DEALER NEWS REPRESENTING ALL AUTO, TRUCK, TRAILER, RV AND POWER SPORT DEALERS OF OREGON
MARCH 2014
magazine
Dealers Under Pressure
INSIDE
• H ow to Select the Best Existing Building • Content Marketing • Washington Update
to Comply F E AT U R E S T O RY O N PA G E 4
OIADA provides dealer education credits for reading this magazine! Easy to follow, easy to learn, easy to comply...
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SAFETY
NEWS
GM Recalls Trucks for Stalling u
Inside 04 Flat Fees vs. Discretionary Compensation for Dealers 08 DamageMAX Conducts Comprehensive Study on Impact of Salvage Titles 12 How to Select the Best Existing Building for Your Car Dealership 16 Washington Update 18 What is Content Marketing and Why Do I Need It? 22 Advertising Game Plan: No Audibles Allowed
What’s New u
Stay Strong as an Independent
NIADA CAN HELP
Advertisers Index
Ally...............................................................................11 Brasher’s Northwest AA......... Inside Back Cover Brasher’s Portland AA......................... Back Cover DAA Northwest / Seattle.........Inside Front Cover Leedom Group.........................................................15 Manheim.com............................................................7 Manheim Pennsylvania........................................17 NextGear Capital.....................................................13 United Acceptance.................................................19 VAuto.............................................................................9
Continuing Education Watch for more information on the number of
hours required to renew your dealer license. Along with the change in number of hours, each dealer will be required to take and submit a test, 10 questions for every hour of Continuing Education. This will be in effect after January 1.
TRANSFER PUMP MALFUNCTION CAUSE FOR CONCERN
General Motors is recalling 9,733 model year 2012-2013 Chevrolet Silverado HD and GMC Sierra HD vehicles equipped with 6.6L diesel engines and dual fuel tanks. In the affected vehicles, the transfer pump which moves fuel from the rear tank to the front tank could malfunction and cause the fuel gauge to indicate an inaccurate reading. If the fuel gauge indicates an inaccurate reading it may result in the vehicle unexpectedly stalling, increasing the risk of a crash. General Motors will notify owners and dealers will inspect and replace the fuel transfer pump, as necessary, free of charge. GM’s number for this recall is 13420. AUCTION NEWS
DAA Seattle Welcomes David Blake u
NEW GM INTRODUCED
Auction veteran Dave Blake has joined the McConkey Auction Group, taking the helm at DAA Seattle as general manager. “We’re glad to have someone with David’s experience and auction knowledge on board,” said DAA’s Bob McConkey. Blake began his career with the Auto Auction of New England in 1995, where he worked his way up the ladder and served 11 years as general manager. “David is a hands-on leader who brings valuable insight to our entire team,” added McConkey. Previously, he held management positions in the lot, reconditioning, arbitration, customer service and operations departments. A native of New England, David Blake is active in the auto auction industry. He has served as both president and
treasurer of the eastern chapter of the NAAA and is currently the co-chair of the Independent Auction Group. Additionally, he served as chairman of the board of the eastern chapter of the NAAA from 2010 to 2013. “I’ve always been committed to giving back to this industry,” said Blake. “I also embrace ongoing change and growth, and I am eager to continue with both at DAA Seattle.” Blake is married with two children and is a certified life coach. Together with DAA Northwest, KCI Kansas City and EPI El Paso, DAA Seattle is a member of the McConkey Auction Group and ServNet, North America’s premier independent auto auction network. More information about DAA Seattle may be found at www. McConkeyAuctions.com.
NIADA Headquarters National Independent Automobile Dealers Association
www.niada.com • www.niada.tv 2521 Brown Blvd. • Arlington, TX 76006-5203 phone (817) 640-3838
For advertising information contact:
Troy Graff (800) 682-3837 or troy@niada.com. OIADA Dealer News is published 8 times per year by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 817-640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 6006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of OIADA Insider or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA , does not constitute an endorsement of the products or services featured. Copyright © 2013 by NIADA Services, Inc.
State Magazine MGR./Sales Troy Graff • troy@niada.com
Editors
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Magazine Layout & Graphic Artist Chantae Arrington • chantae@niada.com
Art Director
Christy Haynes • christy@niada.com
Printing
OIADA Office Oregon Independent Auto
Executive Committee
Dealers Association, 1475 Capitol St. NE Salem, OR 97301 800-447-0302
President
Treasurer
Executive Vice President
Secretary
1st Vice President
Chairman of the Board
Dan Nicholson, CMD Central Oregon Motors 1123 N 6th Street Redmond, OR 97756 541-923-3961 com@bendbroadband.com
Bryan Steward AAA Oregon AutoSource 6 SW Centerpoint Dr #100 Lake Oswego, OR 97035 503-973-6570 bsteward@aaaautosource.com
Eric Freeman, CMD 7524 SW Macadam Ave Portland, OR 97219 503-310-5555 eric@freemanmotor.com
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Tommy Wilson Jr., CMD Tommy Wilson Motors 9215 SW Canyon Rd Portland, OR 97225 503-629-6000 tommyjr@tommywilsonmotorco.com
Todd Staver, CMD West Coast Auto Enthusiast 3219 NW Guam St Portland, OR 97210 503-799-1465 tstaver@wcaenthusiasts.com
Gary Sargent Sargent’s Motorsports 10207 SE Foster Rd Portland, OR 97266 503-775-9445 sargiii@sargentsmotorsports.com
Nieman Printing
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OIADA
DEALER
NEWS 2/19/14 4:29 PM
COMPLIANCE
OVERDRIVE
Flat Fees vs. Discretionary Compensation for Dealers
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T H E D E B A T E C O N T I N U E S
In March 2013, the Consumer Financial Protection Bureau published guidance on compliance with fair lending requirements for indirect auto lending. Since then the issue has grown to become the industry’s most significant compliance issue in quite some time. In December, the CFPB entered into a consent order with a large lender involving millions of dollars in damages and penalties. Others could follow. Be prepared, because this issue may also result in lenders changing how they pay dealers for retail contracts. The CFPB’s focus is on how lenders compensate dealers when they buy completed retail contracts. After analyzing information about a proposed credit sale, an indirect auto lender will offer to buy the completed retail contract if it has a specified (minimum) contract interest rate. Sometimes the minimum rate is referred to as the “wholesale rate” or the “buy rate.” Some lenders pay dealers a share of the increased interest revenues if the completed contract interest rate is more than the buy rate. This practice is often referred to as “dealer rate markup,” “dealer reserve” or “dealer participation.” The CFPB’s concern is that dealer discretion to increase interest rates may result in some buyers paying more than others – which is a OIADA
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violation of the law if the pricing disparities affect buyers of one race, gender or other protected group more than others. To be clear, there is no debate about the evils of intentional credit discrimination. Every reputable auto dealer and lender condemns discrimination against buyers on the basis of race, ethnicity, gender and all other classes protected by the law. Intentional credit discrimination is against the law, is bad policy and has no place in this industry. Everyone agrees. The current issue is more subtle because it involves unintentional discrimination, referred to as “disparate impact.” A dealer and lender could implement what they believe to be discrimination-free business policies and practices only to find that they result in statistical anomalies showing buyers of a certain race or gender are paying more for credit. Unless the variations can be justified by legitimate business needs, they are violations of law because they have a discriminatory impact on certain protected buyers. It doesn’t require the dealer or lender to have discriminatory intent. It only matters that their actions had a disparate impact. The CFPB’s guidance last March and its actions since then have all focused on dealer discretion to increase lender’s MARCH 2014
