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OCTOBER/NOVEMBER 2011

I O W A

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

STREET SMART THE CARLAWYER LSO CAFE and Green Vehicles: Their Relationship Explained A PLUS Getting to Know You – Bob Pippert

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INSIDE

DON’T BE IN THE DARK:

MAGAZINECONTENTS

KNOW WHERE TO LOOK FOR RECALL INFORMATION ON VEHICLES

INSIDE

06 Getting to Know You 08 The CARLAWYER 14 CAFÉ and Green Vehicles

Vehicle dealers needing information on factory recalls can visit www.autorecalls.us or find the manufacturer toll free numbers by going to www.autopedia. com/html/HotLinks.html and making contact with the respective automaker.

Know what recalls are impending on vehicles before you purchase them and give your customers peace of mind by checking out possible recalls before you retail the vehicle.

WHAT’SNEW

R A2Z EDUCATION SERIES - Autozone Educating the independent dealer to deliver the highest quality service levels to your customers, manage your shop efficiently, train your technicians and maximize profits. niada.tv R TURBO TIPS – Cars.com Provides Independent Dealers with practicable and actionable tips to help you sell more cars now! niada.tv R DEALER DAY - SEMA November 2, 2011, Las Vegas. This program provides the latest trends, tools and resources to sell more cars and increase the dealership’s bottom line semashow.com

ADVERTISERSINDEX ADESA.....................................................................7 AutoTrader.com...................................... Back Cover Cars.com...................................... Inside Front Cover Chase ...................................................................12 Manheim.com ......................................................13 Manheim Minneapolis.............................................5 Protective................................................................9 ShipCarsNow ........................................................15 SmartAuction .......................................................11 TD Auto Finance ...........................Inside Back Cover

IIADAOFFICE FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT JUDY WILSON IIADA • 409 EAST MARKET • PANORA, IA 50216 (641) 755-4177 • IIADA@NETINS.NET

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.

STREET SMART IS PUBLISHED 6 TIMES PER YEAR BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE 817-6403838. 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 STREET SMART OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF NIADA, DOES NOT CONSTITUTE AN EDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT© 2011 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED. 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

FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT JUDY WILSON IIADA • 409 EAST MARKET • PANORA, IA 50216 (641) 755-4177 • IIADA@NETINS.NET

Investigations Information Line

TOLL FREE: 1-866-908-4636

THIS TELEPHONE LINE RECEIVES NUMEROUS CALLS DURING THE DAY, SO AN EMAIL ADDRESS HAS BEEN ESTABLISHED WHERE QUESTIONS CAN BE SENT. THE EMAIL ADDRESS IS: invmve@dot.iowa.gov.

The Motor Vehicle Investigations Information Line provides a way for the public to request information, ask questions, or file a complaint related to investigative duties and responsibilities. This line is the primary point of contact to reach an investigator who is responsible for investigations in a specific area of the State of Iowa. To ensure accurate information is provided, the Motor Vehicle Investigations Information Line is answered by a Motor Vehicle Enforcement Investigator. The hours of operation are Monday through Friday 8:30 a.m. to 3:30 p.m. As this line receives numerous calls during the day, please leave a message if the line is busy and your call will be returned promptly.

BOARD OF DIRECTORS PRESIDENT Douglas Livy, Jr. Quality Motors of Ames, Ltd. 705 S. Duff Avenue Ames, Iowa 50010 Ph: 515-232-1780 CHAIRMAN OF THE BOARD Louise Cordes Jim Cordes Motors, Inc. 104 E. Main St., P.O. Box 68 New London, Iowa 52645 1-319-367-2271 VICE PRESIDENT David A. Farmer David A. Farmer, Inc. 1613 Franklin Center Point, Iowa 52213 1-319-848-2432 TREASURER Judy Wilson 409 E. Market Street P.O.Box 337 Panora, Ia. 50216 Ph: 641-755-4177

REGIONAL REPRESENTATIVES Merrill Hitchcock Merrill’s Garage 317 N. 8th Street Winterset, Ia. 50273 Ph: 515-462-1683 Roger Poulsen The Car Guys 1301 S.W. 7th Street Atlantic, Ia. 50022 Ph: 712-243-6915 Robert Pippert Pippert Cars & Trucks 2047 Highway T-47 P.O. Box B Gladbrook, Iowa 50635 641-473-3121 Clay Winterboer Carroll Car Credit Co. 409 E. 6th St., Box 805 Carroll, Ia. 51401 Ph: 712-792-0140

Jim Harbach J’s Auto 945 E. Main Manchester, Ia. 52057 Ph: 563-927-2811 Doug Wilson Lake Country Auto 409 East Market St. P.O. Box 341 Panora, Iowa 50216 641-755-3048 Linda Kilgore Kilgore’s Enterprises Inc. 501 E. Townline Creston, IA 50801 641-782-5512 Jeff Schneider Pocahontas Sales & Service 205 E. Elm Ave., P.O. Box 66 Pocahontas, IA 50574 712-335-4470

Kim Nelson Nelson Automotive LLC 300 Sandpiper Court P.O. Box 466 Polk City, IA 50226 515-984-9600 ADMINISTRATIVE OFFICES 409 East Market Street P.O. Box 337 Panora, Iowa 50216 Ph: 641-755-4177 Fax: 641-755-3247 Email: iiada@netins.net Toll Free: 866-962-9202

NEW MEMBER BENEFITS YES, IT COSTS TO JOIN IIADA – BUT IT PAYS TO BELONG – THINK ABOUT IT • • • •

You don’t buy a newspaper, you buy the news You don’t buy life insurance, you buy security for others You don’t buy glasses, you buy vision You don’t buy awnings, you buy shade

• Y  ou don’t buy membership in IIADA, you buy cooperation of the ablest men and women in your profession with whom you can join hands to accomplish things you could not do alone.

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FDIC SPECIAL ALERTS WEBPAGE

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The Federal Deposit Insurance Corp. maintains a special alerts page regarding questionable activity involving banks or banking products. The alerts include reports of counterfeit official checks and cashiers checks. To access the list, visit

MIDWEST AUTO AUCTION DIRECTORY

http://www.fdic.gov/news/news/ SpecialAlert/2011/index.html. Each listed alert links to a page with details about the reported activity. In the case of counterfeit documents, the detail page includes descriptions of both the counterfeit item and the bank’s valid documents. It is amazing how many financial institutions have reported counterfeit cashiers checks. Yes, there have been some in Iowa, Nebraska, Missouri, Kansas and most other states. This could prove to be a great resource for auto dealers who conduct business with out-of-state buyers.

