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CIADA INSIDER

COLORADO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION

MAY/JUNE 2011

FACEBOOK 101 ALSO NIADA Mobile Service for Smart Phones PLUS Planning Critical in the Wake of Healthcare Reform

DALLAS, TEXAS Permit No. 2079

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PRSRT Standard U.S. Postage

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HELLO, GOODBYE “I TOOK THE ROAD LESS TRAVELED BY, AND THAT HAS MADE ALL THE DIFFERENCE.”

ROBERT FROST

In the January-February Issue of CIADA Insider, I introduced myself to many of our members for the first time since coming aboard as executive director in August 2010.

While we have made the rounds to most of the auto auctions on the Front Range, most of my efforts have been spent fortifying some operational weaknesses which badly needed repairing. By late February, CIADA had installed updated accounting software, revamped its magazine, launched a new and improved website, installed a functional and scalable IT environment and fixed a myriad of other issues. And just as we approached the end of these extremely important (albeit not a lot of fun) projects, an unexpected opportunity found me. The elections of November 2010 were historic for a lot of reasons. Regardless of your political stripe, the challenges of our time brought a heightened debate about the direction of Colorado and the United States. Democrats, Republicans, Independents, Tea Partiers, and many others – affiliated and unaffiliated – have demanded accountability from government. In Colorado, some of our elected leaders chose course corrections in their positions and policies to better reflect the desires of the electorate. Fresh new voices also joined the discourse in the form of first-time candidates running for office. Once such candidate was Scott Gessler, who now is also known as Secretary of State Scott Gessler. Your new secretary of state, to be sure, is an energetic and candid man with some differences of opinion from his predecessor. He has a strong track record of advocacy for issues of importance to business growth and job creation. At the same time, the Colorado Department of State provides critical services to many sectors of the

population. It looks a lot like the highvolume service businesses for which I have served in executive positions throughout my Fortune 500, tech and association management career. That notwithstanding, I was both caught a little off-guard and extremely honored when Secretary Gessler asked me to serve as his chief administrative officer. In 1981, just prior to receiving an undergraduate degree in political science from the University of Colorado at Boulder, I landed a dream job as a communications intern in the Washington, D.C., office of U.S. Sen. William Armstrong. Due to the real-world financial reality I faced at the time, a year later I chose to pursue and earn an MBA from the University of Denver. My 26-year career has been varied, satisfying and rewarding. The opportunity to serve the people of Colorado is humbling

and exciting. The only element which at all impeded my decision was the friendship and kindness experienced with CIADA members, staff and its dedicated board of directors. I regret that, after just seven months, the board is forced to give of its valuable time to once again engage in an executive director search. I regret CIADA staff, particularly Debbie Woodley and Flor OlguinEsquivel, and I teamed together so briefly. But at the end of my stint as executive director, CIADA is a stronger and better association. I am grateful for what I’ve learned and for friendships made. Thank you for the privilege of serving the many fine men and women who are the independent automobile dealership community. Sincerely, Gary Zimmerman

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INSIDE

P E R I S H T H E T H O U G H T… PEPPE DEMARCO, CIADA PRE SIDENT HIGHLINE MOTORS, FORT COLLINS

MAGAZINECONTENTS

6 Planning Critical in the Wake of Healthcare Reform 10 NIADA Mobile Service for Smart Phones 12 Facebook 101

BOARD OF DIRECTORS

In my three decades of auto industry experience, I’ve learned most of us (independent dealers) have a lot in common. For instance, in our business lives we typically have two overriding thoughts: 1) How can I maximize the

number of cars we sell per month, and; 2) What can we do to acquire the best cars possible at a price that supports gross margin expectations and in quantities which provide a selection while fulfilling customer demand? Yes, we have demographic difference amongst us – urban, rural, age, ethnicity, etc. – but we’re all pretty much hard-wired to think about sales and inventory most of the day. If most all dealerships are focused on sales and inventory, does this mean the worst thing that could happen to an independent dealership is that sales slump or we string together a few poor weeks at the auction? Doubtful. While the list is lengthy enough to give most dealers prematurely gray hair, towards the top of my list is the fear of a workplace accident. An injury to a valued employee costs dealers in numerous ways. There’s

PRESIDENT Peppe DeMarco Highline Motors 970-206-9963 pdemarco@highlineweb.com TREASURER Dave Cardella Cardella’s Car Deals 303-887-8977 Dcard65724@msn.com SECRETARY Dean Strawn Autotrek, Inc. 303-934-5600 Dstrawn@autotrek.com CHAIRMAN Don Walker Walker Investments LLC 303-359-3092 Don.walker@comcast.net

ADVERTISERSINDEX Access Capital Investment Group.........................3 ADESA............................................................ 11 AutoTrader.com ....................... Inside Back Cover CarMax Auctions ............................................14 Chase .............................................................17 GoldStar GPS...........................Inside Front Cover Lobel Financial Corporation ...............................9 Loveland Auto Auction......................................18 Manheim Colorado............................ Back Cover Manheim Denver.................................Back Cover Manheim.com ...................................................5 SmartAuction .....................................................7 United Acceptance ..........................................15 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.

the loss of productivity in the form of reduced sales or falling behind in prep or service. From a financial perspective, a workers’ compensation claim can easily run into many thousands of dollars. And the financial hit continues for years in the form of higher premiums. The issue of workers’ compensation is presently exacerbated by a period of unprecedented increases in employer premium costs. CIADA is aware of the risk posed all of us, so to help address the matter, we are embarking on a campaign to ensure members are informed about their options. This month’s CIADA Insider includes an article from Oasis Outsourcing, a national provider of employer services. Your CIADA staff utilizes Oasis for all its payroll, benefits, compliance and risk-reduction needs. We have been so impressed with Oasis we’ve endeavored to introduce all CIADA members to its services (see p. 6). Meantime, I hope as the spring season blooms, so do the opportunities for you to grow and increase the profitability of your dealership. As always, CIADA is here to assist. Thank you!

