ALABAMA
AL ABAMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION | APRIL /MAY 2019
AIADA’S 50TH ANNUAL CONVENTION & TRADE EXPO July 18-20, 2019
Celebrating Our 50th Anniversary • L earn the best ways to make your dealership more profitable. • Get more customers on your lot. • Discover where to find the hard to get investor. • Meet vendors face to face. • Learn from the best in the nation. • Make plans now to join us at Perdido Beach Resort!
Early Bird registration specials are in effect now!
DALLAS, TEXAS Permit No. 2079
PAID
C all our office today at (205) 942-1000 or go to www.youraiada.com
PRSRT Standard U.S. Postage S TAT E A F F I L I AT E
VISIT US AT W W W.AL ABAMAIADA.ORG
See registration form on page 7.
ACCELERATE |
By GWC Warranty
IS YOUR REPUTATION IN GOOD HANDS?
component coverage or a look at the contract itself, having this in place helps customers know exactly how they’re covered. Find a Shop A customer’s nightmare is a mechanical breakdown far away from home. A nationwide network of service facilities is one thing but being able to easily find a shop in an unfamiliar area is another. This online application takes the worry out of an out-of-town breakdown. Quick Answers These days, consumers demand answers, and they demand them quickly and on their terms. Having a service contract provider that allows customers to submit questions via online forms, live chat or social media
gives customers multiple options, so they can get answers in whatever way suits their busy schedules. Good Reviews Online reviews in today’s automotive industry are vital to success. The same goes for service contract providers. Stick to trusted sites like Google (sometimes hidden in the maps section), Facebook, or Consumer Affairs and look beyond just star ratings. While overall ratings are important on the surface, looking at how often a service contract responds and the frequency with which customers leave reviews will give you a sense of how that provider cares for your customers.
CHOOSE YOUR SERVICE CONTRACT PROVIDER WISELY
Unfortunately in the used car business, your reputation after the sale can sometimes be out of your hands. Once that aspect of your business is out of your control, you need to be sure it’s protected in the hands of someone you trust. If you’ve been in the business long enough, you know that despite the best reconditioning and the best inventory selection, you’re bound to run into vehicles that encounter issues after the sale. When this happens, it’s your reputation on the line. How these fragile situations are handled can have long-lasting impacts on your reputation in your market.
Partnering with a service contract provider that has the tools in place to take care of your customers the way you’d want them treated is perhaps the most important thing you could do to protect your reputation when your customer’s experience is out of your control. That’s why you need to know some specifics about what your service contract provider has to offer so you can be sure your customers are in good hands after they drive off your lot. Coverage Lookup A simple online coverage lookup tool is a great way for customers to learn details about their contract on a moment’s notice. Whether it’s start or end mileage, expiration dates, WWW.ALABAMAIADA.ORG APRIL/MAY 2019 AIADA 3
ASSOCIATION NEWS
NEW MEMBERS
WELCOME TO THE FOLLOWING NEW MEMBERS:
AIADA’S 50TH ANNUAL CONVENTION & TRADE EXPO July 18-20, 2019
INSIDE
05................................. Finding Good Cheap Cars 06........................AIADA 50th Annual Convention 08.........................................President’s Message 09.................................................. Paper is Cheap 12............................................ Advantages of CPO 14................................NIADA Government Report 18........................................ The “Wow” is Worth it
ADVERTISERS INDEX
ABM AUTO PARTS Hoover
JAMES ALDRIDGE All Star Auto Sales Tuscaloosa
THAN STERNER BacklotCars Kansas City, MO
TINKER BOYD
Boyd Auto Sales LLC Florence
JAN ROEBUCK
Bucks Auto Sales LLC Clanton
NICK GEER
Cima Insurance Agency Inc. Greystone Motors Gardendale Birmingham
JAMES D. (DOUG) PHILLIPs QUINCY SCOTT Scott Auto Sales Montgomery
JOSH/ALEXIS CRIEF
DOMINIC LIMONGELLI
ROBERT SIMMONS
TIM JACKSON
RODERICK (ROD) CALLINS
KENNETH PYSHER/ BRANDON BROWN
TREMANE FREEMAN
SCOTT REED
Countryside Motors Opelika Discount Auto Sales Pell City
Dream Builders Auto Sales Birmingham
TREY CRANFORD
Fleming Automotive Lincoln
ProGuard Warranty Pittston, PA
R & S Auto Sales LLC Birmingham
JAMES A. STOKES III Releaf Auto LLC Montgomery
BENJAMIN DUVALL
WHAT’S NEW
BOARD OF DIRECTORS
CONVENTION R E G I S T R AT I O N O N L I N E Registration for the 73rd annual NIADA | NABD Convention & Expo is now online! You don’t want to miss this industry-leading mega-conference! The event is June 17-20 at the Venetian in Las Vegas. Learn more and register today at www. niadaconvention.com.
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
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
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Car from Home LLC Elkmont
TUNGA SENIOR/ RODNEY SENIOR Senior Auto Sales Birmingham
DONALD W. DRENNEN III JAMES HARDING Franklin Automotive Birmingham
PRESIDENT
Rocky’s Auto Bessemer
TREASURER
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
Roderick Underwood Bessemer runderwood@ anthonyunderwood.com
SECRETARY
West Side Motors Montgomery
Reed Wholesale Motors Hueytown
BacklotCars..................................................... IBC Manheim ............................................................. 11 NextGear Capital...........................................12-13 vAuto................................................... Back Cover Warrantech.......................................................IFC
Simmons Used Cars Selma
Randy Jones
Barry Searcy Muscle Shoals
Randy Little Satsuma
Michael Bratton Jr. Phenix City
Erek Yarbrough Pleasant Grove yarbroughbiz@yahoo.com
SAFETY WATCH
AUDI RECALLS SEDANS FOR ELECTRICAL ISSUES
AUXILIARY HEATER ELECTRICAL CONNECTOR
Volkswagen Group of America Inc. is recalling 845 2015-16 Audi A6 Sedans and 2015 Audi A7 vehicles. The auxiliary heater electrical connector on these vehicles may have been incorrectly inserted into the auxiliary heater, possibly resulting in increased electrical resistance. Volkswagen will notify owners, and dealers will inspect the auxiliary heater connector, replacing the auxiliary heater and connector, as necessary, free of charge. Volkswagen’s number for this recall is 82C1.
