august 2015 msada auto dealer

August 2015 • Vol. 27 No. 8

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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

THE NEXT GENERATION

Ta b l e o f C o n T e n T s

4 From the President: Going national

6 the roUndUP: Regulators always on the Prowl

8 LeGisLAtiVe sCoreCArd

9 troUBLeshootnG: Hiring and Religious accommodations

10 soUnd oFF: business is Good

11 deALer serViCes: The Car Culture Crisis

12 AUto oUtLooK

14 seCUritY: Third-Party Management in Dealerships

15 ACCoUntinG: Is Your Parts Inventory balance accurate?

16 Cover Story: The next Generation

21 neWs From Around the horn

26 nAdA mArKet BeAt

29 nAdA UPdAte: fair Credit and Consumer Competition Wins a Round

www.msada.org Massachusetts auto Dealer AUGUST 2015

The official publication of the Massachusetts State Automobile Dealers Association, Incs Ta f f D I R e C T o R YRobert 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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from the President

AUGUST 2015 Massachusetts auto Dealer www.msada.org

By Scott Dube MSADA President

A

Going National Never let Capitol Hill forget who drives our economy

s Summer fades into memory, we at MSADA are doing much more than stacking firewood and holing up for the Winter that seems to never go away. In September, your Association will have among the strongest presence of any state at the annual NADA Washington Conference. We take each year as an opportunity to refresh everyone down on Capitol Hill about the basics of the automotive retail business and how it affects each and every corner of their districts.

But despite the realities of our contribution to the economy remaining ever pres-ent, Congress and other federal agencies find ways to shift our burdens whichever way the wind is blowing. With each passing year, I see the general principle of free enterprise under attack throughout DC. Whether it’s the Consumer Finance Protec-tion Bureau or tax “reform” under consideration, these visits often feel like trying to talk someone off a ledge.

So we keep it simple. Our elevator pitch lays out the stakes, and we make sure our legislators understand that tax increases and regulatory changes may seem sensible while dreaming them up in their offices, but back in Massachusetts they have and will hit much differently. The small businesses that make up the fabric of communities from Cape Cod to the Berkshires are not the boogeymen that some of our legislators like to imagine when looking to slay dragons. Quite the opposite, when you think about it.

But we can never stop putting effort into making sure our representatives know who we are, what we do, and how vital our contribution is to their districts. Build-ing these relationships means that it becomes more difficult to write-off real busi-ness 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 our NADA Director Don Sudbay 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 dealers, 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 Washington, and that’s why we feel privileged to speak on your behalf.

While most of us are shifting our focus as the Summer season closes, it’s impor-tant to remember we all have the ability to play an important part in DC. Our state Political Action Committee is a great way to make a big impact, and so is writing or calling your representative 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.

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MSAdA BoArd Barnstable County

brad Tracy, Tracy VolkswagenBerkshire County

brian bedard, bedard brothers auto sales Bristol County

Richard Mastria, Mastria auto GroupEssex County

William Deluca III, Woodworth Motors John Hartman, Ira Motor Group

Franklin CountyJay Dillon, Dillon Chevrolet

Hampden CountyJeb balise, balise auto Group

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 braintreePlymouth County

Christine alicandro, Marty’s buick GMC IsuzuSuffolk County

Robert boch, expressway ToyotaWorcester County

steven sewell, Westboro Mitsubishisteve 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 Dube

Vice President, Chris Connolly, Jr.Treasurer, Jack Madden, Jr.

Clerk, Charles Tufankjian

MSADA4

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Albin, Randall & Bennett Barton D. Haag (207) 772-1981American Fidelity Assurance Co. Lennox Cornwall (304) 702-7399American Tire Distributors Pamela LaFleur (774) 307-0707 AutoAlert Don Corinna (505) 304-3040Auto/Mate Dealership Systems Troy Potter (877) 340-2677Bank 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, Tom Drislane (617) 929-8373Burns & Levinson LLP Paul Marshall Harris (617) 345-3854Cars.com Heidi Allen (312) 601-5376 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Sarah Macomber (781) 246-9400CVR John Alviggi (267) 419-3261DealerDoCx Brad Bass (978) 766-9000 Dealermine Inc. Karen Parmenter (800) 304-3341 x5179 DealerTrack Ernest Lattimer (516) 547-2242Downey & Company Paul McGovern (781) 849-3100EasyCare New England Inc. David DeCredico (800) 458-7070Ethos 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) 532-9320

Gulf State Financial Services Cliff Lang (713) 580-3143GW Marketing Services Gordon Wisbach (781) 899-8509 Huntington National Bank John J. Marchand (781) 326-0823The Institute For Business Excellence Bill Napolitano (508) 643-2299John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 KEEPS Corporation Darcy Silver (718) 309-6133Key Bank James Q. Moretti (781) 558-5132, Mark Flibotte (617) 385-6232KPA Michael Hurd (207) 400-6535Leader Auto Resources, Inc. Chuck August (518) 364-8723Lynnway Auto Auction Jim Lamb (781) 596-8500M & T Bank John Federici (508) 699-3576Management Developers, Inc. Dale Boch (617) 312-2100Micorp 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) 658-0004Northeast Dealer Services Jim Schaffer (781) 255-6399o’Connor & Drew, P.C. Kevin Carnes (617) 471-1120Performance Management Group, Inc. Mark Puccio (508) 393-1400Preowned Auto Logistics Anthony Parente (877) 542-1955 Quik Video Jack Gardner (617) 221-5502 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300Reflex Lighting Ping Weiner (617) 269-4510

Resources 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) 731-1222Santander Richard Anderson (401) 432-0749Schlossberg, 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) 591-2886Solect Energy Development Kristen Brandt (781) 733-0223 Southern Auto Auction Tom Munson (860) 292-7500Sprague Timothy Teevens (800) 828-9427SunTrust Bank Michael Walsh (617) 345-6567 Taino Consulting Group Herby Duverné (617) 797-9316Target Dealer Services Andrew Boli (508) 564-5050TD Auto Finance BethAnn Durepo (603) 490-9615TD Bank Michael M. Lefebvre (413) 748-8272TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Zurich American Insurance Company Steven Megee (774) 210-0092

MSADA ASSociAte MeMber Directory

Associate Members

One issue that we confront continually in our discussions with legislators and consumer-advo-cate agencies is the documentary preparation fee, a/k/a “the doc prep fee” or “doc fee”. Once again, a bill has been filed for the current legislative session to require new and used car dealers to cap their doc prep fees at $100. (A similar bill was filed in 2013, with a cap of $75; that bill saw no action in the last legislative session.) This issue also received con-siderable attention at our Annual Meeting in May as part of our legislative presentation.

In addition to the scrutiny the doc prep fee re-ceives from legislators, regulators, and the media, consumers and your own sales people generate confusion and questions about the fee. For ex-ample, over the course of the year how often have your salespeople heard the following: “Why are you charging me a documentary preparation fee, and why is it $(fill in the blank)?” More important-ly, what does your sales team tell your customers? That can be the really scary part of the story.

