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JUNE/JULY 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

Get ready for the

CIADA ANNUAL CONVENTION

page 24

in Myrtle Beach, SC

Inventory 40% Faster Turn Your

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• CIADA CONVENTION PREVIEW • PROVISIONING: NEW SCIENCE OF USED CARS • MOBILE ADS A MUST FOR DEALERS

DALLAS, TEXAS Permit No. 2079

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PRSRT Standard U.S. Postage

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DEPARTMENT OF THE TREASURY IRS ENTERPRISE COMPUTING CENTER P.O. BOX 33116 DETROIT, MI 48232-0116

inside

Person to Contact: Dail Hughes, ID#02-37367 Tax Law Specialist Telephone Numbers: 1(866)270-0733 option# 3 or (313)2346146 Refer Reply to: SE: S:/FBSA:PO:DCC: CTR SG120487 Date: April 5, 2012

Secrecy Act forms approximately every three years and financial institutions must submit the most current version of a 06 Provisioning: Used Car Science 08 Cash is King in BHPH form. Please resubmit the form(s) as soon 10 Go All In on Service as possible and no later than 10 business 14 Mobile Ads a Must for Dealers 24 New NIADA CPO Program days upon receipt of this letter. Failure 32 Convention Preview to properly file a BSA form may result in fines or other penalties. WHAT’S NEW If you need to resubmit this form(s) on Sirius XM Satellite Radio is America’s paper, please visit FinCEN’s website to satellite radio company. Independent dealerships can now offer a free SiriusXM three-month trial on obtain and download the most current all pre-owned vehicles with factory-equipped Dear Sir or Madam, version of the form: http://www.fincen. satellite radio. In addition to selling your customers a quality vehicle, you’ll be giving The Financial Crimes Enforcement gov/forms/bsaforms/. Make sure that them the opportunity to enjoy satellite radio. Network (FinCEN), via the Internal you mail the form(s) to the address And there’s no cost to your customer. Visit Revenue Service Enterprise Computing identified in the “When and Where to www.siriusxm.com/niadaprogram to enroll your dealership today! Center-Detroit (ECC-D), has received the File” section of the particular form. Do NIADA Member Health Plans, administered Form(s) 8300, Report of Cash Payments not mail the form(s) to the address at the by JLBG Health, bring you choice and flexibility Over $10,000 Received in a Trade or top of this letter. when designing your personal health plan while Business, dated February 27, 2012. We If you have any questions about this providing potential savings of thousands of The Carolinas Independent Automobile Dealers Association was organized in dollars annually. To review the plan details are unable to process the Form(s) 8300 letter, please contact Dail Hughes @ 1955 to assist members in enhancing their reputation in the marketplace, gain and receive an instant online rate, visit www. because youpolitical did not submit the and correct (866) 270-0733 NIADAHealthPlans.com or call 1-888-308-9340. influence provide 1opportunities to option interact#3. with and meet other form version. FinCEN Bank Thank you organized for your assistance. dealers forupdates the purpose of sharing business and marketing The Carolinas Independent Automobile Dealers Association was in ideas. 1955 to assist members in enhancing their reputation in the marketplace, gain ADVERTISERS INDEX IRS Form 8300 Rev. Nov. 2011 political influence and opportunities to interact with and we meet As provide a mature and long-standing Association, areother proud to maintain the ideABC Loan............................................................22 ADESA ...............................................................13 dealers for the sharing business marketing ideas. als of and principles set and by the founders. But today, offer more…far more. Thepurpose Carolinas Independent Automobile Dealers Association waswe organized in Ally ....................................................................11 The Carolinas With a fulltime inprofessional staff,reputation modern in technology and world class educa1955 to assist members enhancing their the marketplace, gain Auto Portfolio Services.......................................23 Independent As a maturepolitical and long-standing Association, we become are proud maintain ideAutoTrader.com .......................... Inside Back Cover tional programs, we have a to strong, effective and influence and provide opportunities to interact withthe and meetinfluential other AutomobileorganizaDealers Auto Use ............................................................28 als and principles set by the founders. But today, we offer more…far more. Association was nondealers for thethat purpose of sharing business and marketing ideas. the independent, tion exists for one reason only: To represent Carolina Auto Auction.................. Inside Front Cover organized in 1955 With a fulltime professional staff, modern technology and world class educafranchised automobile dealer! Charleston Auto Auction........................Back Cover The Carolinas Independent Automobile Dealers Association was organized in to assist members tional programs, we haveand become a strong, effective and influential Chase ................................................................18 As amembers mature long-standing proud organizatoDIRECTOR maintain enhancing their PRESIDENT EXECUTIVE 1955 to assist in enhancing theirAssociation, reputation inwe theare marketplace, gain the inideGoldStar GPS......................................................tion 17 reputation in the als and principles setopportunities by the To founders. Butthe today, weBROWN offer more…far more. that influence exists for one reason only: represent independent, nonTRACY MYERS JOHN political and provide to interact with and meet other Manheim.com.......................................................7 marketplace, gain FRANK MYERS AUTO MAXXstaff, INC. modern technology EXT 105 With a fulltime professional franchised dealer! NIADA Certified...................................................25 political influence and dealers forautomobile the purpose ofSALEM, sharing business and marketing ideas. and world class educaNC tionalWINSTON programs, we have become a strong, effective and influential organizaNowcom.............................................................. 9 provide opportunities STARS GPS.........................................................20 to interact with and tion that exists for one reason we only: To represent the independent, nonAs a mature and long-standing Association, are proud to maintain the ideSterling Credit.....................................................15 meet other dealers PRESIDENT ELECT dealer! ANGEL LONG franchised United Acceptance..............................................19 for the purpose of als and principles setautomobile by the founders. But today, we offer more…far more.

MAGAZINE CONTENTS

CIADA STAFF

EXECUTIVE COMMITTEE

Meet Our Professional Staff

Meet Our Professional Staff

MALCOLM SHEALOR DRIS ASSISTANT UsedCars.com by Dealix ..................................... With 5 ASHLEY PREFERRED EXT 109 a fulltime professional staff,AUTO modern technology and world class educaVoisys.................................................................38 GROUP INC. tional programs,MT. wePLEASANT, have become a strong, effective and influential organizaWolters Kluwer....................................................21 SC

CIADA OFFICE

tion that exists for one reason only: To represent the independent, nonfranchised automobile dealer! CATHERINE NEELY NC VICE PRESIDENT

P.O. BOX 1088 • HARRISBURG, NC 28075 PHONE: 704-455-2117 OR 1-800-432-4232 FAX: 704-455-6810 • WWW.THECIADA.COM CIADA is a non-profit 501(c)6

NATIONAL INDEPENDENT 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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Meet Our Professional Staff

MICHAEL DARROW THE AUTO FINDERS INC. DURHAM, NC

ADMINISTRATIVE

DIRECTOR John Brown Executive EXT Director 102 Ext 105

Carl Mischinski Ext 109

Meet Our Professional Staff LISA KLUTTZ Carl Mischinski Ext 109

John Brown Executive Director Ext 105

SC VICE PRESIDENT LUKE GODWINCarl Mischinski GODWIN MOTORS INC. Ext 109 COLUMBIA, SC

Catherine Neely Ext 102

John Brown Executive Director Ext 105

Krista Simmons Ext 103

TREASURER WILL DAVIS Carl Mischinski John Brown Jayne Harris Krista Lisa Kluttz G Ext &Simmons B AUTO SALES OF Ext 109 Executive Director Ext 111 103 Ext 107 Ext 105 LOUISBURG INC. LOUISBURG, NC Krista Simmons

SECRETARY Ext 103 DARLA BOOHER DEAL DEPOT, INC. GREER, SC Krista Simmons

Lisa Kluttz

Catherine Neely Ext 102

CUSTOMER SERVICE EXT 103

Catherine Neely Ext 102

Lisa Kluttz Ext 107 Catherine Neely Leslie Waslo Ext Ext102 110

Lisa Kluttz Ext 107

Jayne Harris Ext 111

Jayne Harris

Leslie Waslo

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

P.O. Box 1088

Ext 111 Ext 110 Ext 103 Ext 107 JULIA ROGERS CHAIRMAN OF Harrisburg, NC 28075 ACCOUNTING THE BOARD Phone: 704-455-2117 or 1-800-432-4232 EXT 101 CHARLES SAVERANCE P.O. Box 1088 Fax: 704-455-6810 SAVERANCE FAMILY AUTONC 28075 Harrisburg, www.theciada.com CENTER Phone: 704-455-2117 or 1-800-432-4232 1088 FLORENCE, SC Fax: 704-455-6810P.O. Box 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 Harrisburg, NC 28075 Phone: 704-455-2117 or 1-800-432-4232 Fax: 704-455-6810

sharing business and marketing ideas.

As a mature and long-standing Association, we are proud to maintain the ideals and principles set by the founders. But today, we offer more…far more. With a fulltime professional staff, modern technology and world 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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ANNUAL CONVENTION

Top 10 Reasons to Attend the CIADA Annual Convention and Expo The CIADA Annual Convention and Expo will be held August 2-5 at the Marriott Grande Dunes Resort in Myrtle Beach S.C. Consider this your personal invitation and make plans to join us for some summer fun in August. It’s 5 o’clock somewhere, and you might as well be at the beach!

IF YOU NEED AN EXCUSE TO ATTEND, LOOK NO FURTHER. HERE ARE THE TOP 10 REASONS WHY YOU NEED TO BE THERE: 10: Business trip meets vacation needs. With the IRS joining us, it has to be tax deductible, right? 9: For NC dealers, complete your mandatory CE training at the beach and beat the classroom blues. 8: For SC dealers, learn what you’ve been missing by not having yearly mandatory education! 7: For three days, its 5 o’clock at the Marriott Grande Dunes Resort in Myrtle Beach. 6: Find out what this “get licked at the beach” is all about. 5: Do your basic training with Col. Shwedo. 4: Learn about the most common title and registration mistakes. 3: Say your prayers with Reverend Ron. 2: Join Leaders of the NC and SC Legislature for candid conversations. 1: Rumor has it the Republican Presidential nominee might show up.

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4:00 pm - 8:00 pm Convention Registration 6:00 pm - 8:00 pm Welcoming Reception Featuring Ron, Amy and Bobby

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7:30 am - 11:45 am Convention Registration 8:00 am - 8:30 am Col. (Ret.) Kevin Shwedo, SC DMV 8:30 am - 10:00 am SC DMV 8:30 am - 10:00 am NC DMV 10:15 am - 11:15 am Tom Webb, Chief Economist, Manheim 11:15 am - 11:45am Carri Grube Lybarker, SC Consumer Affairs 12:00 pm - 1:15 pm Awards Luncheon 1:30 pm - 7:00 pm Convention Registration 1:30 pm - 3:30 pm Larry Oxenham - Protecting Your Business Ownership 3:30 pm - 4:00 pm Lizard Lick Towing & Recovery 4:00 pm - 4:30 pm Luke Godwin, CIADA SC VP, BHPH 4:30 pm - 5:15 pm Mark Dubois, BHPH Performance Groups 5:15 pm - 5:45 pm Tamara Garris, UsedCars.com 5:45 pm - 6:30 pm “Car Men” Premier 6:30 pm - 9:30 pm EXPO 2012/Dinner

Come join your fellow dealers from the Carolinas at the only event for independent dealers hosted by the only nonprofit organization that represents only the non-franchise dealer. We have strategically positioned our organization to help you stay in compliance with local, state and federal laws and regulations, become the best of the best by earning your Certified Master Dealer designation through our national organization, get you auction discounts and much, much more. CIADA will help you grow your top line, help you grow your bottom line and help you work smarter to sell more and stay in compliance. Here’s the tentative schedule for the Annual Convention and Expo. I hope to see you at 5 o’clock in Myrtle Beach.

