Texas Dealer, June 2015 by Texas Independent Auto Dealers Association

August 9–12,

TIADA

JW Marriott San Antonio Hill Country Resort and Spa www.TiadaAnnualConference.com

Also In This Issue: – A Cautionary Tale About Changing Your Business Entity – Michael W. Dunagan reflects on Jim “Jimmy Boy” Watson, the Father of Deferred Sales Tax – Do You Need Great Salespeople?

EXTENDED ARBITRATION Now through July 31, 2015

When you purchase eligible inventory on ADESA DealerBlock and use CarsArrive Network to transport, your arbitration window will be extended to 48 hours after vehicle delivery. è Eligible inventory includes off-lease, rental, dealer, fleet and repo vehicles posted in the open sale from an offsite location. Moving inventory the smart way: 1.7M cars transported each year...and growing! è Select CarsArrive for transportation at time of sale.

Extended arbitration applies to eligible vehicles purchased on DealerBlock and transported by CarsArrive Network: Buyer has 48 hours from the delivery date on bill of lading to arbitrate. Type 1 transport only; buyer must select CarsArrive at time of sale. Transaction must be paid within three (3) days of sale; sale date equals zero. Offer applies to offsite vehicles only; ADESA “at auction” units are not included. Valid through July 31, 2015.

ADESA is a proud business partner of the Texas Independent Automobile Dealers Association ( TIADA ).

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2015 TIADA Board of Directors PRESIDENT Brent Rhodes/Fiesta Motors 5150 Industrial Way Drive Buda, TX 78610 Office: 512.312.2201 Email: brent@fiestamotors.net PRESIDENT ELECT Phil Lathrop/VP Auto Sales Inc. 2921 S. Garland Avenue Garland, TX 75041 Office: 972.864.1300 Email: phillipl@vpautosales.com CHAIRMAN OF THE BOARD Michael Thomasson/Mike Carlson Motor Company 264 Exchange St. Burleson, TX 76028 Office: 817.366.9578 Email: mthomasson@mcmcauto.com SECRETARY Kathrine Tolsch/CICO Auto Sales 11050 Harry Hines Blvd. Dallas, TX 75229 Office: 214.352.9282 Email: cicoauto@verizon.net TREASURER Greg Zak/Dixon Motors 7902 North Freeway Houston, TX 77037 Office: 281.931.1300 Email: gzak@windstream.net VICE PRESIDENT, WEST TEXAS (REGION 1) James Hobson/H-Town Motors 3714 Dyer Street El Paso, TX 79930 Office: 915.564.9797 Email: htownmotors@sbcglobal.net VICE PRESIDENT, FORT WORTH (REGION 2) Tommy Gregory/Abilene Used Cars Sales Inc. 497 E.S. 11th Abilene, TX 79602 Office: 325.676.8000 Email: aucsinc@sbcglobal.net VICE PRESIDENT, DALLAS (REGION 3) Vacant VICE PRESIDENT, HOUSTON (REGION 4) Juan Sabillon/Mi Tierra Auto Sales 7935 Gulf Freeway Houston, TX 77017 Office: 713.644.2446 Email: brentfordct@yahoo.com VICE PRESIDENT, CENTRAL TEXAS (REGION 5) Robert Beck/Stop N’Drive Motors 711 N. General McMullen Dr. San Antonio, TX 78228 Office: 210.432.1101 Email: stopdrive@texas.net VICE PRESIDENT, SOUTH TEXAS (REGION 6) Dan Keetch/Keetch Motors 1010 S. Staples Corpus Christi, TX 78404 Office: 361.882.3541 Email: dankeetch51@yahoo.com VICE PRESIDENT AT LARGE Ryan Winkelmann/BJ’s Autohaus 5005 Telephone Road Houston, TX 77087 Office: 713.641.0980 Email: ryan.winkelmann@sbcglobal.net VICE PRESIDENT AT LARGE Trey Crouch/Trey Crouch’s Wheels On Credit 636 E. Business 83 McAllen TX 78501 Office: 956.972.0700 Email: trey@wheelsoncredit.com TIADA EXECUTIVE DIRECTOR Jeff Martin 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750 Office Hours M-F 8:30am - 4:30pm 800.442.5944 • Fax 512.244.6218 jeff.martin@txiada.com

Volume XV

Issue 6

J u n e 2 015

texasDealer 5 Officers’ Message

contents

by Greg Zak, TIADA Treasurer

9 Legal Corner: Jim Watson: Father of Deferred Sales Tax by Michael W. Dunagan

10 Upcoming Events 14 2015 VIP Auction Card Directory 17 Beating the Boomer Bust by John F. Dini

21 Do You Need Great Salespeople? by Jerry Thibeau

25 TIADA Annual Conference and Expo 36 News & Notes 39 Regulation Matters: A Cautionary Tale About Changing Your Business Entity by Danny Langfield

43 Local Chapters 45 In Memoriam: Jimmy Boy Watson 46 Legislative Bulletin 48 Board of Directors Meeting Minutes 51 Need a Line of Credit? Be prepared for the LARGEST Financial Commitment of Your Life! by Paxton Wright

53 New Members 54 Behind the Wheel by Jeff Martin

What’s happening at w w w . t x i a d a . c o m ?

DID YOU KNOW THAT... You can find out the legislative results on the advocacy section of the TIADA website? This is your best source of up-tothe-minute information on legislative issues that will affect your industry. The Editor of the Texas Dealer magazine is Teresa Orkun, Marketing Communications Coordinator of TIADA. To change your address for subscription and/or for other TIADA products, call the TIADA state office at 800.442.5944, 512.244.6060 or fax 512.244.6218. E-mail: info@txiada.com. New Membership/Subscriptions: If you are a member of TIADA, you may receive this magazine free of charge. Membership year runs from Jan 1 to Dec 31. Back issues are available for $20 each subject to availability. Send a check or money order, along with your name and mailing address to TEXAS DEALER, Attn: Back Issues, 9951 Anderson Mill Rd., Suite 101, Austin, TX 78750. Sorry, no billing. Notice to all members concerning services and products: TIADA was established in 1944 to develop professional standards of service and conduct for the independent auto industry. Opinions expressed herein are not necessarily those of the TIADA management, the Board of Directors or the membership. Likewise, the appearance of advertisers or their indemnifications of TIADA does not constitute endorsement of the products or services featured.

officers’ message What’s $10,000 Worth To You?

ost of you when reading the topic for this article think this is a silly question. Well, $10,000 is worth $10,000, right? I’ll answer that question in a minute. As you might have heard, TIADA is having its Annual Conference & Expo this August 9th through the 12th at the J.W. Marriott in San Antonio. Every year at the annual conference the association has a special membership ticket drawing whereby the association gives away a Grand Prize of $10,000 as well as many other cash prizes totaling over $20,000. You can purchase one of these tickets for only $100 for a chance to win. Now, let’s dive a little deeper into what the $10,000 is really worth. Of course $10,000 cash is worth $10,000. But let’s look at what the association does with the money it raises from this special membership event. As I write this article, Jeff Martin, Danny Langfield, Mario Martinez, and Mike Dunagan are working at the state capitol for the interest of EVERY INDEPENDENT DEALER, and for that matter every vendor who benefits from our industry in the state of Texas. Through the legislative caucus at our conference last year, we the dealers decided which areas in our businesses were giving us the most grief so that we could focus the legislative effort into solving these problem areas. We decided to file two pieces of legislation that were most

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by Greg

Zak

ixon Motors D (Houston) TIADA TREASURER

concerning to the dealer body at large. Jeff and the team then went on to work on finding a legislator who would carry our bill through the process and achieve legislative approval from both the house and the senate. Throughout the legislative session our team read and scanned over roughly 4,000 bills to make sure that none of the proposed bills of legislation negatively affect YOU, the dealer. Do you have time to read through 4,000 proposed legislative bills and visit with the many legislators, aides, and political directors who have filed these bills which may have a negative impact on your business? I think I already know the answer to that question. You see, the special membership is more than just a chance to win a large sum of money. In the end it helps you, the dealer and vendor, in your business. So, that special membership ticket that you can buy for $100 for a chance to win up to $10,000, and which supports the association in its efforts to protect YOU the dealer is starting to sound like the best bargain in town, isn’t it? We ended last year with record membership of over 1400 members. If 50% of the members would buy just one ticket each, we would also set a record on special membership. This should be an easy number to hit. Who doesn’t like to break records? I have been fortunate on various occasions to win several of the cash prizes including the $10,000 grand 5

Better Business Through Superior Customer Service!

SALE SCHEDULE

prize. I have used a strategy for many years that has helped me win, and I will let you in on the strategy but first let me ask you another question… Do you think you have a better chance at making a sale today if you have ten people come onto your lot or one person? I think I like my odds of making a sale from a possibility of ten people versus one chance with one person. Sounds logical, right? So my strategy has simply been to buy a lot of special membership tickets and I usually leave the conference winning several thousands of dollars. I’m not bragging. I’m just letting you in on my strategy. The more tickets you buy, the better your odds are of winning. This year’s special membership drawing will have a surprise. I know all of you are wondering what’s the surprise. It’s going to be really, really exciting. But, I guess you will need to come to the conference in August to find out. You don’t have to be present to win the Grand Prize but we sure would love to see you at the conference. You will find one special membership ticket included in the binding of this magazine and you’ll also get two tickets in the mail. All you have to do is complete the bottom part of the ticket and mail it back to the TIADA office along with payment. Buy or sell them all! And if you need more, the state office will be happy to send them to you. Just call 800-442-5944. That $10,000 is sure worth a lot of money to me in my business. How about you?

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legal corner

Jim Watson: Father of Deferred Sales Tax by Michael

eferred sales tax has become the life blood of the buyhere-pay-here business in Texas. One nationally-recognized industry accounting expert recently referred to the deferred sales tax law in Texas as one of the most favorable sales tax situations for buy-herepay-here dealers in the country. He pointed to the direct benefit to dealers of only having to remit tax on payments after they are received as part of the business environment for Texas dealers that gives rise to envy by dealers in other states. But it wasn’t always that way. Prior to passage by the Texas Legislature of TIADA’s so-called Fair Tax Bill in 1993, dealers were responsible for advancing the total amount of the sales tax at the time of transfer. And there was no provision in the law for obtaining a refund if a debtor quit paying (there was a bad debt credit available for sellers who financed things other than motor vehicles). There were many situations where dealers would front the sales tax money in order to transfer the title and record their lien, only to have the customer skip or default. Paying sales tax on money never collected resulted in an effective sales tax rate that could exceed twenty or thirty per cent of all revenue collected from customers, according to one accountant’s analysis. The only way a BHPH dealer could avoid having to advance sales tax was to deliver the title certificate to the buyer at the time of sale, which most dealers were not willing to do.

