IIADA Jan 13

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PAIDDALLAS, TEXASPermit No. 2079

V i s i t u s a t w w w . i l - i a d a . o r g

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PAIDDALLAS, TEXASPermit No. 2079

JANUARY/FEBRUARY 2013

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

DEALER’S EDGE

• NEGATIVE SEO?• EXPAND YOUR AUCTION OPTIONS

• COMPLIANCE OVERDRIVE

Embrace the Green Revolution BECOMING ENVIRONMENTALLY CONSCIOUS CAN BE

COST-EFFECTIVE – AND FINANCIALLY REWARDING

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JANUARY/FEBRUARY 2013 T H E D E A L E R ’ S E D G E

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ChairmanRandy CraseCrase Auto Connection25355 E. Ames St.Channahon, IL [email protected]

PresidentGordon TormohlenTormohlen’s Good People Automotive1800 S. Ihm Blvd.Freeport, IL [email protected]

1st Vice PresidentAnthony FerraroPayless Motorsport13449 S. Pulaski RoadRobbins, IL 60472708-388-2300 [email protected]

TreasurerLori Chignoli-CoraChignoli Auto Sales1850 Essington RoadJoliet, IL [email protected]

SecretaryEric NelsonNelson Automotive Inc.1801 S. BusseMt Prospect, IL [email protected]

Directors:Mark AlcornCarlyle Auto Sales1708 BroadwayRockford, IL [email protected]

Paul GluchowskiTurner Acceptance4454 N. Western Ave.Chicago, IL [email protected]

Melanie BrownChicago Car Auction2731 Belvidere RoadWaukegan, IL [email protected]

Amy Goodnight Lohman Companies 3901 15th St.Moline, IL [email protected]

Alex TovstanovskyPrestige Motor Works Inc.8959 Hanslik CourtNaperville, IL [email protected]

Janette PeakPJP Auto Enterprise3100 S. Douglas Springfield, IL [email protected]

For information on how to become a member of IIADA, please contact Bruce Eklund at 800-987-6627 or [email protected].

Board of Directors

WHAT’S NEW

MAGAZINE CONTENTS

ADVERTISERS INDEX

06 Negative SEO?08 2013: What’s In Store10 The Environmentally Conscious Dealer14 Creating an Elite Sales Force16 Government Report18 Expand Your Auction Options22 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] Dealer’s Edge 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 statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of The Dealer’s Edge, the Illinois Independent Automobile Dealers Association, or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of IIADA or NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2013 by NIADA Services, Inc. All rights reserved. Visit the NIADA Web site at www.niada.com. STATE MAGAZINE MGR./SALES Troy Graff • [email protected] Andy Friedlander • [email protected] DIRECTOR Christy Haynes • [email protected] Nieman Printing

OFFICEFOR INFORMATION ON HOW TO BECOME A MEMBER OF IIADA, PLEASE CONTACT BRUCE EKLUND AT 800-987-6627 OR [email protected].

Ally ...................................................................................9AutoManager ................................................................ 19Auto Search Technologies ........................................... 12CarMax Auctions .......................................................... 15Dealer Center ............................................................... 18Dealer Services Corp. .................................................. 11Dyer Auto Auction ..........................................................14Insurance Auto Auctions ......................Inside Front CoverMAFS ....................................................Inside Back CoverManheim.com ...............................................................17Manheim Minneapolis ....................................................5NIADA Certified ............................................................ 20Protective ........................................................................7United Acceptance ....................................................... 13VAuto ...............................................................Back Cover

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Certified Master Dealer Program - Feb. & April 2013 Educates dealers on how to manage and grow a profitable business “Effective Management Practices”, “Business Planning”, “Human Resources”, “Merchandising”. “Financial Management” Call (800)756-4232 to sign up.

TAKE US WITH YOUwww.niada.tv - Free Dealer Education 24/7

CA R C O M M U N I T Y

CARFAX announced it is supporting the National Kidney Foundation by promoting the donation of used cars.

For vehicles donated to the Kidney Cars program, CARFAX will make the donation part of the vehicle’s history by adding a record to its CARFAX Vehicle History Report. The record will include links to the National Kidney Foundation and the Kidney Cars program websites.

“This is a great way to support the efforts of the National Kidney Foundation while providing buyers and sellers with another valuable piece of information about a used car’s past,” CARFAX spokesman Larry Gamache said. “Kidney Cars is one of the country’s largest vehicle donation programs and we encourage people to consider donating their cars to help this important cause.”

For nearly 30 years, Kidney Cars has accepted vehicle donations to benefit the National Kidney Foundation. More than 100 vehicles are donated to the program every day.

“We are so glad to have the support of CARFAX as we work to ease the burden of kidney disease through the patient programs and prevention initiatives our donated cars help fund,” Kidney Cars director Chad Iseman said. FOR MORE INFORMATION ON DONATING A CAR TO THE NATIONAL KIDNEY FOUNDATION, VISIT WWW.KIDNEYCARS.ORG.

CARFAX Promotes Car Donations to Fight Kidney Disease

Manheim has named Bill Harbourne as general sales manager for its Northeast market, while Nicole Graham-Ponce will take over as general manager at Manheim’s Dallas-Fort Worth auction.

Harbourne will lead Manheim’s Northeast field sales team, focusing on building on its relationships with dealers. He has 14 years of remarketing experience, serving most recently as an account manager for the company’s major dealer team, working with some of Manheim’s largest dealers nationwide.

“Bill is helping to lead change in an evolving marketplace, while growing sales through teamwork, strategy and business development,” said Scott Michaels, Manheim’s Eastern regional vice president of field sales.

Graham-Ponce, who began her career in the car business running an independent dealership with her father and has worked in auctions since 1998, will be responsible for all business, employee and customer operations at Manheim DFW.

Manheim Names Regional Chief

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T H E D E A L E R ’ S E D G E JANUARY/FEBRUARY 2013

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Negative SEO?When you first hear the words

“Negative SEO” you probably think it sounds like an oxymoron. You know, like living dead, original copy, dark light or accidentally on purpose.

But two items that don’t seem to mesh are finally doing so.

During this election year, we have all seen the dirty tricks politicians have played on each other – negative smear campaigns and truth spinning. But don’t think those tactics are isolated to politics.

In the automotive industry, there are growing numbers of companies that like to play dirty as well, and if you are not aware of it yet, you need to continue reading.

With the constant uphill battle of your competition “flagging” your ads on Craigslist or leaving negative reviews on listing services such as Dealerrater .com, Google Places or even Merchant Circle, the war has just become a bit more complicated.

“Negative SEO” can mean any type of malicious harm intentionally caused to hurt the placement of a website’s search engine rankings. The thought process is, if you can’t become No. 1, then sabotage all of those ahead of you until you are No. 1.

