OHIO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
DEALER INDEPENDENT
MARCH/APRIL 2019
NEWS
| PAGE 14 |
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WWW.OHIADA.ORG MARCH/APRIL 2019 INDEPENDENT DEALER NEWS 1
MARCH/APRIL PREFERRED PARTNERS 2019 ASSOCIATION NEWS
INSIDE
06.....Use Data and Technology to Up Your Game 07............................................ Director’s Message 08...............................New & Renewing Members 09.....The Importance of a Supplier’s Knowledge 10................................NIADA Government Report 13..........................Warranty vs. Service Contract 14........................................ The “Wow” is Worth it
ADVERTISERS INDEX
AutoZone............................................................. 7 Columbus Fair AA ............................................IFC Corry Auto Dealers Exchange.......................... BC Manheim ............................................................. 11 Micro 21................................................................4 NextGear Capital............................................. 8-9 Value Auto Auction.......................................... IBC vAuto.................................................................... 5
WHAT’S NEW
CONVENTION R E G I S T R AT I O N O N L I N E Registration for the 73rd annual NIADA | NABD Convention & Expo is now online! You don’t want to miss this industry-leading mega-conference! The event is June 17-20 at the Venetian in Las Vegas. Learn more and register today at www. niadaconvention.com.
700 Credit ACV Auctions ADESA Cincinnati/Dayton, Inc. ADESA Cleveland Auto Auction ADESA Mercer AFC-Automotive Finance Corp - Columbus AFC-Automotive Finance Corp - Franklin AFC-Automotive Finance Corp - Ohio AFC-Automotive Finance Corp- Perrysburg AFC-Automotive Finance Corp - Cleveland AFC-Automotive Finance Corp - Corporate American Guardian Group of Companies AutoZone AutoTrader Carfax Car-Ware
Columbus Fair Auto Auction Comsoft Electronic Merchant Systems Frazer Computing, Inc. Integrity Warranty LLC Manheim Cincinnati Auto Auction Manheim Ohio Auto Auction NextGear PassTime Phoenix Financial Solutions Inc. Pro Credit Express / ProMax ProGuard Warranty Inc. Protective Asset Protection Stolly Insurance Group The Milby Group Insurance Agency, Inc. UIS Insurance & Investments
BOARD OF DIRECTORS Executive Director
President
Past Chairman
Treasurer
Chairman
Wendy Rinehart OIADA 614-863-5800
Mark Meadows Miracle Motor Mart 614-337-0037 David Adkins Wilmington Auto Sales, Inc. 937-382-7714
OFFICE
For more information, contact OIADA at (614) 863-5800 or www.ohiada.org
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838
For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. 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 © 2019 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
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Scott Welch Lock 20 Auto, Ltd 740-498-8811
Board Members Dmitry Shilman Cleveland Auto Wholesale 440-951-0808
Randy Shirk Randy Shirk’s Northpointe Auto 419-729-2688
Craig Leitwein Gahanna Auto Sales 614-475-7148
Jay North Jay North, Llc 937-325-3748
Robert Fahey Fairdale Auto Sales 740-432-4185
Secretary
Lev Shafer Shafer Auto Group Columbus, OH 614-654-2525
Thomas Onesti Car Port 330-726-6633
Scott Shook Shook Auto Inc. 330-339-5711
Lisa Dugger Madison Motors London, OH 740-490-0028
Thomas Smith Smitty’s Auto Sales 937-981-4317
MANAGEMENT MATTERS | By Joe Oliveri & Steve Nicholson
USE DATA AND TECHNOLOGY TO UP YOUR GAME
DRIVE
LONG-TERM
SUCCESS
If you’re anything like the average consumer, you spend five hours each day on your smartphone – maybe more. And you’re probably doing more than catching up on the news and scrolling through your social media feed. You’re researching purchases big and small, buying birthday presents and maybe even ordering dinner or scheduling a grocery delivery. There’s an app for just about everything – and some of them even help make your life easier or improve productivity, if you can figure out how to use them. Technology and data have completely redefined how consumers interact with the world around us. It’s not just about replacing Columbia House’s mail-order CD club with iTunes and Spotify, or Blockbuster with Netflix and Hulu. And it’s more than just the ease of pre-ordering a custom drink so you don’t have to wait in line at the coffee shop. It’s about reducing friction and adding convenience to every consumer interaction – across every facet of your life. The good news is that it’s not just consumers profiting from this boon. Technology and data are racing their way up the supply chain into the wholesale automotive marketplace – and as dealers, you can benefit. You now have more information and resources at your fingertips than ever before to make smart, informed decisions – faster than ever. Here are three ways you can do more to increase both margins and profits. START WITH SMARTER SOURCING The average car buyer visits just 1.6 auto dealerships while car shopping. That’s a big change from 15 years ago, when buyers visited an average of five dealerships. On the other hand, 41 percent of used car shoppers don’t purchase a vehicle from the first dealership they visit because the dealer didn’t have what they wanted. Why is this important? It means inventory matters. Consumers are doing their research before they ever set foot on your lot. In fact, there’s a good chance they know more than your sales team about the specific vehicle they want. So if you don’t have what they want, they won’t stop by, or they’ll quickly move on. So how do you source the right cars? The first step is adopting a 360-degree approach to your remarketing strategy. The choices abound when it comes to marketplaces for buying and selling used vehicles – in lane, dealer-to-dealer, mobile apps, and online. By adopting a holistic 360-degree approach to your remarketing strategy – maximizing what each venue has
