Texas Dealer, February 2013 by Texas Independent Auto Dealers Association

The

Customer Experience What Are They Thinking?

In This Issue:

-T he Results of Our Lien Holder Insurance Issues Survey -M ichael W. Dunagan on Limited-Coverage Property Damage Policies -T alking Shop: What Really Gets You Ticked?

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281-580-1800 Sale day: Wednesday

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Volume XIII

2013 TIADA Board of Directors

CHAIRMAN OF THE BOARD Scott Allen/Auto Land 5925 E. Belknap Haltom City, TX 76117 Office: 817.834.4222 Email: scotta@goodwheelsgooddeals.com

SECRETARY Brent Rhodes/Fiesta Motors 5150 Industrial Way Drive Buda, TX 78610 Office: 512.312.2201 Email: brent@fiestamotors.net TREASURER HL Hensley/Automax of Lubbock P.O. Box 5627 Lubbock, TX 79452 Office: 806.744.3533 Email: hl@gospac.com 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) Ahmed Belmeshkan/New Rio Grande Motors 2000 NE 28th Street Fort Worth, TX 76106 Office: 817.740.0801 Email: newriogrande@yahoo.com VICE PRESIDENT, DALLAS (REGION 3) Kathrine Tolsch/CICO Auto Sales 11050 Harry Hines Blvd. Dallas, TX 75229 Office: 214.352.9282 Email: ktolsch@verizon.net VICE PRESIDENT, HOUSTON (REGION 4) Ryan Winkelmann/BJ’s Autohaus 5005 Telephone Road Houston, TX 77087 Office: 713.641.0980 Email: ryan.winkelmann@sbcglobal.net VICE PRESIDENT, CENTRAL TEXAS (REGION 5) Sonny Paredez/Discount Auto Center 7203 NW Loop 410 San Antonio, TX 78245 Office: 210.680.5600 Email: sonnyparedez@yahoo.com VICE PRESIDENT, SOUTH TEXAS (REGION 6) Trey Crouch/Trey Crouch’s Wheels On Credit 636 E. Business 83 McAllen TX 78501 Office: 956.972.0700 Email: trey@wheelsoncredit.com VICE PRESIDENT AT LARGE Greg Zak/Dixon Motors 7902 North Freeway Houston, TX 77037 Office: 281.931.1300 Email: gzak@windstream.net VICE PRESIDENT AT LARGE Tommy Gregory/Abilene Used Cars Sales Inc. 497 E.S. 11th Abilene, TX 79602 Office: 325.676.8000 Email: aucsinc@sbcglobal.net TIADA EXECUTIVE DIRECTOR Jeff Martin PO Box 127/Round Rock 78680 Office Hours M-F 8:30am - 4:30pm 800.442.5944 • Fax 512.244.6218 jeff.martin@txiada.com

Issue 2

Fe b r u a r y 2 013

texasDealer

PRESIDENT Byron Riley/Uncle Buddy’s PreOwned Autos, LTD. 409 North Loop West Houston, TX 77008 Office: 713.869.3405 Email: byron@unclebuddyauto.com

PRESIDENT ELECT Michael Thomasson/Mike Carlson Motor Company 264 Exchange St. Burleson, TX 76028 Office: 817.366.9578 Email: mthomasson@mcmcauto.com

contents

Officers’ Message

Face Time

Letter to the Editor: Repossession Scam

Local Chapters

2013 Auto Auction Directory & Resource Guide

Legislative Bulletin: A Few New Faces

Upcoming Events

by HL Hensley, TIADA Treasurer by T. Scott Gross

by Jeff Martin

18 On The Cover: The Customer Experience: What Are They Thinking? by Dacia Rivers

Lein Holder Insurance Issues Survey Results

Chapter News: Local Chapter Roundup

Fines & Violations

Talking Shop: What Really Gets You Ticked?

compiled by TIADA staff

41 Legal Corner: Can Limited-Coverage Property Damage Policies Be Rejected by a Car Creditor? by Michael W. Dunagan 45

Regulation Matters: How Can They Do That?

Behind the Wheel

by Danny Langfield

by Jeff Martin

What’s happening at w w w . t x i a d a . c o m ? GO MOBILE! The TIADA website now features a mobile version which will automatically be detected by your Android or iPhone browser. Check it out and let us know what you think… The Editor of the Texas Dealer magazine is Danny Langfield, Deputy Executive Director 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, P.O. Box 127, Round Rock, TX 78680-0127. 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 Focusing on the Task at Hand

e watch the news. We read the newspaper (well, a few of us still do). We absorb news on various internet sites. We listen to friends and colleagues. We worry and concern ourselves about social and political issues that we generally have no immediate control over. We fuss, we argue, we find commonality amongst our peers. We never talk about it at dinner or at holidays with those cousins or siblings. We hear, or may say, “Well, in my day…” or “It didn’t used to be like this.” While this is all interesting fodder for conversation, it often detracts our attention from the task-at-hand. I recently had a conversation with another dealer and our visit seemed to center around these social and political ideas that have nothing to do with our job: being the best car dealership in our area with quality sales, outstanding customer service, and excellent, honest and ethical business practices. I find that often too many us find ourselves almost paralyzed by what we talk about, read about, think about, especially when the topics surround complicated social and political constructs. I’m not suggesting we don’t discuss these items, I’m simply offering that perhaps we should try not to let ourselves, our attitudes, our leadership, etc., be negatively affected by what we cannot directly control today. It’s perfectly reasonable, and advisable, that we consider the future and plan; however, to the extent that such topical discussions hamper our dealership performance, we need to remember to take a deep breath and focus on the task-at-hand.

by HL

Hensley

Automax of Lubbock TIADA TREASURER

With our dealership in its third decade, we certainly get trapped in the above conversations. I will tell you, the past couple of years have been socially and politically challenging to say the least. With various new laws, regulations and compliance initiatives being directed toward our industry at every turn, we sometimes feel overwhelmed. However, and most importantly, the above has also presented some very good opportunities and insights. We have learned the measure and character of our immediate and local competition. We have realized that customer service is as important today as it has ever been. We have also realized that we (like many of you reading this) are an exceptional operation when we focus on the task-at-hand, regardless of outside forces. At the time of this writing, tax refunds are scheduled for delivery on February 15th. This is a date that is moving, with rather rapid speed in the past few years, later and later. While many dealers lament this new found reality of “tax season” becoming a shorter and shorter event, I want to encourage all of us to remember that we have the ability to perform and execute with exceptional results, regardless of social and political calendars. This could be the year, the month, the day, that we reassess our leadership within our communities as well as our dealerships. Let’s be the best dealership, the best business for employees, the best business in our community. Let’s stop talking about when we will become this dealership and be this dealer now. Let’s remember that we are a business that focuses on the task-at-hand.

...the past couple of years have been socially and politically challenging to say the least. February 2013

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feature Face Time

by T. Scott Gross Performance Management Consultant

{Editor’s Note: Scott will be the keynote speaker at the Opening General Session of the 2013 TIADA Annual Conference & Expo}

here is a tremendously valuable asset going to waste in your organization... face time. Face time is that old real estate principle of highest and best use applied to the boss. Even in this egalitarian world where the boss is known by Pam or Chuck, customers, internal and external, still put a premium on time spent with the boss. Face time is nothing less but a whole lot more than the mere presence of El Jefe. The Chief Honcho. The Boss. The Grand Poobah. Face time is important for three reasons… status, example, and intelligence. More about these in a moment. Office time almost never has the same value as face time. Offices are too often a place to hide. If the boss has superior expertise, then why isn’t it in the field or on the floor where it can be shared? If the boss is a marginal sort, then maybe the office is the place where he or she is least likely to do damage. Otherwise, most of what gets done in offices either could be done by someone who has a much lower face value or, as is often the case, office work is work that really needn’t be done at all. Pagers are a variation on the theme. Pagers are too often an excuse to be someplace you shouldn’t be. Period.

The Employment of Face

Face time puts the boss in direct contact with the customer. Even at the lowest level, the boss’s face has incredible value. When we owned our little restaurant, where four dollars would get you lunch and change, people wanted to be recognized by the owner. They wanted to know that when they walked in the door, the owner, not a clerk or cook or assistant, would call them by name. A restaurant that serves mediocre food but where the boss is omnipresent will beat out a fine dining establishment where the boss never makes an appearance. Think about the businesses that make you feel good and I guarantee that the boss is likely to be present much of the time. Better yet, I guarantee that the boss is right out front, maybe even knows you by name. Right? Right! You visit the White House. What do your neighbors want to know? See what I mean? 6

You travel to Hollywood. What do your friends ask about? The weather? No way! The same goes for your business. Your customers want to see Y-O-U! You don’t have to be a celebrity to have face value. Like the Wizard of Oz might say, “What you need is a title.” ‘Boss’ will do nicely. When we visit Boccone’s Restaurant we know three things. The food and service will be out of this world. We’ll have to wait for a parking space and then wait for a table. We’ll see Al or Mary Helen, probably both. And it’s the latter fact that accounts for the first two on the list. Face time also has immeasurable value in terms of the training that inevitably occurs. Look, all learning is by doing. The things your people are most likely to do (learn) are the things that they see in the work environment and try for themselves. This means that the other people at work are, in fact, your training program. It follows that since the boss is, well, the boss and carries pretty hefty face value, then the boss is the most potent training aid of all. Be careful! This sword cuts both ways. The last thing a boss can get away with is a “Do as I say, not what I do” attitude. Like it or not, what the boss does, the troops do. Boss grouchy—grouchy troops. Boss qualityminded— troops watch quality. Boss cleans break room— boss cleans break room! (This stuff is powerful but not perfect!!) The important thing to remember is that floor time isn’t necessarily face time. If you are working the floor out of sight and earshot of the employees your time, at least as far as the employees are concerned, has no more value than that of another body on the clock. It may still have face time to the customer and then, only if the customer knows that you are the boss.

The Boss on the Line

One late night I slipped into the office in underwear and tennis shoes. (I know that’s an odd combination but the office is attached to the house and the dog doesn’t seem to mind.) The phone rang and I answered, “T. Scott Gross & Friends” just like the staff had taught me! “Can I order a book at this number?” T e x a s

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February 2013

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Protective Asset Protection has been serving auto dealers of all sizes for 50 years. We know your job is tough – that’s why we’re in the process of getting you some help with your finance and insurance solutions. So, be on the lookout for your new addition. We’ll be making the big announcement soon.