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John Brown Executive Director

8:00 am - 9:00 am Prayer Session 11:00 am Checkout

8:00 am - 10:00 am General Buffet Breakfast - How to Get Your Deal Financed 8:30 am - 9:30 am Past Presidents’ Breakfast 8:30 am - 12:00 pm Convention Registration 10:00 am - 11:00 am General Membership/Board Meeting/Election of New Officers 12:00 pm - 6:00 pm Golf Tournament - (Pine Lakes Country Club) 6:00 pm - 9:30 pm Kid’s Only Party 6:30 pm - 7:00 pm Convention Registration 6:30 pm - 7:00 pm Reception 7:00 pm - 9:00 pm Banquet/Installation of New Officers

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CARFAX Offers Support for Carolina Dealers CARFAX is constantly looking for ways to further improve the exceptional service it provides dealer customers in the Carolinas. Timing is everything in our industry, which is why we have a dedicated team of professionals who handle customer requests quickly. As a result, we’re proud to say we have streamlined our data research process. When CIADA dealer members have questions about information on a CARFAX Vehicle History Report, we provide personalized assistance fast. The research process begins with a few simple steps. Any CARFAX-subscribing dealer can

THE CARFAX TEAM

access his CARFAX account at carfaxonline .com/help. Next, click the link that takes you directly to the online data correction form. After submitting the form with the 17-digit vehicle identification number (VIN) and requested research, a CARFAX representative will work with the dealer directly throughout the data verification process and confirm the issue has been resolved. In most cases, the entire process is completed in a few hours. CARFAX is always here to help, especially on the rare occasions data research is needed. Inconsistent odometer readings, for example,

Chris Tietz Charlotte, N.C. Regional Account Manager christietz@carfax.com Cell: 803-579-0031

Lindsay Youngblood Columbia, S.C. Regional Account Manager lindsayyoungblood@carfax.com Cell: 803-727-6467

Craig Ross Greenville, S.C. Regional Account Manager craigross@carfax.com Cell: 864-200-1348

Brian Johnson Raleigh, N.C. brianjohnson@carfax.com Cell: 919-986-9256

can raise a red flag, but may be the result of simple human error. We’ve made it easier for dealers to initiate the process and get a faster resolution. We’re helping our customers manage a more efficient business and keeping their operations running smoothly. Any CIADA dealer member with questions about a CARFAX account or the data research process can call CARFAX Business Services at 800-274-2277. Dealers can also reach out to their local regional account Manager. Below is a reference list of names. It is our pleasure to serve you.

Shannon Graham Greensboro, N.C. shannongraham@carfax.com Cell: 252-548-0088

John Eager (Corporate) Industry Liaison johneager@carfax.com Cell: 703-439-9362

Anita Ojeda (Corporate) Resolution Specialist anitaojeda@carfax.com 703-934-2664 x4457

Kathy Collins (Corporate) Industry Relations Manager kathycollins@carfax.com Cell: 404-323-8584

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U S E O N L I N E A U C T I O N S T O H E L P K E E P YO U R L O T F U L L O F V E H I C L E S YO U K N O W W I L L S E L L .

The New Science of Used Vehicle Sourcing & Sales These days, dealers are looking for every edge to find quality inventory for their lots. Americans are holding onto their cars longer than ever, causing higher prices at auction and a smaller crop of quality vehicles on which dealers can bid. According to a new study by R.L. Polk, length of vehicle ownership recently hit an all-time high: 71 months for new vehicles and 50 months for used cars and trucks. The study also noted that people holding onto their cars longer has resulted in decreased used-vehicle supply. In this crowded marketplace, you need to assess your strategy for long-term success if you want to outperform your goals and beat the competition. To help, consider this new method dealers are using to better evaluate and acquire indemand units others might pass up. It’s called provisioning. What Is Provisioning? Provisioning is defined as the efficient allocation of resources to achieve a successful mission. To be clear, the mission for dealers is to operate a financially successful used car operation. Put simply, for your business to thrive, you need to know what cars to buy, what to pay for them and where to find the right units for your inventory. Provisioning is a new way for dealers to set their used vehicle strategy (size of inventory investment, ROI/turn expectations) and efficiently pursue the vehicles necessary to execute their plan successfully. Provisioning is like a science because it provides a methodical approach to buying used vehicles. It helps evaluate certain types of information vital to the success of your used car business. What types of information? Demand: The number of people in your area searching online for a specific vehicle. Interest: The average conversion

rate from search results pages to vehicle details pages for a vehicle in your area. Volume: The number of units recently sold in your area. Market days supply: The current available supply of similarly configured vehicles and the rate at which such vehicles have been sold over the past 45 days. Profitability: The spread between average asking price and wholesale price – the auction price vs. list price in your market. Availability: The number of units currently available at auction. Experience: The success of your recent sales for a specific make/model. Analyzing that information on your own isn’t easy. But technology and tools can help you determine the types of vehicles that will deliver the best return on investment every month, giving you a huge advantage on your competition. What to Pay and Where to Find It Once you determine the cars that sell fast in your market, you’ll want to make sure you pay the right price for them. At auction, there aren’t too many obvious deals these days, but you can still find gems with a little guidance. Many dealers rely on professional buyer solutions like those by vAuto, for example. Those services use in-market data to help determine which units are worth your investment. They can even help you identify the price point at which a vehicle will get the most attention, get you the profit you need and cover your reconditioning costs so you still hold gross. If you’re a dealer in the Northeast in the winter, you might have difficulty finding enough SUVs to keep your inventory fully stocked. Similarly, a dealer in the South probably can’t find enough convertibles in the summer months. Wherever you are, there’s inevitably a shortage of certain cars in

demand. So it can pay to look outside your immediate area for quality inventory. Use online auctions to help keep your lot full of vehicles you know will sell. Online auctions can be some of the best places to find cars at good prices without the hassle of waking up early, checking pages of run lists and elbowing past other dealers to find your spot in the lane. Instead, sit back with your coffee and bid from the comfort of your home or the office. How to Reduce Acquisition Risk Of course, if you bid online, you won’t be able to “kick the tires” and inspect the vehicles in person, so you’ll especially need to consider the condition and history of those vehicles. Otherwise you might end up paying too much for a car that seems perfect but has reported damage or another incident that could affect its retail value. The key is knowing the cars with good service histories that merit your bids, since those vehicles often sell for better prices. Many successful dealers run a vehicle history report on every car they consider buying as part of their standard procedure to assess a vehicle’s condition and spot any related acquisition risks. Whether through online auctions or in-person trades, this triage ensures the dealer and his buyers feel more confident that the inventory placed on the lot will turn fast and make top dollar. With declining supply and increasing demand for quality vehicles, there is little room to make acquisition mistakes on vehicles you “had a feeling about” but didn’t take the time to carefully vet. Provisioning helps you avoid these mistakes and turns your ability to efficiently and effectively evaluate and acquire used vehicles into a competitive advantage.

BY DALE POLLAK AND CHAD GOODSON

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C A S H I S K I N G I N O U R B U S I N E S S . N O T O N LY T H E AVA I L A B I L I T Y O F I T B U T T H E E F F E C T I V E M A N A G E M E N T O F I T A S W E L L .

Cash Is King in Buy Here-Pay Here The two keys to Buy Here-Pay Here are risk management and cash management. Both, as always, are hot topics. More so now with everything that is going on in the automotive industry and the economy in general. But cash – and the availability or the management thereof – seems to be on everyone’s mind, and in some cases closing their doors. Cash is not as available as it was this time last year. The good news is it is still available, which isn’t true in some other unfortunate industries. It’s just not as easy to find or secure, not to mention afford, since the rates we enjoyed a year ago are no longer there. Local banks and credit unions appear to be the best sources for lines of credit. The large regional and national banks still seem to be staying out of the car business. Local banks and credit unions have smaller organizational charts and usually less turnover, leading to a more stable decision-making future. The three necessities to securing a line with those sources are patience, persistence and preparation. The days of simply walking into a bank and securing a line of credit on a handshake and a promise to pay are long gone. Local banks and credit unions have learned from the mistakes of the regional and national banks and have become smarter and more sophisticated in their approval process. Patience is needed because local banks and credit unions need a complete education on our industry. Not everyone is familiar with what we do and how we do it. In some cases, it can be hard to convince a bank to loan money to a business that will in turn extend credit to someone who has shown little ability to repay it. They need a K-through-12 to make their decision and continuing education after the line is secured. Persistence is needed because the

days of lending institutions seeking out beneficiaries of their generosity have just about ended, especially to those dealing with subprime clientele. BHPH dealers have to be willing to go door-to-door and sell our business to lenders. In most cases, it will take knocking on more than one door. And once in the door, it will take more than one cast to reel them in. Preparation is the determining factor to success, initially and in the future. Because banks and credit unions have become more sophisticated in their decision-making, BHPH dealers have to provide more sophisticated information to them. Performas, financial statements and cash-flow analysis are a few examples of data that needs to be provided up front to obtain a line and on an ongoing basis once a line is secured. The key to maintaining a good relationship with a capital source is providing as much information in the beginning as possible and to keep doing so on a regular basis so they never have to ask for anything. Full and accurate disclosure is paramount. Put yourself on the other side of the desk. What would like to know if it was your money? In this instance, there really is no such thing as too much information. Having all the access in the world to capital will be worthless unless you know how to manage it. In today’s tight credit market, BHPH dealers have to manage not only their credit lines, but cash in general. Not understanding how to manage available cash has closed more BHPH dealers’ doors than any other cause. It is that important. The best tool to effectively manage cash is common sense. Don’t spend what you don’t have. Too many dealers feel the need to live the lifestyle. Success can breed contentment and contentment can breed laziness, which usually leads to failure. A cash-flow model helps keep

common sense at the forefront. The model can be very detailed or simplified to cover the basic cash-in, cash-out categories. Either way, it should show a one-, three- and possibly five-year analysis, and should be updated at least annually or when there has been a change to the overall business model. Adding a location, an increase or decrease in ACV, or even a change in underwriting standards can impact cash needs. The model should be realistic. Pie in the sky and wishful thinking serve no purpose. Having the model is only the first step. Having the discipline to manage to it is the challenge. Without it, a dealer might as well have the “sell some cars, collect some money” business plan and hold on for dear life – a plan that is not used by successful BHPH dealers. The model should be looked at on a monthly basis and compared to actual performance. That way, adjustments can be made immediately to either the model or the personnel in charge of managing to it. Cash is king in our business. Not only the availability of it, but the effective management of it as well. There are BHPH dealers who operate without the need of a credit line because they understand how to manage cash. There are BHPH dealers who operate within credit lines effectively because they understand how to manage cash. But there are too many dealers experiencing capital reductions and, in some cases, all-out line calls because they don’t understand how to manage cash. Having the patience, persistence and preparation to obtain and secure cash, then the discipline to manage it, will take a load off your mind and help keep your doors open.

