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WASHINGTON UPDATE

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WE CAN’T SEEM TO HIRE THE RIGHT PEOPLE

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COMPLIANCE OVERDRIVE

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SOCIAL AND CONTENT MARKETING

M I C H I G A N

I N D E P E N D E N T

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D E A L E R S

A S S O C I A T I O N

magazine

M I C H I G A N

I N D E P E N D E N T

A U T O

D E A L E R S

A S S O C I A T I O N

FEATURE STORY

IN AN AGE OF RAPID CHANGE, FOCUS ON THE BASICS Start by Evaluating Your Value Proposition BY CHET HEUGHAN

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DALLAS, TEXAS Permit No. 2079

PAID

PRSRT Standard U.S. Postage

VISIT US AT W W W.MIADA.US

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S P R I N G

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06 VAN’S 90TH BIRTHDAY

08 FOCUS ON THE BASICS

10 SOCIAL AND CONTENT MARKETING

12 PROTECT YOUR DATA

WHAT’S NEW

Tire Safety Week BE TIRE SMART

Mark your calendars for the 2015 National Tire Safety Week May 2430. The event is sponsored by the Rubber Manufacturers Association to raise consumer awareness about tire safety. Help consumers keep their tires safe and demonstrate your commitment to motorist safety. Sign up for free materials, download a tire safety brochure and listen to public service announcements from NASCAR driver Joey Logano at www.rma.org/tire-safety/tiresafety-week.

ADVERTISERS INDEX

ADESA …..…..…..…..…..…..…..…..…..…. IFC ADESA CANADA …..…..…..…..…..…..… 11 AUTOZONE…..…..…..…..…..…..…..…..… 16 BLACK BOOK…..…..…..…..…..…..…..…..…3 GREATER KALAMAZOO AA …..…..…. 17 INDIANA AUTO AUCTION…..…..…..…..6 LAKESIDE INSURANCE…..…..…..…..…IBC MANHEIM.COM …..…..…..…..…..…..…..9 MANHEIM PENNSYLVANIA …..…..…. 13 NEXTGEAR CAPITAL…..…..…..…..…..… 15 PREFERRED WARRANTIES …..…..…..…5 PROTECTIVE …..…..…..…..…..…..…..…..…7 VAUTO …..…..…..…..…..….. BACK COVER

OFFICE

14 WASHINGTON UPDATE

16 WE CAN’T SEEM TO HIRE THE RIGHT PEOPLE

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DRIVELINE

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COMPLIANCE OVERDRIVE

For information on how to become a member, please contact us at (248) 828-7010 • www.miada.us

NIADA HEADQUARTERS NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM WWW.NIADA.TV 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 Driveline is a publication of the Michigan Independent Automobile Dealers Association Inc., but is also mailed to non-member dealers in Michigan in an effort to encourage them to join and support our efforts to improve the profit potential for the industry. The Driveline is published by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006. Periodical postage is paid at Arlington TX, and at additional offices. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of the Michigan Independent Automobile Dealers Association Inc., Automotive Dealers Resource of Michigan, or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of the Michigan or National Associations does not constitute an endorsement of the products or services featured. We have worked to represent the independent automobile dealers in Michigan. We need your support. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT & GRAPHIC ARTIST Chantae Arrington • chantae@niada.com ART DIRECTOR Christy Haynes • christy@niada.com PRINTING Nieman Printing

VIP Cards for 2015

M IADA MEMBERS TO RECEIVE DISCOUNT CARDS All current members of the Michigan Independent Automobile Dealers Association will receive their 2015 VIP Auction Discount Card upon joining or renewing their membership investment. The VIP Auction Discount Card is MIADA’s way of saying “thanks” for your membership commitment to the only professional trade association that represents you, the independent auto dealer. This is the ninth year MIADA has offered this member benefit.

ASSOCI AT ION NE W S Here are the 12 participating auctions: u ABC Detroit Toledo u ADESA Great Lakes u ADESA Lansing u ADESA Northern Ohio u Flint Auto Auction u Grand Rapids Auto Auction u Greater Detroit Auto Auction u Greater Kalamazoo Auto Auction u Interstate-94 Vehicle Auto Auction u Manheim Detroit u Manheim Milwaukee u West Michigan Auto Auction

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Inside

A special “Thank you” to our sponsoring auctions for their generosity and to you, our members, for your continued loyalty to MIADA!

F& I M AT T ERS

Doc Fee Increase NEW FEE $210

The commissioner of the Department of Insurance and Financial Services has reviewed the documentary preparation fee for adjustment and has determined the maximum shall be adjusted to $210 from $200. Therefore, the documentary preparation fee shall not exceed 5 percent of the cash price of the motor vehicle or $210, whichever is less.

