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DECEMBER 2010

W E S T C OA S T DEALER

INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION OF CALIFORNIA

STRIKING GOLD: IADAC’S 42ND ANNUAL CONVENTION ALSO Mike Gough Named IADAC Quality Dealer of the Year PLUS Credit Applications Do’s & Don’ts

s ’ n o s a e S s g n i t e e Gr Happy 52nd Anniversary IADAC On October 24, 1958, IADAC was incorporated.

DALLAS, TEXAS Permit No. 2079

PAID PRSRT Standard U.S. Postage

VISIT US AT WWW.IADAC.ORG

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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

AIADAENCOURAGESLEGISLATURE 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 identificationasmembersofNIADA,doesnotconstituteanendorsementofthe 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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By David Angelicchio

Standards to Make Auctions Better for Customers The National Auto Auction Association (NAAA) is the leading remarketer of used vehicles in the world. NAAA

member auctions sell about nine million vehicles per year through the physical auction lanes and online. Over the past several years, NAAA has been focused on developing consistent standards and practices to be applied at all member auctions to enable customers to buy with more confidence from any auction they choose, whether they buy in-lane or online. The ultimate goals are to improve buyers overall auction experience and increase vehicle residuals. In connection with this renewed focus on standards, the Auction Standards Committee (ASC) was formed. It’s comprised of representatives from Manheim, ADESA, ServNet and independent auctions. Because of the complexity of the issues and their importance to the industry, the ASC also engages an outside industry consultant to assist in the development of policy. The ASC also works hand in hand with

other industry associations to help to ensure industry acceptance and endorsement of the standards and policies that are developed. The first area of focus for the ASC was the development of a revised arbitration policy. The arbitration standard was completed and approved by the NAAA board in October 2009 and became effective on January 1. This policy has been universally endorsed and adopted by NAAA member auctions and the rest of the vehicle remarketing industry. The next area of focus was the development of a standard wholesale certification standard. The ASC determined although buyers believed there was a definite value to wholesale certification, they were confused by the large number of programs and could not define them or quantify their value. In addition, the myriad of different policies created operational inefficiencies at the auction level. The ASC was charged with developing a standard certification program that combined the major elements of all the separate policies while maintaining individual company branding. After extensive study, the ASC – working with Agility Consulting and the IARA – developed the NAAA Certification Standard, approved by the NAAA board in September. This standard has been endorsed by IARA and will become effective on Jan. 1, 2011. The marketing materials for this program

are being prepared and will be available soon. The ASC also has developed a process to receive comments on all NAAA standards so they can continually be updated. The committee will continue to look at other areas of standardization including vehicle grading. As the leader in vehicle remarketing, NAAA is committed to the continued development of consistent auction standards and practices in order to provide the best possible service to the dealers. All NIADA members and dealers seeking full detail on national vehicle condition standards in place at NAAA auctions beginning next month should visit www.NAAA.com and click on Standards. David Angelicchio is chairman of the board and past president of NAAA, which represents more than 317 auto auctions both domestic and international, with more than 8.9 million units sold each year. He is the general manager of the Pittsburgh (Pa.) Independent Auto Auction.

Kelley Blue Book Implements Values with precision, Transparency Sophisticated Forecasting Models Gives Dealers Accurate Picture of Future Values, Instead of Last Week’s Auction Sales With the numerous and complex factors that go into determining a vehicle’s value not only today, but next week, it is amazing that a dealer could make any profitable vehicle buying and selling decision without a background in economics. 

