D E C E M B E R 2 016
STREET SMART
MAGAZINE
O F F I C I A L P U B L I C AT I O N O F I I A D A O C T O B E R / N O V E M B E R 2 0 17
DOES YOUR
SALES PROCESS
MEASURE UP? Time to Fine Tune PAGE 14
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W W W.IO WA I A DA .C O M
S TAT E A F F I L I AT E
DEALER SPOTLIGHT
BY IIADA STAFF
GETTING TO KNOW YOU Marcus Hebert Marcus Hebert’s great grandparents immigrated to America from Czechoslovakia. He calls himself a “Bohunk.” A 1999 graduate of the University of Nebraska-Omaha with a degree in broadcasting/communications, Marcus’ first full time television job was a production tech for NBC in San Diego. This six foot, four inch, 42 year old auto dealer has a very pleasant demeanor. He probably can’t be labeled a “typical” car dealer, not only because of his background, but also because he has a big taste for entrepreneurship. Prior to becoming a car dealer, Marcus worked with an Omaha television station doing production news and various business promotions as well as TV commercials. He specialized in car commercials. When he decided to become an auto dealer nearly 10 years ago, Marcus first worked for a friend for a year to learn how a dealership operates. Nine years ago he started CarsNow, a Council Bluffs Buy HerePay Here dealership. Born and raised in the Omaha area, Marcus has one brother. His mother still lives in the homestead her grandparents bought in 1921 in South Omaha. Marcus has several favorite restaurants in the Omaha area – the Bohemian Café and several of the south Omaha Italian restaurants, including Caniglia’s. One of his favorite dishes is pork and dumplings like his grandmother used to make for him. Since the Bohemian Café and Cagnilia’s have now closed he must patronize Pitch more. A few years ago Marcus had an opportunity to diversify his assets. Marcus said, “I always told my wife, Regan, we are not going to get into the restaurant and bar business as I helped put myself through college bartending and that type of business takes a lot of time. I did not want to do that again. “We had the opportunity to get into a growth business and had an operator who wanted to be at the restaurant every day and run the front part of the operation and we as investors would run the back of the operation. We started Pitch Pizzeria in the west Omaha Village Point area and now have two locations in Omaha. We have built another facility in Scottsdale, Arizona, and it will open in late fall of this year. “The restaurants we have started allow us to grow using an owner/operator model. We offer our operator a chance to own part of the business. They work for us for a while and then we open it up for them to
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THE HEBERT FAMILY
get involved financially as well. This model provides us with excellent employees and smooth running restaurant operations.” The restaurants support a variety of charities as does the car lot, but the charities have to be local. Marcus said, “We support homeless shelters in Omaha, Council Bluffs and Carter Lake.” Marcus and his wife, Regan, have three children: Lauren, 12, Stanley, 11, and Claire, 7. Regan is now a stay at home mom, but was a teacher for 15 years. The family has a Golden-doodle named Seaside who inherited her name from a little town in Florida. “We try to take several vacations every year,” Marcus said. “Our favorite vacation spot is Panama City, Florida, with its bright white sandy beaches.” Marcus doesn’t have much time for hobbies but still does videos of his children’s sports activities. When Marcus was asked about his pet peeves he said, “I am too positive of a person – there is just too much good to worry and reflect on the bad stuff.” We asked Marcus what he likes best about the car business. He replied, “The energy – you never know what is going to happen. The craziest things happen. The car business breeds energy. It is fun to come to work at the dealership and that has spilled over into our restaurant business. “While I realize we need regulations in the auto industry and the paperwork and regulation is always necessary as a lot of dealers don’t do things right, it is not my
WHEN HE DECIDED TO BECOME AN AUTO DEALER NEARLY 10 YEARS AGO, MARCUS FIRST WORKED FOR A FRIEND FOR A YEAR TO LEARN HOW A DEALERSHIP OPERATES. NINE YEARS AGO HE STARTED CARSNOW, A COUNCIL BLUFFS BUY HERE-PAY HERE DEALERSHIP. favorite part of the business.” Marcus has had the opportunity to get to know more and more dealers over the years and sees a common trait among those who are successful – their tenacity to stick with it and get through the lean times. Marcus said, “I hope that I have that trait and enjoy seeing it in other dealers too.” Marcus can relax a little when he turns off his phone. He also enjoys boating and has had speed boats, but really likes his recently purchased pontoon, which he finds relaxing. Marcus has served on the IIADA board for three years. He said if he were to give advice to a beginning dealer he would tell them to be honest, don’t get lazy, be proud of the profit you make and always give back. Marcus is a devoted family man and is looking forward to some fall trips with his family pontooning on the Missouri River. By all standards Marcus has created a successful dealership, employing seven people, while pursuing expansion in the food service business with a model for good food as well as well trained and rewarded employees. As their website proclaims, “every taste and texture you experience at Pitch is lovingly made from scratch.” Marcus exemplifies the reward for work well done as it provides the opportunity to do more. We wish Marcus continued success with his dealership and the expansion of his restaurants, and thank him for the privilege of sharing his story with others. There could be a special place in heaven for this Bohunk. Marcus Hebert, we wish you an abundance of good fortune. October/November 2017 / STREET SMART
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INSIDE
03............................... Dealer Spotlight: Marcus Hebert 06...................................................... Tidbits from IIADA 07...................................................................CarLawyer 09...Tips to Secure Vehicle Service Contract Financing 10.....................Examining Salvage/Total Loss Vehicles 14.....................Does Your Sales Process Measure Up?
WHAT’S NEW
NATIONAL POLICY CONFERENCE SESSIONS CATCH THEM ON NIADA.TV
Get caught up on the latest national regulations on the NIADA.tv Compliance/Legal channel! There was an impressive lineup of federal compliance and regulatory educational sessions during the recent National Policy Conference in Washington, D.C., including updates from the FTC, CFPB, and Small Business Administration. These sessions will be available for viewing on NIADA.tv October 16.
ADVERTISERS INDEX
Black Book...................................................................IFC Manheim......................................................................11 NextGear Capital...........................................................8 Protective................................................................... IBC vAuto............................................................. Back Cover
OFFICE
For information on how to become a member please contact Judy Wilson. iiada@netins.net • 641-755-4177
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 Street Smart is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of Street Smart or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright© 2017 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT
Christopher Hanley • chris@niada.com PRINTING
Nieman Printing
RETAIL INSTALLMENT CONTRACTS IIADA has two distributors who will provide the Wolters Kluwer Financial Services retail installment contracts for Iowa dealers. These retail installment contracts have a compliance warranty. In some cases, you will need to have your software provider reprogram for you. You may order by phone or online and these will be shipped directly to the dealership. Thank you for working with these distributors. PLEASE CONTACT: WILSON DISTRIBUTOR SERVICE • 1-800-634-0974 • www.wds-usa.com or Erikson Solutions Services, llc • 402-639-0664
KNOW WHERE TO LOOK FOR RECALL INFORMATION ON VEHICLES
Vehicle dealers needing information on factory recalls can visit www.recalls.gov or find manufacturer toll-free numbers by going to www.autopedia.com/html/HotLinks.html and making contact with the respective automaker. Know what recalls are pending on vehicles before you purchase them and give your customers peace of mind by checking out possible recalls before you retail the vehicle. For further info please visit www.safercar.gov or www.safercar.gov/vinlookup FIND ADDITIONAL RECALL INFORMATION AT THE FOLLOWING WEBSITES: www.recalls.gov and www.autosafety.org
INVESTIGATIONS INFORMATION LINE 515-237-3050
The hours of operation are Monday through Friday, 8:30 A.M. TO 3:30 P.M. This phone line receives numerous calls so the IDOT encourages the use of our email (invbureau@iowadot.us) if the phone line is busy. The bureau investigations information line provides a way for the public to request information, ask questions or file a complaint related to investigative duties and responsibilities. This line is the primary point of contact to reach an investigator who is responsible for investigations in a specific area of the state of Iowa. To ensure accurate information is provided, the bureau investigations information line is answered by a bureau of investigation and identity protection investigator.
