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FEBRUARY/MARCH 2011

DEALER NEWS O F F I C I A L

P U B L I C A T I O N

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N I A D A

N E V A D A

PREPARING FOR THE FUTURE LSO Learn to Earn A PLUS Can More Small Cars Equal More Sales?

DALLAS, TEXAS Permit No. 2079

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MAGAZINECONTENTS 4 Preparing for the Future 6 Learn to Earn 10 Can More Small Cars Equal More Sales?

CMD Classes Dealers who demonstrate commitment and support the principles and ethical business standards of the CMD® designation complete a four-day seminar that addresses Business Management, Merchandising, Financial Management, Human Resources, and Business Planning. Northwood University provides the instructor and awards four Continuing Education units for this course. The next class will be March 10-12 at the SuperMedia Hotel and Conference Center at DFW. Visit niada.com for more information.

NIADA/Manheim Community Service Award Manheim, the world’s largest provider of vehicle remarketing services, cares about its employees, the environment and the communities it serves. From fund raising drives to tutoring kids after school to supporting long-term conservation efforts, Manheim and its employees are dedicated to giving back to their communities and knows independent vehicle dealerships across the country share in this commitment. For the first time this year, Manheim is recognizing and honoring those dealerships by awarding the 2011 National Manheim Community Service Award at the 65th NIADA Annual Convention and Expo. For information on how to nominate and to obtain more in-depth information, please contact Georgia Brown, NIADA director of education, at 817-640-3838 or see page 12.

ADVERTISERSINDEX ADESA.................................... Inside Back Cover AutoTrader.com ................................ Back Cover Cars.com............................................................9 Lobel Financial ..................................................7 Manheim.com .........................Inside Front Cover NIADA Convention.................................... 16, 17 SmartAuction .....................................................5 United Acceptance........................................... 11 Western General / Protective............................15

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION FOR INFORMATION ON HOW TO BECOME A WWW.NIADA.COM • WWW.NIADA.TV MEMBER PLEASE CONTACT CINDY SIRKEL. NIADA HEADQUARTERS: • 800-756-4232 CINDY@NIADA.COM 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 NATIONAL INDEPENDENT PHONE (817) 640-3838 FOR ADVERTISING INFORMATION TROY GRAFF AUTOMOBILE DEALERSCONTACT: ASSOCIATION (800) 682-3837 OR TROY@NIADA.COM.

WWW.NIADA.COM • WWW.NIADA.TV

The Nevada Dealer News is published bi-monthly by the National NIADA HEADQUARTERS: Independent Automobile Dealers Association Services Corpora2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 tion, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 817PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: 640-3838. Periodicals postage paid at Dallas, TX TROY and atGRAFF additional (800) 682-3837 OR TROY@NIADA.COM. offices. POSTMASTER: Send address changes to NIADA State THE NEVADA2521 DEALER NEWS IS Arlington, PUBLISHEDTXBI-MONTHLY BY The THE Publications, Brown Blvd., 76006-5203. NATIONALand INDEPENDENT AUTOMOBILE ASSOCIAstatements opinions expressed herein areDEALERS those of the individTION SERVICES CORPORATION, BROWN BLVD., ual authors and do not necessarily 2521 represent the views of ARLINGNevada TON, News TX 76006-5203; PHONE 817-640-3838. PERIODICALS Dealer or the National Independent Automobile Dealers AsPOSTAGELikewise, PAID AT the DALLAS, TX AND ADDITIONAL OFFICES. sociation. appearance of AT advertisers, or their identifiPOSTMASTER: ADDRESS TOanNIADA STATE cation as membersSEND of NIADA, does CHANGES not constitute endorsement PUBLICATIONS, BROWN BLVD., ARLINGTON, 76006of the products or2521 services featured. Copyright © 2011 TX by NIADA 5203. THE AND OPINIONS EXPRESSED HEREIN Services, Inc.STATEMENTS All rights reserved. ARE THOSE OF THEMGR./SALES INDIVIDUAL AUTHORS DO NOT NECSTATE MAGAZINE Troy GraffAND • troy@niada.com ESSARILY REPRESENT THEMorgan VIEWS OF NEVADA DEALER NEWS FRONT COVER BY Mike OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASEDITOR Mike Harbour • mharbour@niada.com SOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, PRODUCTION MGR. Jacob Kerns • jacob@niada.com OR THEIR IDENTIFICATION AS MEMBERS NIADA, DOES ART/PRODUCTION MGR. Christy Haynes • OF christy@niada.com NOT CONSTITUTE ENDORSEMENT OF THE PRODUCTS OR PRINTING Nieman AN Printing SERVICES FEATURED. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Mike Harbour • mharbour@niada.com PRODUCTION MGR. Jacob Kerns • jacob@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing

THE NEXT CLASS WILL BE MARCH 10-12

Discount code available for NADA Guide No dealer should be without the NADA Official Used Car Guide.

