DEALER
NEWS
NEVADA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
OCTOBER/NOVEMBER 2018
LYFT
SOME
RISK
LEVERAGING RIDE SHARING FOR YOUR BENEFIT. | PAGE 06| DID YOU MISS THE DALLAS, TEXAS Permit No. 2079
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INSIDE DEALER NEWS
SECURITY WATCH |
By Tyson Lee
EMAIL SECURITY TIPS
NEVADA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
05................................................Saved Time Is Made Money 06......................................................................Lyft Some Risk 07..................................................... Finding Good Cheap Cars 08..........................................The Facebook “Secret Formula” 09................................................................. Financial Tune-Up 10................................................. NIADA Government Report 13............................................... Four Ingredients for Success
WHAT’S NEW
Certified Master Dealer Program Next Class November 5-7
Developed in 2001, the Certified Master Dealer program is one of the industry’s most respected training programs. Recently revamped, the program is taught by NIADA’s Justin Osburn, who brings over a decade of experience in retail and Buy Here-Pay Here executive management. The next class is November 5-7. Contact Diann Flanders at 888-906-8283 or diann@niada.com for more information.
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For information on how to become a member please contact Tiana Ballard. tiana@niada.com • 800-682-3837
NIADA HEADQUARTERS
How to Keep Hackers Out
I recently received an email from a dealer we just funded on a bulk purchase asking to cancel the funds we had just sent electronically. He said he would send me his new banking instructions. Thinking this strange, I called the dealer and texted him a picture of the email I received. He said, “Tyson, I did not send this. This did not come from me.” While on the phone, I got our IT department involved. We found the hacker was deleting the messages the dealer was sending from the dealer’s email, but we could still pull them up in his archived folders. We had the dealer change his password, but the hacker was still able to send emails out. We then had the dealer unplug all Internet access, all computers and the router, and to power everything down. We had him call his Internet provider to make sure the IP address would be changed. The dealer also contacted his anti-virus provider to see what they could do. Just think what this hacker could have done if he was able to get ahold of credit card numbers or customers’ personal information! What a mess it could have been for this dealer. Here are some tips on how to keep hackers out. Use strong passwords. Strong passwords, although hard to remember, are your first step towards protecting your email and other online accounts from the bad guys. Use a combination of uppercase and
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. The Nevada Dealer News is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of Nevada Dealer News 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
Jeffrey McQuirk • jeffrey@niada.com PRINTING
Nieman Printing
lowercase letters, numbers and special characters such as $, &, or %. Use a secure online strong password generator such as https://xkpasswd.net or https://www. passworddog.com if you need help. Don’t use the same password across all the online services you access. With the growing number of online services we access, remembering multiple passwords is getting harder. So, users tend to use the same password across all the services they use. The danger with this approach is if your password gets leaked or one of the online services you use gets hacked, all your online service accounts are vulnerable to unauthorized access. Don’t write your passwords on sticky notes. Do not write your passwords on sticky notes and keep them with your phone or leave them next to your computer. If you are having trouble keeping track of different passwords you use for your online accounts, there’s help for you in the form of password managers or password vaults that help you store you passwords in a secure manner. Check out LastPass free password manager at http://www.lastpass.com. Enable two-factor authentication (2FA). Most of the popular email providers such as Gmail, Yahoo, and Microsoft, and online services such as Facebook, Instagram, and Twitter support two-factor authentication. With 2FA, you use a second factor besides your password to access your account. This second factor, in most cases, is simply a verification code sent to your phone. Be aware of phishing. Phishing is a form of fraud in which fraudsters send you emails that look like the ones you would receive from a reputable company such as Facebook or Apple, but are meant to trick you into revealing your user ID and password so fraudsters can gain access to your email, confidential data, or other valuable information from your account. Once they gain access to your account, they will then try to send emails to people on your contact list and try to trick them into revealing their account credentials. Install anti-virus software with email scanner. Hackers send viruses, malware and spyware as email attachments. Virus and malware are software programs or code written with the intent to harm or disable your computers. Spyware is software written with the intent to steal your confidential information or let hackers control your computer remotely. One of the best ways to protect yourself from these is to install antivirus software that includes an email scanner. AVG Free is one such free software with email scanner (http://free.avg.com). Antivirus email scanners scan email and attachments and remove or block viruses, malware and spyware. Since hackers are changing their software constantly, make sure you update the antivirus software and virus definitions regularly. Tyson Lee is the marketing and sales manager for United Acceptance, Inc. He has been helping dealers across the nation for the past 12 years.
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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.
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.