AT
YOUR
DEALERSHIP
to offer – you can ensure you have access to the broadest array of inventory at the best prices. Going digital first goes hand-in-hand with adopting a 360-degree approach to your remarketing strategy. While it’s important to not limit yourself to one channel for inventory acquisition, some of the best quality, most attractively priced inventory is available first through digital channels. It’s the first opportunity to bid on cars before they go to physical auction, and also broadens your geographic reach for finding good cars at a great price. Whether it’s a dealer-to-dealer mobile auction marketplace like TradeRev or an online auction like ADESA DealerBlock, these digital and mobile channels typically offer great vehicles and lower fees. Plus, they’re always on, allowing you to bid from anywhere at any time. So if you aren’t already including these channels in your strategy – and seeking them out first – you’re missing out on some great inventory. TAP INTO BIG DATA Big data isn’t just for big companies. Your customers take advantage of big data and analytics when doing their car-buying research – and now you can, too. The past decade has brought many new tools to market that can help dealers optimize their lots. New data and technologies can help dealers not only acquire the right inventory, but sell it smarter and faster. The right tools can increase both your cash flow and your profit margin. Find the right vehicle with new targeted recommendations. It’s all about efficiency – getting the right car to the right dealer and then to the right consumer at the right time. New mobile and digital marketplaces have given dealers access to virtually unlimited inventory options – but your time is precious, and there aren’t enough hours in a day to sort through all the options. Today’s remarketing platforms increasingly help take the leg work out of this for you. For instance, our data analytics arm analyzes millions of data points each day to make specific, tailored dealer buy recommendations for your rooftop. These tailored recommendations assess market dynamics, whether a vehicle is undersupplied, and what moves from your lot quickly – just to name a few. Still want to do your own research? Apps like Autoniq seamlessly integrate your vehicle pricing guide, market report and VHR subscriptions into one easy-to-use
6 INDEPENDENT DEALER NEWS MARCH/APRIL 2019 WWW.OHIADA.ORG
interface so you don’t have to flip between multiple platforms – saving you time when buying on trade, shopping online or in the lane. Just remember: a vehicle sitting on your lot is a rotting asset. Make you sure you buy it right from the start – and if it’s not selling, get rid of it. Start flooring something that data shows will sell, and at higher margins. UP YOUR RETAIL GAME Using data to source the right vehicles and optimize your lot is a great start, but don’t overlook opportunities to improve your retail game, too. It can also help you better understand your customer and make every customer interaction a positive experience – helping differentiate you from the other dealer across the street. In fact, 77 percent of consumers have chosen, recommended, or even paid more for a brand that provides a personalized service or experience. Know your customers and their online habits. Are they a traditionalist who always pulls the vehicle history report and checks Consumer Reports first? Or, are they a cost-conscious consumer glued to their smartphone who spends more than 17 hours price comparing online before stepping foot in a physical dealership? A digital-first retailing approach can yield invaluable data about your customers, helping you better target your sales approach and close the deal. Make it personal. We’ve gotten spoiled, and expect every in-person shopping experience to be as personalized and painless as Amazon or Apple. Consumers want it to be a unique, personalized experience – whether chatting in the check-out line with the friendly cashier who never forgets your name or binge-watching your new favorite show that Netflix recommended based on previously watched shows. Why should you care? Consumers will pay more for it: 54 percent would buy from a dealership that offers their preferred experience, even if it didn’t have the lowest price. It’s not rocket science. Combining the right products at the right price with a personalized customer experience will help you sell more cars, profitably. Joe Oliveri is general manager of data as a service at KAR Auction Services, Inc., the parent of more than 20 automotive remarketing brands and services including ADESA, TradeRev, AFC and Autoniq.
