WEST COAST
DEALER
T H E O F F I C I A L M A G A Z I N E O F I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I AT I O N O F C A L I F O R N I A | A P R I L / M AY 2 019
RAMPANT CURBSTONING HURTS CONSUMERS AND DEALERS
HELP MITIGATE THIS CRIMINAL ACTIVITY PAGE 8
DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage S TAT E A F F I L I AT E
VISIT US AT W W W.IADAC.ORG
WWW.IADAC.ORG
APRIL/MAY 2019 WEST COAST DEALER 1
SCHOLARSHIP
ASSOCIATION NEWS
DEADLINE
INSIDE
05.........................................President’s Message 06........................... Dealer Bond vs Cash Deposit 08...................................... Rampant Curbstoning 10.........................................Online Review Trends 12................................................. Dealer Spotlight 18........................................ The “Wow” is Worth it
ADVERTISERS INDEX
ACV Auctions...................................... Back Cover AutoZone............................................................. 9 iMetrik.................................................................15 Lobel Financial.................................................... 3 Manheim ............................................................. 11 NextGear Capital...........................................12-13 vAuto................................................................ IBC Warrantech.......................................................IFC
WHAT’S NEW
CONVENTION R E G I S T R AT I O N O N L I N E Registration for the 73rd annual NIADA | NABD Convention & Expo is now online! You don’t want to miss this industry-leading mega-conference! The event is June 17-20 at the Venetian in Las Vegas. Learn more and register today at www. niadaconvention.com.
OFFICE
For information on how to become a member please contact larry@IADAC.ORG or 916-893-3306.
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838
For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. 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 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 © 2019 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT Christy Haynes • christy@niada.com PRINTING Nieman Printing
JULY
IADAC PAST PRESIDENTS LIST GUS CAMACHO, 2015-2017 ROCCO DELAPA, 2013-2015 ROD DAVIS, 2010-2013 DAVID AAHL, 2009-2010 TERRY DEGMETICH, 2007-2009 LUIS ESTRADA, 2006-2007,
2001-2002, 1989-1990 ROGER HANKE, 2004-2006 PEANUT RENFROW, 2003-2004, 1996-1997 FRANK GROMAK, 2002-2003 MIKE MACAULAY, 2000-2001 BOB HENRY, 1998-2000 RAY FOREST, 1997-1998 REX RODEN, 1995-1996
“Trader Vic” Snyder
If you would like to donate to the fund please contact Larry at Larry@iadac.org. Monetary donations or items which can be offered during our convention are gladly accepted. IADAC is set up as a non-profit, which should qualify for a tax deduction (please check with your accountant to confirm).
DOUG ROBERTS, 1994-1995 ED DOHNT, 1993-1994 OPIE HENDRICKS, 1992-1993 MANNY PADILLA, 1991-1992 GREG HODGES, 1990-1991 JERRY COWGILL, 1988-1989 DON HEAD, 1987-1988 JOHN BRAUN, 1986-1987 RAY GLOVER, 1984-1986 PAT MATLACH, 1983-1984 LARRY BRASHER, 1982-1983 TOM FIELD, 1981-1982 JIM MCCABE, 1980-1981 ROY WILHITE, 1979-1980 LEONARD BOYD, 1978-1979 JORDAN SUGARMAN, 1977-1978 BOB DUTTON, 1976-1977 TOM KENT, 1975-1976
JIM MITCHELL, 1974-1975 VIC SNYDER, 1973-1974 FRANK HAMMER, 1972-1973 MANUEL ROGERS, 1971-1972 JOHN HIATT, 1970-1971 DOUG ALMAN, 1969-1970 BOB SCORDINO, 1968-1969 LUCKY SKYRME, 1966-1968 LEONARD CRAVENS, 1964-1966, 1960-1961
WALT HOWEY, 1962-1964 TRAVIS GODBOLD, 1961-1962 WENDALL ANDERSON, 1959-1960 DICK RAFFERTY, 1957-1959
HONORARY PRESIDENTS
FRANK MURRAY RICK GOMEZ
EXECUTIVE COMMITTEE CHAIRMAN OF THE BOARD
VICE PRESIDENT
Gus Camacho Camacho Auto Sales, Inc. Lancaster, CA
Guy Strohmeier Auto Center 87 Soda Bay Rd Lakeport, CA
PRESIDENT
VICE PRESIDENT
SR. VICE PRESIDENT
VICE PRESIDENT
Brenna Stansberry Park Marina Motors Redding, CA Bruce LaVergne Pacific Auto
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Annually, children and grandchildren of IADAC dealer members submit and receive monetary help toward higher education from the Vic and Ethyl Snyder Memorial Scholarship Fund. These young learners qualify for the scholarship award if his or her parent has been an IADAC dealer member for at least two full years prior to application. The award presented to each recipient is $1,000, which each qualified student may collect up to four years. For these students, the award can be valuable help toward the cost of books or tuition. The absolute deadline is July 31 for applications to be received. Rules and applications may be found on the IADAC website at www.iadac.org. Click member benefits on the top menu bar. This program was set up years ago by IADAC past president Vic Snyder and his wife Ethyl. A very entertaining short video about Trader Vic’s history is found at www.iadac.org in the video vault. Annually, IADAC raises funds to help replenish that fund to assure future applicants of continued assistance.
