Oklahoma Independent Automobile Dealers Association
DEALERS’ RESOURCE March 2012
OIADA Is Your
LIFELINE
To The Automotive Industry!
In This Issue • Holder In Due Course Rule • Need Help? • TILA Threshold Update
Change Service Requested DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
OIADA, P.O. Box 6905, Moore, OK 73153
Visit Us Online At www.e-oiada.com OK_0312.indd 1
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MAGAZINECONTENTS 06 TILA Threshold Update 08 Holder In Due Course Rule 19 Need Help?
OIADA BOARD OF DIRECTORS PRESIDENT
ADVERTISERSINDEX 71B Auto Auction.................................................. 11 ADESA ..........................................Inside Back Cover Albright Insurance...................................................7 AutoTrader.com.......................................................5 Dealer’s Auto Auction of OKC.................. Back Cover Jordan Insurance Group .........................................9 Loftis & Wetzel Insurance .....................................19 Manheim North Texas ..................Inside Front Cover Manheim.com.......................................................13 Nowcom ...............................................................23 SmartAuction .......................................................15 United Acceptance................................................17
Chris Goad Regal Motors 3515 N. May Oklahoma City, OK 73112 405-917-5800 managerokc@regalcars.com
CHAIRMAN OF THE BOARD
John Easttom Auto Mart of Elk City P.O. Box 981 Elk City, OK 73648 580-225-1100 automart@cableone.net
SECRETARY/ TREASURER
WHAT’SNEW
R A2Z EDUCATION SERIES - AutoZone Educating the independent dealer to deliver the highest quality service levels to your customers, manage your shop efficiently, train your technicians and maximize profits. niada.tv
Bruce Beam Dealers Auto Auction of OKC 1028 S. Portland Oklahoma City, OK 73147 405-947-2886 www.daaokc.com
R Certified Master Dealer Program
VICE PRESIDENTS
March 22-24, 2012
Educates dealers on how to manage and grow a profitable business “Effective Management Practices”, “Business Planning”, “Human Resources”, “Merchandising”. “Financial Management” Call (800)756-4232 to sign up.
R World Automobile Auctioneers Championship Live online coverage of the event begins at 11 am ET on Friday, March 3O, 2012 and is free for all online viewers. visit www.niada.com and click on the “EVENTS” tab or call (303) 807-1108.
OIADAOFFICE 813 NORTHWEST 34TH MOORE, OK 73160
EMAIL: odell.morgan@sbcglobal.net ROSE & ODELL MORGAN, Executive Directors
AMBER SNOOK, Administrative Assistant
JACKIE GARNER, Office Manager
JARED MORGAN, Electronics/ Software Technician
LYNNA KAY, Programmer STEVE MORGAN, Consultant MIKE MORGAN, Technical Aide
FOR INFORMATION ON HOW TO BECOME A MEMBER OF OIADA PLEASE CONTACT ROSE OR ODELL MORGAN AT 405-232-2947.
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM.
DEALERS’ RESOURCE IS A PUBLICATION OF AUTOMOTIVE DEALERS RESOURCE OF OKLAHOMA (ADR) PRODUCED ON BEHALF OF THE OKLAHOMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION (OIADA), P.O. BOX 6905, MOORE, OK 73153. THE DEALERS’ RESOURCE IS PUBLISHED MONTHLY BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION. PERIODICAL POSTAGE PAID AT ARLINGTON, TX, AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO OIADA, P.O. BOX 6905, MOORE, OK 73153. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF ADR OF OKLAHOMA, THE OKLAHOMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF OIADA OR NIADA DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT © 2011 BY O&R MORGAN, INC. DBA OIADA. ALL RIGHTS RESERVED. DEALERS’ RESOURCE IS A PUBLICATION OF AUTOMOTIVE DEALERS RESOURCE OF OKLAHOMA ON BEHALF OF THE OKLAHOMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION (OIADA), BUT IS MAILED TO ALL DEALERS IN THE STATE IN AN EFFORT TO EDUCATE AND ENCOURAGE NON-MEMBERS TO JOIN THE ASSOCIATION AND SUPPORT OUR EFFORTS TO IMPROVE THE IMAGE AND PROFIT POTENTIAL OF THE INDUSTRY. FOR 55 YEARS, WE HAVE WORKED TO REPRESENT THE INDEPENDENT MOTOR VEHICLE DEALER IN OKLAHOMA. WE NEED YOUR SUPPORT. FRONT COVER BY Mike Morgan STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Andy Friedlander • andy@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing
John T. Longacre, IV Taft Motors, Inc. 722 S. Linden St. Sapulpa, OK 918-224-7700 taftmotorsinc@msn.com Julian Codding Reliable Motors, Inc. 9201 S. Shields Oklahoma City, OK 405-912-5000 juliancodding@msn.com Monte Shockley Shockley Auto Sales 2605 N. Broadway Poteau, OK 74953 918-647-3999 sas@clnk.net
EMISSIONS SYSTEM DISCLOSURE REMINDER
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ffective Nov. 1, 2003, the Oklahoma state legislature enacted a portion of law (Title 47 O.S. Section 12-423) that requires the emission system to be functioning properly before you may sell the vehicle. The Used Motor Vehicle & Parts Commission is using the following guidelines to determine compliance with the statute:
1. I f you are selling the vehicle to another dealer, the system may be inoperable provided you disclose that fact to the purchasing dealer in writing or make an announcement at an auction.
2. I f you are selling the vehicle at a public auction and the system is inoperable, only a licensed dealer may purchase the vehicle. Again, it must be announced prior to the sale.
3. I f you are selling the vehicle to a consumer, you cannot
disclaim the emission system. It must be operable and functioning properly. If the commission receives a complaint you will be required to bring the system up to compliance or repurchase the vehicle.
Glenn McDaniel I-35 Credit Auto 1113 SE 51st St. Oklahoma City, OK 73129 405-670-4100 gtamcd@aol.com David McQuerry McQuerry Motors, Inc. 1302 N. Harrison St. Shawnee, OK 74801 405-273-8171 mcquerrymotors@yahoo.com
OIADA CONTACT INFO
Primary Number (OKC): 405-232-2947 Toll Free: 800-346-4232 BUSY SIGNAL? The 405-2322947 number is designed to roll over to any of four other lines in our office, but has recently not been working correctly. If you encounter a busy signal at the 232 number, please call the 800 number or any of the following: 405-799-7116 405-799-1113 405-799-8115 405-799-3759
For your convenience, we have recently added a toll-free fax number: 877-804-3449. 3
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DEALERS’
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HOW TO TURNA NEGATIVE INTO APOSITIVE
Humans make decisions based almost solely on emotion. That is why I pay such close attention to how I feel when I do business with someone.
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nsure the “but” stops here when breaking bad news to a customer. The server approached my table to take my order. I asked if I could order breakfast and she said, “We usually serve breakfast, but it’s after 10 o’clock, so we’re on the lunch menu now.” I called to see if I could get my car’s “check engine” light looked at before I left town with the car. The auto shop owner said, “We can probably take a look at it, but we’re pretty backed up right now.” I called for an appointment with my doctor and the receptionist said, “I can check her schedule, but she doesn’t come in on Thursdays.” I’m not a picky guy. I really don’t care whether I eat breakfast or lunch. I can schedule appointments with quite a bit of flexibility. The service itself at all of the above was just fine… but that’s the problem. Most employees rate their performance on how well they do their job, not on how they make the customer feel. If humans were entirely creatures of intellect, we would make decisions based solely on facts. Of course, we would all act more like Mr. Spock from Star Trek, too, and that wouldn’t be very much fun. Facts alone would drive me to return to the businesses above because the end result was a good meal, a reliable car and a life with less illness. The fact is, we don’t really care about facts. Humans make decisions based almost solely on emotion. That is why I pay such close attention to how I feel when I do business with someone. One word in each of the above cases made me feel a slight irk. You probably already guessed: It is the word “but.” “But” carries a strong psychological trigger. Whenever we hear the word “but,” we don’t remember anything that was said before it, and we don’t
trust anything that is said afterward. With the server, I don’t remember the positive in her statement. “We usually serve breakfast” was meant to make me feel better about the restaurant and think about it the next time I wanted pancakes. Once she said, “but it’s after 10 o’clock,” the positive was gone. The auto mechanic probably thought he was being respectful of my time in giving me fair warning, “but we’re pretty backed up right now.” Instead, he just caused me to sit around stressed, worried that he might not finish in time. He covered his backside and created a pain in mine. The doctor’s receptionist was thinking only in scheduling mode, so she made sure I didn’t ask for an appointment on a day that wouldn’t work. That might seem trivial, but emotions are tricky things and must be managed delicately. She began the conversation with the equivalent of a warning, which doesn’t create positive emotions. All of those phrases are what we in the world of improvisational training call “negations.” A negation is any “yeah, but” statement; a statement that is seemingly positive, yet followed by a negative. We call these statements negations because they negate the direction in which you are trying to take the conversation. Negative words include “but,” “however,” “although” and the like. The funny thing about negations is, if used to reverse a bad situation, they can actually have a positive effect. “I’m sorry, we just switched over to our lunch menu, but we have got some great new specials you will love!” “We’ve got some cars ahead of yours at the shop; however, we’ll get to yours as soon as possible and have you on your way.” “The doctor spends Thursdays out of the clinic, but I’m sure we can find a time that will fit your schedule.”