buy rate and the risk that such discretion may lead to a disparate impact on protected buyers. If a dealer doesn’t have a set of rules for how and when it marks up the buy rate, then how can it ensure that buyers with similar credit profiles are being treated equally? For example, if a dealer’s only credit pricing rule is to charge each customer as much as he/she will bear, then it is not trying to provide the same credit pricing to buyers with similar credit profiles and it is likely violating the fair lending requirements. We heard from many lenders who spent a good part of 2013 trying to figure out how to ensure compliance without negatively affecting their ability to purchase dealer contracts. For better or worse, the CFPB’s guidance didn’t require a magic bullet solution. If it had, lenders might have all quickly adopted changes knowing that all their competitors would do the same. Instead, a lender that changes its dealer compensation method might reduce compliance risk but then takes the risk that its new compensation method will still be attractive to dealers. A bold lender could lose business if dealers negatively react to the change. These factors may have led to some hesitation by lenders on the issue. Any hesitation probably ended in December when the CFPB
entered into a consent order with a large auto lender. In the consent order, the CFPB alleges that the lender’s discretionary dealer rate markup practices resulted in a disparate impact on certain buyers in violation of the Equal Credit Opportunity Act. The CFPB’s allegations were based on its analysis of the lender’s auto loan portfolio. The CFPB ordered the lender to institute ECOA program changes, pay $80 million to certain buyers as damages and pay the CFPB $18 million in penalties. Now there is more pressure than ever for lenders and dealers to take action to address the CFPB’s concerns. The CFPB’s March 2013 guidance offered two alternative courses of action. They aren’t perfect solutions, but they provide a clear dichotomy of choice. 1. Lender uses a discretionary dealer participation compensation method. For example, a lender might continue to allow dealers the discretion to mark up the buy rate and compensate dealers based on the amount of the markup. These methods require lenders to: u Impose controls on dealer markup and compensation policies. For example, controls could include a cap on the amount of markups. Other controls could be to allow dealers to use a set rate markup allowing variation only under certain authorized circumstances. C O N T I N U E D O N PA G E 6
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Q& A
How will YOU answer a federal enforcement investigation into your business practices? P A. Subscribe to and complete the NIADA ONLINE DEALER COMPLIANCE PROGRAM P B. Install self-policing policies P C. Create a culture of compliance P D. ALL OF THE ABOVE
Train. Document. Track. Comply.
ANNUAL COMPLIANCE SUBSCRIPTION IS ONLY $495 PER LOCATION!
Finally, a comprehensive dealer compliance solution that fits your schedule...and your budget. www.niadadealercompliance.com
Online Dealer Compliance Now more than ever, independent auto dealers must show their diligence in operational compliance. Federal agencies like the FTC and CFPB have made it no secret that your business needs to play by the rules AND show that you are taking every step to train your employees as well.
Available online for your entire staff (per location), NIADA’S Online Dealer Compliance modules includes 13 video training session topics below and include interactive testing after each video session:
Video Topics • The Red Flags Rule • The Safeguards Rule • United States Patriot Act: OFAC • U.S. Patriot Act: IRS/FENCEN FORM 8300 • National Do Not Call Act • The Federal Used Car Rule
• Compliant Sales Process • Dealer Advertising Guidelines • O SHA: Dealer Health & Safety Program • OSHA: Hazzard Communication Program • OSHA: Auto Repair Safety • Workplace Diversity • Sexual Harassment
DOWNLOAD Compliance Policies & Deal Agreements • D ownload and print a variety of federally-required dealership compliance policies • D ownload and print documents & agreements designed to limit dealer liability
For more information and to subscribe now, visit www.niadadealercompliance.com or call Angela at 817-640-3838.
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amount without the discretion to increase or decrease the marked up amount.) u Lender could pay a flat fee to dealer on every transaction plus a percentage based on the amount financed. This would provide more compensation to dealer for larger credit transactions. Again, the presumption is that dealer would not be allowed to change the lender’s buy rate. Solutions 1 and 2 both require lenders to have a fair lending compliance management program in place, but the first solution requires heavy monitoring and analyzing activity. Even with heavy monitoring, lenders still run the risk that their analysis will reveal credit pricing anomalies which will then need to be addressed with affected buyers and the dealers involved. In theory, the second solution does not require those extra steps because dealers do not have discretion to change credit pricing for different buyers. Doesn’t the second solution sound like it would be much easier for lenders to implement than the first? Obviously, lenders need to analyze how they approach
AASC Announces Standardized Vehicle Condition Grading Technology
PRODUCTS
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The NADA recently recommended that its member dealers implement rate caps and allow dealer discretion to decrease the markup only for certain legitimate business needs. It recommended that dealers document the business reason(s) whenever they discount the markup. u Review and analyze their loans regularly at the portfolio level and at the individual dealer level. Depending on the size of the portfolio, lenders may need
& SERVICES
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to analyze it as often as quarterly. u Address any unexplained pricing disparities on prohibited bases. This would require finding and correcting the root cause of the disparities. If certain dealers are creating the problems, then a lender may need to restrict pricing for those dealers or stop buying their contracts. Addressing prohibited disparities also means returning money to affected buyers or providing them redress in some other way. 2. Lender compensates dealers using a formula that does not give dealer discretion. For example: u Lender could pay a flat fee so dealer is compensated the same amount for every contract sold to lender regardless of the contract interest rate. Since dealer isn’t compensated for increasing the buy rate, it has little reason to do so. Actually, the presumption is that lender would not allow dealer to change lender’s buy rate because that would involve dealer pricing discretion. (A variation might be that dealer marks up every transaction by the same
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this compliance issue. The administrative cost and burden and increased compliance risk may be too much for them to keep discretionary dealer credit pricing. If they keep it, they may tweak their compensation formulas with limits or controls, maybe to something like the NADA’s recommendations. If they change to non-discretionary pricing models, the challenge will be for them to create new compensation formulas that are competitive and attractive to dealers. As noted in prior articles, dealers must create and maintain solid fair lending policies, procedures and practices. If you haven’t done it yet, you need to make it a priority. Be prepared to prove to your lenders and your regulators that you have a solid program in place. In addition, now you should also be prepared for changes in the compensation lenders offer when they buy your retail contracts.
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.
