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ASSOCIATION NEWS | BY ANDY FRIEDLANDER
For the past several years, NIADA has worked hard to top itself when it comes to the annual NIADA Convention and Expo.
While it hasn’t been easy, that goal has been met. Attendance has risen for each of the past five conventions, with the past two setting alltime records in that category. The 2017 event had more attendees, more exhibitors and more education sessions on more topics than any in the convention’s 71-year history. Clearing such a high bar takes extreme measures. And so, NIADA has gone mega. That’s mega as in MegaConference – for the first time ever, a showcase for the combined resources of NIADA and the National Alliance of Buy Here-Pay Here Dealers, which was acquired by NIADA in December. The acquisition was the impetus for merging NABD’s traditional May conference into NIADA’s Convention in June, which will create what is expected to be the largest event in the used car industry, one that will provide unmatched resources for independent dealers and allow you to Rewrite the Playbook for success. That event – the NIADANABD Mega-Conference, officially known as the 72nd NIADA Convention and Expo – is coming up June 18-21. After nine years in Las Vegas, it’s moving for 2018 to a brandnew venue, the luxurious Rosen Shingle Creek Resort in Orlando, Fla. So what exactly is a MegaConference? It is some 60 education sessions, the most ever for an NIADA event, covering every aspect of independent dealership operations in five distinct educational tracks – Retail, BHPH, Legal and Regulatory, CPO and an allnew Digital Marketing track. It is sessions exploring new developments and best practices in inventory acquisition, sales, marketing and advertising, F&I, collections, technology, social
NIADA GOES MEGA NABD Joins NIADA Convention and Expo to Create the Used Car Industry’s Largest Event – the Mega-Conference
media, cybersecurity and so much more, led by the industry’s best and brightest experts – including NIADA’s own Justin Osburn. It is the top-of-the-line BHPH-specific training attendees of NABD conferences have come to expect over the years, featuring NABD founders Ken Shilson and Ingram Walters, NIADA BHPH gurus Chuck Bonanno, David Brotherton and Mark Dubois, and many more of the Buy Here-Pay Here world’s top minds. It is Wednesday afternoon’s Financing Fair, a chance for you to meet one-on-one with a variety of finance companies to discuss your specific problems – and to find solutions. It is the new Marketplace Keynote Series, offering the insights of some of the industry’s most prominent leaders, thinkers, innovators
and disruptors about where the used car market is now and where it’s headed, as well as cutting-edge ideas on how you can take advantage of those conditions. It is by far the largest Expo Hall in NIADA Convention history, featuring more than 210 exhibitors offering the latest state-of-the-art products and services to help keep you ahead of the pack in today’s ultra-competitive used vehicle market. It is the boundless enthusiasm of keynote speaker Dick Vitale, appearing courtesy of CARFAX. Known to basketball fans for his energy, wit and colorful descriptions of players and plays, Dickie V’s entertaining message of overcoming life’s challenges and obstacles is nothing short of “awesome, baby!” He’ll speak Tuesday afternoon and will meet attendees at the CARFAX
DESIGN CHOICE. I WOULD LIKE TO LET THE BACKGROUND GRAPHIC SHOW LIKE THIS.
booth during the Expo Hall’s Grand Opening Reception that evening. And, of course, it is the traditions that have become an essential part of the NIADA Convention and Expo, beginning with the popular Cigars and Martinis welcome reception Monday night, featuring a tailgate party theme. We’ll honor the industry’s best at Wednesday night’s National Leadership Awards banquet – including Crystal Eagle membership awards, the CPO Dealer of the Year the NABD BHPH Hall of Fame’s latest inductee and the NIADA & Cox Automotive Community Service Award – leading up to the climactic announcement of the National Quality Dealer of the Year on Thursday night. And we’ll close the event in style with a rocking After Party featuring live music. Your chance to go mega by attending the NIADA-NABD Mega-Conference is here now. You can register online at www.niadaconvention.com. And don’t miss out on group discount opportunities for additional attendees from your dealership. Due to the immense interest in this event, NIADA is offering five options for accommodations. Because the Rosen Shingle Creek is sold out, NIADA has secured a block of rooms at four nearby hotels – with transportation to and from the Convention venue provided. Don’t miss out on this great opportunity. Register and make your travel plans now. For more information about the 2018 NIADA Convention and Expo, visit www.niadaconvention.com or www.bhphinfo.com, or call 800-682-3837.
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INSIDE 06................................................AIADA Auction Coupon App 07............................................................President’s Message 08..............................................................World Class Motors 10............................................................Don’t Step on a Rake 12.............................................................. Director’s Message 14............................................................... BHPH Benchmarks 16................................................................AIADA Convention
WHAT’S NEW
Big and Rich Concert NIADA is pleased to announce the popular Cigars and Martinis welcome reception on the opening night of the first-ever NIADA/NABD Mega-Conference will be followed by a special concert on the terrace featuring none other than country duo Big and Rich. The concert is presented by TradeRev. Learn more about the concert, and the largest and most comprehensive education agenda in the used car industry, at www. NIADAconvention.com.
