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DRIVINGFORCET H E N E W Y O R K

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ALSO Staying Afloat in Sea of PaperworkPLUS Compliance Overdrive

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INVENTORY ACQUISITION 101

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NOVEMBER/DECEMBER 2011 T H E N E W Y O R K D R I V I N G F O R C E

An Important Insurance Update from the NYIADA President

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As the NYIADA president for the past 10 years, I am proud to introduce our NYIADA group insurance ... Experts in Dealers Insurance. NYIADA Insurance Group is proud to offer our Preferred Independent Car Dealer Insurance Program.

Our vast experience insuring many used car dealers means you will not only receive outstanding protection, you’ll also be working with an agent who specializes in protecting car dealers, auto repair shops and body shops. We know your business, we speak your language and we understand the issues facing used car dealers – and their insurance policies. This is particularly important because dealers insurance is complicated and few agents understand it well.

Our comprehensive auto dealer insurance program includes garage liability insurance of course, but we allow you to add to that: dealer’s open lot coverage for your inventory, building and contents coverage and even workers compensation coverage if needed. Also, be sure to ask us about our special feature for your comprehensive deductible. This small, little-understood tweak will save you hundreds or thousands of dollars even if your lot is hit by a hailstorm – something that was never considered by Northeast coast dealers until recently.

We offer fantastic independent car dealers insurance coverage at rates so low you will be surprised, and unlike many agents, we can offer you higher limits. We make the process easy for you. In fact, we can usually provide you with a rate quote on your dealers garage insurance in less than 24 hours

We’re professionals when it comes to auto dealers insurance. Because we insure many car dealers, auto repair shops and body shops in New York and New Jersey, we understand the unique challenges you face in your business, and our goal is to help protect your dealership and your inventory. Don’t waste another minute – our rates are so low that each year we have limited availability on this special coverage.

Contact us today and put our experienced, professional agents to work for you right away!

Please visit our website www.newyorkiada.org and fill out the online insurance questionnaire for a quote.

We have worked hard to put these plans together for NYIADA and NJIADA.

Fred DonnellyPresidentNYIADA565 Hunts Point AvenueBronx, NY 10474(917) 567-3396

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T H E N E W Y O R K D R I V I N G F O R C E NOVEMBER/DECEMBER 2011

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MAGAZINECONTENTS

ADVERTISERSINDEX

INSIDE

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

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

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

MAGAZINECONTENTS

ADVERTISERSINDEX

6 Dealing with Paperwork12 Inventory Acquisition 101 14 Compliance Overdrive

ADESA ..........................................Inside Front CoverAuto Use ..............................................................10AutoTrader.com ...................................... Back CoverManheim.com ......................................................11Mironov Group ......................................................13Protective ...............................................................9SmartAuction ............................... Inside Back CoverSouthern Auto Auction ............................................7TD Auto Finance ....................................................5

WHAT’SNEWR 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 NIADA Mobile now offers access to Manheim Auction information on the go through our smart phone app. Manheim run lists and market reports are among the many enhancements now available. NIADA.Gigglepop.com

Tim West, Black Book’s vice president and North American auction director, was inducted into the National Auto Auction Association Hall of Fame during its 63rd annual conference in Chicago.

“Tim is extremely knowledgeable, personable and dependable,” NAAA chairman of the board David Angelicchio said. “He’s out there exchanging ideas and sharing information with our members. His efforts have earned him respect as a trusted friend and advisor to many auction owners and general managers. He embodies what it means to be a true NAAA stalwart.”

West joins three of his Black Book associates in the NAAA Hall of Fame: Gene McDonald, Dave Cape and Bob Burnett.

Since he began his career with Black Book in 1984 as an editorial assistant, West has worked diligently to build personal relationships with those in the industry. During the next decade he served as editor of both the Old Car and Domestic Car guides, then as assistant field coordinator and North American auction director.

