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OCTOBER/NOVEMBER 2011

DEALER NEWS O F F I C I A L

P U B L I C A T I O N

O F

N I A D A

N E V A D A

INVENTORY ACQUISITION 101 LSO CAFE and Green Vehicles: Their Relationship Explained A PLUS SEMA Dealer Day Offers Value, Benefits for Dealerships

DALLAS, TEXAS Permit No. 2079

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INSIDE

MAGAZINECONTENTS

INSIDE

04 Inventory Acquisition 101 06 CAFÉ and Green Vehicles 08 SEMA Dealer Day

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 TURBO TIPS – Cars.com Provides Independent Dealers with practicable and actionable tips to help you sell more cars now! niada.tv R DEALER DAY - SEMA November 2, 2011, Las Vegas. This program provides the latest trends, tools and resources to sell more cars and increase the dealership’s bottom line semashow.com

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

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 © 2011 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Mike Harbour • mharbour@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing

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

Is Automotive Print Advertising Dead (or Dying?)

We have all heard the latest advertising strategy adopted by a growing number of auto dealers. Refrains of “I’m online only,” and “Print advertising doesn’t work anymore” are fairly common. There are very compelling reasons to adopt this posture as a part of an overall marketing plan for a dealership. Data suggests most buyers use the Internet to educate themselves about manufacturers, specific vehicles and pricing. Many dealers report people come to their showrooms armed with printouts of vehicles available for sale at other dealers (even if those autos are from outside the market they’re in), with the latest on rebates, trade-in values and anything else they can find online to aid in their attempts to drive the selling price downward. A dealer who uses a website, dealer feeds and e-mail leads as their sole tools for selling vehicles is missing a large portion of the buying public. Industry reports show niche publications remain a viable and effective tool for driving traffic to lots – both franchise and independent. The 2009 NIADA Used Car Industry Report, the 2008 Northwood Dealer Walk-in Study and the NADA Data Report show the Internet is the number one media source driving walk-in traffic. According to these studies, the next best driver of walk in traffic is not newspapers, radio, TV or direct mail. The report discovered the most effective choice of media other than the Internet is classified magazines. An advertising plan that combines Internet advertising and a classified magazine provides nearly 70 percent of all walk-in traffic generated by advertising. It is critical this migration of buyers from daily newspapers to niche publications that feature the inventories of local dealers be recognized by all size dealerships. If there is an automotive classified magazine in your market, you can be sure dealers using this marketing tool are enjoying excellent response to their printed message. How do we know this?

Telephone call tracking reports, as well as the significant number of copies of these print products that are picked up each and every week demonstrate the car-buying public rely on this form of advertising to help them in their decision-making process. For example, in the Bay Area, there is a print product (Bay Classifieds) that moves more than 40,000 copies every week. This publication, available in thousands of locations, is gobbled up 52 weeks a year by people who make the conscious choice to look for the latest copy. In the area around rural Oroville, Calif., Great Northern Wheels & Deals sees nearly 25,000 copies of its publication gobbled up each and every week. Throughout California, from the Recycler in Los Angeles to The Nickel in Redding, auto buyers consistently grab their copy of these publications. If print is really dead, how do we explain this consistent demand from buyers for a print product that provides them with information from which they can make an informed buying decision? Shouldn’t we have seen an erosion of demand for these products “because everyone shops on the Internet?” The publishers of these and other niche publications report strong demand for the products, and are proud of the product’s ability to generate e-mail leads, telephone calls and walk-in traffic. These print products provide dealers, large or small, the opportunity to tell a story about what makes their stores unique. Many dealers report customers walking onto lots with the print product in hand asking to see a particular car featured in a print ad. This is likely the best quality up a dealer can hope for. Contrasting that type of potential buyer to some of the Internet leads dealers receive from all over the country, we can see the local buyer carrying a local publication and talking to a local dealer is what every dealer would like to have more of. Kevin Aylmer is vice president for Target Media Partners

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IndustryNews

Inventory Acquisition 101 No need to overthink and thus overcomplicate things. The hottest topic right now in the Buy Here-Pay Here world has to be inventory.

