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JUNE/JULY 2011

DEALER NEWS O F F I C I A L

P U B L I C A T I O N

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N I A D A

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PREPARING YOUR DEALERSHIP FOR SUMMER LSO QR Codes 101: Point, Scan, Sell A PLUS NIADA Mobile Service for Smart Phones

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INSIDE

MAGAZINECONTENTS 4 QR Codes 101: Point, Scan, Sell 8 NIADA Mobile Service for Smart Phones 12 Preparing Your Dealership for Summer

NEW EDUCATION SESSIONS FROM THE CONFERENCE OF AUTOMOTIVE REMARKETING ARE NOW RUNNING ON NIADA.TV

Several educational sessions from the recent Conference of Automotive Remarketing (CAR) are now up and running free of charge on NIADA.TV. Over

12 sessions from the recent conference will be posted to www.NIADA.TV throughout April and May, so check back often over the next few months. These sessions will be posted in NIADA.TV’s “Remarketing” Channel as well as in the “New Programs” Channel. Get caught up on the latest in “Remarketing” at your leisure 24/7 by visiting to niada.tv.

ADVERTISERSINDEX ADESA..................................... Inside Back Cover AutoTrader.com ................................. Back Cover Cars.com ........................................................ 5 Chase ............................................................ 15 Lobel Financial .................................................. 7 Manheim.com ...........................Inside Front Cover SmartAuction .................................................... 9 United Acceptance .......................................... 13 Western General / Protective ........................... 11

Odometer Replacement on Exempt Vehicles NAAA has been presented with the following scenario: A customer bought a vehicle that was exempt, but the odometer had been replaced with one that had significantly fewer miles (280,000 to 108,000). The seller did not announce that, so the seller was told he had to buy it back. The seller balked saying that being exempt it didn’t matter. Although disagreeing with his argument, we checked with a few other auctions and were surprised that many auctions agreed with the seller. A review of the National Highway Traffic Safety Administration (NHTSA) website found information explaining that an odometer rollback was illegal on an exempt vehicle but did not address odometer replacement. A call was made to the NHTSA for clarification. The NHTSA confirmed that all laws concerning odometers, except title documentation, apply to exempt vehicles. NAAA Arbitration Policy (http://www. naaa.com/pdfs/NAAAArbitrationPolicy_ Jan2011.pdf) states on page 7, item 10, that the seller must announce these discrepancies. Additionally, the NHTSA also states that auctions are required to record the mileage on exempt vehicles somewhere in the records even if it does not get recorded on the bill of sale. The federal statute concerning odometer service, repair, and replacement is 49 USC 32704 and the statute concerning auction records is 49 USC 32705(e). Additional

guidance concerning auction companies may be found in the Code of Federal Regulations under 49 CFR 580.9. The following is an excerpt from a previously issued interpretation letter concerning odometer replacement procedures. It is from NHTSA General Counsel Frank Berndt written to Key Scales Ford, Inc. on September 25, 1980. Despite the age of this interpretation it remains relevant as the statute has not changed. “This is in response to your letter of September 4, 1980, in which you requested information on the proper procedures to be followed with respect to the odometer setting when a new odometer/speedometer head is installed. When an odometer is repaired or replaced the mileage on the repaired or new odometer must be identical to that on the odometer before the repair or replacement. In those instances where the odometer is incapable of registering the same mileage, the odometer must be adjusted to read zero and a notice in writing must be attached to the left door frame of the vehicle specifying the mileage prior to the repair or replacement of the date of such service. There is no specified format for the notice, but it must include the above information.” For additional concerns, the point of contact in NHTSA’s Office of Chief Counsel is David Case at david.case@ dot.gov or 202.366.2239. In order to receive a written interpretation you will need to describe your particular concerns and questions in writing. NHTSA’s response will be posted on their website to serve as guidance for others.

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION FOR INFORMATION ON HOW TO BECOME A WWW.NIADA.COM • WWW.NIADA.TV MEMBER PLEASE CONTACT CINDY SIRKEL. NIADA HEADQUARTERS: • 800-756-4232 CINDY@NIADA.COM 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 NATIONAL INDEPENDENT PHONE (817) 640-3838 FOR ADVERTISING INFORMATION TROY GRAFF AUTOMOBILE DEALERSCONTACT: ASSOCIATION (800) 682-3837 OR TROY@NIADA.COM.

