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CATERING TO THE CUSTOMER ALSO QR Codes 101: Point, Scan, Sell PLUS New President to Continue NIADA’s Positive Efforts

DALLAS, TEXAS Permit No. 2079


PRSRT Standard U.S. Postage

Visit us at

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Used vehicle values have been increasing across nearly all segment most of this year; Rising gas prices have led to strength in fuel-efficient segments, yet safe to say all used-vehicle values strong through April.

6 Catering to the Customer 10 QR Codes 101: Point, Scan, Sell 12 New President to Continue NIADA’s Positive Efforts


Lack of used vehicle supply, from reduced new-car sales in same period.


Business is Getting Better

Tornadoes in Southeast US have caused temporary engine plant shutdowns.


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






New-vehicle transaction prices will rise, and incentives will be scaled back.




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Used Vehicle Values

Demand spill over to used, putting further upward pressure on used-car values.


Up 20% since January, far cry from steady depreciation of 2009 and 2010.


Strong w/ only slight declines in last month for most fuel-thirsty segments.


Full-size trucks down 2.4%, while full-size SUVs dropped 1.1%.



AFC – Automotive Finance Corporation ...... 7 AST ............................................................ 14 ......................... Back Cover . .................................................. 13 Chicago Car Auction ................................... 5 Dyer Auto Auction ..................................... 18 Insurance Auto Auctions .............................. 9 Leedom Group . ................. Inside Front Cover Lohman Companies.................................... 11 ............................................ 19 Protective ...................................................... 3 ShipCarsNow ............................................ 15 Smart Auction .................... Inside Back Cover United Acceptance...................................... 17 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.



Kelley Blue Book , Director of Vehicle Valuation


Board of Directors Chairman Randy Crase Crase Auto Connection 25355 E. Ames St. Channahan, IL 60410 815-467-1807

Treasurer Mark Alcorn Carlyle Auto Sales 1708 Broadway Rockford, IL 61104 815-397-5010

President Gordon Tormohlen Tormohlen’s Good People Automotive 1800 S. Ihm Blvd. Freeport, IL 61032 815-232-5543

Secretary Eric Nelson Nelson Automotive Inc. 1801 S. Busse Mt Prospect, IL 60056 847-439-2277

Vice President Lori Chignoli-Cora Chignoli Auto Sales 1850 Essington Road Joliet, IL 60485 815-439-2233 1st Vice President Anthony Ferraro Payless Motorsport 13449 S. Pulaski Road Robbins, IL 60472 708-388-2300

Directors: Melanie Brown Chicago Car Auction 2731 Belvidere Road Waukegan, IL 60085 847-662-0100 Robert Doppelt Anything With Wheels 2296 N. Rand Road Palatine, IL 60074 847-776-9007

Alex Tovstanovsky Prestige Motor Works Inc. 8959 Hanslik Court Naperville, IL 60564 630-780-6439 Kim Vanderwall Manheim Arena Auto Auction 200 W. Old Chicago Road Bolingbrook, IL 60440 888-273-6222




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Catering to the Customer Changes in technology during the last few years have had a profound change in how the average consumer shops for a car or truck. This, in turn, has meant dealers wishing to stand out from the competition had to change the way they interact with customers, such as delivering vehicles to buyers instead of requiring them to come to the store.

The days of the dealer holding all the cards and controlling the transaction – what information to tell the customer, including price – are gone, said Joe Lescota, veteran dealer and automotive marketing department chair at Northwood University in Midland, Mich. In the old days, the first question a salesman often would ask a potential customer was what kind of payment the customer could afford, Lescota said. Sometimes customers wouldn’t even be told the price of a vehicle. But, thanks to the Internet, that kind of salesmanship just doesn’t work like it used to, Lescota said. “When people shop for a car these days, most often they start with the Internet,” Lescota said. “Today’s savvy consumer wouldn’t think of going to a

dealership without first checking online to see the inventory.” This has changed the balance of power between buyer and seller. In the space of an hour, a potential buyer can now check the inventory of auto dealers within easy driving range. Even the inventory of dealerships in other states is accessible on the Web. By the time today’s customers go to a lot, Lescota said, they have a pretty good idea of what they want to purchase. This new way of shopping for a vehicle requires dealers offer new kinds of services. “Dealers are learning that they can’t differentiate on price alone,” Lescota said. “If a dealer attempts to stand out on price alone, he will lose. A dealer who wants to stick out these days has to do it by service.” The reason is simple, Lescota said. Just as the Internet has changed the way consumers buy autos, it’s changed the way dealers purchase inventory. It’s now possible to check auction prices across the country just using a smartphone. The result is prices are more even than they’ve ever been. “Dealers and OEMs have made some assumptions about how to attract customers,” Lescota said, “by spending a lot of money on buildings – making the dealership look really nice. They do this on the assumption that people will come to them and they want to see a nice building and facilities. That never hurts, but a smart dealer makes part of his investment in facilities in a virtual showroom.” That means having a nice, easy-touse website that displays inventory. But dealers also need to understand that consumers, now more than ever, make buying decisions based on trust and relationships. “It’s not just about product anymore,” Lescota said. “For example, everyone I know has stopped going to one restaurant or another because they didn’t like the service. Bad service can really turn off a customer for life.” On the other hand, good service, including offering home deliveries, can make someone a customer for life. Many dealers make the assumption customers can come to their dealerships to make a purchase, Lescota said. But in this economy it’s not uncommon for people to work two or even three jobs. They don’t have Saturdays off or the time to go to the dealership. But the dealer who can adjust his selling style to meet the needs of the overworked customer

