NOVEMBER/DECEMBER 2012

• LONGTIME CIADA DIRECTOR IN HALL OF FAME• BE ON THE LOOKOUT FOR OPEN RECALLS• TECHNOLOGY’S GROWING ROLE IN POST-RECESSION MARKET

inside

BHPH Sales vs. Collection Is it really a battle, or are they one and the same?

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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 TROY@NIADA.COM.CIADA Insider is published 6 times per year 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 6006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of CIADA Insider or the National Independent Automobile 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 © 2012 by NIADA Services, Inc.STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.comEDITOR Andy Friedlander • andy@niada.comART/PRODUCTION MGR. Christy Haynes • christy@niada.comPRINTING Nieman Printing

MAGAZINE CONTENTS

ADVERTISERS INDEX

BOARD OF DIRECTORSPRESIDENTDean StrawnAutoTrek303-934-5600dstrawn@autotrek.com

VICE PRESIDENTDave CardellaCardella’s Car Deals303-887-8977dcard65724@msn.com

SECRETARYLloyd DonnellyKing Credit Auto Sales303-287-5511rtholdings@aol.com

TREASURERStan MartinStan’s Auto Sales LLC303-761-9928stansasllc@gmail.com

CHAIRMANPeppe DeMarcoHighline Motors970-206-9963pdemarco@highlineweb.com

WHAT’S NEW

Pre-Licensing CertificationColorado state statute requires anyone applying for a used motor vehicle dealer’s license or a used powersports dealer’s license be certified through a pre-licensing course. This seminar is also offered to salespeople to be able to pass the New Mastery Examination Test. Class is given at least once a week. Check our website for dates.

Basic Title Training ClassJoin us to get updated information to learn the CORRECT way to fill out your paperwork at time of sale, other topics including title compliance, do’s and don’ts for titles and more. This class is given once a month for half a day.

NEW!!Upcoming seminars on various topics offered the second Monday of every month. Get updates on what’s new for social media, web advertising, compliance and more. Go to our website to check dates and times and to register.

Call CIADA for information on these classes, also to get your forms and/or Dealer/Salespersons Bonds. 303-239-8000

All classes are subject to change without noticePlease check our website at www.ciada.org for any changes. www.ciada.org303.239.8000 – phone303.237-3305 - fax

Colorado Independent Automobile Dealers Association Lakewood, Colorado

Education & Training Center6464 West 14th Ave, # 100 Lakewood, CO 80214

InsideF R O N T R A N G E C L A S S E S

04 Mike Bonicelli: Hall of Famer06 Government Report08 Technology’s Growing Role10 BHPH Success: Sales vs. Collection12 Look Out for Open Recalls14 Driving Traffic16 Money Matters22 Compliance Overdrive

ADESA .....................................................................11Ally ............................................................................5AutoTrader.com ................................ Inside Back CoverChase .......................................................................16Dealer Center ............................................................9 Dodah.com ...............................................................13GoldStar GPS ................................... Inside Front CoverLobel Financial Corporation ........................................7Loveland Auto Auction ..............................................19Manheim Denver .........................................Back CoverNIADA Certified ........................................................18Protective .................................................................15United Acceptance ...................................................17Voisys .......................................................................22

www.niada20groups.comNIADA 20 Groups are designed for NIADA’s independent dealers as they do business today – retail, BHPH or a little bit of both.

FREE Dealer Education on www.niada.tv• Waking the Economy Up from a Bad Dream • Automotive Outlook: Back from the Brink, Now

for the Golden Age • Protecting Our American Dream

Studies Say Consumers Interested in Alternative Powertrains

Accord­ing­to­two­new­stud­ies,­dri­vers­want­and­will­pay­for­more­fuel-effi­cient­cars,­including­hybrids­and plug-in cars.Ford­Motor­Co.­hired­Penn­Schoen­Berland­to­con­duct­a­study­that­found­seven­in­10­dri­vers­are­

tak­ing­steps­to­reduce­gaso­line­con­sump­tion.­A­quar­ter­of­them­told­researchers­that­if­they­had­an­extra­$1,000­avail­able­at­the­time­of­their­next­vehi­cle­pur­chase,­they­would­pre­fer­a­hybrid­over­a­con­ven­tion-ally­pow­ered­vehicle.In­another­study­con­ducted­by­Phoenix­Mar­ket­ing­Inter­na­tional,­a­solid­major­ity­of­Amer­i­can­motorists­

say­they’re­now­will­ing­to­con­sider­some­form­of­alter­na­tive­propulsion,­whether­it’s­hybrid,­pure­battery-electric­or­some­thing­else­even­more­radical.The­study­found­con­sumers­in­the­lux­ury­mar­ket­more­open­to­alter­na­tive­tech­nolo­gies­by­a­mar­gin­of­

three-to-one.­For­main­stream­prod­uct­seg­ments,­the­margin­of­those­willing­to­consider­alternatives­was­closer­to­two-to-one.­Car­buyers­under­40­years­old­are­even­more­inter­ested­–­only­10­percent­of­them­are­not­open­to­cleaner­or­more­fuel-efficient­pow­er­train­technology.­­

Dealer’s Charity Event Ready to RollSanta’s­Toy­Run,­a­three-day­racing­event­benefiting­children’s­charities,­is­coming­up­Nov.­30-Dec.­2­

at­Road­Atlanta­in­Braselton,­Ga.The­event­is­run­by­Circle­Heart­Racing,­a­racing­team­dedicated­to­raising­money­to­help­children­in­

North­Georgia­and­nationwide.­Circle­Heart­was­founded­by­Ron­and­Debbie­Rigdon,­owners­of­Ron’s­Auto­Sales­in­Lawrenceville,­Ga.,­who­were­honored­for­their­charitable­work­as­the­winners­of­the­2012­NIADA­Manheim­National­Community­Service­Award.Santa’s­Toy­Run­will­benefit­five­children’s­charities.­Admission­to­the­event­is­free­with­the­donation­

of­a­toy­or­gift­card,­and­fans­can­also­purchase­full-speed­race­car­ride-alongs­and­pledge­donations­for­completed laps.Circle­Heart­Racing­has­provided­assistance­to­some­2,000­area­children­in­the­past­six­years.­Last­

year’s­Toy­Run­collected­more­than­1,500­toys­and­a­raised­record­$9,000­in­donations.­For­more­information­on­how­you­can­help,­visit­www.santastoyrun.org.­

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Mike Bonicelli: Hall of FamerCIADA congratulates Mike Bonicelli of

Nevada Auto Sales in Colorado Springs as one of 10 newly inducted members of the Colorado Motorsports Hall of Fame for 2012.

Mike’s accomplishments go far beyond racing. He has given freely of his time and energy to support CIADA over the years. As a member, dealer and past president of CIADA, Mike has a track record of support for the auto industry and has had a stellar career that includes a State Quality Dealer award.

We are proud to have him on our team.Mike Bonicelli began racing at age

18, when he built a drag car and raced it locally in Colorado. But his dream was to

race ovals, so before his 20th birthday he switched to local stock car racing.

Mike began racing at Pikes Peak Speedway in 1971 and was very successful in the late model stock car class. He had many fast times and won a number of main events.

He went on to race at Colorado Springs International Speedway, which he and his father built east of Colorado Springs in 1976. They contacted NASCAR for sanctioning and their track became the first short track in Colorado to have NASCAR-sanctioned events. That was the beginning of the Winston Racing Series in Colorado. Mike was the NASCAR Winston Racing Series

champion in 1978. During his years of racing in Colorado

Springs, Mike was an active member of the Pikes Peak Stock Car Racing Association, and he held many positions as an officer and served as chairman of the board.

Mike continued to run at CSIS but wanted to advance again, and began racing at Colorado National Speedway in Erie, Colo., against Denver-area competitors. He also ran short track open competitions in Colorado, Nebraska, Utah, Nevada, Arizona, Texas, California and Washington.

He was successful, winning open competitions, setting track records and earning a winning record with more than 100 victories on short tracks. Mike’s pink

No. 8 Camaro was featured on the cover of Circle Track magazine, a great honor for Mike and his team.

