JANUARY 2024 AUTO DEALER

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

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January 2024 • Vol. 37 No. 1

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

Honoring One of Cape Cod’s Finest

Thomas Murphy Falmouth Toyota

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

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S ta f f D i r e c t o r y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org 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 Ethos Group, 2 GW Marketing Services, 26 Merchant Advocate, 30 PlugStar/Plug In America, 41 Reynolds & Reynolds, 35 Sprague Energy, 27 Withum, 48

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

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

Table of Contents

4 From the President: Getting Ready for 2024 and Beyond 5 ASSOCIATE MEMBERS DIRECTORY 6 THE ROUNDUP: The Mother Rule 10 LEGISLATIVE SCORECARD 11 RECORD RETENTION GUIDE FOR MASS. AUTO DEALERS 16 AUTO OUTLOOK 20 Cover Story: Honoring One of Our Finest – Dealer of the Year, Tom Murphy

24 NEWS from Around the Horn 28 Accounting: Dealership

Year-End Review and Clean-up

31 Accounting: It Is a New Year, So Set Your 2024 Resolutions

32 DEALER OPS: Cox Automotive 2024 Market Forecast 34 DEALER OPS: ACV Trend Report – Winning at Your Dealership Every Day in 2024

36 LEGAL: Dealers Need to Comply with Copyright Law 37 LEGAL: Biden Reshapes Federal Workplace Law 38 NADA Market Beat 40 AIADA: 2024 Holds Opportunities for Dealers 42 TRUCK CORNER: All Set for ATD Show 2024 45 nada update: Vegas Ready

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

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From the President

MSADA

Getting Ready for 2024 and Beyond

By Jeb Balise, MSADA President Soon we will be traveling to Las Vegas for NADA Show 2024. This annual celebration of our industry is a wonderful opportunity and showcase for all of us. It brings together NADA leadership, thousands of dealers from around the country and key managers, and hundreds of vendors and exhibitors in an effort to move our businesses forward in a positive manner. And there are plenty of parties, too.

While we cannot control In November, we will be witnessing a what the post-election very contentious presidential election as landscape will look like, well as scores of federal and state legislative elections which will determine we can control how who will be enacting bills and policies well we can prepare for over the next two years. While we cannot future disruptions from control what the post-election landscape will look like, we can control how well our elected officials, we can prepare for future disruptions regulatory agencies, and from our elected officials, regulatory franchisor manufacturers. agencies, and franchisor manufacturers.

NADA 2024 provides us the tools.

I always enjoy our MSADA party, in partnership with Withum/O’Connor & Drew, to honor our Massachusetts TIME Dealer of the Year. Last year, we were thrilled to have Gary Rome selected as the national TDOY winner – our first ever national titleholder.

This year, I am excited for my fellow Toyota dealer, Tom Murphy of Falmouth Toyota. In the 55-year history of the TIME DOY award, Tom is just the second dealer from Barnstable County to be so honored by your MSADA. (Jay Tracy of Tracy VW in Hyannis was the first, in 1996.) On top of his considerable bussiness achievements, Tom’s charitable activities fill a void on Cape Cod for which he is now receiving long-overdue recognition. If you are in Vegas next month, stop by our party for Tom at the Encore Hotel on Saturday, February 3. Good luck, Tom, and thank you for your commitment to our industry.

Finally, NADA is just a few days in which we all come together to enjoy fellowship, camaraderie, and a chance to learn a few things to improve our businesses. I look forward to filling my toolbox with some of what NADA has to offer to be a better businessman and steward within my community for 2024 and the years to come. t

JANUARY 2024

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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 Broadway Equipment Company Fred Bauer (860) 798-5869 Brown & Brown Dealer Services Jason Bayko (508) 624-4344 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 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 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

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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 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 Wells Fargo Dealer Services Josh Tobin (508) 951-8334 Zurich American Insurance Company Steven Megee (774) 210-0092

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The Roundup

The Mother Rule

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

rokoniewski@msada.org Follow us on X (formerly Twitter) • @MassAutoDealers According to the Chinese horoscope, 2024 is the year of the Wood Dragon. Depending how deeply one reads into these traditional predictions, those associated with the dragon will experience prosperity and abundance, but not without a few bumps in the road.

As for our predictions here, grounded in a little bit more reality than ancient superstitions, 2024 definitely should be considered the Year of the Compliance Beast.

As the year unfolds, the Biden administration, while completing its final year of this presidential term, will be doing everything in its power to inflict new rules on the business community in the rush toward the November presidential election.

After all, there is no guarantee it will return in 2025 for a second term. The current volume of laws and regulations are not enough – we need to double, even triple, down on all that is on the books presently.

On top of the federal rulebooks, we have our own set of state laws and regulations, many of which go beyond their federal companions. The hodge podge of alphabet agencies in Washington, D.C. – FTC, EPA, FCC, OSHA, IRS, just to name a few – always have their sights on the business community, especially auto dealers. Just recently the FTC announced its Vehicle Shopping Rule, which we have written about in numerous bulletins and on these pages. In addition to federal efforts on advertising and junk and hidden fees, our own Attorney General Andrea Joy Campbell, issued draft regulations around Thanksgiving that would impose new requirements on businesses and how they assess certain fees on their customJANUARY 2024

Massachusetts Auto Dealer www.msada.org

ers. The December 20 public hearing saw strong opposition, including from your Association, expressed on the draft document.

Auto dealers are already spending considerable sums annually to stay ahead of the ever-changing compliance landscape. Even as we and NADA put out volumes of written material and conduct numerous webinars to keep dealers abreast of the latest regulatory forays into our businesses, slip ups happen. The not-so vigilant end up feeling the wrath of the agency du jour.

Here at your Association headquarters, I handle all kinds of calls and emails every day regarding best practices for dealerships. In addition, I see certain practices that could encourage additional scrutiny from the authorities. As youths, we all learned the Golden Rule. However, when I hear of or see certain transactional activities, they prompt me to invoke the Mother Rule: Would you do that to your own mother? More importantly, would you want anyone to do that to your own mother?

Now, I am sure there are those out there who may not have the best relationship with one’s own mother. But I would surmise that would be a small minority. Regardless, I would submit to you, that the next time you or one of your employee’s wants to do something that may not be the most prudent thing to do or could be straying over the line to the dark side, feel free to contact your association and discuss the matter. At a minimum, ask yourself, “Would I want someone to do that to my mother?” The answer could save you a ton of heartache – and cash, embarrassment, negative PR – in the long run. Can you really afford to be tomorrow’s enforcement headline?

MSADA FTC Delays Effective Date of Vehicle Shopping Rule As we have written previously, late last year, the Federal Trade Commission finally issued its Vehicle Shopping Rule, well over a year after its unveiling for comment back in June 2023. The FTC set an effective date of July 30, 2024, for compliance.

This month, dealers received a reprieve, of sorts, at least with a delay – length of time uncertain – of the July compliance date.

On January 18, in response to the petition for judicial review sought by NADA and the Texas Automobile Dealers Association (TADA), the Federal Trade Commission (FTC) issued an Order postponing the July 30, 2024, effective date of the Vehicle Shopping Rule pending judicial review of the petition. The FTC’s order notes that “it is in the interests of justice to stay the effective date of the rule to allow for judicial review.”

In response to the FTC’s action, NADA released the following statement by its President and CEO Mike Stanton: “We are pleased that the FTC has determined that ‘it is in the interests of justice to stay the effective date of the rule to allow for judicial review.’ We continue to believe the rule is unnecessary, redundant, confusing, and will needlessly lengthen the car sales process for consumers. The FTC failed to demonstrate the need for the rule and has not tested the effectiveness of its mandates with consumers. NADA will continue to advocate in the courts and in Congress to keep this ill-conceived rule from taking effect.”

While this action does not revoke or otherwise affect the rule’s requirements, it does mean that the previously announced effective date of July 30, 2024, is no longer the effective date for the Vehicle Shopping Rule.

On January 4, 2024, NADA and TADA filed a Petition for Review of the Vehicle Shopping Rule in the United States Court of Appeals for the Fifth Circuit, challenging the rule on the basis that it is “arbitrary, capricious, an abuse of discretion, without observance of procedure required by law,

or otherwise not in accordance with law.”

Subsequently, on January 8, 2024, NADA and TADA filed a motion with the Fifth Circuit seeking a stay of the rule and expedited consideration of the Petition for Review.

In addition to the judicial filing, NADA is continuing to support federal legislation to prevent the implementation and enforcement of the rule, including not only a provision in a House appropriations bill that would deny funding for enforcing the rule but also the “FTC REDO Act” (S. 3014), which requires the FTC to follow basic regulatory safeguards should the agency choose to redo the rule.

Dealers are encouraged to continue to review NADA compliance materials and take steps to understand and be prepared for the rule. Your MSADA and NADA will continue to update dealers as we learn more about timing related to compliance with the rule.

Mass. AG Draft Regs on Junk Fees Just in time for last year’s holidays, prompted by initiatives pushed by the Biden administration, Massachusetts Attorney General Andrea Joy Campbell issued draft regulations, 940 CMR 38.00, to regulate so-called junk fees and hidden fees that businesses charge consumers for various services or products – such things as “resort fees” at hotels, certain types of delivery fees charged by food services, etc. However, the manner in which the rules are drafted, a large scope of businesses could be dragged into the milieu of regulatory oversight as an unintended consequence of charging normal fees in the course of doing business.

At the December 20 public hearing, members of the business community, including your Association, submitted comments in person or by email to the AG’s Office. In our letter to the AGO, we stressed the fact that we are presently highly regulated by current federal and state laws and rules, especially under the Massachusetts Consumer Protection Act www.msada.org

as well as the motor vehicle advertising and sales contract rules.

Regarding the AGO’s proposal, we specifically highlighted several items within 940 CMR 38.00 that are problematic: • Disclosure Requirements. Massachusetts law presently is very clear regarding the disclosure of advertising and contract requirements. Our franchised dealers, in compliance with current state and federal rules, also meet significant recordkeeping requirements. Further, the federal Truth in Lending Act and the Consumer Leasing Act require necessary disclosures for the consumer to ascertain just what he or she is agreeing to with the vehicle purchase or lease. In today’s Massachusetts transaction, there is no shortage of paperwork requiring a customer signature or acknowledgement via initialing. In reading today’s proposed regulation, it is unclear how today’s proposal will interact with the FTC’s Vehicle Shopping Rule. I also must note that a currently proposed federal junk fees regulation exempts dealers because of the FTC’s oversight pursuant to the Vehicle Shopping Rule. We ask that the AGO also recognize that automobile dealers are already subject to regulation under 940 CMR 5.00, thereby making the applicability of the proposed rule on dealers unnecessary.

• Initial Presentation of Product Price. This provision requires more clarity within the context of the proposed rule. The presentation of an accurate price to a vehicle consumer is already highly regulated and includes considerable transparency.

Whether a consumer sees an advertised vehicle price in the newspaper or views the sticker price upon visiting a dealership showroom or lot or espies a vehicle price when surfing through a dealership website, a consumer will receive an “initial presentation” of the vehicle price.

The advertised price must also include, as required by current state and federal advertising regulations, all charges necessary or usual prior to delivery such as freight, handling, vehicle preparation, and documentary preparation fee. To

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THE ROUNDUP create a new “price” disclosure standard with conflicting elements, as contemplated within 540 CMR 58.00, will make the transactional process more complicated and less beneficial for all parties.

• Price to Include “Interest”. Compliance with this provision would require extricating oneself from a circular trap. The proposed regulation mentions the required inclusion of “interest” within the price with no definition as to what that means. Regardless, it is an impossible requirement to meet. Dealers cannot calculate a final cost to the consumer, within the confines of comprehensive federal and state rules, until they pull a consumer’s credit report and then determine the finance rate and final interest charges assessed by the lender chosen by the consumer. In the proposed regulation, the dealer could not obtain personal information from a consumer without giving the total price. Yet, the dealer cannot give the total price, which includes lender financing costs, without obtaining personal information. Around and around in circles we could go. Also, the inclusion of “interest” in the price presumes a consumer will obtain financing with the assistance of the dealership. Many consumers, however, arrive at a dealership with financing in hand from a local bank or credit union or with an intention to pay cash for the total transaction, thereby avoiding any finance costs. At a minimum, the required inclusion of “interest” should be removed from the price composition.

