carolinas ciada auto dealer news

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ALSO Resolutions, Opportunities and Cupid

PLUS Learn to Earn

PREPARING FOR THE FUTURE

AUTO DEALER NEWS C A R O L I N A S 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

February/March 2011

PRSRT StandardU.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

V i s i t u s a t w w w . t h e c i a d a . c o m

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ADVERTISERSINDEXADESA ....................................................... 9AutoTrader.com .................. Inside Back CoverCars.com ..................................................... 7 Charleston Auto Auction ............... Back CoverManheim.com ..................... Inside Front CoverSmartAuction ..............................................11Spartan Financial Partners .......................... 5Sterling Credit .......................................... 17United Acceptance ................................... 13Western General / Protective........................ 3

INSIDE

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] CAROLINAS INDEPENDENT AUTOMOBILE DEALERS ASSO-CIATION IS PUBLISHED BI-MONTHLY BY THE NATIONAL INDEPEN-DENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPO-RATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE (817) 640-3838. PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF CIADA OR THE NATIONAL INDEPENDENT AUTOMOBILE DEAL-ERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTIS-ERS, OR THEIR IDENTIFICATION AS MEMBERS OF NIADA, DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT © 2011 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

MAGAZINECONTENTS 6 Resolutions, Opportunities and Cupid 8 Preparing for the Future 10 Learn to Earn

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P.O. BOX 1088 HARRISBURG, NC 28075 PHONE: 704-455-2117 OR 1-800-432-4232 FAX: 704-455-6810 WWW.THECIADA.COM CIADA IS A NON-PROFIT 501(C)6

CIADAOFFICE

No dealer should be without the NADA Official Used Car Guide. These must-have guides feature pocket-size portability for quick and easy car-side appraisals. Additionally, NADA Online gives you 24/7 online access to used vehicle values, at your desk and out at the auction on your smart phone, while NADA e-Valuator for Dealers software combines more than 19 years of NADA values on your PC and offers an inventory feature.

NIADA offers member subscription discounts for the NADA Official Used Car Guide, as well as NADA Online and NADA e-Valuator for Dealers.

Contact your state association or NIADA at 800-682-3837 for your discounted subscriptions or complete the online ordering form at www.nada.com/niada. The promotional code for ordering discounted NADA products is NIADA199. This code will need to be entered during checkout to receive the discount.

Discount code available for NADA Guide

NIAD

A199

Dealers who demonstrate commitment and support the principles and ethical business standards of the CMD® designation complete a four-day seminar that addresses Business Management, Merchan-dising, Financial Management, Human Resources, and Business Planning. Northwood University provides the instructor 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. Visit niada.com for more information.

CMD Classes

THE NEXT CLASS WILL BE MARCH 10-12

Manheim, the world’s largest provider of vehicle remarketing services, cares about its employees, the environment and the communities it serves. From fund raising drives to tutoring kids after school to supporting long-term conservation efforts, Manheim and its employees are dedicated to giving back to their communities and knows independent vehicle dealerships across the country share in this commitment.

For the first time this year, Manheim is recognizing and honoring those dealerships by awarding the 2011 National Manheim Community Service Award at the 65th NIADA Annual Convention and Expo. For information on how to nominate and to obtain more in-depth information, please contact Georgia Brown, NIADA director of education, at 817-640-3838 or see page 15.

NIADA/Manheim Community Service Award

The Carolinas Independent Automobile Dealers Association was organized in 1955 to assist members in enhancing their reputation in the marketplace, gain political influence and provide opportunities to interact with and meet other dealers for the purpose of sharing business and marketing ideas.

As a mature and long-standing Association, we are proud to maintain the ideals and principles set by the founders. But today, we offer more…far more. With a fulltime professional staff, modern technology and world class educational programs, we have become a strong, effective and influential organization that exists for one reason only: To represent the independent, non-franchised automobile dealer!

PRESIDENTCHARLES SAVERANCESAVERANCE FAMILY AUTO CENTERFLORENCE, SC

PRESIDENT ELECTTRACY MYERSFRANK MYERS AUTO MAXX INC.WINSTON SALEM, NC

NC VICE PRESIDENTMICHAEL DARROWTHE AUTO FINDERS INC.DURHAM, NC

SC VICE PRESIDENTMALCOLM SHEALORASHLEY PREFERRED AUTO GROUP INC.MT. PLEASANT, SC

TREASURERLUKE GODWINGODWIN MOTORS INC.COLUMBIA, SC

SECRETARYWILL DAVISG & B AUTO SALES OF LOUISBURG INC.LOUISBURG, NC

CHAIRMAN OF THE BOARDBOBBY HOFFMANSPEC HOFFMAN AUTO SALESASHEBORO, NC

EXECUTIVE COMMITTEE

CIADA STAFF

The Carolinas Independent Automobile Dealers Association was organized in 1955 to assist members in enhancing their reputation in the marketplace, gain political influence and provide opportunities to interact with and meet other dealers for the purpose of sharing business and marketing ideas. As a mature and long-standing Association, we are proud to maintain the ide-als and principles set by the founders. But today, we offer more…far more. With a fulltime professional staff, modern technology and world class educa-tional programs, we have become a strong, effective and influential organiza-tion that exists for one reason only: To represent the independent, non-franchised automobile dealer!

