west coast dealer oct/nov 2012

PLEASE JOIN US FOR THE 44TH ANNUAL IADAC CONVENTION, SET FOR OCT. 26-27 AT THE GOLD COUNTRY CASINO/HOTEL IN OROVILLE

• 2012 SCHOLARSHIP AWARD RECIPIENTS• CONTRACTORS OR EMPLOYEES?• TECHNOLOGY’S GROWING ROLE IN POST-RECESSION MARKET

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PRSRT StandardU.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

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

WEST COAST DEALER

V i s i t u s a t w w w . i a d a c . o r g

OCTOBER/NOVEMBER 2012

44th Annual IADAC ConventionPage 6

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T H E W E S T C O A S T D E A L E R OCTOBER/NOVEMBER 2012

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WHAT’S NEW

MAGAZINE CONTENTS

ADVERTISERS INDEX

08 Legislative Update10 Contractors or Employees?12 2012 Scholarship Award Recipients16 Lookout for Open Recalls18 Loosening Loans Drive Sales20 Form 8300 Reporting24 Technology’s Growing Role30 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] West Coast Dealer is published bi-monthly by the National Indpendent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817) 640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of The West Coast Dealer, IADAC, or the National Independent Au-tomobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or ser-vices 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

IIADAC OFFICE

ADESA ........................................Inside Back CoverAllen L. Hawkins Insurance ................................26Ally ....................................................................15AutoDataDirect ....................................................9Auto Portfolio Services.......................................22AutoTrader.com .......................... Inside Front CoverBerkshire Risk ..................................................24Black Book ........................................................12Brasher’s Sacramento Auto Auction ......Back CoverCARFAX .............................................................17Chase ................................................................23Dealer Center ....................................................19Dealer Services Corp (DSC) .................................3Dodah.com ..........................................................5Insurance Auto Auctions ....................................27Lobel Financial ...................................................11Manheim.com ....................................................13NIADA Certified ..................................................14 Protective .........................................................21United Acceptance .............................................25Voisys ................................................................30Westlake Financial ...............................................7Wolters Kluwer ...................................................28

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

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

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

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

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

MAGAZINECONTENTSINSIDE

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

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

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

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

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

THE CURRENT STATE OF THE AUTO INDUSTRY

CMD CLASSES

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Dear Editor:

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

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

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

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

Sincerely,

Kari SloanManager, Dealer Business UnitCarfax

Carfax Is Here To HelpSCHOLARSHIPS!

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

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

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

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

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

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

“Westlake Remarketing Releases Q3 Top Auctions List”

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

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

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

Larry LaskowskiTreasurerThe Auto OutletRoseville, CA [email protected]

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

Vice PresidentA to Z MotorsWinters, CA [email protected]

Rick GomezVice PresidentRJ Auto BrokersCarmichael, CA [email protected]

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

10 10 Questions for AutoCheck14 Auction Security18 In the Spotlight

12 Local Auto Dealers Usedby Clunkers

MAGAZINECONTENTS

ADVERTISERSINDEX

INSIDE

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

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

CERTIFIED MASTERDEALER� PROGRAM:

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

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

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

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

EXECUTIVE COMMITTEE

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

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

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

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

BREAKING NEWS!BREAKING NEWS!

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

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CMD CLASSES

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Dear Editor:





Sincerely,




















MAGAZINECONTENTS

ADVERTISERSINDEX

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EXECUTIVE COMMITTEE







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

New Executive Committee

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

Mark Glover

Greg Meier(crop to head shot please)

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

Vince CardinaleIADAC Vice-PresidentA to Z MotorsWinters, CA 95694











CMD CLASSES

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Dear Editor:





Sincerely,




















MAGAZINECONTENTS

ADVERTISERSINDEX

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EXECUTIVE COMMITTEE







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

New Executive Committee

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

Mark Glover

Greg Meier(crop to head shot please)

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

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

Larry LaskowskiExecutive DirectorThe Auto OutletRoseville, CA [email protected]

Executive Committee

Michael CaseyCal West Motors1977 E 14th StSan Leandro, CA 94577-5022510-352-9230

Whether or not you’ve attended an IADAC Convention in the past, I highly recommend attending this year’s annual event, our most important meeting of the year.

The Convention will be held at the Gold Country Casino/Hotel in Oroville. For a $99 registration fee, which includes meals, you’ll benefit from many events and educational opportunities.

The Convention is just a short day-and-a-half, but it is filled with nonstop activities. Aside from the educational seminars, there will be music and dancing, so please bring your spouse as well.

At the Convention, IADAC’s prestigious Quality Dealer of the Year award will be presented by State Sen. Doug LaMalfa, our keynote speaker for the Quality Dealer Luncheon.

It is important to familiarize yourself with the legislative process, because this year auto dealers have been the target of three devastating bills. Find out how you can help your own cause when the next round begins.

IADAC annually presents the children or grandchildren of dealer members a number of scholarship awards. This year, the Victor J. and Ethel G. Snyder Memorial Scholarship Trust Fund provided 29 $1,000 awards to assist the next generation in its quest for higher education. IADAC members are fortunate the fund exists to benefit these children. In fact, the total dollar amount of the scholarships is greater than that offered by NIADA.

Please join us Oct. 26-27 in Oroville. You may think you don’t have the time to leave your business, but I urge you to consider that you can’t afford not to take the time to learn more about the issues facing our industry. I personally guarantee your satisfaction, or I will refund your money. BY ROD DAVIS

President’s Message

NIADA.TV Now available at www.niada.tv:• Building an Effective

Dealership Website with Michael D. Jackson

• Tracking Devices with Jay Rose

• Legislative/Regulatory Scene with Shaun Petersen and panel

• Avoiding The Potholes with Ken Shilson

• Feel Unstoppable in 60 Minutes with Ruben Gonzalez

NIADA Dealer 20 Groups NIADA’s new 20 Groups program is designed for NIADA’s independent dealers as they do business today in BHPH, retail or both. Take your profits to the next level. Visit www.niada20groups.com

Auction Update: ManheimThe Manheim 2012 Q2 update is a quick look at web traffic, online visits and transactions

at Manheim.com for the second quarter of 2012.Mobile: Mobile visits to Manheim.com are up an astounding 368 percent over last

year – 4.76 million vs. 1.02 million for the second quarter of 2011. One in three customers accessed Manheim.com on a mobile device, an indication mobile is becoming increasingly popular in the auto remarketing industry as dealers use smartphones to conduct business at their convenience.

More customers are choosing to do business online – 25 percent of all transactions for the quarter were made by an online buyer.

Digital visits: Digital visits to Manheim are up 12 percent over last year.Simulcast turns 10: More than 4 million vehicles have been purchased via Simulcast

since its launch in 2002, representing almost $60 billion worth of inventory.Buying: More than 30,000 customers bought vehicles online in 2012.Selling: More than 20,000 customers sold a vehicle online in 2012.

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Most of you reading this magazine are probably stakeholders in the used car industry. Whether you are a dealer or a vendor, the changes that occur in this industry affect you in some way.

Many dealers take a reactive approach to new regulations and practices. When they find out they are doing something wrong, they change their ways. Doing things incorrectly usually comes with a price tag, some very small, some much greater. Many dealers will receive a warning or infraction when their dealership is spot-checked by a DMV inspector.

It is so easy to be compliant it doesn’t make sense not to know all the rules. Take this test right now. Go to www.iadac.org and download the DMV Lot Inspection Report. You’ll find it on the home page under “Quick links.” Go down the check list and check your dealership.

Do you have Buyers Guides on all vehicles? Do you have foreign language

documents if you service those customers? These are easy things you can do to maintain compliance. What about some of the newer requirements? Do you provide an adverse action letter for those customers who do not qualify for financing?

The federal government is becoming more involved in your business than ever before, particularly if you are involved in financing. Recently, the newly formed Consumer Financial Protection Bureau began an investigation of DriveTime Automotive Group, asking to examine all documents related to its business. There have been no allegations of wrongdoing, but you can be assured the investigation will cost DriveTime a pretty penny in any case.

