Iowa Auto Dealer (Fall/Winter 2015)

Fall/Winter 2015

valuations

FROM THE PRESIDENT

welcome to iowa auto dealer

Bruce Anderson IADA President

Welcome to the re-launched and re-imagined 21st century version of the Iowa Automobile Dealer Association’s magazine. I hope you enjoy this inaugural edition. It is written, designed, and even named for you— the Iowa auto dealer. It has been more than 30 years since IADA has published this magazine. The last time we sent out an edition of Iowa Auto Dealer fax machines were a novelty and the Internet was a theoretical concept being tested for military and academic applications. Back in those days magazines were an essential way for trade associations to communicate with their members. I am convinced that they still are. Magazines serve an important role, one that has been missing at IADA for too long. They occupy a special place somewhere between the pressing timeliness that characterizes newspapers and the permanent archives that are books. Magazines are more accessible and reader-friendly than books, and they have a longer “shelf-life” than a daily newspaper. Something else I like about magazines is that they are portable. I grew up in a home where things were shared. Being the younger brother, I often wore hand-me-down clothes. It was the same with magazines. As a Cub Scout I always read Boy’s Life after my brother the Boy Scout was finished with it. I had to wait to read the other magazine titles in our house, too. My dad’s Newsweek, Grandpa Dewey’s Wallace’s Farmer, Grandma Minnie’s Reader’s Digest, and especially Grandpa Keith’s Mechanix Illustrated all eventually found their way into my hands. They were the textbooks of my childhood. What I really like about magazines is that they’re durable. Almost permanent. The content of Iowa Auto Dealer is designed to be both timely and timeless. I hope you will find articles here that are helpful and relevant to you today. I also hope that you will keep your copy of this magazine to read again later or to share with others in automotive retailing. But the best thing about magazines is that they are responsive to their readership. The really good ones reflect the interests, needs, and passions of their readers. Every edition of Boy’s Life had the “Hitchin’ Post” section where Scouts’ letters to Pedro the donkey (who supposedly wrote the magazine) were answered. While I always suspected that Grandpa Keith subscribed to Mechanix Illustrated because of Mimi the Gadget Girl, my favorite section was “Your Invention Clinic,” which was fueled by the ideas and interests of the readers. Iowa Auto Dealer has a key advantage over other magazines when it comes to being responsive to its readers. It is published by your trade association. The publisher is owned by and operated for the benefit of Iowa’s automobile dealers. Everyone who works here knows your business model and goes to work every day to make your dealerships more valuable and profitable. You can help us do that by letting us know how you like Iowa Auto Dealer and what you would like to see in the next edition.

FALL/WINTER 2015  1

DEPARTMENT TITLE

in this issue

1111 Office Park Road West Des Moines, Iowa 50265 p: 800.869.1900 f: 515.226.1988 CHAIRMAN Jeff Weber VICE CHAIRMAN Brad Deery PRESIDENT Bruce Anderson SECRETARY Jim O’Halloran TREASURER Jeff Finch DIRECTOR AT LARGE

Mike Clemons

DIRECTOR AT LARGE Scott Deter HEAVY DUTY TRUCK DIRECTOR

Jon McCoy

INDEPENDENT DIRECTOR

departments

DISTRICT ONE DIRECTOR

01

Dale Finch Jeff Haun

DISTRICT TWO DIRECTOR

Doug Krieger

DISTRICT THREE DIRECTOR

Matt Brown

DISTRICT FOUR DIRECTOR

John Gookin

NADA DIRECTOR Mark Birdnow

from the president Welcome to our new magazine!

04

five things DOT’s Trombino in the hot seat.

06

pro tip On-hold mistakes can be costly.

08

show & tell Employee program trains dealership leaders.

EDITOR Brittany Bungert CONTRIBUTING DESIGNER

Michelle Leland

Iowa Auto Dealer is a bi-annual magazine produced for members of the Iowa Automobile Dealers Association. For advertising information, contact Brittany Bungert at 515.226.1900. Cover Photo: The Chamberlain Building on Des Moines’ historic Auto Row provides the perfect backdrop for classic cars during the Des Moines Concours d’Elegance. PHOTO BY TIM BUNGERT

2 IOWA AUTO DEALER

09

q&a Social media strategies for dealerships.

32

the close Iowa’s role in electric vehicle history.

10

iad foundation Scholarship winner lives his dream.

features

12

dealers’ guide to effective advocacy Get ready for the legislative session with these helpful tips.

14

out with the old When dealerships move, what happens to the buildings left behind?

22

wellness works Employee wellness programs are good for workers—and for business.

28

the consumer protection act Iowa’s motor vehicle franchise act is important for dealers and consumers alike.

FIVE THINGS

five things from paul trombino What the Department of Transportation Director wants Iowa’s automobile dealers to know.

1

Assure that you are investing enough time and resources into your hiring process. As you look to hire new employees, be mindful of not only the applicant's skill set but also their employment history, especially as it relates to criminal behavior. Iowa law prohibits anyone from being employed by or associated with a licensed motor vehicle dealer for five years after conviction of an indictable offense related to the selling of motor vehicles or other motor vehicle-related activity. Please do your due diligence when hiring.

PHOTO COURTESY OF THE IOWA DEPARTMENT OF TRANSPORTATION

2

4 IOWA AUTO DEALER

Invest in education. Do you have employees who are new to the motor vehicle sales business? Would you like to sharpen your knowledge of the rules and regulations of motor vehicle sales? We encourage all dealers to regularly train their employees on how to avoid pitfalls that can occur during motor vehicle transactions. The Iowa Independent Automobile Dealers Association offers dealer education classes for all licensed motor vehicle dealers. Please make plans for your employees to attend these classes. The information taught in these classes pertains to all motor vehicle transactions. Visit the following website to learn more: iowaiada.com/en/dealer_education.cfm Editor’s Note: Only non-franchised dealers are required by Iowa law to attend the dealer education classes offered by the Iowa Independent Automobile Dealers Association. IADA encourages franchised dealers to take advantage of education opportunities offered by IADA, by NADA, and through their manufacturers.

3

Know when a sale is final. A frequently asked question by dealers is: How do I back out of a motor vehicle title transfer when the sale transaction is complete and the vehicle has been delivered to the new owner? The short answer is Iowa law does not allow

FIVE THINGS

a title transfer to be negated in such a scenario. In this situation, the title transfer must be completed and refunds may be applied for in an attempt to recover applicable registration fees paid. This is a good reminder to make sure everything is complete and agreed upon before finalizing a sales transaction.

4 5

Iowa dealer licensing laws are in place to provide protection to both the public and motor vehicle dealers when making motor vehicle sales transactions. A licensed dealer may be asked by friends to allow them to buy and sell vehicles off of their dealer license at other locations. A dealer may be tempted to obtain an extension lot license to help a friend get into the motor vehicle sales business. Vehicles bought and sold under the name of a licensed dealer are the responsibility of the licensed dealer. Violations that occur from transactions done under the licensed dealer’s name will impact the dealer license and, if serious enough, may cause the dealer to lose their license. So please be careful! Technology has changed the way motor vehicle sales are transacted today. A dealer must be savvy to catch the eye of a potential buyer, as many buyers research on the Internet before visiting the dealership. As regulators of the motor vehicle dealer licensing laws, we understand technology allows for communication and transactions that were never thought about when most licensing laws and rules were written. We welcome the opportunity to hear from you as to how current laws and regulations function given today's technology. Please share your thoughts or comments at 866.908.4636 (toll free) or invbureau@dot.iowa.gov. Paul Trombino is the director of the Iowa Department of Transportation. He has served in that role since 2011. Prior to his appointment, Trombino worked for the Wisconsin Department of Transportation.

