FEBRUARY 2017
www.FIADA.com
Information and Insight for Florida Used Car Dealers
We Are
READY TO GO! Just a few weeks away from the start of the 2017 Legislative Session and FIADA is prepared. Page 14.
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Dealer Independent
MAILING ADDRESS 1840 Fiddler Court Tallahassee, FL 32308 TELEPHONE (850) 385-2712 (800) 237-0448 FAX (850) 385-3251 WEBSITE www.FIADA.com EXECUTIVE COMMITTEE Lisa Compagno President Scott Lanier, CMD Senior Vice President Jim Winterick, Sr. Chairman of the Board Christopher Leedom Secretary Brad Joel Treasurer Frank Fuzy Regional Vice President George Hickey Regional Vice President Steve Marbais, CMD Regional Vice President Dino Mercurio Regional Vice President
Contents February 2017
For members of the Florida Independent Automobile Dealers Association
C O L U M N S & F E AT U R E S 4
President’s Message Lisa Compagno
6
Executive Director’s Message Lisette Mariner, CAE
8
Top 10 Things to Know Here are a few ways to help out with the Legislative Session this year.
Brandi Noegel Regional Vice President
10 Back to Basics Jennifer Finlay answers common questions about the Electronic Filing System.
FIADA STAFF Lisette Mariner, CAE Executive Director
12
Membership News
14
Legislative Update Preview of the 2017 Legislative Session.
18
Town Hall Time Take a look at what the January Town Hall attendees learned, and mark your calendar for the next Town Hall in April.
22
The Growing Need for BHPH Advice on how Buy Here-Pay Here dealers can change with the times and keep a profitable business model.
24
Quality Dealer of the Year 2017 It's not too early to get your nomination in for the most prestigious award FIADA gives.
28
A Look at Current Legal Issues Attorneys Tom Hudson and Nicole Munro recap recent federal and legal developments of interest to dealers.
30
Industry News
Terry Myers Educational Instructor Jason Berthiaume Education and Marketing Coordinator Amelia Tillman Membership Director Christy Taylor Editorial/Advertising
POSTMASTER:
Send address changes to
FIADA • 1840 Fiddler Court Tallahassee, FL 32308 (850) 385-2712 • Call/Text: (800) 237-0448 Fax (850) 385-3251 • www.FIADA.com The Independent Dealer is a publication of: Florida Independent Automobile Dealers Association, 1840 Fiddler Court, Tallahassee, FL 32308 The magazine is published every month in Tallahassee and distributed to Florida new, used, wholesale and lease/retail car dealers. Advertising rates are available upon request. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of Independent Dealer or the Association. Likewise, the appearance of advertisers, or their identification as members of FIADA, does not constitute an endorsement of the products or services featured.
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February 2017 — Independent Dealer — 3
FROM THE PRESIDENT
Get Your Nomination In! BY LISA COMPAGNO, FIADA PRESIDENT
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winner of NIADA’s National Quality Dealer of the Year is elcome to the February 2017 Edition of your also awarded a plaque to display, a ring and a full write up in FIADA Independent Dealer magazine! This issue the national Used Car Dealer magazine. The national winner offers a summary of our January Town Hall and Board of Directors meetings, some general industry articles to help your business and a legislative preview. What I’d like to The Florida Quality Dealer is selected by the talk about, however, is our Quality Dealer nominating committee in July and formally of the Year Nominations. The Quality announced at the Annual Convention in October. Dealer of the Year winner is selected by our nominating committee during our July Board Meeting. This year our July Board will also receive help with press releases and the NIADA will Meeting is scheduled for July 29, 2017. Thus, it is definitely also participate in any press events you might organize to not too early to get your nominations in. highlight your receipt of this high honor. You can nominate yourself or someone you know for this As I said, the Florida winner is selected in July, however, prominent award. The application is on our website at fiada. the winner is not announced until October at our annual com, under the “About” tab. You can also find a copy in this FIADA Convention. During our January Board Meeting, magazine on page 25 . the Convention committee recommended, and the Board approved, a Mardi Gras theme for our Convention this year. Once a dealer is nominated, his or her application is reviewed We plan to bring the fun back to Convention! With that by our nominating committee. The committee ensures that in mind, the Board also approved to bring back the formal the dealer is qualified to be awarded Quality Dealer of the dining event where we will announce our Florida Quality Year. The FIADA’s qualifications for Quality Dealer of the Dealer of the Year. We are very excited to be bringing back Year mirror the qualifications required to be the NIADA the formal dinner and we look forward to celebrating with all National Quality Dealer of the Year. This includes being the of you as our next Quality Dealer of the Year is announced! “Dealer Principle” or listed as the President of the dealership corporation. A full list of qualifications is also available on As always, if you have any questions about the Quality Dealer our website. of the Year, or anything else, please contact us by phone or text at 800.237.0448 or info@fiada.com. In addition to the prestige that comes along with being named the Quality Dealer of the Year, the winner of Quality Well that about wraps it up for me for this issue. Until next Dealer of the Year is awarded a beautifully framed medallion time, happy reading, learning, and most importantly, selling! to be proudly displayed at your dealership, a ring that denotes the wearer is Quality Dealer of the Year and a full write up and recognition in this very magazine. The Florida Quality Lisa Compagno Dealer of the Year also becomes entered in the running for FIADA President National Quality Dealer of the Year for the NIADA. The
4 — Independent Dealer — February 2017
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EXECUTIVE DIREC TOR’S MESSAGE
Busy, Busy, Busy BY LISET TE MARINER, CAE, EXECUTIVE DIRECTOR
