MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109
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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
September 2014 • Vol. 27 No. 9
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Making an Impact
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 ry 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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INSURANCE: Using Total Rewards as a Recruitment Tool
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AUTO OUTLOOK
From the President: Inside the Beltway THE ROUNDUP: The CFPB Battle Continues
TROUBLESHOOTNG: No Right to Positive Online Reviews LEGAL: Massachusetts’s New Domestic Violence Leave Law: What Dealerships Need to Know
14 Cover Story: Making an Impact
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NEWS From Around the Horn
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NADA UPDATE: Urge Congress to Rescind Flawed CFPB ‘Guidance’ on Auto Finance
23 24
INSURANCE: Are You Required to File a Form 5500?
Ad Directory BlumShapiro, 18 Boston Herald, 28 Lynnway Auto Auction, 19 M&T Bank, 17 Nancy Phillips Associates, Inc., 18 O’Connor & Drew, P.C., 27 Southern Auto Auction, 20
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NADA MARKET BEAT
ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org
Join us on Twitter at @MassAutoDealers Quarter Page: $450 Half Page: $700 Full Page: $1,400
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
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Massachusetts Auto Dealer SEPTEMBER 2014
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from the President
by Scott Dube, MSADA President
Inside the Beltway Bringing the grassroots to Capitol Hill
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“Each year the same founding American principle is under attack: free enterprise.”
s auto dealers, our industry is regulated locally, by state authorities, and by the federal government. We all know that regulations, if done properly, can keep consumers and dealers safe, but without our constant input, stereotypes and easy scapegoating can get in the way of sound policy. This month a delegation consisting of NADA Director Don Sudbay, MSADA Vice President Chris Connolly, Dealer Ray Ciccolo, Next Gen dealer representative, Emily Dube, Executive Vice President Robert O’Koniewski, and me journeyed to Capitol Hill as a part of NADA’s annual Washington Conference. The Washington Conference is a chance to make sure our representatives understand that we continue to struggle under the weight of a down economy, and that the policies they pursue should be focused on making it easier to do business, not harder. We aren’t seeking any special favors or privileges, just a level playing field. Each year the same founding American principle is under attack: free enterprise. Of course, the scope of that problem is well beyond any one industry. We keep our punch list short and stick with making sure our legislators understand that tax increases and regulatory changes may seem copacetic while dreaming them up in the halls of power, but back in Lawrence or Northampton or Framingham the small businesses that make up the fabric of those communities are being tugged at the seams. We’ll get into a little more detail about what these issues are in this month’s cover story and Bob’s column. As usual, unfortunately our dealer delegation has its work cut out for it as Congress continues to back initiatives such as the Consumer Finance
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Protection Bureau and IRS issues, including the estate tax and elimination of LIFO. But we can never stop putting effort into making sure our representatives know who we are, what we do, and how vital our contribution is to their districts and our communities. We may not agree on every issue, but as we’ve seen proven during these past couple of years, when the chips are down the time put into establishing these relationships can really pay off. All of this work is done for the benefit of our member dealers, who are working tirelessly day in and day out to make their businesses succeed. They’re putting food on the table for their families, and by extension are doing the same for as many as 50 men and women in their communities. They don’t all have time to make a trip down to Washington, and that’s why we feel privileged to speak on your behalf. I’d also like to thank our Washington Conference dealer delegation for literally going the extra mile(s) to make sure our voice is heard. It can be a slog, especially given the nature of our Congress right now, but they remember who they’re putting in the time for. I hope you’ll join me in showing them our appreciation. As a final note, I want to continue to stress the importance of your voice in this process. We make the trip down to DC so you don’t have to, but that doesn’t mean you shouldn’t pick up the phone and let your legislator know what issues you care about as an important economic engine in their community. Please let me or Bob know if you would like any talking points or other tips for representing our business.
Massachusetts Auto Dealer www.msada.org
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MSADA
Msada Board Barnstable County
Gary Beard, Dick Beard Chevrolet
Berkshire County
Brian Bedard, Bedard Brothers Auto Sales
Bristol County
Richard Mastria, Mastria Auto Group
Essex County
William DeLuca III, Woodworth Motors John Hartman, Ira Motor Group
Franklin County
Jay Dillon, Dillon Chevrolet
Hampden County
Jack Sarat, Jr., Sarat Ford
Hampshire County
Bryan Burke, Burke Chevrolet
Middlesex County
Chris Connolly, Jr., Herb Connolly Motors Scott Dube, Bill Dube Hyundai Frank Hanenberger, MetroWest Subaru
Norfolk County
Jack Madden, Jr., Jack Madden Ford Charles Tufankjian, Toyota Scion of Braintree
Plymouth County
Christine Alicandro, Marty’s Buick GMC Isuzu
Suffolk County
Robert Boch, Expressway Toyota
Worcester County
Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto
Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]
Immediate Past President James G. Boyle, Tuck’s Trucks
NADA Director
Don Sudbay, Jr., Sudbay Motors
Officers
President, Scott Dube Vice President, Chris Connolly, Jr. Treasurer, Jack Madden, Jr. Clerk, Charles Tufankjian
A ssociate M ember D irectory Name Contact Telephone ADESA Boston Chris Carli (508) 270-5403 ADP Dealer Services Maria Trezza (973) 404-4466 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Tom Trudell (413) 885-5477 AutoAlert Don Corinna (949) 398-7008 AutoRaptor (RAL) Howard L. Leavitt (401) 421-6533 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 (617) 929-8373 The Boston Business Advisory Group Paul Cuomo (781) 681-1501 Vincent Saccone (781) 681-1519 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Cars.com Heidi Allen (312) 601-5376 CitNOW Jack Gardner (617) 221-8008 Construction Management & Builders, Inc. Kate Sullivan (781) 246-9400 CVR John Alviggi (267) 419-3261 Dealermine Inc. Karen Parmenter (800) 304-3341 x5179 Dealerdocx Brad Bass (978) 766-9000 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company Paul McGovern (781) 849-3100 EasyCare New England Inc. Mike Douglas (770) 246-9724 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 GW Marketing Services Gordon G. Wisbach Jr. (781) 899-8509 Huntington National Bank John J. Marchand (781) 326-0823 Key Bank James Q. Moretti (781) 558-5132 KPA Rob Stansbury (484) 326-9765 Leader Auto Resources, Inc. Brendan J. Murphy (518) 878-6341 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Bosch (617) 312-2100 MetroMedia Energy Timothy Teevens (800) 828-9427 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 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 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 Schlossberg, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Southern Auto Auction Tom Munson (860) 292-7500 Sovereign Bank Richard Anderson (401) 432-0749 Sun Trust Bank Michael Walsh (617) 345-6567 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance BethAnn Durepo (603) 490-9615 TD Bank Michael M. Lefebvre (413) 748-8272 TrueCar Pat Watson (803) 360-6094 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Windstream Rick Caruth (978) 296-0313; (413) 977-6111 Zurich American Insurance Company Steven Megee (774) 210-0092
www.msada.org
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The Roundup