WWW.NIADA.COM • WWW.NIADA.TV

The Nevada Dealer News is published bi-monthly by the National NIADA HEADQUARTERS: Independent Automobile Dealers Association Services Corpora2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 tion, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 817PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: 640-3838. Periodicals postage paid at Dallas, TX TROY and atGRAFF additional (800) 682-3837 OR TROY@NIADA.COM. offices. POSTMASTER: Send address changes to NIADA State THE NEVADA2521 DEALER NEWS IS Arlington, PUBLISHEDTXBI-MONTHLY BY The THE Publications, Brown Blvd., 76006-5203. NATIONALand INDEPENDENT AUTOMOBILE ASSOCIAstatements opinions expressed herein areDEALERS those of the individTION SERVICES CORPORATION, BROWN BLVD., ual authors and do not necessarily 2521 represent the views of ARLINGNevada TON, News TX 76006-5203; PHONE 817-640-3838. PERIODICALS Dealer or the National Independent Automobile Dealers AsPOSTAGELikewise, PAID AT the DALLAS, TX AND ADDITIONAL OFFICES. sociation. appearance of AT advertisers, or their identifiPOSTMASTER: ADDRESS TOanNIADA STATE cation as membersSEND of NIADA, does CHANGES not constitute endorsement PUBLICATIONS, BROWN BLVD., ARLINGTON, 76006of the products or2521 services featured. Copyright © 2011 TX by NIADA 5203. THE AND OPINIONS EXPRESSED HEREIN Services, Inc.STATEMENTS All rights reserved. ARE THOSE OF THEMGR./SALES INDIVIDUAL AUTHORS DO NOT NECSTATE MAGAZINE Troy GraffAND • troy@niada.com ESSARILY REPRESENT THEMorgan VIEWS OF NEVADA DEALER NEWS FRONT COVER BY Mike OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASEDITOR Mike Harbour • mharbour@niada.com SOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, PRODUCTION MGR. Jacob Kerns • jacob@niada.com OR THEIR IDENTIFICATION AS MEMBERS NIADA, DOES ART/PRODUCTION MGR. Christy Haynes • OF christy@niada.com NOT CONSTITUTE ENDORSEMENT OF THE PRODUCTS OR PRINTING Nieman AN Printing SERVICES FEATURED. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Mike Harbour • mharbour@niada.com PRODUCTION MGR. Jacob Kerns • jacob@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing

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JUNE 19-23, 2011

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Registration rates start at only $395. Register online at www.niada.com Caesars Palace is the host hotel and offers $144 per night room rates. Education for all aspects of your business. Solutions and Services for your dealership in the exhibit hall. Evening events to network with peers in the industry. And Much much more

need additional information? Go to www.niada.com or call (800) 682-3837

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Has your dealership implemented a process for engaging customers and shoppers with QR codes? If the answer

Point Scan Sell QR CODES 101: QR codes have optimized the way information is shared, making it easier to direct somebody to your information on-site, such as inventory, coupons, service, specials, blogs, events and more.

is no, don’t worry because you’re not alone. If you don’t know what a QR code is or have heard of it and don’t know how it can benefit your dealership, you’ll find some answers here. QR (Quick Response) codes are becoming increasingly popular for any business looking to provide information to current and potential customers quickly and effortlessly. The codes are a byproduct of the smartphone movement sweeping America. Nielsen reports 31 percent of U.S. mobile phone owners had a smartphone as of December 2010 and expects smartphones to become the majority by the end of this year. eMarketer predicts smartphone ownership will reach 43 percent of the U.S. mobile population by 2015. QR codes have optimized the way information is shared, making it easier to direct somebody to your information on-site, such as inventory, coupons, service, specials, blogs, events and more. Smartphone owners have access to a wide variety of apps and QR code readers are a standard app on most, if not all, smartphones. Because the technology is so new and progressive, not all QR code scanners can read all QR codes, but these instances are rare and will become fewer as the technology advances. The basis for QR codes is quite simple and nearly the same as the standard barcode seen on merchandise tags or VIN stickers on vehicles. Barcodes were developed to carry information in a very small space that is scan-able; they’re limited in that they are horizontally shaped. QR codes work the same way, but more information can be carried since they are based on horizontal and vertical dimensions, so there is no limitation to what or how much information can be included. Common types of QR-coded information include URLs, text, phone numbers and SMS. Remember, each QR code is unique, so there is no end to the possibilities here. Here is an example of how using QR codes can help you gather potential customer’s information. Say you have customers looking at vehicles after normal business hours (or on Sundays), but choose to call later to learn more about a certain one. This is the typical thought process of many people. By having a QR code on your vehicle, you can get someone engaged into requesting more information at that moment while lessening the risk of the customer losing interest by morning.

At the same time, your potential customers are excited because they get to use their smartphone technology by simply scanning the QR code. From there, they can get to your mobile website, maybe grab a mobile coupon or check out whatever dealership info you want to share. We recommend you have some type of quick form for people to complete for a coupon. Guess what? Now you have contact information; in other words, my friends, you’ve got leads! As with email 15 years ago and texting 5 years ago, people are excited about how technology is giving them more ways to communicate today. During the sales process, a lot of customers will prefer this because of the non-invasive way of communicating with the dealership. You will see companies offering a free online book by scanning a QR code in an airport or a major advertisement in a publication with a code printed in the corner. These are all enticements that target engagement from potential customers at the peak of their initial excitement or curiosity. Because it is effortless to scan a QR code, pairing them with a marketing strategy will help you capitalize on customers engaging when their emotional excitement is high. The more time that passes, the more distant the customer becomes. You can see how powerful QR codes can be with convenience and timing. Be careful not to be overwhelming in requesting the customer’s information. Use QR codes in a variety of different ways to not only generate leads, but to deliver your message. For instance, in your next mailer, create a QR code that sends them to a web form that gives the customer a free car wash. All they have to do is complete and submit the form, then present the generated coupon to a sales manager. For a softer approach, implement a process to get more Facebook fans by creating a QR code that takes a person to your Facebook Fan page, keeping them totally in their comfort zone. Be sure to scan the codes in this column to better understand how QR codes can work for your dealership. BY DUSTIN JANSSON

Dustin Jansson provides consulting for e-commerce and social media strategies for dealers, as well as providing a full suite of inventory management, marketing, and photography solutions. Staying ahead of the technology curve in the autos business is his passion. Contact him at 303232-3435 or dj@dealernetsolutions.com.

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F&I Perspectives Since the credit crisis began a couple of years ago, it’s no secret used vehicle inventory has been tight. The Cash for Clunkers program only compounded the problem. Now, the tragic and devastating disaster in Japan has disrupted the automotive supply chain, causing a ripple effect not only from the suspension of new car production, but also from a lack of component output.