• “Shipping Charges” Definition. There is an inconsistency between “shipping” in this rule and what is presently covered and included in price in the state’s advertising regulations described as “freight charges”. If the intent of this rule is to cover motor vehicle transactions, this definition would need to be amended because, as presently drafted, it does not reflect what occurs within the realm of “shipping” as covered within the AGO’s current vehicle advertising regulations.

• Service Contracts. The proposed regulation mentions “service contracts” in several places; this term, however, is not defined. The Massachusetts General Laws JANUARY 2024

presently regulate service contracts, and there is proposed legislation before the Legislature to address the current statutory scheme to provide more clarity to the regulation of the service contracts industry. It is important to recognize that the purchase of additional optional service contracts, so-called voluntary protection products, whose terms are fully and accurately disclosed to a consumer, during the sale negotiations for a new automobile result in additional costs to the consumer that will add to the final agreed upon sale price. Consumers, at their option, often purchase multiple service contracts to extend existing warranties or to provide additional repair protections to their vehicles. The cost of these voluntary protection products cannot be anticipated for the consumer by the dealer when they advertise the price of the vehicle to the consumer.

• Finally, the manner in which the Small Business Impact Statement is completed is inaccurate in several regards: Contrary to what is indicated on the form, our franchised dealerships (“small businesses”) will have to implement additional recordkeeping requirements; they will have to provide additional oversight; and there are other regulations that duplicate or conflict with the proposed regulation.

The AGO has made no indication as to a timeline for promulgating the regulations.

We and others within the business community continue to communicate with the AGO to advocate for adjustments to the proposal.

Federal EV Sales Reports Effective January 1, the Biden administration and the IRS made a number of adjustments to the federal EV tax credits program which greatly impacted the menu of EVs and PHEVs eligible for the tax credits. Regardless of these changes, dealers still need to file EV sales reports with the IRS.

By January 31, dealers must file the 2023 sales report detailing to whom and what eligible EVs and PHEVs were sold to customers in calendar year 2023. The IRS will use the information to determine

Massachusetts Auto Dealer www.msada.org

if a buyer who claims the tax credit was eligible to do so.

Beginning January 1, dealers who wish to participate in the IRS’s cash-on-thehood program must be registered with the agency. If a dealer opts out of registration, the buyer cannot work with the dealer to convert the tax credit to a cash reduction on the vehicle price, but the buyer will still be able to claim the tax credit on the income tax filing. Whether or not the dealer is registered, the dealer still needs to report the sale of any eligible EV or PHEV to the IRS within three days of the sale.

Should you require additional information, contact your Association or visit the IRS website at www.irs.gov.

Legislature Kicks Off 2024 Session The start of the new year saw the Massachusetts General Court shake off some holiday dust in preparation for the rush to the July 31 end of formal sessions. For instance, by February 7, the legislative committees need to make a decision on every bill before them – issue a favorable or adverse report, place into a study, extend its deliberation time, discharge to another committee, etc. Once that happens, observers and interested parties will know what their work is ahead of them.

This month, the Joint Committee on Consumer Protection and Professional Licensure gave favorable reports to several bills of interest to dealerships: • House 351 (Lewis) with Senate 150 (Crighton), An Act Relative to Consumer Protection on Online Automobile Transactions, which would modernize the on-line vehicle purchase process so that such transactions do not fall under the three-day right of rescission for off-site sales. The bill would exclude transactions for the sale of a new or used motor vehicle by a seller in which the buyer signs by electronic means away from the seller’s place of business a written contract regarding the sale of a motor vehicle, provided that the seller gives written notice at time of sale to the buyer of this exclusion. House 351 was subsequently sent to the House Committee on Steer-

MSADA ing and Policy, which schedules bills for consideration on the House calendar.

• House 4277 (Thomas Walsh), An Act Relative to Vehicle Recalls, which would require the RMV to issue information to vehicle owners about any open safety recalls on their vehicles. The RMV, prior to issuing a motor vehicle registration, would be required to check information made available by the National Highway Traffic Safety Administration to determine whether the motor vehicle is subject to an open safety recall, and to provide the owner of the motor vehicle written notice of all open safety recalls applicable to that vehicle. The Registrar would be prohibited from issuing a registration certificate for a motor vehicle until each open safety recall is repaired.

Exemptions to these requirements would include: (i) the vehicle manufacturer has not made a remedy available; (ii) the necessary replacement parts are not readily available; (iii) the vehicle requires repairs that are not covered by a recall in order to enable the application of the remedy; (iv) the customer has installed aftermarket modifications that prevent the application of the remedy; or (v) the Registrar determines that there were circumstances beyond the control of the owner or undue hardship that prevented the consumer from having the recall remedied. The bill was then sent to the House Committee on Ways and Means.

• House 270 (Chan) with House 289 (Finn) and Senate 204 (O’Connor), An Act Relative to the Issuance of a Class 1 Dealer License, which would establish a process for challenging an improperly issued class 1 license to a business claiming to be a franchisee of a manufacturer.

• Senate 171 (Feeney) with House 311 (Gonzalez), An Act Modernizing Protections for Consumers in Automobile Transactions, which would amend the used vehicle lemon law to make leases subject to the law; amend MGL Chapter 90 (Motor Vehicles) to establish that the 7-day period for the consumer to get a newly-purchased vehicle inspected runs from the time of delivery, not sale, and

increases the maximum mileage for coverage under the used vehicle lemon law to 200,000 miles; would allow the Attorney General to pursue claims against automobile dealers and increases the bond amounts used vehicle dealers must post to $50,000. This bill was then referred to the Senate Committee on Ways and Means.

Additionally, on January 24, the Joint Committee on Transportation held a public hearing on 70 bills, some of which interested us: • We testified in favor of Senate 2219 (Cronin) and House 3255 (Arciero), legislation filed on our behalf to eliminate the initial vehicle inspection on a new car, thereby allowing dealers to use the pre-delivery inspection process to confirm the operational and safety aspects of the vehicle.

• We offered testimony in opposition to House 3348 (Howitt), which would put a cap on the documentary preparation fee.

Also on that day, Gov. Maura Healey filed her FY 2025 budget, a $58 billion spending plan that will now receive scrutiny first in the House, which will take action probably some time in April, followed by the Senate in May. The Legislature will need to then submit a budget agreement to the governor by the start of FY25 on July 1, a deadline which has not been met for several years.

New Endorsements for Vendor Services Your Association has engaged several vendors for newly agreed upon endorsed services: • Merchant Advocate works with retailers to analyze the credit card fees those businesses are charged and assessed in processing transactions. The savings can be considerable, as Merchant Advocate uncovers duplicate or unsubstantiated fees from the credit card companies. Over the last several years, they have saved retailers across the country over $380 million.

• Plug In America, though its PlugStar program, works with dealerships to train personnel, including salespersons, to be able to best address your customwww.msada.org

ers’ needs and questions regarding electric vehicles. They presently work with dealerships in over 30 states to assist dealerships in the transition to EV sales and servicing.

• Sprague Energy works with businesses to analyze their electric and gas charges in an attempt to provide them with reduced charges for such services. Sprague works with a number of Massachusetts dealerships currently in those efforts.

Check out the ads for each of these companies in this month’s Auto Dealer magazine.

RMV Temp Tags Update Under our recently revised temp tags law, Non-Resident Short-Term Registrations are available to out-of-state residents purchasing a motor vehicle (not including trailers or mopeds) from a dealer in Massachusetts. These registrations were originally valid for nine days from the transaction date.

This month, the Massachusetts Registry of Motor Vehicles (RMV) announced that, effective January 18, 2024, Non-Resident Short-Term Registrations issued on January 18 or later will be valid for 15 days from the transaction date. Non-Resident Short-Term Registrations issued January 17 or earlier will still be valid for nine days from the transaction date.

Under the law and the RMV’s rules, customers are issued a Registration Certificate and a paper temporary plate inserted into a plastic sleeve. These plates can only be used for transporting a vehicle back to the customer’s home state; these plates cannot be used for commercial purposes (including the transportation of passengers, goods, wares, and merchandise).

Updated Document Retention Guide We have issued our updated document retention guide, drafted by the experts at Withum (previously O’Connor & Drew).

The Guide is included on pages 11-15 in this month’s magazine. Should you have any questions, do not hesitate to contact us. t

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MSADA L EGISLATIVE S CORECARD

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BILL#

SPONSOR

SUBJECT

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. H270 reported favorably on Jan. 25, 2024; sent to House Ways and Means.

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. H351 reported favorably on Jan. 25, 2024; sent to House Steering & Policy Committee.

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. Redraft H4277 reported favorably on Jan. 25, 2024; sent to House Ways and Means.

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

Joint Committee on Transportation held public hearing on Jan. 24, 2024.

H3348

Rep Howitt

Limit doc prep fee amounts.

OPPOSE

Joint Committee on Transportation held public hearing on Jan. 24, 2024.

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. Bill sent to AITIC Committee on November 2, 2023.

JANUARY 2024

STATUS

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MSADA

RECORD RETENTION

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THE RECORD RETENTION

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AUTO OUTLOOK

JANUARY 2024 Auto Dealer FEBRUARY 2022 Massachusetts Massachusetts Auto Dealerwww.msada.org www.msada.org

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www.msada.org Massachusetts MassachusettsAuto AutoDealer Dealer FEBRUARY JANUARY 2022 2024 www.msada.org

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COVER STORY

Honoring One of C Thomas Murphy of Falmouth Toyota Heads to Las Vegas as the 2024 Massachusetts TIME Dealer of the Year “Award-winning auto dealer” are not necessarily the first words that come to mind when one talks about our national treasure, Cape Cod. “Beaches, golf, summer vacations, ice cream, lobster rolls and clam bakes, swimming” – yes. “Dealer of the Year”? Uh, maybe not so much.

Well, that is about to change. This year, Tom Murphy of Falmouth Toyota will be walking onto the stage next month at NADA Show 2024 in Las Vegas – the 107th edition of the national convention – as the Massachusetts TIME Dealer of the Year (TDOY). Tom will join 48 of his fellow dealers from around the country to vie for the national honor.

The winner will succeed our very own Gary Rome of Gary Rome Hyundai in Holyoke, who received the national title in Dallas a year ago.

The TIME Dealer of the Year award is one of the automobile industry’s most prestigious and highly coveted honors. The award recognizes the nation’s most successful auto dealers who also demonstrate a long-standing commitment to community service. Murphy was chosen to represent the Massachusetts State Automobile Dealers Association in the national competition – one of only 49 auto dealers nominated for the 55th annual award from more than 16,000 nationwide.

“For decades, Falmouth Toyota has set a standard for honesty and integrity, winning top honors in customer satisfaction both regionally and nationally many times over,” Murphy said. “We could not have done any of it without our amazing customers and so many great employees we’ve had the privilege to work with throughout the years.”

Murphy is a 1957 graduate of Framingham High School in Framingham, Massachusetts. He enlisted in the United States Army in 1960 and attended the University of Massachusetts AmJANUARY 2024

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herst from 1964 to 1966 until his tuition coverage under the G.I. Bill ran out.

To pay for the rest of his college education, Murphy took a job as a lot attendant at a Dodge dealership in Natick, Massachusetts, and was soon working on the sales floor.

“I had found my calling,” he said. With a knack for selling, Murphy became sales manager and eventually general manager.

He then moved to a Volkswagen dealership in Westborough, Massachusetts, where he met Chris Bullock, who later opened a Toyota store in Hyannis on Cape Cod and asked Murphy to be his general manager.

“My family had very little money when I was growing up, but I had such happy memories of times spent on the Cape,” he said. “I took the job, and it is one of the best decisions my wife, Janet, and I ever made.”

Murphy ran the dealership for 10 years, establishing a strong reputation for honesty and integrity, before he was offered an opportunity to run a Toyota store in East Falmouth, Massachusetts, with an ownership stake and full buy-out option.

“It was truly a complete and total leap of faith,” he said. “I asked one of my sales managers to join me and, in 1982, Mike Conroy and I started at Falmouth Toyota with the mission of providing the absolute best car-buying experience possible.”

Within two years, Murphy completed the buy-out and was the sole owner. And the timing was ideal as the Toyota brand gained strength and popularity in the

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Cape Cod’s Finest 1980s. Conroy and Murphy built a loyal and growing customer base and in 1989, they moved to a larger location in Bourne but kept the Falmouth Toyota name.

