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

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

October 2013 • Vol. 26 No. 10

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

a Day on Beacon Hill


MA S S A C H U S E T T S

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S TA F F D I R E C T O R Y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Paul Fellows Administrative Assistant/ Membership Coordinator pfellows@msada.org AUTO DEALER MAGAZINE Robert O’Koniewski, Esq. Executive Editor Catherine MacDonald Editorial Coordinator macdonaldcs8@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to: MSADA by e-mail: pfellows@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Quarter Page: $450

Full Page: $1,400

Half Page: $700

Back Cover: $1,800

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, 23 Boston Herald, 32 Downey and Company, LLP 23 Lynnway Auto Auction, 20 Nancy Phillips Associates Inc, 21 O’Connor & Drew, P.C., 31 Reynolds & Reynolds, 27 Southern Auto Auction, 22 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org

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

TA B L E O F C O N T E N T S

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FROM THE PRESIDENT: Making Numbers Count THE ROUNDUP: Dealers Visit Beacon Hill LEGISLATIVE SCORECARD TROUBLESHOOTNG: Charging for Shop Supplies

AUTO OUTLOOK LEGAL: Cover All Bases ACCOUNTING: Help Prevent Customer Privacy Violations

with Strong Policies

16 COVER STORY: A Day on Beacon Hill

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INSURANCE:

Loss Prevention

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NEWS From Around the Horn

25 28

NADA UPDATE: NADA Endorses Hiring Our Heroes Program NADA MARKET BEAT

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

Massachusetts Auto Dealer OCTOBER 2013


from the PRESIDENT

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by Scott Dube, MSADA President

Making Numbers Count We have stats, but we also need to tell our story

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t’s high season for making sure our lawmakers know our story. If there’s one thing I’ve learned about our legislators on Beacon Hill, it’s that they are all overwhelmed by dozens of issues at any one time. Hundreds upon hundreds of bills get filed through the State House every session. It’s an unfathomable amount of information to keep track of, and frankly most legislators can barely keep track of their own initiatives. That’s why it’s important to have friends, or as close to friends as you can ever truly have in politics. But not playing the game isn’t an option. If we don’t engage in the issues being brought to their attention, if we don’t bring our own needs into the spotlight, someone else is simply going to have an easier time making our lives difficult. The franchised automotive industry needs to ensure that we have legislators who remember who we are, what we stand for, and how large of an impact we have on our Commonwealth. That we make up 20 percent of the retail economy in this state is usually enough to make those unaware perk their ears up. As Massachusetts continues to climb out of the hole of the 2008 recession, local dealerships are businesses that are easy for any legislator to support as they require no public investment and reap jobs and tax revenue for all involved. Dealer Day on Beacon Hill is a critically important event in our calendar, because it gives MSADA a chance to show our legislators that the issues they’re confronting are not in a vacuum. Every bill they put forward and every vote they take has the chance to impact our businesses -- positively or negatively. Those consequences are much more stark than they realize. Our 412 franchised auto dealerships employ more than 20,000

people in Massachusetts, and we cover every part of the state. Where the broader concepts at play often get drowned out, such as in the “Right to Repair” battle or this Tesla situation, numbers are much easier for them to understand. Bottom line is, they know the difference we make in their local economy when we show them the numbers. The Teslas and AutoZones of the world can’t make the same case that we can, and they don’t provide the constituency that we do. Legislators can often be reasoned with, and a lot of times the flashy issue of the day simply needs proper illumination from a local economics perspective. I’d like to take a moment to thank all of you who took the time out of your busy schedule to join me and MSADA staff at the Omni Parker House. Your support is what makes this organization what it is. If you haven’t already, I encourage you to donate to our state Political Action Committee. It’s a key way of keeping our agenda on the table, and it only takes a few minutes. Contact Executive Vice President Robert O’Koniewski at (617) 451-1051 or rokoniewski@msada.org.

“Not playing the game isn’t an option”

OCTOBER 2013

Massachusetts Auto Dealer www.msada.org

Preparations for Auto Show Charity Gala Keep an eye out for information about the date of our next New England International Auto Show Charity Gala. As usual, Jean Fabrizio and the rest of the MSADA staff are planning a fantastic event, and I encourage all of our Associate Members to get in touch with her for information about sponsorship opportunities. She can be reached at (617) 451-1051 or by email at jfabrizio@msada.org.

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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, 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 GMC

Middlesex County Chris Connolly Jr., Herb Connolly Motors Scott Dube, Bill Dube Hyundai

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

OFFICERS 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 AutoRaptor (RAL) Howard L. Leavitt (401) 421-6533 Bank of America Merrill Lynch Lawrence Corrente 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 Construction Management & Builders, Inc. Kate Sullivan (781) 246-9400 CVR Scott Herbers (714) 684-2614 DealerDOCX Merchon Brower (585) 451-3322 DealerTrack Ernest Lattimer (516) 547-2242 Downey & Company James Downey (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 Chris Welch (724) 766-6666 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Grant Thornton LLP Alan Oslomowski (508) 926-2200 GW Marketing Services Gordon G. Wisbach Jr. (781) 899-8509 Huntington National Bank John J. Marchand (781) 326-0823 Key Bank James Q. Moretti (781) 558-5132 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 MetroMedia Energy Timothy Teevens (800) 828-9427 Micorp LLC Ryan Kim (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 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 Ray-Jurgen Richard Thibadeau (860) 585-0111 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Resource 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 Southern Auto Auction Tom Munson (860) 292-7500 Sovereign Bank Richard Anderson (401) 432-0749 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance BethAnn Durepo (603) 490-9615 TD Bank Michael M. Lefebvre (413) 748-8272 Wells Fargo Dealer Services Christopher Peck (508-314-1283) Wicked Local Media Massachusetts Jay Pelland (617) 757-5571 Zurich American Insurance Company Steven Megee (800) 443-4513

www.msada.org

Massachusetts Auto Dealer OCTOBER 2013


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The Roundup

Dealers Visit Beacon Hill by Robert O’Koniewski, Esq. MSADA Executive Vice President Almost every dealer has some sort of relationship with his or her legislators at the local level, whose roots can be found in the interaction of our businessmen and women with their politicians in any number of different settings. Before last year, however, dealers had never collectively come together to communicate directly with legislators at their place of business, the State House. On October 2, your Association held its second “Dealer Day on Beacon Hill” event designed to bring our member dealers right into the political arena where the legislative decisions are made affecting your businesses. A contingent of about fifty dealers (some even brought key employees) convened in the morning at the Parker House Hotel, just down the street from the State House. After a welcome from MSADA President Scott Dube, I provided an issues briefing on three key bills in which we have an interest: resolving the conflict between two existing “right to repair” laws, the deal bill that the Legislature passed in July 2012 and the initiative petition law passed by the voters in November; our proposed 93B franchise law amendments; and legislation filed by Tesla that would allow it to open a factory-owned store, sans dealer, in the Commonwealth. More importantly, I reminded our dealers that it is important to tell your own stories regarding your role in the community, including your economic impact, the employees you manage, and the taxes they, your customers, and you pay. Legislators know dealers and dealerships exist; they just do not know the long and deep reach of your businesses’ tentacles into the state and local economy and throughout the community, especially

OCTOBER 2013

Massachusetts Auto Dealer www.msada.org

through your charitable and other service-related activities. All our dealers were well received, and the dealers’ presence throughout the building created quite a buzz. In order to build on the successes of our first two “Dealer Days”, it is vital that we continue to grow our attendance and participation amongst our members. It is extremely helpful to our lobbying efforts for legislators to see their constituents face to face and receive a perspective they don’t have in the normal course of their activities. No one knows your business better than you. That knowledge needs to be conveyed to your legislators in an environment and manner they understand. As a result of our dealers’ input, this event truly was a success upon which we can build for the future.

