Issuu on Google+

CIADA INSIDER

COLORADO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION

SEPTEMBER/OCTOBER 2011

THE POWER OF ATTORNEY AUTHORITY ALSO The 3 Dimensions of Mobile Marketing for Dealers PLUS Understanding Buy Here-Pay Here Customers

DALLAS, TEXAS Permit No. 2079

PAID

PRSRT Standard U.S. Postage

1

w w w . c i a dWa W .o Wr. Cg I

CO_0911.indd 1

ADA.ORG

SEPTEMBER/OCTOBER 2011

CIADA

INSIDER

8/22/11 2:22 PM


CO_0911.indd 2

8/22/11 2:22 PM


INSIDE

MAGAZINECONTENTS ADESA 7 6 The Power of Attorney Authority AST 14 8 The 3 Dimensions of Mobile Marketing for Dealers AutoTrader.com Inside Back 1 0  Understanding Buy CoverHere Customers Here-Pay Cars.com 5 GoldStar GPS Inside Front Cover Lobel Financial Corporation 11 BOARD OF Loveland Auto Auction 19 DIRECTORS Manheim Colorado Back Cover Manheim.com 17 PRESIDENT Peppe DeMarco Protective 13 Highline Motors Smart Auction 970-206-9963 9 pdemarco@highlineweb.com United Acceptance 15 TREASURER Dave Cardella Cardella’s Car Deals 303-887-8977 Dcard65724@msn.com SECRETARY Dean Strawn Autotrek, Inc. 303-934-5600 Dstrawn@autotrek.com CHAIRMAN Don Walker Walker Investments LLC 303-359-3092 Don.walker@comcast.net

ADVERTISERSINDEX ADESA..............................................................................5 AutoTrader.com .....................................Inside Back Cover Chase............................................................................. 15 GoldStar GPS.........................................Inside Front Cover Kelley Blue Book ........................................................... 13 Lobel Financial Corporation ............................................ 7 Loveland Auto Auction................................................... 17 Manheim Colorado.......................................... Back Cover Manheim.com ................................................................ 19 Protective ....................................................................... 11 Smart Auction................................................................... 9 United Acceptance ........................................................ 16

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.

CIADA INSIDER IS PUBLISHED 6 TIMES PER YEAR BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE 817-640-3838. PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., ARLINGTON, TX 6006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF CIADA INSIDER 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 © 2011 BY NIADA SERVICES, INC.

STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Mike Harbour • mharbour@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing

Business is Getting Better

The used motor vehicle industry is alive and well, and news of independent dealer sales eclipsing franchise dealer sales of used autos over the last few months is even more encouraging. The 13th edition of NIADA’s Used Car Industry Report brings you a snapshot of all of this activity and provides valuable insight in all aspects of dealer operations. The complete 2011 edition, unveiled at NIADA’s 65th Annual Convention & Expo last month, is available for viewing and download at www.niada.com/publications. 2011

A NIAD

USED

CAR

STRY INDU

RT REPO

1

5/27/11

2:49 PM

m a.co .niad www

.indd 1

UCIR_2011

Westlake Names Q2 Top Auction Winners

A

uctions in Alabama, California, Colorado, Idaho and Nevada won top honors from Westlake Remarketing for their service during the second quarter. “We continued to see strong sale performance in the western states during the second quarter” said Bill Walters, vice president of remarketing. “As such, our top auctions held relatively stable compared to Q1.” Taking the overall top position was Norwalk (Calif.) Auto Auction, followed by Manheim (Las Vegas) Nevada which had held the top spot for four consecutive quarters. Besides strong sale results, Norwalk was recognized for excellent service. “The staff at Norwalk makes my job much easier by going above and beyond,” said Brad Hall, regional auction representative. ABC Birmingham (Ala.) retained its position as Top Service Auction. Dirk Grammel, regional auction representative, said “they are my most consistent auction for vehicle processing and sale preparation.” Dealers Auto Auction of Idaho continued to top the rankings in Westlake’s Dealer Loyalty Program. “We have a strong partnership with Dealers Idaho through the Loyalty Program,” Walters added. This quarter, Westlake added a category for Most Improved Auction. “We wanted to recognize the auction that showed the best overall improvement throughout the quarter,” Walters said. ADESA Colorado Springs (Colo.) took this position with a solid improvement in sale results. Regional Auction Representative Steve Gunsberger also highlighted strong service grades in contributing to the auction’s overall performance. Westlake President Ian Anderson offered congratulations to all the Q2 Top Auctions. “As we head into the second half, we look forward to working with all of our auction partners into making 2011 a record year,” he said. “A hat tip to our Q2 top auctions and congratulations to ADESA Colorado Springs for their charge up the rankings.

Edmunds.com Names Best Bets on Used Autos for 2011 Edmunds.com, the premier online resource for automotive information, released its 15 best used vehicle bets for 2011 in June. A total of 11 makes are represented on the list, with four makes (Ford, Honda, Hyundai and Toyota) each contributing two models.

BY SEGMENT, THE WINNERS ARE:

•Compact Sedan: 2004-2009 Hyundai Elantra •Midsize Sedan: 2004-2009 Nissan Altima •Large Sedan: 2006-2009 Hyundai Azera •Coupe: 2004-2009 BMW 3 Series •Convertible: 2004-2009 Mazda Miata •Wagon: 2004-2009 Pontiac Vibe •Compact SUV/Crossover: 2004-2009 Honda CR-V •Midsize SUV/Crossover: 2004-2009 Ford Explorer •Large SUV/Crossover: 2004-2009 Chevrolet Tahoe •Minivan/Van: 2004-2009 Honda Odyssey •Compact Truck: 2004-2009 Toyota Tacoma •Large Truck: •Luxury: 2004-2009 Infiniti G35/G37 •Hybrid: 2004-2009 Toyota Prius •Sport Compact: 2004-2009 Subaru Impreza WRX A team of Edmunds.com editors assembled the list, which emphasizes the most important criteria to consider when researching and deciding on a used vehicle: reliability, safety, value and availability. Eligibility was limited to vehicles ranging in age from 2 to 7 years. For more details on Edmunds.com’s selection process and for a brief description of all the cars on this year’s list, visit 2011 Used Car Best Bets at www.edmunds.com/car-reviews/best-used-cars.html.

