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O H I O I ND E P E ND E N T AU T O M O B I L E D E A L E R S A S S O C I AT I O N

M A R C H /A P R I L 2 0 18

DESIGNING A SUPERIOR MEET AND GREET

CRAFTING AND REVIEWING THE PLAY PAGE 18

NEW RULE FOR SALES TO MILITARY SERVICE MEMBERS

DOD SAYS “CREDIT-RELATED” PRODUCTS ARE SUBJECT TO MLA REQUIREMENTS PAGE 16

DALLAS, TEXAS Permit No. 2079

PAID

PRSRT Standard U.S. Postage S TAT E A F F I L I AT E

VISIT US AT W W W.OHIADA.ORG

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March/April 2018

INDEPENDENT DEALER NEWS

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ASSOCIATION NEWS

Preferred Partners 06................................................Understanding CSPA: Part 2 07..................................................Missing Repeat Customers 08.................................Deadline to Use the Old Buyers Guide 10........................Pros and Cons of Building a Facebook Page 14................................................. NIADA Government Report 16............... New Rule for Sales to Military Servicemembers

What’s New

NIADA NABD Convention & Expo Register Now! Registration is open for the NIADA/NABD Convention & Expo, June 18-21 in Orlando! With the forces of NIADA and NABD combined, it promises to be the most robust convention yet. Learn more and register today at www.niadaconvention.com.

Advertisers Index

ACV Auctions................................................................... IBC Columbus Fair AA..............................................................IFC Corry Auto Dealers Exchange .......................................... BC Kassel Real Estate................................................................5 Manheim ............................................................................ 11 Micro 21................................................................................4 NextGear Capital................................................................12 Protective........................................................................... 13 Skipco Auto Auction............................................................7 Value Auto Auction .............................................................3 vAuto ...................................................................................9

Office

For more information, contact us at (614) 863-5800 or www.ohiada.org

NIADA Headquarters NATIONAL INDEPENDENT AUTOMOBILE

700 Credit ACV Auctions ADESA Cincinnati / Dayton, Inc. ADESA Cleveland Auto Auction ADESA Mercer AFC-Automotive Finance Corp American Guardian Group of Companies AutoZone Carfax CARS.COM Car-Ware Columbus Fair Auto Auction Comsoft Cox Automotive Media

Board of Directors Executive Director

Vice President

Board Members

Wendy Rinehart OIADA 614-863-5800

Scott Welch Lock 20 Auto, Ltd 740-498-8811

Jay North Jay North, Llc 937-325-3748

Past Chairman

Treasurer

Mark Meadows Miracle Motor Mart 614-337-0037

Chairman

David Adkins Wilmington Auto Sales, Inc. 937-382-7714

President

Lauren Bowden Thomas Bowden Motors 937-593-0014

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. Independent 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 the Ohio Independent Automobile Dealers Association or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2018 by NIADA Services, Inc.

STATE MAGAZINE MGR./SALES

Troy Graff • troy@niada.com EDITORS

Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT

Christy Haynes • christy@niada.com PRINTING

Nieman Printing

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March/April 2018

eBay Motors Electronic Merchant Systems Frazer Computing, Inc. Lease IT Own IT Manheim Cincinnati Auto Auction Manheim Ohio Auto Auction NextGear Capital PassTime Pro Credit Express / ProMax ProGuard Warranty Inc. Protective Asset Protection Stolly Insurance Group The Milby Group Insurance Agency, Inc.

www.ohiada.org

Robert Fahey Fairdale Auto Sales Craig Leitwein Gahanna Auto Sales 740-432-4185 614-475-7148 Thomas Onesti Car Port Secretary 330-726-6633 Scott Shook Shook Auto Inc. Dmitry Shilman 330-339-5711 Cleveland Auto Wholesale 440-951-0808

Randy Shirk Randy Shirk’s Northpointe Auto 419-729-2688 Thomas Smith Smitty’s Auto Sales 937-981-4317 Chris Johnson Towne Auto Sales 330-723-2550

ASSOCIATION NEWS

New & Renewing Members

OHIADA 2018 Events Friday, March 16

Dinner and Texas Hold ‘Em Tournament York Golf Course 7459 N High St Columbus, OH 43235 6:00 p.m. Register at www.ohiada.org

Wednesday, May 9

OIADA Open Member Board Meeting Bylaw changes/Vote OIADA Offices 2040 Brice Rd. Reynoldsburg, OH 43068 1:30 p.m.

June 18-21

1st Gear Auto Inc. dba Go Car Credit 1st Gear Auto Inc. dba North Coast Auto Mall A.G. Birrell Co ACS Sales and Leasing ADESA Mercer Akron Auto Finance LLC dba North Coast Auto Mall Alpha Warranty Services Ambrose Auto Sales LLC AW’s Used Cars LLC Black Car LLC Black Diamond Auto Ltd Blessed Auto Sales of Columbus LLC Budget Auto Cambridge Rent A Car Inc. Car KO LLC CarMax Auto Superstores Carroll Halliday Inc. Choice Auto Sales Country Auto Sales Inc. Credit Acceptance Corporation Dixie Imports, Inc. Drive Motorcars LLC Dunn Auto Sales LLC Dunn Brothers Premium Auto Corp. Dunn Chevrolet Buick Inc. Fair Dealer Services, LLC Fatboyz Auto Sales LLC Federal Financial Services Inc. Flory Motors LLC Foreign Exchange GTX Auto Group Inc. Guardian Finance Company Indiana Auto Auction Innovative Dealers Services Inc.

