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DEALER NEWS APRIL/MAY 2012

Auto Shopping page 10

GOES MOBILE inside

• MAKE THE RIGHT COMPLIANCE MOVES • IS TECHNOLOGY COSTING YOU? • USED CAR SALES UP IN 2011

DALLAS, TEXAS Permit No. 2079

PAID

PRSRT Standard U.S. Postage

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inside

MAGAZINECONTENTS

INSIDE

04 Is Technology Costing You? 06 Make the Right Compliance Moves 10 Auto Shopping Goes Mobile

WHAT’SNEW

R A2Z EDUCATION SERIES - AutoZone Educating the independent dealer to deliver the highest quality service levels to your customers, manage your shop efficiently, train your technicians and maximize profits. niada.tv R N  ATIONAL TIRE SAFETY WEEK: June 3-9 National Tire Safety Week is a nationwide event sponsored by the Rubber Manufacturers Association to raise consumer awareness about tire safety, help consumers keep their tires safe and demonstrate the industry’s commitment to motorist safety. Visit www.betiresmart.org and fill out the form to receive your free National Tire Safety Week kit that includes brochures and other materials.

ADVERTISERSINDEX ADESA...............................................Inside Back Cover AutoTrader.com ......................................... Back Cover Chase....................................................................... 12 Lobel Financial ...........................................................7 Manheim.com ..................................Inside Front Cover Nowcom......................................................................9 SmartAuction........................................................... 11 United Acceptance................................................... 13 Westlake Financial......................................................5

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV

NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM. THE NEVADA DEALER NEWS IS PUBLISHED BI-MONTHLY BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 760065203; PHONE 817-640-3838. PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF NEVADA DEALER NEWS OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF NIADA, DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT © 2012 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Andy Friedlander • andy@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing

FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT CINDY SIRKEL. CINDY@NIADA.COM • 800-756-4232

Used Car Sales, Prices Rose in 2011 Americans bought nearly 39 million used vehicles in 2011, more than three times the number of new cars, trucks and crossovers sold last year. But with demand threatening to outstrip supply – especially for “nearly new” vehicles – buyers saw prices rise sharply, a trend likely to continue through 2012, according to CNW Marketing Research. “We saw a lot of people whose existing cars were just tired, so after two years of pent-up demand, that finally led to a surge of used car sales last year, and especially in November and December,” CNW’s Art Spinella said. Used vehicle sales totaled 38.8 million for 2011, according to CNW, up 5.2 percent from 2010. December volume surged 12 percent, to 3.1 million. Private party, or consumer-to-consumer, sales surged in 2011, especially in the final months. Shoppers and sellers have increasingly turned to free online services such as Craigslist.org to make the connection, along with fee-based services such as AutoTrader.com. Dealers have been using the Internet to boost their business, and according to CNW, 73.1 percent of available used cars were listed online in December, compared to 69 percent a year earlier. Since the economic recession began in 2008, there has been a notable shift in the marketplace. Many traditional new car buyers have migrated to the used vehicle market, according to Spinella. Even as the economy _ and, in turn, the new car market _ has begun to recover, many are still opting for previously owned products. That reflects the emphasis on value, higher prices for new cars and limited credit availability. Spinella noted a “new phenomenon we’ve only seen since about 2008 [in which] a lot of buyers who would normally choose a new car are going for what we call ‘transitional used cars,” he said. Those are vehicles they expect to keep only until their personal

financial situation improves and they can get back into a new car, he explained. But there’s a problem for such buyers. In the past, they might have opted for “nearly new” vehicles – cars that have just come off short-term leases and are in nearnew condition, often backed by like-new warranties. But because most lenders cut down on leases in recent years – many halting leasing entirely – there are far fewer of those vehicles available, driving up prices on used cars overall, and relatively new models in particular.