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ow, it has been a busy first two months of 2017. We had a great Town Hall meeting last month in Jacksonville. You can see some of the photos on page 18 of our featured speakers who covered topics like updates on labor laws, to the insurance bond market and more. Thanks to sponsors like Auto Data Direct, the American Recovery Association, Golden Eagle Management Services and Wayne Reaves Dealer Software, we are able to present these meetings FREE of charge to all Florida dealers. That is a huge value! If you have not yet taken advantage of attending one of our free Town Hall meetings, please mark your calendar for the next one on July 28. Details on page 19. We plan the Town Hall meetings to coincide with our Board of Directors meetings (which are also FREE of charge to anyone who wants to attend). Our Board Meetings are open to both non-members and members, however only Board members are able to cast votes. We got a lot of things done at the January meeting, including the initial planning for the Annual Convention in October. I'm so "jazzed" that this year's theme is Mardi Gras! The board also decided to bring back the Annual Awards Banquet this year, which will be a fun evening event full of good food, dancing and recognition for some of the Association's top honors. You will not want to miss this special night. Legislative Session begins in just a few short weeks, but FIADA has been preparing since the end of the 2016 session so as this month's cover says, we are ready! Thank you to everyone who participated in the survey we sent out to get input on the Used Tire Bill we are watching. The majority of the survey responses we received indicated that our members don’t sell used tires but do either install them or have them installed on their inventory. The majority also feel that there is much liability 6 — Independent Dealer — February 2017
for independent dealers in this bill, thus creating increased financial burden. This is very helpful in shaping FIADA’s position on this bill. We will continue to monitor its progress and will keep you advised as it moves through the process. The DHSVM bill has been filed by Rep. Payne and will begin making its way to Committee. Essentially, the department's number one priority is to raise salaries for the highway patrol and second to complete the second phase of the modernization project which will redesign FRVIS ( the Florida Real-time Vehicle Information System for tag and titles). They will also take care of the transporter tag issue that we’ve been following for a number of years through our participation on the Automobile Dealers Advisory Board. You can read more about what to watch for this session from our Lobbyists on page 14. On the federal front, NIADA continues to fight for dealers against overreaching rules and regulations. A recent memo from NIADA's Senior Vice President Legal and Government Affairs Shaun Peterson said, "now that President Trump and the new Congress are seated and off to the races with their agenda, including the just announced Executive Order the President signed ordering a full review of the Dodd-Frank Act, we believe we have an opportunity to be proactive in seeking changes at the CFPB." The NIADA is looking for anecdotes and feedback from members who have been the target of CFPB enforcement action. If you have something to share on this subject, feel free to email me at lisette@fiada.com. We will all be waiting and watching to see what happens next on the regulatory front. In the meantime, keep working hard and don't forget to download the new FIADA app! You can find it for free download in the App Store and in Google Play. www.fiada.com
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February 2017 — Independent Dealer — 7
1
1
Things to Know
TOP
LEGISLATIVE SESSION The 2017 Florida Legislative Session will start March 7. The session will last 60 days and there will be approximately 2,000 bills introduced, with only around 10 percent passing and becoming law. As always, the FIADA Legislative Committee and Lobbyists will be on the scene in Tallahassee, but here are a few things you can do to help. If you have a suggestion for a topic, for the Top 10, send it to us at info@fiada.com.
GET EDUCATED
Brush up on your civics and review just how the legislative process works. Legislators introduce a bill, discuss and debate it in various committees amending and changing it as needed. After it passes both chambers with a majority of votes, it goes to the Governor's office to be signed, become law without a signature or vetoed. If a bill doesn’t make it all the way through this process before the session ends, it dies and must begin the process anew the next year.
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KNOW YOUR LEGISLATORS
Senators and Representatives want to hear from their constituents; the people who live and work in the area they are representing. If you are unsure who your local elected officials are, you can easily find out by visiting www.flsenate.gov and www.myfloridahouse.gov.
STAY INFORMED DURING SESSION
FIADA makes it very easy for you to follow along with the proposed legislation that could affect your business. Watch for Legislative Alerts in your inbox as well as updates in the magazine.
DONATE TO THE FIADA PAC
Donating to the FIADA PAC is one of the most effective ways to help the Association advocate on your behalf. Money donated to the FIADA PAC is used to help support legislators who have championed our cause in the past and who are interested in working with us in the future.
VISIT, CALL AND WRITE
During the Legislative Session, the FIADA may ask members to contact their legislators to show support or concern on proposed legislation. When you are asked to act, please do so. When a Legislator hears from several constituents on the same issue, they are most likely to listen and act. 8 — Independent Dealer — February 2017
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MAKE IT PERSONAL
When contacting your Legislator, the best way is to meet in person. If a face-to-face meeting is not an option, then a phone call is preferred. Try to tell your legislator how the proposed legislation will affect you personally−good or bad. Examples would be sharing how your customers would be affected or how your business stands to benefit or loose.
BUILD RELATIONSHIPS
The best time to build relationships with your Legislators is before the Legislative Session begins. If it's an election year, offer to help with the campaign, make a donation or place signs at your dealership. You are also welcome to make an appointment with your legislator to introduce yourself and get to know them.
ATTEND FIADA EVENTS
The FIADA encourages members to be legislatively-minded. FIADA events, including Town Halls, Board Meetings and the Annual Convention have a legislative update session that not only keeps members informed but offers the opportunity to meet and greet with high-ranking legislators.
GET INVOLVED
The Legislative Committee is one of the most active FIADA committees. The Legislative Committee works with the Executive Director and Lobbyists to establish an agenda prior to each Legislative Session. No experience necessary to join.
