august 2014 msada auto dealer

August 2014 • Vol. 27 No. 8

FIRST CLASS MAILUS POSTAGE PAID

BOSTON, MAPERMIT NO. 216

MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109

autoD E A L E R

M A S S A C H U S E T T S

The official publication of the Massachusetts State Automobile Dealers Association, Inc

‘No Other Event Like This’

RECALLR E A D I N E S S

TA B L E O F C O N T E N T S

4 FROM THE PRESIDENT: Looking Out for No. 1

6 THE ROUNDUP: Recall Madness

10 TROUBLESHOOTNG: Post-Sale Exports

11 LEGAL: A Retaliation Refresher: What Managers Need

To Know

12 AUTO OUTLOOK

14 COVER STORY:

Recall Readiness

17 NEWS From Around the

Horn

21 NADA UPDATE: ‘Engage’

in Opportunities

24 NADA MARKET BEAT

www.msada.org Massachusetts Auto Dealer AUGUST 2014

The official publication of the Massachusetts State Automobile Dealers Association, IncS TA F F D I R E C T O R Y

Robert O’Koniewski, Esq.Executive Vice [email protected]

Jean Fabrizio Director of Administration

[email protected] Brennan, Esq.

Staff [email protected]

Marta Argueta-GuerraAdministrative Assistant/ Membership Coordinator

[email protected]

A U T O D E A L E R M A G A Z I N ERobert O’Koniewski, Esq.

Executive EditorCatherine MacDonald

Editorial [email protected]

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M A S S A C H U S E T T S

Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information

about the Bay State auto retail industry and news of MSADA and its membership.

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from the PRESIDENT4

AUGUST 2014 Massachusetts Auto Dealer www.msada.org

by Scott Dube, MSADA President

A

Looking Out for No. 1Why your Association is taking your case to Capitol Hill

s I write this, MSADA is gearing up for the annual NADA Washington Conference Sep-tember 9-10. It’s our chance to make sure our representatives in Congress understand that we continue to struggle under the weight of a inconsistent economy, and that the policies they pur-sue should be focused on making it easier to do business instead of more difficult.

The more things change in Congress, the more they stay the same. Each year it seems the same general principle is under at-tack: free enterprise. Of course, the scope of that problem is well beyond any one industry. We keep our punch list short and stick with making sure our legislators understand that tax increases and regulatory changes may seem sensible while dreaming them up in their offices, but back in Dedham or Northampton or Hyan-nis the small businesses that make up the fabric of those commu-nities are being stretched thin by the unintended consequences of their noble intentions.

But we can never stop putting effort into making sure our rep-resentatives know who we are, what we do, and how vital our contribution is to their districts. Building these relationships means that it becomes more difficult to write-off real business concerns. Instead, we’re putting faces to names and doing the best we can to establish some level of trust.

We may not agree on every issue, but as folks such as NADA Director Don Sudbay, ATD Chairman Dick Witcher and Direc-tor Jim Boyle have proven these past couple of years, when the chips are down the time put into establishing these relationships can really pay off.

All of this work is done for the benefit of our member deal-

ers, who are working tirelessly day in and day out to make their businesses succeed. They’re putting food on the table for their families, and by extension

are doing the same for as many as 50 men and women in their communities. They don’t have time to make a trip down to Wash-ington, and that’s why we feel privileged to speak on your behalf.

While most of us are going to be going about our business that week, it’s important to remember we all have the ability to play an important part. Our state Political Action Committee is a great way to make a big impact, and so is writing or calling your rep-resentative to check in. There doesn’t have to be some big issue at hand. Simply saying hello, and inviting your representative to come visit, will help immeasurably the next time a potentially difficult piece of legislation crosses their desk.

Get Ready for the Sept. 22 Internet Sales 20 Group

I hope you have already made plans to attend our upcoming Internet 20 Sales Group, which will take place at the Newton Marriott Hotel from September 22-24. Internet sales guru Sean Bradley’s dynamic presentation along with a lot of other very ac-complished presenters such as Jim Zeigler, Scott Pechstein from Autobytel and others too numerous to mention promises to help attendees set new benchmarks and develop individualized action plans. We’ve booked a block of rooms and invite you to join your fellow dealers for a information packed conference. Please con-tact Executive Vice President Bob O’Koniewski with questions at [email protected] or (617) 451-1051.

t

MSADA

“We can never stop making sure our representatives know who we are, what we do, and how vital our contribution is

to the economy.”

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Name Contact TelephoneADESA Boston Chris Carli (508) 270-5403ADP Dealer Services Maria Trezza (973) 404-4466Albin, Randall & Bennett Barton D. Haag (207) 772-1981American Fidelity Assurance Co. Tom Trudell (413) 885-5477AutoAlert Don Corinna (949) 398-7008AutoRaptor (RAL) Howard L. Leavitt (401) 421-6533Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000Boston Globe Mary Kelly (617) 929-8373The Boston Business Advisory Group Paul Cuomo (781) 681-1501 Vincent Saccone (781) 681-1519Burns & Levinson LLP Paul Marshall Harris (617) 345-3854Cars.com Heidi Allen (312) 601-5376 CitNOW Jack Gardner (617) 221-8008 CloudDOCX Michael DeCarlo (585) 704-6826 Construction Management & Builders, Inc. Kate Sullivan (781) 246-9400CVR John Alviggi (267) 419-3261Dealermine Inc. Karen Parmenter (800) 304-3341 x5179 DealerTrack Ernest Lattimer (516) 547-2242Downey & Company Paul McGovern (781) 849-3100EasyCare New England Inc. Mike Douglas (770) 246-9724Ethos Group, Inc. Drew Spring (617) 694-9761F & I Resources Jason Bayko (508) 624-4344Federated Insurance John Ballard (859) 312-9896First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320GW Marketing Services Gordon G. Wisbach Jr. (781) 899-8509 Huntington National Bank John J. Marchand (781) 326-0823Key Bank James Q. Moretti (781) 558-5132KPA Rob Stansbury (484) 326-9765Leader Auto Resources, Inc. Brendan J. Murphy (518) 878-6341Lynnway Auto Auction Jim Lamb (781) 596-8500M & T Bank John Federici (508) 699-3576Management Developers, Inc. Dale Bosch (617) 312-2100MetroMedia Energy Timothy Teevens (800) 828-9427Micorp Dealer Services Frank Salkovitz (508) 832-9816Mid-State Insurance Agency James Pietro (508) 791-5566Mintz Levin Kurt Steinkrauss (617) 542-6000Murtha Cullina Thomas Vangel (617) 457-4000Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120Performance Management Group, Inc. Mark Puccio (508) 393-1400R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300Reflex Lighting Ping Weiner (617) 269-4510Resources Management Group J. Gregory Hoffman (800) 761-4546Reynolds & Reynolds Marc Appel (413) 537-1336Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301Samet & Company John J. Czyzewski (617) 731-1222Schlossberg, LLC Michael O’Neil, Esq. (781) 848-5028Sentry Insurance Company Eric Stiles (715) 346-7096Shepherd & Goldstein Ron Masiello (508) 757-3311Silverman Advisors, PC Scott Silverman (781) 591-2886Southern Auto Auction Tom Munson (860) 292-7500Sovereign Bank Richard Anderson (401) 432-0749Target Dealer Services Andrew Boli (508) 564-5050TD Auto Finance BethAnn Durepo (603) 490-9615TD Bank Michael M. Lefebvre (413) 748-8272TrueCar Steve White (774) 392-2904 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Windstream Rick Caruth (978) 296-0313; (413) 977-6111 Zurich American Insurance Company Steven Megee (774) 210-0092

AssociAte MeMber Directory

MSADA BOARD Barnstable County

Gary Beard, Dick Beard Chevrolet

Berkshire CountyBrian Bedard, Bedard Brothers Auto Sales

Bristol CountyRichard Mastria, Mastria Auto Group

Essex CountyWilliam DeLuca III, Woodworth Motors

John Hartman, Ira Motor Group

Franklin CountyJay Dillon, Dillon Chevrolet

Hampden CountyJack Sarat, Jr., Sarat Ford

Hampshire CountyBryan Burke, Burke Chevrolet

Middlesex CountyChris Connolly, Jr., Herb Connolly Motors

Scott Dube, Bill Dube HyundaiFrank Hanenberger, MetroWest Subaru

Norfolk CountyJack Madden, Jr., Jack Madden Ford

Charles Tufankjian, Toyota Scion of Braintree

Plymouth CountyChristine Alicandro, Marty’s Buick GMC Isuzu

Suffolk CountyRobert Boch, Expressway Toyota

Worcester County Steven Sewell, Westboro Mitsubishi

Steve Salvadore, Salvadore Auto

Medium/Heavy-Duty Truck Dealer Director-at-Large

[Open]

Immediate Past PresidentJames G. Boyle, Tuck’s Trucks

NADA DirectorDon Sudbay, Jr., Sudbay Motors

OFFICERSPresident, Scott DubeVice President, Chris Connolly, Jr.Treasurer, Jack Madden, Jr.Clerk, Charles Tufankjian

MSADA

U.S. DOT/NHTSA Rollout Online Lookup Tool for Vehicle Recalls

Over the last several months we have written ex-tensively on dealers’ obligations when confronting the overwhelming number of recalls receiving cov-erage in the media. These responsibilities cannot be taken lightly, especially when state and federal consumer protection laws are at play.

