Texas Dealer January 2022

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2021 Dealer Member Survey r

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Surprising Shifts in Acquisitions and Advertising Also In this issue:

– Michael W. Dunagan: Miltary Enlistments Raise Concerns Over Serviceperson’s Civil Relief Act – Seven Leadership Actions to Help Make 2022 Successful – The Road to Buying 100 Cars a Month from the Public – How to Sell Service Contracts to Every Car Buyer


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TIADA Board of Directors PRESIDENT Mark Jones/MCMC Corporate 264 Exchange Burleson, TX 76028 PRESIDENT ELECT Ryan Winkelmann/BJ’s Autohaus 5005 Telephone Road Houston, TX 77087 CHAIRMAN OF THE BOARD Robert Beck/Stop N’ Drive Motors 711 N. General McMullen San Antonio, TX 78228 SECRETARY Eddie Hale/Neighborhood Autos PO Box 1719 Decatur TX 76234 TREASURER Vicki Davis/A-OK Auto Sales 23980 FM 1314 Porter, TX 77365 ICE PRESIDENT, WEST TEXAS V (REGION 1) Cesar Stark/S&S Motors 7699 Alameda Ave. El Paso, TX 77915 ICE PRESIDENT, FORT WORTH V (REGION 2) Chad Lancaster/Chacon Autos 11800 E. Northwest Hwy Dallas TX 75218 ICE PRESIDENT, DALLAS V (REGION 3) Greg Reine/Auto Liquidators 39670 LBJ Freeway Dallas TX 75237 ICE PRESIDENT, HOUSTON V (REGION 4) Russell Moore/Top Notch Used Cars 900 East Davis Conroe, TX 77301 ICE PRESIDENT, CENTRAL TEXAS V (REGION 5) Robert Blankenship/Texas Auto Center 6809 Suite B S IH35 Austin, TX 78744 ICE PRESIDENT, SOUTH TEXAS V (REGION 6) Armando Villarreal/McAllen Auto Sales, LLC 4215 S. 23rd St McAllen, TX 78503 ICE PRESIDENT AT LARGE V Brad Kalivoda/Fiesta Motors 2599 74th Street Lubbock, TX 79423 ICE PRESIDENT AT LARGE V Greg Phea/Austin Rising Fast 8024 IH 35 North Austin TX 78753 TIADA EXECUTIVE DIRECTOR Jeff Martin 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750 Office Hours M-F 8:30am – 4:30pm 512.244.6060 • Fax 512.244.6218 jeff.martin@txiada.org

Vo l u m e X X I I / I s s u e 1 / J a n u a r y 2 0 2 2

TexasDealer 4 Officers’ Message

contents

by Robert Beck, TIADA Chairman of the Board

6 Upcoming Events 8 TIADA Membership Application 9 Dealer Spotlight: Cristo Mendoza 13 Legal Corner: Military Enlistments Raise Concerns Over Serviceperson’s Civil Relief Act by Michael W. Dunagan

18 TIADA Auction Directory 20 On The Cover: 2021 TIADA Member Survey Results: Surprising Shifts in Acquisitions and Advertising by Stephen Pallas

23 Local Chapters 24 New Members 24 2022 TIADA Conference & Expo 27 How to Sell Service Contracts to Every Car Buyer by Howard Leavitt

30 TIADA Scholarship Application 31 Seven Leadership Actions to Make 2022 Successful by Rich Levene

35 The Road to Buying 100 Cars a Month from the Public by Danny Zaslavsky

41 Awards for America’s Car-Mart and Tammy Swofford by TIADA Staff

43 2 022 Predictions: 5 Factors Impacting Independent Dealers by Steve Greenfield

46 Behind the Wheel by Jeff Martin

Did You Know?Dealer members receive a new

set of coupons on the TIADA Auction App upon renewal. Save in 2022 by downloading the app and renewing your membership today! See more on page 17. Notice to all members concerning services and products: TIADA was established in 1944 to develop professional standards of service and conduct for the independent auto industry. Opinions expressed herein are not necessarily those of the TIADA management, the Board of Directors or the membership. Likewise, the appearance of advertisers or their indemnifications of TIADA does not constitute endorsement of the products or services featured.

Editor: Stephen Pallas

Magazine Ad Sales: Patty Huber, 512-310-9795


officers’ message by Robert

A Buy-Here, Pay-Here Dealer’s Perspective

Beck

Stop N’ Drive Motors (San Antonio) TIADA CHAIRMAN OF THE BOARD

I

’m writing today from the perspective of what I am — a Buy-Here Pay-Here Dealer. I know there are many of you who are pure retail dealers and/or Subprime originators for ThirdParty Finance companies and I wouldn’t pretend to have a lot of information for you today because I’m not in those lines of business. With only just a few cash-deal exceptions, I operate pretty much a 100% Buy-Here Pay-Here lot. So, here’s a few of my recent thoughts about our business. A couple of days ago I drove past a car lot in San Antonio belonging to a good friend of mine. He’s a good dealer, has been in business for a very long time, and is a member of TIADA. I noticed as I drove by his lot that much of his inventory consisted of older vehicles than I remember him normally carrying throughout the time I’ve known him. This reminded me of a couple of things. First — if we don’t change with market conditions as least as fast as those conditions change, we’ll soon be out of business. The COVID-19 pandemic over the last two years has changed our market conditions. Inventory once

plentiful and fairly easily obtained is now limited, much higher priced, and much more difficult to buy. Down payments remain largely unchanged (especially since the free-money stimulus funds are gone). Also, some of our customers have opted to receive their tax refund (mainly the Child Credit) monthly throughout the year, instead of being included in their tax refund in February or March. Because of all of this and more, the cash-indeal we’re facing for this upcoming tax season will be unprecedented. Thankfully, my business partner and I (cont’d on pg. 6)

The optimist inside my head assures me that, in the end, we’ll be alright. 4

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Officers’ Message (cont’d from pg. 4)

Upcoming Events 2022 TIADA DEALER ACADEMY Online registration available. www.txiada.org

February 7 Keeping Your BHPH Dealership Legal and Compliant Houston, TX

OTHER TIADA EVENTS

January 24 Board of Directors Meeting Austin, TX

April 25 Board of Directors Meeting Austin, TX

July 24 Board of Directors Meeting Round Rock, TX

24–26 TIADA Conference and Expo Round Rock, TX

have consistently stashed resources away for times such as these. While we anticipate a higher cash-in-deal, we are not lowering the quality of new customers we put on the books even if it means fewer sales. We owe no money to anyone and I’m hoping this alone will help us through until the market balances out to a more normal and sane level. I’ve spent a lot of time here discussing changes we’ve witnessed in acquiring inventory. There are also additional market changes in other areas such as collection practices, regulatory, marketing, reconditioning, underwriting, and technology, which if discussed in detail would fill this whole magazine. Suffice it to say we should be committed to making ourselves aware of such changes, and then implementing constant updates and changes in our business practices which align with these market changes in a fashion consistent with our business model. Second — I’ve been reminded of a principle another dealer taught me a couple of decades ago to “guard the waterhole” in financially challenging times. The waterhole he refers to is our financial resources which are constantly sought after by others. He called these resources a waterhole because they are what gives life to our business much like a waterhole in a desert gives life to a desert oasis. There’s no shortage of those who would like access to our financial

resources — be they suppliers, employees, or even customers. Note: I’m not advocating being a cheapskate on necessary and legitimate business expenses. It takes investment of capital to make a return. Rather, what I’m suggesting is that we remain vigilant and careful in the accumulation and disposition of limited financial resources. An annual review of vendor’s products, prices, and policies is beneficial to guarding our waterhole and related financial resources. Also, we should constantly put money aside for future needs and never spend all (or more than) we make in any given month or year. Delayed gratification will always win the day in the end. The silver lining in what I’ve talked about today is that, despite changing market conditions, we’re still gonna be OK! Like the friend of mine I mentioned earlier, we too have changed our inventory mix and we’re spending a lot more time in acquiring new inventory very carefully and in multiple forums. But more importantly, we’ve recommitted ourselves to our long-standing business model of providing quality transportation at fair and profitable prices, standing behind our vehicles, and always helping our customers to stay on the road in vehicles we’ve sold them. The optimist inside my head assures me that, in the end, we’ll be alright as we make appropriate adjustments while navigating the times in which we live.

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dealer spotlight Cristo Mendoza Mendoza Auto Sales, Donna, TX

Texas Dealer: Are you a seller finance or retail dealer? CM: We do both retail and buy-here, pay-here.

Especially the past couple of years, it is good to have your hands in all kinds of different selling options as a dealer.

