t s a c e c i r o m F o n Eco 20
24
Also in this issue: – Michael W. Dunagan: What To Do When Peaceable Repossession is Not Possible – Marketing Trends for Independent Automobile Dealers in 2024 – The Truth About Trust: Earn It to Sell More in BHPH and LHPH – What Consumers Really Think About Modern Retail
NO SURPRISES JUST HIGHER PROFITS 30+ PHOTOS
ENGINE RECORDINGS
CONDITION REPORTS
VIRTUAL LIFT
ACV’S INDUSTRY-LEADING CONDITION REPORTS LEAD TO
$316 MORE PROFIT PER VEHICLE.
ACV’s inspection tools, data and condition reporting leave you with more profit and without any surprises. Our inventory runs all day, every day, so source with us and start earning more right away.
Discover higher profit at acvauctions.com
TIADA Board of Directors PRESIDENT Eddie Hale/Neighborhood Autos PO Box 1719 Decatur, TX 76234 PRESIDENT ELECT Vicki Davis/A-OK Auto Sales 23980 FM 1314 Porter, TX 77365 CHAIRMAN OF THE BOARD Ryan Winkelmann/BJ’s Autohaus 5005 Telephone Road Houston, TX 77087 SECRETARY Greg Phea/Austin Rising Fast 8024 IH 35 North Austin, TX 78753 TREASURER Brad Kalivoda/Fiesta Motors 2599 74th Street Lubbock, TX 79423 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) Tyler Simmons/Abilene Used Car Sales, Inc. 2150 N. 1st Street Abilene, TX 79603 ICE PRESIDENT, DALLAS V (REGION 3) Greg Reine/Auto Liquidators 39670 LBJ Freeway Dallas, TX 75237 ICE PRESIDENT, HOUSTON V (REGION 4) Lowell Rogers/11th Street Motors 1355 N 11th St, Beaumont, TX 77702 ICE PRESIDENT, CENTRAL TEXAS V (REGION 5) Chad Lancaster/Chacon Autos 11800 E. Northwest Hwy Dallas, TX 75218
Volume XXIV / Is sue 1 / Januar y 2024
TexasDealer
contents
5 Officers’ Message by Ryan Winkelmann, TIADA Chairman of the Board
6 Upcoming Events 6 New Members 8 TIADA Auction Directory 10 The Truth About Trust: Earn It to Sell More in BHPH and LHPH by Jim Rhoads
13 Local Chapters 14 TIADA Membership Application 18 On The Cover: 2024 Economic Forecast by Jonathan Smoke
27 Legal Corner: What To Do When Peaceable Repossession is Not Possible by Michael W. Dunagan
31 What Consumers Really Think About Modern Retail by Ryan Leschel
34 Scholarship Application 37 Marketing Trends for Independent Automobile Dealers in 2024 by Stephen Pallas
ICE PRESIDENT, SOUTH TEXAS V (REGION 6) Cesar Torres/Lofi Motors 4634 Ayers St. Corpus Christi, TX 78415
41 Financial Management in Car Dealerships: Five Essential Tips
ICE PRESIDENT AT LARGE V Armando Villarreal/McAllen Auto Sales, LLC 4215 S. 23rd St McAllen, TX 78503
45 Behind the Wheel
ICE PRESIDENT AT LARGE V Russell Moore/Top Notch Used Cars 900 East Davis Conroe, TX 77301
TIADA EXECUTIVE DIRECTOR John Frullo 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750 Office Hours M-F 8:30am – 4:30pm 512.244.6060 • Fax 512.244.6218 john.frullo@txiada.org
by Sean Toussi by John Frullo
Did You Know?The majority of the auctions are now accepting the coupons from the TIADA Auction App for online purchases. Visit https:// www.txiada.org/auction_app for more information.
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
Powerfully Simple Payment Processing
Empower your dealership to seamlessly process customer payments with FrazerPay.
Credit card, debit card, and ACH processing Secure payment terminals and hand-keyed entry Online payments Recurring payments for Buy Here, Pay Here customers
FrazerPay, the new payments solution designed exclusively for independent used car dealers by the most trusted DMS in the industry.
www.Frazer.com | Phone: 888-963-5369
officers’ message by Ryan
New Year’s Resolution
S
everal years ago, I became the owner of an auto dealership that I had worked in for over 20 years. It was 2012, and I remember that fresh start feeling that emerged the day following signing the dotted line. I thought just like any other Texas dealer when looking outward into the landscape of opportunity for the first time. “How quickly can I become Bob Blankenship?” OK, that didn’t really happen, but nobody dreams small by default. I mention this because we are starting a New Year, and with it will more than likely come bearing New Year resolutions with a proven 90% fail rate soon to follow. I reflect back at my time spent on the TIADA board of directors within the same past ten years and recall many conversations I’ve had about life and business with some of our state’s most successful dealers, dealers who have made huge strides over the years building incredible businesses that I look up to. I question why I haven’t seemed to have followed a similar path. Will this year finally be the year I once again see growth? How could I have been surrounded by such greatness during those years and not utilized those experiences to initiate the growth within my own business at a greater level? When contemplating my current New Year’s resolution, I wanted to research why they have such a high fail rate. Proving to myself over the past several years that
Winkelmann
BJ’s Autohaus (Houston) TIADA CHAIRMAN OF THE BOARD
optimism alone won’t result in the change I’m looking for, what actually will? An article I read recently stated, “Where we go wrong with New Year resolutions is there is an idea that it’s supposed to be some big, sweeping change, because it sounds very appealing…But, as humans we’re not wired to make big, sweeping changes.” It is also understood that in order to change a behavior, you have to be uncomfortable, and nobody wants to be uncomfortable. So, to see a lasting change, you have to be in a state of discomfort for a really long period of time, apparently. I haven’t. I know I haven’t. What did change during those years? I got married to the girl of my dreams. I started a beautiful family and now have a home filled with kid toys and laundry tossed about. When I wasn’t working hard, I was traveling the globe and playing even harder. I served eight of those years on the Houston Automotive Board and ten on the TIADA Board of Directors, eventually becoming President. I seemed to have successfully steered my personal life in a positive direction that yielded me true happiness and the favorable conditions that I had desired for many years. Although my professional career thrived, my business didn’t grow. It did, however, survive. It survived and made money through my redirection and sometimes lack of personal attention while my personal affairs took the front seat.
...it’s not going to happen by simply setting the expectation that we are going to turn over a whole new leaf in one day, let alone January 1. January 2024
T e x a s
D e a l e r
5
Upcoming Events 2024 TIADA DEALER ACADEMY For online registration and information, see www.txiada.org
OTHER TIADA EVENTS
January
29 Board of Directors Meeting Austin, TX
March 4 BHPH Compliance Summit
Upon further reflection, maybe I wasn’t ready for a change in my business. Change is hard. New Year resolutions aside, if anyone hopes to create lasting change, it’s not going to happen by simply setting the expectation that we are going to turn over a whole new leaf in one day, let alone January 1. Real change requires incremental changes, setting smaller, more immediate goals. I think by this point, I’ve left you with a slight impression that I’d like to initiate growth in my business this year. There it is, my New Year’s resolution. Now that the dust has cleared on some of my other professional and personal adventures, I have the time and focus to initiate it. Ultimately, I feel like the timing couldn’t be better to pull it off effectively. Four months ago, I decided to
join an NIADA 20 Group. This was one of the smaller, more immediate goals I mentioned earlier to increase the success of my bigger picture. Slicing my business into about 180 pieces for review and strategic planning has been a real eye-opening experience. I’m excited for this next chapter, both personally and professionally, and I plan to give it 100% of my undivided attention. Just like the pioneers and heavy hitters of our industry, I spoke of at the introduction of this article, they didn’t do it alone. They all chose a time to build and execute their plan of growth, and I know it didn’t come without times of discomfort. Let’s see what the next ten years produce, and I wish you all the luck with your own resolutions for the New Year! *Although luck will have NOTHING to do with it.
Please Welcome Our Newest TIADA Members DEALER MEMBERS Bankers Autos
Dan Kulle . . . . . . . . . . . . . . . . . . . . . . . . . . 4108 E University Dr., Denton, TX 76208
Chromez Auto
Aref Jabr . . . . . . . . . . . . . . . . . . . . . . . . . . 437 University Blvd, Birmiham, AL 35205
Discount Motors LLC
Luige Mendoza . . . . . . . . . . . . . . . . . . . . . . . . . 2017 Roman St, Mission, TX 78573
Sheraton Houston Brookhollow Hotel Houston, TX
El Centro Auto Group LLC
April
Mark Gaona . . . . . . . . . . . . . . . . . . . . . . . . . . 5541 Evers Rd, San Antonio, TX 78238
29 Board of Directors Meeting
Eric Gonzalez . . . . . . . . . . . . . . . . . . . . . . 11036 Harry Hines Blvd, Dallas, TX 75229
Five Star Motors
Kenyon Auto Sales LLC
Jeffrey Kenyon . . . . . . . . . . . . . . . . . . . . . . . 4145 E. SH-29 Ste 3, Burnet, TX 78611
Princeton Motors
Austin, TX
Zyad Ali . . . . . . . . . . . . . . . . . . . . . . . . . . . 5206 East Hwy 380, Princeton, TX 75407
July
Jerry Clark . . . . . . . . . . . . . . . . . . . . . . . 36918 State Hwy 64, Wills Point, TX 75169
21 Board of Directors Meeting
Milt Clark Sales Stett’s Autos
Chad Stett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2160 Rock Hill Rd, Aubrey, TX 76227
Swift Rent-A-Car
JW Marriott Hill Country Resort San Antonio, TX
Atif Qureshi . . . . . . . . . . . . . . . . . . . . . . . . . . 107 S. Walker St, Mesquite, TX 75149
21-23 TIADA Conference and Expo
ASSOCIATE MEMBERS CorePLUS
JW Marriott Hill Country Resort San Antonio, TX
Vmax Cars
Ibrahim Daqah . . . . . . . . . . . . . . . 404 N. Central Expressway, Richardson, TX 75080
Larry Ledesma . . . . . . . . . . . . . . . 500 N Akard Street, Suite 1500, Dallas, TX 75201
Spartan Automotive Technology Group
Michael Langlois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Bartram Market Drive, Suite 135-183, Saint Johns, FL 32259 6
T e x a s
D e a l e r
January 2024
Ma xi m ize Yo u r M emb e r sh ip Re ceiv e L iv e and Onli ne Auct i on Di scou n ts N early $ 14, 000 in Tot al Savi ng s Avai lable i n 2 0 2 4
Al l C oupo n s Ava ila b le S tart i ng Ja nu ar y 8th * More au ction s t ha n e v er ar e of fe r ing b onu s coupo ns thi s y ea r.