BOARD MEMBERS PRESIDENT
Jeff Schneider
Pocahontas Sales & Service PO Box 66 Pocahontas, IA 50574 712-335-4470
CHAIRMAN OF THE BOARD
Douglas Livy, Jr.
Preowned Solutions 11010 Douglas Ave. Urbandale, IA 50322 515-528-8180
Kim Nelson
Nelson Automotive, LLC 300 Sandpiper Court P.O. Box 466 Polk City, IA 50226 515-984-9600
VICE PRESIDENT
Craig Dam
Carroll Car Credit Co. 409 E. 6th St., Box 805 Carroll, IA 51401 712-792-0140
TREASURER
Judy Wilson, IIADA P.O. Box 337 Panora, IA 50216 641-755-4177
STREET SMART / October/November 2017
Tab Miller
Quality Motors of Ames PO Box 7 Ames, IA 50010 515-290-2673
Clay Winterboer
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REGIONAL REPRESENTATIVES
Dam Auto Sales, Inc. 1021 Lewis Blvd. Sioux City, IA 51105 712-522-2831
Rick Theilen
Theilen Auto Sales 10536 265th Street Clear Lake, IA 50428 641-424-3352
Jay Muller
Best Auto, Inc. 900 S. Grand Avenue Spencer, IA 51301 712-262-4581
David A. Farmer
David A. Farmer, Inc. 1613 Franklin Center Point, IA 52213 319-849-2432
ADMINISTRATIVE OFFICES
P.O. Box 337 Panora, IA 50216 Ph: 641-755-4177 Fax: 641-755-3247 Email: iiada@netins.net Toll Free: 866-962-9202
Doug Wilson
Lake Country Automotive P.O. Box 341 Panora, IA 50216 641-755-3048
Marcus Hebert
CarsNow, LLC 2124 W. Broadway Council Bluffs, IA 51501 712-256-6757
Merrill Hitchcock
Merrill’s Motors 317 N. 8th Street Winterset, IA 50273 515-462-1683
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ASSOCIATION NEWS
PRESIDENT’S LETTER
Fellow car warriors, A scientist did a study with monkeys. He trained them to respond to a test by touching the correct picture on a screen. When they got the answer right, he gave them a grape. The monkeys were so happy to receive the grape they concentrated and learned. He then put two monkeys beside each other in separate cages. They each gave the correct answer. He gave one monkey a grape and the other a banana. After the third such reward, the monkey getting the grape became visibly irritated. After five or six more questions, the monkey getting the grape became violent. This response is instinctive. No matter how much you try to reason with the angry monkey, he will never be happy as long as he sees the other monkey getting a better reward. I used to work in a factory and one of my coworkers had a negative attitude toward management. One time another employee received a nice raise. I thought, “He hasn’t missed a day of work in two years. He really deserves that raise.” My negative coworker, however, asked, “Did you hear about Charlie? They gave him a 10 percent raise! Why should he get a raise?! I’ve been here longer than him!” He went around the plant grumbling and
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nearly started a riot. He riled up several employees about the matter as if the company took money from his paycheck to give it directly to Charlie. I couldn’t help but wonder why he was so ruffled about something that had no negative effect on him. In fact, I had new hope it was possible for me to get a similar raise. I asked him, “Were you happy with your pay yesterday?” He just stared at me blankly because he realized if he told me the truth it would not align with his current narrative. We see examples like this all the time. Most of us are wired to react with emotion instead of using logic. One of my mentors once said, “If someone spits on you, does that make you mad?” and of course, everyone said yes. He then said, “That’s the difference between knowing what to think instead of knowing how to think. If someone spits on me, I get wet. I then have to decide to get mad.” When you know how to think, it empowers you far beyond those who know what to think. As we go through our everyday routines, we barely notice how we are constantly getting programmed by the news, radio, television, coworkers, social media, and other outside sources. All this input is helping us decide what to think about different subjects and events, and we don’t even realize it. Just stop for a second and ask yourself, “What could make people go out of their way to take a stand on things that have no negative effect on them personally?”
The angry employees were being programmed what to think and forgetting how to think. Try to keep this in mind the next time you have a disgruntled employee or get in an argument with your wife. Or even if someone spits on you, remember, you’re only wet. You have to decide to get mad. Now a little joke. A farmer is being interviewed about his cows. The interviewer asked, “How much milk do these cows give?” Farmer: “Which one? The black one or the brown one?” Interviewer: “Brown one.” “A couple of liters per day.” “And the black one?” “A couple of liters per day.” The interviewer, naturally a bit irritated, says, “I see. What do you give them to eat?” “Which one? Black or brown?” “Black.” “It eats grass.” “And the other one?” “Grass.” Even more annoyed, the interviewer asks, “Why do you keep asking which one when the answers are the same?!” “Because the black one’s mine.” “Oh, and the brown one?” “It’s also mine.” I hope this letter helps some of you and, if nothing else, puts a smile on your face. Thanks and best regards, Jeff Schneider President IIADA
October/November 2017 / STREET SMART
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ASSOCIATION NEWS
TIDBITS FROM IIADA Industry Updates The Used Car Rule Rumor has it Iowa DOT, while performing dealership audits, is discovering some dealers are not posting buyer’s guides in their vehicles. These dealers claim if they do not sell more than five vehicles a year they do not have to place a buyer’s guide in the vehicle window. Perhaps this needs to be clarified for these folks. Many years ago the Federal Trade Commission put out a booklet, in cooperation with National Independent Automobile Dealers Association, which explained in depth who must comply with the Used Car Rule and how. That piece said “most car dealers who sell used vehicles must comply with the Federal Trade Commission’s Used Car Rule. In fact, car dealers who sell more than five used vehicles in a 12-month period must comply with the rule.” At that time the fine for failure to comply with the rule was $10,000, which was a civil penalty amount set by statute. The FTC, after revisions to the Used Car Rule in November 2016, updated these guidelines. It now states “most car dealers who sell used vehicles must comply with the Federal Trade Commission’s Used Car Rule. In fact, car dealers who sell, or offer for sale, more than five used vehicles in a 12 month period must comply with the rule.” The fine for non-compliance now is $40,654. It seems rather than worrying about how few vehicles you can sell and not include a buyer’s guide in the vehicle transaction a dealer would just include a buyer’s guide with each vehicle’s paperwork. The forms can simply be filled out online and printed off. Dealers can surely spend a few minutes preparing a buyer’s guide for display on all vehicles offered for sale to their customers. Let’s get real folks. Plus, get serious about compliance in general. The Used Car Rule has been around since 1985 and fines have gone from $10,000 to $40,654 per violation. In 2015 Congress passed the Federal Civil Penalties Inflation Adjustment Act, which requires annual readjustments for inflation. Please go to the FTC’s website at www. ftc.gov and search for Dealer’s Guide to the Used Car Rule. Forms are available online. It is just too easy to not be in compliance. The cost is pennies. Everything you need to understand regarding the Used Car Rule is online and available to any dealer who will take the time to review the material.