3

w w w. c i a d a . o r g

CO_0911.indd 3

SEPTEMBER/OCTOBER 2011

CIADA

INSIDER

8/22/11 2:22 PM


SECOND QUARTER 2011

ECONOMY:  TEMPORARY  SLOWDOWN Temporary  factors  such  as  the  Japanese  earthquake,  a  spike  in  oil  prices,  the  debt  ceiling  debate,  and  European  debt  problems   reduced  economic  growth  to  about  two  percent  at  an  annual  rate  in  the  first  half  of  this  year.  While  we  expect  growth  in  the   second  half  to  accelerate  as  the  temporary  problems  lessen,  growth  will  continue  to  be  constrained  by  the  significant  drag  that   the  absence  of  a  housing  recovery  has  had  on  the  strength  of  the  economic  expansion.    However,  extremely  low  levels  of  new   construction  are  reducing  the  overhang  of  available  homes.  With  fewer  houses  available,  and  higher  rents,  low  home  prices,  low   mortgage  rates,  and  a  growing  population  boosting  demand,  we  expect  a  significant  move  up  in  new  home  construction  next  year.     In  addition,  as  business  sales  continue  to  grow  corporations  and  banks  will  begin  to  increase  their  support  of  the  expansion  by   using  their  massive  cash  balances  to  invest,  hire,  and  make  loans.   NEW  VEHICLE  SALES:  DOWN,  BUT  NOT  OUT   New  light  vehicle  sales  in  the  second  quarter  declined  to  12.1  million  at  a  seasonally  adjusted  annual  rate  from  13  million  in  the   first  quarter.    Despite  the  seasonally  adjusted  quarter-­‐to-­‐quarter  decline,  second  quarter  sales  were  up  7.5%  from  the  previous   year.   The   second   quarter   slowdown   can   be   traced   to   a   combination   of   higher  gas   prices,   a   weak   job   market,  and   supply   problems   related  to  the  Japanese  earthquake.     Increased  supply  availability  of  Japanese  models  for  purchase  and  comparison  is  expected  to  result  in  higher  new  vehicle  sales   levels  in  the  second  half.  As  the  industry  normalizes  and  the  labor  market  improves,  new  vehicle  sales  are  forecast  to  reach  the  15   million  level  next  year.   USED  VEHICLE  SALES:  SALES  WEAKEN,  BUT  PRICES  FIRM   Following   the   decline   in   new   vehicle   sales   and   the   resultant   lack   of   trade-­‐ins   moving   into   the   used   market,   year-­‐to-­‐year   retail   used   vehicle   sales   weakened   in   the   second  quarter.    For  the  first  half  of  2011,  used  car  sales   were   up   3.5%   compared   to   4.2%   in   the   second   half   of   2010.   Reflecting   a   lack   of   supply   relative   to   demand,   used   car   retail   prices   have   moved   up   sharply   in   the   last   few   months   with   the   second   quarter   up   4.2%   and   June   up   over  5%.     AUCTION  VOLUME:  DISAPPOINTING   Second   quarter   auction   volume   declined   11.2%   year-­‐to-­‐ year   after   dropping   7.8%   in   the   previous   quarter,   as   smaller  increases  in  dealer  consignment  were  more  than   offset  by  large  declines  in  other  categories.   Flat  prices  resulted  in  a  similar  decline  in  gross  value  as   in  volume     Regions:  Volume  in  the  Northeast  and  Southeast  regions   declined   the   least   in   the   second   quarter,   with   the   Northeast   doing   substantially   better   than   the   other   regions  in  the  first  half.  

 

TYPE:   Past   large   declines   in   new   sales   into   leases   and   rental   cars   are   continuing   to   reduce   overall   auction   volume,   with   fleet/lease   and   manufacturer/factory   both   down   sharply   in   the   second   quarter.     Weak   current   new/used   sales   was   reflected   in   the   smallest   dealer   consignment   gain   in   three   quarters,   while   the   improved   economy   reduced   repossession   volume   by   over   20%   for   the  second  quarter  in  a  row.    

4

SEGMENT:   The   decline   in   gas   prices   was   quickly   reflected   in  a  relatively  good  performance  for  SUVs.  Large  declines   in   CUVs   and   passenger   cars   probably   were   related   to   problems  in  supply  from  Japanese  dealers.   AUCTION  PRICE:  FLAT   Overall,   second   quarter   average   auction   prices   were   flat   with  last  year.   C  I A D A

CO_0911.indd 4

INSIDER

SEPTEMBER/OCTOBER 2011

 

1  

w w w . c i a d7/27/11   a.or g

8/22/11 2:22 PM


CO_0911.indd 5

8/22/11 2:22 PM


FACTS LAW

The Power of Attorney Authority BY C H E L L E E P P E R S O N, AC C U R AT E AUTO TITLE SPECIALISTS, LLC

Chelle Epperson of Accurate Auto Title Specialists, LLC, may be reached at Facebook. com/AATS.LLC or http://www.cindytitles.com.

B

y definition, this term appears self-explanatory as defined, “The authority to act for another person in specified or all legal or financial matters.” In Colorado, motor vehicle dealers, financial institutions and individual purchasers have a common understanding that once acknowledged, notarized and delivered, the power of attorney grants authorization to transfer title ownership between parties. But there is another part of the process becoming misconstrued as an acceptable practice as well: unwitnessed signatures by Colorado notaries to validate and authorize a power of attorney. Personally, I’ve worked with the motor vehicle power of attorney form and watched it progress from the yellow form of the 1990s which was validated under penalty of perjury (this form allowed a new height of forgeries and non-compliance issues to force motor vehicle sales) to the more sophisticated and reliable DR 2174 secured form and the DR 2175 PDF version. The secured form is used more specifically for licensed dealers where the PDF version can be used by all other authorities.

THE POWER OF ATTORNEY OFFERS A BENEFIT EXTREMELY USEFUL FOR CUSTOMERS WHO NEED AN AGENT TO ACT ON BEHALF OF THEIR BEST LEGAL INTEREST IN RELATION TO THEIR MOTOR VEHICLE TITLE. Some of the differences between these two forms besides their obvious formats are most importantly secure vs. unsecured. The DR 2174 is a secure form in triplicate used mostly by dealerships, which includes an odometer disclosure statement and perjury statement for certifications. DR2175 form protects the State of Colorado by providing a notarycertified document encompassing secure and verifiable requirements, applicable powers, termination date and explicit disclosures and certifications that inform the agent and grantor of their duties incorporated into one form. The main similarities are the forms attempt to advise the importance of

making “false statement,” “certify under penalty of perjury” and “assumes the fiduciary and other legal responsibilities” necessary in compliance with legal document transfer. Colorado Law Section 15-14-705 and other related ruling are contingent on “providing that the signature on a power of attorney is presumed genuine if acknowledged.” The key cohort, where mandates turn to misconception, is defined by the notary whose responsibility is to witness the signing in lieu of the legal party authorizing power of attorney. Once endorsed, the notary validates that the legal party’s signature was actually applied to the power of attorney document, in front of them, and the seal and stamp reinforce the notary certification. Unfortunately in some cases, a dealer that employs a title clerk or a notary has found it convenient, when in a bind and to get the deal through to avoid code violations, financial obligations and deadlines, it’s OK to have the document signed and mailed to the dealership for notarization. This practice may be especially abused when performing business with an out-of-state client. The whole ideal of the power of attorney is based on acceptance in good faith that the document is valid. To process any other way is unethical for the dealer, the notary and the titleholder. Colorado Law Section 15-14-720 highlights the notary’s obligation to protect the integrity of the transaction through good faith in verifying signature as a legal witness. As an employer under Section 15-14-742 (6), “further protection is provided…for persons that conduct activities through their employees.” In other words, it’s extremely negligible to permit an employee to act out of accordance by Colorado law. The power of attorney offers a benefit extremely useful for customers who need an agent to act on behalf of their best legal interest in relation to their motor vehicle title. Acting ethically and responsibly is the best way to deter instances of fraud that avoid consumer complaints, code violations and civil suits. The DR 2174 form can be ordered at www.coloradodealers. org/orderform.php. The DR 2175 also can be found at the previous site but more commonly downloaded at www. colorado.gov/cs/Satellite/Revenue-MV/ RMV/1211879852491.

