new england dealer news jan 13

JANUARY/FEBRUARY 2013

• 2013: WHAT’S IN STORE• WHAT MOTIVATES YOUR SALES STAFF?

• COMPLIANCE OVERDRIVE

Embrace the Green Revolution BECOMING ENVIRONMENTALLY CONSCIOUS CAN BE

COST-EFFECTIVE – AND FINANCIALLY REWARDING

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PRSRT StandardU.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

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

O FF IC IAL PUB L ICAT IO N O F THE MA S SACHUSE T T S / NE W E N GL AND INDE PE NDE NT AUTO M O B ILE DE ALE R S A S S O C IAT IO N

DEALER NEWSM A S S A C H U S E T T S / N E W E N G L A N D

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D E A L E R N E W S JANUARY/FEBRUARY 2013

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MAGAZINE CONTENTS

ADVERTISERS INDEX

08 The Environmentally Conscious Dealer12 Government Report14 2013: What’s In Store16 Creating an Elite Sales Force20 What Motivates Your Sales Staff?26 Compliance Overdrive

MIADA/NE OFFICE

ADESA .......................................................................... 15 Ally .................................................................................17Auto Auction of New England ....................................... 11Auto Search Technologies ............................................22Auto Use ....................................................................... 18CarMax Auctions .......................................................... 19Dealer Services Corp. .................................................. 13 Lynnway Auto Auction .....................................................5Manheim.com .................................................................9MAFS ....................................................Inside Front CoverNIADA Certified ............................................................ 23Paine Auto Auction ..........................................Back CoverPersian Acceptance Corp. ...................Inside Back Cover Protective ........................................................................7 Southern Auto Auction ...........................................20, 21 VAuto ...............................................................................3

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NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATIONWWW.NIADA.COM • WWW.NIADA.TVNIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR [email protected] MA/New England Dealer News is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 817-640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of Independent Auto Dealer or the National Independent Atomobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of MIADA or NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2012 by NIADA Services, Inc. All rights reserved. STATE MAGAZINE MGR./SALES Troy Graff • [email protected] Andy Friedlander • [email protected] DIRECTOR Christy Haynes • [email protected] Nieman Printing

FOR INFORMATION ON HOW TO BECOME A MEMBER OF MIADA/NE, PLEASE CONTACT THE MIADA OFFICE AT 781-278-0077 OR [email protected]

WHAT’S NEW

Executive Committee

PresidentJohn [email protected] Vice PresidentBob Hayes [email protected] TreasurerEric [email protected] SecretaryLarry CunninghamAftermarket Specialists

State ExecutiveMelissa [email protected]

Board Members

Negash AdbelkaderRoyal Motors LLC Dave ChandlerToy Store Auto SalesRich CopponiAutoUseDana DuchakLynnway Auto AuctionTom FioreFiore’s Truck Sales

Tim HoeglerManheim New EnglandBob Shaw Sr.Shaw Auto LeasingBilly VanLaarhovenMartin Auto Sales Bob RanneySouthern Auto Auction

Certified Master Dealer Program - Feb. & April 2013 Educates dealers on how to manage and grow a profitable business “Effective Management Practices”, “Business Planning”, “Human Resources”, “Merchandising”. “Financial Management” Call (800)756-4232 to sign up.

TAKE US WITH YOUwww.niada.tv - Free Dealer Education 24/7

CA R C O M M U N I T Y

CARFAX announced it is supporting the National Kidney Foundation by promoting the donation of used cars.

For vehicles donated to the Kidney Cars program, CARFAX will make the donation part of the vehicle’s history by adding a record to its CARFAX Vehicle History Report. The record will include links to the National Kidney Foundation and the Kidney Cars program websites.

“This is a great way to support the efforts of the National Kidney Foundation while providing buyers and sellers with another valuable piece of information about a used car’s past,” CARFAX spokesman Larry Gamache said. “Kidney Cars is one of the country’s largest vehicle donation programs and we encourage people to consider donating their cars to help this important cause.”

For nearly 30 years, Kidney Cars has accepted vehicle donations to benefit the National Kidney Foundation. More than 100 vehicles are donated to the program every day.

“We are so glad to have the support of CARFAX as we work to ease the burden of kidney disease through the patient programs and prevention initiatives our donated cars help fund,” Kidney Cars director Chad Iseman said. FOR MORE INFORMATION ON DONATING A CAR TO THE NATIONAL KIDNEY FOUNDATION, VISIT WWW.KIDNEYCARS.ORG.

CARFAX Promotes Car Donations to Fight Kidney Disease

Manheim has named Bill Harbourne as general sales manager for its Northeast market, while Nicole Graham-Ponce will take over as general manager at Manheim’s Dallas-Fort Worth auction.

Harbourne will lead Manheim’s Northeast field sales team, focusing on building on its relationships with dealers. He has 14 years of remarketing experience, serving most recently as an account manager for the company’s major dealer team, working with some of Manheim’s largest dealers nationwide.

“Bill is helping to lead change in an evolving marketplace, while growing sales through teamwork, strategy and business development,” said Scott Michaels, Manheim’s Eastern regional vice president of field sales.

Graham-Ponce, who began her career in the car business running an independent dealership with her father and has worked in auctions since 1998, will be responsible for all business, employee and customer operations at Manheim DFW.

Manheim Names Regional Chief

I N D U S T RY N E W S

Board of Directors

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A DV E R T O R I A L

INDEPENDENT DEALERS NEED NEW ‘F&I MANAGER’

Having had the pleasure of serving automobile dealers for more than 50 years, we at Protective Asset Protection are committed to meeting the finance and insurance needs of our dealer customers.

Like many readers of this magazine, we place great importance on industry studies to ensure we are on top of the latest market trends – and in particular, your needs. However, we recognize selling cars is more than numbers and charts. It’s a people business.

We spend countless hours working to support dealers of all sizes and types. We’re in the car business and a lot of what we do still takes place with a meeting, a handshake, leadership and good in-store training.

More than five decades of experience and doing business the old-fashioned way has positioned Protective to exceed the expectations of our dealer customers.

In our goal to share proven dealer solutions, we turned to the largest audience – the growing group of independent auto dealers. We wanted to better understand what you really need to help further drive your F&I sales and profits.

We asked many of you from across the county questions about your operations, current selling processes and the importance of F&I to your businesses. Your feedback was informative and insightful, and aligned with many of the current successful approaches we use today.

Here is a snapshot of what we learned: When we inquired about the types of vehicles and service contracts being sold

today, we learned the average vehicle sold is 3-7 years old with 50,000-100,000 miles on it. We discovered more than 65 percent of you sell vehicle service contracts in your dealership.

When we inquired how Protective could better support you, we learned that ease of doing business is very important, followed by working with a company you can trust. On the technology front, 55 percent of you use or plan to use an electronic device such as an iPad® or a tablet device to educate your current and future consumers about F&I products.

We found that in general, consumers still rely on good, quality education from you to learn about the value of a service contract and most consumers don’t have preconceived ideas about what that value really offers them.

The study reinforces what Protective Asset Protection already does well: helping dealers make money selling F&I products.

So what is the best way to help you be more productive, drive more revenue and increase customer retention within the F&I process?