BY BRENT CARMICHAEL

EXECUTIVE CONFERENCE MODERATOR NCM ASSOCIATES INC. BCARMICHAEL@NCM20.COM

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BACK TO THE BASICS: GO ALL IN

A Service Department Can Be a Big Edge for Dealers Willing to Make the Commitment For independent dealers, having a service department isn’t something that should be taken lightly. Not all dealerships offer service – it isn’t for everybody – but for those that do it should be an integral part of the business, used to give the dealer an opportunity to attract, retain and better understand customers. Joe Lescota, the NIADA’s new director of dealer development, said he knows many dealers who lose money in the service department because the money that comes in through service goes into one big pot. “There’s a whole process in operating a service department,” said Lescota, the longtime instructor for NIADA’s Certified Master Dealer program. “Dealers think they are selling service when what they’re really doing is selling time. “A dealership only has so many hours in the day to operate. So a dealer should take the number of techs he has and multiply that number by the number of hours in operation. So a dealer might have 80 hours a day of time to sell. From a profit standpoint, it doesn’t matter if the dealer is changing oil or dropping an engine.” Doug and Nyla Borgmann, owners of Creighton Auto, Inc., in Creighton, Neb., manage to keep their mechanic and their body man pretty busy, which is good for their business. That means doing repairs for everyone, not just customers. “Offering service works for us,”

Doug Borgmann said. “We advertise on our store sign. Service accounts for between 25 and 30 percent of business. Our mechanic has been with us since the early 1980s. He’ll retire in four or five years and that has me worried. Replacing him will be hard. Our body man has been with us for about three years. Before getting him, we had a hard time getting someone full time to do our body work.” J.R. Westbrook, owner of Tyro Auto Sales in Bay City, Texas, has been offering service at his store since 1971. He does outside work in addition to working on the cars of customers, but he doesn’t advertise. He depends on word of mouth. Westbrook has kept his technician for years, operating on the theory that it’s easier to keep the person you have happy than go out and find new people. Staff is a key component to offering a good service department. Getting good help was one of the reasons Randy Yates, owner of Yates Motors in Gering, Neb., closed his service center. Yates is a third-generation dealer. His lot has been around for 66 years, and for much of that time, it offered service. Eventually, though, it wasn’t worth the trouble. “We got rid of our old service center, must be around nine years ago,” Yates said. “It was hard getting and keeping good people. I’d train people and they would get the skills they needed to do the job. But then they’d go to

dealerships, often franchise operations, that would pay better wages and I’d have to start the process all over again.” Yates said he realized he was better off if he stuck to what he did best – sell cars. Now he sends his cars to be fixed by people who do what they do best – repair and recondition cars. By letting the work get done by specialists, he doesn’t have to bother with the hassle of hiring and training technicians, then replacing them as they leave his business. Yates said he ended up spending a lot of time trying to drum up business for his mechanics instead of selling cars. “If the mechanics aren’t busy all the time, then they aren’t making as much money as they could be,” Yates said. “It finally came to the point where it became too much work for me to find work for them and for myself. Now I have less headaches just selling the cars and farming any mechanical work out.” He also didn’t have to keep up with the expense of getting new equipment all the time. For one thing, the types of tools a service provider must own has changed dramatically. Gone are the days when a mechanic could do all his work with a lift and some wrenches. Cars now are computerized, and dealers and shop owners have to invest their own money in the purchase of scanners and other electronic devices used to communicate with a vehicle’s electronics. Lescota said Yates’ situation reflects a reality of operating a service department – it’s not easy. But, he C O N T I N U E D O N PA G E 1 2

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T O U R N A M E N T - A W A R D S

D A Y - T R A D E

| A Service Department Can Be a Big Edge for Dealers Willing to Make the Commitment |

added, the payoff can be tremendous when the job is done right. “It’s always a challenge to get good technicians,” Lescota said. “So I suggest that dealers go the technical schools and start grooming technicians before they even graduate. Also, you have to give someone a reason to stay at your dealership.” Usually that means giving them enough to do. As Yates discovered, if technicians don’t have enough to do, they’ll go somewhere where their skills will be in more demand. It might also mean giving them more money. After all, technicians have to eat too, Lescota said. “When I hear that a dealer can’t keep a technician, my thoughts first run to him not getting either enough work or enough money,” Lescota said. “And you can’t cheat on the equipment. It’s the cheap man who pays the most for things. By trying to save money on new equipment needed to work on today’s computerized cars, a dealer will end up having to spend a lot of money trying to keep technicians. “People like to work in comfortable environments and technicians are no different from anyone else. I always say if a dealer can’t keep good mechanics, it can usually be traced back to poor lighting, poor parts and poor work conditions. There’s a demand for technicians and they’ll go where they feel most comfortable.” Having a service department is a full commitment, Lescota said. And getting good technicians is a competitive sport between dealers. Maybe that tech left to go to a franchise operation because the boss there promised to send him to an ASE-certified program, where the tech could improve his skill set. Independent dealers should consider similar actions. Bill Elliff, owner of Elliff Motors in Harlingen, Texas, is an example of a dealer who is committed to his service department. His lot provides a full variety of services, and he long ago realized that in order to have a service department, he had to have enough service work to keep his employees busy. To better service his customers, his dealership can do anything from changing oil to engine replacement. He owns a couple of lots with a total

of seven service bays and 10 people working them. He advertises in print and on the signage around his lots. He said finding qualified people isn’t that hard. Finding qualified people who are dependable and can be counted on to show up on time ready to work every day is the tough part, Elliff said. But the effort is worth it. By hiring the right people, a dealer can have a service department that drives potential customers to the store, Elliff said. While they’re getting their car worked on, many of his service customers will wander around the lot and take a look at inventory. Maybe that person is looking for something new, and if he sees something he likes that service customer can be converted into a vehicle customer. Elliff estimates his service department accounts for about 20 percent of his total business. He said some of his fellow dealers don’t realize that a service department has to be able to make it on its own. It shouldn’t be a loss leader. Additionally, he sees dealers actually short-changing themselves when it comes to pricing their cars. A dealer might, for example, put $100 worth of reconditioning in a car he bought for, say, $5,000. When it comes time to price the car, he’ll want $1,000 profit. So he’ll price the vehicle at $6,100, Elliff said. That’s a mistake. Any work put into a vehicle using the dealership’s own service department should be reflected positively in the price of the vehicle. If $100 of work was put into the car, that should translate into adding, say, $200 to the back-end value of the vehicle. So that car should be priced at $6,200, not $6,100. “As an owner, you have to put the money in to develop the infrastructure needed to run a good service department,” Elliff said. “That means having the latest diagnostic equipment. But if you charge right for your services, you will always come out ahead.” Ultimately, having a good service department should mean more than another revenue source, Lescota said. By having a service department aimed at serving the public at large and not just his current customer base, Elliff is bringing in new potential buyers to look at his inventory.

S H O W

BACK TO THE BASICS: GO ALL IN

He’s creating a captive audience. But a good service department can do even more. When a customer brings in a car, a dealer can glean all sorts of information about the customer. It’s built-in market research. “The smart dealer should now know all sorts of things about that customer,” Lescota said. “The dealer should know how that service customer uses his car. Does he baby it or does he really run it through the ringer and wear it out? With that knowledge, the dealer can better help the customer make an informed decision on the best vehicle to buy when it comes time to get another car.” By having a complete service department, a dealer can get a customer used to bringing his vehicle to his dealership. Need an oil change? Bring the car to good old Joe’s. In an accident? Have the car towed to Joe’s. Need some engine work? Go to Joe’s. “There comes a time in every car’s life when it becomes counter-productive to keep putting more money in that vehicle,” Lescota said. “If you have a good relationship with your customers, and they bring their cars to you for service, you can tell that customer when it’s time to get a new car.” A service department can also help Buy Here-Pay Here dealers with their bottom line, Lescota said. It’s a rule of that segment of the used car business that when a car stops running, the payments stop coming. If a dealer has a service department, the customer can bring the car in to get fixed and the cost of repairs can be added to the payment schedule. A customer might not have $300 on him right then and there, but he can usually make his payments if that $300 is spread out over the rest of the payment schedule. “A good service department gives dealers control,” Lescota said. “It gives the customer a reason to keep coming back to you. But if you’re going to have a service department, you can’t go in halfhearted. As they say in poker, you have to go all in – but the rewards can be huge. “These days, dealers need every edge they can get. Now more than ever, dealers who don’t keep up, fall behind and go out of business.”

BY JIM STICKFORD

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D O N ’ T WA I T U N T I L 7 5 P E R C E N T O F YO U R W E B S I T E V I S I T O R S A R E U S I N G H A N D H E L D S .

Mobile Advertising a Must for Car Dealers According to sales statistics for the first quarter of 2012, shipments of desktop and laptop PCs fell another 5 percent, and tablets and smartphones are cannibalizing PC sales by 50 percent. Just another reason for car dealerships to optimize websites for mobile devices and include mobile advertising in their monthly budget. Many mobile users are cruising classified sites and social media sites from their smart devices. Therefore, it is imperative for car dealers to get inventory on all of those sites, such as Craigslist and Backpage. Those classified sites are growing rapidly with inventory and shoppers, and since posting on them is free, the return on investment is phenomenal. In its Internet and American Life Project, in a study called “Americans and Their Cellphones,” the Pew Research Center found mobile phones have become a nearly ubiquitous tool for informationseeking and communicating – 83 percent of American adults own some kind of cellphone – and they have an impact on many aspects of their owners’ daily lives. Cellphones are useful for quick information retrieval, so much so that their absence can cause problems. More than half of all adult cell owners had used their phone at least once to get information they needed right away. More than one fourth said they experienced a situation in the previous month in which they had trouble doing something because they did not have their phone at hand. Cellphones are important tools in emergency situations – 40 percent of cell owners said they found themselves in an emergency in which having their phone with them helped. Cell phones can help stave off boredom – 42 percent of cell owners used their phone for entertainment when they were bored. Despite the advantages, some cellphone owners need an occasional break – 29 percent of cell owners turned their phone

off for a period of time just to get a break from using it. Even the advantages can cause frustration – 20 percent of cell owners experienced frustration because their phone was taking too long to download something, 16 percent had difficulty reading something on their phone because the screen was too small and 10 percent had difficulty entering a lot of text on their phone. Cellphones can help prevent unwanted personal interactions – 13 percent of cell owners pretended to be using their phone in order to avoid interacting with people around them. Text messaging and picturetaking continue to top the list of ways Americans use their mobile phones, with 75 percent of all cell owners using their phones for those purposes. Other relatively common activities include sending photos or videos to others (54 percent of cell owners do this) as well as accessing the Internet (44 percent) Thirty-five percent of American adults own a smartphone of some kind, and they take advantage of a wide range of their phones’ capabilities. Nine of 10 smartphone owners use text messaging or take pictures with their phones, and eight in 10 use the phone to go online or send photos or videos to others. Many activities — downloading apps, watching videos, accessing social networking sites or posting multimedia content online — are almost entirely confined to the smartphone population. The statistics make it easy to see that mobile advertising is becoming increasingly important, and focusing on rich media advertising is even more important. Rich media ads offer more in-app interactivity via video, sound, gaming and so on. The aesthetic value is an obvious advantage that will attract advertisers and ad creators. Furthermore, with the growing adoption of smartphones as the device of choice, rich media is the natural

progression toward more engaging ads on free sites, which captures a captive audience. The engagement rates are as high as 33 percent on rich media ads. If a car dealership depends on its web presence in any way, it’s important to start thinking about mobile now. Check how the website looks and works – or doesn’t – on mobile devices. Mobile Internet use is growing faster than anyone realizes. Don’t wait until 75 percent of your website visitors are using handhelds. That’s like waiting until most of your backyard is on fire before grabbing a water hose. Start thinking now about how to make your website work hard for you on mobile devices, as well as getting ads developed for your dealership to run mobile campaigns. Mobile campaigns are used widely by manufacturers but can be brought to a local level with some geo-specific targeting. That means ads can be targeted to certain zip codes to run in your local area in order to attract more local business for your sales and service department. Running coupon ads, loss leaders and teaser ads on mobile devices seem to be the most effective ways to attract local customers. The use of QR codes in paper advertisements can drive customers to either a mobile landing page or a video about your sales or service specials. With the explosion of Internet video consumption, it is confirmed mobile video has largely been adopted. While video isn’t a huge focus for advertisers right now – many cite broadband and technology inadequacies as barriers – many static stats tell the story of video’s increasing importance for car dealers and salesmen.

