• Final MY 2025 CAFE Standards • Ending Deceptive Marketing Tactics • OK DOCC Investigation
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INDUSTRY NEWS
MAGAZINE CONTENTS 06 07 08 14 30
Ending Deceptive Marketing Tactics OK DOCC Investigation BHPH Sales vs. Collection Compliance Overdrive MY 2025 CAFE Standards
ADVERTISERS INDEX 71B Auto Auction...................................................... 11 ADESA ..............................................Inside Back Cover Albright Insurance...................................................... 7 Ally........................................................................... 19 AutoTrader.com.......................................................... 5 Chickasha Auto Auction............................................ 23 Dealer Center........................................................... 13 Dealer’s Auto Auction of OKC......................Back Cover Dodah.com................................................................17 Jordan Insurance Group ............................................ 9 LEAKE Auction Company.......................................... 25 Loftis Wetzel Insurance............................................ 21 Manheim North Texas...................... Inside Front Cover Oklahoma Auto Exchange......................................... 20 Protective................................................................. 15 United Acceptance .................................................. 22 Voisys....................................................................... 30
WHAT’S NEW www.niada20groups.com
NIADA 20 Groups are designed for NIADA’s independent dealers as they do business today – retail, BHPH or a little bit of both.
FREE Dealer Education on www.niada.tv
• Waking the Economy Up from a Bad Dream •A utomotive Outlook: Back from the Brink, Now for the Golden Age • Protecting Our American Dream
OIADA OFFICE
813 NORTHWEST 34TH MOORE, OK 73160
EMAIL: odell.morgan@sbcglobal.net ROSE & ODELL MORGAN, Executive Directors
AMBER SNOOK, Administrative Assistant
JACKIE GARNER, Office Manager
JARED MORGAN, Electronics/ Software Technician
LYNNA KAY, Programmer STEVE MORGAN, Consultant MIKE MORGAN, Technical Aide
FOR INFORMATION ON HOW TO BECOME A MEMBER OF OIADA PLEASE CONTACT ROSE OR ODELL MORGAN AT 405-232-2947.
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM.
OIADA BOARD OF DIRECTORS PRESIDENT
Chris Goad Regal Motors 3515 N. May Oklahoma City, OK 73112 405-917-5800 managerokc@regalcars.com
CHAIRMAN OF THE BOARD
John Easttom Auto Mart of Elk City P.O. Box 981 Elk City, OK 73648 580-225-1100 automart@cableone.net www.daaokc.com
VICE PRESIDENTS
John T. Longacre, IV Taft Motors, Inc. 722 S. Linden St. Sapulpa, OK 918-224-7700 taftmotorsinc@msn.com Julian Codding Reliable Motors, Inc. 9201 S. Shields Oklahoma City, OK 405-912-5000 juliancodding@msn.com Monte Shockley Shockley Auto Sales 2605 N. Broadway Poteau, OK 74953 918-647-3999 sas@clnk.net
Alert: Missing Arizona Titles
The state of Arizona advises that title certificates displaying the numbers 20950501 through 20953000 have been reported missing. Please contact the Oklahoma Tax Commission’s Motor Vehicle Division or your local tag agency should an Arizona title displaying one of the referenced control numbers be presented to you.
BY ADR STAFF
Commission Approves Consent Agreement on Forms Violations Included in the Used Motor Vehicle and Parts Commission action of Sept. 14 was the approval of a consent agreement between the commission and Hussam Al-Bakri on behalf of Golden Auto Sale & Leasing, a used motor vehicle dealer (respondent) for the following violations: Respondent failed to properly assign certificates of title to vehicles sold by failing to affix tax stamps and in one instance, delivering an open title to a purchaser. Respondent failed to use “We Owe” forms in the sale of vehicles. Respondent failed to keep a record of temporary license plates used on the sale of used motor vehicles. For these violations, the commission staff assessed and Hussam Al-Bakri agreed to pay a fine of $1,000.
BY ADR STAFF
Glenn McDaniel I-35 Credit Auto 1113 SE 51st St. Oklahoma City, OK 73129 405-670-4100 gtamcd@aol.com David McQuerry McQuerry Motors, Inc. 1302 N. Harrison St. Shawnee, OK 74801 405-273-8171 mcquerrymotors@yahoo.com
OIADA CONTACT INFO
Dealers’ Resource is a publication of Automotive Dealers Resource of Oklahoma (ADR) produced on behalf of the Oklahoma Independent Automobile Dealers Association (OIADA), P.O. Box 6905, Moore, OK 73153. The Dealers’ Resource is published monthly by the National Independent Automobile Dealers Association Services Corporation. Periodical postage paid at Arlington, TX, and at additional offices. POSTMASTER: Send address changes to OIADA, P.O. Box 6905, Moore, OK 73153. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of ADR of Oklahoma, the Oklahoma Independent Automobile Dealers Association or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of OIADA or NIADA does not constitute an endorsement of the products or services featured. Copyright © 2011 by O&R Morgan, Inc. dba OIADA. All rights reserved. Dealers’ Resource is a publication of Automotive Dealers Resource of Oklahoma on behalf of the Oklahoma Independent Automobile Dealers Association (OIADA), but is mailed to all dealers in the state in an effort to educate and encourage non-members to join the Association and support our efforts to improve the image and profit potential of the industry. For 55 years, we have worked to represent the independent motor vehicle dealer in Oklahoma. We need your support. FRONT COVER BY Mike Morgan STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Andy Friedlander • andy@niada.com ART DIRECTOR Christy Haynes • christy@niada.com PRINTING Nieman Printing
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A R U N D O W N O F S O M E O F T H E L AT E S T G O V E R N M E N TA L I S S U E S A N D A C T I V I T Y A F F E C T I N G T H E U S E D C A R I N D U S T R Y
Government Report Here’s a rundown of some of the latest governmental issues and activity affecting the used car industry from Sante Esposito of Federal Advocates and NIADA legislative/regulatory/compliance counsel Shaun Petersen. Consumer Financial Protection Bureau Procedural rules to establish supervisory authority over certain nonbank covered persons based on risk determination: The CFPB says it can assert jurisdiction over any financial entity that otherwise is not covered under the definition of a “larger market participant” if the CFPB has reasonable cause to believe such an entity is posing a risk to the market. That proposed procedural rule has the potential to impact our members that are not otherwise defined as larger market participants. The procedural rules outline the process under which the CFPB would find an entity to be a risk and the process by which that entity is entitled to challenge the proposed determination before being subject to the CFPB’s supervision. If the CFPB staff has “reasonable cause” to believe the entity is a risk, the deputy director will send a written notice to the entity explaining the why the bureau believes that risk exists. It will then provide an opportunity for the entity to respond in writing and to participate in an informal telephone hearing between the CFPB staff and the assistant director. The response from the entity would include any written information the CFPB could and should consider. After the informational hearing, the assistant director would submit a written proposed order to the director of the CFPB to bring the entity under the supervisory oversight of the CFPB. If the determination is made to supervise the entity, the CFPB will do so for a minimum of two years and can make a petition to be relieved of that obligation after that time, but only once annually. We reviewed these proposed rules and found several concerns we asked the CFPB to consider through comments submitted to it. Our first significant concern was the lack of clarity from the
bureau as to the type of conduct the bureau believes is “reasonable cause” to find an entity to be a risk. The proposed rule does not define “reasonable cause” or provide any framework of conduct the bureau believes would create the risk. We asked the CFPB to revise the rule to provide this definition. We also asked the CFPB to limit the risk to inappropriate or undisclosed financial risk to the consumer so the scope of misconduct the bureau would attempt to regulate is not overly broad. Second, we raised concerns about the information used to make that determination. Presumably, much of the information will be made on consumer complaints, but the rules do not specify the information the bureau will use in making its risk determination. We asked the bureau to address that. We also pointed out what we considered an unfair process, notwithstanding the CFPB’s attempt to keep it informal. The procedures proposed in the draft rule would not allow entity potentially subject to conduct to exercise discovery and examine the same material the CFPB reviewed in making its determination. The rule would not allow an entity to depose witnesses, review documents, ask interrogatories of either consumer complainants or CFPB staff as to what forms the basis of the “reasonable cause.” We believe it is patently unfair to be placed at such a disadvantage when compared to the CFPB staff, which has access to consumers or other information in making its determination. An entity should be provided the same level of access in order to properly defend itself. We also asked the CFPB to consider allowing an entity the opportunity to rebut the assistant director’s recommendation to the director before the Director makes his final recommendation. Regulation Z: The CFPB has proposed a number of changes to Reg Z in the mortgage arena. While it does not directly affect the automotive industry, it could be an indicator for proposed regulations in the near future. The proposed mortgage regulation would require prompt crediting of payments on mortgage loans and prompt response time for payoff amount inquiry.