Who Should We Talk to Next? In each issue of Iowa Auto Dealer, we ask a key regulator, legislator, or government official what five things they would like to tell Iowa’s auto dealers. If you have a suggestion for who we should talk to next, let us know! Email your suggestions to Brittany Bungert at bbungert@iada.com.

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FALL/WINTER 2015  5

PRO TIP

hold, please

Make the most of the time customers spend on hold. A customer calls your dealership and needs to be transferred to the service department. What does she hear while the call is being transferred? If you answered “Nothing,” “I don’t know,” or “Music” it’s time to re-evaluate your on-hold messaging strategy. “Most businesses try not to put people on hold,” says Chad Haskell of Works24, a digital on-hold messaging provider. “This is common practice, but in reality most businesses still have to place people on hold or transfer customers between departments.” The key is making the most of that time. “On-hold messaging is often your clients’ first impression,” Haskell says. “A business takes good care of the appearance of the facility because people notice cleanliness and a nicely landscaped yard. When people don’t walk into your business, their first impression is often during a phone call.” The caller experience is an important part of good customer service, says Bryant Wilson, chairman of the On Hold Messaging Association. “On-hold messaging is a vital part of an engaging caller experience—especially in a competitive marketplace.” Keep these do’s and don’ts in mind when planning your on-hold messaging strategy. DO CHANGE YOUR MESSAGING FREQUENTLY. When you manage your on-hold messages digitally, there’s no reason why you can’t update messages with new promotions on a regular basis. DON’T HAVE SILENCE WHEN A LINE IS PLACED ON HOLD. “Clients perceive their wait time to be much greater

when they hear silence on hold and often wonder if they have been cut off,” Haskell says.

DO THINK OF ON HOLD AS A KEY PART OF YOUR ADVERTISING, BRANDING, AND MARKETING. “Businesses

spend a lot of marketing dollars on external communication to try to get new customers in the door, but often underestimate the power of internally communicating and cross-promoting to loyal customers that already use their products and services,” says Haskell. Wilson agrees. “Many businesses fail to anticipate their complete customer journey. Marketing is more than just an email campaign or direct mail piece. Most marketing is designed to create an action that causes a prospect to connect with a brand. Many times, businesses focus solely on creating those inbound connections, but that’s where the effort stops—leaving a significant hole in the customer experience. Businesses should ensure that when prospects connect with their business the experience is all inclusive, from the initial advertisement to the way their call is handled.”

6 IOWA AUTO DEALER

Still playing the radio on hold? Stop! Not only might you be giving your competitors’ commercials airplay to your customers, but rebroadcasting the radio over your phone is also against the law.

PRO TIP DON’T FORGET ABOUT ON-HOLD MESSAGING JUST BECAUSE YOU NEVER GET PLACED ON HOLD.

Out-of-sight, out-of-mind is never a good business strategy. “Statistically speaking, 70% of all business calls are placed on hold, making hold time nearly inevitable,” says Wilson. “Adjusting to that mindset will result in a marketing strategy that anticipates every call, including the on-hold experience.” DO CREATE CUSTOM MESSAGES.

Some services provide generic messages for their customers to use, which can be nice to include in the mix. But make sure to create messages specific to your dealership and promotions. “Studies reveal that 84% of callers want to hear information that’s relevant to their call,” says Wilson. “We live in a day and age where people want to be educated and informed. Strategically include informative and fresh content in your message in a voice that accurately represents your brand presence. This

will create deeper connections with your customers.” DON’T JUST PROMOTE YOUR DEALERSHIP IN YOUR MESSAGES.

Include trivia and fun facts in your on-hold mix. “We have had numerous clients tell us they have had customers request to be placed back on hold because they wanted to finish listening to a message or piece of trivia,” Haskell says.

DO COMBINE MUSIC WITH SPOKEN MESSAGES. “Music by itself

can’t articulate the distinctive elements of a brand or promote a dealer’s unique offerings in a particular market,” Wilson says. “By combining voice and music elements, dealers can capture a caller’s attention, deepen interest, and target specific actions.” DON’T INCLUDE EMPTY STATEMENTS. “It’s best to remove

may sound counterintuitive, but in reality such statements are an outdated approach that actually draws attention to the fact that the callers are still holding,” Wilson says. Focus your efforts on messages that are relevant, creative, and in your brand’s voice. DO THINK FROM THE VANTAGE POINT OF THE CALLER. According to

Wilson, “People hate to be sold but love to buy. So focus on what your callers want to hear.”

Find Out More Works24 is IADA’s preferred provider for on-hold messaging services. Contact Chad Haskell at chaskell@works24.com or visit works24.com for more information.

empty statements such as ‘Thank you for holding,’ ‘We appreciate your call,’ and ‘Your call is important to us.’ This

Dealers make a difference.

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Invest in the future. Contribute today. Since 1998, the IAD Foundation for Education has awarded more than 200 scholarships to students across Iowa. To learn more about the Foundation visit IADA.com/FoundationForEducation.aspx or email mcason@iada.com.

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FALL/WINTER 2015  7

SHOW & TELL

leading by example

Not everyone is going to be a manager, but anyone can be a leader. That simple philosophy, empowering everyone from lot attendants to store managers, is embraced at the McGrath Family of Dealerships. In 2014, the dealership group created an Emerging Leaders Class to help foster leadership among non-management employees. The inspiration for the class came during a conversation with the COO of Van Meter Inc. The Cedar Rapids company had created an emerging leaders class, and COO Lura McBride reported great success with the program. So Gavin McGrath, Lindsay McGrath, and Murphy McGrath set out to create a class of their own. The three McGraths wanted the class to be a select group, so they designed a three-phase application process. Each applicant wrote an essay, had a manager sign off on their application, and took part in an interview. From the more than 40 applicants across the dealership group’s stores, 25 were selected to be part of the inaugural group. The Emerging Leaders Class met over the lunch hour twice a month for ten months, reading and discussing books on varying leadership styles, from John Maxwell to John Wooden. They toured area businesses, and University of Iowa Wrestling Coach Tom Brands spoke to the class. “All of the curriculum was based on how you can be a better leader,” says Jason Stratton, who took part in the inaugural class. Stratton found himself inspired to incorporate different aspects of each leadership style into his own daily work. He was promoted to a management position after beginning the program and credits the program

8 IOWA AUTO DEALER

PHOTO COURTESY OF MCGRATH FAMILY OF DEALERSHIPS

Inspired by a local company’s success creating a leadership class for employees, the McGrath Family of Dealerships implemented a course of its own.

The inaugural Emerging Leaders Class at their graduation.

with his success in his new role. “When I went into management, I had a leg up on someone who didn’t go through the program.” The goal of the program isn’t to help participants get promoted to management, although nearly half of the inaugural class earned promotions during or after the class. Stratton points out that the opportunity to go through the class and demonstrate character and work ethic is a chance to get noticed by dealership managers. Gavin McGrath saw similar benefits for the dealership. “It’s to help us grow our bench, if you will,” he says. The class also provided an opportunity to reinforce McGrath values. “Leadership isn’t always what people think,” says McGrath. “We want people

that are servants, who will take a bullet for their people, so to speak. Who will never ask people to do things they won’t do themselves.” At the end of the program, 22 classmates graduated by giving 10-minute speeches on what the past year had meant to them. What McGrath found particularly heartening was that everyone took something different away from the class. And because of the success of the initial group, the dealership decided to offer the program every year. Stratton, noting that program members often brought what they were learning back to their departments, says the program benefits more than just those in the class. “It’s great for everyone, from lot attendants to Pat McGrath himself.”

Q & A

going social

Three experts weigh in on social media strategy for dealerships.

Q:

I’ve seen a lot of dealerships posting their inventory on Facebook and Twitter. Should my dealership be doing this? If not, what should we post? What best practices should we be following?

