A L A B A M A
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
ALABAMA A P R I L / M AY 2 0 1 4
magazine
JOIN US FOR AIADA’S 45TH ANNUAL CONVENTION: This convention will be an all in one Great Package “Of Learning and Family Fun” Stay educated with our Top Of The Line Speakers, including but not limited to:
LUTHER STRANGE
• Luther Strange Alabama’s Attorney General • Gideon Sinasohn Senior Attorney at The FTC (Federal Trade Commission) • Joe Lescota Director of Dealer Development at Northwood University • Alabama’s Director of Revenue Motor Vehicle Division • Jeff Ingram and John Galese from The Law Offices of Galese & Ingram PC • Rod Heasley Executive Vice President Peritus Portfolio Services
AND A MUST ATTEND COMPLIANCE WORKSHOP BY JEFF INGRAM, DON’T MISS THIS!!
July 17-19, 2014, at the beautiful Hilton Pensacola Beach Gulf Front in Pensacola, Florida. This will be a must attend convention. Bring your family to the beaches of Florida!
SEE PAGE 17 & 25 FOR MORE INFORMATION
DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
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ASSOCIATION NEWS
Jimmy Darrell Woods Named Alabama Quality Dealer COME SUPPORT HIM IN VEGAS!
INSIDE
Congratulations to Jimmy Darrell Woods for being named Alabama’s State Quality Dealer of the Year. Woods is now in the running for becoming the National Quality Dealer, which will be presented at NIADA’s national Convention and Expo June 23-26 in Las Vegas. Let’s get behind Mr. Woods and support him in Vegas! Call (800) 682-3837 today for more information or to register.
WHAT’S NEW
ASSOCIATION NEWS
05 Common Errors by Agents 06 Legends of AIADA: Ernest Crump 10 Washington Update 12 Common Sales Tax Issues 14 Flat Fees vs. Discretionary Compensation 18 AIADA Partners with STARS GPS 26 Advertising Game Plan
2014 WAAC TO WEBCAST LIVE WATCH EVENT ONLINE MAY 9
ADESA Boston will host the 2014 World Automobile Auctioneers Championship on May 9. The event will showcase the world’s best automobile auctioneers vying for the coveted titles of World Champion Automobile Auctioneer, World Champion Automobile Ringman and World Champion Team. Free live broadcast of the 2014 championship is available at www.niada.tv; www.niada.com; www.waacnet.com and www.autoconsumer.tv.
ADVERTISERS INDEX
ADESA.................................. Inside Front Cover Ally................................................................... 11 AutoZone...........................................................5 Black Book............................ Inside Back Cover Dealer Funding..................................................8 DealerMatch....................................................13 Hamilton State Bank.......................................16. Manheim.com....................................................7. Manheim Pennsylvania.....................................9 .. NextGear Capital.............................................15 .. STARS GPS.....................................................19. United Acceptance.......................................... 17. VAuto.................................................Back Cover
OFFICE
120 Vulcan Road • Birmingham, AL 35209 Phone: (205) 942-1000 Fax: (205) 942-3565 Website: www.alabamaiada.com To become a member of AIADA, please call (800) 239-2423.
NIADA HEADQUARTERS
National Independent Automobile Dealers Association www.niada.com • www.niada.tv 2521 Brown Blvd. • Arlington, TX 76006-5203 phone (817) 640-3838 For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. The Alabama Independent Automobile Dealers Association is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 760065203; 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 AIADA 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 © 2014 by NIADA Services, Inc. All rights reserved. Visit the NIADA Web site at www.niada.com. State Magazine MGR./Sales Troy Graff • troy@niada.com Editors Andy Friedlander • andy@niada.com Jacinda Timmerman • jacinda@niada.com Magazine Layout & Graphic Artist Chantae Arrington • chantae@niada.com Art Director Christy Haynes • christy@niada.com Printing Nieman Printing
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In Memory…
The following two members of the association recently passed away. Please keep these families in your thoughts and prayers. • Donald Gant of A & D Motors, Arab, Ala. • Junior Compton of Junior Compton Motors, Albertville, Ala. TWO ASSOCIATION MEMBERS PASS AWAY
Executive Committee Executive Director Randy Jones President Ken Mcfarland Birmingham President Elect Rex Canterbury Fayette Chairman of Board Charles Moring Midland City Vice President Todd Smith Dothan
AUCTION
Secretary/Treasurer Thomas L. Brimer (Pokey) Oxford Directors Barry Searcy Muscle Shoals John Dunn Sylacauga Lance Turner Anniston Willie Colvin Tuscaloosa Paul Claborn Albertville
Robert Case Hartselle
Heath Hendricks Greenville
Tim Duke Birmingham
Kelly Steely Hoover
Jay Saul Jasper
Darrel Pettie Pleasant Grove
Randy Crump Jasper
Ethan Hunt Mobile
Larry Morris Birmingham
Bryan Cooper Huntsville
Darrin Henderson Montgomery
Tony Richards Montgomery
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NEWS
ADESA Reveals Management Changes at Four Auctions FOUR INDIVIDUALS ARE PROVEN LEADERS Management recently changed at four of ADESA’s locations. ADESA chief executive officer and president Stéphane St-Hilaire said, “All of these individuals are proven leaders who know what it takes to run a successful auction. I am excited to share their expertise with each of these locations and their customers.” Jay Hinchman, previously general manager at ADESA New Jersey, will now serve as general manager of ADESA Las Vegas. Hinchman’s career in the remarketing industry spans more than 18 years. Theo Jelks will return to ADESA Los Angeles, where he served as general manager from 2009 through 2011. In late 2011, he joined the company’s newest auction, ADESA Las Vegas, as the auction’s general manager. Craig Estep has been named general manager at ADESA New Jersey. He most recently served as general manager for Upstate Auto Auction. Estep began his career in the auction industry in 1991 at Statesville Auto Auction before joining ADESA Indianapolis in 1994. Zachary Jones, previously operations/transportation manager at ADESA Great Lakes, will now oversee operations as the auction’s general manager. Jones joined ADESA in 2006. Prior to joining the company, he worked as a fleet manager, dispatcher and driver for ASR Services/Daltons Towing/ Auto Site. A P R I L / M AY 2 0 1 4
AIADA
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AIADA 45TH
ANNUAL CONVENTION
ASSOCIATION NEWS
Ladies Auxiliary Update SCHOLARSHIPS, RONALD MCDONALD AND CONVENTION
ASSOCIATION NEWS
From the Desk of Randy Jones, Executive Director AIADA 45TH ANNUAL CONVENTION
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AIADA’s 45th annual convention will be held July 17-19, 2014, at the beautiful Hilton Pensacola Beach Gulf Front in Pensacola, Fla. We are extremely proud of the convention this year. We will celebrate the achievements of president Ken McFarland and welcome our incoming president Rex Canterbury. Alabama, as well as our country, has gone through a lot of business changes. Some for the better, some not and some remain to be seen. Ken has shown great leadership and planning to help keep Alabama at the top of the marketplace. This does not come from waiting for things to happen, it comes only with aggressive planning and training. With this in mind, we have planned a convention with more workshops and education than ever before. We know this is the tool to success! AIADA is planning a convention that will focus on Alabama’s independent dealers of every type: Buy Here-Pay Here dealers, large retail stores dealers, multilocation independent dealers, cash only dealers, mom & pop stores, secondary financing stores, prime financing stores, etc. We have something for you!
This will be a must attend convention. You will learn more in two days then you usually learn in two years. We have some of the top speakers in the nation attending this year. Becoming the best you can be takes a lot of training. Being the best is never easy, but it is worth it! Bring your family and let them enjoy our convention with you. Start making this your family’s annual event. Make new friends and watch your business grow. “Now putting a cherry on top of the ice cream…” We have great list of vendors and you will be able to meet all of them face to face. This is the best way to build strong relationships. You will meet prime finance companies, sub-prime finance companies, credit unions, banks, floor plan companies, GPS companies, insurance companies, auctions, attorneys, Alabama department of revenue, title (ETAPS) department and many more. Now fill out the enrollment form on page 25 and let’s get started today.