Right to Repair Update Your Association, as well as the vehicle manufacturers and the Right to Repair Coalition, aggressively are lobbying the Legislature to correct the conflict between the two RTR laws that exists due to the passage of last year’s initiative petition after the Legislature passed, and the governor signed, the compromise bill supported by all the effected parties. House 184, filed by Rep. Garrett Bradley (DHingham), represents the compromise bill structured in negotiations between your Association, the Alliance of Automobile Manufacturers, the Global Automakers, and the RTR Coalition, which the Legislature took up on its last of formal sessions in an effort to bypass the initiative peti-


MSADA tion. The bypass efforts failed as certain RTR parties walked away from the agreement to defeat the initiative petition. As a result, we have two RTR laws on the books that conflict with each other. The primary point we have made with legislators, including in our visits during Dealer Day is this: Without legislative action to resolve this statutory conflict, vehicle manufacturers may be out of compliance in January 2014, and dealerships in their communities will be unable to sell certain cars and trucks as a result. This would force our customers – their constituents – to go out-of-state to buy those certain vehicles and bring them back here to register them, thereby leading to dealership closures and job losses. (The initiative petition law contains vehicle requirements and other provisions much stricter than the compromise bill and which kick in for Model Year 2015 vehicles, as opposed to the compromise law’s provisions which take effect with Model Year 2018.) In fact, one truck manufacturer has already sent out letters to its dealers regarding its potential inability to supply heavyduty trucks after January 1, 2014. A major component of the holdup is certain truck repair groups trying to change the compromise law so that truck manufacturers are covered in the law. As you may recall, we successfully lobbied the Legislature last year to carve commercial and heavy-duty trucks out of the RTR law because they cannot comply with the information platforms the RTR Coalition was seeking. Motorcycle groups also are trying to amend the compromise law to have those vehicles included as well, even though motorcycles have no way of complying with what the law demands. Finally, AAA of Southern New England is trying to change certain provisions protecting the propriety of OEMs’ telematics technology, which has served to slow down legislative action, too. The Joint Committee on Consumer Protection and Professional Licensure conducted its public hearing on this issue on July 23. Legislators, including legisla-

tive leaders on both sides of the building, are well aware of the MY2015 problem and the need to resolve this by the time the Legislature completes formal sessions for 2013 on November 20. Right now the problem is not one of information or awareness of urgency. Hopefully, as it seemingly always tends to do, the Legislature will get this book report done before the holiday break on the 20th.

Tesla Update Recently MSADA’s appeal to the Massachusetts Appeals Court of the Norfolk County Superior Court’s negative ruling on our standing in the challenge to Tesla’s efforts to open an illegal factory-owned store in Natick took a new turn. The state’s highest court, the Supreme Judicial Court (SJC), after reading the parties’ briefs, took the appeal from the appellate court’s docket and will hear the case directly itself. Oral arguments will most likely be scheduled for a February date. The SJC also has requested any interested party to submit an amicus brief on the following two issues, focusing on the ramifications of a decision in either party’s favor: (1) Whether, following the 2002 amendment to the Chapter 93B franchise law, a vehicle manufacturer, distributor, or dealer has standing to bring suit for perceived violations of the statute against a manufacturer, distributor or dealer with whom it is not affiliated; and (2) Whether Beard Motors, Inc. v. Toyota Motor Distrib., Inc. (1985) and its progeny continue to apply to Chapter 93B, as amended. Stay tuned for future updates as they occur.

2014 Auto Show, Dealer Summit & Charity Gala MSADA’s 57th edition of the New England International Auto Show will run January 16-20, 2014 at the Boston Convention and Exposition Center in South Boston. In order to celebrate our Auto Show, dealers need to circle Friday,

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January 17, on their calendars – you are invited to attend our Seventeenth Annual Auto Show Charity Gala at the BCEC, 5:00 p.m. to 9:00 p.m. The Gala benefits our Charitable Foundation’s Automotive Technician Scholarship Program. This is a change for us, as we have conducted the Charity Gala previously during mid-week prior to the Auto Show as a “preview night” party. By moving the Charity Gala to Friday evening we hope to avoid conflict with a weekday work night. As we have done previously, 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. This year’s keynote speaker is Grant Cardone, a dynamic international business and sales expert who captivates audiences with his down-to-earth, entertaining speaking style as he tackles timely topics regarding sales, marketing, branding and entrepreneurship, outlining what people need to do to thrive in the new global economy. We are very excited to have Grant speak at our Summit, and we hope you will be, too. Invitations have been sent out, so be sure to register as soon as possible. For 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 as an Association exist to help our dealers in any manner that we can, and we provide a host of member services to achieve that end. 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. After all, this is YOUR Association, and we are in business to assist you. continued on next page

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The Roundup Member Survey Your Association always is looking for ways to better serve its members. Recently the MSADA Board of Directors approved the creation of a Member Services Committee to review the services and benefits your Association presently provides its members; to assess the level at which members access the services and benefits currently being provided; and to investigate what services and benefits members would like us to provide them which we currently do not. Toward this end, in early October we emailed to every member dealer a survey, which would take a couple of minutes to complete, so that your Association can evaluate its benefits and services to maximize member participation and value. We also included a section at the end of the survey where you can add any suggestions for potential services that we do not offer currently (nor which were contained in the survey questions). We asked that our member dealers submit the completed survey to our office by snail mail, email, or fax by November 1. On behalf of the MSADA Board of Directors, thank you for your assistance on this project.

Auto Tech Scholarships Awarded In 2003, the Massachusetts State Automobile Dealers Charitable Foundation began its Automotive Technician Scholarship Program. Over that time, the Foundation has awarded over $1 million to more than 200 of the industry’s best and brightest up-and-coming auto technicians. A scholarship award is worth $6,000$13,000 each over two years. Recently the Scholarship Committee reviewed its Class#11 applications and awarded 8 scholarships. Class #11 runs from the Fall 2013 semester through the Spring 2015 semester. Those receiving scholarships include the following: Michael Amos (MassBay Community College), Nathan Burgess (MassBay Community College), Edwin Cruz (Benjamin OCTOBER 2013

Franklin Institute of Technology), Tyler Farrell (MassBay Community College), Alex McArdle (Nashua Community College), Shawn McArdle (Nashua Community College), Aaron Prendergast (MassBay Community College), and Christopher Rotz (MassBay Community College). In order to obtain and stay qualified for the scholarship, a student must maintain a B average in his tech classes and be employed in a co-op position with a Massachusetts dealership. We congratulate our recipients and wish them the best of luck with their studies.

New FCC Rules on Robocalls and Text Messages The Federal Communication Commission (FCC) is strengthening its regulations under the Telephone Consumer Protection Act (TCPA), which governs the use of prerecorded calls or calls placed with an automated telephone dialing system – so called “robocalls.” The changes took effect October 16, 2013, and apply to telemarketing calls and messages. The new rules require dealers to get express written consent before making a prerecorded or autodialed telemarketing call. This means that before making such calls, dealers must get written consent signed by the customer that specifically indicates the dealer who will be making the calls, and it must include the telephone number for which consent is being given. This also means that the established business relationship exemption to the consent requirement is being eliminated for these types of calls. For the most part, the FCC is changing its rules to align the TCPA regulations with the FTC’s Telemarketing Sales Rule (TSR). Thus, dealers already in compliance with the FTC’s more stringent rules under the TSR will not generally need to change their practices to comply with the recent FCC changes with respect to telephone calls made to residential land telephone lines. There are several issues raised by these

Massachusetts Auto Dealer www.msada.org

new FCC rules that dealers must understand: (1) Are you using an “Automated Telephone Dialing System” (“ATDS”)? You may not be using prerecorded calls to contact consumers, but are you using software or systems that meet the definition of an ATDS under the new rules? The TCPA definition of ATDS may cover computers used to make or assist in making telephone calls. That means that the FCC may consider ANY telemarketing phone call made using such a system to be improper under the TCPA unless you have the consumer’s prior express written consent. (2) Calls to Cell Phones: Generally, you cannot make prerecorded or autodialed calls of any kind to a cell phone without prior express consent. (There is some lack of clarity whether a customer who simply provides a cell phone number to the dealer would have provided the necessary prior express consent to receive a call on that cell phone; the case law is mixed.) This includes purely informational calls (e.g., calls to notify a customer that their vehicle is ready for pickup in the Service department.) After October 16, telemarketing prerecorded or autodialed calls made to cell phones will now require prior express written consent. (3) Text Messages: As NADA has previously informed dealers, the FCC considers SMS or “text” messages to be telephone calls. Therefore, as text messages are generally sent to cell phones, after October 16 any automated telemarketing text message requires prior express written consent. Depending on the nature of method used (and a court’s interpretation of that method), all text messages may require prior express written consent. There are several issues with respect to text messaging that make their treatment unclear under current law, and dealers must consult their legal counsel and work with their vendors to determine the best approach. Until more clarity is achieved, the conservative approach is to ensure that no text messages are sent by the dealer or on behalf of the dealer by the dealer’s


MSADA service providers without ensuring (and being able to prove) prior express written consent by the text recipient. Again, dealers should consult their legal counsel for more on these changes, and should work closely with any third party vendors to ensure that any calls and text messages made or sent by the dealer or on the dealer’s behalf comply with the new requirements.