DURING MUCH OF 2011, USED CAR PRICES HIT RECORD LEVELS. During much of 2011, used car prices hit record levels. They dropped about 1 percent in December, but Americans still spent about $28.2 billion on used vehicles for the month, up from $25.6 billion a year earlier. “And that trend will certainly continue,” predicted Spinella, though he noted many lenders are beginning to loosen up credit again for used car customers.

BY PAUL A. EISENSTEIN THEDETROITBUREAU.COM

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IS TECHNOLOGY - OR THE LACK OF IT-

Costing You? Technology, or the lack thereof, could be costing you millions. OK, millions might be a bit much, but thousands doesn’t sound much better. Either way, profit dollars could easily be leaving your pocket on a monthly basis at an alarming rate. Technology, or the lack thereof, is costing dealers in every market and in every state in the country. The dealers in question are either technological junkies or technologically challenged. Neither scenario is conducive to success. In the current economic climate, having and using what is necessary for the foreseeable future makes the best and only economic sense. Not too much, not too little. Technology touches many facets of the Buy Here-Pay Here industry. Video surveillance, starter interrupt/GPS and software are the most popular areas for technological discussion in BHPH, and those areas seem to be the most under- and over-utilized as well. Of the three, DMS software is the only one that is necessary for current and future success. The others? Well, that’s up to the dealer. Video surveillance is probably more overused than the other two – too many dealers have thousands of dollars tied up in high-tech systems that are really not necessary. Those dealers have convinced themselves they are preventing not only outside theft, but internal theft as well. Surveillance systems have proven to aid in deterring both kinds of theft. The decision whether to use video surveillance should be based on specific market conditions in regard to preventing

outside theft and providing additional security. A lot in a small rural market that displays 20 or so vehicles and employs a total of four people doesn’t necessarily need a 16 exterior color camera system with real-time web access. That example may seem extreme, but that dealer exists. For preventing internal theft, the money might be better spent on developing the organization’s culture. Studies have shown office supplies are the most commonly pilfered items at a business, not money. This is a direct result of lack of pride and ownership in the business by the employee. A background investigation and personality profile prior to hiring a new employee, and ongoing training and open lines of communication after hiring are ways to instill and improve an organization’s culture. There is a good possibility those steps will also reduce turnover and, in most cases, prevent if not halt employee theft – and will likely cost less than a surveillance system over time. Payment devices – starter interrupt, GPS, and combo devices – are still a topic of great debate and ongoing discussion. This is an area that seems to be either black or white in most dealers’ eyes. Dealers seem to be 100 percent for them or 100 percent against them, with little in between. Data shows such devices can increase collections dollars and, in some cases, reduce the amount of personnel needed to manage a portfolio. Data also shows they do not have a significant impact on loss rates. That data is what causes the “all-in” or “all-out” mentality. There are just as many highly successful dealers not using the devices as there are using them.

As with any technological advance, they are only effective if used as directed or intended. Too many dealers don’t. And by not doing so, they are wasting money. The decision to use payment devices, and specifically which kind, is a significant one. It is a decision that should be based solely on the dealer’s personal business philosophy. As with any business decision, it shouldn’t be made until all the homework is done. Also not to be overlooked in the decision-making process is preparing internally. Policies and procedures will have to be created and implemented. Last, but definitely not least, is DMS software. This is an area where dealers have a tendency to cut corners and cost themselves in the long run. Bigger is not necessarily better. Software packages have undergone significant technological advances in recent years, and there are an increasing number of provider options. For better or worse, nowadays there seem to be more providers than actual dealers. That’s better in that more options provide a more diversified product offering and pricing structure. It’s worse in that when it comes time to choose a system, a dealer can be buried by information overload and the process can become overly time-consuming when he’s trying to comparison-shop. Technology can take any business to the next level. Technology can also set any business back. The key lies somewhere between being a junkie and being challenged. Which one are you?

