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AUTO DEALER NEWS

C A R O L I N A S I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I AT I O N April/May 2011

MOBILE COMMERCE TAKES CENTER STAGE ALSO The Art and Science of Used Auto Inventory PLUS Charleston Auto Auction Receives Award

DALLAS, TEXAS Permit No. 2079

PAID PRSRT Standard U.S. Postage

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."(";*/&CONTENTS 8 Mobile Commerce Takes Center Stage 12 The Art and Science of Used Auto Inventory 19 Charleston Auto Auction Receives Award

NIADA/Manheim Community Service Award

Manheim, the world’s largest provider of vehicle remarketing services, cares about its employees, the environment and the communities it serves. From fundraising drives and tutoring kids after school to supporting long-term conservation efforts, Manheim and its employees are dedicated to giving back to their communities and know independent vehicle dealerships across the country share in this commitment. For the first time this year, Manheim is recognizing and honoring those dealerships by awarding the 2011 National Manheim Community Service Award at the 65th NIADA Annual Convention and Expo. For more information, contact Georgia Brown, NIADA director of education, at 817-640-3838 or download the nomination form at niada.com (click on the Manheim Dealers Edge link under the Services tab).

&9&$65*7& COMMITTEE

CIADA STAFF

PRESIDENT CHARLES SAVERANCE SAVERANCE FAMILY AUTO CENTER FLORENCE, SC

&9&$65*7& %*3&$503 JOHN BROWN EXT 105

PRESIDENT ELECT TRACY MYERS FRANK MYERS AUTO MAXX INC. WINSTON SALEM, NC

CARL MISCHINSKI Dealers Insurance EXT 109

NC VICE PRESIDENT MICHAEL DARROW THE AUTO FINDERS INC. DURHAM, NC

CATHERINE NEELY Office Manager EXT 102

SC VICE PRESIDENT MALCOLM SHEALOR ASHLEY PREFERRED AUTO GROUP INC. MT. PLEASANT, SC

LISA KLUTTZ Forms, Membership and Education EXT 107

TREASURER LUKE GODWIN GODWIN MOTORS INC. COLUMBIA, SC

ADVERTISERSINDEX ADESA ...................................................... 15 AutoTrader.com ..................Inside Back Cover CarMax Auctions .......................................17 Cars.com ....................................................11 Charleston Auto Auction................ Back Cover Chase ...................................................... 19 Manheim.com .............................................. 7 SmartAuction ............................................. 13 Spartan Financial Partners ............................ 5 STARS GPS......................... Inside Front Cover Sterling Credit ............................................ 9 United Acceptance .....................................16 Wayne Reaves ........................................... 25 Western General / Protective ...................... 3

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION 888 /*"%" $0. t 888 /*"%" 57 NIADA HEADQUARTERS: #308/ #-7% t "3-*/(50/ 59 1)0/& '03 "%7&35*4*/( */'03."5*0/ $0/5"$5 530: (3"'' 03 530:!/*"%" $0.

THE CAROLINAS INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION IS PUBLISHED BI-MONTHLY BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE (817) 640-3838. PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF CIADA OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF NIADA, DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT Š 2011 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED. 45"5& ."(";*/& .(3 4"-&4 Mkhr @kZ__ mkhr9gbZ]Z'\hf EDITOR Fbd^ AZk[hnk faZk[hnk9gbZ]Z'\hf 130%6$5*0/ .(3 CZ\h[ D^kgl cZ\h[9gbZ]Z'\hf "35 130%6$5*0/ .(3 <akblmr AZrg^l \akblmr9gbZ]Z'\hf 13*/5*/( Nieman Printing

CIADAOFFICE 1 0 #09 )"33*4#63( /$ 1)0/& 03 '"9 WWW.THECIADA.COM CIADA IS A NON-PROFIT 501(C)6

4&$3&5"3: WILL DAVIS G & B AUTO SALES OF LOUISBURG INC. LOUISBURG, NC

JAYNE HARRIS Education and Membership EXT 111

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 more‌far 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!

LESLIE WASLO Insurance Services EXT 110

CHAIRMAN OF THE BOARD BOBBY HOFFMAN SPEC HOFFMAN AUTO SALES ASHEBORO, NC

OVE.COM HONORS TOP PERFORMING PARTNERS WITH OTTO AWARDS OVE.com, Manheim’s 24/7 bid or buy now wholesale vehicle marketplace, has awarded 10 auction locations across the country with Otto Awards, recognizing them for being outstanding partners in the OVE.com marketplace.

The awards, which are named for the company’s ferret mascot, were presented at a reception prior to the Conference of Automotive Remarketing, held March 9-10 at Caesars Palace in Las Vegas. The Otto Awards were presented to two separate winners, one Manheim operating location and one independent auction, in each of five categories.

THE CATEGORIES AND WINNERS FOR 2011 ARE: Best Overall: DAA Northwest; Manheim Nevada Most Innovative: Norwalk Auto Auction; Manheim Ft. Lauderdale Most Sold (Commercial): Greensboro Auto Auction; Manheim Pennsylvania Most Sold (Dealer): Dyer Auto Auction; Manheim Pennsylvania Highest Year-Over-Year Growth: Greater Kalamazoo Auto Auction; Manheim Milwaukee

“Congratulations to the locations and their teams for being recognized with 2011 Otto Awards,� said Joe George, group vice president, Manheim Online Solutions. “This year’s winners are meeting the needs of a wider range of buyers and sellers by tapping into online resources such as OVE.com. We’re proud to be a part of their successful sales strategies and for leading the way in providing customers the most comprehensive remarketing services in the industry.�

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Without profits, you don’t get any new jobs and you lose what you do have.