Every Motor Vehicle Purchase Contract (the “Purchase and Sale Agreement”, so-called) we’ve seen has a line earmarked for “Documentary Prep-aration Fee.” A doc prep fee is charged by dealers to offset the costs incurred by a dealer in process-ing various paperwork associated with a sale.

Although this is one item that really has not yet received much scrutiny from Massachusetts legal authorities, various state legislatures across the country have gone so far as to statutorily set a cap on the fee, to as low as $50. Also elsewhere, at-torneys general and plaintiff attorneys have com-menced legal action under their states’ consumer protection laws in response to absurdly high doc fees being unfair and deceptive business practices.

We now have heard that this issue is heating up

in Connecticut, based on one legislative leader’s bad experience at a dealership. We all need to re-member that commerce does not occur in a vacu-um, and that attorneys general and regulators all talk with each other and compare notes, especially at their annual conventions.

Dealers need to practice restraint and discretion when setting the fee so as to avoid prosecution or lawsuits under the Massachusetts Consumer Pro-tection Act (MGL Chapter 93A). The fee is allowed for cost recovery; it is not intended to be a “profit-making” component of the vehicle purchase.

The “Documentary Preparation Fee” can be passed on to the consumer but only if it is (1) part of the total purchase price advertised to the cus-tomer, and (2) a fee associated with legitimate costs that you incur. There is no maximum amount set in law that a dealer can charge for doc fees. How-ever, you must make sure that any doc fee charged to a customer has a reasonable relationship to the actual costs you incur in preparing the necessary documents for the customers, except for titling and preparation of finance-related documents, as ex-plained below.

Cost recovery consists of passing on to the cus-tomer the costs incurred in doing the following: for example, preparing a P&S, an appraisal document, odometer statements, insurance verifications, etc.; storing or archiving documents; and personnel and computer costs associated with these tasks.

Two items that may never be included in the doc prep fee: (1) preparation of the Retail Installment Sales Contract cannot be part of the fee’s calcu-lation as you would then need to wrap it into the APR calculation; and (2) if you are on the EVR system, you cannot include the EVR fee in the doc prep fee.

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the roundup

By Robert O’Koniewski, Esq. MSADA Executive Vice PresidentFollow us on Twitter - @MassAutoDealers

Regulators Always on the Prowl

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MSADA

Doc fees charged to customers should be uniform in amount. If you are aggregating your costs and apportioning these costs to each of your customers on a pro rata basis, excluding a customer will throw the for-mula off and strengthen a customer’s argu-ment that the fee is arbitrary. Be sure you can justify the fee’s total amount that you are charging a customer on the P&S. (You are not, however, required to put an item-ization on the P&S. It is sufficient to have an explanation available if you are asked by a customer to justify the doc fee.)

Dealers must also NEVER represent to customers that any portion of the doc prep fee is required by or remitted to the RMV or any other state agency.

Furthermore, dealers must note that the doc prep fee cannot have anything to do with the Title Preparation Fee. The Title Preparation Fee (which is on a separate line on the P&S) has been capped by the Legis-lature at $5. You cannot charge a titling fee higher than $5, nor can you roll your costs above the $5 into the doc prep fee. Any cost you incur in preparing or procuring title above the $5 amount CANNOT be passed on to the consumer other than through the gross profit earned on the vehicle.

Finally, as of January 2014, as a result of a ruling from the Massachusetts Depart-ment of Revenue, the doc prep fee is part of the taxable amount of the vehicle sale transaction.

In short, if you are charging a doc fee, be sure you can justify the amount and charge every customer the same amount. Do NOT charge anyone a title preparation fee higher than $5. Be sure the fee is part of the transaction’s sales taxable amount.

Customer Brochure: In order to as-sist you in explaining the need for the doc prep fee to your customers, your As-sociation has developed a brochure you can provide to them. A sample brochure can be obtained at the MSADA website [www.msada.org] with your member log-in. Once you log-in, go to “Members Only”, and then go to “Compliance Re-sources”, where you will find the link for the brochure. If you want to use this as

a template and print these for yourself, customized for your dealership, DO NOT CHANGE the content.

Vehicle Recall RemindersRecalls of new and used vehicles are not

going away any time soon. As regulators struggle how to best protect consumers in the face of manufacturer-issued recalls, federal and state legislators try to fill the void with new legislative proposals. We have discussed some of the federal bills in our previous writings. Now, a state senator has filed a bill, Senate 1989, which would require each Massachusetts inspection fa-cility, while performing the vehicle inspec-tion, to provide notice of any open manu-facturer recalls in a form and manner to be set by the registrar of motor vehicles.

Moving forward, keep these in mind:• You can enter a vehicle’s VIN in the

National Highway Traffic Safety Ad-ministration (NHTSA) website [www.safecar.gov] to determine if a vehicle is included in a recall campaign.

• Be up to date on the recall status of any vehicle you sell, including “stop sale” designations on any new and used in-ventory.

• Knowing the recall status of your ve-hicles will enable you to disclose un-remedied recalls to purchasers, and help avoid any 93A Consumer Protection Act complaints down the road.

• As we have advised generally in the past, in order to have the most informa-tion available on vehicles in your pos-session, in addition to checking vehicle histories, it would be prudent to check the recall status of used vehicles prior to taking them in trade or buying them.

• Finally, if there is a “stop sale” on a new vehicle, check with your manufacturer about any floor-plan assistance on those vehicles (see our January magazine for more info on this).

Economic Impact ReportOnce again we are asking you to assist

us in creating our annual Economic Im-pact Report, which we use with legislators

and opinion makers to demonstrate the real dollar and cents economic impact that dealers have on our Commonwealth and in their cities and towns. People not involved in our industry, including lawmakers, are consistently surprised by the fact that our dealers’ businesses account for almost 20 percent of the total retail economic activity in Massachusetts.

We recently sent the form to you. Please take a few minutes to complete the survey form for each of your dealerships and fax it to Auto Outlook at (610) 640-2907 as soon as possible. Your submitted survey is strictly confidential. We need returns from at least half our members for our survey to be accurate. We will be collecting the surveys until the end of September. Thank you for your assistance on this project.

Upcoming DealersEdge Webinars

Are you taking full advantage of our weekly educational and training seminars provided to you through our partnership with DealersEdge Management Training?

The live courses, and more than 100 pre-recorded webinars (and growing), are available to MSADA members either on an a la carte basis or through our annual season ticket.

If you have any questions, please don’t hesitate to contact DealersEdge at (800) 321-5312 or me at [email protected]. All MSADA-related DealersEdge information can be found at www.msada.dealersedge.com.

