The Puget Sound Dealer Official Publication of the Puget Sound Automobile Dealers Association 16101 Greenwood Avenue N Bldg 2100 Seattle WA 98133 Phone: 206 542-3551 Fax: 206 542-7561 Email: firstname.lastname@example.org www.psada.com
BOARD OF DIRECTORS 2012 President Jim Morino Acura of Lynnwood 1st Vice President Sara Carter Carter Subaru, Shoreline 2nd Vice President Steve Klein Klein Honda, Everett 3rd Vice President Jim Walen Ford-Hyundai of Kirkland Trustee Position #1 Dan Wilder, Jr. Wilder Auto Center, Port Angeles Trustee Position #2 Marc Ikegami Doug’s Lynnwood Mazda, Doug’s Lynnwood Hyundai, Doug’s Northwest Cadillac Immediate Past President Jason Courter Honda Auto Center of Bellevue PSADA STAFF James R. Hammond Executive Director Linda Halverson Executive Assistant Susan Leonhardi Programs and Data Base Manager Michele Foley Office Assistant
Inside this Issue
For information on advertising in this publication contact Jim Aitkins Blue Water Publishers, LLC 360.805.6474
Cover photo by Adam Buchanan 4
A Message from the Editor
Have You Ever Noticed
Did you ever see the movie Shall We Dance? This was a 2004 romantic comedy where a bored, overworked Estate Lawyer (Richard Gere), upon first sight of a beautiful instructor (Jennifer Lopez), signs up for ballroom dancing. Meanwhile, his wife (Susan Sarandon) thinks he is having an affair, which he is not. He is just learning how to dance to break the monotony of his routine work life. As the story goes, Susan Sarandon goes to her psychiatrist totally distraught over her husband. During the scene of Sarandon with her doctor, she says “I just want to be noticed.” I have remembered this line ever since I saw the movie. How true! Don’t we all want to be noticed by someone who actually SEES us? Someone we can notice back! This is very different than seeing people every day and talking to them at work or at the grocery store or after work having a drink or beer. We see each other during these times, but do we really notice each other? Do we? Do we take time to go beyond the superficial and actually care when we ask “How are you?” or when we say “Glad to see you?” Do our conversations reveal anything that lets the other person know that we truly are glad to see them and that we truly are listening to what they are saying and actually care about them? Do we go home to who we love and let them know that we notice them? You know what I mean – this is more than “I am home.” Psychologists will confirm that one of the most important things in any of our lives is relationships and being noticed. We all have a need to connect on a deeper, less superficial level. Sarandon said all she wanted to be is noticed. Pretty profound. I would extend this need well past our personal lives. I would put it right in the middle of our workplace – in our dealerships. When is the last time you noticed your assistant, or your parts counterperson, or your receptionist, or any of your employees? Being noticed as a living person by your boss or supervisor is often worth more than any money in the world. This doesn’t replace raises, but it will change how you see every day when you come to work. It will change your appreciation for everything you have and the amazing stories that each and every one of your employees can tell you if you take the time to notice them. Am I crazy? I think not! We all appreciate being noticed for being who we are. I do. Don’t you? James Hammond Executive Director
Message from the President - Jim Morino
Your Turn for a Form I-9 Audit is Coming Soon
An Update - Sales, B & O and Use Tax
Sara Carter and Wade Carter - Living a Legacy
Compensation: The “Perfect Pay Plan”
Avoiding the Political Pile-Up
NADA 2012 -Las Vegas: Technology
PSADA Takes Major Step Into 21st Century Technology
Make the Most of Your Ad Dollars in a Political Year
Embracing Today’s Technology
Retirement Income: How Much Will You Really Need?
You Talk. We Listen. At Ryan Swanson, we connect with people on a human level. Thatâ€™s why our approach to helping clients reach their goals is practical, straightforward and cost effective. Itâ€™s our no-nonsense way of doing business that puts people first, like Brad Brotherton of Brotherton Cadillac.
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Message from the President
Jim Morino Acura of Lynnwood
Things Don’t Have to Change the World to Be Important
It’s been a long stretch, but we have made it. Two thousand and eight headlines were doom and gloom and most of us feared for our futures and the survival of our dealerships. But we survived. We did what our instincts told us to do, because we are dealers – natural entrepreneurs and innovative business people. Most of us didn’t do grandiose things to survive. Things don’t have to change the world to be important. We changed the way we did business, how we managed expenses, how we managed employees and benefits, and how we positioned ourselves as important businesses in the vast number of businesses in our communities. We learned what we were made of and we found out that what we were made of was good. Our communities recognized how important we were to them and the state government recognized that unless we sell cars the local cities and municipalities and the state government itself would suffer huge shortfalls in operating funds. Times are better now. NADA is predicting a 14 million+ vehicle sales year for 2012. Many say the auto dealers are leading the nation’s financial recovery. But, we cannot forget where we were and what we learned. And we cannot let the governing bodies of our nation, cities and state forget how important they realized we were to their survival. As times improve it is so easy for the importance of who we are and what we do
to be put in the background and shadowed by new issues. As we entered 2011 there was a widespread, healthy realization of the importance of the local new car dealer. As our recovery continues and sales return to normal, or even better, we can feel comfortable that things are finally back on the right track. But, as Will Rogers once said, “Even if you’re on the right track, you’ll get run over if you just sit there.” So I encourage you to stay involved. Become part of WSADA’s Dealer Day. This event helps us tell our story to the state government. Respond to WSADA’s calls to action. Continue to be visible in your local communities. Be wise, but talk to the media and tell them your story. PSADA is constantly reminding the media and regional and state leadership how important you are to the state economy. PSADA reminds them that car dealers are one of the largest contributors to state sales tax income; that our industry is one of the largest sectors of the state’s retail sales volume; and that new car dealers’ annual salary to employees remains one of the state’s largest retail sales payrolls. The economy may have changed and the way we do business may have changed. But our importance to the state’s economy has NOT changed. As an industry we can be proud of that. Everyday PSADA holds up your honor. Thank you for supporting your PSADA Board and staff. Keep making a difference. 7
Your Turn for a Form I-9 Audit is Coming...SOON Audits have already begun in Washington State
By Joel H. Paget Ryan, Swanson & Cleveland, PLLC
On March 8, 2012, the Director of U.S. Immigration and Customs Enforcement, (“USICE”), John Morton, submitted a written report to the House Committee on Appropriations in which he reported: “Since January 2009, ICE has audited more than 6,468 employers suspected of hiring illegal labor, debarred 521 companies and individuals, and imposed more than $76.4 million in financial sanctions. This focus will continue this year.” We already have reports of more and more audits throughout the state of Washington. So, it is just a matter of time before you are subject to such an audit. THE AUDIT USICE agents only have to provide employers (dealers) 72 hours to produce the Forms I-9 for the agency to review. It is therefore more critical than ever to perform a self-audit on all of your Forms I-9 now to help avoid potential fines and penalties. If agents from USICE or the Department of Labor show up at your dealership be sure to immediately contact a knowledgeable immigration attorney. If there is missing data that is technical or procedural, you will have at least 10 days after the audit to fix the problems. But only the employee can correct Section One and the employee may be long gone. So you will not be able to correct Section One. Now is the time to audit your Forms I-9 and correct them. There are correct ways to amend the forms, so consult a competent immigration attorney.
