2023 DECEMBER AUTO DEALER

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

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Desember 2023 • Vol. 36 No. 9

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

Marcotte Ford Charges Ahead

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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 Auto Dealer MAgazine Robert O’Koniewski, Esq. Executive Editor MSADA One McKinley Square Sixth Floor Boston, MA 02109 Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to MSADA by e-mail: jfabrizio@msada.org 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 2024 NADA Show, 2 Ethos Group, 23 GW Marketing Services, 20 Merchant Advocate, 19 Nancy Phillips Associates, 20 O’Connor & Drew + Withum, 44 PlugStar/Plug In America, 29 Reynolds & Reynolds, 33 Sprague Energy, 37 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Quarter Page: $450 Half Page: $700 Full Page: $1,400

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

Table of Contents

4 From the President: Our Challenges, Known and Unknown 5 ASSOCIATE MEMBERS DIRECTORY 6 THE ROUNDUP: Preparing for Your Future Success?

11 LEGISLATIVE SCORECARD 12 AUTO OUTLOOK 16 Cover Story: Marcotte Ford Charges Ahead

20 NEWS from Around the Horn 24 Accounting: Tax Strategies Dealerships Should Consider

25 Accounting: Dealership

Profitability Through Ancillary Businesses

26 Accounting: Tips to Improve Your Form 8300 Process 28 DEALER OPS: Latest Toyota Data Breach – Evidence of an Industry Under Attack

30 LEGAL: Hyundai Partners with Amazon to Sell Cars; FTC Vehicle Shopping Rule Creates Challenges for Dealers

32 LEGAL: We Wish You a Litigation-Free 2024 34 NADA Market Beat 36 AIADA: Dealers Look Ahead to 2024 38 TRUCK CORNER: ATD 2023 Accomplishments 41 nada update: Winding Down 2023 as We Prepare for 2024

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

Massachusetts Auto Dealer

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From the President

MSADA

Our Challenges, Known and Unknown

By Jeb Balise, MSADA President Selling cars used to be so easy!

As we do every year, there are those matters we know we need to get right all the time – wage compliance, HR training, workplace safety rules, and tax planning. While these are all the things we can control in our businesses, it keeps getting more complicated, and it is essential we focus more time and effort on them.

Aggressive government regulatory intrusion requires planning to minimize their detriment to our success. For example, we had almost a year and a half to plan for compliance with the FTC’s Safeguards Rule that began on June 9. Our newest challenge came in December when the FTC released its Vehicle Shopping Rule, which NADA and your MSADA had been lobbying against since it was first unveiled in June 2022.

For all the reasons we have talked about previously, this rule will add no measurable benefit to consumers but instead will make the car shopping process that much more onerous for dealers and their customers alike.

With a mid-2024 kick-in date, we will plan accordingly, hoping maybe either Congress or the courts can derail a rule that makes no sense.

Our businesses are built to expect the unexpected. We will continue to work through matters with our OEMs, the franchise system, and government regulations. Through “Our businesses are built to our collective strength, we can con- expect the unexpected. We will front any challenge and come out continue to work through the better for it. Managing under an matters with our OEMs, extreme regulatory environment just the franchise system, and adds to the burden. That is why we all need to be wired into our MSADA government regulations.” and NADA, who are engaged with the Massachusetts Legislature, Congress, and government agencies of all stripes. One resolution you could make for 2024 for yourself is to try to be that much more involved with your associations and our efforts on your behalf. I was so encouraged to see the next generation dealers attend the Annual MSADA meeting in October. Your involvement will help our continued success.

I wish you, your team, and your family a healthy and successful 2024. t DECEMBER 2023

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, Bill DeLuca Family of Dealerships Paul Bertoli, Priority ChryslerJeep Dodge Ram

Franklin County [Open]

Hampden County

Jeb Balise, Balise Auto Group

Hampshire County

Bryan Burke, Burke Chevrolet

Middlesex County

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

Chris Connolly, Jr., Herb Connolly Chevrolet

NADA Director

Scott Dube, McGovern Hyundai Rt.93

Officers

President, Jeb Balise Vice President, Steve Sewell Treasurer, Jack Madden, Jr. Clerk, Charles Tufankjian

Associate Members MSADA A ssociate M ember D irectory ACV Auctions Steve Sirko (856) 381-3914 ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 Ally Financial Maryanne Recupero (617) 997-9574 American Fidelity Assurance Co. Kathleen Weisenbach (402) 523-5945 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 Automotive Search Group Howard Weisberg (508) 620-6300 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 BCI Financial Corp.

Timothy Rourke (203) 439-9400 Bellavia Blatt Leonard Bellavia (516) 873-3000 Bernstein Shur PA Ned Sackman (603) 623-8700 Broadway Equipment Company Fred Bauer (860) 798-5869 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Sarah Decatur Judge (617) 345-3211 CDK Global Rob Steele (508) 564-1346 Chase Auto Ken Miller (508) 902-8908 Clifton Larson Allen Rick Parmelee (860) 982-9307 ComplyNet Adam Crowell (614) 634-8843 Cooperative Systems Scott Spatz (860) 250-4965 Cox Automotive Ernest Lattimer (516) 547-2242 Creative Resources Group Charlie Rasak (508) 726-7544 CVR John Alviggi (267) 419-3261 Dave Cantin Group Woody Woodward (401) 465-7000 DealerSafeGuardSolutions Doug Fusco (972) 740-8638 DealerShop Ken Grove (248) 444-6283 Brian Fleischman (716) 864-0379 Downey & Company Paul McGovern (781) 849-3100

DP Sales Distributors Andrew Prussack {631) 842-7549 Driving Dealer Performance Kimberly Guerin (978) 760-0322 Eastern Bank David Sawyer (617) 620-3484 EasyCare New England Greg Gomer (617) 967-0303 Electric Supply Center Jennifer Williams (781) 265-4272 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 Joe Ambash (617) 532-9320 Jeff Fritz (617) 532-9325 Josh Nadreau (617) 532-9323 GW Marketing Services Gordon Wisbach (857) 404-0226 Hilb Group James Pietro (508) 791-5566 Huntington National Bank Michael Ham (740) 815-5085 JMA Group Chris “KC” Hwang (954) 415-6961 John W. Furrh Associates Inc. Pamela Barr (508) 824-4939 Key Bank Mark Flibotte (617) 385-6232 KPA Abe Cohen (503) 902-6567 LocaliQ Automotive Jay Pelland (508) 626-4334 LoJack by Spireon Ashvir Toor and Robin Dukes (800) 557-1449 LotLinx Giovanna Scognemiglio (310) 526-1463 M & T Credit Corp.

John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 McWalter Volunteer Benefits Group Shawn Allen (617) 483-0359 Merchant Advocate, LLC Dan Giordano (973) 897-2778 Mintz Levin Kurt Steinkrauss (617) 542-6000

www.msada.org

Murtha Cullina Thomas Vangel (617) 457-4000 Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 NEAD Insurance Trust Charles Muise (781) 706-6944 Northeast Dealer Services Johna Cutlip (401) 243-7331 OCD Tech Michael Hammond (844) 623-8324 O’Connor & Drew, P.C. + Withum Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Dale Ducasse (508) 393-1400 Piper Consulting Jim Piper (207) 754-0789 Pro-Vigil Sasha Lam-Plattes (408) 569-2385 Pullman & Comley LLC James F. Martin, Esq. (413) 314-6160 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Austin Ziske (802) 505-0016 Rinn Advisors John Corcoran (617) 480-6693 Rockland Trust Co. Joseph Herzog (508)-830-3241 Samet & Company John J. Czyzewski (617) 731-1222 Santander Bank Richard Anderson (401) 432-0749 Chris Peck (508) 314-1283 Schlossberg, LLC Michael O’Neil, Esq. (781) 848-5028 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Southern Auto Auction Joe Derohanian (860) 292-7500 Sprague Energy Rick Pasquatelli (508) 768-7640 The Towne Law Firm P.C. James T. Towne, Jr. (518) 452-1800 TrueCar Pat Watson (803) 360-6094 Truist Andrew Carmer (401) 409-9467 US Bank Vincent Gaglia (716) 649-0581 Wallbox USA, Inc. Sean Ugrin (720) 220-1711 Wells Fargo Dealer Services Josh Tobin (508) 951-8334 Windwalker Herby Duverne (617) 797-9316 Zurich American Insurance Company Steven Megee (774) 210-0092

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The Roundup

Preparing for Your Future Success?

By Robert O’Koniewski, Esq. MSADA Executive Vice President

rokoniewski@msada.org Follow us on X (formerly Twitter) • @MassAutoDealers As we sit astride the threshold of 2024, we have experienced two years of perhaps the most extensive overreach into our industry courtesy of the federal government since the Obama administration.

With a seemingly brief respite during the more pro-business Trump years, a realm of Biden administration federal agencies, which are better known by their alphabetic appellations, have layered numerous new regulations upon dealership operations and our franchisor manufacturers. It does not matter the agency – FTC, EPA, OSHA, CFPB, FCC, IRS – none of what they do is designed to make your job easier. After all, the business model of government since the FDR years is based on creating new rules regardless of their need or efficacy.

The need to comply will never go away. Compliance with federal and state laws and rules will always drain money from your business’s bank account. Yet it is the one area of your business you control fully. After all, the easiest way to stay out of trouble is to make sure you are not breaking the rules that will get you into trouble. That is all on you, well within your grasp in the immediate future and beyond. Challenging? Yes. Expensive?

Yes. Not going away? Yes. Your responsibility?

Yes. A more pressing concern, and a reality which one needs to commence to address sooner rather than later, is your dealership’s ability to meet the franchisors’ complete electrification of vehicle inventory by 2035.

Presently there exists a schizophrenic approach to EVs in this country. Since 1967, under Section 177 of the U.S. Clean Air Act, states must either DECEMBER 2023

Massachusetts Auto Dealer www.msada.org

adhere to the federal emissions standards or, if they choose to do so, adopt California’s more stringent guidelines. In 1990, Massachusetts passed a law (MGL Chapter 111, Section 142K) that requires us to follow whatever rules the California Air Resources Board sets regarding motor vehicle emissions. In 1991, the Commonwealth adopted the California Low Emissions Vehicle (LEV) program through a regulatory proceeding. As required by law, the Commonwealth has amended the regulations many times to remain consistent with California.

Most recently, subsequent to legislative affirmation in last year’s clean energy law, the state once again passed regulations to adopt CARB’s Advanced Clean Cars II rules, which require all new vehicle sales to be ZEVs and PHEVs by 2035.

The CARB rules include annual benchmarks that must be met on the way to 100% EVs by 2035: for example, 35% by 2026; 68% by 2030; 88% by 2033, etc. The onus will be on our franchisor manufacturers, under the threat of severe financial penalties, to make sure we are at those intermediate benchmarks on the way to 100% by 2035; no small task.

While CARB, Massachusetts, and at least eight other states march onward to 2035’s 100% mandate, the EPA this year proposed emissions standards that would effectively require 67.5% of all new vehicles sold be fully electric by 2032. This initiative provoked considerable outcry in Congress, especially from Republicans and those in states where EVs are not particularly welcome as a vehicle propulsion of choice. Whereas the CARB states represent 40% of new vehicle sales nationally, the outcry from the 60% that have no desire

MSADA to be under the rule of unelected regulatory bureaucrats in California unfortunately would be subject to this Biden-EPA rule that is also the product of unelected regulatory bureaucrats in Washington, D.C. Throughout all this, your franchisor manufacturers are struggling to craft a game plan to hit the CARB standards while the EPA proceeds with its rulemaking. Since last year, for example, Ford’s Model e Program received the bulk of dealer and media attention as Ford dealers, state dealer associations, and dealer attorneys attempted to decipher how dealers would fit within the new calculus and even if the program complied with state franchise laws. The Ford Model e Program prompted legal challenges in a handful of states, with dealers scoring an initial victory in Illinois while the matter remains pending in other states.

Absent an extraordinary event that would cause our legislature to alter the Commonwealth’s commitment to the CARB 2035 goal, this all begs the questions, “What will the manufacturers do to lay the foundation for EV sales success by 2035?” and “What will dealers do to succeed while riding the backs of their franchisors’ compliance efforts?”

The most obvious example is before us in the Blue Oval family. Ford dealers for over a year now have been asking themselves what to do about participation in the Model e Program. Do they go all-in and commit to the Certified Elite requirements, or do they hold back and dip the toe in the water with Certified status and see how it goes, or do they resign themselves to not taking up the EV commitment at all since their customers have no desire or ability to want an EV product?

No easy answers for any dealer. The future is never easy to predict, and most people are skeptical, if not afraid, of change and new things. A government-induced market change, which neglects true consumer desires, can be even more galling.

Nevertheless, here in Massachusetts, we do know that our franchisor manufacturers must plan for the 2035 EV mandate

and all the intermediate goals on the way.

And ten years is not a long time. A child born in December, in time to provide his or her parents the 2023 tax deduction, will be entering middle school as the EV mandate plays out. In a political context, after next year’s presidential election, one two-term president, taking office in January 2025, will be calling the shots on our EV commitments leading up to 2035. (That’s right; I think it will be someone who is not one of the two that receive all the attention today.)

Each Massachusetts dealer has access to the tools needed for success on the way to 2035. Whether it is training of sales and service staff, or committing the necessary financial resources, or tapping into the expertise and resources of your local electric utility, dealers moving forward with a plan in step with a franchisor manufacturer cannot waver in the effort to be successful under the yoke of this government mandate. Witness the Ford dealers in our Commonwealth who are going “allin” with their Certified Elite commitment.

