NY_0312_O

MARCH/APRIL 2012

inside• EDUCATION: LUXURY OR NECESSITY? • GOING GREEN: AUTO RECYCLING IS BOOMING• COMPLIANCE OVERDRIVE

IS TECHNOLOGY - OR THE LACK OF IT - COSTING YOU?

page

8

DRIVING FORCE

V i s i t u s a t w w w . n e w y o r k i a d a . o r g

PRSRT StandardU.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

T H E N E W Y O R K

NY_0312.indd 1 2/16/12 4:14 PM

NY_0312.indd 2 2/16/12 4:14 PM

NY_0312.indd 3 2/16/12 4:14 PM

T H E N E W Y O R K D R I V I N G F O R C E MARCH/APRIL 2012

4

w w w . n e w y o r k i a d a . o r g

MAGAZINECONTENTS

ADVERTISERSINDEX

INSIDE

FOR INFORMATION ON HOW TO BECOME A MEMBER OF THE NYIADA, PLEASE CONTACTPAULA FRENDEL (855) 694-2324 [email protected]

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATIONWWW.NIADA.COM • WWW.NIADA.TVNIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR [email protected] NEW YORK DRIVING FORCE IS PUBLISHED BI-MONTHLY BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIA-TION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE 817-640-3838.PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDU-AL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF NEW YORK DRIVING FORCE OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF NIA-DA, DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT (C) 2011 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED.

STATE MAGAZINE MGR./SALES Troy Graff • [email protected] Andy Friedlander • [email protected]/PRODUCTION MGR. Christy Haynes • [email protected] Nieman Printing

MAGAZINECONTENTS

ADVERTISERSINDEX

06 Going Green: Auto Recycling08 Is Technology Costing You?14 The Power of Money

ADESA ....................................................................5Auto Auction of New England ........Inside Front CoverAuto Use ..............................................................13AutoTrader.com ..................................... Back CoverChase ...................................................................15Corry Auto Dealers Exchange ...............................11Manheim.com ........................................................7Protective ..................................... Inside Back CoverSmartAuction .........................................................9STARS GPS .............................................................3Westlake Financial ...............................................17

WHAT’SNEW

4

R A2Z EDUCATION SERIES - AutoZoneEducating the independent dealer to deliver the highest quality service levels to your customers, manage your shop efficiently, train your technicians and maximize profits.niada.tv

R Certified Master Dealer ProgramMarch 22-24, 2012Educates dealers on how to manage and grow a profitable business “Effective Management Practices”, “Business Planning”, “Human Resources”, “Merchandising”. “Financial Management” Call (800)756-4232 to sign up.

R World Automobile Auctioneers Championship Live online coverage of the event begins at 11 am ET on Friday, March 3O, 2012 and is free for all online viewers. visit www.niada.com and click on the “EVENTS” tab or call (303) 807-1108.

THE WORLD AUTOMOBILE AUCTIONEERS CHAMPIONSHIP will be webcast live this year for the first time, courtesy of NIADA.TV. The live webcast of the 2012 WAAC can be viewed in its entirety on the home pages of www.niada.tv, www.niada.com and www.waacnet.net . Coverage begins at 11 a.m. Eastern time on Mar. 30 and is free for all online viewers. Cheer on your hometown favorite auctioneers and ringmen, and catch all the fun and excitement of the 2012 World Automobile Auctioneers Championship at your leisure, exclusively on all three websites. For more detailed information please visit www.niada.com and click on the “Events” tab, or call (303) 807-1108.

WORLD AUTOMOBILE AUCTIONEERS CHAMPIONSHIP

WORL

D AUTOMOBILE

CHAMPIONSHIP

PH2 Solutions 111 Northfield Ave., Suite 204

W. Orange, NJ 07052 973-902-5517

Mr. President enjoys success with the PH2 Validator℠

December 9, 2011

Fred Donnelly of Hunts Point Auto Sales Service & Financing in the Bronx, NY is a busy guy. He sells used cars, has a very busy service department, performs New York emissions tests several times per day and is President of the NY Independent Automotive Dealers Association (NYIADA). He cannot afford to waste time, and he certainly doesn’t want customers to come back as a result of a repair not being done correctly. Fred purchased the new PH2 ValidatorSM diagnostic software in October 2011, and has become a real fan of the product. One of the biggest benefits he received:

“The PH2 Validator insures that the repair I made for a Check Engine Light issue is the right repair.”

After being in the repair business for many years, Fred knows a number of ways to work on getting the emissions monitors to complete, but he has found the biggest success with the Validator is it helps him identify problems much more quickly. In fact, it has allowed him to increase his repair orders by “selling a complete repair”, including having the ability to identify upcoming issues in advance of a Check Engine Light problem. His “comebacks” have decreased substantially, and again, knowing that he fixed it right the first time is the key. Fred also praised the PH2 Solutions technical staff for their excellent support when needed. He acknowledged his decision to purchase the Validator was good for both him and his customers.

