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APRIL/MAY 2011

DEALER NEWS O F F I C I A L

P U B L I C A T I O N

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

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

NIADA/Manheim Community Service Award

Manheim, the world’s largest provider of vehicle remarketing services, cares about its employees, the environment and the communities it serves.

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).

ADVERTISERSINDEX ADESA ........................................ Inside Back Cover AutoTrader.com ......................................Back Cover Lobel Financial .................................................... 5 Manheim.com ............................ Inside Front Cover NIADA Convention ..................................... 12, 13 SmartAuction ...................................................... 9 United Acceptance ............................................. 11 Western General / Protective ............................... 7

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

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The Nevada Dealer News is published bi-monthly by the National NIADA HEADQUARTERS: Independent Automobile Dealers Association Services Corpora #308/ #-7% t "3-*/(50/ 59 tion, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 8171)0/& '03 "%7&35*4*/( */'03."5*0/ $0/5"$5 530: (3"'' 640-3838. Periodicals postage paid at Dallas, TX and at additional 03 530:!/*"%" $0. h_Ă›\^l' IHLMF:LM>K3 L^g] Z]]k^ll \aZg`^l mh GB:=: LmZm^ MA> G>O:=: =>:E>K G>PL BL IN;EBLA>= ;B&FHGMAER ;R MA> Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The G:MBHG:E BG=>I>G=>GM :NMHFH;BE> :LLH<B:statements and opinions expressed herein are=>:E>KL those of the individMBHG L>KOB<>L <HKIHK:MBHG% +.+* ;KHPG ;EO='% :KEBG@ual authors and do not necessarily represent the views of Nevada MHG% News MQ 0/))/&.+),4 IAHG> 1*0&/-)&,1,1' I>KBH=B<:EL Dealer or the National Independent Automobile Dealers AsIHLM:@> I:B= :M =:EE:L% MQ :G= :M :==BMBHG:E H??B<>L' lh\bZmbhg' Ebd^pbl^% ma^ Zii^ZkZg\^ h_ Z]o^kmbl^kl% hk ma^bk b]^gmbĂ›IHLMF:LM>K3 L>G= :==K>LL MH LM:M> cation as members of NIADA, does <A:G@>L not constitute anGB:=: endorsement IN;EB<:MBHGL% +.+* ;KHPG ;EO='% :KEBG@MHG% MQ 0/))/& of the products or services featured. Copyright Š 2011 by NIADA .+),' MA> :G= HIBGBHGL >QIK>LL>= A>K>BG Services, Inc.LM:M>F>GML All rights reserved. :K> MAHL> H? MA> BG=BOB=N:E :NMAHKL :G= =H GHM G><45"5& ."(";*/& .(3 4"-&4 Mkhr @kZ__ mkhr9gbZ]Z'\hf >LL:KBER K>IK>L>GM MA> OB>PL H? G>O:=: =>:E>K G>PL '30/5 $07&3 #: Fbd^ Fhk`Zg HK MA> G:MBHG:E BG=>I>G=>GM :NMHFH;BE> =>:E>KL :LEDITOR Fbd^ AZk[hnk faZk[hnk9gbZ]Z'\hf LH<B:MBHG' EBD>PBL>% MA> :II>:K:G<> H? :=O>KMBL>KL% 130%6$5*0/ .(3 CZ\h[ D^kgl cZ\h[9gbZ]Z'\hf HK MA>BK B=>GMB?B<:MBHG :L F>F;>KL H? GB:=:% =H>L "35 130%6$5*0/ .(3 <akblmr AZrg^l \akblmr9gbZ]Z'\hf GHM <HGLMBMNM> :G >G=HKL>F>GM H? MA> IKH=N<ML HK 13*/5*/( Nieman Printing L>KOB<>L ?>:MNK>=' 45"5& ."(";*/& .(3 4"-&4 Mkhr @kZ__ mkhr9gbZ]Z'\hf 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*/( Nieman Printing

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

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 userfriendly technology is key to moving more cars and saving money in the process.

Product Discounts for NIADA Members NIADA members can save up to 29 percent on select FedExŽ shipping services. For more information or to enroll in this program, visit www.1800members.com/ niada or call 800-636-2377 (8 a.m.–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 Thrifty’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 AutoZone’s “hot-shot� 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

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.

Don’t worry, as the IRS has an entire section of its website dedicated to automotive businesses. We’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

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NEWS

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

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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.

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FEBRUARY 2011

FEDERAL ADVOCATES LOBBYING REPORT Federal Advocates is NIADA’s governmental advocacy partner. To read past lobbying reports, visit www.niada.com/legislative_and_legal.php

SPRING

INTO ACTION NOW VIE W OVER 450 HOURS OF DE ALER EDUC ATION SE S 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

&/5&3 4*5& "/% $-*$, 0/ /&8 130(3".4

V 112th 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. V 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.

V 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.

V 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. V 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. V 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.

