DEALER INSIGHT
N E W M E X I C O I N D E P E N D E N T AU T O D E A L E R S A S S O C I AT I O N
THE OFFICIAL MAGA ZINE OF NEW MEXICO IADA
S T A T E
A F F I L I A T E
S E P T E M B E R / O C T O B E R 2 016
DEALER BEST PRACTICES
WHAT LENDERS WANT TO KNOW ABOUT YOUR DEALERSHIP Vendor Management P A G E 12
DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
VISIT US www.nmiada.com
AT W W W.NMIADA.COM
SEPTEMBER/OCTOBER 2016 / DEALER INSIGHT 1
Inside
INSIDE WHAT’S NEW
2016 National Leadership Conference NIADA’s National Leadership Conference will be held September 26-29 at the Dupont Circle Hotel in Washington, D.C. Once again, the Leadership Conference will be combined with a Legislative & Regulatory Summit and Lobbying Day on Capitol Hill. This important event will help frame the NIADA Legislative & Regulatory agenda for 2016 2017 and beyond as NIADA’s legislative committee and association leadership meet face-to-face with legislators and continue their important work. For more information, visit www.niada.com.
04 .L ETTER FROM THE EXECUTIVE DIRECTOR 06 SECRET TO A SUCCESSFUL BHPH BUSINESS 10 .T RADITIONS AND TRENDS NEED TO WORK TOGETHER 12 WHAT LENDERS WANT TO KNOW ABOUT YOUR DEALERSHIP 14 CASHING IN ON LEADS 16 WHAT TO POST ON FACEBOOK 18 N MIADA CONVENTION 22 WASHINGTON UPDATE ADVERTISER’S INDEX
Autotrader ....................................................... 15 AutoZone .........................................................14 Alliance Inspection Mgt. ...................................16 Lobel Financial............................................... IFC Manheim .................................................... 10, 11 Manheim Pennsylvania .................................... 13 New Mexico Mutual ........................................... 7 NextGear Capital........................................... 9, 12 Precision Auto Inspections ..............................IBC ReCARnation .................................................... 5 Spireon ............................................................17 VAuto..................................................Back Cover
OFFICE
New Mexico Independent Auto Dealers Association 608 Chama NE • Albuquerque, NM 87108 Phone: 505.232.0809 • Fax: 505.232.0810 email: james@nmiada.com website: www.nmiada.com
NIADA HEADQUARTERS
BOARD MEMBERS Chairman
Secretary
Associate Board Members
Alan Clark Zurich Direct Markets PO Box 30846 Albuquerque, NM 87190 (505) 328-2387 Alan.clark@zurichna.com
Pat Martinez All Star Auto Center Inc. 2307 E Main St Farmington, NM 87401 (505) 325-2300 pmatrinez@allstarcars.net
Rob Martinez ABQ Auto Deals, LLC 169 Griegos NW Albuquerque, NM 87107 (505) 554-2428 rob@abqautodeals.com
President
James Santistevan Zia Auto Wholesalers LLC 4913 Menaul Blvd NE Albuquerque, NM 87110 (505) 889-9653 ziawhsl@cs.com
Dealer Board Members
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.
Vice President
Luis Soto Sun City Motors 8504 Central Ave SE Albuquerque, NM 87108 (505) 256-1200 suncitymotors@yahoo.com
NM Dealer Insight is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation. 2521 Brown Blvd., Arlington, TX 76006-5203; (817) 640-3838. 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 NMIADA or the 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 © 2016 by NIADA Services, Inc. All rights reserved. Visit the NIADA website at www.niada.com. 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 Senior Art Director/Production Manager Christy Haynes • christy@niada.com Printing Nieman Printing
www.nmiada.com
Felicia Richesin A Quality Auto Sales 921 Eubank Blvd Albuquerque, NM 87112 (505) 275-9999 aqualityautosales@gmail.com
Treasurer
Aaron Flores A-Star Motors LLC 5700 Menaul Blvd NE Albuquerque, NM 87110 (505) 503-6846 aaron@astarmotors.com
Thomas Hawkins AutoMax Farmington 5210 E Main St Farmington, NM 87402 (505) 327-0500 thomas@4automax.com
James Schrimer The Car Store, Inc. 1650 N. Valley Las Cruces, NM 88007 (505) 524-2283 thecarstorelc@gmail.com Dan Fiske Airport Auto Center 130 Airport Drive Farmington, NM 87401 (505) 325-3799 dfiske@goautoairport.com
Gene Lujan Manheim Auto Auction-NM 3411 Broadway SE Albuquerque, NM 87105 (505) 400-6965 Eugene.Lujan@manheim.com
Alan Rumm ION GPS 5925 Phelan Blvd, Suite G Beaumont, TX 77706 (409) 866-6116 alan@ionmycar.com Ken Star Sunstar Capital Inc. PO Box 53279 Albuquerque, NM 87153 (505) 292-0611 ken@sunstarcap.com Mike Godin Godin Dealer Services PO Box 67440 Albuquerque, NM 87193 (505) 710-7295 mike@godindealerservices.com
SEPTEMBER/OCTOBER 2016 / DEALER INSIGHT 3
ASSOCIATION NEWS / BY JAMES ZANIOS
Disclosure form we highly recommend every dealer start to use as a part of their daily sales process. There is no law that requires the form to be used, but it’s best to be proactive. Our legal team agreed that by creating this form, we are getting ahead of the regulatory curve since sales of vehicles with open recalls is a subject consumer advocates are bringing to the forefront in our >> state and nationwide. Be prepared. Get your packet of forms ALL OF OUR DEALER MEMBERS AND PARTNERS: today to implement this best practice at your Wow, can you believe it is already dealership. September and the kids are back in school? I Curbstoning can’t, and am in shock how quickly summer As you will see in this edition of our flew by. As we move from the dog days of newsletter, NMIADA is on a long anticipated summer into the cooler fall weather, my hope statewide campaign to stop the practice is that each of you as independent dealers of illegal car sales on curbs all over our are diligently working to better your business towns in New Mexico. We have provided a practices. Part of what NMIADA does for all of couple of posters we are going to use in our the independent dealers in our state is make campaign to stop this practice from preying sure you have the best information to run on unknowing consumers and taking away your business and stay up to date on what is legitimate sales from our trusted and bonded going on in the business world around us. dealers. Forms Please take a look at the posters and tell Last month I highlighted the new forms us what you think. We want to be sure and class we have each month to allow you to get support your efforts of being a legal car a refresher on what forms need to be used dealer in our state. and when. NMIADA produces and provides The board of directors has also put for our dealers compliant forms that focus together a plan to partner with several other on New Mexico statutes and regulations, stakeholders in this statewide problem, to along with forms that help you create deal see if we can come up with a legislative or folders that provide your dealership the best regulatory solution. I hope we can get this in protection possible against frivolous lawsuits. place and possibly ready for the legislative In July, NMIADA created a new Recall session coming up in early 2017.