can profit. “Dealers have to go to people’s homes,” Lescota said. “Dominoes made a billion-dollar business by mastering home delivery. This just doesn’t apply to cars. For example, I needed shutters, but I didn’t go to the store. A store guy came to my home, looked at what was needed and we went from there. It was a little more expensive, but if you take the formula of time equals money, and I didn’t have the time to shop, it made sense. Dealers have to ask themselves ‘how do my customers shop?’” Lescota emphasized dealers don’t have to provide home service for free. He recently hosted a focus group on behalf of dealers. Group members were asked if they would pay extra if someone came and picked up and later returned their vehicles to have their oil changed. The answer was yes, and the figures given ranged from $5 to $10 extra. “People are willing to pay more for extra service,” Lescota said. “They understand pampering. Customers like to brag that the salesman came out to his house. This is not a theory. About 30 percent of my personal sales come from home sales.” Now it’s possible for an auto salesman to have his entire inventory on his smartphone. When Lescota was asked what should happen if a customer doesn’t like a vehicle after it’s been delivered to his home. Lescota has an eloquent response. “Big deal,” he said. “Go back and get another car. What are you going to be doing anyway? Waiting for ups to walk into the store? If you’re smart, you’ll use this incident as an opportunity to better understand what the customer wants. Ask him why he didn’t like the particular car. He might say it’s the color. Get the customer sold on the fact that you’re willing to break your back to get them the car they want.” But dealers might say that’s inefficient compared to making an appointment for the customer to visit the dealership. Lescota points out customers skip appointments all the time. “They’re busy,” he said. “Something comes up or they forget, but have someone come to their home to show and drop off cars? That is an appointment they’ll keep.” All cars are alike these days, Lescota said, thanks to much better engineering and manufacturing. Add in reconditioning and the quality difference between vehicles at different dealerships continued on page 8



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“ service

continued from page 6

“There will always be challenges in any industry and if you can navigate them, you’ll be successful as a business,” Daniell said. “If you’re not a flash in the pan and you service your customers with excellence, you’ll last. Often we’ll throw in a tank of gas when we make a sale.”

Madalene Daniell, vice president of the familyowned Daniell Motors in Hattiesburg, Miss

just isn’t that great anymore. “It comes down to service,” he said. “If a customer has a problem with a car, it’s better to ask him where the dealer will pick it up as opposed to telling him to drop it off at the dealership. We need to remind ourselves that people often make sacrifices to buy a car, even a used one. Car buying is an emotional experience and the dealer who remembers that will do better.” But, Lescota warned, the laws governing auto sales are different in every state. It’s possible in some states for dealers to sell a vehicle without a customer ever having to step into a dealership. In other states, the customer will have to make at least one trip to the lot to fill out the paperwork. Dealers need to know the laws in their states and set up plans accordingly. Jody Midgette, owner of Midgette Auto in Harbinger, N.C., said he’s located in a state that requires the deal to be completed at the dealership. With that in mind, he said it’s still vitally important for his dealership to provide excellent service. “We’re located in the Outer Banks region of North Carolina,” Midgette said. “This is a relatively remote area and we’re not near a large metro area, so that means we don’t get a lot customers who came in because they were driving by and saw something they liked on the lot, so we have to go the extra mile to keep our customer happy. If we don’t there aren’t a lot of people out there who can replace them.” Being located in hurricane country has meant catering to customers in difficult circumstances, Midgette said. There have been times he’s picked up customers left stranded by weather and even had to set up a remote site to sell vehicles because of a hurricane. It’s all a part of doing business. “Now consumers have so much information,” Midgette said. “If we don’t provide the best service, they’ll go to someone else. By the time a customer calls us, they know what they want. They know what mileage the car they’re interested in gets. Businesses here are busy and they don’t have the staff they use to. They don’t have the time to take off a day to buy a car for their businesses. So we’ll bring a vehicle to them.” But this is only a part of their service package, Midgette said. Ultimately, it’s his goal to get the customer into the store to show off their full range of services. “We want them to see who we are and what we do,” Midgette said. “We want to build a relationship. If that means picking someone up or dropping off a car they bought, then that’s what we do because keeping the customers you have is a lot easier than replacing customers you lost.”

Bringing the cars to where the people are is just part of being a full-service dealership, Midgette said. Quality service is just part of an overall strategy. Midgette Auto maintains an inventory of about 75 vehicles, ranging in price from $3,000 to $30,000. The dealership sells cars and trucks to both citizens and businesses. They even do some Buy Here-Pay Here sales. “In this competitive economy, you have to be all things to all people,” Midgette said. Madalene Daniell, vice president of the family-owned Daniell Motors in Hattiesburg, Miss., said their service begins with a 30-point inspection. It’s a service that allows them to give each vehicle they sell a gold star warranty that’s good for one month or 1,000 miles. She emphasized they give a warranty and not a service contract. “We believe a happy customer out in the community is our best marketing tool,” Daniell said. “We’re located about 60 to 90 minutes between three airports in New Orleans, Jackson, Miss., and Gulfport, Miss. We have a lot of people who buy from us regionally. We’ll pick people up from any one of those three airports.” In addition to offering customers a complimentary airport shuttle, she believes they also deserve a no-pressure atmosphere. Daniell agrees with Lescota’s belief about today’s cars selling themselves. As a small family business, Daniell Motors doesn’t have the staff to be open 24/7. Part of offering excellent service means the dealership stays open late for the customer who comes from out of town. “There will always be challenges in any industry and if you can navigate them, you’ll be successful as a business,” Daniell said. “If you’re not a flash in the pan and you service your customers with excellence, you’ll last. Often we’ll throw in a tank of gas when we make a sale.” Service goes even further, Daniell said. They’ll help customers with their credit problems. She said they’re not a BHPH store, but that doesn’t mean they can’t help. Daniell’s staff will walk customers through their financial issues and what steps they’ll need to improve their credit ratings. Once the process is complete, the customers will come back and buy a vehicle. “We’ll even tell a customer to continue to drive the car they so that they can save up for a down payment,” Daniell said. “That way they won’t get slammed by the payments. This is all about serving the customer. They don’t have to buy their cars from you.”