Keno’s On Lorain King Motors Larry Schaaf Auto Sales Inc. Lease IT Own IT Let’s Drive Auto Credit LLC LGM Auto Finance Magic City Motorcars Inc. Main Stream Auto Sales LLC Maxtown Motor Car Company Michael’s Motors Limited Micro 21 Midwest Auto & Truck 2 LLC Midwest Auto & Truck LLC 3 Mission Auto Connection Inc. Next Gen Automotive LLC North East Auto Credit dba North Coast Auto Mall Northeast Auto Sales LLC Oak Hill Auto Sales of Wooster LLC Platinum Motors LLC Portage Car & Truck Sales Inc. Poyar Enterprises Inc. Precise Motors LLC Reel’s Auto Sales Rev Automotiv Rick’s Motor Sales Ride Smart Inc. RPM Auto Sales Smart Dealer Inc dba Rino’s Auto Sales Inc. Stratton Auto Sales West 40 Auto Sales Inc. Wheels That Turn, LLC Wholesale Automotive Solutions LLC DBA Columbus Auto Source X-treme Auto Sales dba X-treme Auto Group

THAN K YOU

CAR LOT FOR SALE

NIADA/NABD Convention & Expo: Rewriting the Playbook Rosen Shingle Creek Resort Orlando, FL Register at www.niadaconvention.com

Friday, July 13

Annual Dealer Golf Outing York Golf Course 7459 N High St Columbus, OH 43235 7:30 a.m. registration 9:00 a.m. shotgun start Register at www.ohiada.org

September 24-26

NIADA National Policy Conference Washington, D.C. www.niada.com

Saturday, October 27

Independent Dealer Expo and Awards Banquet Nationwide Hotel & Conference Center 100 Greenmeadows Dr S Lewis Center, OH 43035 Expo: 8:00 a.m.-4:30 p.m. Banquet: 5:30 p.m.-midnight Register at www.ohiada.org

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March/April 2018

INDEPENDENT DEALER NEWS

LEGAL MATTERS | BY MARK TURNER

IGNORE OHIO CONSUMER LAW AT YOUR OWN PERIL Understanding CSPA: Part 2

This article is part of a series on Ohio’s consumer laws, designed to raise awareness of a part of business owners’ potential pitfalls of these laws and how they can be avoided. You do not want to find yourself on the wrong side of a CSPA lawsuit. In a previous column, we covered “Why you need to understand the CSPA” and “Who must worry about the CSPA.” Check it out in the January/February 2018 issue of Independent Dealer News, or visit www.gertsburglaw.com/blog for the full CSPA series and more legal tips for your business. How can you avoid being sued under the CSPA? Your best defense to reduce the risk of being sued under the Consumer Sales Practices Act is to follow every business owner’s mantra: “Don’t do anything stupid.” While this mantra prevents most violations, parts of the CSPA are so technical this advice only goes so far. The best way to understand how the CSPA impacts your business is to review your contracts, policies, advertisements and warranties and make certain they are in compliance. For businesses that have industry specific rules, special attention must be paid to those operational areas. Generally, if a supplier follows the following guidelines, it will greatly reduce the risk of violating the CSPA. These guidelines, developed by the Ohio attorney general, set out some minimum standards. The various statutes and rules, as well as case law, of the CSPA requires sellers – or “suppliers” – to: • Accurately represent the characteristics of a product or service. •H onor guarantees and warranties. •M ake no misrepresentations about the nature of their business, their products or services, the prices of their goods, or the terms of a transaction. •N ot mislead consumers. •N ot take advantage of a consumer’s illiteracy, mental disability, physical disability, or inability to understand the terms of a sale. •N ot sell a product or service knowing the consumer cannot afford or substantially benefit from it. •D isclose important exclusions and limitations in advertisements. •N ot sell used items as new. •N ot use bait-and-switch tactics to trick consumers into paying higher prices.

Most of these guidelines are common sense practices all good business owners follow. However, sometimes it is not that simple. For example, a contractor is hired to put in a new concrete driveway. As part of that job, the contractor hires a subcontractor to remove the old concrete. If the subcontractor makes a mistake and damages the homeowner’s property, you as the contractor would expect the subcontractor to pay to repair the damages. However, under the CSPA, the homeowner will hold the contractor responsible and if the contactor tells the homeowner to sue the subcontractor, he has just violated the CSPA. The contractor must be responsible for all damages caused by any subcontractor he hires. There are even some courts that imply failure to notify the consumer of the use of subcontractors is a violation of the CSPA. This is but one example how important it is to know the CSPA and make sure you comply with it. Reading the CSPA law and rules is not enough to protect yourself because Ohio consumer laws also involve court interpretations that businesses are expected to comply with. A simple misunderstanding with a customer or a subcontractor can quickly escalate into an ugly, time consuming and expensive situation. How do you know what violates the CSPA? That is really the biggest question you must know to make sure your company does not get into trouble. But there is no simple answer. In many areas of the law the axiom “Don’t do anything stupid” will allow you to avoid problems. While this applies to the Consumer Sales Practices Act, one must go beyond this simple advice to fully understand the pitfalls of the CSPA. First, there are three different ways the state has created to define what a CSPA violation is. The first and most straightforward is the Ohio Revised Code. That is the Ohio law passed by the Ohio legislature. This forms the basis of all of the CSPA. However, under that law, the Ohio attorney general is permitted to draft rules that supplement the CSPA. Those rules have the force and effect of any of the laws passed by the legislature. Finally, courts also create part of the CSPA. When a consumer sues a supplier and wins, that case becomes part of the law of Ohio. That means if a consumer