Thank you to all of the seniors who completed their scholarship application. The ladies auxiliary received several applications and the winners were announced in March. We will have the winners in the next issue. In January the ladies auxiliary was able to visit the Ronald McDonald House in Birmingham. There are about 40 families that stay there while their children are being treated in the hospital. We had food catered from Jim N Nicks and served dinner to the families. One of the families we met is from Lanette, Ala. Raylee Wright, who is 4 years old, and her great-grandfather Gene Wright were such a blessing to all of us. We also talked to many other families, some who had heard of local used car dealers in their area that we mentioned. The convention will be here before we know it and we have started making plans for the beach party theme on Friday night. Make sure to wear your beach attire for a chance to win a money ticket for the best dressed. As always, thank you for your support. Sherri McFarland Ladies Auxiliary President
By Randy Jones Executive Director
AIADA 45TH
ANNUAL CONVENTION AIADA
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REGULATORY
MATTERS
Common Errors Made by Designated Agents WATCH FOR THESE ERRORS The Department of Revenue, Motor Vehicle Division, has identified the following as common errors for which certificate of title applications are being returned to designated agents for corrections on a regular basis. Dates of purchase on the certificate of title vs. title application. The date of purchase on the reverse side of a certificate of title/MSO must match the date of purchase on the application for a certificate of title. Federal Truth in Mileage Act (TIMA). The purpose of the federal Truth and Mileage Act is to limit odometer fraud and ensure that the buyer of the motor vehicle knows the true mileage of the vehicle. The transferor (seller) of the motor vehicle is required to provide the transferee (buyer) a written certification of the vehicle’s mileage registered on the odometer in connection with
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the transfer of ownership. In keeping with the provisions of TIMA, the same person or representative of the same company may not sign the odometer certification as both the buyer and seller. When submitting an Affidavit of Correction to a Document to Support an Application for a Certificate of Title, form MVT 5-7, please ensure that both the buyer and seller sign the document. Too often, this document is submitted without containing both signatures and signature notarization. If the buyer and seller sign at different times, each signature must be notarized. If the affidavit of correction is submitted on the designated agent’s letterhead rather than the MVT 5-7 form, notarization is not required. If, however, the affidavit is submitted without being on letterhead or the form MVT5-7, it must be notarized. It is important to note that
Alabama dealers must use the form MVT 5-7. Out of state transfers. Please ensure that the odometer reading certification is disclosed in the assignment by marking the appropriate box before submitting paperwork to the department. Title assignments. Each title assignment must be completed in detail at the time of transfer to include the purchaser’s name and address, date of sale, buyer(s) and seller(s) signatures, odometer reading and dealer license number. The printed name in the title assignment area must be the name of the person signing the certificate of title in the assignment area. Additionally, if the owner’s name contains Inc., LLC, LLP, etc. this needs to be included in the name in the assignment area. Ensuring that paperwork is submitted accurately by addressing these areas of concern will ensure that certificates of
BY LISA BLANKENSHIP
title are issued in a timely manner upon the first submission of paperwork. This is the goal of the department, its designated agents and vehicle owners. BRENDA R. COONE IS THE DIRECTOR OF THE STATE OF ALABAMA DEPARTMENT OF REVENUE MOTOR VEHICLE DIVISION. LISA BLANKENSHIP, TITLE SECTION ASSISTANT SUPERVISOR, IS THE AUTHOR OF THIS ARTICLE. AIADA THANKS MRS. COONE AND MRS. BLANKENSHIP FOR TAKING THE TIME TO KEEP OUR DEALERS INFORMED AND UP TO DATE ON POLICY AND REGULATION CHANGES THAT AFFECT THEIR BUSINESS RELATIONSHIP WITH THE DEPARTMENT AND THE ALABAMA CONSUMERS WE SERVE EVERY DAY.
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OF AIADA LEGENDS
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Ernest Crump As an association, we would not even exist today if not for the men and women who had a vision of what AIADA could become and worked hard to make it happen. The man we honor in this issue of the magazine is one such man, Ernest Crump of Ernest Crump Motor Company in Jasper, Ala. Ernest has been like a solid oak to the board of this association. His advice and leadership is rooted in oak-like strength. He has led by the example of his character, integrity and ability. Ernest was born on February 25, 1926, in the small community of Townley, Ala., to Wesley Orton, Sr. and Cinnie Belle Crump. He is the third youngest of 12 children. Wesley was a timber man, buying, cutting and selling timber as well as farming. Ernest grew up cutting timber and tending the land to help provide for the family. It was hard work, and he still has the scars to prove it. This part of his early life developed the deep respect for hard work Ernest has exemplified throughout his career. Jasper has always been a coal town. When it came time for Ernest’s older brother Claude to go out on his own, however, the coal mines were in decline and not hiring, so Claude decided to try his hand in the automobile business. Claude was successful in his venture and led the way for his seven brothers, who also entered the automobile business. In 1944, while Ernest was serving in the US Army as a member of the 82nd airborne division, he came home on furlough. He bought a 1936 Ford for $200. After a little work, Ernest sold it for $450 before returning to camp. He pocketed a lot more profit than he made in the army at that time, and the seed was planted for a rewarding career in the car business. Ernest served in Germany at the end of World War II and was honorably discharged in 1946. He then returned home to Jasper, Ala. While attending a community dance, he met the love of his life, Dorothy (Dot) Wilkerson. Ernest made one of the best decisions of his life in pursuing Dot. When he and Dot were married on January 31, 1948, she told him it was time to go to work. Being the good husband that he is, he did. Within two months of marriage, Ernest opened Ernest Crump Motor Company on 1900 Birmingham Avenue in Jasper, Ala., the very same corner where the business resides today. Dot has always been the bookkeeper at Ernest Crump Motor Company. In addition to wife and mother, she has been business partner, money manager and Ernest’s best friend. It is refreshing to honor such AIADA
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A SOLID OAK TO THE ASSOCIATION
commitment from two great people who have shared so much being married and working together for over 66 years. The little business that Ernest and Dot started in 1948 has sold over 36,000 vehicles. That is an average of over 45 vehicles a month. Words cannot describe how truly successful they have been. Jay Saul of E-Z Auto Credit in Jasper related the story of when he began his career selling new Toyotas for Ernest’s nephew, John Crump. He had a customer trying to buy a new Camry and could not close the deal. John asked the customer, “I know you have been a long time customer of Ernest Crump Motor Company. If Ernest had this car would you pay him another $1000 for it?” The customer promptly replied, “I would, but Ernest would make me like it, and you boys have not done that yet.” Jay said this experience changed his career. He started to look closely at Ernest and his operation in order to improve his own career. He found that Ernest’s customers loved him because he treated each one as though he or she was royalty. Ernest’s customers have said new car warranties did not matter to them because a car purchased from Ernest had a better warranty than any new car. It came with Ernest and his word. He had always taken care of them. Jay said his business is better today because he learned from Ernest and tries to emulate how Ernest conducts business. While hospitalized due to a snake bite, Ernest requested strongly to be placed in the corner room, which was opposite his lot so he could watch it. When a customer came to pay a payment, Ernest would call the secretary and tell her to put the customer on the phone and he would try to trade cars with them. Even with the challenge of a hospital stay, Ernest found a path to success. In 1967 Ernest was a new car dealer for American Motors. Even though it was a hard franchise, Ernest Crump was successful. Nevertheless, Ernest liked the personal hands-on approach to selling cars, and the added responsibilities of the new car business did not always conform to the style of business that has always made Ernest Crump successful. Two years later, Ernest left American Motors and stayed in the independent automobile business for the remainder of his career. Through his business, Ernest has made a difference in Jasper, Ala. The street in front of his business was recently renamed Ernest Crump Drive in his honor. He is esteemed by fellow car dealers,
his customers, civic leaders and church community as a good Christian man and hard worker whose word is always good and who goes above and beyond to make any situation right. Ernest and Dot have been members of First Baptist Church of Jasper for over 40 years. He is a supporter of many charities and events in Jasper. Even though he turned 88 on February 25, 2014, Ernest is still active in his church, community and business. Though not a charter member of the Alabama Independent Automobile Dealers Association, Ernest joined the association in its infancy. As he does with everything he is involved in, he not only became a member but an active partner. Instrumental in starting the Walker County chapter of AIADA, Ernest’s fellow dealers quickly recognized his leadership qualities. He was appointed to the AIADA board of directors and Dot took an active role in the ladies auxiliary of AIADA. Ernest and Dot brought with them a commitment to improve the industry through association and the strength of association. In 1992 Ernest won the prestigious Alabama Quality Dealer of the Year award and represented Alabama at the national convention. He has received many awards and accolades for his work with AIADA. According to Henry Mullinax, a long time board member who served with Ernest, “Ernest and Charles [Little] led by example and in doing so made me want to be a part of what they were doing with the association. Besides loving the car business, I credit Ernest and Charles for making me feel I was important and could make a difference in our industry.” Ernest Crump helped make many strides for the association. One of many projects he was instrumental in was acquiring the association office. Until the purchase of the building, AIADA worked out of a small office. Crump, along with the other members of the board, foresaw the growth potential of AIADA and the need of a building to ensure the stability and growth of the association. This association and industry is much better because of the involvement of Ernest and Dot Crump. Ernest and Dot have three children: Brenda, Deb and Mark. They have six grandchildren, two great-grandchildren and a third on the way. Their legacy of life is secure in the fine family they have created. Their legacy of hard work, honesty, integrity and sound morals is an example to us all. Thank you, Ernest and Dot, for the leadership, loyalty, friendship and wonderfully fun times we have shared over the years. W W W. A L A B A M A I A D A . C O M
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AUCTION
NEWS
ADESA Boston Hosts Auctioneers Championship
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LIVE WEBCAST OF THE EVENT AVAILABLE ADESA Boston will host the 2014 World Automobile Auctioneers Championship on May 9. The event will showcase the world’s best automobile auctioneers vying for the coveted titles of World Champion Automobile Auctioneer, World Champion Automobile Ringman and World Champion Team. This year’s judges include ADESA CEO/president Tom Caruso, NAAA CEO Frank Hackett, Manheim president/CEO Sandy Schwartz and Central Auto Auction CEO/general manager Peter Saldamarco. “These are the men and women who help fuel our business, who help us get better prices, plus describe cars, help us get cars sold,” commented Schwartz. “[In 2012] I was so amazed at the intensity, at the professionalism and, most importantly, the love that all the auctioneers and ringmen have for our business.” Schwartz added, “It’s so great to watch people who love their craft and are so good at it that are really the heart and soul of the business. We love our auctioneers.” The 2014 championship will be webcast live on May 9, starting at 9 a.m. Eastern Daylight Time. Cheer on your hometown favorite auctioneers and/or ringmen and catch all of the fun and excitement of the 2014 World Automobile Auctioneers Championship. The free live broadcast is available exclusively at the following websites: www.niada.tv; www.niada.com; www. waacnet.com and www.autoconsumer.tv. For more information, visit http://www.niada.com/world_ automobile_auctioneers_championship.php.