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NADART Offers New Retirement, Financial Resources

Dealers: Drivers are Noticing Headlights These Days

NADART (NADA Retirement Administrators, Inc.) is pleased to announce a number of new products and enhanced services, which includes the Sub20 Plan, online investment guidance and NADART’s Executive/Deferred Compensation Plan. NADART offers a number of retirement plan options, including the Sub20 Plan designed specifically for small businesses (a 401(k) plan for those with 20 or fewer employees). As an added benefit for starting a new plan, employers will benefit from a three-year tax credit. In addition, the Executive/ Deferred Compensation Plan allows owners and select employees to contribute up to 100 percent of their compensation on a tax-deferred basis to a retirement savings plan. The company has provided and administered retirement plans for dealerships and automotive trade associations since 1957. It offers retirement plans and financial services to companies in all industries, as well as to members of NIADA. NADART maintains about $3 billion in assets for close to 100,000 participants nationwide. For more information, visit or contact the provider at 800-462-3278 or

Automakers going bug-eyed over LEDs. Those twinkling lights on the fronts of luxury cars are starting to find their way into the mainstream. High-end brands, led by Audi a few years ago, were first to distinguish the look of their cars with strings of small light-emitting-diodes, or LEDs, next to the headlights. As costs for the lights come down, they are showing up on moderately priced and even entry-level models. Check these out: • Kia added LEDs for daytime running lights for its redone 2012 Soul small crossover and Rio entry-level subcompacts. The Soul will offer a double deck of the lights below each headlight and two rows in the taillights. • Volkswagen rims the round headlights of new 2012 Beetle with a necklace of LED daytime running lights.


• Chrysler now has a “light pipe” of LEDs in the headlights of its midsize 200 and plush 300 sedans.


• Ford chose LEDs for the parking lights/turn signals of its redone 2013 Taurus full-size sedan, coming early next year. It sports LED taillights too.

The IAA Hybrid Auction Model combines live and live-online bidding into one auction event selling to buyers from more than 100 countries. Let us show you how our live auctioneers, IAA Run & Drive® lanes, and onsite previews promote your vehicles’ full value for high retentions.

LEDs are proving to be cost-effective and an added safety feature, but they’re more than that, as fun LEDs can add character, personality with a custom touch, depending upon which pattern you choose.

As costs for the lights come down, they are showing up on moderately priced and even entry-level models.







Contact us or visit to learn more about IAA’s Live Advantage!

Stephen Cortez Chicago Area Auction Coordinator • 630.335.0907

One Car One Difference turns donated vehicles into charity dollars. Make a difference in 2011 – visit © 2010 Insurance Auto Auctions, Inc. All rights reserved.

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Point Scan Sell

QR CODES 101: QR codes have optimized the way information is shared, making it easier to direct somebody to your information on-site, such as inventory, coupons, service, specials, blogs, events and more.

Has your dealership implemented a process for engaging customers and shoppers with QR codes? If the answer

is no, don’t worry because you’re not alone. If you don’t know what a QR code is or have heard of it and don’t know how it can benefit your dealership, you’ll find some answers here. QR (Quick Response) codes are becoming increasingly popular for any business looking to provide information to current and potential customers quickly and effortlessly. The codes are a byproduct of the smartphone movement sweeping America. Nielsen reports 31 percent of U.S. mobile phone owners had a smartphone as of December 2010 and expects smartphones to become the majority by the end of this year. eMarketer predicts smartphone ownership will reach 43 percent of the U.S. mobile population by 2015. QR codes have optimized the way information is shared, making it easier to direct somebody to your information on-site, such as inventory, coupons, service, specials, blogs, events and more. Smartphone owners have access to a wide variety of apps and QR code readers are a standard app on most, if not all, smartphones. Because the technology is so new and progressive, not all QR code scanners can read all QR codes, but these instances are rare and will become fewer as the technology advances. The basis for QR codes is quite simple and nearly the same as the standard barcode seen on merchandise tags or VIN stickers on vehicles. Barcodes were developed to carry information in a very small space that is scan-able; they’re limited in that they are horizontally shaped. QR codes work the same way, but more information can be carried since they are based on horizontal and vertical dimensions, so there is no limitation to what or how much information can be included. Common types of QR-coded information include URLs, text, phone numbers and SMS. Remember, each QR code is unique, so there is no end to the possibilities here. Here is an example of how using QR codes can help you gather potential customer’s information. Say you have customers looking at vehicles after normal business hours (or on Sundays), but choose to call later to learn more about a certain one. This is the typical thought process of many people. By having a QR code on your vehicle, you can get someone engaged into requesting

more information at that moment while lessening the risk of the customer losing interest by morning. At the same time, your potential customers are excited because they get to use their smartphone technology by simply scanning the QR code. From there, they can get to your mobile website, maybe grab a mobile coupon or check out whatever dealership info you want to share. We recommend you have some type of quick form for people to complete for a coupon. Guess what? Now you have contact information; in other words, my friends, you’ve got leads! As with email 15 years ago and texting 5 years ago, people are excited about how technology is giving them more ways to communicate today. During the sales process, a lot of customers will prefer this because of the non-invasive way of communicating with the dealership. You will see companies offering a free online book by scanning a QR code in an airport or a major advertisement in a publication with a code printed in the corner. These are all enticements that target engagement from potential customers at the peak of their initial excitement or curiosity. Because it is effortless to scan a QR code, pairing them with a marketing strategy will help you capitalize on customers engaging when their emotional excitement is high. The more time that passes, the more distant the customer becomes. You can see how powerful QR codes can be with convenience and timing. Be careful not to be overwhelming in requesting the customer’s information. Use QR codes in a variety of different ways to not only generate leads, but to deliver your message. For instance, in your next mailer, create a QR code that sends them to a web form that gives the customer a free car wash. All they have to do is complete and submit the form, then present the generated coupon to a sales manager. For a softer approach, implement a process to get more Facebook fans by creating a QR code that takes a person to your Facebook Fan page, keeping them totally in their comfort zone. Be sure to scan the codes in this column to better understand how QR codes can work for your dealership. Dustin Jansson provides consulting for e-commerce and social media strategies for dealers, as well as providing a full suite of inventory management, marketing, and photography solutions. Staying ahead of the technology curve in the autos business is his passion. Contact him at 303-232-3435 or dj@



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New President to Continue NIADA’s Positive Efforts It is likely Don Fincher Sr. can’t remember a time when he wasn’t working at a dealership.

