INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION OF CALIFORNIA
OCTOBER/NOVEMBER 2017
WEST COAST DEALER
IADAC 49TH ANNUAL CONVENTION OCTOBER 12-13 AT HARVEY’S LAKE TAHOE PAGE 06
DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
V I S I T U S AT W W W. I A DAC .O R G
MAGAZINE
S TAT E A F F I L I AT E
INSIDE
06.......................................... 49th Annual IADAC Convention 08...........................................................Social Media Lessons 10.........................................California Dealers File Complaint 12...................................................DMV Seminar and Update 16........................................................................ In Memoriam 19..............................Pitfalls in Shutting Down Your Business 20.............................................................Advertising Smarter
WHAT’S NEW
NATIONAL POLICY CONFERENCE SESSIONS CATCH THEM ON NIADA.TV
Get caught up on the latest national regulations on the NIADA.tv Compliance/Legal channel! There was an impressive lineup of federal compliance and regulatory educational sessions during the recent National Policy Conference in Washington, D.C., including updates from the FTC, CFPB, and Small Business Administration. These sessions will be available for viewing on NIADA.tv October 16.
ADVERTISERS INDEX
ADESA...................................................................................15 Alliance Inspection Management.........................................17 AmTrust Financial..................................................................13 AVRS........................................................................................5 Black Book...............................................................................7 CarMax Auctions...................................................................19 Lobel Financial.........................................................................3 Manheim................................................................................11 NextGear Capital...................................................................12 STARS GPS.............................................................Back Cover VAuto....................................................................................IFC
OFFICE
For information on how to become a member please contact larry@IADAC.ORG or (916) 601-4976
NIADA HEADQUARTERS NATIONAL INDEPENDENT AUTOMOBILE
DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. West Coast Dealer is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of CIADA Insider or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2017 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com
ASSOCIATION NEWS BY GUS CAMACHO
PRESIDENT’S MESSAGE Avoid Pitfalls In my years as owner of multiple dealerships I’ve found policy shaping events have not come from any single source. Although I often wish there was a “manual” that would describe how to set up an auto dealership, I haven’t found it yet. My lessons have come one at a time with cost and often at very inconvenient times. This is how I’ve learned to avoid pitfalls. When you experience one problem, you figure out how to avoid it in the future. I have also learned to avoid pitfalls by listening to trusted sources who describe potential pitfalls they have experienced and how they would keep it from occurring again. Now that is progress! Let someone else take the hard knocks and benefit by avoiding the problem in the first place. That’s what it is like when a dealer attends the IADAC Annual Convention. Industry experts and other dealers describe potential problems for dealers – you simply take steps
to avoid them! It’s a much better way to shape policy than to actually experience the headaches of such problems. Plus, as front end profits shrink it is even more important to avoid costly mistakes. This year’s event has been trimmed to a single day as a result of dealer demand. You spoke, and we listened! On October 13 at Harvey’s Lake Tahoe we’ll have a full schedule of great speakers, vendor expo and much more. Arrive the afternoon of the 12th for a welcome reception and show then prepare for the day ahead. It’s a great way to benefit your dealership at beautiful Lake Tahoe for just $119 per person, including meals. Download registration forms at www.iadac.org in the event calendar. Please call the IADAC office at 916-893-3306 if you have questions.
ASSOCIATION NEWS BY LARRY LASKOWSKI
EXECUTIVE DIRECTOR’S MESSAGE Beware of Lawsuits It’s human nature to optimistically believe you won’t be one of the small percentage of people who have an unfortunate accident occur to them. And it is true you would be in the minority if you’re struck by lightning, in a plane that crashes or if you are a dealer who is served with a lawsuit. But dealers should know the odds really are stacked against you. Even if you’re just a “little guy” or a “mom and pop” type dealer without a ton of assets,
you still have a valuable asset that will attract many consumer attorneys. That, of course, would be your dealer bond. Yes, the $50,000 dealer bond is an attractive payday and, coupled with a potential for suing a lender, makes a consumer attorney salivate like dangling a juicy steak in front of a dog! You should be aware that with your dealer license you have acquired a permanent target on your back. How big or small the target is up to you. Not concerned about the possibility of a lawsuit? Are you unlikely to stay abreast of mandated compliance requirements? The odds of you being a defendant in a lawsuit just increased significantly.
EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT
Christopher Hanley • chris@niada.com PRINTING
Nieman Printing
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
VICE PRESIDENT
CHAIRMAN OF THE BOARD
Brenna Stansberry Park Marina Motors Redding, CA 96002 Putu Blanco Paul Blanco's Good Car Company Sacramento, CA
TREASURER
Beto Beas Beas Auto Sales Stockton, CA
Brittany Hibdon Hibdon Auto Center Orland, CA Rocco DeLapa Vacaville Auto Sales Vacaville, CA
MAGAZINE CHAIRMAN
Mike Macaulay Car Systems carsystems40@yahoo.com
www.iadac.org
ASSOCIATION NEWS
49TH ANNUAL IADAC CONVENTION AT HARVEY’S LAKE TAHOE Don’t Miss It!
Proactive: controlling a situation by causing something to happen rather than responding to it after it has happened. Technological advances have allowed business owners to realize more hours in every day they spend working. Your smartphone, arguably your best and favorite tool can also be your worst enemy when it comes to taking a moment to survey your business for needed changes. We suggest you force yourself to pause long enough to gaze into the crystal ball of the future at the 49th Annual IADAC Convention October 1213 at Lake Tahoe!