AIADA
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National Independent Automobile Dealers Association
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AIADA
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LEGAL
NEWS
Common Sales Tax Issues MAKE SURE YOU COLLECT AND REMIT THE APPROPRIATE SALES TAX
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Sales taxes for most transactions are relatively simple. You buy an item for your use. The seller is under a responsibility to collect the necessary sales tax. Most of the time, the amount of that tax is determined by a simple calculation. However, as many of you have learned, the intricacies of the motor vehicle business can create issues for even a relatively simple transaction. To assist dealers, the Alabama Department of Revenue has recently prepared a sales tax guide and listed a number of common problems regarding motor vehicles. Here are some of those problems: Companies purchasing items for resale generally do not have to pay sales tax. Simply having a tax number is not a license to avoid paying sales taxes. For example, a retail store purchases a truck from your dealership for making deliveries as part of its business. Even though that retail store may provide you with a tax number, you must still collect sales tax on that transaction. It is only purchases for the purpose of resale that are not subject to sales tax. A further example of how businesses, even car dealerships, can incur sales tax obligations AUCTION
is a common example of a car dealership purchasing a vehicle for the personal use of an owner. Purchases of a vehicle by a dealership from another dealership are not taxable if the purchasing dealer intends to place the vehicle into its inventory for resale. However, consider the situation where a used motor vehicle dealer purchases a vehicle from a new motor vehicle dealer for the used dealer’s personal use or the use of the dealer’s spouse or child. In that case, the sale is a taxable sale because the vehicle is not being purchased for resale. Another common issue is the use of demo vehicles by dealership employees. Vehicles used by a dealership employee for demonstrator purposes are subject to a state withdrawal charge of $5 per year. Many dealerships charge doc fees in the sale of a vehicle. This fee may be called a doc fee, a dealer prep charge, a customer service fee or a number of other names. Whatever it is called, sales tax must be charged on these fees because they are considered part of the sale price of the vehicle. You are allowed to charge $16.50 for title fees. If that amount is clearly labeled and
BY JEFF INGRAM OF GALESE & INGRAM
separately stated on the purchase documents, no sales tax should be charged on this fee. If that amount is not clearly labeled and separately stated, sales tax has to be charged on the fee. So, for example, you cannot simply include that $16.50 fee in a doc fee and then deduct the $16.50 fee when calculating sales tax.
vehicle from inventory for permanent use by the dealership, sales tax is due at the time of withdrawal based on your dealership’s cost in the vehicle. For example, you might purchase a truck for $10,000 and place it into your inventory for sale. After some period of time, having not sold the truck, you decide to remove it from
Sales to non-residents of Alabama are exempt if the vehicle will be registered or titled outside Alabama and the vehicle is removed from Alabama within 72 hours after the sale. To be exempt, such sales must be documented on the Department of Revenue’s “Automotive Vehicle Drive Out Certificate for NonResidents” form or the “Certificate of Exemption - Out of State Delivery” form. If you decide to remove a
inventory to use as a service truck. When you do that, sales tax is due on the $10,000 acquisition cost. We have all heard the line about death and taxes. Do not get into a situation where you have failed to collect and remit the appropriate sales tax. Doing so can create real problems for you. If you are not sure what is and is not taxable, take steps to find out so that you can be sure that you are operating correctly. There is no shame in asking a question to get it right.
NEWS
Chattanooga Auto Auction Joins Company’s Sister Auctions CITY ENTERPRISES ACQUIRES CHATTANOOGA AUTO AUCTION David Andrews, CEO of City Enterprises, LLC, recently announced the acquisition of Chattanooga Auto Auction, joining the company’s sister Dealers Auto Auctions in Memphis, Tenn.; Mobile, Ala.; Huntsville, Ala.; and Murfreesboro, Tenn. “We are thrilled to have Chattanooga join our family of auctions,” said Andrews. “This addition will help to expand Dealers Auto Auction into a new region, and increases Chattanooga’s client base and the services provided to their AIADA
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dealers. “Our acquisition and development of DAA Chattanooga is a great strategic addition to our portfolio of auctions,” said Andrews. “This allows us to grow our service offering to the remarketing clients and dealers of Dealers Auto Auction Group, while supporting our sister companies within City Enterprises.” DAA Chattanooga general manager Casey Tuggle commented, “We are looking forward to expanding our offering with what we consider
to be best-in-class service for our clients and dealers. We are excited to be a part of the Dealers Auto family of auctions, and are preparing the lanes to welcome our newest clients, which include Remarketing by GE, PHH, Lease Plan and ARI.” Dealers Auto Auction Chattanooga is located at 2120 Stein Drive in Chattanooga, Tennessee. The six-lane auction facility holds weekly dealer sales on Thursdays at 9:45am and dealer and public sales on Tuesdays at 6:30pm. DAA Chattanooga hosts monthly sale
events featuring TVA (Tennessee Valley Authority), and are now extending their expertise with more new car dealer and fleet accounts. CITY ENTERPRISES, LLC, IS THE MANAGEMENT COMPANY AND PARENT ENTITY OF CITY AUTO SALES, LLC, DEALERS AUTO AUCTIONS GROUP, CITY DIRECT, CONNECT1RECOVERY, CITY LEASING AND CITY AUTO FINANCE. THE DEALER’S AUTO AUCTION GROUP IS COMPRISED OF DAA MEMPHIS; DAA MURFREESBORO; DAA HUNTSVILLE, DAA MOBILE AND NOW DAA CHATTANOOGA. CHATTANOOGA AUTO AUCTION IS A FULL-SERVICE FACILITY OPEN TO LICENSED AUTOMOBILE DEALERS WITH REGULARLY SCHEDULED DEALER AND GOVERNMENTSPONSORED VEHICLE SALES. IT SERVES THE EAST TENNESSEE, NORTHERN ALABAMA, SOUTH CAROLINA AND GEORGIA MARKETS, AND IS CENTRALLY LOCATED JUST OFF I-75 NEAR THE INTERSECTION OF I-75, I-24, AND I-59.