Certainly by 2026 we will have a glimpse of just how the factories will hit CARB’s 35% mandate as we approach the initial step of the journey up to 100% within the ensuing decade.

FTC Issues Vehicle Shopping Rule Readers may recall that in June 2022 the Federal Trade Commission proposed a massive new rule that would dramatically impact the automotive sales process by requiring new disclosures and paperwork to combat activity that is already illegal.

The rule would make more onerous and time-consuming a sales process in which many consumers already are reluctant to participate. The proposed draconian rule was crafted with no basis in fact, a condition strongly pointed out in comments NADA, your MSADA, and other franchised dealer associations from across the country filed with the FTC in the Summer of 2022.

On December 12, the FTC donned its Grinch costume, flew into D.C. Whoville, www.msada.org

and, instead of taking all its fine citizens’ presents, quite unexpectedly deposited its final Vehicle Shopping Rule on an unsuspecting industry.

And like all things Washington does, the FTC gave it a title with its very own pejorative acronym – the CARS Rule (“Combating Auto Retail Scams”), which quite accurately reflects the anti-business mindset of the agency’s commissioners and employees toward our multi-trillion dollar industry created and nurtured by our 16,000 franchised dealers and all their employees who toil in it across this fine land.

In response to the rule’s issuance, NADA CEO Mike Stanton released the following statement: “This regulation is heavy-handed bureaucratic overreach and redundancy at its worst, that will needlessly lengthen the car sales process by forcing new layers of disclosures and complexity into the transaction. The FTC made up data to support its claims, then rejected calls to slow down the process and test the effectiveness of its proposal with real consumers. We are exploring all options on how to keep this ill-conceived rule from taking effect.”

The rule takes effect July 30, 2024.

NADA’s quick review of the document indicates that, in response to comments submitted by NADA and state and metro dealer associations, the FTC scaled back the proposed rule in several important ways. According to NADA, among other changes, the FTC eliminated requirements that dealers: • Maintain on their website a list of all “add-on” products offered and the price of each such product; • Provide a series of written disclosures related to the sale of “add-on” products; and • Retain copies of “Add-On” Lists and documents describing “Add-On” products offered to consumers.

The final rule would still impose several new problematic oral and written disclosures, numerous ill-defined requirements, and additional burdensome record-keeping obligations.

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THE ROUNDUP NADA also stated that it is considering its legal options related to the final rule and continues to support legislation introduced in Congress that would prevent the rule from taking effect.

Supp Budget Includes Temp Tags Law Fixes Finally, FY 2023 officially came to a close, albeit five months late.

The General Court failed to complete its work by the November 15 legislative deadline on a spending bill to close out FY 2023 that ended on June 30. They then engaged in several weeks of secret conference committee negotiations culminating in a final deal that was met with Republican procedural delays in the House. This forced the Democrat leadership to call in all legislators from their recess in order to pass the spending bill in the informal session. The saga surrounding the $3.1 billion package finally came to an end.

Gov. Maura Healey on December 5 signed the supp budget into law, thereby allowing, amongst various items, the funding of state worker collective bargaining agreements and directing the expenditure of $250 million to address the growing migrant crisis in Massachusetts.

As far as we are concerned, the legislation includes provisions to fix flaws in our new temp tags law, which was passed in January of this year, regarding no longer assessing the motor vehicle excise tax on the purchased vehicle that would not be domiciled here, the issuance of a vehicle title here for vehicles sold to out-ofstate buyers and delivered on a temp tag here, and demonstration of insurance by an out-of-state buyer at a level as required in current Massachusetts law. These fixes should improve the temp tag process moving forward.

We are appreciative of not only all legislators who assisted in this effort but also Gov. Healey who signed this spending bill into law with the temp tags law fix. After all, she tried to address this problem with her original supp budget filing in March.

We will continue our work with the Registry of Motor Vehicles to ensure the smooth incorporation of these statutory DECEMBER 2023

amendments with the current temp tags program.

IRS Updates on EV/PHEV Tax Credits With the start of the new year, consumers purchasing qualifying EVs and PHEVs will be able to transfer the full value of the federal tax credit to the selling dealer, thereby reducing the purchase price of a new or used vehicle at the time of sale.

Beginning January 1, 2024, as established under the Inflation Reduction Act, franchised new-car and truck dealers will be able to use the IRS’s EV tax credits portal to determine if a new EV or PHEV being purchased by a customer qualifies for up to the $7,500 tax credit administered under Section 30D of the tax code.

(For a qualifying used EV or PHEV, the tax credit is $4,000.) Only vehicles purchased under the consumer clean vehicle credits are eligible for this benefit.

Under the program, vehicle purchasers can choose to transfer the value of the tax credit to the dealer at the point of sale in order to obtain a discount on the vehicle at that time.

Dealers must keep in mind that registration for the IRS program is separate and distinct from the required registration in the Massachusetts MOR-EV program if dealers want to participate in the state’s EV rebate “cash on the hood” program.

For buyers to be eligible to claim or transfer a federal credit starting January 1, 2024, the dealer they purchase their vehicle from must first register with Energy Credits Online. Dealers will also use Energy Credits Online to submit “time of sale” reports, which will confirm vehicles’ eligibility for a credit, whether or not the buyer chooses to transfer the credit to the dealer.

When a buyer chooses to transfer the credit, registered dealers will reduce the purchase price of the vehicle or provide cash to the buyer. The amount provided must equal the full amount of the credit available for the eligible vehicle. When completing the sale, the dealer will electronically submit information regarding the transfer, including a time of sale re-

Massachusetts Auto Dealer www.msada.org

port, to receive an advance payment for the value of the credit. The IRS expects to issue advance payments within 72 hours.

To provide clarity and certainty, the dealer will provide buyers with required disclosures as part of the credit transfer and electronic time-of-sale submission process and with written confirmation that the vehicle they’re buying is eligible for a credit and the credit amount.

The IRS’s guidance proposes rules regarding who is eligible to elect to transfer the credit to the dealer and under what circumstances these taxpayers may have to pay back some of the transferred credit.

Consumers may transfer the credit if they attest that they believe they are eligible, including that they fell below the applicable income thresholds in the prior year or expect to be below these thresholds in the year the vehicle is placed in service. Consumers will need to directly repay the full value of a transferred tax credit to the IRS when filing their taxes if they exceed the applicable modified adjusted gross income limitation.

The guidance also includes important safeguards to help prevent fraud or abuse.

These measures would help ensure only verified, tax-compliant dealers will get the benefit of advance payments from the IRS and only eligible vehicles will get the benefit of the credit. These measures would collect and verify information received from the dealer during the IRS Energy Credits Online dealer registration process.

A registration ID is provided to the dealer only once the IRS is confident in validity of the registration. Fact sheets, FAQs, checklists and other materials for consumers and dealers will be made available before the end of the year.

The guidance also provides clarity regarding the federal income tax treatment of the transferred credit and advance payment for the buyer and the dealer. Under the proposed rules, credit transfers and advance payments would generally not affect dealers’ tax liability. Payment of the value of the transferred credit by the dealer to the consumer would be treated as repaid by the consumer to the dealer as part of the purchase price of the vehicle, and

MSADA therefore be treated as an amount realized by the dealer.

Advance payments received by the dealer would not be treated as a tax credit to the dealer and may exceed the dealer’s regular tax liability. Advance payments received by the dealer would not be includible in the gross income of the dealer.

The payment made by the dealer to the consumer in exchange for the transferred credit would not be deductible by the dealer. The payment made by the dealer to the consumer (in the form of a cash payment, down payment, or partial down payment) would not be includible in the gross income of the consumer.

Treasury and the IRS have affirmed they will carefully consider public comments and feedback before issuing final rules.

All the Treasury Department’s information regarding this process is available at home.treasury.gov/news/press-releases/jy1783.

Your Association will monitor this situation over the coming months, especially as the program is fully implemented in 2024, to ensure we do not fall into a repeat of the “Cash for Clunkers” reimbursement fiasco over a decade ago. Please be sure to inform us of any problems you experience so that we can attempt to resolve them early in this endeavor.

Finally, as stated earlier, the Commonwealth of Massachusetts, as part of its MOR-EV rebate program, also has commenced a point-of-sale process to enable buyers to take advantage of the EV rebate at the time of purchase, thereby avoiding the need for the buyer to apply for the applicable rebate on the eligible new or used EV car or truck post-sale. This process also involves dealership registration in the program, which is separate and distinct from the federal tax credit process.

The regular rebate process in which the car buyer applies for the state rebate postsale remains in place. The dealer does not need to do anything in that situation.

However, to participate in the state’s new point-of-sale rebate process, a dealer must enroll in the program. Dealers can enroll at mor-ev.org. The Massachu-

setts Department of Energy Resources (DOER) has compiled a Dealer FAQ page as a quick reference to questions about the new program. The bulk of the FAQs are based on questions dealers posed to DOER during the webinar and afterwards. The FAQs can be found also at mor-ev.org.

Dealerships can expect consumer confusion as buyers attempt to navigate the different and conflicting federal and state eligibility standards and processes for vehicle purchases and leases based on vehicle type, vehicle price, income eligibility, etc. Never hesitate to reach out to your Association should you require additional assistance.

Dealers Ask Biden to Stall EVs Mandate; House Cuts EPA Funding At the end of November, a group of almost 4,000 franchised new-car and truck dealers sent a letter to President Joe Biden urging his administration to slow proposed regulations that would require that two-thirds of new vehicles sold in the U.S. be electric by 2032. The group claims this mandate is unrealistic given the waning EV demand.

Over the course of several weeks, upon the initiation of a grassroots effort, 3,882 dealerships across all 50 states, representing most brands, including over 100 franchised rooftops in Massachusetts, agreed to support the letter sent to the president.

In the letter, the dealers stress that they believe customers are not interested in EVs. “Currently, there are many excellent battery electric vehicles available for consumers to purchase,” the letter says.

“These vehicles are ideal for many people, and we believe their appeal will grow over time. The reality, however, is that electric vehicle demand today is not keeping up with the large influx of BEVs arriving at our dealerships prompted by the current regulations. BEVs are stacking up on our lots.”

The group recognizes that EVs are an ideal choice for many customers. However, they feel early adopters have already purchased their EVs, and now, “enthusiwww.msada.org

asm has stalled.” Yet, because of the government regulations, the dealers are getting a larger influx of EVs which exceeds current demand.

According to the dealership group, there are several barriers that remain to be cleared before more customers are open to purchasing an EV. Some of these barriers include high purchase prices, charging station availability, and reduced range in extreme weather conditions or when towing.

“Many of these challenges can and will be addressed by our manufacturers, but many of these challenges are outside of their control,” the letter says. “Reliable charging networks, electric grid stability, sourcing of materials, and many other issues need time to resolve. And finally, many people just want to make their own choice about what vehicle is right for them.”

The ask of the Biden administration is that it relaxes the proposed regulations to allow for more time for technological barriers to be addressed. The dealers also say they feel more patience is needed to get American car buyers comfortable with the idea of purchasing an electric vehicle.

On December 6, 223 Members of Congress sent a letter to House Speaker Mike Johnson (R-Louisiana) and Senate Republican Leader Mitch McConnell (R-Kentucky) urging enactment of language to impose a one-year stay on the EPA using funds to finalize or implement its unrealistic 67.5% EV mandate. The bill also includes language stopping EPA’s “Phase 3” heavy-duty truck rule (Zero Emission Vehicle Mandates) for one year.

“We strongly oppose the EPA’s misguided attempt to force the production of a vehicle mix that fails to meet the transportation needs or fit within the budgets of American families,” wrote the Members of Congress, led by Rep. Lisa McClain (R-Michigan). “The EPA mandate would also radically reshape America’s auto industry and the types of vehicles in America’s driveways. Battery electric vehicles may or may not be the right choice for everyone. If required to haul, drive long distances in areas without charging

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THE ROUNDUP infrastructure, or live in a colder climate, a fully battery electric vehicle may not meet the needs of our constituents. Americans – not the government – should be able to choose which vehicle is right for them.”

Subsequent to the Congressional letter, the House voted, 221-197, to approve H.R. 4468, the “Choice in Automobile Retail Sales Act”, that would kill the EV mandate.

Five Democrats — Reps. Henry Cuellar and Vicente Gonzalez of Texas; Don Davis of North Carolina; Jared Golden of Maine; and Mary Peltola of Alaska — voted with Republicans to block the EPA rule. The measure now goes to the Senate, where it is unlikely to advance.

NADA issued a statement applauding such Congressional efforts. “America’s franchised dealers have invested $6 billion in EV infrastructure. While we share the goal of lowering greenhouse gas emissions, the EPA’s proposed rule goes too far too fast. Apart from the lack of charging infrastructure, EPA’s EV mandate will significantly reduce consumer choice and make vehicles less affordable,” said NADA President and CEO Mike Stanton. “Rep. McClain’s common-sense leadership is a much-needed reality check to stop a policy that will hurt working families.”

The EPA’s proposed rule is expected to be finalized in 2024.

MA GOP Wins Senate Special Election On November 7, GOP state Rep. Peter Durant of Spencer defeated Democrat state Rep. Jonathan Zlotnik of Gardner, 55%-45%, in a special election for a 22-community central Massachusetts Senate seat that opened up with the resignation of the long-time incumbent, Ann Gobi (D-Spencer). Gobi gave up her seat to join the Healey-Driscoll administration as the state’s first Director of Rural Affairs.

With the victory, the GOP increased its caucus by 33%, now holding 4 of the Senate’s 40 seats. Former Republican Gov. Charlie Baker had endorsed Rep. Durant, characterizing him as “an independent voice for the people” and having “a DECEMBER 2023

track record of standing up for taxpayers, helping small business, and ensuring state government is thrifty and accountable.”

