Oklahoma Independent Automobile Dealers Association
DEALERS’ RESOURCE February 2011
“’Tis better to be silent and be thought a fool, than to speak and remove all doubt.” -Abraham Lincoln
In This Issue A Refresher Course: UMVPC Education Page 12 Using the New Privacy Notices Yet? Page 16 Preparing for the Future Page 18 Change Service Requested DALLAS, TEXAS Permit No. 2079
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OIADA, P.O. Box 6905, Moore, OK 73153
Visit Us Online At www.e-oiada.com OK_0211.indd 1
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INSIDE
MAGAZINECONTENTS 4 DAA of OKC Hosts OVE Seminar 12 A Refresher Course: UMVPC Education 16 Using the New Privacy Notices Yet? 18 Preparing for the Future
ADVERTISERSINDEX 71B Auto Auction ......................................... 11 ADESA ........................................................15 Albright Insurance ........................................ 7 AutoTrader.com.............................................. 5 Cars.com.......................................................13 Dealers Auto Auction of OKC ......... Back Cover Insurance Solutions........................................21 Jordan Insurance Group................................. 9 Loftis Wetzel Insurance................................. 23 Manheim.com .......................Inside Back Cover Manheim North Texas............Inside Front Cover SmartAuction.................................................17 United Acceptance......................................... 8 Western General / Protective.........................19
BOARD OF DIRECTORS PRESIDENT
VICE PRESIDENTS
CHAIRMAN OF THE BOARD
Julian Codding Reliable Motors, Inc. 9201 S. Shields Oklahoma City, OK 405-912-5000 juliancodding@msn.com
Chris Goad Regal Motors 3515 N. May Oklahoma City, OK 73112 405-917-5800 managerokc@regalcars.com
John Easttom Auto Mart of Elk City P.O. Box 981 Elk City, OK 73648 580-225-1100 automart@cableone.net
SECRETARY/ TREASURER
Bruce Beam Dealers Auto Auction of OKC 1028 S. Portland Oklahoma City, OK 73147 405-947-2886 www.daaokc.com
John T. Longacre, IV Taft Motors, Inc. 722 S. Linden St. Sapulpa, OK 918-224-7700 taftmotorsinc@msn.com
Glenn McDaniel I-35 Credit Auto 1113 SE 51st St. Oklahoma City, OK 73129 405-670-4100 gtamcd@aol.com David McQuerry McQuerry Motors, Inc. 1302 N. Harrison St. Shawnee, OK 74801 405-273-8171 mcquerrymotors@yahoo.com
Monte Shockley Shockley Auto Sales 2605 N. Broadway Poteau, OK 74953 918-647-3999 sas@clnk.net
OIADAOFFICE 813 NORTHWEST 34TH MOORE, OK 73160
EMAIL: odell.morgan@sbcglobal.net ROSE & ODELL MORGAN, Executive Directors
AMBER SNOOK, Administrative Assistant
JACKIE GARNER, Office Manager
JARED MORGAN, Electronics/ Software Technician
LYNNA KAY, Programmer STEVE MORGAN, Consultant MIKE MORGAN, Technical Aide
FOR INFORMATION ON HOW TO BECOME A MEMBER OF OIADA PLEASE CONTACT ROSE OR ODELL MORGAN AT 405-232-2947.
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM.
DEALERS’ RESOURCE IS A PUBLICATION OF AUTOMOTIVE DEALERS RESOURCE OF OKLAHOMA (ADR) PRODUCED ON BEHALF OF THE OKLAHOMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION (OIADA), P.O. BOX 6905, MOORE, OK 73153. THE DEALERS’ RESOURCE IS PUBLISHED MONTHLY BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION. PERIODICAL POSTAGE PAID AT ARLINGTON, TX, AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO OIADA, P.O. BOX 6905, MOORE, OK 73153. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF ADR OF OKLAHOMA, THE OKLAHOMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF OIADA OR NIADA DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT © 2011 BY O&R MORGAN, INC. DBA OIADA. ALL RIGHTS RESERVED. DEALERS’ RESOURCE IS A PUBLICATION OF AUTOMOTIVE DEALERS RESOURCE OF OKLAHOMA ON BEHALF OF THE OKLAHOMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION (OIADA), BUT IS MAILED TO ALL DEALERS IN THE STATE IN AN EFFORT TO EDUCATE AND ENCOURAGE NON-MEMBERS TO JOIN THE ASSOCIATION AND SUPPORT OUR EFFORTS TO IMPROVE THE IMAGE AND PROFIT POTENTIAL OF THE INDUSTRY. FOR 55 YEARS, WE HAVE WORKED TO REPRESENT THE INDEPENDENT MOTOR VEHICLE DEALER IN OKLAHOMA. WE NEED YOUR SUPPORT. FRONT COVER BY Mike Morgan STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Mike Harbour • mharbour@niada.com PRODUCTION MGR. Jacob Kerns • jacob@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing
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Dealers Auto Auction of OKC recently hosted a free Online Vehicle Exchange (OVE) seminar to familiarize dealers with the OVE system and explain the value and benefits of being able to buy and sell vehicles 24-7 using that system. These images caught some of the action at the seminar.
DAA OF OKC Hosts OVE Seminar
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Senate Amendments to Repeal 1099 Requirements Fail The U.S. Senate failed to approve amendments last November to repeal the onerous 1099 reporting requirement that’s part of the Obama Health Care Bill.
Both the Johanns and Baucus amendments failed to pass under the two-thirds rule. The Johanns amendment, which would have paid for the repeal with unused stimulus funds, failed 61-35. The Baucus amendment failed 44-35; it had no provision for offsetting the revenue loss.
T H E V O T E S W E R E A S F O L L O W S O N T H E J O H A N N S A M E N D M E N T: YEAs - 61 Alexander (R-TN) Barrasso (R-WY) Bayh (D-IN) Bennet (D-CO) Bennett (R-UT) Bingaman (D-NM) Bond (R-MO) Brown (R-MA) Bunning (R-KY) Cantwell (D-WA) Chambliss (R-GA) Coburn (R-OK) Cochran (R-MS) Collins (R-ME) Conrad (D-ND) Corker (R-TN) Cornyn (R-TX) Crapo (R-ID) DeMint (R-SC) Ensign (R-NV)
Enzi (R-WY) Feingold (D-WI) Graham (R-SC) Grassley (R-IA) Gregg (R-NH) Hagan (D-NC) Hatch (R-UT) Hutchison (R-TX) Inhofe (R-OK) Isakson (R-GA) Johanns (R-NE) Kirk (R-IL) Klobuchar (D-MN) Kohl (D-WI) Kyl (R-AZ) LeMieux (R-FL) Lincoln (D-AR) Lugar (R-IN) Manchin (D-WV) McCain (R-AZ) McCaskill (D-MO)
McConnell (R-KY) Menendez (D-NJ) Murkowski (R-AK) Nelson (D-FL) Nelson (D-NE) Risch (R-ID) Roberts (R-KS) Sessions (R-AL) Shelby (R-AL) Snowe (R-ME) Stabenow (D-MI) Tester (D-MT) Thune (R-SD) Udall (D-CO) Udall (D-NM) Vitter (R-LA) Voinovich (R-OH) Warner (D-VA) Webb (D-VA) Wicker (R-MS)
NAYs - 35 Akaka (D-HI) Baucus (D-MT) Begich (D-AK) Boxer (D-CA) Brown (D-OH) Cardin (D-MD) Carper (D-DE) Casey (D-PA) Coons (D-DE) Dodd (D-CT) Dorgan (D-ND) Durbin (D-IL) Feinstein (D-CA) Franken (D-MN) Gillibrand (D-NY) Harkin (D-IA) Inouye (D-HI) Johnson (D-SD) Kerry (D-MA) Landrieu (D-LA)
Lautenberg (D-NJ) Leahy (D-VT) Levin (D-MI) Merkley (D-OR) Mikulski (D-MD) Murray (D-WA) Reed (D-RI) Reid (D-NV) Rockefeller (D-WV) Sanders (I-VT) Schumer (D-NY) Shaheen (D-NH) Specter (D-PA) Whitehouse (D-RI) Wyden (D-OR) Not Voting - 4 Brownback (R-KS) Burr (R-NC) Lieberman (ID-CT) Pryor (D-AR)
We have one calendar year before the new 1099 reporting requirement goes into effect.
