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Inside:

• The Lost Art of the Switch • Effective July 1, 2016 • CarLawyer

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Tech Enabled Dealerships Need TechSavvy Employees

than two visits (1.9 to be exact) to a dealership before making a purchase. Online shopping is the main culprit. Because of the free flow of information on the web, car buyers are more inclined to research their auto purchases at home or on the go using their computers and mobile devices. They’re no longer so dependent on salespeople REMAIN COMPETITIVE for information about IN TODAY’S INDUSTRY specific cars. As a result, BY KEVIN BAUMGART some auto dealerships are equipping their sales team with greater technology, like tablets, to facilitate customer interactions and close deals in the showroom. Unfortunately, you can’t just arm your sales team with tablets and expect them to be effective at selling in a new way. This is a significant shift, and your employee base has to be comfortable with approaching the customer and engaging them with a piece of technology. Most dealers are targeting Millennials to work on the sales floor for this reason alone. There are many benefits to having technology on the floor accompanied by techsavvy employees: • It gives the sales team instant access to information when customers have questions to which they may not know the immediate answer. • It initiates the sale on the floor instead of having to wait until customers are in the back office. • It helps build early credibility and trust if your customer sees the employee as a reliable source. • It will improve the level of professionalism and drive What do Millennials and positive impressions of the technology mean for the future store. of your auto dealership? The Providing a mix of access truth of the matter is you’re to this type of technology going to need both if you want and tech-savvy employees is to remain competitive in one way auto dealerships can today’s industry. remain competitive. The Impact of Technology on Millennials are a Perfect Auto Dealerships Fit for Technology Enabled One of the biggest changes Dealerships forcing dealerships to shift the While the common way they sell cars is customer stereotype you see of behavior. According to an Millennials is a group of article from Fortune magazine, people who constantly customers now make fewer have their smartphones at

the ready or are scrolling through their preferred social media feeds, this generation is exceptionally adept at technology. They were born into an era of innovation that made digital technology one of the primary ways people experience the world. As a result, the generation has been groomed to reach for technology – mobile devices in particular – when searching for the answers to questions. According to the Society of Human Resource Management, Millennials are highly collaborative and make research-driven decisions. What’s more, according to a recent study from PricewaterhouseCoopers, 78 percent of Millennials believe access to technology makes them more effective in their roles at work. Thus, the technology your auto dealership implements is a major contributing factor when Millennials are considering employers. In fact, six in 10 Millennials say the quality of technology a business has was important during recruitment. However, it’s increasingly likely Millennials will utilize their personal technology if the tools they have in the workplace limit them. Meanwhile, employers are also creating or updating their IT policies to adapt to Millennials’ technology needs – for instance, providing smartphones as an employee benefit. Technology and Millennials go hand in hand, especially at your dealership. Whether it’s informed consumers arriving at your dealership with buying research saved on their smart devices or tech-savvy employees who understand your customers, technology surrounds this generation and is paramount to delivering a positive buying experience. Kevin Baumgart is VP of Business Development at Hireology. His focus is to help retail automotive clients to improve the people side of the dealership. Kevin has spent his entire 15-year career in sales and sales management for entrepreneurial and start-up companies. This article originally appeared on NCM’s Up to Speed blog (http://blog.ncminstitute.com) and is reprinted with permission. CAR LINES

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Inside J U L Y

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THE LOST ART OF THE SWITCH Bring the Pendulum Back | PAGE 06

EFFECTIVE JULY 1, 2016

Days for Delivery of Title and Temporary Plates Increases | PAGE 08

NOW IT IS A MUST

How Can We Do A Better Job Retaining Women In Sales? | PAGE 10

COMPETING WITH FRANCHISE DEALERS AND COMING OUT ON TOP

How Converting Sales to Service Can Help You Sell Cars | PAGE 12

CARLAWYER

Latest Governmental Issues and Activity | PAGE 14

GOLF TOURNAMENT | PAGE 16

LIFTING THE HOOD ON CFPB’S PROPOSED CONSUMER ARBITRATION RULES How it Might Affect You | PAGE 22

What’s New

NEW PASSTIME SERIES ON NIADA.TV

Get more from your GPS! There is a new video series on niada.tv that identifies how PassTime GPS tracking solutions facilitate higher rates of return on financing based upon improved customer payment performance. It also discusses PassTime’s wireless GPS telematics products. Check out this new series and much more at niada.tv!

Advertiser’s Index

ADESA..................................................................................IFC Black Book............................................................................5 CarMax Auctions ............................................................6 Dyer Auto Auction.......................................................15 Kesler Schaefer AA........................................................9 Manheim ....................................................................10,11 Manheim Indianapolis................................................3 Manheim Pennsylvania..........................................13 NextGear Capital..........................................................12 PassTime ..............................................................................7 Spireon.............................................................................. IBC VAuto...............................................................................Back Cover

Office

For information on how to become a member of IIADA, please call 219.661.0287 128 S. East Street # 1393 Crown Point, IN 46308 iiada@comcast.net • www.iiada.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 For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. Car Lines is published 10 times per year by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 817-640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of Car Lines or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA , does not constitute an endorsement of the products or services featured. Copyright © 2016 by NIADA Services, Inc. All

STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT & GRAPHIC ARTIST Chantae Arrington • chantae@niada.com ART DIRECTOR Christy Haynes • christy@niada.com PRINTING Nieman Printing

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ADESA Names Executive VP of Online Services

JASON FERRERI

ADESA recently named Jason Ferreri executive vice president of online services in the U.S. Ferreri has been with the company since 2004. His most recent role was as senior vice president of commercial sales for ADESA. In the new position, Jason will report to ADESA president and chief executive officer Stéphane St-Hilaire and KAR Digital Services Group president Peter Kelly. His responsibilities will be to head up the strategy, adoption and execution of ADESA’s online initiatives. “With a continued focus on our customers, we have combined all of our online products and services under one leadership,” said StHilaire. “Our goal is to provide our customers every advantage in both the online and in-lane

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auction spaces and provide a more consistent experience throughout the entire vehicle remarketing lifecycle. Jason brings a unique skill set and diverse background working with dealer services, commercial accounts, sales and online auction technology that will truly be an asset in optimizing our vehicle remarketing channels.” Kelly added, “We are committed to harnessing technology’s transformative impact on the customer experience. It creates new business opportunities and offers streamlined efficiencies to help our customers run their business more effectively. Jason is a perfect leader to best leverage these tools for our customers.”

Board of Directors Andy Zay President Zay Leasing & Rentals, Inc. 4957 N. Broadway Huntington, IN 46750 Phone: 260.356.1588 azay@sbcglobal.net

Kim Graham Kim Graham, Inc. 1648 A US 31 S Greenwood, IN 46143 317.888.0100 Fax: 317.888.8900 k.motors@sbcglobal.net

Harold Drees H.T.D., Inc. 200 E. Main Street Thorntown, IN 46071 317.402.2312 Fax: 765.436.7222 htdinc@msn.com

Fritz Kreutzinger Chairman of the Board Legislative Chairman Fritz Associates P.O. Box 168 Fishers, IN 46038 317.842.2228 Fax: 317.842.7900 fritzauto@aol.com

Ed White White’s Auto Sales 1105 McKinley Ave. Rensselaer, IN 47978 219.866.7553 Fax: 219.866.7256 edwhite123@att.net

Doug Alvey First Class Auto Sales, Inc. 695 W. 900S Hebron, IN 46341 219.996.2600 Fax: 219.531.4628 talvey65@yahoo.com

John Stumpf Greater Kalamazoo Auto Auction P. O. Box 697 Schoolcraft, MI 49087 269.679.5021 jstumpf@kalamazooaa.com

Andrew J. Inabnitt Approval Auto Credit Inc. 9825 Huggin Hollow Rd. Martinsville, IN 46151 317.422.8001 Fax: 317.422.8020 joe@approvalautocredit.com