AUTOGRADE EXPECTED TO HELP AUCTIONS STRENGTHEN VEHICLE CONDITION PROCESSES
Through joint collaboration across the wholesale automotive industry, Auto Auction Services Corporation has introduced a new industry standard for vehicle condition data reporting available to all members. This new standard will drive consistency across the entire automotive wholesale marketplace. Through an arrangement with the National Auto Auction Association, AASC will soon distribute Manheim’s AutoGrade service to all member auctions at no additional cost. ADESA, Bel Air Auto Auction, Greensboro Auto Auction and Tallahassee Auto Auction will be first to use the service once the integration project is complete. “We are very pleased to share this new technology with the industry, which was developed through our partnership with Manheim,” said Mike Broe, chief executive officer and president of AASC. “AutoGrade will help auctions and sellers in North America maintain a consistent vehicle OIADA
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grading system and allow buyers to see condition report consistency across all channels.” The AutoGrade service becomes available at a time when wholesale volumes are increasing, buyers are embracing Internet platforms and sellers are asking for consistency and transparency in their vehicle valuation processes across all venues and geographies. Whether or not auctions have a scoring methodology of their own, they will now have the option to offer an AutoGrade on every vehicle in their inventory. Positioning AASC as the distribution source for AutoGrade will allow all auctions to easily and confidently adopt the AutoGrade methodology, ultimately improving condition report quality and consistency across the industry. An analysis of vehicle sales data shows that vehicles listed online with an AutoGrade score are three times more likely to sell than vehicles without. “The AutoGrade score is MARCH 2014
acknowledged as the gold standard in the industry – buyers can consistently compare like-for-like vehicles and have the highest confidence in their purchase decision,” said Charles Nichols, BSC America’s president. “AutoGrade utilizes vehicle information to calculate a consistent objective grade the same way, every time, across auction locations and online platforms,” said Paul Lips, executive vice president of operations and finance for ADESA. “This increases confidence for buyers and allows them to more effectively comparison shop vehicles. It also makes it easier for sellers to accurately price vehicles. Implementing AutoGrade as the standard for the industry should considerably improve the overall customer experience.” How it Works AutoGrade will allow auctions an opportunity to input vehicle damages to generate vehicle scores while preserving confidentiality of
certain vehicle data. Here is how the process will work: • Auctions collect and submit vehicle damage information to AASC via AutoIMS in much the same way they do today. • AASC will remove all vehicle data (including the VIN, year, make and model) along with the auction name and transmit the data to Manheim. • Manheim then returns an AutoGrade score back to the auction via AASC. To use AutoGrade, each auction must maintain a membership in AASC, who maintains the remarketing industry standard inventory management system AutoIMS. AASC continues in its 16th year serving the industry. To register for the service, please contact Jay Cadigan at Manheim (jay.cadigan@manheim.com) or Mike Broe at AASC (mike.broe@ autoims.com). For more information about Auto Auction Services Corporation, visit www.autoims. com. w w w. o i a d a . c o m 2/19/14 4:29 PM
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MARKET
WATCH
DamageMAX Conducts Comprehensive Study on Impact of Salvage Titles u
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STUDY OFFERS THREE FINDINGS AND FOUR RECOMMENDATIONS
Damaged vehicle buyer DamageMAX recently completed a comprehensive analysis on the impact of salvage title brands on repaired and damaged vehicles, arriving at three important findings and four proposed recommendations. For the study, the company reviewed more than five million wholesale vehicle transactions to identify trends in value diminution associated with salvage (rebuilt) title brands. DamageMAX's key findings included: • Rebuilding salvage branded vehicles (even to factory specs) generally has a negative return on investment. • Luxury car and pickup segments suffer the most from salvage title branding. • SUV and midsized segments are least impacted by salvage brands. Title Brand Classification DamageMAX explained there are different terms associated with salvage branding. These are controlled at the state level and are unique similar to the administration of titles which come in many shapes, sizes, colors and prices. For the purposes of this study, analysts indicated only salvage, rebuilt and rebuildable branded vehicles were included and non-rebuildable/parts-only title vehicles were excluded. Not all states have salvage title thresholds, but those that do generally range from 60 to 100 percent of the fair market value of the vehicle, which insurance carriers refer to as actual cash value. "Salvage thresholds are in place to discourage the public from repairing vehicles if the extent of the collision damage is beyond what that state department of insurance deems as safe," DamageMAX said. When collision damage is severe, the company indicated certain states including Florida and Michigan mandate that OIADA
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a Certificate of Destruction or scrap title be issued. This requires that the vehicle identification number be decommissioned and the vehicle be sold for parts. "Insurance carriers favor the term ACV in place of FMV to help avoid disputes with their claimants who seek the maximum reimbursement (retail) for their total loss," DamageMAX said. Scope of Data Vehicles from 1997 to 2013 were evaluated in clean and damaged condition. Salvage title discounts were established by model year. "We found that the sample size used was large enough to establish firm trends without granularity of criteria typically used (make/model/body) for predictive pricing," DamageMAX said. The study determined the average discount a salvage title vehicle will experience when compared to an analogous clean title is 66 percent, meaning that the vehicle will only fetch 34 percent of average wholesale in repaired form. "Conventional wisdom dictates that an unrepaired vehicle is worth less than a repaired vehicle of the same year, make, model and miles. This is not always true as a repaired vehicle with a salvage title is often worth less than an unrepaired vehicle with a clean title," study orchestrators said. "Parts buyers (recyclers) typically look to buy salvage title vehicles because they do not want to compete with wholesalers and retail dealers who intend to repair and resell to an end user," they continued. "This segment of buyers also includes exporters who have no interest in what the title brand is because the title is simply an instrument needed for the export process." Conclusions and Recommendations DamageMAX wrapped up its analysis by offering four final conclusions: MARCH 2014
• Generally speaking, salvage title vehicles should not be rebuilt. "Financially, it is not a good investment and there is rarely an exception to this rule of thumb," DamageMAX said. "States with salvage title thresholds have created these thresholds to protect the residents of their home state; and in these states, the brand effectively carries a significant financial deterrent — value diminution. "To ignore this issue and invest an inordinate amount of money trying to rebuild and restore a passenger vehicle to be roadworthy is not wise," the company added. • Titles should only be branded if warranted. "Many insurance carriers are overly conservative, salvage branding a vehicle that could easily be made road worthy
safely," DamageMAX said. "Some states (for example, Pennsylvania) require that recovered theft vehicles be branded with a salvage title if a total loss settlement is issued by an insurance carrier. The physical condition of the vehicle does not matter and is actually not even considered. "We believe that this is extreme, but the law is controlled by the state, and the state wants that vehicle brand to follow that vehicle for the remainder of its life," the company went on to say. • Wrecked vehicles with structural damage (greater than $3,500 as a guide) typically yield better returns if sold unrepaired. • Stigma history, title brands and poorly performed previous repairs are "value killers."
BY JOHN CHAPIN COMPLETE SELLING, INC.
