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ALSO Economic Outlook PLUS Compliance Overdrive

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PAIDDALLAS, TEXASPermit No. 2079

V i s i t u s a t w w w . t h e c i a d a . c o m

CAROLINAS INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION

DEC

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AUTO DEALER NEWS Hiring Smarter

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FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT JUDY WILSON IIADA • 409 EAST MARKET • PANORA, IA 50216(641) 755-4177 • [email protected]

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WHAT’SNEW

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06 Hiring Smarter10 Economic Outlook22 Compliance Overdrive

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] CAROLINAS INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION IS PUBLISHED BI-MONTHLY BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION 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 STATE-MENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF CIADA OR THE NATIONAL INDEPENDENT AUTO-MOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF NIADA, DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT © 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

CIADAOFFICE

ABC Loan .............................................................16ADESA ..................................................................15AutoTrader.com ............................ Inside Back CoverAuto Use .............................................................18Charleston Auto Auction ........................ Back CoverGoldStar GPS ........................................................ 7Manheim.com ..................................................... 11Protective ...........................................................17SmartAuction .....................................................13STARS GPS ................................ Inside Front CoverSterling Credit .....................................................5United Acceptance ............................................19UsedCars.com by Dealix ......................................9

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P.O. BOX 1088 • HARRISBURG, NC 28075 PHONE: 704-455-2117 OR 1-800-432-4232 FAX: 704-455-6810 • WWW.THECIADA.COM CIADA IS A NON-PROFIT 501(C)6

PRESIDENTTRACY MYERSFRANK MYERS AUTO MAXX INC.WINSTON SALEM, NC

PRESIDENT ELECTMALCOLM SHEALORASHLEY PREFERRED AUTO GROUP INC.MT. PLEASANT, SC

NC VICE PRESIDENTMICHAEL DARROWTHE AUTO FINDERS INC.DURHAM, NC

SC VICE PRESIDENTLUKE GODWINGODWIN MOTORS INC.COLUMBIA, SC

TREASURERWILL DAVISG & B AUTO SALES OF LOUISBURG INC.LOUISBURG, NC

SECRETARYDARLA BOOHERDEAL DEPOT, INC.GREER, SC

CHAIRMAN OF THE BOARDCHARLES SAVERANCESAVERANCE FAMILY AUTO CENTERFLORENCE, SC

EXECUTIVE COMMITTEE

The Carolinas Independent Automobile Dealers Association was organized in 1955 to assist members in enhancing their reputation in the marketplace, gain political influence and provide opportunities to interact with and meet other dealers for the purpose of sharing business and marketing ideas.

As a mature and long-standing Association, we are proud to maintain the ideals and principles set by the founders. But today, we offer more…far more. With a fulltime professional staff, modern technology and world class educational programs, we have become a strong, effective and influential organization that exists for one reason only: To represent the independent, non-franchised automobile dealer!

CIADA is the only not for profit that represents the independent automobile dealer in the Carolinas with a National affiliation.

CIADA STAFF

The Carolinas Independent Automobile Dealers Association was organized in 1955 to assist members in enhancing their reputation in the marketplace, gain political influence and provide opportunities to interact with and meet other dealers for the purpose of sharing business and marketing ideas. As a mature and long-standing Association, we are proud to maintain the ide-als and principles set by the founders. But today, we offer more…far more. With a fulltime professional staff, modern technology and world class educa-tional programs, we have become a strong, effective and influential organiza-tion that exists for one reason only: To represent the independent, non-franchised automobile dealer!

P.O. Box 1088 Harrisburg, NC 28075

Phone: 704-455-2117 or 1-800-432-4232 Fax: 704-455-6810 www.theciada.com

CIADA is a non-profit 501(c)6

Lisa Kluttz Ext 107

Jayne Harris Ext 111

Leslie Waslo Ext 110

Catherine Neely Ext 102

Carl Mischinski Ext 109

Krista Simmons Ext 103

John Brown Executive Director

Ext 105

Meet Our Professional Staff





Lisa Kluttz Ext 107







Ext 105






Lisa Kluttz Ext 107







Ext 105






Lisa Kluttz Ext 107







Ext 105


EXECUTIVE DIRECTOR JOHN BROWNEXT 105

ANGEL LONG DRIS ASSISTANT EXT 107

CATHERINE NEELYADMINISTRATIVE DIRECTOREXT 102

LISA KLUTTZCUSTOMER SERVICEEXT 107

JAYNE HARRISCUSTOMER SERVICEEXT 111

LESLIE WASLODRIS ACCOUNTS MANAGEREXT 110

JULIA ROGERSACCOUNTINGEXT 101

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 TURBO TIPS – Cars.comProvides Independent Dealers with practicable and actionable tips to help you sell more cars now! niada.tv

R NIADA Mobile Get access to Manheim and Independent run lists, Vehicle History Reports, Guide Books and much more. Free VIN Scanner when you sign up!!! Available for Android and iPhone devices. Niada.gigglepop.com

NIADA Association Executive Counsel would like to thank Stars GPS and ServNet for sponsoring the OK City meeting held this past October.

T H A N K Y O U

The NIADA Certified Pre-Owned Program was standardized in November of 2010 to reflect a 12 month, 12,000 mile, comprehensive $0 deductible warranty and now that we have close to 12 months under our belts we have the remarkable research to show the impact it has had on dealers. It was already proven that adding a Certified program to a dealership could turn the inventory quicker and make the dealer more money. But there was little research showing how much it could impact an Independent Used Car dealer.

By keeping track of when our dealers register their vehicle as certified on NAC’s turn-key Express Lane system, compared to the date of when the vehicle is retailed, the NIADA Certified Pre-Owned program found that dealer’s inventory is turning on an average of 21 days. We have also were able to determine that dealers are getting an average profit of $2,062.28 per unit.