Jerry Giles
Mike Osaji Harvest Jeff DeMeis Hoover
MARKET PERSPECTIVE | By Doug Hadden
FINDING GOOD CHEAP CARS
PART
3:
NEW
TECHNOLOGY
In the first installment of this three-part series, we looked at how to take advantage of upstream online auctions. Upstream is just a fancy way of saying “before the vehicle is shipped to physical auction.” We focused on OLOCs (One-Owner, Low-Mileage, Off-lease Cars) and learned how to acquire affordable cars your customers want, without having to go to a physical auction. In the second installment, we looked at buying real-time in multiple lanes, at multiple auctions, right from your desktop, laptop or phone! Since these articles, I have received a lot of great feedback and even trained some folks on how to buy cars live online – including easily accessible options like ADESA’s simulcast platform that allows dealers to bid virtually, in real time, on cars in the lane. One dealer said, “I may never go to a physical auction again.” Another dealer I worked with loves going to the physical auction. After training, he was standing in the auction lane bidding on cars as they drove through while also on his phone – bidding on cars at the same auction, at the same time, but in different lanes, and even checking proxy bids on cars at other auctions. Technology is opening new doors of opportunity for dealers, giving them a competitive edge like no other. This month we will look at new technology that is changing the way we buy and sell wholesale vehicles. When I owned my pre-owned lot many, many years ago, besides attending two local auctions every week, I spent every Monday morning stopping at Starbucks buying coffee and pastries I would take to my favorite used car manager who ran a large new car franchise. I usually arrived at the store as soon as the service department opened the front gates so I could look at and book out all the weekend trades before the UCM arrived. I would list what I wanted to pay for each car and what it needed for reconditioning on my yellow pad, head to his office and wait. We would grind out prices and two or three hours later I would call some drivers and get my new inventory to reconditioning. Not only did I have to get up at the crack of dawn, pay too much for a couple of rundown cars to get the ones I wanted (the old “package deal”), but I also burnt half a day away from my lot. Needless to say, this wasn’t a very efficient use of my time or inventory dollars. Fast forward to last week. I’m sitting at lunch with a friend who owns a small preowned lot, talking about how hard it is to find good cheap cars. His phone gives off
a chirp. He quickly taps his phone, scrolls through a couple of screens, pounds out some numbers on his phone calculator, taps his phone one more time and gets back to our conversation. What was he doing? He was bidding on a car that was traded in at a new car franchise less than two hours ago. That’s right, sitting at lunch bidding on fresh trades and in the time it took to eat his burger, he owned the car! There are a few companies in this stillgrowing, dealerto-dealer digital auction space. I’m most familiar with ADESA’s sister company TradeRev, a mobile app that sends notifications to your phone as new car franchise dealers launch cars to a 45-minute on-demand, digital auction. You can view multiple photos, watch videos and even listen to the engine run. Settings allow you to customize your experience, enabling you to create alerts for only the types of cars you want – so you spend less time looking and more time buying. Think about the efficiencies this technology brings to the industry. With built-in artificial intelligence and machine learning, you can find the right car at the right price, in a transparent and fair process, all in about an hour. You can have funding, titling and transport pre-arranged in the app so when you win a car it quickly appears on your lot. And what about the seller? We know the longer you keep a car in stock the less gross you get – the dreaded “lot rot” is real. Even when you hit a home run on an aged unit, if you do the math on a profit-per-day basis, the ROI is weak at best. What would wholesaling a trade the same day it’s brought into inventory do for the average inventory turn time? It’s a win-win for both buyer and seller! The industry is changing, but so is the technology we use to run our operations. If you have not embraced buying cars upstream, live online from your PC, laptop or phone, or the newest app-driven one-hour, on-demand auction, you may want to rethink your business plan.
I’m not saying you can’t continue doing what you’re doing now and be profitable. I’m saying there is technology out there that can and will help you be more efficient – which leads to higher profits with less effort. Mastering these new, high-tech systems and apps is so easy there is no reason not to give them a try. I’ll even help you get started. Email me at Doug.Hadden@ADESA.com and I will set up some time for training you on one or all of the new technologies discussed in these articles. Once you get comfortable using the new tech, not only will you be more efficient and profitable, you may also have time left over to do other things you haven’t been able to do, like spending more time with family and friends! Until next time – have fun and sell cars! Doug Hadden is executive director of dealer consulting services for ADESA Auctions Inc. He can be reached at Doug. Hadden@adesa.com.
WWW.ALABAMAIADA.ORG APRIL/MAY 2019 AIADA 5
ASSOCIATION NEWS | By Randy Jones
AIADA CELEBRATING 50TH ANNIVERSARY
A
CONVENTION
FOR
This will be a convention for the history books. Your AIADA’s 50th annual Convention and Expo will be held July 18-20 at Perdido Beach Resort in Orange Beach, Alabama. We are extremely proud of the convention this year. We will celebrate the achievements of president Chad Tillery with Ellison Auto Sales in Jemison and welcome our incoming president, Robbie Case with Robert’s Auto Sales in Hartselle. Chad has done a great job this year in leading AIADA to bigger and better things. Robbie has his goals set on getting more done in Montgomery and Washington DC. Each year your association president works on your behalf to make the automotive industry in Alabama a better place to have your business and raise your family. But you need to remember it is not a one man show. It takes a lot of teamwork! A lot of us have different party lines and political platforms, but we all have the same love for our country! At this convention we have several politicians attending as our guests. These politicians need to get to know us, especially you and your family! We want the people working on the front line of setting the policies that steer our state and country to know us. We want them to share our industry needs and goals so we can work together to build a stronger Alabama and America!