N I A D A M E M B E R B E N E F I T: CheckThatVIN NIADA recently announced its National Member Benefits Program and the CARCO Group have struck a deal to help association members be certain that vehicles for sale on their lots have clean records.
“WE ARE THRILLED TO BE ABLE TO EXTEND OUR SERVICE WITH EXCLUSIVE MEMBER BENEFITS TO THE NIADA MEMBERSHIP,” SHARED JAMES OWENS, CHIEF EXECUTIVE OFFICER OF CARCO.
CARCO powers the CheckThatVin website. This portal taps into the National Motor Vehicle Title Information System to obtain a vehicle’s title and salvage history as well as its reported odometer reading. CheckThatVin provides title and brand information, in addition to data from state departments of motor vehicles, insurance companies, as well as junk and salvage businesses. NIADA members are being offered access the NIADA.CheckThatVin.com portal and are being given exclusive member pricing. Officials said each vehicle search through the portal will only cost NIADA members a maximum of $2.50. The fee could possibly be less for these dealers, they noted. The CARCO volume discount is being offered to NIADA. Basically, the more searches NIADA dealers combine to make during a particular month, the less expensive it will
be to search the next month, officials explained. “We are thrilled to be able to extend our service with exclusive member benefits to the NIADA membership,” shared James Owens, chief executive officer of CARCO. “There is no better way for NIADA members to protect themselves than by checking every car they are considering bringing on their lots with our NMVTIS service,” he continued. “Unlike other commercially available services, CheckThatVIN offers title, brand and salvage information, all pulled from the National Motor Vehicle Title Information System and because of that, it’s a very valuable tool.” Scott Lilja, NIADA’s vice president of member services, added: “We are pleased to offer the members of NIADA the opportunity to protect their businesses and especially to offer them a very aggressive discount to do so, via our new National Member Benefit Partnership with NIADA.CheckThatVIN.com. “This provides our members additional risk mitigation services via a service that is very convenient and easy to use,” he said.
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vAuto Rolls Out Mobile App for Android
vAuto revealed recently that dealers can now tap into the company’s used-vehicle management system through their Android mobile devices, giving them another avenue to access the company’s services while on the go. “We are excited to offer our dealers the vAuto mobile app for the Android platform,” says Keith Jezek, vAuto’s president. “This innovation allows dealers to have vAuto in the palm of their hands for accessing realtime market information,” he continued. “vAuto’s live market appraisal and stocking modules are available on the app for making strategic decisions from any location.” Sharing some of the vAuto’s mobile application’s features, it offers third-party guidebooks, auction values and vAuto’s exclusive rBook. Explaining how the latter function works, officials noted that the rBook allows dealers to determine how identically equipped models are priced in their respective markets. Moreover, other features of the mobile app are vAuto’s heat sheet and buy list, which can help dealers figure out and find which models are selling strong in their areas. Officials said that for vAuto customers, there is no extra monthly fee to tap into the mobile app. The application can be utilized on Android 2.1 or higher operating systems. Included in the app is the new advanced barcode vehicle identification number capture. Users with Android devices that have auto focus cameras can utilize this function to automatically decode a barcode VIN and upload it to vAuto. It can be downloaded from the Android market. vAuto’s mobile app is already available via the Apple iPhone and iPod Touch devices.
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F T C L A U N C H E S I N V E S T I G AT I O N I N T O D E A L E R P R A C T I C E S
The Federal Trade Commission (FTC) has sent letters to a random selection of motor vehicle dealers requesting voluntary (in lieu of compulsory process) submission of a series of documents related to dealers’ vehicle financing procedures. These are letters that will send
chills up and down a dealer’s spine much like one of those dreaded IRS letters. The letters contain language such as “We request that you provide....the material described in the attached Information Requests within 30 days of your receipt of this letter.” And, they ask for a year’s worth of documents. And further request “you retain all records (not only the information requested, but also any other documents relating to this matter including computer disks and tapes) until Commission staff has disposed of this inquiry or until the Commission or a court determines that the retention is no longer necessary.” The move appears to be a part of the FTC’s effort to learn how dealers are conducting business as it prepares to enforce regulations that will be created under the Consumer Finance Protection Bureau (CFPB). We understand some of the FTC staff is preparing to transfer to the CFPB when that agency is ready to be
By ADR Staff
staffed, since the bureau will be assuming many of the duties now performed by the FTC. The investigation, known as the Holder in Due Course investigation, focuses, initially at least, on dealer practices related to the financing of motor vehicles. The name of the investigation comes from the FTC’s Holder in Due Course Rule on the Preservation of Claims and Defenses. 16 CFR 433 requires contract language in financed consumer sales which abrogates any protections available for the assignee. In effect, this rule tends to negate protections the holder in due course is afforded in the Truth in Lending Act (TILA). This language, when written into the installment sales contract as required, becomes enforceable as a contract term. The specific language, in at least 10-point bold faced type, is as follows:
NOTICE
ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.
What this language does is contractually subject the holder of the note with the same liabilities and defenses as the seller has as for claims by the debtor. Questions have been raised regarding the FTC’s authority to promulgate such a rule and lawsuits are now pending that challenge use of the phrase. This rule has been on the books for several years, but given the tone of these letters, we believe dealers would be well advised to check the retail installment contracts or other financing documents they use to be sure that language is included. The language is generally on the reverse side of the contract. The FTC has requested those dealers that received the letters to produce copies of all contracts from early October 2009 through the present. The FTC has indicated this is a random survey, but if any non-compliance is found within the documents, chances are the investigation will be expanded. At any rate, this investigation is just the beginning of what’s to come as the CFPB is established and gets off the ground. This is a good time to review all your paperwork and make sure that your documents are compliant and are being properly used.
If you have questions, contact the ADR staff at 405-232-2947 or odell.morgan@sbcglobal.net.
ADR: OUR MISSION, YOUR SUCCESS.
This article is intended for information only – It has no legal application. For its application to your dealership, you are requested to contact your legal counsel.
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SMART PHONE USERS NADA AppraisalPRO Optimized for Smart Phones mobile access to its products. NADA AppraisalPRO has been optimized to work on smart phones, including iPhones, iPads, Androids and Palm Pre/Pixies, in another step to provide clear mobile access to its products. Devel-
oped by NADA Used Car Guide, NADA AppraisalPRO is the only used-vehicle appraisal product on the market to tap the resources and data of six industry leaders: AutoTrader.com, J.D. Power and Associates/PIN, Manheim Market Report, NADA, vAuto and Experian AutoCheck. “We listened to dealers and responded to their needs by making our data and values more readily accessible,” said Mike Stanton, vice president and chief operating officer of NADA Used Car Guide. “There’s no room for error when making buying and selling decisions on the go.” Smart phone users can now view all of the market information offered by NADA AppraisalPRO in a format that matches the screens and functionality of Smartphones, providing clear mobile access to key industry data, including: Asking and advertised prices online (Auto-
Trader.com); What a particular model or similar vehicles are selling for currently in the local market (J.D. Power and Associates/PIN); Auction selling prices, including trim-level detail (Manheim Market Report); Rough, average and clean trade-in, clean loan and clean retail values (NADA); The day’s supply for that area (vAuto); The vehicle’s history (Experian AutoCheck) -- available as an optimized summary or as the entire report for easy access on the go; and A purchase worksheet that lets you input your purchase or trade-in price, add and deduct for reconditioning costs, and see where you stand profit-wise. With this complete picture of the market, dealers can determine a precise trade number or auction bid that reflects actual conditions. In October, NADA Used Car Guide also optimized its NADA Online online valuation product for smart phones as part of its ongoing efforts to increase mobile access to its products.
