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March 2015 Vol. 27 No. 3 FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216 MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109 AUTO D E A L E R MASSACHUSETTS The official publication of the Massachusetts State Automobile Dealers Association, Inc Getting On B ard

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The official publication of the Massachusetts State Automobile Dealer Association, Inc.

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Page 1: March 2015 MSADA Auto Dealer

March 2015 • Vol. 27 No. 3

FIRST CLASS MAILUS POSTAGE PAID

BOSTON, MAPERMIT NO. 216

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

autoD E A L E R

M A s s A c h u s E t t s

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

Getting

On B ard

Page 2: March 2015 MSADA Auto Dealer
Page 3: March 2015 MSADA Auto Dealer

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

4 From the President: springing forward

6 the roUndUP: legislature Crawls along

10 troUBLeshootnG: Handling employee Complaints

11 LeGAL: The Commission-Paid overtime exemption: are You Maximizing Its Utility?

12 AUto oUtLooK

14 ACCoUntinG: buying or selling a Dealership?

16 soUnd oFF: benchmarks of Dealership Values

18 Cover Story: Getting on board

22 neWs From Around the horn

27 nAdA UPdAte: Throwing My Hat into the Ring

28 ACCoUntinG: The Forgotten Profit Center

29 deALer serViCes: Transitions to Work

30 deALer serViCes: Why so Much sales People Turnover?

32 nAdA mArKet BeAt

www.msada.org Massachusetts auto Dealer MARCH 2015

The official publication of the Massachusetts State Automobile Dealers Association, Incs Ta f f D I R e C T o R YRobert O’Koniewski, Esq.

executive Vice [email protected]

Jean Fabrizio Director of administration

[email protected] Brennan, Esq.

Staff [email protected]

Marta Argueta-Guerraadministrative assistant

Membership [email protected]

a U T o D e a l e R M a G a z I n eRobert O’Koniewski, Esq.

executive editorCatherine MacDonald

editorial [email protected]

subscriptions provided annually to Massachusetts member dealers. all address changes should be submitted to: MsaDa by

e-mail: [email protected]:

send address change to:one McKinley square, sixth floor

boston, Ma 02109

autoD E A L E R

M A s s A c h u s E t t s

auto Dealer is published by the Massachusetts state automobile Dealers association, Inc. to provide information

about the bay state auto retail industry and news of MsaDa and its membership.

aD DIReCToRY

blum shapiro, 23boston Herald, 36

Downey & Company, 24lynnway auto auction, 25

nancy Phillips, 23 o’Connor & Drew, 35

Reynolds & Reynolds, 21 southern auto auction, 22

sunTrust, 26

aDVeRTIsInG RaTesInquire for multiple-insertion discounts or

full Media Kit. e-mail [email protected]

Join us on Twitter at @MassautoDealersQuarter Page: $450

Half Page: $700full Page: $1,400

back Cover: $1,800Inside front: $1,700Inside back: $1,600

Page 4: March 2015 MSADA Auto Dealer

from the President4

MARCH 2015 Massachusetts auto Dealer www.msada.org

By Scott Dube, MSADA President

A

Springing Forward As the snow melts, MSADA watches for new dangers in our industry

s we continue to dig out from one of the harshest win-ters any of us can remember, I’m both excited and wary about the challenges facing our industry this year. On the positive side, we’ve got two great new additions to your Association’s Board of Directors. Then, of course, there’s the ever present regulatory threats that we push back on every day.

Being an auto dealer is an all consuming task. This isn’t a job where you can have a case of the Mondays or phone in from the club house four days out of the week. Our business requires leadership, giving it 100 percent every day. MSADA is here to keep lookout while you are out moving metal.

A handful of your colleagues are always spreading them-selves between both worlds -- the daily grind and bigger pic-ture. In addition to the stalwarts on our Executive Board, we’re always in need of representation from across the Common-wealth. And it’s my pleasure to welcome new board members: Brad Tracy, who now represents Barnstable County through his Tracy Volkswagen dealership, and Jeb Balise, who represents Hampden County through the Balise Auto Group.

Both are hard working, high achieving dealers whose back-grounds you more than likely share. Read more about them in this month’s cover story on page 18. I look forward to continu-ing to work with them on the board as we face a ramp up in legislative activity and continue to plan for the year ahead.

You’ve heard me say it over and over again, but it’s always more true than the last time I said it: We all can do a few simple things to advance the interests of our entire industry in Mas-sachusetts. When was the last time you called your legislator?

Was it when we were work-ing for 93B reform or fight-ing back on Tesla’s encroach-ment? It’s time to make that call again. And while there’s always something on our agen-da, it’s important to never for-get that engaging them on the

ins and outs of your business is crucial. You legislator should care about how your business is doing, not just how you feel about the hot button issue of the day. Our next Dealer Day on Beacon Hill will be Wednesday, May 13. When you receive our materials, please be sure to register.

As we finally enter Spring, I encourage you to grow your relationship with your legislators. It’s a relationship that will always pay off when it counts, and it’s as simple as a few min-utes here and there. While a new governor might provide some relief, it’s never a good time to be complacent as business own-ers in Massachusetts.

So next time you see Brad and Jeb, likely at our Annual Meeting on May 1, please take a minute to show your apprecia-tion for their efforts. More importantly, I encourage you to join us for Dealer Day and make that call to your legislator some time soon -- definitely before the next crisis. While not all of us have the time or ability to contribute at the director level, we can all be useful in helping to spread the word about our role in the communities we serve.

Finally, we wish “good luck” to our NADA Director Don Sudbay, who has thrown his hat in the ring for NADA Vice Chairman. The Vice Chair has never been from Massachusetts, so this is an historic undertaking.

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MSADA

“Our business requires 100 percent every day. MSADA is here

to keep lookout while you are out moving metal.”

Page 5: March 2015 MSADA Auto Dealer

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www.msada.org Massachusetts auto Dealer MARCH 2015

Name Contact TelephoneAlbin, Randall & Bennett Barton D. Haag (207) 772-1981American Fidelity Assurance Co. Lennox Cornwall (304) 702-7399AutoAlert Don Corinna (505) 304-3040AutoRaptor (RAL) Howard L. Leavitt (401) 421-6533Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000Boston Globe Mary Kelly, Tom Drislane (617) 929-8373The Boston Business Advisory Group Paul Cuomo (781) 681-1501 Vincent Saccone (781) 681-1519Burns & Levinson LLP Paul Marshall Harris (617) 345-3854Cars.com Heidi Allen (312) 601-5376 CDK Global Chris Wong (847) 407-3187CitNOW Jack Gardner (617) 221-8008 Construction Management & Builders, Inc. Kate Sullivan (781) 246-9400CVR John Alviggi (267) 419-3261DealerDOCx Brad Bass (978) 766-9000 Dealermine Inc. Karen Parmenter (800) 304-3341 x5179 DealerTrack Ernest Lattimer (516) 547-2242Downey & Company Paul McGovern (781) 849-3100EasyCare New England Inc. Mike Douglas (770) 246-9724Ethos Group, Inc. Drew Spring (617) 694-9761F & I Resources Jason Bayko (508) 624-4344Federated Insurance John Ballard (859) 312-9896First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320Gulf State Financial Services Cliff Lang (713) 580-3143GW Marketing Services Gordon Wisbach (781) 899-8509 Huntington National Bank John J. Marchand (781) 326-0823John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 KEEPS Corporation Darcy Silver (718) 309-6133Key Bank James Q. Moretti (781) 558-5132, Mark Flibotte (617) 385-6232KPA Rob Stansbury (484) 326-9765Leader Auto Resources, Inc. Chuck August (518) 364-8723Lynnway Auto Auction Jim Lamb (781) 596-8500M & T Bank John Federici (508) 699-3576Management Developers, Inc. Dale Boch (617) 312-2100MetalWave Mark Babcock (603) 686-4421 MetroMedia Energy Timothy Teevens (800) 828-9427Micorp Dealer Services Frank Salkovitz (508) 832-9816Mid-State Insurance Agency James Pietro (508) 791-5566Mintz Levin Kurt Steinkrauss (617) 542-6000Murtha Cullina Thomas Vangel (617) 457-4000Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004Northeast Dealer Services, Jim Schaffer (781) 255-6399O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120Performance Management Group, Inc. Mark Puccio (508) 393-1400R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300Reflex Lighting Ping Weiner (617) 269-4510Resources Management Group J. Gregory Hoffman (800) 761-4546Reynolds & Reynolds Marc Appel (413) 537-1336Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301Samet & Company John J. Czyzewski (617) 731-1222Santander Richard Anderson (401) 432-0749Schlossberg, LLC Michael O’Neil, Esq. (781) 848-5028Sentry Insurance Company Eric Stiles (715) 346-7096Shepherd & Goldstein Ron Masiello (508) 757-3311Silverman Advisors, PC Scott Silverman (781) 591-2886Solect Energy Development Kristen Brandt (781) 733-0223 Southern Auto Auction Tom Munson (860) 292-7500SunTrust Bank Michael Walsh (617) 345-6567 Taino Consulting Group Herby Duverné (617) 797-9316Target Dealer Services Andrew Boli (508) 564-5050TD Auto Finance BethAnn Durepo (603) 490-9615TD Bank Michael M. Lefebvre (413) 748-8272The Institute For Business Excellence Bill Napolitano (508) 643-2299TrueCar Pat Watson (803) 360-6094 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Windstream Rick Caruth (978) 296-0313; (413) 977-6111 Zurich American Insurance Company Steven Megee (774) 210-0092

AssociAte MeMber Directory

MsAdA BoARd Barnstable County

brad Tracy, Tracy Volkswagon audiBerkshire County

brian bedard, bedard brothers auto sales Bristol County

Richard Mastria, Mastria auto GroupEssex County

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

Franklin CountyJay Dillon, Dillon Chevrolet

Hampden CountyJeb balise, balise auto Group

Hampshire Countybryan burke, burke Chevrolet

Middlesex CountyChris Connolly, Jr., Herb Connolly Motors

scott Dube, bill Dube Hyundaifrank Hanenberger, MetroWest subaru

Norfolk CountyJack Madden, Jr., Jack Madden ford

Charles Tufankjian, Toyota scion of braintreePlymouth County

Christine alicandro, Marty’s buick GMC IsuzuSuffolk County

Robert boch, expressway ToyotaWorcester County

steven sewell, Westboro Mitsubishisteve salvadore, salvadore auto

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

[open]Immediate Past PresidentJames G. boyle, Tuck’s Trucks

NADA DirectorDon sudbay, Jr., sudbay Motors

OFFICERsPresident, scott DubeVice President, Chris Connolly, Jr.Treasurer, Jack Madden, Jr.Clerk, Charles Tufankjian

MSADA

Page 6: March 2015 MSADA Auto Dealer

As we approach the first day of Spring (finally!) the Legislature seems stuck in its procedural dol-drums about which we wrote last month. As you may recall, the House and Senate have elected their overall leaders for the 2015-2016 session, and each chamber has approved rules govern-ing their own sides of the building. A conference committee, however, is still meeting to resolve differences in the joint rules proposals put forth by each chamber.

