T E N N E S S E E
I N D E P E N D E N T
A U T O M O B I L E
TENNESSEE
DEALER
D E A L E R S
A S S O C I A T I O N
CONNECT OCTOBER/NOVEMBER 2014
magazine
CONSUMERS NOT JUST CHOOSING
VEHICLES ONLINE, BUT PAYING ONLINE TOO The Increasing Demand to Pay Online and Possible Solutions FEATURE STORY page 10
q inside
• AVOID LEARNING LESSONS THE HARD WAY • USED CARS TO RECOMMEND FOR TEENS • NHTSA VIN LOOKUP TOOL
DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
V I S I T
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ASSOCIATION
NIADA Sponsors Education Sessions at SEMA Show
INSIDE
06 Avoid Learning Lessons the Hard Way 08 Sales Model of the Future 10 Consumers Not Just Choosing Vehicles Online 12 Used Cars to Recommend for Teens 16 Now More than Ever 19 Washington Update 22 NHTSA VIN Lookup Tool
WHAT’S NEW
Mark Your Calendar for the National Leadership Conference
NOVEMBER 11-14, 2014
The 2013 NIADA National Leadership Conference and Legislative Summit was a huge success. You don’t want to miss this year’s event! You’ll hear the latest legislative and regulatory updates in the industry and have the opportunity to voice your concerns to your U.S. congressmen. Make plans now to attend Nov. 11-14 at the Omni Shoreham Hotel in Washington, D.C.
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ADVERTISERS INDEX
Ace Motor Acceptance Corp..............................17 ADESA......................................Inside Back Cover Ally.........................................................................7 AutoZone.............................................................15 Black Book............................................................3 Dealer Funding...................................................14 Hamilton State Bank.......................................... 21 Manheim.com.....................................................19 Manheim Pennsylvania.......... Inside Front Cover NextGear Capital..................................................5. Peritus Portfolio Services...................................12 Preferred Warranties..........................................11 Protective...............................................................9. United Acceptance.............................................13 VAuto...................................................Back Cover
THREE SESSIONS FREE TO ATTENDEES NIADA is sponsoring three education sessions during the SEMA Show, the premier automotive specialty products trade event in the world. The show takes place November 4-7 at the Las Vegas Convention Center. Part of the SEMA Show is the Education Days that feature top industry experts to help dealers adapt to today’s quickly changing business environment. Sessions, which are on various topics, are both practical and progressive. The NIADA-sponsored sessions include “Accessory Trends that Will Boost Your Business,” “The Art of Accessory Sales: Getting the Most from Your Sales Team” and “Money v. Myths: The Truth About Profiting from Accessory Sales.” These sessions have a single purpose: Build auto dealer profit centers. Now is the time to discover ways to dramatically increase sales and profits. Participate in these SEMA Auto Dealer sessions and take the lead in your market. All sessions are free with your SEMA Show registration. Register before October 18 for only $25, a $50 savings. To learn more or register, visit www.semashow/NIA.
National Independent Automobile Dealers Association www.niada.com • www.niada.tv 2521 Brown Blvd. • Arlington, TX 76006-5203 phone (817) 640-3838 For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. The Tennessee Dealer Connect is published bi-monthly 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 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of TNIADA or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2014 by NIADA Services, Inc. All rights reserved.
Editors Andy Friedlander • andy@niada.com Jacinda Timmerman • jacinda@niada.com Magazine Layout & Graphic Artist Chantae Arrington • chantae@niada.com Art Director Christy Haynes • christy@niada.com Printing Nieman Printing
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WATCH
SPIDERS CAUSE SUZUKI RECALL
Suzuki Motor Of America Inc. is recalling 19,249 model year 2010-2013 Kizashi vehicles manufactured October 2009 through July 2012. In the affected vehicles, spiders may weave a web in the evaporative canister vent hose, blocking it and causing the fuel tank to have an excessive amount of negative pressure. Negative pressure could cause the fuel tank to crack resulting in a fuel leak, increasing the risk of a fire. Dealers will replace the evaporative canister vent line on the affected vehicles with a vent line that has a filter on the end. If the canister vent line is found to be obstructed by a spider web, the fuel tank will also be replaced. Suzuki’s number for this recall is VG.
GM RECALLS SATURNS FOR IGNITION ISSUES General Motors LLC is recalling certain model year 2002-04 Saturn Vue vehicles manufactured Sept. 11, 2001, to April 6, 2004. In the affected vehicles, it may be possible for the key to be removed from the ignition when the ignition is not in the “Off” position. If so, the vehicle could roll away: (a) for an automatic transmission, if the transmission is not in the “Park” position; or (b) for a manual transmission, if the parking brake is not engaged and the transmission is not in the “Reverse” position. If the key can be pulled out when the ignition is off, dealers will replace the ignition cylinder and keys, free of charge. GM’s number for this recall is 14506.
Board Members
NIADA HEADQUARTERS
State Magazine MGR./Sales Troy Graff • troy@niada.com
SAFETY
NEWS
Executive Director Darryl Noble P.O. Box 2219 Lebanon, TN 37088 615-506-4968 Cell 1-866-5TNIADA (586-4232) 615-443-7486 Fax dnoble@tniada.com
President-Elect Marcus Davis Marcka Auto Auction 150 Cox Avenue Crossville, TN 38555 931-456-7555 Office 931-456-7566 Fax marcka@citilink.net
Chairman of the Board J.T. Livezey Mid-State Auto, Inc. 1023 Bridge Ave. Murfreesboro, TN 37129 615-962-9147 Office 615-962-9175Fax 901-484-4840 Cell jtlivezey@yahoo.com
Sr. Vice President Mark Noble AmeriCar, Inc. 200 W. Main Street Lebanon, TN 37087 615-977-3313 Cell 615-547-6075 Office 615-443-7486 Fax mnoble@tdstn.com
President Alan McFadden Al’s Auto Mart 202 Hwy 52 W Portland, TN 37148 615-325-2727 Office 615-403-1190 Cell 615-325-1190 Fax Carnut3333@yahoo.com
Secretary/Creative Marketing Phyllis Sartin Creative Marketing P.O. Box 680574 Franklin, TN 37068 615-838-3110 Cell Creativemktg1@yahoo.com
OCTOBER/NOVEMBER 2014
Auction Member Representative Stephanie Baker DAA Murfreesboro 1815 Old Ft. Parkway Murfreesboro, TN 37129 615-217-2848 Office 615-217-6994 Fax sbaker@dealersauto.com Member David Stancil D&B Auto Sales 1384 Poplar Drive Crossville, TN 38558 931-707-8899 Office 931-707-9341 Fax
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COMPLIANCE
OVERDRIVE
Avoid Learning Lessons the Hard Way TAKE A COMPREHENSIVE APPROACH TO YOUR COMPLIANCE HEALTH
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In one of my recent Compliance Overdrive columns (How a Compliance Management System Can Help Your Dealership), I discussed increasing pressures on independent auto dealers as the Consumer Financial Protection Bureau and other federal regulators move to require them to demonstrate how they will ensure compliance with various consumer protection requirements. These mounting pressures are in addition to already challenging day-today requirements for managing operational and compliance risk by a staff of individuals wearing many hats and juggling a variety of responsibilities. This month we look at a good example of how state regulators can sometimes enforce not only state but also federal requirements. This reinforces the need to address both state and federal compliance issues to avoid some potentially painful lessons in compliance management. A case in point: Condor Capital. Condor Capital Corporation is a New York-based sales finance company that acquires and services subprime automobile retail sales contracts. Condor’s 2013 loan portfolio reportedly contained outstanding loans of more than $300 million nationwide.
AN OBVIOUS TAKEAWAY FROM THIS LAWSUIT IS THE IMPORTANCE OF HAVING BUSINESS CULTURES AND PRACTICES THAT PLACE THE HIGHEST VALUE ON HONESTY AND INTEGRITY.