ADVERTISERS INDEX
AmTrust Financial................................................................IBC ARA GPS..................................................................................4 AutoZone.................................................................................7 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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ASSOCIATION NEWS
|
NEW MEMBERS
Chuck Burns CRB Auto Sales Birmingham
Kamelliah Furlow Inn-Route Automotive Birmingham
Welcome
Danny Britt Danny’s Wholesale Auto Inc. Pinson
Richard Jones Jones Auto Group LLC Montgomery
Eric Wallis 1803 Capital, LLC Gretna, LA
Paula R. Hall Dais Used Auto Sales Talladega
Jeff Lowery/Anthon Lanthrip A & M Automotive Sylacauga
Gary Murrell Dependable Auto Sales LLC Montgomery
Jorge Clements Lang Motor Company LLC Decatur
Ronin Farahmand Auto Matrix Car Solutions Hollywood, FL John Buzbee Buzbee Auto & Service Birmingham David Phillips Classic Motors Pinson Brad Porch Coosa Valley Auto Sylacauga
Eddie Lambert Discount Auto Mart LLC Auburn Eddie Dawson E & Jay’s Automotive LLC Birmingham Tom Rector Floorplan Xpress LLC Mathews Mike Shelda Free Land Automotive Birmingham
James Adams/James Geddings MGM Auto Brokers LLC Montgomery Randall McCormack McCormack Auto Service LLC Pell City Scott Shirley Midtown Auto Sales Winfield Robert Malone PLM Motorsports Wetumpka
Michael Green Pinnacle Auto Brokers Rainbow City Anthony Victor Prestige Autos LLC Decatur Lee Stockton Regal Auto Sales LLC Alabaster Duke Caro River Region Auto LLC Prattville Andrew Lee Ronnie Lee’s Imports Daphne Scott Posey S & G Auto Sales Trussville Edgar Valerio Valerios Auto Sales Montgomery Brittany Jackson Valleyside Automotive Company Huntsville
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
Erek Yarbrough Pleasant Grove
Tim Duke Birmingham
Chris Mundy Columbiana
Jay Saul Jasper
Chris Mullinax Hoover
Randy Crump Jasper
Ricky Young Boaz
Kelly Steely Hoover
Patrick Graves Moody
Jerry Giles Tuscaloosa Randy Little Satsuma
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
MANAGEMENT MATTERS
Four Contributing Factors
You might think that with rising supplies of wholesale vehicles dealers would have an easier time seeking out auction cars to fill gaps in their inventories. But the reality is different. Dealers still struggle to acquire cars that will appeal most to buyers in their markets, and purchase them at prices that will yield respectable margins. Competition accounts for part of the struggle. Even with more available cars, there are more dealers vying for them. But the difficulties dealers face also owe to four factors that encompass the ways dealers prepare for auctions, their auction expectations, and the inherent inefficiencies of sourcing vehicles from remote locations. Knowing Exactly What to Buy Despite technology that can efficiently tell dealers the exact vehicles they should acquire before they go to an auction, many dealers and their buyers just show up. They do little homework. Instead, they rely on instinct to size up cars they believe they need. This approach is far less efficient than using technology to determine the precise cars to pursue. Likewise, it’s not 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. • Lots of special updates coming: You can receive a special text if an auction is having a special sell. • Check for open recalls. • Link to you Carfax or AutoCheck account. • Go directly to your favorite auctions’ run list. • And much more. AIADA, working with your auctions making your buying experience easier! Call us today at (205) 942-1000 to get yours!
uncommon for dealers who rely mostly on instinct to find that their auction units contribute significantly to inventory age issues. Finding the Right Inventory It’s one thing to know the exact used vehicles you need. It’s another task altogether to locate these vehicles at auctions across the country. While some dealers have adopted new technologies to efficiently identify the auctions where the cars they need reside, many still rely only on auctions closer to home. This preference may help minimize transportation costs, but in today’s wholesale market it also limits selection and concentrates competition for the same vehicles. The end result: Dealers restrict their opportunities to acquire the right inventory when they stay local. Buying at the Right Price A dealer recently shared that while he’d love to pay less to acquire nearnew vehicles for his certified pre-owned program, he’s come to understand that’s impossible if he wants to maintain his retail sales velocity. “I’ve found the ‘right’ price at auction translates to a roughly $1,000 front-end gross,” he said. “To me, they’re ‘spinner’ cars that we buy and then spin them through the shop and sell fast. Then, we repeat the cycle.” The key take-away: The dealer’s determined the “right” price for himself with every car. He uses technology and tools to calculate each unit’s profit potential
(accounting for the costs of acquisition, transportation, reconditioning, etc.), and the maximum he might pay, before he places his bid. When dealers complain they can’t acquire auction vehicles for the “right” money, I typically find they haven’t conducted a dispassionate calculation of the “right” price for themselves, or their expectations for a front-end profit don’t match the realities of today’s market. Reducing the Time Required Dealers who proactively address each of the preceding factors will, by design, become more efficient as they source vehicles from auctions. But the level of efficiency dealers achieve will depend primarily on how well they use the technology and tools that facilitate faster acquisitions. I would add that auctions, as well as solutions providers, could do more to make the wholesale marketplace a more efficient place for dealers to do business. It’d be pretty cool, I think, if dealers could count on a system that, almost automatically, began the work of re-supplying their inventories when a retail used unit heads home with a customer, if not sooner. Until that day, however, there’s much dealers can do themselves to become more effective and efficient at acquiring the cars they need at auction.
