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WEST COAST DEALER

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AU G U S T/ S E P T E M B E R 2 016

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IADAC PARTICIPATES IN 70TH ANNUAL NIADA CONVENTION & EXPO Record Setting Historical Event

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WHAT’S NEW

New PassTime Series on niada.tv Get more from your GPS! There is a new video series on niada.tv that identifies how PassTime GPS tracking solutions facilitate higher rates of return on financing based upon improved customer payment performance. It also discusses PassTime’s wireless GPS telematics products. Check out this new series and much more at niada.tv!

08 T HREE UNIQUE WOMEN IN THE INDUSTRY 12 COMPETING WITH FRANCHISE DEALERS 16 NIADA CONVENTION 19 SAFETY RECALLS 20 W ASHINGTON UPDATE 22 KNOW YOUR RIGHTS 28 R EY GULUARTE RETIRES 30 C FPB’S PROPOSED CONSUMER ARBITRATION RULES

ADVERTISER’S INDEX ADESA............................................................. IBC

ADESA Brasher’s ............................................... BC Alliance Inspection Mgmt ................................... 27 Autotrader ......................................................... 21 AVRS....................................................................9 Black Book............................................................7 CarMax Auctions................................................. 18 Dealership Valuation Services............................. 23 GM Financial .......................................................15 Kirk Hawkins Insurance ......................................24 Lobel Financial.....................................................3 Manheim.......................................................10, 11 Manheim Pennsylvania........................................13 Mark-One Financial............................................. 5 NextGear Capital.............................................12, 17 PassTime GPS ..................................................... 25 Spireon ..............................................................22 Team Velocity Marketing.................................... 26 Top Finance Company ......................................... 19 VAuto............................................................... IFC Veros Credit........................................................28

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.

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The West Coast Dealer is published bi-monthly by the National Indpendent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817) 640-3838.

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 individual authors and do not necessarily represent the views of The West Coast Dealer, IADAC, or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright 2016

by NIADA Services, Inc. All rights reserved.

State Magazine MGR./Sales Troy Graff • troy@niada.com Editors Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com Magazine Layout & Graphic Artist Chantae Arrington • chantae@niada.com Art Director Christy Haynes • christy@niada.com Printing Nieman Printing

4 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

ASSOCIATION NEWS / BY LARRY LASKOWSKI

EXECUTIVE DIRECTOR’S MESSAGE

>>

INSIDE

>> Putting Disclosures to the Test

THIS YEAR, IADAC SPONSORED bill AB 1777, which proposed requirements for licensed auto salespersons to maintain a current continuing education certificate. It is a very simple bill, drafted with no cost to the state. The overwhelming majority of dealers polled were in favor of this proposal.

The current system allows a person to easily obtain a license to sell vehicles and then begin selling to the public immediately after hiring.

With no requirement for compliance training, a salesperson may handle sensitive consumer personal and financial information. With no understanding of the laws of which a dealer must be aware, a licensed salesperson may say or do things that could unintentionally mislead or misinform a potential buyer. Additionally, the DMV issues salesperson licenses and has the authority to revoke that license and even bring charges against a licensee but no educational requirements exist to inform the licensee what he should or should not do.

ASSOCIATION NEWS / BY LARRY LASKOWSKI

IADAC WELCOMES NEW MEMBERS >> Recognizing the Benefits

DEALERS AND VENDORS BOTH have recognized the benefits of membership with IADAC. Dealers find the monetary bonus using the VIP Auction Discount Cards and wealth of information available to be huge benefits.

Vendors find IADAC membership is a great way to reach dealers.

The following dealers and vendors have joined since April 1, 2016. IADAC wishes you all success!

Every other major industry requires training prior to licensing. Realtors, tax preparers, insurance salespersons and even cosmetologists require education before snipping a lock of your hair. Auto salespeople are not required to be aware of the Red Flags Rules, proper handling of legal paperwork, how to legally present documents or comply with the thousands of regulations governing auto sales. IADAC sees this as an opportunity to provide greater protection for the consumer in the form of a more secure auto sales transaction.

Unfortunately, this bill will be held over until next year. Our first committee hearing was the Assembly Transportation Committee and the bill was pulled by the chairman just minutes before the session with no explanation. We’ll address any issues with the language of the bill and bring it back in next year’s legislative session.

Meanwhile, IADAC is developing a state of the art continuing education platform.

This program will be entirely video based and viewable on a smartphone or tablet. Dealers will immediately recognize the ease of use and benefits of IADAC’s connection to the industry in this premier learning tool.

It is commonly known that when busy dealer/owners are faced with license renewal, their main goal is to get the certificate in hand as quickly as possible. We also

Autosports, Inc. Direct Auto Outlet, LLC P & G Auto CoreLane Technologies New Aeon Motor Group Amtrust North America Sac Direct Auto Denco Dealer Ins. Services Inc. Glorious Motor Cars VIP Autos CST Motors North State Auto Sales Asmara Auto Sales Premier Auto Credit Pacific Surety Insurance Services Family Auto Sales & Service Blackhorse Performance Motors Northern California Reg. Services Industry Standard, Inc.

EXECUTIVE COMMITTEE President Gus Camacho Camacho Auto Sales, Inc. Lancaster, CA 93534 661-945-2609 gus@camachoauto.com Sr. Vice President Mehdi Chitgari Classic Chariots, Inc. Vista, CA 92083 Vice President Guy Strohmeier Auto Center 87 Soda Bay Rd Lakeport, CA 95453

Vice President Brenna Stansberry Park Marina Motors Redding, CA 96002

Secretary Brittany Hibdon Hibdon Auto Center Orland, CA

Vice President Putu Blanco Paul Blanco's Good Car Company Sacramento, CA

Chairman of the Board Rocco DeLapa Vacaville Auto Sales Vacaville, CA

Treasurer Beto Beas Beas Auto Sales Stockton, CA

Magazine Chairman Mike Macaulay Car Systems carsystems40@yahoo.com

www.iadac.org

ASSOCIATION NEWS /// understand many education programs have that in mind and provide the “quickie” continuing education solution, catering to those dealers. One such platform I personally completed in seven minutes. This program taught me nothing.

Don’t expect that of IADAC’s program.

Our mission is to educate and you will definitely get that from our program. Recognizing the different means people best receive and store information, our program has been designed for ease of use and maximum retention for the user.

Salespeople will also find great value in IADAC’s online continuing education program. Bonus material will be geared specifically for salespeople with cautions, tips and suggestions for compliance leading to greater sales and more satisfied customers.

Even though no mandate exists for salesperson education or training, it is highly recommended dealers take the initiative and have their sales staff complete IADAC’s education program. The knowledge that sales staff has some education will provide peace of mind for dealer/owners.

IADAC’s continuing education program will be available for use later this year. Our target date is September 2016. Users will go to the iadac.org website to register and the course will be available for them to complete in a single setting or at their own pace. Complete a few chapters at a time using your smartphone during breaks. Watch for more info on this great new program!

NOTICIAS DE LA ASOCIACIÓN /

ATENCIÓN DILERS DE HABLA HISPANA! >> Queremos tus Pensamientos

SI USTED ES UN DILER de habla hispana y desea escribir sobre cualquier asunto o problema conteniendo a su negocio, o simplemente tiene un problema con el Departamento De Vehículos (DMV), por favor mándenos un email o escriba a IADAC. Nos gustaría publicar sus pensamientos.

Nos gustaría tener y publicar una sección en español dentro de nuestra revista para nuestros dilers. IADAC es el único grupo representando a la industria usada.

Esperamos atentamente sus comentarios e ideas para publicar en nuestra revista.

Gracias.

Larry Laskowski Director Ejecutivo www.iadac.org

AUGUST/SEPTEMBER 2016 / WEST COAST DEALER 5

SALES MATTERS /

BY BRENT CARMICHAEL, NCM ASSOCIATES

4 ESSENTIALS FOR BIG SALES IN THE DOG DAYS OF SUMMER

>>

>> The Right Plan for Summer Profit

THE DOG DAYS of summer are here. The typical

BHPH dealer will sell 30 to 35 percent of their annual units in the first three months of the year. They will also realize about the same percentage of their annual profit in the first quarter.

So, if you got off to a slow start this year, summer could be the only way to salvage your annual sales. However, it’s going to be a lot harder.

But you can profit in the summer – with the right plan.

Good sales in the summer are no different than selling in the first-quarter heydays. It just requires more focus and drive because your customers have less money and can be harder to find. The four steps I outline below will give your team the skills and focus to make sales, even in the most challenging months.

