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SALES MATTERS | BY JOHN CHAPIN

THE MOST IMPORTANT SALES CONVERSATION Self Talk There is a much overlooked aspect of sales success that is rarely talked about and people pay little attention to. It is self-talk.

The most important conversation is the one you have with yourself. The reason that conversation is so important is because the words and language you use both reveal and reinforce your beliefs about yourself and the world. Those beliefs dictate the action you take, or don’t take, and ultimately determine success or failure.

If you have a problem selling, you more than likely have a self-talk problem. The difference between top salespeople and everyone else is the top people became aware of their negative self-talk and beliefs and reprogrammed their language and beliefs to positive ones, or they were one of the lucky few who received positive programming right from the get go.

The latter is the exception. Most of us received negative programming growing up.

Either way, if you want to become a champion, you need to ensure your self-talk is positive, upbeat, and supports you.

HOW TO IDENTIFY AND SOLVE POSSIBLE SELF-TALK ISSUES Step 1: Awareness.

Like everything else in life, awareness is step one. You can’t fix a problem you don’t know you have.

If you are overweight, but don’t think you are, the problem won’t get fixed. If your finances are wrong, but you don’t know there’s a problem, you won’t get them right. If you have a self-talk problem, you need to be aware of it before you can change it.

The first thing you want to do is monitor your self-talk. What do you catch yourself saying about yourself and the world around you? Are most of your conversations negative or positive?

Do you find yourself saying negative things about the economy, your particular market, your industry, or your product?

How about your self-talk about you? Do you believe you aren’t smart enough, young enough or old enough? You don’t have enough energy or have too much energy? Do you believe bad things always happen to you, or the odds are always stacked against you? Your beliefs will be your reality.

Step 2: Getting your self-talk right.

If you realize you have a self-talk problem, here are some ways to work on it.

Positive Affirmations Many people are familiar with affirmations and have either tried them in the past or use

them currently. In a nutshell, positive affirmations are a series of positive statements that reinforce a belief you want to have about yourself.

For example, if you want to have more self-confidence, you might use affirmations such as: “I am confident,” “I believe in myself,” “I feel my confidence increasing every day,” and other similar statements.

Positive “Afformations” Noah St. John coined the phrase “afformations” in his book by the same name. Afformations are similar to affirmations but they are in the form of questions versus statements.

In the case of afformations, if you wanted to have more self-confidence, you would use questions such as: “Why am I so confident?”, “Why is it so easy for me to believe in myself and do the things I need to do?”, and “Why do I have so much talent and ability?”

The theory is that while your brain may be able to argue with a statement, as in affirmation, it searches for an answer to a question. You can check out Noah’s book for a list of afformations for most areas of life people struggle with.

Note: There are four ways to work with affirmations and afformations: listening to a recording of them, reading them, writing them, or saying them to yourself, either out loud or silently. Ideally if you are vocalizing them, you want to say them with as much feeling and emotion as possible. It’s best to work with affirmations and afformations first thing in the morning, right before going to bed, and then, if possible, during the day.

Psycho-Cybernetics The most popular psycho-cybernetic technique to shift self-talk is to cancel out negative statements. You do this by saying the word “cancel” after you catch yourself saying something negative and then following the word “cancel” with a positive statement.

For example, if you catch yourself saying, “Why do things always go wrong for me?” you’d say “cancel” – out loud if possible – and follow with either an affirmation – such as, “Things always go right for me” – or an afformation, such as, “Why do things always go right for me?”

Clean up your environment.

Specifically eliminate negatives and negative people from your environment.

Where you end up five, 10, or 15 years from now will come down to what you put in your brain and who you hang out with.

You cannot watch the evening news and be positive. You also cannot hang out with negative people and have positive self-talk for any length of time.

Finally, keep in mind everyone has some

LIKE EVERY THING ELSE IN LIFE, A WA R E N E S S I S S T E P O N E . Y O U CAN’T FIX A PROBLEM YOU DON’T K N O W Y O U H AV E .

negative self-talk occasionally. In fact, the majority of champions have had self-talk problems caused by major self-esteem and self-confidence issues. Many were plagued by insecurities constantly reinforced with negative self-talk.

The key is that they recognized it and did something about it, and that’s the key for you too. Become aware of these thoughts, catch yourself in the act, and shift the conversation.

Reinforce the positive until it becomes your new habit. This does not happen overnight and takes work, but if you commit yourself to positive words and language, you should see a fairly substantial and positive shift in about 30 days.

By the way, another great book related to self-talk is What to Say When you Talk to Yourself by Shad Helmstetter.

John Chapin is a sales and motivational speaker and trainer. He has over 27 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.

www.alabamaiada.org April/May 2018

AIADA

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ASSOCIATION NEWS

p 06.................................AIADA Convention: Save the Date 08.... How to Contend (And Win) Against Big Competition 09.............................................. Where is the CFPB Going?

10............................................ NIADA Government Report 14.... Why it’s Time Your Store Invested in a CRM System 16........................ NEW 2018 AIADA Auction Coupon App 18..................... Does Your RFC Pass the IRS Validity Test?

WHAT’S NEW

CONVENTION ROOM BLOCK FILLING FAST RESERVE YOUR ROOM NOW

The NIADA room block at Rosen Shingle Creek is quickly filling up. Make sure you secure your spot at the special NIADA rate. Also, a preliminary agenda for the 2018 NIADA/NABD Convention and Expo is now online!

Review the agenda and reserve your room today at www.niadaconvention.com.

