C A ROL IN AS INDEP ENDEN T AU T OMOBIL E DE A L ERS ASSOCI AT ION O C T O B E R / N O V E M B E R 2 0 17
AUTO DEALER NEWS
S TAT E A F F I L I AT E
MAGAZINE
CIADA NAMES QUALITY DEALER OF THE YEAR M&M Auto in Lumberton PAGE 33
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V I S I T U S A T W W W .T H E C I A D A . C O M
INSIDE
06..........................................................Social Media Lessons 08........... Tips to Secure Vehicle Service Contract Financing 13............................................................ CIADA Scholarships 18.............................................. BHPH Auto Financing Trends 28......................................................................Clients for Life 32............................................. CIADA Convention Highlights 38..............................Does Your Sales Process Measure Up?
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
Ace Motor Acceptance.........................................................21 Alliance Inspection Management..........................................16 AmTrust Financial...................................................................15 Auto Use.................................................................................17 Black Book................................................................................3 CARFAX....................................................................................5 Carolina Auto Auction...........................................................IFC Charleston Auto Auction......................................... Back Cover Greensboro Auto Auction........................................................7 Manheim.................................................................................11 NextGear Capital....................................................................12 Proactive Dealer Solutions.......................................................9 Reynolds and Reynolds..........................................................19 STARS GPS.............................................................................13 VAuto.................................................................................... IBC
PRODUCTS & SERVICES
BY USED CAR NEWS
MANHEIM UPGRADES MMR Enhanced Manheim Market Report
Manheim introduced a sweeping set of enhancements to its Manheim Market Report. Adjusted MMR is a more specific valuation because it includes a vehicle’s specific AutoGrade condition and exterior color, in addition to vehicle mileage and region. With this enhancement, clients can manually input a vehicle’s specific condition, color, mileage, and region to get the Adjusted MMR. The mileage, color, and condition will automatically display and clients can manually select region (based on preference) to get the Adjusted MMR. Adjusted MMR
delivers a more accurate vehicle valuation to both buyers and sellers, which drives greater confidence to transact online. Available across desktop, tablet and mobile devices, the new MMR experience provides insight into how each vehiclespecific adjustment affects its MMR value, and facilitates more transparent pricing using data visualizations that allow clients to quickly compare their vehicle’s Adjusted MMR value to the Base MMR value at a glance. The new API provides on-demand access to the more accurate Adjusted MMR values, and also takes advantage of OEM Build Data in the VIN-decoding process, providing convenience and strategic insights to clients with high volumes.
OFFICE
5643 Harrisburg Industrial Park Dr. Harrisburg, NC 28075 Phone: 704-455-2117 or 1-800-432-4232 Fax: 704-454-5567 www.theciada.com CIADA is a non-profit 501(c)6
NIADA HEADQUARTERS NATIONAL INDEPENDENT AUTOMOBILE
DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 The Carolinas Independent Automobile Dealers Association 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 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 EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT
Christopher Hanley • chris@niada.com PRINTING
Nieman Printing
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AUTO DEALER NEWS October/November 2017
EXECUTIVE COMMITTEE
CIADA STAFF
Immediate Past Chairman
NC Vice President
Executive Director
Steve Matthews Matthews Motors Inc. Clayton, NC 27520
John Brown 5643 Harrisburg Industrial Harrisburg, NC
Chairman
SC Vice President
Controller
Darla Booher Deal Depot Inc. Greer, SC 29651
Kevin Pendergrass Carolina Auto Sales Myrtle Beach Myrtle Beach, SC 29577
President
Treasurer
Will Davis G & B Auto Sales of Louisburg Inc. Louisburg, NC 27549
Steve Wetmore McAdenville Motors Gastonia, NC 28056
Kim Bradshaw 1st Nations Auto Sales Burlington, NC 27217
President-Elect
Secretary
Michael Threadgill Vans Auto Sales Florence, SC 29506
Darryl Jackson Crown Automotive Sales and Finance Charlotte, NC 28213
Debbie Braswell
Education & Membership Services Jenny Myrick
Education & Membership Services Jayne Harris
DRIS Insurance Martha Brown
MISSION STATEMENT The Carolinas Independent Automobile Dealers Association was organized in 1955 to assist members in enhancing their reputation in the marketplace, gain political influence and provide opportunities to interact with and meet other dealers for the purpose of sharing
business and marketing ideas. As a mature and long-standing Association, we are proud to maintain the ideals and principles set by the founders. But today, we offer more…far more. With a fulltime professional staff, modern technology and world class educational programs, we have become a strong,
effective and influential organization that exists for one reason only: To represent the independent, non-franchised automobile dealer! CIADA is the only not for profit association that represents the independent automobile dealer in the Carolinas with a National affiliation.
www.theciada.com
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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AUTO DEALER NEWS October/November 2017
www.theciada.com
ACCELERATE
BY GWC WARRANTY
TIPS TO SECURE VEHICLE SERVICE CONTRACT FINANCING How to Convince and Reassure Lenders
If you’ve heard it once, you’ve heard it a million times: “There’s no room on this deal for a vehicle service contract.” It’s a struggle so many dealers face when trying to secure the funding for not just the vehicle sale but also back end F&I products. But there’s no need to fret. Knowing some tricks of the trade can help you convince lenders of the value of a vehicle service contract while also reassuring them that including one on the deal won’t diminish their chances of receiving regular payments. Ask multiple times. Sometimes, all it takes to get a lender on board with funding a service contract is to ask again. If the initial reaction is a “no,” you can remind your lender why a service
contract is beneficial to them and ask again if it’s possible to find a touch more for the back end. Show a Certified checklist. A lender’s primary concern is ensuring they continue to get paid. Nothing can stop that more quickly than a broken down vehicle. Don’t be afraid to show a hesitant lender the checklist from your Certified program to help get them over the edge and on board with a service contract on the deal. It will demonstrate the effort you put into reconditioning and make the lender more comfortable with the quality of the vehicle. Provide protection from delinquencies. Like you and your lender know, a broken down vehicle usually leads to a broken down loan. And what better way to keep a vehicle on the road than a service contract that protects customers from budgetbusting repair bills. Remind your lenders of this fact when attempting to secure back end funding. Stress the importance of protecting subprime customers. One objection you might hear is a customer’s credit score is preventing you from securing additional funding. In this case, you can reference the tight monthly budgets of many subprime customers
as further evidence a service contract is needed. It’s assurance that an already tight budget won’t get tighter because of an unexpected repair, hence keeping the payments rolling into your lender. Build a great relationship. The more you and your lender work together and succeed on deals with a service contract, the more confident you will get with each other. And the more confident you are with each other, the better the prospects for a prosperous and profitable future together. Highlight for your lenders that making a deal work today could lead to many more deals down the road.