A MERICA’S BUSINE S S IS SMALL BUSINESS BY JOH N BROWN

CIADA members are small business In fact, NIADA member owners.

research indicates that a little over 80% of members have ten or less employees and approximately 75% operate from one location. If America’s Free Enterprise System is to flourish and help put the Nation back to work, small business owners including independent dealers in North and South Carolina will help lead the way. The world is certainly an interesting place. Since the end of the Cold War governments in the former Soviet Union and in Eastern Europe have been chasing a “Free Enterprise” type of capitalist system and a free-market based economy. Every evening on the nightly news we see the Middle East in turmoil as citizens demand to be free from their government. By contrast, here in America, on a regular basis, we hear about the evils of profits and how markets, from automobiles to healthcare to mortgage lending, must be regulated to protect the citizens from greedy, rich business owners. Private entrepreneurship, ownership, risk based rewards; competition and choice are continuously questioned by elected leaders, community leaders, the media and individuals. In my opinion - in simple terms - we have become a Nation who loves jobs and hates employers. CIADA members have consistently come under attack with more and more federal regulation, more and more frivolous lawsuits, more and more state and local regulation that threatens the profitability of our future. Without profits, you don’t get any new jobs and you lose what you do have. For CIADA members and industry partners we must stand together and raise our voices to say that succeeding as a small business owner is as important as “baseball, hotdogs and apple pie…” As your Executive Director I have written and have taken (and will continue to do so) every opportunity to speak about how your CIADA will work to be your partner to help improve the reputation of the independent dealer, help you sell more cars and help your dealership make more

money. Let’s all get comfortable talking about being successful business leaders. We do not have to apologize for being successful. We need to talk more about how to make every dealer and all your employees more successful. As the only non-profit organization focused solely on representing the independent automobile dealer in the Carolinas, we will continue to promote, educate and help advance your dealership by providing information relative to your business and industry; advance a better understanding of your business within the Carolina economy and with legislators, regulators and policy makers, and; protect, defend and promote the free enterprise system and your ability to make a profit. While I will continue to do everything I can do as the Executive Director of CIADA to help make you successful, I also need your help. I need for you to continue investing in CIADA as the only non-profit association that focuses on representing your business. By renewing your membership annually with CIADA you have the opportunity to actually “make money off your membership.” I told you I was going to do everything I can do to make you more profitable and I started with your membership. You will continue to receive our VIP Card that is worth more than two times your actual membership costs and you have access to many other partners with discounts that you can use both for your dealership and personally. Additionally, when North Carolina Dealers need to meet State Continuing Education requirements we encourage you to enroll in our classes. CIADA has provided training for more independent dealers than most, if not all the other providers combined. Dealers throughout the Carolinas are our best advocates to promote CIADA and all we do for you and your industry. I also want to take this opportunity to personally invite you to attend the CIADA Annual Convention and Trade Show August 4-7 at the Marriott Resort & Spa at Grande Dunes in Myrtle Beach, SC.

The CIADA Quality Dealer Award will be presented at the Annual Convention. This Quality Dealer Award recognition is CIADA’s most prestigious award. Nomination and selection brings high honor to the individual and the Dealership. You serve as an inspiration and model for other independent dealers in the Association. The winner of the State Quality Dealer Award must agree to participate in the NIADA Quality Dealer Awards

THE DEADLINE FOR NOMINATIONS IS JUNE 17, 2011 AND THE NOMINATING FORM CAN BE FOUND ON THE CIADA WEBSITE, WWW. THECIADA.COM AND IN THIS EDITION OF THE MAGAZINE. recognition banquet to be held at the NIADA Annual Convention and Expo in 2012. (Should you win the State Quality Dealer Award, we will fund a portion of the expenses associated with attending the National convention.) The deadline for Nominations is June 17, 2011 and the nominating form can be found on the CIADA website, www. theciada.com and in this edition of the Magazine. On behalf of CIADA, I thank you for your support and membership. If you are not a member, I invite you to join the only non-profit organization focused on representing the independent automobile dealer in the Carolinas that is also part of a national association who represents only independent automobile dealers. Customers want to do business with those who are vested in their communities and belong to local civic organizations and industry related trade groups. Join today and be part of our growing influence in the Carolinas. Sincerely, John Brown Executive Director

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MOBILE COMMERCE

WITH CONSUMERS LOOKING FOR VEHICLES, PARTS AND ACCES SORIES This past holiday season, surveys and statistics showed what many analysts and industry observers were thinking: mobile commerce is growing by leaps and bounds, and every industry is in on the trend, including automotive.

In 2011, smartphones are forecasted to account for half of the mobile phone market, according to The Nielsen Co. On top of that, an ABI Research report says mobile online shopping will generate $119 billion in sales by 2015, accounting for 8 percent of the e-commerce market. When car dealers make it easy for their business to be found through a mobile web browser, loyalty campaigns, marketing initiatives, text promotions and sales can attract and retain customers. What are consumers browsing with their smart phones? The same types of items they started browsing on computers: researching purchase decisions, cost comparisons and finding the location of physical items. Recently, eBay reported a substantial increase in mobile traffic, where sales more than tripled in 2010 to near $2 billion in gross merchandise volume. Last year, vehicle purchases led all categories on eBay mobile applications in terms of GMV, while parts and accessories were number two in terms of the total number of items purchased. Dealers know when they have a physical lot, customers still come to kick the tires when the sales office is closed. Now, today’s consumer might still come to the lot, but he or she will also pull out a smart phone, check the hours of the dealership and research the same make and model for competitive pricing. The same thing is happening even if the consumer doesn’t drive to a physical lot. A consumer may be in his garage working on a car and need to find a part or accessory. Instead of going inside and turning on the computer, he’s browsing his smart phone to find the part, price and local availability. Just as e-commerce has completely changed the way we do business, wireless devices and smartphones are again altering what we know about consumers’ purchasing behaviors. Seeing similarities in mobile commerce and e-commerce, auto dealers ask themselves a familiar question:

