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APRIL/MAY 2011

NORTHLAND DEALERS

N O R T H L A N D

I N D E P E N D E N T

A U T O M O B I L E

D E A L E R S

MOBILE COMMERCE TAKES CENTER STAGE ALSO The Art and Science of Used Auto Inventory PLUS Compliance Overdrive

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."(";*/&CONTEN ."(";*/&CONTENTS 4 Mobile Commerce Takes Center Stage The Art and Science of Used Auto Inventory 14 Compliance Overdrive

NIADA/Manheim Community Service Award

Used Auto Prices Reduced After 30 Days More than 50 percent of used vehicles listed for more than 30 days have at least one price drop, according to a study released in late February by leading online automotive community CarGurus.com.

Think about the top concerns your customers have when shopping for a used car: previous damage, maintenance, ownership history, and of course, price. Tools like Carfax Vehicle History Reports are readily-available through various mobile devices to verify this important information

Manheim, the worldâ&#x20AC;&#x2122;s largest provider of vehicle remarketing services, cares about its employees, the environment and the communities it serves.

Product Discounts for NIADA Members

From fundraising drives and tutoring kids after school to supporting long-term conservation efforts, Manheim and its employees are dedicated to giving back to their communities and know independent vehicle dealerships across the country share in this commitment. For the first time this year, Manheim is recognizing and honoring those dealerships by awarding the 2011 National Manheim Community Service Award at the 65th NIADA Annual Convention and Expo. For more information, contact Georgia Brown, NIADA director of education, at 817-640-3838 or download the nomination form at niada.com (click on the Manheim Dealers Edge link under the Services tab).

NIADA members can save up to 29 percent on select FedExÂŽ shipping services. For more information or to enroll in this program, visit www.1800members.com/ niada or call 800-636-2377 (8 a.m.â&#x20AC;&#x201C;6 p.m. Eastern, Mon.-Fri.). Renting a car just became easier and economical with the new Thrifty Car Rental Discount Program for NIADA members. Visit www.thrifty.com/?iata=00227148 &PromotionCode=NIADA to receive a 5 percent discount off Thriftyâ&#x20AC;&#x2122;s already low rates anywhere or any size vehicle in the U.S. A 24-hour advance reservation is required and reservations can only be made through this URL or via the link on the NIADA website. Offer is valid for travel until Dec. 31, 2011. AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States with over 4,350 stores across 48 states, the District of Columbia and Puerto Rico. NIADA members have access to AutoZoneâ&#x20AC;&#x2122;s â&#x20AC;&#x153;hot-shotâ&#x20AC;? delivery program including discounts on more than 750,000 product level SKUs in over 70 distinct product categories. For more information, view www.niada.com/dealers_edge.php

ADVERTISERSINDEX ADESA ................................................................ 9 AutoTrader.com ......................................Back Cover Manheim.com ............................ Inside Front Cover Manheim Minneapolis ......................................... 5 NIADA Convention ........................................... 13 SmartAuction ............................... Inside Back Cover Western General / Protective ................................ 7

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION 888 /*"%" $0. t 888 /*"%" 57 NIADA HEADQUARTERS: #308/ #-7% t "3-*/(50/ 59 1)0/& '03 "%7&35*4*/( */'03."5*0/ $0/5"$5 530: (3"'' 03 530:!/*"%" $0.

THE NORTHLAND DEALERS IS PUBLISHED BI-MONTHLY BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE 817-640-3838. PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., ARLINGTON, TX 760065203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF NORTHLAND DEALERS OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF NORTHLAND IADA OR NIADA, DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT ÂŠ 2011 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED. 45"5& ."(";*/& .(3 4"-&4 Mkhr @kZ__ mkhr9gbZ]Z'\hf FRONT COVER BY Fbd^ Fhk`Zg EDITOR Fbd^ AZk[hnk faZk[hnk9gbZ]Z'\hf 130%6$5*0/ .(3 CZ\h[ D^kgl cZ\h[9gbZ]Z'\hf "35 130%6$5*0/ .(3 <akblmr AZrg^l \akblmr9gbZ]Z'\hf 13*/5*/( Gb^fZg Ikbgmbg`

FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT ALLEN LENTSCH KEYS@NORTHLANDDEALERS.COM (800) 879-3433

and bid with confidence. Having your mobile device handy helps you tie it all together quickly and successfully acquire the right cars for your lot. Todayâ&#x20AC;&#x2122;s mobile devices provide access to information that brings transparency and process effi ciency to dealers. The possibilities mobile is opening up for our industry are truly extraordinary â&#x20AC;&#x201C; and in the current economic climate, leveraging new and userfriendly technology is key to moving more cars and saving money in the process.