The upcoming schedule of webinars for the next several weeks is as follows:• September 17, 1pm EST – “Labor Law

Basics for Car Dealers: Four Things You Need to Know”, by presenter Charles Feuss;

• September 24, 1pm EST – “Five Things to Consider Before Changing Your DMS Provider”, by presenter Sandi Jerome;

• October 1, 1pm EST – “Five Keys to Avoiding Perils of Factory and Extend-ed Warranty Audits”, by presenter Rob Campbell.

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8 MSADA



9MSADA troubleshooting

As our member dealers and their man-agers are aware, the process of hiring new employees can be complicated. A misstep at any point in the process can leave the employer exposed to liability under sev-eral federal and state laws.

When making a hiring decision, the employer must be certain not to base the decision, even in part, on the applicant’s race, color, national origin and ancestry, age, sex, sexual orientation, religion, dis-ability, military status, or genetic infor-mation. As noted in the MSADA Wage and Hour guide, hiring decisions should be based on defensible objective factors such as employment experience, educa-tion, and prior job stability. Hiring deci-sions based on subjective factors can lead to discrimination lawsuits from unsuc-cessful job candidates.

A recent Supreme Court decision, Equal Employment Opportunity Com-mission (EEOC) v. Abercrombie & Fitch Stores, illustrates the perils of basing a hiring decision on a prohibited factor and should serve as a cautionary tale to em-ployers - especially retailers.

In Abercrombie, Samantha Elauf had applied for a salesperson position at the clothing retailer Abercrombie & Fitch. Unbeknownst to Ms. Elauf, the company prohibited its salespeople from wearing any headgear as part the company’s “look policy”. At the time of the interview, Ms. Elauf was wearing a hijab, or headscarf, in accordance with her Muslim faith.

The store manager that interviewed Ms. Elauf found that she was quali-

fied for the position, but feared that she would not be able to abide by the com-pany’s “look policy”. A regional man-ager agreed that the hijab would violate the “look policy”, and Ms. Elauf was not hired. Abercrombie claimed, and a lower court agreed, that their decision not to hire Ms. Elauf did not violate Title VII of the Civil Rights Act of 1964 (Title VII), which prohibits employment discrimina-tion based on religion, because the store did not know that Ms. Elauf’s hijab was worn for religious purposes and she had not asked for a religious accommodation.

In its ruling, the Supreme Court found that while the plaintiff could not show that Abercrombie had actual knowledge that the hijab was worn for religious pur-poses, the company had at least suspected that the headscarf was worn for religious purposes and had made the hiring deci-sion under the assumption that Ms. Elauf would need to continue to wear the hijab on the job.

In its decision in Abercrombie, the Court slightly altered the criteria for a plaintiff to succeed in an action under Title VII. The plaintiff must only show that the plaintiff’s need or potential need for an accommodation under Title VII was a motivating factor in the employ-er’s decision, not that the employer had knowledge of the plaintiff’s need for ac-commodation.

This decision is especially important in the context of hiring practices at deal-erships, where most employees interact with customers on a daily basis. The appearance of employees that interact with customers is a legitimate concern for dealers and managers, and cautious dealers are careful to note the dress and hygiene standards that these employees will be held to in the employee hand-book while allowing accommodations for those that seek them for legitimate purposes.

Most employers are aware of the vari-ous state and federal anti-discrimination laws that govern the workplace and are

careful to comply and provide reasonable accommodations when requested. What the Abercrombie decision shows is that employers can face exposure to liability for actions or non-actions that occur even before any accommodation has been re-quested.

Suppose a qualified male candidate applies for a position as a salesman at a dealership and mentions, unprompted, during the interview (perhaps while talk-ing about his hobbies) that he is active in the local Seventh Day Adventist church. The interviewer, looking to avoid talk of religion during the interview, does not ask whether this would impact the candidate’s ability to work at the dealer-ship on weekends. After the interview, the manager does some research on the candidate’s church and finds that the can-didate, if hired, would likely seek a reli-gious accommodation to avoid working on Saturdays. If the manager decides not to hire the candidate based on this rea-son, it is clear under Abercrombie that the store could face substantial liability al-though no accommodation was request-ed, and the interviewer did not have any actual knowledge that an accommodation would be required.

Importantly, Title VII and other job discrimination laws such as the Equal Pay Act, the Age Discrimination and Employment Act, the Americans with Disabilities Act and the Genetic Informa-tion Nondiscrimination Act apply to not just the hiring phase but all aspects of employment. Employers must keep these laws, and Abercrombie in mind, when making employee decisions on hiring, firing, and everything in between.

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If you require any additional infor-mation regarding prize promotions 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.

MSADA StAff Attorney

By Peter Brennan, Esq.

Hiring and Religious Accommodations

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MSADA

By Jack Gardner Quik Video

Wow, we find ourselves in a period of great opportunity and prosperity. The economy is in good health, banks are lending, and, most impor-tantly, customers are spend-ing. This truly is a time of plenty. But we all know that this will change eventually.

The only way to view the future is to look at the past. And the further you look back, the further you can see ahead. This begs the question: What are you doing to ensure that when the economy turns (and it will) that you have put into place the processes, tools, and systems that guarantees you come out of a down economy stronger than you went into it?

What are you doing to ensure the customer that buys a car or truck from you today will return and buy from you in two, three, four, or five years’ time?

The hard work is done. You sold a new or used car or truck to Mr and Mrs Jones today. They are now your customer, and it’s up to you to keep them. It’s a lot easier and cheaper to re-tain a customer than it is to advertise and get a new one.

OK, so you sold them a vehicle and it was a good experience for the customer. Great, we started on the right foot, but you cannot depend on this good experience alone to bring them back in years to come.

The easiest way for you to ‘wow’ the customer during their period of ownership is in the service department. I am so tired of hearing owners and management referring to their service de-partment as the back end.Wake up, people, your service depart-ment is not the back end. It is the backbone of your dealership – and as your service department goes, so goes your business.

What are the easy and inexpensive ways to leave your service customers with a warm and fuzzy feeling? The first is knowledgeable and friendly service staff. There is nothing worse than a service advisor making the customer feel like they have interrupted the advisor’s morning, or worse, making the customer feel stupid. Another is a complimentary wash and vacuum, it’s not that expensive but has a great impact.

Quick Lane: Almost all manufactures now require dealers to provide some form of quick lane. They do this because that’s what surveys say customers want, but it’s extremely important that dealers don’t get caught up in the time factor alone. Yes,

it’s important that this service be provided in a timely manner, but not at the expense of providing subpar service. You are still required to carry out the MPI, and not just on cars with over 30,000 miles on them. Sure, this is most likely where some additional work will be identified, but what about the customer that has only five thousand miles on their vehicle? Surely they would like to hear that their vehicle is in perfect working order.

Don’t allow your service department to become Bad News

Bobby. Don’t just tell customers about their problems, but also about the good things on their car. If possible, show them, use photos. Better yet, use videos to reinforce this. Remember, not everybody is knowledgeable about the workings of a car. They don’t know what a CV boot is, or what it does, and certainly won’t pay to have it replaced no matter how well your advi-sors explain it to them in person or over the phone. You need to show them. Think about it: when your kids were small you didn’t tell them how to do something, you showed them.

