers fail to reach self-actualization due to a lack of vision, they will look elsewhere.

Promotions Based on Tenure Promoting an employee because they have “earned the opportunity” based on tenure and not results will kill your organization’s momentum and make the high performers question the leadership’s commitment to excellence. Your best employees will consistently deliver exceptional results, are self-motivated, and, by nature, will challenge weak managers. High performers crave a culture where employees earn rewards, pay, and promotions through measurable performance standards. They want a culture based on merit and will not stick around to work for managers that were promoted because of tenure and not performance. When an organizational culture rewards longevity and not results, it sends the message that not getting fired is more important than consistently exceeding expectations. High performers will not stick around to work for a manager they don’t feel will add value to their professional and personal growth. www.msada.org

Weak Leadership High performers do not quit a company; they leave due to poor management. When an organization promotes average people into management positions, they do not magically become great managers. These new managers will lack the same drive and high level of personal accountability that the high performers have which means these weak managers will consistently struggle to lead the high performers. Over time these managers will hire people who are average and will not be able to elevate employees on their team beyond their average skill level. Weak managers will put any organization on the fast track to mediocrity.

Lack of Recognition According to a recent case study published in the Harvard Business Review, high performers can deliver as much as 400% more productivity than the average employee. Behavior that gets recognized and rewarded gets repeated, and this is especially important in motivating your high performers. They are intrinsically driven to achieve results, but they want to be recognized and paid for their contributions. If they are not recognized, they will find that recognition with another organization.

No Accountability When you ignore poor performance and do not address employees who fail to live up to the performance standards, it will diminish your credibility as a leader. If you are a leader who talks about your vision of being the best in your market and then sit by idly while employees fail to hit your high standards, your employees will rightfully question your commitment. When they feel your words as a leader are not aligned with your actions, they will look for leadership in another organization that will share their commitment to winning. t

Massachusetts Auto Dealer SEPTEMBER 2017

COVER STORY

Grassroots

Powered

NADA Washington Conference brings Massachusetts dealers to Capitol Hill By Tom Nash

While Congress often takes on issues directly relating to “Main Street” businesses, much of the discussion occurs far removed from the realities outside Capitol Hill offices. Auto dealers are uniquely positioned to help bring reality back to Washington simply by showing up. 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 and senators. This year, MSADA President Chris Connolly (Herb Connolly Auto Group), MSADA Board Member Jay Dillon (Dillon Chevrolet), Immediate Past President Scott Dube (Bill Dube Hyundai), Next Gen rep Emily Dube, and ATD Board Member Kevin Holmes (Tri-State Truck Center) made the trip alongside Executive Vice President Robert O’Koniewski, Lobbyist Jim Hurrell, and Staff Attorney Peter Brennan. The MSADA delegation met with Rep. Stephen Lynch (D-South Boston), Rep. William Keating (D-Bourne), Rep. Michael Capuano (D-Somerville), Rep. Jim McGovern (D-Worcester), and Rep. Joe Kennedy III (D-Brookline), and with staff for U.S. Sen. Ed

SEPTEMBER 2017

“The thing about these le that it is a process. They do something we constan -Chris Connolly, Markey (D), Rep. Niki Tsongas (D-Lowell), Rep. Seth Moulton (D-Salem), and Rep. Katherine Clark (D-Cambridge). This was Dillon’s first time attending the Washington Conference. “It was a great experience to see how the system works,” Dillon said upon his return. “I was surprised that we were able to meet with the legislators one on one -- it was nice to be able to sit down with them.” Dillon added that meeting McGovern, his congressional representative, was especially beneficial. “We kind of planted the seed for future relationships,” Dillon said. “If (one of our issues)

Massachusetts Auto Dealer www.msada.org

MSADA MSADA Issue: LIFO and Advertising Expenses LIFO is a longstanding inventory accounting method used by businesses to help mitigate rising inventory costs. Similarly, advertising has been considered an ordinary business expense for more than 100 years. Repealing the use of LIFO and limiting advertising deductibility would take working capital away from dealerships that could otherwise be used to create jobs. Although the Congress has maintained LIFO, questions remain about the treatment of inventory, LIFO reserves, and advertising expenses. NADA urged Congress to maintain the current tax treatment of LIFO and advertising deductibility.

