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SEPTEMBER/OCTOBER 2012

INDEPENDENT DEALER OFFICIAL PUBLICATION OF THE OHIO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION

Regulatory Landscape Feeling Tougher? Y O U ’ R E

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A L O N E

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• ONLINE REPUTATION AFFECTS YOUR SALES • ADVERTISING OR MARKETING? • LEASE HERE-PAY HERE VS. BUY HERE-PAY HERE

DALLAS, TEXAS Permit No. 2079

PAID

PRSRT Standard U.S. Postage

V isit us at w w w.ohiada.org

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MARKETING NEWS

Help Your Dealership Go for the Gold Think your shot at living like an Olympian ended after your high school or college athletic career? Think again. Successful Olympic athletes employ a set of traits and techniques you can still use to help market your car dealership. The elements that work together to create popular medalists, with thousands or millions of people rooting for them, can similarly elevate your dealership in the eyes of your customers. On the website marketingprofs.com, Veronica Maria Jarski showed how winning Olympians’ behavior relates to marketing, and that applies perfectly to the way your car dealership can win by adopting the same focus. Don’t believe it? Here’s how you can use what works for the gold medal winners: Share your story: The personal story behind the winners often creates massive support for one athlete or another, or sometimes an entire team. You weren’t dropped onto this earth running a successful auto dealership, so go ahead and share what it took to get there. Every dealership began with a lifelong love of cars, a careful plan or a less-than-direct route that included far-flung adventures. Whatever the story, knowing it helps people identify with you. Understanding the journey

builds support for current success. Deliver on your promises: Actions count far more than words, so prove what matters to you with every engagement, every customer and every sale. The claims you make about what distinguishes your dealership carry a lot more weight when they’re backed up in the interactions that happen minute by minute. Use the right tools: A diver can’t use a pommel horse and a gymnast doesn’t get any mileage out of a pool. Make sure your marketing messages go to the audiences that can use them best. Your brand and your message should be consistent, but it’s smart to craft and deliver the relevant points with laser targeting. Details, details: Try to think about the dealership experience from a customer’s perspective. The little details of each phone call or visit are critically important in shaping the impression visitors take away from any contact. It’s all connected: Authenticity matters everywhere your dealership has a presence. The customers who seem to disappear are still making waves and influencing your reputation long after they’ve left the premises. What happens on the showroom floor and in the finance department today will assuredly be reflected someday, somehow, in a conversation online or in person where you don’t hear it.

You can only run today’s race today: Letting go of the past, wins and losses alike, is the best way to free up energy to focus on today’s challenges. Learn from what worked and what didn’t, but greet each new customer with fresh and full intent to create a lasting asset. Remember the team: Good sportsmanship is appealing. Acknowledging all the people who make your dealership successful is as relevant as the cars and deals themselves. From the manufacturers to the service personnel, your team merits respect and appreciation. They will appreciate the recognition, too. Happy employees will work harder and are more loyal. While you might never stand on a podium and proudly listen to the national anthem while your fans cheer wildly, you can certainly enjoy strong popular support and the loyalty of customers who see you as a winner. Follow these strategies and go for the gold!

BY JIM FITZPATRICK

JIM FITZPATRICK IS PRESIDENT/CEO OF FITZPATRICK ADVERTISING, A FULL-SERVICE AUTOMOTIVE ADVERTISING AGENCY, AND FOUNDER OF FORCE MARKETING, A DIGITAL AND DIRECT MARKETING COMPANY. FOR MORE INFORMATION, CALL 1-800917-8637, EMAIL JFITZPATRICK@FITZADV.COM OR VISIT FITZPATRICKADVERTISING.COM.

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M ONESTI CHAIRMAN

FF RADER RD MEMBER

OIADA BOARD OF DIRECTORS

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TOM ONESTI PAST CHAIRMAN

MAGAZINE CONTENTS

DAN REEL PRESIDENT

Board of Directors OIADA BOARD OF DIRECTORS

08 Credit Reports: What You Need to Know 10 Advertising or Marketing? 12 Form 8300 Reporting 16 Full-Service Auctions 22 Online Reputation Affects Sales 24 LHPH vs. BHPH 34 Compliance Overdrive

WHAT’S NEW

JAY NORTH CHAIRMAN

JEFF RADER BOARD MEMBER

TOM ONESTI PAST CHAIRMAN

NIADA.TV Now available at www.niada.tv: • Building an Effective Dealership Website with Michael D. Jackson

BOB FAHEY BOARD MEMBER

Past Chairman Thomas Onesti Car Port PO Box 9943 Youngstown, OH 44513 JAY NORTH DAN REEL Tel: 330-726-6633 CHAIRMAN PRESIDENT Fax: 330-726-2633 Cell: 330-565-6833 OIADA BOARD OF DIRECTORS tomocarport@aol.com

BOB VAUGHAN BOARD MEMBER

CHRISTINE WHITE MARK MEADOWS VICEEXECUTIVE PRESIDENTASSNT TOM ONESTI PAST CHAIRMAN

MARK MEADOWS VICE PRESIDENT

GEORGE POLCE BOARD MEMBER

LAUREN THOMAS BOARD MEMBER

TERRY REINEKE TREASURER

JOHN REMY RANDY GRIESDORN BOARD MEMBER BOARD MEMBER

DAVE ADKINS SECRETARY

TOM SMITH BOARD MEMBER

OIADA BOARD OF DIRECTORS Administrative Assistant Christine White OIADA 2040 Brice Road, Suite 110 Reynoldsburg, OH 43068 JIM MITCHELL TERRY REINEKE DAVE ADKINS Office: 614-863-5800 EXECUTIVE DIRECTOR TREASURER SECRETARY Fax: 614-863-5801 JAY NORTH DAN REEL MARK MEADOWS cwhite.oiada@gmail.com CHAIRMAN PRESIDENT VICE PRESIDENT OIADA BOARD OF DIRECTORS