would anyone really buy a car from their smart phone? In 2010, more than $118 million in car and truck purchases were made via the eBay mobile application – more than 12,600 vehicles were sold. Parts were the second biggest category in mobile last year, with more than 911,722 parts purchased, and more than $60 million in sales. For independent dealers, mobile applications and mobile commerce are the must-have digital tools of 2011. With smartphones capable of surfing, downloading apps and co nnecting with coworkers and friends in an instant, researching and shopping for vehicles, parts and services is a natural extension. For example, a business traveler waiting at an airport may use that downtime to look for a needed part for his car or browse available vehicles for a new truck. If an independent dealer’s inventory is not readily available on a mobile app, chances are there’s an entire customer segment that may not see what’s for sale. A recent ForeSee Results survey found 30 percent of consumers used a mobile phone to research products on the Internet, compared with 11 percent in 2009. Those making a purchase through a mobile phoWWne increased from 2 percent in 2009 to 11 percent in 2010. For example, Tilo Steurer, founder and owner of Eurocar, the West Coast’s largest independent dealership of its kind, sells and buys vehicles and regularly uses eBay’s mobile app to buy cars, parts and accessories. “I purchase anywhere from five to 10 cars every month, most of the time through the eBay mobile app,” Steurer said. He also uses the eBay mobile app to keep track of his business while not in the office. With any form of sales – online, mobile or in-store – customers consider the credibility of the seller and business before making a purchase. Building that credibility takes consistent communication, which is made easier when dealers can keep in touch through mobile and online sources. “Communication is very important, especially when making an expensive online purchase such as a luxury car,” Steurer said. “With the eBay mobile app, I can re-

spond more quickly to customer questions, which builds credibility and increases the opportunity for a sale.” To accommodate this growing trend, eBay Motors is launching a mobile app that will provide a customizable buying experience optimized for vehicles, parts and accessories, as well as unique social and community features for the enthusiast.

FOR DEALERS, HAVING PARTS, ACCESSORIES AND VEHICLES AT A CONSUMER’S FINGERTIPS IS AN IDEAL WAY TO EXTEND MARKETING AND SALES WITHOUT A LOT OF DEVELOPMENT AND TECHNICAL EFFORT. Features include VIN scanning and a virtual garage to give enthusiasts personalized information. After searching for a vehicle, users can share it with friends and social networks or ask the seller a question. Users can create “car cards” for their vehicles which display photos and stats about the vehicle and can be used in searches for parts and accessories. On the garage tab, consumers can input and store the vehicles they own or scan the VIN barcode with the iPhone’s camera to populate information. In the garage, car owners can create to-do list for vehicle projects, store custom parts searches and share the garage with their social network. For dealers, having parts, accessories and vehicles at a consumer’s fingertips is an ideal way to extend marketing and sales without a lot of development and technical effort. Mobile commerce is still in its infancy but is growing at a faster pace than e-commerce. With the Internet available wherever consumers are with their smart phones, it’s only a matter of time before mobile commerce becomes a dominant form of purchasing. Because of the similarities to e-commerce, consumers are quickly adopting m-commerce and expecting businesses to be on board.

BY CLAYTO N STAN FI ELD, EBAY MOTO RS 8

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FEBRUARY 2011

FEDERAL ADVOCATES LOBBYING REPORT Federal Advocates is NIADA’s governmental advocacy partner. To read past lobbying reports, visit www.niada.com/legislative_and_legal.php

SPRING

INTO ACTION NOW VIE W OVER 450 HOURS OF DE ALER EDUC ATION SE S SIONS A S WELL A S OTHER SPECIAL TR AINING SEMINARS AND MONTHLY DE ALER TIP S 24/7 AT W W W.NIADA.T V

&/5&3 4*5& "/% $-*$, 0/ /&8 130(3".4

V 112th Congress Issues On Feb. 3, Federal Advocates met with NADA to discuss upcoming issues for the 112th Congress and various pending matters. As we jointly see it, the issues for Congress are fuel economy and green gas within the context of energy legislation, the Consumer Financial Protection Bureau and its mandates, the Toyota Safety Bill (which we both believe is dead), possible Congressional oversight that may impact the industry and the National Highway Traffic Safety Administration reauthorization effort (a priority of Sen. Jay Rockefeller, D-WV, who’s chairman of the Senate Commerce Committee). Harrington also mentioned a General Accounting Office study (see separate heading) which Rep. Ed Towns, D-NY, and chairman of the 111th Congress House Governmental Affairs Committee, requested on section 310 of the Senate Toyota bill. It would’ve required dealers to provide info to buyers on a vehicle’s history. Lastly, we both agreed it’s important to continue monitoring relevant activity of the FTC. V Consumer

Financial Protection Bureau Meetings

reluctance to extend credit. A law enacted in September 2010 increased the loan limits and in October, the SBA adopted a rule expanding eligibility for the program to the majority of dealerships. The SBA also suspended the program in October and has been working since with lenders in an attempt to increase their participation. The pilot program will continue through September 2013. To address various issues related to the program, a conference call was held with Whann, and the SBA’s Steven Smits, associate administrator, and Patrick Kelley, senior advisor, Office of Capital Access.