This all sounds nitpicky, and it is. But the next time you listen to that little voice inside of you that says, “I’m not happy,” it is probably due to some small detail few other people would even notice. Wedding ceremonies aren’t ruined because the organist didn’t show up; they’re ruined because the bride’s veil arrived burnt sienna instead of carmine pink. Vacations aren’t destroyed because the hotel lost the reservation; they’re destroyed because the front desk clerk said, “but the pool closes at 9.” Someone asked me recently about the most difficult part of writing my column. I said, “keeping track of my emotions everywhere I go.” If I feel great after being served, I try to figure out what that person did to make me feel that way. If I feel bad, I write about it. More importantly, whatever that person did to shift my emotions, I have to make sure I don’t do to my own customers. And it doesn’t take much to shift someone away from happy. Removing the word “but” from conversations is one of the most challenging tasks for anyone. Replace “but” with words such as “so,” which force you to follow up with a solution. “We don’t have that color in stock right now, so why don’t I see if we have something close that will suit your needs.” Or, “so why don’t I take your name and number and I’ll call you as soon as I can get a special order in for you.” If you can’t remove “but,” at least shift it to where it will do some good. Look at the face of the person you’re talking to. His or her expression will tell you if you put it in the right spot.
WITH PERMISSION FROM STEVIE RAY AS PUBLISHED IN THE MINNEAPOLIS/ST. PAUL BUSINESS JOURNAL AND AMERICAN CITY BUSINESS JOURNALS. STEVIE RAY IS A MINNEAPOLIS-BASED CORPORATE SPEAKER AND TRAINER. HE CAN BE REACHED AT STEVIE@STEVIE-RAYS.ORG.
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DEALERS’
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O THE RIGHT THINGS WILL SURVIVE,
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NOWCOM RENEWS GOLD PARTNERSHIP WITH NIADA
NEW DOLLAR THRESHOLD FOR TILA/ REG Z COVERAGE NOTE: THE TRUTH IN LENDING DISCLOSURE THRESHOLD FOR 2012 IS $51,800.
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ongress enacted the Truth in Lending Act (TILA) in 1968 “to assure a meaningful disclosure of credit terms so the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.” In 1969, a non-dwelling secured consumer credit transaction was subject to TILA and Regulation Z – TILA’s implementing regulation – if the transaction had an amount financed of $25,000 or less, in the case of closedend credit; or had a written credit limit of $25,000 or less, in the case of open-end credit. When the $25,000 threshold was set, a new Corvette sold for less than $5,000. Today, 43 years later, the average selling price of a new car exceeds the threshold by nearly $5,000. Though consumer credit transactions in any amount that are secured by the consumer’s dwelling have been subject to Regulation Z since 1969 and, more recently, private education loans (PELs) have been covered regardless of loan amount, Congress recognized it was time to update TILA’s threshold for the remaining categories of consumer credit. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), the dollar threshold value for TILA coverage was increased from $25,000 to $50,000, effective July 21, 2011. On April 4, 2011, the Board of Governors of the Federal Reserve System issued a final rule amending Regulation Z to implement Dodd-Frank. This article reviews the requirements of the final rule.
A key distinction between the old threshold rule and the new one is that the old threshold for closed-end credit was based on the value of the amount financed, while the new rule is based on the amount of credit extended. To illustrate this difference, assume under the original threshold of $25,000 that the consumer obtains a car loan in the amount of $25,050. Assume further that the consumer must separately pay a $75 credit report fee. The amount financed under those conditions would be $24,975, and the loan would be subject to Regulation Z because the amount financed would not exceed $25,000. Now assume under the new $50,000 threshold a consumer obtains a car loan in the amount of $50,050 and pays the same $75 credit report fee. Though the amount financed is $49,975, the loan would not be subject to Regulation Z because the amount of credit extended exceeds $50,000. The rule requires the threshold to be adjusted for inflation on Jan. 1 of each year. The threshold amount will increase (rounded to the nearest $100 increment) by any annual percentage increase in the consumer price index for urban wage earners and clerical workers (CPI-W), as published by the Bureau of Labor Statistics for June 1 of the prior year. The threshold will not decrease if the index value decreases. The applicable threshold for July 21 through December 31, 2011 was $50,000. The threshold for 2012 is $51,800. NOTE: THIS ARTICLE IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT PRESENTED AS LEGAL ADVICE.
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owcom, a leading provider of dealer management solutions, announced it has renewed its partnership with the National Independent Automobile Dealers Association for a second year as a Gold National Corporate Partner. Nowcom has worked with NIADA since 2005. It became a Preferred Partner in 2009, a Bronze Corporate Partner in 2010 and began as Gold National Corporate Partner in 2011. The NIADA Member Services partners with industry leaders that offer excellent services to help their members grow their business, protect their assets and enhance profitability.
NIADA Member Services National Corporate Partner Program was formed in 2010 to provide NIADA members with an extensive, highly vetted roster of partners they can rely on to provide a broad portfolio of services they use on a daily basis. Through discounted affinity agreements, NIADA Member Services offers numerous member benefit services. For dealers with neither the time nor staff to conduct thorough supplier evaluations, NIADA members look to NIADA Member Services for outstanding partner recommendations and discounts. Nowcom is the provider of DealerCenter.net, an all-in-one webbased dealer management software system that allows the dealer full control over sales, inventory, credit reports, insurance offering and financing.
CONTACT YOUR LEGAL COUNSEL FOR ITS APPLICATION, IF ANY, TO YOUR BUSINESS.
For more information, visit www.nowcom.com.
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THE TEST DRIVE AGREEMENT
he test drive is an opportunity for a dealership to promote its merchandise to a customer, but it can also jeopardize the dealership’s future if it is not properly conducted. For instance, your dealership is liable if you permit an unqualified person to drive one of your vehicles or fail to instruct the driver not to operate the vehicle negligently or contrary to law. This form, in addition to permitting the customer to take a vehicle for a test drive, also outlines for the customer his or her obligations during the test drive/evaluation. It’s a tool that helps guide the dealership staff in gathering the information necessary to protect the dealership. In exchange for the dealership permitting a customer to take the vehicle, the customer must show he has a license to operate the vehicle, a copy of which should be made and kept by the dealership. The test drive form provides a place for the driver’s license number to be recorded. By signing this form, the customer agrees to have in effect collision and liability insurance coverage that applies to the vehicle during the time it is in the customer’s care, custody and control. He also agrees to the mileage and time limitation established by the dealership. He agrees he is not to remove the vehicle from the state and not let anyone other than those persons identified on the form to drive the vehicle. The customer agrees to immediately report any accident, damage, theft or vandalism involving the vehicle to the police, the dealership and his insurance company, and indemnify the dealership from any damage arising out of the customer’s use of the vehicle during the term of the vehicle evaluation. The form enables the dealership to record information about the vehicle’s condition before and after the evaluation – information such as the odometer reading, the number of miles the vehicle was driven and any damage the vehicle sustained prior to its return to the dealership. This information should be kept in the vehicle’s deal jacket to help the dealer detect potential problems with the vehicle and make material disclosures regarding the condition of the vehicle when it is sold. The obligations imposed on the customer by the use of this form are necessary to protect the dealership’s interest in the vehicle while it is being test driven and to safeguard the dealership from unwanted liability that may arise as a result of the customer’s actions while the vehicle is under the customer’s control. To order a test drive form, call OIADA at 405-232-2947 or 800-346-4232 and protect yourself and your customers. Or you can order on line at www.e-oiada.com
* FOR ACCOUNTS THAT QUALIFY / ACCEPTABLE WITH UNDERWRITING
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MANHEIM PURCHASES FLOOR-PLAN PROVIDER DSC
EXPLAINING THE HOLDER IN DUE COURSE RULE
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he Holder in Due Course Rule is designed to ensure consumer credit contracts used in financing the retail purchase of consumer goods or services specifically preserve the consumer’s rights against the seller in the event the seller fails to meet his obligations under the contract. The rule primarily comes into play when dealers sell the buyers’ credit contracts to other lenders, or when dealers arrange to have the debt instrument held by a third party. Officially titled “Preservation of Consumers’ Claims and Defenses,” the rule was created in 1976 in an effort to protect consumers involved in certain third-party finance situations. Prior to the rule, the circumstances were as follows: A consumer relying in good faith on what the seller has represented to be a product’s characteristics, service warranty, etc., makes a purchase on credit terms. The consumer then finds the product unsatisfactory – it fails to measure up to the claims made on its behalf by the seller, or the seller refuses to provide promised maintenance. The consumer then seeks relief from his debt obligations only to find no relief is possible. The consumer’s debt obligation, he is told, is not to the seller but to a third party. And because of a doctrine in law known as the “Holder in Due Course Doctrine,” the third party’s claim to payment is legally unrelated to any promises made about the product. In adopting Preservation of Consumers’ Claims and Defenses, dubbed the Holder in Due Course Rule, the Federal Trade Commission determined that it constitutes an unfair and deceptive practice for a seller, in financing a consumer purchase of goods or services, to employ procedures that make the consumer’s duty to pay independent of the seller’s duty to fulfill his obligations. In the course of public proceedings of the rule, the commission documented numerous cases in which consumer purchases were financed in such a way that the consumer was legally obligated to make full payment to a creditor despite breach of warranty, misrepresentation and even fraud on the part of the seller. To ensure the consumer’s rights, the rule requires sellers to include the following provision, or notice, in the text of any consumer credit contract they execute with a buyer: “Any holder of this consumer credit contract is subject to all claims and defenses which the
debtor could assert against the seller of goods or services obtained pursuant hereto or with the proceeds hereof. Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder.” In addition, if a seller arranges direct loan financing for his customers, the rule prohibits the seller from accepting the proceeds of the loan as payment for a sale, unless any loan contract signed by the buyer and the direct lender contains a similar provision. The following guidelines regarding use of the notices required by the rule are provided for your benefit: • The notice requirement generally applies to consumer credit sales and consumer purchase money loans subject to the Truth in Lending Act (TILA) and Regulation Z. The notice is not required in credit contracts for sales of goods or services for commercial use, including purchase of equipment for agricultural production. • Effective July 21, 2011, the Dodd-Frank Act updated the exemption threshold for TILA coverage from its 1960s level of $25,000 to $50,000 and included an annual inflation adjustment. For 2012, the adjusted threshold is $51,800 based on the amount of credit extended – in other words, consumer credit transactions in which the amount of credit extended exceeds $51,800 are exempt from TILA and consequently exempt from the Holder in Due Course Rule notice requirement. • The rule imposes no requirement with respect to the location of the notice within the text of a consumer credit contract. It can appear anywhere. The rule is satisfied as long as the notice is clearly a part of the contract. • The text of the notice must be presented in at least 10-point, boldface type. • A ll retail installment sales contracts offered for sale through OIADA include the appropriate notice language and fully comply with the requirements of the Holder In Due Course Rule. Note: This article is provided for informational purposes only. It is not presented as legal advice. Contact your legal counsel for its application, if any, to your business. FOR MORE INFORMATION REFER TO: FEDERAL TRADE COMMISSION PUBLICATION “STAFF GUIDELINES ON TRADE REGULATION RULE CONCERNING PRESERVATION OF CONSUMERS’ CLAIMS AND DEFENSES.”