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THE
RECORD
BOOKS
We need each of you dealers and vendors to set aside the third week of July 2019 to do your part in making Alabama the best state in the nation to be in the automotive business! As we offer different types of events, we have the opportunity to do some networking. Last night we met with someone who can help us with one of our biggest problems. Now we are on the road to possibly getting it solved! Again we want to thank Peak Performance, one of many vendors who give back to your industry and are investing in your future! AIADA is building a better tomorrow for you, your family and your customers! Please be sure to thank Mike and Danny as well as your fellow dealers who made this possible! As a big plus, this year’s convention offers various classes meant to keep you up to date on the latest compliance issues, regulatory changes and best practices. Our research has shown us we must provide you the best-in-class dealer training and education. Your convention committee has done just that. They have made tremendous effort to get the best of the best for this convention. I’m sure I can speak for you in saying Alabama dealers, vendors and our buyers have gone through a lot of changes in the last few years. And the changes are not slowing down! The world as we know it is changing all around us – the customers, our vehicles, the way we advertise, just about everything!
This is a must attend convention! You will learn more in two days than you usually learn in four or five years. We have some of the top speakers in the nation, hands down! At AIADA we are not waiting to see what happens tomorrow. We have planned some very aggressive training platforms to face tomorrow with the education and tools for your success! AIADA conventions are for all Alabama’s independent dealers – Buy Here-Pay Here, retail, dealers with multiple locations, cash only dealers, mom and pop stores, secondary financing stores, prime financing stores, etc. We have something for you! Being the best is never easy, but it is worth it! Bring your family – let them enjoy the white sands and the blue water of the Gulf of Mexico while you build for your success. Make new friends and watch your business grow. We have great list of vendors and you will be able to meet all of them face to face. Some of the most respected voices in the automotive industry will tell you, AIADA – hands down – puts on the best automotive convention in the nation! We must agree! Come find out for yourself. Join us as AIADA celebrates its 50-year anniversary! Call our office at (205) 942-1000 and let’s get started today!
DEALER Convention Registration Form
ALABAMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION 50th Annual Convention – July 18-20, 2019 Perdido Beach Resort, Orange Beach, AL
Participant Information: Member Name (as it will appear on badge):____________________________________________________ Name of Spouse/Guest (as it will appear on badge):______________________________________________ Names of Children attending1.____________________Age____ 2._______________________Age______ ***(Please fill in age) 3.____________________Age____ 4._______________________Age______ Dealership/Business Name:___________________________________________ Contact Person:______________________________ Address:_____________________________________________ Email Address:_____________________ City:____________________State:_____Zip:___________Telephone:______________Fax:____________
Please give us a count on how many in your party are attending each meal. This will help us with the meal count for the hotel. 13 yrs & up 6 yrs to 12 years MEALS: Fri. Breakfast Adults ___ Children___ Children____ Fri. Lunch Adults____Children___ Children____ DEADLINE FOR Fri. Dinner Adults____Children___ Children____ REGISTRATION IS Sat. Breakfast Adults____Children___ Children____ JULY 10, 2018 Sat. Banquet Adults____ Children___ Children ____ Registration Fees:
Member: $349 IF YOU REGISTER BY JUNE 1, $399 AFTER JUNE 1 $__________ Member’s Spouse or Guest: $149 IF YOU REGISTER BY JUNE 1, $189 AFTER JUNE 1 $__________ Each Employee of Business: $349 IF YOU REGISTER BY JUNE 1, $399 AFTER JUNE 1 $__________ Each Employee’s Spouse or Guest: $149 IF YOU REGISTER BY JUNE 1, $189 AFTER JUNE 1 $__________ Ages 13-16 years----------------------------------------------------------- $110 = $________ Ages 6-12 years ------------------------------------------------------------- $99 = $________ Children 0-5 years FREE (# of children coming 0-5 years old) ________ TOTAL REGISTRATION PAYMENT = $____________ (Please make check payable to: A.I.A.D.A. Payment must accompany registration form.) CREDIT CARD TYPE: Visa______, Mastercard_______, Discover______Amex_____
Card #___________________________Expiration_________CVV#________(3 numbers on back of card)
or (4 numbers on front of AMEX)
BILLING ADDRESS FOR CARD (if different from above)_________________________________________________________ NAME ON CARD_______________________________SIGNATURE CARD HOLDER__________________________________
Please return registration form to: A.I.A.D.A., P.O. Box 19627, Birmingham, AL 35219 or fax to 205-942-3565 or you can email to judypbenton@gmail.com
• • •
To make reservations for hotel call 1-850-916-2999 and use Group ID# AIA. Reservation deadline is June 17. Earlybird deadline for dealers is June 1 to make you eligible for a drawing at the convention. WWW.ALABAMAIADA.ORG APRIL/MAY 2019 AIADA 7
ASSOCIATION NEWS
| By Chad Tillery
PRESIDENT’S MESSAGE
WHY YOU SHOULD COME TO CONVENTION First, I would like to say how excited I am about our upcoming convention. This year will be AIADA’s 50th Annual Convention. I cannot wait to see you there. For the dealers who have never attended, I would like to give you a few reasons you should. Vendors Vendors are a vital part of our convention. Our vendors come to the convention looking for the best dealers in the state of Alabama. In return, our dealers are looking for the best vendors to do business with. We always have a great lineup of vendors. We ask if you have a vendor you do business with you would like to recommend come to the convention, let us know. Fellowship Thursday night starts off with a “meet and greet” event for dealers and vendors. This is where you can mingle with other dealers and vendors in a more laidback atmosphere. We will have hors d’oeuvres, drinks and games for all ages. This is a very family friendly atmosphere, so bring the kids. MARKETING MATTERS
Fellowship is a healthy part of any business. Political Leaders We will have some political leaders from Montgomery come in and speak at the breakfast. These men and women are likeminded in business as we are. It is never a bad thing to meet, shake hands with, and put our face in front of political leaders who share our values. Education There will be several education classes. This may consist of how to make money, how to stay compliant, how to keep your nose clean and out of trouble, or how to use today’s technology. Fun We also have a lot of fun at these conventions, from Thursday’s “meet and greet,” to Friday night’s Ladies Auxiliary auction, to giving away $10,000 on Saturday night. Make plans now to join us at Perdido Beach Resort in Orange Beach, Alabama, July 18-20. I cannot wait to see you there. Bring the family! Did I mention we are at the beach? Don’t be that dealer who doesn’t make it. Hearing about it is never as good as being there.