ADVERTISERS INDEX

Ace Motor Acceptance..................................................... 7 AmTrust Financial...........................................................IBC ARA GPS........................................................................... 4 Automotive Finance Corporation................................... IFC AutoZone........................................................................... 9 DAA Dealers Auto Auction Group, LLC............................. 5 Manheim......................................................................... 11 NextGear Capital............................................................. 12 VAuto.................................................................Back Cover

OFFICE

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 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 © 2018 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

Christopher Hanley • chris@niada.com PRINTING

Nieman Printing

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NEW MEMBERS Welcome Raj Khanijow Autoluxe Motorcars LLC Huntsville

Luis and Denise Nieves Favor Auto Sales Dothan

William T. Plain Nice Clean Cars Centerpoint

Leah Gardener Cig Financial LLC Mobile

Kenny Milligan GM Sales LLC Albertville

Mahnaz Jahanbakhsh Northside Auto Imports LLC Birmingham

Gerald Rice County Road 12 Garage Inc. Fayette

Wesley Wilkerson H & R Motors Rainbow City

Sandy Pool RSP Enterprises Alabaster

Paul Mulready Integrity Warranty LLC Ooltewah, TN

Rodney Robinson Rodney’s Auto Sales Jacksonville

John Hughes Mt. Cheaha Auto Sales LLC Heflin

Jonathon Gibbs S.E.C. Motors Athens

Frank Spangler Decatur Auto Remarketing Decatur Ali Cassum Dixie Motors Northport

ASSOCIATION NEWS

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BOARD OF DIRECTORS President Todd Oden Birmingham Dpip.ptp@aol.com

Chairman of Board Pokey Brimer Oxford pbrimer6@gmail.com

President Elect Chad Tillery Jemison cktillery@hotmail.com

Executive Director Randy Jones

Vice President Robert Case Hartselle robertsautosales1@ live.com Secretary/Treasurer Roderick Underwood Bessemer roderickunderwood@ hotmail.com

DIRECTORS Barry Searcy Muscle Shoals John Dunn Sylacauga Lance Turner Anniston Willie Colvin Tuscaloosa

Bryan Cooper Huntsville

Randy Little Satsuma

Tim Duke Birmingham

Erek Yarbrough Pleasant Grove

Jay Saul Jasper

Chris Mundy Columbiana

Randy Crump Jasper

Chris Mullinax Hoover

Kelly Steely Hoover

Ricky Young Boaz

Jerry Giles Tuscaloosa

Patrick Graves Moody

Roderick Underwood Bessemer

ASSOCIATION NEWS |

SAVE THE DATE

AIADA Convention July 20-21

Pensacola Beach, look out. Here we come!

SAVE THIS DATE: July 20-21, 2018, for AIADA’s 49th Annual Convention & Expo.

RACING TO THE FINISH LINE “You will learn things about yourself and your dealership you never thought possible!”

This year we will be at the beautiful Hilton Pensacola Beach Gulf Front Motel in Pensacola Beach, Florida.

We are excited to bring you some of the most respected teachers and trainers in the automotive industry.

Learn from the best!

Here are just some of the things you can take home this year: • Learn about changes in the laws and rules that affect our dealers.

• Learn the secrets from the auction on how to get the correct inventory for your dealership, at the best price.

• Meet new lenders, prime and subprime, and find the right one for you. Find the “perfect match” and get to know them in person!

• Where are today’s buyers? Learn the newest and most effective ways to use multimedia to bring customers to you!

Bring your family for a quick three-day vacation on the Gulf Coast and go home refreshed with the knowledge to make your dealership the best it can be!

There has never been a better time to attend our annual convention.

You want to be able to take full advantage of the expected growth in the used car industry. We will give you the tools to start your race to the finish line.

Start your engine and call us today at (205) 942-1000.

ASSOCIATION NEWS | BY GINA ODEN

DMV NEWS |

GREETINGS FROM THE LADIES AUXILIARY! Ladies Auxiliary Update

NEW TITLE SYSTEM Alabama Title System

We have some very exciting things planned for 2018.

In 2017, with help from Shoals and ADESA auto auctions, we raised over $21,000 for the Make-A-Wish Foundation. In April, America’s Auto Auction (formerly ABC) will be hosting a live auction to raise money for Make-A-Wish, followed by Dealers Auto Auction later this summer.

The ladies auxilliary was very honored to help various families in need through Ronald McDonald House Birmingham and Ronald McDonald House Mobile. We hope to increase our list of charities throughout this year.

We want to thank everyone who enrolled in the ladies auxiliary scholarship program.

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• Need some new ideas? You will be able to talk with some of the most successful dealers in the industry on better ways to grow your business.

• Need to learn about the newest products in the automotive industry and learn how they will make your business grow? See this in person, ask questions and learn. Get a step ahead of your competition.

Go home with the knowledge to make you the best of the best!

In addition, this is a family event!

AIADA

April/May 2018

to Replace ETAPS

We give a $1,000 cash scholarship to a deserving senior entering their freshman year of college. The applicant must be a child or grandchild of an auto dealer who is a member of AIADA. We will post the winners in our next AIADA magazine.

Lastly, I would like to give a special thank you to the ladies auxiliary board members for all their hard work, support and dedication. If you are not a member we encourage you to join in and be a part of our organization!

Thank you!

www.alabamaiada.org

The Alabama Department of Revenue Motor Vehicle Division is moving forward with the implementation of its new title system known as ALTS (Alabama Title System).

It will eventually replace the current ETAPS system.

The department developed ALTS because ETAPS was built on an older operating system that may be difficult or impossible to support in the future. While a date has not been determined to shut down ETAPS, it will be in the near future.

Dealers are encouraged to begin converting to ALTS. All county licensing offices are using the ALTS system, and many dealers have also converted. Note: Dealers may continue to use ETAPS after they migrate to ALTS until ETAPS is shut down.

The department has worked with all title system integration vendors to ensure dealer systems can communicate with the new title system. Dealers are encouraged to contact their vendors if they have any questions regarding their title service.

For information on how to migrate to ALTS, please go to www. mvtrip.alabama.gov and click on the “Title” banner. This will open links to the ALTS Migration Manual and ALTS Webinar icons. ALTS training videos are also available at the bottom of the MVTRIP homepage.

If you have questions or concerns, please contact the department at (334) 242-9000 or www.support. revenue.alabama.gov.

MANAGEMENT MATTERS | BY DALE POLLAK

THE USED VEHICLE DONUT HOLE Three Ways to Work Around and Through

I’ve been struck by three trends in the current used vehicle market.

First, late-model – three years and younger – vehicles account for almost 60 percent of retail sales, a fact affirmed in the latest Used Car Market Report from Edmunds. You can trace this development to the rise of offlease supply, which many analysts expect to continue, albeit at a slower clip than recent years.

Second, the prevalence of late-model inventory is a bit tricky. Lower-mileage, nearnew used vehicles are facing competition with heavily incentivized new vehicles. As a result, the near-new vehicles aren’t selling nearly as fast as similarly aged units with higher miles.

