tennessee dealer connect

• PROVISIONING: NEW SCIENCE OF USED CARS• CASH IS KING IN BUY HERE-PAY HERE• COMPLIANCE OVERDRIVE

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PAIDDALLAS, TEXASPermit No. 2079

JUNE/JULY 2012

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

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WHAT’S NEW

MAGAZINE CONTENTS

ADVERTISERS INDEX

04 Provisioning: Used Car Science06 Cash Is King in BHPH08 Go All in on Service16 Mobile Ads a Must for Dealers18 New NIADA CPO Program22 Compliance Overdrive

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] Tennessee Dealer Connect 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 TNIADA or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of 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]/PRODUCTION MGR. Christy Haynes • [email protected] Nieman Printing

TNIADA BOARD MEMBERS

ADESA .......................................Inside Back CoverAlly ......................................................................9AutoTrader.com ....................................Back Cover Chase ................................................................12Manheim.com ......................................................5Manheim Nashville .................... Inside Front CoverNIADA Certified .................................................19Nowcom ............................................................11 STARS GPS .......................................................14Thrifty Car Sales ................................................15United Acceptance ............................................13Voisys ................................................................22Westlake Financial .............................................. 7

CARFAX has launched its newest wave of television ads as part of the national “Show Me the CARFAX” campaign.

Starring again in all of the ads to deliver the message of smarter used car shopping is the knowledgeable Car Fox. The spots, which humorously depict people buying used cars from various types of sellers, illustrate how CARFAX vehicle history reports can build confidence in the cars people buy as well as the dealers from whom they’re buying. Car Fox issues a friendly reminder for consumers to make an educated buying decision from a trusted seller by saying, “Show Me the CARFAX.”

“Smart used car shoppers make good buying decisions by consulting the experts first,” CARFAX communications director Larry Gamache said. “An inspection by a qualified mechanic and a trusted CARFAX Report is the best one-two punch.

“We’ve watched Car Fox help boost traffic at dealerships and build

confidence with consumers everywhere since he became part of the ‘Show Me the CARFAX’ campaign. We fully expect that success to increase with these latest ads.”

The new ads can be viewed on the CARFAX channel on YouTube or the company’s website, carfax.com.

“The ads featuring Car Fox have been wildly successful,” said Zevin Auerbach, a creative partner at Zimmerman Advertising. “The new series will give fans something to really look forward to. In essence, they’re mini-TV shows with a car dealer as a recurring character. The imaginative dealer is constantly trying to outfox Car Fox with a series of gimmicks like a ‘seal of approval,’ which is actually a live sea lion.

“Of course at the end, the customer says ‘Show me the CARFAX,’ as our dealer makes one last humorous attempt to provide an alternative.”

Carfax gives free marketing materials featuring Car Fox to dealers, including an inflatable Car Fox for Carfax Advantage Dealers.

inside CARFAX Introduces Its Latest TV Ads

Person to Contact:Dail Hughes, ID#02-37367Tax Law SpecialistTelephone Numbers:1(866)270-0733 option# 3 or(313)2346146Refer Reply to:SE: S:/FBSA:PO:DCC: CTRSG120487Date: April 5, 2012

Dear Sir or Madam,The Financial Crimes Enforcement

Network (FinCEN), via the Internal Revenue Service Enterprise Computing Center-Detroit (ECC-D), has received the Form(s) 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, dated February 27, 2012. We are unable to process the Form(s) 8300 because you did not submit the correct form version. FinCEN updates Bank

Secrecy Act forms approximately every three years and financial institutions must submit the most current version of a form. Please resubmit the form(s) as soon as possible and no later than 10 business days upon receipt of this letter. Failure to properly file a BSA form may result in fines or other penalties.

If you need to resubmit this form(s) on paper, please visit FinCEN’s website to obtain and download the most current version of the form: http://www.fincen.gov/forms/bsaforms/. Make sure that you mail the form(s) to the address identified in the “When and Where to File” section of the particular form. Do not mail the form(s) to the address at the top of this letter.

If you have any questions about this letter, please contact Dail Hughes @ 1 (866) 270-0733 option #3.

Thank you for your assistance.

DEPARTMENT OF THE TREASURYIRS ENTERPRISE COMPUTING CENTERP.O. BOX 33116DETROIT, MI 48232-0116

T H E L AT E S T | visit carfax.com

JT LIVEZEYPRESIDENTMID-STATE AUTO, INC.

MARK SHUBERTPRESIDENT-ELECTSHUBERT MOTORS

MICKEY DORSEYCHAIRMAN OF THE BOARDFRIENDLY AUTO

DAVID WILSONTREASURERWILSON’S AUTO SALES

JOHN NIVENSECRETARYAUTO AGENCY, INC.

MARCUS DAVISAUCTION MEMBERMARCKA AUTO AUCTION

DARRYL NOBLEEXECUTIVE [email protected]

Sirius XM Satellite Radio is America’s satellite radio company. Independent dealerships can now offer a free SiriusXM three-month trial on all pre-owned vehicles with factory-equipped satellite radio. In addition to selling your customers a quality vehicle, you’ll be giving them the opportunity to enjoy satellite radio. And there’s no cost to your customer. Visit www.siriusxm.com/niadaprogram to enroll your dealership today!

NIADA Member Health Plans, administered by JLBG Health, bring you choice and flexibility when designing your personal health plan while providing potential savings of thousands of dollars annually. To review the plan details and receive an instant online rate, visit www.NIADAHealthPlans.com or call 1-888-308-9340.

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These days, dealers are looking for every edge to find quality inventory for their lots. Americans are holding onto their cars longer than ever, causing higher prices at auction and a smaller crop of quality vehicles on which dealers can bid.

According to a new study by R.L. Polk, length of vehicle ownership recently hit an all-time high: 71 months for new vehicles and 50 months for used cars and trucks. The study also noted that people holding onto their cars longer has resulted in decreased used-vehicle supply.

In this crowded marketplace, you need to assess your strategy for long-term success if you want to outperform your goals and beat the competition. To help, consider this new method dealers are using to better evaluate and acquire in-demand units others might pass up. It’s called provisioning.

What Is Provisioning?Provisioning is defined as the efficient

allocation of resources to achieve a successful mission. To be clear, the mission for dealers is to operate a financially successful used car operation.

Put simply, for your business to thrive, you need to know what cars to buy, what to pay for them and where to find the right units for your inventory. Provisioning is a new way for dealers to set their used vehicle strategy (size of inventory investment, ROI/turn expectations) and efficiently pursue the vehicles necessary to execute their plan successfully.

Provisioning is like a science because it provides a methodical approach to buying used vehicles. It helps evaluate certain types of information vital to the success of your used car business.

What types of information?Demand: The number of people

in your area searching online for a specific vehicle.