Learn

More

VISIT: www.colorado.gov/cs/Satellite/ Revenue-MV/RMV/1211879852491

6

CIADA

CO_0911.indd 6

INSIDER

SEPTEMBER/OCTOBER 2011

w w w. c i a d a . o r g

8/22/11 2:22 PM


CO_0911.indd 7

8/22/11 2:22 PM


FACTS

The 3 Dimensions of Mobile Marketing for Dealers BY CHAD GOODSON, PROCESS IM PROVEM ENT M ANAGER, CARFA X

D

id you know there are about 300 million mobile phones in the U.S. active today? That’s practically one for every American. We rely on smartphones to help do our jobs, keep up with current events and shop for things like used autos. Indeed, phones today can do almost anything and are the constant center of attention for many of us. The prominence of our phones provides greater opportunity for dealers to reach potential customers more efficiently and effectively. However, you need a proven search marketing strategy to successfully capture the attention of this massive audience and sell more vehicles. If you’re an independent dealer, you need to know the three dimensions of mobile marketing. 1ST DIMENSION - YOUR MOBILE WEBSITE

You need a mobile website to stay competitive in today’s used vehicle marketplace. Why? Customers expect you to have one. A recent survey showed

TO HELP SHOPPERS FIND YOUR MOBILE SITE WHILE SEARCHING, YOU’LL WANT TO USE KEYWORDS

88 percent of mobile phone users said they’d be more likely to buy a vehicle from a dealer with a mobile website. Having a mobile website can significantly increase your ability to engage potential customers and sell autos. However, not having one can seriously limit your ability to compete with tech-savvy dealers. When it comes to the design of your mobile website, simplicity is crucial. It should have minimal words and pictures. Then, visitors will feel comfortable browsing your inventory on their phones. Try using touchable text and large buttons. That’ll make it easier for visitors to ‘thumb-surf’ through your site and contact you. Don’t hide critical information such as your phone number or email address in a graphic. Remember, visitors are likely to abandon your mobile site if they can’t easily access information they want. If you have a mobile website but don’t feel like you’re getting enough value yet, it may pay to consider mobile marketing resources such as those offered by AutoRevo. The company’s proven techniques help dealers boost online response rates so they can sell more. For example, some dealers use AutoRevo mobile tools to help sell inventory on Facebook Marketplace or eBay. Other dealers like to track performance metrics of their mobile website and paid search campaigns to help identify areas of their business that need improvement. 2ND DIMENSION – WHY LOCAL SEARCH IS VITAL

Now that you know how valuable your mobile website can be, it’s time to start promoting it. Then, Internet search engines and more shoppers can find you online. Focus on local search marketing – it’s your best opportunity to see results fast. Did you know researchers saw a 500-percent increase in mobile searches from 2008-2010? Not surprisingly, they found Google to be the most frequently used search engine. So make sure your dealership and mobile website are visible on Google Places. Then, shoppers can find you faster. Luckily, claiming your business listing with Google Places is a free, straightforward process – just follow the instructions online at google.com/ places. To help shoppers find your mobile site while searching, you’ll want to use keywords on Google Places such as: used cars, your city, your dealership name, and, for franchise dealers, your OEM affiliation. Also, include your

local phone number and a link to your mobile website. You can add up to 10 photos and five videos on Google Places. Use these as opportunities to show customers why your dealership is the best place to buy. For example, the logo used by Carfax Advantage Dealers helps them stand out and build confidence with online buyers. It shows shoppers that every auto sold comes with a free Carfax Vehicle History Report. The power of a trusted brand can give you an edge over other dealers in your area. Important: When it comes to search marketing, it’s important to avoid duplicate content between your main and mobile websites. Otherwise, it could have a negative impact on your search rankings. In other words, don’t run your mobile website on the same exact URL as your main website. Try using variations like: m.yourdealership.com, mobile. yourdealership.com or yourdealership. mobi to make your mobile URL appear different to the search engines. Without a unique web address, your mobile site runs the risk of penalty for duplicate content by Google. 3RD DIMENSION – QR CODES AND THE FUTURE

If you’re ready to try something new, tell your marketing team to include a Quick Response (or QR) code with your next newspaper or print advertising opportunity. It can instantly turn an offline consumer into an online shopper. Today, QR codes are one of the hottest trends in mobile marketing. These black and white barcodes are generally the size of postage stamps, and link users to mobile websites. You simply scan a barcode with your smartphone from a printed piece and are sent to a specific mobile website. It’s great for marketing because it’s a curious way to get consumers to interact with your dealership. A relatively new technology, QR codes saw a reported 1,200-percent increase in scanning from July to December 2010. This fast and engaging marketing method could be the way you take business to the next level. Most of us couldn’t get through the day without our smartphones or mobile devices. Yet many independent dealers haven’t even attempted to reach this massive mobile audience. With so much opportunity out there, you need the right mobile marketing strategies in place to engage a greater number of shoppers and sell more vehicles.

8

CIADA

CO_0911.indd 8

INSIDER

SEPTEMBER/OCTOBER 2011

w w w. c i a d a . o r g

8/22/11 2:22 PM


CO_0911.indd 9

8/22/11 2:22 PM


BHPH

Understanding Buy Here-Pay Here Customers 2 0 11 B H P H B U Y E R S T U D Y F R O M AUTOTR ADER.COM

I

The Findings Four out of five BHPH customers conduct research before visiting the dealership. According to the study, 81 percent of BHPH vehicle buyers said they performed either some or a great deal of research as part of the car shopping process before going to a dealership compared to the 19 percent who stated they conducted very little research.