The Edmunds report affirms this trend.

It said, “High levels of lease returns coupled with increasingly stringent mileage limits will feed an expanding pool of low-mileage used vehicle inventories that have proven to have a limited buying audience.”

Third, there’s strong demand and interest for older, higher-mileage vehicles, but they aren’t nearly as plentiful as the later model

ACCELERATE | BY GWC WARRANTY

HOW TO CONTEND -AND WINAGAINST BIG COMPETITION Level the Playing Field Being an independent dealer in a world of new big box stores, online retailers and nearby competitors can feel like being the small fish in an ocean of competition. You can level the playing field, though, with nothing more than an open mind and a willingness to adapt.

Keep It Simple And by this, we mean keep it simple for your customers.

Is it easy for them to get to your website?

Is your inventory laid out in a way that’s intuitive for customers to browse? Can they contact you with just one click and limited information?

Today’s customer wants the information they need exactly when they desire it. Your website is the most important piece in making sure they get information quickly and easily.

Merchandising As an independent dealer, you don’t have

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year inventory. The consumer demand for these vehicles isn’t surprising. There’s always strong demand for cheap, reliable transportation. Indeed, Edmunds noted these vehicles are turning faster than most other used vehicle inventory.

In many ways, these trends force dealers to work around and through what might be described as a “donut hole” in today’s market.

Here are three recommendations to help dealers address these market conditions: Re-assess your inventory strategy.

The best Velocity dealers have been evaluating whether their inventory allocations for vehicle types and cost segments are truly correct and sufficiently precise for the current market. In some cases, dealers realize they’ve effectively given up on lower-cost vehicles and their buyers as they’ve placed a greater priority on higher-cost, late-model inventory. Inevitably, as dealers examine their allocations they find corrective opportunities to right-size segments they’ve overlooked, overstocked and understocked.

Examine your inventory age/days to sale by segment.

This analysis can affirm and illuminate inventory strategy assessment takeaways.

Which vehicle segments are moving faster or slower than they used to and why? How do the Market Days Supply and Price to Market metrics compare to those of your fastest sellers?

Dealers who conduct this analysis often find one of two factors, and sometimes both,

account for slower-movers – either the vehicle itself or its merchandising/pricing isn’t “right” for the market. Both suggest an opportunity for process changes. Dealers who apply these lessons learned are more likely to achieve the goal of retailing at least 55 percent of inventory in less than 30 days.

Address Cost to Market creep.

I have written before about the rise of inventory-level Cost to Market metrics climbing close to 90 percent, leaving only a maximum 10 percent spread for front-end gross profit. Dealers often know they should strive to maintain an inventory level Cost to Market ratio of 85 percent, but the creep occurs nonetheless.

It’s true the prevalence of near-new inventory contributes to the Cost to Market increase. But it’s also true these vehicles are the easy pickings and perhaps reflect a lack of desire, discipline or interest in finding vehicles with more favorable Cost to Market ratios. I also recommend dealers revisit their reconditioning costs, particularly those associated with outside vendors, to find additional savings to help reduce Cost to Market ratios.

The good news is that most forecasts call for a relatively robust used vehicle market in the months ahead – a suitable environment to make inventory management adjustments that help you work more effectively around and through the donut hole.

Dale Pollak is the founder of vAuto and an executive with Cox Automotive.

This column originally ran on his blog. For this story and all his posts, visit www.dalepollak.com.

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the luxury of manufacturer certified preowned programs. But that shouldn’t stop you from merchandising your inventory the same way. This goes for both on the lot and online.

Having a certified pre-owned program in place helps you make the same promises as bigger stores while giving your customers the confidence that comes with the perception of a certified vehicle.

Communication Flexibility Not every customer will want to send messages through web form. And not every customer will want a phone call. Some will want to send you a Facebook message, others might want to tweet at you and some might want a text message.

Being able to communicate with your

customers in their desired format lets you reach more potential leads. But it’s dependent on your commitment to learning how to communicate in all these different formats.

Unique Experience The advantage an independent dealer will always have over bigger competition is a truly unique experience customers can’t get anywhere else. When done correctly, independent dealers can offer a more intimate, lower-pressure experience than big box stores to go along with a friendly local feel that only an independent dealer can provide. Once you’ve used tools and merchandising to attract the same business as bigger competition, use your friendly, comfortable environment to bring it all home.

REGULATORY MATTERS | BY JEFF INGRAM

WHERE IS THE CFPB GOING? Update on CFPB Changes Almost from its inception, the Consumer Financial Protection Bureau has been a constant concern for motor vehicle dealers.

It has aggressively pursued policies designed to change the way dealers operate. It has done this in ways that, at times, have seemed contrary to existing law and even the interests of the consumers it was ostensibly trying to protect.

For those who believed the CFPB was acting in an unrestrained way not in accordance with the law, some hope appeared in October 2016. At that time, a three judge panel of the U.S. Court of Appeals for the D.C. Circuit declared the structure of the CFPB was unconstitutional. The flaw, according to the court, was that the director of the CFPB could not be removed by and was largely unaccountable to the President.

That decision had the potential to dramatically reshape the CFPB. The CFPB then asked all the judges of that circuit court to hear and decide the case. The Justice Department, then under the control of President Trump, filed a brief changing the federal government’s position and argued the director of the CFPB should be subject to removal by the President. All involved parties have been awaiting the court’s decision.

The full D.C. Circuit has now released a decision. The court reversed the panel’s decision and held the structure of the CFPB was not unconstitutional. It seems unlikely this decision will be appealed.

Are we therefore stuck with an unaccountable agency that is aggressively over-regulating businesses under its authority? Due to another development, not exactly.

In November, Richard Cordray resigned as director of the CFPB. As director, he had exercised basically exclusive authority to structure and direct the CFPB. Good or bad, it acted as he directed.

As one of his last acts, Cordray appointed Leandra English as deputy director. He did so to position her to serve as acting director upon his resignation. Almost immediately, President Trump appointed Mick Mulvaney, who was director of the Office of Management and Budget, to be acting director pending the appointment and confirmation of a new director.

