INDEPENDENT DEALER THE
OFFICIAL
PUBLICATION
OF
THE
OHIO
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 AT I O N
NOVEMBER/DECEMBER 2014
magazine
CONVERSATIONS WITH LENDERS The Importance of a Strong Relationship FE AT U R E S T O R Y page 38
q inside
• OIADA MOURNS JIM MITCHELL • NHTSA UNVEILS ONLINE SEARCH TOOL • SIX BENEFITS OF SOCIAL SELLING
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INDEPENDENT AUTO DEALERS CONFERENCE AND EXPO
ALL DEALERS WELCOME!!!!!! ADVANCE TICKETS FOR DINNER CERMEMONY
BROUGHT TO YOU BY THE OHIO INDEPENDENT AUTO DEALERS ASSOCIATION
WHEN
5:30PM TO MIDNIGHT
$65.00 PER PERSON INCLUDES:
December 6th, 2014 9am to 4pm
Cocktail Hour Semi-formal plated dinner
WHERE
NorthPointe Hotel & Conference Center
Quality Dealer of the Year Award Drinks & Dancing After Party
100 Green Meadows Dr S, Lewis Center, OH 43035 Hotel Rooms Available at discounted rate
Learning Labs and Workshops - Special Guests Johns Meadow - JDMC Group Ken Shilson - BHPH Experts Joe Lescota - Certified Master Dealer Shaun Petersen - NIADA Attorney at Law Free Registration for all Dealers bitly.com/dealerreg2014
W W W. O H I A D A . O R G
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PLEASE CONTACT SAMANTHA AT THE OIADA OFFICE FOR MORE INFORMATION
614-863-5800 OR EMAIL INFO@OHIADA.ORG
NOVEMBER/DECEMBER 2014
INDEPENDENT DEALER
10/23/14 2:51 PM
ONESTI AIRMAN
RADER MEMBER
INSIDE
06 OIADA Mourns Jim Mitchell 08 CFPB Forecast for Dealers 10 NHTSA Unveils Online Search Tool 12 Washington Update 14 Generating F&I Profits 16 Six Benefits of Social Selling 28 Joe’s Garage 38 Conversations with Lenders
AUCTION
NEWS
NextGear Honors Akron Auto Auction
WHAT’S NEW
Look for Valuable Industry Statistics
OHIO AUCTION RECEIVES REMARKETER OF THE YEAR AWARD
FOURTH QUARTER MEMBER SURVEY RESULTS
NextGear gave awards to various auctions during the National Auto Auction Association annual convention in Boston. The award for Remarketer of the Year went to Akron Auto Auction in Ohio. The Remarketing Excellence Award recognizes the auction that demonstrates the highest percentage of sales recovered based on percentage of valuation of each vehicle, the best throughput performance (number ADVERTISERS INDEX of days from when a vehicle is at the auction AC AutoPay......................................................25 to days sold), and the best sales follow-up ADESA, Inc............................ Inside Back Cover (efficient timing on getting proceeds of sales Alliance Inspection Mgt....................................29 Ally....................................................................15 to NextGear Capital). AutoZone..........................................................26 In addition, four independently owned Black Book..........................................................5 OIADA BOARD DIRECTORS autoOF auctions were honored for their Corry Auto Dealers Exchange.........................28
Keep your eyes open for results from the fourth quarter Dealer Member and Business Confidence Survey, which will be disseminated mid-November as an addendum to the 2014 Used Car Industry Report. This is a priceless tool for comparing your stats and sales with other dealers nationwide. It also serves as a benchmark for industry data NIADA provides to regulators, legislators and other entities needing data on the used motor vehicle industry.
Dealer Funding.................................................27 DealerSocket....................................................19 Indiana Auto Auction........................................32 Insurance Auto Auctions....................................7 Manheim Pennsylvania.........Inside Front Cover Mark One Holdings..........................................22 NextGear Capital................................................9 Phoenix Systems..............................................24 Preferred Warranties........................................11 TOM ONESTI JAY NORTH Protective..........................................................13 PAST CHAIRMAN CHAIRMAN Sirius XM.......................................................... 23 STARS GPS..................................................... 20 TrueCar.............................................................17 United Acceptance...........................................21 VAuto ................................................ Back Cover
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OFFICE
JEFF RADER
BOB FAHEY
BY USED CAR NEWS
dedication to and support of the industry. The auction winners included: Southern Auto Auction, East Windsor, Conn., in the large market category; Harrisburg Auto Auction, Mechanicsburg, Pa., in the medium market; and ABC Bowling Green (Kentucky) in the small market category. This was the second year of the NextGear Capital Auction Partners Awards, with the inaugural event held at last year’s NAAA event in Indianapolis. The Operational Excellence awards are presented to the auctions that demonstrate excellent efficiency, top sales retention and overall operational performance, and most effective response to the needs of NextGear Capital. OIADA BOARD OF DIRECTORS
Board of Directors
DAN REEL PRESIDENT
TOM ONESTI PAST CHAIRMAN BOB VAUGHAN
BOARDIndependent MEMBER BOARD MEMBER BOARD MEMBER To contact the Ohio Auto Dealers Association, call (614) 863-5800 or email info@ohiada.org.
MARK MEADOWS VICE PRESIDENT
TERRY REINEKE
OIADA BOARD OFTREASURER DIRECTORS
JAY NORTH
LAURENCHAIRMAN THOMAS BOARD MEMBER
Past Chairman Jay North Jay North LLC 501 E. Columbia Street Springfield, OH 45503 Tel: 937-325-3748 DAN REEL MARK MEADOWS PRESIDENT Fax:POLCE 937-398-1075 GEORGE TOM SMITH VICE PRESIDENT RANDY SHIRK BOARD MEMBER BOARD MEMBER BOARD MEMBER htron435@yahoo.com
DAVE ADKINS SECRETARY
TERRY REINEKE TREASURER JAMES HOWALD BOARD MEMBER
OIADA BOARD OF DIRECTORS
TOM ONESTI PAST CHAIRMAN
JAY NORTH CHAIRMAN
Secretary James D. Howald YES Automotive 1706 W. 4th Street Ontario, OH 44906 Tel:DAVE 419-775-7186 ADKINS JEFF RADER BOB FAHEY SECRETARY Fax: 419-775-5319 BOARD MEMBER BOARD MEMBER Cell: 419-709-0029 j_howald@yahoo.com
DAN REEL PRESIDENT
BOB VAUGHAN BOARD MEMBER
GEORGE POLCE BOARD MEMBER TOM ONESTI PAST CHAIRMAN
Chairman Executive Director Daniel Reel Wendy Rinehart Reel’s Auto Sales LLC 2040 Brice Road, Ste. 110 JEFF RADER BOB FAHEY BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH 547 East Main Street Reynoldsburg, OH 43068 National Independent Automobile Dealers Association CHRISTINE WHITE BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER EXECUTIVE ASSNT www.niada.com • www.niada.tv Orwell, OH 44076 614-863-5800 – Office 2521 Brown Blvd. • Arlington, TX 76006-5203 Tel: 440-437-5893 614-863-5801 – Fax TOM ONESTI JAY NORTH DAN REEL MARK MEADOWS TERRY REINEKE DAVE ADKINS phone (817) 640-3838 Cell:VICE 440-319-1247 PAST CHAIRMAN CHAIRMAN PRESIDENT PRESIDENT TREASURER SECRETARY wendy@ohiada.org For advertising information contact: Fax: 440-437-5759 Troy Graff (800) 682-3837 or troy@niada.com. OIADA BOARD OF DIRECTORS OIADA BOARD OF DIRECTORS danreel@hotmail.com OIADA BOARD OF DIRECTORS
NIADA HEADQUARTERS
JEFF RADER BOARD MEMBER
MARK MEADOWS VICE PRESIDENT
TERRY REINEKE TREASURER
George Polce Jenroc Auto, Inc. OIADA BOARD OF D 101 N. Tuscarawas Ave Dover, OH 44622 Tel: 330-364-2525 Fax: 330-364-6726 LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM Cell: 330-268-4724 BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD Jenroc@wilkshire.net JAY NORTH CHAIRMAN
DAN REEL PRESIDENT
Jeff Rader Rader Car Company 1429 Schrock Road Columbus, OH 43229 JIM MITCHELL EXECUTIVE DIRECTOR Tel: 614-888-3111 Fax: 614-888-3811 BOB FAHEY BOB VAUGHAN Cell: 614-582-1822 BOARD MEMBER BOARD MEMBER jeff@radercarco.com
GEORGE POLCE BOARD MEMBER
The Ohio Independent Dealer News is published bi-monthly by the National Independent Automobile President CHRISTINE WHITE JIM MITCHELL Terry Reineke Office Manager OIADA BOARD OF DIRECTORS Dealers Association Services Corporation, 2521 Brown EXECUTIVE ASSNT EXECUTIVE DIRECTOR Mark Meadows Rino’s Auto Sales Inc Samantha Torres Blvd., Arlington, TX 76006-5203; phone (817) 640-3838. Miracle Motor Mart Periodicals postage paid at Dallas, TX and at additional 1610 Industrial Pkwy 2040 Brice Road, Suite #110 offices. POSTMASTER: Send address to NIADABOB VAUGHAN GEORGE POLCE 2380 JEFF RADER changes BOB FAHEY LAURENMorse THOMAS Road JOHN REMY RANDY GRIESDORN TOM SMITH Celina, OHCHRISTINE 45822 Reynoldsburg, OH 43068 WHITE BOARD MEMBER BOARDTX MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER State Publications, 2521 Brown Blvd., Arlington, EXECUTIVE ASSNT Columbus, OH 43229 Tel: 419-586-6161 Office: 614-863-5800 76006-5203. The statements and opinions expressed Tel: 614-437-0037 Fax:DAVE 419-586-8700 Fax: 614-863-5801 herein are those of the individual and do not TOM ONESTI JAYauthors NORTH DAN REEL MARK MEADOWS TERRY REINEKE DAVE TOMADKINS ONESTI JAY NORTH DAN REEL MARK MEADOWS TERRY REINEKE ADKINS Fax: TREASURER 614-337-1063PAST CHAIRMANthe viewsCHAIRMAN PRESIDENT VICE PRESIDENT SECRETARY Cell: SECRETARY 419-305-4009 samantha@ohiada.org necessarilyPAST represent of Ohio Independent CHAIRMAN CHAIRMAN PRESIDENT VICE PRESIDENT TREASURER Cell: 614-348-6503 Dealer News, the Ohio Independent Automobile Dealers rinos@bright.net TOM ONESTI NORTH DAN REEL TERRY REINEKE DAVE ADKINS TOMJAY ONESTI JAY NORTH DAN MARK REEL MEADOWS MARK MEADOWS TERRY REINEKE DAVE ADKINS Association, or the National Automobile dmarkmeadows@aol.com OIADA BOARD OFIndependent DIRECTORS PAST CHAIRMAN CHAIRMAN PRESIDENT VICE PRESIDENT TREASURER SECRETARY PAST CHAIRMAN CHAIRMAN PRESIDENT VICE PRESIDENT TREASURER SECRETARY Dealers Association. Likewise, the appearance of advertisers, or their identification as members of OIADA OIADA BOARD OF DIRECTORS OIADA BOARD OFRobert DIRECTORS Vice President Randy Shirk Fahey or NIADA, does not constitute an endorsement of the CHRISTINE WHITE JIM MITCHELL David Adkins EXECUTIVE DIRECTOR products or services featured. Copyright 2014 by NIADAEXECUTIVE ASSNT Fairdale Auto Sales Randy Shirk’s Northpointe Services, Inc. All rights reserved. Wilmington Auto Sales Inc 6209 Glenn Rd. Auto Sales LLC JEFF RADER
BOB FAHEY
BOB VAUGHAN BOARD MEMBER
State Magazine MGR./Sales BOARD MEMBER BOARD MEMBER Troy Graff • troy@niada.com JAY NORTH CHAIRMAN
MARK MEADOWS Editors DAN REEL PRESIDENT VICE PRESIDENT Andy Friedlander • andy@niada.com Jacinda TOM Timmerman • jacinda@niada.com ONESTI JAY NORTH
PAST CHAIRMAN
TERRY REINEKE TREASURER
CHAIRMAN
Magazine Layout & Graphic Artist Chantae Arrington • chantae@niada.com
DAN REEL PRESIDENT
1780 Rombach Avenue Cambridge, OH 43725 5505 TOM N. Summit St BOB FAHEY BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN SMITH BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER Wilmington, OH 45177 Tel: 740-432-4185 Toledo, OH 43613 Tel: 937-382-7714 Fax: 740-435-0765 Tel: 419-729-2688 DAVE ADKINS JEFF RADER BOB FAHEY BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH Fax: 937-383-2392 JEFF RADER BOB FAHEY VAUGHAN LAUREN THOMAS GEORGE TOM SMITH RANDYMEMBER SHIRK JAMES Cell: 740-607-4011 Fax:HOWALD 419-729-2588 SECRETARY BOARD MEMBER BOBBOARD MEMBER BOARD MEMBER BOARD POLCE MEMBER BOARD MEMBER BOARD BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER Cell: 937-725-8512 r_fahey@yahoo.com Cell: 419-290-1993 MARK MEADOWS TOM ONESTI TERRY REINEKEJAY NORTH DAVE ADKINS DAN REEL MARK MEADOWS TERRY REINEKE DAVE ADKINS david@wilmingtonautocenter.com VICE PRESIDENT OIADA DIRECTORSshirkshark@netscape.net PAST CHAIRMAN TREASURER CHAIRMAN SECRETARY PRESIDENT VICE PRESIDENT TREASURERBOARD OFSECRETARY
LAUREN THOMAS BOARD MEMBER
JOHN REMY RANDY GRIESDORN TOM SMITH JEFF RADER BOARD MEMBER BOARD MEMBER BOARD BOARDMEMBER MEMBER