IRS Offers Helpful Auto Dealer Tax Tips Confused about what the Internal 31 of the year following the calendar year in Revenue Service requires from dealers at which the cash is received and a copy of this tax time? statement kept for your records.

Donâ&#x20AC;&#x2122;t worry, as the IRS has an entire section of its website dedicated to automotive businesses. Weâ&#x20AC;&#x2122;ve included a few tips here. As most dealers already know, the IRS requires each person engaged in a trade or business who, in the course of conducting that trade or business, receives more than $10,000 in cash in one transaction or in two or more related transactions must file a Form 8300. The agency recommends filers should keep a copy of each Form 8300 for five years from the filing date. Form 8300s should be filed by the 15th day after the date the cash was received. The form should be filed on the next business day if that date falls on a Saturday, Sunday or legal holiday. The filer must give a written statement to each person named on a required Form 8300 on or before January

Changing your accounting method? That generally requires IRS approval. To get approval, you must file Form 3115, Application for Change in Accounting Method. A change in your accounting method includes a change not only in your overall system of accounting but also in the treatment of any material item. If you finance the purchase of your property, instead of having the buyer get a loan or mortgage from a third party, you probably have an installment sale. It is not an installment sale if the buyer borrows the money from a third party and then pays you the total selling price. FO R MO RE I N FO RMATI O N, VISIT WWW. I RS.GOV/BUSI N ESSES/SMALL/I N DUSTRI ES/ ARTI CLE/0,, I D =98978,0 0.HTM L . 3

w w w. n o r t h l a n d d e a l e r s . c o m

APRIL/MAY 2011

NORTHLAND

DEALERS

MOBILE COMMERCE

WITH CONSUMERS LOOKING FOR VEHICLES, PARTS AND ACCES SORIES This past holiday season, surveys and statistics showed what many analysts and industry observers were thinking: mobile commerce is growing by leaps and bounds, and every industry is in on the trend, including automotive.

In 2011, smartphones are forecasted to account for half of the mobile phone market, according to The Nielsen Co. On top of that, an ABI Research report says mobile online shopping will generate $119 billion in sales by 2015, accounting for 8 percent of the e-commerce market. When car dealers make it easy for their business to be found through a mobile web browser, loyalty campaigns, marketing initiatives, text promotions and sales can attract and retain customers. What are consumers browsing with their smart phones? The same types of items they started browsing on computers: researching purchase decisions, cost comparisons and finding the location of physical items. Recently, eBay reported a substantial increase in mobile traffic, where sales more than tripled in 2010 to near $2 billion in gross merchandise volume. Last year, vehicle purchases led all categories on eBay mobile applications in terms of GMV, while parts and accessories were number two in terms of the total number of items purchased. Dealers know when they have a physical lot, customers still come to kick the tires when the sales office is closed. Now, today’s consumer might still come to the lot, but he or she will also pull out a smart phone, check the hours of the dealership and research the same make and model for competitive pricing. The same thing is happening even if the consumer doesn’t drive to a physical lot. A consumer may be in his garage working on a car and need to find a part or accessory. Instead of going inside and turning on the computer, he’s browsing his smart phone to find the part, price and local availability. Just as e-commerce has completely changed the way we do business, wireless devices and smartphones are again altering what we know about consumers’ purchasing behaviors. Seeing similarities in mobile commerce and e-commerce, auto dealers ask themselves a familiar question:

would anyone really buy a car from their smart phone? In 2010, more than $118 million in car and truck purchases were made via the eBay mobile application – more than 12,600 vehicles were sold. Parts were the second biggest category in mobile last year, with more than 911,722 parts purchased, and more than $60 million in sales. For independent dealers, mobile applications and mobile commerce are the must-have digital tools of 2011. With smartphones capable of surfing, downloading apps and co nnecting with coworkers and friends in an instant, researching and shopping for vehicles, parts and services is a natural extension. For example, a business traveler waiting at an airport may use that downtime to look for a needed part for his car or browse available vehicles for a new truck. If an independent dealer’s inventory is not readily available on a mobile app, chances are there’s an entire customer segment that may not see what’s for sale. A recent ForeSee Results survey found 30 percent of consumers used a mobile phone to research products on the Internet, compared with 11 percent in 2009. Those making a purchase through a mobile phoWWne increased from 2 percent in 2009 to 11 percent in 2010. For example, Tilo Steurer, founder and owner of Eurocar, the West Coast’s largest independent dealership of its kind, sells and buys vehicles and regularly uses eBay’s mobile app to buy cars, parts and accessories. “I purchase anywhere from five to 10 cars every month, most of the time through the eBay mobile app,” Steurer said. He also uses the eBay mobile app to keep track of his business while not in the office. With any form of sales – online, mobile or in-store – customers consider the credibility of the seller and business before making a purchase. Building that credibility takes consistent communication, which is made easier when dealers can keep in touch through mobile and online sources. “Communication is very important, especially when making an expensive online purchase such as a luxury car,” Steurer said. “With the eBay mobile app, I can re-

spond more quickly to customer questions, which builds credibility and increases the opportunity for a sale.” To accommodate this growing trend, eBay Motors is launching a mobile app that will provide a customizable buying experience optimized for vehicles, parts and accessories, as well as unique social and community features for the enthusiast.

FOR DEALERS, HAVING PARTS, ACCESSORIES AND VEHICLES AT A CONSUMER’S FINGERTIPS IS AN IDEAL WAY TO EXTEND MARKETING AND SALES WITHOUT A LOT OF DEVELOPMENT AND TECHNICAL EFFORT. Features include VIN scanning and a virtual garage to give enthusiasts personalized information. After searching for a vehicle, users can share it with friends and social networks or ask the seller a question. Users can create “car cards” for their vehicles which display photos and stats about the vehicle and can be used in searches for parts and accessories. On the garage tab, consumers can input and store the vehicles they own or scan the VIN barcode with the iPhone’s camera to populate information. In the garage, car owners can create to-do list for vehicle projects, store custom parts searches and share the garage with their social network. For dealers, having parts, accessories and vehicles at a consumer’s fingertips is an ideal way to extend marketing and sales without a lot of development and technical effort. Mobile commerce is still in its infancy but is growing at a faster pace than e-commerce. With the Internet available wherever consumers are with their smart phones, it’s only a matter of time before mobile commerce becomes a dominant form of purchasing. Because of the similarities to e-commerce, consumers are quickly adopting m-commerce and expecting businesses to be on board.

BY CLAYTO N STAN FI ELD, EBAY MOTO RS 4

NORTHLAND

DEALERS

APRIL/MAY 2011

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THE ART AND SCIENCE OF USED AUTO INVENTORY Building a profitable used auto inventory requires having the right information and the talent to know how to use it. Over the years, I’ve been blessed with tremendous mentors who have provided me with valuable insights, one of which is managing a used vehicle department is both a science and an art. While there are no

cookie-cutter solutions applicable to every scenario, there are tried and true blocking and tackling strategies that can help any department maximize results. When it comes to proper inventory mix, there are several ways a dealership can study information to improve volume,

USED CAR MANAGERS SHOULD BE AWARE, AT THE VERY LEAST, OF THE TOP-SELLING VEHICLES IN THEIR MARKET BY MAKE, MODEL, AND YEAR AS WELL AS THE TOP-SELLING VEHICLES AT THEIR STORE gross and ROI. However, before the information can be broken down, the store must have the information. While this may seem obvious to some, I am routinely presented with departments that fail to accomplish this seemingly simple task. Used car managers should be aware, at the very least, of the top-selling vehicles in their market by make, model, and year as well as the top-selling vehicles at their store. All too often when I ask used auto managers to name the three top-selling used vehicles in their markets, they look at me like a deer in headlights. Or, they automatically respond “Honda Accord” or “Toyota Camry.” That’s great! What year? What trim level? What mileage band? How

many of these have been sold at your store in the last 90 days? What was the average age when it was sold? There are several tools available to help managers accumulate this data, such as Auto Exchange for internal data and Cross Sell for external data. Once this data is collected, it is imperative management consistently identify which vehicles sell in their market (internal and external). That’s the science part of the equation; it’s not especially difficult to identify commodity type vehicles and, if you’re willing to travel or pay, to procure them. Further breakdown of historical internal and external trends is, however, necessary. Specifically, it would be beneficial to track sales volume, aging, and gross profit for specific COS bands. These could be broken down as follows:

$0 – $5000 $5,001 – $10,000 $10,001 – $12,500 $12,501 – $15,000 $15,000-plus The used auto dealer should be aware of and actively track each of the above categories for each price band in used cars, trucks, SUVs, and vans, comparing the current stocking mix to what has yielded the greatest success. The categories can be broken down further into import/domestic categories as well, if needed. This information, coupled with knowledge from external tools, is used to direct buying specific inventory at specific price points to generate specific results. The art of used vehicle inventory comes from identifying and procuring vehicles that put your store ahead of the curve. For example, a few years back fuel prices spiked and, as a result, highly economic, smaller pre-owned vehicles were suddenly at a premium, while large pickups and SUVs could be bought for a dime a dozen. The market was quickly flooded with these gas guzzlers, but few people had the vision or foresight to accumulate them. Those who did were those who had the knowledge and experience to understand the

ebb and flow of the used car market, so they loaded up on these vehicles at very cheap prices. It’s not difficult to guess what happened to their profits when the price of fuel went back down. Recognition of these opportunities is not always easy; often it comes from experience. I believe we are involved in one as I type this column. Thanks to the Cash for Clunkers program, new car inventories are generally low; there are fewer trades in most used inventories and the price of vehicles at auction has gotten higher. While this could mean several different things depending on your market, I would think the potential for increased gross profit, even on vehicles more traditionally thought of as commodity cars, is greater than ever. Hopefully, you’re tracking the trade capture rate. A normal benchmark for capturing trades is 55 percent of appraisals. Because of today’s market conditions, I would encourage all managers to aggressively get involved with customers and inquire about their desire to trade their vehicle, as well as ensure your store is appraising every vehicle possible. Further, I believe it’s imperative to improve the appraisal capture rate by 10 percent or more. Used autos are at a premium and the extra money put into a trade has never been a better investment. This type of forward thinking involves risk some dealers simply may not be willing to accept. Those who do so are more frequently ahead of the used vehicle game. The science of used inventory can be resolved by accumulating information, breaking it down (all the way to COS bands, if you really want to be detailed) and buying and trading aggressively according to trends. The art requires experience and guts. BY BI LL MOKRY

Bill Mokry is a sales and F&I specialist for Service Group, an insurance and financial services company that provides income development training and servicing solutions to auto dealerships. His many years of dealership experience include several as general manager of a successful used car operation. He can be reached at bmokry@sgifs.com.

NORTHLAND

DEALERS

APRIL/MAY 2011

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FEBRUARY 2011

FEDERAL ADVOCATES LOBBYING REPORT As part of the review, GAO is speaking with all of the stakeholders in the process such as dealerships and dealership representatives. 12th Congress Issues On Feb. 3, Federal Advocates met with NADA to discuss upcoming issues for the 112th Congress and various pending matters. As we jointly see it, the issues for Congress are fuel economy and green gas within the context of energy legislation, the Consumer Financial Protection Bureau and its mandates, the Toyota Safety Bill (which we both believe is dead), possible Congressional oversight that may impact the industry and the National Highway Traffic Safety Administration reauthorization effort (a priority of Sen. Jay Rockefeller, D-WV, who’s chairman of the Senate Commerce Committee). Harrington also mentioned a General Accounting Office study (see separate heading) which Rep. Ed Towns, D-NY, and chairman of the 111th Congress House Governmental Affairs Committee, requested on section 310 of the Senate Toyota bill. It would’ve required dealers to provide info to buyers on a vehicle’s history. Lastly, we both agreed it’s important to continue monitoring relevant activity of the FTC. Consumer Financial Protection Bureau Meetings On March 4, NIADA General Counsel Keith Whann and Federal Advocates will be meeting with Holly Petraeus, director of the Consumer Financial Protection Bureau’s Office of Service Member Affairs, to introduce NIADA and to discuss various auto industry issues related to the newlycreated CFPB. In addition, a meeting request is pending with Richard Cordray, CFPB general counsel, to discuss various consumer auto issues and the soon-to-be appointed Consumer Advisory Board.

