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Jim Holman Named OIADA Quality Dealer for 2011 Page 4 Compliance Benchmarks Page 6 Tax Changes for Small Businesses Page 16

INSIDE

BOARD OF DIRECTORS

MAGAZINECONTENTS N 4 Jim Holman Named OIADA Quality Dealer for 2011 6 Compliance Benchmarks 16 Tax Changes for Small Businesses

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PRESIDENT

VICE PRESIDENTS

Chris Goad Regal Motors 3515 N. May Oklahoma City, OK 73112 405-917-5800 managerokc@regalcars.com

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

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 al.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 888 /*"%" $0. t 888 /*"%" 57 NIADA HEADQUARTERS: #308/ #-7% t "3-*/(50/ 59 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM.

DEALERSâ&#x20AC;&#x2122; 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 DEALERSâ&#x20AC;&#x2122; 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 Â© 2011 BY O&R MORGAN, INC. DBA OIADA. ALL RIGHTS RESERVED. DEALERSâ&#x20AC;&#x2122; 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 Mkhr @kZ__ mkhr9gbZ]Z'\hf EDITOR Fbd^ AZk[hnk faZk[hnk9gbZ]Z'\hf PRODUCTION MGR. CZ\h[ D^kgl cZ\h[9gbZ]Z'\hf ART/PRODUCTION MGR. <akblmr AZrg^l \akblmr9gbZ]Z'\hf PRINTING Gb^fZg Ikbgmbg`

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Jim and wife Angie live in Oklahoma City. Both are big believers in giving back to the community and they act on that belief.

JAMES H. (“JIM”) HOLMAN, OIADA 2011 QUALITY DEALER’S HISTORY

Jim Holman began selling Chevrolets in 1969 for Jim Click Chevrolet in his hometown of Altus. After graduating

from college with a degree in economics, he transitioned from “selling cars” part time into a full-time career in the auto business. He has sold cars, managed dealership departments, managed dealerships, owned dealerships and was vice president of pperations for Cross Continent Auto Retailers, Inc. (NYSE-XC), the first publically traded auto dealership group in the US. “I have had the marvelous opportunity to stand on the shoulders of some of the greatest car guys that will ever be and I am very grateful to them,” he says. Other career highlights after the CCAR IPO include assembling and launching the pink Cadillac program for Mary Kay Cosmetics in Dallas in the mid-seventies and founding a Lease Here-Pay Here operation in 2001 which grew into The Car Store in south Oklahoma City which he founded in 2005. Jim and wife Angie live in Oklahoma City. Both are big believers in giving back to the community and they act on that belief. Angie rocks babies for the neo-natal unit at the Oklahoma Health Science Center and drives Mobile Meals for their church. Jim calls her a “rock star” and is a board member of the Oklahoma-Arkansas chapter of the Alzheimer’s Association. They are both quite active in St Luke’s United Methodist Church where Jim is chairman of the administrative board. Their daughter, son-in-law and a three-year-old granddaughter recently relocated from Chicago to OKC. “I admit being a bit intimidated by the grandfather thing, but I’m learning. A whole lot of it is making memories,” he says. While Holman has never promoted family in the business, he is quite excited David Pasnau, his son-in-law, has recently joined The Car Store. When questioned as to how all this happened, he cites the combination of good, disciplined people, a dedication to the treatment of customers that “exceeds their expectations” and a business model that defines and serves the niche without compromising the fiduciary responsibility it requires. “The new car business was very good to me for almost four decades. I never considered anything else,” he says, smiling. “We started our leasing company in 2001 as another alternative finance source for used cars...we had no idea or expectation that it would grow to be our only business. I love BHPH, it amazes me every day…I absolutely love what I do” On behalf of all Oklahoma dealers, the OIADA Board of Directors and staff take this opportunity to congratulate OIADA 2011 Quality Dealer 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.

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FINANCIAL BENCHMARKS HELP THE BOT TOM LINE, COMPLIANCE BENCHMARKS PROTECT IT When dealers think about benchmarks, financial and numerical items such as profitability, expenses, inventory turn and finance and insurance penetration come to mind. Often overlooked are

benchmarks for legal and regulatory compliance, which can have a significant impact on a dealership’s bottom line. We frequently receive inquiries requesting advice on what a motor vehicle dealer should be doing in this area. The following list of suggestions will help you set legal and regulatory compliance benchmarks for various areas within your dealership:

Paperwork: Dealers should have their paperwork reviewed and, as necessary, updated on a yearly basis. Having a relationship with a paperwork vendor capable of keeping you apprised of compliance issues as they develop will help streamline this process. You should also limit who within the dealership has authority to revise the paperwork and have procedures in place to ensure employees don’t use paperwork brought from outside sources, such as the last dealership where they worked. Regularly auditing actual deals can help to ensure paperwork is being properly completed and computers are properly programmed to print information in the appropriate places.

Advertising: Those who create your dealership’s advertisements should be familiar with the Federal Truth in Lending and Leasing acts and state advertising laws. Your ads should be reviewed for compliance with these laws. Regardless of whether they appear in the newspaper, on TV, in a letter to a potential customer, or on the dealerships’ store window, your advertisements must contain mandated disclosures if you use any of the triggering terms defined in Regulations Z and M. They must also contain any material limitations or exclusions disclosed in a clear and conspicuous manner. Direct mailers and telephone solicitations or follow-up calls can raise a whole host of other issues. If mailers are sent to a list of prescreened customers or guarantee financing, for example, there

are numerous other laws to consider, including the Fair Credit Reporting Act, federal and state privacy laws, the Driver’s Privacy Protection Act and your state’s credit repairs and services act. On a final note, remember to keep copies of all ads in case you need to respond to a consumer or regulatory inquiry about an offer or the contents of a particular one.

Finance and Insurance: Dealers should start their list of compliance benchmarks in the F&I department with making sure they have a copy of a dealer agreement for each lender and service provider with whom the dealership does business. These agreements and any related materials should always be reviewed by someone who has knowledge about both the products being offered and our industry. Reviewing dealer agreements and properly training employees on how to sell service contracts, GAP agreements, insurance products and any other aftermarket products sold at the dealership can go a long way in protecting your dealership from potential liability. All too often we find dealers rely on representations made by the third party as to the compliance of its marketing materials, the products it offers and even the training it provides to the dealership’s employees. For those who use a F&I menu, remember to revise it whenever you begin or cease offering a product so it accurately reflects the products and services available at the dealership. If product disclosures, finance charges and payment terms in the retail installment contracts and lease agreements are calculated by a computer program, you should also take time to verify that the required information and related calculations are in compliance with applicable laws.

Employees: All potential employees should be required to complete an employment application and, at a minimum, you should contact references to verify that the individual is qualified for the position. Depending upon the job responsibilities and access the applicant will have to confidential information about your dealership and customers, you may also wish to con-

OFTEN OVERLOOKED ARE BENCHMARKS FOR LEGAL AND REGULATORY COMPLIANCE, WHICH CAN HAVE A SIGNIFICANT IMPACT ON A DEALERSHIP’S BOTTOM LINE. duct background investigations or obtain a credit report. All employees should also receive an employee handbook that contains information about the dealership’s internal policies and procedures. Remember to address issues such as who has access to pull and/or review credit reports, whether customer information belongs exclusively to the dealership and whether employees are permitted to remove such information from the dealership both during the term of employment and afterwards. If specific agreements are made with respect to commission payments and bonuses, you may also wish to enter into a separate written employment or compensation agreement. Employee handbooks should be updated regularly and employees should always be required to acknowledge in writing that they have received and read the materials. Just as important is requiring all employees to attend training and/or educational seminars related to their duties at the dealership, not just at the time they are hired, but on an ongoing basis.