Treasurer Thomas Onesti CHRISTINE WHITE JIM MITCHELL Lauren Bowden Thomas Car Port EXECUTIVE ASSNT EXECUTIVE DIRECTOR Bowden Motors PO Box 9943 1426 South Main Street Printing GEORGE POLCE LAUREN THOMAS CHRISTINE WHITE JIM MITCHELL Youngstown, OH 44513 BOB VAUGHAN JOHN REMY RANDY GRIESDORN TOM SMITH EXECUTIVE ASSNT EXECUTIVE DIRECTOR Nieman Printing Tel: 330-726-6633 BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER Bellfontaine, OH 43311 Tel: 937-593-0014 Fax: 330-726-2633 TOM ONESTI JAY NORTH DAN REEL MARK MEADOWS RADER BOB FAHEY POLCE LAUREN THOMAS RANDY GRIESDORN TOMPRESIDENT SMITH JEFF RADER BOB FAHEY BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JEFF JOHN REMY RANDY GRIESDORN BOB VAUGHAN TOM SMITH GEORGE Fax: 937-593-0514 PAST CHAIRMAN CHAIRMAN JOHN REMY PRESIDENT VICE Cell: 330-565-6833 MEMBER MEMBER MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD BOARD MEMBER BOARD BOARD MEMBER BOARD BOARD MEMBERBOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER bowdenmotorslauren@embarqmail.com tomocarport@aol.com CHRISTINE WHITE
Art Director EXECUTIVE ASSNT Christy Haynes • christy@niada.com
BOB FAHEY BOARD MEMBER
GEORGE POLCE BOARD MEMBER
CHRISTINE WHITE EXECUTIVE ASSNT
INDEPENDENT DEALER
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JIM MITCHELL EXECUTIVE DIRECTOR
JIM MITCHELL EXECUTIVE DIRECTOR
NOVEMBER/DECEMBER 2014
CHRISTINE WHITE EXECUTIVE ASSNT
JIM MITCHELL EXECUTIVE DIRECTOR
CHRISTINE WHITE EXECUTIVE ASSNT
JEFF RADER BOARD MEMBER
BOB FAHEY BOB VAUGHAN JIM MITCHELL BOARD MEMBER BOARD MEMBER
GEORGE POLCE BOARD MEMBER
DAVE AD SECRET
Thomas C. Smith Smitty’s Auto Sales 668 S. 7th St Greenfield, OH 45123 Tel:(937)981-4317 Fax: TERRY (937)981-4317 REINEKE DAVE ADKINS TREASURER SECRETARY Cell: (937)218-3658 tommy4317@yahoo.com
W W W. HIAD A . GRIESDORN ORG LAUREN THOMAS JOHNO REMY RANDY BOARD MEMBER BOARD MEMBER BOARD MEMBER
TOM SMITH BOARD MEMBER
EXECUTIVE DIRECTOR
10/21/14 1:30 PM
MAR VIC
LAUREN BOARD
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ASSOCIATION
NEWS
OIADA Mourns the Loss of Jim Mitchell FORMER OIADA DIRECTOR WAS WIDELY ADMIRED AND RESPECTED James R. (Jim) Mitchell passed away September 14, 2014, in his home after a long battle with cancer. Jim had a long and distinguished career in the automobile industry. He was widely admired and respected by his peers and colleagues. Jim served as the executive director of the Ohio Independent Automobile Dealers Association from 2003 to 2013. In June 2011, he was named the National Executive Director of the Year by the NIADA and also served as chairman of the NIADA Association Executives Council. Mitchell began his automotive industry career in 1969 as a salesman for a Buick-Mazda dealership. He rose through the ranks in his 15 years at the dealership, serving as F&I manager, general sales manager and, eventually, co-owner. In the mid-1980s, Jim sold his interest in the dealership and began a management, consulting and sales training company that served the
automotive and marine industries throughout the U.S. as well as in Europe and Asia. At the same time, he was executive vice president of automotive consulting firm R.E.C. Technologies, where he helped expand the company’s sales and distribution channels nationwide and to over 20 other countries. During his time as executive director of OIADA, Mitchell wrote, “In all my 43 years of business I can honestly say that I am currently doing a job that I actually love to do every day. All of the training and all of the experience that I have gained during my career have enabled me to help many of our dealer and non-dealer members to succeed and for all of this I thank God for hanging in there with me. “My objectives from this day forward are to make sure that the OIADA is prepared for the time that Jim Mitchell will ride off into the sunset so that the members of this great organization will not have to do without.”
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Jim is missed by all of us who knew him and we are grateful to have had him as our friend. From Our Members:
“So sorry for the loss. Jim has touched so many lives in the car business. Whether you were a small dealer or big, he always had time for you, no matter what.” ~ Jon Rankin, Jon Rankin Auto Sales “Our deepest sympathy goes out to the Mitchell family. We are sad to hear this news and wishing his family the best during these hard times.” ~ Eric Gault, Gran Sport Motors “Our deepest condolences to all of you and his family! Thoughts and prayers are with all of you at this time!” ~ Akron Auto Auction “I am sorry to hear of Jim’s passing. My deepest sympathy, condolences and prayers to his family during this difficult time. He will be greatly missed.” ~ James Blakeney, Blakes Auto Sales “As a new executive director two years ago, Jim was the first to reach out with humor, kindness and a helping hand. He was the type of committed man to the industry and had me thinking, ‘hmmm, when I grow up I want to be just like him.’ He was a leader in our end of the industry. He helped to bring so much to the table. “He will be missed, but never forgotten. Please share my heartfelt sorrow with his family and all of you at OIADA.” ~ Diane Sparks, Oregon IADA “That guy was extra special and he never let a person feel left out. So warm, comical and helpful. He is truly missed.” ~ Fay Carr “I'm sorry to hear about Jim. I talked on the phone to him many times but only met him a couple of times at auctions. I can tell you that he seemed like a tremendous gentleman and was always very helpful. He seemed to go out of his way to always try to help.” ~ Jeff Black, Bill's & Son “I wish the tears could be evidence to my sadness of losing Jim as a person, mentor, father and as a great person. For the short period of time that I knew him I knew that I had an opportunity to meet a legacy that was blessed with skill of how to lead and support and always with passion to hear from those who asked his advice. We, and especially myself, at Quality Acceptance lost a friend and a man that his memories will stay forever.” ~ Ofer Alon “I have known Jim for many years. He has always been a gentleman and always always helped me every time I needed him. They don't come any better than Jim. I will miss him but now he's with the Lord. Thank you, Jim Mitchell.” ~ Ron Ferrari, Ron Ferrari Auto Sales “Jim was a good man, always very helpful to Express Auto Sales. Our deepest regrets to his family. We will keep him in our prayers.” ~ Express Auto Sales “Jim was a great guy and truly a good man in the Lord. He has helped Jon and I on numerous occasions, taking time from his busy day to see that we always came away with a solid answer. He will be missed for now but we know we will see him again someday with the Lord in heaven.” ~ Jim Ruby, Ruby Automotive Group, LLC W W W. O H I A D A . O R G
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REGULATORY
NEWS
Revised OSHA Rule Brings Changes for Dealers NO LONGER EXEMPT
BY ERIC SCHMITZ
Effective January 1, 2015, OSHA will require all employers, including dealers, to report work-related fatalities to OSHA within eight hours and to report work-related hospitalizations, amputations and losses of eye within 24 hours. In the past, new and used car dealerships, among other industries, had been exempt from completing and posting the OSHA 300 Log based on their Standard Industry Code. However, under the new regulatory change, dealerships have lost this exemption and must keep this accident and injury form up to date. Injury reporting will also change under the new rule. Under the current regulation, employers are required to report work-related fatalities and in-patient hospitalizations of three or more employees within eight hours of the event. Under the
EFFECTIVE JANUARY 1, 2015, OSHA WILL REQUIRE ALL EMPLOYERS, INCLUDING DEALERS, TO REPORT WORK-RELATED FATALITIES TO OSHA WITHIN EIGHT HOURS AND TO REPORT WORK-RELATED HOSPITALIZATIONS, AMPUTATIONS AND LOSSES OF EYE WITHIN 24 HOURS.
new rule, employers must report all workrelated fatalities to OSHA within eight hours of the event and all work-related in-patient hospitalizations, as well as amputations and loss of an eye, to OSHA within 24 hours of the event. What is an OSHA 300 Log? The OSHA 300 Log is used to catalog and classify injuries and illnesses of any full time, contract or temporary workers over the course of a full calendar year. This log is required even if Worker’s Compensation Loss Runs are maintained at your facility. OSHA 300 Logs are now required for all facilities to allow OSHA to track and measure injury and illness rates throughout the country for multiple industries. The OSHA 300 Log is a more reliable way to track these rates than workers’ compensation records because workers’ compensation records vary from state to state. OSHA will use the data from the logs to determine the following: • The number of workers who are injured or made ill in the workplace. • The types of injuries and illnesses sustained.
• Departments and jobs that have the highest occurrence of injuries and illnesses. • Priorities for correcting job hazards. To stay compliant with the new rule, the following must be listed on the OSHA 300 Log: • Death. • Work days missed. • Restricted work. • Job transfers. • Medical treatment beyond first aid. • L oss of consciousness. • Significant injury or illness diagnosed by a licensed medical professional. As the rule change approaches, KPA will be providing a variety of training and webinars. Please visit www.dealerwebinars. com to view a webinar, or contact info@ kpaonline.com to learn more. ERIC SCHMITZ IS VICE PRESIDENT OF PRODUCT AND BUSINESS DEVELOPMENT AT KPA. KPA PROVIDES SOFTWARE AND CONSULTING SERVICES THROUGH TWO INDUSTRY-SPECIFIC PRODUCT LINES: HR MANAGEMENT AND ENVIRONMENTAL HEALTH AND SAFETY. TO LEARN MORE, VISIT WWW.KPAONLINE.COM OR CALL 866.356.1735. THIS ARTICLE ORIGINALLY APPEARED ON NCM’S UP TO SPEED BLOG (HTTP://BLOG.NCMINSTITUTE.COM) AND IS REPRINTED WITH PERMISSION.
8 REGULATORY
NEWS
CFPB Forecast: 4 Dealer Areas Where Bureau Might Focus
RICK HACKETT SHARES INSIGHT Rick Hackett, former assistant director at the Consumer Financial Protection Bureau and current partner at Hudson Cook, told the crowd of more than 600 attendees at AutoStar Solutions’ seventh annual Innovate conference the four areas of auto lending he believes the CFPB will focus on next year. As an established expert in auto compliance, Hackett first addressed the fact that the CFPB is indeed interested in Buy Here-Pay Here dealers in the same way bureau officials are interested in large finance companies. “Up until now, the CFPB’s only way to investigate a non-bank auto finance source — including Buy Here-Pay Here dealers and independent lenders — has been civil investigative demands, which are narrow in scope,” Hackett said. “Last week, the CFPB announced plans to extend their oversight by supervising non-bank auto finance sources that make, acquire or refinance 10,000 or more loans or leases per year. That equates to around 38 additional companies. And some of those companies are likely represented here today.” Hackett then shared where the bureau might turn its attention during the next 12 months, including: • Discrimination. • Credit reporting. • Ancillary products. INDEPENDENT DEALER
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BY BHPH REPORT STAFF
• Compliance management system examinations. Expounding on this list, Hackett said credit reporting accuracy is the responsibility of the furnisher (that is, auto dealers or finance companies), no matter who provides the technology interface. “You must exercise extreme caution when selecting vendors for credit reporting. Insist they fix known errors,” Hackett said. “If you know of bad service from a vendor, complaining is not enough. It’s all about results.” Hackett recommended the following steps for selling ancillary products with 100 percent compliance: • Make sure your technical disclosures house is in order. This includes truth-in-lending compliance and your state’s disclosure rules. • Ensure that voluntary products are truly voluntary and that the consumer understands their cost. Menu selling can help with this. • Train and monitor your sales personnel around what “voluntary” really means. If you have one F&I manager with 90 percent penetration on GAP insurance, but your average among other employees is 40 percent, take a closer look at the sales tactics your high performer is using.
