DEALER’S EDGE
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MAGAZINE
I L L I N O I S I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I AT I O N JANUARY/FEBRUARY 2017
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NEW YEAR! DALLAS, TEXAS Permit No. 2079
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VISIT US AT W W W.IL- IADA.ORG
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INSIDE
AUCTION NEWS
BY USED CAR NEWS
WHAT’S NEW
NAAA INDUCTS OWNER OF TWO AUCTIONS INTO HALL OF FAME Patty Stanley Honored
Class dates for NIADA’s industry leading Certified Master Dealer program have been announced for the upcoming year! Look for a class coming to your area! Dates include Feb. 9-11 in Portland, Ore.; May 15-17 in Atlanta; Sept. 12-14 in Dallas; and Dec. 11-13 in Tampa, Fla. Visit www. niada.com or contact Diann Flanders at 888-906-8283 or diann@niada.com for more information.
Patty Stanley, co-owner of Carolina Auto Auction and Indiana Auto Auction, was inducted into the National Auto Auction Association Hall of Fame during the association’s recent convention. NAAA has given the honor each year
ADVERTISER’S INDEX
SAFETY WATCH
06.............................Election Provides Insights to Car Selling 08................................................ NIADA Government Report 10......................................................The Importance of Value 12.....................................................Phone Ups that Show Up 15..........................................................Security Starts Within 18...................................... FTC Issues Revised Used Car Rule
CMD Dates Announced
ADESA.....................................................................................9 AutoZone...............................................................................14 Black Book...............................................................................3 CarMax Auctions...................................................................16 Dyer Auto Auction.................................................................18 Manheim.com.................................................................... 10,11 Manheim Minneapolis............................................................5 Manheim Pennsylvania.........................................................13 NIADA Certified................................................................... IFC NextGear Capital...................................................................17 Protective............................................................................ IBC Spireon.................................................................................. 15 VAuto......................................................................Back Cover
OFFICE
For information on how to become a member of IIADA, please contact Sally Leahy at 800-682-3837 or sally@niada.com.
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 The Dealer’s Edge is published bi-monthly 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 The Dealer’s Edge or NIADA. Likewise, the appearance of advertisers, or their identification as members of IIADA or 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 & GRAPHIC ARTIST
Christopher Hanley • chris@niada.com
SENIOR ART DIRECTOR / PRODUCTION MANAGER
Christy Haynes • christy@niada.com PRINTING
Nieman Printing
KIA RECALLS SPORTAGES Circuit Board May Short Circuit
Kia Motors America is recalling 71,704 model year 2008-2009 Kia Sportage vehicles manufactured Aug. 9, 2007, to May 13, 2009. The wire harness cover on the Hydraulic Electronic Control Unit (HECU) may be improperly sealed, allowing water to get onto the HECU circuit board. If the water is contaminated with salt, such as could occur from melted snow, the wire harness connector pins may corrode and the circuit board may short circuit.
Chairman
Gordon Tormohlen Tormohlen’s Good People Automotive 1800 S Ihm Blvd Freeport, IL 61032 815-232-5543 goodpeople@aeroinc.net
President
Joe Mok G Motor Cars 2411 E. Oakton St Arlington Heights, IL 60005
Vice President
Eric Nelson Nelson Automotive Inc. 1801 S Busse Mt Prospect, IL 60056 eric@heycars.com
Treasurer
Secretary
Alex Tovstanovsky 8959 Hanslik Ct Naperville, IL 60564 (630) 631-2535
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If the HECU short circuits, there is an increased risk of an engine compartment fire. Kia will notify owners, and dealers will inspect the connector pins for corrosion. If no corrosion is found, the connector cover will be replaced. If corrosion is present, the dealer will replace the HECU assembly and the connector cover, free of charge. Kia’s number for this recall is SC138.
BOARD MEMBERS
Lori Chignoli-Cora Chignoli Auto Sales 1850 Essington Rd Joliet, IL 60485 lori@chignoli.com
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since 1968. It is bestowed on those who have worked for the improvement of NAAA and consistently followed the high standards of the association’s Code of Ethics. Patty Stanley joins her husband Henry Stanley, a former NAAA president, who was inducted into the Hall of Fame in 2013. She currently serves as ServNet’s chairman of the board and has been in the auction industry since 1969, when she and her husband purchased Capital Auto Auction in Columbus, Ohio, which they renamed Ohio Auto Auction. Charlotte Pyle, co-owner/operator of two West Virginia auto auctions, presented the award to Stanley, noting that their professional and personal relationship spans nearly three decades.