“It is hard to believe Falmouth Toyota has grown and thrived in our current location for nearly 35 years,” he said. “Mike is still with me as are many other wonderful employees that have been here 20, 30, even 40 years.”

Murphy and his wife, Janet, have two sons and one daughter, Kathleen. Murphy’s two sons, Matt and Tom, have joined the family enterprise and are the next generation to carry on a legacy of outstanding customer service.

“At 85 years old, I still love coming to work every day and I still love the automobile business,” he said. “Sometimes I have to stop and reflect on my good fortune as my wife and I have truly lived the American Dream.”

Murphy works to help others achieve their own ambitions through a wide range of community initiatives. Once a caddie himself, Murphy partnered with his friend and hockey great Bobby Orr to establish a scholarship for caddies at the Ridge Club in Sandwich, Massachusetts. The scholarship is administered through the Francis Ouimet Scholarship Fund, which provides need-based college scholarships to young men and women who work at Massachusetts golf courses.

For the Massachusetts Maritime Academy (MMA) in nearby Buzzards Bay, Murphy created the Falmouth Toyota scholarship fund, which provides financial assistance to incoming freshmen with diverse and/or low-income backgrounds.

“With some of the highest graduation rates in the nation, MMA’s rigorous and challenging curriculum results in graduates that enjoy success worldwide in an array of fields,” he said. “We

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HONORING ON OF CAPE COD’S FINEST

are so proud to be affiliated with an institution that is such a beacon in challenging times.”

He also supports the Robert G. Ahern Scholarship Trust Fund that awards scholarships to students whose parents or legal guardians are employees of New England Toyota dealerships.

Murphy never forgets his roots and the struggles he faced as a child, including food insecurity. To that end, his dealership has supported food pantries for decades. For several years Murphy has been a very strong supporter of Habitat for Humanity Cape Cod as he personally identifies with their mission of community-building through hard work and self-reliance.

“For more than 20 years, we have donated over 200 turkeys JANUARY 2024

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annually at Thanksgiving and Christmas to the food pantries in the towns of Bourne, Falmouth, and Sandwich,” he said. “In addition, we contribute financially to these same organizations monthly and annually so that their amazing volunteers can continue their incredible work in the community.”

Dealers are nominated by the executives of state and metro dealer associations around the country. A panel of faculty members from the Tauber Institute for Global Operations at the University of Michigan will select one finalist from each of the four NADA regions and one national Dealer of the Year. Three finalists will receive $5,000 for their favorite charities, and the winner will receive $10,000 to give to charity, donated by Ally.

MSADA In its 13th year as exclusive sponsor, Ally also will recognize dealer nominees and their community efforts by contributing $1,000 to each nominee’s 501(c)3 charity of choice. Nominees will be recognized on AllyDealerHeroes.com, which highlights the philanthropic contributions and achievements of TIME Dealer of the Year nominees.

“At TIME, we are proud to uphold the decades-long tradition of honoring automotive dealers who make a positive impact and show dedication to their communities through our TIME Dealer of the Year award,” said TIME CEO Jessica Sibley. “We are excited to keep this tradition of applauding these community contributions together with our partners at Ally.”

Doug Timmerman, president of dealer financial services, Ally, said, “Auto dealers nominated for the TIME Dealer of the Year award have demonstrated an unwavering commitment to not only the industry but to their respective communities through volunteerism, sponsorships, and supporting charitable causes, no matter the market climate. Whether their clients are purchasing a first car or upgrading for a growing family, these selected dealers have successfully extended their relationships beyond the showroom and have been steadfast in driving their communities forward.”

Murphy was nominated for the TIME Dealer of the Year award

by Robert O’Koniewski, executive vice president and general counsel of the Massachusetts State Automobile Dealers Association. Murphy is now the second Cape Cod dealer in the award’s 55-year history to be so honored. MSADA nominated Jay Tracy of Tracy VW in Hyannis as TDOY in 1996.

“For decades, Tom has been a positive force for our dealer community on the Cape,” said O’Koniewski. “More importantly, those in his community always know they can depend on Tom to help out no matter what the situation. This is a well-deserved award, a long time coming. Tom’s commitment cannot be measured in dollars and cents but in heart and humanity. We are honored to have him represent all Massachusetts dealers at the ceremony in Las Vegas.” t

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NEWS

from Around the Horn

NORTHAMPTON

TommyCar Auto Group Continues with Impressive Local Efforts to Battle Cancer to Wrap Up 2023 TommyCar Auto Group, led by Carla and Tommy Cosenzi, closed out 2023 on a high note as it raised impressive funds for local efforts in the fight against cancer.

In late September, the Tom Cosenzi Driving For The Cure Charity Golf Tournament celebrated its 15th annual golf tournament, marking a significant milestone in its ongoing support for the Dana-Farber Cancer Institute. This year’s tournament raised a record-breaking $160,000.

For over a decade and a half, the charity golf tournament has stood as a beacon of hope in the Dana-Farber Cancer Institute’s

Left to Right: Carla Cosenzi, Co-Founder of Tom Cosenzi Driving For The Cure Charity Golf Tournament; Tommy Cosenzi, Co-Founder of Tom Cosenzi Driving For The Cure Charity Golf Tournament; Dr. Patrick Wen, Director of the Center for Neuro-Oncology at Dana-Farber Cancer Institute

fundraising initiatives. The annual golf tournament was started in memory of a beloved member of the community who passed away, Tom Cosenzi. He dedicated his life to making a positive impact on those around him, and his legacy of generosity and service continues to inspire those who knew him. The tournament serves as a celebration of his life, bringing together friends and family to remember his impact and raise money for neuro-oncology research at Dana-Farber Cancer Institute. Through this tournament, the memory of this exceptional person lives on, inspiring others to make a meaningful impact in their communities.

Carla Cosenzi, President and Co-owner of TommyCar Auto, expressed her gratitude, saying, “We’re deeply thankful for the incredible support at this year’s golf tournament. Our Presenting Sponsor, Volkswagen of America, along with other sponsors, volunteers, and golfers, played a pivotal role in this success.”

The charity golf tournament was held at Twin Hills Country Club. The tournament featured a raffle, silent and live auctions, JANUARY 2024

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hole-in-one contests, on the course pop-ups, live music by Noah Lis, and illusionist Yoel Spielman, adding to the excitement and enjoyment of the day.

The Tom Cosenzi Driving For The Cure Charity Golf Tournament stands as a testament to the community’s unity and determination to combat cancer. The astounding success of this year’s event sets an inspiring precedent for the continued fight against this disease.

And in December, TommyCar Auto Group announced the success of their No Shave November initiative in partnership with the Hampshire County Sheriff’s Office and Sheriff Patrick Cahillane. Together, they raised a record-breaking total of $9,826.90 to Dana-Farber Cancer Institute.

Throughout November, members of the Hampshire County Sheriff’s Office boldly embraced No Shave November, setting aside their razors to symbolize solidarity in the fight against cancer. Each participant made a $20 donation, with all proceeds directly benefiting the Tom Cosenzi Driving for the Cure Charity Golf Tournament, a key supporter of Dana-Farber Cancer Institute.

TommyCar’s commitment to community engagement extends beyond automotive services. As part of their dedication to charitable causes, the TommyCard Rewards program, an exclusive loyalty program for TommyCar Auto Group customers, played a pivotal role. Members were given the unique opportunity to contribute their rewards points (1 Point = $1) to Dana-Farber Cancer Institute.

“The unwavering support from the Hampshire County Sheriff’s Office has been instrumental in furthering our mission,” said Carla Cosenzi. “Witnessing the generosity of our community reinforces the urgency to strive for a future free from the hardships endured by those battling cancer.”

No Shave November served as a catalyst for sparking conversations, fostering cancer awareness, and mobilizing resources toward multifaceted cancer-related initiatives. It stands as a testament to the impact individuals can make by joining forces for a common cause.

The TommyCar Auto Group operates five dealerships in Western Massachusetts: Country Nissan in Hadley, and Country Hyundai, Genesis of Northampton, Northampton Volkswagen and Volvo Cars Pioneer Valley in Northampton as well as TommyCar Collision Center and TommyCar Towing.

NEWS from Around the Horn BOSTON

Village Auto Group Named One of Top Corporate Charitable Contributors in Mass.

In late 2023, The Boston Business Journal recognized the Village Automotive Group, led by President Ray Ciccolo, a past MSADA NADA director and two-time Massachusetts TIME Dealer of the Year, as one of the top corporate charitable contributors in Massachusetts for 2022. Ranked by total cash contributions paid out to Massachusetts-based charitable organizations in 2022, Village Auto Group came in at #57 in the BBJ top-100. Ciccolo’s dealer group had total Massachusetts giving of $925,893.

DEARBORN, MICHIGAN

Ford Cuts F-150 Lightning Production as EV Demand Slows As reported in Reuters Wires Service in early January, Ford Motor announced it would reduce production of its F-150 Lightning pickup truck, as demand for electric vehicles (EVs) slows. The No. 2 U.S. automaker said it would cut production at its Michigan Rouge Electric Vehicle Center to one shift starting April 1.

In October 2023, the automaker said it would temporarily cut one of three shifts at the Michigan plant that builds the electric F-150 Lightning pickup truck.

The announcement is the latest sign of softening demand for EV trucks. General Motors in October 2023 postponed the opening of a $4 billion electric truck plant in Michigan for a year. Ford told suppliers in December that it planned to produce about 1,600 F-150 Lightning EV trucks per week starting in January, roughly half of the 3,200 it previously had planned. The production cut comes at a time when Detroit automakers are protesting that the Biden Administration is going too far with proposals to use emissions rules that would result in 67% of all new vehicles in 2032 being EVs. Ford said the move impacts 1,400 workers at the plant. Roughly 700 will transfer to its Michigan Assembly Plant and others will be placed in roles at the Rouge Complex or other facilities in Michigan or take advantage of a special retirement program.

The automaker sees continued growth in global EV sales in 2024, though expects it to be “less than anticipated.” Ford said a few dozen employees could be impacted at component plants supporting F-150 Lightning production.

Ford lost an estimated $36,000 on each of the 36,000 EVs it delivered to dealers in the third quarter, the company said in October, after announcing earlier it would slow the ramp-up of money-losing EVs, shifting investment to Ford’s commercial vehicle unit and citing plans to quadruple sales of gas-electric hybrids

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over the next five years.

Legacy car manufacturers have sharpened their focus towards hybrid models over the past year as buyers snapped up more of those in place of all-electric models.

The Detroit automaker said it would add a third shift and create nearly 900 jobs at its Michigan assembly plant to increase production of Bronco SUVs and Ranger pickups.

DETROIT

GM Leads US Auto Sales as Industry Heads for Best Year Since Pandemic

General Motors edged past rival Toyota Motor to remain the top-selling automaker in the U.S. in 2023 as easing supply snags and sustained demand drive the industry to its best year since the pandemic, Reuters Wire Service reported in January. The Detroit automaker shrugged off a hit from a costly auto strike to report U.S. new vehicle sales of about 2.6 million units for 2023, up 14.1% from last year, while Toyota’s annual sales rose 6.6% to about 2.25 million vehicles.

Automakers are expected to have sold a total of about 15.5 million vehicles in the U.S. last year, the highest since 2019, and surpassing sales of nearly 13.9 million in 2022, according to figures from consultant Cox Automotive. The resurgence in sales comes after companies ramped up production to keep up with sustained demand for new vehicles in 2023, though some analysts have warned that high interest rates will take a toll on demand this year.

“High vehicle prices and high interest rates remain the industry’s Grinch right now, and that trend will continue into next year,” Cox said.

In a sign of easing demand, car dealers had to offer generous incentives and discounts in December to clear older inventory after two years of holding back on promotions.

“This is the third consecutive year in which U.S. consumers spent more than half a trillion dollars buying new vehicles,” J.D. Power said in a report last month.

Electric vehicles also grabbed a bigger share of consumer spending in 2023. Toyota reported sales of electrified vehicles, which include hybrid vehicles and all electric models, rose 30.4% to 657,327 vehicles, making up 29.2% of its overall U.S. sales.

GM sold 75,883 EVs - of which 62,045 were Bolts and 13,838 were Ultium platform EVs. GM expects the robust demand to carry over into 2024 and forecast total industry sales of 16 million units for the year. The company also said it would offer $7,500 incentives on its EVs that lost a U.S. government tax credit this week. Total U.S. EV sales are expected to be about 8% of overall auto sales in 2023, with that number rising to around 10% this year, Cox added. But analysts say high interest rates are set to hurt EV demand as well.

