Nebraska Dealer Updates by NIADA

DEALER

UPDATES

NEBRASKA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION

SEP TEMBER /OCTOBER 2018

AFFORDABLE VEHICLE ACQUISITION IN TODAYâ&#x20AC;&#x2122;S MARKET.

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INDUSTRY PERSPECTIVE | By Kenny Atcheson

SHOULD YOU SWING FOR HOME RUNS IN BUSINESS?

Big Plays May Not be Your Best Strategy

A record 10 home runs were hit in the Major League Baseball All-Star game in July. In my e-newsletter shortly thereafter, I told subscribers: “The 10 home runs hit in the Major League Baseball All-Star game may work well for entertainment, but it does not work well for growing your business in this decade. There was a time when business owners used ‘home run’ marketing. They could throw a wad of money at one type of advertising and count the sales. “Yet stringing together singles and doubles (marketing) is more secure, stable, and nets a more predictable ROI. “If you would like a steady flow of customers, there is one thing that can do that for you: Referrals and repeat business. “Yes, I know that’s two things, but the same behaviors lead to both. If you do what it takes to earn a lot of repeat business, then you probably already earn steady referrals. If not, you can make small but important tweaks to make that happen.” After sending that e-newsletter, I researched deeper and discovered the following:

• At the 2018 All-Star break, eight of the top 15 team home run total leaders would not make the playoffs if the playoffs had begun at the break (Angels, A’s, Blue Jays, Rockies, Cardinals, Nationals, Orioles, Rangers). • Since 1981, in 37 years, the major league individual home run leader has been on the World Series winning team once. • Since 1984, only the 2009 Yankees led the league in home runs and won the World Series the same year. It seems that home runs aren’t all they are cracked up to be. These statistics indicate the “all or nothing” approach doesn’t really work. Why do so many team owners, coaches and players focus on hitting home runs? Because home runs are sexy. I get it. As a baseball player who focused on great defense, showing off my arm, and hitting for average, I dreamt of hitting home runs. I dreamt of the “walk off” home run – the crowd cheering as I rounded the bases with a slow home run trot, relishing the moment. When gym work and a tweak to my swing led to hitting home runs, that’s all I wanted to do. After all, “chicks dig the long ball” as Greg Maddux and Tom Glavine said in the 1990s Nike commercial. I even wore a Nike T-shirt with that quote under my jersey to remind myself. Home runs are sexy. Just like a new mountain of website and/or lot traffic is sexy. The thought of a

IT SEEMS THAT HOME RUNS AREN’T ALL THEY ARE CRACKED UP TO BE. THESE STATISTICS INDICATE THE “ALL OR NO THING” APPROACH DOESN’T R E A L LY W O R K . new massive advertising campaign that is an instant home run is sexy. However, a steady flow of repeat and referral customers is sustainable, repeatable, and much more profitable. Kenny Atcheson is the founder of Dealer Profit Pros and author of Marketing Battleground: How to Deploy Underthe-Radar Strategies to Explode Your Profits. For more information visit www. DealerProfitPros.com

PRODUCTS & SERVICES |

REDCAP PARTNERS WITH LYFT FOR TRANSPORTATION SOLUTIONS

Helps Dealerships Create Seamless Automotive Service Experience

RedCap Technologies, a Solera Holdings, Inc. company, are innovators of frictionless customer experiences that enable OEMs and dealers to provide simple, easy and convenient means for consumers to service their vehicles. The company recently partnered with ridesharing company Lyft to expand its dealership-wide mobility platform. The new offering leverages RedCap’s existing mobility platform and taps into Lyft’s Concierge API platform to deliver a smooth and convenient experience for both dealers and customers. Through this partnership, dealers can request Lyft rides for customers unable to get a loaner vehicle while their vehicle is being serviced. These customers no longer have to sit in a waiting room or wait for a shuttle van to return to their home or office. Participating customers do not pay for the ride and do not need the Lyft app to get a ride from the dealership.

This integration continues the reinvention of customer experience and enables a seamless future for customers interacting with traditional automotive dealerships. While convenience remains a top priority for customers in the automotive space, dealers are looking to retain a greater percentage of repair business by proactively offering services, like picking up and delivering cars for service, to effectively repair vehicles without customers having to ever leave their home or office. For customers who prefer to visit their dealership for repair, the Lyft integration allows them to minimize the amount of time

spent waiting if repairs take longer than estimated, which they often do. Additionally, the experience is white labeled for the dealer, allowing their brand to align with a quick and positive customer experience. “Time is a person’s most valuable commodity. Keeping this in mind, we’ve got to deliver solutions that keep convenience as the top priority,” said RedCap managing director David Zwick. “Creating a seamless experience is a major focus for OEMs and dealers. If we don’t develop these types of convenient solutions, customers will vote with their wallet and take their business elsewhere.” Offering this type of ideal repair experience helps dealers cater to the immediate delivery and customer service expectations of today. “Technology has changed expectations, so we’ve changed our approach to meet and hopefully exceed those expectations,” said Zwick. “We’re excited to partner with RedCap to expand alternative transportation options for dealerships and improve the user experience,” said Lyft’s area vice president Ben Sternsmith. “By leveraging the platform, dealerships are able to minimize wait times and friction for customers, while simultaneously improving efficiencies for their business.” For more information, please visit solera. com or www.lyft.com/business.

