What’d You Say? Lot Lingo 101

by Eric Baker WISCONSIN DEALER LAW

{Editor's Note - this article Is being reprinted (with permission) from Defender Newsletter published by the National Association of Dealer Counsel (NADC), a professional association of which NMEDA's CEO Danny Langfield is a member.}

Recently, a newly-minted attorney was asking about the first dealership lawsuit I worked on. At the time I already had a fair amount of business litigation experience, and I recalled that one of the more difficult tasks in getting my feet under me was understanding what the heck some of the deponents were talking about—or for that matter, what our own client’s employees were describing—when they launched into the barrage of industry lingo that is so common in motor vehicle retailing. Fast-forward 15-odd years (“odd” connoting an estimated number and as well as the experience), and I still now and then run across an industry term I don’t recall ever hearing.

Thankfully for our colleagues entering our ranks, several years ago NADC started offering the “Dealer 101” preconference seminar (thanks to Past President Steve Linzer for spearheading this very well-received primer), and we pulled together a list of “lot lingo” to give attendees. I recently proposed that we augment this list and post it in our dealercounsel.com document bank as a living document for members to access and also for members to offer their favorite lingo to expand the collection. So, below is our debut collection of “lot lingo” for your consideration.

Addendum: An additional sticker posted near the Monroney Sticker (see below), that may be used to give notice of added dealer options or market pricing adjustments.

Adverse Action: The denial of requested credit or credit terms, which triggers a notice requirement.

AI: Artificial intelligence; used in vehicle systems and in development of autonomous vehicles (AVs).

Allocation: The number and mix of vehicles allocated to individual dealerships, or the formula by which number and mix of vehicles is determined.

APR: Annual Percentage Rate; the APR (disclosed on a RISC – Retail Installment Sales Contract) includes the interest rate charged by the lender plus whatever additional costs of financing are included in the final deal.

AOR: Area of Responsibility (also called PMA – Primary Market Area); geographic region assigned by franchisor in measuring dealership performance.

Back End: Service, Parts, Collision Center; also may refer to profit from aftermarket sales (see F & I and Voluntary Protection Products (VPP)).

BDC: Business Development Center; often a telemarketing dept., sometimes a third party.

BEV: Battery Electric Vehicle.

Bird Dog: Referral fee, okay in some states but not others.

Blue Sky: Generally, in valuing a dealership, the value of good will and other intangibles, such as the customer list – valuation has become much more “scientific” in recent years.

Bookout: A detailed itemization of a vehicle’s specs and options used for determining the vehicle’s value. Used in connection with retail financing.

Bullpen or Bullpenning: Holding units in an area away from customeraccessible lots, because they cannot be marketed for sale due to lack of inspection, a recall, or some other quarantine-type issue.

Bushing: Increasing the cash price on the purchase contract or changing the financing terms to less favorable terms for the buyer after an agreement has been made.

Buyers’ Guide: Required by the FTC Used Car Rule; dealers must display specific forms on used cars, including information regarding warranties, if any; must be posted in Spanish if transaction is negotiated in Spanish.

Buy-Here-Pay-Here: A dealership that has in-house financing arrangements, usually catering to subprime customers that cannot be approved through a traditional lender.

Buy-Sell: Agreement for a dealer to sell a dealership to another party.

California Car: Vehicles meeting California’s stricter emissions standards (various states follow this instead of the federal rules; see CARB).

Captive Finance Company or Lender: A lender owned by or affiliated with an original equipment manufacturer (“OEM”) and created for the purpose of making dealers’ and customers’ purchases of products more convenient, including floorplan and retail financing.

CARB: California Air Resources Board; sets the emissions standards for vehicles in California; these standards are followed by “Section 177” states, which are: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington, as well as the District of Columbia. Arizona adopted California’s standards in 2008, but the state repealed them in January 2012.

Cash Reporting: Transactions which involve more than $10,000 in cash (or cash equivalents) or suspicious transactions that appear to be structured to avoid this threshold amount which must be reported within 15 days to the IRS on FINCen Form 8300 (Financial Crimes Enforcement Network).

Chase Car: A car that follows another car when delivering a car or truck to a customer or transporting a car to a service facility.

Choke and Croak: Credit disability and life insurance policies sold in the F&I office.

CNG: Compressed Natural Gas; gas (mostly methane) that is compressed to 1% its normal volume to be used as an alternative (cleaner burning) fuel.

Cream Puff: High quality used car. The opposite of a sled (see below). Also referred to as a diamond or pedigree.

Credit Card Surcharges: Additional charges levied upon a consumer who pays using a credit card instead of by check or cash. Check state law and any updates to federal law regarding the legality of such surcharges.

CRM: customer relationship management. Often a software database program for managing the dealership marketing and sales process with individual customers.

CSI: Customer Service Index; goes by various names and is used extensively by OEMs to gauge dealer performance in delivering quality service center customer experience.

Curb-stoning: A dealer posing as a private seller of a vehicle. Oftentimes the seller is an unlicensed dealer.

Deal Jacket: The packet or folder of documents involved in a vehicle sale.

Dealer Principal: Owner of a dealership; may be a single person designated in the Dealer Agreement where there are multiple owners.

Dealer Trade: A vehicle transferred from one dealership to another dealership.

Demonstrator or Demo: Demonstrator vehicle for test drives, sometimes assigned to employees. Tax, liability, and sales disclosures issues may be associated with these vehicles.

DMS: Dealer management system; the specialized computer system that everything runs on, such as CDK, DealerTrack, Auto/Mate, etc.

DOC or Daily Operating Control: A tool that shows how much money is flowing into and out of the dealership on a daily basis, generally looked at for each department and often generated by the DMS.

Doc Fee: Fee to charge to customers on a sale for processing DMV work or otherwise permitted by applicable state law. Also known as a Service Fee in some states.

Down Stroke: Down payment.

Debt to Income or DTI: Financial calculation to determine the percent of debt a buyer has compared to their monthly income.

Equal Credit Opportunity Act or ECOA: Federal law prohibiting discrimination in granting credit or credit terms. Requires dealers to provide Adverse Action Notices to consumers in certain circumstances.

EV: Electric vehicle; also referred to as BEV (Battery Electric Vehicle).

F&I: Finance and Insurance unit in a dealership. Typically assists with customer financing and sale of voluntary protection products such as credit insurance, GAP, or extended warranty products. Also sometimes referred to as The Box or the Business Office.

Fair Credit Reporting Act or FCRA: Federal law that governs credit reporting practices. Requires businesses to have explicit permission or a permissible purpose to access a consumer’s credit report.

First Pencil: First offer written on paper presented to a customer to begin negotiations.

Flat Rate: Service technician pay by the job, not by the hour, based on “book” rates.

Floor Plan: The financing of dealer inventory.

Front End: Sales, Business, F&I, Clerical, Title Departments (showroom, offices, waiting area); also could refer to the gross profit made on the sale of a vehicle, not including F&I/VPP.

Front Line Ready: A vehicle that is inspected, tested, detailed, and ready for sale.

Gap Insurance: When a vehicle purchase is financed (through loans or leases), there is usually a “gap” between the market value (which is what insurance will reimburse) and the amount owing under the loan or lease contract at any given time during the term of the loan or lease. The purchaser or lessee can protect him or herself in the event of a loss (fire, theft, collision) by purchasing Gap Insurance or a Gap Waiver. In most states, this is regulated in one way or another, and dealers need to be sure to explain the limitations of whatever Gap product they sell.

General Manager or GM: Overall manager of the entire dealership operation. The dealership may also have a general sales manager, one or more sales managers, and a service manager.