| By Christopher Leedom
MAKE PHONE TAG A THING OF THE PAST OPTIMIZE COMMUNICATION WITH SMS
How many of you are frustrated by the volume of voicemail – both left and received – during the average workday? Whether it is for sales, service or collections, your staff leaves dozens, if not hundreds, of voicemails every day. It has probably become one of the biggest drains of productivity and labor – though nevertheless necessary – until now. Do I have you scratching your head a bit? First, let me issue a challenge. Identify one employee in your dealership or finance company that interacts with your customer base on a daily basis – for instance, a salesperson, collector or service advisor. Next, identify 20 customers you need to communicate with that particular day. If you are a working with a collector, pick 20 accounts that just became delinquent. If you are in sales, pick 20 customers that need follow up. Take 10 of these customers and send them an SMS message initiating communication with them. Sales, service, or collections – it doesn’t matter. Call the other 10 customers, leaving a voicemail initiating communication if you don’t reach them. By the time you get done calling the 10 “phone call” customers, chances are 50 percent
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of the SMS customers will have already texted you back! Why? Because 93 percent of SMS messages are read within 10 minutes and a return text is usually sent within 20 minutes. How does that compare to the voicemails? It’s no contest. You probably will connect with two or maybe three of the outbound phone calls and will likely leave seven or eight voicemails. I have observed this exercise with countless operations. Our organization has worked with thousands of dealers and finance companies over the past 20 years. When we started Textmaxx Pro four years ago, I could not have predicted the impact on productivity. We see it not just in the auto space, but across virtually every industry we serve. In today’s world everyone returns an SMS message well before returning a voicemail. There are countless studies that prove this. So how do you optimize your SMS messaging strategy? First, think of it the same as your phone system. You need a tool that is proprietary and resident to your business that will serve your SMS communication needs, and ensure compliance. I hear too many dealers say, “My employees are really good at texting – they use their
personal phones.” I cringe. Think about it, would you utilize your salesperson’s personal phone number when advertising on the web or in television commercials? Would you give each employee a copy of their entire CRM activity when they leave your dealership to work elsewhere? That is precisely what you are doing if you do not have a product that allows you to store, monitor and control all SMS activity. It doesn’t matter whether it is sales or collections. You need to retain and control those conversations for a host of reasons, not the least of which is compliance – but that is a topic for an entire article itself. If you want to eliminate – or at least greatly reduce – the wasted time and effort of phone tag, implement a well thought out customer contact strategy where SMS communication is your first form of communication. You will be amazed at the impact it will have on employee productivity. It is an incredibly effective way to communicate with your customers. In my opinion, it is even more effective in collections or service, where you already have a relationship with the customer. Studies show SMS messaging to be the preferred method of communication of most customers, across virtually every demographic. It is hands down the most efficient mode for just about every conversation. Chris Leedom is the CEO and founder of the Leedom Group. The Leedom Group includes Textmaxx Pro, a complete SMS messaging solution for small to medium businesses with a custom design for the automotive industry. You may reach Chris at chris@leedomgroup.com.