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September/October 2018

DEALER UPDATES

INSIDE

NEBRASKA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION

DEALER

UPDATES

06..........................................The Facebook “Secret Formula” 07................................................................ Good Cheap Cars? 10.................................BHPH Budget and Expense Oversight 12....................................................................Online Channels 13................................................. NIADA Government Report 14..................................Four Keys to Massive Sales Success

National Policy Conference The 2018 National Policy Conference will be held September 24-26 at the Ritz-Carlton Pentagon City. Make plans now to join NIADA in Washington, D.C. as we meet legislators face-to-face to make your voice heard! Learn more and register today at niadapolicyconference.com.

ADVERTISERS INDEX

Manheim................................................................................11 Manheim Omaha................................................................ IBC Nebraska Auto Auction........................................................IFC NextGear Capital ..................................................................12 TrueCar ....................................................................................5 vAuto.......................................................................Back Cover

OFFICE

For information on how to become a member please contact Scott Erikson: eriksons@aol.com or 402-639-0664

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. Nebraska Dealer Updates is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of Nebraska Dealer Updates or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2018 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

Christy Haynes • christy@niada.com

MEMBER BENEFITS. BECOME A MEMBER. For information on how to become a member please contact Scott Erikson:

eriksons@aol.com or 402-639-0664 When you become a member of the Nebraska IADA you also become a member of the National IADA. The National IADA has a wide range of member benefits from insurance to parts supply, title check services, accounting, credit card and financial services just to name a few. Go to niada.com and click on member benefits program under the Services tab for more information.

1) Manheim Omaha: $10 off buy or sell once a week. 2) Auto Owners Insurance: Up to 10% discount off select lot insurance. 3) Auto Services: $90 coupon on warranty service, one year or more. 4) Lincoln Auto Auction: Two $25 coupons for buy or sell fee, one per visit. 5) Nebraska Auto Auction: New member: $100 gift certificate for a buy or sell fee. Renewing member: $100 gift certificate for buy or sell fee. 6) Salina Auto Auction: Two $25 coupons for buy or sell fee. One per visit. 7) National IADA Membership: Includes subscription to Used Car Dealer magazine.

BOARD MEMBERS PRESIDENT

Conrad Neverve Conrad’s Auto Center 718 3rd Ave. Kearney, NE 68845 308-236-2088 www.conradsautocenter.com

PRESIDENT ELECT

Mike Bockmann Bockmann Auto Sales 217 2nd St. St. Paul, NE 68873 308-754-5645 www.bockmannauto.net

SECRETARY/TREASURER

Chad Tessman Velocity Auto Sales 2801 N Lincoln Ave. York, NE 68467 402-362-2886 www.velocityautosales.com

EXTENSION OFFICER

Deb Chesterman World Auto Sales 1651 S. 11th St Nebraska City, NE 68410 402-873-6925 www.worldautosalesneb.com

PRINTING

Nieman Printing

DEALER UPDATES

September/October 2018

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DIRECTORS

Ray Biltoft 420 E 4th Street Superior, NE 68978 402-879-4287 Chuck Borgmann Borgmann Auto Sales 105 13th Street Norfolk, NE 68701 402-379-4553 www.borgmannauto.com Joel Kershner Kershner’s Auto Korner 220 West South Street Hastings, NE 68901 402-461-3161 www.kershnerautokorner.com Arlan Kuehn Kuehn Auto Sales, Inc. 495 Old Hwy. 20 South Sioux City, NE 68776 402-494-2677 www.kuehnauto.com Chuck Rogers Chuck Rogers Auto Sales 675 Hwy. 75 Tekamah, NE 68061 402-374-2400 www.chuckrogersauto.com

Clint Jones 805 23rd St. Columbus, NE 68601 402-563-3602 www.clocktowerauto.com Frank Penate 708 Locust St. Grand Island, NE 68801 308-675-3133 islandautogi.com Denny Vetter Angus St. Gretna, NE 68028 402-332-2700 402-332-2014 doveauto.com

ADVISORY DIRECTORS Karl Jensvold 25505 W 12 Mile Rd. Southfield, MI 48034 402-480-2571