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October/November 2018
DEALER NEWS
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MANAGEMENT | By John F. Possumato
Cover Story
LYFT SOME RISK
LEVERAGING RIDE SHARING FOR YOUR BENEFIT
Sometimes a counterintuitive but simple idea surfaces that seems so obvious you have a, “Why didn’t somebody think of this before?” moment. This is one of them. But perhaps it’s not so obvious unless you have some understanding of both the traditional BHPH/ subprime dealer world and the new world of ride sharing/ride hailing. As BHPH dealers, we have our money at risk every day. The skill is in judging whom to take that risk on and how to get them to pay us each month for their vehicle. In the completely different world of ride sharing – led by companies such as Lyft and Uber – the lifeblood is recruiting new drivers, but screening those drivers before they ever take on a passenger. Once screened, the best ride share driver tends to be a part time, “casual” driver who uses the on-demand employment of ride sharing to supplement income when his or her “day job” doesn’t bring home enough to pay all the bills. Those part-time drivers tend to drive 1020 hours a week. They are steady, reliable contributors and don’t seem to burn out or drive too much to increase the probability of accidents. As BHPH dealers, we frequently review credit, but we don’t have access to prospects’ DMV records or – even more useful – a full background check to know whether the individual to whom we are about to extend credit has ever committed a crime. We resort to asking for utility bills, next of kin addresses, etc., anticipating the worst. Even if we had the ability to quickly and accurately do DMV and background checks on every prospect who walked through the door, there would be a cost, particularly for the background check, of upwards of $35-50 per candidate. So here’s the idea: Why not combine the need for a strict ride share candidate screening with your desire to know whether the prospect you’re intending to risk your BHPH or recourse loan with has a clean DMV and background check? Specifically, why not set up an iPad online kiosk in the store and, based on your discretion in “reading” your prospect, suggest or even require a potential customer to apply to drive for Lyft (which has a more
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stringent background check than Uber) on the spot, the same way you require pay stubs, utility bills, addresses of friends/ relatives, etc.? You call the shots here, so you can make acceptance by Lyft to drive as another of your criteria for “buying” the candidate. Wouldn’t it be nice to know your potential new customers have passed a DMV check and a thorough background check before you trust them with your vehicle? Of course, if a candidate fails to qualify, you won’t know exactly why. But you will know something was wrong in one of those categories, so you can evaluate the situation accordingly. Best of all, with a Lyft kiosk in the showroom, the screening checks would be quick and cost-free to you. How can you beat that? Well, I’ll tell you how. Let’s say, hypothetically, one of your customers is a little overdue on a payment and gives you what sounds like a legitimate story about why he/she can’t pay you today. Now you could pull out the file, see he or she was accepted to drive and say, in a very understanding tone, “I totally understand why you are short on cash, but that’s in the past. Go turn your Lyft app on, take a few extra hours – I know you are approved – and come bring me all of the payment tomorrow.” A ride share driver can make up to $35 an hour and be paid the same day. Now if your customer doesn’t come in with all of the money to pay you in 24 hours or so, well, you know to turn off the vehicle and get it.
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On-demand employment truly answers a lot of questions, if not solve some of our problems. Now, you might counter, “I had a customer once take my vehicle and, unknown to me, drive for Uber/Lyft, kill my vehicle, never pay me and the repossessed vehicle was trash.” Everyone has had or heard a story like that, right? Well, you always have had to screen for abusers, long before there was Uber and Lyft. Ride sharing just makes it a little easier for that type to defraud both parties. So you will still have to use your judgment – there is no getting around that side of the business. However, if you are the one to introduce the idea of applying to drive, the prospect is less likely to already have that in mind, or to be a career driver. Maybe you can “root out” those who are career drivers if your new prospect responds to the idea by sharing he/she already is a ride share driver. You can then inquire further as to how many hours the prospect drives and use your GPS device to track miles more closely if you roll him/her. Additionally, those ride share drivers who “kill cars” don’t last long on the Lyft program. Every passenger rates every ride. If the vehicle has problems, the passenger invariably gives a low rating, and just a few low ratings can cause deactivation by Lyft. So there you are – perfect synergy here and a great way to leverage “new mobility” to your benefit. John F. Possumato is founder and CEO of DriveItAway, which recently integrated with HyreCar, to roll his “path to ownership” and “Lyft Your Down Payment” program, and dealer-based “Car Sharing for Ride Sharing” nationally.
I
n the first installment of this threepart series, we looked at how to take advantage of upstream online auctions. Upstream is just a fancy way of saying “before the vehicle is shipped to physical auction.” We focused on OLOCs (One-owner, Low-mileage, Off-lease Cars) and discussed how you can acquire affordable cars your customers want, without having to go to a physical auction. I received a lot of great feedback and even helped some dealers buy a few cars online for the very first time! Turns out, it’s not as hard as they thought! A lot of folks told me the cars they need – the $2,000 to $7,000 cars – are only at the physical auctions. So, in this article we are going to focus on buying cars from the physical auction. I’ve shared before that if you go to a physical auction there will be only a limited number of cars that might work for your lot and you will only be able to bid on a few. This means you probably won’t get the cars you need at the price you want – or at least not all the cars you need. So, why are we talking about going to the auction again? Well, I didn’t say we were going to go to the physical auction. I said we were going to buy cars from a physical auction. Some of the most successful used car dealers (and new car dealers as well) have mastered buying cars from multiple live online auctions. Remember, one auction will have a limited number of cars, but five auctions will have five times as many. How can you be at five live auctions at the same time? It’s made possible with the power of the Internet, of course. Thanks to advances in technology, nearly all auctions have a live video broadcast allowing dealers to bid and buy from the comfort of their office. You can watch and hear the sale, and then bid and buy right from your phone! Yes, multiple auctions, multiple cities and multiple states all from your computer or phone.
