California by NIADA

INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION OF CALIFORNIA

DECEMBER 2017

WEST COAST DEALER

BRENNA STANSBERRY

IADACâ&#x20AC;&#x2122;s First Female President

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.............................................Executive Director’s Message 08..............................................Dealer Profile: Mehdi Chitgari 10............................................................. Building New Roads 12.................................... What’s Your Peace of Mind Worth? 14..............................................................Pitfalls in Ad Details 18.............................................. IADAC Convention Highlights 20.....................................Kelley Blue Book Values in the Deal

WHAT’S NEW

SPECIAL FEATURES: DISASTER RELIEF

NIADA and Spireon recently teamed up to provide disaster relief to those directly impacted by hurricanes Harvey and Irma. Partnering with the NIADA Foundation Disaster Relief Fund, Spireon is contributing $100,000 through the end of the year to help with recovery. Spireon is also helping customers get their businesses back up and running through data on their NSpire platform. To learn more, check out the story on NIADA.tv’s Special Features channel.

ADVERTISERS INDEX

ADESA...................................................................................17 AmTrust Financial..................................................................15 AVRS........................................................................................5 Black Book...............................................................................7 Lobel Financial.........................................................................3 Manheim................................................................................11 Manheim Southern California.................................................9 NADA Convention.................................................................13 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 West Coast Dealerr 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.

ASSOCIATION NEWS

PRESIDENT’S MESSAGE Introducing New President Brenna Stansberry

As I begin my term as president of IADAC, my excitement of being able to help make a difference overwhelms me. For those of you who don’t know me, here’s a little background. I was born and raised in Northern California. I joined the US Navy at 17 years old and spent five years serving our country, learning, growing and maturing. After a few years in public employment, I joined in the family business. My parents ran Budget Auto Center for over 30 years. Seven years ago they handed the reins over to me. We have since moved to a larger location and rebranded with a new name, Park Marina Motors. I have experienced ups and downs of this business, from new laws to new technology. Though there is some good and some bad, for the most part I love the car business and can’t see myself anywhere else. On that note, I can’t begin to thank all the

people who have the faith in me to take on this new adventure. Thank you to my family, friends, board members and fellow dealers who have given me the confidence to jump in with both feet. My desire is to grow our association. Easy to say, but how do we accomplish this? First, we educate our California dealers, vendors and lending institutions on the importance of the association. We do this by being involved in our communities and building confidence in the independent dealers. We do this by word of mouth – by one dealer telling another, by one vendor telling a dealer, by one bank encouraging each dealer they do business with. As the old saying goes, “Together we can make a difference.” For anyone looking for information of how to sign up new members, there is a link on our website, IADAC.org. Finally, I would like to share a quote with you from Henry Ford: “Coming together is a beginning. Keeping together is progress. Working together is success.” Sincerely, Brenna Stansberry IADAC President

EXECUTIVE COMMITTEE CHAIRMAN OF THE BOARD

VICE PRESIDENT

Gus Camacho Camacho Auto Sales, Inc. Lancaster, CA 93534

Guy Strohmeier Auto Center 87 Soda Bay Rd Lakeport, CA 95453

PRESIDENT

VICE-PRESIDENT

SR. VICE PRESIDENT

VICE-PRESIDENT

Brenna Stansberry Park Marina Motors Redding, CA 96002 Mehdi Chitgari Classic Chariots, Inc. Vista, CA 92083

Brittany Hibdon Hibdon Auto Center Orland, CA Bruce LaVergne

TREASURER

Beto Beas Beas Auto Sales Stockton, CA

SECRETARY

Christina Hinkle ADESA Brasher’s, Rio Linda, CA.

MAGAZINE CHAIRMAN

Mike Macaulay Car Systems carsystems40@yahoo.com

STATE MAGAZINE MGR./SALES

Troy Graff • troy@niada.com EDITORS

Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT

Christopher Hanley • chris@niada.com PRINTING

Nieman Printing

WEST COAST DEALER / December 2017

www.iadac.org

ASSOCIATION NEWS

BY LARRY LASKOWSKI

EXECUTIVE DIRECTOR’S MESSAGE Helping You Improve Your Business

When we prepare for a convention or seminar we always strive to introduce great speakers and topics for our various presentations. First and foremost, those topics must be relevant and important to dealers. As we finalized topics for this year’s October convention we knew we had a great lineup for our guests: • Issues with California labor laws continue to surface. Guest speaker Katherine Sandberg provided a “top five” list of things employers do that get them in trouble. • Our industry may face significant change in the near future. News of driverless vehicles, manufacturers ditching gas powered vehicles for electric power, ridesharing and more

tell a story of an industry primed for change. DMV deputy director Bernard Soriano gave our group an entertaining peek into the rapid rise of autonomous vehicle testing and technology. • Dealers continue to face demand letters and lawsuits in record numbers. How these costly diversions from daily business can be avoided and what to do if you are facing such a claim was the basis for attorney David Parker’s presentation. Parker shared keys to his successes defending dealers and suggested best practices to avoid problems in the first place. I point these things out for this reason: IADAC is always providing you relevant information to improve your business. Part of our mission statement is to educate the industry, and we take that seriously. Another part is to provide value and help you be more profitable. Any time you spend learning is time spent improving your bottom line. I hear from dealers who tell me in one breath they struggle to be profitable yet they also spend a great deal of time distracted by issues with customer complaints, most