DealersEdge Webinars Are you taking full advantage of our weekly educational and training seminars provided to you through our partnership with DealersEdge Management Training? Are you receiving our weekly e-mails announcing upcoming webinars and registration information? If not, you are missing out on an incredible bargain that will add value to your employees knowledge and skills, and ultimately to the success of your stores. DealersEdge annually provides more than 45 live weekly webinars that feature timely, topical information delivered by an incredible roster of presenters that are experts in various fields. The live courses, and more than 100 pre-recorded webinars (and growing), are available to MSADA members in two ways. Members can elect to register for a live webinar or purchase a pre-recorded course on an a la carte basis with MSADA’s member discount of $149 per course OR you can sign up for the MSADA VIP Season Ticket. For just $800 annually, a dealership can use the VIP Season Ticket to register up to 10 team members to access all programming, both live and recorded. That’s more than $30,000 worth of training for JUST $800! If you aren’t already, we hope you will consider this extremely cost-effective and time-saving method of training your management staff on the latest information in their area of expertise. If you have any questions, please don’t hesitate to contact DealersEdge at 800-321-5312 or me at rokoniewski@msada.org. The upcoming schedule of webinars for

the next several weeks is as follows: • Thursday, October 31, 1:00 p.m. EDT – Paul Potratz, COO of Potratz Partners Advertising: Facebook’s New “Newsfeed Ads” Provide New Opportunities for Auto Dealerships. • Thursday, November 7, 1:00 p.m. EDT – Brooke Samples, Profit Blueprints LLC: Forecasting 2014 – A Step-By-Step Guide for Creating Actionable Dealership Forecasts that Yield Results. • Thursday, November 14, 1:00 p.m. EDT – Rob Campbell, The Mironov Group: Key Performance Indicators for Parts Managers – De-Mystifying the Financial Statement. • Thursday, November 21, 1:00 p.m. EDT – Greg Criss: BluePrinting the Body Shop – A Process for Improving Efficiency and Profits. • Thursday, December 5, 1:00 p.m. EDT – Stephen Murphy, Bamboo Interactive: LinkedIn for Auto Dealerships – How to Build, Maintain and Safely Market to Your Contact Network.

Brian Kelly – Mass. TIME Dealer of the Year Recently the MSADA Directors named Brian Kelly, president of Kelly Automotive Group in Danvers, as our Massachusetts Dealer of the Year and, as a result, subsequently nominated him for the 2014 TIME Dealer of the Year award.

As our Massachusetts nominee, Brian is one of a select group of 57 dealers from across the country who will be honored at the 97th annual National Automobile Dealers Association (NADA) Convention & Exposition in New Orleans on January 25, 2014. 
The TIME Dealer of the Year award is one of the automobile industry’s most prestigious and highly coveted honors. Recipients are among the nation’s most successful auto dealers who must also demonstrate a long-standing commitment to community service. The award is sponsored by TIME Magazine in association with Ally, and in cooperation with NADA. Brian’s long-standing connection to his community has spurred many philanthropwww.msada.org

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ic endeavors. The organizations he supports include YMCA, Boys & Girls Clubs of America, Special Olympics, Miles for Smiles (to find a cure for the neuro-genetic disorder Angelman Syndrome) and Ellie Fund (to fight breast cancer). He has also participated in Globe Santa, the Boston Globe’s annual appeal to help in-need families and children enjoy the holidays, by donating a Fiat for the organization’s raffle that raised over $60,000. In addition, he donated $100 for every auto sold to a Beverly resident over a sixmonth period to support the Beverly High School’s new sports park, raising more than $20,000. He has pledged $25,000 to J. Henry Higgins Middle School in Peabody to help fund their after-school program. And he was delighted to donate a police service motorcycle to the Lynnfield Police Department for use in crowd control during parades and to help support the D.A.R.E program. Our more recent Dealers of the Year have included Ray Ciccolo, Ann Regan Flynn, William DeLuca III, and Richard Mastria.

Our PACs - DEAC & NCDPAC Each year MSADA expresses itself politically through NADA’s federal PAC, Dealers Election Action Committee (DEAC), and through our state PAC, the New Car Dealers Political Action Committee (NCDPAC). We depend on contributions from our dealers to keep these PACs strong, as we need to have an active voice in Washington and on Beacon Hill. Contributions to our PACs are an inexpensive insurance policy. Since by law we cannot use our membership dues or other association revenues for political contributions, the PACs help us to remain strong politically as we advocate for our dealers’ interests in the political process. If you have not yet given to the PACs this year, please contact me at rokoniewski@msada.org and we can make sure your contributions happen. Thank you.

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Troubleshooting

MSADA

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Charging for Shop Supplies By Peter Brennan, Esq.

Staff Attorney, MSADA Your Association deals with a variety of legal questions on a daily basis, and one issue that comes up frequently is the proper way to charge customers “shop supplies” in a repair bill. As you know, the term “shop supplies” generally refers to things like cleaners, solvents, small quantities of fluids, rags, the servicing of the parts-cleaning machine, the disposal of waste oil and environmentally toxic materials, and other parts and supplies normally maintained as inventory. While smaller repair operations have the benefit of keeping track of and itemizing each product used in a particular repair, many Association member dealers are simply too busy to employ this time consuming process. The main alternatives to itemization are to include the shop supplies in the labor rate (which the customer must be notified of up front), or to charge the customer a percentage of the total repair (which the customer must be notified of up front with the charge then stated in the receipt). In Massachusetts, the Attorney General’s regulations regarding automotive repairs and service (940 CMR 5.05) do not specifically define how shop supplies must be charged to the customer, leaving the dealer some leeway in determining their process. However, pursuant to the regulations, a dealer must notify the customer prior to the repair of the estimated costs of the repair, including all parts and labor. Posting conspicuous notices re-

garding the hourly labor rate, parts costs, shop supplies charge, and other potential fees in an area where the notices will be visible to the customer is a good way to show actual notice under the regulations and will protect dealers that face a complaint based on “hidden costs”. Under the applicable regulations, after the repair has been made the dealer must prepare for the consumer a receipt containing the following information: (a) the name and address of the consumer; (b) the date the vehicle was presented for repair; (c) the date the vehicle was returned to the consumer; (d) the number of days the consumer’s warranty has been extended as a result of the repairs; (e) the mileage on the date the vehicle was presented for repair and on the date it was returned to the consumer; (f) the defect and symptoms complained of; (g) an itemized list of the work performed in an attempt to correct the defect; (h) the identity of the repairer that performed the work if not the dealer; (i) the parts replaced in performing the work, identified by name and number, including a statement detailing any used, reconditioned or rebuilt part; and (j) any amount charged to the consumer for the repair, with a detailed accounting of the hourly rate or flat fee charged. (M.G.L.A. c. 90, § 7N¼(3)(A)(i); 201 C.M.R. § 11.17(1); 940 C.M.R. § 5.05(9).) If shop supplies are charged to the consumer, and not included in the hourly labor rate, they should be specifically listed in the receipt, and the dealer’s repair shop representative should be ready to explain this charge to the consumer. Many times, an angry consumer can be mollified if a dealer’s representative can adequately explain the shop supplies charge in an honest in friendly manner, and no complaint will result. Nonetheless, failure to comply with the receipt guidelines incorporated in the regulations listed above can open the door to liability for an unfair or deceptive busiwww.msada.org

ness practice. Association members also need to be wary of tax implications when charging the consumer for shop supplies. Pursuant to the applicable state regulation, 830 CMR 64H 1.1, automobile repair is a service transaction, and the sales tax treatment of the transaction depends on whether (i) the property transferred is a consequential element of the transaction and (ii) the charge for the tangible personal property is separately stated on the bill. Notably, if you list a separately stated charge for shop supplies, sales tax should be charged and collected, whether or not the value of the supplies is inconsequential or not. However, if there is not a separately stated charge for the supplies, it needs to be determined if the value of the supplies used are inconsequential (less than 10% of the total charge). If inconsequential, and not separately stated, sales tax does not need to be charged and collected. If not separately stated and not inconsequential, then sales tax should be charged and collected on the total charge to the customer. When purchasing shop supplies, a resale certificate can be used for supplies that will be separately charged to customers (with sales tax charged and collected) that are transferred to the customer as part of the customer’s automobile. A resale certificate cannot be used, however, for the purchase of supplies that are used in the repair but do not become part of the customer’s automobile, regardless of whether or not these items are separately charged to the customer. If you require guidance or additional information regarding shop supplies practices, please contact Robert O’Koniewski, MSADA Executive Vice President, rokoniewski@msada.org or Peter Brennan, MSADA Staff Attorney, pbrennan@msada.org or by phone at (617) 451-1051.