TERRY REINEK TREASURER

Jeff Rader Chairman Rader Car Company Jay North 1429 Schrock Road with Shaun Petersen and panel Jay North LLC Columbus, OH 43229 JEFF RADER BOB FAHEY BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH 501 E. Columbia StreetBOARD MEMBER BOARD MEMBER BOARD MEMBER Tel: 614-888-3111 BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER • Avoiding The Potholes with Ken Shilson Springfield, OH 45503 Fax: 614-888-3811 JEFF RADER BOB FAHEY BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RAND • Feel Unstoppable in 60 Minutes BOARD MEMBER BOARD MEMBER Tel: 937-325-3748 Cell: 614-582-1822 TOM ONESTI JAY NORTH DAN REEL MARK MEADOWS TERRY REINEKE DAVE ADKINS BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOA with Ruben Gonzalez TOM ONESTI MARK MEADOWS TERRY REINEKE DAVE PAST CHAIRMAN CHAIRMAN PRESIDENT VICE PRESIDENT TREASURERJAY NORTH SECRETARY DAN REEL Fax: 937-398-1075 PAST CHAIRMAN CHAIRMAN jeff@radercarco.com PRESIDENT VICE PRESIDENT TREASURER SEC NIADA Dealer 20 Groups OIADA BOARDhtron435@yahoo.com OF DIRECTORS OIADA BOARD OF DIRECTORS NIADA’s new 20 Groups program is designed for Robert Fahey NIADA’s independent dealers as they do business President Fairdale Auto Sales today in BHPH, retail or both. Take your profits to CHRISTINE WHITE JIM MITCHELL Daniel Reel 6209 Glenn Rd. EXECUTIVE ASSNT EXECUTIVE DIRECTOR the next level. Visit www.niada20groups.com Cambridge, OH 43725 Reel’s Auto Sales LLC CHRISTINE WHITE JIM MITCHELL Tel: 740-432-4185 547 East Main Street EXECUTIVE ASSNT EXECUTIVE DIRECTOR JEFF RADER BOB FAHEY BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH 740-435-0765 OH 44076 RADERMEMBER BOB FAHEY BOB BOARD VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TO BOARD MEMBER BOARD MEMBER BOARD Orwell, MEMBER BOARD MEMBER BOARD MEMBER JEFF BOARD BOARD MEMBERFax: MEMBER BOARD MEMBER BOARD MEMBER BOARD BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOA Tel: MARK 440-437-5893 Cell:MEMBER 740-607-4011 TOM ONESTI JAY NORTH DAN REEL MEADOWS TERRY REINEKE DAVE ADKINS TOM ONESTI JAY NORTH DAN REEL MARK MEADOWS TERRY REINEKE DAVE ADKINS PAST CHAIRMAN CHAIRMAN PRESIDENT VICE PRESIDENT TREASURER SECRETARY ADESA.........................................Inside Back Cover Cell: 440-319-1247 r_fahey@yahoo.com PAST CHAIRMAN CHAIRMAN PRESIDENT VICE PRESIDENT TREASURER SECRETARY Ally.....................................................................15 Fax: 440-437-5759 OIADA BOARD OF DIRECTORS Auto Portfolio Services.......................................29 Robert Vaughan danreel@hotmail.com OIADA AutoTrader.com......................................Back CoverBOARD OF DIRECTORS Vaughan Motor Car Company Auto Use.............................................................25 Vice President 808 Parsons Avenue Berkshire Risk....................................................23 CHRISTINE Mark WHITE Meadows JIM MITCHELL Columbus, OH 43206 Chase.................................................................22 CHRISTINE WHITE JIM MITCHELL EXECUTIVE ASSNT EXECUTIVE DIRECTOR EXECUTIVE ASSNT EXECUTIVE DIRECTOR Tel: 614-444-7839 Miracle Motor Mart Columbus Fair Auto Auction................................11 JEFF RADER BOB FAHEY BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH Fax: 2380 Morse RoadMEMBER Corry Auto Dealers Exchange..............................30 RADER BOARD BOB FAHEY BOARD BOB VAUGHAN GEORGE614-444-1133 POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARDJEFF MEMBER MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER Dealer Services Corp (DSC).................................. 5 Cell:MEMBER 614-565-5682 Columbus, OH 43229 TOM ONESTI JAY NORTH DAN REEL MARK MEADOWS TERRY REINEKE DAVE ADKINS Dodah.com........................................................... 7 sales@vaughanmotors.com 614-437-0037 CHAIRMAN PRESIDENT VICE PRESIDENT TREASURER SECRETARY TOM ONESTI JAY NORTH DAN REEL MARK MEADOWS Tel: PAST TERRYCHAIRMAN REINEKE DAVE ADKINS Indiana Auto Auction...........................................28 PAST CHAIRMAN CHAIRMAN PRESIDENT VICE PRESIDENT TREASURER SECRETARY Fax: 614-337-1063 OIADA BOARD OF DIRECTORS Insurance Auto Auctions.....................................19 George Polce Cell: 614-348-6503 Manheim.com.....................................................13 Jenroc Auto, Inc. dmarkmeadows@aol.com OIADA BOARD OF DIRECTORS Micro21..............................................................18 101 N. Tuscarawas Ave NIADA Certified...................................................26 CHRISTINE WHITE Dover, OH 44622 JIM MITCHELL TreasurerJIM MITCHELL Nowcom............................................................. 17EXECUTIVE CHRISTINE WHITE ASSNT EXECUTIVE DIRECTOR Tel: 330-364-2525 Terry Reineke EXECUTIVE ASSNT EXECUTIVE DIRECTOR Protective............................................................. 9 Fax: 330-364-6726 Rino’sJEFF Auto IncFAHEY STARS GPS.........................................................31 RADERSales BOB BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH OIADA OF DIRECTORS BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER Cell: BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER JEFF RADER ............................................... BOB FAHEY BOB VAUGHANBOARD GEORGE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH United Acceptance. 3 POLCE 330-268-4724 1610 Industrial Pkwy BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER TOM ONESTI JAY NORTH DAN REEL MARK MEADOWS TERRY REINEKE DAVE ADKINS UsedCars.com by Dealix............. Inside Front Cover Celina, OHCHAIRMAN 45822 BOARDPRESIDENT OIADA OF DIRECTORSVICE PRESIDENTJenroc@wilkshire.net PAST CHAIRMAN TREASURER SECRETARY Voisys.................................................................34 Tel: 419-586-6161 TOM ONESTI JAY NORTH DAN REEL MARK MEADOWS TERRY REINEKE DAVE ADKINS Westlake Financial PAST CHAIRMAN CHAIRMAN .............................................21 PRESIDENT VICE PRESIDENT TREASURER SECRETARY Fax: 419-586-8700 Lauren Bowden Thomas Wolters Kluwer....................................................27 Bowden Motors Cell: 419-305-4009 NATIONAL INDEPENDENT rinos@bright.net 1426 South Main Street OIADA BOARD OF ASSOCIATION DIRECTORS AUTOMOBILE DEALERS Bellfontaine, OH 43311 CHRISTINE WHITE JIM MITCHELL WWW.NIADA.COM • WWW.NIADA.TV TOM ONESTI JAY NORTH DAN REEL MARK MEADOWS JIM MITCHELL TERRY REINEKE DAVE ADKINS EXECUTIVE ASSNT EXECUTIVE DIRECTOR Secretary Tel: 937-593-0014 CHRISTINE WHITE NIADA HEADQUARTERS: PAST CHAIRMAN CHAIRMAN VICE PRESIDENTEXECUTIVE DIRECTOR TREASURER SECRETARY EXECUTIVEPRESIDENT ASSNT 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 Fax: Adkins JEFF RADER FAHEY BOB VAUGHAN GEORGE JOHN 937-593-0514 REMY RANDY GRIESDORN TOM SMITH TOM ONESTI JAY David NORTH BOB DAN REEL MARKPOLCE MEADOWSLAUREN THOMAS TERRY REINEKE DAVE ADKINS PHONE (817) 640-3838 BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER PAST CHAIRMAN CHAIRMAN PRESIDENT VICEMEMBER PRESIDENT BOARD MEMBER TREASURER SECRETARY bowdenmotorslauren@embarqmail.com Wilmington Auto Sales Inc BOARD FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF JEFF RADER(800) 682-3837 BOB FAHEY OR TROY@NIADA.COM. BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH 1780 Rombach Avenue BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARDBOARD MEMBER OF BOARD MEMBER OIADA DIRECTORS The Ohio Independent Dealer News is published John Remy Wilmington, OH 45177 bi-monthly by the National Independent Automobile Tel: 937-382-7714 Remy’s Auto Group JAY NORTH DAN REEL MARK MEADOWS TERRY REINEKE DAVE ADKINS Dealers Association Services Corporation, 2521 58905 US 50 Fax: 937-383-2392 CHAIRMAN PRESIDENT VICE PRESIDENT TREASURER SECRETARY Brown Blvd., Arlington, TX 76006-5203; phone Cell: 937-725-8512 McArthur, OH 45651 (817)JEFF 640-3838. Periodicals postage at POLCE LAUREN THOMAS RADER BOB FAHEY BOB VAUGHANpaid GEORGE JOHN REMY RANDY GRIESDORN TOM SMITH david@wilmingtonautocenter.com Tel: 740-596-4694 BOARDTX MEMBER MEMBER offices. BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER CHRISTINE BOARDWHITE MEMBER JIM MITCHELL Dallas, and atBOARD additional POSTMASTER: JEFF RADER BOB FAHEY BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH Fax: 740-740-596-5526 ASSNT EXECUTIVE DIRECTOR Send address changes to NIADA State Publications, BOARD MEMBER BOARD MEMBER BOARD MEMBER EXECUTIVE BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER CHRISTINE WHITE JIM MITCHELL Executive Director TERRY REINEKE Cell: 740-395-4214 2521 Brown Blvd., Arlington, TXTOM 76006-5203. The ONESTI JAY NORTH DIRECTOR DAN REEL MARK MEADOWS DAVE ADKINS EXECUTIVE ASSNT EXECUTIVE jremy@remysauto.com PAST CHAIRMAN PRESIDENT James R. VICEMitchell PRESIDENT TREASURER SECRETARY statements and opinions expressed herein are CHAIRMAN OIADA those of the individual authors and do not necesBOB FAHEY BOB VAUGHAN GEORGE THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH 2040 Brice Road, Suite 110 Thomas C. Smith sarily represent thePOLCE viewsLAUREN of Ohio Independent BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER Reynoldsburg, OH 43068 Smitty’s Auto Sales Dealer News, the Ohio Independent Automobile Dealers Association, or the CHRISTINE National Independent 668 S 7th St WHITE JIM MITCHELL Cell: 614-436-3393 EXECUTIVE ASSNT EXECUTIVE DIRECTOR Office: Automobile Dealers Association. Likewise, the 614-863-5800 Greenfield, OH 45123 CHRISTINE WHITE JIM MITCHELL EXECUTIVE ASSNT EXECUTIVE DIRECTOR appearance of advertisers, or their identification Fax: 614-863-5801 Tel:(937)981-4317 as members of OIADA or NIADA,JEFF does not constijrmitch49@aol.com Fax: (937)981-4317 RADER BOB FAHEY BOB VAUGHAN GEORGE POLCE LAUREN THOMAS JOHN REMY RANDY GRIESDORN TOM SMITH tute an endorsement of the products or services BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER Cell: (937)218-3658 featured. Copyright 2011 by NIADA Services, Inc. tommy4317@yahoo.com CHRISTINE WHITE JIM MITCHELL All rights reserved. • Tracking Devices with Jay Rose • L egislative/Regulatory Scene

ADVERTISERS INDEX

EXECUTIVE ASSNT

EXECUTIVE DIRECTOR

STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Andy Friedlander • andy@niada.com ART DIRECTOR Christy Haynes • christy@niada.com PRINTING Nieman Printing CHRISTINE WHITE EXECUTIVE ASSNT

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JIM MITCHELL EXECUTIVE DIRECTOR

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Congratulations Michael T. D’Andrea

Dealer of the Year Former Ohio State football player Michael T. D’Andrea of Columbus, Ohio was named 2012 National Quality Dealer of the Year by the National Independent Automobile Dealers Association during NIADA’s 66th Annual Convention and Expo last week in Las Vegas. Mike has been a long time member of the OIADA and we are proud to have him named as the number one dealer in the USA. Congratulations to Michael, his Partner Mark Meadows and to his family and dealership staff!

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F E D E R A L T R A D E C O M M I S S I O N G U I D E ( W W W. F T C . G O V )

IN THE INDUSTRY

Credit Reports: What Information Providers Need To Know The Fair Credit Reporting Act (FCRA) is designed to protect the privacy of credit report information and to guarantee that information supplied by consumer reporting agencies (CRAs) is as accurate as possible. If you report information about consumers to a CRA, you are considered a “furnisher” of information under the FCRA. The responsibilities of information providers are explained here. Items 2 and 5 apply only to furnishers who provide information to CRAs “regularly and in the ordinary course of their business.” All information providers must comply with the other responsibilities. 1. General prohibition on reporting inaccurate information: You may not furnish information you know – or consciously avoid knowing – is inaccurate. If you “clearly and conspicuously” provide consumers with an address for dispute notices, you are exempt from this obligation but subject to the duties discussed in item 3. What does “clear and conspicuous” mean? Reasonably easy to read and understand. For example, a notice buried in a mailing is not clear or conspicuous. 2. Correcting and updating information: If you discover you’ve supplied one or more CRAs with incomplete or inaccurate information, you must correct it, resubmit it to each CRA and report only the correct information in the future. 3. Responsibilities after notice of a consumer dispute from a consumer: If a consumer writes to the address you specify for disputes to challenge the accuracy of any information you furnished and if the information is, in fact, inaccurate, you must report only the correct information to CRAs in the future. If you are a regular furnisher, you will also have to satisfy the duties in item 2. Once a consumer has given notice that he or she disputes information, you may not give that information to any CRA without also telling the CRA that the information is in dispute. 4. Responsibilities after receiving notice from a consumer reporting agency: If a CRA notifies you that a consumer disputes information

you provided: • You must investigate the dispute and review all relevant information provided by the CRA about the dispute. • You must report your findings to the CRA. • If your investigation shows the information to be incomplete or inaccurate, you must provide corrected information to all national CRAs that received the information. • You should complete these steps within the time period the FCRA sets for the CRA to resolve the dispute – normally 30 days after receipt of a dispute notice from the consumer. If the consumer provides additional relevant information during the 30-day period, the CRA has 15 days more. The CRA must give you all relevant information it gets within five business days of receipt, and must promptly give you additional relevant information provided from the consumers. If you do not investigate and respond with the specified time periods, the CRA must delete the disputed information from its files. 5. Reporting voluntary account closings: You must notify CRAs when consumers voluntarily close credit accounts. That is important because some information users might interpret a closed account as an indicator of bad credit unless it is clearly disclosed that the consumer – not the creditor – closed the account. 6. R  eporting delinquencies: If you report information about a delinquent account that’s placed for collection, charged to profit or loss, or subject to any similar action, you must, within 90 days after you report the information, notify the CRA of the month and year of the commencement of the delinquency that immediately preceded your action. That will ensure CRAs use the correct date when computing how long derogatory information can be kept in a consumer’s file. How do you report accounts you have charged off or placed for collection? A few examples: • A consumer became delinquent on

March 15, 1998. The creditor placed the account for collection on October 1, 1998. In that case, the delinquency began on March 15, 1998. The date the creditor placed the account for collection has no significance for calculating how long the account can stay on the consumer’s credit report. In that case, the date that must be reported to CRAs within 90 days after you first report the collection action is March 1998. • A consumer fell behind on monthly payments in January 1998, then brought the account current in June 1998, paid on time and in full every month through October 1998 but thereafter made no payments. The creditor charged off the account in December 1999. In that case, the most recent delinquency began when the consumer failed to make the payment due in November 1998. The earlier delinquency is irrelevant. The creditor must report the November 1998 date within 90 days of reporting the charge-off. For example, if the creditor charged off the account in December 1999 and reported the charge-off on Dec. 31, 1999, the creditor must provide the month and year of the delinquency – November 1998 – within 90 days of Dec. 31, 1999. • A consumer’s account became delinquent on Dec. 15, 1997. The account was first placed for collection on April 1, 1998. Collection was not successful. The merchant placed the account with a second collection agency on June 1, 2003. The date of the delinquency for reporting purposes is December 1997. Repeatedly placing an account for collection does not change the date the delinquency began. • A consumer’s credit account became delinquent on April 15, 1998. The consumer made partial payments for the next five months but never brought the account current. The merchant placed the account for collection in May 1999. Since the account was never brought current during the period partial payments were made, the delinquency that immediately preceded the collection commenced in April 1998, when the consumer first became delinquent.

