Massachusetts Auto Dealer Magazine January 2022

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

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

2022

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

January 2022 • Vol. 35 No. 1

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S ta f f D i r e c t o r y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Auto Dealer MAgazine Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to MSADA by e-mail: jfabrizio@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 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 Bellavia Blatt, 21 Ethos, 2 Nancy Phillips, 18 NEAD, 18 O’Connor & Drew, 28

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

Table of Contents

4 5 6 9 10

From the President: Eyes on the Road ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: A Baker’s Dozen LEGISLATIVE SCORECARD AUTO OUTLOOK

14 Cover Story: Forecast 2022

17 19 20 22 24 25 26

NEWS From Around the Horn TROUBLESHOOTING: Stay on the Nice List in 2022 LEGAL: Mass. SJC Clarifies ‘Joint Employment’ Test NADA Market Beat AIADA Brief: New Year, New Opportunities TRUCK CORNER: A Holiday Message nada update: Getting Beyond ‘New Normal’

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

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

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

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From the President

MSADA

Eyes on the Road We must focus on what matters when we cannot change the world at large

By Chris Connolly, MSADA President Your Association continues to monitor COVID-19 with the same care and attention as we have since the first rumblings around this same time two full years ago. Back then, it may have been unfathomable that we would be glued to the same updates on infection rates for two full years. As stewards of both our overall industry well-being and, of course, the New England International Auto Show, we remain vigilant no matter how much it begins to feel like “Groundhog Day.” We were very much looking forward to resuming our annual Auto Show after leaving 2021 off the calendar. Ultimately, our customers’ safety and yours remain the only priority that truly matters. When we can safely assemble, we will do so. Who defines “safely,” of course, remains one of the central sources of confusion and conflict across the world as I write this. Our global markets tumbled in “I hope you will take 2020 – what will happen if they tumble again? time to hold family How much uncertainty can the entire world take?

Two years ago we faced a mysterious virus. close and remember Today, we face that same virus with a new muwhat matters as we tation, and it is time for our policy makers to ask emerge from this themselves if we have really learned nothing over the course of two years. holiday season with These are large, unanswerable questions. Our still more questions Association has a part to play in what unfolds, about what lies ahead.” and we can only keep our corner prepared. As business owners, we also have our own health and safety concerns for our employees and customers at each of our stores. We have proven that it is possible to keep businesses running safely through a pandemic. The answer has remained clear: Get vaccinated and stay masked if rates are high.

The Auto Show remains a sticking point in what are otherwise sound principles of doing business in the pandemic era. While we have served customers using every reasonable measure to ensure safety, promoting safety among thousands of show goers in one place at one time becomes much more difficult. We will put the show on as soon as we possibly can.

As we enter a new year, I hope you will take time to hold family close and remember what matters as we emerge from this holiday season with still more questions about what lies ahead. At your Association, we will continue our efforts to ensure business is allowed to be conducted safely by our government and regulators.

Our mission has been to ensure they understand our dealer members serve their communities, and that communities cannot stop functioning no matter how trying the times may be. As always, I thank you for this opportunity to lead this effort. I wish you and your loved ones a happy, safe, and prosperous new year. t JANUARY 2022

Massachusetts Auto Dealer www.msada.org

Msada Board Barnstable County

Brad Tracy, Tracy Volkswagen

Berkshire County

Brian Bedard, Bedard Brothers Auto Sales

Bristol County

Richard Mastria, Mastria Auto Group

Essex County

William DeLuca III, Woodworth Motors Don Sudbay, Sudbay Motors

Franklin County

Jay Dillon, Dillon Chevrolet

Hampden County

Jeb Balise, Balise Auto Group

Hampshire County

Bryan Burke, Burke Chevrolet

Middlesex County

Chris Connolly, Jr., Herb Connolly Motors Frank Hanenberger, MetroWest Subaru

Norfolk County

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

Plymouth County

Christine Alicandro, Marty’s Buick GMC Isuzu

Suffolk County

Robert Boch, Expressway Toyota

Worcester County

Steven Sewell, Westboro Chrysler Dodge Ram Jeep Steve Salvadore, Salvadore Auto

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

Immediate Past President [Open]

NADA Director

Scott Dube, Bill Dube Hyundai

Officers

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

Associate Members MSADA A ssociate M ember D irectory ACV Auctions Will Morris (860) 670-7867 ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. 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 CDK Global Rob Steele (508) 564-1346 Chase Auto Ken Miller (508) 902-8908 Clifton Larson Allen Rick Parmelee (860) 982-9307 Coastal Outsourced Solutions Andrea Vieira (508) 979-4733 ComplyNet Adam Crowell (614) 634-8843 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cooperative Systems Scott Spatz (860) 250-4965 Cox Automotive Ernest Lattimer (516) 547-2242 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 DealerSocket Marco Suarez (877) 340-2677

Downey & Company Paul McGovern (781) 849-3100 DP Sales Distributors Andrew Prussack {631) 842-7549 Eastern Bank David Sawyer (617) 620-3484 Eastern Insurance Group John Berksza (508) 620-3349 EasyCare New England Greg Gomer (617) 967-0303 Enterprise Rent-A-Car Timothy Allard (602) 818-3607 Ethos Group, Inc. Drew Spring (617) 694-9761 F&I Direct Sean Wiita (508) 414-0706 Michelle Salas (508) 599-0081 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350 Fisher Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gulf State Financial Services Mike Sims (817) 689-1735 GW Marketing Services Gordon Wisbach (857) 404-0226 JM&A Jim Beauregard (508) 561-2951 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 Kim Carroll and Robin Dukes (800) 557-1449 LotLinx Giovanna Scognemiglio (310) 526-1463 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 McWalter Volunteer Benefits Group Shawn Allen (617) 483-0359 Merchant Advocate, LLC Dan Giordano (973) 897-2778 Mid-State Insurance Agency James Pietro (508) 791-5566 Mintz Levin Kurt Steinkrauss (617) 542-6000

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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 Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Dale Ducasse (508) 393-1400 Piper Consulting Jim Piper (207) 754-0789 Pro-Vigil Sasha Lam-Plattes (408) 569-2385 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Austin Ziske (802) 505-0016 Rinn Advisors John Corcoran (617) 480-6693 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 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 Service Credit Union Dave Pasternak (603) 812-8967 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Southern Auto Auction Joe Derohanian (860) 292-7500 Sprague Energy Robert Savary (603) 430-7254 The Towne Law Firm P.C. James T. Towne, Jr. (518) 452-1800 TrueCar Pat Watson (803) 360-6094 Truist Michael Walsh (617) 345-6567 US Bank Vincent Gaglia (716) 649-0581 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

A Baker’s Dozen

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

ARPA Spending; UI Update On December 13 Gov. Charlie Baker signed the long-awaited $4 billion COVID-19 relief bill, which will appropriate $2.55 billion in American Rescue Plan Act money and $1.45 billion in fiscal 2021 surplus state tax revenue, while preserving a little more than $2.3 billion in federal ARPA funds for future use.

The bill signing completed an almost seven-month process to identify and debate spending priorities for the state’s FY21 surplus and federal ARPA monies.

