MI DAT L ANT I C
DEALER NEWS
HOW TO PROTECT YOUR DEALERSHIP FROM GENERATIVE AI-ASSISTED FRAUD
Why Dealers Must Leverage GPS Tracking Solutions to Stay Ahead of Advancing Fraud Threats
NAVIGATING CHALLENGES IN THE RETAIL AUTO MARKET: STRATEGIES FOR SUCCESS
The Evolving Landscape of the Auto Dealership Industry
Independent auto dealers face numerous challenges with regulatory compliance and threats. MidAtlantic IADA and their vendors are here to assist.
DEPENDENCIES IN YOUR DEALERSHIP A BAD DAY AT THE OFFICE
Dealers Association
DEALERS ASSOCIATION PENNSYLVANIA • MARYLAND • DELAWARE 1501 North Front St., Harrisburg, PA 17102 (717) 238-9002 | midatlanticiada.org (717) 238-9002 | midatlanticiada.org
EXECUTIVE BOARD
Bert Straub, President 1st Choice Auto LLC, Fairview, PA bertcstraub@gmail.com
Dan Limongelli, President-Elect
Jo Dan Motors, Plains, PA jodanmotors@gmail.com
Danielle Royer, Treasurer Royer’s 322 Motors, DuBois, PA royers322motors@gmail.com
Michael Mansour, Secretary Car Connection, New Castle, PA mike@carconnection1.com
Noah Melamed, Chairman
Ticket to Ride Auto, Lancaster, PA nmelamed@yourttr.com
BOARD MEMBERS
Clint Weaver
America's Auto Auction, Harrisburg, PA clint.weaver@americasautoauction.com
Lisa Cohowicz
North East Pennsylvania Auto Auction, Scranton, PA lisac@nepautoauction.com
Beth Melamed Ticket to Ride Auto, Lancaster, PA bmelamed@yourttr.com
Gregg Pachik
Manheim Philadelphia, Hatfield, PA gregg.pachik@manheim.com
Kerri Rotunda
America’s Auto Auction Erie, Corry, PA kerrir@corryade.com
Tom Campbell
Reliable Car Connection, Allentown, PA tcampbell@reliablecarconnection.com
Gunnar Horst
Advantage Auto Sales & Credit, Quakertown, PA gunnarh@wefinanceyou123.com
Jashan Singh-Singh Automotive Sales LLC, Millersville, PA jashanf1@gmail.com
Melissa Rowan
Red White and Blue Autos, Inc., Ashland, PA melissa@rwbautos.com
Tom Brandis, Executive Director tom@midatlanticiada.org | (215) 805-2034
Kathy Sabaski, Deputy Executive Director kathy@midatlanticiada.org | (267) 733-5402 Copyright 2025
How to Protect Your Dealership from Generative AIAssisted Fraud
Just when you think you’ve caught up with fraud prevention, a new disrupter enters the scene. The latest security threat? Generative AI and fraud - especially as AI is used to aid synthetic identity fraud. This new advance in fraud might not be widespread yet, but there has already been a significant uptick in fraud since recent advances in generative AI.
Dependencies in Your Dealership
Emphasizing the importance of coordination between sales and collections. When teams are disjointed, it leads to inefficiency and financial struggles. All staff, from inventory buyers to salespeople, must adopt procedures that support successful collections, focusing on collecting payments rather than just selling cars.
Navigating Challenges in the Retail Auto Market: Strategies for Success
The independent auto dealership industry is shifting, with Buy-Here-Pay-Here (BHPH) dealerships thriving due to flexible financing, while traditional retail dealers selling vehicles over $15,000 are struggling with profitability amid rising prices. To succeed, retail dealers should diversify financing, optimize inventory, and enhance digital marketing.
A Bad Day at the Office
Dealerships face significant risks from litigation, especially from class action lawsuits, which can be financially devastating. It is crucial for these businesses to prioritize compliance and adopt sound practices, as neglecting these areas can lead to severe consequences.
What You Don't Know CAN Hurt You...
Compliance is essential for protecting consumers and dealerships amid increasing regulatory scrutiny. The FTC and CFPB are targeting smaller dealers, making understanding key regulations crucial. Knowledge of rules like the Used Car Rule is vital for safeguarding your business.
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MIDATLANTIC STAFF
TOMMY BRANDIS
Executive Director (215) 805-2034 tom@midatlanticiada.org
KATHY SABASKI
Deputy Executive Director (717) 238-9002 kathy@midatlanticiada.org
STEVE SMITH
Operations Manager (717) 238-9002 steve@midatlanticiada.org
CYNTHIA SLEMONS
Membership Specialist (717) 238-9002 cynthia@midatlanticiada.org
NICOLE AUTRY
Dealer Set-Up Unit (717) 317-1966 nicole@midatlanticiada.org
BRENDA BAUGHER
Lead Title Clerk (717) 238-9002 brenda@midatlanticiada.org
INDIA THOMAS
Lead Title Clerk (717) 238-9002 india@midatlanticiada.org
PRESIDENT'S MESSAGE
The world of independent auto dealerships constantly evolves, presenting challenges and opportunities. We need more than determination and hard work to navigate this ever-changing landscape; we require the right resources, support, and connections. This is where the MidAtlantic Independent Auto Dealers Association (MidAtlantic IADA) plays a crucial role in our industry and businesses.