BY BRENT CARMICHAEL

EXECUTIVE CONFERENCE MODERATOR NCM ASSOCIATES INC. BCARMICHAEL@NCM20.COM

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BACK TO BASICS Make All the Right Moves

AS REGULATIONS INCREASE, STAYING INSIDE THE LINES BECOMES A BIGGER PRIORITY Paul Taylor, chief economist for the National Automobile Dealers Association, recently predicted more than 13.9 million new cars and light trucks will be purchased or leased in the U.S. in 2012. With the influx of new car buyers to the market, it’s a safe bet that used car sales will also increase significantly this year. While that’s good news for everyone, a dealer’s focus needs to be on more than just how many cars his store sells. Getting back to the basics has always been a great tactic for boosting performance in the sales and fixed operations departments. Now it’s time to redefine what “the basics” means and focus on more than just strategies to create profit. Attention also needs to be given to basic legal compliance, an area that can have significant economic consequences if dealers are not focused on protecting their assets. Thirty years ago, dealers had a lot less to worry about when it came to legal

compliance. A dealer could spend the majority of his time on advertising, marketing and merchandising, as well as on buying, selling and servicing cars, without any real worry about being sued. Today, if dealers are not aware of every aspect of the business conducted in their store, they might have a lot to worry about. Even if a dealer has not been sued when an employee knowingly or unknowingly crossed the proverbial line, he most likely knows or has heard about a dealer who has been. Dealers who aren’t as vigilant as they should be when it comes to compliance put themselves at risk every single day, and eventually the law can catch up with them. Though there are no specific statistics about exactly how many dealership lawsuits have occurred in the past decade, it’s safe to say there have been too many. It’s not possible to cover every aspect of dealership legal compliance in limited space, but it is possible to highlight some important legal compliance areas for used car dealers to focus on. The components that follow are basic items all used car dealerships need to make sure they are doing correctly in order to avoid potential legal issues down the road:

Privacy Laws In recent years, the number of people who have become victims of identity theft has skyrocketed, which is why various laws have been created to protect consumers

from privacy violations. Businesses that don’t enact clear and solid practices to protect their customers’ private information can face tens of thousands of dollars in regulatory fines and potential civil liability. General practices most dealerships use for protecting consumers’ private information (such as keeping customer information away from public view, having locks on the finance office doors and shredders at various work areas) might not be enough. Dealers may need to re-evaluate their practices when it comes to protecting consumer information and consider some basic privacy questions such as: Do salespeople or finance managers work on computers in an area where others can easily glance over their shoulder? If so, it might be important to use privacy screens on those computers to prevent lurkers from seeing information they shouldn’t see. Is there a glass window in your finance office, allowing someone to look in and read customer information on the finance manager’s desk? Perhaps blinds need to be installed to help prevent that from happening. The blinds need to be kept closed. If they are left open, they serve no purpose. Even though you have shredders for disposing of customers’ personal information, is there a shredder within easy access of every salesperson or the finance manager’s desk? If the salesperson or finance manager needs to get up and walk a few feet to dispose of confidential CONTINUED ON PAGE 8

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CONTINUED FROM PAGE 6

BACK TO BASICS information in a shredder or can simply toss it in an unsecure wastebasket right at his feet, which option do you think he will select at times? Adding additional shredders near each desk might be necessary to ensure all documents are properly shredded. Who has access to all of the customer information stored in your computer’s DMS or CRM tool? Best practice is to limit access to customer information to those employees who truly need to have it. Dealers need to make sure their people truly understand why all privacy rules are in place, and thoroughly explain what actions need to occur to protect their customers’ information. Dealers must also appoint a manager to oversee the actions being taken to protect customer information. Not only is this required by law, it is also an effective way to track the privacy program in the store.

