INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION OF CALIFORNIA
FEBRUARY/MARCH 2017
WEST COAST DEALER
S TAT E A F F I L I AT E
MAGAZINE
PAGE 6
IADAC PRESIDENT GUS CAMACHO & WIFE RHONDA PRESIDENT’S MESSAGE
DALLAS, TEXAS Permit No. 2079
PAID
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V I S I T U S AT W W W. I A DAC .O R G
www.iadac.org
February/March 2017
WEST COAST DEALER
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INSIDE
ASSOCIATION NEWS BY LARRY LASKOWSKI
06...........................................................President’s Message 08...........................................AB 516 Offers Unique Solution 10....................................................................Dealers Beware 14....................................................When You Least Expect It 18............................................. California Government Report 22........................................................................Legal Minute 24...........................Loyalty Programs Drive Dealership Sales 24......................................Santa Rosa Chapter Holiday Party
EXECUTIVE DIRECTOR’S MESSAGE Shut the Door on Consumer Attorneys
WHAT’S NEW
CMD Dates Announced
Class dates for NIADA’s industry leading Certified Master Dealer program have been announced for the upcoming year! Look for a class coming to your area! Dates include Feb. 9-11 in Portland, Ore.; May 15-17 in Atlanta; Sept. 12-14 in Dallas; and Dec. 11-13 in Tampa, Fla. Visit www. niada.com or contact Diann Flanders at 888-906-8283 or diann@niada.com for more information.
ADVERTISER’S INDEX
ADESA....................................................................................15 AutoZone............................................................................... 20 AVRS.........................................................................................9 Black Book................................................................................7 BMW Group Direct.................................................................. 5 CarMax Auctions ...................................................................17 Dealership Valuation Services ..............................................23 Kirk Hawkins Insurance ........................................................ 16 Lobel Financial..........................................................................3 Manheim................................................................................ 11 Manheim Pennsylvania..........................................................13 NextGear Capital....................................................................19 NIADA CPO.......................................................................... IBC Spireon ...................................................................................21 STARS GPS ............................................................. Back Cover VAuto.....................................................................................IFC
OFFICE
For information on how to become a member please contact larry@IADAC.ORG or (916) 601-4976
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 West Coast Dealer 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 The West Coast Dealer 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© 2017 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
In a recent action heard by the California Supreme Court involving Raceway Ford and over 1,100 class members, the primary issue involved backdating of contracts. A previous case, Nelson v. Pearson Ford, determined that backdating of rewritten contracts violates the AFSA. As a result, the industry has adopted the policy that contract rewrites should be dated with the current date. In the Raceway case, the court determined the plaintiff’s claim the interest charged between the first and second contracts does not violate the Automobile Financial Services Act. This was certainly a very high stakes game. Both parties were heavily invested but the decision was important to the industry also. This Supreme Court decision will hopefully discourage other consumer attorneys from similarly targeting other dealers. Dealers should consult their trusted attorney for advice regarding contract rewrite policies. One other issue addressed within this case was an error in Raceway’s dealer management software, which incorrectly charged a smog certification fee for diesel vehicles (prior to diesel vehicle smog requirements). Raceway identified the problem, fixed the software and refunded all impacted customers the fee, plus tax and interest. The court ruled the error was accidental, and that it would not be fair to allow consumers to rescind their purchases on those grounds. A key takeaway from this decision is that dealers should act immediately when they learn a customer has been erroneously charged or overcharged. Prompt action shows intent to do the right thing as seen in the Raceway case.
EXECUTIVE COMMITTEE PRESIDENT
Gus Camacho Camacho Auto Sales, Inc. Lancaster, CA 93534 661-945-2609 gus@camachoauto.com
Christy Haynes • christy@niada.com PRINTING Nieman Printing
SR. VICE PRESIDENT
Mehdi Chitgari Classic Chariots, Inc. Vista, CA 92083
VICE PRESIDENT
Guy Strohmeier Auto Center 87 Soda Bay Rd Lakeport, CA 95453
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Not always does a court decision favor the dealer. In another case involving Carmax vehicle certification, the 9th Circuit Court of Appeals ruled that by merely listing the items inspected for certified vehicles, Carmax has not fulfilled the court’s interpretation of the California law regarding “certified vehicles.” Carmax provides their customers with a certification that lists the items inspected but the absence of a check box or other indication for a pass/fail of the item was noted as a reason for the court to rule in favor of the plaintiff. A request to have the Supreme Court consider that case has been made. In many legal actions, consumer attorneys focus on minute errors that violate known laws. Even though the discrepancy may amount to no more than pennies, a violation allows them to create a case. Lack of knowledge on the part of the dealer provides opportunity for consumer attorneys. Dealers can help themselves by reducing or eliminating the opportunities they provide consumer attorneys to create lawsuits. IADAC Continuing Education was created to help you learn how to shut the door on consumer attorneys. Find out how easy it is to learn with our new video based, DMV approved program. Dealer owners or licensed managers will earn a CE Certificate to use on your next dealer license renewal. Go to www.iadac.org and enroll today!
VICE PRESIDENT
SECRETARY
VICE PRESIDENT
CHAIRMAN OF THE BOARD
Brenna Stansberry Park Marina Motors Redding, CA 96002 Putu Blanco Paul Blanco's Good Car Company Sacramento, CA
TREASURER
Beto Beas Beas Auto Sales Stockton, CA
Brittany Hibdon Hibdon Auto Center Orland, CA Rocco DeLapa Vacaville Auto Sales Vacaville, CA
MAGAZINE CHAIRMAN
Mike Macaulay Car Systems carsystems40@yahoo.com
www.iadac.org
ASSOCIATION NEWS
BY GUS CAMACHO, CAMACHO AUTO SALES
MESSAGE FROM THE PRESIDENT Dealing with Change
Many of you may not be aware of the structural makeup of IADAC. IADAC is a non-profit organization and relies heavily on the participation of the volunteer members of the board of directors. The board of directors provides help and guidance for various functions, along with support from vendors. I think it is important California dealers recognize the time and effort these individuals donate for the betterment of our industry. You dealers who support IADAC as members, I thank you and look for your continued support. Thanks also to our vendors who provide support as members and sponsors at our events during the year. IADAC resources are prioritized toward representation of our dealers. As with any business, limited resources means choices must be made as to how those resources are best utilized. Although membership is critical to maintain solvency, dealer issues are our priority. We believe
legislative issues are critical and the relationships we have developed with key departments such as DMV fulfill our mission statement. The reason we prioritize membership lower than dealer representation is that we believe dealers will want to become members when they see the results of the work we do and the benefits offered by IADAC. Auction fee discounts, increases in the doc fee, scholarship awards, killing bills that would have increased the dealer bond to $100k and the veto of one of the Buy Here-Pay Here bills are just a few examples of the way IADAC benefits the industry. So I ask you, our members, to help us remain focused on dealer representation by bringing others into the organization. Ask a fellow dealer to join. Point him to our website iadac.org and have him browse the vast resources available there. If you are not a member, sign up today. The auction discounts will cover membership and more. IADAC membership is truly a “no brainer!” Each one of you could help the industry by bringing someone aboard. This idea doesn’t work if everyone expects someone else to do the work. The auto industry is where you chose to make your career and you can help ensure the future remains bright for you and your family.
