Massachusetts Auto Dealer Magazine September 2020

MSADA,OneMcKinleySquare,SixthFloor, Boston,MA02109

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

September 2020 • Vol. 32 No. 9

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

“NO”

on 1

Why the New “Right to Repair” Ballot Question is All Wrong

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

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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 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: jfabrizio@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109

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

Table of Contents

4 5 6 8 9 10

From the President: Getting Local - Online ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: Right to Repair Redux—Vote No on Question #1 LEGISLATIVE SCORECARD TROUBLESHOOTING: Back to School AUTO OUTLOOK

14 Cover Story: “No” on 1: Why the New “Right to Repair” Ballot Question is All Wrong

18

NEWS From Around the Horn

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.

21

Ad Directory BlumShapiro, 20 Ethos, 2 Nancy Phillips, 20 O’Connor & Drew, 28

22 24 25

TRUCK CORNER: Election Time at ATD

26

nada update: Virtual Washington Conference

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

BUSINESS OPS: Summer 2020 Showed Strong Profits; What’s Next? nada Market Beat LEGAL: Whistleblower Complaints on the Rise under COVID-19; Anti-Retaliation Programs Can Help

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

Join us on Twitter at @MassAutoDealers www.msada.org

Massachusetts Auto Dealer

SEPTEMBER 2020

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From the President

MSADA

Getting Local Online COVID-19 will not stand in the way of dealer voices being heard

By Chris Connolly, MSADA President It may be a lot to ask, but put aside the 2020 presidential election for a moment.

This is the time of year to remember that beyond the White House, the policies being debated on Beacon Hill, Capitol Hill, and even the ballot box affect us directly.

We simply cannot afford to be silent.

While the online format of the annual NADA Washington Conference was certainly different this year, we remain committed to representing Massachusetts dealers’ views on important issues. I want to thank those of you who took the time to participate -- including our stalwart NADA Director Scott Dube.

It is important to remember that if we do not use our ability to advocate for ourselves, someone “It is important to else will always be ready to step in front of us instead. remember that if we In addition to issues that play out on Capitol Hill, the neverdo not use our ability ending debate about the so-called to advocate for “Right to Repair” has reached another crescendo this Fall. Look ourselves, someone for more details in this month’s coverage, and, as always, now is else will always be the time to be on the phone, or on Zoom, with our elected officials ready to step in front to help them understand what is at stake. of us instead.”

When you head to the voting booth in November, please remember that now is a great time to remind your representatives in your hometown and in Boston that you are paying attention. Invite them to your dealership -- online or safely-distanced.

Additionally, if you have not already given this year, I encourage you to donate to our state Political Action Committee. It is an important way to keep our needs from being shoved off the table on Beacon Hill. This remains the easiest way to contribute to our grassroots effort to keep our legislators informed and takes only a few minutes. Contact Executive Vice President Robert O’Koniewski at (617) 451-1051 or rokoniewski@msada.org. t

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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 Don Sudbay, Sudbay Motors

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 Chrysler Dodge Ram Jeep Steve Salvadore, Salvadore Auto

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

Immediate Past President [Open]

NADA Director

Scott Dube, Bill Dube Hyundai

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 ACV Auctions Will Morris (860) 670-7867 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 America’s Auto Auction Boston Jim Lamb (781) 596-8500 Armatus Dealer Uplift Joe Jankowski (410) 391-5701 Auto Auction of New England Steven DeLuca (603) 437-5700 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 Automotive Search Group Howard Weisberg (508) 620-6300 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bernstein Shur PA Ned Sackman (603) 623-8700 Blum Shapiro John D. Spatcher (860) 561-4000 Boston Magazine Noreen Murray (617) 275-2012 Broadway Equipment Company Fred Bauer (860) 798-5869 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Capital Automotive Real Estate Services Daniel Garces (703) 394-1313 CDK Global Chris Wong (847) 407-3187 Chase Auto Alex Khademi (404) 375-4504 Coastal Outsourced Solutions Andrea Vieira (508) 979-4733 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cox Automotive Ernest Lattimer (516) 547-2242 CVR John Alviggi (267) 419-3261 Dave Cantin Group Woody Woodward (401) 465-7000 Dealershop Chuck August (518) 364-8723 Downey & Company Paul McGovern (781) 849-3100

DP Sales Distributors Andrew Prussack {631) 842-7549 Eastern Bank David Sawyer (617) 620-3484 Eastern Insurance Group John Berksza (508) 620-3349 EasyCare New England Greg Gomer (617) 967-0303 Enterprise Rent-A-Car Timothy Allard (602) 818-3607 Ethos Group, Inc. Drew Spring (617) 694-9761 F&I Direct Sean Wiita (508) 414-0706 Michelle Salas (508) 599-0081 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350 Fisher Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gulf State Financial Services Mike Sims (817) 689-1735 GW Marketing Services Gordon Wisbach (857) 404-0226 Hub International Insurance Brokerage Jim Walsh (603) 494-9016 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 Abe Cohen (503) 902-6567 LocaliQ Automotive Jay Pelland (508) 626-4334 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 McWalter Volunteer Benefits Group Shawn Allen (617) 483-0359 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

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NEAD Insurance Trust Charles Muise (781) 706-6944 Northeast Dealer Services Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Dale Ducasse (508) 393-1400 Piper Consulting Jim Piper (207) 754-0789 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Mike O’Connor (860) 462-7958 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Rockland Trust Co. Manny Silva (781) 982-6806 Samet & Company John J. Czyzewski (617) 731-1222 Santander Bank Richard Anderson (401) 432-0749 Chris Peck (508) 314-1283 Schlossberg & Associates, LLC Michael O’Neil, Esq. (781) 848-5028 Service Credit Union Dave Pasternak (603) 812-8967 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Southern Auto Auction Joe Derohanian (860) 292-7500 Sprague Energy Robert Savary (603) 430-7254 SunPower Christie McCarthy (408) 457-2357 Kristin Hodges (707) 694-7759 SunTrust Bank Michael Walsh (617) 345-6567 TradeRev Dennis Finkel (508) 397-2702 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Josh Tobin (508) 951-8334 Windwalker Group Herby Duverne (617) 797-9316 Zurich American Insurance Company Steven Megee (774) 210-0092

Massachusetts Auto Dealer

SEPTEMBER 2020

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The Roundup

Right to Repair Redux

Vote No on Question #1

By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers

On this year’s November 3 ballot, in addition to making choices for President and other federal, state, and county offices, voters will have the opportunity to weigh in on two initiative petitions.

The one that greatly concerns us this year as franchised dealers is Question #1, regarding a re-write of the existing Massachusetts law on “right to repair”. Your association, as well as the franchisor vehicle manufacturers, are opposing this effort by aftermarket parts companies, big box repair entities, and independent repair shops to expand the current law in an effort to grab all sorts of non-diagnostic and non-repair information from car owners’ vehicles.

The Legislature enacted the current law, Chapter 93K of the Massachusetts General Laws, after the RTR squad pushed a ballot question in 2012, causing the parties to come to a separate agreement that ultimately was re-passed and signed by Governor Patrick in 2013. Subsequently, in 2014, the vehicle manufacturers and many members of the RTR coalition memorialized our statute in a memorandum of understanding that essentially committed the manufacturers to providing diagnostic and repair info to independent repairers across the country on the basis of the terms contained in our state law.

The National Automobile Dealers Association (NADA) did not participate in the MOU discussions or agreement.

Over the years, we are not aware of a single legitimate complaint filed with state or federal authorities alleging blockage to diagnostic and repair SEPTEMBER 2020

Massachusetts Auto Dealer www.msada.org

information under the 2013 law. It seems the RTR proponents are not content with just having access to vehicle diagnostic and repair information. They now want to extend their reach into all types of data that flows through vehicle computer systems in the vehicle telematics.

RTR redux, just as the original RTR debate ten years ago, has nothing to do with diagnostic and repair info. It is all about gaining access to vehicle travel data and consumers’ personal information.

