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L O U I S I A N A 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

The

OPEN ROADPRSRT Standard

U.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

V i s i t u s a t w w w . l o u i s i a n a i a d a . c o m

ALSO Economic Outlook PLUS Compliance Overdrive

HIRING SMARTER

DEC

EMBE

R 2011

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DECEMBER 2011 T H E O P E N R O A D

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2011 LIADA OFFICERS: PRESIDENTBrad SaiaSAIA Auto Consultant7212 Goodwood Ave.Baton Rouge, LA [email protected] (fax)

PRESIDENT EMERITUSJ.L. RichardP.O. Box 481Carencro, LA [email protected] (fax)

IMMEDIATE PAST PRESIDENT Val ClaryCourtesy Auto Sales Inc.3570 Greenwood RoadShreveport, LA [email protected] (fax) VICE PRESIDENTJunior GonzalezPan-Am LLC201 Chalet DriveLafayette, LA 70508 [email protected] 337-234-7170 (fax)

SECRETARYClint BlakeyBlakey Auto Plex LLC3601 Benton RoadBossier City, LA [email protected]

TREASURERDino TaylorFreedom Motors Inc.601 Trenton St.West Monroe, LA [email protected]

BOARD OF DIRECTORS:Doug Perry Doug Perry Wholesale Cars734 Bayou Shores Drive Monroe, LA 71203 [email protected] (fax)

Danny MooreD Moore Auctioneers 15481 Airline Hwy. Baton Rouge, LA [email protected] Scott Ledet Ledet’s Auto Sales P.O. Box 1505 Gonzales, LA 70707 [email protected] 225-644-2419 (fax)

Steve TaylorCar Town of Monroe Inc.319 N. 3rd St.Monroe, LA [email protected] (fax)

Junior GonzalezPan-Am LLC201 Chalet DriveLafayette, LA 70508 [email protected] 337-234-7170 (fax)

Kevin Rembert Manheim New OrleansP.O. Box 320 Slidell, LA 70459 [email protected] (fax)

John BrakefieldBlue Ribbon Motors Inc.8308 Airline HighwayBaton Rouge, LA 70815225-925-8931225-926-0736 (fax)

Philip CrainRide Time LLC319 N. 3rd St.Monroe, LA [email protected] (fax)

Wayne PattPatt Enterprises15150 Florida Blvd.Baton Rouge, LA [email protected]

Michael McCainMagic Motors7960 Florida Blvd.Baton Rouge, LA [email protected]

BOARD OF D IR ECTORS

Executive Director’s MessageWe would like to thank dealers and vendors for their support of LIADA and LIADA Trust.We are having great response to our membership drive at the auto auctions. Special thanks to the management

and staff for their support. They are helpful partners in our association as we continue to grow together.We look forward to providing the service our dealers expect.Please contact LIADA with any questions, concerns, or comments.

Thanks, Kevin RembertExecutive Director800-960-5423

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

T H A N K Y O U

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

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

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

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

Digital Odometer Tampering

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

INSIDE

WHAT’SNEW

MAGAZINECONTENTS

ADVERTISERSINDEX

04 Hiring Smarter08 Economic Outlook22 Compliance Overdrive

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATIONWWW.NIADA.COM • WWW.NIADA.TVNIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR [email protected].

THE OPEN ROAD 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 OPEN ROAD OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF NIADA, DOES NOT CON-STITUTE ANENDORSEMENT OF THE PRODUCTS OR SERVICES FEA-TURED. COPYRIGHT © 2011 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED.

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

LIADAOFFICE

ADESA ..................................................................11AutoTrader.com .................................... Back CoverFirst Consumers Financial ....................................18LA’s 1st Choice Auto Auction ........Inside Front CoverManheim.com ......................................................17Manheim Houston .................................................7Manheim Mississippi .............................................5Manheim New Orleans ................ Inside Back CoverProtective .............................................................15SmartAuction .......................................................13TD Auto Finance .....................................................9United Acceptance ...............................................19

INSIDE

1630 NORTH FLANNERY ROAD BATON ROUGE, LA [email protected]

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

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

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

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A Strong Dealership Starts with the Right People

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

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

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

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

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

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

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

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

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

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

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

Know What You WantJoe Lescota, chairman of the automotive

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

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

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

Give the appropriate staff a say in who’s hired

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HiringNews

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

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

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

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

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

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

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

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

Do your homeworkJanel Bryan, manager of Auto Brokers in

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

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

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

HiringNewsC O N T I N U E D F R O M P A G E 4

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

Records Retention Guidelines

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

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

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

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

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

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

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

all appeals are exhausted.