Why MIADA Membership Matters
As independent dealers, we face unique challenges, from regulatory compliance and financing issues to shifting consumer trends and technological advancements. Joining MIADA provides us with the tools, insights, and networks necessary to overcome these obstacles and thrive in a competitive market.
Here are the key benefits of MidAtlantic IADA membership:
Advocacy and Representation
• MidAtlantic IADA serves as our voice in legislative and regulatory matters.
• Actively monitors and advocates for policies that protect and enhance the interests of independent dealers.
• Ensures our concerns are heard at both the state and national levels.
Education and Training
• Offers a variety of resources to help members stay informed and compliant.
• Provides workshops, webinars, and certification programs.
• Equips dealers with the knowledge to operate ethically, efficiently, and profitably.
Recognition Opportunities
• Members can nominate themselves or others for the National Quality Dealer of the Year award.
• Recognized at the state convention and celebrated at the national level.
Legal Support
• Access to legal counsel to assist with business needs.
• Prepares members to handle complex legal situations effectively.
Staying Ahead of Trends
• Keeps members informed about industry shifts, such as the rise of electric vehicles and changes in consumer financing preferences.
• Helps members adapt and remain competitive in the evolving automotive landscape.
Strength in Unity
One of the greatest advantages of MidAtlantic IADA membership is the collective strength it provides. Together, we are not just independent dealers - we are a united force driving the success of our industry. By sharing knowledge, supporting each other, and collaborating, we can overcome challenges and achieve new heights of success.
A Call to Action
How may we help you?
Learn more about your Association staff members serving you! Our friendly and knowledgeable staff is always here to help members. Call or email us today!
DEALER NEWS
ADVERVTISE WITHIN
To advertise in the MidAtlantic Dealer News magazine, please send a request via email to tom@midatlanticiada.org
“Bert” Straub President, MidAtlantic IADA
If you are already a MidAtlantic IADA member, take full advantage of the resources and opportunities available.
• Attend events.
• Participate in training.
• Engage with the MidAtlantic IADA community.
If you are not yet a member, now is the perfect time to join.
• The benefits far outweigh themyraid costs.
• The return on investment is clear in the success stories of countless dealers who have leveraged MidAtlantic IADA’s support.
Let’s continue to elevate our industry and businesses by embracing collaboration and the resources offered by MidAtlantic IADA. Together, we can ensure a prosperous future for all independent auto dealers in the Mid-Atlantic region.
Sincerely,
Robert
MI DAT L ANT IC
Message from the Executive Director
Hello Dealers,
Happy March!!! I hope by the time you read this issue that the tax $$$ is flowing and you are crushing sales. The tax season window seems to get smaller every year. I hope you are having a good one.
The first quarter of the year is when most of the Association membership renewals come due. We have been working on our renewal process to make it easier for you to renew your membership. Hopefully, you took advantage of them and renewed your membership immediately. If not, you probably got a call from Cyndi Slemons to remind you. Cyndi loves talking with you and helping anyway she can. In fact, check out her message on Doc Fees in this issue. We are here to serve you, our members. Our goal is to help you become more profitable while staying compliant with the everchanging regulations in our industry. While we offer numerous benefits, ultimately, the most powerful weapon we have against further regulation is strength in numbers. Even if you think you don’t need us, it is still important to be a member. Your membership is your voice. The more members the
louder the voice, not only in our states, but also on the national level. Your membership with us automatically makes you a member of NIADA. So, if you recently renewed, thank you!!! If you haven’t, please do so now. If you are reading this and you aren’t a member, please call Cyndi and sign up today.
I am excited to announce that we just added a major member benefit. ISC Coverage has joined the association as an annual vendor. Their founder Rob Johnson is looking forward to assisting you with all your insurance and risk management needs. Check out his bio and their advertisement in this issue. ISC Coverage is the final piece of the puzzle. Membership in the MidAtlantic IADA now provides a full complement of solutions for our dealer members. We are a one-stop shop for all your business needs.
Just a quick reminder if you are a BHPH dealer and haven’t already registered for the BHPH United Summit 2025. This year, attendees have 2 conferences for the price of 1. Compliance Unleashed has partnered up for the event that is being held at Caesars Palace, Las Vegas, on April 22-24. This is the best opportunity to gain knowledge and
be better from truly the best in our business. I hope to see you there!!!
NIADA has opened early bird registration for their annual convention and expo being held at the Fontainebleau in Las Vegas on June 23-26, 2025. This event is the cornerstone of our industry, and this year promises to be the best yet.