What resulted was a fight between English and Mulvaney as to who would control the CFPB. As you might expect, the fight between English and Mulvaney quickly ended up in court with, to date, Mulvaney prevailing, allowing him to control the CFPB. With the change in control, it has quickly become apparent the CFPB will act far differently under Mulvaney than it did under

Cordray. The CFPB, under Mulvaney, has issued several requests for information. This allows outside people to submit comments to the CFPB on various issues.

These requests for information seek comments on how the CFPB is exercising its supervisory authority, its enforcement practice, civil investigative demands (similar to subpoenas) and administrative adjudications.

These requests seem to be clear indications Mulvaney plans to change, in formal ways, how the CFPB conducts business.

The CFPB has dropped a new regulation aimed at payday lenders. Payday lenders had been a favorite target of the CFPB. The CFPB has also dropped a suit it was pursuing regarding alleged unfair loan practices. These things, among others, demonstrate a far different direction for the CFPB. So, everything is good now, right? Well, maybe for now.

The important thing to keep in mind is that these changes can be undone by a new director with a different political outlook. Whoever is eventually appointed by President Trump is unlikely to reverse this course. What happens when a different President appoints a new director is anyone’s guess. So long as the director remains unaccountable while in office, how the CFPB acts is likely to change with the political winds. So don’t get too comfortable with the idea the CFPB is no longer a threat to your business.

www.alabamaiada.org April/May 2018

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WASHINGTON UPDATE | BY SHAUN PETERSEN

NIADA GOVERNMENT UPDATE

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.

REGULATORY Department of Labor: DOL has proposed a new rule that would permit small businesses and selfemployed individuals to join together in an association health plan.

The proposed rule, issued in response to an executive order by President Trump, would allow those associations to purchase cheaper health insurance that’s not subject to some of the current limitations in federal law.

The rule would expand the types of groups that can form an AHP and allow for membership across state lines. It would also allow self-employed individuals to take part in a large-group AHP. The proposed rule has the support of many in Congress, including Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Health Committee.

“If made final, this rule should help up to 11 million hard-working Americans who don’t have access to employersponsored coverage,” he said, “and in addition, provide new, more affordable options to Americans in the individual market who are getting hammered by skyrocketing premiums.”

NIADA submitted comments supporting the proposal with some changes designed to provide small businesses greater access to less expensive health care.

CFPB: The retooling of the Consumer Financial Protection Bureau continues under acting director Mick Mulvaney.

The CFPB has now issued seven requests

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for information, seeking public comment on enforcement, supervision, external engagements, reporting on consumer complaints and rulemaking in addition to the original two – civil investigative demands and administrative adjudication.

The requests are aimed at assessing those processes and identifying changes that need to be made.

The bureau also announced it has formulated a five-year strategic plan that includes three primary goals: • Ensure all consumers have access to markets for consumer financial products and services.

• Implement and enforce the law consistently to make sure markets for consumer financial products and services are fair, transparent and competitive.

• Foster operational excellence through efficient and effective processes, governance and security of resources and information.

Mulvaney said the CFPB will focus on equally protecting the legal rights of all – including the businesses regulated by the bureau – and will use its rulemaking authority rather than “regulation by enforcement.”

“We have committed to fulfill the bureau’s statutory responsibilities, but go no further,” Mulvaney said, adding that doing so will help guard against “the misuse of our unparalleled powers.”

www.alabamaiada.org

GRASS ROOTS RAGA meeting: Republican state attorneys general from across the country gathered in Washington, D.C. in February for meetings of the Republican Attorneys General Association.

NIADA had a front row seat as a panel of AGs from Utah, South Carolina, Nebraska and Arizona discussed their office’s role in consumer protection – particularly in light of the recent changes at the CFPB. They engaged a representative of the White House to discuss how the President’s regulatory reform initiatives are impacting the states in the private and public sectors.

Republican candidates for attorney general from several states were also present, giving NIADA the opportunity to discuss the virtues of our industry and the good independent dealers do in their communities.

Of course, the campaigning was not limited to potential future AGs. Many of the current AGs attending the meeting are running for higher offices, including governor and the U.S. Senate.

The relationship NIADA has developed with them as attorneys general can certainly benefit the industry as they move on to new positions.

Colorado: Over the past several legislative sessions, the Colorado IADA has been working with the state legislature and Gov. John Hickenlooper to strengthen and revamp

laws aimed at preventing curbstoning, including increasing penalties and permitting additional law enforcement authorities to enforce the statute.

This session, CIADA won the unanimous support of the legislature for an amendment allowing the DMV to share penalty revenues with the agency that initiates the enforcement proceedings.

The governor is expected to sign that bill.

LEGISLATIVE CFPB funding: The President’s proposed budget for fiscal year 2019 calls for reduced funding for the CFPB over the next two years as the administration seeks to restrict the bureau’s enforcement authority to prevent burdening the financial industry and consumer choice.

The budget would cap agency’s budget at $485 million for FY 2019 and $610 million for 2020. For comparison, the CFPB’s FY 2018 budget request under Obama-appointed director Richard Cordray was $630.4 million.

The White House said the two-year “restructuring period” will create an “efficient transition” as the CFPB imposes “financial discipline” and reduces “wasteful spending.”

The administration is hoping the bureau undergoes legislative overhaul that would bring its budget under Congressional oversight.

Currently, the CFPB is funded from the Federal Reserve.

Interim CFPB director Mick Mulvaney requested a $0 budget for the first quarter of 2018, saying the CFPB will draw from

reserves.

Recall issues: The Trump Administration released its plan for a massive infrastructure bill Feb. 12, and Congress is expected to take up the issue soon.

The infrastructure bill is likely to be the platform for Sen. Richard Blumenthal to try once again to introduce an amendment that would prohibit the sale or lease of a motor vehicle subject to a recall until the recall defect has been remedied.

The Connecticut Democrat has attempted unsuccessfully to attach the so-called Blumenthal Amendment to a number of bills over the past three years. NIADA has worked with Congressional leaders to help block the amendment in the past and will continue to monitor any action on the recall issue.

Shaun Petersen is NIADA’s senior vice president of legal and government affairs.