NADA AppraisalPRO subscribers may use their mobile browser to visit mobile.nada. com/MobileWeb, and then log in to their NADA AppraisalPRO account using their same credentials.
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Used Motor Vehicle and Parts Commission Report DECEMBER 14, 2010
Following convening of the meeting and approval of the minutes of the previous meeting, acting Chairman Steve Ross called on Director John Maile for the director’s report. Maile began
his report by noting the October and November expenditure reports were in the agenda packet. Maile went on to report while they were up to date on renewals as of Nov. 25, they nevertheless are still in the middle of renewals. The renewal trend numbers are down slightly, but are expected to be near normal by the end of the renewal session. Maile advised the commission its legislative liaison had taken a position with another entity and as a result would not be available to the commission this legislative session. As a result, he sought authority to begin search for another individual for that position. The commission chair appointed a search committee to find suitable candidates to recommend for consideration. Following the director’s report, a motion was properly made and seconded to approve the October and November expenditure reports. Motion passed. Acting Chairman Ross then called on Deputy Director Kenneth Whitehead for his report. Whitehead indicated that due to renewal activity by staff, there was no district court action or informal hearings for the month. Whitehead’s written report indicated commission staff had issued eight cease and desist letters (a listing of those letter recipients is included following this report). Investigators completed 22 inspections for the period. Staff handled 32 written complaints, 11 of which were title issues, 12 had to do with contract violations, three were related to mechanical issues and there were four complaints of a miscellaneous nature. Whitehead reported for the period, the commission education program had 17 in attendance. Applicants for a new license and dealers involved in significant rule violations are required to attend the commission’s education program as a part of acquiring or maintaining a state license. Until further notice, these education sessions are being held at the commission conference room at 2401 NW 23, Oklahoma City. Classes are held on Monday prior to the Commission meeting on the second Tuesday of each month. The sessions run from 9 a.m. to about noon or 1 p.m. You are asked to make reservations so staff can be prepared to accommodate you. For reservations, call 405-521-3600.
REPORT OF CEASE & DESIST LETTERS ISSUED
These letters direct the individual or business to cease violations of laws or rules. ENTITY
Hector Hernandez Jehova Jireh Roy Johnson Terry Lark Francisco Maders Billy Jones Omari El Paise Mario Soto
TYPE VIOLATION
insurance pool used dealer insurance pool insurance pool insurance pool insurance pool insurance pool insurance pool
CITY
DATE ISSUED
Tulsa Oklahoma City Spencer Broken Arrow Oklahoma City Oklahoma City Tulsa Oklahoma City
11/04/10 11/05/10 11/02/10 11/02/10 11/02/10 11/04/10 11/02/10 11/04/10
CLOSED COMPLAINT REPORT
These are complaints that have been resolved one way or another. They do not necessarily reflect any wrongdoing on the part of dealers. ENTITY
America’s Auto Auction AW Auto Sales Blue Dot Autos, LLC Bob Howard Toyota C.A.R.S. Towing & Recovery C.A.R.S. Towing & Recovery Country Classic Homes Country Classic Homes Country Classic Homes Country Classic Homes David Stanley Ford Eskridge Honda Express Credit Auto #2 Express Credit Auto Inc. Express Motor Company Henryetta Ford Ranch Henryetta Ford Ranch Henryetta Ford Ranch Henryetta Ford Ranch Henryetta Ford Ranch Henryetta Ford Ranch Insurance Auto Auctions Corp. JC’s Pickup Tucks, Parts & Salvage Lochwood Motors LLC Lochwood Motors LLC Lochwood Motors LLC Norman Auto Sales Inc. Oakley Pontiac-Buick Inc. Redline Motorsports Inc. Suburban Chevrolet Inc. Turn Key Auto Mart LLC Your Car Store
CITY
Tulsa Oklahoma City Oklahoma City Oklahoma City Chandler Chandler Marlow Marlow Marlow Marlow Oklahoma City Oklahoma City Oklahoma City Oklahoma City Chickasha Henryetta Henryetta Henryetta Henryetta Henryetta Henryetta Oklahoma City Tuttle Oklahoma City Oklahoma City Oklahoma City Norman Bartlesville Tulsa Claremore Oklahoma City Enid
COMPLAINT
miscellaneous contract contract title title title miscellaneous contract contract miscellaneous mechanical title title title mechanical contract contract contract contract contract contract title title miscellaneous miscellaneous miscellaneous contract title title contract title mechanical
RESOLVED
11/08/10 11/30/10 11/04/10 11/03/10 11/17/10 11/08/10 11/02/10 11/02/10 11/02/10 11/02/10 11/03/10 11/03/10 11/03/10 11/04/10 11/03/10 11/16/10 11/16/10 11/16/10 11/16/10 11/16/10 11/16/10 11/08/10 11/03/10 11/23/10 11/17/10 11/17/10 11/03/10 11/03/10 11/08/10 11/08/10 11/16/10 11/18/10
LICENSES SUSPENDED OR ABANDONED
Auto World, Shawnee: Out of business; phone disconnected. I-240 Supercenter, Oklahoma City: Out of business; per John Hunt. Kamphaus Motors, Granite: Out of business; change of ownership. T H Auto Sales, Oklahoma City: Out of business; phone disconnected.
CONSENT AGREEMENT APPROVED
The Commission approved the following Consent Agreement: A Consent Agreement between UMV&PC and Jak’lene Lineberry, on behalf of Lineberry’s Auto Sales, a sole proprietorship, a licensed used motor vehicle dealer, hereinafter referred to as “respondent.” The following is a summary of the facts concerning the investigation by commission personnel of the above referenced respondent, the violations of the used motor vehicle licensing laws and/or rules of the commission, the possible sanctions which may be imposed, and the sanctions the respondent has agreed to in order to resolve this investigation. 1. Respondent has failed to deliver a certificate of title to a vehicle sold within thirty days of the sale of the vehicle. 2. Respondent has failed to license a person who has acted as a salesperson for her dealership. 3. Respondent acknowledges that in the event of a hearing before the commission, the sanctions could, in addition to the assessment of fines within a range of $100 per violation, include suspension or revocation of respondent’s used motor vehicle dealer’s license. 4. Respondent agrees to pay to the Used Motor Vehicle and Parts Commission for said violations as follows as full and complete disposition of this matter: Respondent therefore agrees it will pay to the Used Motor Vehicle and Parts Commission the sum of $600, payable by the first day of the month following the month in which the commission approves this consent agreement. In the event the sum is paid as agreed, said payment will constitute full and final action on all violations pending or which may be charged against respondent at the time of this agreement. In the event said sum is not paid as agreed, Respondent acknowledges that further action may be taken, which may include a formal hearing for the revocation of respondent’s used motor vehicle dealer’s license.
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Mark Your Calendars for the 2011 National Tire Safety Week! RMA’s tenth annual National Tire Safety Week will be held June 5-11.