ADESA Aus tin ADESA Dallas ADESA Houston ADESA San A ntonio Alliance Auto Auct ion Abile ne Alliance Auto Auct ion Au st in Alliance Auto Auct ion Dallas Alliance Auto Auct ion L ongvie w Alliance Auto Auct ion W aco Ame rica’s Auto Auction Buda Ame rica’s Auto Auction D allas Ame rica’s Auto Auction Hou ston Ame rica’s Auto Auction Nor th Hous ton Ame rica’s Auto Auction L one Star L ub boc k Auto Nation Auto Au ction Big Valle y Au to Auction Corpus C hristi Au to Auction Hou ston Au to Auction M anhe im D allas M anhe im D FW M anhe im El Paso M anhe im Houston M anhe im Hobby M anhe im San A ntonio San Antonio Auto Au ction
* Bo nu s Cou pons Expir e on Janu ary 31, 20 2 4
TIADA Auction Directory
Save thousands on buy or sell fees at these participating auctions! * VALID FOR SELL FEE ONLY AT INSURANCE AA LOCATIONS ** ONLINE AUCTION AVAILABLE
Abilene
ALLIANCE AUTO AUCTION ABILENE**
www.allianceautoauction.com 6657 US Highway 80 West, Abilene, TX 79605 325.698.4391 GM: Brandon Denison Friday, 9:45 a.m.
$AVE : $200
IAA ABILENE*
www.iaai.com 7700 US 277, Hawley, TX 79601 325.675.0699 GM: Shaun Lemke Thursday, 9:30 a.m.
$AVE : up to $200 Sell Fee
Amarillo
DAX of AMARILLO** NEW
www.daxofamarillo.com 3208 SE 10th Ave., Amarillo, TX 79104 806.374.8982 GM: Kelsy Allen Every Tuesday, 11:00 a.m.
$AVE : $200
IAA AMARILLO*
www.iaai.com 11150 S. FM 1541, Amarillo, TX 79118 806.622.1322 GM: Shawn Norris Monday, 9:30 a.m.
$AVE : up to $200 Sell Fee
Austin
ADESA AUSTIN**
www.adesa.com 2108 Ferguson Ln., Austin, TX 78754 512.873.4000 GM: Michele Arguijo Tuesday, 9:30 a.m.
$AVE : $200
ALLIANCE AUTO AUCTION AUSTIN**
IAA DALLAS*
$AVE : up to $200 Sell Fee
$AVE : up to $200 Sell Fee
www.iaai.com 2191 Highway 21 West, Dale, TX 78616 512.385.3126 GM: Rick Hahn Tuesday, 9:30 a.m.
www.iaai.com 204 Mars Rd., Wilmer, TX 75172 972.525.6401 GM: Terrie Smith Wednesday, 9:30 a.m.
METRO AUTO AUCTION AUSTIN
IAA DFW*
$AVE : $200
$AVE : up to $200 Sell Fee
www.metroautoauction.com 2221 Hwy 21 W., Dale, TX 78616 512.282.7900 GM: Brent Rhodes 3rd Saturday monthly, 9:00 a.m.
Corpus Christi CORPUS CHRISTI AUTO AUCTION**
www.corpuschristiautoauction.com 2149 IH-69 Access Road, Corpus Christi, TX 78380 361.767.4100 GM: Hunter Dunn Friday, 10:00 a.m.
$AVE : $200
IAA CORPUS CHRISTI*
www.iaai.com 4701 Agnes Street, Corpus Christi, TX 78405 361.881.9555 GM: Patricia Kohlstrand Wednesday, 9:30 a.m.
$AVE : up to $200 Sell Fee
Dallas-Ft. Worth Metroplex ADESA DALLAS**
www.adesa.com 3501 Lancaster-Hutchins Rd., Hutchins, TX 75141 972.225.6000 GM: Eric Jenkins Thursday, 9:30 a.m.
$AVE : $200
ALLIANCE AUTO AUCTION DALLAS**
www.iaai.com 4226 East Main St., Grand Prairie, TX 75050 972.522.5000 GM: Julissa Reyes Monday, 9:30 a.m.
IAA FORT WORTH NORTH*
www.iaai.com 3748 McPherson Dr., Justin, TX 76247 940.648.5541 GM: Jack Panczyk Tuesday, 9:30 a.m.
$AVE : up to $200 Sell Fee
MANHEIM DALLAS**
www.manheim.com 5333 W. Kiest Blvd., Dallas, TX 75236 214.330.1800 GM: Rich Curtis Tuesday 9:30am / Wednesday, 9:00 a.m.
$AVE : $100
MANHEIM DALLAS FORT WORTH**
www.manheim.com 12101 Trinity Blvd., Fort Worth, TX 76040 817.399.4000 GM: Glenna Bishop Thursday, 9:30 a.m.
$AVE : $100
METRO AUTO AUCTION DALLAS**
www.metroaa.com 1836 Midway Road, Lewisville, TX 75056 972.492.0900 GM: Scott Stalder Tuesday, 9:30 a.m.
www.allianceautoauction.com 1550 CR 107, Hutto, TX 78634 737.300.6300 GM: Brad Wilson Thursday, 9:15 a.m.
www.allianceautoauction.com 9426 Lakefield Blvd., Dallas, TX 75220 214.646.3136 GM: Robert Kersh Wednesday, 12:30 p.m.
$AVE : $200
$AVE : $200
AMERICA’S AA AUSTIN**
AMERICA’S AA DALLAS**
AMERICA’S AUTO AUCTION EL PASO
$AVE : $200
$AVE : $200
El Paso
www.americasaa.com 219 N. Loop 12, Irving, TX 75061 972.445.1044 GM: Ruben Figueroa Tuesday, 12:00 p.m. / Thursday, 12:30 p.m.
www.aaaelpaso.com 7930 Artcraft Rd., El Paso, TX 79932 915.587.6700 GM: Judith Ayub Wednesday, 9:30 a.m. MST
$AVE : $200
$AVE : $200
AMERICA’S AA LONE STAR AUSTIN NEW
DAX of ROCKWALL** NEW
IAA EL PASO*
$AVE : $200
$AVE : $200
$AVE : up to $200 Sell Fee
www.americasaa.com 16611 S. IH-35, Buda, TX 78610 512.268.6600 GM: Jamie McCollum Tuesday, 1:00 p.m. / Thursday, 1:00 p.m.
www.americasaa.com 8408 Shoal Creek Blvd., Austin, TX 78757 214.483.3597 GM: Sara Edgington Friday and Every Other Thursday, 11:00 a.m. 8
IAA AUSTIN*
www.daxofrockwall.com 1810 E I-30, Rockwall, TX 75087 972.771.9919 GM: Tim Clement Tuesday, 6:00 p.m. / Thursday, 2:00 p.m.
www.iaai.com 14651 Gateway Blvd. W, El Paso, TX 79927 915.852.2489 GM: Hector Escobar Wednesday, 9:30 a.m. MST T e x a s
D e a l e r
January 2024
MANHEIM EL PASO**
www.manheim.com 485 Coates Drive, El Paso, TX 79932 915.833.9333 GM: JD Guerrero Thursday, 10:00 a.m. MST
$AVE : $100
IAA HOUSTON SOUTH*
www.iaai.com 2839 E. FM 1462, Rosharon, TX 77583 281.369.1010 GM: Roxy Castillo Friday, 9:30 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 GM: Ydalia Sandoval Tuesday, 9:30 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 GM: Lisa Franz Thursday, 9:30 a.m.
$AVE : $200
www.manheim.com 14450 West Road, Houston, TX 77041 281.890.4300 GM: Nick Hanson Tuesday, 9:30 a.m.
$AVE : $100
MANHEIM TEXAS HOBBY**
www.manheim.com 8215 Kopman Road, Houston, TX 77061 713.649.8233 GM: Darren Slack Thursday, 9:00 a.m.
$AVE : $100
Houston
Longview
www.adesa.com 4526 N. Sam Houston, Houston, TX 77086 281.580.1800 GM: Keyvan Nayeri Wednesday, 9:30 a.m.
www.allianceautoauction.com 6000 SE Loop 281, Longview, TX 75602 903.212.2955 GM: Billy Fitzgerald Friday, 9:30 a.m.
AMERICA’S AA HOUSTON**
IAA LONGVIEW*
ALLIANCE AUTO AUCTION LONGVIEW**
ADESA HOUSTON**
$AVE : $200
www.americasaa.com 1826 Almeda Genoa Rd., Houston, TX 77047 281.819.3600 GM: Kyle Drake Thursday, 2:00 p.m.
$AVE : $200
AMERICA’S AA NORTH HOUSTON** www.americasaa.com 1440 FM 3083, Conroe, TX 77301 936.441.2882 GM: Buddy Cheney Tuesday, 1:00 p.m.
$AVE : $200
AUTONATION AUTO AUCTION - HOUSTON** www.autonationautoauction.com 608 W. Mitchell Road, Houston, TX 77037 855.905.2622 GM: Juan Gallo Friday, 9:15 a.m.
$AVE : $200
HOUSTON AUTO AUCTION**
www.houstonautoauction.com 2000 Cavalcade, Houston, TX 77009 713.644.5566 GM: Rich Levene Tuesday, 12:00 p.m.
$AVE : $200
IAA HOUSTON*
www.iaai.com 2535 West. Mt. Houston, Houston, TX 77038 281.847.4700 GM: Alvin Banks Wednesday, 9:30 a.m.
$AVE : up to $200 Sell Fee
$AVE : $200
www.iaai.com 5577 Highway 80 East, Longview, TX 75605 903.553.9248 GM: Ulysses Else Thursday, 9:30 a.m.