The fame of the Pikes Peak Hill Climb pulled at Mike, and he drove up “the hill” twice. He finished the first time on two flat tires, and during the second race he rolled the car at the picnic grounds in an effort to miss some spectators who were standing hand-in-hand across the race course.

In 1980, Mike drove a Grand National car owned by Chuck Williamson of Seaside, Calif., at Phoenix International Raceway. Mike was running third in the race when an unscheduled pit stop dropped him to a ninth-place finish.

Finishing in the top 10 in his first NASCAR Grand National race spurred him on to want more. The team put together a car for the Grand National Series in the Southeast. After running a limited schedule for a couple of years, Mike found he could not breathe well enough for the longer races due to acute asthma.

He knew his driving career would have to end soon, and though he was a very successful driver, he stepped back to an ownership role and hired drivers for his team. In the last few years of Mike’s ownership, his team finished second in the Southwest Tour and had a driver named the tour’s Rookie of the Year.

Mike finally decided to sell his cars and equipment in 2003. However, he continues to help young racers in his area to see if they have what it takes to go big time, and counsels them on the hard road to getting there.

LONGTIME CIADA MEMBER AND DIRECTOR IS INDUCTED INTO COLORADO MOTORSPORTS HALL OF FAME

He was successful, winning open competitions, setting track records and earning a winning record with more than 100 victories on short tracks.

KEEPING CARS LONGER IS HERE TO STAY

The­two-­to­three-year­vehicle­purchasing­cycle­is­gone, according to a survey of­nearly­4,000­car­owners­by­AutoMD.com.Three­of­four­respondents­

to­the­study,­conducted­from­March­to­May,­agreed­that­buying­a­vehicle­every­two­to­three­years­is­a­thing­of­the­past.­And­half­said­a­better­economy­would­not­change­their­habit­of­holding­onto­their­vehicle­longer­than­in­the­past.“There­is­nothing­surprising­

about­the­economy­driving­car­owners­to­hold­onto­their­vehicles­for­longer­–­our­data­has­been­showing­this­trend­for­the­past­three­years,”­AutoMD.com vice president of­marketing­Brian­Hafer­said.­“But­what­is­most­compelling­is­that­longer­ownership­has­become­an­embedded­habit­for car owners, regardless of what­the­economy­does.­This­significant­lengthening­of­the­ownership­cycle­looks­like­it­is­here­to­stay.”The­survey­showed­78­

percent of drivers now keep their­cars­10­years­or­longer,­and­60­percent­said­their­primary­vehicle­has­more­than­100,000­miles­on­it.­Two-thirds­of­those­surveyed­said­they­plan­to­keep­their­car­until­it­surpasses­150,000­miles.The­survey­indicated­the­

longer­ownership­trend­is­spurring consumers to seek out­independent­repair­shops­over­dealership­service­centers.Among­customers­who­

usually go to a service center for repairs or maintenance, 69­percent­said­they­were­more likely to use independent repair­shops­over­dealerships­(20­percent)­and­chains­(8­percent).

For more information, visit www.automd.com.

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A R U N D OW N O F S O M E O F T H E L AT E S T G OV E R N M E N TA L I S S U E S A N D AC T I V I T Y A F F E C T I N G T H E U S E D CA R I N D U S T RY

Government ReportHere’s a rundown of some of the

latest governmental issues and activity affecting the used car industry from Sante Esposito of Federal Advocates and NIADA legislative/regulatory/compliance counsel Shaun Petersen.

Consumer Financial Protection Bureau

Procedural rules to establish supervisory authority over certain nonbank covered persons based on risk determination: The CFPB says it can assert jurisdiction over any financial entity that otherwise is not covered under the definition of a “larger market participant” if the CFPB has reasonable cause to believe such an entity is posing a risk to the market.

That proposed procedural rule has the potential to impact our members that are not otherwise defined as larger market participants.

The procedural rules outline the process under which the CFPB would find an entity to be a risk and the process by which that entity is entitled to challenge the proposed determination before being subject to the CFPB’s supervision. If the CFPB staff has “reasonable cause” to believe the entity is a risk, the deputy director will send a written notice to the entity explaining the why the bureau believes that risk exists.

It will then provide an opportunity for the entity to respond in writing and to participate in an informal telephone hearing between the CFPB staff and the assistant director. The response from the entity would include any written information the CFPB could and should consider.

After the informational hearing, the assistant director would submit a written proposed order to the director of the CFPB to bring the entity under the supervisory oversight of the CFPB. If the determination is made to supervise the entity, the CFPB will do so for a minimum of two years and can make a petition to be relieved of that obligation after that time, but only once annually.

We reviewed these proposed rules and found several concerns we asked the CFPB to consider through comments submitted to it. Our first significant concern was the lack of clarity from the

bureau as to the type of conduct the bureau believes is “reasonable cause” to find an entity to be a risk. The proposed rule does not define “reasonable cause” or provide any framework of conduct the bureau believes would create the risk.

We asked the CFPB to revise the rule to provide this definition. We also asked the CFPB to limit the risk to inappropriate or undisclosed financial risk to the consumer so the scope of misconduct the bureau would attempt to regulate is not overly broad.

Second, we raised concerns about the information used to make that determination. Presumably, much of the information will be made on consumer complaints, but the rules do not specify the information the bureau will use in making its risk determination. We asked the bureau to address that.

We also pointed out what we considered an unfair process, notwithstanding the CFPB’s attempt to keep it informal. The procedures proposed in the draft rule would not allow entity potentially subject to conduct to exercise discovery and examine the same material the CFPB reviewed in making its determination. The rule would not allow an entity to depose witnesses, review documents, ask interrogatories of either consumer complainants or CFPB staff as to what forms the basis of the “reasonable cause.”

We believe it is patently unfair to be placed at such a disadvantage when compared to the CFPB staff, which has access to consumers or other information in making its determination. An entity should be provided the same level of access in order to properly defend itself.

We also asked the CFPB to consider allowing an entity the opportunity to rebut the assistant director’s recommendation to the director before the Director makes his final recommendation.

Regulation Z: The CFPB has proposed a number of changes to Reg Z in the mortgage arena. While it does not directly affect the automotive industry, it could be an indicator for proposed regulations in the near future.

The proposed mortgage regulation would require prompt crediting of payments on mortgage loans and prompt response time for payoff amount inquiry.

Reg Z already requires higher-price mortgage lenders to look at the consumer’s ability to repay the loan before lending. The CFPB amended the regulation to expand its scope to any credit transaction secured by a dwelling. That rule becomes effective Jan. 21.

The CFPB is proposing changes to the definition of “finance charge” in a mortgage transaction by eliminating certain exclusions that were not otherwise considered when calculating an APR. The CFPB has invited comments on the proposed changes to be submitted by Nov. 6. We will analyze the proposed change for any potential impact if something similar was adopted in the auto finance sector.

Rental CarsA month after Rep. Lois Capps

(D-Calif.) introduced H.R. 6094, which prohibits the rental of motor vehicles under a safety recall until the defect or noncompliance is remedied, Sen. Barbara Boxer (D-Calif.) introduced S. 3502, the Raechel and Jacqueline Houck Safe Rental Car Act of 2012, with Sen. Feinstein (D-Calif.) as cosponsor.

The bill, a modification of a similar bill introduced by Sen. Boxer in 2011, requires notification by car rental companies to renters about any defect or noncompliance regarding the rented vehicle at issue, as well as imposing limitations on sales, leases or rentals by rental companies, holding rental companies to the same standard of responsibility as dealers with respect to various vehicle inspection, investigation and records requirements, and authorizing the Department of Transportation to study “the effectiveness of the amendments made by [the bill] and other related activities of rental companies.”

Federal Trade CommissionThe FTC recently held a roundtable

discussion about the issues facing consumers and businesses relating to online marketing and privacy, specifically regarding mobile devices and social media websites. The roundtable was used as a fact-finding tool for potential future legislation.