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anheim has agreed to purchase Dealer Services Corporation (DSC), a used vehicle floor plan company for independent dealers based in Carmel, Ind. The acquisition complements Manheim’s current lending products provided through Manheim Financial Services (MAFS). Manheim said the move reinforces its commitment to provide inventory financing to independent dealers. “Manheim is always looking for ways to enhance its service offering to customers,” Manheim president Sandy Schwartz said. “The purchase of DSC presents a great opportunity for us to broaden our lending scope and customer base. In addition, we gain access to state-of-the-art technology and digital tools that will enhance our customers’ experience and improve the company’s efficiencies and opportunities for lending.” Adding the DSC line to MAFS’s existing products will give dealers access to broader offerings and additional staff to serve their needs both in-lane and online, as well as technology designed to make it easier for customers to get information about Manheim lines of credit through their smart phones and desktops. CEO Brian Geitner will remain in charge of DSC, which had been the largest independently owned inventory finance provider for used vehicles. “Like Manheim, DSC is a company that focuses on the success of its customers,” Geitner said. “Our mission of empowering our customers with strategic products and services is only more enhanced by joining the Manheim group of companies. It’s easy to see how MAFS’s and DSC’s service platforms will complement each other and broaden Manheim’s service reach across the country.”
BY ADR S TAFF
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DEALERS’
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BEST AND WORST SELLING CARS OF 2011
BEST
WORST
The 10 best selling cars of 2011, as
The 10 worst selling cars of 2011, as
Vehicle
Vehicle
published by www.AutoBlog.com: Units Sold
Ford F-Series 516,639 Chevrolet Silverado 367,343 Ford Escape 228,719 Ford Fusion 226,445 Ram pickup 218,750 Chevrolet Cruze 215,057 Chevrolet Malibu 191,774 Chevrolet Equinox 175,079 Ford Focus 161,436 Chevrolet Impala 160,955
determined by www.AutoBlog.com: MSRP
Units Sold
Subaru Tribeca $30,595 2,791 Mazda Tribute $20,555 2,696 Mercedes-Benz R-Class $52,690 2,385 Suzuki Equator $17,899 2,127 Cadillac Escalade EXT $63,060 2,036 Toyota Land Cruiser $68,920 1,662 Acura ZDX $46,020 1,564 Mitsubishi Lancer Sportback $18,395 1,548 Hyundai Azera $25,495 1,524 Acura RL $47,700 1,096
Note: In the ten worst category, AutoBlog excluded from consideration vehicles with MSRP of more than $100,000 and vehicles that were not manufactured through all 12 months of 2011.
BY ADR S TAFF
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OMVC Requests TrueCar/ Zag Suspend Business
AIR BAGS STOLEN OR DEPLOYED?
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he theft of air bags is an increasing problem for our industry, with replacements running anywhere from $200 to $2,000 or more per unit. The price makes those units prime targets for thieves and significantly increases a vehicle’s cost if a dealer has to replace one. Though there is no law requiring stolen or deployed air bags be replaced and the National Highway Traffic and Safety Administration (NHTSA) is only concerned about operational air bags in new motor vehicles, the Used Motor Vehicle and Parts Commission (UMV&PC) does require the dealer to disclose if the airbags have been deployed and are not replaced or are inoperable if you purchase a vehicle with the knowledge that the airbags are deployed and you choose not to replace them, or if while you own the vehicle, you discover the airbags are inoperable and do not repair them. UMV&PC reminds you that if you have firsthand knowledge regarding inoperable airbags and do not disclose that fact to the consumer in writing before the purchase, you might be required to repurchase the vehicle. Even worse, a dealer’s liability exposure for both personal injury and property damage can be enormous if a customer wasn’t informed that the air bags were inoperable – and then the worst happens. It often is not easy to discern when an air bag is missing or inoperable. Original covers are generally marked with a name or logo, whereas most replacement covers for cosmetic purposes are blank. We recommend that a dealer visit that issue with his customer, and if the air bag is not operational or is missing, get the customer to sign off on that fact. One way that a dealer might learn about a missing or deployed airbag or other hidden defect is through the use of a Trade-In Vehicle Appraisal form that has questions asked of the vehicle owner at the time of appraisal. A customer might not “remember” to disclose such defects unless he is asked a direct question about them – it seems most people, when asked a direct question, will respond truthfully. That’s one of the many values of the Trade-In Vehicle Appraisal form, which is part of the Finance Express (FEX) forms offering. They are readily available from OIADA for immediate shipment. Call toll free 1-800-346-4232, or (405) 232-2947 in the Oklahoma City area. The fax number is (405) 7993367. The information contained herein is for general information purposes only. You should contact legal counsel for specific application.
At the Oklahoma Motor Vehicle Commission (OMVC) meeting Jan. 10, the commission discussed the TrueCar and/or Zag business model. According to the TrueCar web site, “TrueCar charges all participating dealers the exact same performance-based service fee.” Similarly, Zag’s web site says, “Zag only charges when a sale is transacted.” Receiving a fee from a dealer for a completed sale of a vehicle arranged through the TrueCar or Zag web site appears to violate Oklahoma Statute 47 O.S. Section 579.1, which prohibits brokering. In addition to brokering, the commission was concerned with several possible OMVC advertising rule violations, which include: • OAC 465:15-3-14(7) “The terms ‘dealer’s cost,’ ‘invoice,’ ‘invoice price’ or other reference to the cost of the vehicle to the dealer shall not be used.” • OAC 465:15-3-2(a) requires a stock number or disclosure of the number of vehicles available at the advertised price, and requires that the vehicle be in possession of the dealer at the time the ad is placed, or may be obtained from the manufacturer or some other source, and this information is disclosed in the advertisement. • OAC 465:15-3-4 “Any advertisement of a ‘bait’ or ‘bait and switch’ nature is prohibited.” TrueCar’s web site acknowledges, “At times, however, your selected color, options or incentives will not be available at a dealership.” That situation could lead to allegations of “bait and switch.” Beware: Oklahoma dealers are subject to regulatory enforcement action by the commission, and if found to be in violation of OMVC laws or rules, it could result in fines up to $1,000 per occurrence and/or suspension or revocation of the dealer’s license. In a letter sent Jan. 10, the commission requested TrueCar/Zag immediately suspend business through Oklahoma dealers until the concerns are addressed and resolved to the satisfaction of the OMVC to fully comply with Oklahoma law. Note: By Jan. 17, TrueCar had temporarily halted operations in Colorado, Louisiana and Nebraska, had modified its billing structure in Virginia and announced “proactive” changes to ensure compliance with laws and regulations in various other states.
ANNOUNCING NEW HIGHLY COMPETITIVE NIADA HEALTH INSURANCE MEMBER BENEFIT PROGRAM! This Health Insurance Program can help provide members, their employees, and families with comprehensive major medical insurance coverage. The program is brought to you by JLBG Health, the largest health insurance provider to Associations in the US.
MEDICAL COVERAGE AND ANCILLARY BENEFITS
• Premium savings. • A wide variety of choices for coverage from HSAs to PPOs for members, their employees or family. • A shrinking deductible - a 20% deductible credit each year you do not meet your deductible. • 10% healthy member discount & preferred rates. • Optional free Health Savings Account. • Optional PPO or traditional health plan with extensive networks. • Plans with a $20, $25, $30 or $40 co-pay for doctor visits. • Wellness benefits and Prescription Drug Card. • Worldwide coverage, 24-hours a day. • Enhanced wellness benefits based on PPACA Guidelines effective September 23, 2010. • Tele-Express, phone application - no paper applications to complete. • Dental Insurance available with or without medical. • Vision Insurance available with or without medical. • Critical Illness coverage available that pays a cash benefit directly to you. • Disability coverage available up to 15,000 per month benefit. Note: Features are subject to state availability and may not apply to all physicians. To learn more about the options available to lower your health insurance costs and maintain comprehensive coverage, visit www.NIADAHealthPlans.com for an INSTANT online rate or contact JLBG Health at 1-888-308-9340 for more details, physician rates, and a 15-minute phone application.