ASSOCIATION NEWS

of which could be avoided if they had solid policies in place that minimized complaints in the first place. I know today’s dealers often think they have to be working every minute to stay competitive but there is value in stepping back periodically. Take off the blinders and see what is going on around you. Read IADAC newsletters and check out the wealth of information on our website. Subscribe to free newsletters. Attend informational seminars and conventions. A little knowledge goes a long way. If you’re not currently an IADAC member, check out our website at iadac.org to find out how benefits not only make membership free but put money in your pocket! I’m also looking forward to working with our new president, Brenna Stansberry. IADAC’s first female leader brings new energy to the group to help us do our part even better! Special thanks to Rocco DeLapa as he exits from the position of Chairman of the Board. He has served as president and chairman of the board for four years and IADAC thanks him for his dedication and service to the industry and to the association.

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

IADAC SCHOLARSHIPS BENEFIT DEALERS’ CHILDREN! IADAC Raises Over $25,000 for Scholarships!

Every year at IADAC’s annual convention the program concludes with a live auction to help raise funds to replenish the awards presented during the year. The event truly creates an infectious generosity by all participants. Vendors and dealers alike provide items and bid on those they desire. Electronic items, vacations, giant stuffed animals and everything in between make up the consignment, which is expertly and entertainingly offered by Rod Davis and David Aahl. Although the two are technically competitors from different auctions, for this event they team up, providing fun jabs and digs as they tag team selling items. Scholarship chairman Don Head announced that over the past eight years, 137 children have received $355,000 in awards! This year’s event raised over $25,000 for children seeking higher education. IADAC thanks all those who contributed to the huge success of this event!

WEST COAST DEALER / December 2017

EDITORIAL COMMENT Updates

Wow, what a great convention! We were given tons of useful information and met wonderful people, all at beautiful Lake Tahoe. IADAC executive director Larry Laskowski did a bang-up job putting it all together. My thanks go to the outgoing board for their dedication and service. Past president Gus Camacho was a gracious host and always had a smile and warm handshake for everyone. Gus will go down as one of the best IADAC presidents. He took control and got things done. Our new president, Brenna Stansberry, asked me to stay on as West Coast Dealer Chair. I accepted this honor. It will be my pleasure to serve IADAC yet another year. Brenna is our first woman president – it’s about time! I look forward to working with Madam President and taking her advice and consent. I am still working on the proposed Mentor Program. If you are in need of help or you know a member dealer who could benefit from advice from a seasoned veteran, please contact me at carsystems40@yahoo.com. There were vendors at the convention with unique products. I propose starting a column in the next issue spotlighting new and interesting products. I am looking for a title for this column, maybe “New Product Reviews” or “New Ideas and Products.” Please help me pick a title. Your ideas and input will be much appreciated. Please submit titles by December 15. Also, vendors/associate members are welcome to let me know what is new or on the horizon for their businesses. We can then help our dealers get first in line for new technology. Thank you to all for your support and input. Let’s continue to do business the IADAC way – with honor and compassion.

www.iadac.org

DEALER PROFILE

BY LARRY LASKOWSKI

MEHDI CHITGARI Classic Chariots is About More than Just Selling Cars

Mehdi Chitgari, owner of Classic Chariots, began his wholesale business in 1989 and expanded it to retail in 2000. Classic Chariots is based in San Diego County and offers its clientele one of the largest selections of pre-owned vehicles in the area. To accommodate the company’s rapid growth, Chitgari purchased the 3.25 acre property located at 1611 W. Vista Way in Vista, California. It has been home to Classic Chariots since 2007. Classic Chariots continually replenishes its inventory of 280 pre-owned vehicles and sells approximately 170 units per month. Classic Chariots is among the leaders in the pre-owned industry at $32 million in annual sales. Also on site is Classic Chariots’ service department, which offers the company a leverage in savings since vehicle repairs are not sublet. Additionally, the in-house service department ensures clients receive the superior service they have come to rely upon over the years. Classic Chariots has earned a world-class reputation and has received outstanding ratings on review sites such as Yelp, Google and more.

IADAC chairman of the board Gus Camacho, president Brenna Stansberry and senior vice president Mehdi Chitgari.

On a personal level, Chitgari has earned numerous accolades. In addition to being awarded the Quality Dealer of the Year in 2015 by the Independent Automobile Dealers Association of California, Chitgari’s philanthropic efforts in his community are sterling. Chitgari holds the position of senior vice president as a member of the IADAC executive committee. Sharing profound thoughts about his success and business philosophy, Mehdi said he has always looked for ways to improve his business. Applying sage advice from his father, Mehdi learned business success would come from doing things right the first time and treating customers with the care and compassion they deserve.

