ALABAMA
2019
AL ABAMA INDEPENDEN T AU T OMOBILE DE ALERS AS SOCIATION | FEBRUARY/ MARCH 2019
TWO IMPORTANT TIPS FOR SUCCESS
| PAGE 14|
HAVE YOUR BEST SALES YEAR
DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
DEALER SPOTLIGHT PAGE 05
S TAT E A F F I L I AT E
VISIT US AT W W W.AL ABAMAIADA.ORG
LIFETIME MEMBER AWARD Ronnie Ellison
NEW CUSTOMERS Vs REPEAT CUSTOMERS SALES MATTERS | By Kenny Atcheson
UPGRADE
YOUR
CUSTOMER
When speaking at 20 groups, conventions, conferences or during private consultations, I typically ask what a dealer needs most. Usually the answer is one of the following, or both: • “More new customers.” • “Better customers.” The answer I rarely hear is: “More repeat and referral business.” Some dealers do a good job of earning more repeat and referral business, but many others haven’t put as much thought into it. The latter group thinks that simply offering a referral fee is enough. A Word on New Customers New customer acquisition is one of the most expensive investments business owners can make. You have not yet earned the trust of new customers. They go through a longer process than do repeat and referral customers. New customers typically require more advertising to get them to take action. They may have to be followed up with more, which requires more labor cost from employees. Even when you earn the business of a new customer, their one-time experience has not earned you the right to be referred – just yet. The threshold for someone to refer business to your dealership is higher than simply buying for themselves. All business owners need a steady flow of new customers, but don’t forget about repeat and referral business. Retention – Repeat Purchases Getting an existing customer to buy from you again is much easier than acquiring new customers. When you take the necessary steps, your existing customer will most likely skip straight to the last step – purchase. You already have their trust. They don’t need to spend time researching your dealership. They are familiar with your company, so they already know where you are and what it takes to do business with you. If they enjoyed their experience, interest and desire is already directed toward your business when the time comes to upgrade to another vehicle. Repeat customers are generally easier and more pleasant to deal with. Repeat customers are more likely to refer business. Repeat customers are harder for the competition to steal due to loyalty. Repeat customers put up less price resistance.
BASE
Going back to the second thing dealers always say they want (better customers), a repeat customer should be a “better customer.” You can upgrade your customer base by choosing those you prefer and expend more effort to get them to buy again. In addition, birds of a feather flock together, so the referrals you get from your upgraded customer base may have friends you would consider better customers. H OW TO I M P ROV E C U STO M E R R E T E NT IO N How you treat the customer during and after the sale is the most obvious answer to the question of improving retention. Perhaps you are friendly when they purchase, service their vehicle or make their payments. Do you contact your customer or put your business/people/personalities in front of them any time outside of when they give you their hard-earned money? If not, you should. Host Large Customer Appreciation Events Yearly We recommended and helped a client promote and organize an event last year. Two of the best sales weeks of the year were the week immediately before and after the party. There is a right and a wrong way to host a customer appreciation party. If you focus on sales, it’s not a party, it’s a sales event. If you don’t promote the event enough to get a group to show up, it looks terrible. It looks like your dealership doesn’t have any happy customers. You must promote the appreciation party as hard as you would a sales event. It should be fun and it should be all about the customer. Host Small Customer Appreciation Events Quarterly Small events include a free lunch or a car wash certificate designated for a specific day. These are inexpensive events to connect your customers with your team. Although these are small, they require face time. Don’t just send an appreciation gift. Have customers come in so your team can get human interaction. Send a Purchase Anniversary and Birthday Card Some CRMs have this as an automated feature. This is not good enough. If you think it is, send an eCard to your mom for Mother’s Day and see how that works.
It does not have the same effect. There is all kinds of research to support the importance of holding something physical in your hands versus digital. It is proven to be a lot more powerful. Send a Print Newsletter Every Other Month to Communicate, Update and Appreciate Regular communication breeds familiarity and trust to form a stronger bond and loyalty. It puts your dealership brand in front of your customer so you are “top of mind.” Newsletters are a relationship tool. When you regularly offer value, updates and occasional personal information, it “humanizes” your business. Humanize Your Business Be less logo and cars. Be more faces, humans, and interaction. Talk and type human-to-human, not business-to-prospect. Check in on your customers once in a while. Let them see your human side. Have a face and personality to the business. When you are known as a person and not just a business, people are less likely to tear into you after a disappointment. The bond you create with your customer is much stronger human-to-human than by using a logo and a catchy jingle. Listen – Everyone Wants to be Heard No real relationship is one person doing all the talking. Give your customers a voice. Give your customers an opportunity to provide feedback without a ridiculously long survey. By doing so, you may find things you didn’t know are wrong. There will always be challenges. No one is perfect. Many of your customers will forgive mess-ups, but only if the problem is fixed in a timely fashion. The White House Office of Consumer Affairs revealed one out of 26 unhappy customers bothers to complain. What are the chances the other 25 purchase again? Use a customer feedback system to give your customers a voice, keep most complaints internal, build a vault of testimonials to use in all of your marketing and keep your employees on their toes. Kenny Atcheson is the founder of Dealer Profit Pros and author of Marketing Battleground: How to Deploy Under-the-Radar Strategies to Explode Your Profits. Kenny teaches workshops and speaks at conventions and 20 Groups. His company offers several marketing and advertising programs found at www. DealerProfitPros.com.