JOHNCHAPIN@COMPLETESELLING.COM WWW.COMPLETESELLING.COM
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ASSOCIATION
AUCTION NEWS
NEWS
ADESA Boston Hosts Mark Your Calendars for Auctioneers Championship NIADA Convention 2014 u
ADESA Boston will host the 2014 World Automobile Auctioneers Championship on May 9. The event will showcase the world’s best automobile auctioneers vying for the coveted titles of World Champion Automobile Auctioneer, World Champion Automobile Ringman and World Champion Team. This year’s judges include ADESA CEO/president Tom Caruso, NAAA CEO Frank Hackett, Manheim president/CEO Sandy Schwartz and Central Auto Auction CEO/general manager Peter Saldamarco. “These are the men and women who help fuel our business, who help us get better prices, plus describe cars, help us get cars sold,” commented Schwartz. “[In 2012] I was so amazed at the intensity, at the professionalism and, most importantly, the love that all the auctioneers and ringmen have for our business.” Schwartz added, “It’s so great to watch people who love their craft
and are so good at it that are really the heart and soul of the business. We love our auctioneers.” The 2014 championship will be webcast live from ADESA Boston on Friday, May 9, starting at 9 a.m. Eastern Daylight Time. Cheer on your hometown favorite auctioneers and/or ringmen and catch all of the fun and excitement of the 2014 World Automobile Auctioneers Championship. Free live broadcast is available exclusively at the following websites: www.niada.tv; www.niada.com; www.waacnet.com and www.autoconsumer.tv. For more information, visit http://www.niada.com/ world_automobile_auctioneers_ championship.php.
J U N E 2 3 - 2 6 AT C A E S A R S PA L A C E I N L A S V E G A S
You don’t want to miss NIADA’s 2014 Convention and Expo. The event will take place June 23-26 at Caesars Palace in Las Vegas. A must attend venue for dealer education, NIADA’s convention and expo offers a great opportunity to network with other dealers and industry leaders, meet with vendors, learn from industry experts and much more. In 2014, NIADA is focusing on what it means to be an independent dealer. Whether you’re from a “mom and pop,” Buy Here-Pay Here, large retail store or multi-location, NIADA has something for you to better equip you to work smarter, more efficiently, with the best tools available to ultimately make you a solid, strong dealership for the future. Convention events include valuable training sessions, a kick-off reception, awards banquet and various breakout sessions. Learn the latest ways to improve your business, honor the best in the business, do a bit of networking and have a great time doing it. There are also great opportunities for sponsors and exhibitors, with full access to convention events. These events are strategically scheduled to not conflict with exhibit hours. Mark your calendar today and make plans to attend. Visit www.niada.com/convention.php for convention details. For more information regarding the convention or sponsorship, contact Holly Swanzy at holly@niada.com or 817.640.3838.
Sluggish Job Rebound FTC Cracks Down on Could Impact Delinquencies Misleading Ads u
J O B L O S S S L O W S C O N S U M E R S ’ M A J O R S P E N D I N G
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MARCH 2014
N AT I O N W I D E S W E E P R E S U LT S I N C H A R G E S A G A I N S T T E N DEALERS u
“Operation Steer Clear” is the latest effort from the FTC to protect consumers in the auto marketplace. The Federal Trade Commission reached an agreement with nine auto dealers to settle deceptive advertising charges and is taking action against a 10th dealer in a nationwide sweep focusing on the sale, financing and leasing of motor vehicles. According to the complaints, the dealers made a variety of misrepresentations in print, Internet and video advertisements that violated the FTC Act. These dealers misled consumers to believe they could purchase vehicles for low prices, finance vehicles with low monthly payments, and/or make no upfront payment to lease vehicles. The proposed consent orders prohibit the dealerships from misrepresenting in any advertisement for the purchase, financing or leasing of motor vehicles the cost of leasing a vehicle, the cost of purchasing a vehicle with financing or any other material fact about the price, sale, financing or leasing of a vehicle. When relevant, the proposed consent orders also address the alleged TILA and CLA violations by requiring the dealerships to clearly and conspicuously disclose terms required by these credit and lease laws. The proposed order also prohibits misrepresenting material terms of any prize, sweepstakes, giveaway or other incentive.
NEWS
According to at least one respected industry observer — Manheim’s Tom Webb — the major cause of an auto loan delinquency remains a job loss. Fitch Ratings’ latest analysis of the labor market showed a rebound in a nationwide employment is not proceeding quickly enough to drive a significant pick-up in U.S. economic growth. Despite a decline in the headline unemployment rate to 6.7 percent in December, Fitch stated labor productivity and participation rates have stayed weak since the recession. “We remain concerned that high levels of unemployment and under-employment will continue to dampen consumer spending and delay the start of a more robust economic recovery,” analysts said. Fitch pointed out that differences between the monthly employment reports released by ADP and the Bureau of Labor Statistics, evident in the December payrolls data, will likely be smoothed over the next quarter as monthly numbers are adjusted. “While significantly different, we believe both surveys have shown ongoing, accelerating improvements in job creation over recent months,” Fitch analysts said. “Unfortunately, the reports still indicate that U.S. employment levels are not rising fast enough to offset job losses suffered during the last recession.” Fitch explained the U.S. economy needs to generate between 185,000 and 200,000 jobs monthly to significantly reduce unemployment.
REGULATORY
ECONOMY WATCH
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EVENT SHOWCASE S WORLD’S BE ST AUTOMOBILE AUCTIONEERS
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MANAGEMENT
MATTERS
How to Select the Best Existing Building for Your Car Dealership u
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KEY COMPONENTS TO CONSIDER DURING THE BUYING PROCESS
During the latest economic downturn, many auto malls became ghost towns as dealers of both new and used cars were forced to close their doors. As the economy turns around and starts to expand, 2014 is the time to take advantage of these great, vacant locations. While these existing car dealerships are in prime locations, many may not be worth the debt on the mortgage, which puts the buyer in a great position to make a deal. The trick is to choose the ideal existing building to fit your needs without having to put too much money into the building to make it your own. The following are some key components to take into account and investigate during the buying process. These points will help you avoid buying a lemon. 1. The first step is to retain the services of a commercial real estate broker with good working knowledge of your desired area and experience in automobile dealership sales. You may think you can negotiate the deal yourself but with an existing building there are always unforeseen issues. Having an experienced expert on your side will help you discover as many issues as possible during the buying process. Also, a broker can help you OIADA
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locate new buildings that are just coming on the market that you would not be able to find on your own. Finally, they can assist in finding the local zoning council, getting a fair appraisal and hiring a good company to do the inspections. 2. Secondly, you want to verify the property is zoned for the specific use of used car sales. This can be accomplished by obtaining a zoning verification letter from the jurisdiction in which the site is located. Many zoning conditions that permit automotive sales only account for the sale of new product. The sale of used vehicles could be prohibited or be a secondary use requiring a zoning variance, special use permits or even a rezoning. These three procedures will take time and could cause a delayed grand opening. It’s prudent to make your final sales contract contingent on obtaining final zoning approval from the jurisdiction prior to closing. This contingency will protect you if there are any issues with the local municipality. If you are required to enter into zoning proceedings, check with the local jurisdiction on the timeframe as they will have strict deadlines. Hiring a zoning attorney who is familiar with the jurisdiction will make the MARCH 2014
process run more smoothly. Your broker can assist in finding good counsel. Depending on the jurisdiction, this process may also require the review of the intended building exterior modifications. If this is required, hire an architect to produce required materials. Other zoning uses to check are fueling, washing and servicing automobiles. 3. As you start to investigate the building, the best advice is to hire an experienced consultant to inspect it. This is another area in which your broker can assist. The inspector can help with identifying issue(s) in the existing building, such as hazardous materials like asbestos and lead. It is best to make sure testing is done during your due diligence process. If the test confirms hazardous materials, you may negotiate the remediation of the materials in your contract for the seller to pay the cost or have the cost of abatement reflected in the asking price. Getting rid of hazardous materials is costly in both time and money. Other issues to address in your inspection are building components such as the electrical system, HVAC system and exterior envelope. Beware the slippery slope of