Tony Houk Kesler-Schaefer Auto Auction, Inc. 5333 W. 46th Street Indianapolis, IN 46253 317.297.2300 Fax: 317.297.6236 skesler@ksaa1.com

David D. Baldwin II Best Deal Auto Sales, Inc. 1875 SR 8 Auburn, IN 46706 260.357.0099 Fax: 260.357.0090 dbthesecond@yahoo.com

Tony Del Real Vice President Del Real Automotive Group 1002 Walnut Avenue Frankfort, IN 46041 Phone: 765.446.9204 tdelreal@delrealauto.com Bruce Norton Treasurer Drive1 USA, Inc. 1512 W. 96th Avenue Suite C Crown Point, IN 46307 Phone: 219.670.0542 Bnorton@drive1usa.com Sharon Brennan Secretary Fritz in Fishers 8599 E. 116th Street Fishers, IN 46038 Phone: 317.842.2228 sharonb@fritzinfishers.com Tricia Trent Trent Auto Sales 1327 N 6th St. Vincennes, IN 47591 812.882.3772 Fax: 812.882.1986 ttrent01@yahoo.com Jennifer Cotton Dyer Auto Auction 219.865.2361 Fax: 219.322.1761 bcotton@dyerauction.com

BY AUTO REMARKETING STAFF

Tyler Trent Trent Auto Sales 1327 N 6th St. Vincennes, IN 47591 812.882.3772 Fax: 812.882.1986 ttrent01@yahoo.com Travis Baldwin Best Deal Auto Sales 2526 Scotswolde Drive Fort Wayne, IN 46808 Phone: 260.483.7999 travisbaldwin@ bestdealautosalesonline.com Taryn Sanchez Whites Auto Sales LLC 1105 N. McKinley Avenue Rensselaer, IN 47978 Phone: 219.866.7553 twhite1517@att.net

Debbie Andersen Executive Director 128 S. East Street # 1393 Crown Point, IN 46308 219.661.0287 iiada@comcast.net

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The Lost Art of the Switch BRING THE PENDULUM BACK BY SCOTT BERGERON

Back when car deals were far easier, and customers didn’t spend six months selfdiagnosing their needs, the ability to switch a prospect out of one car into another was commonplace and done with virtually every deal. Today, switching prospects from one vehicle to another can almost be considered a lost art. Refocusing on it, though, can bring your dealership more deals. Historically, switching vehicles was a natural part of the sales process. Today, customers are more rigid in their quest, and to them, it’s often more about finding the “exact perfect vehicle.” Prospects walk in armed with loads of online research information about vehicle history, equipment, trade-in and retail values. But often they haven’t accurately assessed the value of their

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trade-in or calculated their monthly payments. That’s when forward momentum stops going forward, and the deal starts going sideways. The Swinging Pendulum – from Too Pushy to Too Cushy Traditional used car salespeople often were branded as being too pushy, too money motivated, and far too aggressive in their efforts to make a sale. Today’s pendulum, in many cases, has swung too far the other way. Reacting to a prospect who seems to know it all, many sales reps have basically adopted an order-taker mentality instead of being a value builder and solution provider. Part of this is a natural aversion to the used car stereotype. Part of it is salespeople or the sales process being allowed to become too soft. Here’s a typical scenario: A prospect walks in with an inflated idea of trade-in value, and little or no idea what their actual monthly payment will be. The prospect has researched trade-in value based on retail versus wholesale, and perfect condition compared to actual condition. Other than perhaps a ballpark guess, the

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monthly payment is an unknown. In some cases, the salesperson may overhear comments about payments or terms, but may choose to still let it go to the finance office – where it can, and in many cases does, blow up. Where’s the sweet spot? Bring the pendulum back toward the center. Just because a prospect has done research and is somewhat knowledgeable doesn’t mean he or she doesn’t need or want an “expert” to help guide the process. A major key to successfully finding that middle ground is knowing and asking the right questions, and if need be, switching the prospect to another vehicle that makes more sense. Switching it Up Salespeople need to be well aware of their “switch car inventory” ahead of time. Rules of the road include: 1. Training the sales force on switching. During your sales meeting, sales manager(s) should go through their inventory with their sales team and train what’s new on the lot, the hot cars from auction, the perfect switch vehicles – such as cars sold at

auction for well below Blue Book and that allow the dealership to essentially get the deal done when trade values are upside down. This gives the sales rep, and the dealership, much better odds at making a deal happen. 2. Training/retraining the sales team on taking charge and being tuned in. Can you tell how to spot a green-pea on the lot? They’re the ones being led by their prospects instead of the other way around. Sales managers need to make sure their team is controlling the deal, not being led down the wrong path by a prospect who seems to know “exactly what they want,” but in the real world isn’t even close to reality for payment and terms. During the initial introduction phase, salespeople should always work towards keeping the prospect as flexible and open to suggestions as possible. As smart as today’s prospects are, it’s always a good idea to remember most only walk into a dealership or purchase a car every four to five years. Salespeople and managers work deals bell to bell nearly every day. So you and your team’s opinion should be taken as expert advice, especially in terms

AUC T ION NE W S of deal structure. You know what’s going to work and what’s not. The key is having enough rapport and trust built to be able to efficiently lead the deal. This level of competence must extend to making sure walk-ins, rarer these days, are helped as soon as possible. I walked into a dealership a few years ago wearing my worst blue jeans, and a tank top covered in dried paint. I had finished my Saturday work around the house and was ready to go buy my dream car. I was looking for a certified pre-owned Porsche 911. I was on the lot for at least 20 minutes. There were several salespeople available, but no one acknowledged me. Being from the car business, I really wanted to see if pre-judging still existed just from the clothes I chose to shop in. I did finally get help, and yes, I bought the car. But the first impression is still something people put a lot of stock in. 3. Understanding the marketplace. When I visit a town, I make it a point to find prevalent radio stations to get an idea of what, how, and who

they’re advertising to. It gives me a quick snapshot of potential audiences for cars – whether it’s young “Kardashian types” or highly educated, more affluent prospects. If I were working at a used car dealership in that town, I would attempt to determine right away what station(s) a prospect tunes in to – which may provide some valuable intel about how to switch and sell a car. Sales managers need to train their people to do similar investigation, so they can learn to spot hot button motivators, as well as building value in benefits. Just segmenting by generation (e.g., millennials) won’t do it. No matter what traits predominate, at the end of the day it still comes back to buying from people they like and can identify with. A salesperson who can listen, build rapport and truly be an expert can switch when need be, or build the value up on the first choice so it makes sense to spend a little more. 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 Books and cloud-based CRM have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@ dailygameplan.com.

ADESA Helps Raise Record Amount for Dogs

RE-AUCTIONED HARLEY RAISES $127,000

An ADESA auction raised a record $128,000 to train service dogs for wounded veterans at the recent NADA Convention & Expo in Las Vegas. One winning bidder after another donated back a 2014 Harley-Davidson Dyna Street Bob FXDB motorcycle to be reauctioned. Mike Dullea placed the winning bid of $25,000. Dullea is CEO of AutoAlert, with locations in Irvine, Calif., and Raytown, Mo. Joe Verde, president of Joe Verde Group in San Juan Capistrano, Calif., matched the bid with $25,000. But then Dullea surprised everyone by donating the motorcycle back to ADESA to be re-auctioned. Lewie Card was the top bidder at $20,000. Card is director of Carlister.co in Bonita Springs, Fla. Verde decided to also match that bid with another $20,000. Then Card donated the motorcycle to

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be re-auctioned. Justin Becker placed the third winning bid of $12,000. Becker is director of logistics for Wholesale Express in Mt. Juliet, Tenn. But Dullea, the first winning bidder, announced he would match Becker’s bid of $12,000. The final surprise came when it was time to write the check to ADESA and Dullea kicked in another $13,000. Another $1,000 was raised in cash donations to bring the final contribution to $128,000. This was the fifth year ADESA has auctioned a motorcycle at the NADA convention. Funds from the event benefit the NADCF Frank E. McCarthy Memorial Fund, which supports the Wounded Veterans Initiative of Canine Companions for Independence. McCarthy served as NADA president for more than 30 years.

