2017 january auto dealer(web)

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

auto M a s s a c h u s e t t s

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

January 2017 • Vol. 29 No. 1

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

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S ta f f D i r e c t o r y 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 Jorge Bernal Administrative Assistant/ Membership Coordinator jbernal@msada.org Auto Dealer MAgazine Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to MSADA by e-mail: jbernal@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 Ethos Group, 32 Lynnway Auto Auction, 28 Nancy Phillips, 27 O’Connor & Drew, P.C., 35 Reynolds & Reynolds, 2 Southern Auto Auction, 26

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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

4 From the President: The Road Ahead 6 THE ROUNDUP: An Exciting Start to 2017 10 TROUBLESHOOTNG: Zero Emission Vehicle Update 11 LEGISLATIVE SCORECARD 12 AUTO OUTLOOK 14 LEGAL: Increased Penalties, Uncertainties, and Litigation 15 ACCOUNTING: Cybersecurity is Not Just An IT Problem Cover Story:

16 Dealer Summit 18 All Jazzed Up 20 Casino Night 22 Auto Show 24 Sponsor Thank-You 26 NEWS From Around the Horn 29 DEALER SERVICES: Lead Like Lombardi 30 nada Market Beat 33 nada update: Let the Good Times Roll

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

Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600

Join us on Twitter at @MassAutoDealers www.msada.org Massachusetts Auto Dealer JANUARY 2017

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from the President

MSADA

The Road Ahead

Taking on the Association’s leadership role

By Chris Connolly, MSADA President

Msada Board Barnstable County

Brad Tracy, Tracy Volkswagen

I write this just after being introduced as MSADA President at the 2017 New England International Auto Show Dealer Summit, where I took on the role with pride and indebtedness to those who have served before me and will serve with me.

What we saw at our Summit and Annual Charity Gala that followed represents one of the highlights of our year as an Association. As we see the public gather around the vehicles on the floor of the Boston Convention and Exhibition Center, we come together to celebrate our common vision for a Commonwealth that allows the public access to these vehicles from local businesses that are a vibrant part of the communities they serve.

The Auto Show represents a significant public-facing part of what your Association provides for its member dealers each year, but it is just one slice of a growing apparatus that protects dealer interests on Beacon Hill, at a regulatory level, and even on Capitol Hill.

Under the continued guidance of Executive Vice President Robert O’Koniewski and his staff, MSADA has been a valuable platform for dealers to get our voices heard at all levels.

What I have gleaned as a board member of the Association, and watching Scott Dube serve in the role these past four years, is how much deeper the connection runs. This organization serves as a binding agent for businesses who day-in and day-out are in competition with each other. That’s the nature of what we do – and we love the work. MSADA gives us a chance to protect our collective industry, but also a space to gather in camaraderie outside the pressures of our daily routine.

As your new Association President, I look forward to continuing on the path set by Scott Dube toward keeping our franchise system at the forefront of conversation in the halls of power. We have the facts on our side. While a report from MIT recently criticized some dealers’ readiness to address changing vehicle technology, they had no doubts about the importance dealerships will continue to play in getting customers in vehicles. Increasing our comfort level with what’s coming down the pike will be an important part of our work in the next few years.

No matter where the industry heads, whether cars are driving themselves, powered by only electricity, hydrogen, or whatever people come up with, the key thing is that we make the case that franchise dealerships are both safest and most economical for consumers. Wherever we encounter opposition to that basic fact, we will push back. Whenever we see opportunity to collaborate toward a brighter future, we will be happy to work with any partner.

I look forward to hearing from you about what you envision for your business in the next few years and down the line. Please always feel free to reach out to me about any issue – big or small. Of course, your MSADA staff remains ready as ever to address your needs as well. As we gear up for our Annual Meeting in May, I encourage you to reach out. In the meantime, I hope your 2017 is off to a great start, and I look forward to helping all of our businesses grow. t JANUARY 2017

Massachusetts Auto Dealer www.msada.org

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 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 Scott Dube, Bill Dube Hyundai

NADA Director

Don Sudbay, Jr., Sudbay Motors

Officers

President, Chris Connolly, Jr. Vice President, Charles Tufankjian Treasurer, Jack Madden, Jr. Clerk, Steve Sewell

Associate Members

MSADA A ssociate M ember D irectory ADESA Jack Neshe (508) 626-7000 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 Armatus Dealer Uplift Joe Jankowski (410) 391-5701 AutoAlert Jessica Gates (816) 506-0515 Auto Auction of New England Steven DeLuca (603) 437-5700 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 and Tom Drislane (617) 929-8373 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Capital Automotive Real Estate Services Willie Beck (703) 394-1323 Cars.com Heidi Allen (312) 601-5376 Catalogs.com David Solar (954) 908-7122 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cox Automotive Ernest Lattimer (516) 547-2242 CVR John Alviggi (267) 419-3261 Dealer Creative Glenn Anderson (919) 247-6658 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Carl Bowen (401)-742-1959 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 (857) 404-404-0226 Harbor First Ron Scolamiero (617) 500-4080 Hireology Kevin Baumgart (773) 220-6035 Huntington National Bank John J. Marchand (781) 326-0823 JM&A Group Jose Ruiz (617) 259-0527 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 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

www.msada.org

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 & Associates, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Southern Auto Auction Tom Munson (860) 292-7500 SPIFFIT Sean Ugrin (303) 862-8655 Sprague Energy Timothy Teevens (800) 828-9427 SunTrust Bank Michael Walsh (617) 345-6567 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

An Exciting Start to 2017

By Robert O’Koniewski, Esq. MSADA Executive Vice President Follow us on Twitter - @MassAutoDealers This month had it all – the end of one legislative session and the start of yet another; the 60th edition of our New England International Auto Show, including our Dealer Summit and Charity Gala; a new president for your Association and the inauguration of our 45th President of the United States; a meeting with the Governor regarding auto tech jobs; and, as we go to press, dealers our preparing to hit New Orleans for the 100th anniversary of the National Automobile Dealers Association.