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New York’s superintendent of financial services recently filed suit against Condor Capital Corporation, alleging, among other things, it has “systematically hidden from its customers the fact that they have refundable positive credit balances and then failed to refund those balances unless specifically requested.” The complaint provides a laundry list of compliance violations beyond the handling of positive balances, all of which seem to suggest the lack of a culture of compliance within the organization. The suit seeks restitution for consumers and disgorgement of profits. The complaint charges that Condor’s activity is an unfair, deceptive or abusive act or practice pursuant to Sections 1031 and 1036(a) (1) of Dodd-Frank. This marks a significant entry into state prosecution under federal Dodd-Frank laws. The authority comes from a provision in the federal Dodd-Frank Act that allows state regulators to enforce the provisions of the act against entities that are statechartered, incorporated, licensed or otherwise authorized to do business under state law. Condor Capital is a state-licensed sales finance company, so the New York regulator chose to bring a claim against it under the federal Dodd-Frank Act as well as other state laws. What are some of the other abuses cited in the Condor case? The complaint details instances of information security and privacy problems. For example, the department examiners found “stacks of hundreds of hard-copy customer loan files lying around the common areas of Condor’s offices,” noting the files were replete with sensitive personal and financial information. Condor even “fails to adhere to the most basic information security policy, known as a ‘clean desk’ policy, which all businesses handling sensitive customer data must follow.” It also did not have adequate policies or practices for handling electronic files. The complaint alleged “Condor has failed – despite repeated directives from the department – to adopt basic policies, procedures, and controls to ensure that its information technology systems – and the customer
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BY CHIP ZYVOLOSKI data they contain – are secure.” Although dealers are exempt from direct CFPB oversight, state regulators are obviously examining these types of compliance issues. And the compliance violations at issue clearly carry over to dealers. The focus on violations also clearly adds to lenders’ compliance concerns about the dealers they work with. An obvious takeaway from this lawsuit is the importance of having business cultures and practices that place the highest value on honesty and integrity. Other directly compliance-related issues include having policies and practices for organizing, managing and storing consumer information. Files cannot just be boxed up and stored on site on open shelves or in spare, unsecured rooms within the premises. But the larger issue is to ensure your dealership has policies and procedures to address all of the important federal and state consumer protection requirements. Establish clear, documented compliance responsibilities and communicate those responsibilities to your employees with proper training. Incorporate these into internal business process responsibilities, ensure those responsibilities are carried out and regulatory requirements are met through frequent reviews and compliance audits and enable and implement corrective action. Be sure to take a comprehensive approach to the compliance health of your dealership. Monitor compliance from your initial advertising/marketing programs through post-closing collection processes. Compliance should be integrated into the dealership’s overall framework and applied to its entire operations. Ultimately, compliance management should be a part of the daily routine for management as well as employees. What is the overarching message here? If you haven’t done so already, it is time to take action to make sure you have enough focus on compliance and compliance management. Your programs will help expose any intentional wrongdoing at your dealership as well as any unintentional violations. Showing that you have solid compliance programs in place will also help your lender relationships. It is easy to take a chance and adopt a “wait and see” attitude with respect to enforcement actions, but these recent headlines may prompt dealers to consider simple actions to help avoid having to learn lessons the hard way. Moreover, it is simply the right thing to do for your business and your customers. 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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SALES
MATTERS
A 3-Step Plan to Prepare for the Sales Model of the Future DON’T RUSH ADOPTION OF THIS NEW APPROACH
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I’ve been getting more inquiries lately from dealers asking about the merits of a one-price sales environment at their dealerships. The dealers have seen reports in automotive trade press about groups like Sonic Automotive adopting this nontraditional approach to provide a more efficient, cost-effective and customer-friendly process for selling new and used vehicles. In some cases, the dealers are simply curious; in others, the dealers are looking to differentiate their dealerships from the competition, and they wonder if a “hagglefree” environment might be better than the traditional negotiation-based sales process they currently employ. I’m quick to tell these dealers that while I believe one-price sales environments will become the industry norm over time, I will not encourage them to rush to adopt this more efficient, customer-friendly way of selling vehicles.
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My reasoning: It takes an absolute commitment from management, 100 percent buy-in from sales teams and a complete change of culture and compensation to make the one-price process really work. The first exception, whether it occurs with the price of a vehicle or trade-in offer, always leads to the failure of the entire system. For many dealers, the learning curve is too steep and the risks too great for me to recommend they implement a one-price model. But I will strongly recommend that dealers explore limiting negotiations to lay the foundation for the day when a one-price sales environment will become a necessary way of doing business. I outline three steps that many dealers have already undertaken: Step 1: Market-based pricing. In most markets, dealers have come to understand that consumers can easily spot, and ignore, used vehicles that are priced “out of the market.” As a result, many dealers now apply more market-rational pricing decisions as a matter of necessity. These dealers may still negotiate when customers come to the dealership, but their used vehicle asking prices are a lot more transactionrealistic than they used to be. This same dynamic is more nascent in new vehicles, but it’s a growing trend as dealers embrace technology and tools that allow them to view competing pricing data and combine incentives into their pricing and promotion strategies. Step 2: Documentation as negotiation. This step often closely follows the adoption of marketbased pricing in used vehicles. The idea: Sales associates explain the dealership’s marketbased pricing strategy with each customer then offer comparative prices of competing cars to validate why the asking price represents a fair price for a vehicle. In addition, the discussion highlights how the dealership uses the vehicle’s unique attributes – color, condition, equipment, mileage and ownership history – to determine its asking price.
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BY DALE POLLAK Step 3: Tracking discounts. Sonic’s effort to adopt a group-wide, one-price sales process follows the launch of its True Price model last year. Under the model, Sonic dealers would determine the lowest acceptable transaction price for each new and used vehicle, and set an asking price with $300 of “wiggle room” to negotiate with customers. This approach is similar to efforts by other dealers who track the variance between the asking and transaction prices of used vehicles in an effort to minimize discounts and “hold gross.” The thinking: With market-based pricing, there’s even less margin available on a vehicle so why give it away if you don’t have to? When dealers employ this level of accountability, their average discount will drop from $400 or $500 to $250 or less. (Note: These dealers also incorporate the discount data into the volume-based pay plans they offer sales associates, providing greater rewards for those who give up the least amount of gross margin.) As I explain these steps to dealers, some begin to understand the decision by Sonic and other dealers to fully adopt a oneprice model and eliminate negotiations altogether represents the next logical step to give customers the level of transaction transparency that they’ve always wanted. A smaller number of dealers will start doing the math and recognize the bottomline benefits a one-price model can create through lower variable expenses and fewer “closers” on the showroom floor. Most dealers, however, aren’t quite ready to embrace the trend toward limiting or eliminating negotiations on the price of a vehicle. It’s an understandable reaction given the level of investment and past success they’ve achieved with traditional negotiation-based sales models. But I believe the handwriting’s on the wall when it comes to one-price selling. In the not-too-distant future, customers will increasingly expect dealers to deliver the kind of experience they can get from other retailers – where the price you see is the price you pay and you don’t have to spend an entire afternoon in a dealership to purchase the vehicle you want. FOUNDER OF VAUTO, DALE POLLAK HAS PUBLISHED SEVERAL BOOKS ON HIS VELOCITY METHOD OF MANAGEMENT. POLLAK GUIDES STRATEGIC PRODUCT DEVELOPMENT AND INTEGRATION FOR VAUTO AS WELL AS OTHER AUTOTRADER GROUP COMPANIES. ARTICLE IS REPRINTED WITH PERMISSION.