The live online auction I’m most familiar with, of course, is LiveBlock from ADESA. You can preview cars that meet all the criteria you want and gather all the information you need to make an informed buying decision: vehicle history reports, build data, Autoniq data, Market Guide, book values and more, all at your fingertips. Then, you can bid on the cars live as they run across the block at auctions around the country. In fact, you can watch and bid four lanes at once! Yes, it will take some practice and, yes, it may be a little confusing at first – but like anything else it becomes much easier after a very short time. Do you remember your first trip to the auction? That wasn’t easy, was it? Over the course of my career, I’ve seen many independent dealers become successful at buying cars this way. They have multiple screens set up to watch, bid and buy at eight or more auctions at a time. I have seen big franchise groups with “war rooms” that have three or four employees in a room, each with multiple screens buying cars. The point is, you can do it! I know, you tried it once and it didn’t work out. You couldn’t buy the cars you wanted or the car you bought turned out to be a problem. Maybe that was a long time ago, or it just made you so frustrated you gave up and never tried again. Whatever the case, you should
reconsider online auctions as a great way to acquire the cars you need. Don’t make this like asking for directions when you’re lost – if you don’t know how, ask for help! Any auction company will be more than happy to make sure you are fully trained and set up to succeed. Seriously, email me and I will connect you to people who will take the time to show you how to buy and sell online! If you’re still worried about making a mistake or getting a bad car – don’t be. There are now products out there like ADESA Assurance that can help reduce the worry – and the risk – of buying cars. If you underestimated the recon costs after buying or had a customer change their mind about buying a car, just send it back. Yes, you read that right: send it back within the defined timeframe and get your money back. There are, of course, some eligibility requirements and conditions but, boy, how times have changed. I want to close with one final tip regarding live online acquisitions: proxy bids. That’s right, proxy bids, also known as AutoBid. This is the most under-used tool in the toolbox. After reviewing the condition reports and data on the cars you need for your lot and determining exactly what you are willing to pay, simply set that number as your AutoBid. You’ll receive notifications if you win the car and what your winning bid was (which won’t exceed your AutoBid) or if you were outbid. You don’t have to watch the sale if you don’t have time – AutoBid will do the work for you. It’s really that easy! Next time I’ll uncover how to take advantage of the latest technology to buy fresh trades directly from the franchise dealer’s lot within minutes of the deal being closed. Until next time, have fun and sell cars!
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Doug Hadden is executive director of dealer consulting services for ADESA Auctions Inc.
October/November 2018
DEALER NEWS
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SOCIAL MEDIA | By Kathi Kruse
INDUSTRY NEWS
THE FACEBOOK “SECRET FORMULA” TO GET MORE CUSTOMERS
CARFAX RIDES FOR AUTISM AWARENESS
Three Crucial Steps
Event Raises $425,000 for Autism Research
It’s a lot easier to sell to people who know you. Over the years, Facebook has been a conduit for dealers and their customers to connect. However, as important as it is in the digital marketing process, connecting doesn’t always equate to more sales. Dealers must make their “connecting” count. There’s a solution that seems to elude a lot of vendors in the social media space. They sell you on the buzzwords but then deliver stingy results. Real results take a proven formula with the right key performance indicators to guide you along the path. The Facebook “secret formula” I use to get more customers has three separate and distinct steps: 1. Attract. 2. Engage. 3. Convert. Each of these three steps contains specific tactics that guide in-market buyers through your sales funnel and into your showroom. Before we get into the formula, it’s important to point out it’s easy to waste time on Facebook. So, no matter what your business goals may be, it’s crucial to start with a solid Facebook marketing strategy (i.e.: what do we want to achieve and how will we get there?). Facebook has become a sprawling urban jungle and it’s easy to get lost in the brush without a plan. THE FACEBOOK “SECRET FORMULA” Attract. Attracting buyers in this highly competitive online landscape requires a deep understanding of your target market. To attract your ideal customers, you must know who they are first! Identify who your target customers are, what they care about, and what influences their purchase decisions. You’ll start with your market area as a base point and then determine the attributes of your ideal customer – income range, credit worthiness, model of vehicles they purchase, etc. Once you determine the audience you want to reach, you can then begin to design content for Facebook posts and ads. It’s widely known consumers purchase from dealers they know, like and trust. Facebook marketing allows you to consistently add value to your target customers’ lives through relevant information, expert tips and insights, entertaining/creative content, and specials offers and discounts. Engage. Engagement drives everything on social media and here’s where many dealers fall flat. They struggle with knowing what to do with