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Consumer Protection Division of the Iowa Attorney General Sends Notice to Creditors In July 2017 all Iowa creditors who engage in consumer credit transactions – including auto dealers – received a letter from the Consumer Protection Division of the Iowa Attorney General’s Office advising them of the increase in the annual notification fee. The fee increased as of July 1, 2017, from $10 to $50. The Iowa attorney general serves as the Iowa Consumer Credit Code administrator. If you are registered with the AG’s office as a creditor/assignee, no additional payment is due. The new fee will apply to your company’s renewal filing in 2018, which must be filed every year by January 31. Late filing fees may also increase to $75, up from $25. The volume fees for the creditor/assignee notification forms remain the same. The bottom line is if you are filling out retail installment contracts, for conventional sales and Buy Here-Pay Here, you must register/file with the attorney general’s office annually. You can locate the forms and review requirements at www.iowaattorneygeneral. gov/for-businesses/creditorsassigneenotification/. A Guide to Help Maintain Compliance Within Your Buy Here-Pay Here Operation The legal team at Hudson Cook identified 10 places where dealerships could get burned if their adherence to state and federal regulations falls short. 1. Advertising: Know the federal and state rules that apply to advertising. 2. Pricing your cars: Eliminate the difference in prices between cars you finance and those you sell for cash. Put your prices on your cars and don’t change the prices based on cash or financed sales. 3. Acquisition fees and discounts: Know the rules that apply when you sell your contracts to finance sources that charge an acquisition fee or buy your contracts at a discount. Do not increase the cost of the car to cover the fee or discount. 4. Hidden finance charges: Don’t create other “hidden” finance charges. For example, don’t tell buyers you can’t get them financed unless they buy a service contract. 5. Financing repairs: Know the rules that apply to financing repairs for your customers. Have a written policy for financing repairs and document the transaction correctly. 6. SID/GPS devices: Know the rules that apply to the use of a starter interrupt
THE USED CAR RULE HAS BEEN AROUND SINCE 1985 AND FINES HAVE GONE FROM $10,000 TO $40,654 PER VIOLATION. IN 2015 CONGRESS PASSED THE FEDERAL CIVIL PENALTIES INFLATION ADJUSTMENT ACT, WHICH REQUIRES ANNUAL READJUSTMENTS FOR INFLATION. or GPS device with your customers. Provide written disclosure. Don’t charge for installation or use. Have a written policy and objective credit criteria regarding installation and use of device. 7. Convenience fees: Know the rules that apply to charging a convenience fee Can you charge a convenience fee? What does the law say? Document the transaction correctly and apply to the contract. 8. NSF fees on electronic payments: Know the rules that apply to charging a nonsufficient funds fee. Can you charge an NSF fee for electronic payments? What does the law say? 9. Fees to reclaim personal property: Do you know the state rules that apply to maintaining buyer’s property post repossession? What does your contract say? Do you charge the buyer(s) a fee to store the property? 10. Dual language materials: Ensure your contracts, advertisements, and other consumer-facing materials are in the same language for the entire document. Do not promote features in Spanish only to provide limitations and disclaimers in English.
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LEGAL UPDATE
BY THOMAS B. HUDSON AND NICOLE FRUSH MUNRO
THE CARLAWYER Keeping You Informed with the Latest
Governmental Issues and Activity in the Used Car Industry
Here’s our monthly article on legal developments in the auto sales, finance and lease world. The big news this month is the release by the Consumer Financial Protection Bureau of its final rule on arbitration. Why do we include items from other states? We want to show you legal developments and trends. Also, another state’s laws might be a lot like your state’s laws. If attorneys general or plaintiffs’ lawyers are pursuing particular types of claims in other states, those claims might soon appear in your state. Note this column does not offer legal advice. Always check with your lawyer to learn how what we report might apply to you, or if you have questions. This Month’s CARLAWYER Compliance Tip This one’s easy. Note the announcement of the CFPB’s new arbitration rule, discussed immediately below. If the documents your dealership uses in its transactions with customers include arbitration provisions, those provisions are going to require a legal review in time to meet the March 2018 deadline. You can’t start that process too soon! FEDERAL DEVELOPMENTS Arbitration Alert! On July 10, the CFPB issued a new rule banning companies from using mandatory arbitration clauses that prohibit consumers from seeking class relief. The rule also requires covered providers of certain consumer financial products and services involved in an arbitration pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the CFPB and also to submit specified court records. The Dodd-Frank Act required the CFPB to study the use of mandatory arbitration clauses in consumer financial markets and authorized the CFPB to issue regulations in the public interest, for the protection of consumers, and based on findings consistent with the CFPB’s study. The CFPB’s study, released in March 2015, showed credit card issuers representing more than half of all credit card debt, and banks representing 44 percent of insured deposits, use mandatory arbitration clauses. Yet, three out of four consumers the CFPB surveyed did not know whether their credit card agreement had an arbitration clause. The study did not address how findings regarding credit cards applied to other financial products and services. In October 2015, the CFPB published an outline of the proposals under consideration and convened a small business review panel to gather feedback from small companies. www.iowaiada.com
Besides consulting with small business representatives, the CFPB sought comments from the public, consumer groups, industry, and other interested parties before continuing with the rulemaking. In May 2016, the CFPB issued a proposed rule and asked for public comment, receiving more than 110,000 comments. The final rule’s effective date is September 18, 2017. The rule requires mandatory compliance for pre-dispute arbitration agreements entered into on or after March 19, 2018. Rules, rules and more rules: On July 20 the CFPB issued its Spring 2017 rulemaking agenda. In addition to the arbitration rule, the agenda lists proposed activities related to payday, auto title, and similar lending products, debt collection, overdraft programs on checking accounts, larger participant and non- depository lender registration, prepaid financial products and modernizing, streamlining, and clarifying consumer financial regulations. The bureau will also carry out its Dodd-Frank Act mandate to assess the effectiveness of significant rules five years after they are implemented, including seeking public comment, and will begin the first in a series of reviews of existing regulations the CFPB inherited from other agencies through the transfer of authorities under the Dodd-Frank Act. Finally, the bureau announced it recently formed an internal task force to coordinate and deepen its focus on concerns about regulatory burdens and projects to identify and reduce unwarranted regulatory burdens consistent with its objectives under section 1021 of the Dodd-Frank Act. Did we make the top five? On July 6, the CFPB issued a release outlining the top five complaints it was receiving regarding financial products and services. The top five: 1. Debt collection: Facing a debt you don’t owe (27 percent of complaints). 2. Mortgages: Problems when you’re unable to pay (23 percent). 3. Credit reporting: Incorrect information on your credit report (17 percent). 4. Credit card: Billing disputes with your credit card company (10 percent). 5. Bank account or service: Account management questions (10 percent). If our math is correct, that’s 87 percent of the complaints the CFPB has fielded. You’ll note that auto financing and leasing didn’t make top billing. CASE OF THE MONTH Car buyer’s fraud claim failed absent
