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MANAGEMENT MATTERS | By Dale Pollak
AUCTION-BUYING IS MORE DIFFICULT THAN IT SHOULD BE
Four Contributing Factors
You might think that with rising supplies of wholesale vehicles dealers would have an easier time seeking out auction cars to fill gaps in their inventories. But the reality is different. Dealers still struggle to acquire cars that will appeal most to buyers in their markets, and purchase them at prices that will yield respectable margins. Competition accounts for part of the struggle. Even with more available cars, there are more dealers vying for them. But the difficulties dealers face also owe to four factors that encompass the ways dealers prepare for auctions, their auction expectations, and the inherent inefficiencies of sourcing vehicles from remote locations. Knowing Exactly What to Buy Despite technology that can efficiently tell dealers the exact vehicles they should acquire before they go to an auction, many dealers and their buyers just show up. They do little homework. Instead, they rely on instinct to size up cars they believe they need. This approach is far less efficient than using technology to determine the precise
ACCELERATE |
By GWC Warranty
THE END OF THE 1-STAR REVIEW
Maintaining Your Online Reputation Online reputation is more important today than ever before. If you take your eye off the ball for even a second, a small number of customers can have a severe impact on your online image. That’s why you need to do whatever it takes to stop 1-star reviews before they pop up online. When it comes to online reputation, sometimes the best offense is a good defense. By putting in place the right steps and procedures, you can simultaneously prevent bad reviews while also potentially turning these negative experiences into positive ones.
YOU CAN’T HELP CUSTOMERS YOU NEVER HEAR FROM A bad review could catch you by surprise. You sold a car and it was uneventful, but before you know it that customer is leaving a stain on your online reputation. It’s frustrating for you since the customer never voiced their issues to you, but there is something you can do. Give all your customers a chance to come to you first with their complaints or issues. This requires regular follow up on your part. Whether it’s by phone, email or old-fashioned direct mail, checking in with your customers
cars to pursue. Likewise, it’s not uncommon for dealers who rely mostly on instinct to find that their auction units contribute significantly to inventory age issues. Finding the Right Inventory It’s one thing to know the exact used vehicles you need. It’s another task altogether to locate these vehicles at auctions across the country. While some dealers have adopted new technologies to efficiently identify the auctions where the cars they need reside, many still rely only on auctions closer to home. This preference may help minimize transportation costs, but in today’s wholesale market it also limits selection and concentrates competition for the same vehicles. The end result: Dealers restrict their opportunities to acquire the right inventory when they stay local. Buying at the Right Price A dealer recently shared that while he’d love to pay less to acquire near-new vehicles for his certified pre-owned program, he’s come to understand that’s impossible if he wants to maintain his retail sales velocity. “I’ve found the ‘right’ price at auction translates to a roughly $1,000 front-end gross,” he said. “To me, they’re ‘spinner’ cars that we buy and then spin them through the shop and sell fast. Then, we repeat the cycle.” The key take-away: The dealer’s determined the “right” price for himself with every car. He uses technology and tools to calculate each unit’s profit potential (accounting for the costs
of acquisition, transportation, reconditioning, etc.), and the maximum he might pay, before he places his bid. When dealers complain they can’t acquire auction vehicles for the “right” money, I typically find they haven’t conducted a dispassionate calculation of the “right” price for themselves, or their expectations for a front-end profit don’t match the realities of today’s market. Reducing the Time Required Dealers who proactively address each of the preceding factors will, by design, become more efficient as they source vehicles from auctions. But the level of efficiency dealers achieve will depend primarily on how well they use the technology and tools that facilitate faster acquisitions. I would add that auctions, as well as solutions providers, could do more to make the wholesale marketplace a more efficient place for dealers to do business. It’d be pretty cool, I think, if dealers could count on a system that, almost automatically, began the work of re-supplying their inventories when a retail used unit heads home with a customer, if not sooner. Until that day, however, there’s much dealers can do themselves to become more effective and efficient at acquiring the cars they need at auction. Dale Pollak serves as executive vice president for Cox Automotive, a position he’s held since the company he founded, vAuto, became part of the Cox family in 2010. Dale pioneered the Velocity Method of Management, which has been adopted by thousands of dealers.
will help you get a chance to proactively address any issues that come up. ARTFULLY CRAFT YOUR ASK If you’re plugged into your online reputation, you’re likely doing something to ask your customers for reviews. Sometimes it’s in person and other times it could be with email or text messages. Whatever you do, having an electronic method for customers to leave negative feedback will help you capture these issues before they turn into online complaints. If you ask electronically, start with a question about whether the customer had a positive experience. If they had a poor experience, direct the customer somewhere he or she can vent to you. If it’s positive, continue them on the way to leaving a positive review. RESPOND TO THE NEGATIVE Sometimes, poor reviews will slip through the cracks. When they do, respond quickly and personally, apologizing for the poor experience and providing a way for the customer to contact you. If you can identify the customer based on the review, you can also reach out directly to the customer. It’s a delicate situation, but try to identify what went wrong for the customer and see if there is anything you can do to resolve the situation. You may even be surprised by a customer revising their negative review into a positive review once you’ve shown how much you care about their experience.
OUTRUN THE BAD REVIEWS Above all else, the best way to limit the impact of 1-star reviews is to outweigh these stories with the positive ones that tell the true story of your business. It’s no secret that upset customers are more likely to leave a review than happy ones, so it’s incredibly important to ask as many customers as possible for reviews. By building a consistent process for asking for reviews, you’ll land enough positive to improve or maintain your positive online image. www.oiada.com
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INSIDE
THE OFFICIAL MAGAZINE OF OREGON IADA
DEALER
NEWS
03.............................................. The End of the 1-Star Review 06....................................................Smart Debt Management 07..................................................................Advertising Rules 08...............................................Proposed OAR Amendments 12...............................The Right Way to Get More Millennials
WHAT’S NEW
National Policy Conference Dates Announced The 2018 National Policy Conference will be held September 24-26 at the Ritz-Carlton Pentagon City. Make plans now to join NIADA in Washington, D.C. as we meet legislators face to face to make your voice heard! Stay tuned for more details.