Warranty: Free has no value, so when you tell your cus-tomer that you replaced some part under warranty, it has little or no impact. The customer feels that you just did your job. Add value to warranty work by showing the customer exactly what you did, and by doing so the customer will appreciate your diligence and professionalism.

In closing, now is the time to put in place the programs and processes that will ensure your continued success. Don’t wait to make your service department the best it can be, make it great today. Exceed expectations and by doing so you will see an increase in referrals, service, and sales.

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Jack Gardner is COO of Quik Video. He can be reached at (617) 221-5502 or [email protected].

sound OffBusiness is Good

A customer is 4 times more likely to defect to a competitor if the problem is service-related than price-or product-related. – Bain & Company

The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20%. – Marketing Metrics.

A 2% increase in customer retention has the same effect as decreasing costs by 10%. – Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy.

55% of customers would pay extra to guarantee a better service. – Defaqto research.

MSADA

MSADA dealer services


11

We have a culture crisis on our hands. For too long, many in the industry have held onto fond memories of the old days – days when a different type of salesperson reported to a different type of sales manag-er who sold to a different type of customer. Times have changed, and the industry also has to change.

Today’s consumers are not simply buy-ing products; they are buying experiences. From clothes to cuisine, from coffee to cars, customers are looking for more than something to spend their money on – they are looking for an experience!

The Age of InformationInformation has changed everything.

Years ago, a buyer’s research was con-ducted in-person, face-to-face with a sales-person. While full-color brochures and informational magazines were certainly a component of the research, it was the ex-perience of interacting with a salesperson during that research that made the differ-ence in what and where they chose to pur-chase.

Technology has put the world in our hands, almost literally. Information is available like never before. Buyers can experience the vehicles on-line, building the perfect model to specification before

taking a virtual test drive, even negotiating (effectively) and applying for financing. The detachment that today’s buyers have from the dealership means that the prod-ucts we sell – vehicles, financing, service, parts, etc. – have the potential to be com-moditized.

Today’s buyers no longer look to deal-erships for their research information. In fact, most buyers probably know the vehi-cles better than the salespeople. They visit the dealership with the intent of buying. In many cases the salesperson is not influ-encing if or what is purchased as much as where it is purchased. This means that the buying experience is more important now than it has ever been before.

The Experience EconomyThe experience a customer has while

buying, financing, or servicing an automo-bile is rooted in the dealership’s culture. We have to be focused on providing an experience that not only satisfies our cus-tomers, it compels them to return again and again.

Creating Your CultureCultures are shaped and developed over

time. Every choice, every action that is made influences what others see, sense,

and feel about the dealership – employees and customers alike. Culture is about who you are as much as what you do.

Recognizing that your dealership is in need of a cultural shift doesn’t mean that your dealership is experiencing a culture crisis; it simply means that you are looking at strengthening your business daily, one decision at a time. These three steps will help ensure your team is operating with singleness of purpose:1) Cast a Visionary Experience

Communicate a vision for the business that is purposed and directed. Your team should be focused and understand the com-mitment that will bring it into reality.2) Define Company Values

Insist that your leadership lead in a way that affirms your company values. There is no quicker way to degrade culture than when your leaders say one thing and do an-other. You want people on your team that live it not just talk it!3) Align the Motivation

It is important to understand that while people need individual recognition, most also desire to be part of a winning team (very few people want to be the best player on the worst team). Create a culture that motivates the individual to perform their best while contributing to the success of the team and the company. Reward per-formance based on individual production, but find ways to incentivize team achieve-ments and company objectives as well.

The Cycle of SatisfactionWhen your team is aligned within one

vision and properly motivated by a single mission, you create a culture that results in a cycle of satisfaction for both your cus-tomers and your employees. Customers will have a truly exceptional and satisfac-tory experience because their expectations were exceeded during the sale, financing, and servicing of their car by employees who take pride being part of a winning team.

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The Car Culture Crisis

rob SneeD iS A DevelopMent rep AnD MotivAtor for ethoS Group ConSultinG ServiCeS AnD the Author of vAriouS ArtiCleS in the AutoMotive inDuStry. ethoS Group proviDeS frAnChiSeD AutoMotive DeAlerShipS with An inteGrAteD proGrAM of reSultS-Driven inCoMe-Develop-Ment ServiCeS, CoMprehenSive trAininG, robuSt reCruitinG AnD inDuStry-leADinG proDuCtS.

By Rob Sneed

“Today’s buyers no longer look to dealerships for their research information. In

fact, most buyers probably know

the vehicles better than the

salespeople.”


AUtO OUtLOOK12 AUtO OUtLOOK


MSADA 13

14


MSADAsecurity

Since most automobile dealerships con-duct business with third-party vendors, the importance of vendor management surrounding many risks that are involved with third-party relationships is crucial in keeping dealerships secure and protected. Third-party management can include es-tablishing personnel security requirements such as roles and responsibilities for third-party vendors; requiring third-party ven-dors to comply with personnel security policies and procedures as defined by the dealership; documenting third-party secu-rity requirements; actively monitored cre-dentials; and monitoring third-party com-pliance.

As a growing number of dealerships rely more on third-parties, it is essential that management is fully aware of the degree of IT risk that comes with each third party relationship and the proper controls sur-rounding third-party management.

When dealing with third-parties, it’s im-portant to understand the nature of third-party risk management. Extensive under-standing of your network and the data that flows through it enables transparency and trust between your security personnel and vendors incorporated in your network. As-sessing the risks associated with utilizing vendors is an ongoing process that should

be monitored for the duration of the ven-dor’s contract. Assessing and monitoring risk should be the first approach to man-aging third-parties, and a third-party risk categorization matrix should be produced.

Essential in determining risk is also hav-ing a firm understanding on what you are protecting, where your critical data and in-formation assets are located, and how your data and is managed and flows through your network. Defining your current state can help you understand the data flows within your network.

A process inventory should also be con-ducted to identify what component vendors will have access to and also what present and future security governance needs may be. This will help determine the necessary controls surrounding vendor management. In other words, once your network is un-derstood and your data and critical infor-mation assets are identified, you can imple-ment a comprehensive set of safeguards surrounding it.

It is also important to understand that it is the dealership’s responsibility to teach employees and vendors their security roles and responsibilities. Not only should your dealership have strong policies surround-ing information security, employees and vendors should be explicitly aware of their roles and the security requirements. Insti-tuting security should not only be compli-ance driven, it should be well thought out in order to best protect customers, data, and other critical assets. Security awareness can be incorporated in your holistic risk management program.