Mr. President enjoys success with the PH2 ValidatorDecember 9, 2011

Fred Donelly of Hunts Point Auto Sales Service & Financing in the Bronx, NY is a busy guy. He sells used cars, has a very busy service department, performs New York emissions tests several times per day and is President of the NY Independent Automobile Dealers Association (NYIADA). He cannot afford to waste time, and he certainly doesn’t want customers to come back as a result of a repair not being done correctly. Fred purchased the new PH2 ValidatorSM diagnostic software in October 2011 and has become a real fan of the product. One of the biggest benefits he received:

“The PH2 Validator insures that the repair I made for a Check Engine Light issue is the right repair.”

After being in the repair business for many years, Fred knows a number of ways to work on getting the emissions monitors to complete, but he has found the biggest success with the Validator is it helps him identify problems much more quickly. In fact, it has allowed him to increase his repair orders by “selling a complete repair”, including having the ability to identify upcoming issues in advance of a Check Engine Light problem. His “comebacks” have decreased substantially, and again, knowing that he fixed it right the first time is the key. Fred also praised the PH2 Solutions technical staff for its excellent support when needed. He acknowledged his decision to purchase the Validator was good for both him and his customers.

PH2 Solutions111 Northfield Ave., Suite 204W. Orange, NJ 07052973-902-5517

NY_0312.indd 4 2/17/12 10:58 AM

NY_0312.indd 5 2/16/12 4:14 PM


6


As we come into the second month of the 2012, how are your business New Year’s resolutions evolving? I’m sure on the

list there are goals to increase profitability and growth, and to improve customer service.

What about going green and saving you and your customers money at the same time?

The auto recycling business is booming and helping its customers do just that. There are about 8,400 auto recycling businesses in the United States generating about $23 billion each year.

Auto recycling is the practice of removing and reusing automotive parts from inoperable vehicles, then safely disposing of the portions of the car that cannot be salvaged. It is performed at auto salvage yards, also called auto recyclers. Auto recycling prevents the waste of usable parts and materials, and promotes environmental conservation by reusing vehicle components instead of disposing of them in a landfill.

There is no product recycled more than the automobile. More than 10 million vehicles reach the end of their lives each year, which equates to acres and acres of landfill space.

The auto recycling industry saves that space – 95 percent of vehicles retired from use are recycled. The process saves an estimated 85 million barrels of oil per year, which would have been used to make replacement parts. About 84 percent of each vehicle is recycled in one way or another. Some 40 percent of the ferrous metal for scrap processing comes from auto recycling. Oils and fluids recycled by the auto recycling industry are equivalent to eight Exxon Valdez oil disasters every year.

“One of the meanings of recycle is to reuse,” said Jason Hilsman, owner of Ace Auto Recyclers in Iowa City, Iowa. “Reusing auto parts helps the environment by saving on the energy and waste produced in making new parts. And, of course, the price is cheaper.”

On average, purchasing a green, recycled part from a recycling yard will save 50 to 75 percent of the original equipment

manufactured price. Because buying used parts from an auto recycler is cheaper than buying them new, repair shops can not only lower the cost of a repair for customers, but can also lower insurance rates if the repair is an insurance claim.

Auto salvage yards also commonly offer recycling of older vehicles for scrap. The yards recycle batteries, tires, fluids and thousands of tons of metal a year. And auto recyclers provide owners of rare, out-of-production vehicles a chance to obtain hard-to-find replacement parts.

Recycled vehicles go through a thorough tear-down and inspection process on delivery to the recycler to ensure the highest quality parts for resale. When a vehicle comes into the recycler, it receives a stock number for tracking, and the VIN is checked to make sure it matches the title. Pictures are taken of all angles of the vehicle and the VIN number, allowing the auto recycler’s customers to see a part before it is delivered and be knowledgeable on the part’s condition prior to a sale.

The vehicle is then inventoried. All parts are checked, including checking whether the car starts, runs and drives, and a check of allpart of the transmission. If the auto recycler decides no parts have any value, fluids are drained and tires, battery and catalytic converter are removed to prepare the car for scrap and crushing.

If the auto recycler will keep the car for its inventory, the catalytic converter and battery are removed and the vehicle is placed in the yard. The fluids are not drained until the car is dismantled. Then the fluids are drained and the usable parts are ready to sell.

In 2008, a group of auto recycling businesses from across Iowa banded together to improve the purchase process and quality of recycled parts.

“When we started the group, the idea was to get 20 of the most progressive auto recyclers in the state to sell a better product by improving the quality of the part, description of the part, the delivery time for less down time for the

repair shop, and to open communication to all repair shops,” said Mike Swift, president of QRP Central and owner of Trails End Auto & Truck in Des Moines.

QRP Central is a group of 18 family-owned professional automotive recyclers that function as trading partners to provide customers with quality recycled used auto parts. The group is committed to the highest quality of recycled and new aftermarket auto parts, delivered on time as described, usually within 24-48 hours.

The combined inventory of the 18 independent auto recyclers is massive: more than 11,000 vehicles purchased annually, more than 1 million parts in computerized inventories and nearly 26,000 parts vehicles stored on site. In addition, yard management technology has advanced to give auto recyclers access to more parts from around the nation.