INDEPENDENT DEALER NEWS

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March/April 2018

sues a company for what the consumer claims to be an unfair or deceptive act, if the court agrees with the consumer, that act becomes an unfair and or deceptive act for all other suppliers. The court is then required to send its decision to the Ohio attorney general. The attorney general has a catalogue of all CSPA cases. Those are stored in what is referred to as the Public Inspection Files (http://opif. ohioattorneygeneral. gov/Search/Pifs). What makes this so important is that by placing them in the PIF, the law considers all consumers and suppliers to have knowledge that those acts are now considered either unfair or deceptive. Any supplier committing that act is now in violation of the CSPA. As a result, sometimes it is very difficult to understand what violates the CSPA. In some cases, perfectly innocent activities can be found to be in violation. For instance, one court has found the use of subcontractors without advanced written notification to the consumer is a violation. While there is a strong argument that not disclosing the use of subcontractors is only a violation when the supplier attempts to blame the subcontractor and does not stand behind his own work, that argument may not stand up in court. To be safe, when using a subcontractor, you should disclose that fact. If you don’t, never try to hide behind the subcontractor. Accept the subcontractor’s work as your own and, if necessary, sue your subcontractor for their failure to do the job in a workmanlike manner, but honor all warranties to your customer. To do otherwise would put you in violation of the CSPA. Because of the numerous ways CSPA violations are created and can arise, you should review your policies and procedures as well as your contracts and work practices regularly. The same is true for advertising, giveaways and the like. It is very easy to make a mistake and find yourself in violation of the CSPA. Mark Turner is an attorney at The Gertsburg Law Firm Co., L.P.A. Mr. Turner does not present or intend his column to be taken as legal advice. Readers seeking legal advice should consult with an attorney. Mr. Turner may be reached at 440-571- 7773, mt@ gertsburglaw.com, or www.gertsburglaw.com.

ACCELERATE | BY GWC WARRANTY

HELP! REPEAT BUYERS GONE MISSING Did You Disappear? Used car dealers are well aware just how important repeat buyers can be. But are you really getting the repeat business you’d like to see? Far too often when repeat buyers go missing, it’s because the dealer disappeared in the months and years following a sale. To tell the tale of the missing repeat buyer, you first must look at what happened with the dealer after a sale. Whether customers engage with you or not, maintaining front-of-mind awareness with them keeps you relevant while ensuring the lines of communication are always open. Post-sale communications can range from a variety of topics, such as service reminders, trade-in offers or just a friendly note to say hello. But if you’re not at least getting started with the basics, the likelihood of your repeat business fading off into another dealership’s lot increases with every passing day. Be strategic. Knowing what to send customers and when is the first step in making sure you don’t disappear from their memories. A good example of a relevant, timely follow up message is checking in with a customer if you’ve sold them a vehicle service contract. Checking in at the expiration of a contract gives you the opportunity to

inform the customer of their expired coverage while offering the opportunity to trade that vehicle in for one with a new service contract. At the very least, this scenario allows you to offer a service contract renewal, where you can still land some unexpected profit. Be creative. A simple text-based email or an unsuspecting voicemail won’t do the trick. But a video-based email or personalized text message might strike the right chord. Anything you can do to stand out from the countless phone calls, emails and solicitations customers receive on a daily basis will help prevent your message from getting glazed over like the rest of them. Be persistent. But not too much. It could be a while until your customers are in the market for a new vehicle, so they may not want to hear from you every week or even every month. Set a messaging cadence that ensures your customers never forget about you. Because even if they aren’t in the market for a vehicle, landing messages with them consistently could remind them of a friend or family member who is in the market. So the next time you’re asking yourself where all the repeat buyers have gone, take a step back and see if your customers should be asking where their selling dealer has disappeared to. Often the mystery of the missing repeat buyer can be solved by finding the dealer who went missing after the sale.

www.ohiada.org

March/April 2018

INDEPENDENT DEALER NEWS

ASSOCIATION NEWS

| BY WENDY RINEHART

DEADLINE TO USE THE OLD BUYERS GUIDE Director’s Message I hope this doesn’t come as a surprise to any of you! The FTC changed the Buyers Guide in November 2016. They gave all dealers exactly one year to use up any of the old forms and implement the new one. That deadline was January 28, 2018. It is now illegal to use the old version. Please check your inventory. Make sure you have the correct version displayed on your vehicles and you’re using the correct version with your paperwork. If you’re ordering the forms from a supplier, make sure they’re sending you the correct version. If they send you an outdated package, send it back and make them send the correct form. The FTC has a great website dedicated to the Buyers Guide and questions dealers commonly have: www.ftc.gov/tips-advice/ business-center/guidance/answeringdealers-questions-about-revised-used-carrule.

YOU ARE P E R M I T T E D,

BUT NOT REQ UIRED, TO DISCLOSE A M A NUFAC T URER ’S WA RR A N T Y ON THE BUYERS GUIDE. YOU’RE NOT P E R M I T T E D T O A LT E R T H E P R E PRINTED PORTIONS OF THE BUYERS GUIDE.

INDEPENDENT DEALER NEWS

March/April 2018

The basic changes: •T he revised Buyers Guide recommends consumers get a vehicle history report before buying a used car and sends them to ftc.gov/usedcars for more information on how to get one. • The revised Buyers Guide advises consumers to visit safercar.gov to check for safety recalls before buying a car. • There’s a new description in the revised Buyers Guide of an “as is” sale to clarify that “as is” refers only to whether the vehicle is offered with a warranty from the dealer. • The revised Buyers Guide adds boxes for dealers to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available. • The revised Buyers Guide adds a box for dealers to indicate whether an unexpired manufacturer’s warranty applies. • The new English-language version of the Buyers Guide adds a statement in Spanish advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish. • On the back of the revised Buyers Guide, air bags and catalytic converters have been added to the list of major defects that may occur in used vehicles. COMMON QUESTIONS AND CONCERNS What’s the difference between a warranty and a service contract? The Used Car Rule defines a service contract as “a contract in writing for any period of time or any specific mileage to refund, repair, replace, or maintain a used vehicle and provided at an extra charge beyond the price of the used vehicle.” By contrast, a warranty is provided as part of the sales price and forms part of the basis of the bargain between the supplier of a consumer product and the purchaser. How do we disclose service contract coverage? If you’re in a state that regulates service contracts as the business of insurance, you continue to have the three options set forth in the 1988 Staff Compliance Guidelines: • You may check the service contract box if you offer to sell service contracts. • You may cross out the box. • You may delete the box entirely before printing. The revised Buyers Guide doesn’t have a space at the top for a stock number, but the old form did. Can we include a stock number on the form we use? Yes. Write or type it at the top of the form or in the space to the right of warranties for this vehicle. You also may put a bar code on the Buyers Guide if your dealership uses bar codes to keep track of its vehicles and Buyers Guides. www.ohiada.org