With further strain in the market, our industry has to rethink the new timeframe to reach equilibrium. This following indications of a peak in the index: wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) declined 1 percent in February after rising in each of the previous five months, according to the Manheim Used Vehicle Value Index. The trend has been prices at the auction have strengthened because of the decrease in new deliveries. Many franchise dealers have built up used inventories in anticipation of a new vehicle shortage that will trickle down to a used vehicle shortage. As a result of these factors, used prices are likely to remain high, making strategic inventory selection even more important for dealers. Given market factors, dealers are wise to deepen their understanding of lender programs to help determine the right inventory to have on the lot. Here are suggestions for navigating challenges and keeping deals profitable. Relationship, relationship, relationship The dealer-lender relationship cannot be undervalued, especially when the market is tight. If you haven’t already developed a strong relationship with your lenders, now is the time. View it as a partnership. Build an honest and professional relationship with underwriting. Talk to your credit analyst. Leverage the knowledge of your account manager or sales rep to gain more insight into the program. Ask for training when needed, so staff can be well educated on making the process as smooth as possible. A good

dialogue with your lenders goes a long way to avoiding funding problems that can cost time and money, leaving you with unsold units. Start at the source Dealers going to the auction to source inventory will face higher prices, but can prepare by carefully reviewing available lending programs prior to making purchases. A strong understanding of program guidelines is critical to avoiding the costly mistake of buying the wrong inventory. Some examples of this preparation include: Know which pricing guides are used. NADA, Kelley Blue Book or Black Book? Pay attention to trends in value, too. For example, NADA recently announced its used auto values for April would reflect large increases in most vehicle segments compared to March, based on the impact of the crisis in Japan. At the time of the announcement, auction prices for two-to-five-year-old compact cars in March had increased by about 11 percent compared to February. There is little question price increases are to be expected in the short-term.

Don’t shy away from asking for what you need to understand and master the program. Strengthening your lender relationships may even help you stay on profit targets and solve some of the main challenges you face in today’s market. Understand the guidelines used to structure deals. Which adds are allowed and which are not? Some lenders will allow leather, sunroof or wheels. Others will not. Knowing which adds are permitted can mean

BY U RI SZAPI RO

the difference between making $1,000 or $2,000 on a deal. Don’t lose out on value. The last thing dealers want in a strained market is a short deal. Auction receipts. Lenders may be more open to a slightly bigger advance or other adjustments when you have proof of higher auction prices. Ask if an original auction receipt could be worth a few hundred dollars more in advance. Mileage and term flexibility. Some lenders may be more flexible or generous with mile allowances and/or terms due to the tightness of the market. The assumption is vehicles are on the road longer now because of reduced inventory. However, these adjustments may not be advertised or published with the program guidelines. Here is where that strong working relationship comes into play. Ask about such adjustments. For example, whereas before the lender wanted a limit of 60,000 miles for a 60-month loan, now 65,000 might be acceptable. Or lenders might be willing to add six months to the term on premium imports as a way of helping the dealer. Staying in touch with your lender can give you the confidence of knowing you have some leeway going to auction. Having a close relationship with lenders is strategic advantage, especially during a tough period in the market. Dealers are wise to communicate with lenders more often, be receptive and pay attention to the program details and guidelines. Don’t shy away from asking for what you need to understand and master the program. Strengthening your lender relationships may even help you stay on profit targets and solve some of the main challenges you face in today’s market. What’s more, the effort you put in now will pay off beyond the bump in the road today, and into the future. BY URI SZAPIRO Uri Szapiro is vice president of originations at AFS Acceptance, LLC, an established, full-service auto finance company serving franchise and independent car dealers’ subprime financing needs since 1996. For more information, visit www.afsacceptance.com or call 877-223-3254.

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NEW NIADA MOBILE SERVICE

FOR SMART PHONES PUTS KE Y APPR AISAL DATA , MEMBER NE WS AT YOUR FINGERTIPS BY SCOTT LI L JA , VI CE PRESI D ENT, N IADA M EM BER SERVI CES

This spring, NIADA members will have access to a new mobile application tool from NIADA that will enhance their productivity and profitability and stay up to date on the latest developments impacting their dealership. This new tool, NIADA Mobile Service, is accessible by Apple iPhones, Android-type phones and other select models. It puts at members’ fingertips a wealth of critical data to help them make better vehicle appraisal, purchase and retail sales decisions. Now, members can access their subscriptions to appraisal services from NADA Guidebook, Kelley Blue Book, Black Book, and Galves Auto Price List. They also will access run lists from participating auctions. Furthermore, NIADA Mobile Service links them by smart phone to select content on NIADA.com. Here’s how NIADA Mobile Service will streamline your operations: On the lot or on line: More quickly appraise a vehicle, for customers at your lot or those selling online through sites such as Craigslist. Access your guide book vehicle appraisal service or a market report – or your subscription vehicle history report service – on the specific unit. Have at your fingertips the right current facts to pencil your best deal. Buying from auction: You can access the auction’s pre-sale run list while at the auction or sitting in your office. You may view the inventory then, once you land on a unit you like, press on the appropriate smart phone icons to pop up auction-supplied information about the unit, its appraisal data, and a vehicle history report. Continual and timely updates ensure you have the freshest available data. During a moment of downtime: Activity suddenly slows its hectic pace for a few minutes, so you use the time to access the NIADA website. There you check some key association information or watch a NIADA.TV video you’d put off. The service also alerts you to urgent messages that might require immediate action. Designed for NIADA