Step One: Develop the right skills.

The first of the key ingredients, and most important, is simply training. Well-trained salespeople can sell any time of year.

Set up a training schedule to get your team on point. Both phone training and basic sales skills training should be done weekly, at a minimum. Specifically, address how to overcome objections. Role playing is a good way to accomplish this.

Educate your staff on how to set effective appointments by recording and reviewing the calls. Lot traffic is at a premium during the dog days, so make sure your people know how to handle effectively what opportunities they do have.

Step Two: Keep up appearances.

Appearance is critical. Now, I’m not necessarily talking about your employees’ appearance, which should always be neat and professional, but your overall lot appearance.

Over my many years in the business and as an executive conference moderator with NCM Associates, I’ve discovered the No. 1 reason BHPH customers choose a dealership is that it looked good when they drove by. Let’s take this at face value and make sure your lot is the bestlooking one in town!

Fortunately, improving your lot appearance isn’t difficult. Make sure it is always neat and orderly.

Arrange vehicles evenly and with a good mix of colors and styles. Don’t have them face all four directions of the compass! Host a lot party or rodeo at least once a week to force yourself to keep the lot fresh.

And don’t forget the cars themselves. You should consider the vehicles on your lot as your mannequins and treat them the way a fine department store treats theirs. Keep them

6 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

fresh, neat, clean and always ready to sell.

That goes for overall lot appearance as well. A fresh coat of paint and some weed killer can do wonders.

Step Three: Entice your customers.

Successful dealerships understand you can’t just wait for clients. Good marketing brings people to your lot, so develop a plan that offers attractive incentives.

Summer is a time when repeat and referral programs really pay dividends. And it is also a good time of year to focus on referrals, not just with your customer base but with outside companies and people as well.

If you are not already paying referrals to noncustomers, it’s something you should give some serious consideration to. I can assure you some, if not all, of your competitors are doing it.

Marketing also extends to your web presence.

Make sure your website is up to date. Read through your “About Us” sections and any testimonials – do you need to make changes?

Review your employee introductions – has anyone left or been promoted? Do the photos need to be replaced? Reviewing photos is of particular importance if you display inventory.

I was on a dealer client’s website the other day and the inventory photos had snow on the vehicles!

It’s also critical you check any advertised specials. You don’t want someone stopping in for a deal that’s no longer current!

Step Four: Get your message out.

If you want to make the most of the dog days of summer, make sure people know about you.

In this very competitive industry, advertising in some form or fashion is a must. The two most popular advertising media are, of course, television and radio. And, contrary to popular belief, use doesn’t drop off in the summer.

Advertising is only effective when it reaches the right folks with the right message. When promoting in these channels, remember to advertise to your customer, not yourself.

Chances are your buyers watch different television stations than you do and may even listen to different radio stations.

Select ad placements where your clients are watching and listening. If you aren’t certain what media your customers are using, survey both new and existing customers to gauge their entertainment preferences. In other words, just ask them.

Moving past traditional media, there are many options in social media to get your message out. I won’t go into them here, but I recommend you get the basics.

As you can see, the formula for selling in the dog days is the same as selling in the heydays.

Although there are usually fewer opportunities, you can capitalize on what you have when you pay more attention to detail.

And it doesn’t need to be expensive – the two most important items outlined above are the least expensive. With the right mix of training, lot maintenance, and marketing and advertising, I know you can keep the dogs at bay.

Brent Carmichael is the executive conference moderator at NCM Associates. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.

MARKET WATCH /

>>

BLACK BOOK UNVEILS RESIDUAL FORECAST ON THREE-YEAR-OLD VEHICLES >> Rising Supply’s Continued Impact

BLACK BOOK, a division of Hearst Business Media that provides new and used vehicle valuation services and custom data licensing solutions, unveiled its May residual forecast illustrating the downward pressure on prices that increased supply will continue to have over the next few years.

Black Book forecast data shows residuals on an average three-year-old vehicle will dip from the current three-year retention of 52 percent in 2016 to 47.8 percent by 2019.

Retention values on a three-year-old vehicle peaked in 2013 when vehicles were retaining approximately 54.5 percent of their original typically-equipped retail.

Favorable credit availability, continued growth in demand, and consistently low gas prices have provided support in keeping retention rates high in the last five years.

Increased used supply in the marketplace, driven by the significantly large volume of sales on new cars and trucks has played a driving role in slipping retention rates this year.

Here are the historical three-year retention rates and the projected residual forecast on an average three-year-old vehicle according to Black Book: • 2012: 53.8 percent.

• 2013: 54.5 percent.

• 2015: 54.1 percent.

• 2016: 52.0 percent.

• 2017: 50.1 percent (forecast).

• 2018: 48.6 percent (forecast).

• 2019: 47.8 percent (forecast).

The historical data represents published Black Book Wholesale Average values as a percent of new typically-equipped retail. The forecast represents published Black Book Residual Values averaged across all threeyear-old models.

“Despite the industry’s continued efforts to maintain a strong pace of sales on new cars and trucks, the increased level of supply in the used market has begun to weaken prices on both cars and trucks,” said senior vice president of automotive valuation and analytics Anil Goyal. “We saw the first sign of this in 2015, when cars saw above-average depreciation on the year, and this year we will see rising depreciation for truck segments as well.” www.iadac.org

www.iadac.org

AUGUST/SEPTEMBER 2016 / WEST COAST DEALER 7

INDUSTRY WATCH / BY BETH WILLIAMS

WOMEN OFFERING A NEW PERSPECTIVE IN THE DEALER WORLD

>>

>> Three Unique Women in the Industry

THE REALM of retail automobile dealerships has long been a man’s world. And while that may be changing, women still comprise only 21 percent of employees working in that world according to the U.S. Department of Labor.

Most of those women are working in the office providing clerical or administrative support.

Less than 5 percent of dealerships are owned by women, which makes them a very rare breed among the industry’s leadership.

For those who are sitting in the CEO’s chair, success in the male dominated business comes from hard work and a focus on the kind of service best delivered by women.

With all due respect to the other 95 percent of owners, women do bring a special touch to the industry. We spoke to three women who have successfully attained ownership of retail dealerships and found that, while their journey to the top differs, their experience and philosophy on what they have to offer is quite similar.

Brittany Hibdon, owner of Hibdon Auto Center will tell you the car business is “in my blood!” She grew up in it with a father who began in sales, moved to management, and eventually owned the dealership.

“I worked for him in high school answering phones,” she said. “Then I married a man who was a third generation car dealer. Our kids are doomed!”

While Brittany worked brief stints in other types of businesses following college, she ultimately came back to the dealership. “I really, really love the car dealership business!

As an employer I can make a positive impact in the community and for our customers, I bring a perspective that female buyers can connect with.”

She knows the value of identifying with women when it comes to sales and service.

According to Road & Travel Magazine, women purchase 53 percent of all used vehicles and influence 95 percent of vehicle purchases overall. That makes women a very important customer base.

“I see things through a woman’s eyes and pay attention to details of the dealership that women care about,” she said. “For example, I have the cleanest, nicest little waiting room. I think, ‘If I’m a mother with children is this the kind of place where I would want to sit for an hour or so, waiting on service?’”

She takes that ability to connect with a woman’s perspective from sales all the way 8 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

through service and said it has made a big difference in her dealership.

Brittany has also taken the opportunity to pay it forward when it comes to mentoring other women in the business.

“Eighty percent of my staff are women in both sales and service,” she said. “I’ve enjoyed showing these young women what their possibilities are in the industry.”

While her passion for the business is heartfelt, Brittany is the first to tell you being a woman in the business is no cake-walk. She said, “As a woman I’ve had to work a lot harder to be taken seriously. I’ve been at auction and had male counterparts ask if I was there by myself. But I’ve also earned a lot of respect because I have made it and been successful.”

Brenna Stansberry, owner of Park Marina Motors, wasn’t quite as enthusiastic about being in the car business when she started out, but has come to love the dealership she took over from her father.

“I really didn’t want anything to do with the dealer business,” she said. She had been in the military, later worked for the post office, and then in retail where she had medical benefits. But life took a turn and the young single mother was looking for work so she went to work for her father at his dealership and has been there for 22 years.

“I started as a DMV clerk, but ended up literally sitting in every chair in the dealership,” she said. “I learned all aspects of the business from paperwork to sales to finance. About 10 years ago my father and his partner opened a franchise dealership and a few years later I was given the opportunity to take over the management of the independent dealerships.”

She said her dad was concerned about her being “eaten alive” in a man’s business.