$AVE : up to $200 Sell Fee
Lubbock AMERICAS AA LONE STAR LUBBOCK** www.americasaa.com 2706 E. Slaton Road., Lubbock, TX 79404 806.745.6606 GM: Dale Martin Wednesday, 9:00 a.m
$AVE : $75/Quarterly
IAA LUBBOCK*
www.iaai.com 5311 N. CR 2000, Lubbock, TX 79415 806.747.5458 GM: Chris Foster Tuesday, 9:30 a.m.
$AVE : up to $200 Sell Fee
Lufkin LUFKIN DEALERS AUTO AUCTION
www.lufkindealers.com 2109 N. John Reddit Dr., Lufkin, TX 75904 936.632.4299 GM: Wayne Cook Thursday, 5:30 p.m.
$AVE : up to $200 Sell Fee
$AVE : up to $200 Sell Fee
T e x a s
D e a l e r
www.adesa.com 200 S. Callaghan Rd., San Antonio, TX 78227 210.434.4999 GM: Clifton Sprenger Thursday, 9:00 a.m.
$AVE : $200
IAA SAN ANTONIO*
www.iaai.com 11275 S. Zarzamora, San Antonio, TX 78224 210.628.6770 GM: Paula Booker Monday, 9:30 a.m.
$AVE : up to $200 Sell Fee
MANHEIM SAN ANTONIO**
www.manheim.com 2042 Ackerman Road, San Antonio, TX 78219 210.661.4200 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, 9:00 a.m
$AVE : $200
Tyler GREATER TYLER AUTO AUCTION** www.greatertyleraa.com 11654 Hwy 64W, Tyler, TX 75704 903.597.2800 GM: Wayne Cook Tuesday, 5:00 p.m.
$AVE : $200
Waco ALLIANCE AUTO AUCTION WACO**
www.allianceautoauction.com 15735 I-35 Frontage Road, Elm Mott, TX 76640 254.829.0123 GM: Christina Thomas Friday, 9:45 a.m.
$AVE : $200
Wichita Falls
DAX of WICHITA FALLS** NEW
www.daxofwichitafalls.com 2206 Sheppard Access Rd., Wichita Falls, TX 76306 940.720.0435 GM: Lisa Shelton Every Other Wednesday, 5:00 p.m.
$AVE : $200
Midland Odessa IAA PERMIAN BASIN*
January 2024
ADESA SAN ANTONIO**
$AVE : $200
IAA HOUSTON NORTH*
www.iaai.com 16602 East Hardy Rd., Houston-North, TX 77032 281.443.1300 GM: Aracelia Palacios Thursday, 9:30 a.m.
San Antonio
www.iaai.com 701 W. 81st Street, Odessa, TX 79764 432.550.7277 GM: Sheila Gray Thursday, 9:30 a.m. 9
feature
The Truth About Trust: Earn It to Sell More in BHPH and LHPH by Jim Rhoads
Co-founder of White Hat Way
L
ike respect, trust has to be earned in my book. No one can demand those. Obedience and compliance, sure. But earning trust requires “making deposits.” More to come on that. At conferences, across social media and all points in between, there is plenty of talk amongst Buy Here Pay Here (BHPH) and Lease Here Pay Here (LHPH) dealers about inventory sourcing, closing ratios, average down payments, repo rates, etc. My wife and business partner, Michelle Rhoads, and I refer to topics of that nature as “straight-line” business matters. Undoubtedly, those are important things to understand and strive to improve in any BHPH or LHPH operation. In addition to operational nuts and bolts, Michelle and I have begun to incorporate more “squiggly-line” subjects when we teach. These can include things like culture, leadership and today’s subject of trust. Though these are less tangible, we view them as foundational and having significant
10
impact on all facets of any business, but especially vital in BHPH/LHPH where there are so many “departments” that our customers interact with and a longer, ongoing relationship with the dealership. Dealers know that earning the trust of consumers in their respective communities translates into more sales. Of course it does. Our own Facebook polls in February of 2023, revealed that an overwhelming majority of dealer respondents agreed. 175 of 178 (98%) said ‘Yes, trust = more sales.” That is easily the highest percentage of any such poll we’ve done. Yet, dealers across our industry continue to be car-forward in most of their marketing efforts. While we certainly recognize that promoting nice looking cars can attract buyers, we suggest that A-B testing can be a valuable tool in analyzing car-focused campaigns vs people/program campaigns. Hopefully with the help of a good CRMT and ongoing tracking, we will see how valuable it will be in BHPH to T e x a s
D e a l e r
January 2024
determine which group of buyers performed better over time. In an August presentation in Arizona, Michelle and I dove deeper into the idea of becoming “known, liked and trusted” and how doing so can increase sales, boost morale and much more. We referenced author Bob Burg who, in 2010, wrote about how “All things being equal, people will do business with and refer business to, those people they know, like and trust.” Then, in our BHPH and LHPH businesses, we have a different and much longer ongoing relationship with the customers we serve. With typical contracts now running about 3 years, we not only want to earn our customers’ business, we want to re-earn it — day after day, month after month. Clearly, a level of trust can go a long way in that regard. Some months ago, I started to refer to the relationship between BHPH dealers and their customers on the whole as one that has a lot of “friction” in it. Across the entire industry, there is a high level of distrust and conflict. We know that it’s fixable, at least for the vast majority of those relationships. At its core, distrust is rooted in fear. It’s not a stretch to say that dealers have some level of fear of their customers and vice versa. Reduce that bi-directional fear and you go a very long way toward reducing repo losses and interest rates. Imagine the difference. The fix, then, is in improving communication. It may just be that the dealer who is providing financing can be totally trustworthy. But the customer probably doesn’t know that. Oh, the customer may see the dealer’s lips moving on Facebook reels, etc. but who are they really? “What will their (the dealer’s) language and tone be after the contract is signed?” Rather than view this as an indictment of dealers, I urge everyone to see this simple awareness as a tremendous opportunity. For those playing what Michelle and I refer to as the “long game” in BHPH/LHPH, learning to really connect with their customer and community and earn trust is huge! Dealers who learn to do this well can expect to have staying power. As we know, trust goes both ways. This suggests that the customer should also be looking to establish a level of trust. After being a dealer for nearly a decade and having been in this specific industry for 26 years, I can say that it is absolutely possible to develop mutual trust with BHPH/LHPH customers. Of course, the customer has to earn it in the same way the dealer does. Considering the tarnished history of this segment of the used car industry, patience on the part of dealers is in order. Give it time. Lean in. Then, lean in again. And if need be, lean in again. Be transparent. Be consistent. Show that your commitment to earning the trust of the community is embedded in the fiber of your entire team. You see, it will take more than just words to win the trust of this often-mistreated customer. It’ll also January 2024
T e x a s
D e a l e r
take showing empathy, kindness, and showing that, as a dealer and upstanding member of the community, you genuinely care about the success of your customers. Learning how to communicate authentically and better tell that true story will allow you to win and keep more customers. As industry expert Ken Shilson has said, “BHPH is about keeping them sold.” Mutual respect and trust are important ingredients in that recipe. As mentioned earlier, trust is about making deposits. When I say “leaning in again and again,” I mean that it helps to think of this part as a bank account. More specifically, let’s call it a trust account — one that is shared between you and your customer. As an account holder, you can make deposits — trust deposits. As dealers, trust deposits might come in the form of quickly honoring a warranty claim. Or, calling the service customer before they call you can represent a small deposit. As the customer sees these figurative deposits being made, they naturally conclude that you mean what you say in those ads on social media. Your trust account is growing. Plus, if the relationship were to face a setback, those trust reserves will have a very positive impact on the actual dialog and sharply increase the chance of a successful resolution. Dealers who live the principles of the White Hat Way understand this and strive to add to that trust account often.
THURSDAYS 3 AM SALE STARTS at 9:00 (Fleet/Lease and Dealer Consignment)
8:30 AM SALVAGE AND INOPS SALE MONTHLY: GSA General Services Adminitration— open to the public www.autoauctions.gsa.gov • 900+ vehicles every week! • 7 Lanes • Online Sales: TAP, Simulcast, Smart Auction, OVE, ADESA Openlane • Great Sellers - Featuring units from Ally, Avis Budget Group, Hertz, Santander and more • 85 paved acres—all concrete—one of few in the country • Marshalling room for 15,000+ vehicles
SERVICES: • MECHANIC SHOP: We offer a full range of make-ready repairs and maintenance. Our one-stop shop makes units sales-floor ready faster! • BODY SHOP: Team of dedicated experts offers full-service cosmetic repair and conditioning • Full-service transportation department • Title processing in-house
1028 S. Portland Oklahoma City, OK 73108 405.947.2886 // daaokc.com
11
and helping dealers earn the trust of their communities.
WHITEHATWAY.COM TRUST 12
TRANSPARENCY
KINDNESS
INTEGRITY T e x a s
LEADERSHIP D e a l e r
January 2024
What is White Hat Way, you ask? In White Hat Way, Michelle and I have simply been creating an identity (white hat cowboy/farmer/ rancher) with trust at the core. And while there are other elements, it all ties back to trust and to a decision to make a difference. The origin story of White Hat Way comes from my high plains upbringing. I grew up around hardworking farmers and ranchers. And, as someone who has always enjoyed a good Western on TV, I came to view the cowboys in white hats as the “good guys.” In the end, WHW is an identity and one that is meant to represent something important. We are working to help all dealers better connect with their customers. It has been fun teaching all of the dealers out there how to become known, liked and trusted as the “good guys” and “good gals” who operate businesses that are clearly an asset to their respective communities.
Again, according to 98% of dealers, being trusted translates to more sales. Clearly, learning to establish and “communicate/ sell trust” would translate to more sales as we step into the new year. Then, showing ourselves to be trustworthy over and over would help to keep those BHPH customers sold as they continue to refer lots of friends and family! As an industry, we’ll all be well-served to talk more about trust and about making a difference. You’ll find us doing that. Come join the conversation! Jim Rhoads is a Co-founder of White Hat Coaching, formerly The Octane Group. Jim co-hosts the Buy Here Pay Here Morning Show (live 3x weekly) with his wife and partner, Michelle. They also host livestream events for BHPH and LHPH dealers on BHPH Nation TV. Jim can be reached at jim@whitehatway.com or (903) 816-0216.