Mehdi handpicks his staff, creating a Classic Chariots “family” to better serve customers. Some employees have been with the “family” for over 20 years! Classic Chariots gives back to its local schools and the military and hosts its Annual Winter Festival to help families in need. Christmas trees are donated to those families who cannot afford them during the Winter Festival, along with gifts for children to help holiday wishes come true. Mehdi doesn’t think he just sells cars. He creates relationships, many of which have lasted decades. Sixty percent of his sales are from repeat and referral customers.

DEALER SPOTLIGHT

BY MIKE MACAULAY, WEST COAST DEALER EDITOR/CHAIR

DEALER DOING GOOD DEED FOR COMMUNITY Pacific Auto in Auburn

Bruce LaVergne and Nader Zaker are owners of Pacific Auto in Auburn. They recently donated a vehicle to Sacramento Valley Teen Challenge. Teen Challenge deals with drug and alcohol dependency issues in teens and young adults. Their focus is on rehab and getting young people back on track. They needed a van to help transport the program participants. Pacific Auto has put in effect a policy in which they put aside $50 per unit sold to be used for charitable works. This is what makes a quality dealer! We at IADAC thank Pacific Auto of Auburn for doing good deeds where needed. Stay tuned for more about Bruce and Nader. They do good works, and not just locally.

WEST COAST DEALER / December 2017

www.iadac.org

MANAGEMENT MATTERS

BY JUSTIN M. OSBURN

RETAIL READY Building New Roads in 2018

In the United States, millions of drivers jump in their vehicles and take to the roads each day. These drivers are from different states and backgrounds, with different levels of education. Though a diverse group, almost none just get up and decide to drive down the wrong side of the road. Why? They know this would be high risk for the safety of themselves and others. They know which side of the road to drive on and at what speed because the federal, state, and local road officials have a common vision of how traffic should flow. To prevent accidents and tragedy, drivers must receive communication from those visionaries. This communication is done primarily through driver’s education and signs. The road visionaries did not expect traffic to just “know” when to stop, when to not pass, what speed to drive, which side of the road to drive or when to exit or stop. Similarly, most workers get up every day with the intention to go to work and do the right thing. Most do not get up with malicious intent to cause chaos at their work place, or at your dealership. However, when the dealer and organizational leaders have not stepped back and thought about how they want their “roads” to function, the vision they have cannot be communicated. Leaders must decide which side of the road drivers will drive on before they can post the sign. The leaders must decide how fast people should drive for safe and efficient travel before they can post a speed limit sign. At the dealership, the senior leaders must have a vision how the business will operate before they communicate it to their team. Leaders must decide what the sales process is before they communicate such to the sales team. If the visionaries of the road system just built a road and no one took the time to decide how it would function, can you imagine what chaos traffic would present each day? Imagine no rules, no signs, no stop signs, no stop lights, no yield signs, no “no passing” zones and signs. Without an organizational vision for your operation, your business might resemble a road system with no thought or communication on how to use it. If you’re familiar with my “Gears to Profitability” dealer model, you know internal service quality precedes external service quality and the result and combination of both dictates profitability. Your responsibility as a leader is to provide short and long term vision. I find many dealers are confused what that means. Back to the roads, if you decide

WEST COAST DEALER / December 2017

roundabouts are safer and more efficient than traffic lights, visionaries will begin to plan the best place to put a roundabout, what the flow of traffic will be and what rules and signs will organize it best for drivers. This is a long term vision. However, if a bridge is about to fall down and requires immediate repair, or an ice storm hits and salt is needed in the dead of night, this is a short term vision to keep traffic flowing until the longer term possibilities are completed. The dealership’s overall vision sets the framework that each leader inside of the business uses to create their own vision for individual departments. Think of the department managers as state and local roadways working together in congruence with overall highway rules. Leaders take responsibility for creating and communicating a compelling vision. This is essential for leading your team to success on the lot, in service or in the office. There is no better time to create and drive a clear vision than at the beginning of the year. So what is a strong and clear vision? It is a picture of the future that is created in the imagination and catalyzes action! The compelling argument for a clear and communicated vision is to prevent organizational chaos. Each leader’s vision is critical to individual success and impact. Effective leadership focuses on doing the right things. Do you do the right things? Do you do things right? Does your team do the right things? Do they do things right? First, know and understand the vision of the organization, how the roadways work. If you are the dealer, have you communicated the vision of the business clearly? This will enable your leaders to develop their own visions within the areas they control in the business to support the overall goals of the dealership. Second, leaders must create a vision that supports and contributes to the overall vision of the organization or department. As a leader, it is not healthy to construct and distribute a vision that is not a primary effort to advance your department toward the overall vision of the business. Doing so will cause you to conflict with the business itself, resulting in friction with other leaders in the operation, conflict with other departments and confusing communication to those in your charge. Imagine you are in charge of the roadways in a small town, and you decide it

