Change to Titling:
Goodbye, White POA... Hello, Secure Dealer Reassigment In This Issue: – “Single Sticker” Part Deux – Michael Dunagan on Fraudulent Mechanic’s Lien Claims – Market Survey of Car Buyers – What You Need to Know About Millennials and Why It Matters
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2016 TIADA Board of Directors PRESIDENT Phil Lathrop/VP Auto Sales Inc. 2921 S. Garland Avenue Garland, TX 75041 Office: 972.864.1300 Email: phillipl@vpautosales.com PRESIDENT ELECT Kathrine Tolsch/CICO Auto Sales 11050 Harry Hines Blvd. Dallas, TX 75229 Office: 214.352.9282 / Fax: 214.352.8227 Email: cicoauto@verizon.net CHAIRMAN OF THE BOARD Brent Rhodes/Fiesta Motors 5150 Industrial Way Drive Buda, TX 78610 Office: 512.312.2201 Email: brent@fiestamotors.net SECRETARY Greg Zak/Dixon Motors 7902 North Freeway Houston, TX 77037 Office: 281.931.1300 Email: gzak@windstream.net TREASURER Trey Crouch/Trey Crouch’s Wheels On Credit, Inc. 636 E. Business 83 McAllen, TX 78501 Office: 956.972.0700 Email: trey@wheelsoncredit.com VICE PRESIDENT, WEST TEXAS (REGION 1) Paul Scott/Fiesta Motors – Lubbock 2599 74th Street Lubbock, TX 79423 Office: 806.765.3640 Email: pscott@gofiestamotors.com 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) Wayne Meagher/M D Auto Sales 2002 W. Main Street Grand Prairie, TX 75050 Office: 972.641.9598 Email: wayne@navchiefs.com 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 James Hobson/H-Town Motors 3714 Dyer Street El Paso TX 79930 Office: 915.564.9797 Email: htownmotors@sbcglobal.net VICE PRESIDENT AT LARGE Ryan Winkelmann/BJ’s Autohaus 5005 Telephone Road Houston, TX 77087 Office: 713.641.0980 Email: ryan.winkelmann@sbcglobal.net 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.org
Volume XVI
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Issue 2
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Fe b r u a r y 2 016
texasDealer contents
5 Officers’ Message
by Brent Rhodes, TIADA Chairman of the Board
8 On The Cover: Goodbye, White POA… Hello, Secure Dealer Reassignment by Mark Dubis with TIADA staff
14 W hat You Need to Know About Millennials & Why It Matters by Howard Polirer
19 Legal Corner: Fraudulent Mechanic’s Lien Claims Still Concern Car Creditors by Michael W. Dunagan
20 Upcoming Events 25 Market Survey of Car Buyers by Somir Paul
30 TIADA Scholarship Application 31 IRS Increases Small Asset Expensing Safe Harbor by Andy Biebl and Chris Hesse
34 Regulation Matters: “Single Sticker” Part Deux by Danny Langfield
37 TIADA Annual Conference and Expo 39 Doing What You Have Always Done, Getting What You Always Have by R.L. “Bud” Abraham
41 New Members 42 TIADA Member Application 43 Local Chapters 44 2016 VIP Auction Card Directory 46 Behind the Wheel by Jeff Martin
What’s happening at w w w . t x i a d a . o r g ?
DID YOU KNOW... You can register online to attend any of our
education seminars? New dates and locations for winter/spring are now available on the TIADA website. Check them out as one might be coming soon to a town near you. 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.org. 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 Maintaining Good Customer Service
T
he reputation of a used car dealer has sure taken a beating over the years. My local news station recently aired a segment titled, “Deadbeat Car Dealerships in Texas.” Furthermore, the internet is full of sites about “How to not get scammed at a dealership,” “10 things to look out for when buying a used car,” etc. Many of these warnings are legitimate because there are some bad dealerships out there and they deserve the negative publicity. So what are you to do to make sure that your dealership does not end up on the “Deadbeat Car Dealership” list? I have three suggestions:
1. M ake sure that you renew your TIADA membership! It will be the smartest investment you can make this year. Your membership will then greatly help you with my second suggestion… 2. S tay up to date with compliance issues. Many customer complaints could be prevented if the dealer would have known about new regulations and compliance issues. And TIADA is by far the best resource for up to date compliance issues. There are various TIADA seminars this year in different parts of the state that will assist you in keeping your dealership legal and compliant. I also learn so much just by reading this magazine each month.
by Brent
Rhodes
iesta Motors F (Buda) TIADA CHAIRMAN OF THE BOARD
3. I firmly believe that your customer service can keep you off the Deadbeat List. (It’s the lack of customer service that will probably get you on the Deadbeat List.) I recently read the book Crafting the Customer Experience for People Not Like You by Kelly McDonald and she says, “You can’t control the economy. But customer service is the one thing that is 100% in your control at all times.” I think you need to take customer service a step further. You might have heard the saying: “Aim for your customer’s heart, not just their head.” In other words, move beyond simply making transactions with your customers; create relationships with them. The Gallup Organization stated that “if you do not make an emotional connection with customers, then satisfaction is worthless.” So, how do we, car dealers, make an emotional connection with our customers? I believe we need to be more empathetic with our customers. Empathy creates an emotional connection; a trust that is crucial to demonstrating an authentic willingness and ability to help the customer. It is the ability to literally experience the world from another person’s perspective; to view life from their living conditions and to feel what it feels like to be that person.
So what are you to do to make sure that your dealership does not end up on the “Deadbeat Car Dealership” list? February 2016
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I was reminded of this recently when looking over my account portfolio and one customer’s name in particular jumped off the page. She lost her job not too long after she bought her truck from us and got behind on her payments due to the lack of income. However, she did not want to lose her truck and made partial payments for the next several months. There were many times that my staff wanted to repossess the truck from her because of her delinquency status. But I kept reminding them to put themselves in her situation. How would she get back on her feet without her vehicle? And besides, she always communicated with us. She eventually found another job and I’m excited to say that she is really close to paying off her truck! I know all accounts don’t end up like this, but it’s nice to celebrate the ones that do. By showing her empathy, we created an emotional
connection with her. And probably a customer for life! Walt Disney once said, “Whatever you do, do it well. Do it so well that when people see you do it, they will want to come back and see you do
it again and they will want to bring others and show them how well you do what you do.” As we start 2016, I hope you consider showing more empathy to your customers. Your business and our industry will benefit from it.