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T H E Y ’ R E N O T N E C E S S A R I LY O N E A N D T H E S A M E

Advertising or Marketing? Webster’s defines advertising as the action of calling something to the attention of the public, especially by paid announcement. Webster’s defines marketing as the process or technique of promoting, selling and distributing a product or service. Similar, but different. Just like the lifelong struggle between good and evil, whether to put resources into advertising to increase traffic (and thus sales) or apply efforts to marketing to increase traffic (and thus sales) is a constant battle for today’s Buy Here-Pay Here dealer. As with life, both have their place and, to some extent, are necessary. Deciding which basket you should put the most eggs in depends on a few factors. If the goal is to increase overall market share, advertising gets most of the eggs. If building through repeat and referrals is the goal, marketing gets the eggs. And for those wanting the best of both worlds, the eggs should be split equally between the two baskets. When it comes to the advertising basket, as with the marketing basket, how the eggs are distributed within plays an integral part in the overall effectiveness. There are four main types of advertising media that seem to be the most effective for the BHPH industry: television, radio, Internet and print. Television seems to be the most popular among BHPH dealers. The keys to effective television advertising are not only being on the right stations, but also on the right programs at the right times. That’s especially true when running commercials on local stations. Having a large number of cheap spots appearing between midnight and 6 a.m. will likely only be seen by a select few, who might not be your idea of the few you want to select. In markets where satellite service is prominent, local stations are the best bet. Again, pick the station or stations that offer programming your customers are watching. A spot airing during Judge Judy will probably produce more business than the same spot airing during 60 Minutes. In markets where cable service is more prominent, there is usually more bang for the buck. Most cable providers offer packages of channels in which any combination of channels

offered can be chosen. As with local stations, timing and program selection are key. A spot airing during Ultimate UFC Fight Night is likely to produce more than the same spot during SportsCenter. As with all television advertising, choose programming and times that fit your customers’ viewing habits, not yours. Radio is the next as far as popularity. As with television, pick the times and stations that fit your customers’ listening habits. A simple way to gauge that is by making note of what stations are programmed into the radio when a vehicle is traded in, or noting which station the customer turns on during a test drive. Doing that costs nothing and tends to be more reliable than expensive radio surveys. Use of the Internet has picked up drastically in the past year. Gone are the days when only big BHPH dealers had websites – websites have become the rule, not the exception. The Internet is proving to be the best way to reach the new credit-challenged customer – the customer who previously received bank financing but now, due to economic challenges, must seek alternate financing. That customer has a tendency to be a web shopper, so not only having a website, but an effective one is paramount to capturing him. Just to put Internet usage in perspective, a recent study by AutoTrader and the National Alliance of BHPH Dealers revealed 80 percent of customers in the BHPH market surveyed had done significant research online prior to purchasing. Our customers are online. At least 80 percent of them, anyway. Last on the advertising list is print. While print has been a staple for the new car industry, it hasn’t produced the same success for BHPH dealers. Beside the cost factor, overall circulation is substantially down, as witnessed by some very prominent newspaper closings recently – thanks in part to the emergence of the Internet. For BHPH, what are known as “throwaways” – free publications found at the local grocery store, such as The Thrifty Nickel and Star Shopper – seem to be most effective. Billboards can also be classified in this category, but as with most things in business, location is the key. When it comes to the marketing basket, a few methods have proven effective for BHPH

dealers, including repeat and referral programs, promotions, giveaways and the Internet. All BHPH dealers should have some eggs in this basket. The most popular form of marketing is repeat and referral programs. Some examples of repeat programs are lower interest rates, lower down payments and a free vehicle after a certain number of vehicles have been purchased. Referral programs include cash for each customer referred, scratch-off cards with varying rewards for each customer referred and a free vehicle after a certain number of referrals. With the current state of the auto industry, BHPH dealers are extending their referral programs to new car dealers to capitalize on the lack of funding available. Those tend to be a little more costly, but are worth it as the customers turned down are definitely in the market to buy. Promotions and giveaways are becoming more and more prevalent and are proving to be effective. They include everything from drawings for cash or gift certificates to incentivizing ontime payments to promotions in which paying off a vehicle is the grand prize. Five years ago, only a handful of BHPH dealers were doing any of those. Now very few dealers aren’t involved in that type of marketing. The Internet has become a good marketing source as usage has increased in the last few years. Where once it seemed very few BHPH customers had access to the worldwide web, it now seems just about all do. Online payments and online application options are the two most prevalent web offerings. Dealers are also taking advantage of their websites to tell their story – a chance to explain some basic policies and procedures and set customers’ minds at ease that their credit history is understood. Advertising and marketing play valuable roles in building and maintaining a successful BHPH operation, and both of those baskets need some eggs. Just remember, both should be geared to your customer base, not you.

BY BRENT CARMICHAEL EXECUTIVE CONFERENCE MODERATOR NCM ASSOCIATES INC. BCARMICHAEL@NCM20.COM

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IRS STEPPING UP FORM 8300 COMPLIANCE AUDITS

IRS Form 8300 Reporting Shaun Peterson, legislative counsel for NIADA, recently reported that the IRS is stepping up compliance audits regarding Form 8300, “Report of Cash Payments Over $10,000 Received in a Trade or Business.” The law requires trades and businesses to report cash payments of more than $10,000 to the federal government by filing Form 8300, a joint form issued by the IRS and the Financial Crimes Enforcement Network (FinCEN). The information provided on the form assists law enforcement in its antimoney laundering efforts. Transactions that require Form 8300 include, but are not limited to: • Pre-existing debt payments. • Making or repaying a loan. • Sale of goods/services. • Sale of real property. • Rental of real or personal property. • Exchange of cash for other cash. Businesses must report cash payments received, if all of the following criteria are met: • The amount of cash is more than $10,000. • The business receives the cash as one lump sum of more than $10,000, installment payments that cause the total cash received within one year of the initial payment to total more than $10,000, or previously unreported payments that cause the total cash received within a 12-month period to total more than $10,000. • The establishment receives the cash in the ordinary course of a trade or business. • The same agent or buyer provides the cash. • The business receives the cash in a single transaction or in related transactions. Cash Includes Cash includes the coins and currency of the United States and foreign countries. Cash may also include cashier’s checks, bank drafts, traveler’s checks and money orders with a face value of $10,000 or less, if the business receives the instrument in a designated reporting transaction, as defined below, or in any transaction in which the business knows the customer is trying to avoid reporting of the transaction on Form 8300. Example: Tom Greenwood purchases a used car from XYZ Auto Dealership for a total of $12,000. He pays with a cashier’s check having a face value of $12,000. The cashier’s check is not treated as cash because its face value is more than $10,000. The business does not need to file Form 8300. A designated reporting transaction is the retail sale of any of the following: • A consumer durable, such as an automobile, boat or property other than land or buildings that is suitable for personal use, can reasonably be

expected to last at least one year under ordinary use, has a sales price of more than $10,000 and can be seen or touched (tangible property). • A collectible such as a work of art, rug, antique, metal, gem, stamp or coin. • Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction or related transactions is more than $10,000. The total sales price of all items sold for a trip or entertainment event includes the sales price of items such as airfare, hotel rooms and admission tickets. Example: Ed Johnson asks a travel agent to charter a passenger airplane to take a group to a sports event in another city. He also asks the travel agent to book hotel rooms and admission tickets for the group. He pays with two money orders, each for $6,000. Since each money order was less than $10,000, the travel agent has received more than $10,000 cash in the designated reporting transaction and must file Form 8300. Cash Does Not Include Cash does not include personal checks drawn on the account of the writer. Example: Jim Roberts purchases an automobile from ABC Auto Dealers for $19,000. He pays with $4,000 in currency and a personal check in the amount of $15,000. Since a personal check is not considered cash, ABC Auto Dealers does not need to file a Form 8300. Cash does not include a cashier’s check, bank draft, traveler’s check or money order with a face value of more than $10,000. When a customer uses currency of more than $10,000 to purchase a monetary instrument, the financial institution issuing the cashier’s check, bank draft, traveler’s check or money order is required to report the transaction by filing FinCEN Form 104, “Currency Transaction Report.” Cash does not include a cashier’s check, bank draft, traveler’s check or money order received in payment for a consumer durable or collectible if all three of the following statements are true: • The business receives it under a payment plan requiring one or more down payments and payment of the rest of the purchase price by the date of the sale. • The business receives it more than 60 days before the date of the sale. • The business uses payment plans with the same or substantially similar terms when selling to ultimate customers in the ordinary course of its trade or business. Definition of a Related Transaction The law requires trades and businesses to report transactions when customers use cash in a single transaction or related transactions. Related transactions are transactions between a payer, or an agent of the payer, and a recipient of cash that occur within a

