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Official Publication of NIADA New York

PREPARING FOR THE FUTURE ALSO Marketing Your Vehicles Beyond the Dealership PLUS How Much Can Just One Curbstoner Cost Your City?

NOT A MEMBER? DON’T RISK IT see page 3

DALLAS, TEXAS Permit No. 2079

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PRSRT Standard U.S. Postage

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BECOME AN NIADA NEW YORK DEALER MEMBER TODAY AND RECEIVE THE SE GRE AT BENEFITS AND DISCOUNTS: Receive thousands of dollars in discounts yearly off of the products and services you use everyday via NIADA’s special member benefit programs it has developed with many industry vendors. Protect Your Business through NIADA’s legislative program that monitors and protects used motor vehicle dealers with Congress, the IRS, NHTSA, FTC, and others.

Communicate Prestige and Professionalism to Customers by placing your “NIADA Member” sticker in your dealership window. Alert Yourself to Laws That May Be Headed Your Way through NIADA’s many channels of communicating late breaking news to members. Provide Yourself with a Valuable Resource for expert advice on financing, marketing, taxes, legal matters, and much more!

Receive valuable educational opportunities with free access to over 450 hours of dealer education on NIADA.TV, education & networking at NIADA’s Annual Convention & Expo, and access to NIADA’s Certified Master Dealer Program.

Join a Nationwide Network of thousands of used car dealers who want to see your business succeed!

Receive Used Car Dealer Magazine, a member-only benefit, that provides industry news, columns and features all designed to help you maximize your profitability.

Get a leg up on your competition, and prove to your community and your customers that you strive for the best and abide by the high business standards set forth by NIADA.

Be Heard with a strong voice in the only national organization which speaks for the used motor vehicle industry.

Call (800) 682-3837 and ask to speak with Cindy Sirkel OR visit us online at www.niada.com/membership.php A B O U T NI A DA The National Independent Automobile Dealers Association (NIADA), founded in 1946 has represented quality independent automobile dealers for 65 years. NIADA is here to assist it’s members in becoming more successful within the used motor vehicle industry. Through membership in NIADA, you join with over 20,000 other professional auto dealers who share your dream of financial prosperity for your business. NIADA is your legislative advocate -- protecting your business interests. The association consistently brings you industry education, valuable information, services and benefits designed to prepare members for an ever-changing marketplace. The simple and better way to keep pace in the used motor vehicle industry is to join NIADA...a highly respected organization dedicated to your success! 3

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MAGAZINECONTENTS 6 Preparing for the Future

8 Marketing Your Vehicles Beyond the Dealership 14 Risk-Based Pricing Rule Takes Effect 14 How Much Can Just One Curbstoner Cost Your City?

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 longterm 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.

ADVERTISERSINDEX ADESA............................................................ 11 AutoTrader.com ................................. Back Cover Cars.com.................................. Inside Front Cover Corry Auto Dealers Exchange ............................7 Manheim.com ..........................Inside Back Cover Smart Auction .................................................. 9 Western General / Protective............................. 5

Summary

NY S 129

Peralta (D) 

Latest Action

12/08/2010 : 

Consumers Right to Repair Act 

Senate Consumer Protection Committee

Establishes the State Consumers’ Right to Repair Act of 2011; mandates automobile manufacturers to release vehicle repair information to vehicle owners to allow the diagnosis, service, and repair of their vehicles and to make, or have made, repairs necessary to keep their vehicles in reasonably serviceable condition during the expected vehicle life. 

PREFILED.

To SENATE Committee on CONSUMER PROTECTION

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.

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 car-side 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

Bill

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

OVE.com Signs 100th auction partner

THE NEW YORK DRIVING FORCE IS PUBLISHED BI-MONTHLY BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE 817-640-3838.PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF NEW YORK DRIVING FORCE 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 (C) 2011 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED.

OVE.com is now the online partner of choice for about 80 percent of the National Auto Auction Association’s (NAAA) member auctions. Unlike other platforms, auctions must be NAAA members to participate on the OVE.com platform, so buyers can purchase confidently knowing that every transaction facilitated on OVE.com adheres to the highest industry standards. “OVE.com plays a critical role in our remarketing strategy,” said Ben Lange, president, America’s Auto Auction. “Our partnership with OVE.com helps our dealer and commercial customers sell cars more quickly, and we’ve been able to touch cars that normally would not come to auction, so we’re expanding virtually. Oftentimes, we’re able to leverage our new online relationships into lane business; and on the buy side, we start to see the OVE.com buyers show up on our AWG simulcast screens and sometimes in the lane.” As partners on OVE.com, independent auctions: Control the entire transaction, from setting their own fees to arbitration Easily list inventory, images and condition reports, especially if using the automated solution Avoid listing or membership fees and never pay anything until they sell a vehicle Expand their reach nationally and even internationally, especially since their inventory is exposed on Manheim.com’s PowerSearch

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.