The GOP victory marks a rare seat flip for Republicans and a defeat for Democrats in the first big contest since Gov. Healey’s election. Despite his loss, Rep. Zlotnik will remain in the House.

The GOP House caucus sits at 24 in the 160-member chamber.

A special election for the open House seat has been set for March 5, with the GOP and Democrat primaries to be held on February 6.

House Passes Bill for Paid Time Off to Vote On December 14, the Massachusetts House of Representatives approved, on a voice vote in an informal session, legislation that would require employers to grant paid time off for an employee to vote in person on election day. The bill, House 4217, now moves to the Senate for its consideration.

Current state law makes accommodation for this, albeit unpaid time off. Under Massachusetts law (MGL Chapter 149, Section 178), certain employers must give an employee up to two hours off to vote if the employee requests it. The employee does not have to be paid for this time but should be allowed a two-hour absence after the opening of the polls in the employee’s voting precinct. The law specifically states: “No owner, superintendent or overseer in any manufacturing, mechanical or mercantile establishment shall employ or permit to be employed therein any person entitled to vote at an election, during the period of two hours after the opening of the polls in the voting precinct, ward or town in which such person is entitled to vote, if he shall make application for leave of absence during such period.”

Under House 4217, • Each employer would be required to allow “sufficient time” for an employee to vote on any election day – there is no designated amount of time provided; • The employee’s time off would be at the beginning or end of the employee’s reg-

Massachusetts Auto Dealer www.msada.org

MSADA ular working hours; • The employee would need to give the employer at least three business days’ notice of his or her intention to exercise this right; • An employer could not require an employee to vote by mail or during a designated early voting period; • An employer who fails to comply with this would be required to provide an employee a full day’s pay; • An employer would be required to post notice at the workplace of this new employee right; • The attorney general would be charged with the enforcement of this new law.

The bill received a favorable report from the Joint Committee on Labor and Workforce Development in October and then referred to the House Ways and Means Committee, which released it for House action on the same day as the vote

2024 Dues Invoices This month your Association sent out 2024 dues invoices to all our dealership and associate members. Our members’ dues help fund the Association’s activities on their behalf, including our lobbying on Beacon Hill and in Washington, our member counsel services, and our education and training activities.

Over the last several years we have witnessed quite a bit of economic disruption in our industry, including governmental over-regulation. More than ever, our dealers need a strong MSADA. MSADA will continue to lead on the various issues that threaten the viability of our dealerships.

We will strive continuously to keep you informed of developments in our industry and how they will play out in Massachusetts. These efforts also include working closely with NADA to better serve our members.

Our strength lies in our members. With your continued support and membership renewal, we can build on our current foundation and begin to enhance your Association’s core purposes of communication, advocacy, and education. t

MSADAL EGISLATIVE S CORECARD DECEMBER 2023

BILL#

SPONSOR

SUBJECT

STATUS

S151 H331

Sen Crighton Rep Hunt

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

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 17, 2023.

H290 H329

Rep Finn Rep Howitt

RTR law amendments to fix Model Year start date and consumer notice.

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 17, 2023.

S204 H270 H289

Sen O’Connor Rep Chan Rep Finn

Creates process to appeal improperly issued Class 1 license.

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 17, 2023.

S150 H351

Sen Crighton Rep Lewis

Modernize on-line vehicle purchase process.

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 17, 2023.

S199

Sen Moore

Amends definition of heavy-duty trucks in RTR law.

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 17, 2023.

S220 H400

Sen Velis Rep Walsh

Open safety recalls notifications.

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 17, 2023.

H354

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

Joint Committee on Consumer Protection held public hearing on July 17, 2023.

S688 H1095 H1118

Sen Moore Rep McMurtry Rep Philips

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

SUPPORT

Joint Committee on Financial Services held public hearing on October 3, 2023.

S639 H1121

Sen Feeney Rep Puppolo

Protects consumer choice in vehicle service contracts.

SUPPORT

Joint Committee on Financial Services held public hearing on October 3, 2023.

S2219 H3255

Sen Cronin Rep Arciero

Eliminates initial state inspection for new vehicle.

SUPPORT

In Joint Committee on Transportation; no hearing scheduled yet.

H3348

Rep Howitt

Limit doc prep fee amounts.

OPPOSE

In Joint Committee on Transportation; no hearing scheduled yet.

S2210

Sen Crighton

Safety shutoff for keyless ignition technology.

OPPOSE

Joint Committee on Transportation held public hearing on October 17, 2023.

S25 H60

Sen Creem Rep Carey

Personal data privacy and security.

OPPOSE

Joint Committee on Advanced Information Technology, the Internet and Cybersecurity held public hearing on October 19, 2023.

S227

Sen Finegold

Mass. Info Privacy & Security Act.

OPPOSE

Joint Committee on Economic Development and Emerging Technologies held public hearing on October 19, 2023.

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www.msada.org 2023 www.msada.org Massachusetts Massachusetts Auto Auto Dealer Dealer DECEMBER FEBRUARY 2022

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AUTO OUTLOOK

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COVER STORY

Marcotte Ford Charg

By Boris Hansen

Metro Boston tends to get all the attention when people talk of the Bay State. Travel west out of Boston down the Mass Turnpike, however, and one sees there is a whole world past Framingham.

After about 90 miles, one will hit the Connecticut River city of Holyoke, which is home to a number of notable firsts: • In 1895, William Morgan invented the sport of “Mintonette”, later to be called volleyball, at the Holyoke YMCA. • In 1946, Massachusetts cuts the ribbon here for the state’s first community college, which today has the largest student body in the community college system.

• Rocky Marciano, the Brockton Bomber, fought his first professional heavyweight bout at the Valley Arena Gardens in 1947, a victory on the way to his historic 49-0 record. He remains the only undefeated heavyweight in history.

• In 2023, Gary Rome, dealer principal at Gary Rome Hyundai on Whiting Farms Road, was the first Massachusetts Dealer of the Year to be named the national TIME Dealer of the Year at the NADA convention in Dallas.

And now we can add to the list yet DECEMBER 2023

another: Marcotte Ford is the first Ford dealership in New England to be completed and operational as Certified Elite under the Model e Program.

“We never hesitated to be ‘all-in’ as a Certified Elite dealership,” said Mike Marcotte, a third-generation owner. “We saw it as a no-brainer to be an all-encompassing resource for every facet of a customer’s needs, whether that choice be gasoline or diesel; electric or plug-in hybrid electric; car, SUV, or truck. Dealers are always looking for opportunities to expand customer outreach, and we saw the Ford Model e Program as a way to grow our realm in the community.”

Back in 1961 when Marcotte’s grandfather started the business, EVs were only in science fiction books.

There were 8-10 dealerships operating in “Paper City” through the 1980s.

Now the city is down to two – Marcotte Ford and Gary Rome Hyundai.

And Marcotte Ford has gone through several iterations since 2015 – buying the old Gary Rome site to acquire land for a new dealership facility and then building a commercial truck sales center across the street, planning construction for a car wash – all with the goal of improving customer choice and service. Their five buildings on

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MSADA

ges Ahead

Main Street are now affectionately referred to as the “Marcotte Mile.”

At the November 20 ribbon cutting, attended by Mayor Josh Garcia, Ford regional manager Ann McDonough, and other local dignitaries, Marcotte unveiled two level 3 chargers, and six available ports on two level 2 chargers. Marcotte reports the level 3 chargers in particular see constant use.

“Committing to Certified Elite was done with the future in mind,” said Marcotte. “With Ford’s EV product line-up, government goals on EV sales that need to be met, growing customer demand – we asked ourselves what we needed to do to succeed not only today or tomorrow but five years, ten years down the road. So, we made the financial investment and jumped right in.”

Marcotte and his general manager, Mike Filomeno, bluntly will tell you this was not easy. There were issues, for example, with the structure of the Ford program, many pieces of which have been changed as a result of dealers’ input across the country. More importantly, they first needed buy-in from key dealership managers

and personnel.

“I came back from a Ford meeting in Texas, where there were ten other dealers, and I was genuinely jazzed up for this transition and ready to prepare for our future and wanted to get our staff involved with the EV transition,” Marcotte said. “Mike (Filomeno) and I saw we needed to get our team comfortable about it. There was some skepticism and apprehension. So we formed a Model e committee and sat down over many hours of meetings to map out a plan of attack to get the whole team fired up to be part of something new and exciting.”

Marcotte’s desire to make this a collaborative effort – not a topdown “my way or the highway” approach – was vital to arriving at this point.

“Mike’s leadership style ultimately gets everyone rowing in the same direction,” Filomeno said. “People know change is coming.

We need to embrace these opportunities and make the best of it for our customers, staff, and long-term health of our business.”

One major hurdle the dealership team faced was getting enough juice to the dealership’s chargers. Holyoke is served by a municipal light department, one of 41 in the state; it is not one of the major utilities operating throughout New England. The capital outlay by Marcotte was not insubstantial, between the cost of the transformer, the level 3 chargers, new wiring requirements, etc. You just do not run an extension cord off a dealership outlet.

“Holyoke Gas & Electric was great to work with, helping us overcome the wiring and delivery challenges. This project would

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MARCOTTE FORD CHARGES AHEAD

not have been successful without their knowledge and flexibility,” said Marcotte. “They and the other municipal light departments and utilities also need to be ready for a transition to meet their customers’ changing electricity delivery needs. Adam Palmer at J&M Electrical and the staff at ChargePoint were instrumental in connecting our needs with the folks at Holyoke Gas & Electric.”

Marcotte and Filomeno stress that there are many moving pieces to account for to make this work, but they feel the benefits are already showing up, especially since the chargers are open to the public 24 hours a day, every day – at a reasonable cost to the consumer, the price for which Marcotte is still trying to optimize.

“Our all-in attitude is helping all our businesses,” Marcotte said. “People know we are the EV dealer; they come to check

DECEMBER 2023

out product and ultimately buy. People use our chargers and walk around the lot or grab a bite to eat at our full-service café in the dealership. We are on third-party websites that people use to find charging locations, which is especially helpful for us as we are just off the highway. Now that we are past the early EV adopters, we are working to grab the general public.”

Filomeno added, “This is not the type of business where you can stand pat. Innovation and taking the steps toward a new future with new products will provide continued opportunities for our dealership and our employees. To not plan for the future will only shortchange all of us in the end.”

“I love ribbon-cuttings in general because they are the ultimate sign of optimism and grit. It says ‘Here we are. We are open for business. Come and let us meet your sales and service needs.

What can we do for you?’” stated Robert O’Koniewski, executive vice president for the Massachusetts State Automobile Dealers Association. “On a bright, sunny morning three days before Thanksgiving, there was a palpable buzz in the air as the dealership folks, local politicians, Ford reps, Holyoke municipal utility techs, and the electric vendors – all who played a role in getting to this day – watched one of Holyoke’s own take a big step forward into this future market place. They certainly are all poised for exciting things.”

Once Marcotte Ford is settled in as a successful Certified Elite dealer, Marcotte and team are already looking for the next “first” for Holyoke. Stay tuned. t

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NEWS

from Around the Horn

MSADA

Northampton

Carla Cosenzi Named Honoree for the 2023 Business West Women of Impact Carla Cosenzi, a prominent business leader and community advocate, has been selected as one of the honorees for the 2023 Business West Women of Impact. Cosenzi is among eight remarkable women who have demonstrated exceptional leadership, dedication, and contributions to the local community.

The Business West Women of Impact awards, now in its fifth year, recognize women who have made a significant impact in their respective fields, showing exemplary leadership and a commitment to bettering the community. Carla Cosenzi’s inclusion as one of the honorees is a testament to her outstanding achievements and the positive influence she has had on her community.

Carla Cosenzi is known for her exceptional leadership within the automotive sector. Serving as the President of Country Nissan, Northampton Volkswagen, Country Hyundai, Volvo Cars Pioneer Valley, Genesis of Northampton, TommyCar Collision Center, and TommyCar Towing, she has exhibited an unparalleled level of dedication and innovation.

DECEMBER 2023

In addition to her exceptional business acumen, Carla Cosenzi’s impact extends far beyond her business ventures. Her dedication to philanthropy is exemplified by her efforts to raise over $1.5 million for the Dana-Farber Cancer Institute through the Tom Cosenzi Driving for the Cure Charity Golf Tournament.

This commitment to giving back also includes providing scholarships through the Tom Cosenzi Scholarship Fund for local high school seniors and spearheading initiatives that promote gender

Massachusetts Auto Dealer www.msada.org

NEWS from Around the Horn equality in the workplace. Her ability to inspire her employees and lead by example has created a culture of giving back that resonates throughout her stores.

Furthermore, Carla Cosenzi’s vision for community engagement is commendable. She has introduced a rewards program within her dealerships that not only benefits customers but also provides support for local community initiatives. This innovative approach demonstrates her ability to intertwine business success with community growth and development. One of Carla’s remarkable initiatives is the TommyCard Rewards program, promoting local businesses to her dealership customers. This unique program not only benefits customers but also supports the local economy, reflecting Carla’s vision of interweaving business success with community growth.

Carla Cosenzi expressed her gratitude and stated, “I am deeply honored to be recognized alongside these exceptional women, and I’m proud to represent our community. It is my belief that through collaboration and hard work, we can achieve great things and make our region a better place for everyone.”

Hyannis

Balise To Open State-of-the-Art Body Shop on Bearse’s Way As reported recently in The Cape Cod Times, Balise Cape Cod Properties LLC is expanding its Cape Cod automotive empire with the construction of an Anchor Collision Repair shop adjacent to Balise Hyundai on Bearse’s Way. The state-of-the-art body shop, a 1,400-square-foot building sitting on the 1.6-acre lot, will have two drive-through booths, six bays, and two frame machines that will enable mechanics to restore frames to the original manufacturer specifications. Balise bought the site in 2018 for $1.2 million. The company razed the Van Lines building to make way for this new construction. It will have 11 employees, moving from the current facility.