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BACK TO BASICS
EDUCATION: LUXURY OR CRITICAL PART OF YOUR SUCCESS?
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t was recently suggested to me that dealers might be viewing the education of their employees as a “luxury.” We all understand that when a company’s belt is tightened, advertising and education are among the first expenses to be cut. But can education actually be viewed as a luxury item? For years, most of us on every level have been doing more with less. How is that possible? The answer is we used the education and technology we have invested in. We have made some difficult choices regarding employees in addition to changing our processes. Using technology for education has once more been brought into the spotlight. While e-learning has been around for many years, it has not been widely used. Many who sit on the sidelines continue to wonder why – after all, it saves on travel expenses. Many dealers have expressed the opinion that e-learning should be free. All I can say to that is: Do you sell units and expect to earn zero gross profit? Of course, you go to work to gain a profit. We all do that. So why would you expect educators to give away what they know for free? Of course, e-learning saves on travel. If you want to know how much, go to your favorite discount travel web site and check. With proper planning, you can secure a ticket to travel across the country for less than $500. Dealerships that use e-learning also save the expense of a room and meals. But while they are saving on these expenses, what are they giving up? Set the stage for success: When a participant is in a learning environment, whether in his office or away in a seminar setting, it is critical that the student have dedicated time to focus on the lessons. When participants are expected to respond to text messages from senior management or answer cellphones, they are not focused on what is happening in their environment. And when they are listening to a web seminar and are interrupted by sales consultants, sales managers, service personnel or customers, they are not focused on the message being delivered. No focus equates to no learning and no value realized from the investment.
Do you save time using e-learning? As an educator, I can attest that it takes two weeks of two hours a day online to cover most of the topics I can cover in a three-day seminar. I can verify reception and understanding of concepts in a face-to-face environment more effectively than I can using the Internet. Most participants are very quiet during a web seminar, even when questions are being solicited from them. Web seminars do have a great use in the learning circle. Web-based education is best used as a follow-up to a traditional seminar setting due to the limited amount of time and focus we have with online participants. After 25 minutes, we lose the attention of part of the audience. Fifteen to 25 minutes is more effective in a web seminar environment. When a dealership chooses to use web seminars in lieu of traditional seminars, what do they sacrifice? They sacrifice time, and they lose the value of group studies after the session. In every group environment, everyone has selective hearing. We retain what is important to us. The value in a group setting is gaining as many perspectives as we can after the meeting is over. What was important to whom, and why? Learning does not cease when the educator gives the evening assignments. It only takes on a different coat. Some dealers do not want to expose their personnel to another dealership’s processes. They also fear that when a group gets together, they chat about pay plans and duties. Well, in all the years I have been teaching, I have yet to walk up on such a conversation. How does a dealership get the most out of the limited dollars it has allocated to education? The answer lies in planning. Advance planning for air fare and for e-learning events, because all events have limited space available. If you have multiple participants, or cannot send your personnel out of the dealership, an alternative is to bring the educator to your location, split the team and run double education shifts. Your team will have the opportunity to implement new ideas right away and provide an immediate report to the senior management. When managing a sales team, it is essential that the entire team is using the same processes with customers. Consistency is
easy to manage. It is also easy to see when someone goes off track. The most important thing a dealer can do is choose an education venue. Make the plans, implement the plans and make inquiries to the participant in addition to the educator. What ideas were shared during the educational event that the participant thinks should be integrated and implemented into your current process? The second most important thing is choosing quality vendors and quality products and services for the finance department to present to the customers. If the finance and sales teams do not believe in the products’ value or have had difficulty with the company in the past, they will not present the policy to the customers. I advocate that the dealership do proper vetting of companies and vendors prior to signing up. Verify references and insurance policies. Ask the vendor for a certificate of insurance and make it a practice to do so every year. That is the only way to verify the policies being sold are actually backed by an insurance company. Begin to collect testimonials from customers. Create a brag book to be shared with your customers. A brag book is a binder that includes positive feedback from your previous customers about the products and the dealership. How was their buying experience? How did the policies serve them in a time of need? Would they purchase the policies again? Happy customers are a result of happy, welleducated and well-compensated employees with a strong commitment to customer satisfaction. Happy customers bring their friends and family to purchase from you. Happy customers are essential in building customer retention and referrals. Education should be a critical part of every business plan. Investing in your human capital brings the highest rate of return. When successful dealers are quizzed about why they are successful, the answer is they surround themselves with quality people who have both the customer’s needs and the bottom line in focus. Education is the foundation for a strong business model and essential for success!
BY JAN KELLY
JAN KELLY, PRESIDENT OF KELLY ENTERPRISES, IS AN EDUCATOR, CONSULTANT AND CONVENTION SPEAKER, AND WRITES FREQUENTLY FOR INDUSTRY PUBLICATIONS. FOR INFORMATION ABOUT EDUCATIONAL VENUES OR JOINING AN F&I 20 GROUP, CALL 1-800-336-4275 OR VISIT WWW.JLKELLY.COM.
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USED MOTOR VEHICLE AND PARTS
COMMISSION REPORT January 17, 2012
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ollowing roll call, in which seven of the 11 commissioners were present, and approval of the Dec. 13 commission minutes, chairman John Longacre called on director John Maile for the director’s report. Maile reported to the commissioners that deputy director Kenneth Whitehead had been hospitalized in December for heart bypass surgery but is expected back to work this week. Because of that, there was not a deputy director’s report for the commissioners’ consideration. He also reported that the expenditure report was included in the commission agenda for consideration. With regard to annual license renewals, Maile reported the process was nearing completion and revenues were some $27,000 behind last year’s renewals. That’s about a 3 percent drop, he said. Maile reported the commission had contracted again with Curt Rogow to serve as legislative liaison and said language was being developed for resident broker legislation. The Oklahoma Motor Vehicle Commission and the Oklahoma Auto Dealers Association had agreed on language for a bill that would require franchise dealers with assets of less than $50,000 to be bonded. A draft bill by Sen. Wilson would require auctions to have a $300,000 bond. The UMV&PC has proposed an auction bond be set at $100,000. Commissioners also acknowledged receipt of and approved the commission’s monthly expenditures list. The list includes contract expenditures, authority for which is included in the approved budget. Applicants for a new license and dealers involved in significant rule violations are required to attend the commission’s education program as a part of acquiring or maintaining a state license. Until further notice, these education sessions are being held at the commission conference room at 2401 NW 23, Oklahoma City. Classes are held on Monday prior to the commission meeting on the second Tuesday of each month. The sessions run from 9 a.m. to about noon or 1 p.m. You are asked to make reservations so staff can be prepared to accommodate you. Call the commission at 405-521-3600 for reservations.
REPORT OF CEASE AND DESIST LETTERS ISSUED
These letters direct the individual or business to cease violations of laws or rules Cora Capps Luis Cervantes Abayomi Fakoya Favio Gramajo Salvador Gutienez Ruben Ruvalcaba James Wilmot
Used Dealer Used Dealer Used Dealer Insurance Pool Used Dealer Insurance Pool Insurance Pool
Mustang Oklahoma City Oklahoma City Oklahoma City Poteau Oklahoma City Owasso
12/16/2011 12/30/2011 12/30/2011 12/06/2011 12/16/2011 12/06/2011 12/06/2011
CLOSED COMPLAINT REPORT
These are complaints that have been resolved one way or another. They do not necessarily reflect any wrongdoing on the part of dealers.
APPLICANTS FOR A NEW LICENSE AND DEALERS INVOLVED IN SIGNIFICANT RULE VIOLATIONS ARE REQUIRED TO ATTEND THE COMMISSION’S EDUCATION PROGRAM AS A PART OF ACQUIRING OR MAINTAINING A STATE LICENSE. BY ADR STAFF
ENTITY Auto Showcase of Tulsa, LLC Barry Sanders Honda Bill’s Auto Sasles, LLC Blue Ribbon Chevrolet, Inc. Bob Howard Automall Bob Moore Dodge Chrysler-Jeep, LLC Bryan’s Car Corner IV Competition Auto Sales David Stanley Chevrolet, Inc. David Stanley Chevrolet, Inc. David Stanley Chevrolet, Inc. David Stanley Dodge, LLC De Luxe Motors, LLC Dealer One Auto Credit, Inc. Joe Cooper Ford of Yukon, LLC Lawton Chry Jeep Dodge / B. Altstatt Lawton Chry Jeep Dodge / B. Altstatt M & M Mobile Home Sales, Inc. Mike Mowdy Autoplex Okie Auto Sales Reynolds Ford Lincoln Merc Edmond Riverside Autoplex, LLC Ronald David Used Cars Sunwest Motors, Inc. The Key Cars Tulsa Woodward Auto Sales Tulsa Woodward Auto Sales TulsaWoodwardAuto.com, LLC Turn Key Auto Mart, LLC
CITY COMPLAINT Tulsa Contract Stillwater Contract Stilwell Title Sallisaw Title Oklahoma City Contract Oklahoma City Title Duncan Contract Tulsa Contract Oklahoma City Oklahoma City Contract Oklahoma City Miscellaneous Midwest City Contract Oklahoma City Contract Oklahoma City Miscellaneous Yukon Mechanical Lawton Contract Lawton Contract Calera Miscellaneous Midwest City Contract Bristow Miscellaneous Oklahoma City Mechanical McAlester Contract Tulsa Title Oklahoma City Contract Oklahoma City Miscellaneous Tulsa Title Tulsa Title Tulsa Title Oklahoma City Miscellaneous
RESOLVED 12/19/2011 12/09/2011 12/19/2011 12/06/2011 12/09/2011 12/09/2011 12/08/2011 12/05/2011 12/20/2011 12/19/2011 12/12/2011 12/12/2011 12/08/2011 12/08/2011 12/09/2011 12/16/2011 12/23/2011 12/12/2011 12/03/2011 12/08/2011 12/09/2011 12/16/2011 12/01/2011 12/08/2011 12/02/2011 12/23/2011 12/01/2011 12/20/2011 12/06/2011
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DAA OF OKC DEALER APPRECIATION PARTY
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DIVISION
WORLD AUTOMOBILE AUCTIONEERS CHAMPIONSHIP HA
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REMINDERS FROM THE MOTOR VEHICLE
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AUTOM O LD
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The World Automobile Auctioneers Championship will be webcast live this year for the first time, courtesy of NIADA.TV. The live webcast of the 2012 WAAC can be viewed in its entirety on the home pages of www.niada. tv, www.niada.com and www. waacnet.net . Coverage begins at 11 a.m. Eastern time on Mar. 30 and is free for all online viewers. Cheer on your hometown favorite auctioneers and ringmen, and catch all the fun and excitement of the 2012 World Automobile Auctioneers Championship at your leisure, exclusively on all three websites. For more detailed information please visit www.niada.com and click on the “Events” tab, or call (303) 807-1108.