Can we list “used car manager” (or a similar job title) on the back of the form, where it says for complaints after sale contact, or do we have to list a specific person? The rule requires dealers to list the name and telephone number of the person to contact for complaints. Dealers may also include the job title, such as used car manager, and telephone number sufficient to identify the person to contact for complaints in case the named individual leaves the dealership. Based on the mileage and model year, we think the manufacturer’s warranty (or at least a portion of it) still applies to a used car we have for sale, but we’re not certain. Can we change the Buyers Guide to say the “manufacturer’s original warranty may not have expired on some components of the vehicle” (or something similar)? If not, do we still have to check the “manufacturer’s warranty still applies” box? Don’t check the “manufacturer’s warranty still applies” box if you’re uncertain. If the mileage and age of the vehicle lead you to think the manufacturer’s original warranty might still apply but you’re uncertain, you can explain that to the customer and direct the customer’s attention to the manufacturer’s warranty booklet or other information. You are permitted, but not required, to disclose a manufacturer’s warranty on the Buyers Guide. You’re not permitted to alter the pre-printed portions of the Buyers Guide. Under the “non-dealer warranties” section of the form, may we check more than one box if more than one applies to a used vehicle? Yes. Where can we learn more about complying with the Used Car Rule? Read the Dealer’s Guide to the Used Car Rule, available on the FTC’s Business Center. The FTC also has a special portal for auto dealers that includes rules and laws, Buyers Guides in English and Spanish (including fillable versions and ones with format notes), recent law enforcement actions, relevant blog posts, and other resources for industry members. These are just some of the questions answered on the site. Stay compliant, ask questions, and get advice. It’s why the association is here and one of the reasons you’re a member. It’s so much cheaper to pay your annual member dues to the OIADA than to pay a fine to the FTC.

SOCIAL MEDIA

| BY KATHI KRUSE

PROS AND CONS OF BUILDING A FACEBOOK PAGE Tips to Decide The time has come to get real about Facebook. Gone are the days of it being “free” other than all the time you put into it. Today, the investment required to build a thriving Facebook page full of active, engaged members can be costly. Dealers must determine whether building a Facebook page makes sense for them and re-evaluate their decision on a quarterly basis. Building a Facebook page is an investment. If you’ve spent any time in the Facebook marketing ecosystem, you know there is a time investment. Building relationships through trust takes time and if Facebook is your chosen platform – after all, it is where your customers spend an average 50 minutes per day – be prepared to make an investment.

ONCE YOU

SPEND T IME IN T HE FACEBOOK ECOSYSTEM AND BEGIN SOME PROMOTIONS, YOU WILL REALIZE Y O U C A N E A S I LY S P I N Y O U R WHEELS, INVEST TIME AND RESOURCES, AND END UP WITH VERY LIT TLE TO SHOW FOR YOUR EFFORTS.

INDEPENDENT DEALER NEWS

March/April 2018

A Facebook page should be considered a valuable company asset and, as such, there are other investments required to retain its value: • Strategy and planning. • Financial resources. • Human resources. Assessing the results of your Facebook investment is crucial. Once you spend time in the Facebook ecosystem and begin some promotions, you will realize you can easily spin your wheels, invest time and resources, and end up with very little to show for your efforts. Pro tip: Always begin with a plan. Set goals and establish your strategy first and you’ll be much more successful in achieving your goals. Ongoing measurement and analysis of specific key performance indicators and metrics will determine if you’re meeting the goals you’ve outlined. Should I make the investment in building a Facebook page or not? I hear from many dealers who are truly in a quandary about making the investment in Facebook, and with good reason. It’s difficult to decide if something is right or wrong for your store when you don’t have all the information. It’s even worse when you don’t know what questions to ask. I’ve outlined the pros and cons of building a Facebook page so you can determine the best route for your dealership. Pros of Building a Facebook Page • I t’s ideal for reaching car shoppers: The average U.S. consumer spends 50 minutes per day on Facebook. It’s embedded in our culture and part of our everyday lives. The key to successful marketing is reaching the widest audience interested in what you sell. Facebook is where your customers spend their time. •E ngage customers long before they’re buyers: With a solid content strategy to reach shoppers at every stage of the buying cycle, including postpurchase, Facebook can’t be beat for engaging people. • Communicate who you are: Today’s consumers want to know your story. By leveraging the right content mix, your Facebook presence allows potential buyers to learn more about you. • Opportunity for transparency and authenticity: Consumers have had enough of fakes and phonies. The more real you are, the closer people will come to you. It makes them more comfortable about their decision when they feel a connection. • Generate leads and sales: Facebook ads drive shoppers to purchase and there’s no reason you shouldn’t capture some of that magic. While they take serious skills to master, it’s worth your time to consider the opportunities in Facebook ads. www.ohiada.org

Cons of Building a Facebook Page •M ajor investment: Building a Facebook page takes commitment. It’s not only time consuming but it requires a financial investment – especially Facebook ads budget and management fees – and human resources, someone to manage and interact with the community you’re growing. • Constant change: If you’re not comfortable with constant change, building a Facebook page will be one of the most infuriating experiences you’ll ever have. They roll out updates without any notice. They make changes to things that don’t necessarily need changing. There are bugs that cause unexplained issues. • It won’t work without a content strategy: The old adage “If you fail to plan then plan to fail” couldn’t be more relevant than with Facebook marketing. Useful information is one of your store’s biggest assets and delivering quality content to buyers via Facebook takes a solid content strategy. • It’s pay to play now: Facebook has changed dramatically, even from just a few months ago. Perhaps the biggest change is that now posting great content is only half the job. Paying to promote your content effectively is the other half. Bonus insider’s tip: Growing your likes was a huge investment that didn’t pay off. Many dealers judge the success of a store by their number of Facebook likes. For years, people have spent millions of dollars on growing their likes, but now that Facebook has shifted their focus to advertising, the amount of likes on a page isn’t as valuable. Some, such as myself, will view this situation as less-than-forthright, but remember, it’s Facebook’s movie and we’re just in it. If you invested in growing your likes over the past few years, treat your investment accordingly. Leverage the community you’ve grown and work on increasing its engagement. If you haven’t built a lot of likes, don’t despair. You can still reach car shoppers through Facebook ads. Building a Facebook page is not for everyone. I hope these tips will help you decide what’s best for your dealership. As always, reach out to me if you need advice on next steps. 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.

