Oklahoma Independent Automobile Dealers Association
DEALERS’ RESOURCE March 2011
FTC Begins Enforcement of the
RED FLAGS RULE In This Issue Jim Holman Named OIADA Quality Dealer Page 4 A Failed Social Media Strategy Page 6 The Red Flags Rule: Protecting Your Business From Fraud Page 8 Categories of Common Red Flags Page 24 Change Service Requested DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
OIADA, P.O. Box 6905, Moore, OK 73153
Visit Us Online At www.e-oiada.com OK_0311.indd 1
2/22/11 4:20 PM
OK_0311.indd 2
2/21/11 6:28 PM
INSIDE
MAGAZINECONTENTS 4 Jim Holman Named OIADA Quality Dealer 6 A Failed Social Media Strategy 8 The Red Flags Rule: Protecting Your Business From Fraud 24 Categories of Common Red Flags
ADVERTISERSINDEX 71B Auto Auction..........................................15 ADESA ........................................................13 Albright Insurance ........................................ 7 AutoTrader.com ............................................. 5 Chase ..........................................................21 Dealer’s Auto Auction of OKC....... Back Cover Jordan Insurance ........................................... 9 Loftis Wetzel Insurance ................................ 23 Manheim North Texas........... Inside Front Cover Manheim.com .......................Inside Back Cover SmartAuction.................................................17 United Acceptance .......................................19 Western General / Protective......................... 11
BOARD OF DIRECTORS PRESIDENT
VICE PRESIDENTS John T. Longacre, IV Taft Motors, Inc. 722 S. Linden St. Sapulpa, OK 918-224-7700 taftmotorsinc@msn.com
sas@clnk.net Glenn McDaniel I-35 Credit Auto 1113 SE 51st St. Oklahoma City, OK 73129 405-670-4100 gtamcd@aol.com
CHAIRMAN OF THE BOARD
Julian Codding Reliable Motors, Inc. 9201 S. Shields Oklahoma City, OK 405-912-5000 juliancodding@msn.com
David McQuerry McQuerry Motors, Inc. 1302 N. Harrison St. Shawnee, OK 74801 405-273-8171 mcquerrymotors@yahoo.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
Monte Shockley Shockley Auto Sales 2605 N. Broadway Poteau, OK 74953 918-647-3999
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
3
w w w. e - o i a d a . c o m
OK_0311.indd 3
MARCH 2011
DEALERS’
RESOURCE
2/22/11 4:23 PM
J I M
H O L M A N
OIADA 2011 QUALITY DEALER 1
T
he OIADA Quality Dealer award is the highest honor bestowed on a member dealer. Since its inception, the OIADA Quality Dealer has come to embody all it means to be a dealer who is committed to quality, excellence, outstanding customer service and to making their community a better place for everyone. Annually, this award honors one dealer selected by past State Quality Dealers from among nominees submitted to OIADA from members across the state. Each year, this award has become more and more coveted... as the standards and what it takes to achieve the award reach new levels with each recipient selected. This year’s award was presented to Jim Holman of The Car Store in Oklahoma City. On behalf of all Oklahoma dealers, we take this opportunity to congratulate Jim Holman and his family for a job well done and thank them for an outstanding performance in representing Oklahoma dealers and for doing their part to advance the image of the independent motor vehicle dealer to consumers all across the state.
2
3
PIC 1: Terry Halbert (2010 OIADA Quality Dealer) and Jim Holman (2011 OIADA Quality Dealer) PIC 2: Jim Holman and Son-In-Law David Pasnau PIC 3: Julian Codding (Reliable Motors, OKC); Terry Halbert (Terry Halbert Auto Sales, Yukon); Jim Holman (the Car Store, OKC); David Pasnau (The Car Store, OKC); and Jack Watts (Sunwest Motors, OKC). 4
DEALERS’
OK_0311.indd 4
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/22/11 4:24 PM
OK_0311.indd 5
2/21/11 6:28 PM
A FAILED SOCIAL MEDIA STR ATEGY Social media shouldn’t be a strategy; it should be a meeting place to learn about your customers, find out how you can help them and build a transparent business people can trust. It’s often hard to say what a company’s goal is when using social media. We can assume all
day long the underlying goal is to make money. However, its actual goal may be to increase product awareness or find out what people really think about the business itself. But in one case, I’d like to assume an auto dealership in Tucson, Arizona, thought it was their last chance at survival. I don’t quite remember the day when this dealer started following me, but I decided it would be wise to follow them back. I kept a close eye on what it was doing and saying. The all-too-often tweet looked like this: “If you own a Suzuki Equator <Your Town>, <company name> wants to be your one stop automotive destination. Visit our FB page.” And that was it. Minus the occasional video post, there was nothing but that same format tweet. And the video posts were only URLs. There was no information. This is all I saw for months... and then: the dealership was in trouble. It announced it would be closing the doors. A week of tweets proclaiming the last chance to get 33 percent off all new inventory was all that remained. One thing I’d like to point out is I have no idea why it was closing. The owner could’ve had a medical reason or just wanted to retire. But as I have seen many times, auto dealers tend to have this notion social media is an overnight fix to their declining sales.
How You Fail With Social Media
Let’s assume for a moment social media was the owner’s plan to save his dealership. Where did he go wrong? The key problem people face with social media is they forget it’s Social. You have to connect and talk with people. Imagine you are at a party. Everyone is mingling and chatting about life. There are conversations about business going on, but that’s not the main focus. And then Steve shows up. Steve stands in the middle of the room and starts shouting, “Now in stock at Steve’s Auto Sales: a new Ford Taurus only $23,995!” The room stops. Everyone looks at Steve for a moment, but nobody has anything to say in response. The masses go back to their conversations. Steve thinks he made an impact. So, he waits a few minutes and then screams it again. This time everyone just ignores it. And so it continues for the rest of the party. If you were attending that party, would Steve have annoyed you? You bet he would have driven me nuts. There’s a good chance I would have left the party. So when this dealership continued to keep posting the same thing over and over, I began to ignore it. Therefore, its social media strategy failed it.
Social Media Shouldn’t Be a Strategy
When kings and queens ruled the world, their children were married for strategic reasons. Every relationship was part of a strategy. As business owners, we tend to
think of relationships the same way, thinking “I’ll play golf at certain country club so I can meet the right people,” or “I go to a specific church so I can visit with people who can afford the cars I sell.” We do it all the time, but people can see through such things. Social media shouldn’t be a strategy; it should be a meeting place to learn about your customers, find out how you can help them and build a transparent business people can trust. Please understand if you build a social media strategy, you’re only building a “how to talk with people” strategy. Social media is not an overnight fix, it’s a way to grow relationships. Don’t believe me? KLM (the Dutch airline owned by Air FranceKLM Group) decided it needed to take a different approach with social media. It wanted to get social. So at its Amsterdam Airport Schiphol hub, KLM started searching for people who were tweeting about flying on KLM and being at the airport. The airline would research the person using Facebook, buy a gift that matched the person and then hand-deliver it. Now that’s being social. It’s a strategy that will actually help create repeat customers. If KLM had just constantly tweeted about how great their flights were, nothing would ever have happened. Oh, and the impact had? KLM generated more than a million impressions. L E S S O N L E A R N E D : social media requires conversations with people, not your normal marketing hoopla. Would you like to view KLM’s video about its social media efforts? Visit www.youtube.com/ watch?v=pqHWAE8GDEk.