Board of Directors CHAIRMAN OF THE BOARD Jerry Drouillard Autohaus of Royal Oak 4411 Delemere Royal Oak, MI 48073 248-549-3636 gdro999@hotmail.com PRESIDENT Ray Campise Certified Motors 23509 Little Mack St Cl. Shs., MI 48080 586-775-7000 sales.cmotors@gmail.com VICE PRESIDENT Ted Cooper Genesys Systems Inc 360 E Maple Rd Troy, MI 48083 248-597-1003 ted@gensystems.com TREASURER Joe Kuhta GWC Warranty 8865 Reese Rd Clarkston, MI 48348 248-670-1133 JKuhta@gwcwarranty.com

SECRETARY Ed Ophoff Ophoff Motor Sales Inc. 2921 S Division Wyoming, MI 49548 616-452-7761 edwoph@aol.com DIRECTORS Dennis Craig Instant Car Credit PO BOX 146 Acme, MI 49610 231-938-2627 dcintc@gmail.com

Rick Rynberg Rynberg’s Car Co. 3880 Holton Rd Muskegon, MI 49445 231-744-1441 rickandwendy1@verizon.net Tony LoBretto Alamo Valley A/S 6100 West D Ave Kalamazoo, MI 49009 269-344-8250 alamovalley@gmail.com

Terry Wolfgang S & S Auto Sales 3434 Chicago Dr. Hudsonville, MI 49426 616-209-5360 terrywolfgang@hotmail.com Otto Hahne City of Cars 1695 Stutz Dr Troy, MI 48084 248-458-1500 otto@cityofcars.com Bob Vincent Automotive Dealer Services LLC PO Box 102 Milford, MI 48381 586-477-8282 robertvincent@live.com Executive Director Lisa Michael 5119 Highland Rd PMB 393 Waterford, MI 48327 248-828-7010 info@miada.us

Mission Statement

The Michigan Independent Automobile Dealers Association is committed to promoting growth and preserving the vitality and integrity of the independent motor vehicle industry through education and legislation as advocates for consumers and dealers.

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ASSOCI AT ION NE W S

Van Celebrates 90th Birthday ASSOCIATION HONORS VETERAN DEALER

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Maurice VanCoillie is best known as simply “Van.” Van owns Van’s Used Cars in St Clair Shores. He is one of the founding members of the MIADA and the eldest used car dealer in the country. Van recently celebrated his 90th birthday. During the celebration, he received a plaque from NIADA. Happy birthday, Van!

INDUS T RY WATCH

GPS Popular with Dealers INILEX STUDIES CHALLENGES OF AUTO INDUSTRY BY USED CAR NEWS

GPS technology is surging in popularity among car dealerships, which are increasingly using it for in-house applications such as lot management and stolen vehicle recovery, according to an auto industry study released by Inilex, the makers of SkyLINK. The study also found that dealers consider GPS-based theft-recovery devices one of the highest-value aftermarket products. The study of 306 new and used car dealers across the United States covered the challenges dealerships are currently facing, which are increasing despite their confidence in the overall auto industry.

Lot management is still a challenge for dealers, with one-third reporting they have been unable to locate a vehicle when preparing to take a customer for a test drive, and a whopping 86 percent encountering a dead battery when getting ready for a test drive. Additionally, 22 percent of dealers had at least one vehicle stolen in the past year. The study found that investments in preloaded theft-recovery devices appear to pay off, as 33 percent of dealers were able to recover a stolen vehicle using a GPS device. Most auto dealers are optimistic about the market conditions for aftermarket sales – 51 percent believe the market opportunity for aftermarket product sales is greater than it was five years ago, while just 15 percent believe it is smaller – although they report consumer and federal challenges. When asked to identify their single biggest F&I sales challenge, auto dealers highlighted lack of financing, and unwillingness by customers to purchase ancillary products they perceive as lacking tangible benefits. In addition, plans by the Consumer Financial Protection Bureau to increase regulation of F&I products is changing the way dealers approach F&I sales – with more than one in three dealers saying they will change their F&I approach or products offered to ensure value and profitability. Dealers named GPS theft-recovery devices as the second-most valuable product they can offer customers, after service contracts. Dealers also noted that GPS theft-devices deliver high value to their F&I departments.

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DE A L ER BES T P R AC T ICES

In an Age of Rapid Change, Focus on the Basics

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START BY EVALUATING YOUR VALUE PROPOSITION

We are surrounded by distractions on a daily basis. If we are to believe the media, one day the economy is tanking, the next the economy is thriving. Everything is shifting to mobile and we are all way behind the curve in adjusting dealer practices to accommodate new trends. You get the idea. The net result is that these extreme examples take our focus away from where it should be. In reality, the key to long-term success in any business is to maintain a focus on the basic question around the value you are delivering to the customer. This is certainly true for independent auto dealers. With this central question guiding your actions, you may constantly reevaluate your basic value proposition to ensure you are delivering the products and services your customer needs in a way that is still relevant. What does this mean?