NIADA’s new president for 2011-12 began his career as porter at his father’s well-established Fred Fincher Motor Co. in Houston, while still a young boy. He was a salesman even before he was a high school graduate. Between 1979 and 1986, he was general manager of the family business and responsible for six locations in the Houston area, reaching more than $12 million in sales. He established Fincher Sales Inc., which does business as Buy Here-Pay Here operation Fincher Motor Co. and Fincher Finance Corp., in 1986. Since then, he’s taken on a host of leadership roles with local and state associations, as well as NIADA positions. Fincher was named Texas Quality Dealer of the Year winner in 1992. Anthony Underwood, NIADA’s mostrecent past president, said Fincher needs to help the association decide its focus, while also raising its public profile and working closely with the auctions and providing dealers valued services. “We are trying to find more services to make the NIADA brand more of a necessary entity in lives and businesses of dealers today,” he said. He said Fincher and NIADA are blessed with a great legacy of wonderful people who have dedicated their lives to building such a strong association, and Fincher already found a way to honor past presidents with the Presidents’ Hall of Fame, which was his brainchild. “He will keep the organization strong, and help us be stronger in the future,” Underwood said. Used Car Dealer recently interviewed Fincher about his upcoming term, his take on the industry and his plans for the association.

What does this year’s NIADA presidency mean to you?

It’s a real privilege and honor to represent so many dealers across the country. Certainly, it’s a humbling experience to take over a job like this. Even though it’s a non-paid job, it’s a very important job because of the industry that we represent; it’s important to protect it from Washington and the bureaucrats that, in some cases, would just regulate us out of business if some of them had their way. What does it mean to me? It’s a very, very important job to protect the industry for our dealers. Again, it’s an honor to represent so many quality and awesome dealers across the country.

So many people who join NIADA don’t take leadership roles with the association. Why did you choose to take a leadership role?

It was kind of a natural inclination for me because I’ve been president of Houston Independent Auto Dealers and I’ve been president of the Texas Independent Auto Dealers, and going to national was just a natural transition. Being involved in making a difference is important to me. It’s easy to sit back and complain, criticize and accuse (in the) industry, but it’s quite another thing to get in the struggle and make a difference…I don’t want to complain about the situation we have, I want to get in there and change it.

What are you going to do to encourage others to take on leadership roles?

When you go out and you talk to people about what’s going on in the industry, especially right now with the FTC and the CFPB starting up and Elizabeth Warren trying to be appointed for these commissions, it’s really not that hard to get people involved. If you are a concerned dealer and you are concerned about your business, you can see the handwriting on the wall about what needs to be done. And it’s really not that hard to get good, quality people involved in the fight.

How has the association helped your business specifically?

NIADA has watched out for us, offered services that we couldn’t have gotten on our own and at lower rates, and they have worked with the auctions and other vendors in ways that give us discounts and help us along the way. The association has been proactive in working with vendors to help dealers get better rates and better products.

NIADA also looks out for our industry in Washington, and tells us when there are issues relevant to us and helped us stay in compliance when rules change; the Red Flags Rule, for instance, was an area where NIADA was proactive and NIADA let us know when it was postponed and when it was ultimately put into effect. They really help us, as dealers, get the information we need. That’s the same at the state and local levels.

What’s your best advice for dealers just starting out in the business?

Definitely join associations because of the information you get from them and the services that they can provide for you. Especially if you are a new dealer and you’re not involved, you are not going to get the expertise of people, some of them, who have been in their whole lives. I’m a second-generation dealer and my son, who graduated from college in 2003, is a third-generation dealer working for me. If you are starting in the business, you get the benefit of people who have been around for a long, long time. It’s almost like having your own 20 Group…with NIADA, you get the best of the best; you get all that information from people who have been in business forever, and you get a different perspective on how things work and the way you can do things. It’s a must for any new business starting up, I think. What’s the greatest lesson learned from running your own business? I’ve learned a lot of lessons running my own business, but certainly controlling overhead is a very key thing. Marketing is really key. There’s a whole bunch of things mixed together that when you run your own business, you get firsthand. When you are paying the bills and you’re writing the checks, you learn pretty quick that the money doesn’t just come in naturally; you have to do things and make adjustments to make things work to where it does comes in. And with this business changing the way it has since I’ve been in it since the 1970s, you have to make adjustments almost on a monthly basis. I could probably list a ton of ways it’s helped me run my own business.

How has both the industry and NIADA changed since you entered the industry?

I think the association has become more focused, while the industry has certainly changed in that there’s more government regulation from the local, state and national levels; the government continued on page 14



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Q&A continued from page 12

I think the economy is going to improve, so banks will come back and capital sources will come back to the subprime industry. - DON FINCHER

intrusion into this business has gotten worse and worse, and there are more forms to fill out and we are accountable to more agencies than ever before. In Texas, for example, we are accountable to the OCCC, which is the Office of Consumer Credit Commission; and we are accountable to the DMV and the State Comptroller’s Office and the State Attorney General’s Office. There are so many people and so many agencies that we are accountable to and it seems like Washington feels like that’s not enough, and they are trying to create more regulation. It’s going to be a challenge for dealers in the future, I can promise you that. It’s changed a lot from the way it was back in the 1970s, when there was very little government intrusion.

What’s your vision for the association?

I want to leave it better than it was when I got there. There are a lot of ways that we can do that. We need to protect dealers from this legislation that’s coming down; at least (keeping dealers in the loop about) the legislation that’s coming down would be great for NIADA, and to be trusted by Washington enough that they see NIADA as a quality organization with relevant things to say. If I could accomplish that and work toward that end, I think that would be a great vision for NIADA. I think the services that NIADA is coming up with are very positive; the certified program that it’s trying to get launched right now and the new app on the iPhone that allows you to book out cars at different actions. NIADA is definitely proactive and doing a lot of positive things for dealers, probably more than ever before. My vision is to continue that process. NIADA is making a difference and being positive about it.


When your term is finished, how do you want members to remember your leadership period?

Certainly that I worked hard for the dealers, and that I was unwavering in the aspect of being diligent about what NIADA is all about and that I was proactive in legislation and in education. I want them to say we have benefited from the services of NIADA though the leadership of NIADA. You know, it’s not just me; it’s the board. The executive board we have this next year is awesome, and I can’t imagine a better board. The members are really going to make me look good because they are so good and really quality dealers.