Auto Show – Charity Gala – Dealer Summit On Friday, January 13, your Association and the Massachusetts State Auto Dealers Charitable Foundation held its 20th Auto Show Charity Gala to celebrate our 60th edition of the New England International Auto Show at the Boston Convention and Exhibition Center.

We feted over 500 guests, including our dealers, sponsors, and other industry representatives, to raise funds for our auto tech scholarship program. Party-goers were entertained by the New Orleans swing sounds of the Fat Tuesday All-Stars.

Based on our previous years’ successes and enthusiasm, we again ran a casino party room where attendees could roll the dice and play JANUARY 2017

Massachusetts Auto Dealer www.msada.org

cards to win great prizes, all for a worthy cause – our tech scholarships. Congratulations to our big winners, in order of finish: Johna Cutlip, Levon Semerjian, Max Huguenin, Anthony Parente, Melissa Crews, and Nate Paul. No paraskevidekatriaphobia amongst them, for sure.

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

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

Prior to the evening’s party, we held our fourth annual Dealer Summit where dealers and their key managers heard presentations from Glenn Mercer (“The Dealership of Tomorrow”), which was a preview of his major presentation at the NADA Convention coming up in New Orleans; Rob Sneed of Ethos Group (“The Ownership Experience”); Joe George of Manheim Vehicle Advantage (“The Evolving Dealership and Emerg-

MSADA ing Trends”); Joe Roesner of The Fontana Group (“Understanding and Responding to Sales Performance Metrics”); Fisher Phillips attorney Joseph Ambash (“Employment Law Outlook for 2017”); and our staff attorney, Peter Brennan, who provided an update on the ZEVs situation in Massachusetts, which he recaps in this month’s Troubleshooting column.

MSADA’s new president, Chris Connolly of Herb Connolly Motors, spoke briefly to start the festivities and urged dealers to take advantage of all that the association offers as well as to get involved with lobbying legislators on those issues important to our industry.

The MSADA Board of Directors elected Chris as President at its December board meeting, elevating him from the position of Vice President. Chris succeeded Scott Dube, Bill Dube Hyundai, who had completed his second two-year term. (The association’s other elected officers are Vice President Charles Tufankjian, Toyota of Braintree; Treasurer Jack Madden, Jack Madden Ford; and Clerk Steve Sewell, Westboro Mitsubishi.)

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.

New Legislative Session Begins The 190th General Court of the Commonwealth of Massachusetts commenced on January 4 within hours of the completion of the 189th at midnight of January 3.

Pomp and ceremony dominated the day, with the script laid out based on hundreds of years of tradition and constitutional requirements. Two hundred legislators comprise the Legislature – 160

representatives and 40 senators – and most of them managed to show up on the morning of January 4 (three were absent due to travel schedules) to be sworn in and to organize themselves for purposes of electing their leaders and informing the governor and the other’s respective legislative branch that they have been sworn and are ready to do business. This session welcomed two new senators and thirteen new representatives.

Once all the ceremonies were completed, the House and Senate got down to the business of electing their chambers’ leaders. Again, no surprises here. Rep. Robert DeLeo (D-Winthrop) was re-elected to a fifth term as speaker of the House. If he serves out the full two-year term, Rep. DeLeo will become the longest serving speaker under the state constitution, surpassing former Speaker Tom McGee’s record nine-and-one-half year run from 1975-1985. Rep. DeLeo is serving in his 14th term in the House. House Republicans re-elected Rep. Bradley Jones (RNorth Reading) to be the minority leader.

On the Senate side, Sen. Stan Rosenberg (D-Amherst) was re-elected as President.

Senate Republicans re-elected Sen. Bruce Tarr (RGloucester) to be the minority leader in that chamber.

At some point over the next several weeks, the Speaker and Senate President will fill out the membership of the various legislative committees along with naming the chairmen of those committees.

Once that is done, bills will start to flow to the committees, and public hearings can be scheduled. The bill filing deadline was January 20. We will have more on the legislative meat on these bones over the www.msada.org

coming months once we see all that has been filed and who will sit on the committees of importance to dealer issues.

For example, although we were able to defeat a legislative cap on the doc prep fee of $100, we will not know if this proposal has been re-filed until the process is completed. Regarding our bill to eliminate the used vehicle record book written requirement – although it passed both the House and Senate, the final version did not receive joint approval before the January 3 midnight deadline so we will have a go at it again this session.

We will keep you informed of developments in the 2017-2018 legislative session through our various communications, including asking you to participate with your legislators in helping move our bills along the process.

Meeting with Governor Baker on Auto Tech Jobs On January 12 your association leadership met with Governor Charlie Baker

and his team at the Milford Department of Correction vehicle repair facility in Milford to discuss a new auto tech training program DOC has commenced for certain qualifying inmates. The Governor’s initiative is designed to train individuals to be able to move into a job at a dealership or other auto repair facility upon the trainee’s release from the state’s hospitality.

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The Roundup MSADA President Chris Connolly, Treasurer Jack Madden, and association staff discussed with the Governor and his staff the possibilities for marrying the need for auto techs at dealerships with outreach into the training program as a means of providing worthwhile employment and a second chance to these individuals. We also discussed with the Governor the auto tech training component of the economic development law that he signed in July and working with his economic development team to create opportunities at dealerships, tech high schools, and community colleges for continued outreach and training to fill job gaps at dealers’ shops.

MSADA Dealer Support Programs Re-Approved for 2017 Since 2014 your association has administered a program in which we subsidize the cost of certain compliance efforts dealers go through at their stores.

Through this program, we have supported dealers’ use of Fisher Phillips for employment law services, such as pay plans, employee handbooks, etc.; KPA and Furrh Associates for OSHA and environmental compliance; and O’Connor & Drew for tax compliance and cybersecurity protections. Your Board of Directors voted at its December board meeting to continue these programs for 2017.

In addition to the compliance assistance, your Board voted to reauthorize the community outreach program for 2017, in which we assist dealers’ efforts for up to $1,000 annually.

Do not hesitate to contact us regarding these programs so you do not lose out on these services supported by your association.