Privacy Policies and Customer Identification Procedures: Every dealer should have a privacy policy that accurately reflects the dealership’s business practices with respect to collecting and sharing customer information and a comprehensive written information security program

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that describes how the dealership protects the confidentiality of the information collected. Access to customer information and other dealership records should be limited to authorized employees who need the information to complete their employment responsibilities. Customer information must be obtained to verify the identity of customers and the dealership has to have procedures to ensure it doesn’t enter into transactions with any individual or entity that appears on the list of Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign Asset Control. Motor vehicle dealers are responsible not only for implementing their own privacy policies and procedures, but must also take steps to ensure that the lenders and service providers with whom they share information have taken steps to maintain the confidentiality of customer information.

Dealership Website and Computer Systems: The same policies and procedures that apply in your day-to-day transactions apply when conducting business online. Online advertisements must comply with federal and state advertising laws and should be updated and deleted on a regular basis. Dealers who permit consumers to submit credit applications electronically must post their privacy policies online and, if they obtain credit reports online, they must be capable of retaining copies for a minimum of 25 months. Keep in mind also that many of the same precautions taken with respect to your paperwork apply to your dealership’s computer system. Computer systems and programs should be reviewed and updated regularly. You should also limit who has the ability to update software applications, take steps to prevent and prepare for a systems failure and ensure that data is eliminated or hard drives removed when disposing of computers and any other electronic media and records. If you have already developed legal and regulatory compliance benchmarks and they meet or exceed those discussed here, then you are on the right track. As you read these words, however, and found yourself thinking we raised a lot of good ideas, then its time to take the next step and put a plan of action in place. Formalizing legal and regulatory compliance benchmarks that help ensure your dealership’s paperwork and day-to-day sales and business activities are in compliance with the law will not only help minimize overall legal exposure, but will help your dealership sell more cars and keep them sold, increasing the dealership’s overall profitability. This article is for general information purposes only. You should contact legal counsel for specific application.

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FEB. 8, 2011

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 be-

gan by advising the Commission that a current expenditures report was unavailable since the State had not yet provided an end of month report. He noted subsequent to the last Commission meeting, a contract had been completed with the new legislative liaison, Curt Roggow. Maile advised the Commission members that current renewal revenue, excluding fines, was about $6,000 less than the prior renewal year. The Commission staff places telephone calls to all of the non- and incomplete renewals. Staff has almost completed that project. Maile also noted the Commission asked the Director to follow up on a felony application from Best Buy Auto as far as the dealership licensing salespeople. Best Buy Auto has four dealerships. Staff has acquired the information on the salespeople and will present it as a proposed consent agreement at the next meeting. Chairman Longacre then called on Deputy Director Kenneth Whitehead for his report. Whitehead’s written report indicated Commission staff had issued 19 cease and desist letters (a listing of those letter recipients is included following this report). Investigators completed 29 inspections for the period. Staff handled 27 written complaints, nine of which were title issues, 11 had to do with contract violations, five were related to mechanical issues and there were five complaints of a miscellaneous nature. Whitehead reported three informal hearings were held. One involved a tag violation. There was actually no violation and no action was taken. The other two issues were resolved at the hearing without Commission intervention. Whitehead reported for the period, the Commission education program had 19 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

TYPE VIOLATION

CITY DATE

ISSUED

A & H Auto Sales A & H Auto Sales B-Line Co. Jerry & Cindy Brown Jerry & Cindy Brown Del City Auto Service Del City Auto Service Willie Dorrough Dos Amigos Dos Amigos Dos Amigos Garber Used Auto Parts Garber Used Auto Parts Martin Gonzalez Ed Helton Randy Lindsey A. Mukhin A. Mukhin Leon Womack

Used Dealer Rebuilder Used Dealer Used Dealer Rebuilder Used Dealer Rebuilder Auto Dismantler Auto Dismantler Used Dealer Rebuilder Used Dealer Rebuilder Insurance Pool Used Dealer Used Dealer Rebuilder Used Dealer Rebuilder

Oklahoma City Oklahoma City Enid Enid Enid Del City Del City Byars Oklahoma City Oklahoma City Oklahoma City Oklahoma City Oklahoma City Tulsa Checotah Porum Bixby Bixby Carney

01/13/2011 01/13/2011 01/04/2011 01/04/2011 01/04/2011 01/28/2011 01/28/2011 01/27/2011 01/05/2011 01/05/2011 01/05/2011 01/14/2011 01/14/2011 01/03/2011 01/19/2011 01/19/2011 01/19/2011 01/19/2011 01/25/2011

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

CITY

COMPLAINT

RESOLVED

AK Autoplex. Barry Sanders Honda Best Buy Car Dealership Best Choice Motors, LLC Bob Howard Dodge Used Cars Bob Howard Honda-Acura Used Cars Car Factory Car Hop #2 Car Source Carnegie Auto Sales Cars & Parts By Tim, Inc. Cash Car Depot Classic Chevrolet, Inc. Crossroads Auto Mall, Inc. David Stanley Dodge, LLC Durant Auto Mart Eagle Cars Fowler Honda Kar Spa Kar Spa Michoacan Auto Sales, LLC Mike Mowdy Autoplex Sam’s 39th Street Auto Sales Scott’s Motor Cars, Inc. Smicklas Chevrolet The Pickup Shop, LLC Woodward Mobile Home Service, Inc.

Collinsville Stillwater Oklahoma City Tulsa Oklahoma City Oklahoma City Oklahoma City Oklahoma City Oklahoma City Carnegie Guthrie Oklahoma City Owasso Oklahoma City Midwest City Calera Oklahoma City Norman Oklahoma City Oklahoma City Tulsa Midwest City Oklahoma City Oklahoma City Oklahoma City Norman Vici

contract contract contract contract contract contract contract mechanical title title title title title miscellaneous contract mechanical title contract title title title contract mechanical mechanical miscellaneous mechanical contract

01/07/2011 01/27/2011 01/07/2011 01/31/2011 01/05/2011 01/03/2011 01/27/2011 01/06/2011 01/10/2011 01/18/2011 01/11/2011 01/05/2011 01/03/2011 01/13/2011 01/03/2011 01/03/2011 01/18/2011 01/14/2011 01/05/2011 01/14/2011 01/03/2011 01/27/2011 01/03/2011 01/04/2011 01/27/2011 01/28/2011 01/05/2011

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LEGISL ATIVE REPOR T HB 1201 - Inman

HB 1761 - Nelson - Shell Bill

Requires any seller of a motor vehicle to disclose in writing to the buyer all warranty repairs, modifications or other warranty work performed on the motor vehicle. Bill History: 01-18-11 H Filed, sent to Economic Development Committee

Creates the “Motor Vehicle Records Act of 2011.” Bill History: 01-20-11 H Filed, sent to Rules Committee

HB 1260 - Rousselot - Shell Bill Establishes the Motor Vehicle Analysis Act. Bill History: 01-18-11 H Filed, sent to Rules Committee

HB 1295 - Derby Any driver that causes an accident that does not comply with the Compulsory Insurance Law will have their vehicle towed home and placed in a tire boot until the time that the accident is paid in full and the driver has insurance. Bill History: 01-19-11 H Filed, sent to Rules Committee