The Motor Vehicle Division of the Oklahoma Tax Commission recently issued the following reminders: Out-of-state VIN/odometer inspections: Oklahoma law requires the VIN/odometer inspection of vehicles entering from another state to be performed by motor license agents. This is a fundamental responsibility of every motor license agency. Under no circumstances is this inspection responsibility to be delegated to another entity – i.e. an Oklahoma dealer. Any such allowance by a motor license agent would be considered a willful disregard of the duties and obligations for which the agent was appointed. Lien entry forms: Multipart carbonless MV-21-A forms are not acceptable for filing a lien, as they are often illegible when imaged. The lien entry form must be black ink on a white background. Motor license agents have been instructed to return any carbonless forms to the lender for a properly formatted lien entry form. Note: A full selection of Oklahoma state-approved used motor vehicle sales forms – including the current Lien Entry form – are available through OIADA. Orders received by 2 p.m. are typically shipped that day and delivered to your dealership the next day.
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IS TECHNOLOGY OR THE LACK OF ITCOSTING YOU? T
echnology, or the lack thereof, could be costing you millions. OK, millions might be a bit much, but thousands doesn’t sound much better. Either way, profit dollars could easily be leaving your pocket on a monthly basis at an alarming rate. Technology, or the lack thereof, is costing dealers in every market and in every state in the country. The dealers in question are either technological junkies or technologically challenged. Neither scenario is conducive to success. In the current economic climate, having and using what is necessary for the foreseeable future makes the best and only economic sense. Not too much, not too little. Technology touches many facets of the Buy Here-Pay Here industry. Video surveillance, starter interrupt/GPS and software are the most popular areas for technological discussion in BHPH, and those areas seem to be the most under- and over-utilized as well. Of the three, DMS software is the only one that is necessary for current and future success. The others? Well, that’s up to the dealer. Video surveillance is probably more overused than the other two – too many dealers have thousands of dollars tied up in high-tech systems that are really not necessary. Those dealers have convinced themselves they are preventing not only outside theft, but internal theft as well. Surveillance systems have proven to aid in deterring both kinds of theft. The decision whether to use video surveillance should be based on specific market conditions in regard to preventing
outside theft and providing additional security. A lot in a small rural market that displays 20 or so vehicles and employs a total of four people doesn’t necessarily need a 16 exterior color camera system with real-time web access. That example may seem extreme, but that dealer exists. For preventing internal theft, the money might be better spent on developing the organization’s culture. Studies have shown office supplies are the most commonly pilfered items at a business, not money. This is a direct result of lack of pride and ownership in the business by the employee. A background investigation and personality profile prior to hiring a new employee, and ongoing training and open lines of communication after hiring are ways to instill and improve an organization’s culture. There is a good possibility those steps will also reduce turnover and, in most cases, prevent if not halt employee theft – and will likely cost less than a surveillance system over time. Payment devices – starter interrupt, GPS, and combo devices – are still a topic of great debate and ongoing discussion. This is an area that seems to be either black or white in most dealers’ eyes. Dealers seem to be 100 percent for them or 100 percent against them, with little in between. Data shows such devices can increase collections dollars and, in some cases, reduce the amount of personnel needed to manage a portfolio. Data also shows they do not have a significant impact on loss rates. That data is what causes the “all-in” or “all-out” mentality. There are just as many highly successful dealers not using the devices as there are using them.
As with any technological advance, they are only effective if used as directed or intended. Too many dealers don’t. And by not doing so, they are wasting money. The decision to use payment devices, and specifically which kind, is a significant one. It is a decision that should be based solely on the dealer’s personal business philosophy. As with any business decision, it shouldn’t be made until all the homework is done. Also not to be overlooked in the decision-making process is preparing internally. Policies and procedures will have to be created and implemented. Last, but definitely not least, is DMS software. This is an area where dealers have a tendency to cut corners and cost themselves in the long run. Bigger is not necessarily better. Software packages have undergone significant technological advances in recent years, and there are an increasing number of provider options. For better or worse, nowadays there seem to be more providers than actual dealers. That’s better in that more options provide a more diversified product offering and pricing structure. It’s worse in that when it comes time to choose a system, a dealer can be buried by information overload and the process can become overly time-consuming when he’s trying to comparison-shop. Technology can take any business to the next level. Technology can also set any business back. The key lies somewhere between being a junkie and being challenged. Which one are you?
BY BRENT CARMICHAEL EXECUTIVE CONFERENCE MODERATOR NCM ASSOCIATES INC. BCARMICHAEL@NCM20.COM
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INCOMPATIBLE OR INCOMPLETE FORMS CAN BE A PROBLEM
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his case demonstrates the very real need to be sure all your documents are compatible and integrated. Often in a disputed transaction, a court will look at how your various deal documents are integrated to determine which documents will apply to the transaction. A Missouri case provides an example. In this instance, truck buyers signed a buyer’s order, an addendum to the buyer’s order that required arbitration of disputes, and a retail installment contract in connection with their purchase. When the buyers sued the dealership for fraud, the dealership moved to dismiss or, alternatively, send the matter to arbitration. The trial court denied the motions, and the dealership appealed. The Missouri Appellate Court affirmed, concluding that because the retail installment contract made no reference to either the buyer’s order or the arbitration addendum and included a merger clause that specifically stated that it represented the complete and exclusive agreement of the parties, the arbitration clause in the addendum to the buyer’s order was superseded by the retail installment contract. See Krueger v. Heartland Chevrolet Inc., 2009 Mo. App. LEXIS 498 (Mo. App. April 21, 2009). The dealer forms available through OIADA, your state association, are designed to avoid this type of problem. For instance, the Retail Purchase Agreement/Bill of Sale includes an “Integrated Documents” section appropriate for listing all forms and paperwork involved in the particular deal. For more information about state-approved used dealer forms available through OIADA, contact the association office at 405232-2947 or 800-346-4232.
NEED HELP? THIS IS AN INVITATION TO JOIN OIADA! Do you have a question about your dealer license or dealer tags? Are you having a problem with a state agency? Do you have a title problem? Do you need a bond? Do you have a question about federal regulations? Do you have an industry question? Do you have a question about legislative issues? Do you need the latest information about what’s going on in the industry? Do you need the latest compliance forms for your business? Are you in need of an attorney who knows the car business? OIADA understands the most important thing on any dealer’s mind is to make that next sale. Due to the ever-changing federal, state and local laws, it is nearly impossible for a dealer to stay completely up to date. That is but one reason why dealers belong to OIADA – so they can stay informed of regulatory/law changes while they concentrate on increasing their bottom line. Members get immediate answers to sometimes complex and sensitive questions and issues. OIADA deals with legal issues daily. While we are not your attorney and do not provide legal advice, we are informed and provide valuable information. OIADA is your lifeline to the automotive industry! Helping dealers since 1955. Call us at (800) 346-4232 or 405-2322947, or go online to www.e-OIADA.com for assistance or information on becoming a member.