First Step in the Shopping Process

n October 2010 and January 2011, the National Alliance of Buy Here-Pay Here Dealers (NABD) and AutoTrader. com teamed up for a groundbreaking study to define the consumer profile of the average BHPH customer and to understand the unique shopping needs Key Messages to Communicate of this customer segment. The two-part Focus on Approval: Since approval is a BHPH shoppers’ top con study included qualitative focus groups approval should take precedence in BHPH dealer advertising – b conducted in Los Angeles and Dallas and a national quantitative online survey Talk about Speed of Process: When making a dealership selectio among 606 BHPH buyers who purchased Seventy percent of BHPH shoppers shoppers regularly use the Internet; that’s as much as traditional Seventy percent of BHPH interested finding a dealer who can handle the vehicle purchase p within the previous 18 months. shoppers foruse general However, buyers do not use the Internet for vehicle regularly the purposes. Internet; that’s BHPH as carstudy. The good news is 83 percent of BHPH dealers complete th The results of this study affirm for the shopping as much as traditional much as traditional shoppersauto for buyers. general or less. As a result, this message is an important one to include in first time many common perceptions purposes. However, BHPH car buyers do Understanding Here-Paycommunity Here Customers: about “Get Your Car Less 2 Hours!” among the Buy BHPH Seventy percent of BHPH use the Internet; that’s as in much as Than traditional not use the Internet for shoppers vehicle regularly shopping 2011 BHPH Buyer Study from AutoTrader.com shoppers for general purposes. However, BHPH car buyers do not use the Internet for vehicle the priorities and behaviors of BHPH asshopping much asastraditional auto buyers. Consider Reporting Customer Payments to Credit Bureaus: Only much as traditional auto buyers. customers. Word count: 619There are also some new customers’ payments appear on their credit report; however, 63 p findings about their Internet usage as In October 2010 and January 2011, the National Alliance of Buy Here-Pay Here Dealers would like their payments reported. As a result, BHPH dealers sh well as the amount of research BHPH (NABD) and AutoTrader.com teamed up for a groundbreaking study to define the consumer such as, “We Can Help You Rebuild Your Credit.” Just be sure, shoppers are conducting prior to visiting profile of the average BHPH customer and to understand the unique shopping needs of this you can follow through on it. Also, don’t forget to vet this messa segment. The two-partwe studyidentify included qualitative acustomer dealership. Finally, key focus groups conducted in Los Angeles and Dallas and a national quantitative online survey among 606 BHPH buyers who messages BHPH dealers can focus on to purchased within the previous 18 months. more effectively target their advertising Key Messages to Communicate KEY MESSAGES TO COMMUNICATE The influence results of thisBHPH study affirm for the first time many the BHPH Since approval is a BHPH shoppers’ top concern, messages about financing and shoppers during thecommon perceptions Focusamong on Approval: Focus on Approval: Since approval is a community about the priorities and behaviors of BHPH customers. There are also some new shopping process. approval should take precedence in BHPH dealer advertising – both online and offline. findings about their Internet usage as well as the amount of research With BHPHfour shoppers shoppers’ top coupled concern, messages out are of five shoppers conducting research priorBHPH to visiting a dealership with the conducting prior to visiting a dealership. Finally, we identify key messages BHPH dealers can financing should high percentage of BHPH customers already online, theabout implication is there’sapproval an opportunity for take CONSUMER PROFILE focus on to more effectively targetOF theirTHE advertising and influence BHPH shoppers during theof Process: When making a dealership selection, many BHPH shoppers are Talk about Speed BHPH dealers to reach and influence their shoppers by precedence tapping into the automotive space inonline BHPH dealer advertising shopping process. AVERAGE CUSTOMER interested finding dealer who can handle vehicle purchase process quickly, according to the with advertising messages information thatthe resonate consumer. With outashoppers of andfive shoppers boththeonline and offline. With fourfour out of five conducting research prior to–with visiting atargeted dealership coupled with the study. The good 83 percent of BHPH complete the buying processfor in two hours BHPH Buyers vs. Buyers Consumer Profile of theTraditional Average Customer high percentage of news BHPHis customers online, dealers the implication is there’s an opportunity conducting research prior to already visiting Talk about Speed of Process: When BHPH Buyers vs. Traditional Buyers or less. As a for result, this message is anhigh important to include in your advertising. It’s important BHPH dealers tothe align their advertising with thethe unique needs of BHPH BHPH dealers tocoupled reach and influence their shoppers by one tapping into online automotive spaceFor example, a dealership with making a dealership selection, many 58% Female 50% Female “Get Your Car in for Less Than 2 approval Hours!” with advertising messages and information that resonate with the targeted consumer. shoppers. The need financing drives the shopping process for BHPH shoppers. finding percentage of BHPH customers already BHPH shoppers are interested Nearly two of three BHPHiscustomers enter the process with securing financing or identifying 39 Years Old 47 Years Old online, theoutfor implication there’s an awithdealer whoneeds canof BHPH handle the vehicle It’s important BHPH dealers toPayments align advertising thewith unique aConsider dealer as Reporting their first priority. While thistheir information in line what37the BHPHof industry Customer to Creditis Bureaus: Only percent BHPHhas opportunity for BHPH dealers to reach purchase process quickly, according to shoppers. The need for financing approval drives the shopping process for BHPH shoppers. <$50k Annual >$50k Annual Income long suspected, the key is to align your advertising messages with the shopping of your customers’ payments appear on their credit report; however, 63 percent ofpriorities BHPH customers and influence their shoppers by tapping the study. The good news is 83 percent Nearly two out of three BHPH customers enter the process with securing financing or identifying Income customer base. Effectively communicating right messages in yourshould advertising may using messages would like their payments reported. As the a result, BHPH dealers consider into the asonline automotive space with a dealer their first priority. While information is in into lineBHPH with whatdealers the BHPH industry has of complete the buying dramatically improve the chances ofthis turning a shopper anbe actual customer. such as, “We Can Help You Rebuild Your Credit.” Just sure, if you advertise message, 44% Married 60% Married long suspected, the keyand is toinformation align your advertising with the priorities of this your advertising messages that messages process inshopping two hours or less. As a result, you can follow through communicating on it. Also, don’t forget to vet this message withmay your legal counsel. customer base. Effectively the right messages in your advertising resonate the targetedProcess consumer. this message is an important one to First Stepwith in the Shopping Poor Credit Rating Excellent/Very Good Credit dramatically improve the chances of turning a shopper into an actual customer. It’s important for BHPH dealers to align Rating include in your advertising. For example, their advertising with the unique needs of “Get Your Car in Less Than 2 Hours!” First Step in the Shopping Process The Findings shoppers. The Four out of five BHPH customers conduct research before visiting BHPH the dealership. According to need for financing Consider Reporting Customer the the study, 81 percent of BHPH vehicle buyers said they performed approval either some ordrives a great deal of shopping process research as part of the car shopping process before going to a dealership compared shoppers. to the 19 Payments to Credit Bureaus: for BHPH Nearly two out of percent who stated they conducted very little research. Only 37 percent of BHPH customers’ three BHPH customers enter the process payments appear on their credit report; with securing financing or identifying however, 63 percent of BHPH customers a dealer as their first priority. While this would like their payments reported. information is in line with what the BHPH As a result, BHPH dealers should industry has long suspected, the key is consider using messages such as, to align your advertising messages with “We Can Help You Rebuild Your the shopping priorities of your customer Credit.” Just be sure, if you advertise base. Effectively communicating the this message, you can follow through on right messages in your advertising may it. Also, don’t forget to vet this message dramatically improve the chances of with your legal counsel. turning a shopper into an actual customer.

SEVENTY PERCENT OF BHPH SHOPPERS REGULARLY USE THE INTERNET

10

CIADA

CO_0911.indd 10

INSIDER

SEPTEMBER/OCTOBER 2011

w w w. c i a d a . o r g

8/22/11 2:22 PM


CO_0911.indd 11

8/22/11 2:22 PM


Independent Auctions: The Dealer’s Friend BY J O H N P O T E E T, M A N AG I N G PA R T N E R , L O U I S I A N A’S 1S T C H O I C E AU T O AU C T I O N

M

MANY

DEALERS BELIEVE INDEPENDENT AUCTIONS MAY NOT HAVE THE TECHNOLOGY OR THE PRODUCTS OF A CHAIN AUCTION, BUT THAT’S FAR FROM THE TRUTH. THE SERVICES OFFERED BY INDEPENDENT AUCTIONS RIVAL THE LATEST IN AUCTION OFFERINGS BY THE LARGE CHAINS. --- JOHN POTEET, MANAGING PARTNER, LOUISIANA’S 1ST CHOICE AUTO AUCTION

ore than half of the 316 auto auctions in the National Auto Auction Association (NAAA) are independently owned and operated. Those 176 independents make up the largest group of auctions in the NAAA and include some of the most innovative, creative entities in the industry. When it comes to customer service and dealer responsiveness, this group is second to none. Independent auctions are very similar to independent dealers because they are often family-owned businesses and may have only one location. Yet, no matter how large or small, they understand – just as independent dealers do – the importance of customer service. When dealers visit an independent auction, they are often dealing with the owner of the business; that can make a difference in how quickly issues are resolved because owners know how important it is for an independent to get things done effectively and efficiently. Many dealers believe independent auctions may not have the technology or the products of a chain auction, but that’s far from the truth. The services offered by independent auctions rival the latest in auction offerings by the large chains. Independents offer the basic services a dealer would expect from an NAAA auction, and most offer other services such as reconditioning, mechanical work, and transportation. In addition, many offer live simulcast sales, Internet sales through OVE, SmartAuction, or OpenLane, post-sale inspections, and array of floor planning services including MAFS, AFC, and DSC among others. The influence of independent auctions is felt throughout the industry. Owners and managers play pivotal roles in arbitration standards, industry legislation, electronic condition reports, and NAAA standards for certification. The impact of independents is so significant 10 of the last 15 and four of the last five NAAA presidents have come from independent auctions.

Louisiana’s 1st Choice Auto Auction sums up the independents devotion to service with one Cajun French word, “lagniappe.” Pronounced LAN-yap, it means that little something extra you get when doing business with a merchant. The auction adopted this philosophy when it opened for business in 2002 to convey to dealers they were more than customers, they are special. Managing Partner John Poteet also believes outstanding service begins with outstanding people, and the tradition of lagniappe is perpetuated by the employees’ drive to go above and beyond the customers’ expectations. An important component of Louisiana’s 1st Choice Auto Auction’s success is the commitment to the latest and best technology for their dealers. Many independent auto auctions in the NAAA are on the cutting edge of auction technology which enhances the customer experience, even when the dealer can’t see the technology in action. This goes from the latest in auction software to implementing platforms such as Auction Pipeline, AWG simulcast, Auction Access, and social networking sites such as Facebook and Twitter. As technology advances, independents are searching for better and faster ways to please their customers and make their employees more efficient. Of course, as dealers become more technologically sophisticated, auctions must respond to their needs. For example, Louisiana’s 1st Choice Auto Auction offers free Wi-Fi for dealers enabling them to use their wireless devices to get the latest information regarding in-sale vehicle information. Another important tool for buyers is the ability to buy online with a simulcast auction. However, sellers can also utilize simulcast to sell vehicles. This is a great feature allowing remote repping for dealers and institutional sellers who cannot attend the auction. According to Poteet, dealers can still buy and sell in the lanes as always, but at Louisiana’s 1st Choice, they also have the options of using simulcast, or buying and selling 24/7 with OVE, OpenLane, SmartAuction, and Auction Pipeline. This choice of buying and selling platforms is unique to independent auctions and gives dealers a greater opportunity to conduct business than any other venue.

