INDEPENDENT AUTOMOBILE DEALERS A S S O C I AT I O N O F C A L I F O R N I A
WEST COAST DEALER
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48TH ANNUAL IADAC CONVENTION AT LAKE TAHOE, OCTOBER 14-15
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INSIDE
05............................................Executive Director’s Message 06..................................................Unlicensed Dealer Activity 08....................Scali Law Firm Working on Behalf of Dealers 14........What Lenders Want to Know About Your Dealership 17................................... New Continuing Education Program 22..................................................What to Post on Facebook 24...............................................................IADAC Convention 26.............................................................Cashing in on Leads
WHAT’S NEW
ASSOCIATION NEWS /
THIS CARTOON FROM ONE OF THE FIRST IADAC MAGAZINES IN 1960!
The NIADA National BHPH Summit will be held
Dec. 6-8 in Dallas, Texas. This year’s theme is “Reaching New Levels of Excellence.” The conference features industry leading speakers covering best practices in various BHPH related topics as well as industry updates and strategies for the upcoming year.
For more information contact Diann Flanders at diann@niada.com or (888) 906-8283.
ADVERTISER’S INDEX
ADESA.................................................................................. IBC ADESA Brasher’s .................................................................. BC Alliance Inspection Mgmt..................................................... 22 AutoZone ...............................................................................20 AVRS.........................................................................................9 Black Book................................................................................7 Dealership Valuation Services ................................................6 Kirk Hawkins Insurance .........................................................17 Lobel Financial..........................................................................3 Manheim ..........................................................................10, 11 Manheim Pennsylvania..........................................................13 Mark-One Financial................................................................. 5 NextGear Capital....................................................................12 Paymaxx Pro ..........................................................................18 Protective............................................................................... 15 Spireon................................................................................... 23 Team Velocity Marketing ......................................................24 Top Finance Company ...........................................................19 VAuto.....................................................................................IFC Veros Credit............................................................................16
OFFICE
For information on how to become a member please contact larry@IADAC.ORG or (916) 601-4976
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 The West Coast Dealer is published 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
Christy Haynes • christy@niada.com Christopher Hanley PRINTING
Nieman Printing
EDITORIAL NOTE /
COMPETING WITH FRANCHISE DEALERS AND COMING OUT ON TOP >> Correction
THE ARTICLE Competing with Franchise Dealers and Coming Out on Top in the August/ September issue inadvertently listed the wrong author. It was actually written by Kathy Tafolla of Lobel Financial. Our apologies.
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
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VICE PRESIDENT
SECRETARY
Brenna Stansberry Park Marina Motors Redding, CA 96002
Brittany Hibdon Hibdon Auto Center Orland, CA
VICE PRESIDENT
CHAIRMAN OF THE BOARD
Putu Blanco Paul Blanco's Good Car Company Sacramento, CA
TREASURER
Beto Beas Beas Auto Sales Stockton, CA
Rocco DeLapa Vacaville Auto Sales Vacaville, CA
MAGAZINE CHAIRMAN
Mike Macaulay Car Systems carsystems40@yahoo.com
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ASSOCIATION NEWS / BY LARRY LASKOWSKI
EXECUTIVE DIRECTOR’S MESSAGE >> Online Continuing Education Program
IADAC REPRESENTS the needs of independent auto dealers with legislative advocacy and provides learning opportunities to improve compliance and customer satisfaction plus reduce liability. That’s the IADAC mission statement in a nutshell. One of the most difficult areas has been effectively sharing information with the tens of thousands of licensed dealers and salespeople in California. To effectively broadcast information, we recently created IADAC’s online Continuing Education Program. Numerous dealers were asked this simple question: “Have your sales staff ever said or done anything that caused a problem for you?” The nearly unanimous answer was “Yes, absolutely!” I’m sure all of you can relate. However, you should be careful before you lay all the blame on your staff. Have you ever provided training for them? Do you have a policy for them to follow or do you simply correct them when mistakes are made? We know the majority of dealers are not educators. We know you can’t be expected to be aware of the ins and outs of the numerous and complex regulations and statutes. This is why we created our new online CE program. We realize dealers typically task a manager to complete a CE course for license renewal and that’s why this new program is a perfect fit. It’s fully video based, so reading comprehension is less important than text based programs. CE certificates are good for two years, so there should never be an urgent scramble to complete a course and get the certificate because your license depends on it. Take the IADAC course now, when you or your manager is not in a hurry and you’ll recognize the benefits of understanding the material in the course. Your sales staff should complete this course also. You’ll be amazed when they show understanding of compliance issues and reduce the number of fires you need to put out because of their lack of knowledge. And the best part is that IADAC CE is under $50. You can’t buy this level of quality education at a lower price. Plus, any smartphone or tablet will connect to the program. A PC works just fine also! Before you send another salesperson out to handle an up, make sure he or she knows how to properly communicate with a customer. Do they know anything about the Red Flags Rules? Do they realize the significant costs the dealership owner faces when laws and regulations aren’t followed? Do they know how to identify a fraudulent transaction? Go to www.iadac.org, click on the Continuing Education Portal and take the first step to reducing your exposure to liability! www.iadac.org CA_1016.indd 5
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PRESIDENT’S MESSAGE
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>> We Represent You
THE COMPLEXION of the auto
industry is constantly changing, particularly as a result of ongoing legislation. Your elected representatives in Congress are there to shape laws in the manner you would expect, which is why you voted for them, right? Considering the vast number of bills that impact many industries, it is difficult for any elected representative to be fully knowledgeable on every issue. That is why concerned constituents communicate with those representatives to explain their positions on various issues. IADAC national organization, the National Independent Automobile Dealers Association, organized a meeting in Washington, D.C., in September to meet with your elected representatives and with representatives of agencies such as the FTC and CFPB. Dealers representing all the
states met with those officials to explain our positions on issues such as the CFPB proposal to eliminate class-action waivers in arbitration agreements. These actions benefit every dealer in the country, whether you are a member of your state trade association or not. The trust you place in IADAC and NIADA provides representation that is not achievable without numbers. Picture yourself as an auto dealer concerned about a serious proposal that could be costly to your profitability. Do you think you could communicate your position to the right people in D.C. and make a significant impact to persuade them to understand your viewpoint? We know many of you balk when considering IADAC membership. In addition to the representation explained above, IADAC benefits include discounts on buy and sell fees, scholarship awards for your children as they enter college, compliance information and much more. The truth is it doesn’t cost to belong to IADAC, it pays! Find out for yourself and see why our members say membership is a “no brainer!”
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LEGAL MATTERS /
UNLICENSED DEALER ACTIVITY
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ASSOCIATION NEWS / BY GUS CAMACHO
>> What Can Be Done About This?