ASSOCIATION NEWS
ASSOCIATION NEWS
LOWER YOUR LIABILITY WITH IADAC CONTINUING EDUCATION Training is Key
Do you know where the weak links are in your business model? What areas expose you to the greatest liabilities? In most dealerships the answer is that sales staff is the single greatest source of potential problems. In a recent poll, dealers were asked if their sales staff ever created customer heat as a result of something they said or did that was not proper. Every dealer responded in the affirmative and many indicated it was a normally occurring problem. Conclusion: Dealers often put out fires as a result of inadequately trained sales staff. So how do you deal with this problem?
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Dealers are not typically educators. The field of education professionals is highly specialized. Even if you were qualified, what content would you teach? IADAC has a solution to help you train your staff! Our new DMV approved education program provides easy to understand video chapters that teach about common pitfalls dealers encounter. After completing this program, your sales staff will understand how to help you maintain compliance and avoid problems. As a team, your store will experience fewer issues because everyone will understand compliance. Beto Beas from Beas Auto Sales in Stockton, Calif., said, “Education is essential to maintain compliance. IADAC’s Continuing Education video program makes it easy to learn in digestible, short chapters. I haven’t taken a CE course before this that provides such a user-friendly approach. We will be having our staff complete this program also.” As a DMV approved program, completion of IADAC Continuing Education allows a CE Certificate to be issued to a dealer owner or licensed manager. Certificates are good for two years so you (or a licensed manager) can complete the program now and receive the
certificate early enough to be included with your next license renewal. Never again will you be tied up waiting for your certificate, delaying your license renewal! The program is competitively priced at just $45.99. There are not many educational programs that can be so effective yet so affordable. The program doesn’t require endless reading of obscure statutes and regulations. Instead it teaches using video. If you or your staff doesn’t have a great grasp for reading the English language, you’ll find this program allows you to learn the material more easily. Plus, the program can be completed on your smartphone, PC or tablet! Topics covered in the IADAC CE Program include DMV required items plus actual experiences dealers have reported to us. We share those items so you won’t have to learn them the hard way. Assign your staff the task of completing the program today! You’ll be pleasantly surprised to learn how much they can help you when they learn what is required to be compliant. Enter the IADAC website at www.iadac. org and click on the Continuing Education module.
www.iadac.org
LEGISLATIVE NEWS BY BETH WILLIAMS
AB 516 OFFERS UNIQUE SOLUTION TO STATEWIDE PROBLEM It Pays Off
The passage of Assembly Bill 516 by the California legislature offers a unique solution to a long discussed problem that costs the toll authorities millions of dollars a year and poses a security issue for state and local law enforcement. AB 516 provides for the development of a system that allows automobile dealers to electronically report the sale of vehicles and print temporary license plates for those that do not already have a metal plate. “This proposal has been kicked around a few times over the years after local government officials began reporting an increase in the number of drivers who evaded tolls by failing to display license plates on both new and used cars,” said California Department of Motor Vehicles deputy director for registration operations division Andrew Conway. “With a trend towards using electronic toll systems, fee collections increasingly rely on their ability to read a license plate.” To compound the growing problem, vehicles purchased at car dealerships can legally operate without license plates until they are received from the DMV. While they usually arrive about a month after the sale, it sometimes takes longer. With car sales reaching new highs, more and more cars are operating without plates and toll authorities report that unpaid tolls are becoming a larger problem than ever before. The current system requires a dealer to submit a paper Report of Sale to the DMV within five days after a vehicle has been sold, and to register and title it within 20 days (new cars) or 30 days (used cars). A copy of the ROS is taped to the car’s front windshield and serves as an operating permit until the license plates arrive.
Another big concern for the department was how this new requirement would impact the motor vehicle industry.
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Depending on how quickly the paperwork is processed, the ROS could stay affixed to the windshield 30 to 60 days. Legally, it remains valid for as long as 90 days. Under the new system, the report of sale will be immediately provided electronically to the DMV at the time the vehicle is purchased. If it does not already have license plates, a temporary paper plate will be created and linked directly to the buyer. Toll authorities will be able to read those paper plates and obtain a name and address, as they already do for permanent license plates. The version of the bill introduced in February 2015 simply called for a mechanism to issue temporary license plates that could be operational by January 2017. “While we knew toll authorities and others were dealing with a growing problem, we were skeptical that the department would be able to accomplish this based on the initial requirements of the bill,” said Conway. “When the legislature gave us more flexibility, we felt comfortable we could turn this into a really good product.” The flexibility came as a result of numerous committee meetings and input from stakeholders affected by the new law. As the bill evolved, it began to include a system that would not only solve the financial and security concerns of local government, but create efficiencies for the dealer community and ensure consumers were not penalized if there was a delay in receiving their metal plates, thus causing their temporary plate to lapse. From a consumer standpoint, early concerns focused on a requirement the temporary plates be valid for no more than 90 days. However, based on the success of the state’s electronic vehicle registration system becoming mandatory in 2011, the average time for vehicle owners to receive the metal plates had fallen to 14 to 30 days. Language was also included in the bill that provided more latitude in determining whether a consumer was at fault for failing to display the metal plate within the required timeframe. Toll authorities and law enforcement agencies signed on as supporters of the bill early on. In 2013-2014, toll authorities reported a loss of $15 million in statewide tolls due to the inability to collect on vehicles with no plates. “According to toll authority officials, even people who would normally pay the toll were figuring out that they could get away with avoiding the toll as long as they had no plate on the car,” said Conway. “For law enforcement, the electronic report of sale and corresponding temporary license plate would give them real-time information on who might be behind the wheel of the vehicle they were pulling over.” Another big concern for the department was how this new requirement would impact the motor vehicle industry. “Making sure we were not just creating
new layers of requirements for the dealer community was an extremely important part of this legislation,” said Conway. “Based on the final outcome, we are intrigued by developing a system that allows them to use the tools and processes they already have, such as their laptop, PC, and standard printers.” IADAC executive director Larry Laskowski said, “IADAC originally opposed AB 516 because the bill included implementation requirements that would have been extremely burdensome and costly for dealers, even impossible in some cases. IADAC discussed the bill with the sponsor on multiple occasions and convinced the sponsor to eliminate the language relative to the mechanism, which paved the way for the DMV to decide the best way to bring the project online.” Laskowski said giving the DMV the latitude to develop the system, having system costs covered through fees collected from the toll authorities, and the ability for dealers to recoup their costs, were key in garnering the association’s support. Conway explained that changes made to the legislation throughout the process greatly enhanced the opportunity to create a system that will make car sales better for both the dealer and consumer. “Once it is implemented, there will be an immediate record of the sale when the car buyer walks off the lot,” he said. “If they have an issue, we have better access to information about the sale.” Conway said it also benefits the dealer in many ways. “Compared to having to complete paperwork, mail it to the DMV, then wait, dealers can input the same data at their desktop and the sale will be immediately recorded. It is also better for those dealers, like the IADAC members, who are doing the right thing, but have to compete with unlicensed dealers or those who simply ignore the law. We can better identify the individuals who are causing problems for everyone.” California DMV director Jean Shiomoto said this legislation and the system it will create is a great example of how consensus building can lead to an outstanding improvement for the state. “We worked hard to understand the perspective of stakeholders and the impact it would have on them,” she said. “Getting industry support was absolutely critical to getting this legislation passed.” Conway said the department’s technology team has moved into the design phase for the system. “We are looking at holding workshops and regional meetings to keep our business partners informed as we move forward,” he said. “For those who cannot attend, we will provide industry updates from the department. We are excited to share the progress on this new and innovative system as we move toward implementation in January 2018.” Beth Williams is on the staff of Auto Data Direct, Inc., a provider of several services to the California dealer community.