The economy has impacted the industry. In what ways do you see the independent dealer changing as the economy continues to recover?

In the last few years, there’s been a lot of capital that’s exited our business. I see more capital coming back into the business. I think the economy is going to improve, so banks will come back and capital sources will come back to the subprime industry. It’s certainly been hard for Buy Here-Pay Here dealers in the last few years, but I think it will improve. This economy has certainly taken a lot from us, and it’s been very difficult as a small business owner to make it in this economy; again, that goes back to making changes quickly to adjust to things that are happening quickly. But, as the economy improves and capital comes back in, I think we’ll be able to make money again and it will be a good business again; as long Congress doesn’t regulate us out of business, that is.

What can members and the national and state associations do to strengthen the used motor vehicle industry?

Be a part of the solution, and get involved. Be proactive with us, and join with the state and local associations, as well as the national association. In Texas, when you join the state association you automatically a member of the national association. There’s strength in numbers and we represent over 20,000 members now; the more we have, the better it’s going be for us in Washington when we are going before them. The trust that the members have in us as leaders is a very responsible and awesome role that we have to take very seriously, and I do.



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Ford F-150, Mercedes-Benz M-Class Recalls

The recall on the expanded population is expected to begin on or about May 9. Owners may contact the Ford customer relationship center at 866-436-7332. Ford’s recall campaign number is 11S18.



Ford is expanding a recall of F-150 and Lincoln Mark LT light trucks. In January 2010, the National Highway Transportation Safety Administration (NHTSA) opened an investigation into inadvertent airbag deployments. As a result of that investigation, Ford recalled about 144,000 2005 and 2006 model year F-150s in March. The most recent announcement expands the recall to include certain model year 2004 through 2006 F-150s as well as certain model year 2006 Lincoln Mark LTs. A total of 1,325,000 units are affected. According to the NHTSA documents, if the airbag clockspring jumper wire comes in contact with the driver side frontal airbag lower horn plate, the wire insulation may become chafed, creating a potential for a short circuit. If this occurs, the airbag warning lamp may illuminate indicating service is required. As a result, the driver side frontal airbag could inadvertently deploy increasing the risk of injury or loss of vehicle control if occurring while in motion. Ford will notify owners and instruct them to take their vehicles to a Ford or Lincoln dealer to have a new clockspring jumper wire installed that incorporates a protective mesh cover. Repairs will be performed free of charge. The recall on the expanded population is expected to begin on or about May 9. Owners may contact the Ford customer relationship center at 866-436-7332. Ford’s recall campaign number is 11S18.

Mercedes-Benz is recalling certain model year 2000 through 2002 M-Class and model year 2000 through 2004 M-Class AMG vehicles. The recall affects 136,751 units. The cruise control system in the affected vehicles allows the driver to disengage the system in a number of ways, including tapping the brake pedal, using the cruise control stalk, or braking the vehicle enough to reach a certain rate of deceleration. Mercedes-Benz has determined that, under certain circumstances, use of the brake pedal may not automatically disengage cruise control as expected by the driver, although the other means of deactivating cruise control remain fully operative. Specifically, where the driver pumps the brakes rather than applying consistent pedal force, the level of force required may be unusually high. The difficulty or delay in disengaging the cruise control can increase the risk of a crash. Dealers will repair the vehicles free of charge. The safety recall is expected to begin during September. Owners may contact Mercedes-Benz at 800-367-6372. Editor’s note: Owners may contact the NHTSA vehicle safety hotline at 888327-4236 (TTY 1-800-424-9153). For more information about these and other recalls, visit


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Two Minutes Could’ve Saved You $500!

“It is the intent of the General Assembly to protect vehicle purchasers.”

Starting in Oct. 1, your annual dealer license renewal fee will go up to at least $1,500 per year. That’s more

than a 50-percent increase from 2010! If you thought the economy was bad, business was slow and this would be a good time for government to assist our industry recovery from one of the most dismal downturns in more than a decade, think again. The Illinois Attorney General and the state legislature thought raising the cost of next year’s annual dealer license renewal was good for you, good for business and good for the consumer! Unfortunately, not enough dealers spoke out against Illinois HB 0880 to prevent the legislation from passing through the Illinois House and Senate. We used auto dealers are not generally known for being very politically active or outspoken when it comes to legislative affairs that affect our business. This was very clearly evident to Bruce Ekland and myself as we made the three-hour journey south to Springfield to voice the opposition of the Illinois IADA to Illinois House Bill 0880. Below is a brief overview of the legislation. On Jan. 31, Illinois Attorney General Lisa Madigan, the Illinois Secretary of State, and the Illinois State Legislature, with the support of the Illinois Auto Dealers Association, introduced a bill before the Illinois House of Representatives asking to amend the Illinois Vehicle Code to create “an Annual Dealer Recovery Fund Fee in the amount of $500 for the applicant’s established place of business, and $50 for each additional place of business.” The legislation goes on further to explain the purpose of the fund: “The General Assembly finds that motor vehicle dealers that go out of business without fulfilling agreements to pay off

the balance of their customers’ liens on traded-in vehicles cause financial harm to those customers by leaving those customers liable for multiple vehicle loans and cause harm to the integrity of the motor vehicle retailing industry. It is the intent of the General Assembly to protect vehicle purchasers.” Who may apply for compensation out of the fund? “(i) A retail customer who, on or after October 1, 2011, purchases a vehicle from a dealer who subsequently files for bankruptcy or whose vehicle dealer’s license is subsequently revoked by the Secretary of State or otherwise terminated and, as part of the purchase transaction, trades the retail customer determines that the lien has not been satisfied; ii) A retail customer who, on or after October 1, 2011, purchases a vehicle with an undisclosed lien from a dealer who subsequently files for bankruptcy or whose vehicle dealer’s license is subsequently revoked by the Secretary of State or otherwise terminated.” At first glance, this legislation looks like a great consumer protection law that’s very necessary in today’s business climate. However, there are some unsettling issues within the legislation that come up as you read into the details. The first and most important issue is the timing and necessity of this law. During private meetings between myself, Bruce Eklund, Sen. Dan Kotowski (D-Park Ridge), representatives from the attorney general’s office and the new car dealers association, we were informed that in 2010, the attorney general received about 30 complaints totaling an estimated $750,000 dollars of potential claims had a dealer recovery fund been in place. At our meeting, Bruce and myself sought to ask some common sense questions that the Illinois IADA found very unsettling. By taxing every auto dealer in the state of Illinois at and additional $500 per year, the dealer recovery fund is expected to generate more than $2.5 million in reserve funds within just the first year! Where is all this money going and who will be in charge of the fund? Who will be in charge of paying out claims and overseeing the fund? How often will the fund meet? All of these questions seemed very straightforward and deserve a fair answer. So we look to the law to answer them. The Dealer Recovery Fund will be administered by a “Fund Administrator [who shall be] the entity that administers the Dealer Recovery Trust Fund, which shall be a statewide automobile dealers trade association representing NEW