ADESA DES MOINES 1800 Gateway Drive Grimes, IA 50111 (515) 986-1200 Fax: (515) 986-1201 www.adesa.com General Manager: Jeff Lisle Fleet/Lease Manager: Kevin Parmenter Consignment Sale every Tuesday at 9:30 a.m. Fleet/Lease Sale Tuesday 10:30 a.m. ADESA KANSAS CITY 101 S.W. Oldham Road Lee’s Summit, MO 64081 (816) 525-1100 (800) 950-2350 Fax: (816) 525-4714 General Manager: Harold Chapman Dealer Sales Manager: Tamara Kunkel Tuesday 9:30 a.m.

DES MOINES AUTO AUCTION 1530 S.E. McKinley Road Des Moines, Iowa 50320 (515) 285-8911 Fax: (515)256-9161 FRIDAY AT 9:30 A.M. Todd Givant, General Manager GREATER QUAD CITY AUTO AUCTION 4015 78th Avenue Milan, Il 61264 (309) 787-6300 Fax: (309) 787-4541 Tuesday 10 a.m. – Thursday – 6 p.m. General Manager: Larry Anderson GREATER ROCKFORD AUTO AUCTION 5937 Sandy Hollow Road Rockford, Il 61109 (815) 874-7800 (800) 830-4722 Fax: (815) 874-1325 General Manager: Mark Capriola Wednesday 10 a.m.

ADESA MINNEAPOLIS 18270 Territorial Road Dayton, MN 55369 763-428-8777 763-428-8701 Sale: Tuesday, 10 a.m. www.adesa.com ADESA SIOUX FALLS 46893 271st Street P.O. Box 218 Tea, SD 57064 (605) 368-5364 Fax: (605) 368-2808 General Manager: Bob Holm Wednesday Sale 10:00 a.m. IAAI SALVAGE SALE EVERY OTHER WEDNESDAY – 8:30 A.M. ADESA WISCONSIN W 10415 State Road 33 Portage, WI 53901 608-742-8245 608-742-4415 (f) Tony Manwarren, general manager Sale: Thursday, 9:30 a.m. www.adesa.com DEALERS CHOICE AUTO AUCTION, INC. 503 South Wapello Road Mediapolis, IA 52637 (319) 394-3510 (888) 771-6810 Fax: (319) 394-3511 www.dcaa.com President: Monte Delzell Nationwide Transportation: EZ Auto Shoppers Steve Miller – (866) 310-5936 Fleet/Lease Manager: Kerri Wilkerson Consignment Sale every Tuesday at 6 p.m. Fleet/Lease Sale Tuesday 6 p.m. Group Sales Dealer Sales 6 p.m. as scheduled.

KCI AUTO AUCTION 11101 N. Congress Kansas City, MO 816-502-3318 816-801-8565 (f) Doug Doll Consignment Sale: Thursday, 9:30 a.m. www.kciaa.com MANHEIM ARENA ILLINOIS Manheim 200 West Old Chicago Drive Bolingbrook, Il 60440 (630) 759-3800 (630) 759-9668 General Manager: John Olejniczak Dealer Sales Manager: Louis Palermo Tuesday 9 a.m. MANHEIM KANSAS CITY 3901 North Skiles Road Kansas City, MO 64161 (800) 247-7163 Fax: (816) 452-2393 General Manager: Peggy Sprenger Dealer Sales Manager: Kevin ­­­ Rhoads Wednesday 9:30 a.m. MANHEIM MINNEAPOLIS 8001 Jefferson Highway Maple Grove, MN 55369-4924 (763) 425-7653 (800) 622-7653 Fax: (763) 493-0310 www.minneapolisautoauction.com General Manager: Jerry Aman Assistant General Manager: W Jon Eisenmann Fleet Manager: Tony Manwarren Consignment Sale every Wednesday at 9:45 a.m. Fleet/ Lease Sale Wednesday at 9 a.m. Daimler Chrysler Sale Tuesday 10 a.m. bi-weekly. Ford Sale Thursday 10 a.m. bi-weekly. Dealer Sale Tuesday Thunder 1 p.m. weekly (under $5K). RV Sale last Wednesday 2 p.m. Monthly.

PRESIDENTS LETTER Working the Internet is a two-way street. You have people trying to find their next vehicle on the Internet. Why don’t you find it for them? You can look for their next vehicle just as well as they can and you will make a profit. At our dealership, we are averaging about three to four calls a week from other dealers looking for vehicles. I just got a call from a dealer in Denver, Colo., looking for a certain vehicle in our inventory. We have sold vehicles to people in both Dakotas, Maryland and most recently to a couple from the Florida Keys. They bought a 1-ton regular cab, two-wheeldrive dually truck from us. Go figure. Of course, we delivered all of these vehicles here on our lot. I always tell people we have access to thousands of vehicles and I am certain that we can find them what they are looking for. It doesn’t take long to search the Internet for their next vehicle and with a little work on your part, YOU can be the one delivering them their next car, truck, SUV or van. Good Selling, Doug Livy, President IIADA

MANHEIM MILWAUKEE 561–South Highway 41 - (27th Street) Caledonia, WI 53108 (262) 835-4436 (800) 662-2947 Fax: (262) 835-2684 General Manager: Dennis Worthy Dealer Sales Manager: Kimberly Schure Wednesay 9 a.m. MANHEIM MISSOURI 2944 W. Sunshine St. Springfield, MO 65807 417-882-1666 417-882-0811 (f) Lance Reid, general manager Sale: Thursday, 9 a.m. www.manheim.com MANHEIM NORTHSTAR MINNESOTA 4908 Valley Industrial Blvd. North Shakopee, MN 55379 (952) 445-5544 (888) 445-2277 Fax: (952) 445-6773 General Manager: Jerry Aman Thursday 9 a.m. MANHEIM OMAHA 9201 S. 144th Street Exit 440 off of I-80 Omaha, NE 68138 (402) 896-8000 (800) 218-4192 Fax: (402) 896-6758 General Manager: Todd Pfeifer Assist. Gen Manager: Korey Grell Thursday 9:30am.

MANHEIM ST. LOUIS 13813 St Charles Rock Road Bridgeton, MO 63044 (314) 739-1300 (800) 533-5414 Fax: (314) 298-3347 General Manager: Mike Goodsell General Sales Manager: Chuck Wickley Tuesday 9 a.m. TRI-STATE AUTO AUCTION Jct. Highway 11 & 80 P.O. Box 735 Cuba City, WI 53807 (608) 744-2020 (608) 744-3418 (800) 356-0625 Fax: (608) 744-7425 Owners/Managers: Gerald and Helen Brogley Thursday 6:30 p.m. TRI-STATE AUTO AUCTION OF CHICAGO 14001 S. Karlov Crestwood, Il 60445 (708) 389-4488 Fax: (708) 389-4558 COO: Gregg Kobel General Manage/Owner: Larry Hero Wednesday 10 a.m.