Finally, don’t forget to save the date. The 2025 MidAtlantic Convention and Vendor Tailgate will be held on October 19-21, 2025, at Ceasar’s Palace, Atlantic City. The agenda is already taking shape, and I promise it will be awesome.
If you have any questions, concerns or ideas, I can be reached tom@ midatlanticiada.org or my direct number, which is always on, 215-805-2034.
Until next month,
TOM BRANDIS Executive Director
How to Protect Your Dealership from Generative AI-Assisted Fraud
Just when you think you’ve caught up with fraud prevention, a new disrupter enters the scene. The latest security threat? Generative AI and fraud—especially as AI is used to aid synthetic identity fraud. This new advance in fraud might not be widespread yet, but there has already been a significant uptick in fraud since recent advances in generative AI.
W ith the extent to which generative AI could increase auto-finance fraud and other fraudulent activity, now is the time to prepare for this looming threat. Wireless GPS tracking is one of your strongest lines of defense.
Fraud is on the rise—and generative AI tools make it easier than ever
To say fraud is on the rise is an understatement. For example, attempts at account-takeover fraud (gaining unauthorized access to users’ accounts) in Q2 2023 jumped by 354% yearover-year, resulting in a predicted $635 billion in losses in 2023. Especially alarming to buy here, pay here and franchise dealerships is that these attacks skyrocketed in the fintech industry alone by a staggering 808% in that period. According to Point Predictive, auto loan fraud is four times greater in 2022 than in 2010—and synthetic identity fraud accounts for 20% of that.
This puts dealerships, finance companies, credit unions and their financial partners in danger of financing that can’t be recovered and lost assets. What’s more, 24% of consumers believe that the business where a fraudulent purchase was made should be held responsible, presenting a liability from consumers who are victims of this identity theft.
This jump coincides with recent advances in generative AI tools like ChatGPT. Generative AI allows fraudsters to create text content, manipulate image and videos, simulate human voices, forge documents and assume false identities—and to do so rapidly, convincingly and at scale like never before.
Watch out for synthetic identity theft
Of particular concern to businesses is synthetic identity theft, a form of financial fraud that combines the stolen information of a real person, like their Social Security number, with other falsified personal information to establish a new identity. With the help of powerful generative AI tools to fabricate increasingly seamless identities, these false identities can be harder than ever to spot. That includes not just faking individual consumer identities, but also creating synthetic businesses, which are fake vendors or corporate customers. These AI tools are making falsifying income information, pay stubs, bank records and other paperwork even easier, and more convincing.
Fraud prevention is necessary, but not enough
T here’s no magical solution to generative AI fraud, and fraud prevention needs to be approached from every angle. Measures might
include a fraud risk-management plan, shoring up vulnerabilities, increased training and awareness and extra identification hurdles in the face of suspicious behavior. You could also fight fire with fire by using AI tools to counter bad actors through automated predictive analytics, live-person detection, identity proofing and fraud investigation.
However, in the face of ever more frequent and sophisticated fraud attempts, this amounts to a costly arms race against fraudsters, who are known for being on the cutting edge of technology. It’s nearly impossible to defend against all threats and, sooner or later, there’s a good chance that scammers will get the best of you. For your peace of mind, you need to be ready to recover fraudulently obtained assets. That’s where battery-powered GPS tracking solutions like PassTime’s Encore come in.
Battery-powered GPS tracking for a second line of defense against fraud
Where fraud prevention fails, asset recovery takes over. A small, battery-powered GPS device like PassTime’s Encore is easy to install discreetly inside seats, glove compartments, consoles and trunks. You can find ever more places to install it by using a magnetized case. In the event of loss due to fraud, your wireless GPS tracking device helps you to track down the vehicle and recover it. These devices can even serve as a deterrent for fraudsters thinking about taking on dealerships.
Your best option for battery-powered GPS tracking will be a device with lithium-battery technology with multiple power modes to maximize battery life. You’ll also want dual location technologies that combine GPS and cellular location technology. These provide you with an accurate location, even in places where traditional GPS can’t reach, like parking garages or warehouses.
Why PassTime’s Encore provides great GPS protection against fraud
PassTime continues to offer industry-leading GPS-tracking technologies and solutions. Our Encore battery-powered GPS tracking devices feature cutting-edge technologies that enable you to manage assets and protect your bottom line. Here’s how:
Simple to use and install discretely
Simple to activate, extremely lightweight (2 ounces) and installs in seconds, practically anywhere. Encore’s ultra-compact design (smaller than a deck of cards) and optional industrial-strength, magnetized clam-shell case lets you place it where unauthorized individuals would be hard-pressed to find it. Leave fraudsters nowhere to hide 4G/5G-compatible dual-location technology with Beyond GPS™ helps you locate assets where traditional GPS-only devices fail, such as indoors and in urban areas.