Interest: The average conversion

rate from search results pages to vehicle details pages for a vehicle in your area.

Volume: The number of units recently sold in your area.

Market days supply: The current available supply of similarly configured vehicles and the rate at which such vehicles have been sold over the past 45 days.Profitability: The spread between

average asking price and wholesale price – the auction price vs. list price in your market.

Availability: The number of units currently available at auction.

Experience: The success of your recent sales for a specific make/model.

Analyzing that information on your own isn’t easy. But technology and tools can help you determine the types of vehicles that will deliver the best return on investment every month, giving you a huge advantage on your competition.

What to Pay and Where to Find ItOnce you determine the cars that sell

fast in your market, you’ll want to make sure you pay the right price for them. At auction, there aren’t too many obvious deals these days, but you can still find gems with a little guidance.

Many dealers rely on professional buyer solutions like those by vAuto, for example. Those services use in-market data to help determine which units are worth your investment. They can even help you identify the price point at which a vehicle will get the most attention, get you the profit you need and cover your reconditioning costs so you still hold gross.

If you’re a dealer in the Northeast in the winter, you might have difficulty finding enough SUVs to keep your inventory fully stocked. Similarly, a dealer in the South probably can’t find enough convertibles in the summer months. Wherever you are, there’s inevitably a shortage of certain cars in

demand. So it can pay to look outside your immediate area for quality inventory.

Use online auctions to help keep your lot full of vehicles you know will sell. Online auctions can be some of the best places to find cars at good prices without the hassle of waking up early, checking pages of run lists and elbowing past other dealers to find your spot in the lane. Instead, sit back with your coffee and bid from the comfort of your home or the office.

How to Reduce Acquisition RiskOf course, if you bid online, you won’t

be able to “kick the tires” and inspect the vehicles in person, so you’ll especially need to consider the condition and history of those vehicles. Otherwise you might end up paying too much for a car that seems perfect but has reported damage or another incident that could affect its retail value.

The key is knowing the cars with good service histories that merit your bids, since those vehicles often sell for better prices.

Many successful dealers run a vehicle history report on every car they consider buying as part of their standard procedure to assess a vehicle’s condition and spot any related acquisition risks. Whether through online auctions or in-person trades, this triage ensures the dealer and his buyers feel more confident that the inventory placed on the lot will turn fast and make top dollar.

With declining supply and increasing demand for quality vehicles, there is little room to make acquisition mistakes on vehicles you “had a feeling about” but didn’t take the time to carefully vet. Provisioning helps you avoid these mistakes and turns your ability to efficiently and effectively evaluate and acquire used vehicles into a competitive advantage.

BY DALE POLLAK AND CHAD GOODSON

The New Science of Used Vehicle Sourcing & SalesU S E O N L I N E AU C T I O N S T O H E L P K E E P YO U R LO T F U L L O F V E H I C L E S YO U K N OW W I L L S E L L .

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U S E O N L I N E AU C T I O N S T O H E L P K E E P YO U R LO T F U L L O F V E H I C L E S YO U K N OW W I L L S E L L .

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The two keys to Buy Here-Pay Here are risk management and cash management. Both, as always, are hot topics. More so now with everything that is going on in the automotive industry and the economy in general.

But cash – and the availability or the management thereof – seems to be on everyone’s mind, and in some cases closing their doors.

Cash is not as available as it was this time last year. The good news is it is still available, which isn’t true in some other unfortunate industries. It’s just not as easy to find or secure, not to mention afford, since the rates we enjoyed a year ago are no longer there.

Local banks and credit unions appear to be the best sources for lines of credit. The large regional and national banks still seem to be staying out of the car business. Local banks and credit unions have smaller organizational charts and usually less turnover, leading to a more stable decision-making future.

The three necessities to securing a line with those sources are patience, persistence and preparation. The days of simply walking into a bank and securing a line of credit on a handshake and a promise to pay are long gone. Local banks and credit unions have learned from the mistakes of the regional and national banks and have become smarter and more sophisticated in their approval process.

Patience is needed because local banks and credit unions need a complete education on our industry. Not everyone is familiar with what we do and how we do it. In some cases, it can be hard to convince a bank to loan money to a business that will in turn extend credit to someone who has shown little ability to repay it. They need a K-through-12 to make their decision and continuing education after the line is secured.

Persistence is needed because the

days of lending institutions seeking out beneficiaries of their generosity have just about ended, especially to those dealing with subprime clientele. BHPH dealers have to be willing to go door-to-door and sell our business to lenders. In most cases, it will take knocking on more than one door. And once in the door, it will take more than one cast to reel them in.

Preparation is the determining factor to success, initially and in the future. Because banks and credit unions have become more sophisticated in their decision-making, BHPH dealers have to provide more sophisticated information to them. Performas, financial statements and cash-flow analysis are a few examples of data that needs to be provided up front to obtain a line and on an ongoing basis once a line is secured.

The key to maintaining a good relationship with a capital source is providing as much information in the beginning as possible and to keep doing so on a regular basis so they never have to ask for anything. Full and accurate disclosure is paramount. Put yourself on the other side of the desk. What would like to know if it was your money? In this instance, there really is no such thing as too much information.

Having all the access in the world to capital will be worthless unless you know how to manage it. In today’s tight credit market, BHPH dealers have to manage not only their credit lines, but cash in general. Not understanding how to manage available cash has closed more BHPH dealers’ doors than any other cause. It is that important.

The best tool to effectively manage cash is common sense. Don’t spend what you don’t have. Too many dealers feel the need to live the lifestyle. Success can breed contentment and contentment can breed laziness, which usually leads to failure.

A cash-flow model helps keep

common sense at the forefront. The model can be very detailed or simplified to cover the basic cash-in, cash-out categories. Either way, it should show a one-, three- and possibly five-year analysis, and should be updated at least annually or when there has been a change to the overall business model.

Adding a location, an increase or decrease in ACV, or even a change in underwriting standards can impact cash needs. The model should be realistic. Pie in the sky and wishful thinking serve no purpose.

Having the model is only the first step. Having the discipline to manage to it is the challenge. Without it, a dealer might as well have the “sell some cars, collect some money” business plan and hold on for dear life – a plan that is not used by successful BHPH dealers.

The model should be looked at on a monthly basis and compared to actual performance. That way, adjustments can be made immediately to either the model or the personnel in charge of managing to it.

Cash is king in our business. Not only the availability of it, but the effective management of it as well. There are BHPH dealers who operate without the need of a credit line because they understand how to manage cash. There are BHPH dealers who operate within credit lines effectively because they understand how to manage cash. But there are too many dealers experiencing capital reductions and, in some cases, all-out line calls because they don’t understand how to manage cash.