You should be prepared for the scope of the investigation. Investigators are requesting records of all current employees as well as any employees terminated within the last year. All independent contractors, temporary staff from an agency, and “on-call” individuals will be scrutinized and the dealer must produce a roster and supporting documentation. Dealers must produce Social Security no-match letters received over the past year. The dealer must provide an employee roster, payroll reports, IRS quarterly tax statements and Washington State L&I reports. TEN DO’S AND DON’TS ON INITIAL PREPARATION OF THE FORMS 1. Do ensure you are using the correct version of the Form I-9. Check the website www.uscis.gov every six months to see if there is a new form. 2. Do keep all the Forms I-9 in a separate folder for current employees and another for terminated employees. You should not keep the Form I-9 in each employee’s personnel file. 3. Do make a copy of the document(s) submitted by the employee for your file. 4. Do not accept any document that has an expiration date that has expired.
10. Do know your rights! And make sure those on the front lines know them also. When the USICE agents come to review your Forms I-9 and conduct an audit, make sure they know they can insist on a written Notice of Inspection three business days before you turn over your original Forms I-9. Offer to bring the documents requested to their office. The less time they are on your premises the better. ISSUES ON RETENTION/DESTRUCTION Forms I-9 must be kept for three years after the date of hire, or one year after the date employment is terminated, whichever is later. For example, if an employee retires after 15 years, his/her Form I-9 will be stored for a total of 16 years. You should destroy the Forms I-9 that you are not required to keep because they may contain errors that would subject the company to fines if there is an audit.
5. Do not re-verify U.S. passports or passport cards, Permanent Resident or Resident Alien Cards, or List B Identity documents. 6. Do have a tickler system to ensure you re-verify expiring work authorization documents before they expire, and do not allow an employee to continue to work after his or her work authorization document expires. 7. Do not engage in discrimination or document abuse when completing the I-9 form process. You do not get to choose which documents the employee should present.
THE PUNISHMENT USICE wants to send a message to employers. “Just a small fine or a slap on the wrist is not a deterrent…we see more robust criminal cases…the prospect of 10 years in prison carries much sharper teeth than just a small fine,” emphasizes Julie Myers, former Director of USICE. Employers, which includes owners, executives, supervisors, and managers, could face multiple charges of Form I-9 errors and violations, including Harboring of Illegal Aliens, Inducing Aliens to stay in the United States for Illegal Purposes, Making False Statements on the Form I-9, aiding or abetting an employee in making false statements or committing other immigration law violations. The liability is assessed for constructive knowledge, not actual knowledge. Fines range from $110 to $1,100 plus per occurrence, (an occurrence is one single Form I-9 violation) to imprisonment and forfeiture of profits. For example, if an employee fails to check a box in Section 1, it may result in a fine of $1,100.
8. Do accept a document that is on the List of Acceptable Documents that appears to be genuine and relates to the person presenting it to you for the completion of Section 2 of the Form I-9.
OUR OFFER We are available to do a random audit of your Forms I-9 for one hour. If we do not find at least ten violations our time is free.
9. Do conduct a self-audit of your Forms I-9 to make sure they are correctly completed. It is so easy to make errors on these forms or leave them incomplete. Assign a detail oriented person to this process.
Joel H. Paget is a Senior Immigration Attorney at Ryan, Swanson & Cleveland, PLLC. For more information, please contact Joel Paget at email@example.com or visit www .SeattleImmigrationGroup.com.
a Winning team Get a CPA firm with a winning record on your team.
Peterson Sullivan LLP, one of the nation’s most successful specialists in auto dealership accounting, serves more than one hundred dealers in the Pacific Northwest. We are one of only a few CPA firms approved to perform audits for GM Motor’s Holding Division. And we are the only Washington State member of the exclusive AutoCPA Group. Following are only a few of the many areas where we are trusted advisors to our automotive industry clients: • Cash controls • Internal controls • Cost segregation • IRS reporting requirements • Dealership valuation • Sales and B&O tax consulting • Estate and succession planning • Tax planning • Financial statement analysis We believe strongly in building long-term relationships with our clients. We aim to understand your business so well that our advice becomes indispensable. Please contact Kevin Allison to see how we may assist your business needs at (206) 382-7777 or by email at firstname.lastname@example.org. Peterson Sullivan. Driving your success.
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By Kevin Allison Partner, Peterson Sullivan LLP
An Update â€”
Sales, B&O and Use Tax
If someone mentions the word tax, most entrepreneurs immediately think of income taxes and the Internal Revenue Service. If you’re an auto dealer though, you should also be considering the B&O, sales and use tax being paid to the Washington State Department of Revenue (“DOR”) since considerably more is paid to the DOR than the IRS each year. While it’s true that most of the taxes being paid comes directly from your customers (the sales tax portion), even this portion of the tax can and will be assessed to the dealership if not properly collected from the customer or paid to DOR. Therefore, it pays to keep current on the rules that affect your dealership daily. Following are a few areas of taxation to be aware of when completing your monthly excise tax report. TAX-EXEMPT VEHICLE SALES There are several types of sales that are exempt from either sales tax or both B&O and sales tax. Some of the major areas are: 1. Nonresident sales (exempt from sales tax) 2. Native American sales (exempt from sales tax, rarely exempt from B&O tax) 3. Dealer trades-new vehicles (exempt from sales and B&O tax) 4. Auction sales (exempt from sales and B&O tax) 5. Out-of-state deliveries (exempt from sales and B&O tax) Each of these types of sales has certain requirements that must be met and documentation that must be completed and retained in the Company’s records.