We think the answer is obvious – hire an F&I manager. No one said it was a simple solution. But an experienced F&I manager brings the knowledge and skills to provide customers with the best options and the true value of making an F&I purchase decision.

Obviously, adding to your headcount is no small task, and we asked ourselves what we could do. So we decided to “fill” your F&I position for you.

Okay, we didn’t hire an F&I manager for each independent dealer. Instead, we created “the manager.” By combining your critical F&I needs with our 50 years of experience, we built Protective’s Protection Plus Solution, designed exclusively for you.

You might have guessed your new F&I manager is not actually a person but instead is an electronic sales presentation using an iPad, or a desktop/laptop-based solution.

While our new strategy might not replace an experienced F&I manager’s know-how and sales ability, it does provide you a tool to increase service contract sales. With our new F&I solution, you have the ability to offer a vehicle service contract customized to the specific needs of your customer, all with easy-to-use technology designed to overcome objections and help close the sale.

We want you to have the closest thing we could provide to an actual F&I manager. Protective’s Protection Plus vehicle service contract and supporting web/iPad app will provide you and your dealership with the next best thing.

Protective Asset Protection looks forward to expanding our nationwide reach and working with independent dealers to introduce them to their new F&I manager. You can learn more about the technology and our goal to bring you innovative new ideas and profit-growth strategies by visiting www.newfandimanager.com.

BY RICK KURTZSENIOR VICE PRESIDENT-DEALER SERVICES FOR PROTECTIVE ASSET PROTECTION HAS MORE THAN 23 YEARS OF INDUSTRY EXPERIENCE. PROTECTIVE ASSET PROTECTION PROVIDES F&I PRODUCTS FOCUSED ON ENHANCING PROFITABILITY AND CUSTOMER SATISFACTION. FOR MORE INFORMATION, CALL 800-950-6060, EXT. 5755, EMAIL [email protected] OR VISIT PROTECTIVEASSETPROTECTION.COM.

While the National Insurance Crime Bureau (NICB) warned of the potential for fraud regarding vehicles affected by Hurricane Sandy, The Associated Press reported the dire predictions of hundreds of thousands of flood-damaged vehicles was way off the mark.

According to insurance claim data reviewed by AP, about 38,000 claims have been received by five major insurance carriers in the area, far fewer than expected.

Early estimates predicted the storm that hit the densely populated Northeast to result in more damaged cars than the 600,000 affected by Hurricane Katrina, which hit the Gulf Coast in 2005. NADA senior analyst Larry Dixon said as many as 200,000 vehicles could end up scrapped because of the storm.

But that apparently is not the case, said Frank Scafidi, a spokesman for the National Insurance Crime Bureau, an insurance company group that monitors fraud and other trends. He said insurers watched by his group are logging far fewer claims than they did with Katrina.

“It doesn’t translate to there’s going to be 2, 3, 400,000 cars out of this thing just because this is such a huge geographic storm,” he told AP.

Even if there are fewer than expected, there are likely to be more flood-damaged vehicles on the market than normal, and many won’t be labeled as such when they are sold in the wholesale or retail markets.

“Unscrupulous salvage operators and dealers often try to conceal from potential buyers the fact that vehicles have been damaged by a natural disaster,” NICB president and CEO Joe Wehrle said.

After Katrina, NICB established VINCheck, a free service that allows individuals to check if a vehicle has ever been declared as salvage by one of NICB’s member insurance companies. VINCheck is available at www.nicb.org.


Sandy Not as Hard on Vehicles as Expected

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The Environmentally Conscious DealerN O T O N LY I S I T C O S T- E F F E C T I V E , I T CA N B E F I N A N C I A L LY R E WA R D I N G T O E M B R AC E T H E G R E E N R E VO LU T I O N .

Each day, consumers and businesses grow more environmentally conscious. Yet we are a long way from where we need to be.

Make no mistake. This is a call for action.For all of us in the auto industry, each car

deal is part of a gigantic revenue machine. Our focus is on retail market value vs. wholesale cost. Subtract recon expenses, advertising expenses, commissions, etc., and we’re left with net profit.

The question many of us fail to ask: What is the impact on the environment?

Fact: The second-leading cause of global warming is carbon dioxide emissions from burning gasoline.

Our industry is married to the internal combustion engine. Our success is predicated on profits from selling large volumes of gas-guzzling, oil-burning hunks of metal to consumers.

Often we gauge our performance on volume. The more, the better.

Given the nature of our industry, it’s vital that we all embrace, with open arms, the need for a heightened level of environmental responsibility.

There are countless ideas each of us can implement today that will make a difference to the environment while feeding our bottom lines.

Green SolutionsRecycle: In my travels and visits to

dealerships, I’m constantly surprised – and disappointed – by the lack of recycling bins at dealerships. That is the easiest way imaginable to have a positive impact on the environment.

Electronic fax: There are several companies that provide the service. Using an e-fax service drastically cuts down on paper and ink, and is super easy to implement.

Forget traditional mailers: Typical response rate on mail advertising is a mere

2 percent. Save the paper, ink, fuel and money. Allocate those resources elsewhere.

Turn off the printer: We print so many things that just don’t need to be printed. Credit reports, for example. Instead try saving them on your computer along with the customer’s email address.

Turn off excess lighting.Use a green demo: Take the Prius

for a spin instead of the Yukon. Most of us drive without passengers a large majority of the time. Driving a smaller, more efficient vehicle will save you gas money while reducing toxic greenhouse emissions.

Walk or cycle: Go by foot or bike to work or to your favorite lunch or coffee spot.

Smartphone apps: Use the extremely broad selection of apps to replace paper whenever possible.

Do business with green businesses: Ask your body shop how it disposes of waste. Choose companies and vendors that act in an environmentally responsible manner.

Eliminate bottled water: Bottled water is extremely inefficient. Instead, install and use a water filtration system.

Hit the switch: Turn off and/or unplug unused appliances and computers when they’re not in use.

Lot lights: Be diligent about adjusting the timer that controls your lot lights.

Every one of these items can be easily implemented today with little or no negative impact on your business. In most cases, you will experience a significant cost savings, especially when that savings accumulates over the course of one or more years.

Simply put, we can no longer ignore the fact we are depleting the world’s natural resources. We are driving at a very fast pace toward a hotter and hotter future. Why ignore the facts when you can benefit

in numerous ways by making some positive changes?

In addition, the consumer climate has changed to the point that it is not only cost- effective, but it can be financially rewarding to embrace the green revolution. Be green and make sure the world knows! You will attract better talent along with more customers as a result.

Electric Vehicles and HybridsA major industry shift is staring all of us

in the face like a hungry bear fresh out of hibernation, and the electric/hybrid market segment is growing rapidly. Nearly every major manufacturer is getting into the space, and new competitors are emerging with cutting-edge products that use state-of-the-art technology to meet consumer demand.

The products currently on the market are extremely compelling, and the future of the segment is exciting.

Here’s a lineup with some information about several of the products available now:

Tesla Model S: The first full electric vehicle to (mostly) overcome consumers’ No. 1 concern – range anxiety. There are different battery options designed to go up to 160, 230 or even 300 miles per charge at 55 mph.

Consumer interest in the product is phenomenal. The fast, sporty and beautiful sedan is expensive for the average consumer, but will be attractive to the masses on the remarketing side.