The annual event is an initiative of the RMA’s “Be Tire Smart – Play Your PART” program, a yearround effort designed to help drivers learn the simple steps they can take to ensure that their tires are in good working condition. RMA is the national trade association for tire manufacturers. Tire manufacturers and retailers nationwide will work to educate motorists about proper tire care and maintenance. RMA provides tire retailers, auto dealers and automotive repair shops with free “Be Tire Smart” brochures and other materials. Many participating retail outlets use the opportunity to promote tire care through advertising, promotions, free tire pressure checks and conducting media outreach. More than 22,000 tire and auto service outlets participated in the 2010 National Tire Safety Week. RMA released a survey of more than 5,400 vehicles that showed half with at least one under inflated tire. Nearly 20 percent of vehicles had at least one tire under inflated by 8 pounds per square inch (psi). Under inflated tires waste fuel, risk safety and cause tires to wear out faster. Tire and auto retailers who are interested in obtaining free RMA materials for National Tire Safety Week can order them online at www.betiresmart.org. Those who have participated in the event before can expect to receive materials again this year.
A REFRESHER COURSE Every now and then, we all have to go back to school. We recently attended
the Used Motor Vehicle and Parts Commission (UMVPC) education session for soonto-be licensed dealers. Their first overhead visual has the following phrase, “Getting it in writing is the only foolproof way to protect you!” If you make a promise to the customer, put it in writing. That will provide verification for both you and your customer regarding the promise. The UMVPC requires those promises be included in the we-owe form and we recommend you also include them in the retail purchase agreement or bill of sale. You keep a copy and the customer keeps a copy. State law requires you retain a photocopy of the front and back of the completed title. That copy should be made only after you affix the tax stamp. The Oklahoma Tax Commission (OTC) has directed tag agents to forward copies of incomplete titles issued by dealers to the UVMPC. A pattern of incomplete titles being issued will no doubt result in a visit by your friendly UVMPC field agent. If you mail a title to your customer, send it by certified mail, return receipt requested, so you’ll have proof the document was mailed and who signed for it. If the document is never acknowledged by the purchaser, the title will be returned to you. That should be placed in your deal jacket for that particular customer (still in the unopened envelope) and held until you are able to make contact with the purchaser.
If an individual picks up the title to a purchased vehicle, you need documentation indicating who picked up the title. It would be most appropriate to have that individual sign the title receipt form. And, yes, you should verify that person’s identity and permission from the purchaser to pick up the title. The UMVPC has authority to assess $100 fines for the following offenses: FAILURE to deliver title to the purchaser within 30 days of the sale of the vehicle; FAILURE to properly assign a title; and Failure to properly complete a spot delivery form.
An administrative fine not to exceed $1,000 may be imposed for violations of any other section. Should you decide to change the location of your dealership, a change of address form and a $100 fee will need to be sent to the UMVPC. Change of dealership name requires a change of name form and a $25 fee. These forms are readily available from the commission website at www.umvpc.state.ok or at the commission office. The dealership license is to be posted in a conspicuous location in the place or places of business of the licensee. A change of ownership, including a change in any primary stockholder in the case of a corporation, or membership in the case of a limited liability company, requires a new application and approval by the UMVPC before
the business may begin operation. A change of ownership or any other change, such as change of name or address, which makes commission records inaccurate must be reported immediately in writing on forms prescribed by the UMVPC for approval by the commission. The dealership must meet all the requirements as prescribed for licensing. The UMVPC may revoke or suspend a license after it has been granted for change of condition resulting in failure to maintain the qualifications for license. Failure to complete the requirements for licensing at the new location within 30 days will result in suspension of the dealer’s license until the licensing requirements are met. The commission strongly urges dealers to photocopy a completed temporary tag prior to affixing it to the purchased vehicle. The photo copy should be retained in the folder for that transaction. Should the temporary tag be altered at a later date, the dealer will have proof of how the tag was filled out when it was affixed to the purchased vehicle. Any used motor vehicle dealer or wholesale used motor vehicle dealer is required to furnish and keep in force a minimum of $25,000 of single liability insurance coverage on all vehicles offered for sale or used in any other capacity in demonstrating or utilizing the streets and roadways in accordance with the financial responsibility laws of this state. For the reinstatement of a used motor vehicle dealer’s license after revocation for cancellation or expiration of insurance, the fee is $100.
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EV Sales Not Charging Ahead This was the year General Motors and Nissan made good on their promise to bring mass-produced electric cars to the market, but don’t count on seeing one in traffic soon. According to the Associated
Press, sales so far have been microscopic, and they’re likely to stay that way for some time because of limited supplies. GM sold between 250 and 350 Chevy Volts in December, and Nissan’s sales of Leaf sedans totaled fewer than 10 in the past two weeks, the AP reported on Jan. 1. Production for both is ramping up slowly. It will be well into 2012 before both the Volt and Leaf are available nationwide. It’s still unclear just how large the market for electric cars will be once those early adopters are supplied. The base sticker price is $40,280 for the Volt and $32,780 for the Leaf; much higher than most similar-sized, gas-powered cars. If those prices rise, it could make them even more of a niche product than predicted.
The base sticker price is $40,280 for the Volt and $32,780 for the Leaf
Product Discounts
AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States with over 4,350 stores across 48 states, the District of Columbia and Puerto Rico. NIADA members have access to AutoZone’s “hotshot” delivery program including discounts on more than 750,000 product level SKUs in over 70 distinct product categories.
For more information, visit www.niada.com/dealers_edge.php
IS YOUR DEALERSHIP SUBJECT TO THE FTC’S RISK-BASED PRICING RULE? Dealerships that don’t pull credit reports from credit reporting agencies aren’t required to issue risk-based pricing (RBP) notices.
A dealership must comply with the RBP rules when it makes sales to consumers for personal, family or household purposes if it (1) obtains credit reports and (2) engages in risk‐based pricing using data from the credit report. Business-to-business transactions do not require a notice. Dealerships that pull credit reports from credit reporting agencies and use information from those reports to establish annual percentage rates (APR) for their consumers are required to comply with the FTC’s Risk-Based Pricing Rule. As of now, most dealers who obtain credit reports and extend credit to consumers must provide this new RBP notice to consumers who receive credit from them but on credit terms that are less favorable than the terms received by a substantial proportion of their other credit customers. This notice is different from an adverse action notice, which is provided when credit is denied or not extended on substantially the same terms as was requested by the consumer. Instead of issuing the RBP general notice to certain of their customers, dealers have the option to issue an alternative notice, known as a credit score disclosure exception notice, to all of their consumer credit applicants regardless
of whether or not credit is ultimately extended. Consequently, a credit applicant who was ultimately turned down would receive both the exception notice and an adverse action notice. In multi‐party credit transactions, such as a typical transaction where a dealership enters into the retail installment sales contract and subsequently assigns the contract to a finance company, the party to whom the credit obligation is initially payable (the dealership) is responsible for issuing the RBP or exception notice. If a dealership chooses to use the exception notice, it must be provided to every consumer who applies for credit regardless of whether or not credit is extended. An exception notice is not required for guarantors or co‐signers who are not applying for credit but rather are only assuming liability for those who are.
An exception notice must contain the following information: • The consumer’s current credit score; • The date on which the credit score was created; • The name of the credit reporting agency or other person that provided the score; • The range of possible credit scores in the credit scoring model used to generate the credit score; • And either a bar graph that breaks down the range of possible credit scores into at least six bars
with each bar indicating the percentage of consumers with credit scores that fall within the range of scores for that bar or a clear statement indicating how the consumer’s credit score compares to other consumers, i.e. “Your credit score ranks higher than____% of U.S. consumers.” This information is generally obtained from the credit reporting agency from which the credit score is obtained. Dealers should keep a copy of the notice given to the customer for its records.