Brittany Hibdon Hibdon Auto Center Orland, CA Mehdi Chitgari Classic Chariots, Inc. Vista, CA
TREASURER
Beto Beas Beas Auto Sales Stockton, CA
SECRETARY
Tony Harb JustBetterCars.com
MAGAZINE CHAIRMAN
Mike Macaulay Car Systems carsystems40@yahoo.com
ASSOCIATION NEWS
| By Brenna Stansberry
PRESIDENT’S MESSAGE
STRONGER
TOGETHER
IADAC’s executive committee recently met to discuss an upcoming meeting with NIADA’s vice president of national field operations, Paul John. Paul was the executive director of the Georgia state association for many years and was responsible for a membership rate of over 70 percent. That equates to nearly 3,000 members. Where is California? Around 400, or 8 percent. Considering California is nearly three times larger than Georgia, our membership is very poor. There is potential in California. There are over 5,000 independent dealers, so we definitely have room to grow. But how? In a strategic planning session in 2017 we discussed several ideas for growth. One of the top ideas was to involve vendors to help us with membership. Vendors usually see
ASSOCIATION NEWS
| By Larry Laskowski
PRINCIPLES
UNDER
many dealers and it would be easy for them to introduce their dealer clients to IADAC. Email Larry at Larry@iadac.org and he will send brochures to your vendors. IADAC offers compliance information and represents dealers at the capital. Monetary benefits include discounts at auto auctions and scholarships for your children and grandchildren. IADAC is a non-profit organization so it is likely you could write off the annual dues, which are just $299 (consult your CPA or tax preparer). When you have questions, don’t panic. Call IADAC! We are always helping dealers with various issues across the state. California dealers and their vendors will be key to helping IADAC grow membership. When we are stronger, the industry benefits. As they say, a high tide raises all ships. Let’s all get together to improve our industry.
EXECUTIVE DIRECTOR’S REPORT SIEGE
Industry issues that cause dealers to struggle are often discussed here, but I ask that you consider something even more important than your typical business problems, just this once. Trends reported on various news channels are hard to miss, even for those who do not pay much attention to news. Many of you live in your own world, trying to sell another car, or sell more this month than last. The auto sales industry has become so competitive all your spare time is consumed just trying to maintain profitability. But let’s consider a larger problem, one that
could make your daily routine obsolete and create a completely different life for you – creeping socialism. Before you turn the page to escape from this crazy notion, please reflect on those things you already know. Your tax dollars already support programs that redistribute your dollars to others. Healthcare is provided to many at no cost, including those in this country illegally. Elected officials consistently raise your taxes to support additional programs that mirror their views of utopia. Founding father Thomas Jefferson stated, “The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.” Any modern society must have programs in place to help those who need help. But where does this start and where does this end? More and more elected politicians openly push “progressive” (a more trendy-sounding word than socialist) ideals that seek to redistribute wealth and allow open borders with asylum for illegal immigrants who have bypassed the process used by others for generations. Consider minimum wage guarantees and overly protective labor laws that make it nearly impossible to terminate any employee, even when that worker’s performance is clearly sub-standard. Progressive politicians are quick to do your thinking for you.
Those of you who created your own businesses under the “American Dream” are scrutinized by a myriad of government regulations and told “you didn’t build it.” Isn’t that you working seven days a week to achieve your dream? Aren’t those your taxes that pay for the infrastructure? Our government doesn’t “earn” money. It simply takes it from you and spends it as it sees fit. Socialism and other non-democratic forms of government gain strength because democracy by definition allows people freedoms, including speech. Journalists express their free speech often, even when they knowingly fail to publish the truth. It is countered only by you paying attention and participating with your vote to maintain the ideals upon which this country was founded. Learn the truth. Originally, elected officials would serve the country for a short term only to return to their businesses or jobs. That has gradually changed and now we have politicians who have never held any other permanent job. They are career politicians. It should be clear that those who have chosen such a political path also need to work hard to remain in office. Can those individuals fairly represent you when their political lives are on the line? Your vote can help maintain this republic. Don’t let our freedoms be swept away by progressive socialist policies.