“I know this business but always felt, as a woman, I had to work harder to prove myself. It’s not that I have been treated with disrespect, but I have been under a microscope.”

Like Brittany, Brenna said her female perspective brings some qualities to the buyer’s experience that might not be present in other dealerships. “We see things differently.

We smell things differently,” she laughed referring to the cleanliness of her store.

She also pointed out she’s not the stereotypical salesperson. “The level of trust goes up when a female buyer sees a woman on the lot. Having a female salesperson or owner on site helps break down those stereotypes of aggressive used car salesmen.”

Brenna believes her perspective also opens her to trying new things: “Women aren’t as stuck in their ways and are more inclined to updating the way things are done.” A big success for her dealership came when she decided to combine the two lots (across town from each other) into one.

“We struggled with one of the locations for a long time and when property became available next to the lot on the main

highway, we were able to move to one location,” she said.

Her decision to make the move proved to be very successful. Brenna said, “We doubled our sales in the first month of operating in the single, expanded location.”

Brenna says she is proud to carry on her father’s legacy: “I love that I am carrying on a piece of him in my business.”

Annie Brisson, owner of Pace Auto Sales, said she “fell into” her leadership position.

“While many women do have family ties to the business, I didn’t.”

Annie served as the finance director at a local dealership in her community and when the general manager left, she was recommended for the position. “But they wouldn’t give me the position,” she said.

“Back then, if you were in that position it was because you were related in some way to a man in the business. I wasn’t.”

Instead, a friend of hers who owned Pace was looking at retirement and asked her to come work for him and take it over.

“I had never actually sold cars to customers,” Annie said. “I learned by the seat of my pants. I served as general manager for four years until he was ready to move on.”

Annie said the former owner taught her about auctions and everything she needed to know to have a comprehensive view of the dealership. But what she didn’t need to learn was how to treat her customers. It came naturally.

“I put my customers at ease,” she said. “We sit down and talk about what they want then we find it. They are comfortable they won’t be forgotten after the sale. As a woman, I’m able to bring down the fear factor and earn their trust.”

All three of these unique women in the industry are members of IADAC and view their affiliation with the association as a valuable tool in being successful.

“As a small dealership, I don’t have a lot of extra time,” said Annie. “IADAC keeps me informed on issues affecting my business and represents me on legislative issues.”

Both Brittany and Brenna serve on the board of IADAC and feel they contribute by bringing their unique perspective to the board. Annie was on the Sacto local board for several years, and has served as president of that chapter.

“It’s a great organization,” said Brittany.

“There’s a new generation of dealers and we want to bring more women into the industry.”

Author Beth Williams is on the staff of Auto Data Direct, Inc. ADD is a provider of several services to the California dealer community.

www.iadac.org

www.iadac.org

AUGUST/SEPTEMBER 2016 / WEST COAST DEALER 9

>>

NOW IT IS A MUST >> How Can We Do A Better

Job Retaining Women In Sales?

DEALERSHIPS CURRENTLY REPORT that women represent just 25 percent of face to-face positions. But that small number is powerful: Within four months of reaching that percentage, dealerships typically experience as much as 35 percent gain in overall vehicle sales, new and used, and a substantially increased used car turnover.

Less numbers-driven, but just as important, those dealerships also see

an increase in desirable employee statements regarding company loyalty and goals toward longevity. How did they do it? Simple: They brought women into their sales, service and management positions and found ways of retaining them.

It’s simple: Attracting women yields high results.

Considering 85 percent of all automotive purchases are either directly made by women buyers or directly influenced by them, if we are not responding to this statistic, then our dealerships are missing the boat. Totally.

ROI is a key driver in how we consider the physical programs and offerings we put forth to the consumer in our efforts

Explore new technology.

>>

MANAGEMENT MATTERS / BY JODY DEVERE

Employ marketing specialists comfortable with women’s needs.

Eliminate procedures we have utilized just because we have always done so.

to entice them to visit our facilities. We do recognize Internet information access has affected profit margins, margins inflated by consumer ignorance as to how much flexibility in costs existed.

The fact is we just cannot make the margins we used to, and have to find ways of addressing our concerns as survival efforts.

Playing the numbers game of total sales for a month will eventually be passed with the money lost in potential profits. The bottom line is we must place our investment monies into areas of concentration that will bring us returns that will not only keep us in business but by their very nature help us grow in our financial viability, viability that is attractive to women who may be considering this industry as a workplace.

Roadblocks to attracting women.

Here are some reasons why we are not attracting women at this point: 1. Traditional resistance. Many organizations still are thematically maledominant and have programs in place that do not have interest to the new womendriven market. “What was good for my dad is good enough for me” is the motto above the entrance of many empty and abandoned dealerships.

2. Reluctance to trying new programs.

Management and owners may not have the desire or courage to try new programs. Or they may be lazy.

3. Equitable pay and work programs.

There need to be considerations for family needs and even part or adjusted time participations. Traditional long hour work periods do not work.

4. Knowledge and expertise. Existing dealership management may simply not have either or both of these to design and implement marketing to attract and hire women, or initialize training and financial or equitable incentive programs to make this happen.

5. Necessary minimal monetary investments. Many management personnel simply may not want to make these investments.

10 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

www.iadac.org

must address the elimination of restrictive traditional procedures we may have in place.

5. Encourage our educational systems to step up to the plate, and support local and regional programs. We need realistic training at design, management, service, finance and especially sales. This must happen at all levels of the industry.

Today’s women are time-constrained, pragmatic, comfort-conscious, and heavy into efficient and consistent communication with their employers. They are extremely effective at communicating within their own social groups and pay little attention to advertising. They are direct with their customers, and women are especially effective at establishing a meaningful rapport that translates into return business

transactions built upon trust.

If we wish to survive, let alone prosper, we cannot wait any longer. Let’s do everything we can to attract these valuable women employees, and provide them with the incentives to keep them with us.

The time is now, not tomorrow.

Jody DeVere is an internationally recognized speaker, trainer, often quoted industry pundit and spokesperson for the automotive industry on the women’s market. As CEO of AskPatty.com, she provides automotive education to women consumers and an interactive online Certified Female Friendly certification training program for automotive retailers on how to attract, sell, retain and market to women. This article originally appeared on NCM’s Up to Speed blog (http:// blog.ncminstitute.com) and is reprinted with permission.

6. Difficult economy conditions. Many organizations lean on this often-perceived statement as an excuse. This is not an excuse.

7. Negative reputation: Previous poor treatment and lack of respect. The dealership’s experience has left a bad taste in many women’s mouths. Women are still greeted on the sales lot with detestable statements such as, “Is your husband with you today?” With such disrespect, it’s not surprising that women don’t consider dealership work as a viable option.

8. Failure to address the needs of female millennials. Times are different. Women in this largest group of consumers want to be in organizations that “feel good” to their basic drives, other than just to climb through positions or achieve high income solely. They want to have better communication with their administrators and are most often prefer working “with” them, as opposed to “for” them.

So, how do we fix this, and not only bring talented women into our organizations but keep them there as well?

With sales consultant turnover figures ranging from 72 percent to 80 percent, the highest turnover rate is women at a shocking 90 percent. Turnover among millennials is presently at 54 percent. It is obvious we are doing a lot of things wrong.

Here are some realistic solutions to retain women: 1. Get off our butts and try new methods. Explore new technology. Employ marketing specialists comfortable with women’s needs. Eliminate procedures we have utilized just because we have always done so.

2. Re-examine possible positions that can effectively interest and challenge women. Conduct non-traditional interviews that ask what these interests might be.

3. Re-evaluate compensation incentives and adjust them. Consider not just the primary needs of full and part-time women, but their family and personal needs as well.

4. Take a new look at our models. We

www.iadac.org

AUGUST/SEPTEMBER 2016 / WEST COAST DEALER 11

SALES MATTERS / BY DEALERSOCKET

COMPETING WITH FRANCHISE DEALERS AND COMING OUT ON TOP >> How Converting Sales

>>

to Service Can Help You Sell Cars

12 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

Every time a

>>

DEALERSOCKET’S DAR for Fall 2015 cites two primary problems independent car dealers face. One is used car sales and the other is repair services. Why are these issues for independent dealers?

This finding is based on an independent dealer’s ability to convert used car sales to repair services, which correlates with customer satisfaction and retention.

How do you convert sales to service? You must change customer perception. Almost all business is judged by the strength of the customer service department. You need to change consumer buying habits.