MANY LICENSED , compliant dealers complain of unlicensed auto sales activity near their dealerships, which creates unfair competition and loss of business. Obviously, reporting the violations to DMV investigations is an option. However, those curbstoners may be prevalent mostly on weekends or may move from location to location, making it difficult for DMV to catch and cite them. IADAC provided help for that problem many years ago by sponsoring AB 2042 with the help of Assemblyman Fuentes. This bill passed in the 2007-2008 session and provides any law enforcement the right to tow and impound a vehicle being offered for sale by someone other than the person listed on the registration as the owner. You can read through the language in this bill online. Go
to leginfo.ca.gov, select “Bill Information,” select session 2007-2008 and type 2042 into the search engine. Most law enforcement does not know the details of every bill. You can print this and provide your local law enforcement with the details and they can take it from there. Here is an excerpt of the bill: “This bill would additionally authorize a peace officer to remove and impound a vehicle when he or she issues a citation to a person acting as a dealer, remanufacturer, manufacturer, or transporter, or as a manufacturer branch, remanufacturer branch, distributor, or distributor branch without a valid license or temporary permit from the Department of Motor Vehicles and the vehicle is being offered for sale.” The best part of the bill is the curbstoner must register the vehicle in his name at DMV, pay all fees and penalties and then he can pay the impound lot for tow and storage. This really makes an impact on their profit margin! Use this information to alert law enforcement when you observe unlicensed activity!
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LEGAL MATTERS /
THE SCALI LAW FIRM WORKING ON BEHALF OF INDEPENDENT DEALERS
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>> Letter of Opposition to CFPB
CONSIDERING THE NOTORIETY achieved by the Consumer Financial Protection Bureau, one would expect it has become somewhat of a household name. But in case you didn’t know, the CFPB was established in 2010 by the Obama administration to protect consumers in the wake of the housing meltdown, which many rightfully argue was caused by our own government. Accountable not even to Congress, the CFPB set out to make a name for itself and began seeking out examples of consumers being harmed. Their work led them to the auto industry, where they have identified numerous issues for investigation, which in turn led to severe penalties for many. The actions of the CFPB, made often without published guidelines, have caused Congress to demand answers. Some legislators are currently working to pass a requirement for accountability of the CFPB. One of the most significant areas of the industry in which the CFPB has become involved has to do with the arbitration clause and class action waiver used in most retail installment contracts. The CFPB believes it is unfair for dealers to request a waiver of class action lawsuit by their customer. They claim a study has shown it prevents consumers from fully receiving relief to which they may be entitled. Other studies have shown consumers typically receive a fraction of a class action purse, the pittance remaining after the lawyers have taken the lion’s share for representing them. IADAC preferred provider The Scali Law Firm has donated their time and expertise to draft a letter on behalf of IADAC, which will be sent to the CFPB in opposition to the class action elimination proposal. You’ll find the content here which has been sent to the CFPB to record our opposition along with the reasons for our position. Special thanks to Chris Scali and his team for the work they do for IADAC members and the industry.
VIA ELECTRONIC AND U.S. MAIL Monica Jackson Office of the Executive Secretary Consumer Financial Protection Bureau 1700 G Street, NW Washington, DC 20552 FederalRegisterComments@cfpb.gov Re: Comments to 12 CFR Part 1040 (Proposed) Docket No. CFPB-2016-0020 Dear bureau members: The Independent Automobile Dealers Association of California (IADAC) respectfully submits the following comments for the record in connection with 12 CFR Part 1040, proposed by the Bureau with regards to pre-dispute arbitration agreements utilized by vehicle finance sources and lessors, particularly as such agreements pertain to class action lawsuits. The Independent Automobile Dealers Association of California is comprised of professionals committed to promoting the ethical practices of the automobile industry. IADAC’s mission is to anticipate, recognize and respond to the industry’s need for education, information and resources with the goal of improving customer confidence and satisfaction. Incorporated in 1958, IADAC is the only association that provides representation before regulatory agencies and advocates fair legislation on behalf of independent dealers and their customers. IADAC provides value and opportunity to its members to increase their profitability and business success. Concern of Independent Dealers and Opposition to Proposed Regulation The major concern of California’s independent dealers as to the proposed regulation is its effective prohibition of class action waivers contained in the arbitration provisions of retail sale and lease contracts originated by dealers. In particular, proposed §1040.4(a)(2) would require finance sources and lessors to insert a plain-language provision into pre-dispute arbitration agreements that neither they nor anyone else will use the agreement to stop the consumer from being part of a class action case in court. In lieu of inserting such a provision, the finance service or lessor can send the consumer a written notice within 60 days with the same language as that provision. This will have the effect of eliminating or abrogating class action waivers now contained in the arbitration provisions of retail sale and lease contracts originated by independent dealers and assigned to finance sources and lessors. The opposition of independent dealers to this proposed regulation arises from their troubling experience with frivolous and substantially expensive class action lawsuits in this state, which have served only the financial interests of the plaintiffs’ bar, with no meaningful benefit realized by consumers. Although these suits have diminished in the last couple of years for reasons explained below, the adoption of the proposed regulation will embolden the plaintiffs’ bar and inevitably lead to a resumption of these frivolous class action lawsuits. Recent History of Frivolous Class Action Lawsuits in California Consumer class action lawsuits against dealers (and against finance sources and lessors who provide indirect financing) in California began proliferating 10 to 15 years ago. This proliferation was due to a very aggressive plaintiffs’ class action bar in this state, and to a host of very consumer-friendly state statutes. These statutes include those which are specifically directed at motor vehicle sales and leasing, together with additional statutes governing consumer transactions in general and which the California courts have held to be of broad application. As a result, independent dealers have been subject to a wide and disparate array of laws which tightly cover every aspect of a sale or lease transaction, including negotiations, the forms used by the dealers, allowable and prohibited terms and conditions, and mandatory detailed disclosures. Unfortunately, the plaintiffs’ bar in California used these laws in a heavy-handed and self-interested fashion. In the vast majority of class action suits, the plaintiffs alleged a violation of one of California’s consumer protection statutes, typically involving a disclosure requirement. And since the relevant statute of limitations in California was four years, the class would include all motor vehicle purchasers and lessees for that four-year period, which, for many dealers, resulted in class sizes ranging from 2,000 members to 5,000 members or more. It is no exaggeration to say that in most of these cases, the alleged violation was hypertechnical in nature with no harm having been suffered by the consumer. Since there was no prospect of a damages award, the plaintiffs’ bar would rather cynically seek the remedy of rescission and restitution, i.e., cancellation of the sale or lease contract and restitution to the consumer of the vehicle’s total purchase price. By way of example, even assuming a small class size of 2,000 consumers and a relatively modest purchase price of $20,000 per vehicle, a dealer’s total exposure in a class action suit would be no less than $4,000,000 – and of course much higher for larger class sizes and more expensive vehicles – plus substantial attorney’s fees which would be awarded to the class attorney. The prospect CONTINUED ON PAGE 10
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CONTINUED FROM PAGE 8 of an award of this size was financially devastating and an existential threat to every dealer facing such a suit, especially in view of the fact that none of the liability carriers insuring automobile dealers provided insurance coverage for restitution payments. Dealers had no choice but to settle these suits, generally paying a six-figure sum to cover payments to the class and attorney’s fees to the attorney. Unfortunately for the class, they would each receive only a small payment, typically less than the amount of a monthly car payment, and then again only if they timely filed a claim, whereas the lion’s share of the payment would go to the attorney. And this in a situation where the individual consumers had suffered no harm to begin with.