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F&I
MATTERS
FEATURE STORY
CONSUMERS NOT JUST CHOOSING
VEHICLES ONLINE, BUT PAYING ONLINE TOO The Increasing Demand to Pay Online and Possible Solutions B Y M A R YA L A N G, B H P H R E P O R T
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According to the most recent study from the Federal Reserve, the average new-vehicle loan in the U.S. stands at more than $26,700 with a loan to value ratio of a huge 80 percent. So the volume of payments there to be collected is vast. Auto finance companies from huge captives down to smaller Buy Here-Pay Here dealers in the subprime market are facing this challenge with consumers increasingly using multiple payment methods in other areas of their consumer life and, therefore, bringing the same expectations to auto finance. Across all other industries, multiple payment options are available to consumers – whether that’s paying your cell phone bill online, scanning a QR code on your most recent electricity bill or paying your healthcare bill over the phone. Statistics from Fiserv’s sixth annual Billing Household Survey 2013 show that 83 percent of consumers use more than one bill payment method monthly – covering e-billing, mobile, check, walk-in and phone. And while the number of auto finance bills paid via the traditional method of mail has reduced by around 50 percent according to the Aite Group, there has only been a slight increase in the number of bills being paid online. However, in mobile payments, although the overall volume is still significantly lower than other channels, there was more than a doubling in the number of bills paid via this channel in 2013. But perhaps the biggest opportunity for the auto finance industry lies in paperless electronic bills. Currently, according to the Fiserv survey, auto loan e-bill penetration TENNESSEE DEALER CONNECT
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stands at just 19 percent, compared to 58 percent of cell phone bills viewed online. So why the hold-up of using multiple payment channels in the auto finance industry? In the BHPH market or the subprime auto market, a lot of consumers pay by actually going to the dealer, often more than once a month. But they are increasingly demanding and using the convenience of paying online or via a mobile device. Personalization vs. Productivity Many consumers already perform price comparisons on their phones while visiting a car lot, and dealerships are in fact operating in a true omni-channel environment, whether they like it or not. But there’s a huge dichotomy the smaller BHPH dealerships in particular are now facing between taking a personalized approach of making payments in store, and becoming more efficient in taking payments via the alternative channels suggested above. In the case where dealers have a large number of subprime borrowers, there can be a resistance to changing payment methods. Many of these dealers actually like to see the borrowers come in to make a payment, and see the car that is the collateral for the loan. But concerns over risk can be countered by the fact that the technology of more advanced payment channels can assist with PCI compliance and other risk management. Possible Solutions Improving efficiency in the auto finance industry is all about relieving pressure in collecting loan payments, as well as making the process more convenient for customers. BHPH dealers don’t have to jump straight
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to the latest technology – such as mobile payments – but need to focus on using tried and tested technology that is relatively new to the auto finance market. For example, interactive voice response solutions are very popular in other markets in offering an interactive, personalized experience over the telephone, and are easy to implement for auto financiers. IVR allows the caller to interact with an automated telephonepayment system to make ACH, debit and credit card payments 24/7. This can be a great option for customers who want to control their finances through efficient self-service, offering them the opportunity to review balances and receive immediate payment verification at any time, day or night. A customer-facing payment ecosystem has evolved, particularly within auto finance, and while we may be seeing greater adoption of this payment technology in the larger independent dealers, the smaller subprime and BHPH markets are still lagging behind other consumer markets. There are of course concerns of compliance issues and understanding the regulation around using different payment channels, but these new channels are tried and tested in terms of compliance. It’s essential that these smaller dealerships recognize the potential of using multiple payment channels to grow their businesses and to attract new customers who want to pay through different channels, and to pay at a time convenient for them. MARYA LANG IS THE GENERAL MANAGER OF AUTO FINANCE AT BILLINGTREE.
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MARKET
WATCH
Used Cars to Recommend to Parents LIST HELPS FIND RIGHT VEHICLES FOR NEW DRIVERS
• YOUNG DRIVERS SHOULD STAY AWAY FROM HIGH HORSEPOWER. • BIGGER, HEAVIER VEHICLES PROTECT BETTER IN A CRASH. • E SC IS A MUST. • V EHICLES SHOULD HAVE THE BEST SAFETY RATINGS POSSIBLE.
When parents step onto the used car lot to help their teen pick out a first car, many have two top concerns: affordability and safety. And many parents struggle with how to satisfy both those needs in the same used vehicle. In response to this need, the Insurance Institute for Highway Safety recently released a few lists helpful for both parents and dealers trying the find the right vehicles for those new to the driver seat. One list IIHS released was of the safest used vehicles for teens. Research showed “many aren’t driving the safest ones,” the organization stated. This marks the organization’s first-ever list of recommended used vehicles for teens. “A teenager’s first car is more than just a financial decision,” said IIHS president Adrian Lund. “These lists of recommended used vehicles can help consumers factor in safety, in addition to affordability.” There are two tiers of recommended vehicles with options at various price points, ranging from less than $5,000 to nearly $20,000, “so parents can buy the most safety for their money, whatever their budget,” said IIHS. The list compiles recommended used
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s
ASSOCIATION
Buying for Teens
DEALER 20 GROUP
BY AUTO REMARKETING STAFF
vehicles for teens starting under $20,000, as well as a separate list for those searching for a vehicle under $10,000. The lists break the vehicles up by segment and provide modelyear suggestions. The more expensive list includes vehicles such as the 2009 model year and later Lincoln MKS, as well as the Toyota Prius v in the midsize cars segment, for example. In the $10,000 and under list, dealers will find older models, such as the 2005 and later Acura RL and the 2009 Ford Taurus. IIHS also offered a little more insight into why lists like these can save parents time, money, and the potential injury of their teens. The organization fielded a series of studies, one which showed mini-cars or small cars were the most commonly purchased type of vehicle for teens, among the 500 parents surveyed. A little over 28 percent of the responders were buying for their teens from this category, which tends to not hold up as well as larger models during a crash. Furthermore, a little more than half of newly purchased vehicles for teens, according to the survey, were from the 2006 model-year or earlier. IIHS pointed out this can be a problem
NEWS
because older vehicles are much less likely to have safety features such as electronic stability control and side airbags. IIHS also offered a list of four factors to consider when selecting vehicles for teens: • Young drivers should stay away from high horsepower. •B igger, heavier vehicles protect better in a crash. • ESC is a must. • Vehicles should have the best safety ratings possible. And though this may be difficult for some families, IIHS said parents may want to consider shelling out a bit more for vehicles bought for their teens. In the parent survey, the mean purchase price for a teen’s vehicle was about $9,800, while the median was just $5,300. “Unfortunately, it’s very difficult to get a safe vehicle for a teenager at the prices most people are paying,” says Anne McCartt, IIHS senior vice president for research. “Our advice to parents would be to remember the risks teens take and consider paying a little more.” To view the complete lists of recommended vehicles for teens from IIHS, visit www.iihs. org/iihs/news.
THE POWER COMES FROM THE DEALERS THEMSELVES The power of NIADA’s Dealer 20 Group comes from the dealers themselves – working and sharing their ideas and real world experiences with each other. If you’re tired of constantly reinventing the wheel and enjoy the sharing of ideas and best business practices with dealers like yourself, the NIADA Dealer 20 Group is for you. Dealers are matched with other dealers of like size and sales volume (outside of the other dealers’ selling area) all with one goal in mind – to be more successful and to learn how to improve day to day operations, increase sales and make more profit. While the NIADA Dealer 20 Group traditionally meets three times a year, dealers have access to their financial performance each and every month of the year. These unique groups are designed for NIADA’s independent dealers as they do business today: retail, BHPH – or a little bit of both. Sessions are moderated by Joe Lescota, NIADA Director of Dealer Development.