BY SHAUN K. PETERSEN AND SANTE ESPOSITO

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T H E P O P U L A R I Z AT I O N O F S M A R T P H O N E S A N D T H E W H I R LW I N D O F A P P S H AV E E M P OW E R E D T H E I N D U S T RY

Growing Role of Technology in Post-Recession MarketHeading into the fourth quarter of

2012, industry leaders continue to point to market trends that forecast the end of the recession. As a result of increased availability of rental, fleet and new car trades at auction and continued strong new car sales, the industry will see nearly one million more vehicles in the market in 2012.

The current challenge for many independent car dealers is sourcing the right inventory as wholesale used car prices decline. The industry continues to stabilize since the peak of the recession. However, the lasting effects of the recession will continue to impact the market as we once knew it.

The extreme market conditions brought on by the recession have produced a unique set of challenges for the independent used car dealer. With sharply climbing gas prices since 2007 and 2008, the market had experienced a negative impact on large truck and SUV sales. Overall used car supplies dropped substantially with the removal of more than 750,000 units by the Cash for Clunkers program.

Those market changes resulted in artificially high used car prices, which made sourcing vehicles even more difficult for the average used car dealer. While the difficult market forced out many dealers during the past five years, a new crop of dealers has recently emerged. Those dealers are turning to technology to drive their businesses and maintain a competitive edge.

The reliance on technology has increased significantly in the automotive sector. This permanent change has helped dealers in all areas of their business. Sourcing inventory is one of the major avenues in which dealers are using technology to assist in their “new business” flow. Many dealers are turning to consumer direct online

portals and wholesale online platforms to supplement purchases at traditional auction facilities.

In addition, the popularization of handheld smartphone devices and the whirlwind of available apps have empowered the industry to source, assess, value and purchase inventory from the tools in the palms of our hands. In fact, the market is rife with smartphone app solutions for every step in the life cycle of a used car.

Choosing the right products and services can take some time, but trying to run a dealership operation without the right tools to stay ahead of the competition takes even more time.

With sourcing issues easing in 2012 and used car prices continuing to stabilize, the rest of the year should produce new opportunities for dealers. But staying on top of local price trends is a must to ensure profit margins stay strong and overall sales increase.

Speculating on inventory levels and pricing heading into tax season can hurt some dealers if consumer demand and prices drop sharply. Market fluctuations, softer prices and macroeconomic factors are all challenges dealers could face in the next few months.

Technology can help dealers stay on top of those trends.

Partnering with technology-based companies that are positioned to forecast market trends and adapt according to industry needs should be an integral part of a dealer’s success in the post-recession marketplace. Dealers should look to align with companies that not only offer technology products that fit their business needs and scale of operations, but that also back their products with superior customer service.

Tech solutions should allow dealers to be more efficient and effective so they can focus on core dealership operations.

Dealers should look for solutions that focus on turning inventory faster while increasing profit margins.

Today’s technology can provide dealers the real-time data needed to do just that — appraisal tools, real-time reporting, market trends on specific vehicles and days’ supply. All are things a successful dealer will find important as a way to stay on top of market conditions.

Additionally, a technology platform that requires dealers to make large-scale changes to their business operations might not be the right choice for all dealers. Technology solutions should enhance a dealer’s successful business practices and provide a consistent means to providing market data.

As we enter a more technologically-driven marketplace, the resilience, determination and entrepreneurial drive of used car dealers continues to inspire companies like DSC to provide the right products and services backed with superior customer service. Since 2005, Dealer Services Corporation has worked to bring innovative technology solutions to our dealer and auction partners to make floorplan financing a seamless business solution.

With state of the art and industry-first technology offerings like the myDSC virtual office and the DSC Unplugged™ mobile smartphone application, DSC provides the support today’s dealers look for in a business partner. DSC is proud to serve independent car dealers and looks forward to long partnerships with its customers in navigating the post-recession market.

BY BRIAN GEITNERBRIAN GEITNER IS PRESIDENT AND CO-FOUNDER OF DEALER SERVICES CORPORATION, THE LARGEST INDEPENDENT INVENTORY FINANCE PROVIDER FOR USED AUTOMOBILES, AND HAS MORE THAN 20 YEARS OF EXPERIENCE IN THE AUTO FINANCE INDUSTRY. FOR MORE INFORMATION ABOUT DSC, VISIT WWW.DISCOVERDSC.COM.

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Growing Role of Technology in Post-Recession Market

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I S I T R E A L LY A B AT T L E , O R A R E T H E Y O N E A N D T H E SA M E ?

BHPH Success: Sales vs. CollectionThe very last thing I wish to do is start

an article by upsetting the salesperson who is out on the front line of a Buy Here-Pay Here dealership every day.

But let’s be honest. Selling a vehicle to customers with terrible credit scores, not much (if any) money down and/or an abnormal quality of life is not a terribly complicated or difficult task.

The objective here is to get you, the dealer principal or general manager of a BHPH operation (no matter what the size), to reposition your thought process and put your priority and focus on the collection process – not the sales procedures – at your store. You need to invest your time as well as your dollars on training your salespeople, and all personnel, in the “art of the collection.”

Let’s look at the entire process from the point of the typical BHPH customer. I have always contended you must always treat them as impulse or emotional buyers, even though they are credit-challenged.

They all still have the following major concerns: vehicle year, make and model; overall pricing structure; weekly, bi-weekly, or monthly payment; and mileage and overall condition of the vehicle.

Obviously there are many more issues associated with the average BHPH transaction at your dealership. But in general, when it comes right down to it, there is no price negotiating and no negotiating of the interest rate, and most of the time the dealership tells the customer which vehicle he or she can purchase that day. The salesperson does not have to overcome all the major objections listed above, and many more, as he or she would when facing a conventional finance customer.

In most instances, the dealer is not overly concerned with back-end profits, or even if any aftermarket products are sold, because he will be financing all the extras anyway. The only big objective left is the ever-important down payment. In reality, Mr. Dealer, you are the bank or lending institution and you solely determine what amount you will accept to proceed with the sale.

Do not misunderstand – first, you must always make a sale, and all the factors prior to that are definitely important, such as first impressions, cleanliness of your facility, attitude of salespeople, dealership reputation and vehicle selection, etc.

What I am trying to get across is that having a first-rate quality collection system in place will have a much greater effect on your profits in a BHPH operation than a good selling process.

The real fact of the matter is you will not even start to make a profit in most cases until you are somewhere well into the age and depth of the note. So you have an obligation to convince each and every one of your customers that it is vitally important (and in their best interest) to make all payments on time as agreed.

Thus, this all-important and high-priority task now becomes the responsibility of your collectors.

So think with me here. Now your collectors become your salespeople.

Allow me to ask you honestly: Have you ever considered your collectors as salespeople?

The collectors must “sell” on each and every contact why your customers must maintain their payment schedules as agreed and why they must maintain constant open communication at all times with their personal collector – whoops, I mean their “salesperson.”

With a lot of small BHPH stores, the collection process is left up to office personnel and basically passed off under the category of a clerical job within the office operations of the dealership.

Do you as the dealer principal or decision-maker contribute hands-on involvement on a daily basis to your own established collection process? Do you have a complete and through understanding of all your collection policies and procedures? Do your collectors (salespeople) exercise the proper attitude and demeanor when it comes to collecting on each and every personal contact?

Because I do business on a daily basis with BHPH dealers all over the United States, from single-point operations that sell 10-15 units a month to BHPH dealers with 65 million dollars worth of notes on the street, it jumps out at me that collections is the single most important process with the most direct effect and instant impact on whether or not you are successful as a BHPH dealer.

Many experts and consultants have thousands of ideas on how you can be successful in a conventional retail used car dealership. But with a BHPH operation, Mr. Dealer, you ain’t in the car business – you

are in the finance business. You must know and understand the separation of the two entirely different operations and concepts.

If you are a current BHPH dealer or are considering getting into that part of our industry, the key to being successful is not rocket science. There are no magic pills you can take to establish and maintain a great BHPH operation with a professional and productive collection process.