Consumer Protection Committee Re-Forms

While the world awaits the commencement of substantive activity by the 189th session of the General Court, the House finally approved chair-men and member assignments for the 27 joint standing committees and the 13 House commit-tees, to go along with the Senate assignments, which occurred in early February.

One of the committees that has oversight of issues of considerable import to us is the Joint Committee on Consumer Protection and Profes-sional Licensure. This committee has jurisdiction over such issues as the new- and used-car Lemon Laws, our 93B franchise law, the 93A Consumer Protection Act, doc fees, proposals like the Car Buyers Bill of Rights, and the so-called “right to repair” act.

As the 2015-2016 session commences, 10 out of the 17 Committee members will be new to this body, including four newly elected representatives (Vincent, Carvalho, Tosado, and McKenna) and one new senator, who was promoted by voters to the Upper Chamber from the House (Fattman).

Thomas Kennedy (D-Brockton) returns as the Senate chairman. There is a new House chair,

however – four-term representative, Jennifer Ben-son, a Democrat from Lunenburg. Here are the committee members with their party and home-town (* indicates returning committee member):

Rep. Jennifer Benson, House Chair (D-Lunenburg)

Rep. Frank Moran, House Vice Chair (D-Lawrence)*

Rep. James Arciero (D-Westford)Rep. Tackey Chan (D-Quincy)*Rep. Jonathan Zlotnick (D-Gardner)Rep. Dan Hunt (D-Dorchester)Rep. RoseLeeVincent (D-Revere)Rep. Evandro Carvalho (D-Dorchester)Rep. Jose Tosado (D-Springfield)Rep. Steven Howitt (R-Seekonk)*Rep. Joseph McKenna (R-Webster)Sen. Thomas Kennedy, Senate Chair

(D-Brockton)*Sen. Anthony Petruccelli, Senate Vice Chair

(D-East Boston)*Sen. Kathleen O’Connor Ives

(D-Newburyport)*Sen. Michael Rodrigues (D-Westport)Sen. James Timilty (D-Walpole)*Sen. Ryan Fattman (R-Webster)Once the legislative process gets into gear and

the public hearings unfold as bills are sent to com-mittees, these individuals will be reviewing some of the most important legislation for dealers. We have been meeting with Committee members and key legislators to brief them on our issues in prep-aration of the hearing process.

Another committee that has oversight of some of our issues, such as activities by the Registry of Motor Vehicles, is the Joint Committee on Transportation, chaired by Sen. Thomas McGee

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MARCH 2015 Massachusetts auto Dealer www.msada.org

the roundup

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

Legislature Crawls Along

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MSADA

(D-Lynn) and Rep. William Straus (D-Mattapoisett). They return as chairmen from the last session, and they are already confronting potential reforms of the pub-lic transportation system, whose flaws were greatly exposed this past Winter.

Dealer Day on Beacon Hill – May 13

A great opportunity for dealers and their key managers to get involved in the legis-lative process, our annual “Dealer Day on Beacon Hill” will be held on Wednesday, May 13, in Boston.

We have sent out information on this event. We are asking our member dealers and their key employees to convene at the Parker House Hotel in Boston beginning at 10:00 a.m. in preparation of walking up to the State House to meet with their representatives and senators to discuss those issues in the automotive industry that dealers are presently confronting. We will have an issues briefing and a keynote address to get dealers in a proper frame of mind to provide legislators a dealer’s perspective on your economic footprint locally and throughout the state in the ag-gregate. For those dealers we know who will be attending, we will schedule your legislative appointments for you.

It is extremely helpful to our lobbying efforts for legislators to see their constitu-ents face to face and receive a perspective they don’t have in the normal course of their activities. No one knows your busi-ness better than you. That knowledge needs to be conveyed to your legislators in an environment and manner they un-derstand, hence our Dealer Day on Bea-con Hill. Please circle the date and plan on visiting Boston on May 13.

Gov’s FY2016 BudgetOn March 4, as required by the state

constitution, Governor Charles Baker filed his proposed spending plan for fiscal year 2016, which begins July 1, 2015. The $38.1 billion budget proposal does not in-clude any new proposed taxes and would increase state spending by 3 percent while

aiming to carve $750 million in savings out of the MassHealth Insurance program.

Having addressed in his first month of office a deficit of at least $760 million in FY2015 left over by his predecessor, De-val Patrick, Gov. Baker is looking at, as offered by several analysts, a structural budget deficit of at least $1.8 billion going into FY2016. One of the major challenges the Governor and legislators face is how to reform the administration of the mass transit system and other public transpor-tation activities, including a discussion of any potential revenue streams earmarked for transportation. Readers may recall that, as a result of other “reforms”, the MBTA presently receives at least 20% of all sales tax revenues, including all sales tax rev-enues derived from motor vehicle sales.

The House and Senate Ways and Means Committees are conducting joint public hearings around the state on the Gover-nor’s budget proposal. The House will of-fer up its own version of the budget for consideration by members in April, and the Senate will do similarly in May. Their differences will be resolved by a confer-ence committee, hopefully in time for the July 1 start of the fiscal year.

Save the Date: Annual Meeting – May 1, Boston

Your Association will conduct this year’s Annual Meeting on Friday, May 1, at the Mandarin Oriental Hotel in Boston. We are lining up a number of exciting industry speakers for the day. Be on the lookout for our invitation and registration materials.

New RMV Head – Erin DeveneyOn March 10 Governor Baker, through

his Secretary of Transportation, Stephanie Pollack, appointed attorney Erin Deveney to the post of Interim Registrar of Motor Vehicles, effective March 16, 2015. This is a one-year appointment. Deveney will succeed Registrar Celia Blue, who will transfer to a new role as MassDOT Senior Advisor for operations assisting Secretary Pollack to facilitate a seamless transition

at the RMV. Blue has served as Registrar since January 30, 2014.

After graduating from the College of the Holy Cross in 1994, Deveney went on to earn a Juris Doctor from Suffolk University Law School in 1997. Deveney comes from the Department of Children and Families, where she served as Interim Commissioner beginning in April 2014.

Immediately prior to joining DCF, De-veney was Chief of Staff at the RMV for five years and previously served as Depu-ty Registrar, General Counsel from 2000 to 2005, under Dan Grabauskas.

Snow Storm Loan FundIn recognizing the hardship that small

businesses throughout the Common-wealth have faced in recent weeks due to unprecedented snowfall and historic winter conditions, Governor Baker an-nounced that the Massachusetts Growth Capital Corporation (MGCC) has ap-proved a snow storm loan fund to help small businesses regain financial stability and recover from lost storm revenue.

MGCC will make up to $1 million in loan funds available to provide micro-loans of $5,000 to $10,000 to small busi-nesses located in communities impacted by the harsh winter weather, particularly those in Boston and in gateway cities. It is anticipated that this program will run through May 2015.

The general terms of the loans are as follows: • Open to Mass.-based businesses;• Loan amounts $5,000-$10,000;• 3-year note;• Annual interest rate 5%;• Personal guarantee required of all own-

ers with 20% or more interest in the company;

• All asset lien on business;• No prepayment penalty.

MGCC will be responsible for funding the loan, managing the loan portfolio, col-lection of interest and principal payments, and all decision-making regarding loan approval. To apply for a snow storm loan from the MGCC, please visit the follow-ing link: http://www.massgcc.com/about/article/application-storm-loan-fund.

continued on next page

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the roundup

MARCH 2015 Massachusetts auto Dealer www.msada.org

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from prezious page

FMLA New Definition of “Spouse”

The United States Department of La-bor issued a new rule, effective March 27, 2015, broadening the definition of “spouse” for purposes of the federal Fam-ily and Medical Leave Act (FMLA). The FMLA grants eligible employees the right to take unpaid, job-protected leave for specified family, medical and military-related reasons. The purpose of the new rule is to permit eligible employees in legal same-sex marriages to take FMLA leave to care for their spouse or family member, regardless of where they live and regardless whether their current state of residence recognizes same-sex mar-riages. The rule change was prompted by a 2013 Supreme Court decision.

Under the new definition, a spouse can be an opposite-sex or same-sex individual who was legally married in the location where the marriage took place, regardless of where they currently live. The regula-tion also recognizes common law marriag-es that were entered into in a state where such marriages are recognized. If the mar-riage was entered into outside the United States, the couple are considered spouses if the marriage was validly entered into in the country where the individuals were married and if the couple could have been lawfully married in a least one state.

Language in the preamble to the new DOL rule seems to suggest that an eligi-ble employee seeking FMLA leave need only allege the existence of a spousal re-lationship, and that employers may not require proof or documentation of such. This runs directly counter to existing reg-ulatory language and to DOL Forms WH-381 and WH-382, which contemplate that employees seeking leave provide suffi-cient documentation to establish a spou-sal relationship. Moreover, the preamble seems to suggest that employers are pre-sumed to know the marriage laws for all potential “places-of-celebration.”

Massachusetts dealers who have 50 or more employees and are therefore cov-

ered by the FMLA should be aware of this expanded definition of spouse in the event they question an employee’s mar-riage status. For most dealers in Massa-chusetts, this will not be a problem since Massachusetts recognizes same-sex mar-riages and dealers are unlikely to inquire about the location of the marriage.

Dealers should revise their leave poli-cies to accommodate the new definition of “spouse,” should educate employees about the new definition and its potential impact on FMLA leave requests, and to attempt to administer the FMLA rules equally and fairly with respect to all eli-gible employees.