Having the patience, persistence and preparation to obtain and secure cash, then the discipline to manage it, will take a load off your mind and help keep your doors open.

BY BRENT CARMICHAELEXECUTIVE CONFERENCE MODERATORNCM ASSOCIATES [email protected]

Cash Is King in Buy Here-Pay HereCA S H I S K I N G I N O U R B U S I N E S S . N O T O N LY T H E AVA I L A B I L I T Y O F I T B U T T H E E F F E C T I V E M A N AG E M E N T O F I T A S W E L L .

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C O N T I N U E D O N PAG E 10

For independent dealers, having a service department isn’t something that should be taken lightly.

Not all dealerships offer service – it isn’t for everybody – but for those that do it should be an integral part of the business, used to give the dealer an opportunity to attract, retain and better understand customers.

Joe Lescota, the NIADA’s new director of dealer development, said he knows many dealers who lose money in the service department because the money that comes in through service goes into one big pot.

“There’s a whole process in operating a service department,” said Lescota, the longtime instructor for NIADA’s Certified Master Dealer program. “Dealers think they are selling service when what they’re really doing is selling time.

“A dealership only has so many hours in the day to operate. So a dealer should take the number of techs he has and multiply that number by the number of hours in operation. So a dealer might have 80 hours a day of time to sell. From a profit standpoint, it doesn’t matter if the dealer is changing oil or dropping an engine.”

Doug and Nyla Borgmann, owners of Creighton Auto, Inc., in Creighton, Neb., manage to keep their mechanic and their body man pretty busy, which is good for their business.

That means doing repairs for everyone, not just customers.

“Offering service works for us,”

Doug Borgmann said. “We advertise on our store sign. Service accounts for between 25 and 30 percent of business. Our mechanic has been with us since the early 1980s. He’ll retire in four or five years and that has me worried. Replacing him will be hard. Our body man has been with us for about three years. Before getting him, we had a hard time getting someone full time to do our body work.”

J.R. Westbrook, owner of Tyro Auto Sales in Bay City, Texas, has been offering service at his store since 1971. He does outside work in addition to working on the cars of customers, but he doesn’t advertise. He depends on word of mouth.

Westbrook has kept his technician for years, operating on the theory that it’s easier to keep the person you have happy than go out and find new people.

Staff is a key component to offering a good service department.

Getting good help was one of the reasons Randy Yates, owner of Yates Motors in Gering, Neb., closed his service center.

Yates is a third-generation dealer. His lot has been around for 66 years, and for much of that time, it offered service. Eventually, though, it wasn’t worth the trouble.

“We got rid of our old service center, must be around nine years ago,” Yates said. “It was hard getting and keeping good people. I’d train people and they would get the skills they needed to do the job. But then they’d go to

dealerships, often franchise operations, that would pay better wages and I’d have to start the process all over again.”

Yates said he realized he was better off if he stuck to what he did best – sell cars. Now he sends his cars to be fixed by people who do what they do best – repair and recondition cars. By letting the work get done by specialists, he doesn’t have to bother with the hassle of hiring and training technicians, then replacing them as they leave his business.

Yates said he ended up spending a lot of time trying to drum up business for his mechanics instead of selling cars.

“If the mechanics aren’t busy all the time, then they aren’t making as much money as they could be,” Yates said. “It finally came to the point where it became too much work for me to find work for them and for myself. Now I have less headaches just selling the cars and farming any mechanical work out.”

He also didn’t have to keep up with the expense of getting new equipment all the time. For one thing, the types of tools a service provider must own has changed dramatically. Gone are the days when a mechanic could do all his work with a lift and some wrenches. Cars now are computerized, and dealers and shop owners have to invest their own money in the purchase of scanners and other electronic devices used to communicate with a vehicle’s electronics.

Lescota said Yates’ situation reflects a reality of operating a service department – it’s not easy. But, he

A Service Department Can Be a Big Edge for Dealers Willing to Make the Commitment

B AC K T O T H E B A S I C S : G O A L L I N

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added, the payoff can be tremendous when the job is done right.

“It’s always a challenge to get good technicians,” Lescota said. “So I suggest that dealers go the technical schools and start grooming technicians before they even graduate. Also, you have to give someone a reason to stay at your dealership.”

Usually that means giving them enough to do. As Yates discovered, if technicians don’t have enough to do, they’ll go somewhere where their skills will be in more demand.

It might also mean giving them more money. After all, technicians have to eat too, Lescota said.

“When I hear that a dealer can’t keep a technician, my thoughts first run to him not getting either enough work or enough money,” Lescota said. “And you can’t cheat on the equipment. It’s the cheap man who pays the most for things. By trying to save money on new equipment needed to work on today’s computerized cars, a dealer will end up having to spend a lot of money trying to keep technicians.

“People like to work in comfortable environments and technicians are no different from anyone else. I always say if a dealer can’t keep good mechanics, it can usually be traced back to poor lighting, poor parts and poor work conditions. There’s a demand for technicians and they’ll go where they feel most comfortable.”

Having a service department is a full commitment, Lescota said. And getting good technicians is a competitive sport between dealers. Maybe that tech left to go to a franchise operation because the boss there promised to send him to an ASE-certified program, where the tech could improve his skill set. Independent dealers should consider similar actions.

Bill Elliff, owner of Elliff Motors in Harlingen, Texas, is an example of a dealer who is committed to his service department. His lot provides a full variety of services, and he long ago realized that in order to have a service department, he had to have enough service work to keep his employees busy.

To better service his customers, his dealership can do anything from changing oil to engine replacement. He owns a couple of lots with a total

of seven service bays and 10 people working them. He advertises in print and on the signage around his lots.

He said finding qualified people isn’t that hard. Finding qualified people who are dependable and can be counted on to show up on time ready to work every day is the tough part, Elliff said.

But the effort is worth it. By hiring the right people, a dealer can have a service department that drives potential customers to the store, Elliff said. While they’re getting their car worked on, many of his service customers will wander around the lot and take a look at inventory. Maybe that person is looking for something new, and if he sees something he likes that service customer can be converted into a vehicle customer.

Elliff estimates his service department accounts for about 20 percent of his total business. He said some of his fellow dealers don’t realize that a service department has to be able to make it on its own. It shouldn’t be a loss leader.

Additionally, he sees dealers actually short-changing themselves when it comes to pricing their cars. A dealer might, for example, put $100 worth of reconditioning in a car he bought for, say, $5,000. When it comes time to price the car, he’ll want $1,000 profit. So he’ll price the vehicle at $6,100, Elliff said.

That’s a mistake. Any work put into a vehicle using the dealership’s own service department should be reflected positively in the price of the vehicle. If $100 of work was put into the car, that should translate into adding, say, $200 to the back-end value of the vehicle. So that car should be priced at $6,200, not $6,100.