These must-have guides feature pocket-size portability for quick and easy carside appraisals. Additionally, NADA Online gives you 24/7 online access to used vehicle values, at your desk and out at the auction on your smart phone, while NADA e-Valuator for Dealers software combines more than 19 years of NADA values on your PC and offers an inventory feature. NIADA offers member subscription discounts for the NADA Official Used Car Guide, as well as NADA Online and NADA e-Valuator for Dealers. Contact your state association or NIADA at 800-682-3837 for your discounted subscriptions or complete the online ordering form at www.nada. com/niada. The promotional code for ordering discounted NADA products is NIADA199. This code will need to be entered during checkout to receive the discount.

NIADA199

INSIDE

Mark Your Calendars for the 2011 National Tire Safety Week! RMA’S TENTH ANNUAL NATIONAL TIRE SAFETY WEEK WILL BE HELD JUNE 5-11.

The annual event is an initiative of the RMA’s “Be Tire Smart – Play Your PART” program, a year-round effort designed to help drivers learn the simple steps they can take to ensure that their tires are in good working condition. RMA is the national trade association for tire manufacturers. Tire manufacturers and retailers nationwide will work to educate motorists about proper tire care and maintenance. RMA provides tire retailers, auto dealers and automotive repair shops with free “Be Tire Smart” brochures and other materials. Many participating retail outlets use the opportunity to promote tire care through advertising, promotions, free tire pressure checks and conducting media outreach.  More than 22,000 tire and auto service outlets participated in the 2010 National Tire Safety Week. RMA released a survey of more than 5,400 vehicles that showed half with at least one under inflated tire. Nearly 20 percent of vehicles had at least one tire under inflated by 8 pounds per square inch (psi). Under inflated tires waste fuel, risk safety and cause tires to wear out faster. Tire and auto retailers who are interested in obtaining free RMA materials for National Tire Safety Week can order them online at www.betiresmart.org. Those who have participated in the event before can expect to receive materials again this year.

Product Discounts AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States with over 4,350 stores across 48 states, the District of Columbia and Puerto Rico. NIADA members have access to AutoZone’s “hot-shot” delivery program including discounts on more than 750,000 product level SKUs in over 70 distinct product categories.

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Future P R E PA R I N G F O R T H E

By Jan Kelly, president of Kelly Enterprises

A

new year brings new goals, and new hopes for improved sales, more lenders, and more profits for everyone. As with any change in the

marketplace, dealerships must prepare their team to meet the current demands of the marketplace. SALES: From all I’ve read, the customers are back. People are once again going to the dealerships to replace their old vehicles with smaller, more fuel-efficient models, and some are adding to their family fleet so they can meet the weather challenges. The great news is the customers are back from their long hiatus. What are they finding at the dealerships? The customers are finding store personnel stretched, and the once-many choices of inventory they enjoyed in the past now cut. The product selection step in the selling cycle will need to stress selling what you see in front of you. During the past few years, those dealerships that survived have learned how to manage inventory more effectively, as well as turning it more quickly. They’ve also learned how to operate in a lean environment. PERSONNEL: Plan on hiring sales personnel and educating them. Personnel are stretched to the point of having job descriptions blurred. I think the time is coming to redefine the roles and create a work environment where they can focus upon the job at hand and cease worrying about what additional items will be asked of them. Multitasking can become dysfunctional after awhile. Sales processes while basic never change, I find each dealership has a specific culture and the process often must be modified to reflect the culture so management will support the process after the educator leaves.

Education is not a one-time event. Plan a continuous relationship with your education resource. Every process

should be monitored, measured, and modified as required. After the modifications have been made, the new process needs to be re-implemented, monitored and the producers need to be held accountable.

LENDERS: The industry needs more of them, and we need them to approve loans. Dealerships will need to continue to seek local credit unions and other local lenders to approve consumer financing. Credit unions may not be use to the independent dealerships, but this is an opportunity to put your best face forward and sell yourself and your business acumen to the lenders. I was asked how important relationships with lenders are; they’re critical to your success. Lenders again wish to become a close business advisor to your operation. They’re going to want a piece of every banking transaction you have; wholesale, retail, merchant services, checkings and savings, personal and business. When you think of lenders, what was old is now new again. Keep your ears to the wind; contact every source prospect for lenders at every opportunity. COMPLIANCE ISSUES: Spend the time it takes to create a binder with your policies and procedures regarding the plethora of federal regulations we must meet. The following is a beginning checklist for those policies and procedures: ______ ______ ______ ______ ______ ______ ______

DISPOSAL RULE P SAFE GUARD RULE P OFAC SDN LIST P RED FLAG RULE P ADDRESS DISCREPANCY RULE RISK-BASED PRICING RULE P ADVERSE ACTION LETTERS P