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FEATURE
STORY
COMPLIANCE OVERDRIVE
Flat Fees vs. Discretionary Compensation for Dealers THE DEBATE CONTINUES BY CHIP ZYVOLOSKI
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In March 2013, the Consumer Financial Protection Bureau published guidance on compliance with fair lending requirements for indirect auto lending. Since then the issue has grown to become the industry’s most significant compliance issue in quite some time. In December, the CFPB entered into a consent order with a large lender involving millions of dollars in damages and penalties. Others could follow. Be prepared, because this issue may also result in lenders changing how they pay dealers for retail contracts. The CFPB’s focus is on how lenders compensate dealers when they buy completed retail contracts. After analyzing information about a proposed credit sale, an indirect auto lender will offer to buy the completed retail contract if it has a specified (minimum) contract interest rate. Sometimes the minimum rate is referred to as the “wholesale rate” or the “buy rate.” Some lenders pay dealers a share of the increased interest revenues if the completed contract interest rate is more than the buy rate. This practice is often referred to as “dealer rate markup,” “dealer reserve” or “dealer participation.” The CFPB’s concern is that dealer discretion to increase interest rates may result in some buyers paying more than others – which is a violation of the law if the pricing disparities affect buyers of one race, gender or other protected group more than others. To be clear, there is no debate about the evils of intentional credit discrimination. Every reputable auto dealer and lender condemns discrimination against buyers on the basis of race, ethnicity, gender and all other classes protected by the law. Intentional credit discrimination is against the law, is bad policy and has no place in this industry. Everyone agrees. The current issue is more subtle because it involves unintentional discrimination, referred to as “disparate impact.” A dealer and lender could implement what they believe to be discrimination-free business policies and practices only to find that they result in statistical anomalies showing buyers of a certain race or gender are paying more for credit. Unless the variations can be justified by legitimate business needs, they are violations of law because they have a discriminatory impact on certain protected buyers. It doesn’t require the dealer or lender to have discriminatory intent. It only AIADA
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matters that their actions had a disparate impact. The CFPB’s guidance last March and its actions since then have all focused on dealer discretion to increase lender’s buy rate and the risk that such discretion may lead to a disparate impact on protected buyers. If a dealer doesn’t have a set of rules for how and when it marks up the buy rate, then how can it ensure that buyers with similar credit profiles are being treated equally? For example, if a dealer’s only credit pricing rule is to charge each customer as much as he/she will bear, then it is not trying to provide the same credit pricing to buyers with similar credit profiles and it is likely violating the fair lending requirements.
u W e heard from
many lenders who spent a good part of 2013 trying to figure out how to ensure compliance without negatively affecting their ability to purchase dealer contracts.
We heard from many lenders who spent a good part of 2013 trying to figure out how to ensure compliance without negatively affecting their ability to purchase dealer contracts. For better or worse, the CFPB’s guidance didn’t require a magic bullet solution. If it had, lenders might have all quickly adopted changes knowing that all their competitors would do the same. Instead, a lender that changes its dealer
compensation method might reduce compliance risk but then takes the risk that its new compensation method would not be attractive to dealers. A bold lender could lose business if dealers negatively react to the change. These factors may have led to some hesitation by lenders on the issue. Any hesitation probably ended in December when the CFPB entered into a consent order with a large auto lender. In the consent order, the CFPB alleges that the lender’s discretionary dealer rate markup practices resulted in a disparate impact on certain buyers in violation of the Equal Credit Opportunity Act. The CFPB’s allegations were based on its analysis of the lender’s auto loan portfolio. The CFPB ordered the lender to institute ECOA program changes, pay $80 million to certain buyers as damages and pay the CFPB $18 million in penalties. Now there is more pressure than ever for lenders and dealers to take action to address the CFPB’s concerns. The CFPB’s March 2013 guidance offered two alternative courses of action. They aren’t perfect solutions, but they provide a clear dichotomy of choice. 1. Lender uses a discretionary dealer participation compensation method. For example, a lender might continue to allow dealers the discretion to mark up the buy rate and compensate dealers based on the amount of the markup. These methods require lenders to: • Impose controls on dealer markup and compensation policies. For example, controls could include a cap on the amount of markups. Other controls could be to allow dealers to use a set rate markup allowing variation only under certain authorized circumstances. The NADA recently recommended that its member dealers implement rate caps and allow dealer discretion to decrease the markup only for certain legitimate business needs. It recommended that dealers document the business reason(s) whenever they discount the markup. • Review and analyze their loans regularly at the portfolio level and at the individual dealer level. Depending on the size of the portfolio, lenders may need to analyze it as often as quarterly. • Address any unexplained pricing disparities on prohibited bases. This would require finding and correcting the root cause of the disparities. CONTINUED ON PAGE 16 W W W. A L A B A M A I A D A . C O M
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STORY
COMPLIANCE OVERDRIVE
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If certain dealers are creating the problems, then a lender may need to restrict pricing for those dealers or stop buying their contracts. Addressing prohibited disparities also means returning money to affected buyers or providing them redress in some other way. 2. Lender compensates dealers using a formula that does not give dealer discretion. For example: • Lender could pay a flat fee so dealer is compensated the same amount for every contract sold to lender regardless of the contract interest rate. Since dealer isn’t compensated for increasing the buy rate, it has little reason to do so. Actually, the presumption is that lender would not allow dealer to change lender’s buy rate because that would involve dealer pricing discretion. (A variation might be that dealer marks up every transaction by the same amount without the discretion to increase or decrease the marked up amount.) • Lender could pay a flat fee to dealer on every transaction plus a percentage based on the amount financed. This would provide more compensation to dealer for larger credit transactions. Again, the presumption is that dealer would not be allowed to change the lender’s buy rate. Solutions 1 and 2 both require lenders to have a fair lending compliance management program in place, but the first solution requires heavy monitoring and analyzing activity. Even with heavy monitoring, lenders still run
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the risk that their analysis will reveal credit pricing anomalies which will then need to be addressed with affected buyers and the dealers involved. In theory, the second solution does not require those extra steps because dealers do not have discretion to change credit pricing for different buyers. Doesn’t the second solution sound like it would be much easier for lenders to implement than the first? Obviously, lenders need to analyze how they approach this compliance issue. The administrative cost and burden and increased compliance risk may be too much for them to keep discretionary dealer credit pricing. If they keep it, they may tweak their compensation formulas with limits or controls, maybe to something like the NADA’s recommendations. If they change to non-discretionary pricing models, the challenge will be for them to create new compensation formulas that are competitive and attractive to dealers. As noted in prior articles, dealers must create and maintain solid fair lending policies, procedures and practices. If you haven’t done it yet, you need to make it a priority. Be prepared to prove to your lenders and your regulators that you have a solid program in place. In addition, now you should also be prepared for changes in the compensation lenders offer when they buy your retail contracts. CHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.
SAFETY
NEWS
GM Recalls Trucks for Stalling TRANSFER PUMP MALFUNCTION General Motors is recalling 9,733 model year 2012-2013 Chevrolet Silverado HD and GMC Sierra HD vehicles equipped with 6.6L diesel engines and dual fuel tanks. In the affected vehicles, the transfer pump which moves fuel from the rear tank to the front tank could malfunction and cause the fuel gauge to indicate an inaccurate reading. If the fuel gauge indicates an inaccurate reading it may result in the vehicle unexpectedly stalling, increasing the risk of a crash. General Motors will notify owners and dealers will inspect and replace the fuel transfer pump, as necessary, free of charge. GM’s number for this recall is 13420.
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ASSOCIATION
NEWS
Join Us at the Beach for Education and Fun AIADA’S 45TH ANNUAL CONVENTION JULY 17-19 IN FLORIDA Join us for AIADA’s 45th annual convention! It will be held July 17-19, 2014, at the beautiful Hilton Pensacola Beach Gulf Front in Pensacola, Florida. This will be a must attend convention full of learning and family fun. Bring your family to the beaches of Florida and learn in an all-inone package! While there, you will learn from industry leaders such as Luther Strange (Alabama Attorney General), Gideon Sinasohn (Senior Attorney, FTC), Joe Lescota (Director of Dealer
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Development at Northwood University), Alabama’s Director of Revenue Motor Vehicle Division, Jeff Ingram and John Galese (The Law Offices of Galese & Ingram PC) and Rod Heasley (Executive Vice President Peritus Portfolio Services). There will also be a panel discussion and a must attend compliance workshop by Jeff Ingram. You don’t want to miss this great lineup of speakers. See page 25 for the enrollment form, or contact us at (205) 9421000 for more information.