A:

Too often when dealers decide to jump onto social media, their first action—often the easiest—is to simply post a feed of their inventory. However, you need to remember things from the users’ perspective. When you arbitrarily post your inventory to Facebook and Twitter, it’s the online equivalent of walking up to a new visitor in your showroom and rattling off all of the cars you have on your lot before they can say a single word. Social media is about having two-way conversations and providing helpful content. Instead of rushing to sell a car immediately today, focus on listening, learning, and engaging. The relationships will bear more fruit than the quick blast of your inventory feed.

Meet the Experts

NICK WESTERGAARD Chief Brand Strategist | Brand Driven Digital | branddrivendigital.com

The exciting thing about social media is that it can be whatever you want it to be. We don’t post our dealership client’s inventory specifically, but we frequently remind our audience that the inventory changes and grows daily. Our focus is less about informing our fans of which cars the dealership has at this precise moment and more about instilling trust that every car on the lot will be sold and serviced by the best, hardest-working professionals in the area. We want to make the dealership relatable, to get people excited about stopping by, so we show off the personality of the people and the features of the cars. If a vehicle wins a national safety award or has the best fuel-economy in its class, that’s the type of thing we want to spread the word about. As far as best practices, come up with a strategy, stick to it, and then test it. A Facebook page or Twitter feed needs to be a living thing; you can’t just set it and forget it. If it worked last week, try it this week but don’t be surprised when it doesn’t work as well. Move your post times around, try posting on weekends or not during business hours. Respond to everything and respond quickly. Social media is an incredible customer service tool but you have to make sure you respond the same way as you would if somebody came through your dealership door with a complaint. The customer is always right, even online.

Nick Westergaard Brand Driven Digital

KATIE PATTERSON Owner/Founder | Happy Medium | itsahappymedium.com

I’m not going to discourage dealerships from participating in Throwback Thursdays or posting fun questions to engage their followers on Facebook or Twitter, but I also recognize that they’re in the business of selling cars and posting their inventory on Facebook and Twitter is essentially free advertising. If you have a solid following on social media, why not use that to your advantage? It is more difficult to measure success on Twitter, but with Facebook, I’ve seen dealerships experience tremendous success when posting from their inventory. When you promote a post on Facebook with a budget as small as $25, you can reach more than a thousand potential car buyers in your area. You’d be hard pressed to find more cost effective advertising than that.

Katie Patterson Happy Medium

BLAKE RUANE Digital Content Specialist | Mudd Advertising | mudd.com

Have a suggestion for our next Q&A?

Submit your questions to bbungert@iada.com.

Blake Ruane Mudd Advertising

FALL/WINTER 2015  9

IOWA AUTOMOBILE DEALERS FOUNDATION FOR EDUCATION

scholarly success Growing up on a farm, Matt Fullerton was always interested in the machinery and equipment that was a part of daily life. That love of all things mechanical evolved into an interest in cars, and, as he began thinking about life after high school, a desire to pursue a career in the auto industry. “When I decided to go into this field, I had in mind specializing in the General Motors products,” Fullerton says. “So DMACC was the clear choice for me because of the programs they have to offer.” Jerry Burns, head of the automotive program at Des Moines Area Community College (DMACC), remembers meeting Fullerton as he applied for the GM Automotive Service Educational Program (ASEP). “I could tell during Matt’s interview that he was very dedicated to doing the best he could in the automotive field,” Burns says. Fullerton completed the GM ASEP program while interning at Mike Molstead Motors in Charles City. The internship portion of the GM ASEP program includes having an instructor oversee the internship, meeting with the service manager and student’s mentor at the dealership. Burns worked with Fullerton during one of his internships at Mike Molstead Motors and remembers the site visit as an especially positive experience. “Both the service manager and mentor had nothing but good things to say about Matt,” Burns says. Going to college is expensive—especially when you need to purchase tools. And Fullerton quickly figured out that purchasing tools while you’re still in school is the way to go, since manufacturers offer significant student discounts to make the pricey purchase a little more affordable. Another way he helped pay

10 IOWA AUTO DEALER

PHOTO COURTESY OF MATT FULLERTON

A Foundation for Education scholarship recipient paves his way in the auto industry.

for school and tools was through scholarships from the Iowa Automobile Dealers Foundation for Education. He initially learned about the $2,000 scholarships when a high school guidance counselor approached him and suggested he apply. “I read about it and thought [applying] was a good idea,” Fullerton says. “It’s a huge scholarship, so it helped me out a lot during school.” He was eligible to receive the scholarship his second year in school, so he applied again. This time, he received the George White Memorial Scholarship, which is awarded to one student each year who demonstrates a strong commitment to the auto industry. Since graduating from DMACC, that commitment to the industry—and furthering his training—has only deepened. He contacted Burns after graduation for information on signing up to take Automotive Service Excellence (ASE) Certification Tests, and, according

to Burns, soon will become an ASEcertified automotive technician. Burns also sees Fullerton at DMACC’s GM training center on a regular basis, where he takes classes to learn about new and upcoming vehicle technologies. “It would not surprise me to see Matt become a GM World Class Certified Technician in the very near future,” Burns says. A few years into his career, Fullerton is considered to be one of the Foundation’s success stories. His commitment to the industry and the dealership that supported him throughout his schooling continues to grow and he still finds himself fascinated by the cars he gets to work on. “I like being able to know how the new systems work,” Fullerton says. “I know some of the people that got out of the game think these new cars are so in depth, but to me staying with the new stuff you see every day—I’m not scared of it.”

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DEALERS’ GUIDE TO EFFECTIVE ADVOCACY

dealers’ guide to effective advocacy Advocating for a cause—especially when it’s something that impacts your day-today business—is an art form, but it’s one in which everyone has the potential to become proficient. Although IADA is at the state capitol every day when the legislature is in session, there may be times when dealers need to discuss issues and proposals directly with their senators and representatives. Keep these tips in mind when it’s time to talk with your local legislators. BE HONEST. “The quickest way to lose all credibility and create ill will is to mislead a legislator,” says IADA Legislative Counsel Scott Sundstrom of Nyemaster Goode PC. “Your reputation is everything with them. If you don’t know the answer to something, say so and ask IADA to get you the information you need.” BE RESPECTFUL. “Most IADA issues are not partisan, so whether a legislator has a D or R after their name isn’t particularly important when talking about issues of concern to dealers,” Sundstrom says. “Getting angry or condescending will never help convince a legislator to support you.” BE CONCISE. Legislators are busy and have to focus on a number of equally important issues. Quickly explain your concern and make your request. If possible, identify the House or Senate file number or amendment number so the legislator will connect your request with the legislation. BUILD RELATIONSHIPS. Get to know your legislators before you need something. “Legislators want to get to know constituents, especially high-profile community members like dealers,” Sundstrom says. “Invite them to your store for a cup of coffee when the legislature isn’t in session.” A few years ago,

12 IOWA AUTO DEALER

PHOTO BY TIM BUNGERT

Top tips for talking with legislators.

“Most IADA issues are not partisan, so whether a legislator has a D or R after their name isn’t particularly important when talking about issues of concern to dealers.” Scott Sundstrom Sundstrom recalls, a dealer did a good job of cultivating a relationship with his local legislator, who happened to be in leadership. When the time came, that dealer was able to get the legislator’s commitment in support of IADA based in large part on that long-standing relationship. LISTEN. “Just like selling a vehicle, effective advocacy requires listening so that you can learn and respond to questions and concerns,” Sundstrom says. “Additionally, legislators, like all

politicians, are very good at saying ‘no’ without saying ‘no.’ Listen carefully when they respond to you so that you know if they really support your position and, if not, why.” SAY THANK YOU. Good manners go a long way. After a phone call or visit with your legislator, follow up with a thank you note. If appropriate, you can use that note to briefly summarize the points you made in your conversation. And always make sure to thank your legislator after a favorable vote.