The CFPB Battle Continues by Robert O’Koniewski, Esq. MSADA Executive Vice President
On the eve of the thirteenth anniversary of the September 2001 terrorist attacks on our soil, a delegation of Massachusetts dealers and Association staff traveled to Washington, DC for NADA’s annual legislative and regulatory conference. For many of us, the events as they unfolded in 2001 while we were attending that year’s Washington Conference seem like they happened yesterday, and several speakers referenced memories of that tragic day 13 years ago in their remarks. Since then, the political atmosphere in DC seems to have devolved into a citywide, perpetual gripe session, with all branches of government doing their part to keep the dysfunction going. What would our annual Washington Conference be without Democrats complaining about Republicans, Republicans complaining about Democrats, and everyone bemoaning the fact that nothing can get done because, depending on the issue, the House, the Senate, or the White House do not want to get to a solution? In recent years “gridlock” and “hyper-partisanship” seem to be the two terms that have become permanently attached to descriptions of “the federal government,” and with them come the infighting, name calling, and pouting exhibited by our elected officials we’ve come to expect in our visits and the speeches we hear. But when your audience is a group of small businessmen and women who have given 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, the political fighting in the sandbox we see firsthand appears rather immature, unprofessional, and tiresome. SEPTEMBER 2014
Massachusetts Auto Dealer www.msada.org
What we do know, however, is that the Obama Administration, supported by its Congressional party members, 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. This year’s MSADA contingent traveled to Washington DC on September 9-10 to participate in NADA’s 39th Annual Washington Conference. Our delegation included MSADA President Scott Dube (Bill Dube Hyundai); Vice President Chris Connolly (Herb Connolly Motors); Massachusetts NADA Director Don Sudbay (Sudbay Auto Group); our past NADA Director and current dealer Ray Ciccolo (Village Auto Group) and his daughter, Michelle; our Next Gen dealer representative, Emily Dube (Bill Dube Hyundai); 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 rubberchicken luncheons and ribbon cuttings. NADA, as part of the festivities, schedules
MSADA 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. Mike Kelly (RPennsylvania), who is a dealer himself; Sen. Jerry Moran (R-Kansas); Rep. Steny Hoyer (D-Maryland), who is the House Minority Whip; Rep. Marlin Stutzman (R-Indiana), who has sponsored legislation to reform the CFPB finance guidance process; Rep. Jamie Herrera Beutler (RWashington), who addressed the NextGen Reception; and political analyst Charlie Cook, whose insights and prognostications received everyone’s rapt attention. 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, treatment of the estate tax, and open recalls on rental vehicles. 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 (DMelrose), and staff members for Rep. John Tierney (D-Salem) and Rep. Niki Tsongas (D-Lowell). 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. Back home, however, we are an association of 420 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 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. No one knows your business better than you. Whether we are in DC or on Beacon Hill at the State House, it is extremely helpful to our lobbying efforts for legislators to see their constituents face to face and receive a perspective they don’t have in the normal course of their activities. That knowledge needs to be conveyed to your legislators in an environment and manner they understand, hence our trips to Washington and our Dealer Days on Beacon Hill.
Lobbying for H.R. 5403 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. 5403, legislation introduced by Reps. Stutzman and Ed Perlmutter (D-Colorado), which 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. We requested our Congressmen, each one a Democrat, to sign on to H.R. 5403 as a co-sponsor. As we go to press, 97 House members (62R, 35D) have signed www.msada.org
on or indicated they will sign on to the bill when Congress returns from its recess on November 12. Of our nine Congressmen, Stephen Lynch is the lone co-sponsor, thus far. The members of Congress are now home for the election recess. We ask that you either try to meet with your member or call him or her at his or her local district and ask them to sponsor H.R. 5403. 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.
Tesla SJC Decision Goes Against MSADA On September 15 the Massachusetts Supreme Judicial Court issued its decision in the Tesla litigation, Massachusetts State Automobile Dealers Association v. Tesla Motors, ruling the MSADA and the named dealers in the litigation did not have the requisite standing to bring suit against Tesla Motors and Tesla Motors MA pursuant to MGL Chapter 93B, the auto dealer franchise law. At the time the lawsuit was filed, we challenged the legality of Tesla’s efforts to open and operate an unlicensed, manufacturer-owned new-car “gallery” located in the Natick Mall, which was set up in September 2012 prior to any licensed “stores” later approved by the Town. The immediate practical results of the decision are the following: • Tesla’s store presently in the Natick Mall will continue to operate. • According to the court, only a dealer or dealers affiliated with a manufacturer through a franchise agreement can sue a manufacturer for violations of Chapter 93B, thereby leaving the Massachusetts Attorney General as the only party under
Massachusetts Auto Dealer SEPTEMBER 2014
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The Roundup the statute who could sue a dealer, manufacturer, or distributor for an alleged violation of the statute should no direct affiliation exist with a challenging party. (So, hypothetically, if GM were to open a factory-owned Cadillac “store” across from a Lincoln dealership, the Lincoln dealer could not file suit to attempt to stop that activity; only another Cadillac dealer or the AG would have standing to do so.) • Notwithstanding the extensive re-write of Chapter 93B that became law in 2002, which included a factory store prohibition throughout the Commonwealth no longer limited to the existence of an affiliated dealer in the relevant market area, there is now a “standing” gap that could potentially allow existing and prospective manufacturers conducting business in Massachusetts to pursue a similar Tesla-like model as a result of the Court’s decision. • Unfortunately, the Court failed to recognize the significance of the 2002 amendment to the factory store prohibition and instead focused on the fact that all of the other amendments to Section 4 of Chapter 93B related solely to the relationship between a manufacturer and its affiliated dealers. Your Association leadership is assessing the decision’s impact and reviewing prospective options. (The SJC is the court of last resort in Massachusetts; thus, the decision cannot be appealed further.) The Tesla saga began in the Spring of 2012 when the Town of Natick contemplated, and ultimately approved (but never issued), a Class 1 license for Tesla. Notwithstanding the Town’s lack of license issuance, on September 28, 2012, Tesla Motors moved forward with its plans for a “dealership” in the Mall and held a grand opening for its mall store, claiming it was only displaying product and conducting no sales activity. After further investigation and due diligence on our part, on October 16, 2012, MSADA filed a civil action against Tesla Motors and Tesla Motors MA in Norfolk SEPTEMBER 2014