www.iadac.org
SAFETY WATCH SOURCE: NICB
DEALERS BEWARE! Thieves Using New Technology The National Insurance Crime Bureau (NICB) says new technology is being used to not only unlock and open vehicles, but to also start and steal them. NICB recently obtained one of the so-called “mystery devices” the public was first warned about over two years ago. At the time, thieves were seen on security cameras across the country, using unknown devices to unlock vehicles and steal valuables inside. In recent months, NICB has noted reports of thieves not only opening the vehicles, but also starting them and driving away. The device obtained by NICB was purchased via a third-party security expert from an overseas company. It was developed by engineers in an effort to provide manufacturers and other antitheft organizations the ability to test the vulnerability of various vehicles’ systems. Called a “Relay Attack” unit, this particular model only works on cars and trucks that use a keyless remote and push-button ignition. In a series of unscientific tests at different locations over a two-week period, 35 makes and models of cars, SUVs, minivans and a pickup truck were tested. We partnered with NICB member company CarMax because they are the nation’s largest used car retailer and have nearly every make and model in their inventory. Tests were also done at a new car dealership, an independent used car dealer, at an auto auction and on NICB employee vehicles and ones owned by private individuals. The vehicles were tested to see if the device could: • Open the door. • Start the vehicle. • Drive it away. • Turn off and restart the engine without the original fob present. The NICB was able to open 19 (54 percent) of the vehicles, and start and drive away 18 (51 percent) of them. Of the 18 that were started, after driving them away and turning off the ignition, the device was used to restart 12 (34 percent) of the vehicles. NICB said there are a number of different devices believed to be offered for sale to thieves. Some use different technology and may work on different makes and models and ignition systems. More expensive models may have a greater range and better capabilities for opening and starting a vehicle. “We’ve now seen for ourselves that these devices work,” said NICB president and CEO Joe Wehrle. “Maybe they don’t work on all makes and models, but certainly on enough that car thieves can target and steal them
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Mystery Device
Device in Action
with relative ease. And the scary part is that there’s no warning or explanation for the owner. Unless someone catches the crime on a security camera, there’s no way for the owner or the police to really know what happened. Many times, they think the vehicle has been towed.” Wehrle said it’s important for law enforcement officers to be aware of this threat and be on the lookout for thieves who may be using the technology. According to NICB chief operating officer Jim Schweitzer, who oversees all NICB investigations, vehicle manufacturers must continue their efforts to counter the attacks on anti-theft technology. “Vehicles are a valuable commodity and thieves will continue to wage a tug of war with the manufacturers to find a way to steal them,” said Schweitzer. “Anti-theft technology has been a major factor in reducing the number of thefts
over the past 25 years. The manufacturers have made tremendous strides with their technology, but now they have to adapt and develop countermeasures as threats like this surface.” While there may not currently be an effective way of preventing this kind of theft, NICB advises drivers to always lock their vehicles and take the remote fob or keys with them. Drivers should also be on the lookout for suspicious persons or activity and alert law enforcement rather than confronting a possible thief. It’s also a good idea to never invite a break-in by leaving valuables in plain sight. And once thieves get inside, they can easily steal a garage door opener and valuable papers such as the vehicle registration that could lead them to your home. So take the garage door opener with you and take a picture of your registration on your cell phone rather than keeping it in the glove compartment.
www.iadac.org
BHPH PERSPECTIVE BY KENNETH SHILSON
&
EVALUATE AND IMPROVE Benefits of Having a Properly Capitalized BHPH Dealership
As another year begins BHPH operators must focus on how to make this year better! The answers can’t be found in their year-end financial statements or even by reviewing unit sales numbers. This article will discuss what every operator should evaluate to improve performance and profitability as follows: • Indicators your installment contracts portfolio needs a tune up. • Proactive ways to improve portfolio performance by using metrics as your guide. • The proper accounting for bad debt losses and why charging off those losses should not be deferred. • Is your business model designed for success or failure? • What you can learn from your losses so you do not repeat them. Here are some indicators your installment portfolio needs a tune up: • Your receivables are increasing but your collections are decreasing. • You are selling more vehicles but your portfolio is not growing at the same rate. • Your bad debt losses are increasing and you don’t know why. • Your portfolio is more than 50 percent liquidated and you aren’t replacing the “run off” with new originations. • Your portfolio performance is worse than the NABD industry benchmarks, which are available at www. subanalytics.com.
CHART
YOUR COURSE
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Hoping that this year will be better is not a prudent strategy. Waiting for the competition to decline or disappear isn’t the answer either! You must take a proactive approach to improving your internal portfolio performance and not depend on the competition declining. The first step is to develop portfolio metrics: static pool, loss/liquidation, and default rates, which are needed so you can compare your performance with your peers and identify performance trends. Here is what you can learn from the aforementioned metric calculations: • Net Static Pool Rates – measures the frequency and severity of your bad debt losses after recoveries (in dollars) over the life of pools of installment receivables. This is your performance report card. • Net Loss/Liquidation Rates – measures the pace of losses in your portfolio (after recoveries) in dollars before pools of receivables are fully amortized. This measurement is important for projecting cash flow, anticipating future
losses, and in identifying changing trends. • Default Rates – measures the frequency of bad debt losses in units (not dollars) over the life of your installment portfolio. This metric is used to measure volatility and portfolio quality. If you don’t have these metrics, your access to capital to fund portfolio growth will be severely limited. Capital providers use the aforementioned metrics to evaluate credit risk and to project loan repayment. You can’t expect to borrow millions of dollars without these portfolio barometers. The next step is to charge off your bad debts when losses become known. Bad debts in BHPH are not like wine – they don’t get better with age. When customers become delinquent 60-90 days, their ability to “catch up” is unlikely. It is important that delinquent debt be charged off when it is identified so losses can be mitigated and the appropriate collection action can be taken. If a charged-off account is subsequently collected, the recovery should be recorded when received. A timely and consistent charge-off policy provides a realistic picture of your portfolio performance and helps you avoid financial surprises. These bad debt charge-offs are deductible for federal tax purposes so your corresponding tax liability is reduced. Your business model dictates your BHPH success! You must evaluate your business model periodically for cash efficiency. That means determining the cash return (ROI) on your portfolio investment. You would not make other investments without first considering their ROI and the same holds true for building a BHPH portfolio. These calculations require the use of static pool and loss/liquidation metrics needed to project future cash flow, after bad debts and recoveries. Such projections are used to identify capital needs and predict future financial performance. A new Credit Loss Measurement Standard passed by the AICPA in June 2016 will require you to reserve for future bad debt losses. You must determine how this new standard will affect your loan covenants and borrowing relationship as soon as possible. Metrics are needed to estimate future losses and to adjust your reserve for bad debts in your financial statements. Those who do not make portfolio adjustments periodically cannot expect better results. The BHPH industry must regain market share by learning from their bad debt losses and not repeating them. Do not enter another year without “looking under the hood” of your own portfolio! The more you learn, the more you will earn! Good luck! Kenneth Shilson, CPA, (Ken@kenshilson.com) is president of Subprime Analytics (www.subanalytics.com) and NABD (www.bhphinfo.com).
