NM Dealer Insight by NIADA

DEALER

INSIGHT

T HE OF F ICI A L M AGA ZINE OF NE W ME X IC O INDEP ENDEN T AU T OMOBIL E DE A L ER S A S S OCI AT ION

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SEP T EMBER /OC T OBER 2018

INSIDE

EXECUTIVE DIRECTOR’S MESSAGE

WELCOME TO THE 2018 NMIADA INSIGHT CONVENTION AND EXPO ISSUE

THE OFFICIAL MAGAZINE OF NEW MEXICO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION

DEALER

05.................................................... NM Convention Schedule 06..........................Creating a Business Development Culture 08............................................................. Jose Quintero’s Flag 10................................................Saved Time Is Made Money 11......................................................................App Download 12................................................................. Financial Tune-Up 14..................................................................Member Benefits

WHAT’S NEW

National Policy Conference Dates Announced 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! Stay tuned for more details.

ADVERTISERS INDEX

Alliance Inspection ..................................................................7 AmTrust Financial .................................................................IFC Lobel Financial..........................................................................3 Manheim.................................................................................. 9 NextGear Capital .....................................................................8 vAuto .......................................................................Back Cover

OFFICE

New Mexico Independent Automobile Dealers Association 604 Chama NE • Albuquerque, NM 87108 Phone: 505.232.0809 • Fax: 505.232.0810 email:marc@nmiada.com website: www.nmiada.com

NIADA HEADQUARTERS

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. NM Dealer Insight is published bimonthly by the National Independent Automobile Dealers Association Services Corporation. 2521 Brown Blvd., Arlington, TX 76006-5203. 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 NMIADA 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 PRINTING

Join us September 27!

On September 27, NMIADA’s 2018 Convention and Expo will take place at Isleta Resort and Casino. We hope our expanded program of compliance, operations and marketing training will help you improve your business, and your bottom line. New this year will be the Dealer/Vendor Mixer sponsored by WayBeyond Rewards the night prior. It will be held September 26 at the Isleta Family Fun Connection, where we will eat, drink, bowl, and maybe even dance. It promises to be a great evening. Please join us! Thursday morning we’ll start with breakfast and a full vendor expo, followed by our annual association membership meeting. Make sure you are in your seat by 8:45 a.m. to experience Lt. General Baca’s story of Jose Quintero’s flag. You’ll be glad you did. After two continuing education sessions, we will celebrate the NMIADA scholarship winners at our annual lunch, with a surprise speaker. There will also be an auction to support our scholarship fund – you’ll want to be there to bid.

CHAIRMAN

James Santistevan Zia Auto Wholesalers LLC 4913 Menaul Blvd NE Albuquerque, NM 87110 (505) 889-9653 ziawhsl@cs.com

PRESIDENT

VICE PRESIDENT

Luis Soto Sun City Motors 8504 Central Ave SE Albuquerque, NM 87108 (505) 256-1200 suncitymotors@yahoo.com

DEALER INSIGHT

September/October 2018

Marc Powell NMIADA Executive Director

BOARD MEMBERS

Rob Martinez ABQ Auto Deals, LLC 169 Griegos NW Albuquerque, NM 87107 (505) 554-2428 rob@abqautodeals.com

Nieman Printing

In between events, please make sure to visit with our supportive sponsors and vendors. They offer a wide range of products and services to help you grow your business profitably. We are deeply grateful to our title sponsors, Cox Automotive and TexCap Financial, LLC. Thank you also to our gold sponsors – Automotive Finance Corporation and CliftonLarsonAllen accounting firm. Please support all of our sponsors and vendors! After lunch we will have our final two continuing education courses and the test required by the state of New Mexico for your certificate. Following that, we will hold the raffle for a $1,000 cash grand prize and other great prizes. Finally, we will recognize New Mexico’s Quality Dealer of the Year and celebrate with a free cocktail reception beginning at 4 p.m. inside the Expo Hall. We look forward to seeing you at Isleta September 26 and 27! Please come prepared to spend the entire day focused on improving your business. Turn off your phone if you can stand it! Thank you for the opportunity to serve, share and support New Mexico’s independent dealer community. As always, your NMIADA team stands ready to help any time. With gratitude,

www.nmiada.com

TREASURER

Aaron Flores A-Star Motors LLC 5700 Menaul Blvd NE Albuquerque, NM 87110 (505) 503-6846 aaron@astarmotors.com