When shopping for a new or additional auction sources, do not limit it to just the large national auctions. Independent auctions are becoming very aggressive in going after dealer business as well. I may be a little old fashioned, but have always preferred the independent auction as they seem to provide better service and an overall buying and selling experience. BY B R E N T C A R M I C H A E L

Not only where, but what and how to find and purchase it. Like most other areas of the BHPH business, the most successful dealers are focusing on the basics in this area, too. They are firm believers in the KISS (keep it simple, stupid) philosophy. No need to overthink and, thus, overcomplicate things. The first basic they are focusing on regarding inventory acquisition is repeat business. For the more successful dealers, between 30 and 40 percent of their monthly sales are from repeat customers. These will be either lowbalance customers traded into a new vehicle or previously paid-out customers that have returned to purchase again. So 30 to 40 percent of their monthly inventory need is satisfied with vehicles they have a history of and with; that’s pretty valuable information to have when it comes to the vehicles we deal with. Recycling of repossessions is the next basic to focus on. With these, you have the ability and time to completely check the vehicle out to determine its reconditioning need. You also have some historical information for the vehicle. The dealers I have the privilege of working with are recycling on average 60 percent of their repossessions each month to put back out on the lot for sale. The only negative seems to be that the recycled vehicles tend to have a higher reconditioning cost. They seem to need a little more love to get them lot ready but overall are more cost effective than purchasing at auction. Speaking of auctions, they are a basic that should not be overlooked. It is true that there are not as many vehicles going across the block these days, but it is still an effective source. The positive to vehicle volumes at auction being down is that they are becoming very competitive with one another for dealer business. Some auctions are even waiving buy or post sale inspection fees. There is no better time to expand your horizons and check out as many auctions as travel and expense will allow. When shopping for a new or additional auction sources, do not limit yourself to just the large national auctions. Independent auctions are becoming very aggressive in going after dealer business as well. I may be a little old fashioned, but have always preferred the independent auction as they seem to provide better service and an overall buying and selling experience.

I also recommend utilizing the World Wide Web in aiding in the search for an auction honey hole. Most auctions, national and independent, are posting most, if not all, of their upcoming sale vehicles, but post-sale information as well. Most are utilizing Smart Auction, Open Lane, and or OVE for the posting. These are also great resources for the dealer to not only purchase vehicles from the comfort of their office but also to research what auctions have available to know where your next auction visit needs to be. You might just stumble on an auction you weren’t even aware existed. A final basic in the kissing of inventory acquisition would be dealer trades. New car sales are down so this is not the source it once was, but still should not be overlooked. It won’t fill the overall need, but still could fill a partial need. I think the key here is personal contact with the dealer. I’m seeing too many buyers just calling the dealer asking what they have instead of taking the time to actually visit the dealers. Not necessarily a basic, but a stone that should not go unturned would be the private seller. Craigslist, eBay, newspapers and auto magazines are all sources to find vehicles. I, too, used to turn my nose up at this stone feeling it wasn’t worth the time and effort, but with today’s economic challenges, there are sellers out there who simply need the money to get by and are far more reasonable in their expectations. Will it fill the lot? No, but it could fill part of it and that is what counts. As for how to KISS the what and how to acquire inventory, I think it comes down to two very simple questions. How much do you have in the bank account? And how much of that are you willing to spend? There still is enough inventory available as long as you are willing to pay for it. Values are a little out of control right now but have seemed to have leveled off a little in the last month. Finding the right inventory for the right price is still possible. The key will be not to overthink and, thus, overcomplicate it. If you focus on the basics and keep it simple, you will be working smarter and not harder. Brent Carmichael Executive Conference Moderator NCM Associates Inc. bcarmichael@ncm20.com

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IndustryInsider

CAFE and Green Vehicles: Their Relationship Explained BY J . D. P OW E R A N D A SS O C I AT E S

Editor’s note: In late July, the White House released new standards for corporate average fuel economy, or CAFE, that will raise targets in 2025 to 54.5 miles per gallon.

Automakers are forced to conform to increasingly more stringent regulations, while consumers are offered sizeable incentives and rebates to put green technology in their driveway. Based on the success these policies have experienced in the past, we can expect to see more of the same in the future.