“As an owner, you have to put the money in to develop the infrastructure needed to run a good service department,” Elliff said. “That means having the latest diagnostic equipment. But if you charge right for your services, you will always come out ahead.”

Ultimately, having a good service department should mean more than another revenue source, Lescota said. By having a service department aimed at serving the public at large and not just his current customer base, Elliff is bringing in new potential buyers to look at his inventory.

He’s creating a captive audience.But a good service department can

do even more. When a customer brings in a car, a dealer can glean all sorts of information about the customer. It’s built-in market research.

“The smart dealer should now know all sorts of things about that customer,” Lescota said. “The dealer should know how that service customer uses his car. Does he baby it or does he really run it through the ringer and wear it out? With that knowledge, the dealer can better help the customer make an informed decision on the best vehicle to buy when it comes time to get another car.”

By having a complete service department, a dealer can get a customer used to bringing his vehicle to his dealership. Need an oil change? Bring the car to good old Joe’s. In an accident? Have the car towed to Joe’s. Need some engine work? Go to Joe’s.

“There comes a time in every car’s life when it becomes counter-productive to keep putting more money in that vehicle,” Lescota said. “If you have a good relationship with your customers, and they bring their cars to you for service, you can tell that customer when it’s time to get a new car.”

A service department can also help Buy Here-Pay Here dealers with their bottom line, Lescota said. It’s a rule of that segment of the used car business that when a car stops running, the payments stop coming.

If a dealer has a service department, the customer can bring the car in to get fixed and the cost of repairs can be added to the payment schedule. A customer might not have $300 on him right then and there, but he can usually make his payments if that $300 is spread out over the rest of the payment schedule.

“A good service department gives dealers control,” Lescota said. “It gives the customer a reason to keep coming back to you. But if you’re going to have a service department, you can’t go in half-hearted. As they say in poker, you have to go all in – but the rewards can be huge.

“These days, dealers need every edge they can get. Now more than ever, dealers who don’t keep up, fall behind and go out of business.”

BY JIM STICKFORD

C O N T I N U E D F RO M PAG E 8 | A Service Department Can Be a Big Edge for Dealers Willing to Make the Commitment | B AC K T O T H E B A S I C S : G O A L L I N

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Looking for “green” cars? Go west.California boasts the most shoppers looking for

vehicles with fuel efficiency ratings of 40 miles per gallon or better, according to research by Cars.com. The data, taken from Cars.com searches, also showed Southern states were the “least green.”

“There’s a perception that Californians are more eco-conscious, and our car shopping data shows that’s true,” Cars.com editor-in-chief Patrick Olsen said. “With more charging stations than any other state and dedicated car-pool lanes, it’s easy to understand why manufacturers typically choose California as the place to launch their new green vehicles.

“The hard workers in the South need their pickup trucks. For these workers, a hybrid or fuel-efficient vehicle would likely be a second car, and that’s just not as feasible for many in this economy.”

The website also ranked the cities and towns with the most and least fuel-efficient vehicle shoppers. Not surprisingly, California dominated the most green list with six of the top 10 cities, led by the San Francisco Bay area, while five Southern markets were among the 10 with the fewest 40-mpg cars, with Midland-Odessa, Texas at the top.

Who Buys the “Greenest” Cars? Does the West Coast Boast More Eco-Friendly Drivers?

Eco

- Frie

ndly

The top 10 eco-friendly cities: 1. San Francisco-Oakland-San Jose, Calif. 2. Madison, Wis. 3. Monterey-Salinas, Calif. 4. Portland, Ore. 5. San Diego, Calif. 6. Green Bay-Appleton, Wis. 7. Santa Maria-Santa Barbara San Luis Obispo, Calif. 8. Sacramento-Stockton-Modesto, Calif. 9. Chico-Redding, Calif. 10. Zanesville, Ohio

The 10 with the fewest green car shoppers:1. Odessa-Midland, Texas 2. Laredo, Texas 3. Fairbanks, Alaska 4. Albany, Ga. 5. Bluefield-Beckley-Oakhill, Va./W. Va. 6. Glendive, Mont. 7. Helena, Mont. 8. Columbus-Tupelo-West Point, Ala./Miss. 9. Casper-Riverton, Wyo. 10. Baton Rouge, La.

T H E R E ’ S A P E RC E P T I O N T H AT CA L I FO R N I A N S A R E M O R E E C O - C O N S C I O U S , A N D O U R CA R S H O P P I N G DATA S H OW S T H AT ’ S T R U E .

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Anyone who had has the experience of shopping for health insurance knows it’s not an easy task. Figuring out ways to keep premiums affordable can be a major struggle. Shopping for apples-to-apples coverage with several carriers is nearly impossible and premiums for similar plans are vastly different from one carrier to the next.

So what’s a person to do?Purchasing health insurance requires a

“think outside the box” approach. Here are three simple tips to help you along the way:• Consider shopping for a much higher

deductible than you are accustomed to. Shop for plans that have a $10,000 deductible or more. It may shock you how drastically lower premiums will be. Too much risk for you? We will show you a way to combat that next. If you would like to see a rate for a higher deductible in comparison, visit www.NIADAHealthPlans.com for an instant online rate.

• To offset the high deductible, consider purchasing a critical illness rider, which attaches to your major medical policy. Critical illness riders pay a cash benefit for

conditions like cancer, heart disease, stroke, coma and kidney disease, and the benefit can be used to pay off your deductible and leave you with additional money for other expenses, such as loss of income. Riders can be purchased to cover your deductible or more – up to $100,000 in cash coverage. Believe it or not, the premiums are very affordable.

• Also to help offset risk, consider purchasing an accident rider to attach to your major medical policy. Like critical illness riders, accident riders pay a cash benefit for accidents or injuries such as cuts, burns, broken bones or strained and pulled muscles. Again the benefit can be used to pay your deductible in the event you or your family is injured. If you have children, especially ones in sports, this is a must-have rider. The premiums are even more affordable. So what types of claims will you then need to

worry about?Since health care reform passed, additional

benefits have now been added so you will not have to pay out of pocket for adult and child wellness exams, such as checkups,

immunizations, lab work, mammograms, pap smears, PSAs and EKGs. They are all covered at 100 percent with no deductible. Why purchase a lower deductible when it’s covered regardless?

Additionally, there are no lifetime maximums. After your deductible, you are covered at 100 percent until infinity. There are no lifetime caps like $2 million, $3 million, etc. If you have a $20 million medical bill, your insurance must now cover it.

With a high-deductible policy you will have to pay for such claims as office calls for a cold/flu, asthma, skin disorders (other than cancer) and other forms of illness. However, most people would rather save $300, $400 or more per month and pay for the occasional office call themselves. And you will still receive the insurance company’s discounted rate for office calls.