Issue: Autonomous Vehicles

egislative relationships is o not just happen — they are ntly have to work on.” MSADA President comes down to a vote a year or two from now, he can put a name with a face and give us a little more attention.” For his part, Connolly, a repeat attendee, said he remains hopeful that Congress might be able to get beyond the partisan gridlock that prevents progress. “There’s still two sides that just do not want to work with each other, so it’s frustrating,” he said. With more than 500 dealer-legislator meetings taking place, NADA singled out four priority issues for the Massachusetts delegation to discuss where congressional action could have an enormous impact on dealers across the country.

Congress is considering legislation to advance self-driving vehicles or Highly Automated Vehicles (HAVs) that could preempt certain state laws. All states have enacted vehicle franchise and licensing laws to provide consumer protections and regulate vehicle commerce. For decades, state vehicle franchise laws have included important consumer protections and regulated the disparity in size and power between local dealers and multinational automakers to help level the playing field. Such protections for state residents are especially important, as there are new risks, as well as opportunities, associated with self-driving technologies and new entrants rapidly entering the auto market. While Congress seeks uniform regulation of self-driving vehicles to avoid a state patchwork that would hamper deployment of these vehicles, Congress must also ensure that the states’ traditional role to regulate motor vehicle commerce within its borders is preserved as applied to self-driving vehicles. On September 6, the House approved H.R. 3388, the “SELF DRIVE Act” by voice vote. Bipartisan language to clarify that

www.msada.org

Massachusetts Auto Dealer SEPTEMBER 2017

GRASSROOTS POWERED Issue: Overbroad Recalls

Congress does not intend to preempt state vehicle licensing/ franchise laws as applied to self-driving vehicles was included in the bill. In the Senate, Sens. John Thune (R-South Dakota), Bill Nelson (D-Florida), and Gary Peters (D-Michigan) plan to introduce the Senate version of this legislation in the fall.

Issue: Tax Reform In 2016, the House Republican leadership released a “Tax Blueprint,” their outline for tax reform legislation expected this Fall. NADA favors provisions in the Blueprint that: • treat pass-throughs fairly, since many automobile dealerships operate as pass-through entities; • maintain the LIFO (last in, first out) inventory accounting method, since repealing LIFO would take working capital away from dealerships that could otherwise be used to create jobs; and • eliminate the estate tax, since the tax hurts family-owned dealerships with assets, such as land and single-use showroom facilities, that cannot be easily liquidated to pay the tax without destroying the viability of the dealership. The Blueprint is silent on deductibility of advertising, which historically has been a major dealership expense. The Blueprint eliminates the deduction for net interest expense, which would negatively affect dealers. Small business dealerships rely heavily on financing to fund vehicle inventory and facilities improvements and do not have access to the equity capital markets. Eliminating or limiting interest deductibility in exchange for full expensing would disproportionately harm small business dealerships and reduce cash flow, increase borrowing costs and hamper funding for new investments, inventory, and jobs. SEPTEMBER 2017

Massachusetts Auto Dealer

Sen. Richard Blumenthal (D-Connecticut) and Rep. Jan Schakowsky (D-Illinois) have introduced partisan bills (S. 1634/H.R. 3449) that could cripple the used-car market by halting the sale or wholesale of any used car under open recall by a dealer, even though most vehicle recalls do not require the drastic step of grounding. These bills would create a “trade-in tax” that would instantly devalue a car buyer’s trade-in by grounding recalled vehicles for such minor matters as a peeling sticker. Because of a shortage of recall parts, it often takes months to repair recalled vehicles. A 2015 study by J.D. Power found that enactment of these bills would result in an average “trade-in tax” of $1,210, and some consumers’ trade-in values would decline by $4,000 to $5,000. Lowering trade-in values would immediately hurt car buyers by reducing the down payment a consumer could use to buy a newer vehicle. Also, since the bills do not regulate private sales, recalled cars would be pushed into the unregulated private market, making it more difficult to complete recall repairs. The Senate Commerce Committee rejected an amendment identical to S. 1634 in 2015.

