Mid-Atlantic Dealer News - December 2023

D E C E M B E R 2 0 2 3 • M I D AT L A N T I C I A D A . O R G

MIDATLANTIC

DEALER NEWS

H I G H L I G H T I N G P E N N S Y L V A N I A • M A R Y L A N D • D E L A W A R E

TOP HIGHLIGHT

THANK YOU TO OUR CONVENTION SPONSORS When the Market Shrinks, Expand Your Brand: The Bold Art of Advertising in a Downturn MIDATLANTIC INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION 1501 North Front St., Harrisburg, PA 17102

Direct Sales Dilemma: Can U.S. Automakers Be Viable Without Car Dealers?

SPECIAL SPONSOR FEATURES Having a Shop in BHPH

“I want the ruling reversed and the cost for dry cleaning my suit.”

PLUS

5 Strategies to Recruit More Diverse Employees at Your Dealership MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 | 1

Greetings SEASONS

WISHING YOU A VERY HAPPY HOLIDAY SEASON AND A PEACEFUL AND PROSPEROUS NEW YEAR. THANK YOU TO ALL OF OUR EMPLOYEES, CUSTOMERS, AND VENDORS FOR YOUR CONTINUED DEDICATION, SUPPORT, AND BUSINESS! 2 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023

The official magazine of the

MIDATLANTIC INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION

DECEMBER 2023 | CONTENTS

PENNSYLVANIA • MARYLAND • DELAWARE 1501 North Front St., Harrisburg, PA 17102 (717) 238-9002 midatlanticiada.org Noah Melamed - Chairman Ticket to Ride Auto, Lancaster, PA nmelamed@yourttr.com Chris Smiley - Advisor Mountville Motor Sales, Columbia, PA rcsmiley@comcast.net Bert Straub, President 1st Choice Auto LLC, Fairview, PA bertcstraub@gmail.com

FEATURES 3 |

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Vacant, President - Elect John DeFilippo - Treasurer U Drive Today Sales & Finance, Prospect Park, PA john.m.defilippo@gmail.com Clint Weaver- Secretary America’s Auto Auction Harrisburg, Mechanicsburg, PA clint.weaver@americasautoauction.com Tom Hodges, Vice-President Tom Hodges Auto Sales, Hollywood, MD tom@tomhodgesauto.com Dan Limongelli, Vice-President Jo Dan Motors, Plains, PA jodanmotors@gmail.com

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Michael Mansour, Vice-President Car Connection, Inc., New Castle, PA mike@carconnection1.com

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Beth Melamed, Vice-President Ticket to Ride Auto, Lancaster, PA bmelamed@yourttr.com

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Lisa Cohowicz • lisac@nepautoauction.com North East Pennsylvania A/A, Scranton, PA Jeff Dreier • dreierauto@hotmail.com Dreier Auto Sales, Shavertown, PA

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April Hollobaugh • ajautosalestitusville@gmail.com A&J Auto Sales, Titusville, PA Kevin Luring • k.luring@yahoo.com ADESA PA, York, PA James Makia • james@exclusivemotorcarsmd.com Exclusive Motorcars, Randallstown, MD Dan McNamee • dtlcars@aol.com Daniel Thomas Auto Sales, Croydon, PA Gregg Pachik • gregg.pachik@manheim.com Manheim Philadelphia, Hatfield, PA Kerri Rotunda • kerrir@corryade.com America’s Auto Auction Erie, Corry, PA

“I want the ruling reversed and the cost for dry cleaning my suit.”

A client was recently complaining to me about a judgment issued against his dealership in a Justice of the Peace Court. Explore what happened.

Thank You to Our Convention Sponsors Having a Shop in BHPH Understanding the skill level of technicians is important to your and their success.

When the Market Shrinks, Expand Your Brand: The Bold Art of Advertising in a Downturn For dealerships that do stay the course during noticeable downturns or increase their promotional activities, the key is to craft messages that reflect the times.

Direct Sales Dilemma: Can U.S. Automakers Be Viable Without Car Dealers?

Delve into the ins and outs of this change and explore the motivations behind automakers’ decisions and their challenges.

5 Strategies to Recruit More Diverse Employees at Your Dealership The automotive industry is evolving, and so should your dealership. With a diverse customer base, your sales and managerial team should reflect that diversity, as well.

Can Car Dealers Trust AI? “Right now, artificial intelligence is in no way a standalone tool” for replying to customer reviews, says Widewail CEO Matt Murray.

Insights on the Unruly Retail Vehicle Market Dealers brace for more new- and used-car price and inventory volatility as the UAW strike continues.

Combined Auction Platform: The Efficient Road to Profitability A combined auction platform – which enables dealers to concurrently buy or sell a vehicle through traditional in-person events as well as through digital-only sales – is the solution the industry has been waiting for.

DEPARTMENTS 2 | 4 | 5 |

President’s Message Executive Director’s Message Advanced Issuing Agent Training Courses

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Auction Directory We’re Hiring - MidAtlantic Employment Ad

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MIDATLANTIC INDEPENDENT AUTO DEALERS ASSOCIATION SPONSORS

George Smouse • gasmouse@zoominternet.net Smouse Trucks & Vans, Mt. Pleasant, PA Steve Worley • worleymotors@hotmail.com Worley Motors, Enola, PA _____________________________ Tom Brandis • Executive Director WOULD YOU LIKE TO RECEIVE A DIGITAL EDITION OF THE MIDATLANTIC DEALER NEWS MAGAZINE? Email heather@piada.org

Copyright 2023 MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 | 1

q PRESIDENT’S MESSAGE

CRITICAL UPDATES FOR THE COMING YEAR Dear Association Members, I hope this message finds you well. We want to update you on our association's significant developments and upcoming events.

Bert Straub President MidAtlantic IADA

MEMBERSHIP RENEWAL: It's that time of year again when we kindly request all members renew their membership for the upcoming year. Your continued support is vital for us to sustain and grow. You will receive an email with detailed instructions on renewing your membership, or you can visit our website for more information.