Protect Tomorrow. Embrace Today.™ Vehicle Service Contracts I GAP Coverage I Credit Insurance I Lifetime Engine Warranty Limited Warranty I Dealer Participation Programs I F&I Training I Advanced F&I Technology

Contact Protective’s Texas representative, Steve Chandler at 866 927 2910 A “National Corporate Partner” has met stringent NIADA criteria demonstrating that it can provide valuable products and services to NIADA members. No legal partnership has been created by the granting of this status, but NIADA does receive compensation from Protective. Lifetime Engine Warranty, Limited Warranty, Vehicle Service Contracts (VSCs) and GAP are backed by Lyndon Property Insurance Company in all states except NY. In NY, VSCs are backed by Old Republic Insurance Company. GAP, Lifetime Engine Warranty and Limited Warranty are not available in NY. Credit Insurance is backed by Protective Life Insurance Company in all states except NY, where it is backed by Protective Life and Annuity Insurance Company.

“Yes, ma’am. You certainly can!” “I need it by tomorrow. I’ve looked at our local bookstore and they are out.” “Well, if you live in the San Antonio area I’m going to the airport and could drop it off to you.” “I live in Kansas City.” “Sorry. Not that airport! Tell me, why do you need the book tomorrow?” “I read an article about Positively Outrageous Service and got so excited about it that I called a staff meeting for the morning. I assumed I could buy the book locally.” “Well, I bet I can help you with a few of the concepts....”. We talked for nearly half an hour as she took notes, asked questions, and generally became a semiexpert on POS. “You’ve been so helpful!” she said. “I can’t believe that someone working the order desk this late at night would be so knowledgeable! Tell your boss that you deserve a raise!” I was so proud of myself for being a good order-taker I didn’t tell her that I had also written the book! Face time. No value.

The Third Value of Face Time

The third value of face time is intelligence gathering. All the mystery shoppers, 800 lines, comment cards and

focus groups in the world won’t tell you half as much as will your loyal customers. Nothing beats asking customers face-to-face what they like about your product or service or how they would change it if they were in charge. Customers will spill their guts helping you beat your competition if they think they are dealing with someone who can and will make a change for the better. There is such a thing as telephone face time too! A few minutes on the phone every day calling customers to ask, “How are we doing?” has more value than an entire day spent poring over numbers from last period. Last period is history! A real customer on the line is opportunity! Face time is leadership in action. Tom Peters called MBWA, Management By Walking Around. I call it MBWA... Management By Working Around. Nothing beats first-hand experience and MBWA is definitely it. Smart managers make a point of scheduling themselves to work a shift or two with the troops. Are you putting in your face time?

T. Scott Gross is a nationally recognized speaker and author on customer service and management. (tscottgross.com)

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letter to the editor

Re: Repossession Scam

from Portia K. Brown, Legal Counsel, Woodlands Financial

January 3, 2013 TIADA P.O. Box 127 Round Rock, TX 78680 Re: Repossession Scam Editor, Texas Dealer magazine: Woodlands Financial recently encountered a situation with a repossession agent, who, working in conjunction with others, was attempting to obtain payment of bogus storage charges. We felt it appropriate to warn others in our business. Woodlands engaged a repossession agent (“R.A.”) to recover a vehicle on which it holds a lien. The R.A. had been screened through our internal process and we had no reason to believe there was any problem with them. Several days after the assignment, Woodlands received a call from R.A. indicating that the vehicle had been located and was housed at a storage facility. Reportedly, the vehicle had been towed at the request of a homeowners’ association and it had been at that storage location for a period of three (3) months. R.A. purported that they had already “negotiated” a release price with the storage facility owner, in which he had agreed to accept a sum substantially less than what was actually owed for the towing and storage. It was represented that a certified letter had been sent to Woodlands in August, 2012, and that the Vehicle was to be taken to auction for sale the following day unless the amount was paid and the Vehicle was picked-up. R.A. indicated that their employee had both inspected and started the Vehicle; that it was in great condition; and advised that it would be in the best interests of Woodlands to pay the negotiated amount. R.A. offered to make arrangements to deliver payment and pick up the Vehicle. February 2013

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Woodlands Financial recently encountered a situation with a repossession agent, who, working in conjunction with others, was attempting to obtain payment of bogus storage charges. We felt it appropriate to warn others in our business. 9

Upon the insistence of Woodlands, R.A. finally revealed the name of the storage facility (“S.F.”) and provided a telephone number. A call to that number reached a woman who identified herself as the wife of the owner. She confirmed that the vehicle had been in the possession of S.F. since July 4, 2012, when the Drennanburg HOA had authorized them to tow it. She represented that a certified letter had been sent to Woodlands in August 2012, to alert them that the vehicle was held for sale, but stated that as long as payment was made by Woodlands within two days, they would agree to release the Vehicle for the reduced charge of $2,300. She even commented on what a “good job” R.A. was doing in representing Woodlands since in all the years they’d been in business, she had never seen her husband agree to such a reduction. Repeated requests were made by Woodlands to both R.A. and S.F. in an effort to obtain itemization of the amount allegedly owed, documentation of the certified notice being sent and any other confirmation of the circumstances. After numerous failures to return calls and representations of electronic difficulties from both R.A. and S.F., R.A. finally provided only a highly questionable invoice. Research on the part of Woodlands revealed the following: • T he Office of the Texas Secretary of State shows no record of a currently existing Texas corporation with the name of S.F. and none of the entities formerly bearing that name have any connection to the owner, locations or business operations provided for this “storage facility.” • T here is not a VSF license shown to be issued to S.F. or its purported owner. • T he address for S.F. is the Katy Mills Mall and believed to be a postal box service. • T he Vehicle cannot have been in the possession of S.F. from July 2012, through December 2012, since Woodlands has reports and photographs of it parked at the home of the titleholder in September, 2012. • D rennanburg HOA does not exist, and the homeowners association covering the area where the Vehicle was supposedly recovered reports that they look to law enforcement in dealing with issues involving vehicles.

...only through the diligent efforts of its employees did Woodlands manage to avoid falling victim to this scam.

• The titleholder’s daughter had reportedly parked the Vehicle on the street, but when she returned to retrieve it a few days later, it was gone. • No report had been made to law enforcement of this Vehicle having been recovered either in July or in December, 2012. Based on our suspicions, Woodlands arranged for an investigator to visit the addresses available for R.A., and the Vehicle was found parked outside one such address. Woodlands arranged to have it picked up by another repossession agent, and the Vehicle is currently in the possession of Woodlands. We have filed a complaint with the TDLR. This was a pretty convincing scenario being presented by the R.A., and only through the diligent efforts of its employees did Woodlands manage to avoid falling victim to this scam. Certainly this may be an isolated incident involving a single repossession agent. In the event this conduct is more prevalent, however, we hope by disseminating this information we can help others avoid being subject to such a practice. Sincerely,

Portia K. Brown Legal Counsel, Woodlands Financial PKB:pe

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February 2013

2 013 T I A D A a u t o a u c t i o n

Local Chapters VICTORIA Alan Wilkinson • AW Motors 361.570.2400 alan@awmotors.com Meeting - 1st Monday (Monthly) FORT WORTH Jerry Smith HJ Smith Automobiles 817.282.0102 hjsmithauto@yahoo.com Meeting - 4th Thursday (Monthly) DALLAS COUNTY Kathrine Tolsch • CICO Auto Sales 214.352.9282 ktolsch@verizon.net Meetings every other month HOUSTON Greg Zak • Dixon Motors 281.931.1300 houstoniada@gmail.com Meeting - 2nd Monday (Monthly) WACO-HEART OF TEXAS Bill Miller • Bill Miller Used Cars 254.753.4161 bmillercars@hot.rr.com Meeting - 2nd Monday (Monthly) For more information contact Eddie Massey, Massey Motors 254.753.6661 SAN ANTONIO Sonny Paredez • Discount Auto Center 210.680.5600 sonnyparedez@yahoo.com Meetings quarterly (dates announced at www.txiada.com) EL PASO James Hobson • H -Town Motors 915.564.9797 htownmotors@aol.com Meeting - 3rd Friday (Monthly) AUSTIN Brent Rhodes • Fiesta Motors 512.312.2201 brent@fiestamotors.net Meetings quarterly BEAUMONT Laura Miller-Sattler Sattler Automotive Group 409.866.2987 lsattler@sattlerautomotive.com Meetings quarterly 12

ABILENE

CM Company Auctions

2258 S. Treadaway / 79602 325.677.3555 866.310.3555 www.cmauctions.com Gregory Chittum, Owner Thursday: 10:00 AM

AUSTIN

America’s Auto Auction Austin / San Antonio

Sparkling City Auto Auctions

4501 Hwy 77 / 78380 361.767.4100 www.sparklingcityaa.com Ace Walker, General Manager Rob Jackson, Operations Manager Ashley Dietze, Fleet Lease Friday: 10 AM

DALLAS / FT. WORTH METROPLEX ADESA Dallas

16611 S. IH-35 / Buda / 78610 512.268.6600 www.americasautoauction.com John Swofford, General Manager Tuesday: 1:30 PM

3501 N. Lancaster-Hutchins Rd / Hutchins / 75141 972.225.6000 Ken Osborn, GM Wednesday: 3 PM - New Car Trade Thursday: 9:30 AM - Consignment/ Fleet/Lease

BEAUMONT

America’s Auto Auction - Dallas

Beaumont Dealers Auction, Inc. 12151 Highway 90 / 77713 409.866.5677 www.beaumontdealers.com Laura Miller-Sattler, Owner Tuesday: 7 PM

Gulf Coast Auto Auction

4450 South 11th Street / 77701 409.840.6000 www.gulfcoastautoauction.com Roger Rashall, General Manager Rocky Rashall Blake Rashall Thursday: 7 PM

CARROLLTON

Texas Lone Star Auto Auction

2205 Country Club Drive / 75006 214.483.3597 www.TLSAA.com Jeff Dunning, Jr., General Manager Tim Clement, Assistant GM Michelle Elrod, Office Manager Tuesday: 1 PM / Thursday: 2 PM

CORPUS CHRISTI Big Valley Auto Auction 5661 Agnes St / 78405 361.356.2020 www.bigvalleyaa.com Bernard Watson, Owner Billy Kratz, GM Tuesday: 10 AM

219 N. Loop 12 / Irving / 75061 972.445.1044 www.americasautoauction.com Robert Hammonds, GM Ruben Figueroa, Assistant GM. Tuesday: 2 PM / Thursday: 2 PM

EL PASO

El Paso Independent Auto Auction

7930 Artcraft Road / 79932 915.587.6700 www.epiaa.com Lori Pidgeon, GM JD Glover, AGM Wednesday: 10 AM - Fleet/Lease & D ealer Consignment Wednesday: 1 PM as scheduled GSA Public Auction