Steve Nicholson is director of major dealer accounts at TradeRev, North America’s leading dealer-to-dealer digital auction platform.
ASSOCIATION NEWS | By Wendy Rinehart
DIRECTOR’S MESSAGE
INDUSTRY
UPDATES
SALVAGE TITLE UPDATE: IT’S A GOOD START! I’m sure you are aware of the salvage title issue we’ve been dealing with in Ohio. In December we scored a huge win with the passage of Senate Bill 263 (thanks to our friends at OADA!). That statute placed a ban on the BMV using NMVTIS reports/data to brand titles as salvage. This ban is in place until January 1, 2021, while a study group looks at the effect and accuracy of using those reports. This means we’re off to a good start but it’s not over yet. Legislation will be needed to update Ohio laws and rules to ensure titles are processed correctly and consumers and dealers are protected. Please stay tuned for further updates and requests for action. 2019 OIADA EVENTS: YOU DON’T WANT TO MISS THEM! • March 15: Annual Dinner and Texas Hold ‘Em Tournament
• July 19: OIADA Golf Outing • November 9: Annual Expo and Awards Banquet Information and registration for these events can be found on our website: OHIADA.org. For more information, contact the office at 614-863-5800 or info@ohiada. org. OHIO’S NEW TITLE: ROLLING OUT COUNTY BY COUNTY In January 2019, the new certificate of title design was introduced and began implementation. Implementation will occur in multiple phases over several months, county by county. BMV Dealer Licensing has posted an announcement on the Dealer Licensing System (DLS) advising of the new certificate of title. Dealers who use a dealer management system may need to have their DMS vendor make adjustments. The dealer may obtain the pdf of the title assignment/application that may be used for setup and alignment
within their DMS. That pdf can be retrieved from the dealer system. If the vendor requires additional information, please have them call 614-752-7637. DEALER LICENSING – CONTINUING EDUCATION? Since 2015, the state of Ohio has required a pre-license class for anyone wanting to become a used motor vehicle dealer. The pre-license classes are working well for new dealers, but we have over 30 years’ worth of dealers who were licensed before this requirement. These dealers are doing things the only way they know how, and it’s sometimes wrong. This doesn’t mean they’re bad dealers. It could just be they haven’t been shown any other way to do something or they haven’t been taught a compliant way to do it. What are your thoughts on a continuing education program for licensed dealers? I’d love to hear them! Email me at wendy@ohiada.org.