MISSING BL ANK COLORADO CER TIFICATE S OF TITLE A box of blank Colorado title certificates failed to be delivered to the El Paso County Motor Vehicle Office on Friday, March 11. The control numbers

are H8192001 through H8194000.

Security features include:

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

• Printed on 8 ½ x 11 security paper. • Control number is on the lower right hand corner printed in red. • The background is composed of three vertical stripes. The outside stripes are light blue in color; the center stripe is light salmon pink with the state seal printed in the center.

Please note the missing title certificates with the control numbers listed above are now void and may not be used as proof of ownership. If presented for any vehicle ownership purpose, they will be considered fraudulent and if any of them are turned in to your office, forward the information to Crystal Soderman, title services manager, at csoderman@dor. state.co.us or the Colora do State Title Section at 303-205-5608.

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PL ANNING CRITICAL IN THE WAKE OF H E A LT H C A R E R E F O R M Understanding the implications of the new healthcare reform legislation will be critical in developing a successful strategic plan for providing medical benefits to employees.

Understanding the implications of the new healthcare reform legislation will be critical in developing a successful strategic plan for providing medical benefits to employees. Historically, employers have

taken a short-term strategic view to providing healthcare benefits. However, the long-term implications of healthcare reform will now require an extended view as decisions made now will have a definite impact on medical costs and on your employees’ overall benefits package down the road. Employers need to understand the financial, administrative and operational implications of the provisions to develop their long-term strategy. For example, employees will have new options, beginning in 2014, when the state insurance exchanges are available. Choices include access to plans outside of the employer-sponsored options as well as new sources of subsidy to offset the cost of healthcare for some employees.

s Insurance Reforms Healthcare reform legislation includes a number of insurance reforms that apply to any group plan offered by an employer. Failure to comply can open up employers to monetary penalties and potential employee lawsuits. A number of new mandates apply to all plans, including those with grandfathered status: Adult child coverage: If a plan offers dependent coverage, it must provide an adult child with coverage through the age of 26. Lifetime maximums: Plans may not impose lifetime dollar limits on essential benefits, nor may they restrict annual dollar limits on essential benefits. Pre-existing conditions: Plans may not impose pre-existing condition exclusions on children’s coverage (under age 19). Starting in 2014, this is extended to coverage for all participants for all group plans. Rescission: Once a person is covered by a plan, the plan may not rescind coverage.

This provision does not preclude an employer from eliminating group health plan coverage.

s Grandfathered Plans There are a number of provisions from which grandfathered plans are exempt. Grandfathered plans are exempt from the following rules: Preventative health services: The act provides that preventative health services must be provided with no cost-sharing requirement. Non-discrimination rules: Under the act, insured plans may not discriminate in favor of higher paid workers. Violations are subject to a penalty of $100 per day per individual failure. s Individual Mandate Beginning in 2014, every U.S. citizen will be required to maintain minimal, essential healthcare coverage or pay a penalty. Certain plans are deemed to be minimum essential coverage, including employersponsored plans, grandfathered plans, certain individual plans, plans under the state insurance exchange, Medicare, Medicaid, the Federal Employees Health Plan and other federal government programs. The penalty for failing to acquire coverage will be the greater of $95 or 1 percent of household income in 2014; $325 or 2 percent of household income in 2015; $695 or 2.5 percent of household income in 2016. The individual mandate may cause employees who have elected not to participate in an employer-sponsored plan to reconsider this offering. Also starting in 2014, tax credits will be available for individuals who make less than 400 percent of the federal poverty limit ($43,320 for an individual and $88,200 for a family of four in 2010) and elect coverage through state exchanges. Employers with a greater risk of new participants entering their plan may want to re-evaluate their plan and contribution structure.

s Employer Mandate In 2014, employers with more than 50 employees will be required to provide coverage to full-time workers (30 hours or more per week) or pay a penalty if even one worker who cannot afford coverage buys coverage on the exchange and receives a subsidy. The penalty is equal to $2,000 times the total number of fulltime employees (less the first 30 full-time employees) if even one employee receives the subsidy. These are just a few examples of the new regulations employers must be aware of when considering how they will provide benefits to their employees after healthcare reform begins to take shape. Understanding the impact of healthcare reform is critical in developing a strategy to ensure compliance and cost containment in this new environment. With gross revenue of more than $1.5 billion, Oasis Outsourcing is one of the largest professional employer organizations in the country — serving more than 80,000 worksite employees through 26 offices nationwide. Oasis Outsourcing specializes in providing comprehensive human resources products and services including HR consulting and training, healthcare benefits, payroll services, tax and risk management services, recruiting and staffing support and much more. Specialized offerings include an HR hotline, a benefits enrollment call center and flexible product plans that can meet the individual needs of businesses of all sizes. Oasis Outsourcing has had overall medical renewal rates that are consistently lower than the industry at large and has received customer satisfaction scores exceeding 98 percent. The Certification Institute, an independent nonprofit organization, has certified Oasis Outsourcing for Workers’ Compensation Risk Management Best Practices and Tax and Benefits Payment Best Practices. For more information, contact Irv Rosen at 303-476-1734 or irosen@oasisadvanatage.com.

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PRODUCT DISCOUNTS FOR NIADA MEMBERS NIADA members can save up to 29 percent on select FedEx® shipping services. For more information or to enroll in this program, visit www.1800members.com/niada or call 800-6362377 (8 a.m.–6 p.m. Eastern, Mon.-Fri.).