HARLINGEN / MCALLEN Big Valley Auto Auction

4315 N. Hutto Rd. / Donna / 78537 956.461.9000 www.bigvalleyaa.com Bernard Watson, GM Lisa Harms, alternate contact Thursdays: 10 AM

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directory & resource guide HOUSTON

America’s Auto Auction – North Houston

1440 FM 3083 / Conroe / 77301 936.441.2882 www.americasautoauction.com Buddy Cheney, GM Ben Nash, Sales Manager Mondays: 6:30 PM

Houston Auto Auction

6767 North Freeway / 77076 713.644.5566 www.houstonaa.com Dave Pratt, Vice President Joe Lavigne, General Manager Dealer Auction every Tuesday Tuesday: 12 PM - Damaged and Disabled Tuesday: 1 PM - Dealer Auction Last Tuesday of the month: 12 PM Heavy Truck and Equipment

LUBBOCK

Lone Star Auto Auction

2706 Slaton Hwy / 79404 806.745.6606 (local) 888.299.6606 (toll-free) www.lsaalubbock.com Jim McNulty, Owner Dale Martin, General Manager Wednesday: 10 AM

LUFKIN

Lufkin Dealers Auto Auction

2109 N. John Redditt Drive / 75904 936.632.4299 Wayne Cook Thursday: 6 PM

Lakeside Auto Auction 1810 East I-30 / 75087 972.771.9919 www.lakesideaa.com Pete Conley, Owner Tuesday: 7:00 PM

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Sparkling City San Antonio 13510 Topperwein / 78233 210.298.5477 www.sparklingcityaa.com Ashley Walker Deitze, GM Weldon Deitze, Ops Manager Tuesday, 11 AM

TYLER

Greater Tyler Auto Auction

11654 State Highway 64 W / 75704 903.597.2800 Tuesday: 5 PM - Repo Lane Tuesday: 6 PM - Consignment

WACO

Heart of Texas Auto Auction

(Waco’s oldest auto auction- Proudly serving dealers for 20 years!) 2508 HWY 6 / 76705 254.755.7713 www.heartoftexasautoauction.com Allan Wichkoski, Owner Kenny Reigert, General Manager Shirley McMillan, Office Manager Thursday: 7 PM

Alliance Auto Auction

15735 N. IH-35 (exit 346) / 76715 254.829.0123 254.829.1298 (fax) www.allianceautoauction.com Darren Darnell, GM darren.darnell@allianceautoauction.com Carmen Klaus, Office Manager Every Friday: 10 AM

OKLAHOMA CITY, OK

Dealers Auto Auction of OKC

ROCKWALL

February 2013

SAN ANTONIO

D e a l e r

1028 S. Portland / Oklahoma City, OK / 73108 405.947.2886 405.943.8370 (fax) www.daaokc.com Gary Smith, Owner/President/GM John Reininger, Asst. GM Mike Egdahl, F/L Manager Thursdays: 8:30 AM - Consignment Sale INOP Sale held weekly GSA sale held monthly (open to public) Call for info on sale dates and times Every other Tuesday: 10:00 AM - GM Sponsored Factory Sale

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

legislative bulletin by Jeff

A Few New Faces

he gavel in both Texas chambers hammered in the beginning of the 83rd Texas Legislative Session last month ushering in over 40 new faces on the house side and a handful of new Senators. All began settling in to their new role of leading the state. One of the first orders of business is to appoint committee members and reward legislators with chairmanships. With so many new faces it is taking a while for the leadership to sort through committee appointments; however, a few key positions are already known. As reported in the January issue of the Texas Dealer, Senator Robert Nichols (R-Jacksonville) is chairing the Senate Transportation Committee. Last month almost fifteen TIADA members welcomed Sen. Nichols to his new post during a special reception held in Dallas. Larry Phillips (R-Sherman) will again head the House Transportation Committee. Once all the committee members have been appointed you can see the complete list by going to www.txiada.com and clicking on Legislative Action Center under Advocacy. As you know, TIADA spends much of its time monitoring bills that might have unintended consequences and could negatively affect our industry. Our goal is always to work with the author of the bill and other stakeholders and offer substitute language when appropriate. A few bills we are working on include:

HB 315 Otto

This bill would change the way VIT may be calculated

Martin

TIADA EXECUTIVE DIRECTOR

and paid by dealers for whom 25% or less of revenue is derived from retail vehicle sales.

HB 152 Alonzo

This bill proposes to amend the acceptable ID requirements for a driver’s license to include, among other things, a consular identity document.

HB 356 Guillen

This bill relates to the notice required to remove a vehicle with an expired registration or inspection certificate from certain private property. TIADA will also be presenting an idea that came from our legislative committee regarding the VTR-136 County of Title Issuance form. The proposal would eliminate the requirement that this form be completed and retained in the deal jacket. We hope to have the bill filed in the next few weeks. Those of you who have followed this process in the past know that the print version of “Legislative Bulletin” tends to become outdated before the ink is even dry on the page. Please be aware that your best source for up-to-the-minute information is the TIADA website under Advocacy / Legislative Action Center. 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.

TIADA spends much of its time monitoring bills that might have unintended consequences and could negatively affect our industry. 14

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February 2013

Date: Name:

DOB:

Address: 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

February 2013

T e x a s

D e a l e r

Upcoming Events OTHER TIADA EVENTS

TIADA DEALER ACADEMY February 2013 11 Dealer 101: Nobody Told Me That!

DoubleTree by Hilton San Antonio Airport 37 NE Loop 410 (at McCullough) San Antonio, TX 78216 210.366.2424 Online registration available at www.txiada.com

March 2013 25 Keeping Your Dealership

Legal & Compliant DoubleTree by Hilton San Antonio Airport 37 NE Loop 410 (at McCullough) San Antonio, TX 78216 210.366.2424 Online registration available at www.txiada.com

April 2013 15 Solving the BHPH Puzzle

May 2013 6 Keeping Your Dealership

Legal & Compliant Norris Conference Center / Sundance Square 304 Houston Street / Fort Worth, TX 76102 817.289.2400 Online registration available at www.txiada.com

June 2013 17 Dealer 101: Nobody Told Me That!

DoubleTree Dallas Market Center 2015 Market Center Blvd. / Dallas, TX 75207 214.741.7481 Online registration available at www.txiada.com

April 2013 22 TIADA Board of Directors Meeting Austin, TX

July 2013 28-31 TIADA Annual

Conference & Expo Hyatt Hill Country Resort & Spa 9800 Hyatt Resort Drive San Antonio, TX 78251 210.647.1234

28 TIADA Board of Directors Meeting San Antonio, TX (In conjunction with the Annual Conference & Expo)

30 TIADA House of Delegates Meeting San Antonio, TX (In conjunction with the Annual Conference & Expo)

& Repossessions: What You Need to Know Crowne Plaza - Houston Northwest 12801 Northwest Frwy / Houston, TX 77040 713.462.9977 Online registration available at www.txiada.com

29 Dealer 101: Nobody Told Me That!

Crowne Plaza - Houston Northwest 12801 Northwest Frwy / Houston, TX 77040 713.462.9977 Online registration available at www.txiada.com

T e x a s

D e a l e r

February 2013

on the cover by Dacia Rivers Freelance Writer

The

Customer Experience: What Are They Thinking?

magine if you could change every one of your customers into a loyal customer. You know the type. They’re the folks who keep coming back to your dealership to purchase car after car. They’re the people who are quick to recommend your business to anyone they know who is looking to buy a used automobile. They sing your praises around town, resulting in the best marketing that money can’t even buy, bringing you multiple new referrals who walk in your door with the potential to become lifelong, loyal customers themselves. It’s a self-reproducing cycle that can grow your business through one of the most powerful and ancient forms of advertising: the word-ofmouth recommendation.

“We wanted someone who would talk to us, give us a fair price and give us a fair payment structure.”

Customer Service Is Key

So how do you turn your customers into loyal customers? How do you earn their repeat business and their steadfast recommendations? We talked to several buyers

who had recently purchased automobiles from TIADA members across the state to give you some perspective on what factors are most important to folks going through the car buying experience. There was one area where they all whole-heartedly agreed: you simply can’t overdo it when it comes to customer service. Every customer we talked to ranked customer service as the number-one determining factor that convinced them to buy a car from the dealership they chose, well above any other factors - including price and vehicle selection. (cont’d on pg. 20) T e x a s

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February 2013

SPARTAN FINANCIAL PARTNERS. BETTER THAN A BANK for BHPH.

“Spartan Financial does it all. They do my line of credit AND they buy my contracts. So it takes days, not weeks, to sell my portfolio. Best of all, they treat my customers as great as I do.”

Ron Janbash Before we started our line of credit with Spartan Financial, we would have to go to a completely different company when we wanted to sell our contracts. We had to start from scratch with diligence and they would want to call every customer to inspect the deal. Not only did it take a long time, but it spooked our customers. Spartan Financial is totally different. They do our line of credit and buy our contracts, so when I get ready to sell, they have all the information in house. No hassle. No waiting. I have quick and easy access to cash in days, not weeks. And best of all, they treat my customers as great as I do. They have a deep understanding of the BHPH business and can relate to the dealers. That comes through in everything they do. I would call them a friend as well as a great company. — Ron Janbash Auto Masters Nashville, TN

Nationwide lines of credit and bulk purchasing for :

............................. » Buy Here Pay Here ............................. » Indirect Lenders ............................. Get started Today:

855-233-3605 spartan-partners.com

Customers described excellent customer “You can get service as everything from being friendly a car from any place. But without being pushy the people at this dealership to helping car buyers get the deals they’re were really nice. They’re looking for. warm and friendly and “We wanted I consider them someone who would talk to us, give us a family now.” fair price and give us a fair payment structure,” one customer recalled of his recent car-buying experience at a San Antonio dealership. “And they did all of that. We had such a good experience the first time that we Some TIADA members went bought our next cars from them.” above and beyond what customCustomers also appreciate honesty ers typically expect from a used from salespeople when shopping for car dealership, successfully earna vehicle. Another recent car buyer ing themselves loyal customers by said he chose the dealership in New providing an extra bit of attention Braunfels where he purchased his when it was most needed. latest car because he trusted the staff. When one customer’s husband “You can read when somebody’s was ill and had to miss work for a trying to shuck and jive you and few weeks, she called the buy-here, when they’re telling you the truth,” pay-here dealership where she had he added. purchased her car to tell them she would be late on a couple of payments due to her husband’s condition. The staff at the dealership told her it wouldn’t be a problem. They didn’t assign her any extra fees and even went so far as to send her husband a getwell card and call to check on his recovery. “They’re great people,” she affirms. “We don’t even look anywhere else when we want a car these days.” The customers we spoke to loved telling stories about the above-and-beyond care they had received from dealerships. One couple from Terrell 20