24-hour period. If the same payer makes two or more transactions totaling more than $10,000 in a 24-hour period, the business must treat the transactions as one transaction and report the payments. A 24-hour period is 24 hours, not necessarily a calendar day or banking day. Example: A retail motorcycle dealer sells a motorcycle for $9,000 in cash to Gary Jones at 10 a.m. During the afternoon of the same day, Mr. Jones returns to buy another motorcycle for his son and pays $9,000 in cash. Since both transactions occurred within a 24-hour period, they are related transactions, and the motorcycle dealer must file Form 8300. Transactions are also related even if they are more than 24 hours apart when a business knows, or has reason to know, that each is a series of connected transactions. Example: A client pays a travel agent $8,000 in cash for a trip. Two days later, the same client pays the travel agent $3,000 more in cash to include another person on the trip. These are related transactions, and the travel agent must file Form 8300. Example: A customer purchases a vehicle for $9,000 and then within the next 12 months pays the dealership additional cash of $1,500 for items such as a new transmission, accessories, customized paint job, etc. The dealership is not required to file a Form 8300, if the additional transactions are not part of the original sales contract and the customer has no additional legal obligation to make such additional transactions. Reporting Suspicious Transactions There might be situations where the business is suspicious about a transaction. A transaction is suspicious if it appears a person is trying to prevent a business from filing Form 8300; if it appears a person is trying to cause a business to file a false or incomplete Form 8300; or if there is a sign of possible illegal activity. The business should report suspicious activity by checking the “suspicious transaction” box on the top line of Form 8300. Businesses are also encouraged to call the IRS Criminal Investigation Division Hotline at 800-800-2877 or the local IRS criminal investigation unit. If a business suspects a transaction is related to terrorist activity, the business should call the Financial Institutions Hotline at 866-556-3974. The business can voluntarily file a Form 8300 in situations in which a transaction is for $10,000 or less and suspicious. When to Report Payments Generally, a business must file Form 8300 within 15 days after the cash is received. If the 15th day falls on a Saturday, Sunday or holiday, the business must file the report on the next business day. C O N T I N U E D O N PA G E 1 4

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CONTINUING A TREND OF SOFTENING PRICES C O N T I N U E D F R O M PA G E 1 2

IRS Form 8300 Reporting

Multiple Payments In some situations, the payer can arrange to pay in cash installment payments. If the first payment is more than $10,000, a business must file Form 8300 within 15 days. If the first payment is not more than $10,000, the business adds the first payment and any later payments made within one year of the first payment. When the total cash payments exceed $10,000, the business must file Form 8300 within 15 days. After a business files Form 8300, it must start a new count of cash payments received from that buyer. If a business receives more than $10,000 in additional cash payments from that buyer within a 12-month period, it must file another Form 8300 within 15 days of the payment that causes the additional payments to total more than $10,000. If a business must file Form 8300 and the same customer makes additional payments within the 15 days before the business must file Form 8300, the business can report all the payments on one form. Example: On January 10, a customer makes a cash payment of $11,000 to a business. The same customer makes additional payments on the same transaction of $4,000 on February 15, $5,000 on March 20, and $6,000 on May 12. By January 25, the business must file Form 8300 for the $11,000 payment. By May 27, the business must file another Form 8300 for the additional payments that total $15,000. Required Written Statement for Customers When a business files a Form 8300, the law requires the business to provide a written statement to each person named on Form 8300 to notify them that the business has filed the form. The statement must include the name and address of the cash recipient’s business, the name and telephone number of a contact person for the business, the total amount of reportable cash received in a 12-month period and a statement that the cash recipient is reporting the information to the IRS. The only exception to the customer’s notice requirement is when the Form 8300 was filed for suspicious activity. In that event, it is actually illegal for the business to notify the customer the Form 8300 was filed. When to Provide a Statement to the Customer The business must provide the written statement to its identified customers on or before January 31 of the year after the year in which the customer made the cash payment that caused the business to file Form 8300. A business that chooses to mail the statement must mail the statement in a timely manner to ensure the customer receives the statement by January 31. IRS Form 8300 and additional instructions can be found at www.irs.gov.

Black Book: More Used Cars Will Cause Price Drop Black Book is predicting an additional 900,000 used vehicles will hit the market in 2012 – the effect of a hot new-car market – calling the massive influx a “glaring reason” for the drop in used prices that has already begun. What’s more, if the new car market gets even hotter in 2013, used prices will fall further, the company said. Black Book cited an outside prediction putting total new vehicle sales for 2012 (retail and non-retail) at 14.2 million units, which would be an increase of 1.5 million units over last year. Black Book’s Ricky Beggs said 60 percent of those additional new vehicle sales are likely to have a trade-in attached, putting 900,000 additional used cars into the market. “Almost a million more used vehicles will be added to the industry this year as a result of more trade-ins on new car sales,” Beggs said. “This is a significant driver of lower prices, combined with additional rental cars being sold at auction and dealers preparing for the coming 2013 models.” So how big an impact does 900,000 additional used units make? Consider: Three years ago, 750,000 units were taken out of the used vehicle market thanks to the so-called “Cash for Clunkers” program, and Black Book noted, “At the time, the auto community thought that would have a profound impact on the industry. By comparison, this year the industry will be adding 900,000 vehicles into the system, which is a glaring reason why prices are falling.” Continuing a trend of softening prices, Beggs said in his June 18 report “Beggs on the Used Car Market” that the week ending June 15 showed car segment prices dipping $31 on average, with only one segment showing an increase. The downturn in truck prices was even steeper ($60). Black Book said used car prices will continue to decline “well into next year assuming 2013 SAAR increases further.” Sales Projections There are likely to be 4.43 million used sales in June, according to data from CNW Marketing Research. That would be down from 4.49 million used sales in June 2011 and up from 4.31 million in May, the firm said. CNW said the “true delivery rate” for used sales – similar to the seasonally adjusted annualized rate often used by analysts in discussing new vehicle sales – was 40.19 million in June, down from 43.58 million in May. CNW said the true delivery rate has stayed above 40 million for every month of 2012 except March, when it dropped to 38.54 million. The latest forecast from J.D. Power and Associates’ Power Information Network and LMC Automotive projected 994,800 new car retail sales in June, a 15 percent rise from June 2011 after adjusting for one more selling day in June 2012. The resulting SAAR would be 11.9 million. Analysts are expecting 1.27 million total new vehicle sales in June (retail and non-retail), which would be up 16 percent over June last year. That would translate to a total SAAR of 13.9 million. The firms said the projections for June were based on the first 17 selling days of the month. For the rest of 2012, LMC held its total new sales forecast at 14.5 million and kept its retail projection at 11.6 million. “Despite a rising level of uncertainty with the economic recovery, consumers remain resilient in their willingness to purchase new vehicles,” LMC Automotive senior vice president of forecasting Jeff Schuster said. “Concerns regarding the macro-economic environment and another potential summer slowdown have increased, but we expect the sales pace to remain strong and stable throughout the second half of the year.”

BY JOE OVERBY EDITOR, AUTO REMARKETING

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T E C H N O L O GY A N D N E C E S S I T Y E X PA N D T H E S E R V I C E S O F F E R E D B Y A U C T I O N S

Back to the Basics: On the Block

Auto auctions today are full-service operations with a growing list of options to keep inventory rolling. The infusion of the Internet into the traditional auction business model has been, arguably, the most significant change in recent years. “The Internet keeps expanding and expanding,” said Charlotte Pyle, owner of Capital City Auto Auction in West Virginia and president of the National Auto Auction Association (NAAA). “I attended an auction recently and the entire lane was not there. They sold every car from a TV screen.” An increasing number of websites are emerging with features allowing dealers to shop for cars across the country without ever leaving the office. IndependentAuctions.com, for instance, has more than 67,000 searchable vehicles from 69 member auctions and boasts more than 41,000 registered dealers on the site. On any given week some 27,000 vehicles are sold. The site contains the inventory, postsale reporting and account management tools to help automotive professionals buy, sell and research vehicles from independently owned locations. ADESA, which operates 68 auctions throughout North America, has been one of the industry leaders in embracing online auctions. “Our biggest news as of late was the acquisition of OpenLane last fall,” said Tom Caruso, ADESA president and CEO and a recent inductee into the National Independent Auto Dealers Association Ring of Honor. “This industry-leading technology will help dealers as they expand their reach outside of their local markets in the online market. We are really excited about the progress we are making bridging our physical auctions and our online tool, ADESA OpenLane, to create a better buyer experience.” Auction Options While the economic issues of the past few years have meant fewer vehicles coming to auction, it has forced auctions to increase their level of service, Pyle said. “Volumes are down for the leases and repos, so auctions have opened up to do more outside work,” Pyle said. Auctions have stepped up floorplanning – providing the inventory loans that are a primary source of financing for dealers to purchase inventory to then resell, either from the showroom or in a wholesale format.

Post-sale inspections have become an expected feature at auctions to give dealers assurance and peace of mind for both their in-lane and online wholesale purchases. “A dealer purchasing a post-sale inspection has assurance that the vehicle purchased passed a rigorous test, was properly represented by the seller and that Perry’s Auto Auction guarantees that the vehicle meets the dealer’s expectations,” noted an item on the website of Perry’s Auto Auction in central Georgia. Most auctions with post-sale inspections follow a checklist of items that would cost $500 or more each to repair or replace. That includes checking the frame or unibody for structural damage as well as checking the paint, transmission, air conditioning system and brakes. They also check for things like odometer verification, flood inspection and emission control. Often there’s nothing mechanically wrong with a vehicle – it’s just dirty. But that’s OK, because many auctions are trumpeting reconditioning packages for dealers. At the Greater Erie Auto Auction, serving Buffalo, N.Y., Cleveland and Pittsburgh, a $95 “full detail” comes with an exterior wash, engine clean, exterior buff, interior clean and tire dressing. At a minimum, they’ll wash it for $10. Auctions also offer around-the-clock security for safe vehicle drop-offs, car title verification and transportation of vehicles. “Some of our dealers are heavily dependent on these truckers delivering the cars to the auctions, and over time the gas bill adds up,” Pyle said. Dealer Reaction Roger Montbleau, owner of Chelmsford Street Auto Sales in Lowell, Mass., buys cars at auction weekly. He’ll typically shell out money for the post-sale check his local auction offers as an extra service. “Good cars are not as plentiful as they used to be,” Montbleau said. “A lot of people mask these vehicles that come through. We need someone who can give us a certification. People aren’t as forthright as we want them to be.” If the cars he brings to the auction do not sell, Montbleau said, he appreciates the auctioneers washing it before the next scheduled date. Stanley Thompson, owner of First Auto Sales in Bradenton, Fla., visits the auction about three times a month and sells 25 to 30 cars per month. “Auctions give you a greater selection at

competitive prices you can’t get anywhere else,” Thompson said. Still, the new lineup of auction services has not exactly won him over. “We do everything in-house,” said Thompson, who has been in business for 20 years. “We know what we’re doing.” Indeed, as much as auctions keep working to enhance their services, some dealers would still rather do without. In fact, some avoid auctions altogether, choosing to get their inventory from other sources. Jay Iverson, manager of Carz Central in Estherville, Iowa, is not a fan of auctions, period. “Other than the fact that the cars are there, there’s not a whole lot I like about auctions,” Iverson said. “There’s a lot of politics involved. The rules keep changing. There’s no consistency.” David Shoffner, owner of David Shoffner‘s Auto Sales in Redding, Calif., visits the auction twice a week. He likes the guarantee that the title is always good. “Whereas buying them off the street, you don’t know what you’re getting,” Shoffner said. Much has changed since Shoffner started selling cars with his dad in the early 1960s. He said he prefers an old-school method of buying cars. He is not impressed with online auctions – he’d rather go in person. “I pretty much cherry-pick the auctions to find what I like, and it allows me to make a good living,” Shoffner said. “I bought two or three cars from the Internet and it was a horrible experience. The cars required mechanical work that was not previously disclosed. “As for me, I like to see them and touch them first.” To be sure, online auto auctions come with risks. Similar to the other popular scams, Kristin Judge, executive director of the Trusted Purchasing Alliance, a division of the nonprofit Center for Internet Security, said there are two central themes to keep in mind when dealing with auto auction fraud: First, if an offer seems too good to be true it probably is, and second, never send money to someone you have not met in person, though that might not always be a practical rule for dealers to follow with online auctions. In 2011, the federal government’s Internet Crime Complaint Center (www.ic3.gov) received 4,066 complaints from victims of auto auction fraud. The total financial C O N T I N U E D O N PA G E 1 8

