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

auto M A S S A C H U S E T T S








October 2014 • Vol. 27 No. 10

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

to Power Internet Sales


auto D

S TA F F D I R E C T O R Y Robert O’Koniewski, Esq. Executive Vice President Jean Fabrizio Director of Administration Peter Brennan, Esq. Staff Attorney Marta Argueta-Guerra Administrative Assistant/ Membership Coordinator AUTO DEALER MAGAZINE Robert O’Koniewski, Esq. Executive Editor Catherine MacDonald Editorial Coordinator Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to: MSADA by e-mail: Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.

AD DIRECTORY BlumShapiro, 21 Boston Herald, 32 ConServ Group, 21 LAR, 24 Lynnway Auto Auction, 19 M&T Bank, 20 Nancy Phillips Associates, Inc., 23 O’Connor & Drew, P.C., 31 Reynolds & Reynolds, 14 Solect, 2 Southern Auto Auction, 22 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail Quarter Page: $450 Half Page: $700 Full Page: $1,400






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


4 6 9 10 11 12 15

FROM THE PRESIDENT: Get Ahead of the Game THE ROUNDUP: A Sprint to Election Season Finale TROUBLESHOOTNG: Data Breach Law and Dealer Precautions ACCOUNTING: Learn from History or Doom to Repeat It LEGAL: “So Where Are You From Originally?” AUTO OUTLOOK FINANCIAL SERVICES: Is Your Dealership Up to Speed on “Play or Pay”?

16 COVER STORY: Energy to Power Internet Sales

19 24 27

NEWS From Around the Horn NADA UPDATE: NADA’s Solution Reduces Fair Credit Risks NADA MARKET BEAT

Join us on Twitter at @MassAutoDealers

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

Massachusetts Auto Dealer OCTOBER 2014

from the PRESIDENT


by Scott Dube, MSADA President

Get Ahead of the Game It’s past time for dealers to stop fearing the Internet


“We can do more than worry about Yelp reviews. The Internet Sales 20 Group gave us a chance to show off how some of us are ahead of the curve.”

want to start by thanking all of you who joined me at the Internet Sales 20 Group event in Boston. It was a fantastic opportunity to bring our industry together and pick up more than a few new tricks in a game that’s changing every day. The biggest lesson I hope all of us took away from the IS20G was that no matter how well we’re doing, we should always be looking for new ways to redefine success. Beyond the obvious measures we’ve used to count growth for as long as the industry’s been around, we have a constantly more informed customer base walking in each day. We can do more than worry about Yelp reviews. The Internet Sales 20 Group gave us a chance to show off how some of us are ahead of the curve. My congratulations to all our Massachusetts dealerships who showed their mettle in competitions ranging from SEO to social media. For those of you who didn’t join us, make sure to check out this month’s cover story and the full report on The next event will be held in May in New York City, and I encourage you to join me there. We will work on getting another one here in the Boston area next year as well.

Vote As Massachusetts heads into the final days of its governor election cycle, it’s a good time to remind ourselves and others that the policies being debated between Martha Coakley and Charlie Baker affect us directly in more ways than most realize. OCTOBER 2014

Massachusetts Auto Dealer

It’s important to remember that if we don’t use our ability to advocate for ourselves, someone else will always be ready to step in to fill that void, usually to our detriment. So as you head to the voting booth, please remember that now is a great time to remind your legislators in your hometown and in Boston that you are paying attention. Invite them to your dealership. Let them know how your business is doing and how their decisions are impacting you every day. If you haven’t already given this year, I encourage you to donate to our state Political Action Committee. It’s an important way to keep our needs from being shoved off the table on Beacon Hill. It’s the easiest way to contribute to our grassroots effort to keep our legislators informed, and it takes only a few minutes. Contact Executive Vice President Robert O’Koniewski at (617) 451-1051 or

Preparations for Preview Night Keep an eye out for information about the date of our next New England International Auto Show Charity Gala. Bob O’Koniewski and the MSADA staff are planning a fantastic event, and I encourage all of our Associate Members to get in touch with Bob or Jean Fabrizio for information about sponsorship opportunities. Jean can be reached at (617) 451-1051 or by email at



A ssociate M ember D irectory Name

MSADA BOARD Barnstable County

Gary Beard, Dick Beard Chevrolet

Berkshire County

Brian Bedard, Bedard Brothers Auto Sales

Bristol County

Richard Mastria, Mastria Auto Group

Essex County

William DeLuca III, Woodworth Motors John Hartman, Ira Motor Group

Franklin County

Jay Dillon, Dillon Chevrolet

Hampden County

Jack Sarat, Jr., Sarat Ford

Hampshire County

Bryan Burke, Burke Chevrolet

Middlesex County

Chris Connolly, Jr., Herb Connolly Motors Scott Dube, Bill Dube Hyundai Frank Hanenberger, MetroWest Subaru

Norfolk County

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

Plymouth County

Christine Alicandro, Marty’s Buick GMC Isuzu

Suffolk County

Robert Boch, Expressway Toyota

Worcester County

Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto

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

Immediate Past President James G. Boyle, Tuck’s Trucks

NADA Director

Don Sudbay, Jr., Sudbay Motors


President, Scott Dube Vice President, Chris Connolly, Jr. Treasurer, Jack Madden, Jr. Clerk, Charles Tufankjian

Contact Telephone

ADESA Boston Chris Carli (508) 270-5403 ADP Dealer Services Maria Trezza (973) 404-4466 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Tom Trudell (413) 885-5477 AutoAlert Don Corinna (949) 398-7008 AutoRaptor (RAL) Howard L. Leavitt (401) 421-6533 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000 Boston Globe Mary Kelly (617) 929-8373 The Boston Business Advisory Group Paul Cuomo (781) 681-1501 Vincent Saccone (781) 681-1519 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 Heidi Allen (312) 601-5376 CitNOW Jack Gardner (617) 221-8008 Construction Management & Builders, Inc. Kate Sullivan (781) 246-9400 CVR John Alviggi (267) 419-3261 Dealermine Inc. Karen Parmenter (800) 304-3341 x5179 DealerDOCX Brad Bass (978) 766-9000 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company Paul McGovern (781) 849-3100 EasyCare New England Inc. Mike Douglas (770) 246-9724 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance John Ballard (859) 312-9896 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gulf State Financial Services Stephanie Franklin (713) 580-3143 GW Marketing Services Gordon G. Wisbach Jr. (781) 899-8509 Huntington National Bank John J. Marchand (781) 326-0823 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 Key Bank James Q. Moretti (781) 558-5132 KPA Rob Stansbury (484) 326-9765 Leader Auto Resources, Inc. Brendan J. Murphy (518) 878-6341 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 MetroMedia Energy Timothy Teevens (800) 828-9427 Micorp Dealer Services Frank Salkovitz (508) 832-9816 Mid-State Insurance Agency James Pietro (508) 791-5566 Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000 Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 Northeast Dealer Services, Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Reflex Lighting Ping Weiner (617) 269-4510 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Marc Appel (413) 537-1336 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Schlossberg, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein Ron Masiello (508) 757-3311 Silverman Advisors, PC Scott Silverman (781) 591-2886 Solect Energy Development Kristen Brandt (781) 733-0223 Southern Auto Auction Tom Munson (860) 292-7500 Sovereign Bank Richard Anderson (401) 432-0749 Sun Trust Bank Michael Walsh (617) 345-6567 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance BethAnn Durepo (603) 490-9615 TD Bank Michael M. Lefebvre (413) 748-8272 TrueCar Pat Watson (803) 360-6094 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Windstream Rick Caruth (978) 296-0313; (413) 977-6111 Zurich American Insurance Company Steven Megee (774) 210-0092