makes more sense for everyone to drive on the left side of the road. Your vision is not congruent with the overall operation’s vision and will cause chaos and tragedy. Last, communicate the organization’s vision in a way that is compelling and inspirational. Part of your responsibility is to consistently broadcast the direction of the department and the dealership to nonleaders on the team. When you are traveling in an unfamiliar, large, downtown area and using GPS to assist you, the directions for your next turn are given two miles, one mile, and half a mile in advance as well as at the time of the turn. Signs are also used, frequently, to communicate the vision – think exit signs, speed limit signs, mile markers, etc. All these communications work to support the overall operational objective. As a leader in your organization, your behaviors demonstrate your vision and impact your dealership’s success. If you tell your team to drive 65 miles per hour on the right hand side of the road, but every day you drive 85 miles per hour on the left hand side of the road, you are not offering yourself or the organization any value. How well does your vision create a shared and meaningful purpose? Does it inspire passion and interest? Does it guide decision-making and strategy? Does it convey values? Effectively communicate your vision. This allows others to decide to follow your vision. The impact is emotional commitment. The New Year brings new beginnings. The page is turning and it brings a fresh start mentally and emotionally. We step out in January and breathe in the new air while feeling anticipation of how this year will be better than the last. While most of us “feel” this reset, it fades away in a relatively short period of time. Make a long lasting effect this year. Imagine and motivate with a vision. I get great satisfaction receiving all of your emails. I’d love to hear your story on vision. Also, contact me for more information on Gears to Profitability or an NIADA 20 Group. Write me at justin@niada.com. JUSTIN OSBURN is a moderator, consultant and trainer for NIADA Dealer 20 Groups, offering more than a decade of experience in retail and Buy Here-Pay Here executive management. He can be reached at justin@niada.com.

www.iadac.org

MANAGEMENT MATTERS

BY RAUL VASQUEZ

WHAT’S YOUR PEACE OF MIND WORTH? Help Protect Your Automotive Business from Fraud

In today’s high-tech society, the very technology that makes our lives easier also puts us at risk for unauthorized access, duplication, hacking and fraud. And if you are a business owner, it’s becoming increasingly clear you’re even more at risk than the average consumer. Because businesses generally have more check transactions than the typical consumer, they are ripe targets for fraudsters. According to The Fraud Bulletin, Volume 14, check fraud is in the tens of billions of dollars each year. Consistent with that astonishing statement, the 2016 Association for Finance Professionals Payments Fraud and Control Survey revealed these shocking statistics: • 62 percent of finance professionals report their organizations were targets of payments fraud. • 77 percent of those were victims of check fraud. • The typical financial loss incurred by companies due to payments fraud was $20,000. As an example, a company may experience check fraud for the first time while reconciling their checking account.

They may notice deductions were made with no record or knowledge of who made them. After speaking with their financial institution and upon further review, each party determines check fraud was involved. Now what? What steps can be taken to avoid your business checking account(s) being compromised? Our recommendation is to find a check provider with decades of experience in check fraud prevention, and who fully understands the magnitude of the crime. This provider will be able to help you choose a check that includes multiple layers of state-of-the-art security features, as well as check fraud protection services. The 2016 AFP Payments Cost Benchmarking Survey findings indicate the median transaction cost for issuing checks ranges between $2.01 and $4.00 per check, depending on overall check volume. If the business spends 21¢ on a basic check and the high-security check is 25¢ per check, the difference is literally pennies. Even at the low end total check processing cost of $2.01 per check, that’s a relatively small portion of the overall cost. RAUL VASQUEZ works with Safeguard Business Systems. For more information email rvasquez@gosafeguard.com or visit www. majrSAFEGUARD.com.

DMV NEWS

BY CALIFORNIA DMV

ELECTRONIC REPORT OF SALE AND TEMPORARY LICENSE PLATES Coming Soon to California

California law (Assembly Bill 516, Chapter 90, Statutes 2016) requires the Department of Motor Vehicles to develop a system for licensed dealers, lessor-retailers, wholesale dealers, and auto auctions to electronically report vehicle sales and provide temporary license plates at the time of sale. A new system and database to accomplish these tasks will be in place by January 1, 2019. The new system will replace pre-printed Report of Sale forms

WEST COAST DEALER / December 2017

and will issue Temporary License Plates if the purchased vehicle does not already display license plates. The temporary license plates will be clearly visible and secured in the same location as permanent plates. The new system will store sales, new owner, and vehicle identification information in the database, which will be accessible to law enforcement, local governments, parking and toll agencies, and other authorized jurisdictions. The temporary license plate will be valid for 90 days. The DMV will issue permanent plates by the expiration date and the temporary license plate will be removed and destroyed by the vehicle owner. There are no new fees or charges to California dealers or vehicle purchasers with the implementation of this new system. An administrative service fee paid by parking and toll agencies when seeking vehicle and new owner information will cover the costs of the Report of Sale/Temporary License Plate system. With the new system, authorized agencies will be able to identify the vehicles by the temporary license plate and promptly send parking and toll citations to violators. www.iadac.org