P

ONCE A POLICY AND PROCEDURE IS PLACED IN WRITING, THE COMPANY IS BOUND BY THE WORDS IT WRITES. With the creation of the new credit protection agency, I think we’ll begin to see enforcement of the rules and regulations and perhaps some additional items will be added to the list of required written documentation. Review your existing policies and verify what’s written is what’s actually happening. If not, then change either the policies or your practices. Once a policy and procedure is placed in writing, the company is bound by the words it writes. Conduct self-audits as written in the policies and procedures. Document the education content and the timing of the education of new hires. Document any breaches of security, or failure to adhere to the company policies. As you know, I am not an attorney and this is not to be used as legal advice. These words are meant to be educational only. Please consult your legal counsel for all legal issues. The future is once again bright. Prepare for success. Jan Kelly is an educator and consultant, international convention speaker and writes frequently for industry publications. For information about educational venues or joining our F&I 20 Group, call 800-336-4275 or visit www. JLKelly.com.

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A S S O C I A T I O N

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Learn to Earn with NIADA’s Education and Training Consortium One of the crucial things I learned during my 30-plus years of interacting with sales-related people is quality salespeople are made, not born. Those

salespeople who experience great sales success are rarely great from the start. They make themselves great because they realized they could be no better than the level of their preparation. I firmly believe the salesperson’s life should be a life of continual learning. There is no place in a sales career where a salesperson can say there is nothing more to learn, no more skills to develop, no more techniques to improve or no more methods to try. Regardless of how long someone has been selling, it is my conviction there is always something to learn. Believe me, nothing fails like a bit of success if it keeps someone from looking for new and better ways to improve performance. As you look at your dealership, what can you say of the results you are getting from your salespeople? Do you need to change or improve your sales culture? Is it time you became more involved in the improvement of your salespeople’s skills? If the answer is “yes,” then think about what your goals might be. Consider a twofold approach. First, provide an educational experience that will help your salespeople achieve mental, emotional and psychological improvement to create instant action and second, to offer your salespeople specific statements (or, as we call it “What to say when…”) for almost any situation, question or objection that they may encounter in their

LEARN toEARN

BY

sales time with customers. One approach might be to define five or six key topics you want to emphasize. May I suggest: How to Locate Customers; Getting to Know the Prospect; A Sales Presentation that Works; Close: Getting to “Yes;” Getting the Deal Done: Finance and the Delivery; and After the “Yes.” These seem to be the prominent skill areas salespersons need most in defining, and experienced – I did not say old – sales staffs often need to sharpen. You want to make sure your sales staff are following your dealership’s philosophy and are singing from the same songbook. I don’t have to tell you there are various ways you can approach training. You probably have already done them all. You probably thought some were effective while others were real bombs. Finding the most effective way of keeping your dealership’s learning curve at its very best is a challenge for every dealer, general manager or sales manager. Squeezing in time for effective new salesperson orientation sessions or training (perhaps retraining) the experienced just doesn’t happen as often as it should. It takes leadership to make it happen. As you evaluate the sales practices at your dealership, consider what is really working, what needs improvement and what you need to eradicate. I challenge you to get involved in making the sales culture the best it has ever been. Be a part of the learning. Be a working leader, actively engaging the sales staff. As a trainer, I preached that message to every group I stood before, and after

L O U

years in the automotive industry; I have collected volumes of presentations. I admit some sessions were better than others, but I have always enjoyed watching a salesperson grow or hearing from a dealer with whom I have worked that his staff is really making strides in sales. Once you get hooked on promoting learning to earn, you miss it when you aren’t as actively involved. That is why when a couple of old independent automobile industry friends of mine suggested I put my knowledge and expertise into an online training program and approach NIADA about using it with it’s members, I decided to create the PreOwned Online Sales Training Course. The timing was perfect because NIADA has recently initiated an Education and Training Consortium to encourage quality educational opportunity providers to join together to offer programs and products to the independent automobile industry. Consortium selection criteria focus on the needs of the dealer. I am happy to say that Lou Vickery’s Pre-Owned Online Sales Training Course met that standard and is one of the first educational opportunities to be offered. It is simple, straightforward and offers flexibility that both the dealer and the salespersons can appreciate. Whether you use this course or select another approach, I challenge you to stay focused on growing your people. Help them become the most effective salespersons in the industry. Encourage their enthusiasm. Cultivate their energy. The profits will be yours!

V I C K E RY

Lou Vickery, an Alabama native, is a former professional baseball player and coach who worked with Merrill Lynch before going into the training and development field. He has presented his customer-focus programs to more than 30,000 people at more than 2,800 companies and dealerships in 44 states and two foreign countries. Vickery, the author of ten books, is in his sixth year of broadcasting and hosts “Lou in the Morning” in the Pensacola, Fla., market.