SBA Floorplan Financing Program The federal government relaunched its suspended floorplan financing program for small dealerships, this time with loan limits of $5 million rather than $2 million. The Small Business Administration’s new rules, which addressed nuts-and-bolts questions of how the financing will work, were published online in the Federal Register on Feb. 8. The Obama administration began a pilot floorplan program in May 2009 during the depths of the recession, but it never got off the ground because of banks’ reluctance to extend credit. A law enacted in September 2010 increased the loan limits and in October, the SBA adopted a rule expanding eligibility for the program to the majority of dealerships. The SBA also suspended the program in October and has been working since with lenders in an attempt to increase their participation. The pilot program will continue through September 2013. To address various issues related to the program, a conference call was held with Whann, and the SBA’s Steven Smits, associate administrator, and Patrick Kelley, senior advisor, Office of Capital Access.

Department of Defense Pam McClelland, a DOD senior program analyst, has taken over for Dave Julian and Frank Emery in the Office of Military Community and Family Planning in the Office of the Deputy Undersecretary of Defense. Per a conversation with her on Feb. 15, NIADA will send information to her, at her request, on how the association can assist service members in purchasing pre-owned vehicles. Pending her review, a meeting or conference call will be scheduled with Whann.

GAO Study The GAO review was requested by Rep. Towns earlier last year that focused on the auto safety recall process. As part of the review, GAO is speaking with all of the stakeholders in the process such as dealerships and dealership representatives. GAO’s audit work is nearing its completion and GAO is due to issue the report on June 15. Pending that, Jim Leonard, an analyst with the GAO’s Physical Infrastructure Team, has discussed with NIADA its views on the issue and the role of pre-owned vehicle dealerships. NIADA’s Mike Linn and Whann discussed this issue with Jim Leonard and other analysts of the GAO earlier this month. White House Meeting Scheduled A March 4 meeting with Steve Croley, special assistant to the President for Justice and Regulatory Policy in the Office of Domestic Policy, has been scheduled to introduce the association to the administration and to provide a briefing on its views on auto consumer issues. FEDERAL ADVOCATES is NIADA’s governmental advocacy partner. To read past lobbying reports, visit www.niada.com/legislative_and_legal.php

NORTHLAND

DEALERS

APRIL/MAY 2011

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ONLINE SALE S SUCCE S S: LET YOUR LISTINGS DO THE TALKING Top dealers consistently get more leads because they pay attention to how their car listings appeal to online consumers. Almost anyone can start selling cars using the Internet today, but those who are most successful give buyers the right information during the shopping process. Sellers like you can break through

the clutter of online used car sales by giving consumers photos, compelling descriptions and vehicle history they want to see while they shop. If you’re not already online, you need to be. The best way to increase used car sales is to be where the most people shop. Eighty percent of consumers today use the Internet to help find their next car. Once your business is established online, you’ve got to make buyers take notice of your online listings. This is vital to online selling success. Consumers visit less than two dealerships on average before deciding to buy. Why so few? Most shoppers narrow their dealer choices down by doing extensive research online – listings, pricing, customer reviews, etc. In fact, when consumers finally do visit a dealership, they have specific cars and prices already in mind and are armed with details about each car. Typically, shoppers start by visiting thirdparty online automalls like AutoTrader.com and Cars.com. A quick search can return hundreds of dealer listings for vehicles similar in style and price. Internet managers and used car dealers with online inventory know the top concern is getting buyers to notice their cars and contact them. Since you can’t sell online shoppers face-to-face, you have to rely on your listings to do the talking. So how do you make them stand out from the rest? Focus your marketing efforts on two lead-generating areas that attract the most attention: Search Results Pages (SRPs) and Vehicle Details Pages (VDPs). Did you know only 4% of online shoppers that see your listing in their search results actually click through to the detail page for your contact information? For all the money you spend to post your cars for sale online, it’s in your best interest to highlight your inventory properly. The SRPs and VDPs are the most prominent places to communicate the value of your used car inventory online. When a