Raise Your Voice

Following the conference, O’Koniewski says it is 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 with dealer participation,” O’Koniewski notes. “Legislators need to remember how important dealers are in their commu-

www.msada.org

MSADA

nities, and that message needs to come from their constituents.” Whether in a Washington office or a dealer’s store, for Connolly developing a relationship with representatives means get-

ting more than rehearsed answers or blank stares when he does make contact. The important thing is making the effort. “The thing about these legislative relationships is that it is a process,” Connolly added. “They do not just happen -- they are something we constantly have to work on.” For more information about what you can do to keep in contact with your representative, contact rokoniewski@msada.org. t www.msada.org Massachusetts Auto Dealer SEPTEMBER 2017

NEWS from the NEWS from Around Around the Horn Horn from Around

NEWS the Horn

FRAMINGHAM

Herb Connolly Classic Raises Funds for Cancer Center The 17th Herb Connolly Classic golf outing, held by the Herb Connolly Auto Group, was held on August 25 to raise funds for Mt. Auburn Hospital’s Hoffman Breast Center. Since its inception, the tournament has raised more than $200,000 for the Center, which delivers comprehensive, patient-focused education, screening, and treatment of all aspects of women’s breast health. Other dealerships sponsoring the event included Jack Madden Ford, Sudbay Chevrolet Buick, and Toyota of Braintree. The funds honor the memory of MSADA President Chris Connolly’s late mother, who received treatment at the center. “It is an honor for us to do this for the hospital,” Connolly said. “I’m always humbled by their great work.”

SEPTEMBER 2017

Christopher F. Connolly Sr., Christopher F. Connolly, III, and MSADA President Christopher F. Connolly, Jr.

Massachusetts Auto Dealer www.msada.org

MSADA PITTSFIELD

Johnson Ford Kicks Off New Showroom Project Gary Johnson, the 2017 Massachusetts Dealer of the Year, began construction on a new showroom for his now 100-year-old Ford dealership this month. The work will include new lighting, flooring, and windows, in addition to a new air conditioning system. Johnson told The Berkshire Eagle that, after ini-

tial work last year, he decided the further updates were necessary. “I would say it’s going to look like a 21st century showroom, not a 1973 showroom,” Johnson told the paper. BROOKLINE

Swedish Car Day Held At Larz Anderson Museum The 18th Annual Swedish Car Day, sponsored by Volvo Village of Danvers, was held at the Larz Anderson Auto Museum in Brookline in late August with hundreds of vehicles on display and thousands of spectators in attendance. The event included a special Volvo XC60 presentation inside the museum as well as charity fundraising for Dana-Farber. Photo by eEuroParts

www.msada.org

Massachusetts Auto Dealer SEPTEMBER 2017

Around the Horn NEWS fromSERVICES DEALER WESTBOROUGH

Dealership Staff Gathers for Drive Electric Training MSADA and Plug In America Program Director Eric Cahill hosted dealership personnel from across the Commonwealth at the Massachusetts Division of Fisheries and Wildlife headquarters for an information and training session in September as dealerships prepared for National Drive Electric Week. The training included commonly asked questions about market adoption and the varying types of electric vehicles available from manufacturers. More information about the materials available from the organization can be found at www.pluginamerica.org.