County Superior Court, seeking a temporary restraining order and a preliminary injunction to cease the companies from operating an unlicensed, manufacturerowned new car “dealership” in the Natick Mall, located in the Town of Natick. At that time, the Town allowed Tesla to establish a “gallery” in the Mall, provided sales activity did not occur there; under the Town’s by-laws, auto sales were prohibited from the Mall and its surrounding environs. Tesla Motors and Tesla Motors MA claimed to operate a non-sale showroom where interested consumers could view a Tesla S model and obtain more information about the companies’ products. However, MSADA contended this was a sham, that the Tesla parties were operating an unlicensed new car “dealership” where sales activity was occurring that is in fact owned and operated by the manufacturer in violation of the Massachusetts Auto Dealer Franchise Law, MGL Chapter 93B, as well as the dealer licensure statute, MGL Chapter 140, Section 58, and the consumer protection laws. On October 25, 2012, in Norfolk County Superior Court in Dedham, attorneys for the MSADA argued our request for a preliminary injunction regarding Tesla’s allegedly illegal, company-owned store operating at the Natick Mall. Unfortunately, the court issued a denial of our injunctive request on November 16, 2012. The judge ruled not on the merits of Tesla’s alleged violations of the Chapter 93B, dealer licensure, and consumer protection laws but on the narrow, technical issue of whether MSADA and the plaintiff dealers had standing to sue for the injunctive relief against Tesla. The judge ruled that we and the dealers did not possess the requisite standing under the franchise law. He based his reasoning on a requirement developed prior to 2002 in the Beard Motors, Inc. v. Toyota Motor Distrib., Inc. case that a dealer could only sue an affiliated manufacturer under Chapter 93B. We then filed an appeal of the Superior Court’s decision with the Massachusetts
Massachusetts Auto Dealer www.msada.org
MSADA Appeals Court. In October 2013, the Commonwealth’s highest court, the Supreme Judicial Court, after reading the parties’ briefs, took the appeal from the appellate court’s docket and decided to hear the case directly itself. The SJC hearing occurred on May 5, 2014, and its decision was issued on September 15. While this court process was running its course, by December 2012 Tesla Motors and Tesla Motors MA re-applied for and received from the Town of Natick a class 1 dealer license to operate a “dealership” at a site in downtown Natick. In late 2013, citing a lack of sales activity and adequate foot traffic at that downtown site, Tesla applied for permission to open a store in the Mall. Since there was a zoning by-law in place prohibiting auto sales in the Mall and the surrounding contiguous property, a warrant was presented at town meeting to alter the zoning overlay to allow for car sales at the Mall. Town Meeting ultimately approved this zoning by-law change. Tesla has moved into a site at the Natick Mall and continues to operate there.
Internet Sales 20 Group (IS20G) As we were going to press, your Association engaged in a unique partnership opportunity when it joined with Sean Bradley and Dealer Synergy to put on the Internet Sales 20 Group Boston at the Newton Marriott on September 22-24. Approximately 150 attendees, which included dealer principals (many of them Toyota store owners in the New England region), GMs, sales managers, BDC and Internet sales directors, heard from a score of speakers who provided a three-day boot camp on how dealers can improve their Internet footprint, on-line reputation, and sales potential and close rates. Although the days were long, the knowledge that these Internet professionals shared with their colleagues provided attendees a potential leg-up on their competitors. Check out our October magazine for more on this event.
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Using Total Rewards as a Recruitment Tool by Kathyn Carlson For some, a job is just a job, but for engaged, productive employees, a job is so much more. Engaged employees are looking for a job that has the whole package: a well-paying, flexible job that includes benefits and work-life balance. “Total Rewards” are the tools available to employers that can attract, motivate, and retain employees. Total rewards are grouped into 5 sections: 1. Compensation 2. Benefits 3. Work-Life balance 4. Performance and Recognition 5. Development and Career Opportunities The package should be adapted to your specific dealership needs and unique culture and employee set. The program often results in satisfied, engaged, and productive employees, which in turn increases performance, results, and thereby profit. Review the following sections of total rewards before putting together your own program:
Compensation: Compensation is comprised of four main parts: fixed pay, variable pay, shortterm incentive pay, and long-term incentive pay. By utilizing all parts of compensation, you positively reinforce employee efforts, incentivizing them to work hard by providing them with additional pay. The four parts of compensation are defined as: 1. Fixed Pay: The base pay of compensation, fixed pay does not vary with performance or results and is determined by your dealership’s pay structure. 2. Variable Pay: A one-time payment, variable pay is often a bonus, and must be re-established and re-earned every time it has been won. 3. Short-Term Incentive Pay: This variable pay is highly focused and based solely on performance over a period of
one year or less. 4. Long-Term Incentive Pay: This variable pay extends over a period longer than a year, and includes forms of pay such as stock options, performance shares, performance units, and cash.
Benefits Benefits are defined as “programs that an employer uses to supplement the cash compensation that employees receive,” (AWLP.org). Benefits can be broken into three elements: 1. Social insurance, which includes unemployment, workers compensation, social security, and occupational disability. 2. Group insurance, which includes medical, dental, vision, prescription drug, mental health, life insurance, AD&D insurance, disability, retirement, and savings. 3. Pay for time not worked, which includes paid work time (breaks, clean-up time, uniform changing time), and paid away from work time (vacation, company holidays, and personal days).
Work-Life Balance Work-life balance is a less structured concept referring to a set of philosophies and policies that allow employees to have a healthy balance between work and home. These practices are not set in stone and vary between workplaces. The five main criteria for a work-life balance are: 1. Workplace flexibility varies based on the dealership and the employee. While some employees may need to vary their schedules to miss traffic or pick up their children from school, others may prefer to have certain days or times off. In essence, workplace flexibility is adapting to individual needs. 2. Paid and unpaid time allows employees to meet their personal needs, sometimes using paid time off or vacation or allowing them to take unpaid time off as the need arises. 3. Health and well-being offers employees things like health club memberships,
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smoking cessation programs. 4. Caring for dependents not only refers to caring for your children, but also to partners and family members. 5. Community involvement allows for employees to do good things for the community. Some dealerships provide employees with one day off per year to volunteer at a place of their choice.
Performance and Recognition Performance refers to more than reviews or guidelines. By aligning individual, team, and organizational goals, performance can lead to success for the dealership as a whole. Performance includes: performance planning, performance, and performance feedback. Recognition can be both formal and informal, but should happen immediately after the fact, and works best when personalized to the awardee.
Development and Career Opportunities Development and career opportunities refers to employee development that allows them to not only perform better in their current position but also prepares them for future roles. Career opportunities include: learning opportunities, coaching and mentoring, and advancement opportunities. Every total rewards strategy should vary based on the individual dealership. Currently, the best employees are looking for more than just a good salary, and keeping them engaged will help avoid the cost of new hires with the use of a total rewards program.
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K athryn C arlson is the V ice P resident for KPA’ s HR Management products. Do you have questions about how to implement a total rewards at your dealership? Contact rstansbury@kpaonline.com or (484) 326-9765. system
Massachusetts Auto Dealer SEPTEMBER 2014
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Troubleshooting
MSADA
No Right to Positive Online Reviews By Peter Brennan, Esq.