Reminder on Open Safety Recalls

A recent ABC News item reported that new vehicles had been delivered with open safety recalls. Federal law imposes a “stop sale” on all new, undelivered ve-hicles and parts subject to a safety recall. Once a dealer receives notice of a safety recall, affected new vehicles or parts may not be delivered until the defect or non-compliance is remedied. Dealers are en-couraged to review their internal policies to ensure that new vehicles under recall are not being delivered to customers.

We have written extensively on dealers’ obligations when confronting the over-whelming number of recalls receiving coverage in the media. These responsi-bilities cannot be taken lightly, especially when state and federal consumer protec-tion laws are at play.

In a further step to bring additional transparency to the recall phenomenon for consumers and dealers alike, in mid-2014 the U.S. Department of Transporta-tion’s National Highway Traffic Safety Administration announced the launch of a new online tool to identify cars and light trucks with uncompleted recalls.

By allowing Vehicle Identification Numbers (VIN) based searches, the look-up tool will help dealerships determine if particular used vehicles have any un-remedied safety recalls. The lookup tool can be used prior to making a purchase

or taking in a trade, for used vehicles in inventory, or to help provide consumers with useful safety recall information on their vehicles.

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

NADA worked with NHTSA to pre-pare the document, Dealer Tips for VIN Lookup and Vehicle Recalls. NADA has also updated its document, Safety Recalls Q&A for Franchised Dealers, which pro-vides guidance on how to handle recalls impacting new and used inventory and service vehicles.

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

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

MSADCF Auto Tech Scholarships Available

Applications for the Massachusetts State Auto Dealers Charitable Foundation’s 2015-2016 Auto Tech Scholarships are now available on our website at www.msa-da.org. The Foundation’s auto tech schol-arship program awards scholarships to eli-gible applicants for use at post-secondary educational institutions that offer auto tech training programs. Since its inception in 2003, the Foundation has awarded almost $1 million to more than 200 students. A scholarship award is worth $6,000-$13,000 each over two years.

To obtain additional information on the scholarship program, contact Jean Fab-rizio at MSADA at (617) 451-1051 or by e-mail at [email protected].

The application deadline is Friday, May 22, 2015

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MSADA

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MSADA

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MSADAtroubleshooting10

MARCH 2015 Massachusetts auto Dealer www.msada.org

Happy employees are productive em-ployees, but despite dealers’ efforts to keep workplace morale high, employee complaints will occur from time to time. When dealing with an employee dispute or complaint, make sure to document ev-ery step, and realize that what seems to be the most logical solution to a problem might turn out to be a costly mistake.

Take the following example: Two of your salesmen often work the same hours and compete for deals. Salesman A develops a flirtatious relationship with the Manager, who begins scheduling Salesman A for work on shifts that are traditionally better for sales volume, to the detriment of Salesman B. Salesman B complains to you about this perceived mistreatment and states that the poten-tially romantic relationship between Salesman A and the Manager is making him uncomfortable. While you suspect that Salesman B’s complaints are mer-itless, as he has underperformed and made excuses in the past, you know that all employee complaints of this nature must be handled carefully and in accor-dance with the law.

After conducting a review of the situ-ation and investigation into the rela-tionship between Salesman A and the Manager, you arrive at what seems like a reasonable solution: You need a sales-man at your same-line make dealership in another town, and decide to transfer Salesman B to that dealership in the same role and same salary. This transfer

will fill a legitimate need for your orga-nization and will diffuse the productivi-ty-sapping tension that the employee rift is causing. Because the move is lateral, you reason, it cannot be interpreted as a retaliation against Salesman B for filing a complaint.

Unfortunately, if Employee B were to file a lawsuit against the dealership in above-described scenario, the likely outcome may not be in the dealer’s fa-vor, based on a recent Massachusetts decision.

Last May, in Kelley v. Commonwealth, et al., the Massachusetts Superior Court upheld a jury verdict which awarded a low level employee of the Department of Conservation and Recreation $750,000 following her complaint of retaliation in response to her grievance to a supervisor about a hostile work environment and subsequent lateral transfer.

In Kelley, the Plaintiff was employed as a clerk for the Department of Con-servation and Recreation at a sign shop near her home. The Plaintiff alleged to her supervisor that a co-worker and a supervisor had engaged in a romantic relationship, which made the Plaintiff uncomfortable and led to the co-work-er receiving favorable treatment in the workplace. DCR investigated the alle-gations, but several other workers in the shop were directly or indirectly made aware of the complaint and the investi-gations, which upset the Plaintiff to the point where she took a sick leave.

When the investigation concluded and the Plaintiff returned to work, she was given a lateral transfer within DCR to a different location with the same salary and benefits. Despite receiving the same compensation, the new location was fur-ther from the Plaintiff’s home, and she filed a lawsuit alleging that the transfer was a retaliation for her complaint.

In upholding the jury verdict, the Supe-rior Court used a “totality of the circum-stances” test to determine that the lateral

transfer was “adverse in character”, as the new position required greater skills, a longer commute and a different schedule.

In Kelley, as well as the preceding example of Salesman B, an employee engaged in activity protected under Massachusetts law (M.G.L. 151B) by complaining to their supervisor about a hostile work environment caused by a potentially inappropriate relationship between another employee and a man-ager. In both cases, the employee was then transferred to a different position in another location, albeit with the same pay and benefits.

Dealers must be extremely cautious when making changes regarding an em-ployee that has engaged in protected activity, as Kelley has demonstrated that preserving salary and benefits is not sufficient. Even if a legitimate business reason exists to move such an employee, as in the example above, the court will look at the totality of the circumstances surrounding the move.

A comprehensive employee handbook that clearly states the dealership’s formal disciplinary process is a necessity when dealing with employee disputes and complaints. A good first step at the earli-est sign of trouble is an informal meet-ing with the employees involved, which is documented by the dealer. If the issue persists, the dealer should not hesitate to issue written warnings. Key here is that the dealer is documenting every step of the disciplinary process, and abiding by the terms of the process laid out in the employee handbook.

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

Staff attorney, MSaDa

By Peter Brennan, Esq.

Handling Employee Complaints

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As you know, state and federal law re-quires employers to pay some employees an overtime premium for any time worked over 40 hours in any workweek, while other employees are exempt from this re-quirement. Many employers are aware of the “executive,” “administrative,” “profes-sional,” and “outside sales” exemptions. Many automobile dealers also are aware of the federal “salesman, partsman, and mechanics” exemption and the Massachu-setts “garageman” exemption. But are you aware of the federal “commission-paid” exemption? And are you aware of how Massachusetts law treats a commission-paid employee? And, most importantly, are you maximizing the utility of the com-mission-paid exemption? This article may help answer these questions.

Unless an employee is exempt from overtime under state and federal law, an employer must pay him an overtime pre-mium (at one-and-a-half times his “regular rate of pay”) for time worked over 40 hours in any workweek. For example, if you pay a non-exempt employee $12 per hour and the employee works 50 hours in any given workweek, his compensation that week would be $660 ((40 hours x $12 per hour) + (10 hours x $18 per hour)). Similarly, if you pay a non-exempt employee a salary (for all hours worked in any workweek) of $500 and the employee works 50 hours in a given week, his compensation that week would be $550 ($500 + ($500 ÷ 50 hours x 0.5 x 10 hours)).

If an employee is exempt from overtime pay under state and federal law, he is not entitled to any overtime premium pay. Most exemptions depend, at least in part, on the actual duties and responsibilities of the employee. For example, for an em-ployee to be exempt under the “executive” exemption, (1) his primary duty must be the management of a department or recog-nized subdivision of the dealership, (2) he

must supervise the work of two or more full-time employees, (3) he must have the authority to hire and fire other employees or to recommend such actions, and (4) he must receive a salary or guarantee of at least $455 per week.

Unlike these other exemptions, the fed-eral “commission-paid” exemption does not depend on the duties and responsibili-ties of the employee. It, therefore, is ver-satile and can apply to many categories of jobs.

To be exempt from overtime under fed-eral law under the “commission-paid” exemption, the employee must (1) be em-ployed at a “retail” dealership (essentially, so long as your non-retail sales, if any, are less than 25% of your gross sales), (2) re-ceive a majority of his compensation over a representative period from commissions on goods or services, and (3) receive at least one-and-a-half times the federal min-imum wage (which is currently $7.25 per hour) for all hours worked in an overtime week. This last prong essentially means, in any week in which the employee works over 40 hours, he must receive at least $10.89 for each hour worked that week. If the employee meets these standards, he will be exempt from overtime pay under federal law.

That takes care of federal law, but, as you should know, that is only half of the concern. When it comes to wage and hour issues, dealerships in the Commonwealth must be in compliance with both federal and Massachusetts law.

Unfortunately, Massachusetts does not have a “commission-paid” exemption. However, unlike federal law, Massachu-setts does not include commissions in de-termining an employee’s regular rate of pay, which is used to determine overtime pay due. Accordingly, if you pay a com-mission-paid employee on a 100% com-mission basis, under Massachusetts law,

his regular rate of pay technically is $0. In that situation, so long as the commissions the employee receives are at least equal to the Massachusetts minimum wage (cur-rently $9 per hour) for all hours worked up to 40 hours, and time-and-a-half (current-ly $13.50) for all hours worked over 40 hours, your dealership will be in compli-ance. (Of course, if the commissions are less than that amount in any workweek, you will need to supplement them.)

Keep in mind that paying an employee on a “piece rate” basis is not a commission basis. A “piece rate” basis means an em-ployer pays the employee a set amount of money for a unit of work (i.e., $10 per car wash, $15 per appointment scheduled, etc.). In contrast, a commission basis means the employee is paid a portion or percentage of the profit resulting from a sale. This is a subtle but important difference.

Are you in compliance with all appli-cable wage and hour laws, which are com-plex and, at times, counterintuitive? If you have not yet taken advantage of the MSA-DA’s subsidized compliance program, which includes a comprehensive pay plan review, you should consider doing so.

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The Commission-Paid Overtime Exemption: Are You Maximizing Its Utility?