This month in our cover story we provide an overview of what the numbers mean and how manufacturers and dealers are coping.

In a further step to bring additional transparency to the recall phenomenon for consumers and deal-ers alike, the U.S. Department of Transportation’s National Highway Traffic Safety Administration announced the launch of a new online tool to iden-tify cars and light trucks with uncompleted recalls.

By allowing Vehicle Identification Numbers (VIN) based searches, the lookup tool will help dealerships determine if particular used vehicles have any unremedied safety recalls. The lookup tool can be used prior to making a purchase or tak-ing in a trade, for used vehicles in inventory, or to help provide consumers with useful safety recall information on their vehicles.

In announcing its new tool, NHTSA specifically mentioned that it is “working with the National Automobile Dealers Association to help ensure that franchise dealerships across the United States become aware of and understand how to use the new VIN search tool.”

NADA worked with NHTSA to prepare the document, “Dealer Tips for VIN Lookup and Ve-hicle Recalls.” NADA has also updated its docu-ment, “Safety Recalls Q&A for Franchised Deal-

ers,” which provides guidance on how to handle recalls impacting new and used inventory and service vehicles.

Dealers and consumers can access the new NHTSA tool at www.safercar.gov/vinlookup, where a consumer FAQ and other recall-related in-formation also are available.

Questions on vehicle safety recall issues or the new VIN-searchable database may be directed to NADA Regulatory Affairs at [email protected] or (703) 821-7040.

MSADA Compliance Program UpdateWe have written previously about our new em-

ployment law/OSHA compliance program, which your Association is subsidizing partially on behalf of our member dealers.

Since our rollout of the program in June, so far 23 dealer principals at 46 dealerships have taken advantage of this program. Are you one of them?

If you are seeking assistance on employment law compliance, pay plan review, employee handbook and job application review, management training, or occupational and environmental safety, check out the materials we have sent you previously or contact me at [email protected] and we can get you in touch with the appropriate people at Fisher & Phillips, KPA, and Furrh Associates.

Further, in continuing with our roster of Educa-tion and Compliance Seminars, we conducted an employment law compliance seminar with attor-neys Joe Ambash and Jeff Fritz of Fisher & Phil-lips, on Wednesday, August 27, at the Beechwood Hotel, in Worcester. These are presented at no cost to our members and are a great way for dealer prin-

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The Roundup

by Robert O’Koniewski, Esq. MSADA Executive Vice President

Recall Madness

7


MSADA

cipals, GMs, and HR personnel to receive updates on compliance issues in this area of the law. Be on the lookout for a seminar coming to your area. For a couple of hours in the morning attendees can get an over-view of what needs to be done to keep their stores out of harm’s way.

Internet Sales 20 Group-Boston Fast Approaching

On September 22-24, at the Marriott Newton Hotel, we will be joining forces with DealerSynergy to provide our mem-ber dealers and other affiliated industry entities throughout New England the op-portunity to participate in a three-day se-ries of workshops billed as “Internet Sales 20 Group – Boston”.

DealerSynergy has conducted five simi-lar events around the country, most recent-ly in Atlantic City, with increasing atten-dance and success at each one.

Register today at www.internetsales-20group.com. Use the MSADA Member code to receive a reduced price ticket.

This event will provide you with every-thing you need to move your dealership’s needle in the right direction. Learn more than just the information. Learn how to evaluate, strategize, and execute a solid ac-tion plan to rise above your competition.

Consumer Affairs’ Survey of Lemon Law Window StickersRecently we heard from dealers who

were visited by representatives of the Mas-sachusetts Office of Consumer Affairs and Business Regulation (OCABR) sev-eral weeks ago. A follow-up phone call to OCABR confirmed that such visits did oc-cur at a random sampling of new and used car dealers across the state. Readers may recall that OCABR conducted similar on-site visits at new-car and used car dealer-ships in 2009 and 2010.

As part of its vast realm of responsibili-ties, OCABR administers the Massachu-setts Lemon Law and Used Vehicle War-ranty Law arbitration programs. OCABR

conducted a number of field visits at deal-erships to assess compliance with state motor vehicle warranty notice laws, espe-cially as they relate to those yellow stick-ers dealers must have affixed to vehicles offered for sale.

On Monday, August 25, your Asso-ciation attended an informational ses-sion held by OCABR regarding the field survey. According to OCABR, all deal-erships that were surveyed have been informed of their results by letter. Addi-tionally, the compiled survey results will soon be made available to the Association.

Dealers should accept this as a remind-er that, in addition to the various notices/stickers required by federal and state law, Massachusetts law requires dealers to comply with the following two sticker re-quirements when offering vehicles for sale:

1. New and Lease Car Warranty Law sticker. For new motor vehicles and those used motor vehicles still within the term of protection which are sold, offered for sale, or displayed in Massachusetts, dealers must post on the vehicle the Massachusetts Lemon Law notice, as required by MGL Chapter 90, Section 7N½ and the regula-tions at 201 CMR 11.23. This is a yel-low sticker and details a purchaser’s new vehicle warranty rights under state law.

2. Used Vehicle Warranty Law stick-er. For every used motor vehicle covered by the warranties established under MGL Chapter 90, Section 7N¼ that a used car dealer sells, offers for sale, or displays in Massachusetts, dealers must affix to the vehicle’s window or the dashboard the Massachusetts Used Car Warranty Law notice, as required by MGL Chap-ter 90, Section 7N¼ and the regulations at 201 CMR 11.22. This is a yellow sticker and details a purchaser’s used vehicle warranty rights under state law.

Each of these stickers can be purchased from Reynolds & Reynolds through our MSADA-Reynolds forms purchas-ing program. Call a sales representa-tive at 800-344-0996 or 800-896-2886.

Electric/Zero Emission Vehicles Special Commission

On July 11 the governor signed into law the FY2015 budget totaling $36.5 billion. As previously reported, the budget plan includes an outside section creating a spe-cial commission on electric vehicles/zero emissions vehicles.

The 27-member special commission includes two slots for Class 1 franchised dealers who sell electric vehicles as a seg-ment of their vehicle inventory. The com-mission will study the economic and envi-ronmental benefits and costs of increased use of electric and other zero emission ve-hicles in Massachusetts, including making recommendations for policies to further expand access to electric and fuel cell vehi-cle infrastructure, encourage the purchase and lease of electric and fuel cell vehicles, and indentify strategies for removing barri-ers to electric and fuel cell vehicle deploy-ment. An action plan will be created by September 2014 and draft legislation filed with the legislative clerks by April 2015.

This proposed special commission is partly in reaction to eight states – Califor-nia, Connecticut, Maryland, Massachu-setts, New York, Oregon, Rhode Island, and Vermont – coming together to create a plan to reduce greenhouse gas emis-sion levels by encouraging consumers to purchase more electric-powered vehicles. The states seek to promote the sale of over three million zero emission vehicles by 2025 through a combination of con-sumer incentives and regulatory actions. (Presently there are only 200,000 nation-wide.) The project aims to install recharg-ing stations at workplaces, expand cash/non-cash incentives for buying electric cars, and push dealers to promote electric vehicles.

Robert Boch of Expressway Toyota and Scott Dube of Bill Dube Hyundai have volunteered to submit their names to the governor’s office for appointment to repre-sent new car franchise dealers on the com-mission.

