DECEMBER 2010
ALABAMA
I N D E P E N D E N T
A U T O M O B I L E
D E A L E R S
A S S O C I A T I O N
NAAA: AUCTION INDUSTRY REPORT ALSO ADESA Birmingham’s 22nd Anniversary PLUS Bama Auto Auction’s Grand Opening
GOD’S SON: LUKE 2:11 “For unto you is born this day in the City of David a Savior, Which is Christ the Lord.”
LIBERTY AND FREEDOM FOR ALL! “Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.” -President Ronald Reagan
DALLAS, TEXAS Permit No. 2079
PAID PRSRT Standard U.S. Postage
V I S I T U S AT W W W. A L A B A M A I A D A . C O M
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INSIDE
MAGAZINECONTENTS 0 NAAA: Auction Industry Report 1 1 4 ADESA Birmingham’s 22nd Anniversary 16 Bama Auto Auction’s Grand Opening
THE CURRENT STATE OF THE AUTO INDUSTRY John McElroy is host of the long-running “Autoline Detroit” television program, covering all aspects of the automotive industry. In this presentation, McElroy provides a thorough and insightful review of where we’ve been, where we now are, and where our industry is headed. Taped at the Automotive Fleet & Leasing Association’s Annual Conference. Log on to www.niada.tv and Click on “OPERATIONS” Remember we have over 400 hours of quality dealer education that can be viewed 24/7 on niada.tv.
ADVERTISERSINDEX AutoTrader.com........................................................ 5 Cars.com ................................................ Back Cover Dealer Funding ........................................................ 7 Manheim Advantage....................................... 10, 11 Manheim Mississippi ............................................. 13 Manheim Nashville....................... Inside Back Cover Manheim Tennessee...................... Inside Back Cover SmartAuction ........................................................... 9 Sterling Credit .............................. Inside Front Cover Western Funding ................................................... 15 Western General / Protective................................... 3
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV
AIADA ENCOURAGES LEGISLATURE TO KEEP SCRAP METAL LAW AIADA Executive Director Tony Wilkerson and Todd Oden, AIADA Executive Board member, encouraged an Alabama legislative interim committee not to weaken a law passed this year to require proof of ownership before a vehicle may be crushed or shredded. Secondary Metals Recycling Industry Interim Study Commission recently heard from scrap metal recyclers and used auto parts businesses that the law, which took effect June 1, has significantly reduced the number of vehicles available for scraping and recycling. Wilkerson and other representatives from the automotive industry and lenders said strong protection must stay in place to discourage rampant auto theft. The committee will be dissolved on election day and a new committee not appointed until next year.
Carfax Is Here To Help Dear Editor: Carfax is always here to help, especially on the rare occasions that data research is needed. Inconsistent odometer readings, for example, can raise a red flag but may be the results of simple human error. We’ve made it easier for dealers to initiate the process and get a faster resolution. We’re helping our customers manage a more efficient business and keeping their operations running smoothly. Any dealer in Alabama that has questions about their Carfax account or the data research process can call Carfax Business Services at 888-695-1885. It is our pleasure to serve you.
Carfax is constantly looking for ways to further improve the exceptional service we provide our independent dealer customers. We have a dedicated team of professionals that handles any customer requests quickly. As a result of our tireless efforts, I am proud to say that we have streamlined our data research process. The research process is easily started with just a few simple steps. Any Carfax-subscribing dealer in Alabama can access their Carfax account at carfaxonline.com. Next, click the link which takes you directly to the online Data Correction Form. After submitting the form with the 17-digit vehicle identification number and requested research, a Carfax representative will work with you throughout the data verification process and confirm the issue has been resolved. In most cases, the entire process is completed in just a few hours.
Sincerely, Jef Graves Manager, Dealer Business Unit Carfax
NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM.
EXECUTIVE COMMITTEE
The Alabama Independent Automobile Dealers Association is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817) 640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of AIADA or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2010 by NIADA Services, Inc. All rights reserved. Visit the NIADA Web site at www.niada.com.
EXECUTIVE DIRECTOR Tony Wilkerson
DIRECTORS Paul Claborn Albertville
PRESIDENT KEN MCFARLAND HUEYTOWN
Rex Canterbury Fayette
STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Mike Harbour • mharbour@niada.com PRODUCTION MGR. Jacob Kerns • jacob@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing
MEMBER OF AIADA, PLEASE CONTACT TONY WILKERSON AT (800) 239-2423 OR TONY@ALABAMAIADA.COM
AIADAOFFICE 120 VULCAN ROAD • BIRMINGHAM, AL 35209 PHONE: (205) 942-1000 • FAX: (205) 942-3565 WEB SITE: www.alabamaiada.com
PRESIDENTELECT RANDY BURNS GADSDEN VICE PRESIDENT CHARLES MORING MIDLAND CITY SECRETARY/ TREASURER TODD ODEN BIRMINGHAM CHAIRMAN OF THE BOARD RONNIE ELLISON CALERA
John Dunn Sylacuga Tommy Greene Birmingham Billy Levins Montgomery Connie Oswalt Northport
ACTIVE PAST PRESIDENTS Todd Smith Dothan O’ Neal Cleveland Pleasant Grove Charles Butler Athens Ernest Crump Jasper Mark Crump Jasper
Lance Turner Anniston
J.W. Cunningham Northport
Willie Colvin Tuscaloosa
James Dennis Prattville
John Pigg Prattville
Jerry Giles Tuscaloosa
Barry Searcy Muscle Shoals
Tracy Honea Albertville
Mike Jones Dothan Charles Little Satusma Verta Barr Meherg Tuscaloosa Del Miles Jacksonville Frank Miles Jacksonville Kerry Mitchell Albertville Dink Tucker Birmingham
ASSOCIATION ATTORNEYS Galese & Ingram PC John Galese & Jeff Ingram Birmingham For information on how to become a member of AIADA, please contact Tony Wilkerson at (800) 239-2423 or tony@alabamaiada.com AIADA OFFICE: 120 Vulcan Road Birmingham, AL 35209 (205) 942 1000 Fax: (205) 942-3565 www.alabamaiada.com
Anthony Underwood Bessemer Dick Wright Sylacauga Henry Mulliax Anniston
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Older Vehicle Title Stats In the past two years we processed 2,031,847 transactions involving title transfers and filing of liens. 582,849 of those transactions (28%) involved vehicles greater than 12 years old. Of those 582, 849 transactions, 182,471 had liens recorded. Respectfully, Mike Gamble, Assistant Director Motor Vehicle Division Alabama Department of Revenue P.O. Box 327610 Montgomery, AL 36132-7610 Office (334) 242-9008 • Fax (334) 353-8698
IT’S NIADA SCHOLARSHIP APPLICATION TIME AGAIN! The NIADA Foundation invites graduating seniors of the 2010-2011 school year to complete a scholarship application in pursuit of funds to be paid to the colleges of their choice in the Fall of 2011. Four regional scholarships are awarded annually in June at the NIADA Convention and Expo. Last year each scholarship was in the amount of $3500. This year’s applications must be POSTMARKED no later than February 1, 2011 and received at the NIADA office by February 10.