evidence of buyer’s damages: A buyer bought a used car for $21,641 and obtained a “clean” title from the New York State DMV. He drove the car 43,000 miles during the two years he owned it. When he tried to renew the car’s registration, the DMV told him it could not renew the registration due to a salvage notation in the vehicle history. The DMV issued him a salvage title. The buyer told the dealership where he bought the car about the salvage title and traded in the used car for a new one. The dealership assessed the trade-in value of the used car at $14,700. The buyer sued the dealership for damages of $18,355, the amount he had paid the dealership to date, for, among other things, violations of New Jersey’s Consumer Fraud Act. The buyer claimed the dealership hid the fact the used car was a salvage vehicle. The trial court granted the dealership’s motion for summary judgment. The Superior Court of New Jersey, Appellate Division, affirmed. Under the CFA, a plaintiff must show he suffered either an out-of-pocket loss or a loss in value due to the defendant’s unlawful conduct. As the appellate court explained, the buyer sought a full refund of the car’s purchase price, which was not the correct measure of damages. The correct measure of damages was the difference in value between the car as represented to the buyer and the car as it was in fact. However, the buyer did not demonstrate the car was worth less when the dealership sold it to him than the amount he paid for it. According to the appellate court, the buyer also did not demonstrate the dealership valued the car incorrectly as a trade-in, especially because the buyer drove it 43,000 miles. Because the buyer did not demonstrate he suffered any loss either when he bought the car or when he traded it in, his CFA claim failed. See Lee v. Hudson Toyota, 2017 N.J. Super. Unpub. LEXIS 1621 (N.J. Super. App. Div. July 5, 2017). So there’s this month’s roundup! Stay legal, and we’ll see you next month. TOM (THUDSON@HUDCO.COM) is of counsel and NIKKI (NMUNRO@HUDCO.COM) is a partner in the law firm of Hudson Cook, LLP. Tom has written several books and is the publisher of Spot Delivery, a monthly legal newsletter for auto dealers. He is editor in chief of CARLAW, a monthly report of legal developments for the auto finance and leasing industry. Nikki is a contributing author to the F&I Legal Desk Book and frequently writes for Spot Delivery. For information, visit www.counselorlibrary.com. © CounselorLibrary.com 2017, all rights reserved. Single publication rights only, to the Association. (8/17). HC# 4852-4229-5116
October/November 2017 / STREET SMART
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MANAGEMENT MATTERS
BY DALE POLLAK
HOW LITTLE THINGS DETERMINE YOUR SUCCESS Details Matter “It’s life by a thousand little things, or death by a thousand cuts.” A dealer recently shared this line as we were discussing how the car business has changed in the last 25 years. The dealer’s observation strikes me as a perfect, cleareyed summation of how efficiency, technology and transparency have made retail automotive a much different environment for dealers. Consider the following common, everyday tasks and how much the little things matter more than ever before. Stocking Vehicles For years, many franchise dealers have followed a fairly reasonable strategy as they order factory vehicles: Stock as many of the cars they know they can sell, based on what they’ve sold. But here’s the problem with this strategy today: It’s too passive. It relies too much on history, and your factory partner. It can ignore, and miss, faster-moving retail trends that help you maintain, if not gain, sales and market share. It’s also imprecise. The situation is very much the same in used vehicles. Variances in vehicle color, condition, mileage and specific equipment make the difference in determining a vehicle’s wholesale or retail value, and its likely appeal among potential buyers, given competing vehicles in the market. It’s easy for an appraiser or buyer to make costly mistakes if they’re relying solely on what they know, rather than augmenting their intelligence with market data. Pricing Vehicles It wasn’t that long ago pricing vehicles was fairly easy. In new vehicles, you pretty much only needed the MSRP or “Call for a Great Price!” In used vehicles, your retail price was just a standard mark-up away from the cost of the unit. Pricing cars didn’t require much critical thinking and, if you made a mistake, buyers forgave you, and they were none the wiser. Today, it’s so very different. Many consumers know almost exactly how
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much they should pay for a vehicle and get a fair deal. They know if your vehicle’s price is in, on or off the market, given the car’s color, condition, equipment and other particulars. They won’t even bother if your prices don’t fit their perception of fair purchase parameters for that vehicle. The environment means that if your prices fit in the context of a consumers’ competitive set, you’re in the game. If not, you’re out. Likewise, if you’re too deeply in the game, you stand a good chance of giving up gross. On top of all this, you’ve got the constant ticktick-tick of inventory age undermining your gross profit potential. Simply put, it’s impossible to price effectively without some kind of technology or tool to help you optimize each vehicle’s market price position. Engaging Buyers It’s easier than ever for consumers to find the vehicle(s) they want to purchase, and the price they think they should pay. It’s also fairly easy for them to find at least one dealer, in virtually every market, who claims to offer a different, hassle free car buying experience. We also know most consumers will only visit one, possibly two, dealers before buying a vehicle. As a result, some dealers take every customer engagement very seriously. To them, every customer conversation, email, instant chat or text message could be the last. “We truly believe that it’s almost as if the customer is looking for a reason not to do business with us,” said the COO for a West Coast dealer group. “We work very, very hard to make sure they don’t find that reason.” Today’s car business may be different, and arguably more difficult, than it used to be. But it’s still a healthy, viable business where success awaits those who properly apply themselves to its pursuit. My dealer friend is correct. The little things matter more than ever. To paraphrase an old saying, “The devil is in the details, and so is your next deal.” DALE POLLAK is the founder of vAuto and an executive with Cox Automotive. This column ran on his blog on June 19. For this story and all his posts, visit www.dalepollak.com.