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INDUSTRY
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ASSOCIATION
WATCH
NEWS
New Carfax Research Shows Title Washing is Growing
Certified Master Dealer Program
EMERGING SCAM NOW PLAGUES NEARLY 800,000 USED CARS NATIONWIDE BY CHRISTOPHER BASSO, CARFAX
HELPING DEALERS MANAGE AND GROW BUSINESSES
A dangerous scam that hides major problems with used cars from consumers is on the rise. According to new research from Carfax, nearly 800,000 used cars lurking on America’s roads may be part of an emerging fraud called title washing. Also alarming, more than 500 are likely being used as taxis. Consumers in New Jersey, North Carolina, Mississippi, California and Georgia are most at risk, but thousands of title washed cars are in every state. Title washing makes rebuilt wrecks and cars with odometer issues look like problemfree used cars on paper. Professional con men illegally alter vehicle documents to get title brands such as “salvage” or “flood” removed from a car’s title. They’ll often patch up the wrecked cars, move them to other states and sell them with a clear title to unsuspecting buyers. Victims can lose thousands of dollars and put their lives at risk purchasing used cars with washed titles. “Our research is clear evidence that title washing continues to fly under the consumer’s radar,” said Larry Gamache, communications director at Carfax. “These cars are sold mainly by perfect strangers who bank on you not taking the proper steps to protect yourself. Demand
The CERTIFIED MASTER DEALER® program was developed in 2001, in collaboration with Northwood University, to help dealers manage and grow their businesses. Since then, it has grown into one of the industry’s most respected training programs. Dealers who attend this training are committed to the industry, support ethical business standards and practices, and are leaders in their communities. They bring a wide range of experience to each class, and leave with new strategies for analyzing their business practices and increasing their bottom line. Instruction is provided by Joe Lescota, NIADA Director of Dealer Development and former retail automotive executive with more than 25 years of frontline dealership, selling management and training experience. For more information, please contact Georgia Brown at (800) 472-8101.
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more information than just the car’s title from any seller and shop at places where vehicle history information is readily available, like the all-new Carfax.com. Knowing what you buy and who you buy from are equally important to help avoid dangerous schemes like title washing.” Every motor vehicle department in the U.S. and Canada reports branded titles to Carfax. With this information, consumers get unprecedented protection from Carfax to help identify and avoid hidden problems. Car buyers and sellers can rest assured they’ll know about reported title brands under the exclusive Carfax Buyback Guarantee. Plus, Carfax vehicle history reports alert people to cases of potential title washing. An inspection by a certified, trusted mechanic is also recommended before buying any used car. Titling laws can differ from state to state. To help, Carfax offers consumers a Used Car Buying Guide with free information about car titling and used car scams, as well as tips to help purchase safe reliable used cars. CARFAX, A UNIT OF IHS INC. (NYSE: IHS), IS THE VEHICLE HISTORY EXPERT FOR USED CAR BUYERS, SELLERS AND THE AUTOMOTIVE INDUSTRY. THE COMPANY MAINTAINS A DATABASE COMPRISING OVER 13 BILLION VEHICLE HISTORY RECORDS FROM MORE THAN 86,000 SOURCES WORLDWIDE. TO LEARN MORE, VISIT WWW.CARFAX.COM.
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INDUSTRY
PERSPECTIVE
The Value of Auction Relationships FLOOR PLAN COMPANIES CAN BE A VALUABLE ASSET FOR AUCTIONS, DEALERS ALSO BENEFIT BY NEXTGEAR CAPITAL Auctions and floor plan companies have a selling more cars – having a relationship with a mutually beneficial relationship. Creating and floor plan company provides the auction with a maintaining these relationships in the floor plan customer who has funds to spend. This leads to industry is essential for success, especially for more units in the lane, which has a more positive auctions, which face numerous challenges in their effect on the auction’s available working cash. day-to-day business, including but not limited to: Higher conversion rates: Generally, • Dealers lacking funding. more money in the lanes equals more cars • Slow payment. sold, resulting in higher conversion rates. • Difficulties in flooring. Furthermore, with wholesale prices continuing • No assistance available. to be volatile, sellers like to sell cars at auctions • No marketing. where dealers have open and available funds. • Fewer dealers at sales. Therefore, they want to go where there is money Floor plan companies help auctions negate some in the lanes. of these challenges, as they provide a valuable Stronger ongoing relationships: As service of fast, timely guaranteed payments for with any business, auctions want dealers to be sold units, which allows auctions to focus on what recurring customers who purchase vehicles they do best: sellings cars. But there are other from them again and again. If an auction has advantages to auctions having a solid relationship a solid relationship with a floor plan company with floor plan companies: that many dealers use, those dealers will be Guaranteed funds in the lane: It is in an more likely to become recurring customers. auction’s best interest to have buying power in What’s more, it will provide auctions with the lanes. This is common knowledge, but it is the word-of-mouth advertising, as those dealers basis and most important aspect to an auction’s will be more likely to tell other dealers about business. the auction, attracting even more customers. As their business is predicated on one thing – To make the most of these advantages,
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it’s important that auctions leverage their relationships with floor plan companies and equally important to think about the future as well as the present when it comes to these relationships. Transparency and trust are vital to the relationship-building process, making it important that both parties set clear concise goals from the beginning of the relationship. This will allow both auction and floor plan company to work together through a relationship that is built on mutual trust and respect. Where this relationship truly adds value can be measured on many levels in addition to what has been mentioned here. Flexibility, clear and concise goals, ease of use, and mutually beneficial relationships are all equally important for the dealer that is looking for a positive buying experience. Providing all of these tangibles can set businesses apart and promote success. Simply put, when both auctions and floor plan companies come together and act as partners to create an atmosphere that benefits the dealer, all parties can win.
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NOW MORE IMPORTANT THAN EVER NOW MORE IMPORTANT THAN EVER BHPH
PERSPECTIVES
HITTING THE MOVING TARGET OF COMPLIANCE BY BRENT CARMICHAEL
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Ever get the feeling that compliance is like trying to hit a moving target? Well you are not alone. In light of recent events, the target might have just become even harder to hit. The hottest topic with all Buy Here-Pay Here dealers has to be the new Consumer Financial Protection Act that recently passed. It has replaced inventory acquisition to give you an idea of how hot the topic is. Not a day goes by I’m not answering multiple emails and phone calls from dealers asking what the bill means for BHPH dealers. Let me start by saying that I am not an attorney, nor do I play one on TV, but I have recently stayed at a Holiday Inn Express. Having said that, I don’t think my understanding of the bill is any more insightful than anyone else’s. I have read parts of the bill (2,000 pages – great insomnia cure) and can’t make heads or tails of what the full impact will be for BHPH. At this time, I don’t think anyone honestly can. A few things we do know for sure. We BHPH dealers are smack dab in the middle of it. Automobile dealers were exempted, but sorry to say those engaging in BHPH weren’t so lucky. This is true whether the dealer has a related finance company or not. I get this belief from industry attorneys and industry insiders whose pay grades are at least two levels above mine. At one time we in the BHPH industry welcomed the affiliation with the alternative finance industry. I’m afraid that affiliation has cost us our exemption since it is one of the main targets of the bureau. There are a couple areas of our industry that could be affected that concern me the most, at least initially. One is arbitration agreements. They may be a casualty of the regulation suggested by the bureau. The other is pricing. It’s not clear whether this will be credit pricing via interest rates or retail pricing of the vehicles. It could very realistically be both. Either way, it’s a loselose from a profitability standpoint. Another thing we know is the government has committed some pretty substantial financial resources to its enforcement. Figures in the $500 to $700 million range are not out of the realm of possibility. For that price tag, I think enforcement will be a fairly high priority. There is even talk some 3,500 attorneys have been added to the new agency to aid not only in defining the new regulations but enforcing them. Insert your own lawyer joke here. Will the CFPB end BHPH as we know it? I don’t believe so. I think it has the potential to significantly change some of TENNESSEE DEALER CONNECT
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I HOPE THE NEW CFPB REGULATIONS, WHEN THEY ARE FINALLY HAMMERED OUT, WILL BE FAIR AND I BELIEVE THEY WILL HAVE EVERYONE’S BEST INTEREST IN MIND. the landscape. I think the dealers trying to do things the right way will be just fine. Those dealers pushing the envelope and playing in the gray areas will be weeded out, which is not necessarily a bad thing. As we have seen from some other industries, a purging is sometimes needed and quite often overdue. CFPB is just one compliance landmine we face in our industry. Uniform Commercial Code, Fair Credit Reporting Act, Risk Based Pricing, 1099-C, and Red Flag are just a few others. And don’t get me started on HIPAA, Privacy or The Patriot Act. You certainly don’t have to look far to find some sort of regulation in our industry. Now more than ever compliance needs to be a priority. The key to compliance in today’s environment is effort. At one of our recent BHPH 20 Group meetings, our guest speaker was a former OSHA inspector now working for an insurance provider. The speaker candidly commented no business can be 100 percent compliant in all aspects. There are simply too many changing rules and regulations, and other variables such as personnel turnover, to be able to stay in complete compliance at all times. It’s the effort and attempt to play by the rules that will be the difference between being fined or just given a warning.