To be eligible Applicants must:
ATTENTION AIADA MEMBERS:
LADIES AUXILIARY AND NIADA SCHOLARSHIPS IF YOU HAVE A CHILD OR GRANDCHILD GRADUATING IN 2011, YOU MAY WANT TO APPLY FOR THE LADIES AUXILIARY SCHOLARSHIPS. THE INFORMATION AND APPLICATION ARE ON THE AIADA WEBSITE AT www.alabamaiada.com. THE DEADLINE IS FEBRUARY 28, 2011. ALSO NIADA (NATIONAL) OFFERS SCHOLARSHIPS. YOU CAN GET THEIR INFORMATION AND APPLICATION AT www.niadafoundation.org.
ADESA Acquires Six Auctions Six vehicle auctions located across the U.S. were purchased by ADESA, one of the nation’s top auto remarketers, from The Premier Auction Group (PAG).
“The acquisition of The Premier Auction Group demonstrates our commitment to increasing our dealer consignment business and enhancing the scale of our offerings to our national consignors,” said ADESA President and CEO Tom Caruso in announcement last month. Bay Auto Auction in Bay City, Mich., Dealers Auto Auction of Michigan in Clare, Mich., East Tennessee Auto Auction in Fall Branch, Tenn., Montpelier (Ohio) Auto Auction, Premier’s Las Vegas Auction in North Las Vegas, Nev., and Wisconsin Auto Auction in Lomira, Wis., were added to the company’s lineup.
The acquisition of PAG’s auctions strategically complements ADESA’s dealer consignment initiative and strengthens the company’s footprint in Michigan, Tennessee, Ohio and Wisconsin. It also provides ADESA with the addition of a specialty sale near the construction of the company’s new greenfield auction, ADESA Las Vegas. Over time, these six locations will be integrated into ADESA’s current infrastructure and resources, ultimately offering the full scope of ADESA’s product and service offerings. To strengthen this transition, Bob Hubregsen, former PAG president, will serve as a vice president for ADESA. Carmel, Ind.-based ADESA has 70 auction locations in the U.S., Canada and Mexico.
Be classified as a high school senior during the current 2010-2011 school year and legally reside in one of the 4 NIADA regions. Have maintained an outstanding academic achievement record as reflected by an official high school transcript; and Demonstrate an aptitude for college work as measured by SAT or ACT scores.
Application Process
To secure an application, go to www.niadafoundation.org and click on the Scholarship link. The completed application must be mailed and received by the deadlines indicated above. It must be submitted in a 10 in. x 13 in envelope, with adequate postage to: SCHOLARSHIP SELECTION COMMITTEE NIADA FOUNDATION 2521 BROWN BLVD ARLINGTON, TX 76006
All information MUST be included with the original application. No additional information will be accepted at a later date. NIADA staff will review the applications for completeness and will forward them to the Scholarship Selection Committee within NIADA and at Northwood University in Midland, Mich. They will be reviewed by regions. One applicant will be selected from each of the four NIADA regions based on the merit of his/her scholarship application and will be notified by the Foundation office no later than mid May 2011. Information regarding the NIADA/AutoTrader.com National Scholarship to Northwood University may be obtained by contacting the Northwood University Financial Aid office.
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Marketing Your Vehicles Beyond the Dealership By Clayton Stanfield, eBay Motors In today’s digital world, it is becoming increasingly challenging for dealers to drive car shoppers from online browsing into their dealerships. It is
Research shows the majority of consumers now start major purchase decisions with online research.