MARKET WATCH |

KELLEY BLUE BOOK BEST RESALE VALUE AWARD 2018 Winners Announced Kelley Blue Book recently announced the 2018 model-year brand and category winners of the annual Best Resale Value Awards, which recognizes vehicles for their projected retained value through the initial five-year ownership period. “Once again, Toyota and Porsche earn top honors in the brand and luxury brand categories, respectively, with the highest average projected resale value among their full model lineups,” said Kelley Blue Book director of residual values Eric Ibara. “The top 10 vehicle winners are predominantly trucks, reflecting the high demand that exists for these models. Despite the higher incentives available on trucks today, used car buyers are willing to pay more for trucks, relative to the initial MSRP, than they are for sedans. Without the prospect of higher gas prices, this trend doesn’t appear to be slowing.” This is the third Best Resale Value: Brand win for Toyota, which previously won in 2014 and 2017. This year marks Porsche’s second consecutive Best Resale Value: Luxury Brand win.

2018 BEST RESALE VALUE: Luxury Brand Porsche

2018 BEST RESALE VALUE: By Vehicle Category

Subcompact Car: Honda Fit Compact Car: Subaru Impreza Sporty Compact Car: Subaru WRX Mid-Size Car: Honda Accord Full-Size Car: Toyota Avalon Entry-Level Luxury Car: Lexus RC Luxury Car: Lexus GS High-End Luxury Car: Porsche Panamera Sports Car: Porsche 718 Cayman High Performance Car: Porsche 911 Hybrid/Alternative Energy Car: Toyota Avalon Hybrid Electric Vehicle: Chevrolet Bolt EV Subcompact SUV/Crossover: Honda HR-V Compact SUV/Crossover: Jeep Wrangler Mid-Size SUV/Crossover: Jeep Wrangler Unlimited Full-Size SUV/Crossover: Chevrolet Tahoe Luxury Compact SUV/Crossover: Porsche Macan Luxury Mid-Size SUV/Crossover: Lexus RX Luxury Full-Size SUV/Crossover: Lexus LX Mid-Size Pickup Truck: Toyota Tacoma Full-Size Pickup Truck: Chevrolet Silverado HD Minivan: Honda Odyssey

2018 BEST RESALE VALUE: Top 10 Cars

Chevrolet Colorado Chevrolet Silverado Ford F-Series GMC Sierra Honda Ridgeline Jeep Wrangler Subaru WRX Toyota 4Runner Toyota Tacoma Toyota Tundra

CHEVROLET BOLT EV

Toyota

2018 BEST RESALE VALUE: Brand

HONDA ACCORD

s TOYOTA TUNDRA

Note: Residual values used for award calculations are based on the 2018 model-year vehicles that appear in the January/February 2018 Kelley Blue Book® Residual Value Guide. Top 10 models appear in alphabetical order. The 2018 Jeep Wrangler and Wrangler Unlimited honored in this year’s Best Resale Value Awards is the JK model. Depreciation often is the greatest expense incurred by drivers during the first five years of vehicle ownership. An average 2018 model-year vehicle will only retain about 35.1 percent of its original value after a five-year ownership period. Vehicles with average or below-average resale values are generally plentiful in the marketplace. However, certain vehicles are projected to hold their value better than others. While much of a vehicle’s resale value is based on supply and demand, as well as current and projected future market conditions, vehicles that retain their value best are typically discounted the least and tend to generate high levels of consumer interest. By comparison, all vehicles in Kelley Blue Book’s Top 10 for Best Resale Value are projected to retain more than 46 percent of their MSRP after five years. Kelley Blue Book’s Best Resale Value Awards are in their 16th year and are based on projections from the Kelley Blue Book Official Residual Value Guide. These values are established by experienced automotive analysts that review the output from statistical models built upon millions of transactions. Vehicles that earn the highest five-year residual values, expressed as a percentage of their original Manufacturer’s Suggested Retail Price, are selected for these prestigious awards. Low-volume vehicles are excluded from award consideration, except in the electric, luxury, sports car and high-performance categories. For more information about Kelley Blue Book’s Best Resale Value Awards, please visit www.kbb.com/new-cars/best-resale-value-awards/.

INDEPENDENT DEALER NEWS

March/April 2018

www.ohiada.org

WASHINGTON UPDATE | BY SHAUN PETERSEN

NIADA GOVERNMENT UPDATE

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.

REGULATORY The Consumer Financial Protection Bureau is taking a hard look at itself under acting director Mick Mulvaney. Mulvaney, the White House budget director filling in as CFPB head until President Trump appoints a permanent director, has issued a “call for evidence” to determine whether the bureau is “fulfilling its proper and appropriate functions to best protect consumers.” To gather that evidence, the bureau is posting a series of requests for information, seeking comments on various aspects of its enforcement, supervision, rulemaking, market monitoring and education activities. Mulvaney said the RFIs give the public a chance to submit feedback and suggest ways to improve outcomes for both consumers and businesses. The first RFI asks for comments about the CFPB’s civil investigative demands, which the bureau issues when collecting information from an entity during enforcement investigations. The comments will help the bureau evaluate its CID processes and procedures and determine if any changes are needed. The CFPB has since posted an RFI regarding its administrative adjudication procedures. The RFIs represent a rare opportunity for independent auto dealers to make their voice heard by a regulatory agency that has left a large imprint on the auto finance industry in recent years. Tell the CFPB about your experience with a CID, the issues you’ve faced in responding as a small business and how the process could be improved to become more efficient. To make a comment on the CFPB’s RFIs, visit www. consumerfinance.gov/ policy-compliance/noticeopportunities-comment/opennotices/call-for-evidence.