As for auto dealers, the days of sailing along with few concerns are over. Every day there are more and more reasons to be involved in your industry. Your liability increases with every court decision that

gives a trial attorney more reasons to go after you. ADA activists are not even required to present damages to sue a business owner, and I know many of you have already paid the price.

So will you continue your reactive approach or start spending some time becoming educated and involved in this industry you’re chosen as your career?

IADAC is looking for willing dealers and vendors who would like to become more involved in the industry and our association. If you’re not sure what IADAC is all about, sign up for our Annual Convention on Oct. 26-27 and find out why so many others recognize the value of membership. The cost is only $99 for members, and I guarantee it will be worth it. You’ll find the registration form elsewhere in this issue.

BY LARRY LASKOWSKIEXECUTIVE DIRECTOR

Executive Directors ReportV I S I T W W W. I A DAC . O RG

Please join us for the 44th Annual IADAC Convention, set for Oct. 26-27 at the Gold Country Casino/Hotel in Oroville. Last year’s event was a huge hit and this year will be even better.

Connect with industry leaders and top-rated companies. Find out why dealers say the IADAC Convention is a must-attend.

Just $99 for IADAC members includes registration and all meals during the event.

Learn from experts how to stay compliant and add profit to your existing deals. This is the year’s best deal, so register now.

Sen. Doug LaMalfa will be the keynote speaker at the Quality Dealer luncheon and will present this year’s award. There will be plenty of fun events, too. Enjoy music and dancing, Pinewood Derby racing and casino action all in one place!

A block of rooms has been reserved for

IADAC. Guests are responsible for booking their own rooms. Mention “IADAC” when making your reservation. Do not wait until the last minute – book your room early.

Once again we have a great event planned for vendors. For more details, please contact IADAC at (916) 893-3306 or by email at [email protected].

See page 29 for additional information and a registration form.

I N D U S T RY E V E N T

44th Annual IADAC Convention

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Troubling Trends in Legislative SessionFinally, the legislative session is coming

to an end – and I thank God, because it has not been kind to the used car industry.

The three bills aimed at Buy Here-Pay Here dealers that were introduced as a result of misleading and inaccurate articles in the Los Angeles Times – SB 956, AB 1447 and AB 1534 – hurt the entire industry and consumers as well.

SB 956 requires a dealer who carries 10 percent or more of his contracts to be licensed as a commercial finance lender with the Department of Corporations and to obtain an additional $ 25,000 bond.

That will put many dealers out of business, not to mention the interest rate will be capped at 17.25 percent. Meanwhile, a subprime lender can still charge 25 percent to the same buyer.

Seems just a little bit unfair, doesn’t it?AB 1447 requires BHPH dealers to

warrant every car for 30 days or 1,000 miles, whichever comes first. Talk about hurting the customer – you would have add the cost of the warranty to the price of the car, causing higher down payments, etc.

That in and of itself might violate the federal law requiring the Buyers Guide

to prominently display whether the car is being sold “As Is” or with a warranty.

AB 1534 requires BHPH dealers to display on every car in their inventory the suggested retail price as determined by Kelley Blue Book or any other publication that estimates prices. Of course, the car might have a greater value than the book says, which would only confuse the potential buyer.

All of those bills are horrible for the used car industry – and not just for BHPH dealers, but to other dealers as well, since the legislature could try to include all dealers, requiring mandated warranties and the labeling of retail prices on all inventory.

IADAC believes all three bills are unconstitutional under the equal protection clause of the Constitution. With the help from NIADA’s legal counsel we are drafting questions about the constitutionality of all three bills and requesting an opinion on the constitutional grounds.

Your executive director, Larry Laskowski, and I have met with DMV and the Department of Corporations to encourage them to request a veto by the governor. We also met with many legislative members as

we lobbied against all three bills.ConventionAt this year’s Convention we are going to

have a great panel from the DMV to discuss business partner arrangements with the department. We’ll also have registration information so you can properly submit your paperwork and have it accepted the first time, another cost and time savings.

There will be a discussion of investigations and what dealers should and should not do, and the DMV lobbyist will explain how his department interacts with IADAC. We will have State Sen. Doug LaMalfa as our keynote speaker for the Quality Dealer Luncheon.

Considering the impact of this year’s legislation, all dealers should be marking the date and registering for this event. You need to know how the work at the Capitol changes your business and your industry.

This event will be very worthwhile and will go toward your continuing education. See you there!

BY BILL DOHRINGIADAC LOBBYIST

L E G I S L AT I V E U P DAT E

In 2008, Autorama Inc. sold a vehicle to a customer named Pierce, who alleged after the sale that the vehicle had sustained frame damage that was undisclosed at the time of sale.

Additionally, Autorama took Pierce’s vehicle on trade and failed to pay it off, a clear violation of California law. In 2009, Pierce filed a complaint against Autorama and Western Surety, the surety on the bond carried by Autorama. Shortly thereafter, Autorama went out of business.

Western Surety reached an agreement with the lender for the unpaid trade-in and settled that issue. Pierce asked for a settlement of $10,000 plus attorney fees. The trial court ruled the surety would be liable for damages plus attorney fees.

The court’s reasoning: In most cases under these statutes, the amount of actual damages is fairly small, so there is little incentive for an attorney to take a consumer’s case on a contingency

basis if the auto dealer has gone out of business and only the surety remains.

In such cases, the consumer is at a severe disadvantage if he or she is unable to retain an attorney, since the surety can refuse to pay and delay the matter as long as possible, even if the surety is clearly obligated to pay. That would frustrate the legislative intent of making sure consumers who are the victims of fraudulent tactics by auto dealers are able to recover their damages and their attorney fees.

Western Surety appealed the case, and in 2012, the Fifth District Court of Appeals upheld the ruling, stating the California Vehicle Code was not specific to prevent attorney fees from being recovered and the California Legal Remedies Act (CLRA) provided language that supported their ruling.

IADAC and other stakeholders in this ruling have filed letters of amicus curiae

with the Supreme Court to petition for review. This ruling is important to dealers because if a surety is deemed liable for attorney fees, the cost and qualification criteria for a dealer bond will skyrocket and even prevent some dealers from being able to get a bond at all. A surety will know that in every instance the entire $50,000 will be wiped out – the trial attorney will make sure of that.

The reasoning of the court is clearly contradictory. To imply the ruling was made for the benefit of the consumer ignores the fact that in the case of multiple claims, only the first claimant with an attorney will be paid. The insurance commissioner exists to provide a consumer with help when a settlement cannot be reached.

This ruling is much more in favor of the trial attorney than the consumer, but that shouldn’t surprise anyone because, after all, this is California.

Addendum to “Legal Minute”Breaking news update: The petition for review of the “Autorama v Pierce” case by the California Supreme Court the petition has been denied, further empowering trial attorneys.

CA L I FO R N I A S U P R E M E C O U R T T O E X A M I N E S U R E T Y CA S E

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Many California car dealers use independent contractors as part of their work force. Salesmen, mechanics, lot people, office staff, detail crew and outside buyers are all examples of jobs some dealers fill with independent contractors.

Using contractors makes employee expenses much lower. Not having to pay EDD, liability insurance costs, workers compensation fees, matching Social Security contributions and much more make the net cost to get work done cheaper and easier.

Each dealer has to make his or her own decisions concerning the liability of independent contractors. If you declare someone who does work for you an “independent contractor” and later it is determined he is not, the fines, penalties and lawsuits can put your business at serious risk.

The California Chamber of Commerce published a Guide to Hiring Independent Contractors. The book cites examples and court judgments in almost every industry in which labor becomes an issue. There are retail, wholesale, factory workers, farm labor, construction, outside sales and many other cases with examples given as to who is and is not an independent contractor.

