CIADA INSIDER
COLORADO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
MARCH/APRIL 2011
THE ART AND SCIENCE OF USED AUTO INVENTORY ALSO Change Marks Colorado State Leadership PLUS Stan Martin Named CIADA Quality Dealer
CIADA ANNOUNCES 2010 COLORADO QUALITY DEALER OF THE YEAR WINNER:
STAN’S AUTO SALES
(Westminster)
DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
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A MESSAGE FROM THE CIADA PRESIDENT Dear CIADA Members, My name is Peppe DeMarco and on Dec. 8, 2010, I was elected CIADA president. As this was past the editorial deadline for the Jan./ March issue of CIADA Insider, this is my first opportunity to communicate with you in my new role. First, a little bit about me. I reside in Ft. Collins where I own Highline Motors. Originally from Sorrento, Italy, I moved to Chicago in 1978. I started my auto career selling vehicles for Svitak Buick. In 1987, I went to work for the Patrick Dealer Group where I was the used car director until 1996. That’s when I decided to move to Ft. Collins and start Highline Motors. My wife Sherryl is both my partner in life and business. We have two beautiful daughters, Dana and Danielle. We all agree the move to Ft. Collins was a good one! Highline Motors has been a longtime member of CIADA. In 2006, we were fortunate enough to be nominated and chosen as the Colorado Quality Dealer of the Year.
I would like to tell my fellow members about the association’s new, improved website at www.ciada.org, which was launched last month. In 2010, after much delay, federal regulators and lawmakers eventually approved and quick implemented three policies which affect most all of us. Understanding the complexity of the components of the Red Flag and RiskBased Pricing rules, as well as revised privacy notices, has taken time away from selling cars. CIADA was out front on these issues; we sent e-mail blasts and posted valuable information to our site to help everyone through the maze. The new site offers members a more valuable and informative online experience. We have a link to www.niada.com and its valuable news and training resources, too, so we urge you to visit regularly and take advantage of all tools you can use for the benefit of your dealership. Sincerely, Peppe Demarco CIADA President
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Product Discounts for NIADA Members
INSIDE
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.
MAGAZINECONTENTS
6 Change Marks Colorado State Leadership
For more information, view www.niada.com/dealers_edge.php
8 Stan Martin Named CIADA Quality Dealer 14 The Art and Science of Used Auto Inventory
So Long, Farewell....
BOARD OF DIRECTORS
I will be leaving CIADA on Friday January 7, 2011. I am starting a new adventure in Denver. I would like to thank all the dealers I have come in contact with over the past 4 ½ years. My passion for the automobile business is immense and I hope I have passed some of that off to you. It has been a pleasure working with all of the CIADA members.
PRESIDENT Peppe DeMarco Highline Motors 970-206-9963 pdemarco@highlineweb.com
It will be a transition for me, leaving a job that I have thoroughly enjoyed being a part of. All the new dealers I have met in the Pre-Licensing class, the look of excitement on your faces says it all. It’s a wonderful and proud business to be in and I wish you all the very best!
TREASURER Dave Cardella Cardella’s Car Deals 303-887-8977 Dcard65724@msn.com
If you are in the “LoDo” area of Denver keep an eye out for me. You may see me at a Rockies game or an Avalanche game or just wandering around enjoying the great city I have the pleasure of living in.
SECRETARY Dean Strawn Autotrek, Inc. 303-934-5600 Dstrawn@autotrek.com
Friends never say goodbye, therefore I will see you later. Pam Kroneberger
CHAIRMAN Don Walker Walker Investments LLC 303-359-3092 Don.walker@comcast.net
ADVERTISERSINDEX Access Capital Investment Group ......................16 ADESA ............................................................ 9 AutoTrader.com ..................... Inside Back Cover Cars.com..........................................................15 Chase ..............................................................3 Lobel Financial Corporation .............................. 7 Loveland Auto Auction .................................... 17 Manheim Colorado ........................... Back Cover Manheim.com ...................................................5 Smart Auction.................................................. 11 STARS GPS...............................Inside Front Cover United Acceptance .........................................19 Western General / Protective ..........................13
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM.
CIADA INSIDER IS PUBLISHED 6 TIMES PER YEAR 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 6006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF CIADA INSIDER 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 © 2011 BY NIADA SERVICES, INC.
STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Mike Harbour • mharbour@niada.com PRODUCTION MGR. Jacob Kerns • jacob@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing
DATAPOINTS OR CLEAR-CUT TREND? At the time of our editorial deadline (late January), independent dealers are presented with compelling data-points on nearly a daily basis. For example,
new unemployment claims are down, but how much of that is because some folks have lost their holiday season gigs or just gave up looking? New car sales are up 11 percent over last year. How much of that is simply pent-up demand and truly sustainable? Independent dealer licenses are up 2 percent versus last year, but that’s because 6 percent of Colorado’s independent dealers ceased operations last year and even more (8 percent) have decided to enter the fray. So just what do we have here? Is it time to gear up for growth or continue a hunker-down strategy until the arrival of better times is confirmed? I would suggest
the answer is yes. No, schizophrenia does not run in my family. In all seriousness, now is indeed the time to do both. You can be strategically aggressive by prudently marketing your dealership without blowing up your balance sheet and increasing operating expenses. Be boldly and cautiously optimistic. The March/April Issue of CIADA Insider contains some examples of strategies you can leverage in uncertain times. In Solution to Survival and Craig’slist 101, authors illustrate ways your dealership can improve incrementally without taking roulette wheel risks. And CIADA will continue to offer programs and services to assist. In January, nearly 20 salespeople attended the first CIADA Best Selling Practices Class and learned skills which will result in higher close rates. Regardless of where your dealership has been, CIADA truly hopes the data reported in recent months is appearing as a favorable trend for you and the entire independent dealer community. We are here to help and greatly appreciate your support. Gary Zimmerman Executive Director gzimmerman@ciada.org
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CHANGE MARKS COLORADO S TATE LE ADERSHIP Greetings and happy New Year, as this is the first article of 2011! Aponte & Busam Public Affairs has compiled the following information about the new administration, legislative leadership and the general climate of the 2011 session. I would like to report the first
agenda item is creating an environment that makes it easier for the independent auto dealers to grow and maintain their businesses; unfortunately, that previously wasn’t the case. I did want to note Roxie Huber, Department of Revenue executive director, will maintain her position for the next six months. The Division of Motor Vehicles and the Auto Dealer Board are part of this department. THE COLORADO LEGISLATURE CONVENES
On Wednesday, Jan. 12, the 68th General Assembly convened and prepared for business. Colorado Supreme Court Chief Justice Michael Bender presided over the swearing in ceremonies in both chambers. The overall mood was one of unity and bi-partisanship, as both chambers looked forward to the challenges of the next 120 days. As is customary, the first several days of session were filled with ceremonial speeches, so little official business was done. HOUSE OF REPRESENTATIVES
Outgoing Speaker of the House Terrance Carroll presided over the House ceremonies and the election of Rep. Frank McNulty (R-Highlands Ranch) as the new speaker of the house. Speaker McNulty and Minority Leader Sal Pace (D-Pueblo) both offered comments to the members which outlined their caucus’ goals and vision for the 2011 session , both of which were squarely focused on job creation and balancing the budget. Despite the bi-partisan atmosphere and the joint focus on job creation, House Democrats did make a point of publically questioning the Republicans’ decision to change certain committee names. Rep. Max Tyler (D-Lakewood), Rep. Jim Riesberg (D-Greeley) and Rep. John Soper (D-Thornton) individually approached the podium to question the committee names changes, a hot topic since the announcement in December. Majority Leader Amy Stephens (R-Monument) addressed each statement and encouraged the House members to do the business of the people, not quibble over the committee names (which are routinely changed when a new party assumes control).