shopper clicks on an SRP listing, they go to the VDP to browse additional photos, read about features, see the vehicle history and locate the seller. The key is getting more shoppers to notice and click your SRP listings so you generate more leads from your VDPs. The vehicle description you provide on SRPs is your first opportunity to tell consumers what they should know. SRPs give you a limited amount of space to market your vehicles, so use that space wisely. Be brief but informative. A vehicle description should not be exclusively technical. Remember, shoppers don’t know as much about cars as you do and detailed features may not mean as much. Things like automatic transmission, power windows and air conditioning, which are standard on most vehicles, shouldn’t be the focus of your selling points. You don’t want potential customers glancing past your listings because they didn’t peak their interest. Generally, your listings also include a small photo when they appear on typical SRPs. It might sound obvious to seasoned sellers, but photos are one of the best ways to grab attention of shoppers during their online used car search. Use the best fulllength photo for the small ‘thumbnail’ image on your SRPs and save detailed images of the interior and other angles for consumers to browse while on the VDP. There are several quick improvements that can make your listings more attractive to online shoppers. One is to use relevant information to attract attention. The more details you can provide the better your listings look. For example, it’s easy to find hundreds of ‘2005 Ford Explorers’ with the same trim package for sale online, so make sure you tell potential customers why they should buy yours. Try to describe the car’s benefits unique to a specific customer – as if they were standing in front of you. For example, you might say, “this van comfortably fits up to eight people” or, “we offer low financing on all our cars” or, “this car shows no reported recalls and comes with a Carfax Vehicle History Report” in the vehicle descriptions on your SRPs.

SO HOW DO YOU MAKE THEM STAND OUT FROM THE REST? FOCUS YOUR MARKETING EFFORTS ON TWO LEAD-GENERATING AREAS THAT ATTRACT THE MOST ATTENTION: SEARCH RESULTS PAGES (SRPS) AND VEHICLE DETAILS PAGES (VDPS). To connect with more online shoppers, you need to think like one. You can compete online and sell cars faster by giving buyers relevant information to help them make an educated decision. Another great way to build confidence with online consumers, in addition to providing a good photo and description, is to link your Carfax Reports to your SRP and VDP listings. You’ll stand out on SRPs by offering these reports free. Plus, being open and up-front builds trust with online shoppers, making them more likely to buy from you. Top dealers consistently get more leads because they pay attention to how their car listings appeal to online consumers. Build consumer confidence by providing trusted information in your listings. Make your SRPs stand out in the crowded online marketplace and more shoppers will click through to your VDPs. More clicks equals more leads and ultimately, more sales. BY DALE PO LLAK AN D LAN CE VICKERY Dale Pollak, founder of vAuto, is a highly sought-after authority on maximizing profits from used vehicle operations, working extensively with Dealer 20 Groups, Dealer Associations and large dealer enterprises across the country. In addition to his regular contributions to auto industry publications like Dealer Magazine, Pollak is a published author of 2 books, Velocity: From the Front Line to the Bottom Line and Velocity 2.0: Paint, Pixels and Profitability. Lance Vickery is director of dealer business at Carfax and has spent more than 25 years in the auto industry.

NORTHLAND

DEALERS

APRIL/MAY 2011

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MAKING SOCIAL MEDIA Work for Your Dealership Social media continues to be a white-hot subject. It’s fueled in no small part by the top players in the field that are beginning to look more like financially viable businesses.

Twitter is predicting $150 million in revenue this year. Foursquare has six million users and its co-founder would have you believe it’s worth $250 million. Facebook banked an astonishing $1.86 billion in revenue in 2010 and some analysts value the company at $50 billion. That’s not bad for a set of businesses the oldest of which hasn’t seen a seventh birthday. Social network users are engaged on an hourly basis sharing family pictures, relationship status, resumes, and opinions on every subject imaginable. A growing number of consumers have both personal and professional profiles and an overwhelming 93 percent of those active in social media expect businesses to have a social media presence. Many independent dealers know this is a powerful and influential space, but only a minority are clear about how to manage their presence and what, if any, ROI can be derived from a commercial online presence. It’s important to remember the five laws of social media.

BY DO NALD FOY

Content is king

Listen and respond

Those interested in your social media presence have an expectation you’ll deliver information they can use. Customers see the dealer as an authority on automobiles. They look to dealerships for information that will guide them through a sea of choices to the car best suited for them. Dealers delivering online content on things such as vehicle reliability, overall satisfaction and trends are far more likely to have shoppers visit their store.