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September/October 2018

DEALER UPDATES

SOCIAL MEDIA | By Kathi Kruse

SAFETY WATCH |

THE FACEBOOK “SECRET FORMULA” TO GET MORE CUSTOMERS

GM RECALLS MALIBUS

Three Crucial Steps

Service Error Affects Air Bags

It’s a lot easier to sell to people who know you. Over the years, Facebook has been a conduit for dealers and their customers to connect. However, as important as it is in the digital marketing process, connecting doesn’t always equate to more sales. Dealers must make their “connecting” count. There’s a solution that seems to elude a lot of vendors in the social media space. They sell you on the buzzwords but then deliver stingy results. Real results take a proven formula with the right key performance indicators to guide you along the path. The Facebook “secret formula” I use to get more customers has three separate and distinct steps: 1. Attract. 2. Engage. 3. Convert. Each of these three steps contains specific tactics that guide in-market buyers through your sales funnel and into your showroom. Before we get into the formula, it’s important to point out it’s easy to waste time on Facebook. So, no matter what your business goals may be, it’s crucial to start with a solid Facebook marketing strategy (i.e.: what do we want to achieve and how will we get there?). Facebook has become a sprawling urban jungle and it’s easy to get lost in the brush without a plan. THE FACEBOOK “SECRET FORMULA” Attract. Attracting buyers in this highly competitive online landscape requires a deep understanding of your target market. To attract your ideal customers, you must know who they are first! Identify who your target customers are, what they care about, and what influences their purchase decisions. You’ll start with your market area as a base point and then determine the attributes of your ideal customer – income range, credit worthiness, model of vehicles they purchase, etc. Once you determine the audience you want to reach, you can then begin to design content for Facebook posts and ads. It’s widely known consumers purchase from dealers they know, like and trust. Facebook marketing allows you to consistently add value to your target customers’ lives through relevant information, expert tips and insights, entertaining/creative content, and specials offers and discounts. Engage. Engagement drives everything on social media and here’s where many dealers fall flat. They struggle with knowing what to do with

DEALER UPDATES

September/October 2018

their fans once they become connected. Fact: You really do need to be social on social media. To be social, you need a human. The first step is to choose someone who can easily speak for you online, manage your ads and your content, answer Facebook Messenger inquiries, etc. To engage successfully, create a “content strategy” that showcases your store and your personality. Post content and regularly review your results – then continue to post the types of content your target customers need and want. Don’t worry about being all things to all people. Focus on genuinely engaging customers and inspiring them to take action. Convert. The unique value of social media is its strength to attract and engage those customers who will most likely buy from you. Selling to people who actually want to hear from you is far more effective than interrupting strangers who don’t. Your targeted content informs, educates and entertains. The next step in the secret formula is to deliver just the right offer (and value) that helps your customers finalize their purchase decision. Once you’ve decided on the offers you want to extend, use Facebook ads to promote them. Facebook ads have become the single most important way to be seen on social media. Pro tip: Ad targeting is a highly-prized skill. If you advertise to people who don’t know you, there’s a wall that needs to be scaled, and without a large budget that’s a tall order. Use Facebook ad targeting to bring in-market buyers closer to you so their decision is easier. Bonus Secret: Retain Social media is your secret weapon in customer service. Currently, 92.5 percent of brands fail to meet customer expectations on social media and these failures can have big implications. Quality customer service – regardless of channel – relies on a meaningful, efficient, solution-focused exchange between a dealership and its customers. The growing preference for social media as a preferred communication channel requires a “re-thinking” of your customer service strategy. Stakes are high, and sloppy customer care is not a risk any modern dealer can afford to take. Wrapping it All Up Facebook is where your customers spend their time. Take advantage of my “secret formula” to explore the opportunities for your organization. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc., which coaches, trains and delivers webinars focused on integrating social media and online reputation management into dealership operations. She can be reached at kathi@krusecontrolinc.com.

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General Motors LLC is recalling 66 2016-18 Chevrolet Malibu vehicles. During servicing, a passenger presence system may have been installed that was not correctly calibrated to the vehicle’s seat type. As a result, the PPS may not properly identify an adult passenger from a child passenger in the front passenger seat, potentially causing the air bag to not deploy when it should, or causing the air bag to deploy when it shouldn’t. GM will notify owners, and dealers will replace the front passenger PPS seat service kit, free of charge. The manufacturer has not yet provided a notification schedule. GM’s number for this recall is 18208.

INDUSTRY NEWS |

ROUTEONE WELCOMES C&F FINANCE

Growing List of Available eContracting Finance Sources

C&F Finance Company is now an available eContracting finance source for dealers utilizing the RouteOne platform. eContracting enables the digital exchange of critical contract documents and data between dealers and finance sources to increase efficiency and reduce contracts in transit. RouteOne is the industry leader in eContracting, booking more than 10 million eContracts to date. RouteOne has over 7,200 active eContracting dealers and 50-plus finance sources in its rapidly growing eContracting customer base. C&F Finance is a leader in indirect auto financing, headquartered in Richmond, Virginia, and providing automobile loans in multiple states throughout the U.S. C&F benefited from a streamlined technical implementation process due to the eContracting certification their loan origination system, defiSOLUTIONS, had previously undergone with RouteOne. “We strive to continually deliver our customers solutions that streamline and solve challenges in the auto finance industry,” said RouteOne chief operating officer Brad Rogers. “eContracting is a solution that benefits all parties involved: dealer, finance source, and consumer. C&F Finance is a welcome addition to our eContracting platform and we are pleased to offer their services to our dealer base.” Dealers interested in eContracting should contact their RouteOne business development manager at 866.768.8301 or www.routeone.com/salesteam.