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

FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT CINDY SIRKEL (800) 682-3837 • CINDY@NIADA.COM OR VISIT US ONLINE AT WWW.NIADA.COM/ MEMBERSHIP.PHP

OVE.com, the world’s largest, 24/7 online wholesale vehicle marketplace, celebrated a centennial milestone in November when it signed its 100th independent auction partner, State Line Auto Auction in Waverly, N.Y.

For more information, visit OVE.com.

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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

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.

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.

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.

marketplace, dealerships must prepare their team to meet the current demands of the marketplace.

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.

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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Standards to Make Auctions Better for Customers By David Angelicchio

The National Auto Auction Association (NAAA) is the leading remarketer of used vehicles in the world. NAAA member auctions sell about nine million ve-

hicles per year through the physical auction lanes and online. Over the past several years, NAAA has been focused on developing consistent standards and practices to be applied at all member auctions to enable customers to buy with more confidence from any auction they choose, whether they buy in-lane or online. The ultimate goals are to improve buyers overall auction experience and increase vehicle residuals. In connection with this renewed focus on standards, the Auction Standards Committee (ASC) was formed. It’s comprised of representatives from Manheim, ADESA, ServNet and independent auctions. Because of the complexity of the issues and their importance to the industry, the ASC also engages an outside industry consultant to assist in the development of policy. The ASC also works hand in hand with other industry associations to help to ensure industry acceptance and endorsement of the standards and policies that are developed. The first area of focus for the ASC was the development of a revised arbitration policy. The arbitration standard was completed and approved by the NAAA board in October 2009 and became effective on January 1. This policy has been universally endorsed and adopted by NAAA member auctions and the rest of the vehicle remarketing industry. The next area of focus was the development of a standard wholesale certification standard. The ASC determined although buyers believed there was a definite value to wholesale certification, they were confused by the large number of programs and could not define them or quantify their value. In addition, the myriad of different policies created operational inefficiencies at the auction level. The ASC was charged with developing a standard certification program that combined the major elements of all the separate policies while maintaining individual company branding. After extensive study, the ASC – working with Agility Consulting and the IARA – developed the NAAA Certification Standard, approved by the NAAA board in September. This standard has been endorsed by IARA and will become effective on Jan. 1, 2011. The marketing materials for this program are being prepared and will be available soon. The ASC also has developed a process to receive comments on all NAAA standards so they can continually be updated. The committee will continue to look at other areas of standardization including vehicle grading. As the leader in vehicle remarketing, NAAA is committed to the continued development of consistent auction standards and practices in order to provide the best possible service to the dealers. All NIADA members and dealers seeking full detail on national vehicle condition standards in place at NAAA auctions beginning next month should visit www.NAAA.com and click on Standards. David Angelicchio is chairman of the board and past president of NAAA, which represents more than 317 auto auctions both domestic and international, with more than 8.9 million units sold each year. He is the general manager of the Pittsburgh (Pa.) Independent Auto Auction.

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Marketing Your Vehicles Beyond the Dealership By Clayton Stanfield, eBay Motors In today’s digital world, it is becoming increasingly challenging for dealers to drive car shoppers from online browsing into their dealerships. It is also growing increasingly im-

RESEARCH SHOWS the majority of consumers now start major purchase decisions with online research.

portant for dealers to widen their reach beyond prospective customers in their own backyards. To find success in today’s changing market, dealers need to broaden their reach and build relationships with consumers who may be hundreds of miles away. Nearly every customer considering an automotive purchase now turns online first to research, find and even buy. To reach those customers, many dealers take advantage of third-party automotive websites, such as eBay Motors, to promote their inventories and services to be introduced to a broader range of potential customers. According to the 2010 J.D. Power and Associates Used Vehicles Market Report, 68 percent of used vehicle buyers use the Internet in their shopping process. This is an increase of five percent from 2009. Online classified ad use to shop for used vehicles has increased to 51 percent, up from 41 percent in 2006. Among the online resources customers use in their shopping process, independent automotive websites, such as ebaymotors.com, receive more visitors than dealer websites. Marketing your vehicle inventory, parts and your dealership on the Internet requires new ways to establish the same reputation and trust it takes to get consumers on the showroom floor. Build awareness. When you want to reach customers in your hometown, you work hard to let them know you’re there. Billboards, commercials, classified advertisements or a combination of these are often used. The same premise remains true when marketing to online consumers. When you want consumers to visit your virtual showroom, dealers need to pay close attention to search engine optimization (SEO). Search engines such as Google, Yahoo and Bing regularly visit websites with automated tools to index key words and phrases consumers often use when searching. To optimize your listings so the search engines can match your terms to what consumers are searching for, it is important you use everyday words and phrases that consumers are likely to type into a search. This way, your listings are more likely to appear in searches and more likely to be noticed by more potential buyers. Search engine optimization can help a dealership reach new customers during the consideration and research phase and also to