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Presentations include a peek into the future by Bill Brennan, director of the California New Motor Vehicle Board. What is in store for auto sales in the future? Autonomous vehicles, artificial intelligence, ridesharing and mass transit may all play a part in changing our industry. Also, consumer attorneys have created a cottage industry targeting auto dealers. It is no longer good enough to simply treat customers fairly. You must have knowledge of what you can be sued for and how to avoid those costly problems. Attorney David Parker will share his secrets to successfully defending dealers, and how you as dealers can make his win percentage better. In addition, recent policy changes at the Industry Business Centers have left many dealers frustrated. How can you avoid ASF and keep your dealer license safe? A panel of DMV guests will review changes and suggest ways to make your transfers more efficiently. Plus, you’ll find the industry’s top rated vendors at the expo showcasing their newest products and services. Learn how
you can save time and money to boost the bottom line! Still think you don’t have time for this event? Really? You need to hit the pause button and refresh your thinking. You know your profits have been getting squeezed. It’s time to take action! Register today for the 49th Annual IADAC Convention! Go to www.iadac.org.
www.iadac.org
SOCIAL MEDIA
BY KATHI KRUSE
SOCIAL MEDIA LESSONS FROM MY PE TEACHER Exercise These Tips for Success
Teachers can affect our eternity. In fact, it’s hard to tell where the influence stops, if at all, even many years later. On today’s social web, our values appear front and center. As the saying goes, reputation is everything, and there are social media lessons to be learned from our days in gym class. Not every teacher has a profound effect but most of us remember what it was like in PE. My teacher was a short, spunky lady named Mrs. Betty Bruno who was also my cheer coach. The best teachers teach from the heart and Mrs. Bruno’s lessons continue to resonate in my world today. I learned each of these lessons from Mrs. Bruno. Let me know how many resonate with you. Failure is not fatal. But failure to change might be. Marketing in the social era can be scary, especially if you’re new. People don’t know what to post or where to even start. The smart thing to do is begin with a strategy, not tactics. Then, keep failing until you succeed. Whatever you do, don’t do nothing. You need to be where your customers are, and that’s social media.
If you find a path with no obstacles, it probably doesn’t lead anywhere. Today we hear a lot of noise urging us to buy a particular social media solution. Don’t believe everything you hear. Social media and managing your digital reputation takes hard work, commitment, talent and a budget. There will be obstacles, but none that can’t be overcome. Once you’re on the right path, you’ll find your sweet spot. Enthusiasm is everything. Social media succeeds because we are social animals. Sharing great information with other humans is embedded in our DNA. Enthusiasm plays a major role in a company’s culture. Empower your employees to create content for your social channels. An enthusiastic team is contagious. Customers will catch it and spread the “awesome.” Teachers teach more by what they are than by what they say. The same is true for your dealership’s brand. It’s no longer viable to just advertise low prices or great service. Your brand is what consumers tell each other it is. Social media affords you the opportunity to show proof of what makes your company unique – to illustrate why customers continue to choose you over the competition. Never mind what others do. Do better than yourself – beat your own record and you’re a success. Many dealers still put a lot of weight on how many Facebook fans or Instagram
followers their competitors have and they judge themselves by it. What matters today in social media is a highly engaged audience that wants to talk about you to their friends. It’s better to have a smaller, engaged group than thousands of followers who’ll never think about becoming customers. Keep score on yourself. Set goals, track KPI’s and measure your progress. That’s how you succeed in social media. People rarely succeed unless they’re having fun at what they’re doing. I can’t begin to tell you the facial expressions I’ve seen when business owners bring up the subject of social media. Whether you agree or not, having fun on social media is one of the keys to success. Drop your preconceived ideas and go have some fun! Experience is a great teacher. I had a client who recently got their first “hater” on their Facebook page. We rode out the storm by remaining patient. Often just having faith your regular, engaged fans will right the ship is all that’s required. It worked this time and the client proved to themselves social media can boost company image. In the future, there will be other haters, but each time you experience these situations, you become better at recognizing how to handle them. Don’t limit yourself. What you believe, you can achieve. With a developed social media strategy, you can engage customers on social media. Many dealers tell me they have to be on social media because everyone else is. While that’s true, they’re limiting themselves by not making an investment. Isn’t your business worth more than a halfhearted effort? It’s not where you start but where you finish. Social media is a seismic shift for every auto retailer. It’s turning companies, especially retail, upside down because operations must be restructured to accommodate customers’ expectations. Wherever you are right now is a good place to start. It’s a moving target – taking swift action matters. Don’t just stand there. Ready. Set. Go. 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.
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www.iadac.org
www.niada.tv
This beat is gnarly.
NIADA leaders nationwide took over Washington D.C. last month for NIADA’s Annual National Policy Conference (formerly the National Leadership Conference).
Regulatory Update featuring Tom Pahl
In October
from the Federal Trade Commission
watch. listen. learn.
An impressive lineup of federal compliance and regulatory educational sessions took place during NIADA’s National Policy Conference. Get caught up on all of the latest national legal and compliance regulations by viewing all these educational sessions on NIADA.TV. These sessions and more will be available for viewing on the NIADA.TV Compliance/Legal Channel beginning October 16.
