The Ontario Dealer - Volume 6 Issue 1

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February 2018 USED CAR DEALERS ASSOCIATION OF ONTARIO 230 Norseman Street, Toronto, ON M8Z 2R4 Tel: 416.231.2600 Toll Free: 1.800.268.2598

FEATURED STORIES Insuring your Dealership By David Miller

12 Publication Mail Agreement #41890516

Improving ROI by Lori Straus

ONTARIO DEALER is published by Laservision Graphics Ltd. four times a year.


130 Industry Street, Unit 36, North York, ON M6M 5G3

Car Warranties by Angela West

EDITOR Gina Monaco Tel: 1.647.344.9300 or 1.289.456.4617



Reconditioning Used Vehicles

Terry Coster Direct: 416.360.0797 Office: 647.344.9300

by Dan Croutch



05 07 09 11 15 22 24 33 35 38 41

The Driver’s Seat Warren Barnard

Editor’s Note Gina Monaco

Member’s Corner Bob Pierce

The Law Matters Jim Hamilton

Trends Chris Chase

Succession Planning Lori Straus

Dealer Profile Rhonda Payne

Tech Talk Angela West

The Common Lawyer Justin M. Jakublak

Used Vehicle Supply Bill Sherk

Old Car Detective Bill Sherk


CONTRIBUTORS Chris Chase, Dan Croutch, David Miller, Rhonda Payne, Bill Sherk, Lori Straus, Angela West. If you are interested in having your personal opinion heard, contact the editor at

The publisher of The Ontario Dealer reserves the right to turn down any advertising or content submitted to it. The Used Car Dealers Association of Ontario and the publisher accept no responsibility for claims or statements made by advertisers in this publication or by the independent authors of articles appearing in this publication. All statements and opinions appearing in this publication are those of the writers themselves and are not to be construed as reflecting the position or endorsement of the Used Car Dealers Association of Ontario or the publisher.


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THE DRIVER’S SEAT My thoughts on “negative equity" Moral judgments aside, extended term loans are perfectly legal and no one, not even OMVIC, seems to be suggesting that the government should legislate them out of existence. They couldn’t, without denying a significant percentage of the population the ability to purchase a quality vehicle. The fact that the loans are offered by third party lenders, not by dealers, seems to have conveniently been ignored in the ensuing debate.

By Warren Barnard, Executive Director, UCDA


story that CBC ran on its Marketplace consumer watchdog program last November, which drew attention to some of the consequences of extended loan financing and the “negative equity” that may result in the future. The show focused on a very unfortunate situation with an individual consumer who, due to the negative equity on a trade-in, had to work two jobs in order to make her car payments. While we never heard the whole story, the show suggested it’s a car dealer’s job to try and talk consumers out of entering into long term loans. According to consumer advocates who appeared on the show, this is apparently anything over 60 months (5 years) when financing the purchase of a vehicle. Shortly after the show aired, OMVIC sent out a bulletin to all dealers which, while not as full of exaggerated claims of consumer calamity as the Marketplace show, echoed the same sentiments.

Can these long-term loans lead to problems? Yes, they can, depending on individual circumstances. Are consumers being misled by dealers and sales staff? Unfortunately, intentionally or not, some consumers probably are. As in all things in the grey “real” world, there are no doubt instances where sales staff have not been clear about the consequences of extended term loans or of negative equity on tradeins. But the suggestion that abuse is rampant in the industry is unfair and frankly offensive to the great majority of honest salespeople. The reality is that not all consumers have prime credit ratings. Many have poor credit, but they still need a reliable vehicle to drive. An extendedterm loan is their only realistic option. Even people with good credit, may prefer a long-term loan, to lower their monthly payments and be able to purchase a more expensive vehicle than they otherwise could. Most buyers know full-well that in the long-run, they will be paying more with a longer term loan. They go into the transaction with their eyes wide open.

Don’t get me wrong, here. Of course, sales staff MUST NOT misrepresent the real costs of extended term financing and how negative equity works. And yes, where it is clear that a customer cannot afford a vehicle, or doesn’t understand the costs, sales people must do their best to explain things in plain terms. As long as this is done and customers understand their options, the salesperson has done their job. I believe the vast majority of dealers and salespeople in Ontario do just that! Now that I’ve got that off my chest, here are some of the topics I hope you’ll enjoy reading about in this issue of THE ONTARIO DEALER.

• Warranties • Reconditioning a Vehicle • Fiscal Fitness • Improving ROI • Insuring Your Dealership • Used Vehicle Supply Update • Succession Planning






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EDITOR’S NOTE Electric cars and the used vehicle industry recently announced that it aims to end the sale of gas and diesel cars by 2040. General Motors has announced plans to roll out 20 models by 2023, while Ford and Volkswagen are among those planning new electric lineups in China. Toyota promised more than 10 electric models by early next decade.

By Gina Monaco, Editor


are rolling out more battery-operated vehicles over the next five years, interested buyers seem few and far between. It appears that consumers are not that interested in the new technology – yet.

Electric cars account for 1 per cent of auto sales worldwide, and less than 10 per cent globally by 2025, according to researcher LMC Automotive. Over the next five years, 127 models will be introduced worldwide and LMC is predicting that electric models will increase to 75 in the U.S. It appears, however, that batterypowered cars are gaining popularity in Europe. Swedish car maker Volvo said all its new cars from 2019 will have an electric motor, ending altogether the manufacture of automobiles that have only a combustion engine. France also

Bloomberg New Energy Finance predicts that electric cars will be as affordable as traditional gas-powered cars by 2025, and that sales will outpace gas vehicles by 2038. Hmmm … there seems to be a lot of hype around electric cars but how realistic is the growth potential, especially in the U.S. and Canada? Jeff Schuster, senior vice-president of forecasting for LMC, said in an interview. “We’re now finally seeing them (sales) in numbers, but the sales numbers are not taking over the industry by any means.” The greatest challenge may not be technological – it might be marketing. Ontario committed to putting $20 million into charging stations to help address so-called range anxiety, to reassure people purchasing electric vehicles they won’t be stuck in the middle of nowhere without access to electric” fuel”.

Of importance for potential vehicle owners is whether there is the infrastructure to get them to where they want to go. So far, that hasn’t happened. There are questions around affordability and if electric vehicles are even practical in Canada. While the concept of electric cars is still evolving, these vehicles are on their way. And automakers are on edge. Do they invest and re-tool their factories? Do auto suppliers invest and build components of battery-powered propulsion systems? Magna International Inc., for example, the largest auto supplier in North America, is having vigorous debates over whether to add capacity to tool up for electric cars when its executives don’t see much demand for them over the next eight years. The company predicts EVs will only grow to between 3 per cent and 6 per cent of global auto sales by 2025, said Jim Tobin, chief marketing officer at the Canadian company. Change is difficult even at the best of times. Unlike China and India where there is a huge incentive to transition to electric vehicles the used car industry in Canada and in the U.S. are relatively safe, for a few more years anyway.

However, the province did not meet its goal to have 500 electric vehicle charging stations up and running in 2017.


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MEMBER’S CORNER Let's get off the roller coaster! (continued from last issue) registered managers and sales people have NOT taken a course or refresher since 2010 (when the MVDA changed everything about the industry).

By Bob Pierce Member Services Director

ONTARIO’S CAR INDUSTRY HAS 101,000 employees, 60,000 of whom are directly or indirectly associated with the sale of motor vehicles and of these 29,000 are registered salespeople. It is hard to dispute that they could use some kind of educational upgrading, web based refresher training or formal certification. Motor vehicle service technicians and financial people need accreditation or certification to stay current and employed. Technicians, for example, need yearly upgrades to continue to do their jobs. In the sales department, newcomers (owners, managers and salespeople) currently need to be certified only when they enter the industry for the first time, and then never again. According to OMVIC, 100,000 people have taken the certification course in the last 20 years. And as I wrote in my last Member's Corner column, 15,000

Almost every week a member calls me with the same story. "I have been audited by OMVIC", and they have issued an invitation to participate in the disciplinary process set out in the MVDA. And always the same stuff … selling over advertised price, failing to disclose one of the mandatory disclosures required by the MVDA or employing unregistered salespeople. I recently had a conversation with a couple of OMVIC folks and I expressed an opinion that I sincerely believe … “I don’t believe that anyone registered in this business went to work today to deliberately make up a non-compliant advertisement. They didn’t deliberately let their registration lapse, nor did they deliberately intend to hide a material fact (a disclosure).” In virtually every case of noncompliance that I hear about, after speaking with the dealer and the managers, it turns out that it was a: • • •

In December of 2017, the UCDA, OMVIC and Wye Management conducted a pilot 3 day Manager’s Course including The Key Elements of the MVDA. The course included an opportunity to re-write and become re-certified under the MVDA. There are no consequences for failing, just a re-test if the person wants it. As the name of the course suggests, it is directed at the middle manager. The course is a comprehensive manager’s course focusing on MANAGEMENT, PROCESSES, and the MVDA. It is not just about regulation; it is about managing the New Car Department and the Used Car Department, in a regulated industry. The 3-Day Manager's Course is intended to improve the knowledge of the middle manager, get the right processes in place so that day to day you can stop the bleeding and get off the OMVIC discipline roller coaster. We hope to offer the course right across Ontario, but it ALL depends on the reception from the industry. So far the reaction has been very positive … I will keep you posted.

lack of process lack of knowledge or, just plain laziness

in checking the deal package for the required information staring them right in the face. It all points to a need for training. Yes, even 8 years after a total rewrite of the MVDA they simply don’t know. So what do we do?


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THE LAW MATTERS Fraud Insurance this fund is there to protect them in the event of a loss caused by a bad transaction. Any actuary would tell you a dealer contribution of a one-time payment of $300 to this fund would have to be much larger to fund that kind of risk! In fact, the fund protects consumers only, to a limit of $45,000 per claim. When a dealer suffers a loss at the hands of a con-man or criminal they have two options: a lawsuit or insurance.

By Jim Hamilton Legal Services Director


… you never need it, or even want it, until you do! I’m not an insurance agent so rest assured I’m not trying to sell anyone anything! Having said that, when a dealer loses a vehicle (or money) due to identity theft, fraud, forgery or one of any number of countless scams that go on every day, the first question I get asked is “do I have coverage for this” or “is there a compensation fund I can go to”. The answer to the first question is “Maybe” and the answer to the second question is “No”! Many dealers know about the Motor Vehicle Dealers Compensation Fund because they all pay into it when they apply for registration with the Ontario Motor Vehicle Industry Council. It’s surprising how many dealers think

As has been pointed out in these pages before, lawsuits are not the most efficient means to obtain compensation. A few reasons for that: lawsuits are time consuming, expensive, labour intensive and, finally, if you’re lucky enough to get judgment, you may never see a dime. Why are judgments so hard to collect on? Well that depends on who you sue. But take my word for it, con-men and criminals do not usually have fat bank accounts or steady jobs just waiting for you to look to for payment. So that leaves insurance. What sort of insurance is it that you would need? Do you possibly have it already? How much would it cost? The insurance I am talking about is called various things by insurance companies … crime and fraud insurance, false pretenses coverage, conversion coverage and so on. It is meant to provide some protection or compensation in the unfortunate event that you are duped or scammed and suffer a loss under certain circumstances. Such coverage can be quite simple or

have layers of complexity (and added cost of course) to include losses due to crime and criminal conduct, theft, fraud, false pretences, electronic fraud and even employee dishonesty. Many general garage insurance policies do not offer coverage for most of these types of crime-related losses. The scope of crime and fraud insurance coverage can vary, depending on the risks faced by your particular business. Past studies at Statistics Canada estimated that about 50% of all retail businesses experienced some type of fraud in their fiscal year. Fraud and related crimes are underreported, but business losses resulting from these crimes are estimated to be significant. Talk to your insurance advisor. As with any insurance, read the policy carefully and with the help of your agent or broker understand what is covered, what is not and in what circumstances. Find the product that fit best with your needs. Finally, I will leave you with this. While it is easy to say, and harder to do, prevent fraud in the first place by being diligent – don’t let your guard down, if it looks or sounds too good to be true be skeptical, ask questions and don’t be afraid to slow a transaction down if it looks to be moving too quickly or in a direction you’re not comfortable with.