The primary reason that a DOR agent denies a tax exemption is simply because the proper documentation is not completed at the time of sale. The required affidavits and/or documentation can be found on the DOR website in the “industry specific guides” section. Also be alert for contradictory information in the customer files such as a credit application indicating in-state employment for a sale to a nonresident or a local phone number being used for a customer’s contact information. USE TAX There are several situations commonly occurring in the auto dealership industry which require the payment of use tax. Since the use tax rate is equal to the sales tax rate, neglecting to properly pay the use tax can result in a substantial assessment being made by the DOR. Some of the more common areas to be aware of are: 1. Demonstrators (vehicles provided to fulltime salespeople) 2. Executive vehicles (vehicles provided to employees other than full-time salespeople) 3. Parts vehicles and service loaners 4. Parts used on company vehicles 5. Fixed asset purchases when no sales tax is paid when purchased 6. Consumables (supplies and/or parts normally purchased for resale, but consumed by the dealership) Each area has a specific method of computing the use tax due which can again be found on the DOR’s website. There are also exceptions that could
eliminate the need to pay use tax. For instance, if an employee who is driving an executive vehicle also has another late model vehicle (current or prior two model years) registered in his or her name; there would be no use tax due on that vehicle. Also, if the dealership paid sales tax when it purchased a vehicle such as a parts truck or a part used on a company vehicle, there would be no requirement to also pay use tax. STREAMLINED SALES TAX (effective July 1, 2008) Normally when a product is shipped to a customer within Washington State, the sales tax rate in effect at the destination of the shipment is to be used under the relatively new streamlined sales tax (“SST”) rules. However, these rules do not affect the taxability of on-road vehicle sales. The sales tax rate in effect at the dealership’s location is to be used for these sales. Also, the SST rules normally would not affect the sales tax rate charged for service work unless the serviced vehicle is delivered to another location. SHARED EXPENSES When a dealer or dealer group own multiple dealerships held in separate legal entities, quite often the dealership will share the cost of certain expenses such as maintenance, janitorial, consulting, or even payroll. If so, you might be unaware that this may be creating a B&O and or use tax obligation. Frequently, one dealership will pay the expense and be reim-
bursed by the other dealership(s). It is this reimbursement that will very likely be subject to B&O and maybe even use tax. The reason for this is that normally all the dealerships involved are either primarily or secondarily liable to the vendor for payment; therefore, the reimbursement is considered “revenue” to the dealership receiving the reimbursement. This is an outcome that many people would not anticipate. The problem can usually be remedied by having the vendor bill each dealership separately and by having each dealership pay its own expense. This unfortunate result can also occur in a “common paymaster” arrangement where one dealership may pay the salary of one or more shared employees and be reimbursed by the other dealership(s). FACTORY INCENTIVES Almost every franchise has at least one type of program requiring the manufacturer to pay the franchised dealer on a reoccurring basis. The various programs each have different requirements that must be fulfilled before the funds are payable. The money received under these programs has been an area that the DOR has been scrutinizing for a number of years. It is DOR’s current position that if any “service” is required to qualify for the incentive program, the money received under the program will be subject to B&O tax, taxable under the service and other category. DOR is presently using a very broad interpretation to define what qualifies as a service, making many of the incentive programs taxable. This interpretation is presently being challenged, but it is uncertain when a final determination will be made. Money received from the factory under programs where no service is required such as holdback, flooring assistance and many of the advertising rebates will continue to be tax exempt. Unfortunately there is no easy answer as to whether your particular program is taxable since each incentive program has unique qualification requirements, but DOR has indicated they will continue to use this broad interpretation until a final decision is reached. These are just a few of the rules that affect your auto dealership. There are many more which can be found on the DOR website. If you have any questions on any of these rules, you should contact your tax specialist to get the most current information. Kevin Allison is a partner at Peterson Sullivan LLP. If you would like to contact him call 206-382-7703 or by email email@example.com.
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Photo by Adam Buchanan
By Craig Chastain
Sara Carter Wade Carter
Living a Legacy
After years of hard work building a business, some car dealers are able to pass on a dealership to their children. Wade Carter, father to Sara and Wade Carter, passed on a legacy. The Ballard Volkswagen/Subaru and Shoreline Subaru stores under the Carter Motors banner have grown and prospered by living a legacy of service begun by the elder Carter more than a half century ago. “Our father focused on treating people the way we would want to be treated,” says Sara. “He gave us, and the Northwest car business, an outstanding example to follow.” Indeed, from the day Wade and wife Mary opened the Ballard store in 1960, the “Carter Advantage” came to represent the best of what a dealership could be – professional, uncompromising, service-minded. More than that, the Carter team became part of the community, with Wade wearing many hats: businessman, philanthropist, family man, race car driver. “I always wanted to work side-by-side with my father,” says the younger Wade. “At fifteen, I started out doing various jobs within the dealership. During my college years, I spent my summer(s) selling Subarus. After graduating from George Fox University, I returned home and began working as a service advisor. I’ve been involved with all aspects of the company ever since.” A year in NADA’s Dealer Academy – from which both he and Sara graduated – gave them a total immersion into the business. Still, with all the training and experience, Wade and Sara feel their father was their most influential teacher.