By Joseph W. Ambash and Jeffrey A. Fritz

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

Legal

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MARCH 2015 Massachusetts auto Dealer www.msada.org

AUtO OUtLOOK12 AUtO OUtLOOK

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www.msada.org Massachusetts auto Dealer MARCH 2015

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Accounting14

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The auto industry has rebounded strongly from the depths of the 2008 recession. ARB’s Automotive Group has seen a rebound as well, particularly among dealer groups in all New England markets. Our group has par-ticipated in well over $200,000,000 in buy/sell transactions for dealership clients over the past several years, and we’ve evaluated many more that didn’t transpire for one rea-son or another. Most experts believe deal-erships are approaching their peak values in the current business cycle and that it’s a seller’s market currently. We agree; howev-er, barriers to entering the retail automotive industry are so significant, valuations will likely remain fairly stable for good fran-chises in strong markets.

Despite the obvious improvement, there are roadblocks ahead, and buying or selling a dealership is no easy task. If you are con-sidering buying or selling a franchise, plan-ning ahead and familiarizing yourself with the landscape is the best first step.

The landscapeUS vehicle sales have increased from a

low of 11 million total SAAR (Seasonally Adjusted Annual Rate) in June 2010 to 16.7 million total SAAR in December 2014 with peak volume over 17 million SAAR. So,

what’s driving higher unit sales? The ARB team recently attended several seminars hosted by Erin Kerrigan of Kerrigan Busi-ness Advisors. Here’s what she had to say:

• Jobs: Most importantly, the US econ-omy has created jobs for 59 consecutive months, which is the longest job-creating streak in history since data has been collect-ed. Broadly, this trend has increased con-sumer confidence and enabled consumers to repair their balance sheets and become more comfortable with additional long term debt.

• Interest Rates: Auto dealerships are obviously heavily reliant on interest rates. Interest rates affect dealership business loans, lines of credit, vehicle floorplan, and consumer loan terms. Since rates have been exceptionally low for an “extended period,” it is natural to expect a rebound in vehicle

production, vehicle inventory, and eventu-ally unit sales to consumers. Low rates for such a long time have clearly contributed to higher unit sales.

• Investors: Finally, investors learned from the Great Recession that it’s nearly impossible to drive your mortgage to work (unless you work from home). As a re-sult, consumers opted to default on their

mortgage payments before they missed car payments. Since investors discovered that auto loans had lower default risk than expected, they have purchased more auto asset-backed securities. In fact, they’re al-ready above pre-recessional levels. As more investors purchase auto securities, credit has expanded for consumers, which further in-creases demand.

Four key factors that drive franchise Blue Sky valuations

Most dealers understand that Blue Sky valuations are not based on the net income figure that’s reported on their monthly manufacturer statements. Adjustments must be made for personal expenses, manage-ment compensation, re-insurance programs, above-market floor plan agreements, above-

or below-market rent payments, and count-less other potential items. Whether or not a dealer’s facilities are image compliant also plays a significant role in valuation. Once these adjustments are made, a base level of earnings is established and blue sky valua-tions can be determined.

When discussing blue sky valuations, most advisors talk in terms of multiples or

Buying or Selling a Dealership? Know the facts about the current landscape

By Bart Haag CPA, Principal, Albin, Randall & Bennett

Jason Kendall CPA, Assistant Senior Accountant, Albin, Randall & Bennett

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return on investment (ROI). So, why do some dealerships command a higher mul-tiple or ROI? In her presentation, Ms. Kerri-gain identified four factors that we agreed were key: earnings growth expectations, dealership buyer demand, real estate, and market vehicle preference. One trend in valuation multiples is clear: there appears to be a 3X floor on Blue Sky multiples currently. Additionally, some manufacturers have higher multiples than others.

1. By far the most important factor in valuations is expected earnings growth in terms of gross per retail unit, Finance and Insurance per unit, and net earnings overall.

2. Second, the data indicates that the higher the number of interested buyers, the higher the valuation. Texas happens to be one particular geographic region that’s in demand — most notably, Warren Buffett’s purchase of Van Tuyl and the creation of Berkshire Hathaway Automotive. This same theory holds true for Northern New England compared with metro areas like Boston, too.

3. Third, dealership compliance with manufacturer brand image requirements is a concern among buyers. Typically, buyers do not want to undertake a large building proj-ect. Therefore, a discount is usually made if a building renovation is needed.

4. Finally, the last, but not least, adjust-ment category for Blue Sky multiples per-tains to how well the franchise is matched the dealership’s geographic region. Items to consider are consumer income in the region, a truck versus car market, as well as luxury brands versus non-luxury brands. Thus, if there’s a strong match between the franchise and the local region, then a premium is add-ed. Conversely, if there isn’t a good match between the dealer and the nearby region, then a discount is applied. It doesn’t make sense to operate a Mercedes-Benz dealer-ship in a low income market.

Trends in Blue Sky MultiplesAs of June 30, 2014 BMW, Mercedes-

Benz, Lexus, Porsche, and Audi have the highest Blue Sky valuations. According to Ms. Kerrigan’s data, these luxury manu-

facturers had an average multiple of 6.3. Some experts believe that a higher multiple is caused by the better performance of high

wage earners out of the recession and also because there are fewer luxury franchises than non-luxury franchises in the market. For example, the data indicates that there are roughly 1,600 luxury franchises in total compared to roughly 3,100 Ford and 3,000 Chevrolet franchises. This and other fac-tors often times translate into higher earn-ings and, thus, higher blue sky.

On the other hand, the top non-luxury manufacturers were Honda and Toyota with 5.75 average valuations. Interestingly, Ms. Kerrigan points out that the data indicates that the higher the manufacturer credit rat-ing, the higher the Blue Sky multiple. Let’s play this out. Toyota/Lexus has a Moody’s credit rating of Aa3 and is, therefore, very high-quality debt. As a result, Toyota is able to borrow from capital markets cheaply and then pass lower rates on to consum-ers, which in turn, increases the demand for Toyota and Lexus vehicles. The reverse is also true. Both GM and Ford have medium-quality credit ratings at Baa3 and cannot pass along lower rates as easily to consum-ers. However, credit ratings are improving for GM and Ford as their balance sheets strengthen.

Buyer attributesBuyers are increasingly big dealership

groups and they are getting bigger. Our prac-tice is seeing an increase of dealership groups as active buyers. After several years of prof-its, buyers have deeper pockets with ample capital to put to work. Moreover, financing from capital markets is more available than ever for public company buyers with few other attractive options for investment. Capi-tal investments such as floor plan expansion yield a meager 2%, US 10-year Treasury bills yield 2.6%, the 10-year average return on the S&P 500 yields 8.2%, while the re-

turns on luxury and non-luxury dealerships are between 14%-17%. Finally, public com-pany buyers have lots of fans and stakehold-

ers who encourage and support expansion. Clearly, expanding the dealership group is an attractive investment opportunity.

Road Blocks & Strategies for SuccessHowever, as Ms. Kerrigan pointed out in

her presentations, sellers are catching on to the trend and recognize that now is the time to act in the current business cycle. Our ex-perience indicates this is true and that more sellers are coming to market. Ms. Kerrigan points out that the average earnings growth rate is expected to be roughly 3%, which is close to inflation and, therefore, indicates that earnings growth is near its peak. This is also consistent with retail sales growth ex-pectations. Additionally, take a look around and you’ll see an aging dealership popula-tion. Many of wthese dealers have week or nonexistent succession plans, which gives reason to sell. Many owners are approach-ing their retirement years and need to plan ahead for succession.

Timing is always important when sell-ing a dealership and some experts believe that after the current business cycle the next best time to sell could be roughly 5-10 years from now. So if you’re a seller, it’s prudent to find multiple buyers so that a higher price is achieved. On the other hand, if you’re a buyer, do your best to find a seller and try to limit the seller’s options of suitable buyers.

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To learn more abouT how arb’s auTomoTive Group can supporT your dealership as you naviGaTe The buyinG and sellinG process, conTacT us aT [email protected] .

barT haaG, cpa and Jason Kendall, cpa pracTice wiTh albin, randall & benneTT’s auTomoTive Group. conTacT Them aT [email protected] or [email protected].

MSADA

www.msada.org Massachusetts auto Dealer MARCH 2015

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Floorplan Financing

US 10 Yr Treasury

A-rated Corporate Bonds

High Yield Bonds

S&P 500 10 Yr Average

MSCI Real Estate 10 Yr

Dealership Returns Luxury

Dealership Returns Non-Luxury

Yield 2.0% 2.6% 3.4% 5.7% 8.2% 8.5% 14.1% 16.9%

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By Nancy Phillips

Why the Theory of ‘Multiples’ May Not be

the AnswerNancy Phillips Associates has

been selling auto dealerships for over 25 years. Documenting and studying dealership transactions has proven to be a reliable way to anticipate and project future dealership values. Every month we receive numerous calls from

Dealers asking what the current multiples are for their partic-ular franchise. The flaw with this method is that a dealership losing money may in fact be worth the same as a profitable one. We feel that value is easier to understand when Business Value (Goodwill) is defined as a percentage of total Dealer-ship Revenues. The three key elements to dealership desir-ability are Franchise, Market Area, and Facility. Profitability is an enhancement; loss, however, while opening the door for negotiation, is not always a deterrent.

Few Buyers Radically OverpayWhile there have been radical increases in the amount of

Business Value paid for certain franchises, overall value fluc-tuations have been moderate. They are neither as low as you might have expected during bad years, nor do they skyrocket in better years. That’s because those buying in difficult mar-kets pay based on better futures, and those buying at the top of a market do so with an eye toward the next downturn. There are very few buyers, either individu-als or Dealership Groups, who will substantially overpay with-out a quantifiable return.

Historical Franchise Values Over the

Last 24 Years The historical information

presented below is based on our portfolio of dealership transac-tions from 1990 through 2014. The data demonstrates varia-

tions in business value that relate to economic factors taking place during specific time periods. Despite the introduction of Dealership Groups as major acquirers, dealership values have increased modestly over the last fifteen years from an average of 4.2% from 1990-2010 to 5.5% from 2011-2014.

A Different Way to Determine Value

Another way to determine the value of a franchise is to compute the amount of Business Value paid for each new vehicle retailed (PNVR) over the past 12 month period. This method, in combination with that of Business Value as a per-cent of total revenues, presents a relatively simple and clear explanation of current franchise values.

Franchise Values TodayOver the last 18 months we have seen new and interesting

trends relative to franchise values. The market is always the defining element and based on recent dealership transaction data; the results indicate that intangible business value has increased significantly for certain franchises that were previ-ously much lower. At the same time, there are several fran-chises that need to focus on reversing noteworthy declines in order to strengthen values in the future.

