Tennessee Dealer News - Jan 08 by TNIADA

Official Publication Of The Tennessee Independent Automobile Dealers Association A Publication Of The California United Auto Dealers Association also in this issue

Learn How To Avoid Wholesale Losses And Make Profitable Decisions plus

Learn How To Average More Money Plus Gross Profit Per Vehicle

Improve Dealership Compliance And Avoid Problems Before They Happen

NEWS DEALER

DEALER WEST Coast Tennessee

Jan|Feb 2008

PAID

PRSRT Standard U.S. Postage

FORT WORTH, TX Permit No. 1122

National Independent Automobile Dealers Association www.niada.com • www.niada.tv NIADA Headquarters • 2521 Brown Blvd. • Arlington, TX 76006-5203 • (817) 640-3838 TN Dealer News is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817) 640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of the Tennessee Independent Automobile Dealers Association or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of TNIADA or NIADA, does not constitute an endorsement of the products or services featured. Copyright 2008 by NIADA Services, Inc. All rights reserved. Visit the TNIADA Web site at www.tniada.com. For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. For information on how to become a member of TNIADA, please contact Darryl Noble at (615) 506-4968 or dnoble@tniada.com.

State Publications Manager/Sales: Troy Graff • troy@niada.com

State Publications Graphic Artist: Amy Moore • amy@niada.com

State Publications Editor: Cecily Holland • cecily@niada.com

Printing: Southwestern ColorGraphics Printing & Mailing Specialists

State Publications Production Manager: Christy Haynes • christy@niada.com

Tennessee Department of Commerce and Insurance Report for 4th Qtr 07: Used Car Dealers- 4,197 Dealers Opened or Relocated in last 90 days – 160 Applications In Process – 38 Sales people –15,592

contents FEATURES

Legal, Legislative And Regulatory Summary

Planning To Avoid Wholesale Losses

Learn how to avoid wholesale losses and make profitable decisions.

Get up to date on the latest legal issues facing the industry. KEITH WHANN

Looking Closely At Your Dealership

RANDY BARONE

How To Average $3,000 To $4,000 Improve dealership Plus Gross Profit Per Vehicle compliance and avoid

Learn how to average more money plus gross profit per vehicle.

problems before they happen.

MARK TEWART

KEITH WHANN

TNIADA HIGHLIGHTS 6 Executive Director’s Letter 8 President’s Letter

28 Supply Order Form 30 Membership Application

BOARD OF DIRECTORS David Andrews – President City Auto Sales 4932 Elmore Road Memphis, TN 38128 Phone: (901) 377-9502 Phone: (901) 333-0103 dsa@cityauto.com Danny England – Vice President Danny England Motors P.O. Box 1620 New Tazwell, TN 37825 Phone: (423) 626-9500 Fax: (423) 626-9543 Cell: (423) 526-7190 dannyenglandmotors88@hotmail.com John Niven, Jr. – Secretary/ Treasurer Auto Agency, Inc P.O. Box 382664 Germantown, TN 38183 Phone: (800) 325-5440 Phone: (901) 756-8557 niven@bellsouth.net

Tony Moorby 141 Woodward Hills Place Brentwood, TN 37027 Cell: (615) 714-7991 Fax: (615) 866-5511 tonymoorby@aol.com

Sam Chaple Manheim’s Nashville Auto Auction 8400 Eastgate Blvd. Mt. Juliet, TN 37122 Phone: (615) 773-3808 sam.chaple@cox.com

John Taylor Taylor Auto Sales & Rental 3832 Clarksville Pike Nashville, TN 37218 Phone: (615) 259-3797 Fax: (615) 259-8969

Darryl Noble – Executive Director P.O. Box 2219 Lebanon, TN 37088 Cell: (615) 506-4968 Office: (866) 5-TNIADA Fax: (615) 443-7486 dnoble@tniada.com lnoble@tniada.com

Don Flanders Guardian Warranty 1800 Colonial Shores Drive Hixson, TN 37343 Phone: (423) 596-7601 Fax: (423) 842-3906 donflan@bellsouth.net

TUNE IN

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Access Educational Sessions On

Tune in for all the latest industry news from NIADA’s experts.

I N D E X

T O

A D V E R T I S E R S

ADESA Knoxville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Aircept/Cal Amp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 AUTOSAVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 AutoTrader.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Back Cover CAR Financial Services, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Cars.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inside Front Cover Credit Acceptance Corporation . . . . . . . . . . . . . . . . . . . . . . . .Inside Back Cover Dealer Funding, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Frazer Computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Georgia-Carolina Auto Auction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Guardian Warranty Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Manheim Nashville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Manheim Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 McNutt Auto Transport Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Preferred Warranties, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 United Acceptance Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Westlake Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Wilshire Consumer Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

Executive Director of TNIADA

A Word from The Executive Director:

his has been a whirlwind year for us as an

the state on a monthly basis, we’ve attended

association. We have truly set some

neighboring state conventions and dealer

records and moved some mountains. While

educational classes so we will be better equipped

our membership has grown, there are many other things that affect you as a member and as a dealer. For the first time since our inception, our

in 2008 when we take on these projects. We also created our first newsletter which is scheduled to go out quarterly in 2008 and we

Board of Directors has

began forming Regional

met no less than

Boards and will

monthly throughout the

We have truly set some

year. This has had a major impact on what we’ve been able to accomplish by meeting goals and deadlines

records and moved some mountains.

conclude this task early this year. There are so many things we are doing but we can’t put them all in our news-letter. However I can tell you what our goal is for

we set earlier in the year. Here are a few other things we’ve accom-

2008, AWARENESS. We are going to make

plished in 2007, we revamped our TNIADA web

every dealer in our state aware of what a strong

site and created new print material, we secured

association can do to help build their bottom line

office space which ABC Auto Auction makes

whether it is through education classes, finance

possible, we have a company vehicle which was

sources, software – there are so many things this

made possible by sponsorship with Chattanooga

association can do for the independent dealer.

Auto Auction and Honda Remarketing. We

So be watching for us this year, we’re going to

created a display booth to be noticed at every auction we attend, we attend 15 sales throughout

be everywhere. Darryl Noble

Congratulations 2007 Quality Dealer Nominees

to the

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

Allen Hodge Motors – Allen Hodge American Car Center – Michael Shivers Bob Johnson Auto Sales – Bob Johnson Cars Plus – Steve McWhirter College Motors – Malcolm Hall Eddie’s Auto Sales – Eddie Morgan Fox Auto Sales – Lester Fox Franklin Motors – Tracy McMurtry Freeman Auto Sales – David Freeman George Rasberry Motors – George Rasberry Griffy Motor Co. – Kent Griffy McClerkin Motors Inc. – Jessee McClerkin Miller Automotive – Moss Miller Shubert Motor Sales – Benny Shubert S&S Motors – Jerry Smith Taylor Auto Sales – John Taylor West TN Motor Co – JT Livezey

President’s Corner

2007 Was Great, 2008 Will Be Even Better! To our members, Thank you for your continued support of the Tennessee Independent Automobile Dealers Association (TNIADA). This past year was a record year for your association. With the combined efforts of our members and Board of Directors we have been able to increase our membership total by over 100 dealers to a current enrollment of 342 members. This puts us in position to make your association better than ever in 2008. The list of accomplishments for 2007 is substantial. They range from building a strong working relationship with the Director of the Tennessee Motor Vehicle Commission to attending all of the NIADA conventions and workshops. All of these meetings have given us

Partnership News

AutoTrader.com And Kbb.com Strike Magnetic Partnership Source: Auto Remarketing News Magazine

the insight into how your state association needs to be directed and managed. With our strong alliance with the National Association (NIADA) and other state associations we can continue to build your state association into the premier association you want and deserve. As of the printing of this newsletter your Board of Directors is preparing the association goals for 2008. These goals will be relayed to you in the next newsletter. We strongly believe we can all benefit from being a member of a dedicated state dealers association with resources to help you, the Dealer. Darryl and Lisa Noble, David and Maryanne Andrews attended the national conference for state presidents and executive directors during the weekend of November 15th thru November 18th. The list of topics covered is too long to be included in this letter. The one topic I would like to relay to you is

that your state and national associations led by Mike Linn and his staff is superbly positioned and dedicated to giving all our state associations and independent dealers the representation and guidance that we need and cannot get without having a national association. The NIADA is truly an outstanding national association. The value of your national and state membership cannot be valued in dollars and cents. In closing, I would like to request all Tennessee members to forward their email address to me at dsa@cityauto.com or Darryl Noble at dnoble@tniada.com We will use this venue to keep you, our members updated on important topics.