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Dealers’ Response in Self-Defense The response of dealers to this smash and grab tactic of the plaintiffs’ bar was to begin using modified sale and lease contract forms containing a class action waiver in the form’s arbitration clause. Significantly, in the case of AT&T Mobility LLC v. Vincent Concepcion (2011) 563 U.S. 333, the U.S. Supreme Court reversed a Ninth Circuit decision that class action waivers in arbitration agreements were not enforceable, thus validating California dealers’ use of the waiver in their sale and lease contracts. This began to have the intended effect of abating the proliferation of expensive and frivolous – and unnecessary – class action suits. We say
unnecessary because, notwithstanding the new vitality of class action waivers, individual consumers still possessed and continued seeking, both in court and through arbitration, the individual remedies widely available to them under California law, including rescission and restitution as to the their individual contract, injunctive relief, and recovery of provable damage together with attorney’s fees, demonstrating that individual consumers have legallymeaningful recourse without resorting to class actions. California consumers fare substantially better in individual suits than in class action suits. Class action waivers have done little or nothing to stem the tide of individual consumer lawsuits against dealers in California. Indeed, the rationale for the proposed regulation, viz., that class action attorneys must be rewarded or no one will bring small balance claims, has no application to auto-related claims. There is good reason for this. Almost without exception, individual suits under California’s consumer protection statutes seek the remedy of rescission of the sale or lease contract and return of the vehicle’s total purchase price – typically $20,000 to $50,000, or more – and thus are large balance disputes offering the consumer more than adequate financial incentive to proceed. Moreover, California’s consumer protection statutes permit the consumer to recover attorney’s fees, ensuring that such fees will not erode their large balance recovery. And experience has shown that recovery of these large balances plus attorney’s fees is not only the verdict awarded in litigation, but is also the centerpiece of the cases which are settled. This holds true whether a consumer brings his or her claim in court or in arbitration. In short, disputes in auto dealer matters are not disputes involving small amounts per customer where only class-wide remedies will work. By contrast, consumer class actions against dealers offer class members, at most, pennies on the dollar. Indeed, the Bureau’s own study confirms this fact. In the 18 auto-related class actions studied, the settlement payment to each class member averaged only $337 – less than a monthly car payment for most vehicle owners, and meager compared to the meaningful remedies and large balance settlements available to individual consumers. It is important to note that the consumers acting as lead plaintiffs and class representatives in these class actions also bring individual claims and are routinely awarded rescission and full restitution of the purchase price on their individual contracts – a remedy available to them in an individual suit without the added expense and complication of a class
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INDUSTRY NEWS / BY USED CAR NEWS
Proposed Regulation Will Cause Immediate Resumption of Frivolous and Unnecessary Class Actions The proposed regulation prohibiting class action waivers will re-open the class action floodgates. Class action claims are typically filed against the dealer and the affected financing sources, but though the financing sources will no longer have the class action waiver as a defense, they typically do have a finance agreement with the dealer which obligates the dealer to defend and indemnify them – or even repurchase the contracts at issue in the suit. In other words, all liability for class action suits will fall entirely on the dealers, and they will again have to deal with the financial devastation and existential threat posed by these frivolous suits. And, it is equally important to point out that, although Congress explicitly exempted franchised and many independent dealers, this liability will have been indirectly imposed by the Bureau on dealers even though the Bureau has no jurisdiction over them.
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action. The only winners in the class setting therefore are the class attorneys, who demand and receive substantial fee awards – whether in litigation or court-approved settlements – far in excess of what they could receive for prosecuting an individual suit, while having accomplished little else for their endeavors.
COX NAMES PRESIDENT FOR MEDIA SOLUTIONS GROUP >> Includes Autotrader, Kelley Blue Book and Dealer.com
COX AUTOMOTIVE ANNOUNCED Brian Geitner has been named president of the company’s Media Solutions Group. Geitner will oversee the company’s Autotrader, Kelley Blue Book and Dealer.com business divisions and brands, leading the integration of Cox Automotive’s platforms. He began his new role Aug. 15, reporting directly to Mark O’Neil, chief operating officer of Cox Automotive. Geitner succeeds Jared Rowe, who is departing the company for a new opportunity outside of the automotive industry. Since 2015, Geitner has served as president of Financial Solutions Group at Cox Automotive responsible for the advancement of NextGear Capital. Geitner joined Cox Automotive in 2012 as chief executive officer of Dealer Service Corp.
Conclusion California consumers continue to be well-served with numerous consumer protection statutes containing attorney’s fee recovery provisions, which give them full and meaningful legal recourse in the form of individual lawsuits. Resort to class action suits is not necessary and only serves to line the pockets of the plaintiffs’ bar at the unfair expense of independent dealers. Yet the proposed regulation will return independent dealers to that troubling era, with only the plaintiffs’ bar, not consumers, standing to gain. We trust that you will find our comments useful in appreciating the serious financial jeopardy in which the dealers may again find themselves, and in understanding the depth of independent dealers’ opposition to the proposed regulation. In light of our comments, we would urge the Bureau to adopt a provision excepting out from the vehicle sale and lease contracts originated by dealers, who are exempt from the Bureau’s jurisdiction to begin with. Respectfully submitted by Larry Laskowski, Executive Director for IADAC
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ASSOCIATION NEWS / BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
JIM MITCHELL PASSES >> Former IADAC President and Quality Dealer
JIM MITCHELL was IADAC president in 1974-1975. In 1987, Jim was presented with the prestigious Quality Dealer Award at the yearly convention. Jim owned and operated Mitchell Motors of San Jose for many years. Although born in Saint Louis, Missouri, Jim was raised as the oldest of four children on a farm just south of Nashville. After finishing school, Jim enlisted in the U.S. Army and served during WWII. After the war, Jim moved to San Jose to pursue a career in the electric lighting industry. The company closed and offered Jim a job back in Tennessee. Jim loved west coast living, and decided to get a dealer’s license and set up business in San Jose. Jim joined IADAC that same year and said, “One of the best things I did was join IADAC and learn from good dealers and their experiences.” Jim served as IADAC president in 1975 and as San Jose local chapter president for several terms. He served on every IADAC committee at least once. Almost every IADAC convention found Jim and his wife Pat attending. Jim and Pat have five children and greatly enjoyed the outdoors with many fishing and motor home trips. Jim Mitchell was a long time friend of Vic and Ethyl Snyder. When Vic and Ethyl passed, they established the “Vic and Ethyl Snyder Memorable Scholarship,” which benefits children and grandchildren of IADAC member dealers. Jim served as a trustee for the scholarship until his recent passing. Jim helped supervise the awarding of scholarships for hundreds of deserving applicants. This program is still going strong thanks to the leadership of trustees like Jim and Don Head. Don is doing a great job keeping the scholarship program viable. Don Head is an IADAC past president and has provided much of Jim Mitchell’s background information. I had the pleasure of meeting Jim on several occasions and remember him fondly. There are not many dealers who have made a lifetime contribution to IADAC greater than Jim Mitchell. We will miss him. AUCTION NEWS //
MANHEIM SAN DIEGO PROMOTES NEW GENERAL MANAGER >> Denis Nazarenkov
CONSISTENT WITH ITS ONGOING EFFORT to promote talent with proven skills and a passion to drive success, Manheim has named Denis Nazarenkov general manager of Manheim San Diego. In this role, he will focus on enhancing the client experience by applying new innovations, efficiencies and Manheim’s expanding services. “The general manager role is a natural fit for Denis because of his exceptional background as a creative and strategic leader and his accessible coaching style,” said Manheim regional VP Barry Roop. “The ease with which he manages change and inspires employee engagement has Denis poised for strong results on the San Diego team.” Nazarenkov joined Manheim in 2006 and has held various management roles of increasing responsibility within human resources. Most recently, he led people strategies for several Cox Automotive brands, including DealShield, Ready Logistics, and Manheim Retail Solutions and Inspections. Before that, he was responsible for human resource operations and strategy for all Manheim North America locations, which includes over 24 direct reports leading 6,000 Human Resource team members. Nazarenkov holds a bachelor of science in legal studies and a master’s in public administration from National University. Denis lives in San Diego with his wife and three sons, ages 19, 13 and 4. 12 WEST COAST DEALER / OCTOBER/NOVEMBER 2016
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ONLINE MARKETING / BYJOHN STERNAL, SWAPALEASE.COM
VENDOR MANAGEMENT
ARE YOU ON YOUTUBE?