2017 Auto Tech Competition On January 14 MSADA hosted 102 students from 12 vocational technical high schools at the preliminary written test portion of our 2017 auto tech competition in Marlborough. The results of the written test winnowed down the group to the top ten two-person senior JANUARY 2017

class teams from the competing schools and the top four two-person junior teams from the whole group. These teams will compete at the hands-on test on February 4 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 on April 18-19.

The top ten teams competing for the state title come from the following high schools: Assabet Valley Regional Tech High School (two teams), Attleboro Vocational High School, Bay Path Regional Vocational Tech High School, Blackstone Valley Regional Tech High School (two teams), Bristol-Plymouth Regional Tech, Nashoba Valley Technical High School, and Old Colony Regional Tech High School (two teams).

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

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 Janu-

Massachusetts Auto Dealer www.msada.org

ary 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/Small -Businesses-&-Self-Employed/Reportof-Cash-Payments-Over-10000-Received-in-a-Trade-or-Business-MotorVehicle-Dealership-QAs • http://www.irs.gov/pub/irs-pdf/f8300. pdf

New Buyers Guide Form Available – New Form Effective January 27 In December the Federal Trade Commission issued a final rule that amends the Used Car Rule and adopts a revised version of the Buyers Guide. The new Guides must be used beginning Janu-

MSADA ary 27, 2017, but dealers may continue to use existing stocks of the current version until January 27, 2018. The penalty for violating the rule can amount to up to $40,000 per violation. For the FTC website explaining the regulation, go to https://www.ftc.gov/tips-advice/ business-center/guidance/dealers-guideused-car-rule. Contact Mike O’Connor at Reynolds & Reynolds by phone at 860462-7958 or email at lawrence_oconnor@reyrey.com for more information and to obtain the new Guides. Check out the information ad on page 2 of our magazine.

NADA 2017 Work Force Study Open The NADA/ATD 2017 Dealership Workforce Study (DWS) is now open.

Your chance as a NADA/ATD member to participate ends on April 28.

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 sixth annual DWS NADA has conducted. The DWS collects data on compensation, employee benefits, retention 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 Work-

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 mem-

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. force 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 28. 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.

2017 Dues Invoices Earlier this month your Association sent out 2017 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 www.msada.org

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

Save the Dates: Annual Meeting – May 5, Boston; Dealer Day on Beacon Hill – May 24 Your Association will conduct this year’s Annual Meeting on Friday, May 5, 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.

Also, be sure to circle Wednesday, May 24, for our annual Dealer Day on Beacon Hill, when we schedule meetings for our attending dealers with their legislators at the State House, to lobby on the important issues of the day for dealers and our industry. t

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Troubleshooting

MSADA

Zero Emission Vehicle Update

By Peter Brennan, Esq.

MSADA Staff Attorney Those that follow the news are probably aware of the push for electric vehicles at both the state and federal level as a means to reduce greenhouse gas emissions. If you attended our recent Dealer Summit, then you also know that states have been struggling to meet the lofty sales goals for these vehicles due to low consumer interest.

Since the Summit, the California Air Resources Board (CARB) has issued its mid-term review and the incoming Environmental Protection Agency director has said that emissions regulations could be revisited under the Trump Administration. In short, it is an electrifying time to be following the topic.

First, what is a Zero Emission Vehicle? A ZEV is a vehicle that emits no tailpipe emissions from its primary onboard power source. These vehicles include: Battery Electric Vehicles (BEVs), which run entirely on electricity and can be recharged from the electricity grid (Nissan Leaf, BMW i3 and Chevy Bolt); Plug-In Hybrid Electric Vehicles (PHEVs), which combine a conventional gasoline-powered engine with a battery that can be recharged from the electrical grid (Ford C-MAX Energi and Toyota Prius); and Hydrogen Fuel Cell Electric Vehicles (FCEVs) which run on electricity produced from a fuel cell using hydrogen gas (Toyota Mirai and Hyundai Tuscon Fuel Cell).

The federal Clean Air Act sets nationJANUARY 2017

wide emissions standards but allows states to follow federal requirements or adopt California’s stricter emission standards. If a state adopts the California standards, then the state must adopt the regulations in full with no alterations.

Massachusetts is one of nine states that have opted-in to California’s requirements, including the “ZEV Mandate”, a mandate on the percentage of vehicles sold in the states that must be ZEVs. The Commonwealth must, therefore, abide by the regulations in full, including any amendments passed by CARB. In order to comply with the ZEV Mandate, 4.5% of a manufacturer’s model year 2018 vehicles must be ZEVs or a mixture of ZEVs and Plug-in Hybrid Electric Vehicles (PHEVs). This rises to 22% for model year 2025, with a minimum of 16% being ZEVs (hybrids cannot account for more than 6% percent of the total). The goal of the mandate is that by 2025 ZEVs will represent 15% of all new vehicle sales, and Massachusetts has committed to having 300,000 EVs on the road in Massachusetts by 2025.

Unfortunately, in 2016 fewer than 2,000 ZEVs were sold in Massachusetts, representing just 0.72% of vehicles sold. To reach the 2025 target requirement, over 290,000 ZEVs will need to be sold in the Commonwealth over the next eight-plus years.

There is widespread concern that automobile manufacturers, who meet their obligation under the regulations by “delivering for sale” the necessary quota of ZEVs to the dealer, not to the end use consumer, will simply dump unwanted vehicles on dealer lots. CARB recently issued a midterm review of the regulations and essentially determined that the ZEV mandate was working as intended and required no drastic changes. The comment period on the review is now open, and it is unclear whether CARB will amend the regulations so that manufacturers only receive credit when a ve-

Massachusetts Auto Dealer www.msada.org

hicle is “placed in service”, a change that is being advocated by dealer associations at the state and federal level (including your MSADA).

There is a chance that CARB’s actions may not matter much in the long term.

Oklahoma Attorney General Scott Pruitt, who, if approved, will soon become EPA administrator, responded to inquiries during his Senate confirmation by stating that he planned to take a look at California’s role in the emissions standards.