MID-STATE AUTO AUCTION 100 Bach Ave. New York Mills, MN 218-385-3777 218-385-3232 (f) Rob Thompson, president Sale: Friday, 10 a.m. www.msaanym.com MISSOURI AUTO DEALERS EXCHANGE 5912 Mitchell Ave. St. Joseph, MO 64507 816-232-7653 816-232-3019 (f) Pam and Scott Wall Consignment Sale: Wednesday, 5:45 p.m. www.moautoexchange.com NEBRASKA AUTO AUCTION 7500 N. 56TH St. Lincoln, NE 68514 402-466-8477 402-466-7932 (f) www.nebraskaautoauction.com Dave LaFleur Consignment Sale: Tuesday, 10:30 a.m.

PLAZA AUTO AUCTION, INC. 320 Highway 30 West   P.O. Box 147 Mt. Vernon, IA  52314 (319) 895-6232 Fax: (319) 895-6727 www.plazaaa.com Owner: Mark Greb Office Manager: Debbie Welsh Becky Thuerauf: Fleet/Lease Administration Connie Van Ginkel: Consignment Manager Consignment Sale every Wednesday at 6:30pm. Fleet/Lease/Repo Sale Wednesday at 7pm.

WEST CENTRAL AUTO AUCTION P.O. Box 700 I-80 Exit 117 3277 Ute Avenue Waukee, IA 502­63 (515) 987-1700 (800) 987-7778 Fax: (515) 987-3005 www.wcaaonline.com Owner: Frank Scaglione Sales: Phyllis Fasbender Consignment Sale every Thursday at 9:30 a.m.

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GETTING TO KNOW YOU IIADA BOARD MEMBER

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BOB PIPPERT

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Sophie always on duty

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Bob and Flossie and their ’64 Chevy Impala SS

For most people in the automobile business, cars just get in your blood and so is the case for IIADA board member Bob Pippert of Gladbrook. He and wife Flossie have been married for 23 years and make teamwork out of their approach to selling cars and trucks on their 11-acre homestead and dealership location. If business is slow, they can always watch the corn grow, but that is seldom the case. While handling cars, truck, vans and SUVs, the largest percentage of their business is selling trucks. “We like trucks,” Bob said, “and people around our area have a strong need for them so it fits well with what we sell.” Bob has also created a niche in the dealership for collector cars and street rods. “I like street rods and enjoy traveling to purchase them and selling them from our lot.” Bob grew up in Tama County and has remained in the area all of his life. Six years ago, he decided to become an auto dealer and works very hard at his business. He graduated from Gladbrook High School and attended Marshalltown Community College (Iowa Valley). Bob’s family owned the elevator in Gladbrook for a number of years and from 1976 to 2005, he had his own trucking company. Bob said, “I started out like a lot of others in the business today – I curbstoned. When I was younger, I worked for a local body shop owned by Denny Luethje and Denny helped me learn about the wholesale auctions.” They attended an auction near Mason City, which is no longer around, and Bob now travels weekly to Des Moines, Omaha, Kansas City and Minneapolis in pursuit of inventory. Bob has also learned to wholesale a few units that get a little age on them. He also has learned how to buy vehicles online when he needs a particular piece for a customer – and says, “You can teach an old dog new tricks – I am living proof of that.” Bob and Flossie are pretty self-sufficient in their operation. Being a former truck owner-operator, Bob adapted easily to pulling his 2000 Freightliner and his 3-4-car trailer to transport inventory to and from the auctions and bring inventory home for the retail operation. A big concern Bob has is the quality of the inventory. “It is so difficult to find units that don’t need more reconditioning than in prior years.” Bob’s average work week consists of driving at least 600 miles to attend auctions. The dealership also performs some service work for their inventory and customers as well. Their website www.pippertcarsandtrucks.com proudly displays customer testimonials and their customers give very high marks about the dealership. Bob Pippert is a very good-natured individual and always has a smile on his face, even after a long haul to the auction. It isn’t unusual for him to leave the dealership late in the evening and truck off to auctions and arrive in time to catch a few winks of sleep before the auction starts. He is generous to other dealers in helping them bring inventory back to their lots, when he has an open space on the trailer. He understands working together is important in this industry. Bob spent six years in the Iowa National Guard and is a member of the American Legion and the Good Guys Street Rod Association. He and Flossie have three grown children. The Pippert family has a lake retreat at Holiday Lake near Brooklyn and spends time with their grandchildren at the lake during the summer. Flossie grew up in the Toledo-Chelsea area, so she and Bob have roots that are close by the dealership. Dealerships come in all sizes, shapes, and locations and Bob and Flossie Pippert have a serene country setting in which to conduct their retailing operation. While others might like the hustle and bustle of a metro dealership, the Pipperts find much pleasure in getting to know their customers over a cool glass of lemonade surrounded by Iowa corn and bean fields, where the overhead can be kept lower. Bob is serving on the IIADA board of directors and has been a member of IIADA for several years. If you are in the area, just head for Gladbrook and take county highway T-47 south out of Gladbrook and Pipperts is on the left side of the roadabout two short miles from Gladbrook. The coffee pot is always on, the computer is running and the phone will be ringing, the office is always busy and the mascot, Sofie, will always welcome you to Pippert Cars and Trucks.

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The CARLAWYER©

BY TH OM A S B. H U DSO N AN D N I CO LE FRUSH MU N RO

Here we are again with our monthly collection of selected legislative and enforcement highlights, and a recap of some of the many auto sale and financing lawsuits we follow each month. Remember - what we report here is

not every recent development. We just review the ones we think should be important to car dealers - and note that this column does not offer legal advice. You should consult your dealership lawyer with any legal questions. We include items from other states. Why? We want you to be able to see new legal developments and trends. Also, another state’s laws might be a lot like your own state’s laws – if AGs or plaintiffs’ lawyers are pursuing particular types of claims, those laws and claims might soon appear in your state. As always, though, there is no substitute for checking with your own lawyer before you rely on anything we report or if you have any questions. FEDERAL LAW