Regulatory Update featuring Damion English from the Consumer Financial Protection Bureau
Regulatory Update and Roundtable featuring Jason Dore from the Small Business Administration
NAAA Auction Standards Committee featuring Matt Arias and Kurt Madvig
2017 NPC Power Lunch Speaker – Senator Richard Shelby
(R-AL)
2017 NIADA Legislator of the Year Award Presentation
LEGAL NEWS
BY KATIE BUDA
CALIFORNIA DEALERS FILE COMPLAINT OVER ONLINE BROKER Carjojo Corp. Sent Cease and Desist
A California dealers group has filed a formal complaint with the state seeking to prevent Carjojo Corp., which the group calls a car broker, from using unauthorized data to advertise dealership vehicles at false prices. The grievance comes after the California New Car Dealers Association discovered the company uses software to copy inventory data from dealership websites then posts the vehicles to its own site at prices far below sticker prices. Carjojo finds vehicles and effectively negotiates a price on behalf of consumers. The association, which represents 1,110 new car dealers in California, submitted a formal report to the state’s Department of Motor Vehicles, citing several violations of both state and federal consumer-protection statutes. The complaint, for example, said Carjojo had advertised a 2017 Toyota Corolla LE sedan in stock at City Toyota in Daly City for $15,478. In fact, the car had been sold months earlier, the association said. “This isn’t the dealer’s ad, this is Carjojo’s ad,” Brian Maas, the association president, told Automotive News. “But still, people come in expecting those prices to be honored.” California Rules Vehicles on the broker’s website include vehicle identification numbers, which is prohibited under state law unless the seller owns the car. As an authorized broker, Carjojo doesn’t own the vehicles, Maas said. He added that some vehicles are listed on Carjojo for several thousands of dollars less than the sticker price and are often linked to dealerships that don’t exist. “In certain cases, not even the vehicles existed,” Maas said. “And the price was nothing the dealer had ever advertised.” Peter Levy, CEO of Carjojo, said, “Since I just received [the complaint], I can’t directly comment on it until we fully digest it.” He said the Silicon Valley start-up provides car data to customers, but the exchange is ultimately up to the dealership. “We’ve provided thousands of free leads to dealers,” Levy said. “Of course it is their job to make the sale.” He added that Carjojo has received an influx of positive feedback in the several
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months it has been operating, with some customers claiming the company negotiated less-than-sticker prices for them. “I believe what we do – deep analytics to predict prices based on a complex proprietary database and analysis, with an Internet portal – will ultimately be the prevailing way that new vehicles are purchased,” Levy said. How Carjojo Works Levy previously founded IntelliChoice, which he said in the 1990s was one of the companies that made “factory invoice” available to consumers, which was “Controversial then, standard now.” Here is how he explained Carjojo’s operation to Automotive News in January during National Automobile Dealers Association’s annual convention. Carjojo’s software tracks the roughly 3.7 million unsold new cars and light trucks on U.S. dealership lots at any given time, while also analyzing transaction prices and available incentives. “We know the lowest price a given car will be sold for,” Levy said in January, which allows the website to effectively tell the shopper, “You should be able to buy this car for this price.” The shopper picks three specific vehicles, say Honda Civics, which can be at three different dealerships, and enters their credit card and other information. Carjojo then emails or texts each dealership in turn, asking if it is willing to sell that Civic at that price. If the first dealership says no but the second says yes, the consumer is alerted and advised to contact that dealership within 24 hours. The car is not held. The shopper pays Carjojo a fee of $199, but Carjojo does not buy the car itself or have any formal relationship with that or other dealerships. Levy said the process allows consumers
to avoid haggling over price, while sending customers to dealerships for cars at a price the dealerships agree to. Broker? According to California state law, an auto broker must inform customers that they do not possess the vehicles and that they can only arrange, negotiate and assist with car sales. But, Maas said, the association found the website misled buyers for multiple pages before disclosing that information. “They can tell folks ‘We can get you a Honda Accord,’ but they can’t say they have the actual cars or the VINs,” Maas said. On its site, Carjojo offers this explanation of how it differs from typical auto brokers: “Carjojo is data driven, does not take a penny from any dealer, and treats all dealers the same. The broker is not data driven but is relationship driven, and works to protect and promote his relationship with his set of ‘in’ dealers. You get a lower price and a larger vehicle selection with Carjojo.” It added, “Carjojo is an auto broker like an orchestra is a barbershop quartet.” Cease and Desist Along with the letter sent to the DMV, the association also delivered a cease and desist notice to Carjojo, in which the company is asked to stop “all unauthorized and/or illegal advertisement of our dealership’s vehicles.” A copy of the letter was mailed to every dealer member of the association, with a request that they forward it to Carjojo on behalf of their dealership. “There’s no disclosure that Carjojo got the information [on vehicles] in the way that they did,” Maas said. “And they certainly did it without the dealer’s permission.” James B. Treece contributed to this report. You can reach Katie Buda at kbuda@crain.com. Reprinted with permission of Automotive News.
www.iadac.org
ASSOCIATION NEWS
DMV SEMINAR AT NORTH BAY AUTO AUCTION Changes to Dealer License Renewal Process
Special thanks to David Aahl and his staff at North Bay Auto Auction for providing the venue for special DMV guests acting occupational license chief Coleen Solomon and inspections program manager Ailene Short to speak to dealers about changes made to improve dealer license renewals. Initiated by IADAC past president Mike Macaulay, DMV met with IADAC to discuss ways the process might be improved. Dealers had reported chronic delays in dealer license renewal, which frequently led to last minute scrambles and/or being locked out of auctions. Coleen and Ailene reviewed the process and implemented multiple changes to solve the problem. Early reports reveal dealers are pleasantly surprised that their licenses are arriving well before the expiration date.
Lunch was provided by IADAC for the dealers in attendance. Past president Terry Degmetich briefly reviewed new laws before turning the mic over to our DMV guests. IADAC values our relationship with the DMV. Many problems can be solved with simple solutions and this is proof DMV is willing and able to help the industry.
DMV NEWS
MODERNIZING THE DMV DRIVER KNOWLEDGE EXAM WITH A TOUCH Touch Screen Testing
As technology advances, so do the hightech tools the California Department of Motor Vehicles incorporates to improve the customer experience. In many DMV field offices, customers are now taking their driver license knowledge tests on touch screen terminals. The electronic exams are offered in English and Spanish with additional language options set for release later this year. The transition to an automated format has proven beneficial for both the customer and DMV. The touch screen terminal provides instant feedback if a question is answered incorrectly and automatically gives instant pass or fail results, which shortens wait times. The electronic exam system also randomizes questions, which reduces opportunities for cheating. The DMV will soon be using touch screen terminals to administer tests for the
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occupational licenses: dealer, driving school operator and instructor and the traffic violator school operator and instructor. They are expected to be up and running at occupational licensing offices throughout the state before the end of the year. Even though the test medium is changing, industry educational requirements are not. So, make sure you study all applicable materials. Good luck!
www.iadac.org
AUCTION PROFILE
BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
ADESA RENO AUTO AUCTION Efficient and Well-Stocked
ADESA Reno Auto Auction was formerly a Brasher’s auction facility. When the ADESA transition occurred, the Reno facility was operated with much the same management and employee base. In my continuing efforts to provide industry news, I ventured to Reno to catch some “hot August nights” and attend the Wednesday sale. The sale ran efficiently and had great inventory. I questioned many support staff and most agreed they went from a great parent company to an even better one. The mandatory safety programs are a win-win for all employees. Before the auction starts, every employee watches instructional videos on driver safety, lot protocol, and emergency procedures. The auction staff is happy to know where they stand and how to do their job. The office staff handled my title and check needs with first rate efficiency. Scott Crane was the assistant general manager for Brasher’s Reno Auto Auction.