T e x a s

D e a l e r

February 2013

MOTOR

VEHICL

E RETAIL

INSTAL

LMENT

SALES

RED ITOR SELL ER/C : ADD RESS ZIP: CITY, ST,

CONTRA

CT DAT E:

ge. ce Char vehicle of the Finan ase the motor ding ve a part BUYER: PHONE: e to purch ents accor to recei R: act, I choos to make paym its right CO-B UYE and retain By signing this contr act. I agree not. “your.” contr : . contract s do “you” or es in this the other ADD RESS assign this is also shown below red to as other charg ment even if r is refer The Seller may ZIP: Price” agree e, and any CITY, ST, ” The Selle Selle r. .” The “CashFinance Charg promises in this Purchased “I” or “me. tiated with the the ced, l Sales Price red to as Use For Which nego PHONE: to keep all the “Tota the Amount Finan be refer as ld is agree I may , r(s) below r ❒ New Family or Househo The Buye Percentage Rate t price is shown I agree to pay youn signs as a buyer respects. ❒ Personal, Commercial al License Numbe in all perso ble) ❒ Demonstrator ber The Annu TO PAY: The credi of this contract. than one ss or r vehicle(s) (if applica ion Num xe. ❒ Busine act. If more ved the moto to the terms Identificat PROMISE Vehicle t according ule in this contr ted, and appro ❒ Factory Official/E ❒ Agricultural on credi accep ent Sched Model to the Paym ughly inspected, ❒ Used CAT ION IDENTIFI I have thoro Make VEH ICLE OR No.: Year MOT License Stock No. No.: License

Trade-in( Year : Year :

s):

Make: Make:

ANNUAL TAGEmy of PERCEN The cost RATEt as a yearly rate. credi

VIN: VIN:

Model: Model:

Financed Amountof credit provided nt

f. RGEt The amou on my behal E CHA to me or the credi FINANC r amount me. The dolla will cost

Price

ents

of Paymhave paid Total nt I will The amouI have made all uled. after as sched payments

on Total Sale purchaseof ent cost of my The totalwith down paym credit $

$ % $

purchased. vehicle being the motor interest in NT(S ) a security NPA YME Due I give you Date ED DOW owe you, DEF ERR or in the future charge of owe you Amount a late debt I now I will pay any other it is due, ses in it and days after my promi ct and all within 15 payment Charge. on this contra ce sts, owe entire I Finan all intere ve my of the p this To secure security d of part do not recei default, Security: (1)Kee writing. get a refun t nonpayment, ge: If you ises in payment. so, I can NO.: Late Char n abou $ all prom scheduled . If I do ds. STOC K put ...... informatio % of the er to........ I owe early yment refun ment for ................ the deal and prepa pay all that refer to this docu ................ rce. Ask nt: I can uled date, I will ................ DATE: to enfo Prepayme l Information: e the sched cult........ REDI TOR: diffi........ full befor are........ SELL ER/C ises........ Additiona repayment in .$ D ................ : ER red ken prom ................ FINA NCE : Spo ces) ........ VIN NUMB ADD RESS any requi servi ANT ................ AMO UNT ... $ ORT s, and IMP ................ sorie ION OF , ST, ZIP: ................ ........ acces CITY IZAT ........ ITEM ................ uding any ................ form. ........ER: $YEAR e) ........ ........BUY PHONE: price: (Incl Color: ................ (2) R:abov box 1. Cash ................ UYE L ................ ment follow ing: CO-B(s) ment ....$ ................ MODE........ fied, the Downpay ................ 2. Downpay ........: ........ .....$ RESS tions speci l:(3) Deferred ......... $ ........ ADD payment ........ ................ r to the and condi Mode ................ MAKE ZIP: Cash down ent (Refe VEHICLE ................ ................ the terms $ ................ E under CITY, ST, ................ ................ downpaym ................ you,........ ................ase from........ VEHICL $ Deferred ................ ) ................ ................ y purch ........ belowE: -in........... PRICE Make: hereb 4.A.PHON ................ : I/We........ ................ (Optional) (St. & No.): Gross trade see Line to License NUMBER ........ ........ ........ G:SOLD........Year: ICLE “0” and by seller STOCK VEHBEIN ................ amounts.): - payoff tive, enter DEALER ........ ........ ........ THIS VEH ICLE........ . $ ge: ........Milea ........ 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 comp anies damage A. Net $ no resp damage ...mes physical company TOTAL 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. Cost $ nal credi Gross FOR ANY cle. e $ ................ of optio Phone: COSTS vehi Allowanc ................ D. Cost $ L PAY ALL nts about the ........................ Trade-in ............. Life any YOU WIL comp ................ eme ........ .$ ff $ ance ................ oral stat ........................ -in Payo ................ insur any Disability ................ Net Trade to theof ........ To: ................ $ ........ ........Lien ance paid Show nt agencies.. ................ .............. ................ insur r rnme ........ ........ gove Bala nce $ E. Othe $ ................ ................ paid to ................ ........... Unp aid Pric e ial fees ................ ................ ................ ................ ling s for F. Offic ess: ................ of Cash ................ tory tax... hand Addr ................ .......... $ ........ the part the nt: rs for ................ er’s inven % of Amou ................ ................ ................ to buye _ired by law. Lienged y of G. Deal ................ Dealer's $ copal ................ ________ ................ a ada ..........$ requ tration fees. berchar and forcarg er's ntory Tax r taxes........ may er ................ ................ notice is ................ : ser labo deal but $ e and/or regis deal ........ dad ........ H. Othe Inve This se ........ the the law, pued the ........ of parties. Ask canti licen Dated and % the pero ired by by ................ ................ ns,una rnment of title fee... usioer not requ por la ley, ________ e exced period. ................ ................ is pay Tax e rights. I. Gove $ ed to antyerido , excl certificate no pued ary rage will nt agre fees......... requNo.: cove ................ erfee even mor State Sales ment rnment no esStock the warr e amoungación By:A docu dealnabl mentación Color: inspection ................ Quoted anty The J. Gove give you docu duri ment rario vehicle ial fee.TY. ofdewarr faildocu d a reaso r.............. es" may rnment and that de an offic RAN to deale hono ONion............. anat not exceeems rario is not ATI License Fees $ K. Gove . Un $ anti expl TED WAR fee mayred l.syst ce fee paid Un honofor full ORM ........ lied warr ary feeLIMI a venta on INF ........"imp ty servi mentary cove Model: N: oficia ume con INuna FULL ........ document (St. & No.): os nt therario Registrati e law, ley. L. Depu ionadDEstat laer Fee: A the sale. A docu License doc TRA relac e es un hono DURATIO anty Und to mentary erida. por mentos : ons requ $ Certificat ación no de docuwarr es Make M. Documents relating gati $ (4) ón ment ... Fee icaciir obli docu de manejo docu Mileage: repa of Title s rario de Esta notif Year: purpo se) (5) ... $ Un hono r como gasto las partes. ........ $ describe mentary $ ........ D: and Docu e: ........ compradoe acordada por paid ERE ** is (6) ................ Phon............... $ S COV for Fee ify who razonabl identTEM ................ ........ V.I.N.: SYS (7) $ (Seller must ................ ................ for ............... r charges ................ ................ N. Othe ................ $ sed ........ sed ........ asses ff To: ................ ............... ge isPayo ge is asses to ce Char inspection, ce Char ................ ................ $ state Finan ........ Finan .... ........ the ........ ........ performs and other charges. which the ................ which the to ................ ................ If the Seller cts, ges Upon ges Upon ................ ................ nmentagency. nce, service contra ssed) ess: ................ zed Char zed Char . ge is Asse Addr ........................ ................ or gover insura Plus Itemi Total Itemi ce Char ................ Seller to a third party retain parts of the ........ Balance $ TAL h No Finan Unpaid ................ ................ insurer SUB -TO paid by may also than $ 5. Total By: (Upon Whic ................ tion fee will be have. The or loss. ................ and the Seller nt not more Quoted I already damage been Sales Tax ................ ................ d by Seller state inspec ctible amou of has not insurance 6. Total (5 + 6) of in: Sales Tax) agencies. Any e fee will be retaine eventand with a dedu de proof OF Cash Tendered $ in the time Financed nment trade servic : ssed Upon provi or to any nt I owe, the policy ATION not ing at this 7. Amount wantrd and deputy (Not Asse paid by Seller to gover e Irega Good Until in the amou anyon paid under entary fee has TO eter is workTHE ITEMIZ andSED Charge with will be n to be odom ge or loss nce from ants CAU 8. Financefee, and license fee inspection fee. Docum insura company warr the perso st dama DUE $ rtyand asstated above. The LUDED IN insurance AGE you propets each ED ed again ge. DAM as an TOTAL name esen obtain insur is INC Taxes, title retain $7.00 of by dama TY ge must le may repr I IS teral r PER ed to flood airab will act. hase nce. I l milea ❒ FINANC ed the colla PRO or unrep Purc the Seller this contr expos rty insuraand actua INSURANCEtotal loss law, You byfigur I must keep Rate. ired of prope a URY AND not been owe under ct to 1. The true BIL H SALE red ntage not INJ subje RANCE: not requ fee CAS and has all that I to give you proof ced. ITY been ILY rende Perce is ce may al ❒ paid title, repla fee LIA INSU balan ct as TY I have red or ipal ary the Annuary docu FOR has notBODreconditioned ce subje . I agree PROPER nce until details RGErepai sameAasdocument A princmentipal balanfor GEleFOR of the The vehic 2. ERA ess in Texas sale. al fee. rebuilt/or this insura law. A CHA not be the porti theon no esof sale, id princ idto COV cle. Ask salvage, ing unpaby ired unpa acióntime I must keep rized to do busin rate not an offici vehi is may Thethis actfee s relat to the issued a : UNLESS e is requ the URANCEbeen contr autho uled. mentIos ary ment document Code of docu am notic contract, de days Thisment ge on rario CT. must be %.docu as asched de URANCE BILITY INS lingcedocu made char jo k s Finan es. This 90 ose. spaces.able date of this in mane parti Fee: Aby for hand Un hono were thersTexa LIA ITY INS the dad razonition s an extr l. trac s de blan t with S CONTRA rate from the particular purp eter ents by is mentary at buye ed canti to lable gasto days oficia any THI to d paym 90 a una LIABIL T FINANCED, Docu ed n defin cond IN con act all rarioicerador como agree as s for r odom withi ED nt as if od charg hono exceder conteains t is avaies un The contr ** certain TED methbe amou Price a serv contract bility or of fitnesthe mileage and/oprior owner trac ngs may Salecon al comp no puedand und er buyda it or if it AMOUN IS NOT INCLUDNCE CHARGE: llment earnibut Totalnable a service es.aciónIfno youcarga sing ice hanta a reaso E INSPEC dand I read ment ied by the charg owe serv ICL ts. mentación ents, ns. excee In disclo e ser A enters into antie s of merc docu righ de docu deexcl por laI ley. usio pued befo ered. CT. S VEH alre of Paym ned check anty, or ed CT vehicle suppl provide. OTHERS FIGURE THE FINAthe scheduled insta all that rario warr AND rario pero ract TRAUn reture, ition Total ts.E THI hono or hono requerida en warr no impli and rer may reading of the le was last regist cont la ley, ing CON Un n es ance . add HAV Charge, es, lYrigh factu por this you s a writt in adv pric CON TRA sales tax, eter YOU officació S be erido sign MA the vehic le manu ge by apply the Finance una venta HOW YOU notif SERVICE r odomor my lega CT, pay requ THIwill notos uctible, seller make congive charg may Esta YOU r vehic ect and there ce Char in which TRA willionad ge and/o maj ER. es" prot:IF righs.t to - Irelac Unless the MSle,OF the moto anti de the laterage, ded er toLER r vehic the Finan Charge. You based las parte the milea S CON by the state e the thatTHI of some tolist TER por ract ER'S ORD asa DEA hav not inclu to cove to the buy the moto RANTIESed, .on Iada lied warrlaw, vehicle inform ationg was issued THE thisERcont a Finance ce Charge does se. OF WAR ss or TO THE LOT THIS BUY n udin the acord ASK the moto I rSIGNED le which Noteicelaw "imp EEimpli keep N:LAIM THE TH ON NG: stat will TIO AGR . Under on the rever s covering ORE on writte, inclthe vehic s, expre to a Finan