It is great having this information proving that there is a program out there that can help the Independent dealer sell more cars and make more money.

The NIADA Certified Pre-Owned Program


C I A D A DECEMBER 2011

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While a student at Ball State University studying political science, I learned a lot – maybe nothing more important than what Professor Tad Perry convinced me of.

The AMERICAN DREAM has been the envy of the world. No other place on earth has provided more opportunity, more freedom, more upward mobility and more security than the United States of America. By definition, the AMERICAN DREAM, for which freedom acts as the cornerstone, includes the possibility of prosperity and success.

The dream is rooted in the United States Declaration of Independence, which proclaims “all men are created equal” and our right to “life, liberty and the pursuit of happiness.” It is our individual right to pursue or not to pursue the AMERICAN DREAM.

So how did we get to this point in history, in which those who do find success and the companies that are successful are now the bad guys? More importantly, how do we correct the course we are on? Can it be corrected? I say, yes it can.

My solution is simple. We need to change the voice of business. We must become our own advocates for a system that allows business to operate, to make and/or sell a product or service, employ others and reward success. As I have written before, we must not shy away from celebrating the fact that making a profit is the AMERICAN DREAM.

The American economy will improve when entrepreneurs are again unleashed to pursue their AMERICAN DREAM. It is small business, including the independent dealer, that will revive America. The beauty of it all is for those who want to pursue the dream, you can. For those who don’t want to pursue

the dream, it is also your right not to. The best days of America are in front of us and we need to become self-advocates for an economic system that is citizen-based, not government-based.

As Ronald Reagan once noted, “Government is like a baby; an alimentary canal with a big appetite at one end and no sense of responsibility at the other.”

A Year YoungCIADA has had a terrific year. We have

experienced lots of positive change, none as important as the change in the perception of the membership about the future of CIADA. Today, members are more frequently asked for their opinions. They are solicited for advice. They are communicated with more frequently, using modern tools and processes. It is truly a member-driven organization.

Our 56th Annual Convention & Expo experienced increased attendance from dealers and exhibitors. There was lots of enthusiasm and we all had more fun. Vendors are already signing up for 2012, and we hope to have record-breaking attendance and participation. We have already confirmed several speakers and you won’t want to miss it. It will be held Aug. 2-5 at the Marriott Grande Dunes in Myrtle Beach, S.C.

Vision ForwardBe on the lookout for additional positive changes

for CIADA members. We have been working with NC DMV to give dealers alternatives to the standard continuing education (CE) classroom attendance. We will have multiple platforms for independent

dealers to take advantage of should their schedule not allow them to spend a complete day in class. We will be reworking the CE in a TV format and more directly align it with the goals of DMV and CIADA.

We will continue to work with many of our vendors to help make your jobs a little easier. One of the things we are currently working on includes our own “Used Car Factory” on the CIADA website, which would provide dealers with another advertising point for customers. More exposure, more units sold!

In addition, we are in discussions with several vendors about how to help qualify direct leads from your advertising efforts.

We are working on a financial portal as well, which will be, for lack of a better description, a one-stop approach to meeting your financing needs for your customers. No more wasting time on multiple phone calls to get an approval for your customer’s loan.

And we are working with various organizations to help reduce the cost of your day-to-day business needs.

And it doesn’t stop there. Over the next 12-15 months, we hope to be able to bring you various seminars and vendor relationships with one goal in mind: making you more profitable and able to live the AMERICAN DREAM.

We have had an exciting year, and with the vision for the next year coming into play, it’s going to be a great time to be part of the only nonprofit organization representing independent automobile dealers in North and South Carolina.

With respect,John Brown, Executive Director

Pontificating on Issues of Various ConcernExecutiveMessage

Get Started with NIADA’s Mobile App Today! For Details & Instructions Visit: http://niada.gigglepop.com or Call 1-855-MY-NIADA (855.696.4232)

ACCESS GUIDEBOOK VEHICLE APPRAISAL SERVICES • GET INSTANT VEHICLE HISTORY REPORTS • ACCESS AUCTION PRE SALE RUN LISTS NATIONWIDE • STAY INFORMED WITH NIADA EVENTS & PROGRAMS

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Pontificating on Issues of Various Concern



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A Strong Dealership Starts with the Right People

As the saying goes, you only have one chance to make a good first impression. For car dealers, that means hiring the right staff – people who can make the buyer feel at ease – to interact with the public as sales people and service staff.

Maurice Van Collie started his Detroit-area dealership back in 1958. He’s semi-retired now, but when he wanted a salesman, he asked his colleagues if they knew a salesman who still wanted to sell but maybe didn’t want to be in a high-pressure environment.

If he needed someone to work in the service department, he’d call up a local high school shop teacher and ask if he knew any bright kids looking for some work and experience. He’d then give the youth the opportunity to get real-world experience until he’d decide to go on to greener pastures. Then Van Collie would start the process all over again.

But the days when a dealer could take such a relaxed attitude are gone. Hiring has become more complicated – and more dangerous. These days, having a plan in place when it comes time to hire a new employee is imperative. A bad hire is an expensive mistake to live with.

Case in point: Hussein “Sam” Mahrouq, owner of an Automax dealership and a Dollar Rent A Car Sales franchise in Arlington, Texas, can testify to what a bad hire can do to an operation in only a few days.

As part of a Texas program to offer customers incentives to buy clean-running newer cars in order to get more polluting older vehicles off the road, Mahrouq’s dealership performs emissions tests on its cars. One employee, though, decided doing all those tests was just too much work and signed off on a number of vehicles without actually doing the inspections. He was caught and fired. But the Texas attorney general’s office sent a letter to Mahrouq a year later saying it had discovered the bogus scans. The result was a $50,000 fine.

Mahrouq said he spoke with an attorney and was told he had a very good chance of beating the charge in court, but between legal costs and the bad publicity that would accompany a lengthy court battle he would be better off paying the fine and working to get his side of the story out to the public.

