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West Coast Dealer Inside:

• Legislative Report • Legal Minute • IADAC Convention

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 AT I O N O F C A L I F O R N I A

DALLAS, TEXAS Permit No. 2079

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VISIT US AT W W W.IADAC.ORG

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Inside D E C E M B E R

ASSOCI AT ION NE W S

President’s Message

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What’s New

NIADA.tv NAAA EDUCATION SESSIONS ONLINE Go to NIADA.tv’s Remarketing channel to view the education sessions from the recent NAAA convention! While you’re there, check out all the resources NIADA.tv has to offer!

WE CAN MAKE A DIFFERENCE

I was asked recently if I would consider assuming the role of president of IADAC, and although I was initially flattered, I did not commit to an answer immediately. My first thought was that I am very busy, perhaps too busy to take on this task. But as I thought about how tough it is to be a dealer today and how misunderstood our industry is, I began to realize that you have to play in the game if you want to win. Sitting on the sidelines and hoping others will do something is why we are misunderstood.

I understand we are all very busy, but even a little participation on any level makes a difference.

The more of us that decide to make a difference, the stronger our voice will be. I am honored to be your president and will do my best to improve the industry and fight for dealers’ rights.

Inside

05 Legislative Report 06 Quality Dealer of the Year 06 Scholarship Fund 08 Legal Minute 10 Eliminate Year-End Accounting Stress 12 In Memoriam 15 47th Annual IADAC Convention 18 Changing Dealer Markups

Advertiser’s Index

ADESA..................................................................................................IBC Allen Hawkins Insurance.......................................................12 AVRS.......................................................................................................... 9 Black Book............................................................................................ 7 Brasher’s Sacramento AA..................................................... BC Lobel Financial Corp..................................................................... 3 Manheim............................................................................................ 21 Manheim Pennsylvania..........................................................13 Mark-One Financial..................................................................... 5 NextGear Capital.......................................................................... 11 TrueCar.................................................................................................14 VAuto....................................................................................................IFC

Office

OUR INDUSTRY NEEDS US TO UNITE AND WE DO THAT THOUGH MEMBERSHIP IN IADAC.

For information on how to become a member please contact larry@IADAC.ORG or (916) 601-4976

NIADA Headquarters

National Independent Automobile Dealers Association www.niada.com www.niada.tv 2521 Brown Blvd.

Arlington, TX 76006-5203 phone (817) 640-3838 For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com.

The West Coast Dealer is published bi-monthly by the National Indpendent 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 The West Coast Dealer, IADAC, 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 2015 by NIADA Services, Inc. All rights reserved.

STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT & GRAPHIC ARTIST Chantae Arrington • chantae@niada.com ART DIRECTOR Christy Haynes • christy@niada.com PRINTING Nieman Printing

My family has been in the car business for over 35 years.

My father emigrated here from Mexico and was able to provide for his wife and children as a result of the opportunities available in the United States.

Although my father is now retired, the family business lives on through my brothers and me.

I know we all face days where it seems like we are fighting an uphill battle in an industry that is overregulated, highly competitive and dangerously litigious. On those days it almost doesn’t seem worth the effort, but like all of you I reach back for the energy to face the problems head on and solve them. That is why I agreed to take this position.

Our industry needs us to unite and we do that through membership in IADAC. I realize you all won’t be able to get involved in the workings of the association, but you can help just by being a member.

Our next major event will be the So Cal Conference on

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Rocco Delapa President Fairfield Auto 1206 N. Texas St. Fairfield, CA 94533

INSIDE INSIDE

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tion, McElroy provides a thorough insightful review of where we’veand been, where we now review of where we’ve been, where we now are, and where our industry is headed. Taped are, and where our industry is headed. Taped at the Automotive Fleet & Leasing W Automotive W. I A D A C . O R&GLeasing Association’sAssociation’s atWthe Fleet Annual Conference.

Annual Conference.

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Dealers who demonstrate and Dealers who demonstrate commitment commitment and support the principles ethical business support the principles and ethicaland business

April 15, 2016, in San Diego.

I hope to meet many of you at that event. It is a single day and I promise it will be worth your time.

There will be more events between now and then and you can receive those announcements, plus industry updates, by signing up for our e-newsletter. Go to www.iadac. org and click the green button on the left border of the home page.

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Brittany Hibdon Vice President Hibdon Auto Center Orland, CA 95963 530-865-5800 Brittany@HibdonAutoCenter.com EXECUTIVE COMMITTEE

Gus Camacho Rod Davis EXECUTIVE COMMITTEE Sr. Vice President Rod Davis President Rod Davis Brasher's Auction Camacho Auto Sales, Inc. Chairman of theAuto Board President Rio Linda, CA 95673 Brasher's Auto Auction Lancaster, CA 93534 Brasher’s Auto Auction 916 - 991 - 5555 MAGAZINECONTENTS Rio Linda, CA 95673 rdavis@brashers.com Rio Linda, 916 - 991 - 5555 CA 95673 MAGAZINECONTENTS 6 Named661-945-2609 IADAC Quality Dealer of the Year rdavis@brashers.com gus@camachoauto.com 916-991-5555 Auction Standards Help 6 Named8IADAC Quality Dealer of the Customers Year David Aah1 Credit Applications Do’s & Don’ts 8 Auction13Standards Help Customers rdavis@brashers.com Chairman of the Board David Aah1 Striking Do’s Gold:& IADAC’s 42nd Annual Convention 13 Credit 14 Applications Don’ts North Bay Auto Auction Mehdi Chitgari Chairman of the Board 14 Striking Gold: IADAC’s 42nd Annual Convention Fairfield, CA 94534 North BayStrohmeier Auto Auction Vice President Guy 707 - 864 - 1040 Fairfield, CA 94534 THE CURRENT STATEInc. Classic Chariots Vice 707 - 864President - 1040 david@nbauto.com THE CURRENT STATE OF THE1611 AUTO INDUSTRY david@nbauto.com W. Vista Way Guy Strohmeier’s OF THEJohn AUTO INDUSTRY McElroy is host of the long-running “AutoMark Glover CA 92083 Auto Center John McElroy hostVista, of television the long-running “AutoMark Glover Sr. Vice President line isDetroit” program, covering all asSr.87 ViceSoda PresidentBay AztecaRd Auto Sales line Detroit” television covering all In as-this presentapects of the program, automotive industry.