This story was written before the announcement, but provides excellent background on CAFE and how those standards relate to the push toward green vehicles. For more on the new CAFE requirements, read Frontline in the September issue of Used Car Dealer. The U.S. auto industry has been mass producing vehicles and conventional internal combustion engines (ICEs) for more than a century. Over the years, hundreds of millions of vehicles have been produced, thousands of support companies (suppliers and related ancillary industries) have been created to provide tooling and parts to support vehicle manufacturing, and hundreds of thousands of employees go to work each day to build the vehicles we drive. Given this long and expansive history, how does the U.S. government persuade automakers and their suppliers, who have been committed to ICE technology, to switch gears and focus on expanding into green technology? Increasingly stringent fuel economy and exhaust emission regulations, combined with incentives to produce more alternative technologies, have been the most common formula. With an energy crisis gripping the world in the early 1970s, the Environmental Protection Agency was quick to establish fuel economy standards (launched 1972) that gave consumers a clearer picture of how their ICE-powered vehicle was performing. Besides making public which vehicles had the highest and lowest fuel economy averages, vehicle owners also quickly came to understand that vehicles with lower fuel economy numbers were generally considered greater polluters. By 1975, the EPA established its CAFE regulations, policies designed to establish fuel economy targets and improve the average vehicle fuel efficiency of all new vehicles sold in the U.S. Today, the CAFE numbers are regulated by the National Highway Traffic Safety Administration (NHTSA) based on numbers measured by the EPA. CAFE is a big motivator for automakers to invest in green technology. If an automaker’s corporate-wide average fuel economy of all cars and trucks sold falls below the CAFE target, the automaker is required by law to pay a penalty ($5.50 per 0.1 mpg under the standard, multiplied by the manufacturer’s total production for the U.S. domestic market). These costs, understandably, add up very quickly. Today’s CAFE standards are much

more stringent than just one decade ago — and they continue to get even tougher. In 2010, the U.S. government passed a law increasing CAFE targets to 35.5 mpg by the 2016 model year (this represents an increase of 8.2 mpg between 2011 and 2016). According to J.D. Power, the U.S. government estimates that by 2020, the new CAFE standards will lead to a reduction of greenhouse-gas (GHG) emissions of 209 million metric tons – the equivalent of taking 31 million of today’s vehicles off the roads in the U.S. In addition to the federally mandated CAFE targets, individual states may also establish their own targets for vehicles sold in their jurisdiction. California has been at the forefront of the efforts to improve air quality. In 1990, California regulators passed the Zero Emission Vehicle (ZEV) Mandate (requiring 2 percent of all vehicles sold in that state in 1998 to be ZEVs, and rising to 10 percent by 2003). Other states, and eventually the U.S. government, followed California’s lead and pushed to develop green technology. Today, the federal government offers automakers (and consumers) subsidies and tax incentives to design, manufacture, and drive vehicles utilizing green technology: • B  attery Electric Vehicles (BEVs), such as the Nissan Leaf and Tesla Roadster, come with $7,500 owner incentives (and there are incentives towards the installation of home charging stations). • P  lug-In Hybrid Electric Vehicles (PHEVs) and Extended-Range Electric Vehicles (ER-EVs), such as the Chevrolet Volt and Toyota Prius ER-EV, are also packed with $7,500 incentives. • L astly, there are even incentives on green technology alternative fuel vehicles. Today’s clean diesels, such as the BMW 335d and Volkswagen Jetta TDI, are offered incentives between $900 and $2,000 depending on make and specific model.

Whether by mandate or incentive, the government has adopted a push-pull method to promote green technology. Automakers are forced to conform to increasingly more stringent regulations, while consumers are offered sizeable incentives and rebates to put green technology in their driveway. Based on the success these policies have experienced in the past, we can expect to see more of the same in the future.

J.D. Power and Associates is a global marketing information services company that provides customer satisfaction research, market research, automotive forecasting, social media research, and performance improvement programs in the auto industry. Established in 1968, the company is a business unit of the McGraw-Hill Companies.