Prior to the first RTR law and after, repair shops have access to all the information needed to diagnose and repair vehicles. Just like last time, what the RTR coalition really wanted, and still wants, is access to all NON-diagnostic and NON- repair information flowing through the vehicle software – making such data as consumer driving habits, patterns, and location available remotely and in real-time to unlimited third parties. They want any vehicle data signifying a problem, such as a check engine light or any other dashboard indicator, for instance, to be sent directly from one’s car to repairers in the vicinity of the car owner’s vehicle.

Consequently, the bill would create a serious threat to consumer privacy and the cybersecurity of Massachusetts vehicle owners. The manner in which this data will flow would make consumers’ personal data potentially accessible to dangerous third parties – hackers, stalkers, thieves – and offers no guidelines as to how customers’ information must be stored or protected.

Unfortunately, the initiative petition is an up or

MSADA down yes/no vote. Any changes to this new proposal, if passed by the voters, will have to be considered in a subsequent legislative session beginning in 2021.

Manufacturer Briefings. The vehicle manufacturers, as part of the Coalition for Safe and Secure Data, have committed at least $25 MILLION to defeat Question #1.

(The RTR coalition plans on spending at least $15 MILLION.) Just crazy money.

Over the last several weeks, many of the factories have conducted meetings with their franchised dealers here to brief them on the ballot question and what the factory is doing in the “No on #1” effort. Additionally, the Coalition for Safe and Secure Data will be sending opposition materials to our member dealers, items such as bumper stickers, yard signs, and information cards, which can be used with your employees and customers.

Independent Repairers. Throughout the RTR effort, independent repair shops have been the face of their advocacy efforts. This month the No on #1 folks have rolled out an ad featuring an independent repairer who opposes the question since all the data needed to diagnose and repair a vehicle is already available. If there is an independent repairer you know or work with who shares a similar mindset and may want to participate in such an ad, let us know and we can facilitate making that connection.

Components of Opposition. On January 13, as part of its constitutionally mandated tasks, the Joint Committee on Consumer Protection and Professional Licensure held the required public hearing on all the RTR bills (16!) as well as the initiative petition, House 4302, “An Act to Enhance, Update and Protect the 2013 Motor Vehicle Right to Repair Law”. As the Legislature did not deem the issue worthy of action, the petition’s proponents were able to obtain the necessary signatures to have it placed on the November ballot. We testified at the public hearing in strong opposition based on the following points: • First, these bills are completely unnecessary. The current law requires automobile manufacturers to provide to any

automotive repairer in Massachusetts all information that is needed to diagnose and repair a vehicle brought into a shop, whether it is owned by an independent repairer or a franchised auto dealer. The law provides legal remedies for repairers who feel that they have not been provided adequate access to such diagnostic and repair information. To the best of our knowledge, in Massachusetts there has not been a single case reported to federal authorities or our Attorney General, or initiated in state court, of a repairer being unable to conduct a repair due to a blockage of such needed information. Finally, if there is such wide-spread abuse by the auto factories in denying the information, why has no other state passed a so-called right to repair law? It is because our law and the 2014 national MOU work as they were intended.

• Second, there is the potential privacy data breach and “stranger danger” aspect to these proposals. The legislation is so broadly written that all data collected and stored in the motor vehicle – whether it is vehicle-related or personal – would be subject to exposure to other entities outside the realm of the customer’s repair shop. This latest RTR scheme is a thinly veiled data grab that could lead to the violation of consumer privacy rights and access to proprietary codes that control emission and other vehicle operating systems as well as car owners’ non-vehicle-related personal information. The more strangers can access the vehicle’s information and a car owner’s personal data, the more likely the data can be misused. In fact, where the RTR proponents claim that the auto manufacturers will hide diagnostic and repair data in the vehicle telematics systems, current law already prohibits the factories from doing just that.

• Third, franchised auto dealers oppose having a new affirmative duty of notice layered onto the vehicle transaction with substantial penalties for noncompliance, including potential loss of business license. Such a notice is more appropriate for inclusion in the vehicle’s owner’s www.msada.org

manual provided by the manufacturer.

Section 4 of the petition would direct the Office of the Attorney General to draft a notice that includes: “(i) an explanation of motor vehicle telematics and its purposes, (ii) a description summarizing the mechanical data collected, stored and transmitted by a telematics system, (iii) the prospective owner’s ability to access the vehicle’s mechanical data through a mobile device, and (iv) an owner’s right to authorize an independent repair facility to access the vehicle’s mechanical data for vehicle diagnostics, repair and maintenance purposes.” Section 4 of the petition also would require new or used motor vehicle dealers to provide the customer a copy of this notice with the customer’s signature attesting he or she read it. A motor vehicle dealer’s failure to comply with this provision would be grounds for any action by the relevant licensing authority regarding the dealer’s license, up to and including revocation of the dealership license. We feel such a loss of license penalty for failure to provide a piece of paper to a consumer describing the engineering aspects of the vehicle, better suited as coming from the vehicle manufacturer, is unjustifiably extreme.

• Finally, an initiative petition with no prior legislative consideration is nothing more than a sword hanging over all our heads and not in the best interests of our customers. The 2013 law was the result of several sessions of legislative consideration with ultimate designs on avoiding a ballot measure. Our Association worked diligently in 2011-2013 with all interested parties to craft a law that would actually work in providing the necessary diagnostic and repair information to repairers. We see no reason to upset the existing statutory framework.

The law works here and across the country through the MOU. Should you require additional information or wish to be more active in the opposition campaign, please feel free to reach out to us. t

Massachusetts Auto Dealer

SEPTEMBER 2020

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MSADA L EGISLATIVE S CORECARD

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SEPTEMBER 2020

BILL#

SPONSOR

SUBJECT

S179 H262

Sen Pacheco Rep Hunt

Amendments to Ch. 93B, the auto dealer franchise law.

SUPPORT

The Joint Committee on Consumer Protection held public hearing on July 15, 2019. Redraft reported favorably on Feb. 5, 2020; referred to Senate Ways and Means.

H3558 S658

Rep Kafka Sen Welch

Creates process to increase the insurance reimbursed labor rate paid to auto body repairers.

SUPPORT

The Joint Committee on Financial Services held public hearing on September 26, 2019. Placed into study.

H1087 S576 H956 S625

Rep Puppolo Sen DiZoglio Rep Donahue Sen Moore

Protects dealers from OEMs’ restrictions on selling non-OEM service contracts.

SUPPORT

The Joint Committee on Financial Services held puplic hearing on October 22, 2019. Redraft S2804 reported favorably; sent to Senate Ways and Means. Redraft H4810 reported favoably; sent to House Scheduling.

H960 S629

Rep Driscoll Sen O’Connor

Creates administrative process to seek diminished value of damaged vehicle.

SUPPORT

The Joint Committee on Financial Services held public hearing on September 26, 2019. Placed into study.

S110 S2416

Sen Braunsberger Redraft

Places burden of recall information to car owner or vehicle inspector.

OPPOSE

The Joint Committee on Consumer Protection held public hearing on July 15, 2019; reported redraft favorably, S2416; referred to Senate Ways and Means.

H3031 H3049 S2133

Rep Golden Rep Howitt Sen Rush

Creates statutory process for allowing temp tags for out-of-state sales.

SUPPORT

The Joint Committee on Transportation held public hearing on May 14, 2019; Committee reported H3031 and S2133 favorably to each’s respective Ways and Means Committee.

H234 H206 S172

Rep Finn Rep Chan Sen O’Connor

Creates process to appeal improperly issued Class 1 license.

SUPPORT

The Joint Committee on Consumer Protection held public hearing on July 15, 2019. Placed into study.

H282

Rep Linsky

Allows an OEM to open a factoryowned store, without a dealer, if there is no same line-make dealer in the state.

(The so-called “Tesla Exemption.”)

OPPOSE

The Joint Committee on Consumer Protection held public hearing on July 15, 2019. Placed into study.

H220 H4307

Rep Cusack Redraft

Clarifies licensure to finance small loan contracts with negative equity.