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T OOnUtheRBlock N |O BackL toFthe Basics:

cost to those victims was more than $8 million, with the average loss being $2,000 per victim. The calls reporting the scams averaged two per hour. “Criminals misrepresent themselves as either Kelley Blue Book agents, or possibly a person moving out of town and needing to sell a car quickly before they leave,” Judge said. “Like other scams, the criminal sets up a persona that helps him appear legitimate. The price for the vehicle is usually at a great discount, too good to pass up. “When a buyer shows interest in the vehicle, he is asked to send a deposit to a third party to hold while the inspection takes place. Unfortunately, there is no legitimate third party. Once the scammer collects the deposit, the victim is left without his money or a car.” Auction Projections The future of auto auctions will place a continued focus on manipulating technology to benefit dealers. “We continue to make investments in our auction infrastructure to facilitate our buyers’ diverse business needs,” ADESA’s Caruso said. “That includes more computer terminals for customers to use, better Wi-Fi access and more reconditioning options both presale and

A M E N T - A W A R D S

post-sale. We will continue to evolve our business to meet the demands of our dealers.” One example is ADESA’s newly released dealer application for the iPhone. “The app combines relevant industry guide books, vehicle history reports and other useful business data with the cars running at our auctions,” Caruso said. “The evolution of mobile technology will continue to shape how we do business.” The new auto auction services have put the technology companies that develop those services in the driver’s seat. In July, vAuto, an Oakbrook, Ill., company specializing in dealer support services and a wholly owned subsidiary of AutoTrader Group Inc., announced the acquisition of Auction Genius, a web-based software solution for auto dealers buying vehicles at auction. “This acquisition advances vAuto’s mission to help dealers become more efficient and effective used vehicle retailers,” vAuto founder Dale Pollak said. With Auction Genius, vAuto promises to eliminate the inefficiencies and difficulties dealers encounter every day as they evaluate and purchase used vehicles from wholesale auctions. “Today, every dealer relies on wholesale auctions for used vehicles,” Auction

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Genius president and co-founder Todd Kinzle said. “This highly competitive environment requires dealers to evaluate far more vehicles than they used to, and the time it takes to do the proper research is overwhelming.” Enter Auction Genius. Kinzle says dealers can now analyze as many as 10 times the number of vehicles and zero in on the “right” cars with significantly more speed and efficiency. Typically dealers will use multiple systems and tools to create used vehicle buy lists, match the lists with cars scheduled to be sold at wholesale online auctions and gather condition/market valuation reports to assess individual vehicles for potential purchase. They also access live online auctions through a separate system to buy the cars that fit their purchase parameters. It’s a piecemeal process. Auction Genius also integrates with a growing list of industry partners, including CARFAX, AutoCheck, NADA Guide Book, Black Book, Kelley Blue Book and Galves. Current auction integration includes Manheim Simulcast, OVE.com, Manheim PowerSearch, ADESA LiveBlock and OpenLane.

BY JASON ROBERSON

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MOBILE NEWS

V I S I T W W W. PAY N E A R M E . C O M

Westlake Financial Adds PayNearMe’s Technology

PayNearMe, the cash transaction network, has launched PayNearMe Lending, a cash payment system for subprime lenders, and has teamed with Westlake Financial Services to integrate PayNearMe’s technology into existing systems, enabling customers to repay retail installment contracts in cash 24/7 at any of 6,600 participating 7-Eleven® stores nationwide. Using PayNearMe, customers of Westlake’s network of more than 15,000 new and used car dealers will be able to make account payments in cash at their local 7-Eleven store, where a unique loan barcode or PayNearMe Card is scanned at the register. With PayNearMe, the transactions are completed instantly, and consumers’ accounts are credited instantly. “PayNearMe offers a remarkably simple way to make our collections process more efficient,” Westlake director of operations John Mason said. “We anticipate reduced operational costs while adding payment locations for our customers.” “Subprime lenders need to make cash payments as easy as possible for themselves and their consumers,” PayNearMe CEO Danny Shader said. “We’ve dramatically changed how cash payments are made by opening up thousands of additional payment locations, accessible any time they are needed.” PayNearMe Lending, a secure hosted web application, provides a comprehensive turnkey service lenders can use to accept cash payments without integration. Lenders can set up PayNearMe Lending in less than 15 minutes and start collecting immediately, and can add additional sites almost instantly. Because PayNearMe Lending does not require any integration with existing systems, it can be used by lenders of any size. “We appreciate that PayNearMe allows our customers to make payments at any time,” Tidalwave Finance Corp. president Ted Beresford said. “In fact, we’ve been pleasantly surprised by how many customers make their payments at 10 p.m.”

Autobytel Launches Mobile Website

Autobytel Inc. has launched a dedicated mobile version of its website. Studies show shoppers prefer using a browser to a downloadable mobile app, so Autobytel’s mobile website was developed from the ground up with today’s mobile consumer in mind. Autobytel mobile includes many of the popular features on the full website built specifically for the mobile environment. The site features a customized dealer directory that allows consumers to find local dealers as well as new and used vehicle research and automotive industry news, and customized shopping tools such as a used car finder, car calculators and the ability to determine used car values and submit purchase requests directly to dealers. For more information, visit www.autobytel.com.

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MARKETING NEWS

Auto Credit Continues to Loosen For car buyers seeking auto loans, happy days are here again. U.S. banks and auto finance companies are once again welcoming all kinds of customers, even those with less-thanstellar credit. The average credit scores of new and used car buyers, which spiked during the economic downturn, have fallen to nearly the same level as 2008 – before the recession. Better yet, experts don’t think the credit pipeline will dry up anytime soon. Low interest rates are making it cheaper for banks to get money, which makes them more willing to lend. The federal funds rate – the rate at which banks lend money to each other – is near zero percent, down from 2 percent in the summer of 2008. Loans to subprime buyers – those with credit scores of 679 or lower – are particularly attractive, since banks can charge higher interest rates. The average interest rate for a deep subprime loan (credit score less than 550) on a new car is 12.9 percent, compared with 3.2 percent for buyers with the highest scores, according to Experian Automotive, which tracks automotive credit data. At the same time, both banks and consumers have lowered their debts, meaning even subprime loans are less risky because borrowers are less likely to be in debt and unable to pay. For example, 0.57 percent of auto loans were 60 days delinquent in the first quarter of this year, compared with 0.78 percent in the first quarter of 2009. Experian hadn’t released second quarter data at press time, but analysts said the trend will hold as long as interest rates stay low. “Consumer spending is still very conservative. People aren’t going hog wild like they did before the recession,’’ said

Lacey Plache, chief economist for the auto information site Edmunds.com. Here is what buyers with various credit scores can expect if they’re shopping for a new or used car, and the estimated monthly payment, excluding sales tax, on a five-year loan if they trade in a car worth $5,000 for a new, fully loaded $24,775 Toyota Camry sedan. Super prime (740 and up): Loan rates average 3.2 percent for a new car and 4.4 percent for a used car, according to Experian. A super prime buyer can expect to pay $357 per month for the Camry. Prime (680-739): Loan rates average 4.5 percent for a new car and 6.4 percent for a used car. A prime buyer can expect to pay $368 per month. Nonprime (620-679): Loan rates average 6.5 percent for a new car and 9.5 percent for a used car. A nonprime buyer can expect to pay $386 per month. Subprime (550-619): Loan rates average 9.9 percent for a new car and 14.4 percent for a used car. A subprime buyer can expect to pay $419 per month. Deep subprime (549 or less): Loan rates average 12.8 percent for a new car and 17.9 percent for a used car. A deep subprime buyer can expect to pay $447 per month. Auto loans suffered a similar fate to home mortgages during the financial crisis. When banks sustained losses and tightened lending requirements, the average credit score for new car buyers rose nearly 20 points to a high of 776 in the first quarter of 2010. Standards have been loosening ever since, but only now are they approaching pre-recession levels. The average credit score for a new car buyer in the first quarter of this year was 760, while the average score for a used car buyer was 659.

The loosening standards are good news for the auto industry, which has seen a steady recovery despite bumpy economic news. U.S. car and truck sales are expected to climb as high as 14.5 million units this year, up from a 30-year low of 10.4 million in 2009. That’s still well below the heady days of the mid-2000s, when easy credit drove annual sales to 17 million, but analysts say the growth rate this time is healthy and sustainable, with consumers making better financial decisions. Buyers also have more options. In 2010, General Motors Co. bought AmeriCredit Inc., a Texas-based company that specializes in subprime lending, because GM’s main finance company was unable to risk taking on subprime buyers. As a result, 8.2 percent of loans for GM vehicles went to subprime customers this spring, nearly double the number before the AmeriCredit purchase. The average for the auto industry is 6 percent. GM says subprime loans, if managed properly, are good for business. “The recession created an awful lot of new subprime buyers, but it doesn’t mean they’re a bad credit risk,” spokesman Jim Cain said. Some are sounding the alarm about the easing of credit standards. In a note to investors Tuesday, Moody’s warned that the subprime auto lending market is seeing the same kind of heated competition and poor underwriting that drove unexpectedly high losses in the mid-1990s. Moody’s said loan performance has been strong over the past few years, but lenders should beware of weakening standards in order to increase profits and market share.

BY DEE-ANN DURBIN THE ASSOCIATED PRESS

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C R E D I B I L I T Y I S T H E M O S T I M P O R TA N T PA R T O F A N Y D E A L E R S H I P ’ S S A L E S .