Reg Z already requires higher-price mortgage lenders to look at the consumer’s ability to repay the loan before lending. The CFPB amended the regulation to expand its scope to any credit transaction secured by a dwelling. That rule becomes effective Jan. 21. The CFPB is proposing changes to the definition of “finance charge” in a mortgage transaction by eliminating certain exclusions that were not otherwise considered when calculating an APR. The CFPB has invited comments on the proposed changes to be submitted by Nov. 6. We will analyze the proposed change for any potential impact if something similar was adopted in the auto finance sector. Rental Cars A month after Rep. Lois Capps (D-Calif.) introduced H.R. 6094, which prohibits the rental of motor vehicles under a safety recall until the defect or noncompliance is remedied, Sen. Barbara Boxer (D-Calif.) introduced S. 3502, the Raechel and Jacqueline Houck Safe Rental Car Act of 2012, with Sen. Feinstein (D-Calif.) as cosponsor. The bill, a modification of a similar bill introduced by Sen. Boxer in 2011, requires notification by car rental companies to renters about any defect or noncompliance regarding the rented vehicle at issue, as well as imposing limitations on sales, leases or rentals by rental companies, holding rental companies to the same standard of responsibility as dealers with respect to various vehicle inspection, investigation and records requirements, and authorizing the Department of Transportation to study “the effectiveness of the amendments made by [the bill] and other related activities of rental companies.” Federal Trade Commission The FTC recently held a roundtable discussion about the issues facing consumers and businesses relating to online marketing and privacy, specifically regarding mobile devices and social media websites. The roundtable was used as a fact-finding tool for potential future legislation.
BY SHAUN K. PETERSEN AND SANTE ESPOSITO
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T H E C F P B H A S B U I LT I T S N E T W O R K A N D I S N O W R E A DY T O G E T O U T O F WA S H I N G T O N A N D G E T S TA R T E D
Ending Deceptive Marketing Practices Note: Though the particulars of the following case apply to a credit card company, the general information regarding Unfair and Deceptive Acts and Practices (UDAP) applies to all entities subject to UDAP laws. For used vehicle dealers, UDAP activities could include misleading marketing of add-on products, as related here, or other misleading marketing; selling a vehicle without disclosing certain known damage; or installing a GPS tracking device without disclosure. UDAP laws can be enforced by the Consumer Financial Protection Bureau, the Federal Trade Commission or the state of Oklahoma. The Consumer Financial Protection Bureau (CFPB) recently announced its first public enforcement action with an order requiring Capital One Bank to refund approximately $140 million to two million customers and pay an additional $25 million penalty. The action resulted from a CFPB examination that identified deceptive marketing tactics used by Capital One’s vendors to pressure or mislead consumers into paying for “add-on products” such as payment protection and credit monitoring when they activated their credit cards. The CFPB’s fact sheet regarding the Capital One case is provided, followed by the CFPB’s UDAP guidance: CFPB Fact Sheet Overview: The Dodd-Frank Act gave the CFPB the authority to pursue institutions engaged in unfair, deceptive or abusive practices. Through the supervision process, CFPB’s examiners discovered Capital One’s call-center vendors engaged in deceptive tactics to sell the company’s credit card add-on products. These products included “payment protection,” which allows consumers to request that the bank cancel up to 12 months of minimum payments – roughly one percent of the credit card balance – if they encounter certain life events like unemployment and temporary disability.
It also provides debt forgiveness in the event of death or permanent disability. Another product was “credit monitoring,” with services such as identity-theft protection, access to “credit education specialists,” and, in some cases, daily monitoring and notification. Deceptive marketing practices: Capital One customers with low credit scores or low credit limits were directed to a third-party call center when they wanted to activate newly issued credit cards. Consumers were offered these products by Capital One’s call center representatives when they called to have their credit card activated. As part of the high-pressure tactics Capital One representatives used to sell these add-on products, consumers were: • Misled about the benefits of the products. Consumers were led to believe the product would improve their credit scores and help them increase the credit limit on their Capital One credit cards. • Deceived about the nature of the products. Consumers were not always told that buying the products was optional. In other cases, consumers were wrongly told they were required to purchase the product in order to receive full information about it, but that they could cancel the product if they were not satisfied. Many of these consumers later had difficulty canceling when they called to do so. • Misled about eligibility. Though most of the payment protection benefits kicked in when consumers became disabled or lost a job, call center representatives marketed and sold the product to unemployed and disabled consumers whose claims would inevitably be denied. • Misinformed about the cost of the products. Consumers were led to believe they would be enrolling in a free product rather than making a purchase. • Enrolled without consent. Some call center vendors processed the add-on product purchases without the consumer’s consent. Consumers were then automatically billed for the product and often had trouble canceling the product when they called to do so.
CFPB Guidance Bulletin In conjunction with the Capital One settlement, the CFPB issued the following guidance regarding UDAP practices. Under the Dodd-Frank Act, it is unlawful for any provider of consumer financial products or services or a service provider to engage in any deceptive act or practice. As a general matter, a representation, omission, act or practice is deceptive if: • The representation, omission, act or practice misleads or is likely to mislead the consumer. • The consumer’s interpretation of the representation, omission, act or practice is reasonable under the circumstances. • The misleading representation, omission, act or practice is material. The CFPB considers the following factors in evaluating the effectiveness of disclosures at preventing consumers from being misled, including where disclosures relate to add-on products: • Is the statement prominent enough for the consumer to notice? • Is the information presented in an easy-to-understand format that does not contradict other information in the package and at a time when the consumer’s attention is not distracted elsewhere? • Is the information in a location where consumers can be expected to look or hear? • Is the information in close proximity to the claim it qualifies? In CFPB director Richard Cordray’s prepared remarks regarding this enforcement action, he put all financial institutions on notice, indicating additional enforcement announcements would be forthcoming. He further recommended that all institutions review their practices in the UDAP area. That is very good advice. The bureau has spent the last year building its supervisory, investigative and enforcement network. It is now ready to get out of Washington and fan out across the country, satisfying its mandate to “protect the consumer.”
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OKLAHOMA DOCC
Dept. of Consumer Credit Investigating BHPH Dealer The Oklahoma Department of Consumer Credit (DOCC) recently filed a Notice of Hearing regarding an investigation of an Oklahoma City Buy Here-Pay Here dealer. The dealer received authorization to begin making consumer credit sales in Oklahoma on July 27, 2010. The credit sales and subsequent transactions occurred from 2008 through 2010. In the Notice of Hearing, the DOCC alleges the dealer has engaged in the following violations of the Uniform Consumer Credit Code (UCCC): • Engaging in consumer credit sales prior to accomplishing DOCC notification filing. • Failing to contract for a delinquency charge on consumer credit sales installments in which a delinquency charge was imposed on consumers. • Collecting a delinquency charge on consumer credit sales installments that were paid in full within 10 days after the scheduled installment due date. Prior to making or offering to make consumer credit sales in Oklahoma, you must receive authorization from the Oklahoma DOCC. Any entity or individual making or offering to make consumer credit sales, consumer leases, consumer loans or supervised loans in this state without a license or notification filing required by this title shall be subject to a civil penalty not to exceed $5,000. Delinquency charges are specifically addressed in the UCCC. With respect to a consumer credit sale, delinquency charges you intend to impose must be specified in the retail installment sales contract. Specifically, you may contract for a delinquency charge on any installment not paid in full within 10 days after its scheduled due date. You may not collect the delinquency charge on installments paid in full within 10 days after the installment due date. For purposes of imposing delinquency charges, payments must be applied first to current installments and then to delinquent installments. The DOCC annually updates the maximum allowable delinquency charge. As of July 1, 2012, the amount of the delinquency charge may not exceed the greater of 5 percent of the unpaid portion of the scheduled installment or $23.50. In the subject investigation, the BHPH dealer repeatedly imposed a $25 delinquency fee on multiple customers. As a reminder, Oklahoma DOCC notification filings must be renewed by Jan. 31 of every year. To allow processing time, submit your renewal application to the DOCC by Jan. 1. Renewal applications can be downloaded from the DOCC website (www.ok.gov/okdocc). The DOCC can be contacted at 405-521-3653. Note: This article is intended for informational purposes only. It is not intended as legal advice. For its application to your situation, contact your legal counsel.
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I S I T R E A L LY A B AT T L E , O R A R E T H E Y O N E A N D T H E S A M E ?