LEGAL MATTERS |
By Jeff Ingram
PAPER IS CHEAP
USE IT TO MINIMIZE RISKS
Hamid Adeli contacted Mercedes-Benz of Northwest Arkansas (MB Arkansas) about a 2007 Ferrari F430. Adeli was an experienced buyer of such vehicles. MB Arkansas had the vehicle inspected by a Ferrari dealer, who supplied a list of recommended services. MB Arkansas had some but not all of the recommended services done. One that MB Arkansas did not perform was a repair to an exhaust header. MB Arkansas testified that the Ferrari dealer said the exhaust header repair was not needed immediately. MB Arkansas gave Adeli a receipt for the repairs that had been made. It did not disclose the repairs that had been recommended but not made. The dealership told Adeli the car was in “turnkey, excellent condition” and that “all necessary repairs” other than a tire pressure issue had been made. MB Arkansas sent a text to Adeli that “all the service has been completed.” Adeli ultimately purchased the vehicle at below market price. Because of that discount, Adeli was not surprised the vehicle was sold “as is.” Before selling the vehicle to Adeli, MB Arkansas had negotiated with a different customer on the vehicle. That customer ultimately decided not to purchase the vehicle. MB Arkansas disclosed to that customer the repairs that had been made and the recommended repairs that had not been made. The customer informed MB Arkansas the exhaust header repair was a potential safety problem. To purchase the vehicle, Adeli signed a disclosure that the vehicle was being sold “as is” with no warranty. That disclosure was in all capital letters, in conspicuous large print at the top of a document. After taking possession of the vehicle, Adeli began to smell gasoline coming from the car. He took it to a mechanic who made numerous repairs, including a repair to a leaky exhaust manifold. Adeli made a claim for breach of express warranty. MB Arkansas defended by stating all warranties had been disclaimed by the “as is” language on documents signed by Adeli. Adeli claimed the text message stating “all the service has been completed” was a written express warranty that had not been disclaimed. Prior to trial, the court decided there was evidence from which a jury could conclude the parties intended the text message to be part of the final contract and refused to grant MB Arkansas a judgment on that issue. Adeli also asserted a claim for fraud. The case ultimately went to trial. The jury awarded Adeli $6,835 in compensatory damages plus $5,800,000 in punitive damages. MB Arkansas asked the court to reduce the amount of punitive damages. The court acknowledged this was an isolated incident in which Adeli, who was not financially vulnerable, suffered only economic damages. The court stated there was “the potential for substantial physical harm,” the potential was “significant” and the dealership had a “reckless disregard of the health and safety of others.” The court then entered an order reducing the amount of punitive damages to $500,000. What went wrong for this dealership? It is impossible to know exactly what the jury was thinking, but several items were problems for the dealership. First, it knew about a problem but did not repair that problem or disclose it to the customer. This was probably aggravated by the fact the dealership had disclosed the issue to a prior customer who refused to purchase the vehicle. The jury may have concluded the dealership was afraid to lose another potential sale over this issue. Second, the unrepaired problem was a safety issue that, according to the judge, presented a significant risk of substantial physical harm. Third, there was proof the dealership told the customer that all issues had been repaired even though it knew some issues remained unrepaired. What lessons should you learn from this case? If you know about a safety issue, you should repair that issue before selling the vehicle. If you know about such an issue and decided not to repair it, disclose that issue to the customer in writing and have the customer sign the disclosure. That disclosure should point out the potential safety risk that exists. Finally, if a customer asks about repairs or problems, do not tell them only the good and omit the bad. Give them complete information in writing about what was and was not done. You will never eliminate all risks as a dealer. You can, however, minimize those risks. Paper is cheap. Use it to give good, accurate information to your customers.
SAFETY WATCH
CHRYSLER RECALLS TRUCKS FOR STEERING
DRAG LINK MAY SEPARATE
Chrysler is recalling 573,876 2013-2017 Ram 3500 and 2014-2017 Ram 3500 Chassis Cab and Ram 2500 vehicles. The outboard steering linkage jam nut may loosen, allowing one end of the drag link to separate. Chrysler will notify owners, and dealers will check the steering linkage jam nut tightness, replacing the drag link assembly or welding the nut to the adjuster sleeve, free of charge. Chrysler’s number for this recall is V06.
SAFETY WATCH
FORD RECALLS MORE THAN 1 MILLION F-150S
SLIPPING GEARS
Ford Motor Co. is recalling 1,263,051 20112013 F-150 vehicles equipped with a 6-speed automatic transmission. The transmission may unexpectedly downshift into first gear, regardless of vehicle speed. Ford will notify owners, and dealers will reprogram the powertrain control module, free of charge. Ford’s number for this recall is 19S07. WWW.ALABAMAIADA.ORG APRIL/MAY 2019 AIADA 9
MANAGEMENT MATTERS |
USE DATA AND TECHNOLOGY TO UP YOUR GAME
DRIVE
By Joe Oliveri & Steve Nicholson
LONG-TERM
SUCCESS
If you’re anything like the average consumer, you spend five hours each day on your smartphone – maybe more. And you’re probably doing more than catching up on the news and scrolling through your social media feed. You’re researching purchases big and small, buying birthday presents and maybe even ordering dinner or scheduling a grocery delivery. There’s an app for just about everything – and some of them even help make your life easier or improve productivity, if you can figure out how to use them. Technology and data have completely redefined how consumers interact with the world around us. It’s not just about replacing Columbia House’s mail-order CD club with iTunes and Spotify, or Blockbuster with Netflix and Hulu. And it’s more than just the ease of pre-ordering a custom drink so you don’t have to wait in line at the coffee shop. It’s about reducing friction and adding convenience to every consumer interaction – across every facet of your life. The good news is that it’s not just consumers profiting from this boon. Technology and data are racing their way up the supply chain into the wholesale automotive marketplace – and as dealers, you can benefit. You now have more information and resources at your fingertips than ever before to make smart, informed decisions – faster than ever. Here are three ways you can do more to increase both margins and profits. START WITH SMARTER SOURCING The average car buyer visits just 1.6 auto dealerships while car shopping. That’s a big change from 15 years ago, when buyers visited an average of five dealerships. On the other hand, 41 percent of used car shoppers don’t purchase a vehicle from the first dealership they visit because the dealer didn’t have what they wanted. Why is this important? It means inventory matters. Consumers are doing their research before they ever set foot on your lot. In fact, there’s a good chance they know more than your sales team about the specific vehicle they want. So if you don’t have what they want, they won’t stop by, or they’ll quickly move on. So how do you source the right cars? The first step is adopting a 360-degree approach to your remarketing strategy. The choices abound when it comes to marketplaces for buying and selling used vehicles – in lane, dealer-to-dealer, mobile apps, and online. By adopting a holistic
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AT