Texas Dealer: How long have you been a car dealer and how did you get into the business? CM: My brother started the company back in 2016. The company was only doing cash deals at the time. It was a very small car lot with 10 or fewer cars, so he closed it for two years. I was a teacher but later retired in 2018 and joined my brother. I helped him with some investments so he could grow the business. Later, I started seeing that the dealership had potential. I had some experience running programs, acting as director for different programs, and managing large budgets. I used those skills and started talking to people at other dealerships, lenders, owners, and salespeople as I really got immersed in our dealership. Of course, my brother’s long-time experience working for dealerships in various venues has also added to the business success. We both have learned that there is significant difference budgeting for your own small business vs. a franchise’s COF & GM investing the owner’s capital. Cash flow must be well-managed by small dealerships in order to be successful. Texas Dealer: What is the worst decision you

have ever made in the business? CM: Well, that’s a tough one. My philosophy is: we’re not perfect and we’re going to make mistakes. Obviously, we all make mistakes (some larger than others), but you have to learn from those. The times when I bought cars and I didn’t do my research are some of the biggest mistakes I have made in the business. It’s important for any company, or anyone January 2022

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going into business, to really have a business plan. This is true whether you’re with a partner or whether you’re the sole owner. You need to have a plan and you need to have your finances in order. Make sure you follow the plan; being prepared with a plan is very important in any business. You also need to have and understand your cashflow and you need to have a governor. Sometimes you have to say no; if you feel that it’s not good business, you just have to wait until the time is right. The worst decision you can make when starting a business is not being involved in it, not having a business plan, not preparing for the future.

Texas Dealer: What is the biggest challenge your dealership has faced? 9


CM: At the beginning I was unable to get as much

involved, as I had previous consulting commitments and leading teacher training. However, it is important to be involved in the entire process of your business: retail, advertisement, sales, finance, and you need to have patience. You also need to have a good accountant, who understands your goals—you need to have goals and then you must be able to adjust. We are a small dealership, so the needs that we have are much different from the larger dealers. You must ask yourself whether you are going to be able to sell a car that is under $7,000? Do you continue to buy cars or over $10,000…$20,000?

Texas Dealer: How long have you been a TIADA member and what do you think are the primary benefits of the membership for you and your dealership? CM: You join a group because you feel you want to be part of their team. I think it’s the same thing with any organization. You want someone who is going to be there for you. We’ve been members of TIADA since 2019. They know the regulations and members have plenty of opportunities to interact with vendors. When I started looking into GPS programs, I did a little bit of research, compared companies, and interviewed them. I narrowed down my list to three companies and one of

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those ended up being a vendor that is also an associate member and sponsor of TIADA. That means a lot to me. Most organizations out there do little more than collect your membership fees, but they don’t go out of their way, especially for a small car lot. TIADA really goes the extra mile for dealers. There are many benefits to being a member of TIADA.

Texas Dealer: What are your general thoughts on the auto industry right now? CM: Like any business, it changes. We analyze our business practices every month and sometimes every week. The industry is going to go through the supply and demand cycle. Many cars, as we are all aware, are selling for well over value price. The cars that were worth $5,000 before the pandemic, are going for at least $8,000 now. Texas Dealer: What are your thoughts on digital

advertising? CM: This is an important issue for me. I have no degree in marketing or advertising, but I have learned from some really good people over the years. More and more consumers are first going to check for vehicles online. People are now very well informed; they’re aware of Consumer Reports. They can check the information

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on the car you’re selling. They’re going to know if a car has accidents or not. That is all good, as long as a dealer is transparent. We don’t have to spend as much time educating the consumer. When they get to the dealership, they are ready to buy. Digital marketing costs money, so you have to be creative. Based on your budget, try to invest in different things and measure your return on investment. Be honest and follow all the DMV and the OCCC regulations.

Texas Dealer: What do you like

to do in your spare time? CM: Business can consume a lot of time. I like to spend time with my parents, who live in San Antonio, I go see them just about every other weekend. I try to make as much time for them as possible. As soon as I close on Saturday, I head over to San Antonio and spend the weekend with them. Family is very important to me, and I work hard to find balance in all of this because it can be a very stressful job. I also

do a little bit of creative writing. I’ve got a few things published here and there, but mostly it helps bring me back to balance to do something completely different from business before I go to sleep. Want to share your story in an upcoming issue of Texas Dealer?

info@txiada.org #TXDealerSpotlight

Texas Dealer: If you had one piece of advice for a dealer getting into the business today, what would it be? CM: For a business to be successful, it’s important to talk to different people. You have to observe. When you’re new in the industry, reading goes a long way, too. I don’t believe that anyone can know everything and it definitely helps to keep an open mind to different ideas. Second opinions have been so valuable to me. I also find it important to be humble and to learn from my mistakes. You have to be open to people, and admit when you’re wrong. Administering a business budget is critical. You can’t, and shouldn’t overspend, and you always remember this: “Profit starts when you buy cheap.” Texas Dealer: What is the most memorable vehicle you have sold (or transaction you have made)? CM: Every sale is exciting because you are providing an opportunity to a new customer. Repeat customers are the ones who are going to keep you in business. Make sure you leave a good impression and deliver a good car. These customers will recommend more people and they’re going to come back and buy another car, and that’s going to grow your business. January 2022

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legal corner

Military Enlistments Raise Concerns Over Serviceperson’s Civil Relief Act

M

ilitary enlistments and reserve activations have raised for car creditors the need to be aware of how to respond to default on car contracts by members of the military. The Serviceperson’s Civil Relief Act (formerly known as the Soldiers and Sailors Civil Relief Act) is a federal law enacted to protect military personnel and their dependents from civil obligations that might interfere with their active military duties. It allows them to suspend or postpone some civil obligations, including repayment of car debt. The federal Consumer Financial Protection Bureau has made targeting financial abuses against service personnel one of its missions. An office of Servicemember Affairs was established to specifically look into claims of businesses taking advantage of those in military life, including seeking out violations of the SCRA.

Origins of the SCRA

The original Soldiers and Sailors Civil Relief Act was passed for the benefit of World War I soldiers. It was reenacted during World War II, and has remained in effect ever since. It was most recently modified during Operation Desert Storm. The law was written and has been enforced with the patriotic intention of protecting those who volunteer for (or are drafted into) military service. The rationale is that those who take up arms for our country shouldn’t be punished for not being able to meet all financial obligations while away from home. January 2022

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The courts routinely interpreted the law liberally to protect active military personnel. The U.S. Supreme Court has declared that the law must be read with “an eye friendly

by Michael

Dunagan

W.

TIADA COUNSEL

Courts usually won’t grant default judgments against activeduty military personnel. Plaintiffs are required by federal law and state rules of procedure to disclose whether the defendant who has failed to answer a suit is in the military. If such a disclosure is not made, the defendant can have the default judgment set aside while on active duty or up to 90 days after release from active duty. to those who dropped their affairs to answer their country’s call.” To invoke the protections of the SCRA, the military member must show that (1) he or she is on active duty; (2) he or she incurred the obligation prior to enlistment or prior to reserve activation to active duty, and (3) that military service materially affects the member’s ability to pay. Thus, the SCRA would

not protect military personnel from actions on debts that were incurred while on active duty, nor would it help reservists not on active duty.

Cap on Interest Rates

One of the specific protective provisions of the law is a reduction in interest (or finance charge on installment contracts) to a cap of six percent on obligations incurred 13


prior to active military service. This includes interest on credit cards, mortgages, and car financing. To invoke the protection, the military member sends a notice to the creditor requesting relief under SCRA. The interest cap begins with the date of entry into active duty and lasts for the duration of activeduty service. Installment payment amounts should be reduced to reflect the lowered finance-charge rate. The law provides that any interest or finance charge contracted for that exceeds six percent is forgiven for the time the debtor is on active duty.

Repossession Prohibited

635 Fritz Dr. Ste 210 Coppell, TX 75019 469-637-0150

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The Act prohibits creditors from exercising self-help repossession. If the active-duty military member is in default, a creditor must seek all remedies through civil courts. Such remedies, even in a judicial proceeding, are more difficult to come by because the Act authorizes judges to grant stays (delays) of actions if the debtor’s ability to appear in court is impaired by his or her military service (such as being out-ofstate or overseas). Courts routinely grant stays of 30-60 days, or until the military member can make an appearance. A secured creditor is also stayed from reselling secured property that was repossessed prior to active duty. A creditor can petition a court to lift the stay when it can establish that the military member’s ability to pay has not been impaired by military duty (such as where a reservist’s civilian employer continues to pay his or her wages and benefits). Courts usually won’t grant default judgments against active-duty military personnel. Plaintiffs are required by federal law and state rules of procedure to disclose whether the defendant who has failed to answer a suit is in the military. If such a disclosure is not made, the defendant can have the default judgment

set aside while on active duty or up to 90 days after release from active duty.

Violations and Penalties

A recent article in an industry trade journal highlights the impact of the SCRA on car creditors. An Alabama dealer had sold to and financed a vehicle for a 22-year-old man. A year later, the customer’s National Guard unit was activated, and the debtor was sent to Afghanistan. The dealer, when informed of the activation, refused to lower the interest rate and subsequently repossessed the vehicle without a court order. His actions led to the dealer being indicted by a federal grand jury on two counts of violating the terms of the SCRA. According to the article, the man faced penalties of one year in prison and a $100,000 fine for each violation found.