The Roundup


8

Reminder on Other State EV Initiatives for Dealers

Since mid-June the Commonwealth of Massachusetts has been administering the Massachusetts Offers Rebates for Electric Vehicles (MOR-EV) program.

Funded by the Executive Office of En-ergy and Environmental Affairs’ Depart-ment of Energy Resources (DOER), the MOR-EV program is part of the Multi-State Zero-Emissions Vehicle Program, which was created in October 2013 through a Memorandum of Understand-ing entered into by the governors of the aforementioned eight states.

Massachusetts drivers can now apply for rebates of up to $2,500 for the pur-chase or lease of new electric vehicles, including battery electric, plug-in hybrid electric, fuel cell electric vehicles, and ze-ro-emission motorcycles. Applicants must apply for the rebate directly within three months of the completed transaction, and the approved applicants will receive their checks directly from the state. There is no action required on the part of the dealer.

Rebate amounts are based on vehicle type and are available in the following amounts: • $2,500 rebate for fuel cell vehicles and

plug-in electric vehicles with large bat-teries;

• $1,500 rebate for plug-in electric ve-hicle with smaller batteries; and

• $750 rebate for electric motorcycles. For a complete vehicle list, please visit

https://mor-ev.org/eligible-vehicles-list. In order to be eligible, applicants must

meet the following requirements: • Purchase or lease an eligible vehicle on

or after the program start date of June 18, 2014;

• Choose a lease term of at least 36 months, where applicable; and

• Apply for the rebate within three months of vehicle purchase or lease date.Your Association has been working with

the MOR-EV program administrators on the program’s roll-out. For more program details and requirements, dealers can:• Visit the MOR-EV program website at

www.mor-ev.org; • Directly contact the Center for Sustain-

able Energy, the program administrator, by e-mail at [email protected] or by phone at (866) 900-4223; or

• Contact MSADA attorney Peter Bren-nan by e-mail at [email protected] or by phone at (617) 451-1051.Provisions have been made by the Com-

monwealth to provide free materials and on-location orientation to sales managers and staff at dealerships. If you are inter-ested in receiving a supply of program brochures and/or having a representative from the outreach program team provide an orientation at your dealership, please contact Eric Skelton at [email protected] or by phone at (617) 259-2028.

Finally, dealers are reminded that the Massachusetts Department of Environ-mental Protection (DEP) is accepting grant applications from employers inter-ested in installing electric vehicle charg-ing stations at their business. Massachu-setts employers with 15 or more employ-ees in non-residential places of business are eligible, and the Commonwealth will provide 50% of funding (up to $25,000) of hardware installation costs for accepted applicants. Applications are processed on a first come, first served basis until all pro-gram funding is expended.

Massachusetts Electric Vehicle Incen-tive Program (MassEVIP): Workplace Charging is a DEP open grant program that provides incentives to employers for the acquisition of Level 1 and Level 2 electric vehicle charging stations. Mas-sachusetts employers with 15 or more employees in non-residential places of business are eligible. DEP will provide 50 percent of the funding (up to $25,000) for hardware costs to employers installing Level 1 and Level 2 charging stations.

Workplace charging refers to the elec-tric vehicle charging infrastructure or electric vehicle supply equipment (EVSE) which is available for electric vehicles at or near places of employment. According to the DEP materials, workplace charging:• Allows access to EV charging for employ-

ees who do not have charging at home; • Demonstrates the employer’s leader-

ship to employees, customers and the

surrounding community; • Furthers employer goals for improving

employee commuting practices and re-ducing greenhouse gases and other ve-hicle emissions; and

• Enhances employee benefits packages and helps employers recruit and retain employees.According to the program guidelines,

DEP will review all employer applica-tions for completeness and eligibility. The agency will, within 30 days of receiving an application and finding it satisfactory, issue to the successful applicant a Grant Application Approval, including an End-User Agreement that defines the terms and conditions of the grant award. After re-turning its signed End-User Agreement to DEP, an approved employer will have up to 180 days to complete the acquisition and installation of its charging station(s). DEP will provide incentive payments directly to charging station vendors on state contract.

Interested dealers are encouraged to review additional information and down-load the grant application at http://www.mass.gov/eea/agencies/massdep/air/grants/workplace-charging.html.

DealersEdge WebinarsAre you taking full advantage of our

weekly educational and training seminars provided to you through our partnership with DealersEdge Management Training? Are you receiving our weekly e-mails an-nouncing upcoming webinars and regis-tration information?

If not, you are missing out on an incred-ible bargain that will add value to your employees knowledge and skills, and ulti-mately to the success of your stores.

DealersEdge annually provides more than 45 live weekly webinars that feature timely, topical information delivered by an incredible roster of presenters that are experts in various fields.

The live courses, and more than 100 pre-recorded webinars (and growing), are available to MSADA members in two ways. Members can elect to register for a live webinar or purchase a pre-recorded course on an a la carte basis with MSA-

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DA’s member discount of $149 per course OR you can sign up for the MSADA VIP Season Ticket. For just $800 annually, a dealership can use the VIP Season Ticket to register up to 10 team members to ac-cess all programming, both live and re-corded. That’s more than $30,000 worth of training for JUST $800!

If you aren’t already, we hope you will consider this extremely cost-effective and time-saving method of training your man-agement staff on the latest information in their area of expertise. If you have any questions, please don’t hesitate to contact DealersEdge at 800-321-5312 or me at [email protected].

The upcoming schedule of webinars for the next several weeks is as follows:• Thursday, September 4, 1:00 p.m. EDT

– Jeff Sacks: The Habits and Practices of the Exceptional General Manager.

• Thursday, September 11, 1:00 p.m. EDT – Kevin Kiernan: Best Practice Hiring and Training for the Automotive BDC.

• Thursday, September 18, 1:00 p.m. EDT – Steve Kwiatkowski: How to Create a Professional Image on the Ser-vice Drive…Improve Retention, CSI, Sales and Profits.

• Thursday, September 25, 1:00 p.m. EDT – Steve Nickelsen: The Habits and Practices of the Exceptional Used Ve-hicle Manager.

Our PACs - DEAC & NCDPACWe appreciate the contributions thus far

received from our member dealers who have answered our calls for donations to our PACs.

Each year MSADA expresses itself politically through NADA’s federal PAC, Dealers Election Action Committee (DEAC), and through our state PAC, the New Car Dealers Political Action Com-mittee (NCDPAC). We depend on con-tributions from our dealers to keep these PACs strong, as we need to have an active voice in Washington and on Beacon Hill. Contributions to our PACs are an inex-pensive insurance policy. Since by law we cannot use our membership dues or other association revenues for political contri-

butions, the PACs help us to remain strong politically as we advocate for our dealers’ interests in the political process.

If you have not yet given to the PACs this year, please contact me at [email protected] and we can make sure your contributions happen. Thank you.

Save the Date – 2015 Auto Show, Dealer Summit & Auto Show Charity Gala

MSADA’s 58th edition of the New England International Auto Show will run January 15-19, 2015 at the Boston Convention and Exposition Center in South Boston. In order to celebrate our Auto Show, dealers need to circle Friday, January 16, on their calendars – you are invited to attend our Eighteenth Annual Auto Show Charity Gala at the BCEC, 5:00 p.m. to 9:00 p.m. The Gala benefits our Charitable Foundation’s Automotive Technician Scholarship Program.

As we have done previously, prior to the Charity Gala we will conduct a Dealer Summit at the BCEC from 2:00 p.m. to 5:00 p.m., at which we will have several speakers discuss on-going events in our industry.

Be on the lookout for our registration materials.

Primary Day – Tuesday, September 9

On Tuesday, September 9, voters can go to the polls to participate in the Republi-can and Democrat Parties’ state primaries to select their candidates to compete in the final election on November 4. Unenrolled voters who have chosen not to join either party are allowed to pick a party ballot that day and participate in that party’s primary.

There are choices throughout the bal-lots, from governor on down to state rep and senator. The race getting all the atten-tion, obviously due to its importance for the Commonwealth and her taxpayers, is that amongst the various candidates run-ning for governor.

On the Democrat side, voters will choose from attorney general Martha Coakley, state treasurer Steve Grossman,

and former federal official Don Berwick. Republicans will be selecting between Charlie Baker, the GOP standard bearer four years ago who lost to Governor Deval Patrick, and businessman Mark Fischer.