FOLLOW NIADA
While FIADA stays focused on the Florida Legislative Session, the NIADA keeps track of federal legislation making its way through Congress. Pay attention to NIADA Alerts and Updates to stay informed on national issues that could affect you. www.fiada.com
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BACK TO BASICS
Q & A About Participating in the Electronic Filing System Program BY JENNIFER FINLAY
As the Florida Highway Safety and Motor Vehicles Department continues to move forward with modernization projects, it may be time for you to get on board with EFS.
O
ver the past few years completing tag and title work has become very modernized. The days of handwriting contracts, forms and temporary tags are over for the majority of dealers. With the variety of Dealer Management Software programs out there, things have become much easier and streamlined.
If I sell a vehicle in one month but it doesn't get finalized until the following month when is the sales tax due? Sales tax is due at time of sale. This means you will always go by the date you SOLD the vehicle, not when the paperwork was finalized. So if you sold a vehicle in January, the sales tax would be due with the return you file in February.
The State of Florida is rapidly moving toward an all electronic system for dealers to process title work. It was only a few months ago that the state implemented the new “Orion” system for EFS dealers. With this new system everything is electronic and physical paperwork is a thing of the past.
Can I renew a plate that a customer wants to transfer if it is expired? Yes. You will have the ability to renew an expired plate and even replace a plate that has either been surrendered or lost. Your vendor site will have options for all of these instances.
So, is EFS for you? The following are the most asked questions concerning EFS. This may help in deciding if it would be a good fit for your dealership:
Can I issue motorcycle plates? Yes. You can issue motorcycle plates; regular as well as the under 21 plates. You can also issue boat registrations and stickers.
Do I have to be a franchise or high volume dealer to participate in EFS? No, and in fact it works well for small to mid-size dealerships who have a small employee count. Time out of the dealership is precious. Why do it if you don’t have to? Everything can be done right at the dealership. No lines, no waiting, no commuting back and forth to the Tax Collector's Office or the DMV.
After scanning the documents through my vendor and getting the deal finalized what do I do with the hard copies? Title, 82040, POA etc.. All documents will remain at your dealership in the deal jacket. Documents will need to be kept for five years. In the event of a records inspection, your compliance officer will ask to see them.
Do I have to pay for tag inventory up front? No. Plate inventory and decals get assigned to you up front. It is not until you finalize a deal for a customer that you get charged, after you have collected from your customer.
If I become an EFS dealer can I still occasionally walk deals through in person? Yes. You can still walk deals though if you need something in a rush or need a special plate.
Do I need to buy special equipment? No. A standard laser printer and scanner are all you need.
Are there any added costs to become an EFS dealer? No. It does not cost extra to participate in Electronic filing. You will be submitting the same state fees that you have all along, nothing more.
Do I have to scan and upload documents at time of sale? No, title documents can be scanned and uploaded through your vendor any time during a 30 day window. Just the same as submitting in paper form.
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Bottom line, electronic filing is a convenient, 24 hour a day, seven days a week option for submitting and finalizing your deals. www.fiada.com
ANNUAL REPORT FILINGS DUE; BEWARE OF SCAMS Your 2017 Annual Report is now due. Annual reports for all corporations, limited liability companies, limited partnerships and limited liability limited partnerships are due each year between January 1st and May 1st. An annual report must be filed each year for your business entity to maintain an active status with the Department of State, and is required regardless of whether you need to make changes or not. All annual reports must be filed online at www.sunbiz.org. Click on Annual Report under Filing Services to complete your filing.
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Carefully review all solicitations, notices and websites that offer various business filings, registrations and/or certification services at prices above the required statutory fees.: • Do not confuse suspicious communications by mail or online with the Florida Division of Corporations’ official notices or website (known as Sunbiz). • Check for non-governmental agency statements before complying with any instructions or using filing or certification services. • Disregard “Annual Minutes” or “Annual Corporate Record Forms” notices. Neither form is required by this office or any other state or government agency.
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Remember to file on or before May 1st. It is easy, quick and secure! A $400 non-negotiable late fee will be imposed on any profit corporation, limited liability company, limited partnership and limited liability limited partnership annual report filed after midnight Eastern Standard Time on May 1st. Any business entity which fails to file its annual report by the third Friday of September will be administratively dissolved or revoked in our records on the fourth Friday in September.