ASSOCIATE MEMBERS ADVERTISING /MARKETING
Autotrader.com 866-836-1455 Used Cars.Com by Dealix 650-599-5616 Cars.com James Lynch 312-601-5052 Carsforsale.com Grant Lockner 605-306-3492 Interactive financial Marketing Group Travis Weisieder 804-248-0892 ATTORNEY
Byrd Cabrera LLP Robert (Scott) Byrd 310-365-1954 AUTO PARTS
ADVERTISERS INDEX
AutoZone, Inc. Daniel Narvaez 971-218-2300 AutoZone Inc Ray Curry 503-964-9420
OFFICE
Hecht & Hecht Insurance Agency Larry Hecht 503-542-1130 Shepard & Shepard Business Solutions Todd Shepard 1-855-396-0488 #8
ADESA..................................................................................... 5 DAA Northwest/Seattle.......................................................IFC Manheim................................................................................ 11 Manheim Portland ...................................................Back Cover NextGear Capital ................................................................... 12 vAuto ....................................................................................IBC Oregon Independent Auto Dealers Association 9150 SW Pioneer Ct Ste. H Wilsonville, OR 97070 800-447-0302
BOND & INSURANCE
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com
ADESA Portland Auto Auction Jerry Hinton 503-492-9200 Crosspoint NW Dealer Auction Brian Hardy 503-594-2800 DAA Northwest (Dealers Auto Auction) Mitzi VanVoorhis 509-244-4500 CarMax Sean McDonald 804-747-0422 DEALER SOFTWARE
Frazer Computing Inc Jake Morley 888-963-5369 Motor Vehicle Software John Brueggeman 546-270-6699 FINANCING
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. OIADA Dealer News is published monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 6006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of OIADA Dealer News or NIADA Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2018 by NIADA Services, Inc.
DEALER AUCTION
Manheim Seattle Auto Auction Ray Priest 206-762-1600 Manheim Portland Auto Auction Alex Fraser 503-286-3000 ADESA Seattle Auto Auction Mark Dumbler 253-735-1600 DAA Seattle Dave Blake 253-737-2200 United Vehicle Auctions Lori Jacoby 503-380-1927 ADESA Northwest Auto Auction Mark Melton 541-689-3901
Credit Acceptance John Bragg 360-980-2214
OIADA BOARD OF DIRECTORS President Siamak Lotfi
Executive Vice President Jim Weaver
EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT
Christy Haynes • christy@niada.com
1st Vice President Gary Brooks
PRINTING
Nieman Printing Secretary/Treasurer Salvador Alvarez Herrera Zamora Auto Sales
Chairman of the Board Gary Sargent
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Lobel Financial David Lobel 714-816-1301 Oregon Auto Finance Gary Veum 541-868-0472 The Equitable Finance Co. Brandon Fox 503-808-7939 Pac West Credit LLC John Kiefer 541-868-2595 United Finance Todd May 503-238-6488 Oregon Community Credit Union Rich Black 541-681-6311 Nationwide Insurance Mark Tischer 503-339-4165 Credit Concepts Inc Jason Moon 541-342-8545 Veros Credit John Pierce 714-415-6125 x21131 Reliable Credit Associations David Marx 503-462-3022 Ted Investment LLC Tom Garza 503-213-1109 FLOORPLAN
Lobel Financial David Lobel 714-816-1301 NextGear Capital Robert Torbet 503-358-3911
Floorplan Xpress Josh Chandler 503-621-9260 Auto Cap Services (ACS) Michael Smith 800-800-6494 ONLINE REVIEW MANAGEMENT
Podium Kaylie Smart 801-376-0677
PUBLIC AUCTION
Woodburn Auto Auction Steve Morin 503-981-8185 Petersen Auction Group of Oregon Curt & Susan Davis 541-689-6824 SECURITY
Pro-Vigil Kris Brackin 210-858-1105 SERVICE CONTRACTS
AUL Corporation Jacqueline Swank 800-826-3207 Elite Warranty, Inc Al Ham 503-530-0912 Automotive Business Developers Shannon Meany 541-944-9186 Benchmark Dealer Services Jacob Bangert 360-834-3333 Protective Asset Dylan Doran 818-836-1455
INDUSTRY NEWS
COX AUTOMOTIVE HIRES PRODUCT CHIEF
Marianne Johnson
Marianne Johnson is joining Cox Automotive as chief product officer, reporting to executive vice president and chief operating officer Mark O’Neil. In her new role, Johnson will partner with the Cox Automotive executive team to focus on building products. As a 30-year veteran in the fintech field, Johnson joins Cox Automotive from First Data, where she was head of product innovation and technology for the network and security solutions line of business and senior vice president of enterprise commercialization. Prior to First Data, Johnson was an executive vice president at Elavon, a U.S. Bank company. Before Elavon, she served as a key driver of strategic growth at Equifax as senior vice president of U.S. growth and operations where she successfully delivered new product innovation that resulted in significant revenue growth and served as an impetus for future innovations.