The book represents the issues from the employers’ point of view. Unfortunately, the Guide is out of print, but information is available at the California Chamber of Commerce website www.hrcalifornia.com. Many libraries have the book available for review and check-out. You can also contact your local Chamber of Commerce for information.

Here are a few things to look for in determining whether you have an independent contractor or an employee:

• The amount of supervision of the worker. Does he take direction/orders from a supervisor?

• The amount of training provided to the worker, if any.

• The level of integration of the worker’s services into the business.

• Who hired assistants for the worker.• Was the worker required to render the

services personally?• Does the business have a continuing

relationship with the worker?• Is the worker required to perform the work

on the employer’s premises?• Is the worker paid by time worked rather

than on a project or commission basis?

• Does the business supply the worker with any necessary tools?

• Does the worker accept business risks?• Does the worker maintain his or her

own office?• Does the worker provide services for any

other business?Examine those issues closely – they can

be taken either way and cause your business harm if not handled properly. Depending on the answers to those questions, he could be an employee, not a contractor.

Here’s an example of a situation going wrong.You terminate an independent contractor.

That person cannot find other work and applies for unemployment benefits. You do not have him listed as an employee and did not pay EDD or other payroll taxes for him.

He tells the EDD he was an employee and deserves benefits. It is his word against yours. The EDD audits your employee records and determines the person was indeed an employee. You are fined, ordered to pay back taxes with stiff penalties, and are liable for the unemployment benefits due your employee.

The EDD, looking at your records, finds other violations, even years back. You can imagine what a problem this can become. They will then notify the IRS to get their share of your pie.

Another example: An independent contractor is injured on the job. You have not been paying workers compensation on this person, so there are no benefits available.

The “employee” then sues your company. There will be no easy way out. Again, look for an audit from your workers compensation carrier.

There are dealers who try to get statements signed by independent contractors to try to avoid such liability. Those statements probably will not hold up in court if any of the above qualifications are met. Dealers are not usually loved by the court system.

Please be careful who and how you hire. There are worse stories to be told. Just think worst case scenario and make your decisions from there.

You can contact me at [email protected] with any of your own stories or to ask advice.

BY MIKE MACAULAYINDEPENDENT CALIFORNIA AUTO DEALER #40IADAC PAST PRESIDENTEDITOR, WEST COAST DEALER

Do You Hire Independent Contractors?

B E CA R E F U L W H O A N D H OW A N D H I R E

KEEPING CARS LONGER IS HERE TO STAY

The two- to three-year vehicle purchasing cycle is gone, according to a survey of nearly 4,000 car owners by AutoMD.com.

Three of four respondents to the study, conducted from March to May, agreed that buying a vehicle every two to three years is a thing of the past. And half said a better economy would not change their habit of holding onto their vehicle longer than in the past.

“There is nothing surprising about the economy driving car owners to hold onto their vehicles for longer – our data has been showing this trend for the past three years,” AutoMD.com vice president of marketing Brian Hafer said. “But what is most compelling is that longer ownership has become an embedded habit for car owners, regardless of what the economy does. This significant lengthening of the ownership cycle looks like it is here to stay.”

The survey showed 78 percent of drivers now keep their cars 10 years or longer, and 60 percent said their primary vehicle has more than 100,000 miles on it. Two-thirds of those surveyed said they plan to keep their car until it surpasses 150,000 miles.

The survey indicated the longer ownership trend is spurring consumers to seek out independent repair shops over dealership service centers.

Among customers who usually go to a service center for repairs or maintenance, 69 percent said they were more likely to use independent repair shops over dealerships (20 percent) and chains (8 percent).

For more information, visit www.automd.com.

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Jeanette Guluarte Autos Guluarte, El CentroGabrielle Carey Classic Vans, HaywardAmee Catalano Rocklin Auto Connection, RocklinPaige Eckhaus Eckhaus Fleet, ClovisTravis Perkins Hart Sierra Hart Auto Sales, W SacramentoDevin E. Kalfayan Si’s Quality Auto, VisaliaAugust Catalano, Jr. Rocklin Auto Connection, RocklinAlyxandra M Fena Valley Auto Sales & Leasing, FresnoJesus Rios Rios Auto Sales, CalexicoArcelie Rios Rios Auto Sales, CalexicoShelby Collins Lampe Chrysler Dodge, VisaliaPaige Collins Lampe Chrysler Dodge, VisaliaJacob Bryant Fleener Lampe Chrysler Dodge, VisaliaKelsey Martin East Bay Auto Brokers, Walnut CreekAlexis Michele Colett Colett Car Co., FresnoAaron Lee Wolfe California Auto Sales, PlacervilleKiera Davis Brasher’s Sacramento Auto AuctionMilan Angelou Prince Autoschu Inc., SacramentoCaitlyn Zucca Auto Factory, StocktonJordan Zucca Auto Factory, StocktonAshley C. Beels Innovative Sales/Lsng, Arroyo GrandeKristin Lampe Lampe Chrysler Dodge, VisaliaTaylor Davis Brasher’s Sacramento Auto AuctionBrooke Lorenzen Corona Auto Wholesale, CoronaKyle Penrod Jay’s Auto Center, PleasantonSamantha Roper Don Head Wholesale, ClovisShelby Willson Bowling Auto Sales, SacramentoTyler Beels Innovative Sales & Leasing, Arroyo GrandeNatalie Straw North Bay Auto Auction, Fairfield

Every year, children and grandchildren of IADAC members submit applications to the Victor J. and Ethyl G. Snyder Memorial Scholarship Trust. This year, 29 applicants received awards of $1,000 each for help toward college tuition.

Founded by Vic Snyder, the fund has benefitted a great many children seeking to further their education. In order to perpetuate this significant program, the fund relies on donations from our members and supporters.

Every year at the IADAC Annual Convention, the Auxiliary Auction provides some help to replenish that fund. As of late, the contributions have been less than the amount paid to applicants. IADAC asks for your support with donations for this worthy cause. If you are unable to attend the Convention, you can help by sending your donations to IADAC at P.O. Box 343, Roseville, CA 95661.

Congratulations to the 2012 Victor J. and Ethyl G. Snyder Memorial Scholarship recipients:

2012 Scholarship Award Recipients

VICTOR J. AND ETHYL G. SNYDER MEMORIAL SCHOLARSHIP TRUST

Trade-Ins Getting Older

Car dealers are receiving trade-ins that are three to four years older than trade-ins received a few years ago, according to estimates from Black Book’s analysts. And with 900,000 more trade-ins than last year expected in 2012, the majority of vehicles entering the used car market are model year 2000-2005, which makes higher mileage trade-ins the new normal.

Black Book estimated the majority of trade-ins now average between 125,000 and 150,000 miles, and F&I experts have reported a rise in vehicles with 200,000 miles. The analysts said Buy Here-Pay Here dealers will benefit the most from the older inventory, and there is plenty of demand as consumer credit has forced more shoppers to seek those deals. Vehicles older than 2005 are more difficult to finance.

According to Black Book, the aged inventory will impact dealers through 2014 before trade-ins begin falling again in age and mileage.

“Americans are holding onto their cars longer today, and this aged vehicle is what’s being traded in as we’ve seen a rise in new-car sales activity,” Black Book managing editor Ricky Beggs said.