renovation. Bringing a structure up to current code can be very expensive. It may be better to demolish the building and build exactly what you want. For your building inspection make sure to hire an inspector that is registered and has a background in doing commercial buildings and car dealerships. A good inspector will be able to tell you the state of your system. You will need to have a geotechnical engineer do a Phase 1 Environmental. This is a test of the property to make sure no fuel, oil, antifreeze or any other contaminating liquid has leaked on site (this also can be into the site from offsite properties). It is possible the seller may have this report from the original or previous sale. Obtaining this report will help your engineer do a quicker and more accurate report. The remediation for these spills is costly and you could later end up in a lawsuit if you sell the building without disclosing this information. These reports will also show if there are any other potential site challenges such as wetlands, unusable land on the property or protected species. 4. Signage is another factor in verifying applicable requirements before you C O N T I N U E D O N PA G E 1 4
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If you are unhappy with the amount of signage your building is allotted, you might consider picking another location to make sure you can be found by potential customers. C O N T I N U E D F R O M PA G E 1 2
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purchase. Every car dealer wants to make sure there are plenty of clear views to signage, whether building mounted or freestanding components. In many locations with existing buildings, signage may be “grandfathered in,” meaning you may be able to utilize the same amount of signage that the current dealership has to offer. However, this is not always the case. If you are unhappy with the amount of signage your building is allotted, you might consider picking another location to make sure you can be found
by potential customers. One advantage to an existing building is that many customers may have already visited the location and be familiar with it. 5. When you do find an existing building that excites you, ask the seller to let you visit the property at night with the lights on. Check what your store will look like as customers arrive in the evening. This will allow you to see how visible the current signage is in the dark and how your merchandise will look. Nighttime lighting is important because most customers purchase
automobiles on Saturdays or after work during the evening. It is more difficult to showcase merchandise color and quality at night, so adequate outdoor lighting is critical for merchandise color. Since the location was likely operating as a dealership previously, you could have strong outdoor lighting fixtures already in place. You can also take this opportunity to check how many of the fixtures are in proper working order. Ask the seller about the operating cost of the current fixtures. Then include the cost of repairing or replacing
the fixtures in your contract negotiations. There will always be unforeseeable issues that arise during the buying process, but by hiring a real estate broker with experience, obtaining a zoning verification letter, doing an inspection of the building and site as well as getting a geotechnical report you will be well on your way to knowing exactly what you’re purchasing and being happy with the result. Enjoy creating your new business location!
BY SARAH ROBERTS, LEED AP SITE FEASIBILITY AND DESIGN PIEPER O’BRIEN HERR ARCHITECTS
KBB Research Shows Brand Loyalty Tied to U.S. Regions u
S H O P P E R S M AY P R E F E R M A N U FAC T U R E R S W I T H L O C A L T I E S
Why are some shoppers dead set on a particular brand, while others can be swayed by a variety of factors including price, fuel efficiency and looks? According to Kelley Blue Book, it might have something to do with where these shoppers call home. KBB announced results of research that focused on the most and least popular auto brands by U.S. region and, overall, statistics show out of all regions, southerners are the least influenced by brand when shopping for a car. “Perhaps manufacturers have the ability to conquest market share in the South since these shoppers are not as loyal to any specific automaker,” KBB officials asserted. The southern trend is illustrated by the relatively small 17 percent preference for Infiniti OIADA OR_0314.indd 14
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over other brands. This is compared to stats such as the following: u Midwest shoppers are 64 percent more likely to consider Chrysler than shoppers from other regions. u Northeast shoppers are 56 percent more likely to consider Subaru than shoppers from other regions. u Western shoppers are 85 percent more likely to consider Tesla than shoppers from other regions. For some of these more brand-oriented regions, KBB. com found the top brands most shopped in specific U.S. regions are often headquartered or have assembly plants in that area, suggesting shoppers prefer manufacturers with local ties to their region. MARCH 2014
“It seems what is popular in one region is overlooked in another,” said Arthur Henry, analyst at Kelley Blue Book. “Westerners prefer fuelefficient brands with style, such as Tesla and Scion, but those same brands are shunned in the South and Northeast,” he added. “Those living in the South gravitate toward brands that are manufactured in the same region. Shoppers from the Midwest also have an affinity for brands headquartered or produced in their own backyard.” KBB also reported regional tendencies towards vehicle segment. Out West, KBB found that new-car shoppers are 66 percent more likely to consider a hybrid car, while Midwest car shoppers are 42 percent more likely to consider a full-size crossover. Southern shoppers are 41
percent more likely to consider a full-size sport utility, followed by the Northeast which is 20 percent more likely to shop for a compact crossover. “Based on actual shopping data on KBB.com, hybrids are synonymous with the West, as SUVs are with the South,” said Henry. “Seeing the key drivers motivating shoppers are topography, metropolitan density and government regulations, it is not surprising compact crossovers are preferred over full-size SUVs in the Northeast. “This shows when brand choice is layered on top of segment preferences, manufacturers like Subaru rise to the top with its four-wheel drive options, along with Volvo and its high safety ratings, which help both brands drive interest in this region.” w w w. o i a d a . c o m 2/19/14 4:30 PM
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WASHINGTON
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NIADA Government Report u
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HOUSE FINANCIAL SERVICES COMMITTEE HEARING
Here’s a rundown of some of the latest governmental issues and activity affecting the used car industry from NIADA regulatory counsel Shaun Petersen and NIADA lobbyist Sante Esposito. LEGISLATIVE REPORT House Financial Services Committee Hearing The Committee on Financial Services held a hearing Jan. 28 to receive the semi-annual report of the Consumer Financial Protection Bureau and the CFPB director’s testimony on the report. Director Richard Cordray was the only witness. Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, requires the bureau to prepare semi-annual reports describing its activities during the previous six months, and requires its director to testify before the Financial Services Committee. At the request of the committee, the NIADA submitted a statement for the record. The statement, from executive vice president Steve Jordan, expressed NIADA’s concerns about the CFPB’s seemingly limitless power, reach and resources – mostly unchecked by congressional or presidential oversight – as well as its disturbing secrecy and some of the bureau’s actions in the area automotive financing. Specifically, NIADA took issue with a 2013 guidance document in which the CFPB suggested dealer markup in indirect auto lending leads to a disparate impact on minorities and discrimination in rates in violation of the Equal Credit Opportunity Act. The CFPB has still not released its evidence of discrimination or its method of reaching that conclusion despite repeated requests from stakeholders and members of Congress. The statement concluded by calling for structural changes to the CFPB to increase its transparency and accountability. Fiscal Year 2014 Appropriations On Jan. 17, President Obama OIADA
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signed a $1.1 trillion omnibus spending bill to keep the federal government funded through September and avoid another shutdown. The bill provides almost $41 billion for the federal highway program – the same level authorized in MAP21, which expires Sept. 30. That’s an increase of $557 million from the fiscal year 2013 level.
reduction atop sequestration. The sequestration relief is evenly divided between defense spending and non-defense discretionary spending. The sequester’s cuts to mandatory spending are unaffected. Spending will be $45 billion higher in 2014 than it would’ve been absent the deal. The deal does not include any extension of unemployment insurance.