also growing increasingly important for dealers to widen their reach beyond prospective customers in their own backyards. To find success in today’s changing market, dealers need to broaden their reach and build relationships with consumers who may be hundreds of miles away. Nearly every customer considering an automotive purchase now turns online first to research, find and even buy. To reach those customers, many dealers take advantage of third-party automotive websites, such as eBay Motors, to promote their inventories and services to be introduced to a broader range of potential customers. According to the 2010 J.D. Power and Associates Used Vehicles Market Report, 68 percent of used vehicle buyers use the Internet in their shopping process. This is an increase of five percent from 2009. Online classified ad use to shop for used vehicles has increased to 51 percent, up from 41 percent in 2006. Among the online resources customers use in their shopping process, independent automotive websites, such as ebaymotors.com, receive more visitors than dealer websites. Marketing your vehicle inventory, parts and your dealership on the Internet requires new ways to establish the same reputation and trust it takes to get consumers on the showroom floor. Build awareness. When you want to reach customers in your hometown, you work hard to let them know you’re there. Billboards, commercials, classified advertisements or a combination of these are often used. The same premise remains true when marketing to online consumers. When you want consumers to visit your virtual showroom, dealers need to pay close attention to search engine optimization (SEO). Search engines such as Google, Yahoo and Bing regularly visit websites with automated tools to index key words and phrases consumers often use when searching. To optimize your listings so the search engines can match your terms to what consumers are searching for, it is important you use everyday words and phrases that consumers are likely to type into a search. This way, your listings are more likely to appear in searches and more likely to be noticed by more potential buyers. Search engine optimization can help a dealership reach new customers during the consideration and research phase and also to build a loyal customer base that will return
to your site or come to your dealership when they are ready to make a purchase. eBay Motors regularly uses search to drive more than 14.8 million unique visitors – and potential buyers, looking for new and used vehicles, parts, accessories and services – each month to its website. Show your reputation. When a customer visits your lot, chances are good they already have some degree of interest and trust, either with a previous relationship or based upon a recommendation. Their friend bought a car there, your children go to school together, or they know your dealership’s reputation from active community involvement. To build trust online, it is vital to provide as much information available as possible about not only the vehicles you sell but also your dealership and the people behind the dealership. When developing online listings to sell vehicles or parts and accessories, use highquality, professional photographs and wellwritten descriptions. This helps to boost consumer confidence and purchase potential. If customers cannot clearly see what they are purchasing, chances are higher they’ll move on to the next item with better images. Also, provide complete disclosure as if customers were looking at the vehicle with you in person. Customers will expect most used cars have some sort of imperfection, so don’t try to camouflage any issues with a buyer. By being truthful and transparent with listings, dealers create a sense of trust and a willingness to conduct business. Offer timely responses. While customers in your dealership may wait for you to call back and track down information, online customers expect a high level of service and responsiveness, even if it’s a response to say you are looking for information to answer the question. Since communication methods such as e-mail and cell phones are the norm, buyers expect quick answers. A buyer ready to make a purchase may be more willing to engage in business with a dealer who is responsive to questions with timely communication. Remember, online customers may be shopping in a different time zone, so regular business hours may not apply. Research shows the majority of consumers now start major purchase decisions with online research. Now that consumers are shopping online, businesses have been quick to follow. With a SEO strategy, an online reputation that encourages trust, customer service and responsiveness, dealers can build a virtual business that drives real results and encourages new customers to shop with ease.
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National Auto Auction Association Auction Industry Report ECONOMY: SLOWDOWN?
The recovery started strong as businesses rebuilt inventories after slashing them to extremely low levels in anticipation of a worse recession than actually occurred. This is typical during business cycles, as firms do not know how bad things will get and overreact to protect themselves against the worst. Then economic growth slowed as inventories were brought into balance with sales. A slowdown in growth at this stage of the recovery also is fairly typical, as the growth driver moves from inventory building to housing, consumer spending, and business investment.
While consumer spending has not been as robust as in some past recoveries, it has been growing at a modest pace and business investment has been relatively strong. Lack of growth in housing, related to the extreme amount of overbuilding that was a major cause of the recession, has been a significant factor holding this recovery back. In addition, the uncertainty associated with the election, taxes, and health care appears to be limiting employment gains to less than what would be expected with recent real GDP growth. As the uncertainty dissipates after the election and decisions on taxes and health care are made,
we should see a pickup in hiring and a decline in the unemployment rate. If this does not occur, the Federal Reserve is ready to provide more stimulus and, whatever the election results, politicians will act if the unemployment rate stays close to 10 percent. With less uncertainty and the beginning of a true housing recovery next year, we expect real GDP growth to average around 3-4 percent during the next two years. NEW VEHICLE SALES: SALES GAINS CONTINUE!
Third-quarter 2010 new light vehicle sales came in at an annual rate of 11.6 million units, the highest quarterly total in two years. On a year-over-year basis, the third quarter gain was only 0.6 percent above the Cash for Clunkersboosted third-quarter 2009 sales rate. New light vehicle sales have recovered sharply from the 9.5 million rate in the first half of 2009. However, we will not likely see the 16 million rate the industry averaged from 1994 to 2007 until the unemployment rate moves down to around 6 percent (probably not before 2014). USED VEHICLE SALES: SALES FLAT!
Third quarter 2010 used vehicle sales were flat with last year as September sales fell 5.6 percent after being up 3.6 percent in the first half. AUCTION VOLUME: VOLUME WEAK!
Auction volume continued declining in the third quarter at about the same rate as in the first half, as a small gain in dealer consignment was not enough to offset large declines in the fleet/
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3rd quarter
National Auto Auction Association Auction Industry Report lease and manufacturer/factory categories. Since Prices were flat with last year in the third quarter, gross value declined at about the same rate as volume Regions: Third quarter volume in the Northeast was relatively stronger than in the other regions for the second quarter in a row. Unit volume in the Southeast and North Central were both down double-digit in the third quarter. TYPE: Dealer consignment volume was only
up 0.8 percent in the third quarter, the only sales type with an increase in each of the last three quarters. Reflecting weak past new sales, fleet/ lease and manufacturer/factory volume declined in the third quarter by 17.2 percent and 25.5 percent respectively. The improving economy continued to result in reduced repos with a 24 percent decline in the third quarter, after a 32 percent increase in 2009.