The Balise Auto Group, headquartered in Springfield, employs more than 1,500 associates at facilities in Massachusetts, Connecticut, and Rhode Island, according to the company’s website.

Anchor Collision has five shops, including two in western Massachusetts, two in Rhode Island, and one on Cape Cod. Milford

McGovern Auto Group Acquires Imperial Hyundai The McGovern Automotive Group, a Newton-based group of automobile dealerships with locations throughout the Northeast which employs 1,600 people, recently announced the opening of McGovern Hyundai of Milford, following the company’s acquisition of Imperial Hyundai.

McGovern’s Milford location is the company’s 29th dealership, following a string of acquisitions that has seen McGovern pur-

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McLean, Virginia

NADA Academy Graduates The following Massachusetts dealership employees have graduated from NADA Academy this year: • Sean Alpert, Jack Madden Ford Sales • Luiz Angelo, Herb Chambers Land Rover Sudbury • Michael Armstrong, McLaren Boston • Myron Callender II, Lia Toyota of Northampton • Steve Carter, Expressway Toyota • Kevin Cregg, Boch Honda West • Matthew D’Ambra, Patriot Subaru of North Attleboro • Robert Fleming, Country Nissan • Damon Jespersen, Honda North Danvers • Ira King, McGee Toyota of Dudley • Alison Lozeau, Midstate Mitsubishi • Dawson Luke, Copeland Toyota • Ira King, McGee Toyota of Dudley • TJ Madden, Herb Chambers Honda of Burlington • Nidal Murashah, McGovern Hyundai Rt. 2 • Dylan Roche, Jack Madden Ford Sales • Naim Salem, Herb Chambers Volvo Norwood • Adam Silver, Central Raynham Chrysler Dodge Jeep Ram • Abigail Silverleib, Silko Honda • Brad Taylor, McGovern Honda • Eric Thorner, McGovern Automotive Group • Damian Tsika, McGovern Hyundai • Alvaro Vieira, Stateline Chrysler Jeep Dodge Ram • Telesha Williams, Gary Rome Hyundai Congratulations and good luck in all your endeavors for our industry.

chase Jaguar Land Rover Peabody, Genesis of Queensbury, New York, and MHQ of Marlborough in 2023.

“We’re thrilled to be bringing the McGovern brand to Milford, and we’re looking forward to giving discerning local drivers the unbeatable service and great deals they crave,” John Kennedy, McGovern regional VP of operations, said in the company’s press release. “It’s been an incredible few months for the McGovern Auto Group, and we couldn’t be more excited about what we have in store for the coming year.”

The company also announced in the release that it has achieved over $2.2 billion in revenue so far in 2023, selling over 36,000 new and used vehicles in that timeframe.

“Our path to becoming the region’s top vehicle retailer is due to the dedication of our team from top to bottom,” Matt McGovern, CEO and founder of the company, said in the statement. “We work tirelessly day in and day out to have the best selection of vehicles, best prices, and the greatest service and parts departments not just in the Northeast but across the country.”

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22 16

NEWS from Around the Horn Waterbury, Vermont

Ken Squier, RIP Legendary car racing sportscaster Ken Squier raced to his final checkered flag on November 15 when he died at the age of 88.

Squier was an icon of broadcasting who helped make NASCAR the national phenomenon that it became.

And in his home state of Vermont his legacy includes building Thunder Road in Barre and shepherding his family’s community radio station, WDEV, into the 21st century.

Born on April 10, 1935, Squier as a youth saw car racing at local fairs and quickly took to the excitement. He always

Norwood

Maserati North America Unveils First New Retail Store Concept On November 29, Maserati announced the debut of its first North American retail store concept at Boch Maserati in Norwood. The innovative new retail concept at Boch Maserati marks a departure from car showrooms of the past to bring the House of the Trident’s luxury craftsmanship to the forefront.

The official launch followed the global premiere of the concept last year in Milan’s historic Magenta district and marries the refinement of a tailor’s atelier with the rawness of an Italian officina to inspire customers as they build and purchase their bespoke Maserati.

Quoting from Maserati’s announcement: “The pioneering new architectural concept echoes a luxury fashion retailer, restaurant, or private club, imbued with rich Italian design and signature Maserati hospitality. With more than 7,450 square feet for visitors to explore, 3,100 square feet have been specially designated as a showroom displaying Maserati vehicles in a raw yet sophisticated setting. This inviting new environment presents the cars lit like dynamic sculptures in a darkened art gallery. Adjustable spotlights are focused on the individual Maserati vehicles while ambient light levels are left very low – allowing the products to stand out from the darker surroundings.

“The vehicles are surrounded by curated exhibits and Fuoriserie collection ‘elements’ to bring guests into the rich world of Maserati.

A large wall projection provides storytelling, showcasing the history of the brand and creating a focal point at the rear end of the showroom, attracting customers to explore the full depth of the space.

Additional rooms encourage further interaction with the brand.

The Launchpad creates a moment of theatre, offering an immersive space with dramatic lighting to celebrate test drives and vehicle delivery. And for those looking for a more private setting away from DECEMBER 2023

MSADA

maintained that the appeal of racing was that it was common people doing uncommon deeds.

After a stint at Boston University studying communications, Squier returned to Vermont and helped found and open Thunder Road in 1960. He also took over WDEV, the station his dad formed, when his dad died in 1979.

It was not until the 1979 Daytona 500, however, that Squier brought the appeal of NASCAR to a national audience when CBS, for the first time, showed the entire race flag to flag while the Northeast was socked in with a major snow storm. Squier commented on races for decades, helping to build NASCAR up to being the second-most watched sport on American television.

A cofounder of the Motor Racing Network, Squier was the first broadcaster to be elected to NASCAR’s Hall of Fame class of 2018.

the showroom, the consultation rooms offer a quiet alternative to the central lounges, each equipped with the high-resolution MXE 3D configurator to bring to life their new model.”

Speaking at the opening to more than 200 attendees, Ernie Boch Jr., President of Boch Maserati, said, “We’re honored to spearhead the new retail concept in the Americas. The new showroom is the embodiment of modern Maserati – allowing clients to bring their passions to life in an inviting, creative space that doesn’t feel like a typical auto retail setting. We look forward to beginning this new chapter and the future of the Maserati brand.”

The launch of the new retail space at Boch Maserati follows global openings in Milan and London, among others. The concept will roll out in additional locations across North America in 2024.

Norwood

DCD Automotive Places Boch Dealerships Under Nucar Banner Recently DCD Automotive, led by Dan and Chris Dagesse, rebranded its Boch dealerships with the Nucar name, the brand under which its score of dealerships across New England is known.

In 2015, DCD purchased five Boch locations from Ernie Boch Jr. An additional three dealerships DCD acquired also received Boch billing.

DCD decided it was time to gather all the Boch stores under the Nucar banner. The rebranding includes Honda, Toyota, Chevrolet, Nissan, and Hyundai stores in Norwood, Toyota and Nissan dealerships in North Attleborough, and a Honda dealership in Westford.

“We decided we wanted to have one platform, one name,” Chris Dagesse, DCD’s president, told The Boston Globe. “It was not an easy decision. Everyone around Boston knows the name Boch. Going forward, we wanted to have our own brand, our own visions.” t

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NEWS from Around the Horn

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ACCOUNTING

MSADA

Tax Strategies Dealerships Should Consider

By Rick Parmelee & John Werlhof

CliftonLarsonAllen LLP Year end is a good time to explore strategies to unlock potential tax saving opportunities. Dealership owners should explore several strategies considering upcoming tax rate and deduction changes, as well as the current high interest rates.

Weigh accounting method changes

There are pros and cons to changing accounting methods, which can help your organization save money in some cases.

When the cost of capital was low, there were fewer benefits. Now that interest rates have risen significantly, considering a new method may be worth revisiting.

Another consideration to factor in are the upcoming tax rate and deduction changes.

The lower individual tax rates from the Tax Cuts and Jobs Act and the Section 199A deduction are scheduled to sunset on December 31, 2025. Barring Congressional action, the top tax rates on pass-through income from a non-specified service business will increase from 29.6% to 39.6%.

Depending on your cost of capital, a deduction against 39.6% income in 2026 may be more valuable than a deduction in 2023 against 29.6% income. Dealers should therefore carefully consider accelerating deductions into tax years beginning prior to 2026. Other common accounting method changes worth considering: • Prepaid expenses. Accrual-method taxpayers can generally deduct certain prepaid expenses, such as insurance, taxes, and warranty or maintenance service contracts, if the term covered by the prepayment does not extend beyond the earlier of 12 months after the first date on which the taxpayer realizes the right or the end of the tax year DECEMBER 2023

following the year of payment.

• Fixed asset methods. Taxpayers who own real estate may be able to accelerate deductions by performing a cost-segregation analysis to determine the appropriate tax life of various real estate assets or a repair analysis to identify costs that can be expensed rather than capitalized. Likewise, they may be able to accelerate deductions related to an energy-efficient building by performing a Section 179D analysis.

• Inventory methods. Dealers should consider the last-in, first-out (LIFO) method for valuing new vehicle inventories. Alternative method LIFO has provided significant deferral for new vehicle dealers over time. With inventory levels returning to pre-pandemic levels and inflation in the base cost of new vehicles, dealers should expect continued benefits under LIFO. Alternative method LIFO was established specifically for automobile dealers and compares the cost of same new models year over year to establish inflation rates.

Dealers should also explore the inventory price index computation (IPIC) method for new, used, and parts inventories. The IPIC method varies from alternative method LIFO as it relies upon consumer price index (CPI) to determine inflation rates. In the current inflationary environment IPIC has proven beneficial. Regardless of which method a dealer uses to value inventories, sufficient detail should be maintained to establish the values used at year end.

Commercial Clean Vehicle Credit Company vehicles, including service loaners, can qualify for the Commercial Clean Vehicle Credit. Vehicles must be manufactured by a qualified manufacturer (consult the IRS-approved list at www. irs.gov). Vehicles must be used in your business and not for resale. The maximum credit is $7,500 for qualified vehicles with a gross vehicle weight of under 14,000 pounds and $40,000 for all other vehicles.

The credit is subject to recapture if the vehicle is sold within three years of its placedin-service date.

Massachusetts Auto Dealer www.msada.org

Roth conversions With top federal income tax rates scheduled to rise in 2026 from 37% to 39.6%, dealers should consider rolling over pretax 401(k)s and individual retirement accounts to Roth 401(k)s or IRAs. While income tax on a rollover is assessed in the year the rollover occurs, you may benefit from the current low federal tax environment. As a reminder, distributions from Roth accounts are tax free and investments grow tax free within the account.

Paying the income tax now also may reduce current estate values for dealers with taxable estates. Prior to converting to a Roth, dealers should consult with their tax and financial advisors.

Timing of fixed asset purchases Bonus depreciation for equipment and other assets is set to drop to 60% in 2024 from its current 80%. If you use immediate expensing under Section 179 and not bonus depreciation, this is not a major concern; it is something to be aware of for the future, however. For 2023, the Section 179 limit is $1.16 million with a phaseout beginning when purchases exceed $2.89 million. The additional bonus depreciation that is available in 2023 provides an extra incentive for taxpayers subject to a Section 179 limit to place assets in service before year end. Anticipated tax rates in 2023 and future years should be considered as well.

Business and wealth succession planning Year end is a key time for future planning. For business owners, that may mean looking at what is next for your business.

There are significant tax consequences associated with selling or transitioning a business, so always be sure to consult your tax professional. t For more information on tax planning for dealers, contact Rick Parmelee at richard. parmelee@claconnect.com or by phone at (860) 570-6492.

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MSADA

Dealership Profitability Through Ancillary Businesses By Barton D. Haag CPA, Albin Randall & Bennett Even through a global pandemic and record inflation, automotive profitability soared during 2022 and remains strong for 2023. Despite overall growth across the industry, many auto dealerships look for ways to maintain profitability in the face of ongoing operational and regulatory hurdles.

As the industry evolves, many auto dealers are working on ways to find strategic avenues for boosting and maintaining gross profits.

One opportunity dealerships could consider is the addition of ancillary services to supplement auto sales and augment profits.

Car Wash

Two key factors have driven the profitability of car washes in recent years: market demand and environmental considerations. Market research indicates that younger generations more frequently utilize professional carwash and detailing services than older generations, suggesting a cultural shift (or lifestyle inflation) is driving demand and, therefore, increasing profits. Add that to the increase in disposable income spurred by the COVID pandemic and the consumer’s demand for fast, on-demand washing service, and it is easy to see how car washes have remained a cornerstone in the auto economy.

Environmental restrictions and policies have surfaced in response to water usage and waste. At-home car washing results in a much higher volume of water and vastly increases the level of toxic chemicals and residue making its way into the surrounding environment. For this reason, many state and regional governments have placed strin-

gent restrictions on at-home car washing and have implemented hefty fines for those failing to follow these guidelines. In contrast, federal law requires professional car washes to follow strict guidelines for proper drainage, treatment, and filtering of water runoff to ensure safe recycling back into the region’s water sources, making commercial car washes an ecologically friendly business with considerable potential profits.

The tax benefits of a car wash can also shorten the payback of such an investment.

This and the fact that car washes complement the business of a dealer make car washes an attractive investment opportunity.