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 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
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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. 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! KATIE BARTH is the senior marketing manager at PureCars.
www.theciada.com
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 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.
AUTO DEALER NEWS October/November 2017
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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AUCTION NEWS
CHARLESTON AUTO AUCTION HONORED NAAA Recognizes Excellence in Public Service
Charleston Auto Auction, a member of the XLerate Group, has been named the National Auto Auction Association’s 2017 Southern Chapter Auto Auction of the Year for its outstanding public service. The Moncks Corner, South Carolina, business was chosen for its depth of commitment that went beyond financial support to taking a very active role in making the local school principal’s dream of a residence for homeless students a reality. The auction will be one of four finalists representing NAAA’s Eastern, Midwest, Southern and Western chapters competing for the top honor of NAAA’s Auto Auction of the Year Award for Excellence in Community Service. Each contender will be recognized at the association’s annual convention in November with a crystal trophy. They will also get a photo in NAAA’s member publications and $5,000 payable to a charity of the auction’s choice. “I’m proud to announce Charleston Auto Auction as our candidate for NAAA’s Auto Auction of the Year,” said NAAA Southern Chapter president Doug Rodriguez. “All our entrants deserve recognition for their public service, but none touched us more than Charleston Auto Auction. Their dedication to helping homeless teens, who were couch surfing or sleeping on benches at the mall and had no idea where their next meal would come from, have a safe place to live so they could focus on school was heartwarming.” Charleston County School District nominated the auction to be honored for its work addressing the problem of 21 homeless students at R.B. Stall High School with its ongoing support of then principal Kim Wilson’s vision of a house, staffed by surrogate parents, that would provide stability and consistency as well as a bed and meals through his plan called Project H.O.M.E. (Helping Others Mirror Excellence). After a news story about the proposed project aired on TV, Wilson got an email
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from Jason Moritz, assistant general manager at Charleston Auto Auction, saying, “Looking forward to raising some funds to help with your efforts!” “I was dumbfounded,” said Wilson. “Here was a guy I didn’t know representing a business I never heard of wanting to help these kids. And help they did!” The auction immediately organized a special monthlong sale, partnering with its dealers to donate a percentage of every vehicle bought or sold. The response was so positive the dealers donated money above the original agreement. Next the business reached out to the general community soliciting contributions. Additional fundraising during the year collected more than $26,000 to get the home under construction with the goal of housing students this fall. “They continue to be a driving force behind this project,” Wilson said. “They’ve taken an active role in making this home their mission with the auction’s general manager Laura Taylor and Jason joining our board of directors. They also speak to businesses and groups in the community to encourage involvement. It’s people like the management and employees at Charleston Auto Auction who see a need and take action that make a difference in this world.” Taylor said working with the H.O.M.E. team has been a pleasure because “they have huge hearts.” She said, “We’re excited about giving students an environment so they can concentrate on academics and sports and not on where they’ll sleep at night. Our auction and our customers plan on continuing donations to ensure Project H.O.M.E.’s success.” In addition to that project, Charleston Auto Auction assists a variety of other causes, including a local food bank, orphan group, animal shelter and camp program for seriously ill children. NAAA established the annual awards in 2016 to recognize the many charitable acts auctions already perform and to encourage even greater volunteer involvement. The winner of the Auto Auction of the Year Award for Excellence in Community Service receives a large crystal loving cup, a cover photo and feature story in NAAA’s On The Block magazine and annual Membership Directory, plus $20,000 payable to the auction’s chosen charity in addition to the previous $5,000 prize as a chapter finalist.
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ASSOCIATION NEWS
CIADA SCHOLARSHIP AWARDS Winners Announced
The CIADA Scholarship Award winners are chosen from a panel of educators, working independently of the executive director and executive committee.
South Carolina From the state of South Carolina our scholarship award winner is Makayla Autenreith from Williamston, S.C. Makayla attends the University of Kentucky, where she is in the Pre-Vet club and participates in intramural sports. In high school Makayla was an academic honors student, cheerleader and involved in many different functions. During the summers, she spends time with her grandmother, a friend to us all and a NAAA Hall of Famer, Patty Stanley, owner of Carolina Auto Auction. Congratulations to Makayla and her family for being the 2017 SC Scholarship winner.
environmental student. She balanced her busy high school life while working at her father’s dealership, Crown Automotive in Charlotte. The other North Carolina scholarship runner up winner is no stranger to any of us. We have watched this young lady grow up right before our eyes. Marissa Martin is the daughter of Chris and Maria Martin from Team E-Z Auto in Fayetteville, N.C. Marissa is a graduate of Pinehurst High School and attends North Carolina State University. Congratulations, Marissa.