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>> What Lenders Want to Know
About Your Dealership
>> You Could be Missing a Key Opportunity
VENDOR MANAGEMENT has become somewhat
of a buzzword in the consumer lending industry, especially around auto lending. It has always been a financial institution’s responsibility and obligation to know who they are doing business with and how loan applications are reaching their institutions. The Consumer Financial Protection Bureau, however, has further emphasized financial institutions are responsible for the end product. This is to say that any negative actions taken by the dealer will become a problem for the lender. Within franchised dealerships the vendor management requirement is aided by a strong presence from the manufacturer. For example, a franchise dealer has certain covenants that require financial reporting, including minimum capital thresholds, required training and certifications. Franchised dealers also benefit from the monitoring of customer satisfaction surveys, detailed inventory tracking and industry benchmarks provided by other franchise dealerships selling the same brands. Independent auto dealers represent a unique challenge for many lenders. Independent auto dealers often vary in size, financial strength, operational models, inventory and experience. Unlike most franchise dealerships, independent auto dealers do not have the support of a franchise offering multiple checks and balances. It is easy to understand why lenders then tend to gravitate toward independent dealers that look and act more like a franchise dealership. As indirect auto lending has become more competitive and lenders struggle to increase yield, many have had to broaden their credit spectrum and move closer toward subprime lending or expand their dealer network outside their traditional relationships. To do this lenders have had to modify their dealer underwriting and dealer management models to fit smaller dealerships with more diverse revenue and sales models. In years past independent auto dealers had to meet the same minimum criteria for doing business with the lender as a franchise dealership, but times are changing. Many lenders have multiple programs and mitigate the risk of smaller dealerships with low working capital and minimal experience by using a third-party risk mitigation platform. With many of these platforms, small or new independent dealerships can gain access to the same national programs as large franchised stores. Lenders are able to serve independent dealers because thirdparty risk mitigation platforms are helping bring efficiency and transparency to the transaction.
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DEALER BEST PRACTICES / BY CHET HEUGHAN
For example, independent dealers may be subject to more frequent underwriting, additional verification steps and less direct access to loan underwriters. While there is more work on the dealer’s side, these steps also benefit the stores’ owners by helping identify fraud attempted by customers or rogue employees. The days of simply signing a lender’s dealer agreement and providing a few supporting documents to gain access to their retail financing program are drawing to a close. Lenders are being required to truly know and manage their dealer relationships. This means updating key pieces of data and underwriting each dealership on an annual basis. As an independent auto dealer it’s important to understand what lenders are looking for and be prepared to provide the documentation needed annually to avoid disruptions in your lenders’ retail financing programs. Lenders will be evaluating the dealer principals, the dealership itself and inventory. They will be looking at credit reports that indicate bankruptcies, tax liens, past-due accounts, and potential fraud or identity theft. In addition, lenders will check criminal history reports and verify addresses, property ownership, bank statements, business financial statements and tax returns. Lenders will also be looking at more subjective data such as references from your auctions, floor plan lenders, warranty providers and personal references. You should be prepared to provide proof of insurance, copies of bonds and licenses, and expect a yearly site visit and basic inspection of your facility. Lenders really want your business, but they must first know who you really are. Creating your own internal process for managing due diligence requests from lenders and thirdparty risk mitigation service providers will make this process easier and more efficient for you. Understanding what lenders are looking for and providing it in a timely manner goes a long way toward building a strong profitable relationship along with the ability to compete with your neighboring franchise stores. Chet Heughan is director of AppOne® Risk Mitigation Services and Indirect Lending for Wolters Kluwer. For more information, please visit www. wolterskluwerfs.com.
MANY CAR DEALERS use Facebook as a way to target, reach and promote deals to car shoppers. But are they missing out on a key opportunity by focusing mostly on Facebook? According to a recent poll by national car lease website Swapalease.com, most car shoppers actually turn to YouTube when researching their next vehicle. The online car lease marketplace polled roughly 2,500 car shoppers across the country in June and found the following social media preferences among car shoppers: • YouTube: 43 percent. • Facebook: 33 percent. • LinkedIn: 10 percent. • Twitter: 9 percent. • Instagram: 7 percent. • Pinterest: 5 percent. “Millions of car shoppers now utilize the Internet as a way to research their next vehicle, as well as look for the deal that’s right for them, and this includes social media websites,” said Swapalease.com executive vice president Scot Hall. “Our research tells us that YouTube is an effective social channel since it gives shoppers a virtual tour of the vehicle they’re looking at, as well as an opportunity to see how it handles on the road. Online videos can be powerful in car shopping, particularly as people gravitate toward the Internet and away from actual test drives at the dealership.” SAFETY WATCH /
CHRYSLER RECALLS TRUCKS, SUVS >> Transmission May Shift to
Neutral Unexpectedly
CHRYSLER IS RECALLING 412,855 model year 2014-15 Jeep Cherokee and 2015 Chrysler 200, Jeep Renegade and Ram ProMaster vehicles equipped with 9-speed automatic transmissions. The transmission sensor clusters may have insufficient crimps in the transmission wire harness, and as a result, the transmission may unexpectedly shift to neutral. If the vehicle unexpectedly shifts to neutral, there is an increased risk of a crash. Chrysler will notify owners, and dealers will update the transmission software to prevent the transmission from shifting into neutral due to a faulty crimp, free of charge. Chrysler’s number for this recall is S55. www.iadac.org 9/14/16 10:41 AM
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INDUSTRY SPOTLIGHT / BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
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“X-FILES” OF DMV INVESTIGATIONS >> Dennis Young
DENNIS YOUNG is a former Colma Police Department officer, former California Department of Insurance investigator, and retired California DMV investigator. He was known by his fellow DMV investigators as “Mr. X-Files.” Mr. Young received that nickname because if a case was going nowhere or was very hard to solve, it was given to Dennis. Dennis had many interesting cases over his DMV tenure. He had a knack for solving the un-solvable. Dennis was also given cases by other state agencies that had an automotive slant. He had a top solve record inside DMV and a reputation to get the case closed. One interesting case involved sub-leasing. A person, who called himself an auto dealer, would advertise he could get the owner out of a buried auto loan, no matter how much was owed. Sub-leasing is and has been illegal. The “dealer” would charge a fee to the vehicle owner, and then charge a fee to a buyer. He would put seller and buyer together, gaining fees on both ends. This sounds easy, but the owner (seller) would
still have the car in their name with a possibly un-qualified buyer driving the car with no verifiable insurance and a promise to make the payments. Many people were desperate to get out of buried auto loans, so they readily went for this scam. The complaints started coming in to DMV by both the buyers and sellers. Department of Motor Vehicles had never had this happen on a large scale before. They gave the case to Dennis. There were 62 recorded victims (subleasers) in the case. There were probably many more that did not come to DMV’s attention. The “dealer” kept extra keys to the more expensive units and picked them up from the buyers, without notice or permission. They would then move the vehicle to another state and “sell” it again. Since the original “lease” was illegal, a complaint about their stolen car wasn’t recorded because they could not prove they owned the car. It was a real mess. The sellers still were responsible for payments and insurance while someone else was driving their car. I remember this mess very well. My car lot was unfortunately next door to one of these so-called dealers. They operated for a couple months and skipped out. Many of their customers knocked on my door looking for direction. I could only tell them to complain to DMV. A DMV investigator came calling, but soon found out they were chasing a ghost. Dennis Young diligently investigated
the case. He required help from the FBI and the U.S. Marshals to finally track the bad guys down. When arrested, they had over $200,000 in vehicles in their sub-lease program. Investigator Young was able to get a felony conviction and stop a major case of consumer fraud. As it turns out, the perpetrator was not a licensed vehicle dealer. Dennis Young is now retired from DMV and operates Young and Associates Investigations in Rohnert Park, California. He specializes in skip tracing, dealer support investigations, and criminal fraud cases, much as he did for DMV. He has agreed to come up with a few more interesting “X-File” stories for us in the future.