P.O. Box 1088 Harrisburg, NC 28075

Phone: 704-455-2117 or 1-800-432-4232 Fax: 704-455-6810 www.theciada.com

CIADA is a non-profit 501(c)6

Lisa Kluttz Ext 107

Jayne Harris Ext 111

Leslie Waslo Ext 110

Catherine Neely Ext 102

Carl Mischinski Ext 109

Krista Simmons Ext 103

John Brown Executive Director

Ext 105

Meet Our Professional Staff





Lisa Kluttz Ext 107







Ext 105






Lisa Kluttz Ext 107







Ext 105






Lisa Kluttz Ext 107







Ext 105






Lisa Kluttz Ext 107







Ext 105






Lisa Kluttz Ext 107







Ext 105


EXECUTIVE DIRECTOR JOHN BROWNEXT 105

CARL MISCHINSKIEXT 109

CATHERINE NEELYEXT 102

LISA KLUTTZEXT 107

JAYNE HARRISEXT 111

LESLIE WASLO EXT 110

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and CupidYou are most likely asking yourself,

what do these three things have in common?

Glad you asked.Simply put, it’s about the future for

CIADA.It’s that time of year when many of us

make a resolution based on the opportunities we would like to have happen to us over the next year. Usually by Valentine’s Day, we have ditched the resolution just about as quickly as Cupid shoots his arrow in inspiration. By the way, like the resolution you just punted on, Cupid’s a myth, too.

What is not a myth is the opportunity before us as an association and as an industry.

When we do hold on to the resolution and change occurs with the desired outcome, there is nothing more satisfying.

In 2011, we have the opportunity to continue building towards an even better 2012 with the change we began in 2010.

With some good news in new car sales starting to bounce back, used car sales will continue to be the bread and butter of the industry. This is good news for our independent dealers who have to be motivated from the fact the worst, economically speaking, is likely behind us.

That provides CIADA with an opportunity and a challenge. We have the opportunity to be of more value to our members by offering quality training and education as well as dealers risk and insurance services by connecting dealers to various business partners who can ultimately improve their financial success and by being the conduit to elected officials and regulators on independent auto dealer issues.

CIADA now has the ability to offer dealers one of the fastest-growing segments in the used auto market through our relationship with NIADA. Certified Pre-Owned programs have gained strength as customers and dealers benefited and everyone wins. Now, CIADA – in partnership with NIADA – can help our

members offer value and peace of mind to customers while selling a certified unit that produces higher profit margins and moves off your lot faster than a non-certified unit.

Leveraging our strengths for the success of our dealers is the value proposition we will continue to build upon in 2011. It is not a New Year’s resolution, but rather a way of life for the CIADA staff as we position your association to better serve you.

Your CIADA board will continue to provide independent dealer guidance and professional experience as a peer, as well as financial stability for the association via strategic investments for CIADA members.

It’s a new beginning and I hope you’ll join me in positioning the organization for both the short and the long term!

If you aren’t a member, I would ask you give us a try. CIADA is a one-stop answer for all your dealer continuing education requirements, questions and needs. Successful dealers are involved in their industry and support their dealer association. CIADA is the only independent dealer association that represents only the interests of the independent dealer and provides a partnership with the only national association representing the independent dealer.

If you want all the benefits, training, discounts and connections to Certified Master Dealers, there is a price to pay. For less than a dollar a day – an insignificant price when compared to the potential cost of benefits provided – you will be part of a growing membership of more than 1,500 dealers who share your passion for being an independent dealer and working in an industry which still has its best days in front of us.

In every issue of the Independent Dealer Magazine, there is a CIADA membership application. Send in your application today and become an active partner in the association that has you and your dealership’s success as its number one objective.

RESOLUTIONS, OPPORTUNITIES

Mark Your Calendars for the 2011 National Tire Safety Week!RMA’s tenth annual National Tire Safety Week will be held June 5-11, 2011.

The annual event is an initiative of the RMA’s “Be Tire Smart – Play Your PART” program, a year-round effort designed to help drivers learn the sim-ple steps they can take to ensure that their tires are in good working condi-tion. RMA is the national trade association for tire manufacturers.

Tire manufacturers and retailers nationwide will work to educate motor-ists about proper tire care and maintenance. RMA provides tire retailers, auto dealers and auto-motive repair shops with free “Be Tire Smart” bro-chures and other materi-als. Many participating retail outlets use the op-portunity to promote tire care through advertising, promotions, free tire pres-sure checks and conduct-ing media outreach.

More than 22,000 tire and auto service outlets participated in the 2010 National Tire Safety Week. RMA re-leased a survey of more than 5,400 vehicles that showed half with at least one under inflated tire. Nearly 20 percent of ve-hicles had at least one tire under inflated by 8 pounds per square inch (psi). Under inflated tires waste fuel, risk safety and cause tires to wear out faster.

Tire and auto retail-ers who are interested in obtaining free RMA ma-terials for National Tire Safety Week can order them online at www.be-tiresmart.org. Those who have participated in the event before can expect to receive materials again this year.

CIADA EXECUTIVE DIRECTOR JOHN BROWNBY

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A new year brings new goals, and new hopes for improved sales, more

lenders, and more profits for everyone. As with any change in the marketplace, dealerships must prepare their team to meet the current demands of the marketplace.

SALES: From all I’ve read, the customers are back. People are once again going to the dealerships to replace their old vehicles with smaller, more fuel-efficient models, and some are adding to their family fleet so they can meet the weather challenges. The great news is the customers are back from their long hiatus.

What are they finding at the dealerships? The customers are finding store personnel stretched, and the once-many choices of inventory they enjoyed in the past now cut. The product selection step in the selling cycle will need to stress selling what you see in front of you. During the past few years, those dealerships that survived have learned how to manage inventory more effectively, as well as turning it more quickly. They’ve also learned how to operate in a lean environment.

PERSONNEL: Plan on hiring sales personnel and educating them. Personnel are stretched to the point of having job descriptions blurred. I think the time is coming to redefine the roles and create a work environment where they can focus upon the job at hand and cease worrying about what additional items will be asked of them. Multitasking can become dysfunctional after awhile.

Sales processes while basic never change, I find each dealership has a specific culture and the process often must be modified to reflect the culture so management will support the process after the educator leaves.