On July 18, President Obama announced his intent to nominate former Ohio Attorney General Richard Cordray to be the first director of the CFPB. Cordray is still unconfirmed by the Senate, so the CFPB came into being on the July 21 transfer date without a director. On July 26, the U.S. Department of the Treasury announced Raj Date would replace Elizabeth Warren as Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau, effective Aug. 1. Date serves as associate director of research, markets, and regulations at the CFPB. Warren headed back to Harvard, and a possible Massachusetts 2012 Senate race on Aug. 1. On July 19, the CFPB released a report to Congress examining the differences between credit scores sold to consumers and scores used by creditors to make credit decisions. The Dodd-Frank Act required the CFPB to make the study. The report covers the process of developing credit scoring models, why different scoring models may produce different scores for the same consumer, how different scoring models are used by creditors in the marketplace, what scores are available to consumers for purchase, and ways that differences between the scores provided to creditors and those provided to consumers may disadvantage consumers. Also in July, the FTC issued a staff report

that compiles and updates the agency’s guidance on the Fair Credit Reporting Act. The new staff report, entitled Forty Years of Experience with the Fair Credit Reporting Act: An FTC Staff Report and Summary of Interpretations, provides a brief overview of the FTC’s role in enforcing and interpreting the FCRA and includes a section-by-section summary of the agency’s interpretations of the act. The FTC also withdrew the agency’s 1990 Commentary on the FCRA. The commission held its second roundtable to gather information on consumers’ experiences in the sale and financing of motor vehicles at dealerships. The roundtable was held in San Antonio, Texas, on Aug. 2-3 and covered topics regarding military consumers’ experiences in buying and financing motor vehicles, the role of financial literacy in consumers’ understanding of that process, and fair lending issues. The first roundtable on motor vehicle sales and financing issues was held in Detroit in April. The FTC also produced a new video to help businesses comply with the commission’s CAN-SPAM Rule. The video includes a seven-point checklist for sending commercial e-mail messages. The FTC is offering a brochure, entitled The CAN-SPAM Act: A Compliance Guide for Businesses. On July 6, the Reserve and the FTC issued final rules to implement the credit score disclosure requirements of the DoddFrank Act. The agencies jointly released amendments to the risk-based pricing rules to require disclosure of credit scores and related information in risk-based pricing notices if the creditor uses the consumer’s credit score to set the material terms of credit or if the creditor takes adverse action. The final rules amend Regulation V (Fair Credit Reporting Act) to revise the content requirements for risk-based pricing notices and to add related model forms that reflect the new credit score disclosure requirements. The final rules also amend certain model notices in Regulation B (Equal Credit Opportunity Act), which combine the adverse action notice requirements for Regulation B and the FCRA, to reflect the new credit score disclosure requirements. The risk based pricing and credit score disclosure requirements were effective July 21, despite the fact that the rules become effective in August.

On June 27, the FTC announced it reached a $1.8-million settlement with Teletrack Inc. for allegedly furnishing credit reports to marketers without a permissible purpose, in violation of the Fair Credit Reporting Act. Teletrack sells credit reports and other services to businesses, such as payday lenders, rental purchase stores, and non-prime auto creditors, in order for these businesses to decide the terms on which they will provide credit to their customers. Teletrack created a database of information it gathered through its credit reporting business and sold the information in the database to marketers. The FTC alleged these marketing lists were credit reports under the FCRA because they contained information about a consumer’s creditworthiness. LITIGATION

Payments Made During Grace Period Were Not Timely under Terms of Note: An issue arose regarding whether mortgagors were in default under the terms of their mortgage note when they made payments during the grace period set forth in the note. The trial court ruled that payments made during the 10-day grace period were not timely and amounted to a default. The Court of Appeals of Michigan affirmed, finding that the loan agreement’s grace period merely concerned whether the lender could assess a late charge and how much, but did not render payments made during that period timely. Farah v. Bank of America, N.A., 2011 Mich. App. LEXIS 1153 (Mich. App. June 23, 2011). Arbitration Clause in Buyer’s Order Unenforceable Where Later Signed RISC Contained Merger Clause but no Arbitration Clause: Vehicle buyers signed a buyer’s order and then signed a retail installment sales contract. The BO contained an arbitration provision. The RISC included a merger clause stating that “this contract contains the entire agreement between you and us relating to this contract” but did not contain an arbitration provision. Two weeks after the buyers accepted delivery of the vehicle and signed all of the documents related to the sale, the dealership demanded an additional $5,000 down payment. When the buyers refused to pay, the dealership repossessed the vehicle, and the buyers sued. The dealership moved to compel arbitration under the terms of the BO. The trial court denied the motion to compel arbitration, CONTINUED

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The CARLAWYER©

CODE OF ETHICS

and the Florida Court of Appeal affirmed, finding that the merger clause in the RISC made it clear that the RISC was intended to constitute the entire agreement between the parties related to the vehicle purchase. As a result, the arbitration provision in the BO was unenforceable. Duval Motors Company v. Rogers, 2011 Fla. App. LEXIS 9344 (Fla. App. June 21, 2011). SCRA Does Not Ban Arbitration of Disputes or Prohibit Class Action Waivers: A captain in the Judge Advocate General’s Corps entered into a vehicle lease that included an arbitration clause with a class action waiver. During the lease term, the individual entered into active military service, returned the vehicle to the lessor, and invoked the Servicemembers Civil Relief Act. During the lease, he paid $595 in “capitalized cost reduction,” an advance toward the lease’s rent. The individual claimed the SCRA entitled him to a prorated refund of lease payments made in advance, but the lessor declined to refund any of the payments, so the individual filed a class action lawsuit for violations of the SCRA. The lessor moved to dismiss, and the U.S. District Court for the District of New Jersey granted the motion and referred the matter to arbitration. The court noted that parties can arbitrate SCRA claims and that the SCRA does not prohibit class action waivers. Wolf v. Nissan Motor Acceptance Corporation, 2011 U.S. Dist. LEXIS 66649 (D.N.J. June 22, 2011). UCC Article 9 Governs Sale Cancellation: An individual bought a car from a dealership and signed, among other documents, a buyer’s order and a retail installment contract. When the dealership was unable to obtain financing for the vehicle, it sought to void the contract and repossessed the car. It later disposed of the vehicle without providing prior notice to the buyer. The buyer sued the dealership for violating Article 9 of the Uniform Commercial Code. The trial court entered judgment for the individual, and the Supreme Court of Virginia affirmed. The appellate court held that the agreement constituted a conditional sales contract, the vehicle was the buyer’s property subject to a security interest in favor of the dealership, and the buyer was a debtor because she made a down payment on the car, traded in her old vehicle, and assumed an obligation to pay monthly installments. Therefore, she was entitled to receive notice under Article 9. Cappo Management V, Inc. v. Britt, 2011 Va. LEXIS 124 (Va. June 9, 2011).