Staff Attorney, MSADA All business owners know how costly a negative review can be, whether that review comes from the internet, a newspaper, or word of mouth. To a franchise new-car dealer, the impact of a negative review can be more devastating than to an average business. The average consumer may only buy ten cars in their lifetime. If a negative review dissuades a consumer from visiting your dealership once, then the odds suggest you will lose them as a potential customer for life. According to Google’s Digital Drives Auto Shopping study, released in November of 2013, a whopping 95% of consumers do research online before purchasing a new automobile. With almost all new car buyers heading online before choosing a dealership, the impact of a negative dealership review on DealerRater, Yelp, or similar site has the real potential to depress sales in a crowded marketplace. Our dealer members and their general managers understand the danger of a negative review. They conduct business in such a way that customers enjoy their car-buying and servicing experience and recommend the dealership to others, in-person and online. Alarmingly, maintaining a high level of customer satisfaction may no longer be enough to generate positive online ratings. In a troubling decision, the United States Court of Appeals for the Ninth Circuit (San Francisco) recently upheld
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a district court decision and ruled, in Levitt v. Yelp! Inc., that leading ratings website Yelp can force businesses to pay to have any positive customer-submitted reviews posted on their Yelp page. The plaintiffs in Levitt are a collection of similarly aggrieved small businesses, including a furniture restoration business, an animal hospital, an auto body repair shop, and a dentistry office. Dr. Tracy Chan, the dentist, alleged that, shortly after she declined to purchase advertising from a Yelp sales representative, nine five-star ratings were removed from her Yelp page, causing her overall rating to plummet from five stars to three. Out of fear, Dr. Chan purchased the advertising package, and her ranking increased as the positive reviews were restored. Several months later, Yelp again contacted Dr. Chan and asked if she would be interested in an increased advertising package. When Dr. Chan declined to upgrade her advertising package, her Yelp ratings tanked once more. Regarding Dr. Chan’s accusations, the Court stated, in its decision, “Chan alleges no independent barrier to the ratings – manipulation of which she complains, and as there is no allegation that Yelp’s advertising services are, objectively, worthless... any implicit threat by Yelp to remove positive reviews absent payment for advertising was not wrongful within the meaning of the extortion statutes.” Yelp has faced accusations of ratings tampering for years and continues to deny the practice. In a post on the Yelp official blog on the day of the decision, the company’s Senior Director of Litigation stated, “For years, fringe commentators have accused Yelp of altering business ratings for money. Yelp has never done this, and individuals making such claims are either misinformed, or more typically, have an axe to grind.” Notwithstanding Yelp’s official com-
Massachusetts Auto Dealer www.msada.org
ments, one imagines that some at the company must have been relieved when the Court asserted that, even if the plaintiffs’ allegations were true, Yelp’s business practices would not rise to the level of extortion, stating, “We conclude, first, that Yelp’s manipulation of user reviews, assuming it occurred, was not wrongful use of economic fear.” Although Yelp has been quick to highlight the decision as proof that the site is unbiased and its actions legal, the Court made it clear that, while Yelp may not have committed extortion, different claims could be viable, stating, “We emphasize that we are not holding that no cause of action exists that would cover conduct such as that alleged, if adequately pled. But for all the reasons noted, extortion is an exceedingly narrow concept as applied to fundamentally economic behavior. The business owners have not alleged a legal theory or plausible facts to support the theories they do argue.” Under the ruling, other causes of action against Yelp, such as defamation, are certainly possible and may have some chance of success. Additionally, small businesses in other states who are facing the same shakedowns may be able to look to their state laws for relief. While Yelp may have escaped liability in Levitt, the company is now facing a shareholder class action for allegedly misleading investors as to the veracity of the reviews posted on its site and the processes it uses to post reviews. Stay tuned. If you require any additional information regarding the legal issues surrounding online reviews 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) 4511051.
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Legal
By Joseph W. Ambash and Jeffrey A. Fritz
Massachusetts’s New Domestic Violence Leave Law: What Dealerships Need to Know Domestic violence, unfortunately, is a problem that faces many individuals in Massachusetts. Many of those individuals, of course, also are employees. Some may be your employees. Therefore, you need to know about Massachusetts’s new domestic violence leave law. On August 8, 2014, Governor Deval Patrick signed into law An Act Relative to Domestic Violence. While geared largely toward the criminal justice system, the new law also impacts most Massachusetts dealers and other employers. Specifically, the law requires Massachusetts employers with more than 50 employees (1) to permit employees impacted by domestic violence to take 15 days of unpaid leave in any 12-month period and (2) to notify employees of their rights and responsibilities under the law. Which Employees Qualify? An employee is eligible for domestic violence leave if he or she (1) is a victim of abusive behavior (or his or her family member is such a victim), and (2) is using the leave from work for purposes closely related to the abusive behavior, including obtaining medical attention or counseling, securing housing, attending court proceedings, and obtaining other victims’ services. This is by no means an exhaustive list; so long as the purpose for the leave appears reasonably related to the abusive behavior, you should assume that the employee is eligible. Perhaps obviously, if your employee is the one engaging in the abusive behavior, he or she is not eligible for domestic violence leave for such purposes. What is “Abusive Behavior?” The law’s definition of what constitutes “abusive behavior” is very broad. It includes both physical and mental abuse. If an employee requests domestic violence leave, you generally should assume that the behavior is sufficiently abusive, and permit the leave. What Kind of Notice Must Employees
Give? The law says that employees must give “appropriate” notice to employers of their need for domestic violence leave, unless a threat of imminent danger faces him or her. What is “appropriate” notice? The law doesn’t say. But so long as you can provide the leave without undue hardship to your business, you should. Moreover, if an unscheduled absence occurs, you cannot take negative action against the employee if he or she produces appropriate documentation of the reason within 30 days. Do You Need Just To Take Your Employee’s Word? No. You can require employees to provide appropriate documentation of their need for leave. However, you must keep any such documentation confidential, and restrictions exist as to whom you may disclose such information. Additionally, you may keep such documentation only for as long as necessary to determine whether your employee is eligible for domestic violence leave. Can You Require Employees to Exhaust Other Available Leave First? Yes. If your employee has other available forms of leave, like vacation, sick time, or personal leave, you can require him or her to use up those forms of leave before using domestic violence leave. What Happens When Your Employee Returns? When your employee returns from domestic violence leave, you must restore him or her to his or her original job, or to an equivalent position, with equivalent pay. Employers Cannot Interfere or Retaliate. Like so many other employmentrelated laws, the Massachusetts domestic violence leave law contains an anti-interference and anti-retaliation provision, which means that your managers cannot interfere with an employee’s attempt to exercise his or her rights under the law or retaliate against him or her for doing so. The law specifically prohibits an employer from making an employee’s domestic violence www.msada.org
leave contingent on him or her having no contact with his or her abuser. You should train your managers on how the new law works, and their obligations under it. Violations Can Be Very Costly. An employee who believes that his or her employer has violated his or her rights under the law can bring a lawsuit under the same provision as other Massachusetts wage and hour violations. This means that employees may recover treble damages for lost or unpaid wages and benefits. In other words, if a court found that your manager fired an employee in retaliation for using domestic violence leave law, and awards three years of back pay, that award would be multiplied by three. You also would have to pay the employee’s attorneys’ fees and costs. When Should You Notify Your Employees About Domestic Violence Leave? If you have not already done so, you should notify your employees about the new domestic violence leave law immediately. You should post such notice wherever you post your required employment-related notices and you should update your handbooks to include a domestic violence leave policy. If you would like a model notice/ policy, at no cost, feel free to call us at the number below, and we will send you one.