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out with the old Dealership buildings find new life years after the cars hit the road.

14 IOWA AUTO DEALER

In the days before franchised car dealerships were built to manufacturer specifications, dealership architecture varied greatly. And as dealer needs changed, businesses moved—or closed—leaving behind structures that had outlived their usefulness. Oftentimes, those buildings were demolished, but in some cases the buildings were renovated, refurbished, and rejuvenated, finding new purpose beyond their original intent. Innovative business owners looked past empty showrooms and service bays, with a vision for what could be and a respect for what has been. Buildings that once were filled with the newest models now house everything from winemaking equipment to trendy restaurants and tech companies to police stations. At least five former dealership buildings in Iowa are on

the National Register for Historic Places. Others are not eligible for that distinction, but are notable nonetheless. Each played an important role in the development of the robust auto industry that dealers enjoy today. Through restoration and renovation, these new businesses occupying the former dealerships are able to keep an important part of Iowa’s automotive heritage alive.

The interior of Santa Maria Winery used to be a dealership showroom. Today you’re more likely to taste their newest wines than see the newest models when standing in the space that used to feature Fords, Chevrolets, and Chryslers. PHOTO COURTESY OF JOHN GUINAN

FALL/WINTER 2015  15

PHOTOS COURTESY OF JOHN GUINAN

OUT WITH THE OLD

The exterior of Santa Maria Winery looks much as it did when the building was constructed in 1913.

Santa Maria Winery, Vineyard & Event Center, Carroll Former Dealerships: Swaney Automobile Company, Mackey Motors, Whaley Motors, McCoy Motors, Wittrock Motor Company Year Built: 1913 Renovation Architects: Don Seymour, Lisa Kirsch

When John and Rose Guinan walked into the former Wittrock dealership in downtown Carroll, their jaws dropped. The couple, working to launch their Santa Maria wine label with a vineyard in nearby Willey, had been searching for a location for the winery. And in the empty building that once housed Ford, Chevrolet, and Chrysler dealerships, they found the future home of their business. “As soon as we looked at it, we decided in about 15 minutes that was where we wanted to be,” John Guinan says. “We’d driven by the Wittrock building for about two years, but thought that it was too small for what we wanted to do.” But much to the Guinans’ delight, the building was 20,000 square feet plus a 5,000-square-foot parking lot—plenty of space for what they had in mind—and the Wittrocks, led by Michael Wittrock Sr., had invested in restoring and preserving that space. The Guinans fell in love with the character of the building,

16 IOWA AUTO DEALER

The building originally housed Swaney Automobile Company Four other dealerships made it their home until 2005, when Wittrock Motor Company moved out.

from the original lights in the showroom to the stamped copper ceiling. But converting the building into a winery and event center wasn’t without its challenges.

OUT WITH THE OLD

What’s In A Name?

Santa Maria Winery is paying homage to its automotive roots with a trio of wines featuring classic cars on the labels. “When you’ve got a winery or a business like this, the story is really a very important part,” Guinan says. “People are looking for experiences. And when we do a tour and tell people about the winery being a former Ford assembly plant, they’re just fascinated.”

Additional steel structure had to be installed to accommodate the heavy wine-making equipment.

“The due diligence informed us that we had oil from the old underground tanks from back before 1970, so we had an issue with the EPA for that, and then we had asbestos in the east building,” Guinan says. They had to properly dispose of the asbestos and install monitoring wells for the old tanks. “The thing that almost upended us was the DNR with the issues about the residual fuel in the ground and the prospect of having to do a clean-up of the facility because of all the petroleum that was left behind,” Guinan says. “We were basically harmless landowners, but the fact was that we may be responsible for any cleanups if it turns out that the petroleum was leaking toward or progressing toward underground water supply or anything like that. We almost put a stop to the whole thing, almost couldn’t get it done because of the DNR. That was a pretty close call.” And if that wasn’t enough, the floor in the east building, where the Guinans planned to put the winemaking equipment, wasn’t strong enough to hold the tanks and other equipment. They had to re-engineer the basement and install additional steel structure below the floor to accommodate the heavy equipment. Once they cleared those hurdles, though, the winery moved along at a swift pace. From start to finish, the process of converting the dealership into a winery and event center took just 16 months. “It was like the building was waiting to be a winery all along,” Guinan says. Fate had its hand in another aspect of their business, as well. The restaurant, which has been named one of the top places to eat in the Midwest by Midwest Living magazine, was never intended to be as robust as it is today. The Guinans had planned to offer catering for the event center and put in a full commercial kitchen. To offset the costs, they decided to offer a small sandwich menu. “We opened and people were lined up down the street, and all they wanted to do was eat,” Guinan says. “Apparently everyone in Carroll knew it was going to be a restaurant but us.” Customers began asking for more selections than just cold sandwiches, so the Guinans expanded the menu. “We got pulled kicking and screaming into the restaurant business,” Guinan says. “If you ever want to make God laugh, tell him your plans.” Santa Maria Winery, Vineyard & Event Center | santamariawinery.com 218 West 6th Street, Carroll | 712.775.2013

FALL/WINTER 2015  17

OUT WITH THE OLD

The Chamberlain Building and 1408 Locust Street, Des Moines Former Dealerships: Manbeck Motors a n d Ta y l o r Mo t o r C a r C o m p a ny (Chamberlain Building), Hudson-Jones Automobile Company, Kruidenier Cadillac (1408 Locust) Year Built: 1917 Renovation Architects: RDG

Before developer Jack Hatch purchased 1312 and 1408 Locust Street in downtown Des Moines, the city planned to raze the buildings in the historic Auto Row for a corporate headquarters. After the prospective corporation decided not to come to Des Moines, Hatch took a gamble on the former Manbeck Motors and Kruidenier Cadillac buildings. “It was a big political jump ball if we could save it,” Hatch says, “and then I’d

18 IOWA AUTO DEALER

have to agree that the city was very helpful in helping us once we bought it and told them what we wanted to do.” The former Manbeck Motors building, known as the Chamberlain Building, was designed by notable architects Proudfoot, Bird & Rawson, which made it eligible to be on the National Register of Historic Places. The Kruidenier building next door, however, was not. “It was designed by two people who were with them [Proudfoot, Bird & Rawson] and went out on their own, but didn’t reach the level of notoriety, so we couldn’t get it certified,” Hatch says. Facing the inability to get historic preservation tax credits for the building, Hatch opted to focus less on preserving the historic character of the Kruidenier building and instead worked with major tenants Flynn Wright and Microsoft to create a modern workspace, with the tile floor the

“It’s really important for a city to save as many old buildings as possible so you remember the fabric of a city, of the history and what came before you.” Jack Hatch only obvious remnant from the dealership. Since the Chamberlain Building was eligible for historic tax credits, a significant effort was put into preservation. Everything from restoring the mezzanines to window selection was a careful process. “When you try to marry the regulation with the practicality of putting in

OUT WITH THE OLD

those plate glass windows, how do you do that? It’s not just coming in and asking a glass manufacturer to put something in. The architect has to think it through. They have to make sure it somehow can tell the story of the original historic features.” The windows in the Chamberlain Building, which allow diners at popular restaurant Americana to gaze out at the Pappajohn Sculpture Park, are exact replicas of the originals, custom made to meet modern energy-efficiency standards. The mezzanine in the Chamberlain Building was where dealership offices, including the president and accountant, were located. At one point, the parts department was even located in the mezzanine. “It’s really important for a city to save as many old buildings as possible so you remember the fabric of a city, of the history and what came before you,” says Hatch.