WWW.ALABAMAIADA.ORG FEBRUARY/MARCH 2019 AIADA 3
FEBRUARY/MARCH
2019
INSIDE
03..........................Upgrade Your Customer Base 05................................... Lifetime Member Award 06............ Your Future as an Independent Dealer 09..................Educating the Educated Customer 10................................NIADA Government Report 12... Your Best Deals are Built on a Firm Foundation 13......................... Reconditioning Best Practices
ASSOCIATION NEWS
NEW MEMBERS WELCOME TO THE NEW MEMBERS:
FOLLOWING
ASEM HASAN
BRETT VALENTZ
MICHAEL & PAIGE POWELL WAYNE WILKINSON Fuelmax Motos LLC Trussville
North Alabama Auto Sales Florence
MISHBAH UDDIN
JOHN RICCIO
Aui Fine Car Sales Montgomery
Cahaba Auto Brokers LLC Argo
STEVE OWENS
JAMES CASE
BILL STANFORD
SCOTT ELDER
Bill Stanford Automotive Inc. Talladega
D A N Automotive Group LLC Birmingham
GORDON R MCGRUE
MATT LANCE
CHRIS & ALLISON PEARL
HELEN S. JORDAN
CHRIS WILLIS
STACEY & LESLIE HILL
RYAN CRUTCHFIELD
JO JANDRLICH
NIADA HR SUPPORT CENTER NIADA is proud to announce the creation of our new HR Support Center. NIADAHR.com is designed to help dealers navigate today’s hazardous and litigious business environment. Need a form? Need a document? Need an employee handbook? Need advice? It is all at your fingertips! Welcome to NIADAHR.com, your complete HR Resource Center. And it is currently offered at a 25-33 percent discount! For more information or a tour of the services, contact our developmental partner at Robin@MyPayrollSite.com or 888-878-2101 Option 2.
JAN & EMERSON ROEBUCK
DUSTIN JACKSON
OFFICE
ADVERTISERS INDEX
Manheim ....................................................... 7 & 11 NextGear Capital............................................. 8-9 STARS GPS ............................. Inside Back Cover vAuto................................................... Back Cover
WHAT’S NEW
120 Vulcan Road Birmingham, AL 35209 Phone: (205) 942-1000 Fax: (205) 942-3565 Website: www.alabamaiada.com To become a member of AIADA, please call (800) 239-2423
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838
For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. The Alabama Independent Automobile Dealers Association is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of AIADA or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2019 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT Christy Haynes PRINTING Nieman Printing
4 AIADA FEBRUARY/MARCH 2019 WWW. ALABAMAIADA.ORG
Access Motor Company Mobile
Black Pearl Garage LLC Arab
Bucks Sales LLC Clanton
C & C Auto LLC Fairhope
G O Parts Inc. Albertville
GS&G Wholesale Used Cars Anniston
Dothan Southside Auto Sales LLC Dothan
Lakeside Auto Sales LLC Wetumpka JLM Auto Sales Fosters
E-Z N Sales Saraland
FDP Enterprises LLC Mobile
TREASURER
Wholesale Price Cars LLC Attalla
Joey Bryant Sylacauga
Del Miles Jacksonville
Tuscaloosa
Lance Turner Anniston
Kelly Steely Hoover
Danny Delich Georgia
Willie Colvin Tuscaloosa
Chris Mundy Columbiana
Ricky Young Boaz
EXECUTIVE DIRECTOR
Tim Duke Trussville
Patrick Graves Moody
DIRECTORS
Jay Saul Jasper
Jennifer Gant Harlow Arab
Chad Tillery Jemison cktillery@hotmail.com
Randy Crump Jasper fas_jasper@yahoo.com
PRESIDENT ELECT
CHAIRMAN OF BOARD
Robert Case Hartselle robertsautosales1@live.com
Todd Oden Birmingham mtomotorsinc@gmail.com
VICE PRESIDENT
SECRETARY
West Mobile Automotive Mobile
Nicholas Financial Inc. Huntsville
BOARD OF DIRECTORS
Roderick Underwood Bessemer runderwood@ anthonyunderwood.com
Victory Auto Sales Arley
LEWIS DEWBERRY
FRED & DONNA PIERCE
PRESIDENT
Topline Motor Co Bryant
Randy Jones
Barry Searcy Muscle Shoals
Randy Little Satsuma
Michael Bratton Jr. Phenix City
Jerry Giles
Mike Osaji Harvest Jeff DeMeis Hoover
Erek Yarbrough Pleasant Grove yarbroughbiz@yahoo.com
ASSOCIATION NEWS
AIADA SCHOLARSHIP
DEADLINE:
FEBRUARY
28
Attention all AIADA members, Do you have a child or grandchild who is about to enter college or vocational school? Do you need money for their education? The ladies auxiliary of AIADA has scholarship money to give away. They will award two scholarships to AIADA members’ students to assist in their education. For more information, or to request an application, call the association office at (205) 942-1000. The application deadline is February 28.
ASSOCIATION NEWS
LIFETIME MEMBER AWARD
RONNIE
ELLISON
Ronnie Ellison recently received the Lifetime Member Award. He is pictured on the right, receiving the award from AIADA president Chad Tillery. The award was presented to Ronnie for his years of service to the association. He served in multiple positions on the board. Ronnie has been a dedicated member of the association, even though he has now retired from the used car business. Congratulations, Ronnie, for a job well done. The association appreciates your every effort throughout the years.