Doing the same thing over and over again and expecting a different result … well, you know the rest. Thinking “outside the box” can not only save you money, but can also provide you with better coverage than you had before.

FO R M O R E I N FO R M AT I O N , CA L L T H E N I A DA H E A LT H P RO G R A M AT 1 - 8 8 8 - 3 0 8 - 9 3 4 0 O R V I S I T W W W. N I A DA H E A LT H P L A N S . C O M

Three “Think Outside The Box” Techniques When Shopping for Health Insurance.

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Congratulations to the following independent dealerships for being nominated for this year’s NIADA/Manheim National Community Service Award.

Independent dealerships across the nation contribute to their communities every day but often go unrecognized for their community support. Many participate through special projects while others provide sponsorships or financial contributions, or lead innovative community improvement activities.

The winning dealership will be named June 13 at the Leadership Awards Banquet during the National Independent Automobile Dealers Association Convention and Expo in Las Vegas. Manheim representatives will present the award along with a $5,000 check payable to the dealership’s chosen charity.

Community Service Award Nominees

The 2012 nominees are:ERTLE BROTHERS DISCOUNT AUTO, STERLING, COLO.NOEGEL’S AUTO SALES, STARKE, FLA.SOUTHEAST CAR AGENCY, INC., GAINESVILLE, FLA.MATTHEWS MOTORS, CLAYTON, N.C.A-1 AUTO SALES OF DULLES, STERLING, VA.REEL’S AUTO SALES, ORWELL, OHIOBOURNE’S AUTO CENTER, SOUTH EASTON, MASS.FRAN MORELLI SALES & SERVICE, BROCKWAY, PA.ED HOLEWIAK’S AUTO SALES, SOMERSET, MASS.PREMIER MOTORS-LEASING, INC., HARDIN, KY.RON’S AUTO SALES, INC., LAWRENCEVILLE, GA.M&F AUTO SALES, ALBUQUERQUE, N.M.ALAMO VALLEY AUTO SALES, KALAMAZOO, MICH.SOUTH TACOMA AUTO SALES, INC., TACOMA, WASH.FAIRLY RELIABLE BOB’S, INC., BOISE, IDAHO

GAS PRICE SCENARIO $4.00 $4.50 $5.00

NADA Used Car Guide Chart I M PAC T O F T H E R I S I N G C O S T O F G A S O N U S E D V E H I C L E P R I C E S E X P E C T E D C H A N G E I N U S E D V E H I C L E P R I C E U N D E R C E R TA I N G A S P R I C E S C E N A R I O S

S O U RC E | NADA Used Car Guide

SEGMENT % $ % $ % $ INTERMEDIATE COMPACT 1.7% $179 6.0% $638 10.4% $1,102INTERMEDIATE MIDSIZE 0.8% $103 2.1% $262 1.8% $233NEAR LUXURY 0.3% $69 -0.2% -$38 -3.0% -$650LARGE CAR 0.3% $39 -0.3% -$34 -3.2% -$415COMPACT UTILITY -0.3% -$37 -2.8% -$408 -8.7% -$1,272LUXURY MIDSIZE -0.3% -$73 -2.9% -$751 -9.0% -$2,313MIDSIZE VAN -0.4% -$49 -3.2% -$453 -9.7% -$1,355MIDSIZE UTILITY -1.0% -$188 -6.4% -$1,144 -16.5% -$2,959LARGE PICKUP -1.5% -$275 -8.6% -$1,540 -21.3% -$3,817LARGE SUV -1.6% -$387 -8.9% -$2,148 -22.0% -$5,298

Fastenal, a national distributor of industrial and construction supplies, has introduced an expense reduction program for auto dealerships to save owners time and money related to their shop supplies and essential tools.

The centerpiece is Fastenal’s FAST Solutions℠ industrial vending system. To date, 8,000-plus machines have been installed to help organizations reduce supply consumption, move the cost of inventory to Fastenal, and increase worker productivity.

To access products, workers enter an ID code and a repair order number, then make a selection. If the request is authorized, the machine dispenses the product and automatically reports the details of the transaction, making workers accountable for what they use. Controls can also be established so that workers only have access to the products (and amounts) needed to do their jobs.

For more information, visit www.fastenal.com.

Fastenal Launches Expense Reduction Program

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N E W 2 0 G RO U P P RO G R A M

After repeated requests from its members, the National Independent Automobile Dealers Association has announced it is entering the 20 Group business.

NIADA CEO Michael Linn announced the NIADA 20 Group program, which will organize and moderate groups of independent auto dealers from around the country to meet and share new ideas and best practices.

Linn said the move is being made after repeated requests from within the group’s membership of nearly 20,000. Dealers have voiced a strong desire to share best practices and operational data between the various member sets.

“NIADA members have historically been a tight-knit group of dealers. Developing a 20 Group platform for them to facilitate ideas and compare operational practices is a natural extension of their close relationships,” Linn said. “Additionally, we have mounting feedback from dealers participating in existing

20 Group models who feel their best interests are being underserved or even ignored. One dealer told me she felt the escalating cost to participate in her current 20 Group was not worth the combative discussions she endures or the pressure she gets to conform to their benchmarks.

“For 66 years as a nonprofit trade association, NIADA has represented the voice of independent auto dealers and has found ways to help them improve their businesses. I can assure you NIADA and our 20 Group program will always put the needs of our dealers first. We will never sacrifice the quality or service we provide our dealers.”The NIADA 20 Group program will be under the direction of Joe Lescota, who was recently introduced as NIADA’s new Director of Dealer Development, effective June 1.

“Even the most successful independent dealers are constantly seeking new ways to improve their businesses,” Lescota said. “They

know the slightest change in sales, financing, service or operational policy can have a major impact on their profitability. Our 20 Groups will be a great way for NIADA dealers to stay on track because colleagues will be there to prod, poke and encourage improved performance. The new platform will match dealers of like size, sales volume and revenue mix for maximized compatibility. They will share ideas and best practices and learn from one another regardless of size or geographical region.

“No independent dealer is too large or too small to contribute, learn and benefit from the collaborative dialogue of a 20 Group discussion. Every one of our members is encouraged to participate.”

The first phase of NIADA’s 20 Group format will focus on independent auto retail operations. More information will be available at the NIADA Convention & Expo in June at Caesars Palace in Las Vegas.

NIADA to Launch New 20 Group Program

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According to sales statistics for the first quarter of 2012, shipments of desktop and laptop PCs fell another 5 percent, and tablets and smartphones are cannibalizing PC sales by 50 percent.

Just another reason for car dealerships to optimize websites for mobile devices and include mobile advertising in their monthly budget.