That one bad hire, in just three weeks, cost Mahrouq $50,000 in fines and a lot of bad publicity a year after the fact. All that despite the fact the problem was discovered by the dealership and the employee was fired.

Mahrouq said he has hiring procedures in place. He does a drug test and a criminal background check, but when you run a small operation, it can be difficult to make sure someone is squeaky clean.

“We care about things like auto theft,” Mahrouq said. “This guy did have the proper license needed for doing scans. We found out the ‘clean’ scans were done over three days during the three weeks he worked for us. All that damage done in three days.”

Old-school dealers like Van Collie operated in different times. Dealers who work like that these days are asking for trouble. The best way for a dealer to protect himself is to have procedures in place and to be careful. A mistake can end up costing a dealer money, or even his dealership.

Know What You WantJoe Lescota, chairman of the automotive

marketing department at Northwood University and instructor for the NIADA’s Certified Master Dealer program, said hiring starts with a plan. The dealer needs to know what he wants and what type of person fits in the dealership’s environment.

“A dealer has to ask questions like, ‘What’s our philosophy?’” Lescota said. “If you want to run a high-pressure sales operation, then you have to hire a person who fits that mold. If you want to hire a low-pressure operation you have to find the right person for that kind of environment. It’s complicated. If you hire the wrong person and they don’t work out, you have to start the interview process all over again. And who wants that?”

So, Lescota said, have a structured process in place for hiring. There should be at least three interviews per post. If there are three finalists, that means there should be nine interviews.

Give the appropriate staff a say in who’s hired

If you’re hiring someone for the service department, the head of service should participate in the process, not just the general manager or owner. When hiring someone for the sales department, the head of sales should be there.

That way no one can say they were “stuck” with someone the big boss hires, which in and of itself can go a long way toward making sure a hire works out. And if that person doesn’t work out, management can be held responsible.

“The third interview should take place during a meal,” Lescota said. “One, it’s a relaxed atmosphere. You can see them interact with the wait staff. Is the potential hire friendly and outgoing? That should tell you something about the person in question. Do they order a couple of scotches during the middle of the day? That’s a clue to that person’s personality and work habits. How much of your money do they spend during the lunch? Do they get the most expensive thing or do they get a burger and soup? These are all clues that help you make the right decision.”

Avoiding the wrong things is as important as doing the right things

People rarely check references, Lescota said, and he doesn’t understand why.

“Not to check references is nuts,” Lescota said. “If I learn someone I want to hire was fired or left a position, I will check his resume and see if there are gaps in his employment record. If you don’t question those gaps, you could be missing something, like the person was in prison or in rehab.”

Employers often don’t give drug tests, and Lescota believes that is a huge mistake. His response to someone who says he is a teetotaler and has never taken an illegal drug in his life and says he’s offended by the mere notion of having to take a drug test – tough.

“If someone doesn’t have a substance abuse problem, they having nothing to lose by taking a test,” Lescota said. “If someone has a problem, then that test can save a dealership a lot of money.

Substance abusers tend to be people who will steal from a dealership. I don’t care if a potential hire’s feelings might be hurt by a drug test.”

Lescota said all a dealer has to do is imagine what would happen to his dealership if a salesperson high on drugs took someone for a test drive and there was an accident.

Jan Kelly, president of Kelly Enterprises, a Vancouver, Wash.-based consulting company that advises motor vehicle dealers, agrees.

“If nothing else, a dealership should have a drug policy as part of its anti-theft efforts,” Kelly said. “In the old days, management might be shocked that staff might want to use drugs, but in this day and age, they shouldn’t be surprised.”

Kelly said another mistake dealers make is hiring just anybody to fill a position.

“Too many dealers are too quick to fill a position with a body instead of talent or even potential talent,” Kelly said. “It’s important to have processes in place when hiring. Conflict occurs between owners and staff over processes that aren’t clear or pay plans that are constantly being changed. If you want to drive a top sales person away from your dealership, the best way is to change the pay plan.”

Have clear, defined job descriptions and procedures so hires and management know what to expect

There are three things dealers should do, Kelly said, when preparing to hire someone. First, have a detailed job written description prepared. Just as important is to have a way to measure how well that job is being done. Finally, have a plan in place for training the person to do the job he is being hired for.

It’s not the fault of the new hire if he or she doesn’t really know what that job entails.

Personality profiles really workKelly and Lescota are both big fans of personality

profiles. The forms aren’t that expensive and there are ways to order them via the Internet. The person filling out the form answers hundreds of test questions that tell the prospective employer the type of personality the potential hire has.

“People say they can fool the tests,” Lescota said. “All that shows is that person is deceptive. But this is important. Once you hire someone, you’re stuck with them.”

Kelly said knowing a potential hire’s personality is important because a dealership needs a mix of types. She said there are four basic personality types for employers to look at.

There’s the steady-Eddie type, which makes up about 57 percent of the population. Those, she said, are plodders. They don’t like change, and are very dependable and loyal. They’ll also hold a grudge.

Then there are the drivers. They make up about 5 percent of the population. They are go-go-go types – but a little goes a long way.

There are the analytical types, who constitute about 17 percent of the population. Kelly calls them bean counters, which is valuable, but they don’t want to talk to people. They can be trained to do so, but for them it can almost be torture.

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“ONE WAY OF KNOWING IF A DEALERSHIP IS ATTRACTIVE TO FEMALE EMPLOYEES IS TO SEE IF WOMEN FEEL COMFORTABLE SHOPPING AT THE LOT.”

Finally, there are the interactive people, about 21 percent of the population. These people can talk to others, but they’re the types who run late and never quite finish what they’re doing – something always seems to come up.

“You won’t want a whole team of steady-Eddies,” Kelly said. “They will need a whole bunch of attaboys to keep them motivated. It can be exhausting. You will want a blend of types. One analytical is all right. A couple of egomaniac guys will be competitive and that’s not bad. If you have a couple of driven people, be prepared to tell them that things will be done your way.”