This past year was a record year for your association.

Happy Holidays, David Andrews

unique monthly visitors — and with both numbers wo of the largest online vehicle market continuing to grow — AutoTrader.com remains the places have agreed to partner up with each best source for buyers to find that perfect car and other to provide more classified information for sellers to quickly find car buyers." to consumers. Auto Trader.com and Kelley Blue Book’s Kbb.com will be teaming up to provide Kbb.com also announced several other immore classified information to consumers. provements for its show case and CDM data The agreement customers, including becomes official on Jan. media advertising in the 4 and then dealers and AutoTrader.com classiAuto Trader.com consumers looking to sell fieds, Kelley Blue Book can have access to a value listings and a and Kelley Blue Book’s greater number of digital window sticker shoppers with executives Kbb.com into Web site listings. highlighted. "This alliance is a Officials also will be teaming up great opportunity for estimate that dealers and Blue Book to consumers can utilize a to provide more classified Kelley further expand its focus network of 26 million information to consumers. on providing value to the unique potential buyers dealer's business, somebetween the two sites and thing we have been those looking at KBB's committed to for more classifieds will have than 80 years," noted Paul Johnson, president of search capability of more than 2 million listings Kelley Blue Book. from which to choose. "With the confidence that Kelley Blue "Our new partnership with Kbb.com signifies Book's trusted values instill in consumers our continued commitment to provide our advercombined with Auto Trader’s experience in tising customers the best value and widest possiclassifieds, this partnership signifies one of the ble exposure," explained Chip Perry, president of AutoTrader.com. "With more than 3 million new most compelling opportunities for dealers to sell and used cars listed on our site and 13 million more cars online," Johnson continued.

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

Lic. #2637

1011 Adesa Parkway Lenoir City, TN 3771 865/988-8000 865/988-5674 Fax

S A L E D AT E S Tuesday Night 5:30 PM & Friday Morning 8:45 AM •

6 Lane Auction

•

Buy Online at ADESA.com

•

Pick up and delivery Service Provided

F E AT U R E A C C O U N TS Capital One, PAR North America, RSA, Regions Bank, Independent Bank, C & F Finance, Tennessee Valley Federal Credit Union, Auto Credit of Knoxville, National Kidney Foundation, Automotive Remarketing, GCB Acceptance, National City Bank, Sunrise Acceptance, Enterprise Rent A Car, Citifinancial, Insurance Auto

STAFF

Auction, Budget Sales and Leasing and First Tennessee Bank.

General Manager – Greg Koepfer Controller – Alan Duff Fleet Lease/Marketing Manager – Paula Willocks General Sales Manager – Tim Dalton Office Manager – Debbie Angle Transportation Manager – Jason Oody

Check Out www.tennessee.gov

New Products

Online Vehicle Title and Registration Search

CalAmp Launches Sixth Generation Aircept Products And Satellite Mapping Services For Mobile Asset Tracking

Can Be Found On The Official Web Site For The State Of Tennessee Source: www.tennessee.gov

n the age of identity theft, natural disasters and financial challenges, it’s great to know there is a tool available to assist businesses in protecting themselves and their customers. At www.tennessee.gov we’ve implemented improvements to the on line vehicle title and registration search (IVTR) to do just that. IVTR has always provided basic vehicle information such as vehicle identification number, tag number, owner, mileage, plate year, number of axles, plate class, title,date and so on. Now IVTR provides more in-depth information about a vehicle’s history. In cooperation with regional automobile dealers and the Department of Revenue, our web site has added new/used vehicle indicator, odometer reading, odometer indicator, previously titled states, which include up to five, lien holder information and in care of information. The new/used vehicle indicator allows us to inform you if an automobile is classified as new, used, demonstrator, rebuilt and passed the anti-theft inspection, flood damaged, specially constructed or non-repairable. The odometer indicator lists mileage as actual blank on title, not actual or exceeding mechanical limits. Previously titled states information can be especially useful for vehicles from states that are not required to report certain classifications and www.tennessee.gov provides up to five previously titled states if present. One can see up to four lien holders with lien date and all address information. The in care of or additional information area can contain the in care of address for a relative or attorney, 3rd and 4th owners if present, or any other relevant vehicle/location information. Signing Up For IVTR Is Simple Simply go to www.tnanytime.org/ivtr and click on subscribe, you will then be prompted to create your account, fill out the subscriber’s agreement and send it into the Department of Revenue with a copy of your business license and letter of intent. The documents are required to aid the department in verifying that all subscribers meet the requirements outlined in the DPPA. For your convenience, your subscription will renew automatically each year until you cancel your subscription. It’s only $75 per year and $2 per search; a great value if you can avoid that one bad transaction. Do You Know TN.GOV? Tennessee.gov is the official state web site and provides a variety of online services such as renewing your professional license, your driver’s license, or paying your sales tax and use tax. Tennessee.gov is constantly growing, evolving and new services are added regularly. If you have ideas and suggestions for new services that will benefit Tennessee citizens and businesses please email us at suggestions@egovtn.org.

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

leading provider of wireless products, services and solutions announced that it has launched the Aircept LMU-1400 Location Messaging Unit for mobile asset tracking. In addition, CalAmp has integrated Google™ satellite mapping views into the Aircept online service for its digital cellular products. With the introduction of the LMU-1400, CalAmp expects to realize annual cost savings of approximately $1 million for the Aircept business based on current shipment run rates. Designed and manufactured by CalAmp, the Aircept LMU-1400 is a new GPS and GSM/GPRS tracking device that delivers 6th generation improvements. Enhancements include better performance through higher cellular receive sensitivity, the ability to simultaneously track up to 16 GPS satellites, Over-The-Air (OTA) delivery of software features, and lower overall power consumption. The Aircept LMU-1400 is available in a smaller and thinner package (2.0 x 4.0 x 0.8 inches) for easier installations. “Since 1999, the Aircept brand has been recognized for pioneering solutions for vehicle tracking, defining the intersection of internet, wireless, and GPS technologies,” stated Jarvis Tou, Vice President and General Manager of CalAmp’s Aircept business. “The introduction of the Aircept LMU-1400 delivers key improvements in performance and reliability. The addition of OTA provides leading edge capabilities and improved robustness. Companies that provide vehicle financing have come to depend on CalAmp’s patented technologies and processes which enable lenders to lower the risk of their loans, and thereby address a larger market of potential customers.” CalAmp’s Aircept business provides both equipment and monitoring services for vehicle financing companies, including ‘Buy-Here-Pay-Here’ dealerships that specialize in automobile financing for high credit risk individuals. According to the 2007 National Independent Automobile Dealers Association (NIADA) Used Car Report, $75.8 billion in used car sales were financed through independent auto dealers in the United States during 2006 as Grade C paper or lower representing an annual addressable market of nearly 9 million vehicles. These new products and services rely on CalAmp’s patented technologies and processes (United States Patent Nos. 6,025,774 and 6,249,217 B1). The patents relate to a vehicle location system whose purpose is to enable automobile dealers and finance companies to locate and repossess vehicles serving as collateral on loans that go into default or have other changes in loan status. The Aircept LMU-1400 is now available directly from CalAmp Corporation. Single unit prices, including shipping and handling, start at $191 each with one year of included air time, and $216 with two years of included air time. For ordering information contact airceptsales@calamp.com. For additional information, please visit the Company’s web site at www.calamp.com.

