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OCTOBER/NOVEMBER 2012

AUTO DEALER NEWS C A R O L I N A S

I N D E P E N D E N T

A U T O M O B I L E

D E A L E R S

A S S O C I A T I O N

2012

HALL OF FAME RECIPIENT MARSHALL C. PERRY, OWNER

MARSHALL’S USED CARS, CONCORD, NC

2012

QUALITY DEALER OF THE YEAR NORMAN B. STUCKEY, PRESIDENT

CENTRAL MOTORS, INC., COLUMBIA, SC

INSIDE: Complete CIADA Convention Coverage - page 32 DALLAS, TEXAS Permit No. 2079

PAID

PRSRT Standard U.S. Postage

V isit us at w w w.t heciada.com

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inside

MAGAZINE CONTENTS 06 10 14 18 22 28 32 42

Executive Message Technology’s Growing Role in Market Look Out for Open Recalls Form 8300 Reporting Regulatory Report BHPH Success: Sales vs. Collection CIADA Convention Coverage Compliance Overdrive

EXECUTIVE COMMITTEE

The CIADA executive committee for 2012-2013 was elected unanimously by the membership. From left: S.C. Vice President Luke Godwin, PresidentElect Michael Darrow, President Malcolm Shealor, N.C. Vice President Will Davis, Treasurer Darla Booher, Secretary Kim Bradshaw, Chairman Tracy Myers. Congratulations to the executive committee on your election.

WHAT’S NEW NIADA.TV Now available at www.niada.tv: • Building an Effective Dealership Website with Michael D. Jackson

• Tracking Devices with Jay Rose • L egislative/Regulatory Scene with Shaun Petersen and panel

• Avoiding The Potholes with Ken Shilson •F  eel Unstoppable in 60 Minutes with Ruben Gonzalez

NIADA Dealer 20 Groups

NIADA’s new 20 Groups program is designed for NIADA’s independent dealers as they do business today in BHPH, retail or both. Take your profits to the next level. Visit www.niada20groups.com

The Carolinas Independent Automobile Dealers Association was organized in 1955 to assist members in enhancing their reputation in the marketplace, gain political influence and provide opportunities to interact with and meet other ADVERTISERS INDEX dealersAutomobile for the purpose of sharing business and marketing The Carolinas Independent Dealers Association was organized in ideas. ADESA.................................................................. 9 1955 to assist members in enhancing their reputation in the marketplace, gain Ally.....................................................................19 political influence and opportunities to interact with and we meet As provide a mature and long-standing Association, areother proud to maintain the ideAutoTrader.com............................Inside Back Cover dealers for the sharing business marketing ideas. als of and principles set and by the founders. But today, offer more…far more. Auto Use.............................................................25 Thepurpose Carolinas Independent Automobile Dealers Association waswe organized in Carolina Auto Auction.................. Inside Front Cover The Carolinas With a fulltime inprofessional staff,reputation modern in technology and world class educa1955 to assist members enhancing their the marketplace, gain Independent Charleston Auto Auction........................Back Cover As a maturepolitical and long-standing Association, we become are proud maintain idetional programs, we have a to strong, effective and influence and provide opportunities to interact withthe and meetinfluential other AutomobileorganizaDealers Chase.................................................................26 als and principles by the founders. today, weand offer more…far more.the independent, Association was nondealersset for thethat purpose of sharing marketing ideas. tion exists for But onebusiness reason only: To represent Computerized Vehicle Registration......................30 organized in 1955 Dealer Center.....................................................23 With a fulltime professional staff, modern technology and world class educafranchised automobile dealer! Carolinas Independent Automobile Dealers Association was organized in to assist members Dealer Services Corp (DSC).................................. The 5 tional programs, we have become a strong, effective and influential organizaAs a mature and long-standing Association, we are proud to maintain the idein enhancing their PRESIDENT Dodah.com.........................................................11 DIRECTOR 1955 to assist members in enhancing their reputation in the EXECUTIVE marketplace, gain reputation in the als and principles setopportunities by the To founders. Butthe today, weBROWN offer more…far more. that influence exists for oneprovide reason only: represent independent, nonMALCOLM SHEALOR GoldStar GPS......................................................tion 17 JOHN political and to interact with and meet other marketplace, gain ASHLEY PREFERRED AUTO staff, modern technology EXT 105 Manheim.com ....................................................15 With a fulltime franchised dealer! political influence and dealers forautomobile the purpose of professional sharing business and marketing ideas. and world class educa-

CIADA STAFF

EXECUTIVE COMMITTEE

Meet Our Professional Staff

INC. NIADA Certified...................................................24 tionalGROUP programs, provide opportunities MT. PLEASANT,we SChave become a strong, effective and influential organizaProtective...........................................................21 to interact with and tion that exists for one reason we only: To represent the independent, nonSTARS GPS.........................................................28 As a mature andPRESIDENT long-standing Association, are proud to maintain the idemeet other dealers ELECT dealer! ANGEL LONG Sterling Credit.....................................................13 franchised automobile for the purpose of als and principles set by the founders. But today, we offer more…far more. MICHAEL DARROW DRIS ASSISTANT United Acceptance .............................................27 sharing business and THE AUTO EXT 109 a fulltime professional staff, modern technology and world class educaUsedCars.com by Dealix....................................... With 7 marketing ideas. INC. Vehicle Acceptance Corp....................................31 tional programs,FINDERS we have become a strong, effective and influential organizaDURHAM, NC Voisys.................................................................42 As a mature and tion that exists for one reason only: To represent the independent, nonWolters Kluwer....................................................29 long-standing NC VICE PRESIDENT franchised automobile dealer! CATHERINE NEELY Association, we are WILL DAVIS ADMINISTRATIVE proud to maintain the G & B AUTO SALES OF Carl Mischinski DIRECTOR John Brown Catherine Neely ideals and principles LOUISBURG INC. Ext 109 Executive Director EXT 102 Ext 102 P.O. BOX 1088 • HARRISBURG, NC 28075 set by the founders. Ext 105 PHONE: 704-455-2117 OR 1-800-432-4232 But today, we offer more…far more. With FAX: 704-455-6810 • WWW.THECIADA.COM Carl VICE Mischinski SC PRESIDENTJohn Brown Catherine Neely a fulltime professional LISA KLUTTZ Ext GODWIN 109 CIADA is a non-profit 501(c)6 Executive Director Ext 102 LUKE Ext 105 staff, modern CUSTOMER SERVICE GODWIN MOTORS INC. technology and world EXT 103 COLUMBIA, SC NATIONAL INDEPENDENT

Meet Our Professional Staff

CIADA OFFICE

Meet Our Professional Staff

Meet Our Professional Staff

AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV

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.

The Carolinas Independent Automobile Dealers Association is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 760065203; 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 CIADA 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 © 2012 by NIADA Services, Inc. All rights reserved. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Andy Friedlander • andy@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing

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Carl Mischinski Ext 109

TREASURER DARLA BOOHER DEAL DEPOT, INC. GREER, SC Carl Mischinski

Krista Simmons Ext 109 Ext 103

John Brown Executive Director Ext 105

Krista Simmons Ext 103

John Brown Jayne Harris Lisa Kluttz Executive Director Ext 111 Ext 107 Ext 105

SECRETARY Krista Simmons KIM BRADSHAW Ext 103 1ST NATIONS AUTO SALES BURLINGTON, N.C.

Lisa Kluttz Ext 107

Lisa Kluttz Ext 107 Catherine Neely Leslie Waslo Ext Ext102 110 Jayne Harris Ext 111

Catherine Neely Ext 102

Jayne Harris

Leslie Waslo

Ext 111 JAYNE HARRIS Ext 110 CUSTOMER SERVICE EXT 110

Leslie Waslo

Ext 110 LESLIE WASLO DRIS ACCOUNTS MANAGER EXT 108

CHAIRMAN OF Jayne Harris Leslie Waslo Krista Simmons Kluttz THE BOARD Lisa Ext 111 Ext 110P.O. Box 1088 Ext 103 Ext 107 JULIA ROGERS TRACY MYERS Harrisburg, NC 28075 FRANK MYERS AUTO MAXX INC. Phone: 704-455-2117ACCOUNTING or 1-800-432-4232 EXT 101 WINSTON SALEM, NC P.O. Box 1088 Fax: 704-455-6810 Harrisburg, NC 28075 www.theciada.com Phone: 704-455-2117 or 1-800-432-4232 P.O. Box 1088 Fax: 704-455-6810 CIADA is a non-profit 501(c)6 Harrisburg, NC 28075 www.theciada.com Phone: 704-455-2117 or 1-800-432-4232 704-455-6810 CIADA is a non-profitFax: 501(c)6 www.theciada.com

CIADA P.O. Box 1088 is a non-profit 501(c)6 OCTOBER/NOVEMBER 2012 Harrisburg, NC 28075 Phone: 704-455-2117 or 1-800-432-4232 Fax: 704-455-6810 www.theciada.com

class educational programs, we have become a strong, effective and influential organization that exists for one reason only: To represent the independent, non-franchised automobile dealer!

CIADA is the only not for profit association that represents the independent automobile dealer in the Carolinas with a National affiliation.