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HotTopics

SEMA Dealer Day Offers Value, Benefits for Dealerships BY S T E V E C A M P B E L L , S P E C I A LT Y E Q U I PM E N T M A R K E T A SS O C I AT I O N

A recent study on vehicle accessorization by the automotive marketing research and consultancy firm AutoPacific confirmed accessories influence more than one million vehicle sales each year. And

Dealer Day will conclude with a networking mixer, where attendees will have the opportunity to confer with fellow dealers as well as with SEMA-member restyling experts and the event organizers.

while many new and used vehicle dealers understand the power of accessorization, others have questions about how to incorporate accessory sales effectively, providing not only an added impetus for vehicle shoppers to make purchases, but also adding to the dealership’s bottom line through a supporting profit channel. Dealer Day at this year’s SEMA Show will answer those questions. Sponsored by NIADA and SEMA’s Professional Restylers Organization (PRO), the 2011 SEMA Show Dealer Day will take place in the Las Vegas Convention Center, Nov. 2, from 8 a.m. to 1 p.m. The program is an exclusive event for dealership principals and top managers. Its sole purpose is to teach dealerships how to tap into the $28.6 billion automotive accessories market. It will provide attendees with proven strategies showing how to identify pitfalls and maximize opportunities, utilizing clearly defined approaches that integrate the dealership’s fixed operations with vehicle sales. The program provides the latest trends, tools and resources to sell more cars and increase the dealership’s bottom line. Dealer principals who have attended previous Dealer Day programs were pleased and enthused about the information they received. “Dealer Day was a great value and benefit for our dealership,” said representatives of the Martin Automotive Group, located in Los Angeles, Calif. “The discussions provided us great insight into the different approaches and strategies for accessory integration. The ability to interact with so many other dealers was invaluable, and the range of knowledge was impressive, to say the least.” Phil Tucker, who attended on behalf of Cerritos Infiniti in Cerritos, Calif., was equally pleased. “Personally, I feel the foundation of SEMA is the exchange of ideas,” he said. “Dealer Day was able to take most of the benefits SEMA has to offer dealers and concentrate it for a more effective use of time away from the store.” The Dealer Day program for 2011 will kick off with an introductory address at 7:30 a.m., followed by a session at 8:10 a.m. on “How to Partner with the Right

Accessories Installer.” Bill North of Classic Design Concepts will moderate the session, which will focus on concepts that go beyond sales alone, including fashion, trends and technology. The session will also discuss how to find qualified professionals who have the skills, training and resources to create fast-moving, highvalue accessory packages, with panelists Joey Johnston of Tops & Trends and Ron Leslie of Katzkin. A consumer focus-group session will take place at 9:20 a.m., centered on the concept of “Understanding Buying Decisions: Auto Enthusiasts Speak.” Enthusiasts are frequently looked upon as expert consultants by their peers and can become evangelists for a dealership. A diverse group of auto enthusiasts will discuss the factors that go into their carbuying decisions and what keeps them loyal. The next session, scheduled for 10:45 a.m., will detail the “Seven Simple Steps to Running a Successful Accessory Business.” Dealer and industry professionals will offer tried-and-true practices that can boost any dealership’s bottom line, from picking the right partners to creating a multi-level buy-in. The panel for this discussion will be moderated by SEMA Council Director Zane Clark and feature David Boutwell of CODA Automotive, Chris Ferren of Bewley Allen Cadillac and Jon Titman of Automotive Essentials. Following lunch, which is provided as part of the program, Diana Braschler of Dealer Source Ltd. and Josh Elliott of Auto Trim of Denver Inc. will conduct a vehicle walk-and-talk session. The presentation will showcase the features and benefits of accessorization and strategies of industryleading restylers as well as effective strategies to consider when showcasing accessory-equipped vehicles. Dealer Day will conclude with a networking mixer, where attendees will have the opportunity to confer with fellow dealers as well as with SEMA-member restyling experts and the event organizers. Make plans to attend today, and let your dealership colleagues know that this is a can’t-miss event for SEMA Show attendees. The 2011 SEMA Dealer Day program is available to both SEMA members and non-members for the same low prices. Through Oct. 17, tickets are $99. After that date, tickets are $149. Onsite pricing starting Oct. 27 in Las Vegas is $149.