BY DANI LUNSFORD

DANI LUNSFORD IS A NATIONAL SALES AND MARKETING EXECUTIVE WITH SHOWCASE PUBLICATIONS, INC. SHE HAS BEEN IN THE RETAIL AUTOMOTIVE INDUSTRY FOR 14 YEARS, WORKING IN SALES, SERVICE, E-COMMERCE MANAGEMENT AND AS A CONSULTANT TO IT COMPANIES AND DEALER GROUPS. SHE CAN BE REACHED AT DANI@AUTOSHOPPER.COM.

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D E A L E R S ’ M O S T C O M M O N A N D C O S T LY M I S TA K E S A N D H O W T O F I X T H E M

Avoid These Marketing Potholes It seems as though every day, new marketing technologies and trends emerge as the hottest thing around. From Google Analytics to Twitter to personalized URLs, something is always changing in sales and marketing. While that provides many new options and opportunities, it can also be overwhelming and confusing for dealers. So how do you know where, how and when to spend your marketing dollars to get the best return on investment? And how do you know what to avoid? The answer is simple – data is king, and the good news is used car dealers have been dealing with it for years, tracking, testing and tailoring data to predict sales and budget. Marketing strategies and technology should deliver more data, telling you more about what’s working and what is not. There are still potholes in the road, but if you steer clear of the four biggest marketing potholes you will see the impact on your growth and bottom line. Not knowing your data Do not make any marketing decisions without first understanding your data. That is crucial. Track your data every week, or even more often, so you can be proactive with any potential costly marketing mistakes. Track how many potential buyers are calling your dealership or submitting lead forms daily, monthly and yearly. If you don’t track those items you will never know how or if your marketing campaigns are working. Use Google Analytics. It’s a free service that can show you important information about how people are using your website. You can track how much traffic is coming to your site, how long viewers are there and which pages are

most popular. It can also show you problem areas like high bounce rates, low time on site and poor goal conversions. You also need to know if you have inventory people are looking for. Consistently review your SRP to tell you if you have the vehicles people want and if you’re merchandising your cars properly. On average, you should be getting twice the number of Internet and phone leads as your traditional UPs. If your numbers are not close, you should work with someone to better analyze your data to see what is not working and make changes. The worst thing you can do with poor results is ignore them. Ignoring Google Places You only get one chance to make a great first impression. This is also true for your image on the web. Google has changed its algorithm so the Google Place pages, which include business reviews, are high atop the search engine results. No amount of paid ads will fix this in the long term. If your Google reviews are negative, your buyers will look elsewhere for their cars. You want to get your existing customers to give you positive reviews when they are most likely to do so – when they’ve just bought their car. Incentivize it by offering them a review card that will give them discounts on service at very little cost to you. Not having a search engine strategy Search Engine Optimization is key. If you are optimized, you should show up on page one of any search. Accomplishing that requires a longterm strategy. You cannot rely on ranking alone. Your strategy needs to include proper keyword research, updated and useful content, and conversion tracking.

Consumers search in many different ways so you need to build landing pages and write copy for websites to make sure all search results are covered. Not having a solid media strategy Today, you need to have a social media presence. If you don’t, you’re missing out on some big opportunities. The bigger problem is using social media without a cohesive strategy. You need a plan for Facebook, Twitter and Pinterest, not just an account where you randomly post and tweet. For people to “Like” you on Facebook or follow you on Twitter, you need to give the consumer value. Research shows the top three reasons people connect with brands on Facebook and other social media are for the games, contests and promotions; to learn about new products; and to show they are fans. Use this information to create an engagement strategy and study the results. It is all about getting consumers involved, not trying to sell them. Extend your brand through social media, but also be sure to take advantage of all the free monitoring and data analysis tools the social media channels offer. Don’t get your business caught up in these common marketing mistakes. If you feel you are stuck, re-evaluate what you are doing and make strategy changes for the long term based on hard facts. With changes in these four areas, you will see improvement in all aspects of your business.

BY BRIAN BAKER

BRIAN BAKER IS EXECUTIVE VICE PRESIDENT AND CHIEF CLIENT OFFICER FOR STREAM COMPANIES, HANDLING STRATEGIC PLANNING AND DAY-TO-DAY OPERATIONS FOR THE AUTOMOTIVE SALES AND CLIENT SERVICES TEAMS.

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Community Service Award Nominees

SOURCE

| NADA Used Car Guide

NADA Used Car Guide Chart

I M PA C T O F T H E R I S I N G C O S T O F G A S O N U S E D V E H I C L E P R I C E S E X P E C T E D C H A N G E I N U S E D V E H I C L E P R I C E U N D E R C E R TA I N G A S PRICE SCENARIOS

GAS PRICE SCENARIO $4.00 $4.50 $5.00 SEGMENT % $ % $ % $ INTERMEDIATE COMPACT 1.7% $179 6.0% $638 INTERMEDIATE MIDSIZE 0.8% $103 2.1% $262 NEAR LUXURY 0.3% $69 -0.2% -$38 LARGE CAR 0.3% $39 -0.3% -$34 COMPACT UTILITY -0.3% -$37 -2.8% -$408 LUXURY MIDSIZE -0.3% -$73 -2.9% -$751 MIDSIZE VAN -0.4% -$49 -3.2% -$453 MIDSIZE UTILITY -1.0% -$188 -6.4% -$1,144 LARGE PICKUP -1.5% -$275 -8.6% -$1,540 LARGE SUV -1.6% -$387 -8.9% -$2,148

10.4% 1.8% -3.0% -3.2% -8.7% -9.0% -9.7% -16.5% -21.3% -22.0%

$1,102 $233 -$650 -$415 -$1,272 -$2,313 -$1,355 -$2,959 -$3,817 -$5,298

Congratulations to the following independent dealerships for being nominated for this year’s NIADA/Manheim National Community Service Award. Independent dealerships across the nation contribute to their communities every day but often go unrecognized for their community support. Many participate through special projects while others provide sponsorships or financial contributions, or lead innovative community improvement activities. The winning dealership will be named June 13 at the Leadership Awards Banquet during the National Independent Automobile Dealers Association Convention and Expo in Las Vegas. Manheim representatives will present the award along with a $5,000 check payable to the dealership’s chosen charity.

The 2012 nominees are: ERTLE BROTHERS DISCOUNT AUTO, STERLING, COLO. NOEGEL’S AUTO SALES, STARKE, FLA. SOUTHEAST CAR AGENCY, INC., GAINESVILLE, FLA. MATTHEWS MOTORS, CLAYTON, N.C. A-1 AUTO SALES OF DULLES, STERLING, VA. REEL’S AUTO SALES, ORWELL, OHIO BOURNE’S AUTO CENTER, SOUTH EASTON, MASS. FRAN MORELLI SALES & SERVICE, BROCKWAY, PA. ED HOLEWIAK’S AUTO SALES, SOMERSET, MASS. PREMIER MOTORS-LEASING, INC., HARDIN, KY. RON’S AUTO SALES, INC., LAWRENCEVILLE, GA. M&F AUTO SALES, ALBUQUERQUE, N.M. ALAMO VALLEY AUTO SALES, KALAMAZOO, MICH. SOUTH TACOMA AUTO SALES, INC., TACOMA, WASH. FAIRLY RELIABLE BOB’S, INC., BOISE, IDAHO

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NEW 20 GROUP PROGRAM

NIADA to Launch New 20 Group Program After repeated requests from its members, the National Independent Automobile Dealers Association has announced it is entering the 20 Group business. NIADA CEO Michael Linn announced the NIADA 20 Group program, which will organize and moderate groups of independent auto dealers from around the country to meet and share new ideas and best practices. Linn said the move is being made after repeated requests from within the group’s membership of nearly 20,000. Dealers have voiced a strong desire to share best practices and operational data between the various member sets. “NIADA members have historically been a tight-knit group of dealers. Developing a 20 Group platform for them to facilitate ideas and compare operational practices is a natural extension of their close relationships,” Linn said. “Additionally, we have mounting feedback from dealers participating in existing

20 Group models who feel their best interests are being underserved or even ignored. One dealer told me she felt the escalating cost to participate in her current 20 Group was not worth the combative discussions she endures or the pressure she gets to conform to their benchmarks. “For 66 years as a nonprofit trade association, NIADA has represented the voice of independent auto dealers and has found ways to help them improve their businesses. I can assure you NIADA and our 20 Group program will always put the needs of our dealers first. We will never sacrifice the quality or service we provide our dealers.”The NIADA 20 Group program will be under the direction of Joe Lescota, who was recently introduced as NIADA’s new Director of Dealer Development, effective June 1. “Even the most successful independent dealers are constantly seeking new ways to improve their businesses,” Lescota said. “They

know the slightest change in sales, financing, service or operational policy can have a major impact on their profitability. Our 20 Groups will be a great way for NIADA dealers to stay on track because colleagues will be there to prod, poke and encourage improved performance. The new platform will match dealers of like size, sales volume and revenue mix for maximized compatibility. They will share ideas and best practices and learn from one another regardless of size or geographical region. “No independent dealer is too large or too small to contribute, learn and benefit from the collaborative dialogue of a 20 Group discussion. Every one of our members is encouraged to participate.” The first phase of NIADA’s 20 Group format will focus on independent auto retail operations. More information will be available at the NIADA Convention & Expo in June at Caesars Palace in Las Vegas.

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Fastenal Launches Expense Reduction Program Fastenal, a national distributor of industrial and construction supplies, has introduced an expense reduction program for auto dealerships to save owners time and money related to their shop supplies and essential tools. The centerpiece is Fastenal’s FAST Solutions℠ industrial vending system. To date, 8,000-plus machines have been installed to help organizations reduce supply consumption, move the cost of inventory to Fastenal, and increase worker productivity. To access products, workers enter an ID code and a repair order number, then make a selection. If the request is authorized, the machine dispenses the product and automatically reports the details of the transaction, making workers accountable for what they use. Controls can also be established so that workers only have access to the products (and amounts) needed to do their jobs. For more information, visit www.fastenal.com.

NIADA Names New Legislative Counsel New Albany, Ohio-based law firm Mac Murray, Petersen & Shuster LLP has been named legislative/regulatory/ compliance counsel for the National Independent Automobile Dealers Association, NIADA chief executive officer Michael Linn announced. The firm, led by former two-term Ohio attorney general and state senator Betty Montgomery, will add additional expertise to NIADA’s legislative and regulatory efforts in Washington D.C. to stay ahead of issues affecting the association and its approximately 18,000 members. “Adding Mac Murray, Petersen & Shuster to the efforts of Federal Advocates, NIADA’s lobbying firm on Capitol Hill, will round out our strategy to work more closely with key federal regulatory agencies,” Linn said. “Staying ahead of rapidly expanding agencies like the CFPB (Consumer Financial Protection Bureau) will be much easier as Betty and her team engages key relationships with their former colleagues at federal agencies like the CFPB and the FTC.” “Dealers and business leaders are still watching how the CFPB, attorneys general and the FTC will work together under new guidelines and how they will affect their businesses in an age of expanding government,” Montgomery said. “Our team is well versed in working with regulators across agency lines to protect the interests of small businesses, and we are honored to work with NIADA more closely to bridge the gap between auto dealers and federal regulators.” Additionally, Mac Murray, Petersen & Shuster includes three former Ohio assistant attorneys general who will advise NIADA on compliance updates and changes in government regulations to the automotive industry. Shaun Petersen, Michele Shuster and Helen Mac Murray all served as chief of the Ohio Attorney General’s Consumer Protection Section and together have more than thirty years of experience managing consumer protection initiatives and helping businesses comply with those programs.