South Carolina Runner Up Our S.C. runner up scholarship award goes to Alyce Hammer. Alyce is the daughter of John and Kelly Hammer and represents US Auto Sales in Columbia, S.C. Alyce is a strong student with 4.0 GPA. She is on the class council and student council and is also a student ambassador and a model UN ambassador. Alyce participates in many club activities and was the captain of her varsity volleyball team. An all-conference student, she ranked in the 97th percentile on her ACT. Alyce plans on attending Southern Methodist University in Dallas, Texas. North Carolina Alyson Lindsay is the North Carolina scholarship winner. Alyson’s father, David, is with Greensboro Auto Auction. Alyson will be attending UNCGreensboro, where she plans on majoring in nursing. She is a straight A student as well as a member of the student council, National Honor Society and team captain of the women’s varsity soccer team. North Carolina Runners Up We have two outstanding nominees who have been selected as runners up in the scholarship program from North Carolina. Destiney Jackson is a graduate of Independence High School in Charlotte and is attending Wingate University. In high school Destiney was active as an honors algebra and earth and www.theciada.com
October/November 2017 AUTO DEALER NEWS
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SAFETY WATCH
MANAGEMENT MATTERS
BY DALE POLLAK
MAZDA RECALLS VEHICLES FOR RUPTURE RISK FEATURED 79,402 Vehicles Involved
HOW LITTLE THINGS DETERMINE YOUR SUCCESS Details Matter
Mazda North America Operations is recalling 79,402 2012 CX-7, CX-9 and Mazda6 vehicles sold, or ever registered, in the states of Alabama, California, Florida, Georgia, Hawaii, Louisiana, Mississippi, South Carolina, Texas, Puerto Rico, American Samoa, Guam, the Northern Mariana Islands (Saipan), and the U.S. Virgin Islands, or “Zone A.” Additionally, unless included in “Zone A” above, Mazda is recalling certain 2009 CX-7, CX-9 and Mazda6 vehicles sold, or ever registered in the states of Arizona, Arkansas, Delaware, District of Columbia, Illinois, Indiana, Kansas, Kentucky, Maryland, Missouri, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Virginia, and West Virginia, or “Zone B.” Additionally, unless included in “Zone A” or “Zone B” above, Mazda is recalling certain 2007-08 CX-7 and CX-9 sold, or ever registered in the states of Alaska, Colorado, Connecticut, Idaho, Iowa, Maine, Massachusetts, Michigan, Minnesota, Montana, New Hampshire, New York, North Dakota, Oregon, Rhode Island, South Dakota, Utah, Vermont, Washington, Wisconsin, and Wyoming. These vehicles are equipped with certain air bag inflators assembled as part of the passenger frontal air bag modules used as original equipment or replacement equipment. In the event of a crash necessitating deployment of the passenger frontal air bag, these inflators may rupture due to propellant degradation occurring after long-term exposure to absolute humidity and temperature cycling. Mazda will notify owners, and dealers will replace the front passenger side air bag inflator with an alternate inflator, free of charge. The recall began Aug. 15. Mazda’s number for this recall is 1317F. This recall supersedes recall 17V-012.
“It’s life by a thousand little things, or death by a thousand cuts.” A dealer recently shared this line as we were discussing how the car business has changed in the last 25 years. The dealer’s observation strikes me as a perfect, cleareyed summation of how efficiency, technology and transparency have made retail automotive a much different environment for dealers. Consider the following common, everyday tasks and how much the little things matter more than ever before. Stocking Vehicles For years, many franchise dealers have followed a fairly reasonable strategy as they order factory vehicles: Stock as many of the cars they know they can sell, based on what they’ve sold. But here’s the problem with this strategy today: It’s too passive. It relies too much on history, and your factory partner. It can ignore, and miss, faster-moving retail trends that help you maintain, if not gain, sales and market share. It’s also imprecise. The situation is very much the same in used vehicles. Variances in vehicle color, condition, mileage and specific equipment make the difference in determining a vehicle’s wholesale or retail value, and its likely appeal among potential buyers, given competing vehicles in the market. It’s easy for an appraiser or buyer to make costly mistakes if they’re relying solely on what they know, rather than augmenting their intelligence with market data. Pricing Vehicles It wasn’t that long ago pricing vehicles was fairly easy. In new vehicles, you pretty much only needed the MSRP or “Call for a Great Price!” In used vehicles, your retail price was just a standard mark-up away from the cost of the unit. Pricing cars didn’t require much critical thinking and, if you made a mistake, buyers forgave you, and they were none the wiser. Today, it’s so very different. Many consumers know almost exactly how
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much they should pay for a vehicle and get a fair deal. They know if your vehicle’s price is in, on or off the market, given the car’s color, condition, equipment and other particulars. They won’t even bother if your prices don’t fit their perception of fair purchase parameters for that vehicle. The environment means that if your prices fit in the context of a consumers’ competitive set, you’re in the game. If not, you’re out. Likewise, if you’re too deeply in the game, you stand a good chance of giving up gross. On top of all this, you’ve got the constant ticktick-tick of inventory age undermining your gross profit potential. Simply put, it’s impossible to price effectively without some kind of technology or tool to help you optimize each vehicle’s market price position. Engaging Buyers It’s easier than ever for consumers to find the vehicle(s) they want to purchase, and the price they think they should pay. It’s also fairly easy for them to find at least one dealer, in virtually every market, who claims to offer a different, hassle free car buying experience. We also know most consumers will only visit one, possibly two, dealers before buying a vehicle. As a result, some dealers take every customer engagement very seriously. To them, every customer conversation, email, instant chat or text message could be the last. “We truly believe that it’s almost as if the customer is looking for a reason not to do business with us,” said the COO for a West Coast dealer group. “We work very, very hard to make sure they don’t find that reason.” Today’s car business may be different, and arguably more difficult, than it used to be. But it’s still a healthy, viable business where success awaits those who properly apply themselves to its pursuit. My dealer friend is correct. The little things matter more than ever. To paraphrase an old saying, “The devil is in the details, and so is your next deal.” DALE POLLAK is the founder of vAuto and an executive with Cox Automotive. This column ran on his blog on June 19. For this story and all his posts, visit www.dalepollak.com.