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The problem came to a head in the early 1990’s when the comptroller’s office discovered that many dealers were not transferring titles on skips and repossessions, and thus not advancing the sales tax. A series of audits of large volume dealers resulted in some million dollarplus assessments. Many dealers were put in a Catch 22-like bind — either timely transfer all sales and advance sales tax and face economic disaster, or continue to pick-and-choose on transfers and face huge tax assessments. A West Texas dealer, who had chosen the second alternative, was actually indicted and charged with felony tax fraud for doing what many dealers around the state were doing (the case was eventually dismissed after the fair tax bill was passed). One dealer and future TIADA president decided it was time to do something about the problem. Jim Watson, whose lot was in the Oak Cliff section of Dallas, had been involved in prior unsuccessful efforts to get the law changed. Legislators and lobbyists, after hearing the concerns of dealers and recommendations for a change to the tax code, were unanimous in their assessments — “there’s no way it will ever happen.” Fortunately, Watson wasn’t listening. Watson was no stranger to the political scene. His car lot office on

Dunagan

TIADA GENERAL COUNSEL

Jim Watson had the vision to organize the right people for the job and put the wheels in motion for doing something that others said would never happen. Jefferson Blvd. was often the informal meeting place for local politicos. As a leader in the Oak Cliff Lion’s Club, his Masonic Lodge, and a member of the Top of the Cliff Club, Watson was well known in the area by elected officials. He had encouraged the Dallas County Tax-Assessor, who had the electable name of Warren Harding, to run for state Comptroller as one way of fixing the problem. Harding, however, lost the race. Watson was also a mainstay of TIADA and a dedicated member and leader. He had served as president of the Dallas County IADA. He and his wife Belinda could be seen at any DCIADA or TIADA event. To kick off a renewed effort to obtain sales tax reform, Watson invited a group of 18 interested dealers to lunch at the Top of the Cliff Club, 9

Upcoming Events TIADA DEALER ACADEMY June 2015 16 Keeping Your Dealership

Legal and Compliant Best Western Plus 100 Alta Mesa Blvd. East Fort Worth, TX 76134 Online registration available www.txiada.com

September 2015 28 Dealer 101: Nobody Told Me That! Houston, TX

October 2015 19 Keeping Your Dealership Legal and Compliant Corpus Christi, TX

December 2015 7 Keeping Your Dealership Legal and Compliant Dallas, TX

OTHER TIADA EVENTS August 2015 9 TIADA Board of Directors

Meeting (in conjunction with the Annual Conference & Expo) San Antonio, TX

9–12 TIADA Annual

Conference and Expo J.W. Marriott Hill Country Resort and Spa San Antonio, TX

11 House of Delegates Meeting (in conjunction with the Annual Conference & Expo) San Antonio, TX 10

which was on the top floor of the only high rise office building south of the downtown Dallas area. The invited group included some of the most successful dealers in the area — dealers that he knew could influence others to join the battle. Watson asked me to present a proposal for legislation to the group. He then asked attendees if they would be committed to seeing the project through. The response was unanimous. Watson asked Bill Plaster of Dallas to chair a new committee to raise the funds to put together an effective lobbying program and see to the passage of a “Fair Tax Bill.” In addition to Plaster, Watson enlisted Roy Carlson of Fort Worth and Don Fincher of Houston, both of whom would later serve as TIADA presidents, and Rick Price of Dallas to serve on the steering committee. The committee immediately started raising the $100,000 that the initial budget called for. The committee members pledged the seed money to start the effort. Carlson agreed to serve as treasurer and proved to be a very effective fund raiser. Many dealers were skeptical that anything could be accomplished and hesitated to contribute. But soon the funds had been raised to actively begin working on a fair tax bill. Part of the strategy for convincing the state that reform was needed was the so-called “zero-tax” initiative. We determined that, if titles could be handed to customers, relieving dealers of any responsibility for sales tax, it was unlikely that buyers would transfer and pay sales tax. Thus, if the program could be implemented, dealers would have to pay zero tax. We found that we could register inventory vehicles in dealers’ names as “for resale purposes only” transactions. When title certificates came back from the state, and vehicles were sold, the dealers would then fill in their liens on the title certificates (at that time, a space for notation of liens appeared on the back of titles) and deliver the titles, along with

filled out and signed transfer applications, to buyers. Many dealers were afraid to hand over titles to credit buyers in any circumstance. But Watson volunteered to be the guinea pig. His sales tax liability disappeared, increasing his cash flow. None of his customer transferred titles, but none tried to wash the lien, either. Based on Watson’s success, other dealers jumped on the zero-tax bandwagon, and soon the comptroller’s office noticed a drop off in sales collections. Discussions with the state suddenly began to move in a positive direction. Dealers wanted a more fair treatment if they were to be the state’s unpaid tax collectors. The state wanted to set up a formal collection procedure that would insure a steady stream of vehicle sales tax revenue, and an audit trail. The focus of the task force became that of achieving both objectives. By the time the 1993 legislative session began, the deferred sales tax bill had been filed. Many of the committee members began making weekly trips to the capitol to meet with legislators. Comptroller John Sharp had agreed to appoint a task force that included members of his staff, the Motor Vehicle Division, and dealers. A proposal to authorize refunds for taxes paid on written-off debt was initially looked at, but Sharp felt that setting up a refund system would be expensive and bulky to administrate. Finally, the task force settled on the idea of a pay-as-you-collect system — which appealed to dealers, and a requirement that dealers would have to obtain a seller-finance sales tax permit and make payments directly to the state — which appealed to the Comptroller’s office. Once Sharp signed off on the deferred tax plan, the focus shifted to working out the details and shepherding the bill through the legislative process. We all held our collective breaths until the bill was finally signed by (cont’d on pg. 12) T e x a s

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Legal Corner (cont’d from pg. 10)

the governor. A series of sales tax workshops were held around the state by TIADA to explain the new system to dealers. There were some skeptics out there who didn’t think it would work. But I don’t think anyone would now question the wisdom of deferred sales tax for BHPH dealers. The advantages that all BHPH dealers enjoy didn’t happen accidently. Jim Watson had the vision to organize the right people for the job and put the wheels in motion for doing something that others said would never happen. Every time a Texas BHPH dealer transfers a title without having to front sales tax, he or she should think about the dealers who make it possible, especially Jim Watson. Sadly, Jim Watson passed away in April. Even though he is gone, his legacy lives on and the fruits of his labors are there for the benefit of all Texas BHPH dealers. Michael W. Dunagan is an attorney in Dallas, Texas who has represented the Texas Independent Automobile Dealers Association for over 35 years. He has written a number of books and hundreds of articles for trade journals and law reviews. His clientele includes dealers, banks, finance companies, auto auctions and credit unions.

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I WAS WONDERING WHAT THE DOWN PAYMENT WAS FOR THIS VEHICLE, AND OR IF THERE WAS A WAY TO WAIVE THE DOWN PAYMENT, OR DELAY I FOR A FEW WEEKS? I’M IN NEED OF A CAR, BUT WON’T BE ABLE TO SUPPLY HUGE DOWN PAYMENT TILL THE 7TH OF MAY. ABOUT HOW MUCH MONEY REQUIRED DOWN. WHAT ABOUT IF YOU DON’T HAVE THAT GREAT OF CREDIT? ALSO I HAVE A CAR THAT I’M CURRENTLY STILL PAYING BUT OWE ABOUT 3,000 WOULD CAN I TRADE IN. HELLO WOULD YOU BE WILLING TO TAKE $2000 DOWN? I AM IN A VERY BAD SITUATION. SOMEONE RAN INTO MY MUSTANG LAST WEEK & BASICALLY TOTALED IT. I AM ON THE VERGE O LOSING MY JOB IF I DON’T GET A RIDE SOON AND I WANT SOMETHING NI WITH MILES THAT AREN’T SKY HIGH. PLEASE GIVE ME A CALL OR EMAIL M THANK YOU. WHAT IS THE LEAST DOWN PAYMENT AND WHAT IS THE PAYMENTS LENGTH AND TERMS. I DO NOT HAVE FANTASTIC CREDIT AT ALL M HUSBAND RUINED MY CREDIT AND AM LOOKING FOR A WAY TO REBUILD MY CREDIT I HAVE A GOOD JOB LIVED IN SAME PLACE FOR 5 YEARS AND TRULY LOVE THIS CAR. I WANTED TO KNOW HOW MUCH I WOULD HAVE TO PUT DOWN FOR THIS 03 NISSAN MAXIM AND HOW MUCH MY CAR NOTE WOULD BE A MONTH. I AM 20 WITH 2 JOBS AND ABSOLUTELY NO CREDIT TO SPEAK OF BUT I’M HOPING TO WORK AROUND THAT AND GET A VEHICLE. SINCE I DONT HAVE CREDIT IVE BEEN TURNED AWAY BY EVERYBODY INCLUDING CREDIT CARD COMPANIES WHEN TRYING TO ESTABLISH CRED S F O R THOUGH C U S T O M E R IS DO T O FNOT I N D YHAVE OU. I WOULD REALLY APPRECIATE ITWIFA YEVEN CREDIT COULD MAKE PAYMENTS ON A VEHICLE WHILE I HAVE IT. SINCE I AM STILL CURRENTLY LIVING WITH MY FAMILY I HAVE ESSENTIALLY NO BILLS TO PAY UNLESS I HAVE TO WHICH LEAVES MY MONEY TOWARDS PAYMENT IF YOU WERE TO PUT ME ON A PAYMENT PLAN. THE DOWN PAYMENT COULD BE WORKED OUT REGARDLESS BUT AS FOR THE MONTHLY I WILL NEED TO BE BETWEEN 200 AND 250 JUST IN CASE I NEED TO PAY A BILL AGAIN BUT IN THAT RANGE YOU WILL BE GUARANTEED ON TIME PAYMENTS. WHETHER YOU WOULD BE WILLING TO WORK WITH ME OR NOT PLEASE LET ME KNO IF I DO NOT ANSWER I AM MOST LIKELY AT WORK SO PLEASE LEAVE A MES

M RE The Buy Here Pay Here Center gives shoppers information that matters to them most – details about your dealership, inventory listings with photos, video, down payments, weekly/monthly payments – all the right options that can get them into a car from your store. It’s easy to use, it’s geo-targeted for local searches and you can even use the BHPH Center as your website.

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2015 TIADA VIP Auction Card Directory

Manheim Manheim DFW Dallas Manheim Manheim San Antonio El Paso Manheim Manheimn Texas Hobby Housto ADESA ADESA Austin San Antonio ADESA ADESA Houston Dallas

Alliance

w Alliance

AA Longvie

Alliance

AA Abilene

AA Waco

Alliance

AA Dallas

’s America AA Austin/ San Antonio

’s ’s America America AA Dallas AA North Houston

Houston

AA AA Metro Austin

Texas Heart of AA El Paso dent AA Waco Indepen Can! America Kids for Texas Lone Star AA Cars Arlington Carrollton CM Dealers y Compan s of OKC Auction

Big Valley AA Donna

Corpus

Austin

Permian

Houston

Basin Dallas

Houston

w North Longvie

McAllen

DFW

ABILENE

CORPUS CHRISTI

Alliance Auto Auction Abliene

Insurance Auto Auctions*

6657 US Highway 80 West Abilene, TX 79605 325.698.4391, Fax 325.691.0263 General Manager: Jimmy Compton Friday, 10:00 a.m.

4701 Agnes Street Corpus Christi, TX 78405 361.881.9555, Fax 361.887.8880 General Manager: Adriana Serrano Wednesday, 9:00 a.m.

www.allianceautoauction.com

www.iaai.com

C.M. Company Auctions, Inc.