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

ENTER SITE AND CLICK ON NEW PROGRAMS

enting a car just became easier and economical with R the new Thrifty Car Rental Discount Program for NIADA members. Visit www.thrifty.com/?iata=00227148&Promo tionCode=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 “hotshot” delivery program including discounts on more than 750,000 product level SKUs in over 70 distinct product categories. NIADA members have our expert field management team and experienced Territory Sales Managers who every day do whatever it takes to help customers deliver the highest level of quality service, manage their shops efficiently, train their technicians and maximize their profits. For more information, contact AutoZone’s Sales Center at 1-866-727-5317 or sc53@autozone.com

NADA Guide Analyst: Used Auto Prices Continue to Surge from Crisis in Japan Prices of fuel-efficient, used autos– both at auction and at the retail level – continue to feel the ripple effect of the March 11 earthquake and tsunami in Japan.

“The dramatic increase in wholesale vehicle prices indicates that buyers are expecting the supply of small, fuel-efficient cars to dwindle even more because of the crisis in Japan and gas prices that continue to rise,” said Jonathan Banks, executive automotive analyst for the NADA Used Car Guide. “In response to this trend, NADA values for April 2011 reflect large increases in most car segments compared to March 2011,” Banks added. “We’re basing our adjustments on the current market conditions and the expectation that these price increases will continue during the next few months.” From March 11 through March 28, for example, auction prices for two- to five-year-old compact cars, such as the Honda Civic, Toyota Corolla and Ford Focus have increased by about 11 percent compared to February. Auction prices for intermediate-sized cars, such as the Nissan Altima, Honda Accord and Chevrolet Malibu have increased by about 8.5 percent from March 11 through March 28 compared to February. Looking at the entire used-vehicle market from March 11 through March 28 compared to February, Banks said overall auction prices across all vehicle segments have increased by about 5 percent, which is higher than the expected seasonal improvement of 3 percent. The crisis in Japan and the subsequent damage to the Fukushima nuclear plant have caused several auto assembly and parts plants to suspend operations, interrupting the supply of new vehicles and parts for export to the U.S. market. “The impact of the crisis in Japan will have its most significant effect on the global auto industry during the next three months, unless Japan is able to quickly restore consistent power,” Banks said. “The bottom line is that price increases—for used cars in demand—are here to stay for the short term.”

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NEW NIADA MOBILE SERVICE

FOR SMART PHONES PUTS KE Y APPR AISAL DATA , MEMBER NE WS AT YOUR FINGERTIPS BY SCOTT LI L JA , VI CE PRESI D ENT, N IADA M EM BER SERVI CES

This spring, NIADA members will have access to a new mobile application tool from NIADA that will enhance their productivity and profitability and stay up to date on the latest developments impacting their dealership. This new tool, NIADA Mobile Service, is accessible by Apple iPhones, Android-type phones and other select models. It puts at members’ fingertips a wealth of critical data to help them make better vehicle appraisal, purchase and retail sales decisions. Now, members can access their subscriptions to appraisal services from NADA Guidebook, Kelley Blue Book, Black Book, and Galves Auto Price List. They also will access run lists from participating auctions. Furthermore, NIADA Mobile Service links them by smart phone to select content on NIADA.com. Here’s how NIADA Mobile Service will streamline your operations: On the lot or on line: More quickly appraise a vehicle, for customers at your lot or those selling online through sites such as Craigslist. Access your guide book vehicle appraisal service or a market report – or your subscription vehicle history report service – on the specific unit. Have at your fingertips the right current facts to pencil your best deal. Buying from auction: You can access the auction’s pre-sale run list while at the auction or sitting in your office. You may view the inventory then, once you land on a unit you like, press on the appropriate smart phone icons to pop up auction-supplied information about the unit, its appraisal data, and a vehicle history report. Continual and timely updates ensure you have the freshest available data. During a moment of downtime: Activity suddenly slows its hectic pace for a few minutes, so you use the time to access the NIADA website. There you check some key association information or watch a NIADA.TV video you’d put off. The service also alerts you to urgent messages that might require immediate action. Designed for NIADA

NIADA Mobile Service was developed by leading automotive mobile applications developer and NIADA technology partner and advisor GigglePop.com Inc. The company is importing NIADA web content and coupling it with existing GigglePop software mobile applications. GigglePop’s technology is known

for speed, accuracy and, of course, mobility. Its fat-finger icon or button designs are a special value when searching for key information when working in distracting environments like auctions. These large icon designs help users easily find and stroke with their fingers the right icons or buttons they want, reducing keystroking errors. As NIADA’s technical partner, GigglePop will continue to support Mobile Service and be an industry liaison for NIADA Mobile. Accessible subscription guidebook data and features through Mobile Service include:

Customizable software settings All guidebook regions or states include s VIN look-up decoder s Stores booked vehicles, recall in an instant s Enter personal notes on booked vehicles s Lists and sorts appraised vehicles s Re-values saved vehicles with each new update s Automatically updates wirelessly s Barcode scanning capability s Seamless integration with all GigglePop valuation tools, including vehicle history report subscription services and auction run lists s SmartBid Market Report s Large easy-to-read fonts s s

NIADA Mobile Service also makes your day at the auction simple, easy and productive. Accessible auction run list data from participating auctions includes: s

s s

s s s

s s

Search by lane or run number to view auction vehicle data Barcode scanning capability Continual auction run list updates even while auction is in progress View those late arrivals Save target vehicle data for future reference Enter personal notes and bid pricing on specific vehicle records Lists and sorts saved target vehicles Seamless integration with all GigglePop valuation tools, including Guide Books, Vehicle History and participating Market Reports

In addition to providing mobile access to these key services, NIADA Mobile Service also connects members to select NIADA content on the NIADA site. Wherever you are, you can stay on top of moving legislative decisions, regulatory compliance issues, new NIADA member services and educational programs.