NOVEMBER/DECEMBER 2014
• Use common sense regarding the suitability of each product for each customer. For example, you should not sell GAP insurance to a customer with a 50 percent down payment. • Stay consistent with pricing. If you normally charge 100 percent markup, but it can vary up to 500 percent, those variable pricing outcomes look a lot like disguised finance charges to the CFPB. When asked about complaint management systems, Hackett said it can be hard to distinguish a complaint from a mere inquiry. “When my clients are developing a complaint management system, I advise that it’s better to be over-inclusive both in establishing categories and in training personnel to identify ‘complaints,’” Hackett said. “The data will later show that many ‘complaints’ are actually questions that are resolved with an explanation and no need for an adjustment.” Hackett also shared that CFPB enforcement strategy attorneys talk frequently with the industry-specific committees of the National Association of Attorneys General. He said one of their goals is to find cases where the CFPB and attorneys general can tag team or allocate resources, depending on who possesses the most effective regulatory tools. W W W. O H I A D A . O R G
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REGULATORY
NEWS
NHTSA Unveils Online Search Tool for Recalls Using Vehicle Identification Number
safercar.gov
CONSUMERS WILL BE ABLE TO TELL WHETHER VEHICLE IS IMPACTED BY A RECALL Every year, millions of vehicles are recalled in the United States due to safety defects or noncompliance with federal safety standards. To help car buyers, owners and renters know their vehicles are safe and their safety defects have been addressed, the U.S. Department of Transportation’s National Highway Traffic Safety Administration recently unveiled a free online search tool consumers can use to find out if a vehicle is directly impacted by a recall. The new tool is available on www. safercar.gov/vinlookup and provides consumers with a quick and easy way to identify uncompleted recalls by entering their Vehicle Identification Number. All major light vehicle and motorcycle brands can be searched. “Safety is our highest priority, and an informed consumer is one of our strongest allies in ensuring recalled vehicles are
VEHICLE RECALLS: WHAT YOU SHOULD KNOW
repaired,” said U.S. Transportation Secretary Anthony Foxx. “Starting today Your car isand important to you, your safety is important to us. But when your car or an item of motor car owners, shoppers, renters canand find equipment poses adefect safety risk to you, your passengers, or other motorists sharing the road with out if a specificvehicle vehicle has a safety you, then – it can be recalled. that needs to be fixed using our free online Determining whether there is a recall tool.” consumers need to take action on is easy. Under the new NHTSA After entering the VIN number into the WHAT ISmandate, A RECALL? all major light vehicle and motorcycleor the Nationalfield, results will appear if the consumer When a manufacturer Highway Traffic Safety Administration determines that a manufacturers are car now to provide hascreates an open recall on their vehicle. or required item of motor vehicle equipment an unreasonable risk to safety orIffails to meet VIN search capability for uncompleted there are will “No OpenThat minimum safety standards, the manufacturer is none, requiredowners to fix that carsee or equipment. be done by repairing it, offering a refund (for equipment), or (in rare cases) recalls on their owncan websites. This data it, replacingRecalls.” theNHTSA’s car. must be updated atrepurchasing least weekly. “Just as every single automaker should new VIN lookup tool directly relies on never hesitate to recall a defective vehicle, WHAT DOES THIS MEAN TO ME? consumers should never hesitate to get information from all major automakers, If there is a safety recall, will fix thevehicle car or equipment free NHTSA of charge. and regularly updated information fromyour themanufacturer their recalled fixed,” said automakers is critical to the efficacy of the deputy administrator David Friedman. HOW WILL I KNOW IF THERE’S A “By RECALL? search tool. making individual VIN searches If there is a vehicle safety recall, your manufacturer notify you we’re by Consumers can find their readilywill available, providing another sending you a letter the mail. The envelope looks like this: – the peace of mind identification number by looking at in the service to consumers SAFETY RECALL NOTICE dashboard on the driver’s sideregister of the your vehicle, that the vehicle You can also car so youknowing can receive NHTSA e-mail they own, or that or on the driver’s side door onorthe door post are thinking notifications alerts sent directly tothey your phone. NHTSA’sof buying or renting, is where the door latches when it isapp closed. free of safety defects.” Safercar mobile (see www.safercar.gov) is available for both Apple devices and Android devices, or RSS feed.
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WHAT DO I DO IF MY CAR IS RECALLED? When you receive a notification, follow any interim safety guidance provided by the manufacturer and contact your local dealership. They will fix the recalled part or portion of safercar.gov your car for free.
safercar.gov
CAN I FIND OUT NOW IF THERE’S A RECALL ON MY CAR?
VEHICLE RECALLS: WHAT YOU SHOULD KNOW Your car is important to you, and your safety is important to us. But when your car or an item of motor vehicle equipment poses a safety risk to you, your passengers, or other motorists sharing the road with you, then it can be recalled. WHAT IS A RECALL? When a manufacturer or the National Highway Traffic Safety Administration determines that a car or item of motor vehicle equipment creates an unreasonable risk to safety or fails to meet minimum safety standards, the manufacturer is required to fix that car or equipment. That can be done by repairing it, replacing it, offering a refund (for equipment), or (in rare cases) repurchasing the car.
You can also download the Safercar mobile app and search for all vehicle recalls. The WHAT IS is THE VIN LOOKUP? Safercar mobile app available for iPhones (https://itunes.apple.com/us/app/safercar/ The National Highway Traffic Safety Administration offers this tool for people to look up id593086230?ls=1&mt=8) and Androids (https://play.google.com/store/apps/details?id=gov. Vehicle Identification Numbers (VINs) to see if they are covered by a safety recall that has yet nhtsa.safercar&hl=en.). to be remedied. It reflects information provided to NHTSA by vehicle manufacturers required to have their own public VIN-specific recall Web sites. WHERE CAN I FIND IT?
pageonline 2 foratmore information on looking The toolSee is available www.safercar.gov/vinlookup.
up your VIN.
WHY SHOULD I USE IT?
WHAT DOES THIS MEAN TO ME? If there is a safety recall, your manufacturer will fix the car or equipment free of charge. HOW WILL I KNOW IF THERE’S A RECALL? If there is a safety recall, your manufacturer will notify you by sending you a letter in the mail. The envelope looks like this:
Yes. You can look up your car on NHTSA’s Web site – www.safercar.gov/vinlookup – or your manufacturer’s Web site, to see if it’s under a recall. You will need your Vehicle Identification DEALER TIPS FOR VIN LOOKUP AND VEHICLE RECALLS Number (VIN) to do the lookup.
SAFETY RECALL NOTICE
You can also register your car so you can receive NHTSA e-mail notifications or alerts sent directly to your phone. NHTSA’s Safercar mobile app (see www.safercar.gov) is available for both Apple devices and Android devices, or RSS feed. WHAT DO I DO IF MY CAR IS RECALLED? When you receive a notification, follow any interim safety guidance provided by the manufacturer and contact your local dealership. They will fix the recalled part or portion of your car for free.
Before purchasing a used vehicle or taking in a trade, this tool can help identify recalled vehicles. It can also be used to learn if used vehicles in inventory are subject to unremedied safety recalls. Lastly, you can help prospective purchasers/lessees to learn more about how they can use this new tool. HOW TO USE THE VIN-LOOKUP TOOL Use this tip sheet to train your staff on the existence of the new NHTSA VIN-lookup tool and how and when to use it. Direct prospective customers to the www.safercar.gov Web site if they have questions on recalls or on other issues involving motor vehicle safety. HOW TO FURTHER DIALOGUE WITH CUSTOMERS ABOUT RECALLS Inform and educate your customers by making available the NHTSA recalls fact sheet. Suggest that customers sign up for recall alerts on www.safercar.gov for the vehicles they own or that they may be interested in buying or leasing.
CAN I FIND OUT NOW IF THERE’S A RECALL ON MY CAR? Yes. You can look up your car on NHTSA’s Web site – www.safercar.gov/vinlookup – or your manufacturer’s Web site, to see if it’s under a recall. You will need your Vehicle Identification Number (VIN) to do the lookup. You can also download the Safercar mobile app and search for all vehicle recalls. The Safercar mobile app is available for iPhones (https://itunes.apple.com/us/app/safercar/ id593086230?ls=1&mt=8) and Androids (https://play.google.com/store/apps/details?id=gov. nhtsa.safercar&hl=en.).
See page 2 for more information on looking up your VIN. 10974b-081914-v2
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WASHINGTON
UPDATE
National Independent Automobile Dealers Association
NIADA Government Report 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.
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REGULATORY REPORT Consumer Financial Protection Bureau The CFPB held a field hearing on automotive finance issues Sept. 18 in Indianapolis. NIADA was extended an invitation to attend directly from the CFPB. The bureau announced three administrative actions during the hearing: a proposed rule defining larger market participants in auto finance, a supervisory report on discrimination in automotive financing and a white paper explaining the methodology used by the CFPB in its 2013 guidance document to determine disparate impact in indirect auto lending. Proposed larger market participant rule: The Dodd-Frank Act gave the bureau the authority to supervise “larger market participants” among non-banks in the automotive finance industry, monitoring their compliance with federal consumer financial laws and regulations. But it must first create a rule to define what a larger market participant is. The proposed rule defines the term as an entity that makes, acquires or refinances 10,000 or more loans or leases in a year. The bureau estimates that standard will include about 38 companies representing 90 percent of the market. NIADA is reviewing the proposed rule and will submit comments before the late November deadline. Supervisory report: The supervisory report detailed what the CFPB asserts are accounts of
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LEGISLATIVE REPORT H.R. 5403, Reforming CFPB Indirect Auto Financing Guidance Act The CFPB’s 2013 guidance sought to eliminate dealers’ flexibility to discount the interest rate offered to consumers to finance vehicle purchases, an attempt
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to change the $905 billion auto loan market and limit market competition without public comment and without analyzing the impact on consumers. With the CFPB’s actions likely to raise the cost of credit for car buyers, H.R. 5403 was developed on a bipartisan basis to rescind the CFPB’s flawed auto finance guidance and make the bureau more transparent and accountable in future auto finance guidance by requiring public participation before it is issued. The bill, introduced Sept. 8 by Reps. Marlin Stutzman (R-Ind.) and Ed Perlmutter (D-Colo.), has 92 cosponsors. The CFPB claims negotiated interest rates create a “significant risk” of unintentional disparate impact discrimination. After more than a year and 11 requests from members of Congress from both parties, the CFPB finally released information about its methodology in September – information that still did not address many of the concerns raised (see Regulatory Report). H.R. 749 and S. 635, Annual Privacy Notice Requirement Recently, the CFPB proposed some changes to the Privacy Rule, specifically the part that deals with providing an annual privacy policy. On July 14, NIADA submitted comments noting that while the concept of removing the annual privacy policy requirement when there is no change to the document and the customer’s information is not being shared with non-affiliated third parties has merit, the delivery method proposed by the CFPB is flawed. The comments included specific concerns with requirements that hurt small businesses, such as maintaining a dedicated toll-free phone line. NIADA recommended that the bureau support H.R. 749, which has already passed the House of Representatives, and S. 635, which is pending in the Senate. That legislation does not include such onerous requirements on small businesses. The bills would, in general, eliminate a costly and duplicative requirement originally passed under the Gramm-Leach-Bliley Act that all financial institutions mail their customers a copy of their privacy notice each year even if there has been no change in their privacy policy. While NIADA supports both bills in concept, the preference is for enactment of House-passed H.R. 749 given concerns over a requirement to provide electronic access to the most recent disclosure statement that is included in the Senate bill but not the House bill.
Washington Update
THE CFPB’S 2013 GUIDANCE SOUGHT TO ELIMINATE DEALERS’ FLEXIBILITY TO DISCOUNT THE INTEREST RATE OFFERED TO CONSUMERS TO FINANCE VEHICLE PURCHASES, AN ATTEMPT TO CHANGE THE $905 BILLION AUTO LOAN MARKET AND LIMIT MARKET COMPETITION WITHOUT PUBLIC COMMENT AND WITHOUT ANALYZING THE IMPACT ON CONSUMERS.
discrimination in auto lending at banks it has supervised for the past two years. The bureau claims minority borrowers paid more for auto loans than similarly situated non-Hispanic white borrowers and said supervisory actions aimed at indirect auto financing institutions resulted in approximately $56 million in remediation for up to 190,000 consumers. Disparate impact white paper: The white paper said CFPB examination teams use a proxy methodology to help them determine race and national origin of loan customers. The bureau uses consumers’ last names and places of residence and proxies them against U.S. Census Bureau data to calculate the probability that an individual belongs to a specific race and ethnicity based on his or her last name. Exam teams then update that probability based on the demographics of the area where the person resides, again using Census Bureau data. NIADA believes the white paper does not address the concerns that have been raised to the bureau. The methodology does not account for errors in the proxy determination and does not address economic impact or other issues asserted by the industry since the guidance was issued in March 2013. NIADA will continue to express its concern to the bureau over its methodology and is working with Congress to pass legislation revoking the bureau’s guidance document (see Legislative Report). The white paper and supervisory report are available at www. consumerfinance.gov/reports. Increase in thresholds for Reg Z and Reg M: The CFPB and the Federal Reserve Board have announced increases in the dollar thresholds under Regulation Z and Regulation M for exempt consumer credit and lease transactions. Both thresholds have been increased by $1,100. In 2015, Regs Z and M will apply to credit transactions and consumer leases of $54,600 or less.
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F&I
MATTERS
Generating F&I Profits without a Dedicated F&I Professional TALK ABOUT BENEFITS THROUGHOUT SALES PROCESS
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Teeing up the F&I products and services Value in the products and services of all the ancillary products should be seen throughout the dealership. Review the trade interview sheet and your trade interview process. Do you simply run a Carfax, followed by an online value of some sort? The trade negotiations might be easier if your sales associate takes the time to ask all the right questions before he or she obtains the market value. Questions include: • When you purchased your trade vehicle did you also purchase a service agreement? • When you purchased your trade vehicle did you also purchase protective coatings for it? • Did you purchase a separate security system for your vehicle? • Do you have all the service records for the time of your ownership? • Have the air bags been deployed? • Is it a salvaged vehicle? • A re the miles correctly shown, or have you had the odometer replaced? • A sk the customers about the last engine & transmission service, tire rotation, etc. The answers are not deal breakers. They are merely information needed to establish the true market value of the trade-in. The sales associates should also employ the use of sound effects. Remember the value of “oohs” and “aahs.” Asking about the current vehicle’s service agreement creates value and will open the customer’s ears when advised of the opportunity to purchase the valued protection for the new (to them) vehicle. Some smaller dealerships will show a payment with a service agreement and a payment without a service agreement on the work sheet. If you employ this strategy it is essential that the retail cost of the service agreement be displayed on the worksheet and the word “optional” appear next to the dollar amount of the policy. It is essential the worksheet also contain the payment without the service agreement. The disclosure of the transaction must be transparent.