UPCOMING EVENTS: We have some exciting events lined up for the coming months, including workshops, seminars, and social gatherings. Keep an eye on our event calendar and mark your calendars to join us for these valuable opportunities.

VOLUNTEER OPPORTUNITIES: Our association thrives on our volunteers' dedication and hard work. If you have some time to spare and wish to contribute as a board member, don't hesitate to contact us for available positions.

FEEDBACK AND SUGGESTIONS: We always value your input. If you have any suggestions, feedback, or ideas for improving our association, please don't hesitate to contact us. Your insights are invaluable.

STAY CONNECTED: For the latest updates, news, and discussions, follow our social media channels and regularly check our website. We are also in the process of launching a members-only forum for more in-depth discussions and networking opportunities.

If you have any questions or need further information on any of the above points, please don't hesitate to contact our association.

Thank you for your continued support and involvement in our association. Together, we can make a positive impact and build a stronger community.

Warm regards and happy holidays,

Bert

2 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023

IT’S TIME TO NOMINATE THE BEST OF THE BEST Please take a moment to consider a nomination for the 2024 MidAtlantic IADA Dealer of the Year and send it in today!

Each year, MidAtlantic IADA recognizes and presents the Dealer of the Year Award to one carefully selected dealer.

The award was created to recognize the remarkable accomplishments of MidAtlantic independent dealers. For many years, award recipients have exemplified their commitment to quality and excellence in the industry, outstanding customer service, and giving back to their community to make it a better place for everyone.

This prestigious award not only celebrates business success, but also honors dealers who embody ethical practices and community stewardship.

Your nomination plays a crucial role in acknowledging and spotlighting those who go above and beyond in shaping the automotive industry with integrity and a positive impact.

EMAIL NOMINATION TO: STEVE@PIADA.ORG Steve Smith, Office Manager

“I want the ruling reversed and the cost for dry cleaning my suit.”

By Steve Levine, Ignite Consulting Partners

A client was recently complaining to me about a judgment issued against his dealership in a Justice of the Peace Court.

Although he thought both the law and facts were in his favor (doesn’t everyone?), the judge ruled in favor of the consumer.

While the verdict wasn’t very much money, it rubbed the dealer the wrong way and he was calling to discuss whether it made sense to appeal the decision.

I explained that he’d have to post a bond and use an attorney for the appeal, and that those costs would exceed the verdict amount. I asked him “What are you hoping to achieve: to get justice, to get out for the lowest amount possible, or prove a point?” Exasperated, he answered, “I want the ruling reversed and the cost for dry cleaning my suit.” Immediately, I told him that was going to be the title for my next article. Heck, I like it so much I may turn it into a movie.

WIN OR LOSE, LAWSUITS ARE A BURDEN Seriously, though, lawsuits can be a serious burden for dealers and finance companies.

Even minor matters can be costly, both in the time it takes to investigate the claims, hire an attorney (if necessary - this varies by jurisdiction) and appear in court. Litigation is a tremendous energy vampire.

I’m frequently asked whether fighting is “worth” it. Like a lot of things, the answer is “it depends.” “Small” claims court isn’t so small anymore, with some jurisdictions allowing the amount in controversy to be up to $ 20,000.00. That’s very different from my early days of practicing, when it was limited to $ 5,000.00 and under in my area. To a lot of defendants, the amount in controversy alone might be the deciding factor in whether to fight.

CONFRONT THE FACTS WITHOUT EMOTION Then there’s the question of the facts surrounding the case and what can be proven. Very often, the case involves “he said - she said” claims and will hinge on the credibility of both the dealer and the consumer. I encourage clients to “confront the brutal facts” when analyzing a claim.

I’ve been led to believe that many plaintiffs were the scourge of the earth, only to be met by a presentable, charismatic and articulate person when we got to court. One of the first things to be done is to honestly evaluate the claim, the facts, and even your own actions and those of your company.

I also advise folks to leave emotions out of the decision making process and look solely at the parties and the facts. Too often over the years, I’ve seen emotional decisions turn out to be costly ones. It’s crucial to conduct an objective analysis and consider all of the facts, both good and bad, and strive to make a “business decision.”

I find that many businesses struggle with making an objective analysis. They are so familiar with their own business and process that they won’t even consider another point of view. This can be a costly mistake. If the business and its team is too set in its ways to be objective, bring in an outsider and see what they think. This could be your lawyer, spouse, neighbor, really anyone. Remember, when you go to court a stranger (whether its a judge or jury) will be hearing about the case for the first time, so it’s important to consider the thoughts and opinions of others that aren’t as familiar with your business or industry.

AVOID LITIGATION WHEN YOU CAN Of course, the best advice I can provide is to avoid litigation altogether, even if it means making concessions that may seem beyond what the customer deserves. I

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believe this because again, litigation is a costly and tiresome distraction. The business (especially a small business) wants its staff focused on productive activities meant to drive revenue, growth, and customer satisfaction, not spending time answering discovery, giving depositions and doing prep work with counsel. I’ve met a lot of dealers that won at trial but still felt they lost.

Litigation avoidance and strong complaint management go hand in hand. In my career, I’ve found that those companies with strong complaint management rarely get dragged into litigation, while those that do not are seemingly in an endless loop of legal disputes. In my mind, complaint management starts before there is one. I encourage clients to create a Feedback@ nameofyourdealership.com email addresses and include this information on deal paperwork as well as make it visible at the store. By doing so, the dealer is providing a path for the customer to follow rather than hope that it finds the right ear. Of course, it’s necessary to train someone on how to review and answer any complaints.

Dealing with the public can be tough, and no matter how hard you try there will be instances where matters will escalate and threats of litigation will be made.

It’s important for a business to develop a process for handling these situations so that a fair and balanced attempt is made to resolve the conflict prior to a lawsuit or having a situation escalate to a regulator. If those efforts aren’t successful and litigation is the next step, a party must consider both the hard and soft costs of litigation (dry cleaning costs included), define what “winning” means in their mind, and whether that desired outcome is realistic.

Good luck with your analysis, and feel free to reach out if you’d like to discuss a particular case or situation. n

MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 | 3

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q EXECUTIVE DIRECTOR’S MESSAGE

LOOKING FORWARD TO 2024 Happy holidays, dealers!