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Cars.com Partners with AULtec to Ramp Up Daily Data Feeds on Inventory Listings

IT’S NIADA SCHOLARSHIP APPLICATION TIME AGAIN!

AULtec announced Tuesday that dealerships  using its  Dealer Profit Center to list, publish and market their online vehicle inventories can now benefit from online inventory feeds and price updates to Cars.com.

The NIADA Foundation invites graduating seniors of the 2010-2011 school year to complete a scholarship application in pursuit of funds to be paid to the colleges of their choice in the Fall of 2011. Four

regional scholarships are awarded annually in June at the NIADA Convention and Expo. Last year, each scholarship was in the amount of $3.500.

THIS YEAR’S APPLICATIONS MUST BE POSTMARKED NO LATER THAN FEBRUARY 1 AND RECEIVED AT THE NIADA OFFICE BY FEBRUARY 10.

AULtec — a sister company of AutoUpLinkUSA that is involved in inventory data and vehicle image acquisition, management and online publishing — will conduct these feeds and updates to Cars.com several times each day, officials said. “This multiple daily data feed from AULtec to Cars.com is a game-changing advancement in online inventory management,” officials noted. Dealers who utilize AULtec’s DPC product suite and Cars.com can tap into the service for free. It is available immediately. Those looking to obtain more information are encouraged to e-mail Skip Murphy at smurphy@AULtec.om or call (866) 949-9754. “Now dealers having this advantage will have the most dynamic, freshest and most competitively priced inventory on the Internet,” they added.

ELIGIBILITY REQUIREMENTS TO BE ELIGIBLE APPLICANTS MUST:

Be classified as a high school senior during the current 2010-2011 school year and legally reside in one of the four NIADA regions; Have maintained an outstanding academic achievement record as reflected by an official high school transcript; and Demonstrate an aptitude for college work as measured by SAT or ACT scores.

APPLICATION PROCESS

The 2011 Scholarship information and application have been posted on the NIADA Foundation website at www.niadafoundation.org. Applications must be postmarked by February 1, 2011. It must be submitted in a 10-by-13-inch envelope with adequate postage to:

SCHOLARSHIP SELECTION COMMITTEE NIADA FOUNDATION 2521 BROWN BLVD ARLINGTON, TX 76006 All information must be included with the original application. No additional information will be accepted at a later date. NIADA staff will review the applications for completeness and will forward them to the NIADA Scholarship Selection Committee and at Northwood University in Midland, Mich. They will be reviewed by regions. One applicant will be selected from each of the four NIADA regions based on the merit of his or her scholarship application and will be notified by the foundation office no later than mid-May 2011. Information regarding the NIADA/AutoTrader. com National Scholarship to Northwood University may be obtained by contacting the Northwood University Financial Aid office. 8

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CAN MORE SMALL

CARS EQUAL MORE SALE$ The compact segment has seen its share of ups and downs in the past few years. When gas prices were above

$4 in the summer of 2008, interest in compact vehicles – or anything that consumed less fuel – was thriving and improved sales of these vehicles followed. Polk recently confirmed the subcompact category (or lower small) more than doubled from 2005 to 2008 as a result of sales of vehicles such as the Nissan Versa and Honda Fit. When oil costs normalized, so did consumers’ eagerness to jump into a smaller vehicle, creating an opening for the utility-driven crossovers that serve the needs of families and outdoor enthusiasts alike – making 2009 effectively the year of the crossover. More than 330,000 compacts were sold in August 2009 during the CARS - or Cashfor-Clunkers – program (since they met the fuel efficiency standards set to qualify for the discount), so unnatural market share inflation occurred for small cars. By comparison, only about half as many compacts left dealer lots last August. But despite the surge in sales compacts enjoyed due to CARS, compact vehicle sales were almost identical through November 2010, demonstrating growing consumer interest in smaller cars. What’s even more telling is the staggering growth in small car shopping in 2010. Compact shopping on Jumpstart sites was up 11 percent on average in 2010 versus 2009. Not always the sexiest of categories, the segment now represents about 14 percent of all vehicle shopping and research on such properties as Vehix.com, TrueCar.com and CarandDriver.com. A segment for decades dominated by Corolla and Civic now boasts new entries that deliver more car for the money, especially in the subcompact and specialty groups. The trajectory in shopping for subcompact (Yaris or Versa) and small specialty (Mini Cooper and Scion xB) is greater than that of traditional favorites in the upper small category.