ACCELERATE
| By GWC Warranty
4 VSC FEATURES THAT COOL POST-SALE HEAT
YOU
DON’T
HAVE
TO
Customer buys a car. Customer leaves your lot. Customer has a breakdown. Now your reputation is on the line. If you informed your customers of the VSC features that can help following a breakdown, this potential for post-sale heat won’t even make you break a sweat. The moments following a breakdown are undoubtedly a stressful time for your customers. They’re worried about getting a tow, how much it will cost, whether their service contract covers the repairs and what they will do in the interim while their vehicle is being repaired. These questions, coupled with emotions running high, can be a recipe for postsale heat you and your reputation can live without. Thankfully, if you’ve informed your customers about key features of their service contracts, you can avoid any potential blowback from angry customers navigating a vehicle breakdown. Find a Service Facility If you don’t have your own service bay, highlighting where your customers can find repair facilities that have an existing relationship with your VSC provider will help them quickly find a place to take their vehicle. Perhaps even more importantly, showing your customers where they can find repair
BREAK
A
SWEAT
facility information can bail them out of a difficult situation when traveling. Coverage Lookup These days it’s all about self-service. Most customers today would prefer to find answers to simple questions on their own. Following a breakdown, a customer may want to know if their service contract is still active and what components are covered. In these instances, if they know where to look up their coverage online, they can quickly find this information on their own, even outside of business hours. Instructional Content When customers need repairs quickly, there’s no time to go back and forth over claims procedures. With content readily available online that outlines proper claims procedures, customers can navigate the claims process with as few roadblocks as possible, ensuring a quick and painless claims experience. Multiple Contact Options Customers have different communication preferences. Some might want to make a phone call while others prefer email or live chat online. A VSC provider with all of these options at your customer’s disposal helps them get the answers they need quickly so they can get their car back on the road as soon as possible. WWW.ALABAMAIADA.ORG FEBRUARY/MARCH 2019 AIADA 5
EXECUTIVE DIRECTOR’S MESSAGE
| By Randy Jones
YOUR FUTURE AS AN INDEPENDENT DEALER THE
IMPORTANCE
OF
Our industry is ever-changing. There are some questions you as an automotive dealer should ask yourself. Do you need an association? Or will you hire someone to make you aware of all the governmental changes? Or will you hire someone to study and find the best solutions for you in today’s market? Or will you hire someone to keep you up on all the new ways of using social media? Can one person do this? Which one is the most important? What would an expert cost? And how would you find these experts? Can you do this by yourself? AIADA and NIADA have partnered to put answers to all the above questions and more at you fingertips. AIADA and NIADA are getting you the best teachers and speakers in the nation to prepare you for tomorrow! AIADA and NIADA are getting you the answers to these questions as well as some you may not even know to ask! Our AIADA convention, along with NIADA’s convention, will get you the top experts in the automotive industry! You will be prepared for tomorrow, not surprised. You will be ready for the changes. You will not have a knee-jerk response that could cost you lots of money and market share. Knowing the many types of changes you can expect, you can be ready to react as they occur. What are some of the upcoming trends in the industry? Hybrid and Electric Vehicles According to Car & Driver, automakers have made significant progress with their development of electric powered cars. Improvements in performance along with their range and available features that make them desirable choices is getting better with each new year. There are some exciting new electric cars going to be released into the market for the upcoming year. If you’re not yet a fan of these eco-friendly vehicles, there might be something on the horizon that changes your mind. This mode of power is a burgeoning wave of the future in automotive technology and we expect what is now a small ripple to become a tsunami in its magnitude in the decade to come.
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AN
INDUSTRY
ASSOCIATION
Vehicles with Automatic Braking Automatic braking technologies combine sensors and brake controls to help prevent high-speed collisions. Some automatic braking systems can prevent collisions altogether but most of them are designed to simply reduce the speed of a vehicle before it hits something. Since high-speed crashes are more likely to be fatal than low-speed collisions, automatic braking systems can save lives and reduce the amount of property damage that occurs during an accident. Vehicles with Collision Avoidance Not so long ago, it would have seemed incredible that your car would be able to “see” other vehicles or pedestrians, anticipate collisions and automatically apply the brakes or take corrective steering actions. But more and more cars can do that to some degree, thanks to a growing list of collision-avoidance systems. Some of these capabilities, such as forwardcollision warning systems, have been around for a few years, mostly on high-end luxury cars. Others, like steering assist, are just getting ready for primetime. The good news is collision-avoidance systems are getting better and spreading to mainstream cars. The potential for these systems is so great that the Insurance Institute for Highway Safety has added collision-avoidance system testing to its suite of safety evaluations. The IIHS has determined some of these collision-avoidance systems could prevent or mitigate many crashes. Now, to win top overall safety scores from the IIHS, a car needs to have a forwardcollision warning system with automatic braking. In addition, any autobrake system has to function effectively in formal track tests the IIHS conducts. Visit the IIHS website for test results on individual models. The National Highway Traffic Safety Administration is also on board, with an eye to making some collision-avoidance systems mandatory. NHTSA’s 5-star safety ratings note which systems are available on cars they crash-test. Their presence doesn’t affect the star ratings yet though. The cost of collision-avoidance systems can still be an obstacle. Most advanced systems today come only as part of a large options package or on a model’s higher, more expensive trim versions. Jumping to the trim
line where the safety goodies are offered can add thousands of dollars to a vehicle’s price. Self-Driving Vehicles Don’t ask when self-driving vehicles will arrive. Ask where. Observers of self-driving vehicles may have noticed a few features have already arrived. While most are still testing and only allowing employees inside – including Uber, Ford, Argo, Aurora, and Cruise – this year also saw the 25,000th passenger trip provided by a collaboration between Aptiv and Lyft, which uses a handful of autonomous vehicles to ferry riders around Las Vegas. Also this year, autonomous shuttle companies May Mobility, Optimus Ride, and Navya beckoned members of the public aboard in Columbus, Ohio; the suburbs of Boston; and Vegas. Just this month, Waymo launched a driverless service in the Phoenix area, albeit a limited one. This body of evidence should help you understand the nuanced answer to an increasingly common question. Aptiv president of automotive mobility Karl Iagnemma said, “We get asked, ‘When are we going to see these cars?’ My answer is, essentially, ‘It depends where you live.’ If you’re in Vegas today, you see them all over the place. Other cities, it’s going to be a long, long time.” That’s the not-so-whispered secret of selfdriving. Most developers believe it will take decades to build a car that can drive anywhere it pleases likes humans do today – if it ever happens at all. “I think it’s possible,” said CEO and cofounder of Boston-based AV company Optimus Ride Ryan Chin, “but there’s no way to predict when that’s going to be.” In recent months, developers have made it clearer than ever that building an automated vehicle requires driving over a veritable mountain of problems. The technical challenges are numerous, and keep cropping up. How will the robots’ expensive, sometimessensitive sensors handle snow, rain, sand, and hail? What about construction zones and unrelenting sun glare? Can the vehicles be trained to prepare for hard-to-imagine road situations such as a truck that suddenly unloads its cargo or a roadster that makes an unusual (or irrational) maneuver on the road?