SUPPORT

The Joint Committee on Consumer Protection held public hearing on May 13, 2019; reported redraft favorably, H4307; referred to House Steering, Policy and Scheduling. Placed on House calendar.

S2498

Sen Barrett

Creates ZEV rebates program.

SUPPORT

The Joint Committee on Telecommunications, Utilities and Energy held public hearing on July 23, 2019. S2498 passed by Senate on Jan. 30, 2020, and referred to House Ways and Means.

H3997

Speaker DeLeo

Creates $30 million ZEV rebates program.

SUPPORT

House passed the bill on July 24; refeered to Senate Ways and Means Committee. Senate Bonding Committee held hearing on Feb. 25, 2020.

H356 H4310

Rep Vincent Redraft

Lemon Law mileage, dollar amount changes.

OPPOSE

Joint Committee on Consumer Protection held public hearing on July 15, 2019; reported redraft favorably, H4310; referred to House Steering, Policy and Scheduling.

H4122 H4302

Rep McMurtry Init. Petition

Amends Right to Repair law [17 bills filed].

OPPOSE

The Joint Committee on Consumer Protection held public hearing on January 13, 2020. Bills placed into study. IP on November ballot.

S120

Sen Creem

Consumer Data Protection Act, based on CAL law.

OPPOSE

The Joint Committee on Consumer Protection held public hearing on October 7, 2019. Placed into study.

H4113

Rep Ehrlich

Mandates automatic shutoff for keyless start vehicles.

OPPOSE

The Joint Committee on Transportation held public hearing on January 2, 2020. Reported favorably and referred to House Ways and Means.

H4754

Rep Jones

Sleepy’s-related affirmative defense.

SEPTEMBER 2020

STATUS

SUPPORT

Massachusetts Auto Dealer www.msada.org

The Joint Committee on Labor and Work Force Development held public hearing on June 12, 2020. Placed in extension until October 27, 2020.

MSADA

Troubleshooting

Back to School ly and medical leave to care for a child only “when you need to, and actually are, caring for your child if you are unable to work or telework as a result of providing care. Generally, you do not need to take such leave if a co-parent, co-guardian, or your usual childcare provider is available MSADA to provide the care your child needs.” As Staff an employer, you are within your rights to Attorney request information about the employee’s childcare situation.

The employer may also seek an exempFor the first time since March, public tion if it has less than 50 employees and schools across Massachusetts recently meets one of these three criteria, as deteropened their doors to students. In addition mined by a director of the company: (1) to the usual core subjects, those students The leave would result in the small busilucky enough to attend class in an actual ness’s expenses and financial obligations classroom are undoubtedly getting an edexceeding available business reveucation in fun new topics such nues and cause the small business as social distancing, mask usage, and epidemiology. Instead of the Many employees will be unable to to cease operating at a minimal work because they will instead capacity; (2) the absence of the coolest sneakers and backpacks, need to supervise the remote employee or employees requesting parents were forced to prioritize learning of a child. paid sick leave or expanded familaptop computers, headphones, ly and medical leave would entail and wi-fi routers in back to school a substantial risk to the financial health or ee, who has been employed for at least 30 shopping budgets. As the local football operational capabilities of the small busicalendar days, is unable to work due to a coach is fond of saying: “It is what it is.” ness because of their specialized skills, bona fide need for leave to care for a child As the parent of a kindergartener, I am knowledge of the business, or responsibiliwhose school or child care provider is all too aware of the Commonwealth’s ties; or (3) there are not sufficient workers closed or unavailable for reasons related color-coded COVID-19 map and the imwho are able, willing, and qualified, and to COVID-19. plications on my child’s already limited who will be available at the time and place A school is “closed” for purposes of an classroom time should our municipalineeded, to perform the labor or services employee’s FFCRA eligibility on days ty fall down the color ladder. One super provided by the employee or employees that a dependent child cannot attend in spreader event is enough to turn a green requesting paid sick leave or expanded person. This is true even if some or all town to red on the all-important map, and family and medical leave, and these labor instruction is being provided online or parents and municipalities across the state or services are needed for the small busiwhether, through another format such as have begun naming and shaming those ness to operate at a minimal capacity. “distance learning,” a dependent child that violate the rules on indoor gatherings Obviously, an exemption that applies to is still expected or required to complete in an attempt to prevent a local outbreak. one employee may not apply to another, assignments. Accordingly, if a dependent Our only hope is that teenagers are resilso the employer should conduct an analychild is beginning the school year remoteient enough to hold their gatherings out in sis for every employee that requests leave ly or on a hybrid schedule in which some the woods even as temperatures drop. under the FFCRA. days are in-person and some days are reThe resulting fallout from the mishmash t mote, the child’s parent may be eligible of school opening policies will continue If you have any questions regarding this to take leave under the FFCRA on those to have a negative effect on the Commoncolumn, please contact Robert O’Koniewsdays when the child is not at school. wealth’s workforce. Many employees will ki, MSADA Executive Vice President, at There are other factors that go into the be unable to work because they will inrokoniewski@msada.org, or Peter Breneligibility determination. First, the DOL stead need to supervise the remote learnnan, MSADA Staff Attorney, at pbrennan@ has provided that an employee can only ing of a child. Helpfully, the Department msada.org, or by phone at (617) 451-1051. take paid sick leave or expanded famiof Labor recently released updated FAQs

By Peter Brennan, Esq.

for the Families First Coronavirus Response Act (FFCRA) that deal with scenarios likely to arise as schools reopen.

As a reminder, the FFCRA provides that employees of covered employers are eligible for: (i) Up to 80 hours of paid sick leave at two-thirds the employee’s regular rate of pay if the employee is unable to work because of a bona fide need to care for an individual subject to quarantine, or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19; and (ii) up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employ-

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Massachusetts Auto Dealer

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AUTO OUTLOOK

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RACE TO THE FINISH COVER STORY

“No” on 1

Why the New “Right to Repair” Ballot Question is All Wrong

By Jeff Breeze Almost a decade after the Legislature enacted a “right to repair” law for Massachusetts, voters are once again being asked to pass extreme revisions to the law that would go well beyond diagnostic and repair information access. The stakes are high and both sides are spending small fortunes to sway voters.

Question Number 1 on this November’s ballot is an attempt to change the Right to Repair Law currently on the books in the Commonwealth. Proponents are looking to gain open access to the wireless transmission of data from a vehicle. It demands that a new system be created and installed in two years, without any apparatus for doing so or any protections for unintended consequences of the technology.

Starting with model year 2022, the proposed law would require manufacturers of motor vehicles sold in Massachusetts to equip any such vehicles that use telematics systems –- systems that collect and wirelessly transmit mechanical SEPTEMBER 2020

data to a remote server –- with a standardized open access data platform.

“In eight years, there has been no independent repair shop that has come forward to any legislator or the Attorney General, complaining about the ability to fix a car; the current Right to Repair Law works,” MSADA President Chris Connolly said.

“This is all about the non-OEM, aftermarket parts people coming back eight years later during a presidential election trying to get this passed when they know a lot of people are going to be voting. That’s what this is really about, so they can have access to all of that client information and data: who people are; where they go; how much they drive; when they are going to need a part; what demographic they fall into; and to whom can we sell this list of names.

That’s what it is all about, and it is sad. The Massachusetts people have been lied to, and the independent repair shops have been lied to, and we dealers have been painted as bad guys, and the dealers have had nothing to do with it.”