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Convention Highlights Convention Highlights Convention Highlights Convention Highlights

PLATINUM SPONSORS Carolina Auto Auction Charleston Auto Auction Greensboro Auto Auction GWC Warranty Manheim Preferred Warranties ProGuard Warranty Protective STARS GPS Usedcars.com by Dealix Wayne Reaves Software

CONVENTION HIGHLIGHTS

A SPECIAL THANK YOU

GOLD SPONSORS

Adesa Auctions Black Book CarFax Car-Ware Coates & Associates Inc. ComSoft Qudeso

SILVER SPONSOR

Hoffman Rental & Leasing

EXHIBITORS

A VERY SPECIAL “THANKS” TO ALL SPONSORS AND EXHIBITORS FOR MAKING THE CIADA 57TH ANNUAL CONVENTION & EXPO A HUGE SUCCESS! A special thank you goes out to our presenting and education sponsors. Presenting Sponsor: Charleston Auto Auction Education Sponsors: Wayne Reaves Software & STARS GPS

AFC AMAC Alliance Inspection Management American Credit Acceptance ASC Warranty Auto Data Direct Inc. Auto Use Automotive Advertising Network AutoRaptor CRM AutoTrader.com AUL Corp. Car Financial Services Inc. Car-Ware Inc. CarFax Carolina Auto Auction Charleston Auto Auction Chase Auto Finance CliftonLarsonAllen LLP ComSoft Counselor Library.com Dealership Capital Partners LLC Dealer Funding LLC Dealer Track RTS Federal Financial Services Inc. Finance Express Go Financial Goldstar GPS Greensboro Auto Auction Greenville Auto Auction GWC Warranty Corp. Howco Insurance Auto Auctions Manheim MarkOne Financial MicroBilt Corporation NorthStar Finance Group LLC PassTime Performance Incorporated Preferred Warranties Inc. Proguard Warranty Inc. Protective Qudeso Inc. Rawls Auto Auction Route One LLC Sensible Auto Lending LLC SmartAuction Spartan Financial Partners STARS GPS LLC Sterling Credit Corp. Tebo Financial Services Triumph Consulting Services United Acceptance Inc. UsedCars.com by Dealix Warrantech Wayne Reaves Software

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EXECUTIVE MESSAGE

Bigger and Better: CIADA 2012 Conference and Expo I believe everyone who attended the 2012 CIADA Annual Convention and Expo at Myrtle Beach in August had a fabulous time. We had a record number of vendors requesting space and a record number of first time dealer attendees. If you weren’t able to join us, don’t miss the pictures from the event in this edition of Auto Dealer News. Thanks to all the dealers who took time to be with us and to be part of our association. CIADA is the only nonprofit organization that represents the independent automobile dealer in the Carolinas. So participating in the CIADA Annual Convention is a great way to meet new dealer friends and reconnect with dealers you may have known for years. I also want to thank the CIADA professional staff for all their hard work, putting in hundreds of hours to make sure the entire event was the very best it could be. Catherine, Angel, Leslie, Lisa, Julia and Jayne take great pride in making sure every detail is taken care of before everyone arrives and making sure the event is both educational and fun for the entire family.

CIADA is honored to have one of our very own dealers serving as NIADA president this year. Chris Martin, president of Team E-Z Auto in Fayetteville, N.C., was elected in June to serve all member dealers. Additionally, Billy Threadgill, owner of Van’s Auto Sales in Florence, S.C., was elected to the NIADA board of directors as regional vice president. I would also like once again to thank our friend Ron Shirley. We are so thankful that with all the attention Lizard Lick Towing gets as one of the most popular reality shows on TV, Ron took the time to attend the entire CIADA Convention and Expo. New episodes of the TV show air on Monday nights at 10 p.m. We hope Ron and Amy and the entire family will join us at The Homestead next August. Speaking of the next Convention and Expo, make plans now to attend the 2013 event at The Homestead, Aug. 1-4, 2013. Watch for early discounts and savings, and sign up to attend today by calling 800-432-4232. Keeping you informed, John Brown

C O N G R AT U L AT I O N S

President’s Ring: Tracy Myers CIADA platinum sponsor and partner GWC Warranty and its CEO, Rob Glander, presented the President’s Ring to Tracy Myers. Tracy served the board with honor as the 2011-2012 CIADA president. His involvement with CIADA and the industry is remarkable. Tracy Myers is an award-winning small business marketing and branding solutions specialist, car dealership owner, best-selling author, speaker and entrepreneur. He is commonly referred to as “the nation’s premier automotive solutions provider.” Best-selling author and legendary speaker Brian Tracy called him “a visionary … a Walt Disney for a new generation.” Tracy is a Certified Master Dealer and was the youngest recipient of NIADA’s national Quality Dealer of the Year award. His car dealership, Frank Myers Auto Maxx, was recently recognized as the No. 1 small business in North Carolina by Business Leader magazine, one of the top three dealerships

to work for in the country by Dealer Business Journal, one of the top 15 independent automotive retailers in the United States by Auto Dealer Monthly magazine and one of the fastest-growing privately owned small businesses in America by Inc. magazine. As the founder of his own marketing and branding academy, Tracy teaches ambitious business owners, professionals and entrepreneurs how to get noticed, gain instant credibility, make millions and dominate their competition by building their celebrity expert status. Congratulations to our past president Tracy Myers on an exceptional year with the help of the executive committee.

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INDUSTRY EVENT S

CIADA 58th Annual Convention & Expo August 1-4, 2013

The Homestead Resort & Spa Hot Springs, Virginia

Make Your Plans and Mark Your Calendars

p

CABANAS

FRONT PORCH

WAT E R S L I D E S

LAZY RIVER

Group Rate: $180

Keep watching for more details from CIADA! OUTSIDE POOL

Visit www.thehomestead.com for additional information on this property!

INDUSTRY NEWS

IAA Raises $140,000 to Battle Childhood Cancer Insurance Auto Auctions, Inc., helped quench its customers’ thirst this summer and, more importantly, raised a little money for fight cancer -- $142,084, to be exact. Employees at 142 of IAA’s 160 North American branches took part in Alex’s Lemonade Stand’s National Lemonade Days, selling lemonade at the auctions as part of a major fundraising initiative held in June of each year by Alex’s Lemonade Stand Foundation (ALSF) to help raise awareness and funds in the battle against childhood cancer. Last year, IAA raised $10,000 for ALSF. “More than 1,800 of our IAA employees came together in this effort by selling lemonade onsite during auction sale days and helped IAA surpass our fundraising goal by more than 40 percent,” IAA chief executive officer Tom O’Brien said. “I am proud to lead this team and to continue to provide support for Alex’s Lemonade

Stand in the fight against childhood cancer.” Families affected by childhood cancer attended auctions at IAA’s Anaheim and Philadelphia branches to help create awareness for IAA’s fundraising efforts. In addition to cash donations, dealers, insurance companies and other donors provided cars to help support the cause. IAA’s buyers and providers contributed to the effort. “It was quite an honor to partner with IAA in support of its Alex’s Lemonade Stand Foundation fundraising efforts and to help generate awareness for pediatric cancer research,” said Joanna Moore, chief claims officer of Mercury Insurance Group, which donated funds generated from auctioning a 2012 Kia Optima SX at an IAA event. “We share IAA’s commitment to give back to the communities we serve to help those in need, and continue to look for ways to support worthy causes and organizations such as Alex’s Lemonade Stand.”

ALSF has created fundraising opportunities that allow people who would not usually participate in fundraising, especially children, to raise money and awareness for childhood cancer. As part of that effort, National Lemonade Days is held annually with the goal of raising $1 million for childhood cancer research over the course of three days. ALSF emerged from the front-yard lemonade stand of cancer patient Alexandra “Alex” Scott, who as a 4-yearold in 2000 announced she wanted to open a lemonade stand to raise money to help find a cure for all children with cancer. Since then, the foundation named for Alex, who died in 2004, has evolved into a national fundraising movement that has raised more than $55 million toward fulfilling Alex’s dream of finding a cure. For more information, visit www. AlexsLemonade.org.

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T H E P O P U L A R I Z AT I O N O F S M A R T P H O N E S A N D T H E W H I R LW I N D O F A P P S H AV E E M P O W E R E D T H E I N D U S T R Y

Growing Role of Technology in Post-Recession Market Heading into the fourth quarter of 2012, industry leaders continue to point to market trends that forecast the end of the recession. As a result of increased availability of rental, fleet and new car trades at auction and continued strong new car sales, the industry will see nearly one million more vehicles in the market in 2012. The current challenge for many independent car dealers is sourcing the right inventory as wholesale used car prices decline. The industry continues to stabilize since the peak of the recession. However, the lasting effects of the recession will continue to impact the market as we once knew it. The extreme market conditions brought on by the recession have produced a unique set of challenges for the independent used car dealer. With sharply climbing gas prices since 2007 and 2008, the market had experienced a negative impact on large truck and SUV sales. Overall used car supplies dropped substantially with the removal of more than 750,000 units by the Cash for Clunkers program. Those market changes resulted in artificially high used car prices, which made sourcing vehicles even more difficult for the average used car dealer. While the difficult market forced out many dealers during the past five years, a new crop of dealers has recently emerged. Those dealers are turning to technology to drive their businesses and maintain a competitive edge. The reliance on technology has increased significantly in the automotive sector. This permanent change has helped dealers in all areas of their business. Sourcing inventory is one of the major avenues in which dealers are using technology to assist in their “new business” flow. Many dealers are turning to consumer direct online

portals and wholesale online platforms to supplement purchases at traditional auction facilities. In addition, the popularization of handheld smartphone devices and the whirlwind of available apps have empowered the industry to source, assess, value and purchase inventory from the tools in the palms of our hands. In fact, the market is rife with smartphone app solutions for every step in the life cycle of a used car. Choosing the right products and services can take some time, but trying to run a dealership operation without the right tools to stay ahead of the competition takes even more time. With sourcing issues easing in 2012 and used car prices continuing to stabilize, the rest of the year should produce new opportunities for dealers. But staying on top of local price trends is a must to ensure profit margins stay strong and overall sales increase. Speculating on inventory levels and pricing heading into tax season can hurt some dealers if consumer demand and prices drop sharply. Market fluctuations, softer prices and macroeconomic factors are all challenges dealers could face in the next few months. Technology can help dealers stay on top of those trends. Partnering with technology-based companies that are positioned to forecast market trends and adapt according to industry needs should be an integral part of a dealer’s success in the post-recession marketplace. Dealers should look to align with companies that not only offer technology products that fit their business needs and scale of operations, but that also back their products with superior customer service. Tech solutions should allow dealers to be more efficient and effective so they can focus on core dealership operations.