BY M I K E MO RGAN 6
DEALERS’
OK_0311.indd 6
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/22/11 4:24 PM
Liquid Motors, NIADA to Present Social Media Webinar NIADA members can learn how to leverage social media to garner brand recognition, build consumer confidence and drive new business opportunities during a social media webinar presented by Liquid Motors and NIADA in April. Learn how to leverage social media to build consumer confidence and drive new business opportunities quickly and easily! Social media continues to be the fastest growing segment on the Internet. As of September 2010, Facebook has over 135 million active users in the U.S. and each user averages seven hours per month on the site, more than double that of any other site on the Internet. THE SEMINAR, SET FOR APRIL 12 AT 10 A.M. CENTRAL, WILL PRESENT THE FOLLOWING:
GETTING STARTED IN SOCIAL MEDIA l
Building a Social Media Marketing Plan - Setting Budget, Goals, Objectives and Guidelines: We’ll cover how to build an effective social media marketing plan Reputation Management: We will help NIADA members understand why this is critical and how to simply and effectively make sure that consumer positive experiences are portrayed and how to respond to negative postings Building a Presence: We will cover how to secure social media accounts and how to configure the accounts for the most effective brand presentation and user experience
LEVERAGING SOCIAL MEDIA TO GROW YOUR DEALERSHIP l
Build Followers and Fans: We’ll discuss how to effectively grow your followers and fans including the dos and don’ts for posting content to social media Leveraging Check-ins: We’ll help members understand how to leverage new location based services to market their dealership on social media sites Dealers also will learn the key metrics to use to track the progress and success of their social media efforts and how to utilize technology to simplify and improve results tracking. TO REGISTER, CALL 877-573-6877 OR SEND A REQUEST TO socialmedia@ liquidmotors.com. 7
w w w. e - o i a d a . c o m
OK_0311.indd 7
MARCH 2011
DEALERS’
RESOURCE
2/21/11 6:28 PM
BY A D R STA FF
THE RED FLAGS RULE: Protecting Your Business from Fraud
You’re closing a deal, making a good sale and the guy hardly balked at your asking price. He’s a clean-cut young man,
friendly sort, talkative, new in town, just getting settled, sounds like he’s got a great job, ready to make the down payment. All that’s left is the paperwork. But, what do you do if… a fraud alert comes back on his credit report, or the identifying information on the credit report doesn’t match his ID, or his physical description doesn’t match what’s on his ID, or he can’t provide a valid physical home address.
Do you even notice the alert or the discrepancy? Do you just ignore it? Do you ask him about it, accept his explanations and go ahead with the sale? Or, does it occur to you that maybe he’s not who he says he is? Does it occur to you that this could be a case of identity theft? If it is identity theft, would you know how to handle it? Would your employees know? Would your employees even have been alerted to the discrepancy? Far too many times, business people and their employees are faced with this or similar situations. And far too many times, they are not alerted to the discrepancies or ignore them. Far too many times, the result is that a fraud is perpetrated on the business. And you – the business owner – are left holding the bag. Your product is gone and you’ll not see one thin dime in compensation – the check you received is returned, or the note you’re carrying is never paid. As many as nine million Americans have their identities stolen each year. The cost to businesses left with unpaid bills racked up by scam artists can be staggering. To say nothing of the damage done to the individuals whose identity was stolen – their bank accounts may be drained, their credit damaged, even their medical treatment endangered. To combat the ever-increasing occurrences of fraud perpetrated by identity theft, various regulatory agencies have implemented the Red Flags Rule. The rule requires many businesses and organiza-
tions to develop and maintain a written identity theft prevention program. These programs are designed with three objectives in mind: Detect the warning signs – or “red flags” – of identity theft in the day-to-day operations of the businesses; Take steps to prevent the crime; and Mitigate the damage it inflicts. By preparing a written plan and implementing it, businesses and their employees are better equipped to spot suspicious patterns when they arise and take steps to prevent a red flag from escalating into a costly episode of identity theft. Beginning Jan. 1, preparation of a written identity theft prevention program as prescribed by the Red Flags Rule is required for businesses defined as financial institutions or creditors who maintain covered accounts. Most car dealers meet the definition of creditors and all car dealers maintain covered accounts.
PREPARATION OF A WRITTEN PROGRAM IS A FOUR-STEP PROCESS: 1. Identify relevant red flags or suspi-
cious patterns or practices or specific activities that indicate the possibility of identity theft. For example, if you are presented with an ID that looks fake, it might be a red flag for your business.
2. Detect red flags. Put in place written
procedures to detect those red flags in your day-to-day business.
3. Prevent and mitigate identity theft.
If you detect a red flag, respond appropriately. By having a written plan and by having trained your employees, you may be able to prevent the crime and lessen the damage, both to your business and to the individual whose identity is at risk.
4. Update
your program. Periodically review and update it to reflect changes in your business, such as offering new types of accounts or allowing accounts to be opened or accessed through the internet.
Once written, your program should be approved by your board of directors (if any) or by an individual in senior management. In addition, a senior employee should be appointed to administer the plan. The rule requires that you train relevant staff as necessary – for example, staff that has received anti-fraud prevention training may not need to be re-trained. In administering your program, be aware that service providers may also be subject with the Red Flags Rule. For instance, if you engage service providers to open or manage accounts, bill customers, or collect debts, take steps to ensure they are also in compliance. For car dealers, the Red Flags Rule is administered by the Federal Trade Commission (FTC). FTC experienced multiple delays in enforcement of the rule. However, last December, the Red Flags Program Clarification Act was signed into law and FTC set its enforcement date as Jan. 1. At the behest of car dealers and other small businesses across the country, relief was afforded those entities deemed to be at low risk of identity theft. The FTC has published a template to assist those lowrisk businesses in development of their program. The staff at OIADA/ADR of Oklahoma is prepared to help you come into compliance with the Red Flags Rule through use of this template. For more information or to take advantage of our solution for the rule, as well as other regulatory requirements, contact us at 800-346-4232, 405232-2947, or odell.morgan@sbcglobal. net. You also may visit www.buyadr.com. Additional information about the rule, including the language of the regulation itself, can be found at www.ftc.gov. Remember, whether mandatory or not, development and implementation of an identity theft prevention program is good business – don’t let yourself be the victim of identity theft fraud. Please note the material contained herein should not be construed as legal advice or as having any particular application to you or your business. We encourage you to consult an attorney regarding these matters and their relevancy and application to your business.
8
DEALERS’
OK_0311.indd 8
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/21/11 6:28 PM
Going Mobile in Your Dealership One of the new keys to the success of your business is your smart phone. You can
operate your dealership on-the-go, making fast, informed decisions that will ultimately improve your bottom line. More than 440,000 mobile sites and over 500,000 mobile apps exist today, including a growing number of auto-industry related apps. It may seem daunting to integrate this emerging technology into your business, but these tools are a must-have for both acquisition and retail. What are ‘mobile apps’ and how do they help dealers? An app is a software application that helps people accomplish tasks faster. Among other things, an app can use the hard drive of the mobile device to store data for faster recall and operation, perform calculations, access hardware features such as camera and GPS – and all without an Internet connection. At its core, the Internet revolution was about how technology harnessed the power of information to generate efficiencies, and this is exactly the opportunity mobile apps offer to dealerships today – providing information onthe-go and tying it all together to take action. How can mobile apps streamline your business?
Mobile browser-based tools provide dealerships with more on-the-go visibility but lack a built-in ability to act in real-time on information organically across the dealership. But, just as a mobile app enables on-the-go stock trading, for example, an app such as eCarList’s ‘True Target Mobile’ allows dealerships to take a massive dataset and a complex, multi-step, -vendor and -personnel process and make it all work from a single handheld device. The ‘True Target Mobile’ app gives dealerships mobile access to pricing data from multiple books, current data from top online marketplaces and the ability to filter, organize and view the data geographically for territory (including vehicle pricing from competitive dealerships). Other functions include VIN scans, taking/adding/removing photos, integrating Carfax Vehicle History Reports and sharing appraisals and pricing with other mobile devices. Are there other benefits to going mobile? On the acquisition side, smart phones provide access to information you need to stock your lot with cars that customers want. It’s no secret that the used car supply is decreasing due to rising demand, so the competition for quality units is getting tighter.