NIADA Mobile Service was developed by leading automotive mobile applications developer and NIADA technology partner and advisor GigglePop.com Inc. The company is importing NIADA web content and coupling it with existing GigglePop software mobile applications. GigglePop’s technology is known

for speed, accuracy and, of course, mobility. Its fat-finger icon or button designs are a special value when searching for key information when working in distracting environments like auctions. These large icon designs help users easily find and stroke with their fingers the right icons or buttons they want, reducing keystroking errors. As NIADA’s technical partner, GigglePop will continue to support Mobile Service and be an industry liaison for NIADA Mobile. Accessible subscription guidebook data and features through Mobile Service include:

Customizable software settings All guidebook regions or states include s VIN look-up decoder s Stores booked vehicles, recall in an instant s Enter personal notes on booked vehicles s Lists and sorts appraised vehicles s Re-values saved vehicles with each new update s Automatically updates wirelessly s Barcode scanning capability s Seamless integration with all GigglePop valuation tools, including vehicle history report subscription services and auction run lists s SmartBid Market Report s Large easy-to-read fonts s s

NIADA Mobile Service also makes your day at the auction simple, easy and productive. Accessible auction run list data from participating auctions includes: s

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Search by lane or run number to view auction vehicle data Barcode scanning capability Continual auction run list updates even while auction is in progress View those late arrivals Save target vehicle data for future reference Enter personal notes and bid pricing on specific vehicle records Lists and sorts saved target vehicles Seamless integration with all GigglePop valuation tools, including Guide Books, Vehicle History and participating Market Reports

In addition to providing mobile access to these key services, NIADA Mobile Service also connects members to select NIADA content on the NIADA site. Wherever you are, you can stay on top of moving legislative decisions, regulatory compliance issues, new NIADA member services and educational programs.

Especially in today’s market, still recovering from the recession, this mobile service will help members operate more profitably. It puts at hand the insight needed to buy and sell more profitably and keep abreast of industry news and events influencing the used vehicle retail market. The more competitive dealers today are clearly adapting to our changing industry by using mobile technologies and solutions to help them better manage their used vehicle operations, inventories, vehicle sourcing and retail sales processes.

DELIVERS TANGIBLE MEMBER BENEFITS Members’ use of the NIADA Mobile Service tool will help them:

I dentify quality, retail-ready inventory: Mobile accessibility to auction inventory as well as vehicle valuation guides can help dealers meet challenges presented by the economic fallout from the last three years’ depressed vehicle sales, drop in leasing activity and reduced stream of fleet rentals into the remarketing stream. s Source the right-priced vehicle for the customer: Reduced levels of wholesale units flowing into remarketing channels have made it more difficult to source and match the right vehicle to customers’ ability to pay. NIADA Mobile Service helps dealers locate those vehicles at an acquisition price the customer can afford and finance, while providing enhanced profit for the dealer. s

Often spread thin by needing to be in the office, on the lot and at the auction seemingly simultaneously, the independent used auto dealer must use time and resources wisely. By adding this new Mobile Service tool to the NIADA portfolio of member services, the association helps its members access critical association information and related vehicle valuation, history reports and auction run list services right from their smart phone. As market needs continue to change and dealers seek new ways to remain competitive, like purchasing inventory outside their local market areas and using web-based competitive vehicle analysis and pricing tools, GigglePop and NIADA will continue to enhance Mobile Service to help dealers make the most informed and profitable business decisions.

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STOP CURBSTONING RELEASES CONSUMER GUIDE: D E T E C T I N G C O L L I S I O N R E PA I R We know that used car buyers today must navigate a minefield of unscrupulous sellers and haphazardly repaired vehicles. Among the worst offenders are “curbstoners”

– unlicensed individuals who buy and sell used cars to make a quick buck from unwary victims. That is why we put together a handy guide to help used car buyers detect collision repair. “ A Used Car Field Guide for Detecting Collision Repair ,” is an online booklet full of useful tips for spotting subpar repair work, ensuring there are no disparities between what a seller says and what the car shows. We’ll share some quick, simple things you can do to uncover any telltale signs of collision damage when buying a used car, including: • How to identify whether body panels have been replaced • How and where to detect paint abnormalities • How to detect frame damage, and more!

A Used Car Field Guide for Detecting Collision Repair www.stopcurbstoning.com It used to be fairly easy to spot the signs of a collision repair: overspray, bad color matching, and misaligned body panels. Now, with computers assisting with everything from frame straightening to color matching, it’s a lot harder to tell if a vehicle has been in a collision, especially if the repair was done well.

vehicle history report form a service like AutoCheck, are absolutely vital steps to take before paying money for any used car from a private party.

That’s great if you want your car fixed after an accident. But it makes things hard if you’re looking for a good used car.

However, here are some quick, simple things you can watch for when you’re out looking at cars. One element on your side is simple greed: curbstoners want to maximize their profits. After all, they only need to fool a buyer long enough to collect the cash. So, curbstoned cars rarely get top-notch repair treatment.