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their fans once they become connected. Fact: You really do need to be social on social media. To be social, you need a human. The first step is to choose someone who can easily speak for you online, manage your ads and your content, answer Facebook Messenger inquiries, etc. To engage successfully, create a “content strategy” that showcases your store and your personality. Post content and regularly review your results – then continue to post the types of content your target customers need and want. Don’t worry about being all things to all people. Focus on genuinely engaging customers and inspiring them to take action. Convert. The unique value of social media is its strength to attract and engage those customers who will most likely buy from you. Selling to people who actually want to hear from you is far more effective than interrupting strangers who don’t. Your targeted content informs, educates and entertains. The next step in the secret formula is to deliver just the right offer (and value) that helps your customers finalize their purchase decision. Once you’ve decided on the offers you want to extend, use Facebook ads to promote them. Facebook ads have become the single most important way to be seen on social media. Pro tip: Ad targeting is a highly prized skill. If you advertise to people who don’t know you, there’s a wall that needs to be scaled, and without a large budget that’s a tall order. Use Facebook ad targeting to bring in-market buyers closer to you so their decision is easier. Bonus Secret: Retain Social media is your secret weapon in customer service. Currently, 92.5 percent of brands fail to meet customer expectations on social media and these failures can have big implications. Quality customer service – regardless of channel – relies on a meaningful, efficient, solution-focused exchange between a dealership and its customers. The growing preference for social media as a preferred communication channel requires a “re-thinking” of your customer service strategy. Stakes are high, and sloppy customer care is not a risk any modern dealer can afford to take. Wrapping it All Up Facebook is where your customers spend their time. Take advantage of my “secret formula” to explore the opportunities for your organization. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc., which coaches, trains and delivers webinars focused on integrating social media and online reputation management into dealership operations. She can be reached at kathi@krusecontrolinc.com.
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More than 1,000 people, including 92 Carfax employees and family members from around the country, banded together to raise a total of $425,000 for autism research in the 2018 Bike to the Beach DC. On Aug. 3, bicycle riders and volunteers from DC-area businesses, members of Congress, charitable organizations and more came together to raise awareness of the disorder. The 106-mile ride from Washington, D.C. to Dewey Beach, Del. is an annual event held in association with Autism Speaks. This was the seventh straight year Carfax supported the event. The Northern Virginiabased company has raised a total of more than $170,000 toward the cause. Carfax’s goal was to raise $60,000 for this year’s ride.
INDUSTRY NEWS
ROUTEONE WELCOMES C&F FINANCE
Growing List of Available eContracting Finance Sources
C&F Finance Company is now an available eContracting finance source for dealers utilizing the RouteOne platform. eContracting enables the digital exchange of critical contract documents and data between dealers and finance sources to increase efficiency and reduce contracts in transit. RouteOne is the industry leader in eContracting, booking more than 10 million eContracts to date. RouteOne has over 7,200 active eContracting dealers and 50-plus finance sources in its rapidly growing eContracting customer base. C&F Finance is a leader in indirect auto financing, headquartered in Richmond, Virginia, and providing automobile loans in multiple states throughout the U.S. C&F benefited from a streamlined technical implementation process due to the eContracting certification their loan origination system, defiSOLUTIONS, had previously undergone with RouteOne. “We strive to continually deliver our customers solutions that streamline and solve challenges in the auto finance industry,” said RouteOne chief operating officer Brad Rogers. “eContracting is a solution that benefits all parties involved: dealer, finance source, and consumer. C&F Finance is a welcome addition to our eContracting platform and we are pleased to offer their services to our dealer base.” Dealers interested in eContracting should contact their RouteOne business development manager at 866.768.8301 or www.routeone. com/salesteam.
BHPH MATTERS | By Scott Bates, CPA
BHPH BUDGET AND EXPENSE OVERSIGHT
Plan to Increase Profitably
The tried and true formula to increase profitability is to either increase revenue or reduce expenses. Is your dealership as profitable as it could be? Is there room to improve your BHPH budget? How do you know? You could compare your dealership to other BHPH dealers and against industry benchmarks. If you discover you are receiving less gross profit per car than the industry benchmarks, you may be leaving money on the table. It could be time to reassess your plan, or your plans. BHPH dealers need several plans to oversee their budgets because it is a very cashintensive business. Your plans should include: • Six to 12 month revenue plan. • Expense plan. • Profit plan. • Cash flow plan. In your cash flow, for example, if you are budgeting for a $1,500 average down payment 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).