INDEPENDENT DEALER NEWS

LEGISLATIVE The Senate will soon be voting on whether to confirm four candidates nominated by President Trump to serve as commissioners of the Federal Trade Commission. Trump sent their names to the Senate on Jan. 25. Among those names is that of Joseph Simons, a former FTC antitrust attorney whom the President said will be his choice for chairman of the commission. The others are Rohit Chopra, a senior fellow at the Consumer Federation of America and former CFPB student loan ombudsman; Noah Phillips, chief counsel to Sen. John Cornyn (R-Texas); and Christine Wilson, senior vice president for regulatory and international affairs for Delta Air Lines. The FTC is led by a fivemember panel that can include no more than three members of any political party. Simons, Phillips and Wilson are Republicans and Chopra is a Democrat. Currently, there are only two FTC commissioners – Republican acting chairman Maureen Ohlhausen, who has been appointed by the President to serve as a judge on the U.S. Court of Federal Claims, and Democrat Terrell McSweeny. Both will leave the commission when their successors are confirmed. There has not yet been a nomination for the fifth spot on the commission, which will be filled by a Democrat. Reuters News Service recently reported Senate Minority Leader Chuck Schumer (D-N.Y.) has recommended his chief counsel, Rebecca Slaughter, to the White House as a nominee.

March/April 2018

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PAC The day before NIADA’s Winter Leadership Meeting opened in Dallas in January, CEO Steve Jordan, president-elect Andy Gabler and executive committee members Joe McCloskey and Scott Allen met for lunch with Rep. Michael Burgess (R-Texas), a member of the House Energy and Commerce Committee. Rep. Burgess is a champion of small business who has engaged with NIADA on issues that impact dealers, such as used vehicle recalls. A longtime physician and member of the Subcommittee on Health, he discussed health care policy and sought to understand more fully the challenges independent dealers face due to rising health care costs. In addition to Burgess – to whom the NIADA-PAC made a campaign contribution – the meeting included a special guest: Rep. Kevin Brady (R-Texas), chairman of the powerful House Ways and Means Committee and author of the recent Tax Cuts and Jobs Act. Rep. Brady thanked NIADA for pushing Congress to keep the tax deduction for net interest expenses for floorplan-related costs and advocating for a small business exemption for all other interest-related expenses. He asked the NIADA dealers how the legislation was impacting their businesses and requested NIADA to continue to engage him on any issues related to the tax legislation. GRASS ROOTS Georgia IADA is mobilizing its members to fight a bill under consideration in the Georgia House that would change the way the state’s title ad valorem tax is calculated. The bill proposes switching the tax calculation from the vehicle’s fair market value to its retail selling price, which, according to the state’s legislative fiscal report, would result in a tax increase of more than $300 per vehicle. GIADA’s legislative team and lobbyists have begun introducing arguments and testimony against the bill and are gearing up for an extended battle. Meanwhile, the association has contacted dealers throughout the state and provided them with the names and contact information for all 12 members of the Georgia House Ways and Means Public Finance Subcommittee so the dealers can tell them to vote no on the bill. It is also encouraging dealers to contact their state representatives and senators. GIADA has supplied its members with talking points to make sure key issues are understood by the legislators. Among them: The tax change would mean consumers who buy a used vehicle from a dealer would pay hundreds of dollars more in taxes compared those who buy from a private seller, which would encourage more curbstoning by unlicensed sellers – a practice that can negatively affect consumers. GIADA is calling for all Georgia dealers to make their voice heard on this important issue.

The 72nd Annual NIADA Convention and Expo JUNE 18-21

20 18

FOR MORE INFORMATION OR TO REGISTER: www.niadaconvention.com or call 1-800-682-3837 Register to attend by May 18

For the Early Bird rate of $549 – and don’t miss out on our group discount opportunities for additional attendees from your dealership.

BMSM: Buy More, Save More! $549

1 attendee

$549.00 each

$899

2 attendees

$449.50 each 18% off

$1,299

3 attendees

$433.00 each 21% off

$1,599

4 attendees

$399.75 each 27% off

$1,899

5 attendees

$379.80 each 31% off

NIADA is Rewriting the Playbook for the biggest event in the used vehicle industry by coming together with the National Alliance of Buy Here-Pay Here Dealers to create a combined Mega-Conference that blends the power of NABD’s BHPH expertise with NIADA’s wide-ranging education agenda – not to mention the largest Expo Hall in our history. The used car game has changed drastically over the past few years and continues to change rapidly. To keep up – and thrive – independent dealers not only have to adjust the plays they’ve been running for years, they need an entirely new playbook. Come join us in Orlando and rewrite your playbook to success!

What’s in it for YOU?

3 of the industry’s best conferences under one

roof as NIADA, NABD and FIADA come together at the NIADA Convention and Expo to create a used car Mega-Conference, offering the most complete and up-to-date education available.

tracks of education to serve the needs of all independent dealers: Retail, BHPH, Legal & Compliance, CPO and digital.

60+

education sessions covering topics such as hiring and retaining sales staff, BHPH collections best practices, certified pre-owned sales and operations, alternative profit centers, prospects and sales, BHPH to LHPH, wage and hour issues, best practices for F&I sales, and many more.