BHPH Success: Sales vs. Collection The very last thing I wish to do is start an article by upsetting the salesperson who is out on the front line of a Buy Here-Pay Here dealership every day. But let’s be honest. Selling a vehicle to customers with terrible credit scores, not much (if any) money down and/or an abnormal quality of life is not a terribly complicated or difficult task. The objective here is to get you, the dealer principal or general manager of a BHPH operation (no matter what the size), to reposition your thought process and put your priority and focus on the collection process – not the sales procedures – at your store. You need to invest your time as well as your dollars on training your salespeople, and all personnel, in the “art of the collection.” Let’s look at the entire process from the point of the typical BHPH customer. I have always contended you must always treat them as impulse or emotional buyers, even though they are credit-challenged. They all still have the following major concerns: vehicle year, make and model; overall pricing structure; weekly, biweekly, or monthly payment; and mileage and overall condition of the vehicle. Obviously there are many more issues associated with the average BHPH transaction at your dealership. But in general, when it comes right down to it, there is no price negotiating and no negotiating of the interest rate, and most of the time the dealership tells the customer which vehicle he or she can purchase that day. The salesperson does not have to overcome all the major objections listed above, and many more, as he or she would when facing a conventional finance customer. In most instances, the dealer is not overly concerned with back-end profits, or even if any aftermarket products are sold, because he will be financing all the extras anyway. The only big objective left is the ever-important down payment. In reality, Mr. Dealer, you are the bank or lending institution and you solely determine what amount you will accept to proceed with the sale. Do not misunderstand – first, you must always make a sale, and all the factors prior to that are definitely important, such as first impressions, cleanliness of your facility, attitude of salespeople, dealership reputation and vehicle selection, etc.
What I am trying to get across is that having a first-rate quality collection system in place will have a much greater effect on your profits in a BHPH operation than a good selling process. The real fact of the matter is you will not even start to make a profit in most cases until you are somewhere well into the age and depth of the note. So you have an obligation to convince each and every one of your customers that it is vitally important (and in their best interest) to make all payments on time as agreed. Thus, this all-important and high-priority task now becomes the responsibility of your collectors. So think with me here. Now your collectors become your salespeople. Allow me to ask you honestly: Have you ever considered your collectors as salespeople? The collectors must “sell” on each and every contact why your customers must maintain their payment schedules as agreed and why they must maintain constant open communication at all times with their personal collector – whoops, I mean their “salesperson.” With a lot of small BHPH stores, the collection process is left up to office personnel and basically passed off under the category of a clerical job within the office operations of the dealership. Do you as the dealer principal or decision-maker contribute hands-on involvement on a daily basis to your own established collection process? Do you have a complete and through understanding of all your collection policies and procedures? Do your collectors (salespeople) exercise the proper attitude and demeanor when it comes to collecting on each and every personal contact? Because I do business on a daily basis with BHPH dealers all over the United States, from single-point operations that sell 10-15 units a month to BHPH dealers with 65 million dollars worth of notes on the street, it jumps out at me that collections is the single most important process with the most direct effect and instant impact on whether or not you are successful as a BHPH dealer. Many experts and consultants have thousands of ideas on how you can be successful in a conventional retail used car dealership. But with a BHPH operation, Mr. Dealer, you ain’t in the car business – you
are in the finance business. You must know and understand the separation of the two entirely different operations and concepts. If you are a current BHPH dealer or are considering getting into that part of our industry, the key to being successful is not rocket science. There are no magic pills you can take to establish and maintain a great BHPH operation with a professional and productive collection process. Good collecting skills go hand and hand with good sales skills. Or are they both the same? A negative and confrontational sales call or a bad retail experience out in front of the store really translates into “no sale today.” A negative and confrontational collection call can result in “no money” for you today, which can ultimately turn into an expensive repossession and/or a possible charge-off. Both situations cost you money right now. I hope you I’ve helped you get the point loud and clear and find the answer to the question: Is sales versus collection really a battle, or are they one in the same? Prioritizing collections over sales sounds like it is out of proper sequence in the entire process, but really, it is not. So, Mr. BHPH Dealer, why not take the necessary time and money to educate and train your collectors as salespeople as well as collectors? Your answer should be that it just sounds like good old simple common sense.
BY ROD A. HEASLEY
ROD HEASLEY IS EXECUTIVE VICE PRESIDENT OF PERITUS PORTFOLIO SERVICES , A SOUTHLAKE, TEXAS-BASED SPECIALTY FINANCE COMPANY THAT SPECIALIZES IN THE PURCHASING OF OPEN BANKRUPTCY ACCOUNTS. HE HAS MORE THAN 30 YEARS’ EXPERIENCE IN THE RETAIL AUTOMOTIVE SALES INDUSTRY AND IS A NOTED WRITER AND SPEAKER ON THE SUBJECT. HE CAN BE REACHED AT RODH@PERITUSSERVICES.NET OR 866-831 5954, EXT. 5.
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H O B B Y L O B B Y F I L E S A F E D E R A L L AW S U I T O N G R O U N D S O F R E L I G I O U S C O N V I C T I O N
Oklahoma Company Challenges Health Care Mandate On Sept. 12, Oklahoma City-based Hobby Lobby Stores, Inc., filed a lawsuit in the U.S. District Court for the Western District of Oklahoma challenging a portion of the Affordable Care Act on grounds of religious conviction. The lawsuit specifically challenges the Health and Human Services “preventive services” mandate, which requires businesses to cover abortion-inducing drugs. Failure to include the “morningafter pill” and “week-after pill” in its health insurance plan could cost the company fines up to $1.3 million per day. Hobby Lobby Stores, Inc., is a privately held arts and crafts retail chain founded by the David Green family in 1972. It began by manufacturing miniature picture frames in a garage. The family borrowed $600 from a bank to open its first retail store, which consisted of 300 square feet of manufacturing space and 300 square
feet of retail space. Over the last 40 years, the company has grown to more than 500 stores in 41 states, employing more than 22,500 individuals nationwide. The Green family’s Christian faith has always been an integral part of the business. “It is by God’s grace and provision that Hobby Lobby has endured,” David Green said. “Therefore we seek to honor God by operating the company in a manner consistent with Biblical principles.” The business’s lawsuit acts to preserve its right to carry out its mission free from government coercion. Its primary challenge is that the Affordable Care Act would force religiously motivated business owners like the Green family to violate their faith under threat of millions of dollars in fines. The legal complaint makes the point that the act is not being applied equally to all persons and businesses across the country.
Specifically, the complaint notes that the government has exempted numerous persons and groups, often for reasons of commercial convenience. Certain nonprofit religious organizations have been exempted from the mandate altogether, and others have been given extra time to comply. Millions of employers can escape the mandate because of the age of their plans or because of the number of people they employ. For instance, the act applies differently to employers with fewer than 50 employees, not counting seasonal workers. The company is represented by The Becket Fund for Religious Liberty, a nonprofit, public-interest law firm dedicated to protecting the free expression of all religious traditions. For more information, go to www.becketfund.org.
BY ADR STAFF
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MONEY MATTERS T H E F I R S T O F A T H R E E - PA R T S E R I E S O N T H E B A S I C S O F B A N K R U P T C Y P R O C E D U R E S A N D W H AT I T M E A N S T O D E A L E R S / L I E N H O L D E R S .
Understanding Your Customer’s Chapter 13 Bankruptcy Congress enacted the federal Bankruptcy Code in 1978, and it has been amended several times since. The procedural aspects are governed by bankruptcy rules and the local rules of each bankruptcy (BK) court. There are 90 BK courts – one in every federal judicial district in the country. The court official with the decisionmaking power in each district is a United States bankruptcy judge. Much of BK process is administrative and conducted away from the courthouse. In Chapter 7 and 13 cases, the ones that affect dealers and lien holders, the process is carried out by a trustee. What’s the Difference? The consumer bankruptcies that affect you most will be filed as Chapter 7 or Chapter 13. Chapter 7 – liquidation: A chapter 7 case does not involve the filing of a plan of repayment, as in chapter 13. Instead, the trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Chapter 13 – wage earner plan: Chapter 13 offers individuals a number of advantages over Chapter 7 liquidation, including an opportunity to save their homes from foreclosure. By filing under Chapter 13, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time, though they must still make all mortgage payments that come due during the Chapter 13 plan on time. Chapter 13 allows individuals to reschedule secured debts, other than a mortgage for their primary residence, and extend them over the life of the plan. That could lower the payments. Chapter 13 also has a special provision that protects third
parties who are liable with the debtor on “consumer debts,” a provision than can protect co-signers. Chapter 13 acts like a consolidation loan under which the individual makes payments to a trustee, who then distributes payments to creditors. Any individual, even if self-employed or operating an unincorporated business, is eligible for Chapter 13 relief as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081. A corporation or partnership cannot be a Chapter 13 debtor. How Chapter 13 Works A Chapter 13 case begins by filing a petition with the bankruptcy court serving the area where the debtor has a residence. Unless the court orders otherwise, the debtor must also file schedules of assets and liabilities, a schedule of current income and expenditures, a schedule of contracts and unexpired leases, and a statement of financial affairs. When an individual files a Chapter 13 petition, an impartial trustee is appointed to evaluate the case and serve as a disbursing agent, collecting payments from the debtor and making distributions to creditors. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor. Between 21 and 50 days after the debtor files the petition, the trustee will hold a meeting of creditors. The debtor, the trustee and those creditors who wish to attend will then come to court for a hearing on the repayment plan. The debtor must file a repayment plan with the petition or within 14 days after the petition is filed. The plan must be submitted for court approval and must provide for payments of fixed amounts to the trustee on a regular basis, typically
biweekly or monthly. The trustee then distributes the funds to creditors according to the terms of the plan, which can offer creditors less than full payment on their claims. If the debtor wants to keep the collateral securing a particular claim, the plan must provide that the holder of the secured claim receive at least the value of the collateral. If the obligation underlying the secured claim was used to buy the collateral – such as a car loan – and the debt was incurred within certain time frames before the bankruptcy filing, the plan must provide for full payment of the debt, not just the value of the collateral. If the court confirms the plan, the trustee will distribute funds received under the plan “as soon as is practicable.” Making the Plan Work Once the court confirms the plan, the debtor must make the plan succeed by making regular payments to the trustee either directly or through payroll deduction, which requires living on a fixed budget for a prolonged period. While confirmation of the plan entitles the debtor to retain property as long as payments are made, the debtor cannot incur new debt without consulting the trustee. Next: The basics of Chapter 7 filings. Note: The information presented should not be cited or relied upon as “legal authority” and should not be used as a substitute for reference to the U.S. Bankruptcy Code and the Federal Rules of Bankruptcy Procedure.