VEHICLE DEALERS or an entity created by a statewide automobile dealers trade association representing NEW VEHICLE DEALERS specifically for the purpose of administering the Dealer Recovery Trust Fund.” But there is more! The law additionally specifies where the revenue collected from dealers is to be held. The law states that the revenue generated by this law, “[shall] be made payable to and remitted directly to the Dealer Recovery Trust Fund, a trust fund outside of the State Treasury.” Translation: this money will be deposited into the private bank account of the new car dealers association. Additionally, “Any interest accrued by moneys in the Fund shall be deposited and become part of the Dealer Recovery Trust Fund.” The legislation further goes on to say that the fund administrator shall be reimbursed for their services at 2 percent of the funds balance. Translation: the fund board, which is made up of three people, shall meet twice a year, and these three people will split a fee of $70,000 per year! The above referenced points were just a few of the major problems we told senators on the Transportation Committee about when Bruce and I testified before them in the state capital. Although we weren’t successful in preventing this law from passing or providing a full exception to all independent dealers in Illinois, we were able to add three major amendments to the legislation which will benefit our members. The first amendment provides an exemption to the small mom-and-pop dealers amongst us selling “25 vehicles or fewer per calendar year.” These dealers will not have to pay $500 into the fund. Additionally, the fund will now meet four times per year, allowing consumers who were adversely impacted by dealer closings to be able to recover their losses in a much timelier manner. Lastly, we were able to amend the legislation to provide the Illinois IADA a voting seat on the fund administration board on an alternating basis with the new car dealers association. Included in the most recent revised version of the law is a cap on the fee levied against dealers. Once the fund reaches $3.5 million in assets, and if it is at that level on Aug. 31 of any year following 2011, the fee will not be charged to dealers renewing their licensed in the following year. Getting these amendments to pass was no easy task, and required a lot of persistence and dedication from



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Two Minutes Could’ve Saved You $500!

the Illinois IADA board as well as the executive director. The association provides many benefits to our members as well as our industry. I believe legislative representation is a vital part of our mission. In Springfield, we were able to muster our sizable strength in numbers and influence to modify a poorly written, unjust and unnecessary law. If more dealers had contacted their state representatives, this law would have never passed through the legislature. The vote in the senate was very close; if more of you reached out to your senator and made the quick two-minute phone call to educate them on our business, you would have most certainly saved yourself $500 next year, and prevented this legislation from passing. Become an Illinois IADA member, stay active, get involved and, most importantly, sell more vehicles! If you would like to get regular legislative updates, please call or email me to be placed on the legislative alert email list at Alex Tovstanovsky is the general manager of Prestige Motor Works Inc. in Naperville, Ill. BY ALE X TOVSTAN OVSK Y


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e e r F


$ $ $

The Web is considerably immense, and there are many places to take into account when advertising online.

In this day and age, having a dynamic web presence versus just a web presence is important. Traditionally when a dealership thinks of online advertising, the first thing that primarily comes to mind is the cost. You can’t traditionally

get anything in the world unless you pay for it, or can you? There are many free resources available to auto dealerships for online advertising that are rarely used to their fullest potential. Sometimes, these avenues are actually the ones that are the most important when it comes to building and growing your online business dynasty. Once your potential customers have researched and found the desired vehicle they wish to purchase, you’d be surprised how much research they will conduct on your actual business to learn if you’re a creditable dealership via sites such as,, and CarDealerCheck. com. Consumer reviews play a valuable role in researching whether they should buy from your dealership or not. The number one resource for a consumer is on the Internet. This is traditionally started by the consumer conducting a search for the name of your business by a search engine of their choice (Google, Bing, Yahoo, Ask, Lycos). The results displayed within the first several pages of results will ultimately play a large

decision during the consumers buying process. Reviews containing no negative information or very little positive information can become a key factor in the decision-making process of where customers will buy vehicles. Make sure the scale is tipped heavily in your dealership’s favor by ensuring you have a dynamic presence.

Business Directory Listings

These are a great and free way to ens ure potential consumers can see your business name repetitively when conducting research on your dealership. Whether you’re an established business that’s been around for awhile or a recent startup that wants to look that way, being in a directory will add valuable online visibility for your dealership. Most all business listings allow you to insert your site’s URL, and if you need to battle any negative online reviews, a good way to combat those remarks is to include the URL directly to a page in your site dedicated to positive client testimonials. When setting up a business profile listing, make you sure keep a clear record of the username and password to your profile in case you need to edit any of the content at a later date.

News Releases

News releases are very commonly overlooked as an advertising medium, yet this is a great tool to utilize for building your online reputation for free. Releases can be picked up by many outlets and redistributed in various media channels without you having to do all of the legwork. If you help support local charities, non-profit organizations or even donate to a local cause, make sure to send out a release about your business’s philanthropic efforts. Releases can also give you great content to use in your social media and blog postings, and if your dealership uses social media, having good content to use is like gold.

Social Media

Social media pages are becoming more popular for consumer research and reviews because they show up in the search engines when your consumers are conducting their online research. Social media can give a snapshot and insight into the dealership as well as its employees. Most businesses’ social continued on next page 18


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media pages do have friends or followers that are customers, and this gives them the ability to contact them to find out how they feel about your business. Displaying customer testimonials on a weekly basis will allow you to always make sure positive content is displayed on your social media outlets so when your consumers find your dealership’s page, it’s reinforcing your reputation. Setting up a schedule of what you post on each day can make it easier to keep updated, too; plus, it will allow your employees to follow along.