Cover Story

remember when I became the used car manager at the small Mazda store where I had been doing F&I. I took to used cars. I’m not sure why. I guess there was such a sense of accomplishment when one sold. The salesperson won with commission. The store won with profits from the shop, parts, the retail sale and F&I. I won by adding revenue to the used car department. And the customer won because they got a dependable used car they could afford. OK, so maybe I was young and hadn’t been through the grind of wholesale loss, aged units, or getting buried in trades to make retail deals. Nor had I experienced being run up the pole at the auction, discovering a $900 repair six days after the arbitration window closed. Nor had I dealt with the customer’s car coming back on the hook 20 days later with a bad tranny. That was a long time ago, more years than I care to admit. And it has only become harder to maintain a reasonable profit selling used cars! When was the last time you uttered the words “five pounder?” Today more than ever, it’s hard to find cars that meet your stocking needs. This is especially true when looking for those under $12,000 (it’s a payment thing). With the cost of new cars rising every year, long term financing and the number of off-lease cars in the market, the question becomes: How do you find good cheap cars? In this three-part series, we will look at ways to acquire the vehicles you need to stock your lot that are affordable and customers want to buy. Let’s start at the higher end of the range, say $12,000 to $9,000. Hard to find? Yes. Impossible? No. But you must change your buying behaviors. How many times have you gone to your local auction with the plan to buy four or five cars in that wholesale price range and come home with none? It’s no fun and not very productive. Even at larger auction facilities, there is a limited number of vehicles that fit your buy list.

Do the math. One auction will have x number of vehicles. Five auctions will have 5x. So how do you buy from five auctions at once? Online, of course. Now don’t get me wrong. I’m not saying don’t go to your local auction. After all, I work for one of the largest auction companies in North America. I want you to buy from my auctions. All the technology in the world won’t bring an end to physical auctions – but you need to learn how to use the technology offered by the auctions to make your purchase decisions more informed. Alright, I can already hear the pushback: “I bought a car online once and it cost too much to transport, took too long to get to my lot and it had damage.” I get it. Let’s back up a second and look at some ways successful, small and large independent used car dealers are buying cars upstream, which is a fancy way of saying “before the vehicle gets to or is offered at a physical auction,” and live online at the physical auction. Let’s start with upstream, online auctions. These are what I call eBay-style auctions. You can shop and buy 24/7. Sellers range from new car franchise captive finance companies, national banks, and large fleet/lease operators to local or regional banks, among others. The cream of the crop are the OLOCs. What’s an OLOC, you ask? One owner, low mileage, off-lease car. Yes, I made that up and I use it all the time. www.neiada.com

What’s that you say? Prices are too high, transport costs too much and only new car dealers buy those cars? Wrong! As I write this today, I’m looking at an off-lease, 2014 Honda Civic 4-door LX in my Marketplace app on my phone. The photos of the car – taken by the thirdparty inspector – show the car sitting in the lessee’s driveway. I can see every detail of the car – including seller, transmission type, mileage, trim, Autograde and even the number of scuffs or marks on the vehicle. The bid now price is $9,900. Like-mileage vehicles in the Market Report from Autoniq have sold wholesale in the last 18 days for a low of $8,600 and a high of $11,500. The Profit Guide in Autoniq shows like vehicles have a 17-day turn and an average retail sold price of $12,378. The average sold price and turn time is pulled from dealerships reporting actual retail transactions. Yes, actual DMS data: what the vehicles are sold for in your market. With a bid now of $9,900 and an average retail price of around $12,300, it looks like there is room for transport, fees and reconditioning. I know these are averages, but they are averages of real retail transactions. Priced too high? Maybe not. Millions of vehicles are sold every year online. Can all of them be priced too high? Again, I’m not saying you can buy all your cars online, although I know independent dealers who do. What I’m saying is, start looking and learning how to take advantage of what online auctions have to offer. Typically, you will find great vehicles (OLOCs) and enjoy lower fees – and, by the way, NAAA rules provide more buyer protection online than in-lane. Next time we’ll dive deeper into both online upstream and live online auctions. We will have tips and best practices to get you started finding the vehicles you need. You don’t want to miss it! Have fun and sell cars! Doug Hadden is executive director of dealer consulting services for ADESA Auctions Inc.

September/October 2018

DEALER UPDATES

Training for new & experienced operators Network with industry experts Capital to fund your operation Collections & underwriting training Best practices that work today and in the future The latest marketing strategies - Including digital Legal and compliance updates Exhibit hall with all the latest products & services New industry technology 8

DEALER UPDATES

September/October 2018

www.neiada.com

///////////////////////////////////

SCHEDULE

SINGLE & DOUBLE REGISTRATION RATES:

OF EVENTS: ////////// MONDAY //////////

1 or 2 Persons: $495 EACH through September 22 $795 EACH after September 22

October 8, 2018

SCHEDULE 12:00 PM - 6:00 PM

Want to save more? Bring your friends!

GROUP REGISTRATION RATES: *Until Sept 22

3 People: 4 People: 5 People:

per person: *After Sept 22

EVENTS

per person:

$1185..............$395/ea.............$1935...........$645/ea $1380..............$345/ea............$2380..........$595/ea $1500..............$300/ea............$2500.........$500/ea

4:00 PM - 5:00 PM

First Timers Reception

5:30 PM - 6:00 PM

BHPH Commission Meeting

6:30 PM - 9:00 PM

Cigars & Martinis Reception

////////// TUESDAY ////////// October 9, 2018

SCHEDULE 8:00 AM - 6:00 PM

HOTEL INFORMATION & RATES: MGM Grand 3799 S Las Vegas Blvd, Las Vegas, NV 89109 Book Now $149/night!