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APRIL/MAY 2019 WEST COAST DEALER 5
LEGAL MATTERS
| By James Sifers
DEALER BOND
OPTIONS
FOR
YOUR
DMV
To operate as a dealer in California, the California Department of Motor Vehicles requires dealers to provide a $50,000 dealer bond to protect purchasers, sellers, financing agencies, and governmental agencies against monetary loss resulting from the dealer committing fraud and/or making fraudulent misrepresentations. (Cal. Veh. Code § 11710.) In response to this requirement, there are a number of third-party surety companies that will provide this bond in exchange for payment of an annual premium and the providing of a personal guarantee to cover any losses incurred by the surety as a result of any claims on the bond. However, once a dealer posts the bond with the DMV via a third-party surety, that dealer loses nearly all control over payment of any claims made on that bond and subjects itself, and likely a personal guarantee, to additional liability over and above the $50,000 bond amount. If a dealer has the means, it may make more sense to deposit $50,000 with the DMV to avoid purchasing a bond from a third-party surety company. When “a purchaser, seller, financing agency, or governmental agency” makes a claim on a bond held by a surety – which is usually done in connection with a lawsuit against the dealer, surety, and if applicable, the financing company – that claim is directed to the surety who then makes a determination as to whether or not to pay the claim. Sureties will generally seek input from the dealer as to the circumstances regarding the claim, but per most surety bonding agreements, the determination on whether to pay the claim rests with the surety. This is where the surety has several options on how to proceed in response to its receipt of a claim. If the claim is determined by the surety to be valid, less than $50,000, and there are no other pending claims that the surety is aware of, the claim may be paid by the surety. Thereafter the surety would likely seek reimbursement from the dealer and/or personal guarantee for not only the amount paid under the claim but any additional costs incurred by the surety, including attorneys’ fees paid by the surety to its counsel to resolve the claim. This means the total liability to the dealer and personal guarantee could exceed the $50,000 bond amount. This approach can be employed by the surety even if the dealer is defending the claim in litigation with the claimant. If the claim is determined to be valid, but there exist other claims that the surety is aware of which could potentially exceed the $50,000 bond, the surety can sue all of the
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BOND
CASH DEPOSIT
REQUIREMENT
claimants on the bond, the dealer, and the personal guarantor in a civil action separate and aside from the litigation that is likely pending by each of the claimants against the dealer and surety. The claimants would be named in this separate action only as claimants on the bond with the entire bond being deposited with the court to allow the claimants, and/or the court should the claimants fail to come to an agreement, to determine how the funds should be divided. The dealer and personal guarantor would be sued to allow the surety a means to recover the $50,000 bond deposited plus any additional costs incurred for having to so act. The surety often recovers its fees and costs associated with depositing the funds directly from the deposited funds, but that will have no bearing on what it seeks to recover from the dealer and personal guarantor as the surety essentially pays itself from its own money. The court action will then proceed with the surety seeking to recover all of its fees and costs from the dealer and personal guarantor. The final option is where the surety elects to defend the claim, either through its own counsel or through the use of the dealer’s counsel. While this may end in a favorable result for the surety if it is determined not to have to pay, the surety, per its agreement with the dealer and personal guarantor, will likely seek reimbursement from the dealer and personal guarantor for all fees and costs incurred in defending the claim. This means the dealer is out-of-pocket even on a win. Should the surety not prevail in its defense of the claim, California case law has held that the surety’s liability for attorneys’ fees and costs is not limited to the bond amount of $50,000 or the damages cap related to the value of the vehicle. (Cal. Veh. Code § 11711; see Pierce v. Western Surety Co. (2012) 207 Cal.App.4th 83 [a case litigated on behalf of the surety by the Law Office of John L. Fallat, a firm who handles a substantial amount of surety representation in California].) While the surety may be the one actually paying the award to the claimant, including the attorneys’ fees and costs award, the surety will likely seek to recover all of its expenses, including the amount paid to the claimant as well as the surety’s attorneys’ fees and costs, from the dealer and personal guarantor. In every situation where a claim is made on the bond, there exists the potential the dealer and personal guarantor could be liable to the surety for fees and costs associated with claims made on the bond. A dealer can avoid this potential lack of control by depositing $50,000 with the DMV in lieu of providing a
bond from a third-party surety company. Cal. Code Civ. Proc. § 995.710 allows the deposit of money in lieu of providing the bond required by Cal. Veh. Code § 11710. While a deposit in lieu of a bond requires the depositor to relinquish control over the deposited funds (Cal. Code Civ. Proc. § 995.710(c)), that deposit has a number of benefits to the dealer not present when the dealer purchases a surety bond. There is no personal guarantee, there is no indemnification requirement for fees and costs incurred over and above the deposited amount, and there is no potential liability in excess of the $50,000 on the funds deposited. (See DMV Form OL 25E Deposit Agreement and Assignment.) This is true even for the attorneys’ fees and costs incurred by the DMV in any claims related to the deposit, as those attorneys’ fees and costs are limited to the deposited funds. (Cal. Veh. Code § 11710.2(b).) This is not to say a claimant could not recover independently against the dealer for any violation of law, but that recovery would require the claimant to seek to enforce a court judgment against the dealer should the $50,000 cash deposited not be sufficient to satisfy the judgment. It must be noted though that should there be an outstanding unsatisfied judgment, even after payment of the $50,000 on deposit with the DMV, the DMV will suspend the dealer’s license until such time as the dealer restores the deposit, provides the required bond, and/or satisfies the outstanding judgment. (Cal. Veh. Code § 11710(c).) Should a dealer decide to deposit funds in lieu of providing a bond, those funds may be returned by the DMV at the expiration of either (1) three years from the date a dealer ceases doing business under a temporary permit; (2) three years from the date a dealer ceased being licensed, provided the DMV “is satisfied there are no outstanding claims against the deposit;” and (3) five years from the date the dealer “secured and maintained a dealer bond” provided the DMV “is satisfied there are no outstanding claims against the deposit.” (Cal. Veh. Code § 11710.2(a)(1).) A dealer may seek the return of the bond via an order from a judgment of the Superior Court per the same time frames. (Cal. Veh. Code § 11710.2(a)(2).) Should a dealer be interested in depositing funds in lieu of paying an annual premium, subjecting its principal(s) to personal liability, and losing all practical control over the payment of claims, please review DMV Form OL 25E Deposit Agreement and Assignment. James S. Sifers, Esq. is part of Madison Law, APC.
ACCELERATE |
By GWC Warranty
IS YOUR REPUTATION IN GOOD HANDS?