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Massachusetts Auto Dealer OCTOBER 2013


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AUTO OUTLOOK

OCTOBER 2013

Massachusetts Auto Dealer www.msada.org


MSADA

www.msada.org

Massachusetts Auto Dealer OCTOBER 2013

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14

Legal

MSADA

By Joseph W. Ambash

Cover All Bases

How to Prevent Rogue Employees from Hurting Your Business Rogue employees can hurt your business. Big time. What’s a rogue employee? Edward Snowden is one. Aaron Hernandez is another. It could also be one of your employees who happens to get arrested for involvement in child pornography or driving under the influence. Hopefully you won’t ever face a situation as notorious as Snowden and Hernandez, but the chance that one of your employees will at some point do something that will embarrass your dealership and damage your reputation is almost certain. As a labor and employment attorney, I receive far more calls than I’d like about embarrassing situations involving employees. A client reads in the newspaper that an employee was arrested for drug activity. A manager is confronted by detectives who want to arrest an employee on site and confiscate the computer he is using. A company owner discovers that an employee embezzled funds right under his nose. An executive discovers that one of her people is trashing her on Facebook. How should you prepare for these situations, and what should you do when they occur? First of all, remember that not reacting is simply not an option. To protect your reputation, you must be prepared to respond quickly, thoughtfully and legally. Here are some suggestions: 1) Start by screening all prospective employees carefully. There are many ways to check an applicant’s background, from using the on-line eCORI program offered by the state, to hiring a backgroundchecking company. Obviously, the degree of pre-screening should be calibrated to the nature of the job and the potential risk OCTOBER 2013

“Remember that not reacting is simply not an option. To protect your reputation, you must be prepared to respond quickly, thoughtfully and legally.” to your company. And screening must be done in accordance with the law. For example, although you may conduct background checks, you may not ask questions about criminal background on a Massachusetts employment application. You must obtain a prospective employee’s consent to conduct a background check, and you must share the information with the applicant if you end up not hiring the person based on that information. 2) If you discover damaging information about a current employee, be prepared to take prompt action. You learn, for example, that an employee has been arrested. Under Massachusetts law, you may not ask the employee the details of an arrest, but you can certainly learn about it from other sources, including the press or the police. And the employee is free to volunteer information about it to you. If you believe that the employee’s continued presence on the job will damage your dealership’s reputation or potentially place others in harm’s way, you are free to suspend the employee “pending investigation,”

Massachusetts Auto Dealer www.msada.org

with or without pay, at your discretion. And under Massachusetts law, you may terminate “at will” employees if you conclude that their continued employment is not justified. 3) Get legal and public relations advice. Rogue employees can cause enormous direct and indirect damage to your business. It is critically important that your public responses are lawful, accurate and effective. You do not want to risk a lawsuit by defaming an employee, but neither do you want to say “No comment” if your customers are looking for information or reassurance. Engaging a public relations professional is particularly important if the situation creates, or has the potential to create, publicity. Unfortunate events involving your employees can be magnified by our 24-hour newscycle and social media. Be ready to deal with the media and consider being proactive. Often, getting ahead of the story is the best way to control it. Please join our seminar, “When Employees Go Rogue,” moderated by Boston Globe columnist Shirley Leung, on December 11, 2013 at the Metro Meeting Center, 101 Federal Street, 4th Floor, starting at 8 a.m. For further information contact tbohn@laborlawyers.com.

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Joe Ambash

is managing

Boston Fisher & Phil-

partner of the office of

lips, a national law firm representing

manage-

ment in labor and employment

law.

He

can

be reached at jambash@ laborlawyers.com.


Accounting

MSADA

Help Prevent Customer Privacy Violations with Strong Policies By Bart D. Haag CPA

B arton D. H aag is a principal at A lbin , R andall & B ennett , where

he

specializes

in automobile and mo torcycle

He

can

dealerships .

be

reached

bhaag @ arbcpa . com .

One dealership learned the hard way about how privacy practice deficiencies occur. When police pulled over the finance manager for a routine traffic violation, a stack of sales contracts was discovered that fueled an identity theft ring. Turns out, the manager stole credit card and drivers’ license numbers from about a dozen of the dealership’s customers. He also stole nearly $30,000 in Lowe’s and Best Buy gift cards through the dealership’s sales incentive program. The manager is now serving a sentence for his crimes, but what could the dealership have done to prevent this impropriety in the first place?

Background Checks

Background checks on prospective employees obviously protect against identity theft. But you shouldn’t only check for criminal records. Obtain credit reports and require drug tests for employees with direct access to sensitive information. Financial distress and drug habits can provide motives to steal. Also ask for references and follow through with phone interviews. Once you’ve hired someone, explain your privacy policies and provide regular compliance training. In the case described above, it turned out the finance manager had a criminal record -- burglary, credit card theft and drug violations -- that was overlooked

because he was a “rainmaker,” earning more than $200,000 through commissions. He also had been employed by area competitors, and they might have clued the store into the manager’s suspicious reputation, if asked.

Violations Can Be Costly

In one case, a defendant was charged $35,000 for improperly disposing of about 40 boxes of sensitive customer records -- including tax returns, credit applications, credit card numbers, drivers’ licenses and credit reports. In addition to this penalty, the settlement required the defendant to hire an independent, third-party security professional to review its privacy protection program annually for the next 10 years. If an audit costs just $5,000 each year, that’s another $50,000 in costs. Plus the defendant had to pay attorneys’ fees and court costs. Although this case involved a mortgage broker, dealers can obtain the same information from their customers and can easily violate the federal Fair Credit Reporting Act and FTC Disposal Rule, which regulate the collection, dissemination, use and disposal of consumer information. Dealers must also comply with other laws and regulations including the Gramm-Leach-Bliley Act and the Red Flags Rule.

Physical Safeguards

It’s surprising how many dealer management systems allow carte blanche access to customer files. Treat sensitive consumer information as if it’s your own. Would you want your Social Security number or credit score lying open on someone’s desk or displayed on a computer screen for all to see? Not likely. Set computers and smart phones to go into sleep mode after an inactive period and require a password to unlock the device. Store deal jackets in locked file cabinets behind locked doors. Employwww.msada.org

ees should never remove deal packets from your dealership premises, under the guise of “working from home.” When possible, go paperless. Limit access to consumer information with passwords. Logins should give employees and vendors access to only those data fields necessary to fulfill their jobs.

Online Safeguards

The Internet may be a valuable source of leads, but it also can be a security risk. If you ask for financial information on your dealership website, make sure the data is encrypted. If you’re unsure, ask your website provider. The provider should use terms like “site certificate” or “SSL,” which means “secure socket layers” and it’s what keeps sites secure by encrypting data, so only your browser can read it. If not, your online application could be putting customers at risk.

Disposal Practices

Retain consumer information for a limited time period only. If someone test drives a vehicle, it’s really not necessary to keep a copy of his or her driver’s license. But do keep the name and contact information for follow-up calls or e-mails. What if you’re legally required to retain hard copies of purchase agreements after the deal closes? Store it onsite under lock and key. Or move records offsite to store with a reputable, trusted vendor.

Surprise Audits

You may not have given your customer privacy practices much thought recently. But you can’t afford to let it slide. Spot-check your data security policies on a regular basis. Put yourself in a prospective employee’s shoes. Walk around the showroom looking for security breaches. Double-check that you’re following the steps outlined in this article. If not, you could become another fraud statistic.

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Massachusetts Auto Dealer OCTOBER 2013

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16

COVER STORY “We come in and say, ‘We’re from the state auto dealers, we represent 412 dealerships with over 20,000 employees in the Commonwealth,’ and their eyes kind of pop out of their heads.”

– MSADA Vice President Chris Connolly

a Day on Beacon

MSADA spearheads grassroots lobbying effort by visiting legislators Dozens of member dealers took to the State House recently for MSADA’s Dealer Day on Beacon Hill. Fresh off the heels of the Washington, D.C. NADA Conference, dealers met with more than 100 state legislators to make their views heard. Dealer Day gives dealers a chance to build and strengthen relationships with their legislators. Every year legislators are presented with significant decisions to make on dealer issues, and the event gives the lawmakers a real life glimpse of the people affected. MSADA Immediate Past President Jim Boyle said such face-toface interactions are invaluable. “We have great representation with our lobbyists, and they did OCTOBER 2013

Massachusetts Auto Dealer www.msada.org

open the door for us, but it means so much more for each dealer to connect and have a relationship with their local legislator,” Boyle said. “There’s just nothing like that one-on-one relationship with your legislators.” This year’s Dealer Day occurred at a time when three key pieces of dealer-related legislation face potential activity in the Senate and the House. Crucial Right to Repair legislation, changes to the state’s franchise law, and legislation related to Tesla were the main issues brought to the table by dealer industry representatives. A luncheon at the Omni Parker House kicked off the event. MSADA Executive Vice President Robert O’Koniewski and


MSADA

17

About Auto Dealers

Hill

This is a small fact sheet dealers presented to legislators. It represents the impact dealers have on their communities and their value in the state economy.