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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.
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AUTO OUTLOOK
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COVER STORY
Making an Im
SEPTEMBER 2014
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MSADA
by Catherine MacDonald
mpact at the National Level MSADA’s dealer delegation makes the trek to D.C. to represent Massachusetts on the national stage
Every year, the MSADA dealer delegation makes an important journey to the nation’s capital. The mission: Ensure Massachusetts legislators are aware of the most important issues facing dealers so they can lend their support at the federal level. On September 9 and 10, MSADA President Scott Dube (Bill Dube Hyundai) joined MSADA Vice President Chris Connolly, Massachusetts NADA Director Don Sudbay, past NADA Director and current dealer Ray Ciccolo and his daughter, Michelle, Next Gen dealer representative Emily Dube, MSADA legislative agent Jim Hurrell, MSADA staff attorney Peter Brennan, and MSADA Executive Vice President Bob O’Koniewski in Washington D.C. to represent Massachusetts dealers. The group met with Rep. Stephen Lynch (D-South Boston), Rep. Jim McGovern (D-Worcester), Rep. William Keating (DBourne), Rep. Michael Capuano (D-Somerville), Rep. Katherine Clark (D-Melrose), and staff members for Rep. John Tier-
ney (D-Salem) and Rep. Niki Tsongas (D-Lowell). Dube said everyone was welcoming, interested, and receptive to hearing from dealers. “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. This year, the dealer delegation’s focus was on three issues in particular. The top priority was urging members of Congress to cosponsor H.R. 5403. The legislation would rescind the Consumer Financial Protection Bureau’s flawed auto finance guidance and make the bureau more transparent and accountable when issuing future auto lending guidance. H.R. 5403 allows the CFPB to re-issue the auto guidance but requires prior notice, public comment, and full transparency of the CFPB’s methodology. The bill also requires the CFPB to consider the impact of its guidance on consumers “What we’re trying to do is get the CFPB to conduct itself like any other regulatory body that we have in the U.S., meaning that when they put out new regulations that they have a comment period and then open hearings on it,” Dube said. “That was the piece de resistance of the entire two days. “ The dealer delegation had an advantage when presenting their points about H.R. 5403: The bill had just come out the day before the conference began. “That gave us something to ask for that was very easy to
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Making an Impact
Rep. Mike Kelly R-Pennsylvania An auto dealer himself, Kelly has been the U.S. Representative for Pennsylvania’s 3rd Congressional District since 2011.
Sen. Jerry Moran R-Kansas The junior United States Senator from Kansas was elected Chairman of the National Republican Senatorial Committee for the 113th U.S. Congress on November 14, 2012.
Rep. Steny Hoyer D-Maryland The House Majority Leader from 2007 to 2011, Hoyer had previously served as House Minority Whip from 2003 to 2007 and was reelected to that post in 2011. These positions make him the second-ranking figure in the House Democratic Leadership hierarchy.
understand,” Dube said. “Plus, it was a short bill that didn’t require a lot of explanation.” Also on the dealers’ agenda was urging Congress to ensure that any changes in LIFO and advertising deductibility do not negatively impact small business. Recently released tax reform proposals would repeal LIFO and significantly restrict the amount of advertising a dealership could deduct each year. Eliminating LIFO and limiting advertising deductibility would take working capital away from dealerships that could otherwise be used to maintain or create jobs. Lastly, the NADA sought to make it known that Senators should address the flaws in S. 921 prior to the bill moving forward. The bill would subject all rental cars under open recall to grounding within 24-48 hours. The bill is overly broad since not all recalls require the drastic step of grounding. For each of these items, Dube said the legislators the group met with were “very interested in our issues. They give us a good amount of time and attention.” MSADA is always looking for additional dealers to join the delegation. Besides putting in important face time, taking part in the D.C. trip allows dealers an inside peek at how issues at the congressional level affect them at home. They can also enjoy the compelling speakers at the conference. Dube said, “They always manage to get good speakers there for us to listen to,” adding that political analyst Charlie Cook was especially noteworthy this year. SEPTEMBER 2014
Massachusetts Auto Dealer www.msada.org
Rep. Martin Stutzman R-Indiana A sponsor of the legislation to reform the CFPB finance guidance process, Stutzman has been a member of the United States House of Representatives, representing Indiana’s 3rd Congressional District, since 2010.
Charlie Cook Political Analyst Cook writes election forecasts and rankings in his own publication, The Cook Political Report, and in other media. He is a political analyst for the National Journal and, since 1994, with NBC.
It’s a big commitment on a dealer’s part to travel down to Washington for two or three days and be away from their stores, and O’Koniewski says he is very appreciative of the time dealers set aside to make the effort. “It comes down to our contingent of dealers who are carrying the Massachusetts flag down to Washington every year on behalf of the Massachusetts dealers up here.” Sudbay says he would especially encourage those dealers who have never visited their legislators in D.C. to attend the conference. “I think it’s something that everybody should do at least once in their life, and this is a great opportunity,” Sudbay said. “Further, there’s strength in numbers. The more people we have the more they’ll listen to us.” Dube, who has made the trek to D.C. four times, emphasized the impact dealers can have when they get involved. He said legislators want to do the right thing, but they need the information. “If we don’t spend the time to educate legislators on this stuff, they’re operating in a vacuum,” Dube said. “You can’t depend on the people who might want these regulations to handicap us, to hamstring us. You can’t allow them to do all the talking.” It’s invaluable for dealers to take the time to explain to legislators what the industry means to the economy – both on a state level and nationally. “People start to take what we do for granted until they hear the numbers,” Dube said. Another way dealers can be involved with their Congressmen locally is to schedule a dealership visit. “I always encourage dealers to be open to the concept of hosting a legislator,” O’Koniewski said. “It’s a great way of making an onsite connection without having to get on a plane.”
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NEWS
from Around the Horn
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FRAMINGHAM
Herb Connolly Classic Golf Outing Raises $200,000 For Charities in 15 Years For 15 years, the Connolly Auto Group has held the Herb Connolly Classic Golf outing. The 15th Annual event was held Friday, August 22, at the Framingham County Club, and raised $13,000 for Mt. Auburn Hospital’s Hoffman Breast Center. “The golf event now has raised $200,000 with $100,000 going to Mt. Auburn since my late mother Kathy Connolly’s cancer came back in 2006. She received great treatment there and got two really wonderful years of good health because if the Hoffman Center before she succumbed to it at the end of 2008,” said Chris Connolly. ”It’s an honor for us to do for the hospital and I’m always humbled by their great work.” The Hoffman Breast Center delivers comprehensive, patientfocused education, screening, and treatment of all aspects of
women’s breast health in a compassionate, professional, and supportive environment. A maximum of 144 golfers (36 teams) participated in a Florida scramble. Afterwards, they were treated to a steak dinner and then could bid on items in a silent auction.