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Jeanette Guluarte Autos Guluarte, El CentroGabrielle Carey Classic Vans, HaywardAmee Catalano Rocklin Auto Connection, RocklinPaige Eckhaus Eckhaus Fleet, ClovisTravis Perkins Hart Sierra Hart Auto Sales, W SacramentoDevin E. Kalfayan Si’s Quality Auto, VisaliaAugust Catalano, Jr. Rocklin Auto Connection, RocklinAlyxandra M Fena Valley Auto Sales & Leasing, FresnoJesus Rios Rios Auto Sales, CalexicoArcelie Rios Rios Auto Sales, CalexicoShelby Collins Lampe Chrysler Dodge, VisaliaPaige Collins Lampe Chrysler Dodge, VisaliaJacob Bryant Fleener Lampe Chrysler Dodge, VisaliaKelsey Martin East Bay Auto Brokers, Walnut CreekAlexis Michele Colett Colett Car Co., FresnoAaron Lee Wolfe California Auto Sales, PlacervilleKiera Davis Brasher’s Sacramento Auto AuctionMilan Angelou Prince Autoschu Inc., SacramentoCaitlyn Zucca Auto Factory, StocktonJordan Zucca Auto Factory, StocktonAshley C. Beels Innovative Sales/Lsng, Arroyo GrandeKristin Lampe Lampe Chrysler Dodge, VisaliaTaylor Davis Brasher’s Sacramento Auto AuctionBrooke Lorenzen Corona Auto Wholesale, CoronaKyle Penrod Jay’s Auto Center, PleasantonSamantha Roper Don Head Wholesale, ClovisShelby Willson Bowling Auto Sales, SacramentoTyler Beels Innovative Sales & Leasing, Arroyo GrandeNatalie Straw North Bay Auto Auction, Fairfield

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M A R K E T N E W S

Report: Expect to See More HybridsExpect to see more hybrids cruising

around the world’s highways in the next few years.

According to market research report distributor ReportStack.com, the global hybrid car market is expected to grow at a rate of 18.92 percent over the next three years.

The cause for the potential double-digit growth: increasing global oil consumption, the report, titled “Global Hybrid Car Market 2011-2015,” explained.

Moreover, as governments around the world try to cut down on fuel emissions, the hybrid car market has “been witnessing an increase in initiatives by governments to create awareness and acceptance of hybrid cars,” the report said.

The report also cites labor arbitrage,

such as the various advantages offered by the hybrid car to the end user, such as energy efficiency, less pollution, better performance, reduced dependency on natural resources and more, as reasons for the hybrid market expansion.

That said, even with the push from politicians, the high cost of hybrid cars is acting as a barrier to the market growth, the report said.

‘’With the time and research on the development of the battery systems of hybrid cars, the overall cost of batteries and total cost of ownership will decrease,” an analyst from the publishing automotive team said. “By 2014, the total cost of ownership of plug-in hybrid electric vehicles with a battery of 10 kilowatt-hours will be below that of an internal combustion engine vehicle, and by 2017, the total

cost of ownership of plug-in hybrid electric vehicles with a battery of 15 KWh will be lower than an internal combustion engine vehicle.

“The total cost of ownership of battery electric vehicles will be less than an internal combustion engine vehicle by 2020 with the development of batteries. This reduction in cost will fuel the growth of the global hybrid car market.”

Who will benefit most from this potential growth?

The vendors currently dominating the hybrid market space include Toyota Motor Corp., Honda Motor Co., Ford Motor Co., and Nissan Motor Co. Ltd., the report noted.

General Motors Co., BMW AG and Volkswagen Group are also expected to play a role in the future fuel-efficient vehicle market.

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A T H I R D O R M O R E O F A L L R E CA L L E D V E H I C L E S A R E N O T F I X E D BY T H E I R OW N E R S . A R E A N Y I N YO U R I N V E N T O RY ?

Finding Open Recalls Should be a Dealer PriorityManufacturer recalls are a common

occurrence, with hundreds of recalls issued every year affecting millions of cars. In fact, more than 20 million cars were recalled in 2010 alone.

But what is alarming about recalls is how many go unfixed by their owners – roughly a third or more of all recalled units. And thousands of those cars are bought and sold every day.

It’s believed there are anywhere from 40 million to 60 million cars out there with unfixed recalls. In just the past two years, roughly 12 million cars with open recalls were added to the growing tally. And some of those vehicles are moving daily through auto auctions and being taken in on trade.

While finding and fixing open recalls is everyone’s responsibility, it’s up to retailers to take the proper steps to identify any potential issues. Many are already keeping a sharp eye out for evidence of things like flood damage, odometer rollbacks or previous accidents. But what about open recalls?

In 2010, a plumber from Delaware named Bob Knotts bought a van for his business from a local independent dealership. He never asked about open recalls, never checked for them and was never told if any existed.

Around midnight his wife ran into the house from walking the dog, screaming that smoke was pouring out of the van. The entire front cabin was engulfed in flames. The van was destroyed.

“It caught fire from an electrical component under the driver’s seat that was recalled and never fixed,” Knotts said, standing next to the van parked less than five feet from his home. “My house could have caught on fire, or I could have been driving it. Had it spread to the back of the van, where I keep a propane torch and glue that’s highly flammable, it would’ve been a complete fireball.

“Not knowing there was an unfixed recall cost me $8,000.”

One way to tell if a car has an open recall is to check the vehicle history. Most manufacturers report their open

recall information to CARFAX. When you’re evaluating a vehicle or looking at the auction run list, consider getting a CARFAX Vehicle History Report to help you pinpoint which vehicles have open recalls before taking them into inventory.

“We understand that recalls are a concern for our customers,” said Ryan Corey, president of Autoline Automotive in Atlantic Beach, Fla. “It’s up to us to make sure the cars we’re selling have had potential issues addressed.

“As an independent dealer, we take full advantage of tools like CARFAX reports that help identify open recalls. Any recalls that show up are taken to get fixed before we retail that vehicle. In fact, as a CARFAX Advantage Dealer, we run a CARFAX report on every vehicle we sell as well as any vehicle we buy. It’s a key part of our everyday operations and builds trust with potential buyers. We know we’re doing right by our customers and are putting the best cars on our lot.”

Checking the vehicle history for every unit on your lot helps you make better buying decisions and builds confidence with customers. It can be to your advantage to let your customers know upfront about an open recall and help them get it fixed.

Auto manufacturers understand the importance of informing their customers about a recall. Customer safety and the company’s reputation are at stake. With so many of those vehicles changing hands before they’re fixed, most manufacturers choose to work directly with CARFAX to reach the greatest number of buyers and sellers.

“Ford is committed to communicating safety recall information to vehicle owners in an open and transparent manner as part of our commitment to top quality,” Ford recall and service programs operations manager Robert Case said. “Ford was the first major automaker to establish a relationship with CARFAX to provide open safety recall information as we recognized the CARFAX Vehicle History Report as a

valuable tool used by many consumers and business entities.”

Independent dealers can save time and choose the right cars by checking for open recalls through a vehicle history report prior to acquisition. If you already have vehicles on your lot with open recalls, the smart and safe thing is to take them in to be closed.

Show your customers the report and the service receipt with the recall completion. Customers will appreciate your honesty and focus on safety.

“Unrepaired open recalls are an important factor in vehicle evaluations,” CARFAX communications director Larry Gamache said. “Estimates are that nearly a third of all recalled vehicles aren’t fixed by their owners. CARFAX is working with leading manufacturers, our dealer customers and consumer advocates to alert people to open recalls and make sure more of these are fixed.”

Used car shoppers are looking to dealers to make them aware of any issues like open recalls. Be informed about the cars you’re retailing before they even reach your lot – CARFAX can help. To become a CARFAX subscriber, NIADA members can visit www.carfaxonline.com, call 877-606-9119 or visit www.niada.com and click on the “Links” tab.

BY CARFAX

“Unrepaired open recalls are an important factor in vehicle evaluations” CARFAX COMMUNICATIONS DIRECTOR LARRY GAMACHE

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AV E R AG E C R E D I T S C O R E S O F N E W A N D U S E D CA R B U Y E R S H AV E FA L L E N T O N E A R LY T H E SA M E L E V E L A S 2 0 0 8

Loosening Loans Are Driving SalesFor car buyers seeking auto loans,

happy days are here again. U.S. banks and auto finance

companies are once again welcoming all kinds of customers, even those with less-than-stellar credit. The average credit scores of new and used car buyers, which spiked during the economic downturn, have fallen to nearly the same level as 2008 – before the recession.