Education is not a one-time event. Plan a continuous relationship with your education resource. Every process should be monitored, measured, and modified as required. After the modifications have been made, the new process needs to be re-implemented, monitored and the producers need to be held accountable.

LENDERS: The industry needs more of them, and we need them to approve loans. Dealerships will need to continue to seek local credit unions and other local lenders to approve consumer financing. Credit unions may not be use to the independent dealerships, but this is an opportunity to put your best face forward and sell yourself and your business acumen to the lenders.

I was asked how important relationships with lenders are; they’re critical to your success. Lenders again wish to become a close business advisor to your operation. They’re going to want a piece of every banking transaction you have; wholesale, retail, merchant services, checkings and savings, personal and business.

When you think of lenders, what was old is now new again. Keep your ears to the wind; contact every source prospect for lenders at every opportunity.

COMPLIANCE ISSUES: Spend the time it takes to create a binder with your policies and procedures regarding the plethora of federal regulations we must meet. The following is a beginning checklist for those policies and procedures:

With the creation of the new credit protection agency, I think we’ll begin to see enforcement of the rules and regulations and perhaps some additional items will be added to the list of required written documentation.

Review your existing policies and verify what’s written is what’s actually happening. If not, then change either the policies or your practices. Once a policy and procedure is placed in writing, the company is bound by the words it writes.

Conduct self-audits as written in the policies and procedures. Document the education content and the timing of the education of new hires. Document any breaches of security, or failure to adhere to the company policies.

As you know, I am not an attorney and this is not to be used as legal advice. These words are meant to be educational only. Please consult your legal counsel for all legal issues.

The future is once again bright. Prepare for success.

______ DISPOSAL RULE P______ SAFE GUARD RULE P______ OFAC SDN LIST P______ RED FLAG RULE P______ ADDRESS DISCREPANCY RULE P______ RISK-BASED PRICING RULE P______ ADVERSE ACTION LETTERS P

FutureBy Jan Kelly, president of Kelly Enterprises

Jan Kelly is an educator and consultant, international convention speaker and writes frequently for industry publications. For information about educational venues or joining our F&I 20 Group, call 800-336-4275 or visit www.JLKelly.com.

P R E PA R I N G F O R T H E

ONCE A POLICY AND PROCEDURE IS PLACED

IN WRITING, THE COMPANY IS BOUND

BY THE WORDS IT WRITES.

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P R E PA R I N G F O R T H E

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One of the crucial things I learned during my 30-plus years of interacting with sales-related people is quality salespeople are made, not born. Those salespeople who experience great sales success are rarely great from the start. They make themselves great because they realized they could be no better than the level of their preparation.

I firmly believe the salesperson’s life should be a life of continual learning. There is no place in a sales career where a salesperson can say there is nothing more to learn, no more skills to develop, no more techniques to improve or no more methods to try. Regardless of how long someone has been selling, it is my conviction there is always something to learn. Believe me, nothing fails like a bit of success if it keeps someone from looking for new and better ways to improve performance.

As you look at your dealership, what can you say of the results you are getting from your salespeople? Do you need to change or improve your sales culture? Is it time you became more involved in the improvement of your salespeople’s skills?

If the answer is “yes,” then think about what your goals might be. Consider a two-fold approach. First, provide an educational experience that will help your salespeople achieve mental, emotional and psychological improvement to create instant action and second, to offer your salespeople specific statements (or, as we call it “What to say when…”) for almost any situation, question or objection that they may encounter in their

sales time with customers.One approach might be to define five or

six key topics you want to emphasize. May I suggest: How to Locate Customers; Getting to Know the Prospect; A Sales Presentation that Works; Close: Getting to “Yes;” Getting the Deal Done: Finance and the Delivery; and After the “Yes.” These seem to be the prominent skill areas salespersons need most in defining, and experienced – I did not say old – sales staffs often need to sharpen. You want to make sure your sales staff are following your dealership’s philosophy and are singing from the same songbook.

I don’t have to tell you there are various ways you can approach training. You probably have already done them all. You probably thought some were effective while others were real bombs. Finding the most effective way of keeping your dealership’s learning curve at its very best is a challenge for every dealer, general manager or sales manager. Squeezing in time for effective new salesperson orientation sessions or training (perhaps retraining) the experienced just doesn’t happen as often as it should. It takes leadership to make it happen.

As you evaluate the sales practices at your dealership, consider what is really working, what needs improvement and what you need to eradicate. I challenge you to get involved in making the sales culture the best it has ever been. Be a part of the learning. Be a working leader, actively engaging the sales staff.

As a trainer, I preached that message to every group I stood before, and after years

in the automotive industry; I have collected volumes of presentations. I admit some sessions were better than others, but I have always enjoyed watching a salesperson grow or hearing from a dealer with whom I have worked that his staff is really making strides in sales. Once you get hooked on promoting learning to earn, you miss it when you aren’t as actively involved. That is why when a couple of old independent automobile industry friends of mine suggested I put my knowledge and expertise into an online training program and approach NIADA about using it with it’s members, I decided to create the Pre-Owned Online Sales Training Course.

The timing was perfect because NIADA has recently initiated an Education and Training Consortium to encourage quality educational opportunity providers to join together to offer programs and products to the independent automobile industry. Consortium selection criteria focus on the needs of the dealer. I am happy to say that Lou Vickery’s Pre-Owned Online Sales Training Course met that standard and is one of the first educational opportunities to be offered. It is simple, straightforward and offers flexibility that both the dealer and the salespersons can appreciate.

Whether you use this course or select another approach, I challenge you to stay focused on growing your people. Help them become the most effective salespersons in the industry. Encourage their enthusiasm. Cultivate their energy. The profits will be yours!