SAFETY WATCH /
NISSAN RECALLS VEHICLES FOR STEERING
>>
>> Direct Adaptive Steering System
NISSAN NORTH AMERICA INC. is recalling 28,182 model year 2014-2016 Infiniti Q50 vehicles manufactured Dec. 26, 2012, to Dec. 11, 2015, and Infiniti Q50 Hybrid vehicles manufactured Dec. 10, 2012, to Dec. 17, 2015. The Direct Adaptive Steering system may experience an error at vehicle start up altering the vehicle’s steering responsiveness and turning radius. If the vehicle does not steer as the driver anticipates, there is an increased the risk of a crash. Nissan will notify owners, and dealers will reprogram the Direct Adaptive Steering ECU software, free of charge. 16 WEST COAST DEALER / OCTOBER/NOVEMBER 2016
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ASSOCIATION NEWS /
IADAC’S NEW CONTINUING EDUCATION PROGRAM
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>> Reduces Dealer Exposure to Liability and
Increases Staff Efficiency
AUTO DEALERS understand the risks they take as business owners and the liability inherent in this industry, particularly in California. Compliance with state and federal regulations comes at a cost, and failure to comply carries an even greater potential financial expense. Add to that the threat of lawsuit from consumer attorneys and you’ll agree dealers could definitely benefit from a program that will minimize risk and liability. A myriad of laws and regulations exist that govern auto dealer activity. The difficulty is finding a program that educates dealers on the most important of those laws and regulations in a short time and in an affordable manner. IADAC has produced a state of the art online continuing education program that covers basic program requirements by DMV plus numerous additional topics dealers have shared with us as industry problems. This program is video based and designed
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to be viewable on your smartphone, tablet or PC. Complete as many chapters as you like then take a break. You’ll pick up right where you left off. Upon completion dealers will receive a Certificate of Completion, which is needed for dealer license renewal every other year. In addition to the DMV required topics, this program also covers threat of lawsuit, new and recent legislation, safety recalls, lot inspection and much, much more. A staggering majority of dealers have reported their staff members have created problems for them as a result of not knowing the laws and regulations governing the auto industry. It’s no surprise really, as no educational requirements exist for a sales license, nor is there a program which offers training they should have. Think about it. You allow your sales staff to greet customers and participate in credit applications – handling sensitive, private consumer information – without any training. There are no other industries that allow sales licensing without education. There is a solution. Have your staff complete IADAC’s CE program. Go to www. iadac.org and enter through the portal for Continuing Education. Select product and make payment. You’ll receive email instructions to set up a username and password for the program. Upon completion, your staff will understand more about your liability and how to avoid creating “heat” for you to
resolve. It’s easy, cheap and effective. Designed for every type of learner, this program allows a user to absorb the most material possible. IADAC CE is both competitively priced and invaluable. We know dealers don’t have the time or knowledge to adequately train staff. Turn them loose to complete this program at their own pace. You’ll be surprised at the level of understanding they will have upon completion. Shoot the QR code with your smartphone for a preview of the program!
OCTOBER/NOVEMBER 2016 / WEST COAST DEALER 17 9/14/16 10:41 AM
AUCTION NEWS /
ADESA SACRAMENTO CELEBRATES 19 YEARS
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>> Driven by Success
ON JUNE 23 , ADESA Sacramento held its 19th Anniversary sale. As this year’s theme, the ADESA Sacramento team chose “Driven by Success.” The slogan alludes to how team members pride themselves on offering exceptional service to buyers and sellers alike. The effort is evident in the numbers. Consistently, ADESA Sacramento is ADESA’s strongest converting dealer auction. Exceeding expectations, the largest event sale of the year was also the highest converting anniversary sale ever. Buyers were treated to a huge vehicle offering along with a commemorative T-shirt and catered lunch. October 27 is the next scheduled event sale. Attendees can look forward to a festive Halloween atmosphere and lots of giveaways.
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MEMBERSHIP DRIVE AT ADESA BRASHER’S >> 15 New Members
IADAC Secretary Brittany Hibdon and Vice President Brenna Stansberry recruit new members.
>>
ASSOCIATION NEWS /
IADAC SECRETARY BRITTANY HIBDON and vice president Brenna Stansberry teamed up on July 19 to organize a membership drive at ADESA Brasher’s. Although normally at the auction to buy inventory, the ladies set aside their personal needs that day to conduct a membership drive, which resulted in 15 new IADAC members. That particular day was the annual Corn Roast Sale at ADESA Brasher’s, which is always a highly anticipated event. IADAC offers special thanks to ADESA Brasher’s for their support and participation to make this membership drive a success.
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IADAC WELCOMES THESE NEW MEMBERS: • Todd Brubaker, South 70 Auto Sales • Joseph Baba, Ashur Motors • Pedram Keshavarz, All Cars & Trucks • Ebrahim Khosrowshahi, Aria Auto Sales • Anthony Ilacqua, Auction Services of California, LLC • Michael Torabian, Speedy Car Sales • Ahmad Mahjour, Affordable Auto & Truck • Faris Fouladi, American River Wholesale • Gerald Lang, Langs • Greg Wilson, Luxury Motor Cars • Ruben Moreno, Moreno Auto Sales • Dan Hancock, North Valley Autos • Rick Lewis, Main Street Auto Sales • Rashid Ali, Economy Auto Sales • Amir Daneshvar, Zen Auto Sales
OCTOBER/NOVEMBER 2016 / WEST COAST DEALER 19 9/14/16 10:41 AM
BHPH PERSPECTIVE / BY DAVID MEYER
HOW MUCH RISK ARE YOU WILLING TO TAKE?