Massachusetts Auto Dealer OCTOBER 2014



The Roundup

A Sprint to Election Season Finale by Robert O’Koniewski, Esq. MSADA Executive Vice President All State Offices Up on November 4 As we go to press, candidates across the Commonwealth are preparing their final pushes for Election Day, Tuesday, November 4. On that day, voters will have the opportunity to mark their choices for a full slate of federal and state offices, including U.S. Senator, all congressional seats, all five constitutional offices, and all 200 state senate and representative seats. Additionally, at the end of the ballot, all voters will be presented the chance to chime in on four ballot questions. As part of our democratic experiment, millions of dollars have been spent on TV and radio ads, brochures, mailings, phone calls, and get-out-thevote efforts, all designed to get one person or another elected, to give one party an edge over the other. By Wednesday, November 5, we may know who got elected, but it will be up to our collective advocacy efforts that decide where future policy directions take us at the state and federal levels. The battle for the Governor’s office has been a spirited one, pitting the current Attorney General, Democrat Martha Coakley, against Republican Charlie Baker, who carried the GOP banner four years ago, as well. Recent polling has Baker with a slight edge. The other constitutional office races are the following: • Secretary of State: Incumbent Democrat William Galvin faces Republican challenger David D’Arcangelo; • Attorney General: This seat is open, pitting Democrat Maura Healey against Republican John Miller; • Treasurer: This, too, is open, with Democrat Deborah Goldberg facing Republican Mike Heffernan; and • Auditor: Republican Patricia Saint Aubin is challenging incumbent Democrat Suzanne Bump. OCTOBER 2014

Massachusetts Auto Dealer

After winning the special election last year to complete John Kerry’s Senate term, Democrat Edward Markey is running for his first full six-year term against Republican challenger Brian Herr. Of the nine Congressional seats, two right now are considered competitive. In the Sixth Congressional District (north of Boston), Republican Richard Tisei, who narrowly lost two years ago, is facing Seth Moulton, a Salem Democrat who defeated incumbent John Tierney in the Democrat primary in September. In the Ninth Congressional District (South Shore and Cape Cod), incumbent Democrat William Keating is getting a spirited run for his money from Republican John Chapman. Both races have seen the Republican candidates with a slight polling lead. Although voters across the state will participate also in electing all 200 legislators, less than half the seats have someone challenging the sitting incumbent. Regardless of that fact, in addition to the usual Election Night surprises where incumbents get unseated, we can expect to see a number of new faces as over 30 seats are open due to retirement, death, or some other reason. Finally, there are four ballot questions for voters to consider: • Question 1 – Eliminating Gas Tax Indexing: A YES vote would eliminate the requirement that the state’s gas tax be adjusted annually based on the Consumer Price Index. A NO vote would make no change in the laws regarding the gas tax. • Question 2 – Expanding the Beverage Container Deposit Law: A YES vote would expand the state’s beverage container deposit law to require deposits on containers for all non-alcoholic, non-carbonated drinks (with some exceptions). A NO vote would make no change in the deposit law.

MSADA • Question 3 – Expanding Prohibitions on Gaming: A YES vote would prohibit casinos, any gaming establishment with slot machines, and wagering on simulcast greyhound races. A NO vote would allow the current casino gaming law to remain in place. • Question 4 – Earned Sick Time for Employees: A YES vote would put in place a law that would allow workers to earn up to 40 hours of sick time a year to take care of their own health or a family member’s health. A NO vote would make no change in the laws regarding earned sick time.

Election Day Voting Time Off On Election Day the Massachusetts voting locations will be open from 7:00 a.m. until 8:00 p.m. This may seem like a long span, but commuting times can impact a citizen’s ability to get to the polls either when they open or before they close. State law makes an accommodation for this. Under Massachusetts law (MGL Chapter 149, Section 178), an employer must give an employee up to two hours off to vote if their employee requests it. The employee does not have to be paid for this time but should be allowed a two-hour absence after the opening of the polls in the employee’s voting precinct.

OSHA Announces New Recordkeeping Rule The federal Occupational Safety and Health Administration (OSHA) recently repealed a number of industry exemptions from its mandate that employers with 11 or more employees keep a workplace injury and illness log, including one for car dealers that dates back to the 1980s. Effective January 1, 2015, car dealers must use OSHA Form 300 to record workplace injuries and illnesses. By February 1, 2016, dealers also must post an OSHA Form 300A summary of the workplace injuries and illnesses that occurred in 2015. Dealers can access an OSHA fact sheet on the rule at, as well as an online tool to train

employees on how to fill out the newly required forms, which is available at www. As a concession to our industry, the final rule contains a commitment by OSHA to review the efficacy of these changes in two years, the direct result of the National Automobile Dealer Association’s opposition to the exemption repeal, first proposed by OSHA in 2011. Overall, the new recordkeeping rule significantly expands reporting requirements for employers while also mandating the publication of the employer-provided information on the OSHA website. The new reporting requirements expand the list of severe injuries that employers must report. Employers presently must notify OSHA of all work-related fatalities and work-related hospitalizations of three or more employees within eight hours of the incident. Under the new rule, employers will be required to report all work-related fatalities, in addition to the following: all work-related inpatient hospitalizations of one or more employees; all work-related amputations; and all work-related losses of an eye. The new rule retains the requirement for reporting all work-related fatalities within eight hours of an incident, but it imposes a 24-hour reporting window for workrelated inpatient hospitalizations, amputations, and losses of an eye. All employers are subject to these reporting requirements, even those employers who are otherwise exempt from routinely keeping OSHA 300 logs. Finally, in a surprise move, OSHA announced that the fatality and injury records will be posted online on the OSHA website. Online posting was never mentioned by OSHA during the three-year rulemaking process. OSHA indicated that publishing severe injury and illness reports on the OSHA website was in part to publicly shame or “nudge” employers to take steps to prevent injuries so they are not seen as unsafe places to work. For more information on this new rule, one can visit OSHA’s webpage at www.

Michael Iovanna, RIP On Sunday, October 19, the Massachusetts new-car dealer family lost one of our more active members with the passing of Michael Iovanna of the Pride Motor Group. Michael and his passenger Chip Hincman were killed in a single car accident that evening. We wish to extend our condolences to the Iovanna family, including his wife and two children, the members of the Pride organization, and the Hincman family. See more about Michael in our News section.

2015 Auto Show, Dealer Summit & Charity Gala Circle the dates now. MSADA’s 58th edition of the New England International Auto Show will run January 15-19, 2015, at the Boston Convention and Exposition Center in South Boston. In order to celebrate our Auto Show, dealers, their families, friends, and key employees are invited to attend on Friday, January 16, our Eighteenth Annual Auto Show Charity Gala at the BCEC, from 5:00 p.m. to 10:00 p.m. The Gala benefits our Charitable Foundation’s Automotive Technician Scholarship Program. Prior to the Charity Gala we will conduct a Dealer Summit at the BCEC from 2:00 p.m. to 5:00 p.m., at which we will have several speakers discuss on-going events in our industry. Invitations have been sent out, so be sure to register as soon as possible. For member dealers and their key staff who attend the Dealer Summit, you will receive at registration two free Charity Gala tickets for each meeting attendee. Additional Charity Gala tickets can be purchased in advance for $50 each. (They will be $100 each at the door.) We urge every dealer principal in this Association to attend these events and bring your key managers with you to see first-hand what your Association is all about.

H.R. 5403 Update As we reported on these pages last month, NADA and the dealer associations across the country, including your

Massachusetts Auto Dealer OCTOBER 2014



The Roundup MSADA, have been lobbying the U.S. House of Representatives to take up legislation, H.R. 5403, to reform the process by which the Consumer Financial Protection Bureau issues guidance to lenders on auto financing activities. The bill is designed to require the CFPB to comply with a transparent process that would include public notice and participation, much like what every federal administrative agency must follow. In an effort to promote this bill, we are striving for a bi-partisan commitment from Republican and Democrat legislators. As of this writing, the bill now has co-sponsor commitments from 118 Congressmen, up from 97 last month. The break down is 72 Republicans and 46 Democrats (up from 62R, 35D). So far, Cong. Stephen Lynch (D-South Boston) is the lone Massachusetts member to commit to the bill, who did so during our meeting with him at the September Washington Conference. If you want more information about this legislation and the topic, including how to contact your Member of Congress, please email me at