The legislation hit a roadblock in late November when the legislative conference committee hashing out differences between the House and Senate bills missed its self-imposed deadline the week before Thanksgiving. Realizing they needed to do something with the bill before the end of the calendar year or begin the process anew in January, legislators approved an agreement between the chambers and sent it to the governor on December 3. The governor used the full ten days of his constitutionally provided review period before signing the bill.

According to an analysis from the Massachusetts Taxpayers Foundation, the spending itself is mostly concentrated on health care ($964 million), housing ($624 million), infrastructure ($414 million), education ($389 million), economic development ($267 million), and an allotment for premium pay awards of between $500 to $2,000 to essential low-income workers who had to work during the pandemic shutdowns ($500 million).

These state ARPA funds are in addition to $7 billion in ARPA funds being sent to the individual cities and towns in the Commonwealth. Municipal officials around Massachusetts have been eagerly waiting for the state to finalize its ARPA plan to see if they might be able to piggyback off of state spending when they put their own ARPA allotments into action.

As for employers, the bill includes an appropriation of $500 million for the Unemployment InsurJANUARY 2022

Massachusetts Auto Dealer www.msada.org

ance Trust Fund to address the deficit created when the state had to borrow federal funds to cover state payouts to the unemployed resulting from state-imposed business closures during the height of the pandemic in 2020 when the unemployment rate exceeded 16%.

In Spring 2021, the legislature created a special assessment against employers, which the governor signed into law, to pay back an amount equal to what the state needed to borrow. The special assessment is to run for the next 20 years. During the ARPA funds debate, the governor originally sought $1 billion for the U.I. Trust Fund to help alleviate the strain on employers who are being forced to cover the deficit of the loan payments to the federal government. The business community, including your Association, argued that the ARPA funds should be used to cover the full deficit, as many states had done with their own ARPA monies. The legislature ignored those pleas and set relief at $500 million. Although the business community did not cause the pandemic-related closures driving unemployment skyward, employers are now being forced to foot the bill.

To toss gasoline on the U.I. fire, the Baker administration has not been forthcoming as to the amount of funds in the state’s U.I. account and just what needs to get paid back to the federal authorities, which is kind of an important detail to know when you are layering another cost of doing business on top of the already strained small business community. Hopefully there will be more sunlight thrown on this issue in 2022 as the business community and legislators demand full transparency from the Baker administration.

No Auto Show in January As previously reported, your Association was preparing enthusiastically for our next New England International Auto Show to be held January 13-17, 2022, along with our Dealer Summit and Charity Gala on January 14. Due to increasing

MSADA Covid concerns as yet another mutation was emerging to rapidly infect people regardless of vaccination status, your board of directors took the prudent step to postpone our events until later in 2022. Although we were disappointed, we needed to make such a decision to prospectively ensure the health and safety of potential auto show and event attendees. We will let you know once we have set our alternate dates.

LIFO Update Many dealerships are facing significant decreases in inventory during 2021 due to supply chain problems. Accordingly, dealerships using the LIFO method of accounting for inventory may face large LIFO recapture income. Dealerships should estimate their LIFO recapture and consider alternatives such as IRC 473 relief or electing off LIFO. Internal Revenue Code section 473 provides a mechanism for LIFO tax relief when the Treasury Department recognizes a qualified inventory interruption due a major foreign trade interruption.

Our most recent information indicates that Treasury continues to decline section 473 relief for the auto industry.

As you may recall, a couple of months back we asked our Members of Congress to sign onto a bipartisan letter urging Treasury Secretary Janet Yellen to implement some form of LIFO relief. The House LIFO recapture letter garnered 92 bipartisan signers (61 Democrats and 31 Republicans), including Massachusetts Cong. Lori Trahan (D-Westford) and Cong. Jake Auchincloss (D-Newton). The Democrat-only Senate letter had 20 signers, but not our two senators.

This month, NADA representatives met with U.S. Treasury officials again to urge Secretary Yellen to provide temporary LIFO relief, since actions related to the pandemic have caused unprecedented and completely unforeseen shortfalls in new-vehicle inventories for dealers. Treasury has the authority to grant LIFO relief, which would allow dealers to restock over a three-year period as factory production normalizes. NADA made a strong case for LIFO relief in response to a “major foreign

trade interruption” of vehicles and vehicle supplies. While the latest Treasury meeting was generally positive, officials did not make any commitments. NADA continues to follow up with Treasury.

For more information from O’Connor & Drew regarding the considerations for electing off LIFO, please see MSADA Bulletin #140 (12/16/21).

File IRS Form 8300 by Jan. 31 The IRS requires any person who receives more than $10,000 in cash in a single transaction or a series of related transactions while conducting his or her trade to file a Form 8300 with the agency. Under the IRS rules, a business also must notify its customers, in writing, by January 31 of the subsequent calendar year that the business has filed a Form 8300 regarding the cash transaction with the customer. As an alternative to filing the paper Form 8300, businesses may file electronically the Form 8300 using FinCEN’s Bank Secrecy Act (BSA) Electronic Filing System. E-filing can be done at no charge, and it is a quick and secure way for individuals to file their Form 8300s. Filers receive an electronic acknowledgement of each submission. To receive more information, visit the BSA E-Filing System at http://bsaefiling.fincen.treas.gov/main.html.

“Vax or Test” Mandate Status On Monday, December 20, the U.S. Supreme Court gave the U.S. Department of Labor until December 30, 2021, to respond to several petitions for an emergency stay of the Occupational Safety and Health Administration’s “Vax or Test” Emergency Temporary Standard (ETS).

On Friday, December 17, 2021, a divided three-judge panel of the U.S. Court of Appeals for the Sixth Circuit lifted a pre-existing stay, effectively reinstating the ETS for covered employees with at least 100 workers. The ETS is now in effect.

However, OSHA has stated that it will exercise enforcement discretion with respect to employers exercising reasonable, goodfaith efforts to come into compliance by not issuing citations for noncompliance before January 10, 2022, for those mandates origwww.msada.org

inally required to be met by December 5, 2021, and by not issuing citations before February 9, 2022, for noncompliance with the “vax or test” mandates originally required by January 4, 2021.

Since the Supreme Court is unlikely to issue a decision prior to the new year, it is very important that dealers review the mandates set out in OSHA’s ETS now, found at www.osha.gov/coronavirus/ets2, and consult with their counsel as to what steps toward compliance they should be taking.

OSHA’s Frequently Asked Questions regarding the ETS can be accessed at: www. osha.gov/coronavirus/ets2/faqs.

The NADA webinar “OSHA’s New COVID-19 Employer Vaccine-or-Test Mandate: A Summary for Franchised Dealerships” is available to members at www. nada.org.

Minimum Wage Hike on 1/1/22 As part of the “Grand Bargain” law of 2018, the next, and penultimate, scheduled increase of the state’s minimum wage is to $14.25 per hour effective on January 1, 2022. That law also included a gradual elimination of the Sunday/holiday premium pay requirement. On January 1, 2022, the premium pay requirement will drop to 1.1 times the employee’s regular rate of pay. On January 1, 2023, when the minimum wage increases to $15 per hour, the premium pay requirement is scheduled to be eliminated.