BY ROD HEASLEY
ROD HEASLEY IS EXECUTIVE VICE PRESIDENT OF PERITUS PORTFOLIO SERVICES , A SOUTHLAKE, TEXAS-BASED SPECIALTY FINANCE COMPANY THAT SPECIALIZES IN THE PURCHASING OF OPEN BANKRUPTCY ACCOUNTS.
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T H E S E C O N D O F A T H R E E - PA R T S E R I E S O N T H E B A S I C S O F B A N K R U P T C Y P R O C E D U R E S A N D W H AT I T M E A N S T O D E A L E R S / L I E N H O L D E R S .
The Ins and Outs of Chapter 7 A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor can be an individual, a partnership, or a corporation or other business entity. Subject to the means test for individual debtors, relief is available under chapter 7 regardless of the amount of the debtor’s debts or whether the debtor is solvent. The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to corporations or other business entities. While an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. How Chapter 7 Works A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives. The debtor must also file schedules of assets and liabilities, a schedule of current income and expenditures, a statement of financial affairs, and a schedule of contracts and unexpired leases. The debtor must also provide: • A list of all creditors and the amount and nature of their claims. • The source, amount and frequency of the debtor’s income. • A list of all of the debtor’s property. • A detailed list of the debtor’s monthly living expenses – food, clothing, shelter, utilities, taxes, transportation, medicine, etc. Filing a petition under chapter 7 automatically “stays” (stops) most
collection actions against the debtor or the debtor’s property. In some situations, the stay is effective only for a short time. The stay requires no judicial action. As long as the stay is in effect, creditors generally cannot initiate or continue lawsuits, wage garnishments or even telephone calls demanding payments. Between 21 and 40 days after the petition is filed, the case trustee will hold a meeting of creditors. The debtor must attend the meeting and answer questions regarding the debtor’s financial affairs and property. Role of Trustee in Chapter 7 When a chapter 7 petition is filed, the U.S. trustee (or the bankruptcy court in Alabama and North Carolina) appoints an impartial case trustee to administer the case and liquidate the debtor’s nonexempt assets. In the typical no-asset chapter 7 case, there is no need for creditors to file proofs of claim because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the bankruptcy court will provide notice to creditors and will allow additional time to file proofs of claim. The primary role of a chapter 7 trustee in an asset case is to liquidate the debtor’s nonexempt assets in a manner that maximizes the return to the debtor’s unsecured creditors. The trustee accomplishes this by selling the debtor’s property if it is free and clear of liens. Chapter 7 Discharge A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge.
Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. If a debtor wishes to keep certain secured property, such as an automobile, he or she may decide to “reaffirm” the debt. That’s an agreement that the debtor will remain liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in the bankruptcy. In return, the creditor promises not to repossess the automobile or other property so long as the debtor continues to pay the debt. The debtor must reaffirm a debt before the discharge is entered, and must sign a written reaffirmation agreement and file it with the court. An individual receives a discharge for most of his or her debts in a chapter 7 bankruptcy case. A creditor may not initiate or continue any legal or other action against the debtor to collect a discharged debt. Your customer has three options in a chapter 7 filing: surrender the vehicle, redemption or reaffirm the note. We recommend that when you as the lien holder receive a chapter 7 notice of filing, you call the customer’s attorney and ask the customer’s intention. That conversation will dictate your next move prior to discharge. Next: Your options when a customer files bankruptcy. Note: The information presented should not be cited or relied upon as “legal authority” and should not be used as a substitute for reference to the U.S. Bankruptcy Code and the Federal Rules of Bankruptcy Procedure.
BY ROD HEASLEY
ROD HEASLEY IS EXECUTIVE VICE PRESIDENT OF PERITUS PORTFOLIO SERVICES , A SOUTHLAKE, TEXAS-BASED SPECIALTY FINANCE COMPANY THAT SPECIALIZES IN THE PURCHASING OF OPEN BANKRUPTCY ACCOUNTS.
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COMPLIANCE OVERDRIVE
Out with the Old and In with the New? The year’s end is a time of reflection. When it comes to auto finance and compliance challenges, the story can sound similar from year to year. There are usually a handful of new regulations facing dealers and lenders that have made a big impact on the industry over the previous 12 months. But this year doesn’t really fit the mold. That’s because 2012 arguably hasn’t been as much about new regulation as about the additional scrutiny of regulators enforcing laws that have been in place for some time. That has been particularly evident in the areas of state-specific forms, model language and loan documentation. Some recent examples suggest a trend that state regulators are taking a closer look at existing motor vehicle retail sales financing authority and transaction documentation: New Mexico: Since 2009, a New Mexico attorney general’s regulation has required creditors to provide a summary or a translation of English-language transaction documents in consumer sales negotiated in a language other than English. Its coverage is very broad and somewhat difficult to understand. This year, the New Mexico attorney general proposed additional changes to the regulation. After receiving comments, the AG acknowledged issues with the proposed changes and with the existing regulation itself. As a result, it pulled back the changes and repealed the existing regulation to allow for further study. Michigan: Years ago, the Michigan Department of Licensing and Regulatory Affairs, Office of Financial and Insurance Regulation (OFIR) said bad check charges are not allowed in motor vehicle retail contracts in spite of statutory authority that seems to allow it. This year, the OFIR published a letter saying bad check charges cannot be collected on retail motor vehicle sales contracts unless the contract contains a bad check charge provision, indirectly reversing its prior position. The OFIR now holds that bad check charges are allowed as long as they are specifically authorized in the retail contract. Montana: The Montana late charge authority is a bit ambiguous and has been that way for many years. Because of the ambiguity, there were vastly different interpretations in the marketplace. In response to a request, the Montana Division of Banking and Financial Institutions recently published a letter clarifying its interpretation of the state statute. The apparently heightened state scrutiny might be just a coincidence. It could also be that states are demonstrating their diligence and control to the public and to the new federal Consumer Financial Protection Bureau (CFPB).
The CFPB regulates dealers who don’t routinely assign their financing contracts to unaffiliated third parties. For the most part, that means the CFPB regulates Buy Here-Pay Here dealers. The Federal Trade Commission (FTC) continues to regulate the rest of the auto sales and finance industry. The net result is there are two federal regulators in the auto finance marketplace. It’s possible states are more actively clarifying and enforcing their existing laws and regulations in an effort to maintain a level of control over the auto finance industry – hoping to minimize federal oversight. In addition to reflecting on the year that has been, it’s also time to think about what might lie ahead. What will the new regulatory environment look like in 2013? Many thought the CFPB would have done a lot of regulatory change in auto financing by now, but that hasn’t been the case. One reason is it has been focused on real estate financing practices and disclosures. The CFPB also seems to be carefully studying the consumer finance marketplace – and even consumers – to lay a solid foundation for its regulatory oversight.
“
While we’re in this waiting period, dealers might feel there are a lot of variables out of their control, but the focus needs to be on the areas you can control.”
The CFPB’s strategic plan for 2013-18 notes one of its strategies is to “develop and maintain an efficient fact-based approach to developing, evaluating, revising and finalizing regulations.” “Fact-based” is a key term. We have seen the CFPB asking good questions and conducting extensive research on areas it is tasked with overseeing. For example, the CFPB tested draft real estate disclosure documents with consumers in shopping malls.
The Dodd Frank Act requires the CFPB to research and provide policy guidance on whether arbitration provisions should be allowed in consumer credit (non-real estate) transactions. To start that process, the CFPB published a request for suggestions, data sources and strategies to study the issue. It’s also clear the CFPB is not afraid to take a fresh approach to presenting transaction information to consumers. For example, the CFPB published a proposed rule in July regarding integrated mortgage disclosures under RESPA and the Truth in Lending Act. Leading up to the proposed rule, it published a number of drafts trying various new disclosure formats and designs. That was one of the first significant proposed rules from the CFPB, and the planning process involved extensive research and solicitation of industry and consumer feedback. As a result, the proposed rule and explanatory materials are more than 1,000 pages. The upside is the CFPB is trying practical, consumer-tested ways to present information so average consumers can understand key transaction terms. The downside is the volume of information in the proposal is overwhelming. It’s hard to know when the CFPB will complete its foundation-building and begin proposing new regulations or revising existing ones that affect the consumer auto finance industry. It’s likely big changes will come to the market. It’s just unclear when. While we’re in this waiting period, dealers might feel there are a lot of variables out of their control, but the focus needs to be on the areas you can control. Since a number of states seem to be focused on clarifying and enforcing existing requirements, dealers should review and button down compliance documentation and processes to make sure they are satisfying those requirements. Additionally, reviewing and tightening transaction standards and communication within the dealership is key. Make sure your sales and finance teams are describing financing terms and options, vehicle features, and addon products and services in a correct and consistent manner. Educate your buyers and be direct and honest about each element of a transaction and the risks each party is assuming. Investing in those areas can go a long way toward maintaining compliance now and preparing for what lies ahead.