People complain all the time about what government is doing to them. Here’s an opportunity for you and your employees to get involved and begin to elect politicians who support the eco-nomic footprint dealerships bring to the table in communities across the state.

Tech Scholarships UpdateIn July our Charitable Foundation’s

Auto Tech Scholarship Committee met to review this year’s applications for what will be our Class #12 group of scholar-ship recipients, comprising two years/four semesters: Fall 2014 through Spring 2015, and Fall 2015 through Spring 2016.

The Foundation awards two types of scholarships: full and partial. In the first year, a full scholarship can total up to $3,250 per semester, and a partial schol-arship can total up to $1,000 per semes-ter. In the second year, a full scholarship can total up to $3,250 per semester, and a partial scholarship can total up to $2,000 per semester.

This year’s recipients are Mason Burns of Hopedale, Xiang Yang Chen of Quincy, Simon Hailu of Waltham, Joseph Maguire of Burlington, Nicholas Tine of Stow, and Kenneth Witts of Dracut. We extend our congratulations to them and wish them the best of luck in their upcoming studies.

Welcome Marta GuerraPlease extend a warm welcome to Mar-

ta Argueta-Guerra, our newest staff mem-ber. Marta will serve in the capacity of administrative assistant and membership coordinator. She also will be responsible for processing our members’ requests for DRT-1 forms. She replaces Paul Fellows, who has moved on to pursue political or-ganizing efforts in Kentucky. Marta can be reached by e-mail at [email protected]. If you get a chance, welcome her aboard to your Association. t

MSADA

MSADATroubleshooting10


Buying new luxury automobiles in the United States and exporting them for sale in Asia or the Middle East is big business these days. Companies are hir-ing straw buyers in markets all over the country to purchase the automobiles and deliver them for export. In some cases, the automobile is towed directly from the dealer’s lot to the port from where it will be shipped.

The impetus behind this seemingly complicated transaction is simple: in some foreign markets, a luxury auto-mobile might fetch three times the price that it would retail for in the United States. This price discrepancy makes it worthwhile for some entrepreneurs op-erating in a gray area of the law to work out the logistics.

That may soon change, however, as the United States Secret Service and the Department of Homeland security began targeting export brokers in a widespread crackdown in 2013. Several car export firms have been the target of recent in-vestigations, and many of these firms have had their assets, including bank accounts and automobiles thought to be scheduled for transport, seized as part of the investigations.

While the federal government may have stopped a few shipments and in-terrupted the exporters’ business, the legality of the scheme is far from clear. The exporters argue that there is noth-ing inherently illegal with their business model, and that the federal government

overstepped its authority by intervening in what is essentially a commercial dis-pute between the automobile manufac-turers and the exporters.

In April, Automotive Consultants of Hollywood, a Los Angeles-based export-er, won a key victory in a forfeiture action before the United States District Court for the Southern District of Ohio. The Court ruled that the federal government had to return to Automotive Consultants of Hol-lywood a $1.16 million Wells Fargo bank account that the government had frozen, as well as two automobiles.

While the underlying case against Automotive Consultants of Hollywood was not dismissed, the ruling is still significant because it is the first of its kind in an exporting case and is likely to set a precedent for other cases where the federal government has seized ex-porter assets. The federal government is currently pursuing forfeiture actions against exporters in Florida, New York, South Carolina and Texas.

The reason for the federal govern-ment’s involvement is unclear, although officials have cited a suspicion that for-eign buyers are using the transactions as a means to launder money. However, advo-cates for the exporters allege that the fed-eral government is acting in response to complaints by automobile manufacturers.

The connection to automobile manu-facturers is an easy one to make. As our member dealers know all-too-well, many manufacturers include language in franchise agreements that punish the dealer if a vehicle is exported within a certain time period after the sale.

In April, California Mercedes-Benz dealers received a notice from the man-ufacturer announcing a revised “Export Policy”, which stated in relevant part that: “Dealers found to have a total num-ber of exports in a calendar year equal to more than 3% of the Dealer’s total net retail sales during that calendar year…shall be subject to sales audit and impo-

sition of the charges in accordance with the applicable Export Policy.”

The Mercedes-Benz Export Policy, as written, seemed to be in clear viola-tion of the California automotive dealer franchise law, which puts the onus on the manufacturer to prove that a dealer knew or reasonably should have known of a customer’s intent to export a vehicle at the time of the sale before they can pur-sue any punishment against the dealer.

Mercedes-Benz USA is hardly alone in seeking to take its export-related frustrations out on dealers. Jaguar Land Rover North America recently revised its export policy to include new penal-ties for dealers that sell a vehicle which is later exported. Jaguar sought to place the burden on dealership employees to determine whether a buyer is an export risk before agreeing to a sale.

From the dealer’s perspective, selling a car meant for export represents a lose-lose proposition: Not only does the dealer risk being penalized by the manufacturer if the vehicle is found to have been ex-ported after it left the lot, but the dealer-ship also misses out on the opportunity to service the vehicle in the future.

The federal government estimates that over 35,000 vehicles are exported every year, and the high profit margins are al-lowing export operations to grow more sophisticated. Dealership employees must be educated on the potential risks of dealing with known exporter compa-nies, as several New York area dealer-ship employees are facing criminal pros-ecution for taking bribes from exporters to arrange sales.

If you require any additional in-formation regarding export laws, or any other issue, please contact Robert O’Koniewski, MSADA Executive Vice President, [email protected] or Peter Brennan, MSADA Staff Attorney, [email protected] or by phone at (617) 451-1051.

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Post-Sale Exports

Staff attorney, MSaDa

By Peter Brennan, Esq.


MSADA Legal 11

Retaliation is the most frequently as-serted discrimination-related claim against employers. Indeed, in 2013, 41.1% of the 93,727 charges filed with the U.S. Equal Employment Opportunities Commission (EEOC) included a retaliation claim. Un-derstanding exactly what a retaliation claim is, and how it works, is essential to mini-mizing the risk of such a claim.

What is Retaliation? Webster’s Dic-tionary defines “retaliation” as the doing of “something bad to someone who has hurt you or treated you badly” or “to get revenge against someone.” In the employment con-text, however, legally-actionable “retalia-tion” has a much narrower definition. Re-taliation under the anti-discrimination (and other employment) laws is when an employ-er takes an “adverse action” against an em-ployee for engaging in “protected activity.”

What is Protected Activity? An em-ployee engages in “protected activity” un-der the anti-discrimination laws when s/he (1) opposes a practice that s/he in good faith believes to be unlawful discrimination (i.e., when s/he complains about discrimination); (2) participates in an employment discrimi-nation proceeding (i.e., when s/he files a charge of discrimination with a state or fed-eral agency, testifies at such a proceeding, or cooperates in an internal investigation involving discrimination); or (3) requests a disability-based or religious-based accom-modation. Of course other activity may be protected under additional laws (i.e., whis-tleblower laws).

What is An Adverse Action? In the re-taliation context, an “adverse action” is any action that would deter or dissuade a reason-able worker from opposing discrimination or making or supporting a charge of dis-crimination. This includes, of course, termi-nating an employee’s employment, denying an employee a promotion, and refusing to hire an applicant. It also includes threats, un-justified negative evaluations, and increased surveillance. Petty slights and annoyances

or stray negative comments, however, do not rise to the level of actionable “adverse actions.” Regardless of the nuances of the definition, managers should never take any action against an employee because s/he en-gaged in “protected activity.”

Employees Also Must Prove Causa-tion. So an employee complains to Human Resources that he believes his manager is treating him unfairly because of his race. Two months later, the employee’s employ-ment is terminated. We have “protected activity.” We have an “adverse action.” To prove retaliation, the employee also would have to offer evidence of causation: that the employer took the “adverse action” because of his “protected activity.” Employees gener-ally attempt to prove causation by two meth-ods: (1) direct evidence (i.e., comments by managers demonstrating causation) and (2) circumstantial evidence. The most common type of circumstantial evidence used to sup-port retaliation claims is that of timing. The more strong the temporal connection, the more strong the retaliation claim.

Employers Must Have Legitimate, Non-Retaliatory Reasons. Assuming an employee can show that his employer took an “adverse action” against him because of his “protected activity,” the burden in retali-ation claims then shifts to the employer, to show that it took the “adverse action” for a legitimate, non-retaliatory reason or rea-sons. Assuming the employer can make such a showing, the burden then shifts back to the employee to prove that the reason the employer proffers for the “adverse action” is merely a pretext or cover up for illegal retaliation.