Prevention really is the best medicine.

VOLUME 6, ISSUE 1 | 11




Owning your own car dealership is a big undertaking filled with pride, joy, stress and a whole bunch of nerves bottled up in one helluva cocktail. The opening ribbon ceremony, followed by that first sale, will bring additional celebration, but a safeguard in keeping that buzz going is in the fine details. Hiring a dedicated and driven staff is vital. So are a number of successful marketing campaigns, but there's one essential necessity and that's dealership insurance. Perhaps dealership insurance may not be the most glamorous of details, but


it's the one that safeguards you and your investments allowing for peace of mind and solid business practices. Just like consumers are protected under the Motor Vehicle Dealers Act, so are dealerships, but each and every one of them must create their own policies that limit risks and liabilities. Insurance needs to cover the in-shop vehicles, employees, office space and equipment, potential hazards, and most importantly, yourself and your business partners. There are so many talking points about insurance, but for this article, we're going to narrow the focus down to liabilities that a dealership may

be held responsible for and the many shapes and forms it takes. Basically, what dealers need to be concerned about. To further understand this subject, we go to the experts and professionals in the field at Baird MacGregor Insurance Brokers, an Ontario-based insurance and risk management solutions company since 1979 who specialize in auto dealership insurance.

“A large percentage of dealers are unaware of how exposed they are.”

On a side note, it's vital to list off on the garage auto policy the potential people that could operate an owned or nonowned vehicle beyond the full-time staff, the principal, and so on. The list will be subject to underwriting, but if they're not listed and a vehicle is in their custody, the dealer group will be exposed to liability if something were to happen. The aforementioned garage auto policy sets a baseline of coverage, but there are plenty of other policies that would appear essential. As a leader in dealership liability claims, Baird MacGregor offer up programs above and beyond the bare minimum catered to their automotive clientele. Many of them feature a multitude of policies under one blanket of coverage and according to Comerford, those policies are “a fraction of the cost of the garage auto.”

“A large percentage of dealers are “It's always surprising to me that it's not unaware of how exposed they are.” an easier sell; 70 percent buy additional explains Philomena Comerford, packages, but a lot still have to be president and CEO of Baird MacGregor. convinced,” adds Comerford. “It's natural to think it won't happen to you, but we see the files all the time, and Not to be confused with garage auto, we're there to help them through the garage liability and comprehensive process.” general liability, are the two most common forms of additional liability Understanding the more common coverage. To make this even more liability dealership coverages confusing, garage liability typically falls under comprehensive general liability, In order to become a licensed dealer so make sure a thorough explanation and maintain status with pink slip occurs with your insurance broker. certification, the Ontario Motor Vehicle Industry Council (OMVIC) Between the garage auto and the requires a dealer to possess a garage general/garage liability policies, there auto liability policy, as well as are so many scenarios that can leave confirmation that business is being the dealer exposed to a claim. Through conducted from a bona fide lot, and the required garage auto policy, a office with clear signage. dealer is covered in accidents involving a test drive or customer drop-off run, Garage auto liability involves automotive as well as during a hail storm when a activities and operations broken down dealer's inventory is exposed outside into three main sections that include over the weekend. But what about a liability for operating both owned and customer slipping inside the dealership non-owned vehicles, no fault accident or an accident caused by a faulty benefits (covers injuries regardless of repair? You name it, it could happen, who's at fault), and physical damage regardless how careful one is not to be featuring optional coverage for collision negligent. At least by having all those and comprehensive and customer above policies in place, the odds and vehicle exposure.

accompanied stress of cutting a big cheque will be significantly reduced. As for comprehensive general liability, the best way to describe it is coverage for non-vehicular events. The most essential reason to get this, is if you're renting or leasing your business property as it would normally include tenants legal liability as part of its subset of coverages. Most leases require tenants to have this in place in case of a fire or something similarly as devastating, but one needs to work with their insurance broker for the limit of the policy to be sufficient with the occupied property. Choosing a liability program always comes with benefits and at Baird MacGregor that's provided in the form of legal expense coverage by DAS Canada. It's actually part of most garage/ general liability programs where the client has access to coverage for legal fees as per your policy limits, as well as unlimited telephone advice from top reputable law firms. This allows each dealer group to receive legal defence, statutory license protection and tax related disputes. If more coverage is desired optional subsections include employee conflicts, contract disputes, property protection and debt recovery. Other liability coverages on the rise According to Comerford, garage liability and general liability are key pillars for protection, but that still can leave a dealer exposed from new threats and attacks. One of those is Cyber and Privacy liability, a standalone policy that protects against sophisticated hacking, ransomware (threatens to publish a victim's data) and many other electronic computer threats. “With all the information dealers collect: banking, credit checks, credit cards and driver's license; dealerships possess a treasure chest of private knowledge that can be extremely hurtful in the wrong hands,” adds Comerford. “With all that information at stake, it almost seems like an implied obligation to secure and protect your business.”

VOLUME 6, ISSUE 1 | 13


Baird MacGregor offers several Cyber and Liability policies to satisfy each customer's needs, starting from $250,000. All policies receive access to CyberScout, formerly IDT911, a dedicated team of cyber threat professionals that provide support, online learning and counsel.

Whether it’s your business to sell New cars or Used cars... it’s our business to keep all your insurance needs covered

Another standalone policy is Directors and Officers liability and Employment Practices liability. They are different things, but come bundled at Baird MacGregor. The former provides financial protection for the directors and officers of the company in the event of a lawsuit pertaining to their duties with the company. The Employment Practices liability part of that duo has become more of a hot topic with the current and growing #MeToo social campaign. As healthy and empowering as the viral campaign is, there can be instances that are untested and unproven, and that's where Employment Practices liability can assist by reporting those claims to your insurer to be looked at by specialists in that field. Lastly, there is Limited Pollution liability. In some instances, a smaller policy may be included in general liability coverage, but if gas tanks, chemicals, or other materials that may be potentially harmful to the environment are more prevalent in your business, a separate stand-alone environment policy would provide broader coverage. The stand-alone version would protect from massive clean-up expenses and other forms of on-site remediation. FINAL TIPS ON LIABILITY COVERAGE Insurance is a hard thing to get excited about. It's something you desperately want after the fact, but a tough sell beforehand that simply becomes another overhead expense, at least for that moment. “As professionals, we care and want to make sure each and every client is cared for through properly crafted policies,” explains Comerford. “It's a sickening feeling when a situation occurs and we can't help, and that's why we make sure if the client is saying no to a certain policy, it becomes an educated no.”

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Not all policies are for everyone, but insurance brokers like Baird MacGregor assist in tailoring those specific programs to better fit your budget and most importantly, your longterm needs. With one or multiple dealerships in place, liability insurance coverage allows both peace of mind and potential savings in the bank account and in some cases, from closing up shop.



many cost-related factors into account when shopping for a used vehicle. One of those will likely be the cost of car insurance. It's a legal necessity for all drivers, sold by an industry that, in many consumers' eyes, lacks transparency in how it prices its policies.

Naturally, there are many consumeroriented organizations that seek to illuminate how car insurance is priced. One of those is the Highway Loss Data Institute (HLDI), a U.S.-based non-profit organization closely affiliated with the Insurance Institute for Highway Safety (IIHS), which conducts vehicle crashsafety testing. The HLDI tracks insurance claim costs to help used-car buyers choose a car that meets their needs while keeping insurance premiums and ownership costs down. The information they offer is split into two streams: collision-claims data tells consumers how much it costs

By Chris Chase

to repair a car after a crash, while injury data indicates how well a vehicle protected occupants in that crash.

also electric vehicles, or EVs: batterypowered versions of the Kia Soul and Volkswagen Golf.

The HLDI released its most recent data at the end of 2017, highlighting vehicles from model years 2014–2016 that had the highest and lowest collision claims losses. Generally, more expensive cars and those with higher-than-average performance are the most costly to insure, a fact that largely held true in the HLDI’s numbers. Another fact frequently borne out is that both repair and injury claims (and, thus, insurance costs) tend to be lowest for large vehicles like pickup trucks and SUVs: Their added size and mass make them less susceptible to serious collision damage. So it's surprising that the vehicle with the lowest collision repair claims was the Smart Fortwo Electric, a tiny twoseat coupe. It occupies the top spot on a list that includes just three other vehicles that aren't pickups or SUVs. One is the Chevrolet Corvette (whose inclusion we'll discuss shortly), and the other two are

Many factors affect how often a collision claim is filed for a particular car and how expensive those claims are, but one of them is how and where the vehicle is driven. While electric-car technology is advancing rapidly, these three EVs are all part of the industry's early push into the electric market and have limited driving ranges. That confines their practical use to city driving, where speeds are lower,

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TRENDS | CHRIS CHASE and also means they'll accumulate lowerthan-average annual odometer readings than a car that can do double duty as a commuter and long-haul driver. The Corvette is another outlier among cars with the lowest collision losses, but for different reasons. The HLDI data indicates the 'Vette in question is the Z06 model, standing in stark contrast to those economical EVs with its 650-hp supercharged V8. The Z06 may boast the lowest claim frequency among vehicles with the lowest overall collision losses, but has the dubious distinction of the highest claim costs. We would have expected that Corvette to appear among the vehicles with the highest collision losses, along with highend cars like the Bentley Continental, Maserati Granturismo, and Audi RS 7.


There are more surprises found in the personal injury claims data. All of the vehicles with the lowest claim frequencies are luxury vehicles, and more than half are performance cars. Conversely, the vehicles most often implicated in injury claims are lowerpriced models, mostly small cars. Interestingly, the HLDI says injury claim frequencies don't necessarily reflect a vehicle's safety rating, but rather how often it is driven and on what kinds of roads.

For a buyer, there's no getting around insuring your vehicle. But while deciding how much to spend is always up to the customer, data such as that compiled by the HLDI can help a dealer find the perfect car to meet a customer's needs while also offering the lowest potential cost of ownership to fit any budget.




and author Nick Webb, dealer consultant Warren Cederberg, and used car dealer Gurkaran Cheema have in common, it’s taking the age-old philosophy of focusing on the sale and turning it into something new: focusing on the customer. It’s that perspective change that all three say will help you increase your customer retention, often without the need for additional money.

Nick Webb: You’re Losing Customers Before You Even Know They Exist. Nick Webb is an author, public speaker, researcher, and business consultant. He consults for some of the largest names in business, including McDonald’s, Intel, Salesforce, Cisco, and 3M. He’s also worked with dealers and OEMs. In 2016, he published a book, What Customers Crave: How to Create Relevant and Memorable Experiences at Every Touchpoint, for which he researched over 2,200 companies. He feels that the heavy focus on sales in dealerships is more than just an annoyance: “We're so focused on selling that we forget that we're not dealing with bots, we're dealing with humans," he says. For example, one sales tactic he doesn’t like is the age-old “Mr. Webb, if I can get you that car for $21,000 today...”

Webb explains, "Those are the kinds of cryptic, circa 1980s behaviours that make most people really not look forward to the human experience of purchasing a car,” he says. The error lies in how the dealer views the customer: there is no one single customer, there is instead a range of personas. Not demographics, personas. He boils it down to this: learn what your customers hate and what they love. "Nothing more," he says. To illustrate what he means, he points a finger to Apple. When you walk in to an Apple store, a member of the sales team will ask you what seem like pretty harmless questions. "But what you don't realize,” Webb says, “is that they're really trying to identify your persona type so they can deliver to you the perfect pre-invented experience."

