LA 0215 by NIADA

F E B R U A R Y / M A R C H

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AUTO DEALER BEST PRACTICES

MARKETING TO MILLENNIALS

WASHINGTON UPDATE

CHRISTMAS GIVEAWAY

Open Road

2015 LOUISIANA

INDEPENDENT

AUTOMOBILE

DEALERS

A S S O C I AT I O N

magazine

COMPLIANCE OUTLOOK FEATURE STORY PAGE 18

What’s in Store for AUTO FINANCE in the YEAR AHEAD?

T H E

O F F I C I A L

M A G A Z I N E

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L O U I S I A N A

I A D A

2015

DALLAS, TEXAS Permit No. 2079

PAID

PRSRT Standard U.S. Postage

VISIT US AT W W W.LOUISIANAIADA.COM

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06 MARKETING TO MILLENNIALS

12 WASHINGTON UPDATE

13 CHRISTMAS GIVEAWAY

14 POWER PLAY

16 NEW SALES FOR ALTERNATIVEPOWERED VEHICLES DIP

18 COMPLIANCE OUTLOOK 2015

CLASSES ACROSS THE COUNTRY

The Certified Master Dealer program one of the industry’s most respected training programs. NIADA recently announced its schedule for CMD classes in 2015. Class locations include Harrisburg, North Carolina; Reynoldsburg, Ohio; Lakewood, Colorado and Dallas, Texas. For more information visit http:// www.niada.com/certified_master_ dealer.php or contact Georgia Brown at georgia@niada.com or 800-682-3837.

ADVERTISERS INDEX

ABC BATON ROUGE …..…..…..…..…..…..…. IBC ADESA …..…..…..…..…..…..…..…..…..…..…..…..…11 AUTOZONE …..…..…..…..…..…..…..…..…..…..…13 BLACK BOOK…..…..…..…..…..…..…..…..…..…..… 5 LA’S 1ST CHOICE AA …..…..…..…..…..…..…. IFC LEEDOM GROUP …..…..…..…..…..…..…..…..…. 9 MANHEIM.COM…..…..…..…..…..…..…..…..…..… 7 MANHEIM PENNSYLVANIA …..…..…..…..…..15 VAUTO…..…..…..…..…..…..…..…..….BACK COVER

OFFICE

For information on how to become a member please contact Dwayne Tambling. dwaynetambling@gmail.com 225-675-3675

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 Open Road is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 817640-3838. 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 Open Road or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute anendorsement of the products or services featured. Copyright © 2015 by NIADA Services, Inc. All rights reserved. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT & GRAPHIC ARTIST Chantae Arrington • chantae@niada.com ART DIRECTOR Christy Haynes • christy@niada.com PRINTING Nieman Printing

ASSOCI AT ION NE W S

Executive Message I would like to thank all of our Independent Dealers and Associate Members for your support. We would like to wish everyone a great start to this new year. It has been a real pleasure serving on this board. I really enjoy connecting our Independent Dealers with our Associate members. Dwayne Tambling, Executive Director of LIADA

Board of Directors PRESIDENT Eric Stroderd MyDealerSupply.com 850 Kaliste Saloom Rd Lafayette, LA 70508 ericstroderd@mydealersupply.com 337-288-7842 cell 877-427-1238 office

Board Members 2014-2015 Doug Perry Doug Perry Wholesale Cars 734 Bayou Shores Drive Monroe, LA 71203 morgwaller@hotmail.com 318-372-7322 phone 318-343-8611 fax

VICE PRESIDENT Kevin Reeves Dixieland Autoplex 15600 Florida Blvd. Baton Rouge, LA 70819 kevin@dixielandautoplex.com 225-248-6519 office

Scott Ledet Ledet’s Auto Sales P.O. Box 1505 Gonzales, LA 70707 scottledet@ledetsautos.com 225-644-2886 phone 225-644-2419 fax

EXECUTIVE DIRECTOR Dwayne Tambling Dwayne Tambling Auto Brokers 46001 HWY 22 St. Amant, LA 70774 dwaynetambling@gmail.com 225-675-3675

Jason Hawthorne Sam’s Used Trucks & Cars 378 Front Street Winnboro, LA 71295 samscars@bellsouth.net 318-435-1146 phone 318-201-6660 cell

SECRETARY Kevin Rembert 15481 Airline Hwy Baton Rouge, LA 70817 kevinprembert@yahoo.com 225-806-9090 cell 225-275-8088 phone 225-275-6889 fax

John Poteet Louisiana 1st Choice Auto Auction 18310 Woodscale Road Hammond, LA 70401 johnpoteet@msn.com 985-345-3302 phone 985-343-5735 fax

TREASURER EJ Daigle Ledets Autos 122 S Burnside Ave Gonzales, LA 70737 ejdaigle@ledetsautos.com 225-644-2886 phone 225-937-0772 cell President Emeritus J.L. Richard P O Box 481 Carencro, LA 70520 jlrichard@carencro.org 337-258-2272 phone 337-896-6278 fax

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Junior Gonzalez Pan-Am LLC 201 Chalet Drve Lafayette, LA 70508 juniorgon@aol.com 337-233-1807 phone 337-278-7682 cell Matt Pedersen Mike Pedersen’s Lake Charles Auto Auction 235 E. Broad Street Lake Charles, LA 70601 Matt@mpcaa.com 337-433-8664 phone 337-436-7197 fax Michael McCain Magic Motors 7960 Florida Blvd Baton Rouge, LA 70806 magicmotorsbrla@yahoo.com 225-588-3404 phone 225-456-2134 fax

Danny Moore D Moore Auctioneers 15481 Airline Hwy Baton Rouge, LA 70817 dannymoore76@yahoo.com 225-752-8630 phone 225-752-8907 fax Phillip Crain Ride Time Auto Sales 419 N. 18th St Monroe , LA 71201 philip@ridetime.biz 318-410-9250 phone Chuck Fuselier Manheim Lafayette 1611 St. Mary Scott, LA 70583 chuck.fuselier@manheim.com 337-408-2035 phone 337-408-2037 fax David Albritton Redline Motors, LLC 605 Cypress Street West Monroe, LA 71291 dcalbritton@gmail.com 318-605-3655 office 318-372-3573 cell 318-605-3991 fax Keith Kiraly Rock n Roll Auto Sales LLC 6600 Westbank Expressway Marrero, LA 70094 keithkiraly@yahoo.com 504-368-3688 office 504-304-2027 fax 504-415-6192 cell Rudy Martinez Ponce’s Imports 6060 Florida Blvd. Baton Rouge LA 70806 rudymp@cox.net 225-268-9556 cell 225-927-4246 office

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AUTO DEALER BEST PRACTICES

NIADA Announces 2015 CMD Schedule

WHAT’S NEW

Director of Dealer Development and former retail automotive executive with more than 25 years of frontline dealership, selling management and training experience. Learn how to improve your business in the ever changing auto industry. Debby Chesterman of World Auto Sales in Nebraska City, Neb., said, “I encourage anyone who wants to continue in the auto sales industry to attend a CMD training. This is a whole new world we are operating in. Things that used to work – don’t. This information is challenging, makes one dig into their own financials to see where improvement can be made and profit leaks abated. I found some gold nuggets in this training to put me on a faster track to a more successful and profitable dealership.” For more information visit http://www.niada. com/certified_master_dealer.php or contact Georgia Brown at georgia@niada.com or 800682-3837.

