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• ONLINE BIDDING• AL HOOPER: A LIFE IN THE CAR INDUSTRY• LEGAL MINUTE

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FEBRUARY/MARCH 2012

Going Green

PRSRT StandardU.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

AUTO RECYCLING IS BOOMING

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PRSRT StandardU.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

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I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I A T I O N O F C A L I F O R N I A

WEST COAST DEALER IADAC Needs Your Help

to Fight New Legislation Aimed at Auto Dealers! See page 22

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WHAT’SNEW

MAGAZINECONTENTS

ADVERTISERSINDEX

IADACOFFICE

ADESA .......................................... Inside Back CoverAllen L. Hawkins Insurance ..................................13AutoTrader.com ............................Inside Front CoverBlack Book ..........................................................19Brasher’s Sacramento Auto Auction ...... Back CoverInsurance Auto Auctions ...................................... 17Lobel Financial .......................................................7Manheim.com .......................................................9Nowcom ................................................................5Protective ...............................................................3SmartAuction .......................................................15 United Acceptance ...............................................11WAAC ..................................................................17

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NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATIONWWW.NIADA.COM • WWW.NIADA.TVNIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR [email protected].

THE WEST COAST DEALER IS PUBLISHED BI-MONTHLY BY THE NATIONAL INDPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE (817) 640-3838. PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDI-VIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF THE WEST COAST DEALER, IADAC, OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF NIADA, DOES NOT CONSTITUTE AN ENDORSE-MENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT 2012 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED. STATE MAGAZINE MGR./SALES Troy Graff • [email protected] Andy Friedlander • [email protected]/PRODUCTION MGR. Christy Haynes • [email protected] Nieman Printing

FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT [email protected] • (916) 601-4976

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Rod DavisPresidentBrasher’s Auto AuctionRio Linda, CA [email protected]

T H E W E S T C O A S T D E A L E R DECEMBER 2010 w w w . i a d a c . o r g

John McElroy is host of the long-running “Auto-line Detroit” television program, covering all as-pects of the automotive industry. In this presenta-tion, McElroy provides a thorough and insightful review of where we’ve been, where we now are, and where our industry is headed. Taped at the Automotive Fleet & Leasing Association’s Annual Conference.

Dealers who demonstrate commitment and support the principles and ethical business standards of the CMD® designation com-plete a four-day seminar that addresses Busi-ness Management, Merchandising, Financial Management, Human Resources, and Business Planning. Northwood University provides the in-structor and awards four Continuing Education units for this course. The next class will be March 10-12 at the SuperMedia Hotel and Conference Center at DFW.

MAGAZINECONTENTSINSIDE

ADVERTISERSINDEXAction Auto Recovery .............................................. 6Allen L. Hawkins Insurance Services ....................... 9AutoTrader.com ............................ Inside Front CoverBlack Book ............................................................. 13Brasher’s Sacramento Auto Auction ........ Back CoverCars.com ......................................Inside Back CoverDealerClick .............................................................. 5J. L. Von Arx & Associates ..................................... 12Manheim Advantage.......................................10, 11SmartAuction .......................................................... 7Western Funding ................................................... 16Western General / Protective .................................. 3

6 Named IADAC Quality Dealer of the Year 8 Auction Standards Help Customers 13 Credit Applications Do’s & Don’ts 14 Striking Gold: IADAC’s 42nd Annual Convention


The West Coast Dealer is published bi-monthly by the National Ind-pendent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817) 640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POST-MASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of The West Coast Dealer, IADAC, or the National Independent Automobile Dealers As-sociation. Likewise, the appearance of advertisers, or their identifica-tion as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright 2010 by NIADA Services, Inc. All rights reserved.

STATE MAGAZINE MGR./SALES Troy Graff • [email protected] Mike Harbour • [email protected] MGR. Jacob Kerns • [email protected]/PRODUCTION MGR. Christy Haynes • [email protected] Nieman Printing

THE CURRENT STATE OF THE AUTO INDUSTRY

CMD CLASSES

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Dear Editor:

Carfax is constantly looking for ways to further improve the exceptional service we provide our independent dealer customers. We have a dedicated team of professionals that handles any customer requests quickly. As a result of our tireless efforts, I am proud to say that we have streamlined our data re-search process.

The research process is easily started with just a few simple steps. Any Carfax-subscrib-ing dealer in California can access their Car-fax account at carfaxonline.com. Next, click the link which takes you directly to the online Data Correction Form. After submitting the form with the 17-digit vehicle identification number and requested research, a Carfax rep-resentative will work with you throughout the data verification process and confirm the issue has been resolved. In most cases, the entire process is completed in just a few hours.

Carfax is always here to help, especially on the rare occasions that data research is needed. Inconsistent odometer readings, for example, can raise a red flag but may be the results of simple human error. We’ve made it easier for dealers to initiate the process and get a faster resolution. We’re helping our cus-tomers manage a more efficient business and keeping their operations running smoothly.

Any dealer in California that has ques-tions about their Carfax account or the data research process can call Carfax Business Services at 888-695-1885. It is our pleasure to serve you.

Sincerely,

Kari SloanManager, Dealer Business UnitCarfax

Carfax Is Here To HelpSCHOLARSHIPS!

FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT [email protected](888) 315-2869

Westlake Financial Services has named their top five auctions for Q3-2010. They are:

1. Manheim Nevada 2 Rawls Auto Auction 3. Norwalk Auto Auction 4. Brashers Salt Lake Auto Auction 5. ADESA Golden Gate

Westlake Remarketing saw strong performance in the recent quarter and is recognizing these top auctions for their superior efforts. Rankings are based on a combination of sale results and

service. All five topped the sale rankings. Man-heim Nevada ranked first overall for the second straight quarter, ranking first for sale results and third for service.

Bill Walters, VP of remarketing, says over-all auction performance has been improving: “Development of these grading measures has helped us recognize strengths and address short-comings in our current network. The continued support of these auction partners is integral to our remarketing success.”

“Westlake Remarketing Releases Q3 Top Auctions List”

Rod DavisPresidentBrasher's Auto AuctionRio Linda, CA 95673916 - 991 - [email protected]

David Aah1Chairman of the BoardNorth Bay Auto AuctionFairfield, CA 94534707 - 864 - [email protected]

Mark GloverSr. Vice PresidentAzteca Auto SalesGalt, CA [email protected]

Larry LaskowskiTreasurerThe Auto OutletRoseville, CA [email protected]

Terry DegmetichSecretaryI - Deal CarsRoseville, CA 95678916-870- [email protected] Cardinale

Vice PresidentA to Z MotorsWinters, CA [email protected]

Rick GomezVice PresidentRJ Auto BrokersCarmichael, CA [email protected]

Mike CaseyVice PresidentCal West MotorsSan Leandro, CA [email protected]

10 10 Questions for AutoCheck14 Auction Security18 In the Spotlight

12 Local Auto Dealers Usedby Clunkers

MAGAZINECONTENTS

ADVERTISERSINDEX

INSIDE

Action Auto Recovery ..................................................8ADESA ......................................................................17AutoTrader.com ................................ Inside Front CoverAutoXplorer................................................................13Black Book..................................................................19Brasher’s Sacramento Auto Auction ..............Back CoverCars.com .......................................... Inside Back CoverDealerClick ..................................................................5J. L. Von Arx & Associates ..........................................9Lobel Financial ..........................................................15Manheim Advantage ..........................................10, 11SmartAuction ..............................................................7Western Funding ........................................................18Western General / Protective........................................3

Dealers who demonstrate commitment andsupport the principles and ethical business stan-dards of the CMD� designation complete a four-day seminar that addresses Business Management,Merchandising, Financial Management, HumanResources, and Business Planning. NorthwoodUniversity provides the instructor and awards 4Continuing Education units for this course.NEXT CLASS OCTOBER 28-30, 2010VISIT NIADA.COM FOR MORE INFOMATION

CERTIFIED MASTERDEALER� PROGRAM:

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NATIONAL INDEPENDENTAUTOMOBILE DEALERS ASSOCIATIONWWW.NIADA.COM • WWW.NIADA.TV

2521 BROWN BLVD. • ARLINGTON, TX 76006-5203PHONE (817) 640-3838FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF(800) 682-3837 OR [email protected] WEST COAST DEALER IS PUBLISHED BI-MONTHLY BY THE NATIONAL IN-DPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORA-TION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE (817)640-3838. PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONALOFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLI-CATIONS, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203. THE STATE-MENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUALAUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF THE WESTCOAST DEALER, IADAC, OR THE NATIONAL INDEPENDENT AUTOMOBILEDEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, ORTHEIR IDENTIFICATION AS MEMBERS OF NIADA, DOES NOT CONSTITUTE ANENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT2010 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED.STATE MAGAZINE MGR./SALES: Troy Graff • [email protected]: Mike Harbour • [email protected]/PRODUCTION MGR.: Christy Haynes • [email protected]: Nieman Printing

FOR INFORMATION ON HOW TOBECOME A MEMBER PLEASE [email protected](888) 315-2869

EXECUTIVE COMMITTEE

Mike Macaulay, Magazine Committee Chair • Car SystemsRoseville, CA • 916-784-7155 • [email protected]

When it comes to motor vehicle bonds, alldealer principals are not alike. At BondSource Insurance Agency, we offer a com-mon sense approach to underwriting. Abusiness’ net worth is the key along with thepersonal character of the business owner.