In that position, West expanded his connections and support during the transition from predominantly locally owned auctions to corporate owned and operated. He manages the overall industry interaction vital to Black Book’s ability to provide accurate and timely information, and oversees the production department, ensuring the quality of the printing and shipping of all the printed guides.

Tim West Named to NAAA Hall of Fame

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NAAA Alert - Take Action!

NAAA asks you to send a letter supporting H.R. 860, Promoting Charitable Donations of Qualified Vehicles Act of 2011.

Seven years ago, Congress changed the tax rules governing car donations. In the first year after the law changed, the IRS reported a 67 percent decline in the number of vehicles donated to charities.

The current law does not allow for a tax deduction until a vehicle is auctioned and then only for the auction sale price. The proposed legislation, H.R. 860, would allow tax deductions based on fair market value up to $2,500 and require an appraisal over that threshold.

This bill would maintain IRS reporting requirements for both taxpayers and charities without scaring away donors.

NAAA urges you to take action by sending a letter to your Congressman asking them to support H.R. 860

Support Legislation to Promote Charitable Donations of Vehicles

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Expert Help Allows Dealers to Stay Afloat in Sea of Regulations

Buying a car can be a lot of fun for both the seller and the buyer. The seller gets to make money, meet the public and experience the thrill of the chase. The buyer gets a new car, transportation to make his lifestyle possible.

But these days, car deals come with a lot of paperwork. All those forms are more than simply a buzz kill for buyers and sellers. They are an important part of the transaction, one that can end up costing a dealer hundreds of thousands of dollars – or his livelihood – if not filled out properly.

Tom Hudson, senior partner for the law firm Hudson Cooke in Hanover, Md., and an expert in the legal issues auto dealers face, said dealers need to understand that the forms and regulations covering retail auto sales are specific. His advice:

GET EXPERT HELP “The biggest mistake I see is when dealers have their contracts written by lawyers who aren’t experts in retail auto sales,” Hudson said. “I just spent the morning reviewing 30 documents that are used by a car dealer who had just acquired my services. Because I am an expert in the field and know what to look for, I spent a couple of hours reviewing his paperwork. I will be able to advise him on what he’s doing right and what he’s doing wrong. As an attorney, I get paid. If that dealer didn’t want to pay my rate and just sent his contracts to another attorney who wasn’t an expert, but charged less, he’d be making a mistake.”

While that other attorney might be a great guy and generally competent, Hudson said, he doesn’t know what to look for. So even if that lawyer is less expensive, he might spend 10 hours reviewing documents instead of just a couple. That costs more. Plus, the dealer would be getting legal advice from someone who isn’t an expert in retail auto sales.

Al Mosher, senior consultant for Constellation Automotive Software in Sarasota, Fla., agrees with Hudson. His company sells the appropriate software to dealers to help them run their operations, and trains dealers how to better run their lots.

“We offer various levels of consulting,” Mosher said, “but one of the things we talk about is the sales process, the collection process and if the dealership is in compliance with all the rules that regulate these processes. That means looking at the paperwork. One of the big regs is the privacy notice, and you’d be surprised at how many dealerships don’t have one in place.”

Mosher said he begins his lessons on the importance of having the correct paperwork to comply with federal and state regulations with horror stories.

He mentions one dealer who got hit with fines totaling $2.8 million for improper collection practices. He tells the story of a dealer who tried to get around reporting cash transactions of more

than $10,000 by unsuccessfully attempting to split a car sale into two transactions, each less than the $10,000 threshold for reporting. The dealer didn’t get away with it, winding up with $250,000 in fines while having to forfeit $169,000 in his bank account as well as losing the title to 10 cars.

A lot of the regulations passed in the last 10 years aren’t only aimed at protecting consumers from dodgy dealers. Many of the regulations were security measures passed as a result of the terrorist attacks of Sept. 11, 2001. So not reporting cash transactions or doing the proper background checks as required by law could mean more than civil fines – they could result in criminal charges. It’s far better to be safe than sorry.