QRP holds its parts inspection process to a higher standard. One of the first things it decided as a group was to make sure there are no surprises. Every step is taken to make sure a part is good. If it is not a good part but is still usable with repair, the recycler makes sure the customer knows and can make an informed decision.

All parts that leave QRP auto recyclers go through a three-point inspection process. They are inspected first by the salesperson, then the parts puller, then the delivery driver. If a part is shipped, the last person to check the part is the shipping department.

Another important aspect for QRP customers is that the businesses are locally owned.

“When a repair facility purchases a green recycled part from QRP Central, it is not only saving the environment but helping keep jobs and revenue in the city, county and state,” Swift said.

For more information on using recycled auto parts for your business, visit www.qrpcentral.net.

GOING GREEN

AUTO RECYCLING IS BOOMING

BY QRP CENTRAL

NY_0312.indd 6 2/16/12 4:14 PM

AUTO RECYCLING IS BOOMING

NY_0312.indd 7 2/16/12 4:14 PM


8


Technology, or the lack thereof, could be costing you millions.

OK, millions might be a bit much, but thousands doesn’t sound much better. Either way, profit dollars could easily be leaving your pocket on a monthly basis at an alarming rate.

Technology, or the lack thereof, is costing dealers in every market and in every state in the country. The dealers in question are either technological junkies or technologically challenged. Neither scenario is conducive to success.

In the current economic climate, having and using what is necessary for the foreseeable future makes the best and only economic sense. Not too much, not too little.

Technology touches many facets of the Buy Here-Pay Here industry. Video surveillance, starter interrupt/GPS and software are the most popular areas for technological discussion in BHPH, and those areas seem to be the most under- and over-utilized as well.

Of the three, DMS software is the only one that is necessary for current and future success. The others? Well, that’s up to the dealer.

Video surveillance is probably more overused than the other two – too many dealers have thousands of dollars tied up in high-tech systems that are really not necessary. Those dealers have convinced themselves they are preventing not only outside theft, but internal theft as well. Surveillance systems have proven to aid in deterring both kinds of theft.

The decision whether to use video surveillance should be based on specific market conditions in regard to preventing

outside theft and providing additional security. A lot in a small rural market that displays 20 or so vehicles and employs a total of four people doesn’t necessarily need a 16 exterior color camera system with real-time web access. That example may seem extreme, but that dealer exists.

For preventing internal theft, the money might be better spent on developing the organization’s culture. Studies have shown office supplies are the most commonly pilfered items at a business, not money. This is a direct result of lack of pride and ownership in the business by the employee.

A background investigation and personality profile prior to hiring a new employee, and ongoing training and open lines of communication after hiring are ways to instill and improve an organization’s culture. There is a good possibility those steps will also reduce turnover and, in most cases, prevent if not halt employee theft – and will likely cost less than a surveillance system over time.

Payment devices – starter interrupt, GPS, and combo devices – are still a topic of great debate and ongoing discussion. This is an area that seems to be either black or white in most dealers’ eyes. Dealers seem to be 100 percent for them or 100 percent against them, with little in between.

Data shows such devices can increase collections dollars and, in some cases, reduce the amount of personnel needed to manage a portfolio. Data also shows they do not have a significant impact on loss rates. That data is what causes the “all-in” or “all-out” mentality. There are just as many highly successful dealers not using the devices as there are using them.

As with any technological advance, they are only effective if used as directed or intended. Too many dealers don’t. And by not doing so, they are wasting money.

The decision to use payment devices, and specifically which kind, is a significant one. It is a decision that should be based solely on the dealer’s personal business philosophy. As with any business decision, it shouldn’t be made until all the homework is done. Also not to be overlooked in the decision-making process is preparing internally. Policies and procedures will have to be created and implemented.

Last, but definitely not least, is DMS software. This is an area where dealers have a tendency to cut corners and cost themselves in the long run. Bigger is not necessarily better.

Software packages have undergone significant technological advances in recent years, and there are an increasing number of provider options. For better or worse, nowadays there seem to be more providers than actual dealers. That’s better in that more options provide a more diversified product offering and pricing structure. It’s worse in that when it comes time to choose a system, a dealer can be buried by information overload and the process can become overly time-consuming when he’s trying to comparison-shop.

Technology can take any business to the next level. Technology can also set any business back. The key lies somewhere between being a junkie and being challenged.

Which one are you?

BY BRENT CARMICHAELEXECUTIVE CONFERENCE MODERATORNCM ASSOCIATES [email protected]

IS TECHNOLOGY - OR THE LACK OF IT- COSTING YOU?

NY_0312.indd 8 2/16/12 4:14 PM

MARCH/APRIL 2012 T H E N E W Y O R K D R I V I N G F O R C E

9


NY_0312.indd 9 2/16/12 4:14 PM


10


With the economic recession and the struggles of the auto industry, the motivation and opportunity for theft

and fraud have increased. The cash-heavy nature of their operations makes dealerships susceptible to fraud and theft, and sometimes the most trusted managers can be the perpetrators.