Executive Director
Bruce Eklund IL-IADA Headquarters 129 S Phelps Ave Suite 706 Rockford, IL 61108 (800) 987-6627
Czar
Dana Eklund IL-IADA Headquarters P.O. Box 7266 Rockford, IL 61125 (800) 987-6627 iiada302@gmail.com
Board Members
Paul Gluchowski Turner Acceptance 4454 N. Western Ave Chicago, IL 60630 (773) 290-5002 paul@turneracceptance.com Amy Goodnight Lohman Companies 3901 15th St. Moline, IL 61266 (309) 764-8331 x 220 amy@lohman-companies.com
Ginger Higgins Integrity Motor Cars 1302 Sandyhollow Rd Rockford, IL 61109 815-397-5555 integritycars3@yahoo.com Brad McCorkle 4th Ave Auto Sales 4130 4th Ave Moline, IL 61265 (309) 736-7550 4thaveauto@gmail.com Paul Schmidt Nationwide Acceptance 3435 N Cicero Chicago, IL 60657 pschmidt@nac-loans.com Rockie Tincher Major Manufacturer VSC PO Box 516 Dyer, IN 46311 800-410-0274 fimgr1015@att.net
www.il-iada.org 800-987-6627 www.il-iada.org
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MANAGEMENT GAMEPLAN BY SCOTT BERGERON
ELECTION PROVIDES INSIGHTS TO MORE EFFECTIVE CAR SELLING Technology Alone Isn’t the Holy Grail Donald Trump’s election proves that state-of-the-art technology, by itself, doesn’t provide all the answers. Based on the vote totals, the highly sophisticated, technology-driven polls missed the mark. In that same vein, relying on technology alone to sell cars isn’t the Holy Grail that some make it out to be. With all its bells and whistles, technology can be undone by people who deliberately distort their answers, provide incomplete/inaccurate information, or change their minds. Case in point: a dealer’s data mining shows that a prospect wants a red crossover SUV, and details the supposed preferences about everything from color to desired storage capacity. Acting on this profile, the sales specialist steers the prospect toward SUV crossovers on the floor. Suddenly, the would-be buyer bolts toward a fire-engine red two-seater convertible on the showroom floor, and wants to test drive it. We see it every day. What they say they want and what they buy are sometimes two different things. Ask away… then listen. Human decision-making is complicated, prone to whimsy and spontaneity, and can be influenced by factors that no technology-driven profiling will uncover. That said, what does it take to help ensure the sale – no matter what has gone before? Good questioning, listening skills and intuition all contribute. Properly done, this will both confirm what the prospect says he prefers and compare it to other feedback that might dictate a different recommendation. (Trump is credited with intuition and listening skills that told him what his audience wanted, and how to respond to “close the sale.”) For example, the prospect may “prefer” an SUV crossover because of its practicality and suitability for a growing family. But there’s another voice screaming for the excitement and freedom of having that hot sports car. A savvy salesperson will then throw out the technologically-driven “personal playbook” and become a good investigative reporter. Questions can be along the lines of: 1. What pressures have moved you in the direction of this SUV? 2. How many of those pressures exist because of the need to satisfy other people (e.g., family)? 3. If you were just buying for yourself, what direction would you go? 4. Is this vehicle going to be a primary family car or serve as a backup, impacting reliance on it for multiple-person transportation? 5. How often do you need to haul goods? What types and volumes of goods do you haul? 6. Are you more interested in the car as dependable transportation, traveling or thrill-seeking? 7. How big a factor is safety?
A key part of getting to clarity in terms of helping a prospect is listening very closely to how the answers are phrased, tone of voice, and emotions being conveyed.