Auto dealerships are a critical driver of our state and local economies.

by Catherine MacDonald

• Dealers are a foundation of the retail industry • Nearly 20% of all retail sales activity in Massachusetts

• Dealers create good jobs – 412 dealerships,

MSADA President Scott Dube spoke to dealers and went over the main points to be presented to legislators at the meetings to follow. The most pressing issue affecting dealers in the State House is the “Right to Repair” legislation. Part of Dealer Day’s message was a call for the Legislature to resolve the conflict between the two existing RTR laws. MSADA members made it clear to legislators that if the conflict is not solved in the State House, auto manufacturers may be out of compliance in January 2014, and dealerships in their communities will be unable to sell certain cars and trucks as a result. This

20,000+ jobs throughout the state. Average salary $55,000+ Dealers generate revenue for the state and our communities Hundreds of millions in sales taxes alone, plus corporate, payroll, excise and property taxes Dealers are active participants in our community, i.e. service, charitable, athletic, and non-profit causes

• • •

www.msada.org

Massachusetts Auto Dealerr OCTOBER 2013


18

A Day on Beacon Hill

would force their constituents to go out-of-state to buy certain vehicles and bring them back to Massachusetts to register them, thereby leading to dealership closures and job losses. Dealers explained to lawmakers that the bill supported by the MSADA, House 184, puts in place a fix to a vexing problem that if left unresolved would potentially lead to the closure of scores of dealerships with the ensuing loss of thousands of jobs and millions in dollars of tax revenue. MSADA President Scott Dube said the Association hopes the solution to the RTR battle is not far away as dealers face a looming deadline of January 1. “There’s the potential for some manufacturers to not be able to sell their new cars in 2014 in the Commonwealth,” Dube said. NADA Director Don Sudbay said this kind of education is crucial. “We really wanted to make sure they understood we will not be able to retail Model Year 2015 vehicles,” Sudbay said. “We really wanted to make sure they understood how important that was and we need to get this remedied as fast as possible.” Sudbay said when it came to the RTR issue, there was a cooperative attitude among the legislators he met with – “I think they got the message.” “They understood the economic impact this could have if they don’t fix this. They certainly understood that this could be catastrophic for us,” he said. “Our employees are all people that live and work in their districts. The clock is ticking.”

Consumer advocates MSADA also supports Senate 129, which would amend Chapter 93B, the Automobile Dealer Franchise Law. The bill would address certain issues between the dealers and manufacturers that have been festering for the last several years. “One common misconception several Massachusetts legislators have is that somehow they think they are more responsible to consumers versus dealers – they somehow think that we are anti-consumer. Nothing is further from the truth,” Boyle said. “If there are no consumers we have no reason to go to work. We are the consumers’ advocate.” The government has a lot of ideas about how the car business operates, Dube says. “Or maybe more ideas about how it should operate,” he said. “If OCTOBER 2013

MSADA MSADA

they get their information from only one side of an issue, they can do a lot of damage.” The Tesla legislation potentially poises a huge threat to dealers, but is a particularly notable example of an issue at the bottom of most legislators’ lists. O’Koniewski said legislators hear Tesla is an electric car, and that’s often the extent of their knowledge. “They don’t understand all the subtleties of the law and why it is what it is,” he said. “Tesla has filed a bill that would allow them to open up a store without a dealer. Part of our education is to bring them up to speed on the positive aspects of the franchise system, why we have stores, and why factoryowned stores are not a good idea.” Dube said the Association is asking legislators to look at Tesla’s proposal as a way to circumvent the law. “All we’re really asking for is for everyone to be on a level playing field.”

Putting a Face to a Name Just like with the NADA Washington Conference, Connolly says, it’s good for dealers to put a name with a face and let lawmakers know what’s important to them, plus the economic impact the industry has on the Commonwealth. “Legislators get excited about a manufacturing plant opening and providing 300 jobs. We come in and say, ‘We’re from the state auto dealers, we represent 412 dealerships with over 20,000 employees in the Commonwealth,’ and their eyes kind of pop out of their heads.” Dealer Day gives legislators a chance to connect with dealers and receive information from someone other than a paid lobbyist, which they appreciate, Dube says. These meetings help legislators understand how fragile the industry really is. “The grassroots effort helps legislators understand how what seems like really small changes can have a huge impact,” Dube said. “Only the local dealer can really deliver that message to their state senator or representative effectively.” Connolly says meeting with lawmakers at the state level is almost more important because dealers can have a greater impact here than at the federal level. “It’s hard to take time out of operating one’s business, but it’s important to be done on an at least annual basis,” Connolly said. “It’s something that dealers should commit to attend in the future, in my opinion.” Sudbay agrees. He said he would like to have seen a few more dealers to build on Dealer Day’s increasing number of attendees each year. “It’s a day out of your work day, but it’s worth it.” This was MSADA Director Steve Sewell’s first year attending Dealer Day and he said it was a great experience. His message to other dealers considering whether to attend next year: “As new car dealers, we need to stick together and fight for our rights.”

Massachusetts Auto Dealer www.msada.org

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Insurance

MSADA

19

Loss Prevention

Protecting your business from public scrutiny and unnecessary litigation

By Steven Megee Steven Megee is regional sales manager at the Framingham Regional Office for Zurich North America Commercial’s Programs & Direct Markets’ business unit. He can be reached at steve.megee@zurichna.com.

Employment-related practices Pick up a newspaper on any given day and you’ll see headlines involving discrimination or harassment. Claims resulting from employment-related practices are serious issues in many industries. All businesses should have an antidiscrimination/harassment program. This includes proper hiring and termination procedures and a “zero tolerance” policy relative to discrimination or harassment of any form. The execution of such a program can offer protection for your business. In at least one case, the U.S. Court of Appeals for the Eleventh Circuit ruled in favor of the employer because it had “...developed and promulgated an effective and comprehensive anti-sexual harassment policy.” How do you protect yourself from public scrutiny and unnecessary litigation? You can start by developing an antidiscrimination/harassment program. Here are some suggested guidelines:

Hiring • Establish policies prohibiting discrimination or harassment of any kind. • Require applicants to complete a full employment application; never hire onthe-spot. • Eliminate questions (interview and application) dealing with age, race, marital status, handicap, health or ancestry. • Conduct the most extensive background investigation allowed by law. (Smaller companies can retain a vendor to provide this service.)

• Implement a drug screening program. Be sure to check any legal requirements before implementation. • Remember that information obtained by employers on employment applications is protected by federal and state privacy regulations. Specifically, non-public personal information such as social security numbers are protected. Even the hiring managers may have no real need for that type of information. • Make sure that all positions have a complete, written job description. • Provide new employees with an employee handbook that clearly describes: – benefits – work rules and regulations – wage and salary policies – performance review procedures – employee responsibilities

known. Consider implementing a hot line number for employees to call to report complaints. • Vendors provide this service through independent, unbiased counselors. This is advantageous because it: offers employees confidentiality when reporting incidents; encourages employees to report incidents immediately; lessens employees’ fears of retaliation. • All written procedures, from initial complaint to resolution, must be followed by the employer. • If the program is established as outlined above, it becomes incumbent upon the employee to utilize the procedural mechanisms established by the company. • Termination procedures must be complied with by all parties, and thorough documentation is critical.

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Education • Employees must receive adequate training on harassment and discrimination issues, including: – definitions of harassment – notification of zero tolerance policy – procedures for complaint investigation, remedial action and follow-up • Managers must be thoroughly trained on how to handle harassment/discrimination complaints. • New employees should receive state and federally-mandated safety training before performing any work activities. • Training programs must be well-known to employees.

Commitment • Consult with legal counsel to develop a discrimination/harassment policy. • Demonstrate management’s commitment to that policy. • Maintain confidentiality and proper documentation.

Follow-up • The program must offer the employee alternate avenues of making a complaint www.msada.org

Zurich offers a web-based, interactive Zero Tolerance Discrimination Training program to our customers. This program will help reduce your risk of sexual harassment and discrimination in your business, and may provide affirmative defense to claims that may arise.

Loss prevention information

For questions about this loss prevention topic, contact the Zurich Risk Engineering Department at 800-821-7803.

Not a customer?

For more information about Zurich’s products and Risk Engineering services, visit www.zurichna.com/automotive or call us at 800-840-8842 ext. 7449.