f e a t u r e

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W H O L E S A L E LO S S E S

Planning To Avoid Wholesale Losses

Keep 'Em Or Cut "Em? By: Randy Barone, American Auto Exchange ounds like a no brainer, right? Yet dealers across the country are still making decisions that result in thousands of dollars in wholesale losses annually. It’s an endless cycle, which, without true process change, leaves dealers with no other option than to continue to incur these losses. From the appraisal process to vehicle disposal, dealers should consider a variety of factors to make sure they are making the most profitable decisions. Better, knowledge backed decisions equal increased whole sale performance. The decisions made around vehicle appraisals are of primary importance. When a customer brings a vehicle to your lot for trade-in, you should be able to instantly determine how that vehicle has traditionally performed in your dealership and sister stores. Having this knowledge helps you to price the vehicle at the “right” price. If you know the vehicle hasn’t performed well on your lot, but has performed well at a sister lot, you can decide to place that vehicle on the lot where it will make the most money and turn in the quickest time.

Better, knowledge backed decisions equal increased whole sale performance. Decisions concerning the vehicles purchased at auction are also critical. All too often, buyers get distracted by vehicles that they have a “gut feeling” will do well on your lot. They invest your dollars in vehicles that end up sitting for too long. Imagine the benefits of having a “grocery list” that your used car manager can take to the auction and use to bid on vehicles they know have performed well and aid in building the ideal inventory mix for your store, or even at a sister store. The ability to identify vehicles that perform well at your sister stores, in addition to knowing what performs well at your store allows you to reap the numerous benefits of group trading. Group trading can result in less time spent at the auction and increases the number of core vehicles on your lot and all lots within your group, leading to increased sales and gross, tighter inventory across lots and less wholesale and aging problems. Having a plan of action for each vehicle from day one allows you to cut ties sooner on vehicles that traditionally haven’t performed well for you. Having data that can tell you where you’re apt to make the most money is very powerful. It gives you the ability to buy the right vehicles at the right price and at the right time. So how do you accomplish all of this? It’s a combination of process improvements paired with the utilization of technology that is available today to help dealers make knowledge-backed decisions. The process changes involved require streamlining of the appraisal and vehicle purchase and disposal processes. The technology part of this equation is equally important. Systems are available today that can take your store’s sales history (and your groups), combine it with local and regional market data and literally provide “buy/sell” recommendations. Extensive reporting such as water and aging reports can assist you in developing a plan of action that ultimately optimizes your inventory, reducing turn times and wholesale losses, while positively impacting your bottom line!

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

f e a t u r e

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How To Average $3,000 - $4,000 Plus Gross Profit Per Vehicle Sold By Mark Tewart

here are only 5 ways to increase the bottom line of a business. #1 - Sell more vehicles. #2 - Practice price elasticity (get more gross profit per sale.) #3 - Create more repeat customers. #4 - Increase the speed of the buying cycle for your current customers. #5- Create continuity programs Get the customer to continually do business with you (service, add-on selling etc.)

Although all are important, one can be obtained instantly and with a huge impact - price elasticity and the ability to increase gross profits. There are four critical areas to increasing your gross profit. The first stage is in the sales process. There is an old saying that "Sales people control numbers and managers control gross profits." I definitely disagree with that saying. You must create rapport, find the customer's real or perceived problem, identify the customer's hot buttons, communicate and listen to the customer, find the right vehicle, give a tailored presentation-demonstration that creates an emotional bond, encourage a proposal and have a positive and enthusiastic attitude towards your customer and the sale before gross profit can occur. The best manager cannot help a sales person create gross profit if those things have not occurred. The manager must act as a check point to make sure that all these things occur before giving a proposal. Have you ever been in a meeting where the manager is talking about selling value and not price? I'm sure you have been in one of those meetings and when you left the meeting, the first thing you were asked when you brought a customer proposal sheet to the manager was "What payment do they want to be at?" and "How much money do they have down?" Obviously these questions are based upon money not value. 14

Try developing ten questions that double check the sales process before you discuss figures. The following is a potential list. #1 - Has the customer driven the vehicle? #2 - What does the customer like or dislike about the vehicle? #3 - Does the customer live/work near here? #4 - Has the customer done business here before? Service or Sales? #5 - Describe the customers trade-in. #6 - What does the customer like or dislike about their current vehicle? #7 - Does the customer have a current or past payment on the vehicle? If there is or was a payment, how much? If the customer paid cash for the vehicle, how much did they pay? #8 - If the customer has a payoff, how much is it and how many payments are left? #9 - What is the customers HFG - Hope for Gain in this purchase? #10 - Who is the primary driver? Are there any secondary drivers? If so, will the secondary driver be involved in the selection? The second way to create higher gross profits is in the deal proposal stage. Disclose all figures to the customer. Price, trade, difference, payoff, total balances, payments, down payments and terms. Preferably, you should show three payment options for every customer. You may give two payments at the same term but with different down payments and then one payment as a lease or with a different term. This proposal will allow a perfect alternative choice close at the end that allows the customer to save face if they don't like either of the proposals. This will also allow customers to focus on what matters to them most. For most customers what matters most is their budget. Price, trade or difference negotiating leads to lower gross profits and lot's of negotiating on things that won't ultimately matter to the customer. When you negotiate solely on price, trade or difference, when the customer agrees on

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

a figure, often they are not really closed because the budgets aren't agreeable. When you give a proposal using budgets, make sure you are asking at least 25 percent down for one of the proposals. Down payment is a key to deal structure, gross profits and getting deals approved. People also will react better if you show down payment amounts and relate that to percentages. Percentages allow people to understand where the figures come from. Remember that between price, trade, down payment, payment or term, that down payment is the only one that the customer controls one hundred percent. The third area that will improve gross profits is to understand what to do at the customer's first objection. You must know what to say and write when the customer objects to price, trade, down payment, payment, term or anything else. You must be prepared to the point that you don't have to think or blink about what to do next. When the customer objects, never ask them what they were thinking or what figure they would like to be at. In the best scenario this lowers gross profit but usually keeps the customer from buying because it creates a shopping mentality in the customer. When you ask a customer to give you a figure they will buy at, they either tell you a low ball figure or tell you that you are the sales person and you should tell them. At first objection you must always verify and validate your original proposal. Otherwise, you invalidate yourself, your dealership and your proposal. Used vehicles are also the key to increasing your overall gross profit. Most used cars are under priced from the beginning. Practicing price elasticity allows you to ask more than you currently are asking and finding that you almost always under price your vehicles versus what people will pay. "Gross profit is a state of mind and price cutting is a self-inflicted wound." Creating higher gross profit also becomes much easier with good lender relations and a thorough knowledge of each lender's buying parameters. Knowing which bank to send the deal to, how to structure it and asking the bank for maximum values are essential. The ability to obtain higher gross profits is part science and part art. You must understand the mechanics but you must have the belief system to support the mechanics. One without the other will lead to the failure to obtain higher gross profits. To find out how Tewart Enterprises averages over $3,000 -$4,000 per vehicle per client email me at info@tewart.com with $4,000 in the subject line.