The

largest Expo Hall in NIADA Convention history, featuring more than 210 exhibitors offering the latest state-of-the-art products and services to help keep you ahead of the pack in today’s competitive market.

BOOK YOUR ROOM BEFORE MAY 1

To receive the NIADA/NABD room rate of $159 per night including resort fee. Rooms at the Rosen Shingle Creek will sell out quickly. Please book now!

No seriously, you need to book your room ASAP!

LEGAL MUSINGS | BY SHAUN PETERSEN

NEW RULE FOR SALES TO MILITARY SERVICE MEMBERS DoD Says “Credit-Related”

Products Are Subject to MLA Requirements

WHEN CONGRESS

P A S S E D T H E M I L I TA R Y L E N D I N G A C T, I T I M P O S E D A S E R I E S O F REQUIREMENTS FOR EX TENDING CREDIT TO MEMBERS OF T H E M I L I TA R Y A N D T H E I R DEPENDENTS.

INDEPENDENT DEALER NEWS

In mid-December, the Department of Defense issued a new interpretation of the Military Lending Act, impacting sales to members of the military and their dependents. When Congress passed the Military Lending Act, it imposed a series of requirements for extending credit to members of the military and their dependents. However, Congress also created several exemptions to those limitations, including one for the extension of credit that is expressly intended to finance the purchase of a motor vehicle when the credit is secured by the motor vehicle purchased. Congress included a similar exemption related to credit extended for the purchase of personal property. The new interpretation drastically alters the scope of what the industry previously understood the motor vehicle exemption to include. Before, dealers and finance companies understood the motor vehicle exemption to include the extension of credit for all things included in a motor vehicle transaction, such as the purchase price of the car, taxes and other state fees, negative equity and voluntary protection products like service contracts, GAP, etc. Now, DoD has turned that on its head. At issue is whether financing above and beyond the actual purchase price of the vehicle takes the transaction out of the safety net of the exemption. DoD’s interpretation says it depends on what is being financed. “Generally, financing costs related to the object securing the credit will not disqualify the transaction from the exceptions,” it reads, “but financing credit-related costs will disqualify the transaction from the exceptions.” So what are “costs related to the object securing the credit”? DoD provided some examples of costs that fit firmly within the exemption. Items such as negative trade equity, extended warranties or service contracts, and “optional leather seats within that vehicle.” What about “financing credit-related costs”? DoD said financing items such as GAP, credit insurance and “additional ‘cashout’ financing” are not included within the exemption.

March/April 2018

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According to DoD, any dealer who finances those credit-related costs is subject to the Military Lending Act regarding transactions as far back as Oct. 3, 2016 – even though the new interpretation is just weeks old. So what should you do? Dealers selling and financing credit-related products such as GAP and credit insurance should determine whether customers are members of the military or dependents of military servicemembers prior to offering F&I products for sale. Dealers can check by entering the customer’s social security number and birthdate into DoD’s MLA website at https:// mla.dmdc.osd.mil/mla/#/single-record. While other services might be available to provide that information, checking that website or subscribing to an MLA offering notated on a credit report from a credit reporting agency provides a safe harbor for determining covered persons. If customers are covered by the rule and you decide to sell credit-related products, specific disclosures must be provided in writing and orally. In addition, the transaction is subject to the military APR rate cap of 36 percent and other contractual limitations will be imposed, including a ban on arbitration provisions. One of the options many are considering to ensure compliance is simply not offering credit-related products to those covered by the rule. Many dealers, once they determine a consumer is covered by the MLA, are simply informing the covered customers that creditrelated products are not offered for sale. Regardless of which compliance option they choose, dealers should consult with their attorneys to determine which products are “credit-related” and thus potentially subject to the rule. Your individual lawyer can provide you with specific legal advice tailored to your business. In the meantime, rest assured NIADA is working with other interested industry partners, members of Congress and federal regulators to express our concerns with the new rule and the lack of process involved in issuing it. DoD did not provide notice of the interpretation nor an opportunity for interested parties to comment before it was issued, precluding NIADA and other stakeholders from pointing out the harm that will come to both the military servicemembers and the industry. One of our strategies in explaining our position is to illustrate the value of those credit-related products. So if you as dealers are aware of any of your military customers who have directly benefited from GAP, credit insurance or other similar products, please contact me at (817) 640-3838 or shaun@niada.com. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.

ACCELERATE | BY GWC WARRANTY

CRAFTING YOUR AUCTION GAME PLAN Be Ready for Game Day The auction is every independent dealer’s game day. The adrenaline. The sounds of anxious buyers pacing and analyzing every vehicle before it heads down the lane. But just like the best athletes prepare for each contest, the best dealers never head to auction without a game plan. Know where to go. Don’t be afraid to stray from your home field. Trying an online auction or one that’s a bit farther from you can help you score a deal. In each of these instances be sure to consider the cost of travel, transportation and delivery when deciding on a car’s overall value. Don’t go it alone. Your vehicle acquisition is only as good as the team you’re on. If you have a great eye for what to look for in a vehicle, bring along someone who can keep an eye on the budget. Conversely, if you have a grasp on the finances, bring along someone who can give an honest opinion about what it would take to get a vehicle lot-ready.

SAFETY WATCH

Never show your hand. It’s important to hide your emotions and never tip your pitches when it comes to winning at auction. Don’t get too excited when bidding for a vehicle and don’t get too disappointed if you miss out on one. Both reactions can tip off savvy buyers who can use that emotion against you. Have an eye for the odometer. The National Highway Traffic Safety Administration estimates upwards of 450,000 vehicles have altered odometers. Keep an eye on a vehicle’s mileage and look for red flags. If a car has low tire tread and bad brakes with under 20,000 miles, it might be a sign something’s afoot. Don’t discount repo cars. When a driver unwillingly gives up a car, it might still be in great shape. Bank-owned repo vehicles could be a solid opportunity for a home run of a deal since banks are usually motivated to get the vehicle off their books. Stick to your game plan. Treat your auction budget like a salary cap. Set a spending target and don’t stray from it. There’s always another auction and another chance to find the right purchase for your lot.