DealerSocket reports for independent dealers only 30 percent of sold customers brought their vehicle back to the dealership for service within the first year. The average percentage of repeat customers is only 20 percent.

They examined a Chrysler Jeep dealer and discovered the average sold customer who brought their vehicle back to the franchise dealer for service during the first year of ownership was 80 percent while the customer retention rate was 44 percent.

How do they do it? According to DealerSocket, they have established a two-step process unique to their group and region. They introduce all new customers who purchase a vehicle to the service department at the time of delivery by scheduling their first oil change. Once the customer is in the service department, they created a program they call Platinum Plus.

Every time a customer spends money in the Service Drive, 15 percent of dollars spent goes towards the purchase of their next vehicle.

This has proven to increase retention in service.

Converting customers who bought vehicles from the sales department into service customers is the formula for increasing customer holdings. The cycle of customer sales purchase to customer repair service, coupled with a 2-5 year trade-in is the pattern every dealership seeks to obtain.

How does an independent dealer compete with the larger franchise? DealerSocket surveyed consumers and found 75 percent say where they purchase their vehicle is influenced by negative online reviews. Your online presence matters and there are ways to make it work for you.

DealerSocket proposes several solutions: • Data mining or data discovery is the process of analyzing data from different perspectives and summarizing it into useful information. This information can be used to increase revenue, cut costs, or both.

customer spends money in the Service Drive, 15 percent of dollars spent goes towards the purchase of their next vehicle.

This software is an analytical tool often used by retail, financial, communication and marketing organizations. It enables companies to determine relationships among internal factors like price, product positioning, or staff skills to external factors like economic indicators, competition, and customer demographics.

This allows you to properly position your business and possibly increase customer sales and retention. Customer relations management software keeps a customer database with phone numbers and email addresses, so you can schedule follow ups, appointments, and email blasts that allow you to continually reach sold and prospective customers.

• Schedule your customer’s first oil change before they walk out the door and send a reminder before the appointment date. This is an excellent way to build a sales/service cycle.

• Examine sales trends, including the retail sales outlook, trends by vehicle type, web based and device driven sales, and the online shopper and how they’re utilizing your website. Traditional marketing processes are irrelevant in light of today’s online marketplace.

The DealerSocket DAR for Fall 2015 summarizes their report the following way: Increase customer retention by: • Integrating sales and service processes.

• Building trust and communicating the value of the service department within the first year of selling a vehicle.

• Utilizing data mining software.

Grow revenue by: • Implementing appointment confirmation processes.

• Focusing on used car opportunities.

• Decreasing spending on traditional advertising.

• Creating a digital shopping experience that drives consumer engagement.

www.iadac.org

ASSOCIATION NEWS / BY GUS CAMACHO

MESSAGE FROM THE PRESIDENT

>>

>> NIADA Convention

THANKS TO ALL THE CALIFORNIA DEALERS who attended the NIADA convention in June. It was great seeing a number of California dealers interested in furthering their knowledge. The event set a record for attendance, eclipsing the previous total from 2006. The acquisition of the Leedom Group assets by NIADA creates a greater variety of topics for dealers.

NIADA provides access to Certified Master Dealer training, 20 Group interaction and a host of compliance solutions. This industry has seen many changes in the past decade that have narrowed the front-end profit margins and a dealer must be open to implement new policies to maintain profitability.

Gone are the days when a dealer can operate without support. Many dealers complain about how things aren’t what they once were yet they do not look for new solutions to their problems. Solutions are available but it means working hard to find them and having the courage to implement them.

Vendor attendance at the expo also reached a new high. I saw some great new ideas showcased that can help set your dealership above the rest.

Tools for your sales staff were in abundance. If you are like many dealer/owners you may think your salespeople do too little. Maybe you haven’t challenged

MANAGEMENT MATTERS / BY KEVIN BAUMGART

DOES YOUR DEALERSHIP VALUE ITS INTERVIEW PROCESS?

>>

>> Be Prepared for the Right Hire

BY THE TIME a candidate reaches the interview stage, it’s clear they have grabbed your attention as a potential hire for your dealership. The interview process is an irreplaceable component of your dealership’s overall hiring strategy. It’s also the point at which both the employer and job seeker determine if it’s worth their time to move forward with the process.

What’s at Stake for Employers?

Taking the time to speak with a candidate in person is critical to determine if someone is a good fit for the role. It’s also an integral part in persuading top talent to work for your dealership.

Research from LinkedIn found that 87 percent of job seekers said a great interview experience would make them reconsider a job offer even if they have initial doubts. In a competitive job market, this can make the difference between hiring an all-star and a dud.

Conversely, 83 percent of candidates say a negative encounter during an interview will erode their interest in a position. Getting the interview process down to a science begins far in advance of the inperson visit.

Employer Due Diligence You will want to use the early stages of the hiring process to get as much information about the applicant as possible to ensure you’re making the right decision by inviting them in for an interview. Hiring technology has come a long way in enabling auto dealers to evaluate job seekers before they ever step foot in the dealership.

Employers should take advantage of tools that test hard skills, soft skills, culture fit and aptitude. Based on the results of these evaluations, you’re able to better gauge whether they meet – or even exceed – the requirements established in your job description. This 14 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

them enough. There are many ways to utilize their idle time by reaching out to past and current customers.

Personally, I am too busy to attend the convention but I make the time. The information I receive is that valuable to me.

California dealers who have not attended a convention before should make the commitment. IADAC’s annual convention is coming up October 14 and 15 at Lake Tahoe. We’ll have great guest speakers and cutting-edge products and services from top industry vendors. It’s the best deal on the planet! Sign up for our free newsletter at www.iadac.org.

Congratulations to our senior vice president Mehdi Chitgari! As the IADAC Quality Dealer of the Year he was one of 18 in the running for the National Quality Dealer Award. Although the 2016 National Quality Dealer was Florida’s Scott Lanier, we are very proud to have Mehdi represent our state.

I hear from many of you that you’re not happy with the direction the industry is moving, citing greater regulation and lack of transparency from some agencies as stifling for your business.

You don’t have to accept these changes, you can make a difference.

You do that by joining IADAC. Your membership gives us a greater voice at our state capitol and at Washington D.C. Membership is cheap, just $299 annually. VIP auction discount cards easily offset that cost, even put money in your pocket!

adds insight that employers can use in conjunction with resumes and applications to make informed judgments about applicants and if they should bring them in for an interview. Once you’ve completed these critical steps, you need to make sure you are prepared to meet the candidate in-person.

How to Prepare for the Interview No detail is too small as you prepare for the interview. Consider what type of impression you’ll leave after you’ve invited a candidate to talk about a specific position and you forget their name, the job they applied for or refer to past work experiences belonging to another applicant. This is the candidate’s first impression of what it would be like to work at your dealership. It’s important to get it right.

You should also have your interview questions prepared in advance and in front of you when you sit down for the interview. Be sure to have questions that will help you effectively identify whether the candidate can perform all necessary tasks defined in the job description. Addressing your priorities up front and asking questions about measurable criteria will help you determine their ability to do well in the role.

At the end of an interview is a great time to allow candidates to ask questions, which helps set expectations for the candidate and the interviewer. If you are prepared for this exchange in advance, it is easier to sell top talent not just on the role, but also on your dealership as a place to work. As much as the employer is judging the candidate, the potential new hire is also forming opinions about working for the dealership, and a great impression will win over allstar candidates.

An Extensive Process The interview is the singular component in hiring that carries the most weight for both the employer and candidate. It’s crucial you have a rock-solid process in place – built on strong intel about each applicant – that will make the encounter productive and illuminating for all parties involved.

Kevin Baumgart is VP of Business Development at Hireology. He has spent his entire 15-year career in sales and sales management for entrepreneurial and start-up companies. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.

www.iadac.org

www.iadac.org

AUGUST/SEPTEMBER 2016 / WEST COAST DEALER 15

ASSOCIATION NEWS ///

Cox Automotive with its many facets.

Mehdi Chitgari shown next to 1978 National Quality Dealer Vic Snyder.

California Quality Dealer Mehdi Chitgari with wife Fariba.

NextGear Capital provided race simulators for the enjoyment of attendees.

ASSOCIATION NEWS /

NIADA CONVENTION RECAP

>>

>> Record Setting Historical Event

THIS YEAR’S RECORD setting event was special in that it was the 70th anniversary of the NIADA convention and the highest total attendance in NIADA history. Acquisition of the Leedom Group assets added to the diverse offerings displayed at The Mirage in Las Vegas. Dealers seeking educational seminars had many topics to take in: compliance training, Certified Pre-Owned sales, alternative profit centers and much more were offered by the best speakers in the industry. California’s Matt Nazar, owner of Aussie Autos in Studio City, was one of the speakers for the Certified PreOwned seminar.

