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MAY 2013 REPRESENTING ALL AUTO, TRUCK, TR AILER, RV

DEALER

A ND POW ER SPOR T DE A L ERS OF OR EGON

NEWS

OFFICIAL PUBLICATION OF THE OR EGON INDE PE NDE NT AUTOMOBILE DE ALE R S A S S O CIATION

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F E AT U R E S T O R Y

THE AFFORDABLE CARE ACT ROADMAP:

W H AT T O E X P E C T F O R Y O U R S M A L L B U S I N E S S

INSIDE u • PRESENTING YOUR PORTFOLIO • WHY CUSTOMERS LEAVE YOUR WEBSITE • COMPLIANCE OVERDRIVE

DALLAS, TEXAS Permit No. 2079

PAID

PRSRT Standard U.S. Postage

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CARFAX Mobile App Reaches 200,000 Downloads

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MAGAZINE CONTENTS 04 08 12 14 18 22

ACA Roadmap Presenting Your Portfolio Washington Update Expand Your Horizons Why Customer Leave Your Website Compliance Overdrive

THE CARFAX FOR DEALERS MOBILE APP HAS EXCEEDED 200,000 downloads by Android and iPhone users, the company announced in Feburary. Launched a year earlier, the app gives dealers mobile access to CARFAX information with a few screen taps. Dealers can scan a barcode or enter a 17-digit vehicle identification number to help quickly evaluate cars at acquisition and find ones their customers want. “When we’re buying vehicles at auction or taking trades on the lot, we always make sure to run them through the CARFAX mobile app,” said Patrick Sullivan, sales manager at Elite Auto Sales in Raleigh, N.C. “It helps us know what we’re getting and make sure there are no surprises when we retail those vehicles.” Access to CARFAX reports is a part of many dealers’ acquisition and retail process. Vehicles run through the CARFAX for Dealers app are automatically added to the dealer’s inventory manager at carfaxonline.com. CARFAX reports are saved for up to 30 days, and dealers can mark vehicles they’re most interested in as favorites within the app. “I love being able to check CARFAX right on my phone when we’re out buying cars,” said William Wessels, dealer principal at Wessels Used Cars in Dillsburg, Pa. “It’s a helpful instrument when we’re appraising cars, too. It helps us make faster, better decisions when we’re buying product.” The CARFAX for Dealers app is a free download from the App Store and Google Play.

WHAT’S NEW

Manheim recently released its 18th annual Used Car Market Report, which highlights 2012 industry trends and an outlook for 2013. A free download of the report is available for all NIADA Dealer Members at www.niada.com/dealers_edge.php

ADVERTISERS INDEX

Ally....................................................... 13 AutoManager, Inc.................................. 11 Brasher’s Northwest Auto Auction.Inside Back Cover Brasher’s Portland Auto Auction.... Back Cover Chase....................................................16 DAA Northwest ............. Inside Front Cover Dealix....................................................15 Hecht & Hecht Insurance Agency............17 Manheim.com..........................................9 Protective................................................7 United Acceptance.................................19 VAuto.......................................................5

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM.

OIADA Dealer News is published 8 times per year by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 817-640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 6006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of OIADA Insider or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA , does not constitute an endorsement of the products or services featured. CopyrighT © 2013 BY NIADA SERVICES, INC. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jennifer Carman • jenniferc@niada.com Andy Friedlander • andy@niada.com ART DIRECTOR Christy Haynes • christy@niada.com PRINTING Nieman Printing

EXECUTIVE COMMITTEE

STAFF

Dan Nicholson, CMD President Central Oregon Motors 1123 N 6th Street Redmond, OR 97756 541-923-3961 Fax 541-923-3964 com@bendbroadband.com

Diane Sparks Executive Director 503-362-6839 dsparks@oiada.com

Pauline Sill Office Manager 503-362-6839 psill@oiada.com

Bryan Steward Executive Vice President AAA Oregon AutoSource 6 SW Centerpointe Dr. #100 Lake Oswego, OR 97035 503-973-6570 | Cell 503-709-3835 bsteward@aaaautosource.com

Carol Effring Dealer Forms Sales Eugene

Tommy Wilson 2nd Vice President Tommy Wilson Motor Company LLC 9215 SW Canyon Rd Portland, OR 97225 503-629-6000 Tom@tommywilsonmotorco.com

Lakyn Jacoby Dealer Forms Sales Portland Metro Area

Eric Freeman, CMD Secretary 7524 SW Macadam Ave Portland, OR 97219 503-310-5555 | Cell 503-320-1596 Eric@freemanmotor.com Gary Sargent Chairman of the Board Sargent’s Motorsports 10207 SE Foster Road Portland, OR 97266 503-775-9445 | Cell 503-969-5228 sargiii@sargentsmotorsports.com

OIADA OFFICE

Oregon Independent Auto Dealers Association, 1475 Capitol St. NE Salem, OR 97301 800-447-0302 3

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F E AT U R E S T O R Y

THE AFFORDABLE CARE ACT ROADMAP:

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A S W I T H A N Y M A J O R C H A N G E I N P O L I C Y, T H E P R O S P E C T O F W H AT T H E A C A E N TA I L S C A N B E O V E R W H E L M I N G F O R S M A L L B U S I N E S S OWNERS WITH LIMITED RESOURCES.

The Patient Protection and Affordable Care Act (ACA), dubbed “Obamacare” by many, was signed into law on March 23, 2010, with the intent to reform the health care industry and provide affordable health coverage for more than 40 million uninsured Americans. Under the ACA, every legal resident of the United States who is not already covered by Medicare or an employerprovided health care plan will be eligible to purchase coverage through an online health insurance exchange. Today, smaller businesses are much less likely to offer health coverage to their employees than larger companies. In 2011, according to the Kaiser Family Foundation, 57 percent of small businesses with 50 or fewer workers offered health benefits to employees, compared to 92 percent of businesses with 51 to 100 workers, and 97 percent of businesses with 101 or more workers. Because of that, some provisions of the ACA will have a larger effect on small businesses, and their employees and families. Expectations of the impact on small businesses are mixed. Some anticipate employees’ hours being cut, costs being passed on to consumers or shareholders, a reduction in hiring and more out-of-pocket costs for larger businesses. Others see benefits for small businesses and their employees. For example, the ACA rewards employees at small companies by subsidizing their purchase of health insurance. According to Casey B. Mulligan, economics professor at the University of Chicago, since those employees can’t take the subsidies with them if they move to a large company, they are “in effect, subsidies to the small businesses themselves, helping them compete more cheaply in the market for employees.” Some provisions of the ACA are already in effect. Others will begin in 2014 and beyond. As with any major change in policy, the prospect of what the ACA entails can be overwhelming for small business owners

with limited resources. So what does the ACA mean for your business? PLANNING YOUR ROUTE: DETERMINE THE SIZE OF YOUR ORGANIZATION The ACA specifically exempts small businesses with fewer than 50 fulltime equivalent (FTE) employees. By some estimates, that means more than 90 percent of businesses will be not be subject to the Employer Shared Responsibility provisions of the ACA. Before you can begin to assess the impact on your business you must determine the size of your organization. Sounds simple, right? Well, not entirely. The ACA defines a full-time employee as an individual working at least 30 hours per week on average. However, for the purposes of calculating your organization’s size, you can’t simply count the number of full-time employees – part-time employees are also factored into the equation. In essence, you have to add up the hours of part-time employees. So, for example, 100 half-time employees equates to 50 FTEs. Similarly, 40 full-time and 20 half-time employees would also be considered equivalent to 50 FTEs. If you own more than one company, in most cases, that will also be taken into account. It’s a bit like an umbrella: If an entrepreneur owns five businesses and each business has 10 FTEs, together they are considered a large business with 50 FTEs, and all five businesses are subject to the Employer Shared Responsibility provisions – even though individually they would be exempt. Obviously, determining FTE counts will be more complex for some businesses than for others. Any businesses that fall close to the 50-employee threshold would be best served by working closely with their accountants to ensure counts are accurate rather than risk penalties for inadvertently being over the threshold. While the Employer Shared Responsibility provisions do not take effect until 2014, the provisions will be applied based on employee counts from 2013, so it’s important for businesses to start planning now.