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INDUSTRY NEWS
MANHEIM ANNOUNCES RETIREMENT OF JAY CADIGAN Member of NIADA Ring of Honor Manheim recently announced vice president of industry relations Jay Cadigan is retiring. His retirement marks the end of a renowned automotive industry career spanning four decades, including leadership positions in the auction as well as leasing and rental car remarketing businesses. “There’s no question Jay has been a driving force at Manheim and within the remarketing industry for some 40 years,” said Cox Automotive Inventory Solutions president Janet Barnard. “He’s been instrumental in helping Manheim maintain its leadership position and worked tirelessly to shape the industry. We can’t thank Jay
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enough for all he’s done for our company, our clients and the industry.” As vice president of industry relations since 2012, Cadigan led Manheim’s strategic efforts to develop, promote and establish consistent standards, processes and policies that further the industry. Prior to that, he served the company as market vice president for Florida and Puerto Rico, president of sales and operations for the General Motors and Avis Budget Group accounts and general manager of Skyline Auto Exchange, now Manheim NY Metro Skyline. Throughout his career, Cadigan served the remarketing industry in National Auto Auction Association volunteer leadership roles. A 2015 inductee into the NAAA Hall of Fame, he is a past president of the association and current member of its executive committee and board of directors, serving as executive vice president. Cadigan is also a past president of the Eastern Auto Auction Association. “Jay’s dedication and commitment to advancing the automotive remarketing profession has been invaluable,” said NAAA chief executive officer Frank Hackett. “His leadership encouraged the development of our association members and the organization alike.”
Other recent industry honors include Cadigan’s 2016 induction into NIADA’s Ring of Honor and being named Remarketer of the Year at the 2015 Conference of Automotive Remarketing. Cadigan began his automotive career working at a car dealership before earning a bachelor’s degree in business management from St. Mary’s College of California. Prior to joining Manheim in 1993, Cadigan sharpened his customer relations and team building skills as assistant general manager of Golden Gate Auto Auction in Fremont, Calif., and gained remarketing experience by working with US Fleet Leasing, Avis Car Leasing and Hertz. “One of my most rewarding career experiences has been watching Manheim and the remarketing industry’s growth and innovation over the years,” said Cadigan. “And, I’ve been fortunate to work alongside some of remarketing’s finest pros, and my years at Manheim are no exception. It’s been an amazing journey, and I’ll forever cherish the relationships I’ve forged over the years.” Looking ahead, Cadigan plans to spend more time golfing, boating, traveling and volunteering in his local community.
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MANAGEMENT MATTERS
BY DALE POLLAK
4 MISUNDERSTANDINGS ABOUT PRICE Could Impede Your Sales Velocity and Profitability
Old beliefs and habits definitely die hard. Take the way many dealers still think about their vehicle prices, for example. Dealers control vehicle prices. I’m not talking about the obvious point that dealers do, in fact, largely set the asking prices for their vehicles. My point relates to the ever-more powerful influence the market has on a dealer’s latitude to price vehicles the way they really want to. Some dealers have let this one go entirely. They’ll price their vehicles based on what the market data tells them – no more, no less. They recognize they can’t control or make the market for a vehicle. They understand the market dictates if the car’s a winner or loser, or lies somewhere in between, and they should price accordingly. A higher price is a better price. Some dealers still believe higher prices lead to higher frontend gross profits. This belief used to be true, before the Internet and pricing transparency gave the market more influence on vehicle prices. Back then, dealers could set their retail asking price as high as they wanted, and negotiate to keep every last bit of gross profit from a customer. Unfortunately, it doesn’t work that way as much or as well today. Vehicle buyers hunt hard for a fair price, and don’t respond well to dealers with vehicles priced 10 to 20 percent higher – or more – than the same or similar cars in their markets for no apparent reason. Price and age aren’t related. This thinking isn’t as prevalent as it used to be in used
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vehicles. Generally, dealers recognize the longer a used vehicle sits in inventory, the less money it makes, due to depreciation, competing units and opportunity costs. As a result, many dealers make the effort to adjust prices as vehicles age to facilitate a timely retail exit. But these same dealers often do not apply the time-is-money principle in new vehicles. The prices these dealers place on new vehicles on Day 1 often don’t change for months. Other dealers, however, have recognized that age- and market-related adjustments result in faster retail sales, which affords them the right to earn additional inventory from their factory partners. When you re-price, you lower your price. Dealers affirm the vast majority of re-pricing decisions result in a lower price. But the most market-astute dealers know this isn’t always true. That’s why they assess each vehicle’s online performance. They ask these and other questions: Is the vehicle’s online listing getting a sufficient number of Vehicle Details Page views? Is the online activity increasing or on the wane? Are there more or fewer competing cars in the current market? How do the prices and Market Days Supply metrics on these cars compare with mine? Most of the time, the answers lead to price reductions. But there are times where dealers are well-justified to raise a vehicle price, or hold off on a price reduction, because their vehicle stands taller in the market than others. I’m sharing these misunderstandings because I’ve seen, time and time again, how they impede a dealer’s ability to fully maximize vehicle sales velocity and profitability. In today’s market, margins are too thin, and time is too precious, to allow these common misunderstandings about vehicle prices to get in the way of tomorrow’s retail sales. DALE POLLAK is the founder of vAuto and an executive with Cox Automotive. This column ran on his blog on June 19. For this story and all his posts, visit www.dalepollak.com.
October/November 2017 AUTO DEALER NEWS
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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
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.