Better yet, experts don’t think the credit pipeline will dry up anytime soon. Low interest rates are making it cheaper for banks to get money, which makes them more willing to lend. The federal funds rate – the rate at which banks lend money to each other – is near zero percent, down from 2 percent in the summer of 2008.

Loans to subprime buyers – those with credit scores of 679 or lower – are particularly attractive, since banks can charge higher interest rates. The average interest rate for a deep subprime loan (credit score less than 550) on a new car is 12.9 percent, compared with 3.2 percent for buyers with the highest scores, according to Experian Automotive, which tracks automotive credit data.

At the same time, both banks and consumers have lowered their debts, meaning even subprime loans are less risky because borrowers are less likely to be in debt and unable to pay. For example, 0.57 percent of auto loans were 60 days delinquent in the first quarter of this year, compared with 0.78 percent in the first quarter of 2009.

Experian hadn’t released second quarter data at press time, but analysts said the trend will hold as long as interest rates stay low.

“Consumer spending is still very conservative. People aren’t going hog wild like they did before the recession,’’

said Lacey Plache, chief economist for the auto information site Edmunds.com.

Here is what buyers with various credit scores can expect if they’re shopping for a new or used car, and the estimated monthly payment, excluding sales tax, on a five-year loan if they trade in a car worth $5,000 for a new, fully loaded $24,775 Toyota Camry sedan.

Super prime (740 and up): Loan rates average 3.2 percent for a new car and 4.4 percent for a used car, according to Experian. A super prime buyer can expect to pay $357 per month for the Camry.

Prime (680-739): Loan rates average 4.5 percent for a new car and 6.4 percent for a used car. A prime buyer can expect to pay $368 per month.

Nonprime (620-679): Loan rates average 6.5 percent for a new car and 9.5 percent for a used car. A nonprime buyer can expect to pay $386 per month.

Subprime (550-619): Loan rates average 9.9 percent for a new car and 14.4 percent for a used car. A subprime buyer can expect to pay $419 per month. Deep subprime (549 or less): Loan

rates average 12.8 percent for a new car and 17.9 percent for a used car. A deep subprime buyer can expect to pay $447 per month.

Auto loans suffered a similar fate to home mortgages during the financial crisis. When banks sustained losses and tightened lending requirements, the average credit score for new car buyers rose nearly 20 points to a high of 776 in the first quarter of 2010.

Standards have been loosening ever since, but only now are they approaching pre-recession levels. The average credit score for a new car buyer in the first quarter of this year was 760, while the average score for a used car buyer was 659.

The loosening standards are good

news for the auto industry, which has seen a steady recovery despite bumpy economic news. U.S. car and truck sales are expected to climb as high as 14.5 million units this year, up from a 30-year low of 10.4 million in 2009. That’s still well below the heady days of the mid-2000s, when easy credit drove annual sales to 17 million, but analysts say the growth rate this time is healthy and sustainable, with consumers making better financial decisions.

Buyers also have more options. In 2010, General Motors Co. bought AmeriCredit Inc., a Texas-based company that specializes in subprime lending, because GM’s main finance company was unable to risk taking on subprime buyers. As a result, 8.2 percent of loans for GM vehicles went to subprime customers this spring, nearly double the number before the AmeriCredit purchase.

The average for the auto industry is 6 percent.

GM says subprime loans, if managed properly, are good for business.

“The recession created an awful lot of new subprime buyers, but it doesn’t mean they’re a bad credit risk,” spokesman Jim Cain said.

Some are sounding the alarm about the easing of credit standards. In a note to investors Tuesday, Moody’s warned that the subprime auto lending market is seeing the same kind of heated competition and poor underwriting that drove unexpectedly high losses in the mid-1990s.

Moody’s said loan performance has been strong over the past few years, but lenders should beware of weakening standards in order to increase profits and market share.

BY DEE-ANN DURBINTHE ASSOCIATED PRESS

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I R S S T E P P I N G U P FO R M 8 3 0 0 C O M P L I A N C E AU D I T S

IRS Form 8300 ReportingShaun Peterson, legislative counsel for

NIADA, recently reported that the IRS is stepping up compliance audits regarding Form 8300, “Report of Cash Payments Over $10,000 Received in a Trade or Business.”

The law requires trades and businesses to report cash payments of more than $10,000 to the federal government by filing Form 8300, a joint form issued by the IRS and the Financial Crimes Enforcement Network (FinCEN). The information provided on the form assists law enforcement in its anti-money laundering efforts.

Transactions that require Form 8300 include, but are not limited to:

• Pre-existing debt payments.• Making or repaying a loan.• Sale of goods/services.• Sale of real property.• Rental of real or personal property.• Exchange of cash for other cash.Businesses must report cash payments

received, if all of the following criteria are met:

• The amount of cash is more than $10,000.

• The business receives the cash as one lump sum of more than $10,000, installment payments that cause the total cash received within one year of the initial payment to total more than $10,000, or previously unreported payments that cause the total cash received within a 12-month period to total more than $10,000.

• The establishment receives the cash in the ordinary course of a trade or business.

• The same agent or buyer provides the cash.

• The business receives the cash in a single transaction or in related transactions.

Cash IncludesCash includes the coins and currency of the

United States and foreign countries. Cash may also include cashier’s checks, bank drafts, traveler’s checks and money orders with a face value of $10,000 or less, if the business receives the instrument in a designated reporting transaction, as defined below, or in any transaction in which the business knows the customer is trying to avoid reporting of the transaction on Form 8300.

Example: Tom Greenwood purchases a used car from XYZ Auto Dealership for a total of $12,000. He pays with a cashier’s check having a face value of $12,000. The cashier’s check is not treated as cash because its face value is more than $10,000. The business does not need to file Form 8300.

A designated reporting transaction is the retail sale of any of the following:

• A consumer durable, such as an automobile, boat or property other than land or buildings that is suitable for personal use, can reasonably be

expected to last at least one year under ordinary use, has a sales price of more than $10,000 and can be seen or touched (tangible property).

• A collectible such as a work of art, rug, antique, metal, gem, stamp or coin.

• Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction or related transactions is more than $10,000. The total sales price of all items sold for a trip or entertainment event includes the sales price of items such as airfare, hotel rooms and admission tickets.

Example: Ed Johnson asks a travel agent to charter a passenger airplane to take a group to a sports event in another city. He also asks the travel agent to book hotel rooms and admission tickets for the group. He pays with two money orders, each for $6,000. Since each money order was less than $10,000, the travel agent has received more than $10,000 cash in the designated reporting transaction and must file Form 8300.

Cash Does Not IncludeCash does not include personal checks

drawn on the account of the writer.Example: Jim Roberts purchases an

automobile from ABC Auto Dealers for $19,000. He pays with $4,000 in currency and a personal check in the amount of $15,000. Since a personal check is not considered cash, ABC Auto Dealers does not need to file a Form 8300.

Cash does not include a cashier’s check, bank draft, traveler’s check or money order with a face value of more than $10,000. When a customer uses currency of more than $10,000 to purchase a monetary instrument, the financial institution issuing the cashier’s check, bank draft, traveler’s check or money order is required to report the transaction by filing FinCEN Form 104, “Currency Transaction Report.”

Cash does not include a cashier’s check, bank draft, traveler’s check or money order received in payment for a consumer durable or collectible if all three of the following statements are true:

• The business receives it under a payment plan requiring one or more down payments and payment of the rest of the purchase price by the date of the sale.

• The business receives it more than 60 days before the date of the sale.

• The business uses payment plans with the same or substantially similar terms when selling to ultimate customers in the ordinary course of its trade or business.

Definition of a Related TransactionThe law requires trades and businesses to

report transactions when customers use cash in a single transaction or related transactions. Related transactions are transactions between a payer, or an agent of the payer, and a recipient of cash that occur within a

24-hour period. If the same payer makes two or more transactions totaling more than $10,000 in a 24-hour period, the business must treat the transactions as one transaction and report the payments. A 24-hour period is 24 hours, not necessarily a calendar day or banking day.

