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F E B R U A R Y / M A R C H 2 0 17
RIGHT-NOW ACTIONS to Improve Your Online Reputation
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V I S I T U S A T W W W .T N I A D A . C O M
INSIDE
06.......................................... Improve Your Online Reputation 09.............................................. When Good Recon Goes Bad 10................................................Autotrader Names Top Tech 12................................................The Growing Need for BHPH 16....................................................................................EZ Tag 18................................................. NIADA Government Report
WHAT’S NEW
CMD Dates Announced
Class dates for NIADA’s industry leading Certified Master Dealer program have been announced for the upcoming year! Look for a class coming to your area! Dates include Feb. 9-11 in Portland, Ore.; May 15-17 in Atlanta; Sept. 12-14 in Dallas; and Dec. 11-13 in Tampa, Fla. Visit www. niada.com or contact Diann Flanders at 888-906-8283 or diann@niada.com for more information.
ADVERTISER’S INDEX
Ace Motor Acceptance...........................................................7 AutoZone............................................................................... 10 Black Book................................................................................3 BMW Group Direct.............................................................. IFC CarMax Auctions..................................................................... 9 DAA Dealers Auto Auction Group, LLC. ................................ 5 Manheim ................................................................................11 Manheim Pennsylvania..........................................................13 NextGear Capital....................................................................17 NIADA CPO .......................................................................... IBC Spireon .....................................................................................8 VAuto....................................................................... Back Cover
OFFICE
Darryl Noble P.O. Box 2219 • Lebanon, TN 37088 615-506-4968 Cell • 1-866-5TNIADA dnoble@tniada.com
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 The Tennessee Dealer Connect is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of TNIADA 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 © 2017 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com
REGULATORY UPDATE BY AUTOMOTIVE NEWS
U.S. PROPOSES V2V MANDATE TO AVERT CRASHES Technology has Significant Safety Potential
U.S. auto safety regulators proposed requiring all new vehicles to be equipped with vehicle-to-vehicle communication systems, citing the technology’s significant potential to reduce crashes. The proposed mandate, recently released by the Department of Transportation, would require all new cars and light trucks to have dedicated short-range communication systems that transmit and receive basic messages about the vehicles’ speed, location, braking and other data. DSRC systems allow cars to “talk” to other vehicles on the road and to infrastructure equipped with the systems, allowing drivers to “see” around corners and be warned of a potential crash. “This technology has enormous safety potential to prevent hundreds of thousands of crashes and save lives,” transportation secretary Anthony Foxx said. Under the proposal, automakers would be required to equip half of all new cars with the technology two years after the National Highway Traffic Safety Administration issues a final rule. Full penetration would be required within four years after the rule is final. U.S. officials have said the technology could potentially reduce non-impaired traffic crashes by 80 percent once fully deployed. Regulators signaled their intent to mandate V2V systems in August 2014. Under this most recent proposal, the DSRC systems would be required to use a common set of
EDITORS
BOARD MEMBERS
MAGAZINE LAYOUT
Executive Director
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com Christy Haynes • christy@niada.com PRINTING
Nieman Printing
Darryl Noble P.O. Box 2219 Lebanon, TN 37088 615-506-4968 Cell 1-866-5TNIADA (586-4232) dnoble@tniada.com
Chairman of the Board Marcus Davis Marcka Auto Auction 150 Cox Avenue Crossville, TN 38555 931-456-7555 Office marcka@citilink.net
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TENNESSEE DEALER CONNECT February/March 2017
President
Mark Noble AmeriCar, Inc. 200 W. Main Street Lebanon, TN 37087 615-977-3313 Cell 615-547-6075 Office mnoble@tdstn.com
President-Elect
Stephanie Baker DAA Murfreesboro 1815 Old Ft. Parkway Murfreesboro, TN 37129 615-217-2848 sbaker@dealersauto.com
communications protocols to ensure all vehicles “speak the same language,” the DOT said. The proposal also contemplates the technology working alongside crash avoidance technologies like automatic emergency braking to help prevent collisions. The proposed rule also has privacy and security requirements, including 128-bit encryption on vehicle data transmissions. In addition, the department said it plans to soon issue guidance on vehicle-toinfrastructure communications. Saving Lives Last year, there were 6.3 million U.S. vehicle crashes. In October, NHTSA said U.S. traffic deaths jumped 10.4 percent in the first six months of 2016. The jump followed a spike in 2015, when road deaths rose 7.2 percent to 35,092, the highest full-year increase since 1966. The rule would not require vehicles currently on U.S. roads to be retrofitted with the technology. Foxx said owners couldn’t turn off the technology but could turn off warnings. The Alliance of Automobile Manufacturers, a trade group representing General Motors, Toyota Motor Corp., Volkswagen AG and other major automakers, noted the system is already being tested. The group said it would study the proposal. Automakers are pushing to ensure that a portion of the spectrum reserved for connected vehicles is not used by other companies for other wireless device use. The U.S. Federal Communication Commission has begun testing potential sharing options. Separately, the Federal Highway Administration plans to issue guidance for vehicle-to-infrastructure communications, which will help planners allow vehicles to “talk” to roadway infrastructure such as traffic lights. Reuters contributed to this report.