BHPH MATTERS
BY SCOTT BATES
BHPH AUTO FINANCING TRENDS Learn About Your Competitive Advantage
Subprime lending is alive and well on Wall Street, and not just in real estate. Low interest rates and less consumer demand are prompting lenders to tap into subprime auto finance more than ever. Rather than focus on this increased competition for indirect loans, auto industry experts recommend BHPH dealers focus on operational efficiency and alternative sources of revenue. Dealers who improve cash flow through aftercare products and customer retention can ride out the subprime boom. As a bonus, a more efficient dealership will be less reliant on working capital financing in the future. For start-ups and independent BHPH dealers, a clean structure will create more cash flow and level the field with subprime lenders at banks, credit unions and online. As we’ve said before, your best asset is not your inventory – it’s your credit portfolio. Let’s take a closer look at your competitors
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AUTO DEALER NEWS October/November 2017
in auto financing. By learning about your dealership’s competitive advantages, you can add more streams of revenue, get more customers to finance on site and get more customer referrals. Auto Financing Trends According to a report by the Center for Responsible Lending, car pricing information available online helps consumers more effectively negotiate the sales price of a car. Because this has reduced the profit margin dealers receive on the sale of cars, all dealers are relying heavily on profits generated after the sale of the car – extended warranties, credit insurance, guaranteed asset protection insurance, vehicle service contracts and so on. In the case of auto financing, however, information is not readily available. Consumers can’t really shop around because financing is based on things like the type of car, the sales price and possible trade-in value as well as the consumer’s credit worthiness. An application for financing is submitted after most decisions are made – and that application could happen online or with the customer’s local bank or credit union. Due to most consumers’ large appetite for used vehicles and lower tolerance for debt,
BHPH dealers face increased competition from brick and mortar lenders and online deep subprime lenders. These lenders are accepting a larger share of consumers to finance for smaller loans than they would prior to the recession. BHPH dealers are a final destination for the least credit-worthy consumers who can’t get a loan anywhere else. This demographic is not easy to manage in collections anyway, which is typically why many BHPH dealers focus on repossession and resale more than on collections and service. We get it. The competition to control financing is tough. Cash flow is tight. Inventory at auction isn’t what it used to be. You are competing for fewer cars with higher mileage and higher average cost per vehicle. However, BHPH dealers who focus on what they can control are faring better with customers and profits. A good place to start is to seek outside expertise from professional associations and your CPA. SCOTT BATES, CPA, is a partner in the audit practice and leads Cornwell Jackson’s Business Services Department, which includes a dedicated team for outsourced accounting, bookkeeping and payroll services. Contact Scott at scott.bates@cornwelljackson.com or 972-202-8000.
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ASSOCIATION NEWS
MATTHEWS MOTORS RECEIVES NATIONAL RECOGNITION 2017 NIADA and Cox Automotive Community Service Award
Just a few short months ago, Cox Automotive proudly presented the NIADA and Cox Automotive Community Service Award during NIADA’s convention and expo. The award honors independent dealerships for outstanding contributions to its community and the innovative ways it helps community partners fulfill their missions. Matthews Motors was named the recipient of the 2017 NIADA and Cox Automotive Community Service Award in recognition of charitable efforts that have made a notable impact in Clayton, N.C. Helping shape a better world through responsible company and individual actions has long been a part of the Cox culture. Cox commends Steve, Dale and the Matthews
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Motors team for embodying those principles and demonstrating how every person, every organization, every day can make a difference when it comes to serving your community. In addition to the award, Cox Automotive made a $10,000 donation to Clayton Area Ministries, the dealership’s charity of choice. The organization provides food, medicine and utility bill assistance to area residents.
Matthews Motors has supported more than 15 local charities and youth programs in the past year. The team at Matthews Motors has raised more than $70,000 for Clayton Area Ministries and partnered with other local businesses to raise more than $10,000 for the Southeastern Medical Oncology Center’s free mammogram screenings program. Congratulations, Steve and Dale Matthews and Matthews Motors!
October/November 2017 AUTO DEALER NEWS
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SAFETY WATCH
PRODUCTS & SERVICES
BY AUTO REMARKETING STAFF
GM RECALLS VEHICLES FOR AIRBAG UPDATE Software Update Needed
General Motors LLC is recalling 40,638 model year 2014-16 Buick Lacrosse and Chevrolet Spark EV, Caprice PPV and SS vehicles; 2014-17 Buick Encore and Chevrolet Corvette, Silverado 1500 and GMC Sierra 1500 vehicles; 2015-16 Cadillac Escalade and Escalade ESV, Chevrolet Tahoe, Trax, Suburban and Silverado 2500 and 3500 and GMC Yukon and Yukon XL vehicles, and 2015-17 GMC Sierra HD 2500 and
3500 vehicles. While being previously remedied for another recall (16V-651), the affected vehicles may not have received the complete software update necessary to remedy the recall condition. Without the update, certain driving conditions may cause the air bag sensing and diagnostic module software to activate a diagnostic test. During this test, deployment of the frontal air bags and the seat belt pretensioners would not occur in the event of a crash. GM will notify owners, and dealers will reflash the SDM software. Vehicles that have had a previous air bag deployment will have the SDM replaced. The manufacturer has not yet provided a notification schedule. GM’s number for this recall is 17287.
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AUTO DEALER NEWS October/November 2017
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 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. www.theciada.com
INDUSTRY WATCH
SUCCESSION PLANNING REMAINS A CHALLENGE FOR DEALERSHIPS National Survey Results
Results from the National Alliance of Auto Dealer Advisors’ first nationwide succession planning survey reveal succession planning remains a challenge for auto dealerships. Nearly one-third of the dealerships surveyed indicate they do not have a succession plan in place. More than 285 dealership owners nationwide were represented in this study, and nearly 80 percent of the respondents were owners. The number one inhibitor for succession planning was listed as timing and the current owner’s willingness to step back. Faced with unique challenges, dealers are pushing off succession planning by more than five years. While nearly 50 percent of the dealerships surveyed
recognize succession planning is important, they also admit they haven’t dealt with it yet. For those that have a plan in place, 79 percent are looking at internal transition. “Different from other studies you may find in the market, this succession planning survey focused on the state of mind of the owners responding, rather than some of the hard metrics on the number of retiring dealership owners,” said NAADA president Steve Hewitt. The full findings will be released in the coming months as part of a succession planning series. The articles will offer solutions to the challenges disclosed in the survey. For more information, visit www. autodealeradvisors.com/2016-dealershipsuccession-survey-results/. NAADA is a nationwide network of accounting firms that specialize in working with auto dealers and their ownership teams. Collectively they represent more than 1,000 dealerships throughout the country from single point stores to multistate enterprises. To learn more about NAADA, please call 609-890-0800 or visit autodealeradvisors.com.
