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Montana Automobile Dealers Association NOVEMBER 2016 NEWS BULLETIN

Montana Montana Automobile Auto Dealers Association Announces the 2017Association Board of Directors Dealers In anticipation of the coming New Year, the Montana Automobile Dealers Association is pleased to announce the 2017 Board of Directors: Chairman Whitney Olson President Elect Erick Henricksen Vice President Will be Appointed at the Dec 5th Board Meeting NADA PAC Toby Hubbard DIRECTORS District 1 Will be appointed at the Dec 5th Board Meeting District 2 Wade Rehbein District 3 Erick Henricksen

District 6 Joe Billion District 7 Charles Notbohm District 8 James Johnson

President Charles Notbohm

NADA Director Don Kaltschmidt

District 5 Whitney Olson

Your Health Insurance Trust board will be comprised of the following:

Whitney Olson

MTADA President

Chairman – Craig Tilleman Directors - Don Kaltschmidt, Jim Stanger, Rob DeMarois, Bill Underriner, Erick Henricksen Next month you’ll find out which Next Gen member was appointed by the board to fill the one year term. We’re looking forward to another year of representing the Montana dealer body. Please reach out to the MTADA if you have any questions or concerns. n

District 4 Tony Pierce

FTC Approves Final Changes to Used Car Rule The Federal Trade Commission has announced final amendments to its Used Car Rule. The FTC has sought public comments on a series of proposed changes to the Rule (formally known as the Used Motor Vehicle Trade Regulation Rule), which requires car dealers to display a window sticker, or “Buyers Guide,” on used cars offered for sale. The Guide discloses whether the dealer is offering to sell a used car “as is” (without a warranty), or with a warranty. If the sale is with a warranty, the Guide discloses the terms and conditions, including the duration of coverage, the percentage of total repair costs the dealer will pay, and the vehicle systems the warranty covers. In states that do not permit “as is” used car sales, dealers must use an alternative Guide that discloses whether the sale is with a warranty or with implied warranties only.


In December 2012, the FTC sought public comments on proposed changes to the Buyers Guide as part of its systematic review of all of the agency’s rules and guides. In response to comments received, the agency sought comments on additional proposed changes to the Used Car Rule and invited comments on alternative approaches that public commenters proposed for the vehicle history disclosure and the “As Is” statement.

Director’s Message


Chairman’s Message


Win a Gift Card!


Phil Aimee Interview


As announced today, the Commission is revising the Buyers Guide by:

Legal Update


Safety Bulletin


■■ changing the description of an “As Is” sale; Continued on PAGE 9

and more! Montana Automobile Dealers Association • 501 North Sanders • Helena Montana • 406.442.1233

Montana Automobile Dealers Association Montana Automobile Dealers Association


U.S. Dealerships Face Evolution, Not Revolution, Expert Says The typical U.S. car dealership will see evolution, but not revolution, over the next 10 years, says a consultant hired by the National Automobile Dealers Association to study the future of dealerships.

adopting prescribed features of factory stores. Don Kaltschmidt

■■ The number of U.S. dealerships NADA Director will shrink slightly to around 16,500 stores in 2025, down from just under 18,000 today.

“We see change coming to the dealership but not a disruptive overthrow of the business model,” consultant Glenn Mercer said Tuesday at AutoConferenceLA.

■■ Steady but slow consolidation of store ownership will continue. Mercer forecasted a pool of 6,500 owners by 2025, down from 8,000 today. Private ownership will continue to dominate.

The goal of the research was to look at the state of auto retailing in 2025. NADA commissioned the study in March as a way to stimulate long-term thinking and planning among dealers, said Mercer, a former McKinsey & Co. partner who previously studied automaker facility programs for NADA. He presented key findings Tuesday. His report is being finalized and will be released to dealers at a later date.

■■ U.S. light-vehicle sales will be in the range of 17 million-18 million vehicles, similar to today’s level. But the mix will shift to more-expensive vehicles and higher-income customers, Mercer said. ■■ Vehicle profit margins will be lower, but asset returns such as return on equity may be more stable. The gap between strong and weak stores will widen, Mercer predicted.