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L EG ISL AT I V E NE W S

EFFECTIVE

DAYS FOR DELIVERY OF TITLE INCREASES TO 31 AND TEMPORARY

he Indiana Independent Automobile Dealers Association understood our members’ inability to provide customers with their title in 21 days and we are pleased to announce the law has changed! The types and geographic locations of lenders, the geography of our customer base, mail delivery, and title processing have changed. These changes are the reason we educated and worked with our legislature to make delivery of title time requirements more reflective of business conditions.

Customer financing has become specialized with subprime financing making up the majority of the financing market. These companies, along with credit unions, state and nationally chartered banks, have given us the ability to meet the needs of our individual customers. However, the physical location of lenders can be almost anywhere, making it increasingly difficult to get titles. This is in contrast to times when the majority of lending was underwritten by a local bank or credit union who held the title in their safe, all located down the street from the dealership.

Internet presence is now as important as physical location to most dealers. Today’s customers are shopping your inventory online 8

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from other states and countries. Buying habits have changed from the times when the majority of vehicle sales came from a customer driving by the dealership to see your inventory or seeing an ad in the local paper. The logistics of delivering a title to a customer many states away increases the time needed to get the title to the customer.

Consumer protection remains in place. The safeguards that protect a consumer purchasing a vehicle in Indiana include: • Indirect Retail Lenders – Lenders are continuously monitoring their dealers to make sure they are compliant and solvent. • Floor Plan Inspections – Dealers who borrow money to finance their inventory are subject to regular inspection by their floor plan lenders. • Dealer Inspections – Dealers are subject to inspections by the Dealer Services Division under the Indiana Secretary of State Office. • Consumer Complaints – A bad “online review” can do a lot of damage to a dealer and his reputation. Indiana’s attorney general investigates customer complaints against Indiana dealers. • Dealer Bonds – Dealers must maintain a $25,000 bond to ensure clear title.IIADA is working for you!

JULY 1,2016

PLATES INCREASE TO 45 DAYS

By IIADA Staff

WORKING TOGETHER Working together we were able to get this legislation written and passed. Fritz Kreutzinger, IIADA legislative chairman, laid much of the groundwork for this legislation through the Motor Vehicle Advisory Board meetings with the Indiana secretary of state.

Indianaâ&#x20AC;&#x2122;s new car dealers endorsed the legislation to extend time for delivery of title. Thank you to the legislators who listened and heard our concerns!

IIADA IS WORKING FOR YOU!

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M A N AG E MEN T M AT T ERS

Now it is a Must

HOW CAN WE DO A BETTER JOB RETAINING WOMEN IN SALES? BY JODY DEVERE

Dealerships currently report that women represent just 25 percent of face to-face positions. But that small number is powerful: Within four months of reaching that percentage, dealerships typically experience as much as 35 percent gain in overall vehicle sales, new and used, and a substantially increased used car turnover. Less numbers-driven, but just as important, those dealerships also see an

increase in desirable employee statements regarding company loyalty and goals toward longevity. How did they do it? Simple: They brought women into their sales, service and management positions and found ways of retaining them. It’s simple: Attracting women yields high results. Considering 85 percent of all automotive purchases are either directly made by women buyers or directly influenced by them, if we are not responding to this statistic, then our dealerships are missing the boat. Totally. ROI is a key driver in how we consider the physical programs and offerings we

EXPLORE NEW TECHNOLOGY. EMPLOY MARKETING SPECIALISTS COMFORTABLE WITH

WOMEN’S NEEDS.

ELIMINATE PROCEDURES WE HAVE UTILIZED JUST BECAUSE WE HAVE ALWAYS DONE SO. put forth to the consumer in our efforts to entice them to visit our facilities. We do recognize Internet information access has affected profit margins, margins inflated by consumer ignorance as to how much flexibility in costs existed. The fact is we just cannot make the margins we used to, and have to find ways of addressing our concerns as survival efforts. Playing the numbers game of total sales for a month will eventually be passed with the money lost in potential profits. The bottom line is we must place our investment monies into areas of concentration that will bring us returns that will not only keep us in business but by their very nature help us grow in our financial viability, viability that is attractive to women who may be considering this industry as a workplace. Roadblocks to attracting women. Here are some reasons why we are not attracting women at this point: 1. Traditional resistance. Many organizations still are thematically maledominant and have programs in place that do not have interest to the new womendriven market. “What was good for my dad is good enough for me” is the motto above the entrance of many empty and abandoned dealerships. 2. Reluctance to trying new programs. Management and owners may not have the desire or courage to try new programs. Or they may be lazy. 3. Equitable pay and work programs. There need to be considerations for family needs and even part or adjusted time participations. Traditional long hour work periods do not work. 4. Knowledge and expertise. Existing dealership management may simply not have either or both of these to design and implement marketing to attract and hire women, or initialize training and financial or equitable incentive programs to make this happen. 5. Necessary minimal monetary investments. Many management

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must address the elimination of restrictive traditional procedures we may have in place. 5. Encourage our educational systems to step up to the plate, and support local and regional programs. We need realistic training at design, management, service, finance and especially sales. This must happen at all levels of the industry. Today’s women are time-constrained, pragmatic, comfort-conscious, and heavy into efficient and consistent communication with their employers. They are extremely effective at communicating within their own social groups and pay little attention to advertising. They are direct with their customers, and women are especially effective at establishing

a meaningful rapport that translates into return business transactions built upon trust. If we wish to survive, let alone prosper, we cannot wait any longer. Let’s do everything we can to attract these valuable women employees, and provide them with the incentives to keep them with us. The time is now, not tomorrow. Jody DeVere is an internationally recognized speaker, trainer, often quoted industry pundit and spokesperson for the automotive industry on the women’s market. As CEO of AskPatty.com, she provides automotive education to women consumers and an interactive online Certified Female Friendly certification training program for automotive retailers on how to attract, sell, retain and market to women. This article originally appeared on NCM’s Up to Speed blog (http://blog. ncminstitute.com) and is reprinted with permission.

personnel simply may not want to make these investments. 6. Difficult economy conditions. Many organizations lean on this often-perceived statement as an excuse. This is not an excuse. 7. Negative reputation: Previous poor treatment and lack of respect. The dealership’s experience has left a bad taste in many women’s mouths. Women are still greeted on the sales lot with detestable statements such as, “Is your husband with you today?” With such disrespect, it’s not surprising that women don’t consider dealership work as a viable option. 8. Failure to address the needs of female millennials. Times are different. Women in this largest group of consumers want to be in organizations that “feel good” to their basic drives, other than just to climb through positions or achieve high income solely. They want to have better communication with their administrators and are most often prefer working “with” them, as opposed to “for” them. So, how do we fix this, and not only bring talented women into our organizations but keep them there as well? With sales consultant turnover figures ranging from 72 percent to 80 percent, the highest turnover rate is women at a shocking 90 percent. Turnover among millennials is presently at 54 percent. It is obvious we are doing a lot of things wrong. Here are some realistic solutions to retain women: 1. Get off our butts and try new methods. Explore new technology. Employ marketing specialists comfortable with women’s needs. Eliminate procedures we have utilized just because we have always done so. 2. Re-examine possible positions that can effectively interest and challenge women. Conduct non-traditional interviews that ask what these interests might be. 3. Re-evaluate compensation incentives and adjust them. Consider not just the primary needs of full and part-time women, but their family and personal needs as well. 4. Take a new look at our models. We CAR LINES

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S A L ES M AT T ERS

Competing with Franchise Dealers and Coming Out on Top HOW CONVERTING SALES TO SERVICE CAN HELP YOU SELL CARS BY DEALERSOCKET