EXECUTIVE DIRECTOR Marc Powell marc@nmiada.com

OPERATIONS MANAGER Victor E. Saenz 604 Chama St NE Albuquerque NM 87108 505-232-0809

DEALER BOARD MEMBERS

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 Rodger Barkoff Affordable Auto Sales 4525 Lomas Blvd NE Albuquerque, NM 87110 (505) 266-2886

ASSOCIATE BOARD

MEMBERS

Vanesa Alarid (Board Advisor) PO Box 36778 Albuquerque, NM 87176 Maxine Vega Manheim 3411 Broadway SE Albuquerque, NM 87105 (505) 242-9191

Mike Godin Godin Dealer Services PO Box 67440 Albuquerque, NM 87193 (505) 710-7295 mike@godindealerservices.com

MANAGEMENT MATTERS

| By Lawson Owen

CREATING A BUSINESS DEVELOPMENT CULTURE

Independents Hungry for Insights

I just returned from the 72nd NIADA/ NABD Convention and Expo. Proactive Dealer Solutions was an exhibitor at the event and I was honored to be a panelist for the session “Developing a Rock Solid BDC.” This was the first convention that NIADA and the National Alliance of Buy Here-Pay Here Dealers (NABD) were combined. The result was impressive. More than 2,100 total attendees filled the exhibit hall. Breakout sessions were filled with independent dealers hungry for information to improve their businesses and make or save them more money. Congratulations to the entire NIADA team! During my panel discussion, I was surprised nearly two-thirds of approximately 100 dealers indicated they had a business development center already in place. I wasn’t surprised there would be interest in why, when, and how to set up a BDC, but I was intrigued that such a large percentage had already taken the initiative to create their own. Judging by the questions they asked, it was obvious there were very different definitions of what constitutes a BDC. That was good,

DEALER INSIGHT

September/October 2018

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because our definition includes everything from a group of 5-10 representatives with a manager and a team leader to sales and/or service reps given a script on how to handle calls. Data shows consumers spend up to 14 hours engaged in online research for their next vehicle purchase. When a prospect calls your store, it’s a hot lead. They have found a vehicle in your inventory they want. Do I need a BDC in my small dealership? As an industry, auto dealerships do a highly ineffective job of handling both inbound and outbound phone calls. Nearly 20 percent of inbound calls are lost, dropped, or abandoned before the prospect ever connects with the person or department he or she wanted. It costs an average of $200 to get your phone to ring – no matter how big you are – so for every 10 inbound calls, you’ve lost $400 off the top. If the call was truly a hot lead, and it was transferred to a salesperson “away from his desk,” what was the real lost revenue – $1,200, $1,800, $2,200? What about that referral down the road? There is no real minimum size for a BDC. The average dealer can gain 15-25 additional units a month if there are enough leads for the sales team to be working. My suggestion is to start small, with just one representative, and move forward from there. In our industry we typically do a horrible job of logging traffic into the CRM. In many cases, there is no contact information taken, and the prospect is never asked to come into the dealership.

If you focus on the 90-day rolling average of your unsold traffic, you could sell 1-3 percent more units each month simply by properly logging all contacts and following up. For some, that might be 20-30 additional cars sold each month. The average dealer loses 30-45 percent of their floor traffic because it is never logged. Most dealers lose 25-30 percent of their phone traffic because it is never logged. So, yes, you need to build a business development culture at your dealership. When should I start a BDC? Size of the BDC and formalization of the department really doesn’t matter. What is most important is that everyone in the dealership, from the receptionist to the service tech, has been steeped in a business development culture. The successful BDC needs to start at the top. You need a champion at the dealership. You need someone to be a driver of that culture. You can build up to a BDC department over time. Developing a BDC culture is about the values instilled in your people. It’s about training, goal-setting and accountability. Leadership needs to drive home these messages: • How do we enhance the customer experience? • How do we increase our awareness to the opportunities we have? • How do we move and motivate the customer to want to visit the dealership?