Breaking down the compact category into three sub-segments (subcompact, small specialty and upper small), upper small (Corolla, Civic, Focus) vehicles continue to lead in shopping volume, but the niche is seeing the greatest decline in share of the category (down 8 percent from the first quarter). The subcompact (Fiesta, Yaris, Versa) segment now represents a nearly 20 percent share of the compact category, growing in interest by about 15 percent throughout 2010. The small specialty (Scion, Mini, Fiat 500) segment is where the greatest growth is occurring. Shopping in that segment increased through November by about 57 percent from the first quarter. After a generation of truck and SUV desirability, Americans could finally be warming up to smaller, more fuel efficient and compact vehicles. The wave of interest in the compact segment has been driven by more vehicles to choose from in the segment, heftier marketing support and, more importantly, noticeably better product. Advanced interior options and safety features have made the small car more appealing; especially to the socially responsible consumer looking to make a green statement without paying thousands more for a hybrid or fiddle with a new technology such as an EV. The small vehicles available today are considerably better than the patchwork of yesteryear’s small cars, when you were lucky to have power windows, let alone power steering. Today’s models are fully equipped with some of the highest standards in safety features, luxurious interiors and, of course, excellent fuel economy. The CAFE standards set forth by the Obama administration (a fleet average of 35 mpg) also have something to do with these developments and, in the past, domestic automakers weren’t well-represented. What’s more, many of the imports have gotten much more creative about their approach to small cars to remain competitive with brands such as Scion and Kia challenging

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traditional design standards. Most recently, the Ford Fiesta has set the gold standard for marketing excellence in the category. Through the Fiesta Movement program, Ford turned to consumers to drive inclusion of many of the features and bells and whistles on the vehicle. The company is enjoying a powerful opening into the compact market with its 2011 models hitting dealerships behind tremendous momentum. The newest entry into the specialty group is the Chrysler-owned Fiat 500, a stylish mini-car designed with sightlines similar to the original Mini Cooper. This is Fiat’s re-introduction to the U.S. market since the 1970s, and it’s betting big on the B-car segment with the release of the 500. So far, the 500 is garnering plenty of interest among car shoppers and enthusiasts on Jumpstart’s automotive research properties, as consumers regularly engage with videos, photos and other content about the new Fiat. Interest from people researching to buy a 500 was at its highest in November 2010, up about 60 percent from the month prior. But while shopping in the specialty segment has rapidly increased, sales have yet to follow. Sales declined over the course of last year, with the peak coming in April at nearly 10,000 vehicles, then dropping to its lowest point near the end of last year, with just over 4,000 vehicles sold. In a very irregular economy, it’s difficult to tell if 2011 will be the year of the small car, but all signs point to the compact segment potentially representing a larger share of the pie this year as product, marketing and options continue to improve. Joe Kyriakoza is vice president of marketing communications & insights at Jumpstart Automotive Group. He has held numerous leadership positions with Jumpstart, one of the largest content and media providers for the automotive publishing space.

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NADA APPRAISALPRO OPTIMIZED FOR SMART PHONES MOBILE ACCESS TO ITS PRODUCTS. NADA AppraisalPRO has been optimized to work on smart phones, including iPhones, iPads, Androids and Palm Pre/Pixies, in another step to provide clear mobile access to its products. Devel-

oped by NADA Used Car Guide, NADA AppraisalPRO is the only used-vehicle appraisal product on the market to tap the resources and data of six industry leaders: AutoTrader.com, J.D. Power and Associates/PIN, Manheim Market Report, NADA, vAuto and Experian AutoCheck. “We listened to dealers and responded to their needs by making our data and values more readily accessible,” said Mike Stanton, vice president and chief operating officer of NADA Used Car Guide. “There’s no room for error when making buying and selling decisions on the go.” Smart phone users can now view all of the market information offered by NADA AppraisalPRO in a format that matches the screens and functionality of Smartphones, providing clear mobile access to key industry data, including: Asking and advertised prices online (Auto-

Trader.com); What a particular model or similar vehicles are selling for currently in the local market (J.D. Power and Associates/PIN); Auction selling prices, including trim-level detail (Manheim Market Report); Rough, average and clean trade-in, clean loan and clean retail values (NADA); The day’s supply for that area (vAuto); The vehicle’s history (Experian AutoCheck) -- available as an optimized summary or as the entire report for easy access on the go; and A purchase worksheet that lets you input your purchase or trade-in price, add and deduct for reconditioning costs, and see where you stand profit-wise. With this complete picture of the market, dealers can determine a precise trade number or auction bid that reflects actual conditions. In October, NADA Used Car Guide also optimized its NADA Online online valuation product for smart phones as part of its ongoing efforts to increase mobile access to its products.

NADA AppraisalPRO subscribers may use their mobile browser to visit mobile.nada. com/MobileWeb, and then log in to their NADA AppraisalPRO account using their same credentials.