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on the cover by Mark Dubis with TIADA Staff
Change to Titling:
Goodbye, White POA... Hello, Secure Dealer Reassigment
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T
exas dealers know the title dance all too well — not to mention the complications that can ensue when that precious blue document is not present at the closing table for the buyer to sign. What to do? What to do? Use the brown, secure POA? Can’t do it unless you’re dealing with a trade-in and there is a payoff or a lost title. Have the customer come back in when the title becomes available? That has been the default setting for many dealers, and most can attest to the futility of trying to actually get the customer to come back in. Sometimes, it just ain’t gonna happen. Over the years, many dealers have resorted to having the customer sign a white, non-secure POA. Although technically not appropriate for dealer transactions, for years many counties would accept this document provided it had been granted to a “disinterested 3rd party” and not the dealer. Some counties even accepted the form when it HAD been granted directly to the dealer, although this practice was prohibited on the face of the document. This was the condition of the industry when the Vehicles Titles and Registration division (VTR) of TxDMV recently undertook to review its forms, practices and procedures with an eye toward ensuring compliance with federal law. During this review, VTR realized that the widespread use of white POAs in dealer transactions was, in most cases, a violation of the federal truth-in-mileage act, which strictly limits the use of POA’s for odometer disclosure statements. VTR brought the matter to the attention of Blake Ingram, a TIADA past president who occupies the position reserved for an independent dealer on the TxDMV board. “I was very concerned when I realized VTR was correct, and that dealers would need to stop using the white
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So How Does This Work? by Danny Langfield
The state is re-iterating its position that the white POA, also known as VTR 271, is not appropriate for dealer transactions. The state recently issued a new version of the VTR 271; however, neither the old nor the new version of the VTR 271 may be used in dealer transactions, according to TxDMV. At the urging of TIADA, the state has decided to allow the use of a secure dealer reassignment form (VTR 41-A) even when all the dealer reassignment spaces have not been used on the original title. TIADA believes this is an enormous win for the industry, as it negates the need for a POA when title is not present at closing. ACTION ITEMS: Starting immediately, TIADA is recommending that, on every applicable sale, dealers do one of two things: Have the customer sign the original title document; or, if the title is not present… Have the customer sign a secure dealer reassignment form (VTR 41-A). We are also recommending that dealers immediately stop using the white POA, as it is unclear whether counties will continue to accept them. Some counties have already begun rejecting dealer title applications supported by a white POA. Keep your TIADA membership current. This POA update is the type of critical information that is only provided to CURRENT members of TIADA. If you are not a member, you can join by calling 800.442.5944 or online at www.txiada.org. ADDITIONAL INFORMATION: This update applies to vehicles subject to the federal odometer disclosure law. Vehicles 10 years or older, or with a gross weight over 16,000 lbs still do not require the buyer’s signature on the title. Form VTR 41-A is only available from the VTR regional service centers as well as some county tax offices. It is a secure, numbered form; therefore it cannot be printed directly or downloaded. A sample image is provided on page 12. Regarding deals already completed with a white POA, but not yet transferred: depending on your county, these deals may still be accepted. If they are rejected, TxDMV has taken the position that you must have the customer sign the original title. Regarding the secure dealer reassignment form (VTR 41-A): As stated above, if the original title is not present at closing, a dealer may have the customer sign VTR 41-A. This form has an eight digit control number printed in red ink in the lower left corner. When the original title becomes available, the dealer must write in the next open reassignment space on the original title, “REASSIGNMENT ON _________” indicating the control number of the VTR-41-A that was used. VTR has indicated that the dealer may write that on any line in the next open reassignment space. If your county has any issues with accepting a VTR 41-A in this manner, please direct them to the state’s registration and titling bulletin, RTB 011-15. This announcement does not affect the secure, or “brown” power of attorney (VTR 271-A). The appropriate usage of this form has not changed. It may only be used when a vehicle is being traded in and the title is physically held by a lienholder or has been lost. In these situations, dealers should continue to use the brown POA. 9
POA,” said Ingram. “I told them, ‘Look, there are a lot of dealers out there using this form. And I mean a LOT. We have to find a solution that all dealers can implement while still satisfying the requirements of the state. Simply telling everyone to stop using the white POA would cause mass confusion and in some cases, completely freeze the vehicle titling process.’” Ingram explained to the agency that a dealer’s preferred method of completing the required odometer disclosures is to have all the information and signatures on the original title. “Unfortunately, that isn’t possible for dealers with multiple locations who have centrally located title offices, or for
dealers on a floorplan program where the lienholder has the title,” stated Ingram. “I realized we had a potentially serious problem on our hands, and I asked VTR to contact TIADA, work with them and see if a solution could be found.” Interestingly, TIADA Deputy Director Danny Langfield had been thinking about just this issue within the last year. “I had a chance to visit our sister association, Georgia IADA in Atlanta back in late Danny Langfield, 2014,” Langfield said. TIADA Deputy Director “I was there to steal all their good ideas and bring them back to Texas. I sat in on one of their dealer education classes, and I saw where they were allowing dealers to have customers sign a secure dealer reassignment form when the title wasn’t present at closing. I remember it was a major ‘A-HA!’ moment. I thought, ‘If we could implement this someday in Texas, that would be big.’” Then the 2015 legislative session got underway, Langfield says, and the idea was promptly moved to the backburner in favor of more pressing issues. When the issue with the white POA arose, VTR Director Jeremiah Kuntz and his staff met with TIADA to discuss the issue in depth and look for possible answers. Meanwhile, Mona Rodriguez, the Comptroller at Texas Auto Center in Austin, got a call from her title service telling her they were sending back about 30 transactions using the white POA form because a county audit found these transactions were out of compliance. She was told they had to resolve the issue and at that point the only way to resolve the problem was to contact every customer and have them come back in and sign the title when it became available. Mona contacted Jeff Martin and Danny Langfield at TIADA who shared that a potential solution was in the works and to be patient while they worked out the issues. Mona said, “We basically just held our breath, hoping a solution would be found.” “We worked with TIADA to explore how other states were handling this issue,” Kuntz said. “Our joint research enabled us to come up with a middle ground solution that met our regulatory requirements and was not disruptive to the sales process of Texas auto dealers.” Kuntz continued, “We always look to our association partners to
“I sat in on one of [Georgia IADA’s] dealer education classes, and I saw where they were allowing dealers to have customers sign a secure dealer reassignment form when the title wasn’t present at closing. I remember it was a major ‘AHA!’ moment. I thought, ‘If we could implement this someday in Texas, that would be big.’”
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try and come up with solutions that are good for the industry as well as meeting our statutory requirements.” “You know who else was a key part of this? The counties, especially Dallas, Harris, Tarrant and Travis,” Langfield stated. “They really understood the street-level implications of these changes, and our conversations with them were extremely helpful.” Mona was delighted that a solution had been found. “When the reassignment form was implemented, we still had to have customers come back in and sign the form, but I did not have to send titles out to our folks where we risk misplacing or losing the title.” Mona continued, “We just got a big supply of the reassignment forms and now have every customer sign the form at closing if the title isn’t there. If the title is available, we naturally have them sign that, but otherwise a completed reassignment form is part of every
package. We are very grateful for the help and support that TIADA provided in this situation.” Tony Proud from Auto Union in Houston had begun running into problems due to the POA issue and he shared, “Since we often don’t physically have the titles we were running into problems with the white POA form that we had been using for years, and then suddenly it wasn’t being accepted by the state,” Proud said. “Now we just have the customer sign the reassignment form and it’s really a perfect solution. This is the right way to do it, and it helps everybody.” Jeff Martin, the Executive Director of TIADA summed things up well when he said, “In our industry and this regulatory environment things are always a bit of a roller-coaster ride, but this seemed like a ride with no brakes. You knew it was going to end eventually; it just felt like it was going to end poorly. I think we all left the first meeting with TxDMV
a little frustrated. We had already reached out to our members to gauge the impact of eliminating the POA with no alternative and it was going to be significant.” Martin continued, “We have always taken the position that we can’t just go to a state agency or a legislator and complain; we have to bring solutions. This one wasn’t immediately obvious, but we have developed a really good relationship with TxDMV so I felt like with some time we would get there. No one wanted to harm the customers or the flow of business.” Mark Dubis is an automotive market strategist and writer for industry publications and blogs. He is also one of the founders of Carfolks.com, a program to highlight the performance of customer focused auto dealerships. You can read more of his articles at www.ilovemycustomer.com. He can be reached at (216) 712-6712.
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feature
What You Need to Know About Millennials & Why It Matters by Howard Polirer
Director, Industry Advancement, Autotrader
F
14
or 50 years now, the boomer generation has driven the evolution and meaning of cars as we know them today. Now, their millennial children have come of age, and they will have the same kind of impact on the car industry as their parents. Despite that their sheer numbers are similar to boomers, that’s where the similarity ends. The Millennials are the most diverse, most educated, most socially-conscious and most techsavvy group living on the planet today. More than half, for example, have at least some college education (vs. Boomers at 36%).1 By 2030, their buying power will exceed all other consumer groups combined.2
Who They Are
Even more significantly, though, is the way they communicate, shop and buy, which is radically different from their parents and is universally tied to technology. Indeed, technology use, more than any other characteristic, is the defining characteristic of this generation.1
Affordability Is the Top Concern for Millennials 1
Born between 1980–2000 (75 million)5 46% of the workforce by 20206 Annual income by 2017 (trillions): $3.4 vs. Boomers $2.87
Attitudes & Behaviors4
Expect speedy, efficient transactions Trust peers more than subject matter experts Very social — online and offline Believe they can make the world a better place
There’s a perception that cars aren’t important to Millennials, but that’s actually not the case. Cars ARE T e x a s
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important to Millennials — they simply aren’t buying them as much as older generations because of their current economic situation and not for lack of interest.8 As a result, this generation is more likely to say that personal debt impacts their ability to purchase a vehicle more so than their older counterparts, likely because they may be carrying a lot of college debt. As a result, 40% are shopping for a car under $20,0001 and are more likely to consider a used car than older drivers.1
71% Factor in Cost of Ownership Before Buying a Car1
Most car shoppers are concerned with cost of ownership, but it’s especially true for Millennials. They look more closely at the lifetime cost of a vehicle than older shoppers. Cost is also the top concern when selecting where to service their vehicle.