Wow, another busy month is in the book. First off, I would like to wish everyone a happy and safe upcoming holiday season. It’s been an interesting year in the “car biz” to say the least, so be sure to take some time and “grab neutral” with your family and friends, because before we know it, it will be tax season.

Last month I, along with our lobbyist, Tyler Burke and board member, John Defilippo, had the chance to sit down with Steve Madrak and his team at PennDOT. It Executive Director was a great meeting. I think both sides came away with MidAtlantic IADA a better understanding of what each of us is dealing with Tommy Brandis daily. We both agreed that by working together, we can create processes and procedures that will benefit our dealers. I look forward to working with them in the future.

I was also invited and had the chance to sit down with Amy Anthony and her team at DelDOT. That was the first meeting our association has ever had with them. We came up with a list of topics to work on. We agreed to meet again shortly after the holidays. I will be sure to keep everyone updated on our discussions.

Finally, check out the recap of our 2023 Convention in the pages to follow. I really wanted to get it in last month’s issue, but it just wasn’t possible to give it the proper credit due and make publishing deadlines. For those who attended, I know you had an informative and fun time. Thank you to all the vendors and sponsors who made it possible. Looking forward to seeing everyone again for our 2024 Convention!!! Save the date: September 15-17, 2024. Same place, same space at Ceasar’s Atlantic City.

Until next month,

Tommy

SALVAGE! SEE PURPLE SOONER!

By Christine Everett, Title Lead, PIADA Struggling with titles doesn’t need to be a never-ending waiting cycle!

Imagine turning 85% or more of titles in less that a week after they arrive.

Sound too good to be true? Not with our members!

We are proud to announce, as of November 9, 2023 with our newly staffed title team, we are successfully printing over 85% of salvage titles inhouse with our title department. That means less waiting for PennDOT to eventually print it and less chance for it to get lost in the mail.

The more that you send to us, the less that goes to PennDOT, which in turn helps reduce the days it takes to get the ones that PennDOT must process (that extra 15%).

Let our experienced title team help you today for more sales as soon as next week! Our window is open for walk-ins from 8:30am to 3:00pm on Tuesdays and Fridays for up to 5 immediately printed salvage titles (possibly more depending on demand at the time of walk-in).

We look forward to seeing you!

Don’t forget about the MidAtlantic

DEALER SERVICE PROVIDER DIRECTORY

Visit piada.org/vendors-auctions/vendor-directory to search the database of vendors and service providers who work specifically with independent dealers. You’ll even find special discounts and offers exclusive to MidAtlantic members. Please let us know if you have any questions.

4 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023

May the joy and warmth of the holiday season fill your home and business with happiness.

We hope you find much prosperityMidAtlanticDealerNews-NewYearAd2024-print.pdf in the coming year. Please feel free to reach out to anyone on the MidAtlantic IADA staff with questions or concerns as we head into 2024.

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11/9/23

ADVANCED

ISSUING AGENT

TRAINING COURSES

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ONLINE COURSES CMY

for your convenience K

The online training courses will be provided by Pennsylvania Association of Notaries, a PennDOT approved instructor.

Members/Nonmembers: $169

REGISTER ONLINE AT

MIDATLANTICIADA.ORG MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 | 5

3:22 PM

THE

MIDATLANTIC IADA

Convention & Expo

WAS A SUCCESS! MidAtlantic Independent Automobile Dealers Association would like to extend our utmost appreciation to the attendees, speakers, sponsors, and vendors of our 2023 Convention and Expo!

This event was jam-packed with inspiration, learning, and networking opportunities. First Step to the Future explored the latest cutting-edge ideas, innovations, and trends shaping our industry and changing how we work.

DIAMOND SPONSOR

WWW.GOWITHBIGTIME.COM

WE LOOK FORWARD TO SEEING YOU AT OUR NEXT EVENT! 2ND ANNUAL CONVENTION AND EXPO 6 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 Information to follow!

SILVER SPONSORS

BALTIMORE | KEYSTONE | PENNSYLVANIA PHILADELPHIA | PITTSBURGH www.manheim.com

ERIE | HARRISBURGH | LANCASTER americasaa.com

proguardwarranty.com

cvrconnect.com

BRONZE SPONSORS

newerahealthplans.com

ignitecp.com

auto-master.com buckeyereinsurance.com

cprforcars.com bscamerica.com

autofinance.com

taxmax.com

SEPTEMBER 15 – 17, 2024 CAESARS ATLANTIC CITY

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MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 | 7

ADDITIONAL SPONSORS

nepautoauction.com

COCKTAIL PARTY carriagetrade.com

MONDAY NIGHT FOOTBALL PARTY NAME BADGES BREAKFAST

bhphunited.com

hex9architects.com

COFFEE BREAKS & TOTE BAGS WE LOOK FORWARD TO SEEING YOU AT OUR NEXT EVENT! 2ND ANNUAL CONVENTION AND EXPO 8 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 Information to follow!

During MidAtlantic IADA’s First Step to the Future Convention and Expo, $8,250 was raised from a 50/50 raffle and live auction for the non-profit Curing Kids Cancer.

Childhood cancer is the leading cause of death by disease in children under the age of 15 in the U.S. 43 children in the U.S. are diagnosed with cancer every day. 91,250 children lose their lives to cancer each year. That is the sad truth...but there is hope.

Curing Kids Cancer funds cutting-edge research that will lead to better treatments with fewer harmful side effects. Their mission: We will find cures for childhood cancers in our lifetime. To date, Curing Kids Cancer has raised more than $26,000,000 to fund research helping cure pediatric cancers.

Auctioneer Brian Burke II, the Pennsylvania Auctioneers Association’s 44th annual bidcalling contest winner, conducted the live auction, auctioning donated items from Association members and vendors. Some of the items in the auction included a sculpture created out of used auto parts, two sets of Philadelphia Eagles tickets, autographed framed pictures of Cam Heyward and Landon Dickerson, and a remote-controlled truck.