The perfect storm of economic events has frightened many people. Layoffs and reductions in compensation, coupled with personal trials at home such as loss of a second income or mounting debt, can lead desperate employees to commit theft. For those with the opportunity, and mounting motivation, the dealership represents an enticing opportunity.

According to the Association of Certified Fraud Examiners in its 2008 Report to the Nation on Occupational Fraud and Abuse, approximately one-third of the reported incidents of fraud in the United States involve two or more people working in collusion, and the median loss is four times greater than when a single perpetrator is involved.

Accounting department employees, who have easy access to company assets and the most opportunity to cover up their fraudulent activities, commit the highest percentage of fraud. Executives and upper management

commit the second-highest percentage.Unfortunately, it’s likely that in your

dealership, staff reductions have eliminated or reduced the appropriate segregation of duties – the dissemination of tasks among multiple employees to provide checks and balances. The segregation of duties is the foundation of a strong system of internal controls.

Though your managers might be longtime trusted employees, changed personal circumstances could drive them to act in ways you wouldn’t anticipate. Every dealer needs an appropriate level of skepticism about what employees, especially those with access to the accounting system, are doing.

KEY ACCOUNTING CONTROL AREASMost dealerships have in place accounting

internal controls designed to prevent or detect fraud. However, if the controls are not designed properly or do not operate as intended, a dealership’s exposure could be significant. Now is a good time to review your dealership’s internal controls and make sure they are operating properly.

Following are some of the many accounting control areas that should be examined and analyzed to help ensure your controls are effective:

• General journal entries• Cash receipts• Parts inventory• Cash disbursements

BEYOND AN ACCOUNTING ISSUEIn today’s economic environment, every

dealership is at risk of, or has already experienced, employee theft or fraud. Especially now, every dealership needs to have a systematic approach in place for analyzing the organization’s internal controls and a plan for testing that the controls are working effectively.

Testing and implementing internal controls is challenging, particularly when a dealership has cut its resources. Having strong internal controls that are operating effectively might seem like an “accounting issue,” but lacking such controls can have a significant negative impact on the bottom line.

It’s time to revisit your controls and tighten the reins on your accounting processes so you can keep the dollars you earn.

FOR MORE INFORMATION, CONTACT GEORGE BERRY OR LOUIS YOUNG AT THE MIRONOV GROUP LLC, CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS.

BY THE MIRONOV GROUP LLC

Employers who misclassify employees as independent contractors might find themselves under audit by

the U.S. Department of Labor and the Internal Revenue Service. Those agencies have announced they will aggressively go after employers for nonpayment of unemployment, disability or Social Security taxes or paying workers compensation premiums for independent contractors.

Employers should be careful – the states and federal government have strict rules regarding who can be classified as an independent contractor and who needs to be treated as an employee. If the employer gets the classification wrong, he could be subject to stiff penalties, fines and work stoppages.

In Announcement 2011-64, the IRS outlined its Voluntary Classification Settlement Program (VCSP). This program will enable many employers to resolve past worker classification issues and achieve certainty under the tax law at a low cost by voluntarily reclassifying their workers. Under the VCSP, an employer can become compliant by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit.

To be eligible for VCSP, an employer must:

• Have consistently treated the workers as nonemployees

• Have filed all required Forms 1099 for the workers for the previous three years

• Not currently be under audit by the

IRS, the Department of Labor or a state agency concerning the classification of the workers.

Interested employers can apply for the program by filing Form 8952, voluntarily reclassifying their workers as employees for future tax periods with limited federal employment tax liability for the past nonemployee treatment (10 percent of the employment tax liability due for the most current tax year not subject to any interest or penalties), and entering into a closing agreement with the IRS.

If you have any questions, consult your tax advisor. FOR MORE INFORMATION, CONTACT GEORGE BERRY OR LOUIS YOUNG AT THE MIRONOV GROUP LLC, CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS.

BY THE MIRONOV GROUP LLC

WORKER MISCLASSIFICATION

WITH INTERNAL CONTROLSPREVENT EMPLOYEE FRAUD

NY_0312.indd 10 2/16/12 4:14 PM


11


NIADA NAMES OHIO FIRM AS NEW LEGISLATIVE COUNSELOhio-based law firm Mac Murray,

Petersen & Shuster LLP has been named legislative/regulatory/compliance

counsel for the National Independent Automobile Dealers Association, NIADA chief executive officer Michael Linn announced.

The firm, based in New Albany, Ohio and led by former Ohio attorney general and state senator Betty Montgomery, will add additional expertise to NIADA’s legislative and regulatory efforts in Washington D.C. to stay ahead of issues affecting the association and its approximately 18,000 members.

“Adding Mac Murray, Petersen & Shuster to the efforts of Federal Advocates, NIADA’s lobbing firm on Capitol Hill, will round out our strategy to work more closely with key federal regulatory agencies,” Linn said. “Staying ahead of rapidly expanding agencies like the CFPB (Consumer Finance Protection Bureau) will be much easier as Betty and her team engage key relationships with their former colleagues at key federal agencies like the CFPB and the FTC.”