February 2017 — Independent Dealer — 11
MEMBERSHIP NEWS
New Members ARACELIS ACEVEDO Sarasota, FL Sponsor: Terry Myers
JANUARY 2017 DOUG GROSE Tampa, FL Sponsor: Terry Myers
ARLA'S USED CARS Ocala, FL Alejandro Lopez Sponsor: John Cousins/Dealers Auto Auction AUTO SPORT GROUP, INC Delray Beach, FL Granger Whitelaw Sponsor: FIADA BIG HITTER MOTORS INC Davie, FL Bill Cafarella Sponsor: Kevin Scott
MIRACLE AUTO SALES Tallahassee, FL Rimoun Aiad Sponsor: Terry Myers GARY NASH Windermere, FL Sponsor: Terry Myers NATIONAL AUTO AUCTION ASSOCIATION Frederick, MD Frank Hackett Sponsor: FIADA
RAUL CASAL Riverview, FL Sponsor: Kevin Scott
PETE’S AUTOS Panama City, FL Peter Vitulli Sponsor: NIADA
COASTAL AUTO RANCH INC Port St Lucie, FL Lori Kinney Sponsor: Kevin Scott
ULTIMATE MOTOR CARS St Augustine, FL Eric Khazravan Sponsor: FIADA
STEPHANIE COBB Jacksonville, FL Sponsor: Terry Myers
WESTFALL AUTO SALES INC Valrico, FL Richard Westfall Sponsor: Amelia Tillman
EXPRESS TRADING & SERVICES GROUP INC. Miami, FL Hady Ossaily Sponsor: FIADA.com
Rejoining Members CARS OF JAX INC. St. Johns, FL Ammar Shakhtour Sponsor: Amelia Tillman ELITE JEEPS INC. Cartersville, GA Russ Hargis Sponsor: FIADA
Renewing Members
JANUARY 2017
30+ Year Members Credit Cars
Orlando, FL
20+ Year Members Marbais Enterprises, Inc. R & L Auto Wholesale The Truck Junction
Ocoee, FL Lakeland, FL Sarasota, FL
10+ Year Members Appearance Plus Auto Sales dba C & C Cars Gene Gorman's Auto Sales Global Wholesale Motor Company Prestige Auto Sales Tax Refund Services, Inc. Ultimate Image Auto, Inc. Under 10 Year Members Adesa Tampa Argentum Financial, LLC Auction123.com Autoline Preowned Bonita Auto Center Inc. Car Solutions LLC Celebrity Auto Group Citrus Auto Trader Dealer Consulting Services, Inc. Fisher & Phillips LLP Freeland Moore dba Harbor Nissan Haines Creek Auto Sales JD Byrider of Bradenton Larry's Auto Service Center Lobel Financial Mike Hubbard MNS Auto LLC Naples Motorsports NextGear Capital Orlando Longwood Auto Auction Paradise Auto Brokers, Inc. Smart Choice Autos SRQ Auto LLC
Pinellas Park, FL Punta Gorda, FL Fort Myers, FL Ocala, FL Tampa, FL Tallahassee, FL Tampa, FL Tampa, FL Weston, FL Jacksonville, FL Bonita Springs, FL West Palm Beach, FL Sarasota, FL Lecanto, FL Miami, FL Ft. Lauderdale, FL Port Charlotte, FL Leesburg, FL Bradenton, FL Beverly Hills, FL Anaheim, CA Inverness, FL Holly Hill, FL Naples, FL Carmel, IN Longwood, FL Pompano Beach, FL Ormond Beach, FL Bradenton, FL
JANUARY 2017 INTERNATIONAL AUTO GROUP Deerfield Beach, FL Arthur Siegle Sponsor: Amelia Tillman LINK'S AUTO SALES, INC. Sanford, FL Edward C. Link Sponsor: A. Tillman/S. Lanier
12 — Independent Dealer — February 2017
LOCAL PERK, INC. DBA MLC MOTORCARS Sarasota, FL Mark Mechigian Sponsor: Amelia Tillman
NEAL'S WHEELS Fanning Springs, FL Neal Moran Sponsor: Amelia Tillman SPACE COAST AUTO AUCTION Melbourne, FL Joe Pritchett Sponsor: Ellen Westphal
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L E G I S L AT I V E U P D AT E
What to Watch in the 2017 Legislative Session BY SANDRA AND ALLEN MORTHAM, FIADA LOBBYISTS
T
he countdown is on to the 2017 Florida Legislative Session. Here's your first glimpse of what is in store and what to keep your eye out for.
Speaker Richard Corcoran and House Priorities:
The House of Representatives focus this year is going to be on K-12 education. Specifically, the Speaker has said he wants to overhaul the charter schools and school choice provisions in statute. Additionally, the Speaker has made it a priority of the House to change the way the appropriations process works as well as the how the House conducts business.
President Joe Negron and Senate Priorities:
The Senate is looking at a number of issues that revolve around the College and University system. The President is strongly committed to making FSU and UF pre-eminent institutions in the U.S. They are also committed to Lake Okeechobee/St Lucie Lagoon cleanup, which will involve Everglades restoration.
Governor Rick Scott Priorities:
The Governor’s number one priority has been his proposed tax cuts totaling $618 million dollars for fiscal year 2017-18. He is also requesting millions of dollars more for “economic development” incentives for business. These funding requests tie in with his ongoing priority of job creation in Florida and are a continuation of budget proposals from previous years. 14 — Independent Dealer — February 2017
General Legislative Topics for 2017
1. Medical Marijuana 2. Death Penalty 3. Gambling legislation, which includes the Seminole Compact 4. Adopt a Balanced Budget
Topics for FIADA:
We are currently following 14 bills, which will continue to increase as additional bills are filed in the House and Senate. The bill-filing deadline is the first day of Legislative Session. Some topics of interest are “unsafe tires”, motor vehicle warranties, as well as towing and storage fees. We anticipate more to come and will continue to be diligent in our monitoring of new legislation. Lisette Mariner, your executive director, will keep you informed on issues important to running your businesses.
Heads Up! FIADA Dealer Alerts are the best way to notify you of upcoming legislative news that needs your attention. Look for these e-mail alerts in your inbox this legislative season. www.fiada.com
SUPPORT THE FIADA PAC Your PAC Contribution helps spread awareness and gain support of issues affecting independent dealers in the state’s capitol. There’s still time to get your contribution in before the session starts if you make it today.
CONTRIBUTION INFORMATION Contributor’s Name:_________________________________________________________________________ Dealership/Company:________________________________________________________________________ Street Address, City, State, Zip:____________________________________________________________________
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Make your check payable to FIADA-PAC and mail to: FIADA • 1840 Fiddler Court • Tallahassee, FL 32308 If making payment via credit card, you may fax your contribution form to 850.385.3251
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February 2017 — Independent Dealer — 15
It’s that time of year again...