NOTE: We’re not saying to avoid any car that’s had bodywork. A vehicle that’s been properly and professionally repaired after a minor fender-bender could be a terrific bargain. We are saying to watch for disparities between what a seller says and what his or her vehicle shows. Of course, no one can catch all the bad cars. That’s why an inspection by a trusted, experienced mechanic, along with a

At A Glance A walk around the vehicle in good light will often disclose whether or not a body panel has been replaced or repainted. Look at the car from several angles to make sure the color matches across all the body panels. Look also at the reflections in the paint – factory paintwork is mirror-smooth, even when dirty or dinged up. Signs of repair often reveal themselves in a slightly rippled reflection, or a reflection that doesn’t exactly line up across two body panels. Be sure to look at reflections from several angles. If the car is so dirty that you can’t see reflections, you might need to ask for the car to be washed. While you’re sighting down the sides of the car, check to make sure the body panels all fit flush, and that the gaps between the panels are even from top-to-bottom and side-to-side.

Good places to look for paint overspray or excess paint include: Around electrical conduits in door jambs Near door, hood, and trunk hinges On window and door seals Around seals and fittings in the engine compartment firewall Along the trim pieces inside wheel wells

Sun damage typically affects large body surfaces like hoods and roofs. When you see small patches of peeling clear-coat, especially in corners and other hard-to-reach areas, they may indicate a poorly prepped paint job. At the same time, beware of too-perfect paint. Even a garaged, well-cared-for used vehicle will have small paint chips and even minor dings. If the chin fascia beneath the front bumper is pristine, it may have been recently replaced or repainted.

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SUMMERTIME AND THE SELLIN’ IS EASY BY AN DY FRI ED LAN D ER

people are out there buying cars in the heat of summer, even in places like Hinesville and Tyler, Texas, were the temperature regularly climbs above 100 in July and August. So a dealer who wants to snag some of that business needs to play it cool – with his customers and his inventory – even when it’s broiling outside.

It gets hot during the summer in south Georgia. Real hot. How hot, exactly?

“So hot our sales people don’t even want to get out there,” said Larry Mannion of M&M Motors in Hinesville, Ga., about 35 miles southwest of Savannah. “I’m talking really hot, you know, like that 100-degree index. I usually take the attitude that if someone is on the lot looking for a car when it gets like that, he must need a car pretty bad, because it’s so hot. I mean, who wants to be out there?” Nevertheless, people are out there buying cars in the heat of summer, even in places like Hinesville and Tyler, Texas, were the temperature regularly climbs above 100 in July and August. So a dealer who wants to snag some of that business needs to play it cool – with his customers and his inventory – even when it’s broiling outside. That means little touches like plenty of chilled water or soft drinks available for potential car buyers, or running the air conditioning for a few minutes to cool off the car before inviting customers in for a test drive. It means checking the coolant level and the AC of every car on the lot before a customer wants to look at it. It means being prepared for the inevitable heat of summer. “One thing you have to remember is our business is all emotional,” said Joe Lescota, chairman of the Automotive Marketing department at Northwood University in Midland, Mich., and the instructor for the NIADA’s Certified Master Dealer program. “It’s a very psychological business. You have to kind of cast the logic out the door a little bit and think about the consumer and the consumer’s experience. Think about how you can make the customer experience much more enjoyable.” In the summer, that’s all about cool, from the look of the offices – fresh paint in light colors – to placing misters outside, an inexpensive touch that can lower temperatures 20 degrees or more on a hot day. “Hook them up to a garden hose and they can blow a cool mist over where customers

will be,” Lescota said. “Think about creating a psychologically cool environment. Have water for the customer, but not just in a water cooler. I like a big bucket filled with ice, where you can actually see bottles of water chilling. That’s psychologically refreshing. Let the customer stay inside as much as ice and water or soft drinks.” It doesn’t hurt to keep the cars cool, too. Lescota suggests investing in a large tent or canopy to put over some of the inventory, protecting it from the sun and, in climates where sudden hailstorms can pop up, hail damage. “Think about putting as much of the inventory as possible under one huge tent,” he said. “I really encourage dealers to get a professional tent or awning company. If I’m looking at lots and one guy’s inventory is out in the sun baking all day, and another’s is in the shade, I can see the difference.” And dealers shouldn’t be afraid to get the word out about their cool touches through their advertising. After all, none of those ideas will bring in customers who don’t know about them. “Dealers not only need to do these things – they need to tell the public about it – advertise it,” Lescota said. “‘Our vehicles are in the shade,’ or, ‘Come on in for some ice-cold water.’ Let people know it’s ice cold. Remember the old days when movie theaters used to advertise ‘ice-cold air conditioning?’ There is a psychological response to that.” That is also true of the dealership’s grounds. Summer is prime time for weeds, those persistent pests that seem to constantly be growing in cracks in the pavement. “You have to look at your property, and that’s an everyday thing, too, because weeds can pop up overnight,” Lescota said. “We have a tendency to look past those things.” The one thing that can’t be looked past is the temperature, which can climb to 130 degrees inside a closed car in hotter climates. If a customer wants a test drive, making him get into that blast furnace isn’t likely to sell him on a vehicle. “We’ll go out and crank the vehicle and C O NTI N U E D PAG E 14

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Ford F-150, Mercedes-Benz M-Class Recalls

By ADR Staff

FORD F-150, LINCOLN MARK LT Ford is expanding a recall of F-150 and Lincoln Mark LT light trucks. In January 2010, the National Highway

The recall on the expanded population is expected to begin on or about May 9. Owners may contact the Ford customer relationship center at 866436-7332. Ford’s recall campaign number is 11S18.