Azteca Auto SalesGalt, 95632 Lakeport, CACA 95453 pects of thetion, automotive industry.

In this presentaMcElroy provides a thorough and insightful Galt, CA 95632 209-712-1886 209-712-1886 mark@countyfinancial.com mark@countyfinancial.com

Larry Laskowski

Larry Laskowski Treasurer Treasurer The Auto Outlet The Auto Outlet Roseville, CA 95678 Roseville, CA 95678 916-784-3408 916-784-3408 autoview@surewest.net autoview@surewest.net

BY GUS CAMACHO

Beto Beas Secretary Beas Auto Sales Stockton, CA 95202 209-944-5770 hhbeas@aol.com

IN INSID

MAG Terry Degmetich Treasurer MAGAZINECO 12 Lo I-Deal Cars by Roseville, CA 95678 12 Local Auto Deale

by Clunkers10 10 916-870-9254 idealmaster@surewest.net 10 10 Questions for14 AutoC Au Vice President

Terry Degmetich Secretary Terry Degmetich I - Deal Cars Secretary Roseville, CA 95678 I - Deal Cars 916-870- 9254 Roseville, CA 95678idealmaster@surewest.net 916-870- 9254 Vince Cardinale idealmaster@surewest.net Vince Cardinale A to Z Motors Vice President Winters, CA 95694 A to Z Motors Winters, CA 95694 925-914-9199 atozmotors1@aol.com 925-914-9199 atozmotors1@aol.com

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support the principles and dards dards of the CMD day design se day seminar that addresses Merch Merchandising, Financial Resou Resources, and Business University providesUnive the in Contin Continuing Education units

Larry Laskowski 18 In the Spotlight Executive Director The Auto Outlet CER Rick Gomez Roseville, CA 95678 CERTIFIED MAST DEA Rick Gomez Vice President DEALER PROGR 916-601-4976 Vice President RJ Auto Brokers De RJ Auto Brokers Carmichael, CA 95608 Dealers who demonst autoview@surewest.net suppo Carmichael, CA 95608 916-425-3349 Mike Casey

Mike Casey Vice President Vice President Cal West Motors Cal West Motors San Leandro, CA 94577 San Leandro, CA 94577 510-352-9230 510-352-9230 clwest1977@aol.com clwest1977@aol.com

NEX NEXT CLASS OCTO

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L EGISL AT I V E NE W S

Legislative Report & Commentary IADAC WORKING FOR YOU

BY BILLY DOHRING, IADAC LOBBYIST

I had the pleasure of attending the 47th annual IADAC convention at Lake Tahoe October 9-10. It was my 33rd IADAC convention and it was the best attended convention in many years. It was great to see many past attendees who haven’t been around in a few years and many new faces. We had an inspiring program and it was great to see the audience absorbing the information that will help them be more profitable in their businesses.

A special thanks to our vendors who help sponsor the convention and provide products that can make your business more profitable.

We seem to be establishing a new beginning in the industry in which you want to attend, not are forced to attend. It would be great if every person who attended this year could bring a friend next year and double the attendance at the next event.

KEEP IN MIND, WHEN IT COMES TO REPRESENTING THE USED CAR INDUSTRY, IADAC IS THE ONLY GAME IN TOWN.

JUST CHECK WITH THE PEOPLE WE’VE HELPED WITH IMPOUND PROBLEMS, REGISTRATION ISSUES AND MUCH MORE. IF YOU HAVE ANY ISSUES, CALL IADAC! WE ARE HERE TO HELP OUR MEMBERS. Keep in mind, when it comes to representing the used car industry, IADAC is the only game in town.

Just check with the people we’ve helped with impound problems, registration issues and much more. If you have any issues, call IADAC! We are here to help our members.

The legislature is on recess now so we don’t have to worry about any group introducing harmful bills until January 2016. AB 287 (safety recalls) will be held over until 2016. That is the California New Car Dealer Association bill which creates a formula for handling factory recalls. That bill in its current condition takes care of all of our concerns.

AB 516 will mandate the installation of temporary (non-metal) plates in cases where a vehicle does not have permanent plates already on the vehicle. This affects new car dealers more than us but we need to be prepared just in case. The author of the bill has listened to our concerns so far and we will continue to monitor that bill.

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ASSOCI AT ION NE W S

ASSOCI AT ION NE W S

Kicking Off the Scholarship Fund

VIC AND ETHYL SNYDER SCHOLARSHIP AUCTION RAISES OVER $30K

ROD DAVIS, AUCTIONEER AND GM AT BRASHER’S SACRAMENTO AUTO AUCTION, PULLING BIDS FOR THE HIGHLY COVETED “TERRY’S COWBOY HAT.”

TIM CORCORAN PRESENTING QUALITY DEALER AWARD TO MEHDI CHITGARI, OWNER OF CLASSIC CHARIOTS.

And the Winner is...

2015 QUALITY DEALER MEHDI CHITGARI

This year at the IADAC fall convention the Quality Dealer of the Year was awarded to one of four very deserving nominees. This year’s outstanding dealer nominees were Mehdi Chitgari from Classic Chariots in Vista, Sam Khacho from Three Amigos in Modesto, Bruce LaVergne and Nader Zaker from Pacific Auto in Auburn and Brittany and Shawn Hibdon from Hibdon Auto Center in Orland.

These dealers are exemplary in the qualities all dealers should strive to achieve. All are active in supporting their local communities and have high customer satisfaction.

This award was presented at the conclusion of the Quality Dealer Luncheon by keynote guest speaker Tim Corcoran, Chief of Occupational Licensing with DMV. Last year’s Quality Dealer Jerry Khan presented Mr. Corcoran with an envelope.

After a dramatic pause, Mehdi Chitgari was announced as this year’s winner.

Congratulations to Mehdi for this welldeserved award!