Since 1993, Bond Source InsuranceAgency is committed to fast and friendlybond service. IADAC members may contactNancy R. Chapman for a bond quote at888-855-0100 or [email protected].

D E A L E R B O N D H E L P

BREAKING NEWS!BREAKING NEWS!

Check out the newlyredesigned IADAC websiteat www.iadac.org.We want to know what youthink of the new site. Let usknow by e-mailing us [email protected].

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10 Online Bidding14 Going Green: Auto Recycling18 Legal Minute











CMD CLASSES

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Dear Editor:





Sincerely,




















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ADVERTISERSINDEX

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EXECUTIVE COMMITTEE







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David AahlChairman of the BoardNorth Bay Auto AuctionFairfield, CA [email protected]

New Executive Committee

Executive Committee: Rod Davis, President (same picture) Mark Glover, Sr. Vice President (New Picture, see below) Mike Casey, Vice President (Same Picture) Vince Cardinale, Vice President (Same Picture) Greg Meier, Vice President (New Picture, see below) Terry Degmetich, Treasurer (same Picture) Mike Gough, Secretary (New Picture, see below) David Aahl, Chairman of the Board (same picture)

Mark Glover

Greg Meier(crop to head shot please)

Mark GloverSr. Vice PresidentCounty FinancialGalt, CA [email protected]

Vince CardinaleIADAC Vice-PresidentA to Z MotorsWinters, CA 95694











CMD CLASSES

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Dear Editor:





Sincerely,




















MAGAZINECONTENTS

ADVERTISERSINDEX

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EXECUTIVE COMMITTEE







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Terry DegmetichTreasurer I-Deal CarsRoseville, CA 95678916-870- [email protected]

New Executive Committee

Executive Committee: Rod Davis, President (same picture) Mark Glover, Sr. Vice President (New Picture, see below) Mike Casey, Vice President (Same Picture) Vince Cardinale, Vice President (Same Picture) Greg Meier, Vice President (New Picture, see below) Terry Degmetich, Treasurer (same Picture) Mike Gough, Secretary (New Picture, see below) David Aahl, Chairman of the Board (same picture)

Mark Glover

Greg Meier(crop to head shot please)

Greg Meier Vice PresidentDiablo Motors, San Ramon, CA 94583Phone 925-830-8747

Mike Gough, (crop to head shot please)

Mike GoughSecretaryMG Auto Wholesale, Vacaville, CA 95687Phone 707-481-6646

Larry LaskowskiExecutive DirectorThe Auto OutletRoseville, CA [email protected]

Executive Committee

R A2Z EDUCATION SERIES - AutoZoneEducating the independent dealer to deliver the highest quality service levels to your customers, manage your shop efficiently, train your technicians and maximize profits.niada.tv

R Certified Master Dealer ProgramMarch 22-24, 2012Educates dealers on how to manage and grow a profitable business “Effective Management Practices”, “Business Planning”, “Human Resources”, “Merchandising”. “Financial Management” Call (800)756-4232 to sign up.

R World Automobile Auctioneers Championship Live online coverage of the event begins at 11 am ET on Friday, March 3O, 2012 and is free for all online viewers. visit www.niada.com and click on the “EVENTS” tab or call (303) 807-1108.

FOR ME, 2011 CAME AND WENT in the blink of an eye. On January 1, 2011, I hit the ground running and I haven’t stopped.

One major goal was to solidify IADAC’s foundation. Establishing a visible presence and letting dealers know IADAC is always working for them was a key part of that plan. Dealers have openly shared their comments and recognized the change. I feel confident IADAC is in a great position to grow our membership and continue supporting independent dealers.

Dealers should know there are many people to thank for the benefits and information they receive. Your executive committee meets once a month for no less than an hour, sometimes much longer. Participation at quarterly meetings add to the time and travel they donate. IADAC past presidents and delegates make time to attend and help at various functions that ultimately benefit all dealers. There are too many to list in this report, but you’ll find their names at www.iadac.org>About IADAC>Board of Directors.

When you see someone on that list, please say thanks for the time, effort and expense they devote to our industry and your well being. I offer my most sincere thanks to those individuals for their actions and for their trust in me to serve IADAC in this position.

I keep reminding members they are represented nationally by NIADA and should take advantage of the many benefits available. Beginning Jan. 1, 2012, an NIADA dues increase will take effect. What does that mean to IADAC members? Nothing. Your executive committee has agreed that IADAC dues will remain unchanged and all IADAC members will still have full access to all previous benefits. To offset the loss, IADAC must add 15 new members next year. Please let other dealers know of the opportunities that exist for IADAC members.

With your help and referral of new members, we can mitigate the impact of this increase and continue to keep your dues at their current level.

Best wishes to all IADAC members and supporters for a healthy and prosperous 2012!

BY LARRY LASKOWSKI

Executive Director’s Report

HAPPY NEW YEAR to all of our dedicated members and associates! I appreciate the association I have with each of you and the opportunity we have to work together to keep the automotive industry profitable and positive.

I recently received an email from Pat Matlach’s nephew. Pat is a past president of IADAC and one of the great supporters of our association over the past 50 years.

Pat’s nephew informed me that Pat had taken a pretty bad fall and had broken his leg. He was in the hospital for a few days, then was taken to a convalescent home. Pat’s nephew spoke of IADAC in his email and talked about how important the association has always been to his uncle.

On IADAC’s behalf, I gave Pat a call. I expected Pat to be drugged up and feeling down and out. Much to my surprise, however, Pat picked up on the first ring and sounded like he was ready to make a car deal. We spoke briefly about his condition and his projected recovery in the coming weeks, and I asked him what he was planning on doing with his business since he was a one-man show. Once again he surprised me when he told me he was still running his business… from his hospital bed. He had files all over his bed and was still making deals and collecting payments on previous sales. His sister-in-law was doing most of the legwork, but Pat was still making decisions and calling the shots

It definitely takes a lot to keep an old dog down. As we concluded our phone visit, Pat expressed his love for and support of the association and its members.

My intent in calling Pat was to offer words of encouragement and support; instead he rejuvenated me and made me proud to be associated with someone of his caliber. Pat Matlach is the epitome of an IADAC member. We wish him a speedy and full recovery.

BY ROD DAVIS

Message from the President

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Terry DegmetichTreasurer I-Deal CarsRoseville, CA 95678916-870- [email protected]

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THE REDWOOD EMPIRE IADAC Chapter had its annual Christmas party December 18 at a local Santa Rosa restaurant. Local president Jerry Kahn estimated more than 200 attended.

Many local dealers brought family and staff to the celebration. Rudolph Inc. (Auto Financing) and AUL Warranty helped organize and fund the party. Jerry Rudolph and daughter Chrissie Rudolph are pictured having a good old time. IADAC executive director Larry Laskowski made the trip from Roseville, showing appreciation to the local chapter. Past IADAC president Mike Macaulay was also in attendance.

Dinner and dancing were on the evening’s agenda. There was a raffle that raised money for the chapter, and a 50-inch flat screen TV was a door prize worth winning.

The event ended at 11 p.m. Fun was had by all and talk of next year’s party has already started!

Redwood Empire Christmas Party

IndustryFun

THANKS TO IADAC’S presence at the Capitol and working closely with DMV, 2011 was a pretty good year. The legislature and consumer groups did not attack the industry, leaving us alone to try and make a dollar.

However, we might not be so lucky in 2012. I have been contacted by consultants from

both the Senate and the Assembly and have been told there are consumer groups planning to introduce legislation to do away with the Buyer’s Guide and mandate that all used cars sold by dealers must have a warranty. That being the case, we will all need to pull together and contact our legislators and defeat these proposed bills.