V Department of Defense Pam McClelland, a DOD senior program analyst, has taken over for Dave Julian and Frank Emery in the Office of Military Community and Family Planning in the Office of the Deputy Undersecretary of Defense. Per a conversation with her on Feb. 15, NIADA will send information to her, at her request, on how the association can assist service members in purchasing pre-owned vehicles. Pending her review, a meeting or conference call will be scheduled with Whann.

V GAO Study The GAO review was requested by Rep. Towns earlier last year that focused on the auto safety recall process. As part of the review, GAO is speaking with all of the stakeholders in the process such as dealerships and dealership representatives. GAO’s audit work is nearing its completion and GAO is due to issue the report on June 15. Pending that, Jim Leonard, an analyst with the GAO’s Physical Infrastructure Team, has discussed with NIADA its views on the issue and the role of pre-owned vehicle dealerships. NIADA’s Mike Linn V SBA Floorplan Financing and Whann discussed this issue with Jim Program Leonard and other analysts of the GAO The federal government relaunched its earlier this month. suspended floorplan financing program for small dealerships, this time with loan limits V White House Meeting of $5 million rather than $2 million. The Small Business Administration’s new rules, Scheduled A March 4 meeting with Steve Croley, which addressed nuts-and-bolts questions special assistant to the President for of how the financing will work, were published online in the Federal Register on Justice and Regulatory Policy in the Office Feb. 8. The Obama administration began of Domestic Policy, has been scheduled a pilot floorplan program in May 2009 to introduce the association to the during the depths of the recession, but it administration and to provide a briefing never got off the ground because of banks’ on its views on auto consumer issues. On March 4, NIADA General Counsel Keith Whann and Federal Advocates will be meeting with Holly Petraeus, director of the Consumer Financial Protection Bureau’s Office of Service Member Affairs, to introduce NIADA and to discuss various auto industry issues related to the newlycreated CFPB. In addition, a meeting request is pending with Richard Cordray, CFPB general counsel, to discuss various consumer auto issues and the soon-to-be appointed Consumer Advisory Board.

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THE ART AND SCIENCE OF USED AUTO INVENTORY Building a profitable used auto inventory requires having the right information and the talent to know how to use it. Over the years, I’ve been blessed with tremendous mentors who have provided me with valuable insights, one of which is managing a used vehicle department is both a science and an art. While there are no

cookie-cutter solutions applicable to every scenario, there are tried and true blocking and tackling strategies that can help any department maximize results. When it comes to proper inventory mix, there are several ways a dealership can study information to improve volume,

USED CAR MANAGERS SHOULD BE AWARE, AT THE VERY LEAST, OF THE TOP-SELLING VEHICLES IN THEIR MARKET BY MAKE, MODEL, AND YEAR AS WELL AS THE TOP-SELLING VEHICLES AT THEIR STORE gross and ROI. However, before the information can be broken down, the store must have the information. While this may seem obvious to some, I am routinely presented with departments that fail to accomplish this seemingly simple task. Used car managers should be aware, at the very least, of the top-selling vehicles in their market by make, model, and year as well as the top-selling vehicles at their store. All too often when I ask used auto managers to name the three top-selling used vehicles in their markets, they look at me like a deer in headlights. Or, they automatically respond “Honda Accord” or “Toyota Camry.” That’s great! What year? What trim level? What mileage band? How

many of these have been sold at your store in the last 90 days? What was the average age when it was sold? There are several tools available to help managers accumulate this data, such as Auto Exchange for internal data and Cross Sell for external data. Once this data is collected, it is imperative management consistently identify which vehicles sell in their market (internal and external). That’s the science part of the equation; it’s not especially difficult to identify commodity type vehicles and, if you’re willing to travel or pay, to procure them. Further breakdown of historical internal and external trends is, however, necessary. Specifically, it would be beneficial to track sales volume, aging, and gross profit for specific COS bands. These could be broken down as follows:

$0 – $5000 $5,001 – $10,000 $10,001 – $12,500 $12,501 – $15,000 $15,000-plus The used auto dealer should be aware of and actively track each of the above categories for each price band in used cars, trucks, SUVs, and vans, comparing the current stocking mix to what has yielded the greatest success. The categories can be broken down further into import/domestic categories as well, if needed. This information, coupled with knowledge from external tools, is used to direct buying specific inventory at specific price points to generate specific results. The art of used vehicle inventory comes from identifying and procuring vehicles that put your store ahead of the curve. For example, a few years back fuel prices spiked and, as a result, highly economic, smaller pre-owned vehicles were suddenly at a premium, while large pickups and SUVs could be bought for a dime a dozen. The market was quickly flooded with these gas guzzlers, but few people had the vision or foresight to accumulate them. Those who did were those who had the knowledge and experience to understand the

ebb and flow of the used car market, so they loaded up on these vehicles at very cheap prices. It’s not difficult to guess what happened to their profits when the price of fuel went back down. Recognition of these opportunities is not always easy; often it comes from experience. I believe we are involved in one as I type this column. Thanks to the Cash for Clunkers program, new car inventories are generally low; there are fewer trades in most used inventories and the price of vehicles at auction has gotten higher. While this could mean several different things depending on your market, I would think the potential for increased gross profit, even on vehicles more traditionally thought of as commodity cars, is greater than ever. Hopefully, you’re tracking the trade capture rate. A normal benchmark for capturing trades is 55 percent of appraisals. Because of today’s market conditions, I would encourage all managers to aggressively get involved with customers and inquire about their desire to trade their vehicle, as well as ensure your store is appraising every vehicle possible. Further, I believe it’s imperative to improve the appraisal capture rate by 10 percent or more. Used autos are at a premium and the extra money put into a trade has never been a better investment. This type of forward thinking involves risk some dealers simply may not be willing to accept. Those who do so are more frequently ahead of the used vehicle game. The science of used inventory can be resolved by accumulating information, breaking it down (all the way to COS bands, if you really want to be detailed) and buying and trading aggressively according to trends. The art requires experience and guts. BY BI LL MOKRY

Bill Mokry is a sales and F&I specialist for Service Group, an insurance and financial services company that provides income development training and servicing solutions to auto dealerships. His many years of dealership experience include several as general manager of a successful used car operation. He can be reached at bmokry@sgifs.com.