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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AUTO DEALER NEWS October/November 2017
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INDUSTRY NEWS
AUCTION NEWS
GREENSBORO AUTO AUCTION INTRODUCES NEW MEMBER Karen Miranda
Greensboro Auto Auction said their fleet management team is complete with the new addition of Karen Miranda. The Greensboro, N.C., auction is buzzing with excitement about the family’s new member. Karen comes to Greensboro with over 15 years of auction management experience. Starting as a sales representative at ABC Auto Auction in Perrysburg, Ohio, Karen was quickly promoted to sales manager, then fleet manager, and finally landed the role of general manager. She gained digital sales and management experience with America’s Auto Auction in Pittsburgh, Pa. before finally joining the GAA team
BY AUTO REMARKETING STAFF
early this summer. The auction said right off the bat Karen has brightened their lanes with an unmistakable positive attitude and can-do nature. She fits into GAA’s southern hospitality business model with ease. Not only a great personality fit, Karen brings the leadership qualities needed to guide her team to new levels of greatness. GAA is very excited to put her market data analysis skills to use as she finds new areas of improvement. The auction is constantly looking to grow and improve, and Karen offers a brand new set of eyes to look over processes and add new ideas to the current plan. For more info about Greensboro Auto Auction please visit greensboroaa .com. You can contact Karen about fleet remarketing opportunities at kmiranda@greensboroaa.com.
DEALERSOCKET NAMES NEW CEO Sejal Pietrzak
DealerSocket has a new president and chief executive officer. Sejal Pietrzak takes over for Jonathan Ord, the co-founder of the company who has been its CEO for 16 years. Ord remains a strategic investor and board member. Pietrzak spent the past 12 years at ACTIVE Network, a provider of intelligence solutions, where her most recent post was chief administrative officer. “I am particularly excited to support Sejal and DealerSocket’s leadership as a continuing investor and board member,” Ord said. “My interactions with Sejal have made it abundantly clear to me she is the right CEO moving forward, as DealerSocket continues to scale and innovate. She has the skills, experience and passion to continue to grow the company and serve our customers for years to come.”
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SALES MATTERS
BY JOHN CHAPIN
CLIENTS FOR LIFE From First Sale to Long-Term Relationship
I’ve had a lot of people ask me about client retention. It’s something I’ve been very successful at over the years. Here are the steps I recommend to navigate from the initial sale all the way through the entire long-term relationship. Step 1: Verbally thank the client for his business when you close the sale. Step 2: Review expectations and what will happen next. Whatever your particular steps are, go over these steps with the client and let him know how and when he will be kept up to date. Step 3: Ask the client if he has any final questions, thank him once again for his business, and reiterate when he will next hear from you or someone from your company. Step 4: Send a handwritten thank you note the day you get the order. Sign the thank you note in blue ink and include your business card. Note: Depending upon the size and significance of an order, it may be appropriate to thank a client with more than a thank you note. You may also do this for more than just the initial order. Here are some various ways to do that: • Small gifts: golf balls, nice pens, cups, etc. • Gift certificates. • A gift to one of his favorite charities. • An investment in client’s business or something else they are involved in. • Vacations or trips to trade shows and other industry events. Step 5: Introduce other team members they might be working with. Step 6: Follow up and deliver what you say you’ll deliver. At a minimum you must deliver what you say you will, when you say you will. Ideally you’ll deliver more than you say you will. Always try to give something extra. Step 7: Call or stop by in person before, during, and after initial delivery of the product or service. It’s particularly important in the beginning of the relationship to communicate often. This may feel like micromanaging and it is. You have to ensure everyone does what they’re supposed to do
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AUTO DEALER NEWS October/November 2017
and everything goes smoothly on this initial sale. It’s best to follow a checklist. Step 8: Survey the client on how you did. Do this step in person or on the phone. What did you do well and what could have been done better? Next, shift your focus to building a lifelong relationship. Step 9: Reach out 18 to 26 times per year. Reach out in a variety of ways: phone calls, emails, regular mail, in-person visits, FedEx, etc. Three contacts: Send out a holiday, birthday, and anniversary card. In addition to sending out holiday cards, you can send gift baskets, bottles of wine, champagne, and other items to your best clients. Also, Thanksgiving and New Year’s Cards stand out because few people send them. Here are some other ways to reach out to clients 18-26 times: • Send cards for promotions, new babies, and other celebratory events. • Send get well cards. • Visit clients in the hospital. • Send items pertaining to their interests and hobbies such as books and T-shirts. • Act on personal information about your clients’ family members and send out notes to acknowledge graduations and similar events. • Get your clients on the mailing list for company publications. • Develop your own newsletter or monthly article and send it out to your clients. • Attend events sponsored by clients. • Do business with your client and send them business if possible. • Send copies of industry articles that may affect their business or simply be of interest. • Send a good business book or resource. Note: You are an expert. You are expected to be learning, reading, and passing applicable and valuable information on to your clients and prospects. • Send information out on new products. • Send promotional items. • Donate money to their favorite charities or events they sponsor. • Drop by with baseball tickets. • Take clients to lunch, dinner, other sporting events, shows, or out to play golf or some other activity. • Connect them with other companies, other people they’d like to meet, and other professionals such as lawyers, CPAs, insurance agents, realtors, and vendors. • Send them potential new employees. • Connect on social media. (Use discretion and your best judgment here.) Step 10: Practice these overall
client rules: • Always make the client your number one priority. • Keep communicating. Focus on good, solid communication. • Personalize the relationship and always seek to build and strengthen it. • Let clients know you appreciate their business and you don’t take them for granted. • Focus completely on the client and how you can help. Always do what’s best for them. • Stay on your toes and do what you say you’ll do. • Go above and beyond. Deliver more than you say you will. Note: You don’t need to follow this plan with all your accounts, only with the clients you want to keep. Most likely these are your largest clients. If you follow the 80/20 Rule, you will be doing this with your top 20 percent of accounts that give you 80 percent of your business. If you care about your clients, treat them right, build strong relationships, and keep them happy. You will rarely have to worry about having enough business. Not only will they stay with you, they will also refer business associates, friends, and family. In addition, if you’re working with happy, lifelong clients all day, your work and life will be much more enjoyable. JOHN CHAPIN is a sales and motivational speaker and trainer. He has over 27 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www.completeselling.com or email johnchapin@completeselling.com.