FTC Used Car Buyer’s Guide Rule Federal Trade Commission Used Car Buyer’s Guide compliance is a key part of doing business for used dealers. Yet this is also an area where it’s easy to skip steps or get lazy with regard to following all aspects of the law. According to the rule, used vehicles must have a Buyer’s Guide clearly and prominently displayed in a position where both sides are readable as soon as the car is in a spot where it can be inspected by a potential customer. That means every used vehicle that is for sale and parked on a used vehicle lot must have a Used Car Buyer’s Guide displayed. Does your dealership meet this standard? If you were to walk your lot today, would every car have a Buyer’s Guide properly displayed? Often, dealerships delegate the responsibility for generating and hanging the Used Car Buyer’s Guides to an outside company that sends a representative to the dealership once or twice a week to update the vehicle inventory. While that seems like a good option, the reality is there are probably several days each week when vehicles are parked on the lot without the required documents. Each of those vehicles could cost the dealership thousands of dollars in legal penalties. Focusing on basic legal compliance means spending a little time and energy to ensure everything is done correctly. For Used Car Buyer’s Guide compliance, that could mean requiring a specific manager to be responsible for creating stickers for every vehicle prior to putting it out on display. This same manager should walk the lot daily to verify that all vehicles on the lot meet the Used Car Buyer’s Guide standards.

Truth in Lending Act/Regulation Z The days of providing broad payment ranges and payment packing are over. However, some managers still work deals by quoting a payment without a proper term and interest rate. That is asking for trouble. Consumer advocates, exposés on national television, books and Internet articles educate today’s consumer about disclosure laws. Best practices suggest when quoting a payment, salespeople should also disclose the rate, term, down payment and finance balance to the customer. Today’s customers don’t just expect this information – they demand it. By providing proper disclosures from the start, you’ll be able to meet and exceed your customers’ expectations and create more sales.

Office of Foreign Assets Control Under the premise of homeland security, the U.S. Department of the Treasury enforces economic and trade sanctions against individuals and groups who potentially threaten the national security, foreign policy or the economy of the United States. As part of that, laws require automobile dealers to screen every customer against the Specially Designated Nationals (SDN) list. The SDN list contains the names of individuals, groups and entities, such as terrorists and narcotics traffickers, who are controlled by, or acting for or on behalf of, targeted countries. The government takes the list very seriously and dealership employees need to as well. The penalty for non-compliance can be up to $250,000 in fines and up to 10 years in prison. But screening a customer’s name against the SDN list can take a few minutes, so it might be tempting for a salesperson or finance manager to skip that step in the sale. Getting back to the basics for legal compliance means taking the time to ensure all required steps are taken in order to protect your store and your assets. Make sure all of your employees are properly trained on how to check a customer’s name against the SDN list and what additional steps they need to take if they get a match or near match.

Real Signatures Some salespeople and sales managers try to “save time” by signing a customer’s name or initials on a document that might have been overlooked when the customer was in the store purchasing a vehicle. Do you know if this is happening in your store? If it is, your assets are at risk. Not only is the practice obviously not compliant, but if discovered it can result in large regulatory fines and even punitive

damages. Never sign a customer’s name or initials, or sign a document “signature on file.” It seems obvious that signing a document for a customer is wrong, but getting back to basics includes reminders even about the obvious. Communicating to your staff a zerotolerance policy underscores that obtaining real customer signatures is vital to the health of your business.

Misrepresentation and Fraud During the course of a vehicle sale, it is not possible to constantly monitor every word that comes out of a salesperson’s mouth. Dealers need to be confident that when left to their own devices, employees will provide accurate and truthful information about the vehicles and services the store provides. Dealers also need to feel confident that employees are making proper disclosures when necessary. Misrepresentation or fraud can not only come back to haunt the salesperson or manager, but it can come back to haunt the dealer and the dealership as well. For that reason, many dealerships are requiring legal training for all store employees. It is also important for dealers themselves to stay abreast of the current laws and regulations. Dealers should proactively seek out information regarding new laws or regulations from sources such as their legal counsel, NIADA or their state and local governments. In addition, the FTC’s website provides a substantial amount of compliance information, some of which is specifically tailored for automobile dealers. What better place to seek compliance advice than from the agency enforcing compliance? By educating dealers and their staffs on the current laws and regulations, basic compliance training is helping dealers avoid many of the headaches and lawsuits that accompany legal issues. In this day and age, dealers can no longer afford to think “it will never happen to me” with regard to legal compliance issues. Today’s rigid requirements and well-informed customers mean dealers need to take clear and conscious steps to protect their assets. While there is no guarantee a dealer will never be sued, making legal compliance a priority and taking simple steps to ensure it becomes an everyday habit in the store can significantly lessen the likelihood he will become a victim of a compliance issue.