HB 1536 - Blackwell

HB 2140 - Steele Creates the State Government Administrative Process Consolidation and Reorganization – Agency Consolidation. Bill History: 02-15-11 Voted Committee Substitute Do Pass from Government Modernization Committee SB 197 - Aldridge Lowers fee for motor vehicle transfer from $10 to $5; Changes wording from “may” to “shall.” Makes mandatory the use of the “Notice of Transfer” on the bottom of Oklahoma Titles. Bill History: 01-11-11 S Filed, amended by Senate Committee on Appropriations – Title stricken Senate Finance Committee

SB 201 - Aldridge

Removes the limit on discounts or credits for tradein vehicles as prescribed by the Oklahoma Tax Commission; EMERGENCY. Bill History: 01-20-11 H Filed, sent to Appropriations Committee – Sub Committee on Revenue & Tax

Allows local municipalities, counties, or the Department of Public Safety to place holds on the registration renewal for motor vehicles associated with violations; allows fees to be collected by motor license agents. Bill History: 01-11-11 S Filed, sent to Finance Committee

HB 1743 - Johnson

SB 215 - Adelson

Empowers the Corporation Commission to supervise, govern and control wrecker fees, tariffs, and rates for transporting and storing vehicles removed in a non-consent tow; empowers the Commission to set the fees and charges; EMERGENCY. Bill History: 01-20-11 H Filed, sent to Public Safety Committee

BY OIADA/ADR STAFF

A new law creating the Oklahoma Motor Vehicle Inspection Act. Requires annual inspections of all motor vehicles; Prohibits the operation of unsafe motor vehicles; Confers authority upon the Commissioner of Public Safety to supervise. Sets inspection fee at $35. Bill History: 01-11-11 S Filed, sent to Public Safety Committee & also Appropriations Committee

SB 343 - Johnson, Rob Directs the Oklahoma Tax Commission to implement a pilot program for an electronic, print on-demand, temporary license plate issuance system for use by motor vehicle dealers. Pilot program for an electronic, print on-demand, temporary license plate issuance system for use by motor vehicle dealers. Bill History: 01-18-11 S Filed, referred to Finance Committee – Heard in Committee and Laid Over – Dead for now.

SB 448 - Barrington Authorizes the Department of Public Safety to take possession of any vehicle document or plate that is in violation of state law. Bill History: 01-18-11 S Filed, sent to Rules Committee

SB 503 Department of Consumer Credit – setting fees – abolishing advisory committee. Bill History: 01-18-11 S Filed, sent to Business & Commerce Committee

SB 729 - Mazzei Removes the listing of motor number, date first sold, distinguishing marks, and statement of source of title from the application for a motor vehicle title. Bill History: 01-18-11 S Filed, sent to Senate Finance -Title Stricken – Do Pass

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PORTFOLIO, THE WARR ANT Y GROUP/FIRS T E X TENDED JOIN NIADA

Independents Remain Profitable in Challenging Environment

Portfolio General Management Group and The Warranty Group/First Extended have joined NIADA to jointly provide the best profit solutions to independent dealers who sell vehicle service contracts and other ownership protection products, such as GAP, antitheft and appearance protection. The unique benefit

of the offering is NIADA dealers will profit from VSC sales and from premiums and investment income. Portfolio and The Warranty Group are the nation’s leading providers of reinsurance management for F&I products sold in dealerships. The dealer’s profits from reinsurance are considerable. Since 1990, more than three million Portfolio contracts have been issued totaling more than $1.2 billion put into dealer-owned reinsurance companies. After claims are paid and investment income earned, Portfolio dealers average an after-tax return of more than 40 percent of the money put into their companies. Reinsurance is the NIADA dealer’s best way to profit twice from the same sale in the dealership. “We see no reason why NIADA dealers should not have the same profit opportunities that franchised dealers have enjoyed for years,” said Steve Burke, Portfolio president. “Portfolio’s philosophy of 100-percent ownership by the dealer means that they can build a new personal wealth asset from activities already taking place in their dealerships. We joined NIADA to help its dealers take advantage of this opportunity.” Patrick Donahue, president of Resource Dealer Group of The Warranty Group, said, “We are looking forward to working with Portfolio’s agents to help NIADA dealers choose the best option in a dealer-owned program. Our First Extended Service Corporation and Resource have worked hand-in-hand with Portfolio for over two decades as allies in the effort to give the dealer every available benefit from being in this business.” Jeffrey Braatz, NIADA’s 2009 National Quality Dealer of the Year, welcomes Portfolio to NIADA and recommends them highly. “Five years ago, I didn’t think such a program could be true to its promise,” he said. “Now I not only have a personal asset to take care of my family’s future, but one that helps me take care of my customers.”

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. BY TOM WEBB 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.

FOR MORE INFORMATION, VISIT WWW PORTFOLIOREINSURANCE.COM OR CALL STEVE BURKE AT 877-789-6200.

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V Our industry is highly regulated, both at the state and federal levels. And if FTC Secretary Clark’s comments are any

indication, oversight will become more, not less, intrusive. Compliance will become both more difficult and more critical. As previously reported in this publication, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank Act, was enacted in July 2010. Among other actions, Dodd-Frank

established the new Bureau of Consumer Financial Protection (CFPB) within the Federal Reserve. While significant authority over certain financial institutions (including Buy Here-Pay Here dealers), has been granted the CFPB, the Federal Trade Commission continues as primary enforcement authority for most regulations governing motor vehicle dealers. More importantly, Dodd-Frank granted new rulemaking authority to the FTC specifically with respect to motor vehicle dealers. In recent correspondence from the FTC to the Reserve dated Jan. 26, FTC Secretary Donald S. Clark expounded on the FTC’s future activities with regards to Dodd-Frank. In Secretary Clark’s words: “The Dodd-Frank Act, enacted in July 2010, substantially restructured the financial services law enforcement and regulatory system. Under the Act, the Commission [FTC] retains it authority to enforce Regulations B, E, M, and Z (and was granted the authority to enforce any Bureau of Consumer Financial Protection (“CFPB”) rules) regarding the entities within the FTC’s jurisdiction; these include most providers of financial services that are not banks, thrifts, and federal credit unions. The Dodd-Frank Act requires that the Commission and the CFPB coordinate certain law enforcement activities, and negotiate an agreement to do so by January 21, 2012. The Commission is committed to continuing to vigorously enforce Regulations B, E, M, and Z. The FTC looks forward to coordinating with the Board, the CFPB, and other federal agencies in the implementation of the Dodd-Frank Act. “Finally, Section 1029 of the DoddFrank Act gives the Commission new and expanded authority regarding motor vehicle dealers. The FTC retains its current law enforcement authority over motor vehicle dealers, although it will share that authority with the CFPB with respect to