As the event has grown, so has the number of vendors. A record number of vendors pitched the best and newest industry products and services. Over 170 vendors filled the expo hall.

The keynote speaker Tuesday afternoon was Kris “Tanto” Paronto, former Army Ranger and hero who helped protect the CIA Annex and American Embassy in Benghazi. His story touched everyone in the audience, reflecting on the inaccurate media portrayal of the event. The desire of his group to set the record 16 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

straight was first recorded in the book and now in the movie 13 Hours.

Paronto emotionally described the loss of his fellow soldiers and how his team was not allowed to protect the embassy initially.

Only after terrorists had set the embassy on fire and gained a strong foothold did Paronto and his group get the go-ahead from the State Department to engage the enemy. A very special thank you goes out to Paronto and his team for the ultimate sacrifices they made.

California Quality Dealer of the Year and IADAC senior vice president Mehdi Chitgari was one of 18 finalists for the National Quality Dealer of the Year award. Mehdi owns Classic Chariots in Vista and supports his community and customers with holiday parties serving dinner and providing gifts for the children.

Ultimately, the winner of the award was Scott Lanier, owner of Credit Cars in Orlando, Florida.

Dealers who do not take advantage of the phenomenal amount of valuable information available through NIADA really set themselves up for problems. Compliance requirements from state and federal agencies are increasing at a rate like never before.

Individually, it is impossible to stay abreast of these changes without the help of groups like NIADA and IADAC. Inquire today and find out how membership doesn’t cost you any money at all! Check out www.iadac.org or call our office at 916-893-3306.

www.iadac.org

ONLINE MARKETING / BY KATHY R. TAFOLLA, LOBEL FINANCIAL

DOES YOUR CONTENT MARKETING STRATEGY INCLUDE VIDEO?

>>

>> Video Outperforms in Driving Conversions

VIDEO CONTENT is exploding across the Internet, in social media feeds and in social hubs. Given the growing quantity of visual content in newsfeeds on social media, you can capitalize on video marketing. Even more, you can shoot, edit and produce these videos inexpensively. How is this possible?

1. Write a script.

2. Record a voice over.

3. Use Adobe to create the graphics.

4. Get a video recorder for live video.

5. Use Adobe After Effects for video editing.

6. Add music using sound effects.

7. Publish.

You can also use PowerPoint to video edit if money is a factor and Adobe is out of your budget.

Video content marketing allows consumers to satisfy their information and entertainment needs all at once. It’s also a great way for small business owners to compete with larger businesses.

Video is unrivaled when it comes to reaching your target audience.

YouTube reports over a billion viewers, almost one-third of the people on the Internet every day. Video content is straightforward, quickly shared and easily accessible. It’s easy to create a business channel where all of your video content can be found through an organic search.

Since buying a car is a visual experience and your dealership website is primarily based on images, it makes sense to include video content as a way to build relationships with customers. You’ll make personal

18 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

connections through your website and build prosperous business connections in the process.

Some examples for you to consider are: • Stories from customers.

• A fictional series.

• Personal stories.

• Documentary style videos.

• An interview.

All of these ideas will help your customers connect to your dealership. This can be a fun and exciting way to not only brand your dealership but engage existing and new customers as well.

In content video marketing storytelling is crucial. It’s effective because people love stories and they connect to authentic human experience. It creates an emotional investment.

Content can be defined as experimental as much of it is based on trial and error. You post content and track it through Google Analytics to see how it’s ranking in the search engines. You want to know how many website visitors are clicking on it and how long they’re staying on the page.

Most B2C business owners know content marketing is the most commercially important part of your digital marketing campaign.

Why? The object of content marketing is to help and inform consumers. It is to show people your business knows the industry and their expertise is credible. Mastering a video content marketing campaign will help you build relationships with your customers before they step foot on the premises.

Content tells people why your products are good and how it benefits them. For dealerships this might include financing options, reliability, and what sets you apart from the competition.

Content allows the consumer to view your offerings, and if presented well, compels them to buy from you.

Online marketing reports indicate content videos outperform other content types in driving conversions. Videos increase consumers’ understanding of products and services and website visitors are more inclined to purchase a product after watching a video. Moreover, you can expect to see a rise in interactive and personal video content to help turn viewers into leads.

www.iadac.org

SAFETY RECALLS

>> What Is Required of an Independent Dealer?

>>

LEGISLATIVE MATTERS /

RECALLS ARE becoming so commonplace that reports of new recalls barely attract a yawn. This doesn’t mean dealers can ignore the topic.

The California New Car Dealers Association proposed a bill, AB287, which has been amended but makes some general, common sense suggestions. IADAC has drafted suggestions for our dealers, which are outlined here: • VIN check every vehicle through the database at www.safercar. gov.

• Determine if the vehicle is unsafe as a result of the recall. If so, label that vehicle “Stop Drive, Stop Sell” until the recall has been performed.

• Make every attempt to have all safety recalls addressed before retail sale.

• If the safety recall cannot be performed (i.e. parts back-ordered) and the vehicle has not been labeled “Stop Drive, Stop Sell,” disclose to the purchaser in writing that the vehicle should be taken to a franchise dealer for free repair as soon as possible.

www.iadac.org

Legislators in Washington, D.C. have suggested all recalls must be repaired before sale by dealer. Last year an amendment

by Blumenthal was shot down thanks to the response of dealers across the country letting their legislators know their opposition.

Blumenthal is back again this year with the same bill, so expect a call to action to oppose it again. Your response does make a difference!

This industry needs to show legislators we are making an effort to do the right thing. Follow the practice outlined above and repair recalls whenever possible. Smart dealers will use this as a “value added” tool also.

The link to the VIN check tool at safercar.gov can be added to your smartphone. That could be very handy if you need to check the status of a safety recall for a vehicle on your purchase list.

AUGUST/SEPTEMBER 2016 / WEST COAST DEALER 19

WASHINGTON UPDATE /

NIADA GOVERNMENT REPORT

>>

>>

The bureau also

 HERE’S A RUNDOWN OF SOME of the latest

governmental issues and activity affecting the used car industry from NIADA lobbyist Sante Esposito of Key Advocates and NIADA senior vice president of legal and government affairs Shaun Petersen.

LEGISLATIVE REPORT S.2663, Reforming CFPB Indirect Auto Financing Guidance Act A letter was sent by a number of stakeholders to all 100 senators to generate support – especially among Democrats – for S.2663 as introduced by Sen. Jerry Moran (R-Kan.).

The bill, which mirrors House-passed H.R. 1737, would rescind the controversial auto financing guidance action regarding dealer discretion on interest rates issued by the CFPB in March 2013 and provide for a more transparent and accountable process for dealing with the issue.

S. 2663 is not expected to be considered on its own but rather included with some other legislation, presumably a mustpass bill. The Senate strategy has shifted from seeking more cosponsors to pursuing commitments from senators to vote in favor of the issue regardless of the context in which it comes up.

Other CFPB Bills The fiscal year 2017 bill approved by the Financial Services and General Government Appropriations Subcommittee of the House Appropriations Committee includes provisions intended to curb the CFPB’s authority.

Notably, the bill provides for the CFPB to be funded through the annual congressional appropriations process rather than through transfers from the Federal Reserve as currently provided by Dodd-Frank – a provision designed to make the bureau more accountable. It would also require the CFPB to report quarterly to various House committees about funding, obligations made during the previous quarter and actions taken to achieve the goals, objectives and performance measures of each office.

The bill would limit the CFPB’s ability to regulate pre-dispute arbitration agreements – the bureau has already released a proposed rule restricting those agreements. And the bureau’s leadership would be changed from a single director to a five-member board of directors appointed by the President.

In addition, Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, released a summary of a bill to replace the Dodd-Frank Act, called the “Financial CHOICE Act” – CHOICE stands for “creating hope and opportunity for investors, consumers and entrepreneurs.”

The bill had not been introduced at press

20 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

released a report from a consumer study it conducted about automotive financing experiences.

time, but the summary indicated it would, among other reforms, change the CFPB’s name to the Consumer Financial Opportunity Commission and give it the dual mission of protecting both consumers and competitive markets. Its rules would be subject to a costbenefit analysis.