| BY DALE POLLAK
AUCTION-BUYING IS MORE DIFFICULT THAN IT SHOULD BE
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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. • Buying online: Use the AIADA Auction Coupon App online at some 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. It will be up to date. 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
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Dale Pollak serves as executive vice president for Cox Automotive, a position he’s held since the company he founded, vAuto, became part of the Cox family in 2010. Dale pioneered the Velocity Method of Management, which has been adopted by thousands of dealers.
ASSOCIATION NEWS
| BY TODD ODEN, AIADA PRESIDENT
THE STRUGGLE IS REAL
President’s Message
I hope by the time you are reading this you and your dealership have received the fruits of another successful tax season. Income tax time is good for all types of dealerships. Traditional, subprime and Buy Here-Pay Here dealerships all share profits from customers having a little extra money to spend on vehicles. For some dealerships it may only be profits from a service center or sale of accessories, but for most it is additional cash in pocket to make deals happen. Being in business for 30-plus years, I have seen many good dealers struggle through tax time. Many dealers struggle with capital to finance their dealership and inventory. They struggle with the long hours and stress on their dealership staff. The toughest struggle can sometimes be on our families. For most dealers, enough quality time is our biggest struggle. I know, like many of you, by the time I get home all I can do is rest up for the next day. I say, “The older I get, the better I used to be.” There are many good tools to help dealers manage their time and dealerships today. One great tool is to attend our yearly AIADA convention, where you
can surround yourself with the best dealers trying to better themselves and their dealerships. You will learn the latest and greatest information, techniques, rules, regulations and advice to make your dealership run smoother and be less stressful. I believe the most important tool is to surround yourself with quality likeminded
dealers, vendors and industry people. The struggle is real! We must all be mindful not to surround ourselves with negativity. Try hard to make other people smile. In return you will find yourself smiling too. The struggle is real, but just maybe with the right attitude the struggle can be real easy.
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DEALER SPOTLIGHT |
WORLD CLASS
MOTORS The Luxury Sensation
When success tapped Jason Thomas on the shoulder in 2010, he knew it was time to expand his burgeoning 2-year-old online automobile sales business into a brick-and-mortar car dealership. And World Class Motors was born. “It seems a little backward in today’s world,” Thomas said. “Over the past few years, more and more businesses are going the other way – eliminating the overhead of a physical location to centralize their products and services online. But in the world of luxury vehicle sales, there’s nothing like being able to see, touch, and drive the merchandise!” World Class Motors customers seem to agree. When Thomas opened the Gardendale, Alabama, store, the lot boasted a small inventory valued at approximately $140,000 – which sold out during Thomas’ first week in business! “My goal was to stock my lot with somewhere around 20 to 25 pre-owned, showroom condition luxury vehicles, but demand quickly adjusted my business plan,” Thomas said.
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“Today we rarely offer fewer than 50 such vehicles at any given time, and we can barely keep those in stock.” In fact, World Class Motors topped $8 million in sales last year. Such impressive numbers prove the word “luxury” shouldn’t scare off prospective customers – because no job is too big or too small. “I don’t want brands like Ferrari, Maserati, and Mercedes to scare off potential clients,” Thomas said. “Sure, I sell vehicles in the $200,000 range, but I also sell vehicles in the $5,000 range. I don’t want my business to detour people on a fixed income because I work with all budgets and price ranges.” In fact, with value in mind, World Class Motors has recently added the Alabama Independent Automobile Dealers Association Certified Pre-Owned vehicle program
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to their catalog of offerings. The CPO program is designed to ensure each vehicle undergoes a thorough, multipoint inspection of various mechanical and aesthetic components to protect World Class customers and their investments. As a complimentary perk, and to show their appreciation to the customers who keep them going, World Class includes AIADA’s Key Loss Protection Plan and Emergency Roadside Assistance coverage as well. “We’ve embraced this CPO program because we care about our customers,” Thomas said. “Our goal is to provide peace
of mind with every car that leaves our lot. Isn’t it nice to know you won’t have to worry about being stranded on the side of the road, or shelling out $300 to replace one of today’s expensive key fobs?” he continued. “That’s how to enjoy your purchase!” What’s not to enjoy? A certified pre-owned vehicle removes the worries associated with many unforeseen expenses. Couple that with luxury brands at excellent prices, and the value is easy to recognize – be it via virtual shopping or visiting the World Class Motors brick-and mortar store! .