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License Applicants Approved The following applicants, as listed in the agenda for the Used Motor Vehicle and Parts Commission regular meeting of Jan. 17, were considered for issuance of used motor vehicle dealer licenses and wholesale vehicle dealer licenses. The applications were approved pending compliance with the state licensing laws and rules, and subject to final approval by commission staff. Used Dealer Licenses COMPANY NAME CITY 108 Auto & Truck Salvage, Inc. Howard J. Gilchrist Stillwater Ace Cars Richard Clouse Oklahoma City *Amins Auto Sales, LLC Farshid Amin Oklahoma City (Two on a lot with Tony’s Auto) **Amu Auto Sales Roman Lysanyuk Oklahoma City Auto Source, LLC Sherrie Madison Warr Acres **Bailey Auto Sales, LLC Collin Bailey Tulsa Blazer Motors Paul James, Jr. Oklahoma City Blazer Motors I-35 Paul James, Jr. Moore Bob Moore NW, LLC Curtis Hayes Oklahoma City Karen Copp Patrick Mark Moore Shannon Hutton Bocho’s Auto Sales, LLC Emanuel Del Piero Perez Tulsa **Car Sales, LLC Tom Porter Oklahoma City Michael Porter Checotah Wholesale Auto Edward Lee Lynch Checotah City Body Shop Used Vehicles Roy Ridenour Hugo Crossroads Auto Mall, Inc. Larry D. Pennington Oklahoma City ***David Boyd Auto Center, LLC David Boyd Tulsa Diesels N Stuff Theodore Brett Swab Tulsa Peter Parker Discount Fleet Nationwide A/S LLC Tim Rogers Cushing John Revels Elite Wholesale Auto Kevin Hammond Durant Darrell Lloyd Edwards **Gefco Used Equipment & Truck Calvert Martin Enid David Charles Silvious Stephen Anderson Tom Campbell Greenlight Motor Center Juanita Rodriguez Lawton Haller Wholesale Auto Jake Haller El Reno Integrity Auto Finance, LLC Omega Bank Trust – Capital Oklahoma City Steven M. Meston Lawrence Matthes Dillard IRR John Roderick Bates Integrity Auto Finance, LLC #2 Steven M. Meston Oklahoma City Dillard 1991 GST Exemp Trust Lawrence Matthes Dillard IRR Omega Bank Trust – Capital John Roderick Bates J & M Auto Sales Joe Robinson Boswell Ronald Ray Coyle Jerry Petty Motor Company Jason Petty Tulsa Timothy Kirk K & N Motorcycles, Inc. E. Louise McDonald Tulsa L. Patrick McDonald Gary McDonald Keimig Auto Sales James E. Keimig Guymon Kirby-Smith Truck Sales Hoyt Kirby,Jr. Oklahoma City Lot Motors Natalie Woody Tulsa McAlary ATV & Cycle, LLC Rex McAlary Elk City Shane McAlary Michael Jackson Auto Sales Michael Cleve Jackson Vinita Pigg Motor Company Henry Lee Pigg Weatherford Quality Autos of Ada, Inc. Robert ‘Caleb’ Fires Ada Ratts Auto Sales Tyson Ratts Owasso Ray Fine Motors, LLC Mia Fine Knapp Chickasha S & A Autos Mohammed Rahman Oklahoma City S & W Motors Brandon Wde Ringling Sal’s Auto Sales, LLC Muhanad Salous Warr Acres Salim Salous *Selectrucks of Tulsa John Miciotto, Jr. Tulsa (Owner John Miciotto Jr., is a resident of Texas) Specialty Vehicles of Tulsa Mike Allen Tulsa Steve’s Cars Richard Steve Cupit Oklahoma City The Key Cars #3 David Frayer Midwest City *The Salvation Army Auto Sales David Jeffery Oklahoma City (Owners David Jeffery, Terry Griffin, John Jones & Larry Broome, are residents of Georgia) *Tricolor Auto Daniel Chu Oklahoma City (Owners Daniel Chu & Marianne Tunnell, are residents of Texas) **Universal Vehicle Sales Virdiana Herrera Tulsa XIT Ford of Boise City, LLC Rhonda McMillen Boise City Cecilia Seibert Tim McMillen *Special Circumstances ** Subject to further review of financial information ***Felony Conviction Wholesale Dealer Licenses COMPANY A & M Auto Sales Ameritrans Equipment Solution In & Out Used Cars L & M Wholesale Cars
NAME Mohammad Bawatna Pam Wood Mel Rains Larry Wayne Cooper
CITY Oklahoma City Broken Arrow Oklahoma City McAlester
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NIADA NAMES OHIO FIRM AS NEW LEGISLATIVE COUNSEL
hio-based law firm Mac Murray, Petersen & Shuster LLP has been named legislative/regulatory/compliance counsel for the National Independent Automobile Dealers Association, NIADA chief executive officer Michael Linn announced. The firm, based in New Albany, Ohio and led by former Ohio attorney general and state senator Betty Montgomery, will add additional expertise to NIADA’s legislative and regulatory efforts in Washington D.C. to stay ahead of issues affecting the association and its approximately 18,000 members. “Adding Mac Murray, Petersen & Shuster
to the efforts of Federal Advocates, NIADA’s lobbing firm on Capitol Hill, will round out our strategy to work more closely with key federal regulatory agencies,” Linn said. “Staying ahead of rapidly expanding agencies like the CFPB (Consumer Finance Protection Bureau) will be much easier as Betty and her team engage key relationships with their former colleagues at key federal agencies like the CFPB and the FTC.” In addition to Montgomery, three former Ohio assistant attorneys general will be advising NIADA on compliance updates and changes in government regulations to the au-
tomotive industry. Shaun Petersen, Michele Shuster and Helen Mac Murray all served as chiefs of the Ohio AG’s Consumer Protection Section. Together they have more than thirty years of experience managing consumer protection initiatives and helping businesses comply with those programs. Petersen’s extensive work representing auto dealers in Ohio through the Ohio Independent Automobile Dealers Association gives him a deep understanding of dealer operations and concerns. He will act as NIADA’s lead counsel from the firm.
NHTSA RECALLS Ford Escape, MY 2001-2002 NHTSA ID Number: 12V005000 Service Brakes, Hydraulic: Antilock: Control Unit/Module Units Affected: 244,530 Ford is recalling certain model year 20012002 Escape vehicles manufactured from Oct. 22, 1999, through July 19, 2002, equipped with a brake master cylinder reservoir cap that could leak brake fluid. If brake fluid leaks from the cap, it could come in contact with the antilock brake system (ABS) module wiring harness connector. Corrosion can develop in the electrical connector leading to melting, smoke or a fire. Dealers will replace the brake master cylinder reservoir cap and the ABS electrical system will be modified. Ford expects to notify owners starting the week of Jan. 23, 2012. Due to a parts delay, however, the remedy might not be available at that time. If parts are not available, Ford will instruct owners to park their vehicles outside until such time as parts become available. Owners may contact the Ford Motor Company Customer Relationship Center at 1-866-436-7332. This recall campaign is related to 07V-156. Ford’s safety recall number is 11S24. Ford Freestar, MY 2004-2005 Mercury Monterey, MY 2004-2005 NHTSA ID Number: 12V006000 Power Train: Automatic Transmission: Torque Converter Units Affected: 205,896 Ford is recalling certain model year 2004 and 2005 Ford Freestar and Mercury Monterey vehicles. The torque converter output
shaft could fail. This condition results in a sudden loss of motive power with no warning, increasing the risk of a crash. Ford will notify owners, and dealers will replace the torque converter free of charge. The safety recall is expected to begin in the second calendar quarter of 2012. Owners may contact the Ford Motor Company Customer Relationship Center at 1-866-436-7332. Ford’s recall campaign number is 11S25. Mini Cooper S, MY 2007-2011 Mini Cooper S Clubman, MY 2008-2011 Mini Cooper S Convertible, MY 2009-2011 Mini Cooper S Countryman, MY 2011 Mini JCW, MY 2009-2011 Mini JCW Clubman, MY 2009 Mini JCW Convertible, MY 2010-2011 NHTSA ID Number: 12V008000 Engine and Engine Cooling Units Affected: 88,911 BMW is recalling certain model year 20072011 Mini Cooper S, 2008-2011 Mini Cooper S Clubman, 2009-2011 Mini Cooper S Convertible, 2009-2011 Mini Cooper JCW, 20092011 Mini Cooper JCW Clubman, 2009-2011 Cooper JCW Convertible and 2011 Cooper S Countryman passenger cars manufactured from Nov. 14, 2006, through Jan. 18, 2011. The electric auxiliary water pump that cools the turbocharger has an electronic circuit board that can malfunction and overheat. The circuit board may smolder which could result in a vehicle fire. BMW will notify owners, and dealers will replace the water pump free of charge. The safety recall is expected to begin during February 2012. Owners may contact
BMW at 1-866-275-6464. Kia Optima, MY 2006-2008 Kia Rondo, MY 2007-2008 NHTSA ID Number: 12V014000 Air Bags: Frontal Units Affected: 145,755 Kia Motors America, Inc., is recalling certain model year 2006-2008 Kia Optima vehicles manufactured from Sept. 29, 2005, through Jan. 29, 2008, and model year 2007 and 2008 Kia Rondo vehicles manufactured from Sept. 13, 2006, through March 21, 2008. The clock spring contact assembly for the driver’s side air bag supplemental restraint system (SRS) may become damaged through usage over time. If the clock spring contact assembly becomes damaged, the driver’s air bag electrical circuit will experience a high resistance condition potentially causing the driver’s air bag to not deploy. If the clock spring develops high resistance, in the event of a crash, the driver’s air bag will not deploy and will not be able to properly protect the driver, increasing the risk of injuries. Kia will notify owners, and dealers will replace the vehicle’s air bag clock spring contact assembly as necessary, free of charge. The safety recall is expected to begin during March 2012. Owners may contact Kia Customer Assistance Center at 1-800-333-4542. For more information, visit www.NHTSA.gov or www.SaferCar.gov.