DALLAS / FT.WORTH METROPLEX

2258 S. Treadaway Abilene, TX 79602 325.677.3555, Fax 325.677.2209 General Manager: Gregory Chittum Thursday, 10:00 a.m.

ADESA Dallas

www.cmauctions.com

www.adesa.com

AUSTIN

3501 Lancaster-Hutchins Rd. Hutchins, TX 75141 972.225.6000, Fax 972.284.4799 General Manager: Brad Garrett Thursday, 9:30 a.m.

ADESA Austin

Alliance Auto Auction Dallas

www.adesa.com

2108 Ferguson Ln Austin, TX 78754 512.873.4000, Fax 512.873.4022 General Manager: Steve Swanson Tuesday, 9:00 a.m.

America’s AA Austin / San Antonio www.americasautoauction.com

16611 S. IH-35 Buda, TX 78610 512.268.6600, Fax 512.295.6666 General Manager: John Swofford Tuesday, 1:30 p.m. / Thursday, 2:00 p.m.

Insurance Auto Auctions* www.iaai.com

2191 Highway 21 West Dale, TX 78616 512.385.3126, Fax 512.385.1141 General Manager: Geoffrey Rabb Tuesday, 9:00 a.m.

Metro Austin Auto Auction www.metroautoauction.com

8605 Cullen Ln. Austin, TX 78748 512.282.7900, Fax 512.282.8165 General Manager: Brent Rhodes 3rd Saturday, monthly

www.allianceautoauction.com

9426 Lakefield Blvd. Dallas, TX 75220 214.646.3136, Fax 469.828.8225 General Manager: Christopher Dean Wednesday, 1:30 p.m.

America Can! Cars for Kids www.charitycarauctions.org

1911 E. Division Arlington, TX 76011 972.274.5437, Fax 214.944.1950 General Manager: Jennifer Kitchens Saturday, 9:00 a.m.

America’s AA Dallas

www.americasautoauction.com

219 N. Loop 12, Irving, TX 75061 972.445.1044, Fax 972.591.2742 General Manager: Robert Hammonds Tuesday, 1:00 p.m. / Thursday, 1:00 p.m.

Insurance Auto Auctions* www.iaai.com

4226 East Main Street Grand Prairie, TX 75050 972.522.5000, Fax 972.522.5090 General Manager: Jennifer Wesner Tuesday, 9:00 a.m.

Insurance Auto Auctions* www.iaai.com

* VIP card accepted for sell fees only 14

Christi

El Paso

Lubbock

San Antonio

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204 Mars Road, Wilmer, TX 75172 972.525.6401, Fax 972.525.6403 General Manager: Henry Valenzuela Wednesday, 9:00 a.m.

Manheim Dallas

www.manheim.com

5333 W. Kiest Blvd., Dallas, TX 75236 214.330.1800, Fax 214.339.6347 General Manager: Jeff Modjeski Wednesday, 9:00 a.m.

Manheim Dallas Fort Worth www.manheim.com

12101 Trinity Blvd. Fort Worth, TX 76040 817.399.4000, Fax 817.399.4251 General Manager: Nicole Graham-Ponce Thursday, 9:30 a.m.

Texas Lone Star Auto Auction www.tlsaa.com

2205 Country Club Drive Carrollton, TX 75006 214.483.3597, Fax 214.483.3814 General Manager: Jeff Dunning Tuesday, 1:00 p.m. / Thursday, 2:00 p.m.

EL PASO El Paso Independent Auto Auction www.epiaa.com

7930 Artcraft Rd El Paso, TX 79932 915.587.6700, Fax 915.587.6700 General Manager: Lori Pidgeon Wednesday, 9:30 AM In-op Video Sale / 10:00 AM Standard Sale.

Insurance Auto Auctions* www.iaai.com

14651 Gateway Blvd. W El Paso, TX 79927 915.852.2489, Fax 915.852.2235 General Manager: Jorge Resendez Friday, 10:30 a.m.

Manheim El Paso

www.manheim.com

485 Coates Drive El Paso, TX 79932 915.833.9333, Fax 915.581.9645 General Manager: Brian Walker Thursday, 10:00 a.m. T e x a s

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June 2015

Insurance Auto Auctions*

SAN ANTONIO

2535 West. Mt. Houston Houston, TX 77038 281.847.4700, Fax 281.847.4799 General Manager: Michelle Casper Wednesday, 9:00 a.m.

ADESA San Antonio

www.iaai.com

Manheim Houston www.manheim.com

HARLINGEN / MCALLEN Big Valley Auto Auction www.bigvalleyaa.com

4315 N. Hutto Road Donna, TX 78537 956.461.9000, Fax 956.461.9005 General Manager: Lisa Franz Thursday, 9:00 a.m.

Insurance Auto Auctions* www.iaai.com

900 N. Hutto Road Donna, TX 78537 956.464.8393, Fax 956.464.8510 General Manager: Ydalia Sandoval Tuesday, 9:00 a.m.

HOUSTON ADESA Houston www.adesa.com

4526 N. Sam Houston Houston, TX 77086 281.580.1800, Fax 281.580.8030 General Manager: Mark Lindenmuth Wednesday, 9:00 a.m.

America’s AA North Houston www.americasautoauction.com

1440 FM 3083 Conroe, TX 77301 936.441.2882, Fax 936.788.2842 General Manager: Buddy Cheney Monday, 6:30 p.m.

Houston Auto Auction

www.houstonautoauction.com

6767 North Freeway Houston, TX 77076 713.644.5566, Fax 713.644.0889 President: Tim Bowers Tuesday, 1:00 p.m.

14450 West Road Houston, TX 77041 281.924.5833, Fax 281.890.7953 General Manager: Eddie Pope Tuesday, 9:00 a.m. / Thursday 6:30 p.m.

Manheim Texas Hobby www.manheim.com

8215 Kopman Road Houston, TX 77061 713.649.8233, Fax 713.640.6330 General Manager: Rich Curtis Thursday, 9:00 a.m.

LONGVIEW Alliance Auto Auction Longview www.allianceautoauction.com

6000 East Loop 281 Longview, TX 75602 903.212.2955, Fax 903.212.2556 General Manager: Jeff Loftin Friday, 10:00 a.m.

Insurance Auto Auctions* www.iaai.com

5577 Highway 80 East Longview, TX 75605 903.553.9248, Fax 903.553.0210 General Manager: Robert Dunning Thursday, 9:00 a.m.

LUBBOCK Insurance Auto Auctions* www.iaai.com

5311 N. CR 2000 Lubbock, TX 79415 806.747.5458, Fax 806.747.5472 General Manager: Lori Davee Tuesday, 9:30 a.m.

MIDLAND / ODESSA

Insurance Auto Auctions*

16602 East Hardy Rd. Houston, TX 77032 281.443.1300, Fax 281.443.4433 General Manager: Louis Cappi Thursday, 9:00 a.m.

701 W. 81st Street Odessa, TX 79764 432.550.7277, Fax 432.366.8725 General Manager: Barbara Hallmark Thursday, 11:00 a.m.

www.iaai.com

June 2015

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www.iaai.com

www.adesa.com

200 S. Callaghan Rd San Antonio, TX 78227 210.434.4999, Fax 210.431.0645 General Manager: Sam D’Amato Thursday, 10:00 a.m.

Insurance Auto Auctions* www.iaai.com

11275 S. Zarzamora San Antonio, TX 78224 210.628.6770, Fax 210.628.6778 General Manager: Brian Sell Monday, 9:00 a.m.

Manheim San Antonio www.manheim.com

2042 Ackerman Road San Antonio, TX 78219 210.661.4200, Fax 210.662.3113 General Manager: Mike Browning Wednesday, 9:00 a.m.

WACO Alliance Auto Auction Waco www.allianceautoauction.com

15735 I-35 Frontage Road Elm Mott, TX 76640 254.829.0123, Fax 254.829.1298 General Manager: Darren Darnell Friday, 10:00 a.m.

Heart of Texas Auto Auction www.heartoftexasautoauction.com

2508 Old Marlin Hwy. 6 Waco, TX 76705 254.755.7713, Fax 254.755.7746 General Manager: Allan Wichkoski Thursday, 7:00 p.m.

OKLAHOMA CITY, OK Dealer’s Auto Auction of OKC, Inc. www.daaokc.com

1028 South Portland Oklahoma City, OK 73108 405.947.2886, Fax 405.943.8370 General Manager: Gary Smith Thursday, 8:30 a.m.

feature

Beating the Boomer Bust

by John F. Dini President MPN Incorporated

{Editor’s Note: John will be featured in the Serial Entrepreneur learning track at the 2015 TIADA Annual Conference & Expo.}

ore than 60% of US business owners are over 50 years old, and many of them are looking toward retirement and the process of attracting and vetting potential buyers to take the reins. Baby Boomers were raised in a highly competitive environment, and many built companies that won’t attract a new generation of buyers. Understanding the buyer who will carry their company’s torch going forward will help owners prepare for a successful transition.

Why Do Boomers Work So Hard?

Baby Boomers are 2-1/2 times more likely to own a business than the generations before or following. Between 1975 (when the first Boomers turned 30), and 1986 the formation of new businesses in America jumped from 300,000 to 700,000 annually. New business start-ups have never again reached that level. Faced with fierce competition on the corporate pathway to success, many Boomers chose to chase the brass ring by going into business for themselves. The impact of the Baby Boomers created a one-time surge in many statistics. They tripled the number of college graduates, and brought over 50 million women into the workforce. Between 1970 and 1980 the population of the United States increased by 11%, but the employment base grew by an astonishing 29%. Replacing such a massive segment of the population in the business sector is no easy task.

The Perfect Storm

There are three major trends that challenge a small business owner preparing to exit. Like the movie “The Perfect Storm,” these three trends; demographic, psychographic and sociographic, are combining to create a tsunami that will change the entire landscape of independent business ownership.

Demographically, the generation following the Boomers (Gen X) is much smaller. From a

supply and demand perspective, there are about half as many available buyers as the number of potential retirees seeking them.

The psychographic profile of the buyer gen eration is unfavorable. What business owner hasn’t

complained about the work ethic of the younger generation? Raised in a forty year period of economic growth (the longest sustained period of expansion in our history)

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Baby Boomers are 25% of the US population, but own over 60% of all small businesses. Generation X and their successors (The Millennials) are more likely to choose family first, and perceive jobs and employers as merely the means to a personal end.

Sociographic trends favor alternative careers over business ownership. Corporate America is

well aware of the issues and attitudes of the younger generations. They have already made many adjustments. Telecommuting, sabbaticals, family leave, and flex time are benefits designed to attract younger workers who have a different set of priorities. Few small businesses have the depth or breadth to allow skilled employees to come and go according to their individual priorities. Young entrepreneurs have little interest in the serviceoriented brick-and-mortar companies that dominate small businesses. Yet, many small business owners are depending on their company to fund a comfortable retirement. Their plan goes something like this: “I will work really hard until I am tired, and then I will find some energetic younger person just like me who is willing to commit everything for this great opportunity.”