SOCIAL MEDIA | BY KATHI KRUSE
DON’T STEP ON A RAKE Avoid Social Media Pitfalls
For many dealers, social media seems like a minefield. Add the fact it's quickly matured into a very viable place to engage customers and promote sales and you've got a terrifying place many dealers would rather ignore.
Ignoring social media in today’s world is the equivalent of opening a store without telling anyone. But all the warnings in the world are not going to motivate a dealer to take action if they still have a lot of fear. I'd like to alleviate some of that fear today. Avoiding social media pitfalls has become a big business. It's difficult to know where to turn for the best advice. For nearly 10 years now, I've been singing the “social media song” and, alas, the needle hasn't moved much, especially for auto retail. You know what? That's okay. It's perfectly fine to venture out into social media at your own pace. What I don't want you to do is venture out and step on a rake.
5 FOUNDATION ESSENTIALS FOR SOCIAL MEDIA SUCCESS
Whether you're new to social media or you've been using it for some time, these five components will help you leverage all you can from each platform.
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Secure Your Reputation with a Social Media Policy
At Kruse Control, we advocate implementing an upto-date policy for employee use of social media. The line between dealers and their employees on social media is steadily blurring. Organizations today need a social media policy that helps keep the store’s reputation intact while also encouraging employee participation online. A social media policy outlines how an organization and its employees should conduct themselves online. This document helps safeguard your brand’s reputation. Ideally, you'll want to consult with the following stakeholders when creating a social media policy for your store: • C-level (owners and managers). • Human Resources. • Corporate counsel. •S ocial media strategist. Because social media moves fast, this policy should be considered a living document – ongoing updates will be necessary.
Written Social Media Strategy
Social media strategy defines how a dealership will use social media to achieve its business goals, including the supporting platforms and tools it will use to do so. At a basic level, it’s a statement of intent, outlining the goals and measurable objectives for using social media, and the target outcomes you want to achieve.
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When defining what it takes to achieve social media success, we need to talk about strategy first. I was inspired to include this component because I receive questions like these from good people, many of whom are struggling to find answers: • “Do I have to be on every social network?” • “What type of things do I say on social media?” • “ How often should I post?” • “How do I get more followers?” • “ My boss asked me to take over the Facebook page, but where do I start?” • “ Should I pay for social advertising?” • “I'm in a boring industry. Do I still need social media?” • “ Do I need social media management tools?” • “Should I outsource my social media?” I've had a run of these emails lately and, frankly, my heart aches for these good people because they're lost. It's easy to get lost these days because the social media landscape is no longer a field of flowers sparsely populated. Today, social media is a dense, crowded, noisy, smoggy urban jungle.
Do a Social Media Audit
Whether your social media marketing is in-house or outsourced, it’s often difficult to see where the gaps are between your current successes and where you need to be. Your inbox is full of tips, tools and hacks to “improve” results and it’s exhausting. The best way to remove the guesswork is with a social media audit. A social media audit is a smart step because time and resources are often wasted trying to improve things that don’t need improving, while neglecting the things that really need attention.
Build an Online Review Funnel
Word of mouth referrals have always been a go-to resource for finding trusted sellers, and online ratings sites are where most people turn today.
Online reviews are insanely influential: • 90 percent of consumers read online reviews. •8 8 percent trust online reviews as much as personal recommendations. • 86 percent will hesitate to purchase from a business that has negative reviews. • Customers are likely to spend 31 percent more with a business that has positive reviews. • 92 percent will use a local business if it has at least a 4-star rating. Benefits of building an online review funnel: 1. S ystematically drive customers to one conversion funnel that routes them to the review sites you care about. 2. Automatically ask, remind and guide happy customers through the funnel. 3. R ecover unhappy customers before they vent online. 4. A nalyze results daily for actionable insights to improve upon.
Engage with Social Customer Service
People increasingly turn to social media to engage with businesses. Social has matured as a communication channel and people have blended it into their lives. They expect dealers to do the same. While many companies now use social media regularly, very few take social customer service seriously. Currently, 92.5 percent of brands fail to meet customer expectations on social media and these failures can have big implications. Quality customer service – regardless of channel – relies on a meaningful, efficient, solution-focused exchange between dealers and their customers. The growing preference for social media as a communication channel requires your organization to re-think its customer service strategy. Good social customer service strategy keeps your store in the conversation and doesn't allow malcontents and competitors to speak for you. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc., which coaches, trains and delivers webinars focused on integrating social media and online reputation management into dealership operations. She can be reached at kathi@krusecontrolinc.com.