YOUR
DEALERSHIP
360-degree approach to your remarketing strategy – maximizing what each venue has to offer – you can ensure you have access to the broadest array of inventory at the best prices. Going digital first goes hand-in-hand with adopting a 360-degree approach to your remarketing strategy. While it’s important to not limit yourself to one channel for inventory acquisition, some of the best quality, most attractively priced inventory is available first through digital channels. It’s the first opportunity to bid on cars before they go to physical auction, and also broadens your geographic reach for finding good cars at a great price. Whether it’s a dealer-to-dealer mobile auction marketplace like TradeRev or an online auction like ADESA DealerBlock, these digital and mobile channels typically offer great vehicles and lower fees. Plus, they’re always on, allowing you to bid from anywhere at any time. So if you aren’t already including these channels in your strategy – and seeking them out first – you’re missing out on some great inventory. TAP INTO BIG DATA Big data isn’t just for big companies. Your customers take advantage of big data and analytics when doing their car-buying research – and now you can, too. The past decade has brought many new tools to market that can help dealers optimize their lots. New data and technologies can help dealers not only acquire the right inventory, but sell it smarter and faster. The right tools can increase both your cash flow and your profit margin. Find the right vehicle with new targeted recommendations. It’s all about efficiency – getting the right car to the right dealer and then to the right consumer at the right time. New mobile and digital marketplaces have given dealers access to virtually unlimited inventory options – but your time is precious, and there aren’t enough hours in a day to sort through all the options. Today’s remarketing platforms increasingly help take the leg work out of this for you. For instance, our data analytics arm analyzes millions of data points each day to make specific, tailored dealer buy recommendations for your rooftop. These tailored recommendations assess market dynamics, whether a vehicle is under-supplied, and what moves from your lot quickly – just to name a few. Still want to do your own research? Apps like Autoniq seamlessly integrate your vehicle pricing guide, market report and VHR
subscriptions into one easy-to-use interface so you don’t have to flip between multiple platforms – saving you time when buying on trade, shopping online or in the lane. Just remember: a vehicle sitting on your lot is a rotting asset. Make you sure you buy it right from the start – and if it’s not selling, get rid of it. Start flooring something that data shows will sell, and at higher margins. UP YOUR RETAIL GAME Using data to source the right vehicles and optimize your lot is a great start, but don’t overlook opportunities to improve your retail game, too. It can also help you better understand your customer and make every customer interaction a positive experience – helping differentiate you from the other dealer across the street. In fact, 77 percent of consumers have chosen, recommended, or even paid more for a brand that provides a personalized service or experience. Know your customers and their online habits. Are they a traditionalist who always pulls the vehicle history report and checks Consumer Reports first? Or, are they a cost-conscious consumer glued to their smartphone who spends more than 17 hours price comparing online before stepping foot in a physical dealership? A digital-first retailing approach can yield invaluable data about your customers, helping you better target your sales approach and close the deal. Make it personal. We’ve gotten spoiled, and expect every in-person shopping experience to be as personalized and painless as Amazon or Apple. Consumers want it to be a unique, personalized experience – whether chatting in the checkout line with the friendly cashier who never forgets your name or binge-watching your new favorite show that Netflix recommended based on previously watched shows. Why should you care? Consumers will pay more for it: 54 percent would buy from a dealership that offers their preferred experience, even if it didn’t have the lowest price. It’s not rocket science. Combining the right products at the right price with a personalized customer experience will help you sell more cars, profitably. Joe Oliveri is general manager of data as a service at KAR Auction Services, Inc., the parent of more than 20 automotive remarketing brands and services including ADESA, TradeRev, AFC and Autoniq.
Steve Nicholson is director of major dealer accounts at TradeRev, North America’s leading dealer-to-dealer digital auction platform.
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MARKET WATCH |
By Danny Delich
ADVANTAGES OF CPO
A CUSTOMER FAVORITE The advantages of selling Certified PreOwned (CPO) vehicles are varied and many, but reduced to the common denominator: a properly utilized CPO program will help you sell more cars. Why? For the customer, a CPO program puts your dealership a cut above the rest because it promises a quality used vehicle without the risks normally associated with the used vehicle marketplace. For example, what if a customer purchases a used car that ends up needing expensive repairs? They can pay the expense themselves or sell the car. If they sell, they either lie about the condition or take a loss when disclosing the vehicle’s issues. A CPO vehicle eliminates this dilemma, thus eliminating the customer’s fear of getting stuck with a lemon. In all likelihood, a CPO car will be a highquality used vehicle that gives the customer a problem-free ownership experience. For one thing, the certification process puts each vehicle through dealership
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reconditioning dictated by an extensive inspection checklist of more than 100 items, ranging from mechanical parts to the condition of the vehicle’s interior. So you and your customer already know the vehicle is sound, inside and out. This is a fact upon which you can build solid negotiations. Added benefits include a limited warranty (which further reassures your customer they won’t be hung out to dry in case of mechanical problems), roadside assistance and provisions for a loaner vehicle if their vehicle is held for covered repairs. These benefits raise the perceived (and actual) value of the program in the eyes of the customer and give peace of mind that makes it worthwhile for the customer to pay a little more – and they realize that. These features add value and should also be discussed during negotiations. Even though the cost of a CPO vehicle is a bit higher, your customer saves money in other ways, such as depreciation. According to Carfax, a typical new vehicle
loses 20 percent of its value in the first year of ownership. That means a $30,000 new car will be worth only $24,000 just one year later. Naturally, any vehicle will continue to depreciate as it ages, but it can be at a much slower rate. Certification allows the customer to buy an “almost new” model for less, which will better hold its value until they’re ready to pass it on to the next owner. And they can enjoy this advantage without worry because although the vehicle is older, it is of certified quality. And who wouldn’t return to a dealership that was able put them into the car of their dreams without the usual worries of a used car purchase? With the knowledge that they’re covered by a limited warranty? Secure they’ll never be stranded at the side of the road? And with the reassurance they’ll have a ride to work even if the car is in the shop for a covered repair? I know I’d be a customer for life, and I’d send my family. Danny Delich is senior vice president at Peak Performance Team.