Although, it begs the question; would dealers have the opportunity to generate more profit if they had the ability to know what a vehicle would be worth in 30 days? Savvy dealers understand that the ability to predict the market offers a tremendous competitive advantage and would drive untold profits. Earlier this year, Kelley Blue Book® implemented a new multi-million dollar, state-ofthe-art vehicle information management system (VIMS) by increasing its data collection ten-fold. The predictive nature of Kelley Blue Book values can forecast unprecedented insights with great accuracy allowing dealers to better control inventory and profits. “We have eliminated the standard paradigm

of inflexible systems that can only provide values based on historical vehicle sales,” said Paul Johnson, president and CEO of Kelley Blue Book. “Our advanced statistical models take into account current economic factors and catalytic events to project what values will be next week, next month, and even further in the future.” Kelley Blue Book has established a gamechanging predictive forecasting model which marries detailed vehicle information with advanced statistical models that take more into consideration than just auction prices, including lease volumes and returns, seasonal trends, interest rates, gas prices, unemployment levels and competition in every market segment.  The new architecture allows Kelley Blue Book Values to leap frog antiquated legacy valuation methods used by other providers creating a new gold standard in valuation giving dealers the tools they need to maximize profits.  With these forecasting abilities, dealers and the industry can now, more than ever, look to Kelley

Blue Book’s weekly values as the most trusted in the industry. “Kelley Blue Book’s new analytic capabilities provide dealers, banks, finance and insurance companies with unrivaled insights into the future of the automotive marketplace, continuing the company’s preeminence in vehicle pricing and values,” said Johnson. “With our transformational enhancements in data collection, advanced statistical modeling and personnel, dealers and finance organizations can manage an entire portfolio of inventory more effectively and profitably than ever before.” VIMS’ integrated valuation forecast feeds more than 15 products, including KARPOWER Online, the company’s flagship valuation and inventory product. With the combination of VIMS, SAS statistical software and blazingly fast data warehouse architecture, Kelley Blue Book is helping the industry to better assess risk, project profits and have the broadest understanding of the vehicle marketplace

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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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CREDIT APPLICATION

DO’S & DON’TS Many consumer attorneys are focusing on an overlooked piece of paper in your deal file…your customer’s credit application. There are several reasons for this.

The primary reason is an almost bulletproof method of rescinding a customer’s purchase contract. Section 2981.9 of the Automobile Sales Finance Act (“ASFA”) requires that you give your customer a fully executed copy of their purchase contract prior to delivery of the vehicle and “any credit statement which… the buyer… has signed during the contract negotiations”. So are you giving your customers a copy of their signed credit application? Informal polling indicates that most franchise dealers are aware of this requirement, but many independent dealers are not. Your customer’s remedy for not receiving a signed purchase contract or signed credit statement is staggering. ASFA Section 2983 states that a violation of this requirement makes the purchase contract not enforceable. If the buyer elects to cancel the con-

tract, he or she must return the vehicle and is entitled to their money back less an offset for their use. The ASFA allows an opportunity to cure such defects, but this right rests with the contract “holder.” As long as you still hold the contract you can cure this mistake by mailing the customer a copy of their contract or credit application. The moral of the story is to prepare a documentation checklist that includes giving your customer a copy of their signed credit application. Another reason attorneys scrutinize the credit application is to find disparities between what your customer actually earns versus what was reported to the lender. Consumer attorneys usually blame the dealers for overstated income and fictitiously reported employers. To avoid such allegations, we recommend having your customer fill out the entire credit application, not the dealer. If your customer filled in all this information, arguing there was a joint conspiracy to defraud the lender is less credible. Make sure you keep a copy of your con-

By Michael C. Rogers, Esq.

tracts, credit statements, and credit reports. ASFA Section 2984.5 (a) requires sellers to keep these records for the length of the contract or seven years, whichever is longer. Credit applications for cancelled or incomplete transactions must be kept for 25 months(Equal Credit Opportunity Act, Regulation B, Part 202, Sec. 202.12). Lastly, if you decided not to sell a customer a vehicle based on their poor credit history, you unwound or refinanced a deal, or no lender approved their deal and the customer rejected the last credit proposal, you are required to mail them an Adverse Action Notice pursuant to Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA). The consequences of violating the ECOA can be significant. The statute provides for class actions and punitive damages of up to $10,000 in individual actions, and punitive damages up to $500,000 in class actions. In addition, a successful ECOA plaintiff can recover attorney’s fees and costs from the defendant.

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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.

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

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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, noncompliance 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, visit www.wolterskluwerfs. com/ilsolutions.