OUTSIDE YOUR FRONT DOOR: WHAT’S ALREADY IN PLACE FOR 2013 Several provisions of the ACA are already in place, or will become effective in 2013. Those of most importance to small businesses include: Grandfathered group plans: Small businesses with insurance plans that were in place prior to March 23, 2010 may keep their current plan. According to the Kaiser Family Foundation, approximately 72 percent of businesses with 100 or fewer workers had at least one plan grandfathered under the ACA in 2011. Those plans are subject to fewer requirements when it comes to coverage levels and access. Under the grandfather provision, companies are even able to change insurance carriers, provided employee costs and benefits remain mostly the same. Grants for wellness programs: Certain small businesses that did not have a workplace wellness program in effect as of March 2010 are eligible for grants to start one. Additional Medicare tax: The additional medicare tax is a 0.9 percent tax increase that applies to an individual’s wages, Railroad Retirement Tax Act compensation and self-employment income above a threshold amount based on the individual’s filing status. Small businesses making less than $250,000 in taxable profit are exempt from the tax increase. Small Business Health Care Tax Credit, phase one: The Small Business Health Care Tax Credit helps certain small businesses and small tax-exempt organizations – particularly those with lowto moderate-income employees – afford the cost of covering their employees. From 2010 through 2013, if your company has fewer than 25 FTEs with average annual wages of less than $50,000 and you purchase health insurance for your employees, you might be eligible to receive a credit of up to 35 percent of your contribution toward employee health insurance premiums. Note: In March 2013, as a result of sequestration provisions, the refundable C O N T I N U E D O N PA G E 6

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FEATURE STORY

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2014

portion of the Small Business Health Care Tax Credit for certain organizations was decreased by 8.7 percent pending the end of the fiscal year or intervening Congressional action. Flexible spending account (FSA) limits: While most small businesses don’t provide FSAs for their employees, those that do should note the new employee contribution cap of $2,500, effective in 2013. W-2 reporting: The ACA requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2. Many employers are eligible for transition relief for tax year 2012 and beyond, until the IRS issues final guidance for that reporting requirement. The amount reported does not affect tax liability, as the value of the employer-excludible contribution to health coverage continues to be excludible from an employee’s income and is not taxable. The reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers.

Businesses with less than 50 FTEs are exempt from the Employer Shared Responsibility provisions of the ACA. If you have more than 50 FTEs, here’s a quick checklist for 2014. •Keep track of full-time and full-time equivalent employee counts. •Offer health coverage to at least 95 percent of full-time employees no later than 90 days after start of employment. •Ensure employee health coverage meets affordability standards. For employee-only coverage, premiums that are no more than 9.5 percent of total wages as stated on the employee’s W-2. •Ensure employee health coverage meets the minimum coverage threshold. It must cover at least 60 percent of an employee’s medical costs; the balance can be made up of deductibles, co-pays, etc. •Provide verification of health coverage.

AROUND THE CORNER: WHAT TO EXPECT IN 2014 Insurance market changes: The health insurance market will undergo several reforms in 2014. • Plans must guarantee availability and renewal of coverage regardless of health status. • Young adults may remain on their parents’ insurance until age 26.

• Premium rating based on health status will be prohibited. • Adults may not be excluded from a plan because of a pre-existing condition. • Plans with a medical loss ratio of less than 80 percent will be required to give rebates to enrollees. Open enrollment for small business health insurance exchanges: Businesses with fewer than 50 FTEs (or 100 FTEs, in select states) will be able to purchase insurance through the Small Business Health Options Program (SHOP) exchange, which is designed to provide an easier way to compare prices and purchase plans. Employers can also purchase insurance outside of the exchange. Employer Shared Responsibility: Employers with more than 50 FTEs will be required to offer health coverage to their full-time employees and are subject to the Employer Shared Responsibility provisions. Those employers will likely be liable for financial penalties if any of their fulltime employees receives a tax credit to help pay for coverage on an exchange because: • The employer doesn’t offer health coverage. • The employer offers health coverage to less than 95 percent of its full-time employees, and as such a full-time employee wasn’t offered coverage. • The health coverage offered by the employer isn’t affordable. • The health coverage offered by the employer isn’t adequate. Remember, if you’re a small business with less than 50 FTEs or an employer who offers adequate and affordable health coverage, you will not be subject to the Employer Shared Responsibility provisions. Small Business Health Care Tax Credit, phase two: Small businesses with fewer than 25 FTEs that purchase insurance through the SHOP exchange can receive a tax credit for up to 50 percent of their contribution toward insurance premiums. Tax-exempt small businesses can receive a credit of 35 percent. THE LONG HAUL: 2015 AND BEYOND Employer Shared Responsibility payments: Employer Shared Responsibility liability for 2014 will begin being assessed in 2015. The IRS will contact employers to inform them of any potential liability and provide them an opportunity to respond before liability is assessed or notice and demand for payment is made. It is important to note that while part-time employees factor into the

determination of employer size, there is no penalty for not offering coverage to part-time employees. So if an employer with 40 full-time and 20 half-time employees fails to provide health coverage and is assessed the Employer Shared Responsibility payment, the amount due would be $2,000 times 10 employees – 40 full-time employees minus the 30-employee exclusion – or $20,000. Additional ACA provisions scheduled for 2015 and beyond include: • E xpanding the parameters of employer-provided health care to include dependents. • Auto-enrollment for companies with more than 200 employees. • Implementation of antidiscrimination provisions, which would prevent employers from offering different packages to employees based on seniority, job title/classification, compensation level or race/gender. • Choice of health plans for small business employees. • Ability for all businesses with 100 or fewer FTEs to purchase insurance through the SHOP exchange (effective in 2016). • Ability for businesses with more than 100 FTEs to purchase insurance through the SHOP exchange (effective in 2017). LOST? WHEN IN DOUBT, ASK FOR DIRECTIONS The ACA represents a major change in the way many businesses operate, and there are more than a few gray areas, so small businesses might find themselves with more questions than answers. Your best bet is to maintain a healthy relationship with your advisors: bankers, accountants, lawyers and association executives and partners. They’ll help keep you in the loop on any major changes that take effect and help you adjust your course as needed to ensure you don’t encounter any hazards along the way. Auctions and dealers looking for additional information regarding the ACA can view an online presentation developed by NAAA and the National Federation for Independent Business. Visit http://www. naaa.com/pages/naaa_events/events.html for more. Through December, National Independent Automobile Dealers Association (NIADA) members can also purchase a health insurance plan and lock in the plan and rate until the end of 2014. By locking in your plan today, you could save thousands in 2014. Visit NIADAHealthPlans.com or call 888308-9340 for additional information. Not a member? Visit www.niada.com today!

BY NIADA STAFF FROM INFORMATION PROVIDED BY NAAA

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INDUSTRY NEWS

Presenting Your Portfolio for the Most Floorplanning Dollars H AV I N G A F L O O R P L A N L I N E O F C R E D I T C A N H E L P YO U S E I Z E O P P O R T U N I T I E S A S T H E Y A R I S E .