Registration / Information Desk

EVENTS Registration / Information Desk

9:00 AM - 11:45 AM

Educational Sessions

12:00 PM - 3:00 PM

GRAND OPENING & EXPO LUNCH

3:15 PM - 5:00 PM

Educational Sessions

5:15 PM - 7:30 PM

Expo Reception

//////// WEDNESDAY //////// October 10, 2018

SCHEDULE 8:00 AM - 6:00 PM

EVENTS Registration / Information Desk

Link:

8:30 AM - 11:45 AM

Educational Sessions

https://book.passkey.com/go/ nationalindependentautomobiles

12:00 PM - 3:00 PM

Expo Hall & Networking Lunch

Reservations: 877.880.0880 - reference NIADA -

3:15 PM - 5:00 PM

Educational Sessions

5:15 PM - 7:30 PM

Expo Reception & Closing

/////////////////////////////////// *SUBJECT TO CHANGE

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September/October 2018

DEALER UPDATES

PRODUCTS & SERVICES

TRADEREV PARTNERS TO PROVIDE FREE VEHICLE TRANSPORT

Cross-Country Promotion Dealers buying on TradeRev from sellers in certain states can now make the most of free vehicle transportation. TradeRev and fellow KAR Auction Services business unit CarsArrive Network have teamed up to run a cross-country promotion that gives buyers from sellers in qualifying states free TradeRev vehicle transportation. In a part of the program that started July 1, dealers buying from sellers in New York, New Jersey and Pennsylvania can take advantage of the aforementioned promotion until Sept. 30. Meanwhile, dealers buying from sellers in qualifying western states can get free vehicle transportation up to Dec. 31. The new promotion’s qualifying western states include Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming. “TradeRev is committed to making the buying and selling of automotive inventory as fast, fair and easy as possible for dealers,” TradeRev president and KAR chief legal officer Becca Polak. “Dealers want seamless purchasing options at a value.” Polak said, “By tapping into KAR’s resources, this partnership with CarsArrive helps sellers reach a broader group of buyers and helps buyers expand their purchasing market area far beyond local at no additional cost.”

BHPH MATTERS | By Scott Bates, CPA

BHPH BUDGET AND EXPENSE OVERSIGHT

Plan to Increase Profitably

The tried and true formula to increase profitability is to either increase revenue or reduce expenses. Is your dealership as profitable as it could be? Is there room to improve your BHPH budget? How do you know? You could compare your dealership to other BHPH dealers and against industry benchmarks. If you discover you are receiving less gross profit per car than the industry benchmarks, you may be leaving money on the table. It could be time to reassess your plan, or your plans. BHPH dealers need several plans to oversee their budgets because it is a very cashintensive business. Your plans should include: • Six to 12 month revenue plan. • Expense plan. • Profit plan. • Cash flow plan. In your cash flow, for example, if you are

ACCELERATE

| By GWC Warranty

SAVED TIME IS MADE MONEY

Maximize Time in the F&I Office

F&I is the final step in a long car-buying process for your customers. The quicker you can provide value, get a signature and make the sale, the better your chances are for growing your profit potential on the back end of deals. Just like every second of your time equates to dollars and cents in your pocket, wasted time in the F&I office can cost you a valuable service contract sale. Maximizing the time you spend with customers in the F&I office helps them be more receptive to the value of a service contract and helps you make the most of every sale’s final moments. With a few small tweaks to your sales and F&I processes, you can save your customer’s time while simultaneously saving your bottom line. F&I Videos in Your Showroom You can start planting the seed about a service contract sale even before a customer steps in the F&I office. If you have a monitor in your showroom, put it to use. Turn off the news and run some videos that help explain the value of a service contract. Doing so gets the customer thinking about protection from out-of-pocket repair bills and understanding why it’s important to them.

DEALER UPDATES

September/October 2018

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budgeting for a $1,500 average down payment but are really averaging $700, you will run out of money to buy more cars. If you are budgeting your expenses based on this cash flow, your budget will quickly be off. In your revenue plan, are you projecting net new account growth or is it going to shrink? The more mature a portfolio gets, the harder it is to attain new growth (e.g. 20 paid off, 20 charged off, 40 loans a month = zero growth). Some dealers choose to chase aggressive sales without considering if the deal is a good one to put on the books. Charge-offs will eat up profitability more than any other expense, and it is usually a self-inflicted expense due to poor deal structures and underwriting. Poor deal structures and underwriting sometimes stem from a lack of training for staff. Dealers should consider staffing and proper training as investments in gross profit rather than as expenses. Too few or untrained staff leads to shortcuts and mistakes. As you gain productivity from staff and consistency in deal documentation and communication, you can increase your gross profit per sale. Plan your expenses in advance as you do your revenue projections. You should know your expense per car sold, including closing and underwriting costs, staffing, service and follow-up care and collections. Scott Bates is an assurance and business services partner for Cornwell Jackson. He supports the firm’s auto dealership practice. Contact Scott at scott.bates@ cornwelljackson.com or 972-202-8000.