WWW.OHIADA.ORG MARCH/APRIL 2019 INDEPENDENT DEALER NEWS 7
ASSOCIATION NEWS
NEW AND RENEWING MEMBERS
THANK
YOU
A & S Auto Mega Sales LLC Akron Auto Auction ALB Auto Sale LLC Audia Motor Group LLC Bellefontaine Motor Sales BG Southside Motors LLC Birdeye, Inc. Black Diamond Auto Ltd BlueLine Classics, LLC Bob’s Auto Sales Bonafide Customs LLC Bond Motorcar Company, Ltd. Boss Auto Sales LLC Brock’s Auto Sales Bryan Auto Depot Inc. Buckeye Auto Connection LLC Budget Auto Cambridge Rent A Car Inc. Car Source LLC CarPort Chapanars Quikeys Chrome Motors Comsoft Country Auto Sales Inc. Credit Acceptance Corporation Dayton Auto Auction Diesel Truck Source LLC Drive Time
Drive Trend Dunn Brothers Premium Auto Corp. Elza Auto Group LLC Enterprise Automotive Ernies Auto LLC Farnzy’s Motors LLC Findlay Truck and RV Sales First Bank of Ohio Loan Center Floorplan Xpress Flory Motors LLC Foreign Exchange Glory Auto Sales LTD Grove City Auto Sales LLC GTX Auto Group Inc. Guardian Finance Company Harvey’s Auto Sales Indiana Auto Auction Integrity Warranty LLC J Beckner Automotive Kidron Kars Inc. Kimaco Auto Sales King Collision Auto Repair Motor Co Lakeshore Auto Sales LLC Landen Auto Mart LLC Larry Schaaf Auto Sales Inc. Lifetime Automotive LLC
8 INDEPENDENT DEALER NEWS MARCH/APRIL 2019 WWW.OHIADA.ORG
Luxury Imports LLC Luxury Motor Car Company Magic City Motorcars Inc. Main Stream Auto Sales LLC Manheim Cincinnati Auto Auction Manheim Ohio Auto Auction McMullen Enterprises LLC Micro 21 Midwest Auto & Truck LLC Mission Auto Connection Inc. New Wave Car Company LLC Newsome Auto Sales Inc. North Coast Auto Mall Oak Hill Auto Sales of Wooster LLC Ohio Specialty Services LTD Platinum Motors LLC Portage Car & Truck Sales Inc. Precise Motors LLC Pro Team Corvette Sales Quality Cars QC LLC Quality Carz & More! LLC Rader Car Company Rafael Motor Sales LLC Reel’s Auto Sales Ride Smart Inc. Rock Motorcars LLC
Route 21 Auto Sales RS Recovery and Auto Sales LLC Rush Sales and Leasing, LTD S & S Wholesale Consulting LLC Sabettas Classics Select Auto Shaddai Auto Sales LLC Rino’s Auto Sales Inc. Southern Select Auto Sales Spark Auto Sales Sprinkles Auto Sales LLC Stout Sales II LLC Stratton Auto Sales Switchcars Inc. The Milby Group Insurance Agency, Inc. U-Drive Auto Group LLC Via Roma Auto Sales Village Auto & Truck Sales LLC VIP Auto Sales & Service LLC West 40 Auto Sales Inc. Westerville Auto Group Wheels and Deals Columbus Auto Source Wilmington Auto Sales and Service Inc. Your Auto LLC
LEGAL MATTERS | By Mark Turner and Cindy Menta
THE IMPORTANCE OF A SUPPLIER’S KNOWLEDGE
PART
7
OF
CSPA
SERIES
This article continues our 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. Previously in this series, we’ve explained why you need to understand consumer law, to whom it applies, how to avoid a CSPA lawsuit, and what to do if a suit is filed against your business. Find these articles in previous issues of Independent Dealer News or visit www. gertsburglaw.com/blog for the full CSPA series as well as more legal tips for your business. There are a variety of responsibilities and risks associated with being a business owner, especially if you are a “supplier” according to the Consumer Sales Practices Act (CSPA). For instance, if a court finds you are a supplier and have violated certain provisions of the CSPA, you may be liable for three times the consumer’s actual damages, also called “treble damages.” Though treble damages alone can lead to a sizeable judgment against the supplier, if the consumer can demonstrate that the supplier knowingly committed a deceptive or unconscionable act, then the consumer may recover their reasonable attorney fees as well. (See R.C. 1345.09(F)(2)).
These attorney fees may be significant, particularly if the lawsuit proceeds through trial. Fortunately for suppliers, these damages are discretionary – not mandatory like treble damages – and depend heavily on whether the supplier had “knowledge” that such act was being committed. But what does having “knowledge” really mean? The Ohio Revised Code defines “knowledge” as it pertains to the CSPA to mean “actual awareness, but such actual awareness may be inferred where objective manifestations indicate that the individual involved acted with such awareness.” (R.C. 1345.01(E)). Because many have found this definition to be unclear, the Ohio Supreme Court has interpreted the provision to mean “the supplier need only intentionally do the act that violates the [CSPA]. The supplier does not have to know that his conduct violates the law for the court to grant attorney fees.” This interpretation can be problematic for suppliers because it means they can violate the CSPA even if they have no intent to deceive the consumer. Simply put: the supplier merely needs to know the act is taking place to be found liable under the statute. For example, if you are hired as a contractor
to perform work on a homeowner’s patio and you hire a sub-contractor to perform portions of the work without informing the homeowner, you would “knowingly” be violating the CSPA, as that type of conduct is considered to be an “unfair and deceptive practice.” Therefore, to help avoid getting hit with treble damages and attorney fees, the supplier should take precautions to ensure its contracts, forms, policies and procedures are all in compliance with the CSPA. It should also take steps to ensure all employees follow these procedures. Or, if a consumer has already filed a lawsuit against the supplier for violating the CSPA, the business owner should discuss the extent of their “knowledge” of the violation with their attorney, and consider sending an offer to cure to the consumer to, at the very least, limit their exposure for the consumer’s attorney fees (as discussed in the previous article). This article is meant to be utilized as a general guideline for understanding the CSPA. Nothing in it is intended to create an attorney-client relationship or to provide legal advice on which you should rely without talking to your own retained attorney first. If you have questions about your particular legal situation, you should contact a legal professional. Mark Turner and Cindy Menta are attorneys at The Gertsburg Law Firm. They can be reached at mt@ gertsburglaw.com, or by phone at 440-571-7773.