CHOOSE YOUR SERVICE CONTRACT P ROV I D E R W I S E LY
Unfortunately in the used car business, your reputation after the sale can sometimes be out of your hands. Once that aspect of your business is out of your control, you need to be sure it’s protected in the hands of someone you trust. If you’ve been in the business long enough, you know that despite the best reconditioning and the best inventory selection, you’re bound to run into vehicles that encounter issues after the sale. When this happens, it’s your reputation on the line. How these fragile situations are handled can have long-lasting impacts on your reputation in your market. Partnering with a service contract provider that has the tools in place to take care of your customers the way you’d want them treated is perhaps the most important thing you could do to protect your reputation when your customer’s experience is out of your control. That’s why you need to know some specifics about what your service contract provider has to offer so you can be sure your customers are in good hands after they drive off your lot. Coverage Lookup A simple online coverage lookup tool is a great way for customers to learn details about their contract on a moment’s notice. Whether it’s start or end mileage, expiration dates, component coverage or a look at the contract itself, having this in place helps customers know exactly how they’re covered.
Find a Shop A customer’s nightmare is a mechanical breakdown far away from home. A nationwide network of service facilities is one thing but being able to easily find a shop in an unfamiliar area is another. This online application takes the worry out of an out-of-town breakdown. Quick Answers These days, consumers demand answers, and they demand them quickly and on their terms. Having a service contract provider that allows customers to submit questions via online forms, live chat or social media gives customers multiple options, so they can get answers in whatever way suits their busy schedules. Good Reviews Online reviews in today’s automotive industry are vital to success. The same goes for service contract providers. Stick to trusted sites like Google (sometimes hidden in the maps section), Facebook, or Consumer Affairs and look beyond just star ratings. While overall ratings are important on the surface, looking at how often a service contract responds and the frequency with which customers leave reviews will give you a sense of how that provider cares for your customers.
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APRIL/MAY 2019 WEST COAST DEALER 7
INDUSTRY WATCH
| By IADAC Staff
RAMPANT CURBSTONING HURTS CONSUMERS AND DEALERS
HELP MITIGATE THIS CRIMINAL ACTIVITY
According to Urban Dictionary, a curbstoner is “an unlicensed used car dealer of the sketchiest kind. Curbstoners typically buy undesirable cars (cars with a salvage title in particular) and will represent the car as their own. If the name on the title does not match the person selling the car, chances are you’re being curbstoned.” San Francisco resident Jane Doe needed a new car. Her old car had developed mechanical problems that would have cost much more than the car was worth. With limited funds, Jane’s selection had to be carefully thought out. It had to be a car known for longevity and low upkeep. She found a 2007 Honda Fit with a reasonable 120,000 miles. It seemed to run well and the price was fair and within her budget so she bought it. What she didn’t know was the vehicle was sold at an auto auction just a few months prior with 217,000 miles recorded as actual miles. The purchaser at this “dealer only” auction was an individual who obtained entry to purchase as an “export only” buyer. He rolled the odometer to make the vehicle appear much more valuable and easier to sell. Jane became another victim of rampant criminal activity. “Export only” buyers claim to be purchasing vehicles for export out of the United States when in reality the vast majority of those vehicles are sold to unsuspecting consumers in the U.S. Though Jane Doe is a fictional name, this is a true story. California resident John Doe has a side hustle going on. Although he is not a licensed dealer, he gains access to “dealer only” auto auctions to purchase vehicles he can “flip” to consumers for profit. Certain individuals have set up shell dealerships in many different states advertising they can help a non-licensed individual obtain passage to auto auctions without having to jump through all the hoops necessary to obtain a legitimate dealer’s license. The out of state dealership adds John Doe as an agent, who may then
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attend any “dealer only” auto auction. John buys a car. The auction sends the title to the out of state dealer and the out of state dealer sends the title back to John Doe. He then sells the vehicle to a consumer. John has cash in his pocket that won’t be claimed as income and the state won’t get the sales tax it should because the stated selling price will be a fraction of the actual selling price. John is just one of many individuals using this scheme to flip cars to consumers. One other benefit John Doe enjoys is full freedom to use Fastrak without payment while driving the vehicles he purchases. You see, DMV doesn’t add out of state buyers to the registration history, so when John blows a Fastrak toll the violation notice is sent to the last California registered owner, usually the dealer who sold it at the auction. This is also a true story, though John Doe is a fictional name. The victims of these activities are numerous. Consumers lose by purchasing vehicles that in many cases have altered odometers and masked problems that ultimately cost the purchaser. Branded titles (i.e. salvage or prior taxi) are often passed along to unsuspecting consumers. The state loses out because the full, correct sales tax is rarely collected. Legitimate dealers lose out because curbstoners operate with zero overhead, purchasing cars from many of the same sources with 100 percent profitability. IADAC works with California DMV investigations and others to mitigate this
criminal activity. Groups also involved are Auction Access and the Arizona Office of Inspector General, who has brought in a recently created anti-curbstoning task force. The Arizona Independent Automobile Dealers Association sponsored a bill which created that group. With collaboration from all the state dealer associations and industry partners there may be a chance to slow rampant curbstoning by providing evidence to Auction Access that could be used to block agents for dealerships who have been proven to be participants in illegal schemes such as those described. Dealers can also participate by noting suspicious activities that may be curbstoning and alert IADAC so we may share it with DMV Investigations. However, it is not unlike “whack-amole,” where another illegal operation pops up when one is taken down. IADAC lobbying efforts have been responsible for previous anti-curbstoning legislation designed to mitigate curbstoning but today’s criminals have countered by creating layers of businesses in other states and using aliases, making it difficult to identify and prosecute those responsible for this illegal activity. While legitimate dealers are working to be compliant with state, local and federal laws, other individuals are working equally hard to find ways around them. The cost of licensing, insurance, compliance, overhead and much more do not exist in John Doe’s illegal and unlicensed sales business. It is not impossible to mitigate curbstoning, but it will require the unified will of all those involved.