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IMPROVING ROI | LORI STRAUSS How does this change the service the customer gets? If the Apple employee feels the customer is a transactional type, they’ll give that person the tools needed to order and pay quickly. If, however, they feel the customer is a nurturing type, they’ll show that person over to the Genius Bar to talk to someone. For Webb, customer experience can be divided into five touchpoints: the pretouch moment, the first touchpoint, the core touchpoint, the last touchpoint, and the in-touch moment. "The best dealerships use each of these touchpoints to deliver the baseline level of customer expectation," he says. When your potential customer is researching their next car purchase, they’re in the pre-touch moment. This can include virtual research, like visiting AutoTrader, and physical research, like driving by your lot. Webb says dealers lose about 30% of annual pop-in revenue before the customer has even arrived on the lot because of what the customer has learned during this phase. Once the customer has walked through your door, they’ve entered what he calls the first touchpoint. Although the second touchpoint in his list, this is the first time you actually deal with the customer. The first touchpoint is their first impression of you as a place to do business with and is therefore heavily weighted. "If we do a great job in our first touchpoint,” Webb says, “customers are very forgiving later on. Conversely, if we do a bad job on our first touchpoint, it's very hard to make up for that later.” Once the customer has entered into the car-buying process, they’ve entered into the core touchpoint. This is where the customer finds out what it’s like to do business with the dealership and can also include Service and Finance.


What Webb calls the last touchpoint is actually the fourth of five, but it’s the last one involving direct contact with the customer during the purchase process and is the final touch of the whole transaction. Webb asks you one question: “What are you sending them off with?” This is the part that often reflects in your online reviews. "Most dealers are so focused on sales that they forget to be thoughtful and judicious about engineering these special moments." Next comes the point that sales people may often not do: staying in touch. Webb says you should ask yourself this: How do you authentically stay in touch with customers in a way that's not designed to sell them something, but designed to provide them something of true value? Warren Cederberg has a few ideas. Warren Cederberg: Your Phone Doesn’t Weigh 300 lbs Automotivaters is a Canadian corporation highly recognized and respected within the automotive industry. Since 1987, the company has acquired an international client base throughout Canada, the United States, the Philippines, Indonesia, French Polynesia, Malaysia, Thailand, and New Zealand, and has helped thousands of dealers improve their operations and increase their sales. Warren Cederberg, director and president of the company, has been in the automotive consulting business for over 20 years and in the automotive industry for over 30.

Used car dealers, he says, are "typically stuck, I think, in some old mindsets. I'll just call it a one-and-done mindset.” Translation: forgetting the customer after the sale has been made and waiting for new ones to walk through the door. He says that, within used car operations, the one-and-done attitude "permeates and it's a sticky one to move." He then adds, "But it's so important and lucrative to change that." Consider a sales rep who averages 60 new customers every year. If a trade cycle is four years, and 30 customers from each year return, then you can see how this sales rep’s numbers will increase with time. But how does the sales rep keep customers coming back? By being mindful of each customer’s trade cycle and trying to stay on top of the customer’s list for the next time they buy a vehicle. The bare minimum you need to make this work is a CRM so you can track who your customers are, what they’ve bought, and when they’re most likely going to purchase a vehicle again. Then, stay in touch with them strategically. "If you don't have something like that, you can't even really get started on tracking and making strategic contacts to your client base,” says Cederberg. Where do you start? With the purchase, of course. During your conversations with the customer, try to find out how often they buy a new car, who else in their circles is buying or will be in the future, how many kilometers the customer drives before considering a new one, etc.


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VOLUME 6, ISSUE 1 | 19


IMPLEMENTING CHANGES Making changes to your existing processes takes time and resources. Webb says, when you’re thinking about any kind of major change, ask yourself how important that change is for your business and use that to drive your motivation. If budget and time are an issue, Webb suggests borrowing from advertising money and putting it towards something that institutionalizes the customer experience that has essentially free-scale benefits. Next, assess your business processes based on his five touchpoints: do you already do each of those items? Then build a roadmap that institutionalizes these principles into the way in which you handle sales and all customer relations. As you deploy it and test it, measure it so you know what’s working and what isn’t. “You don't have to do everything overnight,” Webb says. If he were to advise a dealer, whether it was a small used car lot or a large OEM retailer, he would say, “Start with your salespeople. Ask them, ‘What are five things we can do to improve the experience, and how do we make it happen?’”


What you’re looking for is hints on when to get back in touch. Then, you pick up the phone, starting a week after the purchase to make sure everything’s still okay. Cederberg is well aware that two factors keep sales reps from picking up the phone: they believe that calling customers who aren’t coming in again soon is a waste of time and that it opens the gates for negative feedback. “We call it the 300-lb phone," he says. “Well, so what? If something's going wrong with the vehicle, you're going to get a negative call, anyway." He points out that, because customers bought from you, they already have a good impression of you. By making those calls, customers will retain that. To enforce this practice, Cederberg says it’s important to include these duties as part of each sales person’s employment contract and to subsequently manage their performance. Why go through all this trouble? All these phone calls focus on the answer: “You're the one that's getting them to think about the best time to trade that one in, and you're probably the first one they're going to come to see. You can probably generate an appointment just from that call if it's close enough to the time that they want to trade,” he says.

"You can’t have repeat business without relationships.” "And that's the strongest retention strategy of all: sell them another vehicle before someone else does,” he says. Cederberg emphasizes the bonuses for sales people who stay in touch with their customers. For starters, it automatically increases their sales in subsequent years. And second, repeat customers are easier to deal with

because they already know and trust the sales rep. And who doesn’t want customers who are easier to deal with? Having a steady stream of repeat business may take three trade cycles, but you can get there, Cederberg says. “All of that will come. But none of it comes by itself." He emphasizes: "You can’t have repeat business without relationships.” And above all, don’t throw away the opportunity to sell to someone who’s just walked in the door. Cederberg doesn’t mince words on this: "The salesperson today has to get their head screwed on right, because just the fact that somebody has come to the dealership tells you where they are in their shopping experience. They’ve already done 10, 11, or 12 hours of research before they turned up at your door. They’re far along. They're not to be dismissed." Dealer Gurkaran Cheema learned that the easy way. Gurkaran Cheema: You’re Giving Your Customers a Step up in Life Like many dealerships, GSR Auto Centre in Hamilton is family operated. It’s been around since 2006, but the Cheema family has been in the car business since the early 90s. Gurkaran Cheema is in the process of becoming a co-owner of GSR Auto Centre with his father and transitioning to becoming its manager. He has one other employee. Cheema’s outlook on the customer reflects the new way of looking at sales: it’s about the customer. Cheema is young – he’s still in his 20s – but he’s already put his philosophy to practice. During a position at another dealership, he helped a Syrian refugee get out of a bad spot he had been manipulated into with a previous purchase. Perhaps not such an issue, until you hear the rest of the story: neither Cheema nor his customer spoke any common language.

“There’s no excuse to not speak with a customer,” he says. He spent three weeks with the customer and earned perhaps $80 in commission, but the work paid off: the customer who had very little, suddenly brought in four or five people who had more. "When the person comes in, no matter what they look like, no matter what they say, what budget they're looking at, always give them the time to understand what they're looking for,” he advises. If he doesn’t have anything for the customer, he’ll take their information and try and find them a vehicle. If he finds something, he calls back to let them know but also ensures they understand there's no pressure to return and have a look.

... customers need to feel that the dealership understands them and plays fair. "It helps them feel that we're actually trying to work with them, not just trying to sell them what we have." Trust is key here, and Cheema says customers need to feel that the dealership understands them and plays fair. He strongly supports educating customers and says he’ll even convince a customer to walk away from a car, e.g., a hybrid, where he would make more commission, if he feels that vehicle is not in the customer’s best interests. "You have to understand that the reward you get for coming to work every day, even for a used car dealer, even for myself, is beyond what you can do financially. It is more so what you can enable people to do. And in this country, having a vehicle is a huge, huge plus point for everybody. You can help people achieve this aspect of their life, you really help them really bring up their quality of life." For Cheema, your attitude becomes your reputation. "If you're only a money grabber, people understand that, and your community will know that, and once your community knows that, that's where your success is shot." Changing the way you view customers doesn’t need to cost a lot. A change in perspective costs nothing. Neither does changing the way sales staff speak with their customers. And having sales staff use the phone during times when they’re not busy? Also $0. More money for no money? Why wouldn’t you?

Spireon is an American company that has been around for 15 years and began by offering GPS tracking for the broader financial industry. This included BHPH dealers. It expanded into fleet management and then into OEM dealers, helping them manage their lots. Just last year, the company released a new solution for new and used car dealers: the Kahu device, which they say will help dealers not only manage their lots but also offer a more personalized customer experience. The device is hard-wired into each car on the lot and communicates with the Kahu system via a cellular signal. Information is read on an app. When the device is with the dealer, the dealer can see where a vehicle is: out for a test drive, in the garage, or on the lot (right down to the parking space). The device does the same for the customer who buys the vehicle. For example, it can help find a stolen vehicle or keep an eye on young family drivers. When the Kahu device transfers to the customer (who usually buys a three or five-year contract), the customer can opt-in to have mileage sent to the dealership. This allows you to send notices to the customer at the right time, e.g., when the car’s mileage has hit the first service milestone. Dealers pay upfront for the device and a one-year cellular signal. There are no other monthly fees. If the device is sold to a customer, the dealer pays a royalty to Kahu. For an additional fee, Spireon will also help integrate the data from the device into other systems. For example, when the device registers that the vehicle has hit a mileage milestone, the app can tell the customer it’s time to book a service appointment and then take the customer directly to your interface so they can book the appointment themselves. The device is already integrated with CDK, Reynolds, and DealerTrack. For more information, visit

VOLUME 6, ISSUE 1 | 21



By Lori Straus

PASS ON YOUR DEALERSHIP PROPERLY WITH SUCCESSION PLANNING Do you have a plan for what will happen to your dealership after you retire? If something tragic should happen before that day, do you know what would happen to the business that provides for so many? Life is often unpredictable and full of unknowns - succession planning is all about planning for those unknowns so that the people who rely on your business won’t be left in the dust when you hang up your boots. Many family businesses fail to properly plan succession, and end up being sold because there is nobody in line to be able to take over. There’s a lot you can do today to ensure that you get the most out of the business you’ve put so much time into when you retire, or for your family, employees, and other stakeholders in the event something unexpected should happen.


Succession planning - a necessary plan of action While many dealership owners may not feel the need to plan for their exit anytime soon, the process of succession planning is a necessity in order to ensure a smooth transition for yourself and your business - no matter how far off that day may be. Succession planning is the process of creating a strategy that will allow you to sell or hand over your business to your successor - often a family member, a co-founder, partner, an employee, or another entrepreneur. An official succession plan is the difference between a smooth exit strategy and one that may ultimately mean the demise of your business. Your plan, if properly executed, will ideally begin with a vision of your company’s future, and end with a successful transition of power that will see you into the next stage of your life, ensuring the survival of your business and legacy. Whether you choose to pass it on to your children or sell your dealership outright, your succession plan requires a great deal of forethought, preparation, arrangement, and time for implementation.