How will they communicate with humans, who have their own subtle road culture? Self-driving developers have responded by limiting where their cars go and when, restricting them to well-mapped, carefully selected terrain. It explains why even though some folks test in tricky areas like San Francisco and Pittsburgh, most of the publicfacing services stick to simple routes or calm areas with reliably good weather. May Mobility CEO Ed Olson called this kind of geofencing a “scalpel for carving away the tricky areas.” One of the deciding factors in where those geofences get built is regulation. Congress failed this year to pass any sort of national self-driving legislation, so it’s still up to local governments to make the rules. In some states, like Arizona and Florida, lawmakers have flung their doors open to self-driving companies, placing few limits on how testing works and what the companies must disclose. “Las Vegas and Nevada were some of the early supporters of autonomous vehicle testing and developers,” said Iagnemma. “They made it very clear what you had to do to get on the road” – legally defining and passing rules for licensing self-driving in 2011 –“and that was very important from a strategic perspective.” Conclusion These three types of vehicles – hybrid/ electric vehicles, vehicles with automatic braking and vehicles with collision avoidance – are growing in our market now. The selfdriving vehicles, however, may be several years away or only a few. Your New Year’s resolution should include becoming an active member of AIADA and NIADA. The Alabama Independent Automobile Dealers Association is the sixth largest independent dealers association in the nation. AIADA represents the used motor vehicle industry in Alabama and teams up with NIADA, which brings a force of more than 38,000 licensed used car dealers, to represent our dealers nationwide. Become a part of AIADA. We are comprised of the most successful and progressive independent dealers and associate members. We promote a general duty of integrity, honor and fair dealing toward the general public. We are passionate in learning the best ways to provide transportation to our customers today and tomorrow. We help our dealers and vendors build stronger communities for our customers and our families. We will help you become the dealer you always wanted be. It won’t be easy, but being the best never is!
The hard fact is the future of our dealerships and our communities lies in our hands. It’s our responsibility to work with Montgomery and Washington, DC to better understand our business needs. Who better to explain our business than us? The better our government understands our business and our needs, the
more of an ally they become to the growth of the independent automotive dealer. Nothing great comes by accident! It comes with organization and strategic planning to achieve our goals. At AIADA and NIADA, this is what we do! For over 50 years, AIADA has been serving the dealers of Alabama, keeping you up to date on all the changes in our marketplace and bringing you the newest technology, education and support. Call us today at (205) 942-1000. We will have you signed up in less than two minutes! You will be forever glad you did! Randy Jones is CEO/Executive Director of Alabama Independent Automobile Dealers Association.
WWW.ALABAMAIADA.ORG FEBRUARY/MARCH 2019 AIADA 7
MARKET WATCH
2019
IIHS TOP SAFETY PICKS MORE
MODELS
RANK
Nearly five dozen 2019 models meet stricter criteria to qualify for a 2019 Top Safety Pick award from the Insurance Institute for Highway Safety. The 30 first-tier “plus” award winners earn the highest rating for passenger-side protection in a small overlap front crash and have good-rated available headlights, while the 27 winners of the second-tier award qualify with an acceptable or higher rating in the newest IIHS crash test and the nighttime headlight evaluation. All 57 vehicles in this group earn good ratings in the institute’s five other crashworthiness evaluations and have an available automatic emergency braking system that rates advanced or superior for front crash prevention. IIHS now requires a good rating in the passenger-side small overlap front test to earn a Top Safety Pick versus the acceptable or good rating required for the 2018 award. This marks the sixth time IIHS has raised the bar to earn the Top Safety Pick+ award since introducing it in the 2013 model year to recognize vehicles that offer a superior level of safety. The Top Safety Pick award launched in
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FOR
SAFETY
the 2006 model year to help consumers identify vehicles with the highest ratings. Over the years, IIHS has added to and strengthened criteria for both awards to encourage manufacturers to speed up safety advances. “We challenged manufacturers to provide the best possible protection in a range of crash scenarios and equip vehicles with an automatic emergency braking system to avoid crashes, as well as offer headlights that give drivers confidence when traveling at night,” IIHS president David Harkey said. “Fifteen brands hit all the marks to give consumers shopping for a new car a wide variety of 2019 models to consider.” Models that earn Top Safety Pick+ or Top Safety Pick are the best vehicle choices for safety within size categories. Size and weight influence occupant protection in serious crashes. Larger, heavier vehicles generally afford more protection than smaller, lighter ones. Thus, a small car that’s a Top Safety Pick+ or Top Safety Pick doesn’t necessarily afford more protection than a bigger car that doesn’t earn the award. For the complete listing of vehicles, visit www.iihs.org/iihs.