Association Update
>>
FROM THE EXECUTIVE DIRECTOR
Regulatory/Legislative As we move towards the 2017 New Mexico 60 Day Legislative Session, it is imperative each of our dealers educate themselves on the issues prevalent in our country and in our state. There are several items I am watching, and we will be a strong voice for you in the Roundhouse this winter. We each must understand the impact of continued government overreach and regulation. Recently, the CFPB promulgated a proposed rule that would drastically change our rights as dealers under our motor vehicle sales contracts by limiting the scope and enforcement within our arbitration clauses. NMIADA, NIADA and most banks and financial institutions strongly object to this huge overreach by the Obama administration and the CFPB, which is growing unchecked and affecting our businesses. We need your support by calling our Washington delegates and educating them on the issue and that the CFPB has gone too far. One of the best ways to make sure your voice is heard is to join me and many of your NMIADA partners and fellow dealers in Washington, DC, September 26-29, for NIADA’s National Leadership Conference and Legislative Summit. We can make an impact if we get involved!
Sincerely, James Zanios
SAFETY WATCH / BY USED CAR NEWS
REFLECTIONS ON MY FIRST NIADA CONVENTION
>>
>> Pleasantly Surprised
I HAD THE PRIVILEGE of attending my first National Independent Automobile Dealers Association convention [in June] in Las Vegas. Quite honestly, I wasn’t sure what to expect, but I was pleased to discover many similarities with my experiences at 47 National Automobile Dealers Association conventions for franchise dealers. First, many of the dealers I met are as astute and keen about their business as many franchise dealers. They understand the wholesale and retail marketplaces are changing fast, and they are wisely seeking new ideas, tools and ways to make their businesses more profitable and successful. Second, like many franchise dealers, the independent dealers are deeply committed to 4 DEALER INSIGHT / SEPTEMBER/OCTOBER 2016
their businesses. It’s their money on the line every day. They are hands-on, pragmatic operators, some of whom are likely to pick up a wrench or a chamois cloth to get a car ready for retail. Third, I was struck by the family nature of the event itself. I met dealers, their wives and their children on the NIADA floor – a reminder that many, if not most, dealers of all types are by their nature a family affair. Finally, I was pleased to be a part of Cox Automotive’s impressive presence on the NIADA floor – a testimony to our commitment to serve independent dealers as we collectively transform the way the world buys and sells cars. My hat’s off to NIADA’s Steve Jordan, CEO, and Joe Lescota, director of dealer development, for hosting an enlightening, productive and well-run event. This year’s NIADA convention may have been my first, but it most definitely won’t be my last. Dale Pollak is the founder of vAuto and an executive with Cox Automotive. This column was published on his website, www.dalepollak. com, on June 18.
>> Damaged Wires Could
Disable Passenger Air Bag
>>
INDUSTRY PERSPECTIVE / BY DALE POLLAK
CHEVY RECALLS IMPALAS FOR AIR BAG ISSUES GENERAL MOTORS LLC IS RECALLING
289,254 model year 2009-10 Chevrolet Impala vehicles manufactured April 25, 2008, through Feb. 16, 2010. The front passenger seat frame may contact and damage the wires of the passenger presence sensor module. If the wires are damaged, the passenger presence sensory system may fail to recognize the passenger seat is occupied, disabling the air bag. Damage may also cause the air bag fuse to short resulting in a loss of all air bags and seat belt pretensions. Both conditions increase the risk of injury during a crash. GM will notify owners, and dealers will double wrap the wires with antiabrasion tape and replace damaged wires as necessary, free of charge. GM’s recall campaign number is 36110.
www.nmiada.com
BHPH PERSPECTIVE ///
>>
Success depends on your available capital and your day-to-day involvement, your commitment to collections, and so much more.
BHPH PERSPECTIVE / BY DUSTIN KERR
WHAT’S THE SECRET TO A SUCCESSFUL BHPH BUSINESS?