DealerSocket’s DAR for Fall 2015 cites two primary problems independent car dealers face. One is used car sales and the other is repair services. Why are these issues for independent dealers? This finding is based on an independent dealer’s ability to convert used car sales to repair services, which correlates with customer satisfaction and retention. How do you convert sales to service? You must change customer perception. Almost all business is judged by the strength of the customer service department. You need to change consumer buying habits. DealerSocket reports for independent dealers only 30 percent of sold customers brought their vehicle back to the dealership for service within the first year. The average percentage of repeat customers is only 20 percent. They examined a Chrysler Jeep dealer and discovered the average sold customer who brought their vehicle back to the franchise dealer for service during the first year of ownership was 80 percent while the customer retention rate was 44 percent. How do they do it? According to DealerSocket, they have established a two-step process unique to their group and region. They introduce all new customers who purchase a vehicle to the service department at the time of delivery by scheduling their first oil change. Once the customer is in the service department, they created a program they call Platinum Plus. Every time a customer spends money in the Service Drive, 15 percent of dollars spent goes towards the purchase of their next vehicle. This has proven to increase retention in service. Converting customers who bought vehicles from the sales department into service

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customers is the formula for increasing customer holdings. The cycle of customer sales purchase to customer repair service, coupled with a 2-5 year trade-in is the pattern every dealership seeks to obtain. How does an independent dealer compete with the larger franchise? DealerSocket surveyed consumers and found 75 percent say where they purchase their vehicle is influenced by negative online reviews. Your online presence matters and there are ways to make it work for you. DealerSocket proposes several solutions: • Data mining or data discovery is the process of analyzing data from different perspectives and summarizing it into useful information. This information can be used to increase revenue, cut costs, or both. This software is an analytical tool often used by retail, financial, communication and marketing organizations. It enables companies to determine relationships among internal factors like price, product positioning, or staff skills to external factors like economic indicators, competition, and customer demographics. This allows you to properly position your business and possibly increase customer sales and retention. Customer relations management software keeps a customer database with phone numbers and email addresses, so you can schedule follow ups, appointments, and email blasts that allow you to continually reach sold and prospective customers. • Schedule your customer’s first oil change before they walk out the door and send a reminder before the appointment date. This is

an excellent way to build a sales/service cycle. • Examine sales trends, including the retail sales outlook, trends by vehicle type, web based and device driven sales, and the online shopper and how they’re utilizing your website. Traditional marketing processes are irrelevant in light of today’s online marketplace. The DealerSocket DAR for Fall 2015 summarizes their report the following way: Increase customer retention by: • Integrating sales and service processes. • Building trust and communicating the value of the service department within the first year of selling a vehicle. • Utilizing data mining software. Grow revenue by: • Implementing appointment confirmation processes. • Focusing on used car opportunities. • Decreasing spending on traditional advertising. • Creating a digital shopping experience that drives consumer engagement.

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M A N AG E MEN T M AT T ERS

The CARLAWYER

HERE, WE’LL AGAIN PASS ON WHAT WE’VE RECENTLY LEARNED ABOUT LEGAL DEVELOPMENTS IN THE AUTO SALES, FINANCE AND LEASE WORLD.

KEEPING YOU INFORMED WITH THE LATEST GOVERNMENTAL ISSUES AND ACTIVITY IN THE USED CAR INDUSTRY BY THOMAS B. HUDSON AND NICOLE FRUSH MUNRO

Nikki’s Orioles and Tom’s Nationals are looking pretty strong this year. An I-95 World Series, maybe? Unfortunately, we aren’t at a game. We’ve traded in our cracker jacks, peanuts, and 7th inning stretch for article writing on compliance issues. Here, we’ll again pass on what we’ve recently learned about legal developments in the auto sales, finance and the lease world. This month, we feature developments from the Consumer Financial Protection Bureau and the Federal Trade Commission, as well as recaps of some of the auto sale and financing lawsuits we follow each month. Remember – we aren’t reporting every recent legal development, only those we think might be particularly important or interesting to the industry. Why do we include items from other states? We want to show you new 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 own lawyer to learn how what we report might apply to you, or if you have questions. This Month’s CARLAWYER Compliance Tip We picked up a lot of online chatter this month about dealers who prepare and have the buyer sign two retail installment sales contracts for a deal so that if the finance companies reject the first one, the dealer can have a substitute ready to re-submit without going through that pesky re-contracting process. That practice is bad for so many reasons we won’t try to elaborate. If your dealership does this, stop immediately until you have vetted your practices with a knowledgeable attorney. FEDERAL DEVELOPMENTS FTC targets VW ads: On March 29, the FTC charged Volkswagen Group of America, Inc. deceived consumers with an advertising campaign promoting its supposedly “clean diesel” VWs and Audis, which, the FTC has alleged, Volkswagen fitted with illegal emission defeat devices designed to mask high emissions during government emission tests. The FTC is seeking a court order requiring VGA to compensate consumers who bought or leased affected VWs between late 2008 and late 2015, and an injunction to prevent the company engaging in such acts again. And not just VW’s ads: On April 18, the FTC issued an enforcement policy statement on deceptively formatted advertisements, including advertising and promotional messages integrated into and presented as

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non-commercial content. The statement lists principles of general applicability on which the FTC will rely in determining whether an ad format is deceptive, in violation of Section 5 of the FTC Act. The statement summarizes the principles underlying the FTC’s enforcement actions, advisory opinions, and other guidance addressing various forms of deceptively formatted ads. The FTC will find an ad deceptive if it misleads reasonable consumers as to its nature or source, and such misleading impression is likely to affect consumers’ decisions or conduct regarding the advertised product or the ad. Hint – check out your website! As we bid a fond farewell to arbitration… The CFPB held a field hearing on arbitration in Albuquerque, New Mexico, on May 5. The hearing featured remarks from CFPB director Richard Cordray, and testimony from consumer groups, industry representatives, and members of the public. As expected, the CFPB used the hearing to launch a proposed rule banning class waivers in contracts for consumer financial services that contain mandatory, pre-dispute arbitration clauses. CFPB targets debt collectors: On April 25, the CFPB announced it obtained consent orders against Pressler & Pressler, LLP, a debt collection law firm, and New Century Financial Services, Inc., a debt buyer, for unfair and deceptive collection practices, in violation of the Fair Debt Collection Practices Act and the Dodd-Frank Act. Specifically, the CFPB alleged the defendants filed collection lawsuits against consumers without sufficiently verifying the validity of the debts, did not properly respond to consumer disputes of the debts, and relied on an automated claim-preparation system and non-attorney support staff to determine which consumers to sue. The orders require the firm to pay a penalty of $1 million and New Century to pay a penalty of $1.5 million to the Bureau’s Civil Penalty Fund. LITIGATION TILA claim not mooted by tender of check equal to plaintiffs’ claimed damages that plaintiffs returned: Car buyers sued the dealership where they bought their car, alleging violations of the federal

Truth in Lending Act and the Maryland Consumer Protection Act, as well as fraud. The dealership sent them a cashier’s check equal to the sum of their down payment plus interest. The plaintiffs declined to accept the check. The dealership moved to dismiss for lack of subject-matter jurisdiction, arguing that its payment to the buyers mooted their TILA claim and eliminated the court’s subject-matter jurisdiction. The court found the unconditional tender equal to the buyers’ claimed damages provided the buyers complete relief under TILA. However, because the buyers returned the check, the court could not find the payment mooted the TILA claim. Accordingly, the court denied the motion to dismiss, but stated if the dealership reissues an unconditional cashier’s check equal to the amount of the down payment plus interest, it may re-file its motion, and the court will then dismiss the TILA and MCPA claims as moot. The court noted the tender would not, however, moot the plaintiffs’ fraud claim. See Price v. Berman’s Automotive Inc., 2016 U.S. Dist. LEXIS 35807 (D. Md. March 21, 2016). Dealership liable to used car buyers and finance company after failing to repair problems buyers experienced within 60 days after purchase: Used car buyers noticed problems with their car immediately after purchase. Learning the car had experienced a front-end collision that was causing the car’s mechanical problems, the buyers sought to revoke acceptance of the car. When the seller ignored their request, the buyers sued for violations of New York General Business Law Sections 349 and 198-b and the MagnusonMoss Warranty Act and sued the assignee of their retail installment sale contract under the FTC Holder Rule. The assignee settled the buyers’ claim and filed a cross-claim against the seller for breach of contract. The buyers and the assignee moved for a default judgment. A magistrate judge granted both motions. The magistrate found the buyers did not establish a claim for violation of Section 349, which prohibits deceptive acts or practices in the conduct of business, because they did not prove the seller’s actions had a broader