but are really averaging $700, you will run out of money to buy more cars. If you are budgeting your expenses based on this cash flow, your budget will quickly be off. In your revenue plan, are you projecting net new account growth or is it going to shrink? The more mature a portfolio gets, the harder it is to attain new growth (e.g. 20 paid off, 20 charged off, 40 loans a month = zero growth). Some dealers choose to chase aggressive sales without considering if the deal is a good one to put on the books. Charge-offs will eat up profitability more than any other expense, and it is usually a self-inflicted expense due to poor deal structures and underwriting. Poor deal structures and underwriting sometimes stem from a lack of training for staff. Dealers should consider staffing and proper training as investments in gross profit rather than as expenses. Too few or untrained staff leads to shortcuts and mistakes. As you gain productivity from staff and consistency in deal documentation and communication, you can increase your gross profit per sale. Plan your expenses in advance as you do your revenue projections. You should know your expense per car sold, including closing and underwriting costs, staffing, service and follow-up care and collections. Scott Bates is an assurance and business services partner for Cornwell Jackson. He supports the firm’s auto dealership practice. Contact Scott at scott.bates@ cornwelljackson.com or 972-202-8000.
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 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.
INDUSTRY NEWS
KAR NAMES PRESIDENT FOR PREFERRED WARRANTIES Edmund Field
KAR Auction Services Inc. named Edmund Field president of the company’s Preferred Warranties Inc. business unit. PWI serves independent used vehicle dealers and small franchise retail automotive and power sports dealers by offering extended service contract protection plans for pre-owned vehicles. Field will be responsible for leading PWI’s operations and digital and mobile product development and advancing the company’s market growth strategies. He will be based at KAR’s global headquarters in Carmel, Ind. Field joined KAR earlier this year as the director of new product development. Before coming to KAR, Field was at Volkswagen Group and VW Credit, Inc. He supported the areas of insurance, sales and business development, new product development, contact center operations, fleet management and manufacturing.
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. 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.
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October/November 2018
DEALER NEWS
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WASHINGTON UPDATE | By Shaun Petersen
or transfer all subscription services that might stay with the car, such as satellite radio or wi-fi hot spots, and to clear any connections between the old car and their devices – for example, apps that let you locate the car in a parking lot or control vehicle functions remotely. Those recommendations apply to dealers as well. Make sure all data is cleared from your vehicles before you sell them. Some vehicles have a factory reset option that returns all settings to their original state. Check the owner’s manual or visit the vehicle manufacturer’s website for information about how to reset and remove the information.
NIADA GOVERNMENT REPORT
Latest Government Issues and Activity
NIADA is your voice in Washington D.C., advocating for independent dealers, the used vehicle industry and small business. Here’s a look at the latest news and NIADA efforts regarding legislative, regulatory, PAC and grass roots activities.
LEGISLATIVE
After a three-week delay requested by Democrats to gather more information, the Senate Banking Committee approved the nomination of Kathy Kraninger as director of the Consumer Financial Protection Bureau by a 13-12 party-line vote. Her bid to head the nation’s most powerful financial regulatory agency now goes before the full Senate. Kraninger, who currently serves as an associate director of the Office of Management and Budget, was nominated by President Trump to replace acting director Mick Mulvaney – Kraninger’s boss at OMB. Committee Democrats criticized Kraninger as unqualified to lead the CFPB, citing a lack of consumer protection experience, and took shots at her role in the policies of the Trump Administration’s Department of Homeland Security, whose budget she oversees. But committee chairman Mike Crapo (R-Idaho) said Kraninger’s “significant leadership experience at federal agencies and on Capitol Hill,” and “her depth and diversity of public service experience” gave him “confidence she is well prepared to lead the bureau.” If confirmed, Kraninger is expected to continue the policies of Mulvaney, who has eliminated what he called the bureau’s “regulation by enforcement” and has critically examined many of the policies implemented by his predecessor, Richard Cordray. Mulvaney has also backed proposed legislative reforms aimed at making the CFPB more accountable. “Personally, I think Ms. Kraninger will
“The Federal Trade Commission has issued a consumer alert advising those selling their cars to clear all data stored in the vehicle’s electronic systems, as personal data that was downloaded from syncing smartphones could remain” 10
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GRASS ROOTS
do a good job of trying to rein in an agency that needs to be reined in,” Sen. Mike Rounds (R-S.D.) said.