Think about the top concerns your customers have when shopping for a used car: previous damage, maintenance, ownership history, and of course, price. Tools like Carfax Vehicle History Reports are readily-available through various mobile devices to verify this important information and bid with confidence. Having your mobile device handy helps you tie it all together quickly and successfully acquire the right cars for your lot. Today’s mobile devices provide access to information that brings transparency and process effi ciency to dealers. The possibilities mobile is opening up for our industry are truly extraordinary – and in the current economic climate, leveraging new and user-friendly technology is key to moving more cars and saving money in the process. BY LEN CRITCHER AND LANCE VICKERY Len Critcher is CEO of eCarList, provider of award-winning inventory management and online marketing solutions that make it easy for dealerships to fully own and control the vehicle merchandising process through one unified platform. Lance Vickery is director of dealer business at Carfax and has spent more than 25 years in the
9
w w w. e - o i a d a . c o m
OK_0311.indd 9
MARCH 2011
DEALERS’
RESOURCE
2/21/11 6:28 PM
BY BI LL MO K RY
THE ART AND SCIENCE OF USED AUTO INVENTORY Building a profitable used auto inventory requires having the right information and the talent to know how to use it. Over the years, I’ve been blessed with tremendous mentors who have provided me with valuable insights, one of which is managing a used vehicle department is both a science and an art.
While there are no cookie-cutter solutions applicable to every scenario, there are tried and true blocking and tackling strategies that can help any department maximize results. When it comes to proper inventory mix, there are several ways a dealership
USED CAR MANAGERS SHOULD BE AWARE, AT THE VERY LEAST, OF THE TOP-SELLING VEHICLES IN THEIR MARKET BY MAKE, MODEL, AND YEAR AS WELL AS THE TOP-SELLING VEHICLES AT THEIR STORE
many of these have been sold at your store in the last 90 days? What was the average age when it was sold? There are several tools available to help managers accumulate this data, such as Auto Exchange for internal data and Cross Sell for external data. Once this data is collected, it is imperative management consistently identify which vehicles sell in their market (internal and external). That’s the science part of the equation; it’s not especially difficult to identify commodity type vehicles and, if you’re willing to travel or pay, to procure them. Further breakdown of historical internal and external trends is, however, necessary. Specifically, it would be beneficial to track sales volume, aging, and gross profit for specific COS bands. These could be broken down as follows:
$0 – $5000 $5,001 – $10,000 $10,001 – $12,500 $12,501 – $15,000 $15,000-plus
can study information to improve volume, gross and ROI. However, before the information can be broken down, the store must have the information. While this may seem obvious to some, I am routinely presented with departments that fail to accomplish this seemingly simple task. Used car managers should be aware, at the very least, of the top-selling vehicles in their market by make, model, and year as well as the top-selling vehicles at their store. All too often when I ask used auto managers to name the three top-selling used vehicles in their markets, they look at me like a deer in headlights. Or, they automatically respond “Honda Accord” or “Toyota Camry.” That’s great! What year? What trim level? What mileage band? How
The used auto dealer should be aware of and actively track each of the above categories for each price band in used cars, trucks, SUVs, and vans, comparing the current stocking mix to what has yielded the greatest success. The categories can be broken down further into import/domestic categories as well, if needed. This information, coupled with knowledge from external tools, is used to direct buying specific inventory at specific price points to generate specific results. The art of used vehicle inventory comes from identifying and procuring vehicles that put your store ahead of the curve. For example, a few years back fuel prices spiked and, as a result, highly economic, smaller pre-owned vehicles were suddenly at a premium, while large pickups and SUVs could be bought for a dime a dozen. The market was quickly flooded with these gas guzzlers, but few people had the vision or foresight to accumulate them. Those who did were those who had the knowledge and experience to understand the ebb and flow of the used car market, so
they loaded up on these vehicles at very cheap prices. It’s not difficult to guess what happened to their profits when the price of fuel went back down. Recognition of these opportunities is not always easy; often it comes from experience. I believe we are involved in one as I type this column. Thanks to the Cash for Clunkers program, new car inventories are generally low; there are fewer trades in most used inventories and the price of vehicles at auction has gotten higher. While this could mean several different things depending on your market, I would think the potential for increased gross profit, even on vehicles more traditionally thought of as commodity cars, is greater than ever. Hopefully, you’re tracking the trade capture rate. A normal benchmark for capturing trades is 55 percent of appraisals. Because of today’s market conditions, I would encourage all managers to aggressively get involved with customers and inquire about their desire to trade their vehicle, as well as ensure your store is appraising every vehicle possible. Further, I believe it’s imperative to improve the appraisal capture rate by 10 percent or more. Used autos are at a premium and the extra money put into a trade has never been a better investment. This type of forward thinking involves risk some dealers simply may not be willing to accept. Those who do so are more frequently ahead of the used vehicle game. The science of used inventory can be resolved by accumulating information, breaking it down (all the way to COS bands, if you really want to be detailed) and buying and trading aggressively according to trends. The art requires experience and guts. BILL MOKRY IS A SALES AND F&I S P E C I A L I S T F O R S E R V I C E G R O U P, A N INSUR ANCE AND FINANCIAL SERV I C ES COM PANY THAT PROVI D ES I N COME DEVELOPMENT TR AINING AND SERVICING SOLUTIONS TO AUTO DEALERSHIPS. HIS MANY YEARS OF DEALERSHIP EXPERIENCE INCLUDE SEVERAL AS GENERAL MANAGER OF A SUCCESSFUL USED CAR OPER ATION. H E CAN BE REAC H ED AT BMOKRY@SGIFS.COM .
10
DEALERS’
OK_0311.indd 10
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/21/11 6:28 PM
OK_0311.indd 11
2/21/11 6:29 PM
FEDER AL REGUL ATIONS,PRIVACY INFORMATION, AND YOU Be aware that penalties for violation of this order are severe. Violators may be subject to civil fines as well as criminal prosecution and multi-year imprisonment. ADR does extensive research and analysis on issues of concern to auto dealers. We do not offer legal advice.
This particular report deals with recent federal regulation implementation deadlines. An aggregate of federal regulations govern the collection, use, and safeguarding of personal non-public customer information. Each set of regulations, often termed a rule, derives from a particular Congressional act or executive order enacted for a specific purpose. While each act or order may have been developed independently, once incorporated into the Code of Federal Regulations, it becomes dependent on existing regulations, often relying upon definitions or language in other areas. Consequently, when interpreting any single rule, you must view the body of regulations as a whole and consider the impact other rules have on your rule of interest. At best, it can be a time-consuming process to extract the information you need and determine its applicability to you as an auto dealer. Since your business is selling vehicles and ours is helping you comply with the law, we’re glad to provide you with the following summary of laws and regulations concerning privacy information. We’ll give a short history of each, show their relationship to each other, and explain their relevance to you, the auto dealer.
s Privacy Act We’ll begin with the Privacy Act itself, formally titled the Financial Services Modernization Act of 1999. Also known as the Gramm-Leach-Bliley (GLB) Act, it opened the way for financial services companies such as banks, insurance companies, and stock brokerage companies to merge. Since Congress then recognized these newly merged institutions might have unlimited access to and use of their customers’ consolidated personal information, the act included protection for the consumer. The Federal Trade Commission’s
implementation of this act with regards to consumer privacy issues applies to businesses under their jurisdiction who are engaged in financial activities as described in the Bank Holding Company Act of 1956. Both the Privacy rule and the Safeguards Rule derive from the GLB. The Privacy Rule, as implemented by the FTC, requires financial institutions – including auto dealers – to provide the customer written notice of the kinds of information they collect, what they use it for, how they protect it, and to provide the customer an option to restrict sharing that information in some cases. The Safeguards Rule, also implemented by the FTC, requires the same financial institutions to develop, implement, and maintain a comprehensive information security program. The program must be in written format and must contain administrative, technical, and physical safeguards appropriate to your business. In 2006, Congress enacted the Financial Services Regulatory Relief Act to provide regulatory relief and improve productivity for insured depository institutions, and for other purposes. This Act amended the GLB Act by directing responsible regulatory Agencies to “… jointly develop a model form which may be used, at the option of the financial institution, for the provision of disclosures under this section.” This amendment resulted in the new privacy notice you began using in January.
s Executive Order 13224 In the wake of the terrorist attacks on Sept. 11, 2001, President Bush signed into law Executive Order 13224. It declared all properties of specifically “listed” persons to be blocked and forbade any U.S. person from engaging in any transaction or dealing of those assets. Accordingly, auto dealers are prohibited from selling a vehicle to or buying a vehicle from any person or entity included among those listed persons.