Source: AuctionNet from NADA
Auction data come from a number of different sources and may not always appear to be consistent. In order to provide the most useful and up-to-date information about the industry, we utilize data from the most appropriate sources and provide you with the underlying implications. Due to their relatively small size and volatility, certain sales types are not included in the above table.
SEGMENT: Although declining in the third
quarter, CUVs and passenger cars continued to be relatively strong, while other segments were down sharply. AUCTION PRICE: NO INCREASE!
After five quarters of year-to-year increases in the 4-10 percent range, auction prices in the third quarter were flat with last year. Year-to-date auction prices are still up 4.2 percent. The move up in auction and used car prices over the past year has brought the relationship between used and new car prices to a point where buyers see less benefit in buying a used car versus a new car - - putting a cap on used retail and auction price inflation.
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PRE-OWNED ONLINE SALESPERSON TRAINING AND DEVELOPMENT COURSE The AIADA is proud to announce that the NIADA has endorsed a quality, user-friendly PRE-OWNED ONLINE SALESPERSON TRAINING AND DEVELOPMENT COURSE. The course was developed by Alabama native Lou Vickery and offers something for salespeople at all skills and experience levels. Here is a brief content synopsis of the course: MODULE 1: HOW TO LOCATE CUSTOMERS Prospecting Mathematics….. Prospecting Attitudes…. How To Make It Work MODULE 2: GETTING TO KNOW THE PROSPECT Meet and Greet……… Fact Finding……… Vehicle Selection MODULE 3: A SALES PRESENTATION THAT WORKS Product Presentation……… Using The Internet……… Test Drive and Trade Evaluation MODULE 4: CLOSE: GETTING TO “YES” Principles of Closing……… Understanding Body Language…..… Negotiating The Deal ……… Handling Objections…….. Follow Through MODULE 5: GETTING THE DEAL DONE Financing…… The Delivery MODULE 6: AFTER THE “YES” Who’s Your Boss?……. The Moment of Truth…… Handling Customer Complaints MODULE 7: THE D.E.A.L. BEHAVIOR PROFILE How To Understand Everyday Sales Behavior……. A.D.A.P.T.Ability Sales Analysis……. How To Better Understand Customer Behavior CONTENTS OF MODULE 8: CAR LINGO Glossary: Words, Terms and Phrases
The PRE-OWNED ONLINE SALESPERSON COURSE can be downloaded for present and future use by salespeople. There is an accompanying ANSWER BOOK that allows salespeople completing the course to quality for a certificate of achievement from NIADA. The Dealer’s Investment in the course is onetime fee of $299. NIADA President Anthony Underwood and AIADA Executor Director Tony Wilkerson were both instrumental in making this course a reality. AIADA will receive a financial benefit for each dealer who purchases the ONLINE COURSE. For greater details on the course and How To purchase, notify the AIADA office or e-mail Lou Vickery at upwordpress@yahoo.com. 12
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Business is Picking Up Lona Mullinax of Mullinax Auto Sales in Anniston said business has been picking up lately, much like it did during previous recessions in the 1970s and ’80s
Getting that first car. Yes, it is something of a ritual for many families with youngsters on the back side of their teenage years. It does not, however, come without stress. After all, it is a scary thought — your teen out on the highway. What was that article you read one time about their brains not being fully developed until they’re 20? So, if the money is there, most parents would rather get the safest and therefore the newest thing available. Airbags are a must; so are the best brakes money can buy, along with a body built to protect a NASCAR driver. Not everyone, though, has that kind of cash hanging around, especially right now. The new driver in the family, then, is mostly likely going to share mom or dad’s car, get some sort of hand-me-down or be the proud owner of a used car. If you fall into that last category, brace yourself. The used car market is hot right now. Nationwide, prices have risen and are still creeping up. Why? Several things, apparently, are contributing to the upswing in prices. Remember last year’s “cash for clunkers” program, the government-sponsored plan that moved older, fuel-inefficient vehicles off the highways? It succeeded in boosting sales of new vehicles, but it also reduced the number of used cars on the highway. A segment on Marketplace, the National Public Radio program, also says the anemic economy and the bland outlook for recovery are causing more people to hold off buying new cars and instead settling for used ones. Well, that’s the deal in Chicago, Seattle, Omaha and elsewhere, but the question is whether the same holds for, say, South Quintard. By most accounts, it does. Lane Luker, the general sales manager for the used division at Sunny King Ford, says that, while used car sales have drifted for the most part, truck sales “have been off the chart.” In this part of Alabama, Luker says, people want trucks. “We just can’t keep enough of them right now,” he said. While a number of reasons could factor into this, including something in our blood that makes people in northeast Ala-
bama want to own a truck, Luker says it doesn’t hurt to be a Ford dealer. “We sell a solid brand,” he said. “People trust what we make.” Business is also brisk across the street at Mullinax Auto Sales, where you can find a wide variety of makes and models of cars and trucks. Lona Mullinax, who has been in the business with her husband, Henry, for decades, says sales are indeed good. “Well, the truth is,” she said, “our business usually picks up in tough times.” Mullinax said that in January of this year, sales started picking up and they have stayed that way all year. “We had the same thing happen back in the 1970s and in the early ’80s when the other recessions happened,” she said. What seems to happen during difficult economic times, she explained, is people turn to used cars because they want to try to stay within budget and are often concerned about the future, such as holding on to their jobs. Rafael Sanchez, the general manager of the new Kia dealership on South Quintard, also reported strong sales of both used and new cars. “There is a quick turnaround in used cars on our lots,” he said. The movement in used cars, however, seems to be having the predictable effect of pushing the prices up. Sanchez reports that the price of used Kias at auction have increased “roughly 15 to 20 percent since the late spring.” Lona Mullinax also says auction prices have increased for many vehicles, something that is confirmed by Lance Turner, the co-owner of Pee Wee Turner’s Used Cars. “Auction prices have moved up a little,” he said. “They certainly haven’t fallen.” Several dealers, including Kenneth Baker at Classic Cadillac GMC, said the stabilization of gas prices has improved the market for used cars. Indeed, Lona Mullinax said sales at her lot have included as many heavy vehicles as fuel-efficient ones. Of course, if the trend continues, if the price of used cars keeps inching up, then there will come a time when the difference between the price of a new and used vehicle is reduced to the point where it will be easy to make the jump to a new one. That’s something the teenager in the family probably wouldn’t mind.