This exchange seemed to set the tone for what could be a contentious session despite the numerous pleas for unity. SENATE
President Brandon Shaffer (D-Longmont) once again assumed control of the gavel in the Senate, as new members of the body were sworn in by Chief Justice Bender. Both President Shaffer and Minority Leader Mike Kopp (R-Littleton) offered comments which were similar in nature to their colleagues in the House. Job creation, a balanced budget and education were at the top of the list in both leaders’ speeches. GOVERNOR HICKENLOOPER’S STATE OF THE STATE ADDRESS
On Thursday, Jan. 13th, Governor Hickenlooper gave his first State of the State address to a joint session of the Colorado General Assembly. While the gallery was less crowded than in previous years, there was a healthy crowd assembled for the event. Collaboration and job creation were the key themes of the governor’s speech, as he echoed the main points from his inaugural address. He received a warm round of applause from Republican leaders when he mentioned the idea of a regulation impact study for each bill proposed this session. Touting his kitchen-table budgeting concept, he challenged lawmakers to be thoughtful about their budget deliberations and redefine the role of government to match what Coloradans want in terms of programs and services. Gov. Hickenlooper did touch on three key areas of government, yet offered little detail on his administration’s policy agenda. In closing, Hickenlooper called out three key concepts his administration will use to improve Colorado state government: effective, efficient and elegant. He stressed the delivery of state services should be just that – effective, efficient and elegant – and his administration will strive to achieve those goals. Along the way, there was plenty of humor as Gov. Hickenlooper is known for his dry wit and self deprecation. POLITICAL HIGHLIGHTS FOR THE 68TH GENERAL ASSEMBLY SENATE
Democrats retained control of the State Senate with a margin of 20-15; leadership remains the same with Senate President Brandon Shaffer (D-Longmont) and Majority Leader John Morse (D-Colorado Springs); Minority Leader Mike Kopp
(R-Littleton) remains and Senator Bill Cadman (R-Colorado Springs) will serve as assistant minority leader. Moderate Senator Al White (R-Hayden) was removed from the JBC by his caucus and replaced by fiscally conservative SenatorElect Kent Lambert (R-Colorado Springs). Sen. White has since taken a position with the Hickenlooper administration as director of tourism and has been replaced by his wife, Jean White. HOUSE
Control of the State House of Representatives shifts to the Republicans with a 33-32 split; Rep. Frank McNulty (R-Highlands Ranch) has been elected speaker of the house, Rep. Amy Stephens (R-Colorado Springs) has been elected majority leader and Rep. Sal Pace (D-Pueblo) will serve as minority leader. GOVERNOR’S OFFICE
Gov. Hickenlooper was inaugurated as Colorado’s 42nd governor on Tuesday, Jan. 11; Lt. Gov. Joe Garcia, Secretary of State Scott Gessler, Treasurer Walker Stapleton and Attorney General John Suthers also were inaugurated Jan. 11. Roxanne White will serve as Gov. Hickenlooper’s chief of staff. Henry Sobanet, former Gov. Owens’ budget director, will assume the role of director of the Office of State Budgeting and Planning. OSPB Director Todd Saliman will step down, yet serve in an advisory capacity through the session. Rep. Christine Scanlan (D-Dillon) has been tapped to serve as the legislative director. She also will help oversee statewide initiatives on issues such as economic development, education reform, I-70 transportation and forest health, and serve as the governor’s chief lobbyist. A MAJORITY OF THE CABINET POSITIONS HAVE BEEN FILLED, INCLUDING: Department of Health Care Policy and Finance: Sue Birch Department of Public Health and Environment: Dr. Chris Urbina Department of Human Services: Reggie Bicha Department of Regulatory Agencies: Barbara Kelley Department of Higher Education: Lt. Gov. Joe Garcia
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CHANGE MARKS COLOR ADO STATE LE ADERSHIP Office of State Planning and Budgeting: Henry Sobanet Commissioner of Agriculture: John Salazar Governor’s Energy Office: TJ Deora Governor’s Office of Homeland Security: Larry Trujillo Department of Corrections: Tom Clements Department of Local Affairs: Reeves Brown Department of Labor and Employment: Ellen Golombek Department of Military and Veteran’s Affairs: Major General Michael Edwards Department of Natural Resources: Mike King Department of Personnel and Administration: Kathy Nesbitt
CIADA ANNOUNCES 2010 COLORADO QUALITY DEALER OF THE YEAR WINNER:
STAN’S AUTO SALES
(WESTMINSTER)
Department of Public Safety: James Davis Department of Transportation: Don Hunt THE BUDGET DILEMMA
The present fiscal year, ending in June 2011, is slated to have a $204 million budget shortfall, due to a smaller-than-budgeted federal match for the Medicaid program and lagging sales tax collections. The JBC is going through the supplemental process, in which it’s approving further cuts for the budget year. Looking forward, the JBC will prepare its FY 11/12 budget proposal, and all of the measures proposed in Gov. Ritter’s November balancing plan be must be adopted, or alternatives identified, to prevent further cuts. FY 11/12 BUDGET RECOMMENDATION