dealers engaged in certain practices. The Commission also obtains new authority as of July 21, 2011, to issue rules prohibiting unfair and deceptive acts and practices in connection with motor vehicle dealers, using the notice and comment rulemaking procedures in Section 553 of the Administrative Procedure Act rather than the more elaborate rulemaking procedures in Section 18 of the FTC Act. In connection with this new authority, the FTC is conducting outreach activities and reviewing a wide range of motor vehicle dealer practices. Section 1029 of the Dodd-Frank Act also requires the FTC and Board to coordinate with the CFPB’s Office of Service Member Affairs to address certain motor vehicle issues related to members of the military. The Commission looks forward to working with the Board, the CFPB, and other federal agencies on this initiative.” As mentioned by Secretary Clark, the FTC retains authority to enforce regulations B (“Equal Credit Opportunity”), E (“Electronic Fund Transfer”), M (“Consumer Leasing”), and Z (“Truth In Lending”). In addition, the commission will have authority to enforce any CFPB rules. This enforcement authority is not insignificant. Penalties and sanctions imposed on companies through agreements settling non-compliance allegations can be severe and long-lasting. For example, last September, the commission announced a settlement to halt discriminatory practices by a mortgage company allegedly charging Hispanic consumers higher prices for mortgage loans than similarly situated non-Hispanic white consumers. The FTC’s complaint had alleged the defendants violated the Equal Credit Opportunity Act (ECOA) and its implementing Regulation B, as well as the FTC Act, by charging different prices to Hispanic consumers that could not be explained by their credit characteristics or underwriting risk. The settlement permanently prohibits defendants from discriminating on the basis of national origin in credit transactions, or otherwise failing to comply with ECOA and Regulation B. The order fur-

ther requires defendants to implement various fair lending policies, training programs, and to satisfy certain compliance reporting guidelines. Additionally, the order imposes a $5.5 million judgment, all but $1.5 million of which is suspended based on defendants’ financial situation. In February, the commission issued a news release regarding cases resulting from their ongoing campaign to protect consumers’ personal information. Three companies whose business is reselling consumers’ credit reports agreed to settle FTC charges that they did not take reasonable steps to protect consumers’ personal information, failures that allowed computer hackers to access that data. Under the Fair Credit Reporting Act, the resellers were charged with failing to protect their internet portals. In addition, the resellers were charged with violating the Gramm-Leach-Bliley Safeguards Rule by failing to design and implement information safeguards to control the risks to consumer information; to regularly test or monitor the effectiveness of their controls and procedures; to evaluate and adjust their information security programs in light of known or identified risks; and to have comprehensive information security programs. The settlements require the companies to strengthen their data security procedures, meet prescribed record-keeping provisions to allow the FTC to monitor compliance, and submit to independent security program audits for 20 years. Our industry is highly regulated, both at the state and federal levels. And if FTC Secretary Clark’s comments are any indication, oversight will become more, not less, intrusive. Compliance will become both more difficult and more critical. At OIADA, we believe it is our responsibility as the used dealer association for Oklahoma to not only keep our dealers informed of relevant regulatory issues, but to also assist you in your compliance efforts. For more information regarding compliance issues and solutions, contact us at 405-232-2947 or odell.morgan@sbcglobal.net.

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BY AD R STAFF

Word from the FTC

BY AD R STAFF

Independent Contractor ( S E L F - E M P L O Y E D) O R E M P L O Y E E ?

The proper classification of independent contractors versus employees continues to be an issue with enforcement agencies at both the state and federal levels.

It is critical you, the business owner, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes and pay unemployment tax on wages paid to an employee. You donâ&#x20AC;&#x2122;t generally have to withhold or pay any taxes on payments to independent contractors. If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals â&#x20AC;&#x201C; including salespersons - providing services are employees or independent contractors. Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be: An independent contractor An employee (common-law employee) A statutory employee A statutory non-employee In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered. You should know the following about hiring people as independent contractors versus hiring them as employees. The IRS uses three characteristics to determine the relationship between businesses and workers: t #FIBWJPSBM DPOUSPM UIJT DPWFST GBDUT UIBU TIPX XIFUIFS UIF CVTJOFTT IBT B SJHIU UP EJSFDU PS DPOUSPM IPX UIF XPSL JT EPOF UISPVHI JOTUSVDUJPOT USBJOJOH PS PUIFS means. t 'JOBODJBM DPOUSPM UIJT DPWFST GBDUT UIBU TIPX XIFUIFS UIF CVTJOFTT IBT B SJHIU UP EJSFDU PS DPOUSPM UIF Ä&#x2022;OBODJBM BOE CVTJOFTT BTQFDUT PG UIF XPSLFS T KPC t 5ZQF PG 3FMBUJPOTIJQ UIJT GBDUPS SFMBUFT UP IPX UIF XPSLFST BOE UIF CVTJOFTT PXOFS QFSDFJWF UIFJS SFMBUJPOTIJQ If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees. If you can direct or control only the result of the work done and not the means and methods

of accomplishing the result, then your workers are probably independent contractors. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms. Workers can avoid higher tax bills and lost benefits if they know their proper status. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS. You can learn more about the critical determination of a workerâ&#x20AC;&#x2122;s status as an independent contractor or employee at IRS.gov by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employerâ&#x20AC;&#x2122;s Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS website or by calling the IRS at 800829-3676 (800-TAX-FORM). Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate the worker is an employee while other factors indicate that the worker is an independent contractor. There is no magic or set number of factors that makes the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another. The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

V Common Law Rules Under common law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is you have the right to control the details of how the services are performed. People such as doctors, dentists, veterinarians, lawyers, accountants or auctioneers who are in an independent trade, business or profession in which they offer their services to the general public are generally independent contractors.

However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.

V Form SS-8 If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF), can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the workerâ&#x20AC;&#x2122;s status. Be aware it can take at least six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8 (PDF).

V Consequences of Treating an Employee as an Independent Cotractor If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). See Internal Revenue Code section 3509 for more information.

V Relief Provisions If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. See Publication 1976, Section 530 Employment Tax Relief Requirements (PDF) for more information.

V Misclassified Workers Can File Social Security Tax Form Workers who believe theyâ&#x20AC;&#x2122;ve been improperly classified as independent contractors by an employer can use Form 8919, Uncollected Social Security and Medicare Tax on Wages, to figure and report the employeeâ&#x20AC;&#x2122;s share of uncollected Social Security and Medicare taxes due on their compensation.

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TA X CHANGES FOR During 2010, new laws, such as the Affordable Care Act and the Small Business Jobs Act of 2010, created or expanded deductions and credits small businesses and self-employed individuals should consider when completing their tax returns and making business decisions in 2011.

Health Insurance Deduction Reduces Self Employment Tax With the enactment of the Small Business Jobs Act of 2010, self-employed taxpayers who pay their own health insurance costs can now reduce their net earnings from selfemployment by these costs. Previously, the self-employed health insurance deduction was allowed only for income tax purposes. For tax year 2010, self-employed taxpayers can also reduce their net earnings from self employment subject to SE taxes on Schedule SE by the amount of self-employed health insurance deduction claimed on line 29 on Form 1040. Taxpayers can claim the self-employed health insurance deduction if the insurance plan is established under their business and if any of the following are true: t Ä&#x2021;FZ XFSF TFMG FNQMPZFE BOE IBE B OFU profit for the year, t Ä&#x2021;FZ VTFE POF PG UIF PQUJPOBM NFUIPET to figure net earnings from self-employment on Schedule SE, or t Ä&#x2021;FZ SFDFJWFE XBHFT GSPN BO 4 DPSQPSBtion in which the taxpayer was a morethan-2-percent shareholder.

Small Business Health Care Tax Credit In general, the Small Business Health Care Tax Credit is available to small employers that pay at least half of the premiums for single health insurance coverage for their employees. It is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lowerincome workers. Small businesses can claim the credit for 2010 through 2013 and for any two years after that. For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations. Beginning in 2014, the maximum tax credit will increase to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible tax-exempt organizations.