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8. How big a factor is MPG? 9. How big a factor is fast acceleration and overall power? 10. How big a factor is economy of ongoing maintenance? Obviously, these are just some basics. The key is to get a clearer idea of what the prospect’s priorities are, then confirm budget, assemble them into recommendations, and see what solutions you can provide to meet the needs and wants. Take into account both verbal and non-verbal clues. A key part of getting to clarity in terms of helping a prospect is listening very closely to how the answers are phrased, tone of voice, and emotions being conveyed. It’s also critical to watch body language. A prospect displaying openness and overt acceptance or guarded response and hesitation can be seen in basic body language gestures. To some of us old school car guys, all of this may sound elementary – because that’s how we came up through the business, before there were all the advanced ways to “figure out” prospects before they entered a showroom floor. Today, between order-takers who just answer questions without asking any of their own, and “know-it-alls” who presume to know their prospects’ total picture based on a digital profile asking confirming questions, these are highly important skills. Get creative with solutions. Once the salesperson has as full a picture as possible, provide ideas that can range from conventional to way out of the box. It may require looking beyond the obvious, including present inventory, to find answers that will resonate with a would-be buyer. In the example above, let’s say the salesperson determines the prospect really wants the sports car but is resigned to the more practical SUV crossover. Based on the intelligence gathered, the SUV meets most of the needs/ preferences. But, what he really yearns for is the excitement of the convertible sports car that can go 0-60 in under four seconds. It’s easy enough to stop with the SUV. After all, it’s the better objective solution for the circumstances at hand. But, as we all know, car buying is also about the emotional thrill of adventure, open air, high speed,
and whatever appeals to that prospect. Why not wrap practicality and performance in a creatively structured “two-car deal?” Find a used SUV crossover that meets the practical needs, and then move on to a sports car (likely older and lower-priced) for the “want” side of things. While two-car deals can be tricky, weigh all the options in the direction that suits your buyer’s ability, wants, and then needs, in that order. Technology itself can fool salespeople into only one solution. As your deal ebbs and flows during the “landing stage,” keep the ideas flowing in your head on how to best structure the deal that will work best based on abilities, wants, and needs. If the deal doesn’t necessarily work out with all your sales expertise, don’t be afraid of a tried and true process, known as the T.O., or turnover. A T.O., or manager introduction, can help move the deal along while the prospect is still there. There may be other options a manager or even another salesperson can think of that you haven’t. In any case, give the prospect a reason to return. Then follow up periodically when another option presents itself on the lot or a special deal can be offered based on other factors. Capture the conversation on a database. One area where technology can be extremely helpful is using a CRM, or other technology, and using it consistently. Get in the habit of recording information immediately after your contact’s visit, call, or email. A CRM is only as good as the information going in. If you prefer writing things down, the secret is in the consistency – even if it’s a 3x5 card. Combining this with post-visit intel can make a powerful follow-up, and creates more customers for life. Moral of this story: Salespeople who rely too much on technology and not enough on good interviewing skills and instincts will find themselves losing sales they could have won. Former dealer executive Scott Bergeron is the founder of Daily Gameplan.com, a sales team performance company. Scott can be reached at 303.918.3169 or scott@ dailygameplan.com.
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WASHINGTON UPDATE
NIADA GOVERNMENT REPORT
Latest Governmental Issues and Activity Here’s a rundown of some of the latest governmental issues and activity affecting the used car industry from NIADA lobbyist Sante Esposito of Key Advocates and NIADA senior vice president of legal and government affairs Shaun Petersen.
LEGISLATIVE REPORT By Sante Esposito
ELECTION IMPACT At press time, the full impact of the November elections on the legislative process was still unclear, as Congress deals with a unique situation in which the traditional model of government seems to have changed. On the positive side, everyone seems committed to working together, and when it comes to issues like reining in the CFPB, fending off efforts to ground recalled vehicles, supporting small business, etc., a Republican administration coupled with a Republican Congress is the best political scenario for NIADA. President-elect Donald Trump campaigned on repealing the Dodd-Frank Act, thereby dismantling the Consumer Financial Protection Bureau. If that is pursued a likely outcome is that the Democrats will push back and accept many of the CFPB reforms proposed in Rep. Jeb Hensarling’s (R-Texas) Financial CHOICE Act, making the bureau subject to the annual appropriations process, replacing the single director with a fivemember commission versus an executive director, revoking the 2013 auto finance guidance and more. With a coming change of party in the White House, Congress is expected to punt on the major legislative items, including S.2663, the Reforming CFPB Indirect Auto Financing Guidance Act, which would rescind the aforementioned 2013 guidance, during the lame duck session. The only must-pass bill is the continuing resolution to fund the government, likely until early next year.
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SALES OF RECALLED VEHICLES While Senate action on motor vehicle recalls is unlikely before the new Congress begins, NIADA continues to work with NADA, NAAA and other stakeholders and interested parties to ensure the issue is not raised in legislation during the lame duck session.