Tesla Roadster: Similar to the Model S, but not as practical. This is a pure sports car.

Fisker Karma: Electric/hybrid with extended range. It can go up to 50 miles on 100 percent electric power, then the internal combustion engine engages for another 250 miles. It averages about 58 mpg.

BMW ActiveE: BMW’s first full electric vehicle is only available in select markets on a two-year lease.

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THE ENVIRONMENTALLY CONSCIOUS DEALERToyota Prius: Arguably the most cost-

effective solution on the market. Though not a full electric vehicle, it deserves a spot in the lineup based on its massive success in the U.S., coupled with its extreme efficiency at 50 mpg.

Chevrolet Volt: The Volt can go up to 50 miles on full electric power before engaging the gasoline engine for up to another 350 miles. Range anxiety is a thing of the past with this electric/hybrid vehicle.

Ford Focus Electric: The Focus can go up to 100 miles on a charge and is more affordable than any of its luxury counterparts. Super-fast charging, and 100 percent electric.

Nissan Leaf: The Leaf was the first mainstream pure electric car offered for sale in the U.S. It is an excellent urban commuter vehicle but falls short when it comes to the range anxiety concern.

Consumers are more informed and environmentally conscious today than ever. They are actively seeking out and going out of their way to find green solutions that meet their needs.

Additionally, gasoline prices are still historically high, so the financial and environmental need for alternative fuel

solutions is growing by the minute. As more products emerge that meet the demands of the modern “eco-sumer,” those products will inevitably gain more traction.

When it comes to pricing, most of those vehicles are at the top end or just outside the reach of the average consumer. But as they flow into the remarketing space, a majority of them will fall right into the sweet spot.

Unfortunately, a large portion of our electric power comes from coal-burning sources. According to the Energy Information Administration, the most predominant sources of electricity in the U.S. come from coal (48.7 percent), natural gas (21.5 percent) and nuclear power (19.4 percent).

Because so much of our energy is created by coal-burning power plants, it is arguable that electric vehicles consume similar amounts of energy and as a result produce nearly as much greenhouse emissions as gas-powered vehicles. Until we create more clean and renewable energy sources, electric vehicles will remain an imperfect solution, But they represent a big step in the right direction.

In the end, innovation without

capitalization will die. But if enough of us buy in and support the movement, the sky is the limit.

The question remains: Where do you stand on the matter? Are you going to be one of the dealers with your hand raised when an electric vehicle crosses the block? Or are you going to stand on the sidelines and watch your competitors lead the charge?

Technology and the environment are two major items that influence and change how our industry looks and feels. DSC remains committed to providing you not only with the best financing options, but also cutting edge technological solutions to enhance and take your business to the next level.

We are also committed to shifting with your business as environmental needs and consumer demand dictates. We are confident we have the most flexible floorplan finance solutions in the industry, designed to empower you and your business to embrace change and grow green.

BY GARRETT JOREWICZ NORTHWEST REGIONAL DIRECTOR OF DEALER SERVICES CORPORATION.

C O N T I N U E D F RO M PAG E 8

•Sales •Operat ions •F&I •Remarket i ng •Compliance •Legal/Regulat ory •Special Feat ures • Indust ry Event s

F R E E D E A L E R E D U C A T I O N 2 4 / 7 O N L Y O N N I A D A . T V

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Automotive Industry News & Special Monthly ProgramsPlus

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30 MinutesNorth ofBoston/LoganAirport

Minutes fromManchester, NHAirport

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is the place to be on Thursdays.1,200 Vehicles Every Thursday.

The Auto Auction ofNew England

To register andparticipate in Pipeline,

simply logon towww.aane.com

SIMULCASTAUCTIONIS HERE!

Conveniently Located at Exit 4, Rt. 938 Action Blvd., Londonderry, NH 03053

10 min. south of Manchester, NHTel: (603) 437-5700 Fax: (603) 437-5800

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NIADA LEGISLATIVE TEAM UPDATEG OV E R N M E N T R E P O R T

REGULATORY REPORTFederal Trade CommissionProposed changes to the Used Car Rule:

Last month, the FTC released a proposed change to the Used Car Rule, which would make the following changes to the Buyers Guide:

• Add a statement encouraging consumers to seek a vehicle history report and directing them to an FTC website with information on vehicle histories.

• Add a statement to the English Buyer’s Guide noting the document is also available in Spanish and informing Spanish-speaking customers they can request the Spanish guide.

• Adding catalytic converters and airbags to the systems covered on the back of the guide.

• Placing boxes on the back of the guide giving the dealer the option of informing the consumer whether the manufacturer’s warranty still applies or whether a manufacturer’s used warranty (such as a CPO warranty) or another third-party used vehicle warranty applies.

The FTC is seeking comments regarding the changes. Comments must be submitted by Feb. 11.

NIADA chief operating officer Steve Jordan, Region III vice president Gordon Tormohlen and counsel Shaun Petersen met with the FTC attorneys responsible for oversight of the Used Car Rule on Dec. 12 to discuss the proposed changes.

NIADA also plans to submit written comments.

In addition, the commission made minor changes to the Spanish guide, effective Feb. 11. The revised Spanish version is available at www.ftc.gov. Dealers can use up their remaining Spanish-language guides after Feb. 11, but must transition to the new guide when existing stock is used up.

The FTC is also seeking comments on the nature and prevalence of deception in Internet vehicle transactions. NIADA will submit comments.

Settlement with car loan modification company: On Nov. 29, the FTC entered into a settlement agreement with a motor vehicle loan modification company regarding its unfair and deceptive practices. The modification offered by the company allegedly promised to save vehicles from repossession and lower vehicle payments. In order to obtain the modification, the consumer was required to pay high up-front fees. Ultimately, the modification provided no

value to the consumer.No civil penalty was assessed to the

directors or company, but the company and its owner have heightened reporting and record retention requirements over the next 20 years.

Interim Red Flags Rule, limiting the definition of creditor: The interim rule constricts the term “creditor,” which is covered by the Red Flags Rule. Under the new rule, a creditor is covered if, in the ordinary course of business, it regularly obtains or uses consumer reports in credit transactions, provides information to consumer reporting agencies in relation to a credit transaction or advances funds to a person.

The FTC has invited comments on the proposed change. NIADA is evaluating the changes.

Top officials leaving: The FTC announced David C. Vladeck, director of the Bureau of Consumer Protection, left Dec. 31 to return to a faculty position at Georgetown University Law Center. Deputy director Charles A. Harwood will serve as the BCP’s acting director.

In addition, FTC executive director Eileen Harrington retired at the end of 2012, with deputy executive director Pat Bak taking over on an interim basis. The executive director is responsible for the administration and management of the FTC, including human resources, information technology, financial management, administrative services and legal document processing and records management activities.

Consumer Financial Protection Bureau

On Dec. 6, the CFPB submitted its annual report to Congress, as required by the Dodd-Frank Act, relating to its supervisory powers under the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act. The report highlighted the CFPB’s investigations over the past year and urged congress to re-examine the transparency of consumer finance, specifically student lending.

The CFPB announced plans to share consumer complaint data with state agencies that have jurisdiction over consumer protection activities via a secure channel that protects confidential and personally identifiable information. The bureau plans to accept complaints and information from state agencies in the future.