GET YOUR
CREDITS
The DMV requires you to renew your Continuing Education (CE) Credits every two years. If you last took a CE course in 2015, you must complete another class by April 30, 2017. FIADA has these easy and convenient options available:
ONLINE Title & Registration or Continuing Education Members FREE Non-Members $39.95 Two DMV approved courses. Choose one! Work at your own pace Print your certificate today
Tampa
Ramada Inn 11714 Morris Bridge Rd
March 3, 2017
IN PERSON Continuing Education Members $79 Non-Members $99 Ask questions, get real-life examples! Leave with certificate in hand DMV approved
UPCOMING CLASS SCHEDULE Tallahassee Orlando West Palm Beach
Jacksonville
FIADA Office 1840 Fiddler Court
Manheim’s Central Florida Auto Auction 9800 Bachman Road
Manheim Palm Beach 600 Sansbury’s Way
Manheim 10817 New Kings Road
March 8, 2017
March 13, 2017
March 20, 2017
April 5, 2017
REGISTER BY PHONE: 800.237.0448 16 — Independent Dealer — February 2017
REGISTER ONLINE: www.FIADA.com www.fiada.com
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February 2017 — Independent Dealer — 17
The crowd learned a lot at the Town Hall Meeting January 13, 2017 in Jacksonville. Topics of interest included a Labor and Employment Trends & Update by Lisa Hodgdon of Broad and Cassel; Dealer Bond Issue Update from Kevin O'Connor, Dealers Insurance Services; Dealer Laws Update by Jason Lambert, Broad and Cassel; and Compliance Management for your Third Party Vendors from Les McCook, American Recovery Association
18 — Independent Dealer — February 2017
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TOWN HALL Join us for a day of learning and networking where you will have the opportunity to ask industry experts important questions as well as get up-to-date on the latest legal issues facing auto dealers.
FRIDAY
Grand Hyatt Tampa Bay 2900 Bayport Dr Tampa, Florida 33607
10:00 AM - 2:30 PM
Room rate is $139/night. Make a reservation by calling (888) 421-1442. Be sure to mention you are with the FIADA group. The deadline to reserve a room in the FIADA block is Tuesday, June 27, 2017.
july 28, 2017
register online at www.fiada.com/events Town Hall meetings are FREE for all dealers to attend. Attendees enjoy a complimentary lunch made possible by event sponsors Auto Data Direct, Inc. and Wayne Reaves Software.
come for the town hall and stay for the fiada board of directors meeting Here’s your chance to help your industry. Attend the FIADA Board of Directors meeting and offer your input and insight. All members are encouraged to join the conversation on July 29, 2017. Details available at FIADA.com www.fiada.com
February 2017 — Independent Dealer — 19
FIADA's app has been revamped and is ready to go. Download it now at your mobile app store. With the new app, you'll have all your FIADA benefits right in your back pocket:
upcoming events The entire Association calendar is synced with the app and you can register to attend with a simple tap.
coupons Access your FIADA Member Coupons from the auction lane if you want. No paper needed! The app keeps track of coupons that have been redeemed.
social Connect with FIADA via Facebook, twitter or YouTube and get updates of social interaction.
additional features Get mobile-ready features of www.FIADA.com from our new app, including photos, videos and other resources.
SINCE 1940
NIADA Foundation’s Annual College Scholarship Program
De a Ma dlin rc e i h 17 s
It’s annual scholarship application time again for outstanding graduating seniors. There are four $3,500 regional scholarships—one for each of the NIADA regions—and one $10,000 national scholarship to Northwood University in Midland, MI. Info is available at www.niada.com/foundation_ scholarship.php The regional applications must be postmarked no later than March 17, 2017.
ELIGIBILITY CRITERIA: To qualify for the scholarship, the applicant must: • Be classified as a high school senior during the current 2016-17 school year and legally residing in one of the 4 NIADA regions. • Have maintained an outstanding academic achievement record as reflected by an official high school transcript; and • Demonstrate an aptitude for college work as measured by SAT or ACT scores. 20 — Independent Dealer — February 2017
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February 2017 — Independent Dealer — 21
BHPH DEALERS
The Growing Need for BHPH BY DAVID ALGOOD
The times are a changing, and so is the BHPH business. How can you keep up in an era of higher priced cars and lower down payments?
T
he Buy Here Pay Here (BHPH) business can be a great resource to build wealth for multiple generations, while also increasing cash flow to withstand the economic ups and downs of the car business. In the past several years, both banks and finance companies have been very aggressive in their purchasing of secondary customer contracts. However, this trend is now changing as the subprime cycle nears its end. In 2016 alone, many subprime banks and finance companies, including Go Financial, Dealer Funding, TAG Financial, Mark One and Santander have either substantially reduced the purchase of contracts from independent dealers or completely discontinued originations. Any dealers that have put themselves in a position to rely solely on a retail financing source, or have chosen not to seek out additional capital, must adapt quickly and prepare themselves for the future. This article will lay out the basic benefits of having a properly capitalized BHPH dealership, instead of relying on retail financing sources in these turbulent times. The aggressiveness of the subprime market caused asset backed securities to see an increase in both delinquency and losses. According to CNN Money and Subprime Analytics, there has 22 — Independent Dealer — February 2017