Other nominees: • Sam Khacho, Three Amigos • Nader Zaker and Bruce LaVergne, Pacific Auto • Shawn and Brittany Hibdon, Hibdon Auto Center

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NADER ZAKER AND BRUCE LAVERGNE

SHAWN AND BRITTANY HIBDON

SAM KHACHO

ADESA Sacramento general manager Laura Seek, along with North Bay Auto Auction GM David Aahl, provided a healthy boost to the scholarship fund by auctioning parking spots at their respective auctions. Paymon Hajjarian with Sacramento European was the high bidder for the ADESA Sacramento spot, entitling him to his very own preferred parking space.

Children of IADAC dealer members may apply for the scholarship after the dealer has been an IADAC member for two full years.

The scholarship recipient receives $1,000 per year, up to four years. The money raised at the annual IADAC convention replenishes the scholarship fund so it may be available for many years to come.

Thanks to all who opened their wallets to purchase items or make cash donations. A very special thanks goes to all our scholarship item donors: • ADESA Sacramento • ADESA Los Angeles • ADESA San Diego • AUL Corp.

• Auto Data Direct • Autotrader/Shawn Nehrir • Brasher’s Sacto AA • Brasher’s Fresno AA • California Republic Bank • Dar Geramian/Bravo Motors of Sacramento • Dealertrack • Gus and Rhonda Camacho/Camacho Auto Sales • Larry and Kathy Laskowski • Manheim California • Manheim San Diego • Manheim Central California • Manheim Riverside • Mike and Terri Casey/Cal West Motors • North Bay Auto Auction/David Aahl • OnStar/Cathy West • Putu and Paul Blanco/Paul Blanco’s Good Car Co. • Rocco and Marjorie DeLapa/Fairfield Auto • Sam and Hilda Khacho/Three Amigos • South Bay Auto Auction • Terry and Rachel Degmetich/I-Deal Cars

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LEGAL MINUTE

THE BENSON RULING

Recent Court of Appeal decision in Benson v. Southern California Auto Sales, Inc., Case No. G050484, hands victory to car dealers who timely respond to CLRA demand letter with an “appropriate correction”: As discussed in our last two articles in this column, when a car dealer timely responds to a CLRA demand letter with an offer of an “appropriate correction” that is rejected, the consumer may be barred from recovering damages – an important legal defense if the consumer ends up filing a lawsuit.

The goal of these proactive measures is to avoid litigation altogether by making the case less attractive to plaintiff’s attorneys whose enthusiasm for CLRA claims often hinge on the allure of being awarded big attorney’s fees should they prevail, fees which, historically at least, could often dwarf a consumer’s actual damages.

Before Benson it was not certain whether a dealer could insist a consumer release all claims and not just the CLRA claim as part of an offer of “appropriate correction” and thereby assure settlement of the CLRA claim would make the whole lawsuit, or potential lawsuit, go away. Likewise, pre-Benson, there was little guidance on what was a “reasonable amount” of attorney’s fees for a dealer to pay as part of settlement of the

claim. Benson now provides much needed clarity on these issues.

In Benson, the plaintiff alleged the used Infiniti he purchased from Southern California Auto Sales, Inc. (“SCAS”) had undisclosed frame damage, he paid more than the advertised price for the car, and a deferred down payment was not properly disclosed on the sale contract. The plaintiff sent the dealer two CLRA demand letters and filed a lawsuit before the 30 days had expired alleging multiple causes of action, including a claim for injunctive relief under the CLRA. The dealership sent a timely response to the CLRA letters offering rescission, $2,500 for attorney’s fees and costs, and demanding a mutual settlement and release of all claims.

Benson rejected the dealership’s offer and amended the complaint to include money damages under the CLRA claim. The case settled with the parties agreeing to have the issue of attorney’s fees decided by motion.

Plaintiff requested the trial court award $182,000 in fees and costs. The trial court denied Benson’s motion for attorney’s fees reasoning Benson could not maintain a cause of action for damages under the CLRA because SCAS timely offered him an “appropriate correction” (rescission plus $2,500 in fees) under the statute. Benson appealed the trial court’s denial of

BY THE SCALI LAW FIRM

his attorney’s fees arguing SCAS’s offer was not appropriate because it included a settlement and release of all claims, not just his CLRA claim.

The Court of Appeal held SCAS’ offer of rescission, $2,500 in attorney’s fees and a requirement that plaintiff release all other claims was “appropriate” and sufficient to cutoff a plaintiff’s ability to recover damages or attorney’s fees. The court indicated this ruling would not necessarily apply to a claim seeking injunctive relief.

Thus in this brave new postBenson world, not only can car dealers insist with confidence a plaintiff release all claims as part of the settlement of a CLRA demand but can point to this written legal opinion quantifying $2,500 as reasonable amount for attorney’s fees incurred in pursuing a CLRA claim. This quantification of reasonable attorney’s fees should provide especially welcome relief from the previously plaintifffavorable climate where plaintiff’s attorneys routinely demanded upwards of $15,000 in attorney’s fees when negotiating settlement of CLRA claims before a complaint was even filed The Court of Appeal observed the policy behind the pre-suit letter is to provide an opportunity to resolve the consumer’s complaint without resorting to litigation. The Court of Appeal then reasoned that because the additional claims

didn’t add any value to the claim that prompted the CLRA notice it was reasonable to include the release of those claims as part of the dealership’s correction offer, observing that “SCAS would have been foolish indeed to correct the CLRA claim if eight other virtually identical claims were going forward notwithstanding the correction.”

This decision underscores the importance of acting promptly when receiving a CLRA demand letter and, upon determination the claim should be settled, making the settlement offer (e.g., rescission plus attorney’s fees as in Benson) within 30 days of receipt of the letter. A customer who rejects the offer faces the realistic prospect of being later barred from maintaining a damages claim or recovering his attorney’s fees.

ARTICLE PROVIDED BY CHRISTIAN J. SCALI, ROBERT D. DANIELS, JOHN P. SWENSON OF THE SCALI LAW FIRM, IADAC PREFERRED PROVIDER: (213) 618-4371.

JOHN P. SWENSON

CHRISTIAN J. SCALI

ROBERT D. DANIELS

AUC T ION SP OT L IGH T

Getting to Know You ADESA GOLDEN GATE GENERAL SALES MANAGER KJERSTA LOYD

Many of you who regularly attend ADESA Golden Gate recognize the energetic Kjersta Loyd pictured here. Kjersta is the general sales manager at ADESA Golden Gate.