Federal Advocates October 2010 Lobbying Report Small Business Jobs and Credit Act of 2010

On September 23, the House passed the Senate-passed bill, which includes an increase in the amount the Small Business Administration’s (SBA) Dealer Floor Plan Financing program can guarantee. This permits the SBA to guarantee bank and finance company loans up to $5 million, which should help, the committee believes, expand dealer access to floorplan lines of credit. We worked with Louisiana Democrat Sen. Mary Landrieu’s Committee and personal staff in conjunction with others on this. This bill may be the subject of subsequent meetings with the Hill and the SBA on how the program “really works!”

FEDERAL ADVOCATES IS NIADA’S GOVERNMENTAL ADVOCACY PARTNER. To read past lobbying reports, visit http:// www.niada.com/legislative_and_legal.php

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We Struck GOLD at IADAC’s 42nd Annual Convention B y K a c y Wa l l i s , E x e c u t i v e Vi c e P r e s i d e n t The California State Capitol provided the perfect backdrop for IADAC’s 42nd Annual Convention. Held on the top floor of the Holiday Inn Capitol Plaza in beautiful downtown Sacramento on Friday, October 22, the one-day event was packed full of fun! In the days leading up to the convention were the amazing auction drives hosted by Brasher’s Sacramento, Manheim San Francisco Bay and North Bay auto auctions. In a first ever event, all three auctions allowed IADAC to have outside exhibitors join us at the membership drives. Participating exhibitors included AUL, Tax Refund Services Tax Max, Cal-Society Insurance Services, Vehicle Acceptance Corp., Western Funding, AssureTech Direct and Nationwide Acceptance. Each exhibitor got an opportunity to talk to hundreds of dealers for the same cost as an exhibit booth at prior year conventions. One exhibitor boasted 15 new leads at one auction alone! Plus IADAC signed 15 new members. We can’t thank the fine folks at Brasher’s, Manheim and North Bay enough for the opportunity! Our stellar group of guest speakers was energetic and informative and each one did an amazing job. Gizzi and Reep, IADAC Preferred Provider, returned for a new legal update to help dealers stay in compliance and out of trouble. VINtek gave us insight into the new paperless title law to hit California in January of 2012. AutoCheck amazed us with the accurate detailing of their vehicle history reporting system, and then ADR Consulting gave us insight into utilizing free marketing and social networking tools to build relationships for increased sales. California Recoveries Company detailed the specific advantages of using a licensed repossessor in repossession situations (including lease returns) and the folks from the Bureau of Automotive Repair and Air Resources Board enlightened us about the new diesel smog laws, despite it being a furlough Friday. Those of you who didn’t attend missed a top-tier group of dynamic speakers. In the midst of our educational session, we took a break to celebrate and honor IADAC’s newest Quality Dealer during a special luncheon. Our sincerest congratulations go to Mike Gough of MG Auto Wholesale in Vacaville! Read more on page 6. The consistent convention favorite over the years has to be the Auxiliary Auction. Proceeds from the auction benefit the Victor J. and Ethel G. Snyder Memorial Trust Scholarship Fund. This year’s event was the largest I have seen and was the year-long project to Mary Glover, wife extraordinare of Senior Vice President, Mark Glover. Mary truly outdid herself! Let’s not forget the team assembled by Mary to assist in the 14

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festivities – auctioneers Rod Davis, David Aahl and Damon Casatico, assistants Aubrey White and Laura Dunham. Special thanks to all the generous people who donated items to auction: Allure Salon, Brasher’s Sacramento Auto Auction, Cal West Motors, Car Systems, Classic J Vans, County Financial, AlamedaContra Costa Chapter of IADAC, Manheim Central California, Mark and Mary Glover, North Bay Auto Auction, RJ Auto Brokers, The Miles Law Firm. We would be remiss if we didn’t mention our sponsors. Thanks to generous donations, IADAC was able to lower this year’s registration fee by $66! Sponsors included AUL, AutoTrader.com, Tax Refund Services Tax Max, Insurance Auto Auctions, GMAC SmartAuction. Without sponsor support, this convention could not have been such a success! Thank you to all the members who joined us, the speakers for donating their time, and the exhibitors and sponsors. To make the 2011 convention a success, we need your input. Please let us know what speakers or topic you would like to have covered, where you would like it held and any other ideas you have. We would love to hear from you! Send your ideas via email at evp@iadac.org or call Linda Albracht toll free at 888-315-2869.