BY JAMES CAHN, JM&A GROUP

JM&A GROUP (WWW.JMAGROUP.COM) IS ONE OF THE LARGEST INDEPENDENT PROVIDERS OF FINANCE AND INSURANCE PRODUCTS IN THE AUTOMOTIVE INDUSTRY AS WELL AS PROVIDING CONSULTING SERVICES AND F&I TRAINING FOR USED CAR SALES OPERATIONS AND SERVICE DEPARTMENTS.

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Smart Dealers Should Aim Their Ads at Smartphones Did you know that men aged 30-49 do more mobile shopping than other age groups? That 50 percent of the popular Groupon’s business over the next couple of years will come from mobile devices? That Starbucks has taken more than 3 million micropayment transactions? A Leger Marketing survey reported one in 10 respondents said they’d rather lose their mother-in-law than their cellphone. Those trends and figures are not only interesting, they affect mobile shopping for cars and trucks as a whole. Understanding the upcoming trends will help car dealers see how important mobile sites, mobile applications and mobile marketing campaigns will be. In 2011, mobile auto consumers climbed 60 percent. Used car sales are soaring, and more people are looking to buy thanks to a comfort level they have achieved with the state of the economy. According to Google/Compete Research, 81 percent of smartphone users access the Internet on their mobile devices, and one of three searches has a local intent. Out of all the mobile shoppers in the world, 17 percent are looking at automotive websites and 53 percent of those end up at a dealership buying a car. Because shoppers use their mobile phones to search for “stuff” in time of need, you have an opportunity to reach them when they are ready to buy or shop your dealership. According to Go Mobile, adding GPS capability to mobile phones has transformed the phone into a targeted weapon focused on the immediate surroundings. According to the 2011 Auto Shopper Behavior Study by Google/Compete/R.L. Polk, today’s auto shoppers research and decide faster, use searches to navigate and compare, and expect dealer sites to be helpful. The study also determined: • Mobile shoppers watch videos to discover and compare brands. • Some 81 percent of mobile auto shoppers make a decision within three months. • New car purchasers tend to search for “Offers” first, followed closely by “Build Your Car,” “Locate a Dealer” and “Search Inventory. ” • More shoppers than ever are searching inventory on third party sites – 42 percent of them searched “Inventory” first, then “Model Information” (32 percent) and “Trade-In” (29). “Request a Quote” and “Reviews” were next, cited by 22 percent. • The most frequent research conducted on