Forcing one website to appear lower in the SERP (search engine rank placement) means other websites will climb higher in the SERP. That’s why negative SEO is considered a viable model by unethical website providers and online marketing companies.

The most common form of negative SEO is accomplished by linking a website to low-quality, unrelated businesses. Those are called “black-hat” links – they’re the bad guys.

Links are among the most important items when it comes to SEO (search engine optimization), but you want to make sure related industry businesses are linking into your website. Links can pass value to your website when done the right way. Links can harm your website when done the wrong way.

There are two types of linking that can be done with any website: internal linking and external linking. Internal linking is linking to resources inside your website/domain, while external linking links to web pages or other resources outside your website/domain.

A link on another website that points to your site can either have value to it and help your site or it can have a negative effect on your website and hurt you. External links that point to your site are a common way negative SEO is applied, and it is very hard to see because it all happens away from your site and is nearly invisible.

Related incoming business links: You might have heard the term “link swapping.” That’s when a business asks you to place a link to it on your website in exchange for a link from its website.

That can be beneficial if the business is in the same industry as you are. For example, if a used car dealership swaps links with an auto repair/service facility, a towing company or a tire sales business.

There is a reason for you to swap links because you are helping your customers navigate to a product or service that you might not offer that could be considered helpful. Value can be associated to both websites in that process.

Each of the links from the other website that points to your website counts as an “incoming/inbound link” to your site. Other related links that can qualify are from third-party paid listing services, social media outlets, online video channels and business directory listings.

If you are link swapping with other businesses, you always want to make sure the links you are pointing to are valid websites that are still in business. If you are linking to an off-line website, or “dead link,” as it is called, it can easily wipe out the value of hundreds of positive links.

Disassociated business links and unnatural links: Disassociated

links are considered an attempt to try to boost the ranking of your site for the sole purpose of increasing your position.

Some businesses think all links are good links. Right? Wrong! Make sure links pointing to your website are within your general industry – stay away from disassociated links, such as linking a used car dealership with, say, a flower shop, a hardware store or a movie theater.

In addition to disassociated links, there are companies referred to as “link farms” that advertise they’ll sell you hundreds or thousands of incoming/inbound links, which are referred to as “backlinks.” The companies will point those links to your website for a monthly fee.

Most of the time, the companies will claim the links they provide will be within the same industry as your business, but there is no real way to guarantee that. Google recently released an update called the Penguin that in part identifies websites in the link farm business that offer unnatural links. If you are found on the receiving end of those links, you could have some serious issues with your online placement.

Because there is nothing to keep a competitor from signing up your website’s URL with those kinds of companies, and the links do not appear on your website, that style of attack can easily go unnoticed.

Be aware of who is linking to you. Periodically looking into what links are being directed to your website can help detect negative SEO campaigns that have been launched against your business, as well as identify any links that are unrelated to your industry.

There are many free websites you can use to check for backlinks. A good free site to check is www.ranksignals.com, which allows you to identify the total number of backlinks as well as get a page rank of the links that are pointing to your website.

BY MICHAEL D. JACKSON CEO OF AUTO SEARCH TECHNOLOGIES, INC. HE CAN BE REACHED AT (949) 608-0809 OR [email protected].

Negative campaigning isn’t limited to politics – your competitors could be sabotaging your website

W E B C H AT

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A DV E R T O R I A L

INDEPENDENT DEALERS NEED NEW ‘F&I MANAGER’

Having had the pleasure of serving automobile dealers for more than 50 years, we at Protective Asset Protection are committed to meeting the finance and insurance needs of our dealer customers.

Like many readers of this magazine, we place great importance on industry studies to ensure we are on top of the latest market trends – and in particular, your needs. However, we recognize selling cars is more than numbers and charts. It’s a people business.

We spend countless hours working to support dealers of all sizes and types. We’re in the car business and a lot of what we do still takes place with a meeting, a handshake, leadership and good in-store training.

More than five decades of experience and doing business the old-fashioned way has positioned Protective to exceed the expectations of our dealer customers.

In our goal to share proven dealer solutions, we turned to the largest audience – the growing group of independent auto dealers. We wanted to better understand what you really need to help further drive your F&I sales and profits.

We asked many of you from across the county questions about your operations, current selling processes and the importance of F&I to your businesses. Your feedback was informative and insightful, and aligned with many of the current successful approaches we use today.

Here is a snapshot of what we learned: When we inquired about the types of vehicles and service contracts being sold

today, we learned the average vehicle sold is 3-7 years old with 50,000-100,000 miles on it. We discovered more than 65 percent of you sell vehicle service contracts in your dealership.

When we inquired how Protective could better support you, we learned that ease of doing business is very important, followed by working with a company you can trust. On the technology front, 55 percent of you use or plan to use an electronic device such as an iPad® or a tablet device to educate your current and future consumers about F&I products.

We found that in general, consumers still rely on good, quality education from you to learn about the value of a service contract and most consumers don’t have preconceived ideas about what that value really offers them.

The study reinforces what Protective Asset Protection already does well: helping dealers make money selling F&I products.

So what is the best way to help you be more productive, drive more revenue and increase customer retention within the F&I process?

We think the answer is obvious – hire an F&I manager. No one said it was a simple solution. But an experienced F&I manager brings the knowledge and skills to provide customers with the best options and the true value of making an F&I purchase decision.

Obviously, adding to your headcount is no small task, and we asked ourselves what we could do. So we decided to “fill” your F&I position for you.

Okay, we didn’t hire an F&I manager for each independent dealer. Instead, we created “the manager.” By combining your critical F&I needs with our 50 years of experience, we built Protective’s Protection Plus Solution, designed exclusively for you.

You might have guessed your new F&I manager is not actually a person but instead is an electronic sales presentation using an iPad, or a desktop/laptop-based solution.

While our new strategy might not replace an experienced F&I manager’s know-how and sales ability, it does provide you a tool to increase service contract sales. With our new F&I solution, you have the ability to offer a vehicle service contract customized to the specific needs of your customer, all with easy-to-use technology designed to overcome objections and help close the sale.

We want you to have the closest thing we could provide to an actual F&I manager. Protective’s Protection Plus vehicle service contract and supporting web/iPad app will provide you and your dealership with the next best thing.

Protective Asset Protection looks forward to expanding our nationwide reach and working with independent dealers to introduce them to their new F&I manager. You can learn more about the technology and our goal to bring you innovative new ideas and profit-growth strategies by visiting www.newfandimanager.com.

BY RICK KURTZSENIOR VICE PRESIDENT-DEALER SERVICES FOR PROTECTIVE ASSET PROTECTION HAS MORE THAN 23 YEARS OF INDUSTRY EXPERIENCE. PROTECTIVE ASSET PROTECTION PROVIDES F&I PRODUCTS FOCUSED ON ENHANCING PROFITABILITY AND CUSTOMER SATISFACTION. FOR MORE INFORMATION, CALL 800-950-6060, EXT. 5755, EMAIL [email protected] OR VISIT PROTECTIVEASSETPROTECTION.COM.