Many mobile users are cruising classified sites and social media sites from their smart devices. Therefore, it is imperative for car dealers to get inventory on all of those sites, such as Craigslist and Backpage. Those classified sites are growing rapidly with inventory and shoppers, and since posting on them is free, the return on investment is phenomenal.

In its Internet and American Life Project, in a study called “Americans and Their Cellphones,” the Pew Research Center found mobile phones have become a nearly ubiquitous tool for information-seeking and communicating – 83 percent of American adults own some kind of cellphone – and they have an impact on many aspects of their owners’ daily lives.

Cellphones are useful for quick information retrieval, so much so that their absence can cause problems. More than half of all adult cell owners had used their phone at least once to get information they needed right away. More than one fourth said they experienced a situation in the previous month in which they had trouble doing something because they did not have their phone at hand.

Cellphones are important tools in emergency situations – 40 percent of cell owners said they found themselves in an emergency in which having their phone with them helped. Cell phones can help stave off boredom – 42 percent of cell owners used their phone for entertainment when they were bored.

Despite the advantages, some cellphone owners need an occasional break – 29 percent of cell owners turned their phone

off for a period of time just to get a break from using it. Even the advantages can cause frustration – 20 percent of cell owners experienced frustration because their phone was taking too long to download something, 16 percent had difficulty reading something on their phone because the screen was too small and 10 percent had difficulty entering a lot of text on their phone.

Cellphones can help prevent unwanted personal interactions – 13 percent of cell owners pretended to be using their phone in order to avoid interacting with people around them.

Text messaging and picture-taking continue to top the list of ways Americans use their mobile phones, with 75 percent of all cell owners using their phones for those purposes. Other relatively common activities include sending photos or videos to others (54 percent of cell owners do this) as well as accessing the Internet (44 percent)

Thirty-five percent of American adults own a smartphone of some kind, and they take advantage of a wide range of their phones’ capabilities. Nine of 10 smartphone owners use text messaging or take pictures with their phones, and eight in 10 use the phone to go online or send photos or videos to others. Many activities — downloading apps, watching videos, accessing social networking sites or posting multimedia content online — are almost entirely confined to the smartphone population.

The statistics make it easy to see that mobile advertising is becoming increasingly important, and focusing on rich media advertising is even more important. Rich media ads offer more in-app interactivity via video, sound, gaming and so on.

The aesthetic value is an obvious advantage that will attract advertisers and ad creators. Furthermore, with the growing adoption of smartphones as the device of choice, rich media is the natural

progression toward more engaging ads on free sites, which captures a captive audience. The engagement rates are as high as 33 percent on rich media ads.

If a car dealership depends on its web presence in any way, it’s important to start thinking about mobile now. Check how the website looks and works – or doesn’t – on mobile devices. Mobile Internet use is growing faster than anyone realizes.

Don’t wait until 75 percent of your website visitors are using handhelds. That’s like waiting until most of your backyard is on fire before grabbing a water hose.

Start thinking now about how to make your website work hard for you on mobile devices, as well as getting ads developed for your dealership to run mobile campaigns. Mobile campaigns are used widely by manufacturers but can be brought to a local level with some geo-specific targeting. That means ads can be targeted to certain zip codes to run in your local area in order to attract more local business for your sales and service department.

Running coupon ads, loss leaders and teaser ads on mobile devices seem to be the most effective ways to attract local customers. The use of QR codes in paper advertisements can drive customers to either a mobile landing page or a video about your sales or service specials.

With the explosion of Internet video consumption, it is confirmed mobile video has largely been adopted. While video isn’t a huge focus for advertisers right now – many cite broadband and technology inadequacies as barriers – many static stats tell the story of video’s increasing importance for car dealers and salesmen.

Mobile Advertising a Must for Car Dealers

D O N ’ T WA I T U N T I L 7 5 P E RC E N T O F YO U R W E B S I T E V I S I T O R S A R E U S I N G H A N D H E L D S .

BY DANI LUNSFORDDANI LUNSFORD IS A NATIONAL SALES AND MARKETING EXECUTIVE WITH SHOWCASE PUBLICATIONS, INC. SHE HAS BEEN IN THE RETAIL AUTOMOTIVE INDUSTRY FOR 14 YEARS, WORKING IN SALES, SERVICE, E-COMMERCE MANAGEMENT AND AS A CONSULTANT TO IT COMPANIES AND DEALER GROUPS. SHE CAN BE REACHED AT [email protected].

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Why all this excitement about selling CPO vehicles?

As an independent used vehicle dealer, you are likely aware of the recent trend in the automobile industry toward selling certified pre-owned vehicles. The trend began with manufacturer-backed programs for new vehicle franchised dealers and has expanded into the independent used car segment.

A vehicle is normally designated as “certified” after undergoing a thorough inspection of key components for both functionality and safety, and completing the needed repairs and reconditioning. Most CPO programs require that the vehicle meets CARFAX standards, assuring the potential buyer he is purchasing a safe and dependable vehicle that is a step above a typical used car.

The programs generally include a mechanical breakdown warranty for a specific term and most provide extended coverage options.

You might have found it difficult to compete against dealers selling a certified program, even with a price advantage, because consumers seem willing to spend more for a vehicle that has been certified and comes with some term of mechanical protection coverage.

So what are the advantages to you, as an independent dealer, of selling CPO vehicles? There are several:

• An enhanced image in your marketplace.• Improved gross revenue and

increased profitability created by the sale of more vehicles.

• The ability to compete with franchise dealerships that offer CPO programs.

• An edge on the competition.• Increased customer satisfaction

and confidence.CPO is very much the cutting edge of the

used auto industry. Sales are growing rapidly. As reported in Auto Remarketing, CPO sales reached 174,471 vehicles in March, the most certified units ever sold in a month, according to the latest numbers from Autodata Corp. That closed the best quarter ever for CPO sales – a record 454,944 vehicles sold in the first three months of 2012, up 8.4 percent from the first quarter of 2011.

In its 2010 Used Vehicle Market Report, J.D. Power and Associates found 67 percent of all used car buyers began their purchase

process planning to buy a certified vehicle, and 21 percent of CPO buyers were not originally looking for a certified vehicle.

Given the obvious consumer interest in them, it’s no wonder CNW Market Research found certified vehicles turn almost 20 days faster than non-certified, with an average 24.8-day turn. CNW’s March statistics also showed CPO sales provide dealers with 12 percent to 17 percent additional profit – an average of $2,274 per unit – versus the sale of non-certified used vehicles. And that premium has been rising steadily since January 2011.

The market potential is huge. More than 35 million used vehicles were sold in 2011, but less than 2 million were certified by manufacturer programs. Independent dealers sold 22.4 million cars in 2010. An independent dealer who chooses to sell certified pre-owned vehicles can expect to earn a larger share of that enormous market and earn a higher percentage of repeat customer sales as a result of the higher level of customer satisfaction with a CPO vehicle.

