Massachusetts Auto Dealer Magazine January 2016

MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109

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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216

January 2016 • Vol. 28 No. 1

The official publication of the Massachusetts State Automobile Dealers Association, Inc

59th NEW ENGLAND INTERNATIONAL AUTO SHOW 2016 DEALER SUMMIT & CHARITY GALA

Ma s s a c h u s e t t s

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S taff D irectory Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Marta Argueta-Guerra Administrative Assistant/ Membership Coordinator mguerra@msada.org A uto D ea l er M A ga z ine Robert O’Koniewski, Esq. Executive Editor Catherine MacDonald Editorial Coordinator macdonaldcs8@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to: MSADA by e-mail: mguerra@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.

Ad Directory Blum Shapiro, 27 Boston Herald, 36 ConServ, 29 Ethos Group, 2 Lynnway Auto Auction, 28 Nancy Phillips, 27 O’Connor & Drew, P.C., 35 Reflex Lighting, 26 Southern Auto Auction, 25 SunTrust Bank, 29

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The official publication of the Massachusetts State Automobile Dealers Association, Inc

Ta b l e o f C o n t e n t s

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From the President: Capping Off Success THE ROUNDUP: Obama Administration Continues Attack on Dealers

10 LEGISLATIVE SCORECARD 11 TROUBLESHOOTNG: The Volkswagen Fallout 12 AUTO OUTLOOK 14 LEGAL: Medical Marijuana 15 ACCOUNTING: Protect Your Profits Cover Story: 16 Revved Up for 2016 18 MSADA Casino Night 20 The New England International Auto Show

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NEWS From Around the Horn nada Market Beat nada update: Going for the Record

ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Quarter Page: $450 Half Page: $700 Full Page: $1,400

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from the President

MSADA

Capping Off Success Auto Show Gala Provided a Perfect Capstone to a Record Year

By Scott Dube MSADA President

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or the past few years that I’ve been President of MSADA, it’s been one of the many privileges to see the excitement increase for our Annual Charity Gala at the Auto Show and the preceding Dealer Summit. While I have no doubt it has much to do with MSADA’s dedicated staff who work to make each event better than the last, this night in January marks the anticipation of a new year and a celebration of the success hard-won the year before.

We as an industry hit record sales last year -- our best in a decade. And we deserved some time to pop the cork and let loose. By bringing our celebration to the Auto Show, it’s a moment when customers, dealers, and everyone else in the industry is united by a sense of optimism and the thrill of a new batch of metal. These new models create excitement no matter what your day-to-day relationship is with them.

We just happen to have a front row seat, which is why no one is more excited to be there than we are.

Every year I am impressed beyond words when I move around the Auto Show floor. It’s our dealer community’s time to shine. And we have the numbers that show that among the thousands who stream through the doors, there are also thousands of future customers who are scoping out their next purchase.

Among the many key messages we can take away from the public’s excitement about the new models is that our industry thrives when it moves forward. We face constant challenges, day in and day out, and the only similarity is that every day adds something new. The Auto Show is a great time to remind the general public, lawmakers, and maybe even ourselves that this industry is international, national, and local down to our Main Street businesses. Whether it’s a company with headquarters in Italy or Korea or Michigan, it’s up to us to get these exciting machines in the hands of customers. It’s a proud moment, and a great reminder of how lucky we are to be the gear that keeps this industry moving forward.

I hope you had a great time during our Gala, which we hosted to support our Charitable Foundation. It was wonderful seeing so many of you, along with your family and friends, having a great time while supporting a great cause.

I would also like to take a moment to thank our Gala sponsors. Each of them understands our commitment to helping the next generation of automotive technicians, and their support helps us further that goal. We couldn’t do the event each year without them. It is a privilege and a pleasure that so many have worked with us for more than a decade. A full list of sponsors is available on page 32. If you’re a vendor in our industry and don’t see your name there, I’d encourage you to reach out to us and get involved by contacting Executive Vice President Robert O’Koniewski (rokoniewski@msada.org). t JANUARY 2016

Massachusetts Auto Dealer www.msada.org

Msada Board Barnstable County

Brad Tracy, Tracy Volkswagen

Berkshire County

Brian Bedard, Bedard Brothers Auto Sales

Bristol County

Richard Mastria, Mastria Auto Group

Essex County

William DeLuca III, Woodworth Motors John Hartman, Ira Motor Group

Franklin County

Jay Dillon, Dillon Chevrolet

Hampden County

Jeb Balise, Balise Auto Group

Hampshire County

Bryan Burke, Burke Chevrolet

Middlesex County

Chris Connolly, Jr., Herb Connolly Motors Scott Dube, Bill Dube Hyundai Frank Hanenberger, MetroWest Subaru

Norfolk County

Jack Madden, Jr., Jack Madden Ford Charles Tufankjian, Toyota Scion of Braintree

Plymouth County

Christine Alicandro, Marty’s Buick GMC Isuzu

Suffolk County

Robert Boch, Expressway Toyota

Worcester County

Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto

Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]

Immediate Past President James G. Boyle, Tuck’s Trucks

NADA Director

Don Sudbay, Jr., Sudbay Motors

Officers

President, Scott Dube Vice President, Chris Connolly, Jr. Treasurer, Jack Madden, Jr. Clerk, Charles Tufankjian

Associate Members

MSADA A ssociate M ember D irectory Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Dan Clements (616) 450-1871 American Tire Distributors Pamela LaFleur (774) 307-0707 AutoAlert Don Corinna (505) 304-3040 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000 Boston Globe Mary Kelly, Tom Drislane (617) 929-8373 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Cars.com Heidi Allen (312) 601-5376 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Sarah Macomber (781) 246-9400 CVR John Alviggi (267) 419-3261 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Carl Bowen Carl Bowen 401-742-1959 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company Paul McGovern (781) 849-3100 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320

Gulf State Financial Services Bob Lowery (713) 302-5547 GW Marketing Services Gordon Wisbach (781) 899-8509 Hireology Kevin Baumgart (773) 220-6035 Huntington National Bank John J. Marchand (781) 326-0823 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 KEEPS Corporation Darcy Silver (718) 309-6133 Key Bank Mark Flibotte (617) 385-6232 KPA Rob Stansbury (484) 326-9765 Leader Auto Resources, Inc. Chuck August (518) 364-8723 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 Micorp Dealer Services Frank Salkovitz (508) 832-9816 Mid-State Insurance Agency James Pietro (508) 791-5566 Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000 Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 Northeast Dealer Services Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 PreOwned Auto Logistics Anthony Parente (877) 542-1955 ProActive Leadership Group Bill Napolitano (774) 254-0383 Quik Video Jack Gardner (617) 221-5502 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300

Reflex Lighting Daryl Swanson (617) 269-4510 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Marc Appel (413) 537-1336 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Santander Richard Anderson (401) 432-0749 Schlossberg, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Solect Energy Development Kristen Brandt (781) 733-0223 Southern Auto Auction Tom Munson (860) 292-7500 Sprague Timothy Teevens (800) 828-9427 SunTrust Bank Michael Walsh (617) 345-6567 Taino Consulting Group Herby Duverné (617) 797-9316 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance BethAnn Durepo (603) 490-9615 TD Bank Michael M. Lefebvre (413) 748-8272 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Zurich American Insurance Company Steven Megee (774) 210-0092

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The Roundup

Obama Administration Continues Attack on Dealers

By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers

FTC Workshop Takes on Dealer Franchise System On January 19 the Federal Trade Commission held a public workshop on the Automobile Distribution System at its conference center in Washington DC. The workshop focused on four areas, the first three being statutory topics regulated by state franchise laws: relevant market area and termination; warranty reimbursement; direct sales; and future trends in the industry. There were four distinct panels that presented on each of these areas.