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Three “Think Outside The Box” Techniques When Shopping for Health Insurance. F O R M O R E I N F O R M AT I O N , C A L L T H E N I A D A H E A LT H P R O G R A M AT 1 - 8 8 8 - 3 0 8 - 9 3 4 0 O R V I S I T W W W. N I A D A H E A LT H P L A N S . C O M

Anyone who had has the experience of shopping for health insurance knows it’s not an easy task. Figuring out ways to keep premiums affordable can be a major struggle. Shopping for apples-to-apples coverage with several carriers is nearly impossible and premiums for similar plans are vastly different from one carrier to the next. So what’s a person to do? Purchasing health insurance requires a “think outside the box” approach. Here are three simple tips to help you along the way: • C  onsider shopping for a much higher deductible than you are accustomed to. Shop for plans that have a $10,000 deductible or more. It may shock you how drastically lower premiums will be. Too much risk for you? We will show you a way to combat that next. If you would like to see a rate for a higher deductible in comparison, visit www.NIADAHealthPlans.com for an instant online rate. • T  o offset the high deductible, consider purchasing a critical illness rider, which attaches to your major medical policy. Critical illness riders pay a cash benefit for

conditions like cancer, heart disease, stroke, coma and kidney disease, and the benefit can be used to pay off your deductible and leave you with additional money for other expenses, such as loss of income. Riders can be purchased to cover your deductible or more – up to $100,000 in cash coverage. Believe it or not, the premiums are very affordable. • Also to help offset risk, consider purchasing an accident rider to attach to your major medical policy. Like critical illness riders, accident riders pay a cash benefit for accidents or injuries such as cuts, burns, broken bones or strained and pulled muscles. Again the benefit can be used to pay your deductible in the event you or your family is injured. If you have children, especially ones in sports, this is a must-have rider. The premiums are even more affordable. So what types of claims will you then need to worry about? Since health care reform passed, additional benefits have now been added so you will not have to pay out of pocket for adult and child wellness exams, such as checkups,

immunizations, lab work, mammograms, pap smears, PSAs and EKGs. They are all covered at 100 percent with no deductible. Why purchase a lower deductible when it’s covered regardless? Additionally, there are no lifetime maximums. After your deductible, you are covered at 100 percent until infinity. There are no lifetime caps like $2 million, $3 million, etc. If you have a $20 million medical bill, your insurance must now cover it. With a high-deductible policy you will have to pay for such claims as office calls for a cold/flu, asthma, skin disorders (other than cancer) and other forms of illness. However, most people would rather save $300, $400 or more per month and pay for the occasional office call themselves. And you will still receive the insurance company’s discounted rate for office calls. Doing the same thing over and over again and expecting a different result … well, you know the rest. Thinking “outside the box” can not only save you money, but can also provide you with better coverage than you had before.

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INDUSTRY TIPS

ARI, Charleston Auto Auction Salute Military Automotive Rentals Incorporated (ARI) and Charleston Auto Auction held a promotion April 13 to honor those past and present who have served our country in the military. The day began with free breakfast and was followed by a performance by the American Legion Color Guard, which played Salute To The Armed Forces to honor each branch of the military, followed by the National Anthem. The sale included more than 500 dealers and nearly 1,000 vehicles, more than 90 of which were offered by ARI. Every dealer who purchased an ARI unit received a “Support Our Troops” military-style hat, and all veterans in attendance received a “Support Our Troops” hat and a complimentary lunch. “This promotion was a great success,” Charleston Auto Auction general manager Laura Taylor said. “Many of our dealers and auction team members have served proudly in the military. Everyone showing their respect and support was amazing. It was a great scene with most in attendance wearing their red, white and blue.” Charleston Auto Auction employs more than 40 veterans of all military branches. Its corporate parent, American Auto Auction Group, has implemented a program to hire more veterans at all its auction locations. Charleston Auto Auction holds a sale every Friday at 10 a.m., with a damaged and disabled sale on the second and last Friday of every month at 9:00 a.m. For more information, visit www.charlestonautoauction.com.

IRS Tax Tip: Claiming the Small Business Health Care Tax Credit

If you are a small employer with fewer than 25 full-time equivalent employees who earn an average wage of less than $50,000 per year, and you pay at least half of employee health insurance premiums, there is a tax credit that can put money in your pocket. The Small Business Health Care Tax Credit is specifically targeted to help small businesses and tax-exempt organizations. The credit can enable small businesses and small tax-exempt organizations to offer health insurance coverage for the first time. It also helps those already offering health insurance coverage maintain the coverage they already have. Here is what small employers need to know so they don’t miss out on the credit for tax year 2011: • Qualifying businesses calculate the Small Business Health Care Credit on Form 8941, Credit for Small Employer Health Insurance Premiums, and claim it as part of the general business credit on Form 3800, General Business Credit, which they would include with their tax return. • Tax-exempt organizations can use Form 8941 to calculate the credit and then claim the credit on Form 990-T, Exempt Organization Business Income Tax Return, Line 44f. • Businesses that couldn’t use the credit in 2011 may be eligible to claim it in future years. Eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014. For tax years 2010 to 2013, the maximum credit for eligible small business employers is 35 percent of premiums paid. For eligible tax-exempt employers the maximum credit is 25 percent of premiums paid. Beginning in 2014, the maximum credit will go up to 50 percent of qualifying premiums paid by eligible small business employers and 35 percent of qualifying premiums paid by eligible tax-exempt organizations. Additional information about eligibility requirements and calculating the credit can be found on the Small Business Health Care Tax Credit for Small Employers page of IRS.gov.

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R E N TA L N E W S

Adding Rentals Can Help Drive Sales David Lanzer sells used cars. That’s the primary mission of Monarch Auto Sales, the dealership he owns and operates in Greensboro, N.C. But Lanzer also rents used cars through a franchise with Rent-A-Wreck, which, he said, fits neatly with mission No. 1. “For the retail used car dealer, there’s so much synergy it’s not even funny,” Lanzer said. “Our rental customer is that same customer we end up selling a car to. They come to Rent-A-Wreck because their 14-year-old car with 250,000 miles on it just died and they’re stuck for a car.” That makes the rental operation a magnet that attracts prime prospects for sales, and Lanzer said he takes full advantage of the opportunities it provides. Throughout the rental process, the dealer considers every rental customer to be a potential sales customer, too. “We market car sales hard to every rental customer that walks in the door,” he said. “We make it clear that all of our cars are for sale, and we talk to our customers. We find out why they need to rent the car, and we sell about 100 cars a year just to our rental customers. That sales volume has been consistent for us for years. “We do insurance replacement rentals where a customer will have just gotten into an accident, and before that customer is even in buying mode, we’re planting the seed that his rental is available for sale and finding out what he’s looking for in his next car. We’ll entice him with a rental ‘test drive,’ where we’ll put the cost of the rental toward the car if they wind up buying.” Lanzer said the rental operation has also helped him with inventory for his retail dealership, a big advantage given the current short supply and high price of quality inventory. “The cars we fleet as rentals end up as perfect retail units for our customers,” he explained. “We fleet a 1-2 year old car, run it profitably in our rental fleet for 18 months to two years, then we’re left with a 4-5 year old car and those are very desirable and in short supply at the auctions now.” Lanzer said the rental business does require a dealer to make some adjustments from the typical dealership model. For example, he said the typical dealer floor plan is for 90 days, while a typical rental floor plan is much longer – more like 12-36 months. In 2011, 11.8 percent of National IADA members offered rental cars at their dealerships, down from 12.4 percent in 2010. Of those, 78.1 percent ran an independent rental operation while 21.9 percent – including Lanzer – worked through a franchise. Lanzer said he prefers the franchise route because of the support offered. “Rent-A-Wreck earns every dime of the royalties I pay them,” he said. “The systems they have in place to deliver reservations and market you on the Internet and travel websites,

the support they provide you as a franchise on everything from your insurance to your financing, the legal stuff, the operations and business management software, coaching and the company sponsored dealer 20 groups – those are all things an independent would have to do for themselves on their own. “ Rent-A-Wreck is currently offering a $1,000 discount for state IADA members through the end of the year, and the company said it will donate $1,000 to the dealer’s state association for every franchise sold to an IADA member.

MONARCH AUTO SALES OWNER DAVID LANZER (SECOND FROM LEFT), WITH STAFF MEMBERS (FROM LEFT) ALEX BODIFORD, TERRY LANZER AND RAYSHAWN JUMPER.

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INDUSTRY NEWS

| for more information (877) 310-0288 or email automotivesales@amtrustgroup.com

NIADA Gets Independents into the Hottest Thing in the Auto Industry: Certified Pre-Owned Why all this excitement about selling CPO vehicles? As an independent used vehicle dealer, you are likely aware of the recent trend in the automobile industry toward selling certified pre-owned vehicles. The trend began with manufacturer-backed programs for new vehicle franchised dealers and has expanded into the independent used car segment. A vehicle is normally designated as “certified” after undergoing a thorough inspection of key components for both functionality and safety, and completing the needed repairs and reconditioning. Most CPO programs require that the vehicle meets CARFAX standards, assuring the potential buyer he is purchasing a safe and dependable vehicle that is a step above a typical used car. The programs generally include a mechanical breakdown warranty for a specific term and most provide extended coverage options. You might have found it difficult to compete against dealers selling a certified program, even with a price advantage, because consumers seem willing to spend more for a vehicle that has been certified and comes with some term of mechanical protection coverage. So what are the advantages to you, as an independent dealer, of selling CPO vehicles? There are several: • An enhanced image in your marketplace. • Improved gross revenue and increased profitability created by the sale of more vehicles. • The ability to compete with franchise dealerships that offer CPO programs. • An edge on the competition. • Increased customer satisfaction and confidence. CPO is very much the cutting edge of the used auto industry. Sales are growing rapidly. As reported in Auto Remarketing, CPO sales reached 174,471 vehicles in March, the most certified units ever sold in a month, according to the latest numbers from Autodata Corp. That closed the best quarter ever for CPO sales – a record 454,944 vehicles sold in the first three months of 2012, up 8.4 percent from the first quarter of 2011. In its 2010 Used Vehicle Market Report, J.D. Power and Associates found 67 percent of all used car buyers began their purchase

process planning to buy a certified vehicle, and 21 percent of CPO buyers were not originally looking for a certified vehicle. Given the obvious consumer interest in them, it’s no wonder CNW Market Research found certified vehicles turn almost 20 days faster than non-certified, with an average 24.8-day turn. CNW’s March statistics also showed CPO sales provide dealers with 12 percent to 17 percent additional profit – an average of $2,274 per unit – versus the sale of non-certified used vehicles. And that premium has been rising steadily since January 2011. The market potential is huge. More than 35 million used vehicles were sold in 2011, but less than 2 million were certified by manufacturer programs. Independent dealers sold 22.4 million cars in 2010. An independent dealer who chooses to sell certified pre-owned vehicles can expect to earn a larger share of that enormous market and earn a higher percentage of repeat customer sales as a result of the higher level of customer satisfaction with a CPO vehicle. Victor Salvato, president of Auto Sales Outlet in Rochester, N.Y., is an independent dealer who has experience offering a CPO program to his customers. Salvato said advertising certified vehicles made an immediate impact on his dealership in a variety of ways. “The quality and volume of the responses to our advertising improved immediately,” he said. “It was obvious that we were reaching a higher quality prospect who was interested in a higher quality vehicle based on the customer’s perception of what a certified vehicle is. We can thank the manufacturers and franchise dealers for educating our customers through their promotion of certified vehicles. “Not only have we sold more cars, but our profits have increased as well. Being a certified dealer has definitely improved our image and our credibility in the marketplace, and we are beginning to see an increase in repeat sales as well.” The New NIADA CPO Program NIADA has partnered with Warrantech, an AmTrust Financial company, in the design and administration of its new certified pre-owned program. NIADA