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FEDERAL ADVOCATES DECEMBER 2010 LOBBYING REPORT FEDERAL ADVOCATES IS NIADA’S GOVERNMENTAL ADVOCACY PARTNER. To read past lobbying reports, visit www niada.com/legislative_and_legal.php

Dodd-Frank Wall Street Reform and Consumer Protection Act

Congress ended with the Federal Trade Commission beginning in earnest to review the auto industry in the light of the above consumer enacted law. Last Nov. 17, NIADA General Counsel Keith Whann and Federal Advocates met with senior staff of the FTC as a follow-up to the Sept. 21 meeting. A series of questions had been provided to NIADA for discussion in November. At the meeting, Keith walked them through the process of buying a car and provided samples of purchasing documents. The FTC is in the process of formulating questions for public comment regarding various aspects of the auto industry as it relates to consumers. FTC staff was not forthcoming as to the timing of that effort, its scope and its intended purpose. The results of the latest meeting were reported to NIADA’s Legislative Committee by conference call on Nov. 23. Also, on Sept. 21, Whann and Federal Advocates met with FTC staff regarding implementation of the above Bill and its impact on the auto industry. Following discussion of various issues, with Whann leading the discussion and answering various questions

as to how the auto industry works, including the auction practice itself, it was decided to schedule a half day session to allow for a more detailed discussion of issues (i.e., the Nov. 17 session). All of this is a result of the so-called Wall Street Reform Bill. As reported previously, the new law exempts some auto dealers from increased oversight with respect to dealer-assisted financing. The law does grant increased powers to the FTC regarding dealer oversight. Also, it requires coordination with the Department of Defense to ensure service members and their families are treated fairly by automobile dealers.

Senate Motor Vehicle Safety Act of 2010

Congress ended with no formal action on this bill. To review, on June 9, the Senate Committee on Commerce, Science and Transportation marked up and order reported S.3302, the so-called Toyota Bill. In earlier drafts of the bill and just prior to markup, language was included (section 310) which would have specified a dealer may not sell or lease a used passenger motor vehicle (both wholesale and retail sales) until the dealer first notifies the purchaser or lessee in writing of any recall notices.

Working primarily with Sen. John Thune, RS.D., his staff (Brenden Plack), and committee staff (Alex Hoehn-Saric and Chris Herndon), and as a result of concern raised by Whann and his proposed suggestion, section 310 has been dropped from the bill. This provision would have seriously hurt used car commerce by imposing tremendous compliance costs and liability exposure for dealers while increasing the safety risk for consumers by pushing unremedied vehicles into the unregulated private sale used car market. While an initial victory, we will continue to advocate on behalf of NIADA’s interest pending further action on the Senate bill as well as a possible House companion bill.

Small Business Jobs and Credit Act of 2010

The Obama administration has delayed implementation of the above bill until March. On Sept. 23, the House passed the Senate-passed bill, which includes an increase in the amount the Small Business Administration’s Dealer Floor Plan Financing program can guarantee. This permits the SBA to guarantee bank and finance company loans up to $5 million, which should help, the committee believes, expand dealer access to floorplan lines of credit. We worked with Louisiana Democrat Sen. Mary Landrieu’s committee and personal staff, in conjunction with others, on this. The bill may be the subject of subsequent meetings with the Hill and the SBA on how the program really works.

White House Reform Request

On Sept. 23 and Sept. 29, Federal Advocates was contacted by the White House, which is still trying to organize and schedule a meeting to include “people who are working to setup the CFPB.” This meeting is in response to a letter sent by NIADA to President Obama requesting “the opportunity to work with you to reform our industry in common-sense ways that achieve real safeguards for consumers, that promote accountability and transparency, and that work.”

Department of Defense

Regarding the issue of “how to ensure that service members and their families are treated fairly by automobile dealers,” Whann and Federal Advocates also met on Sept. 21 with the Defense Department’s Frank Emery in the Office of Personal Finance, Family Policy Outreach Directorate. Whann relayed a specific example of how he helped a service member at Fort Bragg with an automobile situation, working with the JAG and others. He also talked about his plan for a special program to teach dealers on how to deal fairly with service members and their families. DOD continues to remain interested in looking for opportunities where Whann could lend his expertise. 12

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vAuto Rolls Out Mobile App for Android

EV Sales Not Charging Ahead This was the year General Motors and Nissan made good on their promise to bring mass-produced electric cars to the market, but don’t count on seeing one in traffic soon. According to the Associated Press, sales

vAuto revealed recently that dealers can now tap into the company’s usedvehicle management system through their Android mobile devices, giving them another avenue to access the company’s services while on the go. “We are excited to offer our dealers the vAuto mobile app for the Android platform,” says Keith Jezek, vAuto’s president. “This innovation allows dealers to have vAuto in the palm of their hands for accessing realtime market information,” he continued. “vAuto’s live market appraisal and stocking modules are available on the app for making strategic decisions from any location.” Sharing some of the vAuto’s mobile application’s features, it offers third-party guidebooks, auction values and vAuto’s exclusive rBook. Explaining how the latter function works, officials noted that the rBook allows dealers to determine how identically equipped models are priced in their respective markets. Moreover, other features of the mobile app are vAuto’s heat sheet and buy list, which can help dealers figure out and find which models are selling strong in their areas. Officials said that for vAuto customers, there is no extra monthly fee to tap into the mobile app. The application can be utilized on Android 2.1 or higher operating systems. Included in the app is the new advanced barcode vehicle identification number capture. Users with Android devices that have auto focus cameras can utilize this function to automatically decode a barcode VIN and upload it to vAuto. It can be downloaded from the Android market. vAuto’s mobile app is already available via the Apple iPhone and iPod Touch devices.