Example: A retail motorcycle dealer sells a motorcycle for $9,000 in cash to Gary Jones at 10 a.m. During the afternoon of the same day, Mr. Jones returns to buy another motorcycle for his son and pays $9,000 in cash. Since both transactions occurred within a 24-hour period, they are related transactions, and the motorcycle dealer must file Form 8300.

Transactions are also related even if they are more than 24 hours apart when a business knows, or has reason to know, that each is a series of connected transactions.

Example: A client pays a travel agent $8,000 in cash for a trip. Two days later, the same client pays the travel agent $3,000 more in cash to include another person on the trip. These are related transactions, and the travel agent must file Form 8300.

Example: A customer purchases a vehicle for $9,000 and then within the next 12 months pays the dealership additional cash of $1,500 for items such as a new transmission, accessories, customized paint job, etc. The dealership is not required to file a Form 8300, if the additional transactions are not part of the original sales contract and the customer has no additional legal obligation to make such additional transactions.

Reporting Suspicious TransactionsThere might be situations where the

business is suspicious about a transaction. A transaction is suspicious if it appears a person is trying to prevent a business from filing Form 8300; if it appears a person is trying to cause a business to file a false or incomplete Form 8300; or if there is a sign of possible illegal activity.

The business should report suspicious activity by checking the “suspicious transaction” box on the top line of Form 8300. Businesses are also encouraged to call the IRS Criminal Investigation Division Hotline at 800-800-2877 or the local IRS criminal investigation unit. If a business suspects a transaction is related to terrorist activity, the business should call the Financial Institutions Hotline at 866-556-3974.

The business can voluntarily file a Form 8300 in situations in which a transaction is for $10,000 or less and suspicious.

When to Report PaymentsGenerally, a business must file Form 8300

within 15 days after the cash is received. If the 15th day falls on a Saturday, Sunday or holiday, the business must file the report on the next business day.

C O N T I N U E D O N PAG E 2 2

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Multiple PaymentsIn some situations, the payer can arrange

to pay in cash installment payments. If the first payment is more than $10,000, a business must file Form 8300 within 15 days. If the first payment is not more than $10,000, the business adds the first payment and any later payments made within one year of the first payment. When the total cash payments exceed $10,000, the business must file Form 8300 within 15 days.

After a business files Form 8300, it must start a new count of cash payments received from that buyer. If a business receives more than $10,000 in additional cash payments from that buyer within a 12-month period, it must file another Form 8300 within 15 days of the payment that causes the additional payments to total more than $10,000.

If a business must file Form 8300 and the same customer makes additional payments within the 15 days before the business must file Form 8300, the business can report all the payments on one form.

Example: On January 10, a customer makes a cash payment of $11,000 to a business. The same customer makes additional payments on the same transaction of $4,000 on February 15, $5,000 on March 20, and $6,000 on May 12. By January 25, the business must file Form 8300 for the $11,000 payment. By May 27, the business must file another Form 8300 for the additional payments that total $15,000.

Required Written Statement for CustomersWhen a business files a Form 8300, the

law requires the business to provide a written statement to each person named on Form 8300 to notify them that the business has filed the form.

The statement must include the name and address of the cash recipient’s business, the name and telephone number of a contact person for the business, the total amount of reportable cash received in a 12-month period and a statement that the cash recipient is reporting the information to the IRS.

The only exception to the customer’s notice requirement is when the Form 8300 was filed for suspicious activity. In that event, it is actually illegal for the business to notify the customer the Form 8300 was filed.

When to Provide a Statement to the Customer

The business must provide the written statement to its identified customers on or before January 31 of the year after the year in which the customer made the cash payment that caused the business to file Form 8300. A business that chooses to mail the statement must mail the statement in a timely manner to ensure the customer receives the statement by January 31.

IRS Form 8300 and additional instructions can be found at www.irs.gov.

BY ADR STAFF

C O N T I N U E D F RO M PAG E 2 0 IRS Form 8300 Reporting

DealerRater Adds Chat SoftwareThe car dealer review website DealerRater has partnered with Contact At Once! to add a live chat

feature for its certified dealer partners, enabling real-time chat between automotive dealerships and online shoppers.

“Our third-party generated dealer reviews and ratings have helped car shoppers to determine and validate which dealerships they would like to do business with,” DealerRater president Chip Grueter said. “We believe the integration of Contact At Once! chat will enable our certified dealers to connect with in-market consumers in a way that is faster and more convenient than an email or a phone call.”

The Contact At Once! dealer chat network includes third-party listing sites such as AutoTrader.com, Cars.com and UsedCars.com, as well as standalone dealership and dealer group web pages.

Once enabled, dealers can respond to consumer chats originating from anywhere in the dealer chat network. Dealers that use dealer live chat typically experience a 25 percent increase in online shoppers contacting the dealership.

S O F T WA R E N E W S

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OCTOBER/NOVEMBER 2012 T H E W E S T C O A S T D E A L E R

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C O N T I N U E D F RO M PAG E 2 0 IRS Form 8300 Reporting

ADESA Sacramento celebrated 15 years of service with a record-breaking anniversary sale June 28. The event included a record number of cars available, a record number of cars sold and a record number of attendees, including more than 60 different franchised dealers.

“What an absolutely amazing day,” ADESA Sacramento general manager Chris McGinness said. “We’re fortunate to have the best buyers, the best sellers and the best employees. I want to thank all of our loyal customers who show up every Thursday morning for sale day, and our employees for organizing this record-breaking event and for truly being the best team in the industry.”

Along with the support of its buyers, sellers and employees, ADESA Sacramento got a little help from its friends. Nearby ADESA Golden Gate pitched in to help get the word out about the sale and sister company AFC reduced flooring expenses as an extra incentive for buyers.

Customers were treated to a day of food, fun, promotions and more than $15,000 in prizes and giveaways. IADAC was present to help provide information regarding the newest mandates that began July 1.

Anniversary Sale at ADESA Sacramento

Well, it’s that time of the year again – time to start thinking about the auction at the Annual IADAC Convention. Last year, we raised more than $15,000 for the scholarship fund. It’s important for everyone to remember that any children or grandchildren of IADAC members can apply for the scholarship.

Many dealers in IADAC have used the scholarship to benefit their family’s college funds. It’s one of the many benefits of belonging to IADAC.

I am looking forward heading up the committee again this year. I know we will have a great auction at the 44th Annual IADAC Convention on October 26-27. I am sure the Gold Country Casino/Hotel will do a fantastic job for us this year.

I am looking forward to seeing Rod Davis and David Aahl challenge each other during the auction to raise money for the scholarship fund.

I want to thank everyone who donated items last year and all the bidders on the auction items. Without you, we would not be able to raise the funds for the scholarship.

Please contact IADAC with your donations at (916) 893-3306.

Mary GloverAuction ChairpersonAuxiliary Committee

Victor J. and Ethel G. Memorial Scholarship Trust Fund

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

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

T H E P O P U L A R I Z AT I O N O F S M A R T P H O N E S A N D T H E W H I R LW I N D O F A P P S H AV E E M P OW E R E D T H E I N D U S T RY

Growing Role of Technology in Post-Recession MarketHeading into the fourth quarter of

2012, industry leaders continue to point to market trends that forecast the end of the recession. As a result of increased availability of rental, fleet and new car trades at auction and continued strong new car sales, the industry will see nearly one million more vehicles in the market in 2012.

The current challenge for many independent car dealers is sourcing the right inventory as wholesale used car prices decline. The industry continues to stabilize since the peak of the recession. However, the lasting effects of the recession will continue to impact the market as we once knew it.

The extreme market conditions brought on by the recession have produced a unique set of challenges for the independent used car dealer. With sharply climbing gas prices since 2007

and 2008, the market had experienced a negative impact on large truck and SUV sales. Overall used car supplies dropped substantially with the removal of more than 750,000 units by the Cash for Clunkers program.