Long-lasting battery life
A dvanced lithium battery with 4+-year lifespan featuring low power consumption and four flexible power modes:
• E ndurance: Track assets twice a day automatically
• Trip: Accelerometer gives you data on the start and end of each trip
• Active: Full functionality for real-time tracking
• Recovery: Full-power mode for vehicle recovery
At PassTime, we’re a true partner dedicated to your business’ success and car-theft prevention. Our solutions help dealerships improve their cash flow, protect their inventories and combat vehicle-finance fraud. Protect your dealership’s assets today. Your customers’ peace of mind depends on you. Reach out today for a free quote
Dependencies in Your Dealership Gene Daughtry
Auto Master Systems
Y’all may or may not know I travel the country working with dealers one way or another.
I did have someone ask me recently: What do you do?
T he short answer is Audit operations, consult with owners and train employees on their tasks or software. Some consulting involves service departments, more involves collections. I have been a Fractional COO of an operation in Chicago where I gave input and made decisions concerning all aspects of operations and inventory to the finance company. I was the Fraction Portfolio Manager of another operation where I coached the Account Managers (Collectors) as I make operational changes to their tasks and created training procedures. I also go onsite with Auto Master Systems to help dealership teams understand the new Dealer Management System (DMS) as we convert their data into AMS and help everyone learn how to do their job with the new “tool” and help management understand how to monitor the metrics. Many of you know me as Jilcat Proline (CVT Supplement) as well. That is the “side hustle” (I run that small company) because of the results the product provides and my connection to so many potential users.
All of that interaction combined with my own 30 years of operating experience gives me some insight into ways the results could improve or at least be more efficient and successful. After countless visits to different operations I find that almost every way of operating can work to achieve profits. I have seen very organized operations with monitored metrics, managers that stay directly on top of each task and trends to be sure there is a response to any fluctuation. I have seen operations where almost nothing is monitored beyond cash coming in and what is paid for vehicles (on the operations level). There have been plenty of dealers that fall somewhere in between.
I have talked with owners and managers that say sales is first and foremost. Let’s roll those vehicles to anyone wanting to buy, having the down we need and will sign today. There are others with sophisticated
AI underwriting with complete stipulations required along with an interview to be approved. The question comes down to what the owner sees as important in an operation and how his team must deal with the constraints to be successful and is there a way to be better?
T his is where dependencies come in. I have been involved with an operation (as a consultant) that was approaching $150M dollars in the portfolio. I was brought in to try and help collections get back into covenants with lenders. It did not take long to determine this was an impossible task under the existing business plan. The entire focus was selling. The operation was owned by new car franchise people. The sales departments were all managed by the same. If you worked in a Used Car Department of a franchise dealership the number one challenge is getting approvals, generally. If those same people had control of the “bank” what do you think was happening? Yep, I see a picture of the monkey cage at the zoo and a load of bananas gets dropped into the cage, peels flying, screaming and jumping around, basically chaos. Imagine…the underwriters were bonused for approvals.
When the collections department opens on Monday when I started, it is like a dump truck backs up to the door and a load of deals pour out into a pile. I go into the Collection Managers (VP of the Finance Company) office to begin the consulting process and
behind me is a person rolling a two-wheel dolly stacked with boxes. Each box stuffed with deal files. He asks where to put the stack and that’s when I realize the office has those box stacks sitting all around the room. The VP starts to cry. In these boxes are the first payment defaults from the previous week that the GPS failed. In the collection room where that day there were 32 collectors, supposed to be 35 but 3 no shows and in the group are 10 new hires. This group operated in Oklahoma and Texas, so many of the customers were not English speaking, or barely at best. Most of the collectors we not bi-lingual. Needless to say, further discussion on this operation is in past tense.
This operation was a shining example of what not to do. If someone in sales says “We sell them and collections collects” needs to be fired. I am willing to bet many of you would say that is obvious but there are more examples than you might realize where the operation is disjointed so collections constantly fail or are daily struggling when it is not necessary.
Your entire operation, everyone, should understand their role in collections and be thinking about how they help. From the inventory buyer through the shop, the GPS installer and the entire “sales” staff all need to have procedures that are designed to help collections succeed. BHPH is not about selling cars, we are about collecting payments. We need to collect all the payments we can. Once sales completes a deal they are on to the next, and should be. It is about their process that can help the customer understand what is expected, what was offered and how to get help as the ownership experience unfolds. If sales just takes the money, cursory reviews any requirements from the management, does not test the GPS or complete the verification process (job, POI, references, insurance) then follows that with a 5 finger signing*, there will be constant issues trying to collect.