Without a formal plan of succession, your business could be without a leader upon your retirement, leaving it and its employees and stakeholders in a state of flux. It could also end up losing you money upon retirement, as a litany of legal and taxation issues may arise during your departure - prolonging your retirement and dragging out the sale of your dealership. What to include in your succession plan? A true succession plan will require the involvement of a lawyer, a certified financial planner, and accountant, all of whom will help to finalize and make your plan official. A successful plan will include the following elements: • Who your successor is to be • How that successor will be trained or prepared for their future role • The roles of other key employees in your business • How the sale of your business or transfer of shares will take place and on what terms • Distribution of ownership

• Further financial, taxation, and legal considerations • Procedures to resolve disputes that may arise • A schedule of succession Keeping it in the family Many dealerships are family-run businesses, with the expectation that the business will be passed on to the next generation. If you’re planning on leaving your business to your spouse, children, or other relative, it’s important to do it correctly. If a business owner fails to properly plan for succession within the family, it could lead to many disputes down the road - ultimately dividing and leading to infighting between your family members. In order to involve your family members in the decision of choosing a successor and to ensure that your business will live to see another generation, you can create a Family Participation Plan. This step is common when planning for succession within your family, and addresses issues like what prerequisites or experience is needed for new owner candidates, how performances will be appraised, what happens to business shares, and what happens in the event that a family member does not work out as an employee. When should you start planning? The experts say that you should start planning today, even if only on an informal basis. “Anybody could be hit by a bus tomorrow” says John Alexander, CFP, and Senior Financial Planner of North Bay’s Assante Wealth Management - “If something happens to you and you don’t have a plan, your business could be left in limbo. With nobody to take the reins, key business decisions tend to be put on the backburner.”

process of succession planning. It’s recommended that business owners start planning formally within five to six years of their expected retirement date. The process can take anywhere from six to eight months on average because of all the parties and key decision making processes involved, so it’s important to be proactive about your plan. When your plan is in place Once your plan of succession has been drawn up and made official by all parties, you can start the process of training the future owner(s) of your company. A well-trained successor will mean that the employees and clients who rely on your business will be able to continue living comfortably, and your business will continue on with your vision in mind.

“If something happens to you and you don’t have a plan, your business could be left in limbo."

Even more important than the proper training of your successor is ensuring that your retirement or exit from the business will go smoothly. Once your plan is in place you can then focus on the planning of your retirement

and estate with tax implications and financials in mind. Since your dealership will be left to the best possible successor, you can have that peace of mind and focus on the next exciting stage of your life. What you stand to gain by planning for succession First and foremost, what you stand to gain by being proactive in succession planning is peace of mind - your legacy will be left intact and the people who rely on you and your business will not be left in the shadows. Since you get to select and groom your own successor, you will have a direct say in the future of the business you fought so hard to keep alive. With your retirement in mind, preparing for succession well ahead of time will mean that you get the most value out of your business, and can maximize the amount you stand to gain upon exiting. With taxation and the legal precautions taken and considered by you and your successor, the future will look bright for all parties. It’s never too early to start thinking about the future, especially when there’s so much at stake. The legacy of yourself and your business, and the livelihood of your family and employees are depending on a smooth transition of power upon your exit from the business. Speak to your family, your employees, and the person(s) you plan on leaving in charge of your business today.

Discussing the terms of your succession often and openly with those who you want to pass the business to will leave all parties ready for the actual

VOLUME 6, ISSUE 1 | 23

DEALER PROFILE Parkway Auto Trade By Rhonda Payne Detail for Retail USED CARS SELL WHEN THEY ARE SHOWCASED AT THEIR BEST. Carmine Mallozzi, owner of Parkway

Auto Trade in Milton, learned this and other tips of the trade from his mentor when he started in the used car business in 1972. He moved up, as so many in the business do, from sales to management, then management to ownership and he credits that mentor and friend with the important values he learned and passed on along the way. “It’s got to be detailed for retail,” Carmine says, quoting his mentor. “It has to be as pristine as possible to make it ready for sale.” He notes when a car is the best it can be, there’s very little a potential buyer can object to if it’s

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Parkway Auto Trade the kind of car they are after. He’s seen this in action. A dirty car with dents will leave a buyer dickering over price, wondering if their possible chariot is a clunker. Some might even walk off the lot when all the car needs is a wash and a touch up. “It’s all about transformation,” says Carmine. “I get fulfillment, I get pumped up and feel desire when I buy a car or a trade-in that needs attention to detail.” Carmine has always seen the best in cars.

way into used car dealer ownership. “I took it on. I bought the dealership in 1986.”

“When I was a kid, I was really into cars,” he says. “I was a tinkerer, a backyard mechanic, when I was in school. I was always fixing teachers’ cars and at the top of my class in auto shop.”

Soon after, Carmine found a spot in a semi-industrial area of Milton, near the James Snow Parkway, right next to Manheim Auto Auction and sold the property in Bolton. He then created the new trade name of Parkway Auto Trade and at this new location has been applying those key lessons from his friend as he continues to transform both cars and the business.

“It’s a family-run business..It’s about pride.” Obviously, Carmine wanted to put those skills into action after graduation, so he went to a Chrysler dealership in Toronto to try to get an apprentice mechanic position. While there wasn’t a mechanic’s position available, there was a sales position, so Carmine took it, planning to move into a mechanic’s role when one became available. Instead, he thrived in sales and absorbed key lessons from his friend and mentor before moving into the role of sales manager at a GM store in Toronto. “I found out that friend of mine, who originally hired me as a sales person, was selling his used car dealership,” Carmine explains as to how he found his


“It’s a family-run business,” Carmine says. “It’s about pride.” His son-in-law, Nick Moretti, has been part of the dealership for about 25 years and Carmine sees his own role in the business winding down as Nick’s continues to ramp up. “My son-in-law pretty much runs the show now,” he says. The sales team also includes Vince Ieluzzi who has been with Parkway Auto Trade for 10 years. The trio has made some strong advancements in the industry, like the website primarily headed up by Vince. “Basically, what we’re doing with some of our customers is… they request a certain car. We find them the car, sight unseen,

bring it in, recondition it,” explains Carmine. “If it’s not what we say it is, you leave it here. Most clients see their purchase for the first time when we deliver it to their door.” Through, Carmine and his team have created a way for customers to order the vehicle they want from wherever it may be. “We search for the vehicle. We deal nationally,” he adds. “If we don’t find it, it doesn’t cost you a thing.” Even the bill of sale specifies that if the car isn’t what Parkway Auto Trade claims, the customer can walk away from the deal. This unique approach allows the dealership to help not just customers within and around Milton, but also those many miles away. Carmine takes pride in dealing with second and third generation customers and through it doesn’t matter where those friends and family live. “I don’t think there’s a safer way of doing business for the consumer than that,” he says. “The philosophy with a lot of dealers is if you don’t have a car in inventory, you can’t sell it. We decided instead of increasing inventory and carrying costs and passing those costs along to our customers, whatever vehicle that individual wants, we find it for them. We just don’t stock it for them.”

Many of the customers who make use of the website already know what vehicle they want, while others can use some helpful, professional advice. “Our clients present us with their criteria,” Carmine says. “A lot are very savvy. They’ll challenge us to, ‘find this for me’, they’ve done their research and they know what they want.”

Doing something different has worked for Carmine. He’s the first to say his dealership is off the beaten track. “We’re not on a main drag,” he says. “We’re in a commercial industrial area. We’ve been here since 1989. People come in through word of mouth and whoever does come in is impressed.” The team at the dealership hears the phrase, “are your cars ever nice,” often. It’s something Carmine has ensured is part of the business. Much as he cares for the cars, he also cares for the dealership itself.

near that stereotype of a used car dealership. A lot of consumers don’t want to go through that rhetoric of going from dealership to dealership, so we pay attention to the little details.” And, they provide a number of options from in-person to online. “Milton started to flourish about 15 years ago,” he says. “That’s when I realized that we were on the right track.”

Other customers may not have that background of information and can In addition to the and benefit from the help the team provides the websites, all of the one-on-one as well as through a radio dealership’s vehicles are advertised online, show Vince (and sometimes Carmine) with Auto Trader and now through the does on AM 640 in Toronto. The once-a“I take pride in the building, the shop,” he UCDA’s new retail site month show has been on the air for six says. “I keep it manicured. We could have years and helps consumers understand moved, but we chose to stay because we “I’m excited about the UCDA method various aspects of the automotive industry. prefer to focus on the quality of cars. I of advertising,” Carmine adds. “It’s in It helps create a more educated and don’t have to be the biggest.” infancy stages right now, hopefully it’s therefore, more satisfied customer when going to take off. I’m sure it will. We’ve it comes to their next car purchase. In his opinion, the smaller dealerships been asking for it.” can stand out from larger dealerships “Vince brings things across about how we if they have quality cars. Parkway Auto Additionally, Parkway Auto Trade is a do things,” he says. “He breaks it all down.” Trade started off with an inventory of supporter of Kidney Car which supports about 15 or 20 cars and grew to about 70 the Kidney Foundation of Canada. Not These are certainly different approaches or 80 along with the town of Milton. only will Carmine and his team take in in the industry, as is the cars that are past their prime and ensure site where Parkway Auto Trade continues “We have our own mechanic shop and a tax receipt is provided to the donor, the customer-focused approach. The detail shop,” Carmine adds. they also dispose of all the dealerships team will provide approximate pricing unsellable cars through Kidney Car and on a car someone is looking to sell. If the Both the mechanic and detailer have make a donation each time a car is sold car is what the customer says it is, they shops within the dealership. The through get that money on the spot when they mechanic of 26 years and his son run their bring the car in. Carmine sees it as a great shop and rent the space from Parkway The legacy of “detail for retail” started by option for those dealing with bankruptcy, Auto Trade as does the detailer of 20 years. Carmine Mallozzi’s friend and mentor will an extra car in the family and even fleet continue as Parkway Auto Trade keeps vehicles – it’s wide open. “It’s based on integrity,” notes Carmine. the focus on the notion that good looking “It’s not about short cuts. We’re nowhere vehicles make for a great dealership.

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journal Numeracy assessed 14 small and medium-sized business to find out the answer to this question: Could these owners extract the information they needed from their financials to successfully run their business?

Can you? If you’re still with me, thank you. I run a small business, too, and I must admit that I’m likely to skip over financial articles myself. I’m not in retail, but from my own experience, it’s depressing looking at numbers at the end of the year and seeing the dismal reality that you didn’t earn what you were hoping for.


(Only reviewing all your numbers annually is one mistake we’ll get into in a moment.) It’s clear that managing your financials takes time, a resource you may be short on. But with everything you’ve invested in your dealership thus far, why would you not spend time managing your money?

Again, not a large group. But here’s the interesting detail: none of those seven performed any type of financial analysis, and only one reviewed statements monthly. In addition, none of them evaluated their return on investment for their business. Does this sound like you at all? Taunya Richardson, owner of Epifany Financial Group and an independent business consultant with the Business Development Bank of Canada, also sees this lack of knowledge about ROI in her clients.

The case study I opened with only involves a small number of businesses, but case studies are used to expose a lot of details that larger studies may not be able to. They open our eyes “So, the biggest investment an to what may be happening, instead entrepreneur is going to make in their of providing us with definitive lifetime is not in their home, it's going conclusions about what does happen. to be in their business,” she says. “But I have yet to have one entrepreneur be Of the 14 businesses, seven were able to answer what the anticipated experiencing financial difficulties return on investment is going to be.” due to one or more of the following categories: loss of revenue, She says it’s important to look at insufficient cash flow, excessive debt. investments of both time and money. “Oftentimes there's lost money,

because they were working at another job, they would've been making more money, but they decided to do their business. So they haven't calculated the true cost,” she says. Richardson has been involved in entrepreneurship for 30 years, has owned eight businesses, and currently runs three. All have been in the area of financial literacy and empowerment. She rarely, if ever, consults with a business owner who knows what the return of investment is in their business. And yet, if the same business owner gave $100,000 to a financial advisor to invest, they would ask for the ROI. "But nobody asks themselves that as an entrepreneur. So, regardless of whether it's automotive or whatever it may be, that's probably one of the critical questions you need to ask yourself, because all of the decisions from that point forward are going to

be reflective of that decision." By looking at your business as an investment, she says, you won’t take it so personally. “It's a separate entity, and it's an investment, and you do what's right for the investment.” So, with that being said, let’s look at some ways to manage your financials. An Easy Fix: Technology Check-Up Michael Burca is the owner of MGB International and consults with businesses, including dealerships, on a wide range of matters. One area he finds many business owners – and not just dealers – skimp on is technology. "I think that the financial burden that businesses in general forget is their accounting systems. One of the things nobody does and the last thing they invest in is technology. Because they don't see it as a profitable division,” he says.