Determining True Value Requires In Depth Analysis

All of the data contained herein is from actual dealership sales. The values obtained were from appropriately priced transactions in which financial statements were recast to

sound OffBenchmarks of Dealership Values

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properly reflect profit or loss, facility upgrade costs were ac-counted for, and all other obstacles and franchise alignment issues were addressed. Strictly speaking, you cannot simply apply these calculations to your own set of circumstances to determine the value of your business.

Why Contact Nancy Phillips AssociatesWe hope you will find this information helpful as you

consider your long term dealership strategy. Information for this article has been obtained from our portfolio of over 300 dealerships sold. Each year Nancy Phillips Associates and

her team average 12 dealership transactions plus over 30 dealership evaluations for the pur-pose of a sale or acqui-sition, estate planning, or partnership buyout. In addition to handling all negotiations perti-nent to a Dealership transaction, we also co-ordinate expert En-vironmental Services, Legal Services, Parts Inventory and Dealer Application Services through our long term highly successful Busi-ness Partners.

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Nancy Phillips Associ-ates specializes in sales, acquisitions and evalua-

tions of franchised automo-bile dealerships. Contact

Nancy Phillips at (603) 658-0004 or email auto@

nancyphillips.com.

Do you have an opinion you want to share? send submissions to [email protected]

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18 Cover Story

MARCH 2015 Massachusetts auto Dealer www.msada.org

By Catherine MacDonaldBeing on the front end of the auto industry isn’t easy, as any

dealer could tell you. The long hours, the uncertainty — and the reward — are all-consuming. But even as individuals seek their own success, it takes a team effort to make sure dealers aren’t swept aside in a constantly evolving business climate.

The MSADA Board of Directors works to make sure member dealers are being represented from across all corners of the Commonwealth. As of the beginning of this year, 19 dealers

now represent their colleagues from the Berkshires to Cape Cod. With the addition of Springfield stalwart Jeb Balise and long-

time Cape Cod dealer Brad Tracy in 2015, the Board of Di-rectors is as fully represented as it has been in years. Their

families represent nearly a century each of auto retail ex-perience and legacies built from the ground floor of some of the world’s most venerated brands. Both spoke to Auto

Dealer magazine about their background, and why it’s im-portant to them to take on a leadership role as the industry con-tinues to turn unknown corners.

Getting On BoardJeb Balise and Brad Tracy reflect on their careers, and why they decided to serve their fellow dealers on the MSADA Board of Directors.

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Hands-On ApproachWhile many dealers may like to tinker around on a project car

in the garage, a dealer who can keep up with the ever-evolving technology of modern automotive engineering is rare. Brad Tra-cy of Tracy Volkswagen in Hyannis is among them. He starts

each morning by checking in on the shop, eager for the challenge a problem car brings.

“It’s hard not to,” Tracy says. “I just love the cars. I grew up working in the shop, and my best friend from kindergarten is the shop foreman. He’s probably one of the best VW techs in the country.”

Tracy’s family has deep roots both in Boston and Hyannis — his great grandfather had one of the first Ford dealerships in the area — and a long history with Volkswagen. His grandfather, Albert Tracy, took on the franchise in the ‘50s, making it among the oldest in the country. Albert began his career with American Motors, and his son, Jay, got into the business straight out of col-lege in the ‘60s as one of the youngest distributors of Cadillacs in the country.

“But both of them always wanted to have their own dealer-ship,” Tracy recalls, “and they had the opportunity with VW.”

The two ended up on the Cape through Tracy’s mother’s side of the family, who held their own Nash dealership. Jay worked summers pumping gas around the corner from it and eventually started working there. His grandson remembers stories of the early car dealing days, when appointments were made during the day for salesmen to make house calls by night.

“You’d go to the living room floor and sell the car,” Brad laughs. But he says that early-era work ethic has grounded his modern day business sensibilities even after spending time in California finding his feet as a VW salesmen. The community

comes before everything else.While Tracy had operated an Audi franchise for years, he sold

it last year to focus on VW. Doing so has allowed what makes his family business great shine through a little brighter. With the singular focus on VW taking hold -- and a new product lineup

around the corner -- Tracy says he was ready for a new challenge. After seeing his father, Jay, heavily involved in MSADA as Brad started in the business, he decided it was time to serve his fellow dealers as well.

“I want to stay in touch with what our rights are and what’s happening with the manufacturers,” Tracy says. “We’ve had quite a few issues with ‘Right to Repair’ and other things like staying on top of our wage and hour laws that change as time goes on. It keeps us on our toes.”

Tracy wants to help keep his fellow dealers ahead of the curve -- whether it’s employment law issues or larger industry question marks such as Tesla.

“Things are coming that we need to try to com-bat, and I want to help make it better for us,” Tracy adds. “We have to be careful to not get our head in the sand out here.”

An Optimistic OutlookThe Balise family’s network of dealerships across Massachu-

setts and Rhode Island didn’t happen overnight. It started with a tractor repair shop in Hatfield in 1919 -- and has emerged with time as both one family and the entire industry continued to grow.

It started with Paul Balise, who grew up on a farm in Hatfield at the beginning of the 20th century. His tinkering on the farm led to that repair shop, and a Chevrolet dealership in 1929. Since then, the family has spread east and from one son to the next. Jeb Balise has presided over the company since 1986.

“I’m not smart enough to do anything else,” Balise jokes. “I was five-years-old, opening and closing the garage door in winter storms. All I’ve ever wanted to do is to be in this business.”

As Balise continues to expand the Balise Auto Group through-

“I think the car business is really good for all dealers right now. The tide is rising.”

—Jeb Balise, Hampden County MSADA Director

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20 Getting On Board

MARCH 2015 Massachusetts auto Dealer www.msada.org

MSADA

out Massachusetts and Rhode Island, he says the time has come for his family business to give back to the larger dealer community.

“I just see a lot of deal-ers that have dedicated their time,” Balise says. “I feel an obligation to my fellow deal-ers and the guys who have

worked their tails off in the past.”Balise is optimistic about the direction of the industry in general

after the cataclysmic changes of the past five years, where dealers were thinned out considerably in the western part of the Com-monwealth as GM and Chrysler proceeded through bankruptcy.

“The consolidation that took place made the playing field a healthier one,” Balise concedes. “I think the car business is really good for all dealers. The tide is rising.”

Those hard won gains are worth defending, Balise says, espe-cially in an industry as family oriented as the auto business. His brothers are also heavily involved with one running Statewide Auto Auction in Connecticut and another working alongside Jeb at Balise Auto Group.

But even as the economy and the industry turns around, Balise says he remains concerned by the looming threat of issues such as Tesla’s encroachment on the dealer franchise system. He hopes his tenure on the board will help keep dealers connected to ways of speaking out for themselves amid the regulatory on-slaught that comes from Beacon Hill.

Room at the TableWhile Balise and Tracy settle into their new roles, MSADA

Executive Vice President Robert O’Koniewski says they’ve tak-en on the challenge with aplomb so far.

“What’s exciting about Brad and Jeb coming on board is how much collective experience they bring,” O’Koniewski says. “Both come from families with deep roots in the business, and I look forward to working with them on the challenges our indus-try is facing.”

O’Koniewski adds that any dealers interested in serving on the Board should reach out. “We’re always interested in hearing from dealers who are looking for opportunities to represent their fellow dealers,” he says, “Our strength lies in our dealers. Each dealer has an opportunity to do his or her part in making sure our interests are represented and our Association remains vital and responsive.”

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from Around the HornNEWS from Around the HornNEWS

IN MEMORIAM

Martin Alicandro, Jr.Martin Alicandro, Jr. (“Marty”), 79, of

Plymouth, MA died on March 5, 2015, at Massachusetts General Hospital surrounded by his family at his bedside.

He was born in Cambridge, MA, the son of the late Martino Alicandro and Josephine Cobuzzi. Marty graduated from Rindge Tech-nical School in 1954. After a two-year stint in the Army, Marty returned home and pursued the trade of an auto technician specializing in automatic transmissions. After meet-ing his soulmate and beloved wife, Barbara Alicandro, formerly Barbara Marinos, of Plymouth, MA, Marty moved to the South Shore and subsequently opened Kingston Automatic Transmis-sion Company, in Kingston, MA with his wife.

Never ones to be complacent, Marty and his wife then pur-chased a GMC Truck franchise, which is now located at 5 Kings-ton Collection Way (formerly Independence Mall Way) in 1968. Through years of hard work, patience, and determination, Marty

fostered the dealership to be an industry lead-ing performer in the region, as evidenced by the multitude of accolades bestowed upon the dealership by General Motors. Determined to enact change on a larger level, Marty served on several boards and committees at General Mo-tors and was a supporter of local charities in the community.

Marty mentored his loving daughter, Chris-tine, who has succeeded Marty as the dealer principal. Through Christine’s leadership, with

the ongoing guidance of Marty, Marty’s GMC continues to flour-ish with the addition of the Isuzu and Buick franchises and its latest renovation. Until his recent illness, Marty’s presence was known to both employees and clients through his almost daily appearances at the dealership, imparting his years of experience, knowledge, and work ethic to those around him.

Marty truly lived the American dream – he was a self-made, selfless man who achieved success through his work ethic, hon-esty and loyalty. He always put his family first and instilled a sense of values that are rare to find these days.

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MSADAfrom Around the HornNEWS

www.msada.org Massachusetts auto Dealer MARCH 2015

Marty’s patience and loyalty were not just exemplified at the dealership. He was one of the original season ticket holders for the New England Patriots in 1960. After tol-erating years of disappointing and often heartbreaking seasons through rain, snow, sleet, and occasionally sun-shine, very little brought him more joy than being pres-ent at three Super Bowl victories with family and friends. Win or lose, Marty’s unwavering devotion to the Pats is indicative of his character – loyal ‘til the bitter end.

Marty’s “work hard, play hard” philosophy did not just apply to football on Sundays. Traveling the world with his family revealed Marty’s adventurous side. From Russia, Australia, Brazil, to Asia and Europe, Marty trea-sured time spent exploring new destinations and cultures and was always a good sport trying new things. He in-stilled this “travel bug” in his daughters, ensuring that they always take advantage of the opportunity to travel, but also enjoy returning to the lives they have built back home.