SMALL BUSINES SES

The maximum credit goes to smaller employers â&#x20AC;&#x201C;â&#x20AC;&#x201C; those with 10 or fewer full-time equivalent (FTE) employees â&#x20AC;&#x201C;â&#x20AC;&#x201C; paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 or more FTEs or that pay average wages of $50,000 or more per year. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, employers that use part-time workers may qualify even if they employ more than 25 individuals. Eligible small businesses will first use Form 8941 to figure the credit and then include the amount of the credit as part of the general business credit on its income tax return.

General Business Credit for Employers The general business credits of eligible small businesses in 2010 are not subject to alternative minimum tax. The new law allows general business credits to offset both regular income tax and alternative minimum tax of eligible small businesses as described in Section 2012 of the Small Business Jobs Act. The provision is effective for any general business credits determined in the first taxable year beginning after Dec. 31, 2009, and to any carryback of such credits. For a list of the general business credits, see Form 3800.

Small Businesses Can Benefit from Higher Expensing / Depreciation Limits For tax years beginning in 2010 and 2011, small businesses can expense up to $500,000 of the first $2 million of certain business property placed in service during the year. In general, businesses can choose to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years. This property is frequently referred to as section 179 property, after the relevant section in the Internal Revenue Code. Section 179 property is property that you acquire by purchase for use in the active conduct of your trade or business, including: t 5BOHJCMF QFSTPOBM QSPQFSUZ t 0UIFS UBOHJCMF QSPQFSUZ FYDFQU CVJMEings and their structural components) used as: t "O JOUFHSBM QBSU PG NBOVGBDUVSJOH QSPduction, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services; t " SFTFBSDI GBDJMJUZ VTFE JO DPOOFDUJPO

with any of the activities in (1) above; or t " GBDJMJUZ VTFE JO DPOOFDUJPO XJUI BOZ of the activities in (1) above for the bulk storage of fungible commodities. t 4JOHMF QVSQPTF BHSJDVMUVSBM MJWFTUPDL PS horticultural structures. t 4UPSBHF GBDJMJUJFT FYDFQU CVJMEJOHT BOE their structural components) used in connection with distributing petroleum or any primary product of petroleum. t 0Ä&#x152; UIF TIFMG DPNQVUFS TPÄ&#x2122;XBSF Section 179 property generally does not include land, investment property (section 212 property), property used mainly outside the United States, property used mainly to furnish lodging and air conditioning or heating units. The Small Business Jobs Act (SBJA) of 2010 increases the section 179 limitations on expensing of depreciable business assets for tax years beginning in 2010 and 2011 and expands temporarily the definition of section 179 property, for tax years beginning in 2010 and 2011, to include certain qualified real property a taxpayer elects to treat as section 179 property. Qualified real property means qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. The $500,000 amount provided under the new law is reduced, but not below zero, if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $2 million. For tax years beginning in 2012, the maximum amount is $125,000; before enactment of the 2010 tax relief legislation, it was set at $25,000.

Depreciation limits on business vehicles The total depreciation deduction (including the section 179 expense deduction and the 50 or 100 percent bonus depreciation) you can take for a passenger automobile (that is not a truck or a van) you use in your business and first placed in service in 2010 is increased to $11,060. The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2010 is increased to $11,160. If you do not take any bonus depreciation for the passenger automobile, truck, or van you use in your business and first placed in service in 2010, the maximum deduction you can take for a passenger automobile is $3,060 and for a truck or van is $3,160. CO NTI N U ED O N PAG E 18

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CO NTI N U ED FROM PAG E 16

50 or 100 Percent Bonus Depreciation Generally, businesses can take a special depreciation allowance to recover part of the cost of qualified property placed in service during the tax year. The allowance applies only for the first year you place the property in service. Businesses that acquire and place qualified property into service after Sept. 8, 2010, can now claim a depreciation allowance of 100 percent of the cost of the property. The property must be placed in service before Jan. 1, 2012 (Jan. 14, 2013 in the case of certain longer-lived and transportation property). Businesses that acquire qualified property during 2010 on or before Sept. 8, 2010, can claim a depreciation allowance of 50 percent of the cost of the property. The property must be placed in service before Jan. 1, 2013 (Jan. 1, 2014 in the case of certain longer production period property and for certain aircraft.) The allowance is an additional deduction

you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. The types of property that can be depreciated are described in the instructions to Form 4562.

Small Businesses To Use EFTPS for Deposits Beginning in 2011 The paper coupon system for federal tax deposits will no longer be maintained by the Treasury Department after Dec. 31, 2010. Most businesses must now make deposits and pay federal taxes through the Electronic Federal Tax Payment System (EFTPS). Using EFTPS to make federal tax deposits provides substantial benefits to both taxpayers and the government. EFTPS users can make tax payments 24 hours a day, seven days a week from home or the office. Deposits can be made online with a computer or by telephone. EFTPS also significantly reduces payment-related errors that

SMALL BUSINES SES could result in a penalty. The system helps taxpayers schedule dates to make payments even when they are out of town or on vacation when a payment is due. EFTPS business users can schedule payments up to 120 days in advance of the desired payment date. Information on EFTPS, including how to enroll, can be found online at www.irs. gov or by calling EFTPS Customer Service at 1-800-555-4477. Some businesses paying a minimal amount of tax may make their payments with the related tax return, instead of using EFTPS. More details regarding taxes required to be deposited using EFTPS, dollar thresholds and other specific requirements are described on page 2 of IRS Publication 15, (Circular E) Employerâ&#x20AC;&#x2122;s Tax Guide.

FOR MORE INFORMATION, VISIT W W W.IRS.GOV.

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Federal Law, Credit Card Receipts and Your Dealership

Why is it important for businesses to make sure they’re complying with this law? Credit card numbers on sales receipts are a golden ticket for fraudsters and identity thieves. Savvy businesses appreciate the importance of protecting their customers — and themselves — from credit card crime. But there are other important reasons to make sure your slips are shipshape. Noncompliance could open a company up to an FTC law enforcement action, including civil penalties and injunctive relief. In addition, the law allows consumers to sue businesses that don’t comply and to collect damages and attorney’s fees.

While Congress passed this provision in December 2003, it was phased in gradually, requiring merchants with newer electronic card processing machines to comply by December 2004. Merchants with older machines were given until Dec. 1, 2006. So now all companies that electronically print credit or debit card receipts must truncate the information on the copy they give their customers. That’s why it’s important to make sure all your equipment complies with the law. Several details of the law are worth noting: it applies only to electronically printed receipts, not to handwritten or imprinted ones. Plus, it applies only to receipts you give your customer at point of sale, not to any transaction record you retain. Be aware, however, when you keep your customers’ personal information — including account data — you have an obligation to keep it safe. Read Protecting Personal Information: A Guide for Business, available at ftc.gov/infosecurity, for tips on safeguarding sensitive data. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair practices in the marketplace and to provide information to businesses to help them comply with the law. To file a complaint or to get free information on consumer issues, visit ftc.gov or call 877-FTC-HELP (877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

CREDIT CARD NUMBERS ON SALES RECEIPTS ARE A GOLDEN TICKET FOR FRAUDSTERS AND IDENTITY THIEVES.