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ASSOCIATION
NEWS
AIADA Partners with STARS GPS STARS BECOMES EXCLUSIVE PREFERRED PROVIDER
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Alabama Independent Automobile Dealers Association is proud to announce a partnership with STARS GPS. As the association’s exclusive preferred provider for GPS and starter interrupt technology, STARS GPS brings a true focus on education, training and consulting, industry best operating practices, effective collection procedures and compliance related issues. This year, STARS will enter its fourth year as the exclusive national corporate partner for NIADA, and maintains IADA association relationships in 11 other states. “We are developing events over this next 12 months to create opportunities for our dealers to be more informed and understand the issues they face in 2014, and beyond,” said R. Allen Douglas, president. Look for “Regulations and Revenue After the Handshake” to be presented this year. This informative education and training event will go into detail about the changing legislative climate. While challenging, this is something every dealer must get informed about and plan for. STARS will continue to stay involved, informed and active in helping disseminate information to aid the dealer in a proactive approach to keep ahead of these issues. “Also, we are delighted to work in conjunction with Larry Carter and A.R.A. GPS Systems to implement this program in Alabama,” Douglas continued. “Professional, dependable, quality driven people are always the cornerstone of any endeavor, and the addition of A.R.A. GPS will only strengthen our results.” What issues are facing dealers in 2014 that must be on their radar? Such a loaded question! Financing, inventory, personnel, cash flow, pricing policies, advertising, compliance, red flag rules, OFAC, disclosure, employee training, FTC, DOJ, CFPB, DMV, OSHA… Where does the list end? This is not all inclusive, but it is exhausting. First and foremost are the national conversations concerning lending practices. To think that this conversation is just national, and far away from your local dealership, is a badly misdirected thought. To put it in the words of what many of us heard from our parents while growing up: “You’ve got another think coming!” This national directive (it is no longer a debate) on lending practices is a targeted focus on deceptive, unfair and abusive practices that negatively affect the consumer. While largely driven by the AIADA
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Consumer Financial Protection Bureau, it is also championed by the Federal Trade Commission, Department of Justice and many local jurisdictions. NIADA recently spent three days in Washington, D.C., during their National Leadership and Legislative Conference. During these three days, it became apparent that much more must be done to get out our message of what truly is happening within your dealership. These agencies have the mindset that the secondary finance industry, especially with emphasis on used car dealerships, are in their very nature abusive and overbearing to the consumer. The high interest rates, large markups and advertising practices draw quick attention. Justification will have to be shown, by you, for your practices and policies. It also became evident on this trip that our voice can be heard. Participants from across the country met with 45 to 50 United States legislators from the Senate and House of Representatives. In addition, several state IADA’s attendees met with representatives from their own state. We learned how active our lobbyists are in getting our message to the national level, but it was quite apparent that much more must be done. I cannot express strongly enough how important it is that our national representatives in the House and Senate hear from you. They are very open and interested in what is happening with their constituents. You have much more access than any lobbyist. Especially with this year being an election year, the doors are wide open for input. We must get persistent and have an active, united and consistent voice of how misdirected current assumptions are within these agencies about our industry. Do this in conjunction with your local IADA. Cellular communication changes 2G, 3G, CDMA? Many of us lived through the migration of cellular communication from the analog to digital world several years ago. Why do we need to change now? Truly, we don’t. The sunset of the 2G networks are dictated by the cellular carriers because they are making room for larger bandwidths and faster data transfer. With the high increase and use of mobile devices, and the resulting streaming of large graphic files like videos and websites that put an amazing amount of data at your fingertips, the necessity exists to move larger amounts of data more quickly. Our industry has no need
for this newer, faster format. Because the packets of data we transfer in order to make your GPS systems function are quite small, we will see a negligible increase in performance. When systems we offer today perform a communication return in six to 10 seconds, what difference will it make if it becomes a second or two quicker? However, we are forced to adopt this new platform since the carriers will dismantle their existing 2G capabilities. The time period for the dismantling varies between carriers, but some have it under contract to last through 2017 and have verbally committed it to last into 2019. So what do you do? First of all, be aware. Plan your adoption of the new technology to be consistent with the length of the loan terms within your portfolio. This year we will see that migration start, but each finance operation should make an informed decision based on their specific needs. Don’t make a hasty decision and throw the baby out with the bath water. The cost of these new systems is greater than the improved communication gained, so plan properly. We are advising, and consulting with, each of our dealers on an individual basis to be sure the right technological and financial decision is made. This also includes which format is best for you concerning 3G vs CDMA. Participation in your local IADA: The mindset towards membership in an association seems to be as varied as the type cars a dealer sells. We work in many states, and nationally with NIADA. I have seen firsthand the passion and dedication of many to work diligently for the industry, and especially for the dealer and finance operation. Education, licensing, dissemination of information, legislative intervention and DMV assistance are just a few areas that these associations focus on completely with the dealer in mind. Events scheduled by your association are not designed to create revenue. While you may pay a fee for that event, they are there to provide you with an opportunity to learn what is going on in the world around you and keep you up to date with what you should be doing. Especially with the current heavily legislated atmosphere building in our industry, there is no substitute for getting involved with your association. It will truly only benefit you. The sounding board provides real CONTINUED ON NEXT PAGE W W W. A L A B A M A I A D A . C O M
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AIADA Partners with STARS GPS ARBITRATION CORNER
experiences from those facing the same challenges you are. It will make you stronger, and more capable, to address those challenges. It also creates a larger body of business people with a louder voice, which will be heard more quickly. NIADA 20 Groups: Do you want to know what other dealers with similar challenges are doing to combat them? Do you want to learn more effective and efficient ways to approach your particular business? Information is knowledge. The more you get, the better, and more profitable, your business will be. Once again, in today’s climate, the very best thing you can do is get involved. Sticking your head in the sand will find you there on that quiet beach by yourself when the legislative truck runs over you. You won’t see it coming and will wonder where it came from. 2014 will bring, as each year does, new challenges and opportunities. This one article does not hold enough space to get detailed about the topics mentioned above. Each of those could easily take a page on their own. Look for opportunities to learn more. Your success will depend completely on you. Doing things as you have in the past will bring you the same old results. Look to the resources available all around you and you will learn that there are many ways to grow, drive more customers to your dealership and become compliant, efficient and even more professional with your business. It will show when those new customers walk in your door.
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PIECING TOGETHER THE STRUCTURAL DISCLOSURE POLICY PUZZLE A FEW CLARIFYING POINTS
Although the revised NAAA Arbitration Policy has been effective since last September, some questions linger about structural disclosures, said Manheim Director of Arbitration Matt Arias, who serves as co-chair of the NAAA Standards Committee. “There are just a few basic points to remember that can help our members clarify which disclosures we recommend be used in what conditions,” he said. First, the Structural Damage Disclosure should be used when a component that is deemed structural has existing permanent damage with poor prior repairs that exclude refinish only, Arias stated. “This damage includes kinked metal, but not bent,” he pointed out. “This disclosure is eventually replacing frame damage and frame/ unibody.” Apply the Certified Structure Repair/ Replacement Disclosure to situations when the structure of the vehicle has been repaired or replaced according to OEM guidelines, Arias explained. “But it must also fall within NAAA’s Used Vehicle
Measurement Standard, and the disclosure supersedes the Certified Frame Repaired Disclosure,” he noted. “If the structure has poor prior repairs, please continue using the Structural Damage Disclosure.” For any modifications made to the structure, use the Structural Alteration Disclosure, Arias said. “This includes but is not limited to lengthening the structure, shortening the structure, welding to the structure, brazing to the structure (excluding exhaust hangers), drilling new holes to the structure and enlarging or elongating the existing born-with (OEM) holes.” He added that the disclosure applies to all modifications made to the structure only, even if aftermarket parts are included on the vehicle. Aftermarket part examples include, but aren’t limited to, fifth wheel brackets, gooseneck brackets, receiver hitch brackets, snowplows, utility bumpers or suspension equipment. If you have questions about the Arbitration Policy, please send them to naaa@ naaa.com.