Verifying Activation

There have also been news accounts of persons falsely claiming protections under the SCRA to hold creditors at bay. Phony military documents had been presented to creditors to stall foreclosure of real estate in one case. When a debtor demands protections under the SCRA, the creditor should perform an investigation to verify the validity of the claims. The federal Defense Manpower Data Center (DMDC) provides access to a database of military personnel. The web address of DMDC is: https:/mla. dmdc.osd.mil. Once it is determined that the debtor is in fact on active duty in the military, extreme care should be taken to avoid violating the SCRA. Michael W. Dunagan is an attorney in Dallas, Texas who has represented the Texas Independent Automobile Dealers Association for over 40 years. He has written a number of books and hundreds of articles for trade journals and law reviews. His clientele includes dealers, banks, finance companies, auto auctions and credit unions. T e x a s

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Keeping Your BHPH Dealership Legal & Compliant Dealer Academy Presenter

Michael W. Dunagan,

TIADA General Counsel, author of Dealer Financing of Used Car Sales and Texas Automobile Repossession: A Lien Holder’s Legal Guide.

Time

9:00am - 4:00pm

Cost

$249 Members, Each Additional $199

(must be from same dealership)

$499 Non-members

Sponsors

in partnership with

One of the quickest ways to ruin a dealership’s profit margin is to be hit with a fine from a regulatory agency, or to lose a lawsuit filed by a customer. This seminar will focus on the practical side of compliance that understands you have a business to run — and you want to run it right. This seminar from TIADA attorney Michael W. Dunagan is the final answer in BHPH compliance. Mike speaks dealer, and with 40 years of experience representing hundreds of BHPH dealers, he knows your business inside and out. Attend this workshop and learn all about: • Properly handling f inancing • How to prepare for (and on repairs survive) an OCCC exam • Real-life DTPA court cases • What to do when the Bankruptcy Notice arrives • Body shops, mechanics, towing and storage issues • Repossessions: f rom A to Z • Specif ic lien-protection steps • TxDMV Enforcement – Title Management Issues • Federal regulations affecting BHPH dealers • Most common advertising violations • Alternatives to traditional insurance • Your right to insurance proceeds • Most common OCCC customer complaints • Using the courts to get your car back • How to respond to an attorney demand letter • Procedures to stay off the CFPB’s radar • Dealer issues in Comptroller audits • Techniques to avoid consumer lawsuits

Monday, February 7, 2022 Houston, Texas Sheraton Houston Brookhollow 3000 North Loop West | Houston, TX 77092 713.688.0100

To register visit January 2022

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Txiada.org or by phone at 512.244.6060. 15


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$AVE : $200

IAA EL PASO*

www.iaai.com 14651 Gateway Blvd. W, El Paso, TX 79927 915.852.2489, Fax 915.852.2235 GM: Jorge Resendez Friday, 10:30 a.m.

$AVE : up to $200 Sell Fee T e x a s

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January 2022


MANHEIM EL PASO

www.manheim.com 485 Coates Drive, El Paso, TX 79932 915.833.9333, Fax 915.581.9645 GM: JD Guerrero Thursday, 10:00 a.m.

$AVE : $100

IAA HOUSTON NORTH* www.iaai.com 16602 East Hardy Rd., Houston-North, TX 77032 281.443.1300, Fax 281.443.4433 GM: Aracelia Molina Thursday, 9:00 a.m.

$AVE : up to $200 Sell Fee

Harlingen/McAllen

MANHEIM HOUSTON

IAA MCALLEN*

www.iaai.com 900 N. Hutto Road, Donna, TX 78537 956.464.8393, Fax 956.464.8510 GM: Ydalia Sandoval Tuesday, 9:00 a.m.

$AVE : up to $200 Sell Fee

BIG VALLEY AUTO AUCTION**

www.bigvalleyaa.com 4315 N. Hutto Road, Donna, TX 78537 956.461.9000, Fax 956.461.9005 GM: Lisa Franz Thursday, 9:30 a.m.

www.manheim.com 14450 West Road, Houston, TX 77041 281.924.5833, Fax 281.890.7953 GM: Brian Walker Tuesday, 9:00 a.m. / Thursday 6:30 p.m.

$AVE : $100

MANHEIM TEXAS HOBBY www.manheim.com 8215 Kopman Road, Houston, TX 77061 713.649.8233, Fax 713.640.6330 GM: Darren Slack Thursday, 9:00 a.m.

$AVE : $200

$AVE : $100

Houston

Longview ALLIANCE AUTO AUCTION LONGVIEW

ADESA HOUSTON

www.adesa.com 4526 N. Sam Houston, Houston, TX 77086 281.580.1800, Fax 281.580.8030 GM: Brian Wetzel Wednesday, 9:00 a.m.

$AVE : $200

www.allianceautoauction.com 6000 East Loop 281, Longview, TX 75602 903.212.2955, Fax 903.212.2556 GM: Chris Barille Friday, 10:00 a.m.

$AVE : $200

AMERICA’S AA HOUSTON

www.americasautoauction.com 1826 Almeda Genoa Rd, Houston, TX 77047 281.819.3600, Fax 281.819.3601 GM: Ben Nash Thursday, 2:00 p.m.

$AVE : $200

AMERICA’S AA NORTH HOUSTON www.americasautoauction.com 1440 FM 3083, Conroe, TX 77301 936.441.2882, Fax 936.788.2842 GM: Buddy Cheney Tuesday, 1:00 p.m.

$AVE : $200

AUTONATION AUTO AUCTION - HOUSTON www.autonationautoauction.com 608 W. Mitchell Road, Houston, TX 77037 822.905.2622, Fax 281.506.3866 GM: Juan Gallo Friday, 9:30 a.m.

$AVE : $200

HOUSTON AUTO AUCTION

www.houstonautoauction.com 2000 Cavalcade, Houston, TX 77009 713.644.5566, Fax 713.644.0889 President/GM: Tim Bowers Wednesday, 11:00 a.m.

$AVE : $200

IAA LONGVIEW* www.iaai.com 5577 Highway 80 East, Longview, TX 75605 903.553.9248, Fax 903.553.0210 GM: David Cooper Thursday, 9:00 a.m.

$AVE : up to $200 Sell Fee

Lubbock IAA LUBBOCK* www.iaai.com 5311 N. CR 2000, Lubbock, TX 79415 806.747.5458, Fax 806.747.5472 GM: Lori Davee Tuesday, 9:00 a.m.

$AVE : up to $200 Sell Fee

TEXAS LONE STAR AUTO AUCTION** www.lsaalubbock.com 2706 E. Slaton Road., Lubbock, TX 79404 806.745.6606 GM: Dale Martin Wednesday, 9:30 a.m

$AVE : $75/Quarterly

Lufkin

Midland Odessa IAA PERMIAN BASIN*

www.iaai.com 701 W. 81st Street, Odessa, TX 79764 432.550.7277, Fax 432.366.8725 GM: Christopher Rogers Thursday, 11:00 a.m.

$AVE : up to $200 Sell Fee

ONLINE ACV AUCTIONS**

www.acvauctions.com 800.553.4070

$AVE : $250

E-DEALERDIRECT**

www.e-dealerdirect.com chris@edealerdirect.com

$AVE : Up to $500/month

San Antonio ADESA SAN ANTONIO

www.adesa.com 200 S. Callaghan Rd., San Antonio, TX 78227 210.434.4999, Fax 210.431.0645 GM: Clifton Sprenger Thursday, 10:00 a.m.

$AVE : $200

IAA SAN ANTONIO*

www.iaai.com 11275 S. Zarzamora, San Antonio, TX 78224 210.628.6770, Fax 210.628.6778 GM: Brian Sell Monday, 9:00 a.m.

$AVE : up to $200 Sell Fee

MANHEIM SAN ANTONIO**

www.manheim.com 2042 Ackerman Road San Antonio, TX 78219 210.661.4200, Fax 210.662.3113 GM: Mike Browning Wednesday, 9:00 a.m.

$AVE : $100

SAN ANTONIO AUTO AUCTION**

www.sanantonioautoauction.com 13510 Toepperwein Rd. San Antonio, TX 78233 210.298.5477 GM: Brandon Walston Tuesday, 10:00 a.m. / Thursday, 1:30 p.m.

$AVE : $200

Tyler GREATER TYLER AUTO AUCTION www.greatertyleraa.com 11654 Hwy 64W, Tyler, TX 75704 903.597.2800, Fax 903.597.3848 GM: Wayne Cook Tuesday, 5:00 p.m.

$AVE : $200

Waco

IAA HOUSTON*

LUFKIN DEALERS AUTO AUCTION

ALLIANCE AUTO AUCTION WACO

$AVE : up to $200 Sell Fee

$AVE : $200

$AVE : $200

www.iaai.com 2535 West. Mt. Houston, Houston, TX 77038 281.847.4700, Fax 281.847.4799 GM: Alvin Banks Wednesday, 9:00 a.m.

January 2022

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www.lufkindealers.com 2109 N. John Reddit Dr., Lufkin, TX 75904 936.632.4299, Fax 936.632.4218 GM: Wayne Cook Thursday, 6:00 p.m.

www.allianceautoauction.com 15735 I-35 Frontage Road Elm Mott, TX 76640 254.829.0123, Fax 254.829.1298 GM: Christina Thomas Friday, 10:00 a.m.