been a rise in both low down payment and extended- term loans, as well as loans to borrowers with no FICO scores. As of February 2016, assetbacked securities saw a 34 percent increase in losses. As the performance of the securities continues to deteriorate, the coming year will see a significant tightening in the subprime sector. According to Equifax, in 2016, 23.5 percent of all new auto loans were subprime borrowers, many of which were securitized. As several large players exit the independent dealer marketplace and securitization standards tighten, there will be a substantial reduction in the availability of credit in the sub-prime and deep sub-prime industry. This means that there is a huge base that you should be prepared to capture as these secondary customers come back into BHPH stores, making the business more attractive than ever for dealers. While many dealers realize there are numerous advantages to being in the BHPH business, most do not have sufficient capital to grow their portfolio as they wish. There are a couple of financial considerations that must first be understood. The days when dealers used to recapture nearly all the vehicle cost with the down payment and finance the profit are long gone. In recent years, the market has shifted dramatically with vehicle
cost rising and down payments declining. According to Subprime Analytics, as of mid-year 2016, BHPH dealers have an average vehicle cost of $7,007 with a down payment of $727 leaving them with $6,280 cash in deal (CID). Dealers have shifted to selling a newer and nicer vehicle with a lower down payment, which in turn creates a larger cash burden. This has created a significant financial barrier to enter or grow a BHPH operation. A dealer looking to enter the BHPH business will likely need between $500,000-$3,000,000 dollars of working capital to fund a single lot operation doing between 15-50 loans per month. For this reason nearly all BHPH dealers use a third party to fund a portion of their operation, often times allowing them to lower their self-funding needs to less than $100,000. Whether you have been in the BHPH business for three generations or you are looking to start a portfolio, choosing the right capital partner, who both understands the BHPH business and that will provide financing to help you grow, is vital to your success. The BHPH business can be extremely profitable. Many dealers are able to cover 100 percent of their credit losses with interest income, meaning they are able to make 100 percent of the markup on their car, which in many cases is $4,000-$5,000 per unit. If your store could benefit from additional sales with great margins then entering or expanding in the BHPH business may be for you. David Algood is the Director of Sales and Marketing at AMAC, a rapidly growing finance company doing business in the Eastern half of the United States. Anyone wanting more information can contact AMAC at 704-882-7100 (ext. 7509) or visit their website at www. acemotoracceptance.com. www.fiada.com
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February 2017 — Independent Dealer — 23
Now Accepting 2017 Quality Dealer of the Year Nominations
I
t is tradition. It is accomplishment. It is the standard by which independent dealers measure their success and stature. It is the Quality Dealer of the Year award. FIADA is excited to announce that nominations are now open for the 2016 Quality Dealer of the Year. If you are (or know) a successful dealer that conducts business in an ethical manner and gives back to the community, then please send us your nomination. Nomination forms can be downloaded at www.FIADA.com and must be submitted by June 30 to qualify. Nominations will be reviewed by the Awards Committee at the FIADA July Board of Directors meeting. The Florida Quality Dealer winner will be announced at FIADA’s 2017 Convention (Oct. 5-7) at the Omni Orlando Resort at ChampionsGate. The FIADA Quality Dealer award recipient will then compete with other state quality dealers for the national quality dealer award at NIADA’s Convention in June 2018. What makes a quality dealer? The guidelines recommended by the 24 — Independent Dealer — February 2017
National Independent Automobile Dealers Association suggest nominees should: Display service to industry by 1. Supporting and serving their state association. 2. Supporting and serving their national association. 3. Demonstrate a willingness to be helpful in performing Association duties when asked by association leaders. 4. Display a willingness to serve the Used Motor Vehicle Industry though helpful service to fellow dealers by sharing his/her knowledge, talent and experience. 5. Willingness to make a commitment to attend their state and national Conventions. 6. Have the necessary credentials to compete at the national level. Be considered an outstanding business operator through: 1. A minimum of five years of experience as a successful licensed independent dealer and member of their state association and NIADA for no less than three years. The candidate must be the Dealer Principle or listed as
2.
3. 4. 5. 6. 7.
the President of the dealership corporation. Have a sanction free record with the state DMV, with no outstanding or unanswered complaints with the Better Business Bureau or Consumer Affairs division of the state Attorney General’s office. A dealership that reflects pride of ownership and is attractive in appearance. An outstanding reputation of good customer relations and handling complaints expediently. Operating in accordance with the NIADA Code of Ethics. Operating as a credit to the independent dealer community and industry as a whole. Customer and Employee testimonial letters, and business and personal letters of recommendation.
Demenostrate community service by: 1. Being involved in the affairs of his/ her local community. For more information or questions about applying for the Quality Dealer of the Year award, please call the FIADA office at (800) 237-0448. www.fiada.com
2017-2018 FIADA Quality Dealer Nomination Do you want to be considered for the FIADA Quality Dealer of the Year Award, or know of someone who should? Use this form to make a nomination. Please return to FIADA by June 30, 2017 by: Fax: 850-385-3251 | E-mail: info@fiada.com | Mail: FIADA, 1840 Fiddler Court, Tallahassee, FL 32308
Nominee Name:_________________________________________ Title:______________________________________ Name of Dealership:_________________________________________________________________________________ Address:__________________________________________________________________________________________ Website:__________________________________________________________________________________________ Phone:_________________________________________________ Email:_____________________________________ Why do you think this dealership is a quality dealer?
What are some of the dealership's accomplishments?
How is the dealership involved within their community?
