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JULY/AUGUST 2011

M ASSACHUSET TS/NEW ENGL AND

DEALER NEWS

OFFICIAL PUBLICATION OF THE MASSACHUSET TS/NE W ENGL AND INDEPENDENT AUTOMOBILE DE ALERS ASSOCIATIONS

REMARKABLE RETENTION RATE FOR MIADA SCHOLARS ALSO Catering to the Customer PLUS An Independent Perspective: Surviving the Used-Inventory Crunch

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INSIDE MAGAZINECONTENTS

6 MAIADA 15th Annual Scholarship Banquet 10 New President to Continue NIADA’s Positive Efforts 22 Supreme Court Ruling Provides Clarity on Arbitration Agreements

BOARD OF DIRECTORS CHAIRMAN OF THE BOARD MA

VICE PRESIDENT MA/NE

PRESIDENT MA

TREASURER MA/NE

Lou Tedeschi A.S.P.I. Motor Cars 781-329-5144 aspided@aol.com

Ben Donnarumma Allstar Auto Sales 508-480-8989 ben@allstarauto.com

PRESIDENT NE Lou Tedeschi A.S.P.I. Motor Cars 781-329-5144 aspided@aol.com

Bill VanLaarhoven Martin Auto Sales 508-294-7738 i.a.s.1@comcast.net

Lynnway Auto Auction moving to Billerica After more than 13 years at its location in Lynn, Mass., Lynnway Auto Auction has grown to more than 1,200 cars per week. With this increase in volume, owners Jim Lamb, George Russo and Bob Brest decided the time had come for a new facility. Without having enough land to expand in Lynn and after two years of searching and planning, Lynnway decided to build a larger, new facility on more than 54 acres at 400 Charter Way in Billerica, Mass. The new site, now under construction, was chosen for its easy access. It’s located just off Route 3 and centrally located between Routes 495, 128/95, 93 and 90/Mass Pike, which will make it easy to reach for dealers from all areas. The secret to Lynnway’s success is the respect, dedication and commitment to service offered to all of the auction’s customers. It starts with, Jim, George and Bob actively participating on the auction floor during every auction. Whether it’s the regular Wednesday sale or the Thursday night auction, dealers will find the owners participating on the floor. This dedication continues all the way down the line with the auction sales team, post sale inspections, arbitration, yard crew and office staff, all dedicated to providing the best customer service and auction experience possible. According to auction sales rep Phil Greenstein, a past MIADA president and one of only four NIADA Certified Master Dealers in New England, many dealers are excited and constantly asking about the move. “When is the big move?”, “What’s the address?”, “Can I ride by and check it out?” are among the many questions being asked, and according to Greenstein, dealers are invited to stop by to check out the progress. No official opening date is set yet, but Jim Lamb says, “Stay tuned, we will continue posting the news as it comes!”

Brad Anthony Select Used Cars 508-533-4114 info@selectusedcars.com

SECRETARY MA/NE

Mark Gabelhart Route 14 Motors LLC 781-293-5599 rt14motors@comcast.net

ADVERTISERSINDEX ADESA..............................................................................9 AST................................................................................. 20 Auto Auction of New England ..............Inside Back Cover AutoTrader.com .............................................................. 3 Auto Use............................................................................8 Leedom Group................................................................. 7 Lynnway Auto Auction..................................................... 5 Manheim.com................................................................. 14 Manheim New England ....................... Inside Front Cover Persian Acceptance Corp............................................... 17 Portfolio.......................................................................... 19 Protective........................................................................ 11 SmartAuction.................................................................. 13 Southern Auto Auction.................................... Back Cover Used Car Lot For Sale.................................................... 16

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM. THE MA/NEW ENGLAND DEALER NEWS IS PUBLISHED BI-MONTHLY BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE 817-640-3838. PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF INDEPENDENT AUTO DEALER OR THE NATIONAL INDEPENDENT ATOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF MIADA OR NIADA, DOES NOT CONSTITUTE AN ENDORSEMENT 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 OF MIADA, PLEASE CONTACT MARY QUINLAN AT 781-278-0077

MIADA OFFICE

1 UPLAND ROAD BLDG. 200 • STE. 226 • NORWOOD, MA WEB SITE: WWW.MIADA.COM • 781-278-0077

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MIADA

B Y L A R R Y Q U I G L E Y, P H . D

164 $1,000 scholarships; a total of $164,000. To the best of our knowledge, 159 of these 164 winners, or 97 percent, are either in college or have graduated from college. This rate of retention is one of the best for any group of scholarship recipients throughout our entire nation. What a credit to our automobile industry and to the parents and grandparents of our members and their employees that they have such tremendous children and grandchildren of whom they can be so justly proud – truly the best and the brightest! In fact, again this year our 97-percent retention rate was even higher than Harvard’s, which stands at 96 percent. To be eligible to apply for this scholarship, each candidate had to meet these six requirements:

Remarkable 97 percent retention rate for MIADA scholars At our recently concluded Massachusetts IADA 15th Annual Scholarship Banquet, Ben Donnarumma was congratulated on his superb leadership as president again this year. I also recognized

all the members of the Scholarship Committee who had selected the 2011 team of 10 scholars who were honored and presented that evening. These scholars are identified on page 4. This committee was chaired by Tim Hoegler, general manager of Manheim Auction of New England in North Dighton, Mass. We also expressed our special, heartfelt thanks to Mary Quinlan, our administrative assistant, for planning and organizing so ably together with President Donnarumma this banquet at Luciano’s on beautiful Lake Pearl in Wrentham, Mass. Our special word of thanks also went out to all our sponsors listed in the program who make these scholarships and this banquet possible annually. This exceptional group of scholars joined the 14 previous groups of winners from across our Commonwealth and the rest of New England who have gone before them. During these past 15 years, this association has generously awarded

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First, to be a high school senior who is the child or grandchild of an MIADA member or of an employee of an MIADA member;

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Second, possess a high school record of academic achievement measured by performance in secondary school;

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Third, demonstrate an aptitude for post-high school education, which has been measured by performance on college entrance exams, such as the Scholastic Aptitude Test, or other standardized tests;

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Fourth, exercise involvement, leadership and participation in extracurricular school activities which may include music, art, theater, school clubs, athletics and other character-building pursuits;

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Fifth, make contributions to one’s varied communities by participation in community activities, beginning to give back to those who are in need and/or contributing to making the lives of others more livable;

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Sixth, presenting up to two personal recommendations and up to two letters from teachers or counselors. Each one of our winners has met or exceeded these requirements, as attendees at the Banquet heard, as the winners were introduced and recognized individually, just as the MIADA has honored each of our MIADA scholars these past 15 years.

Also, we maintain our tradition of interspersing our program with

advice and insights from three of our scholarship alumni. Each year they have provided many a heads-up to our current graduates as to what to anticipate and what they’ll experience in college. Like a Big Brother or a Big Sister, they have given frank and valuable peer counsel to our graduates. Each year at this banquet, I express the fact I am deeply humbled and extremely grateful for having these MIADA scholarships named in my honor. A major part of my professional life has been dedicated to education, especially higher education, as I ultimately served as deputy chancellor of the then 10-college Massachusetts State College System with 70,000 students spread across the Commonwealth. And in the early part of my life from ages seven to 18, I worked on weekends and in summers with my dad in his automobile business before going off to college, as many members have undoubtedly done. I returned “to be about my father’s business” for eight years part-time and 12 years full-time before retiring, working with ADESA Concord and ADESA Boston, becoming vice president of marketing and sales. Since I have always had one foot in education and the other in business (even consulting with business during 25 of my 35 years in education), these dealers saw fit at a time when I had just survived major surgery to name these scholarships for a professional who has spent his life in the educational world, as well as in the business world – most especially, that of our automotive business which I love so much. This honor is the highest and most cherished professional honor I have ever received because it also honors our young people who are not only our future, but even to our amazement, our present, as all attendees at the banquet heard with awesome wonder at what they are already doing. Each scholarship winner, standing beside his parents or grandparents, has his or her five minutes in the spotlight as I highlight their magnificent accomplishments academically, in extracurricular activities and in giving back to the various communities they belong to. Tributes from the four referees each winner is entitled to have nominate them are interwoven into these statements of praise in the presence of their beaming parents. As one example, Stephanie Miller, an MIADA Scholar from the Class of 2007, has just graduated in 2011 from Fordham University as salutatorian of continued on page 8

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MIADA continued from page 6

her graduating class of 3,500 students, having earned a 3.97 cumulative Grade Point Average, winning honors summa cum laude. She was also awarded the Senior Gold Medal for being the graduate with the highest GPA throughout her Senior year. In addition, she earned the Award for Excellence in Accounting for demonstrating superior achievement in the field of accounting. As I exhorted this year’s stellar group of scholars: “Each one of you is so deserving of this special award. Your parents and families, your schools and your communities may all be so proud of all you have done with your lives to date, especially in giving back to so many who have helped mold you into the splendid persons you are becoming today. Just remember, as Shakespeare puts in the mouth of Prospero in the Prologue to his final play, The Tempest, written in his final year, 1616, ‘The past is prologue.’ Indeed, for each of you, if you keep moving along that excellent course you are on now, riding the highs and lows of ‘The Tempests’ life offers you, we can all concur that indeed ‘the past is prologue’; certainly, the best is yet to come!” Each year, I also weave the NIADA Code of Ethics, which is enclosed in