Other conclusions reached by Mercer: ■■ The dealership model will remain dominant, with direct-sales efforts focused on high-end vehicles and representing just a small fraction of U.S. vehicle sales. But dealerships will become more alike with dealers

■■ Purely online sales will become common but not dominant. Continued on PAGE 8


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Policy Goals Can’t Be Achieved On the Backs of Our Customers DETROIT (Oct. 5, 2016) NADA Chairman Jeff Carlson on Wednesday sounded another warning to Washington, D.C., about implementing policies that would inadvertently make buying, financing, trading-in, and servicing cars and trucks harder and more expensive for consumers.

Jeff Carlson

2016 NADA Chairman

Carlson, in NADA’s annual policy speech to the Automotive Press Association in Detroit, illustrated a number of realworld examples of how decisions in Washington and elsewhere are leading to increased prices for consumers when they go to buy new vehicles, when consumers obtain financing for those vehicles, and when consumers go to trade-in older vehicles for newer, cleaner and safer cars and trucks. “If Washington wanted to implement a policy that would add $600 to the cost of financing a new car, what would you call that?” Carlson asked. “What about a policy that would take anywhere from $1,200 to $6,000 out of a customer’s pocket when they went to trade-in a used vehicle in order to buy a new one? How about a policy that would

Win a $20 Amazon Gift Card! Here is the November Trivia Question: As its name implies, there are a lot of mountains in Montana. There are 77 named mountain ranges and a staggering 2991 named mountains. Which one is Montana’s highest mountain? Submit your trivia answer to The winner will be chosen at random from the correct respondents and will receive a $20 Amazon gift card and be put in the drawing for the Grand Prize which will be announced in upcoming newsletters!

Continued on PAGE 10

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An Interview with Phil Aimee

Senior Director of National Automotive Sales and Motorsports for Spectrum Reach Digital Media and Dealership Marketing Dealers have more methods of reaching consumers than ever before, but the sheer amount of choices can sometimes lead to decision paralysis. AutoSuccess recently sat down with Phil Aime, the senior national director of automotive advertising and motorsports for Spectrum Reach, to discuss what dealers should look for in a marketing partner when it comes to digital marketing to make sure that their message gets to the right consumer at the right time. AutoSuccess: How can digital marketing help auto dealers specifically in ways that other media can’t? Phil Aimee: There are several benefits to dealers when it comes to digital marketing. Some of these benefits include reduced costs and easy-to-measure campaigns, along with results in real-time and greater engagement levels than those that traditional media channels can typically deliver.


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AS: What should dealers look for when searching for a partner to aid them in their digital marketing efforts? What makes for a successful partnership? PA: It’s very advantageous for a dealer to have someone on their side who will Phil Aimee listen well and learn the inner workings Senior Director Spectrum Reach of their dealership. A partner who will take the time to provide fresh ideas and help with strategic planning to target marketing to a dealer’s specific audience and area can be just as important as your most valuable employees. AS: In what ways can a digital marketing agency help dealers reach consumers in various parts of the sales funnel, from those just beginning their search to those deep in the funnel? PA: It is important for any agency to have multiple solutions in place to help reach the right client, regardless of where they are in the sales cycle. Each solution can target the right network and deliver the right message at the right time. It’s important to have the right tool for the job, and digital marketing has the ability to provide a dealer with many tools for many different situations. AS: What reporting data should a digital marketing agency provide to a dealer who wants to track his return on investment? What data is most important? PS: It’s critically important for a marketing company to give their client data during the life of a campaign so that the dealer can track the effectiveness of the effort, and to better target future campaigns. Dealers should be looking for revenue and conversion-focused data from their agencies. Site traffic, clicks to their Website, phone calls and emails are all very important KPIs (Key Performance Indicators) to monitor. n

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Montana Automobile Dealers Association Montana Automobile Dealers Association


Shape Up Your Pay Plans Carl Woodward, CPA to numerous dealers highlighted pay plan issues in his recent newsletter. He makes an important point. Most pay plans involve commissions based on the “gross” of the deal, but fail to define what “gross” means. Lack of a definition leads to disgruntled employees claiming that their commission should be based on both the front end and back end of the deals without deduction, while the dealer views the matter much differently, making the calculation on elements of the total gross, but deducting most, if not all, of the back end of the deal.

the “cost” of the vehicle over a “soft/ hard pack” and other “costs/fees,” which is the “commissionable,” “payable” or R. J. “Jim” Sewell, Jr. “payroll” gross profit, but it might be MTADA General Counsel incorrectly labeled “gross profit” in either the oral understanding or the actual written compensation plan. If the wording in the compensation plan only says “gross profit,” and even though the employee knows what was intended by the term “gross profit,” the written agreement could possibly be used against the dealership if there is ever a dispute.