Managers and owners will be pushing on the collections department, there will be turnover and finger pointing between departments about what is wrong. The answer will be everything is wrong. The vehicles need to be bought with longevity in mind but excitement is important. The shop should have a recon process that addresses maintenance issues and truly makes the repairs so the vehicle rolls out in shape to last best as possible. The GPS needs to be installed properly (you would be surprised how many fail because of shotty work) and tested multiple times in the store’s procedures including by the sales team when the deal is closing. Is the check stub or POI real? Do you look at more than gross pay to determine a payment? Do you actually have good information for collections to use coming with the deal from sales? Once the delivery takes place is the shop setup with
priorities so that new sales get immediate attention if an issue arises?
In the creation of a sales model do you take into consideration the car having mechanical issues? Not just “I hope they don’t” adding in “the customer bought it and they will need to find a shop”. Yes, in BHPH our customers complain. I see many dealers cause their own headaches with car condition and after sale help with problems. The customers we deal with today have been “screwed” in their mind by another dealer(s) and the junk being
sold. Many of our customers have a short fuse with car problems because it always happens to them. What do you do that is different to help the customer’s ownership experience which in turn helps collections? Do you even think about the ownership experience or is it only the sales experience you are concerned about?
*5 finger signing: spread the documents out so only the signature lines show and tell the customer to sign where you point.
Consultation for all MidAtlantic IADA members. Also receive discounts with our enterprise partners, Dealerone LLC and Gimmie Consulting.
VENDOR SPOTLIGHT
Rob Johnson is a dynamic and highly respected expert in the field of Garage & Dealer Insurance. With a career spanning 32 years, Rob has made significant contributions within the Commercial Insurance sector, earning a reputation as a thought leader, innovator, and problem solver.
As President & Founder at ISC Coverage, Rob has been at the forefront of creating innovative insurance solutions, and their work has had a profound impact on the Automotive Dealer Environment.
Rob and ISC’s passion for Commercial Insurance is evident in their extensive
ISC Coverage: Your Partner in Risk Management and Insurance Solutions
At ISC Coverage, we specialize in protecting businesses in the automotive service industry through strategic insurance and risk management solutions. From small, independent operators to large multi-location dealerships, we provide comprehensive coverage designed to safeguard against risks such as property damage, liability claims, and employee injuries.
Why Partner with ISC Coverage?
Î Industry Expertise: We understand the unique challenges your business faces and deliver solutions to manage risks and claims effectively.
Î Customized Service: Our team works closely with each client to design insurance plans that align with specific needs and budgets.
Î Competitive Rates: Partnering with leading carriers, we combine comprehensive coverage with costefficient pricing.
What We Offer:
Î General Liability & Property Insurance
Î Garage Keepers Insurance
Î Dealer Bonding
Î Towing Programs
Î Workers' Compensation & Disability Insurance
Î Pollution Liability
Î Dealer Plates Coverage
involvement with various organizations such as the Association for Independent Agents, IIABNY, and The BIG I Association within the United States. They have been a leading organization for insurance solutions working within the NIADA and NADA on a national and regional level. ISC operates in 35 states and growing!
Rob maintains designations including CIC, LUTCF, and is in the process of completing his CPCU in the field of Risk Management and Insurance Consulting from The Institutes. Rob is dedicated to advancing the field through ongoing research and mentorship of emerging talent.
Î Inventory/Open Lot Protection
Î Cyber Insurance
Navigating Challenges in the Retail Auto Market: Strategies for Success
MARKETING
The independent auto dealership industry is undergoing a significant shift. While Buy-Here-Pay-Here (BHPH) dealerships are experiencing a surge in growth and subprime dealerships are holding steady, many traditional retail dealers—especially those selling vehicles priced above $15,000—are grappling with declining profitability. This transformation is driven by evolving consumer behavior, economic pressures, and heightened competition. However, dealerships that recognize these challenges and proactively adapt can still carve out a path to success in this competitive environment.
W HO’S WINNING AND WHO’S STRUGGLING?
BHPH Boom and Subprime Stability
BHPH dealerships continue to outperform expectations, primarily due to their ability to offer flexible, in-house financing for credit-challenged buyers. In an era of rising interest rates and tightening credit approval standards, these dealerships provide a crucial alternative for consumers who may struggle to secure traditional financing. According to Experian Automotive, subprime auto loans accounted for 19.2% of all vehicle financing in Q4 2024, indicating that while the segment remains stable, it is not expanding at the same rate as BHPH.
Retail Dealers Face Headwinds
On the other hand, traditional retail dealers—particularly those selling vehicles above $15,000—are encountering increasing difficulties. Dealers specializing in lower-priced vehicles are seeing continued demand, but those catering to mid-range and higher-end used car buyers face more resistance. Kelley Blue Book’s 2025 Used Car Market Report found that the average price of a used car remains over $26,000, making affordability a growing concern for many consumers.
W HAT’S DRIVING RETAIL DEALER STRUGGLES?
Several factors are contributing to the challenges faced by retail dealers. Understanding these trends is essential for adapting and finding new opportunities in the marketplace.