Lemon Law and Breach of Warranty Claims Fail Where Defect Was in Design and Warranty Did Not Cover Design Defects: After attempting to have his new car repaired on several occasions, the owner sued the manufacturer and others for breach of Ohio’s Lemon Law and the MagnusonMoss Warranty Act. The manufacturer moved for summary judgment, and the trial court granted the motion. The Ohio Court of Appeals affirmed. The appellate court noted that because the trial court found that the defects with the vehicle were in its design and because the warranty did not cover design defects, there was no violation of the Lemon Law, which requires manufacturers to honor a new motor vehicle’s express warranty by making any repairs necessary to conform the vehicle to the warranty, or the MMWA, which “establishes a federal right of action for consumers to enforce written or implied warranties against suppliers, warrantors, or service contractors.” Whitt v. Mazda Motor of America, 2011 Ohio App. LEXIS 2619 (Ohio App. June 20, 2011). Presentation of Vehicle for Repair Required Before Suing for Breach of Warranty: Several individuals sued the manufacturer of their vehicles for, among other things, breach of express warranty and breach of written warranty under the Magnuson-Moss Warranty Act. The individuals replaced failed rims on their cars and did not ask the manufacturer to repair or replace the rims because they were “generally aware” that the manufacturer would claim the replacement was not covered under the warranty. The U.S. District Court for the District of New Jersey granted the manufacturer’s motion to dismiss the breach of warranty claims, finding that the Uniform Commercial Code and New Jersey law required a buyer to notify the seller and request a repair of the defect before suing for breach of warranty. Luppino v. Mercedes-Benz USA, LLC, 2011 U.S. Dist. LEXIS 65495 (D.N.J. June 20, 2011). So there you have it! Stay legal, and we’ll see you next month.

Tom (thudson@hudco.com) and Nikki (nmunro@hudco. com) are partners in the law firm of Hudson Cook, LLC. Tom is the author of several books, are available at www. counselorlibrary.com. Tom is also the publisher of Spot Delivery®, a monthly legal newsletter for auto dealers, and the Editor in Chief of CARLAW®, a monthly report of legal developments in all states for the auto finance and leasing industry (not to be confused with the book). Nikki is a contributing author to the F&I Legal Desk Book and frequently writes for Spot Delivery. Spot Delivery, CARLAW and the books are produced by CounselorLibrary.com

We will have a general duty of integrity, honor and fair dealing toward the general public. We will comply with all city, county, state and federal laws and shall endeavor to keep ourselves informed of those laws governing our business. We will not intentionally injure the business reputation of another member or competitor. We will employ truth and accuracy in advertising and selling. We will stand behind any guarantee given with the sale of a motor vehicle. We will not perform any act which would bring disrepute to the motor vehicle industry. We will expose or halt, where found, any scheme designed to deceive or defraud the automobile buying public and aid in prosecuting those guilty of such acts. We will constantly strive to improve business methods to the end that the public will be better served. We will encourage the American system of free enterprise.

MISSION STATEMENT The mission of the National Independent

Automobile Dealers Association, the only national not-for-profit organization representing the independent motor vehicle industry, is to promote, educate and advance the independent motor vehicle dealer by: • Accumulating, processing and disseminating information relative to the motor vehicle industry; • Developing, compiling and providing to the consumer, information which will promote a better understanding of the independent motor vehicle dealers’ place in the economy; • Providing relevant information to regulatory and lawmaking bodies so that they may have a better understanding of the possible effects of proposed laws, rules and regulations on the consumer and the motor vehicle industry; • Assisting in the promotion and organization of local, state or regional independent motor vehicle dealer associations; and • Anticipating, recognizing and responding to current and future issues and needs of the independent motor vehicle industry and the consumer.

HISTORY OF NIADA NIADA was founded in 1946 to lobby for the

repeal of rationing of tires and automotive parts after World War II. The efforts put forward by the organization under the leadership of founding President Charlie Hillard resulted in the successful repealing of those wartime restrictions by the end of 1947. To learn more about NIADA’s history, visit http://www.niada.com/about.php.

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Inventory Acquisition 101 No need to overthink and thus overcomplicate things. The hottest topic right now in the Buy Here-Pay Here world has to be inventory.

When shopping for a new or additional auction sources, do not limit it to just the large national auctions. Independent auctions are becoming very aggressive in going after dealer business as well. I may be a little old fashioned, but have always preferred the independent auction as they seem to provide better service and an overall buying and selling experience. BY B R E N T C A R M I C H A E L

Not only where, but what and how to find and purchase it. Like most other areas of the BHPH business, the most successful dealers are focusing on the basics in this area, too. They are firm believers in the KISS (keep it simple, stupid) philosophy. No need to overthink and, thus, overcomplicate things. The first basic they are focusing on regarding inventory acquisition is repeat business. For the more successful dealers, between 30 and 40 percent of their monthly sales are from repeat customers. These will be either lowbalance customers traded into a new vehicle or previously paid-out customers that have returned to purchase again. So 30 to 40 percent

of their monthly inventory need is satisfied with vehicles they have a history of and with; that’s pretty valuable information to have when it comes to the vehicles we deal with. Recycling of repossessions is the next basic to focus on. With these, you have the ability and time to completely check the vehicle out to determine its reconditioning need. You also have some historical information for the vehicle. The dealers I have the privilege of working with are recycling on average 60 percent of their repossessions each month to put back out on the lot for sale. The only negative seems to be that the recycled vehicles tend to have a higher reconditioning cost. They seem to need a little more love to get them lot ready but overall are more cost effective than purchasing at auction. CONTINUED ON NEXT PAGE

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IndustryNEWS

Speaking of auctions, they are a basic that should not be overlooked. It is true that there are not as many vehicles going across the block these days, but it is still an effective source. The positive to vehicle volumes at auction being down is that they are becoming very competitive with one another for dealer business. Some auctions are even waiving buy or post sale inspection fees. There is no better time to expand your horizons and check out as many auctions as travel and expense will allow. When shopping for a new or additional auction sources, do not limit yourself to just the large national auctions. Independent auctions are becoming very aggressive in going after dealer business as well. I may be a little old fashioned, but have always preferred the independent auction as they seem to provide better service and an overall buying and selling experience. I also recommend utilizing the World Wide Web in aiding in the search for an auction honey hole. Most auctions, national and independent, are posting most, if not all, of their upcoming sale vehicles, but post-sale information as

well. Most are utilizing Smart Auction, Open Lane, and or OVE for the posting. These are also great resources for the dealer to not only purchase vehicles from the comfort of their office but also to research what auctions have available to know where your next auction visit needs to be. You might just stumble on an auction you weren’t even aware existed. A final basic in the kissing of inventory acquisition would be dealer trades. New car sales are down so this is not the source it once was, but still should not be overlooked. It won’t fill the overall need, but still could fill a partial need. I think the key here is personal contact with the dealer. I’m seeing too many buyers just calling the dealer asking what they have instead of taking the time to actually visit the dealers. Not necessarily a basic, but a stone that should not go unturned would be the private seller. Craigslist, eBay, newspapers and auto magazines are all sources to find vehicles. I, too, used to turn my nose up at this stone feeling it wasn’t worth the time and effort, but