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ASSOCIATION NEWS | BY RANDY JONES, AIADA EXECUTIVE DIRECTOR
DIRECTOR’S MESSAGE
Who We Are
Who is AIADA?
The Alabama Independent Automobile Dealers Association is the sixth largest independent dealers association, in the nation. AIADA represents the used motor vehicle industry in Alabama and teams up with NIADA, which brings a force of more than 38,000 licensed used car dealers and represents our dealers nationwide. Your 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, we form a grassroots framework that provides a dual layer of advocacy unmatched in the independent industry. For over 49 years, AIADA has engineered programs and leveraged technology to fulfill its mission to advance, educate and promote the independent automotive 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. Your customers are aware – they look for the AIADA logo on your website and business locations. AIADA is your one-stop source for automotive information. We show you the best ways to get your vehicles in front of customers, lenders to finance your customers, floor plan companies to increase your inventory, warranty companies to keep your customers safe from the cost of unexpected breakdowns, dealer management systems to run your business, insurance companies, etc. Do you need help with automotive titles, power of attorney, title extensions, title corrections, arbitrations, legal advice or any other automotive related questions? AIADA has the answers for our members!
The Importance of a Large Association The bigger you are, the more power you have. I would like to invite every automotive dealer and related vendor to get to know us better. If you are currently a member, thank you for your AIADA membership! If not, we need you to join!
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We are a very active association and work with government officials at local levels as well as state and national levels. To make our input more effective, we need you to become more active. The laws and rules that govern us are being modified, and sometimes completely changed, more frequently than ever before. For us to continue to have input on these and other important matters we need to grow. Montgomery and Washington, D.C., will listen to numbers. The larger we are, the more power we have. We have seen some great changes in the past few years, but more is needed. We are staying aggressive, pushing the changes we need to grow our businesses and take care of our customers. The new compliance laws and changes with the privacy rules are prime examples of the old ways. Because of our growth and working together with our government officials, we have played a big part in these needed changes. AIADA will stay on top of these changes and make them part of our day to day operations.
BHPH Lenders, Banks, Credit Unions and Subprime Lenders We need to do more to make it easier to get good financing for our used vehicle buyer in Alabama. The more we can do to take care of our lenders, the better finance rates our customers will receive. Thinking it will fix itself is a pipe dream. It is going to take us being aggressive. We need to stop all the predators sucking the life out of our lenders, though I know it will not be easy! But with dealers and vendors working together, we can make Alabama friendly to BHPH lenders, banks, credit unions and subprime lenders.
Closing AIADA is here to help you and your business in many ways. We are a non-profit association set up by and operated by a board of directors made up of dealers and vendors like you. This is your association. Whether your dealership sells one vehicle a month or 300, whether your dealership does Buy Here-Pay Here, cash sales, subprime financing, prime financing or all the above, you need to become a member of AIADA. Start building the foundation for your business today! It takes only two minutes to join AIADA. Call (205) 942-1000.
LEGAL NEWS | BY JEFF INGRAM
REPOSSESSIONS U.S. Department of Justice Taking a Closer Look
On December 19, 2003, President George W. Bush signed into law the Servicemembers Civil Relief Act. The SCRA is federal legislation aimed at protecting the legal rights of individuals serving in the United States armed forces. One of the basic protections of the SCRA is from the repossession of a motor vehicle owned by a servicemember, individually or jointly as a co-signor, while said servicemember is in military service. If an individual is in the military and has defaulted on an automobile loan, the SCRA provides that person with special protections against the repossession of the vehicle. While you may still be able to repossess the vehicle, that right is limited by the SCRA. The SCRA prevents you from repossessing a vehicle without a court order while your customer is in military service. The SCRA requires a court to review and approve any repossession if the servicemember took out the loan and made a deposit or loan payment before entering into military service. Recently, the DOJ has taken a closer look into situations involving auto finance companies and the repossession of vehicles owned by servicemembers. Since 2016, the DOJ has filed many lawsuits against auto finance companies alleging violations of the SCRA by the repossession of vehicles owned by servicemembers without obtaining the necessary court orders. In July 2016, the DOJ filed suit against Michigan-based