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NEWS from Around the Horn RAYNHAM
Mastria Featured in Globe Rick Mastria, a third-generation automotive dealer, was recently featured in The Boston Globe. The article detailed his family’s history in the business and the opportunities that brought the dealer to where he is today. Mastria became a dealer at 26, and when GM took an interest in his business things really took off. GM was looking to open a Saturn store in the area and was intrigued by Mastria’s record of customer satisfaction. “They interviewed our customers and employees, then granted us the franchise and helped us build a facility on Route 44,” Mastria told the Globe. “It was an unbelievable awakening for us to be doing business in such a high-traffic area.” “Everyone wanted to be the next Saturn,” says Mastria. “Before you knew it Honda (Silko), Chevrolet (McGee) and Chrysler (Classic) all built around us. Suddenly we had our own Auto Mile in Raynham.” The real test came in late 2008 when GM filed for bankruptcy. “In June, we got a letter saying we were losing Saturn, Pontiac, and Cadillac,” he says. “All in one day. Fortunately we kept Buick and GMC, and GM rescinded its decision on Caddy almost immediately.” With Saturn closed, Mastria found himself with an empty Saturn building. A local Mazda dealership became available and “it was a perfect fit.” Today, Mastria runs the Raynham-based auto group that features the Buick, Cadillac, GMC, Mazda, Nissan, and Subaru brands. NORWOOD
Madden Featured in Globe Jack Madden, who grew up in the auto dealer business, was featured in The Boston Globe recently. The article detailed Jack Madden Ford’s roots (which can be traced back to October 1954, when Jack’s father opened a Ford dealership in downtown Norwood on Washington Street) to where the company is at today: a fixture on Norwood’s Automile and features an average inventory of around 400 new cars and 200 used cars, employs 85 people, and moves well over 2,000 cars per year. Madden discussed how big changes in the marketplace are a reality of the car business, and the biggest by far has been the internet. “A dealer has to be knowledgeable about search engine optimization and marketSEPTEMBER 2014
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MSADA ing as well as have an awareness of what opportunities are out there for him as well as his competitors. And I have plenty of competitors,” he told the Globe. He also explained that he strives for a warm, familiar atmosphere. It’s a multi-generational family business and Jack still has a brother and sister who work for the dealership. He also tries to remain as approachable as possible. “I have no problem giving out my cell number. Nobody calls me Mr. Madden. They call me Jack, and I’m happy to take calls myself from customers if they are having issues.” From Jack’s 1957 Thunderbird prominently displayed in the showroom to the latest hybrids, the six-decades-old tradition of selling Fords and sticking to what works is apparent at Jack Madden Ford. Likewise, Madden’s friendly and genuine approach to customer service has clearly trickled down to his employees, so it’s easy to believe him when he says, “I love the cars and I love the people.”
SUDBURY
19 Cars Gutted, Damaged by Fire at Chambers Dealership A large fire at a luxury car dealership in Sudbury in the early morning of September 22 destroyed or damaged 19 cars, officials said. Firefighters rushed to the Herb Chambers Land Rover dealership on Route 20 at 1:07 a.m., the Sudbury Fire Department said in a statement. “Crews had heavy fire showing from several vehicles upon arrival at the auto dealership,” said Fire Chief William Miles in a statement. No one was injured in the fire. Investigators have determined the fire started in a Jaguar and quickly spread to 18 other cars, including Jaguars, Range Rovers, Land Rovers, and Jeeps, causing an estimated $500,000 in damage.
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LYNN
Over 60 Come Out for Baker Event at Pride Chevrolet On September 10 at Pride Chevrolet in Lynn, Paul Bertoli, Michael Iovanna, and Don Campbell hosted Republican gubernatorial candidate Charlie Baker and his running mate, former State Rep. Karyn Polito, who is vying for the lieutenant governor’s job. Over 60 members of the Lynn area business community attended to hear Baker and Polito speak on their plan to improve and grow the Massachusetts economy. “Charlie and Karyn each have an extensive business background – Charlie in health care and Karyn in small business – and they‘get it’”, Campbell said. “They fully understand what small business owners and their employees go through every day, month to month, and year to year to try to be successful in an economy where we do not necessarily have the most business friendly environment working in our favor.”
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MSADA NADA Update by Don Sudbay Urge Congress to Rescind Flawed CFPB ‘Guidance’ on Auto Finance
I want to personally thank our delegation that visited Washington in September for the Annual NADA Washington Conference. Similar to last year, much of our time was devoted to the CFPB and how the agency’s onerous directives can affect negatively our member dealers. Fortunately, as you will read below in Forrest McConnell’s remarks, there is a bipartisan bill that will hopefully make some headway to curb the CFPB’s misuse of power. The Massachusetts congressional delegation listened to our plea, and we hope to have some of these Congressmen and women on board as sponsors. Be assured, NADA is working very hard to preserve our ability to secure financing for our customers at the lowest interest rates possible. Proposals that the CFPB have discussed will make it more costly for those customers to finance their vehicles.
to finance their vehicles through new-car dealerships, which is always optional. “Despite this fact, the CFPB is taking actions that will ultimately harm car buyers by reducing competition in the auto-lending marketplace. “This controversy with the CFPB has been ongoing since March 2013 when the agency issued its ‘guidance,’ which took the wrong direction by attempting to eliminate the flexibility of new-car dealers to discount financing rates offered to their customers. Since then, the industry—from dealers to lenders—and Members of Congress have worked to bring greater transparency and accountability to the CFPB. “Make no mistake. This issue is complex. But what NADA wants from the CFPB is quite simple and our message to the CFPB is this: Make sure you fully understand the industry you’re attempting to regulate before issuing guidance by allowing for feedback and public participation. Be aware that your actions can harm consumers rather than protect them. And car buyers should not be forced by a government agency to lose their ability to negotiate discounted auto loan rates in dealer showrooms. “Dealers should contact their Members of Congress and urge them to support H.R. 5403, the Stutzman-Perlmutter bill. “For more information, visit www.nada.org/cfpb.”