To donate, go to curingkidscancer.org/donate Curing Kids Cancer is a 501(c)(3) organization, tax id: 20-3388093

SEPTEMBER 15 – 17, 2024 CAESARS ATLANTIC CITY

MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 | 9

Having a Shop in BHPH

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By Gene Daughtry. Senior Consultant, AMS Consulting I believe having a shop is important to most BHPH dealers. I know you have either lived it or heard it: Hiring and keeping good technicians is a real problem. This is very dependent on the person managing the shop. In a smaller shop the “manager” may be more of a lead tech. I would get away from that quickly as you grow since so much time is needed dealing with customers (unless you have service advisors or writers). Technician is a skilled position in high demand. Often these folks are a little different and, much like sales associates, the traits that make them good also make them temperamental employees. Head strong, know it all, can get hired at a new job everyday makes many of them temperamental (not all).

Understanding the skill level is important to your and their success (back to the manager hired to run the shop). You will want, as you grow, more specialized experience like transmissions, engine R and R, reconditioning level etc., so you have a collective experience base to handle whatever comes in.

PAY PLANS: This is a topic that will be debated forever. I cannot pay straight time myself. I want them on commission.

I know of success paying straight time but that does require a strong manager and some specific metrics for the techs to maintain or you will be calling me saying “I cannot get any work from them”. In either case (flag or clock time) I always put up a team bonus for total labor hours in the shop. You can have individual bonuses to help each technician keep on track, but the team bonus helps the group push each other. In one shop I would take $2500 a month and divide it amongst all the people (6 to 8) involved in the shop except managers (had their own incentives) if the team went over 900 labor hours. If they could reach 1000 I made the bonus $3000. We kept a whiteboard updated with each tech’s hours so they could all see who was dragging the team down. It works the same as a delinquency board in collections

or a sales move board in sales…..everyone knows who is behind or leading and that causes competition.

KPI’S: I want my techs to have access to 2 lifts and produce 60 hours from them each week. This is flag time so no overtime. If the tech can do his 60 hours in 40 that is great (generally it took 50). I have had and seen techs who can generate 50 hours a week from one lift. That involves excellent time management with a shop manager understanding the flow and having jobs ready to go as needed.

This is a procedure discussion on how to help maximize technicians’ time. Whoever is managing the techs needs to be assessing the vehicles that need repairs, set a priority system for what comes into the shop next and control the flow. The manager should know which tech is best at what services and what models. Each day the technician should have 2-3 cars lined up that will come into his bay in the order the manager wants. I would have a porter that is finding the vehicles and getting them lined up so the technicians aren’t searching for the next car. Often this is where a lot of time is wasted. The technician goes outside to find a car, calls the girlfriend, has a smoke or dip and wanders about. If he adds a bathroom break to that he could be out of his bay for 30 minutes. I take that away from them. I limit smoke breaks (and say “don’t smoke” if it’s a problem), but the goal is to keep the technicians under the hood turning wrenches more hours. Like a surgeon in the hospital, I want the manager to have the cars lined up that are desired to be done today, the porter to find them and have them ready to pull in (includes getting them started or pushing them), find the parts (if that is applicable) and take the opportunities to wander away.

PARTS: I do not like having techs order parts. Someone else should do that. I want the technicians to diagnose the vehicle and suggest parts needed, turn in the estimate

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(while the porter is switching out the vehicles) and let the parts person find the parts needed. Once ALL the parts are in, the manager puts the car back into rotation.

COME BACKS: I do not want to see more than 1 a month. Often it can come back for something not related, but if the not related was an issue when the car arrived, why didn’t we catch it? If it is a part failure, this is where the vendor relationship comes into play and the tech gets paid again to redo with a better part. Comebacks also speak to diagnosing issues. If a customer comes in, we do a repair, and the customer comes right back saying we didn’t fix the issue, who missed it? 1 a month legit comeback is enough. Hold the technicians accountable for missing issues. Depending on who is engaging the customer and discovering why the car is at the shop, it is up to that person to understand the customer’s issue and articulate that to the technicians.

I want the cars to come to us and I want my techs to check the car like it is recon so we can determine what really needs to be addressed. It is our collateral, and we need the vehicle to stay on the road. I have had customer complaints not expressed to the technicians, but other repairs found and done. The car is “finished” according to the tech but what the customer had concerns about was not addressed and it caused a big problem.

Someone has to talk with the customers before, during and after repairs to help customers know what is happening, get their approval (especially if it is costing them money) and we need to know what their complaint is. Someone needs to quality control every repair done BEFORE the customer gets it back or the vehicle goes to the lot. Not a drive by the technician but someone else. I had a salesperson who was a stickler about ride and drive. He QC’d all the cars for the lot. The service writers would QC the customer cars and check off each line item on the repair order. n

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When the Market Shrinks, Expand Your Brand: The Bold Art of Advertising in a Downturn

By Terry MacCauley, CEO, Big Time Advertising & Marketing, LLC

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during the 1981 and 1982 recession had significantly higher sales after the economy recovered. Specifically, those that advertised aggressively during the recession had 256% higher sales than those that did not continue to advertise.

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For dealerships that do stay the course and continue to advertise during noticeable downturns or increase their promotional activities, the key is to craft marketing messages that reflect the times and describe how their vehicles or services still benefits the consumer especially during these more difficult times.

W

ith dealers under increasingly enormous pressure to control costs and maintain liquidity in the current economic environment, advertising budgets often appear to be a dispensable luxury in the struggle to survive. Principals and General Managers who succumb to that temptation, however, put the long-term future of their dealerships at risk, according to Wharton and advertising experts.

The first reaction is to cut, cut, cut, and advertising is sadly one of the first things to get cut. As companies slash advertising in a downturn, they leave empty space in consumers’ minds for more aggressive marketers to make strong inroads into market share. Today’s economy provides a unique opportunity to differentiate yourself and stand out in a crowded dealer space.

But it takes a lot of courage and convincing to get most management teams on board with this kind of forward thinking.

Keep in mind that when the demand for advertising services pulls back, the cost of these multitude of mediums goes down, making advertising expenditures even more defensible in a bad business climate.