Especially in today’s market, still recovering from the recession, this mobile service will help members operate more profitably. It puts at hand the insight needed to buy and sell more profitably and keep abreast of industry news and events influencing the used vehicle retail market. The more competitive dealers today are clearly adapting to our changing industry by using mobile technologies and solutions to help them better manage their used vehicle operations, inventories, vehicle sourcing and retail sales processes.

DELIVERS TANGIBLE MEMBER BENEFITS Members’ use of the NIADA Mobile Service tool will help them:

I dentify quality, retail-ready inventory: Mobile accessibility to auction inventory as well as vehicle valuation guides can help dealers meet challenges presented by the economic fallout from the last three years’ depressed vehicle sales, drop in leasing activity and reduced stream of fleet rentals into the remarketing stream. s Source the right-priced vehicle for the customer: Reduced levels of wholesale units flowing into remarketing channels have made it more difficult to source and match the right vehicle to customers’ ability to pay. NIADA Mobile Service helps dealers locate those vehicles at an acquisition price the customer can afford and finance, while providing enhanced profit for the dealer. s

Often spread thin by needing to be in the office, on the lot and at the auction seemingly simultaneously, the independent used auto dealer must use time and resources wisely. By adding this new Mobile Service tool to the NIADA portfolio of member services, the association helps its members access critical association information and related vehicle valuation, history reports and auction run list services right from their smart phone. As market needs continue to change and dealers seek new ways to remain competitive, like purchasing inventory outside their local market areas and using web-based competitive vehicle analysis and pricing tools, GigglePop and NIADA will continue to enhance Mobile Service to help dealers make the most informed and profitable business decisions.

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FACEBOOK 101

THE DEALERS SOCIAL MEDIA BY DUSTI N JANSSO N

How effective is your dealership’s following and interaction with Facebook and other social media? Most dealers create a fan

page, load a photo of their dealership and don’t invest any more time or effort in the page’s content or building the fan base. Although thousands of dollars are spent in a dealer’s monthly advertising budget, the Facebook and social media investment is often overlooked when it could be the best source of customer retention and referral business. Social media can be exceptionally beneficial when you’re dealing with hundreds of millions of people on multiple levels. First, you have the ability to connect with consumers on more of a personal level. Second, you create a one-off relationship where the thought of making a purchase from a dealer utilizing these tools is a much more comfortable engagement. Third, you can effectively continue a relationship with the consumer for years rather than days.

FACEBOOK FACTS

• More than 500 million active users • 5 0 percent of active users log on to Facebook in any given day

• Average user has 200 friends • P eople spend more than 700 billion minutes per month on Facebook

• 2 5 percent of all internet traffic in the U.S. is going through Facebook

• “Like” button found on two millionplus websites (Bing, etc.)

Start by tending to your own backyard… your customers! The horsepower of a fan page is built by your following that will give you the power to deliver your messages more efficiently and methodically. Advertising a sale every weekend by posting it on FB is not the answer.

Remember the customer calendars with the picture of them buying their car from your dealership and those cut-out coupons spread throughout months for service and parts? Social media is the same concept, but on steroids and at a fraction of the cost or effort! You want your customers to “like” your fan page because that shows their hundreds of FB friends they like you. You can take this one step further and take a picture of every customer in their new car and “tag” them in the photo. Once you’ve tagged that person, all their friends will see it, leading to limitless impressions! The immediate network everyone possesses on FB is your highway to customer retention and referral business. Try enticing your customers by offering a referral or bird-dog fee to give them incentive to engage their FB friends into your dealership. Again, social media is not necessarily lead generator, but a vessel to grow your business’s reputation on multiple levels. You may not get a Facebook message saying, “I would like to purchase a car from you,” but you will likely get recommendations from people in your network to buy from your dealership. Proper page setup and execution of your social media is important. Your dealership page should be set up as a fan page on FB, not a personal profile. Information and photo captions on fan pages are indexed for search engines, so make sure your information is complete and appropriately labeled. You also can have your inventory listed with videos, if applicable. Sending mass messages to your fans is only possible with fan pages. The list of fan page do’s and don’ts goes on and on so if you believe you need help with the setup of your social media pages contact DealerNet Solutions for some consulting. Execution of your social media really comes down to this: what reason do you give people to like your page and revisit

it? You need to run on all cylinders (sales, parts, service, customer appreciation, etc.). Make your content fun and attractive to the customer as well as informing and beneficial. Update your fans about the little league baseball team you sponsor, or about a little-known holiday that’s occurring today, then add something about the new offerings your service or detail department has. Prospecting with social media is possible, too. There is technology now available that allows you to enter keywords to search for in a specific geographic radius on the social networks. Every time those words show up in somebody’s shared post or tweet, you see them (e.g. shared post; I am looking at a Toyota Camry) and can often capture their contact info by just “friend-ing” or “following” them. Companies such as DealerNet Solutions have taken the lead in the social media realm by not only providing auto-targeting to capture the millions of consumers, but also by tying in traditional internet inventory posting on their social media thus creating a web around all aspects of internet marketing. Again, driving sales with Internet postings is not enough, but coupling it with social media creates a new generation of sales. All the potential is in the big picture. The way dealers advertise has changed immensely and the days of the instant leads are growing fewer. Your services and reputation are what set you apart from the rest of the competition. Being able to manage millions of potential customers will take you to the top. DUSTI N JANSSO N provides consulting on social media and social media management tools as well as complete dealer inventory marketing and management products. Contact him at 303-232-3435 or dj@ dealernetsolutions.com

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F EDER AL ADVOCAT ES LOBBY ING REPOR T