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

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

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

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

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

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

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

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

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

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

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

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

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

IndustryUpdate

Learn More

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EconomicOutlook

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

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

Key September/October DataPositive Signs

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

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

Negative SignsThe unemployment rate remained unchanged

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

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

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

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

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

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

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

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

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

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

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

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

Two Very Important Words:

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

Follow up!

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

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

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

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www.stopcurbstoning.com

A different breed of curbstoner, andyet another way cities leak revenues.

If there’s such a thing as a pro�le of a typical curbstoner, it’s someone

who buys cars cheap, cleans them up, and �ips them for a pro�t

to unsuspecting consumers under the pretense of being a private

party. But recently, we’ve become aware of an entirely different type

of curbstoner – and curbstoning.

These are rogue tow truck operators who buy junked or non-running

vehicles and resell them, either whole or in parts.

“CASH PAID FOR ANY VEHICLE RUNNING OR NOT”You may have seen listings like that one on free classi�ed ad websites,

or posted on telephone poles or community bulletin boards.

Sometimes, it’s from a salvage yard that needs to boost its inventory

or a scrap yard looking to make a legitimate pro�t through recycling.

But often, it’s from one of these rogue tow truck operators.

Here’s how they work. They buy basically junk cars for $200-$300

apiece. If the car runs, they �x it up enough to sell it to an unsuspecting

buyer, typically doubling or tripling their money as a curbstoner with

little effort. They don’t take title to the vehicle, so there’s no paper

trail associating them with the junker. Instead, the title jumps directly

from the previous owner to the buyer, hence the term “title jumping.”

Title jumping is illegal. But, because there’s no direct paper trail,

enforcement is dif�cult when buyers don’t insist on conducting

business with the registered owner of the vehicle.

But what if the vehicle doesn’t run? That’s when things get interesting,

and every bit as pro�table.

First, easily removed parts are listed for sale online. Such resalable

parts may include wheels, headlights, taillights, emblems and trim,

and even the glass and seats. With the rise of online classi�ed ads,

those parts easily �nd willing cash buyers on the used parts market.

In most cities, auto parts salvage and resale are regulated businesses,

requiring licensing and, in some areas, additional inspections and

permits. So these parts curbstoners, like regular curbstoners, generate

unlicensed, largely untaxed business pro�ts while taking sales from

legitimate local businesses.

After the saleable parts are salvaged and sold, what’s left is recycled

as scrap metal. For instance, if it doesn’t �nd a buyer as an intact

used part, a used catalytic converter can bring $40-$80 or more

as scrap, depending on the converter, the market, and the price of

unrecovered platinum. Aluminum wheels are worth $10-$15 per

wheel as scrap, even if damaged and unusable as wheels. The radiator

and wiring harness may contain scrap copper worth $10-$30.

What’s left is simply sold

for scrap at about $300

per ton. With an average

of a ton and a half of scrap

per vehicle, that’s $450.

Once again, the perpetrator doubles or triples his or her money, most

of it in cash, with no trace of any transaction taking place.

And, a busy rogue tow truck operator could easily �ip hundreds of

vehicles per year. If an operator averaged only one car a day at $250

per car in pro�t, that adds up to $91,250 in under-the-table income

every year. Many �ip – and make – much more.

But what if the vehicledoesn’t run? That’s whenthings get interesting,and every bit as pro�table.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Do You Know Your Collection

CSI?

CustomerService

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

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

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

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

THE KEY TO SETTING THE RIGHT TONE IS GETTING

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

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

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

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

MUCH AS WE SPEAK.

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The NIADA announced its 66th Annual Convention & Expo will be held June 11-14, 2012 – a week earlier than previously scheduled – at Caesars Palace Hotel and Casino in Las Vegas.

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

Online registration will open in December. Details will be available at NIADA.com. Rooms at Caesars Palace will be available at the discounted rate of $154 per night.

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

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

NIADA Annual Convention & Expo Set for June 11-14, 2012

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

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

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

The NIADA Certified Pre-Owned Program

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

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

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

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

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

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

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

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

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

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

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

SubPrime Auto FinanceNews

Subprime Auto Loans are on the Rise

IndustryNews

To those who customize cars, there seems to be no question about the hottest car on the market. It’s the Chevrolet Camaro, which won the SEMA Award as the Hottest Car at the 2011 SEMA Show last month in Las Vegas. The victory was the second in a row for the Camaro, which remains the only winner in the award’s two-year history.

The Fiat 500 was named Hottest Sport Compact Car, while the Ford F-Series for the Hottest Truck and the Jeep Wrangler for the Hottest 4x4/SUV. The Ford and Jeep were also repeat winners.