Learn to Earn with NIADA’s Education and Training Consortium

A S S O C I A T I O N N E W S

Lou Vickery, an Alabama native, is a former professional baseball player and coach who worked with Merrill Lynch before going into the training and development field. He has presented his customer-focus programs to more than 30,000 people at more than 2,800 companies and dealerships in 44 states and two foreign countries. Vickery, the author of ten books, is in his sixth year of broadcasting and hosts “Lou in the Morning” in the Pensacola, Fla., market.

B Y L O U V I C K E R Y

LEARNEARN to

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BHPH CHOOSING YOUR FINANCING PATH By Stephanie Patrick

The struggling economy, a troubled housing market and skyrocketing car and truck prices were all factors in Daryl Spear’s decision to offer Buy Here-Pay Here (BHPH) at his new dealership.

His base clientele was the working poor. They had low-wage jobs and damaged credit histories, but they needed cars and wanted reliable, pre-owned General Motors vehicles to transport them to their jobs safely without breaking their families’ already-tight budgets with high repair bills.

Spear’s Auto Sales moved to a larger location in 2009 and there are a few Toyota, Honda, Saab and Subaru vehicles sold alongside GMs these days, but the Spokane Valley, Wash., dealership’s business model and philosophy remains largely unchanged nearly 28 years later.

“When people are down with economic woes, it’s great to be able to give them the chance to start over with us and build back their finances,” said Courtney Spear, Daryl’s daughter, who took the reins as the dealership’s president in 2004 when her father retired. “People just want a chance, and they can be

very loyal customers if you put trust in them.”The dealership has second- and third-

generation return customers to prove the late Spear’s business decision successful. But establishing BHPH operations and making them work in the long-term require much more, said his daughter and other BHPH

veterans.Build a well-planned cash forecast to

provide an understanding of how much money you’ll need during the first 24 to 36 months to operate a business that often caters to frazzled single moms, overworked factory workers and tired waitresses all struggling to afford reliable transportation, said Chris Leedom, founder and president of The Leedom Group, a Sarasota, Fla.-based consultancy specializing in pre-owned car sales, special finance and BHPH.

“The single-biggest mistake that somebody makes is they say, especially if they are already a dealer, ‘How complicated can this be? I’m selling cars,’” said Leedom, who owns several BHPH dealerships. “Even in 25 months to three years, a dealership can consume as much as $1 million in cash.

“A lot of people miscalculate how much cash it’s going to take them as a dealer.”

Leedom said both those entering BHPH for the first time in 2011 and BHPH veterans must maintain Excel spreadsheets monthly. That way, they understand the cash demands of BHPH and effectively can develop cash

forecasts and their own business models.Leedom’s firm counsels about 150 new

dealers and non-dealers each year, ranging from cardiologists to certified public accountants, since 1995.

“We typically tell them that if they don’t have readily available at least $500,000 or

$750,000 of working capital, and they can’t see in the first 12 months of operation where they have that at their availability not where they can go out and borrow it--- they are probably going down the wrong path,” he said.

“You might call that the price of admission. If you don’t have $750,000, which is pretty much the price of admission on a new start up, you’re probably pursuing the wrong business opportunity.”

Leedom said existing dealers should set aside $250,000-$500,000.

Even automotive industry veterans often fail to factor financial realities in BHPH situations, he said. In an average BHPH scenario, the customer may pay $500-$1,000 down, but that doesn’t cover costs associated with reconditioning the vehicle or taxes; so, the real cost is likely more than $3,000 per vehicle.

With the typical BHPH customer paying about $300 per month loan payments, if paying as agreed, it takes nearly a year to recoup costs. Multiply that by 25 units, and it’s nearly $1 million not including overhead costs of running any store.

The flipside is BHPH helps dealerships in slow sales months because they can expect previous customers’ loan payments each month. And as long as dealers are cognizant of the cash considerations, Leedom said BHPH-only models are easier for new dealerships to adopt when the store is opened.

“THE SINGLE-BIGGEST MISTAKE THAT SOMEBODY MAKES IS THEY SAY, ESPECIALLY

IF THEY ARE ALREADY A DEALER, ‘HOW COMPLICATED CAN THIS BE? I’M SELLING CARS,’” SAID LEEDOM, WHO OWNS SEVERAL BHPH DEALERSHIPS. “EVEN IN 25 MONTHS TO

THREE YEARS, A DEALERSHIP CAN CONSUME AS MUCH AS $1 MILLION IN CASH.

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“The advantage is now all of your inventory, all of your marketing and your entire business effort, is narrowly focused on one type of business,” he said. “You are strictly trying to attract customers (who really) need financing for vehicles, and you can craft your marketing that way.

“Where it becomes difficult is if you are trying to become all things to all people. It can be challenging to attract the Buy Here-Pay Here customer who requires financing and the same time try to sell me a 2-year-old Chevy Tahoe for $22,000...you are probably not going to be able to carry that type inventory.

“There are two completely different marketing paths there.”

Ken’s Kars, which opened in Dayton, Ohio, in the 1940s, offers pre-owned vehicles that range from $2,000 Chevy Cavaliers to $30,000 Chevy Tahoes. But, third-generation owner Ken Smiley said the dealership is moving away from its long tradition of offering BHPH-only loans.

Smiley said most cars are too expensive to finance via BHPH these days, and the Cash for Clunkers program now has too many new car dealers keeping more of their used vehicles and purchasing additional used units at auctions. Ken’s Kars sells 15-20 vehicles each month

under BHPH with 18-month terms, compared to about 60 vehicles per month five years ago.

“Typically, I try to only BHPH finance cars under $9,000,” he said. “I also stick with American cars, such as the smaller SUVs, Bonnevilles and Chevy Impalas because they last longer and they don’t break down as often.