Sr. Vice President (Vacant)
Treasurer
Jimmy Evans Evans Auto Exchange 615-895-6990 evansautoexchange@ yahoo.com
Secretary (Vacant)
Member
David Stancil D&B Auto Sales 1384 Poplar Drive Crossville, TN 38558 931-707-8899 Office
Member
Tracy McMurtry Franklin Motors 3823 Dickerson Road Nashville, TN 37207 615-865-7350
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Make it easy for your happy customers to write reviews. Implement a proactive, automated process with the help of online reputation management software like Grade.us. SOCIAL MEDIA BY KATHI KRUSE
RIGHT-NOW ACTIONS TO IMPROVE YOUR ONLINE REPUTATION It Pays Off
Online ratings are what brought me to digital marketing. It was 2008 and I could see the 4-way intersection of social media, online ratings, customer experience and dealership operations becoming the foundation to build a modern business. Online ratings are one of the first places people go when they’re looking for solid, trustworthy advice, so staying informed on the latest ways to improve your online reputation could actually increase business. I’ve stayed in touch with a lot of my colleagues from my days managing car dealerships. Back in 2008, one of my friends had moved to a BMW store in Orange County and I became a customer. One day after picking up my car from service, I decided to post a Yelp review. I discovered the dealership had a rating of 1.5 stars. Surprised (because I knew this dealer was a good operator and the store had high CSI ratings through the manufacturer), I decided to do a “mini market study” on my couch. There were 50 or so BMW stores in California at the time and, shockingly, I found all but about four had less than two stars on Yelp. I saw an opportunity to leverage my years of auto retail experience and bring value to companies who needed guidance with social media marketing. Now, social media and online reputation have merged. In fact, SEO, content marketing and social advertising all work together to provide dealers with lucrative ways to attract, engage and sell to their target customers. I’m a natural networker. Word of mouth referrals have always been my go-to source for finding trusted sellers, and online
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ratings sites are where most people turn today. • 90 percent of consumers read online reviews. • 88 percent trust online reviews as much as personal recommendations. • 86 percent will hesitate to purchase from a business that has negative reviews. • Customers are likely to spend 31 percent more with a business that has positive reviews. • 92 percent will use a local business if it has at least a 4-star rating. Reviews are Insanely Influential We live in what Forrester Research has dubbed “The Age of the Customer.” Empowered customers are more demanding than ever, and they have the ability to make or break your business. They don’t trust what you say about your product or service, and they really don’t trust your ads. Instead, they trust other people like themselves. I’ve seen numerous car dealerships that have over 400 reviews and a 2-star rating. To me, this would constitute a call to 911. When you’ve got a large amount of reviews and your overall reputation reads negative, that’s a consensus... not just the opinions of a few unhappy customers. Myth: My Reputation Can Take Care of Itself Online ratings and reviews have the potential to be the single most effective and rewarding marketing channel for small and local businesses, and yet most marketers and business owners do very little to foster and shape reviews because they assume it’s out of their hands. They take a wait-and-see approach – forever. RIGHT-NOW ACTIONS TO IMPROVE YOUR ONLINE REPUTATION Improving, protecting, and promoting the company’s online reputation should become part of daily operations. Negative reviews deter buyers. If you have even one negative review, it’s impossible to gauge how many sales you lost because of it. Use the following eight actions to improve your online reputation and give your store every chance to reach its revenue goals. Remove the obstacles that stymie reviews. Ninety percent of consumers read online reviews. Six percent write them.