Dealers should look for solutions that focus on turning inventory faster while increasing profit margins. Today’s technology can provide dealers the real-time data needed to do just that — appraisal tools, real-time reporting, market trends on specific vehicles and days’ supply. All are things a successful dealer will find important as a way to stay on top of market conditions. Additionally, a technology platform that requires dealers to make large-scale changes to their business operations might not be the right choice for all dealers. Technology solutions should enhance a dealer’s successful business practices and provide a consistent means to providing market data. As we enter a more technologicallydriven marketplace, the resilience, determination and entrepreneurial drive of used car dealers continues to inspire companies like DSC to provide the right products and services backed with superior customer service. Since 2005, Dealer Services Corporation has worked to bring innovative technology solutions to our dealer and auction partners to make floorplan financing a seamless business solution. With state of the art and industry-first technology offerings like the myDSC virtual office and the DSC Unplugged™ mobile smartphone application, DSC provides the support today’s dealers look for in a business partner. DSC is proud to serve independent car dealers and looks forward to long partnerships with its customers in navigating the postrecession market.

BY BRIAN GEITNER

BRIAN GEITNER IS PRESIDENT AND CO-FOUNDER OF DEALER SERVICES CORPORATION, THE LARGEST INDEPENDENT INVENTORY FINANCE PROVIDER FOR USED AUTOMOBILES, AND HAS MORE THAN 20 YEARS OF EXPERIENCE IN THE AUTO FINANCE INDUSTRY. FOR MORE INFORMATION ABOUT DSC, VISIT WWW.DISCOVERDSC.COM.

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AV E R A G E C R E D I T S C O R E S O F N E W A N D U S E D C A R B U Y E R S H AV E FA L L E N T O N E A R LY T H E S A M E L E V E L A S 2 0 0 8

Loosening Loans Are Driving Sales For car buyers seeking auto loans, happy days are here again. U.S. banks and auto finance companies are once again welcoming all kinds of customers, even those with lessthan-stellar credit. The average credit scores of new and used car buyers, which spiked during the economic downturn, have fallen to nearly the same level as 2008 – before the recession. Better yet, experts don’t think the credit pipeline will dry up anytime soon. Low interest rates are making it cheaper for banks to get money, which makes them more willing to lend. The federal funds rate – the rate at which banks lend money to each other – is near zero percent, down from 2 percent in the summer of 2008. Loans to subprime buyers – those with credit scores of 679 or lower – are particularly attractive, since banks can charge higher interest rates. The average interest rate for a deep subprime loan (credit score less than 550) on a new car is 12.9 percent, compared with 3.2 percent for buyers with the highest scores, according to Experian Automotive, which tracks automotive credit data. At the same time, both banks and consumers have lowered their debts, meaning even subprime loans are less risky because borrowers are less likely to be in debt and unable to pay. For example, 0.57 percent of auto loans were 60 days delinquent in the first quarter of this year, compared with 0.78 percent in the first quarter of 2009. Experian hadn’t released second quarter data at press time, but analysts said the trend will hold as long as interest rates stay low. “Consumer spending is still very conservative. People aren’t going hog wild like they did before the recession,’’

said Lacey Plache, chief economist for the auto information site Edmunds.com. Here is what buyers with various credit scores can expect if they’re shopping for a new or used car, and the estimated monthly payment, excluding sales tax, on a five-year loan if they trade in a car worth $5,000 for a new, fully loaded $24,775 Toyota Camry sedan. Super prime (740 and up): Loan rates average 3.2 percent for a new car and 4.4 percent for a used car, according to Experian. A super prime buyer can expect to pay $357 per month for the Camry. Prime (680-739): Loan rates average 4.5 percent for a new car and 6.4 percent for a used car. A prime buyer can expect to pay $368 per month. Nonprime (620-679): Loan rates average 6.5 percent for a new car and 9.5 percent for a used car. A nonprime buyer can expect to pay $386 per month. Subprime (550-619): Loan rates average 9.9 percent for a new car and 14.4 percent for a used car. A subprime buyer can expect to pay $419 per month. Deep subprime (549 or less): Loan rates average 12.8 percent for a new car and 17.9 percent for a used car. A deep subprime buyer can expect to pay $447 per month. Auto loans suffered a similar fate to home mortgages during the financial crisis. When banks sustained losses and tightened lending requirements, the average credit score for new car buyers rose nearly 20 points to a high of 776 in the first quarter of 2010. Standards have been loosening ever since, but only now are they approaching pre-recession levels. The average credit score for a new car buyer in the first quarter of this year was 760, while the average score for a used car buyer was 659. The loosening standards are good

news for the auto industry, which has seen a steady recovery despite bumpy economic news. U.S. car and truck sales are expected to climb as high as 14.5 million units this year, up from a 30-year low of 10.4 million in 2009. That’s still well below the heady days of the mid-2000s, when easy credit drove annual sales to 17 million, but analysts say the growth rate this time is healthy and sustainable, with consumers making better financial decisions. Buyers also have more options. In 2010, General Motors Co. bought AmeriCredit Inc., a Texas-based company that specializes in subprime lending, because GM’s main finance company was unable to risk taking on subprime buyers. As a result, 8.2 percent of loans for GM vehicles went to subprime customers this spring, nearly double the number before the AmeriCredit purchase. The average for the auto industry is 6 percent. GM says subprime loans, if managed properly, are good for business. “The recession created an awful lot of new subprime buyers, but it doesn’t mean they’re a bad credit risk,” spokesman Jim Cain said. Some are sounding the alarm about the easing of credit standards. In a note to investors Tuesday, Moody’s warned that the subprime auto lending market is seeing the same kind of heated competition and poor underwriting that drove unexpectedly high losses in the mid-1990s. Moody’s said loan performance has been strong over the past few years, but lenders should beware of weakening standards in order to increase profits and market share.

BY DEE-ANN DURBIN THE ASSOCIATED PRESS

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Unrepaired open recalls are an important factor in vehicle evaluations” CARFAX COMMUNICATIONS DIRECTOR LARRY GAMACHE

A T H I R D O R M O R E O F A L L R E C A L L E D V E H I C L E S A R E N O T F I X E D B Y T H E I R O W N E R S . A R E A N Y I N YO U R I N V E N T O R Y ?

Finding Open Recalls Should be a Dealer Priority Manufacturer recalls are a common occurrence, with hundreds of recalls issued every year affecting millions of cars. In fact, more than 20 million cars were recalled in 2010 alone. But what is alarming about recalls is how many go unfixed by their owners – roughly a third or more of all recalled units. And thousands of those cars are bought and sold every day. It’s believed there are anywhere from 40 million to 60 million cars out there with unfixed recalls. In just the past two years, roughly 12 million cars with open recalls were added to the growing tally. And some of those vehicles are moving daily through auto auctions and being taken in on trade. While finding and fixing open recalls is everyone’s responsibility, it’s up to retailers to take the proper steps to identify any potential issues. Many are already keeping a sharp eye out for evidence of things like flood damage, odometer rollbacks or previous accidents. But what about open recalls? In 2010, a plumber from Delaware named Bob Knotts bought a van for his business from a local independent dealership. He never asked about open recalls, never checked for them and was never told if any existed. Around midnight his wife ran into the house from walking the dog, screaming that smoke was pouring out of the van. The entire front cabin was engulfed in flames. The van was destroyed. “It caught fire from an electrical component under the driver’s seat that was recalled and never fixed,” Knotts said, standing next to the van parked less than five feet from his home. “My house could have caught on fire, or I could have been driving it. Had it spread to the back of the van, where I keep a propane torch and glue that’s highly flammable, it would’ve been a complete fireball. “Not knowing there was an unfixed recall cost me $8,000.” One way to tell if a car has an open recall is to check the vehicle history. Most manufacturers report their open

recall information to CARFAX. When you’re evaluating a vehicle or looking at the auction run list, consider getting a CARFAX Vehicle History Report to help you pinpoint which vehicles have open recalls before taking them into inventory. “We understand that recalls are a concern for our customers,” said Ryan Corey, president of Autoline Automotive in Atlantic Beach, Fla. “It’s up to us to make sure the cars we’re selling have had potential issues addressed. “As an independent dealer, we take full advantage of tools like CARFAX reports that help identify open recalls. Any recalls that show up are taken to get fixed before we retail that vehicle. In fact, as a CARFAX Advantage Dealer, we run a CARFAX report on every vehicle we sell as well as any vehicle we buy. It’s a key part of our everyday operations and builds trust with potential buyers. We know we’re doing right by our customers and are putting the best cars on our lot.” Checking the vehicle history for every unit on your lot helps you make better buying decisions and builds confidence with customers. It can be to your advantage to let your customers know upfront about an open recall and help them get it fixed. Auto manufacturers understand the importance of informing their customers about a recall. Customer safety and the company’s reputation are at stake. With so many of those vehicles changing hands before they’re fixed, most manufacturers choose to work directly with CARFAX to reach the greatest number of buyers and sellers. “Ford is committed to communicating safety recall information to vehicle owners in an open and transparent manner as part of our commitment to top quality,” Ford recall and service programs operations manager Robert Case said. “Ford was the first major automaker to establish a relationship with CARFAX to provide open safety recall information as we recognized the CARFAX Vehicle History Report as a