The CFPB hearing Jan. 28 to receive the semi-annual report of the Consumer Financial Protection Bureau and the CFPB director’s testimony on the report. u
It also provides $600 million for another round of grants for transportation infrastructure projects – known as Transportation Investment Generating Economic Recovery (TIGER) grants. The bill contains $2.15 billion for the Federal Transit Administration, a decrease of $100 million from 2013. The legislation allows $8.6 billion in state and local transit grant funding, consistent with MAP21, as well as $2.1 billion for new starts, full funding for state and local small starts and funding for all current full funding grant agreement projects. The total deal is for $85 billion. About $45 billion of that replaces sequestration cuts in 2014. About $20 billion replaces sequestration cuts in 2015. About $20 billion is deficit MARCH 2014
REGULATORY REPORT Department of Justice DOJ sues N.C. BHPH dealership: The DOJ brought a lawsuit against an independent auto dealer in the Western District Court of North Carolina. The complaint alleged the dealership intentionally targeted African-American consumers for the extension and servicing of installment sale contracts on unfair and predatory terms. Specifically, the DOJ alleged that the dealership inflated sale prices, down payments and interest rates without tying the increase to a meaningful difference in the customer’s credit. It further alleged that the dealership’s owner used derogatory terms when referring to African-Americans, and that African-American customers had higher rates of default and
repossession or had vehicles repossessed even though the loan was not in default, and that the dealership failed to provide notice that vehicles had a GPS tracker installed and that the tracker would be used for repossessing the vehicle. Environmental Protection Agency EPA settles with importer: The EPA settled with a Dallasbased vehicle importer Savoia Inc., BMX Imports L.P., BMX Trading LLC., and Terry Zimmer for alleged violations of the Clean Air Act. The importer imported more than 24,000 motorcycles and recreational vehicles without an EPA Certificate of Conformity, compliant emission control information labels or proper warranties. As part of the settlement, the business must cease operation or follow an EPA compliance plan. The business must destroy 115 vehicles in inventory that have catalytic converters or carburetors that do not conform to the Certificate of Conformity, and must pay a $120,000 penalty. Federal Trade Commission Nissan North America settlement: Nissan North America Inc. and the advertising agency that designed its television ads for the Nissan Frontier settled allegations of deceptive advertising. The companies’ ad for the Frontier showed the truck rescuing a dune buggy stuck in sand on a steep hill. However, the FTC alleged the truck cannot actually perform such a task and the ad was misleading because the hill was made to appear steeper than it was. Under the settlements, the companies are banned from misrepresenting any material quality or feature of a pickup truck through the depiction of a test, experiment or demonstration. The orders do not prohibit the use of special effects and other production techniques as long as they do not misrepresent a material quality or feature of the pickup truck. w w w. o i a d a . c o m 2/19/14 4:30 PM
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ONLINE
MARKETING
What is Content Marketing and Why Do I Need It? u
M O R E T H A N A T R E N D , C O N T E N T M A R K E T I N G I S L I K E LY T O B E C E NTR AL TO AN Y B U S I N E S S G ROW TH S TR ATEGY
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Content marketing is a vital component of your business’ overall digital marketing strategy. You may have heard the term “content is king” over the past few years, but what power does this “king” actually have when it comes to driving traffic, leads and sales? At the core of your marketing should be useful information. It should attract, convert and eventually close sales. Content marketing then is your business’ ability to be the most helpful and effective teacher in the world at what you do. The old way of delivering content to customers was to simply create an ad and broadcast it to the masses. Today, instead of broadcasting a one way message that no one trusts anymore, content marketing pulls people towards your company. Customers consume the information you provide and naturally come to trust your business. Successful content marketing aligns what you publish with your customers’ information needs. In fact, content must serve two purposes: it has to appeal to the prospective customer (more so now than ever) and it has to appeal to search engines. You might now be saying, “Ugh, another thing I have to do that takes me away from my business. I’ll wait until the trend fizzles.” Content marketing is more than a trend. It’s likely to be central to any business growth strategy, at least for the foreseeable future. Great content turns visitors into customers, even evangelists. If you don’t take time for content marketing there could be a chance very soon that you won’t have a business to be taken away from! Content marketing may be something you’ve heard about but perhaps you’re not fully convinced of its value and that’s got you stuck. You’re not alone. I meet dealers and other business owners often who have apprehensions. Here’s how content marketing works: OIADA
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Attract customers with content. • Blog posts supply the information your customers need. • Keywords and phrases optimize your post for better search visibility. • Social media syndicates your content and boosts your search visibility and online influence. Confused on what to write about? You already have a wealth of ideas in-house. Employees are on the front lines with your customers and they know what questions customers are asking. The goal is to be helpful. You don’t need to appear intelligent. Marcus Sheridan recommends these “big five” topics for best results: • Cost/Price questions • Problems/issues/concerns questions • Vs/comparison questions • “Best” questions • Review/opinion-based questions Convert visitors to your site or social media. • Create a compelling reason for them to take action. • Use sign-up forms to collect contact info. • Use landing pages to drive visitors further down the sales funnel. Close sales with superior internal workflows. • Listen. • Engage. • Learn to recognize leads immediately. • Nurture leads intelligently. Why do I need content marketing? Content marketing is the best way to turn strangers into customers. When you answer your prospects’ questions, they remember who answered them and come back when it’s time to buy. You need content marketing because it moves the needle: • Your business gets found in search. • Your business is seen as a “likable expert,” you become MARCH 2014
known as a thought leader. • People stay on your site longer when they have quality information to absorb and enjoy. • You build trust. • People who regularly consume your content are much more likely to buy. Listen. Communicate. Teach. Content marketing has been around for ages (ancient texts have given mankind useful information since time began). Today, technology has greased the wheels of information. Every consumer has questions. When a prospect or customer asks your company a question, you need to have solid tactics in place to answer it. Creating content is time consuming and expensive. Distributing it is tricky. Unless you’ve already established your business as a trusted authoritative source, you may have trouble overcoming the clutter and noise of the Internet and social networks. Working with a creative marketing partner or coach can help overcome some of these challenges. Some have come to believe that sales is a numbers game. In some respects, that’s still true. But we also have ways to develop relationships with customers during all stages of the
At the core of your marketing should be useful information. It should attract, convert and eventually close sales. Content marketing then is your business’ ability to be the most helpful and effective teacher in the world at what you do. u
buying cycle. Content marketing attracts and nurtures those sales relationships, digitally. Trees that are slow to grow bear the best fruit. Sales close faster and easier when the trust is evident. If you haven’t yet integrated content marketing into your business’ overall strategy, what are you waiting for?