If a credit score is unavailable from a credit reporting agency for a particular customer, dealers are required to issue an alternate type of exception notice similar to the exception notice discussed above, which advises the consumer that a credit score is not available for that consumer. Proper use of these safe harbor forms provides that creditors will not be liable for failing to perform the duties the rule imposes if, at the time of failure, the creditor maintained reasonable compliance policies and procedures. ADR is prepared to assist dealers in preparing these notices for their dealership. Failure to comply with the RBPR can lead to penalties of $3,500 for each “knowing” violation and increased penalties of up to $16,000 for future violations arising out of repeated failures to comply with the rule. This article is intended for information only – it has no legal application. For its application to your dealership, you are requested to contact your legal advisor.
By ADR Staff
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NIADA Certified Announces Two Partnerships eBay Motors and OPENLANE will join forces with NIADA’s Certified PreOwned Program beginning Feb. 1 in a pair of new partnerships formed to better serve the association’s members.
Consistently ranked the No. 1 automotive site on the Web, eBay Motors will display all NIADA Certified vehicles in its classified ads portal, its certified search results, as well as detail the program on its certified vehicle landing pages. “Our new relationship with eBay is key to the continued success of the NIADA Certified program,” Linn said. “Our dealers’ certified inventory will be afforded tremendous visibility on the eBay platform. Consumers are searching for certified vehicles and the NIADA Certified brand awareness will be greatly enhanced by this relationship.” Kevin Considine, vice president, eBay Motors, agreed: “The NIADA certification
program is a natural progression for eBay to continue to enhance the value offering for independent dealers. We are proud to be an early adopter of the NIADA Certified program and look forward to continuing to enhance our relationship with NIADA.” Also starting this month, OPENLANE – a leader in online wholesale vehicle transactions – will display a new vehicle listing category: NIADA Certified. The category will provide online buyers and sellers with the knowledge the vehicle listed has passed the certification requirements to be listed as NIADA Certified. “This acknowledgement builds value for NIADA’s Certified Pre-Owned Program, but as importantly, assures online buyers that they are buying a vehicle of quality,” Linn said. “We continue to look for ways to gain visibility for the NIADA Certified program. Our relationship with OPENLANE reinforces that
certified vehicles are worth more money in both the wholesale and retail marketplaces.” The NIADA Certified Program is available to all NIADA members and represents the industry standard for coverage and protection. It provides 12 months and 12,000 miles of comprehensive limited warranty coverage on most vehicles 2001-2011 up to 100,000 miles. The program is administrated by National Auto Care (NAC) and insured by an A-rated company. NIADA Certified is further supported by detailed implementation and sales training, best practice reviews and includes many point-of-sale tools, including; access to print an online Buyers Guide, marketing collateral, online media kits, and a free AutoCheck vehicle history report. For more information, visit NIADA.com and click on the NIADA Certified link under the Services menu.
IF YOU AREN’T YET USING THE NEW PRIVACY NOTICES, START NOW! “Procrastination is like a credit card: It’s a lot of fun until you get the bill.” – Christopher Parker
If you haven’t already done so, it’s time to take advantage of the Model Privacy Notice Forms which, when used properly, provide dealers a safe harbor from Federal Trade Commission (FTC) enforcement of the new privacy rules. As you may know, the privacy notices you’ve been using are now obsolete and noncompliant. The new privacy notice safe harbor forms are intended to make it simple and easy for consumers to understand what personal nonpublic information you collect from them, what you use it for, and how you protect that information. Unfortunately, the information a dealer is required to provide to achieve a safe harbor is not that simple or easy for the dealer to configure. The reason is there are 261 pages of rules to be understood and some 280 variations of information required to be put into the forms to correctly represent your dealership. For instance, each dealer’s notice must be configured to that dealership’s operation. One dealership’s notice will be different from all others. Therefore, for ADR to configure and produce a privacy notice to conform to your
dealership, we will need you to provide us with specific information regarding your collection, use, protection and disposal of the consumers’ personal, nonpublic information. If you will provide us with your e-mail address, this process will be much quicker, easier and more efficient because it will allow you to fill out, on line, the five-page privacy worksheet and review the completed form information that we submit to you once we have the worksheet information. The prompt exchange of information through the use of email and completion of the worksheet on line will expedite the ultimate printing and delivery of your personalized privacy notices. For those of you who, for whatever reason, don’t want to fill in the worksheet using the web page version, ADR staff will be happy to mail or email a copy of the paper or digital version for your use. We will also make staff available by appointment to take your information by phone (405-799-7116) to fill out a worksheet or to assist you in filling out the worksheet. To access the worksheet online, visit www. buyadr.com, select Oklahoma, then click Go. On the next page, click the “New Privacy…” headline on the left, then follow the instructions.
THE PRINT PRICE SCHEDULE:
If you have problems or need help, contact us at the number or odell.morgan@sbcglobal.net. We will help you in whatever way is most convenient for you. The deadline was Jan. 1! The ADR team is prepared to personalize your privacy notices, using the information you provide on the worksheet. The model form must be printed on white or light color paper (such as cream) using black ink. Logos are not recommended, but may be added and printed in color if you desire. Very little room is available on the model forms for a logo; if you want it in color, there is an additional charge. There is a one-time set-up fee of $50 to configure the form for printing using the information the dealership provides. Most dealerships will only need a single sheet printed front and back. Unfortunately, the forms cannot be produced in bulk to save on cost because of the need to personalize each dealer’s privacy disclosures. We have negotiated what we believe are the best print prices that we can get. The forms cost will vary, depending upon the number of pages your dealership requires and the volume of forms ordered.
>>
All pages 8 ½” X 11” Price per100 Price per 300 Price per 500 One side, black ink $20 $40 $50 Duplex (1 page printed both sides) $30 $60 $70 *The one most dealers will need. Duplex (1 page W/color - logo)
$50
$120
$145
WE ARE HERE TO SERVE YOU. ADR: OUR MISSION, YOUR SUCCESS. This article is intended for information only – it has no legal application. For its application to your dealership, you are requested to contact your legal advisor.
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Future P R E PA R I N G F O R T H E
By Jan Kelly, president of Kelly Enterprises
A
new year brings new goals, and new hopes for improved sales, more lenders, and more profits for everyone. As with any change in the
marketplace, dealerships must prepare their team to meet the current demands of the marketplace. SALES: From all I’ve read, the customers are back. People are once again going to the dealerships to replace their old vehicles with smaller, more fuel-efficient models, and some are adding to their family fleet so they can meet the weather challenges. The great news is the customers are back from their long hiatus. What are they finding at the dealerships? The customers are finding store personnel stretched, and the once-many choices of inventory they enjoyed in the past now cut. The product selection step in the selling cycle will need to stress selling what you see in front of you. During the past few years, those dealerships that survived have learned how to manage inventory more effectively, as well as turning it more quickly. They’ve also learned how to operate in a lean environment. PERSONNEL: Plan on hiring sales personnel and educating them. Personnel are stretched to the point of having job descriptions blurred. I think the time is coming to redefine the roles and create a work environment where they can focus upon the job at hand and cease worrying about what additional items will be asked of them. Multitasking can become dysfunctional after awhile. Sales processes while basic never change, I find each dealership has a specific culture and the process often must be modified to reflect the culture so management will support the process after the educator leaves.
Education is not a one-time event. Plan a continuous relationship with your education resource. Every process
should be monitored, measured, and modified as required. After the modifications have been made, the new process needs to be re-implemented, monitored and the producers need to be held accountable.