LEGAL MATTERS

BYJAMES S. SIFERS

PITFALLS IN AD DETAILS Avoid Deceptive Advertising

Dealers are always looking to gain an edge on their competition. This has led to many dealers attempting to “cut corners” to have their inventory show up at the top of online searches. One way to guarantee both consumer attorneys and governmental agencies, such as the Federal Trade Commission, take notice of a dealer’s advertisements is to deceptively advertise. One such advertisement we are seeing with increasing frequency is a vehicle advertised at a specific price, but with additional items added to the final price at the time of signing based on upgrades to the vehicle, such as rims and window tinting. This is done despite the fact these “upgrades” are visible from the picture of the vehicle in the advertisement. When dealers advertise vehicles for sale, they are under stringent regulations as to what those advertisements can and cannot include (See Cal. Veh. Code § 11713). For example, a vehicle advertisement must not be misleading or untrue. The bulk of the California Vehicle Code’s

regulations of advertisements deals with the vehicle price. For example, a vehicle may not be advertised at a specific price, without fees, taxes, etc., where the advertisement does not include a statement that additional charges such as government fees and taxes, finance charges, dealer document processing charge, electronic filing charge, and an emission testing charge will be included at the time of sale (Cal. Veh. Code § 11713.1(c).). By attempting to add additional charges to the underlying vehicle price based on optional equipment visible from the advertisement, a dealer is likely violating Cal. Veh. Code § 11713.1(e), which requires dealers sell a vehicle at or below an advertised price. This is probably true even when the advertisement attempts to disclaim and/or disclose the additional charges that will be included at the time of sale as Cal. Veh. Code § 11713.1(b) requires the total price of the

vehicle to be stated in the advertisement. Should a dealership find itself in litigation over this issue, or dealing with a claim by the FTC, it will be very difficult to prove compliance with the California Vehicle Code as the consumer or the FTC will almost certainly have a picture of the vehicle from the advertisement and the purchase documents where the additional charges were added to increase the ultimate price of the vehicle above the advertised price. To protect your dealership, it’s prudent to ensure the vehicle is accurately priced. There is no violation for attempting to sell additional products at the time of purchase, but the vehicle must be able to be purchased for the advertised price without those additional items to comply with the California Vehicle Code. JAMES S. SIFERS, ESQ. is part of Madison Law, APC.

LEGISLATIVE NEWS

BY KATHERINE SANDBERG

BAN THE BOX New Law Restricts Employers’ Inquiries Into Applicants’ Criminal Histories

What Is Ban the Box? Effective January 1, 2018, employers with five or more employees may no longer inquire into an applicant’s criminal history until a conditional offer of employment is made. Once the conditional offer of employment is made, the employer may run a background check or otherwise ask about the applicant’s conviction history. However, the employer cannot then deny the applicant the position based on any criminal history that is gathered unless it performs an individualized assessment and allows the applicant to respond. In addition, the law prohibits employers from including questions on their job applications that seek the disclosure of the applicant’s criminal conviction history. What do I have to do for the individualized assessment? Employers who want to deny an applicant a position based on their criminal conviction history must be able to tie the conviction history to the specific duties of the job. The employer must also notify the applicant in writing and provide specific notices to the applicant. The applicant must then be allowed at least five business days to respond, plus an additional five

WEST COAST DEALER / December 2017

days if the applicant disputes the accuracy of their conviction history. The employer must notify the applicant of its final determination and provide further notices, including that the applicant has a right to file a complaint with the Department of Fair Employment and Housing. What about potential negligent hiring claims? Unfortunately, the law does not provide any relief for employers from negligence liability. On one hand, employers now face potential employment discrimination lawsuits for refusing to hire an applicant with a criminal conviction history. On the other, they may face a negligent hiring claim if they hire an applicant knowing their criminal history and the employee causes harm to a coworker, customer, or other third party. What do I do now? Although the law will not go into effect until January, employers can take steps now to ensure they comply. You should begin by reviewing the following: (1) your solicitations and advertisements; (2) applications; (3) interview policies and procedures; and (4) criminal record-based screening policies and procedures. Also make sure you communicate with and train all potential interviewers about the new law, the questions that they can and cannot ask, and the individualized assessment. If you have any questions regarding compliance with the law or its impact on your business, please contact Katherine Sandberg at (916) 210-0406 or KSandberg@fisherphillips.com.

EMPLOYERS WHO WANT TO DENY AN APPLICANT A POSITION BASED ON THEIR CRIMINAL CONVICTION HISTORY MUST BE ABLE TO TIE THE CONVICTION HISTORY TO THE SPECIFIC DUTIES OF THE JOB.

www.iadac.org

AUCTION NEWS

ADESA GOLDEN GATE ANNIVERSARY SALE October 10, 2017

Tuesday, October 10, was a huge sale day at ADESA Golden Gate as the auction celebrated their 15th anniversary. There were 2,600 vehicles consigned and $15,000 in prize giveaways. Prizes included tickets to the Indy 500, including hotel and credit toward airfare, plus many other great items. General manager Jeff Hoyt and staff continue to provide outstanding service for their customers at every turn. This event had a sales percentage over 60 percent!