Those market changes resulted in artificially high used car prices, which made sourcing vehicles even more difficult for the average used car dealer. While the difficult market forced out many dealers during the past five years, a new crop of dealers has recently emerged. Those dealers are turning to technology to drive their businesses and maintain a competitive edge.

The reliance on technology has increased significantly in the automotive sector. This permanent change has helped dealers in all areas of their business. Sourcing inventory is one of the major avenues in which dealers are

using technology to assist in their “new business” flow. Many dealers are turning to consumer direct online portals and wholesale online platforms to supplement purchases at traditional auction facilities.

In addition, the popularization of handheld smartphone devices and the whirlwind of available apps have empowered the industry to source, assess, value and purchase inventory from the tools in the palms of our hands. In fact, the market is rife with smartphone app solutions for every step in the life cycle of a used car.

Choosing the right products and services can take some time, but trying to run a dealership operation without the right tools to stay ahead of the competition takes even more time.

With sourcing issues easing in 2012 and used car prices continuing to stabilize, the rest of the year should produce new

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Growing Role of Technology in Post-Recession Market opportunities for dealers. But staying on top of local price trends is a must to ensure profit margins stay strong and overall sales increase.

Speculating on inventory levels and pricing heading into tax season can hurt some dealers if consumer demand and prices drop sharply. Market fluctuations, softer prices and macroeconomic factors are all challenges dealers could face in the next few months.

Technology can help dealers stay on top of those trends.

Partnering with technology-based companies that are positioned to forecast market trends and adapt according to industry needs should be an integral part of a dealer’s success in the post-recession marketplace. Dealers should look to align with companies that not only offer technology products that fit their business needs and scale of operations, but that also back their products with superior customer service.

Tech solutions should allow dealers to be more efficient and effective so they can focus on core dealership operations. Dealers should look for solutions that focus on turning inventory faster while increasing profit margins.

Today’s technology can provide dealers the real-time data needed to do just that — appraisal tools, real-time reporting, market trends on specific vehicles and days’ supply. All are things a successful dealer will find important as a way to stay on top of market conditions.

Additionally, a technology platform that requires dealers to make large-scale changes to their business operations might not be the right choice for all dealers. Technology solutions should enhance a dealer’s successful business practices and provide a consistent means to providing market data.

As we enter a more technologically-driven marketplace, the resilience, determination and entrepreneurial drive

of used car dealers continues to inspire companies like DSC to provide the right products and services backed with superior customer service. Since 2005, Dealer Services Corporation has worked to bring innovative technology solutions to our dealer and auction partners to make floorplan financing a seamless business solution.

With state of the art and industry-first technology offerings like the myDSC virtual office and the DSC Unplugged™ mobile smartphone application, DSC provides the support today’s dealers look for in a business partner. DSC is proud to serve independent car dealers and looks forward to long partnerships with its customers in navigating the post-recession market.

BY BRIAN GEITNERBRIAN GEITNER IS PRESIDENT AND CO-FOUNDER OF DEALER SERVICES CORPORATION, THE LARGEST INDEPENDENT INVENTORY FINANCE PROVIDER FOR USED AUTOMOBILES, AND HAS MORE THAN 20 YEARS OF EXPERIENCE IN THE AUTO FINANCE INDUSTRY. FOR MORE INFORMATION ABOUT DSC, VISIT WWW.DISCOVERDSC.COM.

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We all know the saying, “Sticks and stones may break my bones, but words will never hurt me.”

Unfortunately, the reality is for any business, words can break you.

It is imperative to your dealership that you proactively manage and build your online reputation. You need to have strategies in place to monitor what is said about you and respond appropriately.

That starts with knowing the sites available for dealership reviews. Google+ Local or Google Places, Yelp, Cars.com, DealerRater and CarHelp are some of the most popular sites.

Monitoring what is posted online about you allows you to contact customers who were dissatisfied and address their complaints. Addressing their concerns effectively eliminates the complaint.

Once you have satisfied the angry customer, you can ask him to please revise his statement and to always communicate with you directly should he have a concern. That responsibility should be handled by someone who has the highest authority to make customer decisions, such as giving away a free service or replacing a bare tire on a vehicle that was just purchased

from your pre-owned selection.Credibility is the most important part of any

dealership’s sales.It’s a good idea to have one person monitor

review sites and report any issues to the general manager, who can then direct customers to the managers of the departments about which they had complaints. Every employee who has contact with customers should be trained on how to handle and manage customer complaints, only escalating the situation to the general manager when a decision is needed beyond the employee’s authority.

Next, you need to effectively encourage your clients to post positive reviews about you. That’s actually much simpler than you think. Just ask.

If there is a customer you know comes in regularly for service, or who is purchasing his third vehicle from you, just say, “Thank you for your continued business. Can I ask what makes you continue to come back?” His response is your review.

Ask if he would mind posting a positive review about you, or if he would mind being recorded with a testimonial. That is a great tool to place in the header of your website, so that every

prospect who visits your site receives a positive review to encourage him to come in and become a customer.

There are several ways to encourage a review, but you must be careful not to encourage or blindly ask your customers to post negative reviews about you. It takes 18 positive reviews to outweigh one negative review. And once a negative review is posted, it is almost impossible to get it removed.

The only way to rectify a negative review is to contact the person who posted it, address his complaints and turn the complaint into a compliment. That’s why monitoring what is said about you is imperative.

There are proactive measures you should take before a negative review is posted about you. Not only do you need to constantly encourage your customers to post positive reviews, you need to have someone responsible for following up with each and every customer after the purchase of a vehicle or a service visit to ensure every customer was completely satisfied with his experience.

Have a polite script of no longer than 30

How Your Online Reputation Affects Sales

C R E D I B I L I T Y I S T H E M O S T I M P O R TA N T PA R T O F A N Y D E A L E R S H I P ’ S SA L E S .

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

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seconds in place. It is important that the person responsible for contacting your customers has the authority and understanding of what goes on in the dealership to proactively address any complaints immediately. The customer should not be passed to two or three managers, with none of them really sure of the entire situation. Making the customer repeat himself raises his level of frustration.

The person contacting the customer initially should be able to make a decision.

“I understand, Mr. Smith.” Repeat the problem back to the customer so he knows you truly understand. “I apologize that your visit was not completely satisfactory. I am here to help you. We need to have you bring your vehicle back to our service department so we can make sure to correct this problem. I will have a loaner car available for you. What time would be best for you, morning or afternoon?”

No promise was given, no diagnosis, no one was thrown under the bus. We listened, we acknowledged and we acted. Now we will have a manager handle the customer from here, with a full understanding of the situation and without passing the customer to two and three voicemails.

Follow-up is one of the most important parts of your online reputation. See the problem and fix it before it causes permanent damage.

Before contacting a customer for follow-up, you should know:

• When he came in.• What he came in for.• If service, was the service internal, warranty,

or customer pay. If a customer paid for the service, he is more likely to be upset or request some type of compensation if dissatisfied, and you should be prepared for that.

• Who was the service advisor or sales representative? The customer will expect you to know, and if you don’t, it immediately makes him feel impersonalized and like he is insignificant or unimportant.

• Who is the manager of the department? If there is a complaint, who will the customer be working with?

It is important to tell the customer who he should ask for and to let him know that a manager will be working with him personally to address his concerns. If he was unhappy with his service advisor or sales representative, he will not want to work with him/her to address the complaint he feels the advisor/sales rep might have caused.

Once the complaint has been addressed, the manager should build the integrity of the service advisor or sales representative back up with the customer and bring the customer and service advisor or sales representative together for an apology and understanding. If a manager cannot support his employee, the employee should not be there. Furthermore, that customer might need to work with that employee again. You never want to get into the problem of having to be careful of who you place customers with.