In addition to Montgomery, three former Ohio assistant attorneys general will be advising NIADA on compliance updates and changes in government regulations to the automotive industry. Shaun Petersen, Michele Shuster and Helen Mac Murray all served as chiefs of the Ohio AG’s Consumer Protection Section. Together they have more than thirty years of experience managing consumer protection initiatives and helping businesses comply with those programs.

Petersen’s extensive work representing auto dealers in Ohio through the Ohio Independent Automobile Dealers Association gives him a deep understanding of dealer operations and concerns. He will act as NIADA’s lead counsel from the firm.

DealerTrack announced it has introduced SmartFind, an online inventory search and comparison tool tied to actual dealer inventory.

The new web service allows dealers to dynamically limit online vehicle selec-tions on their web sites to inventoried vehicles using proprietary “best match” search algorithms to return a ranked list of available vehicles in inventory based on a con-sumer’s specific search parameters. The service then allows consumers to perform comparisons of actual vehicles in inventory.

“In today’s market, consumers expect to perform more of the vehicle transaction process online than ever before,” DealerTrack Data Services general manager Amit Maheshwari said. “However, traditional inventory searches have been a stumbling point because they don’t link directly to current inventory at a particular dealership. The SmartFind solution will integrate fully with the dealer’s existing online vehicle and inventory workflows to deliver timely and more accurate vehicle availability informa-tion and the ability to compare inventoried vehicles.”

NEW SMARTFIND TOOL TIES SEARCHES TO DEALER’S INVENTORY

NY_0312.indd 11 2/16/12 4:14 PM


12


It was recently suggested to me that dealers might be viewing the education of their employees as a “luxury.” We all understand

that when a company’s belt is tightened, advertising and education are among the first expenses to be cut.

But can education actually be viewed as a luxury item?

For years, most of us on every level have been doing more with less. How is that possible? The answer is we used the education and technology we have invested in. We have made some difficult choices regarding employees in addition to changing our processes.

Using technology for education has once more been brought into the spotlight. While e-learning has been around for many years, it has not been widely used. Many who sit on the sidelines continue to wonder why – after all, it saves on travel expenses.

Many dealers have expressed the opinion that e-learning should be free. All I can say to that is: Do you sell units and expect to earn zero gross profit? Of course, you go to work to gain a profit. We all do that. So why would you expect educators to give away what they know for free?

Of course, e-learning saves on travel. If you want to know how much, go to your favorite discount travel web site and check. With proper planning, you can secure a ticket to travel across the country for less than $500. Dealerships that use e-learning also save the expense of a room and meals.

But while they are saving on these expenses, what are they giving up?

Set the stage for success: When a participant is in a learning environment, whether in his office or away in a seminar setting, it is critical that the student have dedicated time to focus on the lessons.

When participants are expected to respond to text messages from senior management or answer cellphones, they are not focused on what is happening in their environment. And when they are listening to a web seminar and are interrupted by sales consultants, sales managers, service personnel or customers, they are not focused on the message being delivered. No focus equates to no learning and no value realized from the investment.

Do you save time using e-learning? As an educator, I can attest that it takes two weeks of two hours a day online to cover most of the topics I can cover in a three-day seminar. I can verify reception and understanding of concepts in a face-to-face environment more effectively than I can using the Internet. Most participants are very quiet during a web seminar, even when questions are being solicited from them.

Web seminars do have a great use in the learning circle. Web-based education is best used as a follow-up to a traditional seminar setting due to the limited amount of time and focus we have with online participants. After 25 minutes, we lose the attention of part of the audience. Fifteen to 25 minutes is more effective in a web seminar environment.

When a dealership chooses to use web seminars in lieu of traditional seminars, what do they sacrifice? They sacrifice time, and they lose the value of group studies after the session. In every group environment, everyone has selective hearing. We retain what is important to us. The value in a group setting is gaining as many perspectives as we can after the meeting is over. What was important to whom, and why?

Learning does not cease when the educator gives the evening assignments. It only takes on a different coat.

Some dealers do not want to expose their personnel to another dealership’s processes. They also fear that when a group gets together, they chat about pay plans and duties. Well, in all the years I have been teaching, I have yet to walk up on such a conversation.

How does a dealership get the most out of the limited dollars it has allocated to education? The answer lies in planning. Advance planning for air fare and for e-learning events, because all events have limited space available.

If you have multiple participants, or cannot send your personnel out of the dealership, an alternative is to bring the educator to your location, split the team and run double education shifts. Your team will have the opportunity to implement new ideas right away and provide an immediate report to the senior management.

When managing a sales team, it is essential that the entire team is using the same processes with customers. Consistency is

easy to manage. It is also easy to see when someone goes off track.

The most important thing a dealer can do is choose an education venue. Make the plans, implement the plans and make inquiries to the participant in addition to the educator. What ideas were shared during the educational event that the participant thinks should be integrated and implemented into your current process?

The second most important thing is choosing quality vendors and quality products and services for the finance department to present to the customers. If the finance and sales teams do not believe in the products’ value or have had difficulty with the company in the past, they will not present the policy to the customers.