valuable tool used by many consumers and business entities.” Independent dealers can save time and choose the right cars by checking for open recalls through a vehicle history report prior to acquisition. If you already have vehicles on your lot with open recalls, the smart and safe thing is to take them in to be closed. Show your customers the report and the service receipt with the recall completion. Customers will appreciate your honesty and focus on safety. “Unrepaired open recalls are an important factor in vehicle evaluations,” CARFAX communications director Larry Gamache said. “Estimates are that nearly a third of all recalled vehicles aren’t fixed by their owners. CARFAX is working with leading manufacturers, our dealer customers and consumer advocates to alert people to open recalls and make sure more of these are fixed.” Used car shoppers are looking to dealers to make them aware of any issues like open recalls. Be informed about the cars you’re retailing before they even reach your lot – CARFAX can help. To become a CARFAX subscriber, NIADA members can visit www.carfaxonline. com, call 877-606-9119 or visit www. niada.com and click on the “Links” tab.

BY CARFAX

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INDUSTRY NEWS

Trade-Ins Getting Older

Car dealers are receiving trade-ins that are three to four years older than tradeins received a few years ago, according to estimates from Black Book’s analysts. And with 900,000 more trade-ins than last year expected in 2012, the majority of vehicles entering the used car market are model year 2000-2005, which makes higher mileage tradeins the new normal. Black Book estimated the majority of trade-ins now average between 125,000 and 150,000 miles, and F&I experts have reported a rise in vehicles with 200,000 miles. The analysts said Buy Here-Pay Here dealers will benefit the most from the older inventory, and there is plenty of demand as consumer credit has forced more shoppers to seek those deals. Vehicles older than 2005 are more difficult to finance. According to Black Book, the aged inventory will impact dealers through 2014 before trade-ins begin falling again in age and mileage. “Americans are holding onto their cars longer today, and this aged vehicle is what’s being traded in as we’ve seen a rise in new-car sales activity,” Black Book managing editor Ricky Beggs said.

Prepaid Plans Drive Service Loyalty

Prepaid or complimentary maintenance plans combined with excellent service delivery are among the best ways to win and retain consumer loyalty – especially “next-gen” customers, according to a survey conducted by DMEautomotive. The national consumer survey showed 56 percent of consumers with a prepaid or complimentary service plan are likely to continue servicing at dealership after the plan expires – only 20 percent said they were unlikely to do so – and 62 percent of those who use a plan for “all” maintenance are likely to stick with their dealer. Roughly one in four U.S. vehicle owners (22 percent) have a dealer/OEM prepaid or free service plan. Nextgeneration consumers – those under age 35 – are more likely to have a plan (31 percent) than those over 35 (18 percent) – and are more likely to have all maintenance done under the plan or at the dealer (72 percent) than those over 35 (61 percent).

MARKETING NEWS

Help Your Dealership Go for the Gold Think your shot at living like an Olympian ended after your high school or college athletic career? Think again. Successful Olympic athletes employ a set of traits and techniques you can still use to help market your car dealership. The elements that work together to create popular medalists, with thousands or millions of people rooting for them, can similarly elevate your dealership in the eyes of your customers. On the website marketingprofs.com, Veronica Maria Jarski showed how winning Olympians’ behavior relates to marketing, and that applies perfectly to the way your car dealership can win by adopting the same focus. Don’t believe it? Here’s how you can use what works for the gold medal winners: Share your story: The personal story behind the winners often creates massive support for one athlete or another, or sometimes an entire team. You weren’t dropped onto this earth running a successful auto dealership, so go ahead and share what it took to get there. Every dealership began with a lifelong love of cars, a careful plan or a less-than-direct route that included far-flung adventures. Whatever the story, knowing it helps people identify with you. Understanding the journey builds support for current success.

Deliver on your promises: Actions count far more than words, so prove what matters to you with every engagement, every customer and every sale. The claims you make about what distinguishes your dealership carry a lot more weight when they’re backed up in the interactions that happen minute by minute. Use the right tools: A diver can’t use a pommel horse and a gymnast doesn’t get any mileage out of a pool. Make sure your marketing messages go to the audiences that can use them best. Your brand and your message should be consistent, but it’s smart to craft and deliver the relevant points with laser targeting. Details, details: Try to think about the dealership experience from a customer’s perspective. The little details of each phone call or visit are critically important in shaping the impression visitors take away from any contact. It’s all connected: Authenticity matters everywhere your dealership has a presence. The customers who seem to disappear are still making waves and influencing your reputation long after they’ve left the premises. What happens on the showroom floor and in the finance department today will assuredly be reflected someday, somehow, in a conversation online or in person where you don’t hear it.

You can only run today’s race today: Letting go of the past, wins and losses alike, is the best way to free up energy to focus on today’s challenges. Learn from what worked and what didn’t, but greet each new customer with fresh and full intent to create a lasting asset. Remember the team: Good sportsmanship is appealing. Acknowledging all the people who make your dealership successful is as relevant as the cars and deals themselves. From the manufacturers to the service personnel, your team merits respect and appreciation. They will appreciate the recognition, too. Happy employees will work harder and are more loyal. While you might never stand on a podium and proudly listen to the national anthem while your fans cheer wildly, you can certainly enjoy strong popular support and the loyalty of customers who see you as a winner. Follow these strategies and go for the gold!

BY JIM FITZPATRICK

JIM FITZPATRICK IS PRESIDENT/CEO OF FITZPATRICK ADVERTISING, A FULL-SERVICE AUTOMOTIVE ADVERTISING AGENCY, AND FOUNDER OF FORCE MARKETING, A DIGITAL AND DIRECT MARKETING COMPANY. FOR MORE INFORMATION, CALL 1-800-917-8637, EMAIL JFITZPATRICK@FITZADV.COM OR VISIT FITZPATRICKADVERTISING.COM.

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IRS STEPPING UP FORM 8300 COMPLIANCE AUDITS

IRS Form 8300 Reporting Shaun Peterson, legislative counsel for NIADA, recently reported that the IRS is stepping up compliance audits regarding Form 8300, “Report of Cash Payments Over $10,000 Received in a Trade or Business.” The law requires trades and businesses to report cash payments of more than $10,000 to the federal government by filing Form 8300, a joint form issued by the IRS and the Financial Crimes Enforcement Network (FinCEN). The information provided on the form assists law enforcement in its antimoney laundering efforts. Transactions that require Form 8300 include, but are not limited to: • Pre-existing debt payments. • Making or repaying a loan. • Sale of goods/services. • Sale of real property. • Rental of real or personal property. • Exchange of cash for other cash. Businesses must report cash payments received, if all of the following criteria are met: • The amount of cash is more than $10,000. • The business receives the cash as one lump sum of more than $10,000, installment payments that cause the total cash received within one year of the initial payment to total more than $10,000, or previously unreported payments that cause the total cash received within a 12-month period to total more than $10,000. • The establishment receives the cash in the ordinary course of a trade or business. • The same agent or buyer provides the cash. • The business receives the cash in a single transaction or in related transactions. Cash Includes Cash includes the coins and currency of the United States and foreign countries. Cash may also include cashier’s checks, bank drafts, traveler’s checks and money orders with a face value of $10,000 or less, if the business receives the instrument in a designated reporting transaction, as defined below, or in any transaction in which the business knows the customer is trying to avoid reporting of the transaction on Form 8300. Example: Tom Greenwood purchases a used car from XYZ Auto Dealership for a total of $12,000. He pays with a cashier’s check having a face value of $12,000. The cashier’s check is not treated as cash because its face value is more than $10,000. The business does not need to file Form 8300. A designated reporting transaction is the retail sale of any of the following: • A consumer durable, such as an automobile, boat or property other than land or buildings that is suitable for personal use, can reasonably be

expected to last at least one year under ordinary use, has a sales price of more than $10,000 and can be seen or touched (tangible property). • A collectible such as a work of art, rug, antique, metal, gem, stamp or coin. • Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction or related transactions is more than $10,000. The total sales price of all items sold for a trip or entertainment event includes the sales price of items such as airfare, hotel rooms and admission tickets. Example: Ed Johnson asks a travel agent to charter a passenger airplane to take a group to a sports event in another city. He also asks the travel agent to book hotel rooms and admission tickets for the group. He pays with two money orders, each for $6,000. Since each money order was less than $10,000, the travel agent has received more than $10,000 cash in the designated reporting transaction and must file Form 8300. Cash Does Not Include Cash does not include personal checks drawn on the account of the writer. Example: Jim Roberts purchases an automobile from ABC Auto Dealers for $19,000. He pays with $4,000 in currency and a personal check in the amount of $15,000. Since a personal check is not considered cash, ABC Auto Dealers does not need to file a Form 8300. Cash does not include a cashier’s check, bank draft, traveler’s check or money order with a face value of more than $10,000. When a customer uses currency of more than $10,000 to purchase a monetary instrument, the financial institution issuing the cashier’s check, bank draft, traveler’s check or money order is required to report the transaction by filing FinCEN Form 104, “Currency Transaction Report.” Cash does not include a cashier’s check, bank draft, traveler’s check or money order received in payment for a consumer durable or collectible if all three of the following statements are true: • The business receives it under a payment plan requiring one or more down payments and payment of the rest of the purchase price by the date of the sale. • The business receives it more than 60 days before the date of the sale. • The business uses payment plans with the same or substantially similar terms when selling to ultimate customers in the ordinary course of its trade or business. Definition of a Related Transaction The law requires trades and businesses to report transactions when customers use cash in a single transaction or related transactions. Related transactions are transactions between a payer, or an agent of the payer, and a recipient of cash that occur within a