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BY GWC WARRANTY
TIPS TO SECURE VEHICLE SERVICE CONTRACT FINANCING How to Convince and Reassure Lenders
If you’ve heard it once, you’ve heard it a million times: “There’s no room on this deal for a vehicle service contract.” It’s a struggle so many dealers face when trying to secure the funding for not just the vehicle sale but also back end F&I products. But there’s no need to fret. Knowing some tricks of the trade can help you convince lenders of the value of a vehicle service contract while also reassuring them that including one on the deal won’t diminish their chances of receiving regular payments. Ask multiple times. Sometimes, all it takes to get a lender on board with funding a service contract is to ask again. If the initial reaction is a “no,” you can remind your lender why a service contract is beneficial to them and ask again if it’s possible to find a touch more for the back end. Show a Certified checklist. A lender’s primary concern is ensuring they continue to get paid. Nothing can stop that more quickly than a broken down vehicle. Don’t be afraid to show a hesitant lender the checklist from your Certified program to help get them over the edge and on board with a service contract on the deal. It will demonstrate the effort you put into reconditioning and make the lender more comfortable with the quality of the vehicle. Provide protection from delinquencies. Like you and your lender know, a broken down vehicle usually leads to a broken down loan. And what better way to keep a vehicle on the road than a service contract that protects customers from budgetbusting repair bills. Remind your lenders of this fact when attempting to secure back end funding. Stress the importance of protecting subprime customers. One objection you might hear is a customer’s credit score is preventing you from securing additional funding. In this case, you can reference the tight monthly budgets of many subprime customers as further evidence a service contract is needed. It’s assurance that an already tight budget won’t get tighter because of an unexpected repair, hence keeping the payments rolling into your lender. Build a great relationship. The more you and your lender work
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IF YOU’VE HEARD IT ONCE, YOU’VE HEARD IT A MILLION TIMES: “THERE’S NO ROOM ON THIS DEAL FOR A VEHICLE SERVICE CONTRACT.” together and succeed on deals with a service contract, the more confident you will get with each other. And the more confident you are with each other, the better the prospects for a prosperous and profitable future together. Highlight for your lenders that making a deal work today could lead to many more deals down the road.
MIDWEST AUTO AUCTION DIRECTORY
ACCELERATE
135 AUTO AUCTION
4716 S. Santa Fe Street Wichita, Kansas 67216 316-351-5001 Dealer Consignment Sale Thursdays at 9:00 a.m. Free Breakfast, Free Car Wash
ADESA DES MOINES
1800 Gateway Drive Grimes, IA 50111 (515) 986-1200 Fax: (515) 986-1201 www.adesa.com General Manager: Jeff Lisle Fleet/Lease Manager: Lesa DeRoy Consignment Sale every Tuesday at 9:30 a.m. Fleet/Lease Sale Tuesday 10:30 a.m.
ADESA KANSAS CITY
15511 Adesa Drive Belton, Missouri 64012 (816) 525-1100 (800) 950-2350 Fax: (816) 525-4714 General Manager: Kevin Rhoads Tuesday 9:30 a.m.
ADESA MINNEAPOLIS
18270 Territorial Road Dayton, MN 55369 763-428-8777 763-428-8701 General Manager: Jay Fahrendorff Sale: Tuesday, 10 a.m. www.adesa.com
ADESA SIOUX FALLS
46893 271st Street P.O. Box 218 Tea, SD 57064 (605) 368-5364 Fax: (605) 368-2808 General Manager: Bob Holm Wednesday Sale 10:00 a.m. IAAI SALVAGE SALE EVERY OTHER WEDNESDAY – 8:30 A.M.
ADESA ST. LOUIS
7858 Highway 61-67 Barnhart, Missouri 63012 636-475-9311
ADESA WISCONSIN
W 10415 State Road 33 Portage, WI 53901 608-742-8245 608-742-4415 (f) Tony Manwarren, general manager Sale: Thursday, 9:30 a.m. www.adesa.com
CARMAX AUCTION – DES MOINES
10315 Hickman Road Urbandale, Iowa To Register: 888-804-6604 In House Auction – Every other Monday 9:30 A.M.
DEALERS CHOICE AUTO AUCTION, INC.
503 South Wapello Road Mediapolis, Iowa 52637 319-394-3510 (888) 771-6810 319-394-3511 (fax) www.dcaa.com President: Monte Delzell Nationwide Transportation: EZ Auto Shippers Steve Miller: 866-310-5936 Sale Every Tuesday – 6:00 p.m.
DES MOINES AUTO AUCTION 1530 S.E. McKinley Road Des Moines, Iowa 50320 (515) 285-8911 Fax: (515)256-9161 FRIDAY AT 9:30 A.M. Todd Givant, General Manager
GREATER QUAD CITY AUTO AUCTION
4015 78th Avenue Milan, Il 61264 (309) 787-6300 Fax: (309) 787-4541 Tuesday 10 a.m. – Thursday – 6 p.m. General Manager: Larry Anderson
GREATER ROCKFORD AUTO AUCTION
5937 Sandy Hollow Road Rockford, Il 61109 (815) 874-7800 (800) 830-4722 Fax: (815) 874-1325 General Manager: Chad Anderson Wednesday 10 A.m.
KCI AUTO AUCTION
11101 N. Congress Kansas City, MO 816-502-3318 816-801-8565 (f) Doug Doll Consignment Sale: Thursday, 9:30 a.m. www.kciaa.com
LINCOLN AUTO AUCTION, LTD 11909 US HWY 6 Waverly, Nebraska 68462 402-475-5500 www.lincolnautoauction.com Ryan Durst, Vice President Weds. 10:00 a.m.
MANHEIM CHICAGO
20401 COX AVENUE MATTESON, ILLINOIS 60443 815-806-4222 Mike Cesta, General Manager
MANHEIM KANSAS CITY
3901 North Skiles Road Kansas City, MO 64161 (800) 247-7163 Fax: (816) 452-2393 General Manager: Victor Ferlaino Wednesday 9:30 a.m.
MANHEIM MILWAUKEE
561 South Highway 41 - 27th Street Caledonia, WI 53108 (262) 835-4436 (800) 662-2947 Fax: (262) 835-2684 General Manager: Dennis Worthy Dealer Sales Manager: Kimberly Schure Wednesay 9 a.m.
MANHEIM MINNEAPOLIS
8001 Jefferson Highway Maple Grove, MN 55369-4924 (763) 425-7653 (800) 622-7653 Fax: (763) 493-0310 www.manheim.com General Manager: Tom Saldutte Assistant General Manager: Felix Hernandez Commercial Accounts Manager: Jennifer Etnier Open Sale Sale every Wednesday; 9am Ford Credit, 9:30 TD Auto Finance, Select Lane and Fleet/Lease/Rental Groups, 9:45am Dealer Consignment. Ford Factory Sale bi-weekly Wednesdays at 12 Noon; Fiat Chrysler Factory Sale bi-weekly Wednesdays at 12 Noon Total Resource Auction/Insurance Sale weekly, Tuesdays at 1:00pm.
MANHEIM NORTHSTAR MINNESOTA
4908 Valley Industrial Blvd. North Shakopee, MN 55379 (952) 445-5544 (888) 445-2277 Fax: (952) 445-6773 General Manager: Scott Maybee Assistant General Manager: Jon Eisenmann Commercial Accounts Manager: Rod Dubbe Open Sale Thursdays at 9am Total Resource Auction/Insurance Sale Thursdays at 1pm Specialty Sale (Heavy Truck/Equipment/ Powersports) every 2nd and 4th Thursday at 12:30pm $4k and Under Sale: Last Wednesday of the Month at 3pm
MANHEIM OMAHA
9201 S. 144th Street Exit 440 off of I-80 Omaha, NE 68138 (402) 896-8000 (800) 218-4192 Fax: (402) 896-6758 General Manager: Steve Robinson Assist. Gen Manager: Korey Grell Thursday 9:30am.