“What makes dealerships successful are relationships,” says Sara.”Our father taught us to put people first, both our customers and our staff. That gives you the foundation, then you add great brands like Volkswagen and Subaru, and you’re ready for success to follow.” Carter Volkswagen has been a Ballard staple since 1960. An avid race car enthusiast, the elder Wade raced Porsches, which led to a connection to VW back when the “bug” and the iconic van were the heart of the brand. Subaru followed in Shoreline in 1976, and when Sara and Wade terminated their Saab franchise in 2008, they enthusiastically put Carter Subaru Ballard in its place. “They are great products for the Northwest – safe, reliable, dependable,” says Wade. “We are very fortunate to have them.” Sara and Wade’s scope of responsibility took a dramatic turn in 2001 when their father was killed in a helicopter crash. The tragic event shook the northwest dealer community and beyond as it took away an extraordinary leader, benefactor, and father. Overnight, the next generation of the Carter family was called on to lead and move forward. Fortunately there was a talented team of committed staff and a solid reputation already in place. “Our father’s approach of putting people first left us with great people – both customers and staff,” says Sara. “Many of our employees started with him – many of our customers first bought from him - and they’re still with us. Once you’re a Carter customer or a member of our team we want to keep you.” The Wade Carter legacy today extends beyond 17
showrooms and service departments to families and community service. Sara and Wade fondly recall that their father was a role model away from the dealership, always seeking a balance between work and family. Moreover, he gave back through service opportunities like Rotary and the Ballard Hospital board. “We’re fortunate now to be able to choose projects and causes in the community that we’re passionate about,” says Sara. “We support the Seattle Men’s and Women’s Choruses, the Woodland Park Zoo, the Seattle Storm, Children’s Hospital, the Edmonds Center for the Arts, and we’ve planted more than 55,000 trees through the Mountains to Sound Greenway.” When not at the dealerships, Sara enjoys various outdoor activities, traveling, and has a passion for animals, in particular her two whippets, Carly and Keke. Wade and wife Rebecca have two children: Allison, 11, and (fourth generation) Wade, age 9. Like his father, Wade places family first. As a family, they enjoy traveling, skiing, music, and auto racing- Wade’s other passion. “I definitely inherited my father’s love for racing,” he says. “We race a little of everything – IMSA, SCCA, vintage. We recently drove in a vintage event in a restored 1972 McLaren, and one of my greatest thrills was racing my dad’s Porsche 906 from the 1960’s. There are a lot of wonderful memories in that car.” While Wade and Sara embrace the remembrances of the past, they are firmly grounded in the technologies and business practices of today. Their marketing utilizes the newest in online and social media tools. Sara and Wade are actively involved in their company. Because of advanced technology, they are not required to travel as frequently as they did in the past. “We both still do a lot of travelling,” says Sara, “but regular visits from our reps, webinars and online meetings have helped us to cut back on the travel and spend more time in our dealerships.” Like her father before her, Sara is involved with the Puget Sound Auto Dealers Association. Her father was on the founding board of the revived Seattle Auto Show in 1975. Sara will be PSADA president next year. She was also recently honored by the AYES (Automotive Youth Educational Systems) as National Dealer of the Month. Individually and together, the two are writing their own stories into the pages of dealer excellence. All the while, they don’t forget the legacy established by their father. Though not actively involved in daily operations, their mother, Mary Carter, enjoys attending various dealer meetings and industry-focused events. She is proud of her children and what Carter Motors represents in the community. “Our father always said, ‘it’s about people’,” says Sara. “We are reminded daily how fortunate we are, and what an honor and privilege it is to be in the car business.” 18
Photos by Adam Buchanan
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COMPENSATION: THE “PERFECT PAY PLAN” 20
By John Strom
This is the third in a series designed to help you look at how you manage key aspects of your business. Each piece offers some insight, some suggestions and a short assessment of that area. The first covered Operational Systems; the second, Job Expectations. Now we look at Compensation. It seems that the quest for the perfect pay plan is never-ending. The retail automobile industry has more variations in their approach to compensation than virtually any other. Yet the pay plans keep changing. The search is still on. Traditional automotive sales compensation plans are based on individual commission often accompanied by a small salary or draw against commission. This is based on the belief that people will be productive and work hard only when they are paid for specific results. Unfortunately, this approach has steered a lot of “good” people away from our business. Today, many organizations are tipping the scales the other way – eliminating commission-based compensation in favor of salaries, some with performance bonuses. This makes a lot of sense given today’s market realities. A fresh look at compensation, beginning with a clean sheet of paper, appears to be appropriate. We begin by deciding on our goals – what the compensation plan must achieve. Commonly accepted goals for the perfect pay plan are summarized in the 10 Principles of Effective Compensation shared on the checklist on the
next page. The perfect pay plan will meet all of these goals/principles. We then must decide how to pay it. There are several traditional methods including: • Salary – You’re paying people for having the job. • An Hourly Wage – You’re paying people to put in the time. • Commission – You’re paying for the result on which it’s based. Today, a new approach has surfaced that, in combination with one or more of the traditional approaches, may be the answer to the perfect pay plan: • Pay for Specific Behaviors – Doing those things that produce the desired results. This approach opens new doors, providing organizations a great deal of flexibility in their compensation plans. The possibilities are endless. Employees can be directly compensated for anything! • • • • • • • • •
CSI/SSI Business Development Activities Follow-Up Contacts Teamwork Individual Efforts Selling Activities Clients Served Product Delivery Accounts Processed
Could this approach lead to the perfect pay plan?
Ultimately, you get what you pay for! The Bottom Line Taking a more progressive approach to compensation will … … create a climate of self-motivation that will … … increase performance, productivity and teamwork, leading to … … increased profits, and higher employee and client loyalty! Use the Compensation Checklist on the next page to inventory your current status. It is recommended that each manager complete a checklist for their area of responsibility.
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__ __ __ x2 x1 x0 __ + __ + 0 = ____
John Strom has been helping retail automotive managers improve their performance for over 25 years. He has held a number of management positions in both single-point and multiple franchise operations, including General Manager. His company, Strom & Associates, is a member of the Performance Development Group. To learn more about their services, visit www.perdevgrp.com. Need help? Contact John Strom to discuss the possibilities: 775-851-3000 or firstname.lastname@example.org
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By Jeff Kent Business Development Manager Comcast Spotlight – NW Region
Many automotive dealers consider it the most cluttered time in media – when the airwaves are inundated with messages calling for votes, defending reputations and posturing for position. The political season is in full swing and it will only get bigger as we inch closer to the general election in November. For auto dealers, it is important to fully understand the impact that political advertising will have on the media landscape in 2012 in order to best take advantage of the opportunities that lay just below the surface.