SEPTEMBER 2017

Massachusetts Auto Dealer www.msada.org

MSADA

MSADA WAREHAM

Robertson’s GMC Offers Prize at Charity Golf Tournament The fourth annual Brent Hastings Memorial Golf Tournament was held in September at Wareham’s Bay Pointe Club, raising funds for Brent’s Bed and the Herren Project under the major sponsorship of Robertson’s GMC. Hastings, a former Wareham resident, passed away from a heroin overdose in 2014. Melodye Conway, Brent’s mother, founded the memorial fund that same year with the goal of erasing the stigma surrounding opioid addiction. Brent’s Bed, which is a new initiative, will assist young men financially as they transition from Miller House, a detox facility, to a recovery residence. “We want to offer them a hand up, not a hand out,” said Conway. “Brent’s Bed and the Herren Project will help these young men get back in the job market and become self-sufficient again.” Conway credited the many local businesses that donated raffle prizes for the tournament’s success. She thanked them for

their support, including Roberton’s GMC for being the tournament’s major sponsor the past two years. The car dealership has agreed to giveaway a new vehicle to the first person in the tournament to get a hole-in-one at a designated par 3. IPSWICH

Officials Cut Ribbon on EV Charging Station As part of National Drive Electric week in September, Ipswich held an official ribbon cutting for an EV charging station in the midst of the town’s weekly farmer’s market. Herb Chambers and Kelly Nissan sent staff and vehicles that were available for test drives. Meanwhile, EV and plug-in hybrid owners pulled into the middle of the farmers market to talk about their cars. Selectman Bill Craft and Electric Light Department manager Jon Blair were on hand to cut the ribbon on the charging station.

www.msada.org

Massachusetts Auto Dealer SEPTEMBER 2017

24 AUGUST 2017

SEPTEMBER 2017

Massachusetts Auto Dealer www.msada.org

MSADA

NADA MARKET BEAT

JANUARY 2016

www.msada.org

Massachusetts Auto Dealer SEPTEMBER 2017

MSADA AUTO OUTLOOK

TRUCK CORNER

Back to School and Back to Business

By Steve Parker

Baltimore Potomac Truck Centers ATD Chairman

September rings in the start of a new school year for students all across the country. Teachers are back in session, and children and adults alike are busy in classrooms enriching their minds and preparing for a better future. It is not unlike what we, as truck dealers, do every day in our own lives and within our own businesses. Each truck we sell contributes to our customers’ businesses and their goals of a better future. Each challenge we face presents an opportunity to become stronger and smarter than we were the day before. September is a time when we can all benefit from teamwork. While students everywhere went back to school, NADA/ATD went back to Capitol Hill to advocate for the nation’s auto and truck dealers. On September 12-13, NADA/ATD hosted its 43rd annual Washington Conference in the heart of the nation’s capital. This year, it was attended by nearly 500 participants, including our most politically active members, national board members, and state association leaders. This grass roots gathering of our retail industry highlights the most critical legislative and regulatory issues for both our car and truck dealer constituents. Just like a classroom, it is a time when we can put our heads together and learn about our mutual goals and the issues affecting our business. In his keynote speech at the conference NADA Chairman Mark Scarpelli highlighted an issue affecting all truck dealers, the Federal Excise Tax. I commend him for relaying the challenges faced by truck dealers and their customers. He asked those in attendance: “Does your member of Congress know that customers are having a tough time paying the 12% federal excise tax on heavy-duty trucks? Because on top of the FET, they still have to pay state and county taxes…” This largely echoes what I have advocated for during ATD’s annual Capitol Hill Fly-In in June. Rest assured, our ‘lessons’ will continually be reinforced in the fall season when Congress releases