Good collecting skills go hand and hand with good sales skills. Or are they both the same?

A negative and confrontational sales call or a bad retail experience out in front of the store really translates into “no sale today.” A negative and confrontational collection call can result in “no money” for you today, which can ultimately turn into an expensive repossession and/or a possible charge-off.

Both situations cost you money right now.I hope you I’ve helped you get the point

loud and clear and find the answer to the question: Is sales versus collection really a battle, or are they one in the same?

Prioritizing collections over sales sounds like it is out of proper sequence in the entire process, but really, it is not.

So, Mr. BHPH Dealer, why not take the necessary time and money to educate and train your collectors as salespeople as well as collectors?

Your answer should be that it just sounds like good old simple common sense.

BY ROD A. HEASLEYROD HEASLEY IS EXECUTIVE VICE PRESIDENT OF PERITUS PORTFOLIO SERVICES , A SOUTHLAKE, TEXAS-BASED SPECIALTY FINANCE COMPANY THAT SPECIALIZES IN THE PURCHASING OF OPEN BANKRUPTCY ACCOUNTS. HE HAS MORE THAN 30 YEARS’ EXPERIENCE IN THE RETAIL AUTOMOTIVE SALES INDUSTRY AND IS A NOTED WRITER AND SPEAKER ON THE SUBJECT. HE CAN BE REACHED AT RODH@PERITUSSERVICES.NET OR 866-8315954, EXT. 5.

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A T H I R D O R M O R E O F A L L R E CA L L E D V E H I C L E S A R E N O T F I X E D BY T H E I R OW N E R S . A R E A N Y I N YO U R I N V E N T O RY ?

Finding Open Recalls Should be a Dealer PriorityManufacturer recalls are a common

occurrence, with hundreds of recalls issued every year affecting millions of cars. In fact, more than 20 million cars were recalled in 2010 alone.

But what is alarming about recalls is how many go unfixed by their owners – roughly a third or more of all recalled units. And thousands of those cars are bought and sold every day.

It’s believed there are anywhere from 40 million to 60 million cars out there with unfixed recalls. In just the past two years, roughly 12 million cars with open recalls were added to the growing tally. And some of those vehicles are moving daily through auto auctions and being taken in on trade.

While finding and fixing open recalls is everyone’s responsibility, it’s up to retailers to take the proper steps to identify any potential issues. Many are already keeping a sharp eye out for evidence of things like flood damage, odometer rollbacks or previous accidents. But what about open recalls?

In 2010, a plumber from Delaware named Bob Knotts bought a van for his business from a local independent dealership. He never asked about open recalls, never checked for them and was never told if any existed.

Around midnight his wife ran into the house from walking the dog, screaming that smoke was pouring out of the van. The entire front cabin was engulfed in flames. The van was destroyed.

“It caught fire from an electrical component under the driver’s seat that was recalled and never fixed,” Knotts said, standing next to the van parked less than five feet from his home. “My house could have caught on fire, or I could have been driving it. Had it spread to the back of the van, where I keep a propane torch and glue that’s highly flammable, it would’ve been a complete fireball.

“Not knowing there was an unfixed recall cost me $8,000.”

One way to tell if a car has an open recall is to check the vehicle history. Most manufacturers report their open

recall information to CARFAX. When you’re evaluating a vehicle or looking at the auction run list, consider getting a CARFAX Vehicle History Report to help you pinpoint which vehicles have open recalls before taking them into inventory.

“We understand that recalls are a concern for our customers,” said Ryan Corey, president of Autoline Automotive in Atlantic Beach, Fla. “It’s up to us to make sure the cars we’re selling have had potential issues addressed.

“As an independent dealer, we take full advantage of tools like CARFAX reports that help identify open recalls. Any recalls that show up are taken to get fixed before we retail that vehicle. In fact, as a CARFAX Advantage Dealer, we run a CARFAX report on every vehicle we sell as well as any vehicle we buy. It’s a key part of our everyday operations and builds trust with potential buyers. We know we’re doing right by our customers and are putting the best cars on our lot.”

Checking the vehicle history for every unit on your lot helps you make better buying decisions and builds confidence with customers. It can be to your advantage to let your customers know upfront about an open recall and help them get it fixed.

Auto manufacturers understand the importance of informing their customers about a recall. Customer safety and the company’s reputation are at stake. With so many of those vehicles changing hands before they’re fixed, most manufacturers choose to work directly with CARFAX to reach the greatest number of buyers and sellers.

“Ford is committed to communicating safety recall information to vehicle owners in an open and transparent manner as part of our commitment to top quality,” Ford recall and service programs operations manager Robert Case said. “Ford was the first major automaker to establish a relationship with CARFAX to provide open safety recall information as we recognized the CARFAX Vehicle History Report as a

valuable tool used by many consumers and business entities.”

Independent dealers can save time and choose the right cars by checking for open recalls through a vehicle history report prior to acquisition. If you already have vehicles on your lot with open recalls, the smart and safe thing is to take them in to be closed.

Show your customers the report and the service receipt with the recall completion. Customers will appreciate your honesty and focus on safety.

“Unrepaired open recalls are an important factor in vehicle evaluations,” CARFAX communications director Larry Gamache said. “Estimates are that nearly a third of all recalled vehicles aren’t fixed by their owners. CARFAX is working with leading manufacturers, our dealer customers and consumer advocates to alert people to open recalls and make sure more of these are fixed.”

Used car shoppers are looking to dealers to make them aware of any issues like open recalls. Be informed about the cars you’re retailing before they even reach your lot – CARFAX can help. To become a CARFAX subscriber, NIADA members can visit www.carfaxonline.com, call 877-606-9119 or visit www.niada.com and click on the “Links” tab.

BY CARFAX

“Unrepaired open recalls are an important factor in vehicle evaluations” CARFAX COMMUNICATIONS DIRECTOR LARRY GAMACHE

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Radically Increase the Results of Your AdvertisingSmart dealers understand they are

in control of their own destiny, growth, success and profitability this year and every year.

The answer to the burning question about increasing sales and profits is better marketing, better response. What you really need to do is to dramatically increase your car advertising results.

How? Good question. You must create marketing that grabs

people’s attention, delivers value and causes them to be attracted to you, so you can start a relationship with them.

We have found the best way to do that is to deliver information. You see, we live in the information age and to get people’s attention and get them to respond, marketers have to create marketing messages that look, feel, and sound like objective, unbiased, useful information that helps consumers solve a problem, fulfill a want or desire, make their lives easier or streamline their decision-making process.

So why does information-focused marketing work radically better than traditional marketing?

Because traditional automotive marketing is all about the dealership, the vehicles and the features, and nobody really cares about those things. Gravitational Marketing, the kind of marketing that uses information to attract customers, is built around education and solutions.

The true goal of effective marketing and advertising should be to educate, to clarify and simplify, to help aid the decision-making process. Gravitational Marketing is about captivating, invigorating and motivating.

All of those are accomplished through deliberately constructed content, not flashy images, misleading promotions, pink gorillas, window paint or clever slogans.

Good marketing provides solutions. Solutions to problems your customers

face right now and want to alleviate. A well planned and executed Gravitational Marketing strategy delivers a much-needed cure to the pain your prospect is suffering.

If you can give your prospects the information they need to eliminate their problem and ultimately provide them with a clearly defined set of steps to take, you will win their business and create a customer you can keep for life. You will become the expert in their eyes and they will flock to you. Price concerns will be secondary to the solution they seek, making your profits soar to new heights.

Why does this Gravitational Marketing approach skyrocket response rates and beat the pants off traditional marketing?

By offering information, solutions and education in your advertising instead of trying to make the sale from a single ad, you give the prospect a low-risk way to respond and indicate to you they are interested in becoming a vehicle intender.

Armed with their contact information, their permission to market to them further and the knowledge that they need and want your help, you can tell your whole sales story because you have their trust and attention. That makes your marketing job easier, your response rates higher and your marketing more cost-effective.