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She was particularly hard to miss while she sported the limegreen cast on her arm recently.

The cast really didn’t slow her down, except when she had to explain how she sustained the

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injury. What most of you don’t know is how the injury happened.

Care to guess? a) B ody checking a competitor in her weekly hockey league. b) Administering an attitude

adjustment to a difficult dealer. c) Cranking up her best friend’s Model T. d) Snowboarding in Colorado.

Answer: C

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M A N AGEMEN T M AT T ERS

14 Fixes to Wipe Out the Stress of Year-End, Once and for All ELIMINATE YEAR-END ACCOUNTING STRESS

BY JEFF McCURRY

Like clockwork, year-end comes around every 365 days.

Yet we always seem to find ourselves less prepared for it than we had planned. Inevitably, we patch things up as best we can and vow to do better next year.

As 2015 rapidly comes to a close, I’m here to tell you it’s not too late. You have just enough time to take care of those

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last-minute transactions and adjustments to your finances to put yourself in the most beneficial position for income tax purposes.

Better yet, you can implement key strategies right now that will set you up for success in 2016. I’m talking about killing off the stress of month- and year-end for good.

So take a deep breath, put on that pot of coffee, and let’s get started.

1) Focus on the long-term.

One of the most unfortunate mistakes you could make is to pay attention only to what’s required for closing out this year.

The fact is great businesses are not built in a reactionary environment. In the midst of the hustle and bustle, don’t forget the bigger picture. That includes taking time to honor your most valued employees, encourage cross training and reassess your vendor relationships.

2) Combine vendor solutions for maximized efficiency.

If one of your vendors offers a technology that would allow you to consolidate several vendors or products into one – and for a fraction of the cost – it’s not rocket science that you should seriously consider it.

For example, a single Dealer Management System can perform more efficiently than working with separate inventory management, servicing, website and inventory listing companies.

3) Automate processes wherever possible.

It all boils down to leveraging your technology to the fullest.

These days, most software solutions offer automation – whether through simply running and emailing reports to key personnel or through approval processes to enforce workflow.

These tools can make sure the right people review the right information at the right time, every time.

4) Remember the “why.”

In general, the purpose of accounting activity is to produce accurate and reliable financial statements. These statements are important for a number of reasons, the most significant being the ability to realistically present the value of your company to your owners and

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investors. This is crucial, especially when attempting to gain additional funding for your operations.

5) Revamp your accounting team.

After ensuring you have the right people in place in all other areas of your business, take a closer look at the accounting team. Every employee should be knowledgeable of generally accepted accounting principles and processes.

6) Train, train, train.

Arrange a complete training plan for your team covering all of the tools they’re expected to use, including software. Whether they receive this training internally or from an outside resource is irrelevant, as long as it results in team members feeling prepared and empowered to properly conduct all of their necessary functions.

7) Review the security rights of your users, and confirm they are able to perform actions appropriate for their job level.

The following sensitive transactions should only be accessible by qualified accounting personnel: • Contract sales • Contract amendments • Term settlements • Applying repo proceeds • Charge-offs • Write-downs • Reversing payments • Extension of payments • Waiving of late fees • Miscellaneous cash receipts/ disbursements 8) Make accounting part of your daily routine.

You simply cannot wait until month-end to take care of all your workflows and then expect everything to go smoothly. If you want to properly manage accounting, it must happen every day. You’ll eliminate stress at month-end, quarter-end and even year-end. Those periods will just be one more day or week in your monthly cycle, because you’re continually rebalancing along the way.

9) Establish clear, easy-tofollow processes for the day, week and month. Of course, make sure you also include these processes in your training.

10) Review all clearing accounts daily.

Your clearing accounts are a useful auditing tool. They act as a dumping ground for frequent transactions offset through other processes, such as bank deposits or accounts payable bill creation. Ideally, these should

zero out at the end of each day. By keeping an eye on these accounts, you can identify any gaps in procedure.

11) Ensure your controller monitors the daily balances of all accounts on the financial statements.

If a reconciliation error occurs, it’s much easier to pinpoint the transaction(s) causing the discrepancy when you are only reviewing a day’s worth of transactions.

12) Set up periodic reviews to confirm that all processes are being followed and are effective. Do not skip this step!

13) Remember that consistency is more important than being correct.

I know that sounds a little surprising, since reliable accounting thrives on accurate information.

However, establishing solid practices that are followed by everyone – particularly those without an accounting background – will make it much easier for your controller or CPA to find and fix errors.

14) Group questionable entries into their own account.

We often recommend dealers add an account in the chart of accounts called “0000-00 I Don’t Know.” Then train your staff to choose this account if they run into an accounting issue where a response is required. It places these transactions into a single area your controller or CPA can sweep and clear, making it as simple as possible to track down and correct discrepancies.

This approach also gives nonaccounting employees an easy process for addressing accounting issues that crop up – all without stopping what they are doing and tracking down your controller or CPA. There’s no question… End-ofmonth and end-of-year activities are easily daunting. But staying on top of day-to-day tasks during the course of the year can save you countless headaches in the final quarter.

The only challenge now is to find the time to do it. (More coffee, anyone?) Even if you choose to delay getting your house in order until Q1 2016, the most important thing is to get it done. If you’re still not convinced, pay attention to how the stress of year-end feels this time around – and remember you have the game plan to change it.

JEFF McCURRY IS DIRECTOR OF ENGINEERING FOR PRODUCT DEVELOPMENT AT DEALERSOCKET. HE LEADS THE TEAM IN CHARGE OF DEVELOPING IDMS, A NEW DEALER MANAGEMENT SYSTEM FOR INDEPENDENT DEALERS, LAUNCHING IN THE SECOND QUARTER OF 2016.

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ASSOCI AT ION NE W S

P RODUC T S & SERV ICES

In Memoriam

Kelley Offers VIN Tool

DELUCCA, BRANDON AND MCDONALD

Many central California dealers recognize the name of Joey Delucca, owner of Santi’s Inc. in Fresno. He passed on June 26, 2015, at age 93.