ADESA Reno General Manager Scott Crane
Scott was always the go-to guy who made the sale work like a well oiled machine. ADESA recently promoted Scott to the permanent position of general manager. ADESA Reno Auto Auction now runs better than ever. Scott has seen improvements in inventory, customer service, and office efficiency as part of his tenure as the new general manager. Congrats to Scott! An active participant in the IADAC Auction Card program, ADESA Reno Auto Auction provides IADAC members with the benefits of this program and offers top shelf hospitality. Make the trip to Reno for one of their many well stocked sales!
MANAGEMENT MATTERS
BY AUTO REMARKETING STAFF
DATA SECURITY WARNING Your Dealership May be Vulnerable
Helion Automotive Technologies has a new data security warning for auto dealerships. In recent weeks spear phishing hackers have been busy planting malware inside social media posts designed to lure employees of organizations to click on them. Dealership employees are ideal targets for spear phishers looking to grab personally identifiable information and bank account information. “This is the same spear phishing scheme that hackers have been using successfully in targeted email messages for several years now,” Helion president and chief executive officer Erik Nachbahr said. “The problem is that although most employees have been told and know not to click on emails from people they don’t know, they don’t think twice when it comes to clicking on a message or offer in their Facebook feed. They are more trusting in a social media environment.” If employees take the bait of hackers and click on infected links, malware can be downloaded onto the employee’s computer, compromising the entire organization’s network. Helion recently conducted a phishing test at an auto dealership by sending emails to 125 employees. Three employees took the bait. When prompted by
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the website the email drove them to, they entered both their usernames and passwords. If the attack were real, the consequences could cost a dealership thousands of dollars. “That test was a good sample that revealed auto dealerships are very vulnerable to this type of attack and need to do a better job at educating their employees,” Nachbahr said. Nachbahr’s tips for preventing a spear phishing attack: • Instruct employees to never click on links in social media posts and messages from their computers or personal devices while at work. • Require employees to change their network login passwords every 90 days. • Encourage employees to keep social media profiles private and not accept friend or connection requests from people they don’t know. • If employees receive a phone call, email message or social media message from a banking institution, vendor or other entity asking for personal information, do not give this information verbally or via email. Contact the institution directly. • Get cyber liability insurance, which covers costs associated with a data security breach and loss of data. • Regularly apply software updates to Microsoft Windows, Internet Explorer and all software applications on every PC.
DEALERSHIP EMPLOYEES ARE IDEAL TARGETS FOR SPEAR PHISHERS LOOKING TO GRAB PERSONALLY IDENTIFIABLE INFORMATION AND BANK ACCOUNT INFORMATION.
www.iadac.org
IN MEMORIAM
BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
ERIC FISCHER Roseville Dealer Eric Fischer Passes Eric Fischer, owner and CEO of JustBetterCars.com, passed away recently. Eric leaves wife Holly and three children: Jacob, Lucas, and Cole. Eric’s business is located in Roseville, California, and specializes in high end used cars and trucks. Fischer had been in our industry for over 31 years. He worked his way up in a major retail auto business. Before he struck out on his own, Eric was the go-to guy for Corporate Motors and directed over 250 employees. In 2001 Eric and Holly realized their dream of becoming an independent dealer. They opened Just Better Cars in Roseville and started with just a handful of cars and a desire to succeed. They had a small location and soon expanded their operation to take over the former BMW dealership property on Riverside Avenue. The success of their business was due to hard work, honest dealings with customers, and loyal employees. Eric saw the value in IADAC and joined soon after opening his dealership. Eric was proactive about our industry and contributed input on a regular basis. Eric Fischer was highly regarded by the IADAC board and was nominated for our highest honor, Quality
Dealer of the Year, in 2011 and 2012. JustBetterCars.com chief operating officer Brian Zambrano said, “Eric was always giving back to his community, employees, and customers. He was the hardest working guy I know in the industry.” Brian had been with Eric since the beginning of JustBetterCars. Richard Sanchez of Champion Auto Wholesale said, “When Eric gave you his attention, he gave you 100 percent. He made you feel like you were the only thing that mattered and he was there to listen and help.” “Sometimes things just don’t make sense, but I have learned to always trust that our
heavenly Father knows and is watching over His children,” said Guy Strohmeier of Strohmeier Auto Center. “With that said, my friend Eric Fischer is seeing a side of life that someday we all will see. “I’ve had the pleasure of flying to an auto auction with Eric on a couple of occasions where we got to share about our businesses. Eric had very much the same philosophy as me, which is to do all we do with integrity concerning our employees and customers. One thing I enjoyed about Eric was his upbeat personality and his humbleness while sharing ideas on how to improve each other’s companies. Our prayers continually go out to his family and employees.” Personal note: JustBetterCars.com is located just next to my old Roseville dealership location. We were neighbors for several years. I got to know Eric, and he was a quality dealer in every way. Eric Fischer was a true professional and a wonderful example of what independent dealers strive to be. In Eric’s own words as remembered by Brian Zambrano, “Life is a bunch of experiences. Have as many good ones as you possibly can.”