I advocate that the dealership do proper vetting of companies and vendors prior to signing up. Verify references and insurance policies. Ask the vendor for a certificate of insurance and make it a practice to do so every year. That is the only way to verify the policies being sold are actually backed by an insurance company.

Begin to collect testimonials from customers. Create a brag book to be shared with your customers. A brag book is a binder that includes positive feedback from your previous customers about the products and the dealership. How was their buying experience? How did the policies serve them in a time of need? Would they purchase the policies again?

Happy customers are a result of happy, well-educated and well-compensated employees with a strong commitment to customer satisfaction. Happy customers bring their friends and family to purchase from you. Happy customers are essential in building customer retention and referrals.

Education should be a critical part of every business plan. Investing in your human capital brings the highest rate of return. When successful dealers are quizzed about why they are successful, the answer is they surround themselves with quality people who have both the customer’s needs and the bottom line in focus.

Education is the foundation for a strong business model and essential for success!

BY JAN KELLY JAN KELLY, PRESIDENT OF KELLY ENTERPRISES, IS AN EDUCATOR, CONSULTANT AND CONVENTION SPEAKER, AND WRITES FREQUENTLY FOR INDUSTRY PUBLICATIONS. FOR INFORMATION ABOUT EDUCATIONAL VENUES OR JOINING AN F&I 20 GROUP, CALL 1-800-336-4275 OR VISIT WWW.JLKELLY.COM.

EDUCATION: LUXURY OR CRITICAL PART OF YOUR SUCCESS?

BACK TO BASICS

NY_0312.indd 12 2/16/12 4:14 PM


13


This Health Insurance Program can help provide members, their employees, and families with comprehensive major medical insurance coverage. The program is brought to you by JLBG Health, the largest health insurance provider to Associations in the US.

MEDICAL COVERAGE AND ANCILLARY BENEFITS • Premium savings.• A wide variety of choices for coverage from HSAs to PPOs for

members, their employees or family.• A shrinking deductible - a 20% deductible credit each year you do not

meet your deductible.• 10% healthy member discount & preferred rates.• Optional free Health Savings Account.• Optional PPO or traditional health plan with extensive networks.• Plans with a $20, $25, $30 or $40 co-pay for doctor visits.• Wellness benefits and Prescription Drug Card.• Worldwide coverage, 24-hours a day.• Enhanced wellness benefits based on PPACA Guidelines effective

September 23, 2010.• Tele-Express, phone application - no paper applications to complete.• Dental Insurance available with or without medical.• Vision Insurance available with or without medical.• Critical Illness coverage available that pays a cash benefit directly to you. • Disability coverage available up to 15,000 per month benefit.

ANNOUNCING NEW HIGHLY

COMPETITIVE NIADA

HEALTH INSURANCE

MEMBER BENEFIT PROGRAM!

Note: Features are subject to state availability and may not apply to all physicians.To learn more about the options available to lower your health insurance costs and maintain comprehensive coverage, visit www.NIADAHealthPlans.com for an INSTANT online rate or contact JLBG Health at 1-888-308-9340 for more details, physician rates, and a 15-minute phone application.

MAJOR MEDICAL COVERAGE AVAILABLE THROUGH NIADA.

NY_0312.indd 13 2/16/12 4:14 PM


14


MONEYTHE POWER OF

While businesses may operate without cash or use other people’s money for brief periods of time, the

old phrase “cash is king” still applies. In many ways, cash is even more important to the success of a business now.

Not only must a business be properly capitalized, but the makeup and liquidity of its capital must be appropriate to its current and future operations. Too little cash restricts business opportunities. Too much cash creates discontent among investors and shareholders. The right amount of cash positions a business to have the resources to take advantage of market opportunities and financial opportunities, and to have the best opportunity to manage and/or survive the unexpected.

Some of the advantages to having the appropriate amount of cash in the business are:• Nearly every business is presented with

opportunities to improve its purchasing power or purchase goods and supplies it needs at special prices. Whether it’s clearance sales, the closing of a supplier’s location or another event, the ability to take advantage of those opportunities cannot be ignored.

• Having appropriate cash reserves allows the business to solicit prompt payment discounts and additional accounts for payment on delivery. Having the appropriate cash reserves in a business also often assists in negotiating supply contracts or financing agreements. The ability to commit to those contracts or make appropriate good-faith deposits that improve terms or conditions of agreements cannot be ignored.

On the opposite side of the equation, some of the items that eat cash and leave a business in a weak position when it comes to seizing unexpected opportunities are:• Curtailment payments required by floor

plan financers have become much more common in the industry. They are nothing less than a penalty resulting from poor vehicle inventory management or the dealership not being able to react quickly enough to changes in market demands for inventory product.

• Factory credits not being received on a timely basis, whether due to the financial affairs of the factory, changes in factory policies, errors in submitting the claims by a dealership or staff vacations and a multitude of other internal operation issues.

• Parts inventory is a huge consumer of cash when turnover ratios, the nature of the items being stocked or the improper handling of seasonal goods is not promptly and correctly dealt with.