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bought a used car that was missing a sun visor, which they knew upfront and “You can understood as part of read when somebody’s the deal when buying a used vehicle. But they tr ying to shuck and were thrilled when a jive you and when staff member at the dealership tracked down they’re telling you a matching visor for the truth.” their vehicle and gave it to them at no extra cost, even after the purchase was completed. “You can get a car from any place,” the mutually customer shared. “But the people beneficial at this dealership were really nice. relationship. But how They’re warm and friendly and I do you get that potential consider them family now.” customer to choose to come onto your lot? Besides word-of-mouth Once a potential customer walks recommendations, the customers into your dealership, providing him we spoke to said they visited the or her with outstanding customer service is the key to building a dealerships where they ended up

Attracting Buyers

buying vehicles after driving by and being impressed. “Some lots have cars outside that look like they wouldn’t run really well,” one Houston-area customer said. Other customers agreed that they visited the dealerships where they ended up purchasing because something new or nice-looking on the lot caught their eye. Some of the customers we spoke with mentioned that they were pleased to be able to go in to buy a specific car and drive it home the same day. These customers appreciated that the salespeople were eager to work with them to get the deal done in a way that made everyone happy while understanding the value of the customers’ time.

T e x a s

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February 2013

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feature Lien Holder Insurance Issues Compiled by TIADA staff

n late 2012, at the request of the ad-hoc Insurance Committee originally appointed by then-TIADA president Scott Allen, the association sent out a survey to our BHPH members. As detailed in the January 2013 Officersâ&#x20AC;&#x2122; Message, the survey was developed to help identify the most prevalent insurance issues facing lien holders and their relative significance to the industry. The following pages contain the results of that survey.

D o you offer any products to protect your collateral?

28.3% How much effort do you put into

making sure your customersâ&#x20AC;&#x2122; insurance is current? 3.8%

57.5%

High If yes, which products: Somewhat High Average Somewhat Low 23.6% Low 69.8%

High Somewhat High Average Somewhat Low 23.6% Low 69.8%

71.7%

1.9%

15.1% 18.9%

Yes No

2.8% 3.8%

Collateral Protection Insurance Debt Cancellation Agreement Other No Product February 2013

Colla Debt Othe No P

wb all I nsu D en ran tho ial ce p ugh of c ayo in p custovera ffs exc lace om ge lud , d er h afte ed ue t ad r ac driv o a cur cid er, o nam ren ent r ot ed t ins eve Fail her -dri uran n allo ure o end ver- ce ors only in cw lienf insu em , r a h a ent not ses w old nce ma he er to com ke a re t m pa Fail clai he cuake a ny to ure m f sto cla of i or t me im or pnsura hem r w selv ill to l rovidnce a i es g e e e n p exc ho oli nt t lusi lde cy i o re ons r, su nfo lea / ex ch a rmat se Fail clu s a ion n ded list lap otifyure o driv of se/ lie f in can n h sur ers cell olde anc atio r u e co n o pon mp f cu ex any sto pira to notFailur me tio ify l e of r po n/ i i licy coven holnsura era der nce ge up com to a on cus a chpany tom ang to Set er p e in tlem olic ent y c h inc eck lud s t e th hat e lie do nho not lde r

30%

February 2013

T e x a s

D e a l e r

11.3

18.9 50.9

52.8

18.9

53.8

20% 18.9

64.2

18.9

30.2

48.1

11.3

18.9

28.3

37.7

28.0

10.4

25.5

60%

40.6

40%

28.0

70% 10.4

80%

25.5

90%

64.2

10.4

100%

43.4

25.5

10%

2.8%

D ran thoenial ce p ugh of c ayo in p custovera ffs exc lace om ge a e lud , d r h fte ed ue t ad r ac driv o a cur cid er, o nam ren ent 53.8 25.5 r ot ed t ins eve Fail u n h d er e riv ranc allo ure o ndo er-o e rsemnly, in cw lienf insu ent notases whold rance ma he er to com ke re Fail he makepany 28.3 ure 52.8a claitm cu a to of i for stom claim n the er w or p sura mse ill to l rovidnce a lves i g e e e n p exc ho oli nt t lusi lde cy i o re ons r, su nfo lea / ex ch a rmat se F clu s a ion 30.2 a 50.9 i l n u ded list lap otify re o driv of se/ lie f in can n h sur ers cell olde anc atio r u e co n o pon mp f cu ex any sto pira to notFailur me tio n ify l e of r po 37.7 43.4 ien ins licy/ cov hol ura era der nce ge up com to a on cus a chpany tom ang to Set er p e in tlem olic 48.1 40.6 ent ch y inc eck lud s t e th hat e lie do nho not lde r

Low bal 64.2 l In su

64.2

I n the last ten years, lien holders have seen various issues arise related to insurance. Please indicate how significant each of the issues below is to your dealership:

50%

Insignificant Significant Very Significant

14.2% T IADA is working with the OCCC Very Significant and Texas Department of Insurance Significant 2.8% to determine whether you, as a Insignificant lienholder, have the right to 83% require your customers to obtain a policy 14.2% that adequately protects your security interest in the vehicle. This would allow you to reject policies with a named-driver-only or 83% excluded driver endorsement, among others. Please indicate how significant this would be to your dealership:

V S In

ver the past five years do O you believe physical damage insurance coverage for your customer has:

I n your opinion, offering a product to your customer to protect your collateral isâ&#x20AC;Ś

4.7%

18.9%

14.2%

17% 25.5%

34%

.7%

17% 25.5%

14.2% Greatly Improved Improved Stayed about35.8% the same Declined Greatly Declined

Greatly Improved 50% Improved 35.8% Stayed about the same Declined Greatly Declined

50%

Better t

About t Worse t

...the custom

Better than About the same as Worse than

...the...the customer carrying theirtheir ownown insu customer carrying insurance.

ow helpful would it be if the state went back to one standard H automobile insurance policy? 3.8%

23.6% 72.6%

Very Helpful Somewhat Helpful Not Helpful

February 2013

H ow helpful would it be if there were more products you could offer to protect your collateral or exposure as a lien holder?

H ow helpful would it be if plain language was required on the declarations page of insurance policies?

3.8%

4.7% 1.9%

Very Helpful Somewhat Helpful

27.4%

Very H

Some Not H

Not Helpful

68.9%

93.4%

4.7% 1.9%

68.9%

Very Helpful Somewhat Helpful Not Helpful

Very Helpful Somewhat Helpful Not Helpful 93.4% (cont’d on pg. 28)

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Lein Holder Insurance Issues (cont’d from pg. 27)

It would be very beneficial if there was a central database of current insurance information that lienholders could access online to verify coverage for customers. Many man hours are spent contacting various ins. companies to verify coverage, deductibles, lienholder information, as well as deciphering claim scenarios for listed/excluded drivers living at residence or given permission to drive vehicle, etc.

In addition to replying to the questions on the survey, respondents were encouraged to add any additional comments anonymously, some of which are included here.

TDI failed consumers and lien holders by approving the authorized driver endorsement (authdriv.003). Many of our customers are not aware of the very limited coverage this affords. Agencies tend to not fully explain the endorsements. The best way to protect a lien holder is to go back to the TX Standard Auto Policy, include lien holders on all payments issued for damage to the vehicles they have an interest in, and require agencies or companies to plainly distinguish between limited coverage policies and standard policies.

I don’t usually favor getting the government involved in business but other than a couple of major companies, the rest are a joke.

Plain language dec pages would be very helpful not only for the lienholder but also for the consumer to know what coverage they had (or didn’t have).

At a minimum insurance companies should be required to note any and all exclusions or exemptions in coverage on the declarations page sent to lienholders.

We need standardized insurance that protects the lienholder, no matter who is driving the vehicle.

Almost every insurance settlement I receive for a total loss is less than what I paid for the vehicle wholesale. If there is any business in Texas that NEEDS more regulation it is the insurance industry.

The claims process is possibly the most frustrating activity we deal with. Most companies use unjust delay and deceptive practices to frustrate our efforts.

I have been in the buy-here, pay-here business for over 21 years & I have seen in the last 5 years it seems to me that the insurance policies that our customers have been purchasing are becoming more & more deceptive. The customer doesn’t have an understanding of what they are purchasing. The only thing they understand is that they think they are purchasing a full coverage policy when they are actually purchasing a policy with several loopholes in it to keep the insurance company from paying claims. This has led to tremendous loss in revenue to our company & to sales tax to the state of Texas. If we could provide our own collateral protection thru our own dealership, we could do it at a lower cost to a customer who is already struggling to survive. Since we are the lien holder we are the party responsible for making the customer make their insurance payments yet we also take the hit if an accident occurs.