mobile phones was comparing features at 55 percent, followed by price comparisons at 47 percent and reading general car and truck information at 44 percent. • The advertisements cited as most useful by mobile users were online videos at 52 percent, sponsored or paid search engine listings (49 percent) and, surprisingly, newspaper ads at 45 percent. All that data should speak loudly to car dealers. We must start following shoppers through this complex yet simple path to purchase rather than relying on traditional online destinations alone. Car dealers need to examine their digital presence and understand navigation is the key to helping auto shoppers do research through many mobile portals. So here are six things to take to the next level: GPS-based marketing: Location-based services are mobile marketing platforms dealers can use to engage shoppers and develop promotions. Dealer apps: A basic app, including inventory, costs about $300 per rooftop, but it’s worth its weight in gold. You can also allow users to accept notifications and send out weekly sales and alerts. Mobile-friendly websites: A developer can easily add codes to your home page to adjust to tablet or cell sizes, allowing your website to display content quickly and optimize even on a very small screen. Mobile ad campaigns: Target customers who are looking to fill an immediate need – oil changes, tire rotations, a special of the week, manager’s special or aged inventory on sale. QR or 2D codes: Incorporate QR codes on all web pages and in newspaper or magazine ads. A QR code is a symbol with an embedded URL. When smartphone users scan it, it drives them to the URL. Some areas to advertise are: browse a website, send an email, make a phone call, Google maps, Foursquare venue, latest tweet, follow us on Facebook, Wi-Fi network inside dealership, or any text or message you want the customer to see. YouTube channel: According Google/ Compete, video ads drive initial interest – online videos ranked as the most useful ad format and a significant influence of brand choices. The last bombshell is that YouTube led two of three shoppers to the car/truck they ended up buying, indicating that YouTube is a leading driver to get

customers to notice your vehicles. The new iPhone has an assistant named Siri. She finds answers to questions from the user. If a mobile phone user asks, “Where is the closet dealership?” Siri will deliver a specific answer with directions. She will only deliver one answer. The problem from a car dealer’s standpoint is she is not a search engine or a database. She will only deliver qualified filtered results. Siri reportedly uses Wikipedia and Yelp, among other websites, as information providers. Each of those sources work differently. Wikipedia provides encyclopedia-style information but can be modified by any user. Yelp is a national review community. Dealers should make it a point to claim their information on those sources and keep watch on reviews and information regarding their dealership. Many believe Apple’s goal is to move completely away from Google – there are rumors about a partnership with Bing to help power Siri (so make sure your dealership is listed with Bing). In a study by the Arora Report, 40 percent of Siri users reported no need to search Google. That provides evidence those users changed their habits, and as a result, Google searches could decline as Siri becomes widely available. The latest trends and statistics indicate the mini-computers we call phones will be at the heart of any and all tasks in the near future, especially auto shopping. That makes a difference for advertising purposes, including the manner in which dealers reach potential customers. Convenience is king, and phones are becoming the go-to resource in our everyday lives. Today’s users are looking for detailed vehicle information, interesting videos and compelling mobile ads to direct their search for a vehicle. This is a once-in-a-lifetime generation changer. As smartphones get smarter and consumer expectations rise, the automobile industry needs to offer the services customers are expecting. All dealerships’ advertising needs to be geared toward the mobile phone war.

BY DANI LUNSFORD DANI LUNSFORD IS A NATIONAL SALES AND MARKETING EXECUTIVE WITH SHOWCASE PUBLICATIONS, INC. SHE HAS BEEN IN THE RETAIL AUTOMOTIVE INDUSTRY FOR 14 YEARS, WORKING IN SALES, SERVICE, E-COMMERCE MANAGEMENT AND AS A CONSULTANT TO IT COMPANIES AND DEALER GROUPS. SHE CAN BE REACHED AT DANI@AUTOSHOPPER.COM.

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Latest NMB Partner Provides Emissions Diagnostics PH2 Solutions has joined NIADA’s National Member Benefit program, offering the association’s members its awardwinning PH2 Validator emissions diagnostic technology for a $259 savings with multiple payment plan options. The diagnostic software of choice for dealers and their on-site staff rapidly identifies emission-related issues on virtually all 1996 and newer vehicles, helping save time and resources on “Check Engine Light” maintenance and repairs, emission inspection compliance, fuel consumption, vehicle