The budget proposal outlines cuts to be taken to address a $988-million shortfall caused largely by the loss of nearly half a billion dollars in ARRA funding for Medicaid and higher education. This balancing plan includes a general fund net reduction of $255.6M. The proposal continues to keep Colorado on the road to recovery while maintaining essential services. While revenues are slowly increasing, they are not increasing a rate fast enough to stave off additional cuts. The plan includes continuing the suspension or elimination of the tax exemptions passed in the 2010 legislative session, including $71.6 million associated with the sales tax vendor fee administrative allowance. Due to the fiscal shortfall anticipated in FY 11/12 and beyond, the budget proposal requests the temporary suspension of the vendor administrative fee allowance be extended for three additional years through FY 13/14. LOOKING FORWARD
Acknowledging the budget dilemma state lawmakers are faced with, there are groups looking toward the future and aiming to place an initiative on the ballot this November. There is a loosely formed coalition of health care, education and social welfare advocates moving toward an initiative asking for a tax increase. Simultaneously, the business community is exploring a future ballot initiative which would address the state’s fiscal knot (i.e., TABOR, Gallagher Amendment, etc.) Proposals from both groups are still pending, and we expect to learn more in the near future.
CIADA is pleased to announce Stan’s Auto Sales LLC has been awarded 2010 Quality Dealer of the Year. This prestigious award is
given annually to the independent dealer which most closely meets the criterion of ethical practices, superb operations, business growth and community commitment. Nominees are received from past award winners and members of the CIADA board of directors. This year’s nominees created a slate of exceptional independent dealerships and business leaders, making the final selection of Stan’s all the more noteworthy. Stan’s was established in 1998. Owner Stan Martin has more than three decades of experience in the automotive industry, including sales, sales management, general management and high-volume, wholesale purchasing. The mission of Stan’s is to offer the public a large selection of competitively priced vehicles, while providing a laidback environment in which its customers are afforded an easy and friendly buying experience. Stan’s staff is customer focused, and brings the further assurance of AutoCheck background reports, Better Business Bureau accreditation and strict adherence to the professional
standards espoused by CIADA. In making the 2010 Award, CIADA Executive Director Gary Zimmerman said “Stan’s Auto Sales is a testament to the time-tested business credo that taking care of customers’ needs in an honest, thoughtful and thorough manner is the key to building a successful enterprise. Stan Martin and his team exude extreme competence and are the epitome of friendly customer service. They’re not just good folks to buy a car from; rather, the people at Stan’s are the type you’ll want to form a lasting relationship with. And since 1998, many Coloradans have done just that.” Upon receiving the 2010 Quality Dealer of the Year Award, Stan Martin said “I am humbled to have received this honor. But more so, I am so very proud of the staff at Stan’s for bringing their best every day. And finally, we are grateful to the thousands of customers who have entrusted their family’s transportation needs to us over the years.” Stan’s Auto Sales is located at 7192 Newton St., Westminster, CO 80030. The dealership may be contacted at 303-650-1011 or www.stansautosalesllc.com.
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STOP Giving Your Profits Away! Education and Training:
THE SOLUTION TO SURVIVAL FOR 2011 BY
TH OM A S
MCC A RTH Y
A N D
Is your business strategy for surviving 2011 a hope and prayer? That may get you through some situations, but it’s no
way to run a business, especially in a slow economy. The great news is you have options. You and your team members are your most valuable assets, so why not increase the value of those assets and your bottom line this year through training? Colorado dealers can take advantage of two training opportunities that won’t cost attendees thousands (or even hundreds) of dollars. CIADA offers monthly sales training seminars to help you stay ahead of your competition, increase your business and make more money. Additionally, Credit Acceptance, a proven leader in subprime financing since 1972, offers not only the opportunity to say yes to everyone who comes to your dealership, but also professional sales training and best practices to help you increase sales and profits – a perfect complement to the CIADA’s offerings.