We’ve seen this problem in real time as suit was brought against a couple of our dealer clients making the exact claims Woodward warns about. We agree with Woodward’s advice that dealers should review their compensation plans for employees that are paid a commission or bonus and revise their pay plans accordingly.

A compensation plan using the term “gross profit” combined with the employee either saying he did not understand or found out later he was not paid on all of the “gross profit” might cause the dealership to have to compensate this employee for past underpayment of wages and commissions. As those in the industry know, most sales department employees, if not all, are not paid on all the “gross profit.”

Woodward said: Most dealerships compensate sales department employees with a combination of an hourly wage (at least minimum wage) or a draw along with some type of “commission.” I am aware of cases where current or former unhappy sales department employees have contended they were not paid on “all” or the entire “gross profit” of each vehicle sale. In almost all cases, these employees understood the basis of their pay plan, but because they are currently “unhappy,” whether still employed or not, they say they were not paid on all vehicle “gross profits.” They might say they were to be paid X% of the “gross profit” on a new vehicle sale when they intend to say “commissionable,” “payable” or “payroll” gross profit. Almost all dealers compute commissions on new vehicle sales starting with the “invoice” of the vehicle. The salesperson’s commission is typically computed on the new vehicle profit above factory invoice plus “packs,” and/or “other costs or fees,” if any. In other words, sales department employees do not share in the “soft/hard pack,” “DOC fees,” “holdback,” “interest,” “D & H,” “advertising,” other factory rebates or other “costs/fees.” On a used vehicle, the salesperson is normally paid on

A clear, written pay plan that fully discloses all the items that are being charged or may be charged to the computation for the commission is an absolute must. At the end of the day if a court is called upon to interpret what you have written, rest assured that any ambiguity in the language will be construed against you and in favor of the employee. n

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Montana Automobile Dealers Association Montana Automobile Dealers Association

Safety Bulletin-Cold Weather Edition

While Driving When driving during slippery and icy conditions, slow down and keep a safe distance from other vehicles, minimize brake use and remember that traction is greatest just before the wheels spin. Gentle pressure on the accelerator pedal when starting is the best method for retaining traction and avoiding skids. The most effective way to stop on ice and snow is to apply brakes gently. With an antilock braking system (ABS), a vibration or pulsation will be felt in the brake pedal when coming to a stop. This means the system is operating as designed to prevent wheel lock up. Do not pump your brakes if your car has ABS. In addition, advise employees to keep seatbelts fastened and make certain that all passengers are securely restrained. When driving in falling snow or fog, lower speed, use low- beam headlights or fog lights, and keep a safe distance from the vehicle in front. Trouble on the Road Advise employees that if they get caught in a blizzard, they should stay in the car. They should not leave the car to search for assistance unless help is visible within 100 yards. They may become disoriented and lost in blowing and drifting snow. They should display a trouble sign, such as a brightly colored cloth on the radio antenna, and raise the hood of the car. Employees should be told to occasionally run engine to keep warm. To do this, they should turn on the car’s engine for about 10 minutes each hour and run the heater while the car is running. Also, they should turn on the car’s dome light when the car is running. Caution employees to be aware of carbon monoxide poisoning. The must keep the exhaust pipe clear of snow, and open a downwind window slightly for ventilation. They should watch for signs of frostbite and hypothermia and do minor exercises to keep up circulation. These exercises can include clapping their hands and moving their arms and legs occasionally. They should try not to stay in one position too long, but must be careful to avoid overexertion, because cold weather puts an added strain on the heart. If more than one person is in the car, they should huddle together for warmth and take turns sleeping. n Source: Montana State Fund




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Montana Automobile Dealers Association

Check and Double Check: The Truth Behind Hospital Quality Rankings Medical Error: It’s the third leading cause of death in the U.S., trailing only heart disease and cancer. Between four and eight million Americans are left seriously injured at the hands of medical errors in the U.S. each year. And the amount of preventable hospital deaths has more than doubled since the start of this millennium. So, Americans do what any smart consumer would do to combat this life-threatening issue; we research online. A quick search leads us to the “2016-17 Best Hospitals Honor Roll”, a report compiled by U.S. News & World Report. Listed in the number one spot is Mayo Clinic Hospital – Saint Mary’s Campus in Rochester, Minn. However, what the report doesn’t release is specific information down to the department or procedure.