“Coffee with Coopsys” Schedule for 2022 In 2022 we will continue with our “Coffee with Coopsys” program, a series of 15-minute webinars regarding IT compliance issues and dealership best practices conducted by our associate member Cooperative Systems. A new webinar is scheduled for the second Tuesday of each month, 10:00 a.m.-10:15 a.m. Registration is complimentary for all MSADA members. The schedule for 2022 is as follows: • January 11: Avoid These Five Bad IT Behaviors That Cost You $$$$ • February 8: Cybersecurity – The Seven Things Your IT Partner Does Not Want

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THE ROUNDUP You To Know • March 8: Password Management – Your Passwords are Compromised (And You Probably Do Not Know About It!) • April 12: We Love To Hate Downtime When Your Technology Fails To Work Properly • May 10: Are You Sure Your Cyber Insurance Policy Covers You? • June 14: Do You Have Guaranteed Protection Against Ransomware Attacks?

CISA Ransomware Warning The federal Cybersecurity and Infrastructure Security Agency (CISA) and the Federal Bureau of Investigation (FBI) remind businesses to stay vigilant against cyber threats during holidays and weekends. Recent history suggests that cyber criminals and attackers may be even more likely to strike during these times. CISA and the FBI have issued a reminder, along with a series of practical steps businesses can take to minimize the risk of a cyberattack. For more information, check out this CISA link: https://www.cisa.gov/uscert/ ncas/alerts/aa21-243a.

Compliance Reminder – Doc Prep Fees As you close out the end of the year and prepare for 2022, now is a great time to review your documentary preparation fee, the so-called “doc fee”. A doc fee can be charged by dealers to offset the costs incurred by a dealer in processing various paperwork associated with a sale; it is not to be used as a “profit-making” component of the vehicle purchase.

• There is no set maximum in Massachusetts law that a dealer can charge, but dealers should practice restraint. We have assisted dealers previously with a calculation template.

• The doc fee must be included in the total purchase price advertised to customers.

• The doc fee is not optional; charge everyone the same amount or charge no one.

• Two items that may never be included in the “doc prep” fee: (1) preparation of the Retail Installment Sales Contract cannot be part of the fee’s calculation as JANUARY 2022

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you would then need to wrap it into the APR calculation; and (2) if you are on the EVR system, you cannot include the EVR fee in the “doc prep” fee.

• Do not charge anyone more than $5 for a title prep fee; it is set in state law.

• We have a template for a customer brochure available for dealers to provide to customers explaining the doc fee.

Several times we have beaten back previous legislative efforts to regulate the doc fee. Please do not let fee abuses cause additional scrutiny from legislators and regulators.

Compliance Reminder – Employee Handbook & Pay Plans Your dealership’s employee handbook and pay plans should be adaptable documents as new federal and state law and regulatory changes impact your operations continually. Use the beginning of the year to work with your counsel to make any necessary changes to your operations and HR policies to remain compliant with the letter of the law. Employee lawsuits are becoming more commonplace and expensive, and fighting these lawsuits will easily overwhelm the simple cost of a legal review of your documents by competent counsel.

ERC Availability The employee retention credit (ERC) is a payroll tax credit for employers that retain and pay workers during periods of operational suspension or shutdown due to government orders relating to COVID-19 or during periods of significant declines in gross receipts. The credit is calculated based on a percentage (50% for 2020, 70% for 2021) of qualified wages and health plan costs paid during calendar quarters in which the employer qualifies for the ERC. The maximum credit for 2020 per employee is $5,000 for the year, and for 2021 per employee is $7,000 per quarter.

The ERC for COVID-19 was introduced as part of the CARES Act in March of 2020. Paycheck Protection Program (PPP) loan borrowers were initially pro-

Massachusetts Auto Dealer www.msada.org

hibited from taking the ERC but became retroactively eligible to claim the ERC for 2020 (and going forward for 2021) as part of the CAA. Originally available only for wages paid between March 12, 2020, to December 31, 2020, the ERC was expanded by CAA, ARPA, and IIJA legislation through Q3 of 2021 for most employers (Q4 of 2021 for certain 2020 startup businesses). For-profit and tax-exempt entities are both eligible for the ERC. The ERC is generally not available for governmental entities; however, for 2021, public colleges and universities are eligible for the credit.

For more information, refer to MSADA Bulletin #135 (12/6/21). Be sure to consult your professional accountant to assess availability for your particular situation.

FTC Safeguards Rule Update As we have discussed previously in several bulletins, the FTC issued final amendments to the FTC Safeguards Rule in late October that contain a significant number of new and expanded procedural, technical, and personnel requirements that financial institutions, including auto dealerships, must satisfy to meet their information security obligations. This month the FTC published the final rule in the Federal Register with an effective date of January 10, 2022; hence, dealerships will need to comply by December 9, 2022 – one year from the publication date. Be sure to consult with legal counsel and your accountants to come into compliance by December 9. NADA also has made numerous resources available.

The clock is ticking.

NADA 2022 Registration NADA’s 2022 Show in Las Vegas will soon be upon us, March 10-13. Our very own NADA director Scott Dube is this year’s chair and has planned a phenomenal event. If you have not yet done so, register at show.nada.org/2022/attendee-registration/. Your MSADA with O’Connor & Drew will honor 2022 TIME Dealer of the Year Joe Shaker at our annual party on Saturday, March 12, at the Encore Hotel, 5pm-8pm.

MSADA

L EGISLATIVE S CORECARD DECEMBER 2021

BILL#

SPONSOR

SUBJECT

STATUS

S183 S239 H407

Sen Crighton Sen Pacheco Rep Hunt

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

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 19, 2021.

H365 H400

Rep Finn Rep Howitt

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

SUPPORT

In the Joint Committee on Consumer Protection; no hearing scheduled yet.

H336 H361 S234

Rep Chan Rep Finn Sen O’Connor

Creates process to appeal improperly issued Class 1 license.

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 19, 2021.

S180 H421

Sen Crighton Rep Lewis

Modernize on-line purchase process.

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 19, 2021.

H345

Rep Cusack

Clarifies licensure to finance small loan contracts with negative equity.

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 12, 2021.

S226

Sen Moore

Amends definition of heavy-duty trucks under RTR law.

SUPPORT

Joint Committee on Consumer Protection held public hearing on July 19, 2021.

S245 H470

Sen Velis Rep Walsh

Open safety recalls notifications.

OPPOSE

Joint Committee on Consumer Protection held public hearing on July 19, 2021.

H423

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 19, 2021.

H1152 H1178 S711

Rep McMurtry Rep Phillips Sen Moore

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

SUPPORT

Joint Committee on Financial Services held public hearing on September 15, 2021.

H1183 S657

Rep Puppolo Sen DiZoglio

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

SUPPORT

Joint Committee on Financial Services held public hearing on September 15, 2021.

H1070 S719

Rep Driscoll Sen O’Connor

Creates administrative appeal process for vehicle owners to seek diminished value of damaged vehicle returned to vehicle owner.

SUPPORT

Joint Committee on Financial Services held public hearing on September 15, 2021.

S46 H142

Sen Creem Rep Vargas

Mass. Information Privacy Act

OPPOSE

Joint Committee on Advanced Information Technology held public hearing on October 13, 2021.