Body Shop

Body shops represent another profitably stable branch of the auto market. Given rising interest rates and vehicle prices, the average car owner is more likely to seek repair than endure another purchase. Not to mention, all cars, regardless of type, will require some level of maintenance or repair over time.

Collision repair necessitates dedicated equipment and a level of expertise outside that of the average consumer, making body shops the primary source of support for car owners. Although the industry anticipates EVs will require less ongoing service and maintenance than traditional motor vehicles, EVs utilize advanced technology and complex parts that require specialized skills to maintain and repair. In the long run, expert training and staffing increase the likelihood of more billable service hours and revenue per hour. Plus, “green repair” branding and certification is an opportunity to meet the consumer’s demand for environmentally responsible standards of operation and eco-friendly practices.

You do have to be “all-in” with a body shop. If you are, this can be a very profitable and tax efficient part of the dealership.

Towing

back quickly as the economy reopened in 2021. As businesses reopened and people returned to work, the need for tow trucks steadily increased with the influx of traffic and cars on the road leading to an uptick in collisions, breakdowns, and parking violations. Regardless of motor type, tow trucks can transport any vehicle without the need for special parts or equipment.

Ultimately, towing requires minimal upfront investment outside of equipment and staff and is considered an essential service for personal drivers, municipalities, and private businesses to travel safely.

Real Estate

As interest rates fluctuate, so do values in the real estate market. Depending on the location and use of the property, however, real estate is still an attractive investment opportunity, especially for dealers that are already “plugged-in” to the local real estate market.

The Tax Cuts and Jobs Act of 2017 (TCJA) changed the rules related to like-kind or section 1031 exchanges. The TCJA eliminated all non-real estate like-kind exchanges. Taxpayers can no longer do like-kind exchanges to defer taxes owed on the sale of non-real estate assets. You can still, however, defer a gain on a real estate transaction by selling one piece of property and rolling the sales proceeds into a similar property.

These transactions can be very complex.

They also generally have favorable tax outcomes. You should discuss with your tax advisor prior to executing one to ensure you follow the proper steps.

What’s next?

A successful dealership understands that the trust and relationship it fosters with its customers is crucial to success. While repeat customers are essential for vehicle sales and referrals, ancillary services can open new lines of revenue and offer vital services to an existing, loyal customer base.

Despite dipping slightly during the pandemic, the towing industry bounced www.msada.org

Massachusetts Auto Dealer

t DECEMBER 2023

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ACCOUNTING

MSADA

Tips to Improve your Form 8300 Process By Jen Moylan Lead Consultant, Withum

On August 30, the IRS formally announced that, effective January 1, 2024, all Form 8300’s must be e-filed, with limited exceptions. No more waiting for that green certified mail receipt to come back, and no more blaming the post office when a form is mailed out a day or two late!

There are a few other issues you might encounter if you are new to the e-filing system.

To file electronically, you first must register with the Financial Crimes Enforcement Network’s BSA E-Filing system.

Once approved, you will sign onto the BSA E-Filing system and complete Form 8300 just like the blank PDF. Since this is an automated process, you will not be able to skip over fields like you can when filling out a paper form. If you have not been able to get a customer’s Social Security number, you will need to enter it as all zeros. Be sure to describe your collection efforts in the Comments section at the bottom of page 2. I recommend providing dates and times of phone calls and emails, along with the response from the customer. Do not delay filing due to lack of information. This applies to any field you cannot complete within that 15-calendar day deadline, as you can send an amended report whenever you do collect the requested details.

You must print your completed form before submitting it online and save the confirmation receipt once finalized. You will not be able to print it once the form is submitted, and keeping a copy of the filed Form 8300 is required. Submitting online is the easy part. We all know that tracking DECEMBER 2023

cash payments can sometimes be a significant challenge.

It seems fairly simple; a customer comes in with a bag of cash, and you know you need to file an IRS form 8300. Things get trickier when multiple payments, multiple parties, and long stretches of time pass between cash payments and taking delivery.

“Smurfing,” also known as structuring, makes it more difficult to notice the large sums of cash attached to a single transaction. You need to tighten up your processes to keep these deals from slipping through unreported.

Your DMS probably has some sort of Form 8300 tracking report. It is only as good as the information that has been entered, and your cashier may be a weak link. Similarly, you must enter a set date range to run the report. Generally, we set the report to run for one year since the IRS rules consider related payments to be received within 12 months. But if we run the report starting one year ago today, what about a deposit taken 13 months ago? Unfortunately, it will not be on that report, even if it relates to a delivery in our current year range.

How to catch these? I recommend a simple worksheet to be completed on every retail delivery. This will detail the total amount due on the sale of the vehicle, then deduct each payment received. Be sure to include the funding balance from the lender, a trade credit, rebates, etc. Make two columns for this worksheet entitled “reportable” and “non-reportable” transactions. Your transactions should be clearly identified.

The total of both columns must match the total purchase amount of the vehicle.

If the total reportable transactions column exceeds $10,000, a Form 8300 must be filed. Do not forget wholesale transactions count, too. If you have a buyer paying in cash, you will need to file on them as well if they give over $10,000 in cash. Vehicles purchased within 24 hours count as related transactions; there is no exception for resellers.

Massachusetts Auto Dealer www.msada.org

By completing a worksheet for every deal, we double-check that all money has been received in-house, and we verify “hands-on” that the deal does or does not require a Form 8300 to be completed. On the off chance that one is missed, you can demonstrate clearly to the auditor that this was a simple mistake, not a willful omission, since you have a very well-defined process in place. Of course, it is unlikely that any would be missed using this worksheet.

Many dealerships struggle with catching transactions that occur before the delivery of the vehicle. During the height of the inventory crisis, many dealers would not hold an insignificant deposit on a hardto-get luxury model. It was not uncommon for a minimum $10,000 down, and I have seen many even higher. If that large deposit was paid in cash, Form 8300 is due within 15 days of the receipt of cash and not the delivery of the vehicle. You might be asking, “But Jen, what happens if the customer ends up not taking the car?”

That, dear reader, is the textbook case of money laundering, which is converting illicit cash into a “depositable” check. You must report that cash payment, even if you refund it the very next day.

But the problem is that we rely on our Finance Manager or Deal Poster to catch a reportable transaction. How do we know about a deposit only? Let’s try something new. Do not wait to start that worksheet until the deal comes to the office. Let’s start completing it when the buyer’s order is written and the first cash receipt is printed. Staple that worksheet to the buyer’s order, as all we need at this point is the customer’s name and the payment.

Once that “reportable payments” column passes $10,000, the form must be filed. If a second deposit is taken before delivery, add it to the worksheet. Keep using that same worksheet since both payments are being applied to the same deal (related transaction, all parties giving cash must get named on the Form 8300 even if they are not being added to the title).

MSADA Train your cashiers to add new payments to the worksheet and look to see how much cash we have so far. If that limit is met, they must notify the office manager, controller, deal poster, or whoever is the designated Form 8300 filer. The person doing the bank deposit is the safety net here; if they have a large cash deposit, they must let the appropriate person know.

Another challenge in reporting comes from the fixed operations side. Yes, service, parts, and body shop sales count, too!

Generally, these sorts of purchases are unrelated to a vehicle sale. To be related, they would have to be paid within 24 hours (buy the car today, tomorrow spend cash repairing or upfitting it to combine with cash down on the purchase and exceed $10,000). If the customer is buying a vehicle and the salesperson gives a quote for accessories, that would suggest a related transaction.

It is very hard to track if the customer returns within twelve months and pays cash to have the accessories installed. But if it’s noted in a deal jacket that an auditor reviews, they will certainly question it.

Do not think an auditor will not notice the large payments from the service department. Train not only cashiers but also service advisors as well as parts counter salespeople that, if you have a large invoice, let the office know how it is paid. Keep it simple! One body shop manager estimated that four to six times a year he collects a seriously large cash payment from a customer. Service had never been invited to a Form 8300 training, and they had no idea this was a “thing.” Needless to say, a new communication channel was opened that day!

The customer may be reluctant to provide their Social Security number and employment details. It is perfectly acceptable

27

to let them know we are complying with a federal rule to report cash and cash equivalent payments over $10,000. The IRS website suggests informing the customer that they may be subject to a $50 penalty assessed for failure to provide a Taxpay-

er Identification Number. If they still refuse, you may complete Form 8300 with “undisclosed” in the required field. Be sure to provide the method and dates of when you attempted to reach the customer in the comments section at the bottom of page two. IRS agents I have spoken with have recommended the preparer check the “suspicious transaction” box at the top of the form. Also, I am seeing some errors occur frequently. Small mistakes potentially lead to large fines.

IRS Form 8300 audits are on the rise.

During the pandemic, these audits were rarely performed due to the need for the www.msada.org

auditor to visit the dealership to review the myriad of documents to indicate large cash and cash equivalent receipts. At the same time, many offices saw shortages or changes in staff, with processes being lost.

But the auditors are back in the field, and dealers are getting visits.

I have many clients going through audits right now.

Auditors are out in full force, making up for lost time. Now is the time to tighten up your processes!

Proactively speak with your team about cash reporting, and make sure everyone understands their role in compliance. Look at your process for cash receipting and ensure that deposits are being kept in an organized manner, with receipts and deposited check copies attached behind daily deposit slips. This is what the auditor will examine first; it is more than likely that they will inspect every single day’s deposits for the year being tested. Keep two copies of the filed Form 8300: one in the deal jacket and one in a binder or large file by year. I recommend keeping copies of relevant documents with this copy: driver’s license, check copies, buyers order, and all receipts. Have a process in writing about how cash is handled in the store, including who receipts, how the is deal tested to determine if a Form 8300 is required, as well as who files and when. Document any training you provide, both in-house, led by management, or by an outside consultant such as myself. t As a Lead Consultant at Withum, Jen helps clients in the automotive industry achieve their business goals and optimize their performance. She has over thirty years of experience in the automotive accounting field as CFO and Controller.

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DECEMBER 2023

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DEALER OPS

MSADA

Latest Toyota Data Breach – Evidence of an Industry Under Attack By Robbie Harriman OCD Tech rharriman@ocd. tech.com

Working in cybersecurity and especially in a consulting role certainly has its moments of premonition. We watch breach trends and do our best to prepare those we protect. It never feels good when these “told you so” moments happen, but it does highlight the importance of the work we do.

In October, I gave a presentation at the Massachusetts State Auto Dealers Association’s annual meeting titled, Dealership Security: State of the Industry from a Cybersecurity Perspective. In this presentation, I warned auto dealers of the likelihood of increased attacks within the industry occurring especially after the compliance date of the enhanced FTC Safeguards Rule with the fines and penalties to which dealers are now subject. In fact, a Midwest auto dealer was hit with a ransomware attack just days after the final amended FTC Safeguards Rule deadline of June 9, 2023.

I had a slide that highlighted two concerning headlines from earlier this year: “Auto dealers are prime targets for hackers, warn researchers” and “Toyota supplier portal breached by white hat hacker.” It is a lethal combination to have a vulnerable industry, which hackers have identified as ripe for the picking. My exact words during my presentation were: “Toyota was lucky it was a good guy that found it this time.”

In mid-November, this headline hit the news: “Toyota confirms breach after Medusa ransomware threatens to leak data.”

Toyota was not so lucky this time. Toyota DECEMBER 2023

Financial Services Europe & Africa was the victim of a ransomware attack to the tune of $8 million, at the threat of releasing a large amount of sensitive consumer and internal data. At least the attack group was “nice” enough to include an option to extend the deadline... at “only” $10,000/day.

A trend we see with these attacks is attackers leveraging regulatory compliance as a motivating factor for their victims to pay a ransom, as they know data breaches may result in fines and penalties. This effect is adding insult on top of the injury of downtime, resulting loss of revenue, damage to reputation, cost of credit monitoring services for victims of a breach, and countless other impacts – some directly financial and others intangible.

These attackers know the stakes are higher now for the auto industry, especially with the latest amendment to the FTC Safeguards to include reporting requirements. In other regulated industries, we have started to see attackers employ a new tactic – threatening not only to release compromised data, but also to report their victims to a regulatory authority. Recently a ransomware group filed a complaint with the US Securities & Exchange Commission when one of its victims, a software company, failed to meet the reporting threshold under a new rule, similar to the requirements the FTC has adopted (albeit with a much shorter window for reporting).

The amounts the attackers chose for the Toyota ransom, expiration date, and extension option are not arbitrary but carefully calculated to maximize inflicted damage and increase likelihood of payout. They do their research, know their targets, and are prepared.

We must be more prepared. Here are some hard-hitting industry-specific statistics that cannot be ignored: • Only 53% of polled auto dealers are confident in their security (actually up 16% from last year - more on that below); • 17% of dealers experienced a cyber-at-

Massachusetts Auto Dealer www.msada.org

tack or incident in the past year; • The average ransom amount is $740,144; • 84% of consumers polled would not purchase another vehicle from a dealership if their data was breached.

And of those dealerships that experienced a cyberattack: • 85% reported that incidents occurred as a result of phishing; • 46% resulted in negative financial/operational impact; • 69% reported employee downtime; • 31% reported damage to reputation.

But there is hope! Let’s move into the solution here: • 75% of dealers that chose to become compliant with the FTC Safeguards saw significant improvement of their security after those efforts; • The key actions identified above included: –Identifying a qualified individual to oversee their cybersecurity; –Implementing cybersecurity training for all employees; –Implementing multi-factor authentication throughout the network; –Performing a risk assessment, conducted by a reputable source; –Basing their information security program on aforementioned risk assessment; –Developing an Incident Response Plan.

If you have not taken these steps towards compliance and improving overall security, now is the time to start. OCD Tech has spent over 10 years helping auto dealers to be more secure, through the processes mentioned above, even prior to the amendments to the FTC Safeguards Rule. These attacks are not likely to decrease until we change attackers’ opinion of the industry.