Let’s start with the automobiles themselves. Do you have the right mix of cars versus trucks, full size versus compacts, and are you carrying inventory that runs across different price points? Just because historically you sold more trucks than cars doesn’t mean that same mix will produce the same result in the future. Keeping up to date on the demographics of your area and the traffic surrounding your dealership can help you make decisions on which vehicles you should keep on the lot. Another treasure trove of information can be found in your dead deal files. Many deals die because you simply did not have the right vehicle on the lot to fit the customers’ needs, or the client couldn’t meet the requirements of the lender, such as a max payment amount. Consider factors such as fuel prices. We all know that when fuel prices are high compact vehicles with better gas mileage tend to sell faster and with better margins. Another play you will want to strongly evaluate is your online presence. Facebook and Twitter can give you great feedback, but what about your website? Do you check it regularly to make sure it’s operating correctly? Can customers find the information they’re looking for and is it readily available? Do you have checks in place to make sure all the links within your website work correctly on a weekly basis? Making sure customers can shop for vehicles and financing 24/7 is a must. One of the best ways to increase sales is to make sure you are accessible to the customer around the clock. The only way to do that is with a working website that offers customers the opportunity to browse your inventory, ask

BY CHET HEUGHAN

questions and apply for credit any time, day or night. So once you establish that you have the right vehicles and a great sales and distribution model, what’s missing? The right people can make or often break your business. Hiring top performers is not a luxury anymore. It’s a critical necessity in a small dealership. Having someone who can not only deal with problems but can identify opportunities to grow your business is a must. It all starts with hiring the right people. Not only should you be checking past employer references and personal references, but also checking with some of your lenders and vendors. This will help you identify top performers or potential problems. Being comfortable with technology is a must. Having an employee that has great relationships with your vendors and lenders is just as important as having an employee that can post great sales results each month. We all know that the right relationships can make or break your business. Create the right compensation plan. Making sure your compensation plan supports the behavior and actions that drive your business goals is essential. It’s important not to create plans that inadvertently put your employee or your business at a disadvantage. If you do not properly evaluate the plan, your sales team will subsequently exploit every hole in the plan to their benefit. Remember the sales plan you lay out for your employees drives their behavior, not what you tell them in a sales meeting. Customer feedback is a great tool. If you are not completing post sale surveys with your customers you are passing up a great opportunity to learn more about your business and how to make it better. Many large dealerships pay thousands of dollars to consultants for information that could otherwise

LIVING IN THE AGE OF THE INTERNET AND SMARTPHONES, THE RATE OF CHANGE IS GROWING EXPONENTIALLY. THE NEED TO CONSTANTLY REEVALUATE YOUR BUSINESS HAS ALSO GROWN. UNDERSTANDING THE MOST BASIC ELEMENTS OF YOUR VALUE PROPOSITION – THE VERY POINTS AT WHICH YOUR SALES AND DISTRIBUTION METHODS IMPACT YOUR CUSTOMER – IS A GREAT PLACE TO START.

be obtained through a simple five-minute survey from each customer. Online services like Survey Monkey make creating and distributing surveys simple and seamless. Interpreting the data from your surveys can help you determine if you have the right employees with the right attitude for long-term success or if you’ve hired people who just want to exploit each customer for the maximum dollar amount benefit and move on to the next dealership. Living in the age of the Internet and smartphones, the rate of change is growing exponentially. The need to constantly reevaluate your business has also grown. Understanding the most basic elements of your value proposition – the very points at which your sales and distribution methods impact your customer – is a great place to start. CHET HEUGHAN IS DIRECTOR OF APP ONE RISK MITIGATION SERVICES, INDIRECT LENDING FOR WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM.

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M A RK E T WATCH SOCI A L MEDI A

4 Key Actions to Improve Social and Content Marketing

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WIN YOUR CUSTOMERS’ ATTENTION WITH REAL VALUE

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Mastering online marketing to ensure your store stands out amongst the noise is not an easy task. Developing key social and content marketing strategies is the first step to winning your customers’ attention. They crave information about your products and services to help them decide. But, it’s getting more and more difficult to get them that information first, before your competitor does. Marketing channels are growing and becoming more complex. Social advertising is prevalent and is required on certain channels just to get your content seen. Algorithms change rapidly and, as a GM, sales manager or even as a salesperson, it’s hard to compete with savvy, socially relevant companies. However, the right content in your marketing can provide real value to your target customers and that’s where you can stake your claim. The competition to gain your target customers’ attention increases daily. Each day, 92,000 articles are posted on the web (moz.com). Dealerships can’t compete with the big media publishers based on sheer volume. However, where you can compete is in understanding, defining and communicating your company’s unique promise of value. Content is still the king in all marketing and advertising. Implementing a solid content strategy will win you the business. Dealers have a unique advantage over the large media companies and larger, less-nimble competitors: They can provide real value like they do in real life, with the relationships they have with current customers they see every day. The real value lies in the quality of your content and following through with a solid strategy that attracts and engages your target customers. It’s time to start providing real value, not just content in marketing. In 2015, it will be crucial to your bottom line to engage prospects and customers with valuable content. Here are four crucial actions to take now to win business.