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WE ALSO HAVE A NABCO CATALOG YOU CAN ORDER PENDANTS, FLAGS, BANNER, KEY TAGS, DECAL, ETC. IF YOU WISH A CATALOG, CHECK THE YES BELOW. AS A MEMBER YOU WILL RECEIVE UP TO 25% DISCOUNT ON THESE ITEMS. Yes, I want a catalog ______ PLEASE US THE CHART BELOW TO DETERMINE THE AMOUNT FOR SHIPPING YOUR ORDER
* MEMBERS MAY FAX ORDER TO 205-942-3565 AND BE BILLED IF YOUR ACCOUNT IS IN GOOD STANDING. * NON MEMBERS CAN FAX ORDER IF CHARGED TO VISA, MASTERCARD, DISCOVER OR AMERICAN EXPRESS. NOTE: Orders received without proper sales tax and shipping charges cannot be processed.
MEMBER SHIPPING & HANDLING CHART NON MEMBER SHIPPING & HANDLING CHART
Email address is judypbenton@gmail.com. Website is www.alabamaiada.com.
SHIPPING & HANDLING CHART MEMBER AMOUNT UPS UP TO $25 $11.50 $26 TO $50 13.00 $51 TO $100 17.00 $101 AND UP 20.00
MAKE CHECKS PAYABLE TO A.I.A.D.A. , P O BOX 19627, BIRMINGHAM, AL 35219
PLEASE FILL IN IF YOU WANT TO CHARGE ON YOUR VISA, MASTERCARD, DISCOVER OR AMEX:
NON MEMBER AMOUNT UPS UP TO $25 $11.75 $26 TO $50 13.75 $51 TO $100 20.00 $101 AND UP 22.75
CREDIT CARD TYPE: MASTERCARD_____VISA_____DISCOVER_____AMEX_____ EXPIRATION DATE_______________________CVV#_______________(3 or 4 Digit Code on front or back of credit card)
****CASES OF FORMS WILL BE WEIGHED AND CHARGED ACCORDINGLY. RESIDENTIAL SHIPPING CHARGES: →ADD $2.00 FOR RESIDENTIAL SHIPPING ADDRESS →ADD $2.50 FOR RURAL RESIDENTIAL SHIPPING ADDRESS →ADD $2.00 FOR RURAL COMMERCIAL SHIPPING ADDRESS
CARD # ___________________________________________________________________ CARD NAME:______________________________________________________________ ADDRESS FOR CARD_______________________________________________________ SIGNATURE:_______________________________________________________________
ALABAMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION AUCTION MEMBER LIST (Auctions with asterisk participate in coupon book) *Cullman Auto Auction 20971 US Highway 31 Cullman, AL 35179 Sale every Monday 6 p.m. Phone: (256) 736-5200 $600.00 Buy or Sell Fee
*Driver’s Way Auto Auction 100 Driver’s Way Pelham, Al. 35124 (205) 982-1998 www.driversway.com Sale Every Second Friday 10:00am
*ABC BIRMINGHAM 1046 A.E. Moore Drive Moody, AL 35004 Sale every Wednesday 12:30 p.m. In Ops at 12 noon Phone: (205) 640-4040 www.auctionbroadcasting.com $250.00 Buy or Sell Fee
*DAA Dealers Auto Auction Of Chattanooga 2120 Stein Drive Chattanooga, Tn. 37421 (615) 499-0015 Dealer Every Thursday In-Op 9:15am Main Sale 10am www.chattaa.com www.dealersauto.com $600.00 Buy or Sell Fee
*DAA Dealers Auto Auction Of Huntsville 26125 Hwy 72 Athens, AL 35613 Sale every Tuesday 9:30 a.m. Phone: (256) 232-0201 www.dealersauto.com $300.00 Buy or Sell Fee
*ADESA OF BIRMINGHAM 804 Sollie Dr. Moody, AL 35004 Wednesday 9 a.m. Phone: (205) 640-1010 www.adesa.com $1,800.00 Buy or Sell Fee
*DAA Dealers Auto Auction Of Huntsville 26125 Hwy 72 Athens, AL 35613 Sale every Tuesday 9:30 a.m. Phone: (256) 232-0201 www.dealersauto.com $600.00 Buy or Sell Fee
*Anaheim Auto Auction 5600 Oporto-Madrid Birmingham, Al. 35210 Phone: (205) 956-2233 Sale Every Friday Night 6pm www.anaheimautoauction.net $600.00 Buy or Sell Fee
*DAA Dealers Auto Auction Of Mobile 3030 McVay Drive Mobile, Al. 36606 (251) 338-7653 Dealer Every Thursday 9:30am www.dealersauto.com $600.00 Buy or Sell Fee
*AUTO AUCTION OF MONTGOMERY 6142 Troy Highway Pike Road, AL 36064 Sale: Every Thursday In-ops 9:30am Main Auction 10:00 a.m. Phone: (334) 288-3399 www.autoauctionofmontgomery.com $600.00 Buy or Sell Fee
*DAA Dealers Auto Auction Of Murphreesboro 1815 Old Fort Parkway Murphreesboro, Tn. 37129 (615) 217-2848 Dealer Every Tuesday 3:00pm www.dealersauto.com $600.00 Buy or Sell Fee
*BAMA AUTO AUCTION 4103 Gault Avenue South Ft. Payne, AL 35967 Sale: every Thursday 6:00 p.m. Phone: (256) 304-0947 www.bamaautoauctionofftpayne.com $600.00 Buy or Sell Fee
*DAA Dealers Auto Auction Of the South 6723 Highway 51 North Horn Lake, Ms. 38637 (877) 216-6232 Dealer Every Thursday 9:30am Salvage Sale Every Thursday of the month 9:00am www.dealersauto.com $600.00 Buy or Sell Fee
*ABC Baton Rouge 3960 Blount Road Baton Rouge, La. 70807 Dealer Sale Thursdays @ 9:30 AM Phone (225) 778-3737 www.auctionbroadcasting.com $250.00 Buy or Sell Fee
*BIRMINGHAM AUTO AUCTION 125 Meadland Circle Birmingham, AL 35023 Sale every Thursday 6 p.m. Phone: (205) 744-4030 www.bhamautoauction.com $150.00 Buy Fee Only
*DEANCO AUTO AUCTION 3664 South Oates St. Dothan, AL 36301 Sale every Wednesday 10 a.m. Phone: (334) 792-1116 www.auto.deancoauction.com $600.00 Buy or Sell Fee
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GO AUTO EXCHANGE ATLANTA 2244 Metropolitan Pkwy Atlanta, GA 30315 Sale Wednesday @ 12:30 pm 404-464-4567 *Insurance Auto Auctions Inc 150 Bessemer Bessemer, Al. 35022 (205) 426-2300 www.iaai.com Sale Every Wednesday 9:30am $50.00 Buy or Sell Fee *Insurance Auto Auctions Inc 15994 US Highway 431 Headland, Al. 36354 (334) 693-4910 www.iaai.com Sale Every Wednesday 11:30am $50.00 Buy or Sell Fee *Insurance Auto Auctions Inc 16326 Ennis Road Athens, Al. 35613 (256) 233-5899 www.iaai.com Sale Every Wednesday 1:00pm $50.00 Buy or Sell Fee *KELLEY AUTO AUCTION 3485 US Hwy. 431 Attalla, AL 35954 Sale every Tuesday night 6:00pm Phone: (256) 538-9095 www.kelleyautoauction.com $600.00 Buy or Sell Fee *Long Beach Auto Auction 8494 County Farm Road Long Beach, Ms. 39560 Phone: (228) 452-2030 Sale every Wednesday 1:30pm www.lbautoauction.com $100.00 Buy or Sell Fee
21 *LOUISIANA’S 1ST CHOICE AUTO AUCTION 18310 Woodscale Rd. Hammond, LA 70401 Sale every Tuesday 8:30 a.m. Phone: (985) 345-3302 www.lafcaa.com $300.00 Buy or Sell Fee
*Mid South Auto Auction 1657 Old Whitfield Road Pearl, Ms. 39208 Phone: (601) 956-2700 http://midsouthaa.com/ Sale Every Tuesday 9:30am Disabled & Damaged (:00am $1200.00 Buy or Sell Fee
*Manheim Atlanta 4900 Buffington Rd Atlanta, Ga. 30349 Phone: (404) 762-9211 Sal Every Thursday http://www.manheim.com $750.00 Buy or Sell Fee
*North Ala Auto Auction 5255 Wilson Dam Rd Tuscumbia, Al. 35674 Phone: (256) 383-9922 Sale Every Thursday 6:30pm $600.00 Buy or Sell Fee
*Manheim Georgia 7205 Campbell Road SW Atlanta, Ga. 30331 Phone: (404) 349-5555 www.georgisdealers.com Sale Every Tuesday 9:30am $750.00 Buy or Sell Fee MANHEIM MISSISSIPPI 7510 US HWY 49 N Hattiesburg, MS 39402 Sale every Monday 5 pm & Thursday 9 am Phone 615-268-7550 *MANHEIM NASHVILLE 8400 Eastgate Blvd. Mt. Juliet, TN 37122 Ford Factory Sale every other Monday 11 a.m. Open Sale every Wednesday 9 a.m. GM Factory Sale every other Thursday 10 a.m. Nissan Factory Sale once per month Friday 9 a.m. Phone: (615) 773-3800 www.manheim.com/locations/NASH $600.00 Buy & $600.00 Sell Fee
*SHOALS NORTH ALABAMA AUTO AUCTION 651 Fairground Road Muscle Shoals, AL Phone: (256) 381-2745 Sale every Tuesday night @ 6:30 p.m. northalabamaautoauction.com/contact_us $600.00 Buy or Sell Fee *Tallahassee Auto Auction 5249 Capital Circle SW Tallahassee, Fl. 32305 Phone: (850) 878-6200 www.bsamerica.com Sale Every Friday 10:00am $300.00 Buy or Sell Fee
*Manheim Pensacola 6359 North “W” Street Pensacola, Fl. 32505-1710 Phone: (850) 477-3063 Sale Every Tuesday 9:15am Specialty Sale Every 2nd Tuesday 8:15 www.manheim.com/locations/PCAA/events $250.00 Buy or Sell Fee *MIDFIELD CAR AUCTION 1468 Hartman Industrial Blvd. Midfield, AL 35228 Sale every Wednesday and Saturday-6:30 p.m. Phone: 205-923-6535 www.midfielscarauctions.com $200.00 Buy Fee Only
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COME JOIN US. WE ARE GROWING.