POLITICAL AD SPENDING IS BIG AND GETTING BIGGER 2012 is on tap to be the biggest political advertising year ever with revenue expected to exceed $9.8 billion dollars fueled in large part by spending from the Super PACs. Washington state will be heavily impacted by this activity as it is ranked 8th in expected expenditures. 66.8% of those dollars will be spent on television.* Cable is expected to see the largest rise in political advertising due, in part, to the limited supply on broadcast stations. The benefits of cable’s ability to run advertising in specific zones are also expected to play a key role as political spenders look for more ways to target their messages. Online advertising will also see unprecedented
growth during the political season. Tactics will be expanding as political marketers will use everything from search to social media to banner ads and video. Online video spending is projected to increase sevenfold from 2008. Targeted display advertising will show the biggest growth in 2012 - 333% vs. 2010 levels.* Reaching specific audiences will now be the priority in political marketers’ online strategies as opposed to simply amassing impressions. These statistics hint at media gridlock and may suggest even the most seasoned auto dealer should sit on the sidelines until November 7. Do not be intimidated. There are numerous opportunities for your dealership to break through the clutter, reach your consumer and grow business in 2012. Cable’s wide variety of programming and networks provide ample choices for marketers who may be shut out of local news programming. The same adult audiences that are watching local news are also watching premier programming on History Channel, Discovery Channel, ESPN and A&E. Consider these statistics to give you a sense of the enormous cross viewing and mass audience that auto dealers can reach in the Seattle market; In an average week, History Channel reaches 671,752 Adult 18+ who typically watch local news, while Discovery Channel reaches 642,405.** High profile programming like American Continued on page 26
from page 24 Political Pile-Up
Pickers and Pawn Stars on History, Shark Week on Discovery and the ubiquitous Sports Center on ESPN are great avenues for reaching potential auto buyers. Additionally, cable news viewers who watch CNN and Fox News are also highly engaged with programming on AMC, Travel Channel, Golf Channel, History and more. The key thing to remember is that while auto buyers will be watching news for updates on the myriad of political issues being debated – they will also be tuning into great premieres during the summer and beyond. The bottom line is that with 50+ channels and 26 zones in the Seattle market, advertising on cable over the next few months will be the golden ticket for auto dealers looking to avoid the political pile up. While political advertisers will be expanding their voice online in 2012, auto dealers have ample opportunities to engage
consumers in this important arena and grow their business. The ability to target auto buyers by zone will prove to be the most efficient online strategy. Consider that 79% of your potential consumers are from just four geographic zones.*** This important statistic can help guide your online media plan. Online video consumption is exploding and pre-roll and in banner video campaigns on xfinity.com is one of the most effective ways to build awareness and drive business. Another opportunity that auto dealers can embrace during the political season is the unique ability to creatively stand out from a homogenous landscape of commercials. Think of your own viewer fatigue leading up to an election as one ad after another argues the merits of a measure or the position of a politician. Use this time and environment to take another look at your creative strategy. Viewers are ready for something different and entertaining during commercial breaks. Make sure your brand is there with a message that provides relief from political season burnout. There is no avoiding the political season in media – as a consumer and as a marketer. But by understanding the landscape, the challenges and the opportunities there are plenty of ways to stay in the game and come out a winner. *Source: Borrell and Associates; 2012 Political Advertising Outlook, March 2012. **Source: Scarborough Seattle – Tacoma DMA, Sep-10 - Aug-11, Adults 18+, Targets = TV Programs Typically Watch: Local News-Morning, Local News Evening or Local News-Late. Cable Viewing = PastWeek (Hardwired Only). XFINITY.com = Internet Sites Visited in Past 30-Days. Scarborough Data & Reports are protected under the federal Copyright Act and are the registered intellectual property of Scarborough Research & Arbitron, Inc. Any use of the Scarborough Data is subject to all limitations and qualifications contained in the Report. ***Among the top 50 dealers in Seattle, an average of 79% of a dealer’s total vehicle sales come from 4 Comcast targeted selling zones. 42% fall within a single zone! Source: Polk Insight Jan-Dec2010, sales based on Comcast Spotlight zones.
i I n O S Na E A aphic CN Spo Cen FL over kelo N olf ann ark TV Fo LC adl etw GTV XF yge rk y c N x r P c C & i V s d en ork S T X G el Ch Hallm TV l He SA N s H e o g i S O A eo rav NB ome ork l D k N ! 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HN b han US e New VH MSN FINIT V N AMC ic CN n Ce ’BCP S ark ar e o pkor omed N k h Sp Fox N LC Golf C l Cha ark C nd dy NFL cover ickel PN C r X T n C ork E M V dli BC rap wo a T N ES e is gen ork BS X Trav Hallm TV L Hea A Net HGT We BC m A& Geog Bravo el N CNN Netw entra ork l D ork y F x ! l w l el nn coE W rts y C F IaS US ews VH1 MSNTY.L ntra Netw ry E n O Net ed T ews TNT PA nneCtrIuFTIVChann nd tion AMC c Cha NBC Spo med k N I o N D e N a a L e e N k v V h e O I r N r C o i x p d C C D a T n o C F o h C o o i l B NF iscoSource: O S C Polk Insight sales within Comcast Spotlight l F the topTL50 olf nne X TV rk TV L adl etw HG N tw l ap &E o D cke N in FthegSeattle G ha allma igeographies e en DMA rkamong M m A eogr Brav nel CNN rts Ne entra two He SA N ws Sregistrations. o W PMar2011-Feb2012 new vehicle y al k Ndealers. V C B H n X w G S x C o l o e T F vel E et O r l truT anne d U ine N VH1 SNBC ITY.c ional MC c Cha BC C Sp edy FL27Ne ery wo E! n OD N peed ews t A phi Tra anne el N l m n h o N B N a I d o a M C ov e C N a Mork F N &E C rk S x N NT lf Ch ann arkW AVHLK I A FO isc Ni HeK Utw V e X TV ery kelod gra avo nel D o T h o T A T o N n o F m C l w e e c N e l G W N t i l l G n k g e al M N P Br G
OWN YOUR ZONE
with fuel-efficient ad performance
79% of a dealer’s new car sales come from just 4 cable zones* Advertising Waste
New Car Buyers
Zone your on-air and online message where your auto buyers are coming from
To get in the driver’s seat, contact Jeff Kent
Jeffrey B. Forsberg, CPA P.S.