Joseph Anthony Delucca, a Buy Here-Pay Here dealer and member of the Fresno Auto Dealers Association for over 50 years, was a Korean War vet previously stationed at numerous bases around the country. He is survived by his wife of 72 years, Eleanor, daughter Diane and her husband Dr. Morten Johnson, granddaughter Jeanne and her husband Bobby Pentorall, great granddaughter Auvney, grandson Michael and his wife Amy Johnson. Joe will always be unforgettable in every way.

David Raymond Brandon passed on August 11, 2015. Dave’s

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love of cars spurred the opening of Pastel Motors in 1965, but his honesty gained him respect as his word was his bond. Dave was selfless, many times helping others to begin their own businesses and by doing so making lifelong friends.

Dave joined the Army in 1951 and served in the Korean conflict as a master sergeant. He was also involved with the Fresno Auto Dealers Association, Fresno Radio Modelers and the Order of AHEPA. Dave is survived by his son David Jr., sisters Lee Gellar, Mary Cotta and Mable Reed, grandchildren, great-grandchildren, nieces and nephews.

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PART OF BUSINESS TO BUSINESS SOLUTIONS

BY USED CAR NEWS

Michael Peter McDonald passed away in Santa Rosa, Calif., on August 29, 2015.

A native Californian, Mike graduated from Oakland High School in 1963 and received his associate of arts degree from Laney Junior College. He and his wife Martha were high school sweethearts who married in 1968 and moved to Santa Rosa in 1969.

Known as Mike to local dealers, he was the owner and operator of Cars R Us for 28 years and a member of IADAC. He was a former member of the Active 20-30 Club, Kiwanis and an active member of the Odd Fellows Santa Rosa Lodge #53.

Kelley Blue Book is offering customers a new self-service interface for access to new- and used-car Kelley values and configuration data by vehicle identification number within its suite of business-tobusiness solutions.

Customers can obtain current vehicle valuations in real time by inputting the desired batch VIN information using a web-based interface.

All VIN-related information is obtained from factory data. Kelley Blue Book also provides all associated VIN trims, if more than one is identified from the decoding process.

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ASSOCI AT ION NE W S

47th Annual IADAC Convention A GREAT CONVENTION

The 47th Annual IADAC Convention at Harvey’s Lake Tahoe provided a great time, valuable information and resources for an ever-increasing number of attendees. Dealers were treated to numerous dynamic seminars and left with plenty of new ideas to improve their operations. Although compliance is very important, the focus this year was on operations and new strategies to improve the bottom line.

Our event actually began Thursday evening with a welcome reception provided by Jim Taylor from Auto Data Direct. Early birds

were treated to appetizers and drinks in a casual setting at the Hard Rock Cafe.

Guest speakers included Michael Jackson with Auto Search Technologies, Ronda Lewis from Dealertrack, Ali Parvaneh from Madison Harbor Law, Shawn Nehrir from Autotrader and renowned sales trainer Paul Webb. Each presentation covered a different facet of operations, including websites, advertising, repossessions, customer relations and sales training for not only staff but also management.

A new IADAC president was installed at this event also. Gus

Camacho, owner of Camacho Auto Sales, will preside over the group. Gus owns five Buy HerePay Here lots and a new car franchise, all situated in Lancaster and Palmdale. His expertise will be very valuable to this association.

New faces on the executive committee include vice presidents Putu Blanco (Paul Blanco’s Good Car Company) and Brenna Stansberry (Budget Auto Center).

Continuing members are Rocco DeLapa (chairman of the board), Mehdi Chitgari (senior vice president), Guy Strohmeier (vice president), Beto Beas (treasurer)

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and Brittany Hibdon (secretary).

Two new delegates were also added: Jose Luna (Alberto’s Auto Sales) and Skye Haulman (Auto Locators).

Every year the Quality Dealer of the Year award winner is selected from nominees suggested by our members. This year’s nominees were Mehdi Chitgari (Classic Chariots in Vista), Sam Khacho (Three Amigos in Modesto), Bruce LaVergne and Nader Zaker (Pacific Auto in Auburn) and Brittany and Shawn Hibdon (Hibdon Auto Center in Orland).

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licensing Tim Corcoran was our Quality Dealer Luncheon keynote speaker and made the presentation of the award to the winner, Mehdi Chitgari.

Congratulations to all nominees and especially to Mehdi Chitgari for this prestigious award!

It is important to understand that IADAC is made up of many volunteers who may not always receive the thanks they deserve for the things they have done for the association and industry. One such person is Rick Gomez. He and his wife Judy have been very active IADAC members in the past and were recognized at this event.

Rick has been a Sacramento chapter president and arranged numerous events spanning decades of service. Although his dealer’s license is no longer active, he continues in the industry working for a new car dealer in Sacramento.

The IADAC executive committee presented Rick with an honorary president status, one of only two such awards. Congratulations and best wishes to Rick and his wife Judy for their support and hard work over the years for the association.

One of the events most enjoyed is the Victor and Ethyl Snyder Scholarship fundraiser. From donations made by dealers, vendors and industry affiliates, bidders purchase donated items to replenish the fund, which provides monetary assistance to children of IADAC dealer members as they seek higher education. Auctioneers and past presidents Rod Davis and David Aahl entertained the group by vocalizing a friendly rivalry as they tag-teamed on the auction items. Later that evening, a poker tournament completed the events for day one.

The final day belonged to sales trainer Paul Webb. His training included ways for the sales staff to better understand your customer, plus tips for managers.

Paul engaged the audience immediately and kept the intensity up for two full hours. Reviews from the dealers in attendance were extremely positive. Look for Paul at our April conference in San Diego!

Dealers also had the opportunity to visit over 25 of the industry’s top-rated vendors showcasing their newest products and services. It’s a huge value to be able to review and compare these in one setting.

Our vendors and convention sponsors really make this event

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happen and IADAC thanks them all. This event has been successful year after year because of the support these companies provide for the dealers and for the industry.

Dealers are encouraged to recognize the vendors’ names and support them with your business as well.

Convention sponsors: Automotive Finance Corp.