ACCELERATE | By GWC Warranty
EDUCATING THE EDUCATED CUSTOMER
TEACH
THEM
SOMETHING
Today, more than ever before, customers are walking through your doors with a plan and a price in mind. It’s a dangerous situation that can cut into your margins if you aren’t prepared to teach them something they don’t already know. A recently released report from Jumpstart Automotive Media and Ipsos reported 86 percent of consumers show up to a dealership with a price in mind for the vehicle they want. This price, despite your best efforts, will likely be lower than sticker since the report showed that 81 percent of consumers don’t believe a dealer’s lowest price is available prior to negotiation. So how do you combat this type of consumer approach when you’re priced competitively and you can’t sacrifice any more off your margins? Certify Your Lot Certified Pre-Owned programs aren’t just for franchise dealers, but you can thank them for the cachet behind the name. Explaining to your customers your
THEY
DON’T
ALREADY
price includes short-term coverage from expensive repairs shows them you’re providing an assurance of a quality vehicle – something they can’t deny demands a higher-than-normal premium. Explain Reconditioning Continuing to build on the fact that higher quality vehicles demand a higher price, you can go into detail with your customer about the work you’ve done to get that vehicle ready for them. Showing you’ve inspected the vehicle for common problems with brakes or replaced tires and fixed cosmetic problems explains value that no third-party website can account for. Back-End Products If a customer is surprised by a monthly payment that includes vehicle service contract coverage, you can explain how the tools they used to come up with a monthly payment don’t include the price of a service contract. If a customer sitting across from you is sensitive enough about a monthly budget to do all these calculations ahead of
KNOW
time, they’ll also be sensitive to what a major repair could do to that same monthly budget. Educating customers on the cost of common repairs and how damaging that can be to a tight budget will help demonstrate just how valuable that relatively minor added monthly cost for a VSC can be.
WWW.ALABAMAIADA.ORG FEBRUARY/MARCH 2019 AIADA 9
WASHINGTON UPDATE | By Shaun Petersen
GOVERNMENT REPORT
LATEST GOVERNMENT ISSUES AND ACTIVITY NIADA is your voice in Washington D.C., advocating for independent dealers, the used vehicle industry and small business. Here’s a look at the latest news and NIADA efforts regarding legislative, regulatory, PAC and grass roots activities. LEGISLATIVE The 116th Congress is now in session, and with significant changes among the members – most notably, the Democrats now hold a 36-seat majority in the House of Representatives – committee assignments and leadership have changed considerably. Rep. Nancy Pelosi (D-Calif.) was again elected Speaker of the House, returning to the job she held 2007-11, when her party last held the majority. The 78-year-old agreed to limit her term as speaker to at most four years in order to gain support from a vocal group of opponents that included many of the young Democrats who won election in November. Pelosi’s longtime lieutenants, Rep. Steny Hoyer (D-Md.) and Rep. James Clyburn (D-S.C.), will serve as majority leader and majority whip. Rep. Kevin McCarthy (R-Calif.) remains in place as minority leader, as does Rep. Steve Scalise (R-La.) as minority whip. Committee leadership also switches to the new majority party. That includes new chairmen for the committees with jurisdiction over areas of interest to the auto sales industry. Those committees include: Transportation and Infrastructure: Chair, Peter DeFazio (D-Ore.); ranking Republican, Sam Graves (R-Mo.). Energy and Commerce: Chair, Frank Pallone (D-N.J.); ranking Republican, Greg Walden (R-Ore.). Financial Services: Chair, Maxine Waters (D-Calif.); ranking Republican, Patrick McHenry (R-N.C.). Ways and Means: Chair, Richard Neal (D-Mass.); ranking Republican, Kevin Brady (R-Texas). With the Republicans increasing their majority in the Senate to 53-47, overall leadership remained the same, with majority leader Mitch McConnell (R-Ky.) heading the chamber. The new majority whip is John Thune (R-N.D.), as Texas’ John Cornyn ran up against a term limit. Minority leader Chuck Schumer (D-N.Y.) and minority whip Dick Durbin (D-Ill.) lead the Democrats. Nevertheless, there were some changes on relevant committees, including Sen. Chuck Grassley (R-Iowa), replacing retired Orrin Hatch as chairman of the Finance Committee, with Ron Wyden (D-Ore.) as the ranking Democrat, and Roger Wicker (R-Miss.) replacing Thune as head of the Commerce Committee with Maria Cantwell (D-Wash.) as ranking Democrat. Other committees of interest include: Banking: Chair, Mike Crapo (R-Idaho); ranking Democrat, Sherrod Brown (D-Ohio). Environment and Public Works: Chair, John Barasso (R-Wyo.); ranking Democrat, Tom Carper (D-Del.).
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REGULATORY Department of Labor: NIADA submitted comments supporting the Department of Labor’s proposed rule to help small businesses strengthen retirement security. The proposed rule would make it easier for small businesses to offer retirement savings plans to their workers through an Association Retirement Plan – a mechanism that allows small businesses to band together to offer 401(k) plans to their employees. DOL proposed the new rule in response to an executive order signed by President Trump on Aug. 31 in a ceremony in Charlotte, N.C. that was attended by NIADA past presidents Chris Martin and Billy Threadgill, Region II vice president Michael Darrow and Carolinas IADA president Darryl Jackson. Under the proposed rule, Association Retirement Plans could be offered by associations of employers in a city, county, state or multi-state metropolitan area, or in a particular industry nationwide. Sole proprietors and their families would also be able to join. DOL said the rule would enable small businesses to offer benefit packages comparable to those offered by large employers by reducing administrative costs through economies of scale and increase their negotiating leverage with financial institutions and other service providers. CFPB’s name game: Kathy Kraninger’s first official act as the new director of the Bureau of Consumer Financial Protection was to change its name back to Consumer Financial Protection Bureau. Kraninger’s predecessor, acting director Mick Mulvaney, initiated the move to call the bureau by the name given it in the 2010 legislation that mandated its creation. Kraninger reversed that decision, noting that the bureau is well known by the CFPB acronym and changing that would only confuse matters. In addition, the name change would have cost an estimated $19 million.