NADA 2012 - Las Vegas!
What a difference a year makes! As NADA has bumped sales target forecasts in 2012, Las Vegas odds improve that dealers will also see profits grow. On top of convention meetings and workshops, attending NADA is also about reducing the gamble with products and services that vendors pitch on the exhibition floor. This year, more than any I can remember, the vendors came heavily armed with technology.
MOBILE APPS Last year, QR codes were the newest technological nod to Gen X, Y and Z. They survived their first year, validating some measure of their utility. This year, mobile apps are giving dealers a low cost way to build customer interest and loyalty. The ubiquity of smart phones has created an opportunity to deliver content without an online connection. Rather than risk losing your customers to competitors using sophisticated redirection search-and-click methods, it’s now possible to offer your customers a free, feature-laden, mobile app that offers a better, more loyal connection with your customers. Features that aim to keep your customers captive include VIN scanners, loyalty rewards, service appointments, VIN scan-
ning, inventory search, finance calculators, and more. Apps are also fast, secure and can be tailored to complement your website. The cost is nominal, especially compared to more traditional efforts to build your customer list. You might start your search with www.mobileapploader.com. NEW WEBSITES As more customer decisions include the Internet, your website can be a great way to make a great first impression. Because the buying process often starts online, purchase decisions can pivot on the quality of your photo galleries, up-to-date inventory details, intuitive navigation and professional-looking graphics. Customer perceptions about your dealership begin early. Compared to the millions spent on real estate, thousands spent on sales training and advertising, the website is probably the most cost-effective means of building customer awareness and interest. DealerTrack premiered some of the best dealer-focused websites I’ve seen in recent memory. They are customized, avoiding the “cookie-cutter” look that loses interest instead of capturing it. And the technology behind improving the customer
experience online is occurring faster than the adoption rate, based on the demonstration I witnessed. Does your website stand out or blend with the crowd? With all the choices available to customers, the decision to visit your dealership or that of your competitor can turn on the quality of your virtual storefront, the dealership’s website. CRYSTAL FUSION Making its first appearance at NADA, Crystal Fusion is a windshield product for your F&I department that provides both breakage and anti-glare protection. More than just insurance, Crystal Fusion is a chemical treatment that seals the porosity of glass. This makes the glass more likely to deflect road debris, reducing the risk of damage and breakage. In addition, the product claims to diminish glare at night. Glass damage is an all too common road hazard. As such, buyers already possess the awareness, side-stepping the need to educate the customer. Unlike the benefits of factory and extended service warranties, which don’t provide glass protection, auto glass is a risk beginning with the first mile driven off the dealer’s lot. Many customers may view it simply as a prepaid item, and to the extent that the treatment prevents glass breakage, the factory seal on the glass is maintained, conferring another benefit. For more information, their website is at www.cftproducts. mobi. DMS UPDATE When discussing DMS vendors, the story is all about evolution, not revolution. Improvements are made glacially slow, limited in part by the legacy database technology that underlie them. The irony is that third party development of CRM and Used Vehicle Management solutions are not waiting, bringing into sharp relief the chasm between old guard DMS software and up-to-date third party applications. At some point, core DMS technology will catch up to things, but it’s unlikely to happen this year. Many harboring future hope for other DMS options have been patient. Canvassing the acreage of NADA’s exhibition floor, there is evidence of that potential among Tier 2 DMS providers. But the limited penetration of the latter vendors carries a degree of risk that makes them tough to wholeheartedly recommend. However, if your current DMS contract runs between 2-3 years, I’m willing to bet your choices improve within this time frame, at which point I’ll have much more to write about. Jeff has written about tax and industry developments impacting the automotive industry over the past 25 years that he has served it. You may reach him at email@example.com 29
PSADA Takes Major Step into 21st Century Technology
Dealers Get State-of-the-Art Online Services
In February, Puget Sound Automotive Dealers Association (PSADA – www.psada.com) and Aptillon, Inc. (www.aptillon. com) launched the nation’s first electronic Wage and Benefit Survey (WBS) involving almost 300 dealers in Washington State. The application replaced PSADA’s long-standing manual mail-it-back handwritten survey and allowed auto dealers to submit their wage and benefit information online. The information was gathered, analyzed, and subsequently published back out to dealers. In May dealers received a comprehensive digital report to evaluate salary packages, benefits, hiring and other business practices. While PSADA has conducted and managed this survey for more than 38 years, this is the first time it was “totally” done electronically. ”This is a major technological step for the auto industry,” comments Jim Hammond, Executive Director of PSADA. “Not only does this provide an efficient and error-free way to collect critical information about the internal operations of the statewide industry, it also provides dealers with accurate, comprehensive and dependable data that they can use to improve the operation of their dealerships which ultimately benefits their employees and their customers.“ The application was built upon Microsoft SharePoint 2010 utilizing Access Services by David Hebert, an independent consultant who has managed and developed the Wage and Benefit survey program for PSADA for the last 20 years. The survey has used several database tools over the years, most recently Microsoft Access and SQL. Survey participants had previously entered their information in paper forms, which was then entered manually into a database for analysis. Dave chose to use Access as the Rapid Application Development tool because it was familiar to the PSADA staff and integrated well with their other databases. Aptillon worked with Hebert and the staff at PSADA to establish the infrastructure for the collection of the data. This started with a security and infrastructure review of PSADA’s existing environment and continued with the creation of a new SharePoint farm utilizing existing hardware assets in
a mixed physical and virtual environment. In addition, Aptillon worked with PSADA to allow them to begin reducing costs by phasing out hardware that was made redundant by the introduction of a new dedicated firewall protecting the SharePoint farm environment. “This has been a fun and engaging project” said Maurice Prather, President of Aptillon. “The PSADA team has put together a solid offering for their dealers. Reduction of paper is definitely a nice green touch. We’re looking forward to helping them expand their services.” ”Aptillon brought our project the expertise we needed to successfully take this gigantic step into twenty-first century technology,” said Hammond. “Their innate understanding of the inner workings of SharePoint and other sophisticated software, added to their detailed efficiency developing our infrastructure, guaranteed us a quality product we can be sure of and proud of.” Aptillon, Inc. is a professional services and product development firm focused on Microsoft SharePoint and related products and services. It is headquartered in Seattle but has offices in Colorado, Texas, Illinois, Pennsylvania and Hawaii. Through its members and partner network, Aptillon focuses upon delivering business value by the appropriate application of technology. More information is available at www.aptillon. com. “Our new sophisticated servers and infrastructure has opened a whole new avenue for PSADA and its well-developed HR Operations which is already providing a large portion of the dealers with printed employee handbooks and related services,” commented Hammond. “In the near future we are going to be able to offer major HR services to dealers online including employee handbooks, dealership document tracking and various safety and management tools. PSADA will become a one-stop shop for dealers that includes fully secured access to documents, confidence in material content and reduced costs for similar products and services that cost significantly more on the open market.”