As expected, the proceeding was not a balanced one. In particular, both the FTC speakers and the supposedly neutral economists the agency selected to present brought preconceived attitudes that were hostile to the franchise system. The dealer representatives, NADA President Peter Welch and Jim Appleton, the New Jersey ATAE, were well prepared, presented well, and effectively rebutted the points made by the various manufacturer representatives and the economists and lawyers recruited by the FTC. Although the panels were balanced, it was quite evident from FTC officials’ comments and the remarks of those the FTC brought in to speak separately, the current FTC staff has a clear anti-franchise dealer bias.

The process now moves to the written comment stage, in which your Association will participate.

NADA will be preparing and submitting a comprehensive set of comments. The preparation will include working with ATAEs, as well as dealer lawyers, dealer accountants, and other third parties, to ensure that the record is replete with stories of the manufacturer abuses and other factual and market realities that lead legislatures to enact these laws. Let me know if you have any examples of JANUARY 2016

Massachusetts Auto Dealer www.msada.org

such abuses and market realities that you wish to provide.

NADA is also developing an appropriate Congressional oversight strategy, and will continue to engage with the media to promote the positive story about the franchise system.

Additional information is available at www. ftc.gov, including how to submit comments during the open comment period that runs through March 2016. Should you require any additional information, please do not hesitate to contact me.

An Exciting Start to 2016 On January 15 your Association and the Massachusetts State Auto Dealers Charitable Foundation held its 19th Auto Show Charity Gala to kick off our 59th edition of the New England International Auto Show at the Boston Convention and Exhibition Center.

We feted over 600 guests, including our dealers, sponsors, and other industry representatives, to raise funds for our auto tech scholarship program.

Party-goers were entertained by the rousing sounds of the Love Dogs, a popular area band.

Based on last year’s success and enthusiasm, we again ran a casino party room where attendees could roll the dice and play cards to win great prizes, all for a worthy cause – our tech scholarships. Congratulations to our big winners, in order of finish: Tom Sullivan, Luke Ryan, Kerry Arneson, John Adams, Robert Fell, and Pamela LaFleur.

Gala attendees had access to the auto show floor, including five “ride and drive” offerings.

This month’s magazine has a full recap of these events.

MSADA Prior to the evening’s party, we held our third annual Dealer Summit where dealers and their key managers heard presentations from keynoter Jeff Cowan (“Manage Your Daily Success”), Ethos Group’s Rob Sneed (“Leadership in the Showroom”), Massachusetts Secretary of Veterans Services Francisco Ureña (“Veterans in the Workforce”), Massachusetts Department of Energy Resources Commissioner Judith Judson (“Zero Emission Vehicle Adoption in Massachusetts”), Craig Lockerd of AutoMax (“Employee Recruitment, Hiring, and Training in Massachusetts”), Fisher & Phillips attorney Joseph Ambash (“Employment Law Hammers Coming Down in 2016”), and Beth Tauro of Transitions to Work.

Finally, we owe a huge debt of gratitude to our generous sponsors for these events. Many of our associate members purchased sponsorships and event tickets, and we have detailed their levels of participation in this issue. As always, we ask our member dealers to keep our associates and sponsors in mind when they seek various services. Our Dealer Summit and Auto Show Charity Gala would not be the successes they were without this outside support. Thank you to all our sponsors.

Busy January for Gov. Baker On January 21 Governor Charlie Baker followed the path of his predecessors into the House chamber and delivered the annual State of the State address. He spoke of the accomplishments of his first year in office, including immediately confronting in his first month blizzards delivering nine feet of snow and their accompanying transportation system breakdowns, plus a billion dollar budget gap, and starting to clean up the mess at the Office of Children, amongst other challenges. He also laid out priorities for 2016, including balancing the budget with more efficiencies and no new taxes, expanding charter schools, and developing improvements for vocational and technical training and jobs. The speech was well received and many acknowledged that the governor has done an excellent job righting the ship

of state’s course.

The following week the governor was set to meet his constitutional obligation by delivering his FY2017 budget proposal to the Legislature, which was expected to come in at just south of $40 billion. We will see to what extent the General Court lives up to the adage “the governor proposes and the Legislature disposes” as the budget debate progresses. FY2017 starts on July 1.

IRS Form 8300 IRS Reporting

by January 31 The IRS requires any person who receives more than $10,000 in cash in a single transaction or a series of related transactions while conducting his or her trade to file a Form 8300 with the agency.

A business must file the Form 8300 to report cash paid to it if the cash payment is: • Over $10,000; • Received as: • One lump sum of over $10,000, or • Two or more related payments that total in excess of $10,000, or • Payments received as part of a single transaction (or two or more related transactions) that cause the total cash received within a 12-month period to total more than $10,000.

• Received in the course of trade or business; • Received from the same buyer (or agent); and • Received in a single transaction or in two or more related transactions.

Under the IRS rules, a business must notify its customers, in writing, by January 31 of the subsequent calendar year that the business has filed a Form 8300 regarding the cash transaction with the customer. (If a letter was sent to the customer at the time of the transaction and the filing of the Form 8300, a second letter is not required.) Neither the code nor the regulations mandate a specific format for the customer letter; the regulations, however, do require the following minimum requirements in the letter: • The name and address of the dealership and a contact person there submitting

the Form 8300; • The aggregate amount of reportable cash, received by the dealership filing the Form 8300 during the calendar year, in all related cash transactions; • A statement that the information contained in the letter is being reported to the IRS. As an alternative to filing the paper Form 8300, businesses may file electronically the Form 8300 using FinCEN’s Bank Secrecy Act (BSA) Electronic Filing System. E-filing can be done at no charge, and it is a quick and secure way for individuals to file their Form 8300s.

Filers receive an electronic acknowledgement of each submission. To receive more information, visit the BSA E-Filing System at http://bsaefiling.fincen.treas.gov/ main.html.