Montana Automobile Dealers Association

By Gillette Viara, M.A. Communications Manager EBMS, INC.

100,000 Preventable 2000 Deaths in Hospitals 250,000 Preventable TODAY Deaths in Hospitals John T. James,, Lippincott Williams and Wilkins, 2013

The FairChex database of healthcare facility quality and costs indicates Mayo Clinic Hospital earned a 23 percent national quality measurement compared to all U.S. inpatient facilities for spinal fusions. That’s right. Mayo Clinic Hospital hit the bottom quartile for all U.S. hospitals for its quality of spinal fusions. Yet, a healthcare consumer researching top hospitals before having a spinal fusion could unknowingly select Mayo Clinic Hospital as a provider for this procedure, based on the recommendation of the U.S. News & World Report ranking. Although rankings for hospitals give Americans a glimpse into which facilities provide higher-quality care, handing over one rating to an entire facility can disguise major differences in the quality of departments. It’s true; no hospital can be perfect. Hospitals have some departments that are robust, while others may be a bit frailer. However, as healthcare consumers, we should educate ourselves — and our workforce — as to why it’s important to evaluate each facility by the various procedures performed to help us make informed decisions that result in better outcomes. n Sources: “Do Overall Hospital Rankings Mislead Patients?” by FairChex; November 2016 John T. James,, Lippincott Williams & Wilkins, 2013


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Montana Automobile Dealers Association Montana Automobile Dealers Association

Director’s Message




■■ Satellite service outlets run by dealers will multiply. Mercer also studied the impact of electric vehicles, autonomous cars and mobility services.

He concluded that electric-vehicle sales will grow by 2025 but remain less than 5 percent of the market. Still, it is crucial for dealers to embrace the electric-vehicle market. By 2025, all vehicles will have high levels of assisted-driving features though perhaps just 10 percent will be capable of full-fledged autonomous driving. The single biggest risk to the dealership system is the potential link between autonomous vehicles and mobility services, Mercer concluded.





a car

your car





“Our own estimate is that this is relatively unlikely to happen, but, if it did happen, it would be cataclysmic and has to be flagged,” Mercer said. “If mobility services converge with autonomous vehicles, such as what Uber is testing in Pittsburgh today, and, in so doing, succeeds at breaking the age-old bond of ownership between Americans and their cars and trucks, that would change things dramatically.” n Source: Automotive News




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Showroom Signage & Interior Displays Event & Tradeshow Promotion n Direct Mail Customer Marketing & Collateral Advertising n Branding



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Car dealers interested in participating on the #1 local vehicle search platform, please call 406-657-1228. NOVEMBER 2016 MTADA NEWS BULLETIN

Montana Automobile Dealers Association FTC Used Car Rule Changes

Montana Automobile Dealers Association


■■ placing boxes on the face of the Buyers Guide that dealers can check to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available; ■■ providing a box that dealers can check to indicate that an unexpired manufacturer’s warranty applies; ■■ adding air bags and catalytic converters to the Buyers Guide’s list of major defects that may occur in used vehicles; ■■ adding a statement that directs consumers to obtain a vehicle history report and to check for open recalls. The statement also instructs consumers to: –– visit for information on how to obtain a vehicle history report; and –– visit to check for open safety recalls; ■■ adding a statement, in Spanish, to the English-language Buyers Guide, advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish; and

■■ providing a Spanish translation of the statement that dealers may use to obtain a consumer’s acknowledgement of receipt of the Buyers Guide. The amended Rule permits dealers to use their remaining stock of Buyers Guides for one year after the effective date of the amended Rule. For more information about the Used Car Rule, read Buying a Used Car. For used car dealers, the FTC offers A Dealer’s Guide to the Used Car Rule. “Fillable” versions of the Buyers Guide in English and Spanish are available at The Commission vote to publish the Notice of Final Rule in the Federal Register was 3-0. The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (3824357). Like the FTC on Facebook , follow us on Twitter , read our blogs and subscribe to press releases for the latest FTC news and resources. n