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MARKET WATCH
BY AUTO REMARKETING STAFF
STUDY REVEALS MEN’S & WOMEN’S FAVORITE CAR COLORS Yellow and Teal iSeeCars.com recently released the findings of its annual Car Color Preferences by Gender Study, which found men’s interest in yellow and orange vehicles has significantly increased this year. The study also found that men’s new preferred car color is yellow. Last year, orange ranked first among men. Women’s current favorite car color is teal. The study reveals they have a stronger preference for teal cars by 19 percent. More Details on Preferences Since last year, men’s preference for yellow cars increased 63.8 percent, and their preference for orange cars increased 41.7 percent. iSeeCars said an increase in market share of yellow convertibles could explain men’s growing preference for yellow. Convertibles made up only 11.8 percent of
yellow cars in the study in 2015, and last year that number rose to 13.9 percent, according to the automotive data and research company. Because convertibles make up only 1.9 percent of all cars, iSeeCars.com suggests this finding illustrates men’s stronger interest in sporty and flashy cars when compared to women. Currently, men favor yellow more than women do by 33.9 percent, followed by orange (32.6 percent) and black (14.2 percent), according to the study. As for the results among women, iSeeCars found that since the first color preferences study in 2013, this is the first year teal has shown up in the women’s rankings. Ranking fifth at 4.3 percent, green also appears on the women’s list for the first time. iSeeCars said teal reflects an interest in more practical cars, such as minivans. While the minivan makes up just 3.7 percent of all cars, 7.8 percent of all teal vehicles are minivans, according to the site. Additional Differences “Men and women don’t just like different colors,” iSeeCars.com chief executive officer Phong Ly said. “Our research shows men’s preferences are much stronger than women’s, and
the top color choices for both of them have actually grown to the highest percentages we’ve seen in four years.” Additionally, men’s and women’s differing preferences are also reflected in the prices they wish to pay. “If you compare prices for pre-owned cars, the average price for men’s favorite colors is 22 percent more expensive than women’s favorite colors,” Ly said. Men’s top ranked yellow cars are 86 percent more expensive than women’s teal cars, according to iSeeCars.com. On average, the cars in the colors men prefer cost $3,258 more than women’s choices. The study found that among women, $14,938 is the average used car price for the colors they prefer, compared to $18,196 for the colors men favor. The average used price for a yellow car is $20,601, while the average for teal cars is just $11,053. iSeeCars.com looked at data from consumer car inquiries between calendar years 2015 and 2016. The site said it analyzed more than 700,000 consumer inquiries and nearly 30 million car sales to identify car color preferences by gender. According to the company, it categorized male and female study responses based on participants’ first names.
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 lead 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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AUTO DEALER NEWS October/November 2017
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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ASSOCIATION NEWS
CIADA CONVENTION HIGHLIGHTS
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AUTO DEALER NEWS October/November 2017
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ASSOCIATION NEWS
CIADA NAMES QUALITY DEALER OF THE YEAR M&M Auto in Lumberton Carolinas Independent Automobile Dealers Association recently awarded its top award, the Quality Dealer of the Year award, to M&M Auto in Lumberton, N.C. At the awards ceremony, the highlight of the annual expo held each year, CIADA presented the award to brothers Chris Moore and Jerry Padrick, Jr., who accepted the award. M&M Auto in Lumberton was selected from several candidates judged on a variety of factors, such as contributions to the auto industry and the association and community involvement. M&M Auto was nominated by another Quality Dealer of the Year, Michael Darrow of the AutoFinders in Durham, N.C. CIADA recognizes the very best of the best at its annual meeting. This year was no different. The CIADA Quality Dealer of the Year award is very well deserved.
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Starting in the car business over 30 years ago, and then taking over from their father about 25 years ago, the 2017 CIADA Quality Dealer of the Year has done it all. From a two bay garage, to a three acre lot then expanding to add a second location in 2015, M&M Auto of Lumberton has never looked back. Last year M&M sold 514 vehicles and the brothers have built a family business that puts the customer first. Their father taught them plenty. From being frugal with their money to doing the right thing for their customer, his advice has paid dividends to their dealership. A member of the CIADA for over 20 years, brothers Chris and Jerry have built their dealership into a family owned and operated business whose focus is on customer satisfaction. Not only is M&M Auto Sales committed to their customer, they are committed to their community as well. Active in their church, they are also involved with Park and Rec as youth baseball and soccer coaches. They are involved with the Robeson County
4-H, the Relay for Life and have made local disaster relief donations to others when tragedy struck their neighbors. CIADA executive director John Brown said, “Jerry and Chris are an inspiration to all dealerships across the Carolinas and the country. M&M Auto walks the walk. It is truly a pleasure to recognize dealers in the Carolinas who achieve greatness. I look forward to having M&M Auto compete for the National Quality Dealer of the Year award in June 2018.” Jerry Padrick, Jr. commented after accepting the award, “It is an honor to be recognized by one of the top IADA’s in the country. We are very humble people and we just do the right thing for our customers. We surround ourselves with the best employees and we learn from others in the community. We just treat others like we would want to be treated when you buy a car. We do the right thing because the right thing is always the thing to do!” The National Quality Dealer of the Year Award will be presented at the annual National Independent Automobile Dealers Association convention and expo in June 2018 in Orlando, Florida.