Community Credit Union after it learned the credit union had repossessed a servicemember’s vehicle. The lawsuit alleged the credit union did not have an SCRA compliance policy and it had unlawfully repossessed the vehicle while the vehicle’s owner was actively engaged in military training. After the lawsuit was filed, the DOJ learned of three additional servicemembers whose vehicles were illegally repossessed. The settlement reached required the credit union to provide $10,000 in compensation to each of the affected servicemembers, plus any lost equity in the vehicle with interest, in addition to the credit union repairing the credit of all affected servicemembers, paying a $5,000 civil penalty to the United States and to develop a procedure to determine, in the future, whether any vehicle it is planning to repossess is owned by an active duty servicemember. In November 2017, the DOJ obtained a $5.4 million settlement for servicemembers whose vehicles were unlawfully repossessed by Wells Fargo Bank in violation of the SCRA. The complaint, filed in September 2016, alleged Wells Fargo had repossessed 413 vehicles of SCRA-protected servicemembers without court orders. During the settlement process, the DOJ discovered an additional 450 violations that had occurred January 2008-July 2015. During the settlement of the Wells Fargo complaint the assistant attorney general announced, following Veteran’s Day,
the Justice Department will continue to honor their service throughout the year by vigorously enforcing servicemembers’ rights under federal law. The men and women of our armed forces should be able to devote their full attention to their military duties, without having to worry about their cars being repossessed back home. The DOJ has done just that by filing several additional lawsuits following the Wells Fargo settlement. In September 2017, the DOJ announced a settlement with CitiFinancial Credit Company wherein CitiFinancial was to pay $907,000 to resolve allegations it violated the SCRA by repossessing 164 cars owned by SCRAprotected servicemembers without first obtaining the required court orders. Also in September/October 2017, the DOJ announced a settlement with Westlake Services, LLC, wherein Westlake was to pay $760,788 to resolve allegations the company had violated the SCRA by repossessing 70 vehicles owned by SCRA protected servicemembers without first obtaining the required court orders. It’s important to note the DOJ alleged the company had failed to check the Defense Center database to determine whether customers were SCRA-protected servicemembers before repossessing vehicles without court orders. More recently, in February 2018, the DOJ settled with a City and County in Hawaii that provided services for towing and disposal of vehicles after repossession and/or after vehicles had been deemed abandoned. The agreement provided for payment of $27,889.95 to one servicemember, $17,253
to another servicemember, and $10,175 to a third servicemember, in addition to the creation of a $150,000 settlement fund to compensate other servicemembers who had been similarly harmed. In March 2018, the DOJ filed a lawsuit against California Auto Finance. This lawsuit was preceded by an investigation the DOJ had launched after receiving only a single complaint from a servicemember. The DOJ alleged, in addition to illegal repossession of vehicles owned by servicemembers, the auto finance company had no process or procedures in place to verify the military status of borrowers before repossessing vehicles. Allegations that a company failed to perform a SCRA search prior to repossession have become a recurring feature of DOJ complaints. The above settlements and complaints also demonstrate the DOJ’s willingness to bring an SCRA enforcement action, even when only a single servicemember is affected by non-compliant lending and collection practices. In light of this low bar, all dealerships and financial service companies should take steps to ensure compliance with all aspects of the SCRA. While the SCRA does not specifically require checking the Department of Defense’s database to verify military status, this requirement has been imposed by the DOJ. As shown by the DOJ’s recent interpretations of the Military Lending Act, and its recent interest in the SCRA and repossession of vehicles owned by servicemembers, military finance and lending is becoming an increasing regulatory risk for dealerships and their related finance companies. So what should you do before taking action to repossess a vehicle, either as a Buy Here-Pay Here dealer or related finance company? It is recommended you conduct a search in the Department of Defense’s database (https://scra.dmdc.osd.mil/ scra) to verify the military status of your customer every time you seek to repossess a vehicle. Once the search is conducted, you should print out the response page and place it in your file. If it is determined the customer is currently in the military service, you should stop all action to repossess the vehicle and proceed with obtaining the required court order.
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MARKET WATCH | BY KENNETH SHILSON
WITH 2017 IN THE REARVIEW MIRROR, WHAT’S AHEAD? Insights from 2017 BHPH Benchmarks I recently completed the BHPH benchmarks for the 20th consecutive year. My sincere thanks to NIADA and its 20 Groups, SGC CPAs, NCM 20 Groups and Subprime Analytics for the portfolio performance information they contributed. Collectively their data and the narrative make this a very informative report. In the aggregate, these statistics provide a comprehensive look at the 2017 financial and operating performance of the BHPH industry, together with important trend information. It is a reference tool for operators, capital providers and others who are interested in the subprime auto finance marketplace. Here is an overview of the 2017 results and metrics: • The deep subprime market remained highly competitive in 2017 but some of that competition declined during the second half of the year and the first quarter of 2018. • Independent operators who did not match the auto bond securitization model involving newer, more costly vehicles, longer loan terms, and higher financing amounts fared better. • Increasing sales prices and amounts financed over longer repayment terms did not appear to work successfully for those who tried it.