Additional information regarding the Form 8300 requirements is available at these IRS links: • http://www.irs.gov/Businesses/SmallBusinesses-&-Self-Employed/Reporto f - C a s h - P a y m e n t s - O v e r- 1 0 0 0 0 Received-in-a-Trade-or-Business-Mo tor-Vehicle-Dealership-QAs • http://www.irs.gov/pub/irs-pdf/f8300. pdf

More EV Rebate Money Released On January 15 Department of Energy Resources (DOER) Commissioner Judith Judson announced at our New England International Auto Show that the BakerPolito Administration is adding $2 million in funding to DOER’s electric vehicle (EV) rebate program.

Since June 2014, the Massachusetts Offers Rebates for Electric Vehicles (MOR-EV) program has issued nearly $3.8 million for 1,606 vehicles, cutting the state’s greenhouse gas emissions output by an estimated 4,554 tons annually.

MOR-EV provides rebates ranging from $750 to $2,500 based on vehicle category and battery capacity.

Zero and low-emission vehicles save drivers money on fuel and maintenance costs, according to the DOER’s Fuel Econ-

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The Roundup omy side-by-side comparison. For example, a driver purchasing a compact battery electric vehicle can save $3,750 dollars on fuel over five years, compared to the same vehicle with a gasoline engine.

According to the Center for Sustainable Energy (CSE), the MOR-EV program administrator, about 65 percent of MOR-EV rebates were for purchase or lease of battery electric vehicles, while the remaining were for plug-in hybrid electric vehicles. Nearly three-quarters of recent MOR-EV recipients who participated in a survey indicated the MOR-EV rebate was an important factor in their decision to buy an electric vehicle.

At our event Commissioner Judson also announced that DOER and the Clean Cities Coalition will partner with the your Association to provide training for new “EV Specialists” for dealerships and provide recognition opportunities to Massachusetts dealers.

For complete rebate program information and other details, go to www.MOREV.org.

formed of an open recall.

To better assist our member dealers on this issue based on their requests, MSADA, through its forms partner Reynolds & Reynolds, now is making available for purchase two recall disclosure forms: • “Notice about Potential Recalls”, to be used to inform the consumer that there may be a potential recall on the vehicle and to obtain written acknowledgement from the consumer this notice was provided; • “Acknowledgement Regarding Recalls”, to be used to inform the consumer that there is a known recall on the vehicle, on which the consumer acknowledges there is a recall and outlines the consumer’s obligations.

To obtain the forms, contact your Reynolds rep directly, call (800) 3440996, or email at RDS@reyrey.com.

made permanent the appointment of Erin Deveney as RMV Registrar. Deveney was appointed as the temporary registrar in March 2015 for a one-year term.

In the announcement, Governor Baker stated, “With more work still to be done, I am proud to officially announce Erin’s permanent appointment as Registrar and consider her to be a true leader who has proven her commitment and ability to lead and move the Registry in the right direction.”

MSADA Stair-Step Poll

MSADA Recall Disclosure Forms Available

We have sent via email a survey to all member dealers through Survey Monkey asking for your views on manufacturers’ stair-step programs. This is an issue that dealers and OEMs discuss constantly, and the NADA Board has been active through the leadership of our NADA Director Don Sudbay in pushing manufacturers to address shortcomings with the programs, especially as they may impact adversely smaller dealerships. Please take a few moments to answer the threequestion survey so as to provide us with a better sense of our members’ views on the subject.

Manufacturer recalls have dominated the industry over the last couple of years.

Included in the recalls controversy is the extent of dealers’ involvement in notifying consumers of open recalls on vehicles in their inventory. In Massachusetts, this can be additionally vexing because, under the state Attorney General’s consumer protection regulations, a dealer must disclose to a customer any and all information that could affect the customer’s decision to buy a vehicle.

With communications from a franchisor manufacturer in combination with the advent of the NHTSA tool allowing one to check on any open recalls simply by entering the VIN, dealers must be on heightened alert to have knowledge of any open recall for new and used vehicles in inventory. In addition to provide the customer with the information, one should receive an acknowledgement from the customer that he or she was in-

On January 16 MSADA hosted 75 students from 10 vocational technical high schools at the preliminary written test portion of its 2016 auto tech competition in Marlborough. The results of the written test winnowed down the group to the top two-person senior class teams from each school and the top four two-person junior teams from the whole group. These teams will compete at the hands-on competition on February 6 at MassBay Community College’s auto tech center in Ashland. The top senior team will be selected to represent Massachusetts at the New York Auto Show national competition in mid-April.

The ten technical high schools competing for the state title are Assabet Valley Regional, Blackstone Valley, BristolPlymouth Regional, Essex Agriculture and Technical, Greater New Bedford Regional, Old Colony Regional, Pathfinder

JANUARY 2016

Registrar Visits Bill Dube Hyundai Recently MSADA President Scott Dube hosted RMV Registrar Erin De-

2016 Auto Tech Competition

veney at Bill Dube Hyundai in Wilmington. In addition to touring Scott’s facility, the Registrar and your MSADA team discussed how to best address problems plaguing dealers such as the used vehicle record book, title delays, electronic vehicle registration, and issuance of inspection facility licenses to new dealerships.

Registrar Deveney Made Permanent On December 28, at an announcement touting improvements to the Registry of Motor Vehicles’ on-line and branchprovided customer services, Governor Charles Baker announced that he had

Massachusetts Auto Dealer www.msada.org

MSADA Regional, Shawsheen, Silver Lake Regional, and Southeastern Regional.

The schools also fielding junior teams are Assabet Valley Regional, Blackstone Valley, Bristol-Plymouth Regional, and Southeastern Regional.

Pay Equity Proposal – Senate 2107 The Massachusetts Senate scheduled debate for January 28 on legislation that would intrude yet further into business operations across the state.

Senate 2107, An Act to Establish Pay Equity, would further define what is meant by “comparable work”, outlaw employers from forbidding employees to discuss their salary with other employees, increase the fine for pay equity violations from $100 to $1,000, require employers to post a notice to employees of their rights under the act, ban employers from reducing the pay of employees to comply with the act, and add conditions, including seniority, where variations in pay may exist for comparable work.

Intended to address situations where pay discrepancies may exist between men and women for comparable work, the bill, if approved by the Senate, would require action by the House before being sent to the Governor for his consideration.

NADA Work Force Study Open The NADA/ATD 2016 Dealership Workforce Study (DWS) is now open.

Your chance as a NADA/ATD member to participate ends on April 29.

Employees are a dealership’s single largest expense and its single biggest advantage over the competition. With the Dealership Workforce Study, NADA and ATD members have the opportunity to find out if they have the best tools to attract and retain the best employees in their markets. Whether it’s compensation, benefits, work schedules, or even the company culture, dealers need to fine-tune these to get it right.