GRASS ROOTS Michigan: Michigan IADA’s efforts pushing for legislation to require pre-licensing and continuing education for the state’s used vehicle dealers paid off when Gov. Rick Snyder signed Senate Bill 1023 into law Dec. 19. The bill, which passed by votes of 96-13 in the House and 36-1 in the Senate, makes Michigan the 20th state with an education requirement for licensed dealers. MIADA president Otto Hahne said the association will work with the Michigan secretary of state’s office to develop the curriculum and will seek to become a state-approved provider of the dealer training program for both pre-license and continuing education. Ohio: On Dec. 19, Gov. John Kasich signed legislation creating a committee to study the use of information from National Motor Vehicle Title Information System reports to brand vehicles as salvage – a brand that would prohibit them from being driven or sold legally in the state. That became an issue last year, when the Ohio Bureau of Motor Vehicles began to brand vehicles that have been driven on Ohio roads safely for years based only on a scrap, crush, sold, salvage or null or blank indication on a NMVTIS report. Ohio IADA filed a lawsuit to fight that policy, which would have left thousands of vehicles inoperable and valueless in the state. Meanwhile, a bill was introduced in the state legislature to form a study committee to look into the issue – and prohibit BMV from placing a salvage brand on a title based solely on information from a NMVTIS report until Jan. 1, 2021, to allow the committee to complete its study. The new law, which took effect Jan. 10, names OIADA as one of the organizations to be represented on the committee. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
F&I MATTERS | By Jeff DeMeis
YOUR BEST DEALS ARE BUILT ON A FIRM FOUNDATION FOUR
C’S
OF
CREDIT
This time of year always brings a great sense of excitement to independent auto dealers in the Buy Here-Pay Here world. Tax time is right around the corner. The overstocking of inventory is a precursor of the days ahead when lots will be full and sales will be plentiful. The great days are just ahead, right? Well, all of that is certainly true. Year in and year out, we see an overwhelming amount of activity between December and May. All those anxious customers are looking for great new (to them) vehicles with the ability to put down solid down payments. There is surely a buzz in the air. However, in times like these, it’s tempting to let good due diligence go by the wayside. Remember, attention to detail is the order of the day. It is easy to cut corners when the lot is full and you are writing one deal after another. I was reminded of the necessity of a firm foundation recently while reading an article about the 1906 San Francisco earthquake. Before the ‘quake, folks in San Francisco didn’t worry much about building codes. It took a devastating event that destroyed over 80 percent of the city to remind them a strong building starts with a strong foundation. How does that apply to our daily lives at the dealership? We can lay a firm foundation for deals with the four C’s of credit: character, capacity, collateral, and credit. And I will add one more I think is also important – communication. Character Just because a customer is on your lot does not make him a buyer, unless he has the cash in hand to pay in full. There are many factors to consider before making a potential buyer a Buy Here-Pay Here customer. Factors include job time and residence time. Are they local or did they come from far away? Did this customer drive past 100 other dealerships from several counties over just to shop with you? Why? Does the customer have an established bank account? Avoiding fraud has become paramount to
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establishing a good receivable. Make sure you are getting good documentation. Capacity Many of the potential buyers you will see during tax time have significant money for a reasonable down payment. That is a great start, but what happens when the payments start coming due? Does the customer have sufficient income to make steady payments toward paying off the loan? Remember, hope is not a strategy. Don’t shortchange yourself or the customer by overloading them on the hope of payments to come and a good down payment. Collateral We all know every customer wants the shiniest vehicle on the lot. It’s up to us to help customers understand their budget and needs. This is where we most often see corners cut. If the decision comes down to simply how much the customer has to put down, you are shortchanging both the buyer and yourself. Tax time brings extra money down but do not let that tempt you into overloading a buyer into too much vehicle. Remember structure first. Don’t allow the extra activity on the lot to tempt you to cut corners. Credit What does the potential buyer’s credit look like? Many of our customers are in the “subprime” credit level. The key here is to distinguish between potential buyers who have run into hard times and are building back up versus those who are simply looking to “rent” your car for a couple of months with their tax time down payment. This point is a great transition to the last “C.” Communication All of the other “C’s” are enhanced with great communication with the customer. Bring them in, sit them down, grab a cup of coffee and ask questions. This is most often completed while getting a good, complete
application. This is the place where you get good references. You can verify they are good by asking questions about them and making sure the answers to your questions are valid and not staged. Do you need to get a co-signer or a joint buyer on the deal to make it work long term? Talking to the customer will get you that answer as well. As crazy as it sounds, this is the one area that is generally tossed aside during tax time. We see all too often applications come across the desk that are what we used to call “5 liners.” They have the buyer’s name, social security number, address, collateral and deal structure. That is just enough information to say yes or no to the deal but makes for a tough job when it comes time to collect a skip or repossess your collateral. It’s so easy to get good information, but it takes an extra minute. Remember when your grandfather sternly told you “do it right the first time!” That lesson is of extra importance during the customer interview and application process. Tax season is always an exciting time for the independent dealer. It is the time we put on the largest percentage of business for the entire year. This year, think back upon all of the lessons of 2018 and vow to change one thing for the better. Maybe it’s learning from folks way back in 1906 and laying a better foundation for every deal you book this year. Remember the 5 C’s of credit and it can help you do just that. Jeff DeMeis is territory manager at CAR Financial Services Inc.