It would also replace the CFPB director with a bipartisan, five-member commission and make it subject to the appropriations process; establish an independent, Senateconfirmed agency inspector general; require the CFOC to obtain permission before collecting personally identifiable consumer information; remove the bureau’s authority to prohibit consumer financial services or products it deems “abusive” and its authority to prohibit the use of arbitration agreements; and repeal the CFPB’s indirect auto lending guidance.

Another bill, H.R. 5413, the CFPB Data Accountability Act, introduced by Rep. Matt Salmon (R-Ariz.), would impose requirements on how the CFPB handles consumer complaints.

REGULATORY REPORT Department of Justice The Department of Justice, Environmental Protection Agency and the FTC announced two agreements with Volkswagen to settle allegations related to the emissions testing scandal.

Volkswagen and its affiliates will offer consumers a buyback or lease termination for nearly 500,000 model year 2009-2015 2.0-liter diesel vehicles sold or leased in the U.S., and will spend up to $10.03 billion to compensate consumers. The companies must also spend $4.7 billion to mitigate pollution from the cars and invest in green vehicle technology.

The vehicles must be bought back at their retail value as of September 2015 – just before the public disclosure of the emissions issue.

Those consumers can also have their loans forgiven by Volkswagen, or can have thirdparty loans paid off by Volkswagen, up to 130 percent of the amount a consumer would be entitled to under the buyback.

Consumers who sold their TDI vehicles after the VW defeat device became public could be eligible for partial compensation, to be split between them and the consumers who purchased the cars from them.

U.S. Supreme Court Encino Motorcars v. Navarro: In a 6-2 decision, the Supreme Court vacated a lower court ruling that held service advisors are eligible for overtime pay because they do not qualify for the automatic exemption for dealership salesmen. The decision overruled a 2011 Department of Labor regulation that interpreted salesmen to only mean employees who sell vehicles.

The Court blasted DOL for changing a practice that had been in place for decades without adequate reasoning in its regulation. The case was sent back to the Ninth Circuit Court to re-interpret the regulation without deferring to DOL’s interpretation.

Federal Trade Commission A federal court ruled in favor of the FTC in its action against a debt collector that allegedly texted, emailed and made phone calls falsely threatening consumers with arrest or lawsuit if they did not make payments. The court banned the defendants from continuing business and ordered them to pay $980,000.

Consumer Financial Protection Bureau The CFPB’s consumer education campaign, “Know Before You Owe,” is designed to provide consumers with information and tips about various financial products. This month, the CFPB released educational information about auto loans, encouraging consumers to shop for comparative financing options, consider more than the monthly payment and be aware of situations and options that result in “costly surprises down the road.”

The initiative includes a guide entitled “Take Control of Your Auto Loan,” which walks consumers through the auto financing process. It includes a shopping sheet with columns for comparative shopping and an explanation of which components of the transaction are negotiable.

The bureau also released a report from a consumer study it conducted about automotive financing experiences. As a result of the report and other indications that ancillary products will become a focus area for regulators, NIADA and other interested parties, including NADA and banking and finance trade associations, have begun discussing how we can collaborate on anticipated regulatory action.

www.iadac.org

LEGAL MINUTE /

BY CHRISTIAN SCALI AND MONICA HARTSOCK, THE SCALI LAW FIRM

>> Notice of Rescission in California

>>

KNOW YOUR RIGHTS

MORE OFTEN THAN not, your customers sign a retail installment sale contract and happily drive off in their new vehicle, never to be heard from again (until they are in the market for another vehicle). But what happens when you can’t find a finance company to take the loan after the customer leaves with the vehicle?

Contrary to popular belief, there is no California statute that allows you to simply cancel the contract or repossess the vehicle if financing is not secured. But if you use a RISC available from Reynolds & Reynolds (the LAW553-CA-ARB sale contract), you may have a contractual right to cancel the contract. Exercising this contractual right requires precision and strict adherence to the contract’s terms.

Generally, to rescind a RISC that contains the Seller’s Right to Cancel you: (1) must have tried but failed to find a finance company to accept the contract, and (2) must give actual notice of cancelation of the contract to the buyer (and co-buyer) within 10 days of the date of sale, and such notice should state the reason for cancelation is the inability to secure financing.

The dealership must first attempt to assign the contract.

We recently encountered a situation where a dealership timely demanded rescission, but review of the deal file revealed the F&I manager had the customer sign an acknowledgement of receipt of a 10-day rescission notice at the time of sale. The dealership reasoned it would keep the acknowledgement just in case it was needed. The problem with this practice is that under the law, the signed acknowledgement rescinds the deal at the time of sale, thereby making the RISC unenforceable.

The rescission notice must be firm and clear.

Notifying the customer that financing has not been secured and that you may require the customer to return the vehicle is of no legal significance and could subject you to a lawsuit for wrongful repossession and conversion of the customer’s property if the car is repossessed. The

22 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

notice should unequivocally state you have rescinded the RISC and the customer is therefore required to return the vehicle.

Actual notice within 10 days is required.

Most RISCs expressly allow you to give notice in any manner as long as the customer has actual notice, and the notice is given within 10 days. If the notice is sent by mail, it is timely if it is deposited in the mail by the 10th day. And although a simple telephone call to the customer by the 10th day is permissible form of notice, the best practice is to always provide notice in writing, which will be Exhibit A to a dealer’s defense if a customer claims their car was repossessed without proper or timely notice.

If these steps are not timely taken (or you cannot prove these steps were timely taken) you have no right to rescind or repossess a customer’s vehicle because of inability to obtain financing. In that event, the law allows the customer to keep the vehicle and it does not matter that you were unable to find financing after the customer took possession of the car. The next time financing cannot be secured, make sure these terms of the contract are followed to exercise your right to rescind.

Seller’s Right to Cancel language from the Reynolds & Reynolds LAW Form No. 553-CAARB.

www.iadac.org

BMW RECALLS VEHICLES FOR CHILD SEAT RISK >> May Increase Risk of Injury

BMW OF NORTH AMERICA LLC is recalling certain model year 2011-17 X3 sDrive28i, X3 xDrive28i and X3 xDrive35i vehicles manufactured July 2, 2010 to April 14; 2015-17 X3 xDrive28d vehicles manufactured March 10, 2014 to March 31; and 2015-17 x4 xDrive28i, X4 xDrive35i and X4 xDriveM40i vehicles manufactured March 3, 2014 to April 15.

The affected vehicles have lower anchor bars for securing child restraint seats that may become damaged when using the EuropeanISOFIX-type, rigid-style connector, child restraint system.

Damaged lower anchor bars may increase the child’s risk of injury in the event of a crash.

BMW will notify owners, and dealers will weld a reinforcing bracket to the lower anchor bars and the vehicle body, free of charge.

www.iadac.org

DEALER PERSPECTIVE /

BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR

>>

SAFETY WATCH /

EDITORIAL COMMENT >> Renewing My Dealer’s License

I AM WRITING THESE PERSONAL comments eight days before my California dealer’s license expires. The renewal form was sent from DMV over 30 days ago. I sent the completed OL 45G form, my current original Continuing Education Certificate of Completion, and my check for the total fees the very next day from receipt.

It was getting close to my expiration date and I decided to contact the DMV Occupational License division. They agreed to check the status of my application and contacted me the following day stating it was never received.

The OL rep told me I should go to the nearest OL office and apply for a temporary operating permit.

Now I have to spend half a day waiting in line, re-produce the documents, and write another check to get a temporary permit. It just doesn’t seem right. Over the last 10 years I have received that same answer from DMV three times! They finally found my application and renewed my license only days before it expired.

Several auto auctions put me on notice that they considered me out of business. I attended three auto auctions this week and was warned three times I was not welcome to do business with their auction until my “license problem” was cleared up.

California Department of Motor Vehicles

Occupational License Division has been aware of the problem with renewing dealer licenses for several years now. The new head of DMV Occupational License gave a speech at a recent IADAC meeting and addressed this problem. He said it would be fixed to our industry’s satisfaction. No help yet.

There has to be a better way to do this.

Perhaps an Internet-based system like smog checks, change of addresses, or release of liabilities would help. We dealers deserve better service!

I suggest we dealers do a few things to protect our business: • Make copies of everything you send to DMV, including your check.

• Send the completed package to DMV via return receipt mail, to have an official record.

• Follow up with DMV Occupational License a couple weeks before expiration.

DMV has many divisions and has been underfunded and understaffed the last several years. We auto dealers depend on DMV to do their job. Please make sure to use the above suggestions so you don’t have a problem renewing your license.