This is the fifth annual DWS NADA has conducted. The DWS collects data on compensation, employee benefits, reten-

tion and turnover, as well as work schedules, and hours of operation, and reports these as well as demographic issues such as the gender and generational gaps in the dealership workforce.

Only NADA and ATD members can participate in the DWS. It is free to participate, and participation involves enrolling, completing a survey, and uploading payroll data.

Just for participating, members receive two valuable complimentary reports: (1) the Basic Report, which is anything but basic, as it is customized to the individual participating dealership, comparing that store’s numbers to the aggregate numbers of peers in the individual dealer’s own region and the entire country; and (2) the Industry Report, which provides overall analysis and trends, and statistics for every region of the U.S. Participants are also eligible to purchase the Enhanced Report, which compares the individual dealership’s numbers to peers who sell the same brand in the same state. By “numbers,” we are talking compensation for 60 job positions; retention, turnover, and tenure; benefits; work schedules; and hours of operation.

The NADA/ATD Dealership Workforce Study is the most comprehensive study available of the retail workforce.

With the data dealer-participants receive, you can adjust your pay plans, work policies, employment practices, etc., so that you are in position to attract and retain the finest workforce in your marketplace.

Deadline to participate is April 29. To enroll in the free survey, go to www.nadaworkforcestudy.com. Participants will need their member (company) ID. Call (800) 447-6232 or email WorkforceStudy@nada.org with any questions.

2016 Dues Invoices Earlier this month your Association sent out 2016 dues invoices to all our dealership and associate members. Our members’ dues help fund the Association’s activities on their behalf, including our lobbying on Beacon Hill and in Washington, our member counsel services, and

our education and training activities.

Over the last several years we have witnessed quite a bit of economic disruption in our industry, including governmental over-regulation. More than ever, our dealers need a strong MSADA. MSADA will continue to lead on the various issues that threaten the viability of our dealerships. We will strive tirelessly to keep you informed of developments in our industry and how they will play out in Massachusetts. These efforts also include working closely with NADA to better serve our members.

Our strength lies in our members.

With your continued support and membership renewal, we can build on our current foundation and begin to enhance your Association’s core purposes of communication, advocacy, and education.

Save the Date: Annual Meeting May 6, Boston Your Association will conduct this year’s Annual Meeting on Friday, May 6, at the Mandarin Oriental Hotel, in Boston. We are lining up a number of exciting industry speakers for the day. Be on the lookout for our invitation and registration materials.

Nash-MacDonald Nuptials Congratulations to our own Catherine MacDonald and Tom Nash who wed on New Year’s Eve at the Bolling-Haxall House in Richmond. We wish the NashMacDonald union the best of luck.

Car Dealer Wins National Championship Congratulations to new car dealer, Nick Saban, head coach of the Alabama Crimson Tide football squad, who won their fourth national football championship in seven years, when they vanquished the undefeated #1-ranked Clemson Tigers, 45-40, on January 7. Saban and his business partners own two dealerships in Alabama – Infiniti of Birmingham and Mercedes-Benz of Birmingham – and are working to open a third. t

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JANUARY 2016

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MSADA

Troubleshooting

The Volkswagen Fallout

By Peter Brennan, Esq.

MSADA Staff Attorney The Volkswagen emissions scandal came to the attention of the general public in September when the company made a bombshell admission that it had installed software designed to cheat emissions tests on several “clean diesel” vehicle models. The resulting fallout from that admission has been extraordinary and has not been limited to VW or its dealers.

The allegations of malfeasance that triggered the VW emissions scandal first surfaced in 2014 when researchers at West Virginia University published findings that the 2012 Jetta TDI and 2013 Passat TDI vehicle models had significantly higher emissions when being measured on a road compared to a laboratory. When confronted with the findings, VW dismissed the results, but later agreed to recall certain TDI models (as the clean diesel vehicles are labeled).

After the recall fix was implemented, the California Air Resources Board (CARB) did further testing and found continued discrepancies that the German automaker could not explain.

After months of additional investigation, the Environmental Protection (EPA) issued a notice of violation of the U.S. Clean Air Act to Volkswagen AG, Audi AG, and Volkswagen Group of America (collectively “VW”). The EPA alleged that VW and Audi’s four-cylinder diesel cars from model year 2009-2015 contained software “defeat devices” designed to circumvent emissions testing.

In total, regulators estimate that roughly

580,000 vehicles are affected. CARB followed with its own action, and VW quickly fessed up and promised to make things right.

Unfortunately for the company, as well as its dealers and vehicle owners, making things right will be anything but simple.

The company has already had one recall proposal rejected by the EPA and CARB and must go back to the proverbial drawing board to design an effective fix for the vehicles currently on the road, as well as those sitting on dealership lots.

Several vehicle models across the Audi, Porsche, and VW lines are subject to a “stop-sale” for the new and certified preowned models.

While it works to design an effective solution that will pass muster with the regulators, VW must also deal with the indispensable second wave of any American scandal: lawsuits. A variety of complainants have already filed suit against the automaker, the most concerning to VW of which is the suit recently filed by the Department of Justice, at the behest of the EPA, seeking per-car fines which could equate to over $46 billion.

The DOJ lawsuit is seen by many as a way to nudge VW towards an acceptable solution concerning the affected vehicles, as the government thus far has been unimpressed with the carmaker’s efforts.

It can also be interpreted as a warning to other automakers that the consequences of such deception will be dire.

While the DOJ lawsuit may have the most zeros attached to its prayer for relief, it is certainly not the only litigation VW is currently facing. Recently, the United States District Court for the Northern District of California appointed a San Francisco attorney as lead counsel for more than five hundred consumer fraud lawsuits that have been filed in federal courts throughout the country against VW. The automaker is facing lawsuits in Canada as well.

So where does this leave franchised VW, Audi, and Porsche dealers, as well www.msada.org

as dealers that have affected vehicle models in their inventory? Anecdotally, many VW dealers have said that the company thus far has been taking care of its franchised dealers in a variety of ways and has been very helpful during a tough time, as sales have declined significantly since the scandal broke.

This goodwill, however, is not shared by all VW dealers. Several franchised dealers, as well as franchised dealers of other line makes, have decided to join in litigation against the automaker. One Florida law firm is representing several dealerships against VW and has created a website, www.dealercoalition.com, where dealers can receive information and assess their rights.

Franchised dealers of other line makes that are stuck with affected WV diesel models on their dealership lots have likely seen these vehicles devalued since the scandal hit, and some have pursued litigation. However, there is still a market for these vehicles, and the stop-sale issued by VW affects only VW, Porsche, and Audi dealers.