NIADA’s Whann Participates in First FTC Roundtable I have just returned from the FTC roundtable entitled “The Road Ahead: Selling and Financing Motor Vehicles” held at the Wayne State University School of Law in Detroit, Mich. Choosing a law school as the venue for the event was perfect! So many of the discussions centered around complicated fact patterns, the application of overlapping federal and state laws and variations and inconsistencies from state to state, you felt as though you were sitting in a law school classroom. The program consisted of six panel roundtable discussions on the following: Understanding the Motor Vehicle Sale and Credit Transaction, From Both Prime and Subprime Perspectives; Interest Rates, Dealer Reserves and Markups; Payment and Locator Devices and Consumer Privacy; Spot Delivery; Contract Add-Ons and Vehicle Title Problems and Dealer Bankruptcies. The panels consisted of five members each (one had four) and had a mix of regulatory, industry and consumer representatives. They were moderated by six different FTC staff members, all of whom I have met on my trips to Capitol Hill (and have had the opportunity to discuss the issues being considered in the roundtables) and they did an excellent job facilitating discussion. While all other industry members were limited to participating on a single panel, I was asked to participate on two (I volunteered for all six). I took it as a compliment, but you decide for yourself.

The goal for the day was to “explore consumer protection issues pertaining to motor vehicle sales and leasing” and to determine “what consumer protection issues, if any, exist that could be addressed through a possible rulemaking or other initiative.” All in all, I would say the day was quite productive. However, with the individual roundtables lasting only 30 to 90 minutes, it was difficult at times to get into depth on many of the subjects. Consider the challenge in even being able to explain something as basic as what is a motor vehicle dealer and how do they operate? Franchised or independent? Big or small? Metro or rural? Threeparty paper financing or two-party paper financing, with a little Buy Here-Pay Here thrown in for good measure? And we are only beginning to scratch the surface! As background, the Dodd–Frank Wall Street Reform and Consumer Protection Act is a federal statute in the U.S. that was signed into law by President Barack Obama on July 21, 2010. The act is categorized into sixteen titles and from the and, from the estimates I have seen, requires regulators create 243 rules, conduct 67 studies, and issue 22 periodic reports. The stated aim of the legislation is: “To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”

So what exactly does the act do? This description from Wikipedia is one of the best I have seen: “The Act changes the existing regulatory structure, such as creating a host of new agencies (while merging and removing others) in an effort to streamline the regulatory process, increasing oversight of specific institutions regarded as a systemic risk, amending the Federal Reserve Act, promoting transparency and additional changes. The Act establishes rigorous standards and supervision to protect the economy and American consumers, investors and businesses, ends taxpayer funded bailouts of financial institutions, provides for an advanced warning system on the stability of the economy, creates rules on executive compensation and corporate governance, and eliminates the loopholes that led to the economic recession. The new agencies are either granted explicit power over a particular aspect of financial regulation, or that power is transferred from an existing agency. All of the new agencies, and some existing ones that are not currently required to do so, are also compelled to report to Congress on an annual (or biannual) basis, to present the results of current plans and to explain future goals. Important new agencies created include Financial Stability Oversight Council, the Office of Financial Research, and the Bureau of Consumer Financial Protection.” It should be noted while section 1029(d) of DoddFrank confers on the FTC authority to prescribe rules under the Administrative Procedures Act with respect to unfair or deceptive acts or practices by motor vehicle dealers it does not, however, expand or otherwise address the authority the FTC already possesses under the Federal Trade Commission Act to initiate enforcement action against unlawful behavior. Given the fact there appears to exist a somewhat unbalanced and hostile view amongst some in the regulatory community towards dealer-assisted financing, one of the most important tasks as an industry will be to assist the FTC and the consuming public in better understanding the mechanics of dealer-assisted financing. We must also collectively establish a facts-based record upon which the question of whether to engage in a UDAP rulemaking may be considered. Over the past 27 years (the last 16 as outside general counsel to NIADA) I have had the opportunity to work with federal regulatory agencies, including the FTC, to promote independent dealers’ compliance with federal statutes and regulations and to educate consumers about the car buying and financing processes. Never in this time period has there been an issue as important to independent dealers and the future of our industry as this. It will change the landscape of how cars are sold and financed for years to come. We will continue to be actively involved in the process as things progress and I look forward to having the opportunity to discuss the issues in greater detail at the NIADA Convention & Expo in June. Until then, you can stay current with the latest developments by following me at www.facebook. com/keithwhann and twitter.com/keithwhann. See you in Las Vegas! FEDERAL ADVOCATES is NIADA’s governmental advocacy partner. To read past lobbying reports, visit www.niada.com/ legislative_and_legal.php

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CNW

Dealers Are Finding Inventory Short on Cars

In what could be stemming from gas-price anxiety, dealers’ used-vehicle inventory on hand appears to be changing. And the shift that CNW Research spotted could possibly end up being “troubling” for dealers. What,

exactly, did CNW see? Basically, CNW noticed instead of there being a shortage of trucks within dealership inventories, dealers are now finding that their lots are short on cars. Overall, used-vehicle days’ supply in March was estimated to be 48.27 days. CNW noted used vehicles are available, but suggested this possible shift in the mix of cars and trucks may be troubling for dealers. In recent years, CNW explained, truck demand has been stronger than car demand. “Beginning in February, though, the trend changed,” said Art Spinella, president of CNW. “Of inventory on hand, cars now represent about 92 percent of days’ supply while trucks have climbed to over 110 percent. “If this were a one-month snapshot, it could be written off as merely an anomaly,” he added. “And it still may not be reflective of a long-term trend. But it is worth noting.”