WWW.OHIADA.ORG MARCH/APRIL 2019 INDEPENDENT DEALER NEWS 9
WASHINGTON UPDATE | By Shaun Petersen
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. REGULATORY Federal Reserve: The Federal Reserve announced it will not implement two interest rate increases it had planned for 2019, deciding instead to “be patient” and keep the federal funds rate at its current range of 2¼ to 2½ percent. Fed chairman Jerome Powell said while domestic economic indicators, including unemployment, are strong, global uncertainty, especially in China and Europe, along with “muted inflation pressures” and the recent U.S. government shutdown, call for caution. “The case for raising rates has weakened somewhat,” he said. “We believe we can best support the economy by being patient and evaluating the outlook before making any future adjustment to policy.” Powell said the decision was not influenced by calls from the White House to cancel the rate increases. “My only motivation is to do the right thing for the economy and the American people,” he said. “That’s it. “The situation calls for patience, I think it does. That stance of policy is appropriate. We see these uncertainties. We see a time where we have the luxury of being able to wait.” Some analysts said the Fed could even reverse course and actually lower interest rates in late 2019 or early 2020. Internal Revenue Service: Soon after President Trump signed the resolution to end the government shutdown until at least Feb. 15, the IRS announced it had begun accepting and processing 2018 federal tax returns – one day earlier than the previous year’s tax-filing season – and expected to have refunds out on time.
The IRS noted that by law it cannot issue refunds for returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit before Feb. 15. That law, designed to give the IRS more time to detect and prevent fraud, went into effect last year. But even with the EITC and ACTC refunds and the additional security safeguards, the IRS still said it expects to issue more than 90 percent of refunds in less than 21 days. The agency said it expects refunds for returns claiming the EITC and/or ACTC to be available beginning Feb. 27 at the earliest for returns requesting direct deposit that have no issues. The “Where’s My Refund?” tool on the IRS.gov website and the IRS mobile app is the best way to check the status of a refund, the IRS said. The IRS began updating that tool Feb. 23. LEGISLATIVE Rep. Maxine Waters (D-Calif,), chairwoman of the House Financial Services Committee, urged the financial services industry to “provide flexible workout arrangements” for consumers affected by the lengthy government shutdown. In a letter to the heads of financial services industry trade associations and the largest credit reporting agencies, Waters called for “a prompt written response” from those organizations. Waters said the shutdown inflicted “tremendous harm to millions of Americans. Affected employees, contractors and other individuals did not cause the shutdown and should not suffer any adverse consequences from these circumstances.” Waters said affected individuals should contact their lenders immediately if they are having financial issues, but called for financial institutions to “to engage in proactive outreach” and make
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arrangements for those unable to pay bills in full or on time due to the shutdown. She also asked institutions to consider whether it’s fair to report adverse information about those customers to credit reporting agencies. “It is in no one’s interest to punish those who may be enduring financial stress through no fault of their own,” she said. GRASS ROOTS State legislative sessions are in full swing across the nation, which means legislation that could affect the used vehicle industry are beginning to make an appearance in various State Houses. Among those bills are proposals to place restrictions on the use of GPS and starter-interrupt devices in a number of states, including New York, Indiana, South Carolina and Virginia, bills that would have an adverse impact on Buy Here-Pay Here dealers – and their often credit-challenged customers. In addition, new recall bills have been introduced in New York and Missouri. NIADA is studying those bills and will work with its affiliated state associations to oppose overburdensome regulations that would adversely impact independent vehicle dealers and the consumers who count on them for transportation. PAC A contingent of NIADA leaders met with Sen. John Cornyn (R-Texas) at an event for the senator Feb. 26 in Washington D.C. During the event, the NIADA-PAC Fund made a contribution to Cornyn’s campaign. Cornyn is a key member of the Senate – he was Majority Whip until a six-year term limit made him give up that post in January, and he is a member of the Senate Finance and Judiciary committees. Shaun Petersen is NIADA’s senior vice president of legal and government affairs
BHPH PERSPECTIVE | By Trisha Keiser
A DECADE IN REVIEW FOR BHPH
SOME
THINGS
HAVE