Three articles published in the Los Angeles Times about Buy Here-Pay Here dealers and their alleged abuses have prompted Sen. Ted Lieu to introduce legislation to further regulate Buy Here-Pay Here dealers. We have met with the Senator and explained that existing law already protects the consumer – which the articles omitted, by the way – and that without Buy Here-Pay Here dealers, many of his constituents would not be able to purchase a car. Hopefully, we have presented a good case and Sen. Lieu will not go forward with the bill. He has committed to work with IADAC should he move forward.

Assemblyman Roger Dickinson has introduced AB 366, which attempts to regulate auto pawns, businesses that loan money to individuals who put their title up for collateral. Working with the Assemblyman we were able to keep the used car industry out of the bill, as a dealer’s holding of a title consists of a purchase and therefore is not a loan.

Our proactive position saved us a lot of time down the road. It is much easier to ask for a bill to be edited while being drafted than to have to ask to change it after it has become law.

With all the changes in regulations and laws it is sometimes tough to keep up, and a mistake could cause a visit from DMV. There is good news on this front because IADAC, with Larry Laskowski at the helm, conducts dealer education programs at auctions that are open to all dealers at the auction – and most of the time, in addition to all the good information, they get a FREE lunch! Don’t miss these vital seminars!

You can check the web site, www.iadac.org, to find out where the next meeting will be. All of the upcoming meetings will discuss AB 1215, which will allow you to charge more for the document preparation fee beginning July 1, 2012.

Hope to see you there.

Legislative ReportIndustryNews

BY BILL DOHRINGIADAC LOBBYIST

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TWO MEETINGS/SEMINARS were held in December, hosted by ADESA Sacramento and North Bay Auto Auction. Attendees were provided lunch while they listened and learned about upcoming changes pertinent to their industry.

The ADESA meeting was co-sponsored by a new associate member, I/O.com, along with IADAC preferred provider AUL Corp. I/O rep Randy Graham introduced himself to the dealers and briefly described his web site product.

At North Bay Auto Auction, general manager David Aahl spiced up his event by adding a Christmas theme, with raffle prizes along with a great lunch courtesy of North Bay Auto Auction.

Attendees at both meetings provided lively, informative discussion on a variety of topics, all geared to increase compliance for the dealers. IADAC thanks ADESA Sacramento and North Bay Auto Auction for their support of the independent auto dealers.

The main topic was Assembly Bill 1215 which will require all dealers to run vehicle history reports through the National Motor Vehicle Title Information Service (NMVTIS) beginning July 1, 2012. See DMV Updates elsewhere in this issue or go to www.iadac.org/ab1215_veh_hist_rpts.php for more details on this important new bill.

Auctions Host December Chapter Meetings

ONE OF IADAC’S DEALERS called recently to request information on proper use of a dealer plate. He said a vehicle being reconditioned for sale needed to have the monitors set to pass the smog inspection and he asked an employee to drive it home, as he lived 17 miles away.

On the way home, the employee stopped to buy groceries. He continued on his way and was pulled over by law enforcement. The officer saw the groceries in the vehicle and cited the employee for improper use of a dealer plate, as he believed the employee was operating a vehicle with a dealer plate for personal use. The employee was not cited for anything else.

You can print the document from the IADAC website that explains how a dealer plate may be used. Go to www.iadac.org and click on “Proper use of a dealer plate” under Quick Links on the home page to view or print the document.

So was the employee misusing the dealer plate by picking up some groceries while driving the car with the dealer plate? Technically, he wasn’t operating the vehicle while he was in the store and as soon as he started driving the car again, he was operating it again as directed by his employer. To set the monitors, often several drive cycles must be attained and the stopping and starting can help achieve that goal. The citation indicates the police interpreted his actions as having used the dealer plate for personal use, which is not permitted by an employee.

The dealer has been scheduled for a hearing before a judge to settle this dispute. Check back next issue to find out the results.

IT’S NOT OFTEN YOU get a $50,000 bonus from the California DMV, but that’s what is being offered to California auto dealers.

The incentive to join DMV’s BPA (Business Partner Automation) program is part of Assembly Bill 1215, which becomes effective July 1, 2012. For new car dealers, registration into the program will be mandatory. The program will be optional for independent auto dealers. The partnership with DMV means dealers will be able to transfer title electronically right at their dealership.

Why would an independent want to be a part of this? Dealers who are Business Partners or use a registration service that is a Business Partner will be able to increase the doc fee by $25. A Business Partner can also print validated registration at the dealership. For some finance deals, that might be a means of expediting payment from the finance company. If you currently submit your transfers to DMV in “bundles,” you won’t have to worry about having charged too little, or possibly having the paperwork lost in transit.

This program probably won’t make sense for all dealers. Each individual will have to evaluate the pros and cons to see if it will be a good fit.

Also, because DMV expects the BPA program to expedite the process for transfers, the Report of Sale will be valid only for 90 days (it was previously six months). DMV has said no changes impacting software for printing contracts and forms will result from the changes to the Report of Sale.

One change dealers should anticipate is contracts will likely need to be updated as a result of some slight changes in language to the doc fee. Dealers can save some money by using up their current supply of contracts and re-ordering the updated versions.

DMV Is Looking for Business Partners

Could this be you?IndustryNews

Auto Dealer Needs Information!Q: I AM LOOKING FOR INFO ON AB 1215, THE MANDATORY VEHICLE HISTORY

REPORTS BILL THAT TAKES EFFECT JULY 1, 2012. WHERE CAN I FIND THAT INFORMATION?

A: GO TO WWW.IADAC.ORG.

Q: I WANT TO SHOP FOR MY GARAGE LIABILITY INSURANCE. WHERE CAN I FIND A LIST OF INSURANCE AGENTS AND OTHER VENDORS. TOO?


Q: I HAVEN’T SIGNED UP FOR DMV ELECTRONIC MEMOS. WHERE CAN I FIND OUT HOW TO DO THAT?


Q: I WAS STOPPED WHILE USING MY DEALER PLATE AND WAS ISSUED A WARNING, BUT I THINK THE OFFICER WAS INCORRECT. WHERE CAN I FIND OUT HOW I CAN USE A DEALER PLATE?


Q: THERE’S A GUY WHO IS ALWAYS SELLING CARS ON THE CORNER NEAR MY LOT AND I KNOW HE ISN’T A DEALER. WHERE DO I FIND A FORM TO REPORT THIS ILLEGAL ACTIVITY?


Our new website is loaded with the information a dealer needs, so check it out the next time you’re looking for an answer: www.iadac.org.

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Could this be you?

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MOST WHOLESALE AUTO AUCTIONS offer customers the option to buy and sell through an online portal. Great improvements have been made in Internet auctions since the early part of this century, when auctions began offering wholesale inventory online.

John Brasher, president of Brasher’s Sacramento Auto Auction, noted that PADE Auction in Pennsylvania was the first to offer vehicles online, in 1996. They were fleet and repossession units. Later that year, Idaho Auto Auction offered the first factory sale online (General Motors).

Rod Davis, assistant general manager of Brasher’s Sacramento Auto Auction, said Manheim auctions were among the first to offer online sales, and were able to market through their nationwide group of auctions. However, independent auctions were quick to jump on board, and Brasher’s began selling rental cars online in November 2003. The next year, they added repossessions and factory vehicles to their Internet lineup. That was possible because condition reports were routinely done on those vehicles.

The Auction Pipeline was established in 2006 and opened the door for more across-the-board sales.

Technology in the early years made it very difficult for dealers and auctions to participate online. Back then, 56k modems were state of the art. Slow Internet connections made online commerce challenging and impractical. The industry saw the future but had to wait for technology to catch up.

Since 2006, the technology has vastly improved, with faster picture loading and more detailed condition reports. That solved some of the early hesitation about buying online: having good information about a vehicle’s condition when the buyer isn’t there to

look under the hood and kick the tires. The modern condition reports tell of almost every aspect of the vehicle, including smell.

In 2008, most online sales began offering regular dealer consignment as well as institutional vehicles, and in 2010, many auctions began offering all vehicles in all lanes online.

Most auctions charge an additional fee to both the buyer and seller for using the online system. At first, I wondered about the fairness of this practice. As a seller, many more buyers online make it possible to reach your desired price. As a buyer, the convenience of bidding from your home office has a great appeal. The fee seems justified, and more than pays for itself.

There are problems still with online sales. There is that little time lag when bidding: an online bidder needs to be quick on the button. Changing the vehicle on the screen for the online sale can also be a problem. The live in-lane auction can move forward while leaving the online buyer looking at the previous vehicle on the screen. I have experienced that while participating in an online sale, and, while it is frustrating, it can be understood. Keeping the block staff trained and on its toes will take care of that problem. Technology gets better daily and these problems will soon be a thing of the past.