www.iadac.org
ASSOCIATION NEWS
SPECIAL THANKS TO AUTO SEARCH TECHNOLOGIES The IADAC Website
Many dealers are aware the iadac.org website is loaded with valuable information dealers can access for compliance and operational information. Videos and specialty documents are available along with links to industry partners. The platform for our site is provided by our friends at Auto Search Technologies, Michael and Chris Jackson. Editing content could not be easier and that allows us to provide relevant, current material for dealers. IADAC does not restrict usage to members only as we want compliance information to be available to all dealers for the benefit of the industry. Dealers and staff should spend some time becoming familiar with the site. Do you need to know how to do an out of state delivery? Check out the short video in the Video Vault. Need a copy of a Goodwill Repair Acknowledgment? Print those out from the Document Vault. The ability to easily customize, update and edit a website is critical. You only get one chance to make a good first impression on customers, and you want to make sure your site can deliver. Your content must be fresh and accurate. Don’t risk losing a sale due to a sub-par, antiquated website. Websites such as the iadac.org site are also available for dealers from Auto Search Technologies. Dealers can make changes on the spot if they want to announce special sales or edit content. There is no need to call your website host and wait days or longer for updates. AST sites are mobile ready also, which allows high SEO placement for top search sites such as Google. Most auto buyers will shop your website before visiting your store. Your website needs to have the functionality to make those customers feel comfortable that they are in the right place. Check out autosearchtech.com for more information on the powerful performance websites available from the National Indepdendent Automobile Dealers Association’s premier web development firm, Auto Search Technologies.
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MANAGEMENT MATTERS BY LARRY LASKOWSKI
WHEN YOU LEAST EXPECT IT... POW! Have Proper Policies in Place
Recently one of our IADAC members had an interesting, albeit costly, experience with a sales transaction gone bad. It was a typical subprime customer and the credit application was sent to a lender who tentatively approved the deal based on the information provided. At no time did the dealer run the customer’s credit. The dealer made the sale, rolled the vehicle and tasked the customer with gathering POI and various stips to satisfy the lender. Some of you can probably guess what happened next. The customer returned with the stips, but the income didn’t prove out. In fact, it was significantly off. Not even close. Of course, the lender withdrew the approval post haste. The dealer submitted the application to other lenders looking for an approval based on the verified income but could not match the original terms. He contacted the customer and delivered the news. The customer wasn’t pleased about the proposed changes. The dealer said if a new contract would not be signed, the customer would need to return the vehicle and receive a full refund. But the customer insisted the dealer was obligated to honor the terms of the contract, even though it was the customer who had incorrectly claimed higher wages. Getting the vehicle back proved to be difficult. The customer refused to return the vehicle and said a review of the contract by the Department of Consumer Affairs would be done. Immediately, the dealer sent a certified letter to the customer stating the loan was not approved and why, and that the vehicle needed to be returned. That letter was well within the 10 day period as stated on the contract.
Unsuccessful at persuading the customer to return the vehicle, the dealer hired a repo company to find and capture the vehicle, which they did. It was located and towed to an impound yard at the expense of the dealer. The customer created such chaos at the tow yard the dealer was told to get it out of there. He took it to his lot and secured it so it could not be driven away. Predictably, the customer contacted the dealer and demanded the vehicle back, then demanded his down payment back (which the dealer had offered from the beginning), but did not come to the dealer’s lot to pick up the money. Instead, the dealer was contacted by an attorney representing the customer. The attorney identified two main issues. First, the credit application was signed by the customer but completed by the dealer. The attorney’s argument was that it was the dealer who erred on the income, not the customer. Secondly, because there were multiple inquiries on the customer’s credit the dealer caused the customer’s credit to be damaged. At this point, the dealer hired an attorney to represent and advise him. The dealer responded to the customers’ attorney that he only completed the credit application with the information provided by the customer, and that according to Experian multiple inquires for credit of the same nature are considered as one inquiry. The dealer explained he had not run the credit, merely sent the application to the lenders so they could run it. Eventually, the customer did collect their down payment and went on their way. But the dealer is out the cost of the attorney, the cost of the repossession and the cost of preparing the vehicle for sale again. Right now, many of you are probably considering how you might have handled this situation differently. The takeaway from this episode should be that you don’t complete credit applications for your customers, and you should really do your best to confirm things like income and time on the job. Things can escalate so quickly and easily that you need to have policies in place which dictate your actions. Those policies should be designed to mitigate confrontational transactions such as this one. www.iadac.org
ASSOCIATION NEWS
BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
BEVERLY HENRY PASSES First Lady of IADAC
Beverly (Bev) Henry recently passed at age 79. She was married to Robert (Bob) Henry for 60 years. They have five children, 11 grandchildren, and five great grandchildren. Bev passed as she lived, with elegance and class. Bev and Bob opened Henry’s Used Cars in Santa Rosa, California in 1983. Bob was active in local, state, and national dealer associations. Bob served many years as a Santa Rosa local president, two terms as IADAC president (1998-2000), and as a regional vice-president for NIADA. Bev and Bob worked hand in hand to run Henry’s Used Cars. Bob did all the easy work: buying, selling, and advertising. Bev kept the dealership afloat by doing everything else. Bev mastered the skill of DMV processing, accounting, and keeping everything together. They had a very successful family business for many years. Bob then decided to open a finance company and Bev opened B&C Registration Service. Bev operated the business until 2015, doing DMV work for
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many local dealers and retail walk-ins. The family still operates the business. The Henry family provided the following statement: “Bev and Bob traveled the United States in their motor home in 1989. They also vacationed to Mexico, Italy, and Austria. One of their fondest trips was traveling by train to Alaska. Nothing compared to vacationing at the Tetons in Jackson Hole, Wyoming. Cascade Canyon Trail was a favorite spot for her. She enjoyed gardening at her home in Penngrove and campouts with friends once a month. Bev enjoyed auto racing, whether it was a big NASCAR event or watching her son Bill and daughter race at Petaluma Speedway. She was the Martha Stewart of decorating, whether for the holidays or a large family celebration. Beverly gathered respect, love, and admiration from so many throughout her life. She made folks feel like family. When Bev’s path took her on her final journey, she left this world with the dignity and grace for which she was known and
loved. We celebrate the life she created for us, we cherish the time we spent together. We are all rich in her love and memories. That is the wealth she left us. This is her legacy.” Bev Henry was at Bob’s side at every IADAC meeting and convention. Her elegant presence was an inspiration to us all. Bev was always ready to help wherever help was needed. She organized many auxiliary events for the spouses of attending dealers. Bev always had everything organized and made Bob look good. We will miss this elegant and classy woman. Bev always shared a genuine smile for every person she touched with her life. We members of IADAC owe Mrs. Beverly Henry a debt of gratitude.