acquisition and remarketing, and reducing customer “comebacks.” ”NIADA is delighted to be working with PH2 Solutions in assisting our members to resolve ‘Check Engine Light’ and vehicle emissions issues,” NIADA vice president of member services Scott Lilja said. “NIADA is confident PH2 Solutions will be a tremendous hit with our members who have vehicle service operations as well as those that outsource.” The PH2Validator earned first place in SEMA’s Best New Tools and Equipment Products category for 2012, and Motor magazine named it one of its Top 20 Tools for 2011. PH2 Validator’s easy-to-use application was developed specifically to address independent repair shop challenges such as OBDII false code problems, no code faults, costly long drive cycles and other emissionsrelated repairs. The diagnostic software redefines conventional factory drive cycles to 10 miles or less by engaging the on-board computer (PCM) with its patented automated repetitive requests of all supported monitors simultaneously, resulting in rapid monitor

completion if conditions are met. If readiness conditions are met, the monitors complete. If they are not met, driving beyond 10 miles will not change the outcome, and the PH2Validator’s automated data stream analysis provides technicians with a real-time record of clues as to why by simultaneously and continuously capturing out-of-range operating values and prioritizing them by seriousness. Exclusive NIADA member-only pricing is also available to repair shops handling member repairs. “We are honored to partner with NIADA and even more excited to offer members this game-changing technology that truly makes life easier for dealers, technicians and service centers, affording them the ability to move inventory faster and more efficiently,” PH2 Solutions president and CEO Mark L. Scotland said.

FOR MORE INFORMATION, CONTACT NIADA@PH2SOLUTIONS.COM, AND TO ORDER, VISIT WWW.PH2SOLUTIONS.COM/ NIADA0818 OR CALL (973) 902-5517.

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February Sales Take a Leap Up The used-car market got a nice bump from 2012 being a leap year. Otherwise, CNW Marketing Research suggested February’s used sales would have been rather static. CNW forecast 1.95 million used sales for the month, an 8.1 percent hike from February 2011 on an unadjusted basis. “Adjusted, however, sales would barely break even with last year,” CNW president Art Spinella said. CNW expected franchise dealers to move 650,000 used units for the month for a 5 percent gain over February 2011, while independents were projected to fall 4.2 percent, with 640,000 used sales. The firm predicted a 27.8 percent spike in private-party sales, at 658,000 units.

January showed larger vehicles grabbing more attention from consumers, CNW said. The market shares for small pickups (10.84 percent) and full-size pickups (13.06 percent) were either at or close behind their highest levels in two years, while small car market share dropped dramatically. But don’t count on those trends to last, Spinella said. “Even under threat of higher fuel bills, consumers are still gravitating toward larger vehicles,” Spinella said. “Small cars, for example, took about 16 percent of the used market in January, down two full points from year ago and seven points lower than in September of last year. Expect that to change as gas prices move upward. … The true test will be in April.” While February sales seemed strong, the number of buyers waiting to make a purchase has gone down. CNW projected pent-up demand for the month to be only 90.8 percent of its level a year ago. Meanwhile, in January, it was up 6.2 percent year-over-year. “The average delay in making an

acquisition among those who have postponed a purchase is around 2.4 months, statistically no different than it was in January but down from February 2011’s three months,” Spinella said. “And while it’s too early to make much of the data, the share of postponers who still plan to buy a used car has dipped to 94.9 percent, compared to 95.17 percent in January.” For franchise dealers, February transactions prices were up 4.28 percent from February 2011 at $11,090, a 2.17 percent rise from January. Asking prices were up 3.21 percent from last year at $11,652. Independents’ transaction prices averaged $9,784, up 10.93 percent from 2011 and 0.72 percent from January. Asking prices for independent dealers averaged $10,516, an 11.07 percent hike from a year ago and a 0.31 percent rise from January. “After concerns that the used-car market price slide among dealers would continue into 2012, February’s pricing has taken a dramatic turn to the positive,” Spinella said.