The awards were determined by the more than 2,000 exhibitors at the SEMA Show, a trade show produced by the Specialty Equipment Market Association to showcase products that improve automotive performance, safety and convenience, as well as those that enhance appearance and comfort. The vehicles in each category selected by the most exhibitors to display their products at their booths earned the SEMA Award, which honors the vehicles specialty-equipment manufacturers believe are the best platforms for accessorization and showing this year’s coolest products.

Camaro Again Named SEMA Show’s Hottest Car

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New IRS Form 8300 in Effect

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

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

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

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

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

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

Defining CashIn addition to coin and currency, cash

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

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

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

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

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

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

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

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

IRS

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

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

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

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

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

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

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

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

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

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

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

FTC PERSPECTIVES

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

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

LESLEY FAIR IS A SENIOR ATTORNEY WITH THE FEDERAL TRADE COMMISSIONS BUREAU OF CONSUMER PROTECTION.

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Kelley Blue Book Warns of Fake Website Scam

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

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

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

Auction’s Project Helps the Hungry and Homeless

Stewpot Community Services, an organization in Jackson, Miss., that shelters the homeless and feeds the hungry, will find its pantries a bit more full this winter thanks to the efforts of Mid-South Auction.

As the auction kicked off its regular Tuesday sale on Oct. 25, general manager Bob Sullivan explained the Brown Bag Project to the dealers present and asked for their help. Tara Lindsey, Stewpot’s director of volunteer services, explained that on an average day, the Stewpot kitchen feeds lunch to 175 people and said the Stewpot pantry also provides groceries to families in need.

“Without good corporate citizens like Mid-South Auction, we wouldn’t be able to meet these needs,” Lindsey said.

Sullivan invited dealers who wanted to help with the project to take grocery bags and fill them with food items from the list attached to each bag. The filled bags were then loaded into a Chevy truck parked in the lobby. The bags could be returned anytime during the next three weeks, but on the first day of the project the truck was already half-full.

Mid-South auction is a modern six-lane facility located minutes from the Jackson-Evers International Airport in Pearl, Miss. A member of the American Auto Auction Group, Mid-South provides corporate-powered, independent service to its customers, and has sister auctions in South Carolina, Florida and Texas. For more information, visit www.midsouthaa.com.

MID-SOUTH AUCTION GENERAL MANAGER BOB SULLIVAN AND TARA LINDSEY KICK OFF THE THREE-WEEK FOOD DRIVE TO HELP FEED THE HUNGRY IN THE JACKSON AREA.

TARA LINDSEY (RIGHT) OF STEWPOT COMMUNITY SERVICES AND LAURA SHARP OF MID-SOUTH AUCTION LOOK OVER DONATIONS COLLECTED ON THE FIRST DAY OF THE BROWN BAG PROJECT.

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ADESA Shreveport7666 Greenwood RoadShreveport, LA 71119318-938-4400 Phone800-673-2240 Toll Free318-938-7623 Faxwww.adesa.comEvery WednesdayIn-Op sale at 8:45 amGM/GMAC sale at 9 amFleet/Lease sale at 10 amConsignment sale at 10 amEvery Other ThursdayGM Factory Closed sale at 10 am

Alexandria Auto Auction515 N 3rd StreetAlexandria, LA 71301318-484-9672 Phone318-484-9699 FaxSale every Tuesday at 5:30 pm

Dealer’s Auto Auction, Inc.136 Gregory DriveMonroe, LA 71202318-343-8200 Phone318-343-8259 Faxwww.manta.comConsignment Sale at 11:00 amSale every Tuesday at 12 noon

Greater Shreveport-Bossier Auto Auction1315 Grimmett Drive, Shreve-port, LA 71107318- 221-3362 Phone 318- 221-3372 Faxwww.gsbautoauction.comEvery Tuesday at 6:00 pm

Insurers Auction406 Almedia RoadSt. Rose, LA 70087504-468-6995 Phone866-468-6995 Toll Freewww.insurers-auction.comSale every other Wednesday at 9:00 am

Long Beach Auto Auction8494 County Farm RoadLong Beach, MS 39560228-452-2030 Phone228-452-9588 Faxwww.lbautoauction.comSale Every Wednesday at 1:30 pmDisabled and Damaged Units is the 4th Wednesday each Month @ 11:00am Capital One Auto Finance Runs the 4th Wednesday Each Month

Louisiana’s 1st Choice Auto Auction18310 Woodscale RoadHammond, LA 70401985-345-3302 Phone985-345-5735 Faxwww.lafcaa.comConsignment Sale every Tuesday at 8:30 am