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Create compelling content. “Compelling” is in the eye of the beholder. Compelling to whom? Compelling how? To create compelling content, you must know what’s already compelling to your prospective clients and customers. Most buyers begin their journey by some recognized void or need. They realize the status quo no longer serves them and they’re motivated to make a change. Content that speaks to their concerns or desires is compelling because it’s aligned with what your customers need right now. It serves them (creates real value) because it helps them understand their needs and puts them on the path to finding answers. You must also create content that should be compelling to them. What do your customers need to know that they don’t already know about you, your company, your products and services or even the buying process? As the expert, you help them discover information that’s important. Leverage your employees’ expertise. Providing value by showing your authentic customer experience helps cement your business in their minds. Construct a content calendar. Systems are awesome. They help you stay focused and keep you out of danger and alleviate that overwhelmed feeling. You can rely on a system to do the thinking for you. Taking the concept of creating compelling content for your prospects a step further, construct a weekly or monthly calendar of the subjects you want to discuss in your content. Start with your customers’ and prospects’ biggest struggles. Pick subjects you know they want to know about: their frequently-asked questions. Plan out weekly or monthly what you’ll cover in your content on your blog, social media and social advertising. When you have a plan, you can refer back to it whenever you need to. It takes the guesswork out of “what to share on social media.” Leverage your content hub. Your website is your content hub. It’s important to take a

BY KATHI KRUSE

holistic view of your marketing channels, and they should all point back to your website. Your blog should live on your site so that when your posts are found on other channels, prospective buyers will be guided to your site. Once you have a system started with your content calendar, use those subjects to formulate your blog posts. Create an additional system component in your blog frequency. Pick the days of the week you’re going to publish and stick to the plan. Be consistent. Search engines love consistency. Fresh, new content that’s published regularly will help you get found quicker. Once you get a routine happening, you’ll find it’s much easier to publish content that provides real value. You’ll come up with great ideas as you’re driving home or taking your morning shower. It happens to me all the time! Publish compelling content on social media. The ideal place to get more visibility for your blog content is on social media. “Syndicating” posts on a regular basis not only allows customers and prospects to witness the real value provided by them but when they click to read, they’re taken back to your site. “Social signals” carry a heavy weight in SEO. Traffic from social media back to your site increases your site’s authority. Your posts are also indexed for the keyword phrases you write about and want to be known for. Providing real value and nurturing customer loyalty will be big trends in 2015. Boring, irrelevant marketing content has a negative effect on your brand – both with users and on your bottom line. Set yourself up for success by adopting these four actions into your marketing right now, before your competition figures it out. KATHI KRUSE IS AN AUTOMOTIVE SOCIAL MEDIA MARKETING EXPERT, BLOGGER, CONSULTANT, AUTHOR, SPEAKER AND FOUNDER OF KRUSE CONTROL INC. KRUSE CONTROL COACHES, TRAINS & DELIVERS WEBINARS FOCUSED ON INTEGRATING SOCIAL MEDIA AND ONLINE REPUTATION MANAGEMENT INTO DEALERSHIP OPERATIONS.

‘Vettes Hold Values 2014 CORVETTE DOMINATES IN VALUE RETENTION BY AUTO REMARKETING STAFF

NADA Used Car Guide analysts detailed the one-year performance of all new, or heavily redesigned, mainstream car and truck models and the 2014 Corvette dominated other models by retaining 84.7 percent of its typically equipped manufacturer suggested retail price. In addition to retaining its value best among the 20 vehicle models deemed eligible for the report (all vehicles listed were either redesigned or all-new for the 2014 model year), the Stingray ($55,345 MSRP) saw a 14.7-percentage point lead over the average value of a car within the upper sport car segment. The significantly less expensive Subaru Forester ($25,820 MSRP) saw similar value retention, keeping 81.8 percent of its retail price. Among the biggest losers, the 2014 Mitsubishi Mirage held only 54.5 percent of its value. This was followed closely by the all-new Fiat 500L ($20,045 MSRP). The pint-sized Italian subcompact kept a scant 55.3 percent of its original manufacturer suggested retail price.

INDUS T RY NE W S

NextGear Capital Names Finance VP ADAM GALEMA PROMOTED BY USED CAR NEWS

NextGear Capital has appointed Adam Galema to the role of vice president of finance. In this role, Galema will lead the company’s treasury, accounting, and financial planning and analysis teams while helping ensure NextGear Capital is positioned properly for future growth. Galema has been with NextGear Capital since 2005, starting as accounting manager before being promoted to controller in 2009, where he was instrumental in the development of the company’s treasury and accounting systems. Prior to joining NextGear Capital, Galema spent four years with Enterprise Rent-a-Car as an accounting supervisor. An Indiana native, Galema holds a bachelor’s in accounting from Anderson University and an MBA from Liberty University.

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M A N AGEMEN T M AT T ERS

Protecting Your Data GUARD YOUR MONEY AND CUSTOMERS FROM DIGITAL HACKERS

The list of companies and corporations that have fallen prey to data hacks in the last year is lengthy – Target, JP Morgan Chase, Home Depot and eBay, just to name a few. These companies, along with millions of people throughout the world, find themselves dealing with the most sophisticated criminal in today’s society: the digital hacker. Ten years ago, no one understood the financial profits one could achieve through hacking. As a result, digital hackers often hacked into computer networks for the simple pleasure of proving they could. Times, like technology, have changed, as today’s hackers hack for the same reason thieves steal: to take your money. The last thing you want as an auto dealer is to be a victim of a cyber-attack. Not only could the hackers gain access to your bank account, but you could also face legal penalties for failure to protect sensitive client information.