LENDERS: The industry needs more of them, and we need them to approve loans. Dealerships will need to continue to seek local credit unions and other local lenders to approve consumer financing. Credit unions may not be use to the independent dealerships, but this is an opportunity to put your best face forward and sell yourself and your business acumen to the lenders. I was asked how important relationships with lenders are; they’re critical to your success. Lenders again wish to become a close business advisor to your operation. They’re going to want a piece of every banking transaction you have; wholesale, retail, merchant services, checkings and savings, personal and business. When you think of lenders, what was old is now new again. Keep your ears to the wind; contact every source prospect for lenders at every opportunity. COMPLIANCE ISSUES: Spend the time it takes to create a binder with your policies and procedures regarding the plethora of federal regulations we must meet. The following is a beginning checklist for those policies and procedures: ______ ______ ______ ______ ______ ______ ______
DISPOSAL RULE P SAFE GUARD RULE P OFAC SDN LIST P RED FLAG RULE P ADDRESS DISCREPANCY RULE RISK-BASED PRICING RULE P ADVERSE ACTION LETTERS P
P
ONCE A POLICY AND PROCEDURE IS PLACED IN WRITING, THE COMPANY IS BOUND BY THE WORDS IT WRITES. With the creation of the new credit protection agency, I think we’ll begin to see enforcement of the rules and regulations and perhaps some additional items will be added to the list of required written documentation. Review your existing policies and verify what’s written is what’s actually happening. If not, then change either the policies or your practices. Once a policy and procedure is placed in writing, the company is bound by the words it writes. Conduct self-audits as written in the policies and procedures. Document the education content and the timing of the education of new hires. Document any breaches of security, or failure to adhere to the company policies. As you know, I am not an attorney and this is not to be used as legal advice. These words are meant to be educational only. Please consult your legal counsel for all legal issues. The future is once again bright. Prepare for success. Jan Kelly is an educator and consultant, international convention speaker and writes frequently for industry publications. For information about educational venues or joining our F&I 20 Group, call 800-336-4275 or visit www. JLKelly.com.
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FEDERAL ADVOCATES DECEMBER 2010 LOBBYING REPORT FEDERAL ADVOCATES IS NIADA’S GOVERNMENTAL ADVOCACY PARTNER. To read past lobbying reports, visit www niada.com/legislative_and_legal.php
Dodd-Frank Wall Street Reform and Consumer Protection Act
Congress ended with the Federal Trade Commission beginning in earnest to review the auto industry in the light of the above consumer enacted law. Last Nov. 17, NIADA General Counsel Keith Whann and Federal Advocates met with senior staff of the FTC as a follow-up to the Sept. 21 meeting. A series of questions had been provided to NIADA for discussion in November. At the meeting, Keith walked them through the process of buying a car and provided samples of purchasing documents. The FTC is in the process of formulating questions for public comment regarding various aspects of the auto industry as it relates to consumers. FTC staff was not forthcoming as to the timing of that effort, its scope and its intended purpose. The results of the latest meeting were reported to NIADA’s Legislative Committee by conference call on Nov. 23. Also, on Sept. 21, Whann and Federal Advocates met with FTC staff regarding implementation of the above Bill and its impact on the auto industry.
Following discussion of various issues, with Whann leading the discussion and answering various questions as to how the auto industry works, including the auction practice itself, it was decided to schedule a half day session to allow for a more detailed discussion of issues (i.e., the Nov. 17 session). All of this is a result of the so-called Wall Street Reform Bill. As reported previously, the new law exempts some auto dealers from increased oversight with respect to dealer-assisted financing. The law does grant increased powers to the FTC regarding dealer oversight. Also, it requires coordination with the Department of Defense to ensure service members and their families are treated fairly by automobile dealers.
Senate Motor Vehicle Safety Act of 2010
Congress ended with no formal action on this bill. To review, on June 9, the Senate Committee on Commerce, Science and Transportation marked up and order reported S.3302, the so-called Toyota Bill. In earlier drafts of the bill and just prior to markup, language was
Knowing that your dealership is ready for the future. The world is quickly changing around us, and it’s up to you to keep your business alive. ADR Consulting is here to help. Our one day, One On One Consulting Sessions are designed to help you grow your business through branding and use of Social Media. Let us help you on your unique journey in these times of constant flux.
To Learn More Call (888) 292-8080 or visit http://adrconsulting.us/confidence 20
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included (section 310) which would have specified a dealer may not sell or lease a used passenger motor vehicle (both wholesale and retail sales) until the dealer first notifies the purchaser or lessee in writing of any recall notices. Working primarily with Sen. John Thune, R-S.D., his staff (Brenden Plack), and committee staff (Alex Hoehn-Saric and Chris Herndon), and as a result of concern raised by Whann and his proposed suggestion, section 310 has been dropped from the bill. This provision would have seriously hurt used car commerce by imposing tremendous compliance costs and liability exposure for dealers while increasing the safety risk for consumers by pushing unremedied vehicles into the unregulated private sale used car market. While an initial victory, we will continue to advocate on behalf of NIADA’s interest pending further action on the Senate bill as well as a possible House companion bill.
tee bank and finance company loans up to $5 million, which should help, the committee believes, expand dealer access to floorplan lines of credit. We worked with Louisiana Democrat Sen. Mary Landrieu’s committee and personal staff, in conjunction with others, on this. The bill may be the subject of subsequent meetings with the Hill and the SBA on how the program really works.
member at Fort Bragg with an automobile situation, working with the JAG and others. He also talked about his plan for a special program to teach dealers on how to deal fairly with service members and their families. DOD continues to remain interested in looking for opportunities where Whann could lend his expertise.
White House Reform Request
Small Business Jobs and Credit Act of 2010
Department of Defense
THE HOUSE PASSED THE SENATE-PASSED BILL, WHICH INCLUDES AN INCREASE IN THE AMOUNT THE SMALL BUSINESS ADMINISTRATION’S DEALER FLOOR PLAN FINANCING PROGRAM CAN GUARANTEE. THIS PERMITS THE SBA TO GUARANTEE BANK AND FINANCE COMPANY LOANS UP TO $5 MILLION, WHICH SHOULD HELP, THE COMMITTEE BELIEVES, EXPAND DEALER ACCESS TO FLOORPLAN LINES OF CREDIT.