Vendor awareness originates at the con-tractual level agreement and expands from there depending on the maturity of the se-curity program in the dealership. Dealer-ship management should champion securi-ty efforts and communicate a firm security culture to its vendors, and also have vendor senior officer communication. Communi-cations and third-party management is a shared initiative, and senor officials should touch base frequently. Often, a simple ex-planation on why policies and controls are in place is enough to prevent vendors from

circumventing your management frame-work.

Prevention isn’t always enough. Dealer-ships also should proactively plan for in-cidents surrounding third-party data com-promises, especially concerning client pay-ment information or personal information compromises. The same diligence applied to fire and evacuation plans should be put towards managing incidents surrounding sensitive data outsourced or exposed to third-parties. A comprehensive incident response plan should be tested and also provide a strong contractual service level agreement for vendors to report incidents to the dealership. It is important to influ-ence or even require third-parties to ac-tively participate in your incident response planning and efforts to detect and share in-formation regarding cyber incidents.

Overall, there are many steps that can be taken to be sure that third-party ven-dors are compliant with the dealership’s standards to provide high quality services to customers and avoid risk of regulatory action, financial loss, litigation, and reputa-tion damages. Completing due diligence on third-party vendors is a key factor in help-ing dealerships mitigate risks. Before con-tracting with third-parties, dealerships need to examine a number of factors including cost versus value, contract review, com-pliance review, service and performance levels, and audit of controls. By ensuring that the dealership is getting what they paid for, vendors need to be compliant, meeting expectations, and have the appropriate con-trols to address risk.

Depending on the maturity of your deal-ership and the cost of implementing proper security controls, it might also be beneficial to have cyber security insurance, as deal-erships do not want to be damaged by a significant security issue at a third-party vendor company. However, if dealerships utilize proper planning, due diligence, comprehensive service agreements, ongo-ing security maintenance and governance, and documentation and reporting, risk can be substantially limited.

t

Third-Party Management in Dealerships

Herby Duverné Principal & CEO of Taino Consulting [email protected]

Matthew Riley Operations Manager at Taino Consulting [email protected]

It is important to institute controls to en-sure that your parts inventory balance as reflected on your general ledger is accu-rate. Dealers should strongly consider hir-ing an outside service company to perform an annual parts inventory, especially if an inventory has not been done in several years. The cost is generally 1.5 to 2 percent of the dollar value of the inventory. With

dealer’s profits soaring in recent years, this should not be considered an unreasonable expense.

We have seen cases in which a dealer has incurred the cost of having the inven-tory done, but the office does not perform a reconciliation to the general ledger. Deal-ers must insist that the office perform a detail reconciliation which considers work in process, returns, and unrecorded pur-

chases. Before the inventory is performed, the office and parts department must meet to ensure that all parts inventory purchases have be entered and that the work in pro-cess is accurate.

The variance between the pad and the general ledger should be under 5 percent

of the inventory. A common reason for the variance is the part’s price appreciation that is recorded on the pad. The accounting de-partment should be posting the price appre-ciation/depreciation on a monthly basis.

One way of avoiding large discrepan-cies discovered during an inventory is to perform monthly reconciliations and track monthly differences. This is done by reconciling the month-end parts pad bal-

ance to the general ledger. We recommend that the reconciliation be provided to the dealer/general manager each month. If the differences are significant in a month, the accounting staff will research the monthly activity to identity the problem. This will prevent the discrepancy from growing, re-sulting in a large difference at the time of the inventory.

Dealers that perform monthly reconcili-ations and an annual parts inventory are less likely to incur parts theft. The parts department is one of the areas of your store most susceptible to theft. Performing an annual parts inventory will ensure that the amounts recorded on the pad are ac-curate and will alert your staff that you are closely monitoring the quantities in your parts department.

Internal controls will also be improved by performing “surprise” bin count checks by personnel other than parts employees. Items most susceptible to theft should be the focus of your bin counts. For example, dealers have been stocking larger quanti-ties of tires in recent years; therefore, in-ventories of tires should be performed at least monthly.

t

Is Your Parts Inventory Balance Accurate?A pair of fresh eyes can catch hidden issues

By Paul McGovernDowney & Company, LLP

pAul MCGovern hAS over 30 yeArS of pub-liC ACCountinG experienCe. he SpeCiAlizeS in ACCountinG AnD tAxAtion of AutoMobile DeAlerShipS, AnD he iS A MeMber of the nA-tionAl AlliAnCe of Auto DeAler ADviSorS. if you hAve Any queStionS reGArDinG thiS Ar-tiCle, pleASe ContACt pAul At [email protected] or 800-849-6022.

MSADA 15


Accounting

“Dealers that perform monthly reconciliations

and an annual parts inventory are less likely to

incur parts theft.”

16 Cover Story


GENERATION“I wouldn’t even know what else to do — you’re just addicted to it.”

-- Tommy Cosenzi

Cover Story 17


MSADA

GENERATIONTHE NEXT

By Catherine MacDonald

The college town of Northampton, tucked away in the Pioneer Valley, has long been known as a quaint and neighborly spot where students, re-tirees, and farmers work to create a community that melds together into a unique whole.

One aspect that wasn’t unique, however, was the commercial corri-dor that leads into town. King Street had long struggled in a post-industrial era when operations such as a peri-scope manufacturer picked up and left town. Among the auto dealers work-ing to revitalize the strip, TommyCar Auto Group stands out with gleaming new Hyundai and Volkswagen stores that opened in 2014.

“Their investment on King Street is not only significant, what they’ve built are really showpiece auto dealerships,” said Suzanne Beck, executive director of the Greater Northampton Chamber of Commerce. “They’ve carried it through right from purchasing the properties to the grand openings, and the nice thing is it continues. They really pay attention to visibility.”

While TommyCar’s business leadership in the Pioneer Valley is an accomplishment in itself, the young brother and sister duo that runs the company, Carla and Tommy Cosenzi, are six years into a journey that began as perseverance in the face of tragedy followed by unexpected challenges.

Hard NewsLike many dealers’ children, some

of Tommy and Carla Cosenzi’s earli-est memories were etched at their fa-ther’s dealerships. By the time they were born, Tommy Cosenzi Sr. had established a name as a prominent dealer and community member in Western Massachusetts. Among Car-la’s first memories are the Christmas parties he would host for underprivi-leged kids from the area.

“We helped as we got a little bit older,” she said. “We helped wash cars, and I remember filing in the of-fice and little tasks he could keep us busy doing.”

Tommy Sr. had worked for de-cades acquiring property and com-peting for market share. He had

hoped to one day pass the business to his children and retire. In 2007, however, his plan took an unexpected turn. A brain can-cer diagnosis left him with limited time, and his children rallied behind the mission of carrying on after he passed.

Both had spent time working in the dealerships, but figured they had years before thinking about where they fit into the business permanently. Carla had graduated from both Colum-bia and the NADA Dealer Academy. Tommy had been studying in Hawaii. Their focus sharpened quickly.