Some Employees Take Advantage Of Anti-Retaliation Laws. We all agree that having laws in place prohibiting retalia-tion is a good thing. Sometimes, however, employees abuse those laws as a form of job protection. For example, an employee may see the writing on the wall—his per-formance is not up to snuff and his manager

has indicated that his failure to improve could result in termination—and, as a re-sult, he may complain about “discrimina-tion” to make his impending termination a less attractive option for his employer. Un-fortunately, the employee is correct: taking an “adverse action” against an employee after s/he complains about alleged discrimi-nation is more risky.

What Can Employers Do? To minimize risk of retaliation claims, employers should train their managers not to do or say the wrong thing after an employee complains about them and to refer any complaints about discrimination to Human Resourc-es. Employers also should investigate any such complaints, instruct the target(s) of the complaints not to retaliate, and inform the complaining employee of the results of the investigation and the company’s anti-retaliation policy, and ask him/her to report any alleged violation of that policy. Further, employers should document well the legiti-mate, non-retaliatory reason(s) for taking any “adverse action.” Finally, employers should seek legal advice when taking an “adverse action” against an employee after s/he complains about discrimination—es-pecially when the “adverse action” occurs shortly after the complaint.

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A Retaliation Refresher: What Managers Need To Know

By Joseph W. Ambash and Jeffrey A. Fritz

Joe aMbaSh iS the Managing Partner anD Jeff fritz iS counSel at fiSher & PhilliPS, llP, a national labor anD eMPloyMent firM rePre-Senting hunDreDS of DealerShiPS in MaSSachu-SettS anD nationally. they May be reacheD at 617 722 0044.

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AUTO OUTLOOK


13MSADA


16 COVER STORY14

Dealers all over Massachusetts are handling the con-sequences of safety recalls. Nearly 44 million vehicles have been recalled in the U.S. this year, according to the National Highway Traffic Safety Administration. While millions of vehicles become subject to NHSTA safety recalls each year, a relatively small percentage of these recalls involve “stop operation” or “stop sale” notices. Luckily, there is more accessible information for dealers than ever before.

In August, the NHTSA rolled out a VIN-searchable safety recall data base on www.safercar.gov. NHTSA is-sued a list of available manufacturers and details on the capability and functionality of the data base, which is mandated by the Moving Ahead for Progress in the 21st Century Act, the transportation bill enacted in July 2012.

by Catherine MacDonald What the new NHTSA VIN search tool covers:• Safety recalls that are incomplete on a vehicle; • Safety recalls conducted over the past 15 calendar years; and• Safety recalls conducted by major light auto automakers, includ-

ing motorcycle manufacturers.

What the new NHSTA VIN search tool does NOT cover:• Completed safety recall information;• Manufacturer customer service or other non-safety recall cam-

paigns;• International vehicles;• Very recently announced safety recalls for which not all VINs

have been identified;• Safety recalls that are more than 15 years old (except where a

manufacturer offers more coverage); and• Safety recalls conducted by small vehicle manufacturers, in-

cluding some ultra-luxury brands and specialty applications.

R E A D I N E S SMSADA preSentS A DeAler’S toolkit for SAfety recAllS

RECALL

Highlighting the VIN search tool, the NADA has provided a list of FAQs designed to respond to questions dealers are asking about how best to handle recalls impacting new and used inventory and service vehi-cles. MSADA has updated that information here.

Questions concerning federal safety recalls or the new VIN-searchable data base may be directed to NADA Regulatory Affairs at [email protected] or 703-821-7040.

Safety Recalls: a Q&A for Franchised Dealers

What is a federal motor vehicle safety recall?

A: The National Traffic and Motor Vehicle Safety Act (the Act) gives the NHTSA author-ity to set safety standards for new motor vehicles built for the U.S. market. When it is determined that a motor vehicle is not in compliance with one of the hundreds of safety standards NHTSA has is-sued or that it has a safe-ty-related defect, a recall may be initiated. The vast majority of safety recalls are initiated voluntarily by vehicle manufacturers (OEMs), with a minor-ity influenced or ordered by NHTSA. In a typical year, tens of millions of motor vehicles and motor vehicle parts are recalled. Given their expertise, training, and investment in necessary tools and information, franchised dealers remedy almost all safety recalls, thereby helping to promote the safety of the motoring public.

How does federal law restrict the sale of new

vehicles subject to a safety recall? A: Federal law imposes a “stop sale” on all new, undelivered vehicles and parts subject to a safety recall. Once a dealer receives no-tice of a safety recall, affected new vehicles or parts may not be delivered until the defect or noncompliance is remedied. However, the Act also mandates that OEMs both reimburse dealers for the cost of remedying recalls and provide additional compensation of at least one percent per month of the manufacturer’s (or distributor’s) selling price, prorated from the date of a recall notice until the date a mo-tor vehicle recall is remedied.

Does federal law restrict the sale of used vehicles

subject to a safety recall? A: No. The Act does not prohibit the sale (by dealers or anyone else) of used vehicles

subject to safety recalls. It does, however, prohibit the sale of used parts subject to re-

15MSADA


Available Manufacturers in the NHTSA

VIN Search ToolAcuraAudiBMW

BRP Can-AmBuick

CadillacChevroletChrysler

DodgeFIATFordGMC

Harley-DavidsonHonda

Honda MotorcyclesHummerHyundaiInfinitiJaguar

JeepKia

Land RoverLexus

LincolnMazda

Mercedes-BenzMercury

MINIMitsubishi

NissanOldsmobile

PontiacPorsche

ProMasterRAMSaab

SaturnScion

SMARTSubaru

Suzuki MotorcyclesToyota

TriumphVolkswagen

Volvo

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RECALL

call. Despite the lack of a federal used-vehicle sales prohibi-tion, dealers should consider the following:

Given that dealer service departments are authorized, trained, and equipped to remedy safety recalls for the brands the deal-er represents, all used inventory of those brands should be checked routinely for unremedied safety recalls and any found should be performed prior to resale. Dealers considering the resale (at retail or wholesale) or lease of such a vehicle prior to performing the remedy should consult with legal counsel about the advisability of doing so.

Dealers may periodically receive OEM “stop sale” notices covering used vehicles in inventory. Other dealers (both fran-chised and independent) may learn of such OEM “stop sale” notices through other means (e.g., via the media). It is most prudent for a dealer with actual knowledge of an OEM “stop sale” to refrain from selling (at retail or wholesale) or leasing a covered vehicle until the recall is remedied.

Alternatively, a dealer with actual knowledge of an OEM “stop sale” could sell or lease covered vehicles if accompa-nied by a clear and conspicuous disclosure of the “stop sale” acknowledged by the purchaser/lessee. However, any dealer considering this latter approach should consult legal counsel (and perhaps its insurance carrier) as to whether such disclo-sure provides sufficient protection under state liability laws. Dealers should also discuss with counsel whether sales/leases contrary to an OEM “stop sale” may violate the terms and con-ditions of a franchise agreement and/or undermine the OEM’s product liability indemnity.

On occasion, dealers may receive OEM recall notices with “stop drive” precautions applicable to certain used vehicles in inventory. As with “stop sales,” other dealers (both fran-chised and independent) may learn of a “stop drive” notice through other means (e.g., via the media). Any dealer with ac-tual knowledge that certain used vehicles are subject to a “stop drive” should not resell (either at retail or at wholesale) or lease such vehicles until the recall is remedied.

Is there a single source of information list-ing the safety recall status of any vehicle?

A: The NHTSA website www.safercar.gov allows anyone (own-ers, lessees, prospective purchasers, dealers, etc.) to search safe-ty recalls by model year, make, model, and vehicle identification number. Previously, the site only allowed safety recall searches by model year, make and model. This new VIN-search function reflects information gathered from the VIN-searchable public-facing safety recall websites established by each light-duty OEM selling more than 25,000 vehicles per year in the U.S. OEMs must post recall status information on their websites concurrent-ly with the creation of each new recall letter recipient list, must display a description of each unremedied safety recall applicable to a particular VIN dating back at least 15 years, and must update

their sites at least once every seven days. Once a vehicle subject to recall is reported as remedied, it will no longer appear on an OEM or the NHTSA data base.