BHPH PERSPECTIVE | By Scott Bates, CPA
SMART DEBT MANAGEMENT
Top Pitfalls to Avoid
In the life cycle of any auto dealership, there will be times when cash flow is tight. Buy Here-Pay Here dealers in particular face complexity in ensuring enough inventory is on hand to attract buyers – and offsetting that investment with a healthy flow through collections and debt management. This balance is never perfect. Dealers need strong banking and/or equity relationships that will extend credit to fill in the cash flow gaps. Debt Management is Proactive Even if their balance sheet is healthy, dealers on the shy side of $1 million in receivables will likely get a less favorable interest rate on credit than more established or larger dealers. This does not mean smaller dealers should accept rates of 10 to 15 percent. It pays to shop around and understand how the bank or private equity firm will consider these characteristics to justify their terms. By working with your CPA, you can provide the lender with financial statements and accounting that aligns with their expectations. As part of the terms of the loan, dealers may be required to provide reviewed or audited financial statements. Because of this additional expense, and also to get more favorable terms, it’s important for dealers to actively seek lower interest rates. It is perfectly acceptable to shop around. Contact competing banks as well as your existing lender and ask about new credit options. Talk to colleagues about the banks they are using. Request multiple offers. Strong accounting, tax and compliance practices help with this process. On the accounting side, owners need regular financial statement preparation to view trends and forecast cash flow – helping them prepare for lending conversations and extensions of credit at the right time each year. On the tax side, the number one tax planning technique for Buy Here-Pay Here dealers is the discount (or loss) on the sale of notes from the dealership to the RFC, which requires cash. Dealers may also qualify for opportunities such as bonus depreciation and deductions with regard to employee perks and compensation. Management may also consider a review of operational efficiencies or gaps in controls that can affect cash flow. Keep in mind every dealership is different when it comes to managing cash flow, so best practices must occur within your own dealership. As BHPH dealerships grow to portfolios of $4 million and above, more favorable financing opens up. But it’s not a guaranteed scenario. Dealers should weigh the benefits of obtaining more financing against the extra administrative costs of public accounting services. Once you have the credit you need, there are various ways to reinvest in your business.
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Some dealers may decide to purchase their location – adding real estate holdings that support the extension of credit in the future. If the dealership also has a service department, cash flow can be set aside to cover repairs and maintenance on recently sold cars. Some dealers choose to cover repairs on cars shortly after purchase to support the customer’s ability and willingness to keep making monthly payments. For example, a repair may cost $800, but it leads to another six to 12 months of customer payments. Compensation is another area that cash flow can support. Attracting and keeping good back office personnel supports collections, which in turn supports the business. Dealers may also consider additional compensation for good salespeople. Let’s say you’ve done as much proactive management as you can. At certain points in the life of a dealership, you will still experience challenges. Some of these challenges can’t be handled alone. Whether you’re with a big bank and have secured a favorable interest rate or your dealership is still considered high risk for lenders, don’t ignore cash flow problems. Your CPA can help you formulate a plan to show numbers and communicate effectively with lenders in a way that is focused on solutions rather than the immediate problem. Lenders don’t like to call a loan for a shortterm issue, and there is usually room for negotiation on loan modifications that will support cash flow as well as repayment. However, year-over-year problems make lenders less willing to keep taking a risk on default. As soon as an issue comes to light, prepare your strategy to keep a strong lender relationship. Work through it like you and your lender are on the same side. It’s in the best interests of you and the lender to find a solution. Debt Management Supports Valuation It is also in the best interests of the dealership long-term to show a consistent history of loan financing, healthy cash flow and debt management. Owners want to show a return on investment and consistent profitability, tied to valuation of the business. There are different approaches to valuation. A key component, however, is determining equity value, which is the market value of the dealership assets minus the market value of its liabilities. Assets include such things as the dealership’s auto inventory and fixed assets, including real estate. They can include intangible assets such as the goodwill value of the dealership’s name and location, sales and service agreements, and also synergies such as multiple locations and strong management. Liabilities will include debt, any excess compensation, tax and rent issues, inventories and contingent liabilities such as environmental issues related to the storage and disposal of fuel, oil or batteries. The bottom line is that a well-performing portfolio, a good location and healthy foot traffic – combined with properly managed
IF YOUR DEALERSHIP STRUGGLES WITH DEBT MANAGEMENT OR CASH FLOW – EITHER I N T E R M I T T E N T LY O R THROUGHOUT THE YEAR – DON’T LET IT HINDER OPPORTUNITIES TO GROW. debt – will be attractive to a potential buyer. A dealership that is attractive to lenders is also attractive to buyers or outside investors, even with debt factored in. If your dealership struggles with debt management or cash flow – either intermittently or throughout the year – don’t let it hinder opportunities to grow. Speak to the professionals, such as the team at Cornwell Jackson, to help you understand the proper structure of financial statements to support proactive lender conversations. Scott Bates is an assurance and business services partner for Cornwell Jackson. He supports the firm’s auto dealership practice. Contact Scott at scott.bates@cornwelljackson.com or 972-202-8000.
SHIFTING GEARS IN OREGON
ASSOCIATION NEWS
ADVERTISING RULES
2018 CONVENTION REGISTRATION
Basic Guidelines
Advertising Rules Avoid these mistakes: • Failure to post the sale price on the vehicle, which is the most common mistake. • Misleading consumers with the use of “free” offers with the sale of a vehicle. • Failure to include information that identifies the specific vehicle on sale. Internet and Social Media Any Internet advertisement must have the following: • Dealer name. • Dealer number. • Address. • Phone number. In a “spot ad” where the dealer is paying per line there is limited room. In that case a dealer may use the business name, the word “dealer” or the abbreviation “dlr.” Please be aware there are many new areas to advertise on the Internet. Be sure to establish a business account with each so it will automatically address the four areas required to advertise as a business. If you are attaching these ads to a personal account, you will need to add the required information in the body of the advertisement to comply with the advertising rules. These rules are very simple to follow and can save you from a great deal of grief, time and possibly money in the long run.