NIADA LEGAL, LEGISLATIVE & REGULATORY SUMMARY

By Keith Whann, NIADA General Counsel

Federal Legislative Activity The Passenger Vehicle Loss Disclosure Act S. 545, titled “The Passenger Vehicle Loss Disclosure Act,” is similar to the Measures introduced at the end of the 109th Congress. The Bill would ensure that certain information regarding vehicles declared a total loss by an insurer or self-insurer is disclosed to the public in a commercially reasonable and electronically accessible manner. The information that would have to be disclosed includes the vehicle identification number of the vehicle, the date of declaration or determination of the total loss, the odometer reading on that date, a statement as to the primary reason for the declaration or determination of total loss, and a statement as to whether one or more airbags were deployed. Insurers oppose S. 545 because they claim it does not clearly define “total loss” and that it would be expensive to maintain a data base containing the required disclosures. We support the Measure, but recognize that there are other issues, such as the carry forward title brands, that could be addressed. (NOTE: Due to the uproar surrounding the Real ID ACT implementation and unfunded state mandates, no amendments to this Bill related to state titling will be entertained).

CAFÉ Legislation House Speaker Nancy Pelosi would like to get a vote on energy legislation (including controversial new vehicle emissions standards). Although a formal conference committee was never appointed, House and Senate staffers have been meeting for several weeks to try to reconcile the Senate Energy Bill passed in June and a House Bill passed in August. The Senate Bill, which Pelosi supports, calls for a 40 percent increase in fuel economy by 2020 to a combined 35 mpg for both cars and trucks. CAFE standards were left out of the House Energy Bill because more than 160 members endorsed an alternative proposal called "Hill-Terry" backed by most of the industry. That proposal provides automakers with more time and flexibility to meet the requirements, which range between 32 mpg and 35 mpg by 2022. Rent-To-Own Reform Act The RENT-TO-OWN Reform Act of 2007 is a Bill to amend the Consumer Credit Protection Act, to protect consumers from inadequate disclosures and certain abusive practices in rent-to-own transactions, among other purposes. This Act is modeled after legislation that is in effect at the State level and should not pose a problem as drafted. (NOTE: With the furor that exists surrounding the sub-prime markets, however, this would be a logical place for consumer groups to seek additional consumer protection gains).

Arbitration Fairness Act The Arbitration Fairness Act of 2007 would amend Chapter 1 of Title 9 of the United States Code, more commonly known as The Federal 16

Arbitration Act. The Bill states that mandatory arbitration undermines the development of public law and is a poor system for protecting civil and consumer rights. The Bill would prohibit a pre-dispute arbitration agreement from being valid in a consumer dispute, where the subject of the transaction is for personal, family or household use. Right To Repair Legislation Returns Right to Repair legislation is back on the forefront after the House Energy and Commerce Committee Chairman reintroduced a Bill (HR 2694) that would require automobile manufacturers to disclose to vehicle owners, repair facilities, and the Federal Trade Commission information necessary to diagnose, service or repair vehicles. Similar Legislation has been introduced three times since 2001 without success. This time, a provision that would have allowed lawsuits to be brought against manufacturers if sufficient information is not provided has been removed. Federal Regulatory Developments FTC Used Car Rule The FTC is conducting a review of the Rule. I have worked with them providing information from our Market Report and other sources in the Industry to determine the time and financial burdens on dealerships to comply with the Rule. I have spoken with them about possible ways to deal with “balance of manufacturer”, “third party” and implied warranty issues without changing the layout of the sticker itself. (NOTE: We have discussed different “interpretations” of the existing Rule that would enable us to resolve current problems related to “certified” vehicle and third party warranties and issues related to states (such as New Mexico and Hawaii) that require implied warranties in connection with a motor vehicle sale, but permit them to be limited in duration.)

IRC§263(A) – The UNICAP Rules The UNICAP rules have existed since section 263A was added to the Code in 1986. Among other things, section 263A and its implementing regulations require taxpayers with production activities to capitalize certain costs associated with their inventories. Congress added this provision to ensure that producers, who already were required to capitalize hard costs associated with their inventories, also capitalize associated indirect costs. Prior to the recent audits, we are not aware of a single instance where the Service classified a dealer as a producer, despite completing thousands of dealer audits since the inception of the UNICAP rules. In fact, the Service has approved hundreds of dealer applications for a change in accounting method (IRS Form 3115) authorizing dealers to be treated as retailers who can utilize special allocation and de minimis rules that do not require the capitalization of these costs. Against this backdrop, IRS field examiners nonetheless have begun classifying dealers as producers. They have latched on to the inclusion of the term “install” in the

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

Code’s definition of “produce” to expand the producers’ provision to retail businesses that perform service work involving parts in their inventory. It would be difficult to overstate the detrimental economic impact that this change may cause for dealers and other industries. If the office of Chief Counsel sustains the field examiners’ current position, it could subject an average size franchised automobile dealer to an additional tax assessment that constitutes approximately 41 percent of its after-tax net annual profit (NADA’s outside tax consultant computed this figure by analyzing the field examiners’ approach against average dealership profile information from the financial statements of 2,700 dealers). (Note: This is a very complicated issue. A dealer can be determined to be a producer or a retailer with production activities. We are working to determine if there are exemptions (dealing either with the activities engaged in or size) that could apply to independent dealers.

Real ID Act Implementation Remains Controversial On May 11, 2005, Congress passed the Real ID Act thereby creating national standards for the issuance of state driver's licenses and/or identification cards that had to be in place by May 11, 2008. According to an analysis that was prepared based upon findings from a survey conducted by the National Governors Association, the National Conference of State Legislatures and the American Association of Motor Vehicle Administrators, implementation of the Real ID Act could cost states more than $11 billion over five years. As a result, the states asked that the mandatory implementation date be extended and that the Government provide the funds and electronic systems necessary for States to comply. In response to the states request, the U.S. Department of Homeland Security issued a temporary reprieve to the states allowing them to delay implementation of the strict requirements until December 31, 2009. The Administration still expects states to begin issuing compliant ID’s in May of 2008, but will be expected to replace all 245 million licenses held by Americans on a “reasonably prompt basis” over five years. States that can justify a request for more time could also be granted additional waivers. The REAL ID Act remains in the news and has become controversial due to concerns about privacy issues and funding. Nationwide costs of complying with the Act are estimated at 11 to 25 billion dollars over 10 years, and concern has been raised that state DMV offices will be forced to pull resources from other areas, such as title processing and registrations, to comply. To date, Congress has appropriated only 40 million dollars for REAL ID programs. In July, a proposal to provide 300 million dollars in federal funds to help states implement the Act was defeated in the Senate. The failure of Congress to provide significant financial assistance for states to comply with Real ID Act will continued on page 18