Under Massachusetts law, dealers need to disclose any and all facts about a vehicle to a buyer or prospective buyer that could impact the buyer’s decision to enter into the transaction. If a potential customer is interested in a used vehicle that contains a “defeat device,” the dealership must explicitly disclose this information to the customer before executing the transaction. The dealership should get written proof of the disclosure and make sure it is retained with the deal jacket. Contact us if you need assistance with such a written disclosure. . t If you require any additional information on documentary preparation fees, please contact Robert O’Koniewski, MSADA Executive Vice President, rokoniewski@msada.org or Peter Brennan, MSADA Staff Attorney, pbrennan@msada.

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Legal

By Joseph W. Ambash and Jeffrey A. Fritz

MSADA

Must Your Dealership Accommodate an Employee’s Use of Medical Marijuana?

Cristina Barbuto had Crohn’s disease and used doctor-prescribed marijuana to treat her illness. In late 2014, she applied for a job with an employer in Foxborough and, ultimately, was offered the position, subject to a mandatory drug test. Predictably, she failed the drug test, having tested positive for marijuana, and the offer was rescinded.

As the use of medical marijuana has grown significantly in Massachusetts—as of December 31, 2015, some 18,476 individuals in the Commonwealth actively use doctor-prescribed marijuana, as compared to just 1,423 the year before—this situation is likely to become more and more common for employers with zero-tolerance illegal drug use policies.

In September 2015, Ms. Barbuto filed a lawsuit in Superior Court, claiming, among other things, disability discrimination under Massachusetts law. She claims, in essence, (1) her Crohn’s disease qualifies as a disability/handicap under Massachusetts’ antidiscrimination law, Chapter 151B, and (2) she was capable of performing the essential functions of the job with “reasonable accommodation,” namely, accommodation of her off-site use of medical marijuana. She argues, therefore, that the defendant’s failure or refusal to accommodate her off-site marijuana use, and its decision to terminate her employment for testing positive, constitute disability discrimination. On January 8, 2016, the defendant filed a motion to dismiss, which, as of the writing of this article, currently is pending with the court. The case likely will clarify a Massachusetts employer’s obligations, at least for now, with respect to an employee’s use of medical marijuana.

Illegal Under Federal Law, Yet Legal Under Massachusetts Law The U.S. Drug Enforcement Administration continues to categorize marijuana as a Schedule I drug, right up there with heroin, LSD, and other illegal drugs. By definiJANUARY 2016

tion, Schedule I drugs have a high potential for abuse, no currently accepted use in treatment in the United States, and a lack of accepted safety even under medical supervision. Nonetheless, the U.S. Department of Justice’s current policy is not to devote its resources toward prosecuting individuals who use marijuana—either medically or recreationally—and to leave such prosecution, if any, to the states.

While marijuana use remains illegal under all circumstances under federal law, a number of states, including Massachusetts, have enacted laws permitting the use of marijuana under certain circumstances. The Act for the Humanitarian Medical Use of Marijuana (the “Massachusetts Act”) went into effect on January 1, 2013, and the implementing regulations went into effect about five months later. The law was established with the purpose and intent of ensuring, among other things, individuals who use medicallyprescribed marijuana to treat a “debilitating medical condition” (such as cancer, glaucoma, HIV/AIDS, hepatitis C, ALS, Crohn’s disease, multiple sclerosis, and others) are not punished for such use under state law.

Where does the inconsistency between federal and Massachusetts law leave employers? Can employers with zero-tolerance illegal drug policies legally terminate an employee who tests positive for marijuana, even if a doctor legally prescribed it under Massachusetts law? The answer, at least currently, is, most likely, “yes.”

While the Massachusetts Act provides that “[a]ny person meeting the requirements under this law shall not be penalized under Massachusetts law in any manner, or denied any right or privilege, for such actions,” the implementing regulations make clear that the Massachusetts Act does not limit the applicability of other laws that pertain to the rights of employers. The implementing regulations also make clear that the Massachusetts Act does not require an employer

Massachusetts Auto Dealer www.msada.org

to accommodate any “on-site” use of medical marijuana. They are silent, however, on whether an employer must accommodate an employee’s off-site use.

Ms. Barbuto’s lawsuit will be the first time a Massachusetts court considers whether Chapter 151B protects an employee’s use of legally-prescribed medical marijuana and/or requires an employer to accommodate such use as treatment for a qualifying disabling condition. Court decisions from other states may be a guide as to how the Massachusetts court will rule.

Courts in other jurisdictions have held that, because marijuana remains illegal under federal law, an employer need not accommodate its use for any reason, and may terminate the employment of those who use it, just as they can any other illegal drug.

Whether Massachusetts follows suit is far from certain. Moreover, as public opinion and more and more legislation appear to favor the legalization of marijuana, both for medical purposes and generally, it very well may be that such use will be protected. In the interim, you should review your policy with respect to illegal drug use, especially as to the use of medical marijuana, and consider whether any adjustments are appropriate. t

Joe Ambash is the Managing Partner and Jeff Fritz is counsel at Fisher & Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They may be reached at (617) 722-0044.

Accounting

MSADA

Protect Your Profits

The New Year is a time for reconciliation By Jeffrey Caruso

CPA, O’Connor & Drew (781) 729-4949

As you close the books on 2015, what is on your short list of things to improve on in 2016? Will you focus on increasing front-end sales and holding gross? Will you make some changes in the back-end while keeping expenses in line?

Focusing on changes in operations can help with the bottom line but are your profits protected? Have you considered your internal controls?

Are any in place? If they are in place, are they operating effectively? Do you even know?

You should.

The simplest of controls, both in cost and operation, are the monthly reconciliations.

Bank reconciliations, inventory reconciliations, and vendor reconciliations can protect the bottom line and improve efficiency. Internal controls can quickly find errors, fraud, and poor management decisions that can cost the dealership material amounts of profit today and down the road.

The monthly bank reconciliation can be very straight-forward. Comparing the activity on the bank statement to the activity recorded on the books will automatically show those items that are not reflected on either the bank statement or the books. Aged and unusual reconciling

items should then be researched. Dealers should consider encouraging their staff to reconcile the bank account daily.

This makes the month-end process less tedious and any potential errors will be discovered more timely.

In addition to the reconciliation process, the owner of the dealership should be receiving the bank statement unopened or periodically reviewing the transactions online as well as requesting and periodically reviewing the payroll reports to ensure employee pay in all departments are in line with pay plans.

from that department. Having this count done every month is a strong deterrent against theft.

The parts counter pad should be reconciled to the general ledger every month.

Typical reconciling items would include work in process, appreciation/depreciation, and unrecorded purchases and credits. The benefit of monthly reconciliations is to recognize any trends in the variance between the pad and the general ledger. An increasing variance may indicate maleficence or errors in accounting.

We would recommend a full physical of the parts inventory annually by an outside company and bin checks performed by someone outside of the parts department on a periodic basis during the year. The appearance of additional oversight over an asset is most often all it takes to deter someone from misappropriation.