“It was a really scary situation,” Carla recalls. “We took the two-and-a-half years he was sick and just sponged off him ev-

After losing their father, two twenty-something siblings decided to run his dealerships. Years later, they reflect on transition and success.

ery day -- learning how to manage managers, how to be an owner.”

The most important lesson they learned, she said, is how important an owner’s employees are. It would take teamwork

from across the company to make the business successful with-out their father. But they never considered not going forward after losing him in 2009. The pair immediately got to work.

“It was great distraction for us,” Carla said. “It kind of felt like we were paying tribute at the same time. We just immedi-ately dug in.”

Taking ChargeThe first lesson the pair learned: Working at a dealership can

be difficult, but running one comes with all the risk on their shoulders.

“The biggest challenge where Tommy and I both struggled: We weren’t just the owners son and daughter, we were the own-

ers. It’s a tough transition to have that respect, (employees) now have to look up to you and respect you.”

“Some of these people had kids our age,” Carla adds. “That in itself was our biggest obstacle.”

One thing that hasn’t been a struggle, her brother says, is getting along at work. The shared experi-ence brought the siblings together.

“We get along really well,” Tom-my said. “We both know what the other one’s strengths are; we stay out of each other’s way.”

“Our Dad being sick made us really close,” he adds. “We don’t fight over the things that aren’t important. We really stick

together.”The roles emerged quickly. Carla became the spokeswoman,

appearing in TV ads and working to become a presence locally. Tommy stayed behind the scenes, working with her on strategy. Working with Hyundai, Buick, and Nissan franchises, they be-gan repositioning them and aiming for a coveted VW franchise. The pair made an aggressive pitch for establishing a store in Northampton.

“You have that really wholesome, earthy feel to it,” Carla said of the town. “This is kind of the small city around here. It’s a great market. There’s the five colleges, it’s a really great demographic for business, and it’s a stable economy.”

After winning the VW franchise and banking on King Street as a location, they also moved their Hyundai store from Green-field. The two new stores opened in 2014, with a cost of $13 million. Both are doing great business, Carla says, and VW has been happy with the results so far. But both keep the desire for growth in perspective.

“It’s not about the number; it’s about the opportunity to have well run stores that are still manageable for us,” she said. “That doesn’t mean we don’t want to grow; it just means it has to be the right time. We care more about having really well run deal-erships and happy employees.”

Giving Back After taking over the business, Carla and Tommy spent time

thinking about how to best honor their father’s memory around the community. What’s emerged since is a network of chari-table donations and events targeting both education and cancer.

The Thomas E. Cosenzi Driving for the Cure golf event is now in its seventh year, having raised nearly $500,000. Tom-myCar also donates $1,000 to local high school seniors attend-ing college each year.

The Next Generation


18

“Some of these people had kids our age. That in

itself was our biggest

obstacle.” — Carla Cosenzi

“We have this opportunity because of my Dad,” Carla said. “He always did those Christmas parties … He always used his success to give back to the community. And it’s become an im-portant part of our success.”

The golf event, she says, is about more than raising money. “It’s a great day to celebrate him. It’s a day we use in remem-brance.”

Looking ForwardAs the pair continues to gain experience in managing opera-

tions at the dealerships, they also have begun to seek out new opportunities as well.

When it comes to the longer term, both say they’re more than happy with the path laid out for them following their father’s passing.

“I can see doing it for another 20 years, probably forever,” Tommy said. “I wouldn’t

even know what else to do -- you’re just addicted to it.”For her part, Carla says their unexpected thrust into the driv-

er’s seat has helped them overcome what she says is a genera-tion gap in work ethic. “This business requires so much dedica-tion and hours. It will be interesting to see the next generation as it comes up,” she said. “We got thrown into the situation. It will be interesting to see as dealers’ sons and daughters take it over at their own pace, how it will change.”

In the meantime, Carla says it’s the day-to-day interactions that give her perspective. “People come in and say ‘I remember buying a car from your Dad.’ That’s what we do this for.”

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MSADA

“Our Dad being sick made us really close. We don’t fight over the things that aren’t important.”

– Tommy Cosenzi

MSADA

JULY 2015 Massachusetts auto Dealer www.msada.org

20

FRAMINGHAM

Herb Connolly Classic raises Funds for Cancer Center

The Connolly Auto Group hosted the Herb Connolly Charity Classic in August, an event held to raise funds for Mount Auburn Hospital’s cancer treatment efforts at the Hoffman Breast Center.

More than $200,000 has been raised over the course of the tour-nament’s 16 years, with more than $100,000 going to Mount Au-burn Hospital, where Kathy Connolly was treated at the Hoffman Breast Center before she succumbed in 2008.

“It was probably one of our most successful years,” Chris Con-nolly (pictured on the course) said after the event. “We raised about $15,000 for Mount Auburn, which is great.”

Sponors included: Samet, Connolly Insurance, Chris Varoch, ServPro, Enterprise, Jack Madden Ford, Janez Design, Toyota of Braintree, AutoTrader, Architectural Glaring, Prime Motor Group, Sunnyside Acura, Acura of Peabody, Adesa Boston, National Sign

Company, Marshall Karp, JP Morgan Chase, AutoParts Interna-tional, Sudbay Motors, and MetroWest Subaru.


from Around the HornNEWS from Around the HornNEWS

21

Photo courtesy Cummings Photography


from Around the HornNEWS22

READING

Lyon-Waugh donates Jaguar Weekend Experience for Charity

The David K. Johnson Foundation recently celebrated its 15th year raising money for Alzheimer’s research and help-ing affected families. To date, the Reading-based foundation has contributed over $280,000 towards their causes, with Lyon-Waugh Auto Group lending a hand at the tournament.

The foundation’s 15th Annual Golf Tournament at Four Oaks Country Club held in August featured a Jaguar on the course, with the closest shot earning a weekend with the vehicle.

“Our golf tournament is our largest fundraiser of the year,” said Co-Founder Gregg Johnson. “Everyone who attends leaves having had a fun/memorable experience while supporting a great cause.”

All proceeds raised by The DKJ Foundation is donated to the Cure Alzheimer’s Fund, Sanborn Place, Home Care & Day Services, and the David and Susan Johnson Me-morial Scholarship Fund.

SOMERVILLE

Herb Chambers renews Jimmy Fund Push

The Herb Chambers Companies matched customers’ gifts to the Jimmy Fund through the end of August, with a cap of $175,000 total.

The arrangement, according to a news release from the company, is part of a larger arrangement with the Dana-Farber Cancer Institute. Gifts can be made at www.herb-chambers.com or at any of the Herb Chambers dealer-ships in Massachusetts and Rhode Island.

BEVERLY

Kelly Auto Group Adds Ford dealership

The Kelly Automotive Group marked its 50th anniver-sary by purchasing Thomas Ford, marking the 12th dealer-ship the business now owns.

“We’re keeping all the Thomas employees and adding some more,” Brian Heney, Kelly’s director of operations, told Boston.com. “We have some good plans for growth.”