www.iadac.org
ASSOCIATION NEWS
BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
DORINE HIATT PASSES IADAC First Lady
Dorine Hiatt, beloved wife of John Hiatt, passed recently following a long battle with Parkinson’s disease. Dorine and John were married 65 years and have two daughters, 19 grandchildren, and 65 great grandchildren, plus two more on the way. John Hiatt became a dealer in Santa Rosa, California, in 1959. He was IADAC president in 1971 and became the very first NIADA president from California in 1973. In 1975 John was awarded IADAC’s highest honor, Quality Dealer of the Year. John and Dorine were fixtures at almost every IADAC state meeting and convention. John said, “Dorine always kept me on the straight and narrow. She just looked me in the eye told me I was wrong or right. She could see the good in everyone. Dorine was a kind, loving, and gentle person.” “My mother was an artist,” said daughter Debra Mittelstadt. “I remember her designing and creating hundreds of nametags for IADAC and NIADA convention attendees. I remember her standing next to my Dad greeting all the members. When
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my father was running for NIADA president, I can see her making tags for everyone to wear saying ‘Vote for Hiatt.’ “For at least 30 years my mother planned a Christmas party at our home. She would make a gourmet dinner with dessert, decorations, and games all by herself. She would sew dresses and aprons for me and my sister Diane, as we were the waitresses. The special attendees were members of the dealer association that worked closely with my dad.” Debra said, “My mother taught me by her example to support your husband in his aspirations. I saw her many times say ‘no’ to other things to accompany my dad to his meetings.” Dorine Hiatt was a wonderful woman and she will be missed by the many folks she touched. Our association owes a debt of gratitude to this gracious first lady of IADAC.
John and Dorine Hiatt
John and Dorine Hiatt with Joan and Mike Macaulay
February/March 2017
WEST COAST DEALER
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LEGISLATIVE MATTERS
NOT POLITICALLY AWARE? MAYBE YOU SHOULD BE! California Government Report
Auto Advisory Services president Jonathan Morrison allowed reprinting of this article for West Coast Dealer readers. Auto Advisory Services’ team of experts is a trusted resource for compliance consulting in the auto industry with services ranging from a legal compliance hotline, to advertising review, to on-site audits provided by former DMV enforcement officials. Auto Advisory Services works closely with Reynolds and Reynolds to help draft language for sales and finance documentation. Learn more at www. autoadvisory.com.
“Just because you do not take an interest in politics does not mean that politics will not take an interest in you.” -Pericles
This quote, attributed to the ancient Greek statesman Pericles over 2,400 years ago, rings just as true today as during the Greek Golden Age, and seems fitting in the aftermath of another legislative session and election season. The California legislature wrapped up the 2015-2016 two-year legislative session at the end of August, giving Governor Jerry Brown a month to review and sign legislation just before the November 8 election. While we continue to review and summarize the 1,161 bills that were signed into law this year, suffice to say our elected officials were quite active again in 2016. Many thanks to the hard-working team at the California New Car Dealers Association (CNCDA) and Independent Auto Dealers Association of California (IADAC) for all that they do to monitor incoming proposals and represent industry interests in lobbying for and against all the bright ideas of California’s legislature.
A Refresher on the Legislative Process
Each bill starts in its house of origin – either the Assembly or Senate (depending upon whether drafted by a senator or assembly member). Once put into writing, the bill is referred to one or more policy committees where the proposal is discussed and approved or rejected. If the proposal may have a fiscal impact upon the state, it’s subjected to an additional hearing before the Appropriations Committee for an evaluation based upon the bill’s fiscal impact to the state. If the bill makes it out of committee hearings before their deadlines, it’s then referred to the floor, where the entire Assembly or Senate must vote on it. If it makes out of its house of origin, it’s then referred to the other house, where the
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AAS Hotline subscribers can always call us at (800) 785-2880 to discuss the new laws and any existing ones as well. process begins anew. If the bill makes it out of both houses before the deadline, it is sent to the governor to sign, veto, or allow to take effect without his signature.
Bills Galore
This year, California’s 120 elected members (40 Senators and 80 assembly members), combined to propose an additional 2,331 formal bill proposals on top of the 2,772 from last year, with 1,527 coming from the Assembly and 804 coming from the Senate. In total, Governor Brown signed another 1,161 bills into law this year, and vetoed 159. This means that 1,161 new laws were passed this year. While most of these bills will not have an impact upon your day to day operations (e.g., resolutions honoring groups or historical events or legislation impacting unrelated industries), many of these will have some impact on what you can or cannot do as a dealer, employer, taxpayer, or repair facility.
Republican versus Democrat Scoreboards
As anybody with even a passing interest in politics is aware, party politics plays an enormous role in achieving policy goals, and California’s legislature is made up of an outsize number of Democrats – 52 Democrat assembly members and 26 Democrat senators in the 2015-2016 legislative session. As you might expect, the legislature is much more likely to pass legislative proposals that advance the platform of the Democratic Party and their supporters (e.g., trial lawyers, organized labor, and consumer groups). When it comes down to vote counting (a critical lobbyist skill), with 52 Democrat assembly members, opponents to Democrat-authored proposals must convince at least 12 Democrats to vote against a member of their own party to defeat the bill. That’s not easy to do even with very controversial legislation. This nature can be seen in both the likelihood of legislation being proposed and the likelihood of bill passage. During the two-year 2015-2016 legislative session, Republican legislators authored
an average of 37 bills per member, while Democrats authored an average of almost 42 bills per member. Even with fewer proposals, only 29 percent of Republican bills made it out of the legislature and were signed into law by Governor Brown – compared to a full 50 percent of Democrat-authored bills.
About that Election…
While the rest of the country leaned right in electing Donald Trump as president, California did just the opposite. In the state Assembly, the Democrats picked up the two seats necessary to achieve a Supermajority (2/3 vote). In the state Senate, the Democrats needed only a single seat to win the Supermajority. The Republican hopes of relevancy rested in a single Senate seat based in traditionally conservative Diamond Bar. Approximately three weeks after the election (votes continued to be counted), Democrat Josh Newman came from behind to pull ahead of Republican Ling Ling Chang by fewer than 2,500 votes of almost 320,000 cast. This result now means that the Democrats can pass tax increases, put Constitutional amendments on the ballot, and override any gubernatorial veto without a single Republican vote. And people sometimes ask themselves whether their vote really matters…
What’s Next?