Additionally, Millennials tend to be more value-conscious and pride themselves on using technology to find all the information they need, but 56% report frustration with being able to find the best deal.1
What You Can Do:
Stock cars that are in demand in your market, and price them aggressively and competitively to appeal to younger shoppers. Consider investing in resources that can help you identify the cars shopped most on popular websites in your local area, and consider using an industry pricing tool. Ensure consistent pricing online and offline. If you have a service drive, post your service rates online. Promote your special offers both online and offline. Provide information about total cost of ownership from thirdparty sources.
Include information about F&I on your dealership website. Doing their own F&I research makes consumers more likely to buy according to the 2015 Online Retail F&I Study by MakeMyDeal.
38% of Millennials Are Satisfied With Their Dealership Experience
There are many opportunities to start building relationships with Millennials to overcome any negative perceptions. Start by working on their hot-button issues: transparency, trust and respect, and avoiding trying to sell a car or service they don’t want.2 Nothing matters more to Millennials than authenticity, integrity and an ability to deliver them. Yet, they are open to new experiences and brands, and are interested in building relationships with them.3
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What You Can Do:
Merchandise cars with multiple photos, video and descriptive comments Avoid a sales pitch; instead, be a consultant who’s armed with answers Be prepared to engage with them on their terms — text, email, chat — let them choose Monitor your reputation — they’re checking you out everywhere
Millennials Use Their Mobile Devices for the Entire Car Shopping Process1
Millennials use their mobile device 2.5 times more often than non-Millennials while shopping for a car, and use it to do everything from looking up car listings to finding pricing to reading consumer ratings and reviews.1 They want instant gratification and put
16
a premium on simplicity, ease, efficiency and convenience in all their transactions. Moving them through the transaction is important in developing and maintaining a relationship with them.4
What You Can Do:
Ensure that your virtual dealer ship (your website) is open 24/7 Understand that the variety of devices is going to increase exponentially and that Millennials will be using all of them Don’t worry about customizing your website and car listings for every device. Yes, you want to make sure that shoppers have a good experience across devices, but that doesn’t necessarily mean investing in the development of special apps. Rather, work with your website vendor to make sure is easily viewable and searchable on mobile devices and focus on robust
content and merchandising of your listings.
References
1 Source: Autotrader Audience Segmentation Study 2 Source: Morpace/Autotrader Dealership Experience Study 3 Source: Edelman “The 8095 Exchange” 4 Source: BCG Perspectives 5 Source: Population Reference Bureau 6 Source: Lynch 7 Source: Javelin Strategy & Research 8 Source: Autotrader Millennials Research Howard Polirer is the Director of Industry Advancement at Autotrader/ Cox Automotive and can be contacted at Howard.polirer@coxautoinc.com. Visit http://agameautotrader.com/insights/ overview to access Autotrader’s Dealer Learning Center.
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TIES FOR -in (if nega ................ part of these No.: ........ ........ trade ........ keep Stock er may = net ............... .$ ................ WARsRAN ................ lf (Sell ................ payment ................ minu 2) my beha price (1 ................ ................ Total down others on of cash ............$ ................ ................ paid to .: balance ss ................ ................ V.I.Nany.................. amounts 3. Unpaid y) ........ regardle company.. including ance ance comp Services tive equit repairs charges insurs, r and insur to any (nega to Othe $ ff 4. ... y for paid payo ance paid Accessorie insur trade-in onsibilit insurance Options,or companies damage A. Net $ damage no resp ...mes physical TOTAL company of physical er assu $ rages with CE $ insurance B. Cost ... nal cove . The deal paid to CASH PRI of optio REPAIRS t insur ance C. 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Amount the policy ing at this (Not Asse paid by Seller to govern fee and deputy Good Until e I want regaberdpaid under in the amou TO entary anyon has not eter is workTHE ITEMIZ andSED Charge with will be ge or loss nce from ants CAU IN 8. Financefee, and license fee inspection fee. Docum person to . The odom company st dama DUE $ the rty anceAGE and warr ts insura ED prope youis as ed again insur stated aboveINCLUDED byTY ge. DAM as TOTAL an esen name obtain insur Taxes, title retain $7.00 of each dama ge le repr may r FINANC IS teral PER ed to flood airab will ct. Ihase ed nce. I mustl milea the colla PRO Purc or unrep the Seller this contra expos law, You rty insura and actua INSURANCE loss AND byfigur I must keep Rate. ired a total not been owe under proof of prope URY 1. The trueBIL H SALE to red ntage ctnot INJ RANCE: not requce CAS and has ced. 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18
T e x a s
D e a l e r
February 2016
legal corner
Fraudulent Mechanic’s Lien Claims Still Concern Car Creditors
W
hen our state’s constitution was written and approved by voters in 1876, one of the things considered important enough to include was a “Mechanics, Artisans, and Material Lien” provision. Since our current constitution predated the invention of the motor vehicle, the lien was probably intended to cover the labor of blacksmiths and buggy makers and similar types of businesses. Article 16, Section 37 of the Constitution of the State of Texas of 1876 (there was an earlier constitution approved in 1845, but was replaced after the Civil War) provides: Mechanics, artisans and material men, of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon, or material furnished therefor; and the Legislature shall provide by law for the speedy and efficient enforcement of said liens. While the creation of a lien to protect honest and honorable mechanics, artisans and material men was probably a good idea, and has no doubt served those folks well over the years, it probably never crossed the minds of the constitutional drafters that this provision would be used by crooks, thieves, and opportunists to take property from the rightful owners. The problem for car creditors and vehicle mortgage lien holders: Texas statutes give valid mechanic’s liens a “super-lien” status, making them superior to prior, recorded and
February 2016
T e x a s
D e a l e r
perfected title liens and security interests. This “super-lien” status has made vehicle mechanic’s liens a very attractive property right, one that has drawn the attention of many people. The Texas Department of Motor Vehicles had at one time estimated that around 50 per cent of all mechanic’slien foreclosure applications involved fraudulent or improper claims. One county tax assessor-collector put the fraudulent or questionable claim figure at more like 70 per cent, and her testimony to that effect before the Texas Senate Transportation and Homeland Security Committee raised some eyebrows. But, no matter whose estimate you take, it was clear that there was a problem. It was in the spirit of achieving a balance between the legitimate goals of mechanics and repair shops for the “speedy and efficient” enforcement of their rights, and the need for the state and for owners and lien holders of vehicles to be protected from fraud and theft, that in 2009 TIADA initiated, and the Texas Legislature passed, reform legislation. The goal of the legislation was to deal with the problem in a way that didn’t interfere with the rights of those who do follow the law and use the lien in the manner and for the purposes that the drafters of the constitution contemplated.
by Michael
Dunagan
W.
TIADA GENERAL COUNSEL
The problem for car creditors and vehicle mortgage lien holders: Texas statutes give valid mechanic’s liens a “super-lien” status, making them superior to prior, recorded and perfected title liens and security interests. Many of the abusers of the mechanic’s-lien law were not mechanics at all. In fact, one of the major targets of the legislation was the use of fraudulent mechanic’s liens by persons wanting to “wash” liens from vehicles that were purchased or acquired from debtors without awareness of the lien status. Creating fictitious mechanic’slien claims, sometimes using nonexistent repair shops, was a way to obtain a free-and-clear title certificate to the vehicle. 19
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22 Better Buy Here Pay Here Financials Houston, TX OTHER TIADA EVENTS April 2016 18 TIADA Board of Directors Meeting Austin, TX
July 2016 24 TIADA Board of Directors Meeting San Antonio, TX
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20
We have also run into thieves who would apply for a mechanic’s lien to a vehicle, often within a few days after the vehicle was sold by a dealer to a retail purchaser, indicating that the purchase was part of a conspiracy to obtain title to the vehicle. Some of the thieves would attach counterfeit postal receipts to their mechanic’s lien applications, without having given notice to anyone. The vehicles were then sold to innocent individuals and dealers using the mechanic’slien titles issued by the state. In a massive prosecution, the U.S. Attorney for the Western District of Texas a few years ago obtained convictions against 19 individuals from Texas, New Jersey, and Arizona who conspired to wash titles and strip liens to approximately 800 vehicles using, among other devices, fraudulent mechanic’s liens. Many of the victims of those crimes were Texas BHPH dealers. Other schemes we’ve seen to abuse mechanic’s liens include: Tow-truck drivers who have “bought” bad checks given to vendors for repairs or parts, then repossessed the vehicles and demanded as much as $2,500 for a “repossession fee.” One debtor filed a statement in court that he had responded to an ad in the Green Sheets offering a fee to persons who were about to be repossessed for turning over their vehicles to the advertiser. After this debtor turned over the vehicle and was paid his fee, the advertising party promptly filed a fraudulent mechanic’s lien application. Collusion between debtors and friends or relatives who may or may not be mechanics to create a mechanic’s lien is a common occurrence.