Does the new NHTSA VIN-searchable site impose additional requirements on

dealers? A: No. The new NHTSA VIN-searchable site does not directly impose new mandates on dealers. However, prudence dictates that dealers consider checking the NHTSA VIN-searchable site (or applicable OEM-specific VIN-searchable sites) prior to pur-chasing or reselling used vehicles. Dealers should also consider periodically rechecking the safety recall status of used vehicles in inventory for more than seven days. It is expected that most dealer management systems and other dealership information vendors will offer products designed to assist dealers with run-ning used-vehicle safety recall VIN searches. Prudence also dictates that, at the least, dealers disclose to purchasers and les-sees the existence of any unremedied safety recall information discovered with a VIN search (although it may be necessary to include in such disclosures disclaimers regarding the informa-tion’s accuracy). NOTE: Given the potential for liability under state law, dealers should consult with their legal counsel con-cerning what additional impact these new VIN-searchable tools may have on their operations.

What’s the best course of action to take when a service customer, informed of an

outstanding safety recall, refuses to authorize the work? A: You can’t force customers to have safety recall remedies performed. In fact, for any given safety recall, many owners/lessees opt not to have the defect or noncompliance remedied, despite the best efforts of OEMs and dealers to get them to do so. It’s best not to do the work surreptitiously. Instead, when a service customer refuses to have the work done, dealers should document that fact by asking the customer to acknowledge on the repair order that repair of the recall at issue was refused.

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16 Recall Readiness16


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MSADA


17from Around the HornNEWS

AUBURN

Langway Ford Buys Former Yankee Drummer Site

The owner of Langway Ford in Auburn has acquired the former site of the Yankee Drummer Motor Inn and is considering building a new dealership on the location.

James F. Langway, owner of Langway Ford Inc., said, “It took a long time, but we finally closed last week.”

The former site of the Yankee Drummer Motor Inn was sold by Lowe’s Companies Inc., three years after Lowe’s announced that it would not be building on the site. Langway told the Worcester Telegram & Gazette he is not certain what his future plans for the site will be.

“My intention is to build a new dealership there. I have designs for a beautiful Ford Trustmark building, but my phone has been ringing off the hook by people, including some major national companies, who want to

buy the site. I had five inquiries in a week,” he said. Langway said he was under agreement with Lowe’s three years

ago, when another buyer offered more for the site, but that recently fell through.

“Lowe’s was tremendous to deal with and showed great integ-rity. Once they contacted me, I closed on the property in about four months. It was a quick closing. It’s a great site. I’m excited. I can’t lose either way,” Mr. Langway said.

Langway said his purchase of the Lowe’s property in no way means business is not good at his current dealership on Route 20.

“When we took over, Millbury Ford averaged 20 car sales a month. Business is good for us in Auburn. We average 250 to 270 cars per month. The market in Worcester has been great,” he said.

Any decisions he makes on the future of the former Yankee Drummer site will be the best for his family, Mr. Langway said. His son, Jimmy Langway, 19, works with him every day and “loves the business.”


from Around the Horn18 NEWSPEABODY

MINI Countryman Is Lone Small Car to Earn Top Rating in Latest IIHS Test

Small cars are increasingly receiving criticism for their inabil-ity to protect drivers in a newly explored crash scenario, but one vehicle bucked that trend during evaluations from the Insurance Institute for Highway Safety (IIHS) last month. In the IIHS’ latest round of crash testing, the 2014 MINI Countryman was the only

one of 12 small cars to earn a top rating of “good” in the small-overlap front test. The Country-man’s quality per-formance in the demanding test helped the four-

door compact crossover receive an IIHS Top Safety Pick desig-nation for the fourth consecutive year.

Introduced in 2012, the small-overlap front crash test sends a vehicle toward a rigid wall at 40 mph so that 25 percent of the front end on the driver’s side strikes the obstacle. According to the IIHS, this type of crash accounts for nearly a quarter of se-vere frontal crashes in the United States, but it is difficult for automakers to design against because the barrier bypasses most of the vehicle’s frontal crush zones. The Countryman achieved Top Safety Pick honors by not only earning a “good” rating in the small-overlap front test, but also by receiving the same designa-tion in the IIHS’ moderate-overlap front, side, roof-strength, and head restraints and seats evaluations. Tellingly, 13 of the 32 small cars now tested by the IIHS for the 2014 model year have failed to be named a Top Safety Pick at least in part because they rated less than “acceptable” in the small-overlap front crash test.

“Designing safe small cars is a major challenge for all auto-makers, especially with the IIHS constantly raising the bar of safety with new tests and criteria, but MINI has risen to the chal-lenge year-in and year-out with its Countryman,” said Marshal Cabot, general manager of MINI of Peabody. “Though it may offer go-kart-like handling when it’s time to have some fun out on the road, the Countryman is built like a rigid crossover when it comes to safety.”


19MSADA

BOSTON

Register Today for the Internet Sales 20 Group Workshop

Registration is now open for IS20G Boston, Sep-tember 22-24, 2014. The event includes partnerships with MSADA, Toyota and more. With the industry’s

best and brightest, a curriculum that is sure to impress, and members to collaborate with throughout the year, this is not an event to miss.

Seats are filling fast – this event will sell out, so register today. Register at internetsales20group.com.

For more information call 866-314-2597, or email [email protected].

BEVERLY

All-New 2015 Ford Transit Arrives at US Dealerships

With its taller and more versatile roof options, the all-new 2015 Ford Transit full-size van required a spe-cial rail car to even make it to U.S. dealerships, but now that it has arrived, businesses have an unprece-dented set of solutions for meeting their transportation needs. Slated to gradually replace Ford’s best-selling E-Series, the Transit comes in van, wagon, chassis-cab and cutaway body styles while offering three roof heights, three body lengths and two wheelbases.

High-roof Ford Transit models provide 81.5 inches of cargo height, allowing a six-foot-four-inch-tall per-son to stand up straight while they load up to 487.3 cubic feet of cargo. That amount of space is an im-provement of nearly 80 percent compared to the most voluminous E-Series model, and more than twice the cargo room of the standard E-Series. Across all Transit models, the rear cargo doors open up to 270 degrees, making it easier to load larger equipment.

“The new Ford Transit can be a real game-changer for small businesses because it is more spacious, more fuel efficient and more comfortable than other large vans on the market,” said Jeff Klein, general sales manager of Thomas Ford, a Ford dealership in Bev-

from Around the Horn20 NEWS MSADA


erly. “Also, the Transit has a short front end and a tight turn-ing radius, so it’s surprisingly maneuverable despite its longer lengths and taller roof heights.”

RAYNHAM

Led by Redesigned Models, Subaru Earns Best-Ever Monthly Sales in July

Subaru received a big sales boost following the redesign of its Forester compact SUV for the 2014 model year, and now its sales appear destined for the stratosphere after the launches of the redesigned 2015 Subaru Legacy and Outback. The automak-er attracted its best-ever monthly sales last month, with five of its vehicles setting either July or all-time sales records.

Currently Subaru’s best-selling vehicle, the Forester moved 14,524 units in July to secure record monthly sales, while the popular XV Crosstrek had its best sales month since debuting for the 2013 model year, totaling 6,603 units. The Legacy and Out-back each rode their recent redesigns to July records along with the affordable Subaru BRZ, which hit the market for the 2013 model year as the automaker’s first rear-wheel-drive sports car.

“In recent years, Subaru has released a constant stream of ei-ther new or redesigned models that have quickly impressed car shoppers, and that has helped the automaker achieve 32 straight months of year-over-year sales growth,” said Chris Dunn, gener-al manager of Mastria Subaru. “Each vehicle redesign has broad-ened the brand’s appeal by significantly improving fuel econo-my, spaciousness and ride quality without sacrificing Subaru’s signature all-wheel-drive capability in the process.”

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MSADANADA Update by Don Sudbay

Make plans now to attend the 2015 NADA Convention in San Francisco. If you have never been to a convention before, this one will be one that you will not want to miss. San Francisco is a great place to visit and between the work-shops, vendors on the floor, industry speakers, and network-ing, you will find this convention a truly worthwhile invest-ment in your time and money. Don’t wait, as the hotels are filling up quickly. I look forward to seeing you there.

A Special Note from NADA Chairman Forrest McConnell:

“Rising car sales are leading the economic recovery. Dealers are hiring. And for the first time since the Great Recession, new-car dealerships across the country now em-ploy more than 1 million people.