BY CHIP ZYVOLOSKI CHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.
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S O U R C E : W W W. N H T S A . G O V
NHTSA Recalls Chevrolet Malibu, MY 2008-2010 Pontiac G6, MY 2008-2010 Saturn Aura, MY 2007-2010 NHTSA ID number: 12V460000 Power train: Automatic transmission: Gear position indicator (PRNDL) Units affected: 426,240 General Motors is recalling certain model year 2007-2010 Saturn Aura and model year 2008-2010 Chevrolet Malibu and Pontiac G6 vehicles equipped with a 4-speed automatic transmission. On these vehicles, the tabs on the transmission shift cable end can fracture and separate. If the tabs were to fracture and separate, the shift lever and the actual position of the transmission gear might not match. The driver would be able to move the shifter to “Park” and remove the ignition key, but the transmission gear might not be in “Park.” The vehicle might not be able to be restarted and the vehicle could roll away after the driver has exited the vehicle, resulting in a possible crash without prior warning. GM will notify owners, and dealers will install a retainer over the cable end or replace the shift cable as necessary. This service will be performed free of charge. GM has not provided a notification schedule. Owners can contact General Motors at 1-800-521-7300.
HONDA ELEMENT Ford Edge, MY 2012 NHTSA ID number: 12V438000 Fuel system, gasoline: Delivery: Hoses, lines/piping and fittings Units affected: 5,499 Ford is recalling certain 2012 Edge vehicles manufactured from Sept. 2, 2010 through Oct. 31, 2011, equipped with 2.0L engines. The fuel line pulse damper metal housing can crack as a result of an improper
manufacturing process. A cracked fuel line pulse damper housing can result in a combination of fuel odor, weepage or a continuous leak while the fuel system is pressurized. A fuel leak in the presence of an ignition source can result in a fire. Ford will notify owners, and dealers will repair the vehicles free of charge. The safety recall is expected to begin on or about Sept. 24, 2012. Owners can contact Ford Motor Company Customer Relationship Center at 1-866-436-7332. Ford’s recall campaign number is 12S40. Honda Ridgeline, MY 2012 NHTSA ID number: 12V432000 Air bags: On-off switch assembly Units affected: 17 Honda is recalling certain model year 2012 Ridgeline vehicles manufactured on April 18, 2012. An incorrect passenger airbag status indicator may have been installed on the vehicles causing them to fail to conform to the requirements of Federal Motor Vehicle Safety Standard No. 208, “Occupant Crash Protection.” Without the proper passenger airbag indicator, the driver and other vehicle occupants might not be informed or aware that the front passenger airbag is off and will not deploy in a crash, thereby potentially increasing the risk of injury to a front passenger seat occupant who might have chosen to sit or been seated elsewhere in the vehicle if the correct indicator had been given. Honda will notify owners, and dealers will replace the passenger airbag indicator free of charge. The safety recall is expected to begin on, or about, Sept. 21, 2012. Owners can contact Honda automobile customers services at 1-800-999-1009. Honda’s recall campaign number is S52. Honda Element, MY 2007-2011 NHTSA ID number: 12V436000 Electrical system: Wiring Units affected: 5,216 Honda is recalling certain model year 2007 through 2011 Element passenger vehicles equipped with an accessory trailer hitch wiring harness. The wire that supplies power to the trailer turn signal lights was inadvertently switched with the stop lamp wire. As a result the turn signals only illuminate when the brake lamps are illuminated. This does not comply with the requirements of Federal Motor Vehicle Safety Standard No. 108, “Lamps, Reflective Devices and Associated Equipment.” Without trailer turn signal illumination, the driver’s intent is not communicated, potentially increasing the risk of a crash. Honda will notify owners, and dealers will repair the vehicles free of charge. The safety recall is expected to begin on, or about, Sept. 20,
2012. Owners may contact Honda at 1-800999-1009. Honda’s recall campaign number is S53. Lamborghini Gallardo, MY 2004-2006 NHTSA ID number: 12V430000 Steering: Hydraulic power assist: Hose, piping and connections Units affected: 1,491 Lamborghini is recalling certain model year 2004-2006 Gallardo Coupe and Spyder vehicles. In certain driving conditions, the high-pressure steering pipes near the steering assistance hydraulic system pump might leak. Leaking fluid in the presence of an ignition source could result in a fire. Lamborghini will notify owners, and dealers will update the power steering system free of charge. The safety recall is expected to begin on, or about, Sept. 10, 2012. Owners can contact Lamborghini at 1-866-681-6276. Chevrolet C3500, MY 2007 Dodge Dakota, MY 2010-2011 Mitsubishi FE180, MY 2008 NHTSA ID number: 12V420000 Equipment: Electrical Units affected: 32 NBC Truck Equipment, Inc., is recalling certain model year 2007-2008 and model year 2010-2011 trucks equipped with Sure Power battery separator devices, due to overheating. Overheating of the battery separator can result in smoke and possible fire. NBC will notify owners, and Sure Power will replace the batter separators free of charge. The safety recall is expected to begin on or about Oct. 15, 2012. Owners can contact NBC Truck Equipment, Inc., at 1-586774-4900. Ford Escape, MY 2013 NHTSA ID number: 12V431000 Engine and engine cooling Units affected: 6,146 Ford is recalling certain model year 2013 Escape vehicles manufactured from Oct. 5, 2011 through Aug. 31, 2012, equipped with 1.6L engines. The cylinder head cup plug (freeze plug) can become dislodged, resulting in significant loss of engine coolant. As leaking coolant evaporates on the hot engine, the glycol can ignite, causing an engine compartment fire. Ford will notify owners, and dealers will seal the existing plug and add a secondary plug cover, free of charge. The safety recall is expected to begin on or about Sept. 10, 2012. Owners can contact Ford at 1-866-436-7332. Ford’s recall campaign number is 12S39. FOR MORE INFORMATION, VISIT WWW. NHTSA.GOV OR WWW.SAFERCAR.GOV.
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OIADA REPORT
Used Motor Vehicle and Parts Commission Report Vice Chairman Steve Ross convened the Sept. 11, 2012 session of the Used Motor Vehicle and Parts Commission. Following roll call and approval of the Aug. 14 meeting minutes, Ross called on director John Maile for the director’s report. Maile called the commissioners’ attention to the expenditure report that was included in the agenda packet. Maile advised the commissioners that on the closed complaint report there were a number of complaints closed against David Stanley in the previous month. Fines assessed included misuse of temporary tags, advertising violations in Internet sales and a couple of late titles. The complaints listed originated prior to July, when Maile contacted Stanley and suggested he monitor complaints against his dealership because the commission was receiving an extraordinary number of customer complaints. Maile then reminded the commissioners that staff is about to start the license renewal cycle. The director had Sherry Killian run a report on the number of dealers and salespeople currently licensed, which found: • There are 2,556 licensed used car dealers. Prior to the recent economic downturn, the commission licensed more than 3,000 used car dealers. • There are 2,124 licensed used car salespersons, down from 2,500. • There are 153 licensed rebuilders. Several dealers have gone into that business to enhance their revenue. • There are 101 licensed wholesale dealers, down from a high of 151. • There are 302 dismantlers licensed. At one time, there were more than 800 dismantlers. Those numbers have been decreasing since the Department of Environmental Quality got involved in requiring rainwater runoff plans and reporting. Adding to the decrease in licensed dismantlers is the elimination of bid cards to get into the salvage pools. • There are 91 manufactured home dealers. At one time there were one third more, but the industry has been hit with difficulty in getting financing. • The industry currently has 77 licensed installers. • There are 38 manufactured home manufacturers. Maile said those are the entities the commission currently collects a license fee from. He expects the numbers to continue to go down, and the loss of revenue concerns the agency. “We are going to have to start looking at another fee increase,” Maile said. “The last increase was six years ago. It was the first time we increased the used dealer fee since 1981. “Sometime in the near future, we are going to have to address our budgetary needs by asking for a fee increase. It won’t be a popular issue, but it is a necessity.” There was lengthy discussion regarding the abuse of Title 42. The commission had previously been presented with information regarding an individual who had filed multiple Title 42 transactions. The case was turned over to the Oklahoma City police department. The captain handling the issue was concerned there were multiple jurisdictions involved. It was recommended that the captain be invited to the next commission meeting. Attorney General liaison John Crittendon volunteered to take multiple cases by one individual to the Attorney General’s fraud unit. Following a vote affirming receipt and approval of the expenditures report, vice chairman Ross called on deputy director Kenneth Whitehead for his report. Whitehead’s written report indicated commission staff had issued 16 cease and desist letters and completed 24 inspections during the period. Staff also handled 48 written complaints – 14 title issues, 14 dealing with contract violations, 14 related to mechanical issues, and eight complaints of a miscellaneous nature. The education program had 24 in attendance. Applicants for a new license and dealers involved in significant rule violations are required to attend the commission’s education program as a part of acquiring or maintaining a state license. The education sessions are held at the commission conference room at 2401 NW 23, Oklahoma City. Classes are held on Monday prior to the commission meeting on the second Tuesday of each month. The sessions run from 9 a.m. to about noon or 1 p.m. You are asked to make reservations so staff can be prepared to accommodate you. Call the commission at 405-521-3600 to make reservations.