A Special Note from NADA Chairman Forrest McConnell:
NADA Statement on New NHTSA Search Tool for Vehicle Recalls
“A new bipartisan bill, which would nullify the Consumer Financial Protection Bureau’s flawed ‘guidance’ on indirect auto lending, has gained a lot of support in Congress from both sides of the aisle over a short period of time. “Since its introduction on September 8, nearly 100 Democrats and Republicans in the U.S. House of Representatives have signed on as supporters of H.R. 5403, a bill sponsored by Reps. Marlin Stutzman (R-Indiana) and Ed Perlmutter (D-Colorado). “H.R. 5403, which is appropriately titled, Reforming CFPB Indirect Auto Financing Guidance Act, requires the CFPB to provide a public comment period before reissuing any guidance on auto finance. The bill also requires transparency and accountability from the agency by making public any studies, data, and analyses used to determine future guidance on auto finance. “Dealer-assisted financing provides great value and competitive advantages, which save car buyers billions of dollars each year. And the proof is in the numbers. Compared to other lending sources, a large majority of car buyers choose
In response to the National Highway Traffic Safety Administration’s new Vehicle Identification Number (VIN) look-up tool for vehicle recall information, Forrest McConnell, chairman of the National Automobile Dealers Association and a Honda/Acura dealer in Montgomery, Alabama, issued the following statement: “The new online look-up tool will help new-car dealerships identify whether a used car or light truck has an unremedied safety recall prior to making a purchase or taking in a trade. It will also help dealerships to determine whether used vehicles in inventory are under recall and to provide used-car shoppers with useful safety recall information. “To improve vehicle safety, NADA urges every car owner who receives a recall notice from a manufacturer to visit his or her local new-car dealership to have the vehicle inspected, and if necessary, fixed at no charge. Historically, about 75 percent of all recalled vehicles get fixed. Our goal is to see 100 percent of those vehicles remedied.” Dealers and consumers can access the new tool from NHTSA at www.safercar.gov/vinlookup.
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).
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Accounting MSADA
NADA Update MSADA
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New Dealership Valuation Guide Now Available A “Dealer Guide to Dealership Valuation” is now available at NADA University Online. Written for NADA by Diane Anderson Murphy and Adam Sanders of the Moss Adams Valuation Services Group, the Driven Management Guide explains the process of valuing car and truck dealerships in a variety of contexts: buy-sell transactions, estate and gift tax settings, ownership succession planning and shareholder buy-in or buy-out. The guide discusses the main standards of value as well as the primary appraisal organizations and the due diligence process for dealership valuation. It explains how to estimate cash flow and dealership value. Other topics addressed include special valuation considerations and the relevance of IRS Revenue Ruling 59-60. The guide also offers strategies to maximize dealership value. The publication will help dealers understand this complex subject and enable them to assist professional appraisers in estimating dealership value. Sign in to www.nadauniversity.com and search BM15 to access the new guide.
Third Annual Dealership Workforce Study Draws Significant Dealer Participation More than 2,000 dealerships enrolled in the 2014 NADA Dealership Workforce Study, the third annual study of car and truck dealership compensation, retention, and turnover, hours of operation, work schedules, and employee benefits. Participants will soon receive a complimentary Basic Report that compares their individual dealership(s) to the regional and national industry, and a complimentary Industry Report providing an overall economic analysis and trends with data for all nine regions of the U.S. Participants may purchase specialty reports, including the Enhanced Report, which provides state and brand comparisons. Also available is the Compensation and Tenure Search Tool, offered as a bundle with the Enhanced Report for participants. With the Search Tool, users can find answers to ad hoc queries, including queries specific to their store or group. Users can search the entire Dealership Workforce Study database, which includes data from 930,000 payroll records and nearly 7,000 rooftops. The Search Tool and the Industry Report are offered as standalone products for non-participants.
NADA Academy Expands Curriculum in 2015 NADA-ATD Academy has expanded its curriculum. The Dealer Candidate Academy (DCA) includes a mock 20 Group session so students can experience the benefits of the financial composite used in a non-competing peer setting. In the General Dealer Management (GDM) program, a 20 Group consultant takes students through a dealership visit, SEPTEMBER 2014
demonstrating the benefits of in-dealership consulting. All classes—DCA, GDM and ATD—visit NADA’s Capitol Hill office for a legislative briefing. Finally, NADA University Online is integrated into the six-week Academy program, with completion of online courses, “Driven” guides and webinars requisite to graduation. In 2015, DCA classes start January 5, February 9, May 11, September 28, and October 5. GDM classes start January 12, February 16, May 18, June 15, September 14, and October 19. ATD classes begin March 9, June 6, and September 21. The GDM session for January is already closed, and prospective students for the February class are on a waiting list. The DCA program has a waiting list for January. Also available is the Special Ops program, which allows dealership managers to attend any of the first five weeks of the Academy program, which cover financial management, parts, service, pre-owned vehicles and new vehicles.
OSHA Repeals Dealer Recordkeeping Exemptions The Occupational Safety and Health Administration (OSHA) repealed a number of industry exemptions from its mandate that employers with 11 or more employees keep a workplace injury and illness log, including one for car dealers that dates back to the 1980s. Effective January 1, 2015, car dealers must use OSHA Form 300 to record workplace injuries and illnesses. By February 1, 2016, they must also post an OSHA Form 300A summary of the workplace injury and illnesses that occurred in 2015. Dealers can access an
Effective January 1, 2015, car dealers must use OSHA Form 300 to record workplace injuries and illnesses. By February 1, 2016, they must also post an OSHA Form 300A summary of the workplace injury and illnesses that occurred in 2015. OSHA fact sheet on today’s rule and an online tool to train employees on how to fill out the newly required forms. As a concession, the final rule contains a commitment by OSHA to review the efficacy of today’s changes in two years, the direct result of NADA’s unwavering opposition to the exemption repeal, first proposed by OSHA in 2011. Regulatory Affairs will soon issue an all-member FAQ on the topic. Questions can be directed to NADA Regulatory Affairs at 703.821.7040 or regulatoryaffairs@nada.org.
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Insurance
Are You Required to File a Form 5500? by Kelli Personette K elli P ersonette is a H ealth C are R eform C onsultant with A merican F idelity A dmin istrative S ervices (AFAS). H er exclusive responsibility
is
helping
H ealth C are R eform
employers
with
15
years
and has over
of experience in health care management , pharmaceuticals , and patient care .
Completing the Form 5500, as well as any required additional schedules, can be time-consuming and challenging. If the form is not filed timely and correctly, the end result could be expensive penalties for the employer. The following article provides some guidance on frequently asked questions regarding Form 5500 filing.
What is the Form 5500? The Form 5500 is an annual return/report required under the Employment Retirement Income Security Act (ERISA). It reports information concerning the employee benefit plan, such as financial condition, investments, fees, and operations, to the Internal Revenue Service (IRS), Department of Labor (DOL), and Pension Benefit Guaranty Corporation (PBGC). Along with the Form 5500, the employer may also be required to file one or more attached Schedules depending on how the employee benefit plan is designed. Two common schedules are Schedule A (Insurance Information) and Schedule C (Service Provider Information).
Who is required to file the Form 5500? Generally, all employers with 100 or more employees (at the end of the year) who are participating in a welfare benefit plan that is covered by ERISA are required to file the Form 5500. Certain employers exempt from ERISA, such as public schools or government entities, are not required to file the Form 5500.