“The forecast this year calls for sales of about 16.4 mil-lion new cars and light trucks. Next year, the forecast is even brighter with sales of nearly 16.8 million new vehicles.

“Now is the perfect time to engage in your future.“Looking ahead to 2015, the NADA Convention & Expo

in San Francisco next January offers dealers and their man-agers, as well as the entire auto industry, a premiere forum to exchange ideas and learn new ways to improve business operations.

“And even if you’ve been to the NADA convention in the past, there’s always something new to learn. If you’ve never been to the convention before, what are you waiting for?

“The 24 dealer-manufacturer franchise meetings, 59 new workshop topics, and 126 workshop sessions and numerous networking events are second-to-none. They’ll make you and your dealerships leaner, smarter, and ready to tackle the challenges for 2015 and beyond.

“Engage in new technology and social media. New to the workshop program in 2015 are the Super Sessions on Thursday, January 22, which includes a panel of successful NADA NextGen dealers who will share their insight on how emerging technologies are reshaping auto retailing, as well as a DrivingSales.com presentation on best practices to win digital buyers; and on Sunday, January 25, the Technology Town Halls feature Q&A sessions with key executive staff from eBay, Google, and others on how they can help dealers sell more cars.

“We’ve also expanded the Expo, which will include near-ly 500 companies exhibiting in more than 600,000 square feet at the Moscone Center.

“The keynote speakers are former Florida Governor Jeb Bush, Jay Leno, and inspirational speaker Beck Weathers, as well as NADA Vice Chairman Bill Fox and me.

“The four-day event, dubbed the ’Automotive Industry Event of the Year,’ runs Thursday, January 22, to Sunday, January 25, at the Moscone Center.

“Online registration is open. Dealers and their managers should make their reservations as soon as possible. Hotels rooms are filling up quickly. Attendee registration is at its high-est pace since 2007. Fourteen hotels have already sold out.

“Join us in San Francisco, and Engage in new opportunities.“We look forward to seeing you there!”

NADA Statement on New NHTSA Search Tool for Vehicle Recalls

In response to the National Highway Traffic Safety Ad-ministration’s new Vehicle Identification Number (VIN) look-up tool for vehicle recall information, Forrest McCon-nell, chairman of the National Automobile Dealers Associa-tion and a Honda/Acura dealer in Montgomery, Alabama, issued the following statement:

“The new online look-up tool will help new-car dealer-ships identify whether a used car or light truck has an un-remedied safety recall prior to making a purchase or taking in a trade. It will also help dealerships to determine whether used vehicles in inventory are under recall and to provide used-car shoppers with useful safety recall information.

“To improve vehicle safety, NADA urges every car owner who receives a recall notice from a manufacturer to visit his or her local new-car dealership to have the vehicle inspect-ed, and if necessary, fixed at no charge. Historically, about

‘Engage’ in New OpportunitiesDon SuDbay, PreSiDent of SuDbay automotive GrouP, rePreSentS mSaDa memberS on the naDa boarD of DirectorS. he welcomeS your queStionS anD concernS ([email protected]).


21

“The [NADA Convention] events are second-to-none. They’ll make you

and your dealerships leaner, smarter, and ready to tackle the challenges

for 2015 and beyond.”

—NADAChairman Forrest McConnell

1522MSADA Accounting26 MSADA22


NADA Update

75 percent of all recalled vehicles get fixed. Our goal is to see 100 percent of those vehicles remedied.”

Dealers and consumers can access the new tool from NHTSA at www.safercar.gov/vinlookup.

NADA: Used-Car Prices Will Fall GraduallyIs a sharp correction in used-vehicle prices imminent?

The National Automobile Dealers Association expects used-vehicle prices will indeed start to fall—but gradually, not all at once.

After the Great Recession, a sharp decrease in new-vehi-cle sales greatly reduced the supply of late-model used ve-hicles. At the same time, price-conscious consumers opted for more affordable used vehicles rather than new vehicles. These two factors helped lift used-vehicle prices by 17% from 2007 to 2013, according to NADA. Prices have grown another 2% so far this year to an all-time high of $16,560.

Now, an improving economy and increased employment have brought new-vehicle sales back up to pre-recession levels, which in turn has increased the supply of late-model used vehicles. Ultimately the additional volume of used ve-hicles and an increasingly competitive new-vehicle market – both in terms of pricing and consumer demand – will de-crease used-vehicle prices.

All these factors greatly reduce the risk of an impending collapse in used-vehicle prices. To be sure, automaker actions will play a key role in determining how far prices will fall in the coming years. The current level of incentive spending is as high as it’s been since 2010. With North American produc-tion scheduled to increase 9 percent through 2017, this raises the potential for incentive spending to grow even further if new-vehicle sales don’t live up to expectations. But, while incentives likely will continue to rise, NADA doesn’t expect spending (and cash discounts in particular, or the form of in-centive with the most direct and immediate impact on used-vehicle prices) to return to the destructive levels of the last decade—at least in the near-term.

Taking current market trends into consideration, NADA ex-pects used-vehicle prices to finish the year roughly on par with 2013, before dropping by 3.5 percent to 4 percent in 2015 and 2016. Notable, yes, but even with the cumulative 8 percent de-cline factored in, prices will still be well above levels recorded in the decade and half leading up to the last recession.

Toyota’s Jim Lentz to Keynote NADA/J.D. Power Western Automotive Conference in LA

Jim Lentz, CEO of Toyota North America, and Gorden Wagener, vice president of design for Daimler AG’s Mer-cedes-Benz division, are the featured keynote speakers at the 2014 Western Automotive Conference in Los Angeles in November.

The half-day conference, presented by the National Auto-mobile Dealers Association and J.D. Power, follows a group luncheon and includes a cross-section of speakers and panel discussions featuring automaker executives covering topi-cal industry issues with a special focus on the marketplace in Los Angeles and California.

The conference theme, “Connecting with Gen Y,” in-cludes presentations by John Humphrey, senior vice presi-dent of global automotive for J.D. Power, and Joe Vitale, global automobile industry leader for Deloitte Touche Tohmatsu Limited, and a panel session, “The Retailers Per-spective,” moderated by NADA President Peter Welch.

Hosted by the Los Angeles Auto Show and in partnership with Greater Los Angeles and California new-car dealer as-sociations, the conference will be held on Tuesday, Novem-ber 18, at the L.A. Hyatt Hotel Downtown—on the eve of press days at the auto show.

The conference closes with a networking reception.

NADA Rebuts Misguided New York Times Editorial on

Auto LendingThe Times’ editorial, “When a Car Loan Means Bankrupt-

cy,” is an unfair and unfounded attempt to portray the auto lending industry as a hotbed of deceptive practices and a harbinger of insolvency that could lead to another recession. Nothing could be further from the truth. Auto loan defaults are at historic lows (less than 1 percent in June).

Franchised new-car dealers deliver widely available and low-priced credit to a broad array of consumers, including those most in need of a car to start their way up the eco-nomic ladder.

Before demonizing such a valuable and consumer-friend-ly system, let’s check the facts:• During the Great Recession, auto loans were one of the

best performing asset classes. Auto loan default rates never went higher than 2.74 percent, versus first mortgage default rates that hit 5.67 percent.

• Extending credit for the purchase of a car – which rapidly depreciates in value – is not profitable unless it’s repaid, so putting consumers in car loans they can’t afford is not a sustainable business model.

• New-car dealerships provide a valuable financing option to consumers. Credit offered by new-car dealers routinely carries lower interest rates than credit offered by other lenders for similar borrowers.

• It’s illegal to misrepresent a borrower’s credit background, and a lender who does so is liable for any default.Enforcement of existing laws against a small minority of

bad players is in everyone’s interest, but smearing an entire industry for the misdeeds of a few is just plain wrong.

MSADA 23


MSADA NADA Update

NADA Convention Expands Expo to Meet Demand for Booth Space

The floor plan of the 2015 National Automobile Dealers Association Convention & Expo in San Francisco has been increased to accommodate a large number of requests for exhibit space.

“There has been an overwhelming response from compa-nies applying for booth space,” said Steve Pitt, NADA vice president of conventions and expositions. “So far, we’ve received more than 500 requests from companies that want to exhibit, and the expansion will allow us to accommodate most of them.”

The NADA Convention runs Thursday, January 22, to Sunday, January 25, at the Moscone Center.

The NADA Expo, which runs January 23-25, will now occupy more than 600,000 square feet of exhibit space in the lower levels of Moscone South, Moscone North, and Levels 1 and 2 of Moscone West.