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BY JAN KELLY
When selling a previously owned vehicle, it is important to let the customer know that depending upon the age of the vehicle and the current mileage the vehicle qualifies for ____ years and _____ miles of mechanical protection. While most previously owned vehicle policies are stated coverage only, the presenter should review the coverage with the customer so he or she can make an informed decision. There is danger in a salesperson talking about a service contract too early in the process. The result may be the policy being a cost of sale item rather than a profit stream. How to avoid this trap? The management and sales team must make it clear on the worksheet that the policy is not part of the selling price of the vehicle. The policy has a separate cost and by law must be disclosed on a separate line of the retail installment contract. It is optional and purchased at the sole discretion of the customer. The dealership could place a notice on the side windows of the vehicles that qualify for service agreements. Example: “Alert – This vehicle qualifies for a ____ year ____mile service agreement. Be sure to inquire with our sales personnel about the benefits and cost of the policy.” Recently I have seen some policies for very high mileage vehicles. The coverage is stated coverage limited in scope. I equate these policies to major medical insurance on a person. While major medical does not cover everything, it covers the major items and it is a true blessing should the person ever require it. The goal is to talk about the protections all the way through the sales process. You should provide opportunities for the customer to say yes to the additional dollars spent. A change of face is always best when presenting ancillary products and service to any customer. The reality is that often that change of face is not possible and the sales personnel will need to take a breath and make the additional presentation. They will also need to be sold on the value of these products and services. JAN KELLY IS PRESIDENT OF KELLY ENTERPRISES. SHE IS AN EDUCATOR AND CONSULTANT, CONVENTION SPEAKER AND WRITES FREQUENTLY FOR INDUSTRY PUBLICATIONS. FOR INFORMATION ABOUT EDUCATIONAL VENUES OR JOINING AN F&I 20 GROUP, CALL 800.336.4275 OR VISIT WWW.JLKELLY.COM.
F&I Matters
Many of your dealerships may be small in size but large in heart. Your location may not lend itself to a special office for a finance person. Your personnel may be limited in numbers and your dealership not open the same hours as a franchise dealership. In fact, your operation might mirror that of a “boutique dealership,” one that is open 9 a.m. to 6 p.m. and closed on Sundays. Regardless of your business model, the products and services of the traditional finance office can make a huge difference in your bottom line. The question is how to achieve the presentation of the products and services without extra personnel. Sales Process The sales manager should manage the sales process. The basic steps to the sale are as old as time. • Meet and greet the customer. • The sales associate conducts a needs assessment or interview. • Based upon the information gleaned, the sales associate proceeds to product selection. • Product demonstration. • Write-up and negotiations begin. • Secure the sale. • Documentation of the sale (F&I process). • Delivery of the unit. • Follow up with the customer. • A sk the customer for referrals. Make appointments to show your vehicles and make additional sales. When you think of interviewing the customer, think of location! The lot has too many distractions going on (traffic noise, inventory, weather, etc.). The best practice is to bring the customers inside and conduct the needs assessment at the sales associate’s workstation. The sales associate should seek advice from the sales manager regarding the correct product selection. The sales associate should be able to relay the basic information about the customer (these inquiries are essential in selecting the right vehicle to show). This information includes name, residence, workplace, whether the purchase is a replacement vehicle or additional, current vehicle and what they like about it as well the current monthly payments and the lien holder of a trade in.
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SOCIAL
MEDIA
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Benefits of Social Selling You’d Be Crazy to Miss!
TIME TO GET OFF THE FENCE
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Buyers are engaging in online communities, asking questions from their peers to provide feedback on products, and researching solutions prior to any sales conversations. With a process for social selling, your salespeople can be in a position to listen and monitor what’s being said and respond to the conversations through thoughtful, value-added responses (not with sales pitches). 2. Reputation Management. We’ve all heard by now that between 80 and 95 percent of buyers’ decisions are influenced by online reviews. Studies show that more and more buyers are not only researching your business, they’re researching your salespeople. Have you ever done a Google search on your salespeople? It would be good to know what your prospects see when they search. With a process for social selling (and training to go with it), when a buyer Googles your salesperson, the salesperson’s optimized, well-planned social profile speaks for him or her before anyone else does. 3. Lead Generation. Generating new revenue opportunities is getting harder. Cold calling is dying. People are clicking on banner ads less and less. One of the benefits of social selling is that once your salespeople have established their social presence, they can monitor, listen and engage in conversations around the products and services the company sells. I recently witnessed a conversation on Twitter by one of my dealer coaching clients. He was monitoring the #Lexus hashtag for sales opportunities. He came across a local user who was having trouble with his car’s battery and had tweeted about it. My client reached out to him, offered help and the customer came into the store that day. They got him what he needed and it turned out that his lease was
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expiring in a few months. What better way to develop the path to the sale than by providing assistance when the customer really needs it? 4. Customer Retention. Every business would like to maintain and grow a loyal customer base. However, most revert to manipulative marketing and sales tactics to get the transaction “in the books.” The point is to get them coming back again and again – not buy once and then disappear. Social selling allows you and your salespeople to maintain contact with your customers in a very non-invasive way. Sharing helpful content and answering people’s burning questions inspires customer loyalty. Attracting repeat customers costs five to seven times less than what it takes to attract a new one. Focus your customer retention programs around helping your salespeople produce the right kind of content that keeps your customers coming back for more. 5. A Sense of Attachment = Sales. When your salespeople are connected with customers through social media, it adds a layer of familiarity to each transaction. These transactions are not one-way streets. Each sale is an exchange between people. When a relationship is established, the customer experience improves. People who rave about their experience tell others about it. The benefits of social selling culminate in referral business. 6. Increased Productivity. The numbers don’t lie: 78 percent of salespeople using social media outsell their peers. If your customer is online and your products are online, shouldn’t your salespeople be online? KATHI KRUSE IS AN AUTOMOTIVE SOCIAL MEDIA MARKETING EXPERT, BLOGGER, CONSULTANT, AUTHOR, SPEAKER AND FOUNDER OF KRUSE CONTROL INC. KRUSE CONTROL COACHES, TRAINS & DELIVERS WEBINARS FOCUSED ON INTEGRATING SOCIAL MEDIA AND ONLINE REPUTATION MANAGEMENT INTO DEALERSHIP OPERATIONS.
Social Media
Are you still on the fence about implementing a process for social selling within your company? Maybe you’re looking for more proof that you need to have your sales team be more social. With numbers as high as 70 percent of the sales process done by the time a prospect contacts you, the time is now to turn your salespeople into savvy social sellers. Technology has transformed the way we buy. It continues to replace outdated sales tactics. Before the phone or email were widely accepted, many were skeptical and stuck to their old comfortable ways. It’s the same today with social selling. But things are moving too fast – if you don’t have a sales process that includes social selling, you’re leaving money on the table. True, not every salesperson will adapt easily to every facet of the social selling process, but many of your salespeople may already be working social media to attract customers. They’ve recognized the benefits of leveraging their networks to connect with prospects, foster those relationships and create digital word of mouth. If you can’t quite see the value yet, check out these six benefits of social selling you’d be crazy to miss out on: 1. Shortened Sales Cycle. Research happens online and drives offline sales. According to an extensive study by ADLittle called “Spinning the Wheel,” the research phase in vehicle purchases has been dramatically shrinking over time. Eighty percent of surveyed customers stated they performed the whole prepurchase research within eight weeks. Social channels can be the catalyst for those purchase intentions. Nearly 70 percent of respondents stated they spent more time online than offline for pre-purchase information gathering, with a relevant number researching online only.
BY KATHI KRUSE
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SALES
MATTERS
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Three Keys to Beating the Competition
WHAT THEY ARE AND WHY THEY’RE IMPORTANT BY JOHN CHAPIN
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purchase happened when they bought your product as a residual effect of having bought you in the connection and relationship stage. The reason you still need a compelling, logical argument is because the prospect’s decision has to stand the test of time and scrutiny from others that they will directly or indirectly justify the decision to. They can justify slight differences in price and quality, they just don’t want to be embarrassed by making a bad decision. The good news is once the prospect likes you, they want you to prevail in making your logical case. In other words, now that they like and trust you, you can lead and educate them as to why your product is the best solution and they will follow and listen. Again, as all products have advantages and disadvantages, at this point you are like a lawyer making your case as to why your advantages outweigh that of the competition. Your sales skills will seal this logical side of the equation by giving the prospect the ammunition they need to justify the decision to themselves and others. 3) Be committed and determined to outwork the competition. This aspect needs to be present both before and after the sale. Before the sale it shows up as pleasant persistence, after the sale it shows up as proactivity and responsiveness. During your initial meeting and subsequent meetings with the prospect, you’ve got to have passion along with an absolute belief and conviction in you, your product and your company. You need to have a dogged determination and you have to be extremely persistent. You have to continue to follow up and be committed to getting them involved with your product. Before the sale make sure you are doing what you say you will do when you say you will do it and do what you can to go above and beyond and stand out from the competition. Get the prospect on your contact list and make sure you are reaching out on a regular basis with pertinent items of interest. Look for ways that you can deliver and
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NOT ONLY DO YOU HAVE TO BE WILLING TO GO THE EXTRA MILE, YOU NEED TO BE WILLING TO GO A MILE OR TWO BEYOND THAT. ALWAYS MAKE SURE YOU GIVE SOMETHING EXTRA, BEND OVER BACKWARDS AND SERVE THE CUSTOMER NOT ONLY BETTER BUT FAR BETTER THAN ANYONE ELSE.
show value before you even get an order. The reaction you’re after here is, “Gee, my rep doesn’t even do that and I’m a customer.” Your objective is to be better and different than the competition and to do things that they aren’t doing and/or won’t do. Both before and after the sale, you must respond as quickly as possible to phone calls, emails and all other customer communications. If they call you with an issue or concern, get on it like a pit bull and get them an answer or resolve the situation as quickly as possible. You also need to be proactive and anticipate problems before they arise and stay ahead of them. Not only do you have to be willing to go the extra mile, you need to be willing to go a mile or two beyond that. Always make sure you give something extra, bend over backwards and serve the customer not only better but far better than anyone else. If you are determined to go above and beyond, do more, work more and go much further than anyone else is willing to go, you will stand out, you will be successful, and you will beat the competition almost every time. Finally, remember that when you are competing you must do everything you can from a fair, legal and ethical standpoint to win. You need to go to bed at night knowing you gave it your best shot possible and did everything you could do to win fair and square. JOHN CHAPIN IS A SALES AND MOTIVATIONAL SPEAKER AND TRAINER. HE HAS 26 YEARS OF SALES EXPERIENCE AS A NUMBER ONE SALES REP AND IS THE AUTHOR OF THE 2010 SALES BOOK OF THE YEAR: SALES ENCYCLOPEDIA. FOR MORE INFORMATION VISIT WWW.COMPLETESELLING.COM OR EMAIL: JOHNCHAPIN@ COMPLETESELLING.COM.