The automotive industry is unique in that it is one of the few in which commercial loans are abundant and relatively easy to qualify for. Whether you are just starting out or looking to shift your business into the next gear, it is extremely likely you will be able to find the capital you need to stock your dealership. But while there is a good chance you will be able to acquire a floorplan line of credit, the size of that line of credit will vary depending on your business needs and your overall portfolio snapshot.

Floorplan 101: The Basics

First and foremost, to qualify for a floorplan, you need to have established credit. Specifically, you should have a history of using and repaying debt. Bad credit and “hiccups” on your credit report aren’t always deal-breakers, but they will likely reduce the amount you qualify for. Additionally, there is a good chance credit issues will have a negative impact on your pricing structure. The good news is that over time, with good performance coupled with adherence to the terms and conditions of any loan agreement, you can overcome those setbacks. It is also important that you are not overextended. If your credit cards are maxed out, that is a red flag even if you have not paid late. Handling your available credit responsibly is essential, so be sure to maintain a substantial amount of available credit.

Getting Started

Thinking about opening a dealership? You will want to set up a free consultation with the floorplan company of your choosing right away. Even if you are well capitalized out of the gate, having a floorplan line of credit is an amazing asset that can help you seize opportunities as they arise. If you aren’t well capitalized, you will probably be looking at starting with a smaller initial line of credit to get your business off the ground. As you turn inventory and build your reserves, submit a formal request for a credit line increase.

Growing Your Business

If you are looking to grow your business through the addition of a

floorplan line of credit, there are several other items that will play into the lending decision beyond your personal credit history. Trade references, business credit, equity, cash and the overall health of your business all come into the picture and become increasingly important in your effort to acquire more floorplanning dollars. The same principles apply if you are looking to increase your existing floorplan credit limit. However, there is another component that could either work in your favor or be held against you: performance. Commercial lenders have learned a lot about managing and mitigating risk, especially over the past several years. It is crucial to closely adhere to your lender’s terms and conditions. NSFs, late curtailments, slow payoffs and bad audits will inevitably prevent you from gaining the additional buying power you need to grow your business. Stay on top of managing your accounts and you will improve your chances of increasing credit limits. Also, those with substantial business equity should flaunt it. To a floorplan company, inventory that is owned outright is viewed similarly to cash and is a good indicator of the viability of your operation. Business equity exhibits an enhanced capacity to repay debt. When applying for a floorplan, take the time to validate your equity position. Your floorplan company might ask to see the titles and bills of sale for everything you currently own. Go with it. They might even ask to physically inspect your owned inventory. That will all play into your favor, as finance companies prefer lending to people that already have money. The more equity you have, the lower the perceived risk.

Heavy Hitters

When seeking a floorplan line of credit in excess of $250,000, both business and personal financials will typically need to be presented in addition to your standard business documents. Those financials typically include: • Personal financial statement (required for each owner/signer). • Personal tax return (two years, required for each owner/signer). • Business tax return (two years). • Business bank statements (three months).

• Income statement (current and prior year end). • Balance sheet (current and prior year end). As you can imagine, the larger the credit line request, the greater scrutiny you and your business will be given. Though you are welcome to provide a stack of photocopies, the best way to present your financials would be to scan them and send the digital files via email or USB thumb drive. Make sure everything is clearly labeled, and when applicable, provide more detail as opposed to less. Anything out of the ordinary should be accompanied by a letter of explanation. In addition to the basic requirements, or if you are requesting a large line of credit (more than $250,000) to stock a start-up dealership, you should be prepared to provide: • A resume for each owner/signer. • Photos of the dealership. • A business plan. • Pro forma financial statements.

Presenting Bank Statements

If you have had any NSFs, they will need to be explained in detail. Also, you want to make sure your business checking exhibits positive cash flow, meaning, in general, you have more money coming in than you have going out. Take note of your average daily balance to see if that figure is strong enough to support the line of credit you are requesting. In an ideal world, you would have at least 20 to 30 percent of your floorplan line of credit in your business checking account at all times. If you fall short of that mark, business equity via owned inventory can help bridge the gap.

Personal Financial Statement

When it comes to your personal financial statement, ideally you should have some liquid assets. Cash, 401Ks, IRAs, CDs and bonds are all desirable elements to have in your portfolio because they are accessible or you may be able to borrow against them if you need to. That is ideal because it demonstrates you have reserves in place to weather the storm should you encounter a few bad months or an unforeseen industry shift. A word of caution: Some dealer principals place an inordinate value on the shares of their dealership in their C O N T I N U E D O N PA G E 1 0

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C O N T I N U E D F R O M PA G E 8

personal financial statement. Though that might beef up your net worth, a floorplan lender probably will not take that into consideration. The real value of your business is predicated on what a buyer is willing to pay for it. Hence, the stated value on your personal financial statement is merely hypothetical. And bear in mind that if your dealership were to go into default, your shares probably wouldn’t be worth much at that point. Another item to keep in mind is that if all of your assets are in the form of equities against mortgaged real estate, you might encounter difficulties with potential lenders.

If your business isn’t building and growing, you probably shouldn’t be seeking more floorplan dollars. More flooring won’t turn around a failing business model. You would just be adding more fuel to the fire. Instead, focus on perfecting your operation.

Banks have become skeptical of real estate equities given the recent real estate crisis. High-dollar homes and commercial properties are slow to move and hard to appraise. Don’t exaggerate your real estate equity on your financial statements. Be realistic. Conversely, if your property is actually worth $500,000 and you only owe $100,000 on your mortgage, that would be an entirely different story. Having minimally leveraged or free and clear real assets should comfort a lender to some extent.

Income Statements

The income statement can be quite revealing, and often is used to help determine what the true business need is when it comes to setting a floorplan credit limit. For instance, if a dealer requested a $500,000 line of credit but only turned $500,000 in gross sales last year, that request would surely be denied unless there were some major material changes in the operation that justified the increase. Additionally, the statement shines a spotlight on the overall sophistication of the operation. If you are generating additional revenues from F&I products and repairs, for instance, that will all be

itemized on the statement.

Balance Sheet

Simply put, the less you owe and the more you own, the lower the credit risk. Again, banks like to lend when the probability of repayment is the highest. Having too few assets and too much debt can become a downward spiral towards insolvency. That ties into the overall viability of your operation. A thriving business should be building equity while reducing debt. A thriving dealer principal should be building net worth, not acquiring debt to keep his business above water. If your business isn’t building and growing, you probably shouldn’t be seeking more floorplan dollars. More flooring won’t turn around a failing business model. You would just be adding more fuel to the fire. Instead, focus on perfecting your operation. However, if your business is building equity and turning a profit, having some additional buying power can surely help you shift into the next gear.

BY GARRETT JOREWICZ

REGIONAL DIRECTOR FOR NEXTGEAR CAPITAL.

Letter from the President T H R O U G H T H E P O W E R O F A S S O C I AT I O N , M E M B E R S E N J OY M U C H O F T H E S A M E B U Y I N G POWER AND BENEFITS AS LARGE BUSINESSES.