12

CIADA

CO_0911.indd 12

INSIDER

SEPTEMBER/OCTOBER 2011

w w w. c i a d a . o r g

8/22/11 2:22 PM


CU R B S TO N I N G

Dealers Want Better Auto Transport Options from Auto Auctions

R

esults from ShipCarsNow’s 2011 survey of independent and franchise auto dealers show dealers want more auto transport options when buying vehicles online from wholesale auto auctions. Preliminary results show the number of dealers who buy pre-owned vehicles via online auction is steadily increasing year over year, and those auctions are increasingly located farther away from the dealership. More dealers report they are expanding their search for wholesale autos nationwide. In 2009, 75 percent of dealers reported they usually sourced inventory within 50 miles of their dealership and only 14 percent were shopping as far away as 500 miles or more. In ShipCarsNow’s 2011 dealer survey, 35 percent of dealers reported they shop nationally and more than half of the survey respondents said they planned to buy more inventory online in 2011 compared to 2010. So, what does this mean for online and simulcast auto auctions? ShipCarsNow reports 63 percent of dealers surveyed said they think online auto auctions should improve transportation options. Almost half said they would purchase more vehicles online if auctions improved auto transport services and increased reliability of condition reports. Suggestions that ranked highest included providing the transportation cost before or during the bidding process and the ability to see discounts for multiple vehicle shipments, as well as the ability to combine vehicles with other dealers’ for economies of scale. Dealers also reported they’d like to see multiple auto transport bids, and that price and reliability are key requirements for any auction offering auto shipping services. So, what is the bottom line? Like any savvy consumer, auto dealers want options. They want to shop where they want, and when they want. They want vehicles delivered safely, timely and economically. And they want the transaction process to be intuitive and hassle-free. Innovative auto transport companies and online auto auctions need to collaborate to develop the tools and services that dealers need.

CU R B S TO N I N G

CU R B S TO N I N G

CU R B S TO N I N G CU R B S TO N I N G

Stop Curbstoning

A Used Car Field Guide for Detecting Collision Repair

www.stopcurbstoning.com We know that used auto buyers today must navigate a minefield of It used to be fairly easy to spot the signs of a collision repair: vehicle history report form a service unscrupulous sellers and haphazardly repaired vehicles. Among the worst offenders overspray, bad color matching, and misaligned body panels. like AutoCheck, are absolutely with computers assisting with everything from frame vital steps to take before paying are “curbstoners” – unlicensed individualsNow, who andit’s asell cars to afromquick buck from straightening tobuy color matching, lot harderused to tell if a vehicle moneymake for any used car has been in a collision, especially if the repair was done well. a private party. unwary victims. That’s great if you want your car fixed after an accident. However, here are some But it makes things hard if you’re looking for a good used car. quick, simple things you That is why we put together a handy guide to help used auto buyers detect collision repair. can watch for when you’re NOTE: We’re not saying to avoid any car that’s had bodywork. out looking at cars. A vehicle that’s been properly and professionally repaired after “A Used Car Field Guide for Detecting Collision Repair,” is an online booklet One element onfull your sideof is useful tips for a minor fender-bender could be a terrific bargain. We are saying simple greed: curbstoners want to maximize their profits. between what a seller says and what his spotting subpar repair work, ensuring theretoor watch arefor disparities no disparities between what aonlyseller andto collect what After all, they need to fool asays buyer long enough the her vehicle shows. cash. So, curbstoned cars rarely get top-notch repair treatment. Of course, no one can catch all the bad cars. That’s why an the vehicle shows. inspection by a trusted, experienced mechanic, along with a

To access the booklet, visit stopcurbstoning.com.

At A Glance

Good places to look for paint overspray or excess paint include: Around electrical conduits in door jambs

A walk around the vehicle in good light will often disclose whether or not a body panel has been replaced or repainted. Look at the car from several angles to make sure the color matches across all the body panels.

Near door, hood, and trunk hinges On window and door seals Around seals and fittings in the engine compartment firewall

Look also at the reflections in the paint – factory paintwork is mirror-smooth, even when dirty or dinged up. Signs of repair often reveal themselves in a slightly rippled reflection, or a reflection that doesn’t exactly line up across two body panels. Be sure to look at reflections from several angles. If the car is so dirty that you can’t see reflections, you might need to ask for the car to be washed. While you’re sighting down the sides of the car, check to make sure the body panels all fit flush, and that the gaps between the panels are even from top-to-bottom and side-to-side.

Along the trim pieces inside wheel wells

Sun damage typically affects large body surfaces like hoods and roofs. When you see small patches of peeling clear-coat, especially in corners and other hard-to-reach areas, they may indicate a poorly prepped paint job. At the same time, beware of too-perfect paint. Even a garaged, well-cared-for used vehicle will have small paint chips and even minor dings. If the chin fascia beneath the front bumper is pristine, it may have been recently replaced or repainted.

1

For more information about ShipCarsNow’s 2011 Dealer Survey, visit www.ShipCarsNow.com; the complete survey report will be available soon.

13

w w w. c i a d a . o r g

CO_0911.indd 13

SEPTEMBER/OCTOBER 2011

CIADA

INSIDER

8/22/11 2:22 PM


DRIVING TR AFFIC

Telling Your Value Story with Video Online video continues to increase in popularity among auto shoppers. Video

brings vehicles to life in a way photos just can’t. Sight, sound and motion make it more emotional and engaging for viewers. As a result, video is a powerful merchandising tool that can help influence shoppers to not just buy your make and model, but to buy it from you.

Video Facts

• M  ore than 75 percent of Internet users watch video online • 5 0 percent of consumers watch videos while shopping for a car • 6 6 percent of car shoppers would watch more video if it were available • 7 2 percent of shoppers are more likely to buy a product or service when a video is used

voiceover with a custom script. It’s a very convenient and easy tool that can effectively showcase any vehicle you are trying to sell.

Leverage Manufacturer Assets

You don’t always have to make a homemade video to communicate the message. Most OEMs will have video assets available for your use, so use them when you can’t use the other two options I mentioned already, or use them in conjunction with a do-it-yourself or pan-and-scan video. If you are participating in a manufacturer’s certified pre-owned program, it’s a great opportunity to leverage these assets as many manufacturer’s have commercials specifically dedicated to the CPO message.

What You Can Do

First, let’s talk about where you should be posting videos online. It’s not just about a video’s content – the key is in the wide distribution of your videos. It doesn’t matter how good the video itself may be if it’s not being seen by auto shoppers. According to an AutoTrader.com Video Survey, vehicle shoppers say they expect to find videos on dealership sites, manufacturer sites and independent sites such as AutoTrader.com. Therefore, it is critical for automotive advertisers to place video content in front of all potential customers. Don’t forget about video sites like YouTube, too. Now that you know where you’re going to be posting your videos, let’s talk content.

Do-It-Yourself Videos

VIDEO

Do a complete video walk-around. Give shoppers a sense of what it would be like to drive and own the car. Keep videos to less than one minute. Shoppers will often lose interest if a video is too long. State the facts. Include price but keep information objective to avoid a sales pitch. Include information that cannot be gained from photos. (i.e., warranty, single owner, non-smoker, etc.) Reinforce the retention of information. Show what you are talking about (i.e., show the odometer while talking about mileage).