19


on the cover by Stephen Pallas

TIADA Director of Marketing and Communications

2021 Dealer Member Survey r

Surprising Shifts

T

IADA conducted its most recent Dealer Member Survey in 2021. We held previous surveys in 2017 and 2014 and plan to continue running them every three years. The industry has seen some dramatic shifts in the ways dealers are acquiring inventory and spending their advertising dollars. Many of the other insights found in the survey results tell us that, in many other respects, TIADA dealer members are sticking to many of the same principles that have made them successful business owners over the years. A large portion of our members have been in business for over twenty years (there also has not been tremendous growth in the number of new businesses across the state), and most have only one location and employ between one and fifteen staff members. If you are one of these smaller dealers, you are in the

20

e

s

u

l

t

s

in Acquisitions and Advertising majority. It’s no secret that the pandemic has brought some serious challenges to almost everyone’s business, challenges which have been further complicated by the continued inventory shortage that have left many dealers with more questions than answers last year.

Methodology

TIADA surveyed our dealer members online and by telephone from April 29 to June 3, 2021, utilizing SurveyMonkey for the online responses and Triton Polling for the telephone responses. We sought statistically valid results with a confidence level (CL) of 95% and a confidence interval (CI) of 4. TIADA has members who have multiple lots but only one membership, and members who have multiple lots and as many memberships. In order to equalize this, we decided to survey only one contact per SET T e x a s

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January 2022


and TIADA will continue to offer discount coupons for participating auctions through our mobile app. When it comes to our dealer member vehicle specifications, not much has changed. More than half of the vehicles held by our survey respondents are between six and ten years old. There does seem to be some slight movement in the numbers of certified pre-owned vehicles being sold, with 12% of dealers offering these CPOs (up from 10% in 2014). More dealers also seem to be offering service contracts for as-is vehicles sold: 41% compared to 36% in 2017 and 34% in 2014. For more on the advantages of selling service contracts, see Howard Leavitt’s article on the subject on page 27.

A pproximately what percentage of your inventory do you acquire from the following sources:

(Percentages represent the average response given across all respondents.) 1.7% 3% 2%

Other

4.6% 3% 4%

Recycled repossessions

4.1% 3% 5%

Public individuals

9.1% 8% 8%

Wholesale dealers

7.9% 5%

Other retail dealers

3%

7.6% 6% 7%

Trade-ins

7.3% 12%

Wholesale auctions- online

33%

57.8% 59%

Wholesale live auctions- in person 39% 0%

10%

20%

30%

40%

50%

60%

of dealerships in instances where we could knowingly do so. We then asked each of those contacts to provide data in total across ALL of their lots. This would allow us to gather consistent information from a dealer who had 10 lots and only one membership as well as a member who had 10 lots and 10 memberships. With a total population of 767, we needed 337 survey results to hit the CI/CL we were targeting. We ended up with a total of 317 surveys -20 short of our goal, bringing the Confidence Interval to 4.22. To read more about our survey’s methodology or to receive a full copy of the results, please call TIADA at 512.244.6060 or email us at info@txiada.org.

Vehicle Financing and Buy-Here,Pay Here Dealers

While it’s difficult to speculate precisely how or why consumers are making certain choices when it comes to financing their vehicles, what is clear is that the average down payment dealers received in 2021 has risen from the figures we saw in 2017 and 2014. Customers providing a down payment of $1,000 dollars or less has fallen from 29% four years ago to only 14% last year. And those paying between $2,000 and $5,000 down has risen to an average of 34%, compared to 18% in 2017 and 23% in 2014). A lot of this extra down payment money may have come from financial assistance

W hat is the average down payment you receive at delivery per vehicle? 1%

Inventory and Vehicle Specifications

The size of most of our dealer members’ lots has remained largely unchanged; 88% of our survey respondents hold 100 or fewer vehicles. One big shift that we have seen is the way dealers are acquiring inventory these days. 39% of dealers say they acquire inventory through in-person auctions, which is down from about 59% in 2017 and 58% back in 2014. The complete opposite story is true of online auctions, where 33% of dealers say they acquired inventory in 2021—up significantly from 12% in 2017 and 7.3% in 2014. No doubt the pandemic has played an outsized role in this switch in the ways dealers are acquiring vehicles, but it remains to be seen how this shift will play out in the long term. One other thing to keep an eye on (and this was a new question in our 2021 survey) is that more than half of our dealer members pay between $251 and $500 in auction fees, while almost a quarter of respondents pay between $101 and $250 per year. As more dealers are shifting to acquiring inventory through online auctions, it will certainly be interesting to see how dealers navigate a new model, January 2022

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More than $5,000

3% 3%

4%

$3,001-$5,000

3% 7%

7%

$2,501-$3,000

5% 11%

12%

$2,001-$2,500

10% 16%

25%

$1,501-$2,000

21% 24%

27%

$1,001-$1,500

29%

25%

17%

$501-$1,000

20%

9%

7%

$500 or less

9% 5%

0%

5%

10%

15%

20%

25%

30%

21


from the federal and state governments, so it is worth keeping an eye on how down payment figures change over the next few years. Not much changed in 2021 in terms of the percentage of sales being financed in-house, and for over 60% of dealer members their primary line of business is buy-here, pay-here (BHPH). In the BHPH space, the average finance charge for 82% of dealers is 15% or greater, which is largely unchanged from previous surveys. Terms of contract, however, may have gotten slightly longer on average. The highest percentage

I f you sell as-is, do you offer a service contract your customers can purchase?

growth in average term of contract were those between 31 and 36 months, which rose to 38% from 26% in 2017 and 24% in 2014. The largest decrease in contracts were those between 19 and 24 months, and this figure has dropped in each of the surveys we conducted (19% in 2021, 22% in 2017, 29% in 2014). The number of active accounts in the BHPH dealers’ portfolios also shows no significant disparity over the years, although that number has fallen a bit. 64% of BHPH dealers had 350 or fewer contracts last year (71% in 2017, 68% in 2014). Still, the vast majority in all of the surveys had 1,000 active accounts or fewer. One number that we are keeping an eye on is the

What is the average Term of Contract? 34%

Yes

5% 6% 6%

36%

More than 42 months 41%

14%

37-42 months

14%

57%

No

46%

16% 24%

31-36 months

26%

38%

45%

18% 19% 16%

25-30 months 9%

Not applicable

19-24 months

18%

19%

14%

0-18 months 0%

10%

20%

30%

40%

50%

7%

60%

0%

5%

29%

22%

10% 11% 10%

15%

20%

25%

30%

35%

40%

45%

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T e x a s

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12/17/20 2:30 PM

January 2022


Local Chapters

Do you use GPS devices for vehicle location tracking?

CORPUS CHRISTI G.R. Moore

74% Yes

81%

The Car Shack

89%

(dates announced at 26% No

www.txiada.org)

19% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

EL PASO Cesar Stark

average gross portfolio balance. 72% of member dealers have an average portfolio of $3 million or less (down 9% since 2014), and the number of portfolios between $5 million and $10 million has doubled in the same timeframe. BHPH dealers also seem to be more interested in vehicle location tracking. 89% of them now use GPS devices, up from 81% in 2017 and 74% in 2014. This has corresponded to a decrease in the number of dealers using starter interrupter devices to disable vehicles (15% in 2021, down from 22% in 2014).

Business Income and Expenses

Most of our dealer members are relatively small businesses in terms of sales. Since 2014, over three quarters of dealer members retail 30 or fewer vehicles per month on average, and there was even a slight increase in the number of dealers selling between 0 and 10 units monthly (up to 31% from 28% in both 2017 and 2014). Prices have also experienced little fluctuation, since 86% of dealers report an average retail price per unit of $20,000 per unit sold. One notable statistic is an increase of vehicles wholesaled per month. While 70% of dealers surveyed report wholesaling 0-5 vehicles, this figure was 85% and 82% in 2017 and January 2022

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2014, respectively. And while 10% of dealers reported 6-10 vehicles wholesaled per month in 2021, this figure was 0% in both 2017 and 2014. Of particular concern to the association, however, is the increase in the average cash value of vehicles purchased by dealers and their conditioning expenses. The number of dealers reporting an ACV of $10,000 or less has fallen to 72%, down from 80% in 2017 and 83% in 2014, which means many more dealers are spending over that amount per vehicle than in years past. Further compounding these expenses, an alarming 34% of dealers spent over $900 per vehicle on reconditioning, more than double the percentage from 2014. And only 21% of dealers spent between $251 and $500 per vehicle, down 15% from both 2017 and 2014. The big takeaway, here, is that dealers are spending much more than ever on acquisitions and reconditioning without a proportionate rise in income, leaving their profit margins more constrained than in prior years. Advertising expenses have also shifted since 2014, with more dealers opting for digital advertising options to traditional methods. Facebook Ads now comprise 30% of our dealer members’ advertising expenses, nearly triple the amount

S & S Motors Meeting – 3rd Friday (Monthly)

FORT WORTH Jerry Smith H J Smith Automobiles (dates announced at

www.txiada.org)