H3477 H3494 S2372

Rep Golden Rep Howitt Sen Rush

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

SUPPORT

Joint Committee on Transportation held public hearing on December 13, 2021.

H3450

Rep Ehrlich

Mandates automatic shutoff for keyless start vehicles

OPPOSE

In the Joint Committee on Transportation; no hearing sheduled yet.

H2004

Rep Jones

Sleepy’s-related affirmative defense.

SUPPORT

Joint Committee on Labor and Workforce Development held public hearing on November 9, 2021.

H3321 H3368 H3888 H4134

Rep Hill Rep Roy Rep Golden Rep Pupollo

Promote sale of EVs.

SUPPORT

Joint Committee on Telecommunications, Utilities, and Energy held public hearing on July 28, 2021, and December 14, 2021.

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AUTO OUTLOOK

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AUTO OUTLOOK

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RACE TO THE FINISH COVER STORY

Forecast 20

By Stephanie Power

Amid unprecedented inventory shortages, kinks in global supply chains, and the ongoing pandemic, dealers nationwide have been, well, dealing.

If you are reading these words, congratulations are due. You made it to the end of a “make-do” 2021. The highs? Soaring retail prices, historic gross profits per unit, and deepening customer relations. Another year in paradise meets a year from the Twilight Zone?

“It is a strange time to be a car dealer,” said MSADA President Chris Connolly. “We have demand; people have money and want to buy cars, but unfortunately we just do not have cars to sell. On the one hand, it is great that we have customers, and they are paying the MSRP, but on the other hand it is frustrating to not have the supply.”

As we prepare to ring in 2022, some questions are circulating: Where are we heading? When will things return to a semblance of normal (if ever)? And the classic, are we there yet?

We sat down with MSADA President Chris Connolly to get his eagle eye perspective on industry trends for Massachusetts dealers in the new year and beyond.

Auto Dealer Magazine: Based on 2021, and despite the supply shortages, many dealers saw heightened profitability and historic gross profits per unit on new and used cars. Do you expect this to continue – and for how long?

Connolly: It is supply and demand. There is a lot of demand and very little supply. To make sure we are responsible business owners with employees we want to take care of, we want to make sure we have enough revenue coming in each month. Based on everything I am reading, the supply chain issue is not going to go away anytime soon. We will probably be into 2023 before we begin to see a correction. 2022 will be similar to the last half of 2021.

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Q: Some automakers are saying they might not ever get back to the level of pre-pandemic inventories because they are profiting with higher sales prices. What do you expect with supply trends and how can you continue to adapt to lower supply?

Connolly: I do not think we will see the days of 120 and 150-day supply of vehicles on the ground again, anytime in the near future, if not ever again. Manufacturers have not made as much money this year, so we are going to see much higher sticker prices on new cars as we continue.

It is not just vehicle models in short supply; it is everything used to make them. It is wiring harnesses;

it is seat foam, microchips, and raw materials. Supply for these vehicles is world wide. The whole supply chain is really like a house of cards.

Q: Do you expect to see more consolidation with large dealer chains buying smaller dealerships who are ready to retire or sell? For example, AutoNation has said they plan to open 130 new dealerships nationwide by 2026. Are you seeing this happen in your area?

Connolly: Yes, we see it a lot. Just locally, there are fewer and fewer single point dealerships like our own Herb Connolly Group. We have seen larger dealer groups buy up a number of

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“We have demand; people have money and want to buy cars, but unfortunately we just do not have cars to sell.” www.msada.org

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RACE TO THE FINISH FORECAST 2022 Crunching the Numbers

According to NADA, the average dealerships earned $2.1 million in pretax profit in 2020, up 48 percent from 2019.

As of May 2021, NADA reported average dealerships posted pretax profits at 5.1 percent, higher than any reported annual figure since 2010, when NADA began publishing the data.

Retail GPU for new vehicles has risen every month in 2021 and reached $3,139 as of August 31. The used vehicle story is similar.

GPUs reached nearly $3,600 as of September 30, 2021, according to NADA data. This represents an increase of $925 from December 31, 2020, and an increase of nearly $1,230 from December 31, 2019.

According to a review published in mid-November by Scott Womack of mercercapital.com, analysts at Black Book are predicting used vehicle retail sales for the remainder of 2021 will equal or eclipse the levels for the same time period in 2019.

“Some analysts believe profit margins and transaction prices for used vehicles are already showing signs of moderating, despite some of those metrics still peaking. As a backdrop, 2019 is often considered by many as the best year ever for retail sales of used vehicles,” Womack adds.

According to Cox Automotive, the average transaction price for a used vehicle topped $27,000 for September. This figure represents the largest average transaction price for used vehicles on record and indicates a 25 percent increase from the average price of used vehicles just one year ago in September 2020.

“Most car buyers understand the historical notion that the value of a car depreciates immediately after you drive it off of the dealership lot,” says Womack. “In 2021, this notion simply is not true for the time being. There are plenty of examples in the marketplace of used vehicles that are 1-2 years old with minimal miles (25-30K) that are selling for prices higher than the original sticker price of the new vehicle!”

Fleet sales for the first half of 2021 equaled about 970,000 units, which according to Cox Automotive represents an increase of 5 percent from 2020, but a decline of nearly 40 percent from the same period in 2019.

Womack offers sound advice for sourcing used vehicles.

“Dealers must be cautious not to purchase large amounts of used vehicles at these elevated prices for the fear that they will not be able to sell all of those units before prices return to more normal levels,” he wrote.

JANUARY 2022

Massachusetts Auto Dealer www.msada.org

MSADA small family dealership entities this year, and we do not see that ending soon. On a larger scale, Group 1 Automotive, a Houston based Fortune 500 company, just bought much of the Prime Automotive Group, which was built up more than 20 years ago by Ira and David Rosenburg all over the Northeast and New England.

Q: Will dealers need to rely more on their roles as delivery and service centers as online retail trends continue in an unpredictable pandemic market and some automakers push into selling directly to consumers?

Connolly: 99% of my customers still come to the showroom. People still like coming into the dealership, seeing the car and test driving the car. I think there is a very, very small part of the population that does not care and will just buy online. More people are doing their research online. People used to travel to four or five different dealerships to compare prices before the pandemic.

Now they visit 1.1 dealerships, and do as much as they can first online.

Customer questions are a little different: “Do you have it available? Do you have it in black? No? OK, I will take it.” People are a lot more flexible because they seem to understand there is limited supply. They will say “OK, I really wanted black, but I will take the blue.”

Q: How will you continue to source used cars with fleet sales down significantly and more people buying their leased vehicles?

Connolly: It is going to be a challenge, obviously.

There are fewer new cars so there are fewer trade-ins, and people are realizing there is a higher end-of-lease value amount. Once they fully own their vehicles, they can trade it and get more money for it. We will continue to find as many creative resources to buy cars off the street and at online auctions if there is anything available. *** MSADA Executive Vice President Robert O’Koniewski said 2022 will likely share a similar pattern to what we have seen for the past two years.