We are reviewing each of the 1,161 bills signed by the governor, most of which took effect January 1, 2017, as well as a number of new state and federal regulations. Of note are laws that will create a new mandate for dealers to issue temporary license plates beginning 2019, additional recall restrictions, a new federal Buyers Guide, revised Proposition 65 warnings, and changes to the service contract laws. We summarized these and other bills that have an impact on dealerships in our 2016 Year End Legislative Summary, which was mailed to our publication subscribers in December. Of course, AAS Hotline subscribers can always call us at (800) 785-2880 to discuss the new laws and any existing ones as well.
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ACCELERATE
BY GWC WARRANTY
WHEN GOOD RECON GOES BAD Solve Your Recon Woes
Few things can be more of a headache for used car dealers than the reconditioning process. Far too often, it can lead to delays, forfeited front-end gross, poor relationships within your dealership and other consequences that ultimately hurt the overall bottom line. It sounds simple enough: Acquire vehicle. Prepare vehicle. Sell vehicle. So how can something so simple cause so many problems? It’s when good recon goes bad. You can solve your recon woes, however, by making small tweaks to your dealership that will have a tangible payout at the end. It’s all about culture. Too many times you hear stories of the back and forth between those acquiring the inventory and those getting it ready to go on the lot. Good recon starts when everyone stops pointing fingers. Cultivate a culture of collaboration. If you’re acquiring inventory, ask your service team what you should look for in a vehicle at
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auction. If you’re getting a vehicle frontline ready, ask about deadlines and find out why a specific turn time is so important. Don’t get overconfident. If you’re estimating how long it will take to recondition a vehicle, be honest with yourself. Time is money, and you can’t accurately appraise and price your vehicle if you’re building in five days of holding costs when it will really take 10. Having a trusting and cooperative culture will help everyone feel comfortable enough to be transparent with these types of details. Know the dollars and cents. It’s estimated that holding costs can range from $30 to $50 dollars per day. Take the average figure from that range ($40 per day) and do the math for what you spend regularly on reconditioning costs. At an average of six recon days for 40 vehicles a month, you’re looking at $9,600 per month in holding costs alone. At that rate, that’s over $115,000 per year. You can even think of this on a per vehicle basis. At that same holding cost, a vehicle that takes five extra days to recondition cuts a $3,000 gross profit into a $2,800 gross profit – all this without even factoring in the actual parts and labor costs of the reconditioning itself. Knowing these numbers will help everyone in the dealership be accountable for their role in reconditioning.
Communicate. It sounds simple, but so many reconditioning processes go bad when management, sales and service simply aren’t on the same page. Things like repair approval delays and misplaced vehicles can add days to the reconditioning process (see above for how much that costs you). Getting all your departments on the same page can help in this process. It can be as simple as creating a spreadsheet that tracks each vehicle’s progress. This way, you’ll be able to see where delays happen and quickly get your reconditioning back on the rails.
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ASSOCIATION NEWS
BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
PAT MATLACH
IADAC Past President Passes
Pat Matlach passed recently after a valiant struggle with his health. He wanted to be at home at the end, and got his wish. His medical team is to be thanked for making this possible. Pat and his wife Gertrude had three children: Daniel, Michael, and Katherine. Pat’s brother Bud Matlach was also a Victorville car dealer. They experienced a friendly rivalry for many years. Bud now lives in Florida. Pat is also survived by nephew Matthew Matlach. Matthew tells of the wonderful example set by Uncle Pat to help guide his life. Matthew is saddened by the loss of a truly great man. Pat opened his first lot, Matlach Motors, in St. Louis in 1948. In early 1952, Pat moved his business to Victorville, California. He named it Desert Motors. Pat operated Desert Motors until his passing, for more than 64 years. Desert Motors is the oldest operating car lot on Route 66, which goes from Chicago to Santa Monica. At his peak, Pat owned five dealerships, all on Route 66! Pat was the buyer, salesman, mechanic,
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office manager, and lot boy! He did it all. Pat got his first fax machine in 2002 and never owned a computer! Once, Pat’s fax machine was damaged in a storm and he didn’t replace it for three years. Pat still used a rotary dial telephone until he was forced to change in 2008. One of the first IADAC members, Pat served at every board position. He became the IADAC president in 1983. He served as the NIADA president in 1991. Concerned about local, state, and national issues, Pat chaired the allimportant IADAC Legislative Committee for more than 20 years. He fended off much bad legislation and helped create many useful tools, such as getting to charge a doc fee. This is a small example of the huge contribution Mr. Pat Matlach gifted his fellow dealer. Pat Matlach is the only California auto dealer to be twice awarded IADAC’s highest honor, the Quality Dealer Award (first in 1986 and second in 2007). This honor will probably never be repeated. IADAC past president Robert Henry said, “Pat reminds me of an old quote by Douglas MacAuthur – ‘Old soldiers never die; they just fade away.’”
Pat Matlach spent almost every day at his lot giving personal attention to the huge amount of repeat and referral business. Pat used to post notes on every vehicle listing what was done in the way of reconditioning. He appreciated and respected his customers. Billy Dohring has been IADAC’s lobbyist for over 35 years and worked closely with Pat on legislative issues. Billy said, “Pat was a dealer’s dealer. He would not suffer bad practices or bad dealers – every dealer should be honest and above board. He was my mentor. I could never have been as good at my job if it hadn’t been for Pat.” There will never be another Pat Matlach and I am proud to have known him.