NIADA LEGAL, LEGISLATIVE & REGULATORY SUMMARY likely increase the call by states to either further delay or dismantle the federal program. New “MPG” Ratings May Apply To Older Model Vehicles Beginning with model year 2008 vehicles, the EPA is mandating the use of a newly designed fuel-economy label similar to that found on the Monroney Sticker for light-duty vehicles. The EPA’s goal is to ensure that the information on the labels more accurately reflect real-world driving conditions. The EPA adopted the new method last December to give more weight to driving factors like higher speeds, harder acceleration and greater use of accessories like air conditioning. It recently has indicated that it will apply the new method to older cars and trucks as well. Revised ratings for older model vehicles may help Dealers because they will make comparisons with new vehicles more valid. Dealers should be prepared to advise consumers that their actual mileage will still vary depending on how they drive and maintain their vehicles and to caution them when comparing newer and older model vehicles. New Air Bag Regulations On The Way As of September 1, 2007 all automakers must place frontal and side crash test and roll over rating information on vehicle window stickers. Additionally, in one of the most significant safety regulations in recent decades, automakers will have to equip all vehicles with side curtain air bags that provide head and torso protection in dangerous side-impact crashes by 2013. While side-impact crashes account for only 9 percent of crashes, they account for more than 20 percent of auto fatalities. For the first time, NHTSA will require automakers to provide head protection for rear seat passengers. Agencies Issue Final Rules On Identity Theft Red Flags The Federal Trade Commission and the federal financial institution regulatory agencies have published final rules on identity theft “red flags” and address discrepancies. The Final Rules implement sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003. The Final Rules require each financial institution and creditor that holds any consumer account, or other account for which there is a reasonably foreseeable risk of identity theft, to develop and implement an Identity Theft Prevention Program (Program) for combating identity theft in connection with new and existing accounts. The Program must include reasonable policies and procedures for detecting, preventing, and mitigating identity theft and enable a financial institution or creditor to: 1. Identify relevant patterns, practices, and specific forms of activity that are “red flags” signaling possible identity theft and incorporate those red flags into the program. 2. Detect red flags that have been incorporated into the program. 3. Respond appropriately to any red flags that are detected to prevent and mitigate identity theft. 4. Ensure the Program is updated periodically to reflect changes in risks from identity theft. 18

The agencies also issued guidelines to assist financial institutions and creditors in developing and implementing a program, including a supplement that provides examples of red flags. The Final Rules require users of consumer reports to develop reasonable policies and procedures to apply when they receive a notice of address discrepancy from a consumer reporting agency. The final rulemaking was issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. The Final Rules are effective on January 1, 2008. Covered financial institutions and creditors must comply with the Rules by November 1, 2008. Unlikely Allies Challenge NHTSA Tire Rules Public Citizen, a consumer-advocacy group, and several tire manufacturers have joined together to challenge new rules adopted by the National Highway Traffic Safety Administration (NHTSA) mandating driver alerts for under-inflated tires. The mandatory tire-pressure monitors are required pursuant to a Law adopted in 2000 in the wake of the recall of more than 6 million Bridgestone/ Firestone tires. The 2nd U.S. Circuit Court of Appeals in New York subsequently threw out an initial regulation, upholding a challenge from the Public Citizen Group claiming that the proposed new rules were not strict enough. The latest version of the rule adopted by NHTSA in 2005 would require that new vehicles include dashboard lights indicating when tires are 25 percent under-inflated, but it only applies to original-equipment tires, not replacements. The Public Citizen Group and manufacturers maintain that the 25 percent standard could result in tire failures without the driver ever seeing a warning light. Emissions Rules The Bush administration is moving ahead on emissions rules to regulate tailpipe emissions as an air pollutant under the Clean Air Act. The EPA is currently writing broad new rules to limit fuel consumption as a result of President Bush’s so-called “20-in-10” plan to reduce gasoline consumption by 20 percent in 10 years. California Sues Federal EPA Over Auto Emissions The state of California sued the federal government in November to force a decision about whether the state can impose the nation's first greenhouse gas emission standards for cars and light trucks. The central issue in the state's lawsuit against the Environmental Protection Agency is California's nearly two-year-old request for a waiver under the federal Clean Air Act to allow it to implement a 2002 state anti-pollution law regulating greenhouse gases. The EPA indicated last summer that it would make a decision by the end of this year; however, California’s position is that the longer it takes to reduce these emissions, the more costly and harmful the impact will be on California. Automakers, and the industry as a whole, oppose California's effort or any other scenario in which emissions regulations vary from state to state.

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Other Activity Of Interest Battle Over Tailpipe Emissions Takes Center Stage The automobile industry’s battle to overturn California’s Greenhouse Gas Emissions Rule on cars and trucks shifted to a new venue this year - a Vermont courtroom. The Automobile Industry began its Federal lawsuit challenging the adoption of strict limits on vehicle emissions of carbon dioxide, a main greenhouse gas. Vermont is one of 9 states that followed California’s lead in mandating that automakers meet tailpipe emissions limits beginning in 2009 that increase annually to cut emissions up to 40 percent by 2016. The central issue in this case is whether states have the power to regulate carbon dioxide emissions in motor vehicles or whether they can only be regulated on a federal level. US District Court Judge William Sessions ruled in September that federal regulations did not preempt state laws that require reductions in carbon emissions. The decision was recently appealed by various auto manufacturers. Hybrid Sales On The Rise Sales of new hybrid vehicles in the United States are on the rise, up 49 percent in the first seven months of this year, due largely to a boom in sales in the Midwest, which rose 57 percent. Recent predictions indicate total U.S. new hybrid sales will exceed 300,000 this year, comprising just over 2 percent of all sales. U.S. consumers bought 254,545 hybrids in 2006. Alternative Energy Sources For Vehicles There are currently 10.5 million alternative fuel vehicles on the road today compared to 9 million in 2006. These vehicles vary by the alternative fuel source that powers them. The most popular being hybrid electric technology, ethanol-blended fuels and biodiesel. Hybrid car sales alone are up 86 percent nationally. For flexfuel vehicles to be a viable alternative there must be sufficient distribution and availability of E85. At present, however, only 1,100 of the nation’s 170,000 fueling stations offer E85. Ethanol production has been on the rise, however, and the Energy Department’s recent announcement that it plans to spend 385 million dollars on six biorefineries that will produce cellulosic ethanol from biomass sources indicates that ethanol may become more widely available. While production of ethanol, the nation’s No. 1 alternative fuel, has exceeded expectations, it also has hit a roadblock, conveyance. Many feel that the need to lay pipelines dedicated exclusively to ethanol is key to reducing U.S. oil dependency. 2008 Fuel Economy Guides Available The U.S. Department of Energy and the Environmental Protection Agency has begun distributing the 2008 model year Fuel Economy Guide providing consumers with information about fuel economy and the benefits of using more fuel-efficient vehicles. This year’s guide contains fuel economy estimates based on updated EPA calculation methods. Copies of the Guide will be available at the NIADA web site.

Partnerships

NADAGUIDES.COM Introduces Video Feature

Dealer Specialties and Carfax Partner Up Source: Auto Remarketing News Magazine

Consumers browsing NADAguides.com for information on potential vehicle purchases may soon be able to utilize interactive video to aid in their shopping decisions. NADAguides.com announced it is adding a New Car Video Buying Guide feature to its Web site, where customers can research everything about a potential purchase from fuel economy to safety ratings through narrated video specific to each vehicle. Potential buyers can also access JDPower.com Power Circle Ratings available to compare the features on a specific vehicle to others, officials stated. Furthermore, the Top Vehicles List function on the site is designed to allow customers to save videos of vehicles they have viewed. This feature can also provide a side-by-side comparison to rival models as well as access to updated reviews, executives highlighted. Additionally, interior and exterior photographs are available, as are 360-degree camera angles. If the customer so chooses, he can send a purchase request to a local dealer via the Web site. "When it comes to buying a car, today's consumers expect a broad range of new-car resources at their fingertips," explained Don Christy Jr., president and chief executive officer of NADAguides.com. To access the video guides, visit NADAguides.com and go to the New Car Buying Guides link at the New Cars section of the site.