Electronic Tools Modern online and electronic tools help speed along the process to get your customers out of the F&I office just as quickly as they got into it. When customers can sign electronically, view educational information on the fly and navigate the process without leafing through papers and signing or initialing multiple places, it makes the entire process simple and painless. Self-Service Post-Sale Tools Having a service contract provider that provides customers with on-demand resources that answer common questions can help you save time in the F&I office. You can save time explaining certain details if your customers have a place to get the answers they need once they leave your dealership. Information like how to file a claim, where to find a shop and looking up coverage details are just a few examples of information your customers should be able to find on their own whenever they need it. Quality Follow Up Reminding your customers of the coverage they have, where to find answers to questions and how to utilize their service contract coverage may be common practice, but there may be ways you can do it more effectively. Tools like Covideo can add a personal touch to the routine email or phone call commonly used in sales and F&I follow ups. Giving your message a better chance to be heard only increases the likelihood that it resonates with customers and results in the experience you desire for them.

INDUSTRY PERSPECTIVE | By Derek Hansen

ONLINE CHANNELS

Bolster Your Acquisition Strategy More Profitably & Efficiently

Auction cars are always available, but one of the biggest challenges dealers face is acquiring auction vehicles efficiently and with precision based on real and timely data. The days of “gut-driven guesswork” can, and should, be put to rest. Today, your best bet is to use tools to evaluate and buy vehicles that are in demand in your market. You can then look at the best inventory from a wide net of resources for quicker, more confident decisions. The most proficient dealers and buyers have expanded to online channels – simulcast and online auction sites where you can bid, buy and sell 24/7, all of which can be done from a mobile device. Currently, only one-third of dealerships attend a simulcast auction every month according to Manheim data, which presents an opportunity for savvy dealers to become “leaders of the pack” in wholesale operation innovation. These early adopters also use technology to facilitate the transfer of the purchased units back to the dealership. The end result: They are more efficient and productive buyers every time they go to an auction. Turn to Earn The time saved by acquiring inventory online can contribute to dealers’ speed to market, and as a result, faster turn, with fewer cars sitting in inventory for longer times. This increased velocity can ultimately lead to improved dealership profitability. Dealers who are not tapping into the efficiencies gained from digital acquisition channels are already falling behind the curve. Online channels cut down on trips to auctions where the cars you need may not be. Not only do these online channels save time and travel expenses, they let you expand your buying radius, giving you access to more vehicles that align with your vehicle selection strategy and inventory needs. In an effort to gain even more efficiency and speed as they acquire auction cars, some of the most progressive dealers now rely solely on online sources, a time-saving shift that improves showroom efficiency, enabling managers to be in the dealership, working deals and managing their teams. Tip: When acquiring vehicles from further distances that may take longer to reach your dealership, have a process in place to get those cars listed online before they arrive at your lot. Mobile apps are another way to speed up the buying and selling process so you can do business from anywhere. These apps let you manage purchases, check your buying activity, view your purchases, and set up and receive post-sale inspection, title and vehicle availability notifications. Mitigating Risk Granted, there is a wealth of inventory online and now multiple ways to acquire that inventory online. But, just like a consumer

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September/October 2018

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buying a vehicle, most dealers like to “kick the tires” to make sure they’re not purchasing a problem vehicle. Let’s face it, all inventory acquisitions carry a measure of risk, and acquiring inventory online might seem like an even riskier proposition. However, there are solutions available to help you mitigate risk and offer peace of mind with your online purchase. Rely on condition reports to avoid problem vehicles. Buyers are three times more likely to bid and four times more likely to purchase a vehicle with a condition report, which is an important consideration for sellers. And for buyers, units with condition reports have a 37 percent decrease in arbitration, according to Manheim sales data. If arbitration is a concern that is preventing you from embracing online channels, consider wholesale vehicle purchase protection programs. Some of these programs offer automatic purchase protection applied to every vehicle you purchase. Having this type of safety net allows you to decrease recon costs, eliminate costly mistakes and expand your inventory mix. Most offer everything from a basic frame check to a full buy-back guarantee. Post-sale inspections are another smart option that don’t require you to be at the auction. Typical PSIs inspect the frame/ unibody, the engine and transmission and can come with 7- or 14-day guarantee options. The benefits of condition reports, PSIs and purchase protection are significant and provide confidence you’re making the right purchase so you can minimize unexpected repair costs. They give you peace of mind with on-the-ground information and save time because you can do everything before the vehicle even leaves the auction. As vice president of offsite solutions, Derek Hansen is responsible for Manheim’s inventory solutions in the ever-evolving digital space and works closely with teams from Manheim, RMS Automotive and vAuto to create a customerfocused digital strategy that takes advantage of the deep expertise of these brands.

WASHINGTON UPDATE | By Shaun Petersen

GRASS ROOTS

NIADA GOVERNMENT REPORT

Latest Government Issues and Activity NIADA is your voice in Washington D.C., advocating for independent dealers, the used vehicle industry and small business. Here’s a look at the latest news and NIADA efforts regarding legislative, regulatory, PAC and grass roots activities.