MANHEIM ST. LOUIS
13813 St Charles Rock Road Bridgeton, MO 63044 (314) 739-1300 (800) 533-5414 Fax: (314) 298-3347 General Manager: Jason Blake
MID-STATE AUTO AUCTION 100 Bach Ave. New York Mills, MN 218-385-3777 218-385-3232 (f) Rob Thompson, president Sale: Friday, 10 a.m. www.msaanym.com
NEBRASKA AUTO AUCTION, INC. 7500 N. 56th Lincoln, Nebraska 68514 402-466-8477 Contact: Mark Cooley Tuesday at 10:00 a.m. www.nebraskaautoauction.com
PLAZA AUTO AUCTION, INC. 320 Highway 30 West P.O. Box 147 Mt. Vernon, IA 52314 (319) 895-6232 Fax: (319) 895-6727 www.plazaaa.com Owner: Mark Greb Office Manager: Debbie Welsh Sales Manager: Becky McGinty Consignment Sale every Wednesday at 6:30pm. Fleet/Lease/Repo Sale Wednesday at 7pm.
TRI-STATE AUTO AUCTION Jct. Highway 11 & 80 P.O. Box 735 Cuba City, WI 53807 (608) 744-2020 (608) 744-3418 (800) 356-0625 Fax: (608) 744-7425 Owners/Managers: Gerald and Helen Brogley Thursday 6:30 p.m.
MANHEIM ARENA ILLINOIS 200 West Old Chicago Drive Bolingbrook, Il 60440 (630) 759-3800 (630) 759-9668 General Manager: John Olejniczak Dealer Sales Manager: Louis Palermo Tuesday 9 a.m.
October/November 2017 / STREET SMART
9
ARBITRATION CORNER
BY MATT ARIAS
EXAMINING SALVAGE/TOTAL LOSS VEHICLES Drawing a Distinction
From time to time, I receive requests to explain the difference between salvage and total loss vehicles. One question I recently received was: “I need your opinion on salvage/total loss units. Sometimes viewed as the same issue but I see a distinction between them. What is your take?” In my opinion, these are different. The basic definitions for total loss and salvage vehicles from total loss and salvage on Investopedia.com are: Total Loss: “A loss that occurs when the insured property is totally destroyed, or is damaged in such a way it can be neither recovered nor repaired for further use, or the insured is irretrievably deprived of it. Usually, this indicates the maximum settlement possible according to the terms of the policy as per the insurance company’s policy.” Salvage: “A term used for a generic title brand. A salvaged vehicle is typically declared a total loss by the insurer, then rebuilt or repaired. These rebuilt or repaired
vehicles will have a salvage title and in some states will require special inspection before they can be put back on the road. Vehicle history reports will show that a vehicle has a salvage title, although they may not provide a reason.” Total loss thresholds may vary by state. Examples can be significant collision damage, mechanical defects, biohazard, flood and structural damage. Once “totaled” by the insurance company, the vehicle may or may not get repaired. If repaired, most states will brand the vehicle’s title to reflect the vehicle’s new status. From the NAAA Arbitration Policy point of view, the vehicle’s title – if branded – will require a disclosure from consignors to would-be buyers. Total loss is not a title brand. • Title discrepancies must be announced, including but not limited to the following: not actual miles, salvage, theft recovery, stolen vehicle, flood damage, Lemon Law buybacks or trade assist. Insurance transfers would also require a disclosure. • All titles submitted by seller must be in seller’s company name on title or on a properly-executed reassignment form. The seller guarantees the titles of vehicles sold through auction. This title guarantee warrants the title shall be marketable and free and clear of all
liens and encumbrances. This includes any brand, such as “salvage,” noted upon the current or any prior certificate of title unless such encumbrances were announced at the time the vehicle was sold through auction and for a period of four years from the date of sale. Seller’s liability under this title guarantee shall never exceed the auction sale price – the “maximum amount” – of the vehicle, and this maximum amount shall be reduced by two percent per month following auction sale date. All liability under this title guarantee shall expire and terminate 48 months after auction sale date. The auction will not be responsible for any expenses incurred on vehicles returned for late title. • Seller warrants, represents and guarantees possession and conveyance of a certificate of title, properly executed, valid in the state where the transaction is occurring and clear of all liens and encumbrances, except current year DMV fees in California. The seller warrants and will defend the title against the claims and demands of all persons whatsoever. We urge all sellers and buyers to fully understand a vehicle’s history and its title status before offering to sell or buy at auction.
parts can find their way into used cars sold to unsuspecting buyers. Takata uses ammonium nitrate to create a small explosion that inflates airbags in a crash. But the volatile chemical can deteriorate over time when exposed to heat and humidity and burn too fast, blowing apart a metal inflator canister. The inflators are responsible for up to 19 deaths worldwide and more than 180 injuries. They have sparked the largest auto recall in US history, involving nearly 70 million inflators. Selling a recalled auto part is illegal under a 2000 federal law that is seldom enforced. The National Highway Traffic Administration confirmed it is investigating the Dorado case. This agency has the authority to enforce civil penalties on businesses that do not comply with regulations. The lawsuit filed by Dorado alleges in June 2015 a Nevada salvage yard purchased a 2001 Accord to sell off the parts. A few months before that, two Las Vegas businesses purchased a 2002 Honda Accord that was involved in a crash in Arizona and deemed a total loss by an insurance
company. The two companies, which specialize in repairing damaged vehicles, bought the car at a salvage vehicle auction in Phoenix, the lawsuit said. Sometime between June and September 2015 the Nevada salvage yard sold the driver’s airbag assembly from the ‘01 Accord to one of the two firms even though the part had been recalled in May 2015, the lawsuit alleges. According to Honda, the airbag was among the most dangerous made by Takata, showing nearly a 50 percent chance of the inflator rupturing in a crash. The repair companies then installed the airbag in the ‘02 Honda Accord and in March 2016 sold the repaired Accord to Dorado’s father. The lawsuit alleges the seller failed to warn the buyer the airbag had been recalled. A year later Karina was driving home after work when her Accord was hit by another car and the airbags inflated. She has ongoing injuries and faces possible additional surgeries. It will be interesting to learn the outcome of this lawsuit, particularly since NHTSA is watching it as well.
LEGAL NEWS
RECALLED TAKATA AIRBAGS SHOWING UP IN USED CARS Case Involving Injured Nevada Woman
A lawsuit filed in Nevada alleges a dangerous Taketa airbag should have been recalled before going from a wrecked car to a salvage facility, eventually ending up in a 2002 Honda Accord and causing a painful injury to a Las Vegas woman. The Accord had been fixed up and sold in March 2016 to the family of Karina Dorado, a 19 year old woman whose trachea was punctured by shrapnel spewed by the faulty airbag. The family claims it was never informed the airbag was subject to a recall. How that airbag got into the Accord is detailed in the lawsuit filed in late August in Nevada. It shows how dangerous recalled
10
STREET SMART / October/November 2017
Excerpts of the above article, written by the Associated Press, were published in Detroit News.