Dealer Specialties announced earlier this week it has agreed to a partnership with Carfax to give dealers window labels with vehicle history. The labels were created to aid in the decision-making process for customers, as they can provide ownership history, qualifications regarding Carfax buy-back guarantees and whether any damage has been reported to Carfax. "This new venture is a natural extension of an already high successful relationship with Carfax," stated Glen Garvin, general manager of Dealer Specialties. "The inclusion of vehicle history data on window stickers is a perfect merger of our respective industry strengths, which benefit both dealers and consumers." "What makes the venture so significant is that the specific information about the vehicle's history will be displayed on the window sticker at the vehicle," Garvin continued. Essentially, the stickers can be created instantaneously once a Carfax vehicle history report is run. And the information they provide, officials point out, can help with consumer confidence. "We believe vehicle history information should be readily available anywhere people shop for used cars," explained Larry Gamahce, communications director at Carmax. "Dealer Specialties' extensive client base ensures that more used-car shoppers will have this information up-front in the buying process, right on the car itself. These dynamic window labels significantly enhance buyer confidence and ultimately make a positive impact on the dealers' bottom line," he concluded. For more information, visit www.dealerspecialties.com or www.carfax.com.

Online Auto

Adicio Launches Online Research Center Source: Auto Remarketing News Magazine Adicio is launching an online auto research center that will incorporate ratings, reviews, photography and video, in addition to pricing and cost of ownership data. The center was created to allow consumers access to information from sources such as IntelliChoice.com, JDPower.com, Kelley Blue Book, NADAguides.com, eVox Productions and The Drivers Seat TV. Some of the features will include: —Five-year cost-of-ownership data from IntelliChoice.com. —Green Efficiency Power Circle Ratings from JDPower.com. —Kelly Blue Book reports on retail, trade-in values, vehicle reviews and various advice. —Video reviews from The Driver’s Seat TV. —NADAguides.com pricing information. —Photographs/images from eVox.

"Over 70 percent of buyers’ research vehicles prior to making a purchase," said Deep Menon, general manager for motors at Adicio. "Our new research center offer consumers access to the most trusted and authoritative resources in the automotive industry." "An online automotive site with advanced search features and an extensive research section is a key to gaining consumer trust and loyalty," Menon added. "We've made it easier for car buyers to do online research by giving them access to all the automotive research they need in one location." For more information, visit www.adicio.com. 20

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

CNW Research

CNW Reveals The Largest Percentage Of Used Shoppers Turn To Older Units By Jennifer Reed, Editor

www.subprimenews.com

he latest data from CNW Research indicates that 67.6 percent of used shoppers are looking to purchase used units five years old or older. Overall, the largest percentage of used shoppers is honing in on the eight- to 12-year-old category at 34.4 percent, CNW pointed out. Next in line are consumers looking for a unit that is one to four years old at 32.4 percent. However, CNW's data found that consumers intending to purchase units that fell within the fiveyear-old to seven-year-old segment or the 13-yearold or older category are slowly gaining ground. Shoppers showed a slight upswing in their

interest in the five- to seven-year-old category, up to He classified "true" BHPH lots as stores that carry their own paper, operate their own collec13.4 percent from 13.1 percent in 2005 and 12.3 tions and rarely sell their loans to third parties. percent in 2003. Breaking down the statistics, CNW discovered The largest jump, however, came about in the consumer interest in the following categories: 13-year or older segment, where 19.8 percent of used shoppers indicate One- to four-yeartheir interest. This is up old units: from 15.4 percent in CY03, 16.1 percent 2005, but down from CY05, 27.8 percent 20.3 percent in 2003. CY07, 32.4 percent "The share of used vehicles sought by usedcar shoppers that are Five- to seven-yearover 13 or more years old vehicles: old has grown in the past CY03, 12.3 percent two years," reported Art CY05, 13.1 percent Spinella, of CNW. That, CY07, 13.4 percent plus the potential for Overall, the largest percentage of significant profits, has lead to a growing used shoppers is honing in on Eight- to 12-year-old models: number of franchised the eight- to 12-year-old category CY03, 51.3 percent new-car dealers to move CY05, 43.7 percent into the Buy-Here, Payat 34.4 percent, CNW pointed out. CY07, 34.4 percent Here business, typically with a lot off-location from their franchised store, he continued. While 13-year-old or older vehicles: the numbers for true BHPH lots are small, they are CY03, 20.3 percent growing steadily," Spinella explained. In the first CY05, 15.4 percent quarter of 2006, there were about 4,200 BHPH CY07, 19.8 percent lots. Today, there are 4,800. Those owned by franchised new-car dealers have grown from For more information on CNW, visit fewer than 370 to more than 475." www.cnwmr.com.

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Leasing Becoming More Popular

Lease Trader.com: Lease Transfers Becoming More Popular Source: Auto Remarketing News Magazine With a mortgage crisis and rising fuel costs dampening the American economy, fewer people have the ability to purchase new vehicles. According to LeaseTrader.com, the consumer's need to have means of transportation still exists. More consumers are taking over pre-existing leases instead of purchasing new vehicles, the Web site explained. "In uncertain economic times, people turn to short-term commitments with their finances," said Sergio Stiberman, chief executive officer and founder of LeaseTrader.com. "With LeaseTrader.com, people can take over an existing car lease and manage their finances more clearly because they can budget their monthly car payment for a much shorter time frame." The companies pointed out those $2,000 down payments aren’t uncommon with new-car purchases. Taking over a lease, however, can be cheaper, as the payment has already been taken care of and the commitment period is generally shorter."Using LeaseTrader.com is a good way to avoid paying a down payment at a dealer," noted Ken Perna, a car shopper from New Jersey. “Also, getting a leased car with only six months remaining gives me a lot of flexibility in determining my driving needs." The company also noted that simply checking out LeaseTrader.com is free; purchasing a membership is $39; and there is a $149 fee to make a transaction.

AUTOTRADER.COM FOUND "MOST USEFUL” AUTOMOTIVE SITE IN J.D. POWER AND ASSOCIATES STUDY AutoTrader.com, the ultimate automotive marketplace, was once again rated as the most useful automotive site among used-car buyers who visited the site in the J.D. Power and Associates 2007 Used Autoshopper.com study. This marks the fourth consecutive year AutoTrader.com has attained this rating. Among automotive sales and information sites, AutoTrader.com was the second most-visited independent site, with 35 precent of survey respondents saying they visited the AutoTrader.com Web site while searching for a car. In addition to highlighting AutoTrader.com’s performance in the online automobile sales space, the study finds that Internet vehicle locators like AutoTrader.com and others are fast becoming the tool of choice for researching car purchases and leading consumers to the actual vehicles they buy. According to the study, in 2007, nearly one in four buyers of late-model used vehicles (23 percent) used an Internet vehicle locator or online classified advertising site to find the vehicle they purchased, a 44 percent increase since 2006. The 2007 J.D. Power and Associates Used Autoshopper.com study is based on responses from 5,476 used-vehicle buyers who purchased preowned 2002-2007 model year vehicles in January and February 2007. T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

By Keith Whann, NIADA General Counsel

Take A Good Look At Your Dealership:

DO YOU

WHAT I Go ahead. Take a good look at your dealership. It appears to be in good shape, but do you see what I see? What do you think it looks like from my perspective?

remember to revise it whenever you begin or

sion, or on the dealership’s Web site, your adver-

cease offering a product so that it accurately

compliance and avoid problems before they

tisements must contain mandated disclosures if

reflects the products and services available at the

happen, while increasing customer satisfaction

you use any of the “triggering terms” defined in

dealership and to make sure the menu is consistent

and overall dealership profitability at the same

Regulations M and Z. They must also disclose

with other paperwork provided to a customer.

time? It can be done. Want to know how I would

any material limitations or exclusions to offers

Employees: All potential employees

accomplish it? I would begin by conducting a

that are made in a clear and conspicuous man-

should be required to complete an employment

“Walk-thru” of your dealership paying special

ner. Direct mailers and telephone solicitations or

application and, at a minimum, you should con-

attention to the following things.