MSADA Compliance Program Update We have written extensively on our new employment law/OSHA compliance program. Laws and regulations are getting more complicated every year. You can no longer gamble and try to go it alone. We urge every member to take full advantage of this program to keep our dealer body compliant with all pertinent employment and workplace rules. This program is underwritten in substantial part by your Association in order to reduce costs and encourage all of our members to take advantage of this opportunity. Since our rollout of the program in June, so far 29 dealer principals at 56 dealerships have taken advantage of this program. Are you one of them? If not, why not? The basics of this program are thus: Employment Law Compliance Program: The MSADA has worked out an arrangement with Fisher & Phillips LLP, OCTOBER 2014

the national labor and employment firm with which we have worked for years, to provide the following services to our members, at a special discounted fee. The MSADA will underwrite a portion of each member’s legal fee for participating in any portion of the program in the following manner: • If you are a single point dealer, the MSADA underwritten portion of one of the three items offered below will be $500. • If you have an anchor store and one or more affiliates, the MSADA underwritten portion of one of the three items offered below will be $500 for the anchor store and $300 per affiliate. The three Fisher & Phillips (F&P) services dealers can partake in are the following. We encourage you to utilize each service; the MSADA financial assistance, however, is only available for a single choice: 1. Pay Plan Review. F&P will review each dealership’s pay plans for all of its employees for compliance with Massachusetts and Federal wage and hour law. It will advise each dealership accordingly. The cost for this review is $1200, minus the MSADA portion of $500 (per single point/anchor)/$300 (per affiliate), for a total to you of $700/$900, if this is your selected choice. 2. Employment Handbook/Application Review. F&P will review each dealership’s employment handbook and application form for compliance with Massachusetts and Federal law and make recommendations accordingly. The cost for this review is $1200, minus the MSADA portion of $500 (per single point/anchor)/$300 (per affiliate), for a total to you of $700 (per single point/anchor)/$900 (per affiliate), if this is your selected choice. 3. Management Training and General Audit: F&P will come to your dealership to provide special training to your managers about compliance with employment laws and the risks to the managers themselves and the dealership of failing to comply with employment laws. This includes training to avoid harassment and interfer-

Massachusetts Auto Dealer

MSADA ence with employee rights on social media. In addition, F&P will meet with top management to perform a general audit of employment law compliance, such as I-9 forms and FMLA. The cost of this training and audit is $1700, minus the MSADA portion of $500 (per single point/anchor)/$300 (per affiliate), for a total to you of $1200 (per single point/anchor)/$1400 (per affiliate), if this is your selected choice. To take advantage of this opportunity, contact attorney Joe Ambash, the Boston Managing Partner of Fisher & Phillips, by phone at (617)532-9320 or by email at F&P will coordinate with MSADA to ensure that members receive the reduced fee underwritten by MSADA. Occupational/Environmental Safety Law Compliance Program: MSADA has worked out an arrangement with two workplace safety compliance firms that many dealers use presently: John Furrh Associates and KPA. MSADA will underwrite a portion of each member’s fee charged by either Furrh Associates or KPA for services rendered to your dealership(s) during the year in the following manner: • If you are a single point dealer, the MSADA underwritten portion of either’s service fee for the year will be $500. • If you have an anchor store and one or more affiliates, the MSADA underwritten portion of either’s service fee for the year will be $500 for the anchor store and $300 per affiliate. To take advantage of this opportunity and begin the process, simply contact: • At Furrh Associates – Jennie Cormier: (508)824-4939 or • At KPA – Rob Stansbury: (484)3269765 or Each company will coordinate with MSADA to ensure that members receive the reduced fee for services as underwritten by MSADA. Should you have any questions, please do not hesitate to contact me.





Data Breach Law and Dealer Precautions By Peter Brennan, Esq.

Staff Attorney, MSADA New massive data breaches hit the news every week, as the systems used by hackers become more advanced and industry struggles to keep pace. Previously, this column has addressed some of the basic elements of dealer data protection, including regulatory requirements, such as the “Safeguards Rule” and the “Privacy Rule” implemented by the passage of the Gramm-Leach-Bliley Act, as well as tips for safeguarding a dealer’s customer data when doing business with third-party service providers. As previously noted, the Federal Trade Commission (FTC) considers the mere ability of a third-party to access a customer’s nonpublic personal information (NPI) that is held by a dealer to be an offense on par with if the third party were to actually access the data. In July 2012, the FTC announced an enforcement action against a franchised automobile dealer in Georgia alleging that, as a result of the dealership’s failure to implement reasonable security measures to protect its customers’ personal information (including names, addresses, social security numbers, dates of birth, and driver’s license numbers), the personal information of 95,000 consumers was made available on a peer-to-peer (P2P) network. This hardline view will continue to allow the FTC to punish dealers for failing to safeguard customer data even if customers suffer no actual harm. However, until recently, the nation’s highest courts

had been hesitant to apply the same standard. In Clapper v. Amnesty International USA, 133 S. Ct. 1138 (2013), which dealt with the constitutionality of an amendment to the Foreign Intelligence Surveillance Act (FISA), the United States Supreme Court ruled that the plaintiffs did not have the prerequisite standing to challenge the amendment under Article III of the United States Constitution. To attain standing under Article III, plaintiffs must show (1) an injury in fact, (2) causation, and (3) redressability. In Clapper, the Court ruled that while the plaintiffs’ fears of government surveillance under the amended FISA were not necessarily unreasonable, that harm was not “certainly impending”, and that the plaintiffs’ claims therefore did not rise to the level of an “injury in fact” as required under Article III. Post-Clapper, many defendants in data breach cases seized on the decision to challenge standing where data was not properly safeguarded but plaintiffs could not show actual access or misuse by third parties. Federal courts throughout the country dismissed claims in such cases, and it appeared that the Clapper decision would prevent plaintiffs from sustaining data breach claims where a misuse of the data could not be proven. However, two federal court decisions from the state of California have stemmed the tide of Clapper dismissals and left the standing issue in data breach cases unsettled. In In re Sony Gaming Networks & Customer Data Sec. Breach Litig. (“Sony II”), the federal court for the Southern District of California affirmed an earlier decision in light of Clapper, and ruled that Clapper did not necessarily require plaintiffs in data breach cases to allege that their information was actually accessed by a third party. Instead, the Court, citing the 9th Circuit Court of Appeals decision in Krottner v. Starbucks, stated that the Clapper decision had not altered

the framework that a “credible threat of harm” that was both “real and immediate” would satisfy the injury in fact requirement of Article III standing. Correspondingly to Sony II, the federal court for the Northern District of California recently issued a decision in In re Adobe Systems Inc. Privacy Litigation, which further opened up California federal courts to claims by users who were impacted by a data breach but could not show that their personal information was accessed. In In re Adobe System, hackers infiltrated Adobe’s servers and cloud storage system and spent weeks stealing personal information belonging to 38 million customers. Judge Lucy Koh, writing for the court, distinguished the unique facts in Clapper and stated that the case did not fundamentally change the law of standing or reformulate “the familiar standing requirements of injury-in-fact, causation, and redressability.” Additionally, Judge Koh stated that the plaintiffs had standing under Article III because “the risk that Plaintiffs’ personal data will be misused by the hackers who breached Adobe’s network is immediate and very real.” Dealers should work with a data security expert to ensure that their customer’s data is properly safeguarded in compliance with state and federal law. Additionally, NADA’s sample Service Provider Dealer Data Access Addendum, available on the NADA website at dealerdata, provides dealers with excellent template language for inclusion in any future contract with a service provider.


If you require any additional information on dealer data security regulations, service provider agreements, or any other issue, please contact Robert O’Koniewski, MSADA Executive Vice President,, or Peter Brennan, MSADA Staff Attorney,, or by phone at (617) 451-1051.

Massachusetts Auto Dealer OCTOBER 2014




Learn from History or Doom to Repeat It by Mark Dow

M ark D ow , CPA, MST is a principal at O’C onnor & D rew , P.C. and has served and




twenty - five


auto over years .

can be reached

617-471-1120 at


The economy, as well as each and every business, experiences cycles. By all accounts, the auto industry is experiencing its fifth straight year of increased new car sales and could possibly see an “unprecedented” sixth straight year of increases in 2015. No one would have predicted such a run back in 2009, and this resurgence has allowed dealers to recover, then prosper, and ultimately strengthen their balance sheets. Soon enough, this upward cycle will wane, as interest rates rise and pent up demand is satisfied. So what is one to do as we move forward? Manage your business by following what the best dealers do in both the good times and the challenging times.

The Devil is in the Details First, pay close attention to the details. Ensure yourself that someone in management is very familiar with the financial and operational aspects of each department. Familiarity with the details will allow you to quickly understand how external changes will impact your results. This requires a certain discipline and persistence. Now is the time to prepare a budget for 2015; this will force you into the details. Remember, it doesn’t have to be fancy.

Cash is King

Accumulating cash is a good thing; both inside and outside of the business. Money makes money. Having the


appropriate levels of cash and working capital in the business allow you to meet factory and banking requirements, provide funding for expansion, and for taking advantage of opportunities that come your way. Be cautious with debt, even in this rather tempting interest-rate environment. While real estate and blue sky values are based on “fair market value”, debt only moves by you making cash payments!