Implementing a policy that no vendor is paid until the vendor statement is reconciled to the dealership’s accounting records is critical. Assuming you have already established a policy that no vendor invoice is entered into the accounts payable system until properly approved, reconciling the general ledger to the vendor statement will ensure you are only paying for what has been authorized. Unrecorded liabilities could also be identified. The master vendor list should also be reviewed annually to ensure only approved vendors are “active” in the system.

While increasing sales and controlling expenses are great first steps to a better 2016, making internal controls equally important will ensure the profits are protected. t

“Dealers should consider encouraging their staff to reconcile the bank account daily.”

Inventory and vendor reconciliations are equally important, although these are sometimes overlooked. Not only do reconciliations ensure that your books and records are complete, but the process also can potentially uncover a fraud. Inventory reconciliations would include a physical count of the inventory, both new and used.

Any differences to the general ledger should be accounted. The person counting the inventory should not be someone

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Cover Story

MSADA President Scott Dube kicked off the 2016 New England International Auto Show MSADA Dealer Summit with a call for dealers to pay attention to the regulatory forces changing the industry.

With electric vehicle sales increasingly mandated in Massachusetts, manufacturers will be putting more of them on lots.

“We have to get excited about this technology,” Dube said. “They’re going to put them there, and we have to sell them.”

Judith Judson, commissioner of the Massachusetts Department of Energy Resources, came to address the Commonwealth’s zero emission vehicle initiative. She cited her background as an engineer at General Motors when discussing her excitement about the rebate incentive program Massachusetts is offering consumers to buy electric vehicles.

“We’re seeing a growth in demand, so these rebates play a critical part in increasing demand,” Hudson said.

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MSADA

The afternoon also focused on several aspects of day-to-day dealership management. Craig Lockerd of AutoMax gave an overview of employment recruiting, hiring, and training in Massachusetts while other speakers made pitches for hiring from specific pools. Beth Tauro from Transitions to Work explained the benefits of hiring developmentally disabled workers, while Massachusetts Department of Veterans Services Secretary Francisco Ureña discussed the Commonwealth’s veteran hiring program.

Moving into the showroom, attorney Joseph Ambash of Fisher & Phillips LLP previewed the employment law climate of 2016, while Rob Sneed from Ethos Group offered tips on leadership. Jeff Cowan wrapped up the afternoon with his “Pro Talk” that overviewed tips for managing service and sales personnel.

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2016 Casino Night M S A DA

Following a cocktail reception, dealers, associate members and guests hit the Casino for a night of excitement that benefitted the Automotive Technician Scholarship Program.

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2016 New England International Auto Show

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2016 New England International Auto Show

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NEWS from Around the Horn from Around

NEWS the Horn

LEOMINSTER WEST SPRINGFIELD

In Memoriam: Mike Balise Family, friends, and the Western Massachusetts and Cape Cod communities mourned the loss of Mike Balise, owner and vice president of Balise Motor Sales in December. He died at the age of 50 at the Dana Farber Cancer Institute in Boston.

Balise learned that he had incurable stomach cancer in Fall 2014.

He continued his day-to-day activities, including his charitable work across the region, while undergoing treatment.

“It doesn’t mean you won’t cry every day,” he told 22News at the time. “It means you will have a different perspective. I have to be clinical about it.

I have to hope for the best and prepare for the worst.”

How he conducted himself during the final year of his life was inspiring to Balise associate, Laurie Flynn.

“The way that Mike carried out the final year of his life, it was no surprise to anyone who knew him ... and he did it with grace and honor. He really was an inspiration to anyone who knew him,” Flynn said.

Springfield Mayor Domenic Sarno released a statement mourning Balise’s passing, noting, “Ever the gentleman, he and the Balise family have been great corporate citizens to our City of Springfield.

Not missing ‘a quality assurance beat,’ even with everything he had going on, he would always ask how my wife Carla’s van was doing.

‘Til the end­– a class act.”

Mike Balise spent much of his remaining time raising funds for awareness and cancer research, and was a longtime supporter of Community Resources for People with Autism. His family is urging anyone who is inclined to make a donation in his honor.

“When Mike was diagnosed with stomach cancer in the fall of 2014, he vowed that in whatever time he had left, he’d live every moment to the fullest,” CEO Jeb Balise said in a letter to employees.

“And that is exactly what he did. In fact, Mike recently shared that this past year was actually the best of his life. With a positive attitude and a wicked sense of humor he embraced every moment – be it spending time with his family, working in the business he loved or raising awareness about this disease so that one day, others might not have to suffer. He touched lives and kept us all smiling right up to the end.”

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Baker Cadillac Hosts Grand Re-Opening Baker Cadillac held their grand opening of a renovated facility and a combined 25th anniversary celebration last month. Dealer Principal Joel Baker opened the store in 1990 as Baker Main Street Motors, and it has been a stand-alone Cadillac dealership since Oldsmobile was dropped from the GM lineup.

In attendance from Cadillac were Andy Dunstan, Vice President of Global Dealer Network Strategy, and Regional Director Steve Flynn. Leominster Mayor Dean Mazzarella attended the ribbon cutting.

The renovation of the dealership adds a service drive

in addition to a new showroom and office area. The new space was added to handle the increased volume anticipated with the new products arriving from Cadillac in the coming years.

MSADA BOSTON

Automotive News profiles Nissan’s Boston Struggle, Manufacturer Responds Automotive News published a report in December on Nissan’s lagging numbers in Massachusetts, noting the manufacturer has been unable to open two new stores because of a lack of interest from would-be dealers.

“More than a dozen dealers in Boston and elsewhere in the U.S. said they believe Nissan, after several years of rapid growth, now is setting unrealistically high sales targets,” the article states.

“It employs stair-step incentives that, these dealers complained, end up causing them to sell cars at a loss to try to qualify for the incentives.”

The article pointed to below average Nissan vehcle registrations as further evidence of the company’s lag in the Bay State.

Massachusetts was at 7.7 percent market share, versus 8.5 percent nationwide. The full article is available at www.automotivenews.com.

Shortly after publication, Nissan communications executive

David Reuter wrote to decry the article: “Had you spoken to the many successful Nissan dealers -- as was offered to your publication during the preparation of the story -- you would have been compelled to paint a much more balanced picture of Nissan’s relationship with its dealer body.”

WEST SPRINGFIELD

Balise Auto Plans New Kia Dealership Balise Auto announced this month that they would open a new Kia dealership in West Springfield next to their Mazda store.

The company expects to have the new Kia dealership open for business by the end of the first quarter of this year.

“Kia is one of the fastest-growing brands in the U.S., and we’re excited to welcome the Kia franchise into the Balise family,” Balise President and Chief Operating Officer Bill Peffer told 22 News.

