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YOUR VOICE HEARD: A BLUEPRINT FOR SUCCESS BY STEVE JORDAN

NIADA CHIEF OPERATING OFFICER

H O W C A L I F O R N I A’ S B U Y H E R E - PAY H E R E L E G I S L AT I O N G A LVA N I Z E D T H E I N D U S T R Y

Since the passage of the Wall Street Reform and Consumer Protection Act in 2010, also known as the Dodd-Frank Act, federal and state regulators have been clamoring with interest in the financial arm of the automotive industry – specifically, the Buy Here-Pay Here (BHPH) segment. The interest in BHPH hasn’t been limited to only regulators, but has also been fueled by state legislators, the media and some consumer advocate groups. It’s been a year since the Los Angeles Times published a three-part series profiling a largely one-sided portrayal of BHPH. Within weeks, three bills were introduced in the California legislature that sought to impose a wide, sweeping choke-hold on BHPH operators in the state. Until then, not many outside the industry had taken a real interest in following the operational complexities of BHPH. Suddenly, for the first time in a very public way, BHPH was under a microscope and the legislative die was cast. Many were asking if it was really possible that those bills were written as a knee-jerk reaction to the series of overly sensational L.A. Times stories. The answer, unfortunately, is yes. Welcome to the age of legislative recklessness, in which public policy can be conjured up by the media, hoping to unfairly influence business law in the name of consumer protection. As automotive dealers, financiers and other industry stakeholders pulled up chairs to watch the drama unfold in California, many BHPH dealers began to wonder how they would tell the intensely customer-service BHPH story to state legislators, committee members and their

staffs. There was growing concern about how the BHPH industry would come together and fight the toxic provisions in California Senate Bill 956, Assembly Bill 1447 and Assembly Bill 1534 (see sidebar). As the committee assignments in the California Senate and Assembly were being handed down, the Independent Automobile Dealers Association of California (IADAC), NIADA’s state affiliate, began to lay the groundwork for its approach to the legislative campaign. Generally, NIADA doesn’t engage in state legislative activities – that is normally directed by our state associations – but given the far-reaching and restrictive nature of the California bills, it was decided that NIADA would participate heavily. With each passing committee hearing, it became more apparent the fate of the bills was being dictated by party-line votes, and our direct opposition to the premise of the bills was falling on deaf ears. Much of the committee testimony we saw in support of the bills consisted of consumers telling customer service stories that would not have been solved by the bill’s provisions. One car buyer complained that a car she bought with four mismatched tires was unreliable. She took the vehicle back to the dealer and ultimately got her money back for the car. Problem solved. Yet supporters of SB 956 claimed that capping interest rates and limiting asset recovery for BHPH dealers would have somehow given this customer additional recourse to solve her problem. A problem that was easily resolved by her dealer once he knew about it. The bills raced through the Democratic-controlled Senate and

Assembly, and in April we realized the traditional lobbying efforts in which we were heavily engaged needed to be augmented by additional public relations support, and the fragmented BHPH voice needed to be unified. During a meeting at the National Alliance of Buy Here-Pay Here Dealers (NABD) Conference that month, Ken Shilson asked that NIADA lead a discussion with the various BHPH industry stakeholders to determine ways we could all work together more collaboratively, since we were all interested in the same outcome. During that meeting, representatives from NIADA, NABD, DriveTime, J.D. Byrider, CarHop, Hudson & Cook and a recently formed group of concerned independent BHPH dealers – most of whom are NIADA members – called the Community Auto Finance Association, all gathered and aired their feelings, concerns and desires to work together for a common cause. We realized we were stronger collectively than individually. And so a more unified voice was agreed on, and the final piece to winning the fight in California was in place. The coalition decided NIADA would take the lead position. Not wasting any time, NIADA’s newly formed ad hoc BHPH “coalition” raised nearly $100,000 and enlisted the help of a public relations firm to tell the BHPH story and show that auto dealers were not the only business concerns in the state opposed to the bills. IADAC’s lobbyist, Bill Dohring, and executive director, Larry Laskowski, continued to march the halls of the legislature and work with officials at the DMV and Department of Corporations. C O N T I N U E D O N PA G E 8

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TNIADA Dealer Connect Dec 2012  

Tennessee Dealer Connect for December 2012