MAKE SURE YOUR FORMS ARE THE RIGHT FORMS.

Vic Owens, owner of Wholesale Forms, said he’s been in the car business for 37 years and has been selling forms since 1987. His inventory includes warranty stickers. He said having stickers on vehicles explaining what an “as is” sale is and what the other warranty issues are is just smart. Buyers know up front what their rights are and it takes pressure off the sales staff.

But having the wrong form can be just as bad as having no form. That’s why Owens follows what’s going on at the Federal Trade Commission. Things change, and form providers have to stay on top of those changes. Staying on top of regulations means staying on top of what the states are doing.

There are 50 states out there, not to mention the District of Columbia. Different states have different rules. When buying forms, it’s critical that dealers buy from someone who knows what that dealer’s state regs are. Owens knows of dealers in California, which has a large Hispanic population, who use contracts that mix Spanish and English. He believes that’s a bad idea. Better to have a Spanish contract and an English contract, instead of one that mixes both languages.

Being paperwork-compliant goes beyond having the right contracts, Mosher said. When he speaks with dealers, he tells them many of their business operation procedures need to be written down.

“The biggest thing I would say about paperwork is that many dealers don’t understand how much of their compliance plan must be in writing,” Mosher said. “The U.S Patriot Act requires a written plan to verify a customer’s identity. It’s not enough that the dealership follow the rules. That procedure must be put down in writing. Graham-Leach-Bliley requires a written procedure to be kept on site.”

DEALERS NEED TO KNOW WHAT THEIR CONTRACTS SAY.

“Dealers buy these forms from various sources, but don’t bother to read them, “Mosher said. “They don’t know what their own contracts allow. Talk about a recipe for trouble.”

Hudson said he’s seen contracts and paperwork that contradict each other. He knows of a dealer who was using forms that defined what a spot delivery was in three places – and the three definitions didn’t match up. Try winning a lawsuit that has been filed by a buyer when your own paperwork is in conflict with itself.

Mosher said there are generic privacy notice forms dealers can buy. Wwhile it’s good to have a privacy form, federal law requires that the privacy form to be about your dealership’s procedures. If a dealer has copied the forms used by Joe’s Auto Sales down the street, that could be trouble, because Joe might have different procedures and his form is no good for your dealership.

DON’T GO IT ALONE.No, paperwork isn’t a lot of fun. Yes, paperwork

is tedious. Yes, paperwork is intimidating, and no, you can’t ignore your paperwork responsibilities. A lot of dealers have left the business because of the paperwork grind, Hudson said. But for dealers who decide to stay in the game, all is not lost. There is help.

First, dealers can belong to their state independent automobile dealers associations (IADAs). The IADAs are there to help members sell more cars. The National Independent Automobile Dealers Association makes use of legal experts in retail auto sales, such as Keith Whann. This expertise flows down to the state associations and through them to their members.

Rose Morgan, co-executive director of the Oklahoma IADA, also sells compliance forms for Automotive Dealer Resources (ADR). She is acutely tuned to the needs of dealers. ADR forms are designed to be easy to use by dealers, who most often aren’t lawyers themselves.

“Our goal is to make the forms simple and easy to use,” Morgan said. “We have videos on our website to walk people through the process.”

Hudson said he advises Reynolds and Reynolds on its forms. Owens and Mosher, among others, are in business to help dealers meet their legal obligations when it comes to paperwork.

“The days of the lone dealer operating by himself with one employee are pretty much gone,” Mosher said. “There are a lot of reasons for that, but one of them is because of paperwork requirements. If you’re smart, you won’t try to go it alone. There are experts out there who will help you. Seek out their advice and services.”

KEEP UP WITH CHANGES IN REGULATIONS, OR USE THE SERVICES OF PEOPLE WHO WILL KEEP UP WITH THE CHANGES.

Mosher said that in the past five years alone, there have been numerous changes in regulations. Dealers can’t just buy forms or attend a training class and think they have things covered. Regulations change, often.