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Q&A With NIADA President Anthony Underwood:

2011 Used Car Market Report

National Independent Automobile Dealers Association (NIADA)

Anthony Underwood was named president of NIADA in 2010. He started selling cars in Alabama in 1977, and he opened his first dealership in 1994 with five vehicles. Anthony’s two stores sell a combined total of 800 vehicles each year. He has been an active member of the NIADA and Alabama IADA for many years. Anthony has served on the boards of both NIADA and AIADA. He was named NIADA National Quality Dealer of the Year in 2003 and, that same year, earned his Certified Master Dealer certification. How have independent dealers adjusted their businesses in the last three years? Independent dealers have faced unprecedented challenges in the last three years. Even though the overall economy is improving, dealers are still struggling with limits on inventory and consumer credit. But dealers are resilient and have adjusted by stocking fewer vehicles and focusing on the types of vehicles that turn quickly. Solid inventory management underpins the successful dealer. Many dealers have retrained employees to ensure that everyone is contributing to the success of the business. Employee productivity has improved as staffs have been reduced to the current level of sales. In the process, we have learned to run our stores more efficiently. We have also seen a shift to the Buy-Here, Pay-Here model by dealers who have access to capital. In our store, we have cut in half both our staff and our inventory. We have also expanded the number of lenders we rely on to finance our customers. We are now sourcing some inventory online, buying vehicles that will sell quickly, and generating more sales based on specific customer orders.

How are independent dealers coping with the shortage of used vehicles? Independent dealers are confronting two challenges: higher prices and fewer pre-owned cars in the marketplace. Independent dealers are spending more time and effort to find the right inventory. Everyone is going to more auctions, both online and in person, as well as tapping local wholesale sources. Some dealers have been very successful in buying inventory directly from private owners. Three or four years ago, dealers were able to find plenty of vehicles under 70,000 miles and three or four years old at acceptable prices. But independent dealers have modified the age and condition guidelines to reflect what their customers can afford. As a result, dealers are doing more reconditioning to get vehicles frontline ready.

You are quoted as saying “We will never go back to business as it was in the past.” Can you explain what you meant by that? Our business model has changed. New car dealers are getting more into the pre-owned business, so we have to meet that challenge. Franchised dealers offer service departments, larger facilities, and access to newer inventory. NIADA members know that they have to continue to improve their business skills and adapt to this new competition. NIADA can teach dealers to run more efficient operations, but the business of selling cars is still about knowing your market and your customers and being responsive to their needs. Independent dealers need access to information to enable them to make quick decisions. NIADA helps independent dealers stay abreast of the national and local economic, regulatory, and business issues facing our industry and each dealer.

How is NIADA monitoring the potential rules under the new Consumer Financial Protection Bureau? We have encouraged members to stay connected with one another by attending local and national meetings and by contacting their legislators on issues that could impact our business, in particular Buy-Here, Pay-Here. The NIADA website includes a blog where dealers can find information on local and national issues and answers to their specific questions.

You are a strong advocate for dealer education. What resources does NIADA provide dealers? NIADA is serious about education, and we recognize that it is one of the strongest things we have to offer our members. Knowledge is power, and what you don’t know can hurt you. Our three-day Certified Master Dealer Program gives dealers the critical skills and information they need to meet the challenges of operating successfully in a challenging environment. NIADA and its industry partners provide dealers with online and in-person training that covers the full range of inventory and dealership management topics. For example, the NIADA/Manheim partnership teaches dealers how to buy and sell vehicles online through The Wholesale Institute training on NIADA TV.

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SALES

ONLINE SALE S SUCCE S S: LET YOUR LISTINGS DO THE TALKING Anyone can start selling cars using the Internet, but those who are most successful give buyers the right information during the shopping process. Sellers can break through

the clutter of online used car sales by giving consumers photos, compelling descriptions and vehicle history while they shop. If you’re not already online, you need to be. Eighty percent of consumers today use the Internet to help find their next car. Furthermore, shoppers visit less than two dealerships before deciding to buy – conducting research online before visiting any lot. Typically, they start by visiting third-party automalls like AutoTrader.com and Cars. com. A quick search can return hundreds of listings for vehicles similar in style and price. Since you can’t sell online shoppers face-toface, your listings have to do the talking. Focus your marketing efforts on two lead-generating areas that attract the most attention: Search Results Pages (SRPs) and Vehicle Details Pages (VDPs). The SRPs and VDPs are the most

prominent places to communicate the value of your used car inventory online. When shoppers click on SRPs, they go to VDPs to browse additional photos, read about features, see the vehicle history and locate the seller. Getting shoppers to click on SRP listings generates more leads from your VDPs. The vehicle description you provide on SRPs is your first opportunity to reach shoppers. Try to describe the car’s benefits as if shoppers were standing in front of you. Be brief but informative. For example, you might say, “this van comfortably fits up to eight people” or, “we offer low financing” or, “includes Free Carfax Vehicle History Report.” You don’t want potential customers glancing past your listings because they didn’t peak their interest. Photos are another way seasoned online sellers grab the attention of used car shoppers on SRPs. Use the best image as the SRP ‘thumbnail’ image on SRPs and save detailed images for the VDP. You can build confidence with online

consumers by linking Carfax Reports to SRP and VDP listings. Shoppers are more likely to buy from open and up-front sellers and your listings will stand out even more. To connect with online shoppers, you need to think like them. By giving buyers relevant information to help them make an educated decision, you can compete online and sell cars faster. Top dealers consistently get more leads because they pay attention to how their car listings appeal to online consumers. 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.

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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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APRIL/MAY 2011

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