with today’s economic challenges, there are sellers out there who simply need the money to get by and are far more reasonable in their expectations. Will it fill the lot? No, but it could fill part of it and that is what counts. As for how to KISS the what and how to acquire inventory, I think it comes down to two very simple questions. How much do you have in the bank account? And how much of that are you willing to spend? There still is enough inventory available as long as you are willing to pay for it. Values are a little out of control right now but have seemed to have leveled off a little in the last month. Finding the right inventory for the right price is still possible. The key will be not to overthink and, thus, overcomplicate it. If you focus on the basics and keep it simple, you will be working smarter and not harder. Brent Carmichael Executive Conference Moderator NCM Associates Inc. bcarmichael@ncm20.com

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IndustryInsider

CAFE and Green Vehicles: Their Relationship Explained BY J . D. P OW E R A N D A SS O C I AT E S

Editor’s note: In late July, the White House released new standards for corporate average fuel economy, or CAFE, that will raise targets in 2025 to 54.5 miles per gallon.

Automakers are forced to conform to increasingly more stringent regulations, while consumers are offered sizeable incentives and rebates to put green technology in their driveway. Based on the success these policies have experienced in the past, we can expect to see more of the same in the future.

This story was written before the announcement, but provides excellent background on CAFE and how those standards relate to the push toward green vehicles. For more on the new CAFE requirements, read Frontline in the September issue of Used Car Dealer. The U.S. auto industry has been mass producing vehicles and conventional internal combustion engines (ICEs) for more than a century. Over the years, hundreds of millions of vehicles have been produced, thousands of support companies (suppliers and related ancillary industries) have been created to provide tooling and parts to support vehicle manufacturing, and hundreds of thousands of employees go to work each day to build the vehicles we drive. Given this long and expansive history, how does the U.S. government persuade automakers and their suppliers, who have been committed to ICE technology, to switch gears and focus on expanding into green technology? Increasingly stringent fuel economy and exhaust emission regulations, combined with incentives to produce more alternative technologies, have been the most common formula. With an energy crisis gripping the world in the early 1970s, the Environmental Protection Agency was quick to establish fuel economy standards (launched 1972) that gave consumers a clearer picture of how their ICE-powered vehicle was performing. Besides making public which vehicles had the highest and lowest fuel economy averages, vehicle owners also quickly came to understand that vehicles with lower fuel economy numbers were generally considered greater polluters. By 1975, the EPA established its CAFE regulations, policies designed to establish fuel economy targets and improve the average vehicle fuel efficiency of all new vehicles sold in the U.S. Today, the CAFE numbers are regulated by the National Highway Traffic Safety Administration (NHTSA) based on numbers measured by the EPA. CAFE is a big motivator for automakers to invest in green technology. If an automaker’s corporate-wide average fuel economy of all cars and trucks sold falls below the CAFE target, the automaker is required by law to pay a penalty ($5.50 per 0.1 mpg under the standard, multiplied by the manufacturer’s total production for the U.S. domestic market). These costs, understandably, add up very quickly. Today’s CAFE standards are much

more stringent than just one decade ago — and they continue to get even tougher. In 2010, the U.S. government passed a law increasing CAFE targets to 35.5 mpg by the 2016 model year (this represents an increase of 8.2 mpg between 2011 and 2016). According to J.D. Power, the U.S. government estimates that by 2020, the new CAFE standards will lead to a reduction of greenhouse-gas (GHG) emissions of 209 million metric tons – the equivalent of taking 31 million of today’s vehicles off the roads in the U.S. In addition to the federally mandated CAFE targets, individual states may also establish their own targets for vehicles sold in their jurisdiction. California has been at the forefront of the efforts to improve air quality. In 1990, California regulators passed the Zero Emission Vehicle (ZEV) Mandate (requiring 2 percent of all vehicles sold in that state in 1998 to be ZEVs, and rising to 10 percent by 2003). Other states, and eventually the U.S. government, followed California’s lead and pushed to develop green technology. Today, the federal government offers automakers (and consumers) subsidies and tax incentives to design, manufacture, and drive vehicles utilizing green technology: • B  attery Electric Vehicles (BEVs), such as the Nissan Leaf and Tesla Roadster, come with $7,500 owner incentives (and there are incentives towards the installation of home charging stations). • P  lug-In Hybrid Electric Vehicles (PHEVs) and Extended-Range Electric Vehicles (ER-EVs), such as the Chevrolet Volt and Toyota Prius ER-EV, are also packed with $7,500 incentives. • L astly, there are even incentives on green technology alternative fuel vehicles. Today’s clean diesels, such as the BMW 335d and Volkswagen Jetta TDI, are offered incentives between $900 and $2,000 depending on make and specific model.

Whether by mandate or incentive, the government has adopted a push-pull method to promote green technology. Automakers are forced to conform to increasingly more stringent regulations, while consumers are offered sizeable incentives and rebates to put green technology in their driveway. Based on the success these policies have experienced in the past, we can expect to see more of the same in the future.

J.D. Power and Associates is a global marketing information services company that provides customer satisfaction research, market research, automotive forecasting, social media research, and performance improvement programs in the auto industry. Established in 1968, the company is a business unit of the McGraw-Hill Companies.

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NIADA Mobile now provides instant auto transport quotes as part of its innovative mobile app. With the addition of ShipCarsNow to the NIADA

mobile app, NIADA members will have shipping costs at their fingertips, giving dealers the ability make quick, informed purchase decisions whenever and wherever they buy wholesale inventory. NIADA Mobile currently provides vehicle values from Black Book, Kelley Blue Book and NADA; CARFAX and AutoCheck reports; as well as pre-auction run lists, continuously updated vehicle data, and VIN bar code scanners. “ShipCarsNow is one of our NIADA National Member Benefit Partners and we are excited to include nationwide auto transport as another service within of our mobile app platform,” said Scott Lilja, NIADA vice president of member services. ShipCarsNow recently introduced ShipCarsNow Mobile, a mobile app that gives auto dealers and remarketers a fast and easy way to get multimodal auto transport quotes from any smartphone. One of the few auto transport companies to offer flexible options of truck and rail service, ShipCarsNow’s mobile app complements their online auto transport service and offers auto dealers mobile access to instant auto shipping quotes while they’re bidding on cars at auction. In addition to instant price quotes, the ShipCarsNow mobile app provides users a link to register with ShipCarsNow.com for lower, preferred customer prices. NIADA members can use the app to login to ShipCarsNow.com to get quotes, track shipments, and quickly access ShipCarsNow sales representatives. To learn more about the NIADA Mobile app with ShipCarsNow auto transport quotes, visit http://niada. gigglepop.com