Sales Matters
There are three skills that will allow you to beat the competition almost every time. THREE IDEAS FOR WINNING AGAINST THE COMPETITION 1) Connect and build superstrong relationships. Assuming you have at least an average product with a reasonable price, your ability to build trust and rapport and develop a relationship with the prospect is by far the most important element when competing. All products and services have advantages and disadvantages, strengths and weaknesses. If people like you and trust you more than your competitors, then even if your product is higher priced and not as good, they will still buy from you. Again, price and value differences cannot be dramatic. Provided that your product is in the general ballpark and you have a great relationship, you’ll win every time. In order for you to hang on to and keep selling to the account after the initial sale, the connection and relationship must remain strong. You do this by communicating often, going above and beyond, and never taking the customer for granted or letting service slip. Send cards, gifts and other items to let the customer know you care and appreciate them. Get and share personal information and act on that information in order to increase the depth of the relationship. Your goal is to develop and personalize each customer relationship to the point where each customer is also a close friend. Satisfied customers who are also close friends will not leave you. And by the way, this relationship selling is nothing new, it’s always been about relationships. 2) Have great sales skills. In addition to allowing you to say and do the right things to make that initial connection and begin building the relationship, great sales skills will also help you make a logical argument for your product. All people, even the most analytic amongst us, buy emotionally and back up the decision logically. The emotional
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MANAGEMENT
MATTERS
Tricks of the Trade
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To take a trade-in or not to take a trade-in? That is not even a question. Taking their customers’ trade-ins is a great way for used vehicle dealers to get inventory and build relationships with fellow dealers as well as customers. And it’s just a smart way to do business. “A dealer who wants to sell more cars has to get more cars,” NIADA director of dealer development Joe Lescota said. “One way to do that is by taking trades.” But that’s not to say taking trades-ins doesn’t come with its own set of problems. A trade-in throws an extra step into the otherwise straightforward inventory acquisition process. “A dealer who makes a straight sale – no trade – just has set costs,” Lescota explained. “He bought the car for $4,000, sold it for $5,000. Had $500 in expenses, so he made $500 in profit.” But, Lescota noted, if there is a trade-in, that complicates the deal. The dealer might not have enough cash on hand to handle a lot of trade-ins. “What dealers have to remember is that trades aren’t cars, they’re cash,” he said. “Trades are essential to a dealer’s business, but if a dealer is weak in making a trade, he’s usually weak on the cash flow. When a
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TA K ING T R A DE- INS P ROV IDES DE A L ERS W I T H A SOL ID SOURCE OF IN V EN TORY – IF T HE P RICE IS RIGH T BY JIM S T ICK FORD
dealer takes a car in trade, that dealer has negative equity in the vehicle until he sells it. That means a dealer must be good at selling trades.” That sale can be to a customer, or to a wholesaler or another dealer, Lescota said. But that dealer won’t make money on the original sale until the trade-in is sold. Doing well with trade-ins means doing well with the dealership’s cash flow. Sometimes dealers don’t like doing trades because they might have too much inventory on hand at the moment, or because the dealer might not feel comfortable with trade-ins. “When dealers lose on trades it’s because they weren’t aggressive enough,” Lescota said. “Life is easier for dealers who don’t trade cars, but they also don’t do as much business.” Lescota said dealers who do take trades shouldn’t hide their light under a bushel. It’s a business advantage – a dealer trade saves consumers the hassle and cost of trying to sell the vehicle themselves – and potential customers should be aware of that fact. It’s something that helps a dealer stand out in a positive way. “One thing I’ve learned working with customers is that they are often unaware that a dealer will take trades,” he said. “Dealers
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need to communicate this. They need to communicate the advantages of a dealer taking a car in trade.” Part of the problem, Lescota said, is that the public really doesn’t understand how the business works. They often confuse retail price with wholesale price. A dealer can offer a customer completely fair wholesale price for his trade-in vehicle, but the customer will have his smartphone with him and check what a similar car is selling for at other dealerships. He’ll see the higher retail price and think the dealer is trying to rip him off. “Without a doubt, the public doesn’t understand the difference between retail and wholesale,” Black Book editorial director Ricky Beggs said. “Dealers understand that there has to be a difference between the two prices so they can cover their costs. But the public doesn’t.” Black Book, Beggs said, has tools dealers can use to give consumers a way to look at trade-in prices in order to educate them. “These are real trade-in prices based on real trades,” Beggs said. “The numbers are realistic and dealers can now interact with buyers in a way that isn’t adversarial.” There are programs available, Beggs said, that help dealers buy right as well. Different
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Tricks of the Trade regional markets often have different values for the same vehicles. “Right now the market is softer than normal,” Beggs said, “so the longer a car stays on a dealer’s lot the more that car depreciates. I don’t know why anyone wouldn’t take a trade-in, except maybe if there was no life left in the car. If the trade won’t sell itself, a dealer can always wholesale it.” That’s what Larry Robinson, owner of Jack’s Used Cars in Centerville, Iowa, does. A veteran of three decades in the used car business, Robinson knows of dealers who specialize in vehicles that have 130,000 or miles on them. If he gets a car like that, he might not want to sell it, but he can send it to one of those dealers. “My problem isn’t what to do with the cars I take in trade,” Robinson said. “Right now I’m selling a lot of cars where the owner doesn’t have a vehicle to trade.” Robinson said the recent recession took a toll on cars. Many of his customers held off getting another car and instead drove their old vehicles until there wasn’t really any life left in them. And between floods, tornadoes and other problems related to bad weather, some cars were just lost. “I’m also seeing a lot of customers keeping their old car as a second car when they come in to buy,” Robinson said. That said, Robinson likes taking trades because it helps with his repeat business. But all things must come to an end, and
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Robinson said his health isn’t what it used to be, so he is in the process of getting out of the business. “From what I’ve learned in 30 years, I don’t understand why a dealer wouldn’t take tradeins,” Robinson said. For James Hunt of Suwanee Motors in Suwanee, Ga., it’s not a matter of policy that prevents him from doing trades, it’s a matter of money. He is in the process of getting his used car business up and running, and the extra cash isn’t there yet. “Right now I am not in a position to do trade-ins,” Hunt said. “I worked in a service department of a new car dealership as a technician for many years and later moved up into administration. Right now I am not a full-fledged car dealer. I still have a lot of things to do to get up and running.” But, Hunt said, he understands the value of trade-ins and feel his experience as a technician gives him an advantage. He can fix the cars himself, and he has a pretty good eye for what’s wrong with a vehicle. Getting a trade for the right price is critical to being successful when buying them, Beggs said. Sometimes a dealer can be so focused on completing a sale that he’ll pay too much for a trade. That is often a problem at franchise operations. The new car side will want to make a sale, pay too much for a trade and then turn around and dump the car off to the used car department, where it becomes their problem. Beggs said dealers should look at trades as
a way to get inventory and keep customers. “I look at it this way,” Beggs said. “With a trade, you might not get the car you want for your lot, but you might be able to trade it to some other dealer for a car you want. You have to be open to the opportunities, and it helps a dealer to keep his wholesale channels open.” Maurice Van Collie has been selling cars in St. Clair Shores, Mich., for more than 40 years. Back when he started, he saw trade-ins as another source of income and a way to save time. “Taking trade-ins meant that I didn’t have to always going off looking for inventory,” Van Collie said. “The vehicles were coming to me. I also saw the trade-in as the customer’s down payment. If the trade-in didn’t sell, I would just turn around and resell it to another dealer or a wholesaler.” Van Collie got his start in the business back when pens were used to fill out finance forms instead of computers, and there were no computers in cars. A dealer with a good working knowledge of engines could take a look under the hood himself to see if there were any potential problems. “I will tell dealers today to be careful when taking trades,” Van Collie said. “It’s very easy for a good trade to go bad if something electronic goes bad. Then the buy isn’t such a good buy anymore. In that case, I just hope to get my money back. “But I look at trade-ins as a great way to build relationships with customers. If the car
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INDUSTRY
Tricks of the Trade C O N T I N U E D F R O M PA G E 21
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I take isn’t that great, I don’t have to keep it.” And, Lescota said, dealers looking for trades to bolster their inventory can sell the deal as a convenience for customers. When a dealer offers a customer a price for a car the dealer wants, sometimes the customer thinks he can get more by selling the car himself. And that’s where the convenience factor comes in. “If that happens,” Lescota said, “the dealer can talk about how convenient it will be for the customer to trade with the dealer. After all, a dealer’s check will be good. How does someone know a stranger’s check will be good?” A dealer can point out what a pain it is to have people come to your home at all hours to look at a car. What if someone wants to take a test drive? What if the car doesn’t sell for weeks? How much time is that customer willing to spend trying to sell the car? Will the customer put ads in the paper? Try some online service? By selling to a dealer, the customer’s work is done. “There are a lot of advantages to both the dealer and the customer when it comes to trade-ins,” Lescota said. “If the dealer understands that and communicates that fact with the customer, both can really benefit.”
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WATCH
New Carfax Research Shows Title Washing is Growing EMERGING SCAM NOW PLAGUES NEARLY 800,000 USED CARS NATIONWIDE BY CHRISTOPHER BASSO, CARFAX A dangerous scam that hides major problems with used cars from consumers is on the rise. According to new research from Carfax, nearly 800,000 used cars lurking on America’s roads may be part of an emerging fraud called title washing. Also alarming, more than 500 are likely being used as taxis. Consumers in New Jersey, North Carolina, Mississippi, California and Georgia are most at risk, but thousands of title washed cars are in every state. Title washing makes rebuilt wrecks and cars with odometer issues look like problemfree used cars on paper. Professional con men illegally alter vehicle documents to get title brands such as “salvage” or “flood” removed from a car’s title. They’ll often patch up the wrecked cars, move them to other states and sell them with a clear title to unsuspecting buyers. Victims can lose thousands of dollars and put their lives at risk purchasing used cars with washed titles. “Our research is clear evidence that title washing continues to fly under the consumer’s radar,” said Larry Gamache, communications director at Carfax. “These cars are sold mainly by perfect strangers who bank on you not taking the proper steps to protect yourself. Demand
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more information than just the car’s title from any seller and shop at places where vehicle history information is readily available, like the all-new Carfax.com. Knowing what you buy and who you buy from are equally important to help avoid dangerous schemes like title washing.” Every motor vehicle department in the U.S. and Canada reports branded titles to Carfax. With this information, consumers get unprecedented protection from Carfax to help identify and avoid hidden problems. Car buyers and sellers can rest assured they’ll know about reported title brands under the exclusive Carfax Buyback Guarantee. Plus, Carfax vehicle history reports alert people to cases of potential title washing. An inspection by a certified, trusted mechanic is also recommended before buying any used car. Titling laws can differ from state to state. To help, Carfax offers consumers a Used Car Buying Guide with free information about car titling and used car scams, as well as tips to help purchase safe reliable used cars. CARFAX, A UNIT OF IHS INC. (NYSE: IHS), IS THE VEHICLE HISTORY EXPERT FOR USED CAR BUYERS, SELLERS AND THE AUTOMOTIVE INDUSTRY. THE COMPANY MAINTAINS A DATABASE COMPRISING OVER 13 BILLION VEHICLE HISTORY RECORDS FROM MORE THAN 86,000 SOURCES WORLDWIDE. TO LEARN MORE, VISIT WWW.CARFAX.COM.
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PRODUCTS
&
LEGAL
SERVICES
Cox Automotive Introduces Listing Tool
HELPS DEALERS UNDERSTAND LOCAL MARKET CONDITIONS BY USED CAR NEWS
Through the combined efforts of two Cox Automotive companies, AutoTrader. com dealers now have access to a new tool - called ListingLogic - that provides actionable insights on how to optimize their used vehicle listings to win more sales. ListingLogic leverages the inventory and consumer traffic on AutoTrader.com and the analytic capabilities of vAuto to help dealers understand local market conditions and what buyers want most, the company said. Available to most AutoTrader.com dealers at no additional cost, the tool provides detailed intelligence about each vehicle’s online performance and recommends specific changes dealers can make to have an immediate impact on their businesses. “With ListingLogic, we cracked the code that had never been cracked before: understanding with particularity and specificity why some vehicles get more attention than others online,” said Dale Pollak, vAuto founder and executive vice president of Cox Automotive. “The Internet is
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the car business today, and the whole name of the game is to get exposure. We knew that if dealers could make the right changes to their listings, they could get more views of their inventory, which could result in more traffic at their dealerships and ultimately more sales.” ListingLogic shows AutoTrader.com dealers where each vehicle stands against its direct competitors. Dealers can drill down into each listing to see key performance factors and understand what matters to shoppers in their local markets, from current vehicle preferences to the ad packages they’re most likely to respond to. With this intelligence, dealers can focus on the factors that will help their performance and ignore those that won’t. ListingLogic has been piloted since the beginning of the year and is currently being rolled out across the nation. Dealers who subscribe to used inventory solutions operating on AutoTrader.com's 2012 platform or newer will have access to the tool.
NEWS
ADESA Simplifies DealerBlock Fee Structure
PRICE BASED ON PURCHASE PRICES ALONE BY AUTO REMARKETING STAFF KAR Auction Services’ business unit ADESA recently announced the new fee structure for open sales on DealerBlock. Those using the company’s 24/7 online marketplace for bid-now events or buy-now inventory should expect to find the fees, in effect for the fourth quarter, to be simpler to calculate and, in some cases, lower. Stephane St-Hilaire, ADESA’s president and chief executive officer, believes dealers will be pleasantly greeted by the program’s new fee system. “We are always looking for ways to make working with us simpler and more profitable for our customers,” St-Hilaire said. “In almost all cases, dealers will be paying less with the fee structure.” The temporary pricing structure will remain in place until the end of the year on Dec. 31. The same price will be paid by all buyers based simply on the purchase prices alone.
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MARKET
WATCH
The Internet Continues to Influence the Auto Shopping Process S T UDIE S SHED L IGH T ON CONSUMER T RENDS
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According to the recently released J.D. Power 2014 New Autoshopper Study, the more time someone spends on the Internet during the car-shopping process, the more dealerships they are likely to visit. The study examines the use of digital devices, websites and apps during the car-shopping and research process. The study found that, on average, automotive Internet users are shopping online for nearly 14 hours prior to buying a vehicle. Individuals who spend 12 or more hours on the Internet end up visiting an average of 3.3 dealers prior to buying, while those who shop between five and 11 hours visit an average of 2.5 dealers. Shoppers who spend between one and four hours online, visit an average of two stores. Another study, commissioned by Cars.com, The Digital Influence: How Online Research Keeps Auto Shoppers in Control found that just half of car shoppers tend to contact a dealership before they physically enter a showroom. A summary of the report found that most shoppers felt they had access to so much information online they could control the
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dialogue with the dealership on their own terms. While the Internet is playing a larger role in the car-shopping process, the dealership visit itself is still very important. Seeing, touching and test driving a vehicle are still important to many buyers and can’t be replicated by an Internet search. In the past, consumers relied heavily on dealership staff to educate them about the vehicles for sale. With the proliferation of online resources, consumers are more educated about a vehicle’s specific attributes before they set foot in a dealership showroom. The Cars.com study found that 68 percent of shoppers used online sources (online searches, dealer websites and independent research sites) to find a dealership. Outdoor ads and radio advertisements were identified by 9 percent and 8 percent of respondents, respectively, as other ways to find a dealership.
WHILE THE INTERNET IS PLAYING A LARGER ROLE IN THE CAR-SHOPPING PROCESS, THE DEALERSHIP VISIT ITSELF IS STILL VERY IMPORTANT. SEEING, TOUCHING AND TEST DRIVING A VEHICLE ARE STILL IMPORTANT TO MANY BUYERS AND CAN’T BE REPLICATED BY AN INTERNET SEARCH.
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BHPH
PERSPECTIVES
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Steps to an Effective Collections Call BY BRENT CARMICHAEL
BASIC STEPS FOR MORE EFFECTIVE COLLECTIONS Many Buy Here-Pay Here dealers seem to have one thing in common. They all struggle with effective collections calls. The main reason is usually lack of training. Here are some basic steps to an effective collections call: 1. THE GREETING. I still believe the best way to start a call is “Good morning/afternoon/ evening.” Starting a collections call with the word “good” helps lower defenses. It also helps reassure the customer’s choice. Take a moment to thank for them choosing you over a competitor. 2. IDENTIFY THE CUSTOMER. The biggest mistake here is asking, “Is (customer’s name) there?” The answer is typically “no.” Try assuming gender specific. If you are calling a female customer and a female answers, simply say, “Hi, (customer’s name). How are you today?” You will very likely be right. If it’s someone else, ask, “May I please speak with (customer’s name)?” Too often collectors ask if the person is there, in or available. It is more effective to assume the person is all of those because the number you are calling is the best number the customer gave you to reach him or her. 3. IDENTIFY YOURSELF. Tell the customer who you are and who you are with.