ASSOCIATION NEWS |
By Rodrick Underwood
HELP GAIN A SEAT AT THE TABLE
AIADA MEMBERSHIP Did you know there are over 800 dealers who are members of the Alabama Independent Automobile Dealers Association? Did you also know that 800 dealers only represents a fraction of the number of automotive dealers in the state of Alabama? Why is this important? One simply has to turn on the news to understand the political tension that exists today and the partisan politics that are very active in today’s political environment. I am not here to advocate for the right or the left, but one thing I cannot be silent about is the automotive business that provides for my family. My love for the car business is not just a pastime or hobby. I depend on my business to be vibrant and financially solvent so I may offer my wife and daughters the very best life has to offer. Well, behind closed doors there are political leaders at work whose sole obligation is to benefit the special interest groups and donors that support their political aspirations. Often the constituency is not defined by the public at
large but by the donors and voters. I am not crying foul. I am just acknowledging the rules of the game. If I want my business to be protected from frivolous taxes and socialist laws, I must have a seat at the political negotiation table. Unfortunately, my pockets are not deep enough and my name is not prominent enough to have a seat at the table alone. Not to be trite, but there is definitely power in numbers. If the Alabama Independent Automobile Dealers Association had over 1,000 members, we could forge our own path and take control of the agenda that governs our businesses. It is an active and robust association that captures the attention of political figures and lends their ear to our concerns. I strongly encourage all recipients of this magazine to join AIADA today and make plans to attend the 50th annual Convention & Trade Expo, Thursday, July 18, to Saturday, July 20, to be held at the beautiful Perdido Beach Resort. Thank you and I look forward to seeing everyone there.
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NIADA Region II vice president Michael Darrow (left) with Senate Majority Leader Mitch McConnell. t
WASHINGTON UPDATE | By Shaun Petersen
GOVERNMENT REPORT
t Texas IADA executive director
Jeff Martin (left) and NIADA’s Shaun Petersen (second from right) met with Speaker of the House Nancy Pelosi and Rep. Henry Cuellar.
t NIADA and used car industry leaders visited Capitol Hill for a series of meetings with legislators and key committee staff.
Latest Government Issues & 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. PAC NIADA met with the Speaker of the House of Representatives, Rep. Nancy Pelosi (D-Calif.), on Feb. 21 in San Antonio, Texas. The meeting was arranged by Rep. Henry Cuellar (D-Texas), a longtime friend of the independent used vehicle industry and a featured speaker at the NIADA National Policy Conference in 2016. Texas IADA executive director Jeff Martin and I attended the event, which also included Rep. Joaquin Castro (D-Texas). The group was small, allowing us an ample opportunity to speak to all three legislators about the used vehicle industry and explain NIADA’s positions on some of the issues affecting it. Five days later, members of NIADA’s executive committee, legislative committee and Buy Here-Pay Here commission traveled to Washington for a series of Congressional meetings, sponsored by PassTime. It began Feb. 26 with an event for Sen. John Cornyn (R-Texas) that drew more than a dozen senators, including Senate Majority Leader Mitch McConnell (R-Ky.), Sen. Ted Cruz (R-Texas), Sen. Jerry Moran (R-Kan.), Sen. Susan Collins (R-Maine), Sen. John Thune (R-S.D.), Sen. Lamar Alexander (R-Tenn.), Sen. Marsha Blackburn (R-Tenn.) and Sen. James Lankford (R-Okla.). We were able to speak with all of them about our industry and our issues. The next day we met with freshman legislators as well as new committee chairs and ranking members of the 116th Congress and discussed issues expected to be considered during the next two years, including recalls, CFPB reform, privacy issues and tariffs. The NIADA group met with the members of the House Financial Services, Energy and Commerce, and Transportation committees, and the Senate Banking and Commerce committees.
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REGULATORY More than 7 million people were at least 90 days delinquent on their car payment at the end of 2018 – an all-time high and more than a million more than in 2010 – according to a report from the Federal Reserve Bank of New York’s Center for Microeconomic Data. The New York Fed called that number, based on data from Equifax, “surprising” considering the strong and growing economy and shrinking unemployment. But in a post on the Liberty Street Economics blog, Fed economists Andrew Haughwout, Donghoon Lee, Joelle Scally and Wilbert van der Klaauw pointed out there are more delinquencies than ever before in part because there are more total borrowers than ever before. More than 89 million people now have some form of auto financing, the most on record since the Fed and Equifax began compiling that data in 1999, with a total balance of $1.27 trillion, another record. “With growth in auto loan participation, there are now more subprime auto loan borrowers than ever, and thus a larger group of borrowers at high risk of delinquency,” they explained. And they noted the quality of borrowers is trending upward, saying, “2018’s strength in auto loans was primarily driven by those originated by the most creditworthy individuals, while originations to those with scores below 720 have leveled off, albeit at high volumes.” The large volume of loans, they said, caused a “quality shift,” as borrowers with credit scores better than 760 accounted for 30 percent of the outstanding debt. Only 22 percent was originated to subprime borrowers. “These percentages would suggest the overall auto loan stock is the highest quality we have observed since our data began,” they said.