the program, into my presentation. I ask each of the winners and, indeed, all present at the banquet, to take with them this code of ethics which each of the owners and workers in the dealership or organization they represent signs up to uphold each year that they renew their NIADA and MIADA memberships. I also urge them to read carefully and to hold onto these nine principles of integrity, honor and fair dealing, as well as free enterprise, in the truly genuine spirit of American business which their families and their parents and/or grandparents announce to the public in their communities, in their state and in their nation as they pledge by using their seal of membership or Good Housekeeping Seal of Approval on their website, on their office door, on their stationery and in their words and deeds. They voluntarily promise to go the extra mile to live up to this code of ethics which they undertake as a commitment, thus helping all boats to rise as a membership of some 25,000 auto dealerships throughout this nation stands up to be counted to be proactive on behalf of consumers’ rights and to fight for the right with all their might. As I then hold up the code of ethics for their admiration and imitation, I

encourage them that “this is the noble heritage, the torch like the Olympic torch that is being handed on to you, the next generation, to cherish and to live up to such high and noble standards.” In addition to President Ben Donnarumma recognizing and presenting our MIADA Dealer of the Year Award, as this year to Rick Ryan, Sr., of Dorchester, Mass., I then conclude this memorable evening with my valedictory to the graduates. Each year I choose significant events from the past year, urging these scholars heading off to college to become more aware of the impact they can have on helping to solve some of the world’s problems such as world hunger, improvement of affordable health care for all and increased involvement in leadership roles that will have an exponential impact upon their fellow citizens on our planet Earth. I cite inspirational examples of others who have taken this road throughout history or who are indeed contemporary heroes. Traditionally, we conclude the evening with an uplifting Celtic poem lifted from the pages of literary lore and culture which they can carry the memory of throughout their brilliant college careers that lie ahead.

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service

BY J IM STI C K FO R D

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 just isn’t that great anymore. continued on page 12

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“ service

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“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

“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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R E PR I NTE D W ITH PE R M ISSI O N BY AUTO R EM AR K ETI N G

An Independent Perspective: Surviving the UsedInventory 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. continued on next page

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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-to-toe 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 retail-plus. 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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Ford F-150, Mercedes-Benz M-Class Recalls By ADR Staff FORD F-150, LINCOLN MARK LT 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.

NADART Offers New Retirement, Financial Resources 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 www.nadart.org/retirement or contact the provider at 800-462-3278 or nadart401k@nada.org.

MERCEDES-BENZ M CLASS

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 MercedesBenz at 800-367-6372. Editor’s note: Owners may contact the NHTSA vehicle safety hotline at 888-327-4236 (TTY 1-800-424-9153). For more information about these and other recalls, visit http://www. safercar.gov. 17

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Q&A

DON FINCHER Q&A

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

While still a young boy, NIADA’s new president for 2011-12 began his career as a porter at his father’s well-established Fred Fincher Motor Co. in Houston. He was even a salesman 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 annual sales. He established Fincher Motor Co. and Fincher Finance Corp., a Buy Here-Pay Here operation, in 1986. Since then, he’s taken on a host of leadership roles with his local and state association, as well as NIADA positions. Fincher was named Texas Quality Dealer of the Year in 1992. Anthony Underwood, NIADA’s current chairman, said Fincher will do well in helping to raise NIADA’s public profile while working closely with the auctions and industry vendors in providing dealers valued services. “We are trying to find more avenues to make the NIADA brand more of a necessary entity in the lives and businesses of dealers today,” Underwood said. “Fincher and NIADA are blessed with a great legacy of wonderful people who have dedicated their lives to building such a strong association.” 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 on an elected position like this. It’s very important because of the industry that we represent; it’s important to protect it from undue and unnecessary legislation and regulation on a local, state and national level. What does it mean to me? It’s very, very important 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 the Houston Independent Auto Dealers Association and I’ve been president of the Texas Independent Auto Dealers, and going to NIADA 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 the industry, but it’s quite another thing to get involved 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 new CFPB starting up, it’s really not that hard to get people involved. You just have to motivate them by making them more aware of certain situations we are faced with as an industry. 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. All they need to do is to participate with us.