Beating the Odds

Fortunately, if you are a successful business owner, you’ve already proven your competitive instincts and abilities. With some planning and foresight, you can still beat the Boomer Bust and achieve your retirement objectives. There are two pathways to succeeding in a crowded sales marketplace.

Pathway One: Build to Sell

Your first option is to build a business that is attractive to younger buyers. It allows for personal flexibility. It can’t require a huge down payment, since these generations were raised in a “buy-now-pay-later” world, where they are carrying substantial debt from the day they graduate college, and have little opportunity to amass liquidity. 17

Retiring Boomers exceed the number of people reaching age 45 by 4,000 a day. Your dealership’s technology doesn’t have to be cutting edge, but it needs to be current. Nothing turns off the tech-savvy young buyer faster than a company that is limping along on outdated software or (heaven forbid) paper. Of course, the other attributes of an attractive acquisition; growing margins, a distributed customer base and predictable revenues, are a given.

Pathway Two: Hire Your Buyer

The second option is to hire your buyer. Many younger go-getters would like to own a business but have difficulty seeing how they can make it possible. Identifying such a buyer in your own organization, or even reaching outside and recruiting one, is a viable option if your target date for exiting is a few years away. Creating your own successor requires a commitment

DO YOU WANT TO

SELL MORE CARS &

MAKE MORE

MONEY?

to planning and development, but the financial aspects are fairly simple. A few years of selling equity in small amounts can let your successor build a minority stake. Then he or she can obtain third-party financing (typically SBA guaranteed) for the balance of the purchase. You maintain control through the process, and take the proceeds with you when you leave. Remember; “The more you work in your business, the less it is worth.” Everything you do to reduce your business’s dependence on your personal talents, to reduce the time commitment of running it, and to make it easier for any successor (whether internal or external) to take over the reins, also increases its value to any buyer. You can’t change the factors that create the most competitive selling environment in history. Understanding what the future looks like, and realizing that your buyer is unlikely to be someone “just like me” is a critical first step in the process. John F. Dini is a coach and consultant to business owners. His latest book, Hunting in a Farmer’s World, Celebrating the Mind of an Entrepreneur is the winner of 11 business book awards. John F. Dini’s 48-page eBook Beating the Boomer Bust is available as a free download at www.theboomerbust.com. The download password is “Woodstock.”

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feature

Do You Need Great Salespeople?

by Jerry Thibeau CEO Phone Ninjas

{Editor’s Note: Jerry will be featured in the Wildcard learning track at the 2015 TIADA Annual Conference & Expo.}

give our industry a D+ when it comes to the hiring process and a frequent complaint right now is “I can’t seem to hire good salespeople.” Joe Webb nailed it when he made this video: The Job Interview. So where do we go to find good people? Posting an online ad is often not very effective and may result in quantity, but not quality. Your current employees and customers are a great place to start to find new employees. A recent Inc. Magazine article written by David Lewis, CEO of Operations Inc. indicates: 50% of the most successful companies have given up on job boards. Social media sites like LinkedIn, Twitter and Facebook are cheaper and more effective. People hired by referral are 47% more likely to stick around after three years, compared to 14% for jobboard applicants. Cash bonuses are the best way to get current employ ees to refer others. $1200 is the average referral bonus across all industries for full-time hires.

automotive experience” since many dealerships don’t take the time to properly train new staff. In 1985, I was a classic example of a bad hiring experience. My first job at a dealership lasted a month because I was never provided with proper training. Fortunately, my second automotive sales position came with lots of training. Talk about the positive things your dealership offers to its employees. Give a brief description of the qualities you seek. The ones I listed above are a good place to start. Ask your applicants to follow a very strict application process like the one outlined below. Look for a salesperson with the qualities needed to

When you are ready to make a hire, start by notifying current employees. If the job pays well, employees will often brag about how much they love their work and attract others to your business. I have used this strategy for the last three years when hiring coaching staff for Phone Ninjas, and I often have qualified applicants waiting for a job. If your dealership has Facebook presence, this is also a great way to inform people of your intentions to hire. You could also offer a bonus to customers who refer others. Everybody knows somebody looking for a job. Here’s an example of an ad that you might place on Facebook (Fig. A): Let’s digest the highlights of the ad at right. Start with a positive upbeat subject line that will catch their attention! Take the average pay of your top two performers and use this number (in our example we used 100K/year). I am not a fan of hiring veteran automotive salespeople unless you are certain they have not been rejected from other dealerships. Salespeople making good money tend to stay put. I do use the term “little or no June 2015

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Fig. A work all aspects of this business. In the email look for quality writing skills, the same ones needed to be effective when replying to Internet leads. In the video, consider passion, personality, and creativity. If someone can make a video, they should be capable of making one 21

to respond to Internet leads. The last bullet point will help weed out unmotivated people because if they don’t perform these steps to get the job, they certainly won’t do them once they have the job. When dealerships implement a better hiring process, they will attract quality people capable of working floor-ups, phone-ups, and Internet leads thereby reducing or eliminating the costs of operating a business development center. After you review your applicants, it’s time to start the interview process. First, send your favorite applicants an e-mail and ask them to call you at a very specific time and make sure you are available at that time. Start with a 5–10 minute conversation to get a feel for their phone skills. If they call you at the scheduled time and the conversation goes well, then it’s time to invite them to an inperson interview. When interviewing, remember that you are also being interviewed, and dealerships often fail to prepare. It’s important that applicants walk into a professional setting. This means no salespeople loitering at the front door. Your dealership should look like a well-oiled machine with professional salespeople at work. Most importantly, be ready for your interviews! Making a person wait is not a good strategy. Here are 15 must-ask interview questions: 1. Take me through your work history and tell my why you left each job. Those with a job jumping history should have a good answer. 2. Did you play sports in high school or college? Competitiveness is one of the best traits you can find in a salesperson. Competitive people are the ones you will find at the top of your sales board. 3. Why do you want to be a salesperson? The right answer is financial motivation. 4. How much money do you need to make monthly in order to maintain your current lifestyle? The higher that

number, the more I like that person. 5. T ell me about your greatest accomplishment in life? Look for passion and excitement as they talk about their accomplishment. If they can’t get excited talking about themselves, they certainly won’t be that way with your customers. 6. I f I asked your current boss what he or she likes about you, what would the answer be? This question will indicate strengths in your applicant. 7. W hat would your current boss say are your weaknesses? These answers could be potential red flags. 8. W hat have you done in the last year to fix those weaknesses? Look for people who are adaptable and focused on self-improvement. 9. W hat is the last educational book you read and what did you learn from it? Look for people who are constantly trying to improve. These people are trainable. 10. W hat qualities did you like about your last or current manager? Look for answers that indicate an applicant’s willingness to take direction. 11. W hat qualities did you not like about your last or current manager? People will often unknowingly reveal their weaknesses when answering this question. If an applicant is willing to trash talk their current or previous employer, move on. Avoid future drama or confrontation! 12. I s there any question I haven’t asked you that I should? This is a perfect opportunity for your applicant to sell himself/herself. 13. I am not quite sure you’re the right person for this job. Help me change my mind. Typically I’ll even leave that last sentence off and see if the applicant can handle my objection. Objection handling is a big part of our business and I want people who won’t take “No” for an answer. This question alone will tell you if you’re

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interviewing a pushover or a closer. Closers will challenge this statement and tell you why you should hire them. 14. H ow do you think you did on this interview? I have just given the applicant the perfect opportunity to close me. Look for closers. “I think I did well” is not the right answer. They need to follow up by asking me for the job. 15. D o you have any questions for me? Remember that quality candidates are interviewing you as well, and their questions will give you the opportunity to sell them on why they should work at your dealership. Poor or no questions can also indicate the candidate is the wrong person for the job. If at any point you don’t like the answers you are hearing, go right to question #13 and end the interview. Never make a job offer after the first interview. If I like a candidate, I will ask him or her to come back soon to meet with one of the other managers and assign a project. One of my favorites is to send the candidate home with a phone script and ask them to study it because part of their job entails answering incoming sales calls. When the candidate returns for the second interview, I will conduct a role play session. Those who know it get the job and those who don’t certainly won’t learn it after

they have the job. Provide your business card in hopes that they thank you for the interview via e-mail and or by phone and demonstrate good follow-up skills. One more thing I would like you to do before letting the applicant leave is to hand them off to another manager for a tour of the dealership. However, do not tell your applicant this person is a manager. Instead, tell them that you’re going to have one of your salespeople show them around before they leave. You may be surprised at what a person will say and ask when they think they are conversing with a peer. Hiring quality people is one of the most important aspects of your business, and making a bad decision can cost your business hundreds of thousands of dollars in lost opportunity. When you surround yourself with great talent, it’s easier to attract talented people and you should always be on the lookout for great talent. Sometimes it is found in the most unexpected places such as Best Buy, Verizon Wireless, restaurants, hardware stores, and places where you are in the role of a customer. I once hired a young man from Burger King just because he greeted me with a smile and great attitude. He turned out to be the dealership’s number one sales rep. Your next superstar is waiting to be found and groomed. Your success or failure as a manager is defined by the people you hire.

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www.teiinsurance.com June 2015

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Winging it is probably a bad idea. Whether you’re just getting off the ground or at the peak of success, winging is never the best option. Based on the unique needs of your dealership, NCM® Retail Coaches will develop customized, in-dealership solutions that streamline operations, improve performance, develop key competencies and enhance productivity. Don’t wing it; we’re here to keep you from landing in the red.

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And now for something completely different...

August 9–12,

TIADA

JW Marriott San Antonio Hill Country Resort and Spa www.TiadaAnnualConference.com

KEYNOTERS OPENING GENERAL SESSION

TUESDAY GENERAL SESSION

Communicate With Strength

A Car Guy and a Data Scientist Walk Into a Bar...

Karen E. Purves, M.A.

Joe Webb

Innovative Impact

DealerKnows Consulting and Chad Bockius Vast

J.W. Marriott

DEALER

ROUNDTABLE Luxury meets learning at San Antonio’s finest resort

DISCUSSIONS

Don’t miss the best dealers in Texas sharing their experiences, vendor opinions and best practices. TOPICS TO INCLUDE: Handling Customer Complaints Getting & Protecting Your Line of Credit Notions from the Nationals It’s All About Collections Best 20 Group Ideas EVER Getting to Know Your Legislator

Home to the 36-hole TPC San Antonio, host of the annual Valero Texas Open – a PGA Tour Experience!

• • • • • •

…and many more!

Recreation opportunities for the entire family including over 2,250 feet of fun water activities

TIADA has arranged a discounted rate of $199/night for conference attendees. Call (210)276-2500 for reservations.

WebDEALER – the Time is Now TxDMV’s online title transferring application is now LIVE and available to used vehicle dealers statewide. Stop by the WebDEALER Workshop area in the Expo and find out how you can stop waiting in line and start transferring online, right from your dealership.