LEGISLATIVE Executives from Equifax, Experian and TransUnion were called to testify before the House Financial Services Committee, which is considering changes to the credit reporting system. The committee noted it has been 15 years since the issue of credit reporting has undergone “comprehensive reform” at the federal level, and cited Equifax’s massive 2017 cybersecurity breach in asserting “there are numerous shortcomings with the current system that need to be addressed.” In his testimony, TransUnion president and CEO James Peck said the U.S. economy provides more “quick and straightforward access to credit” than any in the world, and he offered the committee six ways the credit reporting process could be improved, calling for more timely updates of critical credit events, establishing new standards for reporting student loan data, increasing the number of Americans able to access credit, helping improve scores and access to credit innovations, protecting Social Security numbers and enhancing financial education. GRASS ROOTS A report by New Jersey’s State Commission of Investigation alleging widespread wrongdoing by “predatory” used car dealers has spawned a pair of bills in the state legislature aimed at tightening regulations in the industry. The report focused primarily on “multi-dealer locations” – locations that provide an address for “dealers” who do not have a lot or who operate in other states. The report described them as fronts for shady operators to obtain a dealer license. Assemblyman Paul Moriarty, the bills’ primary sponsor, said the report showed “the New Jersey used car industry – specifically the multi-dealer locations – is rife with fraud and deceit and in some cases unlawful activity.” One of the bills would prohibit “as is” sales in the state, increase the limitations of the implied warranty on used cars and require dealers to offer contract cancellation options. The other would transfer licensing and enforcement power from the state’s Motor Vehicle Commission to the Department of Consumer Affairs in the attorney general’s office. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
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MANAGEMENT MATTERS | By Dave Anderson
THE “WOW” IS WORTH IT! CREATE
BETTER
EXPERIENCES
In his book Never By Chance, Joe Calloway said, “A brand is defined as a trademark or distinctive name, reputation, or capability that identifies and differentiates a product or service from the competition, for better or for worse.” Every company has a brand. That’s not the question. Does your brand positively differentiate you or render you to commodity status? Does it elevate or diminish the value people see in doing business with you? To delve deeper, a brand isn’t primarily about your logo, jingle, or creative graphics. These things may explain or reinforce your brand, but they aren’t your brand. Nor is building a powerful brand for your dealership accomplished through big ad budgets and slick promotional campaigns. Building a powerful brand happens when you create a culture that supports consistently creating “wow” customer experiences, and by hiring and training the right people at all levels within your organization capable of consistently delivering said experiences. Focus more on the “reputation, or capability that identifies and differentiates you from the competition” aspect of the brand than on a logo, trademark, or distinctive name to communicate it. As a leader, it’s your job to make sure this gets done daily, and that chasing greater excellence in this regard is a priority for every team member. Here are some supporting thoughts and strategies to help refine your focus on intentionally building and leveraging the power of your brand. · T he bottom line is your brand is defined by customer experiences. You may declare what your brand is, but a customer defines it based on his or her experience with your company or product. In short, whatever a customer thinks about when they hear your dealership mentioned – which will be based on either a personal experience or one they’ve heard about from others – is your brand. You can say what you want about who you are, but your customers believe what they experience – and that is your brand. · I n case the prior point wasn’t clear enough, let me rephrase it slightly: Nothing is more important than customer experience when it comes to brand management. If you want to improve the strength of your brand, you must elevate the quality of the experiences you’re creating for both team members and customers. That starts
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with hiring the right people at the outset, setting clear expectations for the experiences you want created (experiential standards) and training team members to deliver that experience while holding them accountable for doing so. · A key to customer experience is consistency of performance. The more consistently great the experience is between departments, the stronger the brand. The greater variation you have between departments concerning the customer experience, or between your various locations, the weaker the brand. One bad apple in this regard will afflict the whole batch. · T he best answer to the question, “Who on our team would create the most outstanding customer experience?” is “Any of them!” If you can’t give that answer, you have work to do, and lots of it. · T he best way to influence a great customer experience is to create a great employee experience! Rest assured, if your team members aren’t having a “wow” experience working for you they’re not as likely to create similar experiences for your customers. Incidentally, micromanagers, oppressive work schedules, lack of training, hiring recklessly, inconsistent management, hypocritical leaders, tenured non-performers and more all drain the “wow” out of the workplace for team members. · K eep in mind that even team members who are far removed from direct customer contact have a “ripple effect” impact on the customer experience. This is because of the effect they have on other employees. Naturally, if a co-worker is negative, incompetent, corrupt and indifferent, he or she will diminish the experience of teammates, causing frustration and lower morale – all of which has the potential to trickle down and affect the experience a teammate is trying to create for a customer. There’s much more to say about building your brand, but since the focus of this piece is on perfecting the customer experience, take some time with key team members to honestly evaluate these questions and address the answers you’re unhappy with: · A re the processes and protocols we have in place designed to just meet a customer’s expectations, or are they intentionally designed to get the “wow?” In either case, how can we do better? · D o we have variation in the customer
experience between departments or locations? If so, why is that? How do we fix it? · H ow often do we talk about getting the “wow” in meetings, during one-on-one coaching sessions, in the interview process, and during onboarding periods? Since you can help change a culture by changing the conversation, what more can we do to shine a brighter light on this key responsibility for each team member? · D o we realize our frontline team members (porters, sales associates, service advisors, receptionists and the like) have more daily opportunities to create a customer experience than the management team since they come into contact with more customers? How much training have they had on creating “wow” experiences? What training could we implement to improve the customer experience, starting with the onboarding of new associates? · D o we have experiential standards for our organization that clearly define guidelines for the things we will always do – and never do – with a customer or when speaking with a customer? Are all departments and locations on the same page with these standards? If not, how and when do we fix it? · D o you know how your experience is significantly different and better from those your competitor delivers – from meet and greet, to customer touch points, to your various processes, to the language you use, to follow up, to communication protocols for service, to what they do while waiting to get into F&I, and the like? If your answers aren’t many and compelling, you’ve got more work to do. If this seems like a lot of work, that’s because it is a lot of work. I never said building a great brand through “wow” customer experiences is easy. But I can assure you it is worth it. And if your people and dealership are continually in price battles to be the cheapest so you can get the deal, there’s a better way: create improved experiences and the price becomes less relevant. People pay more for better experiences, and they return for more and tell others to do likewise. Believe me, whatever it costs you in time, training, or dollars to build a “wow” brand, when all is said and done, the “wow” is worth it. Dave Anderson, “Mr. Accountability,” is a leading international speaker on personal and corporate performance improvement. He is also the author of 14 books and host of the podcast, The Game Changer Life.