Well, we’ve made it through another winter and are gearing up for spring and summer. Many of us have had a few speed bumps over the past few months; with fewer quality vehicles and higher prices out there, it’s not that easy. To get ahead – or sometimes just to say above water – we have to be smarter and more efficient in all aspects of our business. I’m reminded of a subject taught by Joe Lescota in NIADA’s Certified Master Deal® course, which I highly recommend. (Look for details soon regarding a CMD course in Oregon in October 2013). In the course, Joe asks the question, “What does it cost you to sell a car?” If you don’t know the answer, I strongly suggest you figure it out. To do so, determine your total monthly expenses, minus your car cost and reconditioning, and divide that by the number of cars you have sold. So, if your monthly expenses are $20,000 and you sell 20 cars per month, it costs you $1,000 to sell a car. But if your sales

drop to only 15 cars per month, it costs you $1,333 to sell a car. Conversely, the more cars you sell per month, the lower your cost to sell each car. As car people we sometimes focus so much on gross profit we forget to keep an eye on the cost per car. In doing so, we can easily fool ourselves into thinking we’re making more than we actually are. If you’re not able to buy and sell more cars at this point in your business, the only way to make more money is to reduce your cost per car. Now, you’re probably thinking, “I’ve reduced my expenses as much as I can.” If you’re like me, you’re most likely doing the jobs of two or three people, and working much more than you used to. But remember the old saying, “work smarter, not harder.” Don’t misunderstand me – you’re still going to have to work hard. But there are ways you can be smarter about reducing costs. This brings me to the value of the association. As a member of the OIADA,

you’re also a member of the NIADA. Through the power of association, members enjoy much of the same buying power and benefits as large businesses. For example, last year I was able to get a FedEx account through NIADA with a rate that was more than 35 percent less than I had been paying on my own. I saved more than $500 last year just in shipping charges. Remember: there is strength in numbers. That’s why it’s so important to belong to the OIADA – the largest and oldest independent automobile dealer association in the state. To our dealer members, we thank you. To dealers who are not yet members, we encourage you to join – it truly pays to belong. Thanks for lending me your ear. Until next month, good selling! Dan Nicholson President, OIADA

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WASHINGTON UPDATE

NIADA Government Report THE PUBLIC CAN SEE THE SPECIFIC DETAILS ABOUT WHAT CONSUMERS COMPLAINED ABOUT AND WHY, AS WELL AS HOW THE COMPANY RESPONDED

Here’s a rundown of some of the latest governmental issues and activity affecting the used car industry from NIADA regulatory counsel Shaun Petersen and NIADA lobbyist Sante Esposito.

REGULATORY REPORT Consumer Financial Protection Bureau

Indirect lending guidance: The CFPB released a guidance document to lenders engaged in indirect auto lending, or dealerassisted financing. The document provides guidance about compliance with the Equal Credit Opportunity Act (ECOA) to lenders that engage in dealer-assisted financing, in which the dealer can adjust the interest rate at which the lender buys the contract. The CFPB believes because the dealer is compensated in the form of a dealer reserve, the markup and compensation policies create significant risk that pricing disparities based on race, national origin or other factors that violate the ECOA will result. The guidance document does not contend lenders or dealers intentionally discriminate against individuals on grounds that would violate the ECOA. Rather, the CFPB believes the current scope of dealerassisted financing could create a “disparate impact” statistically between different groups in a lender’s portfolio. In other words, when examining the entirety of a lender’s portfolio and looking at interest rates given to one race as opposed to another, the statistics could show a particular race received more favorable rates than another. If that is true, the CFPB opines, that would violate the ECOA. To prevent disparate impact, the CFPB tells indirect lenders to: • Impose controls on dealer markup and compensation policies and monitor the effects of the policies and controls to address unexplained pricing disparities on prohibited bases. • Eliminate the dealer’s discretion to mark up the rate and compensate dealers in a different manner, such as a flat fee. • Develop a robust fair lending compliance management program. The guidance document can be found at www.consumerfinance.gov. Consumer complaint database: The CFPB’s consumer complaint database went live March 28. There are roughly 90,000 complaints related to mortgages, student loans, bank accounts and services, other consumer loans and credit cards.

The public can see the specific details about what consumers complained about and why, as well as how the company responded – the timeliness of the response, what was done and whether the consumer disputed the company’s response. Complaints are not included in the database until the company responds or has had the complaint for at least 15 days, whichever comes first. The CFPB will not verify allegations in complaints before including them in the database, but will substantiate that a commercial relationship between a consumer and company exists before a complaint is added. More categories will be added to database as the CFPB accepts complaints about other financial products or services, such as credit reporting. The database is available at www. consumerfinance.gov/complaintdatabase.

FEDERAL TRADE COMMISSION

Used Car Rule: The extended comment period on the FTC’s proposed changes to the Used Car Rule ended March 13. NIADA submitted comments expressing our overall acceptance of the proposed changes with some minor suggestions. The comments also provided background on vehicle sales over the Internet and NIADA’s position that because there is no evidence of a prevalence of fraud in Internet sales, the FTC should decline to specifically regulate that area. Text messaging: In March, the FTC announced a crackdown on a series of scams built on text messages. Dealers must remember the same rules of advertising apply to text messages as other media. Likewise, marketing through text messages will subject dealers to additional federal and state telemarketing laws and regulations. Mobile payments: An FTC staff report highlighted the issues facing consumers and companies in the use of mobile payment systems, which is growing significantly. In using the technology, the FTC recommends companies: • Develop clear policies on how consumers can resolve disputes arising from a fraudulent mobile payment or unauthorized charge. • Adopt industry-wide measures to protect sensitive financial information. • Incorporate strong privacy practices, consumer choice and transparency into mobile payment products from the outset of the transaction. The report can be found at www.ftc.gov/

os/2013/03/130306mobilereport.pdf.

NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION

NHTSA settled with a Honda power sport dealer in Tennessee over alleged violations stemming from a 2012 investigation. NHTSA alleged the dealership was made aware of recalls but failed to make any repairs prior to selling the vehicles. NHTSA inspected 329 motorcycles sold between 2007 and 2012. While how many vehicles were sold without necessary repairs was not disclosed, the dealer will pay $125,000 in the settlement. The penalty for failing to repair known defects is a maximum of $6,000 per vehicle.

LEGISLATIVE REPORT Rental Cars

The Boxer-Schumer rental cars recall bill has still not been introduced, but that is expected soon. Reportedly, the new bill will be the same one Sen. Chuck Schumer (D-N.Y.) and Sen. Barbara Boxer (D-Calif.) drafted at the end of the last Congress. It will not address concerns raised by various stakeholders, including NIADA. Hearings are expected after introduction. Rep. Lois Capps (D-Calif.) is expected to introduce an identical bill in the House. NIADA, in conjunction with NADA, has prepared an amendment that would exempt small businesses, as defined by Small Business Administration regulations. The net effect would be that the bill – which prohibits the sale or lease of rental vehicles subject to a recall without the defect being cured – would apply only to major rental car companies such as Avis, Hertz and Enterprise. NIADA met with Rosemary Shahin of Consumers for Auto Reliability and Safety, the primary proponent of the Boxer-Schumer bill. We posed a number of questions for which she had no answers, including: • What would be the cost to independent dealers (unknown but potentially burdensome)? • What is the magnitude of the safety incidents caused by the failure to fix recall defects (other than the California incident that sparked the bill, none have been documented)? • What is the impact of the bill on small businesses (unfair to put them in the same category as entities whose primary business is leasing or selling rental cars)? • What is the political support for such a requirement?