• The importance of strong credit policy when it comes to granting credit and following up on collecting fixed receivables is a key to cash management. Every dollar not collected means that dollar of profit is at risk.

• Not matching the asset acquired with the life expectancy or benefit period of the asset can cut into a business’s cash reserves. Long-lived assets should be supported by either permanent capital or the appropriate third-party financing. Cash should not be used to finance building improvements and other forms of expansion.

What are the warning signs for a business that indicates it is losing its “cash advantage?” • Shareholder managers not being able to

completely withdraw from the business last year’s dividends or bonuses.

• Accounts payable being paid on a slower basis than in the previous year. Having more days in accounts payable than there have been in the past or compared to industry standards.

• The business’ operating line, which historically had been used periodically on an infrequent basis, is not revolving anymore. There is an ongoing balance month to month.

• At the end of the month there is a search for cash. The business office is scoured for deals that have been completed but the paperwork not submitted to the financial institution, there is a review of accounts receivable to see whose checks can be picked up, and there is a review of accounts payable to decide which bill payments can be deferred for the next 10 or 15 days.Whether the interest rate you pay is 2

percent or 22 percent, the impact of proper management of cash and the impact of having the proper level of cash in your business cannot be ignored. Those who can manage their business and manage their cash have a greater likelihood of success in all of their business endeavors.

BY THE MIRONOV GROUP LLCFOR MORE INFORMATION, CONTACT GEORGE BERRY OR LOUIS YOUNG AT THE MIRONOV GROUP LLC, CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS.

NY_0312.indd 14 2/16/12 4:14 PM


15


MONEYPaula Frendel’s first year as

executive director of the New York Independent Automobile

Dealers Association has been busy as she expanded her association’s reach into New Jersey.

“I started in February 2011 and then (became director) of the New Jersey IADA in July,” she said.

The New York group had been in and out of affiliation with the National Independent Automobile Dealers Association over the years. New Jersey lacked an official IADA for years.

New York IADA President Fred Donelly, owner of Hunts Point Auto in the Bronx, said the association is happy to have Frendel at the helm.

He said the consistency of having a full-time executive director, rather than a part-time person, has made a big difference.

Frendel said the group has also hired a lobbyist in Albany, which helps her to focus on serving members.

Donelly and Frendel have been traveling the state, signing up dealers

for the New York and New Jersey IADA, which now has about 200 members.

Donelly said Frendel has been visiting two auctions a week since she took over and the pair is continuing to draw dealers from different areas of the state.

Since Frendel is based in New Jersey, she is able to serve both state organizations.

“We’re going to have a convention in September,” Frendel said, “with New York, New Jersey, Maryland, Delaware and Pennsylvania.”

Donelly said the association is also working closely with the New York State Department of Motor Vehicles on issues affecting dealers.

“Curbstoning is one of the big issues we’re making pretty good progress on,” he said.

The key has more to do with enforcement than legislation.

Donelly said the group is just trying to convince the state that cracking down on curbstoners will boost revenue and protect consumers.

“Illegal dealers are the problem,” he said, “not the legitimate dealers.”

In addition to scheduling a state convention, signing up members and working with DMV officials, the association is also adding benefits for members.

The association offers everything from $3,500 in auction coupons, to group insurance plans, credit card services and other offers along with upcoming education programs.

Mike Linn, chief executive officer of the NIADA, is happy with the direction of the New York affiliate.

“Paula has done an excellent job in revitalizing membership in New York,” he said. “Membership is the highest since 2006 and, overall, you would need to go all the way back to 1999 to find significantly higher numbers. Membership (in New Jersey) is now the highest since 1997.

“NIADA has high hopes for her continued success in both states.” BY JEFFREY BELLANT,USED CAR NEWS

FIRST YEAR EXECUTIVE DIRECTOR

NY_0312.indd 15 2/17/12 9:46 AM


16


MEMBERSHIP APPLICATION

It is important to me to be recognized as a professional! Enclosed are my annual dues of $350 to make sure that my business has all the advantages the NYIADA provides to put me at the forefront of my profession. By completing this form, I am consenting to and giving NYIADA, its affiliates and subsidiaries, my permission to contact me and provide information to me at the mailing and email addresses, telephone and fax number(s) I have provided. Business Name: _________________________________________________________ Contact Person: _________________________________________________________ Mailing Address: ________________________________________________________ ________________________________________________________ Physical Address: ________________________________________________________ (if different from mailing) ________________________________________________________ Phone: ____________________________ Fax: ____________________________ Email Address: __________________________________________________________ Website Address: ________________________________________________________ Dealer License Number: ________________________ How did you hear about NYIADA? _________________________________________ Please mail application and $350 check or money order made payable to New York Independent Automobile Dealers Association (NYIADA) to the address above.

Thank you for being a member of NYIADA! “Individually we struggle to be heard, collectively we cannot be ignored.”