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CLASSES TO BE HELD IN MULTIPLE STATES To step toward a more profitable and successful dealership, NIADA offers the Certified Master Dealer program. Since it was developed in 2001, it has become one of the industry’s most respected training programs. Dealers bring a wide range of experiences to each class and leave with new strategies for analyzing their business practices and increasing their bottom line. NIADA recently announced its CMD schedule for 2015. Class locations include Harrisburg, North Carolina; Reynoldsburg, Ohio; Lakewood, Colorado and Dallas, Texas. “The CMD class needs to be a top priority for any dealer who wants to thrive in the used car business,” said Jason Matthews from Matthews Motor Company in Covington, Penn. “There is no room for error anymore. You need to know the right way to run your business or you will be out of business.” Instruction is provided by Joe Lescota, NIADA

F E B R U A R Y / M A R C H

CMD Program Prepares for Nationwide Tour

OPEN ROAD

Inside

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DE A L ER P R AC T ICES

Auto Dealer Best Practices: Add-On Products

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SELL ADD-ON PRODUCTS WITH CONFIDENCE

Auto dealers have been operating in an environment of increased regulatory scrutiny for years, and industry observers have been warning it isn’t a matter of if, but when, greater oversight will arrive at the doorstep of auto finance companies. Last September, the Consumer Financial Protection Bureau took its first official move to establish greater oversight of big automakers, a move ultimately expected to allow the agency to examine the largest auto financers. Many of the bureau’s concerns have been in the form of growing attention on whether auto finance customers may be led into more expensive loans when they qualify for cheaper ones. Another primary area of concern that has gathered more attention in the past year, but has been the subject of DOJ action for several decades, is the area of add-on products. The concern has been that customers may be misled about the terms and benefits of these products. When we talk about add-on products, traditional examples include credit life and disability insurance, but the most common example is the extended warranty or service contract. More recently, however, the industry has seen a proliferation of products that serve various niche consumer needs, including credit unemployment insurance, GAP insurance, GAP waiver, debt cancellation or debt suspension products, roadside hazard and towing and, of course, windshield, glass or tire protection products. It is important for dealers to have a well-documented sales practice involving vehicle financing and back-end products sales. It also makes good business sense for auto finance companies and dealers alike to perform a meaningful review of loan origination practices. Auto finance companies want to make sure that sales practices at the dealerships they work with are transparent and well-defined, and

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that adequate training is provided to employees. A well-documented sales process can be especially important when it comes to financing and add-on products: When does a consumer first become aware of additional products? When are they getting the product summaries? Which products are offered in your finance office? If all of these items are not already documented, action should be taken to close any process gaps right away. Here are some best practices you can incorporate into your dealership that will allow you to sell add-on products with confidence. Create Product Menus A common, customer-friendly approach to product offerings is to employ “menus.” Your finance and insurance office is an extension of the sales team and is there to increase profitability by providing financing to your customers, but it should also be there to protect your dealership. Menus help ensure consistency, which is key. A menu will help drive a common process for every sale, answering the regulatory requirement to present all customers with the same products. At the same time, it facilitates an effective sales discussion with the potential customer. If you are not using menus, salespeople could be missing some opportunities or prejudging customers. When salespeople decide a certain client probably won’t purchase a given option, they are taking the decision out of the hands of the customer. Offer customers all products consistently with the full selection of the features and benefits your dealership has to offer. Let the customer make the decision. Build a Catalogue of “Proof Points” When you shop for yourself, you likely explore many different online sources to better understand the benefits and features of products you are considering purchasing. More importantly, you likely look for customer reviews or testimonials. Your customers are no different. Compile any resources you or your team members come across into a catalogue of “proof points.” Do some research to find articles, statistics and online reviews that can be a testament to the benefits

of the products you offer. These catalogues can be very effective aids for selling add-on products. Your menu will likely feature a lot of intangible services that are hard for consumers to visualize. Help them visualize the benefits of these “peace of mind” products. Show amounts paid on GAP claims, for example. Most of these sales are about building the real value of the service in the mind of the customer, and these “proof points” are a great way to substantiate the products. Regular, Documented Training is Key Facilitate meetings between sales and the F&I office every week. This will allow regular interaction over how products are moving and any issues that come up, as well as keep the pulse on what is resonating with clients. Training will also help address where financing may be struggling and get things back on track. Often all you need to do is sit down and talk about issues, share success stories and discuss any problems with clients or finance sources. Document any training, what is covered and what materials you went over with staff. In this way you can demonstrate these discussions for regulators if you ever need to produce proof that you have covered a given topic or actions you took to implement new rules or processes. Employ Random Checks We recommend auditing deals on a regular basis to make sure all documents are present and properly executed. A great way to accomplish this is by utilizing your Dealer Management System to choose several types of deals such as close loans and dead deals. Once you’ve determined the subset of deals you would like to review, randomly pick several deals from each subset and review the actual documents. You’ll want to make sure the file contains all disclosures, signatures, product forms and correct pricing. You want to make sure that any exceptions are well documented with sound reasoning. Depending on the size of your dealership, completing customer surveys may be a valuable tool to learn whether customers were offered all of your add-on products and why they found value in some products but

BY CHET HEUGHAN

not others. Monitor Penetration Levels Daily Monitoring add-on product penetration levels can tell you a lot about what is working and what isn’t. A consistently high penetration ratio for a particular add-on product can indicate that your finance manager is consistently offering the product to all customers. It may also confirm customers find value in the given product. Low product penetration levels could indicate lack of consistency in the sales process or point to pricing disparities. Maybe it simply means that customers do not find value in the product. In any case, this information can be a great starting point for further investigation. Honesty Really is the Best Policy It may sound basic, but this one is fundamental. Make sure the customer knows exactly what they paid and what they paid for. Building trust with the public is critical for every dealership to succeed. Avoid ambiguity. The more forthright, open and honest you are in your interaction with the customer, the more they appreciate it. Over the years, I’ve conducted many loan audits and found that some of the best performing loans had nothing to do with the customer’s credit score, but more to do with the fact that the customer completely understood what they had purchased, how much they had paid for it and their obligation going forward. A well-documented and compliant sales practice benefits you in more than one way. It usually produces a happier customer who is more likely to purchase from you again. It also ensures a quality loan for your lender. At the core of all these best practices is the desire to just do good business. In the end, it often comes down to common sense, but it’s an approach that has been proven time and again to be in the best interest of all parties involved, and also the most profitable. CHET HEUGHAN IS DIRECTOR OF APP ONE RISK MITIGATION SERVICES, INDIRECT LENDING FOR WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM.

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INDUS T RY NE W S

PassTime Device Helps Save Kidnap Victim

M A RK E T ING M AT T ERS

Marketing to Millennial Car Buyers

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TO SUCCEED YOU MUST TAILOR YOUR SHOPPING EXPERIENCE TO THESE ASTUTE BUYERS

Over the past 30 years I’ve witnessed many changes in the car business, from the surge of Japanese automakers in the 80s to the shift to SUVs and trucks in the 90s, and recently the rise of hybrids and new technology. But the most significant change to the car business in the past several decades has had nothing to do with products, performance, efficiency or economics. More than any single development, the Internet changed our industry fundamentally and I think for the better. Consumers now have more information at their fingertips than ever before. Whether features, pricing or background information, today we’re working with our most astute buyer ever. The group that best showcases the change is the Millennial Generation, what’s often called Generation Y. These consumers were born between the early 1980s and the early 2000s and grew up with the Internet. They’ve always purchased products and services online, and expect anyone selling anything to have an online presence. Most millennials have never used a travel agent, rarely step inside a bookstore, may have never even waited in line to buy a ticket to a concert, and rarely, if ever, pick up a printed newspaper, much less subscribe to one. They don’t share their parent’s or grandparent’s life experiences and, most critically, they shop differently. Today, the reality is that for retailers or service providers to succeed, they must tailor their shopping experience to the expectations of millennials. In our business, that means modifying decades-old sales techniques and business practices which required that customers come to us. Once they had no choice, but today they do. Millennials may like to touch and feel products like the rest of us, and get the “behind