HOUSTON April Hanson Coast to Coast Motors Meeting – 2nd Tuesday (Monthly)

SAN ANTONIO Jose Engler Irving Motors Corp (dates announced at

www.txiada.org) 23


Please Welcome Our Newest TIADA Members DEALER MEMBERS Ace of Spades Auto Sales David Sherman . . . . . . . . . . . . . . . . . 614 S Gordon St, Alvin, TX 77511 Auto Liquidators - Tyler Jenissa Rice . . . . . . . . . . . . . . . . . 12360 HWY 155 South, Tyler, TX 75703 Autotex Financial Inc Amelia Sanchez Puig . . . . . . . . . . . . . 119 Walsh St, San Antonio, TX 78212 Bang Bang Autos, LLC Katressa Riley . . . . . . . . . . . . . . . 1916 SW 6th Avenue, Amarillo, TX 79106 DriveTime - Lubbock Licensing Department . . . . . . . . . . . . 6540 82nd Street, Lubbock, TX 79424 Firm Automotive John Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . 3501 NE 28th St, Fort Worth, TX 76111 Katriel Motors Inc. Christopher Mayberry . . . . . . . . . . . . . . . 8316 Mcavoy Dr., Houston, TX 77074 Low Price Motors Anthony Lee . . . . . . . . . . . . . . . 6373 S Great Trinity Forest Wa, Dallas, TX 75217 NTX Auto Sales LLC Joshua Allred . . . . . . . . . . . . . . . . . . . . . . . . 8739 Davis Blvd, Keller, TX 76248 Texas Country Motors Inc Adan Banderas . . . . . . . . . . . . . . . 408 US-83 Bus, McAllen, TX 78501 Vehitex LLC Moez Labidi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3410 Dunvale Rd, Houston, TX 77063 ASSOCIATE MEMBERS Dac Lending Group Bobby Turner . . . . . . . . . . . . . . . 6968 Clarkridge Dr, #2201, Dallas, TX 75236 Harris County Recovery Agency Estelia Dominguez . . . . 22618 Diane Drive, Spring, TX 77373 PORT DriveAway Jamal Dean . . . . . . . . . . . . . . . . . . . 10935 Estate Lane #433, Garland, TX 75047

SAVE THE DATE

July 24-26,

2022

24

from 2017; and the budget spent on Google Ads has almost doubled (though only 5.7% of advertising budgets are used on Google). The one digital space from which dealers are shifting away is Craigslist; that platform now only represents 4.3% of advertising budgets (down from 11.4% four years ago). The percentage of advertising in newspapers, magazines, and outdoor ads has decreased by more than half. Even with increased attention and exposure offered by online platforms like Facebook and Google, many dealers (18.2% in 2021 and 18.5% in 2017) say they do no advertising at all.

Key Inferences

Based on our survey results, there is no doubt that dealers are becoming more digital. Between greater attendance at online auctions to shifting advertising practices, the industry is relying more heavily on digital spaces than dealers were accustomed to in the past. Even though some of this was forced by conditions of the pandemic, it’s difficult to imagine a dramatic swing back in the other direction. Our next survey will help us to determine whether these trends accelerate or if dealers try some hybrid version of traditional models of acquiring inventory and advertising their vehicles. With dealers facing rising costs in acquiring and reconditioning their inventory, they may also need to offer more certified pre-owned to stay competitive, and they may also find it beneficial to find other streams of revenue by offering service contracts. In whatever ways these changes to the industry unfold, TIADA will continue to monitor how dealers make decisions for their businesses and continue to protect the industry and develop its image across the state. T e x a s

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January 2022


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January 2022

T e x a s

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What People Are Saying: “Great ref resher course, helped me remember a lot of items that I need to be intoned with.” “The course provides all the necessary information, links, and rules where I can f ind useful tools for my business.” “If you want to learn more about a specif ic topic this course includes a direct link to the source you are trying to f ind out more information on.” “Overall, this program was great and I am happy that eLICENSING implemented this to ensure we know the basic stuff of running our dealers and running a clean ship without having to face violations or risk your license, this is awesome!” “This is a good training course for all new dealers. It can also be recommended for old dealers as a ref resher training course.”

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T e x a s

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January 2022


feature

How to Sell Service Contracts to Every Car Buyer by Howard Leavitt

CEO and Founder, AutoRaptor

I

f you can sell cars, you can sell service contracts. And if you can sell service contracts, you can keep more cash in your tank while you’re helping your customers. A service contract takes the worry out of the later cost of repairs and maintenance for car buyers. For you, it’s an upsell that guarantees more revenue and more customer loyalty. What’s important to remember here is that every car buyer is different. Some are happy to take care of oil changes and basic repairs on their own. Others don’t want to have to think about anything except putting gas in the car. Anything else, from changing a light bulb to putting in a new starter, is out of their comfort zone. So how do you create something

January 2022

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that appeals to everyone that’s lowcost enough that every customer would want it, but that also makes money for you? And how do you share the value of this add-on to buyers who may not like the idea of spending more money than they’re already putting into a car?

How to Create and Sell Service Contracts that No One Will Turn Down:

The first step is probably obvious, but you have to know your audience. For example, if you want to sell service contracts to mechanics who are buying from you, you’ll need a very different contract than you would for busy people who don’t want to deal with any mechanical or maintenance issues.

There’s also no rule that says you can’t have several service contract options. The point here is that you want something that’s an easy upsell. To that effect, consider service contract levels. You can call them Level 1, 2, and 3, or Silver, Gold, and Platinum, or anything else that seems appropriate. What might those look like? Maybe Level 1 includes two years of oil changes, filter changes, alignments, tire rotation, and fluid topoffs. Level 2 would consist of all of this for three years plus new brakes. Level 3 would encompass all of Level 2 for four years, plus a new set of tires (including balancing, mounting, etc.) at the end of the service contract. You could even add a Level 4 and cover all repairs and maintenance for five years. 27


resource guide The TIADA Website: www.txiada.org

Members can log in with their username/password and access our Dealer Member Directory, Legislative Action Center, Compliance Consultation Service and much more. Register for all upcoming TIADA events online through the Calendar of Events, access our online membership application, find contact information for all our Local Chapters, and access many additional resources through our Knowledge Base.

License Renewal Certificate

TexasDealerEducation.com

Texas Department of Motor Vehicles 888.368.4689 www.txdmv.gov

Office of Consumer Credit Commissioner 800.538.1579 occc.texas.gov

Texas Comptroller

800.252.1382 comptroller.texas.gov

NIADA

800.682.3837 www.niada.com

REPOSSESSIONS

American Recovery Association 972.755.4755 www.repo.org or contact TIADA state office

FORMS

Burrell Printing

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The details, of course, can vary quite a bit. One of the significant factors is how to make it worth it for your dealership to sell service contracts, while making it affordable enough that people are willing to buy it. There’s no easy answer to this since there are so many factors that go into pricing. Whether it’s the cost of parts, the expected frequency of repairs or maintenance, or the specifics of what your service contracts may include, you’ll need to spend some time with your calculator and figure out pricing. Outside of the actual price, however, there are ways to make it affordable for your customers. The most common approach is to wrap the cost of the service contract into the overall auto loan. So maybe that $200 monthly payment becomes $215 or $225.

What About the Reluctant Customer?

No matter how affordable, there will be people who don’t see the value in add-ons like this. For these customers, you’ll need to devise a strategy to sell service contracts that really highlight the benefits. For example, list everything side by side with the retail cost vs. what it would cost with the service contract. Even a basic oil change can be $50-$60. An alignment runs a little over $100, and new brakes can be $300-$400 and up. What does this look like compared to a service contract? Can you show customers exactly how much they would save on different services? Even better, though, when you sell service contracts, you’re selling peace of mind. Your customer won’t have to come up with $400 for new brakes because it’s already paid for. They won’t need to worry about many of the normal wear-and-tear expenses that can be difficult to fund if you don’t plan ahead. Done right, service contracts can be a win-win situation for your dealership and for your customer. T e x a s

D e a l e r

January 2022


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3. Each applicant must complete the application form.

Date of Graduation:

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5. Provide a detailed description of participation in any academic, honorary, civic or extracurricular activities in college. In addition, a detailed description of high school activities is required from college freshmen along with a college acceptance letter.