AUCTION NEWS
DAA SEATTLE NAMES AGM Brian McConkey Expands Auction Responsibilities
Now in its fifth year and offering over 800 units each week, DAA Seattle has added an assistant general manager. Brian McConkey, who joined the auction in 2013, has taken on the role. Prior to coming on board with DAA Seattle, McConkey was employed by Nordstrom, where he received management training, worked in corporate Human Resources and was responsible for interviewing, hiring and providing successful onboarding of new employees for the company’s downtown Seattle flagship store. This human resources experience transitioned well into DAA Seattle, which has grown from 19 to 84 employees since McConkey joined the team. In addition to human resources, he assists with the management of IT, marketing, industry events and conferences, corporate and dealer relations, operational efficiencies, competitive analysis, auction safety and more. “Brian is a natural leader who has earned the respect of his peers,” said general manager Dave Blake. “I appreciate his openness to understanding an individual’s challenges, his ability to study opportunities for improvement, and his innovative mind. He is a perfect fit for the AGM position here in Seattle, and I look forward to growing success in our partnership.” About DAA Seattle: Together with DAA Northwest and KCI Kansas City, DAA Seattle is a member of the McConkey Auction Group. All three locations are ServNet auctions, powered by Auction Edge. www.oiada.com
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SHIFTING GEARS IN OREGON
PROPOSED OAR AMENDMENTS
Replacement and Duplicate Registration Plates
735-032-0000 (1) For the purpose of this rule the following definitions apply: (a) “Replacement plate(s)” means the registered plate(s) issued to a vehicle, as provided in ORS 803.530, that has a different number or letter sequence than the plate(s) last assigned to that vehicle. (b) “Duplicate plate(s)” means the registration plate(s) issued to a vehicle, as provided in ORS 803.530, that has the same number or letter sequence as the plate(s) last assigned to the vehicle. (2) The vehicle owner may make application to the Driver and Motor Vehicle Services Division of the Department of Transportation (DMV) for replacement or duplicate plates. (3) To obtain replacement or duplicate plates the vehicle owner must make application to DMV and: (a) Pay the replacement or duplicate plate fee as provided in ORS 803.575; (b) Pay the plate manufacturing fee when required under ORS 803.570 and as provided in OAR 735-032-0010; and (c) Meet any other applicable requirements for the title and registration of the vehicle. (4) DMV will determine whether the plates issued are required to be issued as duplicate plates or replacement plates. In most cases, DMV will issue replacement plates. Statutory/Other Authority: ORS 184.619, 802.010, 803.530, 803.570 & 805.200 Statutes/Other Implemented: ORS 803.530 735-046-0010 Custom Plates: Application and Standards (1) A person who wishes to obtain custom plates must submit an application for custom plates and all applicable fees to DMV. Custom plate choices: (a) May not be reserved in advance of application and payment of required fees; and (b) Are approved and assigned by DMV on a first-come, first-served basis. When two or more applications requesting an identical plate choice are received, DMV will consider for approval the first one received with the required fees, without regard to whether the first application received is an original application for a custom plate or an application for renewal of a custom plate that has been expired for more than 30 days. “Application,” as used in this subsection, may include application by phone, provided DMV is in possession of the required fees. (2) Except as provided for in OAR 735-0460020, an applicant for custom plates must qualify for Oregon title and registration for the vehicle listed on the custom plate application. (3) A custom plate choice is assigned to a vehicle at the time the plate is issued by DMV. (4) A custom plate choice must: (a) B e compatible with DMV’s computer system. (b) Not be identical to any plate configuration reserved for:
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• Qualified Congressional Medal of Honor recipients. • Current Oregon office holders. • An Honorary Consul as defined under Oregon Laws 2009, chapter 621. The Governor, unless the custom plate is being issued under the provisions of OAR 735-0460050. (c) Not begin with the letters CMH, MOH, ORE, SEN, REP, USS, or USR and be followed by numbers. (d) Be alphabetic or numeric characters, or alphanumeric characters. A plate choice may not include punctuation or symbols other than a dash or space. (e) Include at least one alphabetic or numeric character. (f) Be limited to no more than six alphabetic characters, numeric characters, spaces or dashes, except that a seventh character may be a space or dash. (g) Except as provided in section (5) of this rule, not be identical to any other plate configuration in current use. The use of a space or a dash within a plate choice is not considered when determining whether the plate is identical to another plate configuration. (5) In addition to other provisions of this rule, all of the following apply to approval of a plate choice that is identical to a plate configuration that is in current use: (a) DMV may approve a plate choice that conflicts with a plate configuration currently in use for motor vehicles registered under ORS 803.420(6)(a) (i.e., passenger plated vehicles) if: • The specific plate configuration requested has previously been issued and is not still in inventory or reserved for future issuance; • The previously issued plates bearing the plate choice are surrendered to DMV with the custom plate request, or are no longer in circulation. If there is any question about such plates being in circulation, it is the applicant’s responsibility to satisfy DMV that the plates have been destroyed, surrendered to DMV or another jurisdiction, or are not available for use on a vehicle; and • The plate choice is to be assigned to a vehicle that qualifies for registration under ORS 803.420(6)(a). (b) For motor vehicles other than those registered under ORS 803.420(6)(a), specifically, vehicles that are not passenger plated vehicles, DMV may approve a plate choice that is identical to a plate configuration that is in current use if: • The vehicle to which the custom plates are to be issued is of a different type than the vehicle to which the plates bearing the identical plate configuration are in current use or could be issued. For example, a plate choice that is identical to a disabled veteran plate configuration (for example D00001) will not be assigned to a custom plate issued to either a passenger vehicle or motor home. A plate choice that is identical to a motor home plate configuration (for example H00001) will not be assigned to a custom plate issued to a motor home but can be assigned to a custom plate issued to a passenger vehicle;