If you have ever been single and tried to get a date, you’ve used this two-step approach. Think back to when you met someone you wanted to get to know better. What did you do? Did you offer to buy them a drink, go to dinner, a movie or coffee? A small next step? Surely, you didn’t go right up to them and ask for engagement, a one-night stand or marriage?

Most dealers do just that in their marketing all the time. They go right for the big one without the romance or relationship-building.

Sales and profits are all about relationships. You don’t sell a car to sell a car. You sell a car to create a client. Or at least you should. A client is someone who buys from you multiple times in his lifetime, doesn’t nickel and dime you and refers repeatedly.

That’s the kind of relationship you want to create with all your customers. And it all starts with the first point of contact.

In today’s extremely cluttered marketplace, successful automotive dealers have to think like consumers and become marketers.

In order to dramatically increase the effectiveness of their advertising, dealers must not look at every single prospect the same way. There isn’t just one group of people they are selling cars to, there are many.

With the proper Gravitational Marketing message, you can attract non-intenders and pull them into the buyers’ circle today, dramatically increasing your pool of potential buyers.

It gets better. Those new buyers you pulled into the market are 100 percent yours for the taking. You don’t have to split the spoils with anyone else because, if done right, they believe you are the only dealer who can help them now. So you don’t have to worry about losing them to the dealer down the street.

Yes, there are many pitfalls and trip wires that can derail your success and keep you from reaching the goal – more ups, better quality ups, dramatically higher response to your advertising and increased sales and profits. It’s not all fun and games.

But it’s not rocket science, either.

BY JIMMY VEE AND TRAVIS MILLERJIMMY VEE AND TRAVIS MILLER ARE EXPERTS ON ATTRACTINGCUSTOMERS AND THE AUTHORS OF GRAVITATIONAL MARKETING: THE SCIENCE OF ATTRACTING CUSTOMERS AND INVASION OF THE PROFIT SNATCHERS. FOR A FREE COPY OF THEIR CONTROVERSIAL NEW BOOK, VISIT WWW.PROFITSNATCHERSBOOK.COM AND USE COUPON CODE UCDM1211.

D R I V I N G T R A F F I C

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Radically Increase the Results of Your Advertising

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Congress enacted the federal Bankruptcy Code in 1978, and it has been amended several times since. The procedural aspects are governed by bankruptcy rules and the local rules of each bankruptcy (BK) court. There are 90 BK courts – one in every federal judicial district in the country.

The court official with the decision-making power in each district is a United States bankruptcy judge. Much of BK process is administrative and conducted away from the courthouse. In Chapter 7 and 13 cases, the ones that affect dealers and lien holders, the process is carried out by a trustee.

What’s the Difference?The consumer bankruptcies that affect you

most will be filed as Chapter 7 or Chapter 13.Chapter 7 – liquidation: A chapter

7 case does not involve the filing of a plan

of repayment, as in chapter 13. Instead, the trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code.

Chapter 13 – wage earner plan: Chapter 13 offers individuals a number of advantages over Chapter 7 liquidation, including an opportunity to save their homes from foreclosure.

By filing under Chapter 13, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time, though they must still make all mortgage payments that come due during the Chapter 13 plan on time.

Chapter 13 allows individuals to reschedule secured debts, other than a mortgage for their primary residence, and

extend them over the life of the plan. That could lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on “consumer debts,” a provision than can protect co-signers.

Chapter 13 acts like a consolidation loan under which the individual makes payments to a trustee, who then distributes payments to creditors.

Any individual, even if self-employed or operating an unincorporated business, is eligible for Chapter 13 relief as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081. A corporation or partnership cannot be a Chapter 13 debtor.

How Chapter 13 Works A Chapter 13 case begins by filing

a petition with the bankruptcy court

Understanding Your Customer’s Chapter 13 BankruptcyT H E F I R S T O F A T H R E E - PA R T S E R I E S O N T H E B A S I C S O F B A N K R U P T C Y P RO C E D U R E S A N D W H AT I T M E A N S T O D E A L E R S / L I E N H O L D E R S . “MONEY

MATTERS

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serving the area where the debtor has a residence. Unless the court orders otherwise, the debtor must also file schedules of assets and liabilities, a schedule of current income and expenditures, a schedule of contracts and unexpired leases, and a statement of financial affairs.

When an individual files a Chapter 13 petition, an impartial trustee is appointed to evaluate the case and serve as a disbursing agent, collecting payments from the debtor and making distributions to creditors. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.

Between 21 and 50 days after the debtor files the petition, the trustee will hold a meeting of creditors. The debtor, the trustee and those creditors who wish to attend will then come to court for a hearing on the repayment plan.

The debtor must file a repayment plan

with the petition or within 14 days after the petition is filed. The plan must be submitted for court approval and must provide for payments of fixed amounts to the trustee on a regular basis, typically biweekly or monthly. The trustee then distributes the funds to creditors according to the terms of the plan, which can offer creditors less than full payment on their claims.

If the debtor wants to keep the collateral securing a particular claim, the plan must provide that the holder of the secured claim receive at least the value of the collateral. If the obligation underlying the secured claim was used to buy the collateral – such as a car loan – and the debt was incurred within certain time frames before the bankruptcy filing, the plan must provide for full payment of the debt, not just the value of the collateral.

If the court confirms the plan, the trustee will distribute funds received under the plan “as soon as is practicable.”

Making the Plan WorkOnce the court confirms the plan,

the debtor must make the plan succeed by making regular payments to the trustee either directly or through payroll deduction, which requires living on a fixed budget for a prolonged period. While confirmation of the plan entitles the debtor to retain property as long as payments are made, the debtor cannot incur new debt without consulting the trustee.

Next: The basics of Chapter 7 filings.

Note: The information presented should not be cited or relied upon as “legal authority” and should not be used as a substitute for reference to the U.S. Bankruptcy Code and the Federal Rules of Bankruptcy Procedure.

BY ROD HEASLEY ROD HEASLEY IS EXECUTIVE VICE PRESIDENT OF PERITUS PORTFOLIO SERVICES , A SOUTHLAKE, TEXAS-BASED SPECIALTY FINANCE COMPANY THAT SPECIALIZES IN THE PURCHASING OF OPEN BANKRUPTCY ACCOUNTS.

“When an individual files a Chapter 13 petition, an impartial trustee is appointed to evaluate the case and serve as a disbursing agent, collecting payments from the debtor and making distributions to creditors.

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A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code.

To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor can be an individual, a partnership, or a corporation or other business entity. Subject to the means test for individual debtors, relief is available under chapter 7 regardless of the amount of the debtor’s debts or whether the debtor is solvent.

The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or

corporations. While an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged.

How Chapter 7 WorksA chapter 7 case begins with the debtor

filing a petition with the bankruptcy court serving the area where the individual lives. The debtor must also file schedules of assets and liabilities, a schedule of current income and expenditures, a statement of financial affairs, and a schedule of contracts and unexpired leases.

The debtor must also provide:• A list of all creditors and the amount

and nature of their claims. • The source, amount and frequency of

the debtor’s income.• A list of all of the debtor’s property.

• A detailed list of the debtor’s monthly living expenses – food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

Filing a petition under chapter 7 automatically “stays” (stops) most collection actions against the debtor or the debtor’s property. In some situations, the stay is effective only for a short time. The stay requires no judicial action. As long as the stay is in effect, creditors generally cannot initiate or continue lawsuits, wage garnishments or even telephone calls demanding payments.

Between 21 and 40 days after the petition is filed, the case trustee will hold a meeting of creditors. The debtor must attend the meeting and answer questions regarding the debtor’s financial affairs and property.

The Ins and Outs of Chapter 7

THE SECOND OF A THREE-PART SERIES ON THE BASICS OF BANKRUPTCY PROCEDURES AND WHAT IT MEANS TO DEALERS/LIEN HOLDERS.

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Role of Trustee in Chapter 7 When a chapter 7 petition is filed, the U.S.

trustee (or the bankruptcy court in Alabama and North Carolina) appoints an impartial case trustee to administer the case and liquidate the debtor’s nonexempt assets.