WHAT SEEMS TO HAPPEN DURING DIFFICULT ECONOMIC TIMES, SHE EXPLAINED, IS PEOPLE TURN TO USED CARS BECAUSE THEY WANT TO TRY TO STAY WITHIN BUDGET AND ARE OFTEN CONCERNED ABOUT THE FUTURE, SUCH AS HOLDING ON TO THEIR JOBS.
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By Donald Barrand
GOOD INSURANCE COVERAGE A SAFE BET With its strange jargon, complex coverages and exclusions, most of us find auto dealer insurance nearly impossible to understand. Add a slew of
regulations that differ from state to state and it can become a complete mystery. However, the most important thing to remember is a good insurance policy is one of the best investments an auto dealer can make. The right insurance not only protects you from potentially losing your business, it allows you to concentrate on what is most important -- growing your business. Insurance for auto dealers can be divided into three main categories: liability, inventory and property. Liability insurance protects against damage or bodily injury resulting from the way you do business. There are two types of liability insurance in a standard garage policy. Auto liability protects you against claims and suits arising from the operation of the vehicles in your inventory, whether driven by you, your employees or customers. So if a customer wrecks one of your vehicles during a test drive and does not have insurance of his own, you’re covered. Garage operations liability, meanwhile, covers you for accidents that do not involve vehicles in your inventory. Let’s say a customer slips on a puddle of transmission fluid. You’re covered. For most auto dealers, inventory is their largest asset. Dealer open lot insurance covers physical damage to the vehicles on your lot. If there’s a hail storm, for instance, your vehicles are covered. Or, if a vehicle is stolen from the lot, you’re covered. In addition, dealer open lot covers vehicles in your inventory while being test driven if they are involved in a collision
INSURANCE COVERAGE
Here are some tips to make the most of your insurance dollar:
Property insurance covers your building and its contents. If your building is knocked down by a tornado, you’re covered. If there is a fire in your garage, you’re covered. Property insurance can also cover loss of income and extra expenses incurred to get back into business quickly. Insurance premiums are based on risk. The more vehicles you have on your lot and the more valuable your buildings, the more you will have to pay for insurance. If your lot is in an area prone to flooding, expect to pay more. Yet when you consider the protection it pro-
vides, insurance is an excellent value. Here are some tips to make the most of your insurance dollar: Don’t undervalue your inventory. If the vehicles on your lot are worth $300,000, don’t value them for $200,000 thinking you’re going to save a lot of money. You won’t. The difference in premium is miniscule. The difference in what you will collect on a claim could be significant. Don’t insure your personal vehicles under your dealer’s insurance. Personal auto and dealer auto are two completely different coverages. There are big gaps in the protection they provide and your losses might not be covered. Don’t confuse theft coverage with false pretense coverage. If a customer test drives your vehicle and doesn’t bring it back – it is not considered a theft, and therefore not covered unless you had false pretense coverage on your policy. If you offer customers financing, you should buy errors and omissions coverage for truthin-lending laws as well as the Fair and Accurate Credit Transaction Act (FACTA) which goes into effect at the end of 2010. A minor data breech exposing a customer’s personal information could result in a lawsuit that could potentially put your business in jeopardy. Make sure your insurance company has an A.M. Best rating of at least A- or better, and a Fitch or Moody’s IFS rating of at least BBB (Good), or preferably A (Strong) or better. Your agent should be able to tell you the insurance company’s rating. What good is insurance if your insurance company can’t pay a claim? Auto dealer coverage is highly specialized. Talk to a few agents to determine who understands your business best and can provide the most comprehensive policy. Seek out an agent who can provide you with a program developed especially for auto dealers. Your local NIADA chapter should be able to provide you with a list of agents. Make sure your agent explains what coverages he or she is able to provide and that you understand what you’re buying. Ask questions until you are completely satisfied you understand what the policy you are buying covers and does not cover. Good insurance enables you to stop worrying and concentrate on selling. Don Barrand, transportation practice leader at V3 Insurance Partners, is a 34-year veteran of the insurance industry. More than 20 of those years were spent specializing in commercial auto and Don was a pioneer in the development of insurance programs designed for new and independent dealers. Don may be reached at 913-297-7468 or don.barrand@v3ins.com.
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ADESA BIRMINGHAM 22ND ANNIVERSARY With the employees dressed in Roaring 20’s garb, fun was had by all.