“Sales of EVs are likely to continue to improve, just not at the astronomical rate the industry saw in years past,” AutoForecast Solutions said in a report. www.msada.org

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NEWS from Around the Horn NANTUCKET

Penske Buys Don Allen Auto As reported in The Nantucket Inquirer and Mirror in late December, the Penske Automotive Group is acquiring Don Allen Auto Service, the island’s only car dealership, for $12.3 million, through a limited partnership affiliated with summer resident and PAG owner Roger Penske, according to a filing with the federal Securities and Exchange Commission. Roger Penske, who has owned a summer home in Pocomo since the mid-1990s, is already chairman of the board and a director of Don Allen Auto Service, according to state records, and holds a majority stake in the company.

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and NTT IndyCar Series, a high-performance motorsports engine company, and Team Penske Racing.

Don Allen sells Ford, Chrysler, Dodge, Jeep, and Ram vehicles out of four properties along Polpis Road. It also operates the island’s only car inspection station and has a fullservice department and body shop.

Tornovish quietly put the dealership up for sale in 2008, during the height of the worldwide economic downturn that hit U.S. automakers particularly hard. There was not much interest given the economic conditions, he said at the time.

Now’s the time to step away, he said.

“It’s been a long run and I’ve done a lot in my career. I’ve got other things going on in my life. I’ve got a grandson; the kids just finished a house in my back yard. I think there’s a lot of fishing in my future,” he said. “There may be other avenues down the road, but it won’t be in the car business. I have a degree in accounting.

Maybe I’ll pursue something like that. But it won’t be right away.” t

Islanders Bill Tornovish Jr. and Erik Evens currently run the business. Tornovish’s family has been involved with the company since the 1960s, when his mother Sally (Allen) was a bookkeeper and his father worked in the garage. Tornovish will retire once the sale is finalized, which is expected by mid-January. Evens, who joined Don Allen in 2012, will stay on.

“I think I’ve been coming out to this property since I was 15,” Tornovish said. “I appreciate the opportunity I was given by my family to run the place. There’s lots to look back on, the ups and downs with the economy, with the manufacturers. But here we are; we made it.”

The business will see few changes other than some upgrades, and Penske understands the importance of providing employee housing, Tornovish said. Don Allen employees will stay in the same jobs at the same pay after the transition.

“Penske prides itself on running a quality operation, and that was important to me, doing what was best for the employees,” Tornovish said. “I didn’t want to just walk away from something my family’s been involved with for so long.”

The Penske Automotive Group, which operates car dealerships around the world, is just one arm of the billionaire’s massive Penske Corp., which also includes Penske Truck Rental, carshop. com, a logistics and supply-chain management company, Penske Entertainment, which owns the Indianapolis Motor Speedway JANUARY 2024

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NEWS from Around the Horn

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ACCOUNTING

Dealership Year-End Review and Clean-up – It Is Not Too Late!

By Laura Everett CPA, Albin Randall & Bennett

The first couple weeks of January can be a blur from the time you step back in the dealership after New Year’s Day to the time you submit the December factory financial statement. There is much going on and even more to think about. You may even be feeling like you did not have the opportunity to do some needed year-end clean up. Do not worry – it is not too late!

January can prove to be a very productive month when a focus is placed on yearend cleanup and starting the new year off right. The following are some areas to encourage you moving in the right direction: • Make sure you have performed accurate bank reconciliations for all bank accounts.

Determine if you have reconciling items that need to be addressed and consider if any aged reconciling items are due to the state for abandoned property. State websites generally have good information to assist the dealership to be compliant with abandoned property requirements.

• Ask yourself, is your excess cash working for you? Are you fully utilizing your floor plan offset account? Should you pay off vehicles on the floor plan line?

Should funds be moved into a higher interest-bearing account? We recommend having 60-90 days of fixed expenses in cash. The rest of the dealership’s cash should be working for you!

• Deep cleaning of schedules will start your new year off with a clean slate.

Keep your eye out for aged receivable balances and determine if amounts are JANUARY 2024

deemed uncollectible and should be written off. Involve other department managers to research and help determine the collectability of aging trade, warranty, vehicle, and factory receivables. This is also a great time to review your process, making certain receivables are converted to cash as soon as possible.

• Have you fully reconciled your finance receivable accounts for December? This reconciliation is a must in making sure the finance receivable schedules are accurate and to highlight the necessary F&I chargebacks and other adjustments.

It is important for pay plans that F&I chargebacks and other adjustments are made in a timely manner.

• If physical inventory counts were not performed at the end of the year, we recommend getting one scheduled. Any variances resulting from the counts should be analyzed and adjustments recorded if deemed necessary. If your accounting office is not comparing the parts pad to the GL on a monthly basis and monitoring variances, this should be added to the dealership’s month-end close checklist.

• Review inventory schedules and record any final adjustments for repair order or pack balances hanging out on the schedule. Remember, this includes your work in process (WIP) schedule. Work closely with your Service Manager to determine year-end open repair orders, which will enable you to adjust WIP to an appropriate balance, if needed. This will also prompt the Service Department to clean up any open repair orders that need to be closed!

• Determine if a used vehicle write-down is necessary to more accurately reflect inventory values at the lower of cost or net realizable value. Unfortunately, this could take on more importance this year.

This is another area to review your process and make sure your sales team is

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not over-allowing on trade-ins or otherwise buying inventory at higher prices.

• The scrubbing of prepaid expense accounts is always a good idea for yearend close. These account balances often grow as a catch-all as the year goes on and the pick-up of additional expenses for the year can reduce the dealership’s taxable income. Also, make sure you are communicating and confirming to your accountant amounts the dealership paid for quarterly tax estimates as these balances often land in a prepaid account and will be needed in the preparation of the dealership’s tax return.

• Have you reported all your fixed asset additions and disposals to your accountant yet? If not, add this to your task list. Once fixed assets are fully reconciled for the year, any true-up depreciation expense adjustments can be made and any remaining tax planning can be performed. Have you reconciled construction costs to the general ledger and determined if a cost segregation study is appropriate?

• Prepare a floor plan reconciliation comparing the dealership floorplan liability balances to the floor plan finance company’s December statement. Determine if any reconciling adjustments need to be made or if there are any issues that need to be resolved. Also, be sure December floor plan interest charges have been properly accrued for. Review your process to ensure your team is getting inventory in your system so it can be sold. Also, now that interest is a bigger deal than it was previously, make certain floorplans are paid off as soon as possible.

• Accounts payable schedules and accrued liability schedules should also be deep cleaned to determine any necessary adjustments. Are there any debit balances or aged items that need to be researched?

Brainstorm with your team if there are any expenses that were incurred during

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January can prove to be a very productive month when a focus is placed on year-end cleanup and starting the new year off right. the year, but an invoice has not been received yet and get those recorded for end of year.

• The beginning of a new year is a good time to review all standard monthly entries set up in the dealership’s DMS. Make sure your prepaid amortization and accrued liability standard monthly entries are appropriately set and contact your accountant to confirm depreciation and tax accrual standard monthly entries are also appropriate.

• January is an important month to make sure certain IRS requirements are met.

Has the dealership filed and issued all required 1099 forms for interest, rent, payments to non-employees above $600, or payments to your attorneys? Remember, depending on the number of forms required to be filed, you may need to do

so electronically this year!

• Make sure all 2023 Forms 15400 or IRS approved equivalent forms are filed by January 31, 2024.

• Plan on performing a review of cash transactions over $10,000 to ensure all required 8300 forms were filed for the year and respective customers were notified of the filing. Consider building the 8300 review and customer letter filing into the dealership’s month-end checklist.

• There should be signed demonstrator agreements with all employees using a demo vehicle. Review these agreements to make sure they are up-to-date and signed. Also, to be compliant with IRS requirements, ensure employees who use a demo vehicle have had the appropriate amount of income added to their W-2. www.msada.org

We all want to start the new year off fresh with our eyes focused on the “road” in front of us. Consider taking some extra time to ensure the items noted above are in good working order. Contact us for an example of month-end and year-end checklists or to discuss your month-end and year-end closing procedures.

Our Auto Dealership Advisory Services Team is actively involved in the industry and committed to helping auto dealerships maintain effective, efficient, and compliant financial operations. We want to help you create and implement strategic accounting practices that optimize daily, monthly, and annual recordkeeping and reporting procedures. If you are ready to talk about your strategy, contact one of our dealership team members today! t

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It Is a New Year, So Set Your 2024 Resolutions By Kevin Carnes Partner, Withum kcarnes@withum. com So, 2023 has come and gone; overall, it has been another excellent year. Who would have thought that the laws of supply and demand learned in high school actually work, and how applicable they have been these past few years? That being said, we cannot expect 2024 to be the same. The supply of inventory continues to grow, and who knows what the customer demands will be? It is time to establish your 2024 resolutions now to ensure another prosperous year, and the following items can assist you in doing just that.

Take Control of Your Cash

Establish a policy that turns your profits into cash on a monthly basis. For example, if you make $100k in profit by the end of February, you should move the established portion of this profit, ideally 80% or $80k, into a separate investment account. Do this each month so the cash does not get sucked up into operations. If the profit cannot be moved, then you should know the reason (i.e., purchased fixed assets, increase in used vehicle equity, etc.).

Restructure Your Compensation Plans

It is a perfect time to roll out a new compensation plan for your staff and establish which parts of your current plans are working and which parts you should scrap.

Change can be difficult, so turn uncertainty into excitement by running a sales incentives contest among your employees along

with potential deals to offer current and prospective customers. Remember that, with anything, communication is key. An explanation for the change and its overall impact can go a long way to quelling any rancor among the staff. Plenty of pay plans have already been reworked over the last year. The professionals at your dealership are no different. Waiting too long to change this could end up costing you big dollars.

Cash Management

With the rise of interest rates over the past twenty-four months, there is a real opportunity to invest excess money. Whether you put the funds in a floorplan offset account, pay down vehicles, or even invest in CDs or Treasury bills, you must monitor the cash in the checkbooks and ensure you are investing the excess cash to take advantage of the current interest rates.

Submit for a Warranty Parts and Labor Increase

As operational expenses continue to rise, service directors should be increasing their retail door rate annually and tweaking their labor grids at the same time. The dollar value of each year’s increase should be calculated based on the year-over-year increases in technician’s pay rates, other personnel costs, operating expenses, and overhead on a cost-per-labor hour basis. Concurrently, management should be submitting for warranty labor rate increases on an annual basis. If you have not submitted for a warranty labor rate increase in over a year, the odds are your rate is much lower than it should be. Additionally, management should also analyze its warranty parts rate to ensure that it is maximizing gross profit.

We have a number of dealerships (various franchises) that have submitted for warranty parts increases multiple times and now have approved warranty parts markups over 100%, with some over 120%. Dealers should analyze their parts price matrices www.msada.org

and adjust pricing to build more profit into the most frequent mechanical repairs. We can analyze your parts and labor sales data and determine how much gross profit your dealership is missing out on. The cost of the analysis is typically recouped in just days for large dealers, 2 to 4 weeks for medium dealers, and 1 to 2 months for small dealers; by the end of next year, you will have added tens of thousands of dollars to your bottom line.

Expense Control

The increased gross in the past few years has helped mask many mistakes regarding expenses. It is now time to go back to work.

Each month, you should choose three to five line-item expenses and review the details within the account. Based upon this, determine if the expense is necessary and whether the expense should be put out to bid.

Moreover, randomly go through the bank statement and review canceled checks.

Much can come to light when you see who and how much is being paid out for each service.

Take the time to review the payroll for 2023 and note what employees were paid.

Also, if amounts appear different than what you expected, make sure to have researched the reasons why. It is not uncommon for payroll errors to be made, particularly when it comes to calculating bonuses.

It would also be beneficial to review the amount of overtime paid for 2023. Overtime continues to be an expense that goes out of control, particularly for the lower-paid employees.

As we close the books on 2023 and prepare for a successful 2024, it is time to go back to work and tighten up the belt buckle.

We all hope that 2024 will continue to be strong and profitable, but you need to get involved in making it a good year. t

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DEALER OPS

Cox Automotive’s Forecast: 2024 – A Return to Normalcy in the U.S. Auto Market For the U.S. auto market, the word that will likely sum up 2024 is “normalcy.”