A LFR E D
R ITZ,
C R E D IT
ACC E P TA N C E
than ever. In addition to being an expert in human relations and sales, dealers must also be knowledgeable in accounting, economics, risk, insurance, sales, marketing, state and federal laws, and technology. CIADA and Credit Acceptance can help you better understand and manage the many facets of your business to help you succeed through training.
Why train with the CIADA and Credit Acceptance?
Both are interested in the success of automobile dealers Both have formal education facilities designed for dealership development Both utilize role playing and current, real-world examples to maximize learning Both are long-time, proven industry leaders with large dealer bases to share success stories
More Food for Thought
CIADA
CIADA, established in 1941, is one of the oldest organizations of its type with more than 1,100 dealers. The organization is committed to assisting dealers in a variety of support roles from the initial dealer application to becoming a dealer to providing ongoing education provided by the CIADA Education & Training Center. It is a powerful resource that’s often underutilized by members. The purpose of the association is to protect, serve and train its constituents to survive and thrive in their markets. As such, CIADA looks to other organizations who share the same objectives and values to help them achieve their goals. One such organization that’s been helping to change the lives of dealers and their customers for more than 38 years is Credit Acceptance. In Colorado, CIADA and Credit Acceptance collaborate to bring dealers quality education and sales training.
Credit Acceptance
Despite a slight economic upturn, many consumers are still struggling to establish a positive credit history or rehabilitate poor credit. These consumers represent a growing subprime market for used auto dealers. Credit Acceptance allows its dealer-partners to offer Guaranteed Credit ApprovalSM* to all consumers regardless of their credit history. The company was ranked the sixth highest-volume, non-captive finance company in the nation by Experian Automotive (Jan. 25, 2010 Automotive News). *Some states prohibit the use of “Guaranteed Credit Approval.” Alternate marketing materials are available.
Why Partner with CIADA and Credit Acceptance?
To survive in today’s economy dealers need to know more
To be completive in your market, your dealership needs to present itself as a value-added opportunity to the consumer. In short, it’s all about value and what differentiates you from the myriad of other dealers they could purchase from. Below are some of the concepts covered monthly to help you succeed: How to stand out from the competition…even with a small lot How to increase your closing ratio How to use the Internet and social media to drive customers to your dealership How to maximize your website How to measure the effectiveness of your virtual tools How to design a work track for the phone opportunity How to maintain consistency among your sales team How to maximize your meet-and-greet opportunity How to market (making your phone ring) Determining whether to use a BDC (Business Development Center) or a call center How to handle objections and price conversations Utilizing floor plans with limited capital How to finance everyone Taking advantage of BHPH opportunities In short, sales is a science, not a guessing game. Training is priceless. Partnering with the right organization can pave the road to success, and there are no better partners than CIADA and Credit Acceptance. Start learning today by contacting CIADA at 303-932-8000 or www.ciada.org. You also may call Credit Acceptance Market Area Manager Tom McCarthy at 720-934-0512 or Market Area Manager Alfred Ritz at 970710-1867. To learn more about Credit Acceptance, visit www. creditacceptance.com.
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Automotive Internet marketing specialist, Michael D. Jackson, CEO, AutoSearch Technologies, shares strategies you can use right now to boost your dealership’s online clout. RUNNING TIME: 50 MINUTES
LOG ON NOW 24 / 7 KEEP YOUR EYES OUT FOR THE NEW “AUCTION TIPS” SERIES COMING EARLY MARCH. OVER 400 HOURS OF DEALER EDUCATION CAN BE SEEN ON WWW.NIADA.TV
ONLINE ADVERTISING
OPTIMISING YOUR ONLINE PRESENCE WITH SEO, SOCIAL NETWORKING, AND THE LATEST TECHNOLOGIES
LIQUID MOTORS, NIADA TO PRESENT SOCIAL MEDIA WEBINAR NIADA members can learn how to leverage social media to garner brand recognition, build consumer confidence and drive new business opportunities during a social media webinar presented by Liquid Motors and NIADA in April. Learn how to leverage social
media to build consumer confidence and drive new business opportunities quickly and easily! Social media continues to be the fastest growing segment on the Internet. As of September 2010, Facebook has over 135 million active users in the U.S. and each user averages seven hours per month on the site, more than double that of any other site on the Internet. THE SEMINAR, SET FOR APRIL 12 AT 10 A.M. CENTRAL, WILL PRESENT THE FOLLOWING:
GETTING STARTED IN SOCIAL MEDIA l
Building a Social Media Marketing Plan - Setting Budget, Goals, Objectives and Guidelines: We’ll cover how to build an effective social media marketing plan Reputation Management: We will help NIADA members understand why this is critical and how to simply and effectively make sure that consumer positive experiences are portrayed and how to respond to negative postings Building a Presence: We will cover how to secure social media accounts and how to configure the accounts for the most effective brand presentation and user experience
LEVERAGING SOCIAL MEDIA TO GROW YOUR DEALERSHIP l
Build Followers and Fans: We’ll discuss how to effectively grow your followers and fans including the dos and don’ts for posting content to social media Leveraging Check-ins: We’ll help members understand how to leverage new location based services to market their dealership on social media sites Dealers also will learn the key metrics to use to track the progress and success of their social media efforts and how to utilize technology to simplify and improve results tracking. TO REGISTER, CALL 877-573-6877 OR SEND A REQUEST TO socialmedia@ liquidmotors.com.