in 1969. Ray and Karleen’s four sons helped in the family business. Mark had a vehicle sales license at age 13 and Michael at age 11! G&G Motors became an IADAC member soon after Ray became a dealer. Ray decided to become an active participant and founded the Greater San Joaquin IADAC Chapter in 1981. Ray built the chapter from zero to 75 members in 18 months! His chapter was the most successful throughout the state. In 1982 Ray Glover was chosen for the highest IADAC honor, the Quality Dealer of the Year. In 1983 Ray was elected by a writein campaign for NIADA regional vice
president. Ray then served on many IADAC committees and held all state officer positions. In 1984 Ray was elected IADAC president and held that office until 1986. Through all this, he still had time to help keep the Greater San Joaquin Chapter healthy. Ray Glover used his knowledge of insurance to help start the IADAC Health Care Plan. He also helped start a dealer only finance company. These two ventures were ahead of their time and eventually closed. Personal note: Ray Glover was my friend. When I was a fledgling president of the Greater Sacramento IADAC Chapter, Ray drove from Stockton and attended every one of our monthly meetings. Ray did not know me personally then but heard the rookie Sacramento president needed help. He took me aside after the meetings and dispensed sage wisdom. Ray taught me much, but the best lesson was in valuing and keeping strong relationships. Ray helped me become a better steward of our industry. I miss my friend.
IN MEMORIAM
BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
RAY GLOVER IADAC Past President Passes
IADAC past president Ray Glover recently passed away at home with his family at his side. Ray was born in 1933 in Knoxville, Tennessee. He moved to Stockton, California, in 1957 and married Karleen. They have four sons: Mark, Michael, Martin, and Matthew. Ray had a talent for insurance sales and opened Glover Insurance Agency. His business started to drift towards auto dealer policies and dealer bonds. Ray enjoyed his many dealer friends and customers. The auto sales business was the next logical step in Ray’s career. Ray and wife Karleen opened G&G Motors
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www.iadac.org
PRODUCTS & SERVICES
BY AUTO REMARKETING STAFF
ROUTEONE AND INTEGRATED LENDING TECHNOLOGIES STREAMLINE ECONTRACTING Certified Loan Origination System RouteOne announced Integrated Lending Technologies is now an eContracting certified loan origination system with RouteOne. Finance sources utilizing either of ILT’s systems will now benefit from a streamlined eContracting implementation process. Both DILLS – ILT’s legacy system – and its recently released AllegroLending Suite, are certified by RouteOne as loan origination systems that have fulfilled the requirements for the base eContracting functionality on the RouteOne system. Certification of an LOS helps ensure the technical implementation, for finance source customers who choose eContracting, is a fast and easy process. RouteOne’s certification allows ILT to easily enable eContracting functionality with RouteOne for its rapidly
www.iadac.org
ASSOCIATION NEWS
growing finance source base. RouteOne is the industry leader in eContracting, booking more than 7.5 million eContracts to date. RouteOne has over 6,200 active eContracting dealers and over 35 finance sources in its rapidly growing eContracting customer base. RouteOne chief executive officer Justin Oesterle said, “We’ve recently seen significant growth in eContracting utilization on a year over year basis. “By ILT completing this certification, they are enabling their entire customer base to easily implement and benefit from eContracting. This rapidly growing eConracting solution is on its way to becoming the business standard for auto finance. ” “We’re very pleased to be able to offer RouteOne’s eContracting service to the technical solutions available to our lender clients,” said ILT president and CEO Will McGregor. “eContracting will enable our clients to take full advantage of our own digital documentation system – DigiDocs – and to focus on their own processes while allowing RouteOne to manage the dealer’s side of electronic documentation.” More information is available at www.routeone.com.
BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR
EDITORIAL COMMENT General Updates
I hope everyone enjoyed my “Test Drive in Tuscany” article. It was fun – you should all try it. We are planning a trip to Spain and Portugal next year. What cars do they make there? It looks like our efforts to clean up the dealer license renewal process have been successful. I have not heard a single complaint about renewals in several months. My friend and past IADAC president Terry Degmetich thanked me for my efforts handling the renewal problem. We were both leaving an auction when he said, “Thanks for your efforts, you helped do something that will benefit all dealers.” Wow, big praise from someone who has done more for our association than anyone else. I, for once in my life, was speechless! Our continuing efforts for the proposed mentoring program are still proceeding. Please contact me at carsystems40@yahoo .com with any advice or comment. We are always looking for magazine content. There is no better content than spotlighting a dealer or associate member who is helping the community. Let us know and make that deal!
October/November 2017
WEST COAST DEALER
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WASHINGTON UPDATE
BY SHAUN PETERSEN
NIADA GOVERNMENT UPDATE Latest Government Issues and Activity
NIADA is your voice in Washington D.C., advocating for independent dealers, the used vehicle industry and small business. Here’s a look at the latest news and NIADA efforts regarding legislative, regulatory, PAC and grass roots activities. PAC The featured speaker at NIADA-PAC’s upcoming event will be the Speaker. Paul Ryan (R-Wis.), Speaker of the U.S. House of Representatives, will be the highlight of a business roundtable discussion hosted by the NIADA’s political action committee on Oct. 17. Ryan will discuss issues related to business and the used vehicle industry with industry leaders in an informal setting.