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Effort is defined by having a written policies and procedures manual. It doesn’t have to be a professionally done manual. It can be a simple handbook provided to all employees outlining the basic policies and procedures for each aspect of your business. The manual should cover things such as collections and underwriting practices, sales process and general company policies. You must make effort to continually update and train on the manual. Simply creating and having one is not good enough. All businesses change over time. Therefore policies and procedures will change. Effort should also be made in seeking out professional help. Document reviews on a regular basis are a must, not necessarily every year but at minimum every other year. Not every document you use in the normal course of business would need to be reviewed. An example would be a retail installment contract provided or purchased from Banker’s Systems. They have ensured its compliance and will notify you of any changes necessary. Regular review is needed for any self generated internal documents used. An example of this would be a warranty form. A letter stating that your documents are in compliance from an accredited attorney can literally be a get out of jail free card. If you are looking for a regulation friendly industry, BHPH is certainly not it. But even with the moving targets of industry regulation, it is still a very lucrative one for those who try to do it the right way. I hope the new CFPB regulations, when they are finally hammered out, will be fair and I believe they will have everyone’s best interest in mind. I think it’s too early for the Chicken Little mentality. No doubt the cost of compliance will go up. As always, the burden is on us to not only know the rules, but play by them to the best of our ability. In today’s electronic age, the availability of information is almost endless so ignorance is definitely no excuse. Here’s hoping that on your next compliance review you receive an “E” for effort and not an “O” for out of business. BRENT CARMICHAEL IS ONE OF THE INDUSTRY’S MOST WELL RESPECTED BUY HERE-PAY HERE EXPERTS. HE IS EXECUTIVE CONFERENCE MODERATOR FOR NCM ASSOCIATES, INC. PRIOR TO JOINING NCM, BRENT WORKED 17-PLUS YEARS IN SUBPRIME FINANCE AND COLLECTIONS.
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PRODUCTS
&
SERVICES
Ready Auto Transport Partners with Manheim
ELECTRONIC GATE PASS TO IMPROVE DELIVERY TIME Ready Auto Transport has launched a new electronic gate pass process nationwide at all Manheim locations to improve vehicle delivery time for buyers at the auction. The company electronically delivers eGate Passes for all customer vehicles directly to its 6,500-member qualified carrier network, making the pickup of vehicles from auctions faster and more efficient. “We are pleased to help our carriers alleviate some of the obstacles they may have at the auction such as arriving after hours when a gate pass is not available,” said John Blobner, vice president and general manager for Ready Auto Transport. “When Manheim buyers choose Ready Auto Transport for transportation, we verify the vehicle is ready and issue the eGate Pass directly to the carrier, eliminating dry runs because they’ll know the
AUCTION
BY USED CAR NEWS
vehicle is ready and can avoid the wait. The new process provides a better experience between Manheim buyers, Ready Auto Transport, and our carriers.” Before launching nationwide, Ready Auto Transport and Manheim successfully released more than 3,000 vehicles without a single issue in a pilot program at Manheim Ohio, Manheim Detroit, Manheim Pittsburgh and Manheim Statesville. With the new process, Ready Auto Transport attaches the eGate Pass to the carrier’s Transport Order in 1Dispatch, Ready Auto Transport’s platform that carriers use to dispatch vehicles and manage assigned loads. Only carriers assigned to vehicles have access to print the pass. This enhancement provides an added level of security to the auction and buyer.
NEWS
Manheim Study Reveals Presence of Physical Title at Sale Greatly Increases Vehicle Conversion Rate
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STUDY FOCUSES ON DEALER VEHICLES
While a variety of factors can affect vehicle conversion rates at auction, Manheim revealed in a recent study that the presence of a physical title at the time of sale can potentially double vehicle conversion rates. The research also revealed that vehicles with same-day titles contribute to slightly higher online sales via Simulcast and OVE.com. “Roughly 35 percent of all vehicles at auction are sold without the presence of a physical title and this can negatively affect customer profitability,” shared Ally Pomeroy, customer consultant. “While we observed significant differences between commercial and dealer sellers when it comes to having physical titles at auction, this study focused on dealers because the majority of vehicles with delayed titles are sold by dealers.” Conversion Rates: Manheim’s study also showed that while typical dealer conversion rates range between 50 and 55 percent, the average conversion rate for dealer vehicles with a title present is 86.2 percent, as opposed to 42 percent for delayed vehicle titles. Also revealed was that newer, lower-mileage vehicles have the lowest conversion rates without a title present, while title delay is less of a factor in the conversion of older, higher-mileage vehicles.
“These findings may be due to a dealer’s tendency to have reconditioning work done on older vehicles to get them ready to retail,” Pomeroy said. “Because they are already expecting delays and extra holding costs due to reconditioning time, the title delay is less of a concern.” Online and Manheim Market Report: Having title-ready vehicles can also influence positive online buyer activity. For example, 18.5 percent of vehicles with physical titles present sold online via Simulcast or OVE.com in 2014, compared to 17.7 percent of vehicles with delayed titles. For online transactions, buyer confidence is crucial, and the risk of a delayed title can discourage dealers from making the purchase. And, when it comes to MMR, the study showed that MMR value by dealer groups is the same whether the title is present or not. The data used for the study included Manheim’s total wholesale vehicle transactions in the U.S. from January 31 through May 31, 2014. In addition, the study captured only “whole car” data and excluded specialty and total resource auctions. To review the results of this study, access the white paper at: http://www.manheim.com/ content_pdfs/products/Impact-of-DelayedTitles-at-Auction.pdf.
ABOUT MANHEIM (WWW.MANHEIM.COM) A SUBSIDIARY OF COX ENTERPRISES, MANHEIM REGISTERS NEARLY 8 MILLION USED VEHICLES ANNUALLY, FACILITATING TRANSACTIONS REPRESENTING MORE THAN $50 BILLION IN VALUE. MANHEIM’S RESEARCH AND CONSULTING ARM, MANHEIM CONSULTING, PROVIDES MARKET INTELLIGENCE AND PUBLISHES THE ANNUAL USED CAR MARKET REPORT.