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AutoTrader.com’s Dealer Learning Center Gives Dealers Free Online Access To Educational Resources We were very thoughtful with the development of this site, taking into consideration how different visitors may prefer to learn as well as browse the content. In an effort to help dealers leverage the Internet to effectively advertise online, AutoTrader.com has launched its Dealer Learning Center (DLC). This online educational

portal brings on-demand video tutorials, topical articles, proprietary and independent research, best practices and marketing handbooks to the dealer community at no charge. Dealers and their staffs can anonymously access these resources at www.dealerlearningcenter.com. As the go-to place for educational content on a variety of online marketing and research topics, the DLC includes information on online merchandising best practices, industry insights, video, social, mobile, chat and more. Dealers can also find important research studies such as the 2011 Polk Automotive Buyer Influence Study and the Northwood Dealer Walk-In Study. “This is yet another way that AutoTrader. com is fulfilling our promise to the dealer community: We Work for You,” said Chip Perry, president and CEO at AutoTrader.com. “We only win if our customers win, so we have been continually focused on ensuring that they have all the tools and resources necessary to be successful. From transforming our sales team into true advertising consultants a few years ago to creating more robust educational programs and resources, AutoTrader.com is bringing the latest information on effective online marketing and merchandising to the dealer community.” The Dealer Learning Center is an extension of the already robust programs AutoTrader. com offers through its Dealer Learning team, which supports the educational needs of dealers through hands-on learning. Comprised of automotive experts with extensive dealership experience, the Dealer Learning Team aims to help dealers use the Internet as a tool to drive shoppers to their showrooms as well as integrate online best practices with in-store processes that maximize operational efficiency. In addition to directly serving the dealer body with an array of educational materials, the Dealer Learning Center will also enable AutoTrader.com advertising consultants to enhance their interactions with their customers by providing facilitated learning that aligns with their customers’ objectives. Visitors can also see a schedule of upcoming events with information about the local market educational workshops being conducted throughout the country. These workshops are open to AutoTrader.com dealer customers, and in many cases, non-customers. Visitors can also learn about the AutoTrader.com Dealer Learning team and read workshops descriptions. The Dealer Learning Center was designed

for ease of use and to provide visitors learning flexibility on the topics important to them. For example, they can watch a 10-15-minute video tutorial on a topic of their choice or read an article on the same topic. It also lets dealers rate the educational resources on a five-star rating scale to help other users determine which assets contain the most valuable content to serve their educational needs. Furthermore, the DLC features full-site search capabilities to help users immediately locate the information they seek. Finally, the DLC offers a variety of ways for dealers to keep up to date with the most recent resources and events added to the site. Dealers can opt in to a monthly email update, which gives a rundown of all new content that has been uploaded to the site during the previous month, they can subscribe to an RSS feed, or they can visit the site’s overview page to stay informed. “We were very thoughtful with the development of this site, taking into consideration how different visitors may prefer to learn as well as browse the content. Our priority is to accommodate and facilitate dealer learning, not only in person but also online,” said Eddie Cawley, director of dealer learning. “Our educators have retail automotive backgrounds, and they are interacting with dealers and their staffs every day. They understand the pain points of dealerships and have insight into what educational information they are hungry for. The content on the DLC speaks directly to the feedback we’re hearing from the field, and it will continue to evolve and grow.” Allyson Estes, Director of Industry Relation & Dealer Learning, explained further. “As an industry, we face new challenges all the time. AutoTrader.com has tremendous access to resources, research, and best practices about effective online marketing. It is our responsibility to share that information with the dealer community so that the industry as a whole is successful.” “We rely on dealers for learning just as much as they rely on us. It’s two-way sharing. This learning center is a new way to foster that communication,” she said. Two of the most popular workshops the team is asked to conduct are OnLot2Online and Customer Connections. According to the workshop description for OnLot2Online, three out of four consumers are shopping online for cars, and they expect the same level of customer service online and offline – from reception to selling and financing. As a result, today’s dealerships require an integrated approach in order to convert prospects into customers and create ongoing customer loyalty. OnLot2Online was designed around this