Marty will be forever missed by his loving wife of 52 years, Barbara Alicandro, f/k/a Barabara Marinos, of Plymouth, MA, dearly loved daughter, Christine Kar-nolt, f/k/a Christine Alicandro, her husband Stephen Karnolt and his cherished grandchildren (or monkeys as he lovingly called them) Sophia and Martin (Tino), all of Kingston, MA, dearly loved daughter, Theonie Ali-candro, and her wife Amy Spurling, of Cambridge, MA. Marty is also survived by his loving siblings Mary Mul-lane, of Medford, MA, Connie McNeil, of Maryland, Joseph Alicandro and his wife Ernestine Alicandro, of Somerville, MA, Joanne Kendall and her husband How-ard Kendall, of Plymouth, MA, Jean Collins and her husband Dan Collins, of Medford, MA. Marty was pre-deceased by his brother Ralph Alicandro. Too numerous to name, but by no means any less treasured, are many nieces and nephews.

Marty’s legacy and impact on his family and the local community will be felt for years to come. Memorial do-nations may be made to the American Lung Association, 55 W. Wacker Drive, Suite 1150, Chicago IL 60601. For online condolences please visit shepherdfuneralhome.com.

NORTHAMPTON

Lia Auto Group Buys Chrysler dealership

The Lia Auto Group purchased Northampton Chrysler Jeep Dodge Ram this month, adding to its growing col-lections of brands across the region.

The Chrysler store, purchased from Artioli Chrysler of Enfield, Connecticut, is Lia Group’s 20th dealership

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from Around the HornNEWS24

MARCH 2015 Massachusetts auto Dealer www.msada.org

among franchises spread across Massachusetts, Connecticut, and New York.

Co-Owner Michael Lia told The Springfield Republican that while they already own a Chrysler location just north of Albany, the brands are making a comeback.

“It is doing very well for us,” Lia said. “The products they have are really good. This was the time to jump back in.”

SALISBURY

Pride Motor Group opens Chrysler dealership

After receiving Selectmen approval in December, Pride Mo-tor Group is now operating a Chrysler franchise in Salisbury.

The Salisbury Chrysler Group franchise is selling Chrysler, Dodge, Jeep, and Ram trucks and expects to carry an inventory of 300 cars.

Pride Vice President Paul Bertoli said he’s excited about opening a dealership in the town -- Pride currently also operates Chevrolet, Hyundai, and Kia franchises.

“I think this town and the surrounding communities are won-derful,” he told the Selectmen. “I think the demographics are great and Salisbury is terrific. It shows very positive growth.”

Bertoli said he plans to spend more than a million dollars on renovations and improvements in months to come. “We have fireplaces in all our other dealerships,” Bertoli said. “We want a warm, welcoming environment when people come in the door.”

WESTWOOD

Boston Globe Profiles David Rosenberg’s Early Challenges

David Rosenberg’s rise to prominence with Prime Motor Group wasn’t always easy, and The Boston Globe featured an extensive interview with the dealer in a recent Sunday feature.

The story chronicles his early years as a dealer, working with his father to build Ira Motors, fresh out of business school and at the helm of a struggling busi-ness.

Rosenberg said his first expe-riences helped him cultivate the culture that he keeps with the company to this day.

“We were honest,” he told the paper. “We told our employees that the dealerships were not do-ing well. A lot of employees were

very loyal to my father; in fact, my dad had instituted a profit sharing plan for them. It still tears me up when I think of the number of employees who wanted to give back some of that

money to help me save the company.”Since that time, Rosenberg built that company up to the point

where he was able to sell it to Group One Automotive. Itching to get back into the business, he later founded Prime, which he and his partner Matt McGovern have built up to 25 dealerships.

WESTBOROUGH

Chambers Earns Honda President’s Award

Herb Chambers Honda of Westborough and Herb Chambers Honda of Burlington have been honored with the 2014 Honda President’s Award. Only 125 out of the more than 1,000 Honda dealerships in the country were given this honor.

“Honda has a proud tradition of delivering excellence in ev-erything we do,” John Mendel, Executive Vice President of Au-tomobile Sales for Honda, said in a press release. “The Presi-dent’s Award is reflective of our long-standing commitment to create exceptional customer experiences. Dealerships that earn this coveted recognition are role models for building positive connections with customers.”

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AcuraPrime Acura of Walpole was named among the Dealerships of Distinction for 2014. The dealership is a 3-year recipi-ent of the award.

Audi2014 Audi Magna Society awards:Magna Society Elite: Audi Burlington Audi Natick

Magna Society: Audi Shrewsbury Audi WestwoodChevroletBest Chevrolet owner Scott Shulman was one of 62 Chevrolet dealers named 2014 Dealer of the Year -- the only Mas-sachusetts dealer so named.

FordFord Credit Partners in Quality Award Winners for 2014:

Owen Motors, DedhamWatertown Ford, Watertown

Mercedes-BenzHerb Chambers was named among the company’s 2014 Best of the Best Dealer Recognition Award.

Toyota Top 25 dealers for 2014 for certified used vehicles:

Boch Toyota, NorwoodIra Toyota, Danvers Boch Toyota South, North Attleborough

Volkswagen 2014 Wolfsburg Crest Club champions – Gold Level: Quirk Volkswagen, Braintree Top Dealer Groups AnnouncedAutomotive News released its annual list of the top 150 dealer groups based on total 2014 new-vehicle retail sales units. Five Massachusetts-based dealer groups made the list: Herb Chambers Companies, based in Somerville (#17); Prime Motor Group, based in Westwood (#44), which made the list for the first time; Balise Mo-tor Sales, based in West Springfield (#64); Colonial Automotive Group, based in Ac-ton (#93); and Kelly Automotive Group, based in Danvers (#112). Additionally, three groups based outside Massachusetts with dealerships located here achieved recognition: Group 1 Automotive (#3), Lia Auto Group (#53), and AutoFair Au-tomotive Group (#123).

Congratulations to all!

Awards SeasonThe season for manufacturers recognizing the achievements of their fran-chise dealers is in full-swing. Here is a list of some of our Massachusetts dealers who have received recognition recently.

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from Around the Horn26 NEWS

MARCH 2015 Massachusetts auto Dealer www.msada.org

IN MEMORIAM

George Berejik Former Oldsmobile dealer

George Berejik of Buzzards Bay and formerly of Needham passed away on March 10, 2015, after a long and courageous battle with kidney cancer.

Berejik Oldsmobile operated in Needham from 1951 through 2001, opened by George’s father, Anthony. As a salesman, George was known for his affinity for muscle cars, which con-tinued through his becoming owner and retirement.

George is remembered as a man who made an impact on ev-eryone he met. He loved working with his hands and was always building and fixing things, especially for neighbors and friends. His passion for Oldsmobiles was evident in his extensive car col-lection and the many car shows he hosted and attended. He loved the ocean, and boating was one of his favorite pastimes. He was well-known for his spectacular Christmas display, which brought people from far and wide. His 11 grandchildren kept him smil-ing every day. His family is his greatest legacy, and he left them many treasured memories. George will always be remembered for his kind heart, generous nature, and zest for life and fun.

He is survived by his adoring wife, Betty Ann (Bernardo), four beloved children, Brandon and his wife Abigail of Wareham, Lori Bosworth and her husband, Michael of Arizona, Christo-pher and his wife Katy of Virginia and Kristen Campanella of New York. He was the cherished Papa of eleven grandchildren (Connor, Ryan Lexi, Morgan, Colton, Cannon, Ace, Jack, River, Riley and Kenzie). He is also survived by his siblings Joan, Har-ry and his wife Susan, and Philip and his wife Danielle Berejik, and many nieces and nephews.

BOSTON

Albrecht to Dine in Deval Patrick’s Office — With Charlie Baker

Governor Charlie Baker had some fun and raised money for a good cause following the controversy surrounding former Gov. Deval Patrick’s $11 million taxpayer-funded office upgrade.

Baker auctioned off lunch with himself at the Junior Achieve-ment of Northern New England anniversary dinner this month, noting “My office, if you haven’t seen it,” before stopping him-self from saying more.

George Albrecht, founder of Albrecht Auto Group, won the auction with a $10,000 bid.

MSADA

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nAdA Update By Don Sudbay

My sincere congratulations and thanks to the new MSADA Directors who have just taken office. I know you will enjoy your experience with this great organization.

Some of you may have heard that I am throwing my hat into the ring as a candidate for NADA Vice Chairman. The election will be held in October of this year at a meeting of the NADA Board of Directors. If I am bestowed the honor, I will assume the office of Vice Chairman at the annual con-vention in March 2016 and the office of Chairman the follow-ing year at the convention in New Orleans.

Those of you who know me know that I am very passion-ate and protective of our franchise system, and I feel strongly that NADA needs to do everything possible to protect our businesses in the future. The time is right for me for this challenge, and I look forward to hearing your thoughts at our Annual Meeting in May.

A Special Note from NADA Chairman Bill Fox“It’s clear by now that new-car dealers are not just re-

sponsible for facilitating the complex transactions of ve-hicle sales to the American public, but also for complying with numerous federal and state regulations on a daily ba-sis. And to assist dealers with this ongoing challenge, the National Automobile Dealers Association is providing its members with another essential tool to help navigate the maze of federal regulations. It’s called A Dealer Guide to Federal Advertising Requirements.

“In January 2014, NADA rolled out a vital resource for its members. The NADA Fair Credit Compliance Policy & Program serves as an optional tool to help dealers comply with fair credit requirements. Just like auto finance, several important federal requirements govern the field of advertis-ing, and cover everything from credit and lease advertising to prize promotions to green-marketing claims.

“To demonstrate its commitment to advertising compli-ance, NADA released its comprehensive guide on federal advertising requirements at the 2015 NADA Convention and Expo. This provides a compliance resource in an area that has come under intense scrutiny by the Federal Trade Commission, and that has resulted in a series of enforce-ment actions against dealers across the country.

“This guide—like the fair credit guide—is a pdf that is eas-ily accessible at www.nada.org. It provides dealers and oth-ers in the industry with information on 41 federal advertising topics; a series of examples of ‘bad’ and ‘good’ ads; and the ability to quickly hyperlink throughout the document and to additional information on various advertising topics. The guide focuses on advertising standards at the federal level, so it is important that dealers consult with their state dealer asso-ciations on additional requirements imposed at the state level.