The Obama administration has delayed implementation of the above bill until March. On Sept. 23, the House passed the Senatepassed bill, which includes an increase in the amount the Small Business Administration’s Dealer Floor Plan Financing program can guarantee. This permits the SBA to guaran-
On Sept. 23 and Sept. 29, Federal Advocates was contacted by the White House, which is still trying to organize and schedule a meeting to include “people who are working to setup the CFPB.” This meeting is in response to a letter sent by NIADA to President Obama requesting “the opportunity to work with you to reform our industry in common-sense ways that achieve real safeguards for consumers, that promote accountability and transparency, and that work.” Regarding the issue of “how to ensure that service members and their families are treated fairly by automobile dealers,” Whann and Federal Advocates also met on Sept. 21 with the Defense Department’s Frank Emery in the Office of Personal Finance, Family Policy Outreach Directorate. Whann relayed a specific example of how he helped a service
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A S S O C I A T I O N Learn to Earn with NIADA’s Education and Training Consortium
LEARN toEARN
One of the crucial things I learned during my 30-plus years of interacting with sales-related people is quality salespeople are made, not born. Those salespeople who experience
great sales success are rarely great from the start. They make themselves great because they realized they could be no better than the level of their preparation. I firmly believe the salesperson’s life should be a life of continual learning. There is no place in a sales career where a salesperson can say there is nothing more to learn, no more skills to develop, no more techniques to improve or no more methods to try. Regardless of how long someone has been selling, it is my conviction there is always something to learn. Believe me, nothing fails like a bit of success if it keeps someone from looking for new and better ways to improve performance. As you look at your dealership, what can
you say of the results you are getting from your salespeople? Do you need to change or improve your sales culture? Is it time you became more involved in the improvement of your salespeople’s skills? If the answer is “yes,” then think about what your goals might be. Consider a two-fold approach. First, provide an educational experience that will help your salespeople achieve mental, emotional and psychological improvement to create instant action and second, to offer your salespeople specific statements (or, as we call it “What to say when…”) for almost any situation, question or objection that they may encounter in their sales time with customers. One approach might be to define five or six key topics you want to emphasize. May I suggest: How to Locate Customers; Getting to Know the Prospect; A Sales Presentation that Works; Close: Getting to “Yes;” Getting
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N E W S the Deal Done: Finance and the Delivery; and After the “Yes.” These seem to be the prominent skill areas salespersons need most in defining, and experienced – I did not say old – sales staffs often need to sharpen. You want to make sure your sales staff are following your dealership’s philosophy and are singing from the same songbook. I don’t have to tell you there are various ways you can approach training. You probably have already done them all. You probably thought some were effective while others were real bombs. Finding the most effective way of keeping your dealership’s learning curve at its very best is a challenge for every dealer, general manager or sales manager. Squeezing in time for effective new salesperson orientation sessions or training (perhaps retraining) the experienced just doesn’t happen as often as it should. It takes leadership to make it happen. As you evaluate the sales practices at your dealership, consider what is really working, what needs improvement and what you need to eradicate. I challenge you to get involved in making the sales culture the best it has ever been. Be a part of the learning. Be a
BY
L O U
working leader, actively engaging the sales staff. As a trainer, I preached that message to every group I stood before, and after years in the automotive industry; I have collected volumes of presentations. I admit some sessions were better than others, but I have always enjoyed watching a salesperson grow or hearing from a dealer with whom I have worked that his staff is really making strides in sales. Once you get hooked on promoting learning to earn, you miss it when you aren’t as actively involved. That is why when a couple of old independent automobile industry friends of mine suggested I put my knowledge and expertise into an online training program and approach NIADA about using it with it’s members, I decided to create the PreOwned Online Sales Training Course. The timing was perfect because NIADA has recently initiated an Education and Training Consortium to encourage quality educational opportunity providers to join together to offer programs and products to the independent automobile industry. Consortium selection criteria focus on the
V I C K E RY
needs of the dealer. I am happy to say that Lou Vickery’s Pre-Owned Online Sales Training Course met that standard and is one of the first educational opportunities to be offered. It is simple, straightforward and offers flexibility that both the dealer and the salespersons can appreciate. Whether you use this course or select another approach, I challenge you to stay focused on growing your people. Help them become the most effective salespersons in the industry. Encourage their enthusiasm. Cultivate their energy. The profits will be yours! Lou Vickery, an Alabama native, is a former professional baseball player and coach who worked with Merrill Lynch before going into the training and development field. He has presented his customer-focus programs to more than 30,000 people at more than 2,800 companies and dealerships in 44 states and two foreign countries. Vickery, the author of ten books, is in his sixth year of broadcasting and hosts “Lou in the Morning” in the Pensacola, Fla., market.
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CAN MORE SMALL
CARS EQUAL MORE SALE$ The compact segment has seen its share of ups and downs in the past few years. When gas prices were above
$4 in the summer of 2008, interest in compact vehicles – or anything that consumed less fuel – was thriving and improved sales of these vehicles followed. Polk recently confirmed the subcompact category (or lower small) more than doubled from 2005 to 2008 as a result of sales of vehicles such as the Nissan Versa and Honda Fit. When oil costs normalized, so did consumers’ eagerness to jump into a smaller vehicle, creating an opening for the utility-driven crossovers that serve the needs of families and outdoor enthusiasts alike – making 2009 effectively the year of the crossover. More than 330,000 compacts were sold in August 2009 during the CARS - or Cashfor-Clunkers – program (since they met the fuel efficiency standards set to qualify for the discount), so unnatural market share inflation occurred for small cars. By comparison, only about half as many compacts left dealer lots last August. But despite the surge in sales compacts enjoyed due to CARS, compact vehicle sales were almost identical through November 2010, demonstrating growing consumer interest in smaller cars. What’s even more telling is the staggering growth in small car shopping in 2010. Compact shopping on Jumpstart sites was up 11 percent on average in 2010 versus 2009. Not always the sexiest of categories, the segment now represents about 14 percent of all vehicle shopping and research on such properties as Vehix.com, TrueCar.com and CarandDriver.com. A segment for decades dominated by Corolla and Civic now boasts new entries that deliver more car for the money, especially in the subcompact and specialty groups. The trajectory in shopping for subcompact (Yaris or Versa) and small specialty (Mini Cooper and Scion xB) is greater than that of traditional favorites in the upper small category.
Breaking down the compact category into three sub-segments (subcompact, small specialty and upper small), upper small (Corolla, Civic, Focus) vehicles continue to lead in shopping volume, but the niche is seeing the greatest decline in share of the category (down 8 percent from the first quarter). The subcompact (Fiesta, Yaris, Versa) segment now represents a nearly 20 percent share of the compact category, growing in interest by about 15 percent throughout 2010. The small specialty (Scion, Mini, Fiat 500) segment is where the greatest growth is occurring. Shopping in that segment increased through November by about 57 percent from the first quarter. After a generation of truck and SUV desirability, Americans could finally be warming up to smaller, more fuel efficient and compact vehicles. The wave of interest in the compact segment has been driven by more vehicles to choose from in the segment, heftier marketing support and, more importantly, noticeably better product. Advanced interior options and safety features have made the small car more appealing; especially to the socially responsible consumer looking to make a green statement without paying thousands more for a hybrid or fiddle with a new technology such as an EV. The small vehicles available today are considerably better than the patchwork of yesteryear’s small cars, when you were lucky to have power windows, let alone power steering. Today’s models are fully equipped with some of the highest standards in safety features, luxurious interiors and, of course, excellent fuel economy. The CAFE standards set forth by the Obama administration (a fleet average of 35 mpg) also have something to do with these developments and, in the past, domestic automakers weren’t well-represented. What’s more, many of the imports have gotten much more creative about their approach to small cars to remain competitive with brands such as Scion and Kia challenging
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traditional design standards. Most recently, the Ford Fiesta has set the gold standard for marketing excellence in the category. Through the Fiesta Movement program, Ford turned to consumers to drive inclusion of many of the features and bells and whistles on the vehicle. The company is enjoying a powerful opening into the compact market with its 2011 models hitting dealerships behind tremendous momentum. The newest entry into the specialty group is the Chrysler-owned Fiat 500, a stylish mini-car designed with sightlines similar to the original Mini Cooper. This is Fiat’s re-introduction to the U.S. market since the 1970s, and it’s betting big on the B-car segment with the release of the 500. So far, the 500 is garnering plenty of interest among car shoppers and enthusiasts on Jumpstart’s automotive research properties, as consumers regularly engage with videos, photos and other content about the new Fiat. Interest from people researching to buy a 500 was at its highest in November 2010, up about 60 percent from the month prior. But while shopping in the specialty segment has rapidly increased, sales have yet to follow. Sales declined over the course of last year, with the peak coming in April at nearly 10,000 vehicles, then dropping to its lowest point near the end of last year, with just over 4,000 vehicles sold. In a very irregular economy, it’s difficult to tell if 2011 will be the year of the small car, but all signs point to the compact segment potentially representing a larger share of the pie this year as product, marketing and options continue to improve. Joe Kyriakoza is vice president of marketing communications & insights at Jumpstart Automotive Group. He has held numerous leadership positions with Jumpstart, one of the largest content and media providers for the automotive publishing space.