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Happy customers don’t often write reviews. They’ll say they forgot to, never thought to do so, got too busy or that it’s just too difficult. Make it easy for your happy customers to write reviews. Implement a proactive, automated process with the help of online reputation management software like Grade. us. This not only makes reviewing your business easy, it simplifies the tasks required within daily operations. Earn the privilege of a positive review. Every customer is looking for a “guide.” One of the most important things a guide does in a customer’s life is participate in their transformation. They help the customer become somebody better than they used to be. Rather than sell them products, you actually position your products as tools they can use to win the day. Positive reviews are a natural extension of your customer’s transformation. Respond to every review honestly, openly and with enthusiasm. Responding to online reviews is an art form. Positive reviews deserve acknowledgement. Respond to each one with a sincere note of thanks. If you’re familiar with the transaction or can do some behind-thescenes research, mention a detail the customer will remember. Everyone likes to feel important. When someone writes something negative about your business, it’s easy to become reactionary. Cooler heads always prevail so stand back, take a deep breath and give yourself time to regroup. Be open, honest and conciliatory. Be humble and offer to do whatever you can to solve the problem. Recognize that online reviews are a company asset. Happiness and enthusiasm about your company is a valuable advantage. A flock of glowing reviews greases the gears of search engines to greatly increase your authority in local search. Combined with the powerful word-ofmouth effect, positive online reviews deserve a place on your company’s balance sheet. After all, if you’ve put in the time and effort to improve your online reputation, positive reviews are worth their weight in gold.
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CONTINUED FROM PAGE 6 Acknowledge that software can help but it’s not a replacement for hard work. There are providers who promise to “manage your online reputation” but let’s get the facts straight. No one truly manages your company’s reputation but you and your staff. Software automates your process but that’s only if you have a process to begin with. Within your company are the seeds from which a stellar reputation blooms. Sustain your process by creating a review funnel, invite customers to provide feedback and recover unhappy customers before they vent online. Engage employees in your process. Customers are Googling salespeople. Reviews equate to online authority and when employees are mentioned it increases their value to the customer and the company. Trustworthy employees make the company appear trustworthy. When employees see their names in online reviews, it’s very powerful. Use this as a leverage point to engage them in the review process. Improve your sales process to build online reputation: • Establish WIIFM (what’s in it for me). • Inspire. • Motivate. • Recognize. • Incentivize. • Reward.
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Craft the right message when inviting reviews. One of the benefits of using software to support your efforts to improve your online reputation is that it guides the customer through the review funnel with a simple choice of either, “I had a good experience” or “I had a bad experience.” If they choose “I had a good experience,” here are two examples of the right way to ask for a review: • “Our business is based on referrals and we’d really appreciate you sharing your experience with others online.” • “Thank you for the awesome opportunity to serve you. We’d love to hear about your experience and no doubt, others would too.” If they’ve chosen the “I had a bad experience,” they will click over to a landing page that helps recover unhappy customers before they vent online. Here’s an example of the right message for this scenario: • “Thank you for alerting us to your bad experience. We don’t like bad experiences either. Please allow us make things right. We’ll contact you within 24 hours (often sooner) to find a solution that works for you! (and humbly ask how we could’ve done better).” Offer an incentive to engage. I don’t mean to suggest that you ever offer an incentive in exchange for a positive
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review, a practice that is not only unethical, but violates the terms of service on many review sites… and may lead to FTC fines, getting banned, named and/or publicly shamed. However, you might offer a no-strings incentive to get customers a step further into your review funnel. For example, Grade.us clients can attach an offer to the landing page they drive customers to for feedback (NOTE: I’m not a paid endorser of Grade.us. There are other similar solutions available). The no-strings offer is simply a way of getting more people to the landing page. The offer – maybe a discount coupon or a free download – is available to anyone, whether or not they post a review. But making the offer available there, on a page otherwise designed to guide customers through the process of submitting a review, increases the odds of getting that review. Next Steps... The data shows taking the necessary steps to improve your online reputation pays off. Reviews are insanely influential. If you find you’re still not comfortable with rolling out an internal process to capture your happy, loyal customers’ feedback, contact me and I’ll be your Sherpa. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc. Kruse Control coaches, trains & delivers webinars focused on integrating social media and online reputation management into dealership operations.