REGULATORY
DOL is listening: The Department of Labor conducted a nationwide series of public listening sessions throughout September to gather views on its Overtime Rule, which spells out the details of the Fair Labor Standards Act’s requirement that employees receive overtime pay for working more than 40 hours in a work week. The rule exempts executive, administrative and professional workers from that requirement. The sessions were held in Atlanta (Sept. 7), Seattle (Sept. 11), Kansas City (Sept. 13), Denver (Sept. 14) and Providence, R.I. (Sept. 24). NIADA member dealers attended each of the sessions to offer their opinion on the rule. The sessions followed a request for information issued by DOL on July 26, seeking feedback on how the overtime exemptions are defined as the department studies a possible revision of the rule. Specifically, DOL is asking for public input about the appropriate salary level at which the overtime exemption should apply, the benefits and costs to employees and employers resulting from an increase in the current salary threshold of $23,660 per year, the methodology used to determine an updated salary level and whether DOL should regularly update the salary standard at certain time intervals. FTC consumer alert: The Federal Trade Commission has issued a consumer alert advising those selling their cars to clear all data stored in the vehicle’s electronic systems, as personal data that was downloaded from syncing smartphones could remain – and be accessible by the new owner. That information includes address books, phone numbers, log-in info and data gathered and stored on apps, location data or even garage entry codes for home or office. The FTC also reminded consumers to cancel
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In August, I represented NIADA at the American Association of Motor Vehicle Administrators International Conference in Philadelphia, interacting with officials from state motor vehicle departments nationwide. One of the topics we discussed was AAMVA’s proposal for a document spelling out recommended best practices for handling titles for junk and salvage vehicles. AAMVA has formed a working group to try to standardize the states’ various definitions for title brands, such as salvage. The group is working on a draft document of proposed definitions that state DMVs can take to their state legislatures to adopt, providing consistency across the country. The draft will also include best practices on how to handle those titles – for example, should a “junk” vehicle ever be allowed to be rebuilt and driven on public roads? NIADA and some of our partners – including NAAA, NADA, Cox Automotive, KAR Auction Services and Copart – met with AAMVA to raise concerns with some of the concepts currently being considered as best practices. Those discussions will continue as we work together to create workable definitions and best practices.
PAC
Rep. Mike Kelly (R-Pa.), a car dealer and a leading voice for the auto industry in the U.S. Congress, was named NIADA’s 2018 Legislator of the Year during last month’s NIADA National Policy Conference in Washington D.C. Kelly was also the speaker at the conference’s Power Lunch during our Day on Capitol Hill, when independent dealers and industry partners from across the nation met with members of Congress and their staff to discuss the issues that affect our industry. Kelly was one of several members of Congress to receive contributions from the NIADA Political Action Committee during the NPC. That group also included 2017 Legislator of the Year Roger Williams (R-Texas), Rep. Mark Walker (R-N.C.) and Rep. Barry Loudermilk (R-Ga.), all of whom participated in the annual Friends of the Automotive Industry Congressional Reception and Dinner. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
ONLINE MARKETING | By Kenny Atcheson
“DRESS UP” FOR YOUR DEALERSHIP
Step in Your Customer’s Shoes
Kids, adults, and pets got dressed up last year for Halloween to the tune of $9 billion. Hot costumes included characters from Stranger Things and Wonder Woman. This year, characters from The Incredibles will likely be hot costumes after a $180 million opening weekend for the animated movie. The hot costume for you and your employees this year should be to “dress up” as your customer. Pretend to be your customer and get into character. Forget everything you know about your business and look at it from an outsider’s perspective. Customers do not know your business offers the best service or products just because you say so. Your competitors say the same thing. Everything your customer has to go through to purchase from you is a direct reflection of your products and services. Therefore, their experience influences whether or not they buy from you the first time or a second time – and it influences whether they send referrals. Start from the beginning of the process as if you were a customer. Do not assume anything. What do you see? Type the same words into Google your customer would when beginning a search for a car, such as “bad credit car dealer.” Take note of what you see. Does your website show up in the top four? Do you have a Google ad in the top two? Is your ad a good reflection of your business? Does your ad display information that makes your dealership stand out as uniquely better than the competition? Is your rating a 4.5 or higher? When the customer looks at your “can’t miss” online reviews and review rating, is it at least 4.5? If not, there is room for improvement. If your company rating is a 4.5 or more, the customer may still click to read reviews about your dealership. If they do, is the latest review – or the one showing at the top – positive? The customer hasn’t made it to your actual website yet, but they are already making a judgment about your dealership. Does your business look like one of many choices – a good choice, the best choice, or The Obvious Choice? (The Obvious Choice is a trademarked training program offered by Dealer Profit Pros.) Is anything broken? The customer finally makes it to your website. Your company website may be up and running – but does it do its job? Your website’s job is to generate leads. If it is not generating enough leads it is likely not building trust with potential customers. How many trust factors are at play? Are there happy customer testimonials continuously