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 vendors in ways that give us discounts and help us along the way. The association has been proactive in working with those vendors to help dealers get better services and better products. These things and more have certainly helped my business. NIADA also looks out for our industry in Washington, and tells us when there are issues relevant to us and has helped us stay in compliance when rules change; the Red Flags Rule, for instance, was just one area where NIADA was proactive. The association really helps 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 the 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 may not find the expertise available or the services you need like other dealers who have been in this business their entire 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 just 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. I think it’s a must for any new business starting up.

What’s the greatest lesson learned from running your own business?

I’ve learned a lot of lessons by running my own business, but certainly controlling overhead is a very key thing. Marketing is also a key. There are a lot of things mixed together that when you run your own business, you get firsthand. When you are paying the bills and you’re signing 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 industry changing the way it has since I first started, you have to make adjustments almost on a monthly basis. I could list a ton of things I’ve learned from running 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. There’s more government regulation from the local, state and national levels; the government involvement in the automotive industry has gotten worse and worse, and there is more paperwork 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 and the state attorney general. There are so many people and so many agencies that we are accountable to now, it’s going to continue to be a challenge continued on next page

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BY S TE PH A N I E PATR I C K

for all dealers in the future. It’s changed a lot from the way it was when I started in the 1970s when there was very little government involvement in our industry.

What’s your vision for the association?

We need to continue protecting and educating our dealers. We need to keep our dealers in the loop about legislative and compliance issues. We need to continue our legislative efforts in D.C. NIADA, over the years, has been building positive trust in our organization by Washington, enough that they see NIADA as a quality organization with relevant things to say. We, as an organization, need to continue that effort. Educating government about our industry is a top focus for us. I think the services that NIADA has been developing are also very positive; the Certified Pre-Owned program that we launched and the new NIADA iPhone app are just two of the many programs that are helping our dealers to compete in the marketplace. 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!

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. 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 us on the state, local and national level. When you join the state association, you automatically become a member of the national association…one set of dues pays for both memberships. There’s strength in numbers and we represent over 20,000 members; the more we have, the better it’s going be for us in Washington. 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.

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

Certainly that I worked hard for our 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 through the leadership of the Association. You know, it’s not just me; it’s the entire board. The executive board we have this next year is awesome, and I can’t imagine a better group. 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 us 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 19

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web

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VS

$ $ $

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 RipOffReport.com, DealerRater.com, 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

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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.

Blogs

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

VS

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@ autosearchtech.com.

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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 class-action 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. wolterskluwerfs.com/indirect.

Auto Auction of New England Unveils New Online Services Department The Auto Auction of New England has announced the launch of a new Online Services Department. “The last year and

especially the last few months have seen a huge jump in dealer’s acceptance of online services, and the need for expansion has been evident,” said General Manager Dave Blake. “In the last year alone, AANE has expanded Auction Pipeline Simulcast to all six lanes and has provided midstream purchasing of vehicles listed online.” In addition, Blake continued, AANE has partnered with OVE. com both as a facilitator for dealers wishing to list vehicles online and as a listing agent for fleet/lease and specialty vehicles that may need to be marketed to a larger pool of buyers. More recently, SmartAuction has also been added to the auction’s list of services available to consignors at the auction. “With all these services available, sometimes it may be confusing to understand which service best meet the needs of the client,” Blake said. “To that end, Rich Blake has been named as AANE’s new online services manager and Jake Pierog is the new online services coordinator.” Rich has been instrumental in navigating through the auction’s many online services and began posting vehicles months ago to test the market. Blake explains that after a few short months, it became clear that handling this effort would require more than adding a few responsibilities to a department, and the Online Services Department was born. Rich now posts vehicles to all of the services AANE provides and is also available to guide consignors who would like to post from their location, providing a forum for upstream sales, too. Starting on April 7, Rich began manning his new post at the AANE Online Services Booth, armed with sign up forms, arbitration policies and a computer to provide visual step-by-step instructions on each service. Every Thursday, Rich is available to answer questions and help customers to sign up, navigate and understand OVE.com, SmartAuction and Auction Pipeline. “It has taken a little time to understand all the different services,” Rich said, “but now that they are up and running regularly, it is time to invite consignors and dealers to take advantage of all that they offer. There is no denying that the sales here in the auction lanes are enjoying an unprecedented number of physical bidders, but the world has gotten smaller. Some vehicles just need a larger market and for those vehicles the new online services we provide will make that happen.” “We are excited to debut this new department,” said Dave Blake. “New technology and media have kept the auto industry moving forward quickly, and we are thrilled to be able to provide a forum for our clients to use many different services to keep their business growing. We encourage all our customers to stop by and visit Rich. He may just have the answers that they have been looking for to bring their business to the next level.” Auto Auction of New England is located in Londonderry, N.H. Auction day is Thursday at 9:15 a.m.

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