BY ADR STAFF (SOURCE: WWW.NHTSA.GOV)
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NEW FEDERAL BUREAU HITS THE GROUND RUNNING The Consumer Financial Protection Bureau (CFPB) was established through enactment of the Dodd-Frank Financial Reform Act and, through that same act, received broad authority to enforce federal consumer financial laws. The CFPB began supervision of very large banks, thrifts, and credit unions – those with assets of more than $10 billion – on July 21, 2011. On Jan. 5, 2012, the CFPB announced its authority to oversee businesses other than banks, regardless of size, in certain markets. That includes mortgage companies, payday lenders and private education lenders. In all other markets, such as debt collection, consumer reporting, auto financing and money services businesses, the CFPB can supervise “larger participants.” The bureau is in the process of setting the definition of “larger participants” and will publish the criteria by July 21. The Dodd-Frank Act also says the CFPB may supervise any nonbank it has reason to believe is engaging in or has engaged in
conduct that poses risks to consumers with regard to consumer financial products or services. The CFPB will be publishing rules setting out procedural guidelines for implementation of this provision. The CFPB has a variety of supervisory and investigative tools at its disposal. It can employ any combination of the following: requiring nonbanks to file certain reports, reviewing the materials companies actually use to offer financial products and services, reviewing their compliance systems and procedures, and reviewing what the business promised consumers. Besides its contingent of supervisory and examination staff, the bureau is enlisting the public’s help by encouraging individuals to alert it to potential violations of federal consumer financial laws. On Dec. 15, the CFPB announced several channels through which “whistleblowers and other knowledgeable sources” can directly report tips regarding alleged violations of federal consumer
BY ADR STAFF
financial laws. The bureau is publicizing the fact that the Dodd-Frank Act provides certain anti-retaliation protections for employees of providers of consumer financial products and services who share information regarding potential violations. The CFPB added its first director in January, when President Obama appointed Rich Cordray. Mr. Cordray previously led the bureau’s Enforcement Division. Before than, he served on the front lines of consumer protection as Ohio’s Attorney General. Mr. Cordray recovered more than $2 billion for Ohio’s retirees, investors and business owners and took major steps to help protect its consumers from fraudulent foreclosures and financial predators. Charged with protecting consumers’ financial interests, the bureau describes itself as “a neighborhood cop on the beat.” We can certainly expect more oversight in the coming months from this new and growing branch of the federal bureaucracy.
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LEGISLATIVE ISSUE – TITLE
HOLDING
Senate Majority Leader Mike Schulz has had a bill drafted to convert Oklahoma’s motor vehicle title system from one in which the vehicle owners hold title to the vehicles they own to one in which lienholders keep the title to the vehicle until the note is paid off (title holding state). If you have a strong opinion on this subject, you are urged to contact Senator Schulz’s office and let your opinion be known. en. Schulz’s state Capitol address S and phone: Senator Mike Schulz 2300 N Lincoln Blvd., Room 418 Oklahoma City, OK 73105 (405) 521-5612 schulz@oksenate.gov District address and phone: 16830 SCR 209 Altus, OK 73521 (580) 482-0886
OIADA NEW AND RENEWAL MEMBERS DECEMBER 2011
The following list includes members who joined or renewed their OIADA/NIADA membership during December 2011. We express our sincere appreciation for all the members of OIADA and we extend our invitation to dealers who are not members. A membership application can be found in this newsletter. We urge you to be an active part of maintaining a strong and effective used car industry voice in the legislative and regulatory environment. With the current Congress, we need that voice more than ever! John Easttom, Chairman
Company
Name
Joined City
R R R R R R N R R R R R R R R R R R R R R R R
Diffee Motor Cars South, Inc. Wholesale Motors, Inc. Reynolds Ford, Inc. John Vance Motors, Inc. Big Red Sports/Imports, Inc. Smart Choice Auto Credit “U” Matter Motors, Inc. Reliable Motors, Inc. Super Sports & Imports, Inc. America’s Auto Auction-Tulsa Burrel Matlock’s Auto Mart Oklahoma Auto Sales Nick & Paul’s Quality Car Corner M G Motor Sports, LLC D & D Truck Sales, Inc. Midwest Auto Mall, LLC Altus Main Street Motors Express Credit Auto #2 Nabors Auto Sales, LLC Larry’s Auto Store, Inc. Dallas Ft. Worth Auto Auction Family Cars & Trucks, Inc. Morris Motorsports
Gary Pitcock Johnny Reese Richard L. Reynolds John Vance Chris Mays Curtis Ray Tyron Wheeler Julian K. Codding Richard T. Walters Monte Freeman Matlock Enterprises, Inc. David Lively Nick Jacewitz Mary Lowry James D. Davis Jose R. Pintor Gayland Miranda Shawn Richardson L. R. Nabors Larry Lichlyter Patti Bailey – AGM Todd Mikel Mark Morris
2011 1993 2010 2003 1991 2010 2012 2005 1996 1999 1993 2006 2009 2009 2000 2010 1999 2005 1998 2001 2006 2004 2009
Oklahoma City Roland Norman Guthrie Norman Yukon Enid Oklahoma City Oklahoma City Tulsa Warr Acres Mangum Tulsa Tulsa Oklahoma City Moore Altus Oklahoma City Chickasha Coweta Fort Worth, TX Duncan Chickasha
BY ADR STAFF
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OIADA Can Help Make
Your Path
Certain.
Oklahoma Independent Automobile Dealers Association For $295 You Get Membership In Both OIADA and NIADA Plus All Of The Following Benefits And Even More That Are Not Listed!
Programs for Extra Profit
• Access to Insured Warranty & Service Agreements • How to Structure a Related Finance Company • Networking Opportunities With Other Dealers
Programs to Help Keep Profit
• NADA Guide Books – single copy or subscription • Black Book Guide Books – single copy or subscription • Dealer Bonds - Salesmen’s Bonds • Discount on complete line of State approved Business Forms • Discount on Dealer supplies National Dealer Network Skip Tracing Contacts
Publications Public
• OIADA Magazine/Newsletter • Federally Required Safeguards Policy Document • Federally Required Red Flags Rules Policy Documents • IRS Audit Technique Guide For the Independent Used Car Dealer • Current Industry Information • Legislative Alerts • NIADA Monthly Magazine • NIADA Annual Buyer’s Guide
Professional Development
• Dealer Educational Seminars • Certified Master Dealer Program • Regional Professional Development Compliance Seminars • Free Access to NIADA.tv Training at Your Business • Access to IndependentDealer.com where dealers go for answers • NIADA Membership and Window Decal • OIADA “Symbol of Integrity” Logo, Window Decal and Membership Plaque • NIADA Annual Convention and Trade Show • Individual Assistance by phone • Code of Ethics
Representation
• State Lobby and Consultant Services • State Legislative and Regulatory Tracking and Reporting • Federal Lobby and Consulting Services • Federal Legal, Legislative and Regulatory Tracking and Reporting • Used Motor Vehicle and Parts Commission Liaison • Oklahoma Tax Commission Liaison • Oklahoma Department of Consumer Credit Liaison • Full Time Professional Staff to assist you when problems arise
Members Can Also Sign Up For Automotive Dealers Rewards From
Automotive Dealers Resource Of Oklahoma and Earn Money Saving Coupons For Their Future Purchases. Visit http://rewards.buyadr.com/
Automotive Dealers Rewards is open to Members and Non-Members Who Purchase From ADR of Oklahoma
Join OIADA online at http://www.e-oiada.com/join 27
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Rev 01/20/12
OIADA/ADR ORDER FORM
Order on line at www.buyadr.com Phone 800-346-4232 Fax 405-799-3367
Prices subject to change without notice Date of Order:___________________ Residential Delivery? yes_____ no_____ Requested By: ____________________________________________________ Visa Master Card Discover Amex 3 or 4 digit code # ________________
Credit Card Billing Address:_______________________________________________________________ Expiration Date:________/_________ Signature:______________________________________________ Ship To: ___________________________________________________________________________________ _____Ph.__________________________ Name ________________________________________________________________________ _______________ Fax:_________________________ Physical Address (no P.O. Boxes) _____________________________________________________________________________________________________________________ City, State, Zip Code
Item #
Item Description
Price $
F01 F02 F03 F04 F04 A F 04 B F04.1 F05 A 127 F05.0 F05.1 F05.3 F05.4 F06 F06.1 F06.2 F07.1 F08 F08.3 F09 F09.0 F10.3 F11 F11.1 F13 F13.2 F13.1 F14.6 F14.4 F14.5
Repo Notice of Sale (2 part) Repo Calculation of Return (2 part) Multiform (Retail Buyers Order – Bill of Sale – 3 part) (short form) Multiform (Retail Buyers Order – Bill of Sale – 2 part) (short form) Retail Purchase Agreement – Multiform – 3 part (long form) Poly Stock Window Stickers (per 250) Retail Installment Contract (4 part) Simple Interest Contract – Legal size (5 part) Lien Entry Form MVD-21-A (pad of 100) Agreement to Provide Insurance We Owe Forms (2 part) Used Car Sales Envelope – Deal Jacket (9”X12” Tan – Printed on both sides) Used Car Sales Envelope – Deal Jacket (9”X12” Green) Credit Application Personal Loan Applications Spot Delivery Form Consignment Forms Certificate of Ownership Dismantler’s Forms
17.00 17.00 25.00 18.00 60.00 30.00 55.00 65.00 10.00 40.00 17.00 25.00 25.00 23.00 23.00 18.00 15.00 25.00 25.00
F07 B F10 F10.0 F10.1 F10.2 F10.3B
Stock Window Stickers – Blue___; White___; Green___; Red___; Red Blank___: Yellow__ Rigidene Key Tags – (Bag 125) White or Yellow Rigidene Key Tags – (Box 500) White or Yellow Top Stripe Key Tags – (Box 250) Black, Green, Orange, Red Blue, or Pink Protek Key Tags (Box 250) Blue, Red, White, Green, Orange, Tan, Gray, or Yellow EIT (Service Department) Key Tags (Pack of 1,000)
11.00 11.00 40.00 20.00 23.00 23.00
F14 F14.1
Plastic Folders for FTC AS IS (Pack of 25) Plastic Folder Kits for FTC AS IS (Box of 100)
21.00 58.00
S15 S15.1 S15.2
Dealer Tag Magnets (per each) Pan Head Tag Screws (Box of 100) Hex Head Tag Screws ( Box of 100) (Continued next page)
7.00 10.00 10.00
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No.