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>> A Way to Cut Costs and Mitigate Risk
AFTER YEARS OF declining sales, the automotive industry is once again on the rise. Fueling much of the resurgence in vehicle sales is the recent growth in subprime automotive financing. So what is fueling the increase in subprime auto loans? In the wake of the recent economic crisis, increasing numbers of car buyers found themselves saddled with poor credit resulting from job loss, foreclosure, bankruptcy and other financial woes. While still struggling with low credit scores, many of those customers are now moving toward financial recovery. They’ve found new jobs and careers, are earning decent salaries, have wiped the slate clean and are lowering their debts. Despite that progress, those creditchallenged customers still cannot qualify for traditional auto financing. But they still need vehicles. To meet that demand, increasing numbers of dealerships and lenders are approving more subprime auto finance, and are going deeper and deeper in the process.
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According to a recent report by Experian, “The percentage of auto loans to buyers with the poorest credit ratings is growing faster than the rest of the auto finance market.” Almost 21 percent of open auto loans are held by individuals with subprime and deep subprime credit ratings. However, with the uptick in auto loans, we are also witnessing one of the largest increases in auto loan delinquency rates on record. According to Fitch, increased loan originations, higher lender competition and looser underwriting standards in the subprime loan market have caused an influx of higher auto delinquencies. That’s a problem. Higher delinquencies mean higher rates of default. Which leads to the question: How can you better manage your portfolio and risk for success? As subprime auto lending continues to gain momentum and loans dive deeper, the associated risks continue to rise. Dealerships and lenders who offer subprime auto financing should be prepared for an increase in delinquencies, defaults, repossessions, collection staff time and resources – all of which come with significant costs that cut into profitability. BHPH dealers and lenders are now turning to GPS tracking as a smart business strategy that cuts costs and mitigates risk while also encouraging their customers to pay on time and improve their credit.
GPS tracking, in its most effective form, is a system that enables dealerships and lenders to verify customer information faster, ensure more on-time payments and locate vehicles in real time to manage their liability with high-risk vehicle collateral. The more advanced GPS vehicle tracking and collateral management systems include additional features such as payment reminders and advanced reporting. Those features further reduce business costs while also promoting on-time payments that help customers stay in their vehicles and rebuild their credit. In a study conducted on Spireon’s GoldStar GPS vehicle tracking, 87 percent of vehicle finance customers saw an increase on their return capital. Further, 77 percent saw a significant improvement of their customers’ credit ratings. The right type of GPS vehicle tracking can improve business profitability, reduce risk, help maintain CFPB compliance and help customers improve their credit. David Meyer is executive vice president of sales and client services for Spireon, bringing more than 28 years of vehicle finance and BHPH industry experience his role overseeing the company’s Automotive Solutions Group.
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MANAGEMENT MATTERS / BY LAURA LEMCO
THE GOOD, THE BAD AND THE UGLY Substantiated Valuation
>>
>> Reasons You Need a
I GREW UP IN DEALERSHIPS. My parents owned a Honda, Suzuki and Harley-Davidson motorcycle dealership, and were among the first in the country to start selling Honda cars. They grew the automobile dealership into Honda, Buick and a line of motorhomes. Fast forward a few years… I have been a consultant in the motorcycle and automotive industries, first working with my dad in the consulting firm he built, then on my own when he got back into retail by buying three Harley-Davidson dealerships. Dad was a master at analyzing the numbers and advising dealers on the actions needed to be more efficient and make more money. In short, he was a dealer advocate, helping them combat “the swirl.” I have spent the last three years studying with the American Society of Appraisers and the National Association of Certified Valuation Analysts to get accredited as a business appraiser. After years of assisting with dealership transitions, I have seen several reasons a dealer needs a substantiated valuation of their dealership. I have broken the reasons down to the good, the bad, and the ugly THE GOOD
Retirement: Do you plan to retire someday? How? A retirement plan and/or a succession plan require an appraisal – a base valuation so you can see where you are and plan how you want to accomplish your plan. Transition: Do you have a son, daughter or protégée you want to see successfully transfer in? A valuation serves as a foundation from which to construct that transition plan. Expansion: Are you having so much success you are looking for more? What could a capital infusion do to your expansion plans? Providing a well-supported valuation to investors helps them understand how well you have succeeded so far, and that the risk of backing you is well justified moving forward. Sales: Maybe it is time to move into something else and you are starting to consider selling your dealership. A valuation provides you a way to plan for a sale, as well as a third-party appraisal you can use to work with a broker in setting your price, and with a potential buyer in negotiating your price.
THE BAD
We don’t always have control over everything that affects our businesses and sometimes we have to be reactive instead of proactive. Unfortunately, you, your friends and/or fellow dealers have gone through divorces, lawsuits or court proceedings that
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required a business appraisal. Sometimes a downturn in the economy causes the bank to require extra financials and assurance their risk is mitigated before they will extend your line of credit. None of these are pleasant circumstances, and having had a recent valuation can sometimes fill the need. Even if an updated valuation is required, it takes less time, effort and expense than having to start from scratch.
THE UGLY
I call them the 4 D’s, and I’m sorry, they really are ugly: • Death • Disease • Disability • Disaster You can, of course, imagine that if any of these things happened, you (or those close to you) will have to scramble to keep everything going as best as possible. There are things you can do ahead of time that make it easier on everyone – most importantly, having a will and a succession plan in place. Both use a dealership valuation to establish base values and a foundation from which to plan. Having a valuation done annually or even bi-annually before one of the ugly D’s strike will save you and your loved ones a lot of hassle. Let them focus on the things that really matter during those tough times. Somehow squeeze some planning and organization into your hectic life to be prepared. Hopefully, none of the ugly D’s will touch your life, and you can put your dealership valuation to use for some of the good reasons! What goes into a dealership valuation? Any appraisal must answer the question: Value to whom and for what purpose? Value to an investor who wants to continue the business? Value to a developer who wants someone to move the business out of that location, scrape the lot and build a hotel? A valuator not only assesses the performance of your dealership, but also the environment (local, national and even international if it has an effect on your dealership). They analyze the risks that affect your dealership, what benefits are most likely in the future, and then determine a value after applying the research and analysis. There are three methods of doing a valuation: market, income and asset. You are familiar with the market method used in real estate appraisals. Appraisers look at comparable properties in the neighborhood and use these “comps” heavily in deriving a value. Income approach looks at a benefit stream such as free cash flow, EBITDA or seller’s discretionary cash flow. They quantify the risk in a discount or capitalization rate, and apply that to future benefit streams. This is the most complicated, but also the method most relied upon by the IRS, financial institutions and the courts. The asset approach typically applies to asset-heavy businesses or a business that
will no longer be a going concern. Basically, all the assets are appraised and added up. This method can apply to your dealership’s new unit inventory. When someone says “a multiple of earnings plus inventory,” they are including all three methods in one phrase (perhaps without realizing it) – earnings (income method), multiple (income method and market method) and inventory (asset method). Depending on the availability and quality of information, appraisals can take anywhere from a couple weeks to a couple months. Honestly, I understand there is never a convenient time to get a valuation done. No dealer wakes up in the morning and says “Hey, I think I’ll get a valuation today!” Most of my engagements arise from an urgency or outside requirement. I get it. But the valuations I have done for proactive reasons are more valuable and less stressful for the dealers. I am not saying, “Drop what you are doing and pick up the phone now!” But I do encourage you: weave a valuation into your next strategy planning session, or start thinking a bit about where all your hard work is going. From growing up in dealerships, I know when I walk into a dealership it is not just a nice building with inventory and staff. This is an owner’s blood, sweat and tears over many years. This is someone’s dream and they made it happen. When you can, find out its value to help you chart your course to maximize that value into the future. Laura Lemco is a business consultant focused on helping improve dealership operations and providing financial analysis and business valuations. Call Laura at (303) 994-6919 for a free, confidential consultation. Learn more at www. DealershipValuations.com.