Under the mechanic’s-lien processing system, anyone can submit an application for a mechanic’s lien through a county tax collector’s office, which forwards it to the Texas Department of Motor Vehicles (TxDMV). Except for certain counties that scrutinize the applications, such as Tarrant and Dallas Counties, little or nothing is done to check the accuracy of the claim, or whether the services were actually rendered (Tax Assessor John Ames of Dallas County has appointed an investigator in his office
...conviction for the submission of false or misleading information with a mechanic’s-lien application is a class B misdemeanor. to look for all types of title fraud, including mechanic’s-lien fraud). If the paperwork appears to be in order, the state will issue a negotiable title, free and clear of any lien or security interest, to the applicant. The only way to stop the issuance of mechanic-lien title is for a real party in interest (such as a secured party) to file a lawsuit naming as defendants the applicant and the State of Texas, seeking an injunction against the issuance of the title. The 2009 legislation made it more difficult for those without a legitimate claim to game the system. For instance, notice of a lien claim now has to be made to the county tax assessor prior to the application going to TxDMV for processing. The tax assessor then sends notice of the lien, with the information about it, to all registered owners and lien holders, who T e x a s
D e a l e r
February 2016
will have an opportunity to intervene if the claim is not legitimate. Deadlines were established for filing lien claims. Also, the claimant has to give registered owners and lien holders an opportunity to inspect the vehicle. It had been common for mechanic’s-lien claimants to refuse access to vehicles or even disclose their location. Additional information is now required to be submitted with an application, including the legal name of the applicant, an employer I.D., the actual location where the repair took place, and a copy of a signed work order. Franchised dealers, who have not been a part of the problem, are exempted from these additional requirements. If an applicant for a mechanic lien doesn’t comply with the new requirements, any lien foreclosed upon is inferior to a prior recorded mortgage lien. Also, conviction for the submission of false or misleading information with a mechanic’s-lien application is a class B misdemeanor. While the number of reported fraud cases involving mechanic’s liens is down drastically since implementation of the 2009 amendments, suspicious claims are still being filed that appear to be intended solely to strip the car creditor’s lien from the title. Third parties, who are attracted to the “super-lien” status of mechanic’s liens, have been formulating schemes to obtain mechanic’s-lien rights against vehicles, including the financing of repairs in exchange for the assignment of the mechanic’s lien. After the debtor defaults on the financing agreement, the finance company would repossess the vehicle and demand that the secured party pay the repair charges, interest (sometimes as high as 300 per cent) and repossession and storage fees to get the vehicle back. TIADA sought additional February 2016
T e x a s
D e a l e r
protections for secured parties in the 2015 session of the Texas Legislature. To make it more difficult for third parties to take assignment of mechanic’s liens (and thus obtain “super” lien status), amendments were added that: Made it clear that release of pos session of a vehicle by a mechanic upon receipt of payment (other than by a bad check or stopped credit charge) would extinguish the mechanic’s lien, and
Provided that a mechanic’s right to possession of a vehicle under a lien could not be assigned to a third party that advanced loan proceeds for repairs. (See “A Victory at the Legislature” in the October 2015 edition of Texas Dealer for a full discussion of the amendments.) What can a secured car creditor do to protect its lien interest from fraudulent mechanic’s-lien claims?
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Here are some suggestions: Titles should be timely trans ferred to perfect security interests and to place the creditor’s lien in the state’s title records. If a title hasn’t been transferred, the lien holder’s position isn’t perfected against most thirdparty claims, and the lien holder is not entitled to notice on mechanic’s and storage lien claims. All mechanic’s-lien claims should be investigated. Determine if the listed shop even exists. Shops are now required to allow lien holders to see the work order and other paperwork, and examine the vehicle. Take along a master mechanic who can tell whether the work has in fact been done. In one fraudulent lien claim case, the mechanic quickly dropped a $5,000 engine overhaul bill when an expert witness confronted him with evidence that the engine still had its original parts, and the block had simply been painted. A certified mechanic can made a good witness at trial if litigation over the matter ensues. There is little that can be done, however, if the vehicle gets sold and disappears
before your expert can make his inspection. Photos and videos can also be used to assist in evaluating whether work was done, or was done properly. If the claimed work appears to have been performed, and the work appears to have been authorized by the owner, an attempt should be made to negotiate a reasonable amount for the parts and services provided. If a mechanic’s-lien claim appears to be fraudulent, it may be necessary to file suit and seek a court order seeking to have the sheriff or constable take possession of the vehicle pending a trial on the dispute. The party seeking the writ must swear to facts sufficient to justify the issuance of the order, and must post a bond. But if the value of the vehicle justifies the cost, this is an effective method of forcing the claimant to prove the authorization for the work and the completion of the work under oath. It can also protect the vehicle from sale or alteration pending the trial. One possibility is to simply pay the disputed lien charge to get the vehicle, then sue for money
damages to the extent you can prove the charges are improper. The down side of this procedure is that the type of person who files false lien claims probably doesn’t have the assets to satisfy a judgment. Another suggestion we make is that lien holders encourage their customers to come to them when problems arise. Of course, if the customer is part of the conspiracy to create a bogus lien, there is little the creditor can do to prevent this from happening. Refusing to assist customers in repairs and sending them away with a reminder that they are responsible for repairs is a sure-fire way to have mechanic’s-lien claims placed on vehicles. 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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February 2016
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feature Market Survey of Car Buyers by Somir Paul
President, Woodlands Financial Services
T
he following data comes from the Market Survey of Car Buyers conducted annually by Woodlands Financial Services, Inc. This survey of 351 car buyers was conducted from October 1, 2015 to October 30, 2015. The sample size for the 2014 survey was 337 customers. The sample was randomly selected from contracts that were purchased from Texas dealerships from January
2011 to September 2015. Customers were interviewed in person at the Woodlands Financial Services payment center or by telephone. Customers were generally located within a 150 mile radius of Houston. The average contract term was 36 months; the average amount financed was $10,000; the average monthly payment was $400; and the mileage on the vehicles ranged from 80,000 to 200,000.
WHAT BROUGHT YOU TO THE DEALER?
What brought you to the dealer? % 50
46
45
42
40 35 30
26
25
21
20 15
19
9
10 5
20
2
3
2
4
6
0 2015
2014
Online Referral Repeat Customer #1 REASON TO BUY?
TV/Radio
Magazine
Driving By
#1 Reason to buy? % 45 40
39
38
35 30
25
24
22
20
17
19
16
15 10
13 6
5
4
1
0 2015 Selection/Inventory February 2016
T e x a s
D e a l e r
Customer Service
1
2014 Price
Financing
Location
Appearance 25
WHEN DO TO BUY YOUR NEXT VEHICLE? When do youYOU plan toPLAN buy your next vehicle? Undecided
60
36 12
Future
28
19
Next Year
27
9 9
This Year 0
10
20
30
2015
40
50
60
70
%
2014
Would you buy new or used? WOULD YOU
BUY NEW OR USED?
%
50
45
43
45 40
34
33
35 30
24
25
21
20 15 10 5
0 2015 New
What kind of vehicle? WHAT % 40 35
2014 Undecided
Used
KIND OF VEHICLE? 40
38
34 30
30 24
30 25 20 15 10
2
2
5
0 2015
Truck 26
2014
SUV
Car
Van T e x a s
D e a l e r
February 2016
WHAT AMOUNT OF MONTHLY PAYMENT CAN YOU MAKE ON THE NEXT VEHICLE?