It will be interesting to see what President Trump, who has been vocal in his support of deregulation but also states’ rights, does on this issue (among others).

The overwhelming majority of green energy fans in our legislature will, most likely, keep Massachusetts out in front of the issue while the Trump presidency may serve to stoke the fires of green issues advocates. As you know, the Commonwealth already leads most, if not all, states by offering a cash-on-the-hood rebate of up to $2,500 per vehicle on ZEVs through the MOR-EV program, to which the Baker administration recently dedicated an additional $12 million.

Additionally, Governor Baker recently signed into law “An Act Relative to the Promotion of Zero Emission Vehicles.”

The legislation regulates vehicles charging stations to make them more accessible to consumers, allows towns to designate certain parking spots for ZEVs, and requires the state to study the addition of ZEVs to the state fleet. It is expected that the Legislature will attempt to build on this fairly weak legislation with additional proposals during the upcoming legislative session. t If you require any additional information on these wage and hour issues please contact Robert O’Koniewski, MSADA Executive Vice President, rokoniewski@ msada.org or Peter Brennan, MSADA Staff Attorney, pbrennan@msada.org or by phone at (617) 451-1051.

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AUTO OUTLOOK

JANUARY 2017

Massachusetts Auto Dealer www.msada.org

MSADA

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Legal

By Joseph W. Ambash and Jeffrey A. Fritz

MSADA

Increased Penalties, Uncertainties, and Litigation As we have reported previously in this column, wage and hour laws continue to evolve, and pay equity litigation is on the rise. Accordingly, it is imperative for your dealership to keep abreast of these changes and developments and to make any necessary adjustments to reduce the risk of liability.

FLSA Penalties Increase Prior to August 2016, the Fair Labor Standards Act (“FLSA”) authorized the U.S. Department of Labor (“USDOL”) to impose a monetary penalty of up to $1,100 for each “repeated” or “willful” violation of the FLSA’s minimum wage or overtime pay requirements. Effective January 13, 2017, that maximum per-violation penalty (which typically is a per-person penalty, based on the number of employees paid incorrectly) was increased to $1,925. Of course, that penalty is separate and apart from what an employee (or, more commonly, a class of employees) could obtain through a lawsuit for FLSA or Massachusetts Wage Act violations, including triple damages and attorneys’ fees.

The FLSA’s child labor monetary penalties also have increased: up to $12,278 for any violation, and up to $55,808 for any child-labor violation resulting in a minor’s serious injury or death (which could be doubled to $111,606 for any “repeated” or “willful” violation). If any of your employees are under 18 years of age, you should pay particular attention to these increases and ensure you are in compliance, as the USDOL takes child labor violations very seriously.

Ninth Circuit Rules Service Advisors Not Exempt Over the years, the USDOL has gone back and forth on whether Service Advisors qualify for the FLSA’s Salesman exemption to overtime pay. Since 2011, the USDOL has held the position that they do not. Most courts, however, have disagreed, and the USDOL has not pushed to enforce JANUARY 2017

its interpretation. That has not stopped plaintiffs’ attorneys from advocating for that view. And, on January 9, 2017, in a lawsuit filed by a Service Advisor in California, the Ninth Circuit Court of Appeals agreed, holding Service Advisors do not qualify for the Salesman exemption and, accordingly, are entitled to overtime.

While the Ninth Circuit’s decision is not binding here, Massachusetts dealers should know it has (1) established precedent that other courts, including those in Massachusetts, may choose to follow, and (2) created a split among the federal appeals courts that ultimately may be resolved by the U.S. Supreme Court.

To ensure your Service Advisors are exempt from overtime, regardless of the outcome of this issue, you should consider paying them on a 100% bona fide commission basis. Under such a scenario, they will qualify for the FLSA’s Commission-Paid exemption to overtime, so long as yours is a “retail” dealership and, in any week in which they work over 40 hours, they are paid at least one-and-a-half times the FLSA’s minimum wage (or $10.89 per hour) for all hours worked. And your dealership will be in compliance under Massachusetts law, so long as they are paid at least $11 per hour (the current Massachusetts minimum wage) for all hours worked up to 40, and $16.50 per hour (or time-and-a-half, if paid a weekly draw on an hourly basis) for all time worked over 40 hours, in any workweek.

(3) refrain from asking questions about salary history on job applications. The USDOL also has been focusing on the issue of pay equity, with robust changes to its EEO-1 survey (that employers of 100 or more employees are required to submit each year) for 2017, including reporting wage and hour data based on gender. Aggrieved employees and their attorneys are taking notice, and filing pay equity lawsuits, some directed at your industry.

For example, on January 11, 2017, a female clay modeler filed a lawsuit against General Motors in the Eastern District of Michigan, claiming gender discrimination and violations of the Equal Pay Act. In essence, she claims GM failed to pay her as much as her “similarly-situated” male coworkers who, she claims, performed “the same or similar duties.” Her lawsuit criticizes the automobile industry’s female recruitment and retention efforts, and cites surveys and statistics showing females are underrepresented in the industry across the board.

In light of the potentially significant exposure for wage and hour violations, you should consider having your pay plans reviewed for compliance with federal and Massachusetts law. You also should consider having your pay practices reviewed to identify and remedy any unlawful disparities with respect to gender. t

Pay Equity Litigation on the Rise Massachusetts recently enacted a pay equity law that goes into effect July 1, 2018, requiring employers, among other things, to (1) pay similarly-situated men and women the same for doing different, but “comparable” jobs, subject to certain permissible variations; (2) refrain from having “pay secrecy” policies or practices and/or disciplining employees for discussing their or other employees’ wages; and

Massachusetts Auto Dealer www.msada.org

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

Cybersecurity Is Not Just An IT Problem By Nick DeLena O’Connor & Drew, P.C.

Many dealers operate under the assumption that cybersecurity is an IT concern to be handled by their IT staff or managed IT firm. To many other dealers, cybersecurity is not on their radar at all.

This is a serious oversight, one that may potentially put you out of business.