“Unfortunately, at least short-term, 2022 will come down to three things — COVID, COVID, and COVID,” O’Koniewski said. “Certain political leaders love to use COVID resurgences and mutations as an excuse for continued control over our personal and commercial behavior.

As many business sectors continue with remote work, that means less commuting, less car usage, less need for maintenance and repair, less potential activity at dealerships, etc.

Further, extended and augmented virus concerns will certainly test our ability to conduct and attend live events. And do not forget, once we get to the Spring, the entire focus will be on the November 2022 mid-term elections, which will be a judgment of the COVID-affected economy.” t

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

NEWS the Horn

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HOLYOKE

Gary Rome Hyundai Hosts Holiday Charity Events Gary Rome Hyundai was transformed over the holiday season by hosting 30 Christmas trees decorated and sponsored by local businesses as part of the store’s first-ever Trees of Hope fundraiser, earning $126,000 in funds for the local Ronald McDonald

House. But that was just one of several initiatives the dealership pursued during the past several weeks. They included: • Naming Kristen Biancuzzo, an ELA teacher at Westfield High School, as the winner of the store’s Salute to Heroes campaign.

She was rewarded with a Hyundai Tucson.

• A $10,000 donation to the Food Bank of Western Massachusetts.

• A Ray’s of Hope Cornhole tournament that brought in more than $1,000 for breast cancer research.

• Donating 1,000 books to the Peck School through the Links to Libraries program.

Rome said he was already planning on hosting a second Trees of Hope event in 2022. He added, “Working together, we can make a difference, especially during the holiday season.”

NORWELL

Village Automotive Group Hosts ‘Toys for Tots’ Event Porsche Norwell hosted dozens of car enthusiasts in December for a breakfast event aimed at gathering donations to the “Toys for Tots” program for South Shore children. The event saw 30 vehicles displayed and more than 500 toys donated.

www.msada.org

Massachusetts Auto Dealer

JANUARY 2022

18

NEWS from Around the Horn I n M emoriam

Eneas J. “Jerry” Couture Eneas J. “Jerry” Couture, 91, longtime Shrewsbury resident, passed away at Rose Monahan Hospice Home with his family at his side.

Jerry was born, raised, and educated in Worcester, as a graduate of South High School, Class of 1948. He attended Wayne State University and General Motors Institute, and graduated from Massachusetts Military Academy as a Cadet Captain. Jerry served in the Massachusetts National Guard for 16 years as a member of HQ Company, Company D, and Service Company, 181st Infantry in Worcester, and was Executive Officer of Company B, 726th Ordnance BN, and Company Commander of Company A, 726th Ordnance BN in Natick.

He retired as a Captain and Assistant S-3 of the 726th Ordnance BN. Jerry was a Massachusetts State Women’s ASA Softball Commissioner for five years. He coached and managed Women’s Softball teams and AAU Women’s Basketball. His 1960 basketball team reached the final four and won the consolation championship at the AAU National Tournament in St. Joseph, Missouri.

Jerry was also employed by The Hebert Candies and managed the Hebert Coach House Candies in Natick until he switched careers and went to Cochituate Motors Chevrolet as sales manager, and later became general manager and vice president. He left to open Colonial Chrysler Plymouth in Hudson, as co-owner and president from 1970-1974, returning to Cochituate as VP and general manager in 1974, and purchasing the dealership from Howard C. Phillips in 1982.

Jerry purchased the Framingham Chevrolet dealership and re-named it Jerome Chevrolet and served as president and treasurer until his retirement in 1996. He also served as a Shrewsbury Town Meeting member for two terms and served on the Original Town Cable TV Board for three years.

Jerry was a former President and Director of Automotive Supply, Inc. in Watertown. He served as a director with the Chrysler Dealers Advertising Association, when he was a Chrysler dealer. He also served as a director of the Chevrolet Dealers Advertising Association for six years. He was a member of the Chevrolet, Boston Zone dealers’ council and a member of MSADA. He was named the Massachusetts TIME Dealer of the Year 1991.

JANUARY 2022

Massachusetts Auto Dealer www.msada.org

Troubleshooting

MSADA

Stay on the Nice List in 2022

By Peter Brennan, Esq. MSADA Staff Attorney

Another interesting year is almost in the books. As we prepare to bid 2021 farewell, keep the following topics in mind to start 2022 where you finished 2021 – on the nice list (hopefully).

Massachusetts Paid COVID-19 Sick Leave Required Until April 2022… At Least:

effective date of the Massachusetts law on May 28, 2021, then that employee became eligible for an additional 40 hours of paid COVID leave when the Massachusetts law took effect. If an employee has used 40 hours of paid COVID leave since May 28, then the employer has satisfied its obligations under the state and federal laws.

As a reminder, reimbursement is currently available through a state fund at a maximum rate of $850 per week.

Importantly, for an employee that has made multiple COVID leave requests, if the employee used 40 hours of paid COVID leave after May 28, and the employer did not seek reimbursement from the state but instead claimed federal tax credits, then the employer may, but is not required to, offer the employee an additional 40 hours of paid COVID leave and may seek reimbursement from the state fund for said paid leave. As long as the employer has satisfied its mandate under the state law, then em-

MSADA

It seems that every time we as a society attempt to move on from the COVID-19 pandemic, a new variant of the virus is discovered, and soon thereafter employee requests for COVID-related sick leave are on the rise. As we deal with the current onslaught of the Omicron variant, remember that Massachusetts enacted legislation similar to the federal COVID emergency sick leave law in May 2021, and then extended the state law through April 2022 after the federal law expired in September.

Accordingly, Massachusetts employers of all sizes are still required to provide up to 40 hours (for a full-time employee) of paid leave to employees who are unable to work due to qualifying reasons related to COVID-19. This leave must be provided in addition to any other paid sick time the employee receives, and the employee cannot be required to use any available PTO before using the paid COVID leave (for a qualifying reason).

It is possible that an employee may have made multiple requests for paid COVID leave over the course of the pandemic.

Employers need to be aware of key dates as those dates impact employers’ requirements under the law. If an employee used 40 hours of paid COVID leave prior to the

“The MSADA legal office has fielded a steady stream of questions pertaining to document preparation fees and lease buyouts.” ployers are not required to offer additional leave under these circumstances. The option is available if the employer chooses to do so, however.

Lease Buyouts – Do Them Right or Pay the Price Limited inventory and a crazy used car market have made the once mundane issue of lease buyouts a hot topic in dealer legal circles around the country. A few months ago, Massachusetts Attorney General and rumored future candidate for Governor Maura Healey put dealers on notice when her office issued an Advisory on Automobile Advertising, Pricing and Lease Buyouts (covered here previously in the October 2021 issue of Massachusetts Auto Dealer).

Since the Advisory was issued, the MSADA legal office has fielded a steady www.msada.org

stream of questions pertaining to document preparation fees and lease buyouts. As we have consistently advised, a dealer should not charge a doc prep fee in a dealer-lessee purchase transaction unless: (i) the original lease disclosed the amount of the doc fee charged in the dealer-lessee transaction as a separate purchase option fee; or (ii) the sum of the doc fee and the price charged the lessee for the vehicle (excluding official fees and the price of any voluntary protection products sold to the lessee in connection with the transaction) is equal to the lease purchase option price. Unless one of these conditions is satisfied, a dealer that charges a doc fee in a lease buyout transaction could face exposure to an enforcement action or consumer litigation under state or federal law. Even if one of the conditions is satisfied, dealers should have their legal counsel carefully review the relevant deal documents and make a determination.