The Federal Reserve Board and the CFPB

increased the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. Transactions at or below the thresholds are subject to regulation. For dealers, the Truth in Lending Act and the Consumer Leasing Act generally will apply to consumer credit transactions and consumer leases of $53,000 or less beginning Jan. 1.

The Wall Street Journal reported deputy director Raj Date, the CFPB’s No. 2 official behind director Richard Cordray, will leave the agency he helped create Jan. 31, after the CFPB finalizes the slate of mortgage rules Congress mandated.

Date played a critical role in the agency’s mortgage rulemaking project, considered the agency’s signature and most complicated assignment. He ran the agency from August 2011 until Cordray was appointed.

LEGISLATIVE REPORTRental Cars (S.1445, S.3502, H.R.

6094)Sens. Charles E. Schumer (D-N.Y.),

Barbara Boxer (D-Calif.) and Claire McCaskill (D-Mo.) reached an agreement with the top four U.S. rental car companies to stop renting or selling vehicles that have been recalled by their manufacturer.

Under the deal, rental car companies Enterprise/National/Alamo, Hertz/Advantage, Avis/Budget and Dollar/Thrifty, as well as the American Car Rental Association, have endorsed new legislation authored by the senators to ensure recalled vehicles stay off the road. Together, the four companies represent 93 percent of the rental car market.

The deal caps a long push by the senators and consumer safety advocates to fix a loophole in current law. While car dealers are prohibited from selling a recalled automobile, rental car companies are not barred from renting or selling one.

The new Senate bill would change that, requiring vehicles under a safety recall to be grounded as soon as possible. Rental companies would have up to 48 hours for recalls that include more than 5,000 vehicles in their fleet.

Also under the legislation, the National Highway Traffic Safety Administration will, for the first time, have authority to investigate and police rental car companies’ recall safety practices.

The timing of any action on the new legislation is still unclear.

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2013: What’s In StoreD E A L E R S H AV E S E E N T H E E R RO R O F T H E I R PA S T WAYS A N D A R E E N J OY I N G T H E S P O I L S O F T H E I R M O R E D I S C I P L I N E D L A B O R

What’s in store for your store in 2013?If it’s anything like 2012, it should be

another good year to be in the Buy Here-Pay Here industry. The new year will not be without its challenges, though. In fact, there are certain areas of the industry that could be more challenging than ever.

To get an idea of what to look forward to in 2013, we first need to review how 2012 treated the BHPH world. Tax season was again sporadic at best, which pretty much set the tone for all facets of the business for the rest of the year.

From a profitability standpoint, the dealers I have the distinct privilege of working with enjoyed another modest 3 percent increase in profitability in 2012 versus 2011. That increase was smaller than the previous year-over-year, and was due mostly to the continued focus on the “rightsizing” of overall operations.

Dealers focused on their entire operations, from top to bottom, on continuing not only to “cut the fat” but to keep it off and run their operations based on the cash being generated instead of relying on lines of credit.

I expect that focus to continue in 2013. Though funding sources have become more readily available, overall most dealers will be focusing again on generating the capital necessary to run their businesses from their businesses.

As always, there will be dealers looking to grow aggressively through borrowing, and rates will continue to make that a very viable option. I don’t see rates rising drastically in the coming year, so it will still be a good time to borrow.

Having said that, I still see it being difficult to secure new lines of credit in 2013. It’s going to take some patience and the willingness to educate some institutions on our industry.

Another financing option that has received quite a bit of interest recently is selling blocks of portfolios or payment streams to generate capital to operate with.

The available resources for that are at an all-time high and rates seem attractive as well. Depending on the resource, it can be done either at point of sale or on seasoned receivables.

Rates will depend on the resource, aging, recourse aspects, performance and securitization. The key to this option is reinvesting the capital received back into receivables in a timely fashion so as not to affect future cash flow levels.

Sales volume for our dealer clients increased by a modest 3 percent in 2012 over 2011. Not a record-setting year by any means, but a sporadic tax season and the resurgence of subprime and special finance are the two dominant factors leading to it. Dealers seemed to want to sell what their cash flow and underwriting standards dictated rather than sell as much as possible.

We all know we can sell as many as we want or have the financial resources to in this industry. There doesn’t seem to be a lack of customers needing or wanting what we have to offer.

We will see those factors continue to hold for 2013. We should have the customers in the market to sell the vehicles we want or need. The biggest question will be the quality of those customers and the availability of inventory.

Now, I’m normally a glass-half-full kind of guy, but when it comes to this, I think the glass might still be half empty. Even though the prices somewhat leveled off during the last half of last year, the numbers still seem to be dwindling for that sub-$5,000 vehicle.

The 2012 portfolio performance included some stabilization from a dollar loss standpoint, but from a number loss standpoint, there was a slight increase or worsening from 2011.

That was driven by a couple of factors, the first being the need for inventory. Some dealers accelerated their repo times

when a desirable unit was involved. That also helped stabilize the dollar losses, as the vehicles were repossessed earlier and in better condition and thus earned larger recovery amounts.

The other factor was renewed focus on underwriting and the overall collection process. Dealers remained more disciplined in both areas, seeking quality over quantity.

For 2013, I see more of the same. Dealers have seen the error of their past ways and are enjoying the spoils of their more disciplined labor. Expect the average charge-off to remain essentially the same and the number as a percentage of sold to remain higher than in past years, but expect collections dollars to improve as well as overall collection effectiveness.

The biggest thing to affect our industry again in 2013 will no doubt come in compliance. The Consumer Financial Protection Bureau was very active in 2012. It has reached out to a few dealers on a number of auditing fronts. Although no new formal regulations have been drafted, it is truly only a matter of time.

We did dodge a fairly substantial bullet with the legislation that was passed – and more important, the bill that was vetoed – in California. While it would only have affected California, passing tight new regulations easily could have influenced other state’s legislators.

Here is the best advice I can give to existing dealers as well as those wanting to get into the business in the coming year: don’t wait. Don’t wait to get compliant. Don’t wait to spend a little money to do so. Don’t wait to review all processes and procedures. Don’t wait to review all expenses. Don’t wait to review all of your employees. Don’t wait to train.

And definitely don’t wait to sell cars, collect money and make money.

BY BRENT CARMICHAELEXECUTIVE CONFERENCE MODERATORNCM ASSOCIATES [email protected]

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D E A L E R S H AV E S E E N T H E E R RO R O F T H E I R PA S T WAYS A N D A R E E N J OY I N G T H E S P O I L S O F T H E I R M O R E D I S C I P L I N E D L A B O R

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In most sales teams, there are a handful of top performers – then there’s everyone else. Imagine how much more successful your dealership could be if every salesperson was an elite top performer.

Think that’s impossible? Think again.In other areas, we see groups of elite people

who band together for a common goal or purpose: Super Bowl teams, Navy SEALs, top college marching bands, etc.

In any of those groups, you don’t see one or two people doing all the work, outperforming their peers or being the lone superstars. Rather, everyone on the team is an elite member. The group as a whole shines because each member contributes greatly, plays an integral part and gives 100 percent at all times.

If it’s possible with those groups of people, it’s possible for your sales department.

But creating an elite group of salespeople involves much more than placing a help wanted ad on a job board. It requires a specific hiring process that attracts only the best of the best. Here are some steps to do that.