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Montana Automobile Dealers Association Montana Automobile Dealers Association

Chairman’s Message


add thousands of dollars to every single new vehicle that every manufacturer makes, up and down their entire lineups, right out of the gate? Or what if new-car buyers had to pay hundreds of dollars more at the retail level because Washington thought it was no longer beneficial to consumers to have multiple, independent retailers competing with each other for the same customers?” “Leaving aside what Washington calls it, what would that feel like as a customer?” Carlson continued. “Do you think that customer feels like they just got taxed? You’re darn right they do.” Carlson - who is also the president of Glenwood Springs Ford and Glenwood Springs Subaru in Colorado, as well as Summit Ford in Silverthorne, Colorado - has been leading the efforts of franchised auto dealers to remind leaders in Washington that their policy objectives can’t be


achieved if vehicles become too expensive for consumers to afford. “NADA is in the business of telling Washington that they better get it right. And getting it right means keeping it affordable,” Carlson said. “So what NADA has said to leaders in Washington is that: We understand your goals, and we agree with many of your goals, but we cannot accomplish those goals on the backs of our customers.” “What we’re doing is standing up for our customers, and helping Washington find a better way that protects our customers but still gets us across the policy goal line.” n Jeff Carlson, 2016 NADA Chairman, is a Ford and Subaru dealer in Glenwood Springs, Colo.


Montana Automobile Dealers Association

Driving Montana’s Economy

Montana Automobile Dealers Association

Annual Contribution of Montana’s New-Car Dealers Numbers reflect annual economic activity during 2015.



(new car)

(created by dealerships)





(average per dealership)

Includes 3,893 direct jobs and 4,792 indirect and induced jobs.


$49,376 Average Annual Earnings


State and Federal Income Taxes Paid




Share of Total Retail Sales in State

Includes income taxes paid for direct, indirect and induced jobs.

NATIONAL AUTOMOBILE DEALERS ASSOCIATION NADA Industry Analysis | 8400 Westpark Drive, Tysons, VA 22102 | 703.821.7010 | NADA Legislative Affairs | 412 First Street, SE | Washington, DC 20003 | 800.563.5500 |



Montana Automobile Dealers Association Montana Automobile Dealers Association


103rd Annual Family Convention AUGUST 25-27, 2017

Fairmont Hot Springs Resort | Anaconda, Montana See the e ett Oldest Corvrld! o in the W



Montana Automobile Dealers Association Montana Automobile Dealers Association

2016 MTADA Board of Directors PRESIDENT



Whitney Olson Bison Motor Co Great Falls 406-727-2552

Chuck Notbohm Notbohm Motors Miles City 406-234-4480

Eric Hendrickson Subaru of Butte Butte 406-676-4420




Joe Billion

Billion Auto Group Bozeman 406-582-7777

Don Kaltschmidt Don “K” Whitefish Whitefish 406-862-2571

Toby Hubbard Denny Menholt University Honda Missoula 406-721-4900



Debbie Jean Office Manager MTADA 406-442-1233 Cell: 406-461-6333

Jim Peterson Valley Ford Kalispell 406-755-3673

Garry Brayko Archie Cochrane Motors Billings 406-656-1100

Kelsey Wandke Director of Dealer Ops. MTADA 406-442-1233 Cell: 406-439-2692

EXEC. VICE PRESIDENT & GOVERNMENT RELATIONS Bruce Knudsen MTADA Helena 406-442-1233 cell: 406-461-7680

Joe Billion Billion Auto Group Bozeman 406-582-7777 Tony Pierce Snowy Mountain Motors Lewistown 406-538-4014 Chuck Notbohm Notbohm Motors Miles City 406-234-4480

Eric Henricksen Subaru of Butte Butte 406-676-4420 Sandi Tyler Karl Tyler Chevrolet and Cadillac Missoula 406-721-2438 Wade Rehbein Rehbein Ford Plains 406-826-3381

Whitney Olson Bison Motor Co Great Falls 406-727-2552



MTADA November Newsletter