What amount of monthly payment can you make on the next vehicle? 3
CASH IN FULL
1 5
$501+
7
27 26
$401-$500
38
$301-$400 $300 OR LESS
23 0
5
10
2015
15
20
OWN Do you DO own orYOU rent your home? OR %
70
25
27
2014
30
35
40
45
RENT YOUR HOME?
66
60
54
50
41
40 30
43
30
20 10
5
4
0 2015
2014
DID YOU RESEARCH ONLINE BEFORE Own Rent/Lease Other SHOPPING FOR YOUR LAST VEHICLE? Did you research online before shopping for your last vehicle? 69
66
% 70 60 50
34
31
40 30 20 10 0
2015 February 2016
T e x a s
D e a l e r
Yes
No
2014 27
DO YOU PLAN TO BUY FROM THE SAME DEALER AStheYOUR LAST PURCHASE? Do you plan to buy from same dealer as your last purchase? % 45 40 35
40
40
35
34
30
26
25
25 20 15 10 5 0 2015
2014
Yes
No
Undecided
Why would you buy from the last dealer you visited/purchased? % 70 60
60
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*Multiple answers given. Total may exceed 100%.
50 40 30 20 10
0
11
17
16
Repeat Customer
8
4
Pricing
3
21 7
3
Financing
2015
Selection/Inventory Customer Service
5
Location
2014
Important Findings from the Survey riving by, referrals and repeat customers D accounted for 87% of the total buyers at the store, the same as 2014. Critical factors that influenced the buying decision in order of importance are: Inventory Selection, Pricing, Customer Service and Financing. This year’s results are exactly the same as the previous two years. This year’s sample shows that 34% shopped on the internet compared to 31% last year. 28
nly thirty-one percent of the customers plan to O purchase a vehicle in the next two years. This is down from 55% for surveys completed in 2013 and 2014. 60% are undecided compared to 36% in 2014. Customers who would go back to the same dealer to buy their next car is at 35% compared to 40% last year. The most important reasons for a customer to ‘avoid a dealer’, in order of importance are: lack of customer service, want a new vehicle, not enough selection, and the price was higher than competitors. T e x a s
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May 1, 2016 {Applications and/or any required documents received after May 1, 2016 will NOT be accepted.} Criteria and Guidelines 1. Each applicant must be entering or currently enrolled in an accredited college or a trade school. Proof of enrollment must be included with this application. 2. Each applicant must provide a letter from their TIADA member sponsor that includes the sponsor’s address and Saturday phone number. 3. Each applicant must complete the application form. 4. Applicant must be in the top 25% of class. If applicant is currently enrolled, provide college transcripts with official university imprint. In addition, a copy of high school transcripts is required for applicants who are college freshmen. 5. Provide a detailed description of participation in any academic, honorary, civic or extracurricular activities in college. In addition, a detailed description of high school activities is required from college freshmen along with a college acceptance letter. 6. Compose an essay of no more than two typed, double-spaced 8 ½” x 11” pages. The essay should discuss the applicant’s relationship with their TIADA scholarship sponsor, current education goals and future aspirations as it relates to the applicant’s subject/training area. 7. Provide at least two (but no more than three) letters of recommendation, no older than one year, from college/high school faculty, employers or other appropriate sources (not related).
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Date: Name:
DOB:
Address: Email: City:
State:
Zip:
State:
Zip:
Telephone Number: High School Last Attended: Address: City: Dates of Attendance: Date of Graduation: Other High Schools Attended (Names and Addresses):
College(s) you are attending or plan to attend for admission:
Parents Name(s): TIADA Member Name (Sponsor): TIADA Member Company Name: TIADA Member Address: City:
State:
Zip:
Sponsor Signature Should you have any questions, please contact TIADA at 800.442.5944. Please return the completed application with all required documents to: TIADA Attention: Scholarship Applications 9951 Anderson Mill Rd., Suite 101 / Austin, TX / 78750
T e x a s
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feature
IRS Increases Small Asset Expensing Safe Harbor by Andy Biebl and Chris Hesse Principals at CliftonLarsonAllen
T
he IRS has increased the lower tier safe harbor amount from $500 to $2,500 for immediate deductibility of small assets, effective for years beginning on or after January 1, 2016. The change affects any business that does not maintain an Applicable Financial Statement (an SEC statement, a certified audit, or a governmentally mandated financial statement) and applies to amounts spent to acquire, produce, or improve tangible property that would normally be capitalized and depreciated.
Deduction versus Depreciation
The new $2,500 threshold applies per invoice or (per item substantiated on an invoice), and must be applied consistently for both financial reporting and tax purposes. As a result, small businesses will be able to immediately deduct many expenditures that would otherwise need to be spread over a period of years through annual depreciation deductions. The IRS Notice says that upon examination, it will not challenge a safe harbor expensing amount of up to $2,500 for pre-2016 years, if the taxpayer has accounting procedures at the beginning of the year that treats these amounts as an expense in its non-tax books and
records. This audit protection provision for pre-2016 years protects businesses that did not elect the $500 safe harbor amount previously because their practice had been to expense small assets under a greater limit, such as $1,000 or $2,000. Businesses with an Applicable Financial Statement may have a written accounting policy, applied consistently for financial reporting and tax purposes, which allows asset acquisitions up to $5,000 per invoice, or $5,000 per item on the invoice, as a current deduction. To use either of these de minimis safe harbors, the taxpayer must make an election by attaching a statement to a timely filed federal tax return. This election is an annual decision.
Example Using the New Safe Harbor
Acme Construction acquires 20 new computer tablets for its field managers and estimators. The invoice reads: “20 Panasonic 8GB Tough pads at $2,200 each = $44,000.” Assuming Acme has accounting procedures in place at the beginning of the year to deduct items under $2,500, the company may expense this $44,000 invoice for tax purposes without consuming any of its Section 179 first-year expensing limitation. Acme’s tax
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return will require a written statement indicating that it has made an election to utilize the de minimis safe harbor for the current year. The company’s books must also reflect consistent expensing of items under $2,500. The de minimis safe harbor does not limit a taxpayer’s ability to deduct what is otherwise an allowable repair that exceeds the safe harbor amount (e.g., a new rubber membrane replacement on a flat roof of a commercial building). The de minimis safe harbor merely establishes a minimum threshold below which all qualifying amounts are considered deductible.
How we can help
Contact your tax advisor if you have questions about adopting an increased safe harbor de minimis expensing amount for 2016 and beyond. Andy Biebl can be reached at andy.biebl@claconnect.com or 612-397-3121. Chris Hesse can be reached at chris.hesse@claconnect.com or 612-397-3071.
Garage Liability Kevin Smith Insurance is now Tri-State Dealer Services. With expansion and coverages being available outside of Texas, we’ve changed our name to better suit the areas of our growing agency.
1-800-687-3236 Tri-State Dealer Services is one of the largest writers of Garage Liability in the state. We work with several A+ rated companies which offer exceptional rates to car dealers and repair shops. Call today for a “quick” 10-minute quote!
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WE ALSO OFFER THESE COVERAGES:
F&I • Vehicle Service Contracts • GAP Insurance • Tire & Wheel Vehicle Protection Products • Property • Wreckers 2 Car Haulers • Cargo • Dealer Bonds • Personal Lines T e x a s
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February 2016
TIADA DEALER ACADEMY 2016 Education Offerings for Winter/Spring 2016
8:30 a.m. - 12:00 p.m.
9:00 a.m. - 4:00 p.m.
The craziness of a busy BHPH operation can make it tough to plan for future growth. But sometimes you need to take a few hours off from working IN your business so you can work ON your business. Participants will learn:
The seminar will focus on advanced financing concepts, with special emphasis on in-house financing, repossession & bankruptcy issues, OCCC compliance and federal regulations.