BY ADR STAFF
REPORT OF CEASE AND DESIST LETTERS ISSUED
These letters direct the individual or business to cease violations of laws or rules ENTITY Todd M. Barber James R. Chopping James R. Chopping Johnny N. Dinh Mayra Granillo Jesse Henry Hackney Juan Hidrogo Morgan K. Ibe Richard Keeler Dave Kuykendall Pete Looper Marco Santa Maria Bernardo Martinez Okechukwu V. Orkie Danny Orth Gary Underwood
TYPE OF VIOLATION Insurance Pool Used Dealer Rebuilder Insurance Pool Insurance Pool Insurance Pool Insurance Pool Insurance Pool Insurance Pool Insurance Pool Dismantler Insurance Pool Insurance Pool Insurance Pool Used Dealer Used Dealer
CITY Guthrie Elk City Elk City Oklahoma City Hinton Oklahoma City Oklahoma City Edmond Union City Jennings Sallisaw Oklahoma City Oklahoma City Oklahoma City Lexington Spiro
DATE ISSUED 08/28/2012 08/23/2012 08/23/2012 08/07/2012 08/28/2012 08/28/2012 08/28/2012 08/28/2012 08/28/2012 08/06/2012 08/16/2012 08/28/2012 08/28/2012 08/28/2012 08/07/2012 08/16/2012
CLOSED COMPLAINT REPORT
These are complaints that have been resolved one way or another. They do not necessarily reflect any wrongdoing on the part of dealers. ENTITY CITY A & G Auto Sales Lawton AAA Motors Henryetta Ada Auto World Ada Big Red Sports/Imports Norman Bob Howard Automall Oklahoma City Bob Howard Automall Oklahoma City Buy Here Motors, Inc. Oklahoma City C & A Auto Sales Muldrow Car Mart of Shawnee Shawnee Cheap Dependable Auto Sales, LLC Oklahoma City Clanton Motor Sports, LLC Oklahoma City Conner Auto Group Waurika David Stanley Chevrolet, Inc. Oklahoma City David Stanley Chevrolet, Inc. Oklahoma City David Stanley Chevrolet, Inc. Oklahoma City David Stanley Chevrolet, Inc. Oklahoma City David Stanley Dodge, LLC Midwest City David Stanley Ford Oklahoma City David Stanley Ford Oklahoma City David Stanley Ford Oklahoma City David Stanley Ford Oklahoma City David Stanley Hyundai, LLC Oklahoma City Diffee Ford-Lincoln-Mercury, Inc. El Reno Dusty Roads Auto Salvage Okemah Edmond Hyundai Edmond Express Credit Auto, Inc. Oklahoma City Hudiburg Toyota Midwest City Hwy 77 Auto Sales Ardmore I-35 Sports & Imports Moore Import Cars & SUV’s, LLC Oklahoma City Joe Cooper Ford of Shawnee, LLC Shawnee Joe Cooper Ford of Shawnee, LLC Shawnee Marie’s Route 66 Motor Company Tulsa Mike Mowdy Autoplex Midwest City Mike Mowdy Autoplex Midwest City Nexxus Remarketing Stillwater Norris Auto Sales & Service, LLC Edmond Norris Auto Sales & Service, LLC Edmond Preferred Auto Sales, Inc. Norman Quik Credit Auto Sales Tulsa Reliable Auto Sales, Inc. Broken Arrow Riverside Autoplex / Holdenville, LLC Holdenville Roberts Dodge Chrysler Jeep Pryor Santa Fe Auto Sales, Inc. Oklahoma City Sapulpa Auto Sales Sapulpa United Sports & Autos Muskogee VIP Auto, Inc. II Oklahoma City VIP Auto, Inc. II Oklahoma City
COMPLAINT Title Miscellaneous Mechanical Contract Mechanical Miscellaneous Miscellaneous Miscellaneous Miscellaneous Mechanical Title Title Title Contract Contract Title Contract Contract Mechanical Title Mechanical Contract Contract Miscellaneous Contract Mechanical Contract Title Title Mechanical Mechanical Mechanical Miscellaneous Contract Contract Title Contract Contract Title Mechanical Title Contract Title Miscellaneous Mechanical Mechanical Title Title
RESOLVED 08/06/2012 08/28/2012 08/24/2012 08/22/2012 08/31/2012 08/31/2012 08/28/2012 08/22/2012 08/27/2012 08/24/2012 08/27/2012 08/06/2012 08/23/2012 08/14/2012 08/14/2012 08/14/2012 08/21/2012 08/30/2012 08/21/2012 08/31/2012 08/24/2012 08/23/2012 08/09/2012 08/30/2012 08/22/2012 08/27/2012 08/08/2012 08/14/2012 08/28/2012 08/30/2012 08/27/2012 08/21/2012 08/20/2012 08/10/2012 08/10/2012 08/30/2012 08/06/2012 08/20/2012 08/28/2012 08/22/2012 08/14/2012 08/30/2012 08/27/2012 08/13/2012 08/27/2012 08/20/2012 08/30/2012 08/30/2012
LICENSES SUSPENDED OR ABANDONED
In other action, the following licenses were suspended or abandoned: BUSINESS NAME LOT CITY REASON Carboys Leasing & Sales Yukon Out of business; failure to complete requirements for change of location I-35 Credit Auto Oklahoma City Out of business; change of ownership Jackson’s Salvage & Auto Grove Out of business per owner Frankie Jackson Lee’s RV City, Inc. Oklahoma City Out of business; change of ownership Masters Easy Auto Sales, LLC Tecumseh Out of business; phone not listed with directory assistance Norman Auto Sales, Inc. Norman Out of business per investigator’s report RS Used Cars Guthrie Out of business per owner Rafay Sheikh TJ Motors Oklahoma City Out of business per investigator’s report Wally’s Auto World Durant Out of business; phone disconnected
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T H E T R U E G O A L O F E F F E C T I V E M A R K E T I N G A N D A D V E R T I S I N G S H O U L D B E T O E D U C AT E , C L A R I F Y A N D S I M P L I F Y
Radically Increase the Results of Your Advertising Smart dealers understand they are in control of their own destiny, growth, success and profitability this year and every year. The answer to the burning question about increasing sales and profits is better marketing, better response. What you really need to do is to dramatically increase your car advertising results. How? Good question. You must create marketing that grabs people’s attention, delivers value and causes them to be attracted to you, so you can start a relationship with them. We have found the best way to do that is to deliver information. You see, we live in the information age and to get people’s attention and get them to respond, marketers have to create marketing messages that look, feel, and sound like objective, unbiased, useful
information that helps consumers solve a problem, fulfill a want or desire, make their lives easier or streamline their decision-making process. So why does information-focused marketing work radically better than traditional marketing? Because traditional automotive marketing is all about the dealership, the vehicles and the features, and nobody really cares about those things. Gravitational Marketing, the kind of marketing that uses information to attract customers, is built around education and solutions. The true goal of effective marketing and advertising should be to educate, to clarify and simplify, to help aid the decision-making process. Gravitational Marketing is about captivating, invigorating and motivating.
All of those are accomplished through deliberately constructed content, not flashy images, misleading promotions, pink gorillas, window paint or clever slogans. Good marketing provides solutions. Solutions to problems your customers face right now and want to alleviate. A well planned and executed Gravitational Marketing strategy delivers a muchneeded cure to the pain your prospect is suffering. If you can give your prospects the information they need to eliminate their problem and ultimately provide them with a clearly defined set of steps to take, you will win their business and create a customer you can keep for life. You will become the expert in their eyes and they will flock to you. Price concerns will be secondary to the solution they seek,
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WITH A WARM MEAL AND COMFORTABLE ENVIRONMENT, YOU’LL ENJOY A BUYING EXPERIENCE THAT WILL BRING YOU BACK WEEK AFTER WEEK!