MANAGEMENT MATTERS | By Adam Tobias
RECONDITIONING USED CARS Audi 2.0 Premium
BEST
Audi 2.0 Premium
PRACTICES
To earn top dollar in the automotive industry, you have to offer top products. And when you deal with used cars, most of the inventory you stock will need some love before you can present it to a customer. Auto reconditioning is what transforms banged up trade-ins into cars that customers will love. The used car market is booming, which is pushing the price of used vehicles higher than ever. To compete with these rising prices and customer expectations, dealers need to invest in better reconditioning practices. Doing so will not only improve a dealer’s profits, but provide the long-term benefit of happy customers. WHAT IS AUTO RECONDITIONING? No used car, whether bought at auction or through a trade-in, will be immediately ready for retail. Investing a small amount of time and money to fix minor issues can significantly boost a vehicle’s retail value. This is the purpose of reconditioning. Reconditioning includes, but is not limited to: · Engine repairs. · Oil and filter changes. · Maintenance on the drivetrain and suspension. · Equipping new brake pads or tires. · Fixing dents, chipped paint, and cracked windows. · Buffing out scratches. Auto reconditioning attempts to restore a vehicle to its optimal condition so it can be sold at the maximum price the market will allow. THE BENEFITS OF AUTO RECONDITIONING Reconditioning ensures buyers leave the lot happy and return with a smile when it’s time to purchase another vehicle. The benefits of reconditioning far outweigh the cost in time and money when done correctly: · Higher retail prices. Reconditioned vehicles can be sold for a higher retail price. There is usually a several thousand dollar variance between vehicles in average condition and those in clean condition. In the image above, you will see how the same exact type of vehicle is appraised differently based on its condition. The condition of a vehicle can have a big impact on the market retail value. · Faster turn rates. Humans like things that look nice, and the market for fixer-uppers
is much smaller than for vehicles ready to drive off the lot. This is why reconditioned vehicles are more likely to find a buyer quickly. · Warranties and certifications. Reconditioning allows your dealership to issue certifications and warranties, which increase consumer trust and satisfaction.
Condition:
Condition:
Odometer: 41,000
Odometer: 41,000
Market Price: $13,650
Market Price: $15,180
THE COST OF RECONDITIONING Reconditioning is an investment, but it does not have unlimited returns. The money spent on reconditioning needs to be monitored and compared to the margin you make on each vehicle. It’s essential to accurately appraise a vehicle and factor in reconditioning costs before approving the work. A good ballpark for reconditioning costs is $1,000. If you designated the vehicle as a retail unit, anything higher than $1,000 should be subject to review: · Is the vehicle in high demand? · Does it have high mileage? · Can you sell it quickly enough? The goal for reconditioning is to restore a vehicle to its maximum retail price while spending the least amount possible. However, this should never come at the cost of quality. BEST PRACTICES FOR AUTO RECONDITIONING Cost and speed are the two major considerations when reconditioning vehicles to sell. Time is money, and every day your vehicle goes unlisted is money lost. Remember the saying: “20 percent of the effort is responsible for 80 percent of the result.” Here are some reconditioning best practices to make sure you put in the right 20 percent in every vehicle. · Optimize reconditioning costs. Dealers should constantly root out inefficiencies and excess costs in their reconditioning process. One way to reduce costs is by using quality, non-OEM parts. However, dealers should make sure this doesn’t disqualify them from any certification programs.
· Fast turnaround. Complete reconditioning should be within 3-4 days of acquiring the vehicle. More days in reconditioning means longer turn rates and less gross profit. The optimum period to sell the vehicle is 30 days. · Buy better vehicles. Sometimes the best way to reduce reconditioning costs is to buy vehicles that need less work. Look for vehicles virtually ready to roll off the lot to offset the cars that need extra work. · Have a reconditioning team. Don’t make your services team decide between reconditioning a vehicle and working on a customer order. Eliminate this conflict by having a dedicated reconditioning team. · Recondition for wholesale. Some dealers overlook reconditioning for wholesale, but this is a mistake. Dealers are human too, and everyone is more likely to buy a vehicle that is in good shape. Reconditioning a vehicle before auction could help you net a few hundred, even a few thousand, dollars more. INVESTING IN RECONDITIONING Can you afford the investment in reconditioning? The real question is, can you afford not to invest? Reconditioning used vehicles is an investment that can reap huge dividends for your dealership. When done right, reconditioning can add thousands of dollars to the final selling price, netting you higher profits and happy customers. The benefit is multiplied with every extra vehicle you sell thanks to faster inventory turn rates. Doing reconditioning the right way takes its own investment of time, education, and tools. Dealers who commit wholeheartedly to improving their reconditioning practices are setting themselves up for success for a long time. Adam Tobias is the co-founder and COO of Dealercue, which provides dealerships with real-time, intelligent, market-driven vehicle appraisal, pricing, inventory management, and sourcing solutions. He can be reached at adam@dealercue.com.