One of his largest clients won’t upgrade their computers. "It affects his finances, affects his payroll, affects his everything, because everything is computerized." Stop Ignoring Costs Richardson always starts at the bottom and works her way up. This means she’ll do annual planning with her clients first. She finds most SMBs are happy to typically operate at 1-3% net profit, "whereas their larger competitors and best in-sector performers are typically operating anywhere at a 25%-40% net profit." This large gap between the two allows the larger competitors to make use of the extra resources, by recruiting and retaining really good people, offering strong bonus strategies, engaging in strong marketing and advertising, and more.

BAD DECISIONS HURT MAKE GOOD DECISIONS. USE VVR. Making good decisions means changing the way you do things to improve your results. By providing third-party validation that the offer you’re making on a trade is fair, VVR’s Offer Sheet helps win more trades and improve customer experiences, helping you build trust and keep them coming back.

VOLUME 6, ISSUE 1 | 29

FISCAL FITNESS | LORI STRAUS However, Richardson finds that SMB owners aren’t always accounting for all their expenses, including a healthy owner’s salary, benefit packages, carrying costs, and debt accumulation on credit cards. After calculating what the net profit will be, she goes through operating expenses and then reviews the cost of goods. It’s in cost of goods that she finds dealers often not accurately accounting for things. According to her, small business owners in the automotive sector frequently lose money in carrying costs. So, if you have an item that costs $10,000 and you’re paying 20% in carrying costs and the item doesn’t sell quickly, you can lose money fast. “That's where a lot of businesses are hemorrhaging their cash, but they're not accounting for it, because it's blended in to their operating,” she says. She then assigns a very specific cost of goods to each product stream so business owners can assign the right price to the product. Then she’ll set sales volume and cash flows for the rest of the year. It’s in the Percentage Richardson also immediately implements using percentages instead of dollars, because she finds it hard to stay on course if you’re looking at dollars. “It's very easy to see where your opportunities and your gaps are,” she says. “So, if we know that we're planning for profit and that every month we need to come in at 16.4% with respect to indirect costs, and our cost of sales need to be at, let's just say it's at 80%, and every month, we can start to dial in on those very specific numbers.” What happens often, though, is that business owners let a bookkeeper


A GOOD TIME TO REVIEW YOUR INSURANCE Alongside reviewing your finances, you should also review your insurance policies once a year. Baird MacGregor Insurance Brokers’ CEO Philomena Comerford cautions dealers against letting insurance policies renew without reviewing them. “Dealers are often not re-evaluating their coverage,” she says. Use the list below as part of your annual insurance review to make sure you’ve got the right coverage. This list is by no means exhaustive, but it will serve as a strong starting point to make sure you’re covered. Then get in touch with your broker and confirm your coverage. HAS YOUR INVENTORY INCREASED OR DECREASED? Your garage policy has a co-insurance clause, which limits how much you’ll receive in the event of damage or loss to your inventory to the amount you’ve insured for. A simple example: Last year, you had $100,000 in inventory. This year, you’ve grown and now have $200,000 in inventory, and you now have a vandalism claim for $50,000. However, you never adjusted your coverage. You should have carried $200,000. This means you’re not fully covered, because the payout is a calculation based on what you did insure, what you should have insured, and how much of your inventory you lost. In this scenario, this means you would receive $25,000, because you’re 50% underinsured. DO YOU HAVE SUFFICIENT COVERAGE FOR CONSIGNMENT AND/OR OTHER CUSTOMERS’ VEHICLES ON YOUR LOT? If you have vehicles on consignment or from other customers, you need coverage there, too, because a dealer can be held liable for damage to these cars. DO YOU REQUIRE MORE OR LESS COVERAGE FOR YOUR ASSETS? Examine the coverage you have on your buildings and all contents. Make sure your policies cover replacement cost, not their depreciated value that you’re carrying on your books. ARE THE PROPERTY VALUES ON YOUR INSURANCE POLICIES STILL ACCURATE? Comerford suggests getting an appraisal on the building or, at the very least, getting an estimate from a builder.

WHO IS RESPONSIBLE FOR INSURING YOUR EMPLOYEES’ TOOLS? Confirm with your employees if your insurance will cover their tools. If you don’t make this clear with them, you may run into further issues should damage or loss occur. DO ANY OF YOUR PROPERTY POLICIES HAVE CO-INSURANCE CLAUSES? Because these clauses can show up here, too. DOES YOUR INSURANCE COVERAGE COVER YOUR OBLIGATIONS UNDER LEASE CONTRACTS? Contracts for anything you lease may include clauses about insurance. In some cases, the landlord may even expect you to insure the building you're leasing. If you’re not required to insure the building, review the tenant’s legal liability limit under your general liability policy. IS YOUR BUSINESS INTERRUPTION COVERAGE STILL ADEQUATE? If you’ve grown significantly in the past year, make sure the coverage available to you is still sufficient. Also, normally business interruption coverage is only for 12 months, so you may need to ask for a longer period. You can usually increase the indemnity period to 18 or 24 months. In addition, clarify what type of coverage your policy has: Not all policies reimburse you for actual loss sustained. DO YOUR BREAKDOWN COVERAGE AND PROPERTY POLICY LIMITS MATCH? Comerford advises that, whatever you do on the property policy, you must also do on the breakdown policy: adjust both policies at the same time and make sure the limits on the breakdown policy mirror the limits on the property policy. Do you have sufficient liability limits to cover your exposures? It’s easy to think “this won’t happen to me,” but it’s harder to have it happen to you and pay for it out of pocket. In addition, if you operate as a sole proprietor, all your personal assets, including your house, may be fair game in a claim. If you have any gas or oil tanks on your property, or anything that could potentially cause environmental damage, Comerford recommends environmental coverage, too. In the end, what you purchase is up to you, but make sure your purchases are a conscious decision, not an accidental happening. Comerford says, “A broker can advise the client, but at the end of the day it's their business and they have to decide how much they want to pay protecting it.”

do the numbers, the numbers get passed to the accountant for year-end review, and then the business owner deals with the numbers three or four months into the following year. “At that point, it's way too late to do anything about it.” Burca agrees. "I wouldn't run a business on annual data." Richardson says using percentages instead of dollar figures lets you see if you’re on track at any time of the year. And if you’re not on track, you’re in a position to fix it. So, What’s the Schedule? The size of your dealership will, in part, help you decide how often you need to complete financial duties. Burca suggests that very small operations contract the work to a bookkeeper and review their books quarterly. "Quarterly works because it keeps everybody on a regimented routine,” he says. He recommends that larger dealerships hire people to work inhouse and review the numbers weekly. "Having an in-house bookkeeper that's constantly doing that, that saves a lot of time and money in the long run." Richardson takes the goals that were set during the annual planning phase and breaks those down into monthly and weekly chunks. Track expenses monthly, she suggests, and especially keep an eye out for what she calls common money leaks: • High interests rates that have not been renegotiated • Late charges on bills because they weren't paid on time (call suppliers and ask them to move payment dates to the 12th or 27th of each month)

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FISCAL FITNESS | LORI STRAUS • Over-limit charges on credit cards • Monthly subscriptions on credit cards for unnecessary services • Unnecessary insurance packages • Unnecessary bank fees and service charges • Overdraft and NSF fees • Overpaying for data • Not bundling services / bundling services you don’t even use (i.e., cable and/or land lines) • Using debit and credit cards for discretionary spending: she calls this a “sure-fire” way to spend too much • Unused domains being renewed each year for a "maybe one-day" scenario In addition to checking expenses monthly, Richardson says sales meetings should also happen monthly. “Make sure that the entire team is positioned and know what the goals are,” she advises. This includes Service, Parts, and Finance. In addition to monthly meetings, if you have specific product to move, quick weekly meetings to inform everyone can also help, she says.

study published in the Journal of Business Research in 2014 analyzed 902 ventures in the US and found that low-performing firms benefited more than high-performing ones from using help from the outside for several key areas, including finance.

She emphasizes that it’s important your sales teams have not only the goals they need to reach but also the tools needed to reach them. “I find in small businesses, the owner's job is more managing people than it is operations. […] Their role is: really keeping everybody engaged, keeping everybody inspired, and keeping everybody motivated to do what they need to do to make sure the business moves forward. If the owner is taking this all on themselves, they've actually just built more of a job for themselves versus a business, and it's very hard for them to sustain or grow with that sort of mentality."

In the study’s case, this help came from the US Small Business Administration’s (SBA) Entrepreneurial Development Resource Partners. The US SBA is similar to the Small Business Centres we have in Ontario.

I Know All This, But I’m Still Behind

"A big piece of what I do with business owners is getting them to understand You’re like most business owners, then. their money mindset and all of their Burca, for example, doesn’t know a limiting habits and patterns that keep business owner who’s never fallen sabotaging their financial progress,” behind on government payments and she explains. taxes. Richardson understands that business owners will carry debt on You can no longer afford to ignore credit cards. your finances. If you do, you increase the risk that your business will suffer. If you’re having difficulty, seek outside help. Make use of your local Small Business Centre ( just search “Small Business Centre” and the name of your city/town or region/county). Don’t forget that the UCDA also has resources for members. Visit www. to see if we have something But how do you deal with these there for you. habits? Try outside help. In fact, a

"You can no longer afford to ignore your finances." 130 Industry St., Unit 36, North York, ON M6M 5G3 e


Richardson is also a financial behaviourist, which means she studies people’s behaviour in financial matters.

TECH TALK By Angela West



in the rearview mirror, automotive heavy hitters like Nissan and Ford have introduced groundbreaking new technology that they hope to implement into their vehicles in the not too distant future, with brain-to-vehicle and vehicleto-everything tech on the horizon to put the power back into the hands of drivers. Other innovators have introduced easyto-use tools that sync directly to a driver’s smartphone, allowing them to view data and car health in real time for a more convenient driving experience. Here’s the latest on what’s happening in automotive gadgets and apps. Nissan debuts new brain-to-vehicle technology at CES

The annual Consumer Electronics Show (CES) is famous for the unveiling of a wide variety of technological innovations, and the 2018 show was no exception. In a bold step away from the move towards selfdriving car technology, Nissan debuted their brand new brain-to-vehicle (B2V) technology that aims to put power back into the hands of drivers worldwide. The innovative B2V technology will involve drivers having their brain monitored in

order to enhance their driving experiences, helping to increase response times while driving and allowing for a smoother, safer journey for consumers. Nissan is following the B2V technology route in order to ensure that the manual driving experience does not become obsolete with the onset of self-driving cars. The technology will see drivers wearing custom-designed sensors as they drive, allowing their vehicle to anticipate their movements ahead of time. The B2V-supported vehicle will correct the driver’s actions through the steering wheel or accelerator based on the driver’s brainwaves, being analysed and interpreted in real time. This will decrease the likelihood of accidents or other mishaps on the road through predictive thinking and adaptation. Nissan’s groundbreaking technology is still a few years over the horizon, but the future potential for its use is limitless. Ford introduces cellular vehicle communication technology CES 2018 also saw an exciting partnership as Ford and Qualcomm revealed a brand new technology that will see Ford

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TECH TALK | ANGELA WEST Track your real-time vehicle performance data with your smartphone The Automatic Pro car adapter has been touted as being a Fitbit-like addition to your car that can help you track your vehicle's data in real time. The Automatic adapter was created with the intention of helping drivers drive safer and greener, with the adapter monitoring and providing feedback on driving behaviours, fuel consumption, and engine diagnostics. The Automatic adapter plugs in right under your dashboard, with driver’s then installing the Automatic app (available to both Android and iPhone users) which will instantly sync driving data to the smartphone app using 3G cellular or Bluetooth. The Automatic car adapter is available in both Lite and Pro versions, each of which offer their own benefits. The Automatic Lite can track business expenses, provide engine light diagnostics, and log your fuel fill-ups and trips, with a web dashboard and Bluetooth syncing available. The Automatic Pro offers the same basic features as the Lite, but with 3G syncing, crash alerts that will notify authorities should the unthinkable ever happen, as well as parking and live vehicle tracking and a streaming app. For drivers looking to become more aware of their driving data with an easy-to-use smartphone friendly app, the Automatic car adapter is a game changer. outfitted vehicles with new vehicle-toeverything communication (V2X) tech. The V2X technology will be broadcast over cellular signals in order to identify and warn drivers of dangerous road conditions, traffic lights, bikes, and a variety of other driving-related situations. The initial rollout of Ford and Qualcomm’s V2X technology will take advantage of 4G cellular signals, with potential for adaptation to the upcoming 5G cellular in the near future. While vehicle-to-vehicle tech has been in existence for some time, V2X is seen as the next logical step in the progression of a safer and smarter driving experience.