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INDUSTRY NEWS

Expanding Your Horizons I N T E R N E T P L AT F O R M S C A N T U R N YO U R L O C A L D E A L E R S H I P I N T O A N AT I O N W I D E – A N D W O R L D W I D E – S A L E S P R E S E N C E

Stop avoiding the Internet, experts say. Any dealer not currently expanding online should be worried he’s missing out on potential customers who could have been visiting the dealership from their smartphones in a coffee shop, at work or at home in their pajamas. “The blow-up monkeys on the car lot are not driving in customers,” said Clayton Stanfield, manager of dealer training for eBay Motors. Instead, Stanfield challenges his dealer customers to answer a few questions. How is your website? How is your Internet presence? How do you build a complete sales process with online customers? How do you get them to fill out a credit application online? An estimated 80 percent of customers start their car research online. That percentage increases to 90 percent for the millennial generation, the youngest of eligible car buyers, Stanfield said. “These customers aren’t going to spend two months on their iPhone researching vehicles and your business, and then spend a couple of hours in a finance office haggling over a deal,” Stanfield said. “When they come into the dealership it’s really just for the delivery of the vehicle. They want to feel confident they’ve got the right credit for the car they want.” Developing a stronger online presence is not as difficult as it might seem, Stanfield said. Any dealer still in business likely already has a strong customer service record. He’s accustomed to delivering a Mercedes S-class every two years to the home of a loyal elderly customer or to giving certain customers a phone call when his inventory changes. Adding the online component just requires transporting those traditional shopping conveniences to the Internet, Stanfield said. Another insight he shares about online shoppers is they typically are faithful to their brands. Someone who loves Honda Accords knows what they drive like at 30,000 miles and 50,000 miles. No test drive is needed. They’re now online simply looking for the right price and color. Stanfield teaches two classes a week to help dealers get the most use out of eBay’s platform. Each year, the eBay Motors website is used by an average of 50,000 licensed dealers, who were largely responsible for the site’s $1.7 billion vehicle volume during last year’s fourth quarter. During that same quarter, 76 percent

of the vehicles sold were interstate transactions, according to eBay’s records.

Dealer Experiences

Frank Fuzy, owner of Century Motors in Pompano Beach, Fla., and one of eBay’s prized success stories, is quite familiar with interstate – and intercontinental – transactions. He started selling cars online 12 years ago with his father-in-law and the help of a vendor. They put five cars up online and sold all five in the first week. Fuzy still remembers his first sale. “It was a red Mitsubishi 3000 GT to a customer in Tokyo, Japan,” he said. When Hurricane Wilma, a Category 5 storm, barged through Florida in October 2005, it kept would-be car shoppers trapped in their homes or shelters for weeks. Brick and mortar businesses suffered, especially dealerships. Despite the storm, Fuzy still sold 11 vehicles to online shoppers. There are drawbacks, however. His advice for dealers is to be prepared for hard work. “You really have to be hands-on,” Fuzy said. “It’s a 24/7 business. Actually, I joke that my wife and I work 9 to 9, nine days a week.” At 4 a.m. one morning, while he was heading to the bathroom, the phone rang from his business line. It was a customer from the Netherlands ready to buy a car. EuroCar Inc., a Costa Mesa, Calif., dealership selling imported brands such as Aston Martin, Audi, Bentley, Ferrari and Lamborghini, adopted Internet sales into its marketing plan in 2007 after recognizing the shift in consumer purchasing behavior. EuroCar was once known as a local dealership, but owner Tilo Steurer said the company is now an industry leader, with more than 70 percent of sales – 75 vehicles per month with an average sale price of $150,000 – made to customers across the country or on other continents. Still, there are glitches to consider, Steurer said. “It is entirely possible to have a customer walk into the dealership and proceed to begin negotiations to purchase a specific vehicle, while another customer sees the vehicle on eBay Motors and calls the dealership to begin the same negotiation process with a salesman,” he said. “It can, and does, happen.” Steurer said when such conflicts arise “traditional customer service really becomes key to keeping both parties happy.” A typical online sales process for

EuroCar begins with either a bid on a listed vehicle from an email or a phone call from the customer. At that point, EuroCar’s sales team gives the customer more detailed information about the vehicle that caught his attention. Sometimes additional photos are sent to the customer or he will schedule a live viewing of the vehicle in real time. Afterward, financing and leasing options are discussed. “Most deals do not actually close online, but about 10 percent do,” Steurer said. “Due to the intricacies of high-line vehicles, most customers like to speak one-on-one with the dealership because that type of buyer is typically relationship-driven.”

Online Selling Strategies

AutoTrader.com has an online marketing handbook available free to auto dealers. It discusses how to integrate online listings into the culture of the sales staff. It includes specific techniques the sales staff needs to know to craft strong online classified listings, including tips on how to create quality images and sales copy that entices customers into the showroom. It also outlines how to measure a dealership’s website traffic against its advertising spending to ensure a dealer is getting the most for his investment. “The goal of automotive Internet marketing is not to sell cars online – it’s to get potential customers to see your car, come into your dealership, and ultimately purchase a vehicle,” the handbook’s opening line reads. “To get consumers to move forward through this process, your online presentation must create value in the minds of shoppers. Essentially, you’re telling potential customers why they should choose you.” Creating a good presentation starts with taking great photos of cars. The handbook notes, “Great photos can motivate customers to stop, look and ultimately buy your vehicles. Use multiple photos to give a virtual ‘walk-around’ of the vehicle and help sell the features to potential shoppers. In fact, listings with photos perform significantly better than listings without photos.” AutoTrader’s research has shown having a single photo will more than double a dealer’s click-through rate. Each additional photo will increases click-through rate by approximately 5 percent. Visitors to EuroCar’s website – www.EurocarOC.com – can view up to 70 photos per vehicle, and even request a live showing of any vehicle in the system. C O N T I N U E D O N PA G E 1 6

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“Here’s a tip about your photos: Show a variety of interior and exterior shots and angles within the first nine photos to ensure that shoppers get a virtual walkaround in the photo thumbnails as soon as they arrive,” AutoTrader’s handbook says. Al Amersdorfer, president and CEO of Automotive Internet Technologies, said Internet salespeople need to do a better job of giving pricing information to prospective car buyers. Amersdorfer said dealers often have a hard time understanding why it’s important for their salespeople to put forth extra effort to get accurate pricing information to customers making online inquiries. “Many old-school types still preach selling techniques that are based on ideas that worked before the Internet changed the way people shop for and buy cars,” Amersdorfer said. “Whatever the reason, the fact is that you almost always will get better results if you embrace an Internet sales process that includes giving prices.” Amersdorfer said dealers need to pay attention to customers’ online shopping habits. “We’ve known for a long time that they

contact multiple dealerships, and we know they typically initiate further contact with those dealerships that provide a high level of service and answer their questions,” Amersdorfer said. “Trying to bring an Internet prospect into the dealership without providing sufficient information is like having an answering machine take your sales calls.”

“Trying to bring an Internet prospect into the dealership without providing sufficient information is like having an answering machine take your sales calls.” His company conducted an analysis last year of Internet leads worked by some of his client dealerships, comparing key results broken down into “gave-pricing” and “didn’t-give-pricing” categories. “It turned out that twice as many of the sold prospects, 67 percent, had been given pricing information,” Amersdorfer said. “We weren’t surprised. Internet prospects need to have their questions

answered, and they will look elsewhere if a dealership doesn’t provide the information they want.” Choosing a dealership occurs during the shopping phase, not the buying phase, and shopping involves information gathering, Amersdorfer said. Many Internet prospects contact dealerships long before they are ready to buy, sometimes months before, he said. Internet prospects typically are in one of three categories: Those who are going to buy in the next five days, in the next 20 days or who won’t be buying for at least 20 days, Amersdorfer said. “Some dealerships are more willing to build a relationship with the longer-term shoppers,” he said. “Those stores provide information, follow up and generally work with the prospect to ultimately bring them into the dealership for the buying phase.” Amersdorfer said being able to interact with prospects on the phone or by email is the first step in getting them into the dealership. “Engaging the prospect is the next step,” he said. “If you can’t engage the prospects, they aren’t going to select you.”

BY JASON ROBERSON

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JOIN US! NIADA’s 2013 Convention & Expo offers the industry’s biggest and most diverse educational opportunity under one roof. With our dynamic mixed panel format, you’ll hear advice and best practices from industry experts, as well as real-world perspectives from dealers who are in the trenches every day - just like you. Find out what’s happening in the regulatory landscape, explore new marketing opportunities, learn how to refocus your sales and operations, discover new avenues for dealer capital...and more. NIADA’s Convention & Expo is not only the largest event of its kind in the used car industry - it’s also the only one to offer live entertainment and a variety of fun networking opportunities.