• The plate choice requested is not currently assigned to a registration plate; and • The plate choice requested will not be assigned to a future plate series. (6) DMV will not approve a custom plate choice, including plate choices that would do so by means of foreign or slang words or phrases, by use of phonetic, numeric or reverse spelling, or by being viewed in mirror image, that: (a) Would have the effect of alarming, threatening, offending or misleading a reasonable person. Such choices may include, but are not limited to, combinations of letters, numbers or both that: • Refer to intimate bodily parts or to sexual or excretory acts or functions. • Refer in an alarming or offensive manner to a person or class of persons on the basis of race, color, gender, ethnic heritage, national origin, or other characteristic. • Suggest that the vehicle to which the custom plate is issued is an official vehicle of a public agency or official, when it is in fact not such a vehicle. • Refer to illegal acts. (b) Refer to alcoholic beverages, or controlled substances or paraphernalia used in the consumption thereof by combinations of letters, numbers or both. (7) DMV may use any reliable lexicological source to determine the meaning of any word, symbol or phrase. (8) When reviewing a plate choice for approval, DMV need not consider the applicant’s subjective intent or declared meaning. (9) DMV will approve the transfer of registration plates that are not from a current issue of plates as custom plates under the provisions of ORS 805.242. All of the following apply to such a transfer: (a) For vehicles that require two registration plates, the applicant must have two registration plates available for transfer to the vehicle. (b) The registration plates being transferred must be legible and capable of being used for identification purposes. (c) The registration plates being transferred must be from a series in current use. (d) The registration plates may only be transferred to a vehicle type that is otherwise eligible for custom plates. (e) The registration plates may only be transferred to a vehicle of the same registration type to which they were originally issued (e.g., passenger vehicle to passenger vehicle). Statutory/Other Authority: ORS 184.619, 802.010, 805.103, 805.200, 805.205 & 805.220 Statutes/Other Implemented: ORS 803.420, 803.535, 805.103, 805.200, 805.220, 805.240, 805.242 & 805.250 735-150-0040 Designation of Dealers as Agents (1) Persons issued a dealer certificate under ORS 822.020 and who meet the qualifications set forth in OAR 735-150-0039 are designated as DMV’s agent pursuant to ORS 802.031 and may perform the duties of an agent as identified in section (4) of this rule. (2) Snowmobile dealers and Class I, Class
III and Class IV all-terrain vehicle dealers are designated as agents of DMV pursuant to ORS 802.031. (3) DMV may impose sanctions against a dealer’s agent status as provided in OAR 735-1500120. (4) An agent of DMV may: (a) Prepare, submit, or prepare and submit documents and collect fees necessary to title and register vehicles they sell, as provided in OAR 735-150-0050. (b) Participate in DMV’s Electronic Vehicle Registration (EVR) program if approved under OAR 735-150-0041. (c) Perform vehicle identification number inspections on vehicles they sell, as provided in OAR 735-022-0070, when the vehicle has been registered or titled in another jurisdiction subject to the limitations of OAR 735-022-0070. (d) Issue temporary registration permits for unregistered vehicles they sell, as provided in ORS 803.625 and OAR 735-150-0060. (e) Issue trip permits for unregistered vehicles they sell, as provided for in OAR 735-1500070 and 735-150-0080. (f) Issue 10-day trip permits for registered vehicles they sell, as provided in ORS 803.600, OAR 735-150-0070, 735-150-0080 and 735-034-0010. When issuing a 10-day trip permit as described in this subsection, a vehicle dealer: • Must ensure any Oregon registration stickers have been removed from the registration plates in accordance with ORS 803.600. • May not issue more than two permits for the same motor vehicle. • Must require the person applying for the permit to provide the insurance company name and policy number on the permit, and sign the certificate on the permit stating that the motor vehicle is covered by an insurance policy that meets the requirements of ORS 806.080 and will continue to be covered as long as the permit is valid. (g) Except as provided under section (9) of this rule, prepare, submit, or prepare and submit documents and collect fees for transfers of registration plates, for vehicles they sell, in accordance with OAR 735-1500050. (5) A dealer who, on behalf of a purchaser, prepared, submitted, or prepared and submitted documents and collected fees necessary to title and register a vehicle and who then receives from DMV the registration plates, stickers or temporary registration for the vehicle, must ensure delivery of the items obtained to the purchaser. Within five working days of receipt from DMV, the dealer must: (a) Deliver the items to the purchaser; (b) Mail the items to the purchaser; or (c) Advise the purchaser the items are at the dealership and, if the purchaser agrees, arrange to have the items picked up at the dealership. (6) The dealer must document in the dealer’s records the actions taken by the dealer to notify the purchaser or to deliver the registration plates, stickers and temporary registration. (7) No dealer may, as a result of a dispute between the purchaser and dealer or for any other reason, withhold registration plates or stickers or
temporary registration from the purchaser. (8) Designated agents must only charge title, registration or plate transfer fees in the amount authorized by Oregon Revised Statutes and Oregon Administrative Rule when collecting such fees on behalf of DMV. (9) A dealer may not prepare, submit, or prepare and submit an application and collect fees for the transfer of plates under subsection (4)(g) of this rule if the dealer determines the plates the purchaser wants to transfer are not from a current issue of plates, are not customized plates described under ORS 805.240 or are not legible and capable of being used for identification purposes. Statutory/Other Authority: ORS 184.619, 802.010, 802.031, 803.530, 803.600, 803.625, 821.060 & 821.080 Statutes/Other Implemented: ORS 802.031, 803.565, 803.600, 803.602, 803.645, 821.060, 821.080, 822.005 & 822.080 735-150-0060 Issuance of Temporary Registration Permits (1) A designated dealer who collects and submits title and registration fees to DMV on behalf of a purchaser may issue a temporary registration permit as provided for in ORS 803.625 for a vehicle or camper the dealer sells, pending receipt of permanent registration plates from DMV. A temporary registration permit may not be issued unless all applicable title, registration and plate transfer fees have been collected and a title and registration application is to be submitted to DMV by the dealer on behalf of the owner. (2) A temporary registration permit may not be issued by a designated dealer until a Department of Environmental Quality (DEQ) Certificate of Compliance, if needed, has been obtained. A trip permit may be issued as provided in OAR 735-150-0070(1)(b) and (6)(b) if the vehicle must be taken to a DEQ inspection station. (3) Temporary