REGULATORY

The Federal Trade Commission has charged Tate’s Auto Group, a group of four dealerships near the border of the Navajo Nation in Arizona and New Mexico, with falsifying consumers’ income and down payment information on credit applications and misrepresenting financial terms in vehicle advertisements. It’s the first time the FTC has taken action against a dealership for allegedly falsifying consumers’ income. In a lawsuit filed in U.S. District Court in Arizona, the commission said Tate’s Auto asked consumers to provide personal information and told them it would be submitted to financing companies. But the information actually submitted allegedly often included falsely inflated numbers, making it appear applicants had higher monthly incomes than they really did, or inflated the amount of the down payment. The FTC said the incomes were increased by as much as $4,000 a month in some instances. The complaint alleged consumers didn’t catch the altered figures because Tate’s Auto employees rushed them through the process or had them fill out forms over the phone or in places like grocery store parking lots or restaurants, or simply altered the documents after they were already signed. The consumers, many of whom are members of the Navajo Nation, were approved for financing based on the false information provided, the FTC said, and as a result they defaulted at a higher rate than qualified buyers. The complaint also alleges the dealerships ran advertising that deceived consumers about the nature and terms of financing or leasing offers, and said their social media ads violated federal law by failing to disclose required terms.

IT’S THE FIRST TIME THE F TC HAS TAKEN ACTION AGAINST A DEALERSHIP F O R A L L E G E D LY FALSIF YING CONSUMERS’ INCOME.

LEGISLATIVE

A vote by the Senate Banking Committee on President Trump’s nominee for director of the Bureau of Consumer Financial Protection, Kathy Kraninger, was postponed as committee Democrats pushed for more information about her policies and her role in the Trump Administration. Kraninger, who currently serves as an associate director of the Office of Management and Budget, testified before the committee July 19 and a vote was scheduled for Aug. 2, but Sen. Elizabeth Warren (D-Mass.) asked committee chairman Mike Crapo (R-Idaho) to delay the hearing until Kraninger provided more detailed answers. Specifically, the Democrats want to know more about how Kraninger would run the CFPB, which is now headed by her boss at OMB, Mick Mulvaney, on an interim basis. They are also seeking information about her role in developing the President’s “zero tolerance” immigration policy. In her current post, she has oversight over the budgets of several cabinet-level departments, including Homeland Security and the Department of Justice. In a related development, Kraninger’s nomination led to the end of a court battle by Leandra English, who had been attempting to win an injunction that would name her acting CFPB director and oust Mulvaney. English also resigned from her position as the CFPB’s deputy director, citing Kraninger’s nomination as the reason. Mulvaney named Brian Johnson, the bureau’s principal policy director, as acting deputy director. www.neiada.com

Ohio IADA is fighting a policy change by the state’s Bureau of Motor Vehicles that could render thousands of vehicles undriveable and unsellable. Ohio does not require a title to be branded as salvage until the vehicle is “dismantled, destroyed, or changed in such a manner that it loses its character as a motor vehicle.” But the BMV, which recently updated its software to pull additional information from National Motor Vehicle Title Information System reports, is now branding vehicles that have been driven on Ohio roads safely for years based on a scrap, crush, sold, salvage or null or blank indication on a NMVTIS report. Those vehicles are not “unfit for operation,” per the state law’s definition of a salvage vehicle. Under Ohio law, once a title is branded salvage, the vehicle cannot be driven on the roads or sold by a dealer until a rebuilt title is obtained. To obtain that title, the owner must provide proof of repairs to the Ohio Highway Patrol. But that proof often can’t be delivered because the damage occurred years before the current owner – or even the previous owner – owned the vehicle. That scenario leaves the current owner, who purchased a vehicle with a clean title, holding a valueless vehicle with no recourse. OIADA has communicated with the governor, attorney general, BMV, state representatives and others on the issue to no avail, and is considering legal recourse against the BMV.

PAC

The NIADA National Policy Conference is coming up Sept. 24-26 in Washington D.C., which means the annual PAC Cup fundraising competition is coming down to crunch time. The Cup is awarded each year to the NIADA region whose members contribute the most to the NIADA-PAC fund between the NIADA Convention and Expo in June and the National Policy Conference in the fall. The competition is expected to go down to the wire as always, as the other three regions attempt to break the stranglehold of Region II (Southeast), which has won the Cup each of the four years it has been awarded. Last year, the four regions combined to add almost $100,000 to the PAC fund. This year, there’s a little extra incentive to contribute. Those making or pledging a donation of $1,000 or more will be entered into a raffle for a chance to win one of four baseball bats signed by a legend of the game – Ted Williams for Region I, Hank Aaron for Region II, Mickey Mantle for Region III and Willie Mays for Region IV. The winners will be drawn during the NPC’s Friends of the Automotive Industry Congressional Reception and Dinner on Sept. 25. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.