This one seems easy, as most businesspeople think they do this all the time. The challenge here comes when a complaint or perceived slight is posted in an open forum. The first reaction for most is to be defensive or, at least, to explain a gripe away. That has proved to be discrediting and incites the audience to defend their position. The proven, successful response is to fully recognize an unhappy comment and ask how to make it right. Customers who complain about an issue aren’t trying to hurt the business; they themselves are hurt. These people were expecting a successful experience and are letting management and the world know they didn’t have one. Forget the problem and get them to the solution. Credibility will skyrocket.

Don’t spam Social media sites are not substitutes for radio, TV or newspaper advertising. Community members aren’t interested in sale specials, inventory, financing or information if those things aren’t catered to their specific needs. This does not mean dealers shouldn’t post inventory for customers to see; what it does mean is dealers shouldn’t blast fans with service deals and lowered prices. In social media, a business or a friend can be banished with one click.

DONALD FOY is the executive director of Manheim’s DRIVE Center. In that role, he oversees innovation research, discussion and testing for Manheim. Contact him at donald.foy@manheim.com and visit his blog www.matters2me.com.

It is social This means that all social media interaction is about a conversation between at least two people. Many dealerships make the mistake of operating in a broadcast mode, blasting out information about sales, products, and business offerings. In the social space, this is unwanted noise. The magic happens when the employees of the dealership, customers, potential buyers, and brand enthusiasts all build an organic discussion around individual objectives. Dealers want to sell cars. Consumers want to get to and from work reliably, express their style, and get a good deal. One dealership in the Southwest offers a regular schedule of updates that includes maintenance and performance tips updated by its chief mechanic, as well as the latest information available about vehicle reliability. Site guests believe the dealership isn’t just trying to sell them just any car, but a car they can rely on.

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It is personal The most effective social online presence comes with a face and a personality. The important thing for dealers to know is a real human advocate creates credibility with customers. The communication style should be personal, too. Dealers know their markets and their customers. Great online community mangers talk to guests as if they were standing on the showroom floor. Top social marketers have potential customers arrive at the dealership shaking hands and saying how good it is to finally meet.

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Phone: 800-879-3433 Website: www.northlanddealers.com Fax: 952-894-8990 E-Mail: keys@northlanddealers.com

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GOING MOBILE IN YOUR DEALERSHIP One of the new keys to the success of your business is your smart phone. You can operate your dealership on-the-go, making fast, informed

SPRING

INTO ACTION NOW VIEW OVER 450 HOURS OF DE ALER EDUC ATION SES SIONS A S WELL A S OTHER SPECIAL TR AINING SEMINARS AND MONTHLY DE ALER TIP S 24/7 AT W W W.NIADA.T V

decisions that will ultimately improve your bottom line. More than 440,000 mobile sites and over 500,000 mobile apps exist today, including a growing number of auto-industry related apps. It may seem daunting to integrate this emerging technology into your business, but these tools are a must-have for both acquisition and retail. V What

are ‘mobile apps’ and how do they help dealers?

An app is a software application that helps people accomplish tasks faster. Among other things, an app can use the hard drive of the mobile device to store data for faster recall and operation, perform calculations, access hardware features such as camera and GPS – and all without an Internet connection. At its core, the Internet revolution was about how technology harnessed the power of information to generate efficiencies, and this is exactly the opportunity mobile apps offer to dealerships today – providing information on-the-go and tying it all together to take action. V How

can mobile apps streamline your business?

Mobile browser-based tools provide dealerships with more on-the-go visibility but lack a built-in ability to act in real-time on information organically across the dealership. But, just as a mobile app enables onthe-go stock trading, for example, an app such as eCarList’s ‘True Target Mobile’ allows dealerships to take a massive dataset and a complex, multi-step, -vendor and -personnel process and make it all work from a single handheld device. The ‘True Target Mobile’ app gives dealerships mobile access to pricing data from multiple books, current data from top online marketplaces and the ability to filter, organize and view the data geographically for territory (including vehicle pricing from competitive dealerships). Other functions include VIN scans, taking/adding/removing photos, integrating Carfax Vehicle History Reports and sharing appraisals and pricinsg with other mobile devices. Are there other benefits to going mobile? On the acquisition side, smart phones provide access to information you need to stock your lot with cars that customers want. It’s no secret that the used car supply is decreasing due to rising demand, so the competition for quality units is getting tighter. Think about the top concerns your customers have when shopping for a used car: previous damage, maintenance, ownership history, and of course, price. Tools like Carfax Vehicle History Reports are readilyavailable through various mobile devices to verify this important information and bid with confidence. Having your mobile device handy helps you tie it all together quickly and successfully acquire the right cars for your lot. Today’s mobile devices provide access to information that brings transparency and process effi ciency to dealers. The possibilities mobile is opening up for our industry are truly extraordinary – and in the current economic climate, leveraging new and user-friendly technology is key to moving more cars and saving money in the process. BY LEN CRITCH ER AN D LANCE VICKERY