DRAWING COURTESY OF BROOKS BORG SKILES ARCHITECTURE ENGINEERING

PHOTOS BY TIM BUNGERT

OPPOSITE PAGE Although a few features of the original Kruidenier Cadillac building at 1408 Locust Street remain, the new, modern facade stands in stark contrast to the antique cars on display during the 2015 Concours d’Elegance. LEFT The Chamberlain Building, restored using historic preservation tax credits, looks much as it did when it was home to dealerships in the middle of the 20th century. BELOW This original architect’s drawing shows the building as Proudfoot, Bird & Rawson designed it.

Auto Row

Des Moines’ Locust Street once was referred to as Auto Row. The street was filled with dealerships, tire shops, and other auto service centers. Today, the only dealership remaining on Auto Row is American Dream Machines, which specializes in classic cars. Dealerships on Auto Row in the 1930s included: • Longwell Motors Makes: Cadillac, La Salle, Oldsmobile • Sanders Motor Company Makes: Dodge, Plymouth • Hudson-Jones Automobile Company Makes: Hudson, Packard • Means Nash Sales Company Make: Nash • Manbeck Motors Makes: Chrysler, Plymouth

• Chambers Motor Company Makes: Ford, Mercury, Lincoln • Brady Motors Make: De Soto • Paul Manning Inc. Make: Chevrolet • Union Motor Co. Make: Studebaker • Schooler Motor Company Make: Pontiac

FALL/WINTER 2015  19

OUT WITH THE OLD

PHOTO BY TIM BUNGERT

Renovations at former dealership buildings range from small tweaks to major modifications. Here are other noteworthy examples from around the state.

The Maples Motors showroom was transformed into a lobby for Hawkeye Stages.

Maples Motors Newton Renovation Architect: Brooks Borg Skiles Architecture Engineering The former dealership was converted into offices, a service center, and garage for charter bus company Hawkeye Stages and the office of the Newton Convention and Visitors Bureau. Herring Motor Car Company Des Moines Renovation Architect: Shiffler Associates The Ford assembly facility was converted into loft-style apartments highlighting some of the historic features of the building.

PHOTO COURTESY OF THE CITY OF BOONE

Extreme Makeover: Dealership Edition

The Moffitt’s Ford Lincoln building was converted into the Boone Police Station (below) after the dealership moved to a new location.

Police Station, Boone Former Dealership: Moffitt’s Ford Lincoln Year Built: 1914 (north half ), 1949 (south half ) Renovation Contractor: R. H. Grabau Construction Inc.

Sometimes, the perfect space is right in front of you. When the City of Boone needed a new home for its police department, the former Moffitt’s Ford Lincoln building, sitting vacant in the heart of the town, ended up fitting the bill. “It was a great bargain and it was the type of area we needed for our operation,” says Luke Nelson, city administrator. Some parts of the dealership remain, while others have shifted purpose. Most of the garage area is similar to when it was a dealership, while the parts department has transformed into a training room. “Most PDs do not have as much garage space as we do,” says Police Chief Bill Skare. “It is a definite advantage.” The previous police department area was 1,100 square feet, located in city hall. “Now the offices are 5,500 square feet and the garage area is approximately 10,000 square feet,” Nelson says. “It was a tremendous improvement in space for our police department.”

Overland Hanson Building Waterloo Renovation Architect: StruXture Architects

Motor Mart Building Sioux City Now called the Commerce Building, the Motor Mart Building was built for an auto supply company in 1912. Seven years later, the supplier moved out and the building was converted into a conventional office building.

20 IOWA AUTO DEALER

PHOTO BY BRUCE ANDERSON

Although the building was originally constructed to house a four-story dealership, it has been home to television station KWWL for more than half a century and is on the National Register of Historic Places.

OUT WITH THE OLD

“The building has been a centerpiece for downtown redevelopment and surrounding neighborhood revitalization and stands as a model for reuse of historical buildings.” Bob Mundt Hughes Irons Building, Council Bluffs Former Dealerships: Hughes-Irons Company, Parmer Motor Company, Hughes Motor Company, Atlantic Auto Company Year Built: 1917 Renovation Architect: Alley Poyner Macchietto Architecture

PHOTOS COURTESY OF COUNCIL BLUFFS AREA CHAMBER OF COMMERCE

With it’s location on a historic block of a historic highway, the Hughes Irons Building seemed destined for something more. The building, which had formerly housed four dealerships at different times, had fallen into disrepair, showing hints of potential hidden under a crumbling facade and mudcaked floors. “We knew the building had limited uses and needed to be a mixed use development to meet the strategic objectives of development in the area and bringing people back downtown,” says Bob Mundt, President/CEO of the Council Bluffs Area Chamber of Commerce. In order for the complex financing package to work, the building needed tenants. So the Chamber of Commerce stepped up and committed to being a tenant in the renovated building.

“As a catalyst for the future revitalization of the area, the Chamber thought the reuse of one of the most historic buildings on the block was something the Chamber should lead,” explains Mundt. A restaurant leased another groundlevel space. A coffee shop opened in the lobby of the Chamber’s space. Seventeen market-rate apartments embracing the historic character of the building filled the second floor. As with many renovations of historic buildings, the project faced complications. “Having to restore the building back to historical standards and meet the requirements of historical renovation also presented issues, including locating period-appropriate replacement parts, salvaging original doors, windows, etc. and sealing walls, roofs, and foundations,” Mundt says. But the reaction from the community has made the renovation a success, according to Mundt. “The building has been a centerpiece for downtown redevelopment and surrounding neighborhood revitalization and stands as a model for reuse of historical buildings.”

LEFT The Hughes Irons Building is home to a restaurant, the Chamber of Commerce, and market-rate apartments. TOP A larger than life photo of the Hughes Motors Company adorns a wall in the renovated building. MIDDLE The original floors were restored for use throughout the apartments. BOTTOM The Hughes Irons building provides a welcoming exterior in the historic district.

FALL/WINTER 2015  21

wellness works

wellness works Dealerships are upping their benefits game—and helping employees get healthier—with wellness programs designed to make a difference.

22 IOWA AUTO DEALER

The shifting landscape of employee benefits means an increasing number of workers expect their companies to provide wellness programs. But employees aren’t the only ones who benefit from the focus on health and wellness—employers find that healthy workers are more productive, are less likely to miss work, and accrue fewer insurance costs. Many employers offer these programs because they genuinely care about the health and well-being of their employees. But the motives aren’t always entirely altruistic. Wellness programs help employees to feel better not only about the company they work for, but also in general. And healthy employees incur fewer workers’ comp claims and fewer insurance claims, and take fewer sick days. “I view wellness as not only a health strategy for your organization—it’s become an economic strategy, too,” says Kate Galligan, account executive in employee benefits at LMC Insurance & Risk Management. Galligan describes the goal of wellness programs as two-fold: Employers want to contain or reduce costs associated with health claims, prescription claims, and workers’ comp claims, and they also want to have happy, healthy, and safe employees. “We want to mitigate risk in an organization, but then, we care about our employee,” she says. Improving employee wellness also improves presenteeism and absenteeism. According to Galligan, “Presenteeism is when you’re at your place of employment and you’re working, but you’re not at 100%. Maybe you’re kind of checked out mentally or you’re not focusing on the job or you’re not safe because of back pain or an ailment. Absenteeism is the amount of time you’re away from the job due to health-related or emotional-related symptoms.” Not only do wellness programs have the potential to save your dealership money, but they also are a tool to help recruit talented employees. “The workforce has become so competitive that younger employees recently out of school are looking for wellness programs,” Galligan says. “They want their employer to have a wellness program or to have access to fitness facilities or reimbursement for those.”