concept and focuses on how to take in-store best practices and move them into the online space. This program covers creating an “Internet Culture” at the dealership among all employees, aligning the online and offline retail shopping experience for shoppers, effective online merchandising tactics, new platforms to engage and influence car shoppers, and methods for tracking and sourcing dealership traffic. Customer Connections offers insight into how dealerships can engage and respond to online shoppers when they call, email, or walk in to the dealership. Additionally, it covers the dealership’s role and the dos and don’ts of new consumer engagement platforms such as live chat and social media-dealer rating sites. It also identifies various channels in which today’s shoppers contact the dealership and explains what shoppers are looking for from the dealership experience. Workshop participants also have an opportunity to practice effective methods for addressing and engaging shoppers. “Our workshops are very interactive. It creates an environment where dealers can also learn from each other. It’s an excellent way to reinforce learning and discover new ways that dealers make the Internet work for them. We are able to share many of the best practices that are working for dealers in other markets as well as the findings from performance metrics on AutoTrader.com,” said Eddie Cawley. The Dealer Learning team also conducts workshops on other topics like business transparency and inventory acquisition. The workshops are customized so that the information is relevant to the audience. “Different dealerships have different needs based on a variety of factors, so we take that into consideration when coming to a market or dealership to conduct a workshop. We want the content to be meaningful to the dealers in the room,” Cawley said. The Dealer Learning Center offers a new, effective format for extending the lessons from interactive workshops the Dealer Learning team conducts around the country. This online platform offers an immediate way for dealers to access these helpful insights about effective online marketing. Dealers can learn more at www.DealerLearningCenter.com.

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Used Dealers Add Rental Franchise to Supplement Business

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hat can a used dealer to do add revenue in these challenging economic times? Surveying dealers at the recent NIADA convention in Las Vegas, we found many different approaches to this challenge of growing profits in a challenging economy. Many of the dealers we spoke with were selling service contracts, warranties, gap insurance, and credit insurance, all reputable products sold to the customer who is already purchasing a vehicle. Vehicle rental is an often overlooked program that can actually bring customers in who would otherwise not have a reason to set foot on your sales lot. Many of the dealers we spoke with at the convention that did offer rentals said it had been the difference between them surviving the tough economy of the last several years and often made the difference between the dealer principals drawing a paycheck or not. Adding a rental operation several years ago has become one of the smartest moves Joe Baldwin ever made. The owner of Baldwin Motor cars in Lafayette, Ind., bought a Rent-AWreck franchise in 2000 while his retail market

was still strong. At times as the market has weakened, he said, his rental operation, which he operates from the same facility as his Buy Here-Pay Here store, has kept the business a success. “Without the rental business, I would be out of business by now,” Baldwin said. “I guarantee it.” Wayne Webb, a consultant with Peer Group Resources Inc., which organizes 20 Groups for rental car operations, said by adding rental franchises to their operations, dealers have increased traffic by as many as 150 potential customers per month with only 25 rental units. Baldwin’s rental fleet represents the bulk of his inventory. He typically keeps 60 rental units and as few as 15 retail units. “When I first bought the rental franchise people laughed,” Baldwin said. “They told me I was never going to make any money with it.” His goal was an extra $5,000 a month. The rental operation earned Baldwin $100,000 in the first year. Baldwin said his key to success was buying the right inventory. Rent-A-Wreck franchisees stock their own inventory, and more than 100 of their nearly

200 franchisees also are dealers. Mel Morris started a sales and service operation in Canton, Mich., prior to buying a Rent-A-Wreck franchise in 1992. He runs Canton Auto Sales, Mel’s Auto Clinic and RentA-Wreck from of the same building. “When business is good you’re selling a car every day, repairs are up and most of the rental fleet is out,” he said. “All aspects of the business feed into each other.” The increased traffic from the rental operation brings more opportunity to sell autos. He also rents a lot of vehicles to people awaiting repairs, which allows him to bid on any of their future repair jobs. “It all works together. Customers come in to rent a car, see the cars I have for sale and end up buying one from me at a later date,” Morris said. For more information about Rent-A-Wreck, or to find out about adding a rental franchise to your dealership, contact Andrew Iatridis at 469939-6132 or aiatridis@rentawreck.com.

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Westlake Names Q2 Top Auction Winners Auctions in Alabama, California, Colorado, Idaho and Nevada won top honors from Westlake Remarketing for their service during the second quarter.