Easily monitor your tire pressure using your smartphone Monitoring the health and pressure of your vehicle’s tires has never been as easy as it is with FOBO Tire, a wireless Bluetooth tire pressure monitoring system. FOBO tire works seamlessly with both Android and iOS devices to provide detailed information about tire health. The smartphone app features a three-level alert system that warns drivers if their tires are underinflated or whether it’s dangerous to continue driving with their tires in a low-pressure state.

The app can also alert drivers of a tire leak, doing so even when drivers are away from their vehicles. This gives drivers a heads-up so that they can have their tires checked and fixed before they set out on another adventure on the road. FOBO Tire allows drivers to be proactive about one of the most important elements of a vehicle, letting you get to work and appointments safely and on-time. Crosspairing technology is available for drivers with multiple vehicles or for those who wish to share their FOBO Tire technology with others. FOBO Tire is dedicated to making sure drivers arrive safely to their destinations on every trip. Make time for your morning coffee with Handpresso Auto For drivers who don’t have enough time to brew up their own coffee or espressos in the morning, Handpresso Auto has got you covered! The in-car coffee brewer allows drivers to make their favourite hot beverages on the go without having to stop on your adventure. Of course, it should not be used while driving! The Handpresso is available in a variety of formats and sizes, letting you brew whatever you want, whenever you want it. Each unit plugs directly into your vehicle’s cigarette-lighter, with other auto adapters also available. If you’re looking for a quality caffeine fix on the go, Handpresso will definitely become a fixture in your vehicle.

THE COMMON LAWYER Repair Loans – Useful Tools, or a Nuisance? likely have to tie-up money by paying it into Court in order to secure the release of the vehicle from the repair lender. Repair loans are tools which can be abused by dealers, mechanics and repair lenders. It is therefore vitally important that repair lenders understand the relevant legislation, that automotive lenders understand their rights, and that dealerships/mechanics train their staff to ensure that any type of lending facility is used appropriately and ethically.

By Justin M. Jakubiak Vehicle repair loans are gaining popularity in Ontario, as are the legal issues and headaches surrounding them. Repair loans are typically advertised as the solution to unexpected costly car repairs that a consumer may not be able to afford. Once approved, the mechanic is paid in full for the repairs, and the consumer can take her car away and repay the repair loan over time by way of fixed monthly installments. What if the customer already has a loan registered against her car? No worries - the repair loan takes priority! Sounds like a great tool; unless you are an automotive lender and previously lent money to the same consumer to purchase her vehicle. In the event of a default by the customer, you as lender may have a significantly reduced equity interest in the customer's vehicle. Also, if you want to challenge the amounts being claimed by the repair lender, you will

Repair and Storage Liens Act Typically, when an automotive lender makes a decision to lend money to a consumer, it does so based on (amongst other things) the value of the vehicle in question, and on the condition that the vehicle's title is "clean"; meaning free from any other encumbrances. At the time of purchase, the automotive lender will register a security interest against the vehicle and as a result there will be notice to the world that the automotive lender has a first-ranking financial interest in the vehicle. This first ranking priority interest is paramount, except for the exceptions granted to repairers and storers under Ontario's Repair and Storage Liens Act ("RSLA"). The RSLA gives repairers and storers lien rights which are in super priority to any other interests in the vehicle. Historically, this has made sense - Why should a repairer who has invested his time and skill into a vehicle (and has thereby improved it) remain unpaid? The RSLA, in addition to protecting the repairer (and storers), also provides a

mechanism where the rights under the RSLA can be assigned. This is where repair lenders have come in and some difficulties have arisen.

"Repair loans are tools which can be abused by dealers, mechanics and repair lenders." In my practice, I am seeing recurring concerns surrounding repair loans in which the lender has taken an assignment of the repairers' rights under the RSLA. I am often contacted by my lending clients after they have received notice from a repair lender that it has repossessed one of their vehicles. The reaction is often significant frustration over the fact that the asset which is securing their automotive loan is now encumbered with a significant repair loan and other fees - about which the repair lender is saying take priority to the interests of my client. Yes and no. It is important to note that the RSLA only pertains to certain expenses and the repair lender has certain notice obligations to abide by. I suggest always reviewing such notice documents with suspicion to ensure that the claimed fees and expenses are valid. If you are concerned, review the notice received from the repair lender with your lawyer and consider challenging the repair lender in court.

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To add to the frustration felt by many car loan companies, borrowers sometimes misuse repair loans, with the participation of repair shops or dealerships, to get money for unperformed work. Some dealerships have also been known to use repair loans in order to get a customer additional financing in order to purchase a vehicle. The misuse of repair loans can cause significant legal hurdles down the road for the repair lender, the dealership (including potential problems with OMVIC!) and the automotive lender. Overview of repair loans Getting a repair loan is relatively straightforward. The difficulties arise in collecting money when the borrower cannot pay. The mechanism for collecting the money owed is based on the repairer's lien. Traditionally, a repairer's lien allows the repairer to keep possession of the vehicle until the owner pays for the work done. Under the RSLA, a repairer may also repossess a vehicle that is no longer in its possession. After appropriate procedure is followed, the repairer may sell the car to satisfy the debt. How does this connect to a repair loan? Essentially, the loan documents involve the repairer agreeing to give (assign) the lender its lien rights for repairs done to the vehicle. The lender then pays the repairer for the work performed. If the

borrower defaults on the loan, and the appropriate procedure for the repairer's lien is followed, the lien allows the lender to repossess the vehicle and sell it to satisfy the unpaid debt. But what happens when, as is often the case, the borrower has other loans for the car? When a borrower defaults, it usually means they do not have money to pay either the repair loan or the outstanding loan for the purchase of the car. Often, the vehicles in question are worth less than the total amount of the loans. Legal disputes arise since repossessing and selling the car is not enough to satisfy both lenders. The lenders end up competing for who gets their money first … or at all. Defaulting on the loan Since the repair loan is secured by a lien under the RSLA, it has priority over the purchase loans, which are secured under Ontario's Personal Property Security Act. The priority means that if the lender for the repair follows the appropriate procedure in enforcing the lien, they will be able to satisfy their debt before the other lenders can. In other words, the repair lender gets its money first. Often, selling the vehicle leaves very little, or no money left over to go towards the loan that is second in line. What options does the car purchase lender have in this scenario? A lien claimant has to follow the procedure set

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out in the RSLA. This means that both the original repairer must have satisfied the procedure, as well as the lender claiming under the RSLA. The car purchase lender may be able to challenge the repair lender's entitlement to a lien. One common example I have encountered in my practice is where evidence indicates the loan was for work that was not actually performed. Another example is that the loan was used to pay for car parts instead of repairs. The below cases are illustrations of these situations. 1. Lovats Acceptance Corp v Advantagewon Inc. ("Lovats") In this case, the court found that the repair lender, Advantagewon Inc.,("Advantagewon"), did not have a lien claim, whereas the lender for the purchase of the vehicle did. The repair loan related to the purchase of summer and winter tires and rims. However, the only 'repair' work done was that the repair shop installed the winter tires. As such, the only possible lien that could arise was in relation to the installation of the winter tires. The court found that no lien arose since the owner of the vehicle immediately paid for the tire installation using his loan. The owner was never indebted to the repairer and there was never any lien that the repairer could assign to Advantagewon. As a result, the lender for the purchase of the vehicle was able to enforce its rights to satisfy the debt of the unpaid loan.

2. Connolly v Advantagewon Inc. ("Connolly") This is a leading case on the issue of repair loans and also deals with the purchase of rims and tires. In this case, the owner of the vehicle admitted that the repairer never installed the tires and that the repairer never had possession of the vehicle. Instead, the owner bought the tires from the 'repairer' and installed them himself. One of the prerequisites for a lien claim is for the repairer to have possession of the vehicle at some point during the repairs. As such, the repairer never had a valid lien that it could assign to Advantagewon. Again, since the repairer never had a lien on the vehicle, there was no lien it could assign to the lender. The above cases point to some potential arguments a lender can make in seeking to enforce its security and collect its money before the repair lender. The situations in which a repair loan may become an issue vary and there may be other arguments to make, depending on the circumstances of each case. Consequences for Repair Shops and Dealerships

In the loan approval documents, the repair shop agrees to assign its lien rights to the lender. Further, there is usually a clause in one of the loan documents requiring the repairer to acknowledge that it performed the work in its invoice. But this does not necessarily mean that the repair shop has an obligation to ensure it has a valid repairer's lien when it accepts money from such a loan. Nevertheless, there may be potential consequences for repair shops that facilitate such loans. At the very least, repair shops should not make invoices for work knowing that it will not be performed, as this would open a potential claim for fraud. Doing so could also be a breach of contract, if there is a clause in the loan documents signed by the repairer stating that it has performed the invoiced work. Such practices could expose shops and dealerships to potential legal claims, license revocations, sanctions from OMVIC, fines, and even criminal charges.

frustrated by a repair lien that has priority over your security in the vehicle, there may be grounds for you to nevertheless enforce your security. Repair shops and dealerships should also practice diligence in signing loan documents. Invoices should be accurate and reflect the work that is actually performed on the vehicle. Lastly, regardless of whether you are an automotive lender, a repair lender or a dealer, well drafted documents and well-designed processes are key. Making sure your documents and process comply with the law is paramount in ensuring success in court. Especially important is making sure your staff are well trained and know what is appropriate and what is not.

Conclusion Repair loans are an increasingly popular financing method and the legal issues surrounding them continue to be defined. If you are a lender that is

As the cases above show, repair loans are sometimes granted despite only a portion, and sometimes none, of the loan going towards actual repair work. While this may open up a potential argument in favour of the car purchase lenders, what about the repair shops and dealerships that participate in such activity? Should they be concerned? Unfortunately, there is no straightforward answer – time and future legal cases will tell.