February/March 2017
WEST COAST DEALER
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LEGAL MATTERS
BY JAMES SIFERS, MADISON HARBOR LAW FIRM
LEGAL MINUTE Pitfalls in Collecting License Fees
A new tactic by consumer attorneys, which has gained momentum over the past few years, is filing suit against dealerships who do not refund estimated vehicle license fees where a refund is due. Many dealers tend to overlook the relatively small amounts due to purchasers where an estimate of vehicle license fees is collected, the amount paid is less than what is collected, and where a refund is due to the purchaser. While these amounts can be nominal, the law requires the fees collected in excess of the actual fees be returned to the purchaser, even without a demand by the purchaser for a refund. A failure to refund can result in a lawsuit where the purchaser may only recover that nominal amount, but where the purchaser’s attorney recovers tens of thousands of dollars in attorneys’ fees and also may succeed in obtaining an injunction against the dealership. Cal. Veh. Code § 11713.4 allows a dealer to estimate the vehicle license fees to be paid in connection with a sale of a vehicle. Section 11713.4 also requires the dealer to refund any excess “of the actual fees due” to the purchaser “whether or not
such purchaser requests the return of the excess amount.” The current vehicle license fees due annually for vehicles is .65 percent of the market value of the vehicle, generally the purchase price where a vehicle is sold by a dealer. (Cal. Rev. & Tax Code § 10752(a)(3).) The Automobile Sales Finance Act requires vehicle license fees to be separately stated on the purchase contract. (Cal. Civ. Code § 2982(a)(2)(A).) This information can be found on Line 2(A) of the Itemization of the Amount Financed on the standard 553 Retail Installment Sales Contract. Many dealers have incorrectly and unwisely failed to refund the overcharge due to the purchaser where the vehicle license fees actually paid is less than what was collected at the time of the sale. This failure to refund is oftentimes not intentional, but merely an oversight given the relatively small amount due for a refund. California used to take a much more relaxed approach to what courts considered a “trifle.” (Bermudez v. Fulton Auto Depot, LLC, (Cal. App. 3d Dist. 2009) 179 Cal. App. 4th 1318.) However, this resulted in a revision to the Automobile Sales Finance Act where the California legislature removed any requirement that a purchaser be actually damaged and opened the door to lawsuits based upon technical violations without actual harm to a consumer. (See Rojas v. Platinum Auto Group, Inc., (Cal. App. 2d Dist. 2013) 212
Cal. App. 4th 997, 1005.) As many dealers have seen, a technical violation is a favorite “go to” for the consumer lawyer. A failure to refund is not only a violation of Section 11713.4, but also may be a violation of the Automobile Sales Finance Act (due to the requirement by Section 2982(a)(2)(A) that the fees be accurately stated) and a Consumers Legal Remedies Act violation. Both of these acts contain attorneys’ fees clauses which may give rise to an award of attorneys’ fees against a dealer who fails to properly refund overcharges for vehicle license fees. Additionally, these violations may give rise to an injunction where the dealer is forever under a court order relating to the disclosure, collection, and/or refunding of vehicle license fees. A violation of which can give rise to criminal and quasicriminal consequences. Finally, and likely most disturbing for dealerships, these types of cases can oftentimes provide a venue for a consumer attorney to gain access to a dealership’s files in order to find not only other purchasers whose transactions may have issues with vehicle license fees, but to find other, unrelated violations, which could give rise to even more litigation. In light of the above, dealers would be well served to accurately disclose the vehicle license fees collected and to promptly refund any fees collected over and above what was actually paid.
WEST COAST DEALER FEATURE
CARTOON CONTEST December’s Winner and
February’s Cartoon Cartoon art by Debra A. Himel
The contest winner for the December 2016 issue is Guy Strohmeier (This guy is good! Pun intended.). His winning caption is “Silly men, don’t they know that women buy a lot of cars!” Below you’ll find the new cartoon awaiting your clever caption. Please submit caption suggestions for next month’s cartoon as soon as possible. We get close to the deadline for next issue when the current issue is mailed. Please send suggestions to carsystems40@yahoo.com.
Winning caption: “Silly men, don’t they know that women buy a lot of cars!”
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ASSOCIATION NEWS
AUCTION NEWS
EDITORIAL COMMENT
MANHEIM RIVERSIDE HONORED
BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
License Renewal Issues
Two issues ago, I commented about the ongoing problem concerning dealer license renewal. Most licenses are finally issued over a month late. At our recent IADAC convention, it was decided a committee would approach the DMV Occupational License Division to voice our concerns and try to give positive input to make the renewal system run smoother. As of mid December 2016, this has yet to happen. I had a renewal problem for my license due June 2016. My license was finally renewed (as stated in the previous issue) and all was good, or so I thought. In early December 2016, I received a letter from DMV threatening to revoke my license and take legal action for a dishonored check given to DMV. I submitted an original check and application which DMV lost or misplaced. I had to duplicate all the paperwork and resubmit everything along with a new check. Using the DMV’s advice, I stopped payment on the first check. Well, it seems they found the first check and tried to cash it. That caused them to send the threatening letter. I called immediately and was told I owed a cashier’s check for the full amount along with a $30 penalty fee. They had no idea where my second check was that was receipted manually at an Occupational License office. I agreed to send another check, but refused to pay the $30 penalty fee. After discussions with a supervisor, they agreed to waive the fee. Nobody knows where my second check is. I was told not to stop payment on the second check, even though they were paid in full. I asked, “What happens if you find and cash my second check?” They said I could apply for a refund, which would probably take a couple months. What a mess! I do plan to approach the head of DMV Occupational License and try to help them fix this broken system. Updates will come when it is finally cleared up.
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Best in Class Performance
Manheim sites across the country were honored by Element Fleet Management for best-in-class performance at the recent 18th annual Remarketing by Element Awards. Manheim led the field of winners this year, taking 10 national and regional awards for outstanding achievements and innovative practices in vehicle remarketing. “Remarketing by Element appreciates all of our partner auctions and commend those that are the best of the best,” said Remarketing by Element vice president Paul Seger. “We congratulate all of our winners, especially Manheim Ohio for achieving the top honor as Auction of the Year.” Highlighting the ceremony was Manheim Ohio winning the Gold Award as the top national auction in Element Fleet Management’s remarketing program and three locations taking top regional auction honors – Manheim Statesville, Manheim Kansas City and Manheim Nevada. In total, Element Fleet Management honored 10 Manheim locations, including: •M anheim Ohio – Gold Award •M anheim Statesville – Silver Award, Northeast •M anheim Kansas City – Silver Award, Midwest •M anheim Nevada – Silver Award, West •M anheim Pennsylvania – National Technology Award, East •M anheim Riverside – National Technology Award, West •M anheim Central Florida – Above and Beyond Award, Southeast •M anheim Chicago – Above and Beyond Award, Midwest •M anheim Phoenix – Above and Beyond Award, West •M anheim Seattle – Outstanding Promotions Award, West “Being recognized by our clients for helping them meet their business goals is one of the highest compliments Manheim can receive,” said Manheim senior vice president of sales Tim McKinley. “These awards are a testament to our locations’ commitment to delivering top-notch service and sales results. We are honored to receive these awards, and we are so very proud of the teams who earned them.”
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MANAGEMENT MATTERS BY KARL SCHMIDT
LOYALTY PROGRAMS DRIVE DEALERSHIP SALES Build a Lifelong Customer
We all know the cost of attracting a new buyer is much higher than retaining an existing customer – nearly five times higher. As staggering a statistic as this is, it shows the value of building a lifelong customer. Loyal customers visit more, spend more, give great feedback and reviews, and recommend a dealership to their friends and family. As the vehicle sales market changes, more and more dealers are realizing the value of retaining existing customers. Establishing a relationship of trust and respect with your existing customers through value-added offerings like loyalty programs provides opportunities to maximize profits from people you already know. By implementing a loyalty program aimed at buyer retention, dealers have a unique opportunity to establish
personalized touch points with customers. Dealers who don’t foster repeated interaction with buyers risk their customers developing the attitude that just any dealer can offer them the oil changes or brake pads their vehicle needs throughout its lifetime. When customers feel there they have an ongoing relationship with their dealer, however, they are more likely to return for service or new purchases. When dealers consider utilizing a loyalty program, it’s important to understand the various elements of the program, and how they can impact the customer relationship and, ultimately, sales. The most effective strategies in a loyalty program focus on customer service and the buyer’s experience. Dealers need to determine the basics of the program they provide their customers. They determine what customer can apply their points toward: entertainment, auto repairs, points toward the purchase of a new car, or others. Most auto dealerships use coop funds toward their loyalty program. An example of an effective loyalty program begins with a photograph of the new buyer taken by the salesperson, which starts the ongoing relationship between the customer and the dealership. This photo can then be included in touch points like a personalized calendar that can be hung on a refrigerator, or on incentive mailers with special offers. Loyalty program customers also have the
opportunity to accumulate reward points through vehicle purchases, referrals to new customers, service department visits, social media posts, and online reviews. Points can be redeemed toward service or a new purchase from the dealership, or at local restaurants, entertainment venues, and more. Vendors that administer loyalty programs for dealerships can offer such elements as personalized customer photos in postcards, emails, quarterly follow up messages, birthday and holiday cards, sharable social media, and more. A third party that administers loyalty programs can also provide the dealership with monthly summaries, analytics, an automated, customizable schedule and more. Through loyalty programs, dealers cultivate customers who will take advantage of the personalized offers. They love to receive points for purchases and will visit the dealership frequently to accumulate and redeem points. If you’re not taking advantage of a loyalty program to stand out in the crowded automotive retail market, now is an excellent time to discover what one can do for your bottom line. This article was provided by Julianna Brazil for Retain Loyalty. She can be reached at julianna@retainloyalty.com or 760877-1459.