January 14, 2019, marked the 10-year anniversary of my loan servicing and debt collections company, Phoenix Financial Solutions, Inc. I am very proud to say my business has stood the test of time. I have found myself recently reminiscing and examining the changes that have taken place in the Buy Here-Pay Here and collections industry. Looking back also shapes my vision for the future, and the future is bright for BHPH! When I first started in this line of work in 2002, I worked for my father’s company, NCCR, which provided similar services as I do now. I came from a newspaper advertising background with a political science degree. I knew absolutely nothing about debt collections, repossessions or the car selling industry. But that wasn’t necessarily a bad thing. Those early days were about getting my feet wet, digging into and understanding the processes and learning the great value of collecting delinquent accounts through civil judgment obtainment and enforcement. As my father’s company grew and evolved, so did I. Over time, probably my biggest contribution to his business was helping it become more efficient and discovering ways for all of us to work smarter, not harder. One of my father’s favorite sayings was the “KISS” philosophy: “Keep it Simple, Stupid!” I often think of that phrase now when analyzing different aspects of our business operations, and it has served us well. In 2009, after my father decided to close NCCR, I was faced with a big decision. I could find a new job or start my own company. Although very daunting, with the support of my family I decided on the latter. Even though it has been extremely challenging
CHANGED,
MUCH
HAS
at times, I haven’t regretted that choice one bit. For many, it’s the American Dream to roll the dice and take a chance. Like my father before me, I decided it was my time to do so. Some things have changed in the past 10 years. These changes – such as skip tracing methods and the customer’s desire to shop online and pay using electronic methods – have greatly impacted how we operate. Similarly, the clear understanding that we need to be focused on compliance every step of the way, and making sure our subcontractors do the same, has only improved our operations and made us less susceptible to CFPB actions and potential lawsuits. Over the past decade, as the economy changed we had to roll with the punches. The recession was hard for us but also extremely lucrative as more people were forced to find transportation through dealer financing as banks and finance companies tightened up requirements. Similarly, as the economy improved, many of those same customers were able to obtain traditional financing and BHPH sales suffered. Currently many industry experts are predicting a large portion of those same customers will be making their way back to BHPH soon as charge offs increase. While I do not hope or predict a recession in our near future, everything is cyclical and I wouldn’t be surprised if we at least see an uptick in BHPH sales in the next year. Probably the biggest thing that hasn’t changed is people. People still need affordable, reliable transportation and would choose the freedom of owning their own set of wheels any day over public transportation, especially in small towns that don’t even offer such a service. Having your own
12 INDEPENDENT DEALER NEWS MARCH/APRIL 2019 WWW.OHIADA.ORG
NOT
transportation also provides a sense of pride and accomplishment, the value of which cannot be underestimated. Further, no matter what year is displayed on the calendar, people still expect to be treated with respect and given some breadth of understanding when they fall on hard times. That is why BHPH, and companies that provide services to dealers, have been so crucial to our economy and why they will continue to be so in the foreseeable future. By providing people with affordable, reliable transportation, we help them get to work, keep their jobs, improve their quality of life and take advantage of opportunities otherwise not available. It’s kind of a big responsibility if you think about it. As BHPH operators and loan servicing companies look toward the future, we would be wise to not fight change, but embrace it and choose to be excited about the positive impact it can have on the car selling industry as a whole. If we want respect, we have to earn it like anyone else and continue to prove we deserve it. Further, always remain customer focused. It sounds cliché, but adhering to that one objective and value above everything else has worked for countless businesses over the years. Those who ignore its importance are left behind. Businesses that adapt to customers’ changing needs while still understanding the importance of customer service and operational compliance will be the businesses that remain a decade from now and are able to reminisce and celebrate like I am now. Have a great 2019 everyone! Trisha Keiser is the president of Phoenix Financial Solutions, Inc. located in Shelby, Ohio. She has over 15 years of experience in collecting auto receivables and deficiency balances. For more information contact her at 419-565-7959 or trisha@phoenixcompanies.biz.