He went on to suggest a likely impetus for the change is concerns about gas prices may finally have hit home and sent people to the car side. “While this will have little impact on casual sales, it will definitely affect franchised and independent dealerships who now have to beware of overloading lots with trucks or being forced to lower truck prices to facilitate a sale,” he said. CNW Projects Robust March With March used-vehicle sales projected to show as high as a 6-percent year-over-year spike, the first quarter of 2011 is likely to signal some significant progress for the used side of the market. Pushed by looser credit, CNW is projecting used sales in March will show anywhere from a 5.5-percent to a 6-percent improvement from the 2.39 million used sales in March 2010. “That would make the opening quarter of 2011 the best since 2008 – 6.336 million versus 6.63 million three years ago,” Spinella noted. CNW also looked at sales per outlet data for independent stores in February and discovered

this average increased by double digits. Specifically, the company found independents moved an average of 17.6 vehicles per outlet during February, which marks a 15.7-percent hike from the 15.2 unit-per-store average from a year ago. “In fact, because of the decline in the economy in 2008 and 2009, the independent dealer body shrunk dramatically,” Spinella said. “With an economic uptick and the availability of inventory, there are more independent outlets today. Outlook: a better profit picture for independents.” Web Trends Another area of the used market CNW examined was used-vehicle sales in the online arena. The company found the sales rate of Internet vehicles came in at 26.9 percent during February. A year ago, it was at 23.9 percent. “The 12.7-percent boost represents a near 90,000 unit increase,” Spinella said. “Total inventory offered on the Internet is four percentage points larger than last year.”

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N IADA/NAC CERTI FI ED PRO G R A M

GROWS WITH NEW PA R T N E R S H I P S, E N H A N C E M E N T S

BY C H RISTI NA SC H RAN K

To give independent dealers the ability to compete with franchise dealers offering manufacturer certified pre-owned vehicles, NIADA and NAC (formerly National Auto Care) last year created NIADA Certified. The program

includes comprehensive 12-month, 12,000-mile warranty coverage with no deductible, 24-hour roadside assistance, towing, rental and more. In November 2010, the program underwent significant changes to incorporate more value for dealers and even higher satisfaction for customers. NIADA Certified added additional team members experienced in the used vehicle market to ensure processes were put in place that would support dealer certified success. Today, the program is supported by an active training calendar with contribution from strategic partners and best practice review. “Certified used autos has become its own listing category. Between new and used, the NIADA Certified program levels the playing field and allows independent dealers the opportunity to compete for those consumers looking for certified inventory,” said Greg Levi, NIADA Certified strategic relationship director. “The program allows independent automobile dealers the opportunity to create their own competitive program.” Subject to a comprehensive inspection, NIADA Certified vehicles include a 12-month, 12,000-mile limited warranty with a zero dollar deductible. Dealers will now be supported through ongoing training and best practices review by the

NIADA Certified team. Better yet, even with the increased warranty coverage, the same eligibility guidelines for NIADA Certified qualify, including most 10-yearold or newer vehicle models with less than 100,000 miles. “The independent market needed an answer to the manufacturers’ certification program and the NIADA certification program lives up to the promise,” Levi said. The positive consumer experience is assured by repairs that can be made at any licensed repair facility and with a program that’s supported by 25 years of administration experience. After a vehicle has passed an inspection that meets the program’s certification standards, it’s then registered with NIADA Certified through our unique online Express Lane™. Following registration, the dealer has access to a free copy of an AutoCheck® vehicle history report, the ability to print a compliant buyer’s guide, print a clean and professional inspection checklist which can be used in either the showroom or online, plus the capability to export certified inventory to third party portals including Auttr Motors, eBay® Motors, and EVERYCARLISTED. com®. These exports provide the ability to advertise the vehicle as NIADA Certified and offer it with a limited warranty that begins when the vehicle is retailed to the consumer. These many new partnerships with third party portals, especially its newly announced affiliation with eBay® Motors, allow the dealer’s NIADA Certified inventory to be discovered with a search for certified inventory alongside manufacturer results. NIADA Certified is the first independent

certification program to be recognized with the manufacturer programs. And, because our system is Web-based, all of this – and much more – is accessible to dealers in just a few simple clicks. The program coverage enhancements have allowed us the opportunity to grow and add to our strategic partnerships, provide above-and-beyond support and service and give dealers a way to offer consistent value to consumers and solidify relationships with lenders. NIADA Certified most recently partnered with eBay® Motors as one of our program’s inventory exports. Each program dealership will have its NIADA Certified inventory exported to eBay® Motors classifieds, providing a free listing to be displayed to all within a 200-mile radius of each dealer. Also, NIADA Certified recently announced a partnership with OPENLANE, an online auction company which now offers program listings to dealers on Open Auction. This new listing acknowledgement gives the NIADA Certified brand additional creditability and provides an option to those dealers who want to wholesale inspected vehicles which meet the program’s certification standards. “These many new third party online portal partnerships are vital to the success of our NIADA Certified program,” said Michael Linn, CEO of NIADA. “The recognition and powerful marketing arm these online portals provide is invaluable to all of the dealers who participate in the program. It’s like free advertising, and research proves over and over again CO NTI N U E D O N N EXT PAG E

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that online listings that promote certified vehicles sell faster and for a larger profit.” The NIADA Certified team also has focused efforts on building partnerships with lenders in order to create incentives and discounts on funding for NIADA Certified vehicles. Recently, NIADA Certified announced Columbus Finance, Inc., a lender serving the central Ohio market, agreed to give dealers an additional 10-percent advance (up to $1,000) and will offer customers one percentage point off program rates when purchasing a NIADA Certified vehicle. The team also is working with additional lenders to put together similar partnerships and lender opportunities to dealers across the country. “As our NIADA Certified program continues to grow, so will the lender partnerships associated with it, at the local, statewide and national levels,” said Linn. “Over the past four years, NIADA has been highly successful at bringing lenders and dealers together, and the NIADA Certified program is another great opportunity to expand on great relationships like the one locally that was just announced in Ohio.” The NIADA Certified team is excited

about the momentum that’s been building during the first quarter of 2011. Today, there are 120 dealers participating in the program in 30 states around the country and the number is growing weekly. Those dealers are enjoying the benefits of the NIADA Certified team’s support before, during and after initiation into the program. Now, after signing on to participate in the free program, dealers attend an online implementation webinar hosted by our NIADA Certified team. The webinar is interactive and allows our team to review the program, tools, best practices and, most importantly, how to get the program started within a dealership. The training is available for both the dealer and their personnel every week. Once implementation training has been completed, marketing materials are sent to the dealership and our training team follows up to ensure the dealer has all the information and tools needed to succeed. Our team then consistently communicates with each dealer on items such as program enhancements and additional training opportunities and continues to review best practices.