Already a customer?

Contact your Zurich Account E xecutive or agent for information about additional Zurich products and Risk Engineering services.

Massachusetts Auto Dealer OCTOBER 2013


20

NEWS

from Around the Horn

BOSTON

Boston Ford Hybrid and Electric Sales Soar One year ago, Ford Motor Co. forayed into the US electric vehicle market with the launch of the 3 new hybrids and 2 plug-in hybrids. In one short year, the Dearborn automaker has become the second-best selling hybrid brand in the country, much to the chagrin of Toyota Motor Corp. Over the last year, Ford sold approximately 85,000 hybrids and electric vehicles compared to just 22,000 in the prior year. The bulk of those sales came at the direct expense of Toyota, the self-appointed king of the hybrid/ electric market. Ford’s new electric lineup includes the Ford Fusion Energi PlugIn Hybrid, Ford C-MAX Energi

OCTOBER 2013

Massachusetts Auto Dealer www.msada.org

Plug-in Hybrid and the Ford Focus Electric. These new electric vehicles, in conjunction with the Ford Fusion Hybrid and C-MAX Hybrid have been met with rave reviews from Boston Ford consumers for their combination of power, performance and luxury which is often missing in hybrid vehicles, such as the Prius. However, the real reason these vehicles have been positively


NEWS from Around the Horn received in Boston and across the country is their impressive fuel economy. The Fusion Energi Plug-In gets 108MPGe, the Ford C-MAX Energi Hybrid has a 620 mile range and the Ford Focus Electric can travel 76 miles on just one charge. This impressive technology has allowed Ford to conquest a significant portion of Toyota’s market share. In April 2012 King Toyota controlled 80% of the electric vehicle market compared to Ford’s meager 3% market share. As of June 2013, Ford had gained a 15% stake in the EV market, while Toyota’s stronghold has dwindled to just 59%. Boston Ford drivers are starting to notice a gradual increase in electric, hybrid, and diesel vehicles on Boston roadways. The reason for this increase is that the CAFE (Corporate Average Fuel Economy) standards are becoming increasingly stringent. American manufacturers must hit 34.1 MPG by 2016 and 54.5 MPG by 2025. This green mandate has spurred auto manufacturers to increase their electric/hybrid vehicle output and greatly improve incentives on these vehicles heading into the 4th quarter of 2013. HOLYOKE

Gary Rome Auto Group Partners with Premier Motoring Concepts

MSADA

AGAWAM

Golf Tournament Raises Money for Cancer Research The TommyCar Auto Group, consisting of Country Nissan, Country Hyundai, Northampton Volkswagen and Patriot Buick GMC, recently held its 5th Annual Tom Cosenzi Driving for the Cure Charity Golf Tournament at Crestview Country Club in Agawam.  The 4-player scramble was a great success and helped raise $102,300 to support Dr. Patrick Wen and his team of researchers in the Neuro-Oncology Department at Dana Farber Cancer Institute.The tournament has raised a total of $406,500 in its five year history for the Jimmy Fund. The tournament was started by Carla and Tommy Cosenzi in memory of their father, Tom Cosenzi, who passed from a Glioblastoma Brain Tumor in 2009, in the hopes of carrying on his legacy and finding a cure for this dreadful disease. “My father’s vision was that no other family would have to endure the pain of cancer,” said Carla Cosenzi. “It was his wish that we continue to raise money for cancer research at Dana-Farber through its Jimmy Fund.”  For more information on the Tom Cosenzi Driving for the Cure Charity Golf Tournament, visit www.TomCosenziDrivingForTheCure.com.

Gary Rome Auto Group has embarked on a lucrative partnership with Premier Motoring Concepts (PMC). The deal allows the auto dealer group to feature PMC products on its accessory store websites while simultaneously providing 120 more product choices for customers. Premier Motoring Concepts is a Hyundai and Kia accessories distributor that sources Hyundai and Kia parts and accessories from South Korea and make them available in the United States. Featured products are not sold through Hyundai Motor America or Kia Motor America. PMC’s customer base includes the five largest-volume Hyundai dealers in the U.S., as well as dealers that sell fewer than 50 units a month. The company prides itself on its excellent reputation for outstanding customer service and impeccable attention to detail. “We are very excited to be offering more product categories for customers to choose from in our Hyundai and Kia Accessory Stores,” says Gary Rome, President of Gary Rome Hyundai in Holyoke and Kia in Enfield, CT. “This partnership is possible because we always listen to our customers and find ways to solve their problems. Our relationship with PMC will help us supply products which are otherwise unavailable in the United States.” www.msada.org

Massachusetts Auto Dealer OCTOBER 2013

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22

NEWS from Around the Horn RAYNAM

Redesigned 2014 Mazda3 Rolls Out to Dealers Mazda’s KODO, or Soul of Motion, design language has already proven popular on the new CX-5 compact crossover and the redesigned 2014 Mazda6, and now the lineup’s best-seller has been given the same flowing styling. The all-new 2014 Mazda3 has been rolling out to dealerships during the past month, donning the brand’s new pentagonal grille, swept-back headlights and aggressively flared fenders. Underneath its sleek new sheet metal, the redesigned Mazda3 now features Mazda’s full suite of lightweight and efficient SKYACTIV technologies, enabling sedan models to return a classleading 41 mpg on the highway with the standard 155-horsepower 2.0-liter SKYACTIV-G engine. Drivers seeking an extra dose of performance can instead opt for the 2.5-liter SKYACTIV-G unit, which produces 184 horsepower while still netting 39 mpg on the highway. “Typically, the compact models that conserve the most fuel are also the most conservative when it comes to styling, but the new Mazda3 bucks that trend with its daring design,” said Barry Chew, sales manager of Mastria Mazda. “The 2014 Mazda3

OCTOBER 2013

Massachusetts Auto Dealer www.msada.org

also backs up its sporty styling with engaging driving dynamics, thanks in large part to its lightweight-yet-strong SKYACTIV body and chassis.”


MSADA QUINCY

Quirk Dealerships Award Free Car for Man Who Made Hole-in-One in Giant Dog Costume A man dressed as a dog received a 2014 Ford Fusion recently as a prize for a hole-in-one at a golf tournament. A memorial tournament was being held at Presidents Golf Course in Quincy, and the prize for an ace on a par 3 was supposed to be a new Ford Fusion by Quirk Auto Dealers in Quincy. During the tournament, a man dressed in a dog costume -- minus the head -- did the unthinkable and aced the hole. Quirk announced it will award the car to the dog via its Facebook page: “Hello Facebook - We will be awarding our Golf Tournament Winner a Brand new Ford Fusion.

We want to let you know that we did indeed buy insurance and the official rules of the contest were not exactly followed (for one, he’s a dog). That said we think that our winner had ‘one hell of a great shot!’ and the outfit was second to none! Congratulations, Cujo! Come Forward and claim your prize!” www.msada.org

Massachusetts Auto Dealer OCTOBER 2013

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NEWS from Around the Horn

MSADA

LYNN

Pride Hyundai Celebrates Reopening After Renovation After a 6-month extensive renovation project, Pride Hyundai of Lynn recently celebrated its grand reopening. More than 170 attended. Among other upgrades, the dealership’s customer waiting lounge now boasts a 55” flat screen TV, fireplace, free Wi-Fi, new furniture as well as complimentary snacks and beverages while guests enjoy a shorter visit to have their vehicle serviced. The showroom is completely redesigned for comfort and a guest experience that is among the best in the industry. The dealership has also added a convenient service drive for guests, keeping the focus on comfort to make sure their needs are addressed very precisely from the moment they arrive. In the parts department, the redesign has streamlined interactions between the receptionist and customers to shorten wait times. The redesigned exterior is more than a visually appealing dealership – Pride Hyundai has made easy access and ample parking a top priority. “All this was done with a keen eye on where we are now and where we want to be 20 years from now,” said Internet Sales and eCommerce Director Don Campell. “Stop by and say hello. We’d love to show you around!”