In short, wellness programs are now part of the complete employee benefits package. Types of Programs Wellness programs fall into two categories: participatory and outcomes-based. In participatory programs, employees receive an incentive simply for taking part. Outcomes-based programs reward employees for being in good health, keeping costs down, and taking specific actions to achieve good health. There are regulations that govern outcomes-based programs, but a wellness program partner should be able to help ensure programs are compliant. (See the sidebar on page 26 for a look at some of the requirements.) “If the company’s goal is to create a culture of health, participatory is usually

the direction they go,” says Kathy Keane of MercyCare Business Health Solutions, a Cedar Rapids-based wellness program provider. All wellness programs typically involve a clinical screening and health risk assessment coupled with some sort of incentive for the employee to participate. Many programs also include a post-screening consultation or coaching to help employees accurately interpret their results. “A post-screening consultation is something I feel so strongly about,” says Galligan. “I feel very strongly that the screening and the post-screening consultation truly go hand-in-hand. I don’t think you should have one without the other.” Galligan notes that many employers make a significant investment offering

“I view wellness as not only a health strategy for your organization—it’s become an economic strategy, too.” Kate Galligan

By the Numbers

Of employers with 50+ employees...

51% offer a wellness program 49% of employers in the Midwest have wellness programs 81% use health risk assessments 62% use clinical screenings 77% offer smoking cessation programs 85% of employers who offer disease management programs

target diabetes

RAND Health study for the U.S. Department of Labor and U.S. Department of Health and Human Services

FALL/WINTER 2015  23

WELLNESS WORKS

Elements of a Wellness Program

HEALTH RISK ASSESSMENT A health risk assessment (HRA) is a questionnaire, typically filled out online, that helps individuals assess and evaluate their health risks. Questions cover diet, exercise habits, tobacco use, and other lifestyle factors.

EDUCATION Workshops or lunch-andlearns focusing on health and wellness topics can complement programs. Topics can include mental health, diet, exercise, and stress management.

24 IOWA AUTO DEALER

CLINICAL SCREENING Clinical screenings typically include a blood draw, blood pressure check, and weight check. The screening and HRA are used together to provide an overall picture of an employee’s health both in an individual report for the employee and in an aggregate report for the employer.

HEALTH PROMOTION ACTIVITIES Health promotion activities include offering on-site influenza vaccinations; fitness benefits, such as gym membership reimbursement; and healthy food options in vending machines.

COACHING Health coaches can take the results of the HRA and clinical screening and help an employee understand their overall health. Some coaching sessions involve setting an actionable goal for the employee to take to improve their health moving forward.

OTHER SERVICES Some robust wellness programs offer additional services that contribute to the overall wellbeing of employees, such as employee assistance programs, occupational health services, and absenteeism management.

PHOTO COURTESY OF LMC INSURANCE & RISK MANAGEMENT

WELLNESS WORKS

An online portal allows employees to take the health risk assessment, giving employees a look at their individual health and employers an understanding of the overall health of their organization.

on-site health screenings for employees, but despite that investment, many employees don’t read their personal health reports or don’t understand the results. The consultation method LMC and its wellness partner uses consists of a 30-minute confidential session with the employee and a coach in which they develop a plan of action for moving forward based on the screening results. “It’s a marathon, not a sprint,” Galligan says. “We don’t want to overwhelm the employee, so it’s just baby steps.” The employer also receives an aggregate report, which allows them to identify areas of risk in their organization and get an overall picture of the health of their employees. The aggregate report can also allow employers to tailor their wellness program to the needs of their employees. A

dealership with a high number of pre-diabetic employees could focus on diabetes prevention, while a dealership with a significant number of overweight employees could focus on dietary strategies. The key to driving participation in a wellness program is incentives. “Every employer that has a wellness program has to—not has to, but should have—incentives. They say that premium differentials, that is a discount on your health insurance premium, is the number one driver of engagement in any wellness program in the country,” Galligan says. There’s no one-size-fits all approach to wellness program incentives, however. Keane notes that she she’s seen programs where a $50 incentive was effective and other programs where a $200 incentive wasn’t.

“There has to be buy-in from the top of the company into the program, and those leaders have to participate and be part of it.” Kathy Keane

Developing Your Program Before a business begins to develop a wellness program, it’s important to decide what the goal of the program is. Are you trying to create a culture of wellness and good health? Are you trying to reduce costs? It is possible for businesses to put together a wellness program without the assistance of an outside partner, but going that route has it’s challenges. “One thing they miss out on is that strategy, having an outside person or party come in and do an assessment or evaluation of their current program, even an environmental assessment of sorts,” Galligan says. Once that assessment is complete, a company and their wellness partner can sit down and focus on a strategy to meet their goals and take a targeted approach to the program. Many companies that run wellness programs themselves also miss out on the robust reporting that comes with the online health risk assessments and clinical screenings. “That’s huge,” says Galligan, “because it really helps drive your program, so you

FALL/WINTER 2015  25

WELLNESS WORKS

know that the presentations and lunchand-learns and workshops are going to help improve some of those problem areas in your organization.” Whether a company decides to move ahead with a partner or chooses a participatory or outcomes-based program, the most important element of launching a program is creating company-wide buy-in. “What makes the biggest difference is the leadership roles within the program,” says Keane. “There has to be buy-in from the top of the company into the program, and those leaders have to participate and be part of it.” Company culture is also important, Galligan says. If you have engaged employees and commitment from the top, the support will trickle down so everyone gets on board with the program. Another key is forming a wellness committee to spearhead the initiative. Galligan suggests having representation from different departments, and a range of ages and a mix of men and women. If dealer groups are launching a program for multiple locations, they should make sure to have representatives from each location on the committee. She also suggests having the committee nominate two co-chairs to lead the effort. “You don’t want all this on one person, you want a co-chair with shared responsibility,” Galligan says.

When the program is designed and ready to launch, messaging will help with employee engagement. “It’s really important that they deliver the message the right way,” Keane says. “The goal of the program is that you care about your employees. To tell employees you want to reduce cost doesn’t always go well, so they feel like they’re being penalized. There are wellness programs out there that penalize employees. There’s a right way and a wrong way to say that.” Dealership Programs Wellness programs aren’t just limited to large corporate offices in major cities. Dealerships in Iowa and across the United States have been offering wellness programs to their employees for years, with significant results. O’Halloran International, a heavyduty truck dealership with locations across Iowa, has offered an employee wellness program for seven years. The program includes a clinical screening and health risk assessment, and those who participate get $50 and are eligible to earn additional incentives, including two days off for volunteering, five wellness days off, gym membership reimbursement, and reimbursement for personal training or fitness events, such as a half-marathon. In the second year of participation in the wellness program,

employees become eligible for a health insurance premium discount. “We believe that healthy lifestyles contribute to the wellbeing of the individual and the company,” says O’Halloran International CFO Todd Meyer. Ken Garff Automotive Group, a dealership group with locations in Iowa and four other states, has an employee wellness program for dealerships in Utah and Texas and is planning to roll out the program to the rest of its stores. The Garff program, which has a participation rate of about 50% of eligible employees, includes a clinical screening and health risk assessment. The results from the screening are used to place employees in levels one, two, or three. “Level One means you don’t have any biometrics in the high range. Level Two means one biometric is out of range. Level Three means you have two or more biometrics out of range,” explains KJ Johnson, a benefits specialist for Ken Garff Automotive Group. Level Two employees must earn 25 points each quarter to remain compliant with the program and Level Three employees must earn 35 points each quarter and have a check-up with their physician to remain complaint. “You can earn points by doing your preventive checks, doing physical activity, attending lunch-and-learns, etc.,” Johnson says.