24-hour period. If the same payer makes two or more transactions totaling more than $10,000 in a 24-hour period, the business must treat the transactions as one transaction and report the payments. A 24-hour period is 24 hours, not necessarily a calendar day or banking day. Example: A retail motorcycle dealer sells a motorcycle for $9,000 in cash to Gary Jones at 10 a.m. During the afternoon of the same day, Mr. Jones returns to buy another motorcycle for his son and pays $9,000 in cash. Since both transactions occurred within a 24-hour period, they are related transactions, and the motorcycle dealer must file Form 8300. Transactions are also related even if they are more than 24 hours apart when a business knows, or has reason to know, that each is a series of connected transactions. Example: A client pays a travel agent $8,000 in cash for a trip. Two days later, the same client pays the travel agent $3,000 more in cash to include another person on the trip. These are related transactions, and the travel agent must file Form 8300. Example: A customer purchases a vehicle for $9,000 and then within the next 12 months pays the dealership additional cash of $1,500 for items such as a new transmission, accessories, customized paint job, etc. The dealership is not required to file a Form 8300, if the additional transactions are not part of the original sales contract and the customer has no additional legal obligation to make such additional transactions. Reporting Suspicious Transactions There might be situations where the business is suspicious about a transaction. A transaction is suspicious if it appears a person is trying to prevent a business from filing Form 8300; if it appears a person is trying to cause a business to file a false or incomplete Form 8300; or if there is a sign of possible illegal activity. The business should report suspicious activity by checking the “suspicious transaction” box on the top line of Form 8300. Businesses are also encouraged to call the IRS Criminal Investigation Division Hotline at 800-800-2877 or the local IRS criminal investigation unit. If a business suspects a transaction is related to terrorist activity, the business should call the Financial Institutions Hotline at 866-556-3974. The business can voluntarily file a Form 8300 in situations in which a transaction is for $10,000 or less and suspicious. When to Report Payments Generally, a business must file Form 8300 within 15 days after the cash is received. If the 15th day falls on a Saturday, Sunday or holiday, the business must file the report on the next business day. C O N T I N U E D O N PA G E 2 0

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C O N T I N U E D F R O M PA G E 1 8

IRS Form 8300 Reporting

Multiple Payments In some situations, the payer can arrange to pay in cash installment payments. If the first payment is more than $10,000, a business must file Form 8300 within 15 days. If the first payment is not more than $10,000, the business adds the first payment and any later payments made within one year of the first payment. When the total cash payments exceed $10,000, the business must file Form 8300 within 15 days. After a business files Form 8300, it must start a new count of cash payments received from that buyer. If a business receives more than $10,000 in additional cash payments from that buyer within a 12-month period, it must file another Form 8300 within 15 days of the payment that causes the additional payments to total more than $10,000. If a business must file Form 8300 and the same customer makes additional payments within the 15 days before the business must file Form 8300, the business can report all the payments on one form. Example: On January 10, a customer makes a cash payment of $11,000 to a business. The same customer makes additional payments on the same transaction of $4,000 on February 15, $5,000 on March 20, and $6,000 on May 12. By January 25, the business must file Form 8300 for the $11,000 payment. By May 27, the business must file another Form 8300 for the additional payments that total $15,000. Required Written Statement for Customers When a business files a Form 8300, the law requires the business to provide a written statement to each person named on Form 8300 to notify them that the business has filed the form. The statement must include the name and address of the cash recipient’s business, the name and telephone number of a contact person for the business, the total amount of reportable cash received in a 12-month period and a statement that the cash recipient is reporting the information to the IRS. The only exception to the customer’s notice requirement is when the Form 8300 was filed for suspicious activity. In that event, it is actually illegal for the business to notify the customer the Form 8300 was filed. When to Provide a Statement to the Customer The business must provide the written statement to its identified customers on or before January 31 of the year after the year in which the customer made the cash payment that caused the business to file Form 8300. A business that chooses to mail the statement must mail the statement in a timely manner to ensure the customer receives the statement by January 31. IRS Form 8300 and additional instructions can be found at www.irs.gov.

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Regulatory Report Procedural rules to establish supervisory authority over certain nonbank covered persons based on risk determination: The CFPB says it can assert jurisdiction over any financial entity that otherwise is not covered under the definition of a “larger market participant” if the CFPB has reasonable cause to believe such an entity is posing a risk to the market. That proposed procedural rule has the potential to impact our members that are not otherwise defined as larger market participants. The procedural rules outline the process under which the CFPB would find an entity to be a risk and the process by which that entity is entitled to challenge the proposed determination before being subject to the CFPB’s supervision. If the CFPB staff has “reasonable cause” to believe the entity is a risk, the deputy director will send a written notice to the entity explaining the why the bureau believes that risk exists. It will then provide an opportunity for the entity to respond in writing and to participate in an informal telephone hearing between the CFPB staff and the assistant director. The response from the entity would include any written information the CFPB could and should consider. After the informational hearing, the assistant director would submit a written proposed order to the director of the CFPB to bring the entity under the supervisory oversight of the CFPB. If the determination is made to supervise the entity, the CFPB will do so for a minimum of two years and can make a petition to be relieved of that obligation after that time, but only once annually. We reviewed these proposed rules and found several concerns we asked the CFPB to consider through comments submitted to it. Our first significant concern was the lack of clarity from the bureau as to the type of conduct the bureau believes is “reasonable cause” to find an entity to be a risk. The proposed rule does not define “reasonable cause” or provide any framework of conduct the bureau believes would create the risk. We asked the CFPB to revise the rule to provide this definition. We also asked the CFPB to limit the risk to

inappropriate or undisclosed financial risk to the consumer so the scope of misconduct the bureau would attempt to regulate is not overly broad. Second, we raised concerns about the information used to make that determination. Presumably, much of the information will be made on consumer complaints, but the rules do not specify the information the bureau will use in making its risk determination. We asked the bureau to address that. We also pointed out what we considered an unfair process, notwithstanding the CFPB’s attempt to keep it informal. The procedures proposed in the draft rule would not allow entity potentially subject to conduct to exercise discovery and examine the same material the CFPB reviewed in making its determination. The rule would not allow an entity to depose witnesses, review documents, ask interrogatories of either consumer complainants or CFPB staff as to what forms the basis of the “reasonable cause.” We believe it is patently unfair to be placed at such a disadvantage when compared to the CFPB staff, which has access to consumers or other information in making its determination. An entity should be provided the same level of access in order to properly defend itself. We also asked the CFPB to consider allowing an entity the opportunity to rebut the assistant director’s recommendation to the director before the Director makes his final recommendation. Regulation Z: The CFPB has proposed a number of changes to Reg Z in the mortgage arena. While it does not directly affect the automotive industry, it could be an indicator for proposed regulations in the near future. The proposed mortgage regulation would require prompt crediting of payments on mortgage loans and prompt response time for payoff amount inquiry. Reg Z already requires higherprice mortgage lenders to look at the consumer’s ability to repay the loan before lending. The CFPB amended the regulation to expand its scope to any credit transaction secured by a dwelling. That rule becomes effective Jan. 21.

The CFPB is proposing changes to the definition of “finance charge” in a mortgage transaction by eliminating certain exclusions that were not otherwise considered when calculating an APR. The CFPB has invited comments on the proposed changes to be submitted by Nov. 6. We will analyze the proposed change for any potential impact if something similar was adopted in the auto finance sector. Federal Trade Commission The FTC recently held a roundtable discussion about the issues facing consumers and businesses relating to online marketing and privacy, specifically regarding mobile devices and social media websites. The roundtable was used as a fact-finding tool for potential future legislation. Environmental Protection Agency On August 28, President Obama finalized the fleet fuel standards at 54.5 miles per gallon by 2025. The EPA filed criminal charges against an individual in Alaska for abandoning hazardous waste without proper storage containers or disposal procedures. He pleaded guilty to all charges on Aug. 17. Dealers who close and have any hazardous waste left at their dealership should be cognizant of this potential. Criminal charges were also pressed against a Louisiana man for negligently disposing of and allowing hazardous waste to discharge into the public sewer without being treated. He pleaded guilty to the charges. Internal Revenue Service The IRS made interim changes to the application process for individual taxpayer identification numbers (ITIN). Applicants must present original – not notarized -- documents, to the IRS to receive their ITIN. National Motor Vehicle Title Information System The NMVTIS Advisory Board meeting was held in Washington on Sept. 11.