“NADA’s goal this year is steadfast; to defend the efficient business model of dealers from the challenges posed in our nation’s capital, and be an effective advocate for the thou-sands of franchised new-car dealers across the country.

“This is a moment in the auto industry when all franchised new-car dealers must show their cards and their diligence—to our supporters and critics—so that we can continue to thrive and proudly serve our customers, manufacturers and communities.

“NADA will continue to provide the tools dealers need to manage the increasingly complex web of federal regulatory requirements that apply to our businesses.”

NADA Hires Jared Allen as Senior Director of Media Relations

The National Automobile Dealers Association recently announced that it has hired Jared Allen, a veteran commu-nications professional and former journalist, as its senior director of media relations. In this position, Allen will help build out NADA’s communications and marketing efforts, and will serve as the organization’s primary spokesperson on policy issues.

Allen comes to NADA with more than ten years of com-bined experience strategic communications, journalism and public affairs. Throughout his career, he has provided leading counsel in the areas of corporate communications and reputational management, issues management, media relations, digital engagement, crisis communications, and litigation communications.

University of Portland Receives Grant from the NADA Foundation

The National Automobile Dealers Charitable Foundation provided the University of Portland with a $7,000 grant last month. The funds will be used for the emergency needs of students. The contribution was made through the NADA Foundation’s Joseph J. Sanchez Memorial Fund. The fund was established to honor Sanchez, former vice president and general manager of General Motors’ Oldsmobile divi-sion and the first president of Saturn Corporation.

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Throwing My Hat into the Ring

don sudbay, presidenT of sudbay auTomoTive Group, represenTs msada members on The nada board of direcTors. he welcomes your quesTions and concerns ([email protected]).

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MSADAAccounting28

When it comes to profit centers in your dealership, you might be thinking: new car sales, used car sales, F&I, parts and service and maybe a body shop, right? What if I told you there is an often over-looked department that may not get the glory of the above but can be vitally im-portant to the profitability of your opera-tions? Not buying it?

If you take a step back and review what your accounting office can provide your dealership, you will see that an ex-perienced accounting firm can help your dealership become more profitable just like any other department. It may not generate gross profit but it will help you retain profits.

Some key areas your office can and should be helping retain profits are:

Compliance – Every day the govern-ment is coming out with more and more regulations with which you must comply. Non-compliance with these regulations can result in significant fines and pen-alties. Cash reporting, sales tax, wage reporting, insurance, privacy safeguard-ing, identity theft, and OSHA are just a few areas where significant fines and penalties can be incurred if you are not in compliance Your accounting office is

the backbone of your compliance efforts. You should be supporting their efforts and ensuring that they are up to date and trained in these areas to keep you com-pliant.

Cash Management – A well run office can ensure that the profits your dealer-ship is making are turned to cash in a timely and efficient manner. Cash flow is imperative for dealerships today. The amount of working capital a dealership needs is significant. Quick turns of cash can result in reduced bank fees and the ability to utilize cash in other areas of the dealership to make profits. Excess cash can also be utilized to reduce floorplan interest charges and to take advantage of vendor discounts if offered.

Office Efficiency – A well run and well trained office can run with fewer person-

nel than a poorly run office resulting in less personnel cost, lower turnover, and a happier work environment. Make sure your office staff is cross-trained to en-sure that if someone is out, their work can be covered. Great office efficiency can only be obtained if the information that is coming into the office is accurate and timely. The old adage, “garbage in – garbage out” is applicable here. You need to support your office in their efforts to ensure that paperwork coming into the office is accurate. They should not be spending their time chasing down miss-ing or inaccurate paperwork.

Accurate Reporting – A timely pre-pared and accurate financial statement or DOC report can provide management of the dealership with the information it needs to make smart and timely business decisions. A month-end close of 5 days or else is ideal. Again, support the office in this area and ensure that sales cut-off is adhered to.

Fraud – Some estimates of losses caused by fraud range anywhere from 1% - to 2% of sales annually. Although this number may seem high, we have all heard the horror stories of dealerships be-ing defrauded out of significant money. This is by far the most important role your office should play in your dealership. The control of these losses is imperative. A well run, well trained office with proper segregation of duties and proper internal

controls can help to mitigate these losses. Again, support your accounting office ef-forts to ensure internal controls are being followed by all departments.

A strong, well run dealership account-ing office should be viewed as an inte-gral part of your operations and not just an overhead item and cost of doing busi-ness. Not only does the office safeguard the dealership assets they also help in reducing, controlling, and eliminating expenses. They may not sell cars or turn a wrench, but they should not be a forgot-ten department.

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Joining o’connor & Drew, P.c. in 1994 anD becoMing a PrinciPal in 2002, ray iS current-ly reSPonSible for Managing accounting, auDiting, anD tax ServiceS for a wiDe range of clientS. ray haS extenSive exPerience in our autoMobile DiviSion, anD he haS written articleS in Several traDe PublicationS. to contact ray, call 617.471.1120 or eMail hiM at [email protected].

By Raymond Lofstrom Principal

The Forgotten Profit Center

“A strong, well run dealership accounting office should be viewed as an integral part of

your operations.”

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MSADA dealer services 29

What was your first job? For some, get-ting hired is an easier process than for oth-ers. Individuals with disabilities are talent-ed, skilled, qualified applicants who are incredibly able, dedicated, and success-ful colleagues, yet getting hired is a high hurdle. The unemployment rate for indi-viduals with disabilities is roughly twice as high as the general population. Transi-tions to Work aims to create transforma-tive change in hiring practices and engage the corporate and business community to employ individuals with disabilities.

Transitions to Work is a high quality supported employment program for young adults with disabilities and is based on an intensive training and internship cycle. Transitions to Work is focused on training participants to meet and exceed the needs and requirements of an employer.

Current employer partners include: Prime Motor Group, The New England Aquarium, CVS Caremark, Brigham and Women’s Hospital, Hebrew Senior Life’s NewBridge on the Charles, Legal Sea Foods, Panera Cares, Reebok, Anton’s Cleaners, Reebok, Kappy’s Fine Wine & Spirits, Destination XL, Combined Jew-ish Philanthropies, Star Market, and The Lewwwventhal-Sidman Jewish Commu-nity Center.

Job responsibilities include: auto dealer customer service greeter and mainte-nance, restaurant host, data finance entry, office clerk, food preparation/ server/wait staff, health club locker room attendant, cashier, mailroom, organizing clothes,

housekeeping, café manager, and stock-room. Approximately 78% of graduates have earned jobs, and there is an 89 per-cent retention rate.

Our employer partners hire Transitions to Work graduates because it is good for business. Their stories exemplify the ben-efits hiring Transitions to Work graduates has brought to their companies. Many have hired multiple candidates.

• Prime Motor Group has hired three Transitions to Work graduates throughout its dealerships. Owner David Rosenberg was an early supporter and introduced Transitions to Work to all of his General Managers. Mike Brown, General Manag-er, Prime Toyota, quickly recognized the opportunity to hire talented candidates and also make a difference. Mike is thrilled to have Isaac Varon as part of his team. Isaac is responsible for keeping the dealership looking like new inside and outside. As Isaac finishes one task, he is planning on how to execute another. Mike reports that Isaac exceeds all of his expectations and is a model employee. Mike admires Isaac’s commitment and dedication. Despite his 1.5 hour commute, Isaac is on time and always ready to work. Mike sums it up by saying, “Everyone loves Isaac; he is like the mayor.”

• Destination XL Senior Vice President Human Resources Walter Sprague’s phi-losophy is to build a good team and to hire individuals who add value and continue to grow in their roles. Mark Burgess, Admin-istrative Assistant for Destination XL and a Transitions to Work graduate, continues to do this. Hired to handle basic office administrative tasks to support the Human Resources, Payroll, and Benefits groups, Mark dove right in. Mark reorganizes and brands files, manages labeling and mail-ings, updates job application status and profiles of applicants, edits requisitions, and handles other computer tasks. Jen-nifer McClaren, Human Resources Gen-

eralist and Mark’s supervisor, describes Mark’s work ethic and skills. “Mark is al-ways ready to take on extra challenges. He asks questions and is great at time man-agement. He has even taught me a few things on the computer!”

Corporate commitment is the corner-stone to creating and implementing inclu-sive hiring. Benefits to a company with inclusive hiring practices include:

• Higher Productivity - Employees with disabilities typically exhibit higher loy-alty, lower turnover, and contribute to the collegiality of the workplace.

• Increased Market Share - Individuals with disabilities and their families reflect an expanding customer base and are loyal patrons of companies that support inclu-sive hiring.

• Expanded Talent Pool - Individuals with disabilities are an underused pool of talented, skilled, and qualified applicants.

• Public Relations - Inclusive hiring positively impacts a company’s image.

• Diversity and Morale - All employees report a higher degree of workplace satis-faction when working in integrated teams.

Transitions to Work continues to con-nect with new employers to educate on inclusive hiring and build employer part-nerships. Please let us know if you or someone you know might be interested in exploring Transitions to Work as a fit for your or their company. Please visit Transitions to Work on Facebook at www.facebook.com/transitionstoworkboston or at www.cjp.org/transitionstowork to learn more about the program. Transitions to Work is a collaboration among Combined Jewish Philanthropies, Jewish Vocational Service, and the Ruderman Family Foun-dation. Funding is provided by the Ru-derman Family Foundation and a grant through The Commonwealth of Massa-chusetts, Executive Office of Labor and Workforce Development.

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Transitions to WorkBusiness Opportunity to Hire Individuals of all Abilities

buSineSS coMMunity liaiSon-coMbineD Jew-iSh PhilanthroPieS/tranSitionS to work.

By Beth Tauro

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Here’s a fact to digest: dealerships with great management don’t have a sales people turnover problem. Dealerships with average to weak management always have a sales turnover problem.

From this statement, you should be able to deduce that turnover is more of a manage-ment issue than it is a sales person issue. Hopefully by the end of this article, you’ll be convinced that the bet-ter the management, the lower the turnover; and the weaker the man-agement, the higher the turnover.

Management usually makes the case that because they’re in desperate need for a body, they quickly advertise and can’t get any good pros-pects. Whether they hire one person or a few people, most of them don’t stick. Management will say those people don’t have the drive, persistence, and ability to handle the customers or the sales floor. So when you think about that, how much of that can be controlled by management? The answer is all of it.