BY NEXTGEAR CAPITAL NEWS STAFF

As a result, it’s more imperative than ever that dealers take necessary steps to ensure that their data, as well as their customers’, remains safe in the digital sphere. Here are some simple tips that may help protect your data. Don’t open/click suspicious looking file attachments. One of the newest trends in the hacking world is spear phishing, which is an email spoofing fraud attempt in which the hacker seeks access to confidential information. In some cases, the hacker will do extensive research on an individual to discover known acquaintances. With this information, the hacker will then send an email that looks like it’s from someone you know with an attachment or a request to click a link, which results in the hacker gaining access to your computer. Once the hacker has access, they can install a key logger to monitor your keystrokes in hopes of discovering passwords

and other confidential information. Therefore, if you receive an email from someone you know that looks even remotely suspicious, do not open it. Instead, contact the person directly to inquire whether they actually sent you an email. Make sure your software is up-to-date. We have all received those annoying little pop-ups on our computer screen stating it’s time to update software. Don’t ignore this message! One of the functions of these updates is to patch security vulnerabilities that could compromise your system. Don’t use the same password for every website. Say you had just one key that unlocked the doors to your house, car and office – and it was stolen. My guess would be you’d feel pretty vulnerable, right? Using the same password on every website is along those same lines. If hackers gain access to that one password, they now have the

keys to everything you do online. There are tools out there to assist in password creation. One free tool is LastPass, which generates complex passwords and remembers them for you in the future. Unfortunately, there’s no way to completely eliminate the risk of cyber-crime. However, by following the simple safeguards above, you can help boost the protection around your data and keep it from falling into the wrong hands.

P RODUC T S & SERV ICES

Equifax Launches Platform to Aid 3rd Party Verifications

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QUICKLY DELIVERS THE NEXT GENERATION OF SOLUTIONS BY SUBPRIME AUTO FINANCE NEWS STAFF

Equifax unveiled its newest technology platform during the recent National Automobile Dealers Association convention. Equifax said AutoConnect can enable partners to deliver credit, marketing, risk and verification solutions seamlessly to their clients. “AutoConnect will help partners pursue opportunities across all segments of the automotive ecosystem,” said Kathi Mehall, vice president of technology for automotive services at Equifax. “It uses auto-specific APIs (application programing interfaces) based on the Standards for Technology in Automotive Retail (STAR) to help streamline partners’ implementation and deployment of Equifax data and services,” Mehall continued. With the automotive industry experiencing significant growth and evolution in the consumer online shopping experience the last several years, Equifax explained that it’s making this crucial investment to deliver a platform as well as capabilities that allow partners to

quickly deliver the next generation of solutions to their customers. Recent partner CreditMiner, a consumer qualification solution provider, announced it will be leveraging Equifax real-time technology platforms and data to empower delivery of their products. “CreditMiner is committed to providing automotive retailers with transparent and financial-driven solutions that allow dealers to increase profitability and decrease exposure to compliance burdens and potential violations,” said Don O’Neill, vice president of sales and marketing at CreditMiner. “Equifax is a trusted brand and is renowned for innovation,” O’Neill continued. “We are excited to partner with their automotive team and look forward to delivering on our commitment to our customers.” Equifax also mentioned AutoConnect can provide third parties access to unique data from the company, such as verification of income and employment, which is accessible through an API designed for the auto industry. Equifax

vice president of marketing for automotive services Scott McMahon stressed this availability can open up new opportunities for partners who deliver solutions to dealers, lenders and OEMs and help to propel their business forward. “Innovative and secure, the AutoConnect platform will be a cornerstone of all our auto marketing solutions – including the ones we have launched and those that we are developing for future deployment,” McMahon said. “Our ongoing investment in AutoConnect will enable growth for our partners’ business, with particular focus in the upfront marketing, online and consumer qualification space.”

Equifax Expands Automotive Team In other company news, Equifax recently expanded its automotive services team. Industry professionals Angelica Jeffreys and John Giamalvo joined Equifax to add decades of real-world automotive

expertise to an already seasoned team of industry veterans. Jeffreys came on board as vice president and automotive dealer leader and Giamalvo is now vice president of dealer services. “Expanding our team is a direct reflection of both our successes in 2014 and our continued commitment to support the automotive industry, and we plan to stay in lock-step with the market’s upward trajectory,” said Gary Hughes, general manager of automotive services at Equifax. “Automotive Services at Equifax is dedicated to finding innovative ways to solve for real-world pain points – because our auto solutions are built by auto people who have spent their careers working directly in the business,” Hughes continued. “We expect 2015 to be an even stronger year for auto and we’re confident that with Angelica and John’s extensive backgrounds, our auto business will have the best tools and consumer insights needed to succeed in a highly competitive market.”

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WASHING TON UP DAT E

NIADA Government Report

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HERE’S A RUNDOWN OF SOME OF THE LATEST GOVERNMENTAL ISSUES AND ACTIVITY AFFECTING THE USED CAR INDUSTRY FROM NIADA REGULATORY COUNSEL SHAUN PETERSEN AND NIADA LOBBYIST SANTE ESPOSITO.