All dealerships should have something to say that is completely relevant in today’s environment or any for that matter. It is going to be more efficient to say it now than it was to say it in the more lucrative times.

History shows that dealers that consistently advertise even during recessions perform better in the long run. A McGrawHill Research study that looked at 600 dealerships from 1980 to 1985 found that those dealers which chose to maintain or raise their level of advertising expenditures

14 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023

For example, dealers might be tempted to emphasize price in a recession, but that only works for mega deep-pocket dealers that are built around a core strategy of providing lowest prices focused on volume over gross. They are counting on expanding their market share with only price.

Smaller independent dealers in a downturn must rally to protect and preserve their unique brand equity that has been nurtured for years, with continued investment in and support of a dealer’s brands, products, and services. The worst thing you can do is cheap-out on delivering your normal services and value they have come to enjoy.

In other words, you can’t put less coffee in the cappuccino and not expect your customers to take notice, as many have in the past. Make it a point that customers can trust your brand even more during the difficult times.

While price is important in any market and especially a recession, the majority of price-driven consumers still factor

in the importance of branding. Clear brand association and leadership comes through communication. If dealers cut the communication (which is advertising), they will have a serious long-term problem.

Dealers must make sure they understand the “elasticity” of their dealership or brand, which would be a gauge of how much — or how little — advertising is necessary to sustain sales. It is not a science. There is a lot of competing messaging out there, but the reality is that to be successful dealers must stay hyper focused by supporting their own dealership and sales.

Also, dealers should head caution knowing that in today’s networked, digital marketplace, consumer buzz about disappointments with a product can metastasize quickly and widely. We must give people good things to talk about by continuing to have good products and communication. If they are struggling to afford gas, help them solve that problem and they will sing praises. Ignore their issues and they will tell double or triple the amount. The biggest lesson is that recessions come and go, but hopefully your dealer brand is for life. So be careful how you react because history reminds us that this downturn is not going to be forever.

If dealers cut deeply into advertising and communications in a down period, the cost to regain share of voice in the market once the economy turns around may cost four or five times as much as the cuts saved.

It is critical that dealers really keep a balance in times like this. DO NOT go dark when customers and consumers need you, because they need you as much now as you need them.

A downturn is a natural time to focus on core strategies and find ways to help communicate your dealership’s ability

to solve their economic transportation concerns. Downturns can be a huge opportunity that is only disguised as a problem. It is critical that the dealer help position their own brand as an ally to consumers in tough times with vehicles and service development or sponsorship programs that meet their wants and needs.

With this approach, consumers will better see by your actions that your dealer’s brand is on their side. This laser focused approach will pay dividends not only during a recession but far beyond when the market comes back, and everyone is spending double or triple to catch up.

Advertisers in all categories must be in tune with consumers in the current climate. They need to fine-tune messaging to be sensitive.

In challenging times, marketers must also work harder to segment consumers with specific messages. If, in the past, you used mass media, you probably want to be more targeted now to make sure the message gets to the right people with the right message.

Dynamic Digital Marketing helps to make this happen. Meet them where they are, and they will show up in droves.

Research indicates that combative advertising which targets competitors escalates during an economic downturn.

When the marketplace is shrinking, you tend to become a little more competitive in your tone. We advise caution as this approach can backfire. If you say your competitor is bad and your competitor says you are bad, ultimately the customer thinks both are probably good and bad. In other words, never give the consumer a reason to shop your competition. By and large consumers tend to be indifferent and truly desire brands that help solve their buying concerns. Even more so in a downturn, if you want to create loyal customers, you do not want to be overly competitive. It is so much better to highlight what you do best and be sensitive to the needs of your customers rather than bashing the competition.

An economic slump may be a time to reconfigure the advertising mix heavily to strong digital marketing outlets that can target with precision, depending

l

on the product, brand positioning and overall dealer strategy. Dealers do not have to put a huge amount of money in the marketplace. The lower-cost digital marketing techniques such as banners, remarketing, retargeting and so much more might merit new attention. Now might be the time to try new digital mediums that you have been on the sidelines wondering.

TikTok, Meta Reels, and so much more can deliver powerful messaging. When times are flush, it is easy to pay a premium for more expensive established media. Instead stay focused, determined, and seek how your dealership can best stay the course during economic downturns and then be way ahead of the competition when the economy fully returns.

Yes, all forms of advertising can be successful even in a recession, although the impact of digital marketing might be easier to quantify and therefore able to withstand the scrutiny of demanding justification for any spending while dealer principals and management teams are under recessionary pressures.

Consumers are looking for hope or a beacon of light during difficult times, steer into their desires and they will reward you in ways unthinkable.

The current economic times offer an opportunity for dealers to provide integrated campaigns meshing a digital marketing full court press. In more recent downturns, 2001 & 2007, digital marketers were operating out of separate agencies, but today dealers can construct fully integrated budget conscious digital advertising and marketing campaigns. We all have been talking about integration for years, but it has been a much slower process than we expected. Yes, the coming economic driven downturn will accelerate that integration, but those who are the most well-integrated and refuse to take complete shelter will start to see some of the biggest benefits. n

MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 | 15

Direct Sales Dilemma: Can U.S. Automakers Be Viable Without Car Dealers?

By Sean Toussi, Glo3D.com

Since 1898 when William E. Metzger established one of the first car dealerships in the United States, the automotive industry has been on the brink of several transformations. One of the most significant ones is happening these days as U.S. automakers are increasingly leaning towards implementing the direct sales model, a shift that could potentially reshape how vehicles are sold in the United States.

Franchised dealer groups and associations from several states are gearing up for a legal battle against automakers’ plans to sell vehicles directly to consumers. The dealerships argue that this move will effectively cut them out of the automotive sales ecosystem, ending a century-long tradition where dealerships played the role of the middleman in the car-buying process.

In this article, we’ll delve into the ins and outs of this change and explore the motivations behind automakers’ decisions and their challenges.

THE DIRECT SALES MODEL The direct sales model in the automotive industry involves automakers selling vehicles directly to consumers, bypassing traditional dealerships. This approach has gained traction recently, primarily driven by technological advancements, changing consumer preferences, and the desire for more control over the customer experience.