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Q&A With NIADA President Anthony Underwood:

2011 Used Car Market Report

National Independent Automobile Dealers Association (NIADA)

Anthony Underwood was named president of NIADA in 2010. He started selling cars in Alabama in 1977, and he opened his first dealership in 1994 with five vehicles. Anthony’s two stores sell a combined total of 800 vehicles each year. He has been an active member of the NIADA and Alabama IADA for many years. Anthony has served on the boards of both NIADA and AIADA. He was named NIADA National Quality Dealer of the Year in 2003 and, that same year, earned his Certified Master Dealer certification. How have independent dealers adjusted their businesses in the last three years? Independent dealers have faced unprecedented challenges in the last three years. Even though the overall economy is improving, dealers are still struggling with limits on inventory and consumer credit. But dealers are resilient and have adjusted by stocking fewer vehicles and focusing on the types of vehicles that turn quickly. Solid inventory management underpins the successful dealer. Many dealers have retrained employees to ensure that everyone is contributing to the success of the business. Employee productivity has improved as staffs have been reduced to the current level of sales. In the process, we have learned to run our stores more efficiently. We have also seen a shift to the Buy-Here, Pay-Here model by dealers who have access to capital. In our store, we have cut in half both our staff and our inventory. We have also expanded the number of lenders we rely on to finance our customers. We are now sourcing some inventory online, buying vehicles that will sell quickly, and generating more sales based on specific customer orders.

How are independent dealers coping with the shortage of used vehicles? Independent dealers are confronting two challenges: higher prices and fewer pre-owned cars in the marketplace. Independent dealers are spending more time and effort to find the right inventory. Everyone is going to more auctions, both online and in person, as well as tapping local wholesale sources. Some dealers have been very successful in buying inventory directly from private owners. Three or four years ago, dealers were able to find plenty of vehicles under 70,000 miles and three or four years old at acceptable prices. But independent dealers have modified the age and condition guidelines to reflect what their customers can afford. As a result, dealers are doing more reconditioning to get vehicles frontline ready.

You are quoted as saying “We will never go back to business as it was in the past.” Can you explain what you meant by that? Our business model has changed. New car dealers are getting more into the pre-owned business, so we have to meet that challenge. Franchised dealers offer service departments, larger facilities, and access to newer inventory. NIADA members know that they have to continue to improve their business skills and adapt to this new competition. NIADA can teach dealers to run more efficient operations, but the business of selling cars is still about knowing your market and your customers and being responsive to their needs. Independent dealers need access to information to enable them to make quick decisions. NIADA helps independent dealers stay abreast of the national and local economic, regulatory, and business issues facing our industry and each dealer.

How is NIADA monitoring the potential rules under the new Consumer Financial Protection Bureau? We have encouraged members to stay connected with one another by attending local and national meetings and by contacting their legislators on issues that could impact our business, in particular Buy-Here, Pay-Here. The NIADA website includes a blog where dealers can find information on local and national issues and answers to their specific questions.

You are a strong advocate for dealer education. What resources does NIADA provide dealers? NIADA is serious about education, and we recognize that it is one of the strongest things we have to offer our members. Knowledge is power, and what you don’t know can hurt you. Our three-day Certified Master Dealer Program gives dealers the critical skills and information they need to meet the challenges of operating successfully in a challenging environment. NIADA and its industry partners provide dealers with online and in-person training that covers the full range of inventory and dealership management topics. For example, the NIADA/Manheim partnership teaches dealers how to buy and sell vehicles online through The Wholesale Institute training on NIADA TV.

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CAROLINAS’ 26"-*5: %&"-&3 0' 5)& :&"3 "8"3% Not only is it award season on TV, there are a couple of important awards that CIADA Members need to be reminded of. The CIADA Quality Dealer for the Carolinas’ Award is seeking nominations. This Quality Award recognition is the CIADA’s most prestigious award. Nomination and selection brings high honor to the individual and to the Dealership. You serve as an inspiration and model for other independent dealers in the Association. CIADA will spotlight several of our nominees in emails in the coming months and ultimately the Winner will be showcased in a future issue of our new CIADA Magazine. By accepting the nomination, I ask that you commit to attending the CIADA Annual Convention and Trade show in August in order to be recognized at the Awards Banquet. Ultimately should you be named as the Carolinas’ Quality Dealer of the Year, you must agree to participate in the NIADA Quality Dealer Awards recognition banquet to be held at the NIADA Annual Convention and Expo in 2012. (Should you win the CIADA Quality Dealer Award, we will fund a portion of the expenses associated with attending the National Convention.) Deadline for Nominations is June 17, 2011 and the nominating form can be found on the CIADA website. Additionally, NIADA and Manheim will recognize and honor a DEALERSHIP for its contribution to the community. This award is for the entire dealership. The award will be presented during the National Leadershsip Awards Banquet on June 22nd at the Convention. Manheim will also present a $5000 check made payable to the winning dealership’s favorite 501 (c)(3) charity. Nominations are due by April 15. The nomination form can be found at the NIADA website at the membership tab.

FREE Dealer Seminar The Car Counselor’s 2.0 Dealer Tech Series will be held at ADESA Charlotte Auto Auction to help industry professionals prepare for the impact of developments in the federal government to their dealerships.