Don’t forget to hire people who can sell to women

Jody DeVere, CEO of the website Ask Patty, said women influence upwards of 70 percent of all car sales. Dealers who hire people who can’t sell to women are really doing themselves no favors.

“One of the challenges dealers have is they don’t get enough women applying for jobs,” DeVere said. “Many employees come to the business through family or Northwood [University]. But if dealers want to make the experience better for women, many of whom have children, have things like flex scheduling and good benefit packages.”

A dealer doesn’t always have to go to the same well to get sales staff. One place they can look for sales staff is the real estate business. Realtors are used to working nontraditional hours and are skilled at listening to customers and what they want.

One way of knowing if a dealership is attractive to female employees is to see if women feel comfortable shopping at the lot, DeVere said. If women feel comfortable shopping there, it often means that the environment is inviting for women to work at the dealership.

Women, DeVere said, are good at listening. Their sales skills tend not to be hard-sell. Not all customers want to deal with a woman salesperson, and that’s OK. But having women on staff can be a great benefit to dealers.

Do your homeworkJanel Bryan, manager of Auto Brokers in

Englewood, Colo., has been hiring staffers in one capacity or another for 20 years. She’s used the services of a staffing agency and agrees that going through references is just common sense.

Bryan said a criminal check means more than checking for felonies. She also checks driving records. Her dealership specializes in taking customers to auctions and picking out a car there. That means her sales people spend a lot of time driving customers to and from auctions. Poor driving habits, as reflected in the records, mean huge potential dangers to customers and the dealership, not to mention increased insurance costs.

“I am a detail-oriented person,” Bryan said. “I’ll even look at shoes and socks when giving an interview. If someone is applying for a sales job, is he wearing the appropriate kind of shoes? Are they shined? Are his socks dress socks, or is he wearing sweats? Even if someone is wearing jeans, you can tell if that person takes pride in his experience.”

HiringNews

Records Retention Guidelines

The beginning of the tax year usually triggers a mad scramble to locate all of the necessary documents to prepare tax returns.

If you retain absolutely all of your records, you might be faced with the monumental task of sorting through the mountains of paper to locate the documents you actually need. One occasionally needs to clear away unused items, but tossing the wrong paper or deleting a necessary data file can have dire consequences, especially for a business.

When disposing of documents, you may want to consider shredding.

W H E N YO U E S TA B L I S H A R E C O R D S R E T E N T I O N P O L I C Y, S O M E T H I N G S T O C O N S I D E R A R E :

• Is there a legal requirement for keeping the document?• Could the item serve any other purpose after it is used for its intended purpose? Would the

documents be needed to support or oppose a position in an investigation or litigation? Could the document support a tax deduction?

• What is the consequence of not being able to locate the document?• Can the item be reliably reproduced if needed?• How long should documents be retained?• Keep any document related to pending or threatened litigation until the matter is settled and

all appeals are exhausted.

Here are some general rules for how long to keep other records:One year: Duplicate deposit slips, I-9s (after termination), receiving sheets.Twenty-five months: Customers’ credit applications that were denied.Three years: General correspondence, employment applications, expired insurance policies,

petty cash vouchers.Four years: Freight bills; inventory lists; invoices; bank deposit slips, reconciliations, statements,

canceled checks; contracts – purchase and sales; depreciation records (retention begins after expiration); employee expense reports.

Five years: OSHA logs; photostat, carbon or other facsimile copies of each odometer mileage statement issued or received. Auction companies are required to keep records of the “most recent owner,” presumably the seller, as well as the name of the buyer, the vehicle identification number and the odometer reading on the date the auction company took possession of the motor vehicle.

Six years: Employee payroll records (W-2, W-4, annual earnings records – retention begins after termination).

Seven years: Accident reports; general ledger; accounts payable and receivable ledgers; bank statements; checks (most); contracts and leases (expired); electronic funds transfer documents; employee personnel records (after termination); expense analyses; product, materials and supplies inventories; notes receivable ledgers; purchase orders and time books and cards.

Eleven years: Worker’s compensation documents.Twenty years: Real estate records.Indefinitely: Accountants’ audit reports; cash books; account charts; construction documents;

important correspondence; deeds, mortgages, bills of sale and titles; depreciation schedules; financial statements; general ledgers; journals; licenses; loan documents; minute books of directors and stockholders, including by-laws and charter; property appraisals; articles of incorporation; by-laws; tax returns and worksheets and trademark registrations.

Employee records should be retained for the length of the employee’s tenure with the company, plus at least the statute of limitations period. Employment records may contain sensitive information and should be stored in a secure area. Immigration and Naturalization Services’ I-9 forms should be kept separate from active employee files to avoid discrimination claims.

A copy of each version of employment and training manuals should be kept with the dates that version was in use.

A D D I T I O N A L I N F O R M A T I O N R E G A R D I N G B U S I N E S S R E C O R D S R E T E N T I O N C A N B E F O U N D A T

W W W. I R S . G O V/ P U B / I R S - P D F/ P 5 8 3 . P D F . P E R S O N A L R E C O R D S R E T E N T I O N I N F O R M A T I O N

C A N B E L O C A T E D A T W W W. I R S . G O V/ P U B / I R S - P D F/ P 5 5 2 . P D F .

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EconomicOutlook

The U.S. economy appears to be at an economic crossroad: to the right lies recovery and prosperity and to the left awaits a second recession, a plummeting stock market and rising unemployment. With current economic data that points in the direction of each of these paths, it becomes difficult to predict which outcome is more likely for the United States in the coming months.