BY AUTO REMARKETING

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NIADA ANNUAL CONVENTION & EXPO SET FOR JUNE 11-14, 2012

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he NIADA announced its 66th Annual Convention & Expo will be held June 11-14, 2012 – a week earlier than previously scheduled – at Caesars Palace Hotel and Casino in Las Vegas. NIADA’s showcase event will offer an expanded dealer education program for 2012, including more sessions covering more topics than ever before, as well as an enhanced Expo featuring more companies representing all facets of the automotive industry. Expo exhibit dates are June 12, 13 and 14. The Convention, to be held for the third consecutive year at spectacular Caesars Palace, will kick off with activities beginning on Monday afternoon, June 11. Online registration is now open at www.niada.com. Rooms at Caesars Palace will be available at the discounted rate of $154 per night. NIADA’s Annual Convention & Expo provides its members with an opportunity to network with their peers, participate in quality education sessions and gather valuable information they can take back and apply toward their dealerships’ success. Educational offerings will cover topics for both retail and Buy HerePay Here dealers. The event is also a gateway for vendors to build and foster relationships with dealers through the Expo, an industry marketplace of top-notch vendors showcasing their products and services and the benefits they can provide to dealers. NIADA has held its Annual Convention & Expo since 1947 and has continued to flourish as the most soughtafter and reputable used motor vehicle industry event for automobile dealers.

ComplianceOverdrive

MANY SHERIFFS CREATE REGULATORY UNCERTAINTY

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emember when the Dodd-Frank bill was being debated in Congress and we all hoped motor vehicle dealers would be exempt from the oversight of the new sheriff – the Consumer Financial Protection Bureau (CFPB)? Be careful what you wish for. You just might get it. As you know, a “dealer exclusion” was included in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Ironically, the dealer exclusion might only increase industry regulatory oversight and add compliance uncertainty. Under Section 1029 of the Dodd-Frank Act, the CFPB may not exercise regulatory supervision or enforcement authority over “a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.” An exception to the exclusion is that the CFPB does have authority over businesses that provide “the extension of retail credit or leases involving motor vehicles,” retail credit or retail leases “directly to consumers” and a contract covering the retail sale or lease that is “not routinely assigned to an unaffiliated third-party finance or leasing source.” The exclusion and exceptions can be a bit confusing, but the net result is that the CFPB has regulatory authority over Buy Here-Pay Here dealers. And even dealers who do not consider themselves to be Buy Here-Pay Here might be regulated by the CFPB if they are assigning contracts to an affiliated third-party finance or leasing source, or if they are not “routinely” assigning contracts to an unaffiliated third party. If you assign some contracts and hold others, there might be some uncertainty about whether you are regulated by the CFPB. The CFPB authority leaves us with a framework in which some auto dealers are regulated by the CFPB and the rest are regulated by the Federal Trade Commission (FTC). That means that in spite of the “dealer exclusion,” we have two sheriffs in town. The two federal regulators have promised to work together, but the regulatory framework itself could create obstacles. For example, the CFPB now has rulemaking authority for a number of consumer financial protection laws formerly granted to several federal agencies, including the Truth in Lending Regulation Z and Consumer Leasing Regulation M. In republishing these regulations, the CFPB made it clear that they applied “except with respect to persons excluded from the bureau’s rulemaking authority by section 1029 of the Dodd-Frank Act.“ That is a clear reminder that CFPB enforcement authority of Regulations Z and M are technically separate from the enforcement authority of the FTC. Dodd-Frank also authorized states to enforce certain federal consumer protection laws. The concern is that might result in local differences in interpretation and enforcement of federal requirements. So essentially, there are now three sheriffs in town. Over time, rules, regulations and interpretations will be published providing clarification on the scope and limits of authority assigned to those three. But for now, we need to deal with the regulatory uncertainty as best we can. It is helpful to keep in mind that the various regulating authorities are trying to protect consumers from unfair and unscrupulous consumer credit transactions. The best practices for these times apply in all situations – be clear, be transparent and be honest in your sales and financing transactions. That should help you satisfy the spirit and intentions of all but the most technical standards of any regulator.

BY CHIP ZYVOLOSKI 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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