Make joining your sales team difficult: You cannot create an elite team if becoming a member is easy. Would a Super Bowl team be spectacular if it let anyone with a helmet on the field? Of course not. In order for any team be con-sidered elite, there must be a stringent process to join the team.

So while you should advertise open sales posi-tions, realize that conducting one interview prior to bringing someone on board is not enough. Rather, conduct multiple interviews, with the candidate speaking to the sales manager and other execu-tives.

The key is to look for people who believe in team spirit, have a positive attitude and display a keen sales demeanor. Don’t have your HR department be responsible for hiring salespeople. HR’s only role in hiring salespeople should be to process the paperwork.

Finally, and perhaps most important, make sure anyone you decide to bring on board realizes that getting past the initial hiring process is the easy part. Now they must prove that they have what it takes to be an elite player. How? By com-pleting step No. 2.

Create an intense six-week new hire training program in which no more than 60

percent pass: For every three people who make it past your initial hiring process, only one should actually become a salesperson for your organiza-tion. While that might sound like a waste of time and money, it’s really an investment in making your sales team the best it can be.

The only time you really waste time and money is when you allow low producing salespeople (typically people who are not a fit for sales, people who don’t like your company or people who have the wrong attitude) to be a part of your organiza-tion. The best way to avoid that is to make sure the people in the sales role have been thoroughly trained and really want to be there.

Having an intense training period is the same approach used by colleges and the military. For example, for every 100 men who start Navy SEAL training, only 17-20 succeed. That’s a success rate of only 17 to 20 percent.

But think about it. Who do you want carrying out the country’s most dangerous and critical military missions? Only the best of the best, right? Well, who do you want to be the face of your com-pany, representing your products and services and interacting daily with your customers? Again, only the best of the best.

Your intense training program should cover:• Product knowledge. Go over your products

and services thoroughly to ensure the prospective salesperson comprehends them inside and out.

• Role-playing. Go over typical sales scenarios as well as the most challenging sales situations you can think of. See how the person responds when things go wrong.

• Sales skills. Even if the person has prior sales experience, you want to give him all the skills and training he’ll need to be successful. Then make sure he knows how to implement the skills.

• Company structure. Teach the salespeople all the parts of the business. Train them on every department so they know the intricacies of the business and understand what happens both before and after the sale is made.

• Research. Put them through the tedious information gathering work. Make them research the market, demographics, competition, etc. If they’re not willing to do the details, they’re not a fit your company.

That intense process will weed out the people who don’t have what it takes to be part of an elite

team. In fact, about 20 percent of the people will drop out by week four.

For the ones remaining, offer them a choice to stay or go, as in: “I’ll give you $1,000 right now for you to leave the training and the company, or you can elect not to take the money and stay.”

Those who take the money aren’t the type of people you want on your elite team. It’s better to pay a small price now to find that out than waste a lot of money down the road with a bad hire.

By the six-week mark, only 60 percent of those who started should still be standing strong with you. Those are your elite sales team members.

If more than 60 percent make it through the training, your training is too easy. Anything that’s too easy has no value.

Have consistent, ongoing training: While the initial training period is a one-time thing, all salespeople should attend regular – and less intense – monthly training sessions. During the sessions, do role-playing, train on specific sales skills and find out any specific challenges your team is facing.

Use the ongoing training sessions to create bonding experiences for the sales team. Have them help each other solve problems, offer suggestions and share best practices. Why? Because the goal is to continually develop a team, not an individual.

As Tecumseh, the Shawnee chief, said, “A single twig breaks easily, but a bundle of twigs is strong.” By bringing your salespeople together monthly, you’re creating a strong and elite sales force that can’t be broken.

To be the best, recruit the best. Sales isn’t an easy profession. So joining an elite sales team shouldn’t be easy either. That’s why you need to shift your focus from filling a sales position to building an elite sales force.

After all, your sales team really is the face of the company. Shouldn’t only the best of the best be representing your brand?

BY VICTOR AROCHOVICTOR AROCHO IS A SALES DEVELOPMENT EXPERT, SALES TRAINER AND MANAGING PARTNER OF POTENTIAL SALES & CONSULTING GROUP, SPECIALIZING IN GROWING SALES BY BRINGING ACCOUNTABILITY TO THE SALES PROCESS AND CRAFTING A SALES CULTURE OF SUCCESS. FOR MORE INFORMATION, VISIT WWW.VICTORAROCHO.COM.

Make Your Sales Team an Elite Force

YO U R SA L E S T E A M I S T H E FAC E O F T H E C O M PA N Y – S H O U L D N ’ T O N LY T H E B E S T O F T H E B E S T R E P R E S E N T YO U R B R A N D ?

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Test Drive Generator Does All the WorkOne of the great things about the

Internet invading the dealership business is the innovative new ways it helps sell cars. Certainly the availability of information about every vehicle on your lot has complicated the business – but sometimes it’s for the better.

An example is the simple idea that customers visiting your website should be able to make an appointment to test drive the car they like without any effort on the part of the dealer. That’s a good thing, because every day there are thousands of leads in your market, and it is pretty tough to engage them all.

Test Drive Generator, a company based in Mukilteo, Wash., has perfected software that allows any dealer, on any type of automotive website platform, to allow customers to schedule their own test drives without any human intervention. Customers just click the button next to the car they like and schedule the test drive on their own.

Why is that a good thing? Think about it. If the customer is scheduling his or her

own test drive, and Test Drive Generator appointments show up 90 to 95 percent of the time, why, oh why, would you want a salesperson to stick his nose in and screw that up?

Once the customer has scheduled a test drive, the folks at Test Drive Generator say, “Leave them alone!”

Nothing good will come of an email or phone call from a salesperson. At best, the customer will still show up. At worst, something the salesperson says or writes will give the customer second thoughts about coming.

Now, you might say your salespeople are tremendous, but why mess with a good thing? Customers are coming for a test drive. Leave them alone and let them arrive. Have you ever seen a salesperson talk a person out of a sale by talking too much? It’s not a pretty sight.

Test Drive Generator takes care of scheduling the test drive appointment. It sends email confirmations and reminders and text reminders. The Test Drive Generator system has a 90 to 95 percent

show ratio and a 60 to 70 percent sold ratio. Perhaps the best thing about Test Drive Generator is the price: $250 per month for a dealership, billed month-to-month, with no long-term contract and no setup fees.

Seems like a pretty good deal to me, whether you get 10 test drives per month or 100. If you want to hear more, call Test Drive Generator at 877-696-0415, email [email protected] or visit www.TestDriveGenerator.com to book a demo.

BY BRETT STEVENSONDEALER MARKETING MAGAZINE

N E W P RO D U C T S

VISIT WWW.TESTDRIVEGENERATOR.COM

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JANUARY/FEBRUARY 2013 D E A L E R N E W S

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American Auto Guardian Inc. announced it is adding a fourth F&I certification class to its 2013 schedule after selling out its three sessions in 2012.

AAGI’s Performance Services department, through its partnership with United Development Systems Inc., will hold a five-day course each quarter in 2013. The program focuses on presentation skills and techniques, lender relations and advanced management skills. Participants will engage in role playing and have their performance critiqued by UDS staff.