Mark Cota with AFC

General Manager Jeff Hoyt

Mike Jones, ADESA Golden Gate Dealer Sales and Service Manager

ACCELERATE

BY GWC WARRANTY

WHY CUSTOMERS REFUSE A VEHICLE SERVICE CONTRACT Setting Yourself Up for Success There’s a lot of blame to go around when an F&I deal falls through. You might put it on the customer who just didn’t have an open mind. Or you could point to the sales department that agreed to a deal that left little room in the customer’s budget. In the end there’s only one place to look when it comes to opportunities in vehicle service contract deals gone bad: the person sitting across from the customer. But there’s good news. It’s an easy problem to fix. Every service contract deal that doesn’t happen is an opportunity to objectively look at why the deal didn’t come to fruition. But boiling things down, there are two main reasons why customers refuse to buy a vehicle service contract: they think they

WEST COAST DEALER / December 2017

can’t afford it or they don’t see the need right now. Focus on key words in each of these objections: Customers think they can’t afford them, and they don’t see the need right now. What’s positive here is the person sitting across the desk from the customer in the F&I office has control over both of these lines of thinking. All it takes is a few questions for you to show the customer what they really can’t afford is a major repair bill and while the vehicle is in great shape now, there are realities with used cars they should prepare for. Almost every customer will object to paying more for a VSC. The key here is getting to the bottom why. Often, it’s a simple misunderstanding of what common repairs cost. Always ask price-conscious customers what they think a major repair costs. Regardless of their answer, you have an opportunity to position the value of a service contract. If their response is too low, you can show past repair orders and ground the customer in the reality of these costs. If the response is on point or on the higher end, you can focus on how such a repair impacts a monthly budget while asking the customer if that repair fits within their monthly expenses.

When customers don’t see the need for a service contract, it’s usually due to confidence they have in the vehicle they’re buying. Most car buyers expect to be purchasing a vehicle in good working order. So why would they need protection on repairs? The reality here, especially with used vehicles, is that components are more likely to break down as they age. Ask a customer about their level of understanding of factory warranties, if the vehicle still qualifies. Here is your opportunity to showcase that factory coverage covers many parts least likely to fail. But a service contract covers many of the components likely to break down with wear and tear. Just like your grandparents visit the doctor more often, used vehicles will visit the shop for smaller issues more often as they age, so it’s important to be prepared for this fact. Getting to the root of why your customer is refusing a service contract is where your opportunities reside. Most of the time, customers are excited to drive off in their new car or they simply don’t understand many of the intricacies of owning a vehicle and what it costs. Take this opportunity to act as a consultant. Ask the right questions and be prepared with the answers, and you’ll set yourself up for more success in the F&I office. www.iadac.org

www.iadac.org

December 2017 / WEST COAST DEALER

IADAC incoming president Brenna Stansberry, Park Marina Motors in Redding.

Left to right: IADAC and NIADA past president John Hiatt presents Quality Dealer Award to Bruce Lavergne and Nader Zaker.

Congratulations to John Mayer, owner of Mayer Equipment, who was presented with the Industry Dedication Award!

Frank Fischer, Jacob Fischer, Brian Zambrano and Holly Fischer accepting Business Excellence Award on behalf of Eric Fischer from Mike Macaulay.

Left to right: Past IADAC Quality Dealers Roger Hanke, Don Head, Guy Strohmeier, Sam Khacho, Terry Degmetich, John Hiatt, Mehdi Chitgari and Mike Macaulay.

ASSOCIATION NEWS

49TH ANNUAL IADAC CONVENTION RECAP Harvey’s Lake Tahoe IADAC strives to provide auto dealers top-notch informational sessions at our conventions with knowledgeable expert speakers discussing the most current and relevant topics in our industry. This 49th Annual Convention did just that. Compliance in California is very important and often dealers only find out what they’re doing wrong when an enforcement arm or costly civil case demands payment for their error. That is why IADAC has a finger on the pulse of the industry. We provide key informational sessions that help guide dealers down the right path. Although labor law is technically outside the scope of IADAC’s coverage, all dealers are business owners and likely to be employers. Even without employees, California labor laws may still come into play. Attorney Katherine Sandberg reviewed the top five problems dealers face as employers and explained the “Ban the Box” bill that recently passed our legislature. Special thanks to Katherine for taking the time to speak to our guests. DMV deputy director Bernard Soriano entertained our group with a very thought-provoking session on autonomous vehicles and the rapid advances they have made. It is impossible to ignore the effect electric and autonomous vehicles are having on our industry. Combined with ridesharing and promises of legislation that seeks to ban gasoline and diesel powered vehicle sales, the future of our industry may be changing dramatically in a very short time.