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There is no big secret here. Even if you are using a blocked call line, they know it is likely a bill collector of some sort. 4. A STRATEGIC PAUSE. As soon as you identify yourself, let there be a moment of silence. They will typically start verbally vomiting in an effort to get you off the phone as quickly as possible. I say let them get it all out and take some notes. I would rather have one 20 minute phone call to figure out what is really going on than five shorter calls over a week to get the same information. 5. REQUEST PAYMENT IN FULL TODAY. Even though they have given reasons why they supposedly can’t pay, you still need to bring them back to reality with the business at hand. Show a little empathy, as in “I’m sorry to hear that,” but then set your expectations. Simply say, “How are you going to make your payment of $___ today?” This tells them you are expecting payment in full and you expect it today. 6. VERIFY SOME INFORMATION. Before you move forward with arrangements, make sure you verify some information regarding the account. Address, phone numbers, job numbers or place of employment would be the most common, but don’t be afraid to verify
reference information, especially if you have had difficulty reaching them or leaving messages with them. 7. THE SOLUTION. Make sure the solution is in the best interest of the company and the customer. It really needs to make sense for both parties to be effective. 8. CLOSE THE CALL. Thank the customer for not only taking time to talk with you about the account, but also for their business. They could have not answered the phone, not called in or called another creditor, but they didn’t. They called you or answered your call, so show a little gratitude. It will go a long way. 9. DOCUMENT EVERYTHING FROM THE CALL. This way everyone in your organization knows what you know. If you happen to not there, your coworkers have all the information necessary to take care of the customer. Practice these nine steps on every collections call, whether it is incoming or outgoing, and I assure you that you will not only collect more money, but not have to work as hard to get it. BRENT CARMICHAEL IS ONE OF THE INDUSTRY’S MOST WELL RESPECTED BUY HERE-PAY HERE EXPERTS. HE IS EXECUTIVE CONFERENCE MODERATOR FOR NCM ASSOCIATES, INC. PRIOR TO JOINING NCM, BRENT WORKED 17-PLUS YEARS IN SUBPRIME FINANCE AND COLLECTIONS.
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AUCTION
NEWS
NAAA Pedal Car Auction Pushes Beyond Half-Million Dollar Mark $576,30 0 BENEF I T S N A A A WA RREN YOUNG, SR. SCHOL AS T IC F OUNDAT ION, INC.
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Pedal cars attracted very adult-sized donations at the National Auto Auction Association’s Black Book Pedal Car Auction, raising more than a half-million dollars to benefit the organization’s nonprofit NAAA Warren Young, Sr. Scholastic Foundation, Inc. The auction was held during the 2014 NAAA Annual Convention in Boston. Among the 14 candy-colored, fully accessorized pedal-powered entrants, a Jump Truck custom-built by State Line Auto Auction of Waverly, NY – complete with jumper cables, compressed air system, push bumper, beacon lights, trash receptacle, fire extinguisher and first aid kit – claimed the “Best In Show” title with a winning bid of $102,000. The team of John Williams, Chris Waters and Ed Garrity under the supervision of Rob Bennett invested almost 130 hours in the project, according to State Line president Jeff Barber. The charity event’s entry fees, vehicle sales, award sponsorships and additional contributions collected a grand total of $576,300 for the association’s annual merit scholarship program. Four other contestants took home special
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show awards sponsored by NextGear Capital and judged by the NAAA’s four chapter presidents: McConkey Auction Group for “Most Creative Pedal Car,” Greater Milwaukee Auto Auction for “Best Custom Pedal Car,” Pittsburgh Auto Auction for “Best Accessories” and Akron Auto Auction for “Most Unusual Paint Job.” “I am truly astonished and extremely gratified by the remarkable response to this first-time fundraiser that far exceeded our expectations tenfold,” said outgoing NAAA president Jack Neshe, explaining the original goal was $50,000. “I want to express my heartfelt appreciation to all of our auction participants for their generous support.” Neshe, who also chairs the WYS Scholastic Foundation’s board, had suggested the auction idea a year ago during a visit to NAAA headquarters where he saw a pedal car in the office of chief executive officer Frank Hackett. “We just thought this offered our members a great way to demonstrate their creativity and craftsmanship in a friendly, fun competition while raising money for our scholastic foundation, which since it began in 2004 has
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helped 120 deserving students achieve their dreams of higher education,” noted Neshe. The auction rules allowed the contestants to modify new or preowned pedal-powered vehicles or even custom make their own – whether trains, planes or automobiles – as much as their imagination and skill would permit. That included paint, decals, graphics, exhausts, lights, sirens and other parts or accessories. Handiwork of all the entrants vying to be among the finalists selected to compete in the auction appeared in a display at the CAR Conference in March. The lucky 13 to be included with Black Book’s entry on the auction’s run list were chosen by a random drawing held at the National Independent Automobile Dealers Association Convention this past June in Las Vegas. In run order the auction contestants and their final bids were: Black Book ($49,500); Capital City/Mountain State Auto Auctions ($10,000); ADESA Indianapolis ($8,500); Akron Auto Auction ($14,000); Sanford Auto Dealers Exchange ($25,000); McConkey Auction Group ($45,000); Manheim
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($75,000); Dealers Auto Auction of the Southwest ($10,000); State Line Auto Auction ($102,000); Lynnway Auto Auction Inc. ($45,000); Greater Milwaukee Auto Auction ($25,000); Farmington Auto Auction ($15,000); Pittsburgh Auto Auction ($31,000) and Charleston Auto Auction ($26,000). “The benevolent spirit of all those who took part was just inspiring,” remarked Hackett. “It was one of the most entertaining and exciting 45 minutes I’ve ever experienced as we approached a half million dollars and people kept making offers to get us over the mark. For example, Black Book and Lynnway both bought their own cars and then donated them back for resale. It was an amazing evening.” Hackett also noted many magnanimous individual gifts helped boost the final tally, which included $5,000 each from Auction Finance Corporation, Auto Auction Solutions and Jay Cadigan; $10,000 apiece from Charleston Auto Auction, Lynnway Auto Auction, Janet Barnard and Auction Insurance Agency and a $25,000 contribution from NextGear Capital. Tom Cross, president of Black Book, said he was proud his company could be the main sponsor of the association’s first ever pedal car auction. “We believe in NAAA’s work on behalf of the industry and are big supporters of the Warren Young Scholastic Foundation. We’re happy to give back to the remarketing community in this role and thrilled at the event’s overwhelming success in raising money for a worthy cause.”
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THE CHARITY EVENT’S ENTRY FEES, VEHICLE SALES, AWARD SPONSORSHIPS AND ADDITIONAL CONTRIBUTIONS COLLECTED A GRAND TOTAL OF $576,300 FOR THE ASSOCIATION’S ANNUAL MERIT SCHOLARSHIP PROGRAM.
BEST IN SHOW WINNER: STATE LINE AUTO AUCTION OF WAVERLY, NY - PEDAL CAR SPONSOR AND HIGHEST BIDDER (LEFT TO RIGHT) PAUL BARBER, AUCTION PRESIDENT JEFF BARBER AND EMILY BARBER.
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GARAGE JOE’S
It’s That Time of Year Again It’s hard to imagine that 2015 is just a few weeks away, and it’s already time to plan what the new year will look like for your business. That’s right, it’s time for you to decide what your business will look like in the new year. Success is no accident. Success comes from careful planning and then implementing those plans so they become your reality. So what will your year look like? I understand it can be challenging to think about a new year when you’re trying to salvage what’s left of this one, but you have to be ready to hit the ground running on Jan. 2, 2015. You can’t waste precious days “cleaning up 2014” while the competition has already started the race. When a dealer thinks about forecasting he typically thinks about how many units he wants to sell, how much gross profit he wants to
WHAT WILL YOUR BUSINESS PLAN LOOK LIKE?
make on each unit or how many sales dollars he wants to generate. He might even forecast how many wholesale units he anticipates selling and whether he anticipates making a profit or loss on those wholesale units. What will your business plan look like for the new year? What are you forecasting? The first thing I ask my clients is, “How much money do you wish to personally make?” I firmly believe dealers need to consider their own personal financial needs and goals before they can forecast targets for their company. How much money will you need to enjoy the quality of life you feel you deserve? How much money do you wish to contribute to charitable entities? And so on. That type of forecasting and planning requires a dealer to think about net profit rather than gross profit.
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BY JOE LESCOTA
Isn’t gross profit what dictates how much net profit you’re going to make? Yes and no. Gross profit is what you earn – but net profit is what you get to keep of what you earn. In order to forecast a net profit for the dealership, the dealer must also forecast expenses for the business. Operating expenses should never be a surprise. Any dealer I ever met who failed to make a profit also failed to forecast expenses, or at least forecast them correctly. Do you have a salesperson or persons? How much sales compensation do you forecast paying out in 2015? You know you’re going to want to motivate your sales team from time to time and you’re probably going to need to move out some of those older units you have in stock. And let’s not forget those times you want to reward your sales staff for hitting that high gross or for exceeding their unit sales forecast. Sooner or later you’ll throw caution to the wind and begin handing out spiffs, bonuses and incentives as the mood strikes you, and thus begins the downward spiral of profitability. I’m all in favor of rewarding outstanding sales achievements by salespeople, but you still have to decide how much money you’re going to be paying out or you’ll end up paying out way more than you originally anticipated. Sales compensation is one of the three major expenses I found contribute most to the loss of dealers’ profits. To stay within reasonable industry guidelines a dealer should keep the amount spent on salesperson compensation to 18-24 percent of total gross profit of unit sales. As a side note, because of the increasing competition in today’s highly efficient marketplace, many dealers have chosen to pay their sales staff a flat rate fee per unit sold rather than a percentage of an ever-decreasing gross profit per retail unit sold. Those dealers have discovered paying a flat rate commission permits them to: •T urn their inventory more rapidly because salespeople are not focusing on gross profit per sale. •H ire salespeople who are truly consumer-focused rather than profit-focused. •S ell more total units, allowing them to gain market share. •F ocus on “super gross” – selling more units at a lower gross profit per unit retailed allows for more units sold, leading to more F&I income, more reconditioning profits (65 percent of recon cost is profit back to the dealer), more service dollars (for dealers with their own service departments), and the opportunity to take in more trade-ins, which leads to more access to inventory. Don’t go into 2015 without a solid business plan. You have time to evaluate where you are today and compare to where you thought you would be. The best way to achieve success is to plan for it. And while you’re at it, let NIADA help you to achieve success even faster by becoming a Certified Master Dealer and discover the other two major profit-robbing expenses. JOE LESCOTA, A VETERAN OF MORE THAN 25 YEARS IN THE AUTOMOTIVE INDUSTRY, IS NIADA’S DIRECTOR OF DEALER DEVELOPMENT AND INSTRUCTOR FOR NIADA’S CERTIFIED MASTER DEALER PROGRAM. HE CAN BE REACHED AT JOE@NIADA.COM.
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REGULATORY
MATTERS
Regulatory Issues Remain in the Spotlight TA K E AWAYS F ROM RECEN T CF P B F IEL D HE A RING the law and be subject to the same level of The Consumer Financial Protection oversight,” said Cordray. “This expansion of Bureau’s increased regulation of auto dealers coverage is important to protect consumers, and lenders has been one of the major but it also will remove a distortion in the storylines this year. Recently, the CFPB held marketplace and is a matter of simple fairness a field hearing in Indianapolis to discuss to competitors who should play by the same the state of the auto financing industry. rules in the same way.” Held on the campus of Indiana University Questions raised over CFPB’s Purdue University Indianapolis, this hearing recommendations consisted of remarks from CFPB director Prior to the hearing, the CFPB released Richard Cordray, a panel discussion from a new supervisory highlight report, in various experts in the world of finance and which the agency describes its fair lending testimony from consumer and civil rights supervisory activity in the indirect automobile groups. lending market. Within this report, the Here are three key takeaways from the CFPB proposed several methods dealers and event: lenders can undertake to help them remain Extension of oversight to captive compliant and avoid discrimination. These lenders methods include: In his opening remarks, Cordray • Increase internal monitoring. announced a proposal for CFPB’s reach • Eliminate dealer discretion to mark up to extend to larger nonbank auto lenders, interest rates by switching to a flat fee model. which includes captive lenders. According to • Develop and implement more intensive Cordray, nonbank auto finance companies compliance management systems. have never been subject to any supervision at During the panel discussion, concern was the federal level, despite lending hundreds of voiced over the CFPB’s recommendation billions in credit to consumers. to switch to a flat fee model to mitigate the “It should not matter whether you get risk of discrimination due to marked up buy a loan or lease from a company that has rates. The panel raised the issue that this a banking charter versus one that does one model does not consider the economic not – every auto lender should be following
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BY NEXTGEAR CAPITAL impact of altering the auto finance market, as switching to flat fees would increase the cost of credit for consumers and doesn’t solve the discrimination problem. Transparency and education vital for consumers Educating consumers and being more transparent was another hot topic during the panel discussion. Because the car buying experience can be a lengthy and taxing process, with long and complicated disclosures, many consumers don’t know what they’re getting into when they purchase a car. While organizations such as the NADA have created publications for consumers promoting financial literacy, the CFPB would like to see dealers and lenders do a better job themselves of simplifying the process for the consumer. The event was met with positive feedback from those in attendance and it’s apparent that many organizations within and outside the auto industry are supportive of the CFPB’s efforts to curb discrimination and bad lending practices. While it remains to be seen what the end result will be from this proposed extension to regulate nonbank auto lenders, it is clear that dealers and lenders need to have their ducks in a row to ensure all consumers are being treated equally and fairly.