MARKET WATCH |

KELLEY BLUE BOOK BEST RESALE VALUE AWARD 2018 Winners Announced Kelley Blue Book recently announced the 2018 model-year brand and category winners of the annual Best Resale Value Awards, which recognizes vehicles for their projected retained value through the initial five-year ownership period.

“Once again, Toyota and Porsche earn top honors in the brand and luxury brand categories, respectively, with the highest average projected resale value among their full model lineups,” said Kelley Blue Book director of residual values Eric Ibara.

“The top 10 vehicle winners are predominantly trucks, reflecting the high demand that exists for these models. Despite the higher incentives available on trucks today, used car buyers are willing to pay more for trucks, relative to the initial MSRP, than they are for sedans.

Without the prospect of higher gas prices, this trend doesn’t appear to be slowing.”

This is the third Best Resale Value: Brand win for Toyota, which previously won in 2014 and 2017. This year marks Porsche’s second consecutive Best Resale Value: Luxury Brand win.

2018 BEST RESALE VALUE: Luxury Brand Porsche

2018 BEST RESALE VALUE: By Vehicle Category

Subcompact Car: Honda Fit Compact Car: Subaru Impreza Sporty Compact Car: Subaru WRX Mid-Size Car: Honda Accord Full-Size Car: Toyota Avalon Entry-Level Luxury Car: Lexus RC Luxury Car: Lexus GS High-End Luxury Car: Porsche Panamera Sports Car: Porsche 718 Cayman High Performance Car: Porsche 911 Hybrid/Alternative Energy Car: Toyota Avalon Hybrid Electric Vehicle: Chevrolet Bolt EV Subcompact SUV/Crossover: Honda HR-V Compact SUV/Crossover: Jeep Wrangler Mid-Size SUV/Crossover: Jeep Wrangler Unlimited Full-Size SUV/Crossover: Chevrolet Tahoe Luxury Compact SUV/Crossover: Porsche Macan Luxury Mid-Size SUV/Crossover: Lexus RX Luxury Full-Size SUV/Crossover: Lexus LX Mid-Size Pickup Truck: Toyota Tacoma Full-Size Pickup Truck: Chevrolet Silverado HD Minivan: Honda Odyssey

2018 BEST RESALE VALUE: Top 10 Cars Chevrolet Colorado Chevrolet Silverado Ford F-Series GMC Sierra Honda Ridgeline Jeep Wrangler Subaru WRX Toyota 4Runner Toyota Tacoma Toyota Tundra

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2018 BEST RESALE VALUE: Brand

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Note: Residual values used for award calculations are based on the 2018 model-year vehicles that appear in the January/February 2018 Kelley Blue Book® Residual Value Guide.

Top 10 models appear in alphabetical order. The 2018 Jeep Wrangler and Wrangler Unlimited honored in this year’s Best Resale Value Awards is the JK model.

Depreciation often is the greatest expense incurred by drivers during the first five years of vehicle ownership. An average 2018 model-year vehicle will only retain about 35.1 percent of its original value after a five-year ownership period.

Vehicles with average or below-average resale values are generally plentiful in the marketplace. However, certain vehicles are projected to hold their value better than others.

While much of a vehicle’s resale value is based on supply and demand, as well as current and projected future market conditions, vehicles that retain their value best are typically discounted the least and tend to generate high levels of consumer interest.

By comparison, all vehicles in Kelley Blue Book’s Top 10 for Best Resale Value are projected to retain more than 46 percent of their MSRP after five years.

Kelley Blue Book’s Best Resale Value Awards are in their 16th year and are based on projections from the Kelley Blue Book Official Residual Value Guide. These values are established by experienced automotive analysts that review the output from statistical models built upon millions of transactions. Vehicles that earn the highest five-year residual values, expressed as a percentage of their original Manufacturer’s Suggested Retail Price, are selected for these prestigious awards. Low-volume vehicles are excluded from award consideration, except in the electric, luxury, sports car and high-performance categories.

For more information about Kelley Blue Book’s Best Resale Value Awards, please visit www.kbb.com/new-cars/best-resale-value-awards/.

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BEST PRACTICES | BY AIADA STAFF

RECALLS

Repair, Report and Register When it comes to recalls, the safest practice is to have all safety recalls completed before selling.

Inventory: If possible, get all recalls completed before selling the vehicle. Go to https://vinrcl.safercar.gov/vin/ and enter the vehicle VIN number for a list of recalls.

Selling vehicle: Go back to https://vinrcl safercar.gov/vin/ and get a new recall history report to be sure nothing new has been added. Have your customer sign and date the report and keep a copy in the deal file.

The safest practice is to make sure all safety recalls are complete!

If not all can be completed and you decide to sell the vehicle, you should disclose the existence of the recall and give the customer the closest franchise dealership’s name, address and phone number. You should check with your attorney for a recall disclosure form.

Make sure you completely disclose the safety recall factor in writing, completely inform the customer and provide a signed copy of the notice prior to the finalization of the sale.

• If a recall is pending, register the new buyer with the Original Equipment Manufacturer through the closest

dealership.

• Give the customer a copy of the recall information. Keep all of these records in your deal folder.

• The new FTC Buyers Guide form tells the customer to ask for a vehicle history report and open recalls.

• Read the back page of the FTC Buyers Guide. Fill the form out completely and have the customer sign.

Vehicle history reports: Use Autocheck, CarFax or go to www.vehiclehistory. gov/nmvtis_vehiclehistory.html to check for NMVTIS approved data providers.

About AIADA The Alabama Independent Automobile Dealers Association is the sixth largest independent dealer 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. AIADA represents the voice and interests of used car dealers in Montgomery, plus at the federal level in Washington D.C. Coupled with NIADA and other state associations across the country, AIADA forms a grassroots framework that provides a dual layer of advocacy unmatched in the used motor vehicle industry.

For over 48 years, AIADA has engineered programs and leveraged technology to fulfill its mission to advance, educate and promote the independent used car dealer.

AIADA members subscribe to a strict code of ethics of duty, honor and integrity, and believe in the advancement of small business in support of the free market system. Join AIADA today to become a part of the grassroots movement!

For more information, contact AIADA at 205.942.1000 or randyejones@live.com.