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surpassed a significant milestone in 2017: it sold more than two million new cars, SUVs and pickup trucks for the first time ever, with December's sales of just under 125,000 pushing the annual total over the hump. That number marks a 4 per cent increase over 2016 and a major bump from the most recent low of about 1.5 million in 2009, when the industry was still reeling from the recession that began the year before. Used-car dealers have also continued to do well: At the time of this writing, Statistics Canada's most recent data showed that sector sales were up nearly 10 per cent, year-over-year, near the end of 2017 following five years of solid growth. So the auto industry is healthy: that’s a good indicator of a Canadian economy whose fitness is being buoyed by consumer confidence, which


improved significantly during the summer and remained that way for the balance of last year. But all of this leads one to wonder how long Canada's auto industry can keep setting sales records. According to industry experts, we won't see newvehicle sales top two million again this year, but that's not necessarily a bad thing for used-vehicle dealers. That record number of new vehicle sales is one factor that will start pushing wholesale values of used vehicles down in 2018, a trend that Brian Murphy of Canadian Black Book (CBB) thinks will continue for the next three or four years. "We’ve been on a bit of a roll as an industry for seven years now, more or less, where we’ve seen values go up, up, up (by) some 20 per cent," says Murphy. "We expect to see some of that given back, but we don’t expect it’s going to happen in nine months’ time. That will take several years to occur, unless there’s some big change to the economic situation." Canada's economy has another role to play in setting used-vehicle values through the strength of the Canadian

dollar, which was hovering around the US$0.80 mark at the beginning of 2018. In recent years, a low Canadian dollar prompted used dealers in the U.S. to come to Canada to source trucks and SUVs, which were in short supply in the American used-vehicle marketplace. That drove prices up for those vehicles, making it difficult for Canada's used dealers to make a profit on trucks and SUVs, segments that have practically served as a license to print money for manufacturers and new-vehicle retailers. But Murphy says that even with the Canadian dollar a few cents weaker than it was in the fall of 2017, a stronger American supply of used vehicles in those segments is largely satisfying that market’s voracious appetite for trucks. "If you and I knew what the Canadian dollar was going to do six months from now, we’d both be very wealthy," he says. "But what’s a certainty is that the U.S. supply is growing. In the last four years the U.S. market usually saw about two million vehicles come back (as lease returns). It’ll start ramping up in 2018, but starting in 2019 they’ll be seeing in the neighbourhood of four million cars coming back."

Canadian Black Book's latest monthly vehicle value-retention index, which tracks wholesale values of used cars and trucks in Canada, shows how recent newvehicle sales trends are affecting the used market. Their data shows that mid-size crossover and SUV values were down about 2 per cent in December compared to the month before and about 5 per cent lower than in 2016, while pickup truck values fell by about half a per cent in 2017 compared to 2016. Meanwhile, values for small cars were up more than 7 per cent in December. Those figures seem counterintuitive, considering trucks and SUVs accounted for the vast majority of sales in Canada's record-breaking 2017, while cars made up just a third of new-vehicle sales last year. "The shift in (used-vehicle) pricing is always a representation of how much product is available just compared to the demand for product," says Murphy. "Some interesting things have been happening: we’ve actually seen compact and subcompact do a little bit better this past year, when they hadn’t been doing so well. And I think that’s because we’re starting to see the price of gas slowly creep up. We’ve been seeing mid-size utilities go down a little bit and we think that is just decreasing demand and perhaps fewer exports to the U.S. market too." Sharon Paraskevopolous, a salesperson with Auto Motion in Chatham, Ontario, says a significant portion of her dealership's inventory -- mostly vehicles "a few years older" and with higher odometer readings -- comes from other dealers, including one 2,000 kilometres away in Nova Scotia. "One of our buyers has a dealership in Nova Scotia that he deals with because he has a good relationship with them," says Paraskevopolous. "(It's a dealership that

doesn't) hold a lot of used vehicles -- they pretty much just sell new ones -- and so we get quite a few from them. You don’t see that too often, coming in all the way from Nova Scotia, because there’s a cost to bring it in, but because they don’t want them, pricing is reasonable, and they’re typically pretty good vehicles." Kal Idriss, sales and operations manager at That Car Place in London, Ontario says his dealership acquires a “surprising” number of cars by buying directly from the public, but it’s not always an easy transaction.

“Our margin has dropped dramatically because of the Internet...” One complication is assuring sellers his dealership is offering them a fair and honest price, and that’s due to the amount of time today’s car buyers spend using the Internet to prepare for the transaction. Those buyers will approach That Car Place knowing their car is retailing for $8,000, but Idriss says that if he pays that price, it will leave no room for a profit once he has the car reconditioned and prepared for sale. “Our margin has dropped dramatically because of the Internet,” says Idriss. “What we offer is what we would pay a wholesaler or an auction for that car. Some sellers understand we can’t offer a retail price. Others decide what we can offer isn’t enough money.” From Idriss’s perspective, an upside to buying from the public is that his dealership avoids paying the customary fees that wholesalers and auctions charge.

Obviously, however, acquiring five cars per month isn’t enough to sustain a car dealership that routinely keeps 200 vehicles in stock, so Idriss says his store relies mainly on auctions and wholesalers to find new inventory. Another source is rental-car agencies, from whom his dealership has recently begun buying directly. He says it’s a good arrangement because he knows those cars and trucks have been well-maintained and won’t need much work to get ready for retail sale. Cam Marshall, manager of business development with B.C.-based dealertraining company Automotivaters, says many used-car dealers could benefit from seeking out alternative sources of inventory. "Regarding auctions, I guess you could say their usefulness is sometimes limited," says Marshall. "When you look at what the contents of the auction listings are, they’re often vehicles that dealers are unable to sell. The good stuff has often been picked off and is being sold on the market. So auctions are definitely a source, but I wouldn’t see it as being the primary source." Marshall encourages dealerships to pay staff specifically to go out and try to find vehicles being sold privately. "Many dealers are already doing things outside of trade-ins and auctions, by looking at private-seller listings," says Marshall. "But the other thing that dealers should be exploring is having staff work for them in sourcing used products. Because you’ll often have a used-car buyer (who will be) running around trying to source inventory, but if you set up remuneration for your staff for sourcing cars, then now you have a team working beyond just your used-car buyer. That’s just (a good) internal strategy, to have people under your rooftop looking for good pre-owned cars."

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USED VEHICLE SUPPLY | CHRIS CHASE But as Idriss and Paraskevopolous pointed out, the challenge in buying cars from private sellers is in finding a price that both buyer and seller are comfortable with. Marshall says another source of inventory many used dealers don't think of is their existing customer base. "So many used-car lots are the one and done," he says. "They get the inventory, they sell it to the customer. One time, one sale. But if you want to be really effective in the market it’s about managing your database, and also knowing how to shorten those trade cycles by coming up with a very effective mining strategy." By doing so, he says you can take advantage of sweet spots in the trading cycle and sell multiple vehicles to that same customer over a longer period of time, while taking in on trade the car they bought from you last time and re-selling it to someone looking for an older car or truck. "That’s where a lot of used-car companies miss the boat," says Marshall. "They’re not effectively working their database. They’re focusing really heavily on trying to source inventory through traditional means when the best place to find inventory is right under your own nose. It’s right in your own database." Marshall says that by working your database effectively and taking advantage of what he calls the cascade effect, there's an opportunity to turn a car twice, selling it to three different buyers over a period of time: first, to someone looking for a nearly-new vehicle that's one or two years old; then to a buyer who wants something three or four years old; and finally, to a driver who is on a tighter budget and can only afford a car that's five or six years old, for example. Canadian Black Book's Brian Murphy says a dealer is smart to look at any source of inventory that falls outside of the norm. "That’s just being good business people," he says. "If you can’t source the product through normal avenues, then see what else works." "If you manage the trade cycle more effectively and give people a reason to change earlier, you’ve just increased your production without pursuing new clientele," says Marshall. "So you use your own database to supply your demand, you get more turns, and you end up commanding the trade cycle."


Harold acted as chauffeur in the front seat while Frank and I squeezed into the rumble seat. With a blast on the ah-OOgah horn, we were on our way.


By Bill Sherk

RUMBLE SEAT RIDE IN 1954, FRANK COOK WAS 17 and living in Gravenhurst, Ontario, when he bought his first car, a 1931 Model A Ford with a rumble seat. He was delivering lumber to an address just south of town when he spotted the car parked in a garage. There were no plates on it and it wasn’t running so Frank was able to scoop it up for only $15.00.

With help from a friend, he towed it home, got it running, and drove it everywhere for the next two years. It was medium blue with steel spoke wheels and whenever the weather turned hot, Frank could crank open the windshield from the bottom for an early form of air conditioning. The rumble seat was a big hit whenever Frank and his girlfriend double-dated with another couple. One day with four

in the car, Frank drove up a hill and made a sharp right turn on a steeply banked curve. That’s when the car rolled over on its side. Luckily, no one was hurt. All four climbed out, had a good laugh, then rolled the car back onto its wheels. When everyone was back inside the car, Frank drove off with his friends, who were eager to tell everyone about their adventure at the side of the road. No cell phones back then. Frank never rode in the rumble seat because he was always doing the driving. On September 15, 2017, on a family visit to Leamington, Frank finally got the chance to ride in a rumble seat. Local resident Harold Enns owns a beautifully restored 1930 Model A Ford coupe and graciously volunteered to drive Frank and me around town. The weather was perfect.

Frank and I felt like royalty as we rode around town in regal splendour and gave the royal wave to everyone we knew. We even waved at people we didn’t know – and some of them waved back. We were surrounded by cars over 80 years younger than the one we were riding in. What a thrill while going through traffic to reflect upon the fun enjoyed by our grandparents as they rode around in rumble seats. When we got back home and had to get out, I discovered that, for me, getting in was easier. You need perfect balance with your left foot on top of the right rear fender while you aim your right foot at the step beside the rear bumper. When your right foot starts to move, the acceleration keeps you moving until both feet are planted once again on Mother Earth. Uncle Frank, although five years my senior, climbed out and reached the ground as if he had been doing this his whole life. As motorists years ago began demanding more protection from the weather, the rumble seat was on its way out. The 1939 Ford, Plymouth, and Canadian Dodge were the last North American cars to offer a rumble seat. Gone but not forgotten. I’m always looking for more stories. email

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WHAT YOU NEED TO KNOW ABOUT USED CAR WARRANTIES IF YOU RUN A DEALERSHIP, you have experience with used car warranty service providers. A third-party warranty service provider offers various products which provide varying levels of protection for the vehicle, depending on the dollar amount the customer wants to spend. The sales pitch is a no-brainer; it removes the fear from purchasing a used car which may still have some form of mechanical breakdown. Your


customers can choose how much or how little protection they want, and their only obligation under the coverage is to keep current with oil changes and maintenance checks. Used car warranty protection is a high-margin added value product that generates income for the dealer and peace of mind for the consumer. Chances are you won’t hear much about the warranty you sold your customer after the fact - unless the customer has a problem with the warranty service provider. Trust is a key factor in selling the warranty - the customer has to trust that the warranty provider will honour its commitment. We spoke with three of

the leading companies in the industry to find out more about what they each offer, and what you should look for in a good warranty service provider. Global Warranty Roy Neufert, the President and CEO of Global Warranty, started his company in January 1987 with a view to “Help

people who are buying used cars. We felt there was so much uncertainty in buying a used car - a warranty would take the financial sting out of unforeseen problems.” Today, Global has over 6,000 dealers in its network and has sold over 1.5 million warranties. The company was responsible for many “firsts”, including a free 90 day “test drive” on the purchased vehicle and coverage with unlimited kilometres and (up to $1 million eligibility for warranty) on a used car. Neufert credits the company’s success with having a customer-centric focus. “We know we are not in the warranty business. We are in the claims business, the service business and the peace of mind business. We protect our customers, not our own pocketbook, and don’t hide behind fine print to get out of paying claims.” Neufert, along with the two spokespeople interviewed for other companies, identified longevity as being one of the key things to look for in a warranty service provider. However, Neufert also identified growth as being a key factor to look for; in 2017, Global Warranty’s sales rose by 17.5%, a figure Neufert is obviously proud of. As far as dealer relationships are concerned, Global only sells its products through its dealer network. “The message we give them is that we’re here to look after their customers. We want to be a partner with them and make sure nothing is lost in the relationship as time goes by.” As far as products go, Global Warranty has the usual core package of warranty services, but has seen additional success