INDUSTRY PERSPECTIVE
DMV NEWS
IT PAYS TO KNOW YOUR LOCAL LAW ENFORCEMENT
JEAN SHIOMOTO RETIREMENT
PARTNER WITH LOCAL AUTHORITIES
Auto dealerships are popular targets among thieves of all kinds. Whether the scheme is to scam you out of one of your vehicles with a phony check or identity or by stealing parts in the middle of the night, dealers must be ever-alert and vigilant to mitigate loss due to theft. Several years ago in Roseville local dealerships were being victimized regularly. Roseville Police Department took action to increase surveillance and in a meeting with local dealers suggested ways to mitigate loss. Recently a Roseville dealer had new oversized wheels and tires stolen from a truck displayed on his lot. His report to the police included video surveillance and resulted in the recovery of the wheels and tires, plus an arrest of the perpetrator for grand theft as the thief was also in possession of a stolen vehicle. It cannot be over-emphasized that it takes interaction to achieve results. Those who complain about problems without taking steps to solve the problem will never mitigate or eliminate them. IADAC highly recommends becoming involved. Meet with your police and local legislative representatives. As a business owner you are automatically an ambassador for your community and should take that role seriously to help yourself and others.
After 38 years of service, DMV director Jean Shiomoto celebrated her retirement on January 23. Various groups and DMV heads were on hand to describe the positive influence Jean brought to every discussion. As DMV director, Jean embraced every opportunity to work with organizations involved in the industry across the country. Director Shiomoto worked with IADAC on many occasions. She was always willing to discuss issues regarding independent dealers. IADAC thanks Jean for her willingness to work with us and her support over the years. Acting director Bill Davidson has filled the role until a permanent appointment is made. He previously served as deputy director. Governor Gavin Newsom will be making the appointment at a future date.
WWW.IADAC.ORG
Prison inmates created a special personalized license plate for Jean Shiomoto at the request of DMV.
APRIL/MAY 2019 WEST COAST DEALER 9
INDUSTRY WATCH |
By Jillian Dykhouse
ONLINE REVIEW TRENDS FOR USED CAR DEALERSHIPS IN CALIFORNIA
RECENT STUDY BY BIRDEYE Online reviews have become a major force in local commerce. Today, 186 million people use various devices to post nearly 150 million reviews each month. And according to Zendesk, 90 percent of car buyers say good online reviews influence their buying decisions. In short, more online reviews can lead to more money in your pocket. We wanted to find out more about how online reviews are impacting used car dealerships in California. So we compiled data using the BirdEye review management solution for 246 used car dealerships in California with one to two locations between February 1, 2018, and January 31, 2019. Where are your customers leaving reviews? Google. Overwhelmingly, 76 percent are Google reviews. Why? Google is the first place your customers start with the research process, so it makes sense it’s also the place they go at the end of the buying process. Top reviews sites for used car dealerships in California: •G oogle reviews with 5,964 reviews (76 percent) •C arGurus with 998 reviews (13 percent) •F acebook with 593 reviews (8 percent) •D ealerRater with 300 reviews (3 percent •C ars.com with 17 reviews (less than 1 percent) According to a Cox Automotive Buyer’s Journey Survey, 60 percent (5 hours and 12 minutes) of the car-buying process is spent using third-party websites like Google and CarGurus to research the purchase. And 88 percent of car buyers go online first while shopping for cars. Add in the fact that 57 percent of car buyers will only visit a dealership for a test drive if it has an average star rating four or more stars, and you see that online reviews equal sales. How are we doing, on a one-to-five point scale? You’re doing pretty well! With an 4.4 average star rating across multiple platforms, you are slightly below the 4.78 average that includes all industries. •D ealerRater had an average rating of 4.9. •T he average rating on Google was 4.4. •F acebook’s average rating was 4.6. •C arGurus had an average rating of 4.4. • Cars.com had an average rating of 4.1. Keep in mind that online reviews for car dealerships, in particular, can be quite polarizing. According to Ceros, who analyzed a dataset of 5.2 million online reviews on 174,000 businesses, reviews of car dealerships tend to run very hot or very cold. Out of the 195,297 reviews for auto dealerships, 57 percent were rated five stars and 26 percent were one star. Congrats! Used car dealerships in California are doing better with reviews than the dealerships from the Ceros study. But our data also shows you to be polarizing: 75 percent of reviews were rated five stars, and 13.5 percent were rated one star.