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BY BI LL MO K RY
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
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 can study information to improve volume, 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. BILL MOKRY IS A SALES AND F&I S P E C I A L I S T F O R S E R V I C E G R O U P, A N INSUR ANCE AND FINANCIAL SERV I C ES COM PANY THAT PROV I D ES I N COME DEVELOPMENT TR AINING AND SERVICING SOLUTIONS TO AUTO DEALERSHIPS. HIS MANY YEARS OF DEALERSHIP EXPERIENCE INCLUDE SEVERAL AS GENERAL MANAGER OF A SUCCESSFUL USED CAR OPER ATION. H E CAN BE REAC H ED AT BMOKRY@SGIFS.COM .
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MOBILE COMMERCE
takes center stage with consumers looking for vehicles, parts and accessories
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 connecting with coworkers and friends in an instant,
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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 respond 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. 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.
B Y C L AY T O N S TA N F I E L D, E B AY M O T O R S
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 phone 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.
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Craigslist 101:
If eBay were free, would you advertise your inventory on it? This should
be a no brainer! Craigslist and Ebay had equal amounts of unique visitors in the U.S. for the first time ever in May 2010, according to comScore data. Dealers who think Craigslist is not for them are missing the boat. It doesn’t matter if you’re selling dollar-cars or the high lines; customers of all ranges are going to the Craigslist marketplace to search for vehicles! A free site offers very little to no technical support, which is why I believe a lot of dealers are missing out on huge opportunities because they’re not educated on Craigslist and don’t have the right process in place to realize potential. Those who have discovered the power of Craigslist advertising will agree it’s a constant battle to keep up with the terms of service as well as keep their posts young, live and searchable to generate leads. The first thing I want to point out is Craigslist is the best ROI for lead generation out there. It is free to post, but to get maximum results requires knowledge of Craigslist terms, time and a dedicated process. With the amount of vehicles posted in the Denver Craigslist market, for example, you must have a daily presence on the site. For the longest time, we used to think that as long as your vehicle is live on Craigslist, it didn’t matter how recently you posted
CRAIGSLIST IS IDEAL FOR THE DEALER BUDGET AND MANY RELY SOLELY ON THE SITE FOR ONLINE LEADS. ARE YOU GETTING YOUR PIECE OF THE PIE?
it. This could not be more wrong; the proof is in the pudding. Every time dealers list a new ad on Craigslist, they get most of the calls the day they post and the day after. After an ad has been on the site more than three days, it gets a lot less calls. Craigslist searches are driven by date. For example, if a customer was to search for a Honda Accord in Denver, there’d be more than 1,000 results spread across 10 or more pages! If you posted your 2008 Honda Accord three days ago, it is most likely already on the fifth results page. Our recommendation is to delete each ad after 48 hours, then repost it to maintain its effectiveness and stay at the top of the list. Remember, the Craigslist consumer will look at the first search page results on craigslist, but they’ll usually find what they’re looking for there and never make it to the next page. A pair of actions you should be aware of is flagging and ghosting. Ghosting is when your ad appears to be live but can’t be found anywhere on Craigslist. It’s an action done by Craigslist administration that’s definitely the worst of the two because you have no idea it’s happened because the ad looks normal. Flagging is done by the Craigslist community. One thing to keep in mind is Craigslist is a community-based classified site. The majority rules and decides whether an ad is worthy enough to stay live. This is where the flagging system comes into play. Each Craigslist consumer has the right to flag your vehicle. One Craigslist visitor cannot take down your vehicle ad, but he can contribute towards it. That means it takes more than one person to flag and remove it from the site. So how many flags does it take? Well, it depends. Nobody really knows the exact figures except Craigslist; in metro Craigslist markets, it may take up to 20 flags to take down an ad. In smaller markets, where, for example, only 100 vehicle ads get posted per day, only two flags might take down an ad!