REGULATORY REPORT Consumer Financial Protection Bureau Complaint portal: The CFPB has sent invitations to Buy Here-Pay Here dealers and/or their related finance companies inviting them to sign up with the bureau’s online complaint portal. NIADA is in communication with the bureau’s staff to find out the reason for the invitations. AFSA study: The American Bankers Association, American Financial Services Association, Consumer Bankers Association, Financial Services Roundtable and U.S. Chamber of Commerce sent a letter to CFPB director Richard Cordray urging the bureau to conduct a thorough review of its disparate impact methodology in light of the recently released AFSA study that shows the flaws in the Bureau’s process. To read the letter, visit www.cfpbmonitor.com/ files/2015/02/JointTradeLetterCordray_02-18-15.pdf. Department of Justice DOJ and Santander Consumer USA Inc., agreed to a $9.35 million settlement over allegations that Santander improperly repossessed more than 1,100 vehicles from military servicemembers between January 2008 and February 2013 in violation of the Servicemembers Civil Relief Act. Santander allegedly repossessed 760 vehicles owned by SCRA-protected servicemembers without court orders. Under the SCRA, servicemembers are entitled to have a court to review and approve any repossession if they took out the loan and made a payment before entering military service. Courts may appoint attorneys for servicemembers and delay repossessions or require lenders to refund prior payments before repossessing. Santander’s failure to obtain court orders before repossessing deprived servicemembers of those rights. The agreement requires Santander to pay $10,000 plus compensation for any lost equity (with interest) to each servicemember. DOJ also claimed Santander

products or services are highly rated or top-ranked based on unbiased consumer reviews, or that customer reviews are unbiased. It also requires the company to clearly and prominently disclose any material connection, if one exists, between it and its endorsers. National Highway Traffic Safety Administration Secretary of Transportation Anthony Foxx and NHTSA Mark Rosekind called on Congress to pass legislation that would require rental car agencies and used car dealers to fix safety defects before renting or selling vehicles subject to a recall.

sought to collect fees from 352 more repossessions that unrelated motor vehicle lenders had conducted in violation of the SCRA before Santander acquired the loans. The agreement requires Santander to pay $5,000 to each of those servicemembers and repair the credit of all affected servicemembers. FEDERAL TRADE COMMISSION CFPB reports: The FTC sent letters to CFPB director Cordray outlining the FTC’s work in enforcing the Fair Debt Collection Practices Act and the Equal Credit Opportunity Act. The FTC highlighted 10 new debt collection cases against 56 defendants, the most filed in any year, and said it received nearly $140 million in judgments for alleged FDCP Act violations. The ECOA report featured the FTC’s public workshop on big data and how big data impacts the extension of credit, employment offers and insurance to consumers. AmeriFreight Settlement: Auto shipment broker AmeriFreight allegedly misrepresented online reviews by failing to disclose that it gave cash discounts to customers to post favorable reviews. The FTC’s proposed order prohibits the company from misrepresenting that their

LEGISLATIVE REPORT Meetings in Washington NIADA executive vice president Steve Jordan, past president Chris Martin and Shaun Petersen attended separate meetings of the Republican Attorneys General Association and the Democratic Attorneys General Association in Washington to continue to build relationships with state AGs. That group, along with NIADA lobbying firm Federal Advocates, also met with key members of Congress to discuss the association’s concerns about the Department of Defense’s ban on the use of the military allotment system for purchase of personal property – including motor vehicles. The concerns were well received and staff suggested some follow-up actions, including legislative language requiring the DOD to report to Congress regarding the process it used to address the issue and the justification for its conclusion, and a letter to members of Congress expressing NIADA’s concerns. MAP-21 Reauthorization The current short-term extension of MAP-21 expires at the end of May. While House and Senate authorizers are drafting policy provisions for a potential long-term reauthorization bill, their hands are tied until Congress determines how to fund the growing gap in the Highway Trust Fund revenues. Congress will either have to again transfer billions in general fund revenues just to maintain the

current flat funding levels or find other sources of revenue. Industry is pushing for a gas tax increase, but strong opposition from House Speaker John Boehner and Ways and Means Committee chairman Paul Ryan might make that politically impossible. Another option gaining interest is a plan proposed by Sens. Rand Paul (R-Ky.) and Barbara Boxer (D-Calif.) to permit U.S. firms to repatriate overseas earnings at a much lower tax rate, with the new tax revenue going to the HTF. The Obama Administration, Sens. Roy Blunt (R-Mo.) and Michael Bennet (D-Colo.), and Rep. John Delaney (D-Md.) have made proposals with similar goals but different details. Dodd-Frank Reform Several bills have been introduced that would repeal or amend the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB. For example, S.89, introduced Jan. 7 by Sen. David Vitter (R-La.), and House companion bill H.R.171, introduced Jan. 26 by Rep. Adam Smith (R-Neb.), would repeal the Dodd-Frank Act and restore the provisions of law amended by it as if it had never been enacted. Vitter also introduced S.107, Terminating the Expansion of Too-Big-To-Fail Act of 2015, on Jan. 7, to repeal the Payment, Clearing and Settlement Supervision Act of 2010 (DoddFrank title VIII) and amend the Financial Stability Act of 2010 (title I of the Dodd-Frank Act), the Federal Deposit Insurance Act and the Federal Reserve Act, to eliminate all supervision by the Federal Reserve’s Board of Governors of domestic and foreign nonbank financial companies, including new or heightened standards and safeguards and minimum leverage capital requirements. The bill would also repeal the Board’s authority to supervise certain nonbank financial companies, including the prohibition against management interlocks between such companies and certain other financial companies and its requirement to report to Congress on bankruptcy issues.