1. Economic Pressures: High Costs and Stagnant Wages
• Rising Interest Rates & Inflation: Auto loan interest rates are now averaging over 8% for used cars (Experian), making higher-priced vehicles less appealing for costconscious buyers.
• Wage Stagnation vs. Rising Car Prices: While vehicle prices have climbed, wages have not kept pace, forcing many middle-class consumers to rethink their purchasing decisions.
2. Consumer Shifts: Prioritizing Affordability Over Premium Features
• Budget-Conscious Shoppers: More consumers are treating vehicles priced above $15,000 as luxury purchases rather than necessities.
• BHPH and Subprime Dealers Filling the Gap: These dealerships offer easier paths to ownership, making them more attractive to buyers who face financing challenges in the traditional retail market.
3. Increased Competition: Online Disruptors & Franchise Dealers
• Digital Marketplaces: Platforms like Carvana, Vroom, and Facebook Marketplace have increased price transparency, making it harder for independent dealers to maintain strong margins.
• Franchise Dealer Advantages: Manufacturer-backed Certified Pre-Owned (CPO) programs and special financing incentives give franchise dealers an edge in attracting higher-income buyers, leaving independent dealers to compete with fewer resources.
4. Inventory & Financing Challenges
• High Acquisition Costs: Wholesale vehicle prices remain high, cutting into dealer margins and making it more challenging to offer competitive prices.
• Limited Financing Options: Many independent dealers lack strong lender relationships, making it difficult to provide competitive financing terms on higher-priced vehicles.
Chris Jackson, Big Time Advertising
S TRATEGIES FOR RETAIL DEALERS TO ADAPT & THRIVE
For dealerships looking to turn things around, the answer isn’t just slashing prices—it’s about evolving strategies in financing, inventory management, and marketing to align with today’s market realities.
1. Expand and Optimize Financing Options
• Diversify Lender Partnerships: Working with multiple financing partners helps secure better rates and terms for buyers.
• O ffer Flexible Payment Structures: Dealers should explore low down payments, extended loan terms, and deferred payment options to make higher-priced vehicles more attractive.
2. Optimize Inventory to Match Market Demand
• Use Data-Driven Insights: Leverage market data to stock vehicles that align with local demand. What sells in one region may not perform as well in another.
• Expand Lower-Priced Inventory: Maintaining a mix of vehicles under $15,000 can attract budget-conscious buyers and boost sales volume.
3. Shift Marketing to Focus on Value
• Emphasize Total Cost of Ownership: Highlight fuel efficiency, maintenance savings, and warranties on higher-priced vehicles to justify the cost.
• Target Local Audiences: Geo-targeted ads and localized SEO strategies help independent dealers stand out against national online retailers.
4. Strengthen Digital Marketing & Online Presence
• Improve Online Listings: High-quality photos and video walkarounds increase engagement and consumer trust.
• Invest in SEO & Retargeting Ads: Optimizing website content and using retargeting strategies can help recapture lost visitors.
• Enable Digital Financing Tools: Allowing online pre-qualification and payment calculators makes the buying process smoother and builds buyer confidence.
5. Build Consumer Trust Through Transparency
• O ffer Free Vehicle History Reports: Providing CARFAX or AutoCheck reports reassures buyers about a vehicle’s reliability.
• Create an Independent CPO Program: Even non-franchise dealers can introduce their own certification programs to increase perceived value.
• Leverage Customer Testimonials: Highlighting positive Google and Facebook reviews builds credibility and trust.
6. Diversify Revenue Streams
• Maximize Trade-Ins: Encouraging strong trade-in offers can lower a vehicle’s effective price for buyers.
• O ffer Add-On Services: Extended warranties and service plans not only generate revenue but also provide peace of mind for customers.
7. Invest in Dealer Training & Education
• Host Sales & Marketing Workshops: Keeping dealership staff up to date on digital marketing trends and innovative financing solutions can drive sales.
• Develop Dealer Playbooks: Providing guidelines on pricing strategies and best practices helps maintain consistency and effectiveness.
8. Consider Hybrid Business Models
• Incorporate BHPH Strategies: Retail dealerships can introduce inhouse financing options to attract subprime buyers.
• Run Strategic Promotions: Offering limited-time discounts or creative financing specials can help move higher-priced vehicles.
A MARKET THAT REWARDS ADAPTATION
The auto retail market is evolving, but dealerships that embrace change can continue to thrive. Traditional retail dealers must adapt by focusing on:
5 Flexible financing solutions to address affordability concerns
5 Inventory diversification to meet shifting consumer preferences
5 A value-driven marketing approach that emphasizes reliability over price
5 A robust digital presence to compete with online disruptors
By implementing these strategies, independent dealerships can navigate today’s challenges, remain profitable, and position themselves for long-term success—even in a market where affordability is king.