If the follow-up process is not handled correctly, you will end up with more complaints than if a follow-up was not made. Be sure to have policies in place for how to handle a complaint and be sure every manager understands the importance

of handling a complaint with the highest sense of priority and urgency.The bottom line is, your dealership needs to have strategies in place to ensure its reputation is

secure. If your online reputation is not being monitored and proactively maintained, it will decline.With 80 percent of your prospects checking your reviews before making a purchasing decision, it

should be one of your top priorities.

BY PETER MARTINPETER “WEB DOC” MARTIN IS PRESIDENT OF CACTUS SKY COMMUNICATIONS. HE CAN BE REACHED BY CALLING (941) 756-1932 OR E-MAILING [email protected]. FOR MORE INFORMATION, VISIT WWW.CACTUSSKY.COM AND CLICK ON “REPUTATION BUILDING”

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I A DAC W E B S I T E

Been to our website lately?The IADAC website, www.iadac.org,

is one of the best sources of real-time information in our industry.

IADAC has had a website since the early 1990s. Our first site was created and operated by Bill Fultz, and it showed IADAC’s position as the leader of dealer representation in California.

Most websites started almost as novelties and not much current information was displayed. It was very difficult to update a website back then. Mike Macaulay, a past IADAC president, took over the site in the mid-1990s and made it more interactive and informative. We had our magazine available online, and much more.

Many dealers dragged their feet in getting up to speed on the new Internet age. The website was still considered a novelty and didn’t get many hits. We promoted the site through magazine articles and auction banners, put up preferred provider ads and even had a question and answer blog.

The website was good, but not a major asset – until now.

Our newly designed site is state-of-the-art and is the envy of every state association, even NIADA. Past IADAC president Terry Degmetich and executive director Larry Laskowski are creating a true masterpiece. They teamed up to again make IADAC an industry leader.

We have real time daily updates, including:• DMV updates and contacts.• Legislative updates.• Legislative watch list with day-to-day

progress.• Industry news.• Bonding and license information and

advice.• Links for DMV fee calculator, Red

Flag Rules, dealer plate law, DMV lot inspection forms and checklist.

• Member benefits, membership application, Vic and Ethyl Snyder Memorial Scholarship applications, award recipients and auction card information.

• Online applications to IADAC Convention/meetings, NIADA

Convention and links to NIADA TV, a great training tool for you and your staff.

• IADAC executive board members with contact information, committee reports and local chapter news.

• Current and prior issues of West Coast Dealer, our California dealer magazine.

• California auction directory with links and contact information.

• Links and lists of IADAC Preferred Providers to get the best professional help.Our website hosts and creators are

Mike and Chris Jackson of Auto Search Technologies. They have been extremely helpful in leading IADAC toward the future. They work hand-in-hand with Terry and Larry to display a quality product.

Our website, www.iadac.org , has made the tools available to help make you a successful and informed dealer. There is much more to our site than what we’ve listed, and more is added every day.

The future is here and we encourage all members to take advantage of it.

BY MIKE MACAULAYIADAC MAGAZINE CHAIRMAN/EDITOR

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44th Annual ConventionOctober 26 & 27, 2012

Gold Country Casino/Hotel • 4020 Olive Highway • Oroville, CA 95966

Registration Form

IADAC MEMBER: X $99 =

IADAC GUEST: X $89 =

NON-MEMBER: X $129 =

NON-MEMBER GUEST: X $119 =

TOTAL AMOUNT DUE: $

BUSINESS NAME:

ADDRESS:

PHONE: FAX:

EMAIL:

PLEASE RETURN THIS FORM TO IADACPO BOX 343 • ROSEVILLE, CA • 95661

PHONE 916.893.3306FAX 916.784.0223

PAYMENT INFORMATION: CHECK ENCLOSED CREDIT CARD CHARGE A/R

VISA MASTERCARD CARD #

CARDHOLDER NAME EXP. DATE

SECURITY CODE SIGNATURE

BRASHERS SAC A/A

NORTH BAY A/A

PLEASE PRINT NAME(S) AS YOU WOULD LIKE THEM ON NAME BADGE(S)

# PEOPLE TOTAL

Gold Country Casino/Hotel4020 Olive HighwayOroville, CA 95966

800.334.9400www.goldcountrycasino.com

Convention Room Rate $99/nightAttendees must make their own room reservations

Exhibitor Information Available at www.iadac.orgor call 916.893.3306

Questions?916.893.3306

44th Annual Convention

Doug LaMalfa4th District Senator

Quality Dealer Luncheon Speaker

Friday, October 26, 201212:00 Expo Opens1:00 Lunch2:00 Board Meeting3:00 DMV Panel5:00 Hors d’oeuvres & Cocktails6:00 Dinner & Auxiliary Auction7:30 Music & Dancing

Saturday, October 27, 20128:00 Breakfast9:00 Education & Guest Speaker

12:00 Quality Dealer Luncheonwith Senator Doug LaMalfa

1:00 Pinewood Derby3:00 Bowling & Dinner

(cost not included)

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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 is no denying that dealers and lenders have grown accustomed to a regulatory environment that is constantly changing, with new laws and regulations.

But today’s regulatory landscape is different than it was years ago – and not just because the requirements continually change.

If you feel like it’s becoming increasingly complex, you’re not alone. Here are the likely culprits:

Shorter notice: Some states have started publishing regulatory changes on rather short notice. For example, in New Mexico the attorney general recently gave 30 days’ notice to add a new spot delivery disclosure to the sales transaction document or purchase order.

The short notice was made worse because a proposed regulation had not been published – at least not recently – so the final regulation came as a surprise to the industry. While one month might feel

Regulatory Landscape Feeling Tougher? You’re Not Alone

like a long time to add one disclosure, the required notice is quite large and requires substantial formatting changes to the documents affected.

The attorney general eventually delayed the effective date of the regulation by 60 days, apparently after significant industry feedback.

More frequent changes and updates: Across the country, there seem to be more frequent changes being made. That has clearly been the case with state motor vehicle title forms. Previously, those forms were rarely revised. But over the past few years, some states have changed their title forms as many as two or three times per year.

One potential driver for that might be that technology now allows states to redesign and reissue their forms and revise (increase) the related fees more easily. But often the changes come with little or no notice, which underscores how important it is for dealers and lenders to be confident in their ability to monitor the changes that are constantly taking place.

Volume of information: While it can be difficult to keep up with the pace of change and various deadlines and effective dates, it’s also quite a task to consume the volume of information and content surrounding new laws and regulations.

For example, the Consumer Financial Protection Bureau (CFPB) published a proposed rule July 9 regarding integrated mortgage disclosures under RESPA and the Truth in Lending Act. It was one of the first significant proposed rules from the CFPB, and the planning process involved extensive research and solicitation of industry and consumer feedback.

As a result, the proposed rule and explanatory materials total more than 1,000 pages. The good news is the proposed rule provides significant details and explanations of the changes. The bad news is that many pages of material can be overwhelming (aren’t you glad you’re not in the mortgage lending business?).

Operating in a highly regulated industry, one can’t help but wonder if that is an indication of the volume of change yet to come and how dealers and lenders will absorb all of the changes and their nuances.

Disparate technology systems: Though computer technology allows us to do many things faster than before, disparate file formats, field naming conventions, calculation engines, software and hardware, and reliance on multiple vendors can make it difficult to quickly change or revise transaction documentation and its completion tools. That often means all the component parts need to be updated in sequence rather than in parallel – adding more time to make the required changes.

Today’s environment is characterized not only by constant change, but by tougher enforcement as well. There is more visibility and greater scrutiny of compliance and risk management in all organizations. Dealerships and financial institutions should regularly question whether they feel confident that new laws and regulations are being embedded in their business operations.

The challenges underscore a need for greater operational efficiency. Disparate systems and procedures can make even relatively simple changes more time-consuming and complex.

As you prepare for additional changes, consider reviewing your process maps, technology, vendor coordination and steps necessary to respond to compliance changes. Creating greater operational efficiency now will make it that much easier for you to respond to the inevitable next compliance crunch-time event.

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

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west coast dealer oct/nov 2012

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