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SALES
MATTERS
How to Generate More Leads With Classifieds in the Next 30 Days PRACTICAL STEPS TO INCREASE LEADS BY NEHAL KAZIM, AMPLIFII AUTO
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As a dealer, you need an ecosystem of lead sources to consistently and predictably have high quality buyers walking through your doors. Here is how to generate more leads with classified ads. Step 1: Choose your classified website(s). There are a variety of classified websites to choose from (nationally and statewide). Here is the breakdown of major classified websites based on listing costs and traffic: Craigslist: Cost of listing: $5/car Traffic Rank*: 10th eBay Classifieds: Cost of listing: $9.95+/car Traffic Rank*: 9th Backpage: Cost of listing: FREE/car Traffic Rank*: 186th eBay Motors: Cost of listing: $50-$125/car Traffic Rank*: 9th *Ranking of most visited websites in the United States. The one thing most dealers will not invest time in is testing which platforms generate the most call volume and sales. Testing volume alone is not good enough because 100 leads for one car from platform 1 may lead to zero sales, but six leads from platform 2 may lead to two sales. If you are not currently testing this, I will outline how to do this below. Step 2: Create appealing ads. Posting one picture of the car and a phone number is not going to be very effective overall. Understand the limitations of each platform and max it out depending on the package you choose. For example, if Craigslist allows you to post a total of eight images, show the real value of your car by taking high quality pictures showcasing the car. Add a border around the image or a bar at the bottom of each image of the car. In this area, you can emphasize your dealer name and phone number. Make sure the first image of the car is the best of the batch. Review your competitors’ ads and you will see most don’t do this. Common sense isn’t common practice, unfortunately. Step 2.1: Create YouTube videos for each car. Videos are tremendously powerful. Video walkthroughs of your inventory increase interest in the car. The buyer spends more time looking at your ad or on your website and is increasingly more likely to reach out to your dealership if you have video. Here’s what you need to have to create a high quality video that sells more cars: • Professional photos of your vehicles from TENNESSEE DEALER CONNECT
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a variety of angles. • A pleasant voiceover or music fitting to the car. • A relevant title with year, model and phone number. • A detailed description outlining the details of the car. • Tags that will help boost visibility in YouTube and Google searches. Creating videos is one of the fastest ways to build credibility and trust with your buyers. This level of trust and credibility leads to more calls and ups. Step 3: Create landing pages. Landing pages are individual pages for each car in your inventory. The reason you need a landing page is the focus is completely on that car. If a buyer is on the site looking at that
TESTING VOLUME ALONE IS NOT GOOD ENOUGH BECAUSE 100 LEADS FOR ONE CAR FROM PLATFORM 1 MAY LEAD TO ZERO SALES, BUT SIX LEADS FROM PLATFORM 2 MAY LEAD TO TWO SALES.
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specific car, he will take the time to review the pictures, specs and details of the car. Beyond that, there should be numerous calls to action on the landing page. Calls to action are parts of the pages that eventually lead to a sale. The bottom line is you want them to submit a form, call you or visit the dealership in person. Elements to consider for your landing pages include: • Visible phone number. • Information request form. • Trade-in appraisal form. • Credit application. • Schedule a test drive form. Here’s a quick checklist when it comes to assessing your landing pages: • Is my inventory easily accessible online? • Is there a landing page for each car? • Is it simple for a prospect to reach out to you? A phone number? A form? • Is there a high quality video that engages the prospect? Step 4: Promote your listing. There are many ways to promote your inventory. Here are some of the best ways to get started with promoting your inventory: Internal ad networks: Each classified platform has an internal ad network to promote your listings to other viewers on the website. Test ad networks inside of classified platforms to gauge the return. Social network – Facebook: One of the easiest ways to drive traffic to your listings is through existing sites on which you are active. Promote your new listing on Facebook by linking your landing page (ideally) or your ad listing. Add a small but intriguing description to get your fans to visit the link. You can also use the Facebook ad platform to increase visibility of the post. Social network – Twitter: Share links on your Twitter page consistently spread across your other content to increase visitors to view your inventory. Step 5: Tracking. There are a variety of solutions to track and record calls for your dealership. At the very basic level, you can use numbers from www.twilio.com to track call volume and listen to recordings. Using Twilio does require an additional platform to view and listen to recordings. Next Steps. To start lead generation for your dealership, there is a quick start checklist to generate more leads with classifieds in the next 30 days at www.amplifiiauto.com/ quickstart. For more information visit www. amplifiiauto.com or contact Nehal at 416722-9553 or nehal@amplifiiauto.com. W W W. T N I A D A . C O M
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WASHINGTON
UPDATE
National Independent Automobile Dealers Association
NIADA GOVERNMENT REPORT HERE’S A RUNDOWN OF SOME OF THE LATEST GOVERNMENTAL ISSUES AND ACTIVIT Y AFFECTING THE USED CAR INDUSTRY FROM NIADA REGULATORY COUNSEL SHAUN PETERSEN AND NIADA LOBBYIST SANTE ESPOSITO.
REGULATORY REPORT Consumer Financial Protection Bureau First Investors settlement: The CFPB settled an enforcement action against Texasbased First Investors Financial Services Group Inc., an auto finance company that lends primarily to subprime borrowers in loans assigned from automobile dealers. First Investors services its own loans and supplies information on its accounts to credit reporting agencies, making it a furnisher under the Fair Credit Reporting Act. Furnishers are required by law to have reasonable policies and procedures regarding the accuracy and integrity of the information they provide. The CFPB alleged First Investors failed to fix known flaws in a computer system that was providing inaccurate information to credit reporting agencies for more than three years. When First Investors discovered the problem, it notified the vendor of the computer system but allegedly did nothing more. The bureau claimed potentially tens of thousands of customers were harmed by having incorrect information supplied to credit reporting agencies, including wrong payments and overdue amounts, incorrect date of first delinquency, inflated number of delinquencies and mischaracterization of the surrender of the vehicles. First Financial was assessed a $2.75 million fine. For a copy of the consent order, visit http://files.consumerfinance.gov/f/201408_ cfpb_consent-order_first-investors.pdf. Department of Justice Fifth Third Bank settlement: Fifth Third Mortgage Company settled allegations that it engaged in a pattern or practice of discrimination on the basis of disability and receipt of public assistance, which is a violation of the Equal Credit Opportunity Act. Fifth Third allegedly required recipients of disability income to provide a letter from their doctor to substantiate their income. Under the settlement, Fifth Third has agreed to maintain revised policies, conduct employee training and pay more than $1.5 million to compensate victims. Federal Trade Commission Debt collection enforcement: The FTC has accused two debt collection companies of engaging in unfair and deceptive tactics in collecting debts. One company allegedly repeatedly called consumers and accused them of owing debts they did not owe, contacted consumers at W W W. T N I A D A . C O M
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ON AUG. 8, PRESIDENT OBAMA SIGNED INTO LAW THE HIGHWAY AND TRANSPORTATION FUNDING ACT OF 2014, WHICH WILL TRANSFER APPROXIMATELY
$10.8 BILLION FROM THE GENERAL FUND INTO THE HIGHWAY TRUST FUND.
work while knowing their employers did not allow the calls, made unauthorized withdrawals from consumers’ bank accounts and disclosed confidential information about debtors to third parties. Another company is charged with falsely threatening to sue consumers when it had no plans to do so; garnish their wages, which it could not do without a court order; or arrest them, which it had no legal right to do. The defendants also allegedly threatened to collect on old debts that were beyond
the statute of limitations, refused to provide information about the debt that consumers were legally entitled to request, continued to attempt to collect on debts without a reasonable basis for telling consumers they owed the debt, told consumers they owed interest on debts when they didn’t, and revealed the debt to consumers’ relatives, employers and coworkers. LEGISLATIVE REPORT MAP-21 Reauthorization On Aug. 8, President Obama signed into law the Highway and Transportation Funding Act of 2014, which will transfer approximately $10.8 billion from the general fund into the highway trust fund to keep the HTF solvent and provide funding for highway and transit programs at current levels through May 31. The cost to the general fund will be offset by various “pay-fors,” all of which are unrelated to transportation and most of which extend over 10 years. They include pension smoothing, an extension of custom duties and a transfer of $1 billion from the leaking underground storage tank trust fund. The bill also includes an extension of the MAP-21 transportation law through May 31 at current funding levels. Given that action, there is little likelihood of legislative action on reauthorization for the rest of this year. S. 2171, Location Privacy Protection Act Introduced on March 27 by Sen. Al Franken (D-Minn.), the bill would, among other things, prohibit a covered nongovernmental entity from knowingly collecting or disclosing to another covered entity geolocation information from an electronic communications device without the consent of the individual using the device – effectively creating a federal requirement for dealers to disclose use of GPS devices installed in the vehicles they sell. CFPB Bills As reported in July, the House has introduced several bills, which have been marked up by the Financial Services Committee, that would regulate various aspects of the way the CFPB operates. While the status of those bills has not changed since then, one of them – H.R. 4383, the Bureau of Consumer Financial Protection Small Business Advisory Board Act – has gained the support of 37 consponsors. The bill, introduced by Rep. Robert Pittenger (R-N.C.), would direct the CFPB to establish a 12-member Small Business Advisory Board to advise and consult with the bureau about small business practices and the impact of the CFPB’s actions on small businesses.