Chinese-made counterfeit airbags have been used as replacement parts for as many as 230,000 used vehicles that have been involved in a crash over the past three years, the National Highway Traffic Safety Administration warned.

The NHTSA’s tests showed the black-market fake airbags, which look like certified original equipment parts right down to the manufacturer’s logo, either don’t deploy at all on impact or explode, sending fiery shrapnel toward the driver’s face.

The airbags are being sold to independent repair shops as original equipment, the NHTSA said. The agency has compiled a list of makes and models for which the counterfeit airbags are known to exist, but admitted it does not yet know the “full scope and scale of the problem” and said the list is likely to “evolve over time.” The list is available at www.safercar.gov.

Cars that have had their airbags replaced by independent shops or by airbags purchased online during the past three years are at risk, the NHTSA said. Owners of such vehicles are asked to contact the call center established by their car’s manufacturer to have the vehicle inspected and the airbag replaced if necessary. The list of call centers and other information is also available at www.safercar.gov.

In August, federal agents arrested a North Carolina auto mechanic and discovered more than 1,500 counterfeit airbags, according to various media reports. The case was reportedly linked to a case in 2011 in Tennessee, in which a Chinese citizen pleaded guilty to trafficking in counterfeit airbags and was sentenced to 37 months in prison.

The NHTSA said no deaths or injuries have been tied to the counterfeit bags but said it is unclear whether police accident investigators would be able to identify a fake airbag from a real one after a wreck.

WA R N I N G

NHTSA Warns of Counterfeit Airbags

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2013: What’s In StoreD E A L E R S H AV E S E E N T H E E R RO R O F T H E I R PA S T WAYS A N D A R E E N J OY I N G T H E S P O I L S O F T H E I R M O R E D I S C I P L I N E D L A B O R

What’s in store for your store in 2013?If it’s anything like 2012, it should be

another good year to be in the Buy Here-Pay Here industry. The new year will not be without its challenges, though. In fact, there are certain areas of the industry that could be more challenging than ever.

To get an idea of what to look forward to in 2013, we first need to review how 2012 treated the BHPH world. Tax season was again sporadic at best, which pretty much set the tone for all facets of the business for the rest of the year.

From a profitability standpoint, the dealers I have the distinct privilege of working with enjoyed another modest 3 percent increase in profitability in 2012 versus 2011. That increase was smaller than the previous year-over-year, and was due mostly to the continued focus on the “rightsizing” of overall operations.

Dealers focused on their entire operations, from top to bottom, on continuing not only to “cut the fat” but to keep it off and run their operations based on the cash being generated instead of relying on lines of credit.

I expect that focus to continue in 2013. Though funding sources have become more readily available, overall most dealers will be focusing again on generating the capital necessary to run their businesses from their businesses.

As always, there will be dealers looking to grow aggressively through borrowing, and rates will continue to make that a very viable option. I don’t see rates rising drastically in the coming year, so it will still be a good time to borrow.

Having said that, I still see it being difficult to secure new lines of credit in 2013. It’s going to take some patience and the willingness to educate some institutions on our industry.

Another financing option that has received quite a bit of interest recently is selling blocks of portfolios or payment streams to generate capital to operate with.

The available resources for that are at an all-time high and rates seem attractive as well. Depending on the resource, it can be done either at point of sale or on seasoned receivables.

Rates will depend on the resource, aging, recourse aspects, performance and securitization. The key to this option is reinvesting the capital received back into receivables in a timely fashion so as not to affect future cash flow levels.

Sales volume for our dealer clients increased by a modest 3 percent in 2012 over 2011. Not a record-setting year by any means, but a sporadic tax season and the resurgence of subprime and special finance are the two dominant factors leading to it. Dealers seemed to want to sell what their cash flow and underwriting standards dictated rather than sell as much as possible.

We all know we can sell as many as we want or have the financial resources to in this industry. There doesn’t seem to be a lack of customers needing or wanting what we have to offer.

We will see those factors continue to hold for 2013. We should have the customers in the market to sell the vehicles we want or need. The biggest question will be the quality of those customers and the availability of inventory.

Now, I’m normally a glass-half-full kind of guy, but when it comes to this, I think the glass might still be half empty. Even though the prices somewhat leveled off during the last half of last year, the numbers still seem to be dwindling for that sub-$5,000 vehicle.

The 2012 portfolio performance included some stabilization from a dollar loss standpoint, but from a number loss standpoint, there was a slight increase or worsening from 2011.

That was driven by a couple of factors, the first being the need for inventory. Some dealers accelerated their repo times

when a desirable unit was involved. That also helped stabilize the dollar losses, as the vehicles were repossessed earlier and in better condition and thus earned larger recovery amounts.

The other factor was renewed focus on underwriting and the overall collection process. Dealers remained more disciplined in both areas, seeking quality over quantity.

For 2013, I see more of the same. Dealers have seen the error of their past ways and are enjoying the spoils of their more disciplined labor. Expect the average charge-off to remain essentially the same and the number as a percentage of sold to remain higher than in past years, but expect collections dollars to improve as well as overall collection effectiveness.

The biggest thing to affect our industry again in 2013 will no doubt come in compliance. The Consumer Financial Protection Bureau was very active in 2012. It has reached out to a few dealers on a number of auditing fronts. Although no new formal regulations have been drafted, it is truly only a matter of time.

We did dodge a fairly substantial bullet with the legislation that was passed – and more important, the bill that was vetoed – in California. While it would only have affected California, passing tight new regulations easily could have influenced other state’s legislators.

Here is the best advice I can give to existing dealers as well as those wanting to get into the business in the coming year: don’t wait. Don’t wait to get compliant. Don’t wait to spend a little money to do so. Don’t wait to review all processes and procedures. Don’t wait to review all expenses. Don’t wait to review all of your employees. Don’t wait to train.

And definitely don’t wait to sell cars, collect money and make money.

BY BRENT CARMICHAELEXECUTIVE CONFERENCE MODERATORNCM ASSOCIATES [email protected]

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D E A L E R S H AV E S E E N T H E E R RO R O F T H E I R PA S T WAYS A N D A R E E N J OY I N G T H E S P O I L S O F T H E I R M O R E D I S C I P L I N E D L A B O R

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The Environmentally Conscious DealerN O T O N LY I S I T C O S T E F F E C T I V E , I T CA N B E F I N A N C I A L LY R E WA R D I N G T O E M B R AC E T H E G R E E N R E VO LU T I O N .

Each day, consumers and businesses grow more environmentally conscious. Yet we are a long way from where we need to be.

Make no mistake. This is a call for action.For all of us in the auto industry, each car

deal is part of a gigantic revenue machine. Our focus is on retail market value vs. wholesale cost. Subtract recon expenses, advertising expenses, commissions, etc., and we’re left with net profit.