Manheim Houston14450 West RdHouston, TX 77041-1103281-890-4300 Phone800-444-2444 Toll Free281-890-7953 FaxTRA Sale - Every Tuesday morning at 8:15AMConsignment Sales - Tuesday, 9AMHertz - Weekly, Tuesdays

Manheim Lafayette 1611 Saint Mary StreetScott, LA 70583337-237-5620 Phone337-237-0762 Faxwww.manheim.comSale every Thursday at 10 am

Manheim New Orleans 61077 St. Tammany AvenueSlidell, LA 70460985-643-2061 Phone800-783-2062 Toll Free985-643-2122 Faxwww.manheim.comDealer Consignment Sale every Wednesday at 9:00 am.Fleet/Lease Sale Wednesday 9:00 am.Total Resource Auctions every Wednesday at 11:00 am

Manheim Texas Hobby8215 Kopman RdHouston, TX 77061-5405713-649-8233 Phone713-640-8395 FaxClosed Ford Factory Sale - Every Other Wed. 10AM CT FMC/Fleet Lease/Dealer OPEN Sale - Tuesday 3:00PM CST, Thursdays 9:00AM CT Mechanically Challenged Sale - Tuesday 2:00PM CSTTotal Recourse Auction – Texas Hobby Tuesdays @ 9:30 AM

Oak View Auto Auction13451 Florida Blvd.Baton Rouge, LA 70815225-272-5139 Phone225-272-5314 Faxwww.oakviewautoauction.comConsignment Sale every Friday at 10 am Fleet/Lease Sale Friday 10 am. Salvage Sale Friday 9 am.

Rea-Brother’s Mid-South Auction800-261-26711657 Old Whitfield RoadJackson/Pearl, MS 39208www.rbmsa.comSale every Tuesday 9:00 am

SmartAuctionYou’re online Auto Auction1-877-273-5572www.smartauction.biz

A U C T I O N D I R E C T O R Y

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In recognition of an act of true heroism by its owner and staff, Dealer’s Auto Auction of Oklahoma City has been named NIADA Auto Auction of the Year, NIADA chief executive officer Mike Linn announced.

Linn presented the award to auction owner Gary Smith and general manager Bruce Beam on Thursday at the National Auto Auction Association annual conference at the Hyatt Regency Chicago.

“This year’s recipient excels in the area of customer service … one which has smiling faces and very capable employees,” Linn said. “This is evidenced by many auctions, but once in a while, an auction will do something that truly sets it apart, sometimes even heroic.”

That’s what happened December 23, 2010, when Odell Morgan, executive director of the Oklahoma Independent Auto Dealers Association, collapsed to the floor as the auction staff was preparing for the day’s sale at about 7 a.m. Smith rushed to him and checked his pulse and found none. The auction owner began performing chest compressions and instructed his staff to contact emergency personnel. Auctioneers, ring men, and dealers were there to assist while Smith continued CPR until paramedics arrived.

Morgan had quadruple bypass surgery and continues his recovery.

“Gary had the foresight to ask his physician many times how to best handle this type situation,” Linn said. “Based on his knowledge, he was able to instruct staff on actions to take and they responded without question. Because of actions taken that day, the auction staff were able to save a life.”

The NIADA began presenting its Auction of the Year award to an NAAA member auction and its general management team in 2008. The award is presented to an auction that demonstrates support of the used motor vehicle industry and the independent dealers who utilize the auction by providing the highest level of customer service, providing dealers with resources to enhance their business, displaying support to the state association and its dealer members through participation in dealer events, and promoting industry community involvement.

NIADA Auction of the Year Winner a Real Lifesaver

Bruce Beam, general manager of Dealers Auto Auction of Oklahoma City, is presented the NIADA Auction of the Year award from NIADA CEO Mike Linn (left) and NAAA president Jay Cadigan (right).

NIADA has partnered with InterCall, the world’s largest conferencing provider, to bring its members exclusive rates on audio and web conferencing services.

With the largest customer base globally, including 94 of the Fortune 100 companies, InterCall is ready to help your business reduce costs and unify your communications needs.

InterCall’s program can reduce your monthly conferencing bills, cut staff travel time and expense and introduce web technology to enhance your conferencing experience.

The NIADA Member Benefits Program provides discounted rates on all InterCall products, including Reservationless-Plus® audio conferencing and industry-leading web conferencing platforms, such as Cisco WebExTM and Microsoft Lync Online. Custom pricing is available for major events.

To enroll, go to www.intercall.com/affinity/niada.htm or call 1-800-636-2377 from 8 a.m. until 6 p.m.

InterCall Brings Conferencing Services to NIADA Members

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Looking for Those Common Threads

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

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

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

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

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

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

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

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

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

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

ComplianceOverdrive

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