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APPROVED MEMBER BENEFIT PROVIDERS ADVANCED BUSINESS PRODUCTS, INC.
Printing, Promotional Products, & Wearables Contact: Scott Jayne PO Box 71547 Des Moines, IA 50325 Phone: 515-225-6343 Toll Free: 888-464-2274 Fax: 515-225-6510 Toll Free Fax: 877-987-3514 Website: www.go4abpi.com
ALLY SMART AUCTION
4300 SW Cambridge Avenue Topeka, Kansas 66610 785-249-4166 Iowa Rep: Seth Fair seth.fair@ally.com 515-777-4592
ASSOCIATIONS MARKETING GROUP INC Health Insurance Jesse and Lee Patton 1112 Maple Street West Des Moines, Iowa 50265 Toll Free: 800-798-6772 Phone: 515-270-8178 Fax: 515-270-0398 E-mail: leepatton@amgi-dsm.com
AUTO OWNERS INSURANCE
8% DISCOUNT TO ALL IIADA MEMBERS
AUTOJINI.COM
Websites for Dealers Contact: Syed Azam 310 Main Street Ste 201 Ames, IA 50010 Phone: 515-232-2024 E-mail: syed@octadyne.com
CITIZENS COMMUNITY CREDIT UNION
2012-1ST AVENUE SOUTH FORT DODGE, IOWA 50501 Phone: 515-955-5524, Ext. 202 Fax: 515-955-8241
CORCORAN & ASSOCIATES INC.
Various Types of Insurance Contact: Teresa Corcoran 18-2nd St., N.E. Mason City, Iowa 50401 Phone: 877-518-4051 Phone: 515-262-3141 Fax: 515-262-3086 Email: teresa@corcoranandassoc.com
CORCORAN & ASSOCIATES, INC. Dealer Insurance and Bonds Mick and Teresa Corcoran 2600 – 72nd Street, Suite C Urbandale, Iowa 50322 Phone: 515-262-3141 teresa@corcoranandassoc.com
CU DIRECT (CUDL)
Contact: Paul Bejarno, Area Account Representative Phone: 515-988-0521 Email: paul.bejarno@cudirect.com Website: www.cudirect.com 2855 E. Guasti Road, Suite 500 Ontario, CA 91761
CYCLONE AUTOMOTIVE TRAINING INC.
F&I Training, Sales Training, Service Contracts Rob Miller and Chris Hochstein 515 N Jefferson Way Ste H Indianola, IA 50125 Phone: 515-962-0099 or 515-962-0100 Fax: 515-961-8400 Rob: 515-205-5900 cell Chris: 515-205-5800 cell E-mail: cycloneautomotive@ cycloneautomotive.com
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DIAMOND OIL COMPANY
Lubricants, Diesel Fuel, Propane & DEF Contact: Jason Heiden 702 S.E. Raccoon Street Des Moines, Iowa 50309 Email: jheiden@diamondoilco.com www.diamondoilco.com
ERIKSON SOLUTIONS SERVICES, LLC
F & I Compliance & Sales Training Alpha Warranty Services Classic Essential GAP – Norman & Co. Frazer Computing Rep Motorsport Dealer Solutions www.motorsport-dealer-solutions.com Contact: Scott Erikson 15210 Castelar Circle Omaha, Nebraska 68144 P: 402-639-0664 F: 402-697-4937 eriksons@aol.com
FOLLOW-UP PLUS
“Customers for Life” Repeat Sales, Referrals & Customer Loyalty Contact: Terry & Sue Newell P.O. Box 294 Carthage IL 62321 Ph: 217-357-9032 Fax: 217-357-9076 E-mail: tlnewell@frontienet.net
FRAZER
Dealer Management Software 6196 US Highway 11, PO Box 569 Canton, NY 13617 Phone: 888-963-5369 Fax: 888-963-3366 Website: www.Frazer.com Email: info@Frazer.com
GATEWAY ONE LENDING & FINANCE a tcf bank company Kim Freeborn 563-275-0057 387 Shuman Blvd., Suite 150E Naperville, Illinois 60593 www.gatewayonelending.com
GLOBE ACCEPTANCE INC
Sub-prime Lender Contact: Beth Dieter P.O. Box 65400 West Des Moines, Iowa 50265 Phone: 515-225-9067 globeaccepts@globeacceptance.com Website: www.GlobeAcceptance.com
GREATER IOWA CREDIT UNION 1630 22nd Street West Des Moines, Iowa 50266-1407 Jason Kolar, Dealer Direct Manager Ph: 515-954-1666 F: 515-956-6966 jkolar@greateriowacu.org
INNOVATIVE DEALER SERVICES, INC.
Dealer Software Management Systems P.O. Box 23189 Shawnee, Kansas 66283 913-312-7344 – Ext. 11 Fax: 810-821-1718 Website: innovativedealer.com Terry Webb twebb@innovativedealer.com
PEOPLES INSURANCE AGENCY
Auto Dealer Insurance Programs 1700 8th St., SW, PO Box 119 Waverly, Iowa 50677 Website: www.peoples-insurance.com Contact: Jason Whitinger/Kathy Mitchell Email: Jason@peopes-insurance.com Kathy@peoples-insurance.com Phone: 319-352-6327, Ext. 13
STREET SMART / October/November 2017
PREFERRED WARRANTIES, INC. 200 Pinebrook Place P.O. Box 278 Orwigsburg, PA 17961 Website: www.warrantys.com Iowa contact: Larry Bohlen Cell: 515-322-6397 Fax: 1-877-233-0298 Email: lbohlen@warrantys.com
PROSOURCE FINANCE
We Do F & I for You 2540 106TH Street, Suite 202 Urbandale, Iowa 50322 800-795-1765 jeff@prosourcefinance.com website: www.ProSourceFinance.net
REYNOLDS & REYNOLDS INC.
Dealer Bonds Long Term Care Insurance Various types of insurance Contact: Dean M Clark 300 Walnut Street Ste 200 Des Moines IA 50309 Phone: 515-243-1724 Toll Free: 800-767-1724 Fax: 515-243-6664 E-mail: d.m.clark@reynolds-reynolds.com
S & C AUTOMOTIVE, INC.