What’s on the credit and debit card receipts you give your customers? The Federal Trade Commission, the nation’s consumer protection agency, reminds companies they are required to check their receipts and make sure they’re complying with a law that’s been in effect for all businesses since Dec. 1, 2006. According to the federal Fair and Accurate Credit Transaction Act (FACTA), the electronically printed credit and debit card receipts you give your customers must shorten — or truncate — the account information. You may include no more than the last five digits of the card number, and you must delete the card’s expiration date. For example, a receipt that truncates the credit card number and deletes the expiration date could look like this: ACCT: ***********12345 EXP: ****

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SALES

ONLINE SALE S SUCCE S S: LET YOUR LISTINGS DO THE TALKING Anyone can start selling cars using the Internet, but those who are most successful give buyers the right information during the shopping process. Sellers can break through

the clutter of online used car sales by giving consumers photos, compelling descriptions and vehicle history while they shop. If you’re not already online, you need to be. Eighty percent of consumers today use the Internet to help find their next car. Furthermore, shoppers visit less than two dealerships before deciding to buy – conducting research online before visiting any lot. Typically, they start by visiting third-party automalls like AutoTrader.com and Cars. com. A quick search can return hundreds of listings for vehicles similar in style and price. Since you can’t sell online shoppers face-toface, your listings have to do the talking. Focus your marketing efforts on two lead-generating areas that attract the most attention: Search Results Pages (SRPs) and Vehicle Details Pages (VDPs). The SRPs and VDPs are the most

prominent places to communicate the value of your used car inventory online. When shoppers click on SRPs, they go to VDPs to browse additional photos, read about features, see the vehicle history and locate the seller. Getting shoppers to click on SRP listings generates more leads from your VDPs. The vehicle description you provide on SRPs is your first opportunity to reach shoppers. Try to describe the car’s benefits as if shoppers were standing in front of you. Be brief but informative. For example, you might say, “this van comfortably fits up to eight people” or, “we offer low financing” or, “includes Free Carfax Vehicle History Report.” You don’t want potential customers glancing past your listings because they didn’t peak their interest. Photos are another way seasoned online sellers grab the attention of used car shoppers on SRPs. Use the best image as the SRP ‘thumbnail’ image on SRPs and save detailed images for the VDP. You can build confidence with online

consumers by linking Carfax Reports to SRP and VDP listings. Shoppers are more likely to buy from open and up-front sellers and your listings will stand out even more. To connect with online shoppers, you need to think like them. By giving buyers relevant information to help them make an educated decision, you can compete online and sell cars faster. Top dealers consistently get more leads because they pay attention to how their car listings appeal to online consumers. Make your SRPs stand out in the crowded online marketplace and more shoppers will click through to your VDPs. More clicks equals more leads and ultimately, more sales. BY DALE PO LLAK AN D LAN CE VICKERY

Dale Pollak, founder of vAuto, is a highly sought-after authority on maximizing profits from used vehicle operations, working extensively with Dealer 20 Groups, Dealer Associations and large dealer enterprises across the country. In addition to his regular contributions to auto industry publications like Dealer Magazine, Pollak is a published author of 2 books, Velocity: From the Front Line to the Bottom Line and Velocity 2.0: Paint, Pixels and Profitability. Lance Vickery is director of dealer business at Carfax and has spent more than 25 years in the auto industry.

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OIADA NEW AND RENE WAL MEMBERS

The following list includes members who joined or renewed their OIADA/NIADA membership during January 2011. 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

NAME

JOINED CITY

N R R R R R R R R R R R R R R R R R R

Gary Pitcock Jeff Skaggs Daniel R. Derr Richard L. Reynolds Karl Blade Bob Moore Mazda Eddie Brown, Jr. Julian K. Codding Bryan Adams Mike Mowdy Kelly Smalygo Jeffery E. Jones Lee Ann Carter Rick Gore C. T. Hutchens I-35 Auto Mall, LLC Mike West Johnny Nix The Guardian Warranty Corp.

2011 1997 1993 2010 1993 2004 2010 2005 1996 2008 2007 1999 1994 2010 2005 2007 2004 2004 2002

Diffee Motor Cars South, Inc. JS Wholesale Autos Thoroughbred Motors, Inc. Reynolds Ford, Inc. Newell Coach Corp. Bob Moore Mazda Brown Ford, Inc. Reliable Motors, Inc. Car Mart #1 Mike Mowdy Autoplex Smalygo Auto Wholesale, Inc. Alpha Auto Finders Carter’s Car Country Greenwood Motors Madill Superlot I-35 Auto Mall, LLC Choctaw Autoplex, LLC Speedline Used Cars, LLC GWC Warranty Corp.

Oklahoma City Sand Springs Oklahoma City Norman Miami Oklahoma City Cordell Oklahoma City Tulsa Midwest City Claremore Stillwater Comanche Oklahoma City Madill Oklahoma City Choctaw McAlester Avoca, PA

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FEBRUARY 2011

FEDERAL ADVOCATES LOBBYING REPORT As part of the review, GAO is speaking with all of the stakeholders in the process such as dealerships and dealership representatives. 12th Congress Issues On Feb. 3, Federal Advocates met with NADA to discuss upcoming issues for the 112th Congress and various pending matters. As we jointly see it, the issues for Congress are fuel economy and green gas within the context of energy legislation, the Consumer Financial Protection Bureau and its mandates, the Toyota Safety Bill (which we both believe is dead), possible Congressional oversight that may impact the industry and the National Highway Traffic Safety Administration reauthorization effort (a priority of Sen. Jay Rockefeller, D-WV, who’s chairman of the Senate Commerce Committee). Harrington also mentioned a General Accounting Office study (see separate heading) which Rep. Ed Towns, D-NY, and chairman of the 111th Congress House Governmental Affairs Committee, requested on section 310 of the Senate Toyota bill. It would’ve required dealers to provide info to buyers on a vehicle’s history. Lastly, we both agreed it’s important to continue monitoring relevant activity of the FTC.

SBA Floorplan Financing Program The federal government relaunched its suspended floorplan financing program for small dealerships, this time with loan limits of $5 million rather than $2 million. The Small Business Administration’s new rules, which addressed nuts-and-bolts questions of how the financing will work, were published online in the Federal Register on Feb. 8. The Obama administration began a pilot floorplan program in May 2009 during the depths of the recession, but it never got off the ground because of banks’ reluctance to extend credit. A law enacted in September 2010 increased the loan limits and in October, the SBA adopted a rule expanding eligibility for the program to the majority of dealerships. The SBA also suspended the program in October and has been working since with lenders in an attempt to increase their participation. The pilot program will continue through September 2013. To address various issues related to the program, a conference call was held with Whann, and the SBA’s Steven Smits, associate administrator, and Patrick Kelley, senior advisor, Office of Capital Access.

Consumer Financial Protection Bureau Meetings

Department of Defense Pam McClelland, a DOD senior program analyst, has taken over for Dave Julian and Frank Emery in the Office of Military Community and Family Planning in the Office of the Deputy Undersecretary of Defense. Per a conversation with her on Feb. 15, NIADA will send information to her, at her request, on how the association can assist service members in purchasing pre-owned vehicles. Pending her review, a meeting or conference call will be scheduled with Whann.

On March 4, NIADA General Counsel Keith Whann and Federal Advocates will be meeting with Holly Petraeus, director of the Consumer Financial Protection Bureau’s Office of Service Member Affairs, to introduce NIADA and to discuss various auto industry issues related to the newlycreated CFPB. In addition, a meeting request is pending with Richard Cordray, CFPB general counsel, to discuss various consumer auto issues and the soon-to-be appointed Consumer Advisory Board.