completed extensive research with its dealer members to assure that the program it is providing is exactly what the dealers want. The combined efforts of NIADA and Warrantech, and the input of the dealers consulted, have resulted in a program that is innovative, marketable, flexible and financially sound. The NIADA CPO program is much more than a 125-point inspection and a warranty. The program is truly a “selling system.” All eligible vehicles must be certified, a requirement that insures the integrity and credibility of the program. The dealer selects one of three limited warranty terms that are complemented by flexible and affordable wrap-around and extended coverage options for the consumer. With three unique plans under the NIADA CPO program, dealers will be able to select the option that is right for their market and their customer base. The options include: • A three-month/3,000-mile limited warranty that includes 36 months/36,000 miles of engine and air conditioning component coverage. • A six-month/6,000-mile limited warranty that includes 36 months/36,000 miles of engine and AC component coverage. • A 12-month/12,000-mile limited warranty. The NIADA CPO limited warranty options include coverage of engine, air conditioning, turbocharger or supercharger, automatic and manual transmission, transfer case, drive axle, steering components, select electrical components and seals and gaskets. For more consumer choice and confidence, the NIADA CPO limited warranty options can be supplemented by adding the extended NIADA Total Care or the NIADA Total Care Plus coverage, which includes front and rear suspension, brakes, fuel system, cooling system and additional electrical components. “In re-tooling the NIADA CPO program, we recognized independent dealer business models vary widely and that we had to offer additional CPO options to specifically meet the operational demands of our dealers,” NIADA chief operating officer Steve Jordan said. “Warrantech’s successful track record with independent auto dealers, varying product offerings, world-class claims

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operation, nationwide sales footprint and long-term commitment to support the success of our dealer members made the partnership decision easy to make.” The program is easy to sell, provides coverage from day one and a solid benefits package, day one rental coverage (no minimum shop time), simplified pricing, low-cost surcharges and eligibility guidelines that are very generous – current plus 14 model years and 100,000 miles at time of sale. The program is supported by a wealth of top-quality marketing and merchandising materials to promote the program throughout the dealership, all proudly displaying the familiar logo of NIADA. An NIADA-backed CPO program adds even more credibility for dealers who choose to market it. NIADA brings the strength of more than 18,000 dealers nationwide, the stability of 66 years of experience and the dependability of being the dealers’ voice to regulators, suppliers and, most importantly, consumers. “Warrantech is honored to have been selected by the 66-year old NIADA as its CPO program administrator,” Warrantech CEO Sean Stapleton said. “We applaud the time-honored tradition of excellence NIADA member dealers observe, including their adherence to a strict code of ethics.

We feel that commitment mirrors Warrantech’s dedication to excellence and drive to provide superior products and continued quality customer service.” NIADA, with the support and participation of the state independent dealer associations around the country, is excited to make this program available to its member dealers. Warrantech and AmTrust In selecting Warrantech/AmTrust as the administrator of the program, NIADA has partnered with a world-class provider of warranty products and administrative services. For more than three decades, Warrantech has been the solution for manufacturers, retailers, dealers, distributors and other sales organizations seeking increased profitability, enhanced market differentiation and long-term customer loyalty. Those clients include Volvo, Mazda, General Motors, Ford, Chrysler, Sony, Samsung, Panasonic, PepBoys and many more familiar names. AmTrust, rated “A” Excellent, FSC IX by A.M. Best, fully insures the NIADA CPO program, adding the financial strength and security necessary to protect the dealers who market the program and the consumers who are protected by the product.

Warrantech provides a state-of-theart claims center that houses more than 300 experienced claims adjustors. All automotive adjustors are ASE-certified technicians with an average tenure of more than 10 years with the company. Claims service highlights for the CPO program include: • Instant credit card payment. • Repairs can be completed at the selling dealership or sublet to any licensed shop or franchised dealer. • Multiple, convenient methods of submitting claims. The NIADA Certified Pre-Owned program is designed to give dealers more options to better serve their customers, allow them to compete with manufacturer CPO programs and provide them with a competitive edge against other used car dealers in their marketplace that do not offer a CPO advantage. If you are interested in marketing the new program or just want more information, please call (877) 310-0288 or email automotivesales@amtrustgroup.com.

BY PATRICK REED PATRICK REED IS BUSINESS DEVELOPMENT MANAGER FOR WARRANTECH/AMTRUST GROUP IN BEDFORD, TEXAS. HE HAS MORE THAN 35 YEARS OF AUTOMOTIVE INDUSTRY EXPERIENCE, FOCUSING ON VEHICLE SERVICE CONTRACTS. HE CAN BE REACHED AT PATRICK. REED@AMTRUSTGROUP.COM OR (817) 785-6248.

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Making Repairs in the Buy Here-Pay Here World For a Buy Here-Pay Here operation, repairs are just part of doing business. All BHPH dealers know the adage: to keep the payments coming, the car has to keep running. What’s more, those cars are usually in need of reconditioning before they’re sold in the first place. So what is the best, most costeffective way to have those cars serviced and repaired? Does it require a complete repair department on site? Maybe just one mechanic on staff? Or perhaps you should simply outsource your service work? For every BHPH dealer, there is a different correct answer. The best way to determine what will work best for your business is by reviewing all the options and weighing the pros, cons and costs involved. “There is no cookie-cutter answer to the service question for all Buy Here-Pay Here dealers like there might be for retail stores,” said Jay Rose, a partner in Global Training Solutions, an international dealer training and business development company. “There are so many things to consider.” In-House Service Department: Pros Building your own in-house repair department, no matter how large, can be advantageous for some BHPH dealers. If executed and operated properly, it can result in lower reconditioning/repair costs, reduced repair time, better quality control, increased sales and enhanced customer satisfaction. The caveat is that any dealer entering the service business has to be fully committed to make it work. Lower repair costs: When a car is sent to an outside repair facility, often the price of the repair is calculated based on a pre-set repair metric. If a certain repair is listed as taking two hours and costing $400, that is what will be charged, even if the facility is able to repair the problem quicker and with fewer parts. “If you are running the repairs, you

have the ability to control those costs,” said Richard Chilgreen, a partner in Global Training Solutions. “That can significantly lower the cost of the repair. By doing this you are helping the customer, creating great customer relations and helping save them money that they are then able to use to continue to pay back their loan.” Another way an in-house repair shop can save dealers money is better utilization of quality used parts. “Especially when reconditioning cars, often a good used part can be used at no sacrifice to safety or quality,” Chilgreen said. “Instead, many independent repair facilities buy complete new replacement kits and use only what is needed and charge for all of it. This is an ever-growing expense in the BHPH arena. By having your own service department, you can make use of used parts suppliers when applicable.” Reduced repair time: Most BHPH customers not only do not want to spend a lot of money on repairs, they also cannot afford to be without their vehicle for an extended period of time. Maintaining a well-run repair facility allows you to make sure your customers get back on the road quickly. Just as important, an in-house service operation can significantly cut down the time it takes to recondition newly acquired units and get them ready for sale, if only by eliminating a trip to an outside service shop and back. And the faster the car can get out on the lot, the faster it can sell. “If you are running the repair facility, you can determine which cars take priority,” Chilgreen said. “This can help expedite any issues internally, instead of just hoping a major repair will take priority with another service provider. This is a great customer service.” Quality control (with a great staff): Having control over the quality of repair work being done is important for the overall customer satisfaction

experience. It starts with hiring a quality staff – especially the person overseeing the shop. “Having the right people oversee everything is crucial,” said Scott Allen, owner of Auto Land in Haltom City, Texas and the 2011 NIADA Quality Dealer of the Year. “As dealers, we need to understand that running a mechanic shop is very different from running a sales and finance operation. Most dealers I know are very good at sales and finance, but not necessarily in what it takes to run a repair shop.” Gary Gosselin, owner of Shannon Motors in Johnston, R.I., agreed. In addition to his two mechanics and a detail expert, he hired a service manager to operate his repair facility. “It is necessary to have someone in charge who can speak with customers and manage the workload,” he said. “Even if I outsourced my service work, I would want a point person to speak with customers and outside vendors related to service. He is vital to my operation.” The quality of the work is directly tied to the quality of mechanics hired. Most experts agree that with the sophistication of cars now, certification from an organization such as Automotive Service Excellence (ASE) is critical, along with experience, knowledge of a variety of cars and a good work ethic. The certification can be a major selling point as well, letting customers know your mechanics have thoroughly inspected the vehicle before the sale. “If you are able to advertise a multipoint inspection by an ASEcertified mechanic who is part of your team, that offers a lot meaning to your customer,” Chilgreen said. “Even if you do not have a full-service department, but just maybe one certified mechanic, offering this inspection helps your customers know it has been examined and repaired properly.” C O N T I N U E D O N N E X T PA G E

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In-House Service Department: Cons On the flip side, before hiring that service manager or mechanic and starting a service department, BHPH dealers need to consider the nuts and bolts and costs that can make an inhouse operation the wrong choice – at least for the moment. Chilgreen and Rose, as well as many dealers who have operated in-house facilities, stressed a careful examination of areas such as cost vs. profit, liability and other legal expenses, and state regulations before opening a service department. “There are two schools of thought when it comes to repairs that we discuss a lot in our dealer 20 groups,” Gosselin said. “Send the work out and eliminate the expense of things like workman’s comp, or keep it in house and keep a better eye on things. You have to decide which works best for you.” Cost vs. profit: Rose said at Global Training Solutions, he sits down with dealers considering the addition of service and asks them to consider a few financial facts. “Do they have an adequate number of accounts in place?” he said. “Do they have the ability to recruit a master mechanic and the right number of people to work? Without the right number of employees, you are going to lose money right away. “Do they have an appropriate facility or will they have to rent one? How much will they have to spend on equipment – both mechanical and things like new computer programs to operate this end of the business, as well as insurance and other fees? Many times a dealer will think, ‘I can save 30 percent by bringing this in-house,’ but they don’t factor in all the costs they will incur and they either don’t break even or lose money by offering service. Sometimes it makes sense, but other times, at this point anyway, it doesn’t make sense.” Liability and other expenses: Depending on the state in which your dealership is located, you also need to examine all liability and other legal and regulatory issues that might be involved.