Powered by the best data and keenest insights, Cox Automotive has developed five themes that offer a collective vision and valuable perspective on the road ahead for the U.S. auto industry. Running throughout the five themes is a welcome return to normalcy after four years of everything but normal, with nothing in the data suggesting surges in any direction, as the industry witnessed in 2021 and 2022.

“A decade from now, when we look back at the years immediately following the global pandemic of 2020, we’ll be awed by the dramatic swings and unprecedented circumstances the economy and auto market endured,” said Cox Automotive Chief Economist Jonathan Smoke.

“To name a few, we saw historic appreciation in vehicle values, unimagined drops in supply, and interest rates moving from all-time lows to 23-year highs at an unforgiving pace. The past four years have been chaotic, even by auto industry standards, and have shifted many normal seasonal patterns out of whack, which adds to the difficulty of forecasting what comes next.”

For 2024, the Cox Automotive Economic and Industry Insights team sees the U.S. auto market being steered by five key themes.

1. Slow Growth Ahead, But It Sure Beats a Recession.

Cox Automotive expects that the economy in 2024 will experience weak growth but will not experience a recession. High interest rates and declining inflation will likely continue, limiting consumer spending. Job and income growth may slow down. The labor market, which significantly contributes to vehicle sales in the JANUARY 2024

U.S. market, is expected to weaken. However, unemployment levels will remain low enough to support a healthy auto industry. Meanwhile, wage growth may cool in 2024 but will stay above average.

Although the possibility of higher loan rates is still on the table, the expectation is for rates to come down from record highs in the year ahead. Though the downward trend likely will not be significant, any decline will help improve vehicle affordability and relieve many households struggling financially.

Consumer debt is expected to grow slowly in 2024, while credit remains tight but stable. Consumer spending will likely slow down, but it should remain healthy enough to support constrained growth.

Overall, the economy in 2024 may not be very exciting, but that is much better than the instability of a recession.

2. Vehicle Supply Is Back, Favoring Consumers, Placing Downward Pressure on Prices.

In 2024, Cox Automotive is expecting new-vehicle inventory to rise, incentives to be higher, and discounting to increase.

New inventory is expected to reach pre-pandemic norms in 2024, with almost three million units available, or three times the amount during the chip shortage.

Days’ supply will stay healthy.

New-vehicle transaction prices are expected to decline moderately. The increase in inventory is expected to lead to higher incentives and discounts; however, we will not see incentives at the record highs reached in 2019 when discounting exceeded 10% of transaction prices and the new-vehicle market was pushed above 17 million units for a 5th consecutive year according to Kelley Blue Book counts.

Massachusetts Auto Dealer www.msada.org

Market forces will likely exert downward pressure on vehicle prices, further improving consumer affordability.

With higher supply and lower prices, new-vehicle sales in 2024 are expected to gain over 2023, but market growth will be constrained, with an increase of less than 2% expected and the market new-vehicle market reaching sales of 15.6 million sales. Retail new-vehicle sales are forecast to be mostly flat in the year ahead, with fleet sales continuing to improve, although at a pace slower than 2023.

In 2024, the used-vehicle market is expected to grow by less than 1%. The total number of used vehicles sold is expected to reach 36.2 million, with 19.2 million vehicles sold via retail channels. Certified preowned (CPO) sales are expected to reach 2.7 million units, up 3% from 2023. Limited production between 2020 and 2022 has led to a scarcity of prime, available CPO products despite strong demand.

In the wholesale market, Manheim operations are expected to experience constrained growth with a volume increase of less than 1%. While the volumes of repossessions, rentals, and off-lease vehicles are expected to increase compared to the previous year, they are still likely to remain below pre-pandemic levels. As for price patterns, we anticipate a normalization trend, and we predict that 2024 will be the first year in five where we will experience fairly normal depreciation.

3. In 2024, We Officially Bid Farewell to the Seller’s Market.

In 2024, dealerships will face the challenge of finding more efficient ways to protect their profit margins. The good news is that the margins for used vehicles and fixed operations are expected to

MSADA 33

remain relatively strong. However, sales departments for new vehicles will be challenged due to an increase in manufacturer’s suggested retail prices (MSRPs) and invoice prices – thanks to material and labor costs and a further shift to pricier models – and downward pressure on transaction prices. For many dealers, their profits will also be affected by higher floor plan costs and the need to invest in infrastructure to support the growing sales of electric vehicles. Heading into 2024, dealers are less optimistic about the future due to interest rates and weaker profits.

4. In the Electric Vehicle Market, 2024 Will Be the Year of More – More Models, More Incentives, More Discounting, More Advertising, and More Sales Muscle.

Demand for electric vehicles (EVs) is increasing, and dealers and manufacturers know that selling more EVs will require additional effort. The expectations for EV growth in the U.S. market have shifted from “rosy to reality” as sales increase, but customer acceptance of EVs isn’t keeping pace. Nevertheless, Cox Automotive expects 2024 to be the Year of More for EVs. The Cox Automotive team expects that the automobile industry will fully

acknowledge the need to convince average consumers of the benefits of electric vehicles. They also believe that many consumers may not easily be convinced.

However, with more electric vehicle models available, more incentives, more discounts, more advertising, and greater sales efforts, Cox Automotive still expects that electric vehicle sales in the U.S. will exceed the 1-million-unit record set in 2023.

Furthermore, electric vehicles, plug-in hybrids, and hybrids combined are likely to account for almost 24% of the market, with electric vehicles alone accounting for more than 10% of total sales.

Although fewer electric vehicles (EVs) may now qualify for the Inflation Reduction Act tax credits due to new guidelines, the federal incentives will still encourage consumers to purchase EVs. Furthermore, leasing of electric vehicles is expected to increase from approximately 20% to 25%.

Meanwhile, the used EV market is expected to be the fastest-growing segment of the wholesale/used-vehicle market.

5. Car Buying in America: Normal is Nice.

After four years of anything but normal, Cox Automotive expects balance to return to the U.S. auto market in 2024. This will www.msada.org

lead to more options, better deals, and easier access to online buying tools for American consumers and fleet buyers. We anticipate that 2024 will be the best year for car buyers since the pandemic.

Our research suggests that Americans are putting more emphasis on buying/ owning personal transportation, in contrast to 2018, when consumers put a higher value on “access to transportation.”

After tumbling in 2021 and 2022, satisfaction with the car buying process is expected to improve in the year ahead, thanks in part to better inventory and the return of discounting, but also from improved processes at the dealership that save time and make car buying more efficient.

Sales growth will be weak and constrained in 2024, which is a more normal state compared to the chaos of the past four years. Although the headline-making swings in economic trends are always interesting to analyze, such turbulence is rarely good news for businesses over the longer term. From the current viewpoint – and unless any unforeseeable events occur – the forecast for the automotive market in 2024 is fairly normal. This might not make headlines, but it should be a welcome relief for everyone involved. t

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DEALER OPS

MSADA MSADA

ACV Trend Report: Establishing the Four Corners for Winning at Your Dealership Every Day in 2024 It has been said that without competition, there is no progress. For automotive retail, this could not be truer. Since the dawn of the automobile, the concept of winning has been built into every transaction we complete. But how do we put ourselves on the path to greatness for EVERY point of interaction in the customer’s journey? It starts with a winning attitude.

Let’s be real for a moment. It is officially 2024. Every company, vendor, and dealership already have a playbook for success, a toolkit for achievement, or a roadmap to victory. There are probably other generic business terms that get thrown around as well, but the point is…if you want to succeed, then you’re already competitively fighting for progress.

Automotive has always been a mixture of aspiration and inspiration. To get to the next level, we need more than buzzwords.

We need practical advice based on data and leveraged by experience. From improving the customer experience to building a better program for training and development, the foundation for prosperity in the automotive industry is tenacity and determination. So, to help you win, here are four attainable cornerstones to build a winning base around.

First, you need to be strategic in how you source inventory. The days of single-point acquisition are gone. You need to diversify your approach to securing valuable vehicles and think outside the box. Competition is fierce in this regard, so the more open you are to new avenues the higher your chances of success. As it stands, physical auctions still have practical applications, but supplementing your brick-and-mortar approach with digital auctions provides you with a slew of new opportunities.

On top of that, wholesaling with a hyJANUARY 2024

brid approach allows you to integrate data into your decision-making. The days of guessing on a car only to have it not perform on your lot are dwindling. Empower your staff to secure inventory that will sell for the highest gross possible every time. Take sourcing a step further and integrate a next-generation widget to your web properties that allows you to best approach consumers for their vehicles. 2024 is the year you need to spread your wings

Coming to NADA? Find out how you can “Win with ACV” at booth #2721W and strategically scoop up the right inventory for your dealership.

Second, an important aspect of success at your used lot is how you attract, market, and acquire business. Bringing traffic to your store is about more than just running ads and hoping for the best. Instead of doing a shotgun blast, build value into your marketing materials and give the consumer what they seek. Provide educational opportunities for customers while focusing on their overall experience. A happy shopper leads to better reviews and a higher rate of referrals.

But traffic is not the “end all, be all” of success in automotive. Having people on your lot or views online doesn’t always translate to sales. So, spend time winning the SEO battle with targeted ads and thoughtful content. Go beyond using social media as a simple vehicle and con-

Massachusetts Auto Dealer www.msada.org

nect with your community to solve their problems. Get creative with your efforts and provide options for customers who are shopping in a hybrid method. There are a lot of quality solutions available to maximize your efforts, including the use of generative AI to supplement your marketing approach and automated ads to build data-rich, high-caliber ads.

However, winning the battle for sales is about offering more during every touchpoint. Whether you are attracting views online or in person, deliver an enhanced customer journey by streamlining the appraisal process with transparency. By being an honest advisor, you gain trust by solving problems for the shopper. Reduce friction and illustrate value. A vehicle is a big purchase. Therefore, treat the trade-in and sales process with the same attention that you would give to friends and family.

Lastly, to increase your overall ability to win in the used automotive market, become a student of the game. Just like your customers are learning more and more about the cars they want to purchase, trim the knowledge gap by empowering your sales team through education. Training and development will never go out of style. When your lot is filled with product experts, they will be better equipped to handle questions on any make or model.

There are tons of resources available for your dealership to win in 2024. Take the time to establish a process that works for your dealership and increase your ability to source the best vehicles, manage inventory with precise data, and sell cars at an unprecedented level. Shed light into the four corners of your dealership and build a foundation that will help you be competitive while offering the best customer experience available. t

27

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Massachusetts Auto Dealer

OCTOBER 2023

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MSADA MSADA

LEGAL

Dealers Need to Ensure They Are Complying with Copyright Law

By Tom Vangel & James Radke

Partners at Murtha Cullina LLP, (617) 457-4072

A recent copyright infringement claim made against a Texas Chevrolet dealership serves as an important reminder that dealers must make efforts to ensure that they are complying with federal copyright law.

In a lawsuit brought in the U.S. District Court for the Northern District of Texas, the owner of a copyright for a viral video sued a Texas dealership after it reposted the video to its Facebook page. The video showed a tornado hitting a Chevy truck, the truck flipping over on its side, spinning around, and then righting itself, allowing the driver to drive away. When the dealership reposted the video, it added background audio from the Chevrolet “Like a Rock” truck commercial and captioned the post “Like a Rock! Watch the red Silverado drive out of this Tornado earlier this week in Elgin, Texas.”

In its complaint, the owner of the video’s copyright alleged that the dealership violated the Copyright Act as it posted the video to “promote traffic to the car dealership” and intended to profit from the use of the video without “paying the customary price” for such commercial use. The Copyright Act gives exclusive rights to an owner of a copyrighted work, including the right to reproduce the work and the right to distribute copies of the work to the public.

In its Motion to Dismiss, the dealership alleged that the claim is precluded by the doctrine of “fair use.” Courts look at four JANUARY 2024

factors to determine whether fair use precludes a copyright infringement action: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential for or value of the copyrighted work.

In weighing these factors, the Court ruled against the dealership because it found that it stood to profit from the exploitation of the copyrighted video due to the commercial nature of the Facebook post and found that the dealership’s use of the video would undermine the copyright holder’s licensing scheme and harm the market for the video.