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Len Critcher is CEO of eCarList, provider of award-winning inventory management and online marketing solutions that make it easy for dealerships to fully own and control the vehicle merchandising process through one unified platform. Lance Vickery is director of dealer business at Carfax and has spent more than 25 years in the auto industry.

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Sorting Through Exceptions to the Risk-Based Pricing Notice The FTC’s risk-based pricing notice requirements became effective Jan. 1. To comply with these requirements, dealers

must alert consumers when they are getting different credit terms than others based on credit information. The good news is the requirements give options for how and when you provide the notice. That’s also the bad news because the options and exceptions can make it difficult to figure out if you’re in compliance. To help you sort through the maze, here are some of the important exceptions and how they apply to you.

Your dealership doesn’t need to provide a notice if: t You don’t do risk-based pricing of credit terms. This applies if every consumer whose application is approved is offered credit on the same terms. t You don’t use credit reports in any way to make a credit decision. If your dealership directly contacts employers and other references and is not otherwise using any third party information, then the risk-based pricing notice is not required (it sounds rare, but there are dealers who qualify for this exception).

A notice isn’t required for a specific transaction if: t The credit requested is not for a consumer purpose (personal, family or household use). t The transaction is a consumer lease. t The consumer applies for a specific credit product and is approved for those terms. t You offer specific terms to a pre-screened group and extend credit on the offered terms to one of them. t The consumer is a co-signer (which is different from a coborrower), guarantor, surety or endorser in the transaction.

Independents Remain Profitable in Challenging Environment Our team at Manheim Consulting had the pleasure of interviewing NIADA President Anthony Underwood for a question and answer session discussing the state of the used vehicle market from the perspective of independent dealers as we compiled the recently released, 16th annual Used Car Market Report (UCMR).

Underwood framed the challenges facing independent dealers in a way that confirmed what our data was telling us: independents are encountering higher prices for inventory at the wholesale level and finding fewer pre-owned vehicles in the marketplace. In response, these dealers are focusing on sound inventory management practices, and using all available sales channels – including online – to source just the right inventory to meet their customers’ needs. We examined these and other trends in the UCMR, which is Manheim’s annual analysis of the forces shaping the used auto industry. As part of the ManheimNIADA Dealer’s Edge partnership, I’m happy to let you know you can download the entire report free of charge by taking a very brief survey at www.surveymonkey.com/s/manheim. As a comprehensive analysis of the trends shaping the automotive industry, the 2011 UCMR contains much more valuable information pertaining to independent dealers, as well as chapters on other aspects of the industry, including rental, leasing, fleets, repossessions and salvage. I encourage NIADA members to download their free copy of the UCMR, and as always, please e-mail me any time with your questions. BY TOM WEBB Tom Webb is chief economist for Manheim Consulting. Contact him at Thomas. webb@manheim.com, follow him via Twitter at www.twitter.com/TomWebb_ Manheim and read his blog at www.manheimconsulting.typepad.com.

t The consumer’s application is denied and you provide an adverse action notice. t You provide the consumer with the credit score disclosure instead of the risk-based pricing notice. The disclosure is an alternative form authorized by the regulations. If you use it, you must provide it to all consumer applicants instead of providing a risk-based pricing notice only to the portion of applicants who are not receiving your most favorable credit terms. It is likely some of these exceptions apply to your dealership and its transactions. Before relying on an exception, review the regulation or discuss it with your legal counsel to be sure you implement it correctly. The regulation can be found at 16 CFR §§ 640.1-.6. BY CH I P ZYVO LOSKI Chip Zyvoloski is senior attorney for indirect lending at Wolters Kluwer Financial Services. For more information, visit www. wolterskluwerfs.com/indirect.

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