>>
>> Some Best Practices for Success
I HAVE THE PLEASURE of meeting Buy HerePay Here dealers all over the country when I travel. I see owners of both small and large operations. Sometimes, I meet a BHPH owner who is just starting out. Other times, I meet one who’s been going strong for many years. I’ve even encountered retail dealers who are seriously considering a jump into our industry. Even with all these differences, there’s one universal question that unites these people: What’s the best way to run a BHPH business? You may not like my answer. It’s a question I take very seriously, so I answer it honestly. And I’m not going to lie. So, generally speaking, they aren’t very satisfied with my answer! Why? Because I genuinely believe there are many successful ways to run this business. There’s no cookie-cutter solution. Success depends on your available capital and your day-to-day involvement, your commitment to collections, and so much more. How the business performs is heavily influenced by your temperament and your market – there are dozens of factors that can make or break BHPH dealerships. I see different business models every day that are highly successful. Pick your method – but follow best practices. Even though I heartily believe the right success model depends on your circumstances and attention to detail, each of the profitable BHPH businesses I’ve encountered operate with a few best practices I believe you should follow to maximize your business and mitigate your exposure to risk. 6 DEALER INSIGHT / SEPTEMBER/OCTOBER 2016
1. Understand this is a collections business, not just a sales business. I see more dealers struggle with this idea than any other because they just don’t understand this simple, but crucial, point. It’s especially hard sometimes for someone who has built a successful franchise or independent business where sales, gross and expense control were the keys to success. In the BHPH business, we cannot just sell our way out of bad collections! To make the most of the business, our collectors have to be the dealership’s most talented, best trained and best compensated employees. A well-run collections department can make up for a lot of mistakes in other areas. 2. Get serious about compliance. If you don’t have the wherewithal to devote time every day to compliance, I suggest not getting into this business. If you’re already in and still not serious about compliance, I suggest getting out while you still have a business and a choice! The CFPB and the Department of Justice will do everything they can to put you out of business if they even think you are not following their rules. Ignoring compliance puts everything you have in jeopardy. If you can’t (or won’t) manage that reality, you shouldn’t have a BHPH dealership. 3. Be an advocate for BHPH businesses. Reread No. 2. If you want life in the BHPH industry to be easier, you have to fight for it. One way is to join the state and national associations that are fighting for your business’s survival against the likes of the CFPB and DOJ. Not only should you be a member, but it is very important you contribute financially to these associations so they can fight for your rights. Connect with your city council members, senators and state/national representatives and other important political figures in your area. Make sure they understand just how much your business contributes to the local economy – and educate them about the industry, so they realize you aren’t the “bad guy” consumer advocacy groups like to make you out to be. Find out their stance on the
CFPB and DOJ and vote accordingly. Remember the quote by Edmund Burke: “The only thing necessary for the triumph of evil is that good men do nothing.” Stand up for yourself and others. 4. Join a 20 Group. The best career move I ever made was joining a 20 Group. Nothing else I tried made me a better operator – or provided a better ROI – than the insights I gained from that group. The power of peer collaboration and accountability you receive in a 20 group setting is magnificent. Imagine sitting in a room with 20 other dealers talking about your business. You get to see the good, the bad and the ugly, and have literally hundreds of years of experience in the room with you! The one warning I will give you, though, is that you must have an open mind and be ready to go back to your dealership and make meaningful change because your fellow 20 group members will hold you accountable to making your business better. Even when you’d prefer they didn’t. BHPH success is possible – and important. I love this industry. Although we often get a bum rap, BHPH dealerships provide a valuable service to the vulnerable in our community. We help people learn to be financially responsible, and we give them the means to get up on their feet and improve their lives. It’s amazing. So, no, there’s no perfect business model for success in this industry, no matter how many times people may ask me to show them the way. But if you take our work seriously, commit to helping people while making a profit and follow the best practices I’ve outlined above, you’ll make it. And if you encounter bumps along the way, give me a call and I’ll help you out! Dustin Kerr has been in the automotive industry for 15 years with the last 10 spent exclusively in the Buy Here-Pay Here and Lease Here-Pay Here industry. Dustin serves as an NCM consultant and sales and collections trainer to the Buy Here-Pay Here industry. This article originally appeared on NCM’s Up to Speed blog (http://blog.ncminstitute.com) and is reprinted with permission.
www.nmiada.com
www.nmiada.com
SEPTEMBER/OCTOBER 2016 / DEALER INSIGHT 7
ASSOCIATION NEWS ///
ASSOCIATION NEWS /
>>
NIADA CONVENTION RECAP
Kris “Tanto” Paronto, one of the heroes of the infamous Sept. 11, 2012 terrorist attack on the U.S. diplomatic mission in Benghazi, Libya, told the harrowing story of those 13 hours in a gripping keynote address >> that left the overflow crowd standing and cheering. Paronto discussed courage and handling adversity and crisis situations, as well as the decision of himself and his CIA Annex security FROM THE VENUE TO THE CONTENT , the 2016 NIADA Convention and team to speak out about what happened that night in the face of Expo was all about reinvention. conflicting reports from government and media that told a different While the theme of “Success By Reinvention” was created with the story. idea of helping dealers thrive in the rapidly changing used car business, Attendees also had a chance to celebrate, dance and loosen up at it fit the industry’s biggest event just as perfectly. the Cigars and Martinis and Margaritas welcome reception in a lush, NIADA celebrated its 70th annual Convention in a new venue – the tropical setting at poolside, and at a disco-themed closing party recently renovated Mirage, which provided a larger yet more intimate following the crowning of Florida’s Scott Lanier as the 2016 National setting – as well as a sold-out 60,000-square foot Expo Hall with more Quality Dealer. than 170 exhibitors and the most extensive dealer education agenda in In addition to the NQD ceremony – webcast live as always on history, featuring more sessions on more topics than ever before. NIADA.TV – the previous night’s National Leadership Awards Banquet It also included more attendees than ever before. The 2016 introduced new NIADA president Billy Threadgill as well as honoring Convention obliterated the event’s attendance record, sailing past the NIADA scholarship recipients and the winners of awards for the top previous mark, set in 2006 at the Las Vegas Hilton, by a staggering 24 performers within the association and the used vehicle industry. percent. The number of dealers and first-time attendees both rose by “I can honestly say my experience was far above and beyond my 30 percent or more. expectations,” said Daniel Johnson of LiteHouse Auto in Lakewood, “I got what I came for,” said Sean Schuetz of Klass Motors in Santa N.Y., a first-time attendee. “We will not miss a Convention from here Ana, Calif. “I wanted to learn new ways to take my business to the next on out.” level, and I’ll be spending the next several months implementing what The 2017 NIADA Convention and Expo will be back at The Mirage and I learned at my dealership. It was the most informative convention I is scheduled for June 12-15, 2017. Save the date and don’t miss your have attended.” chance to be part of the used vehicle industry’s biggest event of the While the education is always the focus, there was, of course, a lot year! more happening.