“People talk about when Congress passes a law,”

BY JIM STICKFORD

Drowning in paperwork

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Mosher said. “That’s done with great fanfare and much publicity. But once the law is passed, it drops out of the news. It might take a couple of years before the first regulations resulting from the passage of a law are put on the books. There’s usually very little fanfare when a new regulation is put into place.”

Never mind new regulations. Mosher has come across dealers who aren’t compliant with regulations that have been on the books for decades. He said he often sees dealers who don’t have the right FTC buyer’s guides. That’s been a requirement since the 1980s, and if an FTC inspector happens to make an inspection, that could end up costing a dealer $16,000 per vehicle with an improper FTC buyer’s guide.

“I know what a lot of dealers say,” Mosher said. “There aren’t a lot of inspectors, what are the odds of me being caught? I say there are inspectors out there. They tend to go in waves, and dealers get caught. Would you like to be the dealer who sold a car to a terrorist or criminal and didn’t do his due diligence? I wouldn’t.”

Morgan said it’s a bad idea to have the attitude of “If the government fines me $100,000, good luck trying to get it.” It’s much better to think, “I’ll be in compliance and avoid trouble.”

PAPERWORK IS HERE TO STAY AND IS NOT LIKELY TO GET SIMPLER.

“I don’t see paperwork getting simpler,” Hudson said. “Ignoring the problem won’t make it go away.”Dealers really do have to be careful. Hudson listed some of the federal regulations that require their own paperwork. They include:• The Patriot Act• The Truth in Lending Act, regulation Z• The Equal Credit Opportunity Act, regulation B• The Consumer Lending Act, regulation M• The Fair Credit Report Act• The Federal Trade Commission Used Car Rules• The Magnuson-Moss Warranty Act• Federal odometer regulations• Gramm Leach Bliley• The FTC privacy notices that go with Gramm Leach Bliley• RS 8300 Cash reporting rules• Do Not Call Regulations• Do Not Fax Regulations• Do Not Email Regulations• Federal Arbitration Regulations.

“And that’s just federal rules,” Hudson said. “Your state might have its own set of rules and regulations you have to follow.

“This is serious stuff that can cost a dealer his business. But there is help out there for dealers and they really should take advantage of what’s out there.”

Paperwork is inevitable. Get used to that fact and a dealer’s life becomes much easier, especially since there are places dealers can go to get help.

Paperwork will never be fu n, but it doesn’t have to be a burden a dealer takes on by himself.

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AutoTrader.com’s Dealer Learning Center Gives Dealers Free Online Access To Educational Resources

In an effort to help dealers leverage the Internet to effectively advertise online, AutoTrader.com has launched its Dealer Learning Center (DLC). This online educational portal brings on-demand video tutorials, topical articles, proprietary and independent research, best practices and marketing handbooks to the dealer community at no charge. Dealers and their staffs can anonymously access these resources at www.dealerlearningcenter.com.

As the go-to place for educational content on a variety of online marketing and research topics, the DLC includes information on online merchandising best practices, industry insights, video, social, mobile, chat and more. Dealers can also find important research studies such as the 2011 Polk Automotive Buyer Influence Study and the Northwood Dealer Walk-In Study.

“This is yet another way that AutoTrader.com is fulfilling our promise to the dealer community: We Work for You,” said Chip Perry, president and CEO at AutoTrader.com. “We only win if our customers win, so we have been continually focused on ensuring that they have all the tools and resources necessary to be successful. From transforming our sales team into true advertising consultants a few years ago to creating more robust educational programs and resources, AutoTrader.com is bringing the latest information on effective online marketing and merchandising to the dealer community.”

The Dealer Learning Center is an extension of the already robust programs AutoTrader.com offers through its Dealer Learning team, which supports the educational needs of dealers through hands-on learning. Comprised of automotive experts with extensive dealership experience, the Dealer Learning Team aims to help dealers use the Internet as a tool to drive shoppers to their showrooms as well as integrate online best practices with in-store processes that maximize operational efficiency.