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When are your customers leaving reviews? Spring (March to May) is prime time for getting online reviews, with an average of 766 reviews received per month. Fall (September to November) is the slowest time for getting online reviews, with an average of 604 reviews per month. The number of reviews directly corresponds to the number of car sales compiled by Federal Reserve: •A verage monthly number of domestic sales during Spring 2018: 111.14 million •A verage monthly number of domestic sales during Fall 2018: 92.81 million What do your customers care about most? No, it’s not price, or the car itself. What matters most to your customer is what they experienced during the entire sales process – from test driving to financing. In fact, there were far higher mentions of the employees (by name) who helped your customers throughout the process than mentions of the actual product. How do we know this? BirdEye uses a Natural Language Processing engine, Athena, to provide you with insights to help you find the root cause of an issue so you can take actions to improve your customer experience. It can give you a holistic view of all your customer feedback so you can focus on only the most crucial information from mountains of unstructured feedback data. Beto Beas, owner of Beas Auto Sales in Stockton, relies on customer reviews for the actionable feedback they offer. “We make sure we ask our customers how we did at each customer point of purchase,” said Beas. “Then we know what we need to keep doing, and what we need to stop doing.” Beas also asks for reviews on Facebook and through the Better Business Bureau. “I’m constantly telling our customers to look at our reviews, look who you are buying from. It’s the only way to find a dealership you can trust,” said Beas. What Topics Reviewers Mentioned Most in Good Reviews The most mentioned topics in good reviews were: • “ Great experience,” with 301 mentions. • “ Great service,” with 227 mentions. • “ Great customer service,” with 220 mentions. “We rely on good customer service to get us reviews,” said JustBetterCars.com CEO Tony Harb. The dealership, which sells an average of 80 cars per month, also has “Review us on Google, Facebook, and CarGurus” signage. And it seems to work because JustBetterCars.com was named a “Top Rated Dealer 2018” by CarGurus. What Topics Reviewers Mentioned Most in Bad Reviews • “ Bad credit,” with 48 mentions. • “ Bad experience,” with 21 mentions. • “ Bad car,” with 20 mentions. Your customers, who are going to hand over thousands of dollars to you, are going
to do their research, with 38 percent of car buyers only visiting one dealership and 52 percent only test driving one vehicle. That’s why it’s so important to make the buying experience as customer-centric as possible. From the coffee in the waiting area to the way your staff explains finance options – make it easy, make it seamless, and make it fun. How are our customers finding us on Google search? Here are the search terms your customers are using in their initial search: •U sed cars for sale. •U sed car dealerships near me. •U sed cars near me. •U sed cars for sale in Los Angeles. Do you want to get your dealership on the top of the page? Then make sure your name, address, and phone number are up to date and consistent across all of your listings – especially your Google My Business page. Do you know what is also great for getting you seen on Google? Online reviews. Where in California is getting the most reviews? Used car dealerships in El Cajon received the most reviews at 1,193 total reviews in a year period. Online reviews continue to change the way your prospective customers are buying a car. If managed properly, online reviews can help your dealership improve your online presence, foster brand trust and loyalty, and increase revenue. Jillian Dykhouse is with BirdEye, Inc. She can be reached at jillian.dykhouse@birdeye.com. For more information, visit birdeye.com.
DEALER SPOTLIGHT
IADAC EXECUTIVE CELEBRATES 30 YEARS IN BUSINESS
MEHDI CHITGARI AND CLASSIC CHARIOTS
Classic Chariots is an icon in the city of Vista and is proof that being part of the local community pays off. Owner Mehdi Chitgari has been in the used car business in San Diego County since 1989 – 30 years. Vista has been the home of Classic Chariots since December 2007. Every year since Mehdi brought Classic Chariots to Vista the business has grown, and that growth is expected to continue. Recent real estate acquisitions will provide the needed space for Classic Chariots to construct a new, state of the art service department, which will help serve Classic Chariots’ customers better as well as beautify the nearby corner of Grapevine and W Vista Way, adding hundreds of feet of badly needed sidewalks. Additionally, the new facility will create more jobs. With
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permits recently acquired, ground breaking will begin soon. Classic Chariots is always there to lend a helping hand in the Vista community with donations and sponsorships for local events. For example, on Thanksgiving local students are invited to participate in a letter writing contest entitled: “What I am Thankful For.” At least two students are chosen from each grade and Classic Chariots buys Thanksgiving dinner for these students’ families. It is amazing how much these dinners are appreciated. The families who receive them would probably not have much of a Thanksgiving dinner if it were not for the kindness and generosity of Mehdi and Classic Chariots. Classic Chariots’ reach of involvement even extends to the local military base,
Camp Pendleton, where the dealership has sponsored numerous events and activities. Those include Thanksgiving lunches, group bridal showers, safety stand downs, single Marine programs and holiday and family events to support the local Marines. This past year marked the 10th annual Christmas/Winter Festival for Classic Chariots. It is a favorite community event, provided at no cost to the public. Activities include a photo booth, face painting, bounce houses and games for the children, plus free food and drink. During the event’s raffle, hundreds of gifts and merchandise provided by local sponsors are given to lucky attendees. This event has consistently grown to include more community members and local businesses. Raffle prizes this past year even included two large flat screen TVs. Classic Chariots has also sponsored several local events, including golf. tournaments and the Strawberry Run/ Festival, which featured Classic Chariots as the title sponsor. Without a doubt, Mehdi Chitgari and Classic Chariots are true community heroes and very well deserving to be recognized as such.