The biggest problems we face as a large operation is 1) both major and minor insurance companies lowballing the settlement offers, even offering below wholesale! Then they drag out the process using bogus market reports generated by some company to justify their offer and hope you will accept or go away making it difficult for the lienholder who has to spend time, energy, and money to fight them on every claim. 2) Not enough support from TDI or insurance boards to regulate these companies from charging high premiums and then “lowballing” on the settlement offers, as I mentioned above. 28

We need safeguards in place so the insurance companies cannot bully you into taking a lowball offer simply because it is not worth the extra expense of making them pay what the collateral is really worth.

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chapter news Local Chapter Roundup

compiled by Texas Dealer staff

Waco

(by Eddie Massey, Massey Motors)

aco/Heart of Texas Independent Dealers met Monday, January 14th for their monthly (L to R): BIADA members Lowell Rogers, Laura meeting. Randy Riggs, new McLennan Miller-Sattler, Tony Renfro & Michael Wilson Jefferson County County Tax Assessor/Collector was our guest speaker. Tax Assessor J. Our organization wanted to meet Mr. Riggs and he Shane Howard welcomed the chance to meet local dealers and hear their HIADA President Greg Zak then spoke about his exconcerns. Mr. Riggs outlined changes he has made in the day-to-day operations of the tax office and recent person- perience in building a successful BHPH business while Byron Riley discussed the benefits of membership and nel changes. He is working towards improving the tax the professional advantages of active involvement within office image and efficiency. As a CPA and former Waco the organization. City Councilman he is well prepared to tackle the job With attention being focused on the need for more of Assessor/Collector. He jokingly pointed out that he dealers in the Southeast Texas area to become involved DOES NOT set tax rates, much to the disbelief of many in TIADA, the local chapter will continue to focus on taxpayers. growth. BIADA is intent on building a strong presence Dealer members had the opportunity to ask questions within the organization, and ensuring that our voice is and Mr. Riggs asked for our input into improvements heard regarding issues that affect Southeast Texas dealers. that could be made in his office to better serve the dealer The next meeting will be held on Wednesday April 10, needs. He is operating his office with an open door policy at 7 PM. The location will be announced at a later date. and is readily available to handle issues that may arise. More information can be found at www.txiada.com. Our next meeting will be a brainstorming session to discuss future guest speakers, how to increase local and state memberships, and other organizational concerns. Our meetings are on the 2nd Monday of each month (by Sheri Winkelmann, HIADA Executive Director) at 6:30 p.m., Casa de Castillo, Sanger & Town Oaks n Monday January 14, 2013, HIADA hosted its Drive, Waco. Call 254-753-6661 for more information. first meeting of the year. It was a packed house ready to listen to speakers Jeff Martin, TIADA Executive Director, and Byron Riley, President of TIADA. Jeff Martin gave a legislative update and a forecast of (by Laura Miller-Sattler, Sattler Automotive Group) the 83rd legislative session which began on January 8, etermined to start the year strong, the new 2013 at the State capitol in Austin. Jeff spoke about key Beaumont Chapter welcomed Jefferson County bills that are currently being monitored for this session. Tax Assessor J. Shane Howard, TIADA President Byron Riley and HIADA President Greg Zak to its meeting. Jeff invited HIADA members to reserve a spot for Lobby Day at the State Capitol January 29th. Byron spoke about A strong relationship built between Chapter President his experience in the car business, and how important it Laura Miller-Sattler and TAC Shane Howard brought is to be involved in your local and state associations. Also attention to problems that the tax office was seeing with present were Steven Goldberg and Jason Cheung from title and inventory tax issues. Shane and two members Shilson, Goldberg, Cheung and Associates to talk about of his staff arrived with information recapping invenform 1099-C (cancellation of debt). tory tax filing guidelines, penalties and fines, registration HIADA would like to thank everyone for coming out times, titling and powers of attorney. An informative and to the meeting. The next monthly meeting will be held on interactive conversation took place. Everyone walked Monday February, 4th at the Saltgrass Steakhouse at 1803 away feeling informed â&#x20AC;&#x201C; and most importantly â&#x20AC;&#x201C; conShepherd Drive. nected with their TAC.

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fines& violations 10-0619 ENF East Texas Ford, Inc. DBA East Texas Ford, Inc. Failure to produce records within (15) days. Sold or offered to sell new motor vehicles without the appropriate license. Sold or offered to sell motor vehicles without the appropriate license for that type of motor vehicle. Filed a false title and tax document. Failure to timely transfer title and pay sales tax. License number is closed, oppose new or renewal for 3 years and attend a Dealer Training Seminar. 10-1710 ENF Christian Ugwu DBA Chimax Auto Sales Failure to timely file Motor Vehicle Inventory Tax statements. Failure to timely transfer title and pay sales tax. $750.00 and attend a Dealer Training Seminar. 11-0098 ENF East Texas Ford Inc. DBA East Texas Ford Inc. Failure to produce records within (15) days. Failure to timely pay lien on a motor vehicle traded in. Failure to timely transfer title and pay sales tax. Sold a motor vehicle without certificate of title or title receipt. License number is closed, oppose new or renewal for 3 years and attend a Dealer Training Seminar.

FINAL ORDERS for August 2012. Agreed orders represent a settlement of the case between the department and the licensee. In most cases there has been a finding that a law has been violated by the licensee.

11-0119 ENF Hassan Rahmanian DBA Legend Auto Failure to timely transfer title and pay sales tax. Sold a motor vehicle without certificate of title or title receipt. $500.00.

11-1466 ENF Nasrullah Juma DBA Diviton Auto Group Failure to maintain complete records by licensed dealer or auction. Failure to timely transfer title and pay sales tax. $500.00.

11-0555 ENF East Texas Ford Inc. DBA East Texas Ford Inc. Failure to display buyerâ&#x20AC;&#x2122;s guide. Failure to produce records within (15) days. Delivered title directly to retail buyer. Failure to timely transfer title and pay sales tax. License number is closed, oppose new or renewal for 3 years and attend a Dealer Training Seminar.

12-0061 ENF Moore Realty Inc. DBA Moore Used Cars Failure to display buyerâ&#x20AC;&#x2122;s guide. Failure to remove Texas plates. Misuse of buyer temporary E-tag. Failure to meet premises requirement(s). Failure to maintain complete records by licensed dealer or auction. $500.00.

11-1075 ENF Dathan L. Faulkner DBA ABC Truck Sales Failure to notify of change of address or telephone number. Sold or offered to sell a motor vehicle at an unlicensed location. $250.00 and attend a Dealer Training Seminar.

12-0103 ENF Triple R Auto Sales, Inc. DBA Triple R Auto Sales, Inc. Failure to maintain complete records by licensed dealer or auction. Failure to timely transfer title and pay sales tax. Attend a Dealer Training Seminar. 12-0154 ENF Texas Country Motors, Inc. DBA Texas Country Motors, Inc. Misuse of buyer temporary E-tag. Failure to timely transfer title and pay sales tax. $3,500.00 and attend a Dealer Training Seminar.

11-1208 ENF James Ryan Leach DBA Leach Investments Failure to have written consignment agreement. Failure to timely transfer title and pay sales tax. $500.00.

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fines& violations 12-0187 ENF Discovery Auto Sales, LLC DBA Discovery Auto Sales, LLC Advertised the amount of down payment in connection with a credit transaction without including the terms of repayment. $1,000.00. 12-0207 ENF Rollston â&#x20AC;&#x201C; Banks LLC, DBA Car Biz Misuse of temporary dealer tag or failed to comply with recordkeeping requirements. Falsified or forged tax or title document. Failure to timely transfer title and pay sales tax. $1,000.00 and attend a Dealer Training Seminar. 12-0369 ENF Silverstone Enterprise, Inc. DBA Silverstone Enterprise Inc Auto Sales Failure to maintain complete records by licensed dealer or auction. Sold or offered to sell a motor vehicle at an unlicensed location. Falsified or forged tax or title document. Failure to timely transfer title and pay sales tax. Failure to allow purchaser to select county for registration. $2,500.00.

12-0394 ENF Jim Bass Ford Inc. DBA Jim Bass Nissan Sold a motor vehicle without certificate of title or title receipt. $250.00. 12-0451 ENF Eduardo Guerra DBA Guerra Auto Sales Failure to comply with a Final Order. $250.00. 12-0474 ENF Luna Car Center LLC DBA Luna Car Center Misuse of buyer temporary E-tag. Failure to allow purchaser to select county for registration. $1,000.00. 12-0491 ENF Adonis Auto Group, LLC DBA Adonis Auto Group, LLC Failure to remove Texas plates. Misuse of buyer temporary E-tag. Failure to allow purchaser to select county for registration. Sold or offered to sell motor vehicles on consecutive Saturday and Sunday. Failure to timely transfer title and pay sales tax. $2,500.00.

12-0516 ENF Hamdy Aboellhasan DBA Budget Motor Company Failure to display buyerâ&#x20AC;&#x2122;s guide. Misuse of buyer temporary E-tag. Failure to maintain complete records by licensed dealer or auction. Failure to timely transfer title and pay sales tax. $1,500.00 and attend a Dealer Training Seminar. 12-0690 ENF Drive Autos LLC, DBA Drive Autos LLC Failure to remove Texas plates. Failure to maintain complete records by licensed dealer or auction. Failure to timely transfer title and pay sales tax. $1,000.00 and attend a Dealer Training Seminar. 12-0791 ENF Exclusive Auto Gallery, LLC DBA Barrett Auto Gallery Misuse of buyer temporary E-tag. Failure to timely transfer title and pay sales tax. $1,500.00. 12-0843 ENF Dick Poe Motors LP, DBA Dick Poe Chrysler-Jeep Failure to remove Texas plates. Attend a Dealer Training Seminar.

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February 2013

12-0894 ENF Stacia L. Ftaiti, DBA Tunsy Motors Misuse of buyer temporary E-tag. Failure to timely transfer title and pay sales tax. $500.00 and attend a Dealer Training Seminar.

12-0970 ENF Red McCombs Motors LTD DBA Red McCombs Toyota Failure to allow purchaser to select county for registration. $1,000.00.

12-0895 ENF AGL IV Enterprises Inc., DBA JR’s Autoplex Sold or offered to sell salvage vehicles without the proper license. Failure to timely transfer title and pay sales tax. $500.00 and attend a Dealer Training Seminar.

12-1118 ENF Rahman Investment Group, Inc. DBA Trucks & Cars For Less Failure to maintain complete records by licensed dealer or auction. Failure to timely transfer title and pay sales tax. $500.00 and attend a Dealer Training Seminar.