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• Overall profitability improved in 2017 for operators who were proactive using social media and advance tax refunds, and who implemented technology to reduce their overhead costs and increase their efficiencies. • Rising interest rates and tighter capital availability forced operators to be more cash-efficient. That trend will continue in 2018 and beyond. Subprime customers are facing higher interest rates and gas prices. • The best performing business models were both profitable and cash efficient. • Bad debt losses and default rates increased as competition has diluted the overall quality of subprime customers during the past 36 months. • A new credit loss measurement standard will require operators to
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increase their allowance for credit losses and reduce their equity in their future financial statements. Prudent operators should prepare now for this change before they are required to report it in their financial statements. • Although vehicle acquisition prices stabilized during 2017, good subprime inventory remains in short supply, challenging to find and expensive. • Salvage values for repossessed vehicles that could not be retailed stabilized in 2017, but remain more than 50 percent lower than their values a few years ago. • Texting has replaced emails as the best way to connect with and collect from subprime customers. They all depend on their smartphones. At the NIADA/NABD Convention and Expo in Orlando, Fla., June 18- 21, I will take a deeper dive into these
benchmarks and discuss more about what worked and what didn’t, what’s ahead and what we have learned during the past 36 months. I will also discuss which business models are the most successful today. Copies of the benchmark report will be available at the conference and in the June issue of BHPH Dealer, a supplement of Used Car Dealer magazine. The retail side of the subprime used vehicle business is declining while BHPH offers some great new profit opportunities for those with the capital and right infrastructure. If you want to make 2018 better, come to Orlando and learn how to Rewrite your Playbook and become more successful in the subprime auto finance business. Good luck and see you in Orlando! Kenneth Shilson, CPA, (ken@kenshilson.com) is president of Subprime Analytics. Subprime Analytics uses data mining to perform computerized portfolio analysis for operators and capital providers. For further information call 832-767-4759.
PRODUCTS & SERVICES | BY DANNY DELICH
PEAK PERFORMANCE TEAM’S RETRO PLANS
AIADA Member Benefit
Retro plans have nothing to do with how your store was set up in the 70’s. They’re a lucrative – if misunderstood – tool for helping you earn more money today.
A lot of dealers have heard the terms “retro” and “dealer participation” in reference to service contracts, but many of you are unfamiliar with the details of these plans – and their potential to make you money! Dealer participation programs come in many forms but all share common characteristics. At their core, participation programs allow the dealer to keep – profit – some of the unused premium. Premiums are the money set aside to pay claims on the contract, and as with any “insurance company” a VSC takes in more money than it pays out. Think of it like this: a retrospective (retro) or dealer participation program is a reward for selling good cars. You earn a partial rebate of the unused service contracts premium, based on lower claims losses and production. This is a reward for doing business the right way. You may think these programs are only for new car stores and the largest independent dealers – the “big boys.” Well, you’re wrong! And you can thank AIADA executive director Randy Jones for reaching out to Peak Performance Team to investigate retro plans and how they can best be tailored to benefit the independent dealers of Alabama. Randy felt independent dealers were missing out on the rewards enjoyed by the “big boys,” even when they do business by serving their customers with consideration, pride, and integrity. Independent dealers who recondition their inventory, put a warranty on each vehicle, sell the customer a service contract, and use their initiative to care for the customer proactively after the sale should enjoy the same rewards as the “big boys!” Since full-on reinsurance (another dealer participation model) takes about $200,000 per year in net premiums – and can be complex as well as expensive – it seems a retro program would be a better fit for smaller dealerships. One of the qualities that better suit retro plans to independents is that they are established with no outlay of cash, which is a basic requirement when setting up reinsurance. With this in mind, PPT has come up with the following retro plan for the independent dealers of the AIADA: • As little as 5 contracts per month (or 60 contracts, annually). • 3 month limited warranty to 5 year/100,000 miles included (for qualifying contracts). • 60 contracts per year (just 5 contracts per month) will earn you 25 percent of the remaining underwriting profits. • As you add contracts, that percentage grows: o 90 contracts per year (less than 8 contracts per month) will earn you 35 percent. o 120 contracts per year (10 contracts per month) will earn you 50 percent. o 240 contracts per year (20 contracts per month) will earn you 75 percent. So even a small dealership that sells 60 to 70 contracts per year will qualify for retro profits! Let’s say you sell 150 cars a year and you put a 3 month/3,000 mile
limited warranty on every vehicle. On average, $75 is going into reserves to pay claims. If you multiply $75 by 150 units, you have $11,250 in annual premiums. The national average of claims loss runs about 70 percent (which means 70 cents is paid out for every dollar the service contract company takes in). At the national average claim loss rate, there would be $3,325 left over at the end of the contract. Peak Performance Team is going to hand you a check for $1,687.50 for just the 3/3,000 limited warranties. This is your money and it goes back into your pocket. Just think of the great things you can do with that cash. That can be a nice vacation for you and your family! And what did your current provider give you last year? Donuts. There’s nothing wrong with donuts. I love donuts, but I love checks more. Don’t you? Peak Performance Team wants to see you rewarded for your hard work. This business has its ups and its downs. I’ve been at it for 30 years and I love it! It has given me a great life, just as it has you. Peak Performance Team wants to make it a little better, and reward you for your efforts. Danny Delich is Peak Performance Team’s SE Regional VP. For more details of the terms and conditions of our programs, contact Danny at 470-955-9757.