How Your Online Reputation Affects Sales We all know the saying, “Sticks and stones may break my bones, but words will never hurt me.” Unfortunately, the reality is for any business, words can break you. It is imperative to your dealership that you proactively manage and build your online reputation. You need to have strategies in place to monitor what is said about you and respond appropriately. That starts with knowing the sites available for dealership reviews. Google+ Local or Google Places, Yelp, Cars.com, DealerRater and CarHelp are some of the most popular sites. Monitoring what is posted online about you allows you to contact customers who were dissatisfied and address their complaints. Addressing their concerns effectively eliminates the complaint. Once you have satisfied the angry customer, you can ask him to please revise his statement and to always communicate with you directly should he have a concern. That responsibility should be handled by someone who has the highest authority to make customer decisions,

such as giving away a free service or replacing a bare tire on a vehicle that was just purchased from your pre-owned selection. Credibility is the most important part of any dealership’s sales. It’s a good idea to have one person monitor review sites and report any issues to the general manager, who can then direct customers to the managers of the departments about which they had complaints. Every employee who has contact with customers should be trained on how to handle and manage customer complaints, only escalating the situation to the general manager when a decision is needed beyond the employee’s authority. Next, you need to effectively encourage your clients to post positive reviews about you. That’s actually much simpler than you think. Just ask. If there is a customer you know comes in regularly for service, or who is purchasing his third vehicle from you, just say, “Thank you for your continued business. Can I ask what makes you continue to come back?” His response is your review.

Ask if he would mind posting a positive review about you, or if he would mind being recorded with a testimonial. That is a great tool to place in the header of your website, so that every prospect who visits your site receives a positive review to encourage him to come in and become a customer. There are several ways to encourage a review, but you must be careful not to encourage or blindly ask your customers to post negative reviews about you. It takes 18 positive reviews to outweigh one negative review. And once a negative review is posted, it is almost impossible to get it removed. The only way to rectify a negative review is to contact the person who posted it, address his complaints and turn the complaint into a compliment. That’s why monitoring what is said about you is imperative. There are proactive measures you should take before a negative review is posted about you. Not only do you need to constantly encourage your customers to post positive reviews, you need to have someone responsible

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for following up with each and every customer after the purchase of a vehicle or a service visit to ensure every customer was completely satisfied with his experience. Have a polite script of no longer than 30 seconds in place. It is important that the person responsible for contacting your customers has the authority and understanding of what goes on in the dealership to proactively address any complaints immediately. The customer should not be passed to two or three managers, with none of them really sure of the entire situation. Making the customer repeat himself raises his level of frustration. The person contacting the customer initially should be able to make a decision. “I understand, Mr. Smith.” Repeat the problem back to the customer so he knows you truly understand. “I apologize that your visit was not completely satisfactory. I am here to help you. We need to have you bring your vehicle back to our service department so we can make sure to correct this problem. I will have a loaner car available for you. What time would be best for you, morning or afternoon?” No promise was given, no diagnosis, no one was thrown under the bus. We listened, we acknowledged and we acted. Now we will have a manager handle the customer from here, with a full understanding of the situation and without

passing the customer to two and three voicemails. Follow-up is one of the most important parts of your online reputation. See the problem and fix it before it causes permanent damage. Before contacting a customer for follow-up, you should know: • When he came in. • What he came in for. • If service, was the service internal, warranty, or customer pay. If a customer paid for the service, he is more likely to be upset or request some type of compensation if dissatisfied, and you should be prepared for that. • Who was the service advisor or sales representative? The customer will expect you to know, and if you don’t, it immediately makes him feel impersonalized and like he is insignificant or unimportant. • Who is the manager of the department? If there is a complaint, who will the customer be working with? It is important to tell the customer who he should ask for and to let him know that a manager will be working with him personally to address his concerns. If he was unhappy with his service advisor or sales representative, he will not want to work with him/her to address the complaint he feels the advisor/sales rep might have caused. Once the complaint has been addressed, the manager should build the integrity of the service

advisor or sales representative back up with the customer and bring the customer and service advisor or sales representative together for an apology and understanding. If a manager cannot support his employee, the employee should not be there. Furthermore, that customer might need to work with that employee again. You never want to get into the problem of having to be careful of who you place customers with. If the follow-up process is not handled correctly, you will end up with more complaints than if a follow-up was not made. Be sure to have policies in place for how to handle a complaint and be sure every manager understands the importance of handling a complaint with the highest sense of priority and urgency. The bottom line is, your dealership needs to have strategies in place to ensure its reputation is secure. If your online reputation is not being monitored and proactively maintained, it will decline. With 80 percent of your prospects checking your reviews before making a purchasing decision, it should be one of your top priorities.

BY PETER MARTIN

PETER “WEB DOC” MARTIN IS PRESIDENT OF CACTUS SKY COMMUNICATIONS. HE CAN BE REACHED BY CALLING (941) 756-1932 OR E-MAILING PETER@CACTUSSKY.COM. FOR MORE INFORMATION, VISIT WWW.CACTUSSKY.COM AND CLICK ON “REPUTATION BUILDING”

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T H E B E N E F I T S F O R T H E D E A L E R , R F C A N D T H E C U S T O M E R A R E R E A L LY C O M P E L L I N G .

LHPH vs. BHPH: Should My Dealership Switch? In recent years, the Lease Here-Pay Here (LHPH) model has generated some buzz in the world of subprime auto sales – and for good reason. LHPH is an offshoot of the Buy Here-Pay Here (BHPH) concept, but it involves a dealer retaining the title to each vehicle and charging usage fees to customers. While the difference might seem subtle at first, it can radically change how the vehicle transaction is managed, taxed and regulated. Among the advantages of LHPH: •Deferred sales tax. •A federal income tax deduction for depreciation of your assets. •It doesn’t require a related finance company (RFC). •Less burdensome regulations. •Faster repossession times. •Vehicles can’t be claimed in a bankruptcy. Probably the most commonly cited advantage of switching to a lease program is the ability to defer sales tax payment on your vehicles. Instead of paying sales tax up front – long before you’ve received all of the customer’s money – you’re allowed to pay the sales tax in installments, every time your customer pays you. That lessens your risk of losing money when a customer defaults, and it makes cash flow more even and manageable. George Klinke, vice president of business development for the San Diegobased company LHPH, LLC, called that the greatest advantage of the model. “There are 32 states where there’s a real cash flow incentive,” Klinke said. “When you buy a car in California, you pay an 8.75 percent sales tax on that vehicle. On a $20,000 car, you’re paying $1,750. That’s money that comes out of the dealer’s or the consumer’s pocket today.” But in California and 31 other states, dealerships can pay the sales tax on

each vehicle as payments are collected, rather than at the lease’s inception. Additionally, lessors can collect a security deposit, which is not subject to taxation. “This is a pool of money where if there are other expenses that come up in the lease, the security deposit can be applied against those,” Klinke said. Unless state law mandates otherwise, the only up-front tax on a lease is paid on the cap cost reduction. For years, BHPH dealers have avoided income taxes on “phantom income” through the use of a related finance company. An RFC is a legally separate corporation an auto dealership establishes to handle financing, often for customers who have difficulty obtaining credit from traditional lenders. Usually, the dealership sells the note from each vehicle transaction to its RFC at a discount, eliminating most of the dealership’s profit on the sale, which would have been taxable income even though no payments had yet been collected from the consumer. The RFC’s income on the note purchase, however, is taxed as the payments are collected, avoiding a large income tax on profits that haven’t been earned yet and creating a substantial cash flow advantage. If executed correctly, this setup is entirely legal. The IRS has even written a guide for it, available at www.irs.gov/ businesses/article/0,,id=137739,00. html. But the IRS also examines RFCs carefully for evidence that they’re substantive businesses that remain at “arm’s length” from dealerships, rather than thinly disguised shell corporations. One small misstep could place you in line for an audit. For dealers wanting to avoid this compliance headache and the difficulty of establishing a legitimate RFC, LHPH is an attractive option.

Because of the inherent tax advantages of leasing, it is not necessary to have a related finance company to handle LHPH deals – though dealers may still choose to keep their RFCs as a buffer against bad publicity, lawsuits and financial risk. Because the dealer is the lessor and therefore the owner of the asset (vehicle), he can claim depreciation over the term of the lease based on IRS guidelines and use it as an income tax deduction, reducing the overall tax bill. Jason Berger, managing partner of AK Acceptance, an RFC in Pittsburgh, said LHPH deals are not constrained by the tougher regulatory requirements that affect BHPH dealers. At the federal level, LHPH deals fall under the less restrictive Regulation M rules that govern auto leasing, rather than the notoriously tough Regulation Z rules that govern auto sales. Under Reg M, a dealer is not obligated to disclose an annual percentage rate because there is no interest rate in a lease – just a “rent” or “lease” charge. The lack of an interest rate also means you are is not encumbered by state usury limits. You can impose mileage overage charges to protect the value of the vehicle. And if the lessee declares bankruptcy after starting an LHPH deal, he won’t be able to avoid repossession because he never had ownership of the vehicle. For the same reason, if a lessee breaches the contract, there’s no mandatory grace period to comply with for repossessions. “We pull the trigger faster,” Berger said, noting dealerships can technically repossess a vehicle if a payment is even one day late – though that might not be a great way to build goodwill in the community. “My target turnaround time is 21 days from the time of default [to when the car is available to lease again]. C O N T I N U E D O N PA G E 2 6

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T O U R N A M E N T - A W A R D S C O N T I N U E D F R O M PA G E 2 4

With a loan, we’d usually let it go a little bit longer.” LHPH has some appeal for consumers, too. Because they aren’t paying for full, lifetime ownership of the vehicle, drivers can normally afford a better quality automobile than if they insisted on purchasing. Like the dealer, customers can usually pay less cash up front. And when the customer is done with the car, he can simply return it and get another car, or become the owner by paying or financing the agreed-on residual value. Klinke said given the choice, customers should prefer to pay the security deposit on their lease rather than a down payment on a loan. “If the lessee does everything correctly,” Klinke said, “he can roll that [sum] over into a new lease or get his money back [at end of term].” Many dealers cite those reasons when attempting to explain the rising national interest in the LHPH model. Berger’s dealership partner had operated on the BHPH model since 1999, but never experienced the growth it has since it switched to LHPH.

D A Y - T R A D E

S H O W

| LHPH vs. BHPH: Should My Dealership Switch?