Total $
All Items in packs of 100 unless otherwise noted Dealer Warranty Disclaimer Odometer Disclosure Statements (3 part) 30 Day Notice (Title Receipt – (1 part perforated)) Buyers Guides – FTC AS IS (2part) Buyers Guides – FTC AS IS 4 seal (2 part) Buyers Guides – FTC AS IS Spanish (2 part) Vehicle Inventory Record (bound book per each) Retail Purchase Agreement (3 part) Wholesale Buyers Order (50) Vehicle Inspection Form (2 part) Privacy Notice – Special Order Required – email mike.morgan@buyadr.com
10.00 11.00 7.00 15.00 50.00 18.00 14.00 25.00 13.00 17.00
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Item # S15.3 S15.4 S15.5 S15.7 S16
Item Description Hex Head Tag Screws (Metric – Box of 100) Nylon Tag Screw Inserts (Box of 100) Tag Thumb Screws (Box of 50) Rubber Tag Holder with Magnet (per each) Rubber Dealer Tag Holder (per each)
S17 S17.1 S17.2 S17.6
Uni Posca Marker (Small – each) White__,Yellow__ Uni Posca Marker (Medium – each) Green__, Orange__, Red__, Pink__, or Yellow___ Uni Posca Marker (Jumbo - each) Pink___, Red___, White___, or Yellow___ Uni Posca Marker ( Wide – each) Wht.___; Yel.___; Red___; Or.___; Gr.___; Pink___
S17.4 S18 S18.1 S18.2 S18.3 S18.4
Solid Marker Paint Stick – Solid Paint (each) Red___ Yellow___ White___ Blue___ Pink__ Key Board – 32 peg (per each) Key Board – 55 peg (per each) Key Board – 105 peg (per each) Key Board – 38 peg (per each) Key Board – 75 peg (per each)
S20 S21 S21.1 S21.2 S21.4 S21.5 S21.6 S21.7
Floor Mats – Plastic/paper (Box of 500) Rear View Mirror Signs – Various imprints (Packs of 50) Windshield Signs – Various model years (Packs of 12) Windshield Message Signs – Various 3 ½ X14” (Packs of 12) Windshield Number Signs – 7 ½” (Packs of 12) Windshield Number Signs – 9 ½” (Packs of 12) Windshield “Bubble” Number Signs – 3”X4” (Packs of 12) Arched Slogan Signs (Mates with year signs) (Packs of 12) (list desired imprints here) TM
A 100 A 101 A 102 A 116 A 119 A 120 A 121 A 123 A 123 S A 123 F A 124 A 125 A 126 A 130 A 140 A 141 A 144 A 145 A 214 B 50.1 B 50.2 B 52 B 54 B 55 B 53
$ Price 10.00 7.00 10.00 16.00 12.00
No.
$Total
4.00 5.00 7.00 9.50 4.00 45.00 65.00 105.00 50.00 88.00 69.00 14.00 6.95 3.50 3.50 3.50 2.00 4.50
TM
FEX (formely DOX – DealerCap ) Forms (Dealership protection): Customer Proposal Trade-in Vehicle Appraisal Test Drive Agreement Used Vehicle Limited Warranty Authorization to Release Payoff Information Notice to Co-Signer Insurance Coverage Acknowledgement Delivery Confirmation and Acknowledgement (also covers “We Owe” Items) Delivery Confirmation (Spanish) Delivery Confirmation (for sales in language other than English or Spanish) Customer Delivery Checklist Acknowledgement of AS IS Sale Good Will Repair Acknowledgement Retail Purchase Agreement Interpreter’s Acknowledgement of Confirmation Service Loaner Agreement Agreement to Arbitrate Retail Lease Agreement Carbonless Receipt Books (meets federal requirements) (200 numbered receipts)
23.00 23.00 23.00 23.00 23.00 23.00 23.00 23.00 23.00 23.00 23.00 23.00 23.00 32.00 23.00 23.00 23.00 32.00 24.00
NADA Used Car Guide (Annual Subscription $98.00) (per each) NADA Older Car Guide (Annual Subscription $75.00) (per each) Black Book Weekly Guide (Annual Sub. $186.00) (per each) Black Book Truck & Van (Annual Sub. $155.00) (per each) Black Book Old Car Monthly Guide (Annual Sub. $116.00) (per each) Black Book CPI Collectible Vehicle Value Guide (Annual Sub. $90.00) (per each) Weatherproof Temporary Tags – To help you to comply with the new law on Temporary Tags, OIADA now supplies weatherproof tags that comply with the UMV&PC Rules. See temporary tag order form elsewhere in this document
10.00 28.00 10.00 10.00 14.00 10.00
OTHER Notes: Member Discount is 10% Order on line at www.buyadr.com Shipping is by UPS Ground - Place your order by 2:00 pm and it will be shipped that day to arrive at your door the next business day. Make checks payable to OIADA. Payment due upon receipt - Net 10 days - 2% per month late payment OIADA managed by ADR of Oklahoma CASH
CHARGE
Check #_________
Visit our Web Page: www.buyadr.com
Shipping & Handling Chart Order Value Amount $ 1.00 $ 30.00 $10.00 $ 30.01 $ 50.00 $11.00 $ 50.01 $100.00 $13.00 $100.01 $130.00 $15.00 $130.01 $150.00 $16.00 $150.01 $200.00 $17.00
ORDER TOTAL MBR DISCOUNT 10%
SUB-TOTAL SALES TAX SHIPPING C.O.D. CHARGE Add $6.00 for residential addr. TOTAL DUE OIADA 29
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TRUECAR CHANGES BILLING STRUCTURE IN VIRGINIA Amid the debate swirling within the auto industry about the company’s practices in the digital space, TrueCar announced it has changed its billing model in Virginia to be subscriptionbased instead of performance-based, and changes in more states could follow. TrueCar said it adjusted the billing model — which had charged participating dealers a $299 fee for each new car sold using TrueCar — in Virginia to make sure it was following proper regulatory protocol in the state. Dealers in the state have been notified of this change. The company said it worked with Virginia regulators and called the adjustment “a meaningful step towards seamlessly providing greater transparency and quality service to car buyers and dealers alike while also working within existing regulatory requirements.” TrueCar said it has been talking with other states’ regulators about the billing model as well, and plans to continuing doing so. The company noted it will bring about, if necessary, other business practice changes – mostly dealing with dealer pricing and advertising – “on a state-by-state basis.” “TrueCar is committed to never putting our dealer partners at risk, which means we will always work closely with regulators to identify a workable solution or either suspend service,” company founder and chief executive officer Scott Painter said. “We also want consumers and dealer partners to know that it’s business as usual in Virginia and price guarantees will be honored at TrueCar dealerships.”
ComplianceOverdrive
MANY SHERIFFS CREATE REGULATORY UNCERTAINTY
R
emember when the Dodd-Frank bill was being debated in Congress and we all hoped motor vehicle dealers would be exempt from the oversight of the new sheriff – the Consumer Financial Protection Bureau (CFPB)? Be careful what you wish for. You just might get it. As you know, a “dealer exclusion” was included in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Ironically, the dealer exclusion might only increase industry regulatory oversight and add compliance uncertainty. Under Section 1029 of the Dodd-Frank Act, the CFPB may not exercise regulatory supervision or enforcement authority over “a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.” An exception to the exclusion is that the CFPB does have authority over businesses that provide “the extension of retail credit or leases involving motor vehicles,” retail credit or retail leases “directly to consumers” and a contract covering the retail sale or lease that is “not routinely assigned to an unaffiliated third-party finance or leasing source.” The exclusion and exceptions can be a bit confusing, but the net result is that the CFPB has regulatory authority over Buy Here-Pay Here dealers. And even dealers who do not consider themselves to be Buy Here-Pay Here might be regulated by the CFPB if they are assigning contracts to an affiliated third-party finance or leasing source, or if they are not “routinely” assigning contracts to an unaffiliated third party. If you assign some contracts and hold others, there might be some uncertainty about whether you are regulated by the CFPB. The CFPB authority leaves us with a framework in which some auto dealers are regulated by the CFPB and the rest are regulated by the Federal Trade Commission (FTC). That means that in spite of the “dealer exclusion,” we have two sheriffs in town. The two federal regulators have promised to work together, but the regulatory framework itself could create obstacles. For example, the CFPB now has rulemaking authority for a number of consumer financial protection laws formerly granted to several federal agencies, including the Truth in Lending Regulation Z and Consumer Leasing Regulation M. In republishing these regulations, the CFPB made it clear that they applied “except with respect to persons excluded from the bureau’s rulemaking authority by section 1029 of the Dodd-Frank Act.“ That is a clear reminder that CFPB enforcement authority of Regulations Z and M are technically separate from the enforcement authority of the FTC. Dodd-Frank also authorized states to enforce certain federal consumer protection laws. The concern is that might result in local differences in interpretation and enforcement of federal requirements. So essentially, there are now three sheriffs in town. Over time, rules, regulations and interpretations will be published providing clarification on the scope and limits of authority assigned to those three. But for now, we need to deal with the regulatory uncertainty as best we can. It is helpful to keep in mind that the various regulating authorities are trying to protect consumers from unfair and unscrupulous consumer credit transactions. The best practices for these times apply in all situations – be clear, be transparent and be honest in your sales and financing transactions. That should help you satisfy the spirit and intentions of all but the most technical standards of any regulator.
BY CHIP ZYVOLOSKI Chip Zyvoloski is a senior attorney for indirect lending at Wolters Kluwer Financial Services. For more information, visit www.wolterskluwerfs.com/indirect.
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