To insure compliance with this order, auto dealers must do two things – first, identify the individual you are dealing with. To do this, you should collect sufficient identifying information, such as name, address, date of birth, social security number or tax identification number, and/or passport number. Second, you must determine whether that individual is listed. The Office of Foreign Assets Control (OFAC) in the Treasury Department maintains the list of persons (termed Specially Designated Nationals or SDNs) whose assets are blocked. You can access the list thru the OIADA website at www.e-oiada.com (select menu item Resources, then Blocked Persons List. The complete listing of SDNs is available in either PDF or plain text format). Be aware that penalties for violation of this order are severe. Violators may be subject to civil fines as well as criminal prosecution and multi-year imprisonment.
BY A D R STA FF
s
s USA Patriot Act As the war on terror intensified after 9/11, Congress passed the USA PATRIOT Act. The formal title is “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.” As the name implies, the act’s intention was to afford law enforcement agencies the authority necessary to combat terrorism. A variety of existing acts were impacted, including the Money Laundering Control Act of 1986 and the Bank Secrecy Act (BSA). For purposes of the Patriot Act, a variety of businesses are considered financial institutions, including a business engaged in vehicle sales, including automobile, airplane, and boat sales, as well as travel agencies, insurance companies, telegraph companies, the U.S. Postal Service and casinos. As originally written, all defined financial institutions including auto dealers would have been subject to the act’s requirements to implement anti-money CONTINUED ON PAGE 14
12
DEALERS’
OK_0311.indd 12
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/21/11 6:29 PM
OK_0311.indd 13
2/21/11 6:29 PM
CONTINUED FROM PAGE 12
laundering programs and verification of identification procedures. As of this date, however, vehicle sellers and various others are temporarily exempted from the anti-money laundering program requirements. In addition, regulations governing verification of identification procedures have not yet been extended to vehicle sellers. Vehicle sellers are not exempted, however, from the act’s requirements implemented as information sharing between federal law enforcement agencies and financial institutions. In short, auto dealers must be prepared to respond to requests for customer information from Financial Crimes Enforcement Network (FinCEN), a Treasury Department agency. Upon written notification from FinCEN, you must search your customer records for accounts and transactions involving specified individuals or entities. Your records must have sufficient identifying information for you to distinguish between individuals of same or similar names, typically by referring to the individual’s date of birth, address, Social Security number, tax identification number and passport number, if applicable. If you determine you’ve transacted business with the specified individual, you are required to respond in a prescribed and timely manner to FinCEN, providing them with identifying account information.
Fair and Accurate Credit Transactions Act (FACTA)
The Fair Credit Reporting Act (FCRA), passed in 1970, was enacted to promote the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. The FCRA was subsequently amended by the Fair and Accurate Credit Transactions Act (FACTA) of 2003. FACTA added several new provisions to the FCRA dealing with the accuracy and privacy of consumer credit information. The regulations known as the Red Flags Rule and the Address Discrepancies Rule both derive from FACTA. The Address Discrepancies Rule is outside the scope of this article and will be addressed at another time. The Red Flags Rule requires certain businesses and organizations to implement a written identity theft prevention program. The program must be designed to detect the warning signs of identity theft as well as define procedures to prevent the crime and mitigate the damage. As implemented by the FTC, the Red Flags Rule became effective Jan. 1 and applies to financial institutions and creditors under its jurisdiction holding covered accounts. Additional informa-
tion regarding the rule and its relevancy to you as an auto dealer can be found in separate articles in this publication. While these acts all began as separate laws, the implementing rules regarding consumers’ nonpublic personal information in many cases overlap and must be considered in relation to the whole. And the intent of the whole is for businesses to appropriately handle and adequately protect that information. Regardless of whether or not you consider your business to be a financial institution, you are collecting sensitive information any time you sell a vehicle, whether it is a cash or credit deal. As mentioned above, you are required by Executive Order 13224 and by the Patriot Act to collect and verify personal identity information from your customers. This information will necessarily include items such as name, date of birth, address, and Social Security number or taxpayer ID number. Thus, because your dealership uses, collects and is in possession of such information, your business and you personally are liable for the proper handling and protection of that information. Suffice it to say, it’s not our intent to force any dealer to comply with these rules. But we believe it’s the association’s responsibility to provide an option for dealers to comply in the simplest, most reasonable way. We are not attorneys, but we do offer solutions designed to free the auto dealer from the quagmire of government regulations by creating for you a bona fide error defense we believe will afford the dealer protection. For information about the Privacy Notice, Risk-Based Pricing Notice, Red Flags Program, and other compliance solutions offered by OIADA/ADR of Oklahoma, call us at 800-346-4232 or 405-232-2947. Alternatively, e-mail us at odell.morgan@sbcglobal.net or check our website at www.buyadr.com. BELOW ARE SOME LINKS THAT MIGHT BE HELPFUL FOR FURTHER RESEARCH: Federal Trade Commission: www.FTC.gov Treasury Department: www. Treasury.gov Government Printing Office: www.GPO.gov
(contains links to the Code of Federal Regulations, the Federal Register, and the United States Code)
This report is not legal advice. You are urged to contact legal counsel for its application to your operation.
s Let us take a moment to say in spite of what one may understand of the rules, auto dealers are covered when they sell vehicles whether cash or credit.
N I A DA /M A N H E I M COMMUNIT Y S E R V I C E AWA R D Manheim, the world’s largest provider of vehicle remarketing services, cares about its employees, the environment and the communities it serves. From
fundraising drives and tutoring kids after school to supporting long-term conservation efforts, Manheim and its employees are dedicated to giving back to their communities and know independent vehicle dealerships across the country share in this commitment.
For the first time this year, Manheim is recognizing and honoring those dealerships by awarding the 2011 National Manheim Community Service Award at the 65th NIADA Annual Convention and Expo. For more information, contact Georgia Brown, NIADA director of education, at 817-6403838 or download the nomination form at niada.com (click on the Manheim Dealers Edge link under the Services tab).
vAuto Helps Dealers Find Manheim Inventory vAuto’s proprietary stocking module can now allow its customers to quickly and efficiently source used vehicles at Manheim auctions as well as access Manheim run lists. “Partnering with Manheim is the first of many exciting integrations with our new AutoTrader.com relationship,” said Keith Jezek, vAuto president, in an early February announcement. “Combining vAuto’s stocking tool with Manheim’s comprehensive list of vehicles is a huge win for our customers. Manheim is a key player in facilitating the buying and selling of used vehicles for automotive dealers, providing vAuto’s customers the best resources to stock vehicles.” vAuto’s stocking module allows dealers to make their decisions for purchasing vehicles based on what the customers are actually buying in their own marketplace at that exact time, down to the level of year, make, model, trim and equipment configuration. In the past, dealers had to rely on historical data, not current trends, when making stocking decisions.