Learning T

BHPH

Special Finance & Retail

Serial Entrepreneur

The lienholder’s learning lab

Winning in the indirect lending game

Big time achievers from outside the auto world

The BHPH Sales Process: What are You Selling? Brent Carmichael

12 Sales & Marketing Strategies to Dominate Your Market Cory Mosley

NCM Associates 20 Group Operations

Mosley Automotive/Mosley Communications

If It Were Easy, Everyone Would Do it BHPH Dealer Panel Discussion

Establishing Regulator-Resistant Repossession Procedures Michael W. Dunagan

Understanding Fair Lending Practices Shaun Petersen MacMurray, Petersen & Shuster, LLP

To Be Announced

Leedom Group

MPN Incorporated

Preparing for the Pivot Dawn Fotopulos BestSmallBizHelp.com

Combining Online & Offline Marketing for Maximum Profit Fred Gleeck Fred Gleeck Productions

Jameson & Dunagan, P.C.

Collections: Numbers That Matter & Why Paxton Wright

Hunting in a Farmer’s World John F. Dini, CMBA, CExP

Structuring Your Deals for 3rd Party Finance Finance Company Panel Discussion

Accounting for the Numberphobic Dawn Fotopulos BestSmallBizHelp.com

DEEPER DIVE

TAILOR YOUR EDUCATION:

MIX AND MATCH FROM 5 CONCURRENT SESSIONS

Wildcard From auction arbitration to viral advertising, anything goes Long Term Auto Values – Can You Handle the Truth? Steven Lang Yahoo Autos

Battle of the Sexes: Selling Differently to Men & Women Karen E. Purves, M.A. Innovative Impact

The Joys of Auction Arbitration Wholesale Auction Panel Discussion

Deadly Secrets of the Phone Ninja Jerry Thibeau Phone Ninjas

The Basics Core fundamentals to keep your foundation strong Choosing the Right DMS for You Industry Panel Discussion

Financing Your Inventory for Growth Will Chandler NextGear Capital

How to Read (and Understand) a Credit Report Angelica Jeffreys Equifax Automotive Services

TxDMV: Avoiding the 9 Most Common Dealer Violations Bill Harbeson / David George TxDMV Enforcement Division

Looking for something more than just a one hour sit-and-get? Consider adding one of these special sessions to your registration. Each of our “Deeper Dives” is a small group, four hour workshop full of interactivity, designed to give you a thorough understanding of a specific topic.

SPACE IS LIMITED

Deeper Dives are offered Sunday afternoon from 1–5pm and each is limited to 30 attendees.

A LA CARTE OPTION

Add one to your Conference registration for just $99, or choose to attend a la carte for $149.

Deeper Dive

TOPICS

Estate and Business Succession Planning for Dealers

Larry Oxenham Author, Senior Advisor American Society for Asset Protection

The Real Shark Tank: 4 Hours with the OCCC Eric Fancher Financial Examiner Office of Consumer Credit Commissioner

Everybody Rides: Delivering a Sales Experience They’ll Love

Cory L. Mosley Principal Mosley Automotive/ Mosley Communications

Specialty Sponsor

115

NextGear Capital

116

V-Auto

117

AutoTrader .com

112

Gold Sponsor Platinum Sponsor

102 Auto Action

101

100

Lane Gorman Trubitt

103 SSW Dealer Supply

LHPH, LLC/ Advantage Funding

110

109

108

104

105

106

107

Tax Refund Svcs Tax Man

ION GPS

Veros Credit

Contact At Once!

Counselor Library / Hudson Cook

Automotive Capital Resources

84 Ann Mullen Insurance

CPIA

63 Sigma Payment

United Acceptance

62 AutoStar Solutions

Waymer & Associates

39 Sparkling City Auto Auction

26 Carmax Auctions

Ituran USA

Primalend Capital

61 Secure Close

54 AutoRevo

81 Woodlands Financial

GM OnStar

68 Black Book USA

69 AutoRaptor CRM

41 DealerLane.com

Cars.com

46 Leedom Group

Peritus Portfolio

Cadence Insurance

21 Tri-State Dealer Svcs

20 Copart Auto Auction

45 CARFAX

33 Floorplan Xpress

32 TexCap Financial

Phone Ninjas

Consumer Portfolio Svcs

AUL Corp.

Lobel Financial

ADESA Auctions

Texas Capital Bank

Insurance Auto Auction

48 REPAY

Victoria Auto Auction

AutoZoom

AFC

Strategic Dealer Svcs.

Spartan Financial

Auto Master Shilson Goldberg Systems Cheung Assoc.

Passtime

Vantage Finance

Dealer Center

Alpha Warranty

Arcana Insurance

Frazer Computing

Preferred Warranties

Titan Card

Wayne Reaves MicroBilt Software Corporation

Strategic Warranty Svcs.

LOUNGE AREA

SDA, Inc.

SmartAuction

Skypatrol

TIADA

119

111

America’s NCM Westlake Associates Financial Svcs Auto Auction

www.TiadaAnnualConference.com

JW Marriott San Antonio Hill Country Resort and Spa

Nelson Wolff Exhibit Hall

Position Plus GPS

Metro Auto Eyewitness SCM Warranty Kelley Creek Blue Book Auction – Dallas Surveillance Barton Auto FInance

Equifax

AutoZone

MAP of EXHIBIT HALL

118

EDU

GO Financial

August 9–12,

True Car

19 Solutions by Text

Alliance Auto Auction

18 DealerSocket

MAIN ENTRANCE

Silver Sponsor

114

SCHEDULE of EVENTS August 9, 2015

August 10, 2015

August 11, 2015

11:00 a.m. - 8:00 p.m.

7:00 a.m. - 12:00 p.m.

7:00 a.m. - 10:00 a.m.

REGISTRATION / HELP DESK

1:00 p.m. - 5:00 p.m.

8:00 a.m. - 9:15 a.m.

8:00 a.m. - 9:00 a.m.

DEEPER DIVE SESSIONS

OPENING GENERAL SESSION

GENERAL SESSION

“Estate and Business Succession Planning for Dealers” – Larry Oxenham

“Communicate With Strength“ – Karen E. Purves, Keynote Speaker

“A Car Guy and a Data Scientist Walk Into a Bar…” – Joe Webb and Chad Bockius, Keynote Speakers

“The Real Shark Tank: 4 Hours with the OCCC” – Eric Fancher

9:30 a.m. - 10:30 a.m.

9:15 a.m. - 10:15 a.m.

LEARNING TRACKS

“The BHPH Sales Process: What are You Selling?“ – Brent Carmichael “12 Sales & Marketing Strategies to Dominate Your Market“ – Cory L. Mosley “Hunting in a Farmer’s World“ – John F. Dini “Long Term Auto Values – Can You Handle the Truth?“ – Steven Lang “Choosing the Right DMS for You“ – Industry Panel Discussion

“Establishing Regulator-Resistant Repossession Procedures“ – Michael W. Dunagan To Be Announced “Combining Online & Offline Marketing for Maximum Profit“ – Fred Gleeck “The Joys of Auction Arbitration“ – Wholesale Auction Panel Discussion “How to Read (and Understand) a Credit Report“ – Angelica Jeffreys

10:45 a.m. - 11:45 a.m.

10:30 a.m. - 11:30 a.m.

LEARNING TRACKS

“Understanding Fair Lending Practices“ – Shaun Petersen “Preparing for the Pivot“ – Dawn Fotopulos “Battle of the Sexes: Selling Differently to Men & Women“ – Karen Purves “Financing Your Inventory for Growth“ – Will Chandler

“Collections: Numbers That Matter & Why” – Paxton Wright “Structuring Your Deals for 3rd Party Finance“ – Finance Company Panel Discussion “Accounting for the Numberphobic“ – Dawn Fotopulus “Deadly Secrets of the Phone Ninja“ – Jerry Thibeau “TxDMV: Avoiding the 9 Most Common Dealer Violations“ – Bill Harbeson /David George

11:45 a.m. - 2:30 p.m.

11:30 a.m. - 2:00 p.m.

“Everybody Rides: Delivering a Sales Experience They’ll Love” – Cory L. Mosley

7:30 p.m. - 8:00 p.m. FIRST TIME DEALER ATTENDEE MEET & GREET

8:00 p.m. - 10:00 p.m. WELCOME RECEPTION

learning tracks

color key:

BUY-HERE, PAY-HERE SPECIAL FINANCE & RETAIL SERIAL ENTREPRENEUR WILDCARD THE BASICS

“If It Were Easy, Everyone Would Do It“ – BHPH Dealer Panel Discussion

EXHIBIT HALL GRAND OPENING

EXHIBIT HALL

Lunch with the Exhibitors

Lunch with Exhibitors

2:45 p.m. - 5:00 p.m.

2:15 p.m. - 3:15 p.m.

DEALER ROUND TABLE DISCUSSIONS

LEGISLATIVE SUMMARY

Each of the dealer roundtable topics will be repeated three (3) times: 2:45 p.m., 3:35 p.m. and 4:25 p.m.

All attendees are invited to attend this session, which will include recent regulatory developments as well as a complete update from the 84th Texas legislative session.

5:00 p.m. - 7:00 p.m.

3:30 p.m. - 4:30 p.m.

EXHIBIT HALL

Networking Reception with Exhibitors

HOUSE OF DELEGATES

7:30 p.m. - 9:30 p.m. PRESIDENTIAL AWARDS BANQUET

August 12, 2015 9:00 a.m. - 10:30 a.m. FAREWELL BREAKFAST BUFFET

Thank You to Our Current Sponsors P L AT I N U M

GOLD

Thank You to Our Current Sponsors S I LV E R

Specialty Sponsors Hotel Key Card: ADESA, Inc. n Lanyard: Arcana Insurance Services Mtg. Directional: Peritus Portfolio Services LLC Re-charge Station: Leedom & Associates

Bronze PLUS and Bronze AUL Corp.

AutoAction

Auto Master Systems, Inc.

Automotive Finance Corporation (AFC) AutoZoom

Cadence Insurance

C A R FA X

AutoRevo

Carmax Auctions

Contact At Once!, a LivePerson Company Dealer Center

Insurance Auto Auction

Ituran USA Inc.

n n

Metro Auto Auction â&#x20AC;&#x201C; Dallas

NCM Associates

PassTime

SecureClose

S o l u t i o n s b y Te x t

Tr u e C a r

United Acceptance Inc.

Waymer & Associates

Frazer Computing, Inc.

vAuto

GO Financial

M u l l e n I n s u r a n c e A g e n c y, I n c . n

PrimaLend Capital

Sigma Payment Processing

Titan Card

Vantage Finance

Wayne Reaves Software

AutoZone

LHPH, LLC / Advantage Funding

SSW Dealer Supply

Ta x R e f u n d S e r v i c e s / Ta x M a x

Autotrader

C o u n s e l o r L i b r a r y/ H u d s o n C o o k L L P

Preferred Warranties, Inc.

Sparkling City Auto Auction

Strategic Warranty Services

MicroBilt Corporation

Shilson, Goldberg, Cheung & Associates, LLP

C o l l a t e r a l P r o t e c t i o n I n s u r a n c e A g e n c y, I n c .

L a n e G o r m a n Tr u b i t t P L L C

Phone Ninjas

Autostar Solutions, Inc.

Floorplan Xpress LLC

Lobel Financial

Automotive Capital Resources, LLC

Copart Auto Auctions

Eyewitness Surveillance, LLC

SDA, Inc.