“Most of the Buy Here-Pay Here that goes bad is because the car breaks down. If the car breaks down, the customer just gives it back; (the customer) doesn’t have any remorse because they are going to run across town and buy something from someone else.”

The dealership’s revenue was good when offering more BHPH, but losses mounted when the housing market started to fall apart a few years ago. The vehicle repossession rate reached 20 percent, but now it’s down to 2 percent or less because Smiley chooses his loan recipients more carefully and sends others to subprime lenders.

“My best advice is not to do Buy Here-Pay Here right now,” he said. “If you are, proper screening of the customers is most important because people’s credit situations are so bad; it’s a great time to find customers but if they can breathe, they can get financed.

“I have people with multiple bankruptcies that I can get financed through subprime

companies. To me, it seems crazy to put your money out (with BHPH loans) when you can make good profits through a subprime company.”

There’s still a need for financing, but some people asking for BHPH now have gotten to the point where they haven’t paid any bills, he said. In addition, gone are the days when a 600 or higher credit score is needed.

“Now, you are looking at 450s and you’re getting them financed through the banks,” Smiley said.

He and Leedom said customers have grown to expect “more cars” for their money, a trend that has most BHPH dealers increasing the average cash value of the vehicles on their lots. Loans for BHPH are typically between $5,000 and $10,000, and Smiley is increasing the quality and average price of his vehicles to compete with new car dealers in his area.

“There’s huge profit in (BHPH), but banks are realizing that, too,” Smiley said. “If they can get somebody with a couple credit dings, they are going to jump all over them at 25 percent interest; that’s what they are doing.”

He recently sold a car to a woman with a 490 credit score, who was bank-approved for a $15,000-$16,000 car.

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It is hard to believe that 10 years have already passed since the opening of the Charleston Auto Auction. Originally opened in 2001 as a one lane auction running 50 vehicles on a good day. It has now grown to a 6 lane, national award winning state of the art facility featuring over 700 vehicles on a weekly basis. Current clients included new car franchise dealers, independent dealers, wholesalers and institutional accounts such as bank/lease/rental and donation organizations.

“I want to thank all of our clients for making us the auction we are today. I especially want to thank our independent dealers for their loyalty. There is no way we would be where we are now if it wasn’t for you. I want everyone to know that no matter how large we become, our beliefs will never change. Excellence in customer service will always be the standard for Charleston Auto Auction. ” stated Keith Lelux, Chief Operating Officer of American Auto Auction Group.

So How Is The Auction Going To Celebrate????By Giving It’s Dealers A Shot At Winning $1,000,000.00 Of Course!

Get ready for the Charleston Auto Auction 10th Anniversary Sale on March 18th!

Featuring $50,000 in cash & prizes, plus the $1,000,000.00 sweepstakes!!!!

This is how it works: For every vehicle you buy or sell January 7th thru March 18th (10th Anniversary Sale) you will receive a ticket. Fill this ticket out and place it in the tumbler located at the auction. At the end of the 10th Anniversary Sale on March 18th, tickets will be drawn from this barrel. 24 dealers will have a chance to spin the Charleston Auto Auction prize wheel hoping to land on the $1,000,000 pie piece. 3 dealers who land on this $1,000,000 piece will have a chance at an early retirement, the other 21 will walk away with a very nice prize.

So how do you win the $1,000,000.00 if you are one of the lucky 3? Each of the 3 dealers will choose one envelope out of a group of 150 envelopes numbered 1 thru 150. 149 of the envelopes says “Sorry, Better Luck Next Time”, one says “WINNER”. If you choose the “WINNER” envelope, you then need to call your bank and tell them to make room for your $1,000,000 deposit!!!

If you are one of the three finalists but do not pull the winning envelope, you will still leave happy because Charleston Auto Auction will still give you a $5,000 consolation check.

“I don’t want to lend her a $15,000 car,” Smiley said. “You have to get the money collected, and it takes you forever to get it collected.”

Casey Skapik, Smiley’s cousin, understands the frustration. While he runs Keowee Auto Sales in Dayton as a more traditional BHPH operation, the former banker considers pre-owned car sales to be more finance-oriented than sales-oriented.

Increased government regulations and the shortage of affordable cars to sell have him considering offering service contracts and insurance products to generate more revenue in 2011. The 65-year old, family owned dealership sells 15-20 cars a month, and the average price is about $7,000.

“I could sell three times more cars than I do, but I would have 10 times more headaches,” Skapik said. “I tend to be more selective who I will sell to.”

He said dealers need to look for signs of financial stability, such as steady jobs and stable housing or rental histories. Skapik requires BHPH customers to provide, on average, a 22-percent down payment and offers 30-month terms.

“There are a lot of people who come in with

$400 or $500 for a down payment but if you let them drive away, you’ll have that car back in a few months because they can’t afford it,” he said. “And they aren’t as committed to the car because they only had $400-$500 invested in it, where my average customer has $1,200-$1,400 in it; they are going to be more attentive to making the payments.”

Keowee’s repossession rate is about 10 percent. Meanwhile, the dealership has a large number of return customers who purchase 1997-2004 vehicles such as Buick Park Avenues and LeSabres, Chevy Impalas, Tahoes and Suburbans, as well Dodge Durangos.

Each dealer also develops a few unwritten rules to protect the dealership’s best interest.

Smiley avoids BHPH loans to the younger crowd and home health nurses, whose jobs often have them traveling to new communities and make them more difficult to track. Leedom’s Florida dealerships opt not to loan to anyone without a Florida driver’s license because that state’s population is so transient.

“Generally, you need to avoid people who are in your area less than six months or a year,” Leedom said. “They are the ones most likely to leave.”