Local Chapters CORPUS CHRISTI G.R. Moore The Car Shack (dates announced at
www.txiada.org)
EL PASO Cesar Stark S & S Motors Meeting – 3rd Friday (Monthly)
FORT WORTH Jerry Smith H J Smith Automobiles
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
Office of Consumer Credit Commissioner 800.538.1579 occc.texas.gov
Texas Comptroller 800.252.1382 comptroller.texas.gov
NIADA 800.682.3837 niada.com
American Recovery Association 972.755.4755 repo.org or contact TIADA state office
FORMS
888.368.4689 txdmv.gov
512.990.1188 burrellprinting.com
T e x a s
Burrell Printing
D e a l e r
www.txiada.org)
HOUSTON Robert Edenfield Mi Pueblo BRP Meeting – 2nd Tuesday (Monthly)
REPOSSESSIONS
Texas Department of Motor Vehicles
January 2024
(dates announced at
SAN ANTONIO Nory Pakravan 210 Auto Credit (dates announced at
www.txiada.org) 13
TI
texas
Become a TIADA Member
TI
texas
Business Name: ____________________________________________ Select one:
Dealer Member
Associate Member
Members $4
Contact Person: ____________________________________________ Address: __________________________________________________
New Me
City: _________________________________________ State: _______
Good throu Pay full am and receive for free.
Zip: __________________ County: _____________________________ E-mail address: _____________________________________________
Renewi
Business Phone: _______________________ Fax: ________________________
good throu
Cell Phone: ___________________________________________
Dues include NIA membership
Dealer P Number: ___________________________________________
Who referred you to TIADA? _________________________ Mailing Address (if different from above):
_______________________________________________
City: _________________________ State: _______ Zip:
PLEASE INDICATE PAYMENT METHOD: Check or Money Order payable to TIADA Check # __________ Credit Card
Card Number: __________________________________________________ Sec.Code: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Expiration Monthly Payments - $41.58 per month Via Credit Card (Please enter card information above)
Mail or Fax Application To: TIADA Membership Services 9951 Anderson Mill Rd., Suite 101, Austin, TX 78750 FAX 512.244.6218
www.txiada.org
512.244.6060
Dues are not deductible as charitable contributions for income tax purposes but may be deductible as miscellaneous itemized deductions, subject to IRS restrictions. It is estimated that 20 percent of your dues dollars is used for lobbying activities and is therefore not deductible.
14
T e x a s
D e a l e r
January 2024
6/22
January 2024
T e x a s
D e a l e r
15
Auto Dealer Solutions
Safeguards Compliance Course Keep Your Dealership Compliant with the FTC's Safeguards Requirements Ensure your staff knows how to protect consumer information to comply with the FTC requirements, avoid inadvertent exposure of your customer's information, government enforcement actions, lawsuits, and bad press. Brought to you by TIADA. Powered by the Dealer Education Portal. Visit dealereducationportal.com Or scan the QR Code for info and registration
Only $75 for the Qualified Individual Only $49 Each for All Other Employees Volume Discounts at $40 for Any Course
January 2024
Sample policies and agreements are included at no additional charge
The course is flexible and on-demand to fit your busy schedule
Volume purchase discounts available for purchase of 10+ courses
All users earn a certificate upon completion
T e x a s
D e a l e r
17
on the cover by Jonathan Smoke
Chief Economist at Cox Automotive
t s a c e c i r o m F o n o c E 20
A
24
decade from now, when we look back at the years immediately following the global COVID pandemic of 2020, we’ll be awed by the dramatic swings and unprecedented circumstances the economy and auto market endured. To name a few, we saw historic appreciation in vehicle values, unimagined drops in supply, and interest rates moving from all-time lows to 23-year highs at an unforgiving pace. The past four years have been chaotic, even by auto
18
The past four years have been chaotic, even by auto industry standards... which adds to the difficulty of forecasting what comes next.
industry standards, and have shifted many normal seasonal patterns out of whack, which adds to the difficulty of forecasting what comes next. Still, the process of developing a forecast is an important exercise and one my team and I enjoy undertaking each and every year. At Cox Automotive, we have access to some of the best data in the business and the keenest insights. Based on that, we have developed several themes for the year ahead, which T e x a s
D e a l e r
January 2024
provide our collective vision of what the next 12 months will bring. While our specific forecast numbers may prove to be incorrect, we expect the themes to provide an even more valuable point of view about the road ahead. For 2024, we believe the market will be steered by five key themes.
slow some but remain healthy enough to support constrained growth. In all, the economy in the year ahead may well be boring, but it sure beats the chaos of a recession.
In all, the
1
Slow Growth Ahead, But It Sure Beats a Recession.
economy in
2
Vehicle Supply Is Back, Favoring Consumers, Placing Downward Pressure on Prices.
Following the global pandemic and ensuing snags in the global automotive supply chain, new-vehicle inventory shortages completely disrupted the vehicle market in the U.S., pushing prices to record levels and limiting vehicle sales in a way that will have long-term effects on the market. Fortunately, in the year ahead, we are expecting inventories to be up substantially from 2022 levels — the height of the shortage — incentives to be higher, and discounting to increase. Overall affordability will limit what is possible in both the new- and usedvehicle markets, but affordability will continue to improve, as household incomes increase, loan rates stop increasing (and maybe come down some), and vehicle prices in new and used react to the market’s undeniable downward price pressure. We expect that new-vehicle inventory will approach
the year ahead may well be
For 2024, we are forecasting the economy to deliver weak growth as the effects of high interest rates and elevated-butdeclining inflation combine to limit consumer spending and slow job and income growth. In 2024, we are banking on an economy that will avoid a recession and move forward with slow, constrained growth. The labor market — a key driver of vehicle sales in the U.S. market — is expected to weaken, but unemployment levels will remain low enough to support a healthy auto industry. Wage growth will cool in 2024 but will remain above average. In mid-December, the Fed held their final meeting of 2023 and decided to keep interest rates and overall monetary policy unchanged for the third consecutive meeting. Although the Fed has not abandoned the possibility of raising rates, their new language suggests that further increases are only an option and not their expectation. Ending 2023, the median expectation by the Fed is to see three-quarters of a point potential decline in the Fed Funds Rate by the end of 2024. Albeit small, any decline would help improve vehicle affordability and offer some relief to many strapped households. Overall, we are expecting consumer debt to slowly grow in 2024 and credit conditions to remain tight, but stable. Consumer spending should
boring, but
it sure beats
the chaos of a recession.
January 2024
T e x a s
D e a l e r
net profit margin 19
pre-pandemic norms in 2024, reaching nearly 3 million units — three times the chip-shortage low — and days’ supply will remain at healthy levels. We will be back to normal. Higher inventories will support higher incentives, but record levels last seen in 2019 — a new-vehicle market in excess of 17 million units — will remain well out of reach. We expect new-vehicle sales in the U.S. to increase less than 2%, finishing at 15.6 million sales in 2024. Retail new-vehicle sales will be mostly flat and fleet sales should recover from an end-of-2023 lull and continue to improve. New-vehicle transaction prices will likely see modest declines again, much like this year and more deflationary than the normal rate of 2.5% to 3.0% seen from 2013 to 2019. What will drive the lower prices will be increasing discounting as judged by what consumers pay relative to MSRP. As a result of that trend, plus more incentives and continued growth in incomes, vehicle affordability for consumers will improve. However, affordability will limit the market in 2024 and will remain an industry-wide challenge that holds new-vehicle sales well below historic highs seen between 2016 and 2018, when the market was artificially inflated by large discounts and incentives and near-zero auto loan rates. The used-vehicle market will see gains in 2024, but gains will be minimal — less than one percent. Total used-vehicle sales may reach 36.2 million, with retail used-vehicle sales at 19.2 million, up 1% year over year. We are expecting certified pre-owned (CPO) sales to outpace used-vehicle growth and reach 2.7 million units, a 3% increase from 2023. Demand is there, while product availability is limited by the lack of production from 2020 through 2022. In our vehicle wholesale operations, we are forecasting volume to increase less than 1% as constrained
growth continues. Repossessions, rental, and off-lease volumes will increase year over year yet remain below pre-pandemic norms. Price patterns will continue to normalize, and we are forecasting that 2024 will be our first year in five for fairly normal depreciation. Overall, as our team is forecasting 2024, we are building our models with expectations that the ongoing inventory recovery will continue and sufficient pent-up fleet demand will help keep the new-vehicle market from falling backward in the face of headwinds — high prices, high loan rates, and a slow-growth environment.
The used-
vehicle market will see gains in 2024 , but gains will
be minimal —
less than one
percent. Total
3
In 2024, We Officially Bid Farewell to the Seller’s Market.
After peaking in the years immediately following the pandemic, dealer profitability is expected to fall further in 2024. Incentives and discounts will continue to grow, but vehicles are not becoming less expensive — only margins are being compressed. More supply and increasing discounting will hold down transaction prices buyers pay, cutting into margins and hurting profitability. In 2024, dealers will be forced to seek further efficiencies to protect their bottom line. The good news: Usedvehicle margins and fixed ops should remain relatively strong in the year ahead. But new-vehicle sales departments will be under pressure as MSRPs and invoices will trend higher while buyers will likely pay less. Thin profits, for many dealers, will be gobbled up by higher floor plan costs and the need to reinvest into infrastructure to support growing electric vehicle (EV) sales. Heading into 2024, dealers are less optimistic about the future, and it’s all about interest rates and weaker profits.
used-vehicle sales may
reach 36.2
million, with retail used-
vehicle sales
at 19.2 million, up 1% year over year.
20
T e x a s
D e a l e r
January 2024
elec
tric
veh
icle
s
4
In the Electric Vehicle Market, 2024 Will Be the Year of More — More Models, More Incentives, More Discounting, More Advertising, and More Sales Muscle.