The availability of a wide range of vehicles online is changing our industry in many ways. Gone are the days of hopping on a plane to a faraway auction, only to be disappointed. Gone are the days of foraging through pages of faxed lists in hopes of finding acceptable inventory.

The new age of online buying is here. Make sure your business is prepared for this new way of doing our old business.

Online Bidding the Wave of the Future – and Today

Brasher’s Sacramento Launches Busy Promo Schedule

BY MIKE MACAULAYIADAC MAGAZINE CHAIRMAN

WITH MARKET ACTIVITY on the upswing, Brasher’s Sacramento Auto Auction has unveiled a busy promotional schedule for 2012, auction president John Brasher said. Consistently leading the market with more vehicles offered and more vehicles sold every week in Sacramento, Brasher’s Sacramento Auto Auction has set dates for five major promotional sales.

“The uncertainties of the economy have presented challenges in our industry, but I am happy to report that the sale activity at Brasher’s Sacramento Auto Auction is strong and continues to build,” Brasher said. “In response, we are working hard to continue making Brasher’s Sacramento Auto Auction the best place to do business in the region. We’re adding more services, investing more in our web site and offering more tools to provide our buyers and sellers with the information they need to make the most of out of their auction transactions. And, as a way to thank our customers for their loyalty and to focus even more attention on the auction lanes, we have planned five big promotional sales for 2012.”

The auction’s inaugural Coat Sale began promotional calendar on January 30-31. Brasher said the auction offered three tiers of prizes based on the number of vehicles bought or sold at the Monday and Tuesday sales.

At the end of March is Brasher’s LIVE, when the auction celebrates its 34th anniversary in Sacramento. A two-day event that includes a customer dinner, entertainment in Brasher’s LIVE! Comedy Club, 2,500-plus vehicles in the lanes and a car with custom paint and accessory package topping the list of prizes, Brasher’s LIVE is the biggest sale of the year in Sacramento.

The auction’s Dealer Appreciation Sale on May 7-8 will be followed by the annual Dealer Appreciation Golf Tournament on May 11. In July, customers will enjoy fresh corn on the cob while bidding on more than 2,000 vehicles at the Corn Roast Sale. Then in October, Brasher’s celebrates its history as one of the longest-running auction companies in the country with its 63rd Anniversary Sale and Barbecue. The first Brasher’s auction was founded in 1949 in Salt Lake City.

“We take our position as Northern California’s market leader seriously,” Brasher said. “The lanes are full of cars and trucks every week, and we are joined by buyers from all over the country – and beyond – both in the lanes and online. Our promotional schedule is planned to add even more vitality and excitement to the auction lanes throughout the year.”

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I HAVE BEEN in the car business for more than 25 years and I’ve seen it grow and morph into what it is today.

One aspect of the business that never really gets talked about is the use of one’s own money. Twenty-five years ago, there weren’t any flooring lines for independent dealers. Back in the day, you either relied on your own money or played the “new car dealer float” – purchasing a vehicle from a new car store, which wouldn’t make you pay for it until they had the title, which in some cases could be more than a month. That would give you time to recon and resale the vehicle before you actually had to shell out the cash.

As long as you were making money, you could make money without actually having it. These relationships were built on trust and friendships. They still exist today, but they are rare. It didn’t take too many bad apples to ruin that longstanding program.

Fast forward to today and you find a completely different environment for purchasing vehicles and paying for them. We are all aware that the auto auctions control most of the vehicles on the wholesale market. And along with that, the auctions or flooring companies provide the means for most dealers to purchase their inventory with “floor plan financing.”

What is a floor plan financing?Floor plan financing is a revolving line of credit

that allows the borrower to obtain financing for retail goods. These loans are made against a specific piece of collateral (an auto, RV, manufactured home, etc.). When each piece of collateral is sold by the dealer, the loan advance against that piece of collateral is repaid.

In short, dealer floor plan financing allows dealers to borrow against retail inventory. The dealer then repays that debt as he sells his

inventory and borrows against the line of credit to add new inventory.

These floor plans allow dealers to compete for inventory without actually having money, and that creates a different mindset for the dealer. This is the reason wholesale prices have kept increasing even during the recession.

It’s plain and simple: Dealers purchase inventory with the attitude of “it’s not my money.” They don’t think of how much money they are risking to make their profits; their only consideration is the flooring cost. So if they only net $500 on a $20,000 transaction, it’s the same as a $2,000 transaction.

If we as dealers are wondering why wholesale prices are so high, we might consider that the guy bidding against us isn’t using his own money. He’s probably using the auction’s. Good luck to us all!

‘IT’S NOT MY MONEY’BY TERRY DEGMETICH

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MY FATHER, Alfred Shattuck Hooper, witnessed the exciting creation of the American auto industry in the beginning of the 20th century. And he was part of it during the 1950s and ‘60s, when it was at the center of glamour and success of a post-World War II world of optimism. And he witnessed its fall from grace, as European and Japanese cars took over much of the innovation in the industry. He saw it all.

My dad was born and raised in San Francisco. His father was in the hotel business, and my dad was raised in downtown hotels. His dad ran the prominent Occidental Hotel until it was destroyed in the fire and earthquake of 1906, then established the Mission Hotel and then the Sutter Hotel, where my dad lived. My dad escaped the hotel life through athletics, especially swimming. He joined the Olympic Club swim team when he was 13 and was captain of the swim teams at Lowell High School and Stanford. A local boy.

He always talked about how he wanted to be a farmer, but somehow he ended up in the auto industry. He began with Chevrolets, and went bankrupt during the Depression. Through World War II and into the mid-1950s he worked at McAllisters on Van Ness Avenue. They sold Chryslers and Plymouths, then Buicks.

McAllisters had a huge elegant showroom with walls covered with heads of stuffed game animals. My dad was given a half of a mountain goat from this collection, which he brought home and hung on our wall much to our family’s chagrin. He became sales manager and hired many of his staff from the Stanford Business School.

My dad was involved in setting up the Salesman’s Union, and was involved in the union even as he became the sales manager at McAllisters and then a dealer himself. He served on various union pension committees as the management representative, and was key to a number of negotiations. Until the union initiated a strike at his dealership, he was a strong union advocate. Even after that he was congenial to the union, but I could tell even as a kid that his heart was not in it anymore.

In 1954 my dad set up Van Ness Oldsmobile, at the corner of Van Ness and Sacramento. He had two partners. Jules Barsotti, a Stanford MBA who worked at McAllisters for my dad, was the son of an Italian immigrant who had a car repair shop in North Beach. He remained my dad’s partner until my father sold his share of the business to Jules in 1990. George Green was the second partner. He provided the investment capital and soon left the business.

I was 6 when my dad set up Van Ness Olds. My sister Karla was born that year. Her middle name is Merry, after Merry Oldsmobile. It was a big occasion for the whole family to be in the Oldsmobile business. It meant grand celebrations each year when the new models

were announced. Big lights shot up into the air along Van Ness Avenue and people dressed for parties strolled from showroom to showroom. As anticipated as the Apple iPhone introduction, but with a public street life that was compelling even to a kid.

It was also a time of “Georamas,” big conventions put on by General Motors that showed new models and innovations. They showed movies of testing facilities where cars were remotely controlled on freeways, in train-like connections. There were monorails that connected with auto service, and flying cars, and of course two-tone models. I’m still waiting for all these things.

My dad became well connected nationally at Oldsmobile, and was invited to Michigan for dealer advisory meetings. He became well acquainted with Harlow Curtis, president of General Motors, whom he admired greatly and who visited him in San Francisco.

In about 1960 Jules and my dad began to experiment with foreign cars that began to find their way to San Francisco. They set up European Motors next door to Van Ness Olds at Van Ness Avenue and Clay Street, selling Fiats and Alfa Romeos and Triumphs and Morgans and Mercedes and more. My dad would drive a different kind of car home from work each night, and all the neighbors would gather and discuss whether there were any parts available, or why good gas mileage might be important, and whether they could live with such a small car.

In order to keep the Mercedes dealership, they needed to become an exclusive Mercedes dealer, so they soon stopped selling the other foreign cars. Jules shifted his focus to European Motors and my dad stayed with the Oldsmobile dealership.

Martin Swig soon joined as a partner in European Motors. My dad once remarked to me that Martin just loved cars too much – that to be in the car business you had to be more objective. European Motors became the largest independently owned dealership in the country. For a while it included a location in Marin, on East Francisco Blvd. It expanded into Oakland permanently and established a large service center very early in the SOMA developments in San Francisco.

My dad soon began trying to get the attention of General Motors to describe the opportunities provided by these European cars. Though he was enthused by the success of the Mercedes business, he also was a loyal American car dealer, and wanted to have the desirable features of the European cars in the GM product lines. Boy was he disappointed. He learned GM didn’t care much about West Coast tastes and considered them an anomaly.