The question many of us fail to ask: What is the impact on the environment?

Fact: The second-leading cause of global warming is carbon dioxide emissions from burning gasoline.

Our industry is married to the internal combustion engine. Our success is predicated on profits from selling large volumes of gas-guzzling, oil-burning hunks of metal to consumers.

Often we gauge our performance on volume. The more, the better.

Given the nature of our industry, it’s vital that we all embrace, with open arms, the need for a heightened level of environmental responsibility.

There are countless ideas each of us can implement today that will make a difference to the environment while feeding our bottom lines.

Green SolutionsRecycle: In my travels and visits to

dealerships, I’m constantly surprised – and disappointed – by the lack of recycling bins at dealerships. That is the easiest way imaginable to have a positive impact on the environment.

Electronic fax: There are several companies that provide the service. Using an e-fax service drastically cuts down on paper and ink, and is super easy to implement.

Forget traditional mailers: Typical response rate on mail advertising is a mere

2 percent. Save the paper, ink, fuel and money. Allocate those resources elsewhere.

Turn off the printer: We print so many things that just don’t need to be printed. Credit reports, for example. Instead try saving them on your computer along with the customer’s email address.

Turn off excess lighting.Use a green demo: Take the Prius

for a spin instead of the Yukon. Most of us drive without passengers a large majority of the time. Driving a smaller, more efficient vehicle will save you gas money while reducing toxic greenhouse emissions.

Walk or cycle: Go by foot or bike to work or to your favorite lunch or coffee spot.

Smartphone apps: Use the extremely broad selection of apps to replace paper whenever possible.

Do business with green businesses: Ask your body shop how it disposes of waste. Choose companies and vendors that act in an environmentally responsible manner.

Eliminate bottled water: Bottled water is extremely inefficient. Instead, install and use a water filtration system.

Hit the switch: Turn off and/or unplug unused appliances and computers when they’re not in use.

Lot lights: Be diligent about adjusting the timer that controls your lot lights.

Every one of these items can be easily implemented today with little or no negative impact on your business. In most cases, you will experience a significant cost savings, especially when that savings accumulates over the course of one or more years.

Simply put, we can no longer ignore the fact we are depleting the world’s natural resources. We are driving at a very fast pace toward a hotter and hotter future. Why ignore the facts when you can benefit

in numerous ways by making some positive changes?

In addition, the consumer climate has changed to the point that it is not only cost- effective, but it can be financially rewarding to embrace the green revolution. Be green and make sure the world knows! You will attract better talent along with more customers as a result.

Electric Vehicles and HybridsA major industry shift is staring all of us

in the face like a hungry bear fresh out of hibernation, and the electric/hybrid market segment is growing rapidly. Nearly every major manufacturer is getting into the space, and new competitors are emerging with cutting-edge products that use state-of-the-art technology to meet consumer demand.

The products currently on the market are extremely compelling, and the future of the segment is exciting.

Here’s a lineup with some information about several of the products available now:

Tesla Model S: The first full electric vehicle to (mostly) overcome consumers’ No. 1 concern – range anxiety. There are different battery options designed to go up to 160, 230 or even 300 miles per charge at 55 mph.

Consumer interest in the product is phenomenal. The fast, sporty and beautiful sedan is expensive for the average consumer, but will be attractive to the masses on the remarketing side.

Tesla Roadster: Similar to the Model S, but not as practical. This is a pure sports car.

Fisker Karma: Electric/hybrid with extended range. It can go up to 50 miles on 100 percent electric power, then the internal combustion engine engages for another 250 miles. It averages about 58 mpg.

BMW ActiveE: BMW’s first full electric vehicle is only available in select markets on a two-year lease.

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THE ENVIRONMENTALLY CONSCIOUS DEALERToyota Prius: Arguably the most cost-

effective solution on the market. Though not a full electric vehicle, it deserves a spot in the lineup based on its massive success in the U.S., coupled with its extreme efficiency at 50 mpg.

Chevrolet Volt: The Volt can go up to 50 miles on full electric power before engaging the gasoline engine for up to another 350 miles. Range anxiety is a thing of the past with this electric/hybrid vehicle.

Ford Focus Electric: The Focus can go up to 100 miles on a charge and is more affordable than any of its luxury counterparts. Super-fast charging, and 100 percent electric.

Nissan Leaf: The Leaf was the first mainstream pure electric car offered for sale in the U.S. It is an excellent urban commuter vehicle but falls short when it comes to the range anxiety concern.

Consumers are more informed and environmentally conscious today than ever. They are actively seeking out and going out of their way to find green solutions that meet their needs.

Additionally, gasoline prices are still historically high, so the financial and environmental need for alternative fuel

solutions is growing by the minute. As more products emerge that meet the demands of the modern “eco-sumer,” those products will inevitably gain more traction.

When it comes to pricing, most of those vehicles are at the top end or just outside the reach of the average consumer. But as they flow into the remarketing space, a majority of them will fall right into the sweet spot.

Unfortunately, a large portion of our electric power comes from coal-burning sources. According to the Energy Information Administration, the most predominant sources of electricity in the U.S. come from coal (48.7 percent), natural gas (21.5 percent) and nuclear power (19.4 percent).

Because so much of our energy is created by coal-burning power plants, it is arguable that electric vehicles consume similar amounts of energy and as a result produce nearly as much greenhouse emissions as gas-powered vehicles. Until we create more clean and renewable energy sources, electric vehicles will remain an imperfect solution, But they represent a big step in the right direction.

In the end, innovation without

capitalization will die. But if enough of us buy in and support the movement, the sky is the limit.

The question remains: Where do you stand on the matter? Are you going to be one of the dealers with your hand raised when an electric vehicle crosses the block? Or are you going to stand on the sidelines and watch your competitors lead the charge?

Technology and the environment are two major items that influence and change how our industry looks and feels. DSC remains committed to providing you not only with the best financing options, but also cutting edge technological solutions to enhance and take your business to the next level.

We are also committed to shifting with your business as environmental needs and consumer demand dictates. We are confident we have the most flexible floorplan finance solutions in the industry, designed to empower you and your business to embrace change and grow green.

BY GARRETT JOREWICZ NORTHWEST REGIONAL DIRECTOR OF DEALER SERVICES CORPORATION.

C O N T I N U E D F RO M PAG E 10

While new car sales were strong throughout November, a shortage of trade-ins caused by Hurricane Sandy is expected to result in a tighter supply of used vehicles and higher prices for the near future, Black Book managing editor Ricky Beggs said.

New car sales reached 1.14 million in November, an increase of 15 percent, and a handful of carmakers had record months. Beggs said the pace of new-car sales combined with the continued replacement of inventory from Hurricane Sandy vehicles impact used cars in a several ways.