“We are thrilled with the vast number of agents and F&I managers who are striving to increase their knowledge, or simply refresh what they learned in the past,” said Jeff Teuscher, vice president of sales and head of AAGI’s performance services. “Gerry Gould brings a high level of excitement and expertise to each session and enables attendees to make the most of their career.”

For more information, call 888-442-2886, ext. 2130, email [email protected] or visit www.aagi.com.

FO R M O R E I N FO R M AT I O N , CA L L 8 8 8 - 4 4 2 - 2 8 8 6 , E X T. 21 3 0 , E M A I L S U SA N B @ A AG I .C O M O R V I S I T W W W. A AG I . C O M .

AAGI Adds Fourth F&I Class for 2013


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

Keystone Offers Discount to NIADA Members

Keystone Automotive has become the National Independent Automobile Dealers Association’s latest National Member Benefit partner, offering NIADA members 48-hour guaranteed delivery and custom member discounts.

In addition, NIADA members can get Keystone’s E-Key e-commerce accessories research/ordering resource for a monthly fee of $19 – less than half the normal fee of $49. The e-commerce tool provides access to all Keystone U.S. inventory listings. Simply enter a vehicle’s make and model for an automatic listing of accessories available by category. Inventory is updated daily.

Keystone is the leading distributor and marketer of aftermarket automotive equipment and accessories in North America, with more than 800 suppliers and 1.2 million accessories and equipment in inventory.

FO R M O R E I N FO R M AT I O N O R T O O R D E R P L E A S E G O T O W W W. K E YS T O N E AU T O M O T I V E .C O M O R CA L L 1 - 8 0 0 - 4 3 2 - 8 0 6 3 .

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What Motivates Your Sales Staff?O F F E R I N G T H E R I G H T I N C E N T I V E S CA N H E L P K E E P YO U R E M P LOY E E S H A P P Y – A N D S E L L I N G

Grappling with a slow economic recovery is forcing dealers to be strategic about how they compensate sales associates.

Dealers are cutting costs nearly everywhere just to make ends meet. Lower sales and narrower margins are pushing dealers to explore different ways of paying salespeople.

But it’s a delicate balance, for sure. If sales associates perceive their boss to be skimping on pay and benefits, they’ll quit, leaving the dealer with high turnover and, eventually, lost sales.

Some dealers, such as AutoNation and CarMax Inc., are playing with new pricing formats, such as no-haggle selling.

“CarMax is always no-haggle and no-hassle

with transparency through the whole process,” CarMax spokeswoman Michelle Topping Ellwood said. “We do not offer sales, discounts or holiday gimmicks. Our sales consultants receive a fixed commission for each car sold so they can focus on getting each customer in the car that’s just right for the individual.”

Other dealers have taken a lump sum – usually less than $1,000 – and divided it by the number of vehicles they need to move to reach a sales goal. Each car sold earns a deserving associate a portion of that lump sum as a bonus.

David Teves, a used car sales associate and author of the blog “Confessions of a Car Man,” remembered one creative spiff his brother

Danny used during morning sales meetings. He would go to each salesman and tear a $100 bill in half in front of him.

“He would give you one half and tell you that in order to get the other half you have to sell two cars that weekend,” Teves said. “The maddening thing about the spiff was if you failed to sell the two cars, he would not ask for your half of the hundred back. In the old days we were closed on Sundays, so you might have that torn bill skulking around in your wallet driving you nuts for a couple of days.”

Competition vs. RecognitionThere’s debate over whether bonus plans that

generate competition among sales associates

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are helpful or hurtful. On one hand, there’s the argument that competition brings out the best in employees – their desire to win lifts the entire team. If it works in sports, it’ll work in a dealership, right?

That’s an old-school mentality that might not work with younger employees, said Ted Kraybill, president of Delta Trends, an employee compensation consulting firm based in Clearwater, Fla. Kraybill just finished a landmark study of more than 2,400 dealerships on turnover, retention and compensation and is set to deliver it to the National Auto Dealers Association (NADA) in the coming months.

“There isn’t really any hard evidence on generous compensation plans and employee retention,” Kraybill said. “I mean, people are definitely motivated by money, but when talking about the millennial-generation [those born between 1977 and 1992], paid time off from work is really a more desired spiff than some

financial spiff on cars sold over the weekend.”For that younger group of employees – a

key demographic many dealerships are trying to attract to rejuvenate and replenish their aging sales forces – work-hour flexibility is more important than money. Kraybill suggested not scheduling sales associates to work every weekend.

Kraybill, whose firm surveys 35,000 to 40,000 retail employees a year, has noticed being part of a successful team is a strong motivator for the millennial generation. If they feel there is no teamwork in a department, they will more than likely be looking for a job somewhere else.

“That would say that the traditional model is not exactly optimal for retaining employees,” Kraybill said.

The data collected in Delta Trends’ compensation study for NADA also suggests that dealers who are able to keep a smaller spread between their lowest- and highest-paid people

have more success retaining employees. The logic behind the data is that associates become frustrated and resentful when only a small handful of employees is doing extremely well.

In the past, dealers would point young new associates to a few seasoned high-flyers, the associates making the big bucks, as motivation.

“They’d say, ‘Here’s what you could be making,’ ” Kraybill said. “But it creates a class system, and that type of class system is not conducive for attracting and retaining employees. The goal is to keep the [compensation] bell curve toward the lower range.”

Jay Rose, a dealer management consultant and president of Global Training Solutions, agreed.

“It’s an old-school mentality, and it’s wrong,” Rose said. “There’s a big difference between competition and recognition.”

When competition is the driving motivator

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for bonuses, Rose said, there is concern that unscrupulous employees will take advantage by stealing customers from other associates, which could break up the team’s chemistry.

“What I do in my stores is I have a team bonus,” Rose said. “Half [of the bonus] is individual-based and half is team-based. If your bonus plan is only based in individual success it can be demotivating.”

His push for a team bonus is rooted in a belief that there’s more to selling than closing the deal, and sales associates have different strengths.

“Sometimes you have the person who is warm and fuzzy, good at getting people in the doors to sign applications, but not the best at closing the deal,” Rose said. “It’s like having a pitcher who can go a good six or seven innings. You still want them on your team.”

He recommends 50 percent of the bonus plan be based on activities such as getting leads, applications and test drives, not just actual sales.

“As we know,” Rose said, “those activities eventually will lead to sales.”

Compensate with CautionOne problem Rose has found with

compensation packages is that employees often confuse pay plans and temporary bonus plans. Rose said a pay plan should be agreed on once a year. Changing it too often can be damaging to employee morale.

A bonus plan, on the other hand, is temporary and should be put in place to reach a specific goal the dealership is currently not achieving.

Once the dealership reaches the set goal in consecutive time periods, the goal should be

raised, Rose said.“The problem is we leave the bonus plan in

place too long and the associates think it is a pay plan,” Rose said. “You know a bonus plan has been in place too long when employees start counting on the bonus to pay their bills.”

The bonus plan should change every 90 days. In some cases Rose changes his weekly, though he admitted that can seem complex. But, he said, it works.

“The only person that hates our compensation plan is the accounting department,” Rose said. “They would prefer to cut one check at the end of the month. But I’m not here to make their job easy. I’m here to sell.”

Cheryl Wilke, a Fort Lauderdale, Fla.-based attorney and partner with Hinshaw & Culbertson LLP, said dealers often make the mistake of paying bonuses to sales associates from petty cash.