AUL Corp. (IADAC Preferred Partner) Auto Data Direct (IADAC Preferred Partner) Autotrader AutoZone Dealertrack (IADAC Preferred Partner’’0 DMV Desk - Motor Vehicle Software Corp Madison Harbor Law Firm Nationwide West NextGear Capital VAuto Convention Participants: Auto Search Technology Budget Plus Insurance CarGurus Carmax Credit Acceptance Data Consultants DealerSocket OnStar Paul Webb Sales Training Promax RouteOne Sirius XM TOP Finance

IADAC EXECUTIVE COMMITTEE ACCEPTING AWARDS FOR SERVICE. FROM LEFT TO RIGHT: BETO BEAS, GUY STROHMEIER, MEHDI CHITGARI, BRITTANY HIBDON, GUS CAMACHO, ROCCO DELAPA, ROD DAVIS AND TERRY DEGMETICH.

IADAC PAST PRESIDENT TERRY DEGMETICH (RIGHT) INTRODUCING KEYNOTE SPEAKER TIM CORCORAN, CHIEF OF OCCUPATIONAL LICENSING AT DMV.

ROCCO DELAPA (NOW CHAIRMAN OF THE BOARD) WITH TWO-TIME PAST PRESIDENT TERRY DEGMETICH.

Mark your calendar for the So Cal Conference in San Diego Friday, April 15, 2016. The event will be at the Crowne Plaza Hotel.

Info for registration and the agenda will be announced on our e-newsletter soon. If you’re not signed up for the newsletter, do so for free at www.iadac.org. Click the green button on the left border of the home page to add email address and name. Simple!

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PAST PRESIDENT MIKE MACAULAY (FAR RIGHT) INSTALLING THE NEW EXECUTIVE COMMITTEE. FROM LEFT TO RIGHT: BETO BEAS, BRITTANY HIBDON, PUTU BLANCO, BRENNA STANSBERRY, GUY STROHMEIER, MEHDI CHITGARI, GUS CAMACHO, ROCCO DELAPA.

GUY STROHMEIER WITH ROCCO DELAPA.

IADAC TREASURER BETO BEAS WITH 3-TIME PAST PRESIDENT ROD DAVIS.

ETICH.

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COMP L I A NCE OV ERDRI V E

Changing Dealer Markups EXPECT MORE IN 2016

BY CHIP ZYVOLOSKI

The story is becoming all too familiar. In July and again in September 2015, the Consumer Financial Protection Bureau and Department of Justice issued consent orders involving large auto lenders. The orders alleged violations stemming from the lenders’ discretionary dealer markup programs.

In the last two years, the CFPB and DOJ have issued consent orders involving three large auto lenders, and the CFPB settled with an undisclosed number of other auto lenders in non-public supervisory resolutions. Damages and civil money penalties from these enforcement actions has reached approximately $200 million. According to The Wall Street Journal, at least eight large auto lenders are under investigation for similar issues.

In short, your discretionary dealer markups are still a CFPB focus. Expect your lending discretion and loan compensation formula with some lenders to change in 2016.

HOW DID WE GET HERE? The CFPB published guidance in March 2013 warning that dealers may exercise rate markup discretion in violation of the Equal Credit Opportunity Act. The CFPB noted it had analyzed auto lending portfolios apparently finding disparate impact along race, national origin and/or gender lines in some auto loan portfolios. The CFPB recommended lenders buying dealer paper protect against this risk by either eliminating dealer markup discretion (for example, by replacing it with flat fee compensation), or by exercising more oversight to be sure dealers have and follow ECOA compliance policies and practices.

When a regulator highlights a concern and provides a solution, the industry is usually very quick

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to respond to ensure compliance.

However, in this case, there were uncertainties that made it difficult for lenders to know how to best respond. For example: CFPB’s portfolio analysis: The CFPB’s concern is based on its analysis of auto loan portfolios. If discrimination is revealed by analyzing auto loan portfolios, how was the analysis done? What controls were used to account for factors that might explain pricing differences?

When the CFPB released its methodology, the industry reviewed it and raised a number of concerns. As an example, nothing in dealer or lender’s records capture buyer’s race and national origin. So any analysis of race or national origin discrimination requires making assumptions. Buyer surname and U.S. census information are used to assume the race/ethnicity of the buyer. This creates a margin of error, but there is disagreement about the error rate.

An independent study by the American Financial Services Association concluded the CFPB’s method overestimates minorities by as much as 41 percent. A high error rate could be the difference between determining an ECOA violation does or does not exist. Other concerns about the analysis methodology also persist.

According to a recent American Banker article, “CFPB Overestimates Potential Discrimination, Documents Show,” the CFPB believes its methodology is valid and reasonable but may risk overestimating disparities, noting an alternative method is also reasonable but risks underestimating disparities.

Lenders may be reluctant to change dealer compensation to address a problem when there is still debate about how to measure and identify the problem.

Do flat fees address the concern? A number of industry commentators responded that it might not yield a better result. For example, it might simply shift dealer discretion to selecting the greatest flat fee offered on any given transaction – which could still result in disparate impact.

Lenders may lose business if they change dealer compensation: As you know, it is a very competitive marketplace.

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contracts to a wide range of willing lenders.

If a lender changes its dealer compensation, it will need to remain competitive by offering incentives comparable to other lenders. If the lender switches to a flat fee, will it still be offering a competitive amount? If not, will dealers sell to someone else who allows them to make more money? The sale of retail contracts has many variables, so a change to dealer compensation will likely affect other aspects of the transaction.

In a recent article, The Wall Street Journal highlighted a lender that had switched from a variable dealer markup to a flat fee, paying dealers 3 percent of the loan amount up to $2,500.

A dealer was reported as saying that the lender now has higher APR’s than other lenders who still permit dealer markups. As a result, the dealer has not sold contracts to the lender since going to a flat fee. Lenders may be reluctant to change dealer compensation methods out of concerns a new method will not be as attractive to dealers.

WHAT WILL HAPPEN IN 2016?

The uncertainties over guidance from the CFPB on dealer rate markup cast a shadow over lenders who are anxious to eliminate any risk of ECOA compliance violations. With at least eight large auto lenders still being examined by the CFPB, there will likely be more consent orders in 2016. Each consent order will likely result in the lender agreeing to change its dealer compensation model. So what are we likely to see in 2016?

• The consumer auto finance industry will continue asking the CFPB and Congress for clarity and resolution of its concerns about the CFPB’s guidance.