GAO Study The GAO review was requested by Rep. Towns earlier last year that focused on the auto safety recall process. As part of the review, GAO is speaking with all of the stakeholders in the process such as dealerships and dealership representatives. GAO’s audit work is nearing its completion and GAO is due to issue the report on June 15. Pending that, Jim Leonard, an analyst with the GAO’s Physical Infrastructure Team, has discussed with NIADA its views on the issue and the role of pre-owned vehicle dealerships. NIADA’s Mike Linn and Whann discussed this issue with Jim Leonard and other analysts of the GAO earlier this month. White House Meeting Scheduled A March 4 meeting with Steve Croley, special assistant to the President for Justice and Regulatory Policy in the Office of Domestic Policy, has been scheduled to introduce the association to the administration and to provide a briefing on its views on auto consumer issues. FEDERAL ADVOCATES is NIADA’s governmental advocacy partner. To read past lobbying reports, visit www.niada.com/legislative_and_legal.php

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OIADA SELECT PROVIDERS

LICENSE APPLICANTS APPROVED USED DEALER LICENSES COMPANY

NAME

CITY

COMPANY

#1 Auto A & H Auto Sales Altus Motorsports

Bob Dabirian Majid Asadi Janette Nassaney George Nassaney Gary Berlin Laura Baker Chandler C. Baker Ronald Renzelman Dennis B. Watson John C. Butler Naveed Ferdowsian Douglas Ray Homayoon Ahmadirahdari Sherman Collins Stephen Conner Loyd B. Cummins Chad Cummins Wade Dorsey David Stanley Peter Parker Theodore Brett Swab Troy Dyer Carl White Curtis Ryan Purdy Chad Critser Steven M. Meston Lawrence Matthes Dillard IR LM Dillard Holding Trust V Dillard 1991 GST Exemp Trust John Roderick Bates David Akbaran Michael Akbaran Dillard 1991 GST Exemp Trust John Roderick Bates LM Dillard Holding Trust V Steven M. Meston Lawrence Matthes Dillard IR Scott Foust Jason Blake Sandra Blake

Oklahoma City Oklahoma City Altus

Jim Wheeler’s Auto Sales JS & P Auto Leasing & Sales, Inc.

Amer Camaro & Firebird Auto Br Bakerboys Yamaha Bargain Motors C & C Truck Sales & Leasing Carney Classics Cars 4 Less Cash4carsokc.com Champion Auto Sales, LLC Collins Used Cars Conner Used Cars Cummins Ford Lincoln, Inc.

David Stanley Hyundai, LLC Diesels N Stuff Dyer Auto Sales First Auto Finance Guymon Auto Sales I-35 Auto Mall, LLC

I-35 Sports & Imports Integrity Auto Finance

Integrity Motors Jamatt RV Sales

Warr Acres Oklahoma City Wilson El Reno Carney Oklahoma City Oklahoma City Oklahoma City Stilwell Lawton Weatherford

Oklahoma City Tulsa Heavener Tulsa Guymon Oklahoma City

Moore Oklahoma City

Yukon Poteau

NAME

CITY

Jim Wheeler Collin Sharp Bryan Berman K. C. Auto Kelly C. Clifton Linda Clifton Kam Motor Sales, LLC Amanda Luong L.A. Auto Sales, Inc. Sue Holliday Larry A. Holliday Lawton Motorsports Janette D. Nassaney George H. Nassaney Lowest Price Auto Parts & Sales, Inc. Mohammad Momennia Malibu’s Auto Sales, LLC Clint Edward Wilson Greg Rushing McNair’s Auto Sales Phillip J. McNair Mimi Auto Pradeep K. Metpally Noble Truck Sales Russell D. Anglin OK Trans Auto Sales Felicia Mack Brian Mack Performance Cycle Gerald Tims R & E Exotic Autos, LLC Eric Gove Ronald Redenins R & T Salvage & Used Cars, LLC Aurelio E. Hernandez Trejo Ratcliffe Auto Group, LLC Kimberly Ratcliffe Jonathan Ratcliffe Royal Rides, LLC Tony Anderson Select Auto Sales Jeffrey Dykes Danny Switzer Stillwater Auto Center Armondo Oliphant James Bradley Nash Sudden Death Motors Wendy Barns Jeremy Munsell The Right Choice Motors, LLC Kenneth L. Cabelka Majella Sue Cabelke TJ Motors Mohammadreza Tajbakhsh United Trucks & Autos John Christopher Pritchard VIP Auto, Inc. Aaron Daniel Johnson West Pointe Chrysler, Jeep, Dodge Performance Dodge, Inc. Smicklas Brothers, LLC Williamson Truck Auto Sales Karen J. Williamson Kim L. Wilson

Tulsa Glenpool Tulsa Tulsa Chickasha Lawton Oklahoma City Moore Marlow Oklahoma City Noble Oklahoma City Bethany Newkirk Del City Madill Marlow Jenks Stillwater Enid Lawton Oklahoma City Muskogee Carnegie Oklahoma City Prague

WHOLESALE USED DEALER LICENSES COMPANY

NAME

CITY

Payless Auto Sales SRB Wholesale Road

Mohommad Rez Moumenzadeh Sharon Brittain Ronald Brittain

Edmond Edmond

The applicants, as listed in the Agenda for the Used Motor Vehicle and Parts Commission Regular Meeting of Feb. 8 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. 23

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OKL A HOM A USED MOTOR V E HIC L E S A L E S P E R S O N S LICENSING REQUIREMENT S A ND DE A L ERSHIP

RE SPONSIBILITIE S BY AD R STAFF

It is the responsibility of each licensed used car dealer to license all salespersons. Upon hiring a salesperson, the dealer shall provide to the Used Motor Vehicle and Parts Commission a signed and notarized Salesperson’s application, check or money order filing fee of $25.00, original $1,000.00 Salesperson’s surety bond signed by the applicant, and a photo copy of the salesperson’s driver’s license. Once all requirements have been submitted, the salesperson is considered temporarily licensed until the Commission takes action on the application. All temporary salesperson license applications shall be submitted for approval to issue permanent license at the first monthly Commission meeting following receipt of the application. A permanent salesperson’s license shall be issued after approval of the applicant by the Commission. A salesperson’s license shall consist of an identification card bearing the name, signature of the salesperson, social security number, name of employer, address, signature of the Executive Director, and the dealer’s license number prefixed with UD (UD-0000). The individual shall carry the card upon his person at all times when acting as a used motor vehicle salesperson at the licensee location. The Oklahoma Used Motor Vehicle and Parts Commission regulations consider anyone who engages in the activities listed below to be a used motor vehicle salesperson requiring licensing: A used motor vehicle salesperson is anyone who: 1. receives gain or compensation of any kind, directly or indirectly, regularly or occasionally for, or negotiates for, sale or trade of a specified used motor vehicle for a specified used motor vehicle dealer, or 2. operates as a broker only for a specified used motor vehicle dealer, or 3. receives compensation for referral of a prospective buyer to his employer or acts on behalf of the dealer in the purchase or sale of a used motor vehicle, or 4. is authorized to transfer and/or sign titles for the dealership, or 5. displays or offers used motor vehicles for sale for the dealership at a licensed location,