It was fun having a dad in the car business – most of the time. It meant when I came home

from a semester abroad in Denmark, I had a bright yellow 442 with four on the floor and a red bow waiting for me in the airport parking lot. It meant I could buy a 450SL for $16,000 in 1974 when I got my first job as an assistant professor, earning $12,000 a year. It meant when I was a visiting faculty at MIT, I could smile a bit to myself when a learned Harvard professor was shocked that my father was a car dealer, mumbling something about how he must have been reasonably smart.

However, it also meant controversy. In 1972, my dad gave me an Oldsmobile for graduate school. He had one of his employees drive it all the way to San Diego for me. And I didn’t want it. I wanted a Volkswagen. It broke his heart.

Somehow people learned about that, and the notion that an American car dealer’s daughter was driving a Volkswagen became big news. Added to all the arguments about the Vietnam war, it was stressful, to say the least. I never could quite tell if he was more upset with me or General Motors, but the combination was significant.

My dad kept driving an hour or more to work every day from Marin County until he was 88 years old. He worked for more than two years to separate the partnership with Jules. He didn’t want his wife or two daughters to be entangled in the automobile business. Martin Swig bought the Oldsmobile dealership, bringing it to his Auto Center on 16th Street. This was a gracious and honorable act, given the decline in the franchise’s value.

During the last few years of his life, my dad continued to hike in the hills above his Marin County home. I would offer to drive him into town for lunches with friends in the city – I could tell he felt a bit unsure about his driving. He would politely decline. It took me a long time to figure out that he had outlived most of his friends, and in many ways the automobile business he had known and loved was gone, too.

He and I did have a good time talking about the glory days of the automobile industry as we walked in the hills. I was working at Apple Computer at the time, involved in the center of experimentation in a new industry, one that was becoming more and more stylish, attracting bright young kids and substantial financial investment. It was interesting to compare the two industries, and to think of where each was headed.

My dad would love learning about the innovations in electric cars if he were alive today, as well as the re-emergence of some innovative styling in cars. He had a good run, but he had been ready to jump on the new things. A great legacy for me and for others to enjoy. August 2011

AlHooper

BY KRISTINA HOOPER WOOLSEY

A LIFE IN THE CAR INDUSTRY

PARTNERS: JULES BARSOTTI AND AL HOOPER 1982 (AL’S

80TH BIRTHDAY CELEBRATION)

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Dealers Open Their Hearts and Wallets

WALTER CASTER joined the staff of North Bay Auto Auction in May 2006. Rain or shine, Walter was always at work with a smile.

In 2009, Walter was named the employee of the year, which he won by a landslide (the employees vote on the honor) and was awarded money and gifts for his struggling family. Walter and his wife, Felicia, have five children ranging from a high school teenager to a kindergartener.

Recently, Walter was told he had a very weak heart. He was put on the donor list and started to explore his options. He decided with his doctors to try a new procedure. The doctors placed a pump in Walter’s heart that would help keep it beating. Unfortunately, the procedure didn’t go as planned. The surgery made him weaker. As the holiday season quickly approached, Walter’s family found making ends meet hard. Things only got worse when Felicia fell and broke her ankle.

As the holiday season started, a 1985 Chevrolet Chevette was donated to the auction. The proceeds were to be donated to the Caster family. The car was auctioned for $200, but the attending dealers donated an additional $2,500.

On December 6, the auction staff asked Felicia to visit with all of their children. The story was told to all the dealers about what a good employee, friend, and all-around good person Walter Caster is. After telling the crowd of dealers the heartbreaking story, the auction presented the family with the $2,700 that was raised for her family to have a Christmas.

But the giving didn’t stop there. Dealers who had missed the Thursday auction took out their wallets and donated more and more money to the Caster family. More than $3,500 was raised for the family, and while Walter is not out of the woods yet, his family has peace of mind because of the generosity of the good dealers.

The staff of North Bay Auto Auction is proud that during these tough economic times, its employees and customers were able to help a friend in need. North Bay holds its auctions every Tuesday at 4 p.m. and every Thursday at 10 a.m.

IndustryNews

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GR

EEN

New

s

AS WE COME INTO the second month of the 2012, how are your business New Year’s resolutions evolving? I’m sure on the list there are goals to increase profitability and growth, and to improve customer service.

What about going green and saving you and your customers money at the same time?

The auto recycling business is booming and helping its customers do just that. There are about 8,400 auto recycling businesses in the United States generating about $23 billion each year.

Auto recycling is the practice of removing and reusing automotive parts from inoperable vehicles, then safely disposing of the portions of the car that cannot be salvaged. It is performed at auto salvage yards, also called auto recyclers. Auto recycling prevents the waste of usable parts and materials, and promotes environmental conservation by reusing vehicle components instead of disposing of them in a landfill.

There is no product recycled more than the automobile. More than 10 million vehicles reach the end of their lives each year, which equates to acres and acres of landfill space.

The auto recycling industry saves that space – 95 percent of vehicles retired from use are recycled. The process saves an estimated 85 million barrels of oil per year, which would have been used to make replacement parts. About 84 percent of each vehicle is recycled in one way or another. Some 40 percent of the ferrous metal for scrap processing comes from auto recycling. Oils and fluids recycled by the auto recycling industry are equivalent to eight Exxon Valdez oil disasters every year.

“One of the meanings of recycle is to reuse,” said Jason Hilsman, owner of Ace Auto Recyclers in Iowa City, Iowa. “Reusing auto parts helps the environment by saving on the energy and waste produced in making new parts. And, of course, the price is cheaper.”

On average, purchasing a green, recycled part from a recycling yard will save 50 to 75 percent of the original equipment

manufactured price. Because buying used parts from an auto recycler is cheaper than buying them new, repair shops can not only lower the cost of a repair for customers, but can also lower insurance rates if the repair is an insurance claim.

Auto salvage yards also commonly offer recycling of older vehicles for scrap. The yards recycle batteries, tires, fluids and thousands of tons of metal a year. And auto recyclers provide owners of rare, out-of-production vehicles a chance to obtain hard-to-find replacement parts.

Recycled vehicles go through a thorough tear-down and inspection process on delivery to the recycler to ensure the highest quality parts for resale. When a vehicle comes into the recycler, it receives a stock number for tracking, and the VIN is checked to make sure it matches the title. Pictures are taken of all angles of the vehicle and the VIN number, allowing the auto recycler’s customers to see a part before it is delivered and be knowledgeable on the part’s condition prior to a sale.

The vehicle is then inventoried. All parts are checked, including checking whether the car starts, runs and drives, and a check of all part of the transmission. If the auto recycler decides no parts have any value, fluids are drained and tires, battery and catalytic converter are removed to prepare the car for scrap and crushing.

If the auto recycler will keep the car for its inventory, the catalytic converter and battery are removed and the vehicle is placed in the yard. The fluids are not drained until the car is dismantled. Then the fluids are drained and the usable parts are ready to sell.

In 2008, a group of auto recycling businesses from across Iowa banded together to improve the purchase process and quality of recycled parts.

“When we started the group, the idea was to get 20 of the most progressive auto recyclers in the state to sell a better product by improving the quality of the part, description of the part, the delivery time for less down time for the repair shop, and to

open communication to all repair shops,” said Mike Swift, president of QRP Central and owner of Trails End Auto & Truck in Des Moines.

QRP Central is a group of 18 family-owned professional automotive recyclers that function as trading partners to provide customers with quality recycled used auto parts. The group is committed to the highest quality of recycled and new aftermarket auto parts, delivered on time as described, usually within 24-48 hours.

The combined inventory of the 18 independent auto recyclers is massive: more than 11,000 vehicles purchased annually, more than 1 million parts in computerized inventories and nearly 26,000 parts vehicles stored on site. In addition, yard management technology has advanced to give auto recyclers access to more parts from around the nation.

QRP holds its parts inspection process to a higher standard. One of the first things it decided as a group was to make sure there are no surprises. Every step is taken to make sure a part is good. If it is not a good part but is still usable with repair, the recycler makes sure the customer knows and can make an informed decision.

All parts that leave QRP auto recyclers go through a three-point inspection process. They are inspected first by the salesperson, then the parts puller, then the delivery driver. If a part is shipped, the last person to check the part is the shipping department.

Another important aspect for QRP customers is that the businesses are locally owned.

“When a repair facility purchases a green recycled part from QRP Central, it is not only saving the environment but helping keep jobs and revenue in the city, county and state,” Swift said.

For more information on using recycled auto parts for your business, visit www.qrpcentral.net.