Nominator Information: Your Name:________________________________________________________________________________________ Phone:_________________________________________________ Email:_____________________________________ www.fiada.com
February 2017 — Independent Dealer — 25
CONTINUING EDUCATION TRADE SHOW AWARDS BANQUET
Find out more at www.FIADA.com 26 — Independent Dealer — February 2017
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February 2017 — Independent Dealer — 27
LEGAL ROUND-UP
A Look At Current Legal Issues BY THOMAS B. HUDSON AND NICOLE FRUSH MUNRO, HUDSON COOK, LLC
A monthly collection of selected legislative and regulatory highlights, and a recap of some of the many auto sale and financing lawsuits followed each month. COMPLIANCE TIP Look both ways for compliance! Dealers always need to worry about compliance with state and federal laws as they enter into retail installment sales agreements and leases with their customers. But there’s another area of compliance that is sometimes overlooked. Dealers selling those RISCs and leases to finance sources do so on terms and conditions set forth in a document usually called a dealer agreement, and most dealers have such dealer agreements with several finance sources. Failure to comply with a dealer agreement can have very severe consequences – your dealership may have to repurchase all noncomplying contracts, for example. If you have not had a legal review of your dealer agreements, coupled with an audit of how well your dealership is complying with them, make that a priority for 2017. FEDERAL DEVELOPMENTS CFPB Announces Data Gathering Program. On December 15, the CFPB released a web-based tool - Consumer Credit Trends - to help track developments in consumer lending and forecast potential future risks. The “Consumer Credit Trends” tool tracks originations for mortgages, credit cards, auto financing, and student loans. The CFPB plans to include other consumer credit products and information on credit applications, delinquency rates, and consumer debt levels. The tool also charts lending to specific groups of consumers. The CFPB will update this information regularly and will offer analyses on notable findings as warranted. 28 — Independent Dealer — February 2017
According to the CFPB's news release, the information in the Consumer Credit Trends tool reflects changes in lenders' and consumers' behavior and will be a starting point for deeper analysis by the CFPB and others. What’s the CFPB Up To? On On December 16, the CFPB released its semi-annual report to Congress. The report provides an update on the CFPB's supervisory activities, enforcement actions, proposed and final rules, and publications for the period of April 1 through September 30, 2016. The Bureau also released its Fall 2016 rulemaking agenda detailing its current and upcoming initiatives. FTC Strikes on CPO Inspection Claims. On December 16, the FTC announced that CarMax, Inc., Asbury Automotive Group, Inc., and WestHerr Automotive Group, Inc. settled allegations that the dealerships touted their rigorous used car inspections, but failed to adequately disclose that some of the cars were subject to unrepaired safety recalls. The proposed consent orders prohibit the dealerships from claiming their used vehicles are safe, have been repaired for safety issues, or have been subject to safety-related inspections, unless the vehicles are free of open recalls or the companies clearly and conspicuously disclose that the vehicles may be subject to unrepaired recalls for safety issues and explain how consumers can determine whether a vehicle is subject to a recall for a safety issue that has not been repaired. In addition, following a public comment period, the FTC
approved final consent orders in similar cases against General Motors Company, Jim Koons Management Company, and Lithia Motors, Inc. that were settled earlier this year. FPB Releases Complaint Report. On December 27, the CFPB released its monthly complaint report, highlighting trends in the complaint data the CFPB receives through its Consumer Complaint Database. The report includes complaint data by company, overall complaint volume and complaint volume by state, and other trends in the data. Each month, the report spotlights complaints about a particular issue and complaints from a particular geographic location. The December 2016 report focuses on complaints related to debt collection and highlights complaints from consumers residing in Arizona. Buyhere, pay-here dealers need to pay attention to the CFPB’s actions on debt collection. CASE OF THE MONTH Arbitration Clause Not Incorporated into Vehicle Sales Contract Where Checkbox Acknowledging Arbitration Clause Was Not Checked We urge dealers to have a formal checklist to use in completing a deal jacket. One of the items on the checklist should be to ensure that signatures and initials appear when they are supposed to. Our Case of the Month illustrates what happens when this sort of quality control breaks down. Car buyers sued the dealership where they bought their car. The dealership moved to compel www.fiada.com
arbitration under an arbitration clause in the sales contract. The front page of the contract stated that additional terms and conditions were on the reverse side. The buyers' signatures appeared at the bottom of the front of the contract beneath a sentence that stated that they had read all pages of the agreement and agreed to all terms and conditions. Directly above that sentence was a checkbox with the sentence: "Buyer acknowledges that if this box is checked, this agreement contains an arbitration clause." The box was not checked. The arbitration clause was located on the back of the contract under the heading "additional terms and conditions." The trial court denied the dealership's motion to compel arbitration, and the Court of Appeals of Missouri affirmed. The appellate court concluded that the buyers did not agree to arbitrate. The appellate court found that the plain meaning of the sentence next to the checkbox was that if the box was checked, the
arbitration clause on the back of the sales contract was included as a term in the sales contract. Because the box was not checked, the arbitration clause was not incorporated into the sales contract. The appellate court rejected the dealership's argument that, even though the box was not checked, the buyers agreed to be bound by all of the terms and conditions on both sides of the contract, including the arbitration clause. The end result? The lack of quality control cost the dealership an important defensive tool – the ability to force the buyers to arbitrate their claims. See Stubblefield v. Best Cars KC, Inc., 2016 Mo. App. LEXIS 1211 (Mo. App. November 22, 2016). Tom (thudson@hudco.com) and Nikki (nmunro@hudco.com) are partners in the law firm of Hudson Cook, LLP. For information, visit www.counselorlibrary. com. Copyright CounselorLibrary. com 2017, all rights reserved. Single publication rights only, to the Association. (2/16). HC# 4848-8454-3277.