In the typical no-asset chapter 7 case, there is no need for creditors to file proofs of claim because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the bankruptcy court will provide notice to creditors and will allow additional time to file proofs of claim.

The primary role of a chapter 7 trustee in an asset case is to liquidate the debtor’s nonexempt assets in a manner that maximizes the return to the debtor’s unsecured creditors. The trustee accomplishes this by selling the debtor’s property if it is free and clear of liens.

Chapter 7 DischargeA discharge releases individual debtors

from personal liability for most debts and prevents the creditors owed those debts

THE SECOND OF A THREE-PART SERIES ON THE BASICS OF BANKRUPTCY PROCEDURES AND WHAT IT MEANS TO DEALERS/LIEN HOLDERS.

CONTINUED ON NEXT PAGE

from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge.

Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases.

If a debtor wishes to keep certain secured property, such as an automobile, he or she may decide to “reaffirm” the debt. That’s an agreement that the debtor will remain liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in the bankruptcy. In return, the creditor promises not to repossess the automobile or other property so long as the debtor continues to pay the debt.

The debtor must reaffirm a debt before the discharge is entered, and must sign a written reaffirmation agreement and file it with the court.

An individual receives a discharge

for most of his or her debts in a chapter 7 bankruptcy case. A creditor may not initiate or continue any legal or other action against the debtor to collect a discharged debt.

Your customer has three options in a chapter 7 filing: surrender the vehicle, redemption or reaffirm the note.

We recommend that when you as the lien holder receive a chapter 7 notice of filing, you call the customer’s attorney and ask the customer’s intention. That conversation will dictate your next move prior to discharge.

Next: Your options when a customer files bankruptcy. Note: The information presented should not be cited or relied upon as “legal authority” and should not be used as a substitute for reference to the U.S. Bankruptcy Code and the Federal Rules of Bankruptcy Procedure.

BY ROD HEASLEY ROD HEASLEY IS EXECUTIVE VICE PRESIDENT OF PERITUS PORTFOLIO SERVICES , A SOUTHLAKE, TEXAS-BASED SPECIALTY FINANCE COMPANY THAT SPECIALIZES IN THE PURCHASING OF OPEN BANKRUPTCY ACCOUNTS.

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AUCTIONS ADESA Colorado SpringsCindy Kuhn10680 Charter Ranch Rd.Fountain, CO 80817719-391-6615www.adesa.com

CarMax Auctions4010 Tutt BlvdColorado Springs, CO 80922888-804-6604www.carmaxauctions.com

Copart Auto AuctionsTroy Callahan1281 CR #27Brighton, CO 80603303-659-0066www.copart.com

Dealers Auto Auction of the RockiesMichelle Noblitt7175 York St.Denver, CO 80229303-289-7716www.daarockies.com

Insurance Auto AuctionBryan Stonecipher409 W 66th Ave.Denver, CO 80221303-428-3024www.iaai.com

Loveland Auto AuctionMatt Read4660 Chapman RdLoveland, CO 80534970-669-4994www.lovelandautoauction.com

Manheim Denver Jeff West17500 East 32nd Ave.Aurora, CO 80011303-343-3443www.manheim.com

P.A.C.O.J. Pratt5450 Dahlia St.Commerce City, CO. 80022303-287-0691www.pacificauction.com

Ritchie Bros AuctioneersDebbie Sutton4444 Ritchie Dr.Longmont, CO 80504970-535-6700www.rbauction.com

Total Resource AuctionsRick Dendorfer8300 Blakeland Dr.Littleton, CO 80125303-470-5511www.traauctions.com

AUTOMOTIVE SERVICESAppOneKary Hooper18153 E. Petroleum Dr.Baton Rouge, LA 70809877-277-6631 xt 1228107www.appone.net

Auto Portfolio Services LLCMichelle Jackson5295 DTC Parkway #200Greenwood Village, CO 80111720-241-7608www.autoportfolioservices.com

AutoStar SolutionsAllen Dobbins1612 Summit Ave, Ste 350Fort Worth, TX 76102800-682-2215www.autostarsolutions.com

Denver Newspaper AgencyMike McKiernan101 W. Colfax AveDenver, CO 80202303-954-2524www.denverpost.com

Inilex GPSMichelle Jackson 4908 E. McDowell Rd. #103 Phoenix, AZ 85008 720-291-4563www.inilex.com

PassTime Security SystemsMelissa Obermoller861 Southpark Dr., Ste #200Littleton, CO 80120303-623-5339www.passtimeusa.com

Payment SolutionsBrian Salazar4065 St. Cloud Dr. Loveland, CO 80538 877-775-0075 www.wegiveunited.com

UCMLinkAllison PittmanPOB 13768Ridgeland, MS 39157601-812-5876www.ucmlink.com

Whipplewood CPAsMona Feeley11852 Shaffer Dr.Littleton, CO 80127303-989-7600www.whipplewood.com

CAR RENTALSEnterprise Rent-A-CarKerri Tiernan7201 S. Fulton St.Centennial, CO 80112720-875-9916

DEALER WEBSITE & PRINT DESIGNSkywerks Martyn Olliver229 Wells Ave. S.Renton, WA 98057425-738-0234 www.skywerks.com

Passport PublishingJulia Byrne970-870-8998

IDENTITY THEFT SERVICESIdentity Theft and Red Flags Rules Specialist Howard Koziara303-257-8200

INSURANCE SERVICESFarmers InsuranceLaura Winter7535 E. Hampden Ave. #200Denver, CO 80231303-368-6571

HUB International InsuranceDon LearnedPOB 4316Pueblo, CO 81003719-546-6834www.hubinternational.com

InsurJim Taylor7445 E Peakview AveCentennial, CO 80111303-770-5157www.insurgroup.net

Moody Insurance Agency IncEvan Moody8055 E. Tufts Ave.Denver, CO 80237303-824-6600www.moodyins.com

Secura Insurance Companies2401 S. Memorial Dr.Appleton, WI 54915920-830-4777www.secura.net

Security Financial InsuranceThomas Luberski11067 W. Polk Pl.Littleton, CO 80127303-933-2006

Taggart InsuranceMark Harrington1600 Canyon Blvd.Boulder, CO 80302 303-442-1484www.taggartinsurance.com

Welsh Insurance AgencyJeff Welsh1310 E. Eisenhower Blvd.Loveland, CO 80537970-663-5404www.wiainsurance.com

INTERNET CAR SALESAuction GeniusBetty Gaylord401 Main St. #2Longmont, CO 80501720-515-1534www.auctiongenius.net

AutoTrader.comJennifer Stone720-560-1088www.autotrader.com

Cars.comSusan Tyson175 W. Jackson Blvd., Ste. 800Chicago, IL 60604303-954-2983www.cars.com

carsforsale.comAaron Oestreich2707 S. Carolyn Ave.Sioux Falls, SD. 57106605-306-3307www.carsforsale.com

LEGALCIADA Members AttorneyMichael McKinnon303-795-2526

LegalShieldHoward Koziara303-257-8200

Steven W. HickoxAttorney & Counselor2120 S Birch StDenver, CO 80222303-756-0277

Vargo & Janson, Pc.Jerry VargoPOB 280389Lakewood, CO 80214303-238-8832www.vargojanson.com

LENDERS AND FINANCE COMPANIESAC AutoPayBrad Rullman1058 Delaware StDenver, CO 80204303-615-7237www.autopay.com

Automotive Finance CorpMicki Whalen1905 Sherman StDenver, CO 80203303-832-4757www.afcdealer.com

Bank of DenverGeorge Dreman810 E 17th AveDenver, CO 80218303-572-3600www.thebankofdenver.com

CIG FinancialKen Anderson6 Executive Cr #100Irvine, CA 92614303-815-7509

Credit Acceptance CorpThomas McCarthy4230 S Alton PlGreenwood Village, CO 80111720-934-1512www.creditacceptance.com

CU Direct Connect6377 S Revere Pkwy #200Centennial, CO 80111720-974-1311www.cudirectconnect.com