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M A N AGEMEN T M AT T ERS

We Can’t Seem to Hire the Right People SOUND FAMILIAR?

overwhelming amount of time and money is spent on sales process, sales desk deal management, F&I process, closing techniques, word tracks and other productivity focused skill sets, often times without determining if you are training “the right person.” If you were to ask dealers how much training time and money they invest in teaching those employees with recruiting, selecting and hiring responsibility how to identify and select “the right people,” some wouldn’t know what you were talking about. Others, who have invested the time and money to develop selection skill sets and processes, would know exactly what you are talking about. For those that don’t understand this approach, they don’t even realize that they may be investing training dollars and time in the wrong people to start with. Let me give an example. I’m sitting with a dealer who says, “I can’t seem to hire the right people.” I ask him to explain

BY JOE BASIL

his hiring process and who has responsibility for hiring decisions. The first step in the store’s process is an initial interview by one of three front-end managers, then a secondary interview by one of the other two managers and/or the dealer. I ask, “Who has final authority for the hiring decision?” He explains that it goes back to the manager who conducted the initial interview. So I ask the dealer to give me his description of the “right” salesperson. He responds, “They have to be energetic self-starters with good people skills who set goals and achieve them; a good closer, good grosser and they have to be a team player.” Next, I ask permission to ask the three front-end managers the same question. Here’s what I found… Manager number one described the right salesperson as someone who is organized, punctual, follows procedure and covers all the details. Manager number two described

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PATTERNS INDICATE THAT MOST PEOPLE WITH HIRING AUTHORITY TEND TO HIRE PEOPLE THAT MATCH THEIR OWN DESCRIPTION OF THE RIGHT PERSON AS OPPOSED TO HIRING A PERSON WITH SKILL SETS PROVEN TO RESULT IN DEVELOPING A “TOP PERFORMER” IN THEIR POSITION.

“We can’t seem to hire the right people.” How many times have you heard this from dealers, managers and business owners? How many times has it been on the 20 Group agenda topic list? Hearing this statement so often, one would think that it is a priority in every business to have a process and system in place to identify, select and hire “the right people.” So what is it that keeps so many dealers and managers from learning the skill set or even recognizing that they lack the skills? Let’s start with how most dealers grew up in the car business. The majority of them came up through the sales or front end of the business. The front end is a very people-oriented area of the business. Anyone with experience in that department has probably hired and trained hundreds of people. When you examine training strategies and concentrations in the front of the store you will typically find an

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Patterns indicate that most people with hiring authority tend to hire people that match their own description of the right person as opposed to hiring a person with skill sets proven to result in developing a “top performer” in their position. So how do you learn to identify “topperforming” skill sets? One simple answer may be right in front of you. Make a list of your best salespeople. Not your top salesperson, your best salespeople. Now jointly, along with those people with hiring authority, describe the personality traits, tendencies, habits, preferences, skill sets and accomplishments of

your “best” salespeople. Assuming you have topperforming salespeople, you should begin to see a pattern. For a point of reference you could perform the same exercise on your “worst” salespeople. From my experience the most effective approach to implementing a recruiting, selecting and hiring process is to hire a professional trainer or consultant. Going back to my earlier point about determining if you are training the right person, you may first want to have your management team evaluated to confirm that you are training the right people to start with.

Should you have any hesitation about investing in a process to improve your selection skills, let me conclude with the following question: Between the date you hired them and the date you fired them, what did you discover about them that you didn’t know when you interviewed them? And how much did it cost you? This should be a no-brainer! JOE BASIL IS AN EXECUTIVE CONFERENCE MODERATOR AT NCM INSTITUTE. HE HAS 40 YEARS OF RETAIL AUTOMOTIVE AND GENERAL BUSINESS EXPERIENCE. JOE IS A GRADUATE OF NORTHWOOD UNIVERSITY WITH A DEGREE IN AUTOMOTIVE MARKETING AND HOLDS A BACHELOR OF SCIENCE DEGREE IN MARKETING FROM CANISIUS COLLEGE. THIS ARTICLE ORIGINALLY APPEARED ON NCM’S UP TO SPEED BLOG (HTTP://BLOG.NCMINSTITUTE.COM) AND IS REPRINTED WITH PERMISSION.

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the right salesperson as someone who can gross, close deals, sell cars and build a book of business. Manager number three described the right salesperson as someone who is friendly with customers, always takes care of their needs, never has customer complaints and has strong customer satisfaction. So, based on four different descriptions of the right person, it’s no wonder this dealer can’t hire the right people. One manager would hire a “neat nick,” the next manger would hire a “slammer” and the last one would hire a “consumer advocate” – and no one would hire the dealer’s salesperson!