Many other Chevy dealers also faced lawsuits from the same company when they shared the video to their social media pages. The dealers all posted the video with captions such as, “Survive whatever life throws at you with a Chevy” and “Always Remember: Chevy’s fight tornadoes – Never seen a Ford do that. BUY A CHEVY[.]” Although the dealers merely reposted the video which had already gone viral, they were subject to copyright claims because they failed to get licenses to use the video. Many of these cases settled, likely forcing the dealers to pay significant costs to avoid further litigation.

These cases serve as an important reminder that dealers must be careful to avoid copyright infringements in connection with their social media and marketing efforts. Although Massachusetts dealers are bound by advertising regulations such as those promulgated under 940 C.M.R. 5.02, they must also comply with federal copyright law to prevent copyright infringement claims from private actors.

In terms of social media, dealers would likely not be subject to a copyright infringement claim if they merely “like” or “retweet” content that is subject to a

Massachusetts Auto Dealer www.msada.org

copyright. However, reproducing a copyrighted image or video to a social media account, even with attribution, would likely be considered infringement. Therefore, dealers should be sure to purchase licenses or obtain permission from the owner prior to posting, to prevent any possible copyright claims. As social media is increasingly being used as a tool for dealers to bring in customers, it is crucial that dealerships develop a plan to prevent copyright infringement and that they incorporate training for staff members who are in charge of marketing and social media.

Copyright issues also commonly arise with showroom entertainment such as music and movies. Under copyright laws, dealers are not able to show copyrighted movies or play copyrighted music without a license from the copyright owner.

However, dealers are permitted to play television broadcasts if the interior of the store is less than 2,000 square feet. If it is greater than 2,000 square feet, the broadcast can be shown as long as it is not from more than four screens. They also are allowed to play music from the radio if the store is less than 2,000 gross square feet of interior space. If it is greater than 2,000 square feet, the radio can still be played but cannot be done by more than six speakers.

Copyright infringement can bring significant penalties such as damages, injunctions, and fees such as attorney’s fees and court costs. To prevent such penalties, dealers should make sure that their staff is provided training on copyright law and that they obtain licenses prior to using or distributing copyrighted work. 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.

LEGAL 37

MSADA

Biden Reshapes Federal Workplace Law

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

With the next presidential election on the horizon, the Biden administration continues to issue regulations impacting all facets of workplace law. From proposed increases to the salary threshold for overtime exempt employees to making it harder to hire independent contractors, the Biden administration has been busy. Here are just a few of the initiatives making their way through the bureaucracy in Washington and how they may impact your operations.

ployee, especially since the white-collar exemptions require a certain level of supervisory responsibility or discretion and independent judgment. Oftentimes, exempt employees like the flexibility that comes with being salaried, and they do not want to track and record their hours worked.

Managers who will now have to clock in and out with their direct reports may be particularly sensitive to this change.

Overtime Salary Threshold

Independent Contractor Classification

In August 2023, the U.S. Department of Labor announced it intends to raise the exempt salary threshold from $684 per week to $1,059, meaning employees would need to earn $55,068 or more per year to be exempt from OT pay – a change the agency says would impact 3.6 million workers.

The proposed rule would also increase the salary threshold automatically based on inflation every three years and increase the threshold for the “highly compensated employee” exemption to $143,988 (from the current threshold of $107,432). While this rule is not yet effective, we anticipate it to be finalized in the coming months.

How can you best prepare for the pending changes? It is a good idea to start by creating a list of your exempt employees who currently earn between $35,568 and $55,068 a year. When the rule is finalized, you will have to decide whether to raise their salary to meet the new threshold or convert them to non-exempt status. Additionally, you may want to start tracking their actual hours worked now to help you understand the potential impact of converting to non-exempt status and to make an informed decision when the time comes.

For many employers, it may not be possible to simply raise every affected employee’s salary to the new threshold. But reclassifying employees to non-exempt could have a negative impact on morale.

Many employees associate prestige with being classified as an exempt-salaried em-

Earlier this month, the Department of Labor finalized its revision of the standards used to determine whether a worker is an independent contractor or an employee. The new rule will reinstate a more complex analysis focusing on the “totality of the circumstances” to determine whether a worker is an employee or independent contractor. But it will also use an employee-friendly interpretation of how each of the factors in the test should be applied – leading to more workers being classified as employees. The six factors set forth in the new rule are: • The worker’s opportunity for profit or loss depending on managerial skill; • The relative amount of investment made by the worker in comparison to investments made by the potential employer; • The permanency of the worker’s relationship with the potential employer; • The nature and degree of the potential employer’s control; • The extent to which the work performed is an integral part of the potential employer’s business; and • Whether the worker uses specialized skills indicative of business-like initiative.

Businesses that rely on the use of independent contractors are at substantial risk of having that classification challenged by the DOL or in private litigation and should proactively take steps to mitigate the risk of a misclassification. www.msada.org

Pro-Union NLRB Decisions & Regulations Late last year the National Labor Relations Board (NLRB) levied a double whammy on employers. First, the Board drastically altered the framework for most union elections and a few months later issued revised “quickie” election rules to further support their union allies. Under the Board’s Cemex decision, employers confronting union recognition demands no longer have the option of rejecting them outright in favor of secret ballot elections. Instead, employer options are now confined to: (1) Recognizing the union as exclusive bargaining representative; or (2) Promptly (i.e., within two weeks of the recognition demand) filing an “RM” petition for a secret-ballot vote to resolve the union’s claim of majority status. More importantly, however, if the Board finds an employer committed even a technical violation at any time during the union election process, it will order an employer to bargain regardless of whether the union wins or loses the election. It may even skip the election all together.

Just one day before the NLRB released this decision, it resurrected the expedited “quickie” election rule first implemented by the Obama-era NLRB. Effective December 26, 2023, this rule substantially reduces the time period between employer (or union) petitions and the ensuing representation election, thereby limiting the time employees have to gather facts on union representation. The “quickie election” rule also will preclude employers from effectively litigating the appropriateness of the appropriate bargaining unit until after the election. Combined with the Cemex decision, the Board gift-wrapped a powerful one-two punch for organized labor.

Over the coming months, we expect to see even more pro-union decisions from the NLRB, in addition to a possible non-compete ban from the Federal Trade Commission. t

Massachusetts Auto Dealer

JANUARY 2024

DECEMBER 2023

38

Patrick Manzi

NADA Senior Economist

Boyi Xu

Economist

New light-vehicle sales totaled 15.46 million units in 2023, up 12.4% from 2022. December sales finished above expectations, with the month’s SAAR reaching 15.8 million units, up 16% year-over-year and up 3.2% compared with November 2023.

Both fleet and retail sales increased in 2023. According to Wards Intelligence, new light-vehicle retail sales totaled an estimated 12.95 million units, and fleet sales totaled some 2.5 million— year-over-year increases of 9.5% and 32%, respectively.

Light trucks represented 80% of all new vehicles sold in 2023, an increase of 0.8 percentage points from 2022. Light trucks accounted for 82.3% of all new vehicles sold in December 2023, an all-time high for any month. Crossovers were once again the most popular segment in 2023, representing 47.9% of all new light vehicles sold and up 2.6 percentage points from 2022.

In 2023 battery electric vehicle (BEV) sales topped 1.1 million units for the first time and made up 7.2% of all new light vehicles sold. Sales of BEVs by franchised dealerships represented 40.1% of all BEVs sold in 2023. Sales of hybrids and plug-in hybrids (PHEVs) also grew in 2023. In 2023, 7.6% of new vehicle sales were hybrids and 1.9% of new vehicles sales were PHEVs, representing market share increases of 2 and 0.6 percentage points, respectively.

New-vehicle inventory rose steadily throughout 2023. New

JANUARY 2024

Massachusetts Auto Dealer www.msada.org

light-vehicle inventory on the ground and in transit totaled 1.7 million units at the start of the year, and by the end of December it had grown to 2.3 million units. With December’s strong sales and fewer production days due to the holidays, inventory at the end of December 2023 was down slightly compared to November 2023 but was up by 37.8% compared to December 2022. Inventory should continue to rise during the first quarter of 2024.

As inventory has increased, so has OEM incentive spending.

According to J.D. Power, average incentive spending per unit in December 2023 is forecast to total $2,458, up 90.7% year over year. J.D. Power expects the average monthly payment on a new-vehicle finance contract to be $739 in December 2023, up $9 from December 2022.

In 2024, we expect new-vehicle inventory will continue to rise, as the industry leaves the chip shortage in the rearview mirror.

High interest rates for new- and used-vehicle finance contracts will be a headwind for vehicle sales, offset somewhat by higher incentive spending by OEMs. But there is the potential for some interest rate relief later in the year if the Fed chooses to cut rates in the back half of 2024. We believe new-vehicle sales will increase slightly in 2024. Our forecast for new light-vehicle sales in 2024 is 15.9 million units. t

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www.msada.org

Massachusetts Auto Dealer

JANUARY 2024

40

AIADA Brief

MSADA MSADA

2024 Holds Opportunities for Dealers

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

Presidential election years might awaken post-traumatic stress symptoms in many Americans, but for groups like AIADA, staffed by professional Capitol Hill advocates, they are something we eagerly anticipate. The political junkies at our association headquarters look forward to all of the new faces and new opportunities an election will bring to Washington, D.C. The stakes are never as high as they are during presidential election years, and, therefore, our responsibility to our dealer members is never more serious.

In 2024, an American election will take place against the background of unsettled and sometimes contradictory EV policies, as well as strained global trade relations and increasing partisanships among both legislators and voters. Those of us in the auto industry interested in preserving and maintaining a healthy market economy have our work cut out for us. But when have we been afraid of work?

Dealers have never had the luxury of avoiding politics because they find it distasteful or offensive. Policies formed in Congress, in the White House, and at federal agencies shape our industry at every level. They influence all parts of the vehicles you sell – from drivetrains to radios – and they dictate the ways in which dealers can advertise, hire, and finance.

You cannot afford to take your eyes off of what is happening in Washington, D.C., because Washington, D.C. always has its eyes on you.

That is why dealers have AIADA and groups like us to represent your interests in Washington, D.C. In the same way you hire professionals to audit your stores, JANUARY 2024

Taking part in America’s democratic process as an advocate for your businesses is more important than ever. handle your marketing, and install your plumbing, you hire us to be your advocates on Capitol Hill. We fight for your interests and present your viewpoints in the corridors of power, so you can focus on the fundamentals of your business.

Today, as dealers once again find themselves in Washington’s political crosshairs, AIADA stands as a vigilant and engaged advocate for our industry. Currently, the federal government is grappling with how to best implement and apply tax credits for EV purchases, all in an effort to meet the EPA’s bold goal of having electric vehicles account for 67 percent of all new car sales by 2032. How is it going so far? Well, according to AIADA’s partner Cox Automotive, in January dealers had, on average, a 117-day supply of EVs on their lots, compared to 70 days for traditional vehicles. Whatever 2024 holds for EVs, the policy-making process is guaranteed to be complicated, and international nameplate dealers in particular must stand ready to protect and defend their stores.

Of course, dealers will have more to monitor than electric vehicle policy in 2024. Both taxes and trade will certainly be hot button election issues. Expect

Massachusetts Auto Dealer www.msada.org

the far right and the far left to continue to beat the drum against proven, market-driven policies. AIADA will offer a powerful counterpoint to this flawed way of viewing global trade and a cheerleader for the positive impact our industry and brands have on the U.S. economy.

Taking part in America’s democratic process as an advocate for your businesses is more important than ever. That is the message from AIADA’s board this January, and that is the message you will hear repeated when we gather in Las Vegas during NADA’s annual convention to celebrate our successes, discuss the challenges that lie ahead, and welcome our 2024 chairman, Anthony Brownlee, to the head of our organization.

As we continue to work on important federal issues impacting dealers, I urge you to keep an eye out for the Winter issue of our AutoDealer magazine, make sure you are subscribed to our e-publications and mailing lists through www.

AIADA.org, and ensure your AIADA membership status is up to date. The year ahead is certain to be an eventful one, and we all must work together to ensure our industry comes out ahead. t

39 37

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SIGN UP TODAY www.msada.org

Massachusetts Auto Dealer

DECEMBER 2023

42

TRUCK CORNER

All Set for ATD Show 2024

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.

JANUARY 2024

The schedule is set, and the flights and rooms are booked. I look forward to seeing all of you February 1-4 in Las Vegas for the 2024 edition of our ATD Show.

In addition to our socializing and attending linemake meetings, we have a comprehensive education lineup scheduled.