Reinvention Creates Success for 70th Annual NIADA Convention and Expo
8 DEALER INSIGHT / SEPTEMBER/OCTOBER 2016
www.nmiada.com
MANAGEMENT GAMEPLAN / BY SCOTT BERGERON
TRADITIONS AND TRENDS NEED TO WORK TOGETHER
>>
>> Finding a Successful Blend
THERE’S A REASON traditions exist. They grow out of established, credible and time-tested circumstances. Trends, on the other hand, can be today’s hot attraction, which may or may not stand the test of time. How can a dealership capture the best of today’s trends and blend them successfully into a tradition-based program that drives more
sales on a consistent basis? CRM and Personal RelationshipBuilding There’s no question technology-driven Customer Relationship Management programs are firmly established as a trend. In all likelihood, CRM will become a tradition over time. But for now it’s still a relatively new and shiny toy many dealerships have embraced as a bedrock organizational and sales tool. CRM enables data mining about customers as well as regular communication with them. In essence, it can serve as the engine that drives relationship-building because it brings evidence-based intel to the table. Depending on the CRM used (and how consistently and completely it is adhered
to), salespeople can gain valuable information about buying history and preferences, and communication preferences. It’s gotten to the point where CRM can tell a dealership how often to communicate with a customer via email, and what not to do (e.g., overwhelm with too many emails that end up alienating the customer). But without tires the vehicle won’t move very far. All the technology-driven protocols in the world can only go so far toward the time-honored tradition of relationshipbuilding. This is the ability through interpersonal contact to establish and maintain trust, comfort and likeability with prospective and present customers. In the rush toward technology trends (e.g., Internet car-shopping and pricing tools), there’s a tendency to embrace the former and forget the latter. The truth is successful salespeople need both – the “scientific” piece that CRM systems can bring to the table and the “artistic” ability to develop rapport oneon-one. When the two work in harmony, dealerships get the best of both worlds. Buyers are “primed” by the CRM outreach that shows the dealership understands them and gives them useful information. In-person relationship-building then seals the deal. Here’s what can happen if the two aren’t working side by side: a prospective buyer walks into a dealership and is basically ignored by salespeople nearby because they’ve been schooled not to be too pushy or aggressive. (In some cases, it’s just plain laziness.) Armed with the amount of information available online, salespeople today too often assume a prospect will seek them out if interested. In the interim, they give them space. In reality, this is the worst way to proceed. It’s happened to me. I wound up feeling ignored rather than valued. Instead, a salesperson could have introduced himself/ herself and offered to help – without coming across as pushy. This would have set the tone for a pleasant and productive discussion and potential sale. Internet Shopping vs. Instinct Another “trend” (yes, many will say it’s
10 DEALER INSIGHT / SEPTEMBER/OCTOBER 2016
www.nmiada.com
The trend is no-haggle pricing.
The tradition is to play the negotiating game. Both are valid. It depends on buyer preferences.
they’ve achieved a lower price through negotiation, they won’t buy at all – or at least they will be reluctant. Here’s another perfect example of how trend and tradition can complement each other perfectly. The trend is nohaggle pricing. The tradition is to play the negotiating game. Both are valid. It depends on buyer preferences. So find out what those preferences are, then go one direction or another – or both. Read the prospective buyer carefully, then adjust as gut feelings dictate. If someone comes in and is adamant from the get-go about a firm price, so be it. If it’s unclear what their preferences might be, ask. (Then, have an option to fit their preferences. If they want to negotiate, be prepared to shift gears from one-price shopping.)
Then, of course, there’s the hybrid – a buyer who wants the firm price and wants to negotiate from there. Decide if/how to address this scenario. In short, prepare your salesforce to deal with all types of buyers. Because just as the U.S. is a melting pot of different ethnicities, so is the car buying population a melting pot of preferences. Those preferences can best be addressed by honoring both trends and traditions. 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.
here to stay) is Internet-based car shopping and pricing. There’s no doubt the abundance of Internet information has led to much more savvy and educated buyers. This is great because it opens the door for a salesperson to build rapport based on instincts instead of just answering pedestrian questions about a potential car or sale. However, exercising those traditional instincts seems to be a lost art in too many dealerships. Salespeople often are cast as order-takers, there to follow through on customer requests. As with the CRM example above, this is leaving a big (some would say the biggest) piece of salesmanship on the salesroom floor. Instincts can be wonderful because they work at a level technology doesn’t. Properly tuned in, a salesperson can intuit buying clues just by observing a prospective buyer’s body language, movements, gestures and actions. For example, a prospect is viewing pricing information on a particular vehicle, then throws up his hands. That well could indicate frustration, or is it exhilaration? The alert salesperson will make sure to find out, and take the conversation in the direction it needs to go from there. While instincts themselves can’t be trained, awareness of when and how to use them can. This needs to become, once again, a key part of salesforce training – at the time of hiring, and periodically thereafter. Even if the new hire is a seasoned pro, the “hows” of exercising instinct may need to change depending on previous experience and current dealer aims. Iron-Clad Internet Pricing vs. Art of the Deal Following through on the trend of all things Internet, one-price-no-dickering shopping has become the rule, not the exception. Why? Yes, I know a gazillion surveys have said buyers don’t want to haggle or be hassled in the price-shopping arena, and that a oneprice policy makes them feel much more at ease and trusting. Well, that’s great for those people. But what about those who like to haggle? There are still many buyers out there who live for the art of the deal. If they can’t feel like
www.nmiada.com
SEPTEMBER/OCTOBER 2016 / DEALER INSIGHT 11
DEALER BEST PRACTICES / BY CHET HEUGHAN
VENDOR MANAGEMENT
>>
>> What Lenders Want to Know
About Your Dealership
VENDOR MANAGEMENT has become somewhat of a buzzword in the consumer lending industry, especially around auto lending. It has always been a financial institution’s responsibility and obligation to know who they are doing business with and how loan applications are reaching their institutions. The Consumer Financial Protection Bureau, however, has further emphasized financial institutions are responsible for the end product. This is to say that any negative actions taken by the dealer will become a problem for the lender. Within franchised dealerships the vendor management requirement is aided by a strong presence from the manufacturer. For example, a franchise dealer has certain covenants that require financial reporting, including minimum capital thresholds, required training and certifications. Franchised dealers also benefit from the monitoring of customer satisfaction surveys, detailed inventory tracking and industry benchmarks provided by other franchise dealerships selling the same brands. Independent auto dealers represent a unique challenge for many lenders. Independent auto dealers often vary in size, financial strength, operational models, inventory and experience. Unlike most franchise dealerships, independent auto dealers do not have the support of a franchise offering multiple checks and balances. It is easy to understand why lenders then tend to gravitate toward independent dealers that look and act more like a franchise dealership. As indirect auto lending has become more competitive and lenders struggle to increase yield, many have had to broaden their credit spectrum and move closer toward subprime lending or expand their dealer network outside their traditional relationships. To do this lenders have had to modify their dealer underwriting and dealer management models to fit smaller dealerships with more diverse revenue and sales models. In years past independent auto dealers had to meet the same minimum criteria for doing business with the lender as a franchise dealership, but times are changing. Many lenders have multiple programs and mitigate the risk of smaller dealerships with low working capital and minimal experience by using a third-party risk mitigation platform. With many of these platforms, small or new independent dealerships can gain access to the same national programs as large franchised stores. Lenders are able to serve independent dealers because thirdparty risk mitigation platforms are helping bring efficiency and transparency to the transaction. 12 DEALER INSIGHT / SEPTEMBER/OCTOBER 2016