follow up calls can raise a whole host of other is-

tact references to verify that the individual is quali-

How can you improve dealership

sues. Remember to keep copies of all advertise-

fied for the position. Depending upon the job

paperwork reviewed and, as necessary,

ments in case you need to respond to a consumer

responsibilities and access the applicant will

updated on a yearly basis. Having a relation-

or regulatory inquiry about an offer or the contents

have to confidential information about your

ship with a paperwork vendor capable of

of an advertisement.

dealership and customers, you may also wish to

Paperwork: Dealers should have their

keeping you apprised of compliance issues as

F&I: Dealers should make sure they have

conduct background investigations or obtain a

they develop will help streamline this process.

a copy of the dealer agreement for each lender

credit report. All employees should also receive

You should also limit who, within the dealership,

and service provider with whom the dealership

an employee handbook that contains informa-

has authority to revise the paperwork and have

does business. These agreements and any

tion about the dealership’s internal policies and

procedures in place to ensure that employees

related materials should always be reviewed by

procedures. Remember to address issues such

do not use paperwork brought from outside

someone who has knowledge about both the

as who has access to pull and/or review credit

sources, such as the last dealership where they

products being offered and our industry.

reports, whether customer information belongs

worked. Regularly auditing actual deals can

Reviewing dealer agreements and properly

exclusively to the dealership and whether

help to ensure that paperwork is being properly

training employees on how to sell service

employees are permitted to remove such

completed and that computers are properly

contracts, GAP agreements, insurance products

information from the dealership both during

programmed to print information in the

and all other “F&I products” sold at the dealer-

the term of employment and afterwards. If

appropriate places.

ship can go a long way in protecting your

specific agreements are made with respect to

dealership from potential liability. All too often

commission payments and bonuses, you may

Advertising: The persons who create

whether they appear in the newspaper, on televi-

your dealership’s advertisements should be fa-

we find that dealers rely on representations

also wish to enter into a separate written

miliar with the Federal Truth-in-Lending and Leas-

made by a third party as to the compliance of its

employment or compensation agreement.

ing Acts and State Advertising Laws, and/or

marketing materials, the products it offers and

Employee handbooks should be updated

your advertisements should be reviewed for

even the training it provides to the dealership’s

compliance with these Laws. Regardless of

employees. For those who use an F&I Menu,

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

continued on page 26

Customer Satisfaction Results

J.D. Power Release Customer Satisfaction Results Source: Auto Remarketing News Magazine

.D. Power and Associates recently released its yearly Sales Satisfaction Index Study. Ranking at the top for customer satisfaction was Lexus. The analysis is broken down into five factors: dealership facility, salesperson, paperwork/finance process, delivery and price. Lexus scored 897 out of 1,000, improving 10 points from last year. "Lexus improves by four rank positions from 2006, which is a gain driven primarily by increased customer delight with the dealership facility, salesperson performance and vehicle price," explained Tom Gauer, senior director of automotive retail research for J.D. Power.

"For example, Lexus salespeople show parmore than they originally budgeted provided that ticular concern for helping people with their budgthe salesperson does a good job of educating ets, choosing the right vehicle for their needs, as the customer about the features and benefits they well as for making the negotiation process clear are receiving," explained Gauer. and understandable," "Customers are he added. looking to the salesperHummer was secson to help them buy a ond-highest at 895, as vehicle that fits their it inclined 21 points on budget, but they are the year, followed by certainly open to spendJaguar, Lincoln and ing more if the salesperMercedes-Benz. son can successfully Officials note that convey the value of the the industry itself is imvehicle," Gauer added. proving. The average Additionally, the Ranked at the top score for all brands was study found that when 852, a seven-point imconsumer experience for customer service provement from the prewas higher than exvious year. pected it can be indicawas Lexus. The company also tive that the customer is noted that 44 percent of likely to return (61 pernew-vehicle customers spent more than intended. cent). On the other hand, when consumer experiThose who ended up spending more than origience simply met expectations (37 percent), the nally anticipated tended to report lower customer customer is less likely to return. satisfaction. In fact, on average, customer satisThe study was based on reports from faction for this group was 67 points less. 38,654 consumers registering purchases in May "While all new-vehicle buyers hope to get a 2007. For more information, visit good deal, customers are receptive to spending www.jdpower.com.

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

DO YOU SEE WHAT I SEE?

regularly and employees should always be

your paperwork? You must have answers to

form indicating that the performance of the

required to acknowledge in writing that they

these questions!

goodwill repair does not create any additional

have received and read the materials. Just as im-

Service: Dealers should also have their

portant is requiring all employees to attend train-

service paperwork reviewed and updated on a

ing and/or educational seminars related to their

regular basis. Start by reviewing the repair

duties at the dealership, not just at the time they are

order and other service related paperwork to

department is necessary not only to make

hired, but on an ongoing basis.

ensure that they contain all of the information

appropriate disclosures to customers, but also to

and disclosures required by applicable law. The

comply with safety-related laws and regulations.

Identification Procedures: Every dealer

dealership should obtain permission from its

Signage advising customers of their right to

should have a Privacy Policy that accurately

customers prior to road-testing their vehicles,

receive an estimate choice, additional fees that

reflects the dealership’s business practices with

ascertain whether they wish to have parts

may be incurred in various circumstances and

respect to collecting and sharing customer informa-

removed from their vehicles discarded or

the dealership’s warranty and return policies

tion and a comprehensive written information

returned, and advise them of additional charges

should be consistent with the information

security program that describes how the dealer-

that may be incurred for miscellaneous materials,

provided to customers in the service paperwork

ship protects the confidentiality of the informa-

partially completed work or for restocking of re-

and be posted in the area where customers

Privacy Policies and Customer

tion collected. Access to customer information to authorized employees who need the information to complete their employment responsibilities. Customer information must be

the dealership has to have procedures to ensure

business practices with respect

individual or entity that appears on the list of

Asset Control (OFAC). Motor vehicle dealers

employees are performing services and repairs, signage should be posted explaining the proper use of safety equipment and the safety stations and goggles should be located in close proximity to the signs and be easily accessible.

to collecting and sharing customer information and a

are responsible not only for implementing their

comprehensive written

own privacy policies and procedures, but must also take steps to ensure that the lenders and

customers to certain areas. In those areas where

equipment, such as first aid kits, eye wash

Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign

Signage posted in the dealership’s service

also have signs that restrict the access of

Every dealer should have a

obtained to verify the identity of customers and that it does not enter into transactions with any

with the repair or service.

commence the service transaction. You should

and other dealership records should be limited

Okay, now you have a glimpse of what I see when I look at your dealership. You probably thought that your dealership was in pretty good shape, but I see numerous areas within the dealership that could use a closer look and a

information security program

service providers with whom they share

little fine-tuning. I see paperwork that needs to be updated and policies and procedures that

that describes how the

information have taken steps to maintain the confidentiality of customer information.

dealership protects the

Dealership Web Site and Computer Systems: Online advertisements

confidentiality of the

must comply with Federal and State Advertising Laws and should be updated on a regular basis.

information collected.

need to be developed or revised along with ways to improve customer satisfaction, prevent mistakes and solve existing dealership problems, not to mention many unanswered Internet questions. If these issues are attended to and appropriate action is taken, it will result in a more efficiently run and profitable dealership.