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populating on your site? Are there testimonial videos? Are there pictures of friendly people – not just cars? Are there any broken links? Your organization should have a regularly scheduled check-up of your website. Click around and make sure everything works. I’ve visited dealer websites on which everything looks fine until I filled out the beginning of a finance application only to be sent to an error page. The lead was never captured. Big, national companies are not immune to this problem either. While planning my travel to deliver The Obvious Choice training to a Buy Here-Pay Here dealer a few states over, I was looking for a rental car. I clicked on an advertisement for National car rental. The ad took me to a webpage that was under construction. Two weeks later I checked to see if National was still paying for advertisements that sent people to a broken webpage. Yep, the ads were still running. Become Sherlock Holmes Create an alias email and/or phone number, or hire someone to check on the followup processes of your dealership. Find out if your salespeople are following up with leads in a timely manner. Do they use the communications and processes you have created? I have a number of horror stories and examples of zero or putrid follow up. I won’t go into all of them here because that’s not the point. The point is that whatever you do, improve your customer experience and continue to monitor their experience and processes. You will earn more business, more referrals and more repeat business. This article doesn’t even discuss customer service. Think about how many other touches there are to get a customer to buy. • Is the person who answers the phone pleasant? • Does the salesperson connect with the customer and build trust? • Does the salesperson follow up after a purchase and non-purchases? There are so many places to make a mistake. If you don’t keep an eye on it, customers may feel like they are going through a haunted house, but not in a fun way. Your profits or lack thereof will be scary. The only thing that should be scary this Halloween are the costumes. Kenny Atcheson is the founder of Dealer Profit Pros and author of Marketing Battleground: How to Deploy Underthe-Radar Strategies to Explode Your Profits. His website can be found at www. DealerProfitPros.com
SALES MATTERS | By John Chapin
FOUR INGREDIENTS FOR SALES AND BUSINESS SUCCESS
Winning Recipe
It happened again two weeks ago. I met with someone struggling to get their business going. One of the first questions I asked, and always ask: “What are you doing to bring in revenue (sell something)?” “I have a display at the local Walmart, and I belong to five chambers of commerce.” “And how long have you been doing that?” “Five years.” “And how much business have you gotten from each one?” “Pretty much zero from all.” I’m not kidding. I also wish I could say this experience is the exception to the rule. Actually, it is more the rule than the exception when I talk to a struggling salesperson or entrepreneur. What’s the definition of insanity? Right. For five years. Look, it really only takes four things to be successful in sales and business. If you have all four, success is virtually guaranteed. If you are missing even one, eventual failure is guaranteed. Good People Skills If you’re good with people – people like you because they feel good around you and believe you care about them – you’re off to a good start. If people like you, they’ll buy from you. The best salespeople and business people always have great people skills. They can connect and carry on a conversations with anyone at any level or any age. They have a charisma about them and their conversations flow smoothly and easily. They are able to make people feel important by talking about what’s important to them, being a good listener, and focusing completely on the other person as if they are the only person in the world. Even in a crowd, they can make you feel as if the two of you are the only ones there. That relationship, that connection, is usually the most important aspect when selling most items. A Great Attitude A great attitude includes: passion, confidence, conviction, commitment, and perseverance. It also includes being positive. The former attributes ensure you have the mental wherewithal to go out into the world with enthusiasm and remain that way while suffering the slings and arrows necessary to succeed in business and sales. The latter attribute, being positive, ensures
you present well to people. Your objective is to be a pleasure to interact with, to be the most pleasant person people encounter during the day, and to be a joy to do business with. You want people to enjoy the experience of working with you. This means going above and beyond, doing more than people expect, and always doing everything in your power to make sure the client feels important. You want to have a can-do, happy-tohelp-you attitude. The Right Activities Activity starts by having a plan that includes how much business you need, how many people you need to talk to, and where to find those people. In addition, you need the self-discipline to stick to the plan and ensure you spend your time and money on the right activities and resources. The most important activities you spend time on during the day are the ones that bring money into the business. It isn’t working on your logo, driving to the post office, or entering information into the computer. During business hours over 90 percent of your time should be spent on activities that generate cash flow. The fastest way to build business is by calling on people in person or on the phone. Business is a contact sport and is all about relationships. In order to build relationships and connect with people, you need to be talking to them live, not sending spam emails, LinkedIn messages, or connecting on Facebook. Also, your activities should be focused on meeting new people. Going to the same networking events and seeing the same people over and over again is a mistake. Incidentally, discomfort and fear of calling on people, both strangers and people you know, is what stops most people and causes them to fail in sales and business. If you’re going to be successful, you need to get over that. Bottom line: focus on meeting strangers and making lots of contacts. Business is a numbers game, if you talk to enough people during the day you will eventually run into someone who needs what you have or knows someone who needs what you have. So go out there and take massive action. A Good Product and Support This one goes without saying. If you have good people skills, a great attitude, and are focused on the right activities, you’ll make your share of one-time sales. But if you have a bad product, or are lacking support, the word will get out and any success will be short-lived. John Chapin is a sales and motivational speaker and trainer. He has over 27 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www.completeselling.com or email johnchapin@completeselling.com.