BY SHAUN K. PETERSEN

SHAUN K. PETERSEN IS A PARTNER WITH THE LAW FIRM OF MAC MURRAY, PETERSEN & SHUSTER LLP AND IS THE HEAD OF THE FIRM’S AUTOMOTIVE PRACTICE. HE IS LEGISLATIVE/ REGULATORY/COMPLIANCE COUNSEL TO NIADA.

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T E C H N O L O GY A N D N E C E S S I T Y E X PA N D T H E S E R V I C E S O F F E R E D B Y A U C T I O N S

Back to the Basics: On the Block Auto auctions today are full-service operations with a growing list of options to keep inventory rolling. The infusion of the Internet into the traditional auction business model has been, arguably, the most significant change in recent years. “The Internet keeps expanding and expanding,” said Charlotte Pyle, owner of Capital City Auto Auction in West Virginia and president of the National Auto Auction Association (NAAA). “I attended an auction recently and the entire lane was not there. They sold every car from a TV screen.” An increasing number of websites are emerging with features allowing dealers to shop for cars across the country without ever leaving the office. IndependentAuctions.com, for instance, has more than 67,000 searchable vehicles from 69 member auctions and boasts more than 41,000 registered dealers on the site. On any given week some 27,000 vehicles are sold. The site contains the inventory, post-sale reporting and account management tools to help automotive professionals buy, sell and research vehicles from independently owned locations. ADESA, which operates 68 auctions throughout North America, has been one of the industry leaders in embracing online auctions.

“Our biggest news as of late was the acquisition of OpenLane last fall,” said Tom Caruso, ADESA president and CEO and a recent inductee into the National Independent Auto Dealers Association Ring of Honor. “This industry-leading technology will help dealers as they expand their reach outside of their local markets in the online market. We are really excited about the progress we are making bridging our physical auctions and our online tool, ADESA OpenLane, to create a better buyer experience.” Auction Options While the economic issues of the past few years have meant fewer vehicles coming to auction, it has forced auctions to increase their level of service, Pyle said. “Volumes are down for the leases and repos, so auctions have opened up to do more outside work,” Pyle said. Auctions have stepped up floorplanning – providing the inventory loans that are a primary source of financing for dealers to purchase inventory to then resell, either from the showroom or in a wholesale format. Post-sale inspections have become an expected feature at auctions to give dealers assurance and peace of mind for both their in-

lane and online wholesale purchases. “A dealer purchasing a post-sale inspection has assurance that the vehicle purchased passed a rigorous test, was properly represented by the seller and that Perry’s Auto Auction guarantees that the vehicle meets the dealer’s expectations,” noted an item on the website of Perry’s Auto Auction in central Georgia. Most auctions with post-sale inspections follow a checklist of items that would cost $500 or more each to repair or replace. That includes checking the frame or unibody for structural damage as well as checking the paint, transmission, air conditioning system and brakes. They also check for things like odometer verification, flood inspection and emission control. Often there’s nothing mechanically wrong with a vehicle – it’s just dirty. But that’s OK, because many auctions are trumpeting reconditioning packages for dealers. At the Greater Erie Auto Auction, serving Buffalo, N.Y., Cleveland and Pittsburgh, a $95 “full detail” comes with an exterior wash, engine clean, exterior buff, interior clean and tire dressing. At a minimum, they’ll wash it for $10. Auctions also offer around-the-clock security for safe vehicle drop-offs, car title verification and transportation of vehicles. C O N T I N U E D O N N E X T PA G E

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“Some of our dealers are heavily dependent on these truckers delivering the cars to the auctions, and over time the gas bill adds up,” Pyle said. Dealer Reaction Roger Montbleau, owner of Chelmsford Street Auto Sales in Lowell, Mass., buys cars at auction weekly. He’ll typically shell out money for the post-sale check his local auction offers as an extra service. “Good cars are not as plentiful as they used to be,” Montbleau said. “A lot of people mask these vehicles that come through. We need someone who can give us a certification. People aren’t as forthright as we want them to be.” If the cars he brings to the auction do not sell, Montbleau said, he appreciates the auction washing it before the next scheduled date. Stanley Thompson, owner of First Auto Sales in Bradenton, Fla., visits the auction about three times a month and sells 25 to 30 cars per month. “Auctions give you a greater selection at competitive prices you can’t get anywhere else,” Thompson said. Still, the new lineup of auction services has not exactly won him over. “We do everything in-house,” said Thompson, who has been in business for 20 years. “We

know what we’re doing.” Indeed, as much as auctions keep working to enhance their services, some dealers would still rather do without. In fact, some avoid auctions altogether, choosing to get their inventory from other sources. Jay Iverson, manager of Carz Central in Estherville, Iowa, is not a fan of auctions, period. “Other than the fact that the cars are there, there’s not a whole lot I like about auctions,” Iverson said. “There’s a lot of politics involved. The rules keep changing. There’s no consistency.” David Shoffner, owner of David Shoffner‘s Auto Sales in Redding, Calif., visits the auction twice a week. He likes the guarantee that the title is always good. “Whereas buying them off the street, you don’t know what you’re getting,” Shoffner said. Much has changed since Shoffner started selling cars with his dad in the early 1960s. He said he prefers an old-school method of buying cars. He is not impressed with online auctions – he’d rather go in person. “I pretty much cherry-pick the auctions to find what I like, and it allows me to make a good living,” Shoffner said. “I bought two or three cars from the Internet and it was a horrible

experience. The cars required mechanical work that was not previously disclosed. “As for me, I like to see them and touch them first.” To be sure, online auto auctions come with risks. Similar to the other popular scams, said Kristin Judge, executive director of the Trusted Purchasing Alliance, a division of the nonprofit Center for Internet Security, there are two central themes to keep in mind when dealing with auto auction fraud: First, if an offer seems too good to be true it probably is, and second, never send money to someone you have not met in person, though that might not always be a practical rule for dealers to follow with online auctions. In 2011, the federal government’s Internet Crime Complaint Center (www.ic3.gov) received 4,066 complaints from victims of auto auction fraud. The total financial cost to those victims was more than $8 million, with the average loss being $2,000 per victim. The calls reporting the scams averaged two per hour. “Criminals misrepresent themselves as either Kelley Blue Book agents, or possibly a person moving out of town and needing to sell a car quickly before they leave,” Judge said. “Like other scams, the criminal sets up a persona that C O N T I N U E D O N PA G E 2 6

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C O N T I N U E D F R O M PA G E 2 5

| Back to the Basics: On the Block

When a buyer shows interest in the vehicle, he is asked to send a deposit to a third party to hold while the inspection takes place. Unfortunately, there is no legitimate third party. Once the scammer collects the deposit, the victim is left without his money or a car.” helps him appear legitimate. The price for the vehicle is usually at a great discount, too good to pass up. “When a buyer shows interest in the vehicle, he is asked to send a deposit to a third party to hold while the inspection takes place. Unfortunately, there is no legitimate third party. Once the scammer collects the deposit, the victim is left without his money or a car.” Auction Projections The future of auto auctions will place a continued focus on manipulating technology to

benefit dealers. “We continue to make investments in our auction infrastructure to facilitate our buyers’ diverse business needs,” ADESA’s Caruso said. “That includes more computer terminals for customers to use, better Wi-Fi access and more reconditioning options both presale and post-sale. We will continue to evolve our business to meet the demands of our dealers.” One example is ADESA’s newly released dealer application for the iPhone. “The app combines relevant industry guide books, vehicle history reports and other useful business data with the cars running at our auctions,” Caruso said. “The evolution of mobile technology will continue to shape how we do business.” The new auto auction services have put the technology companies that develop those services in the driver’s seat. In July, vAuto, an Oakbrook, Ill., company specializing in dealer support services and a wholly owned subsidiary of AutoTrader Group Inc., announced the acquisition of Auction Genius, a web-based software solution for auto dealers buying vehicles at auction. “This acquisition advances vAuto’s mission to help dealers become more efficient and effective used vehicle retailers,” vAuto founder Dale Pollak said. With Auction Genius, vAuto promises to eliminate the inefficiencies and difficulties

dealers encounter every day as they evaluate and purchase used vehicles from wholesale auctions. “Today, every dealer relies on wholesale auctions for used vehicles,” Auction Genius president and co-founder Todd Kinzle said. “This highly competitive environment requires dealers to evaluate far more vehicles than they used to, and the time it takes to do the proper research is overwhelming.” Enter Auction Genius. Kinzle says dealers can now analyze as many as 10 times the number of vehicles and zero in on the “right” cars with significantly more speed and efficiency. Typically dealers will use multiple systems and tools to create used vehicle buy lists, match the lists with cars scheduled to be sold at wholesale online auctions and gather condition/market valuation reports to assess individual vehicles for potential purchase. They also access live online auctions through a separate system to buy the cars that fit their purchase parameters. It’s a piecemeal process. Auction Genius also integrates with a growing list of industry partners, including CARFAX, AutoCheck, NADA Guide Book, Black Book, Kelley Blue Book and Galves. Current auction integration includes Manheim Simulcast, OVE.com, Manheim PowerSearch, ADESA LiveBlock and OpenLane.

BY JASON ROBERSON

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AUCTION NEWS

Charleston Auto Auction Supports Ronald McDonald House Charleston Auto Auction and its dealers raised more than $5,000 for the Ronald McDonald House of Charleston, S.C. In a promotion called “Wear a Shirt, Provide a Place to Stay,” representatives of the Ronald McDonald House, which helps seriously ill children and their families, were on site giving away T-shirts to everyone who made a donation. Charleston Auto Auction also held a 50/50 drawing for three consecutive weeks to help the foundation. At the end of the promotion, Charleston Auto Auction matched all contributions, raising the total to more than $5,000. “The Ronald McDonald House is a great organization,” auction general manager Laura Taylor said. “All our dealers always open their hearts and wallets to help.”