BY QRP CENTRAL

Going Green A U T O R E C Y C L I N G I S B O O M I N G

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FAMILY AFFAIR? ABSOLUTELY. Established in 1948 by brothers Fred and Val Hengehold, IADAC member Hengehold Trucks has built a legacy that thrives today. With truck sales and rentals both in the same facility, Hengehold Trucks has carved a market niche for itself. Today, grandchildren Matt and Annie, along with their father Jim and uncle Dave, serve up the product with a proven recipe for success.

Co-founder Fred passed away in 2003 at the age of 100 while still working five days a week. To say the company is well established would be an understatement – it has been at its current location since 1965. About half of the business comes from previous customers, a testament to the high level of customer service the dealership provides.

As a thank you for the support from the community, Hengehold gives back in many ways, such as providing free rental vehicles for food banks.

IADAC wishes Hengehold Motor Company continued success.

Hengehold Motor Company

DealerProfileth

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er

THE INTERNAL REVENUE SERVICE (IRS) has announced the 2012 optional standard mileage rates used to calculate the deductible costs of using a vehicle for business, charitable, medical or moving purposes.

Beginning Jan. 1, the standard mileage rates will be 55.5 cents per mile for business use, 23 cents per mile for medical or moving purposes and 14 cents per mile in service of charities. The rate for business miles is unchanged from a mid-year adjustment that became effective July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating a car. The IRS reminds taxpayers they always have the option of calculating the actual costs of using their vehicles rather than using the standard mileage rates.

IRSAnnounces 2012 Standard Mileage Rates

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Hengehold Motor CompanyTHE WORLD AUTOMOBILE AUCTIONEERS CHAMPIONSHIP will be webcast live this year

for the first time, courtesy of NIADA.TV. The live webcast of the 2012 WAAC can be viewed in its entirety on the home pages of www.niada.tv, www.niada.com and www.waacnet.net . Coverage begins at 11 a.m. Eastern time on Mar. 30 and is free for all online viewers. Cheer on your hometown favorite auctioneers and ringmen, and catch all the fun and excitement of the 2012 World Automobile Auctioneers Championship at your leisure, exclusively on all three websites. For more detailed information please visit www.niada.com and click on the “Events” tab, or call (303) 807-1108.

WORLD AUTOMOBI LE AUCT IONEERS CHAMPIONSHIP

WORL

D AUTOMOBILE

CHAMPIONSHIP

PAYNEARME, which has offered various business a vehicle for accepting instant cash payments from customers at 7-Eleven stores, has created an application specifically for Buy Here-Pay Here dealers.

PayNearMe Auto allows customers to make payments in cash in seconds at any of 6,400 7-Elevens, with the funds going directly into the dealership’s bank account, PayNearMe CEO Danny Shader said.

“What we’re providing is just so incredibly convenient – 24/7, literally anytime, day or night, right at your neighborhood 7-Eleven store and other retailers, walk in and in 30 seconds or less, you’ve made your payment and you’re gone, maybe with a Slurpee,” Shader said. “It’s instant, real-time credit for a loan, done 24/7 in your neighborhood. It literally couldn’t be any simpler. And in real time, as soon as they do that, the dealer is notified of the payment and the money is sent to the dealer’s bank account.

“The way to think of this is, it’s as though the dealer suddenly had 6,400 cash drawers around the country.”

Shader said his company has tested the product with a small number of dealers and the response has been “enthusiastic.”

“A high percentage of our customers would like to make their car payments with cash, but we haven’t offered that option until now because accepting cash payments on-site comes with risks,” said Ave Horowitz of Auto Warehouse in Chicago. “PayNearMe Auto makes cash transactions simple for both my dealership and my customers. Because PayNearMe provides our customers more locations to pay and because they can do it at a time convenient to them, we’re collecting more payments and increasing our efficiency.”

While some dealers encourage their customers to pay at the dealership, allowing them to check on the car and make sure the cash is received, Shader said many dealers do not, citing the expense and risk of handling so much cash in the store, the geographical limitations involved and keeping hours that allow customers to come in and pay.

“And with securitization of subprime auto loans,” Shader said, “in many cases, the folks who are buying the paper from dealers are insisting on a payment mechanism that exists independent of the subprime lender or the dealer so if something happens to either one of them there’s still a mechanism for that loan to be repaid. That reduces risk for the loan.”

Shader said he expects to add more locations for payments to be made in the near future, and that PayNearMe is also preparing to launch a “self-serve product for subprime auto lenders.”

PayNearMe Offers BHPH Dealers a New Way to Collect

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IN THE PAST YEAR, we have observed an increase in lawsuits involving the improper disclosure of DMV-related fees on purchase contracts. Those lawsuits are referred to as 2A/2B litigation because they involve Lines 2A and 2B on the purchase contract.

Dealers are probably aware that Line 2A is for license fees. Line 2B is for the disclosure of registration, transfer and title fees. Thus, the contract assumes these items will be separately itemized and then totaled on the line showing amounts paid for official fees.

The 2A/2B litigation occurs when the dealer incorrectly lumps the license fees, registration, transfer and title fees onto one line, usually Line 2A. This usually occurs due to a software setting in the dealer management program or dealer employees simply not knowing how the various fees should be itemized.

Consumer attorneys argue that lumping the fees together on one line results in an inadequate disclosure to the consumer. They say when the fees are lumped together, a consumer cannot tell how much he or she is being charged for estimated registration fees. As a result, the consumer is unaware if he is being overcharged and entitled to a refund. In regard to a used car, consumer attorneys properly note there should always be a charge on Line 2B of the contract. At a minimum, Line 2B should have the $15 title transfer fee required Vehicle Code §9255.

In some cases, the attorneys have a valid point. If a consumer was overcharged for registration and never received a refund from the dealer, the consumer has a potential breach of contract case and a potential claim under the Rees-Levering Automobile Sales Finance Act, Civil Code §2981 et seq. (“ASFA”). The remedy under Rees-Levering is cancellation of the contract, including the return of all the client’s money (down payment and installment payments) less an offset for vehicle use.

On the other hand, what if the consumer’s lumped fees on Line 2A were actually totaled correctly, underestimated, or overestimated and the customer received a refund? The consumer attorneys still argue the contract is cancellable under ASFA. In essence, they argue that ASFA is a strict liability statute and that any technicality, even if no damages are sustained, warrants cancellation of the contract.

Consumer attorneys are filing class action lawsuits over Line 2A/2B violations because a dealer’s lumping violation is often systemic across hundreds if not thousands of contracts. Can you imagine all those contracts being unwound over a technicality with no damages?

Substantial Compliance DefenseWhen there have been no damages

shown, there is a strong argument that the dealer “substantially complied” with its legal obligations under ASFA. In Stasher v. Harger-Haldeman, 58 Cal.2d 23, 32-33. (1962), the court accepted a “substantial compliance” argument in regard to fee lumping. The court also

noted that Civil Code Section 2982(a) does not specifically require that license fees and vehicle registration fees be itemized independently of each other, but simply calls for a statement of the amounts due to public officials.

Some of the local trial courts have followed the Stasher case, but others have bought into the consumer attorneys’ logic that the technical mistake, even with no damages, requires cancellation of the contract.Legislature to the Rescue?

Due to screaming dealers and active lobbyists, the California Legislature was forced to do something about 2A/2B litigation. In September 2011, the legislature passed an emergency bill to prevent continued litigation over fee lumping. Though the bill preamble states it was to take effect “immediately,” the actual bill language only applies to contracts signed after Jan. 1, 2012. Thus, the bill is not immediate nor does it retroactively apply to contracts signed before that date. In sum, the non-business friendly Legislature left open dealers’ backsides to the consumer attorneys.Arbitration Clause Unenforceable

After the U.S. Supreme Court resuscitated class action waivers earlier this year in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), dealers have once again sought to enforce the waivers set forth in the California 553-ARB form to prevent out of control class action litigation. However, California’s liberal court system has once again undone what the U.S. Supreme Court has already ruled on.

On Oct. 24, 2011, in Sanchez v. Valencia Holding Co., LLC, Cal.Rptr.3d, 2011 WL 5027488, a California Court of Appeal found the California 553-ARB contract is not enforceable. The court stated the Federal Arbitration Act (FAA) did not preempt California’s unconscionability doctrine as applied to invalidate the arbitration provision in a car dealer’s sale contract.

The court found the 553-ARB contract unenforceable because the arbitration clause was “hidden” on the back of the contract with no areas for initials or signatures, the customer was told the preprinted forms were on a “take it or leave it” basis, and because certain language in the arbitration clause favored the dealer more than the consumer.

In sum, the court found the arbitration clause was not fair to the consumer and refused to enforce it.