Why It’s called “Fixed Operations”

A well-run service and parts department can be the cornerstone of a dealership. By its nature, the net income from these departments is more predictable and can cover much of the dealer-

having the right people in the right seats on the bus can make all the difference. Be sure to understand the realistic operating metrics that each department should be achieving and then work to find the right people to manage each area.

An Ounce of Prevention

These relatively good times also provide an opportunity to ensure the business is protected. There is no shortage of Federal and state agencies checking small business for various compliance matters. Amongst the most important items to have a handle on: • Wage and overtime policies are proper; • F&I regulations are followed; • Adherence to documentation for manufacturer rebates and incentives;

“Dealers are among the most entrepreneurial of all businesspeople. The communities they serve and the people they employ benefit greatly from this ‘can do’ attitude.” ships overhead. Be sure to pay attention to this area, as it is often overlooked. Proper labor rates, manager approval for policy adjustments, parts matrix pricing, the right mix of technicians, and inventory control are all important factors to watch. Keeping CSI scores high is also a key element, as this can impact factory incentive payments. Also, be sure you are maximizing your manufacturer reimbursements on warranty parts…we can help you with this one.

People Matter

Businesses frequently analyze the different parts of their business, make certain adjustments, set goals, measure the results, and then find little to no change. Having good people always helps, but

Massachusetts Auto Dealer

• Sales tax is properly collected and paid (incidentally, we have seen an increase in sales tax audits of auto dealers in recent months); and • I.T. systems and sensitive personal data are protected and not subject to an “easy” compromise. Dealers are among the most entrepreneurial of all business-people. The communities they serve and the people they employ benefit greatly from this “can do” attitude. The great lesson from the last recession was that “managing risk” isn’t just a phrase. We know quite well that as CPAs our nature is to row a little too close to shore. The risks dealers take is often what makes the business thrive; just don’t find yourself too far “out” when the tide turns. t




By Joseph W. Ambash and Jeffrey A. Fritz

“So Where Are You From Originally?” “So where are you from originally?” Seems innocent enough, right? Just polite and friendly banter. Perfectly acceptable topic of conversation with someone you meet at a party or in some other social setting. Nothing offensive about the question; indeed, it demonstrates your interest in learning more about the person and his or her background. But while your motives may be the same if you asked the same question of an applicant during a job interview, that question and other seemingly innocuous questions can create risk for your dealership. That’s because, in a job interview setting, an interviewer is presumed to ask questions the answers to which he or she will consider to determine whether the applicant is suitable for the job. Questions that don’t have such a focus can be risky. The following are some examples: So where are you from originally? “Mexico.” You now know the applicant’s national origin, and the reason you know is because you asked for that information in the context of an interview for a job. Of course, both state and federal law prohibit employers from making adverse employment decisions based on national origin. Assuming you ultimately choose not to hire the applicant—for reasons having nothing to do with the fact that he is from Mexico, of course—you’ve made a national origin discrimination claim more difficult to defend. His story: “The interviewer specifically asked about my national origin during his job interview, and once he learned I was from Mexico, he decided not to hire me.” Better not to ask the question, and not know the applicant’s national origin (or any other non-obvious protected statuses) when making the decision on whether to hire or not to hire. (That holds true, of course, for any employment-related decisions (i.e., promotion, termination, etc.).) Have you ever been arrested? Okay, probably less polite to ask about, even in a social setting. But Massachusetts law spe-

cifically prohibits employers from asking applicants or employees about (1) arrests that did not lead to a conviction, (2) firsttime convictions for drunkenness, simple assault, speeding, minor traffic violations, affray, or disturbing the peace, or (3) misdemeanor convictions that are at least five years old, unless the applicant had another conviction within the prior five years. Asking whether an applicant (or employee) has ever been arrested would encompass such questions and would be illegal. On a

“The more your questions focus on the duties, responsibilities, and requirements of the job, the less risk you’ll have of a discriminatory failureto-hire claim.” related note, you should be aware that, in Massachusetts, you cannot ask about an applicant’s criminal history on an employment application. Do you have any medical conditions that would limit your ability to do the job? Your intention here, no doubt, is good. As a conscientious employer, you want to know if your employee has a medical condition that you can reasonably accommodate. But the better approach here is to focus not on the applicant’s medical condition but on his or her ability to do the job. The less risky phrasing of this question is: “This job requires the ability to do ‘x’. Can you do ‘x’?” If the answer is “no,” then the follow up question would be: “Is there anything we could do that would enable you to do ‘x’?” You’ve received the information you sought, and you didn’t even have to ask about the applicant’s medical condition—which may or may not be a protected “disability” or “handicap” under federal or state law—before making your decision. When do you plan to retire? Unless the position is temporary or short-term, most

employers aren’t looking to hire employees who plan to leave in a year or two. Most employers look for competent employees who will stick around for a while and grow with the company. Asking an applicant when he or she plans to retire, however, could support an age discrimination claim in the event that you do not hire him or her. Do you have kids? Do you plan to have kids? Questions like these, which essentially focus on an applicant’s familial responsibilities, especially when asked of a woman, can support a sex discrimination claim. These questions evince stereotypes about a woman’s familial obligations that might take her time or attention away from the workplace. Here again, better to focus on the requirements of the job, not on the things that might make an applicant unable to fulfill them: “This position requires your attendance from 9am to 5pm, Monday through Friday. Are you able to be here during those times?” This is by no means an exhaustive list of questions you should not ask an applicant during a job interview, but it illustrates the point: The more your questions focus on the duties, responsibilities, and requirements of the job, the less risk you’ll have of a discriminatory failure-to-hire claim. Your hiring managers need to know this.


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

Massachusetts Auto Dealer OCTOBER 2014




Massachusetts Auto Dealer


Massachusetts Auto Dealer OCTOBER 2014



Financial Services



Is Your Dealership Up to Speed on “Play or Pay”? What you don’t know could cost you $2,000 or more per employee!

by Jed Davidson J ed







Bos -

Business Advisory G roup. H e specializes in E mployee B enefits . ton

The Patient Protection and Affordable Care Act, also known as PPACA or ObamaCare, was enacted in March 2010. When this legislation was originally introduced it faced many challenges; however, most of the law was upheld and will be impacting business owners very shortly. The most daunting task for employers is certainly the “Play or Pay” provision slated to begin January 1, 2015. Not only do auto dealers have to be aware of how many employees they have, they also have to make sure their coverage is affordable and that they are offering insurance to the right people on the plan or they will face penalties.

Do you feel confident in your understanding of the law and how it could impact your auto dealership? It is important for auto dealers to understand who this law impacts and how: • Currently, the magic number is 50 fulltime employees or a combination of full time and part-time employees. Variable hour employees are crucial to this calculation and can often be overlooked. In order to calculate your full-time employees or full-time equivalents, simply take the number of full-time employees as your first number. Once you have that number, calculate the number of hours worked by variable hour employees and divide that by 1,560 (130 hours a month x 12 months). • Next, add all the hours worked by your variable hour employees. For this ex-

ample, let’s say it equals 30,000 hours. The calculation would be 30,000 divided by 1,560 = 19 full-time equivalent employees. You would add 19 full-time equivalents to the number of full-time employees and that would be your total employee count. If that number is over 50, you must comply with the regulations. Now that we have determined whether or not you need to comply with the law, it is important to dig deeper into some of the financial impacts this could have on your business. If you are an auto dealer who employs variable hour employees that are not currently offered benefits, this legislation greatly impacts your dealership. Variable hour employees are now eligible for benefits if they average 30 hours per week, during the testing period. Typically, variable hour employees did not receive benefits if they work under 35 or even 40 hours. With the new law it is important to understand when an employee is truly eligible for benefits. Auto dealers are also subject to the reporting and recording of information and hours worked with even more scrutiny. To determine if someone is “eligible” for benefits that is a variable hour employee, he or she must satisfy an employer determined measurement period. If the employee works the required amount of hours during the measurement period, he or she is eligible for benefits, such as health and dental insurance. Again, this is another task that the auto dealer must complete and keep track of due to these changes. Not only do you have to offer coverage to employees, but the coverage also must now pass the affordability testing. The amount that your employees pay for their insurance through payroll deductions cannot exceed 9.5% of their annual W2 earnings. Let’s look at an extreme example: An employee who works 30 hours per week and is paid $12 per hour makes $18,720 per year. If we calculate 9.5% of the

nual salary, the employee cannot pay more than $1,778 annually for their health insurance coverage. What are the penalties for not being in compliance with the law? If you do not offer health insurance coverage at all to your employees, then your auto dealership will pay $2,000 per employee per year, minus the first 30 employees. This is based on total employee count, not eligible employees. For example, a company with 300 employees would pay an annual nontax-deductible fine of $540,000: (300EE’s – 30)*$2,000 = $540,000 If you offer health insurance and do not meet the affordability test, your fine is $3,000 per employee that receives subsidized health care coverage through an exchange. The affordability fine is only triggered when an employee goes to a health exchange because the insurance coverage offered by the employer is not affordable. By simply offering unaffordable coverage, there is no fine assessed until an employee goes to an exchange and receives a federal subsidy for their coverage. In conclusion, if you’re like most business owners you probably found this article confusing and a bit overwhelming. This is why it is extremely important to have a health care professional who understands all the compliance issues of the Affordable Care Act. This is the reason The Boston Business Advisory Group partnered with CBA to provide high quality service to the members of the MSADA. The legislation is not going away, and, unfortunately, most of the responsibility falls onto the employer. Now, more than ever, your auto dealership must be working with a consultant who understands how the pieces of the law fit together and impact your business.