Massachusetts Auto Dealer www.msada.org

MSADA way that any vehicle can A “no” vote would make no be plugged into a reader changes to current law. that can be connected to “Vote ‘No’ on Question 1 to your whole dealership or protect your privacy, your safeone that can bought for ty, and your family. Question 1 as cheap as $20 at Tarhas nothing to do with fixing get, and both will procars,” Steve McElhinney of the vide you with the same Coalition for Safe and Secure vehicle diagnostics and Data said. “Question 1 is a data telematics information. grab by third parties who want The new legislation to gather your personal vehicle would only ensure that information and access it reothers would receive motely, including location data any wireless transmisin real time.” sions as well, but it steps What the new Right to Reinto very treacherous pair offers is a true Pandora’s territory as this leaves Box. Having a universal digital so much information telematics phone app may seem If this new platform goes exposed. Unfortunately convenient to some; however, this new Right to Repair it simultaneously opens up the in the way the question is initiative is being tied to possible vulnerability of a syswritten, there is going to be the original; where that tem and all of its data. served to level the play“If it passes, what the balthis back door into the car’s ing field for all repair lot question says is that the computer system that probably work, this is making exmanufacturers would have to treme and unnecessary build such a platform in the car any hacker can figure out demands that threaten standardized for all makes and not only the industry, but models sold in Massachusetts how to compromise. the data and well-being that would make the computer of the customer. accessible to a mobile device,” “The proposed law is a strong departure from what was needConnolly said. “That would create a serious cybersecurity risk ed under our current law to assist all repairers, even those at for cars on the road, data privacy concerns for drivers, malware franchised dealerships working on other line-makes, with apliabilities for our dealerships, and even the independents that propriate access to diagnose and repair cars,” O’Koniewski want to use this.” stated. “This is now more about what I like to call the ‘Right to The bill reached the ballot as a result of efforts by the Right Steal Personal Data.’ In this day and age of the digital economy, to Repair Coalition. The group is financed by the Coalition for such data is money, and the aftermarket companies want unfetAuto Repair Equality, a national, nonprofit organization repretered access to it. Unfortunately, there are severe consequences senting major companies in the $200 billion-a-year aftermarthat cannot be addressed in a bumper sticker campaign slogan ket, who thus far have ponied up more than $4 million for the limited to a simple up-or-down vote by the people.” cause. Auto Care Association, Advance Auto Parts, Auto Zone, “The fact is these independents have been sold a bill of goods and Genuine Parts Company have each added $2.5 million as by the RTR people,” Connolly proclaimed. “We dealers do not well. The opposition to the bill is led by Coalition for Safe and receive any information on how to repair a vehicle from the Secure Data, a group funded through the efforts of the vehicle manufacturers though telematics. It is against the Right to Remanufacturers. Given that Massachusetts is the only state that pair Law from 2012. Everything goes through the OBD2 syshas established any sort of Right to Repair law, it is striking that tem. When a car has a check engine light on, they bring it into this battleground was where they chose to focus the fight as 17 the shop, we plug it into the scan tools that we have. The indeother states contemplated Right to Repair bills. pendent repairers plug it into the scan tools that they have, and When this was initially filed last August, MSADA loudly it spits out what is wrong with the car. Maybe 8 or 10 years ago opposed it with Executive Vice President Robert O’Koniewski if they did not have each individual manufacturer’s scan tool, it writing a letter to Attorney General Maura Healy. She ignored was onerous and they had a valid point. When the law passed in these entreaties, and the initiative petition advanced after get2012, the manufacturers all agreed to put in a platform that one ting enough signatures to make the ballot. particular inexpensive scan device would work throughout all The original Right to Repair Law helped universalize the www.msada.org

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NO on “Right Repair” RACE TO THEto FINISH the different brands and that is still the way it is.

“What did get get carved out in 2012 was access to customer information - telematics - so that when a light comes on in your car, that message gets sent to a manufacturer and they let the selling dealer know that light is on. They could possibly

be called by that dealership’s staff to schedule an appointment.

Very few people do things that way with their car. It is a very, very small number of our customers that get booked because of the telematics for service. People have to opt in to use that telematics service anyway, and they have to pay for it. There is only a certain percentage of people that do have these services.”

Catering the laws for an exclusive service seems quite excessive. When the first law hit the ballot it passed at an 86% rate, and it would only be proper for this to fail at the same percentage. The demands of creating something that is standardized and allows open access make safety and privacy legitimate concerns.

“If this new platform goes in the way the question is written, there is going to be this back door into the car’s computer system that probably any hacker can figure out how to compromise. So the manufacturers will be dealing with creating new cybersecurity issues at a cost down the road at really no benefit for the independent repair guy,” Connolly said. “It is just going to be a benefit for the parts makers who also have access to that information and can send out direct emails telling customers to go buy their parts at Auto Zone this month.

They will sell your information to other groups as well, groups of independents, to groups of other parts manufacturers, to SEPTEMBER 2020

groups of people who sell furniture, who knows. There will be no accountability.

“There’s already enough issues with software problems in new cars these days. People are always plugging their phones in to use Waze or the newest app for this or that, and often times they are not compatible, or their iPhone update now means something in the car does not work right. There are always headaches that we are dealing with and clients are dealing with. I am just really nervous that if this thing passes, it is going to be a real nightmare for customers.

There’s really going to be little security, and cybersecurity issues are greatly concerning.”

With big-budget backing, television ads have been vitriolic and omnipresent, with ad hominem attacks on the dealers and rebuttals to claims of cybersecurity threats by a former chief of police on the Right to Repair payroll. Some of the “no” ads have been accused of fear-mongering, but the potential threat for someone to hack or exploit the information in the system is all too real.

Technological evolution brings legitimate and necessary questions of safety and confidentiality. It is the consumer who ultimately should be in control of how their own data is used.

With information held remotely in clouds instead of directly on devices, there are merely more points where that can be intercepted. Being in possession of a consumer’s data and keeping it private can pay dividends in the name of reliable return customers, who have learned that you protect them from any unintended consequences.

Massachusetts Auto Dealer www.msada.org

MSADA

It would create a serious cybersecurity risk for cars on the road, data privacy concerns for drivers, malware liabilities for our dealerships and even the independents that want to use this.

“We’re sort of on the outside. We are collateral damage in all of these commercials, because the Right to Repair people have painted us as being part of the manufacturers as if we were not independent businesses. They have made it seem like the dealerships here in Massachusetts are all owned and operated by the manufacturers. Our reputation has taken a beating unfairly from the RTR people,” Connolly said. “We are small businesses. We have 50 people or less at a dealership, but we employ 30,000 people in Massachusetts that are still gainfully employed in this pandemic.”

In the end, regardless of the outcome, we can expect the Legislature to address the issue in the 2021-2022 session.

“We were very successful this year convincing legislators that this issue was, in fact, fabricated on misinformation,” O’Koniewski said. “Unfortunately, come the end of the day, millions of dollars will be spent for a proposal that could end up before the courts and back before the Legislature next year. As always, the attorneys and campaign consultants will make out just fine. If the proper protections are not ultimately provided for customer data, vehicle owners could be victimized. Stay tuned for more to this story.” t www.msada.org

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

NEWS the Horn

LYNNFIELD

Kelly Jeep Debuts New Store Kelly Automotive Group’s new Jeep dealership in Lynnfield opened later than planned, but the delay created an opportunity to tailor the layout to Covid-19 protocols. The $20 million investment opened in August, after consumers and businesses adjusted to a new reality and auto plants were running again.

Construction delays put the kibosh on plans to open the sprawling six-acre new Jeep store last Fall. They still were not ready for a Presidents’ Day weekend open, and things had to be adjusted again for the Covid-19 era. Allowing for more spacing in the sales and service areas, spreading things out led to some spots being turned into working spaces that were not originally planned to be.

The 46,000-square-foot facility is the largest stand-alone Jeep store in the U.S., and it is among a growing number of dealerships dedicated solely to the rugged SUV brand as Fiat Chrysler

Automobiles seeks more exclusivity for it in certain markets.

It is also one of the first new dealerships entering a world reshaped by the pandemic — one in which many consumers would prefer to work through more of the sales process digitally instead of spending much time in this Jeep palace. But Kelly already had made the investment, which included buying the land for the store, so it has to move forward in a much different sales environment than previously envisioned.

While some Jeep stores have adopted a casual dress code, the Kelly location will stick with its tried-and-true formula of having salespeople wear suits. The group hopes the professional look, combined with the new store’s aesthetics, will pay dividends as Jeep works to attract more affluent buyers who are accustomed to upscale experiences. The pinnacle for the brand will be the upcoming Grand Wagoneer, a three-row luxury hauler that will stretch into six-figure territory and aim to compete with the Range Rover.