Scheduled to start at 9 a.m. EDT on Wednesday, April 27th, the workshop will be presented by Keith Whann, general counsel of the National Independent Automobile Dealers Association and the co-owner and chief executive officer of Columbus Fair Auto Auction. He also serves as “The Car Counselor.” Whann has met with members of Congress, the Department of Defense and Federal Trade Commission, among other regulatory bodies, to voice the concerns of auto dealers, organizers said.

Topics will include: Capital Hill Update: How your business and the industry will be affected. Online and Offline Marketing: Sell more cars the right way. Web 2.0: Enhance your Internet presence. Compliance Solutions: Practical approaches to diminish and eliminate liability. Buy-Here, Pay-Here: Successful solutions for today’s changing marketplace. Access to Capital: Relationships have never been more important. Registration begins at 8 a.m. The morning group session rusn from 9 a.m. to noon. Then, one-on-one practical application sessions will run from noon to 3 p.m. Lunch will be provided. The event is sponsored by the Car Counselor, Auttr, NIADA, CIADA and Adesa Charlotte. To register for the event call 800-432-4232. You can also pre registration for the event at www.auttr.com or you can go to auttr.com/dealer-tech-2-0/ We hope to see you on April 27th.

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One of the new keys to the success of your business is your smart phone. You can

operate your dealership on-the-go, making fast, informed decisions that will ultimately improve your bottom line. More than 440,000 mobile sites and over 500,000 mobile apps exist today, including a growing number of auto-industry related apps. It may seem daunting to integrate this emerging technology into your business, but these tools are a must-have for both acquisition and retail.

What are ‘mobile apps’ and how do they help dealers?

An app is a software application that helps people accomplish tasks faster. Among other things, an app can use the hard drive of the mobile device to store data for faster recall and operation, perform calculations, access hardware features such as camera and GPS – and all without an Internet connection. At its core, the Internet revolution was about how technology harnessed the power of information to generate efficiencies, and this is exactly the opportunity mobile apps offer to dealerships today – providing information onthe-go and tying it all together to take action.

How can mobile apps streamline your business?

APPS

Going Mobile in Your Dealership

It’s no secret that the used car supply is decreasing due to rising demand, so the competition for quality units is getting tighter. Think about the top concerns your customers have when shopping for a used car: previous damage, maintenance, ownership history, and of course, price. Tools like Carfax Vehicle History Reports are readily-available through various mobile devices to verify this important information and bid with confidence. Having your mobile device handy helps you tie it all together quickly and successfully acquire the right cars for your lot. Today’s mobile devices provide access to information that brings transparency and process effi ciency to dealers. The possibilities mobile is opening up for our industry are truly extraordinary – and in the current economic climate, leveraging new and user-friendly technology is key to moving more cars and saving money in the process.

Mobile browser-based tools provide dealerships with more on-the-go visibility but lack a built-in ability to act in realtime on information organically across the dealership. But, just as a mobile app enables on-the-go stock trading, for example, an app such as eCarList’s ‘True Target Mobile’ allows dealerships to take a massive dataset and a complex, multi-step, -vendor and -personnel process and make it all work from a single handheld device. The ‘True Target Mobile’ app gives dealerships mobile access to pricing data from multiple books, current data from top online marketplaces and the ability to filter, organize and view the data geographically for territory (including vehicle pricing from competitive dealerships). Other functions include VIN scans, taking/adding/removing photos, integrating Carfax Vehicle History Reports and sharing appraisals and pricinsg with other BY LEN CRITCH ER AN D LANCE VICKERY mobile devices. Len Critcher is CEO of eCarList, provider of award-winning Are there other benefits to going mobile? inventory management and online marketing solutions that On the acquisition side, smart phones make it easy for dealerships to fully own and control the merchandising process through one unified platform. provide access to information you need to vehicle Lance Vickery is director of dealer business at Carfax and has stock your lot with cars that customers want. spent more than 25 years in the auto industry.

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Used Auto Prices Reduced After 30 Days More than 50 percent of used vehicles listed for more than 30 days have at least one price drop, according to a study released in late February by leading online automotive community CarGurus.com.

. " 3 , :0 6 3 C A L E N DA R S FO R TH E 2 011 N ATI O N A L 5* 3 & 4" '& 5 : 8 & & , RMA’s tenth annual Na tional Tire Safety Week XJMM CF IFME +VOF The annual event is an initiative of the RMA’s “Be Tire Smart – Play Your PARTâ€? program, a year-round effort designed to help drivers learn the simple steps they can take to ensure that their tires are in good working condition. RMA is the national trade association for tire manufacturers. Tire manufacturers and retailers nationwide will work to educate motorists about proper tire care and maintenance. RMA provides tire retailers, auto dealers and automotive repair shops with free “Be Tire Smartâ€? brochures and other materials. Many participating retail outlets use the opportunity to promote tire care through advertising, promotions, free tire pressure checks and conducting media outreach. More than 22,000 tire and auto service outlets participated in the 2010 National Tire Safety Week. RMA released a survey of more than 5,400 vehicles that showed half with at least one under inflated tire. Nearly 20 percent of vehicles had at least one tire under inflated by 8 pounds per square inch (psi). Under inflated tires waste fuel, risk safety and cause tires to wear out faster. Tire and auto retailers who are interested in obtaining free RMA materials for National Tire Safety Week can order them online at www. betiresmart.org. Those who have participated in the event before can expect to receive materials again this year.