In addition to directly serving the dealer body with an array of educational materials, the Dealer Learning Center will also enable AutoTrader.com advertising consultants to enhance their interactions with their customers by providing facilitated learning that aligns with their customers’ objectives.

Visitors can also see a schedule of upcoming events with information about the local market educational workshops being conducted throughout the country. These workshops are open to AutoTrader.com dealer customers, and in many cases, non-customers. Visitors can also learn about the AutoTrader.com Dealer Learning team and read workshops descriptions.

The Dealer Learning Center was designed for ease of use and to provide visitors learning flexibility on the topics important to them. For

example, they can watch a 10-15-minute video tutorial on a topic of their choice or read an article on the same topic. It also lets dealers rate the educational resources on a five-star rating scale to help other users determine which assets contain the most valuable content to serve their educational needs.

Furthermore, the DLC features full-site search capabilities to help users immediately locate the information they seek. Finally, the DLC offers a variety of ways for dealers to keep up to date with the most recent resources and events added to the site. Dealers can opt in to a monthly email update, which gives a rundown of all new content that has been uploaded to the site during the previous month, they can subscribe to an RSS feed, or they can visit the site’s overview page to stay informed.

“We were very thoughtful with the development of this site, taking into consideration how different visitors may prefer to learn as well as browse the content. Our priority is to accommodate and facilitate dealer learning, not only in person but also online,” said Eddie Cawley, director of dealer learning. “Our educators have retail automotive backgrounds, and they are interacting with dealers and their staffs every day. They understand the pain points of dealerships and have insight into what educational information they are hungry for. The content on the DLC speaks directly to the feedback we’re hearing from the field, and it will continue to evolve and grow.”

Allyson Estes, Director of Industry Relation & Dealer Learning, explained further.

“As an industry, we face new challenges all the time. AutoTrader.com has tremendous access to resources, research, and best practices about effective online marketing. It is our responsibility to share that information with the dealer community so that the industry as a whole is successful.”

“We rely on dealers for learning just as much as they rely on us. It’s two-way sharing. This learning center is a new way to foster that communication,” she said.

Two of the most popular workshops the team is asked to conduct are OnLot2Online and Customer Connections.

According to the workshop description for OnLot2Online, three out of four consumers are shopping online for cars, and they expect the same level of customer service online and offline – from reception to selling and financing. As a result, today’s dealerships require an integrated approach in order to convert prospects into customers and create ongoing customer loyalty.

OnLot2Online was designed around this concept and focuses on how to take in-store best practices and move them into the online space. This program covers creating an “Internet Culture” at the dealership among all employees, aligning the online and offline retail shopping experience for shoppers, effective online merchandising tactics, new platforms to engage and influence car shoppers, and methods for tracking and sourcing dealership traffic.

Customer Connections offers insight into how dealerships can engage and respond to online shoppers when they call, email, or walk in to the dealership. Additionally, it covers the dealership’s role and the dos and don’ts of new consumer engagement platforms such as live chat and social media-dealer rating sites. It also identifies various channels in which today’s shoppers contact the dealership and explains what shoppers are looking for from the dealership experience. Workshop participants also have an opportunity to practice effective methods for addressing and engaging shoppers.

“Our workshops are very interactive. It creates an environment where dealers can also learn from each other. It’s an excellent way to reinforce learning and discover new ways that dealers make the Internet work for them. We are able to share many of the best practices that are working for dealers in other markets as well as the findings from performance metrics on AutoTrader.com,” said Eddie Cawley.

The Dealer Learning team also conducts workshops on other topics like business transparency and inventory acquisition. The workshops are customized so that the information is relevant to the audience.

“Different dealerships have different needs based on a variety of factors, so we take that into consideration when coming to a market or dealership to conduct a workshop. We want the content to be meaningful to the dealers in the room,” Cawley said.