OCTOBER/NOVEMBER 2014
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MANAGEMENT
MATTERS
NIADA Certified 2.0
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Certified pre-owned has become the industry’s most repeated buzzword lately. The CPO model, created by franchise dealers and OEMs, has set a new standard for used car sales and redefined the way customers shop for cars. In 2013, sales of manufacturer-certified pre-owned vehicles totaled a record 2.1 million units and sales this year have been even better, with May’s 207,371 units setting a record for sales in a month, according to Autodata. And those CPO sales are generating significantly more revenue than average vehicles. Citing figures from CNW Research, Automotive News reported the average premium for CPO units was $2,842 in August – the 14th consecutive month it had surpassed $2,800 – with a peak of $2,944 in June. High-dollar national marketing campaigns have educated the car-buying public about the benefits of buying a used car that has been certified, so much so that it has now become an expected part of the process. Much like a missing vehicle history report, if a car has not been certified many customers wonder what the dealer is hiding. For the most part, independent dealers have
LEGAL
been left out of the CPO game. Good dealers, of course, have always inspected their cars and done their best to represent the condition of the vehicle as accurately as possible. Some even stand behind their inventory by offering some type of limited warranty to ease the mind of wary customers. Even so, customers can be a little skittish of a dealer-endorsed certified car and many end up paying more at a franchise dealer’s used car lot to get the label they are after. But that can change with the re-introduction of the NIADA Certified Pre-Owned program. NIADA Certified has been around for a few years, but it recently underwent some extended enhancements that have made it a more attractive option to customers and a powerful profit center for dealers. “The NIADA Certified program allows independents to play on an even field with the new car dealers,” said NIADA president-elect Frank Fuzy, owner of Century Motors in Pompano Beach, Fla. “It’s 50 percent easier to sell a car that’s been certified and has a warranty, and we know that today every sale counts.” The NIADA Certified program is backed
by Warrantech, an AmTrust Financial company. NIADA approached the company last year to retool the program and develop something that made sense for independents. Warrantech, which built similar programs for other national partners, compiled all the data it could from dealers, consumers and associations to create a program it says is “built for dealers, by dealers.” “We basically asked, ‘What do you want?’ and then we listened to what everyone said,” Warrantech national business development manager Natalie Suarez said. Since it kicked off in January, the number of dealers using the program has increased steadily. Suarez said dealers understanding exactly what CPO is, and can be, is part of the reason. “Customers want peace of mind,” she said. “They are looking for cars that are advertised and branded as something they can trust has been thoroughly checked out. NIADA Certified gives them a guarantee.” Some of the biggest changes to the new program include:
NEWS
Important Notice for Businesses with Consumer Clauses RULES FOR THE ARBITRATION OF DISPUTES ARISING FROM CONSUMER AGREEMENTS The American Arbitration Association has announced the upcoming launch of the Consumer Arbitration Rules (“Consumer Rules”). Effective September 1, 2014, it is the AAA’s first stand-alone set of rules developed specifically for the arbitration of disputes arising from consumer agreements. The Consumer Rules will apply to all applicable cases filed on or after September 1, 2014, and as of that date will replace the ConsumerRelated Disputes Supplementary Procedures.
This advance notice is to alert you to one of the important provisions of the rules: A business currently providing for or intending to provide for the AAA to administer its consumer arbitrations under the Consumer Rules or another set of AAA rules in a consumer contract must register its consumer arbitration clause with the newly-created AAA Consumer Clause Registry.
The procedure is simple: The business submits the clause, accompanied by the TENNESSEE DEALER CONNECT
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consumer review and registry fee. The AAA reviews the clause for compliance with the Due Process Protocol. If the clause is compliant with the protocol, the AAA will administer disputes arising out of that clause, and the business will be included on the publiclyaccessible Consumer Clause Registry, which contains the name and address of the business, the consumer arbitration clause and additional documents that may be related to the clause. The AAA may decline to administer a case if a business does not comply with the Due Process Protocol and/ or registration requirement as per this notification. Notes about Fees: • The consumer review and registry fee represents the cost of reviewing the clause and maintaining the clause on the registry. This fee is non-refundable. • For clauses submitted to the AAA within the 2014 calendar year: The fee is $650 per clause, which covers the cost of appearing
OCTOBER/NOVEMBER 2014
on the registry through 2015. A yearly fee of $500* will be charged to maintain each individual clause on the registry for each calendar year thereafter. • For clauses submitted within the 2015 calendar year: The fee is $500. A yearly fee of $500* will be charged to maintain each clause on the registry for each calendar year thereafter. • For a demand for consumer arbitration received by the AAA pursuant to an arbitration clause not previously submitted to the AAA for review and placement on the registry: The fee is $250, in addition to the review and registry fees described above, for an expedited review of the clause. *Future registry fees are subject to change. To register a consumer clause or view more information about the AAA’s Consumer Clause Registry, go to www.adr.org/ consumerclauseregistry. For questions, please contact the AAA at consumerreview@adr.org. W W W. T N I A D A . C O M
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E N H A N C ED N I A DA C E R T I FI ED P R E - O W N ED P R O G R A M GE T S INDEP ENDEN T DE A L ERS IN TO T HE LUCR AT I V E CP O M A RK E T
Three very flexible CPO limited warranty programs that include basic, standard and enhanced options. CPO coverage for vehicles up to 14 years old and with up to 150,000 miles. 100 percent credit of the CPO limited warranty investment if the customer upgrades to an NIADA vehicle service contract. No surcharges. Enhanced NIADA CPO marketing resources, including large window banners, lot flags, etc. A more seamless, less timeconsuming CPO contract forms processing procedure. eBay Motors promotion and inventory listing support/endorsement. ASE certified technician vehicle inspection requirement enhancing validity to the customer.
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BY CHRISTY TAYLOR
NIADA Certified is exclusive to NIADA members. Dealers choose which vehicles they want to certify, as well as the terms of the warranties – three months/3,000 miles, six months/6,000 miles or 12 months/12,000 miles. Current model year plus 14-year units with zero to 150,000 miles are eligible. There is a cost to the dealer to certify, but if the customer upgrades to a service contract the fee is waived. Even if he doesn’t, the value added with the certified status can cover the cost.“There is a small cost to it in the beginning, but it gives leverage to the dealer to ask for more money in the price because of the value it has being certified,” Suarez said. “Consumers will and do pay more for certified.” “If you ask them, about one in four customers will upgrade to the service warranty, so the program really pays for itself,” Fuzy said. His dealership has had so much success with NIADA Certified that he jokingly said he doesn’t want other dealers to know about it. His message to them? “Don’t do it because your sales will increase and you’ll be competing with me.” For more information about NIADA Certified, visit www.niadacertified.com or call 1-877-3100288. CHRISTY TAYLOR HAS WRITTEN ABOUT THE INDEPENDENT AUTO SALES INDUSTRY FOR 14 YEARS AND OPERATES CROSSROADS COMMUNICATIONS, A PROVIDER OF EDITORIAL, CREATIVE AND MARKETING SUPPORT FOR BUSINESSES. FOR MORE INFORMATION, VISIT WWW.CROSSROADS-COM.COM.