Wilke warned those payments must be properly recorded for tax purposes.

“Also, if they make the bonus plan a competition where the rules are not transparent, or the rules are not clear, it could be a problem,” Wilke said. “If two people reach the sales goal, is the bonus split 50-50? What are the rules?”

Wilke said dealers can’t retroactively use a bonus as a basis to collect money. For instance, if a salesperson loses a deal, or after receiving a bonus a sales associate later underperforms, the money cannot be taken away.

“Remember, it is not a treasury,” she said. Wilke cautioned dealers to be certain that

any bonus plan is based on objective goals, like

sales or number of applications. “It cannot be subjective things, such as a

bonus if you sell so many cars to women,” Wilke said.

She said she represented one dealer client in a case in which the dealership was located in an area with a large Filipino population. The dealer wanted to diversify his customer base by befriending that ethnic community, so he constructed a bonus plan to pay associates more for selling cars to Filipino families.

“The business reason is fine, but that doesn’t make it legal,” Wilke said.

Gregg Lawler, owner of Thrifty Car Sales in Rogers, Ark. – who often jokes about using a cattle prod to motivate his workers – said he offers his associates a simple salary-based incentive “based on their loyalty and how well they perform.”

Customer ReferralsOften satisfied customers carry as much

weight in creating sales as star sales associates. Dealers are always looking for ways to encourage customers to bring in their family, friends and church members.

Lawler said he stays away from offering incentives for customer referrals. Instead he relies on word of mouth about his customer service, which he believes is superior to that of his competitors.

“We don’t buy our way into sales,” he said. To keep customers coming back, he sells

certified vehicles and spends “a lot of money” on reconditioning the cars. His Thrifty Car Sales dealership also offers a three-day money-back guarantee.

“Kindness and honesty – it’s a very simple process,” he said.

Michael Brumfield, owner of South Side Motors in Columbus, Ohio, has no problem with customer incentive programs – he just can’t afford them. He spends half of his day fixing up the cars at his small dealership of less than 50 cars.

“In this economy, I try to keep costs down as much as possible,” Brumfield said.

Jan Kelly, president of Kelly Enterprises, a sales training and consulting company based in Vancouver, Wash., said many states prohibit “bird dogging,” dealership slang for referral fees.

“What I think is best is sending [customers] a thank-you note, and maybe a dinner for two out to a nice restaurant, something that says, ‘I appreciate you,’ ” Kelly said. “Just think of how marvelous PR there is for the dealership. The customer will be telling everyone about the dinner. It’s great whenever you do something unexpected.”

Motivation can make a difference, but the trick is understanding what motivates whom. Is paid time off a better incentive for your staff than money? Are you better off offering individual bonuses or setting team goals? Knowing your salespeople and what drives them is the key.

And don’t forget that the most commonly overlooked sales force in the industry is your customer base. Referrals can be a huge resource, and incentives such as contests, prizes, free service or perhaps a customer appreciation day that includes food and giveaways, can sweeten the pot for customers to tell their friends and family about your dealership.

BY JASON ROBERSON

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W H A T M O T I V A T E S Y O U R S A L E S S T A F F ?

REGION I: MAINE, VERMONT, NEW HAMPSHIRE, MASSACHUSETTS, CONNECTICUT, RHODE ISLAND, NEW YORK, PENNSYLVANIA, NEW JERSEY, DELAWARE, MARYLAND, VIRGINIA, WEST VIRGINIA, INDIANA, OHIO AND MICHIGAN.

REGION II: KENTUCKY, TENNESSEE, NORTH CAROLINA, SOUTH CAROLINA, GEORGIA, FLORIDA AND ALABAMA.

REGION III: NORTH DAKOTA, SOUTH DAKOTA, MINNESOTA, WISCONSIN, ILLINOIS, IOWA, MISSOURI, KANSAS, NEBRASKA, OKLAHOMA, ARKANSAS, LOUISIANA, MISSISSIPPI AND TEXAS.

REGION IV: WASHINGTON, OREGON, CALIFORNIA, NEVADA, IDAHO, MONTANA, WYOMING, UTAH, COLORADO, ARIZONA, NEW MEXICO, ALASKA AND HAWAII.

The foundation invites you as an eligible student to complete this application in pursuit of scholarship funds to be paid to the college of your choice in the fall of 2013. Applications must be POSTMARKED NO LATER THAN MARCH 1, 2013 AND RECEIVED NO LATER THAN MARCH 11, 2013.

The National Independent Automobile Dealers Association Foundation was founded in 2006 by the National Independent Automobile Dealers Association, a 66-year-old trade association, to “improve the independent motor vehicle industry by informing and educating consumers of the general public and training individuals associated with our industry.”

Historically, the association’s scholarship program was the responsibility of the NIADA’s auxiliary. Now, however, as an IRS-approved 501(c)(3) nonprofit organization, the foundation has assumed the oversight of that scholarship program’s functions.

Submit the completed application form with the required attachments in a 10 inch-by-13 inch envelope with adequate postage to:

SCHOLARSHIP SELECTION COMMITTEENIADA FOUNDATION2521 BROWN BLVDARLINGTON, TX 76006

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

Staff will review the applications for completeness and will forward them to the Scholarship Selection Committee within NIADA and at Northwood University in Midland, Mich. They will be reviewed by region. One applicant will be selected from each of the four NIADA regions based on the merit of his or her scholarship application and will be notified by the foundation office no later than mid-May 2013.

FOUR REGIONAL SCHOLARSHIPS ARE AWARDED ANNUALLY AT THE ANNUAL NIADA CONVENTION IN JUNE.

Annual Scholarship Program

FIND THE SCHOLARSHIP APPLICATION AT WWW.NIADAFOUNDATION.ORG

In November and December, more than 4 million American businesses, including 740,000 retailers, will receive 2012 Economic Census forms. Responses to the questionnaire are required by law to be returned by Feb. 12.

Every five years, the government conducts the Economic Census to develop a comprehensive portrait of American business, from the national to the local level, relying on timely and accurate data.

The U.S. Census Bureau has created a web page __ business.census.gov __ to provide information about the Economic Census as well as statistics businesses can use to assess and grow their business operations.

The site includes webinars and videos to educate businesses about the census and what it means to them, as well as a section geared toward small businesses.

FOR MORE INFORMATION, VISIT BUSINESS.CENSUS.GOV.

Economic Census Coming Soon

E C O N O M I C N E W S

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Looking to improve your bottom line, manage more effectively, improve employee retention,

and leverage the newest and most effective marketing techniques? NIADA can help!

CERTIFIED MASTER DEALER TRAINING

CMD training positions you to take your success to the next level. The CMD designation serves as recog-nition of your dedication to the industry, and of your

proven record for stability, reliability, and ethical business practices.

February: DallasApril: AtlantaJuly: Arizona

September: Atlantic City

DEALER 20 GROUPSShare successful ideas and best business practices in this unique, cost-effective 20 Group, designed for

BHPH and retail dealers alike. January: Atlanta

April: DallasAugust: Atlanta

December: Dallas

FO R M O R E I N FO R M AT I O N , V I S I T:W W W. N I A DA . C O M / E D U CAT I O N . P H P

Chinese-made counterfeit airbags have been used as replacement parts for as many as 230,000 used vehicles that have been involved in a crash over the past three years, the National Highway Traffic Safety Administration warned.