Industry leaders, dealers, manufacturers, and other key players will convene at our ATD Show to learn the latest tools, tactics, and trends, and make important connections in the dynamic, collaborative atmosphere only ATD can provide.

Our workshops focus on “Driving the Future.”

ATD Show 2024 will support the dealerships of tomorrow, by teaching dealers how to hire the best personnel, grow existing talent, stay on top of what consumers need and want, and how to stay ahead of trends that affect their businesses.

Attendees can chart their own course or follow a track tailored to their role and interests, among: • Business Essentials and Innovations: Identify vital information impacting your dealership’s operations and explore the latest innovations crucial to your organization’s continued success.

• Human Capital: Discover proven strategies for hiring and retaining exceptional staff, enhancing dealership culture, and fostering diversity and inclusion.

• Leadership: Learn how to train and nurture teams that will propel your business to the next level of success.

• Marketing and Digital: Stay ahead of the curve with the latest marketing strategies and insights into maximizing your dealership’s presence in the ever-evolving world of digital retailing.

The full lineup of workshops includes: • Improving Dealership Performance Through Workflow and Technology Integration • Thinking about passing along credit card fees to your customers? Get the facts!

• Entry-level techs are ready to work. Are you ready for them?

• Advancing the Truck Dealer Public Policy Agenda Attendees can engage in peer-to-peer learning while participating in roundtable discussions to brainstorm and problem-solve among commercial truck industry peers. The ATD Exchange session topics were carefully selected based on input from early bird registrants, and the topics are: Massachusetts Auto Dealer www.msada.org

• How to Get My Fixed Operations to 115%+ • Managing Multiple Locations • Maximize New-Truck Sales Profits • Preparing for the Future of Electric Vehicles • Technician Pay, Benefits, and Retention Program • Uptime and Throughput in the Service Department ATD Show attendees also have access to NADA Show, including the welcome reception at the Sphere and NADA Main Stage speakers: • Jon Taffer: The business expert and executive producer of “Bar Rescue” will share insights on self-honesty, focusing on what truly matters, and avoiding common pitfalls.

• Danica Patrick: The former racecar driver, author, broadcaster, podcast host, and entrepreneur will inspire you with lessons learned from breaking barriers, setting records and achieving remarkable feats both on and off the track.

• Kurt Warner: The Hall of Fame quarterback and philanthropist will share his remarkable story of triumph over adversity, emphasizing the importance of faith, family, and the pursuit of dreams.

With such an extensive and diverse program, ATD Show 2024 is a must-attend event for all truck industry professionals. Gear up to enhance your leadership skills, stay informed about regulations impacting your business, understand the future of truck electrification, and be inspired by remarkable individuals, including fellow truck dealers and managers.

ATD Truck Beat: 2023 Commercial Truck Sales Reach Half a Million for First Time Since 2019 Commercial truck sales in 2023 topped half a million units for the first time since 2019. Sales totaled 507,277 in 2023, up 7.6% from 2022. Sales of medium-duty trucks reached 240,525 in 2023, up 10.8% year over year. And heavy-duty truck sales totaled 266,752 in 2023, an increase of 5% from 2022. Sales of heavy-duty trucks slowed this December compared with a year earlier, with Class 8 truck sales dropping by 19.8%.

According to ACT Research, Class 8 orders in December ended the fourth quarter totaling 26,500, a decline of 12.5% year over year. Class 8 orders cooled in December following a solid month for them in November, when they posted their strongest year-over-year gain since October 2022. Despite recent weakness in freight market orders, truck buyers

MSADA 43 appear to be somewhat confident in the year ahead and continue to replace aging equipment even if those replacement rates will be a bit below 2023’s stellar performance.

Now that new-truck production has recovered, prices for used Class 8 equipment have returned to a more normal level. According to ACT Research, the average retail price of a Class 8 truck sold in November 2022 was $59,292, down 6.2% from October 2023 and off a whopping 27.4% compared with November 2022’s average retail price of $81,657. November’s average sale price was the first average price below $60,000 since April 2021, ACT Research says.

For 2024, we do not expect another year of a half-million-plus commercial truck sales. Headwinds for the industry include high interest rates, declining truckload rates and new regulations in California that will severely limit California truck dealers’ ability to sell new Class 8 trucks. Our forecast is for medium-duty truck sales to increase slightly to some 248,000 units, while Class 8 truck sales will likely decline some 20% to around 213,000 units.

Three Transportation Technology Trends from CES 2024 HDT News, Jack Roberts CES, formerly known as the world-famous Consumer Electronics Show, is a lot to take in. It’s impossible to see everything at the show, which sprawls over almost the entire, massive, Las Vegas Convention Center complex. Nonetheless, CES is the place to see the latest and greatest tech trends for any market segment or industry you can think of. Transportation is no exception.

Although CES isn’t an automotive-focused show, it is still a great place to get a sense of the overall trends shaping both trucking and passenger car markets. This year’s show was no exception.

Here are a few emerging trends from CES 2024 that I think OEMs, suppliers, and fleets ought to pay attention to. In my opinion, these are major technology developments that will be shaping commercial vehicle design, use, and operation in the coming years.

1. Software-Defined Vehicles – But Whose Software?

Last year from CES I reported that the rise of the Software-Defined Vehicle was imminent. And that’s still true.

Really, the concept of the “software-defined vehicle” makes perfect evolutionary sense from a technology point of view. Software and computing systems dominate every other facet of our lives, and motor vehicles aren’t going to be an exception. Cars and trucks are well on their way to becoming rolling computers.

OEMs and outside suppliers are hard at work developing new apps and special computing programs designed to heighten safety and increase comfort for drivers and passengers alike.

But there are already problems with this new software push.

The average passenger car today depends on more than 10 million lines of computer code to operate its various systems. More often than not, these codes are written by multiple suppliers. The brake

supplier writes the code for the brakes. The engine supplier writes the code for the engine. The transmission supplier writes the code for the AMT. And so on.

Figuring out how to get all of these codes to work smoothly together without some sort of common, open-source, baseline operating code is already starting to be a problem. The Chevrolet Blazer EV has already become a poster child for this challenge, with a litany of highly publicized software issues plaguing the vehicle.

There’s another issue as well: The OEMs have been eying the airlines’ business model and really like the idea of having the people who buy their vehicles paying monthly subscription fees for “add-on” features, ranging from heated seats to any number of apps performing any number of services. But it remains to be seen if the people who purchase those vehicles will be as enthusiastic about paying subscriptions for all of those features as OEMs hope they will be.

2. Mandatory Driver and Passenger Monitoring Systems are Coming Beginning this year, every vehicle sold in Europe is required to have interior camera systems that monitor driver behavior. The U.S. is considering enacting similar regulations.

Obviously, the trucking industry has already dealt with this issue on a voluntary basis, driven by the need to reduce crashes, lower insurance costs, and minimize the threat of nuclear verdicts.

We understand well how unpopular those systems can be with commercial drivers. But it seems like this is something very likely to become a regulatory reality fairly soon.

Not surprisingly, several automotive suppliers at CES 2024 this year, notably Bosch and Continental, introduced new in-vehicle camera and radar systems to monitor both drivers and passengers.

These systems use AI to make sure the driver is not sleepy, intoxicated, ill, impaired, or distracted and that passengers are behaving reasonably.

These sophisticated systems can even identify objects inside the vehicle such as smartphones or laptops. Bosch has augmented its camera monitoring system with an in-cabin radar system that can detect objects out of the line of sight of the cameras. These radars are sensitive enough to pick up respiratory patterns in the air emitted by unattended children covered by blankets or pets asleep in the floorboard.

This technology seems poised for rapid growth and is certainly worth watching.

3. Get Ready for a Whole New Driver-Vehicle Interface Just like it was only a matter of time before software became the dominant design/operational system for cars and trucks, we’re frankly overdue for a complete reworking of how drivers and passengers get information while they’re driving or riding in a vehicle.

True, there are a lot more bells and whistles and display screens in modern vehicles. But for the most part, the dashboard and inwww.msada.org

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TRUCK CORNER teriors look a lot like they did 50 or 60 years ago. But that’s about to change.

Very soon, modern graphics and touch-pad interfaces, combined with new window coatings, lighting and interiors, are going to completely transform every aspect of a vehicle’s interior and how drivers get information from the vehicle itself, its immediate surroundings, and the outside world.

Several technology suppliers at CES 2024 demonstrated brandnew dashboards that bring modern computing icons, graphics, and information into the vehicle in a truly stunning way.

AUO, a Taiwanese computer graphics and display company, showed me a compelling suite of all-new display systems that allow real-time information, including navigation prompts and danger alerts, to be flashed onto the windshield in front of the driver.

All this in addition to new, completely customizable dashboards and control systems for vehicle functions.

With the AUO system, passengers can receive descriptions of landmarks, or even advertisements or special offers from buildings and businesses they drive past translucently displayed on the vehicle’s side windows.

And, significantly for commercial vehicles, those window display screens work both ways. So, a truck driver using AUO vehicle display systems can get a see-through message flashed on the front windshield above the steering wheel directing them to their assigned loading dock to make a delivery. At the same time, a QR code with information on the shipment and the cargo could be flashed on the outside windshield to be scanned by a dock worker and expedite the shipment onward to its final destination. The same interactive system, tied in with the truck’s telematics system, could display a maintenance checklist on the side window for technicians, who could then tick off the work performed right on that window/computer screen.

How and when these new technologies will begin to show up on new vehicles remains to be seen. But it is obvious that all three have tremendous potential to transform fleet operations if implemented successfully.

Now Open: 2024 ATD Dealership Workforce Study The Commercial Truck dealership-focused Dealership Workforce Study returns in 2024. Last year, the study had record participation and we expect to see even greater participation this year.

Participation is key to the value of the data produced from this study and we greatly appreciate members who take the time to participate. Registration deadline is March 29, 2024.

Participation in the study will enable you to make informed decisions on pay plans; take steps to reduce turnover and retain your best employees; and know the demographic issues facing your dealership.

There is no cost to participate. Once you enroll you will receive an email with instructions to complete an online benefits questionnaire and complete the payroll file. All responses and data are confidential.

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MSADA Go to this link to register: https://www.atdworkforcestudy.com/.

You will need the NADA Member ID number for your single store or Dealer Group to enroll. If you do not have this NADA Member ID number, please contact NADA Customer Service at (800) 5576232.

Participation is the only way for you to receive: • Complimentary custom report comparing your dealership against aggregated data from your peers across the nation and region, right down to dealerships selling your brand in your state.

• Complimentary National & Regional Trends in Compensation, Benefits & Retention Report with analysis of workforce data across the nation and by region.

• EXCLUSIVE one year access to the DWS Database Search Tool: An online based customizable search tool with archived tenure and compensation data from all NADA Dealership Workforce Studies for over 60 positions!

This is the only authoritative and comprehensive examination of commercial truck dealership employee compensation, benefits, turnover, retention, demographics, hiring trends, hours of operation and more. This study provides the latest workforce trends nationally and regionally. In addition, you can also see data across various sales volume ranges from low and high-volume stores.

7 Impacts Commercial Truck Dealers Had on Their Communities America’s commercial truck dealers sell BIG trucks and move the goods that keep our country running, but they also play a BIG role in their communities. Like their customers, truck dealers have strong roots and commitments to their hometowns and states.

They show their loyalty and appreciation through philanthropy efforts to their local nonprofits, schools and hospitals.

Below are just a few examples of truck dealerships’ philanthropic initiatives in 2023: • Contribution of office space to technical student organization (Advantage Truck Group, Raynham, Mass.)

• Donation of a Ram 5500 truck to the nonprofit First Response Emergency Medical Services (Chrysler, Jeep, Dodge and Ram Dealers Association, San Juan, Puerto Rico) • Donation and delivery of thousands of meals to food pantries (Advantage Truck Group, Shrewsbury, Mass.)

• Gift of school supplies and backpacks to the Boys and Girls Club (Affinity Truck Center, Bakersfield, Calif.)

• Fundraising raffle, contributing more than $10,000 to children’s hospitals in Wisconsin and Michigan (The McCoy Group, Dubuque, Iowa) • Partnership with high school and trade school technician programs (Hunter Truck Sales, Pittsburgh, Pa.) • Sponsor of charity cart race benefitting local nonprofits (Advantage Truck Group, Cape Cod, Mass.)