The CARLAWYER impact on consumers at large. The magistrate found the buyers established a breach of warranty claim under Section 198 but not under the MMWA, which requires an amount-incontroversy of at least $50,000 the buyers did not satisfy. The magistrate also found the assignee proved its breach of contract claim against the seller for failure to defend and indemnify under its Dealer Agreement. See Chin v. Planet Motor Cars, Inc., 2016 U.S. Dist. LEXIS 47372 (E.D.N.Y. April 5, 2016). Motor home seller not prevented from disclaiming warranties where service contract it sold buyer required it to perform only diagnostic services: A mobile home buyer signed a purchase agreement in which the seller stated it disclaimed all warranties. The buyer bought a third-party service contract from the seller to cover the motor home. The service contract required the buyer to take the home to the seller to diagnose an issue, but allowed her to seek repairs from any repair facility. The buyer discovered defects in the motor home and asked the seller to make the required repairs. The buyer alleged the repairs were inadequate, that the motor home had developed additional defects, and that the motor home was unsafe and unfit for use. The buyer sued the seller for breaching the warranty of merchantability, and the seller moved to dismiss. The federal trial court granted the motion. The buyer argued the Magnuson-Moss Warranty Act prevented the seller from disclaiming the implied warranty of merchantability. The MMWA precludes warranty disclaimers if the seller “enters into” a service contract with a buyer within 90 days of the purchase. The buyer cited a 1991 case in which a dealer was found to be an agent for a service contract company to argue the seller entered into a service contract with her. However, the court distinguished that case, explaining the buyer was required to obtain repairs from that dealer, but in the present case, the buyer was required to bring the motor home to the seller for diagnosis but could obtain repairs anywhere. As a result, the seller could not be considered an agent of the service contract company and, therefore, did not enter into the contract with the buyer. As such, the seller was not prevented from disclaiming the warranty of merchantability. See Coyne v. Crossville BNRV Sales, LLC, 2016 U.S. Dist. LEXIS 40160 (E.D. Tenn. March 28, 2016). So there’s this month’s roundup! Stay legal, and we’ll see you next month.

P RODUC T S & SER V ICES

Wayne Reaves Updates DMS with Equifax Reporting Feature STREAMLINES REPORTING PROCESS

DMS provider Wayne Reaves Software rolled out an enhancement to its current platform provides the capability for Buy HerePay Here dealers to furnish credit data to Equifax. The technology enhancement allows for a streamlined reporting process, using a program provided by Equifax together with the National Independent Automotive Dealership Association and the National Alliance of Buy Here-Pay Here Dealers. “Reporting credit data can benefit both dealers and their customers,” Wayne Reaves president Jason Reaves said. “On one hand, you have dealers who will be armed with a more comprehensive view of a customer’s loan payment history, improving their ability to assess risk. And on

BY BHPH REPORT STAFF

the other, dealers who report credit data can provide a compelling value proposition for their customers, as timely payments could help them build their credit.” Reaves added the latest version of the tool will help to support compliance efforts with consistent and seamless reporting of trade line data. The company mentioned the enhancement will also offer access to Automated Data View, an Equifax solution that allows dealers to quickly view the accuracy of reported payment and collection information, in support of the consumer dispute process. “Traditionally, many independent and Buy HerePay Here dealers have faced obstacles in reporting their customers’ auto loans and payments,” said Equifax vice president of enterprise

alliances Ryan Guthrie. “Previously, dealers had to hold a minimum number of accounts, which can be difficult for smaller operations to meet. “To help overcome these barriers, we started a program last year to enable NIADA and NABD dealer members to report their loan payment data to Equifax, regardless of how many accounts they hold, and Wayne Reaves has now successfully automated the process,” Guthrie added.

Tom (thudson@hudco.com) and Nikki (nmunro@hudco. com) are partners 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. Copyright CounselorLibrary.com 2016, all rights reserved. Single publication rights only, to the Association. (5/16). HC# 4830-2565-6113.

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Golf Tournament-Awards Day-Trade Show Excellentsponsorshipopportunitiesareavailableforour29thAnniversaryGolfTournament-AwardsDay-TradeShowEventon September 11, 2016, at Ironwood Golf Club in Fishers. Market your company and support the Indiana Independent Automobile Dealers Association All sponsors will be recognized at the tournament, on our website (iiada.com) and in our Car Lines publication. CALL 800.310.3112 OR EMAIL IIADA@COMCAST.NET FOR DETAILS

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Celebrating Long-Time Members First Name Last Name Joined Organization Name 2008 AF Sales and Service LLC Greg Goresen 2009 Affordable Computer Systems Inc. Jeff Kubicki 2008 AllyAuto Andrew Inabnitt 2009 Approval Auto Credit, Inc. Thomas Adams Jr. 2009 Auction Insurance Agency Shant Aslan 2010 Auto Zone Bart Churchward 2008 Bart’s Car Store Mark Stepp 2008 Basic Auto Sales LLC Ron Zimmerman 2010 CVR Licensing 2010 Drive Time-Shadeland Richard Feldman 2009 Feldman Auto Center Kent Greer 2009 Greer Motors Curt Holmes 2010 Heritage Acceptance Corp. Vance Trattner 2009 Insurance Auto Auctions Jan Hatoway 2008 Insurance Professionals Lori Simpson 2009 Keystone Insurers Group Tim McHugh 2010 McHugh Motors Inc. Beecher Greer 2009 Mr. Care Auto Nicholas Loyd 2010 NJ Enterprises Mike Harris 2010 Patrick’s Car and Truck Inc. Michael Firestone 2009 Plainfield Auto Sales Inc. James Horner 2009 Prestige Auto Sales Inc. Lester Dean 2010 Reliable Auto Finance Chet Kitch 2008 Southwest Auto Sales Chuck Surack 2010 SweetCars LLC Trent & Troy Davis 2010 TNT Auto Sales & Service Inc.

First Name Last Name Rick Jackson Jeff Cork Alex Shapiro Andy Zay Ava & Lloyd Arthur Carlos Asay Darlene Pfledderer Jaspal Gothra Ron Burgess Harry Georgalas Mark Dimmich Heidi Allen Stoyan Stoyanov Matt Fetter Mike Hamilton Ronald Ondra Eddy DelReal Ralph Butrum Thomas E Druley John Eaton George Mammarella Doug & Tina Alvey Alan Stock Michael Frazer Eva Gaeta John Gerton Brad Gray Rich Newenhouse Fred Grote Tom Hilsmeyer Harold Drees Dushan Galic Jack Newenhouse Brian Hague Zach Milito Angela Walsh Paddy Jamerson Tammy Naville Ken Brophey Donn Wray Kathy Ellegood Gregg St. Germain David Kaflik Martin Less Howard Curry Rodney Pletcher Greg Bradshaw Guy Loeffler Dan Morrison Robert Trock Paul Shillings Bob Schultz Dave Zatorski Thomas Stark Tom Wood William Welch Jr. Scott Eakins Gary Ross Bob Ruth

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City Indianapolis Jeffersonville Indianapolis Martinsville Birmingham Memphis Columbia City Attica Indianapolis Tempe Greensburg Thayer Elkhart Indianapolis New Palestine Northumberland Indianapolis Camby Indianapolis Whiteland Plainfield Indianapolis Wyoming Ft. Wayne Fort Wayne Kokomo