12-0954 ENF AGC Auto Sales Corporation DBA AG Auto Sales Sold or offered to sell a motor vehicle at an unlicensed location. $500.00 and attend a Dealer Training Seminar.

12-1159 ENF RML Waxahachie Dodge, LLC DBA Waxahachie Dodge Chrysler Jeep Misuse of buyer temporary E-tag. Failure to timely transfer title and pay sales tax. $1,500.00.

12-0960 ENF Port Lavaca Dodge Chrysler Jeep, Inc. DBA Port Lavaca Dodge Chrysler Jeep Misuse of buyer temporary E-tag. Failure to timely transfer title and pay sales tax. Sold a motor vehicle without certificate of title or title receipt. $1,500.00 and attend a Dealer Training Seminar.

12-1221 ENF Moore Realty, Inc. DBA Moore Used Cars Failure to meet premises requirement(s). Failure to maintain complete records by licensed dealer or auction. Delivered title directly to retail buyer. $500.00 and attend a Dealer Training Seminar.

12-1228 ENF Gardea, Inc. DBA Cars Plus Failure to make dealership records available for inspection. Attend a Dealer Training Seminar. 12-1229 ENF L L & H, Inc. DBA Auto Credit Failure to display buyer’s guide. Failure to remove Texas plates. Cease and desist. 12-1259 ENF Randall Noe Hyundai LP DBA Hyundai of Longview Failure to maintain complete records by licensed dealer or auction. Failure to timely transfer title and pay sales tax. $2,500.00 and attend a Dealer Training Seminar. 12-1265 ENF Alejandro Rodriguez DBA Capitol Auto Sales Failure to notify of change of address or telephone number. Sold or offered to sell a motor vehicle at an unlicensed location. Attend a Dealer Training Seminar.

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February 2013

fines& violations 12-1272 ENF P C Edwards DBA Edwards Motor Company Failure to comply with a Final Order. $250.00.

12-1460 ENF Roberto D. Perez DBA Lone Star Auto Plex Failure to display buyer’s guide. Failure to remove Texas plates. $150.00.

12-1337 ENF Finn’s Discount Auto, Inc. DBA Finn’s Discount Auto, Inc. Failure to display buyer’s guide. Failure to maintain complete records by licensed dealer or auction. Failure to observe right of way. $500.00 and attend a Dealer Training Seminar.

12-1472 ENF James Higdon, Simone Higdon DBA Bullfrog Auto Sales Failure to display buyer’s guide. $100.00.

12-1450 ENF Temple Mac Haik Dodge LTD DBA Mac Haik Pre-Owned Misuse of buyer temporary E-tag. Failure to timely transfer title and pay sales tax. $250.00 and attend a Dealer Training Seminar. 12-1382 ENF Deborah Fabiola Diaz DBA Express Motors Failure to remove Texas plates. Failure to observe right of way. $150.00. 12-1386 ENF Auto Facil Inc. DBA Auto Facil Inc. Failure to display buyer’s guide. $100.00. 12-1393 ENF Jesus Marroquin DBA Marroquin’s Motors Failure to remove Texas plates. $50.00. 12-1407 ENF Gilbert Garza Baron DBA Associated Autos Failure to display buyer’s guide. $100.00. 12-1408 ENF John P. Hencerling DBA Southwestern Sales Failure to display buyer’s guide. Failure to maintain complete records by licensed dealer or auction. $200.00. 12-1410 ENF Caldwell Used Vehicles, LLC DBA Periko Auto Sales Failure to display buyer’s guide. Failure to maintain complete records by licensed dealer or auction. $200.00. 12-1437 ENF Don E. Thompson DBA Thompson Motors Failure to remove Texas plates. $50.00. February 2013

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12-1474 ENF Motor Homes of Texas LLC DBA Motor Homes of Texas Failure to maintain complete records by licensed dealer or auction. $100.00. 12-1478 ENF Margarito Hernandez, Maria Hernandez DBA Herdez Auto Sales Failure to display buyer’s guide. Failure to remove Texas plates. $150.00. 12-1479 ENF Clarence W. Goud, Charles W. Goud DBA Goud Chevrolet Co. Failure to display buyer’s guide. Failure to remove Texas plates. $150.00. 12-1480 ENF Ward Motor Co. Inc. DBA Ward Motor Co. Failure to remove Texas plates. $50.00. 12-1488 ENF Salvador Diaz, Gabriel Diaz DBA Autos Morelia Failure to display buyer’s guide. $100.00. 12-1515 ENF Rolando Arroyo DBA Auto Corral Investments Failure to display buyer’s guide. Failure to maintain complete records by licensed dealer or auction. $200.00. 12-1541 ENF Eduardo Dariel De Hoyos DBA Rodaxa Auto Sales Failure to display buyer’s guide. Failure to remove Texas plates. $150.00. 12-1542 ENF Laura N. De Hoyos DBA Auto World Motors Failure to display buyer’s guide. Failure to remove Texas plates. $150.00.

talking shop What Really Gets You Ticked? compiled by Texas Dealer staff

t can be a stressful business. Demanding customers, flaky employees, officious bureaucrats, illogical finance markets and lots more can make the used car business a real challenge to navigate. Veteran dealers have learned to take the good with the bad and keep it all in perspective (with varying degrees of success). On the other hand, letting off a little steam from time to time never hurt anyone, either. So, with that in mind, consider this to be a SOUND OFF! of sorts. This month’s Talking Shop question was: WHAT REALLY GETS YOU TICKED?

“When a customer gets behind on payments, and they won’t return calls for 3-4 months, then the car gets repossessed. So then they call right away and tell us we’re bad business people, and why won’t we help them out? It’s always the repossessions that get me. We helped ‘em out by letting ‘em ride for four months for free, didn’t we?!” – Nikki Nevarez, JP Auto Sales - Waco “Well, the most frustrating thing for me is some customers who have very unrealistic expectations of a used car. Some of these people think a used car should be 100% perfect forever, no cosmetic defects, nothing. And also those customers that get buyer’s remorse, after 60 days want you to take the car back and have you get them into something else. I had one guy, wanted to buy this car from us, and he test drove it four times. He buys it, then two weeks later wanted to trade it in cause his wife couldn’t drive a standard. Seriously? You test drove the thing four times! You knew it was a standard!” – Ben Terry, Taylor Auto Credit – Taylor

“I’m a pretty easy-going guy, takes a whole lot to get me mad. I’d say breakdowns. We have a repair facility, and sometimes we have to fix cars over and over again. The repair part of the business is definitely the part I hate the most.” – Joe Ray, King Auto Sales – Katy “Not being on the same playing field with franchise dealers as far as customer financing. The banks have a preference. We send one or two deals to a bank for a subprime customer, and they won’t do them. But if they get it from a franchise dealer, even if it’s the same deal, they accept that. If the customer’s credit stinks, their credit stinks – it shouldn’t matter if they’re coming from a big franchise store or little old H-Town Motors. But that’s the playing field we don’t get.” – James Hobson, H-Town Motors – El Paso

“I guess the most upsetting thing is when I sell customer and close ‘em, I always tell them, ‘Communicate with me. If you will, I work with you any way I can.’ And then they don’t do it. They think ignoring the problem is better than talking it out. If you call me and tell me you don’t have any money, hey, I’ll try work it out. But you gotta call.” – Mitch Hamner, Wise Car & Truck – Bridgeport “Let’s see, basically when we have customers who want to go to their own bank to get the deal done. We had one lady who went to her bank, it was over a month and they hadn’t given her an answer. We had her do a credit app through us and we had an approval for her in 24 hours. Happens a fair amount when they go to their own source. Big banks it just takes forever for them to get an answer to the client. That’s what ticks me off, banks that just keep asking questions and not giving answers.” – Jeff Cory, Dave Cory Motors - Houston

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February 2013

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legal corner

Can Limited-Coverage Property Damage Policies Be Rejected by a Car Creditor? Dealer Question: I am a BHPH

dealer who has been burned many times by “limited” insurance policies provided by my customers to satisfy the insurance requirement of my contracts. Can I advise my customers that I will not accept certain types of property damage insurance which I don’t believe adequately protect my security interest in vehicles sold?

Answer: Yes, if the limitations you impose fall within the guidelines established by the Office of Consumer Credit Commissioner.

he proliferation of so-called limited policies over the last few years has created a crisis for buy-here-pay-here dealers and other car creditors, especially those who finance in the sub-prime credit markets. These policies have eliminated some of the areas of coverage that were taken for granted in the standard motorist policies that were the norm in days past. The most common limited policies restrict coverage to accidents or damage that occur while a specific, named driver is behind the wheel, or, exclude coverage when some specific, named excluded person is driving. We’ve seen some damage claims denied because of a named-driver exclusion or a named-driver-only endorsement, even though there was no indication of such limitations on the certificate of insurance presented to the car creditor. Justification for the denial of the claim was that a nameddriver-only or an excluded-driver endorsement was added after the certificate of insurance was issued. In some situations, the loss payee was never

February 2013

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informed of this change until after the vehicle was destroyed in an accident. Another common characteristic of the newer, more limited policies being sold to drivers is the absence of lien holder protections that the standard motor vehicle policies have contained. For example, some limited policies provide an escape clause for the insurer if a check given by the insured for a premium payment bounces. In some cases, insurers have used these provisions to deny coverage, even though the lien holders were given certifications that insurance was in place. In reliance on the certificates of insurance, the lien holders would release the vehicles to the debtors. Yet after the vehicles were damaged, the insurance companies issued denials based on these “retroactive” cancellation provisions. Most standard polices of the past contained a “union clause” that shielded loss payees (lien holders) from some of the defenses that an insurer could raise against the policy holder. The limited policies have much more restrictive loss-payee clauses that leave lien holders in the same position as the insured in terms of defenses that can be raised to preclude responsibility on the part of the insurers. This issue becomes especially important when a debtor disappears or refuses to cooperate in the claims process. We’ve also experienced a number of cases where a lien holder did not receive notice of cancellation of a policy, or a change in the covered vehicle by the debtor, leaving the lien holder who thought he or she was insured without coverage. The terms of some

by Michael

W. Dunagan

TIADA GENERAL COUNSEL

of the policies limit the obligation of the insurer to notify lien holders of such changes and cancellations in a way that results in the lien holders being unknowingly uninsured. And, of course, many lien holders, especially in the sub-prime market, have experienced repeated problems with low-ball settlement offers from certain companies and adjustors that refuse to recognize the valuations contained in the standard industry value guides. Instead, they rely on their own proprietary value guides that apparently peg values at substantially less than NADA or Black Book. When a low-ball offer is made, the lien holder’s only option is to sue the insurer to have a court determine the actual value, an option that most lien holders find to be not cost effective. Some car creditors have adopted a self-defense policy of not accepting certain limitedcoverage policies and policies issued by agents or insurers that have proven in the past to be of little or no value in protecting the creditors’ collateral. We have seen no court cases that have directly addressed just what the car creditor’s rights are with regard to rejecting insurance policies that don’t conform to the coverages provided in the standard Texas driver’s policy. But we can look to the Texas Finance Code and the OCCC for guidance. The Texas Finance Code provides that a car creditor can require a retail 41

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* valid for sell fee only at Insurance AA locations.