“Year-over-year, I’ve seen a 73 percent jump in originations,” Berger said. “The primary reason for that is leasing.” But before you take the plunge, you should also consider the challenges of LHPH. •An expensive retraining process. •It requires more advanced dealer management software. •Vicarious liability issues that require contingent liability insurance. •Less liquidity than BHPH. As advantageous as LHPH can be, it is not a simple change for dealerships to make. LHPH deals require more advanced dealership management systems that can perform complex lease calculations like depreciation schedules and payments that include rental charges, depreciation and sales tax. Those programs often cost more than basic deal software. Allen Lentsch, CEO of Northland Dealers and executive director of the Northland Independent Auto Dealers Association, said there is also some liability risk involved. “When you do LHPH, you own the title of the car, so you can be held

responsible for things your customers do with it,” Lentsch said. That includes causing an accident. The concept is called vicarious liability. To be protected against vicarious liability and the risk of lawsuits, dealers must purchase contingent liability insurance, which many turnkey LHPH solutions provide for their dealers. The Graves Amendment, passed by Congress in 2005, was written to prevent unlimited vicarious liability lawsuits, but the law has been challenged frequently. And despite the Graves Amendment, there is still potential vicarious liability for the dealer/lessor up to the state minimum financial responsibility limits. Because of that risk, it’s incumbent on dealers to make certain each lessee has proper insurance coverage. “We always make sure a customer has insurance, just as much as we make sure they’re keeping up with payments,” Berger said. “We disable vehicles if [a customer’s] insurance lapses.” If you’re a BHPH dealer who sells loan portfolios to investors, you might have a tougher time drumming up interest in

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your LHPH leases, partially because the product is less commonly understood. “Some lenders are opening up to this,” Berger said. “From what we see, there are going to be more in the near future.” To dodge potential complications, many LHPH dealers use consulting organizations, such as Northland Dealers, LHPH, LLC and Lease It Own It, to advise them on compliance issues and provide training materials, forms and access to specialized insurance. The services can assume various levels of responsibility for a dealer’s compliance with lease regulations. LHPH, LLC even goes so far as to adopt the responsibilities of the lessor, shielding the dealership from some legal risks. Before switching, it’s a good idea to contact some LHPH services to learn the different approaches and costs associated with outsourcing LHPH implementation. Working with experts of some kind could be the smartest way to go. Implementing a LHPH Program If LHPH sounds like the right way forward for your business, there are a few things you should focus on right out

of the gate. “I would recommend to any dealer to try to set the most accurate residual [value] possible,” Berger said. “If you do that, you’ll get that vehicle back and put that vehicle back on the road. [You] can get eight years out of it and lease it three times.” However, dealers should also remember the IRS imposes limits on how low residual values can be set and still remain a true lease. Because dealers should keep leased vehicles in good condition for the next lessee, high-maintenance autos are not recommended for an LHPH program. In addition to requiring lessees to purchase comprehensive coverage for their vehicles, many LHPH dealers package in a warranty or service agreement so they’re able to keep their vehicle in good shape while profiting from the reconditioning. Berger said the biggest challenge for the dealership he works with is persuading customers – and employees – to go along with the LHPH plan. “Your customers need to understand that the vehicle isn’t really an asset, it’s

an expense for them,” Berger said. “At the end of [a three-year lease], how much will this vehicle actually be worth?” Berger recalled employees at the dealership he works with took about two months to get fully used to the terminology differences between BHPH and LHPH. “When you have people who have been selling cars for 16 or 17 years and all of a sudden you hand them a new model, of course there’s a transition,” he said. “But when they see how much this helps us sell cars, they really want to learn it.” To many dealers, the challenges involved in switching to the LHPH model are far outweighed by its rewards. “I’ve never seen anybody switch back,” Klinke said. “The benefits for the dealer, RFC and the customer are really compelling, and to switch back would just be a real headache for everybody.”

BY ALEX BRAUN

ALEX BRAUN IS MARKETING MANAGER OF AUTOMANAGER, A PROVIDER OF INTEGRATED DEALER MANAGEMENT SOFTWARE, DEALER WEBSITES AND ONLINE VEHICLE MARKETING FOR MORE THAN 25 YEARS. HE CAN BE REACHED AT ALEX@AUTOMANAGER.COM.

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EXTENDED COMMITMENT

I N D U S T R Y U P D AT E

NIADA’s Petersen Joins NMVTIS Advisory Board Independent dealers were given a voice in the National Motor Vehicle Title Information System (NMVTIS) when NIADA legislative /regulatory/compliance counsel Shaun Petersen was named to the NMVTIS Advisory Board. Petersen becomes the second auto industry representative on the 27-member board, joining James Moors of the National Auto Dealers Association. Moors, who represents new car dealers, suggested adding Petersen to the board to represent the used car business, Petersen said. “My appointment to the board will bring the voice of the used car dealer to the table,” Petersen said. “NIADA is seen as an independent and different voice from the new car dealer. I think it is significant they sought us out.” The board – which also includes members representing the insurance industry, the salvage industry, law enforcement, consumer advocates, state departments of motor vehicles, organizations focused on preventing vehiclerelated crime and the system’s technology partners – was established to advise the Department of Justice’s Bureau of Justice Assistance on ways to promote the effective and efficient administration of the NMVTIS program and database. NMVTIS was created to prevent the introduction of stolen vehicles into commerce, to protect states and consumers from fraud, to reduce the use of stolen vehicles for illicit purposes and to provide consumer protection from unsafe vehicles. NMVTIS reports provide title and branding data, odometer readings, total loss history and salvage history. Insurance carriers, auto recyclers and junk and salvage yards are required to report data to the system, and states must perform an NMVTIS check before issuing a title.

Rent-A-Wreck Offers $1,000 Off a Franchise Rent-A-Wreck of America, a franchise company with more than 150 used car rental locations throughout the U.S., is now offering NIADA members a $1,000 discount off the purchase of a franchise. Rent-A-Wreck, an endorsed NIADA National Member Benefit Partner, has extended its commitment to independent dealers by pledging to contribute $1,000 to the dealer’s state association or the national association for every franchise sold to an NIADA member. Since 1973, Rent-A-Wreck of America has offered used car dealers a franchise they can operate at their existing retail sales lot to bring extra revenue and additional foot traffic with little additional overhead. “Our franchise brings used car dealers everything they need to become a player in their local car rental marketplace,” Rent-A-Wreck of America vice president of operations Michael DeLorenzo said. “We have financing, insurance, a global reservation system and a comprehensive and sophisticated training system that makes car rental a near turnkey opportunity for a used car dealer. “Rent-A-Wreck is a great brand with a long and successful history with used car dealers. Our franchisees who are used car dealers see the benefit of additional cash flow and profits from rentals, but also see that the increased foot traffic helps them sell more cars as well.” Rent-A-Wreck franchise owners receive access to a fleet leasing and purchase program that includes access to closed factory sales, a reservation system connected to multiple global booking channels, online travel agencies, rentawreck.com and 1-800 telephone reservations, point of sale integration with the reservation system, a comprehensive training program in pre-open and post-open phases, a dedicated area representative for recurrent and ongoing needs, insurance and more. For more information, visit www.rentawreck.com/NIADA or call (469) 939-6132 to speak to a company representative.

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Diamond Warranty Celebrates 7 Years

Diamond Warranty Corp. is celebrating its seventh year in business. Our warranty and service contracts are fully insured by an A.M. Best A-rated insurance carrier offering you and our mutual customers piece of mind. We offer warranty and service contracts from three months to seven years on vehicles up to 175,000 miles at the time of sale. Additionally, we offer a variety of F&I products such as GAP insurance, auto shield and service contract financing. Our courteous claims and administrative staff have more than 85 years of automotive experience. Our senior management has an extensive warranty and service contract background. CEO Samuel McArthur, president James C. Limongelli and vice president Michael R. McArthur were previously part of the management team with the Guardian Warranty Corporation. Diamond Warranty was built on the foundation of the personal service and commitment to excellence we provide all of our customers, and we continue to support the OIADA as a preferred partner of the association and all of its members. That is why dealers in Ohio and nationally are switching to Diamond Warranty.

AUCTION NEWS

Auction Update: Manheim

The Manheim 2012 Q2 update is a quick look at web traffic, online visits and transactions at Manheim.com for the second quarter of 2012. Mobile: Mobile visits to Manheim.com are up an astounding 368 percent over last year – 4.76 million vs. 1.02 million for the second quarter of 2011. One in three customers accessed Manheim. com on a mobile device, an indication mobile is becoming increasingly popular in the auto remarketing industry as dealers use smartphones to conduct business at their convenience. More customers are choosing to do business online – 25 percent of all transactions for the quarter were made by an online buyer. Digital visits: Digital visits to Manheim are up 12 percent over last year. Simulcast turns 10: More than 4 million vehicles have been purchased via Simulcast since its launch in 2002, representing almost $60 billion worth of inventory. Buying: More than 30,000 customers bought vehicles online in 2012. Selling: More than 20,000 customers sold a vehicle online in 2012.

New Service Offers Free Websites to Dealers

Strategy Star Inc. has introduced StarAuto CMS, a new service that provides free websites to auto dealers with instant setup. StarAuto CMS, which launched in January, allows auto dealers to manage their entire web presence from a control panel that requires no technical skills. StarAuto CMS powered websites come with an easy-to-use front end for potential customers to browse dealer inventory and include a mobile version as well. The basic version of the service is free – the paid version allows dealers to post more inventory and pictures on their websites. StarAuto CMS said its goal is to enable every car dealership in North America to run its own web presence and stay competitive in a market in which shoppers are spending 60 percent of the time spent researching car purchases online. StarAuto CMS is the latest service created by Strategy Star Inc., which has been in business since 2005. StarAuto CMS has a complete live demo on the website that allows potential customers to check out every feature of the product before signing up. For more information, call (214) 3100419 or visit www.starautocms.com. 29

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S O F T WA R E N E W S

DealerRater Adds Chat Software

The car dealer review website DealerRater has partnered with Contact At Once! to add a live chat feature for its certified dealer partners, enabling real-time chat between automotive dealerships and online shoppers. “Our third-party generated dealer reviews and ratings have helped car shoppers to determine and validate which dealerships they would like to do business with,” DealerRater president Chip Grueter said. “We believe the integration of Contact At Once! chat will enable our certified dealers to connect with in-market consumers in a way that is faster and more convenient than an email or a phone call.” The Contact At Once! dealer chat network includes third-party listing sites such as AutoTrader.com, Cars.com and UsedCars.com, as well as standalone dealership and dealer group web pages. Once enabled, dealers can respond to consumer chats originating from anywhere in the dealer chat network. Dealers that use dealer live chat typically experience a 25 percent increase in online shoppers contacting the dealership.

DrivingSales Issues Call for Best Ideas

DrivingSales has issued a call for entries to the 2012 DrivingSales Best Idea contest. The contest recognizes the most innovative auto dealership strategies of 2012. Five auto dealer finalists will have a chance to win cash and prizes totaling $10,000, as well as the opportunity to present their “best idea” at the DrivingSales Executive Summit, scheduled for Oct. 21-23 at the Bellagio in Las Vegas. All U.S. dealerships and dealership employees are invited to apply at drivingsalesexecutivesummit.com/ contests/. The application deadline is Aug. 31.

“We are excited to see so many forward-thinking dealers and big ideas throughout the year, which is why we are so proud to have the opportunity to shine light on the best of the best ideas with this annual award,” DrivingSales founder and CEO Jared Hamilton said. “The Best Idea award not only recognizes these hard-working innovators, but provides DSES attendees with a window into new and implementable ideas that are driving results for progressive dealers across the country.” Last year’s award went to Mary Catherine Curry, Marketing Manager of Rice Toyota Scion, who received the highest score for her idea of a sales and service alliance with a local hospital group. All applications are reviewed by a dealer panel, which selects five finalists to be invited onstage at the DSES to present their ideas. A panel of dealer judges reviews each strategy with the competitor, then determines the winner and a runner-up in the contest, with the prizes totaling $10,000. 30

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V I S I T W W W. N I A D A H E A LT H P L A N S . C O M .