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MANAGEMENT
MATTERS
NIADA Certified 2.0
E N H A N C ED N I A DA C E R T I F I ED P R E - O W N ED P R O G R A M GE T S INDEP ENDEN T DE A L ERS IN TO T HE LUCR AT I V E CP O M A RK E T
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Certified pre-owned has become the industry’s most repeated buzzword lately. The CPO model, created by franchise dealers and OEMs, has set a new standard for used car sales and redefined the way customers shop for cars. In 2013, sales of manufacturer-certified pre-owned vehicles totaled a record 2.1 million units and sales this year have been even better, with May’s 207,371 units setting a record for sales in a month, according to Autodata. And those CPO sales are generating significantly more revenue than average vehicles. Citing figures from CNW Research, Automotive News reported the average premium for CPO units was $2,842 in August – the 14th consecutive month it had surpassed $2,800 – with a peak of $2,944 in June. High-dollar national marketing campaigns have educated the car-buying public about the benefits of buying a used car that has been certified, so much so that it has now become an expected part of the process. Much like a missing vehicle history report, if a car has not been certified many customers wonder what the dealer is hiding. For the most part, independent dealers have been left out of the CPO game. Good dealers, of course, have always inspected their cars and done their best to represent the condition of the vehicle as accurately as possible. Some even stand behind their inventory by offering some type of limited warranty to ease the mind of wary customers. Even so, customers can be a little skittish of a dealer-endorsed certified car and many end up paying more at a franchise dealer’s used car lot to get the label they are after. But that can change with the reintroduction of the NIADA Certified PreOwned program. NIADA Certified has been around for a few years, but it recently underwent some extended enhancements that have made it a more attractive option to customers and a powerful profit center for dealers. “The NIADA Certified program allows independents to play on an even field with the new car dealers,” said NIADA president-elect Frank Fuzy, owner of Century Motors in Pompano Beach, Fla. “It’s 50 percent easier to sell a car that’s been certified and has a warranty, and we know that today every sale counts.” The NIADA Certified program is backed by Warrantech, an AmTrust Financial company. NIADA approached the company last year to retool the program and INDEPENDENT DEALER
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develop something that made sense for independents. Warrantech, which built similar programs for other national partners, compiled all the data it could from dealers, consumers and associations to create a program it says is “built for dealers, by dealers.” “We basically asked, ‘What do you want?’ and then we listened to what everyone said,” Warrantech national business development manager Natalie Suarez said. Since it kicked off in January, the number of dealers using the program has increased steadily. Suarez said dealers understanding exactly what CPO is, and can be, is part of the reason. “Customers want peace of mind,” she said. “They are looking for cars that are advertised and branded as something they can trust has been thoroughly checked out. NIADA Certified gives them a guarantee.” Some of the biggest changes to the new program include:
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Three very flexible CPO limited warranty programs that include basic, standard and enhanced options. CPO coverage for vehicles up to 14 years old and with up to 150,000 miles. 100 percent credit of the CPO limited warranty investment if the customer upgrades to an NIADA vehicle service contract. No surcharges. Enhanced NIADA CPO marketing resources, including large window banners, lot flags, etc. A more seamless, less timeconsuming CPO contract forms processing procedure. eBay Motors promotion and inventory listing support/ endorsement. ASE certified technician vehicle inspection requirement enhancing validity to the customer.
BY CHRISTY TAYLOR
NIADA Certified is exclusive to NIADA members. Dealers choose which vehicles they want to certify, as well as the terms of the warranties – three months/3,000 miles, six months/6,000 miles or 12 months/12,000 miles. Current model year plus 14-year units with zero to 150,000 miles are eligible. There is a cost to the dealer to certify, but if the customer upgrades to a service contract the fee is waived. Even if he doesn’t, the value added with the certified status can cover the cost.
THE NIADA CERTIFIED PROGRAM IS BACKED BY WARRANTECH, AN AMTRUST FINANCIAL COMPANY. NIADA APPROACHED THE COMPANY LAST YEAR TO RETOOL THE PROGRAM AND DEVELOP SOMETHING THAT MADE SENSE FOR INDEPENDENTS. “There is a small cost to it in the beginning, but it gives leverage to the dealer to ask for more money in the price because of the value it has being certified,” Suarez said. “Consumers will and do pay more for certified.” “If you ask them, about one in four customers will upgrade to the service warranty, so the program really pays for itself,” Fuzy said. His dealership has had so much success with NIADA Certified that he jokingly said he doesn’t want other dealers to know about it. His message to them? “Don’t do it because your sales will increase and you’ll be competing with me.” For more information about NIADA Certified, visit www.niadacertified.com or call 1-877-310-0288. CHRISTY TAYLOR HAS WRITTEN ABOUT THE INDEPENDENT AUTO SALES INDUSTRY FOR 14 YEARS AND OPERATES CROSSROADS COMMUNICATIONS, A PROVIDER OF EDITORIAL, CREATIVE AND MARKETING SUPPORT FOR BUSINESSES. FOR MORE INFORMATION, VISIT WWW.CROSSROADS-COM.COM.
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INDUSTRY
NEWS
PassTime Press Memo RESP ONSE TO MEDI A QUES T IONS IN L IGH T OF L I T IG AT ION
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PassTime has been recently contacted by various media outlets regarding its products as the result of pending litigation against one of PassTime’s valued customers. Our company policies prevent us from commenting on pending litigation involving our product. With that said, our device plays a vital role in allowing those who might not otherwise qualify for an auto credit to get financed. We are proud that our technology has given consumers greater access to financing and enhanced transportation options. PassTime has been in business nearly two decades and has well over one million devices on the road. During that time, thousands of car buyers have personally called the PassTime customer service line to thank us for helping them get car financing for a better vehicle at lower rates than they otherwise would have had access to. Further, independent studies have demonstrated that, with the use of devices like PassTime, payment default rates at dealerships using the devices fall from as high as 40 percent to below 5 percent, while repossession rates as high as 25 to 30 percent fall to below 3 percent. In simple terms, the devices let people
buy cars, and let them keep cars. Nearly all car buyers with these devices installed also consistently see their credit scores improve – and access to credit builds personal wealth. PassTime actively works with dealers and finance sources to ensure compliance with applicable local and federal laws. This includes providing regular workshops on the issues of legal compliance. We have engaged national compliance counsel for over 15 years to monitor and advise us of changes in federal and state laws that impact the use of devices as those changes occur. PassTime also works with state regulators to ensure regulators understand the use and safety of the devices and that PassTime complies with applicable state law. PassTime has also consulted on state legislation ensuring that enacted laws provide proper consumer protection and guidance for dealers and finance companies using the devices. PassTime prohibits its dealers and finance sources from charging car buyers for the devices. PassTime provides its dealers a comprehensive disclosure statement detailing the purpose and functions of the devices – including, where applicable, a device’s ability to render a vehicle unable to start. Dealers agree to use the PassTime disclosure or adopt
PASSTIME ACTIVELY WORKS WITH DEALERS AND FINANCE SOURCES TO ENSURE COMPLIANCE WITH APPLICABLE LOCAL AND FEDERAL LAWS. THIS INCLUDES PROVIDING REGULAR WORKSHOPS ON THE ISSUES OF LEGAL COMPLIANCE. a similar comprehensive disclosure that a car buyer must read and sign before buying the car. Devices cannot disable a moving vehicle, and all devices capable of vehicle disablement have audible warnings reminding the consumer when payment is due. In the event of an emergency or to avoid inconvenience, a customer who has his or her vehicle disabled for nonpayment may contact PassTime 24/7 for a code allowing the customer another 24 hours to drive the vehicle. PassTime is proud of its products, committed to compliance and respectful of consumers. Again, PassTime will not comment on the merit or lack of merit of any lawsuit. PassTime will conduct an internal, thorough investigation of the matter, and will continue to ensure its compliance with the law.
DEALER 20 GROUP THE POWER COMES FROM THE DEALERS THEMSELVES The power of NIADA’s Dealer 20 Group comes from the dealers themselves – working and sharing their ideas and real world experiences with each other. If you’re tired of constantly reinventing the wheel and enjoy the sharing of ideas and best business practices with dealers like yourself, the NIADA Dealer 20 Group is for you. Dealers are matched with other dealers of like size and sales volume (outside of the other dealers’ selling area) all with one goal in mind – to be more successful and to learn how to improve day to day operations, increase sales and make more profit. While the NIADA Dealer 20 Group traditionally meets three times a year, dealers have access to their financial performance each and every month of the year. These unique groups are designed for NIADA’s independent dealers as they do business today: retail, BHPH – or a little bit of both. Sessions are moderated by Joe Lescota, NIADA Director of Dealer Development.
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Preferred Partners OIADA Partners ‐ Discounts are available for OIADA members. Call now to join ‐ 614‐863‐5800 or email info@ohiada.org & mention “state magazine.” AFC
American Tire Distributors
ASC Warranty
Inventory nancing available for dealer trades & accepted at 1000+ auc�ons in USA & Canada. Foorplan nancing programs for retail & wholesale automobile dealers. Call 1‐888‐345‐0600.
American Tire Distributors is the na�on's largest �re distributor and ATD also carries wheels, accessories and supplies to keep your shop running smooth. Contact Colin Gallagher at 704‐280‐2219.
We understand the vital role a great service agreement can play in building a rela�onship between the dealer and customer that results in con�nued business. Call Clayton at 937‐725‐1729.
Autotrader.com
AutoZone
Our solu�ons give dealers the exposure to reach the largest audience of in‐market car shoppers with cost‐effec�ve adver�sing solu�ons. Www.weworkforyou.com or 1‐877‐627‐9585.
�ene�its � Group Join our group discounted pool! Members can save up to 53% on your workers compensa�on premiums. Call: Mike Brown at 1‐877‐765‐4200 ext. 270.
EMS
Cars.com
Cars.com is dedicated to providing dealerships with comprehensive resources and training that will ensure their success in the online world. Cars.com keeps you aware of the latest trends in the online automo�ve world. 1‐800‐298‐1460.
Guardian Life Insurance
AUL Corp
Premier Service Contract Company offering dealers the opportunity to increase prots and sa�sfy their customer needs for quality vehicle protec�on. Represented in Ohio by Innova�ve Dealer Services. In Ohio call 740‐492‐4138.
We are offering an Auto Parts Discount Program for NIADA/OIADA members only. Customized program to t all your needs with discounts unsurpassed in the industry. Call 614‐475‐2621.
Car‐Ware
Comsoft
The Dealer Management So�ware (DMS) that does everything you need to do, plus a unique accoun�ng integra�on with Quick Books! Call Lynn at 1‐855‐504‐5949 ext. 8006.
We have been specializing in Dealership Management & Marke�ng So�ware Solu�ons (DMS) since 1971. Visit www.comso�.com or call Chip at 1‐800‐849‐3838.
Higher Turnover
Intellinectics
Electronic Merchant Systems (EMS) provides the best opportunity in the state to accept credit cards at your dealership with the best retail dealer rate available. Call 1‐866‐845‐6025.
People are at the heart of everything we do. Individuals, families and business owners put their trust in us to protect the people who ma�er to them. And we make it a point never to forget that. (614) 516‐ 4009 or mark_mesewicz@glic.com.
Higher Turnover specializes in working with small dealerships. We know that small dealers usually need more than what other companies offer. Call 1‐800‐430‐2119.
Don’t put your les in a cabinet, scan them into the next genera�on of storage facili�es. For more informa�on call 614‐921‐8170.
Lease It Own It
Mighty Distributors
The Milby Group
NextGear Capital
BHPH dealers have discovered the many different advantages of a Lease to Own Business as compared to the standard BHPH programs available. Contact Rick or Rob at 614‐395‐5363.
Full service program with Tier One OEM quality auto parts from the world's leading global manufacturers, a true two step distribu�on from the manufacturers to professional installers. Contact Jeff at 614‐252‐6000.
Providing F&I Auto Sales & Management Training, vehicle service contracts, Limited Warran�es, Cer�ed Programs, Gap, BHPH Gap, VSI and Credit Insurance. We provide a mul�tude of services for all your dealer needs. Call 740‐652‐9942.
With pioneering technology and a total commitment to customer service, NextGear Capital empowers dealers to oor plan vehicles from anywhere, at any �me. 1 (888) 969‐3721
PassTime
Pro‐Credit Express
ProGuard Warranty
Stolly Insurance
PassTime has supported & enhanced the Special Finance Industry through the implementa�on of high‐tech Payment Assurance & GPS solu�ons that improve customer payments. Call: 1‐877‐727‐7846
Providing the fastest & easiest total solu�on for all your credit bureau & compliance needs. We provide all 3 credit reports at a frac�on of the cost ! All signup fees are waived for OIADA members ‐ Call Vince at (330) 904‐9303.
We provide independent and a full menu of vehicle service contracts along with a variety of ancillary products. A ProGuard partnership benets the dealer in many ways. Contact or visit us at 1‐877‐474‐9462 or www.proguardwarranty.com.
Special insurance program for all the needs of the independent automobile dealer . Garage Liability call Sarah at 614‐795‐3368. Health Insurances call Randee at 419‐227‐2570.
Take 5
Terry’s Tire Town
Usedcars.com
Vantage Finance
We help in genera�ng news sales for your dealership. Services include direct mail, email & data appending and crea�ve design. Call Eric at 561‐819‐5555 x117 or Alex at 561‐819‐5555 x174.