OCTOBER/NOVEMBER 2016 / WEST COAST DEALER 21 9/14/16 10:41 AM
SOCIAL MEDIA / BY KATHI KRUSE
5 WAYS TO FIGURE OUT WHAT TO POST ON FACEBOOK >> Engage Your Customers and
Reach Your Goals
ONE OF THE most common challenges for independent dealers is social media. It’s actually a challenge for most companies simply because it’s a medium not well understood. Not to oversimplify it, but Facebook and other social channels are just another medium to connect with customers. If you think about the “traditional” media such as TV, radio, print, billboards, email and phone, they are all places where customers spend time, and it’s your job (through marketing and advertising) to attract them to your store. Once a dealer has decided to venture out into Facebookland, the first question that comes up is “What do I post on Facebook to attract more customers?” The answer is a simple one but not so easy to find. Engagement is king on Facebook. It drives everything. There are two types of Facebook engagement: organic and paid. Organic simply means you did not pay to promote your post. Organic is the best kind of engagement and it’s the hardest to achieve.
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Solid, original, high-quality content achieves organic reach and engagement. People like, comment and share, which builds more authority with Facebook’s algorithms. It’s key to pay close attention to what’s working and what’s not. You must learn through data how best to promote (pay for) your content to improve on what’s happening organically. But what do you do when you hit a brick wall for ideas? These five ways will help you figure out what to post on Facebook to engage customers and reach your goals. 1. It all begins with your why. If you’ve done the work to determine your true why – why you’re participating in this race, and why your customers choose you over your competitor – the search for what to post on Facebook gets so much easier. Simon Sinek said, “People don’t buy what you do, they buy why you do it. The goal is not to do business with people who need what you have. The goal is to do business with people who believe what you believe.” Without inspiration, motivation and passion to craft meaningful content, your Facebook page falls flat. Pro tip: If you’re new to determining your why, take a look at your online reviews. Look and listen for commonalities from what your customers are saying – that will help you know why your customers choose you.
2. Determine what your target customers want to know. Building relationships with buyers is how business gets done (with or without Facebook, right?). Knowing your customers’ interests and challenges helps you create content for your page that matters to them. Whether you realize it or not, there’s a story happening in the mind of your customer. They are the hero of their story, and when you actively participate in that narrative in a meaningful way (which Facebook is ideal for), you position your business within your customer’s story... and have a great shot at the sale! Pro tip: Begin to notice ideal customer experiences within your store and find a way to document them.
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>>
Review your list
and discover you've just experienced what it's like to know what to post on Facebook.
3. Identify and develop your resources. Part of your plan for what to post on Facebook is sitting down and assessing just what it is you have available. Failing to identify and develop your resources makes it even harder to know what to post on Facebook. Answer these questions: • Who will produce our content? • Who’s in charge of our content? • Who will maintain our content? (Content is a business asset!) • Examine and describe what forms of content are most comfortable right now (written, images, audio, video). • What types of content do you want to focus on in the next 12 months? • What do you need to do to get there?
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4. Encourage employee participation. Most dealers agree they need to A) produce more content and B) connect on a deeper, personalized level with today’s hyperconnected buyers. Shifting your internal processes to engage employees (especially salespeople) in content creation helps with both of these challenges. When you showcase employees as thought leaders in the automotive industry, the company receives more recognition online. Employees reap the benefit of their voices being broadcast, paving the way for more referrals, leads and sales. The company looks smarter because its employees look smarter. 5. Don’t make it too complicated. If you’ve been managing a Facebook page for a business, chances are one or more of these statements apply to you: •Y ou’re a current or potential customer of that store. •Y ou possess similar attributes to the customers you’re trying to attract. •Y ou have empathy for customers’ struggles and feel a connection. This means you are uniquely positioned to understand your customer (because they’re just like you). You have an idea of what would be valuable to post on Facebook and you need to give it wings. Try this: identify four to five Facebook pages you like and what it is about them you admire. Write down your answers. Review your list and discover you’ve just experienced what it’s like to know what to
post on Facebook. Those pages you identified are successful for the reasons that attracted you. They are the same or similar to the reasons customers like your page. Brainstorm with others within and without your organization to come up with a game plan to create content that elicits the same interest, excitement and belonging you feel when you visit those pages on your list. Pro tip: We all get busy and it’s nice to have one place to refer to our game plan. A content calendar helps you think through what to post on Facebook, gives you the room you need to plan your strategy and allows you to schedule posts into the future to save time. Fact: figuring out what to post on Facebook is a creative process. Not everyone is cut out for it, but those who are usually realize it’s fun once you get things in place. Don’t be afraid to test different types of content with your fans. This will build your self-confidence and motivate you to keep going. The answer to “what to post on Facebook” is simple, but not easy. Do the work, test your ideas and make good use of a content calendar. You’ll soon stop struggling, find the answers and become a Facebook superstar. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc. Kruse Control coaches, trains & delivers webinars focused on integrating social media and online reputation management into dealership operations.
OCTOBER/NOVEMBER 2016 / WEST COAST DEALER 23 9/14/16 10:41 AM
ASSOCIATION NEWS /
48TH ANNUAL IADAC CONVENTION AT LAKE TAHOE
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>> There’s Still Time To Register!
THE 48TH ANNUAL IADAC CONVENTION will be held at Lake Tahoe, October 14-15, 2016. Every year technology finds ways to have us use more and more of our spare time. It must be a good thing, right? Um.... maybe not! Certain “old school” methods of communication continue to deliver the best message despite the latest and greatest technology. The IADAC convention provides personal contact with industry speakers who have their fingers on the pulse of the industry. Plus you’ll meet the industry’s premier vendors displaying their newest products and services. And it’s all just a day and a half event! Dealers often comment (or complain) their profits are constantly being shaved, yet they continue to take the same steps down the same path. Isn’t that the definition of insanity, repeating the same thing over and over and expecting a different result? Sometimes the best first step along a new path is a step backward to
see the big picture. Would you take a day and a half away from your store to explore new options that may cause your profits to grow? Register for the 48th annual convention today! The cost is remarkably low, just $119, which includes your meals. Harvey’s provides great pricing for our group for this event. Don’t wait, however, as the room block discount expires three weeks before the event. You’ll find a registration flyer in this issue or at www.iadac.org in the event calendar.