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February 2017 — Independent Dealer — 29
INDUSTRY NEWS Employee Eligibility Verification and I-9s With a lot of news and attention focused on immigration issues, it may be a good idea to review the federal requirements for employee eligibility verification:
Charleston Auto Auction Opens Reconditioning Center With Special Event
Which Form I-9 should I Use? Beginning Jan. 22, 2017, employers must only use the revised version Form I-9, Employment Eligibility Verification, dated 11/14/2016, to verify the identity and work eligibility of every new employee hired after Nov. 6, 1986. Which Form I-9 should I use for reverification? Reverification of expiring employment authorization for existing employees must be completed using the revised version, dated 11/14/2016. On or after Jan. 22, 2017, will prior versions of Form I-9 be valid for use? Prior versions of the form will no longer be valid for use. What should I do with the previously completed Form I-9? Employers should continue to follow existing storage and retentions rules for all of their previously completed Form I-9. Are there penalties? Employers who fail to use Form I-9 (11/14/2016 N) on or after Jan. 22, 2017 may be subject to all applicable penalties under section 274A of the Immigration and Nationality Act, 8 U.S.C. 1324a, as enforced by U.S. Immigration and Customs Enforcement (ICE). Where can I find the latest Form I-9 and more information? • Visit I-9 Central • Join a free Webinar • Request a customized webinar for your business. Don’t forget to Like us on Facebook! www.facebook.com/FLIndAutoDealersAssoc 30 — Independent Dealer — February 2017
Charleston Auto Auction’s Reconditioning Center Grand Opening was held on Friday, January 20. The celebration event kicked off with a full southern style breakfast provided to all in attendance. A ribbon cutting for the 6,500 square foot detail and reconditioning center continued the day’s activities. Over 1000 vehicles of all types crossed the block in six actionpacked lanes including new clients US Bank and Southeast Toyota Finance. “We are excited to have our new detail and reconditioning facility open.” said General Manager Laura Taylor. “Our added resources will support our institutional clients including our newest clients – Westlake, US Bank and Southeast Toyota.” The day’s events concluded with a $10,000 late bird drawing.
PassTime Hires New VP of Sales Southeast Region PassTime announced it has hired J. Blair Witter as the company’s new VP of Sales, Southeast Region. Witter brings with him decades of industry experience, coming from Credit Acceptance, the 6th largest used car finance company in the U.S. Witter worked at Credit Acceptance for nearly 11 years, serving as a Market Area Manager, and more recently, Director of Sales. www.fiada.com
2016-2017 FIADA EXECUTIVE COMMITTEE:
LISA COMPAGNO President Palm Tree Auto Sales Stuart, FL (772) 288-2099
JIM WINTERICK, SR. Chairman of the Board Gulfstream Motor Credit Miami, FL (305) 253-2335
STEVE MARBAIS, CMD GEORGE HICKEY Regional Vice President Regional Vice President Bond Auto Sales, Inc. Marbais Enterprises, Inc. Ocoee, FL Tampa, FL 33604 (407) 877-7422 (813) 238-7478
CHRISTOPHER LEEDOM BRAD JOEL Secretary Treasurer AutoMaxx Splish Splash Auto Sales Sarasota, FL Princeton, FL 33032 (941) 309-1111 (305) 258-1191
BRANDI NOEGEL DINO MERCURIO Regional Vice President Regional Vice President Noegel’s Auto Sales Independent Credit, Inc. Starke, FL West Palm Beach, FL (904) 964-6461 (561) 686-8673
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FRANK FUZY Regional Vice President Century Motors of S. Fla., Inc. Pompano Beach, FL 33064 (954) 785-0369
SCOTT LANIER, CMD Senior Vice President Credit Cars Orlando, FL 32808 (407) 295-6211
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February 2017 — Independent Dealer — 31
MANHEIM FLORIDA ALWAYS NEARBY.
Manheim Daytona Beach 1305 Indian Lake Road Daytona Beach, FL 32124 386.255.2500 Sale: Wed 3 PM Total Resource Auction every Wed 2:30 PM Manheim Fort Lauderdale 5353 S State Road 7 Davie, FL 33314 954.791.3520 Sale: Fri 9 AM Total Resource Auction Tue 9 AM Ford Open Sale every other Fri Manheim Fort Myers 2100 Rockfill Rd Fort Myers, FL 33916 239.476.9800 Sale: Wed 4 PM Total Resource Auction every other Wed 3 PM Specialty Sale last Wed monthly 2 PM Galloway Direct Off Site Sale 2nd & 4th Tues 12 PM Manheim Jacksonville 10817 New Kings Rd Jacksonville, FL 32219 904.768.9981 Sale: Thurs 1 PM Total Resource Auction every Thurs 12:40 PM Manheim Lakeland 8025 N State Road 33 Lakeland, FL 33809 863.984.1551 Sale: Wed 2 PM Specialty RV/Boat Sale 1st Wed monthly 9 AM
32 — Independent Dealer — February 2017
Manheim Orlando 11801 W Colonial Dr Ocoee, FL 34761 Sale: Tues 9 AM Highline Exotic Sale Kicks off every 4th Tues 11 AM with Mercedes & BMW Chrysler Closed Factory Sale bi-weekly on Mon 12:30 PM GM Closed Sales bi-weekly on Mon 1 PM Nissan Infiniti Closed Sale 1st Wed monthly 9 AM Manheim Palm Beach 600 Sansbury Way West Palm Beach, FL 33411 561.790.1200 Sale: Thursday 9 AM Exotic Highline Sale every 4th Wed 9:30 AM Manheim St Pete 14950 Roosevelt Blvd Clearwater, FL 33762 727.531.7717 Sale: Thurs Weekly 2:30 PM inops Regular Sale 3 PM Manheim Tampa 401 S 50th St Tampa, FL 33619 813.247.1666 Sale: Thursday 9 AM Total Resource Auction Mon 9:30 AM at Cone Road location Ford Factory Sale every other Wed 10 AM Manheim Caribbean 1050 Carretera 865 KM 4.7 Bo. Candelaria Toa Baja, PR 00949 787.261.7300 Sale: Thurs 12 PM Salvage Sale Thurs 11 AM
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Manheim Central Florida 9800 Bachman Rd Orlando, FL 32824 407.438.1000 Sale: Wed 9 AM Total Resource Auction Wed 8:30 AM “Manheim Imperial Nights” Sale Tues 4 PM Specialty Heavy Truck & Equipment Sale Second Thurs Monthly at 10 AM
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