For example, independent dealers may be subject to more frequent underwriting, additional verification steps and less direct access to loan underwriters. While there is more work on the dealer’s side, these steps also benefit the stores’ owners by helping identify fraud attempted by customers or rogue employees. The days of simply signing a lender’s dealer agreement and providing a few supporting documents to gain access to their retail financing program are drawing to a close. Lenders are being required to truly know and manage their dealer relationships. This means updating key pieces of data and underwriting each dealership on an annual basis. As an independent auto dealer it’s important to understand what lenders are looking for and be prepared to provide the documentation needed annually to avoid disruptions in your lenders’ retail financing programs. Lenders will be evaluating the dealer principals, the dealership itself and inventory. They will be looking at credit reports that indicate bankruptcies, tax liens, past-due accounts, and potential fraud or identity theft. In addition, lenders will check criminal history reports and verify addresses, property ownership, bank statements, business financial statements and tax returns. Lenders will also be looking at more subjective data such as references from your auctions, floor plan lenders, warranty providers and personal references. You should be prepared to provide proof of insurance, copies of bonds and licenses, and expect a yearly site visit and basic inspection of your facility. Lenders really want your business, but they must first know who you really are. Creating your own internal process for managing due diligence requests from lenders and thirdparty risk mitigation service providers will make this process easier and more efficient for you. Understanding what lenders are looking for and providing it in a timely manner goes a long way toward building a strong profitable relationship along with the ability to compete with your neighboring franchise stores. Chet Heughan is director of AppOne® Risk Mitigation Services and Indirect Lending for Wolters Kluwer. For more information, please visit www. wolterskluwerfs.com.
www.nmiada.com
CASHING IN ON LEADS
>>
>> Do’s and Don’ts
URGENCY TO BUY HAS NEVER BEEN GREATER.
A Google/Polk study recently found 81 percent of car buyers make a purchase within three months of beginning their online search and 51 percent buy within one month of their first clicks. Furthermore, a Cars.com survey found online shoppers are three times more likely to contact a dealership by phone than they are to reach out via email or chat. What does that mean for you? It shows you need to be on your toes for each and every phone call that comes into your dealership. Here are some simple do’s and don’ts that will help you capitalize on Internet leads that find their way to your phone lines. DO’S • Have a process. Without a process, you’re just guessing. Make sure you answer the phone consistently, ask for names, provide your name and treat sales calls as the golden opportunities they are. A Marchex Institute study showed 53 percent of answered calls were from shoppers with a clear intent to buy. • Set an appointment. Don’t put the
14 DEALER INSIGHT / SEPTEMBER/OCTOBER 2016
phone on the hook without putting something on the books. If you haven’t set an appointment for a customer to come look around the lot or test drive a car they saw online, you wasted your time and your customer’s. They called because something about your dealership caught their eye. Find out what it is and get them in the door to take a closer look. • Return calls promptly. Surprisingly enough, this may not be as simple as it sounds. Only about 20 percent of car shoppers begin their search looking at the brand they’re going to buy. You’re not the only dealer they’re looking at, but you could be if you’re the first to respond. DON’TS • Don’t try to sell a car over the phone. Best Mark placed test calls to dealerships around the country and found 91 percent of salespeople attempted to sell a car over the phone rather than set an appointment. Nothing sells a car better than seeing it in person. A sale over the phone is rarely effective. • Don’t wing it. Best Mark’s survey also uncovered the staggering fact that 95 percent of salespeople don’t have a defined road to an appointment. Like we said about creating a process, guessing at what will get your customers off the phone and in their next vehicle isn’t the most practical way to approach a lead. • Don’t wait for an email. Online shoppers are often searching on a cell phone or mobile device. They have easy
A Google/Polk study recently
>>
ACCELERATE / BY GWC WARRANTY
found 81 percent of car buyers make a purchase within three months of beginning their online search and 51 percent buy within one month of their first clicks.
access to a call button, plus we’ve already established they’re three times more likely to place a phone call than type up an email. If you think all your leads will land in your inbox, you could be sadly mistaken.
www.nmiada.com
SOCIAL MEDIA / BY KATHI KRUSE, FOUNDER CEO KRUSE CONTROL INC.
5 WAYS TO FIGURE OUT WHAT TO POST ON FACEBOOK >> Engage Your Customers and
Reach Your Goals
ONE OF THE most common challenges for independent dealers is social media. It’s actually a challenge for most companies simply because it’s a medium not well understood. Not to oversimplify it, but Facebook and other social channels are just another medium to connect with customers. If you think about the “traditional” media such as TV, radio, print, billboards, email and phone, they are all places where customers spend time, and it’s your job (through marketing and advertising) to attract them to your store. Once a dealer has decided to venture out into Facebookland, the first question that comes up is “What do I post on Facebook to attract more customers?” The answer is a simple one but not so easy to find. Engagement is king on Facebook. It drives everything. There are two types of Facebook engagement: organic and paid. Organic
16 DEALER INSIGHT / SEPTEMBER/OCTOBER 2016
simply means you did not pay to promote your post. Organic is the best kind of engagement and it’s the hardest to achieve. Solid, original, high-quality content achieves organic reach and engagement. People like, comment and share, which builds more authority with Facebook’s algorithms. It’s key to pay close attention to what’s working and what’s not. You must learn through data how best to promote (pay for) your content to improve on what’s happening organically. But what do you do when you hit a brick wall for ideas? These five ways will help you figure out what to post on Facebook to engage customers and reach your goals. 1. It all begins with your why. If you’ve done the work to determine your true why – why you’re participating in this race, and why your customers choose you over your competitor – the search for what to post on Facebook gets so much easier. Simon Sinek said, “People don’t buy what you do, they buy why you do it. The goal is not to do business with people who need what you have. The goal is to do business with people who believe what you believe.” Without inspiration, motivation and passion to craft meaningful content, your Facebook page falls flat. Pro tip: If you’re new to determining your why, take a look at your online reviews. Look and listen for commonalities from what your customers are saying – that will help you know why your customers choose you.