A schedule could look like this example:

Linking Together

Monday: Client Testimonial Tuesday: Prize Giveaway Winner Wednesday: Sales Announcement Thursday: News Release Friday: Photo/Video Update

e Fre


Blogs are an inexpensive to set up and are quick and easy to maintain. They can provide easy access to dealership news and information for your consumers, and they help make your dealership appear more accessible and authoritative. Even if you have an internal blog in your site, having an external blog for your company provides yet another channel to help grow your reputation and footprint to spin additional positive aspects of your business. From websites, paid listing services, free online listing services and social media outlets to blogs, business directories and news releases, building your online footprint can be easy. Linking them together can create more value than you can imagine. It’s no secret link-building for your site can add positive SEO factors. The more links that point to your site, the higher the site will climb in the search engine


rankings. Linking between your other online outlets is also equally important. If you have a page dedicated to client testimonials or a section pertaining to them in your social media, add links in your business directory listings to allow those researching your company to find them. Michael D. Jackson is CEO and co-founder of Auto Search Technologies Inc. (www.autosearchtech. com). For more information, contact him at 949608-0809, 949-892-5322 (fax) or mjackson@


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An Independent Perspective: Surviving the Used-Inventory Crunch Speaking for independent dealers from Connecticut to California, Auto Remarketing caught up with Anthony Underwood this week while he was driving back to his dealership after making one of his biweekly auction trips.

The former NIADA president (his term ended in June), called the search for inventory – especially fuel-efficient models – “amazing.” “You talk with seasoned dealers who have been in the business for 30 or 40 years and they all say, ‘It’s the worst I’ve ever seen it,’” Underwood shared with Auto Remarketing. “The best description out here is dealers are saying it’s not any fun anymore. It staggers the imagination that we’re paying this,” Underwood added. While returning to his store located near Birmingham, Ala., Underwood recollected his own personal experience with a gas sipper. Three months ago, he spotted a 2011 Ford Focus coming down the lane and bought it for $11,500 despite his instincts telling him that was too much. “Now that same vehicle is $13,500, maybe $14,000. To make it worse, a 2009 Focus is bringing $11,000 now. That’s just how ridiculous it is. When’s it going to end? I don’t know,” said Underwood, who was NIADA’s National Quality Dealer of the Year in 2003. “Most dealers have a memory like an elephant,” he continued. “We all remember what we paid a year ago or two years ago. That’s the paradox of it all. This is an unprecedented time we’re dealing with. We don’t have a playbook to know what we’re doing.” Some analysts have tried to compare the current situation with 2008, especially in terms of gas prices. However, Underwood doesn’t believe that’s necessarily a fair assessment. “Keep in mind, when gas spiked three years ago, people were trying to dump SUVs and you could buy them for a song. Now, there’s no escape. There’s no particular vehicle category that has a price break,” Underwood surmised. And that especially seems to be the case with fuel-efficient models. Even units such as the Chevrolet Cobalt – a model Underwood thinks dealers used to be able to find “any day of the week” – are becoming

more difficult to acquire at a price that won’t completely erase store margin. Underwood offered what veteran dealers readily understand, “Small cars are easy to sell, but the problem is they have very thin margins.”

Is the Inventory Solution Online?

When asked about whether online avenues would be a better route to find vehicles that would turn, Underwood gave a mixed assessment. “The online route obviously gives you more coverage area but the problem is that you’re buying cars in different locations. If you only have one or two in each area, you’ve got to try to group them together to get the transportation done in time,” Underwood explained. “Buying a truckload is hard to do unless you’re paying a considerable price for them. Sometimes, you’re only buying maybe two in Dallas and one in Hattiesburg (Miss.),” he continued. “If you’ve got 10 cars scattered across the Southeast, you’ve got a problem trying to get them back in a reasonable time or getting a good price on getting them back,” Underwood went on to say. Even if logistics can be difficult, Underwood has seen plenty of online activity while he’s been at a physical auction. “I think a lot of dealers are buying online. I’ve seen dealers from all across the country bidding on cars. That’s the advantage, you have the opportunity to buy either in lane or online,” Underwood observed.

Franchise Stores Feeling the Pinch, Too

While Underwood is a veteran independent dealer and is at the top of NIADA, he doesn’t think franchise stores are having any easier of a time finding inventory. “The old stories back in the day were the new-car dealers were getting the trade-ins so they don’t have as difficult a time. But I don’t find that to be true,” Underwood told Auto Remarketing. “I think the new-car dealers are not getting the trade-ins that they got in the past. And if so, they’re not the quality of car that they’re used to because now they’re retailing high-mileage cars on franchise dealer lots now more than ever. “New-car dealers are standing toe-totoe with independent and they’re bidding on these cars, too. And they’re paying the price,” he acknowledged. “You may find in many cases where a franchise dealer will stay a little longer and pay more for it. But they’re still facing the same dilemma.”

Buyers Still in the Market

Though inventory managers are struggling to scour auction lanes to find turn-ready models, Underwood thinks

buyers are still coming to lots or shopping online, ready to make a deal. “It’s not a problem with traffic. The problem is how we’re paying the price for cars. People come in and they want to buy cars. They’re looking to do business. That’s not the problem,” Underwood insisted. “And it’s not isolated to a certain location. People are coming into the stores to do business. The problem is we all have a small inventory to choose from and our margins are now less than they’ve ever been because we’re paying more for the cars,” he continued. “We’re not seeing people necessarily complain so much about the price of the car. The problem is getting them financed and getting them to put enough down. It’s a three-ring circus – the finance company, the dealership and the customer – and we’ve all got to agree upon what’s a fair value,” Underwood added.

What If Gas Prices Drop?