• How to increase their credit line, and/or establish a new line • Cash flow management (the key to future planning) • How to determine how many units and dollars you need on hand • Static pool analysis—what it is and how it works • How to properly value inventory, including turn time • Proper expense allocation and costing MEMBERS - $99 (includes up to 3 attendees for dealership) NON-MEMBERS $199
• OCCC Audits – what are the most common mistakes dealers make? • What is the Comptrollers position on GPS units? • Credit Card Convenience Fees – what is allowable? • Consumer Financial Protection Bureau (CFPB) – how might it affect dealers? • Bankruptcy – when do we have to give the vehicle back? MEMBERS - 1st Registrant $149, each additional $99 NON-MEMBERS $299
Wednesday, May 11, 2016 – Dallas Wednesday, June 22, 2016 – Houston
Monday, February 8, 2016 – Houston Monday, April 11, 2016 – Temple Monday, June 6, 2016 – Tyler
An Introduction to Transferring Titles This self-guided online course is designed to walk you through the process of a successful title transfer and is best suited for people new to transferring titles or those who want to brush up on the basics. MEMBERS $49 / NON-MEMBERS $99
For details and registration, visit www.txiada.org/DealerTrainingCenter
Register online at w w w . t x i a d a . o r g or by phone at 8 0 0 . 4 4 2 . 5 9 4 4 . Texas Independent Automobile Dealers Association
regulation matters “Single Sticker” Part Deux
by Danny
W
hew! That’s a relief. Looks like we finally have this “single sticker” thing just about figured out. As all dealers now know, the registration and inspection stickers were combined in 2015, resulting in the elimination of the inspection sticker — and plenty of confusion. Dubbed, “Two Steps, One Sticker” by TxDMV, the gist of the matter was that a vehicle was now required to have a “current,” passing inspection in order to be registered. Clear enough, right? Right! For now, that is. However, as of March 1, 2016, the definition of “current” will change. This may be best explained by looking at the pre-March 1, 2016 definition and the post-March 1, 2016 definition.
Pre-March 1, 2016
“Current” inspection means the vehicle has to have at least one full month of good inspection remaining at the time the registration application is submitted to the county.
Post-March 1, 2016
On a dealer sale, “current” inspection will mean the vehicle has to have been inspected in the 180 day period preceding the sale date. According to the various regulatory agencies that oversee this process, nothing else will change. Below we will cover a few points likely to cause confusion… but first, a recap of what I wrote in this space last April regarding vehicles that you believe DO have current inspection: According to TxDMV, as long as a vehicle’s in spection is current, the county’s systems are supposed to automatically verify the date and type of the last inspection. However, if that automatic verification fails (this is reportedly happening on about 3% of transactions), the county must manually enter the date and type of last inspection. To do that, the county may require the dealer to provide a copy of the vehicle’s VIR (Vehicle Inspection Report). If a dealer doesn’t have a copy of the VIR, we are told that you may go to the website mytxcar.org, enter the VIN and print out the result, if it shows
34
Langfield
TIADA DEPUTY DIRECTOR
…as of March 1, 2016, the definition of “current” [passing inspection] will change. On a dealer sale, “current” inspection will mean the vehicle has to have been inspected in the 180 day period preceding the sale date. inspection to be current. TxDMV has stated that the county will accept either the VIR or the printout from mytxcar.org as proof of current inspection. A copy of the VIR may also be obtained at any inspection station, according to TxDMV. TxDMV has taken the position that, if automatic verification fails, and if a VIR or a printout from mytxcar.org does not indicate that the vehicle has current inspection, that means the state has no record of a current inspection. In that case, TxDMV has stated that a new inspection must be obtained. Recommendation: We highly recommend that dealers include a copy of the VIR or a printout from mytxcar.org with each title transfer T e x a s
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February 2016
submitted, rather than relying solely on the automated inspection verification from TxDMV.
Now, a few points of potential confusion. First, you will no doubt be seeing a large amount of coverage in the media about this issue, which will likely be emphasizing the point that a vehicle must be inspected in the 90 day period preceding the registration application. The 90 day period applies only to private sales and registration renewal. On a dealer sale, to reiterate, the vehicle has to have been inspected in the 180 day period preceding the sale date. This is the result of an intense TIADA lobbying effort during the 2013 legislative session when the “single sticker” law was being crafted. Without the dealer exception we were able to negotiate, dealers would have had to get vehicles inspected even when they still had up to 9 months good inspection left. The second point of potential confusion is with regard to vehicles being registered in counties where emissions testing is required in addition to the normal safety inspection. Nothing has changed here, but it is worth noting the current process: A vehicle that was previously registered in a non-emissions county which is now applying for registration in an emissions county must provide evidence to the county of a passing emissions test dated within 90 days of the date the county processes the registration application. To repeat: This only applies to a vehicle that was previously registered in a non-emissions county which is now applying for registration in an emissions county. No doubt there will be more complexities to iron out once March 1 arrives and the new process is in place. TIADA will continue to keep you abreast of all developments. I’d also make sure you are receiving our weekly email updates; that is the medium we use to communicate changes in the most timely manner. If you aren’t getting those emails, are not sure if you are, or just want to add additional employee addresses to your membership profile, login to www.txiada.org or give us a call at 800.442.5944 and we will be glad to help. February 2016
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This is the result of an intense TIADA lobbying effort during the 2013 legislative session when the “single sticker” law was being crafted. Without the dealer exception we were able to negotiate, dealers would have had to get vehicles inspected even when they still had up to 9 months good inspection left.
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5th AnniversAry event Come Celebrate Five Great Years With EPI El Paso! Tuesday, February 16th Party at Rosa’s Cantina* - 7 PM - 11 PM Wednesday, February 17th Anniversary Sale - 10 AM *Enjoy live music, food, and drinks. Due to space limitations, invited dealers and one guest only, please.
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T e x a s
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feature
Doing What You Have Always Done, Getting What You Always Have by R.L. “Bud” Abraham
Detail Plus Car Appearance Systems
I
f dealers do not change their paradigm about detail department management and employees, they will always have problems. Many years ago, some wise sage coined this meaningful phrase, “if you do what you have always done, you will get what you have always got...” Later another wise sage stated it this way... “doing the same thing over and over again and expecting a different result is insanity...” At the risk of being offensive, I believe that many auto dealers ignore the wisdom of these statements with regard to their detailing/reconditioning department. For most dealers the detailing department is a problem child, a dirty, messy, disorganized, and unsightly area. Staffed by undependable employees whose work habits result in low quality work that takes too long to complete. In general, the department is costly and troublesome to operate. Labor, supply and chemical costs to cars detailed is far too high. So how does a department like this exist in an otherwise efficiently operating and profitable dealership? It would seem that the dealer keeps doing what they have always done with regard to detailing/reconditioning. At the risk of being presumptuous on this issue, I will offer my opinions on some of the attitudes that most in the dealership, including general managers, service managers, and fixed operations managers have who continue to do what they always have: See detailing /reconditioning as an expense area See it as a necessary evil Give it little, or no, management time Provide little supervision of the department Invest very little in technology to improve perfor mance and production
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Hire the same type of people they have always hired, “typical detailers” Pay as little as possible for employees Don’t hire a competent department manager/ supervisor (usually a detailer) Provide no formal or ongoing training for the detail manager or technicians Allow an attitude to prevail in the dealership that the detailing/reconditioning department is the “lowest place in the dealership” While not every manager is guilty of all of these points, I can say with some confidence that quite a few are guilty as charged. And, it is usually enough to cause them to “get what they always have”.
What is the Dealer to Do?
1
Recognize that detailing is an “in-demand” automotive service for the motorist and consider selling the service to the public. At the least, you used to look at the department as a “profit center” even if it only sells its services to the new and used car departments. The dealership’s in-house needs can be a very profitable customer for your detailing/reconditioning department.
3
2
success.
Change your paradigm about detailing. See it as an important and critical part of the dealership’s
Make the decision to devote some of your valuable management time to the detailing/reconditioning department. Let us face it; you are the prime mover with regards to the department in the dealership. If people see you giving your time to insuring a successful and profitable department, it will be. Do not expect others to care anymore about the department than you do. The time and attention you give it is a clear reflection of this to all, especially to detail employees. 39
4
It is not critical that you personally supervise the department, but you must insure that a competent management level person is assigned to supervise the department setting and monitor performance goals and standards like any other department in the dealership. Without this supervision, how can you expect anything than what you get?
5
Whether you realize it or not, there is a lot of advanced technology available that will increase productivity, maximize labor, improve quality, and reduce the time to process a vehicle. You must search this technology out. And, you must be willing to invest more than a few dollars for a shop vacuum, portable extractor, and squeeze and spray bottles.