Think about the top concerns your customers have when shopping for a used car: previous damage, maintenance, ownership history, and of course, price. Tools like Carfax Vehicle History Reports are readily-available through various mobile devices to verify this important information

and bid with confidence. Having your mobile device handy helps you tie it all together quickly and successfully acquire the right cars for your lot. Today’s mobile devices provide access to information that brings transparency and process effi ciency to dealers. The possibilities mobile is opening up for our industry are truly extraordinary – and in the current economic climate, leveraging new and userfriendly technology is key to moving more cars and saving money in the process.

Product Discounts for NIADA Members NIADA members can save up to 29 percent on select FedExŽ shipping services. For more information or to enroll in this program, visit www.1800members.com/ niada or call 800-636-2377 (8 a.m.–6 p.m. Eastern, Mon.-Fri.). Renting a car just became easier and economical with the new Thrifty Car Rental Discount Program for NIADA members. Visit www.thrifty.com/?iata=00227148 &PromotionCode=NIADA to receive a 5 percent discount off Thrifty’s already low rates anywhere or any size vehicle in the U.S. A 24-hour advance reservation is required and reservations can only be made through this URL or via the link on the NIADA website. Offer is valid for travel until Dec. 31, 2011. AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States with over 4,350 stores across 48 states, the District of Columbia and Puerto Rico. NIADA members have access to AutoZone’s “hot-shot� delivery program including discounts on more than 750,000 product level SKUs in over 70 distinct product categories. For more information, view www.niada.com/dealers_edge.php

IRS Offers Helpful Auto Dealer Tax Tips Confused about what the Internal 31 of the year following the calendar year in Revenue Service requires from dealers at which the cash is received and a copy of this tax time? statement kept for your records.

Don’t worry, as the IRS has an entire section of its website dedicated to automotive businesses. We’ve included a few tips here. As most dealers already know, the IRS requires each person engaged in a trade or business who, in the course of conducting that trade or business, receives more than $10,000 in cash in one transaction or in two or more related transactions must file a Form 8300. The agency recommends filers should keep a copy of each Form 8300 for five years from the filing date. Form 8300s should be filed by the 15th day after the date the cash was received. The form should be filed on the next business day if that date falls on a Saturday, Sunday or legal holiday. The filer must give a written statement to each person named on a required Form 8300 on or before January

Changing your accounting method? That generally requires IRS approval. To get approval, you must file Form 3115, Application for Change in Accounting Method. A change in your accounting method includes a change not only in your overall system of accounting but also in the treatment of any material item. If you finance the purchase of your property, instead of having the buyer get a loan or mortgage from a third party, you probably have an installment sale. It is not an installment sale if the buyer borrows the money from a third party and then pays you the total selling price. FO R MO RE I N FO RMATI O N, VISIT WWW. I RS.GOV/BUSI N ESSES/SMALL/I N DUSTRI ES/ ARTI CLE/0,, I D =98978,0 0.HTM L .

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CHARLESTON AUTO AUCTION RECEIVES AUCTION OF THE :&"3 "8"3D 'PS UIF UIJSE UJNF JO ĂĽWF ZFBST $IBSMFTUPO "VUP "VDUJPO has been named the top performing auction in the Southeast Region of the United States for Automotive Resources *OUFSOBUJPOBM "3* This award is given to the auction that has shown the highest results in multiple areas including service, retention and overall performance. New Jersey-based ARI, a part of the Holman Automotive Group, is the fastest growing vehicle fleet management company in North America. “We are honored to once again receive this award. ARI has a national presence and a strong following in our area, and to outperform all the auctions in our region is a great accomplishment. Rest assured we will work hard through 2011 in hopes of winning once again,â€? said Chris Wise, the auction’s national remarketing manager. Laura Taylor, general manager at Charleston, said, “I am very pleased to add another ARI trophy to our collection. We take pride in our ability to get the maximum value for our clients. I would like to thank ARI for this award and for their continued partnership with Charleston Auto Auction.â€? The auction is a member of the American Auto Auction Group. It holds a sale every Friday at 10 a.m. with a damaged and disabled sale on the second and last Friday of every month at 9 a.m. For more information about Charleston Auto Auction, visit www.charlestonautoauction.com.

“I AM VERY PLEASED TO ADD ANOTHER ARI TROPHY TO OUR COLLECTION. WE TAKE PRIDE IN OUR ABILITY TO GET THE MAXIMUM VALUE FOR OUR CLIENTS.� LAURA TAYLOR, GENERAL MANAGER AT CHARLESTON

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AAAG’s Steve Simon Shipping Out to Afghanistan to Entertain Our Troops Steve Simon, CEO of American Auto artists to entertain our men and woman in uniform Auction Group (AAAG), is set to ship out to who are fighting a war,” Simon said. “These amazing Americans have made so many sacrifices Afghanistan in mid April. He will be heading up a two-week blues concert tour to entertain US troops serving in the war zone. AAAG is headquartered in Charleston. For a number of years, Simon has periodically traded his business wardrobe for khakis and fatigues to take blues artists overseas to entertain U.S. troops and embassy staffs. Coordinated through the Defense and State departments, Simon’s concert tours, named Bluzapalooza, have included performances in Iraq, South Korea, Japan, Italy, Kuwait and Egypt. “It is an honor to be able to bring celebrity blues

to keep us safe at home. We will be giving them a show that they will never forget and that will remind them of how much they are loved and prayed for by all of us.” Last year, Simon was honored by the Defense Department for his volunteer work with members of the armed forces and civilian employees serving in Iraq. Signed by Lt. Gen. Lloyd J. Austin III, the commendation praised Simon for his “exemplary support to the members of our Armed Forces, Department of Defense civilian employees and contractors in Iraq.” The commendation also notes

Simon’s “willingness to serve our troops has had a significant impact on the morale and welfare of our dedicated men and women deployed in support of Operation Iraqi Freedom.” Simon launched AAAG in January 2010 with fellow industry veteran Keith Lelux. Building on a network of independent auctions throughout the country, AAAG provides a viable alternative for vehicle sellers who require national sales coverage and has three premier auction properties: Charleston Auto Auction in Moncks Corner, S.C.; Rea Brothers Mid-South Auto Auction in Jackson, Miss.; and Texas Lone Star Auto Auction in Carrollton, Texas. For more information about AAAG, call 843-579-AUTO or visit americanautoauctiongroup.com.