NAC is the administrator of the NIADA Certified program. The warranties are backed by an A-rated insurance carrier with more than $26 billion in assets, a figure that gives dealers with the peace of mind provided only by a fully insured program. There is zero dealer liability for repairs that fall under the warranty period. All dealers on the program receive a contractual liability insurance policy issued directly from the insurance company. For more information on NIADA Certified, call 800-840-2567 or visit www. niadacertified.com. Don’t forget to visit often, as the site is constantly updated with new and exciting information, announcements and program enhancements. NIADA Certified also can be followed on Facebook, Auttr and Twitter. CH RISTI NA SCH RAN K

is the vice president of marketing for NAC and a 15-year veteran of the auto industry. NAC has been developing innovative, value-based aftermarket products and competitive service agreement programs for automotive, power sports, and recreational vehicles for almost 30 years.

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Contact At Once PARTNER FOR DEALER CHAT AVAILABILITY AutoTrader.com and Contact At Once recently partnered to deliver chat functionality to dealers who list their vehicles for sale on the site. The dealer live chat feature is a part of AutoTrader.com’s Connections Bundle, which is intended to provide dealers with multiple avenues to build and foster relationships with shoppers online. The Connections Bundle also includes dealer ratings, social media connections and Sitelink Advanced. Officials believe the integration of chat capability through chat software provider www.autodealerchat.com can enable dealers to instantly connect with prospects via text-based conversations online and boost the bundle’s overall value. After an extensive search and testing process, AutoTrader.com explained it selected Contact At Once to power the dealer live chat solution because of Contact At Once’s position as a leader in the space and ability to deliver a bestin-class chat experience for both dealers and consumers. Officials highlighted the chat window can display the name and photo of actual dealership employees, a feature meant to improve the

consumer experience. They believe this function has been shown to increase the number of chat inquiries dealerships receive. AutoTrader.com pointed out the dealer live chat solution is also presence aware, so consumers will only be prompted to initiate a chat session if a representative is available, ensuring consumers are never left hanging. Additionally, the Contact At Once dealer live chat solution can enable dealers to conduct chats via their iPads, smartphones or other mobile devices. Dealers can be responsive to consumer inquiries even when they’re not at their desks, according to the companies. According to the recent Automotive Buyer Influence Study conducted by Polk and AutoTrader.com, consumers spend 18 to 19 hours shopping for vehicles before they make a purchase with about 60 percent of that time spent online. However, the study found consumers have shown a reluctance to pick up the phone to call dealers during their search and have long been dissatisfied with e-mail response times, leading 70 percent to just walk into a dealership without first making contact.

“Faster than e-mail and more convenient than a phone call, online chat enables consumers to get instant answers to their questions while enabling dealers to begin creating a relationship with shoppers before they show up on the lot,” said AutoTrader.com president and chief executive officer Chip Perry. “We are pleased with the performance of the Contact At Once dealer live chat platform and excited about the value it has already brought both dealers and consumers.” Early value tests conducted by AutoTrader. com showed dealers who added dealer live chat to their listings experienced an average lift in shopper interaction of about 20 percent. “AutoTrader.com’s embrace affirms the mainstream status of dealer live chat software and signals a new reality — that dealers not using chat are missing sales opportunities,” said John Hanger, president and CEO of Contact At Once. “We are honored to have been selected and look forward to working with AutoTrader. com to connect dealers and consumers.” Dealers who are interested in learning more about the Connections Bundle should talk to their AutoTrader.com advertising consultants.

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NIADA and Constellation Automotive Solutions Announce Training & Education Partnership The National Independent Automobile Dealers Association and Constellation Automotive Solutions are pleased to announce an education and training resources partnership designed for NIADA members. Constellation will provide comprehensive education and training solutions for the Buy Here – Pay Here and Lease Here – Pay Here dealerships, together known as the “Dealer Controlled Financing (DCF) industry”. These educational programs will include best practices training with solutions for maximizing sales, collections and profitability through seminars, online training on NIADATV and articles in NIADA publications. Partnered with NIADA, Constellation will add a Certified DCF Dealer option to NIADA’s Certified Master Dealer Program®. “I was looking to develop a partnership with an entity that has good, experienced trainers that NIADA could use as our BHPH and LHPH training solution”, said Michael Linn, CEO of NIADA. “It was important to me to offer quality education and training to our members. Constellation Automotive Solutions was the perfect fit for us.” Linn continued, “Their training materials are superb and their trainers, Al Mosher and Don Miller, have extensive knowledge and experience in the Buy Here – Pay Here and Lease Here – Pay Here industry.” “NIADA is the leading voice for independent auto dealers in the country”, said Robert Lowenstein, Business Manager for Constellation. “It is an honor to be able to serve its 20,000 members and help NIADA expand its educational resources for dealers engaged in Dealer Controlled Financing.” Constellation will provide a number of valuable services to NIADA members, including: National DCF Monthly Composite The DCF Monthly Dealer Composite provides the BHPH/LHPH dealer a four page report reflecting their dealership’s business results from the previous month, as well as year-to-date. It compares their operation with the averages, minimums and maximums of other BHPH/LHPH dealers across the nation. Also included are 12 months of historical figures and graphs which can aid dealers with projections and spotting dangerous trends. Convention & Expo Seminars Constellation, in consultation with NIADA, will be responsible for providing educational opportunities concerning dealer controlled financing at the NIADA Convention & Expo every year. This will kick off at this year’s convention June 20th – 23rd in Las Vegas with a seminar titled “7 Keys to Success in Dealer Controlled Financing”. That session will include valuable information on 7 key topics ranging from business models to inventory to collections and will feature tips from a panel of successful dealers.