new legislation that will affect our business. Just as students can benefit from a guest lecturer in a classroom, NADA/ATD was proud to host members of Congress during the conference. We heard from U.S. Rep. Don Beyer (D-Virginia), U.S. Sen. Lindsey Graham (R-South Carolina), and Department of Transportation Secretary Elaine Chao, just to name a few. They addressed numerous issues that are critical to the industry--from tax reform to recall legislation. As always, the conference culminated with our ‘final test’ and hundreds of dealers going to Capitol Hill for meetings with congressional representatives where we have a chance to make an impact for our businesses. Finally, I would like to say that nothing makes a bigger impact on our industry than having your participation and engagement. With elections for several ATD board seats imminent in the next month, I’d like to encourage all active and interested dealers to capitalize on your opportunity to serve our great industry. I can tell you personally that there is nothing more rewarding than fighting for our fellow truck dealers, standing up for what we do, and preserving our industry. ATD welcomes your leadership and influence for the greater good of our dealer body. September is a busy and essential time for all families. On behalf of ATD, I wish you and your loved ones a productive and successful academic year and a booming season for your businesses! t

“Nothing makes a bigger impact on our industry than having your participation and engagement.”

www.msada.org

Steve Parker is chairman of ATD, a division of NADA, which represents 1,800 heavyand medium-duty truck dealerships. He is president of Baltimore Potomac Truck Centers in Linthicum, Maryland, which operates five full-service commercial truck dealership locations with Mack, Volvo, and Hino Trucks franchises in Maryland and Virginia. Massachusetts Auto Dealer SEPTEMBER 2017

MSADA MSADA

Sound Off

Sun Powered Relief for Your Dealership’s Fixed Expenses By Ryan Ferrero Independent Power Systems

The recent solar eclipse stirred all of us one way or another. Clearly, solar is big news. Indeed, solar photovoltaic energy is making an ever-greater impact as a viable means of generating electricity. Now automobile dealers are taking a good look at what solar can do for them—for their bottom line and otherwise. When Boulder Nissan General Manager Ted Christiano and Dealer Principal Jason Purdum said ‘yes’ to solar at their small Boulder, Colorado, Nissan store, they knew they would be saving on taxes and electricity costs. Calculations indicated that by offsetting 67 percent of their store’s electricity consumption, they would be realizing savings of approximately $134,000 over 10 years, $384,000 over 25 years. They also knew that their solar-powered store would attract sustainability-minded customers. Boulder Nissan’s modest 50kW rooftop solar system has been functioning for nearly one year now, and it is a case study proving the financial advantage of such projects for car dealers. After a long-time as a Chrysler dealer, I left the auto industry, but I did not go far. With a mission to lead car dealerships to go solar, I recently joined up with expert installers and engineers at Boulder-based Independent Power Systems and major solar panel manufacturer, SunPower. We went from zero to 60 in three seconds. The program has transitioned to the National Solar Program 2020, or NSP 2020. It is now an entrant for the NADA Convention floor next March in Las Vegas. I am currently speaking with NADA 20 groups, dealer groups, and associations throughout the U.S. The only reason dealers aren’t currently using solar is they do not know about it. I well understand the priorities of a Dealer Principal and General Manager, and if it looks good

on a 20 Group Composite, that is probably the right priority. The solar benefit is old news to the Herb Connolly Chevrolet dealership in Framingham, which sought a solar canopy solution—with integrated EV chargers—to promote its inventory of electric vehicles and reduce its energy bills. A stylish SunPower/Solaire canopy now protects its electric vehicle inventory from harsh New England weather. What a win—both a financial and green solution! Recently, Covert Ford and Chevrolet in central Texas installed a 125 kW solar system allowing them to offset their electricity by 53 percent. This means they will pocket $500,000 in savings over the next 25 years. NSP 2020 has no-cost options. For example, impact investors supporting the program are motivated to purchase systems and pay dealers energy savings starting month one. Financing options exist. Some dealers, like Covert, choose to self-finance the installation and use the 30 percent Federal Investment Tax Credit, along with their utility company’s 20 percent rebate. Our team initiates the process with a free service, by reviewing 12 months of past utility bills and then analyzing available incentives and offset opportunities. Dealers like Covert have systems that pay for themselves in three years. Dealer need to be aware that these incentives start sunsetting in December 2019. As dealers nationwide become aware of the benefits solar power offers for their bottom line, we continue to receive inquiries. More information for Massachusetts Dealers is available here: http://solarips.com/massachusetts-solar-project-2020/ t

“The only reason dealers aren’t currently using solar is they do not know about it.”