ASSOCIATION NEWS |

NOMINATIONS OPEN FOR COMMUNITY SERVICE AWARD Deadline for Nominations Is May 1 Nominations are open for the 2018 NIADA & Cox Automotive Community Service Award presented by Manheim, the used car industry’s most prestigious award honoring community service by independent dealers.

The deadline for nominations is May 1.

Nominations of NIADA member dealerships can be submitted at www.coxautoinc.com/ community-service-award.

The national award recognizes a dealership that goes above and beyond to give back to its community through its donations of time, money and leadership to charitable efforts, and works to find innovative and meaningful ways to collaborate with community partners to help further its mission.

The award includes a $10,000 donation to the charity of the winning dealership’s choice from Manheim. The winner will be announced during the 2018 NIADA Convention and Expo, June 18-21 at the Rosen Shingle Creek Resort in Orlando, Fla. Last year the award was presented to Matthews Motors in Clayton, N.C., owned by

Steve and Dale Matthews accept the 2017 NIADA & Cox Automotive Community Service Award from Cox Automotive’s Janet Barnard (right).

Steve and Dale Matthews, with Clayton Area Ministries receiving the $10,000 donation.

Cox Automotive’s Janet Barnard said Matthews Motors “embodies the principles of helping shape a better world through individual actions and demonstrating how every person, every organization, every day can make a difference when it comes to serving your community.”

If you know of a dealership that makes an extra effort in community service and charitable work, let us know. Nominations are accepted from individuals, dealerships, community organizations, agencies or vendors.

For more information or to nominate a dealer, visit www.coxautoinc.com/communityservice-award or www.niada.com. www.alabamaiada.org April/May 2018

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MANAGEMENT MATTERS | BY ZACH KLEMPF

WHY IT’S TIME YOUR STORE INVESTED IN A CRM SYSTEM Help Your Dealership Succeed Over the past several years I have had the opportunity to travel across the United States as well as Canada speaking with independent and BHPH dealerships of all sizes. The most evident observation I have had is most of these dealerships operate without a CRM system.

In the franchise dealer world, customer relationship management is a de facto mandatory system critical for managing a dealership’s sales pipeline. Typically, used car dealerships believe they are too small or CRM is too expensive for their store.

In fact, these dealerships need CRM/ILM technology the most.

Historically, most industry-focused CRMs were built for new car stores and large independent operations. The complexities of these tools were barriers to entry for independents. In recent years, that has dramatically changed with more costefficient options entering the marketplace.

When I talk with an independent dealer manager I often ask the following three questions: • What is your customer acquisition cost across your different marketing channels?

• What lead provider is performing the best and what is its close rate?

• What is your cost per sale across the different lead providers you work with?

The majority of the time the manager cannot give a concrete answer to these questions, which points to a deficiency in their business. Many used car dealerships spend the majority of their marketing budget on Internet lead providers like TrueCar, Car Gurus, and Autotrader.

However, they don’t invest in tracking these data sources, which could save thousands of dollars per month as well as provide key performance indicators for their business.

With fierce competition from franchise dealer pre-owned departments and automotive e-commerce players like Carvana, used car dealers need to be more data driven in their day-to-day operations. A decrease in front/back margin means all of the “fat” of the business must be trimmed, and making an investment into tools that provide analytics is key.

If your dealership is making the marketing investment into multiple lead providers there is a real need to track how many deals close rather than how many overall leads you are receiving.

Often I hear a dealer say they get the most leads from “X” lead provider but when further reviewing the data many of those

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leads are not closing as high and it may not be the best overall performing lead provider. When looking at the performance of a lead provider it cannot solely be based on the number of leads, which is a vanity metric. It should be attributed to deal conversion, and unless there is a CRM or other system in place this is very difficult for an independent dealership to track.

One of the most fundamental components of effectively implementing any CRM, especially in a smaller independent store, is the “garbage in, garbage out” philosophy. Paradoxically, this tends to be a cause of churn in independent dealerships fully leveraging the capabilities of a CRM. Let me run through the three most common CRM implementation and usage issues I have observed with independent dealerships’ adoption of a CRM program.

Onboard training: This is one of the most crucial components of the CRM setup process. Often dealerships do not take this call as seriously as they should.

During the onboard call everyone who plans on using the CRM should be present, attentive, and listening carefully. This is where the nuances of the system will be explained and important features like lead reassignment rules will be set up. Missing out on this call or not paying attention will hinder a dealership from reaching the true potential of the CRM.

Hold your team accountable: Often dealerships will get set up on a CRM, excited about the “idea” of implementing a CRM, and let the system primarily be used only by the salespeople. Management should also be involved in using the platform and oversee whether salespeople are completing follow ups and are on task.

While a CRM adds some automation to this, it is up to management to enforce usage.

Always greener on the other side: Some independent dealers make a decision on an impulse and terminate a vendor on a whim. It’s important to realize each CRM system will have its own quirks. Constantly changing vendors “to find the right fit” can lose momentum and unnecessarily take employee bandwidth with setup. Be sure to vet and research your new CRM provider before signing up. Then allow 3-6 months for your store to adapt to the new system.

Implementing a CRM is sometimes a painful process, especially if technology has not been previously embraced in the dealership. Nonetheless it’s important to understand that being more data driven and putting the proper systems in place will ultimately help your dealership succeed in today’s competitive marketplace.

Zach Klempf is founder and CEO of Selly Automotive. He can be reached at zach@ a1softwaregroup.com.

ASSOCIATION NEWS | BY RANDY JONES

NEW 2018 AIADA AUCTION COUPON APP Thousands in Savings at Your Fingertips!

Probably the most practical benefit of belonging to AIADA has been the AIADA Auction Coupon Book. Now that benefit is getting even better with the introduction of the AIADA Auction Coupon App! It will offer the same great savings in the convenience of a mobile app. Never worry about losing or forgetting your book again.

To redeem your savings at one of our participating auctions, simply open the app, pull up the auction coupon and show it to the auction employee when paying your fees.

You will receive one free buy or sell fee monthly. Your membership will pay for itself in no time.

Currently, there are over 20 top quality auctions all across Alabama, Tennessee, Georgia, Northern Florida, parts of Louisiana and Texas!

AIADA is proud to introduce the AIADA Auction Coupon App! We’ve gone digital!