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COMP L I A NCE OV ERDRI V E

Five Tips for Avoiding Fraudulent, Deceptive and Unfair Advertising Practices

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DON’T RISK YOUR DEALERSHIP’S REPUTATION

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The past year has been extremely active on the regulatory compliance front in the automobile sales and financing industry. In addition to actions by the Consumer Financial Protection Bureau, the Federal Trade Commission continues to take enforcement actions against dealers. The FTC’s activities in 2014 were likely just an indicator of what will continue throughout the coming year. The mission of the Federal Trade Commission is to work on behalf of consumers to recognize and stop fraudulent, deceptive and unfair business practices. Given the increased focus on auto dealer practices, it is a good time to review internal processes to ensure compliance with relevant rules and laws that exist to ensure dealers represent financing and leasing terms accurately and clearly through any advertising efforts, from television and print to social media. Here are five key tips you will want to consider to avoid fraudulent, deceptive and unfair advertising practices. Promotional Half-Truths “Nothing down!” “Everyone qualifies for credit!” “Get out of your lease for $1!” All of these promotions and, of course, many more have been criticized by regulators in the last few years for not being truthful. In the last example, which is one of the most recent, an auto dealer settled with the FTC after facing an enforcement action that charged it used deceptive ads to promote the sale and lease of vehicles. This specific case cited violations of Consumer Leasing Act, Regulation M, Truth in Lending Act and Regulation Z provisions of misrepresenting material costs. In other words, presenting “just part of the story” in an advertisement won’t fly with regulators. Your dealerships should confidently advertise the special credit and incentive offers you are able to extend to customers, as long as you can demonstrate that claims like these are completely true, and true in

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every case. Details in Fine Print When considering the requirement you include the “full story” in any ad, remember if there are any exceptions to your promotions to make them prominent. Any advertising that offers enticing prices, lease or finance terms, and promotions, and then uses small text to add caveats or limit the headline offer should be avoided. In another real example from late last year, FTC action against several dealerships and their advertising company noted violations for frequently focusing on only a few attractive terms in the ads while including details and exceptions in fine print, through distracting visuals or with rapid-fire audio delivery. Ads were called out for promoting low monthly payments or attractive annual percentage rates and finance periods while concealing other material items, such as the fact that the low payments were actually for leases, not sales; major limits existed on who could qualify for discounts; and offers included significant added costs. The qualifications and limitations should be prominent so your target audience clearly understands the terms. Truth-in-Lending Advertising Requirements The Truth-in-Lending Act and Regulation Z (12 CFR 1026.24) require specific disclosures be given certain levels of prominence when triggering terms, such as “finance charge,” are used. One of the highest fines recorded last year was for an advertisement failing to display credit disclosures “clearly and conspicuously,” as required by the TILA. All promotions should be reviewed for these advertising disclosure requirements by your compliance department. Responsibility ultimately falls with your dealership. Don’t assume that your marketing firm or advertising agency knows the specifics of these requirements. Penalties for enforcement actions have not been lessened in any recent cases due to claims of

lack of awareness of the rules or by shifting responsibility to the advertising agency. All Forms of Media Consider all the forms of media distribution you are using for your promotions. In addition to print and TV advertisements, ads on websites, Facebook, Twitter and other social media outlets are subject to scrutiny. In many cases ads are being communicated in English and in other languages in local and regional media. Make sure all promotions in all languages and forms of media are following the same guidelines. It’s important to understand what constitutes examples of

ADVERTISING REQUIREMENTS EXIST AT THE FEDERAL AS WELL AS THE STATE OR LOCAL LEVEL, AND THESE RULES CAN VARY SIGNIFICANTLY. ANY LEGAL REVIEW OF YOUR ADVERTISING SHOULD CONSIDER THE FULL SCOPE AND BREADTH OF RULES THAT MAY APPLY.

BY CHIP ZYVOLOSKI

misleading ads and acceptable ads for various forms of media. What might make sense in a print ad for a newspaper likely won’t work in a Twitter campaign without significant adjustment. Your compliance department should be well-versed in how to apply state and federal advertising rules to various media, including how to properly make discount claims, specific rules for email advertising, claims related to “green marketing,” Internet advertising, satisfaction guarantees and the list of various disclosure “trigger” terms. Reputational Risk Advertising is subject to regulatorycompliance review and risk, but the bigger risk may be to your business’s reputation. Nothing is more important to the long term success of your business than your reputation with the public. Beyond any potential enforcement actions, your dealership may suffer an even greater loss if you develop a bad reputation when potential customers are disappointed or feel deceived upon finding out that advertised deals are less than expected. Fines and citations can be paid for and resolved, but it is difficult, even impossible sometimes, to restore public trust that has been damaged. Summary We have seen over 20 enforcement actions in the indirect auto lending industry in recent years by the FTC in an effort to protect consumers. Advertising requirements exist at the federal as well as the state or local level, and these rules can vary significantly. Any legal review of your advertising should consider the full scope and breadth of rules that may apply. Making sure advertisements are in compliance with the full spectrum of rules and laws to which your dealership is beholden is part of the relationship you should have with your legal counsel. Beyond the steep cost of any penalties, perhaps the most important consideration is that the reputation of your dealership is ultimately at stake. And that’s not something you want to put at risk. CHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.

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