Joined Organization Name City 2002 30 West Auto Warsaw 2005 American Imports Speedway 2006 AMS Cars Indianapolis 2006 Andy Zay Leasing, Inc. Huntington 2006 Arthur, Inc. Auto Sales Solsberry 2003 Asay Motor Sales Lafayette 2003 Autobarn Sales & Leasing, Inc. Francesville 2006 Best Buy Motors Lafayette 2007 Burgess Motors Michigan City 2006 C & G Auto Sales Inc. Gary 2003 Cars To Go Lafayette 2005 Cars.com Chicago 2003 CARS2YOU LLC Mishawaka 2003 Clark County Auto Auction Jeffersonville 2005 Curtis Motor Sales Co., Inc. Indianapolis 2003 Custom Auto Sales Cedar Lake 2004 Del Real Auto Sales Lafayette 2004 Dependable Auto Sales Inc. Indianapolis 2007 Druley Investments Inc. Laotto 2006 Eatons Auto Sales Mt. Vernon 2004 Economy Auto Sales of Knox Inc. Knox 2005 First Class Auto Sales Hebron 2004 Frankies Auto Sales Dyer 2004 Frazer Computing Inc. Canton 2006 Gaeta Auto Sales Inc. Lafayette 2004 Gerton Auto Sales, Inc. Mt. Vernon 2002 Gray Auto Brokers, Inc. Greenfield 2005 Great Deals on Wheels Michigan City 2006 Grote Automotive Inc. Fort Wayne 2003 H & H Auto Sales, Inc. Jasper 2003 H.T.D., Inc. Thorntown 2006 Hillside Motors Schererville 2005 Homestead Motors, Inc. Highland 2005 Indy Motorwerks, Inc. Carmel 2006 Indy Star/Online Services Indianapolis 2003 J.D. Byrider Systems Carmel 2006 Jamerson Auto Sales Anderson 2002 Jim Butner Auto & RV Inc. Clarksville 2007 K & J Auto Sales Indianapolis 2004 KATZ & KORIN, PC Indianapolis 2006 KLM Car & Truck Columbus 2005 Lincolnway Insurance Services Schererville 2003 Manheim’s Louisville Auto Auction Clarksville 2004 Nationwide Cassel LLC Chicago 2007 Patriot Sales Liberty 2007 Pletcher Motor Company, Inc. Goshen 2005 Preferred Auto Inc. Kendallville 2007 Preferred Warranties, Inc. 2006 Quick Auto Elkhart 2003 Rainbow Auto Sales Hammond 2003 Sam & Ed Wolf Inc. Indianapolis 2004 Schultz Auto Sales DeMotte 2007 Ski’s Body Shop and Truck Sales LLC Rockville 2004 Stark Leasing Indianapolis 2004 Tom Wood Automotive Group Indianapolis 2006 Welch Motors Inc. Rolling Prairie 2002 Westside Motors LLC Delphi 2007 What A Deal Motors Inc. Kokomo 2007 Whitewater Motors, Inc. West Harrison 2005 Wolfe’s South Bend Auto Auction South Bend W W W. I I A D A . C O M

First Name Marvin Doug David David Bob David David Marc Robert Mike Curtis Kelli Rex Gretchen Christopher Chuck Sam Sam Darrel Robert Patrick Danny Karen Nick Robin Rick

Last Name Bailey Bessler Baldwin Bohall Hayes Unice Jamesen Gray Curtis Adams Sandefer Vinciarelli Hatton Carpenter Kramer Werner Kamdar Kamdar Eissler Walczak O’Hern Ritchie Smith Schenkel Redman Jones

Joined 2000 2000 2000 2001 2001 2001 1997 2001 2000 1998 1997 1998 2001 1997 2001 2000 2000 2000 1997 2001 1999 1998 1997 2000 2000 2001

Organization Name City Bailey Brothers Used Cars Shoals Bessler’s Trackside Auto Depot Batesville Best Deal Auto Sales Fort Wayne Big Daddy’s Auto Sales Indianapolis Bob’s 31 South Auto Sales Franklin CarMax Auto Superstores Richmond Concord Cars Inc. Elkhart Cruisin Auto Sales Madison Curtis Auto Sales Indianapolis East 30 Motor Co. New Haven GMG Motors Morgantown GWC Warranty Wilkes-Barre H & H Auto Sales of Camby LLC Camby Instant Auto Finance South Bend Kramer Motor Co. Shelbyville Manheim Indianapolis Indianapolis Mint Auto Sales Ft. Wayne Mint Auto Sales Fort Wayne Ohio Valley Auto Brokers Newburgh Omni Auto Sales Whiting One Way Auto Sales Hammond Ritchie Auto Sales Inc. Middlebury South Bend Mishawaka Auto Auction Mishawaka Superior Auto, Inc. Fort Wayne Time Motors Inc Evansville Valley Motors Enterprise Mooresville

First Name Last Name Joined Organization Name Kirk Slikas 1993 45th Street Motors Ltd Angela Monix 1992 ADESA Auto Auction Dan Francis 1994 Andrews Auto Sales, Inc. Bob Sullivan 1993 Bob Sullivan Motors Ron Povinelli Sr. 1995 Circle City Enterprises Bruce Norton 1992 Drive 1 USA, Inc. Tim Gebhardt 1995 Gebhardt Motor Sales Greg Morris 1995 Greg’s Auto Sales Eric Autenrieth 1992 Indiana Auto Auction George Krier 1992 Joe’s Auto Sales Wayne Justice 1996 Justice Auto Center Tony Houk 1992 Kesler Schaefer Auto Auction, Inc. Dave Lewis 1992 Lewis Motor Sales Bill McLaughlin 1996 Motorama Michael L Shaver 1995 Shaver Preferred Motors Richard Herma 1995 Snyder Auto Inc. Dan Spoor 1992 Spoors Auto Sales, Inc. Tyler & Tricia Trent 1995 Trent Auto Sales Jim Wheeler 1993 Used Car Factory, Inc. Jeff Wolfe 1992 Wolfe’s Evansville Auto Auction Dan Wolfe 1992 Wolfe’s Terre Haute Auto Auction

City Highland Plainfield Evansville New Palestine Indianapolis Crown Point Osceola Evansville Fort Wayne Indianapolis Greenwood Indianapolis Lafayette Mooresville Merrillville DeMotte LaPorte Vincennes Franklin Evansville Terre Haute

First Name Kelly Buzz Fritz Danny Kim Bob Randy Randy Ed

City LaPorte Dyer Fishers Whitestown Greenwood Anderson Elkhart Goshen Rensselaer

Last Name Crowl Cotton Kreutzinger Hockett Graham Okeley Chupp Stutzman White

Joined 1988 199? 1987 1991 1990 1990 1988 1990 1987

Organization Name All Star Autos, Inc. Dyer Auto Auction Fritz Associates Indianapolis Car Exchange Kim Graham Inc. Oak Motors RC Leasing, Inc. Stutzman Motor Sales Whites Auto Sales

INDUS T R Y NE W S

FTC Schedules Disclosures Workshop

ASSOCIATE MEMBERS

IIADA Associate Membership is available to automotive related businesses. Please call 800-310-3112 for more information on Associate Memberships.