Certain states carry more restrictions than others and possibly make in-house servicing of vehicles very cost-prohibitive. In addition, some states require auto service facilities to be licensed. Always check your local laws and regulations before beginning a service/ repair operation. “Some places have much higher insurance costs and regulations dealers have to follow,” Chilgreen said. “For example, where I live, in Maine, there is a very high fee for the handling and disposing of waste oil properly. If you don’t do it right and have the right machinery to do it, you set yourself up for lawsuits and fines.” Other considerations that must be made include making sure all equipment is approved by the Occupational Safety and Health Administration (OSHA) and that you have appropriate insurance in place in case an accident happens in the shop or after a repair is made. “All repairs that are made to critical parts such as brakes need extra attention,” Chilgreen said. “The potential for liability is very high in these areas for Buy HerePay Here dealers. These issues can also vary from state to state so it is very important for dealers to understand their own state laws and regulations.” Offering Service – But Outsourcing It If the costs, regulations or other issues are too prohibitive to open an in-house service department, but you want to offer quality service, partnering with good outside vendors can be the answer for some BHPH dealers. When Allen started his business 15 years ago, he offered in-house service, mainly because other dealers in his area were doing it. After three years of dealing with internal problems, he decided to close the in-house facility and began to outsource his repair work. After some investigation into local facilities, he contracted with several who now work with his dealership. “I got out into the community and went in and talked to people at several different repair facilities,” he said. “If they were

a quality shop, I negotiated an hourly rate with them and I never promise any amount of work. If the quality is there and the price is right, I send them more work. If not, I stop. I try to keep about 10 to 12 shops on the list at any time. They know I will use others as well, so they know they have to do what they promise or we will go somewhere else.” Although his customers know the repairs are outsourced, Allen said they don’t mind because he still maintains control of the process and the customer drops off and picks up the car at his dealership. “They don’t really care as long as they get their car fixed right and at a reasonable price,” he said. “The only difference might be that they can’t drive in Saturday morning with a problem and expect it to be repaired right away – they will have to come back Monday. But I think we are good about letting them know that up front and it hasn’t really been an issue.” Amy Eversole, owner of Sojourner Autoplex in Crystal Springs, Miss., also uses an outside service facility. For her small dealership, she appreciates another business coming alongside her to share any liability issues that might arise. “It gives me more confidence that before I sell a car to someone, it was not just us that looked it over but another, independent company,” she said. “It allows us to bring someone else in to shoulder any burdens with us and take care of our customers.” Whether service and repairs are made in-house or are outsourced, they are part of doing business for the Buy Here-Pay Here dealer, and figuring out the most cost-effective, customer-friendly, hasslefree way of accomplishing them is crucial for the success of the dealership. Talking to other dealers can help point you in the right direction. “Learn from others’ experience,” Gosselin said. “At dealer 20 groups, we talk about issues like this and help each other find ways to make service and other challenging and changing issues work best in our own situation.”

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T H E L AT E S T

| visit carfax.com

CARFAX Introduces Its Latest TV Ads

CARFAX has launched its newest wave of television ads as part of the national “Show Me the CARFAX” campaign. Starring again in all of the ads to deliver the message of smarter used car shopping is the knowledgeable Car Fox. The spots, which humorously depict people buying used cars from various types of sellers, illustrate how CARFAX vehicle history reports can build confidence in the cars people buy as well as the dealers from whom they’re buying. Car Fox issues a friendly reminder for consumers to make an educated buying decision from a trusted seller by saying, “Show Me the CARFAX.” “Smart used car shoppers make good buying decisions by consulting the experts first,” CARFAX communications director Larry Gamache said. “An inspection by a qualified mechanic and a trusted CARFAX Report is the best one-two punch. “We’ve watched Car Fox help boost traffic at dealerships and build confidence with consumers everywhere since he became part of the ‘Show Me the CARFAX’ campaign. We fully expect that success to increase with these latest ads.” The new ads can be viewed on the CARFAX channel on YouTube or the company’s website, carfax.com. “The ads featuring Car Fox have been wildly successful,” said Zevin Auerbach, a creative partner at Zimmerman Advertising. “The new series will give fans something to really look forward to. In essence, they’re mini-TV shows with a car dealer as a recurring character. The imaginative dealer is constantly trying to outfox Car Fox with a series of gimmicks like a ‘seal of approval,’ which is actually a live sea lion. “Of course at the end, the customer says ‘Show me the CARFAX,’ as our dealer makes one last humorous attempt to provide an alternative.” Carfax gives free marketing materials featuring Car Fox to dealers, including an inflatable Car Fox for Carfax Advantage Dealers.

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Eco - Friendly

Who Buys the “Greenest” Cars? Does the West Coast Boast More Eco-Friendly Drivers? Looking for “green” cars? Go west. California boasts the most shoppers looking for vehicles with fuel efficiency ratings of 40 miles per gallon or better, according to research by Cars. com. The data, taken from Cars.com searches, also showed Southern states were the “least green.” “There’s a perception that Californians are more eco-conscious, and our car shopping data shows that’s true,” Cars.com editor-in-chief Patrick Olsen said. “With more charging stations than any other state and dedicated car-pool lanes, it’s easy to understand why manufacturers typically choose California as the place to launch their new green vehicles. “The hard workers in the South need their pickup trucks. For these workers, a hybrid or fuel-efficient vehicle would likely be a second car, and that’s just not as feasible for many in this economy.” The website also ranked the cities and towns with the most and least fuel-efficient vehicle shoppers. Not surprisingly, California dominated the most green list with six of the top 10 cities, led by the San Francisco Bay area, while five Southern markets were among the 10 with the fewest 40-mpg cars, with Midland-Odessa, Texas at the top.

The top 10 eco-friendly cities: 1. San Francisco-Oakland-San Jose, Calif. 2. Madison, Wis. 3. Monterey-Salinas, Calif. 4. Portland, Ore. 5. San Diego, Calif. 6. Green Bay-Appleton, Wis. 7. Santa Maria-Santa Barbara San Luis Obispo, Calif. 8. Sacramento-Stockton-Modesto, Calif. 9. Chico-Redding, Calif. 10. Zanesville, Ohio  he 10 with the fewest green car shoppers: T 1. Odessa-Midland, Texas 2. Laredo, Texas 3. Fairbanks, Alaska 4. Albany, Ga. 5. Bluefield-Beckley-Oakhill, Va./W. Va. 6. Glendive, Mont. 7. Helena, Mont. 8. Columbus-Tupelo-West Point, Ala./Miss. 9. Casper-Riverton, Wyo. 10. Baton Rouge, La.

T H E R E ’ S A P E R C E P T I O N T H AT C A L I F O R N I A N S A R E M O R E E C O - C O N S C I O U S , A N D O U R C A R S H O P P I N G D ATA S H O W S T H AT ’ S T R U E .

Rise Above the Crowd Become a Certified Master Dealer Be on the lookout for your next chance to become an NIADA Certified Master Dealer. The association holds CMD classes at various times during the year, giving dealers nationwide the opportunity to learn in one of the auto industry’s most respected training programs. The course, taught by Joe Lescota, former chairman of Northwood University’s Automotive Marketing Department, focuses on areas such as business management, merchandising, financial management, business planning and human resources. Lescota is a former retail automotive executive with more than 25 years of frontline dealership, sales, management and training experience. Dealership associates whose employer is already a Certified Master Dealer or has been approved for CMD training can also attend the training session. The CMD program was developed in 2001 to provide dealers with the education and tools

to take their businesses to higher levels of service, efficiency and profitability. Dealers who attend the training are committed to our industry, support ethical business standards and are leaders in their communities. They bring a wide range of experience to each class and leave with new strategies for analyzing their business practices and increasing their bottom line. They make friends who share their interests and their challenges and who often become valuable professional resources. The cost for the three-day course is $2,995 for dealers and $2,795 for associates. In addition, Certified Master Dealers seeking recertification – they must have 12 hours of NIADA-approved continuing education every three years to retain certification – can attend for $995. FOR APPLICATIONS AND INFORMATION ON YOUR NEXT CHANCE TO EARN THE TITLE OF CERTIFIED MASTER DEALER, VISIT WWW.NIADA.COM/CERTIFIED_ MASTER_DEALER.PHP.

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Carolinas Independent Automobile Dealers Association    th 57  Annual Convention & Expo  Presenting Sponsor

Marriott Grande Dunes Resort & Spa Myrtle Beach, SC August 2-5, 2012 Back by Popular Demand:  Lizard Lick appearing Thursday night!    Power packed education sessions including DMV Title Workshops; BHPH featuring CIADA’s very own SC Vice President,  Luke Godwin of Columbia, SC and Mark Dubois of BHPH Performance Groups; UsedCars.com; the IRS and more!    NC Dealers – Get your Continuing Education Credits FREE with your Convention Registration!    You don’t want to miss the Friday Night Expo themed “It’s 5 O’clock Somewhere!”!!  Jam packed with lots of exhibitors and prizes, great food and good fun!!    Learn “How To Get Your Deal Financed” at the Saturday morning Breakfast!      New this year!!  Join us for an “Hour of Prayer” Sunday morning from 8‐9 a.m.!!    The Room Block is OPEN!!!  Make your reservations NOW!!!  Call 1‐800‐644‐2881 and say you’re with CIADA   to get the Group Rate of $205 plus tax per night!!  GROUP RATE EXPIRES JULY 2, 2012 so don’t wait!!  Call right now while you are thinking about it!! 

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Presenting Sponsor

2012 SCHEDULE OF EVENTS (schedule is subject to change)

Thursday, August 2 4:00 pm - 8:00 pm Convention Registration 6:00 pm - 8:00 pm Welcoming Reception Friday, August 3 7:30 am - 11:45 am 8:00 am - 8:30 am 8:30 am - 10:00 am 8:30 am - 10:00 am 10:15 am - 11:15 am 11:15 am - 11:45am 12:00 pm - 1:15 pm 1:30 pm - 7:00 pm 1:30 pm - 3:30 pm 3:30 pm - 4:00 pm 4:00 pm - 4:30 pm 4:30 pm - 5:15 pm 5:15 pm - 5:45 pm 5:45 pm - 6:30 pm 6:30 pm - 9:30 pm

Convention Registration Col. (Ret.) Kevin Shwedo, SC DMV SC DMV NC DMV Tom Webb, Chief Economist, Manheim Carri Grube Lybarker, SC Consumer Affairs Awards Luncheon Convention Registration Larry Oxenham - Protecting Your Business Ownership Lizard Lick Towing & Recovery Luke Godwin, CIADA SC VP, BHPH Mark Dubois, BHPH Performance Groups Tamara Garris, UsedCars.com “Car Men” Premier EXPO 2012/Dinner (Theme: It’s 5 O’clock Somewhere!) 

Saturday, August 4 8:00 am - 10:00 am 8:30 am - 9:30 am 8:30 am - 12:00 pm 10:00 am - 11:00 am 12:00 pm - 6:00 pm 6:00 pm - 9:30 pm 6:30 pm - 7:00 pm 6:30 pm - 7:00 pm 7:00 pm - 9:00 pm

General Buffet Breakfast - How to Get Your Deal Financed Past Presidents Breakfast Convention Registration General Membership/Board Meeting/Election of New Officers Golf Tournament - (Pine Lakes Country Club) Kid’s Only Party Convention Registration Reception  Banquet/Installation of New Officers 

Sunday, August 5 8:00 am - 9:00 am 11:00 am

Prayer Session Checkout



Business Casual coat or coat & tie optional

- All events are business casual unless otherwise noted Business Casual collared shirts, slacks, loafers acceptable

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CIADA 57th ANNUAL CONVENTION AND EXPO Marriott Grande Dunes Resort, Myrtle Beach, SC August 2-5, 2012

REGISTRATION FORM

ˆ DEALER

ˆ VENDOR

COMPANY INFORMATION:

ˆ OTHER

DEALER NO.