“We continued to see strong sale performance in the western states during the second quarter” said Bill Walters, vice president of remarketing. “As such, our top auctions held relatively stable compared to Q1.” Taking the overall top position was Norwalk (Calif.) Auto Auction, followed by Manheim (Las Vegas) Nevada which had held the top spot for four consecutive quarters. Besides strong sale results, Norwalk was recognized for excellent service. “The staff at Norwalk makes my job much easier by going above and beyond,” said Brad Hall, regional auction representative. ABC Birmingham (Ala.) retained its position as Top Service Auction. Dirk Grammel, regional auction representative, said “they are my most consistent auction for vehicle processing and sale preparation.” Dealers Auto Auction of Idaho continued to top the rankings in Westlake’s Dealer Loyalty Program. “We have a strong partnership with Dealers Idaho through the Loyalty Program,” Walters added. This quarter, Westlake added a category for Most Improved Auction. “We wanted to recognize the auction that showed the best overall improvement throughout the quarter,” Walters said. ADESA Colorado Springs (Colo.) took this position with a solid improvement in sale results. Regional Auction Representative Steve Gunsberger also highlighted strong service grades in contributing to the auction’s overall performance. Westlake President Ian Anderson offered congratulations to all the Q2 Top Auctions. “As we head into the second half, we look forward to working with all of our auction partners into making 2011 a record year,” he said. “A hat tip to our Q2 top auctions and congratulations to ADESA Colorado Springs for their charge up the rankings.”

J.D. Power and Associates 2011 U.S. Green Automotive Study BY ADR STAFF

Based primarily on a study of prospective vehicle purchasers fielded in February 2011, J.D. Power and Associates is predicting the outlook for green vehicles remains limited for the foreseeable future. The company expects the share of hybrid and electric vehicles to remain below 10 percent of the U.S. market through 2016. The 2011 U.S. Green Automotive Study considered the attitudes of 4,000 consumers toward hybrid electric vehicles, clean diesel engines, plug-in hybrid electric vehicles, and battery electric vehicles. Despite interest in the vehicles, consumers’ concerns about both vehicle cost and vehicle functionality will constrain sales, according to the study. The study also found substantial consumer interest in green alternative powertrain vehicles, but more as a means of reducing fuel costs, not out of interest for the environment. Of those consumers actually considering an alternative powertrain vehicle for their next purchase, 75 percent cited lower fuel costs as the primary reason. Only 50 percent cited environmental concerns. Consumers not considering purchase of an alternative powertrain vehicle also recognized the potential fuel cost savings. However, in addition to purchase price, they cited concerns about functionality – such as driving range and performance – as a major impediment to ownership. “It is the financial issues that most often resonate with consumers, whether it is the higher price of the vehicle itself, the cost to fuel or charge the vehicle, or the fear of higher maintenance costs. The bottom line is that most consumers want to be green, but not if there is a significant personal cost to them,” according to Mike VanNieuwkuyk, executive director of global vehicle research at J.D. Power and Associates. The study concludes consumers have interest in alternative powertrain vehicles and the perceptions of green vehicles is largely positive. However, converting this interest into actual sales will require concerted efforts to improve the technology and infrastructure and reduce the cost to consumers. For more information, including the news release issued by J.D. Power and Associates, visit www.JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

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NIADA Mobile now provides instant auto transport quotes as part of its innovative mobile app. With the

addition of ShipCarsNow to the NIADA mobile app, NIADA members will have shipping costs at their fingertips, giving dealers the ability make quick, informed purchase decisions whenever and wherever they buy wholesale inventory. NIADA Mobile currently provides vehicle values from Black Book, Kelley Blue Book and NADA; CARFAX and AutoCheck reports; as well as pre-auction run lists, continuously updated vehicle data, and VIN bar code scanners. “ShipCarsNow is one of our NIADA National Member Benefit Partners and we are excited to include nationwide auto transport as another service within of our mobile app platform,” said Scott Lilja, NIADA vice president of member services. ShipCarsNow recently introduced ShipCarsNow Mobile, a mobile app that gives auto dealers and remarketers a fast and easy way to get multimodal auto transport quotes from any smartphone. One of the few auto transport companies to offer flexible options of truck and rail service, ShipCarsNow’s mobile app complements their online auto transport service and offers auto dealers mobile access to instant auto shipping quotes while they’re bidding on cars at auction. In addition to instant price quotes, the ShipCarsNow mobile app provides users a link to register with ShipCarsNow.com for lower, preferred customer prices. NIADA members can use the app to login to ShipCarsNow. com to get quotes, track shipments, and quickly access ShipCarsNow sales representatives. To learn more about the NIADA Mobile app with ShipCarsNow auto transport quotes, visit http://niada.gigglepop.com