WEST COAST DEALER / December 2017

Attorney David Parker provided great tips and precautions relative to demand letters and lawsuits. Dealers’ mistakes often provide all the ammunition a consumer attorney needs to have a slam-dunk case. Avoiding those mistakes can create an advantage for the dealer, which often prevents costly awards for damages and attorney’s fees. IADAC is proud to announce our new executive committee. The following individuals have been installed as our 20172018 officers. Please note Brenna Stansberry is IADAC’s first female president! • Chairman of the Board: Gus Camacho • President: Brenna Stansberry • Sr. Vice President: Mehdi Chitgari • Vice President: Guy Strohmeier • Vice President: Brittany Hibdon • Vice President: Bruce Lavergne • Treasurer: Beto Beas • Secretary: Christina Hinkle The vendor expo is always a treat for dealers. They have plenty of time to test drive and evaluate the newest products and services. Special thanks to all those who participated, and especially those who stepped up with sponsorships. Without those generous people our event would not happen. Please make note of those companies listed here: • ADESA Los Angeles • AUL Corp. • Auto Data Direct • AutoZone • Automotive Finance Corp. • Balboa Thrift and Loan • California Republic Bank • CarMax

• Motor Vehicle Software Corp. • Nationwide West • Guy and Sandy Strohmeier • The Scali Law Firm The prestigious Quality Dealer Award was presented to Bruce LaVergne and Nader Zaker of Pacific Auto in Auburn. Their success has been overshadowed by their concern for community, evidenced by numerous philanthropic efforts. Congratulations, Bruce and Nader! A special Business Excellence Award was presented to Holly Fischer for her husband Eric, who passed unexpectedly at the age of 54. Holly’s words stirred emotion in all attendees with a touching tribute to Eric’s business and life philosophies. Eric and Holly founded Just Better Cars.com in Roseville, California. On behalf of John Mayer, owner of Mayer Equipment, IADAC past president and current magazine chairman Mike Macaulay accepted an Industry Dedication Award. John could not be present to receive the award himself. Mike described the unselfish generosity John displayed time and time again as a solid supporter of IADAC. The event concluded with a funfilled live auction to replenish funds for our scholarship awards. Many generous donors and bidders helped raise over $25,000 for the children and grandchildren of IADAC dealer members. Thanks to our volunteer auctioneers, David Aahl and Rod Davis.

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ASSOCIATION NEWS

PRE-CONVENTION VENDOR TRADE SHOW AT MANHEIM SAN FRANCISCO BAY

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CONVENTIONRECAP

Past presidents Terry Degmetich and John Hiatt.

John Hayes, ADESA Sacramento GM Laura Seek, and Paymon Hajjarian. John and Paymon both purchased premium reserved parking to benefit the IADAC Scholarship Fund.

December 2017 / WEST COAST DEALER

DEMYSTIFYING KELLEY BLUE BOOK VALUES

KELLEY BLUE BOOK VALUES IN THE DEAL Bringing Buyers and Sellers Together

Previously, Kelley Blue Book provided detailed information and a behind-the-scenes look at the various Kelley Blue Book values, and the process of deriving and publishing these values to provide an independent, market-reflective pricing snapshot for car buyers and sellers. Now it’s time for the practical application to share our goal of bringing buyers and sellers together by removing friction in the transaction. With the majority of car buyers using the Internet for their vehicle research, dealers and consumers come to the table with more information than ever before. In my experience on both the retail and vendor side of the business, most dealers have no problem working with educated consumers. In fact, many would prefer to work with someone who has a valid point of reference. Working with someone who has realistic expectations around what their trade would be worth to a dealer and/or what they should expect to pay for a specific vehicle in a certain market based on supply and demand, color, and condition makes for a more enjoyable experience for both parties. Instead of starting negotiations miles apart based on erroneous, misunderstood, biased or inaccurate information, the two parties are much closer to an agreement from the start when both are referencing the same recent, market-relevant information. In my opinion, there are two groups of online car shoppers that historically have been the most difficult to reach an agreement with: 1. The consumer just starting out with no reference point on pricing. A large percentage of car dealers now post inventory complete with asking prices. A salesperson can do a great job of selling themselves, the car and the dealership, but unless the customer has something to compare your asking price to, they could find it difficult to move forward with a purchase without first checking somewhere else. They need a point of reference to feel comfortable enough to say “yes” to ease concerns of buyer’s remorse. This is a very difficult customer to move forward because even though you may be aggressive and competitive with pricing the customer has no context for your price as it relates to the market. 2. The customer who has shopped themselves to the point of confusion, has shopped multiple cars, dealers and prices