While dealerships have provided convenience and variety to consumers, some have taken advantage of their position to charge exorbitant markups on vehicles.

High markups have become more common, particularly due to supply shortages in the industry. However, as the automotive landscape shifts towards electric vehicles (EVs), car manufacturers are pushing back by exploring the direct sales model.

Dealer associations and franchised dealer groups invoke legal safeguards to challenge the practice of direct sales to consumers.

They also argue that the state’s franchise laws constitute “economic protectionism” and inhibit the company from selling its electric vehicles in the state. Despite initial opposition, Tesla, the electric vehicle pioneer, has been at the forefront of the direct sales model in the U.S. Tesla’s direct-to-consumer approach has allowed the company to control the entire

16 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023

customer journey, from online ordering to delivery and servicing. This success has also inspired other automakers to explore similar strategies to such an extent that Rivian and Lucid, two electric vehicle (EV) manufacturers, have achieved a significant victory in their quest to sell directly to consumers. This follows in the footsteps of Tesla, which has faced legal battles in various states. They pursued a direct-to-consumer sales strategy by building robust online platforms and remote service operations to cater to their customers and eliminate the need for traditional dealerships.

MOTIVATIONS BEHIND THE SHIFT Profit Margins: One of the primary motivations behind automakers’ interest in direct sales is the potential for increased profit margins. By eliminating the middleman – the dealership – automakers can retain a larger portion of the selling price. This can be especially appealing for electric vehicle (EV) manufacturers, whose profit margins may initially be lower due to the high cost of battery technology.

Consumer Experience: Direct sales allow automakers to have more control over the entire customer experience, from the moment of interest to the final purchase.

This includes everything from marketing and education to test drives and financing options. This control can lead to a more seamless and consistent experience for consumers.

Data Collection: Gathering customer data is invaluable in today’s data-driven world. When automakers sell directly, they can collect valuable information about consumer preferences, driving habits, and more. This data can be used to refine future product offerings and marketing strategies. However, by selling the vehicle indirectly, the data may not be accessible to automakers.

CHALLENGES AND OBSTACLES While the shift to direct sales offers numerous advantages, it also comes with its fair share of challenges and obstacles: Legal and Regulatory Hurdles: State laws in the U.S. vary when it comes to automakerdirect sales, with many states requiring the involvement of franchised dealerships.

Overcoming these legal hurdles can be a complex and lengthy process.

Infrastructure Investment: Manufacturers would need to invest heavily in creating their own distribution centers or warehouses to store the vehicles before they are sold to consumers. This is a significant capital investment.

Complex Supply Chains: Managing a supply chain that includes the transportation of vehicles from the manufacturing plant to the distribution center and then to the customer requires a sophisticated logistics operation.

This includes coordinating with transportation companies, managing shipping schedules, and ensuring timely deliveries.

Inventory Management: Direct sales necessitate that manufacturers have a more accurate forecast of demand to ensure that the right number of vehicles are produced and available when customers place orders. Without dealerships to hold inventory, manufacturers bear the full risk of overproduction or mismatches in supply and demand. Overproduction can lead to excess inventory costs, while underproduction can result in lost sales and dissatisfied customers.

Maintenance and Service: Dealerships have traditionally handled vehicle servicing and maintenance. Automakers adopting direct sales must establish a robust service network to address customer needs adequately.

The automotive industry is at a crossroads, with U.S. automakers increasingly considering the direct sales model to cut dealers out of automotive sales. While this shift offers the promise of higher profits and enhanced customer experiences, it also presents significant challenges, specifically, the franchise laws and inventory management. The outcome of this transformation will likely depend on how automakers navigate the legal, regulatory, and industry dynamics while ensuring that consumers continue to have convenient access to vehicles and necessary services. As this evolution unfolds, it will be essential to monitor how the auto industry adapts to these changes and how consumers respond to a new era of car buying. n

5 Strategies to Recruit More Diverse Employees at Your Dealership

BY PROFESSIONAL MOJO

T

he automotive industry is evolving, and so should your dealership. With a diverse customer base, your sales and managerial team should reflect that diversity, as well. Recruiting and retaining diverse employees can give your dealership a strategic advantage, higher profits, and increase employee retention.

1. Leverage Your and Your Current Employees’ Referral Networks One of the best resources for finding more diverse candidates is through current employee referrals. Encourage your employees to identify and refer candidates from diverse backgrounds.

Incentivize referrals and create a culture that values diversity and inclusion.

2. Reach Out to Diverse Community Organizations To attract diverse candidates, build relationships with organizations that represent and support underrepresented groups in the automotive industry.

Collaborate with these organizations to create internships, job postings, and job fairs to connect with diverse talent.

3. Think Outside the Recruiting Box Don’t limit your search to traditional recruiting sources. Look beyond the automotive industry and explore nontraditional areas to find diverse candidates. Reach out to local chambers of commerce, talk to recruiting companies that specialize in diverse

candidate placements, and post on social media platforms. By widening your search, you increase the chances of finding talented individuals from different backgrounds who will bring fresh ideas to your dealership.

4. Develop an Inclusive Employer Brand Create an employer brand that showcases your commitment to diversity and inclusion. Social media is a great way to highlight your company’s values, policies, and initiatives that promote diversity.

Highlight your employees and offer testimonials from diverse employees to attract candidates who are looking for diversity in the workplace.

5. Create a Pipeline Partner with schools, community organizations, and diversity-focused programs to connect with candidates from different backgrounds. Internships, co-op programs, and mentoring opportunities are great ways to nurture talent, provide a valuable work experience and create a pipeline for future employee needs.

Diversity and inclusion are not just buzz words. Dealerships benefit from cultivating diverse employees who are more representative of the communities around them.

Ready for more strategies to grow your dealership? Visit midatlanticiada.org and join MidAtlantic IADA today! n

MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 | 17

Can Car Dealers Trust AI?

“Right now, artificial intelligence is in no way a standalone tool” for replying to customer reviews, says Widewail CEO Matt Murray.