Transportation Safety Administration (NHTSA) opened an investigation into inadvertent airbag deployments. As a result of that investigation, Ford recalled about 144,000 2005 and 2006 model year F-150s in March. The most recent announcement expands the recall to include certain model year 2004 through 2006 F-150s as well as certain model year 2006 Lincoln Mark LTs. A total of 1,325,000 units are affected. According to the NHTSA documents, if the airbag clockspring jumper wire comes in contact with the driver side frontal airbag lower horn plate, the wire insulation may become chafed, creating a potential for a short circuit. If this occurs, the airbag warning lamp may illuminate indicating service is required. As a result, the driver side frontal airbag could inadvertently deploy increasing the risk of injury or loss of vehicle control if occurring while in motion. Ford will notify owners and instruct them to take their vehicles to a Ford or Lincoln dealer to have a new clockspring jumper wire installed that incorporates a protective mesh cover. Repairs will be performed free of charge. The recall on the expanded population is expected to begin on or about May 9. Owners may contact the Ford customer relationship center at 866436-7332. Ford’s recall campaign number is 11S18.

MERCEDES-BENZ M CLASS

Mercedes-Benz is recalling certain model year 2000 through 2002 M-Class and model year 2000 through 2004 M-Class AMG vehicles. The recall affects 136,751 units. The cruise control system in the affected vehicles allows the driver to disengage the system in a number of ways, including tapping the brake pedal, using the cruise control stalk, or braking the vehicle enough to reach a certain rate of deceleration. Mercedes-Benz has determined that, under certain circumstances, use of the brake pedal may not automatically disengage cruise control as expected by the driver, although the other means of deactivating cruise control remain fully operative. Specifically, where the driver pumps the brakes rather than applying consistent pedal force, the level of force required may be unusually high. The difficulty or delay in disengaging the cruise control can increase the risk of a crash. Dealers will repair the vehicles free of charge. The safety recall is expected to begin during September. Owners may contact Mercedes-Benz at 800-367-6372. Editor’s note: Owners may contact the NHTSA vehicle safety hotline at 888-327-4236 (TTY 1-800-424-9153). For more information about these and other recalls, visit http://www.safercar.gov.

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“We find people don’t want to be out in the middle of the day in the heat and get into a car that feels like it’s about 180 degrees,” he said. “We post 8 o’clock hours but a lot of times we are here even later.” bring it up front for them and sit inside and talk to them for awhile and let the vehicle cool off,” said Brian Pool, co-owner — along with his father, Scott — of Autohouse Auto Finance in Tyler, Texas. “Let the AC run.” Lescota is all for that. He also said rolling the car’s windows down on hot, sunny days can keep the interior from getting too bad in the first place. Sales consultant Jan Kelly of Kelly Enterprises said having windows tinted can help, too. “If it gets too hot in there, when I get in that car, I’m not thinking, ‘Wow, this is a nice car.’ I’m thinking, ‘I hope I don’t get a third-degree burn,’” he said. “And of course, don’t just throw a customer in the darn car. Let the salesperson crank the car and cool it down, so when the customer gets in the car, it’s an ‘Ahhh’ feeling as opposed to an ‘Ow, this hurts’ feeling.” Jim Coury, owner of Integrity Auto Sales, has been selling cars in steamy Port Orange, Fla., since 1987, so he knows a thing or two about dealing with heat. One of his major changes for summer is his of hours of operation, a move aimed at increasing traffic of customers trying to avoid the hottest part of the day. In the winter, Coury’s lot closes at 6 p.m., sometimes earlier. In summer, it will be open until 8 or beyond. “We find people don’t want to be out in the middle of the day in the heat and get into a car that feels like it’s about 180 degrees,” he said. “We post 8 o’clock hours but a lot of times we are here even later.” Coury also changes his advertising during the summer, buying more radio ads to target people out driving or at the beach. “Radio advertising does well in the summer – you get a lot more bang for your buck that time of year,” he said. As for the cars themselves, Lescota said it’s

worth the extra time and effort to keep the inventory looking clean and sharp. That can be especially difficult in summer, when the hot sun tends to fade paint and upholstery, and dust and debris tend to blow in from the surrounding area. While keeping the vehicles out of the sun is preferable, it isn’t always feasible, so a dealer has to be prepared to clean the inventory often. “People buy visually, so you need to be sensitive to making sure every single car, every single day, looks fresh,” Lescota said. “It’s easy to get a car looking good for the lot. The hard part is keeping it looking good while it’s on the lot. That’s why it’s very important for the dealer to make sure he’s got a good coat of wax on the car. And have the porter wipe the cars down first thing in the morning, not anywhere near the afternoon because that water will cause water spots and some water spots can be very, very, very difficult to get out. A lot of that preparation needs to be done very early in the morning.” Lescota also suggested washing the windows with a solution of one part ammonia to four parts water to “make them absolutely sparkle.” “People might say that kind of stuff isn’t a big deal,” he said. “Of course it is. Look at how any person shops. If I’m at a store and I find something on the shelf that has dust on it, I put it back and I look for a box or can that doesn’t have dust on it. Dust says it’s old. Dust says it’s stale. It might not be, but that’s what it says. That’s a very powerful tool that can motivate a potential buyer.” Not all of the issues facing cars sitting in the heat of summer are cosmetic. Some can be legal – the heat can make stickers face or even fall off, including required FTC stickers and Monroney stickers. And the heat can even keep a car from starting. “Believe it or not, we have to make sure we keep the cars started once a week because batteries take just as much of a beating in the summertime as they do in the winter,” Coury said. “The heat is just as bad for a battery as the cold. It’s funny, it will be the dead of summer and you’ll be going, ‘What the heck? All these batteries are going bad on me.’ The heat is really tough on those batteries. So we make sure we have a lot of batteries in stock, ready to go.” Ross Turner, assistant commercial category manager for AutoZone, an NIADA National Member Benefit provider, suggests keeping a careful eye on the cars’ rubber items – such as belts, hoses, tires and wiper blades — because rubber can be greatly affected by heat. And an extra thorough wash might be a good idea when the weather warms up, especially in places that had rough winters. “Remember that it wasn’t just snow and