The new dealership is next door to Kelly’s old Jeep-Chrysler location, which closed for a month when the pandemic began in SEPTEMBER 2020

the Spring. Although it is dedicated to Jeep, the group has not given up on its Chrysler franchise; how it will handle that brand is still being ironed out.

“Whenever you make an investment like we made in our Jeep facility, you want to know that the product is going to be coming behind so you have a level of comfort — and we do have that,” Kelly COO Brian Heney said. “The Jeep product coming through is pretty phenomenal. We don’t have any remorse at all.

We’re not second guessing anything.”

LAWRENCE

Half-Million Dollar Fraud Ring Busted Four people from Massachusetts, and eight in total, have been charged with using stolen identities of U.S. citizens from Puerto Rico to fraudulently purchase and finance about $500,000 worth of late-model vehicles from car dealerships in Massachusetts. In a joint effort, the U.S. District of New Jersey, Northern District of Ohio, and the state of New Jersey also charged the defendants in the scheme.

Between October 2017 and January 2019, eight people — including one each from Lawrence, Methuen, Lowell, and Haverhill — visited Massachusetts car dealerships to buy vehicles and applied for 100% financing, according to a press release from U.S. Attorney Andrew Lelling. Other people charged are from Manchester, New Hampshire; Reading, Pennsylvania; and Union City, New Jersey.

On their applications for financing to buy the vehicles, the people charged provided stolen biographical information of real U.S. citizens, fraudulent Puerto Rico driver’s licenses, and fraudulent Social Security cards. The group used the stolen identities to illegally open bank accounts and obtain credit cards before buying vehicles, many of which were then shipped out of the United States.

These local people were charged: Neida Lopez, 43, of Methuen, charged with aggravated identity theft and conspiracy to commit wire fraud. Lopez allegedly used a stolen identity to obtain a credit card and then made $21,931 in charges on that card.

Arialka Moya, 31, of Lowell, false representation of a Social Security number and wire fraud. Moya allegedly used a stolen identity to obtain a car loan to purchase one car worth $60,982.

Alvin Rivera, 37, of Haverhill, charged with false representation of a Social Security number, aiding and abetting the same, aggravated identity theft, aiding and abetting the same, and wire fraud. Rivera allegedly helped other people with the fraudulent purchase of vehicles by providing them with stolen personal identities and information.

Wanda Sanchez, 36, of Lawrence, charged with false repre-

Massachusetts Auto Dealer www.msada.org

MSADA

NEWS from Around the Horn

sentation of a Social Security number, aggravated identity theft, and wire fraud. Sanchez allegedly used a stolen identity to obtain a loan to buy a car worth $50,962.

The investigation was conducted by Homeland Security Investigation’s Document and Benefit Fraud Task Force. The DBFTF is a specialized field group that investigates organizations and individuals involved in document, identity, and benefit fraud. Including local, state, and federal officers with expertise in detecting fraud schemes, the group has been investigating this scheme since January 2019, with assistance provided by police from Lowell, Lawrence, Methuen, Haverhill, Woburn, and Dartmouth.

The charges of wire fraud and conspiracy to commit wire fraud call for a sentence of up to 20 years in prison, three years of supervised release, and a fine of up to $250,000 or twice the gross gain or loss from the offense. The charge of aggravated identity theft carries a mandatory two-year sentence, up to one year of supervised release, and a fine of up to $250,000, he said. The charge of false representation of a Social Security number provides for a sentence of up to five years in prison, three years of supervised release, and a fine of $250,000.

The case is being prosecuted by Assistant U.S. Attorneys Elianna Nuzum and Adam Deitch from Lelling’s Major Crimes Unit.

FRAMINGHAM

Family-Owned Dealership Changing Hands A Framingham dealership that has been owned by the same local family for nearly 50 years is changing hands. The McGovern Automotive Group, which owns 14 dealerships in New York, Massachusetts, and New Hampshire, will soon close on a deal to buy Framingham Ford. The new owner has pledged to keep the dealership exactly the same, except the name will change to McGovern Ford.

Jerry Chase founded Framingham Ford in 1971 after leaving a corporate job with Ford in Detroit. The dealership was originally located along westbound Route 9 across from the current location behind Stop & Shop at Temple Street. His son, Jerry Chase Jr., took over the business in the early 2000s.

Chase is selling because both he and the dealership’s general manager Arthur Campbell plan to retire, he told the Board of License Commissioners on September 14. McGovern will keep all

the dealership’s employees. McGovern Automotive Group owner Matt McGovern said he plans to close on the purchase of Framingham Ford sometime in October.

ARLINGTON, TEXAS

A Plague of Mayflies and Rotten Odors 2020 has been a strange year and an especially challenging year for car makers, and the world keeps throwing curveballs. While no one has detected the pounding of horse hooves from the apocalypse, or a plague of locusts, other insects have wreaked havoc on car buyers. For roughly 2,600 potential buyers of the 2021 Chevrolet Tahoe and GMC Yukon, the mayfly is wreaking havoc on vehicle paint, chrome trim, and windows while the new vehicles are awaiting distribution to dealers.

The mayfly residue has affected these high demand vehicles that were built in GM’s Arlington, Texas, plant. This has caused GM to delay shipment, as the company rushes to find a solution and clean cars that have been affected. The damage can be so severe that one Oklahoma Chevrolet dealer opted to repaint the hood because of the damage caused. It could not come at a worse time with dealer inventory tight after the COVID shut down and consumer demand high.

Meanwhile, Hyundai, is having its own unique struggles with the a very distinct new car smell. Apparently new Hyundai Palisade owners have a new car smell that is less than appealing.

Hyundai is dealing with an unexpected issue with their newly launched flagship SUV. Owners are complaining about an interior smell that has been described as truly foul. Owners report a smell resembling gym socks, rotting cabbage, or old garlic. Initially, Hyundai thought the floor mats were to blame, but removing them did not dissipate the odor. Hyundai is on the scent and found it may only be present in upmarket Limited models equipped with a light-colored interior and Nappa leather upholstery. The smell seems to come from either the headrests or from inside the seats themselves. The Palisade’s sister vehicle, the Kia Telluride, does not appear to have the same issue.

SACRAMENTO, CALIFORNIA

California Aims For Zero Emissions by 2035 California will ban the sale of new gasoline-powered passenger cars and trucks in 15 years, as Governor Gavin Newsom established a timeline in the nation’s most populous state that could force U.S. automakers to shift their zero-emission efforts into overdrive. The plan would not stop people from owning gas-powered cars or selling them on the used car market. But in 2035 it would end the sale of all new such vehicles in the state of nearly 40 million people that accounts for more than one out of every 10 new cars sold in the country.

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NEWS from Around the Horn Newsom signed the executive order on the hood of a red, electric-powered Ford Mustang Mach-E, directing state regulators to develop new regulations to meet the deadline. He urged Californians to “pull away from the gas pumps” and encouraged other states to join for the good of the environment and public health.

California would be the first state with such a mandate while at least 15 other countries have already made similar commitments, including Germany, France, and Norway.

“If you want to reduce asthma, if you want to mitigate the rise of sea level, if you want to mitigate a loss of ice sheets around the globe, then this is a policy for other states to follow,” Newsom said.

While environmental groups cheered the announcement, the oil industry panned it and the automakers’ industry group sought a middle ground, saying it is committed to increasing zero-emission vehicles but through cooperation among governments and businesses, not by mandates.

Newsom says his order will reduce greenhouse gas emissions by 35%. He stressed the benefits went beyond the environment, saying electric cars and trucks are “the next big global industry and California wants to dominate it.”

California is already home to 34 electric vehicle manufacturers — including Tesla, the world’s top-selling maker — and accounts for about half of all electric vehicle sales in the U.S. Some auto industry analysts warned the timeline could be too fast for technology to catch up to customer’s expectations. Battery life and manufacturing costs are still issues that have not been resolved, said IHS Markit principal analyst Stephanie Brinley, who studies the North and South American auto markets.