• How do I have more consistent, effective, long-term follow up and follow through? It really starts at the top and flows down. When you start a BDC or begin building a business development culture, you will have people push and fight because there is a higher level of accountability. A lot of people do not like accountability, but accountability is nothing more than awareness. Do I need a BDC manager? If you have one, two, or three people, you probably don’t need a manager. You might be able to get away with a team leader. You may pay that person an extra $1 or $2 an hour to be the lead person to give you the information and feedback. They make sure the reports are accurate. Once you get above three people, you really need a manager – someone who is going to drive and monitor the behaviors of that department. It comes down to activity and behavior management. The numbers will take care of themselves if we have the right activity and behaviors in place. Technology has given us tools to more accurately monitor calls, avoid lost calls, and quickly rectify mistakes when they occur. We can also provide the additional training for the BDC and/or sales rep. By the way, everything that works here for sales works with dealers who have their own customer-pay service department.

Does a BDC work with my BHPH business? Two of the other panelists – Mike Brill of B&B Automotive in Croydon, Pa. and Gus Camacho of Camacho Auto Sales, in Lancaster, Calif. – are two of the largest and most successful Buy HerePay Here operators in the country. Both implemented a BDC years ago and are still successfully using the program today. BHPH dealers still have unsold traffic and need to log in floor, phone, and Internet traffic, consistently and effectively. BHPH dealers also need to have a 90-120 follow up process that is rigorous. After that, you should be touching your customers – sold or unsold – 3-4 times a year to maintain the relationship and build rapport. Yes, you talk to most of your customers regularly through your collections department, but you still need to have the sales and service side of the dealership maintain a relationship with them. You want referrals. You want to know their situation. You want to know if they’re ready for a new or different vehicle. The only difference for a BHPH dealer would be different scripting. Lawson Owen is the founder and CEO of Proactive Dealer Solutions, based in Charlotte, N.C. The international firm has worked with more than 3,000 automotive retailers across North America and is credited with developing the BDC concept for retailers more than 25 years ago.

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September/October 2018

DEALER INSIGHT

INDUSTRY NEWS

LT. GENERAL ED BACA PRESENTS JOSE QUINTERO’S FLAG

Inspirational Story to Kick Off NMIADA Convention

For almost three decades, retired Lt. General Ed Baca has been the custodian of a very special handmade United States of America flag, created during WWII by a New Mexico soldier while a prisoner of war. General Baca has told the story of this flag and its creator in every state and territory of the U.S., sharing the strength, character and incredible patriotism that ultimately saved hundreds of lives. On September 27, General Baca will kick off the New Mexico Independent Automobile Dealers Association annual convention and expo by sharing this inspirational story. Jose Quintero, also known as Joe or Don Jose, was born in Texas to firstgeneration immigrants from Mexico, and moved to New Mexico as a child. As WWII raged in Europe, Quintero joined the New Mexico National Guard and was assigned to the 60th Coastal Army stationed on Corregidor in the Philippines. On December 8, 1941, the Japanese brutally attacked. For over five months, Jose and his unit fought until they were out of food, ammunition and weapons – finally surrendering to the overwhelming Japanese force. Corporal Quintero and those left in his unit were subjected to four years of pure hell by the Japanese. Their torture included being forced to march almost

DEALER INSIGHT

September/October 2018

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70 miles without food or water on the infamous Bataan Death March, during which hundreds of American prisoners and thousands of Filipino soldiers died. After surviving the march, Quintero nearly died on a ship headed for Japan when an emergency appendectomy performed by a fellow prisoner with a razor blade and spoons led to a massive infection. While recuperating, Jose began to ruminate on the meaning of the flag and being an American. Jose conspired with a Canadian double-amputee to create an American flag out of bed sheets, a red blanket and dungarees. Knowing discovery would mean tortuous death for himself and his unit, Jose worked under the cover of darkness for almost a year to complete the flag. He purposely mounted it on a bamboo prodding stick his captors used to beat prisoners. Jose later said he wanted to honor his fallen brothers and show the emperor of Japan that while his body was captive, his spirit was not. One day Jose heard bombers approaching the POW camp. He knew it must be Americans, and Jose unearthed the flag from its hiding place. He ran into the middle of the camp waving the flag wildly. The bomber, seeing the flag, waggled his wings and called off the bombing run, saving the lives of the prisoners and guards. In 1991, Lt. General Baca, then the adjutant general of the New Mexico National Guard, presented Jose with the New Mexico Medal of Honor. Corporal Quintero had a surprise in store. He presented the flag to General Baca and asked him to tell the story of this simple yet powerful homemade flag. The flag is ultimately destined for the Smithsonian Institute, where the story of Jose Quintero’s flag will be permanently told.