Ryan Ferrero, NSP director for IPS solar, can be reached at ryan@ryanferrero.com.

Have an opinion you want to share? Email rokoniewski@msada.org. SEPTEMBER 2017

Massachusetts Auto Dealer www.msada.org

NADA Update

By Don Sudbay

Helping Dealers Recover 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 Tropical Storm Jose looms on the Eastern Seaboard, now is a good time to remember that any of us could find ourselves facing life-altering impacts from events beyond our control. While Houston continues to recover, joined now by Florida, dealers across the country are working to help their communities and each other through difficult times. Below, you will see some of the ways NADA is working to help reverse the fortunes of our fellow dealers, their employees, and the communities where they live. I encourage you to contribute what you can to the NADA Foundation’s Emergency Relief Fund. We dealers need to band together in times of tragedy – NADA is ready to help maximize our impact.

Dealership Employee Riki Burkhart: ‘We Have to Rebuild’ after Hurricane Irma Gary Matern, president and general manager of O’Brien Auto Park of Fort Myers, estimates nearly all 145 employees working at his Hyundai-Subaru-Mazda dealership sustained some level of property damage to their homes and cars. “I do not yet have an exact account of every employee. Some are still making their way back from out of state,” Matern said last week. “It ranges from minor damage to several employees with extreme losses.” One of Matern’s employees is Riki Burkhart, who has worked at the dealership for the past 12 years. The home she shares with her mother and stepfather in Buckingham, a community east of Fort Meyers, is located in one of Hurricane Irma’s hardest hit areas. “When the storm first hit our area, we seemed to have gotten through that okay. But through the night, we went to sleep and woke up in the morning. It was raining and the water continued to rise,” Burkhart said. “We walked out into the garage, which began to flood and eventually started to seep into the house. The garage flooded with about two feet of water. Outside, the water level almost covered the tires of the cars sitting in the driveway.” At that point, Burkhart recalls gathering what they could

and evacuating in a truck that survived the flooding. “It looked like a river. You could not see the road. There were power lines down everywhere,” she added. “It was dangerous driving out, but we really had no choice.” The NADA Foundation’s Emergency Relief Fund is working closely with the Florida Automobile Dealers Charitable Fund to provide relief to dealership employees who suffered substantial property damage as a result of Hurricane Irma that is not covered by insurance or government aid. “Dealers should be encouraged to contribute to these funds because every single dollar donated goes directly to

“We dealers need to band together in times of tragedy – NADA is ready to help maximize our impact.” dealership employees who have suffered uninsured losses,” said Ted Smith, president of the Florida Automobile Dealers Association. Dealers and dealership groups can donate online to the Emergency Relief Fund, which is dedicated exclusively to providing financial assistance to dealership employees who sustained property damage from hurricanes Irma and Harvey. “Our home was completely flooded. It is not livable. What was in the house is ruined. We have to rebuild,” Burkhart said. “And several vehicles we own are a total loss.” Burkhart and her family are currently staying at the home of a family friend. As the news cycle inevitably shifts, the Gulf Coast region in Texas is only just beginning its recovery process. And for the dealership employees who sustained property damage from Hurricane Harvey, the impact will be felt for years to come. NADA President and CEO Peter Welch, NADA Chairman Mark Scarpelli, and NADA Foundation Chairman Annette Sykora were in Houston this month meeting with relief workers and delivering much needed resources to dealership employees. The NADA Foundation’s Emergency Relief Fund had