Ford Motor Company said it agreed with Newsom that it is time to take action to address climate change. But the Alliance for Automotive Innovation, which represents Ford and most other automakers, said markets cannot be built with mandates and bans.

Mary Nichols, chairwoman of the California Air Resources board tasked with writing regulations for the plan, said electric vehicles will be more affordable in 15 years and everyone will benefit from cleaner air.

California already has some of the most progressive climate laws in the country, putting it at odds with the Trump administration and its more relaxed regulatory approach to environmental policy. The federal government has tried to end California’s authority to set emission standards for cars and trucks, a move the state is fighting in court.

About a dozen states, including Massachusetts, follow California’s lead on auto emissions standards that are more restrictive than federal rules. If those states follow suit on zero-emission vehicles, it could have a huge impact on the U.S. automobile industry.

Newsom’s order also targeted medium- and heavy-duty commercial trucks, saying he wants those to be 100% zero-emission vehicles by 2045 “where feasible.” t SEPTEMBER 2020

Massachusetts Auto Dealer www.msada.org

MSADA

BUSINESS OPS

MSADA

Summer 2020 Showed Strong Profits, What’s Next?

Michael Cosgrove CPA, Principal, O’Connor & Drew, P.C.

Michael Cosgrove joined the firm in 2007 and was promoted to Principal in 2017. He manages accounting, auditing, and tax services for a wide range of clients working on a variety of client engagements, including audits, reviews, compilations, and agreed-upon procedures.

Michael

oversees both the tax and assurance components of his engagements.

It is not a shock to anyone that auto dealers were hit significantly hard from mid-March through the end of April. However, what seemed unrealistic at the time but now is the current reality, auto dealers have seen profits surge from May through August.

Now, after an initial round of government stimulus and strong profits from the Spring and Summer, many are wondering what is coming next. While no one can say definitively what will happen, there are a few strategies to be mindful of: Manage Expenses Everyone refocused on expenses in March and April, but often times, many are too quick to go back to their old spending habits.

It is critical to continue to review expenses, whether it is costs for car cleaning, gas cards, or personnel. In terms of personnel, many dealers are now beginning to review pay plans. Most pay plans were adjusted when the pandemic hit and there was significant uncertainty. Now, many dealers are reviewing their pay plans because the target levels were reduced for the pandemic, but those levels were then met easily in the last several months. Also, some of the pandemic-related changes may help with the scheduling of employees and how many hours they are needed at the stores.

More and more customers are scheduling appointments. Dealers are trying to be sure that the dealership is ready for them to be there. You should be able to schedule the sales staff more accurately given the volume and the timing of when customers are looking to visit.

Review Internal Controls With the significant staff reductions in March, many employees who remained saw their roles change greatly. They took over responsibilities that were previously handled by another team member. As the employees are hired back and staffing levels reach back to appropriate levels, it is critical to ensure that the roles and responsibilities of the individuals remain appropriate. Some key basics to remember in terms of internal controls are: • Segregation of Duties – This is ALWAYS the first control listed because of its significance. Remember, one easy example of this is the responsibilities for receiving cash or checks, prepar-

ing the deposit, and reconciling the deposit should be separated. Is this true at all of your stores?

• Reconciliation and Review – As employees become acclimated to their new roles and responsibilities, leaders should be ensuring that there are proper processes for review of performance as well as reconciliations amongst the various source documents and accounting records.

• Authorization and Approval – It is critical to ensure that each location has the appropriate approval processes in place. It is imperative to ensure that everyone is on the same page in terms of who is allowed to make what types of decisions.

Inventory Shortages We all saw the inventory struggles as the majority of auto dealers stopped or significantly slowed down their purchasing at the beginning of the pandemic and have now tried to ramp that spending back up. Inventory is always a critical area and one that requires significant attention. It is critical that you are trying to get the best mix possible of vehicles, so that customers have as many

You need to understand how you see the next few months playing out and be sure to communicate that to your team options as possible, even in this environment. It is also critical to be aware that with all of the uncertainty surrounding the next few months, loading up on inventory may not be the best approach.

You need to understand how you see the next few months playing out and be sure to communicate that to your team so that proper inventory levels can be achieved.

Cash Management This is always a critical area for all businesses, but auto dealers in particular, due to the amount of capital required and the slower cash conversion cycle. Most dealerships have excess cash right now after the strong Summer and government stimulus, so it is critical to determine what to do with the cash. For some, paying down floorplan on vehicles or investing in their cash management accounts (CMA) are the best methods. This allows the dealerships the ability to generate a return on that money while still having the flexibility to pull the cash or re-floor the vehicles if necessary.

Some owners, depending upon their level of oversight, like to pull the cash from the dealerships so that the dealership team does not see the excess cash and use it to stock up on inventory, if that is not in line with the owners’ strategy. t

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22 AUGUST 2020

Patrick Manzi

NADA Senior Economist

Boyi Xu

Economist

New light-vehicle sales continued to recover in August from April lows. August’s SAAR of 15.2 million units marked a 4.8% increase from July’s SAAR of 14.5 million units but is down 11% compared with August 2019. And through eight months of 2020, new light-vehicle sales were off by 20.7% compared with the same period in 2019. Raw sales volume in August 2020 totaled 1.33 million units, representing a decline of 19.1% from August 2019. However, there were two fewer selling days last month than in August 2019, which also included the Labor Day sales weekend. While the differences in the sales calendar contributed to a lower raw volume of sales in August, the sale volumes this September will likely see a boost compared with September 2019.

After adjusting for daily selling rates, retail sales volume in August was off by 10% year over year, according to Wards Intelligence. Since April, fleet sales volume has decreased more than retail sales volume. Fleet sales fell by roughly 32% compared with August 2019. While significant, it was actually a smaller fleet sales drop than in recent months, which averaged 66% in the April-July 2020 period. Vehicles sold in August spent less time on dealer lots and had lower average discounts compared with

SEPTEMBER 2020

August 2019. According to J.D. Power, 45% of vehicles sold this August spent fewer than 20 days on the lot, up from 35% in August 2019. Average incentive spending per unit is expected to be $4,105, down $49 from August 2019 and $848 from its high in April 2020.

Based on inventory levels at the beginning and end of the month, dealers turned roughly 50% of their inventory in August.

OEMs have been working hard to restore production, especially in popular segments such as crossovers and pickups, but steady sales led to inventory levels rising only 0.9% throughout August.

At the end of the month the industry-wide days’ supply was 52 days, down from 55 days in July 2020 and 61 days in July 2019.

And days’ supply for the crossover, pickup, and SUV segments all remain below the industry benchmark of 60 days.

These inventory constraints—coupled with low consumer confidence, persistently high unemployment, and tightening credit standards—still present some economic headwinds. However given steady monthly gains in retail sales and the expectation that inventory levels will continue to rise, we remain optimistic about the new-vehicle sales recovery for the rest of the year.

Massachusetts Auto Dealer www.msada.org

MSADA

NADA MARKET BEAT

JANUARY 2016

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TRUCK CORNER

MSADA MSADA

Election Time at ATD

By Steve Bassett Chairman, American Truck Dealers Steve

is

the

dealer

General Truck Sales in Muncie, Indiana. He also has locations in Indianapolis, I ndiana , and T oledo , O hio . H e sells V olvo , Isuzu, H ino, and M ack trucks. principal

of

SEPTEMBER 2020

With the ballots going out for ATD line representative seats, it is an opportune time to discuss how your ATD officials are elected and how they represent your interests at your national association. A sentiment I hear from franchised line representatives all the time is that many dealers do not realize how much ATD does for its members. I know this because I had the same feeling when I first joined the ATD board in 2015, and now I have the privilege of having the driver’s-side view. The responsibility of an ATD leadership role is critical, particularly when we must navigate the most difficult circumstances such as we have done this year.