SkyPatrol

Strategic Dealer Services n

Tr i - S t a t e D e a l e r S e r v i c e s

Victoria Auto Auction

Westlake Financial Services

news & notes

Happenings in the Industry…

compiled by Texas Dealer staff

Fines & Violations Section Reminder

As it was mentioned in the May and June 2014 issues of this magazine, the Texas Department of Motor Vehicles no longer compiles the enforcement action summary that the agency previously used for internal purposes and which was provided as a courtesy to TIADA for use in our “Fines & Violations” section. TxDMV has indicated that the underlying enforcement action information can still be obtained through the public information (open records) process. According to the agency, requests for enforcement division records may be made via email to OGCOpenRecords@txdmv.gov. It is our understanding that such a request will not result in a summary report, but rather in delivery of the actual, individual final order documents, each of which may be several pages each in length. Also, please keep in mind that there will be a fee involved for these documents. We apologize for any inconvenience this situation may cause for our members.

OCCC License Renewal Deadline Approaching

exas dealers who hold a Motor Vehicle Sales Finance (MVSF) license from the OCCC are reminded that MVSF license renewals and fee assessment payments are due to the OCCC by July 1. The OCCC will continue to accept renewals and payments through July 31. According to the OCCC, initial renewal notices are mailed in early June and a second renewal notice is mailed not later than July 15. If payment is not received by July 31, your MVSF license will expire. You can reinstate an expired license by paying a $1000 late fee within 180 days of July 31. After that, you will be required to apply for a new license. Financing with an expired license is considered the same as financing without a license and can result in a $10,000 fine. This year, dealers can renew their license online using the new Application Licensing Examination Compliance System (ALECS). Eric Fancher, Financial Examiner with the OCCC, will be presenting The Real Shark Tank: 4 Hours with the OCCC, one of the Deeper Dive sessions

at the TIADA Annual Conference & Expo on August 9 at the J.W. Marriott in San Antonio, TX. For more information on MVSF license renewal, call the Office of Consumer Credit Commissioner at (512) 936.7600 or visit www.occc.state.tx.us.

TIADA Scholarship

hank you so much to everyone who sponsored a scholarship applicant. We have received a larger number of applications than in previous years and we are very excited about it. Applicants will be contacted soon and the winner will be announced at the awards banquet of the TIADA Annual Conference & Expo.

Recruiting Challenge Update

ere are the standings on the Member Recruit Challenge as of May 1st, 2015:

Members who have earned a cup of coffee on us: Bob Blankenship, Texas Auto Center . . . . . . . . . . . . . . . George Dodd, Dodd Motor Company . . . . . . . . . . . . . . Gary Charlton, Charlton Motors . . . . . . . . . . . . . . . . . . Michael Kirby, Texas Auto Pros . . . . . . . . . . . . . . . . . . . Richard Roman, G & R Auto Sales . . . . . . . . . . . . . . . . . Mike Kolb, SDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Phil Lathrop, VP Auto Sales . . . . . . . . . . . . . . . . . . . . . . Richard Dodson, B&M Car Company . . . . . . . . . . . . . . Trey Crouch, Wheels on Credit . . . . . . . . . . . . . . . . . . . . Brent Rhodes, Fiesta Motors (Buda) . . . . . . . . . . . . . . . . Chris Elkins, M D Auto Sales . . . . . . . . . . . . . . . . . . . . .

1 1 1 1 1 1 1 1 1 2 4

Members who have also earned a free registration to the 2015 TIADA Conference & Expo AND free hotel accommodations at the JW Marriott Resort and Spa during conference: Michael Zak, Dixon Motors . . . . . . . . . . . . . . . . . . . . . . 10 Members who have earned ALL of the above PLUS an all expense trip for 2 to Las Vegas to attend the NIADA national conference: Mark Brown, Red Carpet Auto Sales . . . . . . . . . . . . . . . 20 Wayne Meagher, M D Auto Sales . . . . . . . . . . . . . . . . . 32 Ahmed Belmeshkan, New Rio Grande Motors . . . . . . 47 T e x a s

D e a l e r

June 2015

regulation matters

A Cautionary Tale About Changing Your Business Entity

it back and pour a tall one as I bring you this real-life tale from the TIADA Legal Consultation Service hotline. As usual, the names have been changed to protect the innocent. Calhoun B. Risky was a sole proprietor dealer doing business as “Cal’s Risky Rides,” where he had built himself up a nice little BHPH business with about 200 active notes on the books. Mr. Risky, being a responsible dealer, held a P number from TxDMV, a motor vehicle sales finance license from the OCCC and a deferred sales tax permit from the comptroller. As his business grew, Cal realized two things: he had an increasing need for more capital; and his exposure to a potential lawsuit as a sole proprietor was increasingly worrisome. Fortunately Cal had a brother-in-law (Ahmed) with a few extra bucks and a burning, yearning desire to get in on the glitz and glamour of the BHPH car business. So the two decided to form a limited liability company, “What Could Go Wrong, LLC,” going in as 50-50 partners. Ahmed and Cal diligently researched what they would need to do in order to get Cal’s Risky Rides operating as an LLC instead of a sole proprietorship. Among other numerous state filings and updates, they applied for a new P-number with TxDMV and filed a transfer of license with the OCCC. Then they assigned all their existing contracts to the LLC. What Could Go Wrong, indeed. The fellows soon realized the nature of their predicament. The Texas Comptroller could very well take the position that sales tax must be accelerated and paid in full on each of the notes assigned to the new LLC, inasmuch as it was a separate legal entity from the sole proprietorship. Discovering this, Ahmed and Cal then decided they better cancel the contract assignments and have the notes stay with the sole proprietorship. One problem: the sole proprietorship no longer had an OCCC finance license; it had been transferred to the LLC. Quite the conundrum. Assign the contracts to the LLC and risk the Comptroller accelerating sales tax, or don’t assign them and risk a $10,000 fine from the OCCC for financing without a license. Damned if you do, damned if you don’t. At press time, it was unclear how the brothers-in-law would proceed. Their situation does lend itself, however,

June 2015

T e x a s

D e a l e r

by Danny

Langfield

TIADA DEPUTY DIRECTOR

Probably the simplest approach to this situation would be for a dealership to maintain its original finance license and keep all existing notes with the original sole proprietorship. to an examination of what another TIADA member might do if s/he were considering a similar business structure change. First it would be wise to note that such an undertaking should be done under the advisement of professionals who thoroughly understand the legal and regulatory landscape of the BHPH business. Cal’s Risky Rides sought counsel from a CPA, who did realize the new LLC would need a financing license, but unfortunately did not understand the nature of deferred sales tax. Probably the simplest approach to this situation would be for a dealership to maintain its original finance license and keep all existing notes with the original sole proprietorship. They could then apply for an all new finance license for the LLC and originate and collect all new notes from the new LLC. The downside would be the necessity of having to keep different books for the two entities. However, once the original notes had paid out or been written off, the dealer could let the sole proprietorship’s finance license lapse and conduct all business through the LLC. 39

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Under Texas law, in order to avoid sales tax acceleration, a Related Finance Company must have 80% common ownership with the dealership. Could Cal’s Risky Rides have formed an RFC (Related Finance Company) and assigned the notes to it, thereby avoiding sales tax acceleration? Not with the fact pattern described above. Under Texas law, in order to avoid sales tax acceleration, the RFC must have 80% common ownership with the dealership. Presuming Ahmed wanted a 50% cut of the RFC, that dog wouldn’t hunt. So there you have it. Come out to the TIADA Conference in August and maybe we’ll talk about how the What Could Go Wrong, LLC story turned out…

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June 2015

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resource guide The TIADA Website:

www.txiada.com Members can log in with their username/password and access our Dealer Member Directory, Legislative Action Center, Legal Consultation Service and much more. Register for all upcoming TIADA events online at the Calendar of Events; access our online membership application; find contact information for all our Local Chapters, and find many additional resources at our Links page. Texas Department of Motor Vehicles 888.368.4689 www.txdmv.gov Office of Consumer Credit Commissioner 800.538.1579 www.occc.state.tx.us

Texas Comptroller 800.252.1382 www.window.state.tx.us NIADA 800.682.3837 www.niada.com

REPOSSESSIONS

American Recovery Association 972.755.4755 www.repo.org or contact TIADA state office

FORMS

Burrell Printing 800.252.9154 www.burrellprinting.com

LUBBOCK

Auction Listings

Lone Star Auto Auction www.lsaalubbock.com

2706 Slaton Hwy Lubbock, TX 79404 806.745.6606 , Toll-Free 888.299.6606 General Manager: Dale Martin Wednesday, 10:00 a.m.

LUFKIN Lufkin Dealers Auto Auction

2109 N. John Reddit Drive Lufkin, TX 75904 936.632.4299 General Manager: Wayne Cook Thursday, 6:00 p.m.

TYLER Greater Tyler Auto Auction

11654 State Higway 64 W Tyler, TX 75704 903.597.2800 General Manager: Wayne Cook Tuesday, 5:00 p.m. – Repo Lane Tuesday, 6:00 p.m. – Consignment

June 2015

T e x a s

D e a l e r

Local Chapters VICTORIA Dennis Schroller Victoria Autos Direct 361.578.0530 Dennis@victoriaautosdirect.com Meeting – 1st Monday (Monthly) FORT WORTH Jerry Smith HJ Smith Automobiles 817.282.0102 hjsmithauto@yahoo.com Meeting- 4th Thursday of December, February, April, June, August and October DALLAS COUNTY Kevin Mims VP Auto Sales 972.864.1300 kevinm@vpautosales.com Meetings as needed/TBD HOUSTON Michael Zak Dixon Motors 281.931.1300 houiada@houiada.com Meeting – 2nd Monday (Monthly) SAN ANTONIO Robert Beck Stop N’ Drive Motors 210.432.1101 stopdrive@texas.net Meetings quarterly (dates announced at www.txiada.com) EL PASO Ricardo Gardea Cars Plus 915.778.8285 cars_plus@att.net Meeting – 3rd Friday (Monthly) 43

in memoriam Jimmy Boy Watson compiled by TIADA staff

t is with great sadness that we report the passing of TIADA past president (1994) Jimmy Boy Watson on April 15th, 2015 in Dallas. Jimmy Boy Watson was born May 22, 1931 in Rockett, Texas. He was in the automotive business for many years and owned and operated Sho-Kar Auto Sales in Dallas. In 1992 he was named Texas Quality Dealer of the year. He served in numerous leadership capacities in the used car business and went on to serve as president of TIADA in 1994. Jimmy Boy was a successful business man, avid sportsman, dedicated Mason and a faithful member of the Church of Christ. He also served in numerous leadership capacities in the Masons, the Safari Club of Dallas, and numerous other civic organizations.