www.tniada.com
ACCELERATE
BY GWC WARRANTY
WHEN GOOD RECON GOES BAD Solve Your Recon Woes
Few things can be more of a headache for used car dealers than the reconditioning process. Far too often, it can lead to delays, forfeited front-end gross, poor relationships within your dealership and other consequences that ultimately hurt the overall bottom line. It sounds simple enough: Acquire vehicle. Prepare vehicle. Sell vehicle. So how can something so simple cause so many problems? It’s when good recon goes bad. You can solve your recon woes, however, by making small tweaks to your dealership that will have a tangible payout at the end. It’s all about culture. Too many times you hear stories of the back and forth between those acquiring the inventory and those getting it ready to go on the lot. Good recon starts when everyone stops pointing fingers. Cultivate a culture of collaboration. If you’re acquiring inventory, ask your service team what you should look for in a vehicle at
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auction. If you’re getting a vehicle frontline ready, ask about deadlines and find out why a specific turn time is so important. Don’t get overconfident. If you’re estimating how long it will take to recondition a vehicle, be honest with yourself. Time is money, and you can’t accurately appraise and price your vehicle if you’re building in five days of holding costs when it will really take 10. Having a trusting and cooperative culture will help everyone feel comfortable enough to be transparent with these types of details. Know the dollars and cents. It’s estimated that holding costs can range from $30 to $50 dollars per day. Take the average figure from that range ($40 per day) and do the math for what you spend regularly on reconditioning costs. At an average of six recon days for 40 vehicles a month, you’re looking at $9,600 per month in holding costs alone. At that rate, that’s over $115,000 per year. You can even think of this on a per vehicle basis. At that same holding cost, a vehicle that takes five extra days to recondition cuts a $3,000 gross profit into a $2,800 gross profit – all this without even factoring in the actual parts and labor costs of the reconditioning itself. Knowing these numbers will help everyone in the dealership be accountable for their role in reconditioning.
Communicate. It sounds simple, but so many reconditioning processes go bad when management, sales and service simply aren’t on the same page. Things like repair approval delays and misplaced vehicles can add days to the reconditioning process (see above for how much that costs you). Getting all your departments on the same page can help in this process. It can be as simple as creating a spreadsheet that tracks each vehicle’s progress. This way, you’ll be able to see where delays happen and quickly get your reconditioning back on the rails.
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MARKET WATCH BY USED CAR NEWS
AUTOTRADER NAMES TOP TECH
Trending Auto Technology
With new automotive technology constantly emerging and 2017 model-year vehicles now flooding dealer lots, the editors at Autotrader recently named their Must-Have Automotive Technology for 2017. Automakers like Mercedes-Benz, Tesla and Volvo are rolling out self-driving systems that can put many autonomous features together in one advanced package, appealing to even the most die-hard auto enthusiasts, especially when it comes to the more boring parts of driving like commutes or long highway trips. While Tesla’s Autopilot may currently be among the most advanced (and
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better-known) of these systems, several other automakers offer an impressive look at the future, including Volvo’s Pilot Assist system. Formerly only seen on ultra-high-end sports cars, adaptive suspension is making its way into other models, allowing you to custom tailor your car’s suspension based on the experience you want to have, with modes like “comfort” and “sport.” For drivers who often find themselves critiquing a car’s ride, or for those who spend a lot of time on rough roads or driving tight corners, the ability to change your driving experience with the push of a button can be well worth the cost. Many new vehicles now offer a suite of autonomous safety tech, including lane keep assist, automatic forward collision braking and adaptive cruise control - and the great news is that these systems are getting more affordable and are no longer only reserved for pricey luxury cars. Affordable new compact models like Honda Civic, Hyundai Elantra and Mazda Mazda3 all feature impressive autonomous safety tech features. Say goodbye to the little sticker on the corner of your windshield that reminds you of your next oil change - now many cars deliver this information and more in a handy app, making it easier to keep track of everything. Some automakers like Hyundai even have the Hyundai Assurance Car Care
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App, which not only tells you when your vehicle needs its next service, but it can even schedule it for you. Gesture control is the wave of the automotive future. It allows you to control various features of your vehicle using gestures instead of pressing a button, touching a screen or using voice commands. Currently BMW is the only automaker to offer this feature (and only on its high-end 7 Series), but expect this to reach more vehicles in the coming years. Huge screens seem to be replacing many gauges and buttons in the cockpit of new cars, operating similarly to a smartphone with ultra-sensitive touch and the ability for details to be reconfigured. While some may worry about the future reliability of such screens in lieu of simple buttons, experts praise the more clean presentation and easier-to-use infotainment systems versus former complex controls or tiny buttons. Electric drivetrain technology is now becoming more widespread and delivers not only the obvious fuel-economy benefit, but also performance benefits. Modern exotic sports cars like the Acura NSX, BMW i8, Porsche 918 Spyder and LaFerrari all feature electric drivetrains. For everyday drivers, features ranging from fully electric to plugin gas/electric hybrids mean several options for the driving masses.