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feature

Seven Leadership Actions to Make 2022 Successful by Rich Levene

Founder and Chief Dignity Officer, Dignity-Leadership.com

L

et’s face it, the last 18-24 months have not been a walk in the park. Everything about our business world is changing. And the change seems to be occurring faster than ever. Without a doubt, the used car industry has not been immune to any of this change. Advanced technology, inventory shortages, and the great resignation are just a few of the major issues to have come about as a result of the pandemic. These three issues, and many more I did not mention, are mostly out of your control. However, there is one area most everyone can improve on to increase their span of influence and create more success for yourself and for your team; leadership. 2022 and the coming years of your dealership could be made or broken based on how you lead your team in the new normal. And your team may be more than just employees. Teams consist of employees, business partners, vendors, friends, and even your family. Based on research by McKinsey & Company, a $10 billion management consulting company, 66% of workers surveyed in 2021 stated that they were reevaluating their job and purpose in life as a result of the disruptions caused by COVID-19. They also reported that Millennials were three times more likely to rethink their current situation as compared to other generations. Based on Pew Research Center data from 2018, Millennials make up the largest sector of the US workforce coming in at 35%. This boils down to a large percentage of employees who are strongly considering leaving their current job. Hopefully I have not put you in a position to believe you are personally responsible for what has happened since the onset of the pandemic. However, as a business owner or manager (at any level in the organization or on any team) you share the burden with other leaders to see that your team is in good hands. It is a lot of pressure, but it comes with the territory of being a successful business owner in the new era that is unfolding before us. Here are seven actions you can do to improve your likelihood for success in the new year and beyond:

1

Actively listen to your team

Your team has a great and unique perspective about your business. You will need to swallow their feedback, ideas, and opinions without judgement.

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Great leaders respond, they do not react. Listening is about hearing and understanding other viewpoints and not waiting to reply to the spoken word. Simply replying without careful consideration to what someone is saying demonstrates a lack of empathy and denies people hope. Instead, listen with the intent of walking a mile in their shoes and imagining how it must feel to be them. Leaders must prove to be nonjudgmental and can think critically by removing personal biases, willfully dropping one-sided assumptions, and embracing the idea that someone is encountering something totally different from how you may have remembered it.

2

Communicate clearly

Choose your words carefully so as not to alienate anyone. Avoid slang and jargon as it lends itself to a feeling of exclusion rather than a feeling of inclusion (This will be difficult as the automotive industry is ripe with jargon.). Research shows that production increases as much as 54% when people feel a sense of belonging. Next, do not assume that everyone will interpret your message the same way. Have a plan and consider what the outcome of your message will have on the team. Speak with empathy and be prepared to listen in return.

3

Be consistent

Do what you say or don’t say it at all. Being predictable is a positive trait that builds stability for your team. It is also a display that you are organized and creating a positive culture where employees are comfortable and productive. Leading by example generates excitement, inspiration, and trust. It is also a display of authenticity and moral authority. When you are consistent with your words and actions it’s easier to demand consistency from your team. Use your strengths and character to do the right thing, at the right time, for the right reasons. Regardless of what leadership style you choose, you must walk the talk. Actions speak louder than words.

4

Build more trust

Trust is the first thing to go when you violate someone’s dignity. The fool proof way to earn respect and build trust is to treat people with grace. You must show them you care about their wellbeing and in 31


return you will see increased productivity, engagement, loyalty and ultimately profits. A lack of trust breaks down teamwork and negatively affects your bottom line costing the organization a considerable amount of revenue. Lack of motivation among followers is also a strong indication that trust is lacking. Build more trust by earning their respect, being authentic, and always be a learner first. You don’t have to have all the answers. Practice humility and give credit to your team.

5

Be More Compassionate

I know the automotive industry has a reputation for being as tough as nails, but that does not always bode well for being a better leader. Whether you have a tenacious reputation or not, it is never too late to be kind and caring. Altruistic leaders engage their employees at a higher level than those who are not kindhearted. Compassionate leaders are viewed as strong, inspiring, and are better connected to their supporters which slows turnover and builds organizational loyalty.

6

Create Hope

Having hope helps to cure what ails us. Hope helps people cope with adversity. Hope creates a buffer that combats the harmful effects of stress. Hope reduces turnover, improves job satisfaction, and

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improves performance. In the book Hope Rising (Morgan James Publishing, 2018), the authors reported that hopeful employees can increase company profits by as much as 21% as compared to employees with low hope.

7

Care More About Your Team than You Do Your Profits

People are the most important part of any business. Unless you are a one person show without friends, family, vendors or business partners, you need people to help you get what you want. And if you want them to care and value your customers, you have to treat your team respectably. Your team won’t know how much you care until you show them how much you care... about them. Helping your team get what they want will help you get what you want. Give first, show gratitude, and the profits will follow. Using these leadership methods while remaining authentic and true to yourself has shown to produce longevity, increase productivity among teams, yield higher profits, grow sales, and improve customer loyalty. People thrive in environments where leadership has proven to the team that the managers unconditionally care about their wellbeing and success. Double down on these tactics by developing a personal growth plan for each team member. As a leader, you build people, and the people will build your business.

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feature

The Road to Buying 100 Cars a Month from the Public by Danny Zaslavsky

Managing Partner, VinCue

I

n its simplest form, a Vehicle Buying Center (VBC) is a dedicated team or department at your dealership that’s focused exclusively on buying cars from the public. That’s it — no sales, no business development. Just private-party acquisition. Private-party acquisition has a lot of advantages over other sourcing strategies and is one of the most important things your dealership should be doing to stay competitive and profitable. There’s no one-size-fits-all strategy out there, but there are a few fundamentals that are true for every dealer. All dealers understand that when we sell a car that was acquired through trade, that car will typically sell faster. Like trades, vehicles bought off the street have the same advantages but even more so because you get to hand-pick what you know you need. When you purchase vehicles from private sellers, their information is added into your CRM and builds

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your marketing base. This allows your sales team to reach out to them in the future with special offers and keeps your dealership top of mind for their next purchase. It also creates the opportunity to convince potential sellers to trade instead of just selling. In our experience, at least 15% of individuals are open to trading over selling — and when you have someone selling an extra car, you end up with the opportunity to purchase two vehicles on trade. Most importantly, when you buy cars from the public at fair, transparent prices, you create lasting relationships with individuals in your community. You can bet that your dealership will be their first stop the next time they’re in the market for a new vehicle.

PART ONE: THE PROMOTION

Just like any business, you need the right tools in your belt before getting started. Especially for inbound 35


leads, that means creating a digital customer journey that drives potential sellers to your buying website, gives them tools to get realistic offers, and ultimately encourages them to connect directly with your buying agents. Lead generation all starts with content, so let’s define content. I’m talking about videos for social media and TV, audio commercials for radio and/or podcasts, digital ads, physical ads, and even physical mailers. For my dealership, we lean heavily into digital because I want to be able to track how many views, clicks, and leads — but traditional media for TV and radio will always still be part of our strategy. Content drives engagement, but you need a clear call-to-action and a single point of destination. From a dedicated landing page intended to generate leads to the tools that generate the offer, allow your buying agents to communicate with sellers, and exchange that data with your CRM, everything must work together to create a unified experience with a consistent message.

Dedicated Landing Pages

The first step is to buy a separate domain for your VBC. Once you have your domain, website designers can help you create a dedicated landing page for your VBC. There are two key benefits of a dedicated landing page:

Search Engine Visibility

Your landing page will show up in search results when customers want to sell their car, researching the value of their car, or are thinking about trading in their car.

Capture all Interested Buyers in one Place All of your vehicle buying traffic will be funneled to your landing page. Sources include social media, digital display ads, email marketing campaigns, and service lane offers.

Clever Engagement

Using consumer-driven valuation tools can be easy to use, highly engaging, and gives both credibility & flexibility to your buy offers. It can also deliver everything you and the seller need to close the deal.

Text Messaging

Research shows that about 66% of users prefer to engage via text compared to emails or chatting over the phone. And 90% of consumers prefer direct communication over autoresponders.

Mobile & Desktop Functionality

A useful Vehicle Buying Center that should work with

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PreferredDealerSolutions.com | kevin@preferreddealersolutions.com | 616-238-9220 36

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any website to: Integrate with your homepage, vehicle details pages, and search results pages Replace existing trade-in tools Create instant control and con nectivity for your team

CRM Integration

The fact is that CRMs were not created for the purpose of acquisition. They were created for sales. More efficient software can help you integrate your CRM with your VBC to capture both Direct Buy and Trade-in Calculator leads by: Utilizing CRM lead-management Managing & refining offers Capturing information and seller behaviors

the art of finding and buying vehicles from the public. These employees aren’t moonlighting as salespeople, finance officers, or service members. Purchasing is their area of expertise. However, not everyone is cut out to be a successful buying agent. Here are some tips to keep in mind when hiring for your VBC.

VBC Agents Have a Customer Service Mindset The personality style of a successful VBC agent is somebody

with great customer service abilities. Individuals who have worked in public-facing positions before are a great fit since they have experience dealing with all types of customers. Keep in mind that these agents should have a knack for sales, but they aren’t salespeople. Their personality favors long-term goals and relationships. Salespeople tend to think in terms of now, now, now — investing 110% of their energy into making a sale that day. VBC agents

Boosting Traffic

You’re probably already using an agency or have a dedicated internet manager responsible for running Facebook, Instagram, and Google Ads. Your Vehicle Buying Center is no different than your sales team, meaning you need to invest in advertising to keep generating new leads.

PART TWO: THE PEOPLE

The best and most effective digital customer journey is really only as effective as the people and the team it leads to. You need buying managers and agents that are committed to your Vehicle Buying Center and understand that the dynamics between a dealer and a seller are different than that of a salesperson and a buyer. To source profitably through your VBC, you’ll need individuals committed to negotiating the best prices with surgical precision. Let’s look at the best ways to assemble your team.