NIADA CPO Program & Training, F&I Products, Reinsurance Formation, Appearance Protection, Spray-on Bedliners, Accessory Installation 3828 70th Street Urbandale, Iowa 50322 P -515-276-9622 Fax: 515-276-8472 Contact: Doug Eckhart doug.eckhart@scautomotive.net Website: www.scautoia.com
U DRIVE ACCEPTANCE CORPORATION
An Iowa Sub-Prime Finance Company P.O. BOX 3107 Sioux City, Iowa 51102 620 S. Lewis Blvd., Sioux City, Iowa 51106 Neil Evans, Director of Originations Office: 712-258-0269 Cell: 402-517-6076 Fax: 712-293-2141 Email: neil@udriveac.com Website: www.udriveac.com
UNIVERSITY OF IOWA COMMUNITY CREDIT UNION
Doug White, Indirect Lending Manager 319-248-5855 dwhite@uiccu.org P.O. Box 800 North Liberty, IA 52317
VERIDIAN CREDIT UNION 1827 Ansborough Avenue P.O. Box 6000 Waterloo, Iowa 50704-6000 800-235-3228 Kara Van Wert –Tony McKillip
WILSON DISTRIBUTOR SERVICE IIADA DEALER CAP FORMS Car Brite Products Forms, Detail Supplies, Equipment & More Jason & Lisa Goody 105 N McCoy Mt. Pleasant IA 52641 Phone: 800-634-0974 Fax: 319-385-2927 E-mail: jasonwds@lisco.com Website: www.wds-usa.com
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IIADA and NIADA Membership Protect your business through IIADA and NIADA’s legislative monitoring efforts at the state and federal level FREE publications – Street Smart and Used Car Dealer magazine Certified Master Dealer Program through NIADA/ Northwood University Garage insurance; health and other types of insurance Retirement program; prescription drug savings Conventions, trade shows and dealer training meetings and seminars Discounts on credit card processing
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8% Discount on Auto Owners Insurance for IIADA members Dealer Awards Scholarships for your children/grandchildren and your employee children $2000 in auction fee discounts from Midwest auto auctions – IIADA Auto Auction Coupon Card Lodging, car rental and restaurant discounts NIADA-TV – 24/7 Telephone assistance to IIADA members and updates on rules, law and regulation IIADA Newsletter
October/November 2017 / STREET SMART
13
MANAGEMENT GAMEPLAN
BY SCOTT BERGERON
DOES YOUR SALES PROCESS MEASURE UP? Time to Fine Tune
Are you fed up with your sales team? Your processes? If you’ve watched your salespeople get too comfortable and satisfied with their own performance, maybe it’s time to shake things up. And I’m not talking about sweeping house and starting over. One of the best salespeople I ever met was Jeff Barber. He’s now retired and living an awesome life, fishing and hunting in the Colorado Rockies. Jeff would always give me advice when I was working my way up, first as a green-pea, then in management. Jeff is a former drag racer. He said, “Selling cars is a lot like drag racing – everyone’s got an engine, and if they’re all built the same way, the one who does the best job of fine tuning his car will win. If you lose a race, you don’t tear apart the engine – you fine tune the obvious problems. “Besides, spark plugs are a lot cheaper than an engine rebuild. We all have the same opportunities in sales, but it’s the guys who work smarter and fine tune themselves and their daily routines who will win.” There’s huge danger in thinking you’ve got everything dialed in – especially when it comes to fundamental items in your dealership. For example, have you reviewed your contract and financing forms to make sure they’re easy to read, navigate and understand? Coasting along without conducting basic inspections of basic processes will lead to problems. Without this step, you’re likely letting profits walk out the front door – in many cases without even knowing it. Then, there’s the other side of the equation – where your processes are so bad everybody knows about it. United Airlines is an example. Their “established” policies led to a firestorm of public criticism and severely damaged their reputation when they dragged a bleeding passenger off a plane. Lack of knowing or lack of inspections will harm your dealership. In the long run, it could damage its reputation, which could take years to bring back to glory days. Here’s an example. One of the nation’s largest dealers recently sold me and my wife a car, but not without many hours of illegible paperwork, and frustrating old school 4-square processes that didn’t even pertain to my situation. If a customer brings in a 60 percent down payment of a free and clear trade, and the salesperson says, “They can’t calculate the payments unless you put cash down,” it can
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STREET SMART / October/November 2017
be a little frustrating to say the least. And no, this wasn’t a green pea. It was an eight-year veteran, and yes the desk required a cash dollar down before they would work up figures, apparently to adhere to established policies. After this silly process, the paperwork was hard to read and looked like it had been copied repeatedly since 1993. Finance processes and slowdowns also can lead to hours of unproductive time for staff, not to mention the reputation it’s putting into your customer’s head. If it can happen in a big box store, it can happen anywhere. Here’s where and how to fine tune your sales engine without large amounts of cash or time investment. Who are you selling to? Whether business is good, decent, or falling off a cliff, look at where sales are or are not coming from. If your dealership has a loyal base of aging customers, you’d better start planning for the next generation of buyers – who have demands, expectations and values different from your older customer base. Ask around, talk to Millennials and find out what they want, what would bring them in the dealership, and what turnoffs exist. Many younger generation buyers don’t believe in the dealership model at all, so you’d better have your Internet department bulletproof, and start thinking outside the box. The dealership model is changing in many ways, and if we rely on “doing things as we’ve always done” you can find yourself kicked to the curb. In fact, there’s nothing wrong with a salesperson asking an UP, “What do you hate most about buying a car?” At least it isn’t the same old, “Can I help you?” It gives customers a chance to vent, and gives the salesperson an opportunity to show off why your store is different, and they’ve just found someone who listens. Salespeople and Performance First, look at your sales board and who’s selling the most cars and why. Then do the same with the bottom of the board. If you have good information, either from a CRM or a paper-based system, you can tell why the top guys are leading and the bottom guys are trailing. It usually stems from a “sales process glitch.” Your top guy who talks to 50 people is usually demo-ing at least 35 of them. What are your bottom guys demoing? How many are they writing up? Raw data on the basics can convey a lot you may have skipped over. Getting a handle on the basics gives you a place to start but it’s a long way from the finish line. For example, good sales performers always can be made better with improved prospecting, tracking and accountability techniques. Poor sales performers likewise can improve with these same steps. There’s always room for improvement. Factor in
THERE’S ALMOST NOTHING WORSE THAN HAVING A HAPPY CUSTOMER GO BAD BECAUSE OF BAD PAPERWORK OR A SLOW PROCESS DURING DELIVERY. the ideas, insights and idiosyncrasies of the up-and-coming customer base and address how to best handle different buying groups – the older, more established and loyal crowd and the younger generation. Finance and Delivery Processes and Procedures There’s almost nothing worse than having a happy customer go bad because of bad paperwork or a slow process during delivery. This is what happened to me at the big box store with my wife. Frankly, I was amazed. Given this dealership’s size, the last thing I expected was hardcopy paperwork where type was illegible and agreements were poorly written. Obviously, I wasn’t alone in this situation. Most people usually don’t wait for the question about what they hate about a dealership experience. Most will tell us without asking – they hate that the process takes so long, even when they do most of the homework ahead of time online. It leaves me asking the following question: How many people will not return, or show consistent loyalty, to a dealership because their last impression was unfavorable? Today’s sale is a chance to do one of two things: Solidify a long term customer, or make them wonder why your dealership isn’t keeping up with the times. Former dealer executive SCOTT BERGERON is the founder and principal at Daily Gameplan (www.dailygameplan. com), a sales team performance company. Daily Gameplan’s “Red Book,” cloud-based CRM, and direct consulting have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@dailygameplan.com.
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STAY FOCUSED ON YOUR CUSTOMERS Visit protective-acp.com
or call 866 924 7513 to learn more.
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