COOPER RECALLS TIRES FOR SEPARATION Incorrect Rubber Compound Cooper Tire & Rubber Co. is recalling 41,014 Cooper Cobra Radial G/T tires, sizes P215/70R14, P225/70R14 and P225/70R15, Cornell 1000 tires, size P235/75R15, El Dorado Golden Fury GFT tires, size P205/75R15, Futura GLS Super Sport tires, size P225/70R14, Mastercraft Avenger G/T tires, size P225/70R14, Mastercraft MC-440 tires, sizes 185/60R15, 215/60R16, 225/60R16, 225/60R17 and 205/55R16, Starfire RS-C 2.0 tires, sizes 215/60R16 and 205/55R16, Starfire SF-340 tires, sizes P215/65R16, P185/60R15, P215/60R16 and P225/60R16, Cooper Trendsetter SE tires, sizes P205/75R15 and P235/75R15, Mastercraft A/S IV tires, sizes P205/75R15 and P235/75R15, and Vanderbilt Turbo-Tech G/T Radial tires, size P225/70R14. These tires were manufactured with an incorrect belt rubber compound that may result in poor adhesion of the rubber to the belt wires, potentially resulting in a belt separation. Cooper will notify owners, and dealers will replace the tires, free of charge. The manufacturer has not yet provided a notification schedule. Cooper’s number for this recall is 170.

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March/April 2018

INDEPENDENT DEALER NEWS

RETAIL READY | BY JUSTIN M. OSBURN

DESIGNING A SUPERIOR MEET AND GREET Crafting and Reviewing the Play Recently I was on an airplane and the lady next to me struck up a conversation. She asked what I did for a living and I told her I consulted independent auto dealers. She became very inquisitive about the car business. She quickly offered her fear of car shopping and told me about her recent experience that turned into a nightmare. I asked her what emotions she felt when thinking about driving onto a car lot to purchase a vehicle. She said, “Fear of being screwed.”

This information is nothing new. However it is the building block of how critical an effective meet and greet can be to our prospects. An additional BHPH fear from the prospect is fear of getting turned down. Our first impressions and ability to gain trust set the sales process up for success or failure. While there are certainly dealerships full of sales professionals who open with a competitive meet and greet, there are some that struggle to offer a consistent and superior greeting to prospective buyers. Why? Why do some nail it time and time again while others struggle to get even one sales professional on the team to conduct a first-class meet and greet? Here are a few steps your dealership can take to improve the overall execution of the meet and greet on the lot, right now! Leadership must decide the expectations of the meet and greet. Team members do not usually wake up each morning and say, “Self, today I am going to have a horrible day and do everything I can to be disruptive and not follow my manager’s instruction.” Actually, most team members come to work each day willing to follow great leaders and the tactics that produce results. A pitfall easy to overlook is no structured script or direction for the sales team to learn, practice and perfect their meet and greet. A critical step to improvement is the leadership deciding, with clarity, how the meet and greet should be conducted and then teaching and coaching the team members to replicate that vision with repetition and practice. Consider regular, short sales meetings each morning. This gives the leadership an opportunity to see who is at work, who is not, who is late and who came dressed for success as well as get a pulse of the team’s attitude for the day and offer some quick and structured practice. Coach the sales department on how to run “the play” of meet and greet. When team members are confused or don’t know what to do, it’s human nature to do nothing, to stand still in the confusion. This is very apparent when a sales team member demonstrates hesitance to take an “up.” They are not sure what to do.

INDEPENDENT DEALER NEWS

March/April 2018

You could fire them, or yell, or, worse, quietly remain bitter toward them as you both drown in failure. An alternative approach is to coach them how to run “the play” of meet and greet laid out in the first step. Then, rehearse it with them until they demonstrate perfect practice. If a mystery shopper walked on to your lot today and was greeted by the sales team, what would it sound like? Evaluate what works and does not work. If there is a well-crafted meet and greet plan and the team is demonstrating perfect practice, leadership should consistently encourage feedback on what parts of the play work and which parts could be improved.

THE GOAL

OF A MEET AND GREET SHOULD BE TO OFFER A G R E AT F I R S T I M P R E S S I O N , O P E N U P THE ABILIT Y TO BUILD RAPPORT AND U LT I M AT E LY M O V E T H E P R O S P E C T T O THE NEX T STEP IN THE SALES PROCESS. In football, a coach draws up a play and shows it to the team, then they practice all week and run the play in the next game. Certainly it doesn’t end there. The coach and the team are interested if the play resulted in big yardage, short yardage or even a loss of yards. They watch film after the game to review how the opponent responded to the play and what parts worked or did not work. If the play lost yards, it is not necessarily scrapped. Perhaps the blocking assignments need tweaking, a different player needs to touch the ball or the play needs to be run in a different situation. Once leadership at the dealership has drawn up a meet and greet, shown it to the team and rehearsed it, there should be a review with the team after it is has been used to see if it needs to be tweaked, changed up and/or improved. What are the results? What is the goal of a meet and greet and how do leadership and the team know if it was a successful play or not? The goal of a meet and greet should be to offer a great first impression, open up the ability to build rapport and ultimately move the prospect to the next step in the sales process. What is the next step? Can your leadership and team answer that question, consistently? Tip: A great opening question: “Hi, my name is Justin. Have you been to our dealership before or is this your first time?” I’d love to hear creative plays your team is running on the meet and greet. Typically a sincere and prepared opening has great results. For a few more opening questions that work, email me at justin@niada.com. Justin Osburn is a moderator, consultant and trainer for NIADA Dealer 20 Groups, offering more than a decade of experience in retail and Buy Here-Pay Here executive management. He can be reached at justin@niada.com.

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INDEPENDENT DEALER NEWS

March/April 2018