October/November 2017 AUTO DEALER NEWS
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ASSOCIATION NEWS
DARLA BOOHER PRESENTED WITH PRESIDENT’S RING Honoring Outgoing President
Darla Booher, president of Deal Depot in Greer, S.C., has been your association president for the last year. Darla is only the second female dealer to be named National Quality Dealer of the Year by the National Independent Automobile Dealers Association. Over the years, Darla Booher has earned an exceptional reputation, not only with her customers and staff but throughout her community and within our industry. Giving back to her community has always been a team effort for Darla and her staff. Darla’s rise from a struggling single mother to a successful businesswoman has been built on hard work, trust and integrity. As she tells her customers, “I wouldn’t sell you a car that I wouldn’t put my grandchildren in.” Booher built her business from zero – or very close to it. After years working for others in the car business, she set out on her own, using her savings, credit cards and a personal loan to open a dealership in Greer, S.C. When it
Lori Kahre (Right), NextGear Capital’s director of industry events and trade shows, presents Darla Booher the president’s ring.
opened in 2001, she had one employee and only 12 cars. Now Deal Depot, a thriving Buy Here-Pay Here dealership, has an additional location in nearby Spartanburg, a related finance company and a towing and recovery company, an inventory of more than 100 vehicles and a staff of 18. Booher became an NIADA Certified Master Dealer in 2007 and has been active in the Carolinas IADA. She has earned a loyal customer base and has an outstanding reputation among her customers, staff and community, with a “dedication to putting people above profit,” she said. That philosophy also shows in Booher’s charitable efforts and community
involvement. She is active in the Sertoma (Service to Mankind) Club, supporting and volunteering at a free summer camp for disadvantaged children, as well as involved with the Miracle Hill Ministries Shelter, Carolina Community Works, Harvest Hope Food Bank, Greer Relief, Greer Community Ministries, Special Olympics, South Carolina School for the Deaf and Blind and many others. On behalf of the entire Cox Automotive family, NextGear is proud to honor Darla Booher with this CIADA President’s Ring. Congratulations, Darla!
ASSOCIATION NEWS
CIADA COMMUNITY SERVICE AWARD Tracy Myers
The CIADA Community Service Award is sponsored by Waymaker Learning Corporation. CIADA strives to encourage our members to be active in the communities they serve. An active community benefits when businesses give back, and our businesses benefit from a prosperous community. This year’s winner of the CIADA Community Service Award is an active dealer in all of the communities he serves. Tracy Myers, owner of Frank Myers Auto Maxx, has been a leader and a giver in the community, always giving back when he could and never asking for anything in return. In 2011, many say he outdid himself when he had the vision to take his passion for sports entertainment and use to raise money to provide toys and Bibles to less fortunate children during Christmas. He created the WrestleCade fundraiser and partnered with The Christmas Toy Drive to benefit Salvation Army.
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AUTO DEALER NEWS October/November 2017
What began as a onetime fundraising event is now entering its 6th year and is one of the largest annual three-day wrestling events in the world! Last year alone, an estimated 6,000 wrestling fans from as far away as Norway attended the event, and dramatically boosted the local economy with tourism dollars. Plus, 6,506 children in the greater Winston-Salem area received 55,690 toys from Salvation Army
and the lives of more than 8,500 families were impacted. This is just one of many, many ways Tracy is involved and gives back to his community. CIADA is proud to announce the 2017 Community Service Award winner: Tracy Myers of Frank Myers Auto MAXX.
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INDUSTRY WATCH
ALERT Stolen Vehicles
VWGoA has reason to believe the vehicles listed have been stolen with the intent of being resold at auction. VWGoA has alerted the proper authorities who are in the process of conducting an investigation into this matter. If you currently possess or come into possession of any of the referenced vehicles, VWGoA strongly urges you to put a permanent hold on these vehicles to prevent their sale and contact VWGoA immediately. In addition, VWGoA asks you contact them immediately if you have or obtain any information regarding the listed
vehicles. VWGoA also requests your cooperation in any investigation of the current status, title status, disposition, and sale, if any, of the vehicles listed. Contact information: Christine Mennel VW Credit, Inc. Phone +1 (248) 754-9982 christine.mennel@vwcredit.com Thank you for your cooperation in this matter.
INDUSTRY PERSPECTIVE
BY JOE OVERBY, AUTOREMARKETING SENIOR EDITOR
HAPPIER SERVICE CUSTOMER MAY BE ONE WHO SCHEDULES ONLINE Can Help Ensure Quality Experience
Among dealership service customers who scheduled their appointment online, more than three-fourths (76 percent) said they were apt to go that route again, according to research from Cox Automotive. What’s more, setting up the service visit online creates a path toward a happier customer, said Xtime vice president of marketing and managed services Jim Roche. The problem is many customers don’t know online appointment-setting is an option. According to the same research from Cox Automotive, 45 percent of customers who didn’t use online scheduling were not aware it was offered.
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AUTO DEALER NEWS October/November 2017
“That is a surprising and disappointing fact,” Roche said. “It’s on us in the industry that we have that lack of awareness.” Fortunately, he said, it’s a “low-hanging fruit” that dealers can do something about. For instance, he urges dealers to send an email blast to customers at least twice a year to let them know that online service appointment scheduling is available – and beneficial. “Setting the appointment online really lays the foundation downstream for a great experience,” Roche said. “Because you get the day and the time you want, the dealer can be prepared for you. The system can make sure the reservation is managed so they can spend as much time with you (as needed). It can look up open recalls on your vehicle.” It can also help ensure the experience is a high quality one, which leads to the uptick in dollars spent. In fact, scheduled visits tend to pull in $54 more per visit than the walk-in visit. “They spend more because it’s a better experience,” Roche said. And it’s one that has been planned for, whereas the walk-in service appointments
might not always been planned. If the consumer has scheduled the appointment, it likely means time and money has been budgeted, too, Roche said. Plus, the dealer has information on the specific issue with the car along with the day and time of the appointment. “You’ve laid the foundation for the dealer to handle your needs in a much smoother and prepared way,” Roche said. Beyond the periodic email blasts, Roche also advises dealers to explain the online appointment-setting process during the delivery of the vehicle. He urges dealers to walk their new customer into the service department and introduce him or her to the service advisors. It’s important to raise that awareness and “repeatedly” tell customers about online service scheduling as an option. People are often creatures of habit, meaning they’ll continue scheduling their service appointments the way they always have. So if that’s to be changed, the benefits of online scheduling have to be communicated.
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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
AUTO DEALER NEWS October/November 2017
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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