While on the subject, a gentle reminder that dealers need to practice restraint and discretion when setting their doc fee so as to avoid prosecution or lawsuits under the Massachusetts Consumer Protection Act (MGL Chapter 93A). The fee is allowed for cost recovery; it is not intended to be a “profit-making” component of the vehicle purchase. The fee can be passed on to the consumer but only if it is (1) part of the total purchase price advertised to the customer, and (2) a fee associated with legitimate costs that you incur. In Massachusetts, unlike other states such as California, Illinois, or New York, to name a few, there is no maximum amount set in law that a dealer can charge, and discretion is strongly advised.

On a personal note - the MSADA legal office wishes everyone a happy and prosperous new year. Hope to see you all in person in 2022. t If you have any questions regarding this column, please contact Robert O’Koniewski, MSADA Executive Vice President, at rokoniewski@msada.org or Peter Brennan, MSADA Staff Attorney, at pbrennan@ msada.org or by phone at (617) 451-1051.

Massachusetts Auto Dealer

JANUARY 2022

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LEGAL

Mass. SJC Clarifies ‘Joint Employment’ Test

By Joseph W. Ambash, Jeffrey A. Fritz, and Joshua Nadreau of Fisher Phillips, LLP The Massachusetts Supreme Judicial Court recently provided much-needed and helpful guidance on the appropriate standard for determining whether an entity is an individual’s “joint employer” in the context of determining liability under state wage and hour laws.

In Jinks v. Credico, the Court confirmed that the same “totality of circumstances” test used when analyzing federal wage and hour matters will be used for determining joint employment status in Massachusetts, guided by four factors. Here is what your dealership needs to know about this welcome change and what you can do to capitalize on this ruling.

As many dealerships have painfully learned, plaintiffs’ attorneys will use just about every trick they can conceive to broaden the scope of employment, thereby creating large classes of employees on whose behalf they then try to sue. In Jinks v. Credico, the plaintiffs’ lawyers tried using the state independent contractor statute as grounds for foisting wage and hour liability onto a separate company, unrelated to the employee’s actual employer. Relying on that statute, the workers argued an entity should be considered an individual’s employer so long as the individual is “performing any service” from which the unrelated entity derives an economic benefit.

The SJC (wisely) concluded such a conception was way too broad. Instead, it rearticulated the standard it put into place in the 2013 Depianti v. Jan-Pro Franchising International, Inc. decision. There, it said that the entity for whom the individual directly performs services is ordinarily the individual’s employer and responsible for wage-and-hour compliance subject to at least two exceptions: where the purported joint employer is merely the “alter ego” of the employing entity or where one entity has engaged another as an “end run” around its wage-and-hour obligations.

After quickly dispensing with both the JANUARY 2022

“alter ego” and “end run” exceptions, the Court confirmed a third exception to the general rule that one entity is not the employer of another entity’s employee: that of joint employment. Under the “joint employer” theory, the Court reviewed whether the putative joint employer, contracting in good faith with a second entity, has retained for itself sufficient control over the terms and conditions of the second entity’s employees to be considered the joint employer of those employees.

To make this determination, the SJC adopted the federal Fair Labor Standards Act’s “totality of the circumstances” inquiry. That standard looks at four factors, examining whether the alleged employer: (1) had the power to hire and fire the employee; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records.

The Court noted, however, this is “not a mechanical determination” insofar as these factors “are not etched in stone” and should not be “blindly applied.” Nonetheless, it concluded these factors provide a framework that generally captures “both the nature and structure of the working relationship as well as the putative employer’s control over the economic aspects of the working relationship.”

The Application: Credico is Not a Joint Employer In Jinks v. Credico, the SJC ultimately concluded insufficient evidence existed to conclude Credico was Jinks’ joint employer. It reached this conclusion, in part, based on the language of Credico’s contract with the workers’ actual employer, which retained, among other things, the exclusive right to hire and fire, and substantial and sufficient control over working conditions — and the fact that no evidence showing any deviation in fact from those provisions. That Credico retained some responsibility for ensuring “quality control” as it

Massachusetts Auto Dealer www.msada.org

pertained to how salespeople conducted themselves in the field (i.e., ensuring proper training, etc.) did not move the needle for the Court. Nor did the plaintiffs have sufficient evidence showing Credico determined their rates and methods of payment or maintained employment records concerning them.

The Takeaway: Consider the 4 Factors in Drafting Agreements and Conducting Business The Jinks decision is a welcome one for the Massachusetts dealership community for three main reasons: • it rejects an exceptionally broad conception of joint employment in the wageand-hour context that the workers in this case wanted adopted; • it aligns federal and state law on the issue, making compliance a bit easier for the average employer; and • it finally provides more specific guidance on an issue that has impacted (in many instances, entirely unfairly) businesses which had no role whatsoever in the alleged wage-and-hour violations at issue.

That said, the “totality of the circumstances” nature of the standard, notwithstanding existence of the four factors, means its application in any given instance may be far from certain. To minimize the risk of being on the hook for another entity’s wage-and-hour violations, you should draft your business agreements with the four factors in mind and ensure your managers do not act in a manner contrary to their provisions. Dealerships that use the services of a “management company” for one or more of their stores should consult with competent counsel as to how to appropriately set up those entities and discuss best practices to ensure that the management companies do not unwillingly become joint employers, thereby exposing themselves or other commonly-owned, but otherwise unrelated, dealerships to wage and hour liability. t

MSADA

Joe Ambash, Jeff Fritz, and Josh Nadreau are Partners in the Boston office of Fisher & Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They may be reached at (617) 722-0044.

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NOVEMBER 2021

Patrick Manzi

NADA Senior Economist

Boyi Xu

Economist

New light-vehicle sales in November came in below expectations, with a SAAR of 12.9 million units, down 19% from November 2020. Despite November’s month-to-month decline, sales through the first 11 months of the year are up by 7% compared with the same period in 2020. While November began with a slight increase in inventory levels from September’s all-time lows, limited vehicle availability continues to keep sales well below current

JANUARY 2022

Massachusetts Auto Dealer www.msada.org

demand. Month-end inventory in November 2021 was up by 2.9% from October 2021, but inventory could again fall a bit during the final month of the year. Tight vehicle inventories will continue to limit sales somewhat in the early months of 2022, but the inventory drag on sales should ease throughout the year as inventories build slowly and steadily. t

MSADA

MARKET BEAT

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Massachusetts Auto Dealer

JANUARY 2022

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AIADA Brief

MSADA MSADA

New Year, New Opportunities

By Cody Lusk AIADA President & CEO

Perspective can be a valuable gift. As we prepare to enter a new year, I find myself looking back at where we stood twelve months ago, as a country and as an industry, and feeling a renewed sense of gratitude for where we are today.

Sure, supply chain shortages may be haunting dealer lots, but demand is high and, for the most part, business is good.