It is already happening, and dealers and manufacturers alike are realizing that selling more EVs will require more effort. Expectations for EV growth in the U.S. market have moved from “rosy to reality” as EV sales increase, but customer acceptance grows slowly. Prices are falling and most automakers are seeing inventories build. In 2024, we are expecting that the industry will fully come to terms with the fact that the average consumer has to be sold on the merits of going electric, and many won’t be easily convinced. But with more models, more incentives, more discounting, more advertising, and more sales muscle, we still believe more sales will follow, with EV sales in the U.S. in 2024 topping the more than 1-million-unit record set in 2023 and accounting for more than 10% of total sales. Hybrid models will add further to mix, pushing the share of electrified vehicles — EVs, Plug-in Hybrids, and Hybrids — to near 24% of the market in 2024. While fewer EVs may be eligible for the IRA tax credits thanks to changing guidelines, we do believe federal incentives will continue to encourage consumers to buy electric, and leasing of electric vehicles should continue to increase as well, growing from approximately 20% to 25%, an increase of 5 percentage points. January 2024
T e x a s
D e a l e r
Heading into 2024 , dealers are less optimistic about the future, and it ’s all about interest rates and weaker profits. Market leader Tesla’s share of total EV sales will continue to decline as the industry pioneer will grow volume but lose share. And the nascent used-EV market will continue to be the fastest-growing product segment in the wholesale/used vehicle market. There will be more used EVs in the market, very much aligned with our expectations that 2024 will be the Year of More when it comes to EVs. 21
5
Car Buying in America: Normal is Nice.
improved processes at the dealership that save time and make car buying more efficient. Overall, we are expecting sales growth to be constrained and weak in 2024 — a bit more normal compared to the chaos of the past three years. As an economist, headline-making swings in economic trends are always interesting to see and analyze, but such turbulence is rarely good news for business over the longer term. Yes, we will be watching the political climate, hoping for a quick solution to the wars in Gaza and Ukraine, seeing how our own presidential election plays out, and monitoring the Fed’s actions closely, but from our vantage today — and barring any new black swan events — the forecast is for a fairly normal automotive market in 2024. That might not make headlines, but it should be a welcome relief for everyone involved.
After four years
After four years of anything but normal, we are expecting balance to return to the U.S. auto market in 2024. And that will clearly be better for American consumers and fleet buyers who find more choices, better deals, and better access to online buying tools. In fact, in many ways, we are expecting 2024 to be the best year for car buyers since the pandemic. Our research suggests that Americans are putting more emphasis on buying/owning personal transportation, in contrast to 2018 and 2019, when consumers put a higher value on “access to transportation.” And after tumbling in 2021 and 2022, satisfaction with the car buying process is expected to improve in the year ahead, thanks in part to better inventory and the return of discounting, but also from
of anything
but normal, we are expecting balance to
return to the
U.S. auto market in 2024 .
6/22
22
T e x a s
D e a l e r
January 2024
Please fill out the form on the next page to help our efforts out at the Capitol!
Thank you to all those who have contributed to INDEPAC in 2023!
A List of INDEPAC ** Contributors through November Bathija, Navin Blankenship, Erika Brown, Mark Browning, Justin Bryan, Kaleb Buchelly, Harry Christian, Amos Cockerell, Clint Cooney, Michael Davis, Brad Davis, Vicki Downey, Mike Edenfield, Robert* Fox, Rob Goodman, Jason* Gregory, Tommy* Hagler, Keith & Marcia* Hale, Eddie Hanson, April*
Hobson, James In Memory of Mario Martinez Jones, Mark* Kanelakos, Collin Kaya, Selcuk Keate, Kyle Labaj, Kanton Lathrop, Phillip Lazo, Deyla Lucio, Jesse Milligan, Robert Moore, Russell* Murphy, Bill Peters, Mark Petersen, Shaun Reine, Greg Rice, Jenissa Rodriguez, Edgar*
Rogers, Lowell* Ruckel, Matt Sabillon, Juan M. Sanchez, Hugo Scott, Paul Simmons, Tyler* Smith, Linda Sommer, Ariad Stark, Cesar Sutton, James Torres, Cesar Turan, Jon Tutor, Corinna Villarreal, Armando Winkelmann, Janette Winkelmann, Ryan* Zak, Gregory* Zak, Michael
*Monthly donor **Special thanks to our anonymous donors
Total Contributions in 2023 to Date January 2024
T e x a s
D e a l e r
$80,310 23
Yes, I would like to help with TIADA’s grassroots effort! Please list me as a sustaining donor. I would like to support my industry by making a monthly credit card donation of $______________ Add me to the KEY-PERSON list! I know (Name of Legislator) _______________________________________________ as a ____ Acquaintance
____ Personal Friend
____ Professional Contact
I would like to attend political fundraisers in my area I would like to support my industry by pledging a one-time donation of ___$1,000
___$500
___$250
___$100
Other $________
______________________________________________________________________________________
____ Personal Check Payable to INDEPAC
_____Personal Credit Card
Name_______________________________________________________________________________ Company ____________________________________________________________________________ Home Address________________________________________________________________________ Email _______________________________________________________________________________
** Personal Check or Personal Credit Card only. Corporate contributions are prohibited by state law. Contributions are not tax deductible as charitable contributions for federal income tax purposes. ** Charge my Credit Card V MC D AM __________________________________________________ Exp: _____/_____ CVV: _____ Name on Card: ____________________________________________________________________________ Card Billing Address (if different):
______________________________________________________
______________________________________________________________________________________
Or donate online at www.txiada.org >> Resources >> Advocacy >> Political Action Committee
______________________________________________________________________________________
Referred by:
c/o TIADA 9951 Anderson Mill Rd Suite 101, Austin Texas 78750
PHONE 512.244.6060 FAX 512.244.6218 EMAIL accounting@txiada.org
24
T e x a s
D e a l e r
January 2024
On-Demand Offerings
Featured Courses TIADA designed and implemented some important on-demand courses to give dealers quality educational programs they can access throughout the year. These programs are essential for dealers to stay compliant. They offer flexibility, so you can complete them according to your schedule. These courses are designed for any dealers with questions related to various regulations that affect their businesses.
Repossession 101: What You Need to Know In this two-part video course TIADA counsel Michael Dunagan answers repossession related questions for both the dealer starting out and those dealers who want a refresher. Dunagan goes through the basics of self-help repossession, repossession when a client has filed bankruptcy, and using the courts to regain collateral through sequestration. The course also covers all the repossession letters and includes a downloadable deck of slides to follow along with the course.
$98 for two 1-hour videos
The Basics of Transferring Titles* Want to avoid having your title transfer paperwork rejected at the tax office? This online course is designed to walk you through the title transfer process and is best suited for people new to transferring titles or those who want to brush up on the basics. This course has been reviewed for accuracy by the Tax Assessor-Collectors Association of Texas.
$48 for the course
*Also available in Spanish
To register visit Txiada.org/on-demand Call us at 512.244.6060 or email us if you need assistance. January 2024 TAutomobile e x a s Dealers D e a Association l e r Texas Independent
25
Insurance Matters! CP Insurance Associates has been providing Buy Here Pay Here Dealers a Custom CPI Program for over 20 years. We will prevent you from being CLIPPED by the unexpected!
26
T e x a s
D e a l e r
January 2024
legal corner What To Do When Peaceable Repossession is Not Possible Dealer Question: I know that as a car creditor
with a lien on a vehicle, I can peaceably repossess the vehicle when the contract is in default. Occasionally, a debtor will hide the vehicle or lock it up in a garage where I can’t repossess it. I’ve contacted our local police department for help, but they tell me they can’t get involved without a court order. Why won’t the police help me and what are my next steps when a peaceable repossession is not possible?
Answer: The Uniform Commercial Code (the Texas version is known as the Texas Business and Commerce Code) provides that the holder of a security interest in collateral can upon default peaceably repossess the collateral without any type of legal process. The key word here is “peaceably.”
C
ourt cases have held that the refusal of a debtor to relinquish possession of collateral takes the situation out of the realm of peaceable. If a repossession can’t be accomplished peaceably (that is, with the permission of the debtor, or without the knowledge of the debtor and without breaching the peace), then it will be necessary to obtain an order (or “writ”) from an appropriate court. Law enforcement officers have generally been trained that they can’t order a debtor to turn over collateral to the creditor without a court order. A creditor, being a private citizen, can peaceably repossess collateral without a court order. A law enforcement officer, by virtue of his or her position, is, in the eyes of the law, a government official. The U.S. Constitution forbids governments or government officials (except in a few emergency situations) from taking property from a citizen without due process of law. Due process of law is accomplished in this situation by applying for relief from a court. On those occasions when self-help repossession is not available to the vehicle lien holder, such as when the collateral is hidden or locked up and the debtor refuses to return it or when repossession cannot be accomplished without breaking and entering or other breach of the peace, the creditor may have no alternative but to turn to the court system to enforce his or her
January 2024
T e x a s
D e a l e r
by Michael W.
Dunagan TIADA COUNSEL
Sequestration is a process by which a court, upon suit being filed and upon being presented with evidence of certain required conditions, can order the collateral to be seized by a constable or sheriff and held pending final judicial determination of the ownership rights to the collateral. rights to the collateral. The most appropriate remedy for a secured creditor seeking court-ordered return of collateral is referred to in Texas as sequestration (in some states the process is referred to as replevin). Sequestration is a process by which a court, upon suit being filed and upon being presented with evidence of certain required conditions, can order the collateral to be seized by a constable or sheriff and held pending final judicial determination of the ownership rights to the collateral. Recourse to sequestration involves the use of the officers empowered by the state (as opposed to self-help repossession), so constitutional due process considerations arise, and strict compliance with legal procedures is required. 27
To obtain a writ of sequestration, the secured creditor must show that he or she is legally entitled to possession of the property and that the party in possession will "conceal, dispose of, ill-treat, waste, or destroy the property or remove it from the county during the suit." A bond must also be posted, in an amount set by the court, before a writ will issue. Once a judge is satisfied that the creditor is entitled to an order of
possession, he or she will sign an order for the clerk of the court to issue the writ of sequestration. The order will also specify the amount of bond that is to be posted by the creditor. Court rules require bonds to be at least the amount of the value of the property plus costs. Some courts will allow local individuals with non-exempt real property to post signature bonds. Others may require a corporate surety bond or a cash bond. Some
Mobility Credit Union can help your dealership grow!