with a new Tire and Rim package that goes above and beyond the basic warranty services for protection against scraped rims, flat tires, general damage to tires and rims, and even cosmetic curb damage. It also offers warranty protection for recreational vehicles. Lubrico Lubrico essentially began the industry in 1977, and was the first to offer used car warranties in Canada. Henry Hammond, Marketing and Technology Officer for Lubrico, spoke with us about Lubrico’s thought leadership in the used car warranty industry and the need for ever-evolving change to keep pace with industry trends and technology. “There’s risk involved in buying used vehicles. A proper warranty mitigates that risk for both buyer and seller. Quite rightly however, consumers are wary. The auto industry as a whole has been working hard to improve its image and Lubrico is known for its contribution to this cause.” Hammond says. He cites a few key factors that a good warranty provider should exhibit: being fullyinsured, the scope and quality of the partner network, and how claims are handled, to name a few. So what does being fully-insured mean? “It’s about peace-of-mind. Drivers and dealers can count on their warranties being honoured for their full term, even if something happens to the warranty provider.” according to Hammond. Lubrico’s business is insured by Northbridge General Insurance, a respected, financially stable, A-Rated insurer. As far as business over time goes, Lubrico has sold over a million

warranties since its inception, and has paid out $180 million in claims and counting in its 40 years of operations. Its network of dealers and repair centres is 7000 strong. As far as the trust factor goes, Lubrico is very transparent with the service it provides. “The concept is straightforward – we want our warranties to serve their purpose. It ends up being about legitimacy, substance and trust. Like with insurance, the customer concern is usually ‘Will I get denied on a technicality?’ Our warranty document contains no fine print and states the driver’s obligation very clearly: follow the maintenance schedule for oil changes, and contact Lubrico prior to having any warranty-related repairs done.” This trust factor extends to Lubrico’s industry activity. The company is a longstanding UCDA member, and frequently attends automotive conferences to learn and engage with industry leaders. It is also the only warranty service provider to be a member of the Power 100.

“– we want our warranties to serve their purpose. It ends up being about legitimacy, substance and trust. " Lubrico is known for its dealer support-with a full digital marketing team that provides cooperative online marketing for dealers. It runs a national targeted digital display campaign on Kijiji Auto in addition to pay-per-click campaigns on Google, Facebook, & Twitter. It sends dealers leads from these campaigns with people interested both in buying used

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CAR WARRANTIES | ANGELA WEST cars and used car warranties. Hammond is almost evangelical about the need to stay on top of emerging technologies and trends in the industry. “We need to not only change and react, but to change and innovate.” Lubrico is also a leader in DMS integration, with integrations for numerous popular dealer management systems. When it comes to changes in its product portfolio and coverage, Lubrico offers core warranty products and innovative coverage such as factory-installed in-car technology (head-unit, touchscreen, Wi-Fi, Bluetooth, sensors, cameras, etc.) It also offers a guarantee - on two year plans and above, if a customer doesn’t use the warranty, it can be extended at the end of its term for another term of equal length for a nominal fee. NationWide Auto Warranty NationWide is a 19-year old company focused in Eastern Canada, mostly in Ontario, which offers its warranty products exclusively through dealerships. It has a full array of warranty products which it tries to keep “as simple as possible,” according to its Dealer Development & Marketing Manager, Jeff Ballantyne. Its secret to success is its staff who are available to dealers at any time, either on the phone, by email, or in-person at the dealership.

“We have wonderful sales staff that have been in the business for a number of years. It’s always easy to reach someone. This is a very competitive business, and that is where human interaction with a sales rep is important.” Aside from the usual range of warranty products, NationWide offers two products which offer peace of mind for vehicle financing: GAP Protection Plan and Loan Guard. Ballantyne points out that many cars are financed, some even with negative equity, and GAP Protection ensures that consumers are not stuck with a huge amount (or any) financing if there is an accident.“GAP protection protects the vehicle owner if they get into an accident and the car gets written off. With GAP, they are covered for the gap in your insurance settlement up to $40,000. This can cover the financing on a written-off car.” In order to keep customers coming back to the originating dealer, NationWide offers its GAP Protection customers a

$500 loyalty credit if they purchase their replacement car from the dealership they originally bought the car from. “It’s a nice incentive to come back to the originating dealer,” says Ballantyne. One thing is clear after talking to all three companies - when it comes to used car warranties, you don’t want to sign on with “the little guy”, for the same reason you wouldn’t buy your auto insurance from an insurance company that just started up last year. Warranty service providers need to be large enough to offer an extensive network of repair centres to its clients, and have enough ongoing new business that they can afford to pay out claims. You are looking for the same stability that you would look for in a financial institution. Global, Lubrico and Nationwide all exhibit this stability, and there are others out on the market that do as well. Which one you choose often comes down to the quality of the relationship they build with you on an individual level, and all of the ones that we interviewed do their best to make their dealers happy.

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RECONDITIONING USED VEHICLES, FROM AUCTION TO SALE Reconditioning is a key part of adding value, and profit, to new auction inventory. There’s a lot at stake in this age of social media, the care taken in reconditioning goes a long way to make customers happy. Let’s take a look at some of the considerations when reconditioning a vehicle purchased from the auction. It starts at the auction

performing the inspection, what would their impression be? By taking the perspective of the customer, you can identify potential issues which would need repair during the reconditioning process. Sticking to common sense at the auction can ensure quality new inventory hits the lot, and faster. With a bit of diligence, you can get nearly showroom ready vehicles right off the auction floor. Some of the costliest issues could also be the smallest. Consider the basic accessories or tools the vehicle was sold new with; manuals, tire jack, iron and spare. Replacing these small items can be costly or, in the case of owner’s manuals, time consuming. Customers may need these critical tools at the most inconvenient time, and they’re not cheap to replace. A simple check at the auction will mean big savings in reconditioning costs later.

A lot of time and effort in the reconditioning process can be avoided by starting right at the auction. There are a lot of clues which, simple on the surface, reveal a potentially neglected product underneath. One red flag would be obvious maintenance items that have lapsed. Check the tires, not just the condition, but the branding. Do they match? If tires are mix and match, there may be other important maintenance items that were done inexpensively. General cleanliness of the interior gives a good general indication of how much the vehicle was cared for. A cleaner There’s a lot to remember when checking vehicle means less detail cost and time for the right car at the auction. Making during reconditioning. a standard checklist of vehicle details makes finding the right auction vehicle A good way to look at the vehicle is to much easier. It also helps ensure a take the eye of a customer. If this vehicle certain standard of vehicle makes your was on your lot, and a customer was lot. When customers view inventory,

"While something in great shape requires less reconditioning, they often fetch a much higher price."

they know what kind of product to expect. Reminders like standardized checklists also avoid costly omissions. They allow managers to delegate inventory acquisition to senior staff, without worrying about the quality or reputation being at risk. Keep in mind the eventual purchase price of the vehicle. While something in great shape requires less reconditioning, they often fetch a much higher price. Finding a balance that allows for the most profit is key. Some minor repairs, or more detailing, may keep auction prices down without raising reconditioning costs much. When the vehicle arrives There may be a temptation to list the vehicle on delivery. Time is money, and the older inventory gets, the less profit there is in it. Odds are, however, that somebody will come looking at the vehicle fairly quickly. Customers then catch you off guard, having to lay down a series of disclaimers before the customer views the vehicle, or putting them off an otherwise ideal product. On the flip side, internet window shoppers often pass by vehicles with one or no photos. Interest is only peaked once the gallery hits. Instead, get to assessing the mechanical situation as soon as the keys are in hand. Have your preferred mechanic provide a list of things to safety. Many dealers offer an in-house certification program that goes above and beyond the provincial safety

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certificate. Those that don’t should consider such a program. Like a checklist at the auction, this provides a clear check sheet for dealers. It sets a minimum baseline for customer expectations. Some vehicles, due to age or mileage, may only be suitable for the repairs required to pass a provincial safety.

patches may also be flagged when doing a recall check on the VIN. Many dealers reported making approved repairs before the vehicles were listed. Some, however, listed straight to dealer owned websites with little more than a visual inspection. Again, dealers with established, documented and standardized processes were most efficient getting repairs done, vehicles detailed and pricing established before they hit online inventories. In either case, customers are most likely to act quickly on a sale when there are few or no outstanding repairs or detailing issues. It’s all in the detailing

Once repairs are complete, a reconditioned vehicle needs a top down detailing. This is more than a vacuum and wipe down. Seats, carpet and headliner should be cleaned, shampooed and dried. Tires are treated and shined. All surfaces are wiped and treated. Air fresheners are a nice, final touch. As with performing full repairs before listing the vehicle, detailing ahead of time reduces delivery time. Vehicles which are being sold under dealer or manufacturer certification programs should be What to repair? If a vehicle has been thoroughly detailed. Those being sold carefully selected at auction, there should "as is" or inexpensively can pass with be few surprises here. Based on what is a simple vacuum and wipe down, but needed for safety, the cost of the repairs nothing should be left uncleaned before should then be compared with the age the vehicle makes its debut in inventory. and mileage of the vehicle. It’s likely the vehicle already has an estimated Finally, the inventory shines like new, sale price assigned to it. Use this as a and doesn’t have anything keeping it baseline to determine the repairs. Try from passing safety or certification. searching the VIN for open recalls at the Larger dealers will have photographers manufacturer's website. on staff, or sales staff with a photogenic eye to capture inventory. Others use a A mechanical part of many modern photographer, who comes on site during vehicles that may be omitted are their the week as scheduled. For dealers infotainment systems. Even four or fivewith staff on site, new inventory can be year-old vehicles often have complex photographed, inside and out, before infotainment or navigation systems. listing. Pricing is established once repair costs are determined, usually in place These software systems receive updates before reconditioning is done. Dealers from the manufacturers, particularly to with scheduled photographers may patch critical vulnerabilities, or address consider listing vehicles online with only potential function flaws. Some of these a few photos, but empty listings should are covered by manufacturer recall, but be avoided. Replace the temporary not all. Check with the manufacturer for images with the full gallery once it’s software updates. Outstanding software available. Newer, more expensive inventory are good candidates for any manufacturer or dealer certification program. These often require more detailed inspections, and in turn the potential for more to repair. However, these certification programs offer customers additional piece of mind, something they are willing to pay more for. Certified vehicles offer more profit margin for the increase in reconditioning required.


Before the customer takes delivery, as a final courtesy, fresh wipers and topped up fluids go a long way. Relatively inexpensive, this simple step can help significantly improve the customer experience in the first months after delivery. The customer is very much a part of the reconditioning process. During their test of a vehicle, there are often concerns raised which may need to be addressed. How much is repaired or left is decided during final sale negotiations. Before a customer takes delivery, a car is repaired fully based on the agreement. A light detail refreshes the cleanliness in cars which have been in inventory and tested a few times. A final check of all the functions and features standard on the vehicle should be performed before delivery. Confirm any Bluetooth connectivity still works, and audio playback is clear. Check for speaker noises. During the safety inspection, check driver aids like cruise control. Backup cameras or sensors should be operational, so long as they are OEM equipment. Test any DVD entertainment system, and ensure included headphones connect and play. Verify all power accessories work freely, and lubricate hinges and doors. Summing it all up Reconditioning a vehicle starts before the purchase is made at the auction. A few red flags can help identify vehicles which may be hiding a poor service history, or several problems. Double check for out of sight accessories, like tire change tools, to ensure they aren’t missing. A standardized list is handy when selecting potential inventory. Avoid the temptation to list immediately, instead initiating mechanical inspections at delivery. Finally, run a check on optional equipment functionality before delivery, and make sure any driver aids are working. The most successful way to recondition a car is to establish an effective standard that all cars go through, ensuring consistent quality across the whole inventory, and minimalizing delivery complications.

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