What Health Care Ruling Means to You The U.S. Supreme Court found in favor of the 2010 health care law, deeming the individual mandate to purchase health insurance unconstitutional under the commerce clause but upholding the mandate by now calling it a tax. Because of the ruling, some of the key factors that will be taking place in the year and a half include: Individual mandate: Starting in 2014, everyone in the United States must buy health insurance or be subject to a tax.

STARTING IN 2014, ALL HEALTH INSURANCE COMPANIES MUST ACCEPT ALL APPLICANTS REGARDLESS OF PRE-EXISTING CONDITIONS. NIADA MEMBERS HAVE ACCESS TO GUARANTEED-ISSUE, LIMITED MEDICAL RIGHT NOW BY VISITING WWW. NIADAHEALTHPLANS.COM.

Those who cannot afford to buy health insurance – families at poverty level – will be subsidized by the government. Families making more than $80,000 per year will not receive a subsidy. That provision was the heart of the lawsuit challenging the law. The individual mandate goes hand-in-hand with the next provision: guaranteed issue. Making everyone buy insurance stops people from buying it only when they become sick. Guaranteed issue: Also starting in 2014, all health insurance companies must accept all applicants regardless of pre-existing conditions. NIADA members have access to guaranteedissue, limited medical right now by visiting www.niadahealthplans.com. Minimum essential coverage (MEC): The provision states the government will regulate what plans will cover and will not cover as a means to qualifying acceptable coverage. Having acceptable coverage means not facing fines or penalties.

It is expected the highest deductible will be $2,000 for an individual and $4,000 for a family. That, however, could jeopardize Health Saving Accounts (HSAs), which are linked to high-deductible health plans and are a popular option for the self-employed and for small businesses. Health insurance exchanges: Each state will set up a health insurance exchange for consumers to shop for health plans. If they qualify, consumers will be able to receive subsidies through the exchange. NIADA members can Visit the NIADA Health Insurance Exchange right now to shop for rates from multiple carriers through www.niadahealthplans.com. Additional questions on the law and how it will affect you? NIADA members can call the NIADA Member Health Plans hotline at 888-308-9340 or visit www.niadahealthplans.com.

BY TODD PAGE, JLBG HEALTH

TODD PAGE IS VICE PRESIDENT OF JLBG HEALTH, THE ADMINISTRATOR OF NIADA MEMBER HEALTH PLANS.

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MARKETING NEWS

NIADA’s Two for One: CMD and 20 Groups in October

Are you content with your current profits? Not many of us are. Most dealers are looking for the magic that will take their profits to the next level. NIADA has spent much of this summer reviewing data, talking to dealers and exploring ways to make that magic happen. The result – the first NIADA Dealer 20 Group – is scheduled to meet Oct. 11-12 at the Dallas-Fort Worth Airport. This group is unique, designed for both the retail and the Buy Here-Pay Here dealer – or the dealer who does both. It reflects the independent industry as we know it today. The composite, which will drive the group analysis, was created with your dealership in mind, analyzing the numbers crucial to your bottom line. The group will be led by NIADA director of dealer development Joe Lescota and Kenny Loveless, a 30-plus-year veteran independent dealer who recently retired after selling his highly successful BHPH dealership in Virginia. “This approach is no nonsense,” Lescota said in a recent discussion. “It is about looking at the math of the dealer’s business and showing him where he is and helping him get where he wants to be. It’s a 20 Group, so it’s a collective effort to improve the business and the industry.” For more information, email Lescota at joe@niada.com, or call Georgia Brown, NIADA director of education, at 800-6823837. And while you’re there, consider this: NIADA’s fall Certified Master Dealer course is scheduled for Oct. 8-10, also in Dallas-Fort Worth. That’s right. You can get two for the price of one airfare! Attend the CMD class, then stay over for the first meeting of the NIADA 20 Groups. Same place. Visit www.niada.com for an application or send an email request to georgia@ niada.com.

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MEMBERSHIP  APPLICATION  

 

OHIO  INDEPENDENT  AUTOMOBILE  DEALERS  ASSOCIATION         Business  Name:    __________________________________________________                License  Number  ______________                         ��                    (Dealers  Only)    

Contact  Name:  ______________________________________  Email________________________________________                                       Address  _______________________________________________      City  _______________      ST  ______      Zip  _______                                                                                                                 Tel:  _________________________        Cell:  ____________________________    Fax  _____________________________          

Type  of  Business:          Retail_____  Wholesale_____  BHPH______  Lease_____  Lease  to  Own  ______  Service  ______       (Check  all  that  apply)     Associate_____      Lender_____   Other  _____      Explain  _______________________________           Average  monthly  inventory:    _______                Have  a  Floor  Plan:  Yes__      No__                Number  of  Employees:  _________       Number  of  years  in  business:  _______              Service  Department:    Yes__  No__          Parts  Department:      Yes  ___  No___          F  &  I  Department:              Yes  ___      No___              Monthly  Sales:                      1-­‐10  __  11-­‐20__  21-­‐30__31-­‐50__  50-­‐100__  100+__   Do  you  Sell:        Vehicles  1  to  7  years  old     Vehicles  older  than  7  years     Service  Contracts       Gap  Waiver      

       

Yes_____   Yes_____   Yes_____   Yes_____  

  CREDIT  CARD  PAYMENT  

       

No_____   No_____   No_____   No_____  

  ______________________________________________________________________                          _____________________   Name  (as  it  appears  on  credit  card)                                                                                                                                                                                            Date     ______________________________________________________________________                      (                  )  ________________  

Billing  Address    

 

City  

 

 

 

 

 

                                                                                                                                                                                                                                                 Phone  

__________________________________________________________                    _______________                    _______________    

 

 

 

 

 

 

                                                                                           State                                                                                                  Zip  

 

_________________________________________________________________________________________          Type  of  Card      M/C          VISA        AMEX      DISCOVER   Email  Address  

  __________________________________________________________________   Card  Number  

 

 

 

     

 

                                                                                                                             

   ________  

             Exp  Date  

   ___________  

                       Code  

I  hereby  agree  to  pay  the  above  named  company  for  all  charges  agreed  to  for  the  purchase  of  the  following  product  or  service:           *Card  Code  in  lieu  of  Signature  may  be  used  for  telephone  transactions  

 

Signed:  ____________________________________________________                                                                  *Signed  By  (Must  be  signed  if  using  Credit  Card)    

 

Date:  _________________  

 

Date:  _________________  

                                               

Referred  by:_________________________________________________     X  

                 YES  it  is  important  to  me  to  be  recognized  as  a  professional!  Enclosed  are  my  annual  dues  of   $345.00  to  make  sure  my  business  

has   all   the   advantages   OIADA   provides   to   put   me   at   the   forefront   of   my   profession.   By   completing   this   form,   I   am   consenting   and   giving  OIADA,  its  affiliates  and  subsidiaries,  my  permission  to  contact  me  and  provide  information  to  me  at  the  mailing,  email  address,   fax  and  phone  numbers  herein  listed  which  I  have  provided.  

 

Mail  to:    OIADA  Membership  Department  *  2040  Brice  Road  *  Suite  110  *  Reynoldsburg,  Ohio  43068                                                                        Phone:  614-­‐863-­‐5800                Visit  us  at:  www.ohiada.org                      Fax  to:    614-­‐863-­‐5801   Membership  dues  are  deductible  for  federal  income  tax  purposes  as  ordinary  and  necessary  business  expenses.   (They  are  not  deductible  as  charitable  contributions)  

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COMPLIANCE OVERDRIVE

Regulatory Landscape Feeling Tougher? You’re Not Alone There is no denying that dealers and lenders have grown accustomed to a regulatory environment that is constantly changing, with new laws and regulations. But today’s regulatory landscape is different than it was years ago – and not just because the requirements continually change. If you feel like it’s becoming increasingly complex, you’re not alone. Here are the likely culprits: Shorter notice: Some states have started publishing regulatory changes on rather short notice. For example, in New Mexico the attorney general recently gave 30 days’ notice to add a new spot delivery disclosure to the sales transaction document or purchase order. The short notice was made worse because a proposed regulation had not been published – at least not recently – so the final regulation came as a surprise to the industry. While one month might feel

like a long time to add one disclosure, the required notice is quite large and requires substantial formatting changes to the documents affected. The attorney general eventually delayed the effective date of the regulation by 60 days, apparently after significant industry feedback. More frequent changes and updates: Across the country, there seem to be more frequent changes being made. That has clearly been the case with state motor vehicle title forms. Previously, those forms were rarely revised. But over the past few years, some states have changed their title forms as many as two or three times per year. One potential driver for that might be that technology now allows states to redesign and reissue their forms and revise (increase) the related fees more easily. But often the changes come with little or no notice, which underscores how important it is for dealers and lenders to be confident in their ability to monitor the changes that are constantly taking place. Volume of information: While it can be difficult to keep up with the pace of change and various deadlines and effective dates, it’s also quite a task to consume the volume of information and content surrounding new laws and regulations. For example, the Consumer Financial Protection Bureau (CFPB) published a proposed rule July 9 regarding integrated mortgage disclosures under RESPA and the Truth in Lending Act. It was one of the first significant proposed rules from the CFPB, and the planning process involved extensive research and solicitation of industry and consumer feedback. As a result, the proposed rule and explanatory materials total more than 1,000 pages. The good news is the proposed rule provides significant details and explanations of the changes. The bad news is that many pages of material can be overwhelming (aren’t you glad you’re not in the mortgage lending business?). Operating in a highly regulated industry, one can’t help but wonder if that is an indication of the volume of change yet to come and how dealers and lenders will absorb all of the changes and their nuances.

Disparate technology systems: Though computer technology allows us to do many things faster than before, disparate file formats, field naming conventions, calculation engines, software and hardware, and reliance on multiple vendors can make it difficult to quickly change or revise transaction documentation and its completion tools. That often means all the component parts need to be updated in sequence rather than in parallel – adding more time to make the required changes. Today’s environment is characterized not only by constant change, but by tougher enforcement as well. There is more visibility and greater scrutiny of compliance and risk management in all organizations. Dealerships and financial institutions should regularly question whether they feel confident that new laws and regulations are being embedded in their business operations. The challenges underscore a need for greater operational efficiency. Disparate systems and procedures can make even relatively simple changes more timeconsuming and complex. As you prepare for additional changes, consider reviewing your process maps, technology, vendor coordination and steps necessary to respond to compliance changes. Creating greater operational efficiency now will make it that much easier for you to respond to the inevitable next compliance crunch-time event.

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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OIADA Independent Dealer Sept/Oct 2012