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A.I.A.D.A CONGRATULATES STEVE DEMEDICIS OF AUCTION INSURANCE, BIRMINGHAM, AL STEVE DEMEDICIS NAMED TO NAAA HALL OF FAME
BY BEN STEIN
Tim West of Black Book offered a glowing assessment of the newest member of the NAAA Hall of Fame – Steve Demedicis, senior vice president of Auction Insurance Agency. Birmingham. Demedicis joins 83 other executives already enshrined. “The NAAA represents an industry full of colorful characters but perhaps none are more interesting than our newest Hall of Fame member.” West began during his introduction of Demedicis. “There is no one in the industry who loves this association and people more than he.” West continued. “Because of his work in the development of a vehicle history service – which we now know as AutoCheck – dealers have greater confidence in the vehicles offered through the lanes of the nation’s wholesale auctions,” said West, who also noted AutoCheck now examines more than 18 million vehicles annually. West’s description of Demedicis didn’t stop there, calling him the “Michelangelo of repo men.” West went on to mention some of the highlights of Demedicis’ career with Auction Insurance Agency that began in 1980. For example, West shared how Demedicis spent all of Decem-
ber 1994 in South America recovering $670,000 worth of vehicles that had been bought with bad checks by a drug dealer. Then three years later, West mentioned how Demedicis led a major recovery effort of more than 1,000 vehicles that had been purchased with bad drafts. “During the last 30 years there have been few bad guys in the auto business who have eluded a meeting with him,” West declared. “His greatest asset is persistence – he will not take no for an answer.” “He happens to own what is recognized as the world’s finest and largest collection of Jack Daniels jugs as well as an extensive collection of local folk art,” West insisted. Finally, West highlighted Demedicis’ personal philosophy that made him a NAAA Hall of Famer. “When training the collection people at Auction Insurance Agency, our man tell them he will teach them the secrets of the collection universe but only if they swear to use those skills for the betterment of mankind.” West explained. “And you should ask him to explain how the U.S. and world economies are ultimately
THE FOLLOWING WAS WRITTEN BY BEN STEIN AND RECITED BY HIM ON CBS SUNDAY MORNING COMMENTARY: My confession: I am a Jew, and every single one of my ancestors was Jewish. And it does not bother me even a little bit when people call those beautiful lit up, bejeweled trees, Christmas trees. I don’t feel threatened. I don’t feel discriminated against. That’s what they are, Christmas trees. It doesn’t bother me a bit when people say, ‘Merry Christmas’ to me. I don’t think they are slighting me or getting ready to put me in a ghetto. In fact, I kind of like it. It shows that we are all brothers and sisters celebrating this happy time of year. It doesn’t bother me at all that there is a manger scene on display at a key intersection near my beach house in Malibu. If people want a crèche, it’s just as fine with me as is the Menorah a few hundred yards away. I don’t like getting pushed around for being a Jew, and I don’t think Christians like getting pushed around for being Christians. I think people who believe in God are sick and tired of getting pushed around, period. I have no idea where the concept came from, that America is an explicitly atheist country. I can’t find it in the Constitution and I don’t like it being shoved down my throat. Or maybe I can put it another way: where did the idea come from that we should worship celebrities and we aren’t allowed to worship God as we understand Him? I guess that’s a sign that I’m getting old, too. But there are a lot of us who are wondering where these celebrities came from and where the America we knew went to. In light of the many jokes we send to one another for a laugh, this is a little different: This is not intended to be a joke; it’s not funny, it’s intended to get you thinking.
Billy Graham’s daughter was interviewed on the Early Show and Jane Clayson asked her ‘How could God let something like this happen?’ (regarding Hurricane Katrina). Anne Graham gave an extremely profound and insightful response. She said, ‘I believe God is deeply saddened by this, just as we are, but for years we’ve been telling God to get out of our schools, to get out of our government and to get out of our lives. And being the gentlemen He is, I believe He has calmly backed out. How can we expect God to give us His blessing and His protection if we demand He leave us alone?’ In light of recent events…terrorists attack, school shootings, etc., I think it started when Madeleine Murray O’Hare (she was murdered, her body found a few years ago) complained she didn’t want prayer in our schools, and we said ‘OK’. Then someone said you better not read the Bible in school. The Bible says ‘thou shalt not kill’, ‘Thou shalt not steal, and ‘Love your neighbor as yourself.’ And we said ‘OK’. Then Dr. Benjamin Spock said we shouldn’t spank our children when they misbehave, because their little personalities would be warped and we might damage their self-esteem. We said an expert should know what he’s talking about. And we said ‘okay’. (Dr. Spock’s son committed suicide.) Now we’re asking ourselves why our children have no conscience, why they don’t know right from wrong, and why it doesn’t bother them to kill strangers, their classmates, and themselves. Probably, if we think about it long and hard enough, we can figure it out. I think it has a great deal to do with ‘WE REAP WHAT WE SOW.’ Funny how simple it is for people to trash God and then wonder why the world’s going to hell. Funny how we believe what the newspapers say, but question what the Bible says. Funny how you can send ‘jokes’ through e-mail and they spread like wildfire, but when you start sending messages regarding the Lord, people think twice about sharing. Funny how lewd, crude, vulgar and obscene articles pass freely through cyberspace, but public discussion of God is suppressed in the school and workplace. Funny how we can be more worried about what other people think of us than what God thinks of us.
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Grand Opening of
BAMA AUTO AUCTION BAMA Auto Auction, Fort Payne, Ala., is in the same location of the Fort Payne Auto Auction that closed last year. The owner is Lester Avery and the opening sale was very good with about 250 vehicles. Sale day will be every Thursday night at 6:00 p.m.
(1) The ribbon cutting (2) Tony Wilkerson with owner Lester Avery (3) lane one after the sale started.