P.O. Box 127 Round Rock, Texas 78680 I 800.442.5944 I 512.244.6060 I 512.244.6218 fax I w w w . t x i a d a . c o m

buyer to insure the motor vehicle purchased under a retail installment transaction. The creditor can require insurance that bears a reasonable relationship to the “existing hazards or risk of loss, damage, or destruction.” The creditor cannot require insurance that covers “unusual or exceptional risks” or provide coverages not ordinarily included in policies issued to the public. The Code also provides that when insurance coverage is required in the contract, the buyer has the option of furnishing the required coverage through an existing policy or a policy obtained through “an insurance company authorized to do business in this state.” These sections of the Code provided little in the way of controversy back when all car policies issued were standard policies with the standard provisions. Every loss payee knew where he or she stood and what could reasonably be expected when damage occurred. The emergence of non-standard limitedcoverage policies changed all that. The key section of the Finance Code that addresses the rights of lien holders to require insurance is the language that authorizes the holder to require coverage of existing hazards or risk of loss. Certainly, a vehicle sold to a person who has multiple drivers in the household would carry reasonable risk of being driven by persons other than the named buyer. An excluded-driver policy, where the excluded driver is the person for whom the vehicle is intended (or who will probably drive it even if he or she is not the main buyer) would also appear to fail to meet the “existing hazards or risk of loss” provision of the Code. The OCCC, in response to a request from TIADA, has now weighed in to give some guidance to lien holders who are concerned about insurance policies that don’t offer

coverage for the hazards and risks that lien holders typically face. In a Motor Vehicle Sales Finance Bulletin dated January 8, 2013, the OCCC has recognized that certain limited-coverage polices might not adequately protect the collateral interest of the lien holder. After citing the potential exposure lien holders face when presented with limited policies, the Bulletin concludes: “Therefore, the

The creditor can require insurance that bears a reasonable relationship to the “existing hazards or risk of loss, damage, or destruction.”

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OCCC will not object if a holder requires a buyer to obtain an insurance policy that contains certain terms that protect the holder’s interest. For example, a named driver policy could be seen as inadequate protection of the holder’s interest when it cannot be reasonably expected that the named driver will be the only person to drive the vehicle.” With regard to excluded-driver policies, the Bulletin says: “…an excludeddriver policy may not adequately protect the holder when the holder has a reasonable expectation that the excluded driver will drive the vehicle.” The best procedure would be to counsel buyers on what is expected in terms of insurance before they are sent out to purchase insurance, and explain why an existing limited policy is not acceptable. While a seller can’t dictate from whom insurance must be purchased, there is not prohibition against the seller referring the buyer to an agent or company that provides appropriate coverage. Also, the Code specifically authorizes the holder to sell property

damage insurance and include the premium in the retail installment contract (of course, sellers must be properly licensed under the Insurance Code). If a policy is sold by the creditor, the buyer does have the option to replace that policy with one he acquired. In the January 8, 2013 Bulletin, the OCCC also stated that lien holders should not prohibit retail buyers from obtaining month-tomonth policies, as long as the policies adequately protect the lien holder’s interest. And, lien holders are advised that they shouldn’t prohibit the buyer from obtaining insurance from a particular agent or insurer. Rather than post a list of undesirable agents or companies, lien holders should identify types of policies and policy provisions that won’t be accepted. Dealers should also consider the range of alternative products that may offer better protection of collateral than the policies that are currently being marketed to sub-prime credit risks, including: • S ingle-Interest Insurance Products •C ollateral Protection Policies •D ebt Cancellation Agreements • S tandard Texas Motorists Policies A discussion of some of these alternatives appears in the February and March, 2012 issues of Texas Dealer. In conclusion, a vehicle seller/lien holder has the ability under the Texas Finance Code to require insurance coverage that adequately and reasonably covers the risks that the collateral faces. With that right comes the ability to reasonably reject insurance policies that don’t cover the risks. Michael W. Dunagan is an attorney in Dallas, Texas who has represented the Texas Independent Automobile Dealers Association for over 36 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. 43

regulation matters How Can They Do That?

ealer prep fee, service fee, detailing fee, etc… regardless of the terminology, a common point of confusion for Texas dealers centers around this idea of “additional charges.” For the purposes of this discussion, we will take that to mean any charges that are not included in the cash price of the vehicle. Additionally, we will delineate between a cash sale and a retail installment transaction. So what is allowable? In a retail installment transaction, the seller is subject to Chapter 348, Texas Finance Code, which allows for the following itemized charges to be added to the cash price under Sec. 348.005: (1) f ees for registration, certificate of title, and license and any additional registration fees charged by a full service deputy under Section 502.114, Transportation Code; (2) any taxes; (3) fees or charges prescribed by law and connected with the sale or inspection of the motor vehicle; and (4) charges authorized for insurance, service contracts, warranties, or a debt cancellation agreement by Subchapter C. Over the years, the OCCC has typically taken the position that any itemized charges not explicitly authorized by this section are, in general, prohibited. In a cash sale, where a retail installment contract is not utilized, a seller is not subject to the provisions of Chapter 348*. Therefore additional charges agreed to by both parties are generally allowable. However, there is one MAJOR caveat to that – advertising rules, specifically 43 TAC §215.250, which states in part: The only charges that may be excluded from the advertised price are: (1) any registration, certificate of title, license fees, or an additional registration fee, if any, charged by a full service deputy as provided by Transportation Code, §502.114; (2) any taxes; and (3) any other fees or charges that are allowed or prescribed by law. Keep in mind the following definition of an advertisement from 43 TAC §215.244 (1): An oral, written, graphic, or pictorial statement made in the course of soliciting business, including, without limitation, a statement or representation made in a newspaper, magazine, or other

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by Danny

Langfield

TIADA DEPUTY DIRECTOR

We receive calls with some regularity from members wondering how a competing dealer is “getting away” with charging certain fees which appear to be prohibited. publication, or contained in a notice, sign, poster, display, circular, pamphlet, or letter, or on radio, the Internet, or via an on-line computer service, or on television. The term does not include an in-person oral communication by a dealer’s employee with a prospective purchaser. Therefore a dealer who advertised a vehicle at a sale price of $12,995 would be in violation of the advertising rules if they required the customer to pay any additional fee not specifically listed above. We receive calls with some regularity from members wondering how a competing dealer is “getting away” with charging certain fees which appear to be prohibited. We understand that a dealer who is charging these fees in addition to the cash price is essentially able to gain an unfair competitive edge by appearing to offer a lower cash price. TIADA believes that a consistent regulatory enforcement of the statutes and rules above helps to establish a level playing field for all dealers. If you believe another dealer is gaining an unfair competitive advantage by disregarding these rules, you have the right to file a written complaint with the OCCC or TxDMV, respectively. * Bear in mind that if a dealer charges a doc fee, that amount must be the same for both cash and financed sales. 45

behind the wheel

Martin

Hope Is Not A Plan

by Jeff

hat would happen at your dealership tomorrow morning if you unexpectedly didn’t show up to work? What if you didn’t come in, or couldn’t come in for a week, two weeks or as long as three months? Could your dealership survive your unplanned absence? At our last meeting the TIADA Board of Directors approved an emergency succession plan for contingencies due to disability, death or departure of the Executive Director. As the Executive Director, I can tell you it was an interesting project to work on and one I supported whole-heartedly. At the conclusion, we had a six page road map that included; key functions, authority, oversight, compensation and a communication plan. It also included a comprehensive inventory of all our key contacts, information and passwords. This plan will not only establish clear direction and calm in what might seem an uncertain and disorderly time, it will also create stability and confidence among employees, members, advertisers and sponsors so that the association can move forward and is not in an indefinite holding pattern. After the board meeting, a number of board members asked if they could have a copy of the plan to use as a template for their own dealership. Large and small dealers alike started talking about “what if.” What if you were out for two month due to some unforeseen accident? Who would go the auction and purchase cars? Who would service your accounts? Who would have conversations with the bank? Who would pay the bills? Who would meet with the sales team? Who would set the goals for the

TIADA EXECUTIVE DIRECTOR

dealership? Write down six to eight of your primary functions and ask yourself who would do each in your absence. Now, the most important question - could your dealership survive? To be blunt, you are nuts if your business doesn’t have some written emergency succession plan. More importantly, do you really want to put your business and your livelihood in such peril if something were to happen to you or another key employee? If you are a two person operation you may think you don’t need a plan. It’s pretty easy to guess who’s going pick up the slack if you’re not around. But do you know where to get the passwords or contact information if you can’t walk down the hallway and ask your spouse or partner? An emergency succession plan will force you to discuss compensation too. There may be no change in compensation but that conversation is better to have now when there is a lot less emotion. There are a number of templates you can find online, or feel free to call the state office and we will be happy to provide you an electronic copy of our plan that will get you started. In less than four hours you can have a complete plan in place. After you have your plan in place, don’t file it away to never be seen again. You must communicate the plan to others so they can put it in action if needed. From time to time you will also need to make changes or updates to your plan. TIADA will review our plan in September during our new board member orientation or whenever we have a key employee move. Don’t let a brief absence slow down your momentum or worse yet, kill your business.

Could your dealership survive your unplanned absence? 46

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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. DCC provides debt forgiveness in the event of a Total Loss and is offered at the point of sale. See what our clients are saying: “Our Debt Cancellation Program, serviced through AVP, was one of the best financial decisions our company has ever made in its 21 year history.”

Benefits NEW PROFIT CENTER REDUCES EXPENSES COLLATERAL PROTECTED INCREASED CASH IN DEAL INCREASED CSI

Michael Brill, President B&B Automotive Inc.

FINANCED WITH CONTRACT FORMS REVIEWED BY OCCC

AVP DEALERS MAKE MORE MONEY PERIOD! www.avpadmin.com

816.756.5430

*Substantial Discounts for TIADA Members

TEXAS INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION P.O. Box 127 Round Rock, TX 78680-0127

PRSRT STD U.S. Postage

PAID

Fort Worth, TX Permit No. 1016