SAFETY WATCH / BY USED CAR NEWS
CHEVY RECALLS IMPALAS FOR AIR BAG ISSUES Disable Passenger Air Bag
>>
>> Damaged Wires Could
GENERAL MOTORS LLC IS RECALLING 289,254 model year 2009-10 Chevrolet Impala vehicles manufactured April 25, 2008, through Feb. 16, 2010. The front passenger seat frame may contact and damage the wires of the passenger presence sensor module. If the wires are damaged, the passenger presence sensory system may fail to recognize the passenger seat is occupied, disabling the air bag. Damage may also cause the air bag fuse to short resulting in a loss of all air bags and seat belt pretensions. Both conditions increase the risk of injury during a crash. GM will notify owners, and dealers will double wrap the wires with anti-abrasion tape and replace damaged wires as necessary, free of charge. GM’s recall campaign number is 36110. 24 WEST COAST DEALER / OCTOBER/NOVEMBER 2016
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48th Annual Convention
Harveys Lake Tahoe Resort - 18 U.S. 50, Stateline, NV, 89449 Hwy 50 at Stateline Ave.
48th Annual Convention Harveys Lake Tahoe 18 U.S. 50 Stateline, NV 89449 (800) 455 - 4770
Attendees must make their own room reservations Group Code# S10IAD6 Reserve early to ensure low rate and availability!
Friday, October 14, 2016 10:00 11:00 12:00 12:45 1:30 3:00 4:00 5:00 6:00 7:00
Board of Directors Meeting Lunch/Expo Open Exploring Alternative Profit Sources What is a 20 Group? Expo Break Legislation, Safety Recalls, Temp Tags Law Suit Seminar Cocktails Dinner Scholarship Auction/Prize Drawings
Saturday, October 15, 2016 9:00 10:00 11:00 12:00
Breakfast Contract Revisions Millenials and Auto Sales Quality Dealer Luncheon
October 14 & 15, 2016 Registration Form
busINess NAMe: ADDress: PhoNe:
MobIle:
eMAIl: # PeoPle IADAC MeMber:
x
$119 =
IADAC Guest:
x
$119 =
NoN-MeMber:
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$159 =
NoN-MeMber Guest:
x
$159 =
totAl AMouNt Due:
PAyMeNt INforMAtIoN: CheCk eNCloseD vIsA MAsterCArD AMex
seCurIty CoDe
Questions? 916.893.3306 or Larry@iadac.org www.iadac.org CA_1016.indd 25
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Po box 343 • rosevIlle, CA • 95661 PhoNe 916.893.3306 fAx 916.784.0223
OCTOBER/NOVEMBER 2016 / WEST COAST DEALER 25 9/14/16 10:41 AM
CASHING IN ON LEADS
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>> Do’s and Don’ts
URGENCY TO BUY HAS NEVER BEEN GREATER. A Google/Polk study recently found 81 percent of car buyers make a purchase within three months of beginning their online search and 51 percent buy within one month of their first clicks. Furthermore, a Cars.com survey found online shoppers are three times more likely to contact a dealership by phone than they are to reach out via email or chat. What does that mean for you? It shows you need to be on your toes for each and every phone call that comes into your dealership. Here are some simple do’s and don’ts that will help you capitalize on Internet leads that find their way to your phone lines.
DO’S • Have a process. Without a process, you’re just guessing. Make sure you answer the phone consistently, ask for names, provide your name and treat sales calls as the golden opportunities they are. A Marchex Institute study showed 53 percent of answered calls were from shoppers with a clear intent to buy. • Set an appointment. Don’t put the phone on the hook without putting something on the books. If you haven’t set an appointment for a customer to come look around the lot or test drive a car they saw online, you wasted your time and your customer’s. They called because something about your dealership caught their eye. Find out what it is and get them in the door to take a closer look. • Return calls promptly. Surprisingly enough, this may not be as simple as it sounds. Only about 20 percent of car shoppers begin their search looking at the brand they’re going to buy. You’re not the only dealer they’re looking at, but you could be if you’re the first to respond.
DON’TS • Don’t try to sell a car over the phone. Best Mark placed test calls to dealerships around the country and found 91 percent of salespeople attempted to sell a car over the phone rather than set an appointment. Nothing sells a car better than seeing it in person. A sale over the phone is rarely effective. • Don’t wing it. Best Mark’s survey also uncovered the staggering fact that 95 percent of salespeople don’t have a defined road to an appointment. Like we said about creating a process, guessing at what will get your customers off the phone and in their next vehicle isn’t the most practical way to approach a lead. • Don’t wait for an email. Online shoppers are often searching on a cell phone or mobile device. They have easy access to a call button, plus we’ve already established they’re three times more likely to place a phone call than type up an email. If you think all your leads will land in your inbox, you could be sadly mistaken.
Henry sees ADESA’s biggest advantage is a better Internet presence. The more audience for auction sales, the more effectively he can do his job. ADESA has a standalone state of the art Internet bidding system. Henry sees this as a better way to give service to his customers and for market expansion. There are real advantages working for a nationwide corporation. Karen Keith and Jim Tearney are employed by ADESA Sacramento Auction. Karen works dealer check-in and has been with ADESA for 11 years. ADESA has been a great employer. She sees a new sharing of information and resources with the now sister ADESA/Brasher’s Sacramento Auction as a real plus. There is a free flow of cooperation between the auctions.
Jim, an ADESA employee for seven years, also works dealer check-in. After the sale Jim works security and vehicle check-out. It is now much easier to coordinate transport of vehicles between auctions. Previously, each auction had their separate set of rules and it was always a source of conflict. Jim enjoys the ease of how things get done now. It seems that ADESA has added much to the Brasher’s Auctions. Brasher’s has also added much to the ADESA group of auctions. There are many facets of the way Brasher’s did business that ADESA will use in their other auction properties. There was and is a great value to what Brasher’s contributed. ADESA Auctions continues to be a huge supporter of IADAC and NIADA. Dealers nationwide will appreciate the new ADESA even more.
>>
ACCELERATE / BY GWC WARRANTY
AUCTION NEWS / BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
HOW IS THE ADESA/BRASHER’S SALE GOING? >> Employee Perspective
IT HAS BEEN A FEW MONTHS since ADESA Auctions purchased all of the Brasher’s auctions. I was wondering how the conversion was going and what the employees think of the changes and new leadership. I interviewed a few Brasher’s former employees and some existing ADESA employees. The answers were interesting. Bill Ropple was a Brasher’s Sacramento employee for 22 years. Bill said the transition is like “going from a great employer to an even better one.” He likes that his net paycheck is bigger – not because the pay is higher, but the health insurance is less expensive. Bill is getting a little better coverage for less money. ADESA is nationwide and has a bigger employee pool to make costs less. Bill also likes the safety training for all employees. There are training videos for lot driving, customer interaction, safety concerns, and all parts of making an auction run. ADESA makes safety a priority. Another thing Bill enjoys is the rules structure. Every employee is on fair equal footing. Henry Cadle was a sales representative for Brasher’s Sacramento for several years. He likes the new employee benefits at a lower price. The new safety regulations are also helpful. 26 WEST COAST DEALER / OCTOBER/NOVEMBER 2016
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