700 Credit Ann Carson 202.422.2351 aclarkA@700credit.com www.700credit.com Affordable Computer Systems Greg Goresen 800.488.9992 acsi@digicove.com www.acsds.com AFC Ryan Lewis 2950 E. Main St. Plainfield, IN 46168 317-453-1172 ryan.lewis@autofinance.com Ally-Smart Auction Jeff Kubicki 812-455-7967 jeffrey.kubicki@ally.com www.smartauction.biz Alpha Omega Group Brad LeBlanc 513.317.9861 brad@aogllc.com Ashton Agency Inc. Dealer Insurance, Bonds Kathy Alexander 407.678.5900 kalexander@ashtonagency.com Auction Insurance/ Robinson Adams Insurance Tom Adams/Debbie Thompson 800-239-1327 www.robinsonadams.com Auto Services Co. Inc. Susan Williams/ Clayton Morgan 800-442-7116 AutoZone Gerry Sutter gerald.sutter@autozone.com 440.263.3389 Black Book National Auto Research Larry Knapp lknapp@blackbookusa.com 800.554.1026 CAR Financial P. O. Box 20229 Knoxville, TN 37940 865.573.3355 Cars.com 175 W. Jackson Blvd., 8th Fl. Chicago, IL 60604 800-298-1460 dealers.cars.com Consolidated Automotive Services Chris Walsh 812.988.8300 www.consolidated autoservices.com

Custom Facilities 317.259.0038 lcolle@cfidm.com BuildMyDealership.com CVR-Computerized Vehicle Registration Ron Zimmerman 317.522.6256 Fax: 866.231.4996 rzimmerman@cvrreg.com DealerRater Amy Rosenfield 800.266.9455 amy@dealerrater.com DealerSocket Kym Tran 949.900.0300 x759 ktran@dealersocket.com id.dealersocket.com Dealertrack Diane Zewalk 115 Pohesanut Dr., Ste. 201 Groton, CT 06340 860-448-3177 Fax: 860-448-3187 Dealer Funding Curt Massey 770.883.3883 cwm@dealerfunding.com www.dealerfunding.com Diversified Vehicle Services Glenna Deviers 317.862.9100

www.diversifiedvehicleservices.com

Drive1 USA, Inc. Bruce Norton 1512 W. 96th Ave., Ste. C Crown Point, IN 46307 Phone: 219.670.0542 Email: Bnorton@drive1usa.com Donn Wray, Attorney at Law Katz & Korin PC Phone: 317.464.1100 dwray@katzkorin.com Envirotest Systems Jennifer Kharchaf 1171 Breuckman Dr., Ste. B Crown Point, IN 46307 888-240-1684 Fax: 219-661-8409 indiana@esph.com Floorplan Xpress Jason Burns jburns@floorplanxpress.com 317.719.9276 Frazer Computing Inc. 6196 US Hwy 11, P O Box 569 Canton, NY 13617 888.963.5369 www.frazer.com GoldStar GPS guided by SPIREON Cesar Yepez 949.697.3459 cyepez@spireon.com

GWC Warranty Carmie Fruits - Indiana Dealer Consultant PO Box 7900 Wilkes-Barre, PA 18773 317-374-6271 cfruits@gwcwarranty.com www.gwcwarranty.com HBK CPAs & Consultant Rex Collins 330.758.8613 rcollins@hbkcpa.com Heritage Acceptance Corporation Curt Holmes cholmes@hfgnet.com Insurance ProfessionalsDealer Specialists Mike Lee 8509 Zephyr Dr. Indianapolis, IN 46217 317-432-1092 Fax: 317-300-0501 teamallenc21@comcast.net Insurance Professionals of New Palestine Network Benefits of Mid America 35 W. Main St. P.O. Box 467 New Palestine, IN 46163 Office: 317-861-4411 800-688-7988 Cell: 317-750-3032 Keystone Insurers Group Lori Simpson 570.473.2146 lsimpson@keystoneinsgrp.co Law Office of Eugene Mogilevsky LLC 1512 N. Delaware Street Indianapolis, IN 46202 317.331.5648 eugene@egmlegal.com Lincolnway Insurance Services Greg St. Germain 336 E. Lincoln Hwy. Schererville, IN 46375 219-865-2227 gregg@lincolnwayinsurance.com

PassTime Jake Frank 303.623.5339 jjones@passtimeusa.com Penn Warranty Corporation Jude Tuma/Michael Roe 1081 Hanover St. Wilkes Barre, PA 18706 800-356-9441 michael.roe@ pennwarrantycorp.com www.pennwarrantycorp.com Preferred Warranties, Inc. Gregg Reidenbach/Guy Loeffler 800-548-1121 info@warrantys.com www.warrantys.com Professional Financial Services Matt Reece Phone: 864.237.6090 Matt.Reece@pfs-corp.net Nat Rieder Nat.Rieder@pfs-corp.net Phone: 614.935.9808 Reliable Auto Finance Lester Dean PO Box 9700 Wyoming, Michigan 49509 616.438.3591 Fax: 616-245-5978 lesterd@reliableautofinance.com Somerset CPAs Jane Saxon, CPA 3925 River Crossing Pkwy. Indianapolis, IN 46240 317.472.2183 jsaxon@somersetcpas.com Teipen, Selanders, Poynter & Ayres, P.C. Certified Public Accountants Barnett Sapurstein, CPA 317.598.6700 bsapurstein@teipencpa.com Turner Acceptance Jonathon Turner Phone: 773.290.5007 turneracceptance.com

Mighty Auto Parts of Central Indiana David McCabe 317.685.8650 mightyautopartsindy@gmail.com

Universal Publications PO Box 628 Plainfield, IN 46168 317.203.5118 publicationsinc.universal@ yahoo.com

Nationwide Cassel LLC 773.777.7600 www.nac-loans.com

Verifacto, Inc. Enrique Castiblanco info@verifacto.com 678.916.8311

NextGear Capital Lori Kahre 1320 City Center Drive Suite 100 Carmel, IN 46033 Phone: 317.571.3845 www.nextgearcapital.com

PUTTING DISCLOSURES TO THE TEST BY USED CAR NEWS The Federal Trade Commission will host a public workshop on Sept. 15 to examine the testing and evaluation of disclosures that companies make to consumers about advertising claims, privacy practices, and other information. The FTC’s workshop will explore how to test the effectiveness of these disclosures to ensure consumers notice them, understand them, and can use them in their decision-making. The workshop, called “Putting isclosures to the Test,” is aimed at encouraging and improving the evaluation and testing of disclosures by industry, academics, and the FTC. Effective disclosures are critical in helping consumers make informed decisions in the marketplace. The FTC has a long commitment to understanding and testing the effectiveness of consumer disclosures, and is especially interested in learning about the costs and benefits of disclosure testing methods in the digital age.

Among the areas where disclosures play a key role in consumer protection are: disclosures in advertising, designed to prevent ads from being deceptive; privacyrelated disclosures, including privacy policies and other mechanisms to inform consumers that they are being tracked; disclosures in specific industries designed to prevent deceptive claims, including jewelry, environmental claims, and fuel economy advertisements. The FTC is soliciting presentation proposals for the event, which may be submitted to disclosuretesting@ftc.gov. More information on the proposal process is available on the workshop’s website. Members of the public may also submit comments for the workshop online. The public comment period will remain open until Nov. 2. The workshop is free and open to the public. It will be held at the Constitution Center, 400 7th St., SW, Washington, DC 20024. CAR LINES

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This is our personal invitation to you to join the State and National Independent Automobile Dealers Professional Associations It is important to me to be recognized as a professional! Enclosed are my annual dues of $295 to make sure that my business has all the advantages IIADA/NIADA Inc., provides to put me at the forefront of my profession. By completing this form, I agree to abide by the Code of Ethics. Also, I am consenting to and giving IIADA/NIADA Inc., its affiliates and subsidiaries, my permission to (until I give written notice to discontinue) contact me and provide information to me at the mailing and email addresses, telephone and fax number(s) I have provided.