Company

Mailing Address

Telephone

City/State/Zip

Fax

Lot Address

Email

City/State/Zip

Website

REGISTRATION INFORMATION:

n All Events

‰$220 each

Quantity

Item Total $

______

_________

Badge Name(s):_____________________________________, _____________________________________

o All Events except Educational Sessions

‰$195 each ‰Child $85 each (7-14 yr)

______ ______

_________ _________

Badge Name(s):_____________________________________, _____________________________________ Badge Name(s): Child ‰______________________________, Child ‰_______________________________

p Friday Only (Educational Sessions & Expo)

‰$195 each

______

_________

q Friday Night Expo Only

‰$105 each ‰Child $50 each (7-14 yr)

______ ______

_________ _________

Badge Name(s):_____________________________________, _____________________________________ Badge Name(s): Child ‰_______________________________, Child ‰______________________________

r Saturday Night Banquet Only

‰$95 each

______

_________

Badge Name(s):_____________________________________, _____________________________________

s Raffle Ticket - $10,000 Grand Prize

‰$100 each

(10 Winners - You do not have to be present to win)

______

_________

t Kid’s Only Party

Name(s):____________________________Age______, _________________________Age______ (Age 2-12, Saturday, August 4th, 6:30-9:30pm)

PAYMENT INFORMATION: FULL PAYMENT MUST ACCOMPANY REGISTRATION FORMS TOTAL $ AMOUNT

‰ Check Enclosed (Please make payable to CIADA)

Credit Card #

‰ VISA

‰ Mastercard

Expires ____________________ V-Code __________________

Credit Card Billing Street Address _______________ ________________________ City,State,Zip_______________________ ___________________ Name on card_________________________________________________ Email (for receipt)_____________________________________________ Signature_____________________________________________________ IN THE EVENT OF CANCELLATION, NOTICE MUST BE POSTMARKED BY JULY 2ND FOR A REFUND MINUS A $25.00 CANCELLATION FEE PER PERSON. NO REFUND WILL BE GIVEN FOR CANCELLATIONS POSTMARKED AFTER JULY 2, 2012.

MAIL OR FAX THIS FORM TO:

HOTEL INFORMATION:

CIADA P.O. Box 1088 Harrisburg, NC 28075 Fax: 800-992-4232

Reservations: Marriott Grande Dunes Resort Myrtle Beach, SC 29575 (800) 644-2881

RATES: Group: CIADA Room rate: $205 per night Rate cut-off July 2, 2012

APP CODE

LAST 4

AMOUNT

DATE

FOR ADMIN USE ONLY

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57TH ANNUAL CONVENTION AND EXPO

BOOTH APPLICATION-CONTRACT FOR EXHIBIT SPACE Marriott Grande Dunes Resort, Myrtle Beach, SC - August 2-5, 2012 Expo Date: Friday, August 3, 2012 Expo Duration: 6:30pm - 9:30pm

2012 Company Information

Company Mailing Address City/State/Zip

Contact Information

Telephone

Fax

Official Contact

Telephone

Email

2 FREE Registrations Product or Service

1

2

What type of product or service will you be exhibiting?

APPLICATION WILL NOT BE ACCEPTED UNLESS FILLED OUT COMPLETELY

DEADLINE June 15, 2012

COST

CIADA Member BOOTH

$ 795.00

Non-member BOOTH Will you need Electricity? Will you need High Speed Internet Connection? How many tables will you need?

ˆ 1 FREE w/booth

TOTAL

$1050.00

ˆ YES

ˆ NO Extra Table 1 ˆ 2 ˆ

ˆ YES

ˆ NO

$ 300.00 $ 25.00 each

Total Booth Registration Fees Due

Payment Information

TOTAL DUE

$

ˆMastercard

ˆ Check Enclosed (Please make payable to: CIADA)

ˆVISA

Expires ___________

Credit Card #

V- Code ___________ Credit Card Billing Address___________________________________________________________________

APP CODE

LAST 4

AMOUNT

DATE

Credit Card City,State,Zip____________________________________________________________________ Name on card__________________________________Signature___________________________________ Email (for receipt)__________________________________________________________________________

FOR ADMIN USE ONLY

The undersigned acknowledges receipt of General Information and hereby makes application for exhibit space during Expo 2012, Marriott Grande Dunes Resort, Friday, August 3, 2012. I the undersigned have received, read and agree to comply with the Official Rules and Conditions of Contract that accompany the application. Exhibitor understands that exhibit space shall be at the discretion of Show Management. No space will be reserved or assigned until application and payment are received. Applications by fax will be accepted only if payment is made by credit card. Print Name & Title___________________________________________________________________________________________________ Signature

_________________________________________________ Date_____________________________________________

APPLICATION WILL NOT BE ACCEPTED UNLESS FILLED OUT COMPLETELY AND ABOVE IS SIGNED. Mail with payment to

CIADA, Attn: Catherine Neely, P.O. Box 1088, Harrisburg, NC 28075 Fax: 800-992-4232

Questions may be emailed to cneely@theciada.com. 35

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UPCOMING   NC DEALER CLASSES  1‐800‐432‐4232 

 

NC CONTINUING EDUCATION – 6 HR Jun 4, 2012  Harrisburg  Jun 12, 2012  Raleigh  Jun 20, 2012  Kenly  Jun 26, 2012  Greensboro  Jul 10, 2012  Harrisburg  Jul 17, 2012  Raleigh  Jul 25, 2012  Kenly  Aug 3, 2012  Myrtle Beach, SC  Aug 9, 2012  Statesville  Aug 15, 2012  Raleigh  Aug 22, 2012  Kenly  Aug 28, 2012  Harrisburg  Sep 6, 2012  Greenville  Sep 11, 2012  Greensboro  Sep 19, 2012  Smithfield  Sep 25, 2012  Harrisburg 

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  Jun 14‐15, 2012  Harrisburg  Jul 12‐13, 2012  Harrisburg  Aug 16‐17, 2012  Raleigh  SC PRE‐LICENSING – 8 HR  Jun 28, 2012  Lexington  Jul 19, 2012  Lexington  Aug 30, 2012  Lexington 

Advanced Ticket Sales Saturday, August 4th 57th Annual Convention Myrtle Beach, SC 1st ticket drawn 2nd ticket drawn 3rd ticket drawn 4th ticket drawn 5th ticket drawn

$1000.00 $ 500.00 $ 250.00 $ 200.00 $ 100.00

$10,000.00 GRAND PRIZE

6th ticket drawn 7th ticket drawn 8th ticket drawn 9th ticket drawn 10th ticket drawn Grand Prize Winning Ticket Salesperson

$ 200.00 $ 250.00 $ 500.00 $ 1000.00 $10,000.00 $ 250.00

Not Tax Deductible for Federal Income Tax purposes but may be deducted as a regular business expense. You do not have to be present to win.

CAROLINAS INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION

Date and Place of Drawing: August 4, 2011 Myrtle Beach, SC

Not Tax Deductible for Federal Income Tax purposes but may be deducted as a regular business expense. You do not have to be present to win.

CAROLINAS INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION COMPANY NAME _________________________________________________________________

P.O. Box 1088 - Harrisburg, NC 28075 1-800-432-4232

NAME ___________________________________________________________________________

GRAND PRIZE $10,000.00

CITY/STATE/ZIP __________________________________________________________________

SPECIAL MEMBERSHIP DONATION $100.00

EMAIL __________________________________________________________________________

ADDRESS _______________________________________________________________________ PHONE __________________________________________________________________________

ONLY 399 TICKETS SOLD

CIADA

P.O. BOX 1088

HARRISBURG, NC 28075 800-432-4232

Special Membership Donation: $100.00

Fill out and mail in with payment or call CIADA at 1-800-432-4232 and tell them you want to purchase a $100 ticket!

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FRONT OF CARD

VIP CIADA MEMBER EACH BLOCK IS GOOD FOR ONE BUY OR SELL FEE UP TO $100.00

BACK OF CARD

CAROLINA AUTO AUCTION CHARLESTON AUTO AUCTION

ABC Company, Inc. 123 Main Street Apple City, NC 28687 Dealer # 12345 Member # CC0829 Expiration: 10/01/09

MID-STATE AUTO AUCTION

ADESACHARLOTTE

MANHEIM NC KENLY MANHEIM NC KENLY MANHEIM DARLINGTON MANHEIM STATESVILLE MENDENHALL AUTO AUCTION

Carolinas Independent Automobile Dealers Association

VIP Sponsors

Member Hotline: 1-800-432-4232

GREENSBORO AUTO AUCTION RAWLS AUTO AUCTION SPARTANBURG AUTO AUCTION SUMMERVILLE AUTO AUCTION TIDEWATER AUTO AUCTION TIDEWATER AUTO AUCTION GREENVILLE AUTO AUCTION

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5/21/12 9:23 AM


COMPLIANCE OVERDRIVE

Reducing the Impact of Consumer Complaints The concept or image of the “complaint department” isn’t anything new, and has provided fodder for jokes and comic strips over the years. But the decision by the Consumer Financial Protection Bureau (CFPB) to expand its consumer complaint system to include complaints regarding vehicle and consumer loans is no laughing matter. If you haven’t been to the site yet, consider taking a look. The site, www. consumerfinance.gov/complaint, makes it very easy for anyone to register a complaint. It asks for a description of what happened, the desired resolution and the parties and products involved. The CFPB’s decision to start accepting and reviewing complaints related to vehicle loans should get your attention for a few reasons. First and foremost, it signals that the CFPB is gaining momentum and is ready to try to identify

and resolve current problems in the industry – and to prevent future ones. Second, the complaint process opens a whole litany of questions about how the CFPB will respond to complaints and how dealers will be involved. We don’t know much about the process yet, but hope the CFPB will provide more detail soon. For now, the question all dealers should be asking themselves is, “How do I avoid complaints in the first place?” It seems consumer finance complaints can originate in at least three ways: • You did something wrong and the customer complains about it. • The customer didn’t understand the agreement and thinks you did something wrong as a result. • You did everything right, but the customer has unreasonable expectations and complains. You can take steps to avoid or reduce the impact of all three scenarios, particularly when it comes to finance and insurance (F&I) processes. You did something wrong Customers should complain if you misrepresent, overstate or lie about the products and services you provide or the nature, reason and amount of charges. If you are running your business that way – or you have a renegade employee who is committing such acts – you should expect whatever consumer complaints, lawsuits and/or criminal charges come your way. The complaints and the liability they bring can be avoided if you run an honest and high-integrity business. You also need internal oversight, management and audit processes to help discover and eliminate any employee misconduct. Customer didn’t understand Some reported court cases I’ve read seem to be based on a lack of consumer understanding that spun out of control. The dealer didn’t necessarily do anything wrong, but the consumer seemed surprised at having to pay for cover insurance, or the gap amount, or having a vehicle repossessed, or any of a number of other predictable outcomes. The financing documents generally cover the fees, responsibilities and consequences, but the consumer didn’t

read or understand them until long after the documents were signed. In one recent case, the consumer asserted he hadn’t read the retail sales contract or been given time to read it. He said he simply signed and initialed where he was told to. He later complained and sued regarding a number of obligations he hadn’t understood, and the lawsuit didn’t turn out well for the dealer. One strategy to avoid this would be to take the time at closing to educate the consumer. You could point out key provisions of the documents, such as late payment provisions, failure to insure, and conditions of and consequences of default. You could emphasize the importance of reading the documents and asking questions before signing, and back it up with a willingness to give consumers time to read and ask basic questions. The idea is, if you tell the consumer what happens on default, he or she is not surprised – and is less likely to complain – if the car is repossessed. Customer is unreasonable There will always be unreasonable customers whose expectations far exceed the terms of your sales agreements, warranties and commercial reasonableness. With those folks, you might not be able to avoid complaints. However, a regulator is more likely to conclude that a complaint is unreasonable if its investigation shows you run an honest, high-integrity business, have compliant processes and documentation in place, work hard to educate customers and set appropriate expectations. While you can’t always please everyone, running a high-integrity business and educating your customers will undoubtedly help prevent customer complaints. The more positive view is that you won’t just be avoiding complaints and mitigating reputational risk, you will be building customer satisfaction and retention. Either way, it’s an investment well worth making.

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 Auto Dealer News