Most importantly, flagging will result in ghosting and will eventually blow up your Craigslist account so none of your ads will stick. You’ll have to go through the Craigslist community forums and blogs to get back to good standing. That process will take a lot of time and reading; most dealers will be overwhelmed doing such a thing. So why do people flag? I believe 80 percent of it occurs because posters aren’t following the terms of service. For example, maybe you posted a 2008 Honda Accord ad on Monday and posted it again on Tuesday without deleting the earlier ad. The Craigslist community frowns upon this and is very click happy when it comes to flagging. If you have experienced this, you might want to consider automated postings that post ads more frequently with a fraction of your present efforts. The other 20 percent of flags, in my opinion, are your competition. Not fair? Perhaps not, but Craigslist is a free service (to post cars and trucks), so who can you complain to? The fact is Craigslist at some point really frustrates every car dealer, but we all have to deal with it. The good news is there are posting tools to take on this challenge as well as automated tools to post your entire inventory every day. If your competition is flagging your ads, they’ll eventually tire from doing so. Just don’t make it easy by attempting to post your entire inventory every day on your own as that effort will result in a high flag and ghosting rate. Craigslist is ideal for the dealer budget and many rely solely on the site for online leads. Are you getting your piece of the pie? Dustin Jansson provides consulting, Craigslist posting tools and automated Craigslist posting services, as well as other dealership products. Contact him at 303-2323435 or dj@dealernetsolutions.com. For more information, visit www. dealernetsolutions.com.
BY DUSTI N JANSSO N
BEST PRACTICES
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Going Mobile in Your Dealership 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?
Mobile browser-based tools provide dealerships with more on-the-go visibility but lack a built-in ability to act in real-time 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 pricing with other mobile devices. Are there other benefits to going mobile? On the acquisition side, smart phones provide access to information you need to stock your lot with cars that customers want. 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. BY LEN CRITCHER AND LANCE VICKERY Len Critcher is CEO of eCarList, provider of award-winning inventory management and online marketing solutions that make it easy for dealerships to fully own and control the vehicle merchandising process through one unified platform. Lance Vickery is director of dealer business at Carfax and has spent more than 25 years in the auto industry.
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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 Manheim-NIADA 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. 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.
VAUTO HELPS DE ALERS FIND MANHEIM INVENTORY vAuto’s proprietary stocking module can now allow its customers to quickly and efficiently source used vehicles at Manheim auctions as well as access Manheim run lists. “Partnering with Manheim is the first of many exciting integrations with our new AutoTrader. com relationship,” said Keith Jezek, vAuto president, in an early February announcement. “Combining vAuto’s stocking tool with Manheim’s comprehensive list of vehicles is a huge win for our customers. Manheim is a key player in facilitating the buying and selling of
used vehicles for automotive dealers, providing vAuto’s customers the best resources to stock vehicles.” vAuto’s stocking module allows dealers to make their decisions for purchasing vehicles based on what the customers are actually buying in their own marketplace at that exact time, down to the level of year, make, model, trim and equipment configuration. In the past, dealers had to rely on historical data, not current trends, when making stocking decisions.