Here is a scenario with which you may be confronted in the near future:

far-fetched, it is not. This type of attack is called ransomware. It is the fastest growing style of attack; in 2015 it was a $24 million crime, which jumped to $850 million last year.

The National Cyber Security Alliance has compiled some alarming statistics that point to severe vulnerabilities in small and medium-sized businesses: • Almost 50% of small businesses have experienced a cyber-attack.

• More than 70% of attacks target small businesses.

• More than 75% of employees leave their computers unsecured.

• As much as 60% of hacked small and medium-sized businesses go out of business after six months.

These distressingly high numbers are an indicator that business owners are not

Unless you’ve obtained cyber liability or data breach insurance, you most likely will not be protected under general liability, property, D&O, and other major lines.

Your staff quickly notices after opening up the dealership one morning that none of the computers are working. Instead of the normal login screen, there is just a message saying all your data has been encrypted and none of your computers is usable. If you want your data back, you have to pay $50,000 in bitcoins to an email address in Russia. If it sounds

taking the security of their staff, systems, and data seriously.

Another assumption dealers make is that their insurance will cover the costs of any data breaches. Unless you have obtained cyber liability or data breach insurance, you most likely will not be protected under general liability, property, D&O, and other major lines. Often, these www.msada.org

policies have specific exclusions for cyber perils.

The biggest cyber risks to small and medium-sized dealer groups fall along the following lines: • Lack of employee training. A 2016 study by Egress found that 66% of security compromises were the result of employee error.

• Not investing in staff and technology.

Ignoring or having untrained staff handle cyber security puts your organization at risk, as does running obsolete hardware and software. The top 10 vulnerabilities were responsible for 85% of successful attacks in 2015. These could have been prevented entirely with a consistent patch management program.

• Assuming your DMS is handling security for you. Know the boundaries of your DMS and understand your responsibilities.

Given the stakes, it is imperative that dealers reevaluate their position. The good news is preventative measures do not need to be expensive or onerous to implement. With several key investments in a few areas, you can drastically improve the security of your network. Consider the “trust but verify” approach and have an independent third party assess your systems. Also consider conducting staff training using simulated phishing exercises where your employees are taught to identify fraudulent emails. With our ever-increasing dependence on technology to run our businesses, ignoring cybersecurity is too big a risk to take. t Nick DeLena is a Senior Manager at OCD Tech, the IT Audit & Security Division of O’Connor & Drew, P.C., one of the most well-respected regional accounting, tax, business and IT consulting firms in New England.

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2017 DEALER SUMMIT

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A Glimpse of the

Future

Dealers gather to hear takes from across the industry about changes ahead

By Tom Nash Opening the 2017 Dealer Summit, part of the Massachusetts State Automobile Dealer Association’s celebration of the New England International Auto Show, new President Chris Connolly reaffirmed the association’s mission.

“We’re always working to provide you value,” Connolly said.

Among subsidized programs such as legal counsel and employee training, Connolly introduced a new program launched with the Commonwealth to partner ex-offenders with dealerships for on-site training as technicians.

“This type of program is going to be a win-win for everybody,” Connolly said. “It’s a win for the inmates, us, our customers, and the Commonwealth in general.”

Executive Vice President Robert O’Koniewski stressed that dealers should always feel free to communicate their needs with MSADA directors, staff, and Connolly. As the Association continues to move forward with its legislative agenda and dealer-service programs, he noted, “I think a lot of us are looking forward to a different direction coming from the new administration in Washington on January 20.”

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Cox Addresses ‘Labyrinth’ Strategies for Dealers Joe George, Senior Vice President at Cox Automotive, offered a look at the dynamic shift over the past two decades within the print realm – a $6 billion industry shrunk to just $2 billion in 2010. Declines have only accelerated since then.

George extended the acclimating media landscape to that of dealers – who he noted are experiencing a “labyrinth” of incentive programs from OEMs. “As that continues to play out, and the margins on new cars continue to be compressed,” he said, “your ability to reshape around the new car business and new service offers, such as car sharing, are more and more important.”

Massachusetts Auto Dealer www.msada.org

MSADA George also noted that, as dealers enjoy a turned-around market, the time to prepare for the next downturn is now. “By delayering, automating, and bringing your profits into a digital environment, you’ll be ready for the next downturn,” he added.

Fontana Offers Advice on SalesMetric Standards Joe Roesner, president of The Fontana Group, brought the experiences of dealerships across the country fighting back against OEM sales metric standards to the Summit, noting the biggest challenge is simply knowing that dealers have the ability to push back.

Time and again, he says, many closure cases based on sales performance have more options than dealers may think. “Talk to your attorneys, because a dealership cannot be terminated without good cause,” Fontana said.

Much of the current closure environment, he added, centers around dealership comparisons being made within an increasingly large radius. “Look at the drive-time,” he suggested “Ask, would I drive to my dealership or would I drive somewhere else?”

Fisher Phillips Attorney Outlines Employment Law Landscape Joe Ambash, an attorney with employment law firm Fisher Phillips LLP, brought dealers up to speed on the changing litigation environment as Massachusetts increases its regulatory oversight. “What you’re going to see is more and more employment lawyers bringing lawsuits to dealerships,” Ambash said. “What I’ve noticed is the plaintiffs’ lawyers typically do not understand how dealers pay employees.”

The issue, he said, is that defending a lawsuit is costly regardless of whether it has merit or not.

“These attorneys do not understand the difference between draws and a salary, and they find a terminated employee, and before you know it you may be a victim of one of these lawsuits.

It’s an enormous problem for a dealership to waste time, money, and energy defending themselves.”

The best defense, he said, is training managers to avoid potential violations out of the gate, “so they avoid making mistakes that lead to these claims.”

Mercer Offers Up ‘Dealership of Tomorrow’ Preview The NADA Commissioned “Dealership of Tomorrow” report was still being prepped for unveiling at the convention in New Orleans later in January, but author Glenn Mercer gave a preview that outlined where dealerships may fit into the next decade of auto retailing.

“Yes, we’ll still be selling cars,” he began. “The dealership model will stay dominant. Direct sales such as the Tesla model will stay at less than 10 percent.”