ATD is thankful for the generosity of our truck dealers who give so much to their communities. t

NADA Update

MSADA

Vegas Ready Dealerships with energy performance scores of 75 and higher will be eligible to earn the ENERGY STAR designation and will receive a certificate of achievement.

Want to Learn More? Go to www.energystar.gov.

Scott Dube, Partner at McGovern Hyundai Rt. 93, represents NADA’s Massachusetts members on the NADA Board of Directors.

He can be reached at sdube@ mcgovernauto.com.

As we go to press, the NADA staff are putting the final touches on the 2024 NADA Show coming up in Las Vegas on February 1-4.

Having been a past Show chairman the last time we were in Vegas, I know firsthand all that goes into making this a smooth and successful event for almost 20,000 attendees.

NADA Show staff do not receive enough credit for ensuring these multi-day events go off without a hitch. Guest speakers on the Stage, hundreds of workshops, Sphere welcome party, coordinating all the vendors and their exhibit spaces, and securing and filling thousands of hotel rooms – the work is endless and thankless. And as soon as our staff all finish and close up shop, preparation will begin for New Orleans 2025.

I look forward to seeing you all next month. Wishing you safe travels and great success at Show 2024.

Can My Dealership Be ENERGY STAR Certified?

The short answer is yes! Through NADA’s partnership with the Environmental Protection Agency’s (EPA), dealers are now eligible to apply for ENERGY STAR certification.

ENERGY STAR helps building owners and managers determine the most cost-effective approach to managing their energy use, enabling dealerships to save energy and money and boost competitiveness. For buildings, eligibility for ENERGY STAR certification means a dealership performs more efficiently than 75% of similar buildings nationwide.

Thanks to dealers across the country who completed preliminary energy surveys, NADA and the EPA have been able to create an ENERGY STAR certification baseline for franchised dealerships. Now all dealers can apply to receive certification and earn recognition for their efforts to save energy, save money, and help protect the environment.

How Do I Get Started? Dealerships can apply for certification using the ENERGY STAR Portfolio Manager tool, which provides dealers with a 1 to 100 score on their energy use.

NY Auto Forum, March 26, 2024 – Register Today The Annual Automotive Forum returns to NYC on March 26, 2024. Hosted by J.D. Power, NADA, and the New York International Auto Show, the Automotive Forum will discuss how current industry and economic conditions will shape the future of the automotive market. The Automotive Forum offers a mixture of keynote addresses and panels featuring OEMs, retailers, and industry experts who are spearheading change in this dynamic industry. Preceding the New York International Auto Show, this must-attend, one-day event will bring together influential industry leaders to address some of the most significant challenges that have recently impacted the automotive market. They will tackle a variety of pressing topics regarding data and analytics, modern retailing, production and inventory, and exclusive OEM content. Early-bird pricing of $695 is available through February 16. One can register at: www.autoforumny.com/website/19502/home-2024/.

6 Top Direct-to-Consumer Marketing Platforms for Car Dealerships (ChatGPT) Following are the top direct-to-consumer marketing platforms for auto retail, according to ChatGPT: 1. Facebook Ads: Facebook is one of the largest social media platforms in the world, making it an attractive option for car dealerships looking to reach a large audience. Facebook Ads can be highly targeted based on demographics, interests, and behaviors. Pros: High audience reach, ability to target specific demographics, relatively low cost. Cons: Can be difficult to create effective ads, may not be as effective for highend vehicles.

2. Google Ads: Google is the most popular search engine in the world, making it a powerful platform for car dealerships looking to reach customers who are actively searching for cars online. Google Ads can be highly targeted based on keywords and search intent. Pros: High visibility for searchers actively looking for cars, ability to target specific keywords, can be highly effective for high-end vehicles. Cons: Can be expensive, highly competitive, and requires significant expertise to manage effectively.

3. Instagram Ads: Instagram is a highly visual social media www.msada.org

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NADA Update platform that is popular among younger audiences, making it a great option for car dealerships looking to reach millennial and Gen Z buyers. Instagram Ads can be highly targeted based on demographics, interests, and behaviors. Pros: Highly visual platform that can showcase cars effectively, ability to target specific demographics, relatively low cost.

Cons: May not be as effective for high-end vehicles, can be difficult to create effective ads.

4. YouTube Ads: YouTube is the second-largest search engine in the world and is owned by Google, making it a powerful platform for car dealerships looking to reach a large audience. YouTube Ads can be highly targeted based on demographics, interests, and behaviors. Pros: Highly visual platform that can showcase cars effectively, ability to target specific demographics, can be highly effective for high-end vehicles. Cons: Can be expensive, requires significant expertise to manage effectively.

5. LinkedIn Ads: LinkedIn is a professional networking platform that can be effective for car dealerships looking to reach business professionals and corporate buyers. LinkedIn Ads can be highly targeted based on job title, company size, and industry. Pros: Highly targeted platform for reaching business professionals, can be effective for high-end vehicles.

Cons: Relatively low audience reach, can be expensive.

6. TikTok Ads: TikTok is a fast-growing social media platform that is popular among younger audiences, making it a great option for car dealerships looking to reach millennial and Gen Z buyers. TikTok Ads can be highly targeted based on demographics and interests. Pros: Highly engaging and entertaining platform that can showcase cars effectively, ability to target specific demographics, relatively low cost. Cons: May not be as effective for high-end vehicles, can be difficult to create effective ads.

Ultimately, the best direct-to-consumer marketing platform for a car dealership will depend on their specific audience and marketing goals. A comprehensive marketing strategy may include a combination of several different platforms in order to reach the widest possible audience.

US Electric Vehicle Sales Growth Slowed in Latest Quarter (Bloomberg News) Electric vehicle sales in the US grew by just 1.3% in the final months of 2023, the latest sign that many American drivers remain cautious about making the leap to battery-powered cars.

A total of 317,168 EVs were sold in the fourth quarter, up from 313,086 in the prior three months, researcher Cox Automotive said in a post on its website, citing data from Kelley Blue Book. The growth marked a deceleration from sequential gains of about 5% in the third quarter and 15% in JANUARY 2024

MSADA the April-through-June period.

Sales still hit a record both for the last quarter and full year, helped by price cuts from market leader Tesla Inc. and a greater variety of EV models available. But slowing growth has contributed to Tesla and competitors Ford Motor Co. and General Motors Co. deciding to throttle the pace of investment in factories that will make all-electric vehicles.

“While records were set, the oft-reported slowdown is real,” Cox said in its analysis. “The EV market in the US is still growing, but not growing as fast.”

EVs made up 7.6% of the US market in 2023, up from 5.9% in 2022, Cox said. The biggest problem remains price.

“While records were set, the oft-reported [EV] slowdown is real.”

Even though Tesla slashed prices for its cars starting in January of 2023, only two models start below $40,000: Nissan Motor Co.’s Leaf and GM’s Chevrolet Bolt. The Chevy model went out of production in December. The average new EV sold for $50,789, which is about $2,000 more than the average gasoline-powered vehicle. While fully electric vehicles will continue to find a following among American buyers, Cox predicts the trendline is likely to be bumpy.

“EV growth will continue to slow, and in the year ahead, we may even report the first quarter-over-quarter sales decline in more than three years,” it said.

US EPA Reviewing California 2035 Electric Vehicle Sales Mandate Plan (Reuters) The U.S. environmental regulatory agency held a hearing in mid-January on whether to approve California’s plan to require all new vehicles sold in the state by 2035 to be electric or plug-in electric hybrids.

The California Air Resources Board (CARB) in August 2022 approved the landmark plan to end the sale of gasoline-only vehicles in the state by 2035. In May 2023, CARB asked the U.S. Environmental Protection Agency (EPA) to approve a waiver under the Clean Air Act allowing the plan to proceed. EPA held a January 10 public hearing and will take written comments through February 27 on California’s request.

CARB said it appreciated EPA scheduling the hearing to consider its request. California’s rules set yearly rising zero emission vehicle requirements starting in 2026, which have been adopted by at least 12 other states. President Joe Biden’s administration has repeatedly refused to endorse setting a date to phase out the sale of gasoline-only vehicles.

Massachusetts Auto Dealer www.msada.org

MSADA Under a separate EPA proposal released in April to drastically cut vehicle emissions through 2032, automakers are forecast to produce 60% EVs by 2030 and 67% by 2032 to meet requirements. Automakers have urged the administration to soften its proposal, which is expected to be finalized in the coming months.

In December, the Republican-led U.S. House of Representatives voted to bar EPA from moving forward with emissions regulations. The White House immediately threatened a veto of that proposal. Former President Donald Trump, who is seeking the Republican nomination to challenge Biden in 2024, has vowed to reverse the EV rules.

According to CARB, California’s zero-emission rules will cut smog-causing pollution from light-duty vehicles by 25% by 2037. The rules mandate 35% of the new cars sold be plug-in hybrid electric (PHEV), EVs or hydrogen fuel cell by 2026. That proportion will rise to 68% by 2030 and 100% by 2035. The California waiver request says through 2040, California’s zero emission rules will cost $210.35 billion but have total benefits of $301.41 billion. CARB’s rules allow automakers to sell up to 20% PHEVs by 2035.

Fisker Leans on Dealerships to Boost EV Sales (Reuters) Electric vehicle company Fisker said this month that it would add dealerships alongside its direct-to-customer distribution model to expand its sales and delivery network.

The California-based company, which sells its vehicles across the United States and Canada apart from other markets in Europe, has only two showrooms or Fisker Lounges in North America – one in Los Angeles and the other in New York. In other locations, it has retail stores called Fisker Center+. Fisker said, in Europe, it will continue to offer direct sales but will bring onboard partners for sales and distribution.

While the EV startup made more than 10,000 vehicles in 2023, it delivered only about 4,700 units of the Ocean sport utility vehicles due to distribution constraints.

“We are evolving our business model and intend to add as many as 50 dealer partners in the US and Canada and a similar number of dealer locations in Europe this year,” CEO Henrik Fisker said.

The company expects to send its first Ocean vehicles to new dealers by the end of the first quarter, Fisker said, adding that it has been in talks with dealer partners since November 2023.

Lucid, Rivian, and Fisker have followed an online and direct-to-consumer model that was started by Elon Musk-led Tesla, in their efforts to cut out middlemen that dealership models have.

Earlier this month, Vietnamese electric car maker VinFast

Auto said that it had signed its first five dealerships in Texas, New York, Kansas, and North Carolina. Swedish EV maker Polestar also uses a dealership model.

FTC Delays Effective Date of Vehicle Shopping Rule On January 18, in response to the petition for judicial review sought by NADA and the Texas Automobile Dealers Association (TADA), the Federal Trade Commission (FTC) issued an Order postponing the July 30, 2024, effective date of the Vehicle Shopping Rule pending judicial review of the petition. The FTC’s order notes that “it is in the interests of justice to stay the effective date of the rule to allow for judicial review.”

In response to the FTC’s action, NADA released the following statement by its President and CEO Mike Stanton: “We are pleased that the FTC has determined that ‘it is in the interests of justice to stay the effective date of the rule to allow for judicial review.’ We continue to believe the rule is unnecessary, redundant, confusing, and will needlessly lengthen the car sales process for consumers. The FTC failed to demonstrate the need for the rule and has not tested the effectiveness of its mandates with consumers. NADA will continue to advocate in the courts and in Congress to keep this ill-conceived rule from taking effect.”

While this action does not revoke or otherwise affect the rule’s requirements, it does mean that the previously announced effective date of July 30, 2024, is no longer the effective date for the Vehicle Shopping Rule.

On January 4, 2024, NADA and TADA filed a Petition for Review of the Vehicle Shopping Rule in the United States Court of Appeals for the Fifth Circuit, challenging the rule on the basis that it is “arbitrary, capricious, an abuse of discretion, without observance of procedure required by law, or otherwise not in accordance with law.” Subsequently, on January 8, 2024, NADA and TADA filed a motion with the Fifth Circuit seeking a stay of the rule and expedited consideration of the Petition for Review.

In addition to the judicial filing, NADA is continuing to support federal legislation to prevent the implementation and enforcement of the rule, including not only a provision in a House appropriations bill that would deny funding for enforcing the rule but also the “FTC REDO Act” (S. 3014), which requires the FTC to follow basic regulatory safeguards should the agency choose to redo the rule.

Dealers are encouraged to continue to review NADA compliance materials and take steps to understand and be prepared for the rule. Your MSADA and NADA will continue to update dealers as we learn more about timing related to compliance with the rule. t

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