on the Senate Committee on Commerce, Science and Transportation – recently sent a letter of inquiry to several Buy Here-Pay Here dealers and subprime finance companies across the country. While Sen. Nelson acknowledged what we in the industry have been pointing out for years – the use of the devices allows creditors to extend more credit on better terms for better vehicles to customers who otherwise might not qualify for those terms – his letter expressed concerns of consumer advocates about data privacy and safety. Nelson cited unsubstantiated claims from consumers who said their vehicles were shut off while they were driving. He also attempted to link the use of the devices and an alleged rise in subprime auto loan delinquencies to the 2008 mortgage crisis. In response, I traveled to Washington D.C. with NIADA ucti legislative committee and BHPH commission member Mike Brill to meet with the senator’s staff. We spent an hour educating the staff about the use of the devices in BHPH
Rep. Steve Stivers (fourth from left) was joined at his fundraiser by (left to right) Shaun Petersen, Steve Jordan, Columbus Fair Auto Auction owner Alexis Jacobs, David Andrews and Andrew Gabler. For more information about the event and how to attend, contact me at 1-800682-3837 or shaun@niada.com. On Aug. 23, NIADA CEO Steve Jordan and I, along with NIADA president David Andrews and president-elect Andrew Gabler, attended a fundraising event for Rep. Steve Stivers (R-Ohio) at Columbus Fair Auto Auction in Columbus, Ohio, and presented Rep. Stivers with a contribution of $4,995 from the NIADA-PAC fund. Stivers serves on the House Financial Services Committee and is a member of the Congressional Automotive Caucus. He has been a proponent of policies to strengthen small business and was a featured speaker at NIADA’s 2014 National Leadership Conference and Legislative Summit. LEGISLATIVE Payment assurance devices have attracted attention on Capitol Hill. Sen. Bill Nelson (D-Fla.) – the ranking Democrat
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dealerships and their related finance companies. We explained the devices are a tool for dealers and finance companies to communicate with customers to assist in account servicing, rather than immediately repossessing a vehicle. We assured them it is not possible for payment assurance devices to shut off vehicles while they are in operation because the devices are not connected to the engine. NIADA will continue to monitor the situation. REGULATORY Near the end of the Obama administration, the Department of Labor issued a rule that would have significantly changed the salary threshold for white-collar employees to be exempt from overtime compensation, raising it from $23,660 annually ($455 per week) to $47,476 ($913 per week). But in November, just before the Dec.
1 date when it was supposed to take effect, a federal judge in Texas issued a temporary injunction against the effective date of the rule. After hearing arguments in the case, Judge Amos Mazzant permanently struck down the rule on Aug. 31, saying the government had overstepped its authority. And last month, the Department of Justice asked the court to dismiss its pending appeal of the judge’s temporary restraining order. Just before the judge’s ruling, the Department of Labor published a new request for information asking for feedback on questions defining the duties and appropriate salary level one must have before being exempted from overtime, including whether nondiscretionary bonuses and incentive payments should be considered a portion of the salary. One of the issues from the struckdown rule being examined by the request is whether that salary level should be automatically updated. NIADA is reviewing the request and will submit appropriate comments. GRASS ROOTS New York Attorney General Eric Schneiderman, who has targeted dozens of car dealers with allegations of regulatory violations over the past year, has put another dealership in his crosshairs. In August, Schneiderman announced a $298,000 settlement with Nissan of New Rochelle for deceptively charging 298 consumers for what he called an “unwanted and bogus anti-theft product that cost up to thousands of dollars per consumer.” The cost of the product – a windowetch program that included a “Total Loss Protection” benefit – was tacked on after customers had agreed to a price for the vehicle and often without their knowledge or consent, Schneiderman said. In addition to refunding the cost of the product, which ranged from $215 to more than $5,000 per vehicle, the dealership agreed to pay the state $22,084 in penalties, fees and costs. It also agreed to fully disclose that any and all after-sale services or products are optional and that the price is negotiable, to clearly explain after-sale services or products being offered to customers, and to only add an after-sale service or product to the final bill with the knowledge and full consent of the consumer. SHAUN PETERSEN is NIADA’s senior vice president of legal and government affairs.
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LEGAL MATTERS
BY JAMES S. SIFERS
PITFALLS IN SHUTTING DOWN It May Not Resolve Litigation Issues
Dealerships come and go. However, some dealers find themselves facing daunting litigation from consumers and potential onerous attorneys’ fees awards that leads many to conclude the only option is to shut down the dealership. However, shutting down a dealership will likely not solve this type of problem. If the shutdown is indeed motivated to avoid litigation from customers, those customers have likely also sued the finance company that took assignment of the purchase contract, and the dealer’s bond company. This means if the dealer fails to defend the case, the finance company and the bond company will likely seek to resolve the case, or cases, without input from the dealer. In doing so, the finance company and the bond company have several options, which mainly consist of either defending or settling the case. The vast majority of finance companies and bond companies are risk adverse and will seek to settle the claims rather than face the uncertainty associated with litigation.
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The bond companies are also put in a difficult position when the potential recovery by the consumers suing the dealer exceeds the statutory amount of the bond, $50,000. In those situations, the bond company will often deposit the bond money with the court and seek to have it divided amongst all of the claimants who have alleged the dealer owes them money. All this often goes on without the dealer’s knowledge. When the dealer does learn what approach the finance companies and bond companies took, it is usually too late. Once the finance companies and bond companies are forced to step in to deal with the litigation borne from the dealer’s actions, those companies will then look to the dealer, and whoever personally guaranteed the dealer’s performance, to make them whole. This means the finance and bond companies will likely file a new action against the dealer and the personal guarantor to recover all funds incurred as a result of the dealer’s litigation. These amounts not only include the money paid to resolve the cases, but also all the attorneys’ fees and costs incurred by the finance companies and bond companies, which could well exceed the amount of the actual settlements to the customers. Given that consumer claims
can, and often are, brought years after the initial purchase, it often takes a number of years before a dealer can be “in the clear” on consumer litigation. In addition to consumer claims, dealership managers and owners are often personally liable for some of the dealership’s taxes and employment issues. Dealers should think very carefully about whether shutting the doors will resolve the litigation issues they are facing before they do so, as many dealers are surprised to learn the overall cost to resolve litigation is almost certainly less when the dealer acknowledges and takes steps to protect not only itself but the finance and bond companies when litigation has been filed. This realization could stave off a much worse scenario, one which more often than not results in the individual dealer having to file for bankruptcy protection. And this action should be avoided at all costs, if possible. JAMES S. SIFERS, ESQ.,is part of Madison Law, APC.