OfficeMax Offers New Partnership At NIADA, we’re always looking for ways to help you get more out of your membership. That’s why we’ve teamed up with OfficeMax to introduce the OfficeMax Partner Advantage program. OfficeMax is a leader in both business-to-business office product solutions and retail office products. OfficeMax provides office supplies and paper, in-store print and document services through OfficeMax ImPress technology products and solutions, and furniture to consumers and to large, medium and small businesses. OfficeMax customers are served by 35,000 associates through direct sales, catalogs, e-commerce and retail stores. OfficeMax has more than 40 years of experience in the business-tobusiness marketplace and is recognized as one of the most experienced national business products supplier. Corporate United, the nation’s largest group purchasing organization, selected OfficeMax as the 2010 recipient of the Corporate United Supplier of the Year Award.

Partners

NIADA Mobile Adds ShipCarsNow Auto Transport Quotes to App

Through the OfficeMax Partner Advantage Program, NIADA members receive:

- Exclusive member-only pricing - Superior personalized service - Innovative programs that deliver value to companies and individuals - Highly skilled technology team - More than 25,000 office essential products - Award-winning house brands - Large recycled product offering - Multiple ordering channels

Online ordering is easy; just visit www.officemaxsolutions.com and type in the following: User name: 0722739w Password: omaxadvantage1 To order via phone, call 877-969-6629. Members with 20 or more employees may call 800-248-6343 to request more information on setting up your business account.

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APPROVED MEMBER BENEFIT PROVIDERS ADVANCED BUSINESS PRODUCTS, INC.

Printing, Promotional Products, & Wearables Contact: Scott Jayne PO Box 71547 Des Moines IA 50325 Phone: 515-225-6343 Toll Free: 888-464-2274 Fax: 515-225-6510 Toll Free Fax: 877-987-3514 Website: www.go4abpi.com

ASHTON BONDING AGENCY

7505 NE Ambassador Place, Suite A Portland, OR 97220 800-452-2663 503-253-1353 (fax) dave@ashtonportland.com

ASSOCIATIONS MARKETING GROUP INC Health Insurance Jesse Patton 1112 Maple Street West Des Moines, Iowa 50265 Toll Free: 800-798-6772 Phone: 515-270-8178 Fax: 515-270-0398 E-mail: lpatton@amgi-dsm.com

AUTO OWNERS INSURANCE

10% DISCOUNT TO ALL IIADA MEMBERS Corcoran & Associates, Inc. Mick and Teresa Corcoran 2525 E. Euclid, Suite 102 Des Moines, Iowa 50317 Phone: 515-262-3141 Fax: 515-262-3086 Toll Free: 877-518-4051 E-mail: teresa@corcoranandassoc.com

AUTO OWNERS INSURANCE EASTERN BORDER OF IOWA Amy Goodnight LOHMAN COMPANIES 3901 15TH STREET D MOLINE, IL 61265 800-747-8431 309-764-5967 (fax) amy@lohman-companies.com

CYCLONE AUTOMOTIVE TRAINING INC.

F&I Training, Sales Training, Service Contracts, Rob Miller and Chris Hochstein 515 N Jefferson Way Ste H Indianola IA 50125 Phone: 515-962-0099 or 515-962-0100 Fax: 515-961-8400 Rob: 515-205-5900 cell Chris: 515-205-5800 cell E-mail: cycloneautomotive@ cycloneautomotive.com

FOLLOW-UP PLUS

“Customers for Life” Repeat Sales, Referrals & Customer Loyalty Contact: Terry & Sue Newell P.O. Box 294 Carthage IL 62321 Ph: 888-353-2668 Fax: 217-357-9076 E-mail: tlnewell@frontienet.net

FRAZER COMPUTING, INC.

2564 W. Main St., P.O. Box 569 Canton, New York 13617 Phone: 888-963-5369 Fax: 888-963-3366 E-mail: ucd@FrazerComputing.com National Rep: Mike Frazer Dealer Management Software for Used Car Dealers

FRAZER COMPUTING, INC.

Contact: Scott Erikson, Iowa Rep 100 Prairie Center Drive, Suite 200 Eden Prairie, Minnesota 55344 Scott Erikson: 402-639-0664 serikson@adgtoday.com

GLOBE ACCEPTANCE INC

Sub-prime Lender Contact: Sarah Grisham P.O. Box 65400 West Des Moines, Iowa 50265 Phone: 515-225-9067 globeaccepts@globeacceptance.com Website: www.GlobeAcceptance.com

GOLDSTAR GPS

AUTOJINI.COM

2093 20th Ave. S.E. DYERSVILLE, IOWA 52040 PHONE: 866-655-8825 Ext. 120 Fax: 866-655-8285 Contact: Mark VanDyke e-mail: markv@goldstargps.com Website: www.goldstargps.com

Websites for Dealers Contact: Syed Azam 310 Main Street Ste 201 Ames IA 50010 Phone: 515-232-2024 E-mail: syed@octadyne.com

AUTOMOTIVE DEVELOPMENT GROUP, LLC

Dealer Compliance Education, F & I Compliance and Training, Service Contracts, GAP and Protective Coatings Contact: Scott Erikson 100 Prairie Center Drive, Suite 200 Eden Prairie, Minnesota 55344 Scott: (402) 639-0664 serikson@adgtoday.com

CHASE AUTO FINANCE

6601 Westown Parkway, Suite 120 West Des Moines, Iowa 50266 Kate Houston - 515-201-7059 katherine.e.houston@chase.com

CITIZENS COMMUNITY CREDIT UNION

2012-1ST AVENUE SOUTH FORT DODGE, IOWA 50501 Phone: 515-955-5524, Ext. 202 Fax: 515-955-8241

CORCORAN & ASSOCIATES INC.

Various Types of Insurance Contact: Teresa Corcoran 18-2nd St., N.E. Mason City, Iowa 50401 Phone: 877-518-4051 Phone: 515-262-3141 Fax: 515-262-3086 Email: teresa@corcoranandassoc.com

GREATER IOWA CREDIT UNION 1630 – 22nd Street West Des Moines, Iowa 50266-1407 Gene Holtorf, Dealer Direct Manager Ph: 515-954-1666 F: 515-956-6966 gholtorf@greateriowacu.org

INNOVATIVE DEALER SERVICES, INC.