• Some lenders may change dealer compensation to lower the dealer discretionary cap.

The three public consent orders issued by the CFPB include options for lender to reduce dealer discretionary markup caps. In the most recent consent orders, lenders agreed to reduce the cap from 2.25 percent or more to 1.25 percent for transactions with a repayment term of 60 months or less.

• Some lenders offering a lower

IN 2016, WE WILL LIKELY SEE MORE CHANGES IN LENDER DISCRETIONARY DEALER RATE MARKUP. markup cap may supplement compensation to remain competitive. For example, one large lender that is reducing its discretionary cap is reportedly also paying dealers 1 percent of the loan value in addition to any rate markup.

• Some lenders may require dealers to confirm their ECOA policies, practices and training as a condition of doing business.

Regulators, lenders and dealers all agree complying with the ECOA and all other compliance requirements is the top priority. After all it’s the law.

Regulators, lenders and dealers also seem to agree dealers are entitled to fair and reasonable compensation for their efforts. Unfortunately, there remains uncertainty on how best to measure disparate impact and how best to correct it, if it occurs.

In 2016, we will likely see more changes in lender discretionary dealer rate markup. Expect lenders to try to maintain the same amount of dealer compensation to remain competitive. Be prepared to review those changes to understand how they will affect your bottom line.

Finally, make sure your dealership has current, written ECOA policies, practices and training. No matter how dealer compensation may change, your dealership must always have a strong ECOA program to comply with the law and to remain in good standing with your lenders.

CHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.

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SOCI A L MEDI A

Social Selling: 3 MustHaves and 6 RightNow Actions for Success CREATE LASTING EXPERIENCES

BY KATHI KRUSE, FOUNDER/CEO KRUSE CONTROL, INC.

Social selling expands on the age-old basics of getting to know your customers and meeting their needs.

Today, customers not only have a choice, they have a voice. Only 33 percent of buyers trust what the seller tells them. However, 92 percent trust what another buyer tells them. What kinds of stories are your customers telling other buyers?

It’s crucial to make sure your true customer experience story is being told, and to do that you need a solid salesforce of storytellers. Whether you’re a one-person show or you have a team of salespeople, simple everyday stories of how you helped customers carry huge weight on social media.

Social selling success only happens when customers are the focus and your salespeople create lasting experiences customers want to tell their network about.

Social selling is the act of leveraging social networks to: • Research prospects.

•P ublish content to develop credibility.

• Network with referral partners.

• Engage repeat customers.

•B uild relationships with new customers.

• Drive revenue.

The modern buyer is: • Digitally driven.

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• Mobile.

• Socially connected.

• Empowered.

•L ooking for sellers with purpose beyond profit.

It all comes down to trust.

When your customers trust what other customers say more than they trust what you say about your company, it’s time to shift gears and leverage the value in social selling.

3 MUST-HAVES FOR SOCIAL SELLING SUCCESS 1. P ersonal Brand A personal brand wields influence.

With it, you’ll likely enjoy: •A steady stream of ideal customers.

• Rewarding partnerships.

• Greater credibility.

•R ecognition as the “likable expert.”

• Higher perceived value.

Your personal brand is how you want customers to remember you and it’s built on authenticity.

Anything other than the real you won’t do. Discover exactly what makes you fascinating – why people buy from you, not your competitor – and build your brand on your true strengths.

2. Nimble’s Smart Contacts App How many times have you connected with someone on LinkedIn, Facebook, Twitter or another social network and wanted to know more about that person? Maybe they’ve mentioned you and you want to follow up? Now, when you find a customer or contact online, the Smart Contacts App will automatically build a profile of that person for you.

Nimble is a pioneer in social customer relationship management. It acts like your personal intelligence system. It “automagically” builds your CRM database by gathering existing contact and company records and linking them with your emails, calendar events and social interactions.

With the Smart Contacts App, you can bring this essential information with you to connect intelligently and take action from social sites and business apps, anytime and anywhere.

Social selling (and any other kind of selling) fails when you don’t do what you say you’re going to do. This Nimble App gives you the ability to follow up and follow through.

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3. LinkedIn Premium If you’re like me, over the years you’ve been able to leverage the free version of LinkedIn pretty well. Now that the search results for the free version are less than acceptable (basically useless for social salespeople and businesses), it’s time to upgrade to the premium version… but only if you want to succeed at social selling.

The advantages of LinkedIn Premium: Visibility: •G et a more complete picture of who’s viewing your profile, enabling you to strategize social selling techniques.

•G et access to entire profiles beyond just the name and headline of 3rd degree profiles.

Reach: LinkedIn messages have a 85 percent open rate over basic email. Leveraging the power of InMail gives you a big advantage – you start conversations more quickly, and often more warmly.

Search: •U sing the free version of search is like trying to find your keys blindfolded.

Premium search more than doubles your search results.

Get to your ideal customer or referral partner more quickly with this enhanced search capability.

•T he Saved Search Alerts is a weekly email you won’t want to miss. LinkedIn emails you any new profiles that fit your search criteria. LinkedIn actually sends you leads.

6 THINGS TO DO RIGHT NOW FOR SOCIAL SELLING SUCCESS 1. Optimize your social profiles for the buyer. Consider your photos and bio. Claim your URL within the networks and connect your blog. Look at you through your customers’ eyes.

2. Research and follow your current and ideal customers. Get to know them well.

3. Publish valuable, helpful information (content) to bring value to relationships and shut out the competition. If you have a blog, here’s where you can really have an impact.

4. ABC – Always Be Connecting.

Expand your professional network.

Engage regularly and when you get the chance to help someone, go for it. “Give to Get” is a great

IT’S CRUCIAL TO MAKE SURE YOUR TRUE CUSTOMER EXPERIENCE STORY IS BEING TOLD, AND TO DO THAT YOU NEED A SOLID SALESFORCE OF STORYTELLERS. WHETHER YOU’RE A ONE-PERSON SHOW OR YOU HAVE A TEAM OF SALESPEOPLE, SIMPLE EVERYDAY STORIES OF HOW YOU HELPED CUSTOMERS CARRY HUGE WEIGHT ON SOCIAL MEDIA. strategy, especially when helping people with automotive needs.