REGULATORY REPORT By Shaun Petersen
DEPARTMENT OF LABOR A federal judge in Texas issued a nationwide injunction that stops the Labor Department’s rule to extend mandatory overtime pay to more than 4 million salaried workers from taking effect. The rule, which was scheduled to take effect Dec. 1, would have doubled the maximum salary a worker can earn and still be eligible for mandatory overtime pay to $47,500. U.S. District Judge Amos Mazzant’s ruling agreed with a lawsuit filed by 21 states and a coalition of business groups that includes the U.S. Chamber of Commerce, which contended the rule is unlawful and arbitrary. Mazzant ruled the federal law governing overtime does not allow the Labor Department to decide which workers are eligible based on salary levels alone. The Fair Labor Standards Act says employees can be exempt from overtime if they perform executive, administrative or professional duties, but the rule “creates essentially a de facto salary-only test,” Mazzant wrote. CONSUMER FINANCIAL PROTECTION BUREAU Sales and production incentives guidance: In the wake of the recent Wells Fargo scandal, the CFPB issued a guidance document warning financial institutions that creating incentives for employees and service providers to meet sales and other business goals can lead to consumer harm if not properly managed. The guidance document offers examples of unfair, deceptive or abusive practices that could result from unchecked incentives, such as opening accounts without consent, misrepresenting benefits of products and steering consumers towards less favorable products or terms. The document is available at www.consumerfinance.gov/ documents/1537/201611_cfpb_Production_ Incentives_Bulletin.pdf Debt collection lawsuit: The CFPB and New York attorney general filed a lawsuit in federal court against several companies and individuals the regulators allege were engaged in a debt collection scheme. The lawsuit alleges the individuals operate a network of companies that harass, threaten and deceive millions of consumers across the nation into paying inflated debts or amounts they might not owe, falsely threatened legal action against consumers and falsely impersonated law-enforcement officials,
government agencies, and court officers. CFPB seeks rehearing: The CFPB has formally requested the entire Court of Appeals for the D.C. Circuit rehear the decision in PHH Corp case, in which the court ruled the structure of the CFPB was unconstitutional. In addition, 21 current and former members of Congress, including Sen. Elizabeth Warren (D-Mass.), Rep. Nancy Pelosi (D-Calif.) and former Rep. Barney Frank (D-Mass.) also filed a petition asking the entire court to rehear the case. PHH Corp has the opportunity to respond to the request before the court makes a determination on whether it will grant the CFPB’s request. FEDERAL COMMUNICATIONS COMMISSION Robotext enforcement: The FCC released an enforcement advisory reaffirming that text messages are regulated as telephone calls under the federal Telephone Consumer Protection Act. The TCPA requires “prior express written consent” for text messages used for advertising/soliciting and “prior express consent” for other types of text messages. Under the TCPA, “the term automatic telephone dialing system” or “autodialer” covers any equipment that has the capacity to store or produce numbers to be dialed and dial them without human intervention – but it does not need to have the present ability to do so. Under that provision, the FCC reiterated its position that the TCPA prohibits autodialed calls or text messages, as well as prerecorded calls, unless made with the prior express consent of the called party, to any telephone number assigned to a cellphone or other mobile device, unless the calls or text messages are made for emergency purposes; free to the end user and have been exempted by the FCC, subject to conditions prescribed to protect consumer privacy rights; or made solely to collect debts “owed to or guaranteed by the United States.” The FCC reminded businesses that contact consumers with an automated text message and claim they have prior express consent that they will need to prove they have consent. The advisory specifically states, “The fact that a consumer’s wireless number is in the contact list of another person’s wireless phone does not, by itself, demonstrate consent to receive robotexts.” The advisory said callers who inadvertently dial a reassigned number are not liable for the first call or message to a consumer who did not provide consent. But the FCC has noted businesses will be liable for any further calls or text messages to a reassigned number, regardless of whether or when the business learns of the reassignment. The guidance is available at http:// transition.fcc.gov/Daily_Releases/Daily_ Business/2016/db1118/DA-16-1299A1.pdf.
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MANAGEMENT MATTERS BY GEORGE GOWEN
THE IMPORTANCE OF VALUE Unveil the Value of Service and Parts
We all know a customer will buy a product or service when the value exceeds price. Unfortunately, automotive dealerships hide the value that the service and parts departments bring. Here’s how you can change that. Recognize the value of “free.” Grocery stores commonly show the
customer how much they “saved” on every receipt. That builds additional value to the price they paid for groceries. For some reason, dealerships comp services but, unlike the grocery store, never let anyone know about it. Here’s an example: Almost every dealership I know requires a multi-point inspection (MPI) for each repair order. This check builds trust and helps sell needed services. But what is the “value” to the customer for that service? None. However, if you show on the repair order that the MPI has a $49-$149 value that we provided at “no charge,” it does means something. After all, the service has actual value, and we should let customers know it. Here’s another example. Many dealerships charge a diagnostic fee, using the information to explain the nature of the problem and how much the repair will cost. Along with the diagnostic work, you probably do a complete inspection of the entire vehicle and don’t charge for it. You should mention this value to your customer.