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MARKETING MATTERS
BY KATIE BARTH
ADVERTISING SMARTER Focusing Ad Spend Where It Counts
2016 was a record year for the automotive industry. After a year of great sales, many dealers are left with a big question: what’s next? We all know the importance of digital advertising, but many spent 2016 just checking the boxes of search, display, and social advertising. The true test comes from a potential customer’s simple search. Is your dealership showing up when they’re looking for you? Advertising successfully online starts with strategy. Far too often we hear things like, “My budget is too small,” “We don’t see
Is your zip code a heavy-traffic area? Hit the customers looking for a route around the traffic with Waze. Wanting to boost your fixed operations sales? Serve an ad for a discounted oil change to the DIYers searching for oil change how-to’s on YouTube. Focus on the Customer Now that you’ve determined what and where to advertise, it’s time to focus on the customer. It wouldn’t make sense to serve an ad for a sports car to a mom of three watching YouTube videos for installing car seats, but often the focus is more on getting the ad out there than strategy in who the ad is being shown to. Connect the dots between your stocking and advertising, and make sure you’re hitting the right audience with the right message. Instead of worrying about how many zeroes are in your budget, focus your efforts on your strategy. Everyone is checking the boxes of digital advertising, but very few are focused on the details. If your focus is where it should be – the right inventory, the right place, and the right customer – even the smallest dealerships can compete with the large stores for the sale. Set your dealership up for success with strategy!
much ROI with our ads,” or “We’re competing against a huge dealership down the street – our budget doesn’t allow us to keep up.” Sure, budgets are important, but how you spend them makes all the difference. Advertise the Cars that Need it Sounds simple, right? When it comes to execution, many find it difficult. Think about the vehicles on your lot right now. How many have been there 60 days or more? Which ones are you advertising? Why did you pick that vehicle over the one you’ve had for two weeks with little engagement? What about the hottest car of the season that’s getting all of the page views? All inventory is not created equally. Focus your spend on the cars that need the boost. Do you have 10 silver sedans on your lot? Spotlight those over the hot rod you’ve had for three days. The hot rod will inevitably sell itself. Focus on the vehicles that need the boost and you’ll see big results. Strategy in Media Buying The average car shopper spends 75 percent of their product search time on the Internet. Google, Bing, Facebook, Instagram, YouTube, Waze, and the list goes on and on! Successful spending – and advertising – lies in the ability to determine which platform is the most relevant for your target audience and the vehicle you’re advertising.
KATIE BARTH is the senior marketing manager at PureCars.
Agent partner Cary Berman said, “Most of our customers are parents and they purchase the EcoMind product option for the benefit of future generations. EcoMind helps to keep the vehicle running clean, and at the same time, we work with the Arbor Day Foundation to plant trees.” Plantings have occurred in 18 forests nationwide, including the following: • Big Thompson Canyon, Colo. • Washington Department of Natural Resources NW Region, Wash. • Washington Klickitat District, Wash. • Tillamook State Forest, Ore. • Idaho National Forest, Idaho. • Modoc National Forest, Calif. • Plumas National Forest, Calif. • Pike National Forest, Colo. • Black Forest, Colo. • Upper Altamaha River Watershed, Ga. • Bayfield County Forrest, Wis. • Pere Marquette State Forest, Mich. • Michigan State Forest, Mich. • Manchester State Forest, S.C. • Little River State Forest, Ala. • Cary State Forest, Fla. • Bastrop State Park, Texas • Mississippi Alluvial Valley, Miss. “We are grateful for the stewardship of our nation’s forests by Warranty Solutions and the example they set,” said Arbor Day Foundation president Dan Lambe. “Because
of their commitment, forests and the lives they impact have been changed for the better across our great nation.” Founded in 1972, the Arbor Day Foundation has grown to become the largest nonprofit membership organization dedicated to planting trees, with more than one million members, supporters, and valued partners. Their vision is to help others understand and use trees as a solution to many of the global issues we face today, including air quality, water quality, climate change, deforestation, poverty and hunger. As one of the world’s largest operating conservation foundations, the Arbor Day Foundation, through its members, partners like Warranty Solutions, and programs, educates and engages stakeholders and communities across the globe to involve themselves in its mission of planting, nurturing and celebrating trees. More information is available at arborday.org. Warranty Solutions, an AmTrust Financial company, offers finance and insurance aftermarket products and services throughout the automotive industry. They are pleased that through EcoMind they can partner with the Arbor Day Foundation and give back to the environment in a meaningful way. For more information visit www.warrantysolutions.com.
INDUSTRY NEWS
OVER 1.7 MILLION TREES PLANTED Warranty Solutions and Arbor Day Foundation Celebrate
Warranty Solutions, through its partnership with the Arbor Day Foundation, is pleased to announce they have planted more than 1.7 million trees in our nation’s forests. The partnership between the two entities began in 2009 to help improve air and water quality as well as mitigate the effects of climate change, combat deforestation and prevent species loss. To date, the number of trees planted would offset the emissions of approximately 5,856 cars for one year. In 2009, Warranty Solutions launched the eco-friendly EcoMind product option, providing additional mechanical breakdown coverage for parts that help vehicles run more efficiently, burn fuel more cleanly and reduce overall emission output. Throughout the last nine years of Warranty Solutions’ partnership with the Arbor Day Foundation, on average, 25 trees were planted for each EcoMind product option purchased.