Terry's Tire Town stocks more than one million �res in all sizes and brands, housed in 11 state‐of‐the‐art warehouses across the Eastern and Midwestern United States. Call Greg at 1‐800‐235‐2921 .
We are one of the leading providers of used car leads, offering dealerships access to more than 20 million in‐market buyers monthly, free inventory lis�ngs on top auto sites. 1‐877‐894‐5062
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Turn‐key F&I solu�on for dealerships that generates revenue without the overhead costs & compliance headaches of tradi�onal F&I opera�ons. 402‐315‐3329 or info@vanatagenance.com.
NOVEMBER/DECEMBER 2014
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INDUSTRY
?
NEWS
Response to Media Questions in Light of Litigation
RESPONSE TO MEDIA QUESTIONS IN LIGHT OF LITIGATION
In response to the recent New York Times article Miss a Payment? Good Luck Moving That Car, PassTime has written the following letter to the editor:
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While the article Miss a Payment? Good Luck Moving That Car does illustrate some of the struggles that many in the United States face, the article does not address many positive aspects to the subprime automotive loan industry, specifically related to devices like those which PassTime provides. Like several of the people referenced in the article, I was once in that very same position. I had subprime credit and could not get a loan. We started PassTime as a way to not only help lenders protect their assets, but to help give options to consumers. The goal of a PassTime solution is to help a consumer buy a car, keep that car, and restore their credit. Use is Voluntary: First, and perhaps foremost, it is important to note that consumers who enter a loan with a PassTime device installed on their vehicle do so completely on a voluntary basis. All PassTime products include a written consumer disclosure which must be signed, outlining exactly what the device does, how it will be used and all party’s obligations regarding the device. The consumer must consent to the installation and use of the device as a condition of their loan. If they do not wish to have a device in their vehicle, they can purchase a vehicle at a different dealership that does not have that requirement. Loan Qualification: PassTime devices help lenders mitigate risk on subprime loans, allowing them to offer loans to consumers who otherwise might not qualify. There was a time when a subprime credit history would nearly automatically disqualify a consumer for an automotive loan. With devices, like those which PassTime provides, lenders have more options when it comes to who may be approved for a loan. When evaluating a loan application, an automatic “no” can be turned into an “I think we can make this work.” While it is an unfortunate event that a consumer falls behind in their loan payment to the extent that the vehicle is rendered unable to start, it is very likely that without the device, that consumer may not have qualified for the loan at all. PassTime has had many consumers over the years thank us for helping them qualify for a loan that may have been unattainable without a device. Access to transportation is so vital to most of us that the thought of not being able to secure funding for a vehicle is a very scary proposition. INDEPENDENT DEALER
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By lowering the overall risk of the loan, PassTime devices in many ways allow access to that transportation that might be unattainable without it. Additionally, many consumers have expressed that they actually value the automatic payment reminders because it helps them stay current on their payments. Who has Subprime Credit: The article states, “lenders are reaching deeper and deeper into the ranks of Americans on the financial margins…” but earlier in the article acknowledges, “roughly 25 percent of all new auto loans made last year were subprime…” One quarter of all new loans issued are to consumers with subprime credit. Subprime credit scores are not just affecting people impacted by the financial downturn and those in the lower economic tiers. We are talking about people from all walks of life, all economic statuses. Compliance and Safety: While we can only speak on behalf of our own company, PassTime actively works with dealers and finance sources to ensure compliance with applicable local and federal laws. This includes providing regular workshops on the issues of legal compliance. We have engaged national compliance counsel for over 15 years to monitor and advise us of changes in federal and state laws that impact the use of devices as those changes occur. PassTime also works with state regulators to ensure regulators understand the use and safety of the devices and that PassTime complies with applicable state law. PassTime devices utilize “starter-interrupt” technology which can in certain cases prevent a vehicle from starting when it is in the off position, but cannot disable a moving vehicle. Devices capable of vehicle disablement have audible warnings reminding the consumer when payment is due. In the event of an emergency or to avoid inconvenience, a customer who has their vehicle disabled for non-payment may contact PassTime’s 24/7/365 customer care center, allowing the customer another 24 hours to drive the vehicle. PassTime products are designed to benefit both the lender and the consumer. By helping lower the risk of issuing a loan to a subprime borrower, PassTime devices can help consumers buy a car – and help them stay in that car. Sincerely, Stan Schwarz Founder & CEO, PassTime
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SAFETY
WATCH
CHRYSLER RECALLS SUVS
VEHICLE MAY STALL UNEXPECTEDLY Chrysler Group LLC is recalling 188,723 model year 2011 Dodge Durango and Jeep Grand Cherokee vehicles manufactured Jan. 5, 2010 to July 20, 2011, and equipped with either a 3.6L or 5.7L engine. In the affected vehicles, the fuel pump relay inside the Totally Integrated Power Module (TIPM-7) may fail, causing the vehicle to stall without warning. A vehicle stall increases the risk of a crash. Chrysler will notify owners, and dealers will replace the fuel pump relay with one external to the TIPM, free of charge. The recall is expected to begin on Oct. 24. Chrysler’s number for this recall is P54.
SAFETY
WATCH
FORD RECALLS HYBRIDS FOR OVERHEATING
COOLANT PUMP MAY FAIL AND SHUT DOWN POWERTRAIN BY USED CAR NEWS Ford Motor Co. is recalling 70,209 model year 2005-08 Ford Escape hybrid electric vehicles manufactured Oct. 13, 2003 to June 20, 2008, and 2006-08 Mercury Mariner hybrid electric vehicles manufactured June 10, 2005 to June 20, 2008. The coolant pump for the hybrid system may fail resulting in the hybrid electronics overheating. If the hybrid electronics system overheats, it may shut down the powertrain, resulting in a stall-like condition, increasing the risk of a crash. Ford will notify owners, and dealers will inspect and replace the original Motor Electronics Coolant Pump with an improved brushless pump, free of charge. W W W. O H I A D A . O R G
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AUCTION
NEWS
Alexis Jacobs Inducted Into NAAA Hall of Fame INNOVATIVE AND PASSIONATE BUSINESSWOMAN HONORED
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A U.S. auto auction industry legend, Alexis Jacobs, was inducted into the National Auto Auction Association Hall of Fame during its 66th annual Convention and Exposition. Jacobs, owner and president of Columbus Fair Auto Auction in Obetz, Ohio, has been a leader in the industry and the association for nearly five decades, and holds many industry honors and awards in the remarketing industry and business community. KAR Auction Services CEO and director James Hallett presented the award. The Hall of Fame award, among the most prestigious the NAAA bestows, is presented annually to an auction executive and/or industry supporter who consistently exemplifies the high standards of the NAAA code of ethics. Jacobs was steeped in the auction business at the early age of 12 alongside her father, William Jacobs, who founded the auction in 1959. Upon his untimely death in 1982, she took on oversight of day-to-day operations of CFAA, which has since grown into an 85acre, 11-lane auto auction facility and nearby body shop that moves nearly 2,000 units on its Wednesday sale days – nearly 200,000 vehicles annually. "Alexis puts her all into absolutely everything she does," Hallett said of his fellow auction executive and longtime friend. "She is a true inspiration to many in the industry, in the community and to me personally." "Anyone who knows Alexis knows that she loves cars, she loves the auction business and she loves people. She truly is one of a kind and has created a lasting legacy in our industry." Jacobs' long support of the remarketing industry and successes as a businessperson and entrepreneur have not gone unnoticed among her peers. She earned the 2011 NAAA Pioneer Award from the National Auto Auction Association. She is also the recipient of the Columbus Automobile Dealers Association's 1996 Automotive Achievement Award, and in 1998 was inducted to the National Independent Automobile Dealers Associations' "Ring of Honor." CFAA, under her leadership, has earned its share of recognition. The auction was a finalist for the 1995 Ernst & Young, Inc. Magazine Central Ohio "Entrepreneur of the Year" award, and has been ranked as one of the top 500 women owned businesses by Working Woman Magazine in both 1999 and 2000. Jacobs' lust for life is evident in her recreational activities, which range from drag racing as a teen and competitive sports, angling in more than 100 billfish tournaments. She landed a 730-pound, nearly 18-foot blue INDEPENDENT DEALER
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marlin during a tournament in the Bahamas. Jacobs has always taken the time and made the effort to give back to the industry she loves and the community. Her charitable efforts have provided support for youth and education, including causes like Nationwide Children's Hospital and Charity Newsies. She has sat on the boards of the Salesian Boys and Girls Club of Columbus and the Ohio State University Foundation. Her involvement with the NAAA spans nearly five decades and includes five years as chair of the legislative committee before becoming the association's second woman president in 1996. Jacobs is a champion of
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efforts to enhance member services and promote legislative initiatives that benefit the industry. She was also one of the founding members of ServNet. "Alexis is passionate about everything she does and never settles for 'good enough,'" Hallett noted. "An auction would not survive – and thrive – for six decades without an innovative leader who is willing to embrace change and adapt with the times. "Alexis is simply a class-act human being. She is incredibly successful and driven, yet always remains gracious and incredibly humble. She is generous with her community, her employees, her family and her friends."
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Feature Story COMPLIANCE
OVERDRIVE
Conversations With Lenders THE IMPORTANCE OF A STRONG RELATIONSHIP
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In times when lenders seem to be making more auto loans and credit availability is not necessarily the most serious issue facing our marketplace, it is important for dealers to understand they gain a competitive edge when they are able to maintain strong, effective relationships with their lenders. These dealers tend to secure more approvals and on more favorable terms. When they benefit, the customer benefits. When it comes to advertising the old adage holds true: Know your customer. When it comes to the success of your dealership: Know your lenders. While some basic principles continue to be key to maintaining good working relationships with your lenders, the reality is credit applications often are incomplete, and even this most basic starting point can be a challenge. When dealers collect customer details, they have an opportunity to get to know their customers better and help their lenders more effectively gauge risk. Finance managers must understand proper processes involved in taking credit
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and document preparation fees set out in the documents, to ensure they comply with state laws. And we are always on the lookout for anything that’s unusual or suspicious about the transaction that could be a possible indication of fraud. As most financing providers do, we have our own internal processes for documenting our checks on the prescribed requirements. Finance providers and dealers are both responsible for ensuring transactions are well-documented and in compliance with applicable laws because, ultimately, we want to set the stage for the best possible customer experience. Are there any red flags you look for in particular? Repeat issues are often regarded as red flags. For example, the following situations could prompt additional scrutiny: • Dealers who submit forms that have to repeatedly be sent back for completeness or accuracy. • Dealers who have an excessive number of held or suspended contracts over a certain period of time. • Dealers who submit applications that are routinely declined, and/or where there seems to be a pattern of misrepresentation between the credit application and booked funding package. Generally, if we keep seeing the same thing over and over, it’s a red flag and it raises concerns as to whether the dealer is committed to submitting high quality applications and funding packages. Closing Remarks My conversation with Brad reminded me that in our fast-paced world, speed can sometimes seem more important than quality. But if the quality of credit information passed to the lender is not 100 percent (e.g., not using current application forms, not providing all required data, not providing accurate data, not describing a transaction that fits the lender’s program requirements, etc.), then it will result in lender rejections and rework. The rejections and rework will require more of dealer’s time than doing it well the first time – and the rejections and rework can create lender frustration and eventually threaten the relationship. The same probably holds true in relationships with our customers, coworkers and families. In the interest of cultivating good relationships across the board, sometimes we just need to slow down so we have the best chance of getting it right the first time. CHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.
Compliance Overdrive
WHILE SOME BASIC PRINCIPLES CONTINUE TO BE KEY TO MAINTAINING GOOD WORKING RELATIONSHIPS WITH YOUR LENDERS, THE REALITY IS CREDIT APPLICATIONS OFTEN ARE INCOMPLETE, AND EVEN THIS MOST BASIC STARTING POINT CAN BE A CHALLENGE. WHEN DEALERS COLLECT CUSTOMER DETAILS, THEY HAVE AN OPPORTUNITY TO GET TO KNOW THEIR CUSTOMERS BETTER AND HELP THEIR LENDERS MORE EFFECTIVELY GAUGE RISK.
applications correctly and have the tools to get to know their customers in depth. There are some basic yet important questions dealers should be addressing in their daily operations to ensure potential issues are addressed. To help gather some insights, I asked Brad Laughlin, senior compliance director for Auto Finance at Ally Financial, a few questions regarding this most critical relationship to the health of any successful dealership. What makes for a good relationship between a dealer and his finance provider when it comes to consumer financing? One of the most important things for the dealer to understand is that from the finance provider’s perspective, the relationship is really a balance between considering the needs of both the dealership and the consumer. When there is honesty and transparency throughout the entire financing process – from how dealers arrange financing for their customers, how they present ancillary products and add-on products and how they conduct themselves during the transaction – the result is more likely to be satisfactory to all parties. What are the most common compliance/documentation mistakes you see on consumer credit applications received from dealers? The number one problem is the submission of unapproved credit application forms. It could be a form from a different finance provider, or an old version of a form that has since been updated. Submitting applications not fully completed can also lead to problems, including issues that may ultimately impact the consumer. Sometimes when there are new or revised forms, dealership systems are not fully updated to account for those changes, which can lead to incomplete or inaccurate documentation being submitted. Dealers interact with a number of financing sources every day and it’s important to recognize which forms, information and disclosures are required by each finance source. When dealers submit funding packages, finance providers are focused on documentation. What requirements do you look for outside the documents themselves? Outside of the documentation, we look at a number of things. Most importantly, we conduct fair lending monitoring. We also check the finance charge rates
BY CHIP ZYVOLOSKI
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