He noted that with the rise of autonomous vehicles and the increasing numbers of older car buyers, dealers will be needed to help serve customers new to this technology. It is clear dealers will sell whatever there’s demand for,” he added.

Brennan Outlines ZEV Sales MSADA Staff Attorney Peter Brennan offered up some context within Massachusetts, where the Commonwealth is the only state offering cash rebates on green vehicles despite a lack of demand. Dealers, he noted, are doing their part to advertise the rebates even as the state lags.

“Sixty percent of customers who said they heard about if for the first time heard about it at the dealership,” Brennan noted.

Ethos Group Offers Depth to a ‘Customer-First’ Mindset Ethos Group representative Rob Sneed closed the Summit with a call to remain vigilant against the commodification of vehicles – where price alone drives the sale.

Instead, core values that make a dealership unique, family-run businesses need to continue to shine in new ways. “Most consumers will consider making the value proposition,” he said.

“We have an obligation to do what we can with what we have right now,” Sneed added. “Customers ultimately want to be catered to. We can’t forget the human interaction during the sale is what people pay for. It is why they pay more. People pay for an experience and it is what we need to recommit to as an industry right now.”

The first course he recommends is taking stock of current procedures and looking for what might be on autopilot.

“If you keep doing the same old thing, you’re going to keep getting the same results,” Sneed concluded. “Step away from doing things you’ve always done, if you are only doing them because you’ve always done them that way.” t

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ALL JAZZED UP FOR 2017

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2017 CASINO NIGHT

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MSADA MSADA PRIZE

WINNERS

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NEW ENGLAND

2017

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MSADA MSADA

INTERNATIONAL

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2017 NEW

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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.

ROCKET FUELED Cox Automotive

WELCOME GIFT SPONSOR Fisher Phillips

TURBO CHARGED Dealer DOCX

HIGH OCTANE Albin, Randall & Bennett Blum Shapiro CDK Global Northeast Dealer Services Reynolds & Reynolds TD Auto Finance Zurich

BAND SPONSOR TrueCar

VALET SERVICE SPONSOR The Boston Globe

CASINO ROOM SPONSOR Ethos Group FULL BAR SPONSOR American Fidelity O’Connor & Drew FOOD STATION SPONSORS Boston Herald CVR Lynnway Auto Auction Murtha Cullina PreOwned Auto Logistics Santander Southern Auto Auction

DESSERT STATION SPONSOR TD Bank PARTING GIFT GW Marketing Services FRIENDS OF THE SCHOLARSHIP PROGRAM Catalogs.com Dealer Creative Downey & Company Huntington Bank Performance Management Group TrueCar

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ENGLAND INTERNATIONAL AUTOMSADA SHOW

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NEWS from the NEWS from Around Around the Horn Horn from Around

NEWS the Horn

MSAMSAMSA-

HADLEY

Eighth Annual Cosenzi Charity Golf Tourney Nets Six Figures The Tom Cosenzi “Driving for the Cure” Charity Golf Tournament started with Carla and Tommy Cosenzi honoring the legacy of their father, Tom Cosenzi, who passed away from a glioblastoma in 2009. As the co-presidents of the TommyCar Auto Group, Carla and Tommy have made this tournament a flagship philanthropic event in the Western New England auto dealership community.

TommyCar announced in January that the Fall 2016 event was the largest tournament to date, raising $113,200 to support Patrick Wen, MD, and his research colleagues in the Center for Neuro-Oncology at Dana-Farber Cancer Institute. Under the leadership of Drs. Patrick Wen and David Reardon, Dana-Farber investigators

JANUARY 2017

are working to increase their understanding of brain and central nervous system tumors and to translate these findings into novel therapies for patients.

The eighth annual golf tournament took place at Crestview Country Club and Oak Ridge Golf Club, followed by a dinner at Chez Josef where more than 350 guests attended. The dinner featured a performance by Noah Lis from The Voice, an appearance by Host and DJ from Rock 102 Steve Nagle, and a heartfelt speech from Jimmy Fund advocate Paul Lincoln, who is a brain tumor survivor.

The event featured a raffle and auctions along with the event’s Presenting Sponsor, Hartford Springfield Auto Auction.

“By participating as a sponsor, a golfer, a donor, or a volun-

Massachusetts Auto Dealer www.msada.org

NEWS from Around the Horn

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teer, your generosity and support for our tournament is truly making the difference that we are striving for,” said Carla Cosenzi. “We are extremely proud to be able to support Dana-Farber’s world-class researcher’s work to reduce and ultimately eliminate the burden of cancer. Your participation is a crucial part of achieving these goals.”

HANOVER

Local Preservation Group Shares in Planet Subaru’s ‘Love’ Planet Subaru in November added a new charity, The Trustees, to its list of beneficiaries of the “Share the Love” charity drive. The Trustees is a land preservation group with several areas near the South Shore, including the Norris Reservation in Norwell, the Ames Estate in Easton, World’s End, and Weir River Farm in Hingham, the Bradley Estate in Canton, and Moose Hill Farm in Sharon.

The Trustees joins the Standish Humane Society, the ASPCA, the Make-a-Wish Foundation, Meals on Wheels, and the National Park Foundation in the list of organizations that customers can choose to support.

During the “Share the Love” promotion that ran until January, Subaru of American donated $250 to a charity for each sale or lease made. For the ninth annual version of this they allowed dealers to add a second local charity to the nationwide options. The results netted donations totaling near $50,000.

“The idea that we can devote dollars to setting aside land permanently for preservation is a nice fit to offset some of the inherent impact that our business operations has on the environment,” Planet Subaru President Jeff Morrill said, “despite all of the efforts we make to minimize them.” www.msada.org

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Around the Horn NEWS fromSERVICES DEALER

MSADA MSADA

CAMBRIDGE

MIT Report Questions Dealers’ Tech Comfort A recent report from the Massachusetts Institute of Technology’s AgeLab revealed that a majority of sales associates were unable to give a thorough explanation of the safety technology in their vehicles. MIT researchers visited 18 dealerships in the Boston area, targeting luxury, mass-market locations that advertised their focus on safety, to determine how that knowledge could influence customers’ buying decisions.