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NADA Update

“The NADA Foundation’s Emergency Relief Fund had received more than 500 applications from dealership employees as of September 7.” received more than 500 applications from dealership employees as of September 7. The NADA Foundation is asking dealers across America to donate $1,000 per store to help dealership families during this difficult time. Many dealers, manufacturers, and associations have already stepped up in a big way, but requests for aid are still coming in faster than the Emergency Relief Fund can currently support. Personal or corporate checks can be made payable to Emergency Relief Fund, c/o NADA Foundation, 8400 Westpark Drive, Tysons, VA 22102. For more information, call (703) 821-7102. (Donations to the NADA Foundation are generally tax-deductible; contributors should consult their tax advisors for details.)

The Equifax Data Breach – What Dealers Should Know By Mark Scarpelli, NADA Chairman Equifax is one of three nationwide credit-reporting agencies that track and rate the financial history of consumers. Equifax recently announced a major breach of the data it stores, and news coverage of the breach has been widespread. Equifax has stated that information from as many as 143 million people in the United States was compromised. Given the number of people affected and the sensitive type of information exposed, dealers should understand the basics of the breach and what it means for their customers. In particular, dealership employees should recognize they are likely to: (a) get questions from customers about the breach, and (b) see a potential increase in “credit freezes” and fraud alerts on credit applicants’ credit reports. As a result, dealership personnel should review the FTC guidance below and understand what they may encounter, what they should look for, and what steps they should take when facing a fraud alert or “frozen” credit report. If dealership personnel do get questions, it is important to first explain that the reported breach occurred at Equifax, and does not involve the dealership, data stored at the dealership, or dealership processes. Dealership personnel can also point consumers to the FTC’s consumer guidance “The Equifax Data Breach: What to Do?” That guidance: (a) provides a link to the Equifax website where consumers can determine if their information is at risk and how to sign up for the free credit monitoring service provided by Equifax, and (b) provides general information about steps SEPTEMBER 2017

consumers can take to protect their credit, including how to place a fraud alert, or a credit “freeze” on their account. What if dealership personnel do see a fraud alert or encounter a “frozen” credit report? First, dealership personnel should review the FTC document entitled “Fraud alerts vs. credit freezes: FTC FAQs” that provides further information about fraud alerts and credit freezes. There, the FTC explains that if a customer’s credit is “frozen” then that customer’s credit report generally cannot be viewed until the customer takes steps to “unfreeze” their credit. They will be assigned a PIN they must use (and may forget), and it may include a fee that the customer must pay (both to place, and to temporarily “lift” the freeze), and may also include a lead time that could affect a financing transaction. If there is a fraud alert on the credit report, then the dealership must take certain additional steps to verify the identity of the applicant before the credit process can be finalized. Generally, that involves calling a phone number that the consumer provided at the time they placed the fraud alert and speaking with the consumer. Dealers and their employees should also be aware that there are already scammers trying to take further advantage of the Equifax breach by calling consumers and trying to obtain personal information through false pretenses. Lastly, this is a good reminder for dealers to revisit their Red Flags program to ensure that they are taking the required steps to detect and prevent scammers from opening a line of credit using someone else’s information.

Wanna Sell Cars? No, Job Seeker Study Finds Job seekers are willing to work at dealerships -- but not selling cars. “Any role, other than salesperson, creates a lift in interest” among job hunters asked about working in auto retailing, said Isabelle Helms, vice president of research and market intelligence for Cox Automotive in Atlanta. That is one finding in a new study by Cox. The company partnered with Hireology, a Chicago hiring and retention technology provider, to conduct the 2017 Dealership Staffing Study. Helms presented the findings Tuesday at Elevate, a conference led by Hireology. In its first such study, Cox surveyed about 800 job seekers and 393 dealership employees, of whom 50 were managers or owners, on hiring and retention. Cox collected the data between late in the third quarter of last year and midway through 2017. t

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