6
Probably the biggest problems dealerships have are the people they hire for the detailing department. For all the criticism I hear from dealerships about the detail/recon personnel, they persist in hiring the same type of people... detailers. If anything is clear evidence of “doing what you have always done and getting what you always have” is the hiring of “experienced detailers”. Experienced detailers are the “type” of people who are not looking for a long-term job, but are looking for work. They are transient in nature and their entire work history reflects this. They have had a great many jobs in a short period; move around a lot; have bad driving records and many “social” problems. So why do dealerships persist on hiring these type of people? The answer lies partly in some of the other points already mentioned. For example, if you do not see the department worthy of anyone’s time then why would you hire better people? Or, if your pay scale is low you are building in “constant turn-over”.
7
Low pay is a direct reflection of your attitude about the importance of detailing and its importance in the dealership. For example, what if you paid the detailing department supervisor a salary of $40,000 plus bonuses per year? If a detailing technician received $12.00 - $15.00 per hour, plus benefits? It would be clear to everyone in the dealership that this is an important part of the business. Maybe your detailing department cannot justify these pay scales, but paying low does send a message to the employees themselves, as well as others in the dealership what the dealer thinks about the department. In the two freestanding professional detail centers that I personally operated on an absentee-owner basis in the 80’s and 90’s, the pay for the manager was a minimum of $30,000 plus bonuses and benefits. Full-time employees were paid a minimum of $10.00 per hour. The point of this example is to let you know that detailing can justify these kind of pay scales and the type of personnel that are deserving of these salaries.
40
8
Every department in the dealership has a competent manager. One who understands production, profitability, motivation. etc. The skills for a good manager is not whether they can perform the job function of the department, but whether they can manage. Do you hire a mechanic as the Service Manager? However, almost without exception in dealerships you find a detailer assigned as the manager/ supervisor. Most, I have found, have absolutely no management or people skills. All they can do, at best, is detail a car. And that is even questionable, because they have had no formal training, which leads to the next point.
9
With all of the problems a dealership has with their detailing department, few, if any make any effort to provide their detail/recon personnel any formal training to perform their job better. And don’t kid yourself, the detail employee knows very well that they are not afforded any training or way to improve themselves in their trade. Don’t dealers offer the sales personnel, mechanics, collision repair technicians, etc. on-going training? Why not detail/reconditioning technicians? Do you know the International Detailing Association (IDA) offers a comprehensive, two-part Detailer’s Certification Program?
10
If you want to eliminate the problems you have with the detailing department you must do most or all of the above-mentioned things. Which should help to eliminate the attitude in the dealership that the detailing department is “the lowest of the low”.
Summary
As always, what is written here is not the last word, or the only word on the subject, but one man’s opinion. In all sincerity, however, it is an informed opinion developed over the past 30 years that I have been working with many companies who want to incorporate detailing into their existing businesses. And, like the dealer, they see detailing in the same way that I have described, and they, like the dealer experience the same exact problems. If you want to change what you are “getting” in relation to your detailing department, then read this article and make every effort to implement some of these recommendations.
R.L. “Bud” Abraham is president of Detail Plus Car Appearance Systems in Portland, Oregon; and a 45+ year member of the car care industry. He is also a founding member and past executive director of the International Detailing Association. He consults with auto dealers to develop and upgrade their detail departments. Mr. Abraham can be contacted at 503-816-7304 or buda@detailplus.com.
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Please Welcome Our Newest TIADA Members DEALER MEMBERS All Core Mark Alexander PO Box 18956 Austin, TX 78760
American Auto Credit — Bluebonnet Nabil Darwish 2847 Bluebonnet Ave Port Arthur, TX 77642 American Auto Credit — Gulfway Nabil Darwish 2915 Gulfway Port Arthur, TX 77642 American Auto Credit — Woodrow Nabil Darwish 1945 Woodrow Blvd Port Arthur, TX 77642 Austin Expo Cars Sebastian Kupcewicz 16203 FM 1325 Austin, TX 78728
Harvest Autos William Frank 3006 SW 26th Ave. Amarillo, TX 79109
Tipton Motors Inc — San Benito Juan Ochoa 1750 W. Expressway San Benito, TX 78586
Melendez Auto Sales of El Paso Jessica Melendez 1590 Joe Battle Blvd. EL Paso, TX 79936
Zephyr William Jernigan 901 10th. Street Plano, TX 75074
PAACO — Tyler Carlos Martinez 12360 State Hwy 155 S Tyler, TX 75703 Tipton Motors Inc. Juan Ochoa 3840 N Expressway Brownsville, TX 78526 Tipton Motors Inc #4675 Juan Ochoa 4675 N. Expressway Brownsville, TX 78520 Tipton Motors Inc — Boca Chica Juan Ochoa 3588 Boca Chica Blvd Brownsville, TX 78521
eWay Auto Group, LLC Julie Nguyen 1213 Trend Dr Carrollton, TX 75006
Tipton Motors Inc dba Tipton Hyundai Juan Ochoa 450 E. Morrison Rd Brownsville, TX 78526
ASSOCIATE MEMBERS
Ace Motor Acceptance Corporation David Algood 111 Cupped Oak Dr, Suite F Matthews, NC 28104 Binary Printing Solutions Eric Maerker 1812 Cindy Ln. Bedford, TX 76021 Makes Media Justin Getz 9007 Rockcrest Dr Austin, TX 78759 Track Your Truck Robert Hall 21754 S. Center Ave. New Lenox, IL 60451 Xavier Reyna, CPA Xavier Reyna 8433 Katy Freeway, Ste 250 Houston, TX 77024
GARAGE LIABILITY WAYMER & ASSOCIATES
(Black & White with gray gradient) Texas I n d epen d ent A utomob i l e D ea l ers A ssociation
1-800-447-5152 February 2016
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Proud Member for over 20 years
41
TIADA Membership Application
2016
Business Name: ____________________________________________ Select one:
Dealer Member
Associate Member
Contact Person: ____________________________________________ Address: __________________________________________________ City: _________________________________________
2016 TIADA Membership Dues:
State: _______
Zip: __________________ County: _____________________________
$425 (Dues include NIADA membership)
E-mail address: _____________________________________________ Phone: _______________________ Fax: ________________________ Dealer P Number: ___________________________________________ Who referred you to TIADA? __________________________________ Mailing Address (if different from above): __________________________________________________________ City: _________________________ State: _______ Zip: ___________
PLEASE INDICATE PAYMENT METHOD: Check or Money Order payable to TIADA Check # __________ Credit Card Card Number: __________________________________________________ Sec.Code: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Expiration Date: ____________ Monthly Payments - $100 initial payment & $29.50 per month Via Credit Card (Please enter card information above. Authorization Agreement required - contact state office) Via Bank Draft (Authorization Agreement & voided check required - contact state office)
Mail or Fax Application To: TIADA Membership Services, 9951 Anderson Mill Rd., Suite 101, Austin, TX 78750 FAX 512.244.6218
www.txiada.com
512.244.6060
800.442.5944
Dues are not deductible as charitable contributions for income tax purposes but may be deductible as miscellaneous itemized deductions, subject to IRS restrictions. It is estimated that 20 percent of your dues dollars is used for lobbying activities and is therefore not deductible.
42
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resource guide The TIADA Website:
www.txiada.org 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
The story on pg. 31 of the December issue incorrectly stated that a NMVTIS report is available with a Carfax. A NMVTIS report is only available on a Carfax in California at this time. The association regrets any confusion this may have caused. February 2016
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Local Chapters VICTORIA Dennis Schroller Victoria Autos Direct 361.578.0530 Dennis@victoriaautosdirect.com Meeting – 1st Monday (Monthly) FORT WORTH Mark Jones MCMC 817.703.7973 mjones@mcmcauto.com Meeting – 4th Thursday of Jan–May and Sep–Oct DALLAS COUNTY Kevin Mims VP Auto Sales 972.864.1300 kevinm@vpautosales.com Meetings as needed/TBD HOUSTON John Freeman Galena Park Motors 713.675.0559 houiada@houiada.com Meeting – 2nd Tuesday (Monthly) SAN ANTONIO Robert Beck Stop N’ Drive Motors 210.432.1101 stopdrive@texas.net Meetings quarterly (dates announced at www.txiada.org) EL PASO Ricardo Gardea Cars Plus 915.778.8285 cars_plus@att.net Meeting – 3rd Friday (Monthly) 43
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2258 S. Treadaway, Abilene, TX 79602 325.677.3555, Fax 325.677.2209 General Manager: Gregory Chittum Thursday, 10:00 a.m.