PEABODY

2014 Acura MDX Rated ‘Advanced’ in IIHS’ New Crash-Prevention Program With active-safety technology becoming more prevalent in the auto industry, the Insurance Institute for Highway Safety (IIHS) has introduced a new test program focused on front-crash prevention systems to guide car buyers’ choices. The redesigned 2014 Acura MDX fared well in the IIHS’ inaugural round of testing, earning an “advanced” rating when equipped with its Forward Collision Warning and Collision Mitigation Braking System (CMBS). An “advanced” rating from the IIHS requires that a vehicle have autobrake and either avoid a crash or reduce its speed by at least 5 mph in a 12-mph test or a 25-mph test. When outfitted with its optional CMBS, the 2014 Acura MDX uses a radar transmitter to identify the distance and closing speed of objects ahead, automatically tugging at the driver’s seat belt and initiating light braking if he or she doesn’t start to slow the vehicle. Should the system sense that a frontal collision is imminent, then the front seatbelts are tightened OCTOBER 2013

Massachusetts Auto Dealer www.msada.org

and strong braking is employed to reduce the impact. “The new MDX is well ahead of the curve when it comes to preventing or mitigating accidents, whether you’re looking at the front-crash prevention systems that the IIHS tested or the model’s available side-focused technologies like Lane Departure Warning or the Blind Spot Information system,” said Joel Avery, general manager of Acura of Peabody. “In those cases where a crash can’t be avoided, though, the Acura MDX is among the industry’s best at providing comprehensive crash protection.”


NADA Update by Don Sudbay

25

NADA Endorses Hiring Our Heroes Program Don Sudbay, President of Sudbay Automotive Group, represents MSADA members on the NADA Board of Directors. He welcomes your

questions

and

concerns

(donsudbayjr@sudbay.com). Thanks to all dealers who participated in our annual “Dealer Day on Beacon Hill.” I think all who attended will agree that it was a day well spent. There are many extremely important issues this year which can affect us all in a negative way if our legislators don’t listen to us and do the right thing. We are a powerful voice on Beacon Hill and every dealer needs to remember that. On the national front, I just returned from the fall NADA Board meeting where we elected a new Vice Chairman: Bill Fox from Auburn, NY. Bill will succeed Forrest McConnell, who will take office as the NADA Chairman at the Convention in New Orleans this coming January. Both of these dealers are strong advocates for the franchise system who will stand up to the challenges from the manufacturers and our government in the coming years.

A Special Note from NADA Chairman David Westcott: “The men and women of the U.S. armed forces, who bravely served and fought for our country, are facing huge hurdles when trying to find employment after leaving the military. There are 800,000 veterans without jobs, and with more than 1 million service members expected to leave the military over the next five years, we are called to help serve those who have served us. “Veterans deserve a fighting chance when they return home. And that starts with finding a job. To join in this effort, the National Automobile Dealers Association has partnered with Hiring Our Heroes to raise awareness of career opportunities available at new-car and -truck dealerships. “Hiring Our Heroes, sponsored by the U.S. Chamber of Commerce Foundation, is a nationwide effort to help veterans and their spouses find jobs in communities across America. “Why hire a military veteran? Veterans possess real-world experience and skill sets that can only enhance our industry. They are team players who have proven leadership skills in the most diverse environments and demanding situations. “To help expand career opportunities for military personnel and their families, we’re encouraging dealers to em-

brace the Hiring Our Heroes program by attending job fairs, posting dealership job openings on military employment websites and engaging in other media outreach initiatives. “So far, Hiring Our Heroes and its partners have hosted 600 job fairs across the country. These job fairs have provided accessible jobs to 20,200 men and women. And nearly 1,200 businesses have participated in the program to hire veterans and their spouses. To participate in a local job fair and find out dates and locations, visit www.uschamber. com/hiringourheroes/events. “NADA encourages you to spread the word about the partnership. Inform your community that you’re a ‘Proud supporter of Hiring Our Heroes’ by branding your website. For examples, visit www.nada.org/heroesbranding. “Post comments on your social media platforms – with a link to NADA’s Hiring Our Heroes campaign at www.nada. org/hiringourheroes – and promote it throughout the year. “We encourage you to become a supporter of Hiring Our Heroes and get involved today.”

Dealers Seek Greater CFPB Transparency on Auto Finance More than 400 new-car dealers and association execs met with their members of Congress during NADA’s Washington Conference from September 18-19 to discuss key policy issues facing franchised auto dealerships. The most prominent among them: the Consumer Financial Protection Bureau’s effort to end the discounts car buyers can negotiate when financing a car or truck through a dealership. During visits to Capitol Hill, dealers asked their senators to sign the letter authored by Sens. Rob Portman (R-Ohio) and Jeanne Shaheen (D-N.H.), which requests that the bureau explain how eliminating a dealer’s ability to “meet or beat” a competitor’s rate is good for consumers. A key ally in the dealers’ fight, Rep. Gary Peters (D-Mich.) said he’s “very concerned” about the CFPB’s recent effort to alter the $800 billion auto finance marketplace without a hearing or offering analysis for public scrutiny. NADA is urging dealers to call both their senators and ask that they sign the Portman-Shaheen Auto Finance letter, which requests greater transparency from the CFPB on indirect lending. For a copy of the letter, visit http://www. nadafrontpage.com/upload/wysiwyg/CFPB_Letter.pdf. The Senate switchboard can be reached by calling (202) 2243121. Operators will direct dealers to the senators from their state. For more information, visit http://www.nada.org/legislativeaffairs/economy-financial/dealer-assisted_auto_financing.htm.

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MSADA

NADA Update Alabama Auto Dealer Forrest McConnell Elected NADA Chairman for 2014 The NADA board of directors has elected Forrest McConnell, III, chairman for 2014. “I’m truly honored,” said McConnell, owner of McConnell Honda/Acura in Montgomery, Ala., who represents Alabama’s new-car dealers on NADA’s board. “I look forward to the challenge.” “Dealers are small Main Street businesses and pillars of their community,” added McConnell, who is only the second dealer from Alabama to lead NADA. “One of the greatest challenges we face is regulations that choke small businesses in America.” Bill Fox was elected NADA vice chairman. He represents New York’s new-car dealers on NADA’s board, and is the owner of Fox Dealerships in Auburn, N.Y. The election took place at NADA’s board meeting in Santa Barbara, Calif. Colorado dealer Jeff Carlson was elected Secretary, and George Nahas, a dealer in Florida, was elected Treasurer. McConnell and Fox will take office at the 2014 NADA Convention & Expo in New Orleans, which runs Jan. 24-27.

Nissan’s Jose Munoz to Keynote NADA/J.D. Power Conference in Los Angeles Jose Munoz, Nissan’s new senior vice president of sales and marketing for the Americas, will deliver keynote remarks at the 2013 Western Automotive Conference in Los Angeles on Tuesday, November 19. The half-day conference, presented by NADA and J.D. Power, also includes Stewart Reed, chairman of the Transportation Design Department at Art Center College of Design in Pasadena, Calif., who will deliver a special keynote presentation, “Identifying and Cultivating Emerging Talent in Transportation Design.” The second annual conference – which precedes press days at the Los Angeles Auto Show (http://laautoshow. com) – includes a panel discussion on “Diversity Marketing,” with an emphasis on the Hispanic market. An OEM panel, “Positioning Your Brand for 2015 and Beyond,” will be moderated by CNBC’s Phil LeBeau and includes James O’Sullivan, president and CEO of Mazda North America Operations; William Fay, group vice president and general manager, Toyota Division; and Thomas Loveless, executive vice president of sales for Kia Motors America. Other speakers include David Westcott, NADA chairman; Finbarr O’Neill, president of J.D. Power; Beth Ann Bovino, chief U.S. economist at Standard & Poor’s; and John Humphrey, senior vice president of global automotive operations for J.D. Power. The conference, held in conjunction with the Greater Los Angeles New Car Dealers Association and the California New Car Dealers Association, will be held at the Biltmore Hotel. Early-bird discounted registration is available through October 18. For more information or to register, OCTOBER 2013

visit http://www.jdpower.com/events/2013-western-automotive-conference.

NADA Convention: 21 Hotels in New Orleans Have Sold Out There’s plenty to get jazzed about with the upcoming 97th annual NADA Convention & Expo in New Orleans next January. For one thing, the city has invested billions of dollars in major restoration projects, and the convention center was updated just this year. Plus, there’s been a 55 percent increase in the number of restaurants over the past seven years, nearly $800 million in hotel upgrades and $77 million in street improvements, including a new streetcar line. “Twenty-one of 33 convention hotels have already sold out, so we’re encouraging attendees to register as soon as possible,” said Desmond Roberts, chairman of NADA’s convention committee. “Exhibit sales on the expo floor are also running higher than the past convention.” The NADA convention runs Friday, January 24, to Monday, January 27. This will be the 10th time the convention has been held in the Big Easy since 1973. Considered the “Automotive Industry Event of the Year,” the convention includes dealer-manufacturer franchise meetings, educational workshops, hundreds of exhibits on the expo floor and numerous networking events. “The city has a festive atmosphere you can’t find anywhere else—from the amazing Creole cuisine and culture to the historic sites and music,” added Roberts, a Chevrolet dealer in Hodgkins, Ill. “New Orleans looks better today than it ever has.” Dealers and their managers who register in advance by January 16 will receive a $75 discount from the on-site rate. For more information or to register, visit www.nadaconvention.org.