Use Pan-and-Scan Video

Consider using pan-and-scan videos. AutoTrader.com offers a personalized, video solution called FastAds that’s based on this technology. This option allows you to use vehicle photos and easily turn them into a virtual walk-around video, narrated by a

Merchandise Your Dealership in a Video, Too

So far, we’ve only focused on videos about your inventory, but your online marketing is about much more than the vehicles you sell. Building confidence in your capability as a dealership is just as important in getting shoppers to choose you. Tell your story. Do a store video tour and highlight amenities and departments. Show customers why you are a dealership they should do business with. Use customer testimonials videos. Build a strong image for your prospective customer. Include dealership information. Be sure to incorporate your contact information, website address, map and directions. Post your videos on a multitude of sites. Include user-generated sites such as YouTube and other social networking sites, as well as your dealership site, independent sites and anywhere else your inventory is listed. BY H OWAR D P O LI R E R Howard Polirer is the director of industry relations for AutoTrader.com. He has helped train more than 10,000 dealers in over 200 cities across the U.S. on the industry’s best practices to reach automotive consumers. He can be reached at howard.polirer@autotrader.com.

14

CIADA

CO_0911.indd 14

INSIDER

SEPTEMBER/OCTOBER 2011

w w w. c i a d a . o r g

8/22/11 2:22 PM


Used Dealers Add Rental Franchise to Supplement Business

W

hat can a used dealer to do add revenue in these challenging economic times? Surveying dealers at the recent NIADA convention in Las Vegas, we found many different approaches to this challenge of growing profits in a challenging economy. Many of the dealers we spoke with were selling service contracts, warranties, gap insurance, and credit insurance, all reputable products sold to the customer who is already purchasing a vehicle. Vehicle rental is an often overlooked program that can actually bring customers in who would otherwise not have a reason to set foot on your sales lot. Many of the dealers we spoke with at the convention that did offer rentals said it had been the difference between them surviving the tough economy of the last several years and often made the difference between the dealer principals drawing a paycheck or not. Adding a rental operation several years ago has become one of the smartest moves Joe Baldwin ever made. The owner of Baldwin Motor cars in Lafayette, Ind., bought a

Rent-A-Wreck franchise in 2000 while his retail market was still strong. At times as the market has weakened, he said, his rental operation, which he operates from the same facility as his Buy Here-Pay Here store, has kept the business a success. “Without the rental business, I would be out of business by now,” Baldwin said. “I guarantee it.” Wayne Webb, a consultant with Peer Group Resources Inc., which organizes 20 Groups for rental car operations, said by adding rental franchises to their operations, dealers have increased traffic by as many as 150 potential customers per month with only 25 rental units. Baldwin’s rental fleet represents the bulk of his inventory. He typically keeps 60 rental units and as few as 15 retail units. “When I first bought the rental franchise people laughed,” Baldwin said. “They told me I was never going to make any money with it.” His goal was an extra $5,000 a month. The rental operation earned Baldwin $100,000 in the first year. Baldwin said his key to success was buying the right inventory.

Rent-A-Wreck franchisees stock their own inventory, and more than 100 of their nearly 200 franchisees also are dealers. Mel Morris started a sales and service operation in Canton, Mich., prior to buying a Rent-A-Wreck franchise in 1992. He runs Canton Auto Sales, Mel’s Auto Clinic and Rent-A-Wreck from of the same building. “When business is good you’re selling a car every day, repairs are up and most of the rental fleet is out,” he said. “All aspects of the business feed into each other.” The increased traffic from the rental operation brings more opportunity to sell autos. He also rents a lot of vehicles to people awaiting repairs, which allows him to bid on any of their future repair jobs. “It all works together. Customers come in to rent a car, see the cars I have for sale and end up buying one from me at a later date,” Morris said. For more information about Rent-AWreck, or to find out about adding a rental franchise to your dealership, contact Andrew Iatridis at 469-939-6132 or aiatridis@ rentawreck.com.

15

w w w. c i a d a . o r g

CO_0911.indd 15

SEPTEMBER/OCTOBER 2011

CIADA

INSIDER

8/22/11 2:22 PM


FAQS

Identity Theft Prevention A Good Idea

T TO READ ADDITIONAL FAQS REGARDING THE RED FLAGS RULE, VISIT THE FTC’S SITE ON THE SUBJECT AT HTTP:// WWW.FTC.GOV/BCP/EDU/MICROSITES/ REDFLAGSRULE/FAQS.SHTM.

he Red Flags Rule requires many businesses and organizations to implement a written identity theft prevention program to detect the warning signs, red flags, of identity theft in their day-to-day operations. The staff of the Federal Trade Commission has heard from companies that are developing programs from across the country. Their questions, and the FTC’s answers, may help you develop a program for your dealership. For example, creditors or financial institutions must develop an identity theft prevention program even if they already comply with data security requirements such as the Health Insurance Portability and Accountability Act (HIPAA) or the Gramm-Leach-Bliley Act (GLB). It’s even a good idea for dealers who may not fall under a creditor or financial institution definition.

The FTC strongly encourages reasonable data security practices, but the Red Flags Rule is not a data security regulation. Good data security practices – such as collecting only the personal information you need, protecting that information, and securely disposing of what you no longer need – help ensure personal information does not fall into the hands of identity thieves. For more information on data security, visit www.ftc.gov/infosecurity. The Red Flags Rule picks up where data security leaves off. If identity thieves do get hold of someone’s personal information, they typically use it to get goods or services from unsuspecting businesses and have no intention of paying the bill. By having companies set up procedures to look for and respond to the red flags that an identity thief is trying to use someone else’s information, the rule seeks to reduce the damage crooks can inflict both on victims of identity theft and on businesses left with accounts receivable they’ll never be able to collect. While you may be able to incorporate some of your data security practices, your identity theft prevention program is a different kind of plan aimed at preventing a different kind of harm.

16

CIADA

CO_0911.indd 16

INSIDER

SEPTEMBER/OCTOBER 2011

w w w. c i a d a . o r g

8/22/11 2:22 PM


FAQS

Dealers Want Better Auto Transport Options from Auto Auctions

R

esults from ShipCarsNow’s 2011 survey of independent and franchise auto dealers show dealers want more auto transport options when buying vehicles online from wholesale auto auctions. Preliminary results show the number of dealers who buy pre-owned vehicles via online auction is steadily increasing year over year, and those auctions are increasingly located farther away from the dealership. More dealers report they are expanding their search for wholesale autos nationwide. In 2009, 75 percent of dealers reported they usually sourced inventory within 50 miles of their dealership and only 14 percent were shopping as far away as 500 miles or more. In ShipCarsNow’s 2011 dealer survey, 35 percent of dealers reported they shop nationally and more than half of the survey respondents said they planned to buy more inventory online in 2011 compared to 2010. So, what does this mean for online and simulcast auto auctions? ShipCarsNow reports 63 percent of dealers surveyed said they think online auto auctions should improve transportation options. Almost half said they would purchase more vehicles online if auctions improved auto

transport services and increased reliability of condition reports. Suggestions that ranked highest included providing the transportation cost before or during the bidding process and the ability to see discounts for multiple vehicle shipments, as well as the ability to combine vehicles with other dealers’ for economies of scale. Dealers also reported they’d like to see multiple auto transport bids, and that price and reliability are key requirements for any auction offering auto shipping services. So, what is the bottom line? Like any savvy consumer, auto dealers want options. They want to shop where they want, and when they want. They want vehicles delivered safely, timely and economically. And they want the transaction process to be intuitive and hassle-free. Innovative auto transport companies and online auto auctions need to collaborate to develop the tools and services that dealers need. For more information about ShipCarsNow’s 2011 Dealer Survey, visit www.ShipCarsNow.com; the complete survey report will be available soon.