RELAX POOLSIDE.

Traveling can be stressful and tiring. After check-in, relax with us poolside for the Cigars & Martinis mixer. Enjoy music, mixed beverages and a light bite to eat in a lush, tropical wonderland.

KICK THINGS OFF VEGAS STYLE.

Kick things off right at Monday’s Opening Gala...where a delicious array of food and a full bar await you. You won’t be able to stay in your seat as we pay tribute to rock legends Elton John, Billy Joel and Tina Turner in true Vegas style!

WIN BIG ON THE EXPO FLOOR.

Participate in our daily Expo scavenger hunt for a chance to win $500 or even $1000! Plus, check out the car we’ll be auctioning off at the end of the week.

MINGLE WITH THE BEST OF THE BEST.

Dine with us as we honor and celebrate the National Leadership and National Quality Dealer Award winners. And don’t forget to tell your friends back home to tune in for the live broadcast on NIADA.tv! All this and more….for a registration rate that’s lower than most other national conventions. We even offer discounted registration rates for spouses and children, plus discounts on hotel, airfare and ground transportation. For more information or to register online, visit www.niada.com and click on Events.

NIADA DEALER 20 GROUPS

Do you feel like you’re constantly trying to reinvent the wheel? Does it seem like you’ve tried everything you can

think of to take your dealership to the next level? Maybe it’s time for a different approach. With NIADA Dealer 20 Groups, you can share successful business ideas and best business practices with other dealers from across the country. While some Dealer 20 Groups focus on resort locations and exotic travel, NIADA 20 Groups aren’t about location. Rather, they’re a cost-effective investment in yourself and your dealership. Whether your dealership is large or small, retail or Buy Here-Pay Here, NIADA 20 Groups are committed to guiding you to serious solutions for greater dealership profitability. NIADA 20 Groups aren’t static classroom sessions. They’re not about lectures, seminars or boring power point presentations. Rather, the power of our 20 Groups comes from the dealers themselves, working together and sharing ideas and real world experience with each other. You’ll be matched with dealers of like size and sales volume from non-competing markets; dealers, working together with one goal in mind: increase success and improve net profitability. Together, you’ll help each other improve day-to-day operations, increase sales, manage expenses, control inventory, and more. Sessions are moderated by Joe Lescota, NIADA Director of Dealer Development and former retail automotive executive with more than 25 years of frontline dealership, selling, management and training experience. NIADA Dealer 20 Groups traditionally meet on weekends, to minimize time away from the pressing day-to-day business needs of your dealership, and are held at various locations across the country. Being part of a 20 Group takes only 12 hours of your time, three times a year, and provides a rare opportunity to share ideas and evaluate your dealership’s performance with people who truly understand your business – because they’re just like you. Take the next step toward achieving, and maybe even exceeding, your business goals by signing up for an NIADA Dealer 20 Group today. For more information, visit www.niada.com or contact georgia@ niada.com.

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WEB CHAT

Why Are Customers Leaving Your Website? B E C O M E A R E S O U R C E A N D A D E S T I N AT I O N F O R W E B V I S I T O R S , A N D S A L E S W I L L F O L L O W

DEALERS OFTEN ASK, “WHERE CAN I GET MORE LEADS?” Rarely, however, do they ask, “How can I increase the conversion of my website?” The answer to the first question is: You can get more leads from your own website. That is the place to start. Of course, then the response is, “But people are not staying on my website.” The majority of marketers and business owners often search outside sources to increase leads and opportunities. They go to third party lead providers – direct mail, radio, TV, newspaper, email blast providers and billboards – to drive more traffic or leads. I understand why marketers and business owners still follow that practice. They have not relearned or reprogrammed their marketing and sales strategy thinking. Think about it this way: You have a brick-and-mortar business and you do your very best to ensure you have the best salespeople possible to close every sales opportunity with shoppers visiting your store. Now that you have achieved a 23-25 percent closing percentage, you feel your sales strategy is working to its maximum. Now you must advertise in order to drive more traffic, in turn feeding your salespeople. For the past 75-plus years, that has always been the responsibility of radio, TV, newspaper, direct mail, billboards and tents and events. Times Have Changed for the Better It’s time to look for more traffic, leads and opportunities … inside. By that I mean inside your own business, inside your own website. Today in marketing, a properly developed website will fill the role of marketing tools like radio, TV, newspaper and billboards. A well-designed website will fill the role of a friendly and always available customer support representative. A website built on the sales funnel-flow process will fill the role of the salesperson you have always dreamed of, one who is willing to do anything at any time, 24/7/365, to close a sale. A salesperson who has a sales funnel packed so full that no 50, 100 or 500 salespeople could ever match him. It is exciting to think your website can be that great of a tool, and you are probably wondering where to start and what it will cost. I will warn you now, it is difficult to find a website that fits this concept, and, yes, it will be expensive on the surface. But when you compare the cost of payroll, taxes, insurance, sales support staff and bad salesperson tactics to a website developed for today’s shoppers, you will be ready to commit to this new way of thinking.

And that’s not to mention the inability to measure return on investment for radio, TV, newspaper and billboard, or that you have to keep paying to receive the ads and when you stop you have nothing to show for it. Coffee is For Closers and Conversion is for Today’s Marketers So let’s get started building the ultimate marketing and sales website. Question swipe file: Create a list of 50 questions shoppers have asked you on more than three occasions. The questions can be about anything – pricing, financing, product, service, warranty or business practices. Those questions will allow you to start your resource or FAQ pages. Add to the list with a minimum of 10 questions every month. I strongly encourage you to ask customers, friends and strangers to pose questions they might have with regard to your business. You can ask people to present questions by email blast; on social sites such as Facebook, Twitter and LinkedIn; in person and on your website with a simple form. Encourage interaction about the questions so you can find objections, interest, concerns and selling signals. The very step of creating a “question swipe file” provides the opportunity to understand what is important to customers and future customers and allows you to start developing your website into a resource where shoppers hang out – and just happen to buy things. The questions will also help you and your sales team to develop a compelling sales approach focused on customers’ needs and wants instead of what you need and want to sell. Resource scripts: Shoppers of all ages visit an average of 23 websites to gather research for a purchase, and that number is increasing by 31 percent every 30 days. So with your questions in hand, it’s time to start developing your scripts or bullet points answering each question. The scripts should be resource and educational scripts, not “Sunday! Sunday! Sunday!” scripts. The length of each script should represent what you would do in a face-to-face explanation or demo. If it takes you 15 minutes to demo a product in your brick-and-mortar store, you will do the same in the video you will produce in the next step. Make sure you have a consistent opening and closing for the videos. It is well worth the extra money to get a professional video and audio intro/outro done to provide consistency and a professional look. It will

help brand you. Movie time: I know what you’re thinking: “Oh, no, I can’t be on camera. I have a face for radio,” or whatever other excuses you can come up with. Believe me, I know. I have been there. But I overcame those issues two years ago when I recorded my first Think Tank Tuesday video and now I have more than 111,000 subscribers and zero traditional sales people. I have never once asked anyone to do business with me or tried to sell in my video series, and people appreciate that. The same goes for your videos. Become a resource to people and they will return the favor by asking you to work with them and sell them. I can’t begin to tell you how important it is to do video – it is what will separate you from everyone else. Producing videos is simple these days. Purchase a $300 video camera that has an external mic input, a wireless or wired mic and two or three daylight-balanced compact fluorescent bulbs in a work light fixture. The software costs less than $150, and don’t overthink it – just pick something or hire someone to do the production for you. Again, make sure you have a professional intro and outro that has your contact information so viewers can reach you for a sale. Starting with Question 1, it’s time to start recording. It is easier than you think, because it is your business and you know it better than anyone. The lines will flow. Don’t be overcritical of yourself. Your first videos will be rough, but by the time you get to the 25th question you will be getting the hang of it all. The instant resource: As you continue recording videos and having someone produce your information segments, it’s time for your webmaster to develop that “FAQ” or “Resource” page. It is important to think about how the videos will be categorized: for example, Finance FAQs, Sales FAQs, etc. It is important to have fewer tabs so the site does not become a mess, but at the same time it has to be easy for visitors to your site to find these helpful videos. While you shouldn’t sell in the videos, you must sell on the page the video is embedded on. If you have a video talking about how to get the best interest rate on a loan, you need to have a form on the page for the visitor to apply for a loan, or a way to call or email you to discuss their current status and interest. C O N T I N U E D O N N E X T PA G E

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Why Are Customers Leaving Your Website?