Victor Salvato, president of Auto Sales Outlet in Rochester, N.Y., is an independent dealer who has experience offering a CPO program to his customers. Salvato said advertising certified vehicles made an immediate impact on his dealership in a variety of ways.

“The quality and volume of the responses to our advertising improved immediately,” he said. “It was obvious that we were reaching a higher quality prospect who was interested in a higher quality vehicle based on the customer’s perception of what a certified vehicle is. We can thank the manufacturers and franchise dealers for educating our customers through their promotion of certified vehicles.

“Not only have we sold more cars, but our profits have increased as well. Being a certified dealer has definitely improved our image and our credibility in the marketplace, and we are beginning to see an increase in repeat sales as well.”

The New NIADA CPO ProgramNIADA has partnered with Warrantech,

an AmTrust Financial company, in the design and administration of its new certified pre-owned program. NIADA

completed extensive research with its dealer members to assure that the program it is providing is exactly what the dealers want.

The combined efforts of NIADA and Warrantech, and the input of the dealers consulted, have resulted in a program that is innovative, marketable, flexible and financially sound.

The NIADA CPO program is much more than a 125-point inspection and a warranty. The program is truly a “selling system.”

All eligible vehicles must be certified, a requirement that insures the integrity and credibility of the program. The dealer selects one of three limited warranty terms that are complemented by flexible and affordable wrap-around and extended coverage options for the consumer.

With three unique plans under the NIADA CPO program, dealers will be able to select the option that is right for their market and their customer base. The options include:

• A three-month/3,000-mile limited warranty that includes 36 months/36,000 miles of engine and air conditioning component coverage.

• A six-month/6,000-mile limited warranty that includes 36 months/36,000 miles of engine and AC component coverage.

• A 12-month/12,000-mile limited warranty.

The NIADA CPO limited warranty options include coverage of engine, air conditioning, turbocharger or supercharger, automatic and manual transmission, transfer case, drive axle, steering components, select electrical components and seals and gaskets.

For more consumer choice and confidence, the NIADA CPO limited warranty options can be supplemented by adding the extended NIADA Total Care or the NIADA Total Care Plus coverage, which includes front and rear suspension, brakes, fuel system, cooling system and additional electrical components.

“In re-tooling the NIADA CPO program, we recognized independent dealer business models vary widely and that we had to offer additional CPO options to specifically meet the operational demands of our dealers,” NIADA chief operating officer Steve Jordan said. “Warrantech’s successful track record with independent auto dealers, varying product offerings, world-class claims

I N D U S T RY N E W S | for more information (877) 310-0288 or email [email protected]

NIADA Gets Independents into the Hottest Thing in the Auto Industry: Certified Pre-Owned

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operation, nationwide sales footprint and long-term commitment to support the success of our dealer members made the partnership decision easy to make.”

The program is easy to sell, provides coverage from day one and a solid benefits package, day one rental coverage (no minimum shop time), simplified pricing, low-cost surcharges and eligibility guidelines that are very generous – current plus 14 model years and 100,000 miles at time of sale.

The program is supported by a wealth of top-quality marketing and merchandising materials to promote the program throughout the dealership, all proudly displaying the familiar logo of NIADA.

An NIADA-backed CPO program adds even more credibility for dealers who choose to market it. NIADA brings the strength of more than 18,000 dealers nationwide, the stability of 66 years of experience and the dependability of being the dealers’ voice to regulators, suppliers and, most importantly, consumers.

“Warrantech is honored to have been selected by the 66-year old NIADA as its CPO program administrator,” Warrantech CEO Sean Stapleton said. “We applaud the time-honored tradition of excellence NIADA member dealers observe, including their adherence to a strict code of ethics.

We feel that commitment mirrors Warrantech’s dedication to excellence and drive to provide superior products and continued quality customer service.”

NIADA, with the support and participation of the state independent dealer associations around the country, is excited to make this program available to its member dealers.

Warrantech and AmTrustIn selecting Warrantech/AmTrust as

the administrator of the program, NIADA has partnered with a world-class provider of warranty products and administrative services. For more than three decades, Warrantech has been the solution for manufacturers, retailers, dealers, distributors and other sales organizations seeking increased profitability, enhanced market differentiation and long-term customer loyalty.

Those clients include Volvo, Mazda, General Motors, Ford, Chrysler, Sony, Samsung, Panasonic, PepBoys and many more familiar names.

AmTrust, rated “A” Excellent, FSC IX by A.M. Best, fully insures the NIADA CPO program, adding the financial strength and security necessary to protect the dealers who market the program and the consumers who are protected by the product.

Warrantech provides a state-of-the-art claims center that houses more than 300 experienced claims adjustors. All automotive adjustors are ASE-certified technicians with an average tenure of more than 10 years with the company.

Claims service highlights for the CPO program include:

• Instant credit card payment.• Repairs can be completed at the

selling dealership or sublet to any licensed shop or franchised dealer.

• Multiple, convenient methods of submitting claims.

The NIADA Certified Pre-Owned program is designed to give dealers more options to better serve their customers, allow them to compete with manufacturer CPO programs and provide them with a competitive edge against other used car dealers in their marketplace that do not offer a CPO advantage.

If you are interested in marketing the new program or just want more information, please call (877) 310-0288 or email [email protected].

BY PATRICK REED PATRICK REED IS BUSINESS DEVELOPMENT MANAGER FOR WARRANTECH/AMTRUST GROUP IN BEDFORD, TEXAS. HE HAS MORE THAN 35 YEARS OF AUTOMOTIVE INDUSTRY EXPERIENCE, FOCUSING ON VEHICLE SERVICE CONTRACTS. HE CAN BE REACHED AT [email protected] OR (817) 785-6248.

NIADA Gets Independents into the Hottest Thing in the Auto Industry: Certified Pre-Owned

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M O N A RC H AU T O SA L E S OW N E R DAV I D L A N Z E R ( S E C O N D F RO M L E F T ) , W I T H S TA F F M E M B E R S ( F RO M L E F T ) A L E X B O D I FO R D , T E R RY L A N Z E R A N D R AYS H AW N J U M P E R .

Adding Rentals Can Help Drive SalesDavid Lanzer sells used cars. That’s the primary mission of Monarch Auto Sales, the

dealership he owns and operates in Greensboro, N.C.But Lanzer also rents used cars through a franchise with Rent-A-Wreck, which, he said, fits

neatly with mission No. 1.“For the retail used car dealer, there’s so much synergy it’s not even funny,” Lanzer said. “Our

rental customer is that same customer we end up selling a car to. They come to Rent-A-Wreck because their 14-year-old car with 250,000 miles on it just died and they’re stuck for a car.”