.

What to Look for When Hiring for Your VBC

Managing a successful VBC is a full-time job. That’s why it’s essential to hire team members dedicated to January 2022

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have a similar mindset, but they’re more committed to working with a lead through the process.

VBC Managers Have the Profile of a Teacher

The best VBC managers have the profile of a teacher. What do we mean by that? First, teachers are fantastic communicators. They have the ability to meet students (i.e., team members) where they are and come up with the lesson plan (i.e., buying strategy) that works best for them individually. Teachers also operate off of a syllabus. These are longterm game plans, informed by a curriculum but tailored to their individual classroom. This is how VBC managers will need to approach their own team’s strategy. While there are certain best practices for them to follow, they’ll need to come up with reasonable benchmarks tailored specifically to their team and a clear path to get there.

PART THREE: THE PROCESS

Leads are the lifeblood of your salespeople. The same goes for your buying agents. When it comes to marketing your VBC, your #1 goal is reaching sellers in your own backyard. They need to know you buy vehicles from the public and where they can go to do that (e.g., SelltoAbcMotors.com). As we mentioned above, there are third-party lead 38

generation partners out there that can help bring in leads for your team. But you’re also paying for them, which ends up cutting into your gross profit on every vehicle you buy. Instead of paid traffic, focus on generating organic traffic to your website for private party vehicle acquisition. This ensures you’re maximizing the money you make off each purchase. Your VBC can help you generate more organic traffic by creating Email Marketing Campaigns, Social Media Campaigns, Display and Google Ad Network Campaigns, In-Store Promotions, Over the Phone (“Thanks for calling ABC Motors, are you calling to buy a car or sell a car?), Service Lane Offers including hang tags with QR codes directed to your sell-to-page, and Referral programs.

Bringing In Sellers: The Road to the Acquisition (RTTA)

Successfully buying from the public is as delicate as selling to them. To ensure your team is taking advantage of every opportunity, negotiating the best deals, and keeping sellers happy, they’ll need to form an indepth understanding of the customer journey.

Incentivizing Your Salespeople to Buy from the Public

Earlier, we touched on the fact that the best acquisition structures include salespeople as part of their overall T e x a s

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strategy. But how do you incentivize salespeople to split their focus between buying and selling? And how do they get into the right mindset to buy successfully? We recently talked with Damian Boudreaux, coauthor of How to Sell 100 Cars a Month, to get a sales expert’s perspective on these questions. According to him, “It’s impossible for salespeople to hit super-high sales numbers WITHOUT a built-in VBC.” In other words, the road to selling 100 cars a month starts with buying 100 cars a month. Here’s why:

Buying Cars Creates More Sales Opportunities

“Successful salespeople have a wish list in their head of vehicles they want to get their hands on,” says Bourdreaux. “As soon as they know a certain vehicle is coming in, they already know who they want to sell it to.” That’s the benefit of training your salespeople to buy from the public. Salespeople can source the inventory they’re looking for directly from the community to close deals quickly.

Buying from the Public Generates Relational Currency

Dealerships have over these companies are invested in the health and success of their community. Buying vehicles from the public is part of that. And not only are vehicles purchased from the public less expensive, but they come with a story: “If you can tell a potential customer ‘I bought this from one of my oldest customers, he took great care of it,’ that can be a huge selling point for people in your community,” Boudreaux says.

Choosing the Right Outbound Strategy

An effective outbound strategy starts with your team. Many dealerships incentivize their salespeople with cash bonuses to spend time looking for cars to buy. Others hire dedicated team members (VBC agents & managers) to buy cars from the public full-time. Both of these can be somewhat effective on their own. However, we recommend using a hybrid strategy that brings your salespeople AND agents together through a unified platform. G OOD Outbound Strategy: incentivizing your existing team (i.e., salespeople) to buy cars from the public through cash bonuses B ETTER Outbound Strategy: putting compensation structures in place and building a dedicated VBC team to buy vehicles directly from the public B EST Outbound Strategy: employing a tool that unifies your team through powerful data and features to maximize your outbound efforts. Building your VBC takes time, but it’s worth it in the long run. Remember: The better it gets, the better it gets.

Maximize Your Sales Potential with the TIADA CPO Program.

PART FOUR: TECHNOLOGY

A digital front door helps you capture potential leads, the people nurture the leads, the process is designed to protect your dealership — but if you want to scale to 100 (or more) vehicles a month, you need the right technology and tools to maximize efficiency. It is important to find a vehicle buying center with built-in inbound process features to help keep your team on top of leads. You’ll also need to have outbound strategies in place to ensure your VBC agents are creating their own opportunities.

New School Vs. Old School Approach to Outbound

Seasoned veterans will remember spending hours combing through the Whitepages to buy cars. Fastforward 20 years, and dealerships are still doing the same thing. The technology may have changed (online marketplaces instead of local classifieds), but the inefficiency has stayed the same. January 2022

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Participating in the certified pre-owned program means your dealership and the CPO vehicles you offer are held to a higher standard.

For more info, visit Txiada.org/TiadaCPOprogram or call 512.244.6060. 39


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feature

Awards for America’s Car-Mart and Tammy Swofford by TIADA Staff

A

merica’s Car-Mart, Inc. was named Independent “In addition, we will continue to open new locations Dealer of the Year for 2021 by Auto and look for acquisition opportunities into the future,” Remarketing and Used Car Week, and in parthe continued. “Our associates have done outstanding nership with KAR Global, for their long-standing level work in very difficult and uncertain times and have of excellence in automotive retailing. demonstrated how nimble our business can be. We have As Car-Mart commemorated its 40th year in business over 2,000 associates supporting over 88,000 customers, in 2021, it has grown to have more than 2,000 associand they come to work every day to make a difference in ates, 153 dealerships in the lives of others.” 12 states (including 13 According to Auto dealerships in Texas) Remarketing, Car-Mart and more than 88,000 also released its first corcustomers, Car-Mart emporate responsibility rephasized that its vision port as part of its ongoing has never wavered from efforts to increase discloits mission of earning sures and transparency as the repeat business of its the network of buy-here, customers by providing pay-here dealerships celquality vehicles, affordebrates four decades of able payment terms, and success. excellent service. As Auto A recent news release Remarketing Reports, by America’s Car-Mart “When the company highlights the company’s started in 1981, it set out commitment to sustaina vision to help creditable business practices From left, Julie Picard, NAAA Chair of the Board; Tammy challenged customers and especially its focus Swofford; and Tricia Heon, NAAA CEO. find a vehicle that makes on its people, the coma difference in their lives. munities and customers It has grown from its beginnings in a converted Dog n’ it serves. The report also delves into how the Car-Mart Suds fast food restaurant in Rogers, Arkansas.” is addressing key environmental, social and governance America’s Car-Mart closed its 2021 fiscal year with (ESG) areas. the highest amount of quarterly revenue in company “Our business strategy is focused on operational exhistory. Their success has caused president and chief cellence and long-term growth, backed with governance executive officer Jeff Williams to speak optimistically principles. Our people, more than 2,000 associates about their future. He recently said, “We are transitionacross 12 states, are committed to making a difference ing from a collections company to a sales company that for customers, their communities and each other. In is very good at collections.” fact, during Car-Mart’s 40-year history, we are proud Williams further explained how the company has of supporting social issues directly in our communities made this transition. “We are completing the rollout where we can have the most impact,” Car-Mart presiof our new service contracts and the reaction from our dent and chief executive officer Jeff Williams said. customers has been very positive,” Williams said. “As we Car-Mart also said it is committed to reviewing the have previously stated, we believe that most of our existenvironmental impacts of the company’s operations ing dealerships could support 1,000 or more customers and services and setting appropriate environmental imover time and that we have significant long-term growth provement goals. The company mentioned studies curpotential from this existing dealership base.” rently are underway internally to determine how those

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TIADA and its

Member Auto

Auctions:

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goals will be quantified to reflect their impact on climate and carbon footprint. “This principle of ‘doing the right thing’ comes through in both our achievements and our commitments to various stakeholders,” Williams said. “It is the foundation of our corporate responsibility philosophy and is the basis for how we now review our work in ESG areas and their impact on our stakeholders. In other news, the National Auto Auction Association (NAAA) has named Tammy Swofford a Warren Young Fellow for 2021. The honor recognizes Swofford for her significant contributions to the auto auction industry and NAAA. The award was announced during the National Remarketing Conference in Las Vegas. Tammy Swofford is national sales director for America’s Auto Auction. She has 25 years of experience as a sales and automotive remarketing executive, and she has worked in the auto auction industry since 2005. She is recognized for her expertise in sales training, managing new account development, and cultivating successful sales and marketing strategies. She has a proven track record in expanding market potential and has handled both in-lane and online sales and managing fleet, lease, and dealer business. For the past eight years, Swofford has used her musical talents to perform the national anthems for the United States and Canada at the opening ceremonies of the NAAA annual conventions. An NAAA Warren Young Fellow award comes with a $2,500 donation in each fellow’s name to the NAAA Warren Young, Sr. Scholastic Foundation, Inc. A fellow is a donor at that level, or in whose honor or memory a contribution is made in that amount, to support the scholarship organization. Since its establishment in 2004, the Scholastic Foundation, named in honor of Warren Young, Sr., a pioneer of the auto auction industry who retired after 35 years of service to his profession and NAAA, has helped students pursue dreams of higher education. The foundation is a self-sustaining nonprofit organization and awards $52,000 in merit scholarships annually for study at accredited institutions. NAAA congratulates Swofford for earning the lifetime distinction of being named a Warren Young Fellow and for joining this exclusive group of individuals who further the legacy of Warren Young, a pioneer of the auto auction industry. T e x a s