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Auction Update: Manheim

INDUSTRY NEWS

NIADA’s Two for One: CMD and 20 Groups in October Are you content with your current profits? Not many of us are. Most dealers are looking for the magic that will take their profits to the next level. NIADA has spent much of this summer reviewing data, talking to dealers and exploring ways to make that magic happen. The result – the first NIADA Dealer 20 Group – is scheduled to meet Oct. 11-12 at the Dallas-Fort Worth Airport. This group is unique, designed for both the retail and the Buy Here-Pay Here dealer – or the dealer who does both. It reflects the independent industry as we know it today. The composite, which will drive the group analysis, was created with your dealership in mind, analyzing the numbers crucial to your bottom line. The group will be led by NIADA director of dealer development Joe Lescota and Kenny Loveless, a 30-plus-year veteran independent dealer who recently retired

after selling his highly successful BHPH dealership in Virginia. “This approach is no nonsense,” Lescota said in a recent discussion. “It is about looking at the math of the dealer’s business and showing him where he is and helping him get where he wants to be. It’s a 20 Group, so it’s a collective effort to improve the business and the industry.” For more information, email Lescota at joe@niada.com, or call Georgia Brown, NIADA director of education, at 800-682-3837. And while you’re there, consider this: NIADA’s fall Certified Master Dealer course is scheduled for Oct. 8-10, also in Dallas-Fort Worth. That’s right. You can get two for the price of one airfare! Attend the CMD class, then stay over for the first meeting of the NIADA 20 Groups. Same place. Visit www.niada.com for an application or send an email request to georgia@ niada.com.

The Manheim 2012 Q2 update is a quick look at web traffic, online visits and transactions at Manheim.com for the second quarter of 2012. Mobile: Mobile visits to Manheim.com are up an astounding 368 percent over last year – 4.76 million vs. 1.02 million for the second quarter of 2011. One in three customers accessed Manheim.com on a mobile device, an indication mobile is becoming increasingly popular in the auto remarketing industry as dealers use smartphones to conduct business at their convenience. More customers are choosing to do business online – 25 percent of all transactions for the quarter were made by an online buyer. Digital visits: Digital visits to Manheim are up 12 percent over last year. Simulcast turns 10: More than 4 million vehicles have been purchased via Simulcast since its launch in 2002, representing almost $60 billion worth of inventory. Buying: More than 30,000 customers bought vehicles online in 2012. Selling: More than 20,000 customers sold a vehicle online in 2012.

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MARKET NEWS

Report: Expect to See More Hybrids Expect to see more hybrids cruising around the world’s highways in the next few years. According to market research report distributor ReportStack.com, the global hybrid car market is expected to grow at a rate of 18.92 percent over the next three years. The cause for the potential doubledigit growth: increasing global oil consumption, the report, titled “Global Hybrid Car Market 2011-2015,” explained. Moreover, as governments around the world try to cut down on fuel emissions, the hybrid car market has “been witnessing an increase in initiatives by governments to create awareness and acceptance of hybrid cars,” the report said. The report also cites labor arbitrage,

such as the various advantages offered by the hybrid car to the end user, such as energy efficiency, less pollution, better performance, reduced dependency on natural resources and more, as reasons for the hybrid market expansion. That said, even with the push from politicians, the high cost of hybrid cars is acting as a barrier to the market growth, the report said. ‘’With the time and research on the development of the battery systems of hybrid cars, the overall cost of batteries and total cost of ownership will decrease,” an analyst from the publishing automotive team said. “By 2014, the total cost of ownership of plug-in hybrid electric vehicles with a battery of 10 kilowatt-hours will be below that of an internal combustion engine vehicle, and by 2017, the total

cost of ownership of plug-in hybrid electric vehicles with a battery of 15 KWh will be lower than an internal combustion engine vehicle. “The total cost of ownership of battery electric vehicles will be less than an internal combustion engine vehicle by 2020 with the development of batteries. This reduction in cost will fuel the growth of the global hybrid car market.” Who will benefit most from this potential growth? The vendors currently dominating the hybrid market space include Toyota Motor Corp., Honda Motor Co., Ford Motor Co., and Nissan Motor Co. Ltd., the report noted. General Motors Co., BMW AG and Volkswagen Group are also expected to play a role in the future fuel-efficient vehicle market.

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N AT I O N A L H I G H WAY T R A F F I C S A F E T Y A D M I N I S T R AT I O N P R E S S R E L E A S E

Volvo to Pay $1.5 Million for Delayed Reporting of Recalls V I S I T W W W. D R C O L O R C H I P. C O M .

Dr. ColorChip Introduces Systems for Dealers Dr. ColorChip, a nationwide provider of automotive touch-up paint, has introduced a new line of commercial automotive paint chip repair systems catered to dealership owners looking to decrease the cost of cosmetic reconditioning of used car inventory. Dr. ColorChip now offers an entry-level basic commercial system designed for dealers with fewer than 40 used car sales per month. It is a customizable 30-color system that enables small dealerships and dealers specializing in the resale of a particular make of vehicle to effectively touch up their inventory. Dr. ColorChip’s standard commercial system is a more comprehensive 80-color system meant to accommodate a dealer serving from 40 to 100 cars per month. Large dealers, chain dealers and auction houses will benefit most from the 160-color deluxe system, which covers the full spectrum of car colors. “The option of bringing this system in-house is extremely attractive and makes great financial sense” to dealerships, Dr. ColorChip co-owner/developer Dan McCool said. “Its impact is immediate – driving cash to the bottom line and generating higher profits.” For more information, contact (561) 845-6122 or sales@drcolorchjp.com, or visit www. drcolorchip.com.

The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) announced that Volvo Cars North America, LLC has agreed to pay $1.5 million in civil penalties in response to the agency’s assertion that the automaker failed to report safety defects and noncompliances to the federal government in a timely manner. The National Traffic and Motor Vehicle Safety Act requires all auto manufacturers to notify NHTSA within five business days of determining a safety defect exists or that the manufacturer is not in compliance with federal motor vehicle safety standards – and to promptly conduct a recall. “With millions of vehicles traveling our highways every single day, we take our responsibility to safeguard the driving public very seriously and we expect automakers to do the same,” Secretary of Transportation Ray LaHood said. “Manufacturers are required to handle safety issues both quickly and appropriately.” In January 2011, NHTSA launched an investigation to determine whether Volvo met its obligation under the law to notify the agency of a safety defect and conduct a recall in a timely manner. NHTSA’s evaluation of six recalls issued in 2010 and one recall announced in 2012 found evidence that Volvo failed to report known safety defects and non-compliances to the agency in accordance with federal law. As part of the settlement, Volvo Cars North America, LLC and its parent company, Volvo Car Corporation, agreed to make internal changes to its recall decision-making process to ensure timely reporting to consumers and the federal government in the future. “It’s critical to the safety of everyone on our roadways that automakers promptly report safety defects – and take immediate action to resolve the issue,” NHTSA administrator David Strickland said. “NHTSA expects all manufacturers to obey the law and address automotive safety concerns without delay.” The fines received from the automaker will be paid into the general fund of the U.S. Treasury.

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INDUSTRY WORKSHOP

Manheim Launches Online Learning Center Manheim has announced the launch of the Learning Center, a resource dedicated to educating dealers on Manheim’s buying and selling services. The Learning Center site (www. manheim.com/tlc), which features brief video overviews of remarketing tools and how to use them, is designed to be a self-service dealer resource aimed at delivering practical tools that can be used in day-to-day business operations. “Whether it’s through classroomstyle workshops, live webinars or answering questions on sale day, Manheim has always been dedicated to educating our dealers,” vice president of dealer sales Susie Heins said. “The Learning Center is an online extension of our educational offerings, giving dealers access and convenience, anytime and anywhere.”

Manheim worked closely with customers in an effort to make the site design user-friendly and to offer information they felt was important. The site requires no log in, allowing dealers who are not Manheim customers to take advantage of the educational tools. The tools include tutorials on understanding OVE.com and Simulcast, bidding and buying on a mobile device, floorplanning vehicles with MAFS, registering vehicles for an in-lane sale and other topics. Dealers can also access The Wholesale Institute workshop information from the website. For more information, visit www. manheim.com/tlc.

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Convention Highlights Convention Highlights Convention Highlights Convention Highlights

Hall of Fame Award: Marshall Perry

Awards Eagle Awards Eagle Awards were presented to Kim Bradshaw of 1st Nations Auto Sales of Burlington, N.C., and Darla Booher of Deal Depot, Inc. of Greer, S.C.

NIADA president Chris Martin presented the Hall of Fame award to Marshall Perry, owner of Marshall’s Used Cars in Concord, N.C. Marshall is no stranger to any of us at CIADA. He has forgotten more about the car business than most of us know. Active in the car business for more than 50 years, Marshall has sold more cars and has more satisfied customers than most of us could ever dream of. Marshall is active in his association – and I do mean his association! He was active in his community and active in his church and still had plenty of time to raise a great family. Marshall’s Used Cars’ success is based on traditional values of providing a good product at a fair price, and the customers will return. His is now serving its third generation of customers. Marshall is a deacon in his church, a Mason, a past president of CIADA (2005), and a winner of previous Eagle Awards. He currently serves on the CIADA services board. Congratulations again to Marshall Perry, our 2012 Hall of Fame award recipient. Previous Hall of Fame recipients include Lamar Cook, JC Clanton, Ray Clanton, EM Stafford and JM Rawls, John Chisolm, Raiford Troutman, Bobby Brinkley, Spec Hoffman, Lawrence Tuttle, Karen Barbee, Larry Cameron, Bun Pugh, Billy Threadgill and Kenny Aycock.