14
DEALERS’
OK_0311.indd 14
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/21/11 6:29 PM
OK_0311.indd 15
2/21/11 6:29 PM
Used Motor Vehicle and Parts Commission Report Following convening of the meeting and approval of the minutes of the previous meeting, Chairman John Longacre called on Director John Maile for the Director’s report. Maile began his report by stating that a copy of the financial statement had been emailed to the Commissioners a week prior to the meeting. A copy of
the December expenditures report was included in the Commission agenda for their consideration. Maile went on to report to the Commissioners the Oklahoma Legislature convened in February and there were several bills of interest. One bill dealt with motor vehicle transfers – the slip at the bottom of a title that allows the vehicle seller to file the form with the Oklahoma Tax Commission advising the vehicle has been sold to a particular purchaser. The fee for voluntary use of that slip is $10. The pre-filed bill would make use of that slip mandatory with a $5 fee. One bill would reinstate the motor vehicle inspection law with a fee of $25. Another pre-filed bill would place a hold on title transfers when there are debts resulting from motor vehicle violations against the vehicle until the debts are paid. Director Maile advised the Commission has an ongoing issue with Internet complaints. The complaints usually arise from the advertising done on the vehicle and how the vehicle is represented as far as the quality of the car and equipment on the car. Some of the advertising services use a formula based on the VIN. It is the dealer’s responsibility to make certain the information is correct in their ads. The dealer will have to remedy the problem or buy the vehicle back when the vehicle is not as described. It is the dealer’s advertisement, so the dealer must verify the ad information correctly applies to the vehicle being advertised. Whitehead’s written Deputy Director’s Report indicated Commission staff had not held any informal hearings during the month. Whitehead said it takes the entire agency to work on the renewals and it did not allow time for informal hearings. Investigators completed 40 inspections for the period. Staff handled 31 written complaints, nine of which were title issues, 13 had to do with contract violations, six were related to mechanical issues and there were three complaints of a miscellaneous nature. The Commission education program had 30 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. Call the Commission at 405-521-3600 to make your reservations.
J A N . 18 , 2 011 REPORT OF CEASE & DESIST LETTERS ISSUED
These letters direct the individual or business to cease violations of laws or rules. ENTITY
James Richie Luis Anival Torres WJK Dream Homes
TYPE VIOLATION
used dealer insurance pool modular homes
CITY
DATE ISSUED
Oklahoma City Yukon Oklahoma City
12/22/2010 12/22/2010 12/20/2010
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
Ben’s Auto Sales, Inc. Best Choice Motors, LLC #2 C & G Autos Car Complex Car Mart of Shawnee Cars On The Move, Inc. David Stanley Ford David Stanley Ford David Stanley Ford Davis-Moore Auto Group, Inc. Don Carlton Acura of Tulsa Executive Kars, Inc. Good Ole Used Cars Heritage Ford Lincoln Mercury, LLC I-240 Supercenter I-240 Supercenter I-35 Credit Auto I-35 Credit Auto International Auto Sales of Tulsa Jim Glover Chevrolet Kar Spa Keystone Chevrolet, Inc. Marc Heitz Ford Mike Mowdy Autoplex Overdrive Automotive Center Poor Mans Auto Emporium Renegade Motor Company RV Connection, Inc. Sal’s Auto Sales Speedline Auto Center
CITY
Warr Acres Tulsa Yukon Oklahoma City Shawnee Wagoner Oklahoma City Oklahoma City Oklahoma City Ponca City Tulsa Oklahoma City Lawton Weatherford Oklahoma City Oklahoma City Oklahoma City Oklahoma City Tulsa Tulsa Oklahoma City Sand Springs Purcell Midwest City Tulsa Miami Oklahoma City Lawton Warr Acres Tulsa
COMPLAINT
contract mechanical miscellaneous contract title title contract mechanical contract mechanical contract miscellaneous title contract title title contract contract mechanical contract title mechanical contract contract title mechanical contract title miscellaneous contract
RESOLVED
12/03/10 12/17/10 12/01/10 12/06/10 12/09/10 12/03/10 12/10/10 12/06/10 12/09/10 12/01/10 12/17/10 12/06/10 12/01/10 12/28/10 12/07/10 12/22/10 12/27/10 12/10/10 12/17/10 12/06/10 12/06/10 12/17/10 12/10/10 12/03/10 12/03/10 12/17/10 12/10/10 12/22/10 12/07/10 12/17/10
16
DEALERS’
OK_0311.indd 16
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/21/11 6:29 PM
OK_0311.indd 17
2/21/11 6:29 PM
OIADA NEW AND RENEWAL MEMBERS
The following list includes members who joined or renewed their OIADA/NIADA membership during December 2010. 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! Chris Goad, President
COMPANY R Buck Myers Motors, Inc. R Howerton Auto Sales R Wholesale Motors, Inc. R Elite Motors, Inc. R John Vance Motors, Inc. R I-Deal Auto Sales, Inc. R Smart Choice Auto Credit R Super Sports & Imports, Inc. R America’s Auto Auction-Tulsa R Hunt Motor Company R Oklahoma Auto Sales R Nick & Paul’s Quality Car Corner R M G Motor Sports, LLC R D & D Truck Sales, Inc. R Midwest Auto Mall, LLC R Altus Main Street Motors R Express Credit Auto #2 R Nabors Auto Sales, LLC R Larry’s Auto Store, Inc. R Bryan’s Car Corner, Inc. R Family Cars & Trucks, Inc. R Morris Motorsports
NAME Matt Myers Kenneth Howerton Johnny Reese Earl Cook John Vance William R. Murphy Curtis Ray Super Sports & Imports, Inc. Monte Freeman Mark Hunt David Lively Nick Jacewitz Mary Lowry James D. Davis Jose R. Pintor Gayland Miranda Shawn Richardson L. R. Nabors Larry Lichlyter Bryan B. Bingham Todd Mikel Mark Morris
JOINED CITY 1993 Claremore 1993 Stillwater 1993 Roland 2006 Sayre 2003 Guthrie 1998 Ponca City 2010 Yukon 1991 Oklahoma City 1999 Tulsa 1992 Duncan 2006 Mangum 2009 Tulsa 2009 Tulsa 2000 Oklahoma City 2010 Moore 1999 Altus 2005 Oklahoma City 1998 Chickasha 2001 Coweta 2004 Chickasha 2004 Duncan 2009 Chickasha
18
DEALERS’
OK_0311.indd 18
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/22/11 4:25 PM
Independents Remain Profitable in Challenging Environment BY TO M WEB B
Our team at Manheim Consulting had the pleasure of interviewing NIADA President Anthony Underwood for a question and answer session discussing the state of the used vehicle market from the perspective of independent dealers as we compiled the recently released, 16th annual Used Car Market Report (UCMR).
Underwood framed the challenges facing independent dealers in a way that confirmed what our data was telling us: independents are encountering higher prices for inventory at the wholesale level and finding fewer pre-owned vehicles in the marketplace. In response, these dealers are focusing on sound inventory management practices, and using all available sales channels – including online – to source just the right inventory to meet their customers’ needs. We examined these and other trends in the UCMR, which is Manheim’s annual
analysis of the forces shaping the used auto industry. As part of the ManheimNIADA Dealer’s Edge partnership, I’m happy to let you know you can download the entire report free of charge by taking a very brief survey at www.surveymonkey. com/s/manheim. As a comprehensive analysis of the trends shaping the automotive industry, the 2011 UCMR contains much more valuable information pertaining to independent dealers, as well as chapters on other aspects of the industry, including rental, leasing, fleets, repossessions and salvage. I encourage NIADA members to download their free copy of the UCMR, and as always, please e-mail me any time with your questions. Tom Webb is chief economist for Manheim Consulting. Contact him at Thomas.webb@manheim.com, follow him via Twitter at www.twitter. com/TomWebb_Manheim and read his blog at www.manheimconsulting.typepad.com.
19
w w w. e - o i a d a . c o m
OK_0311.indd 19
MARCH 2011
DEALERS’
RESOURCE
2/21/11 6:29 PM
MOBILE COMMERCE
takes center stage with consumers looking for vehicles, parts and accessories
This past holiday season, surveys and statistics showed what many analysts and industry observers were thinking: mobile commerce is growing by leaps and bounds, and every industry is in on the trend, including automotive.