OfficeMax Offers New Partnership At NIADA, we’re always looking for ways to help you get more out of your membership. That’s why we’ve teamed up with OfficeMax to introduce the OfficeMax Partner Advantage program. OfficeMax is a leader in both business-to-business office product solutions and retail office products. OfficeMax provides office supplies and paper, in-store print and document services through OfficeMax ImPress technology products and solutions, and furniture to consumers and to large, medium and small businesses. OfficeMax customers are served by 35,000 associates through direct sales, catalogs, e-commerce and retail stores. OfficeMax has more than 40 years of experience in the business-to-business marketplace and is recognized as one of the most experienced national business products supplier. Corporate United, the nation’s largest group purchasing organization, selected OfficeMax as the 2010 recipient of the Corporate United Supplier of the Year Award.

Partners

NIADA Mobile Adds ShipCarsNow Auto Transport Quotes to App

Through the OfficeMax Partner Advantage Program, NIADA members receive:

- Exclusive member-only pricing - Superior personalized service - Innovative programs that deliver value to companies and individuals - Highly skilled technology team - More than 25,000 office essential products - Award-winning house brands - Large recycled product offering - Multiple ordering channels

Online ordering is easy; just visit www.officemaxsolutions.com and type in the following: User name: 0722739w Password: omaxadvantage1 To order via phone, call 877-969-6629. Members with 20 or more employees may call 800-248-6343 to request more information on setting up your business account.

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FREE DEALER EDUCATION

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Watch where you want... ...when you want

What You See Isn’t Always What You Get

A

s an attorney, I find that many people are surprised to learn I am also a magician. It’s a fun and challenging hobby that can offer good lessons. For example, you quickly learn that things are not always what they seem. To master most techniques, you need to clearly understand what’s happening beyond the visual component. This lesson also applies to regulatory compliance. For dealerships, it particularly rings true when it comes to relationships with third-party service providers and their products. A company might appear to be reputable on the outside, but it could be just an illusion. There are risks involved with all third-party relationships, whether they involve backend products dealers sell to buyers, such as credit life insurance, GAP insurance, extended warranties or service contracts, or operational products dealers buy or license from third-parties, including consumer credit information, loan documents or software. One risk with third-party relationships is whether the vendor understands and satisfies its unique regulatory compliance requirements. As a dealer, do you understand where your responsibilities end and the vendor’s begin in terms of service, performance and providing any required disclosures? A vendor’s compliance failure may ultimately cause your dealership to be out of compliance too. So how do you protect your dealership’s reputation and ensure your vendors understand and are focused on compliance? Here are some questions to consider in the due diligence process: • Does the vendor stand behind its products and services with a warranty or other written representations? • Does it have stable management and finances to support its obligations to you and your customers? • Does its business history suggest that it will be around several years from now to fulfill its promises? • Does it have a customer service area that is responsive to customer questions and problems? •Does it understand the laws and regulations that apply to its products and services? For example, does it know whether its product is considered insurance in your state? If it is an insurance product, is the vendor licensed to sell that particular type of insurance in your state? • Is the vendor current on law or regulatory changes that affect its products and services (are its marketing materials and customer contracts in compliance and up-to-date)? • Is the vendor the subject of any complaints to regulators, investigations, and/or is it involved in any serious litigation?

Sales • Operations • F&I • Remarketing • Compliance • Legal/Regulatory • Special Features • Industry Events

PLUS: Automotive Industry News & Special Monthly Programs

Dealers want to make sure their customers are getting the best service possible, and regulatory compliance issues can greatly impact that goal. Third-party providers may have relationships with hundreds or thousands of dealerships. Their offerings may include a number of products in multiple states, which can increase the chances for error or oversight. In a regulatory environment that’s constantly changing, the dealer needs to confirm that its vendors are keeping up with state and federal laws. A third-party provider might say the magic words you want to hear, but it’s up to you to make sure it’s not hocus-pocus. BY CHIP ZYVOLOSKI

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

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