In addition, a BHPH dealer must be flexible, said Spear, whose dealership also began dabbling in non-BHPH finance options a few months ago. Even well-intentioned customers have financial disasters affect their abilities to pay their loans, and each late-paying situation should be handled with respect and consideration.

“Our business is tough right now in general, but so is everyone else’s business,” she said. “We have to remember that because our buy here pay here customers really do need us.”

The dealership has about 60 cars on its lot at any time and records about five repossessions in a month, and customers can get them back if they pay their accounts. The repossession rate decreased steadily as the dealership increased the value of its vehicles, selling them for $5000-$14,000.

Spear still wants to sell less expensive cars, those in the $3,999-$5,000 range without salvage titles, because there’s customer demand. However, like the many other dealers nationwide, she can’t find enough now.

“You can’t just go after the quick buck,” she said. “If you get into car sales, it’s because you like people; if you get into Buy Here-Pay Here, it’s because you care about people.”

BHPH continued FROM PAGE 13

REMEMBER, THE MORE YOU BUY AND SELL

JANUARY 7TH THRU MARCH 18TH,

THE BETTER YOUR CHANCES AT

WINNING!

10 GREAT YEARS!!!!CELEBRATING

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Dodd-Frank Wall Street Reform and Con-sumer Protection Act

Congress ended with the Federal Trade Com-mission beginning in earnest to review the auto industry in the light of the above consumer en-acted law. Last Nov. 17, NIADA General Counsel Keith Whann and Federal Advocates met with se-nior staff of the FTC as a follow-up to the Sept. 21 meeting. A series of questions had been provided to NIADA for discussion in November. At the meeting, Keith walked them through the process of buying a car and provided samples of purchas-ing documents. The FTC is in the process of for-mulating questions for public comment regarding various aspects of the auto industry as it relates to consumers. FTC staff was not forthcoming as to the timing of that effort, its scope and its intended purpose. The results of the latest meeting were reported to NIADA’s Legislative Committee by conference call on Nov. 23.

Also, on Sept. 21, Whann and Federal Advo-cates met with FTC staff regarding implementa-tion of the above Bill and its impact on the auto industry. Following discussion of various issues, with Whann leading the discussion and answer-ing various questions as to how the auto industry works, including the auction practice itself, it was decided to schedule a half day session to allow for a more detailed discussion of issues (i.e., the Nov. 17 session). All of this is a result of the so-called Wall Street Reform Bill. As reported previously, the new law exempts some auto dealers from in-creased oversight with respect to dealer-assisted financing. The law does grant increased powers to the FTC regarding dealer oversight. Also, it requires coordination with the Department of De-fense to ensure service members and their families are treated fairly by automobile dealers.

Senate Motor Vehicle Safety Act of 2010

Congress ended with no formal action on this bill. To review, on June 9, the Senate Commit-tee on Commerce, Science and Transportation marked up and order reported S.3302, the so-called Toyota Bill. In earlier drafts of the bill and just prior to markup, language was included (sec-tion 310) which would have specified a dealer may not sell or lease a used passenger motor vehicle (both wholesale and retail sales) until the dealer first notifies the purchaser or lessee in writing of any recall notices.

Working primarily with Sen. John Thune, R-S.D., his staff (Brenden Plack), and committee staff (Alex Hoehn-Saric and Chris Herndon), and as a result of concern raised by Whann and his pro-posed suggestion, section 310 has been dropped from the bill. This provision would have seriously hurt used car commerce by imposing tremendous compliance costs and liability exposure for dealers while increasing the safety risk for consumers by pushing unremedied vehicles into the unregulated private sale used car market. While an initial vic-

tory, we will continue to advocate on behalf of NIADA’s interest pending further action on the Senate bill as well as a possible House companion bill.

Small Business Jobs and Credit Act of 2010

The Obama administration has delayed implementation of the above bill until March. On Sept. 23, the House passed the Senate-passed bill, which includes an increase in the amount the Small Business Administration’s Dealer Floor Plan Financing program can guarantee. This permits the SBA to guaran-tee bank and finance company loans up to $5 million, which should help, the committee believes, expand dealer access to floorplan lines of credit. We worked with Louisiana Democrat Sen. Mary Landrieu’s committee and personal staff, in conjunction with others, on this. The bill may be the subject of subse-quent meetings with the Hill and the SBA on how the program really works.

White House Reform RequestOn Sept. 23 and Sept. 29, Federal Advo-

cates was contacted by the White House,

which is still trying to organize and schedule a meeting to include “people who are work-ing to setup the CFPB.” This meeting is in re-sponse to a letter sent by NIADA to President Obama requesting “the opportunity to work with you to reform our industry in common-sense ways that achieve real safeguards for consumers, that promote accountability and transparency, and that work.”

Department of DefenseRegarding the issue of “how to ensure

that service members and their families are treated fairly by automobile dealers,” Whann and Federal Advocates also met on Sept. 21 with the Defense Department’s Frank Emery in the Office of Personal Finance, Family Policy Outreach Directorate. Whann relayed a specific example of how he helped a service member at Fort Bragg with an automobile situation, working with the JAG and others. He also talked about his plan for a special program to teach dealers on how to deal fair-ly with service members and their families. DOD continues to remain interested in look-ing for opportunities where Whann could lend his expertise.

FEDERAL ADVOCATES IS NIADA’S GOVERNMENTAL ADVOCACY PARTNER. To read past lobbying reports, visit www niada.com/legislative_and_legal.php

FEDERAL ADVOCATES DECEMBER 2010 LOBBYING REPORT

10 GREAT YEARS!!!!

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The NIADA Foundation invites graduating seniors of the 2010-2011 school year to complete a scholarship application in pursuit of funds to be paid to the colleges of their choice in the Fall of 2011. Four regional scholarships are awarded annually in June at the NIADA Convention and Expo. Last year, each scholarship was in the amount of $3.500.