registration permits must be obtained in bulk from the Salem DMV Headquarters, 1905 Lana Avenue NE, Salem, OR 97314. There is no charge for temporary registration permits. A designated dealer may not charge a fee for the issuance of a temporary registration permit. (4) Temporary registration permits are valid for a period not to exceed 90 consecutive days from the date they are issued or until plates and, if applicable, stickers are received from DMV and placed on the vehicle, whichever occurs first. A dealer may not extend the expiration date of a temporary registration permit or issue a subsequent permit to extend the registration period of the initial permit. (5) A designated dealer must comply with the following requirements when issuing temporary registration permits: (a) Legibly complete each temporary registration permit with the following information: • The name and address of the person(s) or business registering as the owner(s) of the vehicle. The name and address must only be recorded on the issuer’s copy and DMV’s copy of the permit and must not be recorded on the purchaser’s (windshield) copy of the permit. • The driver license number and the state
of issuance for the person(s) registering as the owner(s) of the vehicle, unless the person does not have a driver license or the permit is issued to a business. The driver license number must only be recorded on the issuer’s copy and DMV’s copy of the permit and must not be recorded on the purchaser’s (windshield) copy of the permit. • The vehicle description, including year, make, body style and identification number. • A written signature of the employee who issued the permit. Initials are not acceptable. • The effective date and expiration date of the permit. The permit must only be issued for a period not to exceed 90 consecutive days, including the effective date of the permit. • Dealer certificate number. • The title fee and registration fee collected on behalf of DMV. (b) DMV’s copy of the temporary registration permit attached to, and submitted with, the application for title and registration. (c) At the time of issuance, notify an owner who pays a plate transfer fee under section (1) of this rule to not attach the registration plates from their old vehicle to the vehicle or camper sold by the dealer before receiving an updated registration card from DMV. (6) To be valid, the owner’s (window) copy of a temporary registration permit must be affixed to the vehicle for which the permit is issued as specified by DMV on the permit. (7) The DMV (issuer’s) copy of the temporary registration permit must remain attached in the permit book. Once all permits have been issued from a book, the book and issuer’s copies must be returned to DMV. (8) Alteration of a temporary registration permit will automatically void the permit. (9) When a temporary registration permit is voided for any reason, the owner’s (window) copy and DMV’s (issuer’s) copy of the permit, together with a written explanation about why the permit was voided, must be left in the book and must be returned to DMV as described in section (7) of this rule. If either copy of the permit is unavailable for submission to DMV, a written explanation as to why the copy is unavailable must be included with the book. (10) Except as permitted in section (11) of this rule, temporary registration permits (or books of permits) may not be loaned to another dealer or person or issued for vehicles sold by another dealer or individual. (11) A dealer who delivers a vehicle to a purchaser and submits applications and fees for title and registration in the purchaser’s name on behalf of another dealer who sold the vehicle to the purchaser, may issue a temporary registration permit for the vehicle as provided by this rule. The application and supporting documents must accurately reflect the name and address of the dealer who sold the vehicle. The temporary registration permit must show the name and dealer number of the issuing dealer and the words “Delivery Only” must be clearly written on the DMV and issuer’s copies of the permit. Statutory/Other Authority: ORS 184.619, 802.010, 802.031, 803.625, 803.640 & 822.035 Statutes/Other Implemented: ORS 803.625 www.oiada.com
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Secretary of State
STATEMENT OF NEED AND FISCAL IMPACT
A Notice of Proposed Rulemaking Hearing or a Notice of Proposed Rulemaking accompanies this form. Oregon Department of Transportation, Driver and Motor Vehicle Services Division
Agency and Division
735
Administrative Rules Chapter Number
Rule Caption (Not more than 15 words that reasonably identifies the subject matter of the agency’s intended action.) Registration Plate and Registration Period Transfer In the Matter of: Amendment of: OAR 735-032-0000; 735-046-0010; 735-150-0040, 735-150-0060 Statutory Authority: 184.619, 802.010, 802.031, 803.530, 803.570, 803.600, 803.625, 803.640, 805.103, 805.200, 805.205, 805.220, 821.060, 821.080 & 822.035 Other Authority: None Stats. Implemented: ORS 802.031, 803.420, 803.530, 803.535, 803.565, 803.600, 803.602, 803.625, 803.645, 805.103, 805.200, 805.220, 805.240, 805.242, 805.250, 821.060, 821.080, 822.005 & 822.080 Need for the Rule(s): Oregon Laws 2018, Chapter 114, Section 10 (HB 4062) now authorizes DMV to transfer registration plates if the plate is “legible and capable of being used for identification purposes”. The statutes previous language prevented DMV from transferring a plate that was “so old, damaged, mutilated or otherwise rendered illegible as to be not useful for purposes of identification”. The proposed amendments to ORS 735-032-0000, 735-046-0010, and 735-150-0040 align rule with the new language. The amendment to 735-150-0060 clarifies that a dealer who collects and submits title fees or title and registration fees in addition to the plate transfer fees on behalf of DMV may issue a temporary permit as provided for in ORS 803.625. Other changes are made for clarity. Documents Relied Upon, and where they are available: https://olis.leg.state.or.us/liz/2018R1/Measures/Overview/HB4062 Fiscal and Economic Impact: None. Statement of Cost of Compliance: 1. Impact on state agencies, units of local government and the public (ORS 183.335(2)(b)(E)): None 2. Cost of compliance effect on small business (ORS 183.336): None a. Estimate the number of small businesses and types of business and industries with small businesses subject to the rule: None. b. Projected reporting, recordkeeping and other administrative activities required for compliance, including costs of professional services: None c. Equipment, supplies, labor and increased administration required for compliance: None How were small businesses involved in the development of this rule? DMV sent draft rules to 12 organizations representing small businesses. No responses were received. Administrative Rule Advisory Committee consulted?: No If not, why?: This rulemaking is a result of a change in law. The rule does not involve any policy decision or other decision where a rule advisory committee could provide assistance. Signature
Printed name
Administrative Rules Unit, Archives Division, Secretary of State, 800 Summer Street NE, Salem, Oregon 97310.