The jump in new sales to a seasonally adjusted annual rate of as much as 15.6 million, according to some industry estimates, should mean additional trades entering the lots, increased inventory that would ease the supply of used cars and offset prices from the Northeast demand. But the percentage of trade-ins for those vehicles has been unusually low, Beggs said.

While usually about 60 percent of all new car sales involve a trade-in, Black Book estimates project the trade-in percentage in the Northeast since Sandy could fall as low as 30 percent, which could cause prices on used cars in the region to continue to rise in the near-term as dealers get fewer used cars from trades and look elsewhere to find inventory.

Northeast Used-Car Supply Tightens

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A S S O C I AT I O N N E W S

United Acceptance Joins as a Bronze PartnerUnited Acceptance, Inc., a financial organization founded in 1991 that provides capital and servicing solutions to Buy Here-Pay Here vehicle dealerships, captive finance companies and independent finance companies, has joined NIADA as a Bronze level National Corporate Partner.

UAI’s strong long-term relationships with auto dealers and its employees have contributed to its growth from a local company in Atlanta to an organization that purchases receivables nationwide.

UAI’s mission is to be a strong financial partner to used car dealerships, allowing them to accelerate their profits though the sale of their receivables – its slogan is “Profits Through Partnership.”

In a time in which it is becoming increasingly difficult to secure credit facilities, selling contracts can be a viable source of raising capital. United Acceptance purchases automobile installment sales contracts (bulk receivables) from BHPH dealers, franchise dealers, finance companies and banks. Its bulk purchase program is simple, and quick funding is available to assist with immediate cash flow needs.

UAI can turn uncollected receivables into liquid cash, reduce risk and repossession costs, improve yield, improve profit versus point-of-sale financing and reduce stress by allowing dealers to sell vehicles instead of collecting debts.

FOR MORE INFORMATION, VISIT WWW.UAIDIRECT.COM OR CALL 877-281-2360.L I K E U S A T N I A D A . C O M

stay connected and stay social

L I K E U S A T N I A D A . C O M

us on FacebookVisit

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In most sales teams, there are a handful of top performers – then there’s everyone else. Imagine how much more successful your dealership could be if every salesperson was an elite top performer.

Think that’s impossible? Think again.In other areas, we see groups of elite

people who band together for a common goal or purpose: Super Bowl teams, Navy SEALs, top college marching bands, etc.

In any of those groups, you don’t see one or two people doing all the work, outperforming their peers or being the lone superstars. Rather, everyone on the team is an elite member. The group as a whole shines because each member contributes greatly, plays an integral part and gives 100 percent at all times.

If it’s possible with those groups of people, it’s possible for your sales department.

But creating an elite group of salespeople involves much more than placing a help wanted ad on a job board. It requires a specific hiring process that attracts only the best of the best. Here are some steps to do that.

Make joining your sales team difficult: You cannot create an elite team if becoming a member is easy. Would a Super Bowl team be spectacular if it let anyone with a helmet on the field? Of course not. In order for any team be considered elite, there must be a stringent process to join the team.

So while you should advertise open sales positions, realize that conducting one interview prior to bringing someone on board is not enough. Rather, conduct multiple interviews, with the candidate speaking to the sales manager and other executives.

The key is to look for people who believe in team spirit, have a positive attitude and display a keen sales demeanor. Don’t have your HR department be responsible for hiring salespeople. HR’s only role in hiring salespeople should be to process the paperwork.

Finally, and perhaps most important, make sure anyone you decide to bring on board realizes that getting past the initial hiring process is the easy part. Now they

must prove that they have what it takes to be an elite player. How? By completing step No. 2.

Create an intense six-week new hire training program in which no more than 60 percent pass: For every three people who make it past your initial hiring process, only one should actually become a salesperson for your organization. While that might sound like a waste of time and money, it’s really an investment in making your sales team the best it can be.

The only time you really waste time and money is when you allow low producing salespeople (typically people who are not a fit for sales, people who don’t like your company or people who have the wrong attitude) to be a part of your organization. The best way to avoid that is to make sure the people in the sales role have been thoroughly trained and really want to be there.

Having an intense training period is the same approach used by colleges and the military. For example, for every 100 men who start Navy SEAL training, only 17-20

MAKE YOUR SALES TEAM AN ELITE FORCEYO U R SA L E S T E A M I S T H E FAC E O F T H E C O M PA N Y – S H O U L D N ’ T O N LY T H E B E S T O F T H E B E S T R E P R E S E N T YO U R B R A N D ?

A S S O C I AT I O N N E W S

Keystone Offers Discount to NIADA Members

Keystone Automotive has become the National Independent Automobile Dealers Association’s latest National Member Benefit partner, offering NIADA members 48-hour guaranteed delivery and custom member discounts.

In addition, NIADA members can get Keystone’s E-Key e-commerce accessories research/ordering resource for a monthly fee of $19 – less than half the normal fee of $49. The e-commerce tool provides access to all Keystone U.S. inventory listings. Simply enter a vehicle’s make and model for an automatic listing of accessories available by category. Inventory is updated daily.

Keystone is the leading distributor and marketer of aftermarket automotive equipment and accessories in North America, with more than 800 suppliers and 1.2 million accessories and equipment in inventory.

FOR MORE INFORMATION OR TO ORDER PLEASE GO TO WWW.KEYSTONEAUTOMOTIVE.COM OR CALL 1-800-432-8063.

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succeed. That’s a success rate of only 17 to 20 percent.

But think about it. Who do you want carrying out the country’s most dangerous and critical military missions? Only the best of the best, right? Well, who do you want to be the face of your company, representing your products and services and interacting daily with your customers? Again, only the best of the best.

Your intense training program should cover:

• Product knowledge. Go over your products and services thoroughly to ensure the prospective salesperson comprehends them inside and out.

• Role-playing. Go over typical sales scenarios as well as the most challenging sales situations you can think of. See how the person responds when things go wrong.

• Sales skills. Even if the person has prior sales experience, you want to give him all the skills and training he’ll need to be successful. Then make sure he knows how to implement the skills.

• Company structure. Teach the salespeople all the parts of the business. Train them on every department so they know the intricacies of the business and understand what happens both before and after the sale

is made.• Research. Put them through the

tedious information gathering work. Make them research the market, demographics, competition, etc. If they’re not willing to do the details, they’re not a fit your company.

That intense process will weed out the people who don’t have what it takes to be part of an elite team. In fact, about 20 percent of the people will drop out by week four.

For the ones remaining, offer them a choice to stay or go, as in: “I’ll give you $1,000 right now for you to leave the training and the company, or you can elect not to take the money and stay.”

Those who take the money aren’t the type of people you want on your elite team. It’s better to pay a small price now to find that out than waste a lot of money down the road with a bad hire.

By the six-week mark, only 60 percent of those who started should still be standing strong with you. Those are your elite sales team members.