The Boston Business Advisory Group will address your Financial Issues on a monthly basis. Email specific questions or suggestions for future articles to

Massachusetts Auto Dealer OCTOBER 2014



ENERGY ENERGY to Power Internet Sales

Dealers pick up tips for sales success at September’s exciting Internet Sales 20 Group workshop

by Catherine MacDonald

Dealers seeking a refreshing boost of energy and enthusiasm

will certainly find it at a three-day intensive workshop with expert panels and success stories, where audience engagement and interaction is encouraged. But if those features don’t quite do it, there’s always the all-night cruise ship party. From September 22-24, dealers from across Massachusetts and several other northeast states attended the Internet Sales 20 Group event. The workshop puts dealer principals, general managers, consultants, and vendors in a room together for an interactive, educational experience. Attendees heard from experts, including 25 speakers and panels. Dealers learned how many components of their operations can bolster Internet sales, with tips and advice on everything from human resources to SEO (Search


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Engine Optimization), from recruiting to digital marketing. MSADA President Scott Dube said the workshop provided him and his staff with very specific ideas about what they could be doing differently. He gleaned valuable tips regarding the sales floor, the Internet department, and new products and services that are available to dealers. “We learned about social media; how to better position ourselves in that area, and to be more global about it,” Dube said. “We have a number of different projects underway as a result. We’re putting some new things into play.” Director of Business Development for Mastria Auto Group, Michelle Mastria, also has implemented changes with social media based on advice from the workshop. “One of the things I did right away when I got back is start ‘Social Media Monday’ with my sales team. For 20 minutes we get together on Monday morning and talk through ways they can engage with our Facebook page,” Mastria said. The sales team quickly picked up on new methods, and customers are responding. “Page engagement has gone through the roof,” Mastria said. Sean Bradley, an automotive Internet sales, business development and auto marketing expert, organizes the event through

MSADA Dealer Synergy and also serves as MC. He says the IS20G event works on two sets: skill set and mind set. “The skill set is technology, strategy, secrets, and tips,” Bradley said. “Mindset means we have to feed your mind. We have to build excitement.” This enthusiasm was a key takeaway for participants, including Dube. “If nothing else you get a ton of energy that you otherwise would miss out on,” he said. Bradley said the event is structured to “get everybody excited. That’s why I do the rock star VIP features. I want them to connect with each other.” He is referring to the Spirit of Boston cruise ship party that took place the first night of the workshop, which Mastria praised as a tone setter for the next few days of the event. “It just allowed people to let down their guard, and not feel so much like you were with a bunch of strangers. Once you’re able to break through that barrier, information flows more easily. All of a sudden we weren’t just attendees; we were having fun together and laughing together,” she said. Mastria said the cruise night built camaraderie among attendees. “The next day you could see people talking a little bit more and sharing a little bit more. It just really enabled it to be a more interactive type of thing,” she said. Preparing for his next IS20G event in New York this May, Bradley said he was pleased with the Boston event. “If dealers are all willing to leave their dealerships for several days at a time, you have to create an amazing environment,” he said. “Everything in my vision was exactly how we executed it.”

The IS20G Boston Composite Analysis and Awards A major selling point of the IS20G workshop was the dealership composite. Dealer Synergy and many of the Internet Sales 20 Group sponsors spent more than six weeks performing complimentary consultations and research on 28 dealerships in order to collect the data compiled in the workshop’s composite study. The dealerships were graded and ranked based on 7 Key Performance Indicators: SEO, Social Media, Credit Applications, Mystery Shop Calls, Online Reputation, Response Audit, and Website Scope. The SEO category assessed the dealership’s main website for accessibility on mobile devices and desktops, made sure links worked properly, and included proper alt tags, headers, and more. The overall test was how well their sites ranked on search engines based on content and key words. With social media being crucial for exposure, this category looked at total fans, followers, and subscribers on the most popular social media sites like Facebook, YouTube, and Twitter. For the Mystery Shop study, every dealership received two monitored calls and were graded in the following areas: initial experience, greeting, and phone etiquette. Dealerships’ reputations were graded on their ratings on online review sites, such as Google Reviews, Yahoo Local, Yelp!, Dealer Rater, Edmunds,, and more. The dealerships were assessed based on the number of reviews, the ratings, and their engagement with reviewers. The Response Audit category was graded based on the dealership’s ability to provide confirmation of vehicle availability, offer test drives, and their overall professionalism while providing details about vehicle inventory. When assessing Website Scope, the most important aspects are the ease of use for the customer. The composite analysis looked for an easy search button for inventory, explanatory videos, such as a used vehicle walk around, and testimonials. Other aspects included a clear call to action, contact information, and a site that was up-todate and relevant. The Credit Miner Credit Applications category looked specifically at credit applications on each dealership’s site. Two key factors were the ease of use and response time after submission. It is important to ensure that dealerships are serving their clientele in the most professional and prompt manner possible. Additionally, a lead estimate was conducted, courtesy of Autobytel. They analyzed the lead opportunities in the local areas surrounding each dealership in the composite. Their search radius spanned from 5 to 25 miles.

Massachusetts Auto Dealer OCTOBER 2014


16 18

Energy to Power Internet Sales


Mass. Dealer Composite Winners SEO (Search Engine Optimization) Toyota of Braintree Why They Won

Toyota of Braintree’s SEO strategy included great keywords, alt tags, and meta data. Their content was fresh, relevant, and updated consistently so they showed up at the top of results in multiple organic searches. How You Can Emulate Their Success

Take time to make sure your content is consistent with what words you want to appear in search engines. The words you choose affect the visibility of your website in search engines and need to be decided based on your target audience. Meta tags play a major role in this process so it’s important to focus your SEO Strategy around these keywords.

SOCIAL MEDIA Route 44 Toyota in Raynham Why They Won

Route 44 Toyota’s Social Media had the most engagement, subscribers, fans, and interactions with these fans as well as followers. Their content was unique, engaging, and professional. How You Can Emulate Their Success

Do not just make your dealership’s site about just your dealership. Be sure to post relevant stores, industry news, and local activities and events in your community. It’s important to see social media as a tool to interact with your customers and potential customers -- not just an advertisement platform.

MYSTERY SHOP Westboro Toyota Why They Won

This dealership was awarded best Mystery Shop Calls based on good phone etiquette displayed by the coordinators, including greeting and closing, and overall exceeding the needs of the caller. How You Can Emulate Their Success

It’s important to start with a set guide for how to take and make phone calls. Having a process in place and training your team accordingly ensures that all the right information is gathered, that the customer is heard, and that ultimately their expectations are met. Starting this way makes it easier to sell the appointment and the vehicle.


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RESPONSE AUDIT Toyota of Watertown Why They Won

The Response Audit award was received based on having the right content with the fastest responses about vehicle availability, test drive, and more. They went above and beyond to not only provide information but great customer service. How to Emulate Their Success

Always remain educated about information at your dealership. At any given time you should be able to provide information about vehicles in stock or that you can access. Having a plan in place for handling responses is important, so training is imperative to guarantee great customer satisfaction.

CREDIT MINER APPLICATION Bernardi Toyota of Framingham and Toyota of Braintree Why They Won

These two dealerships tied for Credit Miner Application, because both dealerships had great credit applications that were easy to fill out and both had a quick response time. How You Can Emulate Their Success

It is important to make credit applications easy and simple. Ask enough information but not too much that you turn them off. And make sure they know how important they are to you by responding quickly.