And, no matter what, make sure the value you provide exceeds the price. Always offer a deal. While we’re looking at other industries for inspiration, let’s consider restaurants. I’ve been to many establishments that promote a special that includes the appetizer, salad, entrée and dessert. You’re told that you’ll get a special value by ordering the components as a group versus ordering them individually. The reality is that people will take advantage of the “deal” even though they likely would not have ordered all the items separately. You can apply the same principle to service menu items. The best performers on menu sale penetration show the value of the combined services versus doing those services individually. But if you offer a “30k Service” for $400 without explaining the value of the individual services, all they will see is the $400. Imagine the penetration level if you showed that all the services in the “30K Service” would separately cost $530! If the menu item is “only $400,” the customer just saved $130 by purchasing it. The same advice goes if you provide a car wash, loaner cars, or any other services: Always make sure the customer knows the value. And, no matter what, make sure the value you provide exceeds the price. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
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ACCELERATE
BY GWC WARRANTY
BANK MORE ON THE BACK END The Ultimate Customer Satisfaction Experience
So much of what you do on a day-today basis is to preserve your front-end gross. You act with discipline when acquiring inventory, you carefully manage reconditioning costs, you price your cars based on demand and market and you work to sell them in a timely fashion. But what are you doing to make more profit on the back end of your deals? Statistics show very few dealers offer service contracts on every sale. But why? Beyond the fact you can better protect your customers after the sale, there are countless benefits that put more profit in your pockets. Think about the extra commas in your bottom line if you apply the same effort to your back-end profits as you do to protecting your front-end gross. Nice mental image, isn’t it? It starts with having a process: Think 300 percent. That means you offer 100 percent of your service contract menu to 100 percent of your customers 100 percent of the time. That doesn’t mean you’ll end up getting every single customer to purchase a service contract. But if you can bump your penetration from 25 percent to 50 percent, you’ve just doubled your profits from the back end of deals. Not to mention the more service contracts you sell, the more you stand to get back in return. You get out what you put in: A portion of every service contract you sell is set aside in the event a claim is paid on that particular vehicle. Check with your service contract provider to see what portion of that reserve, if any, you can get back when the contract expires. GWC Warranty dealers who qualify for our Elite Dealer Program begin earning a portion of those reserves back when they reach certain service contract volume milestones. Create enough service contract volume and WealthBuilder dealers can qualify for up to 100 percent of their underwriting profits. Service contract volume isn’t the only driver of that profit center. Selling quality vehicles and focusing on reconditioning will help keep reserve accounts full, as fewer claims are paid from them. Up your game with upsells: When it comes to immediate profits, upsells to richer coverage levels with longer terms will help build up reserve account balances.
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If you’ve followed the first two steps of this process and you work in upsell opportunities, you’ll be offering better contracts more often, making more underwriting profits available and, perhaps most important, improving post-sale satisfaction, setting you up for long-term profitable benefits as well. Repeat, refer, rejoice: Where you stand to benefit the most from a standardized back-end profit approach is when it comes back to you on the front end. How does that work? Imagine the customer you protected for a longer
term with richer component coverage. Now think about how he’ll feel when two, three, four or even five years down the road, the service contract you sold is still saving him money on unexpected repairs. It’s the ultimate customer satisfaction experience, and one customers will tell family and friends about. So when their cousin, friend or colleague needs a quality vehicle, where will they go? You guessed it – they’re coming to you. And when they’re in the market for another vehicle, you can be sure they’ll start their search where their last one ended – on your doorstep.
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SALES MATTERS BY ALAN RAM
PHONE UPS THAT SHOW UP The Goal is Not Simply an Appointment
Every time I ask a group, whether it be dealers or salespeople, what the goal of a sales call is they tell me it’s to “set an appointment.” No, it’s not! Let me explain with two scenarios. Scenario A: You take a sales call. Everything goes great: You get a name, you get a number and, yes, the caller sets an appointment. You hear barking in the background, and you start talking to the caller about his dog. Now you’ve got some Golden Doodle-rapport. Unfortunately, that appointment does not show up. Scenario B: Someone calls and you get her name and number. That’s no problem – you again use the highly effective technique that I call “asking them for it,” which works just about every time. This customer will not set up an appointment no matter how hard you try. She just won’t commit. But later on that evening, she comes in and buys. Which would you rather have? And that’s not a trick question. Clearly Scenario B, right? But she didn’t