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Make the Most of Your Ad Dollars in a Political Year
Don’t get left in the dark this Fall when political advertising ramps up – be flexible, and be prepared when planning your marketing. The following article will give you some insights and ideas to help make the most of your advertising dollars this year. The 2012 general presidential election will be held on November 6, and advertising will ramp up 60 days prior, beginning in early to mid-September. Start now in planning the timing of your campaigns and consider running them heavily ahead of or after this time period. As August and December traditionally have been peak sales months for automobile dealers, focus on those key times to advertise in order to capitalize on momentum. This may also help make up for those times of the year when sales are lower. In 2012, television is expected to get the largest share of political advertising dollars.1 There is limited inventory in television so be prepared to pay a premium rate for ad space. The Federal Communications Commission (FCC), which regulates interstate and international communications by radio, television, wire, satellite and cable, mandates that political advertisers get the lowest unit charge. Political advertisers can also preempt a station’s non-political advertisers, pushing them off the air. Leverage long term relationships with media partners, and consider sponsorships and promotions packages to maintain a presence and brand awareness. Package media campaigns with online, which will less likely be preempted. If video assets are available, then utilize them online to get the most out of your investment. Registered voters in Western Washington tend to be primarily women age 35 and older.2 If this is the target demographic your business is trying to reach, then there are plenty of other ways to reach them with your message. Consider reaching your target audience more effectively in other media where there is less political advertising than television such as cable, direct mail, newspaper, online, outdoor and radio. A strong benefit of print media is its unlimited inventory. Environment is important when conveying your business’ advertising message and establishing your company brand. Consider whether or not to align your company brand around political advertising, which sometimes can become negative.
By Victoria Wenick The Seattle Times
Political advertising tends to be positioned within the news, which is the most highly engaged content among consumers. Be flexible if the advertisement is preempted from news content, and consider other places to position the brand such as entertainment or sports. Relevance is a key component to positioning advertising messages. Evaluate what content is truly the most relevant to your target audience and position your company’s message where the audience is consuming content relevant to them. Consumers are more willing to engage with a message that is relevant to them. Don’t get lost in the shuffle. Your company’s ad needs to stand out. Use this time to try something different. Experiment with a new advertising message, fresh and impactful creative, unique offer or new media mix. Be innovative, which will likely increase awareness and market share. Consider increasing your advertising budget during this time as this will enable you to position your company’s advertising messages when and where you want them (which I like to call cherry picking) to make a greater impact and the advertising message will stand out from the clutter. Spend advertising dollars wisely and let data be your friend - utilize research to learn new insights on your customers’ media-consumption habits to help determine the right media mix. New-car purchasing and leasing is closely linked to the economic health of the United States and consumer preferences for vehicle features shift as gas prices rise and fall.3 How well politicians work to improve the economy and job creation will directly impact the success of the auto industry. There are many unknowns until we elect a new president, but one thing we do know is that the only way to invite customers into the showroom is to continue to advertise. Take some of the guesswork out of advertising decisions by using research. Leverage media partnerships and don’t be afraid to try something different and innovative to stand out from the pack. 1 2012 Borrell Political Advertising Forecast 2 2011 Scarborough Report, Release 2 3 National Automobile Dealers Association
For more information or to make an appointment for a free consultation, contact Victoria Wenick, Media Planning Specialist, The Seattle Times; phone 206/652-6845 or email email@example.com.
Embracing Today’s Technology
Google, Bing, Twitter, Facebook, Yahoo, Linkedin, YouTube, Plaxo and hundreds of other seemingly strange assemblage of letters are all words that have recently become part of our daily vocabulary. Each one of these new words represents new technology. Chances are many of you are familiar with some, or perhaps all, of these technological systems. Many of you have embraced this new technology and are using it every day. Another new technology that works very well in many dealerships today is automated new and used vehicle inventory management. There are several companies out there doing this, including mine. It has long been known that inventory management can make or break a company. In fact, part of Chrysler’s problems over the past couple of years was largely due to new vehicle inventory mismanagement. One of the secrets of success of Walmart, the world’s largest retailer, is precise inventory management. Each store location knows, without any doubt, the speed of the turn of over 15,000 individual items. They know how many they have on the shelf, how many they have in the pipeline, if the rate of turn is increasing or decreasing, their return on investment, how price affects shelf movement and many more key indicators that relate to increasing sales with a more effective inventory. If it works well, they get more, if it doesn’t, they cut back. They do pay attention to regional
By Scott Dreisbach
trends, but I can assure you that different stores, in different locations, in the same market area, have vastly different inventories. A good example is the north side Chicago vs. the south side of Chicago. It’s the same regional market but with completely different demographics and completely different inventories. Any vehicle inventory management system or process you choose must first focus on your store, your location, your traffic, your activities and your demographics. Market area information is important but your inventory needs to match your store’s specific needs. The vehicle inventories that you have investments in are no different than any other type of investment portfolio. Some investments clearly perform better than others. It is only natural that when a specific portion of your portfolio is producing a significant return, you would want to do more of it. Conversely, when other portions of your investment portfolio are underperforming, you would want to do less of it. The secret to maximizing this profit center is to know exactly what each individual investment has done for you in the past, what it is doing for you now and how the investment needs to be structured to grow your sales in the future. Below are a few of the types of information available for your Dealership with today’s technology and a few clicks of your mouse:
Continued on page 36
from page 34 Embracing Today’s Technolgy