Stars GPS
We are pleased to include Stars GPS as an OIADA Branded Provider of vehicle tracking and recovery solutions for our industry. Stars GPS specializes in providing the best technology with personal service, training and support for the independent and franchise dealership. For more information, go to www.stars-gps.com, email info@stat-gps.com or call 877-828-4770.
David L. Nunn, Esq.
David L. Nunn heads the Edmond, Okla., law office of David L. Nunn, P.C., which serves the greater metro Oklahoma City area. We are pleased to include Mr. Nunn as an OIADA Select Provider of legal services to the industry. David L. Nunn, P.C. is located at 17 East First Street, Edmond, OK 73034. He can be reached at 405-330-4053 or by fax at 405-330-8470. Mr. Nunn is included as a Select Provider not because he asked to be, but because we know the quality of service that he provides to dealers.
B & C Auto Transport, Inc.
B & C Auto Transport takes pride in providing fast, dependable transport service to auto dealers nationwide. We are pleased to include B & C Auto Transport, Inc. as an OIADA Select Provider of transport services for auto dealers nationwide because of its record of providing outstanding service at reasonable rates. Call 405-381-0114 or 405-641- 6057 (cell), or email BCAutoTransportInc@gmail.com.
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making your profits soar to new heights. Why does this Gravitational Marketing approach skyrocket response rates and beat the pants off traditional marketing? By offering information, solutions and education in your advertising instead of trying to make the sale from a single ad, you give the prospect a low-risk way to respond and indicate to you they are interested in becoming a vehicle intender. Armed with their contact information, their permission to market to them further and the knowledge that they need and want your help, you can tell your whole sales story because you have their trust and attention. That makes your marketing job easier, your response rates higher and your marketing more cost-effective. If you have ever been single and tried to get a date, you’ve used this two-step approach. Think back to when you met someone you wanted to get to know better. What did you do? Did you offer to buy them a drink, go to dinner, a movie or coffee? A small next step? Surely,
you didn’t go right up to them and ask for engagement, a one-night stand or marriage? Most dealers do just that in their marketing all the time. They go right for the big one without the romance or relationship-building. Sales and profits are all about relationships. You don’t sell a car to sell a car. You sell a car to create a client. Or at least you should. A client is someone who buys from you multiple times in his lifetime, doesn’t nickel and dime you and refers repeatedly. That’s the kind of relationship you want to create with all your customers. And it all starts with the first point of contact. In today’s extremely cluttered marketplace, successful automotive dealers have to think like consumers and become marketers. In order to dramatically increase the effectiveness of their advertising, dealers must not look at every single prospect the same way. There isn’t just one group of people they are selling cars to, there are many.
With the proper Gravitational Marketing message, you can attract nonintenders and pull them into the buyers’ circle today, dramatically increasing your pool of potential buyers. It gets better. Those new buyers you pulled into the market are 100 percent yours for the taking. You don’t have to split the spoils with anyone else because, if done right, they believe you are the only dealer who can help them now. So you don’t have to worry about losing them to the dealer down the street. Yes, there are many pitfalls and trip wires that can derail your success and keep you from reaching the goal – more ups, better quality ups, dramatically higher response to your advertising and increased sales and profits. It’s not all fun and games. But it’s not rocket science, either.
BY JIMMY VEE AND TRAVIS MILLER
JIMMY VEE AND TRAVIS MILLER ARE EXPERTS ON ATTRACTING CUSTOMERS AND THE AUTHORS OF GRAVITATIONAL MARKETING: THE SCIENCE OF ATTRACTING CUSTOMERS AND INVASION OF THE PROFIT SNATCHERS. FOR A FREE COPY OF THEIR CONTROVERSIAL NEW BOOK, VISIT WWW. PROFITSNATCHERSBOOK.COM AND USE COUPON CODE UCDM1211.
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MOTOR VEHICLE DIVISION
F U N FA C T
MVD Vehicle Information Request Form Revised The Motor Vehicle Division (MVD) of the Oklahoma Tax Commission (OTC) recently provided notice that OTC Form 769, Vehicle Information Request, has been revised. The changes are relatively minor, consisting of rearranging requestor’s information portion to the middle of the front side; rewording “Important Notice Regarding Title Histories” information on back side; and updating the MVD phone number on the bottom of the back side. The old forms remain valid and can be used until supply is depleted. New forms are available on the OTC website (www.tax.ok.gov). Follow the links “Forms & Publications,” “Motor Vehicle Forms” and “General Motor Vehicle Forms.” Please make note of the MVD’s current telephone numbers: In-state toll-free, 1-800-522-8165, option 5, ext. 1-3120; alternatively 405-521-3120, ext. 139 or 143. The MVD’s mailing address is Oklahoma Tax Commission – Motor Vehicle Division, 2501 North Lincoln Blvd., Oklahoma City, OK 73194.
BY ADR STAFF
Studies Say Consumers Interested in Alternative Powertrains According to two new studies, drivers want and will pay for more fuel-efficient cars, including hybrids and plug-in cars. Ford Motor Co. hired Penn Schoen Berland to con duct a study that found seven in 10 drivers are taking steps to reduce gasoline consumption. A quarter of them told researchers that if they had an extra $1,000 available at the time of their next vehicle purchase, they would prefer a hybrid over a conventionally pow ered vehicle. In another study conducted by Phoenix Marketing International, a solid majority of American motorists say they’re now willing to consider some form of alter native propulsion, whether it’s hybrid, pure batteryelectric or something else even more radical. The study found consumers in the luxury market more open to alternative technologies by a margin of three-to-one. For mainstream product segments, the margin of those willing to consider alternatives was closer to two-to-one. Car buyers under 40 years old are even more interested – only 10 percent of them are not open to cleaner or more fuel-efficient power train technology.
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A S S O C I AT I O N N E W S
Bond and License Renewal Schedule
D AT E
ACTION
C O N TA C T
NOTE
In Oklahoma, all used dealer bonds and licenses expire Dec. 31 of each year. That includes used dealer licenses, salesman licenses, dealership bonds and salesman bonds. Your dealer plates, issued by the Oklahoma Tax Commission, also expire Dec. 31. And, unlike public vehicle license plates, there is no grace period for dealer plates. You cannot do business without proper bonding and licensing, so it’s to your benefit to submit completed renewal applications in a timely manner and follow up on the status of each until you receive approval. Here’s a schedule of steps to help guide you through the bond and license renewal process:
CONTACT INFO: CONTACT INFO: BONDS: ROSE MORGAN, 405-232-2947 OR 800-346-4232 DEALER LICENSE RENEWALS: USED MOTOR VEHICLE & PARTS COMMISSION, 405-521-3600 DEALER PLATES AND DECALS: OKLAHOMA TAX COMMISSION, 800-522-8165 OR WWW.TAX.OK.GOV CONSUMER CREDIT NOTIFICATION FILING: OKLAHOMA DEPT OF CONSUMER CREDIT, 405-521-3653 OR WWW.OK.GOV/OKDOCC
“CHICKASHA AUTO AUCTION...WHERE SERVICE SELLS!”
AUCTION SALE EVERY THURSDAY NIGHT! Dealer registration forms, additional sale information and directions are available on our web site: chickashaautoauction.com
Auction starts at 6:30pm
Dinner is served from 5:30 till 6:30pm. • We have a host of New Car Stores, Loan companies, Banks, and credit unions. • We strive to provide an extremely friendly atmosphere and full service to our dealer family. • Come Experience where Dealers will be treated with more respect and service !! • We are a family owned and operated, experienced business with a respected reputation thru out the automobile industry. We take great pridein being the best we can possibly be.
OWNERS: DAVID BLALOCK, JIM BLALOCK
P. O . B O X 2 1 5 7 •
4 11 E . H W Y 1 9 C H I C K A S H A , O K 7 3 0 2 3
W E A R E A D E A L E R S A L E O N LY
•
P : 4 0 5 2 2 2 3 111 • F :
4 0 5 2 2 2 3 11 5
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AUGUST 2012
License Applicants Approved The following applicants, as listed in the agenda for the Used Motor Vehicle and Parts Commission regular meeting of Sept. 11, 2012, were considered for issuance of used motor vehicle dealer licenses and wholesale vehicle dealer licenses. The applications were approved pending compliance with the state licensing laws and rules and subject to final approval by commission staff.
USED DEALER LICENSES COMPANY NAME
OIADA New and Renewal Members
The following list includes members who joined or renewed their OIADA/NIADA membership during August. We express our sincere appreciation for all the members of OIADA and extend our invitation to dealers who are not members. A membership application can be found elsewhere in this newsletter. We urge you to be an active part of maintaining a strong and effective used car industry voice in the legislative and regulatory environment. With the current administration’s attitude toward the motor vehicle sales industry, we need that voice more than ever!
R R R R R R R R R R R R R R R R
COMPANY
Wholesale Enterprises Auto Sales McQuerry Motors, Inc. Morris Auto Sales Nix Auto Center, Inc. Henryetta Ford Ranch Len Roberts Enterprises, Inc. I-40 Auto Auction, Inc. Discount Auto Sales Clearcut Auto, LLC Shreve Truck & Equip. Sales De Luxe Motors #2 Kent’s Custom Cars & Trucks, Inc. Credit Connection Auto Sales, Inc. Baustert Motor Co., Inc. O & R Morgan, Inc. OIADA, Inc.