have an appointment. So what? The goal of a sales call is not to set an appointment but to have someone actually show up at your dealership. SHOW-UPS COUNT, NOT APPOINTMENTS. There’s a big difference between setting up appointments and having people arrive. I’ve had plenty of salespeople come up to me excited because they just used one of my word tracks on a customer on the phone and it worked great. My question is always, “Did the caller show up yet?” If not, nothing has worked “great” yet. Not until they show. Now, I’m not telling you not to set up appointments, so relax. Of course you want to set up appointments. But let’s face it, nobody comes into your dealership because you got their name and phone number. “Hey honey, that salesperson at Friendly Kia just got our phone number! Let’s get down there!” MESSAGING MATTERS By the same token, nobody comes into your dealership simply because you set up an appointment. They come in because of everything else you say. What reasons are you giving customers to come to your dealership, other than to see you? If you can’t answer that question, you need to figure it out. Most telephone training in the automotive industry is simple:
1. Get their name. 2. Get their phone number. 3. Smile, because a smile can be heard over the phone – that is true, by the way. 4. Then set up an appointment they probably won’t show up for. You need to step up your game. To get people to come to the dealership, you must give them solid reasons to show up. The next time someone asks you what your goal on a sales call is, I want you to say: “It’s to get someone to actually show up.” Alan Ram is president of Proactive Training Solutions. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
MARKETING MATTERS BY KENNY ATCHESON
ELIMINATE WASTE IN ADVERTISING Data-Driven Decisions
When consulting with a dealer, I usually find waste in their advertising. A multilocation dealer tends to have a bigger budget and may have more waste. That’s not always the case, but a multi-location dealer with a larger advertising budget sees media salespeople who are after his full budget. It’s how they get paid. I prefer to see dealerships with larger budgets spend their budget only if it’s working. This is why tracking and measuring as much as possible helps define what the budget actually is or should be. It may be fluid throughout the year, not just during tax time. The marketing director for the current winning presidential candidate said, “We used digital data to decide where to spend the budget offline.” Data-driven decisions remove human bias from budget decisions. Recently, we launched a new message with media to help dealers who are already using a program to generate new business before tax returns arrive. A dealer called me
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to ask about it, and I said, “I expect it to work, but we are testing it. The data will answer that question.” At my recommendation, several of our larger clients have saved money on advertising by moving a portion of their budget to media and delivery that is more effective… and it’s trackable. For example, $20,000 per month may be reallocated to a different strategy, but I want to track effectiveness. We may find the last $5,000 of that spend is not working out because it is used to reach a potential customer base that is geographically too far away. So that portion of the budget is cut and the same or more cars are sold with less investment. Dealers with smaller budgets have their share of waste in advertising. The culprit is often the geographical area in which they advertise. Much of the time their radius is too large. There is a slight chance someone who lives 100 miles away will buy from them if given the chance, but they shouldn’t spend money trying to lure them in. That’s like management in a steakhouse spending good money on advertising targeting vegetarians just in case there is a chance they may come in for a fancy salad. Whatever you do, track and measure so you can tweak or cut it.
Kenny Atcheson is the president of Dealer Profit Pros and author of Marketing Battleground: How to Deploy an Army to Battle for Your Business. Kenny teaches workshops, speaks at conventions and 20 Groups, and his company offers several marketing and advertising programs. His website is www.DealerProfitPros.com.
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SAFETY WATCH
AUCTION NEWS
ADESA MAKES $40 MILLION INVESTMENT IN CHICAGO FACILITY Customer-Centric Technologically Advanced Location
ADESA recently announced it has officially opened its new ADESA Chicago auto auction. KAR invested approximately $40 million to develop the company’s most integrated, customer-centric and technologically advanced physical auction location to date. “As one of the largest car markets in the United States, Chicago is a top priority in our strategic growth initiatives. There are nearly 1,100 car dealers within a 100-mile radius of our centrally located Hoffman Estates auction facility. Our goal is to provide our services to the majority – if not all – of those customers,” said ADESA CEO and president Stéphane St-Hilaire. During the first sale, customers were introduced to some of the most innovative technology and concierge-level service in the industry, including mobile iOS applications that allow dealers to do even more while in the auction lanes. Right from their mobile devices, dealers can now: pay for their vehicles, request post-sale inspections and get gate passes emailed to their device. “More than 200,000 vehicles were sold at auction last year in Illinois. We are committed to expanding
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our market share and facilitating the exchange of many of these vehicles. We are filling an unmet need in the market with our endto-end remarketing services and unmatched technology,” St-Hilaire said. Advanced technology also streamlines the checkout process with an iOS application that quickly and easily scans the driver’s license, gate pass and vehicle barcode. Mobile printers managed by ADESA employees also allow dealers to print bid badges from their mobile devices pre-sale. ADESA Chicago joins the already well-established presence of KAR subsidiaries in the Chicago market, Insurance Auto Auctions and Automotive Finance Corporation. ADESA Chicago is KAR’s seventh location within 40 miles of Chicago proper. This auction facility hosted its first sale on Friday, October 28, for dealers in the Chicago, Wisconsin and Indiana markets. It is conveniently located between six major interstate systems and near O’Hare International airport. The 167,000-square-foot facility is built across 65 acres and is currently hiring 100 employees.