For now, most courts will look to Sanchez as controlling authority. Thus, we anticipate the arbitration provisions on the back of the 553-ARB form to undergo drastic modifications so dealers can once again take advantage of the U.S. Supreme Court’s favorable ruling on class action waivers.

BY MICHAEL C. ROGERSMICHAEL C. ROGERS, ESQ., IS A

REGULAR CONTRIBUTOR AND AN

IADAC PREFERRED PARTNER. VISIT

CALIFORNIADEALERLAW.COM.

2A/2B Lawsuits Making Dealers Toe the Lines

MINUTELEGAL

What Has IADAC Done for You Lately? Wards Auto Center Impound Predicament

I HAD A VEHICLE on a Buy Here-Pay Here lot of which Wards Auto Center was the lien holder. I received a standard impound notice in the mail from a local tow yard. I knew I had to get the vehicle back from the tow yard – as we all know, the dollars add up quickly.

I called the tow yard and asked what I needed to get the vehicle released. They said they need a release from the Sheriff’s office and the amount of the tow and storage to date. I got the deal jacket and headed to the Sheriff’s department. I explained the situation to the deputy clerk, and she told me she needed repossession paperwork and $165 for the department to release the vehicle to Wards Auto Center, and that didn’t even count the tow yard’s billing.

I told her the vehicle was not in repo status and I could not give her the paperwork showing the vehicle was in default. The deputy clerk told me she could not release the vehicle to Wards Auto Center, because I didn’t have legal recourse to take the vehicle.

After about 30 minutes of explaining to her that it was my vehicle and feeling like they were accusing me of a crime, I was at an impasse. My blood was boiling at this point and I left very frustrated, thinking, “I know this is wrong.”

All I felt was the clock ticking and money running out of my pocket. I went back to work and started breaking out the vehicle code book and feeling I was never going to find what I needed. After about an hour of looking through law books and searching the web, I thought, “I’m a member of IADAC. I’ll call Larry Laskowski at IADAC.”

I’ll be darned – Larry answered my call on the second ring and told me to call lobbyist Bill Dohring. I left a message with Bill and he called back within the hour. Bill told me exactly what I needed to know. He quoted the law verbatim and told me where and how to find it.

I went back to the Sheriff’s department armed with the knowledge I needed. I spoke again with the deputy clerk and after a brief squabble, she went to the officer in charge and they released my vehicle.

You should have seen the look on their faces when they were shown the law. They were just interpreting the law their own way, not the way it was written. Knowledge is power, and thanks to my membership in IADAC I had some power at a very small price (membership for IADAC), and that’s priceless.

Thanks again, Larry and Bill, for your timely information.

Ron Ward Wards Auto Center

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KELLEY BLUE BOOK has released a list of its 10 best used cars for less than $8,000, pushing the consumer base towards the option of pre-owned vehicles.

Though quality used inventory remains scarce, KBB contends there are still ways to get into a “good (and modern)” used vehicle without spending too much money.

With well-known models like the Ford Escape and more obscure units like the Mazda Protege5 making the list, KBB explained it has found the cars with the best “track record” from 2002 and later.

The popular Honda Civic tops the list with its 2004 model.

“We first compiled all the used cars 2002 and newer with a Kelley Blue Book retail value of less than $8,000 as of December 2011,” said Jack Nerad, executive editorial director for Kelley Blue Book’s kbb.com. “We then went through the list and handpicked the 10 used cars with the most appealing mixes of reliability, versatility and desirability, with an emphasis on track record. The vehicles on our short list offer incredible value for today’s budget-conscious car shopper.”

Here is KBB’s list of the 10 Best Used Cars Under $8,000 with commentary from its staff:

10. 2008 Kia Rio “The 2008 Kia Rio is the newest car on

our list, and is still covered under its original factory warranty. A great value as a new car, the Rio not only provides reliable performance in the subcompact market, but can be found in a number of trim levels, potentially making the value for your used car dollar even greater.”

Kelley Blue Book retail value as of December 2011: $7,895.

9. 2004 Ford Crown Victoria “The Crown Victoria is big, proven and an

American classic. With the discontinuation of the Crown Vic in the U.S., the desirability of good used examples is only going to rise. While you can, snag one of these great sedans for great value.”


8. 2003 Mazda Protege5 “The 2003 Protege5 gives you spirited

handling, good gas mileage, and in this 5-door wagon configuration, great utility as well. If you’re looking for a practical daily driver with a decent fun streak in its roots, the Protege5 deserves a serious look.”


7. 2002 Toyota Tundra Standard Cab “Those looking for a used full-size pickup

truck should seriously consider the 2002 Tundra. A bit spartan but with surprising handling and legendary reliability on its side, the Tundra offers a unique mix of capability and value. With its smooth and durable V8 engine, a used Tundra will return thousands of sure-footed miles.”

Kelley Blue Book retail value as of December 2011: $5,925

6. 2003 Ford Escape “Easy to drive, convenient and reliable, the

Escape provides ample space for grocery-getting without being overwrought in weight

Kelley Blue Book’s Top Used Cars Under $8,000

or size. A comfortable ride helps solidify Ford’s popular compact SUV a spot on this list.”


5. 2004 Scion xA“The 2004 xA was designed with value in

mind, and that value is magnified when the xA is a used car. The xA is extremely comfortable and offers surprising handling for an economy car. One quibble many had with the xA when it was released was the cost of the options; shop wisely and you’ll find yourself a truly great deal today.”


4. 2004 Pontiac Vibe “Owners of the Pontiac Vibe always seem to

get around to praising two aspects of this small, tall wagon: its gas mileage and its comfort. If you need some passenger and cargo space and don’t need some kind of status-flaunting accessory, the 2004 Vibe may just be the ticket for you.”


3. 2002 Toyota Corolla “You knew this one was coming. Purpose-

built to deliver reliability, comfort and value, the Corolla is always worth considering when

on a budget. It may not be the most exciting car on this list, but the Corolla’s value is unimpeachable.”


2. 2002 Infiniti G20“When released, this upscale reworking of

the Sentra was considered too similar to its little brother from Nissan. These days, if you can find one, you can get a premium badge and more features for less than you’d pay for a similarly sized but more pedestrian used car. Handling in the G20 is better than the Sentra, and it’s much better looking as well.”


1. 2004 Honda Civic “What else could top this list? If you have

24 hours and $8,000 to acquire some new wheels, just go buy the nearest used Civic and you’re likely to enjoy many years of trouble-free transportation. In addition to famous quality and reliability, the Civic is more fun and more comfortable than most of its compact sedan contemporaries. The same value and reliability that keep the Honda Civic near the top of the new car sales charts every year also qualify it as one of the all-time great used cars.”


BY AUTO REMARKETING

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SUNDAY, JUNE 10, 20123:00 pm – 7:00 pm Registration

MONDAY, JUNE 11, 20128:00 am – 9:00 pm Registration10:00 am – 12:00 pm EC/Svcs/Foundation Boards & Past

Presidents Meeting12:00 pm – 1:00 pm EC/Svcs/Foundation Boards & Past

Presidents Lunch3:00 pm – 5:00 pm BOD Meeting5:30 pm – 7:00 pm Cigars & Martinis7:00 pm – 9:00 pm Convention Kick-off Reception

TUESDAY, JUNE 12, 20127:00 am – 7:00 pm Registration9:00 am – 10:00 am CONVENTION OPENING SESSION10:15 am – 11:30 am GENERAL SESSION11:30 am – 1:00 pm Lunch

EDUCATION ON THE HOUR, EVERY HOUR1:00 pm – 1:45 pm Breakout 1, Breakout 22:00 pm – 2:45 pm Breakout 3, Breakout 43:00 pm – 3:45 pm Breakout 5, Breakout 64:00 pm – 4:45 pm Breakout 7, Breakout 85:00 pm – 9:00 pm Expo Grand Opening w/ Dinner

WEDNESDAY, JUNE 13, 20128:00 am – 6:00 pm Registration9:00 am – 10:00 am GENERAL SESSION10:00 am – 11:00 am GENERAL SESSION8:00 am – 2:00 pm NQD/Scholarship Interviews11:00 am – 3:00 pm Expo Open w/ Lunch3:00 pm – 3:45 pm Breakout 9, Breakout 10, Breakout 114:00 pm – 4:45 pm Breakout 12, Breakout 13, Breakout 147:00 pm – 9:00 pm National Leadership Awards Banquet

THURSDAY, JUNE 14, 20128:00 am – 3:00 pm Registration10:00 am – 12:00 pm State Presidents Council Meeting8:00 am – 5:00 pm Association Executives Council Meeting9:00 am – 9:45 am GENERAL SESSION10:00 am – 10:45 am GENERAL SESSION11:00 am – 2:00 pm Expo Open w/ Lunch