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 INSIGHT

September/October 2018

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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.

www.nmiada.com

September/October 2018

DEALER INSIGHT

MANAGEMENT MATTERS

By Victor Kraft

FINANCIAL TUNE-UP

Give Your Dealership a Competitive Edge

The business of buying and selling vehicles continues to transform. Dealerships face challenges related to operations, the industry’s regulatory environment, and buyer financing. However, taking advantage of tax reform, getting your financial reporting in shape, understanding the true cost of inventory, and broadening customer financing options can help keep your dealership in fine tune and give you a competitive edge. Get familiar with the impacts of tax reform on dealerships and their owners. The Tax Cuts and Jobs Act has major implications for dealers. Chief among them is the deductibility of interest expenses. The good news is floor plan interest is still deductible in full. For dealers with less than $25 million in gross receipts, non-floor plan interest is limited to 30 percent of net income before interest and depreciation. The limitation has a higher chance of applicability when profitability is low and there are large amounts of non-floor plan interest expense (e.g., lines of credit, bank notes, and mortgages). Dealership business losses can no longer be carried back to prior tax years to claim refunds. This will likely affect dealers who have alternating years of profits and losses. The maximum C corporate tax rate is now 21 percent. Pass-through entities, such as S

DEALER INSIGHT

September/October 2018

corporations and partnerships, are eligible for a 20 percent deduction of qualifying income. In some cases, restructuring the entity type may reduce dealership tax liability. Understand the importance of timely and accurate financial reporting. The need for timely and accurate financial reporting is crucial for all dealerships. Dealerships may have cash in the bank, but if future obligations, payables, and bills have not been recorded, a dealer is exposed to cash flow issues and may be hampered in its ability to secure lending. A good rule of thumb is to have monthly financials closed within 10-15 days after the end of the month. Many small dealerships use the cash method of accounting. There are inherent limitations of this accounting method as sales and expenses are only recorded when cash is received or paid by the dealership. Long term obligations, bills received but not paid, and the value of inventory may not be accurately captured under cash accounting. Consider using the accrual method of accounting, as it paints a clearer picture of the status of the dealership and is the preferred method of banks and lenders. Know your inventory. Do you know the true cost of each vehicle on your lot? Vehicle costs include the acquisition cost, floor plan interest and fees, and reconditioning costs. We recommend analyzing the dealership’s overhead costs (building/lot rent, administrative salaries, etc.) and applying a standard pack to each vehicle. Knowing the true cost can help dealers make better decisions when negotiating deals with customers.

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Having the right product mix is crucial for dealerships and should be tailored for the market and desired customer. Performing a two- to three-year sales analysis of vehicles by make, model, and type can shed light on which are losers and winners. Diversify product offerings. Increases to the cost of vehicles continue to exceed wages of consumers, which has put pressure on selling prices and hampered margins. Consumers are reliant on vehicle financing, which presents dealerships opportunities to offer a variety of financial products associated with financing. GAP (guaranteed asset protection) insurance, extended warranties, and voluntary debt cancellation coverage provide risk coverage to customers while providing backend revenue to dealerships. Victor Kraft is a senior associate in CLA’s dealership practice. Find out more at CLAconnect.com/dealerships.

The NMIADA offers education, services, and support to its members. This includes PLE, Continuing Education compliance training and support, client conflict resolution, academic scholarships for membersâ&#x20AC;&#x2122;, children and grandchildren, NMAG 6% inspections, vehicle title and registrations services; state approved forms and dealership merchandise; and lobbying in Santa Fe & Washington D.C.

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Joining is Easy!

Go to www.NMIADA.com Call Adelina at 505-300-7731 or email her at adelina@nmiada.com 14

DEALER INSIGHT

September/October 2018

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DEALER INSIGHT

September/October 2018

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September/October 2018

DEALER INSIGHT