THIS YEAR’S APPLICATIONS MUST BE POSTMARKED NO LATER THAN FEBRUARY 1 AND RECEIVED AT THE NIADA OFFICE BY FEBRUARY 10.

ELIGIBILITY REQUIREMENTSTO BE ELIGIBLE APPLICANTS MUST: Be classified as a high school senior during the current 2010-2011 school year and legally reside in one of the four NIADA regions;

Have maintained an outstanding academic achievement record as reflected by an official high school transcript; and

Demonstrate an aptitude for college work as measured by SAT or ACT scores.

APPLICATION PROCESSThe 2011 Scholarship information and application have been posted on the NIADA Foundation website at www.niadafoundation.org. Applications must be postmarked by February 1, 2011. It must be submitted in a 10-by-13-inch envelope with adequate postage to:

SCHOLARSHIP SELECTION COMMITTEE NIADA FOUNDATION2521 BROWN BLVDARLINGTON, TX 76006

All information must be included with the original application. No additional information will be accepted at a later date.

NIADA staff will review the applications for completeness and will forward them to the NIADA Scholarship Selection Committee and at Northwood University in Midland, Mich. They will be reviewed by regions. One applicant will be selected from each of the four NIADA regions based on the merit of his or her scholarship application and will be notified by the foundation office no later than mid-May 2011.

Information regarding the NIADA/AutoTrader.com National Scholarship to Northwood University may be obtained by contacting the Northwood University Financial Aid office.

IT’S NIADA SCHOLARSHIP APPLICATION TIME AGAIN!

AULtec announced Tuesday that dealerships using its Dealer Profit Center to list, publish and market their online vehicle inventories can now benefit from online inventory feeds and price updates to Cars.com.

AULtec — a sister company of AutoUpLinkUSA that is involved in inventory data and vehicle image acquisition, management and online publishing — will conduct these feeds and updates to Cars.com several times each day, officials said.

“This multiple daily data feed from AULtec to Cars.com is a game-changing advancement in online inventory management,” officials noted.

Dealers who utilize AULtec’s DPC product suite and Cars.com can tap into the service for free. It is available immediately. Those looking to obtain more infor-mation are encouraged to e-mail Skip Murphy at [email protected] or call (866) 949-9754.

“Now dealers having this advantage will have the most dynamic, freshest and most competitively priced inventory on the Internet,” they added.

Cars.com Partners with AULtec to Ramp Up Daily Data Feeds on Inventory Listings

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>> Any positive working relationship is based on trust. An environment of trust assumes both parties will be safe, and it carries with it an implicit message you have each other’s best interests in mind. That’s why employees can accept criticism and even anger from a boss they trust. The employees know deep down the boss really means to help. Trust is an interesting quality because, once it is lost, it is hard to recapture.

The question is how do you develop trust between people in the workplace? After all, when you have people from various backgrounds coming to work together, they usually don’t have a history with each other and there’s no base of trust to begin with and grow upon. That’s the reason managers need to be proactive and create an environment of trust apparent to all.

Limit LecturingTo ensure employees will make good

decisions, managers often begin to lecture. Lecturing and telling your employees what to do implies you don’t have faith in their decision-making abilities. This can result in their becoming defensive. If people do not have faith in themselves, then the manager’s faith in them decreases even more and the lecturing begins again.

Even well-intentioned lectures convey the subtle and negative message that what the employee has done is wrong or not good enough. All people are sensitive about being told what to do and they often want to prove themselves in the workplace. Rather than lecture employees, consider using reflective questions such as, “What do you think about . . . ?” “Have you thought of . . . ?” and “Would you consider . . . ?”

Listen to LearnEpictetus is credited with saying, “Man

has one tongue but two ears that we may hear from others twice as much as we speak.”

Listening to learn and valuing people’s feelings and ideas is what promotes the ability of managers to effectively communicate with and influence their staff. For most managers, their first reaction is to evaluate the employee from their own point of view, then approve or disapprove of what the person says. This is listening autobiographically. It shuts down the employee’s self-confidence, initiative, and open communication.

An easy strategy for replacing this tendency of listening autobiographically is to cultivate the habit of listening to learn. Listening is a

skill that can be improved. It starts by taking the position of a good listener. It’s getting ready to hear what’s about to be said. It is refraining from the all-too-common practice of hearing a few words and then jumping in with a response. You may have experienced the feeling that arose when someone finished your sentence before you had finished it yourself. When a manager interrupts an employee who is attempting to communicate, it prompts a negative emotion and no one enjoys being interrupted.

Listening in anticipation of what an employee will say is another habit to break. Listening in anticipation encourages interruptions. All people want to be acknowledged and don’t wish to feel you know what is about to be said. Interrupting is an indication you don’t care about hearing the other person’s viewpoint as much as your own.

THREE KEYS TO BUILDING TRUST BETWEEN MANAGERS AND EMPLOYEES

Management Perspectives A manager who listens well acknowledges their employees’ feelings and opinions. Remember, no great insight ever enters the mind through an open mouth. It is important to let people know you’re willing to listen, even though it may not result in agreement. Just use the most effective sales principle: inquiry precedes advocacy. In other words, listen before you talk.

Work Smarter

Many people often say, “If I want something done right, I have to do it myself.” Yet effective managers know delegation of tasks is essential for building trust in the workplace. When you hold onto tasks and don’t delegate, you deprive your employees of an opportunity to advance their skills. Focus on treating your staff as if they are who, how, and what you would like them to be.

Once the employee completes a task, the objective should be to focus on progress rather than perfection. If the person’s result does not meet your expectations, you can still find something positive to comment on while helping the employee understand what the initial expectations are. This is far more effective than comments that foster guilt or a sense of failure. A positive approach prompts an incentive for the task.