Membership in AIADA is an investment in the growth and protection of the Independent Automobile Business in Alabama. We who are already members welcome you aboard and THANK YOU for becoming involved in the association! STEVEN D PHILLIPS B & S AUTO SALES MERIDIANVILLE HAMID BAGHAEI BEL AIR MOTORS INC MOBILE BILL STEWART BILL’S AUTO SALES TROY JEFF DEMEIS CAR FINANCIAL HOOVER TIM COUCH COUCH WHOLESALE AUTO & TRUCK CTR WINFIELD W. FRED DOBBS DAWIN DOBBS CO ALEX CITY LANCE SEESOCK EAGLE IMPORTS LLC AUBURN
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ZIAD TAER GOLDSTAR AUTO BROKERS LLC PELHAM JOHN CUELLAR, GM INTERNATIONAL AUTO WHOLESALERS BIRMINGHAM JEFF GANN STEEL CITY MOTORCARS INC BIRMINGHAM DARRYL CALDWELL THE JUSTON GROUP LLC dba C & H AUTO SALES TROY NHIEM VO, DUC VO, SHARON HUNTER, THU HUYNH. LIHN VO TINTMASTER MOTORS LLC THEODORE
DECEMBER RENEWALS:
(not in last magazine) ALA ASHOURI ALA SALES INC HOOVER AHMAD HAMMOUD AMERICAS GROUP BIRMINGHAM ALVIN CARLISLE CARLISLE CLASSY CARS BIRMINGHAM
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BARNEY CLARK CLARK AUTO & ELECTRIC PELL CITY
CRAIG WESTBROOK BIRMINGHAM BROKER LLC BIRMINGHAM
OZZIE KING KING’S AUTO SALES LLC MUSCLE SHOALS
JENNIFER CALDWELL CONSUMERS INSURANCE COMPANY MURFREESBORO, TN
WILLIAM CLAYTON BURTON BURTON CAMPERS INC CALERA
BRUCE & BETTY DIENES L A AUTOS & MORE INC KINSTON
GENE CAPPS/GLORIA CAPPS G & M MOTORS SEMMES
GEORGE ADKINS BUY GEORGE AUTO SALES INC HUEYTOWN
M. C. MORRIS LONG BEACH A UTO AUCTION LONG BEACH, MS
KATHRYN HOWARD HOWARD AUTOS INC MCCALLA
JIM CLARK, GM CENTERPOINT AUTO AUCTION BIRMINGHAM
TERRY LOWERY LOWERY BROTHERS MOTORS INC BOAZ
KIM WILLIAMS, PRESIDENT CENTRAL MOTORS INC JASPER
MARK HAAS MEETING STREET GRAPHICS HUEYTOWN
LARRY BOESE LARRY BOESE TRUCK & AUTO SALE MACON, MS SHAHIN RADMARD PRESTIGE AUTO SALES BIRMINGHAM MARTY STONE SCOTTSBORO AUTO SALES SCOTTSBORO STEVE HOGGLE WOODALL & HOGGLE INSURANCE AGENCY (Preferred Benefit Provider) GUNTERSVILLE
JANUARY RENEWALS MIKE PEAVY A & P AUTO SERVICE INC MONTGOMERY
WILLIAM J HARDY ADGER AUTO ADGER HENRY GREENBERG APEX MOTORS LLC BIRMINGHAM RONALD JONES AUTO SHINE USED CARS LLC PRATTVILLE RON DELUCCA AUTOMOTIVE FINANCE CORP MOODY CHARLES W REDDEN, PRESIDENT AUTOTEC LLC BIRMINGHAM SHERRY FOSTER AUTOTRADER.COM CHARLOTTE, NC
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O’NEAL CLEVELAND CLEVELAND AUTO SALES SPRINGVILLE TREY BENTLEY CREDIT NOW AUTO SALES HUNTSVILLE ROBERT C BRYANT CROWN AUTO SALES MOBILE JAMES L WILABAY CVC AUTO SALES INC ALBERTVILLE DAVID DAWOUD DAWOUD AUTO SALES BIRMINGHAM DEWEY BARBER DEWEY BARBER CHEVROLET WARRIOR RUSS LARSON J D BYRIDER HUNTSVILLE JEREMY BOLZLE & TIFFANY BOLZLE JEREMY’S AUTO SALES VINEMONT MARTY BOYLES JACKSONVILLE AUTO SALES JACKSONVILLE KENNY HOLLOWAY KENNY’S WHOLESALE INC NORTHPORT
CINDY WARREN MONTGOMERY AUTOMOTIVE GROUP INC MONTGOMERY O F RAMOS/DANIA RAMOS-INFANTE, KNOX NORTH NATIONAL AUTO LENDERS INC MIAMI LAKES, FL JEFF CORNELIUS/ PHYLLIS FRANKS QUALITY AUTO SALES GUNTERSVILLE RAY RODDAM SAM’S AUTO SALES BIRMINGHAM BOBBY SANDERS SANDERS MOTOR CO WETUMPKA LISA BOUDOUSQUIE SLAP OUT AUTO SALES WETUMPKA JERRY GILES/ RICHARD JOHNSON SUPERIOR AUTOS TUSCALOOSA JOSH GUNTHER, PRESIDENT TEAM GUNTHER DAPHNE KEITH BROWN TRUSSVILLE MOTORS LLC TRUSSVILLE VERLON AND SHEILA PAINTER VERLON PAINTER MOTORS INC ALBERTVILLE
FEBRUARY RENEWALS JEFF WREYFORD/ MIKE GERRISH AFFORDABLE MOTORS LANETT
LEON J ALEXANDER ALEXANDER DODGE/ CHRYSLER/JEEP ALBERTVILLE BILLY THOMPSON BILLY THOMPSON MOTORS SYLACAUGA J SHANNON BROWN BROWN’S KAR MART INC ALBERTVILLE LINDA HILYER C & J AUTO SALES INC FORT PAYNE MAURICE NUBY CARS-4-YOU/DBA PREFERRED IMPORTS BIRMINGHAM KEITH PARKER CASINO AUTOMOTIVE LLC MOBILE DAVID ANDREWS/JIM BRANNON CITY AUTO FINANCE LLC MEMPHIS HERSHEL CLAYTON CLAYTON CAR COMPANY TONEY LARRY D PUCKETT COMMUNITY CARS INC PRATTVILLE STEVE GOQUEN D & S AUTO SALES ARDMORE DARREL PALMER DARREL PALMER AUTO SALES MONTGOMERY BARRY/NATALIE SEARCY E-Z RIDE AUTO SALES MUSCLE SHOALS DARRELL PETTIE FIRST CLASS AUTO SALES PLEASANT GROVE PETE SELLERS GULF COAST MOTORS INC BAY MINETTE
RONNIE WARE/DON GENTRY GENTRY & WARE MOTOR CO OPELIKA
BILLY L PRESSLEY PRESSLEY AUTO SALES OXFORD
RAMI ACHDUT HIGHLINE IMPORTS INC BIRMINGHAM
JOHN D HIGHTOWER III ROAD RUNNER AUTO SALES TUSCALOOSA
JACK HOLLAND HOLLAND FAMILY AUTOS ADAMSVILLE
BILL HUDGENS SOUTHEASTERN CAR & TRUCK MONTGOMERY
JIMMY WELLS JIMMY WELLS USED CARS INC RAINSVILLE
LARRY JEAN SYBLE’S AUTO SALES MERIDIANVILLE
JERRY KILPATRICK JERRY V KILPATRICK MOTORS INC BOAZ JOHN DUNN JOHN DUNN AUTO SALES SYLACAUGA
TERRY SHELL TERRY SHELL MOTORS ALBERTVILLE MITCH EARLY/JOHN WATSON THE LEMON LOT LLC DOTHAN MIKE TIDWELL TIDWELL MOTORS ONEONTA
JANET LANGFORD BONCI LANGFORD’S QUALITY CARS ENTERPRISE JAMES A CONHEADY MAGNOLIA AUTO SALES INC DECATUR CHARLES T MALONE MALONE AUTO SALES INC CINTRONELLE WAYNE WILKINSON NATIONAL ADVANCE AUTO SALES FLORENCE DAVE LAWSON MIDFIELD CAR AUCTION MIDFIELD
ANDREW TURNBULL TURNBULL GROUP LLC STERRETT WAYNE GRAVES WAYNE’S AUTO SALES ALABASTER WAYNE REAVES WAYNE REAVES AUTO SCHOOL/COMPUTER MACON, GA JIM/MICHELLE SHELTON WE FINANCE AUTO SALES LLC HAZEL GREEN
CHRIS MUNDY MUNDY MOTOR CO INC CHELSEA STANLEY FOWLER NORTHWOOD AUTO SALES LLC NORTHPORT MARK A ODOM SR ODOM CHEVROLET EUTAW GARRICK PARKER/ GABRIEL DUNCAN PARKER PLATINUM MOTORS LLC MADISON
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Advertising Game Plan: No Audibles Allowed FTC PUTS DEALERS ON NOTICE