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REGULATORY
NEWS
NHTSA Unveils Online Search Tool for Recalls Using Vehicle Identification Number
safercar.gov
CONSUMERS WILL BE ABLE TO TELL WHETHER VEHICLE IS IMPACTED BY A RECALL Every year, millions of vehicles are recalled in the United States due to safety defects or noncompliance with federal safety standards. To help car buyers, owners and renters know their vehicles are safe and their safety defects have been addressed, the U.S. Department of Transportation’s National Highway Traffic Safety Administration recently unveiled a free online search tool consumers can use to find out if a vehicle is directly impacted by a recall. The new tool is available on www. safercar.gov/vinlookup and provides consumers with a quick and easy way to identify uncompleted recalls by entering their Vehicle Identification Number. All major light vehicle and motorcycle brands can be searched. “Safety is our highest priority, and an informed consumer is one of our strongest allies in ensuring recalled vehicles are
VEHICLE RECALLS: WHAT YOU SHOULD KNOW
repaired,” said U.S. Transportation Secretary Anthony Foxx. “Starting today Your car isand important to you, your safety is important to us. But when your car or an item of motor car owners, shoppers, renters canand find equipment poses adefect safety risk to you, your passengers, or other motorists sharing the road with out if a specificvehicle vehicle has a safety you, then – it can be recalled. that needs to be fixed using our free online Determining whether there is a recall tool.” consumers need to take action on is easy. Under the new NHTSA After entering the VIN number into the WHAT ISmandate, A RECALL? all major light vehicle and motorcycleor the Nationalfield, results will appear if the consumer When a manufacturer Highway Traffic Safety Administration determines that a manufacturers are car now to vehicle provide hascreates an open recall on their vehicle. or required item of motor equipment an unreasonable risk to safety orIffails to meet VIN search capability for uncompleted there are will “No OpenThat minimum safety standards, the manufacturer is none, requiredowners to fix that carsee or equipment. be done by repairing it, offering a refund (for equipment), or (in rare cases) recalls on their owncan websites. This data it, replacingRecalls.” theNHTSA’s car. must be updated atrepurchasing least weekly. “Just as every single automaker should new VIN lookup tool directly relies on never hesitate to recall a defective vehicle, WHAT DOES THIS MEAN TO ME? consumers should never hesitate to get information from all major automakers, If there is a safety recall, will fix thevehicle car or equipment free NHTSA of charge. and regularly updated information fromyour themanufacturer their recalled fixed,” said automakers is critical to the efficacy of the deputy administrator David Friedman. HOW WILL I KNOW IF THERE’S A “By RECALL? search tool. making individual VIN searches If there is a vehicle safety recall, your manufacturer notify you we’re by Consumers can find their readilywill available, providing another sending you a letter the mail. The envelope looks like this: – the peace of mind identification number by looking at in the service to consumers SAFETY RECALL NOTICE dashboard on the driver’s sideregister of the your vehicle, that the vehicle You can also car so youknowing can receive NHTSA e-mail they own, or that or on the driver’s side door onorthe door post are thinking notifications alerts sent directly tothey your phone. NHTSA’sof buying or renting, is where the door latches when it isapp closed. free of safety defects.” Safercar mobile (see www.safercar.gov) is available for both Apple devices and Android devices, or RSS feed.
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WHAT DO I DO IF MY CAR IS RECALLED? When you receive a notification, follow any interim safety guidance provided by the manufacturer and contact your local dealership. They will fix the recalled part or portion of safercar.gov your car for free.
safercar.gov
CAN I FIND OUT NOW IF THERE’S A RECALL ON MY CAR?
VEHICLE RECALLS: WHAT YOU SHOULD KNOW Your car is important to you, and your safety is important to us. But when your car or an item of motor vehicle equipment poses a safety risk to you, your passengers, or other motorists sharing the road with you, then it can be recalled. WHAT IS A RECALL? When a manufacturer or the National Highway Traffic Safety Administration determines that a car or item of motor vehicle equipment creates an unreasonable risk to safety or fails to meet minimum safety standards, the manufacturer is required to fix that car or equipment. That can be done by repairing it, replacing it, offering a refund (for equipment), or (in rare cases) repurchasing the car.
Yes. You can look up your car on NHTSA’s Web site – www.safercar.gov/vinlookup – or your manufacturer’s Web site, to see if it’s under a recall. You will need your Vehicle Identification DEALER TIPS FOR VIN LOOKUP AND VEHICLE RECALLS Number (VIN) to do the lookup. You can also download the Safercar mobile app and search for all vehicle recalls. The WHAT IS is THE VIN LOOKUP? Safercar mobile app available for iPhones (https://itunes.apple.com/us/app/safercar/ The National Highway Traffic Safety Administration offers this tool for people to look up id593086230?ls=1&mt=8) and Androids (https://play.google.com/store/apps/details?id=gov. Vehicle Identification Numbers (VINs) to see if they are covered by a safety recall that has yet nhtsa.safercar&hl=en.). to be remedied. It reflects information provided to NHTSA by vehicle manufacturers required to have their own public VIN-specific recall Web sites. WHERE CAN I FIND IT?
pageonline 2 foratmore information on looking The toolSee is available www.safercar.gov/vinlookup.
up your VIN.
WHY SHOULD I USE IT?
WHAT DOES THIS MEAN TO ME? If there is a safety recall, your manufacturer will fix the car or equipment free of charge. HOW WILL I KNOW IF THERE’S A RECALL? If there is a safety recall, your manufacturer will notify you by sending you a letter in the mail. The envelope looks like this:
SAFETY RECALL NOTICE
You can also register your car so you can receive NHTSA e-mail notifications or alerts sent directly to your phone. NHTSA’s Safercar mobile app (see www.safercar.gov) is available for both Apple devices and Android devices, or RSS feed. WHAT DO I DO IF MY CAR IS RECALLED? When you receive a notification, follow any interim safety guidance provided by the manufacturer and contact your local dealership. They will fix the recalled part or portion of your car for free.
Before purchasing a used vehicle or taking in a trade, this tool can help identify recalled vehicles. It can also be used to learn if used vehicles in inventory are subject to unremedied safety recalls. Lastly, you can help prospective purchasers/lessees to learn more about how they can use this new tool. HOW TO USE THE VIN-LOOKUP TOOL Use this tip sheet to train your staff on the existence of the new NHTSA VIN-lookup tool and how and when to use it. Direct prospective customers to the www.safercar.gov Web site if they have questions on recalls or on other issues involving motor vehicle safety. HOW TO FURTHER DIALOGUE WITH CUSTOMERS ABOUT RECALLS Inform and educate your customers by making available the NHTSA recalls fact sheet. Suggest that customers sign up for recall alerts on www.safercar.gov for the vehicles they own or that they may be interested in buying or leasing.
CAN I FIND OUT NOW IF THERE’S A RECALL ON MY CAR? Yes. You can look up your car on NHTSA’s Web site – www.safercar.gov/vinlookup – or your manufacturer’s Web site, to see if it’s under a recall. You will need your Vehicle Identification Number (VIN) to do the lookup. You can also download the Safercar mobile app and search for all vehicle recalls. The Safercar mobile app is available for iPhones (https://itunes.apple.com/us/app/safercar/ id593086230?ls=1&mt=8) and Androids (https://play.google.com/store/apps/details?id=gov. nhtsa.safercar&hl=en.).
See page 2 for more information on looking up your VIN. 10974b-081914-v2
TENNESSEE DEALER CONNECT
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