If more than 60 percent make it through the training, your training is too easy. Anything that’s too easy has no value.

Have consistent, ongoing training: While the initial training period is a one-time thing, all salespeople should attend regular – and

less intense – monthly training sessions. During the sessions, do role-playing, train on specific sales skills and find out any specific challenges your team is facing.

Use the ongoing training sessions to create bonding experiences for the sales team. Have them help each other solve problems, offer suggestions and share best practices. Why? Because the goal is to continually develop a team, not an individual.

As Tecumseh, the Shawnee chief, said, “A single twig breaks easily, but a bundle of twigs is strong.” By bringing your salespeople together monthly, you’re creating a strong and elite sales force that can’t be broken.

To be the best, recruit the best. Sales isn’t an easy profession. So joining an elite sales team shouldn’t be easy either. That’s why you need to shift your focus from filling a sales position to building an elite sales force.

After all, your sales team really is the face of the company. Shouldn’t only the best of the best be representing your brand?

BY VICTOR AROCHOVICTOR AROCHO IS A SALES DEVELOPMENT EXPERT, SALES TRAINER AND MANAGING PARTNER OF POTENTIAL SALES & CONSULTING GROUP, SPECIALIZING IN GROWING SALES BY BRINGING ACCOUNTABILITY TO THE SALES PROCESS AND CRAFTING A SALES CULTURE OF SUCCESS. FOR MORE INFORMATION, VISIT WWW.VICTORAROCHO.COM.

MAKE YOUR SALES TEAM AN ELITE FORCE

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NIADA LEGISLATIVE TEAM UPDATEG OV E R N M E N T R E P O R T

REGULATORY REPORTFederal Trade CommissionProposed changes to the Used Car Rule:

Last month, the FTC released a proposed change to the Used Car Rule, which would make the following changes to the Buyers Guide:

• Add a statement encouraging consumers to seek a vehicle history report and directing them to an FTC website with information on vehicle histories.

• Add a statement to the English Buyer’s Guide noting the document is also available in Spanish and informing Spanish-speaking customers they can request the Spanish guide.

• Adding catalytic converters and airbags to the systems covered on the back of the guide.

• Placing boxes on the back of the guide giving the dealer the option of informing the consumer whether the manufacturer’s warranty still applies or whether a manufacturer’s used warranty (such as a CPO warranty) or another third-party used vehicle warranty applies.

The FTC is seeking comments regarding the changes. Comments must be submitted by Feb. 11.

NIADA chief operating officer Steve Jordan, Region III vice president Gordon Tormohlen and counsel Shaun Petersen met with the FTC attorneys responsible for oversight of the Used Car Rule on Dec. 12 to discuss the proposed changes.

NIADA also plans to submit written comments.

In addition, the commission made minor changes to the Spanish guide, effective Feb. 11. The revised Spanish version is available at www.ftc.gov. Dealers can use up their remaining Spanish-language guides after Feb. 11, but must transition to the new guide when existing stock is used up.

The FTC is also seeking comments on the nature and prevalence of deception in Internet vehicle transactions. NIADA will submit comments.

Settlement with car loan modification company: On Nov. 29, the FTC entered into a settlement agreement with a motor vehicle loan modification company regarding its unfair and deceptive practices. The modification offered by the company allegedly promised to save vehicles from repossession and lower vehicle payments. In order to obtain the modification, the consumer was required to pay high up-front fees. Ultimately, the modification provided no

value to the consumer.No civil penalty was assessed to the

directors or company, but the company and its owner have heightened reporting and record retention requirements over the next 20 years.

Interim Red Flags Rule, limiting the definition of creditor: The interim rule constricts the term “creditor,” which is covered by the Red Flags Rule. Under the new rule, a creditor is covered if, in the ordinary course of business, it regularly obtains or uses consumer reports in credit transactions, provides information to consumer reporting agencies in relation to a credit transaction or advances funds to a person.

The FTC has invited comments on the proposed change. NIADA is evaluating the changes.

Top officials leaving: The FTC announced David C. Vladeck, director of the Bureau of Consumer Protection, left Dec. 31 to return to a faculty position at Georgetown University Law Center. Deputy director Charles A. Harwood will serve as the BCP’s acting director.

In addition, FTC executive director Eileen Harrington retired at the end of 2012, with deputy executive director Pat Bak taking over on an interim basis. The executive director is responsible for the administration and management of the FTC, including human resources, information technology, financial management, administrative services and legal document processing and records management activities.

Consumer Financial Protection Bureau

On Dec. 6, the CFPB submitted its annual report to Congress, as required by the Dodd-Frank Act, relating to its supervisory powers under the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act. The report highlighted the CFPB’s investigations over the past year and urged congress to re-examine the transparency of consumer finance, specifically student lending.

The CFPB announced plans to share consumer complaint data with state agencies that have jurisdiction over consumer protection activities via a secure channel that protects confidential and personally identifiable information. The bureau plans to accept complaints and information from state agencies in the future.

The Federal Reserve Board and the CFPB

increased the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. Transactions at or below the thresholds are subject to regulation. For dealers, the Truth in Lending Act and the Consumer Leasing Act generally will apply to consumer credit transactions and consumer leases of $53,000 or less beginning Jan. 1.

The Wall Street Journal reported deputy director Raj Date, the CFPB’s No. 2 official behind director Richard Cordray, will leave the agency he helped create Jan. 31, after the CFPB finalizes the slate of mortgage rules Congress mandated.

Date played a critical role in the agency’s mortgage rulemaking project, considered the agency’s signature and most complicated assignment. He ran the agency from August 2011 until Cordray was appointed.

LEGISLATIVE REPORTRental Cars (S.1445, S.3502, H.R.

6094)Sens. Charles E. Schumer (D-N.Y.),

Barbara Boxer (D-Calif.) and Claire McCaskill (D-Mo.) reached an agreement with the top four U.S. rental car companies to stop renting or selling vehicles that have been recalled by their manufacturer.

Under the deal, rental car companies Enterprise/National/Alamo, Hertz/Advantage, Avis/Budget and Dollar/Thrifty, as well as the American Car Rental Association, have endorsed new legislation authored by the senators to ensure recalled vehicles stay off the road. Together, the four companies represent 93 percent of the rental car market.

The deal caps a long push by the senators and consumer safety advocates to fix a loophole in current law. While car dealers are prohibited from selling a recalled automobile, rental car companies are not barred from renting or selling one.

The new Senate bill would change that, requiring vehicles under a safety recall to be grounded as soon as possible. Rental companies would have up to 48 hours for recalls that include more than 5,000 vehicles in their fleet.

Also under the legislation, the National Highway Traffic Safety Administration will, for the first time, have authority to investigate and police rental car companies’ recall safety practices.

The timing of any action on the new legislation is still unclear.