People don’t like to be sold to, but they love to buy. To clarify, have a master page that lists all the videos and descriptions. The visitor clicks on the video description and is redirected to a single page that shows the video and also includes some text explaining what the viewer will learn from the video. Don’t forget to have a call to action form on that page that is related to the topic you are covering. That video now becomes a traffic-driving resource to your website, because you will post a link to the video on Facebook, Twitter and LinkedIn. You can also use it in your emails, and your staff can direct shoppers to it when they have questions. Chances are those videos will never get old – they will be yours forever to drive leads, unlike radio, TV, newspaper, direct mail or a salesperson who changes jobs like he changes clothes? Repeat and cash the checks: This is the both easiest and hardest part. You will get the feeling that, “OK, my work is done. On to the next thing.” But this work is never done. Every week new questions will pop up, new inventory will roll in and new ideas will come. That’s why it’s critical that you develop a calendar and stick to it. You need to add to your resource swipe

file every week and record video every week. Have fun with it and even consider bringing your customers in on your videos for discussions about a product or service. Now repeat after me: “I will commit to my success by becoming a resource. And when I am a resource, shoppers will visit my website, see value, and stay on my website. Shoppers will, in return, do business with me and not my competitors.” I took the long way around to tell you how to keep shoppers from leaving your website, which leaves the question: Why are they leaving your website? It’s because your website is not a resource of information that helps a shopper make a decision in the purchase. Yes, your website has prices, but so does everyone else’s. Price is at the end of the shopping funnel, but what gets a person to finding price is much more important. Make your website a giving website, a resource tool, and visitors will stay and do business with you. Keep your website as a taking website, and you are just one of many websites they just happen to land on.

BY PAUL POTRATZ

PAUL POTRATZ IS A SPECIALIST IN DIGITAL, BEHAVIORAL AND SOCIAL MEDIA MARKETING FOR THE AUTOMOTIVE INDUSTRY AND STAR OF THINK TANK TUESDAY, AVAILABLE ON NIADA.TV AND ITUNES. HE CAN BE REACHED AT (518) 631-5505 OR PAUL@PPADV. COM, OR BY VISITING HTTP://EXCLUSIVELYAUTOMOTIVE.COM OR WWW.FACEBOOK.COM/POTRATZADVERTISING.

NIADA CERTIFIED MASTER DEALER® CERTIFIED MASTER DEALER® (CMD) training positions you to take your success to the next level. The CMD designation serves as recognition of your dedication to the industry, and of your proven record for stability, reliability, and ethical business practices. THE CERTIFIED MASTER DEALER® program was developed in 2001, in collaboration with Northwood University, to help dealers manage and grow their businesses. Since then, it has grown into one of the industry’s most respected training programs. Dealers who attend this training are committed to the industry, support ethical business standards and practices, and are leaders in their communities. They bring a wide range of experience to each class, and leave with new strategies for analyzing their business practices and increasing their bottom line. Instruction is provided by Joe Lescota, NIADA Director of Dealer Development and former retail automotive executive with more than 25 years of frontline dealership, selling management and training experience. FOR MORE INFORMATION, VISIT WWW.NIADA.COM OR CONTACT GEORGIA@NIADA.COM.

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REPRESENTING ALL AUTO, TRUCK TRAILER, RV AND POWER SPORT DEALERS OF OREGON

OIADA

MEMBERSHIP APPLICATION

Business Name_____________________________________________________________________ Dealer# ______________________________________________________Expiration_____________ Name_____________________________________Spouse__________________________________ Business Address____________________________________________________________________ City_______________________________________State/ZIP________________________________ Mailing Address (if Different) __________________________________________________________ Business Phone #____________________________________________________________________ E-mail___________________________________________________________________________ Cell____________________________________Fax_______________________________________ Signature___________________________________________Date_____________________________________ Upon acceptance as a member, I pledge to uphold the OIADA Code of Ethics and all laws pertaining to the automobile business.

PAYMENT MUST ACCOMPANY THIS APPLICATION Annual dues - $325 PAC – Political Action Committee – Keeps us strong at the Legislature! Your voluntary $50 contribution is an Oregon Tax Credit taken directly off your state tax liability. Your contribution will actually cost you nothing

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PAC $50 $375

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By completing this form, I am consenting and giving OIADA/NIADA, its affiliates and subsidiaries, my permission to contact me and provide information to me at the mailing and email address, telephone and fax numbers I have provided.

OIADA 1475 Capitol St. NE, Salem, OR 97301 | Phone 503-362-6839 | Fax 503-364-7331

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Associate Members ADVERTISING Affiliated Media LLC Ronald Massey 503-705-9497 AutoTrader.com Ed Merrick, 503-747-9162 Ed.merrick@autotrader.com Carsforsale.com Aaron Oestretch 605-306-3302

Brasher’s Northwest Auto Auction Mark Melton 800-905-3901 www.brashersnw.com Crosspoint NW Dealer Auction Brian Hardy 503-594-2800 www.crosspointnw.com Manheim Portland Auto Auction 503-286-3000 www.manheim.com

Cars.com 312-601-6134 The Oregonian Rich Fryback 503-221-8486

OUT-OF-STATE AUCTIONS Adesa Seattle Auto Auction Jason Arcaro 253-735-1600 x 213

UCMLink Allison Pittman 601-812-5876 www.ucmlink.com

Dealer’s Auto Auction Northwest Steve Doyle 509-244-4500

UsedCars.com by Dealix Tamara Garris 704-243-6652

Manheim Seattle Auto Auction Julie Picard 206-762-1600

AUTO ACCESSORIES Auto Marketing Associates Northwest Gary Palaniuk 503-519-7725

PUBLIC AUCTIONS Insurance Auto Auctions, Inc. Ryan Hall 503-253-1500

PRIVATE AUCTIONS Brasher’s Portland Auto Auction Jerry Hinton 800-300-3200 www.brashersportland.com

Quiz

Petersen Auction Group of Oregon Curt & Susan Davis 541-689-6824 Woodburn Auction Steve Morin 503-981-8185 www.woodburnauction.com

DEALER SOFTWARE Skywerks Martyn Olliver 425-738-0234 Frazer Computing Michael Frazer 888-963-5369 FINANCING Credit Acceptance John Bragg 253-279-3230 Credit Concepts Jason Moon 541-342-8545 JP Morgan Chase Auto Finance Jeff DeGarmo 503-201-4370 Nationwide Northwest, LLC Mark Tischer 503-339-4165 Reliable Credit Association David Marx 503-462-3022 Gold Acceptance/ Oregon Auto Finance 1700 Valley River Dr. #300 Eugene, OR 97401 Gary Veum, 541-868-0472 United Finance Burnside, 503-232-5153 Eugene, 503-342-7671 Salem, 503-585-6411 Medford, 541-779-7391