build a loyal customer base that will return to your site or come to your dealership when they are ready to make a purchase. eBay Motors regularly uses search to drive more than 14.8 million unique visitors – and potential buyers, looking for new and used vehicles, parts, accessories and services – each month to its website. Show your reputation. When a customer visits your lot, chances are good they already have some degree of interest and trust, either with a previous relationship or based upon a recommendation. Their friend bought a car there, your children go to school together, or they know your dealership’s reputation from active community involvement. To build trust online, it is vital to provide as much information available as possible about not only the vehicles you sell but also your dealership and the people behind the dealership. When developing online listings to sell vehicles or parts and accessories, use highquality, professional photographs and wellwritten descriptions. This helps to boost consumer confidence and purchase potential. If customers cannot clearly see what they are purchasing, chances are higher they’ll move on to the next item with better images. Also, provide complete disclosure as if customers were looking at the vehicle with you in person. Customers will expect most used cars have some sort of imperfection, so don’t try to camouflage any issues with a buyer. By being truthful and transparent with listings, dealers create a sense of trust and a willingness to conduct business. Offer timely responses. While customers in your dealership may wait for you to call back and track down information, online customers expect a high level of service and responsiveness, even if it’s a response to say you are looking for information to answer the question. Since communication methods such as e-mail and cell phones are the norm, buyers expect quick answers. A buyer ready to make a purchase may be more willing to engage in business with a dealer who is responsive to questions with timely communication. Remember, online customers may be shopping in a different time zone, so regular business hours may not apply. Research shows the majority of consumers now start major purchase decisions with online research. Now that consumers are shopping online, businesses have been quick to follow. With a SEO strategy, an online reputation that encourages trust, customer service and responsiveness, dealers can build a virtual business that drives real results and encourages new customers to shop with ease.

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“Wall Street/Consumer” Financial Services Reform Bill

Federal Advocates January 2011 Lobbying Report

On November 17, NIADA General Counsel Keith Whann and Federal Advocates met with senior staff of the FTC as a follow-up to the September 21 meeting. A series of questions had been provided to NIADA for discussion at the November 17 session. At the meeting, Keith walked them through the process of buying a car and provided samples of purchasing documents. The FTC is in the middle 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 November 17 meeting were reported to NIADA’s Legislative Committee by conference call on November 23. To review, on September 21, Keith 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 Keith 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 November 17 session). To review further, on July 22, President Obama signed into law 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. To get to that result, advocacy activities included numerous meetings, strategy phone conference calls, letters, talking points, legislative alerts, etc. 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

NIADA is reviewing this bill pending possible Senate floor action in December. 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 that 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, R-S.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, language was included in the final reported version of the bill exempting wholesale transactions from the section’s application. While an initial victory, the remaining provision is still very troublesome and we continue to advocate on behalf of NIADA’s interest pending further action on the Senate bill as well as a possible House companion bill. The latest Senate draft and the companion House bill (H.R. 5381) are being reviewed by NIADA.

Small Business Jobs and Credit Act of 2010

On September 23, the House passed the Senate-passed bill, which includes an increase in the amount the Small Business Administration’s (SBA) 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. This 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 September 23 and September 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 set up 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 FEDERAL ADVOCATES IS NIADA’S GOVERNMENTAL ADVOCACY PARTNER. To read past lobbying reports, visit http:// www.niada.com/legislative_and_legal.php

Regarding the issue of “how to ensure that service members and their families are treated fairly by automobile dealers,” Keith Whann and Federal Advocates also met on September 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. The DOD continues to remain interested in looking for opportunities where Whann could lend his expertise. Details are to be finalized at a later date.