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AU C T I O N N E W S

Dealers across the country complain about the difficulty of finding enough of the “right” cars at auctions.

The complaint is completely understandable. The recession slowed the pace of new vehicle sales, leases and trade-ins, which has diminished used vehicle supplies at auctions.

In addition, vehicle owners are holding onto their cars longer – industry statistics say the average age of a vehicle on the road now is 11 years – another crimp in the auction vehicle pipeline.

On top of that, there are more dealers buying vehicles at auctions. The lanes are more crowded and there’s greater competition from online buyers

for independent and franchise dealerships. All that means one thing: Dealers who want

to maintain, if not grow, their used vehicle sales volume and profitability must take their efforts to acquire vehicles at auctions to the next level.

That means expanding the number of auctions you rely on to source inventory. Simply put, you need to cast a wider net and review more cars to ensure you and your buyers don’t come home from auctions empty-handed, or, worse yet, bring a bunch of second-rate cars back to your dealership.

I’ve come across three best practices from independent and franchised dealers who have met the current used vehicle sourcing challenge

with an effective and fresh perspective. Go beyond “tried and true” auctions: Dealers

say relying on one or two local auctions isn’t enough in today’s era of tight used vehicle supply. Many dealers have doubled or tripled the number of wholesale auctions they use to acquire used vehicles. Their new sourcing footprint often extends across several state lines.

That can be a difficult change for some dealers/buyers. It means traveling farther and going beyond the familiar. It also adds greater pressure to acquire the cars for the “right” money because of the additional costs for transportation and related fees.

The good news: Every dealer faces the same challenge, which means those who are able to expand their sourcing efforts in the most time- and cost-efficient manner have an edge over their competitors.

Get online: A growing number of dealers are sourcing a portion of their auction vehicles using online platforms from auction providers. That allows them to expand their access to a larger number of vehicles in a more time-efficient manner.

Still, there are many dealers who prefer physical auctions, and some who refuse to buy online at all.

The resistance comes from a belief that dealers need to “see, touch and smell” the cars they might purchase. Many of those dealers are concerned that a vehicle purchased online will show up at the dealership with an unpleasant surprise that wasn’t identified in a condition report or other disclosure.

I faced the same challenge when I was a dealer. At my store, we bit the bullet and went online to properly feed our inventory needs. We recognized there wasn’t any other way to get the cars, sales volumes and inventory turns we expected.

To be sure, we had a few surprises when the vehicles arrived at our dealership. But when that occurred and we initiated auction arbitration processes, we were rarely, if ever, dissatisfied with the resolution.

As the old saying goes, the squeaky wheel gets the grease.

A related tip: To help mitigate the risk of surprises, we would limit our live and proxy bids to vehicles with auction- or dealer-generated condition reports (with a score of 3 or better) to better size up each car’s potential risks.

Speed up your vehicle research and reviews: At my dealership, it took five to six hours, twice a week, to review auction run lists and research the cars that fit our inventory acquisition parameters. On a per-car basis, we averaged 10 minutes to access condition reports and valuation guides and determine our bidding strategy.

Over time, we were able to reduce that to about one minute per vehicle, thanks to technology and tools that helped us streamline our research process to determine if a car was worthy of our attention. Likewise, the tools helped us become faster and more efficient when we acquired vehicles through online auctions.

The key, of course, is to find ways to increase your efficiency without short-cutting the amount of research you conduct to avoid surprises when auction-purchased cars arrive at your dealership.

Taken together, these three best practices will go a long way toward helping you acquire all the cars you need from auctions and doing so in a more efficient, less frustrating manner.

BY TODD KINZLE CO-FOUNDER AND OPERATIONS DIRECTOR OF AUCTION GENIUS (WWW.AUCTIONGENIUS.COM) AND A FORMER INDEPENDENT DEALER IN LONGMONT, COLO.

Expand Your Auction Options

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Test Drive Generator Does All the WorkOne of the great things about the

Internet invading the dealership business is the innovative new ways it helps sell cars. Certainly the availability of information about every vehicle on your lot has complicated the business – but sometimes it’s for the better.

An example is the simple idea that customers visiting your website should be able to make an appointment to test drive the car they like without any effort on the part of the dealer. That’s a good thing, because every day there are thousands of leads in your market, and it is pretty tough to engage them all.

Test Drive Generator, a company based in Mukilteo, Wash., has perfected software that allows any dealer, on any type of automotive website platform, to allow customers to schedule their own test drives without any human intervention. Customers just click the button next to the car they like and schedule the test drive on their own.

Why is that a good thing? Think about it. If the customer is scheduling his or her

own test drive, and Test Drive Generator appointments show up 90 to 95 percent of the time, why, oh why, would you want a salesperson to stick his nose in and screw that up?

Once the customer has scheduled a test drive, the folks at Test Drive Generator say, “Leave them alone!”

Nothing good will come of an email or phone call from a salesperson. At best, the customer will still show up. At worst, something the salesperson says or writes will give the customer second thoughts about coming.

Now, you might say your salespeople are tremendous, but why mess with a good thing? Customers are coming for a test drive. Leave them alone and let them arrive. Have you ever seen a salesperson talk a person out of a sale by talking too much? It’s not a pretty sight.

Test Drive Generator takes care of scheduling the test drive appointment. It sends email confirmations and reminders and text reminders. The Test Drive Generator system has a 90 to 95 percent

show ratio and a 60 to 70 percent sold ratio. Perhaps the best thing about Test Drive Generator is the price: $250 per month for a dealership, billed month-to-month, with no long-term contract and no setup fees.

Seems like a pretty good deal to me, whether you get 10 test drives per month or 100. If you want to hear more, call Test Drive Generator at 877-696-0415, email [email protected] or visit www.TestDriveGenerator.com to book a demo.

BY BRETT STEVENSONDEALER MARKETING MAGAZINE

N E W P RO D U C T S

VISIT WWW.TESTDRIVEGENERATOR.COM

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JANUARY/FEBRUARY 2013 T H E D E A L E R ’ S E D G Ew w w . i l - i a d a . o r g

REGION I: MAINE, VERMONT, NEW HAMPSHIRE, MASSACHUSETTS, CONNECTICUT, RHODE ISLAND, NEW YORK, PENNSYLVANIA, NEW JERSEY, DELAWARE, MARYLAND, VIRGINIA, WEST VIRGINIA, INDIANA, OHIO AND MICHIGAN.

REGION II: KENTUCKY, TENNESSEE, NORTH CAROLINA, SOUTH CAROLINA, GEORGIA, FLORIDA AND ALABAMA.

REGION III: NORTH DAKOTA, SOUTH DAKOTA, MINNESOTA, WISCONSIN, ILLINOIS, IOWA, MISSOURI, KANSAS, NEBRASKA, OKLAHOMA, ARKANSAS, LOUISIANA, MISSISSIPPI AND TEXAS.