MAN WHO PREYED ON DEALERS GETS FEDERAL SENTENCE A Washington state man is going to jail for a finance scam authorities said hurt independent dealers across the U.S. Steven P. Drury, of Vancouver, Wash., was sentenced in early February by a U.S. district judge to two years in prison and three years of supervised release for money laundering. Judge Benjamin H. Settle ordered Drury to pay $219,000 in restitution to various car dealers who were victimized in the scheme. In 2005, Drury established Auto Credit Solutions. For three months during 2005 and 2006, the company marketed itself to used auto dealers claiming for a fee it would bundle a dealership’s auto loans and market them to investors, essentially selling the car dealers’ collectable debt. For this service, Auto Credit Solutions required the auto dealers to pay Auto Credit Solutions the car buyers’ first two to three months’ payments. The company collected the fees, but never marketed the loans. In his plea agreement, Drury agreed Auto Credit Solutions had fraudulently charged more than 50 dealers $122,000. He also agreed to make restitution of $541,124 to dealers who had dealt with other similar businesses he had been charged with operating (including Sub-Prime Financial Services, Easy Credit Store, Instant Funding Systems, Great Northwest Financial Services, and Western Empire Financial Services). However, because not all of the dealerships could be identified from available records, the amount of restitution that could be ordered was $219,000. Drury was indicted April 15, 2010, and pleaded guilty Aug. 3. His co-defendants who participated in the scheme face shorter prison terms. Last November, Shannon Huggins, 33, also of Vancouver, was sentenced to four months in prison and six months of home detention with three years of supervised release. Ben King, 31, another Vancouver resident, will be sentenced in March. Both pleaded guilty to mail fraud. 22

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Sorting Through Exceptions to the Risk-Based Pricing Notice The FTC’s risk-based pricing notice requirements became effective Jan. 1. To comply with these requirements, dealers

must alert consumers when they are getting different credit terms than others based on credit information. The good news is the requirements give options for how and when you provide the notice. That’s also the bad news because the options and exceptions can make it difficult to figure out if you’re in compliance. To help you sort through the maze, here are some of the important exceptions and how they apply to you.

Your dealership doesn’t need to provide a notice if: t You don’t do risk-based pricing of credit terms. This applies if every consumer whose application is approved is offered credit on the same terms. t You don’t use credit reports in any way to make a credit decision. If your dealership directly contacts employers and other references and is not otherwise using any third party information, then the risk-based pricing notice is not required (it sounds rare, but there are dealers who qualify for this exception).

A notice isn’t required for a specific transaction if: t The credit requested is not for a consumer purpose (personal, family or household use). t The transaction is a consumer lease. t The consumer applies for a specific credit product and is approved for those terms. t You offer specific terms to a pre-screened group and extend credit on the offered terms to one of them. t The consumer is a co-signer (which is different from a coborrower), guarantor, surety or endorser in the transaction.

Independents Remain Profitable in Challenging Environment Our team at Manheim Consulting had the pleasure of interviewing NIADA President Anthony Underwood for a question and answer session discussing the state of the used vehicle market from the perspective of independent dealers as we compiled the recently released, 16th annual Used Car Market Report (UCMR).

Underwood framed the challenges facing independent dealers in a way that confirmed what our data was telling us: independents are encountering higher prices for inventory at the wholesale level and finding fewer pre-owned vehicles in the marketplace. In response, these dealers are focusing on sound inventory management practices, and using all available sales channels – including online – to source just the right inventory to meet their customers’ needs. We examined these and other trends in the UCMR, which is Manheim’s annual analysis of the forces shaping the used auto industry. As part of the ManheimNIADA Dealer’s Edge partnership, I’m happy to let you know you can download the entire report free of charge by taking a very brief survey at www.surveymonkey.com/s/manheim. As a comprehensive analysis of the trends shaping the automotive industry, the 2011 UCMR contains much more valuable information pertaining to independent dealers, as well as chapters on other aspects of the industry, including rental, leasing, fleets, repossessions and salvage. I encourage NIADA members to download their free copy of the UCMR, and as always, please e-mail me any time with your questions. BY TOM WEBB Tom Webb is chief economist for Manheim Consulting. Contact him at Thomas. webb@manheim.com, follow him via Twitter at www.twitter.com/TomWebb_ Manheim and read his blog at www.manheimconsulting.typepad.com.

t The consumer’s application is denied and you provide an adverse action notice. t You provide the consumer with the credit score disclosure instead of the risk-based pricing notice. The disclosure is an alternative form authorized by the regulations. If you use it, you must provide it to all consumer applicants instead of providing a risk-based pricing notice only to the portion of applicants who are not receiving your most favorable credit terms. It is likely some of these exceptions apply to your dealership and its transactions. Before relying on an exception, review the regulation or discuss it with your legal counsel to be sure you implement it correctly. The regulation can be found at 16 CFR §§ 640.1-.6. BY CH I P ZYVO LOSKI Chip Zyvoloski is senior attorney for indirect lending at Wolters Kluwer Financial Services. For more information, visit www. wolterskluwerfs.com/indirect.

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