2. Determine what your target customers want to know. Building relationships with buyers is how business gets done (with or without Facebook, right?). Knowing your customers’ interests and challenges helps you create content for your page that matters to them. Whether you realize it or not, there’s a story happening in the mind of your customer. They are the hero of their story, and when you actively participate in that narrative in a meaningful way (which Facebook is ideal for), you position your business within your customer’s story... and have a great shot at the sale! Pro tip: Begin to notice ideal customer experiences within your store and find a way to
www.nmiada.com
>>
Review your list
and discover you've just experienced what it's like to know what to post on Facebook.
document them. 3. Identify and develop your resources. Part of your plan for what to post on Facebook is sitting down and assessing just what it is you have available. Failing to identify and develop your resources makes it even harder to know what to post on Facebook. Answer these questions: • Who will produce our content? • Who’s in charge of our content? • Who will maintain our content? (Content is a business asset!) • Examine and describe what forms of content are most comfortable right now (written, images, audio, video). • What types of content do you want to
www.nmiada.com
focus on in the next 12 months? • What do you need to do to get there? 4. Encourage employee participation. Most dealers agree they need to A) produce more content and B) connect on a deeper, personalized level with today’s hyperconnected buyers. Shifting your internal processes to engage employees (especially salespeople) in content creation helps with both of these challenges. When you showcase employees as thought leaders in the automotive industry, the company receives more recognition online. Employees reap the benefit of their voices being broadcast, paving the way for more referrals, leads and sales. The company looks smarter because its employees look smarter. 5. Don’t make it too complicated. If you’ve been managing a Facebook page for a business, chances are one or more of these statements apply to you: •Y ou’re a current or potential customer of that store. •Y ou possess similar attributes to the customers you’re trying to attract. •Y ou have empathy for customers’ struggles and feel a connection. This means you are uniquely positioned to understand your customer (because they’re just like you). You have an idea of what would be valuable to post on Facebook and you need to give it wings. Try this: identify four to five Facebook pages you like and what it is about them you admire. Write down your answers.
Review your list and discover you’ve just experienced what it’s like to know what to post on Facebook. Those pages you identified are successful for the reasons that attracted you. They are the same or similar to the reasons customers like your page. Brainstorm with others within and without your organization to come up with a game plan to create content that elicits the same interest, excitement and belonging you feel when you visit those pages on your list. Pro tip: We all get busy and it’s nice to have one place to refer to our game plan. A content calendar helps you think through what to post on Facebook, gives you the room you need to plan your strategy and allows you to schedule posts into the future to save time. Fact: figuring out what to post on Facebook is a creative process. Not everyone is cut out for it, but those who are usually realize it’s fun once you get things in place. Don’t be afraid to test different types of content with your fans. This will build your self-confidence and motivate you to keep going. The answer to “what to post on Facebook” is simple, but not easy. Do the work, test your ideas and make good use of a content calendar. You’ll soon stop struggling, find the answers and become a Facebook superstar. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc. Kruse Control coaches, trains & delivers webinars focused on integrating social media and online reputation management into dealership operations.
SEPTEMBER/OCTOBER 2016 / DEALER INSIGHT 17
18 DEALER INSIGHT / SEPTEMBER/OCTOBER 2016
www.nmiada.com
MANAGEMENT MATTERS / BY KEVIN BAUMGART
DOES YOUR DEALERSHIP VALUE ITS INTERVIEW PROCESS?
>>
>> Be Prepared for the Right Hire
BY THE TIME a candidate reaches the interview stage, it’s clear they have grabbed your attention as a potential hire for your dealership. The interview process is an irreplaceable component of your dealership’s overall hiring strategy. It’s also the point at which both the employer and job seeker determine if it’s worth their time to move forward with the process. What’s at Stake for Employers? Taking the time to speak with a candidate in person is critical to determine if someone is a good fit for the role. It’s also an integral part in persuading top talent to work for your dealership. Research from LinkedIn found that 87 percent of job seekers said a great interview experience would make them reconsider a job offer even if they have initial doubts. In a competitive job market, this can make the difference between hiring an all-star and a dud. Conversely, 83 percent of candidates say a negative encounter during an interview will erode their interest in a position. Getting the interview process down to a science begins far in advance of the inperson visit. Employer Due Diligence You will want to use the early stages of the hiring process to get as much information about the applicant as possible to ensure you’re making the right decision by inviting them in for an interview. Hiring technology has come a long way in enabling auto dealers to evaluate job seekers before they ever step foot in the dealership. Employers should take advantage of tools that test hard skills, soft skills, culture fit and aptitude. Based on the results of these evaluations, you’re able to better gauge whether they meet – or even exceed – the requirements established in your job description. This
adds insight that employers can use in conjunction with resumes and applications to make informed judgments about applicants and if they should bring them in for an interview. Once you’ve completed these critical steps, you need to make sure you are prepared to meet the candidate in-person. How to Prepare for the Interview No detail is too small as you prepare for the interview. Consider what type of impression you’ll leave after you’ve invited a candidate to talk about a specific position and you forget their name, the job they applied for or refer to past work experiences belonging to another applicant. This is the candidate’s first impression of what it would be like to work at your dealership. It’s important to get it right. You should also have your interview questions prepared in advance and in front of you when you sit down for the interview. Be sure to have questions that will help you effectively identify whether the candidate can perform all necessary tasks defined in the job description. Addressing your priorities up front and asking questions about measurable criteria will help you determine their ability to do well in the role. At the end of an interview is a great time to allow candidates to ask questions, which helps set expectations for the candidate and the interviewer. If you are prepared for this exchange in advance, it is easier to sell top talent not just on the role, but also on your dealership as a place to work. As much as the employer is judging the candidate, the potential new hire is also forming opinions about working for the dealership, and a great impression will win over allstar candidates. An Extensive Process The interview is the singular component in hiring that carries the most weight for both the employer and candidate. It’s crucial you have a rock-solid process in place – built on strong intel about each applicant – that will make the encounter productive and illuminating for all parties involved. Kevin Baumgart is VP of Business Development at Hireology. He 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 (blog.ncminstitute.com) and is reprinted with permission.