What is a Welfare Benefit Plan? A welfare benefit plan is an employer-sponsored plan that provides certain benefits, such as medical (including dental coverage), surgical, or hospital care; benefits in the event of sickness, accident, disability, death, or unemployment; vacation benefits, apprenticeship or other training programs; or day care centers, scholarship funds, or prepaid legal services, to employees. The
Form 5500 is not necessarily required for all plans that provide welfare-type benefits.
When is the Form 5500 due? The Form 5500 is due the last day of the 7th month after the plan year ends. For example, a plan sponsor with a plan year that ends on December 31, 2014, would be required to file the Form 5500 by July 31, 2015. The employer may file for a one-time extension by completing Form 5558. The extension may not exceed the 15th day of the third month after the normal due date.
My employer has never filed a Form 5500. What do we do now? Normally, the employer would be subject to a late penalty of $25 per day until the delinquent form is filed, up to a maximum of $15,000. The DOL may also assess civil penalties for the late filing of up to $1,100 per day, with no maximum. The Department of Labor’s Employee Benefits Security Administration (EBSA) implemented the Delinquent Filer Voluntary Compliance Program in an effort to encourage employers to voluntarily comply and file overdue annual reports. Under this program, the employer would electronically complete the Form 5500, including all necessary schedules, for each year the employer is seeking relief and would mark the “DFVC� box in Part I, line D of the form (this option is available as long as the employer has not yet received notification of failure to file a timely annual report) . The penalty for an employer with 100 or more participants at the beginning of the plan year would be reduced to $10 per day for each delinquent annual report filed not to exceed $2,000. If the employer is filing more than one delinquent annual report for the same plan, the maximum penalty is reduced to $2,000 for each report, not to exceed $4,000 for each plan. Form 5500 filing can be a time-consuming process that, if not done, can result in expensive penalties for the employer. American Fidelity Administrative Services understands the complexities associated with the Form 5000 and can assist with Form 5500 preparation and filing services, including current as well as delinquent plan year filings. Some products and services may be provided by third party contractors or affiliated companies. AFAS does not provide tax or legal advice and, given the complexity of the Form 5500 filing rules, we always recommend working with your own legal counsel to discuss how your plans could be affected and to review guidance provided by our AFAS consultants.
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NADA Market Beat
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Produced by NADA’s Industry Analysis Group • Angela Lisulo, Economist
Review of New Light Vehicle Sales Overall
There were 1.6 million light-vehicle sales in August 2014. This sales figure was up 10.5 percent from July 2014, and it was up 5.4 percent from August 2013. August 2014 YTD light-vehicle sales amounted to 11.1 mil-
lion, up 5.0 percent from a year ago. The August 2014 Seasonally Adjusted Annual Rate (SAAR) for light-vehicle sales was 17.5 million. This month marked the first time, this year, for a SAAR value to be recorded above 17 million. In August 2014 YTD figures, car sales held a market share of 47.7 percent with sales up 80 basis points from a year ago. Corresponding figures for light trucks put the light-truck share at 52.3 percent with sales up 9.1 percent from a year ago. See Figure 1.
Companies/Brands
Companies with a geographic base in the Asia/Pacific region held the largest market share of light-vehicle sales for August 2014 at 48.2 percent of the market. This was followed by companies based in North America (Detroit 3 and Tesla Motors) at 43.6 percent and then companies based in Europe at 8.2 percent. SEPTEMBER 2014
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For August 2014 YTD, companies based in the Asia/Pacific region also held the largest share of light-vehicle sales, in the U.S., at 46.2 percent, which was up from a share of 45.7 percent a year ago. The corresponding share held by companies based in North America was 45.2 percent, down from a share of 45.5 percent
MSADA last year, and that for the Europe-based companies was 8.6 percent, down from a share of 8.9 percent last year. All company categories by geographic bases – North America, Asia/Pacific and Europe – experienced growth in light-vehicle sales, in YTD terms, since last August with the Asia/Pacific region in the lead with growth of 6.2 percent. Of the Detroit 3 companies, Fiat Chrysler experienced the most growth in August 2014 YTD sales, from a year ago, at 14.2 percent, followed by General Motors at 2.8 percent. Ford experienced a contraction in sales over the same period with sales down 40 basis points. From the group of Asia/Pacific-based companies, Isuzu experienced the most growth in August 2014 YTD sales from last August at 71.0 percent, followed by Mitsubishi at 28.9 percent. From the group of Europe-based companies, Audi experienced the most growth in August 2014 YTD sales from a year ago at 14.5 percent, followed by Porsche at 11.6 percent. See Figures 2, 3 and 4.
Segments
The cross utility vehicle (CUV) segment held the largest share of August 2014 YTD sales at 26.7 percent, up from a share of 25.2 percent last year. The middle CUV sub-segment held the largest share of this segment at 64.6 percent of CUV August 2014 YTD sales. Apart from the CUV segment, the sport utility vehicle (SUV) and van segments were the only other segments that experienced an increase in market share, in YTD terms, over last year. The rest of the segments have each experienced a decline in YTD market share over this period. With the exception of the large car segment, all the segments experienced growth, in terms of YTD sales, with the SUV segment in the lead with the greatest change of 12.8 percent since last year. The large car segment experienced a contraction of 10.3 percent in YTD sales since last year. The large car segment also held the least market share, of all the segments, of August 2014 YTD sales as well as August 2013 YTD sales with shares of 2.2 percent and 2.6 percent, respectively. See Figures 5 and 6. www.msada.org
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NADA Market Beat Power Source
Gasoline-powered light vehicles held a market share of 93.4 percent of August 2014 YTD lightvehicle sales, which was up from a share of 93.3 percent a year ago. The market share held by diesel-powered light vehicles was 2.9 percent, in YTD terms, which was up from a share of 2.7 percent last year.
The market shares held by electrics and plug-in hybrids each grew compared to last year, in YTD terms, while those for hybrids and light vehicles powered by natural gas and fuel cell technology each declined over the same period. For the alternative power category, in August 2014, the following light vehicles were sold: 6,848 electrics, no units powered by fuel cell technology, 48,970 hybrids, 46 units powered by natural gas and 5,935 plug-in hybrids amounting to 61,799 light-vehicle sales. The share held by the alternative power category was 3.7 percent of August 2014 YTD light-vehicle sales; this share was down from 3.9 percent last year. See Figure 7.
Models
There were three pickup trucks and two cars occupying the highest five ranks of the best-selling light vehicles for August 2014 YTD. The three leading pickup trucks were models from the Detroit 3 companies: Ford F-Series, Chevrolet Silverado and Ram pickup SEPTEMBER 2014
Massachusetts Auto Dealer www.msada.org
ranking in first, second, and fourth place, respectively. The two leading cars were models from companies based in the Asia/Pacific region: Toyota Camry and Honda Accord, ranking in third and fifth place, respectively. From the list of the 15 best-selling light vehicles for August 2014 YTD, seven out of 15 models were from companies based in the Asia/ Pacific region while eight out of 15 models were from the Detroit 3 companies. See Figure 8.
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