The NHTSA’s tests showed the black-market fake airbags, which look like certified original equipment parts right down to the manufacturer’s logo, either don’t deploy at all on impact or explode, sending fiery shrapnel toward the driver’s face.

The airbags are being sold to independent repair shops as original equipment, the NHTSA said. The agency has compiled a list of makes and models for which the counterfeit airbags are known to exist, but admitted it does not yet know the “full scope and scale of the problem” and said the list is likely to “evolve over time.” The list is available at www.safercar.gov.

Cars that have had their airbags replaced

by independent shops or by airbags purchased online during the past three years are at risk, the NHTSA said. Owners of such vehicles are asked to contact the call center established by their car’s manufacturer to have the vehicle inspected the airbag replaced if necessary. The list of call centers and other information is also available at www.safercar.gov.

In August, federal agents arrested a North Carolina auto mechanic and discovered more than 1,500 counterfeit airbags, according to various media reports. The case was reportedly linked to a case last year in Tennessee, in which a Chinese citizen pleaded guilty to trafficking in counterfeit airbags and was sentenced to 37 months in prison.

The NHTSA said no deaths or injuries have been tied to the counterfeit bags but said it is unclear whether police accident investigators would be able to identify a fake airbag from a real one after a wreck.

WA R N I N G

NHTSA Warns of Counterfeit Airbags

Buyers, sellers and consigners across the independent auto auction industry can now seamlessly use ShipCarsNow from Auction Edge Inc.’s auction management platform, allowing customers to ship multiple vehicles to multiple destinations and take advantage of built-in volume pricing.

ShipCarsNow is part of Union Pacific, which transports approximately one out of three new cars sold in the U.S. With more than 1,300 quality trucking companies under contract and strategic ties with major railroads, ShipCarsNow offers nationwide, door-to-door rail and direct truck service at competitive pricing. ShipCarsNow provides Auction Edge members with the capability to transport cars safely and securely, supported by 24/7 customer service.

“We want to make it as easy and as cost-efficient as possible for our Auction Edge customers to manage shipping and delivery of their sales and purchases,” Auction Edge senior vice president Scott Finkle said. “Dealers and consigners with AuctionACCESS IDs will be able to set up a ShipCarsNow account with a couple of clicks and start shipping vehicles immediately.”

For more information, visit www.shipcarsnow.com or call 866- 207-3360.

Auction Edge, a national remarketing platform that powers more than 130 independent auto auctions in North America, also introduced a new function that allows key auction employees to view credit lines and available credit for dealers with Automotive Finance Corporation (AFC) floorplans, enabling auction personnel to help the dealer complete purchases and quickly floorplan their vehicles through AFC.

FOR MORE INFORMATION, VISIT WWW.AUCTIONEDGE.COM.

Auction Edge Integrates with ShipCarsNow, AFC

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BY CHIP ZYVOLOSKICHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.

There’s no question that what a dealer says to a customer as part of the sales process matters.

But it’s not just about what is said by the F&I department and what’s documented on a sales contract to finalize a deal. It’s also about what is being communicated outside, on the car lot.

No matter how accurate and compliant your finance documentation is, if it disconnects from promises made during the sales process, you could be facing a problem.

Though the law is different in every state, most have passed some version of the model Uniform Commercial Code (UCC) § 2-313. It provides that an express warranty is created by the seller when it makes a statement of fact or promise to the buyer relating to the goods, which becomes part of the basis of the bargain.

The elements are pretty broad and cover a wide range of common statements a salesperson might make when discussing a vehicle with a potential buyer. For example, if a salesperson says to a potential buyer, “This car comes with a new spare tire,” as part of the sales discussion, the promise is probably an express warranty.

What happens if the customer picks up his or her car after the sales contract is signed and a used spare tire is in the trunk?

Contrary to what some might think, express warranties generally can’t be waived or disclaimed. UCC § 2-316 provides that words or conduct creating an express warranty and words or conduct disclaiming or limiting the warranty must be interpreted in a way that makes them consistent with each other. If that’s not possible, then the disclaimers or limitations will not be enforced.

In short, you can’t give with one hand and take away with the other. If a salesperson promises the car comes with a new spare tire and a used one is delivered, a written warranty disclaimer will not help.

Note that the express warranty doesn’t have to be in writing and it doesn’t require using the word “warranty.” As a result, what

the salesperson says can affect a transaction just as much as the documents produced by the F&I department.

That’s why it’s important to know what your sales team is communicating and, more important, promising to customers.

Sometimes the situation involves a simple mistake on the sales lot. A car could be presented as a six-cylinder when it’s actually an eight-cylinder. Or maybe the customer is told the car had two prior owners but there were really three. An uninformed or mistaken salesperson might also tell a customer the car has never been in an accident when in fact he or she doesn’t really know if it has or not.

The new spare tire example may sound farfetched, but a dispute about whether new or used tires were delivered was just one of numerous inconsistencies between promises and documentation by the seller and what was delivered to the buyer in the California case of Sanchez v. Valencia ( 201 Cal. App. 4th 74 (2011)). The case is known for its decision on arbitration clauses and wasn’t about warranties. Still, it is a good example of how discussions on the lot can have a big effect on the dealer’s liability.

Those kinds of express warranty-creating mistakes can be avoided by simply being careful about representations about vehicle features and facts.

While services like CARFAX and certain branding of vehicle titles can help prevent some of those mistakes, or at least bring them to light before an agreement is finalized, dealers are still facing situations in which customers are unhappy because an expectation that played a key factor in their decision to buy has not been met.

So what can you do to help prevent this from happening?

Tell your sales staff that what they say matters and why: A salesperson is a liability risk if he or she thinks all promises are wiped out by a disclaimer in the sales contract.

Train your staff on proper sales techniques: That includes arming them

with facts about the inventory available for sale.

Encourage potential buyers to take a test drive: Also encourage them to take the vehicle to a mechanic or get a vehicle history report and other information about the car so they have the best opportunity to know the features, functionality and condition of the vehicle without relying on information from you. Some dealerships have installed Internet kiosks for customers to conduct on-the-spot research.

This is a complex area of law, littered with exceptions and replete with court decisions that are very fact-specific and findings that are not always consistent. For example, in some situations, disclaimers or waivers can be enforced if the sales contract includes a provision saying it is the all-inclusive and exclusive agreement covering the sale.

Whether a given statement is a statement of fact or promise (creating an express warranty) or merely sales puffery (not an express warranty) is regularly litigated. Many case decisions exist and entire books have been written on the subject.

The key point is that what your sales team says on the lot is important. If there is conflict between what was promised during the sale and what was delivered, the dealer has a problem. The problem could be characterized as the breach of an express warranty, but it could also be a fraudulent misrepresentation, unfair or deceptive act, etc. – keep in mind that 15 causes of action were alleged in the Sanchez case based on the tires and other inconsistencies.

Creating consistency throughout the entire sales process and making sure the lines of communication between the sales staff and F&I team are open can help mitigate risk for your dealership, ultimately saving time and money.

C O M P L I A N C E OV E R D R I V E

Unintended Express Warranties: What Sales Staff Says Matters

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