so far have been microscopic, and they’re likely to stay that way for some time because of limited supplies. GM sold between 250 and 350 Chevy Volts in December, and Nissan’s sales of Leaf sedans totaled fewer than 10 in the past two weeks, the AP reported on Jan. 1. Production for both is ramping up slowly. It will be well into 2012 before both the Volt and Leaf are available nationwide. It’s still unclear just how large the market for electric cars will be once those early adopters are supplied. The base sticker price is $40,280 for the Volt and $32,780 for the Leaf; much higher than most similar-sized, gas-powered cars. If those prices rise, it could make them even more of a niche product than predicted.

The base sticker price is $40,280 for the Volt and $32,780 for the Leaf

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FTC USES ITS

EXPANDED AUTHORITY Although the new Consumer Finance Protection Bureau (CFPB), authorized last year by the DoddFrank Act, is only just now being assembled and likely will not be issuing final rules for another year, the Federal Trade Commission (FTC), which has been issuing rules for dealers for many years, is already exercising the expanded authority it received from the act. As you in the motor vehicle sales business know, the

FTC is responsible for many of the rules dealers are required to comply with. The FTC’s past rulemaking has, by and large, been fairly reasonable and the industry has been able to comply and continue to serve the motoring public’s needs with a high degree of efficiency and effectiveness. It has taken some time, but we are beginning to observe the impact of the 2008 federal elections on regulators. That election year gave consumer advocates a terrific boost. With both the White House and Congress lending a sympathetic ear to those whose whole purpose in life is to protect the consumer (whether the consumer wants or needs protection or not), we have seen a whole host of laws passed and bureaus created which are beginning to impact our industry in very negative ways and are likely to do so for some time to come. One of the first of these consumer protection efforts to impact the industry comes from the administration’s push for the regulatory agencies to revise the Gramm-Leach-Bliley Act’s privacy rule. For years, businesses have been providing privacy notices and protecting consumers’ private nonpublic information. Some in the government decided financial institutions (particularly the motor vehicle industry) had not been doing an adequate job. They decided privacy notices needed to be simpler and easier for the public to understand its rights and to be reminded of how we in the industry collect and protect their private nonpublic information. So, at the behest of Congress and the administration, the FTC, with their expanded regulatory powers, assisted in the production of 266 pages of regulations that resulted in some 288 variations of what the new safe harbor privacy notices for dealers should look like. The rules make it impossible to develop a standardized version of the privacy notice that can be mass produced and used by most any dealership. Instead, each dealership’s version of

the notice must be configured exclusively for that dealership. To perform that task, one must have a good understanding of what the rules say and be able to properly apply the rules to a dealership’s privacy notice. They may have made it simpler for consumers, but they certainly didn’t do dealerships any favors. Use of properly configured safe harbor forms is optional, but their use does give a dealership some assurance that it will be immune to possible severe penalties. While use of the safe harbor forms is optional, the information required in a dealership’s privacy notice is not optional. That information is required and must be in use as of Jan. 1. Compliance with Gramm-Leach-Bliley Act and the FTC privacy rule needs to be taken seriously because the penalties for violations can be quite severe. Listed below are the sanctions that can be taken against companies for violations of Gramm-Leach Bliley Act: A civil penalty of not more than $100,000 may be assessed for each violation Dealership principals and staff are subject to, and personally liable for, a civil penalty of not more than $10,000 for each violation Fines imposed in accordance with Title 18 of the United States Code, or imprisonment for not more than five years, or both If the violation occurs while violating another federal law, or as a part of a pattern of any illegal activity involving more than $100,000 within a twelve-month period: a fine of up to twice the amount provided in Title 18 and imprisonment for more than ten years, or both Implementation of cease and desist orders barring policies or practices deemed in violation of the act’s privacy provisions Removal of the company’s management, including directors, officers, etc., and potentially barring them, permanently, from working in a financial institution including a dealership We emphasize again the safe harbor phrases authorized for use through Dec. 31, 2010, are no long compliant with the new privacy notice requirements. Be sure your dealership’s website privacy notice and other privacy documents follow the 2011 privacy notice rules.