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the wheel” experience like previous generations, but they are in no way limited to them. Here are a few of the ways we’ve learned to better connect with millennials. Transparency is key. Begin with the fact that, as a group, millennials are the besteducated and informed client we’ve ever had. Before ever stepping foot in a dealership, they typically research cars online. They understand features and selling points before we ever get a chance to present them faceto-face. And because pricing information is so widely available online, and savvy customers now have a better understanding of our products, we need to embrace transparency. Millennials are accustomed to seeing a price online and paying it. They prefer not to haggle and know what a fair price is before they reach us. They want to see their options and make the most of their time. The upside for the car industry is we can now offer a sale price that will be honored by both parties. But be wary of hardsell negotiation tactics, because for the millennial customer another seller is always just a click away. Encourage sharing because it builds loyalty. Selecting a symbol for the millennial generation is simple: The smartphone. It’s their lifestyle hub, and serves as a one-to-one and group communication tool, research device and sharing super machine. Individually written posts, photos and videos created on smartphones are instantly shared across growing and changing social networks. Social sharing channels may come and go, but the act of sharing is no fad. Millennials share their experiences readily, and for retailers and service providers, this offers a powerful tool and an opportunity that

BY MARIO MURGADO

shouldn’t be missed. We’d like all of our customers to post a photo or video of their new car, product or item of clothing. It not only offers a moment of joy for the customer (and retailer), it’s a genuine and authentic expression of goodwill that can be developed into brand loyalty. Consider ways to encourage your clients to share their buying experience through review sites, social channels or just taking a selfie with their new purchase. If you do a good job, great customers can become raving fans. Consider their worldview. How we buy a car is where we again see how the millennial worldview differs dramatically from their parents. Baby Boomers aspired to buy a car, pay it off and “drive it ‘til the wheels fall off,” dreaming of the day without car payments, if we couldn’t pay cash and avoid financing charges in the first place. Millennials just entering the workforce are more comfortable with payments. Their budgets already include monthly payments for rent, insurance and smartphones. Car payments are a viable purchase option and just another payment. Many see themselves making payments forever, and because of it feel less urgency to pay off their vehicles. In the car business, we’ve adjusted our view of pricing accordingly. Now and in the future, we must embrace millennial consumers, as a growing and long-term segment of our customer base. MARIO MURGADO IS PRESIDENT AND CEO OF BRICKELL MOTORS WITH AUDI, BUICK, GMC, HONDA AND INFINITI DEALERSHIPS IN CENTRAL AND SOUTH FLORIDA. HE IS A FORMER CHAIRMAN OF THE FLORIDA AUTOMOBILE DEALER ASSOCIATION AND THE AMERICAN HONDA NATIONAL DEALER ADVISORY BOARD. HE HAS PASSIONATELY SOLD CARS AND TRUCKS FOR MORE THAN 30 YEARS. THIS ARTICLE ORIGINALLY APPEARED IN DEALER MARKETING MAGAZINE.

SUSPECT’S CAR LOCATED WITH AID OF PAYMENT ASSURANCE DEVICE BY USED CAR NEWS

A bad man with bad credit is in custody and the woman he is accused of abducting is free, thanks in part to a payment assurance device. Carlesha Freeland-Gaither, a 22-year-old woman who was abducted on Nov. 2 in Philadelphia, was rescued from the car of her alleged kidnapper, 37-year-old Delvin Barnes, in a Jessup, Md., parking lot Nov. 5, officials said. The suspect’s vehicle had been located by law enforcement using the GPS functionality of a PassTime device installed on the car. Barnes was already under investigation by federal agents in another case and they recognized him in photos taken from surveillance videos. PassTime, which has been in business for over 20 years, manufactures and sells GPS devices used for subprime automotive lending, theft-recovery and vehicle fleet markets. While PassTime devices are not designed as law enforcement tools, PassTime has been periodically called on by law enforcement to assist in their investigations.

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Auction Group Changes Name AMERICAN AUTO AUCTION GROUP NOW XLERATE GROUP

American Auto Auction Group has rebranded itself as the XLerate Group. Established in 2010 under the AAAG name, XLerate Group is comprised of the following independent auto auctions: •AIM Auctions in Motion in California •Badger State Auto Auction in Wisconsin •Charleston Auto Auction in South Carolina • Mid-South Auction in Mississippi • Texas Lone Star Auto Auction in Texas • Your Auction in Florida

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P RODUC T S & SERV ICES

Easy Ways for NIADA Members to Know About Open Recalls STAY ON TOP OF OPEN RECALLS

With 2014 being a recordshattering year for recalls, all eyes are on dealers – especially used car dealers – to know about recalled units in their inventory. News stories about recalls continually focus on independent dealers unaware of recalled cars on their lot. The pressure is on and independent dealers are in an understandably difficult position, unable to perform recall repairs and not getting recall notices from the manufacturer in most cases. Good news – there’s help for you to easily find out about open recalls. Carfax maintains a national database of VIN-specific open recall information reported by the manufacturers that is updated daily. Open recalls are included on Carfax Vehicle History Reports at the very top and in the Detailed History

section of the report. Open recalls are removed from the Carfax Report and the database once the repair is reported to Carfax. There are more than 37 million used cars with open safety recalls currently in operation across the United States. Many of them will likely pass through auctions, be traded in or pull into dealer service bays this year, so you need to be prepared. With that in mind, NIADA members can take advantage of several unique solutions Carfax offers to help identify recalled cars that haven’t been fixed: Email: As a Carfax Advantage Dealer, you’ll receive an email every week alerting you to open recalls on your inventory. Let Carfax do the checking for you so your managers and sales staff will be the first to know which

BY CARFAX

units have an unfixed recall. Reports: Carfax Advantage Dealers also can run all the Carfax Reports they need to know about open recalls at acquisition and disclose them to buyers at retail by showing them the Carfax. If you’re unable to get the recall fixed by a franchise dealer prior to sale, letting a buyer know about the recall(s) is the next best thing. It’ll help address their concerns about recalls and build their confidence in you. App: Protect all your customers by signing them up with myCarfax, a free service that alerts car owners when their car has a recall. It’s a great customer service step that can help you stand out from the competition and keep your customers informed of any recalls now and in the future.

FTC Seeks Comments on Additional Proposed Changes to Used Car Rule

In the end, recalls are good things that help maintain the safety and performance of the vehicles in your inventory. However, when no one knows about the recall, problems can start. Remember that these are safety-related recalls that may result in vehicle damage and/or cause harm to passengers and others on the road if the recalled part fails. While knowing about recalls ultimately is everyone’s responsibility, buyers inevitably rely on experts like you to tell them. Carfax is working to support NIADA members and all independent dealers by helping them stay on top of open recalls.

REGUL ATORY NE W S

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PROPOSED BUYERS GUIDE REQUIRES DEALERS TO DISCLOSE IF THEY HAVE VEHICLE HISTORY REPORTS

The Federal Trade Commission is seeking supplemental public comments on proposed changes to the agency’s Used Car Rule and the Used Car Buyers Guide that the rule requires dealers to display. The Commission is not adopting any final amendments to the Rule at this time. The Used Motor Vehicle Trade Regulation Rule, in effect since 1985, requires car dealers to display a window sticker, called a Buyers Guide, on used cars they offer for sale. The Buyers Guide discloses whether the dealer is offering to sell a used car “as is” (without a warranty), or with a warranty. If the sale is with a warranty, the Buyers Guide discloses the warranty’s terms and conditions, including the duration of coverage, the percentage of total repair costs the dealer will pay, and the vehicle systems that the warranty covers. In states that do not permit “as is” used car sales, dealers must use an alternative Buyers Guide that discloses whether the sale