Dealer Services CorporationPatty Turner1320 City Center Dr #100Carmel, IN 46032888-969-3721www.discoverdsc.com

Floorplan XpressTom Smith608 Garrison StLakewood, CO 80215720-259-5800www.floorplanxpress.com

J P Morgan Chase BankJerri Wunder5734 S Prince St, 2nd FlLittleton, CO 80120303-734-4116www.jpmorganchase.com

Lobel FinancialKathy Haag6551 S Revere Pkwy #100Centennial, CO 80111303-706-1400www.lobelfinancial.com

Security Capital FundingDana RomeroPOB 1257Englewood, CO 80150303-761-7744

REPOSSESSION COMPANIESAsset Services IncSusan MillerPOB 17866Denver, CO 80217303-333-0500www.assetservicescolorado.com

Pratt Adjustment BureauJeanne Lewis6800 Downing StDenver, CO 80229303-289-7710www.corepo.com

Premier Recovery ServiceJennifer HubbardPOB 211599Denver, CO 80221303-426-8100www.premierrecovery.com

SERVICE AGREEMENTSAUL CorpJason Garner1250 Main St., Ste #300Napa, CA 94559800-826-3207www.aulcorp.com

Diamond Warranty CorporationTaylor Anderson9 North Main StPittston, PA 18640570-394-3291

GWC Warranty Corp40 Coal StWilkes-Barre, PA 18702800-482-7357www.gwcwarranty.com

Mile High Consulting IncMike CintronPOB 740460Arvada, CO 80006720-838-7400www.milehighconsultinginc.com

Protective Life – Asset ProtectionJoe MarcusDenver, CO 303-918-9735

N AT I O N A L H I G H WAY T R A F F I C SA F E T Y A D M I N I S T R AT I O N P R E S S R E L E A S E

The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) announced that Volvo Cars North America, LLC has agreed to pay $1.5 million in civil penalties in response to the agency’s assertion that the automaker failed to report safety defects and non-compliances to the federal government in a timely manner.

The National Traffic and Motor Vehicle Safety Act requires all auto manufacturers to notify NHTSA within five business days of determining a safety defect exists or that the manufacturer is not in compliance with federal motor vehicle safety standards – and to promptly conduct a recall.

“With millions of vehicles traveling our highways every single day, we take our responsibility to safeguard the driving public very seriously and we expect automakers to do the same,” Secretary of Transportation Ray LaHood said. “Manufacturers are required to handle safety issues both quickly and appropriately.”

In January 2011, NHTSA launched an investigation to determine whether Volvo met its obligation under the law to notify the agency of a safety defect and conduct a recall in a timely manner. NHTSA’s evaluation of six recalls issued in 2010 and one recall announced in 2012 found evidence that Volvo failed to report known safety defects and non-compliances to the agency in accordance with federal law.

As part of the settlement, Volvo Cars North America, LLC and its parent company, Volvo Car Corporation, agreed to make internal changes to its recall decision-making process to ensure timely reporting to consumers and the federal government in the future.

“It’s critical to the safety of everyone on our roadways that automakers promptly report safety defects – and take immediate action to resolve the issue,” NHTSA administrator David Strickland said. “NHTSA expects all manufacturers to obey the law and address automotive safety concerns without delay.”

The fines received from the automaker will be paid into the general fund of the U.S. Treasury.

VOLVO TO PAY $1.5 MILLION FOR DELAYED REPORTING OF RECALLS

Providers

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M A R K E T N E W S

Report: Expect to See More Hybrids

Expect to see more hybrids cruising around the world’s highways in the next few years.

According to market research report distributor ReportStack.com, the global hybrid car market is expected to grow at a rate of 18.92 percent over the next three years.

The cause for the potential double-digit growth: increasing global oil consumption, the report, titled “Global Hybrid Car Market 2011-2015,” explained.

Moreover, as governments around the world try to cut down on fuel emissions, the hybrid car market has “been witnessing an increase in initiatives by governments to create awareness and acceptance of hybrid cars,” the report said.

The report also cites labor arbitrage, such as the various advantages offered by the hybrid car to the end user, such as energy efficiency, less pollution, better performance, reduced dependency on natural resources and more, as reasons for the hybrid market expansion.

That said, even with the push from politicians, the high cost of hybrid cars is acting as a barrier to the market growth, the report said.

‘’With the time and research on the development of the battery systems of hybrid cars, the overall cost of batteries and total cost of ownership will decrease,” an analyst from the publishing automotive team said. “By 2014, the total cost of ownership of plug-in hybrid electric vehicles with a battery of 10 kilowatt-hours will be below that of an internal combustion engine vehicle, and by 2017, the total cost of ownership of plug-in hybrid electric vehicles with a battery of 15 KWh will be lower than an internal combustion engine vehicle.

“The total cost of ownership of battery electric vehicles will be less than an internal combustion engine vehicle by 2020 with the development of batteries. This reduction in cost will fuel the growth of the global hybrid car market.”

Who will benefit most from this potential growth?

The vendors currently dominating the hybrid market space include Toyota Motor Corp., Honda Motor Co., Ford Motor Co., and Nissan Motor Co. Ltd., the report noted.

General Motors Co., BMW AG and Volkswagen Group are also expected to play a role in the future fuel-efficient vehicle market.

CIADA has been helping Independent Dealers for 71 years. This non-profit trade association was established in 1941 to represent car dealers in Colorado. CIADA has a presence before the state legislature and becomes involved with the regulatory agencies whenever necessary. CIADA is the only trade association in Colorado representing the Independent Used Car Dealer. The association is organized to assure that control of the policies and activities of the industry is in the hands of active dealer members. CIADA is dedicated to combating legislation that is unfavorable to used motor vehicle dealers. Alone, a single dealer has little chance of successfully combating legislation and rules that will be harmful to his/her business. Dealers who are united under the CIADA banner have a voice that is commanding and powerful. CIADA sends important news and information about the automobile industry to members through the CIADA Insider Magazine, the Used Car Dealer national magazine and email alerts. These publications will keep you informed on issues likely to affect your business. CIADA is recognized throughout Colorado as the official voice of the used car dealer. The association has an established record of accomplishment and fair dealing. Representatives of CIADA are welcomed and respected by officials of every regulatory agency that deals with the used car industry. CIADA proudly includes in its membership dealers of all sizes, from the smallest to the largest. Its strength is in the devotion of its individual members. So whether your business is large or small, you are urged to join the progressive association, an association dedicated to serving you, the Independent Used Car Dealer. CIADA provides an up-to-date and user friendly website packed with information ranging from Business Partners to requirements for obtaining a dealer license and an online store for all your form and business needs. CIADA has numerous educational opportunities including a weekly State approved Pre-Licensing class and regularly scheduled Title and Compliance seminars.

CIADA REINTRODUCES “VIP CARD” - Join now and receive more than $600 worth of special discounts and reduced fees..

CIADA members have free access to NIADA.tv for additional business training and information.

CIADA is always looking for programs and services that are beneficial to the Independent Dealer.

Membership dues are $225 for 12 months from the date you join and your National IIADA dues are included. Call CIADA 303-239-8000 with questions.

www.CIADA.org

RICH TRADITION

71 Years of Helping Independent Dealers Succeed !

Colorado Independent Automobile Dealers Association

Get Both CIADA and NIADA Memberships for only $225 Join Now And Receive All Of The Following Benefits Plus Many More. . .