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ACCELERATE |
By GWC Warranty
There’s a right way and a wrong way to go after more millennial business. Do it right and you’re capitalizing on a demographic with loads of discretionary income. Do it wrong and you could miss out on a gold mine of profit opportunity. A recent study by eBay found that despite delayed tax refunds, most millennials filed before the technology incidents that caused a delay for others. Furthermore, the research reported 37 percent of millennials planned to use their returns to buy a car and 80 percent planned on rewarding themselves with their returns. But are you ready to pounce on this limitedtime opportunity? Advertise in the Right Places Millennials won’t be able to find you unless you make the effort to get noticed where they’re looking. Social media advertising can be an affordable way to reach a highly targeted audience with a highly targeted message. You can select the age, location and other characteristics of your audience and speak directly to their needs and wants. Have the Right Cars If you often look back to see what sells well before you head off to auction, now’s the time to take it to the next level. Go back in the books to see if there are any trends in what past millennial buyers have purchased from you. If you don’t have much of a history with this group, some research from outside the car industry could help. It’s been widely reported how much millennials rely on recommendations, how much they research a purchase of this size and how image-conscious they are. Making sure you have vehicles that are reliable and competitively priced with all the right perks will go a long way.
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Cover Story
Communicate the Right Way Millennials, more so than most audiences, are bombarded with emails, text messages, phone calls and more on a daily basis. So before, during and after a sale, your messages need to stand out. Tools like Covideo, which embeds personalized video messages into emails, can make your messages stand out from the crowd and get noticed. Using these kinds of messages throughout the buying experience can help a millennial customer stay more engaged with your dealership. Appeal to the Right Sensibilities We mentioned earlier how 80 percent of millennials are looking to reward themselves with their tax returns. This supports the idea that millennial decision-making is driven by emotion and self-image. Playing to this personality trait while millennials are on your lot or interacting with you online is an effective practice to get them in a car from your lot. Let them know how their image will benefit from this purchase and it could pay dividends. Provide the Right Protection Perhaps more so than anything else, millennials have high expectations after pouring hours upon hours of research, negotiations and time on the lot into making a vehicle purchase. Because of this, you don’t want a repair – big or small – after the purchase to put a damper on your millennial customer’s entire experience. This makes getting a service contract on every millennial deal an absolute necessity, especially since this demographic is also more likely to leave a review online.
SAFETY WATCH
CHRYSLER TELLS ALMOST 5 MILLION DRIVERS NOT TO USE CRUISE
Defect Could Prevent System from Disengaging
Chrysler is recalling 4,846,885 2014-18 Dodge Journey, Charger and Durango, RAM 2500, 3500, 3500 Cab Chassis (more than 10,000 lb.), 4500 Cab Chassis and 5500 Cab Chassis, Jeep Cherokee and Grand Cherokee and Chrysler 300, 201419 RAM 1500, 2015-18 Dodge Challenger, 2015-17 Chrysler 200, 2016-18 RAM 3500 Cab Chassis (less than 10,000 lb.), 2017-18 Chrysler Pacifica and 2018 Jeep Wrangler vehicles.
THESE VEHICLES ARE BEING RECALLED TO ADDRESS A DEFECT THAT COULD PREVENT THE CRUISE CONTROL SYSTEM FROM DISENGAGING. These vehicles are being recalled to address a defect that could prevent the cruise control system from disengaging. If, when using cruise control, there is a short circuit within the vehicle's wiring, the driver may not be able to shut off the cruise control either by depressing the brake pedal or manually turning the system off once it has been engaged, resulting in either the vehicle maintaining its current speed or possibly accelerating. Chrysler will notify owners, and dealers will inspect the software, and perform a software flash on the engine or powertrain control module, free of charge. Owners are advised to stop using cruise control until the software update has been performed. In the event that cruise control cannot be disengaged while driving, owners should firmly and steadily apply the brakes and shift the transmission to neutral, placing the vehicle in park once it has stopped.
MANAGEMENT MATTERS | By Dale Pollak
MARGIN COMPRESSION
TAKES A BITE
How Will You Bite Back?