It is imperative that dealers work with a partner to implement these security best practices above, to best protect themselves against these ever-increasing, ever-evolving threats. t

MSADA

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Massachusetts Auto Dealer

OCTOBER 2023

30

LEGAL

MSADA

Hyundai Partners with Amazon to Sell Cars; FTC Vehicle Shopping Rule Creates Challenges for Dealers

By Thomas S. Vangel, Esq., and Jamie Radke, Esq., Murtha Cullina LLP In a move that has captured the attention of auto dealers around the country, Amazon and Hyundai announced on November 16 that they had entered a partnership to sell new Hyundai vehicles online over the Amazon sales platform beginning in 2024. The new sales model will allow Hyundai dealers to sell their inventory through the Amazon platform while allowing customers to finance and pay for their cars “within the Amazon experience” to which they have become accustomed when purchasing other retail goods.

Although this new arrangement does not eliminate dealers’ role in the sale process, it will greatly reduce or eliminate the direct contact between the dealer and customer, inserting Amazon as a middleman of sorts that will connect the customer with the inventory of local dealers. This arrangement raises important questions about how existing state franchise laws can be applied to protect dealers as new online sales models take hold.

Hyundai and Amazon will begin testing the program in January 2024 with eighteen dealerships in five states and are expected to expand to other Hyundai dealers throughout the year. Hyundai is currently the only brand partnered with Amazon.

Others are expected to follow suit, as Amazon’s President announced that the company’s next step will be to expand within Hyundai Motor Group’s portfolio to Kia and Genesis and then to partner with other brands.

Commentators predict that Amazon will provide the digital aspect of the sales experience while Hyundai dealers will continue to assist customers with financing DECEMBER 2023

and delivery of the vehicle. Hyundai’s Amazon store will highlight its dealers’ inventory and connect them with in-market buyers. Consumers will be able to search for vehicles by trim, model, and color, and dealers will be allowed to set the vehicle price. However, once the price is listed, consumers will lose the ability to haggle or negotiate with the dealer. Amazon executives have stated that Hyundai dealers will be able to adjust their prices at any time.

Amazon customers will have the option to pick up the vehicle at a nearby dealership or have it delivered to their home.

It is expected that Amazon will charge a per-unit transaction fee to dealers and/ or OEMs for facilitating the transaction.

While Amazon has stressed that this new shopping experience will create a way for dealers to build awareness of their selection and offer convenience to their customers, there is serious concern among the dealer body that this arrangement will turn dealers into delivery agents, rather than allowing them to run the sales process as they have for generations.

The Hyundai/Amazon deal has been structured so that it likely will not run afoul of state laws that prohibit direct sales by manufacturers, including the Massachusetts dealer franchise law, MGL

Massachusetts Auto Dealer www.msada.org

Chapter 93B, at Section 4(c)(10).

As the Hyundai/Amazon partnership suggests, dealers would still be responsible for setting the price, helping arrange for the financing of the transaction, and delivering the vehicle, while Amazon will facilitate the digital aspect of the sales experience. By using Amazon to process the transaction rather than taking on that role directly, Hyundai will attempt to evade liability for direct sales to consumers.

Nonetheless, there remains a question as to whether the new Amazon arrangement constitutes such a fundamental change to the relationship between dealers and manufacturers that it alters their franchise agreements. As discussed in our previous article, the Illinois Motor Vehicle Review Board recently found that Ford had materially changed its dealers’ franchise agreements in Illinois through the Model e Program by requiring dealers to use the Ford. com website to sell vehicles. Ford’s program called for online sales to be fulfilled by a local dealer of the customer’s choice, with Ford’s website being the exclusive platform for online sales. After being challenged by Illinois dealers, the Illinois Motor Vehicle Board found that Ford had increased its role in the retail transaction by placing itself in the middle of the sale process and that it had not met the “good cause” standard for altering its franchise agreements as required under Illinois law.

Although Amazon and Hyundai’s partnership avoids some of the issues that caused the Illinois Board to strike down aspects of Ford’s Model e Program, there are parallels between that program and the Hyundai-Amazon partnership that could

MSADA allow for a legal challenge. Under both programs, dealers will deliver the vehicle while the transaction is completed through third-party platforms outside of the dealers’ control. Additionally, under both programs, consumers will lose the ability to negotiate with dealers over the vehicle price, reducing competition between dealers in ways that negatively affect the consumer. Arguably, these changes constitute fundamental changes to the franchise agreements between Hyundai and its dealers that cannot be imposed unilaterally by Hyundai under various state laws, including Massachusetts’s.

New FTC Rule and Proposed Mass.

Regs Challenges for Dealers Regulators at the local and national levels are taking action to address pricing transparency and so-called “junk fees”.

On November 30, 2023, Massachusetts Attorney General Andrea Joy Campbell announced new proposed regulations (540 CMR 38.00) that define certain practices in the sale and marketing of goods, services, and programs as “unfair and deceptive practices” under our state’s Consumer Protection Law, MGL Chapter 93A. This law imposes extremely harsh penalties for violations, including the possibility of multiple damages and an award of attorneys’ fees to affected consumers.

If enacted, the AG’s regulations would require businesses across various industries to clearly disclose the total price of goods, services, and programs (all defined as “Products”) when the price is first presented to consumers and to provide clear information concerning associated fees. Specifically, Section 38:04 of the proposed regulations would define the following practices to be unfair or deceptive: (1) misrepresenting or failing to disclose the total price of a Product when the price is first disclosed to the consumer; (2) misrepresenting or failing to disclose (a) the existence and purpose of any fees, interest, charges, or other expenses to be imposed on the consumer, and (b) whether such fees are optional, required, or refundable; (3) failing to disclose the total price of any product prior to re-

quiring a consumer to provide any personal information; (4) misrepresenting that any fees or other expenses are required by law when they are not; and (5) failing to display the total price more prominently than any other pricing information.

The proposed regulations also address recurring fees and trial offers. Under Section 38:05 of the regulations, it would be considered an unfair and deceptive act to: (1) fail to provide information such as a phone number or address for cancellation for a continuous service contract or trial offer; (2) fail to allow a consumer who entered into an automatic renewal or continuous service contract online to terminate it online; (3) fail to clearly disclose certain terms of any trial offer; and (4) fail to provide the consumer additional notice within no fewer than five calendar days prior to the date upon which they must cancel in order to avoid incurring an additional financial obligation.

If passed, these regulations will likely have a significant impact on the operations of Massachusetts auto dealers. First, the additional disclosures will likely add time to the car buying process, which will frustrate many who already find the process cumbersome. Further, as the automotive industry has been leaning into technology and offering services that require monthly and annual subscriptions, Massachusetts dealers will be burdened with the opt-out and disclosure provisions of Section 38:05 referenced above, which are not imposed on competing dealers from other states.

The AG’s Office will be holding public hearings and taking comments concerning the proposed regulations as the implementation process moves forward.

Meanwhile, national regulators looking to address pricing practices have been taking aim squarely at the automotive industry. On December 12, the Federal Trade Commission (FTC) enacted its Vehicle Shopping Rule, first proposed in June 2022 and now pejoratively renamed the Combating Auto Retail Scams (CARS) Rule, which targets junk fees and bait-andswitch tactics and attempts to provide more transparency in the car buying and leasing www.msada.org

process. Among other things, the CARS Rule will require dealers to (i) obtain their customers’ consent before charging any fees; (ii) provide clear disclosure of the vehicle’s total offering price; (iii) disclose that all add-ons are optional and prohibit dealers from offering add-ons that provide no benefit; and (iv) include the total payment amount when walking the buyer through financing. The CARS Rule also adds certain protections for military service members and seniors, who the FTC says have been targeted with unnecessary add-on products. The FTC commissioners unanimously passed the CARS Rule, and it will take effect on July 30, 2024.

While the FTC has said that nothing should change for “honest dealers,” critics of the CARS Rule, including the National Automobile Dealers Association (NADA), say it will add confusion and complexity to the car buying transaction with numerous additional forms and disclosures for customers to sign. A study released by NADA found that the Rule would add an additional two-hours to the car buying process and a median of $46,950 in upfront compliance costs for dealers for updated training, investment in IT systems, planning, and preparation.

While there is little doubt that the FTC’s CARS Rule and the proposed regulations of the Massachusetts AG, if passed, will have a significant impact on dealer operations, the best way for dealers to stay out of trouble is to embrace the culture of transparency that the rules attempt to address. As shopping habits have changed across industries, consumers have been signaling that they want a straightforward buying experience without being surprised with hidden fees and costs. Dealers should foster a transparent sales process and begin preparing for these changes so they are ready to hit the ground running when the CARS Rule goes into effect in July 2024. t Tom Vangel and Jamie Radke are partners with the law firm of Murtha Cullina LLP in Boston who specialize in automotive law. They can be reached at (617) 457-4072.

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DECEMBER 2023

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MSADA MSADA

LEGAL

We Wish You a Litigation-Free 2024

By Jeff Fritz, Esq., and Joshua Nadreau, Esq., Fisher Phillips LLP

2023 may be winding down, but legal claims against employers in Massachusetts (and elsewhere) are on the rise. We have seen a flurry of litigation against clients over the past several months. With aggrieved former employees under considerable financial pressure and looking to leverage settlements, we see no sign that the trend will reverse in 2024. Here are some claims to look out for in the coming year.

Late or Non-Payment of Wages As we have reported a few times here, in mid-2022, the Massachusetts Supreme Judicial Court issued a decision in Reuter v. City of Methuen essentially holding that late or non-payment of wages subjects an employer to automatic treble damages upon the violation (as opposed to upon the filing of a lawsuit, as prior lower court decisions had held). Since that time, we have seen a significant uptick in these types of claims, and, in most instances, the employer is essentially dead in the water (to the tune of three times the wages at issue). Thus, it is extremely important to ensure you are paying wages (including final pay) on time.

Think about this scenario. You discover an employee stole $1,000 from petty cash and (after investigation, of course) you terminate his employment and, the next day (which is a day late on an involuntary termination in Massachusetts), process his final pay (of $2,000). The aggrieved former employee hooks up with one of the many plaintiffs’ lawyers in Massachusetts, who sends you a letter demanding another $4,000 plus his attorneys’ fees (and who knows what else in terms of legal claims). What defenses are available to the employer? Essentially none. But he stole money from you? From a wage-andhour perspective, it does not matter. What are the employer’s options? Pay it now and avoid more significant legal fees (both his and theirs) or pay to litigate and then DECEMBER 2023

pay more later. The choice is obvious.

We cannot stress enough that it pays to be super-vigilant on wage-and-hour compliance as violations, even innocent ones, can be very costly and, in many instances, a bitter pill to swallow.

PFML Retaliation We also have seen an uptick in retaliation claims under the Massachusetts Paid Family and Medical Leave Act. We have addressed the nuts and bolts of this law, enacted January 1, 2021, on a few occasions in this space. Today, we focus on the anti-retaliation provision. Most employment-related statutes contain anti-retaliation provisions, but the burden of proof (as it should be) is on the employee to prove, by a preponderance of the evidence, that his employer retaliated against him.

yers love these claims because of the shifted burden of proof and have no compunction making these claims with no evidence whatsoever (other than the fact of the leave) in light of it. You need to be aware of this provision and mindful of it when taking adverse action against employees who have taken PFML leave.

Harassment We continue to see many harassment claims, including on the basis of sex, race, and national origin. The claims range from fairly serious (at least as alleged) to the outright absurd and nonsensical.

But regardless of the merits, employers put themselves in the best position to defend against these claims (and potential damages) by (1) ensuring they have (and make known) avenues available for em-

Training your managers on how to identify potential issues and what to do when they do identify them (i.e., inform HR) is also extremely important.

The PFML anti-retaliation provision is different. It imposes a presumption of retaliation against the employer for any adverse employment action that occurs during an employee’s leave and for six months thereafter. In other words, if you terminate an employee while on leave or within the subsequent six months, the law presumes you retaliated against him.

And then it is your burden to prove, by clear and convincing evidence (which is a heightened evidentiary standard), that you did not retaliate. And, again, violations expose an employer to automatic treble damages (plus attorneys’ fees and costs).

Some employers are simply not aware of this provision, take adverse action against an employee (for perfectly legitimate reasons), and then find themselves behind the eight-ball (and regretting the timing of their decision). Plaintiffs’ law-

Massachusetts Auto Dealer www.msada.org

ployees to report any belief that they are being harassed or discriminated against; (2) promptly and appropriately investigating any and all reports, however absurd they may appear initially; and (3) taking prompt and appropriate remedial action for any conduct you conclude was inappropriate. Further, employers who fail to take such measures frequently find themselves at a disadvantage in litigation.

Training your managers on how to identify potential issues and what to do when they do identify them (i.e., inform HR) is also extremely important. Their awareness of such issues and failure to act appropriately can expose your dealership to significant risk.

We wish you all happy holidays and a happy, healthy, and litigation-free new year. t

27

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Massachusetts Auto Dealer

OCTOBER 2023

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NOVEMBER 2023

Patrick Manzi

NADA Senior Economist

Boyi Xu

Economist

New light-vehicle sales in November 2023 totaled a SAAR of 15.3 million units, marking the second month of sequential month-over-month SAAR declines. Yet despite the cooling SAARs of the past few months, November’s figure was still up 7.4% from November 2022 and marked the 15th straight month of year-over-year SAAR increases. Through 11 months of the year, new light-vehicle sales increased 12.2% compared with the same period last year.