The Equitable Finance Company Brandon Fox bfox@equitablefinco.com P: 503-808-7939 / C: 503896-8873 / F: 503-546-1689 FLOORPLAN FINANCING Floorplan Xpress Sean Fodrea 503-621-9260 sfodrea@fpxus.com Dealer Services Corporation Garrett Jorewicz 866-230-0820 HEALTH CARE & BENEFITS The Summit Group of Oregon, LLC John Petrie 503-581-2825 INSURANCE & BONDING Consumer Insurance USA Robert Wells 77-431-0970 Hecht & Hecht Insurance Evelyn Hecht 800-609-0979 evelyn@hechtins.com Shepard & Shepard Insurance www.shepardinsurance quote.com 509-396-0488 LEASING Oregon Roads, Inc. New & Used Vehicle & Commercial Leasing

Joseph McKinney 541-683-2277 SERVICE CONTRACTS AUL Corporation Jacqueline Swank 800-826-3207 Automotive Business Developers Shannon Meany 541-944-9186 Auto Marketing Associates Northwest Gary Palaniuk 503-519-7725 Auto Services Company Dick Proudfoot 503-705-7597 A.U.L. Corp/ D.P.C. Inc. Jim Bangert 360-834-3333 Protective - Asset Protection Division Dylan Doran 818-836-1455 TRAINING Automotive Business Developers Shannon Meany 541-944-9186 OIADA: Continuing Education, Title & Registration & Pre-licensing Pauline Sill 800-447-0302 503-362-6839

MA

SmartwayAdvisors Sheldon Harris 503-795-7700 O I A D A C O N T I N U I N G E D U C AT I O N P R O G R A M

Read & Respond or Certify Below Complete this test or Certify below that you have read the articles for

MAY 2013

ACA Roadmap

What does FTE stand for? ___________________________________________________________________________

What constitutes a “small employer” according to the ACA?__________________________________________________

If a company has more than 200 employees, those employees will be auto-enrolled in employer-provided healthcare

plans starting in 2014 ________ True ________ False

Expanding Your Horizons

What three categories to Internet prospects fall into: ______________________________________________________

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Presenting Your Portfolio

to grow their business.

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What types of “liquid assets” are helpful to have at your disposal?

________________________________ __________________ ____________________________________________

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What percentage of cars sold on eBay Motors during the fourth quarter of 2012 were interstate transactions? __________

Name 3 things that are taken into account when lenders make a decision about a floorplan line of credit for dealers looking

I CERTIFY TO OIADA THAT I HAVE PERSONALLY READ THESE ARTICLES IN THE OREGON DEALER NEWS MAGAZINE FOR #5-2013 My Name ________________________________________________ Dealership Name ___________________________________________________ Dealership # _______ ___________ ___________ _______Dealer License Expiration Date:(Month)_________________________________________ Year)______________Signed: _________________________________________________Date _____________________________________________

FAX TO: 503-364-7331 or mail to OIADA, 1475 Capitol St NE, Salem, Oregon 97301 21

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OIADA

DEALER

NEWS

4/18/13 11:52 AM


COMPLIANCE OVERDRIVE

Is it Time to Review Your Dealership’s Compliance Practices? THE LAWS AND REGULATIONS REQUIRE DEALERS TO CREATE AND FOLLOW REASONABLE PRACTICES BASED ON THEIR UNIQUE BUSINESS CONDITIONS.

As many state legislative sessions wrap up at midyear, lenders and dealers must begin watching for legislative summaries – and maybe new legislation and requirements that will be taking effect soon. Facing a regulatory landscape that continually seems to move faster and grow in complexity, dealers must be even more vigilant in making sure laws and regulations are being embedded within their business. In some cases, the laws and regulations tell us exactly what needs to be done. For example, a disclosure using specific words in a specific type size must be given to consumers at a specific time. But in other areas, the laws and regulations require dealers to create and follow reasonable practices based on their unique business conditions. Those types of requirements can be challenging to meet because they evolve as your business and the industry changes. Certain areas, though, deserve continual focus, including regular reviews of policies, procedures and processes.

Information/Data Security

Some of the most obvious risks for dealerships are related to information and data security. Dealers must view identity theft as an accident that’s always waiting to happen because of to the various types of personal and financial information they manage for their customers. Hundreds of people can walk through dealers’ sales floors, which in many cases are open, with some sales desks located in the showroom. Is your staff diligent about making sure sensitive customer information isn’t left sitting out on a desk or up on a computer screen so anyone walking by can view it? Is anyone within earshot when a potential customer is verbally providing personal information? That includes not only dealership visitors, but also employees who should not have access to specific data. In short, your information security program needs to start on the sales lot and in the showroom. Your Red Flags program should already address potential security risks, at least as they relate to potential identify theft. The Red Flags Rule

requires each dealer to have a program designed to detect, prevent and mitigate identity theft in connection with opening or maintaining an account involving an extension of credit. Reasonable program activities will evolve as technology and business practices change and as identity theft techniques and vulnerabilities change. So compliance with the Red Flags Rule will always be an evolving standard. Make sure you have data security and ID theft programs and policies. Make sure you follow them. And make sure you regularly review and update them – even if there isn’t a law or regulation change reminding you to do so.

Employee Security

Along those same lines, dealers need to be mindful of processes related to employee security. It must be clearly defined which employees have access to what. In your dealership, are F&I files password-protected so only certain employees can access them? Sales team members might need limited access to information to determine a potential buyer’s creditworthiness, but does the receptionist really need access to the same information and tools? Are there clear parameters for who has access to different types of information? Are those policies communicated and understood among employees? Employee security also involves background checks and other operational issues related to hiring and firing employees. Dealerships should use background checks in their hiring process in addition to checking references and other representations a candidate provides. Be thorough. For example, instead of just doing a criminal record check for the county where the applicant lives or the dealership is located, consider expanding it to the entire state. You should also review states of prior residence for the past several years. Remember to re-run background checks (or at least the criminal background check) periodically to note any changes. If an employee is arrested after employment begins, he or she might not tell you about it. If you don’t re-run criminal background checks, how will you find out an existing employee was convicted of misdemeanor shoplifting or DWI (with suspension of driver’s license)?

Depending on the employee’s role, that might be critical employment-related information.

Content Security

While the risks mentioned so far might seem somewhat obvious, other risks are more subtle, such as access to template documentation. Though blank standard documentation might not contain personal information about customers, they could present opportunities for criminals. For example, even without access to customer personal data, a thief might be able to create fraudulent transactions if he or she has access to preprinted retail sales contracts or the software that generates them. Dealers should consider restricting access to blank standard documents even though they don’t contain personal customer data.

Information Retention

A critical area of focus for customer personal information is protecting it at the time it’s provided by credit applicants and the points the information is transmitted to others as part of the credit analysis process. But dealers also need to focus on their retention of that information during the credit processing period and afterward. Red Flags programs should include procedures to protect personal information during and after the credit process and transaction closing. Protecting that information long after the sale requires as much vigilance as the protection you provide during the credit processing phase. All of this reminds us some compliance requirements evolve with changing business practices and technologies. It’s important to regularly review compliance efforts for these kinds of requirements even if they aren’t revised by law or regulation changes this year. The theme of this year’s NIADA Convention and Expo is “New Strategies for Tomorrow.” The world moves faster every day. Are you ready for what tomorrow brings? Knowing your dealership is continually working to mitigate business and compliance risks can bring peace of mind when considering your own preparedness.

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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Oregon Dealer News May 13