Requirements for Outcomes-Based Wellness Programs If a wellness program requires meeting a health-related goal to earn an incentive, there are five requirements that must be met. According to the U.S. Department of Labor’s FAQ on HIPAA Nondiscrimination Requirements, the requirements are: 1. The total reward is limited and does not exceed 20% of the cost of employee-only coverage under the plan. If spouses or dependent children are eligible to participate in the wellness program, the reward must not exceed 20% of the cost of the coverage for the employee and dependents. 2. The program must be reasonably designed to promote health and prevent diseases. 3. The program must give eligible individuals the opportunity to qualify for the incentive at least once a year. 4. The incentive must be available to all similarly situated individuals, and must allow a reasonable alternative goal for any individual when meeting that goal is unreasonably difficult due to a medical condition. 5. All materials about the program must disclose the availability of a reasonable alternative goal.

26 IOWA AUTO DEALER

WELLNESS WORKS

“Because you can’t predict if you’ve prevented someone from having a heart attack, it’s hard to predict ROI.” Kathy Keane Employees who stay compliant receive a discount on their health insurance premium. Employees can also receive a $25 reimbursement per quarter for marathon or 5k entry fees and a free subscription for a health magazine. The dealership group also offers challenges where employees can earn an additional $150 twice a year. Kemna Auto Group, which has locations in Algona and Fort Dodge, offers an employee wellness program to all full-time employees, regardless of whether they are on the company’s insurance plan. Participants meet twice a year with health coaches to set up specific, measurable health goals. As an incentive, all participants receive a 10% discount on their health insurance premiums, with an additional 5% discount available if the employee’s spouse joins the program as well. Participants must be within 30% of their goal by the 6 month check to continue with the discount, and must reach 100% of the goal at year’s end to be eligible for an annual health bonus. The health bonus is available to employees who participate but do not have health insurance through the dealership. Kemna’s program has been offered for 10 years and approximately 80% of eligible employees participate. Kathy Arndorfer, marketing director at Kemna Auto Group, says the dealership has reaped benefits from the program, including “Fewer sick days, camaraderie amongst co-workers, and fun contests to reach their goals.” Return on Investment Deciding to embark on an employee wellness program is a big step. And while there is plenty of anecdotal evidence to support the programs’ success, there aren’t many hard numbers to demonstrate the

overall return on investment. “I can tell you that return on investment in wellness programs is very difficult to measure,” says Keane. “Because you can’t predict if you’ve prevented someone from having a heart attack, it’s very hard to predict ROI.” While businesses may not be able to definitively say that the wellness program prevented an employee from incurring a significant insurance claim, wellness programs can, over time, result in cost savings through soft costs, such as an increase in productivity and decrease in absenteeism. Keane suggests that while the measure of a successful wellness program depends on each individual company’s goals, employee engagement is often a good indicator. “A lot of times, really, what I find successful in a program is that they have high engagement and high participation rates,” Keane says. Dealership programs, at least anecdotally, are meeting with success. O’Halloran International reports that the employees who participate in the wellness program are, in general, healthier than those who do not take part. And Johnson of Ken Garff Automotive Group notes that because employees are conscious about their health, claims stay within a good range. LMC’s Galligan points out that while employers might balk at the initial investment of offering a wellness program, as employees get healthier they may not incur as many high-cost claims, ultimately saving them money. And she hopes for a day when employee wellness programs aren’t needed. “Eventually, we hope we’ll put ourselves out of business as employees get healthier.”

Dealership Wellness Resources LMC Insurance & Risk Management

LMC’s Total Health Management works with employers to strategically create wellness programs designed to fit each business’ needs. Programs can include health risk assessments, clinical screenings, post-screening consultations, coaching, and more. For More Information: Kate Galligan | 515.237.0177 kate.galligan@lmcins.com

MercyCare Business Health Solutions

MercyCare offers customizable worksite wellness programs that assess health risks, set goals, and engage employees. Programs can include health education seminars and displays, incentive programs, and customized wellness events. For More Information: Kathy Keane | 319.398.6661 MercyCare.org/BHS

Iowa State University Extension and Outreach Worksite Wellness Program Iowa State’s Extension and Outreach has three wellness programs available to come to your dealership, including a create your own wellness program series.

For More Information: extension.iastate.edu/humansciences/ worksite-wellness

Iowa Department of Health — Iowans Fit for Life

The Iowa Department of Health created a toolkit for companies to use when planning and implementing wellness programs. For More Information: idph.state.ia.us/IowansFitForLife/ default.asp idph.state.ia.us./IowansFitForLife/ Common/PDF/Healthy_Worksites_ Toolkit.pdf

FALL/WINTER 2015  27

DEPARTMENT TITLE

r e m u s n o c r e l a e d t e c a th n o i t c e t o pr

Iowa wa e h t , o n act o serve I o i t c te st r pro ontinue t. e m c u cons hise Act nactmen a s rity nc da se pula th t a e i o r n r p F g e i i a aft icle win Des re w ikability. s h r e e o a h t V t e r y ing dl wn Moto yers 55 ly go right do iness an ross e r a r u rank ustworth nities ac ssage s are car b tr pa ealer smen mu t

c ale t: D the om s of the a ace i act, car s in term role in c ed with s f e s ’ o t d ut s t f Le t. In Congres portant s cemen ot only cturer, b n s e t r w f im fa .N con islato hise Act d manu ns who o ers o serve an g b e l m n a a te s nc me ealer that sta hicle Fra n dealer yday Iow d t u r e e l e e B e o tor V or ev —a r betw Iowa Iowa Mo ionship ections f t e at of th e the rel rtant pro t o s. dicta has imp r vehicle o o it als rive mot d and

28 IOWA AUTO DEALER

DEPARTMENT TITLE

FALL/WINTER 2015  29

THE CONSUMER PROTECTION ACT

“We have held that the primary purpose of chapter 322A is to protect the public—to ensure that once franchises are established in a community, the requisite services are continued for the benefit and safety of vehicle buyers and the public at large.” Iowa Supreme Court “State franchise laws were enacted to protect consumers, promote competition and to help level the playing field between manufacturers and dealers,” says Jim Moors, director of franchising and state law at the National Automobile Dealers Association (NADA). “I feel certain that the Iowa Legislature was prompted by similar considerations when it enacted the Iowa Motor Vehicle Franchise Act. The Iowa law plays an important role in making sure that the transportation needs of the public are met.” The Iowa Supreme Court specifically addressed the consumer protections of the Iowa Motor Vehicle Franchise Act in its decision in Midwest Automotive III LLC v. Iowa Department of Transportation, saying “We have held that the primary purpose of chapter 322A is to protect the public—to ensure that once franchises are established in a community, the requisite services are continued for the benefit and safety of vehicle buyers and the public at large.” Even though the act’s intent and continued interpretation is that of a consumer protection law, many people aren’t aware of the important protections it provides the motoring public. Here are four important facets of the Iowa Motor Vehicle Franchise Act. Warranties must be fulfilled. “Every franchiser and franchisee shall fulfill the terms of any express or implied warranty concerning the sale of a motor vehicle to the public of the line-make which is the subject of a contract or franchise agreement between the parties. If it is determined by the district court that either the franchiser or the franchisee, or both, have violated an express or implied warranty, the court shall add to any award or relief granted an additional award for reasonable attorney fees and other necessary expenses for maintaining the litigation.” Iowa Code Chapter 322A.5

Consumer protection doesn’t get much clearer than this. Dealers and manufacturers must honor warranty terms—and if they don’t, they can lose their license to operate in Iowa. In the state of Iowa, a warranty on any product or service is a contractual relationship between the manufacturer and purchaser and if breached the purchaser has grounds for a private cause of action. The Iowa Motor Vehicle Franchise Act takes those protections a step further, making it a requirement of licensure that the manufacturer and its dealers fulfill warranties. The failure of a dealership to provide warranty work may also be grounds for termination of its franchise, provided the manufacturer reimburses the dealer for that warranty work.