Changes you will like: • Never forget your coupon book again!

All your AIADA auctions are on your smartphone.

AUCTION PERSPECTIVE | BY CARY DONOVAN

FROM THE AUCTION TO YOUR LOT IN 72 HOURS Expediting the Process Protects Profitability

It’s a simple concept. The sooner you get your cars on the lot, the sooner they’re ready to sell. Easy enough: Buy, transport, recondition, take photos, create a description, upload to your website and third-party sites, and put it on the lot.

But what’s soon? A week? Two weeks? How does three days sound? Because that’s what you should be shooting for.

Driving efficiency and speed into your operation on the front end is one of the biggest areas of opportunity to protect your profitability. Acquire, inspect, recondition, merchandise and get the unit frontline ready to the customer as quickly as possible. How fast you get your inventory merchandised and online has a direct correlation to how fast that inventory moves, and in most cases inventory turn equates to improved overall profits from vehicle sales.

Here are seven ways to create front-end operational efficiencies: 1. Use tools and technology to evaluate and buy vehicles that are in demand in your market. Look at the best inventory from a wide

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• Buying online: Use the AIADA Auction Coupon App online at select auctions (not all online auctions have this access yet, but more are coming online).

• If you lose your phone or your phone crashes, no problem. Just download the app on your new phone. Your data is not kept on your phone. It is protected on a server and always up to date.

• Have more than one buyer at your dealership? You can put the AIADA Auction Coupon App on more than one phone. You and your buyers can use your AIADA auction coupons at different auctions at the same time. Just remember you can only use one coupon per month per dealer. Every AIADA member has only one account. This prevents misuse

and our auctions are protected from the use of duplicate coupons.

• Every time your coupon app is used, you will receive an email showing the auction, vehicle purchased, phone number of phone used, time and date.

• You can receive a special text if an auction is having a special sell.

• Check for open recalls.

• Link to your Carfax or AutoCheck account.

• Go directly to your favorite auctions’ run list.

• And much more.

AIADA, working with your auctions and making your buying experience easier!

net of resources for quicker, more confident decisions.

2. Tweak your transportation model. Does it really make sense to wait two weeks for a transporter to load up his truck so you can save a few bucks? Consider centralizing with a trusted (and insured) transportation provider that specializes in smaller loads and can optimize loads with carriers for the best price and provide guaranteed prices, transportation routes and schedules.

3. Take advantage of online channels, like simulcast auctions and online wholesale marketplaces. Online channels not only allow you to purchase vehicles without ever having to leave your dealership, but can also expand your buying radius, giving you access to more vehicles that align with your strategy.

If arbitration is a concern, consider purchase protection programs. When acquiring vehicles from further distances, have a process in place to get those cars listed online before they arrive at your lot. (See number 6 below.) Tip: purchase and transport from warmer climates during the winter months to avoid weather delays.

4. Get vehicles inspected before they leave the auction.

5. Buy retail-ready salvage vehicles that have had all the work done, or vehicles that have been reconned and detailed at the auction. This avoids recon time at the dealership so you can get them on the front line fast.

6. Get your vehicles online before you

leave the auction. The sooner you get your cars online, the more car shoppers can see – and potentially buy – your cars. Even if they need recon, take six to nine photos with your mobile device and get them online as soon as possible while the vehicle is in transition.

If acquiring through online channels, use photos from the condition report or online wholesale listing.

Once a car arrives at your lot, replace temporary photos with high quality ones.

This method is especially effective if you know there’s strong demand for specific make/models. Enterprising dealers are taking images from the wholesale VDP and converting it to the retail VDP on the spot.

7. If you can’t get it online before leaving the auction, do the detailing before recon so you can take pictures and get the vehicle online. Shoot for getting every vehicle online within 24 hours of arrival at your dealership. Do the recon after you’ve created the VDP. Inventory is another form of currency. A car is just a financial instrument you take to a customer to cash. The sooner the customer cashes it, the more money you make.

Cary Donovan is an automotive sales and operations executive with over 20 years of leadership experience. He is a respected thought leader in the industry and currently serves as senior director of operations at Manheim.

LEGISLATIVE NEWS | BY SUBPRIME AUTO FINANCE NEWS STAFF

HOUSE BILL CLARIFIES INTEREST RATES WHEN CONTRACTS ARE SOLD Law Affects Auto Financing The House of Representatives recently passed two strongly bipartisan bills from the Financial Services Committee, one of which could have a significant impact on auto financing.

Lawmakers highlighted that H.R. 3299 – the Protecting Consumers’ Access to Credit Act of 2017 – clarifies current law to ensure innovative marketplace lending remains intact while simultaneously providing safe consumer protections.

Authored by Financial Services Committee vice chair Rep. Patrick McHenry, a North Carolina Republican, officials indicated H.R. 3299 ensures the lawful interest rate on a loan originated by a bank remains valid if the loan is sold, assigned or transferred to a non-bank third party. The bill was included in the House-passed Financial CHOICE Act. H.R. 3299 passed through the House by a vote of 245-171 and went on over to the Senate, which received it, read the measure

twice and referred to the Committee on Banking, Housing and Urban Affairs.

Hudson Cook partner Catherine Brennan cheered the action by House members.

“H.R. 3299 will ease uncertainty in the market, as it affirms the longstanding rule that a loan is valid at the time it is made if it is made pursuant to the lawful interest authority of a lender,” Brennan said. “The idea that a loan made by a bank should become retroactively invalid is absurd.

“Indeed, former President Obama’s own solicitor general recognized this to be the case in a brief to the Supreme Court. Nothing in this legislation undermines the rights of consumers, and it was the right thing for the House to do in passing the bill.”

This legislation passed along with H.R.

3978, which is a package of five bills that committee members say will provide important regulatory relief that reduces burdens for financial institutions and strengthens and makes the capital markets more attractive, competitive and efficient.

“These bills will help cut at least some of the red tape that places such a disproportionate burden on Main Street businesses and financial entities and limits consumer access to credit,” Financial Services Committee chairman Jeb Hensarling said. “These bills are practical, they are strongly bipartisan and they are needed.”

“I applaud the sponsors of each of these commonsense regulatory relief bills for their hard work in bringing these bills to the floor.”

for a selected vehicle in a buyer’s location and the red zone indicates an exceptionally low supply with high demand and falls above the KBB CPO Fair Market Range.