When it comes to the election process, there is a marked distinction between ATD and NADA. While NADA directors are elected by geography, ATD line representatives are elected based on the OEMs they represent. All ATD line representatives serve a threeyear term, and each person holding this seat has the responsibility to advocate for the best interests of their fellow truck dealers. The ATD vice chair is elected by the ATD board for a one-year term, while the ATD chair serves a total of two years (followed by one year as immediate past chair.) However, what many people do not know is that the ATD chairperson is also an NADA director, serves on the NADA executive committee, and serves as the voice for truck dealer members on the NADA board. This allows ATD/NADA to maintain a collaborative atmosphere and a unique synergy in our advocacy and grassroots efforts.

As I mentioned, ballots for several line representative positions are going out this month. Our ATD mission guides everything we do: To serve and represent our members through federal advocacy, industry relations, education, and other services. This includes engaging in important annual events such as three board meetings and the ATD Show; helping to present the results of our Dealer Attitude Survey to OEM executives and suppliers; and spearheading important subcommittee assignments whether it is regulatory affairs, dealership operations, or legislative affairs. I can testify that the work of our ATD line reps is extremely gratifying and makes a difference in the direction of our industry.

In coming years, dealers will be navigating unprecedented terrain, and the responsibility of every ATD board member will be heightened. We must do everything we can to secure our future in the commercial truck industry. As line representatives, we Massachusetts Auto Dealer www.msada.org

ultimately serve as the bridge between our OEMs and truck dealers; between our businesses and Capitol Hill; and between fellow truck dealers and our great association. Our agenda has critical long-term goals, such as continuing to fight for the repeal of the harmful federal excise tax. And we must work hard to strengthen our workforce by recruiting and retaining thousands of capable diesel technicians.

On behalf of the ATD board, I want to thank our dealer community for your commitment and confidence in this great association. Also, please thank your line representatives for the work they do on your behalf at the national level. I look forward to our elections ahead!

First-Ever National Technician Appreciation Week The American Trucking Associations and ATA’s Technology and Maintenance Council celebrated the inaugural National Technician Appreciation Week on September 21-25.

“Professional technicians ensure that drivers are able to travel safely, which has always been, and remains our highest priority,” said ATA President and CEO Chris Spear. “The technician team of any size motor carrier, private carrier, or service provider is critical to its successful operation. Without the work they do, the trucks would stop running, and drivers would be unable to deliver the products and supplies that keep the American economy running.”

NTA Week will celebrate the hard work and commitment of professional technicians, acknowledge the extraordinary efforts of these dedicated professionals, and help attract prospective talent to the industry.

The inaugural event featured a series of virtual events and educational sessions, including webinars on: • After-treatment Diagnostics and Maintenance • Electrical System Diagnostics • Vehicle Data Network Diagnostics • Collision Mitigation Systems • How to Prepare for ASE Certification Testing “We are proud and beyond excited to launch this important week and dedicate a time to say ‘thank you’ to the professional technicians that are so integral to the trucking industry,” said TMC Executive Director Robert Braswell. “Professional technicians are the unsung heroes. They keep business moving and trucks on the road. TMC is honored to highlight the significant impact they have.” t

MSADA

LEGAL

By Joseph W. Ambash and Jeffrey A. Fritz

Whistleblower Complaints on the Rise under COVID-19; Anti-Retaliation Programs Can Help Last month the U.S. Department of Labor Office of Inspector General (OIG) issued a report entitled, “COVID-19: OSHA Needs to Improve Its Handling of Whistleblower Complaints During the Pandemic.” The report noted a significant increase in whistleblower complaints recently, many COVID-19-related, and made recommendations to OSHA for ensuring prompt and appropriate investigation. And earlier this month, a COVID-19-related whistleblower complaint was filed in Massachusetts federal court. With these sorts of claims apparently on the rise, it would behoove all employers to understand their responsibilities, and what they can do to minimize risk.

The OIG Report. The OIG report found some 4,100 OSHA whistleblower claims were filed with OSHA from February 1, 2020, through May 31, 2020, representing a marked 30% increase from the same timeframe in 2019. It also noted 39% of such complaints—approximately 1,600 of them—were directly related to COVID-19, including allegations of retaliation for claiming violations of social distancing guidelines and failure to provide personal protective equipment. Accordingly, and at the OIG’s recommendation, OSHA is likely to refocus attention on these types of claims. Whether the number claims will continue to increase over prior years remains to be seen, and likely will depend on the extent to which the pandemic continues to impact employers and employees (which is likely to remain significant).

Recently Filed COVID-19 Lawsuit.

A lawsuit was filed in Massachusetts federal court on September 9, 2020, against Hampshire Regional YMCA. In it, a former employee claims her employer (1) failed to provide her two weeks’ paid sick leave, in violation of the Emergency Paid Sick Leave (EPSL) Act (part of the Families First Coronavirus Response Act), (2) terminated her employment in retaliation for her seeking EPSL, and (3) terminated her employment because she complained

to her employer about coworkers not being required to wear masks or appropriately social distancing. It remains to be seen how this, and other cases like it, turn out.

Elements of a Whistleblower Claim.

Generally speaking, to prevail on a whistleblower claim, an employee must allege and prove four key elements: (1) s/he engaged in “protected activity” (i.e., activity that a whistleblower protection law protects, such as reporting unsafe conditions, a violation of law, etc.); (2) the employer knew about, or suspected, the employee engaged in such activity; (3) the employer took an adverse action against the employee (i.e., termination of employment); and (4) the employee’s protected activity motivated or contributed to the adverse action.

In the event the employee can make such a showing, which is minimal, the employer has the opportunity to show it took such adverse action for a legitimate, non-retaliatory reason.

Anti-Retaliation Programs Can Minimize Risk. Employing an anti-retaliation program can go a long way toward minimizing risk. Such a program (1) provides an avenue for employees to raise concerns, (2) is more likely to address their concerns, and (3) shows (to your employees, to regulators and, ultimately, to judges and juries) you take employee concerns and health-andsafety-issues seriously. OSHA publicizes recommended practices for such a program, which focus on five key elements: (1) management leadership, commitment, and accountability, (2) adopting a system for listening to and resolving employees’ safety and compliance concerns, (3) adopting a system for receiving and responding to reports of retaliation, (4) anti-retaliation training for employees and managers, and (4) program oversight. While there is no way to ensure no employee ever files a whistleblower claim, having in place a system for listening to and resolving concerns, in particular, certainly can minimize the risk.

If employees feel comfortable raising conwww.msada.org

cerns and feel their employer has listened to them and taken their concerns seriously, they are less likely claim retaliation if and when they experience an adverse action.

Do not dismiss employee concerns; listen to them and sympathize; try to find a solution. Regularly monitor and implement CDC, OSHA, and local guidance concerning appropriate COVID-19 safety practices. Train employees on appropriate COVID-19 safety practices. Address concerns promptly and appropriately. Explain your reason for doing, or not doing, something an employee asks of you. Take all concerns an employee raises seriously. And seek guidance when you are unsure of your obligations.

That all said, make sure you regularly document performance deficiencies, misconduct, or any other bases underlying all adverse actions. This goes for all employees, not just those who engage in protected activity. Indeed, the best defense to a claim of retaliation is a well-articulated, legitimate reason for taking an adverse action, and contemporaneous documentation sufficient to support it. Good documentation is key; no documentation (or worse, bad documentation) makes such claims more difficult to defend against (and, accordingly, generally more costly to defend against and, ultimately, resolve). t

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

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NADA Update

By Scott Dube

Virtual Washington Conference Scott Dube, President of Bill Dube Hyundai and MSADA Immediate Past President, represents NADA’s Massachusetts members on the NADA Board of Directors. He can be reached at scott@dubecars.com.

With a pandemic still keeping people from traveling and gathering, this year’s Washington Conference took on a very different face. With all of the events conducted virtually, dealers were able to follow along from home, but the impact of gathering together as a unified force and getting to meet personally with legislators was greatly diminished.

After last year’s conference had been scheduled for a time when Congress was not in session, there is now a whole tenure of young Representatives who have not engaged in face-toface meetings with dealers, and that is a difficult way to make an impact on pending legislation. While the conference itself helps unite dealers, and this pandemic inhibits direct interactions, we must both as individuals and as a dealer body reach out to those who create the laws that define our industry. This does not mean just once a year. This is regular contact that everyone should engage in for the betterment of our business.