28
•
Up to 120% LTV RETAIL financing
Get signed up today!
•
Same-day funding
dealer relationship representative
•
Statewide membership in Texas
•
Direct representative customer service
•
Competitive rates
•
Terms up to 84 months
•
Local buyers
gage hernandez 972.482.9101
ghernandez@mobilitycu.com
LEARN MORE
MOBILITYCU.COM/INDIRECT
surety companies that specialize in litigation-type bonds provide sequestration bonds to lien holders. After the bond is received and approved by the court clerk, the writ is issued and sent to the sheriff or constable instructing the officer to take possession of the property. Sequestration is only a temporary taking process, so the secured creditor must go forward with obtaining a final judgment awarding ultimate possession. However, once property is taken by an officer with a writ, many defaulting debtors don’t respond to the suit. If the debtor doesn’t respond, the creditor is entitled to take a default judgment. Once the officer takes possession of the property, the creditor can ask the court to grant it possession after ten days, absent the filing of a counter-bond by the debtor. While it is rare for a debtor to file a counter-bond, the court could award possession to the debtor pending a final determination of the legal rights of the parties. Because of the technical procedural due process requirements of sequestration, it will usually be necessary to hire an attorney to prepare the appropriate pleadings and affidavits. Justice-of-the-Peace courts have the authority to issue emergency orders, including writs of sequestration, but most J.P.s will not undertake to handle a sequestration. Some will allow individuals without attorneys to file suits seeking sequestration writs in their courts. Some even provide forms for creditors to fill out. Justice courts have jurisdiction in cases where the value of the collateral does not exceed $20,000.00. It has been our experience that most J.P.s, choose not to get involved in issuing writs. To determine whether your local J.P. will process a sequestration action and whether the lien holder can file without an attorney, call the justice court and ask the judge or civil T e x a s
D e a l e r
January 2024
clerk. Because of the legal technicalities involved in the process, we recommend having an attorney involved. If the value of the vehicle exceeds $20,000, it will be necessary to file the action in a county or district court. Generally, representation of an attorney will be required at that level. We occasionally run into situations where debtors simply refuse to honor the officer’s demand for possession under the writ. It is then necessary to file an action in the court seeking to have the debtor held in contempt of court. This process requires additional procedural steps and thus adds to the expense of the process. While our discussion up to now has involved lien holders obtaining possession from debtors after default, the sequestration process can be used whenever a third party is wrongfully in possession of collateral and refuses to return it. Examples would include someone who has “bought” the vehicle from the debtor without clearing the lien; a third party holding a vehicle to secure some type of obligation owed by the debtor that is not superior to the vehicle lien; and a person claiming a wrongful mechanic’s or storage lien (see the article Fraudulent Mechanic’s Lien Claims Still Concern Car Creditors in the March, 2022 issue of Texas Dealer for more about steps to take when confronted with a questionable lien claim). January 2024
T e x a s
D e a l e r
Finally, a practical consideration about sequestration: When neither the debtor nor the vehicle can be found, this remedy is of little value. The writ must be served upon the debtor (or a person in illegal possession of the property). The sheriff or constable attempting to serve the writ will typically not provide skiptracing services, and will rely on the creditor to supply a valid address.
Conclusion: Given the cost and time restraints of the sequestration process, self-help repossession is still the most desirable way to retake collateral. But when peaceable repossession is unavailable, or forced resistance or violence is threatened, sequestration is the safest and best remedy for a car creditor. Editor’s Note: This article is taken from Texas Automobile Repossession: A Lien Holder’s Legal Guide. The book is available from TIADA. Michael W. Dunagan is an attorney in Dallas, Texas who has represented the Texas Independent Automobile Dealers Association for over 45 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. 29
T
D E
ealer Educ sD
The Texas License Renewal Education Course provides the ins and outs of being a dealer in
Texas in a self-guided online course, available 24/7. This is the same course required by the TxDMV to renew a GDN license, so it covers all the important subjects including: • Staying compliant with TxDMV regarding premises requirements • Acquiring Inventory • Temp Tags and Metal Dealer Plates • Buyer’s Guide • Deal Jacket Documents
• Transferring Titles • Record Keeping • Special Inventory Tax (VIT) • Federal Requirements • The OCCC • Enforcement and Investigation • Advertising Rules
Register your staff today! Just $99 This course is perfect for managers that need an overall refresher or for the new employee that needs to be brought up to speed on all aspects of this industry in a fast, convenient and reliable way. In addition to TxDMV’s approval, this course has been reviewed by the Tax-Assessor Collectors Association of Texas for accuracy so you’ll never have your title transfer paperwork rejected again. To register visit TexasDealerEducation .com and select the Texas License Renewal Education Course.
Tex a
ion at
ealer Educ sD
ion at
Tex a
Avoid expensive fines and penalties
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.”
feature
What Consumers Really Think About Modern Retail by Ryan Leschel
Field Manager of Marketing at JM&A Group
F
rom New York to California and everywhere in between, consumers' interest in modern retail is increasing. Many believe the pandemic was the catalyst that began this shift, but the desire for a smoother and more efficient process took place long before March 2020. The interest in virtual purchasing is not restricted solely to the car buying process as more and more dealers are applying digital solutions to the F&I process, an often tedious and time-consuming undertaking. While some dealers understand the benefits of a virtual process and the freedom it gives their buyers, many still need to figure out if it is an option worth offering. A good rule of thumb is that if the customer enjoys it and saves time, it’s worth having. So, overall, do customers enjoy a digital solution? What about a hybrid of traditional and digital? JM&A Group recently partnered with the Automotive News Research and Data Center to explore consumer perceptions around the F&I process and how digital retail options influence dealership loyalty and purchase decisions. The participants of the study were a cross-generational mix of 1,500 Gen Z, Gen Y, Gen X, and Baby Boomers across the country who were in the market for a car and F&I products. With the goal of figuring out what participants thought about the F&I process, we identified three key takeaways that really painted the picture.
January 2024
T e x a s
D e a l e r
1
Consumers are unfamiliar with F&I.
Dealers can create positive experiences that also educate consumers about F&I options, but getting it wrong risks the sale and future business.
2
Consumers want an efficient experience. Digital
3
Digital matters. Online solutions that present available F&I
retailing products and services can help deliver efficiency, but dealers should keep sight of the importance of human interaction. options can both educate consumers and influence their purchasing decisions before ever meeting with F&I. Let's dive into what we found and how you can apply the insights from this study.
Opportunity for Education
Over 80% of consumers state they are unfamiliar with what the F&I department does and the products they sell — a huge opportunity to engage 31
and educate customers. Did you know that 79% of consumers stated that understanding F&I products/ packages and the overall cost before they meet with an F&I manager would influence their final decision to buy add-on products? This lack of understanding on the customer’s part gives dealers the opportunity to set expectations at an early stage while still being able to influence and control the narrative. If you have clear-cut steps within the
Maximize Your Sales Potential with the TIADA CPO Program.
defined process, you remove a huge pain point for the customer while providing transparency. Online solutions that present F&I options tackle two things at once. They educate the consumer while directly influencing their purchasing decision long before meeting with an F&I professional.
Creating an Enjoyable Experience
The negative stereotypes surrounding the car buying process can be alleviated. By offering an option to purchase the car traditionally and digitally, you create a more enjoyable experience. Having a solidified process that is transparent is crucial. One of the most significant points of friction for customers is when the transition from salesperson to the F&I manager takes place. It’s safe to say that a poor experience during the F&I process can really hurt a dealership. If you take precious time away from the customer and put them in a less-than-ideal position, it has a long-term, negative effect. That’s another big reason why having the capability to offer a digital retail solution that saves time, energy, and frustration is so important in this competitive climate.
Mixing Human and Digital Interactions
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. 32
Consumers want an efficient experience, and digital retailing can give that to them. It is essential for dealers to note that they should maintain sight of the importance of human interaction, digital or otherwise, when looking to implement a process that includes a digital component. Knowledge is one of many things customers crave. They want a great experience that is as painless as possible. A virtual solution is a highly user-friendly process that just makes sense. When you pair that with real human interaction, it becomes a force T e x a s
D e a l e r
January 2024
multiplier. The digital element adds speed, convenience, and a feeling of relief from the pressure a customer would encounter sitting in the F&I office for hours. With 44% of customers stating that they would not feel comfortable buying an F&I product unless they had spoken to a member of the dealership, the math is easy.
Real human interaction + seamless digital processes = positive and productive customer experience.
It is a win for the dealer as well as the customer. So, keep in mind that even though you may have a tremendous virtual process, you have to make sure that you keep the interaction human and conversational. Don’t lose sight of how important the human touch is. The buyer experience must be consistent and fully integrated, and it must span both online and in-person to work correctly.
Summary
As dealers move towards a virtual option, it’s critical to have teams be brought up to speed and ready to adopt the process. This includes a mindset shift and buy-in from the managers down. Luckily, there are things you can do to prepare for the process implementation long before outside help comes in. The technological aspect of this process is something that dealership staff may need to get spun up on prior to engaging customers or digital retail providers. The tools you use (website, customer portal, internal features, video tools, etc.) need to be top-notch, and your staff needs to know how to navigate them and be a subject matter expert for the customer. Once that is in a good place, talking to experts in this field is critical to bring it to the finish line. January 2024
T e x a s
D e a l e r
SAME TIME ,
SAME PLACE .
SAVE THE DATE .
JULY 2123 2024
33
ATTENTION STUDENTS!!!
$1,000
Marvin Norwood Scholarship DEADLINE
May 15, 2024 {Applications and/or any required documents received after May 15, 2025 will NOT be accepted.} Criteria and Guidelines 1. Each applicant must be entering or currently enrolled in an accredited college or a trade school. Proof of enrollment must be included with this application.
Date: Name:
DOB:
Address: City:
State: (You will receive an email confirmation of receipt.)
Telephone Number: High School Last Attended: Address:
3. Each applicant must complete the application form.
Date of Graduation:
4. A copy of high school transcripts is required for applicants who are college freshmen. If applicant is currently enrolled, provide college transcripts with official university imprint.