Heney said the dealership had long been on the group’s wishlist. “Our president, Brian Kelly Sr., has been trying to buy this dealership for 20 years,” Heney says.

Kelly Ford sits less than a mile away from the site of the group’s Rantoul street location where Kelly’s father, Ro-land D. Kelly, opened a used-car lot in 1965.

MSADA 23


NORTHAMPTON

dEP requirements Keep dealership Lot Empty

The site of a former Northampton Honda dealership has been vacant for a decade, and rehabilitating has been dif-ficult since the Massachusetts DEP put restrictions on the site in 2006 for soil contamination.

The property was used for auto repairs and sales since 1946. Between 1928 and 1951 portions of the property housed businesses, including a machine shop, lumber, coal, and a junk yard. A northern parcel has been leased by MassElectric as recent as 2001.

The Northampton Honda Dealership was sold and relo-cated further down the road as Lia Honda. The buildings were demolished last summer due to safety issues.

Marianna Gregersen of Marianne’s Boutique told 22News, “Looking at this vacant lot. People dump things there, people park there for hours. This side of town is a little bit quiet, and I think it really needs to tie into the downtown Northampton area somehow.”

A mixed use retail office development was approved for the site in 2007 but was never constructed in part due to the site’s environmental issues. The property has been as-sessed at $984,000.

Country Hyundai and Northampton Volkswagen recently pro-vided a used vehicle to the Northampton Fire Department for rescue training. Firefighters spend countless hours training and honing their skills to ensure they are prepared for any emergen-cy. The vehicle will be put to work in upcoming training exer-cises in which firefighters will utilize their extrication equipment on the vehicles, also known as the Hurst Tool or the Jaws of Life.

“Ensuring firefighters have the latest training is critical to the safety of this community,” said Carla Cosenzi, President of Country Hyundai and Northampton Volkswagen. “We’re proud to be able to help in such a meaningful way, knowing so many people will ultimately benefit.”

“We really want to thank Country Hyundai and Northampton Volkswagen for the generous contribution,” said Bill Schuetze, Captain Training Officer for the Northampton Fire Department. “We will get a lot of use out of this car to train our firefighters on rescue efforts.”

Country Hyundai and Northampton Volkswagen hope to have an ongoing relationship with the Northampton Fire Department and in the future be able to offer more vehicles.

NORTHAMPTON

TommyCar Auto Group Provides Vehicle to Assist Northampton Fire department

left to Right- Michael Paquette (General sales Manager of Country Hyundai), Carla Cosenzi (President of TommyCar auto Group) and Marcus lynch (General Manager of northampton Volkswagen).

24


from Around the HornNEWS MSADA

After getting pitches from three dealerships, town officials in Dartmouth have decided the most cost-effective and green ride for municipal vehicles is the BMW i3.

Though the 2014 model of the luxury i3 generally sells for about $39,435, BMW was one of only two brands available through a leasing program, mak-ing the cost of the vehicle to the city far cheaper. By leasing the BMWs, Dartmouth qualifies for a federal incentive program, which along with state assistance could knock the price per car down to about $800 per year.

“We’re always out there looking for programs that provide an advantage for the town in terms of saving energy or looking at renewable energy or conserving it,” town administrator David Cressman told The Bos-ton Globe.

The first shipment of the three 2014 BMW i3 ve-hicles arrived in August from BMW Gallery of Nor-wood. Two were given to the Department of Public Works, and one was given to the Conservation Commission. Cressman said they plan to order an additional three cars for use by the police, Building Department, and Council on Aging.

Dartmouth is one of several cities and towns in Massachusetts

taking part in the state’s Electric Vehicle Incentive Program, which will provide Dartmouth with subsidies for the electric cars and the three charging stations to be built at the town hall, water department, and public works administration building.

senior DPW engineer Tim barber, administrative analyst evan Melillo, and en-vironmental Affairs Coordinator Mike O’Reilly stand by one of the new electric bMWs.

DARTMOUTH

Town Officials Get Brand-New BMWs

www.msada.org Massachusetts auto Dealer JULY 2015


26

MSADA

nAdA Market BeatProduced by Steven Szakaly, NADA Chief Economist

Autos have beaten all expectations and continue to gain strength in an otherwise mixed economy. How long can it last? Expect this strong auto market to continue into 2016, though such numbers

can’t continue forever. Our outlook—revised in June to 17.17 mil-lion for 2015—remains unchanged, and we expect a strong finish to 2015.

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MSADA

nAdA Market BeatProduced by Steven Szakaly, NADA Chief Economist

MSADA 27

27nAdA Update By Don Sudbay

Our Past Chairman Forrest McConnell’s comments at the end of this article should give us all pause. The fuel econ-omy standards that our government has mandated for 2015 call for a fleet average of over 50 mpg! With gas heading toward two dollars a gallon and the long term outlook for low oil prices should make us all concerned that the auto-makers are building what our customers want and can af-ford. NADA is on top of this issue and will be looking out for the best interests of dealers and our customers when the standards are reviewed in two years.

A Special Note from NADA Chairman Bill Fox“On one side of the arena is the Reforming CFPB Indirect

Auto Financing Guidance Act (H.R. 1737 for short.) This is where NADA and its allies stand, working hard to preserve dealer-assisted financing.

“This grassroots battle started at the steps of the Capitol. And members of Congress have listened to the earnest call from NADA, industry partners, and franchised dealers ev-erywhere. The U.S. House Financial Services Committee responded by passing a bill that would rescind the Consum-er Financial Protection Bureau’s flawed auto finance guid-ance; a guidance that threatens to eliminate a customer’s ability to get a discount in the showroom.

“H.R. 1737, introduced this April by Reps. Frank Guinta (R-N.H.) and Ed Perlmutter (D-Colorado), passed in com-mittee by an overwhelming 47-10 vote last month. This vote represents countless hours of hard work and dedica-tion, dozens of meetings and phone calls between the in-dustry and Congress, and an ingrained commitment to do what’s best for consumers nationwide.

“On the other side of the arena stands the CFPB.“Since 2013, the CFPB has led a crusade to alter the auto

finance market in a way that would make it less competitive and more costly for consumers. For the past two years, the CFPB has pressured auto lenders to eliminate a dealer’s dis-cretion to discount auto financing for customers. It’s 2015 and NADA has shown empirically that the CFPB’s policy will harm car buyers, because it eliminates the competition that brings lower rates for customers. Taking away a cus-

tomer’s right to find the best loan possible, or the right to negotiate, or the right to find a better deal, is not what Wash-ington should be doing.

“NADA and its members make it clear that we also sup-port the nation’s fair lending laws and the commitment of federal agencies to ensure fairness. But the CFPB’s plays are misguided and its policies are wrong.