Learn

More

VISIT: www.ShipCarsNow.com

17

w w w. c i a d a . o r g

CO_0911.indd 17

SEPTEMBER/OCTOBER 2011

CIADA

INSIDER

8/22/11 2:22 PM


FACTS

A Deal is a Deal? BY ZURICH FINANCIAL SERVICES GROUP

I

t should be no surprise to you how many federal consumer laws and regulations affect the typical automobile dealer. The Truth in Lending, Equal Credit Opportunity and Fair Credit Reporting acts are all too familiar. The same is true of regulations Z and B and the various Federal Trade Rules, including the Used Car Rule. Then, of course, there are state unfair business practice acts, common law fraud, misrepresentation and improper disclosure to consider. The fact is you must be more careful than ever to ensure a deal is put together the right way. As the stack of paperwork that must be signed by your customer grows, so does the opportunity for mistakes and mistakes can cost you money – perhaps far more money than you realize. The winter issue of The Specialist reported a recent fraud and failure-to-disclose situation where a dealer’s customer was awarded $218,000 in punitive damages (not insurable in many states) as the result of a lawsuit involving damage disclosure. The customer was told the vehicle was “in perfect condition,” “had never been wrecked” and was a “one-owner vehicle.” Evidence later proved none of these assertions were true. Take appropriate measures to protect your dealership from damage disclosure and truth in lending complaints and lawsuits. We offer the following suggestions: MANAGEMENT ISSUES

NEW FEDERAL AND STATE CONSUMER LAWS ARE PASSED EVERY YEAR, SO IT IS IMPORTANT TO UNDERSTAND AND EDUCATE DEALERSHIP PERSONNEL ON HOW TO COMPLY. This Loss Prevention Bulletin is provided for informational purposes only. Please consult with qualified legal counsel to address your particular circumstances and needs. Zurich is not providing legal advice and assumes no liability concerning the information set forth above.

• Provide extensive training to sales and F&I personnel on all consumer laws. • Have legal counsel review all sales, leasing and other applicable documents for compliance with federal, state and local laws. • Implement a vehicle sales checklist to establish standard procedures for staff. • Have customer sign or initial forms as needed. • Establish policies to address ethical business practices and ensure your management team abides by them. TRADE-INS

• Perform a title search to verify mileage, past ownership and lien holders. • Develop and use a seller’s disclosure, customer title disclosure and tradein certification or equivalent forms to document mileage, prior damage, airbag deployment, salvage vehicles, frame damage, etc. • Odometers must be inspected carefully for rollback, replacement or tampering. • Vehicle appraisers (and managers) must be diligent in evaluating trade-ins and determining prior damage manager.

AUCTION VEHICLES

• Use a title search firm or state agencies to check vehicle history. • Deal with auctions that guarantee the title is free and clean. • Don’t purchase vehicles with prior frame damage. RETAIL TRANSACTIONS

• In conjunction with legal counsel, consider developing and implementing a buyer’s arbitration agreement requiring the customer to seek relief through an arbitration process in lieu of litigation. We neither recommend nor disfavor arbitration agreements. This is a business decision that only you and your advisors can make. Note: as of Jan. 1, 1999, the American Arbitration Association (AAA) will not administer an arbitration proceeding if the signed agreement does not meet minimum standards established by its National Disputes Advisory Committee. The AAA’s Consumer Due Process Protocol includes a statement of 15 principles intended to protect consumer rights. • To avoid being held financially responsible to a creditor deemed unsecured by a bankruptcy court, process the title work promptly to ensure timely perfection in all cases within 20 days after the vehicle is delivered. • If the customers’ creditworthiness is questionable, delay the delivery as the 20 days noted above does not begin until the vehicle is delivered. • Be very cautious with deals involving out-of-state paperwork or missing titles, it may be difficult to process the necessary title paperwork • Videotape the sales transaction in the business office, but only after the customer (and your employee) voluntarily agree to be videotaped. Consult your legal counsel to determine how long the tape should be kept and the potential risk of not taping or saving all transactions. While videotaping can be a good idea, it isn’t one you should proceed to undertake without careful thought of all ramifications. New federal and state consumer laws are passed every year, so it is important to understand and educate dealership personnel on how to comply. Your legal counsel and auto dealer associations are excellent resources for keeping appraised of these new regulations. Contact your local Zurich account executive for additional information on how these laws affect your business. If you have any questions or comments, contact your Zurich account executive or the Loss Prevention Department at 800-821-7803.

18

CIADA

CO_0911.indd 18

INSIDER

SEPTEMBER/OCTOBER 2011

w w w. c i a d a . o r g

8/22/11 2:22 PM


Is Automotive Print Advertising Dead (or Dying?)

W

e have all heard the latest advertising strategy adopted by a growing number of auto dealers. Refrains from “I’m online only,” and “…print advertising doesn’t work anymore” are fairly common. There are very compelling reasons to adopt this posture as a part of an overall marketing plan for a dealership. Data suggests most auto buyers use the internet to educate themselves about manufacturers, specific vehicles and pricing. Many dealers report people to their showrooms come armed with printouts of vehicles available for sale at other dealers (even if those autos are from outside the market they are in), with the latest on rebates, trade-in values and anything else they can find online to aid in their attempts to drive the selling price downward. A dealer who uses a website, dealer feeds and e-mail leads as their sole tools for selling vehicles is missing a large portion of the buying public. Industry reports show niche publications remain a viable and effective tool for driving traffic to lots – both franchise and independent. The 2009 NIADA Used Car Industry Report, the 2008 Northwood Dealer Walk-in Study and the NADA Data Report show the Internet is the number one media source driving walk-in traffic. According to these studies, the next best driver of walk in traffic is not newspapers, radio, TV or direct mail. The report discovered the most

effective choice of media other than the Internet is classified magazines. An advertising plan that combines Internet advertising and a classified magazine provides nearly 70 percent of all walk-in traffic generated by advertising. It is critical this migration of buyers from daily newspapers to niche publications that feature the inventories of local dealers be recognized by all size dealerships. If there is an automotive classified magazine in your market, you can be sure dealers using this marketing tool are enjoying excellent response to their printed message. HOW DO WE KNOW THIS?

Telephone call tracking reports, as well as the significant number of copies of these print products that are picked up each and every week demonstrate the car-buying public rely on this form of advertising to help them in their decisionmaking process. For example, in the Bay Area, there is a print product (Bay Classifieds) that moves more than 40,000 copies every week. This publication, available in thousands of locations, is gobbled up 52 weeks a year by people who make the conscious choice to look for the latest copy. In the area around rural Oroville, Calif., Great Northern Wheels & Deals sees nearly 25,000 copies of its publication gobbled up each and every

week. Throughout California, from the Recycler in Los Angeles to The Nickel in Redding, auto buyers consistently grab their copy of these publications. If print is really dead, how do we explain this consistent demand from buyers for a print product that provides them with information from which they can make an informed buying decision? Shouldn’t we have seen an eroSion of demand for these products “…because everyone shops on the Internet?��� The publishers of these and other niche publications report strong demand for the products, and are proud of the product’s ability to generate e-mail leads, telephone calls and walk-in traffic. These print products provide dealers, large or small, the opportunity to tell a story about what makes their stores unique. Many dealers report customers walking onto lots with the print product in hand asking to see a particular car featured in a print ad. This is likely the best quality up a dealer can hope for. Contrasting that type of potential buyer to some of the Internet leads dealers receive from all over the country, we can see the local buyer carrying a local publication and talking to a local dealer is what every dealer would like to have more of. Kevin Aylmer is vice president for Target Media Partners and an IADAC associate member and supporter.

19

w w w. c i a d a . o r g

CO_0911.indd 19

SEPTEMBER/OCTOBER 2011

CIADA

INSIDER

8/22/11 2:22 PM


NIADA

NIADA’s Certified Pre-Owned Program Available to Members Nationwide GREG LEVI OF NIADA CERTIFIED ANSWERS QUESTIONS ABOUT THIS GREAT OPPORTUNIT Y FOR ALL NIADA MEMBERS.