AUGUST/SEPTEMBER 2016 / WEST COAST DEALER 23

INDUSTRY WATCH / BY LARRY LASKOWSKI

>>

IN MEMORIAM: R.I.P. POT LOT >> Changes in the Low End Vehicle Market

THIS TITLE may be slightly misleading as the entry-level buyer’s market is still alive but it is nowhere near the robust business model it once was. Car lots where low price buyers shopped to find the most basic transportation are not nearly as plentiful as in the past. Threat of litigation, burdensome legislation, a new wave of deep subprime investors and much more have contributed to unfavorable conditions for dealers who chose or choose to provide basic transportation to consumers at the lowest prices.

Across the country, a general attitude exists that everyone deserves to own a home, or receive wage increases the market doesn’t command, or have healthcare available, or you can fill in the blank.

In 2012 California legislators saw fit to go to the rescue of those who purchase from Buy Here-Pay Here dealers by requiring warranties to be provided with the sale of those vehicles.

What was the result? Many BHPH dealers modified their business models to include newer, more expensive vehicles, which of course mean fewer shoppers would qualify for greater loan amounts.

Consumers were forced to spend more than they intended and in some cases took on debt they did not want.

Some BHPH dealers shifted to subprime lenders for financing.

Others abandoned the BHPH model altogether. This left many Californians seeking alternative sources for low-end transportation.

Threat of lawsuit from consumer attorneys has become significantly elevated in the past five years. It isn’t difficult to find an attorney to take a case on contingency even if the dealer did nothing wrong. It’s not fair but it is a way of life for many unscrupulous attorneys – file a baseless lawsuit and force the dealer to fight or pay.

Shakedowns are successful because it costs so much to prove innocence – often the best financial decision may be to settle. Plus, liberal court decisions rarely allow prevailing defendants to recover

24 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

costs. In general, dealers have migrated toward newer, more expensive inventory to avoid problems common to older, higher mileage vehicles.

Extremely low interest rates have investors looking to subprime lending as investment, even if there is great risk associated and the investor knows nothing about the auto industry. Experian recently reported the average deep subprime loan is $14,000. Deep subprime is defined as credit score below 500.

Wow. So let’s take a look at what we know. Entry level buyers still exist.

It is a way of life for many to buy an older, high mileage vehicle and drive it as long as possible before replacement is required.

Can you guess where the entry level buyers are shopping? If you guessed Craigslist, give yourself an A+. Craigslist has become the source for those vehicles, and so many listings are from people who make their living selling vehicles. But they are not dealers.

Unlicensed, unregulated dealer activity has filled the need for California’s low-end auto buyers.

This is what happens when a market segment is overregulated.

And what else has contributed to this change? How about lack of available resources for enforcement? This problem is huge.

www.iadac.org

AUCTION NEWS /

ADESA BRASHER’S UVA FACILITY GRAND OPENING

Investigation, then prosecution, cannot possibly keep up. It has been reported district attorneys in some counties will not take any cases from DMV for prosecution.

Low end vehicles have become very tough to sell at auction. They bring so little money it is often not worth the cost of the sale fee. And what about the average consumer who wanted to trade in their old vehicle?

They get quite a surprise when they find out how little they can get on trade. All this brought to you by those who fight for the rights of the consumer. The pendulum has swung far to one side and for now is stuck.

www.iadac.org

>>

>> Offers Convenient Online Auctions

AFTER SIX MONTHS of construction and years of planning, the new United Vehicle Auctions facility on the grounds of ADESA Brasher’s Sacramento Auto Auction had its grand opening on May 3, right after the regular sale. UVA is an online auction where inventory is offered to bidders while it is still at the dealership.

Vehicles in this sale are front line units and UVA allows dealers to streamline the process. A dealer who wants to wholesale an aged unit would normally have to send it to an auction, wait until sale day and maybe sell the unit. With UVA, the vehicle stays on the lot available for sale until it actually sells on UVA. UVA founder Ed Hebert said the concept has come a long way from the vision he first had for the process. Ed is also the general manager for the ADESA San Jose Auto Auction.

The new facility was packed with dealers enjoying a prime rib lunch prior to the sale. No matter what the weather is, the UVA building will be a great place to cool off or warm up after a day in the lanes for the live auction.

AUGUST/SEPTEMBER 2016 / WEST COAST DEALER 25

AUCTION NEWS / BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR

NORTH BAY AUTO AUCTION ALIGNS WITH SERVNET

>>

>> Both Organizations Consider it a Win

SERVNET, AN ASSOCIATION of independent auto auctions, has welcomed its newest member – North Bay Auto Auction. Pierre Pons, ServNet’s CEO, made the announcement at a recent board meeting. Mr. Pons is excited to add NBAA to fill in the spot left

by Brasher’s auctions’ sale to ADESA. I spoke to David Aahl, North Bay Auction’s VP, GM, and part owner concerning what this meant to their business. David was very happy about being accepted to the auction group. Many things have changed for the better, including being able to confer with the national members to share “inside” information that was not previously available.

There is also the fact that teaming up with ServNet adds to the already great reputation NBAA has earned. Being chosen by ServNet is considered an honor within the industry.

Another advantage to ServNet membership is access to the state of the art training facility, Auction Academy. This enables member auctions to send employees for training in all facets of an auction’s business. The curriculum includes arbitration, recon managing, employee safety, Internet sales, and other programs vital to auction management.

There is also the trust gained by buyers and sellers who understand what the backing of ServNet means. Both ServNet and North Bay Auto Auction consider their joining as a “win win” deal.

NBAA was one of the first auctions to participate in IADAC’s Auction Discount Card program and holds regular local association meetings at their facility. We at IADAC wish them great business success for years to come.

David Aahl, North Bay Auto Auction general manager and part owner (waving).

NIADA.TV /

CONVENTION SESSIONS ONLINE >> Education and Special Events

DID YOU ATTEND NIADA 2016 but miss a session? Did you miss NIADA 2016 but want access to the excellent training and education? Either way, we have you covered.

Log on to the brand new NIADA online convention website for instant access to the following NIADA 2016 training and education:

• NIADA Convention General Sessions • Retail Track Education Sessions • BHPH Track Education Sessions • Special Events Coverage and National Quality Dealer of the Year Awards ReBroadcast Plus, tour the virtual trade show on www.niada.tv. The convention website is www.niadaconvention.tv.

26 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

www.iadac.org

PRODUCTS & SERVICES /

AUTO DATA DIRECT DEVELOPS APP FOR CALIFORNIA Comply with New Law

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>> Helps Those Taking Possession of Towed Vehicles

AUTO DATA DIRECT recently launched DropClaim.com, a secure, paperless compliance tool for California tow operators and businesses taking possession of towed vehicles, which could include units in the repossession process.

The company explained that in January new state requirements became effective as a result of passage of California Assembly Bill 1222. The new law requires specific documentation and record keeping between a tow company and any business such as a dealership, body shop or mechanic that takes possession of a towed vehicle.

DropClaim.com is a web-based mobile app that can allow affected industries to comply with the new law using their laptop, smartphone or desktop computer while securely protecting any private information included in the transfer of a vehicle.

“ADD is constantly looking at legislation affecting the industries we serve,” chief executive officer Jim Taylor said. “Our focus since the company was founded in 1999 is to provide effective solutions to both industry and government to comply with regulations at the state and federal level.”

Taylor explained that when AB 1222 was signed into law, his team began looking for a way to address the tow industry’s No. 1 concern of having to transfer a wrecker operator’s driver’s license number to the claimant.

“Not only were we able to develop a process of encrypting that protected information, we can now offer a paperless and secure system for both the tow (Drop) company, and the receiver of the vehicle (claim) which archives the transaction electronically,” he said.

Taylor said the new law specifically requires tow operators

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to document information about each vehicle towed, the towing company, the tow truck drive, and the drop-off location. Businesses receiving the vehicle must affirm receipt of each vehicle and maintain the documentation once the vehicle is claimed.

ADD added that willful violation of the new law can result in a fine of up to $2,500, up to three months in jail, or both.

DropClaim.com can offer the tow or wrecker company a secure process to protect personal data, the ability to populate the required information in a “drop document” automatically and create an Express Claim code that is easily transferred to the claimant by simply scanning a QR code with a smartphone.

For more information visit DropClaim.com or call (866) 923-3123.

AUGUST/SEPTEMBER 2016 / WEST COAST DEALER 27

INDUSTRY NEWS /

>> Heartfelt Words from Rey

THESE HEARTFELT WORDS FROM REY : I would like to notify you I have reached my time of retirement as an auto dealer of California.