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A BAD DAY AT THE OFFICE
STEVE LEVINE, IGNITE CONSULTING PARTNERS
Every so often, “it” happens. I’m forced to have one of “those” miserable conversations that I dread. It happened just the other day, when a random dealer reached out and asked for my help in analyzing a lawsuit recently filed against his dealership. He dismissively glossed over the facts, not showing much concern, placing blame solely on the consumer that had purchased and financed a vehicle, and summed things up by classifying it a “nuisance” case.
Not So Fast - this is a Class Action Lawsuit
When I studied the lawsuit papers, I just about fell out of my chair, immediately seeing this was no run of the mill lawsuit. This is a CLASS ACTION case being pursued by a plaintiff’s firm that knows how to press the issue. I’d bet that this firm is already examining the dealership’s title transfer history on file with the state to identify other similarly situated customers to add to the class. At best this case will cost a small fortune to defend, and at worst it could put the dealer out of business.
I had to deliver the bad news. It’s those kinds of conversations that knock the wind right out of me because they are brutal. I had to explain that even if the allegations in the pleadings were not accurate, there was no quick and easy way to get rid of this case. The consumer’s lawyers wouldn’t take their word for it, they were going to send a bunch of written requests for documents, ask a lot of questions that have to be answered under oath, and even take a deposition or two.
Forget about budgets, inventory planning, and the typical daily worries that dealers face. Survival mode hits very quickly and the most pressing question is how much will this cost? While that depends on a lot of variables, the real answer is it costs a lot more than anyone plans to spend and will take a lot of time and energy and be a big distraction for the business. A lot of other needs will have to be sacrificed because this is a “bet the company” problem.
To make matters worse, this dealer is not particularly large, doesn’t sell and finance many cars, and has a small staff. It is not in a financial position to take on this added
litigation expense. In fact, on the basis of a few conversations this gentleman and I had in the past, it seems to me that that compliance and best practices weren’t prioritized because the dealer took the “I’m too small, it can’t happen to me” approach. Well it did happen, and it does every day, to dealers and other creditors all over the country. Administrations come and go, regulator priorities change over time, but lawsuits remain a constant threat and continue to be the biggest risk faced by an independent dealer.
That Won’t Happen to Me
Does that refrain sound familiar? Are a lot of you readers shifting uncomfortably in your seats? Let me say it again. This is a small dealer that doesn’t sell a lot of cars, has a small number of employees, and, like a lot of you out there, it pushes compliance to the back of the line because it isn’t sexy and doesn’t move the “profit needle” on a monthly basis. Is any of this hitting too close to home?
Folks, I’m well aware that improving search engine optimization, bumping up Facebook marketing, or finding a way to close more
deals is front and center on your collective minds. After all, the response I get when wanting to discuss compliance is very similar to what happens at the beginning of the drum solo at most rock concerts: lots of folks head for the door for a bathroom or smoke break.
The Threat is Real
The threat is real, folks. In my opinion, too many of you are comfortable whistling in the dark, hoping that the boogie-man will pass you by. The reality is it only takes one mistake, one employee having a bad day, one failure to follow the right process, and everything that’s been invested in your dealership is at risk. If the allegations in this lawsuit I mention are accurate, a lot of “ones” combined to add up to the perfect storm. These include a lack of policies, failure to follow the ones that did exist, lack of training, careless completion of forms, failure to use an arbitration clause, lack of complaint management, and servicing errors. Many of you will smugly think “that’s not us”, but how many of you are willing to put that to the test in the form of a risk
assessment or “mock” audit? Judging from the absence of a line at my door, I’d say not many.
I’m not writing this as a scare tactic and I’m not being alarmist. I’m writing it to illustrate how just about anyone reading this is susceptible to the same horrible fate.
Another Horror Story
Want another sad tale, as if one is necessary? A few years ago a dealer in Texas got hit with nearly a $ 100,000 verdict, not to mention the expense of the dealer’s own legal fees for taking the case to trial and then appealing the jury verdict against it. The actual damages suffered by the plaintiff were less than $ 10,000, but it was the plaintiff’s lawyers fees that put the big dent in the dealer’s pocket. The worst part is that the case centered around the dealer’s decision to repossess a vehicle because of lack of proof of insurance and the “he said-she said” allegations that followed, not to mention the dealer’s insisting on the customer’s payment of a $500 repossession fee before returning the vehicle, despite the fact that the dealer didn’t incur such fee. Throw in lack of written, consistent procedures, lack of an arbitration clause, poor account notes, and what seems to be a stubborn unwillingness to admit a mistake, and we’ve got another in a long line of ugly court decisions that presents our industry in the worst light possible.