Analysts also have been projecting fuel costs eventually will dip from the nationwide average that’s at about $4 per gallon. Should gas prices fall significantly, dealers could be left in the lurch with lots of fuel-efficient models because as Underwood said, “Americans don’t like small cars.” NIADA’s president conceded, “The biggest fear right now is you buy a car at a certain value and, by chance, tomorrow the market just drops. Now when you’re retailing that car, you’re cost base is retailplus. You can lose money on 30, 40, 50 cars on the lot. That’s the biggest fear right now. “Falling gas prices would take the pressure off the small cars,” Underwood predicted. “We all know we’re paying too much for small cars based on the emotion of good gas mileage. There’s no reason why the 2010 Hyundai Accent should bring $10,500 or $11,000. You could probably buy that car new for not much higher than that.”

Advice to Fellow Dealers

Underwood has been instructing his lot personnel to use a strategy that could work for any size dealership – franchise or independent. “You have to get cars that are as close to retail possible, but you’re going to pay the money for it,” Underwood asserted. “Back in the old days, you could go out and replace a car tomorrow. Today you probably can’t. You need to make money when you sell that car. “You’ve got to make sure you buy right,” he went on to say. “There’s an old saying in the car business: You make your money when you buy the car; you realize the profit when you sell it. If you buy right, that’s half the battle.” Reprinted on behalf of Nick Zulovich, staff writer, Auto Remarketing



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MEMBERSHIP APPLICATION & BENEFITS PROGRAMS TO HELP YOU SAVE MONEY •  Access to Insured Warranty & Service Agreements •  Online Marketing and Advertising of Inventory •  Vehicle History Report Discounts •  Access to Customer Financing and Leasing Options •  Networking with Dealers Nationwide •  Discount Automotive Guide Books Subscriptions •  Discount on State Approved Business Forms •  Standardized Dealer Accounting Software •  Annual College Scholarships for Family •  NIADA Insurance •  Prescription Drug Discounts •  Savings on Shipping Services •  Hotel & Rental Car Discounts •  Telephone and Other Utilities Savings •  Vehicle Transportation Services •  Marketing Supplies & Printing Services    REPRESENTATION •   Federal Legal, Legislative and Regulatory Tracking and Reporting PUBLICATIONS •  Used Car Dealer Magazine

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Evaluate Core Inventory to Sell Cars Faster Many experienced dealers will admit a challenge greater than selling autos is buying the right ones for their inventory – autos customers want. With vehicle

values always in swing between public demand and manufacturer supply, dealers are often unsure which units will bring the greatest return on investment.Find your breadand-butter. Vehicles in your core inventory sell fastest and make you the most money. Typically, a vehicle is core to your business if you can regularly sell it in less than 30 days and hold more than $1,500 gross profit. They are your bread-and-butter.


Once you determine the best-selling vehicles on your lot and in your market, the final step is staying competitive with other dealers. To identify potential core inventory candidates, look at sales logs from the past few months. Record how many days it took to sell, and how much gross profit you made on each vehicle. Then, compare to see which units consistently sold fast and gave you the most money. Your goal is to learn which vehicles are best sellers for your business. Hot or not? The next step in growing your business is to find best sellers in your area with help from an inventory management system. A system such as AAX by DealerTrack helps you seamlessly evaluate and manage your entire inventory. The Nissan Altima may be the fastest selling car in your area, but may bring in only a couple hundred dollars profit. On the other hand, it may take twice as long to sell an Acura MDX but you can expect to walk away with thousands in gross. You need to have trusted documentation to support your purchasing decisions. While you should never have 100 percent of autos as core inventory, you want to aim for at least 50 percent. You should still feel free to take on non-core autos if you truly believe they will sell. Stand out. Once you determine the best-selling vehicles on your lot and in your market, the final step is staying competitive with other dealers. Make sure your prices are in line with other online listings. Also, check the history before acquiring autos and offer it at retail. Most inventory management systems and auctions have integrated access to Carfax Vehicle History Reports. Finally, consider including Carfax in your advertising to attract customers and build confidence. The market for used vehicles can be diverse and unpredictable, but you can still find autos in your area that sell consistently. Look at your core inventory and stock more of these valuable units. Remember to regularly check the performance of your inventory – an inventory management system can help. Finally, check the vehicle’s history to avoid units customers don’t want. You can sell faster, improve your buying power and make better decisions for your business by arming yourself with information about your core inventory vehicles.

Supreme Court Ruling Provides Clarity On Arbitration Agreements A recent U.S. Supreme Court decision marks a turning point for auto dealers in the use of arbitration agreements to avoid class action lawsuits and class arbitration. On April 27, the

court ruled under the Federal Arbitration Act such agreements are enforceable, helping dealers avoid lengthy legal battles with hundreds or thousands of disgruntled consumers. In position papers, press releases and letters to Congress, numerous state and metro dealer associations had pointed to arbitration agreements with waivers of class arbitration as a means to quickly, efficiently and cost-effectively resolve consumer disputes in the place of class-action lawsuits. Arbitration agreements that include waivers of class-action arbitration can help dealers avoid a tarnished reputation, a decreased customer base and millions of dollars in damages and legal fees resulting from a classaction suit. The associations have also contended that the agreements benefit consumers by helping them get complaints taken care of more rapidly and saving them the cost of attorneys’ fees. Recent cases highlight the favorable impact the Supreme Court decision could have on the industry. For example, a California dealer made headlines in February when a Court of Appeals judge ruled against it in a class-action lawsuit dating back to 2007. The suit was tied to the dealer’s practice of backdating a sales contract and including insurance in the purchase price of the vehicle. The Court of Appeals’ decision will allow 1,500 auto buyers to have their purchase contracts rescinded, which is estimated to cost the dealer up to $30 million. And in March 2010, a Missouri dealer group settled a class-action lawsuit tied to document preparation fees for $8.8 million. That suit was filed in 2008. A well-crafted arbitration agreement that avoids resolving disputes in court and prohibits class arbitration can help dealers avoid legal landmines like these. Because the Supreme Court’s decision removes a significant obstacle to the enforceability of these agreements, independent auto dealers who have been uncertain about using them in retail installment sales contracts or leases may be inclined to give them a second look. Those dealers already using them have a reason to feel more confident that they will be enforced if challenged in court. BY CHIP ZYVOLOSKI

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




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