My business, which is currently located in El Centro, Calif., will be up for rent starting August 1, 2016. In case there are any fellow associates within our association who are interested in renting my location, please feel free to contact me at (760) 353-7878 or cell (760) 336-9112. My business is located on 271 E. Main and has been successful for over 30 years with an extraordinary reputation.

To me it was a huge benefit being a part of IADAC. It was an amazing experience and I feel honored and a pronounced feeling of satisfaction. I have been through various wonderful stages in my life. However, being part of IADAC has been by far one of the best experiences. Due to all your wonderful leaders, IADAC will forever remain in my heart as well as my family’s hearts.

Due to IADAC staff, I was able to be a delegate in the Imperial Valley for over 10 years. Also, I was California Quality Dealer in 2011, when I was awarded with recognition by

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LONGTIME IADAC MEMBER REY GULUARTE RETIRES

U.S. Representative Tom McClintock. In addition, I was recognized by NIADA as the best dealer in California in June 2012 in Las Vegas, Nevada.

I would also like to give a particular acknowledgment to all the great personalities within our association, such as Don Head, Larry Laskowski, Jim Haas, Luis Estrada, Mike Macaulay, Terry Demetich, Rod Davis, Guy Strohmeier, Mehdi Chitgari, Gus Camacho, Beto Beas, Frank Murray, Rick Gomez, Rocco Delapa and past presidents and directors, and a very special thank you to my good friend Bill Dohring and our grand educator Pat Matlach.

I feel very grateful for my friend Bill Dohring, who has dedicated a lot of his time to dealers in the Imperial County.

He organized various meetings with authorities and officials of our county to diminish illegal sales in our area.

I would also like to invite all of our auto dealers of California who are not a part of our association to unite and become well advised, due to all the negative changes approaching our automobile industry. The cost of being a part of IADAC is nowhere near the cost of all the incalculable services we offer. I would also like to invite Hispanic auto dealers from southern California to approach me in El Centro if you have any questions regarding how to be a part of the IADAC. I am willing to offer advice and beneficial information regarding finances that can

I am retiring

with great satisfaction because I know IADAC is in great hands and I will always be here willing to assist with anything I can.

help our kids as well as their future children.

Furthermore, I will be more than happy to give legal advice, as well as assistance with paperwork and problems in regards to the DMV, which could help you save money and inform you as well. Therefore, this could help you avoid penalties and fines that do not apply.

I would like to thank our companion Don Head, representative of IADAC, for granting my two daughters scholarships and being a great asset to their education while they attended Imperial Valley College. Thank you to all past presidents and directors for your dedication and confirmation of camaraderie.

It has been a great honor being a part of this association for over 30 years where I felt no discrimination against race, religion or politics. This association has treated each and every one of their partners with dignity and respect. I am retiring with great satisfaction because I know IADAC is in great hands and I will always be here willing to assist with anything I can.

Sincerely, Rey Guluarte Autos Guluarte Inc. President

28 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

www.iadac.org

LIFTING THE HOOD ON CFPB’S PROPOSED CONSUMER ARBITRATION RULES

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>> How it Might Affect You

BY NOW, YOU’VE READ about the Consumer Financial Protection Bureau’s proposed new rule affecting consumer arbitration agreements.

The headlines are all about its proposal to prohibit consumer arbitration clauses from blocking consumers’ ability to join class action lawsuits. A lot has already been written about that point.

But there are a few details that will help round out your understanding of the proposal. So let’s look under the hood at the proposed rule and how it might affect you if it becomes final.

1. Ban on prohibiting consumers from joining a class action lawsuit.

This is the main point you’ve heard about.

Arbitration provisions are often part of the retail sales contract or are separately executed to cover a motor vehicle credit sale.

They commonly give either party the right to require the other to arbitrate a future dispute rather than resolve it with a civil lawsuit.

That means, for example, if a buyer files a civil lawsuit or joins a class action civil lawsuit, the dealer can require the buyer to resolve the issue through arbitration.

If the CFPB’s proposed rule is finalized, consumer arbitration agreements could no longer allow a dealer/creditor to require a buyer to arbitrate instead of filing or joining a class action lawsuit.

If the proposed rule becomes final, consumer arbitration agreements entered into after the effective date will require the following provision: We agree that neither we nor anyone else will use this agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it.

Dealers will need to modify their consumer arbitration agreements to include the new provision and to make the text consistent with new limitations. Of course, the other option is for dealers to simply stop using consumer arbitration provisions.

2. Arbitration class actions.

The proposed rule does not seem to prohibit consumer arbitration provisions that prevent buyers from creating or joining a class-wide arbitration proceeding.

Consumer arbitration agreements commonly prohibit class action arbitration proceedings, so those provisions could remain unchanged.

30 WEST COAST DEALER / AUGUST/SEPTEMBER 2016

3. Paying for consumer arbitration.

In the past, the consumer arbitration process was criticized for potentially being more expensive for consumers than small claims courts or other civil lawsuit alternatives.

If it was more expensive, the prospect of arbitration might cause some consumers not to pursue their claims. The cost of arbitration has been raised in lawsuits to argue that an arbitration agreement should not be enforced.

Today, many consumer arbitration agreements provide the dealer will pay most or all of the arbitration filing fees, arbitrator’s fees and other arbitration costs.

In addition, arbitration organizations like the American Arbitration Association and JAMS have adopted consumer arbitration rules requiring the dealer to pay most or all of the costs of arbitration.

The CFPB’s proposed rule does not regulate who pays for consumer arbitration. Since claims will probably be subject to arbitration organization rules anyway, it’s not likely dealers will change their contract terms on who pays for arbitration. Dealers will probably continue to bear much of the costs of consumer arbitrations.

4. Required reporting of arbitration results.

If the proposed rule becomes final, in any arbitration action that results from a consumer pre-dispute arbitration agreement, the creditor must provide the CFPB with certain information about the claim and results of arbitration. The CFPB plans to use the information as part of its research on the topic.

5. Timeline from proposal to final rule.

The CFPB is seeking public comments on its proposed rule. Comments must be submitted within 90 days of the date the proposed rule is published in the Federal Register. If the amount of early media attention is any indication, the CFPB will likely receive a number of comments. It will then take some time to analyze the comments and consider any edits to the proposed rule.

The proposed rule specifically provides that if it is finalized, it will become effective 211 days after publication of the final rule in the Federal Register. Putting these steps together, if the CFPB publishes a final rule, it probably will become effective no sooner than May 2017.

The CFPB’s proposed rule is receiving a lot of attention in the auto finance marketplace.

Most of the attention is on the proposal that dealers can’t use an arbitration agreement to prohibit consumers from joining a class action lawsuit.

Much will continue to be written about that specific item. But remember the other details will help determine whether the engine of consumer arbitration agreements will continue to run or end up on the scrap heap.

Chip Zyvoloski is a senior attorney for indirect lending at Wolters Kluwer. For more information, please visit www.wolterskluwerfs. com/indirect.

INDUSTRY NEWS / BY USED CAR NEWS

FTC SCHEDULES DISCLOSURES WORKSHOP

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COMPLIANCE OVERDRIVE / BY CHIP ZYVOLOSKI

>> Putting Disclosures to the Test

THE FEDERAL TRADE COMMISSION will host a public workshop on Sept. 15 to examine the testing and evaluation of disclosures that companies make to consumers about advertising claims, privacy practices, and other information. The FTC’s workshop will explore how to test the effectiveness of these disclosures to ensure consumers notice them, understand them, and can use them in their decision-making.

The workshop, called “Putting Disclosures to the Test,” is aimed at encouraging and improving the evaluation and testing of disclosures by industry, academics, and the FTC. Effective disclosures are critical in helping consumers make informed decisions in the marketplace. The FTC has a long commitment to understanding and testing the effectiveness of consumer disclosures, and is especially interested in learning about the costs and benefits of disclosure testing methods in the digital age. Among the areas where disclosures play a key role in consumer protection are: disclosures in advertising, designed to prevent ads from being deceptive; privacy-related disclosures, including privacy policies and other mechanisms to inform consumers that they are being tracked; disclosures in specific industries designed to prevent deceptive claims, including jewelry, environmental claims, and fuel economy advertisements.

The FTC is soliciting presentation proposals for the event, which may be submitted to disclosuretesting@ftc.gov.

More information on the proposal process is available on the workshop’s website.

Members of the public may also submit comments for the workshop online. The public comment period will remain open until Nov. 2.

The workshop is free and open to the public. It will be held at the Constitution Center, 400 7th St., SW, Washington, DC 20024. www.iadac.org