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is with a warranty or with implied warranties only. In December 2012, the FTC sought public comments on proposed changes to the Buyers Guide as part of its systematic review of all of the agency’s rules and guides. In response to the comments the commission received, the agency also sought comments on additional proposed changes to the Used Car Rule, including: •Requiring dealers who have obtained a vehicle history report to indicate that fact in a box on the Buyers Guide, and to provide a copy to consumers upon request. •Modifying the Buyers Guide description of an “as is” sale to clarify that it means the sale of a used car without a warranty. •Placing boxes on the front of the Buyers Guide for dealers to disclose “non-dealer” warranties. The proposed changes incorporate certain previously proposed amendments, including: •Adding a statement to the Buyers Guide encouraging

consumers to obtain vehicle history reports, to check for safety recalls, and to visit a proposed FTC website for more information. •Adding a statement, in Spanish, on the front of the English language Buyers Guide, advising Spanish-speaking consumers to ask for the Guide in Spanish if they cannot read it in English. The commission also invited comments on alternative approaches that public commenters proposed for the vehicle history disclosure and the “as is” statement. For more information about the Used Car Rule, the FTC offers A Dealer’s Guide to the Used Car Rule, available at www.business. ftc.gov/selected-industries/ automobiles. “Fillable” versions of the Buyers Guide in English and Spanish are available at FTC.gov. The commission vote to publish the Proposed Supplemental Notice of Proposed Rulemaking in the Federal Register was 5-0. The deadline to submit comments was January 30, 2015. All comments

will be posted at www.ftc.gov/ policy/public-comments. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive and unfair business practices and to provide information to help spot, stop and avoid them. To file a complaint, visit the FTC’s online Complaint Assistant or call 1-877-FTCHELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.

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Why 2015 is the Perfect Time to Floor Plan THE BENEFITS OF FLOOR PLANNING

As we enter 2015, the industry looks set to have another great year. As more off-lease volume enters the market, dealers are going to have more options to choose from, driving up bidding in the auction lanes. As such, now would be the appropriate time for you to consider investing in a floor plan provider to help maximize your business efforts. Inventory financing (or “floor planning”) continues to be a viable source for dealers to floor their units. Not only is it relatively easy to use, but most are short term (30 to 60 days) loans with dealers having the option for curtailments or loan extensions. There are many benefits to floor planning, including the ability to expand your offerings, free up capital for other uses and using technology to allow you to focus on what you do best: sell cars. Expand Offerings A flexible floor plan allows

BY NEXTGEAR CAPITAL

dealers of any size to finance used and new vehicles from multiple buying channels, including auction purchases, trade-ins, wholesale units, dealer-owned inventory and even private owner purchases. Because there isn’t a “one size fits all” when it comes to floor planning, the flexibility of a floor plan permits you to meet your specific needs by choosing the programs and terms that are right for you. Free Up Working Capital For years, floor planning has been a resource to help loosen up working capital for dealers. What would you do with increased working capital? Would you open a second lot? Hire a new sales person? Advertise more? The possibilities are endless. Simply put, floor planning provides you the ability to keep your lot full – full of cars and customers.

Conduct Business on the Go Recent advances in technology – such as the use of mobile devices – have made floor planning an easier to use and more powerful tool for dealers by saving time and simplifying the process of buying and selling inventory. With this rise in technology, you now have the ability to browse and purchase inventory from the comfort of your desk or home, meaning you can conduct business on your own terms. While it’s impossible to predict the future, 2015 looks like it’s shaping up to be a great year for the used car industry, which means there’s no better time than now to partner with a floor plan provider. By doing so, you will have the opportunity to expand your offerings, free up capital and conduct business on the go. Most importantly, you’ll put yourself in a position to ultimately grow your business.

5 Unique Questions to Ask on the Phone to Get Appointments

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TURNING INCOMING CALLS INTO GREAT APPOINTMENTS

When you take a phone call from a potential customer, how confident are you that you can turn the conversation into an appointment? Many sales people do not treat incoming calls as excellent opportunities for prospects. Some even think, “If they were serious about buying, they’d come in instead.” I believe the reason many incoming calls do not turn into great appointments is because sales people ask poor questions! I want to teach you five unique questions to ask on the phone in order to build rapport and get better appointments. Here is the list, in no particular order. Are you familiar with this vehicle because you own something similar? This question does two positive things for you. The first is that it opens up the comparison between what they’re driving now and what they’re looking for. Knowing what they drive now will give you valuable information, such as an idea of their financial status and

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what type of vehicle they’re familiar with. Another benefit of asking this question is learning about the type of research the customer has done on the vehicle they’re considering. Did they read about it? Do they know a friend driving it who loves it? Have they been looking for this specific vehicle for a long time? Knowing these facts will allow you to add information value, which will motivate the customer to continue the conversation in person. If I had similar vehicles to also show you, what is most important to you in your next car? This is a great, unique question to test your customer’s flexibility. Are they set on the specific car they’re inquiring about or are they willing to consider similar options, especially if they could save money? The question will also help you uncover the customer’s hot buttons. Typical themes in responses can include safety, economy, style or space.

BY JONATHAN DAWSON

Are you familiar with our dealership and how we do business? Most likely, the customer will not be very familiar with your dealership, and it will give you an opportunity to describe your dealership’s unique selling proposition, pricing strategy and customer service commitment. For example, you could say something like this: “As a family-owned dealership, we are committed to treating customers like family. That promise includes transparent, no hassle pricing. Our reviews and customer satisfaction ratings put us #1 in the entire state.” Other than getting the right vehicle and a great deal, what else is important to you when you’re car shopping? This question affirms your primary goal of finding the right car and offering a fair deal. It also invites the customer to share questions or concerns about the car buying experience and to possibly share any negative experiences they may have had.

HOOD COULD UNEXPECTEDLY OPEN BY USED CAR NEWS

SA F E T Y WATCH

M A N AGEMEN T M AT T ERS

Ford Recalls Sports Cars for Airbags

Ford Motor Co. is recalling 462,911 model year 2005-08 Ford Mustangs manufactured from Aug.1, 2004 to June 30, 2007, and 2005-06 Ford GT vehicles manufactured Feb. 11, 2005 to Jan. 30, 2006. Upon deployment of the driver side frontal airbag, excessive internal pressure may cause the inflator to rupture. In the event of a crash necessitating deployment of the driver side frontal airbag, the inflator could rupture with metal fragments striking and potentially seriously injuring the vehicle occupants. Ford will notify owners, and dealers will replace the driver side frontal airbag inflator, free of charge. The manufacturer has not yet provided a notification schedule. This recall supersedes, in part, safety recall 14V-343 as to the front driver airbag inflators in 2005-08 Ford Mustang and 2005-06 Ford GT vehicles only. The driver’s airbag inflators in 2004-05 Ford Rangers originally sold, or ever registered in, certain hot and humid locations will continue to be addressed by that recall.

SA L ES M AT T ERS In order to make this the best car buying experience you’ve ever had, what do I need to know? This question stresses the importance of customer service and your commitment to providing an excellent buying experience. In many cases, the customer will tell you what will make them comfortable and all you have to do as a sales person is to provide it. I believe customers call in because they’re serious buyers. It is up to you as a professional sales person to respect and engage them effectively. Start asking these five unique questions today to build rapport and to get better appointments! JONATHAN W. DAWSON IS FOUNDER OF SELLCHOLOGY, WHICH IS ALL ABOUT SELLING THROUGH PSYCHOLOGY, AND MORE SPECIFICALLY, PROACTIVE PSYCHOLOGY. JONATHAN’S PASSION IS PROVIDING “TEACHING THAT TRANSFORMS.” HE HAS BEEN TEACHING AND TRANSFORMING SALESPEOPLE FOR OVER A DECADE. HIS APPROACH COMBINES CUSTOMER FOCUSED SELLING, CONSUMER DRIVEN MARKETING AND PEOPLE FOCUSED LEADERSHIP. THIS ARTICLE ORIGINALLY APPEARED ON NCM’S UP TO SPEED BLOG (HTTP://BLOG.NCMINSTITUTE. COM) AND IS REPRINTED WITH PERMISSION.

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WASHING TON UP DAT E

NIADA Government Report

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HERE’S A RUNDOWN OF SOME OF THE LATEST GOVERNMENTAL ISSUES AND ACTIVITY AFFECTING THE USED CAR INDUSTRY FROM NIADA REGULATORY COUNSEL SHAUN PETERSEN AND NIADA LOBBYIST SANTE ESPOSITO.