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Online Auctions 101:

Dos and Don’ts BY ANDREW IORGULESCU

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n the recent economic downturn, the automotive industry, like many others, was hit hard. Dealerships around the country had to adapt to industry changes as well as adopt their business operations to grow profits and increase overall business performance.

This adaptation has prompted the incredible growth of the online wholesale auction industry. The sector made huge strides in the past five years and is continuing its upward trend. That outstanding, widespread growth, coupled with the resulting benefits dealers have reaped from buying and selling online, has made virtual auctions a mainstay in many dealers’ operations. Although physical auctions still dominate the remarketing business, online auctions are becoming increasingly vital to dealer operations, primarily because of the time and cost savings realized by avoiding travel to physical auctions and a large, nationwide selection of inventory. With thousands of vehicles available online, dealers are privy to the freshest inventory from a wide variety of sellers and realize significant savings by buying and selling directly from the comforts of the dealership. In addition, dealers now have the luxury of using online auctions as a virtual showroom offering myriad choices to customers that extends the inventory they house or what’s found at regional auctions. With the comprehensive services now available on the best online auction sites, dealers can take care of everything needed for a complete sale, including floorplanning, transportation, fair arbitration and transaction policies for a seamless end-to-end transaction. Not all online auctions are the same, nor do they offer the same services. Before you begin buying and selling on the Internet, it is important to do some research and find the online auction that works best for you and your dealership.

Do:

Look for an online auction that makes the buying process as seamless as possible. An auction offering comprehensive services will enable you to purchase and sell vehicles more quickly and efficiently. Having services such as financing, transportation, third-party vehicle inspections and vehicle condition reports at your fingertips that are already integrated and offered on the auction site will make the buying process much easier. Try before you buy. Peruse the inventory at different auction sites to ensure they have the kinds of vehicles you need. Online auctions source their vehicles from a wide number of consignors and providers and will offer thousands of vehicles at any given time that should meet your inventory needs. Defined search parameters should be available to help you quickly locate the cars that you are seeking. Utilize multiple channels simultaneously to sell vehicles. Incorporating online auctions doesn’t mean it’s an either/or proposition. Consider online auctions to be a complement to your existing buying and selling practices, and you can slowly begin integrating online auctions into your operations. Ensure the auction has a support team available to assist you during the registration and listing process. With a dedicated customer service line in place, you will have confidence in knowing you have a support team ready if you run into any problems or have any questions during the transaction. Use market pricing to determine the accurate values for your vehicles. Before making guesses on how to most accurately price your vehicles, refer to the auction’s market pricing guidance resources to ensure you’re selling at the right price. Take advantage of dealer networks to market your inventory online. Online auctions are shared by dealers across North America and many feature a community of dealers to purchase from in addition to consignors. Utilize existing networks and make other dealers aware of your online presence and tell them to spread the word. Take lots of pictures. With online auctions, dealers don’t have the luxury of seeing the vehicle in person and kicking the tires. That said, with an array of 360-degree photos to accompany each vehicle, and a comprehensive third-party inspection report on the listing, potential buyers have all the information they need to make a decision.

Don’t:

Rush into listing cars online without knowing the ins and outs of the auction itself. Conduct due diligence and make sure you’re familiar with the process for each online auction you are considering. Some have extra fees you may not be aware of, so be sure to investigate all auction processes, including state regulations or arbitration policies. Misrepresent the vehicle you are listing. Not only do your profits rest on your vehicle listings, but your reputation does, too. Be honest in your assessment of the vehicle and ensure your inspections are accurate and complete at the time of delivery or run the risk of losing sales and customers or having to go through arbitration. Release vehicles to buyers without confirmation of payment to your dealership or the online auction. Like any other business transaction, make sure payment has been processed and cleared before releasing a vehicle to the buyer. Forget to immediately remove a vehicle from the auction once sold to avoid double selling. To avoid any confusion about vehicle availability, make sure once a car sells, it’s removed from the auction. Although buying and selling cars online may seem daunting to beginners, the technology is very easy to learn; once it’s been adopted into a dealership’s remarketing strategy, there is a world of possibilities. Andrew Iorgulescu is a co-founder of OPENLANE, a leading North American online auction company for auto dealers to buy and sell wholesale vehicles. He’s the vice president of business and dealer development at the company and formerly held positions at GO Networks, Autobytel.com and GE Capital Financial Services.

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IT’S NIADA SCHOLARSHIP APPLICATION TIME AGAIN!!! 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.

Eligibility Requirements 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.

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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 noncompliance, 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 quarter-million 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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The New York Driving Force