In its most recent release, the Bureau of Economic Analysis announced an advance estimate of 2.5 percent for the third quarter U.S. gross domestic product. This follows an even weaker second quarter GDP, which settled at a lowly 1.3 percent. Inflation increased in September to 3.9 percent. This is combined with gold and silver prices that are again on the rise after sliding directly following the United States’ credit downgrade. Together these metrics suggest higher inflation in the U.S.’s future.

Key September/October DataPositive Signs

U.S. productivity remains among the highest in the world, while U.S. non-financial corporations’ cash reserves remain at nearly $2 trillion. The October Conference Board Global Leading Economic Indicators Report shows the U.S. and China increased by 0.2 percent and 0.5 percent, while Europe decreased by 0.6 percent. Though automobile, SUV and light truck sales were down 1.7 percent in September relative to August 2011, they were up 9.9 percent relative to September 2010.

Monthly total light vehicle sales have exceeded one million units for the past seven months. Personal disposable income is up 3.2 percent relative to September 2010 and now sits at $968.3 billion. Construction spending increased further in September and is now 48 percent higher than January 2011.

Negative SignsThe unemployment rate remained unchanged

at 9.1 percent in September as nonfarm payroll employment increased by 103,000 and private sector employment increased by 91,000. Oil prices climbed in October, surpassing $90 a barrel. Housing starts slid for the second straight month. Consumer confidence dropped considerably in October, reaching its lowest level since March 2009.

Current IssuesIn all my years in the retail auto industry and of

all the things I’ve experienced in selling vehicles, I’ve found the most impactful way to generate more sales is to follow up with guests who do not purchase the first time they visit your dealership.

That’s right. Study after study (I do a lot of them) clearly has shown that a typical retail dealership, whether franchised or independent, only effectively manages to achieve a 25 percent “be-back” rate of guests who leave without making a purchase on their first visit. That says 75 percent of the guests are not returning to that dealership to make a purchase.

Yet studies clearly show that guests who do return to gather more information or to re-evaluate their first visit are closed 50 percent of the time versus a 19 percent rate on initial visits. So the real question is, why are these high-percentage closing rate types of potential customers not returning?

The answer is … they were never asked to return. No one ever followed up with them. Over the years, I have been able to track many of these guests with a follow-up call regarding their initial visit. In more than 80 percent of the cases, when I ask, “Has anyone contacted you since your visit to the dealership?” the answer is an emphatic “NO.”

I wanted to put some teeth into my research in an attempt to determine the financial impact should a dealership develop and implement a

consistent (consistency is essential) follow-up procedure for guests who do not make an initial purchase. I selected a dealership averaging 49 retail used vehicle sales per month and turning its used vehicle inventory a minimum of four times per year.

With a clear focus on getting more guests back into the dealership for a “second shot,” the management team agreed to practice a very rigid and dedicated system of having managers follow up with the guests rather than the sales team – just for a controlled benchmark; the sales staff got the deal if the returning customer made a purchase.

Here are the results: Management involvement improved the return rate of guests from 25 percent to 34 percent within seven days, leading to a 31.5 percent increase in the effective closing rate. That led to a 30 percent increase in the used vehicle inventory turn rate. By getting management involved in the follow-up process, monthly used vehicle sales went from 49 retail units to 64 by month’s end, generating an additional $31,105 in gross and reducing operating expenses by approximately $2,795.

All because management got more involved in the follow-up process of guests who visited the dealership but did not make a purchase on that initial visit.

What would happen if your management team and sales team followed up, followed up, followed up and followed up?

Two Very Important Words:

B Y D R . T I M O T H Y N A S H A N D J O E L E S C O T A

Follow up!

Students interested in studying the automotive industry can contact Dr. Timothy Nash at [email protected] for information about Northwood’s programs

Dr. Timothy Nash, an associate professor in Economics, Business and Public Policy, heads specialty programs, including Automotive Aftermarket and Automotive Marketing, for Northwood University.

Joe Lescota is chairman of the Automotive Marketing Department at Northwood University and the instructor for the NIADA Certified Master Dealer program.




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How would your collection department’s CSI (Customer Service Index/Indicator) measure up to everyone in the Buy Here-Pay Here industry? Most BHPH operators haven’t given it a second thought. As of yet, there hasn’t been a national BHPH CSI developed, but it’s something that must be tracked and monitored to have any hope of future success.

In today’s highly competitive BHPH marketplace, a low CSI will not only cost you money, it could literally cost you your entire business. Obviously customer service and satisfaction is important in all facets of the business from sales to service to collections, but in the recent economic and competitive climate, how the customer is treated during the collection process will set you up for future success – or failure.

The BHPH business is widely recognized, and rightly so, as a collection or risk management business. Yet often the service after the sale, so to speak, is neglected or simply ignored. The most successful operators thrive on repeat and referral business – a direct result of providing good overall customer service. And those same operators usually experience a better performing portfolio, which, again, is what this business is all about.

One of the biggest challenges to providing effective collection customer service comes from the top. Some operators still cling to an old-school train of thought. They have already provided service by selling and financing a vehicle for a customer when more than one other dealer said no. Another car in that same train carries the thought that the customer has signed a contract and that’s where the obligation ends.

These thought processes are filtered down and can affect everyone’s attitude in the organization toward their greatest asset, the customer. I’m not saying the customer is always right, but he is becoming more right every day.

Another sizeable challenge in providing good collection customer service is setting the right tone. The first collection customer contact usually occurs when a payment is missed or there is a service issue, neither of which is particularly positive from the customer’s viewpoint. Too often it is assumed that the customer is either lying in regard to his circumstances or simply trying to get something for nothing. Both of those lead to an overly aggressive posture, usually through bullying or ultimatums, to try to exert some form of control over the customer. Very rarely does this work effectively in the long run.

The key to setting the right tone is getting customers to first like you. If they like you, they will trust you. And if they trust you, they will respect you. Once they respect you, they will be much more likely to accept what you have to say – good, bad or indifferent.