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AIADA’S 49TH ANNUAL CONVENTION SAVE THIS DATE & EXPO RACING TO THE FINISH LINE JULY 20-21, 2018
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/trainers in the automotive industry! Learn from the best!
Here are just some of the things you will take home this year: • All the changes in the laws and rules that affect dealers. • The proper paperwork you need with different type sales to protect your dealership. • Better ways to get the correct inventory for your dealership. • Meet new lenders and find the one who works the best for
“YOU WILL LEARN MORE your customers. • Today’s buyers are on the cloud. Learn the newest and most THINGS ABOUT YOURSELF effective ways to use multimedia to bring the customers AND YOUR DEALERSHIP to you! THEN YOU EVER THOUGHT Go home with the knowledge POSSIBLE!” to make you the best of the best! 16
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Convention Registration Form
ALABAMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION 49th Annual Convention July 19-21, 2018 Hilton, Pensacola Beach, FL Deadline for registration is July 10, 2018 PARTICIPANT INFORMATION: Member Name (as it will appear on badge):______________________________ Name of Spouse/Guest (as it will appear on badge):_________________________ Names of Children attending 1.__________________Age____ 2.________________Age____***(Please fill in age)
3.__________________Age____4.________________Age____ Dealership/Business Name: ______________________________ Contact Person: ______________________ Address:_____________________________________Email: ________________ 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____
FRI. DINNER
Adults ______ Children ______ Children____
SAT. BREAKFAST
Adults ______ Children ______ Children____
SAT. BANQUET (0 to 5 years are free)
Adults ______ Children ______ Children____
REGISTRATION FEES: MEMBER: $349.00 if you register by JUNE 1, $399 AFTER JUNE 1 $_________ MEMBER’S SPOUSE/GUEST: $99 if you register by JUNE 1, $149.00 after JUNE 1 $__________ EACH EMPLOYEE OF BUSINESS: $349 if you register by JUNE 1, $399 after JUNE 1 $__________ EACH EMPLOYEE’S SPOUSE/GUEST: $99 if you register by JUNE 1, $149.00 after JUNE 1 $__________ CHILDREN 13-16 YEARS OLD: $110.00 $________ CHILDREN 6-12 YEARS OLD: $99.00 $________ CHILDREN 0 TO 5 YRS: FREE (# of children coming 0-5 years old) ________ TOTAL REGISTRATION PAYMENT =$____________ (Please make check payable to: A.I.A.D.A. (Payment must accompany registration form) (please check ) 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 group ID#AIA. • Reservation deadline is June 17, 2018. • Earlybird deadline for dealers is June 1 to make you eligible for a drawing at the convention.
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GOLF REGISTRATION
If you wish to play golf, just fill in the names of the golfers and we will get you into the golf tournament. Details are in progress as far as the tournament place, time and cost. It will probably be Thursday morning, July 19.
Name of Golfer_____________________________________________ Handicap___________Email Address____________________________ Phone:________________________ Name of Golfer_____________________________________________ Handicap___________Email Address____________________________ Phone:________________________ Name of Golfer_____________________________________________ Handicap___________Email Address____________________________ Phone:________________________ Name of Golfer_____________________________________________ Handicap___________Email Address____________________________ Phone:________________________
AIADA T-SHIRT FORM
AIADA LADIES AUXILIARY
We will be selling T-shirts at this year’s convention commemorating our 2018 event at Hilton Pensacola Beach Gulf Front Hotel in Pensacola Beach, Florida, to raise funds for our scholarship program and the charities we support, along with other situations that need a helping hand. For example, we have been working with several auctions for the Make a Wish Foundation, and what a blessing to see these children’s wishes come true. The faces of these children, when their wish is granted, will bring tears to your eyes and joy to your heart. We sold T-shirts at last year’s convention and it was a great success, so we decided to sell again this year. We hope you will help us out and order T-shirts even if you are not attending our convention. Though we hope you will attend. Since Friday night is the Ladies Auxiliary night, we can all wear our T-shirts then. We will need your sizes, number of T-shirts and your money beforehand so we can get them ordered. Please fill in the form below and return with payment to the association office as soon as possible. DEADLINE TO GET YOUR ORDER IN IS JUNE 1. COMPANY NAME:_________________________________________________________________ CONTACT OF PERSON FOR T-SHIRT__________________________________________________ LADIES
MEN
CHILDREN
SIZE ________
SIZE_______
SIZE_______
HOW MANY________
HOW MANY_________
HOW MANY_________
PRICE IS $20 EACH
TOTAL AMOUNT ENCLOSED $_______________
You can pay by check, credit card or cash. Please make check payable to AIADA Ladies Auxiliary and mail to: AIADA, P O BOX 19627, Birmingham, AL 35219. Type of Card: Visa____ MC____ AMEX _____ Discover_____ CC# ______________________________________________ Expiration_______________CODE _________ (3 digit on back of card or 4 digit AMEX on front of card) Billing Address ________________________________________________________ Signature______________________________________________
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