For many dealers, margin compression in used vehicles has been a bit like a leaky water line. The truth is the line’s been slowly dripping for years. But no one really noticed it until now – after a ceiling or wall has started to bubble, crack or crumble. Dealers’ awareness of margin compression seems to have taken hold this year, following the realization that despite a fairly strong year of used vehicle sales in 2017, they actually made less money. You can see this picture in end of year financial data from the National Automobile Dealers Association. Their December 2017 financial profile shows two disturbing yearend stats: • Average net profit per used vehicle retailed in 2017: -$2. I can’t remember ever seeing used vehicle net profit as a negative number. But it’s been dropping for the past few years. It was $164 in 2014, $132 in 2015 and $65 in 2016. Can you hear the sound? Drip. Drip. Drip. • Front-end gross profit declined. NADA reported the average retail gross profit dropped $78 to $2,337 last year, down from $2,415 in 2016. The average was $2,444 in 2015. Drip. Drip. Drip. (Note: NADA’s numbers include F&I income, which means the margin decline would be more pronounced, given many dealers’ efforts to increase F&I sales in recent years.) The numbers wouldn’t be so disturbing if they were just a temporary blip. But like the leaky water line, the problem’s more chronic than coincidental. The key question on the minds of dealers in my conversations is now that they’ve recognized the problem, what steps can and should they take to fix it? I’ll answer the question with some bad news. Unfortunately, there isn’t really a “fix” for margin compression. It’s now the nature of our ever-more competitive, efficient and transparent used vehicle marketplace. But there are ways to mitigate the problem and stop leaks that often erode used vehicle profitability. Here are four recommendations.
Cost to market measures your cost to acquire the vehicle against the prevailing retail asking prices for the unit, a calculation that yields your potential profit margin spread. If you acquire a vehicle for $8,500 and the retail asking price is $10,000, the cost to market is 85 percent. There’s margin to be gained by managing and measuring the consistency of your appraisals, as weighed against your cost to market targets. I recognize there are real-life pressures to allow a little more for trade-ins. But I would submit those pressures will fade as you use the current market to establish the fair value of your acquisitions.
TRIM RECONDITIONING COSTS
I’ll put aside the question of how much you can rightfully charge for labor and parts for your internal reconditioning work. But when was the last time someone asked your third-party vendors for a little haircut, perhaps a 5 percent to 10 percent reduction? Chances are those invoices get paid without too much question – an area of oversight that offers some margin opportunity. It’s worth remembering part of the NADA-reported net loss on used vehicles amounts to someone else’s gain.
MINIMIZE DISCOUNTING
Just as some appraisers seem to acquire more cars for the right money than others, some sales associates are better at avoiding discounts than others. When you price your used vehicles to the market, there’s simply less room for negotiation, and your average showroom/other discount should reflect this reality. The key, of course, is to manage and measure your discounts. Everyone who puts their initials on a deal should be held accountable for the discounts they approve – and be properly trained to know how to maintain your margin.
REDUCE INVENTORY AGE
In today’s margin-compressed market, retail speed is the only way to take advantage of the age-old truth that fresh cars deliver the best gross. Dealers who sell a larger share of fresh vehicles would maximize each unit’s gross profit potential. It’s really a black and white proposition. No doubt, that’s why top-performing dealers maintain at least 55 percent of their inventories under 30 days. Their gross profits tend to look better than dealers who carry a larger share of older vehicles. As I mentioned, these recommendations won’t completely eliminate margin MEASURE/MANAGE EFFICIENCY compression. But they can help slow OF ACQUISITIONS its harmful effects and help you avoid At many dealerships, there are at least a profitability leaks that make the problem handful of individuals, if not more, who have even worse. the authority to appraise vehicles. From my Dale Pollak serves as executive vice president for Cox Automotive, a position observations, there’s a fairly wide degree of he’s held since the company he founded, variance among the appraisers when you vAuto, became part of the Cox family in 2010. Dale pioneered the Velocity judge their decisions based on their cost to Method of Management, which has been market ratios. adopted by thousands of dealers. www.oiada.com
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OIADA CONTINUING EDUCATION PROGRAM |
OIADA CONTINUING E D U C AT I O N P R O G R A M
READ & RESPOND CERTIFY BELOW
Complete this test and certify below that you have read the articles for July 2018. “AUCTION-BUYING IS MORE DIFFICULT THAN IT SHOULD BE” True/False: When dealers complain they can’t acquire auction vehicles for the “right” money, Dale typically finds they haven’t conducted a dispassionate calculation of the “right” price for themselves, or their expectations for a front-end profit don’t match the realities of today’s market. True/False: The level of efficiency dealers achieve will depend primarily on how well they use the technology and tools that facilitate faster acquisitions. “THE END OF THE 1-STAR REVIEW” How can you avoid negative online reviews? a) Perform regular follow up. b) Artfully craft your ask. c) Respond to and outrun negative reviews. d) All of the above. “SMART DEBT MANAGEMENT” True/False: It is in the best interest of the dealership long-term to show a consistent history of loan financing, healthy cash flow and debt management WHAT KEY COMPONENT OF VALUATION IS NAMED IN THE ARTICLE? a) Determining net income. b) Determining equity value. c) Determining customer base. “THE RIGHT WAY TO GET MORE MILLENNIALS” True/False: A recent study by eBay found that despite delayed tax refunds, most millennials filed before the technology incidents that caused a delay for others. True/False: It doesn’t matter how you communicate to millennials as long as you communicate. I certify to OIADA that I have personally read these articles in The Oregon Dealer News Magazine for July 2018. STOP!! Before you sign and send this form, make sure you have answered and completed all the quiz questions to receive Continued Education Credits.
My Name ____________________________________________________________ ____________________________________________________________________ Dealership Name ______________________________________________________ Dealership # __________________________________________________________ Dealer License Expiration Date: (Month)_____________________________________ (Year)________________ Signed: _________________________________________ Date _________________________________________________________________
FAX TO: 503-364-7331 MAIL TO OIADA at 9150 SW Pioneer Ct Ste H, Wilsonville, OR 97070
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