NAME
JOINED CITY
Wholesale Enterprises 1993 David McQuerry 2000 Russell Casey 1991 Nix Chevrolet-Olds-Cadillac, Inc. 2009 Henryetta Ford, Inc. 2007 Len E. Roberts 1995 Jeff Haley 1991 John Sharp 1992 Chad Pratt 2007 Terry Shreve 2005 Guadalupe Pena, Jr. 2002 Kent Smalygo 2000 Charles West 2002 John P. Baustert 2005 Odell Morgan 2000 Rose Morgan 2000
Midwest City Shawnee Morris McAlester Henryetta Bethany Del City Broken Arrow Broken Bow Barnsdall Oklahoma City Collinsville Midwest City Okarche Moore Moore
CITY
Auto Option Kyle Hill Edmond Barry Switzer Hunter Miller Armando Rosell John Kenneth Davidson C & K Auto Sales, Inc. Yvonne Kliner Locust Grove Katrina Threlkeld Cornerstone Auto Sales Dale Miller Lawton Everest Auto Aashish Karki Oklahoma City Biral Tecimer *EZ Drive Auto Jerry Russell Durant (Owners Jerry Russell, Jeffrey Brady, Vince Chiquita and Charlie Francis are Texas residents) Fowler Chevrolet of Tulsa Billy E. Fowler Tulsa Michael S. Fowler Donald A. Griffin Fowler Toyota of Tulsa Donald A. Griffin Tulsa Billy E. Fowler Michael S. Fowler Grove Credit World Auto Sales Sharon Sharp Grove John Sharp Huff Motor Company Tim Huff Sapulpa *Kat Motor Company #2 Dave McInnis Tulsa (Two on a lot with Quick Credit Auto Sales) *OKC Car Guys, LLC Juan Lopez Edmond (Two on a lot with Wholesale Auto Mart) Premier Car Center Majd Habib Park Hill Muhsen Ziyada Majed Wasim Hussein R-America Automobile, LLC Shawn Sejera Bixby Jerusha Sejera Southeast Motors Tommy West Atoka Southern Oklahoma Auto Sales Larry Barryhill Ardmore Jeremy Berryhill Superior Motor Sales Tim Shipman Tulsa
* Special circumstances
WHOLESALE DEALER LICENSES COMPANY NAME
Advantage Motors of Oklahoma Tulsa Wholesale Cars Wholesale Vehicle Dealer, LLC David Lee Riley
Roger Chasteen Joseph Van Wiggins Ann Todd Riley
CITY
Tulsa Tulsa Norman
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OIADA Can Help Make
Your Path
Certain.
Oklahoma Independent Automobile Dealers Association For $295 You Get Membership In Both OIADA and NIADA Plus All Of The Following Benefits And Even More That Are Not Listed!
Programs for Extra Profit
• Access to Insured Warranty & Service Agreements • How to Structure a Related Finance Company • Networking Opportunities With Other Dealers
Programs to Help Keep Profit
• NADA Guide Books – single copy or subscription • Black Book Guide Books – single copy or subscription • Dealer Bonds - Salesmen’s Bonds • Discount on complete line of State approved Business Forms • Discount on Dealer supplies National Dealer Network Skip Tracing Contacts
Publications Public
• OIADA Magazine/Newsletter • Federally Required Safeguards Policy Document • Federally Required Red Flags Rules Policy Documents • IRS Audit Technique Guide For the Independent Used Car Dealer • Current Industry Information • Legislative Alerts • NIADA Monthly Magazine • NIADA Annual Buyer’s Guide
Professional Development
• Dealer Educational Seminars • Certified Master Dealer Program • Regional Professional Development Compliance Seminars • Free Access to NIADA.tv Training at Your Business • Access to IndependentDealer.com where dealers go for answers • NIADA Membership and Window Decal • OIADA “Symbol of Integrity” Logo, Window Decal and Membership Plaque • NIADA Annual Convention and Trade Show • Individual Assistance by phone • Code of Ethics
Representation
• State Lobby and Consultant Services • State Legislative and Regulatory Tracking and Reporting • Federal Lobby and Consulting Services • Federal Legal, Legislative and Regulatory Tracking and Reporting • Used Motor Vehicle and Parts Commission Liaison • Oklahoma Tax Commission Liaison • Oklahoma Department of Consumer Credit Liaison • Full Time Professional Staff to assist you when problems arise
Members Can Also Sign Up For Automotive Dealers Rewards From
Automotive Dealers Resource Of Oklahoma and Earn Money Saving Coupons For Their Future Purchases. Visit http://rewards.buyadr.com/
Automotive Dealers Rewards is open to Members and Non-Members Who Purchase From ADR of Oklahoma
Join OIADA online at http://www.e-oiada.com/join 27
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T H E N H T S A’ S P R O G R A M I N C L U D E S I N C E N T I V E S F O R A LT E R N AT I V E F U E L S , I N C L U D I N G N AT U R A L G A S
Final CAFE Standards for MY 2025 Under the direction of the Obama Administration, the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency recently finalized standards aimed at increasing fuel economy to the equivalent of 54.5 mpg for cars and light-duty trucks for model year 2025. When combined with previous standards, the projected standards will nearly double the fuel efficiency of those vehicles compared to the new vehicles currently on the road. According to the agencies, achieving the new fuel efficiency standards will encourage innovation, increase investment in advanced technologies, improve economic competitiveness and support high-quality domestic jobs in the auto industry. In total, the national program is projected to save consumers more than $1.7 trillion at the gas pump, resulting in an average fuel savings of more than $8,000 over the lifetime of the vehicle by 2025. For families purchasing a 2025 vehicle, the net savings will be comparable to lowering the price of gasoline by approximately $1 per gallon. Additionally, the programs are projected to reduce oil consumption by more than 2 million
barrels per day by 2025. That represents half the U.S. daily imports from OPEC. The agencies said a wide range of technologies are available for automakers to meet the new standards, including advanced gasoline engines and transmissions, vehicle weight reduction, lower tire rolling resistance, improvements in aerodynamics, diesel engines, more efficient accessories and improvements in air conditioning systems. And, in what could be a bit of good news for Oklahoma and other natural gas-producing states, the program includes manufacturer incentives for alternative fuel vehicles, including those powered by natural gas. Offsetting the anticipated fuel savings, however, will be an increase in the cost of vehicle manufacturing. The agencies estimate the technologies used to meet the MY 20172025 standards will add, on average, $1,800 to the cost of a new light-duty vehicle. For those consumers who purchase a new 2025 vehicle with cash, the increase in purchase price will be returned through fuel savings in 3.3 years. Consumers purchasing the same vehicle on a typical five-year note will realize an average monthly cash-flow saving of
$12 during the loan period. When considering the $1,800 cost increase, it’s important to realize the agencies’ estimate is relative to projected MY 2016 prices. Those 2016 vehicle prices already include increases necessary to achieve current standards. According to a study published by the National Automobile Dealers Association (NADA) in February 2012, the average overall increase in vehicle prices to achieve the total MY 2011-2025 CAFE standards is $2,937 in 2010 dollars. The NADA study explains that raising the average vehicle purchase price by $3,000 will increase certain consumers’ debt-to-income ratio. Consequently, by 2025, NADA estimates 3.1 to 4.2 million households, or 5.8 to 6.8 million licensed drivers, would no longer qualify for financing on the least expensive new vehicle, thus removing them from the new vehicle market. In NADA’s estimation, the increase in new car prices and the additional consumers’ inability to qualify for the least expensive new cars will place upward pressure on used vehicle demand.
BY ADR STAFF
A F T E R M A R K E T U P D AT E
Protection Rules Accessories as Electronics Decline
Auto protection products continued to outsell other accessories in the first half of 2012, according to the 2012 AOA Auto Accessories Midyear Trend Report released by izmocars. The report, which analyzes accessories sales data from dealerships across the country showed a sharp decline in electronics sales, with the exception of electronic protection products, such as alarms. There was a precipitous drop in volume for all electronics, particularly bluetooth, navigation and video products, dropping that category out of the top 10 in sales. The report attributed that to the explosion of original equipment electronics in new cars. Because automakers are loading up vehicles with bluetooth and other electronic features, fewer consumers need to turn to the aftermarket or dealership accessories departments for those items. “As more and more electronic features come standard in vehicles, fewer consumers are purchasing electronics as add-on accessories,” izmocars vice president Sidney Haider said. The No. 1-selling accessories by volume, by revenue and by profit were protection products, with floor mats leading in volume and paint protection in revenue and profit. Body side moldings and window tints also had strong performances. “The results of our midyear report underscore the continued strength of protection products in the market, indicating the trend we started to observe last year is moving beyond trend into a reality as the vehicle ownership lifecycle expands,” Haider said.
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