WEST COAST DEALER / December 2017

and is now so spun around they are more confused than when they even started. This was prevalent in the early days of Internet car shopping, and still exists to a lesser degree, when many auto information sites provided incomplete or erroneous invoice information, which caused two problems. First, providing just invoice and MSRP information on new cars often set customer’s expectations that “invoice” was the figure to shoot for regardless of the current market value of a specific car. Second, allowing shoppers to configure their own invoice online without any guidance caused many to misconfigure cars by building theoretical vehicles that would never be ordered by a dealer because of undesirable or hardto-move equipment packages or not understanding the need to include certain options when required with other options, resulting in unrealistic expectations. Pull out a new car dealer ordering guide and look at the myriad of option configurations and restrictions. It’s hard enough for a sales team to properly “build” a car much less someone who has never done it before. Some consider tax returns to be easier than building out a car, especially with trucks. Now, with the abundance of actual retail sales transaction data available for optionspecific vehicles, it is possible to solve both of these issues. Keep in mind, as mentioned in a previous article, Kelley Blue Book is relied on by 66 percent of auto shoppers to gain information that helps shape their buying expectations, and Kelley Blue Book has a tremendous opportunity and responsibility to help alleviate all the confusion by providing market-based pricing guidance on both

sides of the transaction: the trade and the purchase. This solves both difficult situations mentioned above. The first by providing consumers peace of mind regardless of whether it might be a consumer’s first stop – most often online – and they see a price but don’t know how it compares to what others have recently paid for a comparable vehicle in their local market, or if it was their 15th visit and they have become confused shopping comparable models in a specific used car segment, making it feel as if it might be best to just start over. The introduction of the Kelley Blue Book Price Advisor in 2015 is Kelley Blue Book’s answer to the disconnect long suffered between car dealers and car buyers. No longer does online research have to result in the frustration often experienced by car shoppers and dealers when expectations based on online resources doesn’t translate to the reality of the actual car selling market. Price Advisor provides a range-based display of vehicle pricing reflecting the current market for a selected vehicle with the buyer’s chosen options and any and all available rebates, excluding taxes and title fees. This information puts dealers and consumers on the same channel and aligns their expectations. Consumers no longer need to shop cars against each other to compare the difference in pricing between dealers. Often this was misleading and forced dealers to lower prices to gain visibility or make the sale because there are additional factors besides year, make, model and trim similarities that could cause each to be priced differently. Factors such as mileage, condition and even color may not have been taken into consideration CONTINUED ON PAGE 22

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CONTINUED FROM PAGE 20

by a consumer when comparison shopping online, and even if they were, there was no way for them to equate value to any differences. As a result many times consumers would seek to purchase a vehicle at a lower-thanadvertised price because “there is another one just like it I saw for less.” Dealers would then need to sell the value of the additional features of their car, even down to desirability of color, to move a buyer to a point where they could cover their investment and achieve a reasonable profit. No longer do dealers need to work from the “bottom up” to justify their asking prices on inventory. Within the Kelley Blue Book Price Advisor every vehicle stands alone and is evaluated “as equipped,” including mileage, condition and color. The Kelley Blue Book Fair Market Range, represented by the green zone of the Price Advisor, is Kelley Blue Book’s estimate of what a consumer might expect to pay for each specific vehicle as it stands and is based on actual recent retail sales transactions of comparably equipped cars in that area. Now a consumer can gain peace of mind on any car selected by researching the dealer’s asking price against real market value instead of what other “somewhat alike” cars are being offered for in the market. This also allows dealers to have peace of mind their inventory is being fairly shopped during the consideration phase of online shopping. Consumers are confident, regardless of what

WEST COAST DEALER / December 2017

vehicle they select, they can see the price of that specific car compared to the market for similarly equipped vehicles, as determined by a credible, independent third-party resource such as Kelley Blue Book. On the other side of the transaction is the purchase of the consumer’s car by a dealer, more commonly referred to as the trade-in. The same types of consumer resistance hold true here. In the past many customers would shop their trade much the same as they would shop for a new or used car. Focusing on what they might receive as a trade allowance often caused car shoppers to see “if I can get more for my trade” from other dealers, in many cases because they did not have a credible point of reference. Consumers found it hard to recognize value even when dealers were stretching to earn their business and dealers often lost sales when figures at competitors were manipulated to show an over-allowance to make it seem as if the customer was getting more than their car was actually worth. All of this might have been solved if the customer simply had a reference point to show what their car, in their area, in this specific condition and with this specific mileage, was valued at based on detailed comparison to recent market activity. Now with the Kelley Blue Book Instant Cash Offer, that credible comparison reference is readily available and goes to great lengths to ensure customers accurately

depict all aspects of the condition of their trade to alleviate friction once inspected at the dealership. By directing consumers through a vigorous online condition report prior to providing an Instant Cash Offer for their vehicle, there is a greater likelihood that consumers will be as objective as possible knowing the offer they receive is only valid after inspection by a participating dealership. This provides great benefit for the consumer because they know exactly what to expect prior to a dealership visit, and benefits dealers by possibly reducing transaction times and increasing CSI by working with consumers who have realistic expectations. How it works: 1. Tell us about your car and get your Instant Cash Offer. 2. Visit a participating dealer to verify your car’s features and condition. 3. Use your offer to trade in your car or let the dealer buy it for cash. Kelley Blue Book’s goal is to reduce friction in the transaction by providing market reflective values that can be used by either party in the transaction to reach an equitable result. When two parties can come together using the same objective, market reflective information it allows for a smoother, more confident and enjoyable experience for both. ROB LANGE is the industry insights and education director for Kelley Blue Book. He can be reached at Rob. Lange@kbb.com.

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