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2022 Predictions: 5 Factors Impacting Independent Dealers by Steve Greenfield

CEO of Automotive Ventures

I

t’s not an exaggeration to say that the automotive industry is going to experience more change in the next decade than we’ve seen over the past 100 years. While dealers only started feeling the impact of the internet some 25 years ago, the rate of technology change is only beginning to affect how consumers shop for cars and how dealers operate. Even just 10 years ago, very few dealers would think of acquiring a used vehicle online. Today, a vast majority of dealers buy inventory through online auctions, and

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tions for the coming year:

many purchase cars from consumers sight-unseen. Given the accelerating pace of change in the industry, I thought we would kick off 2022 with five predic-

Prediction 1:

Used Car Values Will Remain High

COVID spawned a “perfect storm” shortage of used cars. Automakers shut down for months. Rental car companies started buying used cars in the auction 43


lanes to compensate for the lack of new cars being sold into fleet. Finance companies stopped repossessing cars. Inflated used car prices meant that off-lease cars were either kept by the driver or the grounding dealer. And commercial fleets kept their cars in circulation longer and were slow to de-fleet. These trends were compounded by increased consumer demand for used vehicles, due to a combination of COVID-driven government stimulus and consumers shifting demand from new cars to used cars. The shortage of new car sales we’ve experienced due to the microchip shortage means that we face years ahead of reduced used vehicle supply in the market, which will continue to support strong used car prices.

often knew more about local market supply, competitive prices and vehicle features than salespeople. But, so far, consumers haven’t had much transparency around the trade in, their financing payment, and the F&I products that a dealer might upsell. But transparency in these areas is coming. Think about how trade-ins have evolved. Five years ago, a consumer had to bring their car to a dealership to get a trade-in value. Today, from the comfort of their home, they can get five or more guaranteed cash offers for their vehicle, with many offering the convenience of picking up the car from their driveway.

Prediction 2:

Dealers Will Have More Channels to Choose From

10 years ago, there weren’t online B2B channels like ACV, TradeRev, BackLot Cars and CarWave to acquire inventory. The proliferation of new B2B online wholesale channels has been a blessing and a curse to dealers. It’s meant access to more inventory choice than ever. But dealers are challenged to keep up with inventory availability across all of these different channels. The barriers to entry for new software startups is low, and there is a lot of capital funding new entrants in the space. That, coupled with the huge dollar amounts paid for acquisitions like BackLot Cars and CarWave, means we expect a number of brand new B2B inventory companies to hit the market over the next 12 to 18 months.

Prediction 3:

It Will Be Harder to Buy Cars

With more online players and dealers aggressively buying vehicles “off the street” directly from consumers, private sellers now have more choice than ever to have dealers compete to buy their cars, which has also driven up prices for trades. Many of the large independent dealers have huge TV and radio ad budgets, enticing consumers to sell their vehicles directly. Dealers can expect to see fewer trades coming in off the street, which will equate to fewer consumers coming in with trades, and higher prices for those vehicles that you are able to buy.

Prediction 4:

Customers Will Have More Information Than Ever

The internet, and the transparency it brought, wasn’t kind to dealers’ front end gross margins. Consumers 44

Prediction 5:

The U.S. Consumer Will Continue to Buy

The U.S. consumer has been consistently resilient throughout COVID. With trillions of additional dollars flowing into stimulus and job creation, and the economy currently experiencing record low unemployment, expect the US consumer to continue to feel confident, which will drive strong demand for used cars. In many ways, it’s never been a better time to be a car dealer. The double-whammy of COVID and new car inventory shortages has meant that dealers have been making record gross profit per unit and achieving sequential quarters of record profitability. But dealers need to remain vigilant and watch for signs of the market turning, whether led by a softening of consumer demand, or more used car inventory hitting the market. But, for the time being, let the good times roll! Steve Greenfield is CEO and Founder of Automotive Ventures, LLC, helping entrepreneurs raise money and maximize the value of their companies. He has over 20 years of experience in the automotive technology space. He started his career in 1999 selling software to car dealers, and has overseen more than $1 billion in automotive technology acquisitions. T e x a s

D e a l e r

January 2022


23 LOCATIONS

Wishing you all the joy the holidays can bring!

Atlanta, GA

Chicago, IL

Interstate 94, MI

Pittsburgh, PA

Austin, TX

Dallas, TX

Jacksonville, FL

St Louis, MO

Baton Rouge, LA

Detroit Toledo, OH

Kansas City, KS

Tulsa, OK

Birmingham, AL

Greenville, SC

Lancaster, PA

Virginia Beach, VA

Boston, MA

Harrisburg, PA

North Houston, TX

West Michigan, MI

Bowling Green, KY

Houston, TX

Pensacola, FL

4

Austin

LOCATIONS IN TEXAS

Dallas

TUESDAYS & THURSDAYS AT 1PM 219 N. Loop 12 Irving, Texas 75601 Phone: 972.445.1044

TUESDAYS & THURSDAYS AT 1PM

16611 South IH 35, Buda, Texas 78610 Phone: 512.268.6600 Houston

THURSDAYS AT 1:30PM

1826 Almeda Genoa Rd, Houston, Texas 77047 Phone: 281.819.3600

Auction Credit is located within each of our Texas facilities for all of your auction financing needs. www.auctioncredit.com

North Houston

TUESDAYS AT 1PM

1440 FM 3083 Conroe, Texas 77301 Phone: 936.441.2882


behind the wheel Texas Auctions Help Offset High Price of Vehicles with the TIADA Auction App

T

IADA has been looking for various options to help our members who are all struggling with the high price of wholesale automobiles. It seems every industry article, news story, blog post, podcast, and panel discussion is focused on how to address the issue and when the prices might come down. That got us to thinking about what we might be able to do. Since we don’t have the financing or the expertise to start a chip manufacturing plant, we took a close look at the TIADA Auction App. Since 41% of our dealer members have already download the TIADA Auction App — and to date 397 coupons have been redeemed — we thought that would be a good place to start. COVID accelerated many auctions moving online in 2020, and our coupon usage had taken a sharp decline. Prior to COVID, our dealer members would redeem 700 to 800 coupons a year. Then, in 2020, that number dropped to barely 300. However, coupon usage and app activity are on the rise again, thanks in large part to the great participation from our Texas Auctions (see page 18 for a complete list of every participating auction). Collectively, these auctions have already accepted $68,075 in TIADA coupons. Oh, but there is more! (I feel like I should offer steak knives right now.) Every time we get a chance to talk to a dealer about this TIADA benefit, we hear the same message: “This is a no-brainer, it’s too good to be true.” That is why our next offer is going to be harder for you to imagine. Skip to the last paragraph if you can’t wait.

46

by Jeff

Martin TIADA EXECUTIVE DIRECTOR

If you haven’t already downloaded the Auction App on your smart phone, I encourage you to give us a call today. We have several friendly and patient team members who are well versed in how to get the Auction App on your phone, and they will walk you through redeeming coupons. I am also happy to report that we have more auctions that are now accepting coupons for online purchases. COVID drove a lot more dealers to buying and selling vehicles online, and again the auctions have stepped up in a big way to accommodate the new marketplace. If you are still not sure how this works, you may want to call up Gary Jackson with Worldwide Auto, Hussam Allo with Momentum Automotive Group, Georges Dib with Dib Motors LLC, or Iraj Afghani with Chase Auto Finance. Each of these members saved over $2,000 in auction fees last year. One dealer told me he went to two new auctions because of the Auction App. He found a new place to source inventory and saved $400. Later this month we will be announcing a special offer from over 10 auctions. Each auction will issue an additional coupon through the TIADA Auction App that is only good for the month of January. Once you renew your membership, all your coupons will be loaded onto your app, along with these special “early renewal coupons” that are good through January 2022. That is over 2,000 more dollars waiting on you as long as you renew now. We can’t fix the chip shortage but, along with our auction partners, we can make a few more vehicles affordable just in time for tax season.

T e x a s

D e a l e r

January 2022



TEXAS INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750

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TEXAS WHOLESALE The nation’s leading provider of end-to-end wholesale vehicle solutions never stops working for you. Whether you work in-lane, online or both, Manheim is here to help you be more successful — with better, faster, seamless wholesale tools that independent dealers love.

VISIT OUR TEXAS LOCATIONS Manheim Dallas, Manheim Dallas-Fort Worth, Manheim El Paso, Manheim Houston, Manheim San Antonio, Manheim Texas Hobby