BY KATHI KRUSE
KATHI KRUSE IS AN AUTOMOTIVE SOCIAL MEDIA MARKETING EXPERT, BLOGGER, AUTHOR, SPEAKER AND FOUNDER OF KRUSE CONTROL INC. SHE IS ALSO THE AUTHOR OF “AUTOMOTIVE SOCIAL BUSINESS – HOW TO CAPTIVATE YOUR CUSTOMERS, SELL MORE CARS & BE GENERALLY REMARKABLE ON SOCIAL MEDIA.”
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P R O G R A M E D U C A T I O N
Complete this test and certify below that you have read the articles for March 2014
“Flat Fees vs. Discretionary Compensation for Dealers” What two alternative courses of action does the CFPB’s March 2013 guidance offer? ______________________________________________ ______________________________________________ ______________________________________________
How does the article define content marketing? a) Create an ad and broadcast it to the masses. b) Your business’ ability to be the most helpful and effective teacher in the world at what you do. c) Marketing via your website and social media. What are some ways content marketing works? ____________________________________________________
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“What is Content Marketing and Why Do I Need It?”
______________________________________________
O I A D A
C O N T I N U I N G
Read & Respond
I certify to OIADA that I have personally read these articles in The Oregon Dealer News Magazine for March 2014.
STOP!! Before you sign and send this form, make sure you
have answered and completed all the quiz questions to receive Continued Education Credits. My Name _________________________________________________ Dealership Name _________________________________________ Dealership # _______________________________________________ Dealer License Expiration Date: (Month)__________________________ (Year)______________ Signed: ____________ Date_______________
MARCH 2014
FAX TO: 503-364-7331 or mail to OIADA, 1475 Capitol St NE, Salem, Oregon 97301
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NEWS 2/19/14 4:30 PM
WHAT’S NEW ON NIADA.TV www.niada.tv
ASSOCIATION
New this month on
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NiADA.tv
If you missed the NIADA National Leadership Conference, or would like to review a session, there’s good news! Multiple videos from the conference are available online at www.niada.tv.
NIADA TELEVISION
EDUCATIONAL
PROGRAMS
Congressman Joe Barton, TX, Addresses the NIADA
Check out Congressman Joe Barton’s session during the NIADA leadership conference prior to meeting with legislators. He advises attendees to not have non-intersecting conversations with legislators, to be polite but honest.
Financial & Economic Overview - NIADA NLC, Washington, DC
Watch as Ken Shilson, CPA & NABD president, and Chris Stinebert, president & CEO of American Financial Services Association, present how the current economic environment is changing prime and sub-prime automotive finance.
UPDATE FROM THE National Motor Vehicle Title Information System (NMVTIS)
Todd Brighton, NMVTIS enforcement coordinator, and Jim Taylor, president of Auto Data Direct, provide an update. NMVTIS is designed to protect consumers from fraud and unsafe vehicles and to keep stolen vehicles from being resold. It is also a tool that assists states and law enforcement in deterring and preventing title fraud and other crimes. To view all of NIADA.TV’s monthly special program series, simply visit www.niada.tv, click on the red enter button, and then look for the “Special Programs Series” buttons on the right side of the main menu page.
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NIADA Collects Nominations for Community Service Award u
A S SOC IATION SE E KS TO HONOR DE ALE RSHIP S THAT SE RVE
NIADA is collecting nominations for the 2014 NIADA Manheim Community Service Award. This award was created to honor independent dealerships that contribute to their communities on a regular basis yet often receive little or no recognition for their support. Their support may come through special projects, sponsorships, financial contributions or even leading innovative community improvement activities. If you are or know of a dealership — owners, staff and even their families — that sets itself apart by its service to the community, NIADA welcomes your nomination. Nominees must be members in good standing of the National Independent Automobile Dealers Association. Nominations may be made by the dealership, a community business or organization, the state independent automobile dealers association, a community member or even a loyal customer. The deadline for nominations is April 1. For more information or to download the 2014 nomination form, visit www. niada.com/community_award.php.
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Associate Members ACCOUNTING Delap CPA’s Adam Puckett 4500 SW Kruse Way, Ste 200 Lake Oswego, OR 97035 ADVERTISING Affiliated Media LLC Aaron Jarvis 503-683-2574 Carsforsale.com Aaron Oestretch 605-306-3302 AutoTrader.com Ed Merrick 503-747-9162 Carjohnny.com Thomas Garza 888-455-3000 Cars.com James Lynch 312-601-5052 The Oregonian Rich Fryback 503-221-8486 UsedCars.com by Dealix Tamara Garris 847-397-1700 AUTO SERVICES & ACCESSORIES Auto Marketing Specialist Gary Palaniuk 503-519-7725 AUTO DETAILER Show Room New Mike Barthe P O Box 822073 Vancouver, WA 98682 360-882-8162
Northwest Auto Accessories Craig Lessard 503-288-5700 SHOWROOM/BUSINESS JANITORIAL JANIKING Morgan Thomas 1500 Valley River Dr., STE # 205 Eugene, OR 97401 503-535-9758 Show Room New Mike Barthe 360-882-8162 COMMERCIAL CLEANING JaniKing Morgan Thomas 541-868-8080 PRIVATE AUCTIONS Brasher’s Northwest Auto Auction Mark Melton 541-689-3901
Brasher’s Portland Auto Auction Jerry Hinton 503-492-9200 Crosspoint NW Dealer Auction Brian Hardy 503-594-2800 Manheim Portland Auto Auction Ray Priest 503-286-3000 OUT-OF-STATE AUCTIONS Adesa Seattle Auto Auction Jason Arcaro 253-735-1600 x 213 DAA Northwest Mitzi Vanvoorhis 509-244-4500
DAA Seattle Dave Blake 3130 D St SE Auburn, WA 98002 253-737-2200
Manheim Seattle Auto Auction Ray Priest 206-762-1600 PUBLIC AUCTIONS & AUCTIONEERS Commercial Industrial Auctioneers Ray Beal 503-760-0499
JP Morgan Chase Auto Finance Jeff DeGarmo 503-201-4370 Lobel Financial Tom McConkey 503-653-8000
Marketing: Opportunity to give coupons to dealer members, included in all dealer packets. Ad space on inside pages all presentation folders sent throughout the year. Meal sponsorships available for Pre-License classes, Title & Registration classes. Databases: Access to all OIADA membership databases for mailings. We require a review of the info that you will be sending to our members. Associates may have a list quarterly or 4 times a year. Each time you get a list you may use it only once for a mailing. Just send us an e-mail request for current database and we’ll be glad to send to you once we review your
The Summit Group of Oregon John Petrie 503-581-2825
Oregon Auto Finance Gary Veum 541-868-0472
LEASING Oregon Roads, Inc. Joseph McKinney 541-683-2277
Oregon Community Credit Union Rich Black 541-681-6311
Petersen Auction Group of Oregon Curt Davis 541-689-6824
Reliable Credit Association David Marx 503-462-3022
Woodburn Auto Auction Steve Morin 503-981-8185 DEALER SOFTWARE Frazer Computing Michael Frazer 888-963-5369 FINANCING Credit Acceptance John Bragg 360-980-2214 Credit Concepts Jason Moon 541-342-8545
Smartway Auto Advisors Sheldon Harris 503-795-7700 The Equitable Finance Co. Brandon Fox 503-808-7939 United Finance Todd May 503-238-6488 FLOORPLAN FINANCING Floorplan Xpress Josh Chandler 503-621-9260 NextGear Robert Torbet 503-358-3911
Associate Member Benefits There is not another association that works harder than we do to provide its vendors with exposure, leads and other lucrative opportunities. Please review some of the following programs and areas that we help promote those businesses that support OIADA.