AUCTION NEWS /
MANHEIM ANNOUNCES SELECTION OF TWO NEW LEADERS >> Digital Inventory Solutions and Retail Solutions
ADDING BENCH STRENGTH to its inventory solutions team, Manheim recently announced the selection of two new members to its leadership team. Derek Hansen is now vice president of Digital Inventory Solutions, reporting to Grace Huang, senior vice president of Inventory Services at Manheim. Also, Angela Babin is vice president of Retail Solutions, reporting to Shane O’Dell, senior vice president of Vehicle Solutions at Manheim. “Clients have asked us to continue to innovate, enhance efficiencies and provide the best digital solutions to help them thrive,” said Huang. “Derek has been instrumental in growing our digital channels and continuing to meet clients’ evolving business needs.” “Angie has deep industry experience and expertise in developing new businesses while growing sales,” O’Dell said. “We are excited to have Angie join our team to help us further develop our Retail Solutions’ offerings while delivering solutions that save time and enhance client growth.” 20 DEALER INSIGHT / SEPTEMBER/OCTOBER 2016
Derek Hansen was promoted from the interim position he has held since January. He now assumes full responsibility for Manheim’s digital operations as vice president of Digital Inventory Solutions. Hansen is responsible for setting the company’s long-term plan in the ever-evolving digital space and works closely with teams from Manheim, RMS Automotive and vAuto to create a customer-focused digital strategy that takes advantage of the deep expertise of these brands. Prior to his work with Manheim, Hansen was senior director of strategy for Cox Automotive. In Manheim’s newly created role of vice president of Retail Solutions, Angela (Angie) Babin is responsible for executing a strategy designed to maximize market return and deliver optimal client service. Retail Solutions provides dealers with greater access to high-quality services that produce retailready vehicles and allows them to seamlessly obtain retail inspections, professional vehicle merchandising, and retail quality mechanical, detailing and reconditioning services. Babin recently joined the Manheim team after serving in a variety of leadership roles with Pep Boys, Central Parking System, Enterprise Rent-a-Car, Affirmative Insurance and zag.com.
www.nmiada.com
ONLINE MARKETING / BY KATHY R. TAFOLLA, LOBEL FINANCIAL
>> Video Outperforms in Driving Conversions
>>
DOES YOUR CONTENT MARKETING STRATEGY INCLUDE VIDEO?
ASSOCIATION NEWS /
VIDEO CONTENT is exploding across the Internet, in social media feeds and in social hubs. Given the growing quantity of visual content in newsfeeds on social media, you can capitalize on video marketing. Even more, you can shoot, edit and produce these videos inexpensively. How is this possible? 1. Write a script. 2. Record a voice over. 3. Use Adobe to create the graphics. 4. Get a video recorder for live video. 5. Use Adobe After Effects for video editing. 6. Add music using sound effects. 7. Publish.
You can also use PowerPoint to video edit if money is a factor and Adobe is out of your budget. Video content marketing allows consumers to satisfy their information and entertainment needs all at once. It’s also a great way for small business owners to compete with larger businesses. Video is unrivaled when it comes to reaching your target audience. YouTube reports over a billion viewers, almost one-third of the people on the Internet every day. Video content is straightforward, quickly shared and easily accessible. It’s easy to create a business channel where all of your video content can be found through an organic search. Since buying a car is a visual experience and your dealership website is primarily based on images, it makes sense to include video content as a way to build relationships with customers. You’ll make personal connections through your website and build prosperous business connections in the process. Some examples for you to consider are: • Stories from customers. • A fictional series. • Personal stories. • Documentary style videos. • An interview. All of these ideas will help your customers connect to your dealership. This can be a fun and exciting way to not only brand your dealership but engage existing and new customers as well. In content video marketing storytelling is crucial. It’s effective because people love stories and they connect to authentic human experience. It creates an emotional investment. Content can be defined as experimental as much of it is based on trial and error. You post content and track it through Google Analytics to see how it’s ranking in the search engines. You want to know how many website visitors are clicking on it and how long they’re staying on the page. Most B2C business owners know content marketing is the most commercially important part of your digital marketing campaign. Why? The object of content marketing is to help and inform consumers. It is to show people your business knows the industry and their expertise is credible. Mastering a video content marketing campaign will help you build relationships with your customers before they step foot on the premises. Content tells people why your products are good and how it benefits them. For dealerships this might include financing options, reliability, and what sets you apart from the competition. Content allows the consumer to view your offerings, and if presented well, compels them to buy from you. Online marketing reports indicate content videos outperform other content types in driving conversions. Videos increase consumers’ understanding of products and services and website visitors are more inclined to purchase a product after watching a video. Moreover, you can expect to see a rise in interactive and personal video content to help turn viewers into leads.
www.nmiada.com
QUALITY DEALERS DUEL IN CHARITY AUCTION >> $27,500 Raised for NIADA Foundation
ANDREW GUROWITZ, the owner of Fairfax Motors in Fairfax, Va., placed the winning bid of $27,500 on a 2015 Chrysler 300 Limited donated by ADESA, AFC, IAA and TradeRev in an auction to raise funds for the NIADA Foundation. All proceeds from the auction, which was held during the NIADA convention, benefit the foundation, which spearheads the association’s commitment to charitable giving as well as awarding scholarships to deserving college-bound students across the U.S. and providing training and educational opportunities to automobile dealers and the general public. The vehicle, an ivory 2015 Chrysler 300 Limited with a black leather interior, a sky-slider roof, a wood-grain dash and 9,320 miles on the odometer, will be delivered to Gurowitz free of charge by ADESA/AFC/IAA/TradeRev. Gurowitz, Virginia’s 2015 Quality Dealer, prevailed in a spirited bidding battle with California’s 2015 Quality Dealer, Mehdi Chitgari of Classic Chariots, Vista, Calif.