The report said associates “were woefully unprepared to educate prospective buyers about safety technology and automated driver assistance programs.” The researchers asked the first salesperson they encountered about six different technologies — adaptive cruise control, automatic emergency braking, blind spot monitoring, forward collision warning, lane departure warning, and lane keeping assist.

According to the report, six of the 17 sales associates at the visited dealerships were able to give “thorough” explanations of the features they were selling. While only two salespeople provided patently wrong information, four were considered poor, and the other seven “satisfactory.”

“Really, there’s a wide range across dealerships visited when it comes to the ability to sell the technologies,” Report author

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Bryan Reimer says. “From Subaru, who is doing a wonderful job of providing customers reasonable information, to the mass-market brands that aren’t cohesively doing so.”

Researchers found that sales staff at Subaru dealers were both well-trained and had material ready in both print and digital formats. BMW has a training system similar to Apple where technology education is presented to salespeople, who can then pass that knowledge along to customers.

However, at the other end of the spectrum, a Ford salesperson incorrectly claimed that the vehicle’s pre-collision assist with pedestrian detection would prevent collisions at all speeds and provided no information on capability limits, while the user manual indicated the systems will not detect pedestrians when traveling above 50-mph, will not detect cyclists, pedestrians, or animals at night, or operate reliably in cold, snowy, icy rainy, or foggy weather.

“As technology continues to increase, consumers’ need for education and understanding at the point of sale is critical,” Reimer said. The best way to be able to provide good service is to know the technology that you are selling.” t

Massachusetts Auto Dealer www.msada.org

DEALER SERVICES

MSADA

Lead Like Lombardi

By Rob Sneed

Rob Sneed is a development rep and motivator for Ethos Group Consulting Services and the author of various articles in the automotive industry. franchised an

Ethos Group

automotive

integrated

program

provides

dealerships of

with

results-driven

income-development services, comprehensive training, robust recruiting and industry-

Vince Lombardi is arguably the greatest football coach of all time. Known for his tireless work ethic and exacting standards, he led the Green Bay Packers to five championships in nine seasons as head coach, and he did it in a very different environment from professional sports today. His Packers won the first two Super Bowls, and the trophy given to the league champion now bears his name. In his 15 seasons as an NFL assistant and head coach, Lombardi’s teams never had a losing season— ever. Leadership like this should be appreciated, regardless of which team’s colors you wear.

Lombardi became famous for his unyielding dedication and tenacious spirit.

He believed in daily, dedicated practice and expected nothing less than excellence from his players and coaches. He demanded attention to detail from every individual and expected a team effort. He understood the strength that comes from a well-trained, unified, and singularly-focused team.

Lombardi’s principles as a leader were focused on an alignment of the team’s priorities, and he shared this guidance with his team: “Your religion, your family, and the Green Bay Packers will be your priorities as long as you are here. And in that order.” Over time, these simple words became known as the “Lombardi Trinity” because they were the foundation

of his ethos and the culture that he created within his teams. He insisted that his players commit themselves to living fulfilling personal lives just as he demanded that they give themselves wholeheartedly to the game of football. He understood that the focus he required of them on the field necessitated that they eliminate distractions off the field. Insisting that they find balance between their personal and professional lives ensured the two were rarely in conflict.

Vince Lombardi’s fundamentals are every bit as applicable to business as to the game of football. By insisting that your people dedicate themselves to their personal lives when at home, you can insist that they dedicate themselves to their professional lives while at work. The more success they see personally, the more success they will experience professionally.

Connect the Success Your leadership team has a responsibility to help those within your organization realize that success at work and success at home are not mutually exclusive. This can be difficult in a business that demands so much time and energy from each person.

One way to encourage your people to dedicate themselves fully is to help them “connect the success”. A cycle of satisfaction is created when a person recognizes that achievements in one area of life translate to progress in another area of life. People begin to embrace the concept “work hard, play hard” with a totally new enthusiasm. You will find them empowered and engaged like never before, and the team benefits along with the individual.

So how do you connect personal and professional success? Here are three keys to unlocking the potential of your business by unlocking the potential of your people:

1. Discover Their Motivation People are motivated differently. While some are motivated by a commission, bonus, or hourly raise, other people respond more positively to a flexible schedule or www.msada.org

paid time off. Sometimes peer recognition for a job well done is the motivation someone needs, while other employees need to feel like a small part in a larger team accomplishment matters.

It is not difficult to find out someone’s motivation – just ask. Ask your employees what they would like to accomplish personally. Ask them what they want to accomplish professionally. Discover what motivates your employees and commit to making the difference happen with them.

2. Reward People Differently Your leadership team must do away with the one-size-fits-all approach (that has been standard operating procedure in the business for too long) because different people experience success in different ways. To prevent potential unfairness in the workplace (from treating people differently), the key is to connect the motivation of the employee to the resulting reward. Treating everyone the way they want to be treated leads to satisfied employees, and satisfied employees lead to satisfied customers.

3. Celebrate the Wins It is not always easy for managers to slow down and celebrate successes with their people. Missing these opportunities can wear down someone’s will to “win” and invalidate professional victories. While it is important to encourage your employees to savor the sweetness of success themselves, it is critical that your leadership team slow down and take the time to recognize both professional and personal victories, and celebrate with others.

Leaders Lead People Your leadership team has a responsibility that goes beyond sales quotas, gross profit percentages, and expense management. Ultimately the team has a responsibility to people. After all, nothing dramatically changes the profitability of a business like the full engagement of the people that make business happen. t

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NADA Update

By Don Sudbay

Letting the Good Times Roll As we gather in New Orleans, the future looks bright for automotive retailers.

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).

Greetings to all from the wonderful city of New Orleans and the floor of the centennial NADA Convention. We find ourselves in the middle of a changing atmosphere both within NADA, in our nation’s capital, and in our Commonwealth.