5. Join LinkedIn and Facebook groups where customers are members.

6. Research and follow your competitors.

Social selling is a new term but it’s rooted in the traditional networking processes of nurturing sales relationships to attract leads and referrals. If you’re new, download a free copy of my Social Selling Starter Guide here: http://bit.ly/ SocialSellingGuide KATHI KRUSE IS AN AUTOMOTIVE SOCIAL MEDIA MARKETING EXPERT, BLOGGER, CONSULTANT, AUTHOR, SPEAKER AND FOUNDER OF KRUSE CONTROL INC. KRUSE CONTROL COACHES, TRAINS & DELIVERS WEBINARS FOCUSED ON INTEGRATING SOCIAL MEDIA AND ONLINE REPUTATION MANAGEMENT INTO DEALERSHIP OPERATIONS.

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DE A L ER BES T P R AC T ICES

Great Dealers Build Strong Customer Relationships THE DIFFERENCE BETWEEN GOOD AND GREAT

We all know the difference between a good dealer and a bad dealer. But what is the difference between a good dealer and a great dealer?

It’s really not too difficult to answer. Good dealers and great dealers have many of the same attributes. They have quality cars, certified used car programs, welltrained employees, top-notch aftermarket products and services and a cutting-edge finance department with a multitude of lenders to meet their customers’ needs.

Outwardly they look very much alike, so what sets apart the great dealer from the good dealer? It’s all about the customer experience. The customer is the decision maker for who’s good and who’s great.

A good dealer can deliver a quality product at a fair price. A great dealer can do the same while also building a relationship with their customers during the sales process. Many of the great dealers, who are consistently winning awards and outselling their competition, are reaping the rewards of business from their repeat customers and those customers’ families.

These dealers have managed to build relationships with their customers that outlast the very products they sell.

Setting Expectations One of the easiest ways to build a lasting relationship with your customers is through communication. Customers like to receive information about the car buying process.

Keep in mind that purchasing a car, for many consumers, is a new process or one they have not gone through in several years. As a result, many of the processes, rules and regulations for purchasing a car may have changed since their last purchase. Letting the customer know early in the car buying process what steps are involved,

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BY CHET HEUGHAN

customers without what information you need from much benefit. them, and approximately how The Prepared long the process will take will pay dividends. The last thing you Customer Many customers leave the want is a customer picking out a dealership feeling they received vehicle online and thinking they a fair deal and are happy with can show up to the dealership their buying experience only and drive away in their new car to develop sour grapes in the in 15 minutes. following months. This can It’s important to realize that largely be avoided by providing as dealers and auto industry your customers with a few key professionals we have a unique pieces of information. perspective of the car buying Giving them copies of all the experience and take many of the steps for granted. Customers left documents they signed should be sufficient, but in reality it’s uninformed will tend to create not. Providing your customers their own expectations of what with a quick reference guide is is involved in purchasing a vehicle and the timelines needed more helpful.

Contents might include to complete the transaction. information about the DMV Setting expectations with your customer and delivering on those process, such as when to expectations can be the first step expect your license plate and information about the lender, in building a relationship. including contact numbers and Subject Matter Expert timelines for receiving their first Another key to building great payment statement or coupon customer relationships is being book. It’s also important to the subject matter expert. include key pieces of information Customers want to deal with people who know more about the about the vehicle warranty, products and services being sold including how to initiate a claim.

Packaging this information in than they do. a single document before the You want your dealership’s customer leaves the dealership name to be the first thought will empower them and eliminate that pops into your customers’ much of their uncertainty, minds when they need their which is often a major cause of next vehicle or when making frustration. recommendations to a friend.

As the seller we often It can be a real disappointment overlook many of the details to customers to ask a question involved in the purchase about a vehicle, product of a vehicle. In this age of or service you offer only to information many of us assume receive a puzzled look from the salesperson or finance manager. customers are far more informed than they really are. Making sure This can happen for two your customers are informed reasons: 1) Inadequate about the complete car buying employee training or 2) Lack process and your dealership’s of time spent by employees to approach to it is a great way to learn about the products and both increase your efficiency services your dealership offers. and build a relationship based It may also be the result of your on informed decisions and dealership offering too many realistic customer expectations. products and services. Having It’s also the best strategy for a wide variety of vehicles on becoming a great dealership. your lot is part of the business, but having a dozen lenders CHET HEUGHAN IS DIRECTOR OF APPONE® RISK MITIGATION SERVICES AND INDIRECT and warranty providers may be LENDING FOR WOLTERS KLUWER FINANCIAL adding complexity to the sales SERVICES. FOR MORE INFORMATION, PLEASE VISIT WWW.WOLTERSKLUWERFS.COM. process and confusing your

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Cox Auto Appoints Sundaram to New Post CHIEF CLIENT SUCCESS OFFICER

BY AUTO REMARKETING STAFF

Now that the acquisition of Dealertrack Technologies is complete, Cox Automotive shifted a top executive who served as copresident of the newest piece of the company portfolio into a new role. Cox Automotive appointed Raj Sundaram to be chief client success officer, reporting directly to Cox Automotive president Sandy Schwartz.

In this key position, the company indicated Sundaram will be responsible for helping clients successfully increase efficiency and grow their business utilizing the combined companies’ comprehensive solutions.

“Client success has always been our top priority, and now with Dealertrack we will take the definition of client success to a new level,” Schwartz said. “With offerings that span the entire value chain in automotive retail, we will take a more strategic approach to delivering the best, most innovative solutions our combined companies have to offer.

Raj is the perfect person to lead this effort with his extensive client relationships and deep understanding of the auto industry.”

Before Dealertrack, Sundaram was president and owner of Automotive Lease Guide. Earlier at Nissan North America, Sundaram held several positions of leadership in financial planning, market research and pricing.

He began his career at Ford Motor Co. in the controller’s office.

“We are uniquely positioned to leverage our suite of industry leading solutions designed to help our clients drive innovation and lead the transformation of auto retail,” Sundaram said. “We are excited about the potential and focused on client success.”

Sundaram holds an MBA in Finance from Lehigh University and a B.S. and M.S. in Accounting from the University of Mumbai in India.

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