“In addition, 10 out of 42 hotels sold out during the first week of attendee registration,” Pitt added.

The keynote speakers are former Florida Governor Jeb Bush and NADA Chairman Forrest McConnell, III, on Friday, January 23; Jay Leno and NADA Vice Chairman Bill Fox on Saturday, January 24; and inspirational speaker Beck Weathers on Sunday, January 25.

Considered the “Automotive Industry Event of the Year,” in addition to the Expo, the NADA Convention includes dealer-manufacturer franchise meetings, hundreds of edu-cational workshops for dealers and their managers and nu-merous networking events.

Online registration is now open. Dealers and their manag-ers are encouraged to make their hotel reservations as soon as possible because rooms will fill up quickly. Early bird registration ends September 12, which includes a $100 dis-count from the onsite rate. For more information or to regis-ter, visit www.nadaconvention.org.

Illinois Auto Dealers Association Selects NADART as its Preferred Retirement Plan

ProviderNADART and the Illinois Automobile Dealers Asso-

ciation (IADA) announced a new strategic partnership. As IADA’s preferred retirement plan provider, NADART will provide customized retirement plans to its member dealers and dealership employees.

“We are excited to partner with NADART,” said IADA President Peter Sander. “Together we share a commitment to all franchised car and truck dealers in Illinois. NADART will provide the services and support needed to and help employees save for a successful retirement.”

NADART, the retirement plan and financial services divi-

sion of the National Automobile Dealers Association, deliv-ers a selection of investment and employee benefit options specifically designed for dealer businesses.

“We look forward to providing our core retirement plan offerings to support IADA and its member dealers. NAD-ART’s retirement plan offerings are unique to the market-place,” said Betsy Piper/Bach, NADART vice president and chief operating officer.

Illinois joins 11 other state dealer associations, which in-clude Alabama, California, Colorado, Georgia, Louisiana, New York, North Carolina, Ohio, Oregon, Pennsylvania, and South Carolina that have recently selected NADART as their preferred retirement plan provider.

NADA: New-Car Sales Gain from Low Interest Rates, Stronger Housing Market, and

Rising EmploymentLow financing rates for auto loans, rising home values,

and an improving employment outlook are key factors con-tributing to a resurgence in new-car and light-truck sales through the first seven months of the year, says Steven Sza-kaly, chief economist for the National Automobile Dealers Association.

“Looking ahead, there is no sign that these fundamental drivers will change this year,” Szakaly said. “Many con-sumers have delayed making a new-car purchase, and with the improving economy, they are now looking at trading up their cars for something newer.”

Szakaly added that there is a lot of upside potential for

new-vehicle sales during the final five months of the year. Earlier this year, he forecasted 16.4 million new-vehicle sales for 2014, a 5.8 percent increase from 2013. Szakaly is predicting a rise in sales to 16.77 million new vehicles in 2015.

“We’ve had an agonizingly slow recovery that has in many ways been led by the automotive sector, but the over-all economy is finally picking up,” he said. “The housing market is stronger, gasoline prices have been relatively sta-ble, and interest rates – while rising recently – are still low compared to historical levels.”

“Five years since the recession, consumers are finally starting to believe the worst is over and are spending again.”

t

“Many consumers have delayed making a new-car purchase, and with

the improving economy, they are now looking at trading up...”

base in the Asia/Pacific region also held the largest share of light-vehicle sales in the U.S. at 45.9 percent, up from a share of 45.3 percent a year ago. The corresponding share held by companies based in North America was 45.5 percent, down from 45.7 per-cent a year ago, and that for the Europe-based companies was 8.6

24


overall There were 1.4 million light-vehicle sales in July 2014. This

sales figure was down 1.0 percent from June 2014, and it was up 9.1 percent from July 2013. July 2014 YTD light-vehicle sales amounted to 9.6 million, up 4.9 percent from a year ago. The

July 2014 Seasonally Adjusted Annual Rate (SAAR) for light-vehicle sales was 16.4 mil-lion. This month marked the fourth time for the SAAR to exceed 16.0 million, thus far, this year.

In July 2014 YTD figures, car sales held a market share of 47.8 percent with sales up 60 basis points from a year ago, while corre-sponding figures for light trucks put the light-truck share at 52.2 percent with sales up 9.1 percent from a year ago.

See Figure 1.

comPanieS/branDSCompanies with a geographic base in the

Asia/Pacific region held the largest market share of light-vehicle sales for July 2014 at 47.2 percent of the market. This was fol-lowed by companies based in North America (Detroit 3 and Tesla Motors) at 44.2 percent and then companies based in Europe at 8.6 percent.

In July 2014 YTD terms, companies with a

Review of New Light Vehicle Sales

NADA Market BeatProduced by NADA’s Industry Analysis Group • Angela Lisulo, Economist


25

Produced by NADA’s Industry Analysis Group • Angela Lisulo, Economist

MSADA

percent, down from 9.0 percent a year ago. All company categories by geographic bases –

North America, Asia/Pacific and Europe – expe-rienced growth in light-vehicle sales in July 2014 YTD figures from last July with the Asia/Pacific region in the lead with 6.1 percent growth.

From the Detroit 3 companies, Fiat Chrysler experienced the most growth in July 2014 YTD sales, from a year ago, at 13.3 percent, followed by General Motors at 3.5 percent; Ford experienced a contraction in sales over the same period with sales down 50 basis points.

From the group of Asia/Pacific-based compa-nies, Isuzu experienced the most growth in July 2014 YTD sales from last July at 81.6 percent, fol-lowed by Mitsubishi at 28.9 percent.

From the group of Europe-based companies, Audi experienced the most growth in July 2014 YTD sales from a year ago at 13.3 percent, followed by Jaguar Land Rover at 10.7 percent.

See Figures 2, 3 and 4.

SeGmentSThe cross utility vehicle

(CUV) segment held the largest share of July 2014 YTD sales at 26.6 percent; this was an increase from its corresponding share of 25.0 percent last year.

In terms of market share, this segment was followed by both the small car and the middle car segments, as they each held the same share of light-vehicle sales at 19.2 percent for July 2014 YTD sales. The share held by the small car segment was down from 19.7 percent a year ago, while that for the middle car segment was down from 20.4 percent a year ago.

Within the CUV segment, the middle CUV sub-segment was the largest sub-segment, holding 64.5 percent of July 2014 YTD CUV sales. Sales in this sub-segment were up 13.8 percent from last year.

Within the CUV segment, the small luxury CUV sub-segment held the least share of sales with 1.4 percent of July 2014 YTD CUV sales. Sales in this sub-segment were up 6.3 percent from a year ago.

All the segments apart from the middle car and large car segments experienced growth in YTD

NADA Market Beat26

sales since last year. The sport utility vehicle (SUV) segment experienced the most growth in July 2014 YTD light-vehicle sales, since last year, with a fig-ure of 12.1 percent.

See Figures 5 and 6.

Power SourceAs a power source, gaso-

line held a market share of 93.5 percent of July 2014 YTD light-vehicle sales, which was up slightly from its corresponding share a year ago at 93.4 percent.

The market share held by the diesel category rose to 2.9 percent, in YTD terms, from its value of 2.7 percent last year.

The market shares held by electrics and plug-in hybrids each grew compared to last year, in YTD terms, while those for hybrids and light vehicles powered by fuel cells and natural gas declined over the same period.

For the alternative power category, in July 2014, the following light vehicles were sold: 5,560 electrics, no units powered by fuel cell tech-nology, 44,575 hybrids, 67 units powered by natural gas, and 5,743 plug-in hybrids, amounting to 55,945 total light-vehicle sales.

See Figure 7.

moDelSThere were seven light trucks and eight cars in the list of 15

best-selling light vehicles for July 2014 YTD. The list comprised of models from the following companies: General Motors, Ford, Fiat Chrysler, Toyota, Honda and Nissan.

Fiat Chrysler and Nissan each contributed one model; the Fiat

Chrysler model was the Ram pickup (light truck), and the Nissan model was the Altima (car). The other companies each had models that fell into both the car and light-truck cat-egories.

From the list of the 15 best-selling light vehicles for July 2014 YTD, seven out of 15 models were from companies based in the Asia/Pacific region, while the rest were from the Detroit 3 companies.

See Figure 8. t


august 2014 msada auto dealer

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