N E W Y O R K I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I A T I O N

5 6 5 H u n t s P o i n t A v e . | B r o n x , N Y 1 0 4 7 4 8 5 5 - 6 9 4 - 2 3 2 4 ( N Y I A D A 4 ) | F a x 7 1 8 - 3 2 8 - 1 4 4 5

p a u l a @ n e w y o r k i a d a . o r g w w w . n e w y o r k i a d a . o r g

NY_0312.indd 16 2/16/12 4:14 PM

NY_0312.indd 17 2/16/12 4:15 PM


18


MANY SHERIFFS CREATE REGULATORY UNCERTAINTY

Remember when the Dodd-Frank bill was being debated in Congress and we all hoped motor vehicle dealers would be exempt from the oversight of the new sheriff – the Consumer Financial Protection Bureau (CFPB)?

Be careful what you wish for. You just might get it. As you know, a “dealer exclusion” was included in the Dodd-Frank Wall Street

Reform and Consumer Protection Act (Dodd-Frank Act). Ironically, the dealer exclusion might only increase industry regulatory oversight and add compliance uncertainty.

Under Section 1029 of the Dodd-Frank Act, the CFPB may not exercise regulatory supervision or enforcement authority over “a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.”

An exception to the exclusion is that the CFPB does have authority over businesses that provide “the extension of retail credit or leases involving motor vehicles,” retail credit or retail leases “directly to consumers” and a contract covering the retail sale or lease that is “not routinely assigned to an unaffiliated third-party finance or leasing source.”

The exclusion and exceptions can be a bit confusing, but the net result is that the CFPB has regulatory authority over Buy Here-Pay Here dealers. And even dealers who do not consider themselves to be Buy Here-Pay Here might be regulated by the CFPB if they are assigning contracts to an affiliated third-party finance or leasing source, or if they are not “routinely” assigning contracts to an unaffiliated third party. If you assign some contracts and hold others, there might be some uncertainty about whether you are regulated by the CFPB.

The CFPB authority leaves us with a framework in which some auto dealers are regulated by the CFPB and the rest are regulated by the Federal Trade Commission (FTC). That means that in spite of the “dealer exclusion,” we have two sheriffs in town.

The two federal regulators have promised to work together, but the regulatory framework itself could create obstacles. For example, the CFPB now has rulemaking authority for a number of consumer financial protection laws formerly granted to several federal agencies, including the Truth in Lending Regulation Z and Consumer Leasing Regulation M. In republishing these regulations, the CFPB made it clear that they applied “except with respect to persons excluded from the bureau’s rulemaking authority by section 1029 of the Dodd-Frank Act.“ That is a clear reminder that CFPB enforcement authority of Regulations Z and M are technically separate from the enforcement authority of the FTC.

Dodd-Frank also authorized states to enforce certain federal consumer protection laws. The concern is that might result in local differences in interpretation and enforcement of federal requirements. So essentially, there are now three sheriffs in town.

Over time, rules, regulations and interpretations will be published providing clarification on the scope and limits of authority assigned to those three. But for now, we need to deal with the regulatory uncertainty as best we can.

It is helpful to keep in mind that the various regulating authorities are trying to protect consumers from unfair and unscrupulous consumer credit transactions. The best practices for these times apply in all situations – be clear, be transparent and be honest in your sales and financing transactions. That should help you satisfy the spirit and intentions of all but the most technical standards of any regulator.

BY CHIP ZYVOLOSKIChip Zyvoloski is a senior attorney for indirect lending at Wolters Kluwer Financial Services.

For more information, visit www.wolterskluwerfs.com/indirect.

ComplianceOverdrive

The NIADA announced its 66th Annual Convention & Expo will be held June 11-14, 2012 – a

week earlier than previously scheduled – at Caesars Palace Hotel and Casino in Las Vegas.

NIADA’s showcase event will offer an expanded dealer education program for 2012, including more sessions covering more topics than ever before, as well as an enhanced Expo featuring more companies representing all facets of the automotive industry. Expo exhibit dates are June 12, 13 and 14. The Convention, to be held for the third consecutive year at spectacular Caesars Palace, will kick off with activities beginning on Monday afternoon, June 11.

Online registration is now open at www.niada.com. Rooms at Caesars Palace will be available at the discounted rate of $154 per night.

NIADA’s Annual Convention & Expo provides its members with an opportunity to network with their peers, participate in quality education sessions and gather valuable information they can take back and apply toward their dealerships’ success. Educational offerings will cover topics for both retail and Buy Here-Pay Here dealers. The event is also a gateway for vendors to build and foster relationships with dealers through the Expo, an industry marketplace of top-notch vendors showcasing their products and services and the benefits they can provide to dealers.

NIADA has held its Annual Convention & Expo since 1947 and has continued to flourish as the most sought-after and reputable used motor vehicle industry event for automobile dealers.

NIADA ANNUAL CONVENTION & EXPO SET FOR JUNE 11-14, 2012

NY_0312.indd 18 2/16/12 4:15 PM

NY_0312.indd 19 2/16/12 4:15 PM

NY_0312.indd 20 2/16/12 4:15 PM

NY_0312_O

Documents

Transcript of NY_0312_O