Dealer Software Management Systems P.O. Box 23189 Shawnee, Kansas 66283 913-312-7344 – Ext. 11 Fax: 810-821-1718 Website: innovativedealer.com Contact: Deems Peterson, Sales Manager dpeterson@innovativedealer.com

JR 5 TRANSPORTATION Transport Services John Robinson, President 1109 S.W. 63rd Street Des Moines, Iowa 50312 515-822-3447

NADA BOOKS

Official Used Car Guides, Subscription Discounts, Annual Subscription through IIADA, Save $$ Contact IIADA at Phone: 641-755-4177 E-mail: iiada@netins.net

RELIABLE AUTO FINANCE INC. 954 28th St. SW P.O. Box 9700 Grand Rapids, MI 49509 800-814-9294 Brian Chisholm brianc@reliableautofinance.com

REYNOLDS & REYNOLDS INC.

Dealer Bonds Long Term Care Insurance Various types of insurance Contact: Dean M Clark 300 Walnut Street Ste 200 Des Moines IA 50309 Phone: 515-243-1724 Toll Free: 800-767-1724 Fax: 515-243-6664 E-mail: d.m.clark@reynolds-reynolds.com

S & C AUTOMOTIVE, INC.

Service Contracts, GAP, Aftermarket Products Sales & F & I Training thru Star Training Group 3828-70th Street Urbandale, Iowa 50322 515-276-9622 800-776-9622 515-276-8472 (fax) e-mail: dougeckhart1@yahoo.com website: www.sandcsales.com Contact: Doug Eckhart

SECURITY AUTO LOANS (SAL) Sub-prime Lender Contact: Scott Erikson/Joe Ruhland 4900 Highway 169 N., Suite 205 New Hope, Minnesota 55428 P: 763-559-5892 F: 763-559-7549 website: www.securityal.com Scott: 402-639-0664 e-mail:serikson@adgtoday.com Joe: 612-804-0720 e-mail: joe@autofaqs.biz

SMARTAUCTION

Matthew Mohler 4300 SW Cambridge Avenue Topeka, Kansas 66610 785-249-4166 matthew.mohler@ally.com

WILSON DISTRIBUTOR SERVICE IIADA DEALER CAP FORMS Car Brite Products Forms, Detail Supplies, Equipment & More Jason & Lisa Goody 105 N McCoy Mt. Pleasant IA 52641 Phone: 800-634-0974 Fax: 319-385-2927 E-mail: jasonwds@lisco.com Website: www.wds-usa.com

ZURICH

Garage Keepers, Property, Garage Liability Dealer Bonds 7045 College Blvd. Overland Park, Kansas 66211 Chris Westberg – Western Iowa Rep chris.westberg@zurichna.com 800-344-4917, Ext. 3909 Scot Smith – Eastern Iowa Rep. scot.smith@zurichna.com Toll Free: 800-840-8842, Ext. 3944

J.D. Power and Associates 2011 U.S. Green Automotive Study BY A D R S TA F F

Based primarily on a study of prospective vehicle purchasers fielded in February 2011, J.D. Power and Associates is predicting the outlook for green vehicles remains limited for the foreseeable future. The company expects the share of hybrid and electric vehicles to remain below 10 percent of the U.S. market through 2016. The 2011 U.S. Green Automotive Study considered the attitudes of 4,000 consumers toward hybrid electric vehicles, clean diesel engines, plug-in hybrid electric vehicles, and battery electric vehicles. Despite interest in the vehicles, consumers’ concerns about both vehicle cost and vehicle functionality will constrain sales, according to the study. The study also found substantial consumer interest in green alternative powertrain vehicles, but more as a means of reducing fuel costs, not out of interest for the environment. Of those consumers actually considering an alternative powertrain vehicle for their next purchase, 75 percent cited lower fuel costs as the primary reason. Only 50 percent cited environmental concerns. Consumers not considering purchase of an alternative powertrain vehicle also recognized the potential fuel cost savings. However, in addition to purchase price, they cited concerns about functionality – such as driving range and performance – as a major impediment to ownership. “It is the financial issues that most often resonate with consumers, whether it is the higher price of the vehicle itself, the cost to fuel or charge the vehicle, or the fear of higher maintenance costs. The bottom line is that most consumers want to be green, but not if there is a significant personal cost to them,” according to Mike VanNieuwkuyk, executive director of global vehicle research at J.D. Power and Associates. The study concludes consumers have interest in alternative powertrain vehicles and the perceptions of green vehicles is largely positive. However, converting this interest into actual sales will require concerted efforts to improve the technology and infrastructure and reduce the cost to consumers. For more information, including the news release issued by J.D. Power and Associates, visit www.JDPower. com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

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Benefits with the Iowa Independent Automobile Dealers Association  IIADA NIADA Membership  Protect your business through IIADA and NIADA’s     

legislative programs that monitors and protect used motor vehicle dealers with Congress, FTC, and others FREE NIADA publications - Street Smart & Used Car Dealer magazine Certified Master Dealer program through the NIADA/Northwood University Garage insurance; health and other types of insurance Retirement program; prescription drug savings Conventions, trade shows and dealer training programs

 Discounts on NADA used car guides - monthly, older,        

RV, marine, motorcycle Discounts on credit card processing Discounts on accounting & investment services Dealer Awards Scholarships - for your children/grandchildren and employee children $2,000 in discount coupons from mid-west auctions Choice hotel discounts; Hertz rental car discounts NIADA-TV - 24/7 Telephone assistance to IIADA members and updates on laws and regulations

Membership Application Name _______________________________________________ Title ___________________________________________ Business Name _________________________________________ State Dealer License # _________________________ Street Address __________________________ City ____________________ State ________ Zip Code _____________ County Where Dealership is Located _______________________________ (Iowa) Phone _______________________ Fax _______________________ E-Mail ______________________________________ Recommended by __________________________________________________________ Years in Business __________ How would you like to receive your newsletter: Mail _____ Fax _____ E-Mail __________________________________ Amount Enclosed ___________________ Date Received ___________________ By signing this application, you certify that you are engaged in the used automobile business or affiliated with the auto industry. You agree upon the signing of the application and, if accepted as a member, you pledge to uphold the by-laws and the constitution of the association, its code of ethics, and all local, state and federal laws pertaining to the automobile business.

Signature ___________________________________________________________________________________________ Annual Dues $250

IIADA is an affiliate of NIADA. NIADA membership included. Please make checks payable to:

IIADA 409 E. Market St., PO Box 337 Panora, Iowa 50216 641-755-4177 17

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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 third-party 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: • 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? • 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?

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

PLUS: Automotive Industry News & Special Monthly Programs

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.

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IA_1011.indd 20

9/23/11 12:14 PM


IA_1011_O