Quality Dealer of the Scholarship Winners: Year: Norman Stuckey Brittany Bowen and Korbin Causey

The State Quality Dealer of the Year is CIADA’s most prestigious award. Nomination and selection brings high honor to the individual and to the dealership. The winning dealer serves as an inspiration and model for other independent automotive dealers to be the very best in their home communities. The 2012 CIADA Quality Dealer of the Year award winner is Norman Stuckey, president of Central Motors in Columbia S.C. Since 1996, Central Motors has been serving customers in South Carolina and the Mid-Atlantic states with exceptional care, customer-focused service and competitive prices. Mr. Stuckey is an active member of CIADA, having been a past president and committee chairman. Norman will represent all dealers of the Carolinas as he competes on the national level. NIADA will announce the national winner at the NIADA Quality Dealer recognition banquet, to be held in June at the NIADA Annual Convention and Expo in Las Vegas.

CIADA awarded two education scholarships at its Convention. Brittany Bowen (not pictured) and Korbin Causey are both very deserving of this award. They were selected by an independent panel of judges for their educational accomplishments and community involvement. The committee makes its selection without influence from the CIADA staff or the executive committee. Our N.C. winner is Brittany Bowen. The daughter of Michael and Judy Bowen of Pleasure Ride Auto in Greenville, N.C., Brittney attends Campbell University, where she begins her senior year with a 4.0 grade-point average studying K-8 education. Brittany wants to be a teacher and is an ideal role model for other students. Congratulations Brittany! Our South Carolina winner is Korbin Causey. Korbin will be a freshman at Coker College this fall and was ranked 14th in his class at Loris High School. An outstanding student and varsity athlete, he is the grandson of Bill Ward of Ward’s Local Motors in Loris, S.C. When Korbin isn’t busy studying or working for the city of Myrtle Beach, you can find him at the lot detailing automobiles and making sure the lot is in top shape to maximize the customer experience. Congratulations Korbin!

“We Owe” Awards: Charles Saverance and Marshall Perry

As your association’s executive director, last year I introduced a new award at the Convention’s awards luncheon. The “We Owe” award is given to a member of CIADA to whom we want to say thank you, someone “we owe” a bit of gratitude toward for going the extra mile. This year it was presented to 2011 CIADA chairman Charles Saverance and CIADA past president Marshall Perry. Charles provided the leadership as CIADA went through unprecedented change. Because of Charles’ dedication, CIADA is stronger today than ever. CIADA is once again a leading state organization within NIADA and is looked on by other state executives as an organization to emulate because of Charles’ dedication and involvement. Marshall Perry has throughout his career cared about his trade association and the leadership it provides to all independent dealers throughout both states. Without Marshall Perry, there would be no CIADA Global Headquarters in Harrisburg. There wouldn’t be an association that is vibrant and well-staffed. Without Marshall Perry, quite frankly, we wouldn’t be what or who we are today as an association. Thank you, Charles and Marshall, for caring about your communities, your industry and your association. “We owe” much of our success to the both of you.

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CIADA 2012

T O M H U D S O N - C O U N S E L O R L I B R A RY. C O M

Seminars and Guest Speakers CHRIS MARTIN NIADA PRESIDENT

LUKE GODWIN SC VP

SHARON MADISON SC DMV

LARRY OXENHAM - AMERICAN SOCIET Y FOR ASSET PROTECTION

SHAUN PETERSEN NIADA LEGAL COUNSEL

MARK DUBOIS - PERFORMANCE I N C O R P O R AT E D

TOM WEBB MANHEIM

D AV I D T H O M L E Y - S C D M V

G A R Y WAT K I N S - I R S

D AV I D R O U Z E R N C S TAT E S E N AT O R

COL. KEVIN SHWEDO - SC DMV

S C R E P R E S E N TAT I V E PHIL OWENS

RON SHIRLEY - LIZARD LICK TOWING & RECOVERY

NC DMV

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Convention Highlights

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Convention Highlights Convention Highlights

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Convention Highlights Convention Highlights

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MILLION $ HOLE-IN-ONE

Golf Highlights WINNING TEAM

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INDUSTRY NEWS

KEEPING CARS LONGER IS HERE TO STAY

The two- to three-year vehicle purchasing cycle is gone, according to a survey of nearly 4,000 car owners by AutoMD.com. Three of four respondents to the study, conducted from March to May, agreed that buying a vehicle every two to three years is a thing of the past. And half said a better economy would not change their habit of holding onto their vehicle longer than in the past. “There is nothing surprising about the economy driving car owners to hold onto their vehicles for longer – our data has been showing this trend for the past three years,” AutoMD.com vice president of marketing Brian Hafer said. “But what is most compelling is that longer ownership has become an embedded habit for car owners, regardless of what the economy does. This significant lengthening of the ownership cycle looks like it is here to stay.” The survey showed 78 percent of drivers now keep their cars 10 years or longer, and 60 percent said their primary vehicle has more than 100,000 miles on it. Two-thirds of those surveyed said they plan to keep their car until it surpasses 150,000 miles. The survey indicated the longer ownership trend is spurring consumers to seek out independent repair shops over dealership service centers. Among customers who usually go to a service center for repairs or maintenance, 69 percent said they were more likely to use independent repair shops over dealerships (20 percent) and chains (8 percent). For more information, visit www. automd.com.

Dates and locations are subject to  change.  Please visit  www.theciada.com   for a complete schedule. 

UPCOMING   PRE‐LICENSING CLASSES  1‐800‐432‐4232  NC PRE‐LICENSING – 12 HR  Oct 4‐5, 2012  Harrisburg  Nov 8‐9, 2012  Raleigh  Dec 6‐7, 2012  Harrisburg  SC PRE‐LICENSING – 8 HR  Oct 18, 2012  Lexington  Nov 20, 2012  Lexington  Dec 13, 2012  Lexington 

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FRONT OF CARD

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2012 Exhibitors

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COMPLIANCE OVERDRIVE

Regulatory Landscape Feeling Tougher? You’re Not Alone There is no denying that dealers and lenders have grown accustomed to a regulatory environment that is constantly changing, with new laws and regulations. But today’s regulatory landscape is different than it was years ago – and not just because the requirements continually change. If you feel like it’s becoming increasingly complex, you’re not alone. Here are the likely culprits: Shorter notice: Some states have started publishing regulatory changes on rather short notice. For example, in New Mexico the attorney general recently gave 30 days’ notice to add a new spot delivery disclosure to the sales transaction document or purchase order. The short notice was made worse because a proposed regulation had not been published – at least not recently – so the final regulation came as a surprise to the industry. While one month might feel

like a long time to add one disclosure, the required notice is quite large and requires substantial formatting changes to the documents affected. The attorney general eventually delayed the effective date of the regulation by 60 days, apparently after significant industry feedback. More frequent changes and updates: Across the country, there seem to be more frequent changes being made. That has clearly been the case with state motor vehicle title forms. Previously, those forms were rarely revised. But over the past few years, some states have changed their title forms as many as two or three times per year. One potential driver for that might be that technology now allows states to redesign and reissue their forms and revise (increase) the related fees more easily. But often the changes come with little or no notice, which underscores how important it is for dealers and lenders to be confident in their ability to monitor the changes that are constantly taking place. Volume of information: While it can be difficult to keep up with the pace of change and various deadlines and effective dates, it’s also quite a task to consume the volume of information and content surrounding new laws and regulations. For example, the Consumer Financial Protection Bureau (CFPB) published a proposed rule July 9 regarding integrated mortgage disclosures under RESPA and the Truth in Lending Act. It was one of the first significant proposed rules from the CFPB, and the planning process involved extensive research and solicitation of industry and consumer feedback. As a result, the proposed rule and explanatory materials total more than 1,000 pages. The good news is the proposed rule provides significant details and explanations of the changes. The bad news is that many pages of material can be overwhelming (aren’t you glad you’re not in the mortgage lending business?). Operating in a highly regulated industry, one can’t help but wonder if that is an indication of the volume of change yet to come and how dealers and lenders will absorb all of the changes and their nuances.

Disparate technology systems: Though computer technology allows us to do many things faster than before, disparate file formats, field naming conventions, calculation engines, software and hardware, and reliance on multiple vendors can make it difficult to quickly change or revise transaction documentation and its completion tools. That often means all the component parts need to be updated in sequence rather than in parallel – adding more time to make the required changes. Today’s environment is characterized not only by constant change, but by tougher enforcement as well. There is more visibility and greater scrutiny of compliance and risk management in all organizations. Dealerships and financial institutions should regularly question whether they feel confident that new laws and regulations are being embedded in their business operations. The challenges underscore a need for greater operational efficiency. Disparate systems and procedures can make even relatively simple changes more timeconsuming and complex. As you prepare for additional changes, consider reviewing your process maps, technology, vendor coordination and steps necessary to respond to compliance changes. Creating greater operational efficiency now will make it that much easier for you to respond to the inevitable next compliance crunch-time event.

BY CHIP ZYVOLOSKI

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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CIADA Dealer News Oct/Nov 2012