Dealers who permit consumers to submit credit applications electronically must post their

dealership obligation or warranty in connection

Accomplishing this must be very

privacy policies online. Keep in mind also that

turned parts. Customers should always be pro-

complicated, time consuming and expensive,

many of the same precautions taken with respect

vided with the appropriate estimate or

right? It doesn’t have to be. In fact, you can do

to your paperwork apply to your dealership’s

estimate choice form before any services/

most of it yourself provided you know what to

computer system. Computer systems and pro-

repairs are performed and a system should be in

look for. Want to see what I see? Get a copy of

grams should be reviewed and updated

place to document any additional services/

The Car Counselor’s Guide titled “Conducting

regularly. You should also limit who has the

repairs that a customer authorizes. The dealership’s

Your Own Dealership Compliance Walk-Thru”

ability to update software applications, take

warranty and return policies should also be

by visiting the Problem Solved! section at

steps to prevent and prepare for a system’s

clearly communicated to customers and be

www.keithwhann.com, and remember, put some

failure and ensure that data is eliminated or hard

consistent in all of the service paperwork, such

fun back into the car buying process!

drives removed when disposing of computers

as the repair order, repair invoice and after

and any other electronic media and records. By

hours repair authorization. If you perform a

the way, one more thing, what exactly is the

repair at no charge or a reduced charge to the

dealership doing online? Marketing, advertising,

customer when you are not obligated to do so

taking orders or selling cars and how does it affect

(a “goodwill” repair), don’t forget to utilize a

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

This information is provided by Keith Whann of the law firm Whann & Associates, LLC and is for general information purposes only. You should contact legal counsel for specific application. Additional information can be obtained at www.KeithWhann.com. Copyright Keith Whann, December 2006.

Build Lifelong Relationships Among Hispanics Source: Auto Remarketing News Magazine Breaking down any preconceived stereotypes among the Hispanic community is the key to building lifelong customers. In terms of numbers and buying power, the Latino market is increasing and creating vast opportunities for dealerships. According to Melissa Commons, general manager of Automercado.com a part of Auto Trader, dealerships must appeal to the Latino heritage by hiring bilingual staff, investing advertising dollars in Spanish-language media and educating potential Hispanic customers on the car-buying process. The reach-out will help develop business beyond the initial customer to the extended family and grow to include friends.

AUCTION CALENDAR

Dealerships can effectively market to the Latino community by using the following tips:

departments, from service to F&I.

• Understand your particular audience and the specific Latino demographic in your local market.

• Have the dealership’s Web site in Spanish as well. Put photos of bilingual sales staff either in the dealership’s advertising or on the online listed inventory.

In terms of numbers

• Try some bilingual advertising in local Spanish-language newspapers, on local Spanish-language radio stations and third-party Internet sites such as Automercado.com.

and buying power, the Latino market is increasing and creating vast opportunities for

• Have all of your forms in Spanish and advertise that fact.

dealerships.

• Along the way, educate Hispanic car buyers about how to get credit and insurance and how to apply for a driver’s license.

MONDAY

TUESDAY

Manheim’s

Nashville Auto Auction

4:00

ADESA Memphis 9:00

Marcka Auto Auction Crossville, TN 6:00

Tennessee Auto Auction

WEDNESDAY THURSDAY

9:00

ADESA Knoxville 9:30

Chattanooga Auto Auction 9:30

Memphis Auto Auction 9:30

East TN Auto Auction 10:00

Jackson Area Auto Auction 10:00

Manheim’s

ABC Murfreesboro 3:00

Airport Auto Auction 5:30

Bristol Auto Auction 10:30

10:30

Manheim’s

Cookeville Auto Auction 6:00

Clarksville Auto Auction 12:00

Fax 615-443-7486 P.O. Box 2219 Lebanon, TN 37088

FRIDAY

ABC Nashville 10:00

Tennessee Auto Auction

1-866-5TNIADA (586-4232)

• Don’t treat them any differently, but realize that their values are different. • Always help the consumer feel comfortable.

• Make sure your advertising plays up long-term relationships with the consumer. • Hire staff who are bilingual for not only your sales team, but for all of the other major

• Get over such stereotypes that all Hispanics are farm workers who ride around in the back end of a pickup truck, don’t have computers, require secondchance financing and need credit help.

Jackson Area Auto Auction 4:00 ADESA Knoxville 5.30

Out of State Sales (Members of TNIADA) Tallahassee Auto Auction Tallahassee, FL 6:00

VISIT OUR WEB SITE FOR updates, Association highlights and information, legislative news, and much more!

Dealer's Auto Auction Huntsville, AL 9:30

ADESA Atlanta 9:30

Dealer’s Auto Auction Horn Lake, MS 9:30

Manheim’s Bishop Brothers Alabama Auto Auction Manheim’s Moody, AL Atlanta, GA Atlanta Auto Auction 10:00 1:00 9:30 Kelly Auto Auction Gadsden, AL 6:30

HADA Auto Auction Huntsville, AL 10:00 3rd Friday Only

ADESA Lexington 10:00 T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008

Level of Membership ❑ Dealer: Any individual who is licensed or will be licensed to sell motor vehicles. Dealer License #: ______________________ Year business began: ___________________ Membership Fee: $295

Members Receive:

Coupon Value Over $10,000

ABC Murfreesboro $600.00 Buy/Sell Fees ABC Nashville $600.00 Buy/Sell Fees ADESA Atlanta $600.00 Buy/Sell Fees ADESA Lexington $600.00 Buy/Sell Fees ADESA Knoxville $600.00 Buy/Sell Fees ADESA Memphis $100.00 Buy/Sell Fees - plus $$$ in auction services Airport Auto Auction $600.00 Buy/Sell Fees Manheim Atlanta $200.00 Buy/Sell Fees Manheim Bishop Bros. $1200.00 Buy/Sell Fees Bristol Auto Auction $200.00 Buy/Sell Fees Chattanooga Auto Auction $1200.00 Buy/Sell Fees Horn Lake Auto Auction $600.00 Buy/Sell Fees - plus $$$ in auction services Huntsville Auto Auction $250.00 Buy/Sell Fees East Tennessee Auto Auction $200.00 Buy/Sell Fees Mid-America Auto Auction $600.00 Buy/Sell Fees Manheim’s Nashville Auto Auction $600.00 Buy/Sell Fees Manheim’s Tennessee Auto Auction $600.00 Buy/Sell Fees - plus $$$ in auction services Tallahassee Auto Auction $600.00 Buy/Sell Fees

Primary Business: ______________________ Membership Fee: $295

Sponsor Name:_______________________________________________________ Company Information Company Name: ________________________________________________________ Contact Name:______________________________ Title:_______________________ Address (mailing address): ________________________________________________ City: ___________________________________ State: __________ Zip: ___________ Phone:_____________________________ Fax:________________________________ Secondary Phone: _______________________________________________________ E-mail: _______________________________ Web site: _________________________

FTC Communication Consent Due to FTC proposed rule changes regarding the regulations for faxing information, please read the following and sign below so you may receive valuable and timely information from the TNIADA. I understand that by providing my mailing address, e-mail address, telephone number and fax number, I consent to receive communications via mail, parcel, e-mail, telephone, and/or fax on behalf of the Tennessee Independent Automobile Dealers Association (TNIADA). This consent shall remain in effect until TNIADA receives a written revocation signed by an authorized representative.

X _______________________________________________________ Authorized Signature

_______________ Date

Payment Information: ❑ Enclosed is my check made payable to TNIADA. Please charge my : ❑ Visa ❑ MasterCard Card Number: _____________________________________ Exp. Date:____________ Name on Card (please print): ______________________________________________ Signature: X _______________________________________ Amount: _____________

New full service Web site at www.tniada.com

$10,375 30

❑ Associate: Any business who provides products and/or services to dealers and other related industry workers.

T E N N E S S E E D E A L E R N E W S | JANUARY/FEBRUARY 2008