Other High Schools Attended (Names and Addresses):
6. Compose an essay of no more than two typed, double-spaced 8 ½” x 11” pages. The essay should discuss the applicant’s relationship with their TIADA scholarship sponsor, current education goals and future aspirations as it relates to the applicant’s subject/training area. 7. Provide at least two (but no more than three) letters of recommendation, no older than one year, from college/high school faculty, employers or other appropriate sources (not related).
Zip:
Email:
2. Each applicant must provide a letter from their TIADA member sponsor that includes the sponsor’s address and phone number.
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.
34
SCHOLARSHIP APPLICATION
City:
State:
Zip:
Dates of Attendance:
College(s) you are attending or plan to attend for admission:
Parents Name(s): TIADA Member Name (Sponsor): TIADA Member Company Name: TIADA Member Address: City:
State:
Zip:
Sponsor Signature Should you have any questions, please contact TIADA at 512.244.6060. Please return the completed application with all required documents to: TIADA Attention: Scholarship Applications 9951 Anderson Mill Rd. Suite 101, Austin, TX 78750
T e x a s
D e a l e r
January 2024
Houston, TX
BHPH
Compliance Summit
4
Monday
March
2024
9:00 a.m. – 4:00 p.m. Lunch will be included
a can't-miss educational experience Featuring representatives from the Texas Department of Motor Vehicles (TxDMV), the Office of Consumer Credit Commissioner (OCCC), the Texas Comptroller of Public Accounts, and long-time TIADA Counsel Michael W. Dunagan.
MEMBERS — $249 1st Registrant each additional $199 (must be from the same dealership) NON-MEMBERS — $498
To register visit
tx i a d a . or g or
call 512.244.6060
feature
Marketing Trends for Independent Automobile Dealers in 2024 by Stephen Pallas
TIADA Director of Marketing and Communications
W
ith 2023 fully in the rearview mirror, the independent automobile industry accelerates into the promising look ahead to 2024. Independent dealers find themselves at the intersection of innovation and consumer dynamics, poised to embrace an evolving landscape that promises both challenges and opportunities. As the road ahead unfolds, the constant evolution of consumer habits compels dealers to not merely keep pace but to pioneer new avenues in marketing. The digital landscape necessitates a strategic approach that intertwines the latest technological trends with the timeless values of community engagement and consumer-centric practices. It is important to attend to the pivotal trends that will define the automotive marketing landscape in the coming year, guiding your dealership toward success in this dynamic and competitive arena.
January 2024
T e x a s
D e a l e r
Short-Form Video Reigns Supreme: TikTok Takes the Wheel The days of hour-long car commercials are over. Gen Z has spoken, and they want their content bite-sized and engaging. Enter TikTok, the undisputed king of short-form video, with its addictive dance challenges and hilarious skits. But don’t be fooled by the platform’s lighthearted veneer. For auto dealers, it’s a treasure trove of potential. Think quick car reviews, behindthe-scenes dealership tours, and quirky tutorials on car maintenance – all within a 60-second window. Take Fernando Alonso, the legendary Formula One driver, who’s amassed millions of followers on TikTok by embracing Gen Z trends and showcasing his playful personality. Remember, it’s not just about selling cars; it’s about building a community and letting your brand’s character shine through.
37
Importantly, for auto dealers, TikTok isn’t merely a stage for selling cars; it’s a dynamic platform for building a community. It’s about creating an environment where your brand’s character can shine through in creative and unexpected ways. Whether it’s leveraging current trends, sharing light-hearted moments from the dealership, or offering valuable insights into car ownership, TikTok provides a canvas for fostering a connection that transcends the transactional nature of traditional marketing. In essence, TikTok isn’t just a fleeting trend; it’s a transformative tool that allows auto dealers to redefine their approach to marketing. By adapting to the preferences of Gen Z, embracing the platform’s creative potential, and weaving a narrative that extends beyond the lot, dealerships can forge lasting connections and position themselves at the forefront of a new era in automotive marketing.
C
M
Y
CM
SEO & AEO: Mastering the Answer Engine
MY
CY
Search engine optimization (SEO) continues to be the bedrock of online marketing, but as we venture into 2024, a paradigm shift is underway with the emergence of Answer Engine Optimization (AEO). This new frontier acknowledges the increasing prevalence of voice search and virtual assistants in shaping the digital landscape. In this era where consumers converse with their devices, optimizing content for question-based queries is no longer an option—it’s a strategic imperative. Imagine a potential car buyer seeking advice on the ideal family SUV using their voice-activated assistant. In response to such inquiries, dealerships must craft content that not only answers these questions but does so with depth and relevance. Informative blog posts dedicated to addressing common car-buying concerns,
CMY
K
38
T e x a s
D e a l e r
January 2024
comprehensive FAQs seamlessly integrated into your website, and engaging video content delving into specific issues potential buyers might encounter—all contribute to mastering AEO. This strategic optimization doesn’t merely guarantee visibility in the vast digital realm; it ensures that your dealership takes center stage precisely when someone queries, “What’s the best used SUV for a family?” By aligning your online content with the conversational patterns of contemporary search practices, you not only meet the expectations of today’s tech-savvy consumers but also position your dealership as a reliable source of information and expertise in the automotive landscape. It’s not just about being found; it’s about being the go-to destination for those seeking informed and personalized answers in the age of voice-activated exploration.
personal level, forging connections that transcend the transactional nature of a car purchase. Furthermore, consider forming symbiotic relationships with other local businesses. Cross-promoting with neighboring establishments not only expands your reach but also strengthens the communal network. Whether it’s collaborating on joint events, offering exclusive discounts to each other’s customers, or simply sharing resources, these partnerships amplify the sense of community and mutual support. The benefits of hyper-local marketing extend far beyond immediate sales. By actively participating in and contributing to the community, your dealership builds a reservoir of goodwill and brand recognition. Customers aren’t just buying a car; they’re investing in
Get Personal: The Power of Hyper-Local Marketing
In an era where global giants cast expansive shadows, independent auto dealers have a unique opportunity to distinguish themselves by wholeheartedly embracing their local roots. Hyperlocal marketing emerges as a powerful strategy, transcending traditional promotional efforts to foster a genuine and meaningful connection with the community. It’s not merely about showcasing cars; it’s about becoming an integral part of the local tapestry. To truly embed your dealership within the fabric of its community, consider going beyond the confines of your dealership. Sponsorship of local sports teams becomes a dynamic avenue to not only promote physical activity and team spirit but also to imprint your brand in the hearts of enthusiastic fans. The dealership, once a place where transactions occurred, transforms into a rallying point for shared local experiences. Active participation in community events amplifies your dealership’s presence, demonstrating a commitment that extends beyond business transactions. Whether it’s a local fair, charity run, or cultural festival, your involvement serves as a tangible testament to your dedication to the community’s well-being. It’s an opportunity to engage with potential customers on a January 2024
T e x a s
D e a l e r
a relationship with a business that cares about the same local causes and experiences they hold dear. This approach has a magnetic effect, attracting customers who value not only the cars on offer but also the dealership’s commitment to the community. In an age where consumers increasingly seek authenticity and connection in their purchases, hyper-local marketing becomes a potent strategy for independent auto dealers to not just survive but thrive in a landscape dominated by global behemoths. It’s about recognizing that the heartbeat of your business is intricately woven into the heartbeat of the local community, and by embracing this symbiosis, your dealership can carve out a distinctive and enduring place in the hearts and minds of those you serve. 39
Build Relationships That Last: The Value of Community Engagement
Imagine going beyond the conventional dealership experience by hosting specialized events like car care clinics. These sessions provide an invaluable opportunity for customers to enhance their understanding of vehicle maintenance, fostering a sense of empowerment and trust. By positioning your dealership as an educator and partner in their automotive journey, you not only elevate customer satisfaction but also cultivate a deeper connection that extends beyond the dealership. Take the initiative to organize social events that go beyond the confines of traditional car-related activities. Whether it’s a weekend coffee meetup, a car enthusiast gathering, or a community drive, these events serve as forums for customers to interact organically, sharing experiences and building friendships. This communal atmosphere transforms your dealership from a mere point of sale into a hub for shared passions and interests. The result of fostering such a sense of community is transformative. Your customers don’t just become buyers; they evolve into dedicated brand advocates. Through their positive experiences and shared connections within your community-centric ecosystem, they become enthusiastic storytellers, singing the praises of your dealership to friends and family alike. Word-of-mouth recommendations, amplified through the power of social media, become a potent force in driving brand loyalty and attracting new customers. In essence, the age of social media demands a paradigm shift. It’s not about transactions; it’s about relationships. By creating spaces that transcend the typical dealership encounter, where customers can connect, learn, and share, you position your brand as more than a seller of cars. You become a facilitator of experiences, a curator of community, and in doing so, you cultivate a customer base that is not just loyal but actively invested in your brand’s narrative and success.