INDUSTRY WATCH |
By Mike Macaulay – West Coast Dealer Editor/Chair
EMPLOYEE TURNOVER
TREND ON THE MOVE
In the last several years there have been many changes in our social structure. Traditionally, employees would get a job and try to keep it, perhaps work their way up the ladder for a better position. Employers have valued employee loyalty and long lasting tenure. This has always been the way of employee/employer relations. But things appear to have changed. The new generations think of a job as a stepping stone. They are always looking for a new and better opportunity. That has always been an option, but now changing jobs is expected. Employee loyalty is not required or expected. Many employers consider an employee lazy or not motivated if they are not constantly looking for a better or different position. There are still “old school” employers who value loyalty and long term commitment. But it seems that the bigger the business the more turnover is expected. In our age of “real time” information gathering and job markets, there is much more to garner your attention. Many business attitudes consider a position to be fluid, always on the move. You should always be looking for a new company or to get your supervisor’s job. The new generations seem to have a sense of entitlement and believe the world
revolves around them. They think the job should be fun, and the employer has the responsibility to make it so. Their job should be something they want to do – not something they have to do. They want to be fulfilled by the job, but are unwilling to earn that fulfillment. This is all a great idea, and in a perfect world it would be so. The lines between employer and employee are becoming thinner. In our industry, sales staffs have always been fluid and changing. It is not unusual to have a high salesperson turnover. But this is now also true in office and management positions. There is a higher need to train all staff for compliance issues. It is much more complicated to sell a vehicle “correctly” than ever before. Though the legislation forwarded by IADAC to require salesperson
continuing education passed, it was vetoed by the governor. That bill would have helped our industry stay educated and in compliance. Now, salesperson turnover is a more troubling issue. How do we keep an educated work force? The answer to this interesting change in our social structure is not an easy one. Our world is, and always has been, in constant change. We have to adjust our attitudes to accommodate this “brave new world.” Check out your employees’ attitudes. Are they “on the move” as I suggest in this article? It is a definite trend that will be more apparent as time passes. Is your business ready?
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ASSOCIATION NEWS |
By Mike Macaulay – West Coast Dealer Editor/Chair
EDITORIAL COMMENT
GENERAL UPDATES
I was thinking of approaching the IADAC executive board with a new membership concept. IADAC could offer a new type of membership to go along with our regular membership. I suggest IADAC offer “salesperson memberships” to be attached to the member dealer’s membership. IADAC could add a special section to our site, www.iadac.org. It would be available for member salespersons. There would be available videos and current information on sales techniques, compliance, new products, customer follow up, telephone skills, and a question and answer blog. The NIADA website also has a huge library for us to draw from. We could provide a link and access for this valuable information. Your sales force could spend their free time improving professional skills and learning what’s new in our industry. That beats lagging for quarters against the shop wall. Our new governor has yet to appoint a permanent DMV director. When this happens, I will do a profile on the appointee and put them on the cover of West Coast Dealer. This will help foster a good working relationship with our most important industry partner. We will continue to provide DMV with a magazine column to keep us informed of changes and new information. I am still providing the “IADAC Mentor Program” to help new and existing member dealers with real time information via telephone or email. Please forward questions and concerns to me at carsystems40@yahoo.com. I wish you all a prosperous year! INDUSTRY WATCH |
ASSOCIATION NEWS |
By Larry Laskowski
IADAC STRATEGIC PARTNERSHIP WITH VITU
MESSAGE FROM EXECUTIVE DIRECTOR
It is with great pleasure I announce a strategic partnership we believe will exponentially benefit all our dealer members. On December 5, 2018, we licensed Motor Vehicle Software Corporation’s Vitu Light – formerly “Vitu Temp Tag” – as the electronic vehicle registration, Temp Tag and virtual reports of sale provider of choice for all independent dealers throughout California. Entering into this relationship provides a level of service and access to innovative technology that moves our industry forward for the benefit of our members. In addition to the many services available to you through Vitu Light, our partnership with MVSC brings the benefit of the company’s vital advocacy role at the capital. MVSC’s public sector expertise and extensive local, state and federal government contacts make them excellent allies as we work to advance legislative and dealer initiatives, improve management training and accelerate industry modernization. We look forward to a strong, effective partnership with MVSC and are confident you will feel the immediate benefits of working with Vitu Light. We encourage you to contact them at 877-761-1817 or vitulight@ vitu.com to learn more. You will discover, as we have, that Vitu Light provides the kind of efficiency and personal service you deserve.
By Mike Macaulay – West Coast Dealer Editor/Chair
CURBSTONING IT IS STILL AN ISSUE!
Curbstoning is the act of selling a vehicle while acting as an unlicensed dealer. We are all licensed and bonded vehicle dealers. We have gone through dealer testing, continuing education, bonding, and a constant barrage of compliance issues to retain our license. A curbstoner does none of this. They sneak through the cracks to unbalance the playing field. There is absolutely no protection for the retail public against these lawbreakers. The Department of Motor Vehicles has and will help us in the enforcement of laws for consumer protection. We as California dealers need to help bring curbstoners to their attention. Vehicles for sale at a shopping center parking lot or at any number of online outlets are our target. The online sales by illegal non-dealers are growing to a dangerous level. We dealers have regulations to guide our sales. We are required to list VINs and correct descriptions. We have to disclose any problems known about the vehicle and provide proof of titling status. Curbstoners can and do cheat and misinform customers, with little recourse. A few years ago, I wrote a story about
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dealing with illegal sales close to my dealership. There was an empty dirt lot down the street. Every day there were 10-15 vehicles for sale by curbstoners. Most of the vehicles listed the same telephone number, so it was obvious. I called the city and was told to mind my own business. I was minding my business by complaining. With no action by the local government, I took a different tactic. I found out who owned the property where the illegal sales were happening. I called the owner and said, “Would you please give me the name of your insurance company? I slipped and hurt my back in an oil slick on your car lot.” He said, “I don’t have a car lot.” “But you do,” I replied, “And you should go look.” I ended up telling the owner he had massive liability running an illegal car lot. The next day all the vehicles had been towed away and the lot posted. That solved my problem. How do we solve your problems? We should be vigilant in finding illegal sales operations and bringing them to IADAC’s attention. IADAC will then contact
DMV Investigations, who promises to take action. As I mentioned, many illegal sales are happening online. How do we spot these offenders? Please send me ideas to help in our industry’s problem at carsystems40@ yahoo.com. We need to work together to level the playing field and foster fair treatment of the consumer.