The new Kia dealership will be the only one in western Massachusetts – Fathers & Sons Kia in West Springfield closed this past fall, and Lia Kia in Northampton also shut down last year.

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NEWS from Around the Horn EVERETT

Honda Cars of Boston Raises ALS Funds Honda Cars of Boston recently partnered with the Frates ALS Research and Support Fund, presenting a check for $13,100 to the group in December. Pete Frates, a former Boston College baseball player, is credited with starting the Ice Bucket Challenge. He was diagnosed with amyotrophic lateral sclerosis (ALS) in 2012.

The dealership had been raising funds since last August, kicking off their own Ice Bucket Challenge with Frates’ mother and father. The dealership pledged $50 per new car sold during Honda’s Summer Clearance Event, selling 262 vehicles. Honda Cars of Boston presented the check on December 29.

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From left to right, owner/operators Rick Giacchino, Gene Giacchino, Nancy Frates, John Frates, Rob Giacchino, and Paul Giacchino present a check to Nancy and John Frates for $13,100 to the Frates ALS Research and Support Fund.

Massachusetts Auto Dealer www.msada.org

MSADA CHELMSFORD

AutoFair Plans Move for Tewksbury Nissan Nearly four years after purchasing the former Ira Nissan dealership in Tewksbury, AutoFair Automotive Group announced it is moving the dealership to Chelmsford some time this year.

Manchester-based AutoFair said demolition work has begun on a building at 95 Drum Hill Road that formerly housed a Sears Hardware & Appliance store and Party City retail outlet. That building will be replaced by a 30,258-square-foot new Nissan facility to be known as AutoFair Nissan of Chelmsford.

The move, expected to be completed by July or August, will bring about 75 jobs to town, including transfers from Tewksbury and new positions.

Andy Crews, president and CEO at AutoFair, said the move will double the size of the local Nissan dealership and add amenities such as internal delivery and a coffee bar.

“Nissan has done well,” he told The Lowell Sun. “This is a great opportunity for the Lowell-Chelmsford market.”

PORTSMOUTH, N.H.

Trump Campaign Makes Stop at Portsmouth Toyota MSADA Past President Jim Boyle served as host to Republican presidential frontrunner Donald Trump in a January event at Toyota of Portsmouth. Trump leads the New Hampshire polls as the February 9 primary nears.

The event featured a stump speech from Trump as well as an appearance by former U.S. Senator Scott Brown.

When a member of the audience shouted a suggestion that Brown serve as Trump’s Vice President, Trump didn’t exactly bat away the idea.

“He’s central casting,” Trump said. “He’s great. Great guy and a great, beautiful wife and family. So important.” www.msada.org

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NEWS from Around the Horn NORWOOD

NorthEeast Dealer Services Hosts Grant Cardone Event Ernie Boch Jr. and NorthEast Dealer Services hosted dealer friends and clients for an evening with guest speaker Grant Cardone, under the theme “How to Blow Up Your Business in 2016.�

Opening with a social hour that drew dealers from across New England, special guest and executive chef Tony Ambrose offered spirits and appetizers. Mixing food and spirits with more than 70 automotive professionals made for a lively engagement over business, politics, and the New England Patriots.

Opening remarks were presented by Ernie Boch Jr.,

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NEDS Vice President Jim Schaffer, and MSADA Executive Vice President Robert O’Koniewski. Drawing on his retail auto experience and success at building a worldclass sales training organization, Cardone spoke on the topics of high expectations for employees, holding them accountable, and the urgency of engaging social marketing in your business operations.

The evening concluded with Cardone signing his book, The 10X Rule. Guests also posed for pictures alongside Boch and Cardone.

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NADA Market Beat

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DECEMBER 2015

M M M M

M Our expectations for a weaker December certainly came true, with sales of just 17.2 million for the month on a SAAR basis. But the year certainly ended with a bang—a record 17.4 million light-duty vehicles were purchased or leased, according to WardsAuto. So will there be another record in 2016? We are sticking with our forecast of 17.7 million, though only if the OEMs increase incentives.

And you can expect them to do so, as capacity in North America creeps up and the rest of the world (particularly China and emerging markets) slow. But without rising incentives in 2016, last year would have marked the high point for sales this decade. Our worry now: We may have started to pull ahead sales for consumers worried about rising rates and others no longer romanced by declining gasoline prices.

M M M M

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Thank You

From the New Car Dealers of Massachusetts and the Auto Tech Scholarship Students you have helped, we thank our event sponsors: NITROUS BOOSTED

S outhern A uto A uction

HIGH OCTANE A lbin , R andall & B ennett CDK G lobal D ealer DOCX N ortheast D ealer S ervices R eynolds & R eynolds Z urich VALET SERVICE SPONSOR T he B oston G lobe COAT CHECK SPONSOR R eflex L ighting WELCOME GIFT SPONSOR F isher & P hillips BAND SPONSOR T rue C ar

DESSERT STATION SPONSORS H untington B ank

CASINO ROOM SPONSOR E thos G roup

PARTING GIFT P re -O wned L ogistics

BREAK STATION SPONSOR A uto A lert

FRIENDS OF THE SCHOLARSHIP PROGRAM D owney & C ompany F ederated I nsurance H ireology TD B ank T rue C ar

FULL BAR SPONSOR A merican F idelity O’C onnor & D rew

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FOOD STATION SPONSORS B oston H erald CVR D ealer T rack GW M arketing S ervices L ynnway A uto A uction M urtha C ullina S antander

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NADA Update

By Don Sudbay

Going for the Record

2016 predictions look promising, let’s make sure to keep it that way.

Don Sudbay, President of Sudbay Automotive Group, represents MSADA members on the NADA Board of Directors. He welcomes your

questions

and

concerns

(donsudbayjr@sudbay.com).

I hope all of you have had a wonderful holiday season and are as excited as I am for the year ahead. As you’ll see below, NADA is predicting big things, and I know I feel the same optimism in my corner as well.

As we get closer to the NADA Convention, I should remind you that it’s time to make travel plans and set the wheels in motion to be able to attend March 31–April 3 in Las Vegas.

It’s truly one of the most exciting sites a dealer can encounter to see the buzz created by such a large, national event. Please be in touch if you have any questions about attending.

NADA Forecasts a Record 17.7 Million NewCar Sales in 2016 U.S. sales of new cars and light trucks will set an all-time record in 2016, predicted Steven Szakaly, chief economist of NADA. “More than 17.7 million new light vehicles will be purchased or leased this year, about a two percent increase from 2015, and setting back-to-back records,” Szakaly said. “It will be the seventh consecutive year of auto sales growth.”

In 2015, a record 17.4 million new light vehicles were retailed, up 5.8 percent from 2014, according to WardsAuto.

The average transaction price of a new car and light truck was $33,269 in 2015, according to NADA. “We are living peak auto sales right now, and we will see one more year of that growth in 2016,” Szakaly added. “But only because of rising incentives that will keep consumers coming into showrooms. The real worry now is whether we’re starting to pull sales ahead from future years.”