THE PINNACLE AWARD Toyota of Braintree Why They Won

Toyota of Braintree scored highly in all of the seven KPIs, which makes them our Pinnacle Award Winner. They combined superior customer service skills with a high online reputation, a great SEO strategy, ease of navigation on their site, and were overall very successful in all areas assessed. How You Can Emulate Their Success

Make sure your dealership has an exceptional website, appears well in search engines, has a call to action, and above all make sure you always provide excellent customer service. It seems overwhelming now, but start by improving one area at a time and you’ll start exceeding not only your customers’ expectations but your own.


from Around the Horn


Commonwealth Motors Featured in Globe Charlie Daher, owner of Commonwealth Motors, was recently featured in The Boston Globe. The article detailed how his business has grown and how he strives to give back to the community in which he grew up. Daher bought an eight-acre dealership in Lawrence in 1991, just after the financial climate forced its closure. Today, that dealership, Commonwealth Motors, has gone from eight to thirty acres and from two to five brands. Commonwealth has more than 300 employees and a 1,000-car inventory that draws customers from all over New England in search of Chevy, Honda, VW, Kia, and Nissan brands. “We do a lot of little things like pay for computers and field trips, but this month we have our Kid’s Cancer Buzz-Off and in December we have the second annual Commonwealth Motors Christmas Classic, a boys and girls high school basketball tournament with 16 teams,” Daher says in the article. “After the tour-


nament, one deserving player on each team gets a $1,000 college scholarship. I can’t stress enough how much we’re involved in the city, and we really enjoy doing it.” The Lawrence City Council has appreciated the dealership’s involvement so much that they named the street outside the dealership Commonwealth Drive. His favorite part about selling cars, Daher said, is still what got him into the business in the first place. “I love a challenge. It’s what kept me going when I started and it’s still my favorite thing about working here. You find challenges in every corner of this business, and I love that.”

Massachusetts Auto Dealer OCTOBER 2014


NEWS from Around the Horn Kid’s Cancer Buzz-Off Charlie Daher and Commonwealth Motors partnered for the second year with the One Mission Kid’s Cancer Buzz-Off. Proceeds from the Kid’s Cancer Buzz-Off benefit Boston’s Children’s Hospital, The Jimmy Fund at Dana-Farber, and The Family Reach Foundation. The second annual Commonwealth Motor’s Buzz-Off took place on October 19 at Commonwealth Chevrolet. The event included giveaways such as sports tickets and memorabilia, concert tickets and gift cards, among others.


Massachusetts Auto Dealer


Group One Auto Host Local Politicians Recently Group One Auto hosted two local politicians in Danvers to provide support for their races. In the top picture, MSADA Director for Essex County John Hartman welcomed to Group One’s Ira Toyota former state Senator Richard Tisei (R-Lynnfield), who is the GOP nominee for the Sixth Congressional District presently held by Cong. John Tierney. Tierney lost his Democrat primary race in September, however, to political newcomer Seth Moulton. Also attending the event, at which MSADA presented Tisei with a DEAC check, were Massachusetts NADA Director Don Sudbay,

MSADA Executive Vice President Robert O’Koniewski, MSADA staff attorney Peter Brennan, and MSADA legislative agent Jim Hurrell. Hartman also played host to state Rep. Ted Speliotis (D-Danvers) at Ira Toyota and Ira Subaru (bottom picture). Rep. Speliotis, who is serving his ninth term at the State House, is currently the House Chairman of the Committee on Bills in the Third Reading, through which all legislation in the House must pass. He previously served as House Chairman of the Joint Committee on Consumer Protection and Business Regulation, which handled our 2012 amendments to the Chapter 93B franchise law and the “right to repair” legislation.

Massachusetts Auto Dealer OCTOBER 2014



NEWS from Around the Horn LYNN

Pride Motor Group Dealer Mourned by Colleagues Michael Iovanna, the president of the Pride Motor Group based in Lynn, Massachusetts, died in a fatal automobile crash that also killed Chester Hincman in Middleton on October 19. Iovanna, 50, of Middleton, was driving a Ferrari with the 40-year-old Hincman of Danvers when it spun out and hit a tree, bursting into flames near the intersection of Peabody Street and Bow Street, near Iovanna’s Mill Street home. The pair were pronounced dead at the accident scene, according to Middleton Police. “It’s been very sad. Our thoughts and prayers are for Mike and his family and the passenger’s family,” Pride Motor GroupVice President Paul Bertoli told The Daily Item. Born in Winthrop, Iovanna was a resident of Swampscott before moving to Middleton. He was a graduate of the former St. Dominic Savio High School in East Boston and Stonehill College, class of 1986. As a business man, Iovanna’s friend Leo Farma said he always put people first. “When a conflict came up, he never looked at it as ‘I’m right,


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they’re wrong.’ He looked at it as, ‘How can we resolve this?’ He was always concerned about the people; the clients and those who worked with him. He made them understand they were in it together,” Farma told the Boston Herald. Following news of Iovanna’s passing, the Kelly Honda dealership nearby on the Lynnway displayed a message on its electronic sign that read “R.I.P. Mike I.” Iovanna is survived by his wife, Suzanne (Mara); a son, Michael Jr; and a daughter, Alexandra. RAYNHAM

Bolder 2016 Mazda MX-5 Miata Makes Its Debut The Mazda MX-5 Miata put the roadster back on the map when it launched in the late 1980s, so it only made sense for a popular rock band from that decade to play in the next generation of the sports car. Duran Duran helped unveil the 2016 MX-5 Miata on Sept. 3 in Monterey, Calif., but despite that rocking ode to the past, the fourth-generation roadster showcased a new design that is decidedly modern. While it nods to the original MX-5 Miata with its smooth, linefree flanks, the 2016 model is lower and wider than past genera-


Acura Three-Peats in Edmunds Best Retained Value Awards Buying a luxury vehicle should be viewed as an investment, meaning that savvy shoppers should not only consider the initial purchase price, but also how much they will get back for a model when they trade it in down the road. According to, Acura is the undisputed king of long-term value, as the marque was recently named the top luxury brand in the auto-research site’s Best Retained Value Awards for the third straight year. The 2014 Best Retained Value Awards recognized brands and 2014-model-year vehicles that have the highest projected five-year residual values based on their average cash True Market Value prices during a period of three to five months, depending on each model’s launch date. With a projected five-year residual value of 45.4 percent, Acura bested all other luxury brands, while the 2014 Acura TSX, TSX Sport Wagon and ILX topped the Luxury Midsize Sedan, Luxury Wagon and Luxury Compact Sedan categories, respectively. “When you purchase other luxury items, you expect them to remain valuable for years to come, so if you choose to

hold your luxury vehicle to those same standards, then your best bet is an Acura,” said Joel Avery, general manager of Acura of Peabody. “While the brand’s three-peat in the Best Retained Value Awards is impressive, the fact that the Acura ILX won its segment in just its second model year on the market may be even more remarkable.”

tions, sporting an “impossibly low” hood and a drastically sloping nose for a more aggressive look. Accentuating that bolder front-end are slim, slanted LED headlights and an oversized Mazda logo. Moving down the side of the new MX-5 Miata, the A-pillars have been pulled backward and blacked out along with the side mirrors, while the muscular rear-end tappers dramatically into the new circular LED taillights. “The MX-5 Miata has dedicated fans who love the roadster’s affordable performance, but many of them have told Mazda that they’d like the car to have a more confident style that would better reflect its engaging handling,” said Barry Chew, sales manager of Mastria Mazda. “With the debut of this next-generation model, Mazda has fulfilled those requests and then some, as the MX-5′s smiling front fascia has been replaced with a mischievous smirk.” Underneath its sleeker sheet metal, the 2016 Mazda MX-5 Miata will ride on an all-new SKYACTIV-CHASSIS that will not only allow the roadster to drop about 220 pounds compared to the outgoing model, but will also help it achieve a lower center of gravity than any previous generation. Though official powertrain details have yet to be announced, the new MX-5 Miata is expected to offer fuel-saving SKYACTIV engines and transmissions when it goes on sale stateside in the middle of next year.