By ADR Staff

If you have questions, contact the ADR staff at 405-232-2947 or odell.morgan@sbcglobal.net. ADR: OUR MISSION, YOUR SUCCESS. This article is intended for information only – It has no legal application. For its application to your dealership, you are requested to contact your legal counsel.

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Complying with the Risk-based Pricing Rule

BY LEE DOMINGUE, CEO OF INDIRECT LENDING, WOLTERS KLUWER FINANCIAL SERVICES

As the new Risk-Based Pricing Rule takes effect this month, auto dealers need to make sure they have information, resources and tools in place so they are ready to comply. Applying to Buy Here-Pay Here (BHPH) dealers

and those who do business with third-party creditors, the rule requires dealers to notify consumers when they receive materially less favorable credit terms than others based on consumer report information. According to the new rule, a risk-based pricing notice must be provided to the consumer before signing the credit agreement (direct lending note or indirect retail installment sales contract). The notice must: Include information about the elements of a credit report. State the annual percentage rate and other terms were set based on the consumer’s credit report. State the terms offered may be less favorable compared with the terms offered to consumers with better credit histories. Encourage the consumer to verify credit report accuracy. Identify all consumer reporting agencies that supplied a consumer report used in the credit decision. Inform the consumer of the right to a complimentary copy of a consumer report from those agencies for 60 days after receipt of the notice. Provide guidance on obtaining a consumer report. Direct the consumer to the Federal Reserve Board and Federal Trade Commission’s websites. Dealers can use a case-by-case method, a credit score proxy method or a tiered pricing method to identify which customers must receive a notice. For more info, a Adobe PDF is available at www.ftc.gov/ os/2009/12/R411009riskbasedpricingfrn.pdf. An exception to the Risk-Based Pricing Rule allows dealers to provide a credit score disclosure notice to all customers who apply for credit. This option is only available to dealers who use credit scores in the decision to extend credit. This exception notice must include the consumer’s credit score, the date it was created, its source, and information about the range of scores and how lenders use them. In addition, the notice must provide a description or graphical representation of how the applicant’s credit score ranks in comparison with other consumers. For this, dealers will need data from their consumer credit report suppliers. The exception notice may be the easiest path to compliance for many dealers, as it avoids the analysis of who is required to receive a risk based-pricing notice. However, each dealer should look at its own unique business to determine which compliance option will work best. While dealers may be concerned that the new rule will create more paperwork and administration, risk management platforms can help automate indirect lending, credit approval and compliance processes. By unifying lending transactions and simplifying documentation, a technology platform can enable quicker decision making and help prevent financial and legal penalties resulting from non-compliance. Whatever notice option your dealership pursues under the new rule, automating credit approval and compliance processes can help you ease the regulatory burden on staff resources, reduce your risks of non-compliance, and safeguard your dealership’s reputation. Lee Domingue is CEO of indirect lending at Wolters Kluwer Financial Services. For more information, visit www.wolterskluwerfs.com/ilsolutions.

HOW MUCH CAN JUST ONE CURBSTONER COST YOUR CITY? Curbstoned cars are often cheap, but state and local governments pay a high price. A new case study from Stop Curbstoning reveals the true cost associated with a single curbstoner. A recent California Department of Motor Vehicles (DMV) curbstoning investigation ended with a felony arrest on 12 counts of perjury and filing false documentation, but for Stop Curbstoning, that was just the beginning. The organization examined the financial impact of curbstoning using this single real-life case as an example. It found cities in which the curbstoner operated lost more than $56,000 in sales tax revenues alone, and the state of California lost $168,000. Other financial costs included lost license revenue, lost local business and potentially increased emergency response burdens due to unsafe vehicles – all from just one curbstoner. “Because there are so many curbstoners out there, even small things add up to a lot,” says Charles Redden, president of AutoTec, one of the companies behind the effort to stop curbstoning. “Take the annual state license fee for used car dealers. In California, it’s $176 for the first year and $126 to renew. But for every thousand curbstoners, that’s over a quartermillion dollars every two years.” “With local governments increasingly strapped for cash, enacting and enforcing anti-curbstoning laws can be a quick way to boost revenues and enhance their communities at the same time.” The community enhancement and public safety aspects of enforcing anti-curbstoning laws are harder to quantify, but should not be underestimated, Redden says. “Getting curbstoned vehicles off the streets frees up parking for local businesses, reduces obstacles to traffic, and eliminates eyesores,” Redden says. “It also eliminates a major source of unsafe vehicles – cars that look OK, but have major structural damage or missing safety equipment. How do you place a dollar value on all that? It’s priceless.”

For more information about the case study, curbstoning and efforts to put a stop to this illegal practice, visit StopCurbstoning.com.

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Nevada Dealer News  

Nevada Dealer News is produced by the National Independent Automobile Dealers Association (NIADA) exclusively for used vehicle dealers who b...

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