6. acts in the capacity of sales manager or finance and insurance manager or acts in any capacity as part of the sales process, 7. does not otherwise come under the definition of a wholesale used motor vehicle dealer and/or is not required to obtain a license as a wholesale used motor vehicle dealer, but is authorized by a person licensed by the Oklahoma Motor Vehicle Commission to sell new or unused motor vehicles, (franchise dealer) to purchase and sell used motor vehicles without direct supervision by the “franchise dealer,” whether at auction or otherwise, towit: a “wholesaler” or individual who pays the “franchise dealer” a draft or check fee for vehicles purchased using the “franchise dealer’s” used motor vehicle dealer’s license; or who is required to compensate the “franchise dealer” for any loss arising from the sale of a vehicle; or who in any manner operates independently of the ordinary business of the “franchise dealer.” The Oklahoma Used Motor Vehicle and Parts Commission regulations prescribe the following with regard to licensed salespersons: 1. A salesperson’s license shall not authorize the person to refer a prospective customer or consumer to another used motor vehicle dealer and obtain compensation therefore without an employment relationship with the other used motor vehicle dealer. 2. A license for a used motor vehicle salesperson will not be issued, renewed, or endorsed until the employing dealer is licensed and has certified that the applicant for said license is in his employ. Dealers’ payrolls and other evidence will be checked to ascertain that all salespersons for such dealers are licensed. It is not intended that the dealer be required to pay for licenses for its salespersons. However, the dealer may do so on a reimbursable basis, or any other plan satisfactory to its dealership organization. All salespersons licenses will be sent to the dealer for distribution to the respective applicants, and the dealer will determine that all its personnel required to obtain licenses have done so. 3. If the salesperson changes employer, the licensee shall immediately mail the license to the Commission for its endorsement of the change of employer. There shall be no charge for such

endorsement. The licensee shall keep his license on his person while engaged in his business and shall display it upon request; however, there shall be no penalty for not having the license upon his person when he has submitted it to the Commission for its endorsement of a change of employer. 4. The dealer will notify the Commission in writing when a salesperson’s employment is terminated. The dealer may be liable for actions of the salesperson until proper notice is filed with the Commission. 5. Each salesperson shall surrender his identification card to the Commission for endorsement of change of employer, before again engaging in the business as a salesperson for another used motor vehicle dealer or as a used motor vehicle dealer. 6. A used motor vehicle salesperson’s license shall permit the licensee to engage in the activities of a used motor vehicle salesperson. A salesperson’s license does not entitle the licensee to perform as a dealer. A used motor vehicle salesperson’s license does not entitle a person to separately own vehicles for sale or any interest in the vehicles or dealer business without first qualifying as a partner, corporate member, or part owner of the dealership and meeting the qualifications of a dealer. 7. A salesperson may not hold more than one used motor vehicle salesperson’s license at any one time or be employed by or sell for any dealer other than the dealer and at the address designated on the salesperson’s license, with the exception that the licensed dealer has more than one location. Then the licensed dealer and licensed salesperson may sell on each location properly licensed as additional locations. 8. A salesperson’s license shall not be issued for an individual who is not actively engaged in the activities of a used motor vehicle salesperson, nor shall it be issued for the purpose of allowing an individual to operate a vehicle with a used motor vehicle dealer’s plate for any use not benefiting the dealer’s business. An application for Used Motor Vehicle Salesperson’s License is included in this newsletter. You may make copies of this form for filing with the Used Motor Vehicle and Parts

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MAKING SOCIAL MEDIA Work for Your Dealership Social media continues to be a white-hot subject. It’s fueled in no small part by the top players in the field that are beginning to look more like financially viable businesses.

Twitter is predicting $150 million in revenue this year. Foursquare has six million users and its co-founder would have you believe it’s worth $250 million. Facebook banked an astonishing $1.86 billion in revenue in 2010 and some analysts value the company at $50 billion. That’s not bad for a set of businesses the oldest of which hasn’t seen a seventh birthday. Social network users are engaged on an hourly basis sharing family pictures, relationship status, resumes, and opinions on every subject imaginable. A growing number of consumers have both personal and professional profiles and an overwhelming 93 percent of those active in social media expect businesses to have a social media presence. Many independent dealers know this is a powerful and influential space, but only a minority are clear about how to manage their presence and what, if any, ROI can be derived from a commercial online presence. It’s important to remember the five laws of social media.

BY DO NALD FOY

Content is king

Listen and respond

Those interested in your social media presence have an expectation you’ll deliver information they can use. Customers see the dealer as an authority on automobiles. They look to dealerships for information that will guide them through a sea of choices to the car best suited for them. Dealers delivering online content on things such as vehicle reliability, overall satisfaction and trends are far more likely to have shoppers visit their store.

This one seems easy, as most businesspeople think they do this all the time. The challenge here comes when a complaint or perceived slight is posted in an open forum. The first reaction for most is to be defensive or, at least, to explain a gripe away. That has proved to be discrediting and incites the audience to defend their position. The proven, successful response is to fully recognize an unhappy comment and ask how to make it right. Customers who complain about an issue aren’t trying to hurt the business; they themselves are hurt. These people were expecting a successful experience and are letting management and the world know they didn’t have one. Forget the problem and get them to the solution. Credibility will skyrocket.

Don’t spam Social media sites are not substitutes for radio, TV or newspaper advertising. Community members aren’t interested in sale specials, inventory, financing or information if those things aren’t catered to their specific needs. This does not mean dealers shouldn’t post inventory for customers to see; what it does mean is dealers shouldn’t blast fans with service deals and lowered prices. In social media, a business or a friend can be banished with one click.

DONALD FOY is the executive director of Manheim’s DRIVE Center. In that role, he oversees innovation research, discussion and testing for Manheim. Contact him at donald.foy@manheim.com and visit his blog www.matters2me.com.

It is social This means that all social media interaction is about a conversation between at least two people. Many dealerships make the mistake of operating in a broadcast mode, blasting out information about sales, products, and business offerings. In the social space, this is unwanted noise. The magic happens when the employees of the dealership, customers, potential buyers, and brand enthusiasts all build an organic discussion around individual objectives. Dealers want to sell cars. Consumers want to get to and from work reliably, express their style, and get a good deal. One dealership in the Southwest offers a regular schedule of updates that includes maintenance and performance tips updated by its chief mechanic, as well as the latest information available about vehicle reliability. Site guests believe the dealership isn’t just trying to sell them just any car, but a car they can rely on.

It is personal The most effective social online presence comes with a face and a personality. The important thing for dealers to know is a real human advocate creates credibility with customers. The communication style should be personal, too. Dealers know their markets and their customers. Great online community mangers talk to guests as if they were standing on the showroom floor. Top social marketers have potential customers arrive at the dealership shaking hands and saying how good it is to finally meet. 31

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One of the new keys to the success of How can mobile apps streamline your business? your business is your smart phone. You can Mobile browser-based tools provide

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.

APPS

Going Mobile in Your Dealership

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.

dealerships with more on-the-go visibility but lack a built-in ability to act in realtime 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 pricinsg with other BY LEN CRITCH ER AN D LANCE VICKERY mobile devices. Len Critcher is CEO of eCarList, provider of award-winning Are there other benefits to going mobile? inventory management and online marketing solutions that On the acquisition side, smart phones make it easy for dealerships to fully own and control the merchandising process through one unified platform. provide access to information you need to vehicle Lance Vickery is director of dealer business at Carfax and has stock your lot with cars that customers want. It’s spent more than 25 years in the auto industry. no secret that the used car supply is decreasing

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