In 2011, smartphones are forecasted to account for half of the mobile phone market, according to The Nielsen Co. On top of that, an ABI Research report says mobile online shopping will generate $119 billion in sales by 2015, accounting for 8
percent of the e-commerce market. When car dealers make it easy for their business to be found through a mobile web browser, loyalty campaigns, marketing initiatives, text promotions and sales can attract and retain customers. What are consumers browsing with their smart phones? The same types of items they started browsing on computers: researching purchase decisions, cost comparisons and finding the location of physical items.
Recently, eBay reported a substantial increase in mobile traffic, where sales more than tripled in 2010 to near $2 billion in gross merchandise volume. Last year, vehicle purchases led all categories on eBay mobile applications in terms of GMV, while parts and accessories were number two in terms of the total number of items purchased. Dealers know when they have a physical lot, customers still come to kick the tires when the sales office is closed. Now, today’s consumer might still come to the lot, but he or she will also pull out a smart phone, check the hours of the dealership and research the same make and model for competitive pricing. The same thing is happening even if the consumer doesn’t drive to a physical lot. A consumer may be in his garage working on a car and need to find a part or accessory. Instead of going inside and turning on the computer, he’s browsing his smart phone to find the part, price and local availability. Just as e-commerce has completely changed the way we do business, wireless devices and smartphones are again altering what we know about consumers’ purchasing behaviors. Seeing similarities in mobile commerce and e-commerce, auto dealers ask themselves a familiar question: would anyone really buy a car from their smart phone? In 2010, more than $118 million in car and truck purchases were made via the eBay mobile application – more than 12,600 vehicles were sold. Parts were the second biggest category in mobile last year, with more than 911,722 parts purchased, and more than $60 million in sales. For independent dealers, mobile applications and mobile commerce are the must-have digital tools of 2011. With smartphones capable of surfing, downloading apps and connecting with coworkers and friends in an instant,
20
DEALERS’
OK_0311.indd 20
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/21/11 6:29 PM
keep track of his business while not in the office. With any form of sales – online, mobile or in-store – customers consider the credibility of the seller and business before making a purchase. Building that credibility takes consistent communication, which is made easier when dealers can keep in touch through mobile and online sources. “Communication is very important, especially when making an expensive online purchase such as a luxury car,” Steurer said. “With the eBay mobile app, I can respond more quickly to customer questions, which builds credibility and increases the opportunity for a sale.” To accommodate this growing trend, eBay Motors is launching a mobile app that will provide a customizable buying experience optimized for vehicles, parts and accessories, as well as unique social and community features for the enthusiast. Features include VIN scanning and a virtual garage to give enthusiasts personalized information. After searching for a vehicle, users can share it with friends
and social networks or ask the seller a question. Users can create “car cards” for their vehicles which display photos and stats about the vehicle and can be used in searches for parts and accessories. On the garage tab, consumers can input and store the vehicles they own or scan the VIN barcode with the iPhone’s camera to populate information. In the garage, car owners can create to-do list for vehicle projects, store custom parts searches and share the garage with their social network. For dealers, having parts, accessories and vehicles at a consumer’s fingertips is an ideal way to extend marketing and sales without a lot of development and technical effort. Mobile commerce is still in its infancy but is growing at a faster pace than e-commerce. With the Internet available wherever consumers are with their smart phones, it’s only a matter of time before mobile commerce becomes a dominant form of purchasing. Because of the similarities to e-commerce, consumers are quickly adopting m-commerce and expecting businesses to be on board.
B Y C L AY T O N S TA N F I E L D, E B AY M O T O R S
researching and shopping for vehicles, parts and services is a natural extension. For example, a business traveler waiting at an airport may use that downtime to look for a needed part for his car or browse available vehicles for a new truck. If an independent dealer’s inventory is not readily available on a mobile app, chances are there’s an entire customer segment that may not see what’s for sale. A recent ForeSee Results survey found 30 percent of consumers used a mobile phone to research products on the Internet, compared with 11 percent in 2009. Those making a purchase through a mobile phone increased from 2 percent in 2009 to 11 percent in 2010. For example, Tilo Steurer, founder and owner of Eurocar, the West Coast’s largest independent dealership of its kind, sells and buys vehicles and regularly uses eBay’s mobile app to buy cars, parts and accessories. “I purchase anywhere from five to 10 cars every month, most of the time through the eBay mobile app,” Steurer said. He also uses the eBay mobile app to
21
w w w. e - o i a d a . c o m
OK_0311.indd 21
MARCH 2011
DEALERS’
RESOURCE
2/22/11 4:25 PM
Craigslist 101:
If eBay were free, would you advertise your inventory on it? This should
be a no brainer! Craigslist and Ebay had equal amounts of unique visitors in the U.S. for the first time ever in May 2010, according to comScore data. Dealers who think Craigslist is not for them are missing the boat. It doesn’t matter if you’re selling dollar-cars or the high lines; customers of all ranges are going to the Craigslist marketplace to search for vehicles! A free site offers very little to no technical support, which is why I believe a lot of dealers are missing out on huge opportunities because they’re not educated on Craigslist and don’t have the right process in place to realize potential. Those who have discovered the power of Craigslist advertising will agree it’s a constant battle to keep up with the terms of service as well as keep their posts young, live and searchable to generate leads. The first thing I want to point out is Craigslist is the best ROI for lead generation out there. It is free to post, but to get maximum results requires knowledge of Craigslist terms, time and a dedicated process. With the amount of vehicles posted in the Denver Craigslist market, for example, you must have a daily presence on the site. For the longest time, we used to think that as long as your vehicle is live on Craigslist, it didn’t matter how recently you posted
CRAIGSLIST IS IDEAL FOR THE DEALER BUDGET AND MANY RELY SOLELY ON THE SITE FOR ONLINE LEADS. ARE YOU GETTING YOUR PIECE OF THE PIE?
it. This could not be more wrong; the proof is in the pudding. Every time dealers list a new ad on Craigslist, they get most of the calls the day they post and the day after. After an ad has been on the site more than three days, it gets a lot less calls. Craigslist searches are driven by date. For example, if a customer was to search for a Honda Accord in Denver, there’d be more than 1,000 results spread across 10 or more pages! If you posted your 2008 Honda Accord three days ago, it is most likely already on the fifth results page. Our recommendation is to delete each ad after 48 hours, then repost it to maintain its effectiveness and stay at the top of the list. Remember, the Craigslist consumer will look at the first search page results on craigslist, but they’ll usually find what they’re looking for there and never make it to the next page. A pair of actions you should be aware of is flagging and ghosting. Ghosting is when your ad appears to be live but can’t be found anywhere on Craigslist. It’s an action done by Craigslist administration that’s definitely the worst of the two because you have no idea it’s happened because the ad looks normal. Flagging is done by the Craigslist community. One thing to keep in mind is Craigslist is a community-based classified site. The majority rules and decides whether an ad is worthy enough to stay live. This is where the flagging system comes into play. Each Craigslist consumer has the right to flag your vehicle. One Craigslist visitor cannot take down your vehicle ad, but he can contribute towards it. That means it takes more than one person to flag and remove it from the site. So how many flags does it take? Well, it depends. Nobody really knows the exact figures except Craigslist; in metro Craigslist markets, it may take up to 20 flags to take down an ad. In smaller markets, where, for example, only 100 vehicle ads get posted per day, only two flags might take down an ad!