LEGISLATIVE REPORT H.R. 5403, Reforming CFPB Indirect Auto Financing Guidance Act This bill, supported by NIADA, is one of two emphasized in the association’s lobbying at the 2014 National Leadership Conference and Legislative Summit. Introduced Sept. 8 by Rep. Marlin Stutzman (R-Ind.) and Rep. Ed Perlmutter (D-Colo.), the bill was not acted on during the lame duck session. NIADA’s plan is to gather as many cosponsors as possible on a bipartisan basis to put pressure on the CFPB to do administratively what the bill would require by law. Accordingly, Senate action has been deferred pending that. It now has 149 cosponsors representing both parties. At press time, the CFPB had not changed its policy on the issue. To review, in March 2013 the Consumer Financial Protection Bureau issued guidance that claimed dealer discretion on interest rates in indirect auto financing creates a “significant risk” of unintentional disparate impact discrimination – in effect, attempting to change the $905 billion auto loan market and limit market competition – without prior public comment and without analyzing the impact of its guidance on consumers. H.R. 5403 was introduced to rescind the CFPB’s flawed auto finance guidance and make the bureau more transparent and accountable when issuing future auto finance guidance by requiring public participation. S.2609, MARKETPLACE AND INTERNET TAX FAIRNESS ACT The bill, also a focus of the NLC lobbying efforts, was introduced July 15 by Sen. Mike Enzi (R-Wyo.). It would allow states that are part of the Streamlined Sales and Use Tax Agreement – a 2002 multistate agreement for the administration and collection of sales and use taxes – to require online and other out-of-state retailers with more than $1 million in total U.S. remote sales to collect and remit sales and use taxes on remote sales, opening the door

to possible double taxation on those transactions. NIADA opposed the bill. On November 21, a motion to proceed to consideration of the bill by the Senate was withdrawn due to opposition from members, and it died when it was not acted on by the end of the 113th Congress. All bills not enacted into law by the end of a Congress “die.” They can be reintroduced in the new Congress but would have to start at the beginning of the legislative process and not where they left off. REGULATORY REPORT Department of Labor OSHA recordkeeping: The revised Occupational Safety and Health Administration recordkeeping rule includes two key changes. First, the rule updates the list of industries exempt from the requirement to routinely keep OSHA injury and illness records. Dealers must begin to keep the OSHA 300 log, 301 form and 300A annual summary. Second, the rule expands the list of severe work-related injuries that all covered employers must report to OSHA. The revised rule requires dealers to report all work-related fatalities within eight hours and adds the requirement to report all work-related inpatient hospitalizations, amputations and loss of an eye to OSHA within 24 hours. For dealers located in states under federal OSHA jurisdiction, the rule became effective Jan. 1. Dealers in states that operate their own safety programs should check with their state for the implementation date. CONSUMER FINANCIAL PROTECTION BUREAU AGs seek arbitration regulation: Sixteen Democratic state attorneys general sent a letter to the CFPB urging the bureau to use its authority under the Dodd-Frank Act to regulate the use of arbitration clauses in consumer financial products. The attorneys general argued the use of such clauses is unfair to consumers because it erodes their fundamental right to assert

claims in court. The letter is available at 20141119-AGs_Ltr_ to_CFPB_re_Arb_Clauses_Final. pdf. Company portal boarding form: The CFPB’s online complaint portal permits companies to register to access the system and respond to consumer complaints filed against it. In an effort to streamline and encourage registration, the CFPB has created a boarding form, available at www. cfpbmonitor.com/files/2014/12/ cfpb-2014-0032-0002.pdf, for companies needing to collect information for registering. The CFPB accepted comments on the form through Feb. 2. NIADA is studying the issue. Freedom Stores: The CFPB and the attorneys general of North Carolina and Virginia settled an enforcement action against Freedom Stores, Inc., Freedom Acceptance Corporation and Military Credit Services LLC for allegedly using illegal tactics to collect debts against military service members. Freedom Stores sells furniture and electronics from retail locations near military installations, and an affiliated company extends credit for the acquisition of those purchases. The defendants are required to pay $2.5 million in consumer redress and to pay a $100,000 civil penalty. INTERNAL REVENUE SERVICE Extenders legislation passed: Congress renewed a number of tax “extenders” that expired at the end of 2013 through the end of 2014. The IRS will begin accepting tax returns electronically Jan. 20, when paper tax returns will begin processing. Mileage deduction rates: Beginning Jan. 1, 2015, the standard mileage rates used to calculate the deductible costs of operating a car, van, pickup or panel truck for business, charitable, medical or moving purposes will be 57.5 cents per mile for business miles driven, 23 cents per mile driven for medical or moving purposes and 14 cents per mile driven in service of charitable organizations.

GENERAL MOTORS REPORTED THAT ENOUGH PARTS ARE NOW AVAILABLE TO FIX ALL FAULTY IGNITION SWITCHES COVERED BY ITS RECENT RECALL OF MORE THAN TWO MILLION VEHICLES. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION GM recall: General Motors reported that enough parts are now available to fix all the faulty ignition switches covered by its recent recall of more than two million vehicles. NHTSA urged owners of unrepaired GM vehicles to immediately contact local dealers to get the recall fixed. Administrator confirmed: Mark Rosekind was confirmed by the Senate as the new NHTSA administrator.

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INDUS T RY NE W S

Christmas Giveaway Provides Two Local Families with Vehicles LOCAL DEALER GIVES BACK

trouble making his decision. Victoria Scott, employee at Ledet’s Auto Sales, said, “Both of the families we picked really needed that vehicle. Instead of just pulling a number out of a hat, Mr. Ledet told us to put another vehicle on the giveaway.” He also got some of his friends to fill up both cars before they handed off the keys – not with gas, but with groceries. Ronnie Trosclair, the owner of Ralph’s Market, said, “Every year around Christmas time, we like to take the opportunity to give back to the community. When Scott called me about the van giveaway we thought that was a fantastic idea and we wanted to be a part of it.” The winners of the “Christmas Giveaway” were Laura Eldredge (winner of the van) and Katherine Shelton (winner of the car). According to Ledet, he just wanted to do it because he knows how important it is to someone to

BY TIM SPROLES

receive a gift like that. “My wife had cancer twice. She beat it both times. When you are dealt a card like that your point of view is changed. You understand that other people need help in life. We should all give back to others

when we can,” said Ledet. The Ledets plan to turn the giveaway into an annual event. They hope to get more people involved next year so they can help a larger number of families.

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Not all of us can say that we were given a car for a gift. And the number of us that can say we were given a car as a gift from the owner of a car dealership is even smaller. But on Christmas Eve two Gonzales families actually received cars as a gift from a car dealership. It started with an idea two weeks ago: “This would really help a family that doesn’t have any transportation.” Scott Ledet, owner of Ledet’s Auto Sales, said, “I received a minivan on a trade-in and the idea just came to me. This would be perfect for a family. It would be even better for a family that doesn’t have any transportation.” Ledet put the word out on social media and in local newspapers. They would hold a “Christmas Giveaway” where people could nominate local families. Forty-four families were nominated. Ledet was able to choose two finalists, but was having

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Power Play ASSOCIAT ION NE W S

NATIONAL LEADERSHIP CONFERENCE’S SUCCESSFUL RETURN TO D.C. SHOWCASES NIADA’S GROWING INFLUENCE IN WASHINGTON BY ANDY FRIEDLANDER