It all begins with listening. We were given two ears and one mouth for a reason. We should listen twice as much as we speak. The like-trust-respect dynamic is instrumental in setting the right tone. Set the wrong tone and it will be an arduous collection task for the length of the note. But rest assured if you set the wrong tone, you will not have to worry about that customer, or anyone he knows, once he is paid off.

There are many ways to develop and foster customer service and satisfaction. Customer rewards programs have proven successful in other industries and are now picking up steam in BHPH. Most everyone has a repeat and referral program, but collection and service reward programs are becoming more prevalent. I can hear those of you on the old-school train: “Reward them for doing what they are supposed to do anyway? Never!” In today’s ultracompetitive BHPH market, that might be just what it will take to thrive. Anything to separate you from the competition, provide added value to the customer and keep him paying you.

Whether it is the customer receiving credit for making payments on time or incentives for keeping up with the regular maintenance of the vehicle, the key is just having something in place.

Deciding to renew or extend your commitment to customer service and satisfaction is step in the right direction. The next step is how to effectively track and monitor progress, or lack thereof. There are a few ways to do this. Written surveys and call recording services or systems seem to be the most popular and effective.

Written surveys should be simple and concise. Multiple choice and/or number grading are the easiest to track and quantify. Open response can sometimes be just that, and often it is not legible and so not of much value. Surveys can be done at the time of sale, as the customer pays off or at the time any service is performed, whether it’s warranty, customer pay, or best of all, goodwill. It’s a good practice to include your employees. If the right tone was set, who better to know what the customer’s likes and dislikes are? Regardless of whom it’s from or when, all feedback can be valuable.

Call recording services or systems are also valuable in tracking and monitoring how well your organization is handling your customers. One bit of advice: Remove all sharp objects and anything that can be thrown or broken prior to listening to the first set of recordings. You will be astonished at what and how things are said to your potential and existing customers by your employees. Once you get past the initial shock, they will provide a great avenue for training and holding your remaining staff accountable. Recordings can also provide a means of verification in a “we said, they said” scenario, preventing a possible legal nightmare.

Customer service and satisfaction is more important now than ever. Competition for the BHPH customer is already fairly stiff and, with the issues befalling the new car industry and the arrival of the new credit-crunch customer, interest is growing by the minute.

The like-trust-respect dynamic is the key not only to sales success, but more importantly, collection success. Today’s BHPH customers only want what we all want. They want to be treated with courtesy and respect. The truly successful operators already understand this and act accordingly, a simple fact that will derail the old-school train.

Do You Know Your Collection

CSI?

CustomerService

B Y B R E N T C A R M I C H A E L

E X E C U T I V E C O N F E R E N C E M O D E R A T O R

N C M A S S O C I A T E S I N C .

b c a r m i c h a e l @ n c m 2 0 . c o m

THE KEY TO SETTING THE RIGHT TONE IS GETTING

CUSTOMERS TO FIRST LIKE YOU. IF THEY LIKE YOU, THEY WILL

TRUST YOU. AND IF THEY TRUST YOU, THEY WILL RESPECT YOU.

ONCE THEY RESPECT YOU, THEY WILL BE MUCH MORE LIKELY TO ACCEPT WHATEVER YOU HAVE TO SAY _ GOOD, BAD, OR INDIFFERENT. IT ALL

BEGINS WITH LISTENING. WE WERE GIVEN TWO EARS AND ONE MOUTH FOR A REASON. WE SHOULD LISTEN TWICE AS

MUCH AS WE SPEAK.



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New IRS Form 8300 in Effect

The IRS has issued an updated Form 8300 dealers must use to report cash transactions of more than $10,000, effective July 1. Cash payments of more than $10,000 in one transaction or in two or more related transactions must be reported to the IRS using the new form, available at www.irs.gov/pub/irs-pdf/f8300.pdf.

The IRS strictly enforces the filing of Form 8300 cash reports and audits New Jersey dealers for compliance. First-time offenders can be fined as little as $50 for each violation of the cash reporting rules. However, the IRS can revisit those dealerships and treat each unreported transaction on the second audit as a willful violation and could fine as much as $25,000 per transaction.

Dealers must file IRS Form 8300 if the cash paid to them is received as:

• One lump sum of more than $10,000• Installment payments that cause the total cash

received within one year of the initial payment to total more than $10,000, or

• Other previously unreported payments for a related transaction that cause the total cash received within a 12-month period to total more than $10,000.

Defining CashIn addition to coin and currency, cash

includes these items with a face amount of $10,000 or less:

• Cashier’s checks• Bank drafts• Traveler’s checks• Money orders

If a dealership receives any combination of the above totaling less than $10,000, the dealership does not need to file Form 8300. However, if a customer pays with any combination of cash totaling more than $10,000 (i.e., a customer pays $5,000 in cash and $6,000 with a bank draft), then the transaction is reportable. Form 8300 must be filed within 15 days of when the cash was received.

• Checks are not cash when drawn from:• Business accounts• Certified personal checks• Individual’s personal account• Loan proceedsDealers can verify loan proceeds through a

copy of loan papers, a written statement from the bank or similar documentation. Any checks with a face value of more than $10,000 are not required to be reported on Form 8300. Instead, the entity that issued the check for more than $10,000 must report the transaction.

Mironov, Sloan & Parziale Offers Form 8300 cash reporting reviews. Mironov will review your dealer’s books and records to determine compliance with cash reporting requirements. For pricing or to schedule a review, contact George Berry at 800-572-7101.

George Berry is a partner with Mironov, Sloan & Parziale, LLC, a certified public accounting and consulting firm serving more than 300 automobile dealerships in New Jersey and the greater regional area. For more information, visit www.mspcpa.net.

B Y G E O R G E B E R R Y, C PA

IRS

Most dealers follow Federal Trade Commission happenings to get the latest on legal compliance. But the FTC also works to protect businesses in their role as consumers.