MITSUBISHI RECALLS OUTLANDERS Possible Wiper Failure
Mitsubishi Motors North America Inc. is recalling 94,534 model year 2011-15 Outlander Sport vehicles manufactured Aug. 26, 2010, to Jan. 5, 2015. In the affected vehicles, water may drop between the hood and the windshield and leak into the wiper motor breathing hole. The water may cause internal corrosion of the windshield wiper motor and the possible failure of the motor. Failure of the wiper motor can cause a loss of visibility, increasing the risk of a crash. MMNA will notify owners, and dealers will replace the wiper motor, free of charge. The manufacturer has not yet provided a notification schedule. MMNA’s number for this recall is SR-16-010.
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TECHNICALLY SPEAKING BY DAN DOMAN
SECURITY STARTS WITHIN Six Steps to Protect Your Dealership’s Data
According to data security firm Virtru, even as hackers become more and more sophisticated, much of the threat to your business actually comes from inside. The company notes that up to 28 percent of enterprise data security incidents come from inside an organization. They’re not saying any of your employees has malicious intent – though that is possible. What they are saying is your staff could be inadequately trained or your data security policies might be incomplete or not enforced. So here are six training and enforcement policies to help protect your dealership from possible threats: Strong passwords: While you’ve heard it before and it might seem obvious, enforcing strict password requirements – such as requiring a minimum of eight alphanumeric characters with symbols – and prompting users to change their passwords regularly are easy ways to protect against unauthorized access. A 2015 survey by TeleSign found 47 percent of people use passwords that are at least
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five years old. Don’t let your dealership’s employees be among them. Authentication: Require multi-factor authentication on every device that accesses your dealership’s data. The process requires users to register their devices to a particular user ID and password. Registering a device requires employees to select and answer a series of “security” questions not easily guessed by anyone but the employee. In the event a user name and password was compromised, a hacker would still be unable to access your dealership’s systems unless that device was authenticated to those credentials, adding another layer of security.
IP blocking: Use IP blocking to limit user access from only dealership-approved IP addresses. That helps prevent unauthorized access from remote or mobile locations. Implementing IP blocking is a great opportunity to review and audit your dealership’s policies regarding remote access to integrated dealer systems and appropriate purposes and use. Now that you have secured the devices that are coming into your system, focus on your dealership’s employees’ day-to-day use. Check your user permissions: Not every employee needs access to all of your dealership’s data. Assign employee permissions and access to specific dealership systems that suit your business processes and
the employees’ respective responsibilities. That will help control their ability to access personal and confidential customer data. Use your systems’ notification or activity alert tools: They can be configured to alert you of potentially suspicious employee activity, such as changes to a user’s “setup” or “preferences.” Run a report: Regularly run a user report to ensure all who have access truly need it. The reports should provide detailed information on users including dealer ID and dealer name (for dealer groups), user name, last successful login date, no user activity for more than 60 days, and admin. It is a sound security practice to check your user reports against your active employee list. You should never have an ex-employee authorized to access your systems. Secure dealerships are successful dealerships, and maintaining a secure dealership begins with fundamental security practices. By implementing the six practices explained here, your dealership will be well on its way to helping ensure the security of your customers’ information – and a successful future. Dan Doman is chief legal and privacy officer of RouteOne LLC (www.routeone.com), a joint venture created by Ally Financial, Ford Motor Credit Company, TD Auto Finance and Toyota Financial Services. He is responsible for managing the legal, governmental, privacy, and security affairs of RouteOne LLC.
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AUCTION NEWS
AUCTION NEWS
KAR AUCTION SERVICES ACQUIRES FLINT AUTO AUCTION Detroit-area Facility Will Operate as ADESA Flint
NATIONAL AUTO AUCTION ASSOCIATION NAMES NEW PRESIDENT Jerry Hinton
KAR Auction Services announced it has acquired Flint Auto Auction, a whole car auction facility in Flint, Mich. The facility will operate as ADESA Flint, strengthening the national footprint of KAR’s ADESA business unit and extending the reach of KAR’s integrated operating model. “Fortifying KAR’s presence in the epicenter of the U.S. automotive industry has been a long-term strategic priority,” KAR chief executive officer and chairman Jim Hallett said. “ADESA Flint enhances KAR’s end-to-end remarketing platform in Detroit and positions us to accelerate growth in the very dynamic Midwest marketplace.” ADESA Flint joins KAR’s other primary business units, Insurance Auto Auctions and Automotive Finance Corporation, in the Detroit market and is KAR’s sixth location in Michigan. Together, the companies provide a full range of whole car, salvage and financing
Jerry W. Hinton was named National Auto Auction Association president during the NAAA Convention/NRC in Las Vegas. Hinton will lead the executive team of the association, which represents more than 300 member auto auctions and 100 associate members in North America, along with outgoing president Mike Browning. Hinton is the general manager of ADESA Portland, a position he held with Brasher’s Portland Auto Auction when it was acquired by ADESA in February 2016. A 28-year veteran of the wholesale auto auction industry, Hinton has a bachelor’s of science degree in business and finance, an MBA and a law degree. His service to the auction industry spans decades. He has served on the association’s national board and currently sits on NAAA’s legislative and membership committees. Hinton has also devoted time to the Oregon Independent Automobile Dealers Association, including 12 terms as membership director and four terms as zone director. He has worked closely with the Oregon Dealers Advisory Committee, helping to pass automobile legislation. In addition to his industry related efforts, Hinton has participated in local government and been involved in his community. “Giving back to our industry, one that has given me so much, is important to me,” Hinton said. “I am honored to have been selected by my peers to lead our association this coming year, and I look forward to working closely with our professional association staff to assist our auction members, clients and our vendors.”