It first starts with the right attitude for

an ad. That attitude is: you’re not looking for a 10-12 vehicles a month sales person; you’re looking for a 20+ vehicles a month sales person. If you advertise compen-sation for a 10-12 a month vehicle sales person, that’s what you’re going to get. If you advertise for a 20+ vehicle a month compensation, that’s what you’ll get.

Now the big problem management has is how to differentiate the two. There are four main attributes a salesperson needs in this business. To the degree they have those attributes is going to determine how successful they will be in selling vehicles. Good dealership support is another impor-tant factor (we’ll get to that later).

The four attributes are as follows:1) Good track record. This means

someone who has some sort of a plan for their life and is interested in trying to reach particular goals. In other words,

constantly improving in their work history or, if there are hiccups, there are good rea-sons for it.

2) Desire to make money. With some-one new coming into a dealership, the sales floor is very competitive and cus-tomers are difficult to relate to correctly. So someone who is living at home, with little responsibility in most cases will not have enough perseverance and determina-tion to be able to overcome those obsta-cles. Because of the usual lack of support

given to new sales people, this problem is compounded. A good strong individ-ual who has a high money need is much more likely to go after the support he or she needs to make it, and they are more resourceful to quickly figure out how they need to relate to a prospect.

3) Good people relationship skills. Managers overlook how difficult it is for someone who comes into this business or someone who is new to this business to be able to quickly relate to strangers who are defensive and feels that the sales per-son is there to take his or her money. A sales person with good people relationship skills has a fighting chance to eventually overcome this and know how to relate properly. Someone who doesn’t have very good people relationship skills doesn’t have a chance. The easiest way to deter-mine if a sales person has good people

relationship skill is to see how they relate to you in the interview. If they look you in the eye, they commu-nicate well and you can’t help but like them, then the people relationship skills are there.

4) An aptitude to sell. If you hand a prospective sales per-

son your cell phone or your pen or what-ever and you ask them to sell it to you, you’re going to see if they don’t have a clue – they’re making up stories and to-tally lost in how they handle a sales situa-tion. Someone who has a basic aptitude is going to ask you good questions, bring out some good points, and try to influence you into having interest in the object they are trying to sell you. Usually there is no mid-dle road, they either have it or they don’t.

I have a test I’ve designed that measures

Why So Much Sales People Turnover?

By Dale Boch

Management Developers Inc (MDI) Dealer-ship Strategic Planning – 25 years in help-ing dealerships build great teams, be more productive, increase market share and im-prove profitability.

“What you’re looking to accomplish is developing people. ... By putting a strong focus on developing people

you will wind up with more and more top performers.”

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these four items on a scale of one to ten. I consider a 32 a passing grade (for a free copy of this test you can email me at [email protected]).

If you perform a thorough interview (which is a lot more important than most people think it is) and you scale a pro-spective sales person on these four items without any bias or prejudice and stick to the 32 rule, your chances will increase tre-mendously on hiring a great sales prospect with true potential.

Good Dealership Support – Developing People

The biggest complaint at this point is that not enough qualified people are an-swering the ad and you need a body. If you continually think this way, you will never stop your turnover because you can never build a high performing team with weak hiring. So how do you hire strong?

This is where great management is an important factor. Great management understands that strong sales people can

manage just about as many prospects as you can throw at them. Average/weak management doesn’t think that way because they have too many weak per-forming sales people. Plus, they’re afraid certain prospects won’t be taken care of, and they are unwilling to get off their butt and find a way to get the prospects taken care of.

Most sales forces consist of 1/3 good producers, 1/3 medium producers, and 1/3 weak producers. In this typical scenario at a dealership, the sales manager is pres-sured to keep filling spots with bodies, for which 80% of those bodies turn out to be weak producers. When they find a strong producer they put him or her into the mix. Because they don’t clearly recognize what they have, they don’t give that producer the support needed to wind up in the top category. A lot of those producers get sti-fled in the middle category and never end up utilizing their true potential. So they end up leaving the dealership.

If you look at typical sales forces, the

turnover is usually in the bottom and mid-dle categories and not the top categories. With average/weak management the top category of sales people rule the roost and they create the environment so average/ weak management can’t succeed in pro-ducing more top performers.

If you are in the league of great man-agement, you will understand that build-ing a team is all about developing people. If you have a sales force that is 1/3 good, 1/3 medium, and 1/3 weak, it is nearly impossible to develop a high performing sales team. In other words, you’ll never be a Bill Belichick.

So what you’re looking to accomplish is developing people. Developing people is to weed out the weak players, chal-lenge the medium players to either per-form with the top players, or fall into the weak category where they become elimi-nated. By putting a strong focus on de-veloping people, you will wind up with more and more top performers.

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

Ford company was in third place with a share of 14.1 percent of the market, for the month, down from a share of 15.1 percent in February 2014. There was a contraction in light-vehicle sales by 2.0 percent for the company from last year. The dominant

brand, Ford, held a 96.5 percent share of Ford company sales in February 2015, up from a share of 96.3 percent in February 2014.

Fiat Chrysler Automobiles (FCA) was in fourth place with a

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overall There were 1.3 million light-vehicle sales in February 2015

across the U.S. Monthly sales were up 9.3 percent from January 2015 and up 5.4 percent from February 2014.

February 2015 YTD light-vehicle sales amounted to 2.4 million units, up 9.2 percent from a year ago. The Febru-ary 2015 Seasonally Adjusted Annual Rate (SAAR) for light-vehicle sales was 16.2 million units.

Car sales held a share of 44.7 percent of February 2015 YTD light-vehicle sales; car sales were up 3.0 percent from last year. Light trucks held a share of 55.3 percent of February 2015 YTD light-vehicle sales; light-truck sales were up 14.8 percent from last February. See Figure 1

companies/brandsGeneral Motors held the leading market share in

February 2015 light-vehicle sales in the U.S. with a share of 18.5 percent, down from a share of 18.7 percent. Sales for the company were up 4.2 percent compared to February 2014, with each brand expe-riencing sales growth except Buick and Cadillac. Although Chevrolet was the brand with the largest share of sales for General Motors in February 2015 at 69.1 percent, GMC was the leading brand in terms of sales growth at 19.3 percent since last February. The Chevrolet share was down from a share of 69.3 percent last year.

In descending order of company market share of sales for the month, Toyota company held second place with a share of 14.4 percent of the market in February 2015, up from a share of 13.4 percent in February 2014. Sales for the company were up 13.3 percent from last year. The Toyota brand held the largest share of the company’s February 2015 sales at 85.1 percent, down from a share of 85.3 percent in February 2014.

Review of New Light Vehicle Sales

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

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33 MSADA

share of 13.0 percent of the February 2015 mar-ket, unchanged from February 2014. Light-vehi-cle sales for the company were up 5.6 percent in February 2015 compared to last year. The Jeep brand held the leading share of the company’s sales at 34.2 percent in February 2015, up from 29.8 percent a year ago.

Nissan company held fifth place with a share of 9.5 percent of February 2015 light-vehicle sales, down from a share of 9.7 percent last year with sales up 2.7 percent from February 2014. The Nissan brand held the leading share of the com-pany’s sales in February 2015 at 90.2 percent, down from 91.6 percent a year ago.

The nine companies in the ‘Other’ category collectively held a share of 8.0 percent of light-vehicle sales in February 2015, up from a share of 7.6 percent in February 2014. This category had sales growth of 11.9 percent since February 2014 with all com-panies experiencing sales growth except Isuzu and Porsche, which each experienced a contraction of sales since last year. See Figures 2, 3 and 4.

SEGMENTSThe cross utility vehicle (CUV)

segment held the largest share of February 2015 YTD light-vehicle sales at 28.8 percent, up from a share of 28.0 percent last year. The CUV, sport utility vehicle (SUV), and pickup segments were the only segments that experienced an increase in market share of light-vehicle sales for February 2015 YTD over last year.

From the light-truck sales for February 2015 YTD, the CUV segment held the largest share of sales at 52.0 percent, but this was down from a share of 53.2 percent a year ago. Pickups held a share of 25.8 percent, up from a share of 25.2 per-cent a year ago. The SUV segment held a share of 13.2 percent of these sales, up from a share of 12.0 percent a year ago.

All the segments except for the large car seg-ment experienced growth in YTD sales since last year with the SUV segment experiencing the most growth at 26.0 percent. The large car seg-ment had a contraction in sales by 8.1 percent over last year. See Figures 5 and 6

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

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nAdA Market Beat34

POWER SOURCEGasoline-powered light vehicles held the dominant share of

light-vehicle sales for February 2015 YTD at 95.0 percent of the market, up from a share of 94.1 percent a year ago. In 2014, there was a visible trend towards an increasing share of YTD sales held by gasoline-powered light vehicles, in comparison with the previ-ous year, and this trend is still evident.

The market share held by diesel-powered light vehicles for February 2015 YTD declined to 2.3 percent from a share of 2.6 percent last year. For February 2015 YTD electric light vehicles were the only vehicles in the alternative power category that ex-perienced an increase in share of sales since last year. The market shares held by plug-in-hybrids, hybrids, and vehicles powered by natural gas each declined over the same period.

The following light vehicles were sold in the alternative power category for February 2015 YTD: 51,731 hybrids; 8,254 electrics; 4,673 plug-in hybrids; 76 units powered by natural gas, and no vehicles powered by fuel cell technology, amounting to 64,734

light-vehicle sales. The alternative power category accounted for 2.7 percent of light-vehicle sales for February 2015 YTD, down from a share of 3.2 percent last year. See Figure 7.

modelsThere were three pickup trucks and two cars in the leading five

ranks of the list of the 15 best-selling light vehicles for February 2015 YTD. The list comprised of eight light-truck models and sev-en car models. The light trucks in the leading five ranks included Ford F series (first place), Chevrolet Silverado (second place), and the Ram pickup (fourth place).The cars in the leading five ranks on the list were both Toyota models: Toyota Camry (third place) followed by Toyota Corolla (fifth place). Nissan has two models on the list of the 15 best-selling light vehicles for February 2015 YTD: Nissan Altima (car) and Nissan Rogue (light truck). This is the first time, this year, for two Nissan models to appear on this list. See Figure 8.

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