Shepard & Shepard Business Solutions Todd Shepard 509-396-0488
Nationwide Insurance Mark Tischer 503-339-4165
Insurance Auto Auctions, Inc. Ryan Hall 503-253-1500
Rick Leathers Auctioneers Rick Leathers 503-668-5326
INSURANCE & BONDING Hecht & Hecht Insurance Agency Evelyn Hecht 503-288-6371
SERVICE CONTRACTS A.U.L./D.P.C. Jim Bangert 360-834-3333 Automotive Business Developers Shannon Meany 541-944-9186 Auto Services Company Susan Williams 800-442-7116 Protective Life Insurance Dylan Doran 818-836-1455 TRAINING OIADA/NIADA Certified Pauline Sill 503-362-6839
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marketing page. OIADA Magazine & Service Provider Listing: Your company and contact information will be listed in OIADA’s Dealer Service Provider Directory in our magazine that is distributed to around 2000 dealers every month of the year. We also have great rates for those companies interested in additional exposure in OIADA’s popular and well read “Oregon Dealer News”
establish a relaxed relationship with future potential prospects. Special Speaking and Sponsorship Opportunities: OIADA is always having events going on where the environment is ideal for sponsors to participate. Some examples of this are regional meetings, golf tournaments, auction membership drives and of course our annual convention and trade show.
Website Listing and Link: If your company has a website, we will add your company link to our company website as well as listed in Oregon Dealer News.
Developing Strategic Relationships: Network with other companies who associate themselves with our association. Either during our regional meetings, membership drives or board meetings.
Regional Meetings (7) and Membership Drives: Many of OIADA’s Associate Members like to get involved in helping with OIADA’s regional meetings. Also our auction hosted membership drives. Those vendors who agree to participate get the benefit of meeting larger groups of dealers in one location while being able to
Annual Convention and Trade Show: Participate in our once a year convention and trade show for maximum exposure and opportunities. Call for information on Reception, Tradeshow, Meal and Golf Tournament sponsor levels.
OIADA Education Schedule March Title and Registration 5 hour Class • March 14, 2014, 9 a.m. Location to be announced u
Title and Registration 5 hour Class • March 28, 2014, 9 a.m. • Host: Portland/ Manheim Auto Auction u
April Title and Registration 5 hour Class • April 11, 2014, 9 a.m. Location to be announced u
Title and Registration 5 hour Class • April 25, 2014, 9 a.m. • Host: Portland/ Manheim Auto Auction u
Pre-License 8 hour Class • March 12, 2014, 8:30 a.m. • Host: Portland/ Manheim Auto Auction u
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REGULATORY
M AT TERS
Advertising Game Plan: No Audibles Allowed u
FTC PUTS DEALERS ON NOTICE
I-formation, twins right, Z motion, halfback dive. “Omaha! Omaha!” Now, I don’t know if Peyton Manning called the isolation dive play over the course of the Denver Broncos’ playoff run, but I do know we heard “Omaha” enough times that the Chamber of Commerce in Nebraska’s largest city owes him a key to the city. In the days following the Broncos’ playoff win over the San Diego Chargers, reporters asked the quarterback to explain the significance of his screaming of “Omaha” before virtually every snap. “I’ve had a lot of people ask what ‘Omaha’ means,” Manning said with a sly smile. “Well, Omaha, it’s a run play, but it could be a pass play, or a play-action pass, depending on a couple of things: the wind, which way we’re going, the quarter and the jerseys that we’re wearing. It really varies, really, from play-toplay. So there’s your answer to that.” While changing the play is entirely acceptable when you are a Hall of Fame quarterback trying to fool a defense, it is as taboo as it gets when you are a licensed motor vehicle dealer trying to sell cars. So taboo, in fact, that the Federal Trade Commission put dealers on notice once again that “hiding the ball” or misdirection tactics will not be tolerated in automobile transactions. On Jan. 9, the FTC announced “Operation Steer Clear,” a nationwide sweep that focused on the advertisements of 10 dealerships from six states. The FTC charged those dealers made material misrepresentations in print, Internet and video advertisements that led consumers to believe they could purchase or lease vehicles for certain terms when such was not the case. What did these dealers do to “hide the ball?” • Two California dealers printed advertisements that prominently displayed a price for a vehicle – for example, a 2008 Chevy Tahoe LS for $17,995. However, in fine print at the bottom of the page, the dealer added this disclaimer: “Prices after $5,000 down + Tax, Lic and Doc fees on approved credit.” So while the ad led consumers to think the price of the vehicle was $17,995, it was actually $22,995. • Several of the dealers advertised leases with zero due at lease signing. Yet when the dealer advertised the specific models available for lease at a particular payment, the fine print said “first payment, acquisition fee, tax, title due at lease signing,” or that a down payment
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was due at signing to get the advertised payment. According to the FTC, the impression left in consumers’ minds was they were not required to leave any money with the dealer to get the advertised monthly payment. But when it came time to close, the dealer slapped them with a bill for potentially thousands of dollars. • Multiple dealers offered vehicles for $99 a month and zero down. That offer was bold and easily recognizable. Sounds like a great deal. But if consumers were able to see the fine print that flashed across the video screen or was placed at the bottom of a print ad, they would have noticed the $99 per month offer only applied to the first few months of the loan – after which the payments increased to $534 for the balance of a 72-month loan. Lest we fall into the trap of thinking this was a one-time splash, Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said, “We have many other investigations in the pipeline. This is a priority for the FTC and you will see many other cases in the auto-related area.” And remember, if the FTC is looking for cases, state attorneys general are right behind them. In order to protect yourself from an enforcement action, remember your advertisements cannot change the play on the consumer. If you make a particular offer, nothing in the fine print can alter the material terms of that offer. Moreover, all material terms of the offer must be clearly and conspicuously disclosed. For print ads, disclosures have to be large enough and readable enough for a consumer to notice, read and comprehend them. Disclosures in videos must be loud enough, slow enough and in a format sufficient for a consumer to understand them. If you use a third party vendor, do not simply rely on its statements that the advertisements are compliant. Ensure the ad has undergone a thorough compliance review. Remember, it is your dealership’s name on the ad. Wonder who the FTC will chase? As you stand in the huddle of your advertising team and the temptation to “change the play” comes, remember the FTC’s team of attorneys is roaming the landscape and will hit you harder than Ray Lewis ever did. Adopt this game plan: No audibles allowed.
BY SHAUN PETERSEN SHAUN PETERSEN IS A PARTNER WITH THE LAW FIRM OF MAC MURRAY, PETERSEN & SHUSTER LLP AND HEAD OF THE FIRM’S AUTOMOTIVE PRACTICE. HE SERVES AS NIADA’S REGULATORY COUNSEL.
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