Remember, there isn’t any empowerment more effective than self-empowerment. Because being positive is so enabling, it is best to displace thoughts and communications that are destructive. For example, saying “you are bad tempered,” has the same meaning as “you need to work on controlling your temper.” However, the first labels the person, whereas the second enables the person. People change more by building on their strengths and aptitudes than by working on their weaknesses.

Create a Trusting Environment Without trust in the workplace,

communication and teamwork will erode. Additionally, morale will decrease while turnover will rise. However, by using these three strategies you can build your employees’ trust in management, thereby making their workplace an environment filled with innovation, creativity, and ultimately higher profits for all.

Dr. Marvin Marshall – an American educator, writer, and lecturer – is widely known for his programs on discipline and learning. His approach stemmed from his acquiring knowledge about youth as a parent; a recreation director and camp counselor; a classroom teacher; a school counselor; an elementary and high school principal; district director of education; and as a certificate holder from the William Glasser Institute. For more information, visit www.marvinmarshall.com.

REMEMBER, THERE ISN’T ANY EMPOWERMENT MORE EFFECTIVE THAN SELF-EMPOWERMENT. REMEMBER, THERE ISN’T ANY EMPOWERMENT MORE EFFECTIVE THAN SELF-EMPOWERMENT. REMEMBER, THERE ISN’T ANY EMPOWERMENT MORE EFFECTIVE THAN SELF-EMPOWERMENT.

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Curbstoned cars are often cheap, but state and local governments pay a high price. A new case study from Stop Curbstoning reveals the true cost associated with a single curbstoner. A recent California Department of Motor Vehicles (DMV) curbstoning investigation ended with a felony arrest on 12 counts of perjury and filing false documentation, but for Stop Curbstoning, that was just the beginning. The organization examined the financial impact of curbstoning using this single real-life case as an example. It found cities in which the curbstoner operated lost more than $56,000 in sales tax revenues alone, and the state of California lost $168,000. Other financial costs included lost license revenue, lost local business and potentially increased emergency response burdens due to unsafe vehicles – all from just one curbstoner. “Because there are so many curbstoners out there, even small things add up to a lot,” says Charles Redden, president of AutoTec, one of the companies behind the effort to stop curbstoning. “Take the annual state license fee for used car dealers. In California, it’s $176 for the first year and $126 to renew. But for every thousand curbstoners, that’s over a quarter-million dollars every two years.” “With local governments increasingly strapped for cash, enacting and enforcing anti-curbstoning laws can be a quick way to boost revenues and enhance their communities at the same time.” The community enhancement and public safety aspects of enforcing anti-curbstoning laws are harder to quantify, but should not be underestimated, Redden says. “Getting curbstoned vehicles off the streets frees up parking for local businesses, reduces obstacles to traffic, and eliminates eyesores,” Redden says. “It also eliminates a major source of unsafe vehicles – cars that look OK, but have major structural damage or missing safety equipment. How do you place a dollar value on all that? It’s priceless.” For more information about the case study, curbstoning and efforts to put a stop to this illegal practice, visit StopCurbstoning.com.

HOW MUCH CAN JUST ONE CURBSTONER COST YOUR CITY? As the new Risk-Based Pricing Rule takes effect this month,

auto dealers need to make sure they have information, resources and tools in place so they are ready to comply. Applying to Buy Here-Pay Here (BHPH) dealers and those who do business with third-party creditors, the rule requires dealers to notify consumers when they receive materially less favorable credit terms than others based on consumer report information.

According to the new rule, a risk-based pricing notice must be provided to the consumer before signing the credit agreement (direct lending note or indirect retail installment sales contract). The notice must:

Include information about the elements of a credit report.State the annual percentage rate and other terms were set based on

the consumer’s credit report.State the terms offered may be less favorable compared with the

terms offered to consumers with better credit histories.Encourage the consumer to verify credit report accuracy.Identify all consumer reporting agencies that supplied a consumer

report used in the credit decision.Inform the consumer of the right to a complimentary copy of a

consumer report from those agencies for 60 days after receipt of the notice.

Provide guidance on obtaining a consumer report.Direct the consumer to the Federal Reserve Board and Federal

Trade Commission’s websites.Dealers can use a case-by-case method, a credit score proxy method

or a tiered pricing method to identify which customers must receive a notice. For more info, a Adobe PDF is available at www.ftc.gov/os/2009/12/R411009riskbasedpricingfrn.pdf.

An exception to the Risk-Based Pricing Rule allows dealers to provide a credit score disclosure notice to all customers who apply for credit. This option is only available to dealers who use credit scores in the decision to extend credit. This exception notice must include the consumer’s credit score, the date it was created, its source, and information about the range of scores and how lenders use them. In addition, the notice must provide a description or graphical representation of how the applicant’s credit score ranks in comparison with other consumers. For this, dealers will need data from their consumer credit report suppliers.

The exception notice may be the easiest path to compliance for many dealers, as it avoids the analysis of who is required to receive a risk based-pricing notice. However, each dealer should look at its own unique business to determine which compliance option will work best.

While dealers may be concerned that the new rule will create more paperwork and administration, risk management platforms can help automate indirect lending, credit approval and compliance processes. By unifying lending transactions and simplifying documentation, a technology platform can enable quicker decision making and help prevent financial and legal penalties resulting from non-compliance.

Whatever notice option your dealership pursues under the new rule, automating credit approval and compliance processes can help you ease the regulatory burden on staff resources, reduce your risks of non-compliance, and safeguard your dealership’s reputation.

Lee Domingue is CEO of indirect lending at Wolters Kluwer Financial Services. For more information, visit www.wolterskluwerfs.com/ilsolutions.

Complying with the Risk-based Pricing Rule

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