Most importantly, flagging will result in ghosting and will eventually blow up your Craigslist account so none of your ads will stick. You’ll have to go through the Craigslist community forums and blogs to get back to good standing. That process will take a lot of time and reading; most dealers will be overwhelmed doing such a thing. So why do people flag? I believe 80 percent of it occurs because posters aren’t following the terms of service. For example, maybe you posted a 2008 Honda Accord ad on Monday and posted it again on Tuesday without deleting the earlier ad. The Craigslist community frowns upon this and is very click happy when it comes to flagging. If you have experienced this, you might want to consider automated postings that post ads more frequently with a fraction of your present efforts. The other 20 percent of flags, in my opinion, are your competition. Not fair? Perhaps not, but Craigslist is a free service (to post cars and trucks), so who can you complain to? The fact is Craigslist at some point really frustrates every car dealer, but we all have to deal with it. The good news is there are posting tools to take on this challenge as well as automated tools to post your entire inventory every day. If your competition is flagging your ads, they’ll eventually tire from doing so. Just don’t make it easy by attempting to post your entire inventory every day on your own as that effort will result in a high flag and ghosting rate. Craigslist is ideal for the dealer budget and many rely solely on the site for online leads. Are you getting your piece of the pie?
BY DUSTI N JANSSO N
BEST PRACTICES
Dustin Jansson provides consulting, Craigslist posting tools and automated Craigslist posting services, as well as other dealership products. Contact him at 303-232-3435 or dj@ dealernetsolutions.com. For more information, visit www.dealernetsolutions.com.
22
DEALERS’
OK_0311.indd 22
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/21/11 6:29 PM
Carfax Debuts Mobile App for iPhone Carfax launched the first mobile app dedicated to providing on-the-go dealers with access to Carfax Vehicle History Reports. The ‘Carfax for Dealers’ app is available for free download to all dealers on the App Store. With an iPhone or other Apple mobile device, dealers can run Carfax Reports using their existing Carfax account to better evaluate used cars anytime, anywhere. “The free ‘Carfax for Dealers’ iPhone app is just what our business needed,” said Justin Villa, pre-owned sales manager with David McDavid Automotive in Irving, Tex. “We downloaded it the day it came out and already we’re saving a ton of time evaluating cars. It’s helping us win at auction and evaluate a customer’s trade faster. After all, time is money.” Running Carfax Reports is a key component to a dealer’s acquisition process. Users start by entering the 17-digit vehicle identification number (VIN) or scanning the vehicle barcode to run the Carfax Report. Any vehicle run through the ‘Carfax for Dealers’ app is automatically added to the dealer’s inventory manager at carfaxonline.com. The reports are saved for up to 30 days and dealers can mark vehicles they’re
most interested in as favorites within the app. “We’ve always been quick to embrace new technology to help maintain our competitive edge,” said Michael Townsend, used sales manager at Townsend Honda in Tuscaloosa, Ala. “When we heard about the new ‘Carfax for Dealers’ app, we went and got it immediately. The app is fast and makes appraising cars easy. It’s my new favorite tool on my phone.”Free access to Carfax Reports also is available through apps from several wireless technology providers. Dealers looking for additional pricing and product integration functionality can visit:
s s s s
“Our customers tell us how important immediate access to Carfax Reports is to their success, especially at acquisition,” said Larry Gamache, Carfax communications director. “The ‘Carfax for Dealers’ app now puts the power of this information in the palm of your hand. And, you can run as many reports as you need through the app if you’re on the Unlimited Carfax Reports Program for dealers.” Dealers not attending the convention may contact their Carfax account manager or call 800-274-2277. To download the app for iPhone, visit h t t p : / / i t u n e s . c o m / a p p s / C A R FA X I n c / CARFAXforDealers. An Android version of the ‘Carfax for Dealers’ app is coming soon.
AutoRevo www.autorevo.com eCarList TrueTarget www.ecarlist.com VIN Viper www.vinviper.com vAuto www.vauto.com
23
w w w. e - o i a d a . c o m
OK_0311.indd 23
MARCH 2011
DEALERS’
RESOURCE
2/21/11 6:29 PM
CATEGORIES OF COMMON RED F L AGS RED F L AGS RED F L AGS RED F L AGS
below aren’t an exhaustive compilation or a mandatory checklist, but rather a way to help you think about relevant red flags in the context of your business. Alerts, Notifications or Warnings from a Consumer Reporting Agency
A fraud or active duty alert is included with a consumer report. A consumer reporting agency provides a notice of credit freeze in response to a request for a consumer report. A consumer reporting agency provides a notice of address discrepancy. A consumer report indicates a pattern of activity that is inconsistent with the history and usual pattern of activity of an applicant or customer, such as: A recent and significant increase in the volume of inquiries; An unusual number of recently established credit relationships; A material change in the use of credit, especially with respect to recently established credit relationships; or, An account closed for cause or identified for abuse of account privileges by a financial institution or creditor. Suspicious Documents
Documents provided for identification appear to have been altered or forged. The photograph or physical description on the identification is not consistent with the appearance of the applicant or customer presenting the identification. Other information on the identification is not consistent with information provided by the person opening a new covered account or customer presenting the identification. Other information on the identification is not consistent with readily accessible information that is on file with the financial institution or creditor, such as a signature card or a recent check. An application appears to have been altered or forged, or gives the appearance of having been destroyed and reassembled. Suspicious Personal Identifying Information
Personal identifying information provided is inconsistent when compared
against external information sources used by the financial institution or creditor. For example: The address does not match any address in the consumer report; or The Social Security Number (SSN) has not been issued, or is listed on the Social Security Administration’s Death Master File. Personal identifying information provided by the customer is not consistent with other personal identifying information provided by the customer. For example, there is a lack of correlation between the SSN range and date of birth. Personal identifying information provided is associated with known fraudulent activity as indicated by internal or third-party sources used by the financial institution or creditor. For example: The address on an application is the same as the address provided on a fraudulent application; or The phone number on an application is the same as the number provided on a fraudulent application. Personal identifying information provided is of a type commonly associated with fraudulent activity as indicated by internal or third-party sources used by the financial institution or creditor. For example: The address on an application is fictitious, a mail drop, or a prison; or The phone number is invalid, or is associated with a pager or answering service. The SSN provided is the same as that submitted by other persons opening an account or other customers. The address or telephone number provided is the same as or similar to the address or telephone number submitted by an unusually large number of other persons opening accounts or other customers. The person opening the covered account or the customer fails to provide all required personal identifying information on an application or in response to notification that the application is incomplete. Personal identifying information provided is not consistent with personal identifying information that is on file with the financial institution or creditor. For financial institutions and creditors that use challenge questions, the person opening the covered account or the
customer cannot provide authenticating information beyond that which generally would be available from a wallet or consumer report. Unusual Use of, or Suspicious Activity Related to, the Covered Account