mud that accumulated on the cars,” he said. “If they were driven, there were also salts, sands and other melting chemicals that have built up on the auto’s finish. Cleaning the interiors and exteriors more thoroughly might set one dealer out ahead of another when it comes to customer impressions.” Summer can even affect the type of cars a dealer wants on the lot. Kelly said the hot items – pun intended – for the upcoming summer will be fuel-efficient vehicles. “The price of gas is going to continue to rise, which means fuel-efficient is in again,” she said. “The fuel-efficient ones are going at a premium. In fact, there might be a shortage of fuel-efficient cars. I hear dealers are having a hard time getting inventory.” At least one dealer already is finding that to be the case. “We’re trying to buy stuff that gets decent gas mileage as we look forward toward summertime,” Pool said. “We’re having trouble finding any inventory. We’re keeping our eyes on gas prices and trying to stock a lot of stuff that gets good fuel economy – cars and small SUVs – and trying to stay away from diesel trucks with the price getting close to $4 a gallon. “We want to get some stuff in here that we can sell. We used to buy SUVs and Suburbans and Tahoes because people were getting ready to go on vacation in the summer and they’d buy those bigger vehicles to carry their families in. But not these days.” Summer actually brings more than heat when it comes to weather. In some areas, it means sudden hailstorms or tornadoes that can pop up at a moment’s notice. In Florida and along the Gulf coast, it means the beginning of hurricane season. Coury found that out the hard way in 2004, when Florida was pounded by four hurricanes – Charley, Francis, Ivan and Jeanne – which left his dealership a wreck. That summer reinforced the need to have a storm plan, whether that’s a tent or cover to keep cars out of the hail in Texas or places to hide Florida cars from hurricane-force winds and storm surges. “One thing I have to do constantly is storm preparedness,” he said. “We rehearse where cars are going and what to do. I’m very close to the water here, probably 100 yards from the Intracoastal Waterway. So I have to worry about any storm surge, flooding, high winds. “During one of the hurricanes we had, I put a bunch of cars together in a big square, not realizing the shingles were going to blow off my roof and skin up every car there was. So I try to take the largest assets and protect them the best, and do what I can do with the rest of it.”

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FuelEconomy It shouldn’t be surprising one of the first considerations shoppers coming into your showroom will mention is fuel economy. The latest Kelley Blue Book Market Intelligence Survey concerning consumer sentiment and gas prices revealed the current economic situation, coupled with concern over the rise in fuel prices, has further caused an increasing number of new- and used-vehicle shoppers to change their vehicle consideration criteria. In April, KBB discovered the vast majority of shoppers — 84 percent, in fact — said gas prices have influenced vehicle considerations, revealing a steady increase in the role fuel prices have played in purchase decisions since January. In addition, analysts found 90 percent of the latest Kbb.com survey respondents expect gas prices to climb even more during the next 30 days. KBB pointed out that those planning to purchase their next vehicle to get better fuel economy has been on the rise since the beginning of 2011, increasing 12 percentage points from January to April. When asked about the effect of the economy on future vehicle purchases, analysts reported 58 percent of consumers said the economy has caused them to make a downgrade. The most popular downgrade was engine size (41 percent), followed by decreased vehicle size (40 percent), less or eliminated vehicle options (35 percent)

and switching from new to used (32 percent). Kelley Blue Book Market Intelligence officials explained they employed the Van Westendorp pricing model as a research strategy to understand consumers’ price sensitivity, discovering that rising gas prices continue to outpace consumer acclimation to a higher price point for fuel. Analysts calculated the current optimum price point for gasoline has risen since the beginning of this year, from $3 per gallon (with an acceptable range of pricing from $2.75 to $3.25) in January and February, to the current optimum price point of $3.23 (with an acceptable range of pricing from $3.07 to $3.41) in April. Therefore, if prices remained around $3.23 per gallon, KBB contends shoppers likely would not make major changes in vehicle consideration criteria. However, at the $4 per gallon price point, the firm believes 70 percent of consumers will feel that gas is so expensive it will affect their vehicle consideration. And at $5 per gallon, KBB stressed that almost all shoppers (92 percent) say their vehicle consideration will be affected. Furthermore, Kelley Blue Book found its latest Kbb.com survey revealed that despite steadily climbing gas prices, many shoppers feel their personal economic situations are somewhat improving. Survey orchestrators determined the number

of respondents indicating that their current economic situation is “poor” decreased by 5 percentage points from 27 percent in February to 22 percent in April. Also, KBB noted concerns about becoming unemployed decreased 9 percentage points from 34 percent in March to 25 percent in April. “As we head into summer driving season, gas prices are going to continue to be a hot topic both in the auto industry and among the cardriving American public,” explained Jack Nerad, executive editorial director and executive market analyst for Kelley Blue Book. “Auto manufacturers increasingly are offering more fuel-efficient vehicles, not only due to the federally mandated Corporate Average Fuel Economy (CAFE) regulations, but also because of rising consumer demand, as indicated by the latest kbb.com survey findings,” Nerad continued. “It’s important for shoppers to know that there are more fuel-efficient options today than ever before, from sub-compact cars to deckedout luxury rides and even highly efficient trucks and SUVs, many of them offering astounding fuel economy numbers, especially in light of the features and safety they offer,” he went on to say. The latest Kelley Blue Book Market Intelligence survey about consumer sentiment and gas prices was fielded to 480 in-market new- and used-vehicle shoppers on Kbb.com from April 12 to 18.