TELL US BRIEFLY ABOUT THE CPO PROGRAM THAT NIADA HAS DEVELOPED FOR OUR MEMBERS.

NIADA sought a program that allowed its membership to compete in the certified marketplace. After several years of research and due diligence, NIADA selected NAC as its plan administrator and rolled out the program nationwide. This is significant for a couple of reasons. First, NAC has been around more than 25 years and has a solid reputation for service and a foundationally strong financial position. Second, NAC provides a Contractual Liability Insurance Policy (CLIP) to each enrolled dealer. This policy assures the dealer of zero financial responsibility in the event anything ever happens to the program itself or the administrator. NIADA certification provides the participating dealer the opportunity to present a vehicle as certified after passing a checklist. The checklist has nine categories, 31 components and the equivalent of a 100-plus point inspection.

A CUSTOMER SEARCHING FOR A CERTIFIED VEHICLE, USING THE CERTIFIED FILTER FOR THE SEARCH, WOULD HAVE NEVER SEEN AN INDEPENDENT DEALER’S INVENTORY. nce complete, the dealer simply O reports the vehicle through our online application. Once reported, the dealer is afforded the following: the ability to print a fully compliant Buyers Guide, the ability to print an elegant checklist to be used as a window sticker or online, the ability to print a free AutoCheck vehicle history report, access to an online media marketing kit and the ability to syndicate the vehicle to various portals. HOW DOES THIS PROGRAM RATE COMPARED TO OTHER CPOS OUT THERE (OEMS, ETC.)?

The NIADA certification is very comprehensive, both in terms and coverage. Coverage is for 12 months or 12,000 miles, whichever comes first. There are no deductibles…that’s right, zero deductible. Coverage is not simple powertrain coverage, but includes heating and air conditioning and even seals and gaskets to name a couple of differences.

WHAT DOES A PROGRAM LIKE THIS DO FOR AN INDEPENDENT DEALER?

Today, franchise dealers are the only dealers able to promote certified through the manufacturer. A customer searching for a certified vehicle, using the certified filter for the search, would have never seen an independent dealer’s inventory. NIADA Certified gives independents the opportunity to compete for the certified buyer. The program also builds value for the dealer at the wholesale marketplace. Representing a vehicle as certified builds value and creditability for the vehicle as it goes through the lane. As a matter of fact, OPENLANE, a premier online auction, created a specific vehicle listing category for NIADA certified vehicles. WHAT ARE THE COSTS AND SETUP FEES?

There are no set-up fees and all marketing materials are provided at no cost. Once a dealer enrolls, NIADA Certified has a variety of online training classes. One is the implementation call. Once completed, the dealer is forwarded marketing and advertising material. There is no cost to the dealer until the vehicle is retailed, at which time the limited warranty coverage begins. DO YOU PROVIDE DEALERS WITH MARKETING MATERIALS, TRAINING, ETC.?

NIADA Certified provides all material for free. Training is done online. We keep a training calendar on www. niadacertified.com. Training is consistent and we frequently offer our strategic partners the opportunity to present best practices training. Tell us about some of the endorsements this program has received from other industry partners (eBay, OPENLANE, etc.). We syndicate NIADA Certified inventory to eBay, Auttr Motors and EveryCarListed.com. These are the portals recognizing the certified program. We are constantly looking for additional portals, as well as lenders, to acknowledge the program advantages. WHAT ARE DEALERS SEEING WHO ARE USING THIS PROGRAM?

More eyeballs, more buyers, more money. If you are interested in learning more about the NIADA Certified Pre-Owned program, visit www.niadacertified.com.

Learn

More

VISIT: www.niadacertified.com

20

CIADA

CO_0911.indd 20

INSIDER

SEPTEMBER/OCTOBER 2011

w w w. c i a d a . o r g

8/22/11 2:22 PM


21

w w w. c i a d a . o r g

CO_0911.indd 21

SEPTEMBER/OCTOBER 2011

CIADA

INSIDER

8/22/11 4:01 PM


FREE DEALER EDUCATION

24/7

ONLY ON NIADA.TV

Watch where you want... ...when you want

What You See Isn’t Always What You Get

A

s an attorney, I find that many people are surprised to learn I am also a magician. It’s a fun and challenging hobby that can offer good lessons. For example, you quickly learn that things are not always what they seem. To master most techniques, you need to clearly understand what’s happening beyond the visual component. This lesson also applies to regulatory compliance. For dealerships, it particularly rings true when it comes to relationships with thirdparty service providers and their products. A company might appear to be reputable on the outside, but it could be just an illusion. There are risks involved with all third-party relationships, whether they involve backend products dealers sell to buyers, such as credit life insurance, GAP insurance, extended warranties or service contracts, or operational products dealers buy or license from third-parties, including consumer credit information, loan documents or software. One risk with third-party relationships is whether the vendor understands and satisfies its unique regulatory compliance requirements. As a dealer, do you understand where your responsibilities end and the vendor’s begin in terms of service, performance and providing any required disclosures? A vendor’s compliance failure may ultimately cause your dealership to be out of compliance too. So how do you protect your dealership’s reputation and ensure your vendors understand and are focused on compliance? Here are some questions to consider in the due diligence process:

1

• Does the vendor stand behind its products and services with a warranty or other written representations? • Does it have stable management and finances to support its obligations to you and your customers? • Does its business history suggest that it will be around several years from now to fulfill its promises? • Does it have a customer service area that is responsive to customer questions and problems? •Does it understand the laws and regulations that apply to its products and services? For example, does it know whether its product is considered insurance in your state? If it is an insurance product, is the vendor licensed to sell that particular type of insurance in your state?

Sales • Operations • F&I • Remarketing • Compliance • Legal/Regulatory • Special Features • Industry Events

PLUS: Automotive Industry News & Special Monthly Programs

www.niada.tv

• Is the vendor current on law or regulatory changes that affect its products and services (are its marketing materials and customer contracts in compliance and up-to-date)? • Is the vendor the subject of any complaints to regulators, investigations, and/or is it involved in any serious litigation? Dealers want to make sure their customers are getting the best service possible, and regulatory compliance issues can greatly impact that goal. Third-party providers may have relationships with hundreds or thousands of dealerships. Their offerings may include a number of products in multiple states, which can increase the chances for error or oversight. In a regulatory environment that’s constantly changing, the dealer needs to confirm that its vendors are keeping up with state and federal laws. A third-party provider might say the magic words you want to hear, but it’s up to you to make sure it’s not hocus-pocus. BY CHIP ZYVOLOSKI

Chip Zyvoloski is senior attorney for indirect lending at Wolters Kluwer Financial Services. For more information, visit www. wolterskluwerfs.com/indirect.

22

CIADA

CO_0911.indd 22

INSIDER

SEPTEMBER/OCTOBER 2011

w w w. c i a d a . o r g

8/22/11 2:22 PM


CO_0911.indd 23

8/22/11 4:02 PM


Two Auctions, One Location Join Manheim Colorado Every Tuesday at Our New Location: 17500 E 32nd Avenue, Aurora, CO

TUESDAY SALE: 9:00am 1700+ UNITS FEATURING:

WEDNESDAY SALE: 8:00am 2000+ UNITS FEATURING:

Featuring GM Products

BARCO As Scheduled

58

TH

ANNIVERSARY PARTY8 SALE!! TUES. h Sept. 20t

lOTS OF GIVEAWAYS!!

am

W E D N E S D A Y , S E P T E M B E R 21 S T

1STANNUAL

POKER PARTY SALE!!

Contact Patty Ernst at | 303.947.4026

Manheim Denver | 303-343-3443 | 800-822-1177 | 17500 East 32nd Avenue, Aurora, Colorado

CO_0911.indd 24

8/22/11 4:03 PM


CO_0911_O