I am proud to be part of an industry that refuses to be beaten and celebrates outof-the-box problem solving. Logistics and planning are what our manufacturers do best, and it is remarkable to see the variety of creative solutions automakers are developing in order to get their products into dealers’ stores. Dealers are remarkably resilient, and this year we discovered that our manufacturer partners are as well.

I am looking forward to discovering what we can accomplish together in 2022, as chip deliveries improve, electric vehicles and infrastructure become more available, and Americans everywhere return to something resembling normal life. Dealers have streamlined processes, developed new digital sales methods, and have become, more than ever, essential small businesses in their communities.

You have earned every ounce of your success, and I expect there will be a great deal of success to celebrate in the coming months.

As an association, AIADA and its members are more united than ever in our mission in Washington, D.C. We will JANUARY 2022

never stop fighting against policies that disadvantage our stores and brands. Over the past year, we drew together as one to repudiate a specific tax credit provision which assumes some American workers matter more than others. We are fighting back against the UAW-only electric vehicle tax credits, and we now have some heavy hitters on our side, including America’s chief trading partners, Canada, Mexico, and the European Union.

Even so, this movement has been driven by dealers, and I am thankful to have

“Dealers have streamlined processes, developed new digital sales methods, and have become, more than ever, essential small businesses in their communities.” you on our side. Remarkably, in 2021, thousands of you used AIADA’s tools to reach out to your lawmakers and express your opposition to UAW-only electric vehicle tax credits. That is an incredible level of engagement and a powerful reminder to lawmakers that dealers are not a group you want to discount.

And as a country? I believe we are well-positioned to begin a new era of American prosperity, assuming lawmak-

Massachusetts Auto Dealer www.msada.org

ers can adhere to the principles that have gotten us this far and refrain from radical, anti-small business policymaking. Main street businesses, like dealerships, are the backbone of this country. Nationally, small businesses account for 48 percent of all American jobs and contribute 43.5 percent of U.S. GDP. International nameplate dealerships alone directly employ 542,000 Americans and indirectly support another 552,000 American jobs. As dealers, we need to ensure our lawmakers understand the impact we have in their districts and include us at the table when shaping policy.

That is why I would like to propose a New Year’s resolution for all international nameplate dealers. And this should be a lot more attainable than getting back on the stationary bike. Today, while it is on your mind, pick up your phone and visit AIADA.org/EV. Click on “email Congress” or “record a video message” – whichever you prefer – and share with your legislators the following: • You are a car dealer in their district who employs [insert number] of American workers.

• You look forward to selling and repairing a growing number of electric vehicles in the coming months and years.

• A discriminatory tax credit that currently can only be applied to ONE of the 50-something EVs on the market (the Chevy Bolt) is an insult to you and your employees.

• The government should keep politics out of car sales. Union jobs are no more important than any other American job.

Once done, you can check that box and feel confident you started the year off on the right foot. Engaging with Congress may not be anyone’s favorite activity, but it is vital for dealers. I appreciate your involvement in AIADA’s mission, and I look forward to a healthy and prosperous 2022. t

MSADA

TRUCK CORNER

A Holiday Message

By Steve Bassett Chairman, American Truck Dealers Steve

is

the

dealer

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

of

As I sit here and contemplate everything we have been through over 11 months, I can hardly believe we are in the last few weeks of 2021. First and foremost, I hope this message reaches all of you in good health and spirits, and that your dealership families have remained safe throughout the year. ATD would like to extend its deepest gratitude to all our truck dealer members—the resilient men and women— who continued to make the commercial truck industry go ‘round. It is time to pause and take stock of all we have accomplished together.

We began the year with a new Administration in D.C. and a ‘new normal’ in our daily lives. Our industry enjoyed a healthy optimism as truck orders began a resurgence and set records in the early part of the year. I am proud of ATD’s work to advocate quickly and efficiently for our businesses during that precarious time. Some of the safeguards we had did not happen overnight.

When it came to the new infrastructure bill, ATD and NADA leadership engaged with lawmakers often because we knew this legislation would impact us tremendously. On another front, we knew that the Environmental Protection Agency’s pending Clean Trucks Rule could significantly disrupt the U.S. trucking marketplace and delay the country’s transition to ZEVs. So, we met with EPA Administrator Michael Regan and worked with industry partners (OEMs, ATA, EMA/TMA, and suppliers) to present our case and fight for mandates that are practical.

This year has been punctuated by ups and downs, bumps and bruises, good news and bad. But I rarely see an industry, a people, and a community as strong and courageous as ours. We marched on despite a critical chip shortage, supply chain issues, and the stress of managing different pandemic rules throughout the country. Despite our ATD Industry Forum being canceled in June due to COVID restrictions, we continued to gain ground on the EV issue. ATD attended an important White House stakeholder meeting on the National EV Charging Network. And through concerted efforts with industry partners, ATD joined the Partners for a Zero Emission Vehicle Future just last month. This coalition will help support the market transition to heavy-duty zero-emission vehicles. As with all difficult things, we must press forward and engage with legislators. We are our best advocates.

There are many uncertainties in the future. One

thing I am sure of is the spirit of service that abounds within ATD. I am surrounded by fellow dealers who are ready and eager to advocate for our businesses every day. Please check out our ATD Board and get to know our entire leadership. I am proud to work with these amazing men and women who serve as your line representatives. Please reach out to them and weigh in on the issues we are facing today, or simply thank them for all their hard work this through the year.

As our dealerships continue to recover and grow, do not underestimate the power of communication.

Thank you for participating in the OEM and Supplier dealer attitude surveys this year. It is the best way ATD can advocate on your behalf with the manufacturers. ATD navigated COVID restrictions once again and presented the results both in-person and virtually as needed. We look forward to meeting and sharing the results of the supplier dealer attitude survey next Spring.

If you need a new year’s resolution, try this: Take full advantage of your ATD membership. ATD continues to support dealers through top-notch education programs such as our 20 Group, Dealer Academy, online courses, Driven publications, and more. And if you are not already an ATD member, consider joining today. You will probably use it more than your gym membership.

Finally, if you have not already done so, please register for the new and improved 2022 ATD Show in Las Vegas, March 10-13. I am excited to see you all as we come together for our first ATD reunion since this pandemic began. It will be our time to celebrate all these achievements while looking toward the challenges of the next few years. If I have not made it clear yet, I want you to know: ATD is always here to support you! We have moved mountains through a historic year. When I became your Chairman in February 2020, I told you this: “We dealers—the smalltown businesses of America—and sure, maybe even a band of misfits from every state—have many odds against us. Yet, we persevere and win each and every day! Because in the end, we are a giant TEAM.” I have never felt that resonate more than it does today. On behalf of ATD, I wish you, your families, and your employees a Merry Christmas and a safe and happy holiday season! t

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Massachusetts Auto Dealer

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26

NADA Update

By Scott Dube

Getting Beyond ‘New Normal’

As we move into 2022, the most important thing is to keep moving

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

While the coming year may be filled with uncertainty, one thing is assured: Our communities need our businesses in order to thrive. At NADA, we are making sure that our member dealers can continue to provide safe and reliable transportation to the people who keep our country running, even amid the difficulty of the past two years.