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& BHPH PERSPECTIVE BY DAVID ALGOOD
THE GROWING NEED FOR BHPH Benefits of Having a Properly Capitalized BHPH Dealership
CHART
YOUR COURSE
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The Buy Here-Pay Here business can be a great resource to build wealth for multiple generations, while also increasing cash flow to withstand the economic ups and downs of the car business. In the past several years, banks and finance companies have been very aggressive in their purchasing of secondary customer contracts. However, this trend is now changing as the subprime cycle nears its end. In 2016 alone, many subprime banks and finance companies, including Go Financial, Dealer Funding, TAG Financial, Mark One and Santander, have either substantially reduced the purchase of contracts from independent dealers or completely discontinued originations. Any dealers who have put themselves in a position to rely solely on a retail financing source, or have chosen not to seek out additional capital, must adapt quickly and prepare themselves for the future. This article will lay out the basic benefits of having a properly capitalized BHPH dealership, instead of relying on retail financing sources in these turbulent times. The aggressiveness of the subprime market caused asset backed securities to see an increase in both delinquency and losses. According to CNN Money and Subprime Analytics, there has been a rise in both low down payment and extended-term loans, as well as loans to borrowers with no FICO scores. As of February 2016, asset-backed securities saw a 34 percent increase in losses. As the performance of the securities continues to deteriorate, the coming year will see a significant tightening in the subprime sector. According to Equifax, in 2016, 23.5 percent of all new auto loans were subprime borrowers, many of which were securitized. As several large players exit the independent dealer marketplace and securitization standards tighten, there will be a substantial reduction in the availability of credit in the subprime and deep subprime industry. This means that there is a huge base you should be prepared to capture as these secondary
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customers come back into BHPH stores, making the business more attractive than ever for dealers. While many dealers realize there are numerous advantages to being in the BHPH business, most do not have sufficient capital to grow their portfolio as they wish. There are a couple of financial considerations that must first be understood. The days when dealers used to recapture nearly all the vehicle costs with the down payment and finance the profit are long gone. In recent years, the market has shifted dramatically with vehicle costs rising and down payments declining. According to Subprime Analytics, as of mid-year 2016, BHPH dealers have an average vehicle cost of $7,007 with a down payment of $727, leaving them with $6,280 cash in deal. Dealers have shifted to selling a newer and nicer vehicle with a lower down payment, which in turn creates a larger cash burden. This has created a significant financial barrier to enter or grow a BHPH operation. A dealer looking to enter the BHPH business will likely need between $500,000 and $3 million of working capital to fund a single lot operation doing 15-50 loans per month. For this reason nearly all BHPH dealers use a third party to fund a portion of their operation, often allowing them to lower their self-funding needs to less than $100,000. Whether you have been in the BHPH business for three generations or you are looking to start a portfolio, choosing the right capital partner who both understands the BHPH business and will provide financing to help you grow is vital to your success. The BHPH business can be extremely profitable. Many dealers are able to cover 100 percent of their credit losses with interest income, meaning they are able to make 100 percent of the markup on their car, which in many cases is $4,000-$5,000 per unit. If your store could benefit from additional sales with great margins then entering or expanding in the BHPH business may be for you. The BHPH business is an excellent choice for dealers who do not want their livelihood to be at the mercy of secondary banks. David Algood is the director of sales and marketing at AMAC, a rapidly growing finance company doing business in the Eastern half of the United States. Anyone wanting more information can contact AMAC at 704-882-7100 (ext. 7509) or visit their website at www.acemotoracceptance.com.
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IMPORTANT NOTICE ANNUAL SALES REPORT November 14, 2016
ATTN: Joe Doe Doe’s Auto DBA: DMR 100 CO ROAD 111 REDWOOD, TN 30000
Save time, submit your Annual
Sales Report online!