September/October 2018

DEALER UPDATES

SAFETY WATCH

SALES MATTERS | By John Chapin

KIA RECALLS 508,000 VEHICLES

FOUR KEYS TO MASSIVE SALES SUCCESS

Airbags May Not Deploy

A faulty control unit that could prevent airbags from deploying in the event of a wreck has prompted Kia to recall 508,000 2010 through 2013 model year vehicles. Kia said the airbag control unit, which tells the airbag and the seat belt pretensioners when to activate, could be “susceptible to electrical overstress” in the event of a frontal collision. If the control unit is damaged internally, it may not relay the severity of the crash to the airbags and seat belt pretensioners. The recall covers a wide swath of Kia vehicles, including the 2010-2013 Kia Forte sedan and Forte Koupe, 2011-2013 Kia Optima sedan, 2011-2012 Kia Optima Hybrid sedan, and 2011-2012 Kia Sedona minivan. The vehicles were built through August of 2012.

KIA SAID THE AIRBAG C O N T R O L U N I T, W H I C H TELLS THE AIRBAG AND THE SE AT BELT PRE T ENSIONERS WHEN TO ACTIVATE, COULD BE “SUSCEPTIBLE TO ELECTRICAL OVERSTRESS” IN THE EVENT OF A FRONTAL COLLISION. The recall stems from a lawsuit filed in 2014 when a 2012 Kia Forte sedan was involved in a wreck and its airbag didn’t deploy. A Forte Koup was involved in a similar wreck in which the airbag didn’t deploy in 2017. Kia, the NHTSA, and the supplier that produced the supplemental restraint system used in the Forte conducted an investigation in May to determine what was at fault and what needed to be repaired.

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September/October 2018

Planning for Success

I was recently speaking with an extremely successful executive known for being able to walk into an organization, clear away all the clutter, and make it extremely successful. He boiled his process down to four keys that can also be applied to successful selling. FOUR KEYS TO SALES SUCCESS Simplicity The formula for success in sales really is simple. It comes down to talking to enough of the right people the right way. That means talking to plenty of qualified prospects and having the skills necessary to find a problem, solve the problem, and get them to take action on the solution. Where people complicate the issue is when they start looking for shortcuts – the simpler, easier way. There isn’t one. Hiding behind social media, email, and reactive marketing will never take the place of in-person calls and phone calls. Set your annual, monthly, and weekly goals, and then calculate your daily activity (how many people you need to talk to). From there, practice and prepare for all sales situations and scenarios. Finally, get out there and make the contacts necessary. As a salesperson, producer, agent, or whatever you call yourself, your first job is to sell. Everything else is just a distraction. Simple. Innovation Innovation is all about value and standing out from the rest of the pack. How do you deliver more, how are you better, and how are you different in a good way? Just as important, how can you deliver more, how can you be better, and how can you be different in a good way? Where are you, your company, and your product truly unique and how can you further adapt, change, improve, and stand out or deliver more value? Of course this begins with you. You are the one thing the competition does not have. If you are willing to out-service, out-work, and out-relationship the competition, you will stand out. How can you personally deliver more value? It can start with handwritten thank-you notes and gifts to let people know they are appreciated. It can include adding products and services, or augmenting them. You can also add hours of operation, be more responsive, or add features such as home delivery. You’re looking for anything that enhances and improves the client experience – anything that better meets the needs, wants, and desires of the client. Innovation also means not resting on your laurels and realizing that what has made you successful thus far may not be what

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makes you successful in the future. This is challenging the old rule of “If it isn’t broken, don’t fix it” by improving further on what already works. It’s refusing to say, “This is the way we’ve always done it” and “That’s good enough.” It’s asking questions like, “How can we bring something completely new to the industry?” “How can we turn the standard way of doing business on its ear?” “How can we reinvent the wheel and make it better?” Bottom line: what can you do to further stand out and deliver more value? Passion Successful people at the highest levels are the most passionate about what they are doing. For many, their work is not work. It’s love. They’d do it for free. Passion is all about the personal why. It is the deep-rooted reason you work crazy hours, persist through failure after failure, and keep getting up no matter how many times you get knocked down. Ideally that passion comes from helping clients, a strong belief that people want and need your product, and enthusiasm about the personal life that sales allows you to live. For most people, the personal why is the strongest. This usually includes either proving something to yourself and others, acquiring money and possessions that give you feelings of fulfillment and help you reach your highest life values such as freedom, helping and contributing to the important people in your life, or a combination of all three. In many older clients I’ve also seen a passion to get out and help new customers, knowing their years of experience puts them in a unique position to “save” others. Still other people may have a passion for meeting new people and making new friends. Others have such a belief in their product they seem to have a save-the-world mentality. Whatever your passion is, it is the fuel that will drive you and keep you going. If strong enough, it will get you up early, keep you up late, and give you tons of energy. To find it you have to ask yourself what’s important to you in life. What will you fight for or die for? What are your most important values? What do you care most about? Once you know what those deep, emotional drivers are, the next step is to tie those to going out and selling your product or service. Execution This is all about taking action. Getting out there and doing what needs to be done. Nike: “Just do it.” Once you know what you want to do and why you’re doing it, put a quick plan together and take action on it. Don’t make it a big complicated plan. Again, think simple. Then execute on the plan as soon as possible. Don’t worry about it being perfect, either. Just take action and then course-correct as you go. Generally speaking, the more action you take, the faster you’ll get to success. John Chapin is a sales and motivational speaker and trainer. He has over 27 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www.completeselling.com or email johnchapin@completeselling.com.