Trade-Ins Getting OlderCar­dealers­are­receiving­trade-ins­that­are­three­to­four­years­older­than­

trade-ins­received­a­few­years­ago,­according­to­estimates­from­Black­Book’s­analysts.­And­with­900,000­more­trade-ins­than­last­year­expected­in­2012,­the­majority­of­vehicles­entering­the­used­car­market­are­model­year­2000-2005,­which­makes­higher­mileage­trade-ins­the­new­normal.Black­Book­estimated­the­majority­of­trade-ins­now­average­between­

125,000­and­150,000­miles,­and­F&I­experts­have­reported­a­rise­in­vehicles­with­200,000­miles.­The­analysts­said­Buy­Here-Pay­Here­dealers­will­benefit­the­most­from­the­older­inventory,­and­there­is­plenty­of­demand­as­consumer­credit­has­forced­more­shoppers­to­seek­those­deals.­Vehicles­older­than­2005­are­more­difficult­to­finance.According­to­Black­Book,­the­aged­inventory­will­impact­dealers­through­

2014­before­trade-ins­begin­falling­again­in­age­and­mileage.“Americans­are­holding­onto­their­cars­longer­today,­and­this­aged­vehicle­

is­what’s­being­traded­in­as­we’ve­seen­a­rise­in­new-car­sales­activity,”­Black­Book­managing­editor­Ricky­Beggs­said.­

I N D U S T RY N E W S

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BY CHIP ZYVOLOSKICHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.

The­year’s­end­is­a­time­of­reflection.When­it­comes­to­auto­finance­and­compliance­

challenges,­the­story­can­sound­similar­from­year­to­year.­There­are­usually­a­handful­of­new­regulations­facing­dealers­and­lenders­that­have­made­a­big­impact­on­the­industry­over­the­previous­12­months.­But­this­year­doesn’t­really­fit­the­mold.­That’s­

because­2012­arguably­hasn’t­been­as­much­about­new­regulation­as­about­the­additional­scrutiny­of­regulators­enforcing­laws­that­have­been­in­place­for­some­time.That­has­been­particularly­evident­in­the­areas­

of­state-specific­forms,­model­language­and­loan­documentation. Some­recent­examples­suggest­a­trend­that­

state­regulators­are­taking­a­closer­look­at­existing­motor­vehicle­retail­sales­financing­authority­and­transaction documentation:New­Mexico:­Since­2009,­a­New­Mexico­

attorney­general’s­regulation­has­required­creditors to provide a summary or a translation of­English-language­transaction­documents­in­consumer­sales­negotiated­in­a­language­other­than­English.­Its­coverage­is­very­broad­and­

somewhat­difficult­to­understand.This­year,­the­New­Mexico­attorney­general­

proposed­additional­changes­to­the­regulation.­After­receiving­comments,­the­AG­acknowledged­issues­with­the­proposed­changes­and­with­the­existing­regulation­itself.­As­a­result,­it­pulled­back­the­changes­and­repealed­the­existing­regulation­to­allow­for­further­study.Michigan:­Years­ago,­the­Michigan­Department­

of­Licensing­and­Regulatory­Affairs,­Office­of­Financial and Insurance Regulation (OFIR) said bad­check­charges­are­not­allowed­in­motor­vehicle­retail­contracts­in­spite­of­statutory­authority­that­seems­to­allow­it.This­year,­the­OFIR­published­a­letter­saying­

bad­check­charges­cannot­be­collected­on­retail­motor­vehicle­sales­contracts­unless­the­contract­contains­a­bad­check­charge­provision,­indirectly­reversing­its­prior­position.­The­OFIR­now­holds­that­bad­check­charges­are­allowed­as­long­as­they­are­specifically­authorized­in­the­retail­contract. Montana:­The­Montana­late­charge­authority­

is­a­bit­ambiguous­and­has­been­that­way­for­many­years.­Because­of­the­ambiguity,­there­were­vastly­different­interpretations­in­the­marketplace.­In­response­to­a­request,­the­Montana­Division­of­Banking­and­Financial­Institutions­recently­published­a­letter­clarifying­its­interpretation­of­the­state statute.The­apparently­heightened­state­scrutiny­might­

be­just­a­coincidence.­It­could­also­be­that­states­are­demonstrating­their­diligence­and­control­to­the­public­and­to­the­new­federal­Consumer­Financial­Protection­Bureau­(CFPB).­The­CFPB­regulates­dealers­who­don’t­

routinely­assign­their­financing­contracts­to­unaffiliated­third­parties.­For­the­most­part,­that­means­the­CFPB­regulates­Buy­Here-Pay­Here­dealers.­The­Federal­Trade­Commission­(FTC)­continues­to­regulate­the­rest­of­the­auto­sales­and­finance­industry.The­net­result­is­there­are­two­federal­

regulators­in­the­auto­finance­marketplace.­It’s­possible­states­are­more­actively­clarifying­and­enforcing­their­existing­laws­and­regulations­in­an­effort­to­maintain­a­level­of­control­over­the­auto­finance­industry­–­hoping­to­minimize­federal­oversight.In­addition­to­reflecting­on­the­year­that­has­

been,­it’s­also­time­to­think­about­what­might­lie­ahead.­What­will­the­new­regulatory­environment­look­like­in­2013?Many­thought­the­CFPB­would­have­done­

a­lot­of­regulatory­change­in­auto­financing­by­now,­but­that­hasn’t­been­the­case.­One­reason­is­it­has­been­focused­on­real­estate­financing­practices­and­disclosures.­The­CFPB­also­seems­to­be­carefully­studying­the­consumer­finance­marketplace­–­and­even­consumers­–­to­lay­a­solid­foundation­for­its­regulatory­oversight.The­CFPB’s­strategic­plan­for­2013-18­notes­

one of its strategies is to “develop and maintain an­efficient­fact-based­approach­to­developing,­evaluating,­revising­and­finalizing­regulations.”“Fact-based”­is­a­key­term.­We­have­seen­the­

CFPB­asking­good­questions­and­conducting­extensive­research­on­areas­it­is­tasked­with­overseeing.­For­example,­the­CFPB­tested­draft­real­estate­disclosure­documents­with­consumers­in­shopping­malls.The­Dodd­Frank­Act­requires­the­CFPB­to­

research­and­provide­policy­guidance­on­whether­arbitration­provisions­should­be­allowed­in­consumer credit (non-real estate) transactions. To start­that­process,­the­CFPB­published­a­request­for suggestions, data sources and strategies to study­the­issue.­It’s­also­clear­the­CFPB­is­not­afraid­to­take­

a­fresh­approach­to­presenting­transaction­information­to­consumers.­For­example,­the­CFPB­published­a­proposed­rule­in­July­regarding­integrated mortgage disclosures under RESPA and­the­Truth­in­Lending­Act.­Leading­up­to­the­proposed­rule,­it­published­a­number­of­drafts­trying various new disclosure formats and designs.That­was­one­of­the­first­significant­proposed­

rules­from­the­CFPB,­and­the­planning­process­involved­extensive­research­and­solicitation­of­industry­and­consumer­feedback.­As­a­result,­the­proposed­rule­and­explanatory­materials­are­more­than­1,000­pages.The­upside­is­the­CFPB­is­trying­practical,­

consumer-tested ways to present information so average consumers can understand key transaction­terms.­The­downside­is­the­volume­of­information­in­the­proposal­is­overwhelming.­It’s­hard­to­know­when­the­CFPB­will­

complete­its­foundation-building­and­begin­proposing­new­regulations­or­revising­existing­ones­that­affect­the­consumer­auto­finance­industry.­It’s­likely­big­changes­will­come­to­the­market.­It’s­just­unclear­when.While­we’re­in­this­waiting­period,­dealers­

might­feel­there­are­a­lot­of­variables­out­of­their­control,­but­the­focus­needs­to­be­on­the­areas­you can control.Since­a­number­of­states­seem­to­be­

focused­on­clarifying­and­enforcing­existing­requirements,­dealers­should­review­and­button­down­compliance­documentation­and­processes­to­make­sure­they­are­satisfying­those­requirements.Additionally,­reviewing­and­tightening­

transaction­standards­and­communication­within­the­dealership­is­key.­Make­sure­your­sales­and­finance­teams­are­describing­financing­terms­and­options,­vehicle­features,­and­add-on­products­and services in a correct and consistent manner. Educate­your­buyers­and­be­direct­and­honest­about­each­element­of­a­transaction­and­the­risks­each­party­is­assuming.Investing­in­those­areas­can­go­a­long­way­

toward maintaining compliance now­and­preparing­for­what­lies­ahead.­

C O M P L I A N C E OV E R D R I V E

Out with the Old and In with the New?

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