Visit our new online licensing system to submit your annual sales report: Documents generated as receipts for online transactions are proof of submission ONLY and do not constitute approval or a license. Be advised you must submit your Annual Sales Report prior to February 15, 2017. Failure to submit your Annual Sales Report by the due date will result in the assessment of a late fee which must be paid before your report will be accepted.
http://core.tn.gov Benefits of using the online service: • 24/7 service • Submission of Renewals • No additional processing fees • Immediate proof of payment • Proof of Submission
If you are using Online Licensing Services for the first time, you must register by clicking Register a New Account . Once you have logged in to your new account, select OPTION B, then select Annual Sales R eport from the “Select Application” drop-down list and answer the questions presented. You may use the following information to access your license: Enter o o o
the following information to create and access your account XXXXX39 License number: 5 XXXXXXX Zip code on file: XXXXXXXX Indiv/Org Number: *all digits must be entered exactly as they appear
Should you be unable to submit your report using the online licensing service, please visit www.tn.gov/commerce/section/motor-vehicle or visit your County Clerk to obtain a copy of the Annual Sales Report form. Thank you for using CORE’s Online Licensing Services.
Tennessee Motor Vehicle Commission • 500 James Robertson Parkway • Nashville, TN 37243 • PHONE: 615-741-2711 • FAX: 615-741-0651 • http://www.tn.gov/commerce/section/motor-vehicle
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TENNESSEE DEALER CONNECT February/March 2017
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December 14, 2016 ANNOUNCEMENT OF ONLINE SERVICES and ANNUAL SALES REPORTING for the 2016 Calendar Year
Dear Stakeholder, Effective immediately the Tennessee Motor Vehicle Commission would like to announce the availability of online application and reporting services. The site is located at http://core.tn.gov. Individual account information for establishing an online account will be mailed no later than December 31. Licensees should be on the lookout for this very important document, which will contain individual account/organization number also known as the (ENTITY NUMBER). This document should be retained as part as a permanent record. (A sample copy of the document being distributed is included for your reference.) IMPORTANT: Please be advised that Annual Sales Reporting will be completed through the online reporting service this year. Dealers WILL NOT receive a paper reporting form to complete Annual Sales Reports for the cycle ending December 31, 2016. When submitting reports online the sender will be able to print a receipt immediately as proof of their submittal. Those who are unable to submit reports using the online licensing service may download a blank Annual Sales Report Form at www.tn.gov/commerce/section/motor-vehicle or they may visit their local county clerk to obtain a copy. There is no change to the Annual Sales Reporting deadline of February 15. Reports received after the deadline will be assessed a $100 late penalty. Payment of the late penalty will automatically be posted to each account on February 16 and can now be paid online. Dealers submitting payment via the online services will be able to print a receipt as proof of payment as soon as the payment is validated. We are very excited to offer the online reporting and payment services. We believe this will reduce the time and hassle of delays which exist using the traditional fax and mail system as well as improve the level of service we are providing our customers and licensees. Thank you for helping us spread the word and for promoting the use of these new services. Sincerely,
Paula J. Shaw Executive Director
Regulatory Boards/Motor Vehicle Commission • 500 James Robertson Pkwy • Nashville • TN, 37343-1153 Tel: 615-741-2711
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WASHINGTON UPDATE
NIADA GOVERNMENT REPORT
July 2016, the CFPB issued proposals it was considering for a debt collection rule for third-party collectors. They are not intended to apply to a first-party creditor collecting its own debts. In the agenda, the CFPB said it will convene a panel of small businesses to consider rulemaking focused on companies that collect their own debts sometime in 2017.
Here’s a rundown of some of the latest governmental issues and activity affecting the used car industry from NIADA senior vice president of legal and government affairs Shaun Petersen and NIADA lobbyist Sante Esposito of Key Advocates.