Companies with a retail presence are a favorite target of B2B con artists. Getting the inside scoop on how B2B scams work can help you shield your company from fraudsters in the future.

For example, the FTC just mailed out refund checks to small businesses ripped off by two telemarketing operations that allegedly tricked them into paying for business directory listings they didn’t order. By falsely claiming the business had already agreed to buy the listings, the defendants got people to pay money they didn’t actually owe.

OK, we’re not expecting the network to sign on for a season of CSI: Commercial Scam Investigators — though if you’re interested, have your people call our people — but a behind-the-scenes peek into how these scams operate can clue your dealership in on what to look for.

The Directory Listing Scam: In this operation, fraudsters contact businesses claiming to “verify” that a company wants to “renew” its listing. Of course, there is no existing listing — and maybe not even a real business directory — but the employee who picked up the phone doesn’t know that. Persuasive double-talkers bulldoze them into saying yes and often play back a tape of the call if the company complains. When a business

disregards the dunning letters, the bad guys up the ante by threatening to ruin their credit or take them to court. Read “Throwing the Book at Business Directory Scams” at http://business.ftc.gov/documents/alt024-throwing-book-business-directory-scams for steps to make sure your staff is wise to this scheme.

The Toner Phoner Flimflam: Every dealership needs office supplies, but you might not have a formal procurement process in place. So when supplies show up at the door, employees pay for them, assuming a colleague must have OKed the buy. The box contains unordered toner cartridges, or maybe it’s empty. Either way, the company is left holding the bag — and the bill. Share “Avoiding Office Supply Scams” (http://business.ftc.gov/documents/bus24-avoiding-office-supply-scams) with employees and follow the tips on streamlining and safeguarding your purchasing process.

The URL Hustle: “Your web address is about to expire if you don’t pay immediately to renew your registration.” That’s enough to send an online dealer into warp speed. Since the invoice emphasizes that time is of the essence, some businesses pay first and ask questions later. Of course, the invoice isn’t from the entities that really handle things like that. It’s from a fraudster, banking on the fact that companies with a web presence will be too busy to investigate. “The Dupe of URL”

(http://business.ftc.gov/blog/2010/09/dupe-url) suggests practices to reduce the risk of getting stung by a domain name scam.

The Charity Con: Dealerships often make it a point to support worthy causes in the community. So when a group claiming to help firefighters, veterans, police or kids asks a company to buy space in a calendar or publication, they’re happy to chip in. Of course, crooks cover their tracks by picking names confusingly similar to reputable charities, so it’s hard for businesses to find out they’ve been had. “Donating to Public Safety Fundraisers” (http://business.ftc.gov/documents/bus31-donating-public-safety-fundraisers) offers advice for making sure your donated dollars wind up with reputable groups.

Looking for more information on complying with the law and protecting your business from fraud? The FTC’s Business Center has a special portal for the automotive industry. Choose “Automobiles” from the “Selected Industries” tab at http://business.ftc.gov. What will you find there? Guidance on complying with the FTC’s Used Car Rule, updates on the agency’s motor vehicle roundtables, brochures and videos on avoiding a data security “oops” with customers’ financial information, and other publications on need-to-know topics written with a maximum of how-to and a minimum ho-hum.

FTC PERSPECTIVES

It’s Always Time to Be on the Lookout for Scams

B Y L E S L E Y F A I R

OK, WE’RE NOT EXPECTING THE NETWORK TO SIGN ON FOR A SEASON OF CSI: COMMERCIAL SCAM INVESTIGATORS — THOUGH IF YOU’RE INTERESTED, HAVE YOUR PEOPLE CALL OUR PEOPLE — BUT A BEHIND-THE-SCENES PEEK INTO HOW THESE SCAMS OPERATE CAN CLUE COMPANIES IN ON WHAT TO LOOK FOR.

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



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The National Auto Auction Association (NAAA) recently issued notice to its members to be on the alert for digital odometer tampering. The NAAA has received reports of digital odometer tampering through the use of odometer mileage programming devices. Since odometers do occasionally malfunction, manufacturers provide legitimate repair facilities security codes to use with authorized odometer mileage programming devices. The NAAA indicates the codes may have been compromised, allowing non-authorized devices to be manufactured and sold online.

The NAAA further reports that the National Highway Traffic Safety Administration (NHTSA) is familiar with the practice and has been in contact with auto manufacturers about the issue.

The NAAA recommends its member auctions be on alert for potential mileage discrepancies that crop up between time of check-in and sale and between time of assignment and delivery to the auction, as this could be an indication that the vehicle was tampered with to decrease its value and provide a fraudulent benefit to the ultimate buyer of the vehicle.

Individuals with information concerning odometer fraud schemes are encouraged to contact the NHTSA’s Office of Odometer Fraud at 202-366-5953. Complaints concerning a single vehicle should be reported at the state level.

Digital Odometer Tampering

Kelley Blue Book Warns of Fake Website Scam

Kelley Blue Book, a leading provider of new car and used car information is warning online car buyers of a scam using a fake Kelley Blue Book website. The scam attempts to solicit funds from buyers through an escrow-based, guaranteed buyer-protection program - something Kelley Blue Book does not offer.

Kelley Blue Book warns that any escrow-based consumer-to-consumer service or buyer and seller protection program offered under its name is a scam. Car shoppers should be aware that imitation websites look similar to the actual kbb.com and they should be cognizant of the domain name (URL) and email address (view the actual address, not the display name) provided by the seller. Car shoppers that encounter this type of offer from online sellers are strongly urged to report the seller to the Internet Crime Complaint Center at www.ic3.gov .

For tips on how to protect yourself from phony online car-buying scams or fraudulent buyer protection programs, visit the FBI website at www.fbi.gov/news/stories/2011/august/car_081511/car_081511 .