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SALES MATTERS |
By John Chapin
HAVE YOUR BEST SALE$ YEAR IN 2019 TWO
IMPORTANT
TIPS
Warning: if you’re looking for a shortcut or easy way to your best year, you probably won’t like this article. What I have to say is not what the majority of the population wants to hear. That said, it is what you need to hear if you want to have your best year in 2019. Here are two tips. Work Harder This is the tip most people won’t like. Here’s the thing about hard work: the harder you work by making more sales calls, the more your sales will increase. Want to increase sales by 20 percent? Simple – increase your sales calls by 20 percent. If everything stays the same – your contact rate, your closing ratio, the quality of prospects you’re calling on, your sales skills, etc. – and you simply call on more people, you will automatically increase sales by the percentage of increase in the number of calls you make. So whatever percentage increase it will take to have your best year, simply increase your calls by that number and you’re guaranteed the result. The most successful people on the planet, in any walk of life, are the hardest workers. No exceptions. The top athletes, top musicians, top actors and actresses and top ditch diggers all work harder than everyone else. Are there exceptions to the rule? Yes, and they are just that – the exceptions. Follow the rule, not the exception. The exception is the person who got rich winning the lottery. You don’t want to rely on those odds. Stop looking for the shortcut – the easy, carefree, painless way. In the long term, those are the longer ways. They are more expensive mentally, physically and financially, and ultimately the shortcuts are a waste of time. Follow the tried-and-true path and work hard. It is also a good idea to increase the effectiveness of your sales calls. If you get better at all aspects of selling – getting to
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FOR
SUCCESS
the decision maker, getting their attention, differentiating yourself, finding their pain, creating a solution, building rapport and long-term relationships, etc. – now an increase in sales calls will grow sales exponentially. Even if you only get better in one or two areas, your sales will increase at a higher rate than if you simply increase the number of calls. Be Disciplined The most important activities of a salesperson are prospecting, presenting and closing. The most important thing you do during the sales day is talk to people who can give you business. It takes lots of discipline to stick to these activities during prime calling hours. You’ve got to make hitting your numbers every day your number one priority. This means you’ve got to guard your time closely against your biggest enemy – distractions. Distractions come in many forms – phone calls from friends and family, text messages, email chimes, social media, chasing a fly around your office for five minutes, paperwork you should be doing off-hours, and other urgent/unimportant tasks that steal your attention during the day. While most of these distractions simply pop up, many of us are also guilty of intentionally placing distractions smack in the middle of our day. Don’t do that. Don’t schedule doctor appointments, dentist appointments, appointments with your financial planner or CPA, or anything else at these times. Obviously there are times when you can’t avoid that, but you want to stick to this rule as much as possible. Also, again, don’t do paperwork and other non-time sensitive activities during prime calling time. You also want to look for other time wasters. I had one insurance agent who was going to every Chamber of Commerce, BNI, and networking event for years, all while getting very little business. When we got her to go out and knock on 50 new prospect doors a week
and follow up with phone calls, her efforts over the next 12 months produced more than 40 times the results she got from attending all those events. It’s simple – she was no longer hoping the same people she saw every week for three years, who were at the networking events primarily to “get” as opposed to “give” business, would have a new lead for her. She was now proactive with in-person visits and phone calls to prospects. Was it harder to knock on the doors and ring the phones and face rejection from strangers? Yes. And as your parents told you growing up, the most difficult thing to do is usually the right thing to do. In-person visits and phone calls are also still the fastest ways I know to grow a business quickly. That said, if you still want to go to the networking events you can, but only after you’ve gotten all the prospects you need from phone calls and visits. In addition to the above, put up two signs – one in your office and one in your car – that say, “Am I working on my most important sales activities right now?” If it’s 5 a.m. and the answer is “no,” that’s fine. If it’s 11 a.m. on a Wednesday, and most of your prospects are on a standard work schedule, that’s an issue. Finally, part of being more disciplined is also delegating activities and finding faster, better, more effective ways to do current tasks. This will free up more time for more sales activities. Ultimately there is only one question you must answer to determine whether you’ll have your best year in 2019: Are you willing to put in the time, effort and energy, and endure the pain, to do the things that must be done, when they must be done, to make it happen? Yes? Great! Then get out of your own way and go make 2019 your best year ever! John Chapin is a sales and motivational speaker and trainer. He has over 31 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www. completeselling.com or email johnchapin@ completeselling.com.
INDUSTRY NEWS
NATIONAL INVENTORS HALL OF FAME MUSEUM EXHIBIT HITS THE ROAD
CUSTOM
SPLIT-MODEL
A custom-built, split-model Ford Mustang journeyed through 13 states to reach its final destination – the Consumer Electronics Show. The National Inventors Hall of Fame (NIHF) and Ford Motor Co. unveiled the oneof-a-kind 1965 and 2015 Ford Mustang splitmodel car in 2016 as part of the Intellectual Property Power exhibition at the NIHF Museum. The split-model car hit the road this year with a stop at CES in Las Vegas in January. The vehicle was on loan to the United States Patent and Trademark Office. The interactive exhibit showcased the differences in features between the two models, how the design has evolved to fit changing consumer tastes and technologies,
FORD
MUSTANG
and how intellectual property affects the design of an automobile. “Our split-model Ford Mustang is taking a road trip to CES,” NIHF CEO Michael J. Oister said. “As one of our most popular exhibits in the NIHF Museum at the USPTO, we are excited to have it displayed at the largest and most influential marketplace of technological innovation.” The split-model car was the brainchild of NIHF, USPTO and Ford, demonstrating 50 years of automotive design and technology protected by patents and trademarks. The 2015 Mustang has 36 patents unique to its production year. The 1965 model used more than 100 of Ford’s existing patents in addition to production year-specific patents.
The Ford Mustang has been in production continuously for more than 50 years and has become an icon of the American muscle car. The split-model car’s journey can be followed on the NIHF social media accounts using #FordMustang. For more information regarding NIHF Museum exhibits visit invent.org/museum. The National Inventors Hall of Fame is the premier nonprofit organization in America dedicated to recognizing inventors and invention, promoting creativity, and advancing the spirit of innovation and entrepreneurship. The National Inventors Hall of Fame Museum is a Smithsonian Affiliate. For more information, visit www. invent.org.
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