That makes the rental operation a magnet that attracts prime prospects for sales, and Lanzer said he takes full advantage of the opportunities it provides. Throughout the rental process, the dealer considers every rental customer to be a potential sales customer, too.

“We market car sales hard to every rental customer that walks in the door,” he said. “We make it clear that all of our cars are for sale, and we talk to our customers. We find out why they need to rent the car, and we sell about 100 cars a year just to our rental customers. That sales volume has been consistent for us for years.

“We do insurance replacement rentals where a customer will have just gotten into an accident, and before that customer is even in buying mode, we’re planting the seed that his rental is available for sale and finding out what he’s looking for in his next car. We’ll entice him with a rental ‘test drive,’ where we’ll put the cost of the rental toward the car if they wind up buying.”

Lanzer said the rental operation has also helped him with inventory for his retail dealership, a big advantage given the current short supply and high price of quality inventory.

“The cars we fleet as rentals end up as perfect retail units for our customers,” he explained. “We fleet a 1-2 year old car, run it profitably in our rental fleet for 18 months to two years, then we’re left with a 4-5 year old car and those are very desirable and in short supply at the auctions now.”

Lanzer said the rental business does require a dealer to make some adjustments from the typical dealership model. For example, he said the typical dealer floor plan is for 90 days, while a typical rental floor plan is much longer – more like 12-36 months.

In 2011, 11.8 percent of National IADA members offered rental cars at their dealerships, down from 12.4 percent in 2010. Of those, 78.1 percent ran an independent rental operation while 21.9 percent – including Lanzer – worked through a franchise.

Lanzer said he prefers the franchise route because of the support offered.“Rent-A-Wreck earns every dime of the royalties I pay them,” he said. “The systems they

have in place to deliver reservations and market you on the Internet and travel websites, the support they provide you as a franchise on everything from your insurance to your financing, the legal stuff, the operations and business management software, coaching and the company sponsored dealer 20 groups – those are all things an independent would have to do for themselves on their own. “

Rent-A-Wreck is currently offering a $1,000 discount for state IADA members through the end of the year, and the company said it will donate $1,000 to the dealer’s state association for every franchise sold to an IADA member.

BY ANDY IATRIDIS ANDY IATRIDIS IS FRANCHISE DEVELOPMENT MANAGER FOR RENT-A-WRECK. TO CONTACT HIM OR GET INFORMATION ABOUT ADDING A RENT-A-WRECK FRANCHISE, CALL (469) 939-6132 OR EMAIL [email protected].

Experian Automotive announced the launch of AutoCheck® Elite, a program that gives car dealers information and insights into the market, the vehicles and the people who buy them.

In addition to the vehicle history data of the original AutoCheck, AutoCheck Elite allows dealers to access reports providing in-depth insights into dealer sales performance, vehicle registrations and consumer demographics in their market. Dealers can use that information to evaluate their sales performance against the competition, track sales trends of the most popular makes and models, and better understand the consumers in their market.

And AutoCheck Elite dealers receive other features, including access to AutoCheck best practices training, a sales event marketing guide and enhanced showroom materials.

For more information, visit www.experianautomotive.com.

Experian Enhances Its AutoCheck Reports

V E H I C L E H I S T O RY

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The concept or image of the “complaint department” isn’t anything new, and has provided fodder for jokes and comic strips over the years. But the decision by the Consumer Financial Protection Bureau (CFPB) to expand its consumer complaint system to include complaints regarding vehicle and consumer loans is no laughing matter.

If you haven’t been to the site yet, consider taking a look. The site, www.consumerfinance.gov/complaint, makes it very easy for anyone to register a complaint. It asks for a description of what happened, the desired resolution and the parties and products involved.

The CFPB’s decision to start accepting and reviewing complaints related to vehicle loans should get your attention for a few reasons. First and foremost, it signals that the CFPB is gaining momentum and is ready to try to identify

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

Reducing the Impact of Consumer Complaintsand resolve current problems in the industry – and to prevent future ones.

Second, the complaint process opens a whole litany of questions about how the CFPB will respond to complaints and how dealers will be involved. We don’t know much about the process yet, but hope the CFPB will provide more detail soon.

For now, the question all dealers should be asking themselves is, “How do I avoid complaints in the first place?”

It seems consumer finance complaints can originate in at least three ways:

• You did something wrong and the customer complains about it.

• The customer didn’t understand the agreement and thinks you did something wrong as a result.

• You did everything right, but the customer has unreasonable expectations and complains.

You can take steps to avoid or reduce the impact of all three scenarios, particularly when it comes to finance and insurance (F&I) processes.

You did something wrongCustomers should complain if you

misrepresent, overstate or lie about the products and services you provide or the nature, reason and amount of charges. If you are running your business that way – or you have a renegade employee who is committing such acts – you should expect whatever consumer complaints, lawsuits and/or criminal charges come your way.

The complaints and the liability they bring can be avoided if you run an honest and high-integrity business. You also need internal oversight, management and audit processes to help discover and eliminate any employee misconduct.

Customer didn’t understand Some reported court cases I’ve

read seem to be based on a lack of consumer understanding that spun out of control. The dealer didn’t necessarily do anything wrong, but the consumer seemed surprised at having to pay for cover insurance, or the gap amount, or having a vehicle repossessed, or any of a number of other predictable outcomes. The financing documents generally cover the fees, responsibilities and consequences, but the consumer didn’t

read or understand them until long after the documents were signed.

In one recent case, the consumer asserted he hadn’t read the retail sales contract or been given time to read it. He said he simply signed and initialed where he was told to. He later complained and sued regarding a number of obligations he hadn’t understood, and the lawsuit didn’t turn out well for the dealer.

One strategy to avoid this would be to take the time at closing to educate the consumer. You could point out key provisions of the documents, such as late payment provisions, failure to insure, and conditions of and consequences of default. You could emphasize the importance of reading the documents and asking questions before signing, and back it up with a willingness to give consumers time to read and ask basic questions.

The idea is, if you tell the consumer what happens on default, he or she is not surprised – and is less likely to complain – if the car is repossessed.

Customer is unreasonableThere will always be unreasonable

customers whose expectations far exceed the terms of your sales agreements, warranties and commercial reasonableness. With those folks, you might not be able to avoid complaints. However, a regulator is more likely to conclude that a complaint is unreasonable if its investigation shows you run an honest, high-integrity business, have compliant processes and documentation in place, work hard to educate customers and set appropriate expectations.

While you can’t always please everyone, running a high-integrity business and educating your customers will undoubtedly help prevent customer complaints. The more positive view is that you won’t just be avoiding complaints and mitigating reputational risk, you will be building customer satisfaction and retention.

Either way, it’s an investment well worth making.

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

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