30 IOWA AUTO DEALER

Manufacturers can’t terminate franchises without good cause—and must replace the dealer or prove the community can’t support the franchise. “1. Unless otherwise provided in subsection 2, notwithstanding the terms, provisions, or conditions of any agreement or franchise, a franchiser shall not terminate or refuse to continue any franchise unless the franchiser has first established, in a hearing held under the provisions of this chapter, that both of the following apply: a. The franchiser has good cause for termination or noncontinuance. b. Upon termination or noncontinuance, another franchise in the same line-make will become effective in the same community, without diminution of the motor vehicle service formerly provided, or that the community cannot be reasonably expected to support such a dealership.  2. A franchiser may terminate a franchise for a particular line-make if the franchiser discontinues that line-make and a franchiser may terminate a franchise if the franchisee’s license as a motor vehicle dealer is revoked pursuant to the provisions of chapter 322.” Iowa Code Chapter 322A.2

“Both of the following apply.” One phrase can make a big difference when it comes to the law. Section 2 of Chapter 322A, states that to terminate a franchise, a manufacturer must have good cause for termination and replace the terminated dealer with another franchise in the same line-make or prove that the community cannot sustain a dealership. “This last provision appears to be unique to Iowa in the requirement that a replacement dealer be appointed,” says NADA’s Moors. NADA and IADA are unaware of any other state with a similar provision. “The practical result is that there is such a high burden on manufacturers that they are more likely to not initiate the formal termination process and let market forces sort it out,” says IADA President Bruce Anderson. Because of that, it’s more common in Iowa for a dealer principal to retire and surrender his or her franchise than it is in other states, where manufacturers may help decide when small town dealers go out of business. “In Iowa, dealers get to leave the business on their terms,” says Anderson. “It’s driven by local consumers and local businesses, not by international corporations.” There’s an undeniable dealer protection built into that section,

THE CONSUMER PROTECTION ACT

but it’s important not to ignore the inherent consumer protections—especially in a state like Iowa where there are so many rural communities that depend on the franchised dealer network to maintain reliable transportation. If the manufacturers today were deciding where to place their dealerships, chances are at least some of the smaller communities in Iowa currently served by dealerships would not make that list. Consumers in those towns would have to drive farther to purchase new vehicles and have safety recall repairs made. When consumers make the decision to purchase a new car or truck, that decision is in part based on the dealer network and the accessibility of services near where they live and work. If manufacturers were able to just close up shop in a community with no replacement dealer that could effect customers’ buying decisions. Dealerships can’t be prohibited by manufacturers from selling other line-makes. “A condition, stipulation, or provision in a franchise prohibiting or restricting the franchisee from continuing another line-make at the dealership or adding an additional line-make to the dealership is void.” Iowa Code Chapter 322A.22

The ability of dealerships to sell vehicles in competing linemakes, known as dualing, is a consumer choice issue. It’s also an issue of local business viability. While small towns may not be able to support three separate dealerships, some dealers have found that combining multiple line-makes under one rooftop permits them to have efficiencies, surviving—and thriving—with a broader portfolio of vehicles. This gives customers in those smaller markets a wider variety of vehicles to choose from than they otherwise would have had, and can be an economic boost to the area. It also makes it easier for customers to have safety recall and warranty repair work done on a wider range of vehicles, which bolsters the dealer network supporting Iowa’s motoring public.

Dealerships can’t be required by the manufacturer to provide customer lists or files. “A condition, stipulation, or provision in a franchise which requires the franchisee to provide its customer lists or service files to the franchiser is void.” Iowa Code Chapter 322A.23

The provision that dealerships cannot be required to provide customer lists to manufacturers is a fairly recent addition to the Iowa Motor Vehicle Franchise Act. When dealers received winddown agreements during the manufacturer bankruptcies, some included a requirement that the dealership must turn over their complete customer database in electronic format. This was a wake-up call to Iowa dealers that it was something manufacturers might require in the future—and it clearly wasn’t in the best interest of their customers. In addition to the franchise relationship, most franchised new car dealers have components of their businesses that are unaffiliated with the manufacturer—pre-owned car sales and providing service to vehicles of other line-makes are just two examples. It is the dealership’s responsibility to protect the private personal data of all their customers and not share it unnecessarily with entities to which the customer has no connection. For example, a customer brings their Ford Focus into the local Chevrolet dealership for an oil change. That customer most likely doesn’t expect the dealership to share that information with Chevrolet so that General Motors can start marketing to them. Nor should they. Customers have an expectation that their data will be protected, and under Iowa law that expectation is valid. That’s not to say there aren’t times when a dealership should and does share customer information with the manufacturer—but entire customer lists can never be required under franchise agreements.

Price Check

Conventional wisdom is that inter-brand competition keeps prices down. Local Ford, Chevrolet, Chrysler, and Toyota dealers all vying for sales keep pricing competitive for consumers. But what about intra-brand competition? In communities with multiple dealerships of the same line-make within a reasonable distance, the Chevrolet dealer’s biggest competitor is the Chevrolet dealer 15 minutes up the highway. They sell the same product and provide the same services, so they must keep prices competitive in order to stay in business. And the ability for customers to do research and view dealership inventories on the Internet before showing up on the lot helps make the competition even more fierce. “Even with the decline in the number of dealerships due to (1) natural consolidation, (2) the elimination of brands, and (3) dealer and manufacturer bankruptcies that occurred during the recession, the majority of consumers can do business with more than one dealer of a given brand within their local market,” writes Maryann Keller & Associates in Consumer Benefits of the Dealer Franchise System. “This means that customers have convenient access to a system that supports competition among same brand dealers and those of competing brands.” Vehicle pricing isn’t the only thing impacted by competition between dealerships. Dealers also compete against each other—and other businesses—for customers’ service needs and financing. All of which means one thing for consumers: lower prices.

FALL/WINTER 2015  31

THE CLOSE

electric origins Iowa’s first-in-the-nation status isn’t limited to the presidential contest. The Hawkeye State is also where the United States’ first workable electric vehicle Just blocks from what would become Des Moines’ Auto Row, William Morrison, a Scottish-born chemist, tinkered in a basement laboratory. He’d long been fascinated by electric batteries and was particularly interested in making batteries practical. As he improved upon his battery design, reducing the weight and increasing the power, he sought out a way to demonstrate the importance of his work. The result: America’s first workable electric vehicle. Morrison installed his batteries on a carriage from the Des Moines Buggy Company and added a steering device that allowed him to pivot each wheel separately. And on September 4, 1890, his electric vehicle made its public debut in the Seni Om Sed parade. According to The Annals of Iowa, “The Des Moines Leader, September 5, 1890, states: ‘The electric buggy met with great applause as it came along. It had just been finished yester“The electric day and had been put through some pretty hard tests.” buggy met Twenty-four storage batwith great tery cells powered the electric vehicle, which had a applause as it range of 100 miles at a maxcame along. imum of 12 miles per hour. Equipped with a four horseIt had just power engine, the buggy been finished could hold nine passengers on three bench seats. yesterday and Despite the positive recephad been put tion of his electric vehicle, Morrison’s focus remained on through batteries. He began working some pretty with the American Battery Company in Chicago, which hard tests.” Des Moines Leader manufactured his batteries and continued to use his electric vehicle to demonstrate the batteries’ capabilities. In 1892, Morrison’s electric vehicle became the first electric vehicle to drive on Chicago’s streets, and in 1893, it was exhibited at the World’s Fair. The vehicle was never mass produced—Morrison’s true passion was in the batteries that powered his vehicle, not in the vehicle itself—but his legacy lives on through his technological advances in batteries.

32 IOWA AUTO DEALER

PHOTOS COURTESY OF STATE HISTORICAL SOCIETY OF IOWA, DES MOINES

was invented.

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