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I-formation, twins right, Z motion, halfback dive. “Omaha! Omaha!” Now, I don’t know if Peyton Manning called the isolation dive play over the course of the Denver Broncos’ playoff run, but I do know we heard “Omaha” enough times that the Chamber of Commerce in Nebraska’s largest city owes him a key to the city. In the days following the Broncos’ playoff win over the San Diego Chargers, reporters asked the quarterback to explain the significance of his screaming of “Omaha” before virtually every snap. “I’ve had a lot of people ask what ‘Omaha’ means,” Manning said with a sly smile. “Well, Omaha, it’s a run play, but it could be a pass play, or a play-action pass, depending on a couple of things: the wind, which way we’re going, the quarter and the jerseys that we’re wearing. It really varies, really, from play-to-play. So there’s your answer to that.” While changing the play is entirely acceptable when you are a Hall of Fame quarterback trying to fool a defense, it is as taboo as it gets when you are a licensed motor vehicle dealer trying to sell cars. So taboo, in fact, that the Federal Trade Commission put dealers on notice once again that “hiding the ball” or misdirection tactics will not be tolerated in automobile transactions. On Jan. 9, the FTC announced “Operation Steer Clear,” a nationwide sweep that focused on the advertisements of 10 dealerships from six states. The FTC charged those dealers made material misrepresentations in print, Internet and video advertisements that led consumers to believe they could purchase or lease vehicles for certain terms when such was not the case. What did these dealers do to “hide the ball?” • Two California dealers printed advertisements that prominently displayed a price for a vehicle – for example, a 2008 Chevy Tahoe LS for $17,995. However, in fine print at the bottom of the page, the dealer added this disclaimer: “Prices after $5,000 down + Tax, Lic and Doc fees on approved credit.” So while the ad led consumers to think the price of the vehicle was $17,995, it was actually $22,995. • Several of the dealers advertised leases with zero due at lease signing. Yet when the dealer advertised the specific models available for lease at a particular payment, the fine print said “first payment, acquisition fee, tax, title due at lease signing,” or that a down payment was due at signing to get the advertised payment. AIADA
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BY SHAUN PETERSEN According to the FTC, the impression left in consumers’ minds was they were not required to leave any money with the dealer to get the advertised monthly payment. But when it came time to close, the dealer slapped them with a bill for potentially thousands of dollars. • Multiple dealers offered vehicles for $99 a month and zero down. That offer was bold and easily recognizable. Sounds like a great deal. But if consumers were able to see the fine print that flashed across the video screen or was placed at the bottom of a print ad, they would have noticed the $99 per month offer only applied to the first few months of the loan – after which the payments increased to $534 for the balance of a 72-month loan. Lest we fall into the trap of thinking this was a one-time splash, Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said, “We have many other investigations in the pipeline. This is a priority for the FTC and you will see many other cases in the auto-related area.” And remember, if the FTC is looking for cases, state attorneys general are right behind them. In order to protect yourself from an enforcement action, remember your advertisements cannot change the play on the consumer. If you make a particular offer, nothing in the fine print can alter the material terms of that offer. Moreover, all material terms of the offer must be clearly and conspicuously disclosed. For print ads, disclosures have to be large enough and readable enough for a consumer to notice, read and comprehend them. Disclosures in videos must be loud enough, slow enough and in a format sufficient for a consumer to understand them. If you use a third party vendor, do not simply rely on its statements that the advertisements are compliant. Ensure the ad has undergone a thorough compliance review. Remember, it is your dealership’s name on the ad. Wonder who the FTC will chase? As you stand in the huddle of your advertising team and the temptation to “change the play” comes, remember the FTC’s team of attorneys is roaming the landscape and will hit you harder than Ray Lewis ever did. Adopt this game plan: No audibles allowed. SHAUN PETERSEN IS A PARTNER WITH THE LAW FIRM OF MAC MURRAY, PETERSEN & SHUSTER LLP AND HEAD OF THE FIRM’S AUTOMOTIVE PRACTICE. HE SERVES AS NIADA’S REGULATORY COUNSEL.
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Black Book Introduces New Mobile Application APP TO HELP SPEED PROFITABLE DECISIONS Black Book recently announced Black Book Digital, the company’s second-generation mobile application. According to Black Book, the application offers a new design with simple-to-use features to help automotive professionals make smarter decisions. Built from the ground up, Black Book Digital offers accurate and reliable vehicle data and is built to accommodate today’s speed of business. Black Book Digital offers users quick access to more data on specific vehicles than ever before. The new application delivers a 360-degree valuation perspective, with information layers that offer vehicle valuation data and additional modules that include Carfax and AutoCheck, trends, vehicle specifications, photos, Demand Index and complete market report information. Users are able to gain access to valuation data offline, ensuring more profitable decisions in split-second environments. They can also leverage Black Book Digital’s Q-List, which helps automotive professionals manage inventory and share information with others in their decision channel, no matter their location. Mike Williams, vice president of direct sales and mobile for Black Book, believes 2014 represents a turning point for mobile within the automotive industry. “Mobile usage among automotive professionals is expected to continuously grow in the coming years, and we now have devices that offer cutting-edge technology and features. Black Book Digital is designed to enable and empower these professionals so they can think faster, think smarter, and, ultimately, make more profitable decisions whether they’re in the field, at an auction or on the sales lot.” For more information and directions on downloading the application to an iOS or Android mobile device, visit www.BlackBookAuto.com/think. W W W. A L A B A M A I A D A . C O M
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