Year-to-date sales of battery electric vehicles (BEVs) topped 1 million units during November, the first time BEV sales have exceeded that threshold in a single sales year.

Through 11 months of the year, BEV sales totaled 1,007,984, an increase of 50.7% year over year. And BEVs sold by franchised dealerships represented 39.7% of all the new BEVs sold so far this year.

Crossover utility vehicles (CUVs) were 51.2% all new vehicles sold in November 2023, the second straight month and the second time in history that crossovers have accounted for more than half of total new vehicles sold in a given month.

DECEMBER 2023

Massachusetts Auto Dealer www.msada.org

Year to date, sales of CUVs accounted for 47.6% of new vehicles sold.

New light-vehicle inventory on the ground and in transit at the beginning of November totaled 2.15 million units and increased throughout the month. At the end of the month, new light-vehicle inventory totaled 2.33 million units, an 8.3% month-over-month increase and a 20-month high.

As inventory levels have grown, so have incentives. According to J.D. Power, average incentive spending per unit will likely total $2,247 in November, an increase of $400 from October 2023 and up 106.4% from November 2022.

Even with beefier incentives, increased transaction prices and interest rates are keeping monthly payments high. According to J.D. Power, the average monthly payment on a new-vehicle finance contract should total $727 in November 2023, up $11 year over year.

For full-year 2023, we expect new light-vehicle sales to total 15.4 million units. t

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www.msada.org

Massachusetts Auto Dealer

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AIADA Brief

MSADA MSADA

Dealers Look Ahead to 2024

By Cody Lusk President & CEO, American International Auto Dealers Association

Every year, as the final days of December count down, Americans begin to look to the future. We make predictions, resolutions, and plans for the next 12 months, and we celebrate the unmatched potential of a New Year. For those of us in the auto industry, this is especially true. Our minds are always on the next months’ numbers, upcoming models, and the inventory headed our way. We are optimists and visionaries, always straining to see what lies ahead.

Looking to the future and planning ahead are important. But it is equally important that we take the time to look back and learn from our recent experiences. The events of 2023 will directly shape our experiences in 2024, and we would be wise to reflect upon them carefully.

The 118th Congress had an historical first year. For the first time ever, a Speaker of the House was ousted by a vote of the full House. The House also expelled a member for the first time in over 20 years. All the while, the Senate attempted to move legislation forward but instead was stymied by an extremely narrow majority — with 51 Senators who vote with the Democrats and 49 Republicans — requiring Vice President Harris to set a record for the most tie breaking votes, 32.

Looking ahead to a presidential election year, we can expect tensions between the political parties to remain high, and we can be almost certain the Vice President will have to take more tie breaking votes. The House is likely to be equally hamstrung by partisanship in 2024. One thing we learned with certainty in 2023 is that, when the legislative branch is unable to legislate, the DECEMBER 2023

executive branch and its many regulatory agencies will make the most of that power vacuum.

An alphabet’s worth of agencies have stepped up in Congress’ absence to propose a mountain of new business regulations. The CFPB, FTC, and EPA have all made major efforts to curb the rights of businesses and add to the red tape dealers grapple with daily. This past Spring, the EPA proposed its strictest ever restrictions on tailpipe emissions, requiring that, by 2032, 67 percent of all new vehicles sold in the U.S. be all-electric. California is leading a group of states in going a step further:

Whatever else 2024 holds, dealers can be certain that AIADA, like it has for more than 50 years, will be fighting for them on all fronts. by 2035 they plan to eliminate the sale of new vehicles with internal combustion engines entirely. The only problem? American consumers are not on board with any of this. In 2022, electric vehicles made up just 5.8 percent of market share. Currently, EV supply far outweighs demand in many of your stores.

Dealers want to be part of a successful transition to green vehicles. That requires not just building EVs but also building and funding the infrastructure that supports them. Over and over again in 2023 we saw that consumers cannot buy an electric car they cannot charge or one they cannot afford. In response, the House in December voted to pass H.R. 4468, the “Choice in Automobile Retail Sales Act of 2023”. The act would prevent the EPA from prescribing a regulation related to new motor vehicle emissions standards that mandates the

Massachusetts Auto Dealer www.msada.org

use of any specific technology or results in limited availability of new motor vehicles based on the type of new motor vehicle engine. AIADA and our friends in Washington are working to ensure that the Senate will vote similarly on its own version of the act in 2024.

In addition to these challenges, Congress left town at the end of 2023 with a long list of to-do items, including supplemental funds for Israel, Ukraine, and Taiwan; enhanced border security and immigration reform; and funding the government for FY24, which actually commenced on October 1.

On the positive side, the U.S. Treasury Department and IRS have opened registration for car dealers to receive direct payments for transferred electric vehicle tax credits when the option becomes available to consumers next year. Dealers must be registered via the new website — called IRS Energy Credits Online — for their customers to claim or transfer federal tax credits and use those funds toward payment for eligible new, and used, EV purchases.

According to the IRS, starting on January 1, registered dealers should be able to use the online portal to submit sale information and receive direct deposit payments.

The portal will also be used to confirm a vehicle’s eligibility for credits, whether or not the customer chooses to transfer them directly to the dealer.

Whatever else 2024 holds, dealers can be certain that AIADA, like it has for more than 50 years, will be fighting for them on all fronts. Whether it be taxes, regulations, or trade, we are a dealer-led organization that fundamentally understands what dealers need from Washington in order to succeed. Among other things, we will remain vigilant and prepared to address concerns related to the EPA tailpipe emissions rule, the current estate tax rules which are set to expire in 2025, and Right to Repair legislation, which is gaining steam at the federal level. t

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DECEMBER 2023

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TRUCK CORNER

ATD 2023 Accomplishments

By Scott McCandless Chairman, American Truck Dealers Scott McCandless is president of McCandless Truck Center in Aurora, Colorado, and a truck industry veteran with 40-plus years of experience.

DECEMBER 2023

It is hard to believe I am wrapping up my final year as your ATD Chairman – and what a year it has been!

The ATD Board of Line Representatives and staff have been hard at work advocating for truck dealers and their customers. Truck dealers are faced with many hurdles, and it is critical that we continue to educate regulators and lawmakers about the effects their proposed environmental regulations will have not only truck dealerships but also on fleets, small businesses, and the American economy.

Our advocacy efforts continued throughout the year before legislators and regulators on a number of fronts.

• ATD Fly-In and Forum: This June, 150 truck dealers, automotive trade association executives, senior OEM executives, and allied industry and truck industry suppliers met in Washington, D.C. for our sold-out ATD Truck Industry Forum and Legislative Fly-In. Truck dealers conducted 95 Capitol Hill visits with Members of Congress and staff to discuss our top priorities. This event is incredibly impactful in our efforts to advocate for dealers with federal lawmakers.

• Environmental Protection Agency (EPA) Greenhouse Gas (GHG) Phase 3 Rule: Reps. Doug LaMalfa (R-Calif.) and Chris Pappas (D-N.H.) sent an ATD-backed letter (signed by 32 Members of Congress) to the EPA urging the agency to consider the trucking industry’s concerns regarding these new EV mandates and the impact on affordability and reliability of these vehicles. ATD also filed comments on the Phase 3 proposal and hosted EPA decision-makers at two truck dealerships. Additionally, we have held meetings throughout the year with key decisionmakers at the agency. Due to the hard work of ATD and other stakeholders, the EPA has postponed finalizing their GHG Phase 3 rule until March 2024, so that the EPA can consider industry input.

• Clean Freight Coalition: In March 2023, ATD, the American Trucking Associations (ATA), and several other trucking industry stakeholders established the Clean Freight Coalition (CFC). The CFC is focused on educating policy makers on the progress the trucking industry has made in reducing emissions and protecting the environment, promoting the work underway to reduce greenhouse gas emissions from freight transportation, and advoMassachusetts Auto Dealer www.msada.org

cating for public policies that transition toward a zero-emission future while maintaining affordable and reliable freight transportation and protecting the nation’s supply chain. In July, I joined the CFC leadership on Capitol Hill to meet with key Senators and members of the House and the Joint Office of Energy and Transportation to educate them on our concerns with the Phase 3 GHG rule and the need for electric commercial vehicle charging infrastructure.

• CARB Mandates: ATD spearheaded substantive dialogue with the OEMs on the CARB and Truck and Engine Manufacturers (EMA) new Clean Truck Agreement in July of 2023. Additionally, ATD hosted a webinar with ATA on the implementation and effects of the new agreement.

• FET Repeal: In March, the bipartisan “Modern, Clean, and Safe Trucks Act of 2023” (H.R. 1440/S. 694) was introduced to repeal the federal excise tax on trucks (FET). The bill has generated 13 cosponsors. ATD submitted testimony for a Senate Environment and Public Works Committee hearing on clean vehicles and public health and sent letters supporting FET repeal to Congressional leadership and the relevant Congressional committees with ATA, the Zero Emission Transportation Association, and other trucking organizations.

• So-Called “Right to Repair”: The ATD Board of Line Representatives sent a letter to House Energy and Commerce Committee leadership on June 16 raising concerns on H.R. 906.

• Catalytic Converter Theft: NADA/ATD secured 71 bipartisan cosponsors for H.R. 621 and eight cosponsors for S. 154, which create federal penalties for catalytic converter theft.

In addition to our legislative and regulatory advocacy efforts, ATD engages in considerable membership outreach in order to have our members more involved with their association and our actions on their behalf.

• Membership Outreach to members and enhancing member engagement has been a top priority during my term. That is why ATD staff have spent the year on the road, visiting seven dealerships and attending nine conferences and 22 OEM and supplier meetings. Our success is reflected by our membership rates. I am proud to announce we currently have 3,300 members, a record high. Crucial

MSADA 39 to a healthy membership is investment in ATD NextGen, our program dedicated to engaging and educating the next generation of truck dealership leaders. We now have an active Steering Committee guiding our priorities, over 100 ATD NextGen members, and a calendar of programming, including receptions, webinars, policy discussion updates, and focused content at the 2024 ATD Show.

• Industry Relations: ATD continues to build upon our strong relationships with OEMs, suppliers, and outside industry stakeholders. The ATD Dealer Attitude Survey is an important piece of that outreach. This year’s response rate was 53%. Our Line Representatives and staff delivered 11 industry presentations across the country on truck dealer priorities based on the results.

• Education: Our education efforts exceeded our expectations at every point this year. The numbers speak for themselves: 51 students graduated from the ATD Academy, which went 14% beyond our 2023 goal. This year we had 251 members of ATD 20 Groups, a record number and 8% increase over last year. ATD had 32 in-dealership consulting days delivered by staff, which is a 68% increase from last year. I encourage you to consider tapping into our educational offerings in 2024.

• 2024 ATD Show: We have a lot to celebrate this year, and I hope you will join me at the 2024 ATD Show in Las Vegas, February 1-4. We have an all-star lineup of industry experts and educators. And you will not want to miss the passing of the gavel to my successor – Scott Pearson, president of Peterbilt of Atlanta, LLC in Jackson, Georgia. Don’t delay: Register today!

ATD Truck Dealer Nominees for 2024 The American Truck Dealers (ATD), Trucks, Parts, and Service, and Procede Software recently announced the nominees for the 2024 Truck Dealer of the Year, a national award that recognizes commercial-truck dealers for business performance, industry leadership, and their efforts to serve their local communities.

The nominees were selected by state, metro, and national dealer association leaders, and fellow ATD members. This year, seven commercial-truck dealers were nominated. The 2024 nominees are: • Paul Burk, Executive Vice President of Doggett Freightliner (San Antonio, Texas). Over the last decade, Paul has overseen the impressive growth of Doggett Freightliner. He attributes this success to his ability to attract the best leaders in the industry and create a winning culture through empowering his employees.

• K.C. Heidler, President and CEO of Tom’s Truck Center (Santa Ana, Calif.). K.C. spent years working alongside his father, who acquired the business after owning gas stations and a tow truck operation. A graduate of the first class of the American Truck Dealers Academy, K.C. has more than 32 years of industry experience and continues to drive Tom’s Truck Center forward.

• Katie Hopkins, President and COO of Truck Centers, Inc.

(Troy, Illinois). Katie is the third generation of her family to lead the company and has played a key role in TCI’s expansion beyond Illinois and the St. Louis region, ensuring the smooth integration of new team members, data, and processes into the TCI network. Katie was an early adopter of Daimler Trucks North America’s Elite Support continuous improvement/lean management program and has served on its Dealer Advisory Board.

• Brian O’Donnell, President of Valley Truck Centers (Cleveland, Ohio). Brian served as Minority Partner and Operations Manager, then General Manager before becoming President.

Valley Ford was chosen to be one of the nation’s pilot dealers for the Freightliner franchise and has evolved from a single point into a network with a variety of brands across Ohio.

• Bill Reilley, Jr., CEO and President of Lakeside International/ Badgerland Idealease (Milwaukee, Wisconsin). Bill has nearly four decades of experience in the commercial truck industry, starting at an early age by working for his father at Lakeside International. Under Bill’s leadership, Lakeside International has grown to eight retail locations and a parts distribution center and has been recognized with Navistar’s Circle of Excellence and Presidential Award and the Idealease OneElite Award.

• Jim Schroeder, President of Peterbilt Pacific (Surrey, British Columbia). Leader of one of Canada’s largest Peterbilt dealers, Jim maintains long-established standards of excellence, proven durability, and high resale value for trucks. Since taking on the role of president, Jim has seen the company grow from five branches to 11.

• Dennis Ross, President of Kenworth of Jacksonville (Jacksonville, Florida). Starting his career as a design engineer at Kenworth, Dennis held various roles within the OEM, including as district sales manager. When Kenworth offered “guaranteed loan” arrangements to convert internal employees into dealer principals, Dennis jumped at the opportunity.