DEPARTMENT OF JUSTICE Volkswagen settlement: DOJ, the EPA and the state of California announced a settlement with Volkswagen AG, Audi AG, Porsche AG and related entities regarding 3.0-liter diesel vehicles sold or leased with emissions defeat devices. For 2009-12 Volkswagen Touareg and Audi Q7 models, Volkswagen is required to offer to buy back the vehicles or terminate leases, and must also offer a modification to substantially reduce emissions, if one is proposed by Volkswagen and approved by regulators. For 2013-16 vehicles affected, including the Touareg, Q7, Porsche Cayenne and Audi A6 Quattro, A7 Quattro, A8, A8L and Q5, if VW demonstrates it can make the vehicles compliant with the certified exhaust emission standards, it will have to fix the vehicles and will not be required to buy them back. Volkswagen is also required to spend $225 million to fund projects that will reduce emissions of nitrogen oxide. Vehicle owners and lessees will receive updated information from Volkswagen, Audi and Porsche concerning their available buyback or modification options once the settlement is approved by the court. Information is also available at www.vwcourtsettlement.com and www. audicourtsettlement.com. Dealer arrested: A New Jersey auto dealer was charged with allegedly defrauding $2 million from more than 140 Russian citizens who were customers of his auto sales business. Sergey Kapustin, owner and president of Global Auto Group, Effect Auto Sales and G Auto Sales in Elizabeth, N.J., had Russian language websites that offered for sale luxury vehicles, including Mercedes and Lexus models priced below market value that could be shipped to Finland for easy delivery to Russian citizens – if they agreed to pay full price up front for the vehicles. Kapustin is Russian and his websites were geared to buyers in Russia, the Ukraine and other former Soviet republics who believed they were getting a “good deal” from a countryman who could be trusted to follow through once the purchase price had been paid. After the buyers wired the full price to one or more bank accounts controlled by Kapustin, he allegedly gave them a litany of excuses for delay in delivery. Allegedly, Kapustin had neither possession of nor title to the vehicles being sold.
Latest Government Issues and Activity
REGULATORY REPORT BY Shaun Petersen
CONSUMER FINANCIAL PROTECTION BUREAU On Dec. 1, the CFPB released its rulemaking agenda through Oct. 19 – before the election. The results of the election could have drastic impact on the agenda. Some of the highlights include: Arbitration rule: The agenda said the CFPB is reviewing and considering comments on its proposed rule banning pre-dispute arbitration agreements with class action waivers and is considering February 2017 as an estimated date for a final rule. Payday, title and deposit advance loans: The CFPB released a proposed rule in June. NIADA filed comments to express our position that the rule did not apply to retail installment contracts for purchase money security interests. Debt collection: In November 2013, the CFPB issued an Advance Notice of Proposed Rulemaking concerning debt collection, about which NIADA filed comments. In
On Dec. 1, the CFPB released its rulemaking agenda through Oct. 19 – before the election.
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TENNESSEE DEALER CONNECT February/March 2017
At some point, the victim was offered a different, often inferior car, burdened with added shipping and storage costs. The victims often wired additional money in an attempt to rescue the car from storage. Many of the vehicles that did make it to customers were allegedly salvage or flood vehicles. DEPARTMENT OF LABOR Whistleblower rule: OSHA finalized its rule for handling retaliation complaints filed by whistleblowers in the automotive industry, which became effective Dec. 14. In accordance with legislation passed by Congress in 2012, motor vehicle manufacturers, parts suppliers and dealerships are prohibited from retaliating against employees who provide information about motor vehicle defects or violations of safety standards; file, testify or assist in any proceeding concerning alleged motor vehicle defects; or object to or refuse to participate in any activity that person believes is a violation of a safety standard. Retaliation includes firing, reduction in pay or hours, discipline or similar sanctions. Employees who believe they have been subject to retaliation have 180 days from the date of alleged retaliation to submit a complaint to OSHA. OSHA recordkeeping: A final rule that took effect Jan. 18 backs OSHA’s longstanding position that an employer’s duty to record an employee’s injury or illness continues for the full five-year record-retention period. The amendments in the final rule add no new compliance obligations and do not require employers to make records of any injuries or illnesses for which records are not already required.
LEGISLATIVE REPORT BY Sante Esposito
CFPB REFORM Rep. Jeb Hensarling (R-Texas) is talking about including his Financial CHOICE Act in the reconciliation bill Republicans are considering using to repeal Obamacare and introduce tax reform. Hensarling’s bill would rein in the CFPB’s authority by, among other provisions, making the bureau subject to the annual Congressional appropriations process, replacing its single director with a fivemember commission, requiring it to obtain permission before collecting personally identifiable consumer information and limiting its authority to prohibit consumer financial services or products it deems “abusive” and to prohibit the use of arbitration agreements. With the new Congress in session, all of the bills and the bills not enacted by the previous Congress have “died” and must be re-introduced – including a House-passed bill that would rescind the CFPB’s controversial 2013 auto financing guidance and specify a more transparent and accountable process. That bill’s language is included in the Financial CHOICE Act.
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