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New & Renewing Members WELCOME NEW MEMBERS WILLIAM J HARDY ADGER AUTO ADGER BUTCH FRANKLIN FRANKLIN MOTORS BESSEMER
SAMMIE BAILEY B J’S AUTO SALES FORT DEPOSIT BILL BRILL BILL BRILL AUTO SALES BIRMINGHAM
JEFF USELTON LIMESTONE AUTO SALES CAPSHAW SAM CHAPLE GM MANHEIM NASHVILLE MOUNT JULIET, TN
RONNIE BRANDON BRANDON CAR CENTER INC BIRMINGHAM
TOM HOLTON GM MANHEIM’S PENSACOLA AUTO AUCTION PENSACOLA
BLAKE ALMAROAD BUDGET SALES INC CLEVELAND
TERRY MILLER MILLER MOTORS HARTSELLE
JEFF DEMEIS CAR FINANCIAL SERVICES INC HOOVER
MITCHELL ALLEN/JESSE GREENBERG MITCHELL ALLEN MOTOR CO MONTGOMERY
BARNEY CLARK CLARK AUTO & ELECTRIC PELL CITY
DAVID M EVANS OAK TREE MOTORS BIRMINGHAM
SHANE TALTON CONSUMER AUTO BROKERS ALBERTVILLE
TONY DEWBERRY PAT’S AUTO SALES SOUTHSIDE
RICHARD BOWMAN RCB AUTO SALES PIKE ROAD
TORREY COCHRANE CONTEMPORARY MITSUBISHI TUSCALOOSA
JOHN & CAROLE PIGG PIGG ENTERPRISES INC PRATTVILLE
SUSAN SCHEIN SUSAN SCHEIN AUTOMOTIVE PELHAM
DANNY THRASH DANNY THRASH MOTORS ALBERTVILLE
RODNEY GRISSOM/GREGORY GRISSOM R & G AUTO SALES MUSCLE SHOALS
CLEM WEBSTER/DAVE SELMAN THE CAR SHOPPE BESSEMER
CHRIS DONOHOO DONOHOO AUTO LLC PELHAM
ELAINE DEARMON SEMMES AUTO SALES INC SEMMES
EARL SHEAR EARL SHEAR MOTOR CO INC OPP
BOB SHAFER SHAFER USED CARS TALLADEGA
LARRY HENSLEY ECONOMY CAR SALES ALEXANDRIA
G T SKINNER, PRESIDENT SKINNER MOTORS INC OXFORD
T K CAHIL F-1 SPORTS CAR CENTER INC BIRMINGHAM
WESLEY BENEFIELD SOUTHERN USED CARS INC OXFORD
FRANK H SIMS FRANK H SIMS INSURANCE MOBILE
DONALD HICKS SPORTSMAN TRUCK AND MARINE ANDALUSIA
CARLOS M HARPER NEXT LEVEL AUTO BROKERS LLC BIRMINGHAM RUSSELL JOLLY KAR CITY MOODY JOHN PARKER JR/STANLEY HILL LEGACY PREMIER AUTOSTORE BIRMINGHAM MICHELLE PIPPEN MIRACLE AUTOMOTIVE GROUP BIRMINGHAM
CARL & RON EISBRENNER TRADEWAY AUTO CORP WINNIPEG, MANITOBA DAVID BARNES JR TROPICAL AUTOS ALES LLC CULLMAN ROYETTA LINKS USED CARS FOR SALE LLC ALEXANDER CITY
RENEWALS:
MEREDITH B COYNE B & B AUTOMOTIVE COLUMBIANA HUGH EDWARDS ED’S AUTO SALES DEMOPOLIS
BRIAN/RONNIE BARNETT THE CAR LOT FORT PAYNE JAMES & REGGIS GOINS GOINS AUTO SALES MUSCLE SHOALS
GIBBS KIRKLAND KIRKLAND MOTOR CO TUSCALOOSA MEL ADAMS LAST CHANCE AUTO SALES DOTHAN DANNY TOOLE RUCKER AUTO SALES ENTERPRISE H.W. (SMITTY) SMITH SMITTY’S TRUCK SALES INC. BIRMINGHAM BILLY NOESA ADESA BIRMINGHAM MOODY CHARLES F SWITZER ALABAMA MOTORS OF IRVINGTON INC IRVINGTON HARRY GREENBERG APEX MOTORS BIRMINGHAM
BART FERGUSON GOOD PATH AUTO SOCIETY ALEXANDRIA HAROLD AKINS HAROLD AKINS AUTO SALES INC BESSEMER DAVID HARRIS HARRIS MOTORS CROSSVILLE JOE SCOTT JOE SCOTT MOTOR COMPANY LLC MONTGOMERY
WALTER BOYD/O N TODD WOODLAND HILLS AUTO SALES TUSCALOOSA
THOMAS L BRIMER POKEY BRIMER AUTOS ALES OXFORD
AHMAD HAMMOUD WORLD AUTO SALES BIRMINGHAM
RALPH SMITH RALPH SMITH MOTORS MONTGOMERY
RYAN EDWARDS GM ADESA ATLANTA AUTO AUCTION FAIRBURN, GA
HORACE D TANKERSLY RIVERCHASE USED CAR CENTER INC BROWNSBORO
BOBBY J SELMAN AUTO BARGAIN CENTER INC TUSCALOOSA
JERRY CORNELIUS/LOLITA CORNELIUS SUPERIOR AUTO SALES INC ALBERTVILLE
WENDELL MOODY/RANDY MOODY B & B MOTORS DOUBLE SPRINGS ERVIN E BISHOP JR BISHOP AUTOMOTIVE LLC THEODORE
LARRY DON TEAGUE TEAGUE AUTO SALES INC FT PAYNE
BRIAN SCOTT BRIAN SCOTT MOTORS LLC ALBERTVILLE
GARY OWEN TRUCKS PLUS INC TARRANT/ORANGE BEACH
BOBBY L MILLER DECATUR MOTOR CO INC DECATUR
DON LEWIS TUSCALOOSA CREDIT UNION NORTHPORT
KATHY R HARBIN E-Z RIDE AUTO SALES INC JASPER
CHARLES & LISA LIVINGS/ HUBERT GLOVER UNITED AUTO WHOLESALE LLC SLOCOMB
STEVE EDGE EDGE MOTORS INC GADSDEN JAVAD KHOLAFAI FOURWAY AUTO SALES LLC MOBILE GARY MITCHELL GARY MITCHELL MOTORS FT PAYNE
ROGER WOOD WOOD BROTHERS AUTOS ALES BIRMINGHAM WILLIAM SAIN/STEVEN WATTS TOWN & COUNTRY FORD BESSEMER
GARY PLIMPTON GRI MOTORS GADSDEN HUGH EDWARDS HUGH’S USED CARS MARION
JIMMY L. ST CLAIR ST CLAIR AUTO SALES CENTRE
JERRY DEWBERRY JERRY’S TRUCKS & CARS MEXIA
THOMAS WIGGINS T & P AUTO SALES ANDALUSIA
BEN SHURLING MANHEIM METRO ATLANTA ATLANTA, GA
LEWIS THOMPSON THOMPSON MOTORS INC ONEONTA
MAX WILLIAMS MAXX MOTOR CO INC BESSEMER
MAX WOOD THRIFTY AUTO SALES % TITLE LOAN EXPRESS PELHAM
DANNY MCGEE MIDFIELD MOTOR CO MIDFIELD
CHRIS AVANT TROY AUTOMOTIVE GROUP TROY
ISAM ABDULLA T & T INTERNATIONAL MONTGOMERY
BILL THAMES MOTOR VEHICLES INC BIRMINGHAM