Massachusetts Auto Dealer OCTOBER 2014


MSADA NADA Update by Don Sudbay

NADA’s Solution Reduces Fair Credit Risks Don Sudbay, President of Sudbay Automotive Group, represents MSADA members on the NADA Board of Directors. He welcomes your




( In the paragraphs below you will read Forrest McConnell’s comments to the Automotive Press Association in Detroit. As he mentions, there is a tremendous amount of misinformation regarding the benefit that automobile dealers provide to the motoring public. Peter Welch, our NADA President, speaks about why we need state franchise laws. Without these laws the manufacturers would have the opportunity to totally upend our business model. In the coming months, Massachusetts dealers may be asked to contact your state legislators to help us with our franchise law and other auto industry issues. It is important that we all have a good working relationship with our local state reps and senators so they will listen to us when issues arise.

A Special Note from NADA Chairman Forrest McConnell: NADA Fair Credit Compliance Policy & Program “When I met with the Automotive Press Association in Detroit earlier this month, I had one goal in mind: inform the journalists and industry executives about how the real dealer franchise system works and set the record straight. There’s been a lot of misinformation reported in the news lately about the business model of new-car dealerships. “The fact of the matter is that the dealer retail network is the most competitive, cost-effective and pro-consumer model for buying and financing vehicles. “Fierce competition between local dealers in any given market drives down prices for car buyers both in and across brands. If a factory owned all of its stores it could set prices and car buyers would lose virtually all bargaining power and would be stuck paying the full sticker price. Further, dealer-assisted financing—which is always optional—provides car buyers with competitive rates on auto financing, which are frequently more affordable than what car buyers can get from a bank or credit union. But the federal govern-

ment is trying to take away the right of car buyer’s to get discounted rates from dealers. “In March 2013, the Consumer Financial Protection Bureau, without prior notice or public comment, issued ‘guidance’ on indirect auto lending that pressures finance sources to compensate dealers with a flat fee. The CFPB claims that negotiated interest rates between dealers and their customers can create a significant risk of unintentional ‘disparate impact’ discrimination. “The National Automobile Dealers Association strongly opposes discrimination in any form and fully supports the efforts of the CFPB, the Department of Justice, the Federal Trade Commission and other federal agencies to eliminate it from the marketplace. However, it is essential that the

“It is important that we all have a good working relationship with our local state reps and senators so they will listen to us when issues arise.” — NADA Director Don Sudbay

government address this issue in a way that will effectively address fair credit risks while preserving competition in the marketplace. “A government-imposed flat fee model wouldn’t benefit consumers, because it would eliminate their ability to get a rate discount on their auto financing. Under the current system, dealers have an incentive to select lenders that offer them low, wholesale buy rates, and dealers frequently have to discount the APRs they offer their customers to earn their business. This dynamic drives down rates for our customers. If the CFPB were to succeed in getting the industry to shift to an across-the-board flat fee compensation system, dealers’ incentive would shift to choosing lenders that pay them the highest flat fee, which in turn would frequently result in higher APRs for consumers. “A mandatory flat fee compensation system also would fail to remove the fair credit risks that a dealer is exposed to

Massachusetts Auto Dealer OCTOBER 2014


Accounting MSADA


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when it lacks a legitimate business explanation for earning different amounts in its credit transactions. “Fortunately, NADA has identified a way forward that addresses both fair credit and competition considerations. “Last January, the NADA developed the NADA Fair Credit Compliance Policy and Program that provides a dealer with an optional mechanism to promote compliance with fair credit laws. The program was released in partnership with the American International Automobile Dealers Association and the National Association of Minority Automobile Dealers. “The voluntary program addresses fair credit risks by ensuring that the amount of dealer reserve earned in a transaction is supported by a legitimate business reason. A dealer following the program sets a standard starting point for dealer reserve that it includes in its credit offers to consumers and only deviates from that rate for predetermined, legitimate business reasons. These include the presence of a monthly budget constraint, a more competitive offer, and inventory reduction considerations. The dealer docu-

“Competing with the dealer down the street or on the Internet benefits car buyers across the nation,” McConnell said in remarks to the Automotive Press Association in Detroit. “Dealers compete fiercely against each other on vehicle pricing, financing and service which reduces costs for consumers.” — NADA Chairman Forrest

ments each pricing decision so that it can demonstrate that it was based on a legitimate, non-discriminatory factor. The NADA program fully incorporates the program created by the Department of Justice for two auto dealerships in 2007 to resolve fair credit cases. “By creating this structure and supporting it with appropriate training and oversight, the NADA program provides a mechanism for addressing fair credit concerns at the consumer, dealer and lender levels. “Last month, U.S. Reps. Marlin Stutzman (R-Indiana) and Ed Perlmutter (D-Colorado) introduced H.R. 5403, a bipartisan bill that would nullify the CFPB’s 2013 auto


lending ‘guidance.’ The bill would require new CFPB guidance involving auto financing to be transparent and open to public participation. Already 118 Members of Congress (46 Democrats and 72 Republicans) in the U.S. House of Representatives have committed to cosponsor or are cosponsors of this important measure. For more information, visit “The NADA Fair Credit Compliance Policy & Program presents the industry with a realistic and effective means of addressing fair credit risks at all levels and in a manner that preserves robust competition in the marketplace. The federal government should encourage its broad adoption. “Competition in automotive retailing is the cornerstone of the franchised new-car dealer network, which benefits both car buyers and automakers. “Competing with the dealer down the street or on the Internet benefits car buyers across the nation. Dealers compete fiercely against each other on vehicle pricing, financing, and service which reduces costs for consumers. “As a percentage of total sales in the new-car, used-car, and service/parts departments, net pretax profit at new-car dealerships was just 2.2 percent in 2013. “Our manufacturers benefit from a high return on capital in making vehicles, as opposed to the low margin of selling them, because dealers bear the cost and risks of these investments—at virtually no cost to the manufacturer. “The franchised dealer network is the most competitive, the most cost-effective, and most pro-consumer model for buying and selling new cars and trucks. If manufacturers sold directly to customers, there would be zero competition in pricing vehicles, parts, and service. Car buyers would be stuck paying the full sticker price, because there would be no ‘same brand dealership’ to shop and compare prices.”

Bill Fox Elected NADA Chairman for 2015 Bill Fox, who represents New York’s franchised new-car dealers on the NADA board of directors, will assume the position of NADA chairman and CEO at the 2015 NADA Convention & Expo next January in San Francisco. “It is a true honor to serve this industry and this board. This is an exciting time for the auto industry and for dealers across the country,” Fox said. “We will continue to advocate strongly for dealers and the franchise system which is the best and most efficient model for consumers, dealers, and manufacturers alike,” he added.

Massachusetts Auto Dealer



NADA Update MSADA He currently serves as a partner in Fox Dealerships, which sells Chevrolet, Chrysler, Dodge, Honda, Jeep, Ram, Scion, Subaru and Toyota brand vehicles in the upstate New York cities of Auburn and Phoenix. Jeff Carlson (left), who represents Colorado’s dealers on NADA’s board, was elected vice chairman. Carlson is president of Glenwood Springs Ford and Glenwood Springs Subaru in Glenwood Springs, Colorado, and partial owner of Summit Ford in Silverthorne, Colo. Neale Kuperman, who represents dealers in New York City, was elected treasurer, and David Shepherd from Kansas was elected secretary. The elections took place at NADA’s recent board meeting in Scottsdale, Arizona.

2014 Truck Dealer of the Year Speaks to Business Students at Indiana University Kyle Treadway, president, dealer principal, and legal counsel of Kenworth Sales Company in Salt Lake City, Utah, spoke to students at Indiana University’s Kelley School of Business earlier this month. As the winner of the 2014 Truck Dealer of the Year, an annual award sponsored by the American Truck Dealers (ATD) and Heavy Duty Trucking magazine, Treadway was invited to speak to students about entrepreneurship and marketing. “Kyle raised the bar for our students,” said Chris Littel, lecturer in the management and entrepreneurship department at Indiana University. “His presentation, insight, and answers to students’ questions were spot on and blended perfectly with our course content and goals.” Treadway spoke to students enrolled in the school’s New Venture Growth Management class, an undergraduate course that focuses on business case studies. He also spoke to a New Venture Business Planning class, a graduate level course that focuses on key tools and methods to create and grow a new business venture. Treadway discussed the commercial truck industry, his professional experiences, and lessons he has learned throughout his career. Following his presentation, students asked questions. “It was a pleasure to speak to the students at Indiana University,” said Treadway, who is a former ATD chairman. “It was very interesting to hear the students dissect my remarks

and identify my observations under the rubrics they have studied. I learned a lot.” Indiana University professors have helped to select the top dealer for the award over the past 20 years.