Honestly Evaluate Where You Stand on Compliance
I implore my readers to “OWN YOUR COMPLIANCE” and stop sweeping shortcomings under the rug. Do some self examination, or better yet, reach out to me and I’ll give you a list of some good places to start looking. Let’s honestly assess what steps you should take to protect your business, and then let’s develop a plan for improvement. Stop simply hoping you won’t be the next headline; hope is not a strategy. Instead, take affirmative and powerful steps to stop “IT” from happening to you
MEET STEVE
Steve Levine is an auto finance lawyer with over 30 years of experience protecting car dealers and finance companies. He is an owner and Chief Legal and Compliance Officer of Ignite Consulting Partners, which offers guidance on compliance, operations and best practices. In 2022 he published Winning the Fight: A Guide to Protect Car Dealers, and his new book Counterpunch: Compliance Strategies for Car Dealers, will be published in early 2025. Please follow Steve on Twitter @LawyerLevine for compliance and industry related content.
What You Don't Know CAN Hurt You...
“Compliance” is not just a buzz word used by a cottage industry trying to grab their share of your hard-earned profits, or an industry association trying to scare you into classes and operational reviews.
Yes, we were all extremely relieved when the U.S Fifth Circuit Court of Appeals vacated the “CARS (Combatting Auto Retail Scams) Rule” on January 27th. Though that judgement took quite a bit of the additional overreach out of the equation – make no mistake, the FTC and CFPB are still pursuing investigations and enforcement actions. The more recent focus has appeared to have been on smaller dealerships with less perceived knowledge of how compliance affects them and less ability to fight back when fines are levied.
The Federal Trade Commission (FTC) and Consumer Fraud Protection Bureau (CFPB) were created in the best spirit and intent – to protect consumers. We all know there are predators in our industry. The honest dealers who want to do things right want them censured as much as the Federal agencies created to do so.
Recent administrations have unfortunately weaponized these well-intentioned agencies against the small businesses that this country relies on - YOU. At this point, though we are all hopeful for a burgeoning
economic resurgence, we need to remain diligent to protect not just the interests of the small independent dealership, but of the over 12MM consumers out there who work hard and need the goods and services you offer.
There are many agencies of varying expense that exist to help educate your staff and review your current compliance for items that need to be addressed – one of the best is Ignite Consulting Partners, with whom MidAtlantic IADA has a close working relationship.
In your own State (or Commonwealth), agencies have been granted similar
If you are not familiar with how the following FTC & CFPB Rules affect your daily business, please reach out for more information and how we can help protect your investment:
¨ Used Car Rule
¨ Magnuson-Moss Warranty Ac
¨ Disposal Rule
¨ Truth In Lending Act
¨ Equal Credit Opportunity Act
¨ Gramm-Leach-Bliley Act
¨ Truth in Advertising Rule
auditing powers to protect consumers from predators. Sadly, years of misrepresentation have these local agencies equally on guard when it comes to consumer protection. Each of these agencies has their own standards by which to audit – please familiarize yourself with those standards and those who can help you maintain those standards. In years past, good dealers “doing right” by the customer had nothing to worry about with compliance – this is no longer the case. You can absolutely lose everything for simply not knowing what you don’t know.
Please take steps to protect yourself, your employees and your legacy. We’re here to help.
Compliance Review by MidAtlantic IADA: ONSITE PennDOT Compliance Review
• Starting at $250 for initial setup of a compliant file management system for new dealerships.
• Average small dealership review: $500 (half-day) to $900 (full day) for assistance and education on management.
• Multi-day or multi-location pricing varies based on complexity and local accommodation costs.
C ALL (717) 238-9002
JOIN MidAtlantic IADA
Hi Everyone,
First, for this month something really important. Doc fees!!! Doc fees went from $464 to $477 if dealers perform on-line registrations with an online provider or from $387 to $398 for processing title work manually.
Doc fees are not state fees and are permissible to be charged but not required by law.
The doc fee is negotiable between the dealer and the customer. It should not be preprinted on any form.
A dealer can charge an online registration fee (no markup allowed) but not the online dealer fee. The online registration fee is the actual amount charged to the dealer by the online provider. This fee must be itemized separately from the doc fee.
If a dealer charges the maximum doc fee amount for electronic transactions but ultimately processes the title work manually??? Then what happens. The dealership will be required to refund the customer the difference between the doc fee amount charged to the customer for the electronic transaction and the amount that should have been charged for the manual transaction.
I’m sure you might have a few more questions, but I thought these answers would be a help.
Okay, so here is the crazy thing… Are you ready…
If you are not an issuing agent, you cannot charge doc fees and you lose out on basically free money!!!
Let’s see if you sell 10 cars in a month and you are an issuing agent, that means $4,770 in on-line doc fees you are losing!!! Crazy right!!!
Well, here’s how I can help you. I can help you become an issuing agent, and I would love to help you.
If you are a member, I will send you a list with things I need from you all spelled out. You email them to me, and I do your whole contract and deal with PennDOT for you!
So, what is your excuse for not getting that extra money???
Please think about it and contact me. When someone says free money to me, I jump!!!
Until next time,
Cyndi
Cynthia Slemons Membership Specialist MidAtlantic IADA
Lebanon Auto Auction