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MANAGEMENT MATTERS | By Dave Anderson
THE “WOW” IS WORTH IT! CREATE
BETTER
EXPERIENCES
In his book Never By Chance, Joe Calloway said, “A brand is defined as a trademark or distinctive name, reputation, or capability that identifies and differentiates a product or service from the competition, for better or for worse.” Every company has a brand. That’s not the question. Does your brand positively differentiate you or render you to commodity status? Does it elevate or diminish the value people see in doing business with you? To delve deeper, a brand isn’t primarily about your logo, jingle, or creative graphics. These things may explain or reinforce your brand, but they aren’t your brand. Nor is building a powerful brand for your dealership accomplished through big ad budgets and slick promotional campaigns. Building a powerful brand happens when you create a culture that supports consistently creating “wow” customer experiences, and by hiring and training the right people at all levels within your organization capable of consistently delivering said experiences. Focus more on the “reputation, or capability that identifies and differentiates you from the competition” aspect of the brand than on a logo, trademark, or distinctive name to communicate it. As a leader, it’s your job to make sure this gets done daily, and that chasing greater excellence in this regard is a priority for every team member. Here are some supporting thoughts and strategies to help refine your focus on intentionally building and leveraging the power of your brand. · T he bottom line is your brand is defined by customer experiences. You may declare what your brand is, but a customer defines it based on his or her experience with your company or product. In short, whatever a customer thinks about when they hear your dealership mentioned – which will be based on either a personal experience or one they’ve heard about from others – is your brand. You can say what you want about who you are, but your customers believe what they experience – and that is your brand. · I n case the prior point wasn’t clear enough, let me rephrase it slightly: Nothing is more important than customer experience when it comes to brand management. If you want to improve the strength of your brand, you must elevate the quality of the experiences you’re creating for both team members and customers. That starts
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with hiring the right people at the outset, setting clear expectations for the experiences you want created (experiential standards) and training team members to deliver that experience while holding them accountable for doing so. · A key to customer experience is consistency of performance. The more consistently great the experience is between departments, the stronger the brand. The greater variation you have between departments concerning the customer experience, or between your various locations, the weaker the brand. One bad apple in this regard will afflict the whole batch. · T he best answer to the question, “Who on our team would create the most outstanding customer experience?” is “Any of them!” If you can’t give that answer, you have work to do, and lots of it. · T he best way to influence a great customer experience is to create a great employee experience! Rest assured, if your team members aren’t having a “wow” experience working for you they’re not as likely to create similar experiences for your customers. Incidentally, micromanagers, oppressive work schedules, lack of training, hiring recklessly, inconsistent management, hypocritical leaders, tenured non-performers and more all drain the “wow” out of the workplace for team members. · K eep in mind that even team members who are far removed from direct customer contact have a “ripple effect” impact on the customer experience. This is because of the effect they have on other employees. Naturally, if a co-worker is negative, incompetent, corrupt and indifferent, he or she will diminish the experience of teammates, causing frustration and lower morale – all of which has the potential to trickle down and affect the experience a teammate is trying to create for a customer. There’s much more to say about building your brand, but since the focus of this piece is on perfecting the customer experience, take some time with key team members to honestly evaluate these questions and address the answers you’re unhappy with: · A re the processes and protocols we have in place designed to just meet a customer’s expectations, or are they intentionally designed to get the “wow?” In either case, how can we do better? · D o we have variation in the customer
experience between departments or locations? If so, why is that? How do we fix it? · H ow often do we talk about getting the “wow” in meetings, during one-on-one coaching sessions, in the interview process, and during onboarding periods? Since you can help change a culture by changing the conversation, what more can we do to shine a brighter light on this key responsibility for each team member? · D o we realize our frontline team members (porters, sales associates, service advisors, receptionists and the like) have more daily opportunities to create a customer experience than the management team since they come into contact with more customers? How much training have they had on creating “wow” experiences? What training could we implement to improve the customer experience, starting with the onboarding of new associates? · D o we have experiential standards for our organization that clearly define guidelines for the things we will always do – and never do – with a customer or when speaking with a customer? Are all departments and locations on the same page with these standards? If not, how and when do we fix it? · D o you know how your experience is significantly different and better from those your competitor delivers – from meet and greet, to customer touch points, to your various processes, to the language you use, to follow up, to communication protocols for service, to what they do while waiting to get into F&I, and the like? If your answers aren’t many and compelling, you’ve got more work to do. If this seems like a lot of work, that’s because it is a lot of work. I never said building a great brand through “wow” customer experiences is easy. But I can assure you it is worth it. And if your people and dealership are continually in price battles to be the cheapest so you can get the deal, there’s a better way: create improved experiences and the price becomes less relevant. People pay more for better experiences, and they return for more and tell others to do likewise. Believe me, whatever it costs you in time, training, or dollars to build a “wow” brand, when all is said and done, the “wow” is worth it. Dave Anderson, “Mr. Accountability,” is a leading international speaker on personal and corporate performance improvement. He is also the author of 14 books and host of the podcast, The Game Changer Life.