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GENERAL INFORMATION Dealership Name ____________________________________ Dealer Lic#_______________ Mail Address ________________________________________________________________ County _____________________________________________________________________ City/State/Zip________________________________________________________________ Phone _____________________________________________Fax ______________________ E-mail_______________________________________________________________________ Website_____________________________________________________________________ Owners (Please Print) _________________________________________________________ Recommended By _____________________________________________________________

PAYMENT INFORMATION oCheck oVisa oMasterCard Credit Card Number: _____________________________________Expiration Date: ________ Signature: ___________________________________________________________________ Please include your email address, phone and fax numbers so that we can easily communicate with you. Membership dues are $295 for 12 months from the date you join, and your National lADA dues are included. Please send application and check or credit card information to: IIADA, PO Box

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C OMP L I A NCE OV ERDRI V E

Lifting the Hood on CFPB’s Proposed Consumer Arbitration Rules

We agree that neither we nor anyone else will use this agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it. Dealers will need to modify their consumer arbitration agreements to include the new provision and to make the text consistent with new limitations. Of course, the HOW IT MIGHT other option is for dealers to AFFECT YOU simply stop using consumer BY CHIP ZYVOLOSKI, SENIOR arbitration provisions. ATTORNEY, WOLTERS KLUWER 2. Arbitration class actions. By now, you’ve read about The proposed rule does not the Consumer Financial seem to prohibit consumer Protection Bureau’s proposed arbitration provisions new rule affecting consumer that prevent buyers from arbitration agreements. creating or joining a classThe headlines are all about wide arbitration proceeding. its proposal to prohibit Consumer arbitration consumer arbitration clauses agreements commonly from blocking consumers’ prohibit class action ability to join class action lawsuits. A lot has already been arbitration proceedings, so those provisions could written about that point. remain unchanged. But there are a few details 3. Paying for consumer that will help round out your understanding of the proposal. arbitration. In the past, the consumer So let’s look under the hood at arbitration process was the proposed rule and how it criticized for potentially might affect you if it becomes being more expensive for final. consumers than small claims 1. Ban on prohibiting courts or other civil lawsuit consumers from joining a alternatives. class action lawsuit. If it was more expensive, This is the main point you’ve the prospect of arbitration heard about. Arbitration might cause some consumers provisions are often part of not to pursue their claims. the retail sales contract or are The cost of arbitration has separately executed to cover a motor vehicle credit sale. They been raised in lawsuits to argue that an arbitration commonly give either party agreement should not be the right to require the other enforced. to arbitrate a future dispute Today, many consumer rather than resolve it with a arbitration agreements civil lawsuit. provide the dealer will pay That means, for example, most or all of the arbitration if a buyer files a civil lawsuit filing fees, arbitrator’s fees or joins a class action civil lawsuit, the dealer can require and other arbitration costs. In addition, arbitration the buyer to resolve the issue organizations like the through arbitration. American Arbitration If the CFPB’s proposed Association and JAMS have rule is finalized, consumer adopted consumer arbitration arbitration agreements could rules requiring the dealer to no longer allow a dealer/ pay most or all of the costs of creditor to require a buyer to arbitration. arbitrate instead of filing or The CFPB’s proposed rule joining a class action lawsuit. If the proposed rule becomes does not regulate who pays for consumer arbitration. final, consumer arbitration Since claims will probably agreements entered into after be subject to arbitration the effective date will require organization rules anyway, the following provision:

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M A RK E T WAT CH it’s not likely dealers will change their contract terms on who pays for arbitration. Dealers will probably continue to bear much of the costs of consumer arbitrations. 4. Required reporting of arbitration results. If the proposed rule becomes final, in any arbitration action that results from a consumer pre-dispute arbitration agreement, the creditor must provide the CFPB with certain information about the claim and results of arbitration. The CFPB plans to use the information as part of its research on the topic. 5. Timeline from proposal to final rule. The CFPB is seeking public comments on its proposed rule. Comments must be submitted within 90 days of the date the proposed rule is published in the Federal Register. If the amount of early media attention is any indication, the CFPB will likely receive a number of comments. It will then take some time to analyze the comments and consider any edits to the proposed rule. The proposed rule specifically provides that if it is finalized, it will become effective 211 days after publication of the final rule in the Federal Register. Putting these steps together, if the CFPB publishes a final rule, it probably will become effective no sooner than May 2017. The CFPB’s proposed rule is receiving a lot of attention in the auto finance marketplace. Most of the attention is on the proposal that dealers can’t use an arbitration agreement to prohibit consumers from joining a class action lawsuit. Much will continue to be written about that specific item. But remember the other details will help determine whether the engine of consumer arbitration agreements will continue to run or end up on the scrap heap. Chip Zyvoloski is a senior attorney for indirect lending at Wolters Kluwer. For more information, please visit www. wolterskluwerfs.com/indirect.

Black Book Unveils Residual Forecast on Three-Year-Old Vehicles RISING SUPPLY’S CONTINUED IMPACT

Black Book, a division of Hearst Business Media that provides new and used vehicle valuation services and custom data licensing solutions, unveiled its May residual forecast illustrating the downward pressure on prices that increased supply will continue to have over the next few years. Black Book forecast data shows residuals on an average three-year-old vehicle will dip from the current threeyear retention of 52 percent in 2016 to 47.8 percent by 2019. Retention values on a three-year-old vehicle peaked in 2013 when vehicles were retaining approximately 54.5 percent of their original typically-equipped retail. Favorable credit availability, continued growth in demand, and consistently low gas prices have provided support in keeping retention rates high in the last five years. Increased used supply in the marketplace, driven by the significantly large volume of sales on new cars and trucks has played a driving role in slipping retention rates this year. Here are the historical three-year retention rates and the projected residual forecast on an average threeyear-old vehicle according to Black Book: • 2012: 53.8 percent. • 2013: 54.5 percent. • 2015: 54.1 percent. • 2016: 52.0 percent. • 2017: 50.1 percent (forecast). • 2018: 48.6 percent (forecast). • 2019: 47.8 percent (forecast). The historical data represents published Black Book Wholesale Average values as a percent of new typicallyequipped retail. The forecast represents published Black Book Residual Values averaged across all three-year-old models. “Despite the industry’s continued efforts to maintain a strong pace of sales on new cars and trucks, the increased level of supply in the used market has begun to weaken prices on both cars and trucks,” said senior vice president of automotive valuation and analytics Anil Goyal. “We saw the first sign of this in 2015, when cars saw above-average depreciation on the year, and this year we will see rising depreciation for truck segments as well.”

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Dealer Alert: New Rental Recall Rules in Effect

Some New Cars Still Include Faulty Airbags

LOANER VEHICLES MAY BE AFFECTED Rental car companies with an average of 35 or more vehicles in a rental fleet are now prohibited from renting those vehicles if they are subject to an open recall. That requirement, which applies to vehicles with a gross vehicle weight rating of 10,000 pounds or less, was part of the Fixing America’s Surface Transportation Act (FAST Act), which was signed by the President in December. The National Highway Traffic Safety Administration now has authority to investigate and enforce the new provisions on rental companies. While the new rule clearly applies to rental vehicles, the law does not state whether “loaner” vehicles are subject to the limitations. Dealers are encouraged to consult their attorneys for specific legal advice on the issue. NIADA successfully lobbied Congress to keep harmful provisions out of the FAST Act, including an amendment that would have prohibited dealers from selling or leasing used motor vehicles with an open recall. Nevertheless, NIADA encourages all dealers to use the VIN lookup tool found at NHTSA’s safercar.gov website regularly to check their inventory for open recalls and to have those vehicles fixed, if possible, before selling, leasing, renting or loaning them. When a repair is not possible, dealers are strongly encouraged to disclose the existence of all open recalls to their customers prior to sale.

FOUR AUTOMAKERS SELLING CARS WITH DEFECTIVE AIRBAGS

Four automakers – Fiat Chrysler, Mitsubishi, Toyota and Volkswagen – are still selling new vehicles that include the defective Takata airbags responsible for the largest recall in automotive history, a U.S. Senate report said. The vehicles are being sold even though their manufacturers know they will have to be recalled by 2018. During an investigation by Senate Commerce Committee, the companies confirmed they are selling cars equipped with Takata airbags that feature ammonium-nitrate inflators without chemical drying agent, citing engineering and supply challenges to explain why they are still relying on the faulty airbags. The vehicles are legal to sell but must be recalled by 2018. So far, almost 70 million cars in the U.S. and 100 million worldwide have been recalled. The inflators can rupture, causing them to explode and send metal shrapnel into the passenger compartments, and have been linked to 13 deaths and more than 100 injuries. The new vehicles with the Takata airbags include the 2016-2017 Mitsubishi i-MiEV, 2016 Volkswagen CC, 2016 Audi TT and 2017 Audi R8. Toyota and Fiat Chrysler declined to name the new models that use the inflators, but Toyota said it expects to produce about 175,000 of the cars for the U.S. through July 2017.

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