A panel of judges from Indiana University’s Kelley School of Business will evaluate the nominees and select a winner. The winner will also have the opportunity to serve as a guest lecturer at the University to share their professional story with students interested in entrepreneurship. Additionally, the winner will serve on the ATD Board of Line Representatives for a one-year term in a non-voting role.

The 2024 winner will succeed 2022-2023 Truck Dealer of the Year nominee Kari Rihm, president and CEO Rihm Kenworth in St. Paul, Minnesota.

The winner will be announced during this year’s ATD Show opening general session on Friday, February 2. The annual ATD Show runs from Thursday, February 1, through Sunday, February 4, 2024, at the Wynn Las Vegas. The four-day event runs concurrently with NADA Show 2024.

Please help us in congratulating the 2024 Truck Dealer of the Year nominees. t

www.msada.org

Massachusetts Auto Dealer

DECEMBER 2023

NADA Update

MSADA

Winding Down 2023 as We Prepare for 2024 10 Ways Local Dealerships Are Spreading Holiday Cheer Scott Dube, Partner at McGovern Hyundai Rt. 93, represents NADA’s M assa chu sett s me mber s o n th e NADA Board of Directors. H e c a n b e r e a c h e d at sd u b e @ mcgovernauto . com .

All dealers are working hard to close out 2023 with a strong finish. There have been many challenges faced and, hopefully, overcome. An aggressive federal regulatory environment and inconsistent economic conditions provided hurdles dealers strove to overcome throughout the year.

But as we continue through the holiday season, dealers step up time and time again to help meet the charitable needs of the communities they operate and live in. Dealers are always the first to answer the call to help out with Toys for Tots, or meals for the needy, or a visit by Santa at the children’s hospital.

Through good times and bad, dealers are there to fill that need.

Going into 2024, we at NADA will continue to confront various challenges presented to us by the usual collection of alphabet agencies – FTC, EPA, FCC, OSHA, etc. – as well as from the OEMs interested in altering the dealer franchise system.

Finally, we are counting down…

In just over a month, the auto industry will converge in dazzling Las Vegas for the highly anticipated NADA Show 2024. This isn’t just an event; it’s an extravaganza that promises something for everyone.

From our Main Stage guest speakers of Bar Rescue’s Jon Taffer, NASCAR’s Danica Patrick, and NFL Hall of Famer Kurt Warner, to the prestigious TIME Dealer of the Year Award, to over 100 workshops and education sessions, to dealer meetings with their OEMs, your NADA convention team has put together quite the Show. We kick it off with the ultimate Welcome Reception at the mind-blowing Sphere, featuring “Postcard from Earth” where you will embark on a jaw-dropping journey through immersive live entertainment, feeling like you’re traveling the globe and venturing into the cosmos.

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N A D A S H O W . O R G

The holiday spirit is strong at franchised new-car dealerships across the country. Dealers and their employees provide community support through donations, resources, and leadership throughout the year and for every occasion, but there is a special energy in holiday philanthropy.

Whether it is the showrooms filled with Toys for Tots, truck beds packed with food donations for the local community kitchen, or floats in the town holiday parade – dealerships are front and center in spreading cheer this December.

Here are a few shining stars from this holiday season: • Carter Myers Automotive in Lynchburg, Virginia, donated 136 children’s bikes to the Patrick Henry Family Services and the Boys and Girls Club.

• DeNooyer Chevrolet in Colonie, N.Y., donated over 100 beds to local children in need.

• Fallon Ford-Toyota in Fallon, Nevada, donated $43,450 to local charities. Throughout the year, each customer who purchases a vehicle chooses a local nonprofit to receive $50 from the sale, and at the end of the year, the dealership matches each total.

• Fred Beans Automotive Group in multiple Pennsylvania and New Jersey locations hosted photos with Santa Claus at their dealerships in conjunction with a canned goods drive for local food pantries. Throughout December, all Fred Beans locations donate a portion of each sale and service to the food pantries with a goal to donate 50,000 meals.

• ONE Automotive Group in Eau Claire, Wisconsin, gave a car to a local single mother.

• Palmiero Toyota in Meadville, Pennsylvania, donated over $65,000 to local nonprofits which were selected by community votes.

• Roger Beasley Mazda in Austin, Texas, auctioned three new Mazda Miatas to support Blue Santa, Brown Santa, and The 100 Club of Central Texas. Blue Santa and Brown Santa give toys and food to families in need in Austin and surrounding Travis County. The 100 Club of Central Texas supports families of first responders who have been killed or critically injured in the line of duty.

• Rudolph Automotive Group in El Paso, Texas, donated 2,000 coats to students in local school districts.

• Upstate Chevrolet Dealers in Attica, N.Y., were the Best Christmas Ever sponsor for the Berkshire Farm Center’s Holiday Angel Program, which ensures foster kids have special gifts for the holidays. www.msada.org

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NADA Update • Williams Subaru in Sayre, N.Y., hosted a free community event for children to meet Santa and Mrs. Claus.

No One Wants Used EVs, Making New Ones a Tougher Sell, Too (Bloomberg News) The shift away from cars with dirty combustion engines in Europe is running into a new hurdle: Drivers don’t want to buy used electric vehicles, and that’s undermining the market for new ones, too.

In the European $1.2 trillion secondhand market, prices for battery-powered cars are falling faster than for their combustion-engine cousins. Buyers are shunning them due to a lack of subsidies, a desire to wait for better technology, and continued shortfalls in charging infrastructures. A fierce price war sparked by Tesla Inc. and competitive Chinese models are further depressing values of new and used cars alike, threatening earnings at rivals like Volkswagen AG and Stellantis NV. Because most new vehicles in Europe are sold via leases, automakers and dealers who finance these transactions are trying to recover losses from plummeting valuations by raising borrowing costs. That is hitting demand in some European markets that were in the vanguard of the shift away from fossil fuel-powered propulsion. Some of the biggest buyers of new cars, including rental firms, are cutting back on EV adoption because they are losing money on resales, with Sixt SE dropping Tesla models from its fleet.

“When a car loses 1% of its worth, I make 1% less profit,” said Christian Dahlheim, who heads VW’s financial services arm. The issues with secondhand EVs, he said, have the potential to destroy billions of euros in earnings for the broader industry.

The problems are expected to intensify next year when many of the 1.2 million EVs sold in Europe in 2021 will come off their three-year leasing contracts and enter the secondhand market. How companies tackle this problem will be key for their bottom lines, consumer confidence, and ultimately decarbonization, including the European Union’s plan to phase out sales of new fuel-burning cars by 2035.

“There isn’t used-car demand for EVs,” said Matt Harrison, Toyota Motor Corp.’s chief operating officer in Europe.

“That’s really hurting the cost-of-ownership story.”

Companies can funnel battery-powered cars into mobility offerings and ride-sharing startups, but there is limited demand from these businesses. Unwanted combustion cars often end up in Africa, where their poor state causes pollution issues. That market is largely shut to EVs because it has no viable infrastructure to charge them.

China offers a cautionary tale. Lucrative subsidies turned the country into an EV giant, but also produced weed-inDECEMBER 2023

MSADA fested graveyards of abandoned battery-powered vehicles.

Any similar eyesores in Europe or the US may strengthen calls from conservative politicians to roll back aid for the industry, with key elections coming up in the US and Europe in 2024.

Warning signs around EVs appeared early this year when Tesla started aggressively cutting prices in an effort to prop up sales. That sparked a price war as other manufacturers followed, eating into profitability for some and pushing up already steep losses for others.

Prices for secondhand EVs slumped by around a third in the year through October, compared with a decline of just 5% in the overall used market, according to sales data from iSeeCars.com, a website that ranks cars and dealers. Used EVs take longer to sell than gasoline models even after significant price cuts, the group said.

In Germany, Europe’s biggest auto market, most new vehicles are first sold as company or fleet cars and then re-enter the private secondhand market one to three years later.

But with orders even for new EVs slowing, more and more used models are sitting on lots longer than 90 days, meaning they’ve become “risk inventory,” according to the Deutsche Automobil Treuhand market researcher.

“One has to slash prices significantly just to get customers to look at EVs,” said Dirk Weddigen von Knapp, who heads a group representing VW and Audi dealers.

Part of the problem is that the industry is handling secondhand EVs for the first time. While combustion-engine cars can be quickly valued via their age and mileage, there are no tests in widespread use that determine the quality of a battery, Weddigen von Knapp said. The battery represents around 30% of an EV’s value, a share that is expected to decline in the coming years, according to BloombergNEF. To be sure, some EVs are performing well years after their introduction, with less-than-expected battery degradation, said Mike Tyndall, an analyst at HSBC. Teslas can sell quickly in the secondhand market because of the brand’s reputation as a technology leader and its regular wireless software updates. The quirky i3 electric car BMW AG introduced a decade ago has even developed a cult following.

Still, most consumers remain reticent buying used EVs. Manufacturers are already working on new battery technologies including solid-state that promise cheaper cars with longer ranges and faster charging. The likes of Mercedes-Benz Group AG and BMW have announced plans to introduce several next-generation EVs around mid-decade, while Volkswagen, Stellantis, and Renault are developing models costing €25,000 or less.

Ayvens, a fleet management company handling around 3.5 million vehicles, said the uncertainty around EV technology will convince more customers to lease rather than

Massachusetts Auto Dealer www.msada.org

MSADA buy, accelerating a shift away from owning a car to driving it for a fee. “EVs are a booster of the transition of ownership to usership,” said Annie Pin, Ayvens’ chief commercial officer.

GM, Ford Vehicles to Lose US EV Tax Credits Jan. 1 (Reuters) Just days before Christmas General Motors announced it expects its Cadillac Lyriq and Chevrolet Blazer EV will temporarily lose eligibility for a U.S. electric vehicle tax credit starting January 1. GM said on January 1 only its Chevrolet Bolt EV will be eligible for the consumer EV tax credit.

Ford Motor said its E-Transit will lose the $3,750 tax credit on January 1, as will the Mach-E and Lincoln Aviator Grand Touring plug-in hybrid; its F-150 EV Lighting will keep the $7,500 credit and the Lincoln Corsair Grand Touring will retain a $3,750 credit.

GM said the two vehicles are losing the credit because of two minor components and added it has pulled ahead sourcing plans for qualifying components in early 2024. GM said it expects the Lyriq and Blazer EV will regain eligibility in early 2024.

GM said it also expects EVs Chevrolet Equinox EV, Chevrolet Silverado EV, GMC Sierra EV, and Cadillac OPTIQ produced “after the sourcing change will be eligible for the full incentive.”

The U.S. Treasury issued guidelines in December detailing new battery sourcing restrictions that take effect January 1 and aimed at weaning the U.S. electric vehicle supply chain away from China.

GM said, “Treasury proposed strict rules disqualifying all EVs with certain foreign battery content including low-value components, which effectively means most EVs will not be eligible beginning on January 1.”

Tesla’s Model 3 Rear-Wheel Drive and Long Range vehicles will also lose federal tax credits starting January 1, the automaker said last week.

NADA Statement on FTC’s Vehicle Shopping Rule In June of 2022, the FTC proposed a massive new rule – the Vehicle Shopping Rule – that would dramatically impact the automotive sales process by requiring new disclosures and paperwork to combat activity that is already illegal. NADA filed extensive comments in response to the proposal. On December 12, the FTC issued its final rule. In response to the issuance of the rule, NADA issued the following statement by its president and CEO Mike Stanton: “This regulation is heavy-handed bureaucratic overreach and redundancy at its worst, that will needlessly lengthen the car sales process by forcing new layers of disclosures

and complexity into the transaction. The FTC made up data to support its claims, then rejected calls to slow down the process and test the effectiveness of its proposal with real consumers. We are exploring all options on how to keep this ill-conceived rule from taking effect.”

NADA Board Elects Washington State Dealer Gary Gilchrist as 2024 Chairman At its October 17 meeting, the NADA’s 65-member board of directors elected Gary Gilchrist as its 2024 chairman.

“It’s with great humility—and a deep sense of responsibility—that I take the helm as the newly elected Chair of this great organization. I am honored and grateful for your trust and confidence in me and allowing me to help lead us into the future,” said Gilchrist, president of Gilchrist Chevrolet Buick GMC, Inc., in Tacoma, Washington. “Our achievements have been the result of dedication, commitment, and sacrifice from dealers, staff, and the ATAEs who have worked tirelessly to uphold the values that define NADA. Now, as we look forward, we will remain committed in our quest to embrace change; remember, it is a force for positive transformation.”

Gilchrist, 70, who currently serves as NADA vice chairman, will succeed Geoffrey Pohanka, chairman of Pohanka Automotive Group in Capitol Heights, Maryland. Gilchrist began his career in the automotive industry when he began selling cars in 1977 after graduating college.

Tom Castriota, 69, who represents new-car dealers in Florida and currently serves on the NADA Finance Committee, was elected NADA vice chairman for 2024.

“I am really humbled by the honor to serve this tremendous organization. I have a sincere desire to do the hard work and serve as the voice of the dealer,” said Castriota, owner of Castriota Chevrolet, Inc., in Hudson, Florida. “Working hand-in-hand towards a shared vision is as important as the outcomes we want to achieve. I look forward to working alongside my friend and colleague Gary Gilchrist to maximize the work of our board.”

Robert Vail, president of Vail Buick GMC in Bedford Hills, N.Y., and serving as Region I vice chairman on the NADA board, was elected secretary. Kirt Frye, president of Sunnyside Automotive Group in Middleburg Heights, Ohio, was elected treasurer.

The new terms begin at NADA Show 2024 in Las Vegas in February. t

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