What I found here in New Orleans is a sense that we dealers have much to be proud of as we hit the 100-year mark as an industry. These are businesses our great-grandparents pioneered, and we continue to stand on their shoulders as we work to provide innovations for our customers each day.

The atmosphere here can and should come home with us – we should take a moment to marvel at how far our industry has come since 1917. We face challenges ahead, but more importantly we are staring straight at opportunity. I know each of us is excited to make our mark and build our community. It is said that the only certainty in life is change. As I look around here I am confident that the change is heading in the right direction.

Welch Offers Charge to Industry to Confront Affordability Problem Together NADA President and CEO Peter Welch challenged the entire automotive industry to acknowledge and confront the numerous threats to vehicle affordability with a strong and unified voice, calling the next four years a “unique opportunity” to ensure that personal transportation remains affordable for millions of Americans.

Welch, speaking at the 2017 Automotive News World Congress in Detroit, cautioned against taking a lax or tepid approach to advocating on behalf of Americans consumers – who are the ultimate arbiters of the industry’s success or failure – particularly at a time when government regulations and mandates are adding enormously to already increasing prices for new cars and trucks.

“Over the past 20 years, the single biggest driver of vehicle price increases has been excessive government regula-

tions and mandates,” Welch said. He warned that further unchecked regulatory costs could lead to a period of “demand destruction” where millions of Americans lose out on the technological, safety, and fuel efficiency benefits that come with new vehicles.

“Unless we as an industry, working with policy makers at all levels of government, start looking through the lens of customer affordability, we risk imposing a new luxury tax on the vehicles our members sell which, in turn, will depress the SAAR, reduce fleet turnover, and deprive large swaths of Americans of the opportunity to obtain and benefit from the ownership of a new car or truck – that’s what I mean by ‘demand destruction,’” Welch continued. “That’s

We should take a moment to marvel at how far our industry has come since

1917.

a road that we as an industry and as a nation cannot afford to take.”

Welch’s charge to the entire industry was to avoid any temptation to “rest on our laurels” during the next four years.

“I understand the reluctance in some quarters not to be seen as too eager to push the regulatory pendulum back in the other direction just because a Republican is soon to be in the White House,” Welch said. “But if demand is sapped four years from now because new vehicle price points are no longer attainable to otherwise willing buyers, we’re going have much bigger problems on our hands than political optics.”

Additionally, Welch challenged his colleagues to confront the serious threats to brand loyalty and price transparency – threats that he said the industry must first acknowledge are “of our own making.”

“In a world where customers crave fairness and transparency in price, why do some manufactures still deploy unfair marketing strategies that produce huge variations in price between various customers?” Welch asked, referring specif-

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NADA Update Welch’s charge to the entire industry was to avoid any temptation to ‘rest on our laurels’ during the next four years.

ically to unfair stair-step incentive programs, indiscriminate price tag coupons, “and other schemes that are too complicated, not consumer friendly and that are not available to all dealers regardless of their size or location.”

“This unfairness leads to multi-tier pricing that has always, and will always, cause our customers to be skeptical of what dealers tell them,” he said. “Simply put, these types of programs are trust killers.”

And Welch warned of a gathering storm resulting from the millions of recalled vehicles that don’t get prompt repairs because of a lack of available replacement parts.

“The current situation we’re in, where millions of vehicles are under recall, and millions of customers have to wait months on end for repair parts, is completely unsustainable for any brand that expects to thrive in the future,” said Welch.

“In the same way that poor quality slowly, but methodically, erased billions of dollars of brand value for domestic manufacturers in the 1980s, I believe that the scores of recalls that aren’t immediately addressed and repaired will soon destroy billions of dollars of brand value for those manufacturers who don’t move heaven and earth to get replacement parts onto dealership shelves as fast as humanly possible,” he added. “Customers can forgive a recall if the defect is fixed promptly. But for many customers, waiting 10 months or longer for a part is just unacceptable – and it kills brand loyalty.”

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Scarpelli to Take On Role as NADA Chairman At the centennial NADA Convention & Expo, Mark Scarpelli officially took over as the association’s 2017 chairman.

He is the president of Raymond Chevrolet and Raymond Kia in Antioch, Illinois, about an hour north of Chicago, and co-owner, with brother Ray Scarpelli Jr., of Ray Chevrolet and Ray ChryslerJeep Ram Dodge in nearby Fox Lake.

Scarpelli’s chairmanship follows a year marked by booming sales and F&I production, a growing call for further digitization of the car-buying process, and new challenges to the Consumer Financial Protection Bureau (CFPB) — including the election of a decidedly pro-business president.

New-Car Dealers Promotes Prom-Season Teen Driving Safety at NADA Convention Prom and graduation are exciting times for high school seniors. It can also be a dangerous time for teens, with seven of the top 10 deadliest driving days occurring between Memorial Day and Labor Day. To underscore this critical time, the National Foundation for Teen Safe Driving (NFTSD) launched “Senior Promise 2017” at the National Automobile Dealers Association (NADA) Convention and Expo in New Orleans.

“Many new-car dealerships already have great relationships with school and community leaders and are best positioned to participate in this important initiative in their local communities,” says Roy Bavaro, NFTSD executive director. “During the NADA convention, we will be asking dealers who visit the booth to support the initiative by sharing the contest and campaign details with schools and organizations in their local communities.”

Campaign items, such as press releases, post cards, posters and web banners, etc., and simple implementation guidelines to raise awareness of Senior Promise 2017 will be available to participating new-car dealerships at no charge.

For more information or to sign up, sign up online at www.NFTSD.org/dealership-application.

Automotive News Issues ‘NADA 100’ Special Edition NADA is celebrating its 100th anniversary and Automotive News has marked the achievement with a 132-page commemorative edition that examines NADA from its origins to its future. The issue includes stories about NADA’s early visionary leaders, its biggest personalities, its involvement in World War II, and how its influence helped make the Interstate Highway System a reality.

Other features: columns by past chairmen and politicians, a chronicle of NADA’s history of generous giving, the evolution of the annual convention and expo, and a look at the future of the franchise system. t

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