“CPO sales continue to climb with 2017 marking the seventh consecutive year

for sales growth,” said Sadowski. “Cox Automotive estimates sales will continue their record streak in 2018 with 2.7 million CPO vehicles sold for the year, making the need for the latest in CPO vehicle pricing a need more than ever before.”

PRODUCTS & SERVICES | BY AUTO REMARKETING STAFF

KBB INTRODUCES NEW MARKETREFLECTIVE CPO PRICE ADVISOR Meeting Need for Latest CPO Pricing

Kelley Blue Book has introduced the CPO Price Advisor, a new source for certified preowned vehicle pricing that has been added to its Price Advisor product suite. CPO Price Advisor pricing information is based on recent certified vehicle sales transactions and is adjusted for local market conditions and seasonal trends. The KBB CPO Price Advisor is now available on KBB.com and on participating dealer websites.

“Updated for the needs of a new-age, CPO car shopper, the Kelley Blue Book CPO Price Advisor is utilizing granular data to equip consumers with the most up to date information possible when buying a certified vehicle,” KBB general manager Mike Sadowski said.

In addition to KBB CPO Fair Market Range and CPO Typical Listing Price information, the new CPO Price Advisor presents three different pricing zones by color – white, green and red.

The white zone represents pricing that falls below the KBB CPO Fair Market Range, the green zone reflects current market conditions

www.alabamaiada.org April/May 2018

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F&I MATTERS

| BY SCOTT BATES & MIKE RIZKAL

DOES YOUR RFC PASS THE IRS VALIDITY TEST? Don’t Let Your RFC Become a Liability

WE FIND MANY RFCS AND DE ALERS

DO NO T REGUL A RLY RE V IE W T HEIR OP ER AT ING AGREEMEN T S OR OP ER AT IONS T O COMP LY W I T H VA L IDI T Y FAC T ORS FOR T HE RFC A ND I T S T R A NSAC T IONS.

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Related finance companies were not designed to be a tax-planning vehicle to reduce or defer auto dealership income. If the IRS validity test discovers noncompliance that cannot be explained in the RFC’s or dealership’s documentation, additional taxes and penalties can be severe.

We find many RFCs and dealers do not regularly review their operating agreements or operations to comply with validity factors for the RFC and its transactions. The process is understandably time consuming and complex. You can rest assured, however, that if the RFC receives an IRS query, a dealership query often follows.

RFCs are usually set up as S Corporations.

The RFC acts as the lender in the dealer’s financing of used vehicles. The notes are sold to the RFC at a discount due to the higher risk the RFC incurs in the transaction. The RFC accrues the income as it is earned from the car buyer’s weekly or bi-weekly payments. The dealership collects cash up front then books a current and deducted loss for the difference between the full contract and the discounted contract.

According to the IRS, a valid RFC must have the following characteristics.

• When the finance contract is sold to the RFC, title has been transferred to the RFC in accordance with title and lien holder laws.

• The discounting of the car dealer’s receivables is sold to the RFC at their fair market value.

• There is a written arms-length contract between the dealership and the RFC. • The finance contracts are normally sold without recourse between the two related parties.

• The RFC is responsible for repossessions.

• The RFC is operated as a separate entity from the dealership and has the following characteristics: •A dequate capital to pay for the contracts.

•M eets all state and local licensing requirements.

• Maintains

its own bank accounts.

•H as its own address and phone number and operates as a separate entity from the dealership.

•M aintains its own books.

•H as its own employees who are compensated directly by the RFC. •P ays its own expenses.

•C ustomers make payments to the

RFC, not to the dealership.

The IRS Audit Technique Guide cites two common issues that put the validity of the RFC into question. Either the dealership and RFC do not treat and record the sale and financing properly or the RFC is operating like a shell company rather than a legitimate separate entity: • At the time of each transaction, the RFC must show actual cash reserves in its own bank accounts to pay the dealer.

The dealer in turn must record receipt of payment for the note. Each entity must have separate journal entries for the transaction. If journal entries don’t match up, the IRS may disallow the transaction.

• As for its validity as a separate entity, if the RFC doesn’t have a separate address and does not advertise itself as a separate company, it factors into the validity test. It must also be proven the RFC is directly collecting payments and paying actual employees.

T H E R F C M AY B E C O M P L E T E LY VA L ID, A ND T HE L EG A L FOR M A BL E TO BE PROVEN, BUT DEALERS AND MANAGERS MUST BE CONFIDENT IN THEIR ABILIT Y TO SHOW P R O O F A N D D O C U M E N TAT I O N IN THE EVENT OF AN IRS QUERY O R A U D I T. S H A R I N G S TA F F O R RUNNING RFC BOOKKEEPING AND A D M I N I S T R AT I O N T H R O U G H T H E DE A L ER SHIP T O S AV E NOW C A N P R O V E C O S T LY I N TA X E S A N D P E N A LT I E S L AT E R O N .

If the IRS does not view the RFC as a separate entity by these tests of validity, it will not allow the dealership to claim a deduction for losses on the sale of discounted vehicles to the RFC. It will defer to related party rules under IRS code 267 that do not allow loss deductions in transactions made between related persons.

Without proper structuring as a separate operation, an RFC can become a liability.

The RFC may be completely valid, and the legal form able to be proven, but dealers and managers must be confident in their ability to show proof and documentation in the event of an IRS query or audit. Sharing staff or running RFC bookkeeping and administration through the dealership to save now can prove costly in taxes and penalties later on.

The IRS may determine the RFC is not a valid separate entity. This finding, in effect, invalidates the cash method of accounting for the sale of notes to the RFC. Interested in more details about RFCs and auto dealership accounting? Download our whitepaper at http://info.cornwelljackson. com/rfc-irs-target.

Scott Bates, CPA, is a partner in the audit practice and leads Cornwell Jackson’s Business Services Department. Contact him at scott. bates@cornwelljackson.com or 972-202-8000.

Mike Rizkal, CPA, is a partner in Cornwell Jackson’s Audit and Attest Service Group. Contact him at Mike.Rizkal@cornwelljackson.com or 972-202-8000.