SOLUTION SESSIONS2:00 pm – 4:00 pm Breakout 15, Breakout 16, Breakout 17,

Breakout 18, Breakout 19, Breakout 205:30 pm – 9:00 pm National Quality Dealer Awards

Broadcast & Banquet9:00 pm – 11:00 pm NQD After-Party

CA_0212.indd 20 1/20/12 3:08 PM


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SUNDAY, JUNE 10, 20123:00 pm – 7:00 pm Registration

MONDAY, JUNE 11, 20128:00 am – 9:00 pm Registration10:00 am – 12:00 pm EC/Svcs/Foundation Boards & Past

Presidents Meeting12:00 pm – 1:00 pm EC/Svcs/Foundation Boards & Past

Presidents Lunch3:00 pm – 5:00 pm BOD Meeting5:30 pm – 7:00 pm Cigars & Martinis7:00 pm – 9:00 pm Convention Kick-off Reception

TUESDAY, JUNE 12, 20127:00 am – 7:00 pm Registration9:00 am – 10:00 am CONVENTION OPENING SESSION10:15 am – 11:30 am GENERAL SESSION11:30 am – 1:00 pm Lunch

EDUCATION ON THE HOUR, EVERY HOUR1:00 pm – 1:45 pm Breakout 1, Breakout 22:00 pm – 2:45 pm Breakout 3, Breakout 43:00 pm – 3:45 pm Breakout 5, Breakout 64:00 pm – 4:45 pm Breakout 7, Breakout 85:00 pm – 9:00 pm Expo Grand Opening w/ Dinner

WEDNESDAY, JUNE 13, 20128:00 am – 6:00 pm Registration9:00 am – 10:00 am GENERAL SESSION10:00 am – 11:00 am GENERAL SESSION8:00 am – 2:00 pm NQD/Scholarship Interviews11:00 am – 3:00 pm Expo Open w/ Lunch3:00 pm – 3:45 pm Breakout 9, Breakout 10, Breakout 114:00 pm – 4:45 pm Breakout 12, Breakout 13, Breakout 147:00 pm – 9:00 pm National Leadership Awards Banquet

THURSDAY, JUNE 14, 20128:00 am – 3:00 pm Registration10:00 am – 12:00 pm State Presidents Council Meeting8:00 am – 5:00 pm Association Executives Council Meeting9:00 am – 9:45 am GENERAL SESSION10:00 am – 10:45 am GENERAL SESSION11:00 am – 2:00 pm Expo Open w/ Lunch

SOLUTION SESSIONS2:00 pm – 4:00 pm Breakout 15, Breakout 16, Breakout 17,

Breakout 18, Breakout 19, Breakout 205:30 pm – 9:00 pm National Quality Dealer Awards

Broadcast & Banquet9:00 pm – 11:00 pm NQD After-Party

CA_0212.indd 21 1/20/12 3:08 PM


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NEW LEGISLATION was recently introduced in the state House and Senate that has the potential to significantly impact the auto industry in California.

As a result of an inflammatory series of articles published in the Los Angeles Times, legislators have busied themselves drafting laws with the intent of protecting the consumer. To see the articles, google “LA Times, Buy Here Pay Here.” Ken Bensinger is the author.

Legislators view the proposed new laws as ways to protect the consumer from abusive auto dealers.

Some details:

AB 1447 Feuers would:• Require auto dealers to display the

sales price of a vehicle on the vehicle• Prohibit dealers from requiring buyers

to make scheduled payments to the seller in person

• Following the sale of a vehicle, prohibit the seller from calling the buyer’s references, tracking the buyer’s vehicle with GPS technology, or disabling the vehicle with ignition override technology.

SB 956 Lieu would:• Impose the first-ever regulations

on dealers offering Buy Here-Pay Here installment loans by requiring them to obtain a California Finance Lender’s license, which would provide consumers with an array of protections

• Limit used-car installment loans to a maximum 17.25 percent interest, which would give California the strongest cap in the nation

• Change the way Buy Here-Pay Here dealers are able to repossess vehicles to include grace periods and make it easier for buyers to reinstate a repossessed car.

IADAC is creating a coalition of stakeholders to properly address the key legislators with facts and solid reasons to oppose the points of the bills. Please contact IADAC at (916) 893-3306 or email [email protected] with your thoughts. When we find out what committees these bills will be heard in, we will publish a list of the representatives for you to contact with your comments.

The first Bill of 2012 to draw our attention was AB 336, by Dickinson. This bill sought to regulate title loans, but the original draft did not have the proper language to exempt the independent dealer from the proposed regulations. Lobbyist Bill Dohring was able to have the bill re-worded to exempt auto dealers, and the bill has since died in committee.

IADAC Needs Your Help!

What is Your Agreement?

WHEN IT COMES TO THE AGREED-ON SALES finance terms between a dealer and a buyer, a lot of questions need to be addressed to avoid misunderstandings and, consequently, compliance and legal troubles for a dealership.

What is the “agreement?” Is it in the credit application, buyer’s order, conditional delivery agreement, trade-in summary, manufacturer’s warranty, retail contract, other documents, or in some combination of them? If the terms are found in many documents, how do you know which ones?

In short, if you can’t easily determine which documents comprise your complete sales financing agreement then you are going to have challenges enforcing it. If the terms of those documents don’t all agree with each other, you are also going to have challenges enforcing them.

A strategy to avoid confusion is to say one document comprises the entire agreement between the parties. For example, a retail installment sales contract (RISC) may include a provision (usually near the signatures) that the entire sales financing agreement between the parties is in the RISC. This makes the RISC the one and only document containing the entire and final terms of the transaction. This is a “merger” or “integration” clause because it merges or integrates all terms into one agreement. The advantage is that if there is litigation, the one and only document needed to interpret the rights and responsibilities of the parties is the RISC.

But a recent court decision highlights how the advantage of a merger clause can turn into a disadvantage. In Duval Ford v. Rogers (District Court of Appeals, Florida, 2011), the court held that a dealer could not enforce its arbitration provision in the buyer’s order. Why? Because the RISC included a merger clause, saying that it contained the entire agreement between the dealer and buyer. Since the arbitration provision wasn’t in the RISC (and wasn’t included by reference), it fell outside the terms of the agreement. This was a case in which the merger clause kept out terms the dealer wanted to be a part of the final agreement.

That disadvantage of a merger clause can be overcome with an adjustment to the clause. A variation of the single document approach is including in the RISC specific references to other documents saying they are also a part of the merged terms. Together, the RISC and the referenced documents describe the entire agreement between the parties.

For example, the RISC could say the parties signed a separate conditional delivery agreement, which is incorporated into and made a part of the RISC by reference. The RISC could also note that

warranty documents are provided separately, including the Federal Trade Commission’s used car window form. Incorporating other documents by reference allows the parties to agree that a specific set of documents comprise the entire agreement. If you use this approach, you need to make sure the RISC includes cross-references to all the separate documents you want included in your final agreement.

It may sound like you should incorporate everything by reference into the RISC – that way you have it all covered. Not so. Another recent Florida decision points out the potential danger of including other documents. In Cuello v. Maroone Honda of Miami (Cir. Court, 11th Judicial Cir., Florida, 2011), the court found it was inconsistent to have RISC terms that purported to be final but then have a separate conditional delivery agreement saying the terms might not be final. The court held that the inconsistency created a Truth in Lending violation and corresponding state statute violations.

One lesson from that case is that the documents you choose to represent the entire sales financing agreement need to be consistent with each other (though whether the RISC and conditional delivery agreement are truly inconsistent is controversial and a topic unto itself). The RISC should include a cross-reference and maybe even a brief explanation about the other specifically included documents so all parties understand that they work together and why.

Perhaps another lesson from the Cuello case is that dealers should carefully choose the documents they want to be enforced as part of the final sales financing agreement between the parties. For example, pre-closing documents may reflect incomplete terms or terms in flux due to information not yet available or in negotiation. They might not include additional warranty protection or service products a buyer decides to purchase at closing. Merging those documents and terms would potentially create confusion about the actual agreed-on final terms.

The market’s response to recent Florida cases is still being determined. For now, it is clear that in Florida, or any other state, the best course of action is to review and determine which documents are intended to be a part of your final sales financing agreement with a buyer and then confirm that your RISC and other documents make it clear.

BY CHIP ZYVOLOSKIChip Zyvoloski is a senior attorney

for indirect lending at Wolters

Kluwer Financial Services. For more

information, visit www.wolterskluwerfs.

com/indirect.

ComplianceOverdrive

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