Auto Dealers Gather Virtually to Make Their Voices Heard in Washington

By Sheryll Poe, NADA Contributor

Regardless of who gets elected President or who controls Congress next year, or even the status of the COVID-19 pandemic and recovery, Congress and the Administration need to hear from the nation’s automobile dealers. This was the central theme emphasized by NADA policy and regulatory experts during NADA’s first all-virtual Washington Conference.

“The future of this industry is in your hands,” NADA President Peter Welch told members of the NADA’s NextGen Program during the conference pre-session on Tuesday, September 15. “Congress needs to hear from you. Tell them how the pandemic has reshaped your business. Share what the auto industry needs to make a strong comeback and prepare for the road ahead.”

The virtual conference kicked off for all attendees on September 21 with a discussion of top legislative and regulatory priorities, virtual Q&A sessions, and a primer on virtual advocacy strategies to help attendees—including NADA’s most politically active members, national board members, and state association leadership—navigate Congressional SEPTEMBER 2020

meetings held entirely online.

One critical issue for dealers: Ensuring that loan expenses undertaken as part of the Paycheck Protection Program (PPP) are tax deductible, according to NADA Legislative Affairs Committee Chairman Dennis Gaudet. In April, the Internal Revenue Service (IRS) issued a notice that forgiven PPP loan expenses may not be deducted from federal income taxes.

Gaudet, a dealer from New Hampshire, explained that many dealers applied for PPP funds as an important and necessary method to retain employees and fund their payrolls.

“NADA advocated for the liquidity, flexibility, and support to navigate the shutdown,” Gaudet noted. “NADA is working hard to make sure these expenses are fully tax deductible.

We need to make sure this issue is corrected before we file our 2020 taxes.”

Not only should dealers urge their member of Congress to pass the corrective legislation known as the “Small Business Expense Protection Act” (S. 3612/H.R. 6821), dealers should also urge their legislators to engage the Administration to fix the issue without requiring legislation by withdrawing the IRS notice, explained NADA’s Senior Vice President of Legislative Affairs, Ivette Rivera. “The IRS notice should be reversed, as it would unfairly raise taxes for small business dealers and is contrary to Congressional intent.”

While negotiations on the next round of coronavirus emergency relief legislation have stalled, NADA is working to ensure that businesses are protected from the threat of meritless COVID-19-related litigation when businesses comply with health and safety laws. “We need Congress to pass safeguards that balance employee and customer safeguards with protections for businesses,” said Rivera The three E’s – the elections, the economy, and engaging with legislators were at the forefront of day two of NADA’s first virtual Washington Conference.

The industry was tested, and NADA responded. 2020 NADA Chairman Rhett Ricart, CEO and owner of Ricart Automotive Group in Columbus, Ohio, kicked off day two of the virtual conference by detailing how NADA and its members “moved at the speed of light to be the first to get to the White House to advocate for the industry,” when the pandemic hit, ensuring that auto dealers were declared an “essential service” and could stay open. “When most of America was shut down, our service centers stayed open for our customers,” Ricart said, “to keep America safely rolling.”

“NADA then shifted into hyperdrive and produced an unprecedented amount of resources,” including an entirely new COVID-19 information portal. Meanwhile, the NADA Academy turned into “a webinar producing machine,” tackling every issue facing auto dealers no matter how big or small.

“Everything NADA did was aimed at keeping dealerships

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MSADA alive and running so we can keep our local economies driving forward,” Ricart said. As a result, “the industry is stronger than ever, more united than ever, and NADA can get us through anything we face in the future.”

The U.S. economy is in a “self-sustaining recovery,” said Larry Kudlow, Assistant to the President for Economic Policy and Director of the United States Economic Policy Council.

Kudlow provided what he termed “a brief on the optimistic side.” He noted that the auto industry itself is booming, with “sales up 74% since the April woes,” and was poised to continue to gain during the fourth quarter. He also pointed to gains in the housing, auto, and retail sectors as signs that the U.S. was well into a “self-sustaining recovery.”

Kudlow touted that the Administration’s policies to lower taxes, roll back regulations, create energy independence, and negotiate better trade agreements had bettered the economy, including increases in household income and declining income inequality. “The biggest gainers in living standards went to middle- and lower-income folks,” he said.

The economy will continue to be a bright spot if the nation sticks with these policies, Kudlow said. “As we work through this pandemic—and vaccines are in sight, case rates are down, fatalities are down, more businesses are re-opening—staying the course with these kinds of free-enterprise policies will generate the kind of continuous improvement of living standards that we saw in the first three years of the president’s term,” he concluded.

With the presidential elections just six weeks away, it was no surprise that one of the most popular sessions of the day (at least, according to the live chat feature on the screen) was the annual political update by Charlie Cook and Amy Walter of The Cook Political Report.

The two elections experts offered their insights into the 2020 presidential election as well as other elections on the ballot. Cook repeatedly referred to the upcoming contests as “an election like no other,” and said it all comes down to a referendum on President Trump and whether the electorate wants to keep him in the job.

When making election predictions, it is wise to keep the lessons of the 2016 elections in mind, Cook said. “The only way 2016 resembles 2020 is that they both are presidential years, Trump is the Republican nominee, and both years begin with a 2,” Cook stated. In 2016, an unprecedented 6% of voters chose to vote for a third-party candidate. This year, Cook predicts less than 3% of voters will cast a ballot for a third-party candidate.

As he wrapped up the day’s programming, NADA President and CEO Peter Welch made note of the historic nature of this new meeting format that allowed this year’s attendees to engage and advocate on behalf of their industry from their homes and businesses. “Ladies and gentlemen, mark this one in the NADA history books: We just had our first virtu-

al NADA Washington Conference. Not too shabby,” Welch said. “ Dealers have always been our most effective lobbyists, and this year we need you more than ever.”

Suicide Prevention Day Offers Dealers an Opportunity to Enhance Business Culture

By Juliet Guerra, NADA Director of Media Relations

Suicide isn’t something we talk about in the automotive retail space frequently; however, given the struggles our world is facing due to the coronavirus pandemic, it is an important time to add mental health and suicide prevention to the conversation around recovery.

September 10 marked International Association for Suicide Prevention’s (IASP) Suicide Prevention Day, a day dedicated to providing a forum for all to prevent suicide and mitigate its impact on those it touches. To commemorate Suicide Prevention Day, NADA hosted a webinar, “Be Nice: Mental Illness and Suicide Prevention Action Plan,” presented by Mental Health Foundation of West Michigan executive director Christy Buck and Elhart Automotive Campus playground director Jeff Elhart.

Suicide prevention is a cause that is near and dear to Elhart’s heart. On March 27, 2015, Elhart’s brother took his own life after suffering from depression. Turning his loss into action, Elhart became an advocate for mental health awareness collaborating with the Mental Health Foundation of West Michigan (MHF) on Be Nice, a source for mental health and suicide prevention education to improve and save lives. The tool, which stands for notice, invite, challenge, and empower, is the “stop, drop, and roll” of mental health.

“Oftentimes, our organization is the catalyst for a positive impact after a tragic loss,” said Buck, who founded the Be Nice Program and Action Plan in 2010. “Our education program is an upstream approach to protecting the mental health of our communities. It equips individuals in schools, the workplace, and faith institutions with the confidence to take action when they notice a mental health change or crisis.”

“Anxiety and depression within Americans and people worldwide is growing at an alarming rate given the uncertainty, the isolation and new ways of social connection that is taking place,” said Elhart. “Mental illness is treatable. Suicide is preventable. This, however, only can happen with education on mental illness awareness and suicide prevention.”

During their webinar, Buck and Elhart shared insights for dealers to enhance their business culture with a simple action plan based on the scientific and evidence-based Be Nice tool.

“Given today’s pandemic it is critical for leaders to recognize the warning signs of anxiety and depression,” added Elhart. “Save a life. Be nice. You’ll be amazed when you bring Be Nice into your workplace how your employee engagement is enhanced.” t

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