Privacy and Data Protection in Automotive Marketing
In an era marked by heightened awareness and scrutiny surrounding data privacy, businesses find themselves at a critical juncture where consumer trust and data protection are paramount. The increasing emphasis on safeguarding personal information has become a cornerstone of ethical business practices, propelling it to the forefront of corporate priorities. Looking ahead to 2024, it is evident that companies embracing robust data privacy practices and cultivating transparent data policies are poised to not only meet regulatory requirements but also gain a 40
distinct competitive advantage in the marketplace. The foundation of this advantage lies in the implementation of secure data collection and storage methods. As businesses handle vast amounts of sensitive customer data, adopting cutting-edge technologies and encryption protocols becomes imperative. The ability to safeguard this information from potential breaches not only mitigates the risk of compromising individual privacy but also fosters an environment where customers feel secure in their interactions. Moreover, obtaining explicit consent emerges as a pivotal step in the pursuit of data protection. Companies must prioritize clear communication with customers, ensuring they understand how their data will be utilized and for what purposes. Transparent and comprehensible consent processes not only comply with evolving privacy regulations but also empower consumers by giving them a voice in how their information is handled. As consumers increasingly become vigilant about the fate of their data, businesses standing out are those that exhibit a steadfast commitment to protecting personal information. Beyond compliance, this commitment becomes a cornerstone of the brand’s identity—a symbol of trustworthiness and integrity. Companies that prioritize data privacy are not seen merely as custodians of information; they become advocates for their customers’ rights and guardians of digital trust. The era of data privacy underscores a paradigm shift where consumers are more discerning about how their information is handled. Businesses that embrace this shift by adopting robust data privacy practices, implementing transparent policies, and proactively adhering to evolving regulations will not only safeguard customer trust and loyalty but also position themselves as ethical leaders in an increasingly data-driven world. Independent automobile dealers face a crucial juncture in 2024 marked by challenges and opportunities. From embracing short-form video trends on platforms like TikTok to mastering Answer Engine Optimization (AEO) and prioritizing hyper-local marketing, the key lies in adaptation and innovation. Furthermore, community engagement remains paramount, shifting the focus from transactions to lasting relationships. Privacy and data protection, vital in an era of heightened awareness, position dealerships as ethical leaders. In essence, success for independent dealers hinges on their ability to innovate, connect with consumers, and navigate the changing digital landscape with transparency and a commitment to community, setting the stage for a thriving future in the automotive industry. T e x a s
D e a l e r
January 2024
feature
Financial Management in Car Dealerships: Five Essential Tips by Sean Toussi Glo3D.com
I
n the dynamic and competitive world of automotive dealerships, mastering the art of financial management is not just a necessity; it’s a critical factor for success and sustainability. The dealership landscape is marked by intricate financial dealings, including sophisticated lending and borrowing scenarios, compliance demands, and the ever-present need to balance risk and growth. In this context, dealerships must navigate their financial path with precision and foresight. This article explains five essential tips from industry insights and successful methods to guide automotive dealerships toward financial prudence and strategic growth.
1
Borrow Wisely and Focus on Debt-to-Asset Ratio
It’s crucial for car dealerships to borrow what is necessary for their growth and operations. Avoid overreliance on debt, especially for daily functioning, and be cautious about maxing out credit lines. In this context, monitoring the debt-to-asset ratio is important. This ratio compares the total debt a dealership owes to its total assets, giving a clear picture of its financial leverage and stability. A lower debt-to-asset ratio indicates a healthier financial position, as it suggests that the dealership is not overly dependent on borrowed money and has sufficient assets to cover its debts if needed. For example, if a dealership has $500,000 in debt and $1,000,000 in assets, its debt-to-asset ratio would be 0.5, indicating that half of its assets are financed by debt. It’s wise for dealerships to aim for a balanced ratio that supports growth while minimizing financial risks, ensuring stability even in fluctuating market conditions.
2
Establish Accurate Loss Reserves Using Static Pool Analysis
It is imperative to adopt a proactive approach like static pool analysis to determine loss reserves. This method focuses on the actual performance of past loans and historical data of ‘pools’ of loans to predict the likelihood and magnitude of future losses. For example, consider a dealership with a history of selling cars on credit. Over the years, it has accumulated data on the repayment patterns of its customers. By employing static pool analysis, the dealership can analyze
January 2024
T e x a s
D e a l e r
the performance of these loans based on factors such as the age of the loan, type of vehicle sold, customer credit score, and economic conditions at the time of the sale. This analysis might reveal that certain categories of loans have a higher default rate. Armed with this knowledge, the dealers can set aside a more precise amount in their loss reserves to cover these anticipated losses. Also, they will follow more prudent lending practices moving forward to increase the overall stability and sustainability of their dealership’s financial operations.
lign Financial Practices 3 Awith Banking Standards
Banks, the primary lenders, expect dealerships to mirror their standards, ensuring mutual understanding and smoother financial relationships. So, dealerships need to align their financial practices with those of the banking 41
O N
D E M A N D
Repossession 101: What You Need to Know
Dealer Academy This is a video course with
sector. This includes meticulous attention to payment histories, proper accounting of troubled loans, and compliance with consumer protection laws. To achieve this alignment, dealerships should:
A dopt Rigorous Credit Assessment:
Implement strict credit assessment procedures similar to those banks use. This includes thorough checks on customers’ credit histories and financial stability before approving loans. Maintain Accurate Financial Records: Keep detailed and accurate financial records, including proper documentation of transactions, loan agreements, and customer payment histories.
Ensure Compliance with Regulations:
Stay up-to-date and compliant with all financial regulations, such as those related to lending, borrowing, and consumer protection.
I mplement Robust Risk Management:
Develop and maintain a risk management framework to identify, assess, and mitigate financial risks, a standard practice in the banking industry.
Michael W. Dunagan TIADA General Counsel, author of Dealer Financing of Used Car Sales and Texas Automobile Repossession: A Lien Holder’s Legal Guide.
In this two-part video course TIADA counsel Michael Dunagan answers repossession related questions for both the dealer starting out and those dealers who want a refresher. Dunagan goes through the basics of selfhelp repossession, repossession when a client has filed bankruptcy, and using the courts to regain collateral through sequestration. The course also covers all the repossession letters and includes a downloadable deck of slides to follow along with the course. • Preliminary Considerations Before Repossession • When is a Customer Considered in Default • Avoiding Liability from Repossession • Types of Disposition • Required Notices to the Debtors • Handling Personal Property • Using the Courts to Get Your Car Back
Registration
98
$
for two 1-hour videos Visit www.txiada.org/on-demand for more information.
42
Consumer Protection 4 Pandrioritize Compliance
Automotive dealerships must focus on developing a robust compliance framework that emphasizes transparency, ethical lending practices, and adherence to consumer protection laws. This involves providing clear and accurate information on financial transactions, assessing customers’ repayment abilities fairly, offering educational resources, and ensuring a suitable complaint-handling system. Regular staff training in these areas is also crucial. By doing so, dealerships not only avoid legal issues but also build trust and loyalty with customers and lenders, enhancing their reputation and long-term success in the industry.
Conclusion
In summary, effective financial management is crucial for the success and resilience of car dealerships. By borrowing wisely, employing static pool analysis for accurate loss reserves, aligning with banking standards, and prioritizing consumer protection and compliance, dealerships can confidently navigate the complex financial landscape. These strategies strengthen financial stability, foster customer trust, and enhance the dealership’s long-term viability in a competitive market. If you have any questions or comments regarding this article, please email Sean@Glo3D.com. Glo3D.com Content Team, DIY and AI-powered Media and Content Generation Software T e x a s
D e a l e r
January 2024
W hy Choose Us? W hy Choose Us? • 40 Years Serving Texas Dealers • 4.9 Star Avg. Customer Rating • Independently Owned
Visit Us Online for Customized Solutions & Helpful Insights Visit Us Online for Customized Solutions & Helpful Insights M U L L ENINSU RANC E.C O M
..................... ...................... ...... . ........ .................. ....................................................................................... ............................. . .... .. .................. ....... ......... .......................... .. ........ ......... ... ... ............................. ................................. ...... ................... ................ . ..... ....... ..................................... ............................................................ ............. .. ......... .. . . ..... . .. .. .
M U L L ENINSU RANC E.C O M
behind the wheel by John Frullo
Strength in Numbers
W
orking together on common goals we face in our industry, for the betterment of the members, is what happens when you are a member of your trade association. Keeping your association strong is what this short article is about. Using the accumulated knowledge and talents of our members from across the state enables us to do what could not be accomplished individually. The members of TIADA operate in a variety of business environments, selling all types of vehicles valued from a few thousand dollars to hundreds of thousands of dollars per unit across our great state. This depth and breadth of knowledge, experience and relationships are what enables TIADA to be at the forefront of auto dealer associations across the nation. This has resulted in some huge and long-lasting wins for our member dealers, leaving more resources in your business and more controls and certainty in your hands.
TIADA EXECUTIVE DIRECTOR
Does anyone want to go back to paying sales tax on the entire sale? Members working with your association made the deferment a reality. How about your fellow members working through the association to keep the car-crushing facilities from just crushing your cars, leaving you with only the outstanding debt? If you have been keeping up with the email blasts or the magazines, you saw how we worked together with the Texas legislature to make it a felony to be in the possession of catalytic converters when you don’t have a lawful business to possess them. Being a member also entitles you to discounts on the educational courses and the only state conference of its size and caliber in the country, right here in Texas, each summer. All of these educational opportunities are specifically tailored to operating in the automobile business in Texas and are updated to help ensure if you take advantage of them, you will be aware of
...depth and breadth of knowledge, experience and relationships are what enables TIADA to be at the forefront of auto dealer associations across the nation. January 2024
T e x a s
D e a l e r
45
how to lawfully comply with the changing rules and regulations that govern our industry. Maybe it is just the peace of mind you are comforted with when it comes to getting timely and accurate answers on compliance issues from your experienced team. Want to know what to do when the Texas Department of Motor Vehicles, Texas Office of the Consumer Credit Commissioner, or the Comptroller wants to talk about your operations? Call us at TIADA, and we can help you. A great benefit is the auction app. You can save up to $200 at 50 auction sites across the state. Do the math; you can make money by just using your membership. Did you know you have fellow members who have saved $30,000 over five years in auction fees they would have otherwise paid? They turned this feature into a profit center! When issues are needed to be discussed with elected officials the more members we have and the closer they are to their elected officials, the more of a voice we all have. Being a member is the easiest way to provide strength; participating in the education products keeps you in the know, and attending the conferences, education events, and town halls provides the networking opportunities and education you can only get as a member. See, there is strength in numbers, and you profit from being a part of your association. 46
T e x a s
D e a l e r
January 2024
IRS Compliant Reinsurance Providing Full Service Reinsurance Administration
CPI GAP DCC Limited Warranties Vehicle Service Contracts
Assured Vehicle Protection, Inc. 6717 Shawnee Mission Parkway, Ste B Mission, KS 66202
913-396-5480 www.avpadmin.com
TEXAS INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750
PRSRT STD
U.S. POSTAGE
PA I D
JEFFERSON CITY, MO
PERMIT NO. 210
BETTER, FASTER
As the nation’s leading provider of end-to-end wholesale vehicle solutions, Manheim is here to help you be more successful with the in-lane and online tools you need.
VISIT OUR TEXAS LOCATIONS Manheim Dallas, Manheim Dallas-Fort Worth, Manheim El Paso, Manheim Houston, Manheim San Antonio, Manheim Texas Hobby
©2023 Manheim, Inc. All rights reserved. Manheim M logo is a trademark of Manheim, Inc. 1238336