Szakaly explained that, in the battle for market share, automakers are expected to increase incentives this year to manage increased manufacturing capacity, and to offset the effects of a slowing global economy, especially in emerging markets.

“If we were looking at a market with stable global growth and no increases in manufacturing, auto sales might actually fall in 2016,” he said. “But we have a situation where plants

have been built, demand is slowing, and the U.S. market remains the most profitable in the world. Growth in places like Mexico will offer some temporary reprieve, but it won’t be sufficient to offset falling demand from Brazil, South Africa and other emerging markets. This means incentives will rise to stoke demand.”

Sustained sales momentum in 2016 is also dependent on expectations that auto financing rates will remain competitive, with interest rates rising modestly - by less than one percentage point - by the end of 2016; wages will grow about 2.5 percent this year; and the economy will add more than two million net new jobs in 2016, Szakaly added.

NADA Responds to Release of Second House Financial Services Committee Report on CFPB NADA, through its spokesman Jared Allen, issued the following statement in response to the release in January of the House Financial Services Committee report “Unsafe at Any Bureaucracy, Part II”: “This report further confirms that the CFPB’s campaign to eliminate auto loan discounts costs consumers money. The CFPB should instead consider the U.S. Department of Justice solution that fully addresses the Bureau’s concerns about fair credit risk in auto lending, but that doesn’t needlessly cost consumers money or harm the very people the agency is trying to help. There is substantial bipartisan support in Congress to force the CFPB to bring transparency and accountability into their policymaking, and for very good reason.”

NADA Completes Rebranding Effort, Launches New Logo as Part of Refocus on Advocacy Efforts NADA announced in January the completion of a major corporate rebranding initiative that coincides with ongoing efforts to re-center the organization around its core mission of advocating on behalf of the nation’s 16,500 franchised newcar dealers.

As part of the rebrand, NADA refreshed its corporate logo to both deliver a modern look and serve as the anchor for a cohesive aesthetic across all of NADA’s communications platform, including print, online, email, social media, advertisements, marketing materials, presentations, videos, signage, displays, and NADA Convention materials. NADA also re-designed its sub-brand logos - including those of the NADA Academy, NADA Convention and Expo, NADA Retirement Program, and others - to align more closely with the refreshed NADA logo.

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NADA Update NADA President Peter Welch explained that creating a single, strong brand that is instantly recognizable to each of NADA’s stakeholder audiences - including member dealers, auto manufacturers and industry partners, policymakers, the media, and the public - is a vital part of being a successful, influential advocacy organization.

“A strong and recognizable brand is critical to the individual success of each of our dealer members, just as it is critical to the success of the manufacturers of the vehicles our dealers sell and service,” said Welch. “It’s no different here at NADA.” NADA also announced it was changing the name of its political action committee to NADA PAC, the National Automobile Dealers Association Political Action Committee, from the earlier Dealers Election Action Committee (DEAC).

As the third-largest trade association PAC by total contributions, NADA PAC has a long record of supporting members of Congress from both parties who recognize the importance of local dealerships to their communities, consumers, economies and constituents.

NADA’s rebranding comes at a time when the organization has recommitted itself to its core advocacy efforts in Washington, D.C. This commitment has included the transition of its in-house retirement plan into a partnership with Empower Retirement, as well as the 2015 sale of the NADA Used Car Guide - which for more than 80 years was the industry standard for accurate and comprehensive used-vehicle valuations. - to J.D. Power and Associates. NADA also relaunched its website in April 2015.

“Enabling NADA to better focus on its core mission of enhancing America’s new-car dealer network, and advocating on behalf of our dealer members in Washington, D.C., has been one of my primary objectives as president of NADA,” Welch added. “Whether we’re talking about mobilizing our grassroots network, testifying before Congress, or the sign on our door, if it’s going to benefit America’s franchised new-car and truck dealers, then NADA is going to do it.”

N.H. Supreme Court Upholds ‘Dealer Bill of Rights’ The New Hampshire Supreme Court has ruled against a challenge to the state’s “dealer bill of rights” by farm-equipment makers, which had held up implementation of 2013 revisions to the state law. John Deere & Co., Kubota Tractor Corp., Husqvarna Professional Products Inc., and others had argued that the law, initially written to protect automobile dealers from excessive demands by automakers, shouldn’t be extended to farm- and construction-equipment dealers, in part because it interfered with their existing franchise agreements. In late Decembre, the state Supreme Court upheld the dealer bill of rights. That revised law had been scheduled to

JANUARY 2016

MSADA go into effect in September 2013, but the companies filed suit in August 2013.

Free Market Groups: Feds Ignoring Evidence in War on Car Dealers A coalition of free-market groups accused federal regulators in January of ignoring evidence that would undermine proposed measures governing automotive sales that stand to enrich a politically-powerful company at consumers’ expense.

The coalition, led by Americans for Tax Reform president Grover Norquist, released a letter to coincide with a Federal Trade Commission workshop examining states’ automotive franchising laws, which limit car manufacturers’ abilities to sell vehicles directly. Critics of the laws, including the Federal Trade Commission, say they restrict new market entrants such as luxury electric vehicle manufacturer Tesla, which says its sales would be threatened by the franchise dealer model.

Norquist’s coalition, which includes representatives from four other free-market groups, insists that ending or restricting automotive franchising would actually decrease consumer choice by reducing competition among dealers selling the same car brands. The letter pointed to a March study by the Phoenix Center for Advanced Legal & Economic Public Policy Studies, which found “that intra-brand competition does, in fact, lower new car prices for consumers.” The coalition says the FTC has ignored that study in an effort to protect its anti-franchising position. “In short, the FTC appears to be trying to find a problem in a market where no evidence of a problem exists,” they wrote.

NADA Dealership Workforce Study Now Open for Participation With a retail workforce topping one million employees and the auto industry poised for sales growth, new-car dealerships now more than ever need to focus on hiring and keeping talented employees. To help dealerships stay competitive, the NADA Dealership Workforce Study provides the industry’s only authoritative analysis of employee compensation, retention and turnover, employee benefits, work schedules, and demographics.

Dealerships that complete a questionnaire and submit their payroll data will receive two complimentary reports—including comparisons of their dealerships to their peers nationally, regionally and by state as well as by brand. The participation period is open now through April 29. The study will close promptly so that NADA can provide dealers the information they need to adjust pay plans and benefit packages. To begin the process, visit www.nadaworkforcestudy.com. If you have any questions, send an email to WorkforceStudy@nada.org or call (800) 557-6232. t

Massachusetts Auto Dealer www.msada.org

MSADA

TRUCK CORNER American Truck Dealers Move the Industry Forward

By Eric K. Jorgensen

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