“The progress of H.R. 1737 demonstrates our elected of-ficials understand this important dynamic and are willing to halt the CFPB’s harmful actions on a supremely successful market. The bill places some necessary safeguards on the agency, including:• Giving notice and a public comment period before issuing

a future auto guidance; • Making critical information public, such as data and meth-

odologies;• Consulting with the Federal Trade Commission, the De-

partment of Justice, and the Board of Governors of the Federal Reserve System; and

• Studying the costs and impacts on consumers for any fu-ture auto guidance.“Most importantly, H.R. 1737 will help ensure that any

future regulation is based on an accurate analysis that truly acts on the best interests of consumers.

“As the bill now moves to the U.S. House of Represen-tatives for consideration, NADA salutes Reps. Guinta and Perlmutter for their efforts on behalf of our industry and our customers. We greatly appreciate their bipartisan leadership and steadfast commitment to fairness and competition.

“And with the resounding vote of 47-10, NADA appreci-ates our industry allies who have stood with us in this arena to protect the right of consumers to find the best credit pos-sible.”

NADA Announces Keynote Speakers for 2016 Convention & Expo in Las Vegas

The National Automobile Dealers Association announced its keynote speakers for the 2016 NADA Convention and Expo in Las Vegas. The speakers are:• Friday, April 1: Jeff Foxworthy, comedian and entertainer;

and 2015 NADA Chairman Bill Fox;• Saturday, April 2: Heading into a presidential election,

Mike Allen, Politico’s chief White House correspondent, will moderate a panel session with Karl Rove, former dep-uty chief of staff and senior advisor to President George W. Bush, and Howard Dean, former governor of Vermont and former chairman of the Democratic National Commit-tee; and incoming NADA Chairman Jeff Carlson;

• Sunday, April 3: Peyton Manning, quarterback for the Denver Broncos, will provide an inspirational address.

Fair Credit and Consumer Competition Wins a Round

Don SuDbay, PreSiDent of SuDbay automotive GrouP, rePreSentS mSaDa memberS on the naDa boarD of DirectorS. he welcomeS your queStionS anD concernS ([email protected]).

29


nAdA UpdateThe NADA convention, which runs Thursday, March 31,

through Sunday, April 3, includes dealer-manufacturer fran-chise meetings, hundreds of educational workshop sessions for dealers and their managers, several hundred exhibitors on the expo floor, and numerous networking events.

The American Truck Dealers (ATD) Convention & Expo runs concurrently with the NADA convention at the Las Ve-gas Convention Center.

Registration, which includes hotel selections, opens on Monday, October 5, with an early-bird discount of $100. For more information or to register, visit www.nadaconven-tion.org.

ATD Chairman: Fuel Economy/GHG Rules Must Encourage New Truck/Equipment Sales

to Achieve Environmental BenefitsEric Jorgensen, chairman of the American Truck Deal-

ers (ATD), testified in August at a government hearing on the Obama administration’s Phase 2 rulemaking proposal to increase fuel economy and greenhouse gas (GHG) stan-dards for medium- and heavy-duty vehicles, engines, and light-duty work trucks and to establish new truck trailer mandates.

In testimony in Chicago at a joint U.S. Environmental Protection Agency and the Department of Transportation’s National Highway Traffic Safety Administration hearing, Jorgensen explained “why Phase 2 truck and engine effi-ciency standards must be affordable and not compromise performance, why the standards must be uniform nation-wide and why doing the rule right is more important than doing it quickly.”

“Cleaner/greener new equipment will do nothing for the environment or for energy security until it is bought and placed into service, more often than not replacing older, less efficient equipment,” said Jorgensen, president of JX En-terprises, Inc., a multi-state medium- and heavy-duty truck dealership group located in Hartland, Wisconsin, which sells Peterbilt, Volvo, and Hino trucks, Kalmar Ottawa trac-tors, and Paccar and Cummins engines. “Consequently, your goal should be to hit a regulatory sweet spot by setting performance standards that result in new products purchas-ers are willing and able to buy.”

ATD plans to file extensive comments addressing a vari-ety of issues involved with the proposal beyond Jorgensen’s testimony.

New Light Vehicle Sales to Rise in 2016Sales of new cars and light trucks will continue their post-

recession climb, reaching an all-time high of 17.46 million vehicles in 2016, said Steven Szakaly, chief economist of the National Automobile Dealers Association.

Szakaly provided his forecast for new- and used-vehicle sales through 2019 at the Center for Automotive Research’s Management Briefing Seminars in Traverse City, Michigan, on Tuesday. He predicts new-vehicle sales of 16.65 million units in 2017. He also outlined some of the long-term car buying challenges facing new-car dealerships.

“Employment is doing very well, which is critical to new- and used-car sales, and we expect gasoline prices to con-tinue to remain low,” Szakaly said.

NADA forecasts that new-car dealerships will retail a total of 31.77 million new and used vehicles in 2015, an increase of 3.3 percent from 2014. (That figure includes 17.17 million new vehicles and 14.6 used vehicles retailed by new-car dealerships in 2015.)

Szakaly also provided insight into the generational shift in car buying demographics, which he said “could present challenges to long-term growth in auto retailing.”

“It will take four Millennials to replace the spending power of one Baby Boomer in the automotive-retailing marketplace,” Szakaly explained. “There’s also a wage gap between Baby Boomers and Millennials, and stagnating wages for Millennials, along with increasing vehicle-trans-action prices, will pose challenges in the long run.”

McConnell: Improved Fuel Economy Comes at a Cost and Needs Balance

When it comes to determining fuel economy rules of the nation’s light-duty vehicles, new-car dealer Forrest McCon-nell said a “realistic balance” between government regula-tions and consumer choice has to be achieved.

“There’s no doubt that we all want cars to be more ef-ficient … get the most miles per gallon … preserve our en-vironment and reduce emissions,” said McConnell, presi-dent of McConnell Honda/Acura in Montgomery, Alabama. “But improved fuel economy comes at a cost. The govern-ment estimates it will cost us an increase of $3,200 to the average price of a car. That’s an increase that new-car buy-ers will have to pay up-front This will dissuade many from purchasing, thereby delaying their use of more environmen-tally friendly and safer vehicles.”

McConnell, who served as chairman of the National Au-tomobile Dealers Association in 2014, was a speaker and panelist during the session, “Policy: Shaping Regulations for Fuel Economy and the Consumer,” at the Center for Automotive Research’s Management Briefing Seminars in Traverse City, Michigan, in August.

“Dealers have a mission to serve our customers by offer-ing choices-choices that fit their lifestyles and budgets,” he added. “What dealers care about is ensuring that customers get options that are meaningful for them.”

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MSADA

“While we’ve had a slower than normal recovery from this recession, we are seeing the sixth consecutive year of new

light vehicle sales growth.”

–NADA Chief Economist Steven Szakal


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trUCK COrnerMSADA

By Eric K. Jorgensen

American Truck Dealers Move the Industry Forward

www.msada.org Massachusetts auto Dealer JUNE 2015

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