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aving introduced itself to the United States Congress and federal regulatory agencies a year earlier, NIADA got down to business in Washington D.C. Some 130 independent dealers and auto industry leaders returned to the nation’s capital in November for NIADA’s National Leadership Conference and Legislative Summit. Their mission: Build on the success of the 2013 event, which brought dealers from across America to Washington for the first time in 14 years to create relationships with government officials and tell the story of NIADA and the used vehicle industry. With that foundation established, the NIADA contingent came prepared to be more aggressive in its interactions, especially with Congress, seeking support for specific legislation and for the industry as a whole. “Last year was a great experience and we were able to make a little headway,” explained Ohio IADA chairman Dan Reel of Reel’s Auto Sales in Orwell, Ohio. “This year, we’re playing a little more offense than defense on some of the issues we’ve been facing.” That offense gained significant yardage during the four-day conference, especially during the highly anticipated Day on the Hill, the highlight of the NLC. NIADA member dealers, joined by auto industry leaders, association lobbyists and NIADA staff, met with 36 members of the Senate and House of Representatives or their legislative staff, making sure the voice of the independent dealer and small business was heard on Capitol Hill. Among the offices visited by NIADA members were those of the leaders of both parties from both houses of Congress – Senate majority and minority leaders Harry Reid and Mitch McConnell, House Speaker John Boehner and House majority and minority leaders Kevin McCarthy and Nancy Pelosi. Sante Esposito of NIADA

lobbying firm Federal Advocates, a longtime Washington veteran, said just being able to get those meetings speaks volumes about the association’s growing influence in Washington. “NIADA’s position in Washington is something that has evolved over the past couple years,” Esposito said as the group returned from the Capitol. “What we saw today was a reflection of the fact that NIADA is now a real player in terms of issues that affect the automobile industry.” Those issues included two bills that were brought up in the Congressional meetings. NIADA expressed support for a bipartisan bill that would make the Consumer Financial Protection Bureau’s operations and guidance procedure more transparent, and opposition to a bill that would allow multiple states to tax Internet sales across state lines. As in 2013, the NLC included two featured speakers from the halls of Congress. Rep. Steve Stivers (R-Ohio) spoke at Wednesday night’s dinner and Sen. Tim Scott (R-S.C.) addressed the association at its Thursday luncheon in the Hart Senate Office Building. Both expressed optimism that the newly elected Republican majority in the Senate – which gave the G.O.P. control of both houses – will push for simpler tax laws and less restrictive regulations on business, allowing small businesses like independent auto dealerships to flourish. “Dealing with higher taxes and higher regulations makes it more difficult to hire people,” Scott said. “My formula for success is simple: Can we get government out of your way? The answer is yes. Should we? The answer is absolutely yes.” Scott speaks from experience as a small business owner. In fact, his story is an embodiment of the American Dream. Raised by a single mother who worked 16-hour days to provide for her family, Scott got his first job – at a gas station – at age 13. After

nearly failing out of high school as a freshman, he was helped by a Chick Fil-A operator named John Moniz, who became a mentor and showed Scott the importance of education. Scott went on to graduate from Charleston Southern University and start an award-winning insurance business from scratch. He was appointed to fill an unexpired Senate term in 2012 and on Nov. 4 became the first African-American elected to the Senate from a Southern state since Reconstruction. Of course, Congress wasn’t NIADA’s only reason for coming to Washington. The group also heard from some of the many federal agencies that regulate the used vehicle industry, allowing them to better understand the complex compliance issues dealerships must contend with in one of the most heavily regulated industries in America – and to provide feedback on how those regulations affect their small businesses. In fact, National Alliance of Buy Here-Pay Here Dealers founder Ken Shilson said the regulators learned as much from the dealers as the dealers learned from the regulators. “Being able to get the top-level regulators here, to let them hear our voice, is absolutely essential,” Shilson said. “We had the opportunity to talk to senior officials and to voice our concerns about certain regulatory matters. And they gave us their views back. That’s the start of resolving some of the issues that face us in the future.” In addition to the regulators’ appearances Wednesday, attendees were also provided updates on the ramifications of the recent midterm elections and the subprime financing market. That night marked the conclusion of the inaugural PAC Cup fundraising competition between NIADA’s four regions. The Cup was awarded to Region II – the Southeast – as its members outpaced the competition by contributing $17,764.80 to the

NIADA-PAC fund. The competition, which began at the NIADA Convention and Expo in June, raised more than $51,000 for the fund, which supports candidates committed to protecting the used vehicle industry and independent dealers. Stivers and Scott both received contributions from the PAC fund during the NLC. Visit www.niada.com/pac.php for information on the NIADA-PAC fund and to contribute. The NLC annually brings together NIADA’s top national leaders as well as those of NIADA’s affiliated state associations to conduct association business, develop their leadership skills and get the latest updates on NIADA legislative, education and business initiatives. This year, those sessions included the first meeting of NIADA’s new Buy Here-Pay Here Commission, created to give BHPH dealers a strong, unified voice in legislative and regulatory matters. “We identified some of the areas we want to focus on and prioritized our goals,” commission director Jeff Martin said. “It certainly helps us start moving in the right direction.” For NIADA as a whole, it’s clear that the right direction is toward Washington, where the association’s significance grows with every visit – which is why this won’t be the last one. “The real takeaway for me came from Harry Reid’s office,” said Alabama IADA vice president Pokey Brimer of Pokey Brimer Auto Sales in Oxford, Ala. “They told us, ‘If you’d been coming here for years in the past, you might not be having the problems you’re having today.’ “I thought that was very telling. Of course, you can’t roll back the clock, but certainly in the future we can take those words to the mountain and we can be proactive. … This is definitely an event that all car dealers should come to.”

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M A RK E T WATCH

New Sales for Alternative-Powered Vehicles Dip EXPERIAN REPORT SHOWS FIRST DECREASE SINCE 2009

Over the last few years, there has been a plethora of attention surrounding hybrid and electric vehicles from consumers and media alike. Whether it’s due to the fact consumers have become more environmentally conscience or that fuel economy standards have begun to take shape, alternative-powered vehicles have steadily risen in popularity. But as the rest of the automotive industry continues to develop more fuelefficient vehicles, can we expect this “green” car segment to keep growing? According to Experian Automotive’s most recent report looking at automotive market share and registration trends, the answer appears to be that the segment’s growth has hit a wall. In the first half of 2014, new sales for alternative-powered vehicles decreased by 3.6 percent from the previous year. This marks the first time that “green” cars have experienced a regression in new sales since the recession in 2009. “Despite arguably being the most talked about vehicle segment in recent memory, we’re beginning to see new sales of alternativepowered vehicles come down slightly,” said Brad Smith, director

for Experian Automotive. “While the reduction could be caused by any number of reasons, we have to keep in mind that there have been significant improvements in gas mileage across all car segments. This combined with the fact that smaller economy vehicles are typically several thousand dollars less than alternative-powered vehicles, consumers are able to get similar car value for their money.” Findings from the report also showed that entry-level CUVs took

over the top spot as the number one vehicle segment among new registrations in the first half of the year. Small economy cars rose to the second spot, while full-sized pickup trucks, which was the top vehicle segment in the first half of 2013, fell to number three on the list. Additionally, the top five CUV models in the first half of 2014 were the Honda CR-V, Ford Escape, Chevrolet Equinox, Toyota RAV4 and Nissan Rogue. The top five small economy car

BY JORDAN TAKEYAMA

models during the same time period were Toyota Corolla, Chevrolet Cruze, Ford Focus, Hyundai Elantra and Nissan Sentra. Other findings from the report include: • Total vehicles in operation in the second quarter of 2014 reached 249.4 million, an increase of 1.5 million vehicles from a year ago. • The average age of vehicles (rolling average of current 15 model year vehicles) decreased to 7.6 years in Q2 2014 from 7.7 years in Q2 2013. • Ford, International and Freightliner were the top three vehicle makes for medium and heavy duty vehicles on the road in Q2 2014. • In Q2 2014, 82.2 percent of all medium and heavy duty vehicles were powered by diesel fuel. • All regions saw a decrease in used vehicle registrations in the first half of 2014, with the exception of the northeast, which saw a 1.8 percent improvement. • Ford F-150, Toyota Camry and Honda Accord were the top three vehicle models in the first half of 2014.