ROBERT THOMASON UNITED MOTOR CO JASPER
E GAYLE JENNINGS/RON ACKER OLD GLORY MOTOR CO LLC TUSCALOOSA
WAYNE KOEPPEN K & B CARS INC MONROEVILLE
MARY LEE WATSON WATSON WHOLESALE INC BREWTON
JOE C PARKER PARKWAY MOTOR CO DOTHAN
JEFFERY BROWN TUSCALOOSA LICENSE COMMISSIONER TUSCALOOSA
GARY HILYER WHEELS OF FT PAYNE FT PAYNE
MICHAEL MATHEWS/JOHN HUIE PERIMETER AUTOMOTIVE LLC BIRMINGHAM
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Beware of Compliance Issues Facing Dealers in 2011 Year-end is generally a time of reflection for many people.
We consider the past year, what has occurred, how we have responded, and look ahead to how we can improve. From a business standpoint, it is a very helpful exercise—especially when considering how you can prepare for the year ahead. As your dealership plans for 2011, here are three top compliance issues to consider: Consumer Financial Protection Bureau – This new regulatory agency was formed to help protect consumers from abusive financial products. It will be funded by the Federal Reserve and will ultimately write and enforce rules related to loans and other products in the financial services industry. CFPB head Elizabeth Warren has said she supports a principles-based regulatory system versus one that’s rules-based as a way to provide clear disclosures rather than rules that state what you can and cannot do. All dealerships will need to pay close attention, as federal principles-based laws could impact state laws and the current safe harbors in place.
NIADA.COM
ES
ALL NEW FOR YOU! NIADA has unveiled a brand new website that’s easy to navigate and offers many new technologically-advanced features for dealer members. Among them:
• The entire NIADA membership roster is now included on the home page via a state map. • All state magazines published by NIADA can now be viewed inclusive of advertisements. The magazines also will be archived on the site. Plus, those same state associations will have direct links from their websites to our site promoting readership of their particular state magazine. To view these magazines go to http:// www.niada.com/state_magazines.php • NIADA National Corporate Partners (NCP) will now have the ability to add a company or product-specific video next to their NCP description. • NIADA’s new dealer social network will be unveiled early 2011.
THE GOAL is to make sure consumers
understand how their credit report data impacts their ability to obtain new credit. Red Flags Rule – While you’ve probably already heard a lot about this rule (which requires implementation of a written identify theft program) because it became effective in 2008, dealers must remember that the Federal Trade Commission’s new enforcement date is Dec. 31, 2010. It’s also important to note that this is just one law among many that affect the way consumer data is protected. This is a trend that will undoubtedly continue into 2011 and beyond—especially as the methods by which we transfer information continue to change with the evolution of technology. Risk-Based Pricing Rule – This new rule, which takes effect Jan. 1, 2011, requires companies that use a credit report or score in connection with a credit decision to send notice to a consumer when he or she is getting different credit terms than others based on credit information. The goal is to make sure consumers understand how their credit report data impacts their ability to obtain new credit. If you haven’t done so already, your dealership should sort through the notice options and evaluate loan underwriting processes. You need to determine if your business activity is covered by the requirements and if any exceptions apply. Remember, non-compliance penalties are steep, and some consumers might also try to recover damages under other legal theories. As any dealer who has weathered the last few years knows, regulatory issues aren’t going away. The dealerships that have remained strong are those that have focused on compliance. While it takes time and resources to invest in compliance, the costs are minimal when compared to potential fines and reputation damage.
About the Author: Lee Domingue is CEO of indirect lending at Wolters Kluwer Financial Services. For more information, please www.wolterskluwerfs. com/ilsolutions.
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