MEMBERSHIP APPLICATION Colorado Independent Automobile Dealers Association 6464 West 14th Ave. Suite 100, Lakewood, CO. 80214 303-239-8000 / 1-800-569-1899 / fax 303-237-3305 / www.ciada.org
Date:__________________
Referred by :_____________________
Type of License And/or Membership (Circle One) Used Only - Wholesale - Franchised - Associate Member Entity Type (Circle One)
Individual - Partnership - Corp - Ltd Liability Co - Other
Name of Business_____________________________________________________________________ Dealer # ____________ Street Address___________________________________________________ City____________________________ State_________ Zip_______ County_____________________ Mailing Address_____________________________________________Cell #____________________ Business Ph______________________ Fax #_______________________Home___________________ E-mail Address_______________________________Web Site Url_____________________________ Owner #1 ___________________________________Spouse__________________________________ Home Address (if different from above)__________________________________________________ City____________________________ State_________ Zip_______ County_____________________ Owner #2 ___________________________________Spouse__________________________________ Home Address (if different from above):_________________________________________________ City____________________________ State_________Zip________County_____________________ Membership Dues Are $225.00 Annually. Please Return Your Check with Completed Application.
By completing this form, I am consenting to and giving CIADA, its affiliates and subsidiaries, my permission to contact me and provide information to me at the mailing and e-mail address, telephone and fax number(s) I have provided. IF YOU WISH TO PAY YOUR ANNUAL MEMBERSHIP DUES OF $225.00 BY CREDIT CARD , PLEASE COMPLETE THE AREA BELOW AND RETURN TO CIADA BY FAX OR MAIL. CREDIT CARD #_________________________________________________________________ EXPIRATION DATE ______________ SECURITY CODE ______________ NAME ON CARD ___________________________________________________________________ AUTHORIZED SIGNATURE ______________________________________________
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Carfax Debuts Mobile App for iPhone Carfax launched the first mobile app dedicated to providing on-the-go dealers with access to Carfax Vehicle History Reports. The ‘Carfax for Dealers’ app is available for free download to all dealers on the App Store. With an iPhone or other Apple mobile device, dealers can run Carfax Reports using their existing Carfax account to better evaluate used cars anytime, anywhere. “The free ‘Carfax for Dealers’ iPhone app is just what our business needed,” said Justin Villa, pre-owned sales manager with David McDavid Automotive in Irving, Tex. “We downloaded it the day it came out and already we’re saving a ton of time evaluating cars. It’s helping us win at auction and evaluate a customer’s trade faster. After all, time is money.” Running Carfax Reports is a key component to a dealer’s acquisition process. Users start by entering the 17-digit vehicle identification number (VIN) or scanning the vehicle barcode to run the Carfax Report. Any vehicle run through the ‘Carfax for Dealers’ app is automatically added to the dealer’s inventory manager at carfaxonline.com. The reports are saved for up to 30 days and dealers can mark vehicles they’re most interested in as favorites within the app. “We’ve always been quick to embrace new technology to help maintain our competitive edge,” said Michael Townsend, used sales manager at Townsend Honda in Tuscaloosa, Ala. “When we heard about the new ‘Carfax for Dealers’ app, we went and got it immediately. The app is fast and makes appraising cars easy. It’s my new favorite tool on my phone.”Free access to Carfax Reports also is available through apps from several wireless technology providers. Dealers looking for additional pricing and product integration functionality can visit:
s s s s
AutoRevo www.autorevo.com eCarList TrueTarget www.ecarlist.com VIN Viper www.vinviper.com vAuto www.vauto.com
Sorting Through Exceptions to the Risk-Based Pricing Notice Curbstoned cars are often cheap, but state and local governments pay a high price. 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: l
l
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: l
l l
l
l
l
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“Our customers tell us how important immediate access to Carfax Reports is to their success, especially at acquisition,” said Larry Gamache, Carfax communications director. “The ‘Carfax for Dealers’ app now puts the power of this information in the palm of your hand. And, you can run as many reports as you need through the app if you’re on the Unlimited Carfax Reports Program for dealers.” Dealers not attending the convention may contact their Carfax account manager or call 800-274-2277. To download the app for iPhone, visit http://itunes.com/apps/ CARFAXInc/CARFAXforDealers. An Android version of the ‘Carfax for Dealers’ app is coming soon.
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.
The credit requested is not for a consumer purpose (personal, family or household use). The transaction is a consumer lease. Th e consumer applies for a specific credit product and is approved for those terms. Y ou offer specific terms to a pre-screened group and extend credit on the offered terms to one of them. Th e consumer is a co-signer (which is different from a coborrower), guarantor, surety or endorser in the transaction. Th e consumer’s application is denied and you provide an adverse action notice. Y ou 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 C H I P Z Y VO LOSK I 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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