By Steve Finlay Artificial intelligence is no joke. But it needs to work on its sense of humor, at least when it comes to responding to customer reviews of car dealerships.

That’s the word from Matt Murray, CEO of Widewail, and Max Muncey, corporate communications director for the Michiganbased 35-dealership LaFontaine Auto Group.

Both of them laud customer reviews as vital feedback for dealers to confirm what they’re doing right and, conversely, to learn of – and fix – shortcomings.

“We want to fully understand the customer experiences, and reviews help us with that,” Muncey says.

Reviews are so crucial to the LaFontaine organization that CEO Ryan LaFontaine gets a daily summary of them.

Widewail’s business includes soliciting reviews for dealer clients, monitoring them and responding to them whether they are on dealer websites or social media sites such as Google.

Murray believes in the future of AI, but he’s a realist about its current state. “Because of the impact of artificial intelligence, we are investing a ton of our time and resources on it,” he tells Wards. “We have a lot of faith in AI as a quantitative tool. But right now, it is in no way a standalone tool.”

So, although AI generates suggested responses to customer reviews, humans at Widewail look at and often revise them before they are posted.

“I just can’t imagine something so important to dealers as customer experience being completely managed by an unmonitored machine,” Murray says. To its credit, AI demonstrates an impressive ability to handle large amounts of data.

Dealership staff work with AI resources to ensure appropriate responses to customer reviews.

“We’ve used it to process 800,000 Google reviews for dealers,” Murray says. “All of this unstructured data is sorted by category, sentiment rating and the density of mentions of certain topics. Artificial intelligence is unbelievable at undertaking those tasks.”

Similarly, the LaFontaine Group uses AI to analyze trends but not to respond to customer reviews, says Muncey, whose job includes reputation management. That ties into customer reviews.

HOW AI FALLS SHORT So why does AI get less than an “A” on firstdraft responses? Murray says: “In managing the customer conversations or reading a review and responding to it, is where we see imperfections.

18 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023

“We see plenty of ‘hallucinations,’ the use of words or phrases that just don’t make sense in context. Improper grammar also is pretty common, unfortunately.”

Then there are weak attempts at humor. How does AI come up with those? It has to do with human nature.

“Remember, AI gathers its capabilities by understanding human intelligence,” Murray says. “It’s repeating everything we produced over many years to come up with the relationship between words. And people, by nature like to make jokes. What people say affects what AI says.”

Widewail uses a digital language model of what can and can’t be said in automated personalized responses to customer reviews.

“We try to eliminate the use of specific words,” Murray says. “For example, a few months ago, AI kept saying, ‘We’re so thrilled to see your review.’ Or: ‘It’s thrilling to see your review.’

No dealer wants a slew of bad reviews, but those can be instructive, Muncey says. “Yes, we love positive feedback, but we can learn from negative feedback, which is not to say we get a lot of it.”

Widewail told the AI system to knock it off. What happened next? It produced a response that said, “We are thrilled (oops) to see your feedback.” Murray calls it AI’s idea of a joke.

Often, the latter involves a manufacturing issue – such as a microchip shortage – that’s out of a dealer’s control.

It’s also why he doesn’t currently see AI at a point where it can go it alone. “It’s a touch irresponsible to allow just the machine to manage these potentially very sensitive customer communications – that also are being seen by potential next customers.”

Consequently, Widewail puts a team member between an AI-generated response and its actual posting to ensure it is accurate, with the right tone and personalization.

Responses to customer reviews “still need a human element,” says Muncey. “We want to make sure the tone and meaning is right.”

LaFontaine assigns “customer-satisfaction champions” at each store whose jobs include handling review responses.

CUSTOMER REVIEWS ARE EVERYWHERE Customer reviews are ubiquitous today.

Few people buy a vehicle at a particular dealership without first checking out reviews from other consumers.

It’s more likely that prospective customers give more credence to reviews than to marketing claims, Murray says.

“Our goal is to push comments to sites that automotive consumers use, such as Google, Cars.com, Facebook, DealerRater,” he says.

“About 80% of the time, it’s Google.”

A Widewail team measures sentiments contained in reviews. Those include topics of discussion. “Are they primarily discussing pricing, or are they upset with F&I, or particularly happy with their salesperson or service adviser?” says Murray, who worked at Cox Automotive’s Dealer.com before he co-founded Widewail in 2018.

“But we want to know if we have a bad apple so we can deal with that,” Muncey says.

Conversely, if an employee consistently gets glowing reviews, “we want to know what that person is doing so we can share it with co-workers.”

REVIEWS NOW GOVERNMENT-REGULATED No company is immune to sour customer reviews once in a while. When a business gets nothing but rave reviews, it raises eyebrows. “The idea that a store is going to have perfect 5-star reviews every time is a red flag,” Murray says. “That’s not achievable. An occasional negative review, in a lot of ways, lends credibility to the positive reviews.”

It’s not just a credibility issue. It can also

become a legal matter. Murray notes that the Federal Trade Commission will punish enterprises who game the system to show only customer accolades.

“The FTC really cares about this process,” Murray says. “Its goal is to protect the voice of the customer and the genuine nature of review feedback. Unduly trying to avoid getting negative reviews is expressly prohibited by the FTC.” He adds: “We’ve seen an increase in legal action pointed at eliminating bad actors and processes that suppress negative reviews.

The FTC has been very clear in saying, ‘If you choose to engage in these types of actions, we will come to you.’”

Case in point: The federal regulator last year fined an e-tailer $4.2 million for suppressing negative reviews.

Muncey says LaFontaine uses its dealership management system to ensure that any review stems from a recorded service or sales transaction. n

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20 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023

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Insights on the Unruly Retail Vehicle Market Dealers brace for more new- and used-car price and inventory volatility as the UAW strike continues.

By Nancy Dunham

As the UAW strike continues, dealers are looking for answers to where the marketplace will shift, although even analysts say no one knows.

The best analysts can do at this point is read the metaphorical tea leaves that show how the market fared in September. The 15th of that month is when the UAW strike began.