REGION IV: WASHINGTON, OREGON, CALIFORNIA, NEVADA, IDAHO, MONTANA, WYOMING, UTAH, COLORADO, ARIZONA, NEW MEXICO, ALASKA AND HAWAII.

The foundation invites you as an eligible student to complete this application in pursuit of scholarship funds to be paid to the college of your choice in the fall of 2013. Applications must be POSTMARKED NO LATER THAN MARCH 1, 2013 AND RECEIVED NO LATER THAN MARCH 11, 2013.

The National Independent Automobile Dealers Association Foundation was founded in 2006 by the National Independent Automobile Dealers Association, a 66-year-old trade association, to “improve the independent motor vehicle industry by informing and educating consumers of the general public and training individuals associated with our industry.”

Historically, the association’s scholarship program was the responsibility of the NIADA’s auxiliary. Now, however, as an IRS-approved 501(c)(3) nonprofit organization, the foundation has assumed the oversight of that scholarship program’s functions.

Submit the completed application form with the required attachments in a 10 inch-by-13 inch envelope with adequate postage to:

SCHOLARSHIP SELECTION COMMITTEENIADA FOUNDATION2521 BROWN BLVDARLINGTON, TX 76006

All information MUST be included with the original application. No additional information will be accepted at a later date.

Staff will review the applications for completeness and will forward them to the Scholarship Selection Committee within NIADA and at Northwood University in Midland, Mich. They will be reviewed by region. One applicant will be selected from each of the four NIADA regions based on the merit of his or her scholarship application and will be notified by the foundation office no later than mid-May 2013.

FOUR REGIONAL SCHOLARSHIPS ARE AWARDED ANNUALLY AT THE ANNUAL NIADA CONVENTION IN JUNE.

Annual Scholarship Program

FIND THE SCHOLARSHIP APPLICATION AT WWW.NIADAFOUNDATION.ORG

21

In November and December, more than 4 million American businesses, including 740,000 retailers, will receive 2012 Economic Census forms. Responses to the questionnaire are required by law to be returned by Feb. 12.

Every five years, the government conducts the Economic Census to develop a comprehensive portrait of American business, from the national to the local level, relying on timely and accurate data.

The U.S. Census Bureau has created a web page __ business.census.gov __ to provide information about the Economic Census as well as statistics businesses can use to assess and grow their business operations.

The site includes webinars and videos to educate businesses about the census and what it means to them, as well as a section geared toward small businesses.

FOR MORE INFORMATION, VISIT BUSINESS.CENSUS.GOV.

Economic Census Coming Soon

E C O N O M I C 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.

There’s no question that what a dealer says to a customer as part of the sales process matters.

But it’s not just about what is said by the F&I department and what’s documented on a sales contract to finalize a deal. It’s also about what is being communicated outside, on the car lot.

No matter how accurate and compliant your finance documentation is, if it disconnects from promises made during the sales process, you could be facing a problem.

Though the law is different in every state, most have passed some version of the model Uniform Commercial Code (UCC) § 2-313. It provides that an express warranty is created by the seller when it makes a statement of fact or promise to the buyer relating to the goods, which becomes part of the basis of the bargain.

The elements are pretty broad and cover a wide range of common statements a salesperson might make when discussing a vehicle with a potential buyer. For example, if a salesperson says to a potential buyer, “This car comes with a new spare tire,” as part of the sales discussion, the promise is probably an express warranty.

What happens if the customer picks up his or her car after the sales contract is signed and a used spare tire is in the trunk?

Contrary to what some might think, express warranties generally can’t be waived or disclaimed. UCC § 2-316 provides that words or conduct creating an express warranty and words or conduct disclaiming or limiting the warranty must be interpreted in a way that makes them consistent with each other. If that’s not possible, then the disclaimers or limitations will not be enforced.

In short, you can’t give with one hand and take away with the other. If a salesperson promises the car comes with a new spare tire and a used one is delivered, a written warranty disclaimer will not help.

Note that the express warranty doesn’t have to be in writing and it doesn’t require using the word “warranty.” As a result, what

the salesperson says can affect a transaction just as much as the documents produced by the F&I department.

That’s why it’s important to know what your sales team is communicating and, more important, promising to customers.

Sometimes the situation involves a simple mistake on the sales lot. A car could be presented as a six-cylinder when it’s actually an eight-cylinder. Or maybe the customer is told the car had two prior owners but there were really three. An uninformed or mistaken salesperson might also tell a customer the car has never been in an accident when in fact he or she doesn’t really know if it has or not.

The new spare tire example may sound farfetched, but a dispute about whether new or used tires were delivered was just one of numerous inconsistencies between promises and documentation by the seller and what was delivered to the buyer in the California case of Sanchez v. Valencia ( 201 Cal. App. 4th 74 (2011)). The case is known for its decision on arbitration clauses and wasn’t about warranties. Still, it is a good example of how discussions on the lot can have a big effect on the dealer’s liability.

Those kinds of express warranty-creating mistakes can be avoided by simply being careful about representations about vehicle features and facts.

While services like CARFAX and certain branding of vehicle titles can help prevent some of those mistakes, or at least bring them to light before an agreement is finalized, dealers are still facing situations in which customers are unhappy because an expectation that played a key factor in their decision to buy has not been met.

So what can you do to help prevent this from happening?

Tell your sales staff that what they say matters and why: A salesperson is a liability risk if he or she thinks all promises are wiped out by a disclaimer in the sales contract.

Train your staff on proper sales techniques: That includes arming them

with facts about the inventory available for sale.

Encourage potential buyers to take a test drive: Also encourage them to take the vehicle to a mechanic or get a vehicle history report and other information about the car so they have the best opportunity to know the features, functionality and condition of the vehicle without relying on information from you. Some dealerships have installed Internet kiosks for customers to conduct on-the-spot research.

This is a complex area of law, littered with exceptions and replete with court decisions that are very fact-specific and findings that are not always consistent. For example, in some situations, disclaimers or waivers can be enforced if the sales contract includes a provision saying it is the all-inclusive and exclusive agreement covering the sale.

Whether a given statement is a statement of fact or promise (creating an express warranty) or merely sales puffery (not an express warranty) is regularly litigated. Many case decisions exist and entire books have been written on the subject.

The key point is that what your sales team says on the lot is important. If there is conflict between what was promised during the sale and what was delivered, the dealer has a problem. The problem could be characterized as the breach of an express warranty, but it could also be a fraudulent misrepresentation, unfair or deceptive act, etc. – keep in mind that 15 causes of action were alleged in the Sanchez case based on the tires and other inconsistencies.

Creating consistency throughout the entire sales process and making sure the lines of communication between the sales staff and F&I team are open can help mitigate risk for your dealership, ultimately saving time and money.

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

Unintended Express Warranties: What Sales Staff Says Matters

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Documents

IIADA Jan 13