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P RODUC T S & SERV ICES

Manheim Improves Online Search and Bidding Experience CUSTOMER FEEDBACK LED TO ENHANCEMENT OF ONLINE PLATFORMS

To support its commitment to create a better and faster online experience for its customers, Manheim has revved up its search and sales functions on Manheim. com and OVE.com, Manheim’s online sales platforms, said the company. These enhancements are designed to help buyers find relevant inventory quicker and make the sale process easier and faster. As part of the rollout, the floor price can be reached within three bids submittals on OVE.com, and only vehicles priced at or below 120 percent of Manheim Market Report will be displayed in search results. Additionally, only vehicles

with condition reports will be displayed in initial search results, and the success and facilitation fees will be combined into one single “Sell Fee.” “These changes come from buyer suggestions and our research,” said Jenifer Eggert, Manheim’s vice president of digital services. “Our customers want and need a faster and easier way to search for and bid on inventory. They have asked for this, and Manheim has delivered with these great new enhancements.” Dealers have shared with Manheim that setting the starting bid significantly lower than the

floor price can extend the sales process. Now if a starting bid is more than three bid increments lower than the floor price, the starting bid will automatically be raised to three bid increments below floor price. According to customer research, buyers are most interested in vehicles that are priced closest to MMR. With changes to the filter settings, customers can find vehicles closest to MMR prices on OVE. com. Buyers will still be able to adjust their filters to see vehicles without an MMR value. For more information, visit www.manheim.com.

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BODY SHOP

Custom Colors Pete McKnight--Billy Rapp customautocolors@gmail.com 11550 Cloverland Ave. Baton Rouge, LA 70809 Phone: 225-752-5947 Fax: 225-752-5940

DEALERSHIP MAINTENANCE

Concrete Floors of Lafayette Rick Burch rburch140@cox.net 401 Chappuis Ave. Rayne, LA 70578 Phone: 337-205-1145

DEALER MANAGEMENT SYSTEMS

Frazer Computing Inc. Michael Frazer accounting@frazer.com 6196 US Hwy 11 P.O. Box 569 Canton, NY 13617 Phone: 1-888-963-5369 Fax: 1-888-963-3366

DEALER SUPPLIES/FORMS

My Dealer Supply Company Eric Stroderd ericstroderd@mydealersupply.com 311 A West University Lafayette, LA 70506 Phone: 877-427-1238 Romano Promotions LLC Megan Romano megan@romanopromo.com 42062 Gardens Blvd Hammond, LA 70403 Phone: 985-634-8274

DETAILING

M M Topshelf Detailing & Recon Lonnie McCauley lmccauley@eatel.net 4452 Jeffery Dr. Baton Rouge, LA 70816 Phone: 225-603-4600 Fax: 225-622-5994s

FINANCES

American Thrift & Finance Plan d/b/a Local Finance Daniel Oppenheim 600 N Highway 190, Suite 12 Covington LA 70433 daoatfp@i-55.com www.american-thrift.net Phone: 318-698-6312 Association of Finance and Insurance Professionals David Robertson afipdave@gmail.com 4104 Felps Dr. Suite H Colleyville, TX 76034 Phone: 817-428-2434

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Edward E Hall Dan Marzouk dmarzouk@edwardehall.com www.eehallautodealer.com Phone: 888-302-4342 First Consumers Financial, LLC Bob Chedville bob@fcfcarloan.com 14580 Florida Blvd. Baton Rouge, LA 70819 Phone: 225-272-9009

INSURANCE & BONDS

A Foto Insurance Agency of Slidell Sherri Foto Tommy Moran afotoinsurance@bellsouth.net 284 Howze Beach Rd. Slidell, LA 70461 Phone: 985-643-2482 Fax: 895643-2483 Phone: 985-634-8274

Beard Insurance & Financials Henry Beard henry@mybif.com North American Auto Finance www.mybif.com Joey Berthelot 12524 Jefferson Hwy., Ste A jberthelot@northamericanauto- Baton Rouge, LA 70816 finance.com Phone: 225-756-7007 9828 Bluebonnet Blvd Ste. K Baton Rouge, LA 70810 Dwight W. Andrus Insurance Phone: 225-767-0433 Bonnie Dozier bbd@andrus.com Nationwide Acceptance P.O. Box 60970 Martin Less Lafayette, LA 70598 mless@nac-loans.com Phone: 337-981-7300 3435 N Cicero Ave. Chicago IL 60641 Insurance & Bonds, LLC Phone: 800-622-7605 John Sonnier Westlake Financial Services 9131 Interline Ave. #10-B Rob Wilson Baton Rouge, LA 70809 4751 Wilshire Blvd, Suite 100 Jsonnier60@gmail.com Los Angeles, CA 90010 Phone: 225-922-3700 dealers@westlakefinancial.com Triumph Consulting www.westlakefinancial.com Barry Zichichi Phone: 888-8YES-YES barryzichichi@triumphconsulting.net 4705 Laudun St. FLOOR PLAN Metairie, LA 70006 AFC Phone: 800-875-3137 Grover Mann Grover.mann@autofinance.com The Surety Group 1610 St Mary Street, Suite A Scott Reinke Scott, LA 70583 sreinke@suretygroup.com Phone: 337-593-8992 12890 Lebanon Rd. Mt. Juliet, TN 37122 AFC Phone: 844-432-6637 Bob Tillman Fax: 404-351-3237 7844 Greenwood Rd Shreveport, LA 71119 US Agencies Bob.tillman@autofinance.com Jenie Miley www.Afcdealer.com jmiley@usagencies.com Phone: 318-938-4421 1121 South Range Ave. Denham Springs LA 70726 CarBucks Floor Plan Brandon Ziebarth PAINT AND BODY www.usecarbucks.com MasterMatch 381 Halton Road Eddie Krueger Greenville, SC 29607 eddielsufan@yahoo.com Phone: 225-819-6747 1104 Pine St. NextGear Capital Suite A Stuart LaBauve Monroe LA 71207 slabauve@discoverdcs.com Phone: 318-322-2886 Phone: 225-620-1660 Fax: 866-550-8694 RECOVERY ASSOCIATION American Recovery Association GLASS/WINDSHIELD Les McCook Babin’s Auto Glass Inc. homeoffice@americanrecoveryassn.org Brent Babin 5525 N MacArthur Blvd., Suite 135 babinsautoglass@eatel.net Irving TX 75038 13283 Airline Hwy. Phone: 972-755-4755 Gonzales, La 70737 Phone: 225-647-1369 RENT TO OWN Seadra Inc. John Garner john@seadraonline.com 10555 Lake Forrest Blvd. New Orleans LA 70127 Phone: 504-241-0211

AutoStar Solutions Mike Speights mike.speights@autostarsolutions.com www.autostarsolutions.com 1300 Summit Ave., Suite 800 Fort Worth, TX 76102 Phone: 800-682-2215 Cajun Software Fred Dietrich cajunsoftware@att.net www.cajunsoftware.net P.O. Box 41434 Baton Rouge, LA 70835 Phone: 225-272-6652 Usedcars.com by Dealix Tamera Garris Tamera.garris@apd.com Redwood City, CA Phone: 704-243-6652

TITLE – NOTARY

Dealer Track (Casey & Casey, Inc.) Dan Casey & Henry Casey dcasey@autotitle.com hcasey@autotitle.com 3939 Veterans Blvd., Suite 204 Metairie, LA 70002 Phone: 504-456-7438

TOWING & RECOVERY

Smart Tow Kevin Rembert 3045 Rosenwald Rd. Baton Rouge, LA 70807 kevinpremert@yahoo.com Phone: 225-356-3002 Fax: 225-356-3222