With a lot of preparation and more than a little luck, the next NADA Show in Las Vegas will be one to remember. As we look forward to March, I also want to take a moment to express my appreciation for this role and the opportunity to serve my fellow dealers at a national level.

Finally, I wish you and yours a safe and happy new year!

If expressed in miles per gallon (mpg) requirements, the EPA rules would result in a fleetwide real-world average of about 40 mpg in 2026, versus 38 mpg under the August proposal and 32 mpg under the Trump rules.

Officials said the EPA as soon as next year could propose tougher requirements through 2030 or beyond for vehicles.

“We urge the agency to get moving on the strongest possible long-term standards that rapidly accelerate the transition to zero-emission vehicles,” said Sierra Club President Ramon Cruz.

The Democratic administrations of Biden and Obama have pushed for stricter fuel efficiency standards to reduce greenhouse gas emissions and fight climate change. The new rules will result in 3.1 billion tons of avoided CO2 emissions through 2050 and come after many states and environmental groups urged the administration to impose stricter rules.

Biden wants 50% of all new vehicles sold in 2030 to be EV or plug-in hybrid models but has not endorsed California’s plan to phase out new gas-powered light-duty vehicles by 2035.

In March 2020, the Trump administration rolled back Obama’s standards to require only 1.5% annual increases in efficiency through 2026. Obama had required 5% annual increases.

The new rules take effect in the 2023 model year and require a 28.3% reduction in vehicle emissions through 2026.

The rules will be challenging for automakers to meet, especially for Detroit’s Big Three automakers. General Motors, Ford Motor Co. and Chrysler-parent Stellantis NV appeared at an event with Regan announcing the rules.

The Biden administration’s EV plans suffered a setback in December when key Democratic Senator Joe Manchin said he would not support a $1.75 trillion domestic investment bill that includes new EV tax credits that would favor Detroit’s Big Three automakers and the United Auto Workers (UAW) union.

UAW President Ray Curry said in an interview he is hopeful that the EV tax credits will ultimately be approved.

A major auto trade association, the Alliance for Automotive Innovation, said the new rules will require a substantial

“While the coming year may be filled with uncertainty, one thing is assured: Our communities need our businesses in order to thrive.”

EPA Announces New Emissions Requirements The Environmental Protection Agency finalized new vehicle emissions requirements through 2026 that reverse former President Donald Trump’s rollback of car pollution cuts and will speed a U.S. shift to more electric vehicles.

EPA Administrator Michael Regan called the tough standards “doable” even as he vowed to quickly move ahead with the next round of requirements. “We are setting robust and rigorous standards that will aggressively reduce the pollution that is harming people and our planet,” Regan said.

In August, President Joe Biden’s administration proposed undoing the Trump-era action easing requirements imposed during the presidency of Barack Obama. The new rule finalized on December 20 is tougher than EPA’s August proposal or requirements issued by Obama.

JANUARY 2022

Massachusetts Auto Dealer www.msada.org

MSADA increase in electric vehicle sales and government incentives for consumers to buy those cars.

EPA estimates the vehicle emissions reduction benefits will exceed costs by up to $190 billion and drivers will save between $210 billion and $420 billion through 2050. EPA estimates the savings from the new rules will outweigh the increase in vehicle costs by about $1,000 over the life of the vehicle. EPA estimates the final rule will result in 17% of new U.S. vehicles by 2026 as EVs or plug-in hybrids.

Save Your Seat for the NADA Show Michael Strahan avows to be inspired by innovators and risk-takers. With a keen interest in technological advancement, he has headed to space and will keynote at NADA Show 2022 in March!

The two-time Emmy winner, Super Bowl champion with the New York Football Giants, and Peabody award winning journalist accepted an invitation to join, and then experienced, a Blue Origin flight to the edge of space.

Save your seat to hear about his epic adventure and career. And check out our full line-up of exciting speakers and events, as we prepare to “Experience the Future.”

NADA Show 2022 promises to be out of this world:

Michael Strahan: Pro Football Hall of Famer, Broadcaster, & Entrepreneur Two-time Emmy winner, Super Bowl Champion and Peabody award winning journalist Michael Strahan currently co-hosts ABC’s “Good Morning America,” serves as an analyst for “Fox NFL Sunday,” and hosts ABC’s primetime game show favorite “$100,000 Pyramid.” Strahan also headlines the Thursday Night Football Pregame Show live on the Fox Broadcast Network. Strahan is the co-founder of SMAC Entertainment, a multi-dimensional talent management, music, branding, and production company which has created a major presence in the sports and entertainment arena. For four years, Strahan co-hosted the hit talk show “LIVE with Kelly and Michael,” and, prior to joining the ranks of the top sports broadcasters in the country, Strahan had a spectacular NFL career that resulted in him being named to the 2014 Pro Football Hall of Fame class.

Dana Perino: American Political Commentator and Author Dana Perino co-anchors “Fox News’s America’s Newsroom with Bill Hemmer & Dana Perino” and is a co-host of the hit show “The Five,” consistently ranked one of the most-watched programs on all of cable and where some viewers have nicknamed Perino “the voice of reason.” She spent more than seven years as part of the administration of President George W. Bush, joining right after the September

11, 2001, terrorist attacks as a spokesperson for the Justice Department. A year later, she was pulled to the White House and stayed until the last day of the Bush administration. She founded Minute Mentoring, a program for young women, and serves on the board of Companions for Heroes, which matches rescue animals with first-responders and veterans managing post-traumatic stress.

Travis Mills: Retired United States Army Soldier Travis Mills is one of only five servicemen from the wars in Iraq and Afghanistan to survive quadruple amputee injuries. He will inspire you with his simple message: “Never give up. Never quit.” Find out how he continues to face down the most daunting challenges with courage and humor and how, through the Travis Mills Foundation, he supports other “recalibrated” veterans and their families.

Secure your spot for the Auto Industry Event of the year at nadashow.org.

Limited Vehicle Availability Continues to Impact Sales Despite Slight Inventory Increases in November

By Patrick Manzi, NADA Chief Economist

New light-vehicle sales in November came in below expectations, with a SAAR of 12.9 million units, down 19% from November 2020. Despite November’s month-tomonth decline, sales through the first 11 months of the year are up by 7% compared with the same period in 2020.

For the second straight month, light trucks represented more than 80% of all new vehicles sold. Year to date, light trucks have accounted for 77.4% of all new light-vehicle sales. Those new light trucks and cars continue to move off dealer lots at a record pace. The average number of days a new vehicle sits on the lot, according to J.D. Power, fell to a record low of 19 days in November, down from 48 days in November 2020. Average incentive spending per unit is expected to be up slightly to $1,612 in November from October’s record-low $1,598. With lower discounts and high demand, average transaction prices should reach a November record of just over $44,000, J.D. Power says.

Average trade-in values, which are up 83% year over year, and new-vehicle finance rates, which are down from a year ago, have helped consumers deal with those rising prices to some degree.

Given the ongoing microchip shortage and its expected impact on vehicle deliveries during the final month of the year, we have lowered our expectations for total light-vehicle sales in 2021. We now expect that new light-vehicle sales will total 14.9 million units for the year t

www.msada.org

Massachusetts Auto Dealer

JANUARY 2022

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