Protective NCP Protective’s Asset Protection Division is now an NIADA National Corporate Partner. The division brings more than 40 years of experience in the automotive sector providing F&I products and solutions focused on enhancing profitability and customer satisfaction to 8,000 dealerships throughout the U.S. and Canada. “Protective and the Asset Protection Division look forward to bringing our years of experience and F&I leadership to further relationships with independent dealers across the country,” said Rick Kurtz, vice president of dealer sales. “By bringing our proven success strategies to this marketplace we will increase dealership F&I revenue with a variety of solutions tailored to their unique needs. Our proven training approaches, new F&I revenue strategies, menu solutions and advanced F&I technology nicely compliment what the independent dealerships tell us is important to them.” Protective has created a unique and important vehicle service contract product exclusively designed for the independent dealer audience. Through a careful examination of marketplace needs, this product will bring attractive terms and eligibility guidelines and competitive pricing to the independent dealership and their end consumers.

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CARFA X L AUNCHES ADVANTAGE PROGRAM FOR DEALERS NEW PROGRAM DESIGNED TO INFLUENCE SHOPPER’S DEALER CHOICE, ENHANCE CONFIDENCE

Carfax is giving dealers a powerful new way to attract customers using the Carfax brand. The Carfax Advantage™ Dealer Program distinguishes Carfax-subscribing dealers that are committed to transparency. Through the program, partici-

pating dealers can set themselves apart from their competition. Used car shoppers know they can buy with greater confidence when shopping at any Carfax Advantage dealership. “Being a Carfax Advantage dealer with unlimited access to Carfax Reports, Carfax has quickly become one of our most valued partners,” said Adam Warmka, general sales manager at Dick Brantmeier Ford Lincoln Kia in Wisconsin. “We use them when we’re buying cars to make sure everything checks out and our salespeople are constantly asking for printed copies so they can show our customers. Every car we list online has a Carfax Report. Carfax is in our advertising, out in front of our dealership and on every car in our inventory. We use them every day.” According to recent research, more than 80% of used car shoppers surveyed said they would prefer to shop at a Carfax Advantage dealership. Carfax Advantage dealers have another way of building confidence with used car buyers and help customers make faster buying decisions. “Our participation in the Carfax Advantage program has helped us build credibility with customers,” said Dan Moltz, general manager at Car Center of Waldorf, Md. “We show the Carfax up front on every car. Customers appreciate it and the result is additional sales and higher customer satisfaction. Also, by pulling Carfax Reports prior to buying inventory, we shorten our turn, which we all know increases retained earnings. The more you turn, the more you earn.” As part of the program, participating dealers have unlimited access to Carfax Vehicle History Reports and Carfax Auction Quick Check, plus a Consumer Information Pack for every car being retailed. Carfax also provides enhanced point-of-sale materials for free, including new items that highlight Carfax Advantage dealerships. “Transparency greatly influences consumers when making their dealer choice,” said Bill Eager, vice president of Carfax. “Thousands of consumers we tested said that the Carfax Advantage program means trust and confidence. They know immediately that a Carfax Advantage dealer will show them the Carfax. As a result, participating dealers enhance their reputation and sell more cars faster.”

PRE-GAME WARM-UP:

REVIEW FINANCING PRACTICES AHEAD OF CFPB AND FTC RULES It’s the beginning of the baseball season. Experts are poring over team rosters, game schedules and statistics to predict the season’s outcome. The fun and fear is the

element of the unknown. The same is true of the new Consumer Financial Protection Bureau. As it takes shape, we are checking its roster of leaders and their speeches and public announcements to predict first-year activities. The fear, not so much the fun, is the element of the unknown. One unknown is how the bureau and the Federal Trade Commission will define an unfair, deceptive, or abusive act or practice in motor vehicle financing. The Dodd-Frank Act authorizes them to make and enforce rules to prevent such acts and practices in consumer financial products and services. Many states already have similar statutes, but each state has its own unique definitions and case law. Some states have developed a large body of case law defining the standard, but the Dodd-Frank Act will add a unique layer of federal law, regulations and court decisions. State attorneys general also can sue to enforce federal law, so we may see case law develop based on unique state decisions to enforce. In addition, state laws that provide greater consumer protection will continue to be enforceable. The FTC recently announced it’s conducting public roundtables in three to five cities around the U.S. to discuss consumer protection issues in connection with motor vehicle sales and leasing. It published a list of discussion topics indicating the acts and practices under the most intense scrutiny. The list includes yo-yo financing, finance company incentives to dealers resulting in more expensive credit, interest rate mark-ups and upfront charges of which the consumer is unaware, negative equity financing, selling and financing add-on products and services and use of GPS location devices. Details may be found at ftc.gov. Information from the roundtable meetings will likely shape the FTC’s view on whether the practices discussed are in any way unfair, deceptive, or abusive acts or practices. The meetings will likely be a game changer. Whether or not you participate in the meetings, you should review your dealership’s practices in these areas. The legal standard for review will develop over time. For now, I suggest the common person standard: Would you be comfortable having your practices displayed on the Jumbotron at the ball game? BY CH I P ZYVOLOSKI Chip Zyvoloski is senior attorney for indirect lending at Wolters Kluwer Financial Services. For more information, visit www.wolterskluwerfs.com/indirect.

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