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AUTOMOTIVE REPAIR

Coy’s Diesel Sales, Service & Performance Coy Redmond coysdieselspecialties@gmail.com 13317 Airline Hwy Gonzales, LA 70737 Phone: 225-647-3699 Fax: 225-647-2699

Automotive Finance Company 11221 Cedar Park Ave. Baton Rouge, LA 70809 Julie@teamhonda.com www.automotivefinancecompany.com Phone: 225-293-6488

RETAIL PARTS

ABC Auto Parts Larry Pyle dereck@abcauto.com P.O. Box 3627 Longview, TX 75606 Phone: 903-232-3060 Technology Auto Search Technologies, Inc. Chris Jackson chris@autostarsolutions.com P.O. Box 167 Saint Anthony, ID 83445 Phone: 832-533-2080

WARRANTY

Auto Services Company, Inc. Mountain Home, AR 72654 Phone: 318-323-6385 CTR Warranty, LLC Ken Rugg 319 North 3rd St. Monroe, LA 71201 Phone: 318-323-6385 Dealer Services South, Inc. Marc Mader mmader@dealerservicesouth.com 17732 Highland Road Ste. G158 Baton Rouge, LA 70810 Phone: 225-907-7715 PTS Auto Club Brad Hanes 113 North Park Ave Calhoun GA 30701 bradh@ptstax.com Phone: 706-602-0597 Preferred Loans LLC Shana Quick preferloans@eatel.net 12241 Roddy Rd. Gonzales, LA 70737 Phone: 225-644-0304 Fax: 225-644-6862

Steven Tureau & Cody Martin steven@tureaumartin.com 322 E Worthey St. Gonzales, LA 70737 Phone: 225-647-8529 Fax: 225 647-8530

2014-2015

FEBRUARY/MARCH 2015

Tureau & Martin Law Firm, LLC

GPS

ION GPS Alan Rumm alan@ionmycar.com 5925 Phelan Blvd., Ste G Beaumont, TX 77706 Phone: 888-466-4771 Position Plus GPS Zanita Phillips zanita@positionplusgps.com 950 Market St. Shreveport, LA 71107 Phone: 318-286-6297

ATTORNEY

AppOne Penny Bearb 6815 Saukview Dr. St. Cloud, MN 56303 pbearb@appone.net www.appone.net Phone: 877-277-6631 x1228109

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Compliance Outlook

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WHAT’S IN STORE FOR AUTO FINANCE IN THE YEAR AHEAD?

The auto industry appears to be headed for a strong year ahead. In fact, many industry observers are predicting record sales. The average new vehicle transaction price – expected to hit $30,000 by the time this publication hits your computer or coffee table – puts retail sales in a stronger position than they have been in more than a decade. Some analysts predict retail sales reaching 14 million new vehicles in 2015, excluding fleet sales, which would match the record set in 2004. Those impressive numbers should provide a source of optimism for dealers across the country. All the sales forecasting makes me wonder what lies ahead for auto finance compliance. No one can predict the future, particularly when it comes to federal and state legislation or regulatory activity. But it helps to prepare for the most likely scenarios. So here are my predictions for auto finance compliance issues that will affect your dealership in 2015. CFPB Study Results and Recommendations on Consumer Arbitration Agreements The Dodd-Frank Act requires the Consumer Financial Protection Bureau to study predispute arbitration provisions in consumer credit agreements. The CFPB is then required to make recommendations to Congress on their use. Under these provisions, parties agree that they either may or must resolve future disputes through arbitration, rather than in the civil court system. The U.S. Supreme Court upheld these provisions in key decisions in the last few years. It essentially held that the Federal Arbitration Act is a core policy favoring arbitration as a means of resolving disputes. However, the provisions are not favored by consumer advocates, and the Dodd-Frank Act expressly prohibits their use in most residential mortgage loans. So the future of arbitration clauses in retail sales contracts rests with the CFPB’s study results and its recommendations to Congress. There is no deadline for

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the study to be completed. The CFPB has been conducting research for more than a year. Preliminary results were published in December 2013, focusing on consumer credit cards, checking accounts and prepaid cards. Director Richard Cordray announced that the second phase of the research would include a few different activities, including a proposed survey of consumers about their awareness, understanding and assumptions regarding arbitration provisions. I predict that the CFPB will complete its study and will make its recommendations to Congress in 2015. Many expect a recommendation that Congress prohibit pre-dispute arbitration provisions in consumer finance contracts (including motor vehicle retail sales contracts). Instead, I expect a middle ground, like a recommendation prohibiting such clauses in certain types of transactions, or possibly just prohibiting certain features. For example, the recommendation might be to allow arbitration clauses but to prohibit a feature that prohibits a consumer from joining classaction arbitrations. Whether the recommendation is a full prohibition or feature prohibition, any changes will likely have a dramatic impact on the use and popularity of arbitration provisions. Of course, the greatest uncertainty on this topic is whether Congress will act on the CFPB’s recommendations. My crystal ball is very foggy on that issue. Focus on the CFPB’s Disparate Impact Methodology In the last 14 months, the CFPB has taken enforcement action against an undisclosed number of lenders for disparate impact issues. Reimbursements and penalties in those actions total more than $150 million. Lenders have been eager to understand the CFPB’s analytical methods so they can include the same methods as part of their own compliance programs. In September 2014, the CFPB released a white paper entitled “Using Publicly Available Information to Proxy for

2015

F E AT URE S T O R Y

COMP L I A NCE OV ERDRI V E

I PREDICT THAT THE CFPB WILL COMPLETE ITS STUDY AND WILL MAKE ITS RECOMMENDATIONS TO CONGRESS IN 2015. POSSIBLY JUST PROHIBITING CERTAIN FEATURES. BY CHIP ZYVOLOSKI

Unidentified Race and Ethnicity.” It details the methodology used by the CFPB to identify possible disparate impact in auto lending loan portfolios. As you probably know, the story doesn’t end there. The industry has now carefully examined the methodology and has identified a number of concerns. Most notable is the study commissioned by AFSA. Its results identified a number of significant concerns about the CFPB’s methodology. I strongly encourage you to read AFSA’s study results if you haven’t already done so. The CFPB’s methodology has been made public and the industry has responded with its concerns. Some form of response or resolution is needed. My prediction is that the CFPB’s portfolio analysis methods will be in the industry spotlight for 2015. Action may ultimately come in the form of Congressional hearings or legislation. The CFPB could hold its own hearings or propose a rule formalizing a methodology. Action could also come in the form of a lender’s defense to enforcement action by the CFPB. No matter what form it takes, this issue will directly impact the way lenders address their Equal Credit Opportunity Act/Reg. B disparate impact compliance programs. It will also impact the compliance programs and expectations that lenders have of their dealers. Dealers’ ECOA Compliance and Dealer Rate Markup Concern about dealer ECOA compliance stems, in part, from the CFPB’s analysis of lenders’ auto loan portfolios. It reports finding disparate impact anomalies using the methodology

discussed above – and attributes the disparate impact to discretionary dealer rate markups. Even though its portfolio analysis is in question, the CFPB’s concern regarding dealer discretion to mark up a lender’s wholesale buy rate will likely persist. Any time dealer discretion is involved, the CFPB believes there is the risk that it could be used in violation of the law. For this reason, the discretionary dealer rate markup practices will continue to be an important regulatory issue in 2015. Some lenders have changed their discretionary markup policies to flat fee structures, but the more likely responses will be to have rate caps and other restrictions – or require explanations when dealer discretion is exercised. I predict – no, I guarantee – that lenders will continue to require dealers to have strong ECOA compliance policies, practices and training in place for 2015. We are likely to see lenders dropping dealers who do not have strong ECOA programs. In summary, these predictions may not possess the same level of glitz as celebrity marriages or the latest Sasquatch sighting. But my predictions regarding arbitration, disparate impact and ECOA compliance, I submit, are more likely to materially affect your business. I hope you have a wonderful and prosperous 2015. And remember that you heard it here first. CHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.

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