SEPTEMBER/OCTOBER 2016 / DEALER INSIGHT 21
WASHINGTON UPDATE /
NIADA GOVERNMENT REPORT
>>
 HERE’S A RUNDOWN OF SOME of the latest
governmental issues and activity affecting the used car industry from NIADA lobbyist Sante Esposito of Key Advocates and NIADA senior vice president of legal and government affairs Shaun Petersen. LEGISLATIVE REPORT S.2663, Reforming CFPB Indirect Auto Financing Guidance Act The bill, which mirrors House-passed H.R. 1737, would rescind the controversial auto financing guidance action regarding dealer discretion on interest rates issued by the CFPB in March 2013 and provide a more transparent and accountable process for dealing with the issue. While H.R. 1737 passed the House by an overwhelming bipartisan vote, the Senate companion bill’s chance of being considered is considered remote at best. The bill faces opposition by Senate Democrats – particularly senators Elizabeth Warren (D-Mass.), Charles Schumer (D-N.Y.) and Richard Blumenthal (D-Conn.) – who fear it will open the door to other CFPB changes that will have the effect of “gutting” the bureau, and by the White House, which has threatened a veto. As part of a series of meetings with key legislators on July 11, NIADA legislative committee chairman Henry Mullinax, senior vice president of legal and government affairs Shaun Petersen and Key Advocates met with staff of Sen. Richard Shelby (R-Ala.), who chairs the committee that has jurisdiction over the CFPB, and requested the senator convene a meeting with the bureau and stakeholders to begin the process of resolving the issue administratively. H.R. 5485, Financial Services and General Government Appropriations Act, 2017 The fiscal year 2017 appropriations bill passed by the House in July includes provisions to curb the CFPB’s authority – among them, a provision that the CFPB would be funded through the annual congressional appropriations process rather than through transfers from the Federal Reserve as currently provided by DoddFrank in order to make the bureau more accountable. It would also require the CFPB to report quarterly to various House committees about funding, obligations made during the previous quarter and actions taken to achieve its goals, objectives and performance measures. The bill would limit the CFPB’s ability to regulate pre-dispute arbitration agreements – the bureau has already released a proposed rule restricting those agreements. And the bureau’s leadership would be changed from
a single director to a five-member board appointed by the President. Seeking support for this bill was NIADA’s primary focus issue during the July 11 meetings. In addition, NIADA’s team met with staff of Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, to support his draft bill, the Financial CHOICE Act, which includes similar reforms for the CFPB. REGULATORY REPORT Consumer Financial Protection Bureau The CFPB proposed an amendment to Regulation P to give financial institutions that meet certain conditions an exemption from the Gramm-Leach-Bliley Act requirement to deliver annual privacy notices to customers. The proposed rule says financial institutions are not required to deliver an annual privacy notice if they limit their sharing of nonpublic personal information to nonaffiliated third parties so the consumer does not have the right to opt out, and the institution’s policies and practices for disclosing nonpublic personal information have not changed from the most recent privacy notice provided to the customer. Institutions must still deliver to consumers an initial privacy notice and provide any opt-out disclosures required under the Fair Credit Reporting Act, which can generally be provided in the initial notice. Federal Trade Commission Settlement with Ohio dealer: The FTC approved a final consent order against Progressive Chevrolet Company and Progressive Motors, Inc., of Massillon, Ohio. The FTC charged the dealership deceived consumers with advertising that touted low monthly car lease payments and down payments but failed to disclose other key terms of the offers, such as credit score requirements and the fact that the payment did not include tax, title and fees. Refunds for bogus warranties: The FTC is mailing nearly 6,000 refund checks totaling more than $4 million to people allegedly tricked into paying thousands of dollars for bogus “extended auto warranties” through robocalls. The checks are part of the FTC’s efforts to collect on a $4.255 million judgment entered against Fereidoun “Fred” Khalilian and his company, The Dolce Group Worldwide, LLC. The FTC alleged the defendants, doing business as My Car Solutions, conned people by leading them to believe the company was affiliated with auto dealers and manufacturers and was offering to sell them extended auto warranties. In reality, no one received a warranty extension and people who tried to get their money back found it nearly impossible. Videos: The FTC released a series of online videos designed to help consumers through the used car buying experience, including financing, understanding add-ons and spotting deceptive car ads. Links to the videos can be found at www.ftc.gov/news-events/ press-releases/2016/07/ftc-mobile-friendly-
The FTC released a series of online videos designed to help consumers through the used car buying experience, including financing, understanding add-ons and spotting deceptive car ads.
videos-help-consumers-shop-cars. Department of Justice Used car dealer sentenced: Andysheh Ayatollahi pleaded guilty to conspiracy to commit financial fraud and filing a false tax return and was sentenced to 74 months in prison followed by four years of supervised release. According to court documents, Ayatollahi, a 50 percent owner of in the Car Store in Virginia Beach, conspired with others to defraud Navy Federal Credit Union by using individuals as straw buyers/borrowers to apply to NFCU for car loans because the actual buyers were not sufficiently creditworthy to qualify. Ayatollahi also submitted fraudulent car loan applications to NFCU with false supporting documents, made telephone calls to NFCU impersonating buyers applying for car loans, provided false employer telephone numbers to NFCU and impersonated the employer while verifying the applicant’s employment and wages, and fraudulently inflated the true purchase price of vehicles and split the excess with the buyers. In total, Ayatollahi fraudulently caused NFCU to issue 61 car loans with a total loan amount of more than $1.1 million. More than $850,000 worth of those loans went into default. Illegal repossessions: DOJ filed a lawsuit against the COPOCO Community Credit Union alleging that it violated the Servicemembers Civil Relief Act by repossessing protected servicemembers’ motor vehicles without obtaining the necessary court orders. DOJ claims COPOCO’s repossession procedures did not include any process to determine customers’ military status – such as checking the Department of Defense’s database – prior to conducting repossessions.