PRODUCTS & SERVICES| By Auto Remarketing Staff
CARS.COM LAUNCHES PRODUCT FOR FACEBOOK MARKETPLACE Promotes Dealer Listings
Cars.com has unveiled a new social solutions product designed to help dealers share their Cars.com used car listings with active shoppers on Facebook Marketplace. Cars.com’s new Facebook Marketplaceintegrated product, Social Sales Drive, can directly connect dealer’s inventory to its business page on Facebook. According to Cars.com, Facebook is two times as efficient as paid search when it comes to directing active car shoppers to a dealership’s website to engage with inventory. “Social is a must-have for automotive dealers with the increasing amount of time people spend on social media and their desire for a shopping experience that meets them where they are,” Cars.com chief executive officer Alex Vetter said. “The combination of powerful Cars.com advertising and targeting with the efficiency of social as a selling channel is a win-win for dealers and manufacturers. Cars.com is innovating at the speed of retail and leading the way for social selling in automotive.” In addition to Conversations, the company’s messaging platform that can seamlessly integrate into dealer websites for 24/7 chat options between dealers and car shoppers on Facebook Messenger, the Social Sales Drive solution can automatically upload a dealers’ complete used car inventory to Facebook Marketplace. According to Cars.com, over 50 percent of Facebook Marketplace car shoppers are connecting with dealerships during off-hours, between 6 p.m. and 9 a.m.
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THE MAP BELOW SHOWS THE IMPAC OPEN RECALLS Alabama Alaska Arizona
2017 1,089,364
157,775
145,226
1,396,060
1,358,761
Arkansas
617,242
574,689
California
7,726,624
7,015,956
Colorado
1,097,810
1,020,042
Connecticut
638,572
562,204
Delaware
198,169
173,828
Florida
4,004,687
3,561,040
Georgia
% INC/DEC YOY
-5.6% -8.0% 2.7% -6.9% -9.2% -7.1% -12.0% -12.3% -11.1% -7.1%
2,049,913
1,905,358
Hawaii
314,923
332,986
5.7%
Idaho
343,458
326,403
Illinois
2,291,334
2,002,885
Indiana
1,373,357
1,226,474
Iowa
643,741
572,192
Kansas
600,321
532,835
Kentucky
982,756
905,462
Louisiana
994,892
924,105
Maine
268,270
242,979
1,053,604
941,925
Massachusetts
1,173,115
1,005,117
-5.0% -12.6% -10.7% -11.1% -11.2% -7.9% -7.1% -9.4% -10.6% -14.3%
Michigan
1,806,617
1,838,789
1.8%
Minnesota
1,011,578
843,859
Mississippi
704,745
687,311
Missouri
1,183,643
1,031,222
Montana
235,651
231,771
Nebraska
401,654
365,647
Nevada
525,799
492,428
New Hampshire
279,620
240,028
New Jersey
1,601,082
1,412,816
New Mexico
451,098
439,593
New York
2,654,158
2,365,864
North Carolina
1,921,824
1,773,724
Maryland
North Dakota
148,362
137,536
2,394,060
2,084,549
Oklahoma
827,710
804,786
Oregon
729,702
666,030
2,715,163
2,417,820
Ohio
Pennsylvania Rhode Island South Carolina South Dakota
189,101
166,564
1,127,368
1,070,721
189,471
174,793
Tennessee
1,442,062
1,343,693
Texas
6,135,430
5,716,471
Utah
599,982
541,291
Vermont
124,406
106,805
Virginia
1,646,541
1,517,153
Washington
1,260,827
1,232,660
383,032
342,294
1,005,410
885,798
139,511
131,293
West Virginia Wisconsin Wyoming
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2016 1,154,354
DEALER NEWS
-16.6% -2.5% -12.9% -16.6% -9.0% -6.3% -14.2% -11.8% -2.6% -10.9% -7.7% -7.3% -12.9% -2.8% -8.7% -11.0% -11.9% -5.0% -7.7% -6.8% -6.8% -9.8% -14.1% -7.9% 2.3% -10.6% -11.9% -5.9%
October/November 2018
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Washington 18.4%
Montana 18.6%
Oregon 18.1%
Idaho
19.5%
Wyoming 21.6%
Nevada 21.4%
Utah
21.5%
Colorado 20.3%
California 22.6%
Arizona 23.0%
New Mexico 23.4%
Alaska 22.9%
Hawaii 24.6%
T OF OPEN RECALLS IN EACH STATE New Hampshire 19.1%
North Dakota 17.8%
Vermont 18.6%
Maine
19.7%
Massachusetts
Minnesota
19.2%
17.3%
New York
Wisconsin
South Dakota
16.9%
18.5%
20.9%
Illinois
19.1%
Kansas 20.0%
19.5%
Missouri
Indiana 20.6%
Delaware
20.1% West Virginia
Kentucky 22.7%
19.5%
23.2%
21.5%
Texas
25.9%
Louisiana
20.7%
South Carolina 22.5%
22.4%
23.0%
Maryland
Virginia 20.3% 20.3%
Arkansas Alabama
20.9%
North Carolina
22.4%
Mississippi 25.5%
New Jersey - 20.4%
Ohio
Tennessee Oklahoma
18.9%
20.7%
18.6%
19.5%
Connecticut
Pennsylvania
Iowa
Nebraska
Rhode Island
20.8%
Michigan
Georgia 22.2%
24.6%
Florida 21.4%
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