LEGAL MATTERS | By Allison L. Harrison
WARRANTY
WHAT
IS
THE
DIFFERENCE?
A lot of my clients offer their own limited warranty or service contract to give buyers piece of mind about their new purchase. A warranty or service contract can be extremely beneficial to the consumer and the business, but it must be done correctly. If it is not, it opens the dealer up to endless liability. I frequently hear dealers use “service contract” and “warranty” interchangeably. This is dangerous as each term is defined differently and creates a different list of obligations for the dealer. A “warranty” is (A) any written affirmation or promise made in connection with the sale of a vehicle by a dealer to a consumer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time or (B) any undertaking in writing in connection with the sale by a dealer of a vehicle to refund, repair, replace, or take other remedial action with respect to such product in the event that such product failed to meet the specifications set forth in the undertaking, which written affirmation, promise, or undertaking becomes part of the basis of the margin between a supplier and buyer for purposes other than resale of the product. A “service contract” is a writing to perform, over a fixed period of time or for a specified duration, services relating to the maintenance or repair (or both) of the vehicle. With a warranty, the dealer is essentially telling the customer the vehicle will not break, but if it does here is how we will fix it. Under a service contract, the dealer is not making any representation about the current or future condition of the car. The service contract states if X happens, you will not have to pay full price to have it fixed. The bigger difference between a service contract and warranty is who pays for the product. Warranties are included in the price of the vehicle and cannot be part of the bargain. A service contract is paid for by the consumer in addition to the price of the vehicle and can be negotiated as to how extensive the coverage is and how much it costs. Often dealers will sell a “warranty” when in fact the dealer is selling a service contract.
SERVICE CONTRACT
If you include repair coverage for free with each vehicle, you are offering a warranty. If you offer repair coverage for a fee in the F&I office, it is a service contract. This is an important distinction, especially if the matter is ever litigated. A breach of warranty claim may allow for the recovery of more damages, including attorney’s fees, where a breach of contract will be limited to the customer’s actual damages. If you are offering either a warranty or a service contract, you must have written agreement beyond the buyer’s guide. The buyer’s guide is meant to be a disclosure, not a warranty or service contract. Under federal law, a written warranty shall include the following information: (a) name and address of warrantor(s), (b) party/parties to whom the warranty is extended, (c) parts
covered, (d) statement of what warrantor will do in the event of a defect and how long they have to do it, (e) a statement of what expense, if any, the consumer must bear, (f) exceptions and exclusions from coverage, (g) dispute settlement procedure and general description of remedies available, (h) period of time the warranty is valid, and (i) period of time in which warrantor will perform warranty obligations. Federal law does not provide requirements of a service contract, but the service contract should have similar terms disclosed as the warranty. If you are unclear whether you are offering a warranty or a service contract, call OIADA at (614) 863-5800 or OIADA’s outside counsel Allison Harrison at (614) 440-1395.
WWW.OHIADA.ORG MARCH/APRIL 2019 INDEPENDENT DEALER NEWS 13
COVER STORY
THE “WOW” IS WORTH IT!