June 2015

T e x a s

D e a l e r

“Jimmy Boy was the old style good ol’ boy dealer. He reached out to me in my early years in TIADA, as he saw the value of recruiting younger members. He was gregarious and charismatic. Many of us old timers remember him wearing a pink tuxedo to a TIADA conference. That’s the kind of guy Jimmy Boy Watson was,” said Phil Lathrop from VP Auto Sales in Garland. “He always wore different colored ostrich boots with a chaparral. I estimate he had about 40 pairs,” remembers Jim Campbell from Big Tex Auto Mart in Dallas. “He was indeed a very colorful guy,” added Keith Hagler from Taylor Auto, “He lit up the room whenever he showed up. He was the epitome of what a used car dealer is. Jimmy Boy gave a lot of time to the association and believed in what we did. He will certainly be missed.”

legislative bulletin

here is always a flurry of activity in the last two months of the session with legislators and special interest groups vying to have their bills land on the Governor’s desk and signed into law. Due to hard work and a strong grassroots effort, we have stopped or considerably slowed the four bills that would have given our industry significant heartburn. It’s not time to celebrate just yet as amendments are still a very real possibility. Two bills we are supporting continue to move through the process; HB 335 (Thompson, Ed) is a bill that would eliminate named driver only insurance policies, and HB 2076 (Oliveira) would clean up language related to the Mechanic’s Lien notification. At press time, each bill had been heard in its respective committee and was awaiting a full floor debate in the House chamber. The next step will be to get each bill out of the House and

by Jeff

Martin

over to the Senate where the process starts all over. By the time you are reading this article the regular session will have come to a close. If either of these two bills hit a significant snag it will be difficult to get them to the Governor’s desk. While the Oliveira bill has not seen any opposition, the Thompson bill is another story. We have seen significant resistance throughout the process from the insurance industry and I expect they will fight this bill to end. Look for a complete legislative wrap up in the September issue of Texas Dealer. Your best source of up-to-the-minute information on legislative issues that will affect your industry is the Legislative Action Center, found under Advocacy at the TIADA website, www.txiada.com. As always, we welcome the input of our members regarding legislative matters. TIADA’s legislative team will work diligently to keep you abreast of the issues and call on you to act when needed.

T e x a s

D e a l e r

June 2015

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board of directors meeting minutes April 20, 2015 | TIADA State Office, Austin, TX

compiled by Texas Dealer staff

At its meeting on Monday, April 20, 2015, TIADA took the following actions:

Jeff Martin provided legislative update. Discussed the status of various bills TIADA is currently tracking.

President Brent Rhodes called the meeting to order at 12:55 p.m.

Greg Zak presented the FY15 budget. He then proposed the FY16 budget.

Minutes Of Last Meeting

The board reviewed the current Business Partners Program and participants.

Kathrine Tolsch presented the minutes of the last Board of Directors Meeting. A motion was made to accept the minutes. Moved by Robert Beck, seconded by Ryan Winkelmann — PASSED

Treasurer’s Report

Greg Zak presented the Treasurer’s report. A motion was made to accept the report. Moved by Kathrine Tolsch, seconded by Juan Sabillón — PASSED

President’s Report

None

New Business

A motion was made to rename the TIADA Annual Scholarship to the TIADA Marvin Norwood Annual Scholarship. Moved by Kevin Mims, seconded by Tommy Gregory — PASSED The board accepted the resignation of VP Region 3, Kevin Mims.

Brent Rhodes updated the board on Executive Committee acceptance of two new business partners: Equifax and Passtime.

President Brent Rhodes appointed Phil Lathrop of VP Auto Sales in Garland to the vacant position of VP Region 3.

Executive Director’s Report

The Executive Committee unanimously approved the appointment of Phil Lathrop to the vacant position of President Elect.

Michael Thomasson provided an update on the recent activities of the NIADA Buy-Here, Pay-Here commission. Jeff Martin discussed the plans for the 2015 Special Membership campaign. Danny Langfield provided membership renewal analytics for the 2014/2015 renewal campaign. Phil Lathrop offered an update on the recent Awards Committee meeting. The board discussed the provisions of the Community Leader award as well as possibly renaming the annual scholarship. Cristina Fowler reviewed the current sponsorship for the upcoming Annual Conference & Expo. Jeff Martin reviewed the TIADA Annual Conference & Expo agenda and noted changes for this year. Board went into Executive Session from 3:40–3:57pm. No formal action was taken. 48

Old Business

A motion was made to ask the Bylaws Committee to address the issue of officer vacancies. Moved by Juan Sabillión, seconded by Robert BeckPASSED A motion was made to adjourn the meeting. Moved by Trey Crouch, seconded by Kathrine Tolsch Meeting adjourned at 5:54p.m. Respectfully submitted, Kathrine Tolsch, Secretary A complete copy of any reports referenced in this document and more detailed notes from the meeting are on file at the TIADA office and available upon request.

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TIADA Dealer Academy 2015 Keeping Your Dealership Legal and Compliant a seminar with

Michael W. Dunagan, TIADA General Counsel

Author of the standard-setting books, “Dealer Financing of Used Car Sales” and “Texas Automobile Repossession: A Lien Holder’s Legal Guide.”

Michael W. Dunagan’s ongoing quarterly compliance seminar features updates on both federal and state regulations with a focus on advanced dealership financing issues. This is the practical side of compliance from the association that understands you have a business to run — and you want to run it right. The seminar will focus on advanced financing concepts, with special emphasis on in-house financing, repossession & bankruptcy issues, OCCC compliance and federal regulations. • Customer ID requirements – what is acceptable? • Privacy Notice requirements – do we need a new, custom form? • Risk-Based Pricing – what does the rule require? • Credit Card Convenience Fees – what is allowable? • Adverse Action Rule – who is affected? • Consumer Financial Protection Bureau (CFPB) – what can dealers expect? • Bankruptcy – when do we have to give the vehicle back? • Repossessions – When does the 60% rule apply? Is repo notice required? Do we have to return custom wheels? Do we have to disclose a GPS unit?

• OCCC Audits – what are the most common mistakes dealers make? • TxDMV Enforcement – advertising violations, title management issues & more

PLUS:

• Texas Legislative Session – an update on bills that will affect the industry • Q & A – don’t leave until you get all your questions answered by the top industry expert in Texas, Michael W. Dunagan

Tuesday, June 16, 2015 Sponsored by: Collateral Protection Insurance www.cpiai.com

Fort Worth, Texas

Seminar will be held from 9:00am - 4:00pm Best Western Plus • 100 Altamesa Blvd. East • Fort Worth, TX 76134 817.293.3088

discount pricing for multiple attendees! MeMbers – First registrant $149, each additional $99 www.passtimeusa.com

www.fpxus.com

(Must be from same dealership)

NON-MeMbers – $299 Register online at w w w . t x i a d a . c o m or by phone at 800.442.5944. Texas Independent Automobile Dealers Association

feature Need a Line of Credit?

Be prepared for the LARGEST Financial Commitment of Your Life! {Editor’s Note: Paxton will be featured in the Buy-Here, Pay-Here learning track at the 2015 TIADA Annual Conference & Expo.}

hen dealers are evaluating their businesses they find themselves asking the following question: Will I have the capital I need to execute my plan? A line of credit (LOC) can be a great tool to help BHPH dealers increase their cash flow, receivables and profits. However, if the LOC is abused or mismanaged, it can also become a burden. So, do you really need a line of credit to achieve your operational goals? Often times, the answer is yes! Over the past decade, many BHPH benchmarks are trending in ways that make it difficult for operators to remain cash flow positive and profitable. Generally speaking, vehicles are more expensive, reconditioning costs are rising, and down payments are falling. All in all, the average cash in deal has INCREASED 63.7% since 2004! Let’s look at this impact, in terms of dollars, for a dealer selling an average of 50 cars per month: Monthly Sales Avg $ in Deal Monthly $ in Deal

2004 50 2,979 148,950

2013 50 4,877 243,850

Monthly Increase in $

94,900

Today, the above business model would annually require $1,138,800 more in capital than needed in 2004. Add rising operating expenses, longer term notes and increased losses to the equation; now you start to understand the significant necessity for more capital. While there are numerous ways owners can raise capital for their businesses, for many, a line of credit has proven to be a fundamentally sound choice. However, for a BHPH dealer, this is not always as simple as it sounds. Traditional lending options such as local banks or credit unions, generally do not have an appetite for this space. Why is that? Many dealers have been profitable for years, produce substantial revenue and adhere to all state and federal regulations. So why is it challenging to secure traditional financing at low interest rates? Bottom line... BHPH dealers originate a portfolio of accounts backed by customers and collateral that, even individually, June 2015

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by Paxton Wright Senior Consultant, 20 Group Moderator Leedom Group

Thankfully, there are financial institutions that specialize in providing capital to BHPH dealers. They understand our customers, collateral and business models.

are unappealing to traditional lending sources. Without knowledge of our industry or experience lending to dealers, it is unlikely to find capital in that arena. Thankfully, there are financial institutions that specialize in providing capital to BHPH dealers. They understand our customers, collateral and business models. While the interest rates and expenses can be significantly higher than traditional lending sources, they offer the best alternative for providing the capital you need, structured in way that allows you to succeed. Best of all, after a few years of solid financial reporting and portfolio performance, they can be a stepping stone to negotiate improved loan terms or even “bank rate” financing options. So, how do you get there? In my experience, with most all dealer principals, a line of credit for your business is the largest financial commitment you will ever make. With this understanding, comes significant responsibility and attention to detail in all aspects of managing this transaction and ultimately the line of credit itself. To best prepare you and your business for the due diligence process, here are a number of items you should plan to deliver: Loan Request Letter • Commitment Amount • Initial Funding • Usage Plan 51

Company Profile: • Dealership Origins and Locations • Executive and Key Management Bio’s • Business Philosophy • Company Affiliations (State Assoc., 20 Groups) • Unique Competitive Advantages • Organizational Chart • Business Awards and Recognitions Company Tax Returns, Income Statement and Balance Sheet (2 years or more) Company Cash Flow Statement (YTD) Company Bank Statements (90 days) Personal Tax Returns and Financial Statements State Licenses, including Selling and Finance License if applicable Company Formation Documents Policy and Procedure Manuals for all underwriting, collections and cash controls Static Pool Loss data (report generated from DMS) DMS Access (direct log-in for lender) Following the delivery of these items, most lending institutions will evaluate the information provided, review credit history and determine if your business is a viable fit for their program offerings. If yes, you will likely receive a letter of intent (LOI) outlining the size, scope, and expenses associated with their line of credit. For example, the LOI will show an anticipated commitment amount, loan term, interest rate, due diligence fees, and even legal expenses. This document will also spell out any key performance metrics and financial covenants that you will be expected to maintain. Once you have negotiated agreeable terms and executed the LOI, most lenders will schedule an on-site visit.

A successful on-site due diligence is paramount in building a relationship with your lender and ultimately in receiving credit committee approval. The purpose of the on-site visit is to validate the documentation provided above, conduct management interviews, a loan file examination, and complete a payment testing review. While each step in this process is important, I can assure you from being on the inside, the management interviews are most vital. Take this opportunity to shine a spotlight on your team’s expertise and demonstrate why you will be a solid partner for your lender. At the conclusion of this process, typically an updated LOI will be delivered and accounts for any adjustments that needed to be made as a result of due diligence findings. Be sure to have legal representation that understands your business and how these funds will be utilized and secured. Once both parties agree on final terms, the closing will typically occur within 14 to 45 days depending on the legal team, the lender and other circumstances. While this may seem like an intimidating venture to undertake, I can assure you that it is worthwhile. In fact, all of the required documents above should already be part of your standard operating procedures. If not, ask yourself why and then decide if you would lend millions of dollars to a business that is missing any component of what I’ve listed here. If your concern is cost versus benefit, I’m happy to assist you in completing that analysis and establishing the appropriate value. My goal is to help you understand how to secure a line of credit and ensure you are properly prepared. To learn more about identifying the right lender for your specific needs and negotiating the best terms possible, contact me directly: paxton@leedomgroup.com.