Shortly following the notice of a change of address for a covered account, the institution or creditor receives a request for a new, additional, or replacement card or a cell phone, or for the addition of authorized users on the account. A new revolving credit account is used in a manner commonly associated with known patterns of fraud patterns. For example: The majority of available credit is used for cash advances or merchandise that is easily convertible to cash (e.g., electronics equipment or jewelry); or The customer fails to make the first payment or makes an initial payment but no subsequent payments. A covered account is used in a manner that is not consistent with established patterns of activity on the account. There is, for example: Nonpayment when there is no history of late or missed payments; A material increase in the use of available credit; A material change in purchasing or spending patterns; A material change in electronic fund transfer patterns in connection with a deposit account; or A material change in telephone call patterns in connection with a cellular phone account. A covered account that has been inactive for a reasonably lengthy period of time is used (taking into consideration the type of account, the expected pattern of usage, and other relevant factors). Mail sent to the customer is returned repeatedly as undeliverable although transactions continue to be conducted in connection with the customer’s covered account. The financial institution or creditor is notified that the customer is not receiving paper account statements. The financial institution or creditor is notified of unauthorized charges or transactions in connection with a customer’s covered account. (Examples drawn from 16 CFR 681 Identity Theft Rules, Supplement to Appendix A)
24
DEALERS’
OK_0311.indd 24
RESOURCE
MARCH 2011
BY A D R STA FF
The first step in complying with the Red Flags Rule is to identify red flags relevant to your business. Regulators have compiled a list of possible red flags organized in several specific categories. The examples provided
w w w. e - o i a d a . c o m
2/21/11 6:29 PM
LICENSE APPLICANTS APPROVED The following applicants, as listed in the Agenda for the Used Motor Vehicle and Parts Commission Regular Meeting of Jan. 18 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
NAME CITY
165 Auto Auction of Muskogee AK Autoplex Amana Auto Sales AOK Auto Sales Auto Connection A-Z Auto Parts & Auto Sales Back Yard Motors Bocho’s Auto Sales, LLC Bucket Truck Sales Ranch Calvin’s Auto Shop Car Starz Cars & Parts By Tim, Inc. Certified Auto Remarketing Creek County Cycles Crismar Auto Sales Curly’s Auto Credit Davis & Kennard Motors Doug Gray Ford Edward’s Ent Truck & Auto Sale Elite Autosource Elite Wholesale Auto Hagle Auto Sales, Inc. Horizon Autos I-35 Pickup & Truck Sales I-40 Auto Auction of Muldrow K.C.’s Auto Sales, Inc. Kar Spa Liberty Motors, LLC Montoya Motors Okie Wholesale Trucks R & M Used Trks & Oilfield Equip, Inc. Reynolds Lincoln-Mercury Ron Miller Motor Company Route 66 Custom Cycles Stewart Wholesale Company, Inc. Tulsa RV, LLC Twin Motors Twister Auto Sales Victory Auto Sales & Credit, LLC Yeoman’s Auto Sales
Lynn Skinner Muskogee Danny Womack Julia Womack Arnis Kokis Collinsville Fouad Khalili Stillwater Soliman Omar Dogah Hossein Mohtashami Oklahoma City Danny C. West Nicoma Park Steven Lee West Joseph S. Maselli Tulsa Emanuel Del Piero Perez Thomas M. Falanga Mustang James Halford Bristow Jason McLaughlin Tulsa Pamela M. Huskey Guthrie Jerry G. Walston Ada L. Rozan Fraser Donna Lowe Sapulpa Edward Thompson Ruben Amador Castro Tulsa James D. “Jim” Rhoads Durant Stephen Davis Norman Doug Gray Sayre Robert Feller James Edwards Stonewall Chris Allen Collinsville Kevin Hammond Durant Karla D. Hagle Yukon Dennis Wayne Sheller Stillwater Matthew B. Spaulding Oklahoma City Lynn Skinner Muldrow Danny Womack Julia Womack Karen Mashore Ardmore David Mashore Curtis Sherfield Oklahoma City Vivekkumar G. Savant Tulsa Armondo Oliphant Oklahoma City James Bradley Nash Dewane Hoffman McAlester Robert W. McQuary Bristow Dale Daniels Norman Richard L. “Dick” Reynolds Ronald J. Miller Arnett Michael A. Johnson Miami Randy Yokeley Terry Stewart Shawnee Saundra Kay Young C. David Rhoades Tulsa Chester Denny Thomas Okmulgee John Davis Lawton Larry Don “Donnie” Wilson, Jr. Oklahoma City Sam Yeoman Big Cabin Brandon Yeoman
WHOLESALE USED DEALER LICENSES COMPANY
NAME CITY
DFC Auto Remarketing. S & G Motors, LLC
Steve M. Meston Shawn Davis
Oklahoma City Oklahoma City
25
w w w. e - o i a d a . c o m
OK_0311.indd 25
MARCH 2011
DEALERS’
RESOURCE
2/21/11 6:29 PM
26
DEALERS’
OK_0311.indd 26
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/21/11 6:29 PM
27
w w w. e - o i a d a . c o m
OK_0311.indd 27
MARCH 2011
DEALERS’
RESOURCE
2/21/11 6:29 PM
28
DEALERS’
OK_0311.indd 28
RESOURCE
MARCH 2011
w w w. e - o i a d a . c o m
2/21/11 6:29 PM
29
w w w. e - o i a d a . c o m
OK_0311.indd 29
MARCH 2011
DEALERS’
RESOURCE
2/21/11 6:29 PM
Q&A With NIADA President Anthony Underwood:
2011
Used Car Market Report
National Independent Automobile Dealers Association (NIADA)
Anthony Underwood was named president of NIADA in 2010. He started selling cars in Alabama in 1977, and he opened his first dealership in 1994 with five vehicles. Anthony’s two stores sell a combined total of 800 vehicles each year. He has been an active member of the NIADA and Alabama IADA for many years. Anthony has served on the boards of both NIADA and AIADA. He was named NIADA National Quality Dealer of the Year in 2003 and, that same year, earned his Certified Master Dealer certification. How have independent dealers adjusted their businesses in the last three years? Independent dealers have faced unprecedented challenges in the last three years. Even though the overall economy is improving, dealers are still struggling with limits on inventory and consumer credit. But dealers are resilient and have adjusted by stocking fewer vehicles and focusing on the types of vehicles that turn quickly. Solid inventory management underpins the successful dealer. Many dealers have retrained employees to ensure that everyone is contributing to the success of the business. Employee productivity has improved as staffs have been reduced to the current level of sales. In the process, we have learned to run our stores more efficiently. We have also seen a shift to the Buy-Here, Pay-Here model by dealers who have access to capital. In our store, we have cut in half both our staff and our inventory. We have also expanded the number of lenders we rely on to finance our customers. We are now sourcing some inventory online, buying vehicles that will sell quickly, and generating more sales based on specific customer orders.
How are independent dealers coping with the shortage of used vehicles? Independent dealers are confronting two challenges: higher prices and fewer pre-owned cars in the marketplace. Independent dealers are spending more time and effort to find the right inventory. Everyone is going to more auctions, both online and in person, as well as tapping local wholesale sources. Some dealers have been very successful in buying inventory directly from private owners. Three or four years ago, dealers were able to find plenty of vehicles under 70,000 miles and three or four years old at acceptable prices. But independent dealers have modified the age and condition guidelines to reflect what their customers can afford. As a result, dealers are doing more reconditioning to get vehicles frontline ready.
30
37 DEALERS’
OK_0311.indd 30
RESOURCE
MARCH 2011
You are quoted as saying “We will never go back to business as it was in the past.” Can you explain what you meant by that? Our business model has changed. New car dealers are getting more into the pre-owned business, so we have to meet that challenge. Franchised dealers offer service departments, larger facilities, and access to newer inventory. NIADA members know that they have to continue to improve their business skills and adapt to this new competition. NIADA can teach dealers to run more efficient operations, but the business of selling cars is still about knowing your market and your customers and being responsive to their needs. Independent dealers need access to information to enable them to make quick decisions. NIADA helps independent dealers stay abreast of the national and local economic, regulatory, and business issues facing our industry and each dealer.
How is NIADA monitoring the potential rules under the new Consumer Financial Protection Bureau? We have encouraged members to stay connected with one another by attending local and national meetings and by contacting their legislators on issues that could impact our business, in particular Buy-Here, Pay-Here. The NIADA website includes a blog where dealers can find information on local and national issues and answers to their specific questions.
You are a strong advocate for dealer education. What resources does NIADA provide dealers? NIADA is serious about education, and we recognize that it is one of the strongest things we have to offer our members. Knowledge is power, and what you don’t know can hurt you. Our three-day Certified Master Dealer Program gives dealers the critical skills and information they need to meet the challenges of operating successfully in a challenging environment. NIADA and its industry partners provide dealers with online and in-person training that covers the full range of inventory and dealership management topics. For example, the NIADA/Manheim partnership teaches dealers how to buy and sell vehicles online through The Wholesale Institute training on NIADA TV.
2011 Used Car Market Report w w w. e - o i a d a . c o m
2/21/11 6:29 PM
OK_0311.indd 31
2/21/11 6:29 PM
OK_0311.indd 32
2/21/11 6:29 PM