You must first come to the realization that your store cannot be all things to all people. Many factors are in play in determining why your customers are coming to your lot and what they are looking for. These factors include demographics, new vehicle franchises represented, reputation, lot size, location, advertising budget, sales people, inventory choices and many more. Some vehicle categories, model years and specific models, simply cause you wholesale pain. When you determine what these specific categories and vehicles are, you can simply “stop doing that”. For the used vehicle department, I advocate the implementation of a system that will separate your sales, gross and inventory first by categories of vehicles (small cars, midsize cars, sporty cars, full-size cars, small pickup, full-size pickup, small sport utility, large sport utility, mini-van and regular van.) and then by the eight most recent model years within each category. Your stocking guide must include your target supply number for each category and model year including the number of units and the desired ready to go ACV. I suggest your target to be no more than a 45-day supply. Most large used vehicle operations are now shooting for a 35-day supply. Your stocking guide needs to be based on your store’s actual sales rate, not forecasts. This “ideal” stocking guide number should then be compared, on a daily basis, to the actual availability for each category and model year. If you are long or short in any
cost of those sales. The next two rows show the actual number of units in inventory and corresponding ACV. The last two rows simply show us what action is required as it relates to the number of units and how much money we are over or under the stocking guide in real money. We use this guide as a shopping list as well as an appraisal guide and inventory decision maker. As a shopping list, the above example clearly points out that we need 2006 and older small sport utilities with ready to go money around the $7,700 area. As an appraisal guide and decision maker, if the next trade we are looking at happens to be a 2006 BMW X5 that is worth around $12,000, we know we want to trade for the vehicle, if possible, but it doesn’t fit our stocking guide, so the appropriate action would be to secure a buy figure on it. Then try it retail for ten days. If it is still here after 10 days, cash it with the person who gave you the buy figure. Do not risk experiencing wholesale pain on something that simply doesn’t fit. If you would like to see what your store looks like using your numbers coupled with the latest vehicle inventory management technology, drop me an email or give me a call. I will send you the stocking guide worksheet simply for the asking. No Charge. You may be surprised at what is available. Embracing today’s technology now will make you more money tomorrow. Remember, you cannot be all things to all people and it is impossible to stock everything. The bottom line is “When your dealership has more on the ground of what your customers are looking for, what do you think will happen?”
“When your dealership has more on the ground of what your customers are looking for, what do you think will happen?”
category, develop an action plan with your managers to correct the condition. Daily vigilance in seeing that the action plan is being implemented is vital. Remember, “In the absence of feedback, any behavior becomes acceptable.” The above chart is an example of a very effective stocking guide for the small sport utility segment of one of my clients. The first two rows are what a 45-day supply of units needs to be with the corresponding ready to go average ACV. These ideal stocking guide unit count numbers are based upon the store’s actual retail sales histories and the ACV is the average 36
Scott Dreisbach is vice president of Valuinsight, Inc. sdrize@valuinsight. com, 561 368 7810 X 108 Direct www.valuinsight.com
RETIREMENT INCOME How Much Will You Really Need?
By Julie Wallerich Annuity.com
What is enough? If you’re considering retiring in the near future, you’ve probably heard or read that you need about 70% of your end salary to live comfortably in retirement. This estimate is frequently repeated, but that doesn’t mean it’s true for everyone; it might not be true for you. You won’t learn how much retirement income you’ll need by reading this article. You’ll want to meet with a qualified retirement planner who can help you plan to estimate your lifestyle needs and short-term and long-term expenses. With that in mind, there are some factors which affect retirement income needs; too often, they go unconsidered. Health. Most of us will face a major health problem at some point in our lives; perhaps even multiple or chronic health problems. We don’t want to think about that reality. But if you’re a new retiree, think for a moment about the costs of prescription medicines, and recurring treatment for chronic ailments. These minor and major costs can really take a bite out of retirement income, even with a great health care plan. While generics have demonstrably slowed the advance of prescription drug costs in the past, one estimate found that a 65-year-old couple who retired in 2011 would pay $230,000 for health care costs, excluding insurance and Medicare, as well as the costs for nursing home care.1,2 Heredity. If you come from a family where people frequently live into their 80s and 90s, you may live as long or longer. Imagine retiring at 55 and living to 95 or 100. You would need 40-45 years of steady retirement income. Portfolio. Many people retire with investment portfolios they haven’t reviewed in years, with asset allocations that may no longer be appropriate. New retirees sometimes carry too much risk in their portfolios, with the result being that the retirement income from their investments fluctuates wildly with the vagaries of the market. 38
New Options for fund management…..outsource! With new annuity income riders now available, much of the worry of asset management can be removed. Having a 3rd party manage your important retirement account can be a major factor in stress reduction. Begin thinking of your money not as a pile but as how much income it will provide on a monthly basis. Spending habits. Do you only spend 70% of your salary? Probably not. If you’re like many Americans, you may spend as much as 90% or 95% of it. Will your spending habits change drastically once you retire? Again, probably not. Most people only change spending habits in response to economic necessity or in pursuit of new financial goals. People don’t want to “live on less” once they have had “more.” Social Security. Will Social Security even exist by the time you’ve retired? A study from the Government Accounting Office brings this into sharp focus, stating that the long-lived program may start to run out of money by 2036 and may be broke by the end of that decade. Furthermore, the GAO suggests a 20% cut in benefits, due to increased longevity and lower employment. Even if SSI is still a going concern in 2040, it may be very slim pickings.3,4 So will you have enough? When it comes to retirement income, a casual assumption may prove to be woefully inaccurate. Meet with a qualified retirement planner while you are still working to discuss these factors and learn all available options. 1 - www.nytimes.com/2007/09/21/business/21generic.html?_r=1&oref=slogin 2 - www.reuters.com/article/2012/02/23/us-column-miller-retirementcost-idUSTRE81M24M20120223 3 - montoyaregistry.com/Financial-Market.aspx?financial-market=will-you-have-an-adequate-retirement-cash-flow&category=3 4 - www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/02/17/investopedia73409.DTL This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
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