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options and a differentiated suite of innovative products and technology solutions. Located just northwest of the Detroit metro area, Flint Auto Auction is a fully automated, eight-lane auction on 60 acres. The site also includes full-service reconditioning facilities, including a body shop and mechanical shop. “ADESA is a leading brand in the industry, and Flint Auto Auction is very pleased to join its international network of auctions,” Flint Auto Auction president Bill Williams Jr. said. “Both companies share a culture of innovation and a strong commitment to customer service. Joining the KAR platform will help us meet the demands of our increasingly sophisticated buyers and sellers, many of whom have been with us for generations.” Lawrence Cubitt will remain as general manager and other members of the auction team will retain key leadership roles. The auction hosts factory, fleet and dealer sales each Wednesday and has received multiple industry recognitions based on service and performance.
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REGULATORY UPDATE BY USED CAR NEWS
FTC ISSUES REVISED USED CAR RULE Changes to Buyer’s Guide The Federal Trade Commission has announced final amendments to its Used Car Rule. The FTC has sought public comments on a series of proposed changes to the rule, which requires car dealers to display a window sticker, or “Buyers Guide,” on used cars offered for sale. The guide discloses whether the dealer is offering to sell a used car “as is” (without a warranty), or with a warranty. If the sale is with a warranty, the guide discloses the terms and conditions, including the duration of coverage, the percentage of total repair costs the dealer will pay, and the vehicle systems the warranty covers. In states that do not permit “as is” used car sales, dealers must use an alternative guide that discloses whether the sale is with a warranty or with implied warranties only. In December 2012, the FTC sought public comments on proposed changes to the Buyers Guide as part of its systematic review of all of the agency’s rules and guides. In response to comments received, the agency sought
comments on additional proposed changes to the Used Car Rule and invited comments on alternative approaches that public commenters proposed for the vehicle history disclosure and the “as is” statement. As announced, the FTC is revising the Buyers Guide by: • Changing the description of an “as is” sale. • Placing boxes on the face of the Buyers Guide dealers can check to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available. • Providing a box dealers can check to indicate an unexpired manufacturer’s warranty applies. • Adding air bags and catalytic converters to the Buyers Guide’s list of major defects that may occur in used vehicles. • Adding a statement that directs consumers to obtain a vehicle history report and to check for open recalls. The statement also instructs consumers to visit ftc.gov/ usedcars for information on how to obtain a vehicle history report and to visit safercar.gov to check for open safety recalls. • Adding a statement, in Spanish, to the English-language Buyers Guide, advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish. • Providing a Spanish translation of the
statement that dealers may use to obtain a consumer’s acknowledgement of receipt of the Buyers Guide. The amended rule, which takes effect Jan. 27, permits dealers to use their remaining stock of Buyers Guides for one year after the effective date.
PRODUCTS AND SERVICES BY GWC WARRANTY
DEALERS GET EXCLUSIVE ACCESS TO FRESH INVENTORY Online-only Program
To help dealers efficiently manage inventory before year-end and prepare for tax season buying and selling surges, OVE and DealShield are offering an onlineonly promotion through March 31, 2017. Participating clients gain access to exclusive inventory on dealers’ lots that has not been seen at auction. Qualifying vehicles must have an AutoGrade Condition Report of 2.0 or higher and be priced and purchased between 90-110 percent of the Manheim Market Report (MMR) price guide. Dealers are incentivized to both buy and sell vehicles, experiencing peace of mind and the conveniences that come with the program’s perks. Buyers receive a free DealShield 21 Day Purchase Advantage Guarantee and condition report information, while sellers benefit from increased buyer assurance, a discounted condition report for $35 and reduced transportation expense. “We are dedicated to helping dealers fill their lots with the right inventory at the right time,” said Manheim vice president of digital and inventory services Derek Hansen. Dealerships can tap into this offer by using a valid auction ACCESS membership number that remains active throughout their participation. Clients can visit http://go.ove. com/ovedealshield to learn more about OVE. com and sign up for the program.
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