DCF Manager Training Course The Manager Training Course is a comprehensive, 3-day class involving all aspects of the day-to-day operation of a DCF dealership. Techniques and guidelines are taught to help you better utilize your inventory and personnel, improve your sales process, establish better and more consistent underwriting, effectively collect what is owed you, better manage your delinquency and stay in compliance with laws and regulations affecting our industry. Attendees will come back to the lot better equipped to consistently produce results to improve their dealerships bottom line.

This partnership between NIADA and Constellation Automotive Solutions opens up a wealth of new educational and training opportunities for NIADA members. Constellation’s consultants have been providing industry-leading training and education for DCF dealers for well over a decade and are excited about this opportunity to expand its services and aid NIADA members with all their needs in the Buy Here – Pay Here and Lease Here – Pay Here arenas. NIADA and Constellation urge all NIADA members to explore how these new programs can benefit them and help them improve their businesses.

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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CARFA X L AUNCHES ADVANTAGE PROGRAM FOR DEALERS NEW PROGRAM DESIGNED TO INFLUENCE SHOPPER’S DEALER CHOICE, ENHANCE CONFIDENCE

Carfax is giving dealers a powerful new way to attract customers using the Carfax brand. The Carfax Advantage™ Dealer Program distinguishes Carfax-subscribing dealers that are committed to transparency. Through the program, partici-

pating dealers can set themselves apart from their competition. Used car shoppers know they can buy with greater confidence when shopping at any Carfax Advantage dealership. “Being a Carfax Advantage dealer with unlimited access to Carfax Reports, Carfax has quickly become one of our most valued partners,” said Adam Warmka, general sales manager at Dick Brantmeier Ford Lincoln Kia in Wisconsin. “We use them when we’re buying cars to make sure everything checks out and our salespeople are constantly asking for printed copies so they can show our customers. Every car we list online has a Carfax Report. Carfax is in our advertising, out in front of our dealership and on every car in our inventory. We use them every day.” According to recent research, more than 80% of used car shoppers surveyed said they would prefer to shop at a Carfax Advantage dealership. Carfax Advantage dealers have another way of building confidence with used car buyers and help customers make faster buying decisions. “Our participation in the Carfax Advantage program has helped us build credibility with customers,” said Dan Moltz, general manager at Car Center of Waldorf, Md. “We show the Carfax up front on every car. Customers appreciate it and the result is additional sales and higher customer satisfaction. Also, by pulling Carfax Reports prior to buying inventory, we shorten our turn, which we all know increases retained earnings. The more you turn, the more you earn.” As part of the program, participating dealers have unlimited access to Carfax Vehicle History Reports and Carfax Auction Quick Check, plus a Consumer Information Pack for every car being retailed. Carfax also provides enhanced point-of-sale materials for free, including new items that highlight Carfax Advantage dealerships. “Transparency greatly influences consumers when making their dealer choice,” said Bill Eager, vice president of Carfax. “Thousands of consumers we tested said that the Carfax Advantage program means trust and confidence. They know immediately that a Carfax Advantage dealer will show them the Carfax. As a result, participating dealers enhance their reputation and sell more cars faster.”

PRE-GAME WARM-UP:

REVIEW FINANCING PRACTICES AHEAD OF CFPB AND FTC RULES It’s the beginning of the baseball season. Experts are poring over team rosters, game schedules and statistics to predict the season’s outcome. The fun and fear is the

element of the unknown. The same is true of the new Consumer Financial Protection Bureau. As it takes shape, we are checking its roster of leaders and their speeches and public announcements to predict first-year activities. The fear, not so much the fun, is the element of the unknown. One unknown is how the bureau and the Federal Trade Commission will define an unfair, deceptive, or abusive act or practice in motor vehicle financing. The Dodd-Frank Act authorizes them to make and enforce rules to prevent such acts and practices in consumer financial products and services. Many states already have similar statutes, but each state has its own unique definitions and case law. Some states have developed a large body of case law defining the standard, but the Dodd-Frank Act will add a unique layer of federal law, regulations and court decisions. State attorneys general also can sue to enforce federal law, so we may see case law develop based on unique state decisions to enforce. In addition, state laws that provide greater consumer protection will continue to be enforceable. The FTC recently announced it’s conducting public roundtables in three to five cities around the U.S. to discuss consumer protection issues in connection with motor vehicle sales and leasing. It published a list of discussion topics indicating the acts and practices under the most intense scrutiny. The list includes yo-yo financing, finance company incentives to dealers resulting in more expensive credit, interest rate mark-ups and upfront charges of which the consumer is unaware, negative equity financing, selling and financing add-on products and services and use of GPS location devices. Details may be found at ftc.gov. Information from the roundtable meetings will likely shape the FTC’s view on whether the practices discussed are in any way unfair, deceptive, or abusive acts or practices. The meetings will likely be a game changer. Whether or not you participate in the meetings, you should review your dealership’s practices in these areas. The legal standard for review will develop over time. For now, I suggest the common person standard: Would you be comfortable having your practices displayed on the Jumbotron at the ball game? BY CH I P ZYVOLOSKI 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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