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Partner
MANAGEMENT GAMEPLAN
BY SCOTT BERGERON
DOES YOUR SALES PROCESS MEASURE UP? Time to Fine Tune
Are you fed up with your sales team? Your processes? If you’ve watched your salespeople get too comfortable and satisfied with their own performance, maybe it’s time to shake things up. And I’m not talking about sweeping house and starting over. One of the best salespeople I ever met was Jeff Barber. He’s now retired and living an awesome life, fishing and hunting in the Colorado Rockies. Jeff would always give me advice when I was working my way up, first as a green-pea, then in management. Jeff is a former drag racer. He said, “Selling cars is a lot like drag racing – everyone’s got an engine, and if they’re all built the same way, the one who does the best job of fine tuning his car will win. If you lose a race, you don’t tear apart the engine – you fine tune the obvious problems. “Besides, spark plugs are a lot cheaper than an engine rebuild. We all have the same opportunities in sales, but it’s the guys who work smarter and fine tune themselves and their daily routines who will win.” There’s huge danger in thinking you’ve got everything dialed in – especially when it comes to fundamental items in your dealership. For example, have you reviewed your contract and financing forms to make sure they’re easy to read, navigate and understand? Coasting along without conducting basic inspections of basic processes will lead to problems. Without this step, you’re likely letting profits walk out the front door – in many cases without even knowing it. Then, there’s the other side of the equation – where your processes are so bad everybody knows about it. United Airlines is an example. Their “established” policies led to a firestorm of public criticism and severely damaged their reputation when they dragged a bleeding passenger off a plane. Lack of knowing or lack of inspections will harm your dealership. In the long run, it could damage its reputation, which could take years to bring back to glory days. Here’s an example. One of the nation’s largest dealers recently sold me and my wife a car, but not without many hours of illegible paperwork, and frustrating old school 4-square processes that didn’t even pertain to my situation. If a customer brings in a 60 percent down payment of a free and clear trade, and the salesperson says, “They can’t calculate the payments unless you put cash down,” it can
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be a little frustrating to say the least. And no, this wasn’t a green pea. It was an eight-year veteran, and yes the desk required a cash dollar down before they would work up figures, apparently to adhere to established policies. After this silly process, the paperwork was hard to read and looked like it had been copied repeatedly since 1993. Finance processes and slowdowns also can lead to hours of unproductive time for staff, not to mention the reputation it’s putting into your customer’s head. If it can happen in a big box store, it can happen anywhere. Here’s where and how to fine tune your sales engine without large amounts of cash or time investment. Who are you selling to? Whether business is good, decent, or falling off a cliff, look at where sales are or are not coming from. If your dealership has a loyal base of aging customers, you’d better start planning for the next generation of buyers – who have demands, expectations and values different from your older customer base. Ask around, talk to Millennials and find out what they want, what would bring them in the dealership, and what turnoffs exist. Many younger generation buyers don’t believe in the dealership model at all, so you’d better have your Internet department bulletproof, and start thinking outside the box. The dealership model is changing in many ways, and if we rely on “doing things as we’ve always done” you can find yourself kicked to the curb. In fact, there’s nothing wrong with a salesperson asking an UP, “What do you hate most about buying a car?” At least it isn’t the same old, “Can I help you?” It gives customers a chance to vent, and gives the salesperson an opportunity to show off why your store is different, and they’ve just found someone who listens. Salespeople and Performance First, look at your sales board and who’s selling the most cars and why. Then do the same with the bottom of the board. If you have good information, either from a CRM or a paper-based system, you can tell why the top guys are leading and the bottom guys are trailing. It usually stems from a “sales process glitch.” Your top guy who talks to 50 people is usually demo-ing at least 35 of them. What are your bottom guys demoing? How many are they writing up? Raw data on the basics can convey a lot you may have skipped over. Getting a handle on the basics gives you a place to start but it’s a long way from the finish line. For example, good sales performers always can be made better with improved prospecting, tracking and accountability techniques. Poor sales performers likewise can improve with these same steps. There’s always room for improvement. Factor in
THERE’S ALMOST NOTHING WORSE THAN HAVING A HAPPY CUSTOMER GO BAD BECAUSE OF BAD PAPERWORK OR A SLOW PROCESS DURING DELIVERY. the ideas, insights and idiosyncrasies of the up-and-coming customer base and address how to best handle different buying groups – the older, more established and loyal crowd and the younger generation. Finance and Delivery Processes and Procedures There’s almost nothing worse than having a happy customer go bad because of bad paperwork or a slow process during delivery. This is what happened to me at the big box store with my wife. Frankly, I was amazed. Given this dealership’s size, the last thing I expected was hardcopy paperwork where type was illegible and agreements were poorly written. Obviously, I wasn’t alone in this situation. Most people usually don’t wait for the question about what they hate about a dealership experience. Most will tell us without asking – they hate that the process takes so long, even when they do most of the homework ahead of time online. It leaves me asking the following question: How many people will not return, or show consistent loyalty, to a dealership because their last impression was unfavorable? Today’s sale is a chance to do one of two things: Solidify a long term customer, or make them wonder why your dealership isn’t keeping up with the times. Former dealer executive SCOTT BERGERON is the founder and principal at Daily Gameplan (www.dailygameplan. com), a sales team performance company. Daily Gameplan’s “Red Book,” cloud-based CRM, and direct consulting have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@dailygameplan.com.
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P BHPH MAN
COMPETIT AGEMENT TECHN IQUES DE ION. SIGNED T O TOPPL E THE M O N T H L O N S TR A I N I N G D Y PAYME E C L A RI N NT REPO G W A P HARD NOS R O N O U TS SSESSIO NS. TA NDI NG PUSH YO ED TRAINING EX PERTS W UR OPER HO AREN ATIONAL P ONE DAY IN ’T AFRAID LIMITS. TENSE TO WAY TO PROFITA WORKSHOPS GU BILITY HE ARANTEE D IGHTS NE VER BEFO TO SWEAT YOUR RE IMAG INED.
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BHPH BOOTCAMPS To register & for more information, visit www.niadabootcamps.com, email diann@niada.com or call 888-906-2705.
GET YOUR TROOPS IN SHAPE
October 10-12 Dallas, TX DAY 1
DAY 2
SALES TRAINING BOOTCAMP Lead Management, Prospecting, Day-to-Day Activities, Accountability, Telephone Sales Techniques, Facts about the BHPH Business, Developing Consistent Repeat & Referral Business, Underwriting Procedures
MANAGER'S BOOTCAMP Identify Key Drivers, Industry Benchmarks, Inventory Management, Expense Allocation, Pricing, Management, Hiring Practices
DAY 3 COLLECTIONS BOOTCAMP Collection Changes and Opportunities, Customer Retention, Alternative Communication Methods, Relationship Building, Objection Handling, Providing a Road-Map to Your Day