ASSOCIATION NEWS
SANTA ROSA CHAPTER HOLIDAY PARTY A Great Success
Santa Rosa Chapter president Jerry Khan’s planning paid off at the Annual Holiday Party in Rohnert Park on December 17. With help and support from Rudolph Finance, the party was a great success with over 100 in attendance. Chapter treasurer Jeff Nyholm and his wife Meg helped with the event as they checked guests at the door and sold raffle tickets. Jerry kept the activity moving with prize giveaways, nonstop DJ entertainment and a dance contest. At a time where events of this nature are dwindling, Jerry managed to find time to organize the event for the tight community of Santa Rosa and nearby cities. Dinner guests anxiously listened as Jerry drew tickets for the prize drawing. Dozens of items were distributed, including a big screen television. Krissy Rudolph humbly accepted thanks for their part in supporting the event. Krissy said she is very proud of her team and pleased to provide support. The importance of vendor support cannot be over-emphasized for these functions. Thanks Rudolph Finance!
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Host Jerry Khan as emcee.
Dance contest participants.
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SAVE•THE•DATE 1,670 attendees
173
exhibitor partners
NIADA’S 71st Annual Used Car Dealer Convention And Expo For 70 consecutive years, since 1946, NIADA has produced the NIADA Convention because we are committed to serving and assisting our dealers, whether you are a dealer or you do business with dealers. The convention includes dealer training, exhibitors, tremendous networking and entertaining events while maintaining our association’s time-honored traditions. However you’re connected to the industry, NIADA has something for you!
46 The Most Successful Used Car Professionals Attend This states 76%
decision makers
332
first time attendees
Convention And Expo Every Year To:
• Gain critical training • Face-to-face interactions that drive new ideas and build connections • Receive updates on federal, regulatory and compliance issues that affect you • Share best practices • Learn about the most current technologies, products and services offered by our top-notch exhibitor partners to accelerate your dealership ahead of the competition
&
Featuring
• BHPH Training • Compliance Training • Retail Operations Training
• Early Registration Rate $549 per person ($599 after May 11)
Who Attended In 2016:
• 1,670 Attendees • 173 Exhibitor Partners • 46 States represented, as well as Grenada and Canada • 76% of dealer attendees are owners, principals or general managers, in other words, decision makers!
• 332 First time attendees
THE MIRAGE•L AS VEGAS•JUNE 12-15
Hiring the right individual for a service advisor position will yield lasting benefits, including an increase in repair order count, CSI and owner retention.
MANAGEMENT MATTERS BY ADAM ROBINSON
HIRING THE MOST IMPORTANT SALES ROLE Service Advisors There is no question a successful dealership has both skilled technicians and knowledgeable salespeople to maintain profit margins. But an oft-overlooked – and equally (or arguably even more) important – component is the service advisor. When people take their cars to a dealership, the service advisor is the first face they see. The service advisor quarterbacks the entire service experience and serves as the critical link between the customer and the work. This dynamic means service advisors have a heavy influence on customer experience, which can either keep them coming back or drive them away. While a basic understanding of how cars work is essential to helping the customer navigate their needs, communication skills are even more crucial in ensuring the customer has a positive experience and feels confident about the work and service your dealership provides. Critical conversations between the advisor and customer include such topics as explaining invoices, deciphering warranty coverage, explaining necessary or suggested additional repairs and providing the customer with updates on the progress of the work. All these conversations require someone with good people skills as well as excellent car skills. Here are key elements I recommend to identify quality service advisor candidates and how to hire them.
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Recognize the Traits of a Solid Service Advisor As mentioned above, a service advisor is the first face your customer sees and the person with whom they communicate the most, if not exclusively, throughout their service experience. A good service advisor should possess the following traits: • Mechanical knowledge and ability to articulate. Because the service advisor is the one to communicate with the customer from start to finish, it is important they understand the industry enough to be able to answer questions, suggest options and explain the process to a customer who may otherwise be unfamiliar with the work needed. Additionally, the service advisor should be able to relay the information without overusing technical jargon, making it simple for every customer to follow and understand. • People skills. The service advisor should have the ability to read and adapt to different customers’ communication preferences: some like a plethora of details while others prefer to be in and out. The service advisor must also possess good listening skills to clearly understand what the customer needs or wants and be able to relay that information correctly to the technicians doing the work. • Integrity. In addition to communicating information between customers and technicians, service advisors have a responsibility to provide the client with accurate information that is in their best interest, instead of using every interaction as an opportunity to upsell extra work. A service advisor with honesty and integrity will quickly earn the confidence of your customers, ensuring they look to your dealership as a trusted place of business, returning for additional needs and sending friends and family your way. Also, a good service advisor will provide updates or call customers back in a timely fashion, keeping them looped in every step of the way.
Things to Consider When Hiring a Solid Service Advisor Now that you know what to look for in a service advisor, there are some factors to keep in mind when you’re considering hiring one. For starters, consider how your dealership and employment brand will appeal to women candidates. Half of your customers are women, so having at least one female service advisor on staff will help you better connect with that demographic. Consider advertising the job with a title other than “service advisor,” so as to appeal to a larger number of applicants. Alternate titles can include customer service representative, service secretary or customer service associate. While technical knowledge is beneficial, you might consider advertising the position with “no experience required” to welcome applicants who have all the other necessary skills without potential bad habits that will require much more aggressive retraining to break. Lastly, consider the number of service advisors your dealership needs to meet demand and give your customers the full attention and service required. Benefits of a Solid Service Advisor Hiring the right individual for a service advisor position will yield lasting benefits, including an increase in repair order count, CSI and owner retention. It will also increase your technicians’ productivity, resulting in a boost of customer loyalty. A service advisor typically touches a customer five times more than a sales person, making proper candidates for this position a crucial component for your dealership’s success. Preparing for 2017 means staffing up with skilled service advisors who can create a lasting, positive impact. Adam Robinson is the co-founder and CEO of Hireology and a noted recruiting industry expert, speaker, and author with over 20 years of experience in the field of hiring and selection management. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
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