“Although the UAW strike has yet to generate a significant impact on the new-car market, with overall pricing and inventory conditions improving for consumers so far, September market data shows rising trends to watch,” says Kevin Roberts, director of industry insights and analytics at CarGurus. “The used market also hasn’t been immune to strike concerns, with inventory rising by 2.5% as dealers are likely looking to have more vehicles on hand in case a prolonged strike impacts new-vehicle availability.”

As Wards has reported, the strike has significantly impacted the availability of midsize pickups. So far, the influence on the Detroit Three’s new inventory has been “negligible” outside of the midsize pickup segment, CarGurus reports. Overall inventory for the Detroit Three is up 4.5% since Sept. 15, while strike-impacted midsize pickups are down 9.5%. The Ford Ranger is leading in declines, falling nearly 26%.

Now, analysts say the availability of some off-road SUVs is dwindling.

Consider these trends from CarGurus’s latest analysis to form your own opinion on where the new- and used-car markets may land: •

• •

Three of the top 10 models seeing the most significant year-over-year (YoY) price increases are strike-impacted offerings: Chevrolet Express +25.7%; GMC Canyon +19.7%; and GMC Savana Chassis +19.1%. But price increases for these models since the strike started are negligible (up at most 1.1% for the GMC Canyon from Sept. 15- 31).

Battery-electric vehicles dominate used-car price declines: All 10 used models with the largest YoY price declines are BEVs, spanning a 33.5% dip for the Volkswagen e-Golf up to a 38.4% decrease for the Tesla Model S. Market-share declines for new green vehicle listings: A surge of gas-powered cars on the market caused a decline in new inventories of EVs, BEVs and hybrids in September. n

22 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023

MIDATLANTIC IADA is GROWING!

MidAtlantic IADA is currently seeking qualified candidates for these roles: •

•

•

Title Department Lead – Pennsylvania (starting at $23/ hour)Ideal candidate will have a minimum of 3 years PennDOT and/or CVR experience Title Clerk – Pennsylvania, Retail and/or Salvage (starting at $20/hour) Ideal candidate will have a minimum of 1 year PennDOT and/or CVR experience Administrative Assistant (starting at $18/hour) Administrative Assistants are given preference for future title clerk positions.

All pay plans are based on proven experience. We also offer medical, dental, vision and retirement plans.

There will be additional upcoming advancement opportunities.

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Combined Auction Platform: The Efficient Road to Profitability

A combined auction platform – which enables dealers to concurrently buy or sell a vehicle through traditional in-person events as well as through digital-only sales – is the solution the industry has been waiting for.

By Lisa Scott, President, and Jai Macker, Chief Product Officer of EBlock The automotive auction and remarketing industry has evolved from strictly physical to physical, with digital capabilities, to exclusively digital. The opportunity to bring all markets together in one place feels like the right solution for all customers in this industry.

Now more than ever, car dealers are challenged to secure the inventory that attracts customers and ensures the viability of the dealership.

The savviest dealers are keeping their ears to the ground as they search for methods that will ensure the vehicles they acquire from auction move quickly and generate a strong financial return. It is incumbent upon every dealership manager and owner to explore the options and put into play the modern technologies and methodologies that will ensure their continued survival and success. Simultaneously, they need to feel confident that a consumer trade will quickly be turned into a frontline-ready piece or will attract a sufficient number of wholesale buyers.

A combined auction platform – which enables dealers to concurrently buy or sell a vehicle through traditional in-person events as well as through digital-only sales – is the solution the industry has been waiting for.

Combined auctions deliver a single marketplace that leverages a mix of land, logistics and technology, providing dealers with the critical information and tools they are familiar with, while allowing them to quickly adapt and move inventory, either virtually or in person. This “best of both worlds” scenario equips dealers with essential information, such as: • A single-run list, removing complications from the process.

• Consistent, reliable condition reports.

• Access to on-site and off-site vehicles being showcased in the same event.

• Essential tools needed to communicate with auction staff to ensure a smooth experience.

Combined auctions provide dealers with an opportunity to significantly extend their searches to a much larger geographic region in a fraction of the time than inperson local auctions. Because in-person auctions take time, effort and expense to attend, busy dealers who may have staffing shortages or schedule conflicts can rest more easily knowing their inventory managers, in effect can be in two places at once. Two significant benefits result: Sellers can reach more dealers, significantly expanding demand and generating greater profits. Buyers gain access to more desirable inventory from regions extending

24 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023

well beyond their own market, which minimizes holding costs and increases front-end profit. The result is live access to both digital and physical auctions with the use of a platform that is convenient, connected and consistent.

CONVENIENCE Combined auctions provide incomparable convenience, allowing dealers to both buy and sell on their own terms. It eliminates the need for dealers to choose between digital and physical options, ultimately exposing their inventory to more potential buyers and providing access to more units than traditional auctions.

Industry-leading combined auctions include myriad features, most notably the combination of physical and digital inventory, customized filters that save time by making quick work of narrowing searches, and the flexibility to sell wholesale units both digitally and in person.

CONNECTED Combining in-person traditional auctions with a technical option allows dealers to buy and sell online or “in lane” with access beyond their local geography, all in one place. This allows them to ask auction staff about vehicles on the block, view both audio and video for physical auctions, and gain access to run lists for vehicles at physical auctions.

CONSISTENT This combined format enables dealers to experience the same momentum, energy and urgency of a live auction with both physical and digital vehicles running simultaneously. They also allow users to benefit from an unparalleled level of functionality that enables dealers to work from one single list and gain access to consistent condition reports. Combined auctions allow for seamless planning and prepping with meticulous event timelines and offer both starting and ending times that work within dealers’ time windows. Combined auction platforms provide dealers with fluid information and a best-of-all-worlds opportunity to maximize their effectiveness from both the acquisition and selling perspectives. They offer a competitive edge in an increasingly competitive landscape. n

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SALE Wednesday, December 20th 1040 Commercial Ave, East Petersburg, PA 17520 717.569.5220 | www.aaalancaster.com | www.edgepipeline.com MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023 | 25

26 | MIDATLANTIC DEALER NEWS | MIDATLANTICIADA.ORG • DECEMBER 2023