NADA President Peter Welch in The Wall Street Journal: Dealers Are Efficient, Competitive: “State automobile franchise laws level the playing field between dealers and manufacturers. “John Kerr’s op-ed critical of state automobile franchise laws misses a core reason of why franchise laws exist. They level the playing field between dealers and manufacturers because dealers are prohibited by antitrust laws from negotiating freely with auto makers (‘Tesla Breaks the Auto Dealer Cartel,’ September 17). “In a truly free market, local new car and truck dealers, who have invested more than $200 billion in their land and facilities, would be able to collectively negotiate their contracts with manufacturers on pricing and distribution. However, dealers are prohibited from federal and state an-

“[The franchise system] is an extremely competitive system that benefits consumers, manufacturers and local communities alike.” — NADA President Peter Welch

titrust laws from doing this. In fact, dealer groups are under constant scrutiny of their compliance with state and federal antitrust laws, including major investigations by the U.S. Department of Justice in recent decades. “The automotive market is highly regulated at all levels—requiring licensing, insurance, financing, care of hazardous materials, all regulated by different bureaucracies. State legislatures passed franchise laws to remedy the antitrust harm against dealers and to help protect consumers. These laws also have the benefit of adding intra-brand price competition into the marketplace, adding extra consumer accountability on warranty and recall issues, and keeping local ownership of businesses on Main Street. And the franchise model is extraordinarily efficient at bringing cars to market with gross margins of less than 6%. It is an extremely competitive system that benefits consumers, manufacturers and local communities alike.”


Massachusetts Auto Dealer OCTOBER 2014


NADA Market Beat


Produced by NADA’s Industry Analysis Group • Angela Lisulo, Economist

Review of New Light Vehicle Sales Overall

There were 1.2 million light-vehicle sales in September 2014. Sales for this month were down 21.5 percent from August 2014, which has been one of the two highest sales months so far this year. September 2014 sales were up 9.3 percent from September 2013. September 2014 YTD light-vehicle sales amounted to 12.4 million, up 5.4 percent from last year. The September 2014 Season-

ally Adjusted Annual Rate (SAAR) for light-vehicle sales was 16.3 million. This month was the sixth month to record a SAAR value in the range of 16.0–16.9 million sales, inclusive, in 2014. In terms of September 2014 YTD, car sales held a market share of 47.5 percent with sales up 90 basis points from last year. The corresponding figures for light trucks put the light-truck share at 52.5 percent with sales up 9.8 percent since last year. For Q3 2014, there were 4.2 million light-vehicle sales, up 7.8 percent from Q3 2013. Car sales for the quarter were up 2.8 percent from Q3 2013, while light-truck sales were up 12.5 percent from Q3 2013. See Figure 1.


Companies with a geographic base in North America (Detroit 3 and Tesla Motors) held the largest market share of light-vehicle sales for September 2014 at 45.9 percent of the market, up from a share of 45.1 percent, last year. This was followed by companies based in the Asia/Pacific region at 44.9 percent, unchanged from the corresponding figure a year ago, and then companies based in Europe at 9.2 perOCTOBER 2014

Massachusetts Auto Dealer

cent, down from a share of 10.0 percent last year. For September 2014 YTD, companies with a base in the Asia/ Pacific region held the largest share of light-vehicle sales in the U.S. at 46.1 percent, which was up from a share of 45.6 percent a year ago. The corresponding share held by companies based in North America was 45.3 percent, down from a share of 45.4 percent last year. The share for the Europe-based companies was 8.6 percent, down from a share of 9.0 percent last year.

MSADA All company categories by geographic bases – North America, Asia/Pacific and Europe – experienced growth in light-vehicle sales in September 2014 YTD figures from last September with the Asia/Pacific region in the lead with 6.5 percent growth. For Q3 2014, companies based in the Asia/Pacific region held the largest share of light-vehicle sales at 46.9 percent, up from a share of 46.8 percent in Q3 2013. The corresponding share held by companies based in North America in Q3 2014 was 44.5 percent, up from a share of 44.0 percent in Q3 2013. In Q3 2014, Europe-based companies held a share of 8.6 percent of light-vehicle sales, down from a share of 9.2 percent in Q3 2013. All company categories experienced growth in light-vehicle sales in Q3 2014 over Q3 2013, with the companies based in North America in the lead with growth of 8.9 percent. From the Detroit 3 companies, Fiat Chrysler and General Motors were the only companies that experienced growth in their respective September 2014 YTD sales compared to last year; Fiat Chrysler had the most growth in this group at 14.6 percent, while General Motors experienced growth of 4.3 percent in its September 2014 YTD sales. From the group of Asia/Pacificbased companies, all companies experienced some growth in their respective YTD light-vehicle sales compared to last year. Isuzu experienced the most growth in this group at 63.9 percent, followed by Mitsubishi at 29.8 percent. From the group of Europebased companies, all companies except Volkswagen and Volvo experienced some growth in September 2014 YTD sales compared to last year. Audi was in the lead in this group with YTD light-vehicle sales growth of 14.5 percent, followed by Porsche at 12.1 percent. See Figures 2, 3 and 4.


The cross utility vehicle (CUV) segment held the largest share of September 2014 YTD light-vehicle sales at 26.7 percent, which was up from its corresponding share of 25.2 percent last year. Although the CUV segment was followed by the middle car segment and the small car segment, respectively, in terms of YTD market share, both these segments experienced a decline in their respective YTD market shares compared to last year. The large car segment held the least share of September 2014 YTD light-vehicle sales at 2.2 percent, which was

Massachusetts Auto Dealer OCTOBER 2014



NADA Market Beat down from its corresponding share of 2.6 percent last year. All the segments except for the large car segment experienced growth in YTD sales, compared to last year. The sport utility vehicle (SUV) segment experienced the most growth in September 2014 YTD light-vehicle sales at 12.7 percent. For Q3 2014 light-vehicle sales, the CUV segment was the largest segment with a share of 27.1 percent of light-vehicle sales, up from a share of 25.7 percent in Q3 2013. The middle CUV sub-segment was the largest CUV sub-segment in Q3 2014, holding 65.2 percent of CUV sales for the quarter. Within this sub-segment, the Honda CR-V was the leading vehicle in sales with 86,323 units, followed by the Ford Escape with sales of 77,272 units for Q3 2014. See Figures 5 and 6.

Power source

Gasoline-powered light vehicles held a market share of 93.4 percent of September 2014 YTD light-vehicle sales, up from a share of 93.3 percent a year ago. Diesel-powered light vehicles held a share of 2.9 percent of September 2014 light-vehicle sales, up from a share of 2.8 percent last year. In YTD terms, the market shares held by electrics and plug-in hybrids each grew compared to last year, while those for hybrids and light vehicles powered by natural gas and fuel cell technology each declined over the same period. In September 2014, the following light vehicles were sold in the alternative power category: 7,072 electrics; no units powered by fuel cell technology; 31,314 hybrids; 33 units powered by natural gas; and 3,349 plugin hybrids, amounting to 41,768 total light-vehicle sales. For the alternative power category, in Q3 2014, the following light vehicles were sold: 19,311 electrics; no vehicles powered by fuel cell technology; 124,936 hybrids; 146 units powered by natural gas; and 15,027 plug-in hybrids, amounting to 159,420 total lightvehicle sales. The Q3 2014 sales for the alternative power category were up 7.8 percent from Q3 2013. See Figure 7.


Massachusetts Auto Dealer


From the list of the 15 best-selling light vehicles for September 2014 YTD, seven out of 15 models were from the Detroit 3 companies while the rest were from companies based in the Asia/ Pacific region. There were three pickup trucks and two cars occupying the highest five ranks of the best-selling light vehicles for September 2014 YTD. The three leading pickup trucks were models from the Detroit 3 companies: Ford F-Series, Chevrolet Silverado, and Ram pickup. The two leading cars were models from companies based in the Asia/Pacific region: Toyota Camry and Honda Accord. This list marks the reappearance of a Hyundai model – the Hyundai Elantra – amongst the ranks of the 15 best-selling light vehicles this year. The Hyundai Elantra appeared on the list for every month this year, except for those for June through August, as the sole Hyundai model. See Figure 8.


October 2014 MSADA Auto Dealer  

The official publication of the Massachusetts State Automobile Dealer Association, Inc.

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