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Federal Advocates October 2010 Lobbying Report “Wall Street/Consumer” Financial Services Reform Bill

On November 17, NIADA General Counsel Keith Whann and Federal Advocates will be meeting with staff of the FTC as a follow-up from the September 21 meeting. A series of questions have been provided to NIADA for discussion at the November session. To review, on September 21, Whann and Federal Advocates met with staff of the Federal Trade Commission (James Dolan, assistant director; Carole Reynolds, senior attorney, Division of Financial Practices; Rebecca Kuehn, assistant director, Division of Privacy and Identity Protection; Katherine Worthman, attorney, Division of Financial Practices; and Daniel Hanks, attorney, Division of Marketing Practices) regarding implementation of the above bill and its impact on the auto industry. Following discussion of various issues, with Whann leading the discussion and answering various questions as to how the auto industry works (including the auction practice itself), it was decided to schedule a follow-up session to allow for a more detailed discussion of issues. To review further, on July 22, President Obama signed into law the socalled Wall Street Reform Bill. As reported previously, the new law exempts certain auto retailers from increased oversight with respect to dealer-assisted financing. To get to that result, advocacy activities included numerous meetings, strategy phone conference calls, letters, talking points, legislative alerts, etc. The law does grant increased powers to the FTC regarding dealer oversight. Also, it requires coordination with the Department of Defense to ensure that service members and their families are treated fairly by automobile dealers.

Senate Motor Vehicle Safety Act of 2010

NIADA is reviewing the above bill pending possible Senate Floor action in November or December. To review, on June 9, the Senate Committee on Commerce, Science and Transportation marked up and reported S.3302, the socalled Toyota Bill. In earlier drafts of the bill and just prior to markup, language was included (section 310) which would have specified that a dealer may not sell or lease a used passenger motor vehicle (both wholesale and retail) until the dealer first notifies the purchaser or lessee in

writing of any recall notices. Working primarily with Sen. John Thune, R-S.D., his staff (Brenden Plack), and committee staff (Alex Hoehn-Saric and Chris Herndon), and as a result of concern raised by Keith Whann and his proposed suggestion, language was included in the final reported version of the bill exempting wholesale transactions from the section’s application. While an initial victory, the remaining provision is still very troublesome and we continue to advocate on behalf of NIADA’s interest pending further action on the Senate bill as well as a possible House companion bill. The latest Senate draft and the companion House bill (H.R. 5381) are being reviewed by NIADA.

White House Reform Request

On September 23 and September 29, Federal Advocates was contacted by the White House, which is still trying to organize and schedule a meeting to include “people who are working to set up the CFPB.” This meeting is in response to a letter sent by NIADA to President Obama requesting “the opportunity to work with you to reform our industry in common-sense ways that achieve real safeguards for consumers, that promote accountability and transparency, and that really work.”

Department of Defense

Regarding the issue of “how to ensure that service members and their families are treated fairly by automobile dealers,” Whann and Federal Advocates also met on September 21 with the Defense Department’s Frank Emery in the Office of Personal Finance, Family Policy Outreach Directorate. Whann relayed a specific example of how he helped a service member at Fort Bragg on an automobile situation working with the base JAG office and others. He also talked about his plan for a special program to teach dealers on how to deal fairly with service members and their families. Emery mentioned a November conference in Denver where Keith could give a presentation. DOT continues to remain interested in looking for opportunities where Keith could lend his expertise. Details are to be finalized at a later date.

FEDERAL ADVOCATES IS NIADA’S GOVERNMENTAL ADVOCACY PARTNER. To read past lobbying reports, visit http:// www.niada.com/legislative_and_legal.php

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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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