MANAGEMENT MATTERS | By Dave Anderson
CREATE
BETTER
EXPERIENCES
In his book Never By Chance, Joe Calloway said, “A brand is defined as a trademark or distinctive name, reputation, or capability that identifies and differentiates a product or service from the competition, for better or for worse.” Every company has a brand. That’s not the question. Does your brand positively differentiate you or render you to commodity status? Does it elevate or diminish the value people see in doing business with you? To delve deeper, a brand isn’t primarily about your logo, jingle, or creative graphics. These things may explain or reinforce your brand, but they aren’t your brand. Nor is building a powerful brand for your dealership accomplished through big ad budgets and slick promotional campaigns. Building a powerful brand happens when you create a culture that supports consistently creating “wow” customer experiences, and by hiring and training the right people at all levels within your organization capable of consistently delivering said experiences. Focus more on the “reputation, or capability that identifies and differentiates you from the competition” aspect of the brand than on a logo, trademark, or distinctive name to communicate it. As a leader, it’s your job to make sure this gets done daily, and that chasing greater excellence in this regard is a priority for every team member. Here are some supporting thoughts and strategies to help refine your focus on intentionally building and leveraging the power of your brand. · The bottom line is your brand is defined by customer experiences. You may declare what your brand is, but a customer defines it based on his or her experience with your company or product. In short, whatever a customer thinks about when they hear your dealership mentioned – which will be based on either a personal experience or one they’ve heard about from others – is your brand. You can say what you want about who you are, but your customers believe what they experience – and that is your brand. · In case the prior point wasn’t clear enough, let me rephrase it slightly: Nothing is more important than customer experience when it comes to brand management. If you want to improve the strength of your brand, you must elevate the quality of the experiences you’re creating for both team members and customers. That starts with hiring the right people at the
outset, setting clear expectations for the experiences you want created (experiential standards) and training team members to deliver that experience while holding them accountable for doing so. · A key to customer experience is consistency of performance. The more consistently great the experience is between departments, the stronger the brand. The greater variation you have between departments concerning the customer experience, or between your various locations, the weaker the brand. One bad apple in this regard will afflict the whole batch. · The best answer to the question, “Who on our team would create the most outstanding customer experience?” is “Any of them!” If you can’t give that answer, you have work to do, and lots of it. · The best way to influence a great customer experience is to create a great employee experience! Rest assured, if your team members aren’t having a “wow” experience working for you they’re not as likely to create similar experiences for your customers. Incidentally, micromanagers, oppressive work schedules, lack of training, hiring recklessly, inconsistent management, hypocritical leaders, tenured nonperformers and more all drain the “wow” out of the workplace for team members. · Keep in mind that even team members who are far removed from direct customer contact have a “ripple effect” impact on the customer experience. This is because of the effect they have on other employees. Naturally, if a co-worker is negative, incompetent, corrupt and indifferent, he or she will diminish the experience of teammates, causing frustration and lower morale – all of which has the potential to trickle down and affect the experience a teammate is trying to create for a customer. There’s much more to say about building your brand, but since the focus of this piece is on perfecting the customer experience, take some time with key team members to honestly evaluate these questions and address the answers you’re unhappy with: · Are the processes and protocols we have in place designed to just meet a customer’s expectations, or are they intentionally designed to get the “wow?” In either case, how can we do better? · Do we have variation in the customer experience between departments or locations? If so, why is that? How do we fix it?
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·H ow often do we talk about getting the “wow” in meetings, during one-on-one coaching sessions, in the interview process, and during onboarding periods? Since you can help change a culture by changing the conversation, what more can we do to shine a brighter light on this key responsibility for each team member? ·D o we realize our frontline team members (porters, sales associates, service advisors, receptionists and the like) have more daily opportunities to create a customer experience than the management team since they come into contact with more customers? How much training have they had on creating “wow” experiences? What training could we implement to improve the customer experience, starting with the onboarding of new associates? ·D o we have experiential standards for our organization that clearly define guidelines for the things we will always do – and never do – with a customer or when speaking with a customer? Are all departments and locations on the same page with these standards? If not, how and when do we fix it? ·D o you know how your experience is significantly different and better from those your competitor delivers – from meet and greet, to customer touch points, to your various processes, to the language you use, to follow up, to communication protocols for service, to what they do while waiting to get into F&I, and the like? If your answers aren’t many and compelling, you’ve got more work to do. If this seems like a lot of work, that’s because it is a lot of work. I never said building a great brand through “wow” customer experiences is easy. But I can assure you it is worth it. And if your people and dealership are continually in price battles to be the cheapest so you can get the deal, there’s a better way: create improved experiences and the price becomes less relevant. People pay more for better experiences, and they return for more and tell others to do likewise. Believe me, whatever it costs you in time, training, or dollars to build a “wow” brand, when all is said and done, the “wow” is worth it. Dave Anderson, “Mr. Accountability,” is a leading international speaker on personal and corporate performance improvement. He is also the author of 14 books and host of the podcast, The Game Changer Life.