BY JOE KYRIAKOZA w w w. e - o i a d a . c o m
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LICENSE APPLICANTS APPROVED The following applicants, as listed in the Agenda for the Used Motor Vehicle and Parts Commission Regular Meeting of Nov. 9, 2010, were considered for issuance of used motor vehicle dealer licenses and wholesale vehicle dealer licenses. The applications were approved pending compliance with the State licensing laws and rules, and subject to final approval by Commission staff.
USED DEALER LICENSES
COMPANY Austin Motors Choctaw County Cheve, Buick, GM *Cowboy Auto Sales Hobart Auto Auction I-44 Auto Center, LLC Joe Cooper Explorer Motors Kamphaus Motors Kiko’s Autos Lindley’s used Cars, LLC Mimi Auto Patriot Auto Sales Phoenix Rising Motors, LLC R V General Store, Inc.-OKC Rex Morgan Cars, LLC Sirtedd’s Auto Sales & Brokerage Warranty Motors II
NAME CITY Tracy Whyburn Tulsa Nick Theofiledes Hugo Jose Manuel Delgado Clinton Berlin Barnes Hobart Darren Reese Bothell Tulsa Gregory J. Kach Midwest City Robert J. Kamphaus Granite Francisco Madera Oklahoma City Jody Lindley McAlester Pradeep K. Metpally Oklahoma City Troy Hankins Lawton Scott King Clinton Barry Bender Oklahoma City Rex L. Morgan Guthrie Teddy G. Ohadugha Oklahoma City Mark Ross Stillwater
WHOLESALE USED DEALER LICENSES COMPANY Automay Car Sales, Inc. *Swift Motors
NAME CITY Amir Shadaram Oklahoma City Soliman Dogha Stillwater
*Subject to review of financials
OIADA NEW AND RENEWAL MEMBERS The following list includes members who joined or renewed their OIADA/NIADA membership during September. We express our sincere appreciation for all the members of OIADA and we extend our invitation to dealers who are not members. A membership application can be found elsewhere in this newsletter. We urge you to be an active part of maintaining a strong and effective used car industry voice in the legislative and regulatory environment. With the current Congress, we need that voice more than ever! John Easttom, President
COMPANY R D & D Used Cars R Temple of Zoom Motorsports R Don Hickey Used Cars R Mitchell Motors, Inc . R Atoka Wholesale Motors R Brookside Motorcycle Co. R Randy Mitchell Auto R Oklahoma Auto Exchange, LLC R Terry Halbert Auto Sales, Inc. R Shreve Truck & Equipment Sales N Norris Auto Sales R #9 Auto Sales N Cycle Ward, LLC R Broken Arrow Motor Co. R L & J Car Sales, LLC R Auto Showcase of Tulsa, LLC R Albright Insurance, Inc. N United Acceptance R Smart Auction N CAR Financial Services, Inc.
NAME Danny Dowdell Mike Northrup Don Hickey, Inc. Jesse Don Mitchell Paul Kisinger Paul Rogers Randy Mitchell Mike Clopton Terry Halbert Terry Shreve Randy Dunn John Fletcher Misty Silver KCAR Enterprises, Inc. Larry Logue Auto Showcase of Tulsa, LLC Daren Wilson United Acceptance Jerry Weston Caleb McClung
JOINED CITY 1991 Clinton 2008 Coweta 1993 Oklahoma City 2000 Stillwater 1993 Atoka 2009 Tulsa 1993 Muldrow 2005 Oklahoma City 1998 Yukon 2005 Barnsdall 2010 Edmond 2000 Tecumseh 2010 Enid 2003 Broken Arrow 2002 Cache 2003 Tulsa 1991 Ponca City 2010 Smyrna, GA 2008 Lewisville, TX 2010 Blanchard
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FTC USES ITS
EXPANDED AUTHORITY Although the new Consumer Finance Protection Bureau (CFPB), authorized last year by the DoddFrank Act, is only just now being assembled and likely will not be issuing final rules for another year, the Federal Trade Commission (FTC), which has been issuing rules for dealers for many years, is already exercising the expanded authority it received from the act. As you in the motor vehicle sales business know, the
FTC is responsible for many of the rules dealers are required to comply with. The FTC’s past rulemaking has, by and large, been fairly reasonable and the industry has been able to comply and continue to serve the motoring public’s needs with a high degree of efficiency and effectiveness. It has taken some time, but we are beginning to observe the impact of the 2008 federal elections on regulators. That election year gave consumer advocates a terrific boost. With both the White House and Congress lending a sympathetic ear to those whose whole purpose in life is to protect the consumer (whether the consumer wants or needs protection or not), we have seen a whole host of laws passed and bureaus created which are beginning to impact our industry in very negative ways and are likely to do so for some time to come. One of the first of these consumer protection efforts to impact the industry comes from the administration’s push for the regulatory agencies to revise the Gramm-Leach-Bliley Act’s privacy rule. For years, businesses have been providing privacy notices and protecting consumers’ private nonpublic information. Some in the government decided financial institutions (particularly the motor vehicle industry) had not been doing an adequate job. They decided privacy notices needed to be simpler and easier for the public to understand its rights and to be reminded of how we in the industry collect and protect their private nonpublic information. So, at the behest of Congress and the administration, the FTC, with their expanded regulatory powers, assisted in the production of 266 pages of regulations that resulted in some 288 variations of what the new safe harbor privacy notices for dealers should look like. The rules make it impossible to develop a standardized version of the privacy notice that can be mass produced and used by most any dealership. Instead, each dealership’s version of
the notice must be configured exclusively for that dealership. To perform that task, one must have a good understanding of what the rules say and be able to properly apply the rules to a dealership’s privacy notice. They may have made it simpler for consumers, but they certainly didn’t do dealerships any favors. Use of properly configured safe harbor forms is optional, but their use does give a dealership some assurance that it will be immune to possible severe penalties. While use of the safe harbor forms is optional, the information required in a dealership’s privacy notice is not optional. That information is required and must be in use as of Jan. 1. Compliance with Gramm-Leach-Bliley Act and the FTC privacy rule needs to be taken seriously because the penalties for violations can be quite severe. Listed below are the sanctions that can be taken against companies for violations of Gramm-Leach Bliley Act: A civil penalty of not more than $100,000 may be assessed for each violation Dealership principals and staff are subject to, and personally liable for, a civil penalty of not more than $10,000 for each violation Fines imposed in accordance with Title 18 of the United States Code, or imprisonment for not more than five years, or both If the violation occurs while violating another federal law, or as a part of a pattern of any illegal activity involving more than $100,000 within a twelve-month period: a fine of up to twice the amount provided in Title 18 and imprisonment for more than ten years, or both Implementation of cease and desist orders barring policies or practices deemed in violation of the act’s privacy provisions Removal of the company’s management, including directors, officers, etc., and potentially barring them, permanently, from working in a financial institution including a dealership We emphasize again the safe harbor phrases authorized for use through Dec. 31, 2010, are no long compliant with the new privacy notice requirements. Be sure your dealership’s website privacy notice and other privacy documents follow the 2011 privacy notice rules.
By ADR Staff
If you have questions, contact the ADR staff at 405-232-2947 or odell.morgan@sbcglobal.net. ADR: OUR MISSION, YOUR SUCCESS. This article is intended for information only – It has no legal application. For its application to your dealership, you are requested to contact your legal counsel.
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