Lt. Gen. Honoré to Address ATD Convention in New Orleans Lt. Gen. Russel L. Honoré (U.S. Army Ret.), commander of the Joint Task Force Katrina and Global Preparedness Authority, will deliver keynote remarks at the 2014 American Truck Dealers (ATD) Convention & Expo, which runs concurrently with the NADA Convention on January 24-27 in New Orleans. As commander of the task force, Honoré led the Defense Department’s response to hurricanes Katrina and Rita in Alabama, Mississippi and Louisiana. Honoré will speak at the ATD luncheon/general session at 12:15 p.m., Monday, Jan. 27. Other speakers are Philip Byrd, incoming chairman of the American Trucking Associations, and ATD Chairman Dick Witcher, CEO of Minuteman Trucks in Walpole, Mass. All attendees who register in advance by January 16 will receive a $100 discount from the onsite rate. For more information or to register, visit www.atdconvention.org.

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NADA Market Beat

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

Review of New Light Vehicle Sales Overall

There were 1.1 million light-vehicle sales, in the U.S., in September 2013 – this was a decline of 24.3 percent from August 2013 and a decline of 4.2 percent over last September. September 2013 YTD figures bring total lightvehicle sales to 11.7 million up 8.1 percent from a year ago. The September 2013 Seasonally Adjusted Annual Rate (SAAR) for light-vehicle sales is 15.2 million which is a decline from the value for August 2013 (16.0 million) but an increase from the value for September 2012 (14.7 million). In September 2013 YTD figures, car sales held a market share of 49.6 percent and sales were up 5.3 percent from a year ago while corresponding figures for light trucks put the light-truck share at

50.4 percent with sales up 10.9 percent from a year ago. For Q3 2013, there were 3.9 million light-vehicle sales up 9.1 percent from Q3 2012. For this recent quarter, car sales amounted to 1.9 million up 7.8 percent from Q3 2012 and light-truck sales amounted to 2.0 million up 10.4 percent from Q3 2012. See Figure 1.

Companies/Brands

Companies with a geographic base in North America (Detroit 3 and Tesla Motors) held the largest market share of light-vehicle sales for September 2013: 45.2 percent of the market. This was followed by companies based in the Asia/Pacific region at 44.8 percent and then companies based in Europe at 10.0 percent. In September 2013 YTD figures, companies with bases in Asia/Pacific held the largest share of light-vehicle sales in the U.S. at 45.6 percent. The corresponding share held by the North America-based companies was 45.4 percent and that for the Europe-based companies was 9.0 percent. All company categories by geographic bases – North America, Asia/Pacific and Europe – experienced growth in light-vehicle sales in September 2013 YTD figures from last year. Of the Detroit 3, Ford has experienced the most growth in September 2013 YTD sales, from a year ago, at 11.7 percent followed by Chrysler (8.6 percent) and then General Motors (7.6 percent). From the group of Asia/Pacific-based companies, Isuzu has experienced the most growth in September 2013 YTD sales from last year at 40.4 percent followed by Subaru at 27.7 percent. From the group of Europe-based companies, Porsche has experienced the most growth in September 2013 YTD sales from a year OCTOBER 2013

Massachusetts Auto Dealer www.msada.org

ago at 26.1 percent followed by Jaguar Land Rover at 16.0 percent. For Q3 2013, companies with bases in Asia/Pacific held the largest share of light-vehicle sales in the U.S. at 46.8 percent. The corresponding share held by the North America-based companies was 44.0 percent and that for the Europe-based companies was 9.2 per-


29 cent. All company categories by geographic bases – North America, Asia/Pacific and Europe – experienced growth in light-vehicle sales in Q3 2013 over Q3 2012. Focus: The ‘Other’ category1 (Audi, International, Isuzu, Jaguar Land Rover, Mazda, Mitsubishi, Porsche, Saab, Subaru, Suzuki, Tesla Motors, Volvo). For 2008-2012, the annual light-vehicle sales for companies within this category have ranged from under 50 units to nearly 350,000 units. 2012 sales figures illustrate an uneven distribution of companies within this category; in 2012, 8 companies had sales under 100,000 units, Audi was in the 100-199,999 sales bracket, Mazda was in the 200-299,999 sales bracket and Subaru was in the 300-399,999 sales bracket. The annual share of total light-vehicle sales held by this category of companies has been in the 6.8-7.0 percent bracket for the duration of the 2008-2012 period. In 2008, the leading company was Mazda, by annual sales, with 263,949 units but it was surpassed by Subaru in 2009 which maintained this lead through to 2012 (2012 Subaru sales were 336,441 units, 2012 Mazda sales were 277,046 units). International had the least annual sales of the group, every year, during 20082012. Subaru is the only company in the ‘Other’ category that experienced growth in sales, every year, for this time frame. The only companies which sold more light vehicles in 2012 over 2008 included: Audi, Jaguar Land Rover, Mazda, Porsche and Subaru. For September 2013 YTD, the ‘Other’ category has sold 843,854 light vehicles which is 7.2 percent of total lightvehicle sales. Not including Saab and International which both had no sales for September 2013 YTD, 7 companies have had sales under 100,000 units, Audi has been in the 100-199,999 sales bracket, Mazda has been in the 200-299,999 sales bracket and Subaru has been in the 300-399,999 sales bracket. Subaru has held the largest sales volume within this category with sales of 313,407 units which is 37.1 percent of the ‘Other’ category sales and 2.7 percent of total light-vehicle sales in the U.S. Of the 7 models under the Subaru brand, the Subaru Outback has held the greatest share at 28.7 percent with 90,073 sales up 5.7 percent from last year. For Q3 2013, there were 288,496 light-vehicle sales made collectively by companies in the ‘Other’ category; this sales volume was up 19.3 percent from Q3 2012. See Figures 2, 3 and 4. www.msada.org

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NADA Market Beat Segments

The cross utility vehicle (CUV) segment has held the largest share in September 2013 YTD terms: 25.2 percent. This has been followed by the middle car segment (20.5 percent) and the small car segment (19.6 percent), respectively. The greatest change in September 2013 YTD light-vehicle sales since last year has been in the CUV segment (16.1 percent) followed by the pickup segment (13.8 percent). For Q3 2013, the CUV segment held the largest share of lightvehicle sales at 25.7 percent with 1.0 million sales up 15.9 percent from Q3 2012. However, it was the large car segment that experienced the greatest change in sales for the quarter with 62,777 sales up 21.3 percent from Q3 2012. Within the large car segment, for the recent quarter, the Dodge Charger is the model (with sales in both Q3 2012 and Q3 2013) that

has experienced the greatest change in sales at 20.5 percent over Q3 2012. There were also 4,230 sales of the Kia Cadenza in Q3 2013 which had no sales in Q3 2012. See Figures 5 and 6.

Power source

Gasoline held a market share of 93.3 percent of September 2013 YTD light-vehicle sales which was down from its corresponding share of 94.0 percent a year ago. The market share held by the diesel category rose slightly to 2.8 percent, in YTD terms, from its value of 2.7 percent last year. The market shares held by electrics, light vehicles powered by fuel cells, hybrids, light vehicles powered by natural gas and plug-in hybrids have each grown since last year, in YTD terms. In September 2013, for the alternative power category, the U.S. automobile industry sold the following light vehicles: 4,071 elecOCTOBER 2013

Massachusetts Auto Dealer www.msada.org

trics, no light vehicles powered by fuel cells, 32,498 hybrids, 105 units powered by natural gas and 4,477 plug-in hybrids amounting to 41,151 light-vehicle sales. For Q3 2013, for the alternative power category, the following light vehicles were sold: 13,672 electrics, 4 light vehicles powered by fuel cells, 129,301 hybrids, 496 light vehicles powered by natural gas and 14,383 plug-in hybrids leading to a total of 157,856 light

vehicles for this category. This sales figure was up 33.7 percent from that of Q3 2012. See Figure 7.

Models

From the list of the 15 best-selling light vehicles for September 2013, 7 out of 15 vehicles were Detroit 3 models while the rest were from companies based in the Asia/Pacific region. There were 8 cars on the list, 6 of which were models from companies in the Asia/Pacific region while the other 2 models came from Ford (Ford Fusion and Ford Focus). There were 7 light trucks on the list, 5 of which were models from the Detroit 3companies while the other 2 models came from companies in the Asia/Pacific region (Toyota RAV4 and Honda CR-V). See Figure 8.

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October 2013 MSADA magazine  

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

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