Specializing in Software for the “BHPH” Dealer! Visit us at

www.wincarsdms.com or call

817-927-5994 52

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Please Welcome Our Newest TIADA Members Cabrera’s Auto Mike Chism 3302 Nogalitos San Antonio, TX 78225

DEALER MEMBERS 2 Amigo Auto Sales Mohammad Neck 3112 E. Abram St Arlington, TX 76040

Carrrs Sam Musia 796 Winding Oaks Dr Waco, TX 76705

A Cars One Faraz Ayatollahi 2820 Lady Birds Dallas, TX 75220

Cars Auto Mall (branch) Hussein Yehia 4305 Vintage Way Garland, TX 75042

Accelerate Motorsports Abdul Mateen Modi 11311 Harry Hines Blvd, Suite 511 Dallas, TX 75229

Champion’s Auto Sales Co. LC Martin Aguayo 1820 Jacksboro Hwy Fort Worth, TX 76114

ACE Motor Group, LLC Hani Saadalla 3312 NE 28th Street Fort Worth, TX 76111

Champion’s Auto Sales Co. LC #2 Martin Aguayo 2024 Jacksboro Hwy Fort Worth, TX 76114

Alamo Autoplex Jose Cavazos 2121 Galveston Rd Houston, TX 77012

Charlton Motors Gary Charlton 1425 Justin Rd Ste 950 Lewisville, TX 75077

American Auto Group Bassam Ismail 8579 Bandera Rd San Antonio, TX 78250 American Truck Source LLC AJ Agiewich 10601 W HWY 29 Liberty Hill, TX 78642 Auto Hangar Craig D’Souza 11652 FM 730 N Azle, TX 76020 Auto Locators of Texas Richard Walsh 4460 Tradition Trail Plano, TX 75093 Auto Magic Car Sales Mojeed Adepegos 6802 SRl Thornton Dallas, TX 75232 Auto Mall 59 - Houston Ali Harandi P.O. Box 630042 Houston, TX 77074 Autofacil Enterprises Yoli Robles-Casanova 8631 N Lamar Austin, TX 78753 Autolimits Sami Noubani 1400 N Beltline Rd, Suite 100 Irving, TX 75061

Clement’s Auto Sales LLC Guillermo Clemente 3616 NE 28th Street Fort Worth, TX 76111 Commercial Finance Ali Harandi 13506 Sunswept Way Houston, TX 77082 Corporate Cars Inc Frank Tajgardown 8406 N Freeway Houston, TX 77037 Detmold Autos Inc Bilal Abdallah 1005 Gulf Freeway Houston, TX 77034 Deuces Auto Layden Walker 7036 Eckhert San Antonio, TX 78238 Diabco Auto Sales Mohammad Diab 1777 E Balm Canyon Palm Springs, CA 92264 Eride Motor Cars Saeed Hamedani 7021 John W Carpenter Fwy Dallas, TX 75247 Expert Auto Sales Aeba Rahmany 3124 E Abram, Suite 120 Arlington, TX 76010

Five-n-Drive Auto Sales, Inc Jeremy Tutle 536 S Mill St, Suite B Lewisville, TX 75057

Motor Power Co. Glenn Ostberg 327 S Business I-35 New Braunfels, TX 78130

Gerald’s Auto Sales (Airport Fwy) Gerald Maldonado 5213 Airport Fwy Fort Worth, TX 76117

National Auto Remarketing Nick Fallahzadeh PO Box 1663 Lake Dallas, TX 75065

Gerald’s Auto Sales (Mansfield Fwy) Gerald Maldonado 3621 Mansfield Fwy Fort Worth, TX 76119 Gerald’s Auto Sales (South Freeway) Gerald Maldonado 4416 South Freeway Fort Worth, TX 76107 Gerald’s Auto Sales, Inc. Gerald Maldonado 208 NW 28th Street Fort Worth, TX 76106 Green Line Motors Hussein Yehia 4305 Vintage Way Garland, TX 75042 GTH Motors Ghaith Abu Suleiman 4313 Lindbergh Dr Addison, TX 75001 IMD Motors Inc Mohammed Robah 5544 Alpha Rd Dallas, TX 75240 JJ Auto Sale LLC Jose Clemente 5518 E Belknap Street Fort Worth, TX 76111 K1 Auto Sales Keyvan Moslemi 4607 Enchanted Bay Blvd Arlington, TX 76016 Legend Auto Hassan Rahmanian 11106 Morrison Ln Dallas, TX 75229 Litani Motors Elias El-Ayoubi 10514 Shady Trail Dallas, TX 75220 Lonestar Autoplex Gustavo Castro 3866 Hemphill Fort Worth, TX 76110

Bronco Motors Hector Rodriguez 1700 N Cage Blvd Pharr, TX 78577

Export Dealer - Mexico Jorge Alberto Castillo Gonzalez 5103 Welara Dr Grand Prairie, TX 75052

Mancave Motorplex, LLC dba NTX Direct Jason Shawver 745 W Hurst Blvd Hurst, TX 76053

C J Auto Sales LLC Carlos Jiminez 1301 S General McMullen San Antonio, TX 78237

Fiesta Mart Maher Atteyah 8751 Navidad Irving, TX 75063

Mirage Motors Karim Ghoghaie PO Box 8000096 Dallas, TX 75380

June 2015

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Oryx Motors Ahmad Khatib 210 S Bagdad Road Grand Prairie, TX 75050 P. M. Standley Motorcars Jason Standley 1835 Forms Dr, Suite 120 Carrollton, TX 75006 Padillas Auto Sales Martin Padilla 3812 South Frwy Fort Worth, TX 76110 Palomino Motors Rhonda Galbreaith 7021 John Carpenter Frwy Dallas, TX 75247 Payless Auto Source Eddie Jamadi 2033 W McDermott, Ste 320 #149 Allen, TX 75013

Texas Capital Auto Credit Ali Harandi 9545 Hwy 6 S, Suite A Houston, TX 77083 Texas National Auto Sales Inc Asghar Salehi 3834 Fredricksburg Rd San Antonio, TX 78201 Texas National Auto Sales (branch) Kevin Salehi 5828 IH 10 San Antonio, TX 78201 The Prestige Car Akram Harb 405 Ridge Point Dr Lewisville, TX 75067 Tomcat Motors Emilio Villarreal 2209 San Dario Ave Laredo, TX 78040 Tovi’s Auto Sales Temer Tovi 2271 Tawny Owl Rd Grand Prairie, TX 75052 Triple E Automotive Sales Eric Oliva 2320 Santa Ursula Laredo, TX 78040

Pro Select Autos Amin Noor 4901 E California Pkwy Forest Hill, TX 76116

Tyson Motor Group Erik West 12423 Hawk Creek Drive Frisco, TX 75033

Quality Work by Davidson Pat Davidson PO Box 690831 Houston, TX 77269

U.S. Auto Sales Abdelmoniem El-Hassan 11310 New Kirk St, Suite #C Dallas, TX 75229

Salem Autos Adel Elhindawi 3515 E Division St Arlington, TX 76011 Sam’s Discount Autos Sam Aldaas 3301 E Division St Arlington, TX 76011 Southern Sun Motors John Scott 4135 Billy Mitchell Dr Addison, TX 75001 SpaCars Enterprises Inc Gerardo Barona 4004 San Pedro San Antonio, TX 78212 Speedway Motors LLC Austin Hunter 5380 N Foster Rd San Antonio, TX 78244

Variety Motorsports Kambiz Mostoufi 11202 Goodnight Lane Dallas, TX 75229 Versons Auto Sales Vernon Watson 110 W Little York Rd Houston, TX 77076 WBG Auto Sales Sky Chung 8041 Bolsa Ave Midway City, CA 92655

ASSOCIATE MEMBERS Eyewitness Surveillance Steve Ward 10856 Cardiff Lane Frisco, TX 75035

Sport Auto Center Miguel Aranda 7845 North Loop El Paso, TX 79915

True Car Pete Ramirez 13412 Galleria Circle, Building H Austin, TX 78738

Sport Motor Cars Hamid Massoudi 2560 Joe Field Rd Dallas, TX 75229

Vantage Finance Dallas Pagel 17410 Burt St, Suite B Omaha, NE 68118

behind the wheel

Martin

Can This Conference Really be That Different?

ine years ago we hosted an annual conference in San Antonio that attracted 56 dealers and 29 exhibitors. We offered six hours of education including one dealer panel. This year we will have almost 90 sponsors, we anticipate around 250 dealer attendees and we will offer over 34 hours of education, including dealer roundtables and four panel discussions. So other than the numbers, how are things going to be completely different as stated on the conference spread (see page 25)? After speaking to a number of dealers — those new to the business and those who have been around for a while, BHPH, special finance and retail operators — we concluded that our conference was as good as any auto dealer conference in the country. We also visited with our sponsors, who are a wealth of knowledge and have a great pulse on the industry. They too believed we had the auto industry part of the business down. However, we heard a couple of nuggets that we felt we could and should address. The newer dealers who haven’t attended felt the conference was only for the more experienced dealers; the retail dealers thought it was just for the BHPH guys; and some of you who have been attending for years said that when it comes to other general business education and in-depth training, auto dealers have to go elsewhere. That is why we took a completely different philosophical approach when we built this year’s conference. We asked the following questions... What do you need to know if you are in business? Then, what do you need to

by Jeff

TIADA EXECUTIVE DIRECTOR

know if you are in the independent automobile industry? And last, what do you need to know to be successful? This was the beginning of something completely different. First, the serial entrepreneur track was born; we wanted to build an education program that would challenge our more experienced dealers and offer something you can’t get anywhere else. This business is about more than buying and selling cars. Then, we focused on making sure we offered good education for the BHPH as well as the retail dealer -most conferences offer one or the other. We were the first conference to put structure around the dealer roundtable conversation and it always receives some of our highest marks so we moved it up a day to allow you to start your networking even earlier. And finally, we wanted to deliver the in-depth education you asked for. On Sunday we will offer three “Deeper Dives”, a small group workshop full of interactivity from 1–5pm designed to give you a thorough understanding of a specific topic. Each Deeper Dive session is limited to 30 attendees and classes are already filling up. If you are interested in a “Deeper Dive” you will need to register soon. It is hard to change when you have had the success we have had over the last nine years, but it is even worse to become complacent. If you are looking for a conference that offers something cutting edge, forward thinking, and completely different then visit www.TiadaAnnualConference.com to learn more about the event and to get you and your staff registered. We will see you in San Antonio.

...we wanted to build an education program that would challenge our more experienced dealers and offer something you can’t get anywhere else. 54

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NOT ALL PROGRAMS ARE CREATED EQUAL Debt Cancellation Coverage Voluntary Debt Cancellation Coverage (DCC) is an alternative to requiring Comprehensive and Collision Insurance.

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