AUSTIN
www.iaai.com
Sparkling City AA Corpus Christi New! www.sparklingcityaa.com
2149 IH69 Access Rd Robstown, TX 78380 361.767.4100, Fax 361.767.9840 General Manager: Wade Walker Friday, 10:00 a.m.
ADESA Austin
DALLAS / FT.WORTH METROPLEX
2108 Ferguson Ln., Austin, TX 78754 512.873.4000, Fax 512.873.4022 General Manager: Steve Swanson Tuesday, 9:00 a.m.
ADESA Dallas
www.adesa.com
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
BELTON Belton Auto Auction New! www.beltonautoauction.com
212 E Loop 121, Belton, TX 76513 254.899.2886, Fax 254.613.4582 General Manager: Joe Lavigne Thursday, 10:00 a.m.
* VIP card accepted for sell fees only 44
sell fee only
www.adesa.com
3501 Lancaster-Hutchins Rd. Hutchins, TX 75141 972.225.6000, Fax 972.284.4799 General Manager: Brad Garrett Thursday, 9:30 a.m.
Alliance Auto Auction Dallas 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
www.iaai.com
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.
Rockwall Auto Auction New! www.rockwallautoauction.com
1810 I-30 Frontage Rd. Rockwall, TX 75087 972.771.9919, Fax 972.722.4827 General Manager: Frank Post Tuesday, 7:00 p.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.
1911 E. Division, Arlington, TX 76011 972.274.5437, Fax 214.944.1950 General Manager: Jennifer Kitchens Saturday, 9:00 a.m.
EL PASO
America’s AA Dallas
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.
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 St., Grand Prairie, TX 75050 972.522.5000, Fax 972.522.5090 General Manager: Jennifer Wesner Tuesday, 9:00 a.m.
El Paso Independent Auto Auction www.epiaa.com
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. T e x a s
D e a l e r
February 2016
Insurance Auto Auctions*
SAN ANTONIO
16602 East Hardy Rd. Houston, TX 77032 281.443.1300, Fax 281.443.4433 General Manager: Louis Cappi Thursday, 9:00 a.m.
ADESA San Antonio
www.iaai.com
Insurance Auto Auctions* www.iaai.com
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.
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
2535 West. Mt. Houston Houston, TX 77038 281.847.4700, Fax 281.847.4799 General Manager: Michelle Casper Wednesday, 9:00 a.m.
Manheim Houston www.manheim.com
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
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.
6000 East Loop 281 Longview, TX 75602 903.212.2955, Fax 903.212.2556 General Manager: Jeff Loftin Friday, 10:00 a.m.
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.
Sparkling City AA San Antonio New! www.sparklingcityaa.com
13510 Toepperwein Rd San Antonio, TX 78233 210.298.5477, Fax 210.298.5484 General Manager: Brandon Walston Tuesday, 10:00 a.m.; Thursday, 1:30 p.m.
TYLER Greater Tyler Auto Auction New! www.greatertyleraa.com
11654 Hwy. 64 W, Tyler, TX 75704 903.597.2800, Fax 903.597.3848 General Manager: Wayne Cook Tuesday, 5:00 p.m.
Insurance Auto Auctions*
WACO
1826 Almeda Genoa Rd., Houston, TX 77047 281.819.3600, Fax: 281.819.3601 General Manager: Rob Frazier Thursday, 2:00 p.m.
5577 Highway 80 East Longview, TX 75605 903.553.9248, Fax 903.553.0210 General Manager: Robert Dunning Thursday, 9:00 a.m.
Alliance Auto Auction Waco
America’s AA North Houston
LUBBOCK
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.
1440 FM 3083, Conroe, TX 77301 936.441.2882, Fax 936.788.2842 General Manager: Buddy Cheney Monday, 6:30 p.m.
Insurance Auto Auctions*
Heart of Texas Auto Auction
5311 N. CR 2000 Lubbock, TX 79415 806.747.5458, Fax 806.747.5472 General Manager: Lori Davee Tuesday, 9:30 a.m.
2508 Old Marlin Hwy. 6 Waco, TX 76705 254.755.7713, Fax 254.755.7746 General Manager: Allan Wichkoski Thursday, 7:00 p.m.
America’s AA Houston New! www.americasautoauction.com
www.americasautoauction.com
Big Texas Auction of Houston New! www.bigtxauctions.com
2000 Cavalcade St. Houston, TX 77009 832.204.7500, Fax 832.204.7499 General Manager: Joe Lavigne Friday, 10:00 a.m. www.houstonautoauction.com
6767 North Freeway, Houston, TX 77076 713.644.5566, Fax 713.644.0889 President: Tim Bowers Tuesday, 1:00 p.m. T e x a s
www.iaai.com
D e a l e r
www.allianceautoauction.com
www.heartoftexasautoauction.com
MIDLAND / ODESSA
OKLAHOMA CITY, OK
Insurance Auto Auctions*
Dealer’s Auto Auction of OKC, Inc.
701 W. 81st Street Odessa, TX 79764 432.550.7277, Fax 432.366.8725 General Manager: Barbara Hallmark Thursday, 11:00 a.m.
1028 South Portland Oklahoma City, OK 73108 405.947.2886, Fax 405.943.8370 General Manager: Gary Smith Thursday, 8:30 a.m.
www.iaai.com
Houston Auto Auction
February 2016
www.iaai.com
www.daaokc.com
45
behind the wheel
Martin
Celebrate Your Success
I
n June 2009 a good friend of mine sent me note that I taped to the back of my door. He is a very successful chemical engineer who has built a profession out of selling his consulting services to power plants. His note read, “Celebrate your successes. Make it fun and make it rewarding. Whether the celebration is with you and others at your place of business or with your significant other, a friend, or whomever, revel in your success when given the chance… you’ve earned it. One of the most enjoyable aspects of my job is the opportunity to celebrate with my team after a big sale. I have always loved being part of a team. In many ways it’s more fun to see others succeed and grow than it is to do it yourself.” At the time we had just celebrated passing the 1000th member mark. We sent congratulatory emails to our members, applauded our top recruiters, praised the auctions and associate members for helping to spread the word and touted the great feat on the cover of our magazine boasting, “1000 Members Strong”. Three years later we quietly toasted when we passed 1356, the highest membership mark recorded at TIADA. And, in workman like fashion we have set new high water marks the following two years ending 2015 just five members shy of 1500. It’s become common around here to set high expectations and lofty goals and it’s also common to reach those goals with little fanfare or festivity. But every now and then I am reminded of the importance of the size or our membership and the impression it makes. Last month I had lunch with Scott Fisher, he is a candidate running for the Texas House of Representatives in the Fort Worth
by Jeff
TIADA EXECUTIVE DIRECTOR
area. During the course of our conversation he asked, as every would be politician does, “how many members belong to your association”? When I told him he responded, “Wow, 1500, that’s a lot.” I have had that same conversation for years now with many legislators. I can remember the first time State Representative Yvonne Davis asked me that question ten years ago. When I told her 850 members she looked puzzled and then murmured something like, in the state? Today, the questions that follow are much different. Mr. Fisher immediately asked how many employees our members have; how much we contribute to the economy; how many of our members live in his district; how could he get to know some of our members a little better; and then the question we all want to hear: What are some of our issues or concerns and how can he help the dealers in his district? Does membership matter? You bet it does. A larger membership means a stronger voice, more relationships, a bigger political action committee and more influence for the association. Are we where we want to be? Are we going to stop working? Certainly not, membership is too important — it’s the most important part of any association. However, we are going to stop and celebrate our successes along the way. Our next celebration is scheduled for July 24–26 at the JW Marriott in San Antonio, TX during our annual conference. We are going to make it fun and rewarding. I hope you will join us and find some time to reward yourself too… you’ve earned it.
Does membership matter?You bet it does. 46
T e x a s
D e a l e r
February 2016
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TEXAS INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750
PRSRT STD
U.S. POSTAGE
PA I D JEFFERSON CITY, MO
PERMIT NO. 210
IT’S YOUR LOCAL
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