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 will open in December. Details will be available at 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




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Charleston Auto Auction of Moncks Corner, S.C., and its dealers helped raise more than $2,000 for the Ronald McDonald House of Charleston, S.C., while also celebrating a record-breaking sale.

On October 7, Charleston Auto Auction held its Hoedown Mega Sale, featuring more than 600 dealers, 1,400 vehicles and $50,000 in cash and prizes. A record was set with more than 400 new car dealer trades consigned.

“All our dealers had a great time and many vehicles were bought and sold,” Charleston Auto Auction general manager Laura Taylor said.

A check was presented to the Ronald McDonald House at the beginning of the sale. Money was collected from 50/50 raffles held prior to the event, with the Charleston Auto Auction matching all money collected. All proceeds went to help seriously ill children and their families.

“The Ronald McDonald House is a great organization and both the auction and our dealers were happy to help them,” Taylor said.

Auction Holds Hoedown Mega Sale for Charity

LocalNews



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The latest Equifax National Credit Trends Report declared auto finance companies have significantly increased lending. In fact, the growth is more than 47 percent during the past two years.

Analysts discovered auto finance lenders outpaced bank and credit union lending to subprime borrowers during the past two years, as well. Equifax defines subprime borrowers as consumers with credit scores less than 640.

According to the most recent monthly report, there were 854,800 auto finance company-originated loans in July, compared to 581,300 for July 2009. Equifax tabulated that vehicle loans to subprime borrowers now account for 38.5 percent of all auto loan originations for auto finance companies and 17.6 percent for banks and credit unions — numbers that are quickly approaching pre-recession levels.

By contrast, analysts pointed out 820,200 loans were originated by banks and credit unions for the same period in July, versus 832,000 for July 2009. That’s a decrease of less than 2 percent.

Equifax mentioned delinquency rates continue to improve for outstanding vehicle loans currently 60 or more days past due.

Michael Koukounas, senior vice president of special client services for Equifax, indicated the rate is now down to 1.63 percent of loans, compared to a peak that was near 3 percent. Koukounas believes the decline reflects a continuation of sustained credit retraction that the auto lending industry is experiencing earlier than other loan types.

“With unemployment rates remaining elevated for a prolonged period, auto lenders have proactively adopted more comprehensive data and verification tools for greater loan-level transparency in evaluating a wider band of consumers, which has helped enable the auto lending industry to recover more quickly than others,” Koukounas explained.

To support his theory, Koukounas pointed out that in July, 1.7 million auto loans were originated, worth $32 billion collectively. From January through July, he said, 11.3 million new auto loans were originated — a 13.2 percent increase over the same span last year.

The collective amount of these loans is 14.8 percent greater than in 2010, climbing to $213.9 billion.

Equifax’s report also revealed the average monthly payment has remained relatively unchanged during the past year. For auto finance company-originated loans, the payment ticked up to $407 in July from $404 in the same month last year. For bank and credit union-originated loans, the payment slid down to $364 in July from $377 in July of last year.

Equifax insisted the changes clearly show that the growth the industry is experiencing is tied to increases in number of loans rather than an increase in average loan amount.

SubPrime Auto FinanceNews

Subprime Auto Loans are on the Rise

IndustryNews



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Looking for Those Common Threads

Have you ever tried staring at a Magic Eye poster or book? At first glance, they look like complex, two-dimensional designs. However, if you view them in just the right way, images seem to pop out in 3D. But it can be a difficult task because the designs are intricate and sometimes overwhelming.

For those in the auto finance world, it’s easy to get the same feeling when looking at the vast number of regulatory changes taking place each year. With so much happening at once, it can be hard to see the big picture. That’s why it’s important to take a step back and look for the patterns.

So what have we been seeing in 2011? A common thread across recent laws and regulations is a strong focus on the credit decision process. Three areas in particular offer key examples of this:

Denial Notices: Section 1100F of the Dodd-Frank Act and its implementation regulations require disclosing a credit score and related information in adverse action notices when that information is used as part of the credit decision. The purpose is to encourage applicants to review credit report and credit score information to see if errors or inaccuracies are causing credit denials.

Risk-Based Pricing Notices: The federal risk-based pricing rule requires dealers, lenders and third-party providers to notify consumers when they receive materially less favorable credit terms than others based on consumer report information. The idea is to give consumers more information and prompt them to review their credit report information to confirm it is correct. It can also help consumers avoid unnecessarily accepting higher credit costs due to credit record errors and inaccuracies.

Privacy Disclosures: The new model privacy notices aim to create more consistency in how vendors, including dealers and lenders, present information. The disclosures are given at the beginning of the credit transaction process so consumers can choose a vendor with privacy disclosures most in line with their information-sharing preferences. The new form is required to be comprehensible to consumers, with a clear format and design; provide clear and conspicuous disclosures; enable consumers to easily identify sharing practices of a financial institution so they can compare privacy practices among financial institutions; be succinct; and use an easily readable type font.

In each of these cases, the laws and regulations focus on preventing consumer misunderstanding, controlling consumer information, encouraging review of credit records for errors and preventing fraud. These are all actions that take place when a consumer is completing a credit application and a credit decision is being made.

These new laws and regulations are aimed at helping borrowers and buyers be more informed at the front end of the credit process. Arguably, this also helps dealers and lenders prevent problems up front, a particularly important benefit during difficult economic times. It is better to have informed customers and accurate credit information at the time of the credit decision. Spotting issues after the sale will often be too late to avoid the losses they will bring.

Like those Magic Eye images, patterns across the regulatory environment aren’t always easy to see at first. But if you adjust your focus, you can train your eye to spot the common threads and see the bigger picture. This can ultimately lead to a better understanding of regulators’ key concerns and help your dealership maintain compliance.

BY CHIP ZYVOLOSKI Chip Zyvoloski is senior attorney for indirect lending at Wolters Kluwer Financial Services. For more information, visit www.wolterskluwerfs.com/indirect.

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