The Dealer Learning Center offers a new, effective format for extending the lessons from interactive workshops the Dealer Learning team conducts around the country. This online platform offers an immediate way for dealers to access these helpful insights about effective online marketing. Dealers can learn more at www.DealerLearningCenter.com.

IndustryEducation

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At NIADA, we’re always looking for ways to help you get more out of your membership. That’s why we’ve teamed up with OfficeMax to introduce the OfficeMax Partner Advantage program.

OfficeMax is a leader in both business-to-business office product solutions and retail office products. OfficeMax provides office supplies and paper, in-store print and document services through OfficeMax ImPress technology products and solutions, and furniture to consumers and to large, medium and small businesses. OfficeMax customers are served by 35,000 associates through direct sales, catalogs, e-commerce and retail stores.

OfficeMax has more than 40 years of experience in the business-to-business marketplace and is recognized as one of the most experienced national business products supplier. Corporate United, the nation’s largest group purchasing organization, selected OfficeMax as the 2010 recipient of the Corporate United Supplier of the Year Award.

Partners

NIADA Mobile now provides instant auto transport quotes as part of its innovative mobile app. With the addition of ShipCarsNow to the NIADA mobile app, NIADA members will have shipping costs at their fingertips, giving dealers the ability make quick, informed purchase decisions whenever and wherever they buy wholesale inventory.

NIADA Mobile currently provides vehicle values from Black Book, Kelley Blue Book and NADA; CARFAX and AutoCheck reports; as well as pre-auction run lists, continuously updated vehicle data, and VIN bar code scanners. “ShipCarsNow is one of our NIADA National Member Benefit Partners and we are excited to include nationwide auto transport as another service within of our mobile app platform,” said Scott Lilja, NIADA vice president of member services.

ShipCarsNow recently introduced ShipCarsNow Mobile, a mobile app that gives auto dealers and remarketers a fast and easy way to get multimodal auto transport quotes from any smartphone. One of the few auto transport companies to offer flexible options of truck and rail service, ShipCarsNow’s mobile app complements their online auto transport service and offers auto dealers mobile access to instant auto shipping quotes while they’re bidding on cars at auction. In addition to instant price quotes, the ShipCarsNow mobile app provides users a link to register with ShipCarsNow.com for lower, preferred customer prices. NIADA members can use the app to login to ShipCarsNow.com to get quotes, track shipments, and quickly access ShipCarsNow sales representatives.

To learn more about the NIADA Mobile app with ShipCarsNow auto transport quotes, visit http://niada.gigglepop.com

NIADA Mobile Adds ShipCarsNow Auto Transport Quotes to App

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NIADA Auction of the Year Winner a Real Lifesaver

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.

IndustryNews

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).

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The hottest topic right now in the Buy Here-Pay Here world has to be inventory. Not only where, but what and how to find and purchase it.

Like most other areas of the BHPH business, the most successful dealers are focusing on the basics in this area, too. They are firm believers in the KISS (keep it simple, stupid) philosophy. No need to overthink and, thus, overcomplicate things.

The first basic they are focusing on regarding inventory acquisition is repeat business. For the more successful dealers, between 30 and 40 percent of their monthly sales are from repeat customers. These will be either low-balance customers traded into a new vehicle or previously paid-out customers that have returned to purchase again. So 30 to 40 percent of their monthly inventory need is satisfied with vehicles they have a history of and with; that’s pretty valuable information to have when it comes to the vehicles we deal with.

Recycling of repossessions is the next basic to focus on. With these, you have the ability and time to completely check the vehicle out to determine its reconditioning need. You also have some historical information for the vehicle. The dealers I have the privilege of working with are recycling on average 60 percent of their repossessions each month to put back out on the lot for sale. The only negative seems to be that the recycled vehicles tend to have a higher reconditioning cost. They seem to need a little more love to get them lot ready but overall are more cost effective than purchasing at auction.

Speaking of auctions, they are a basic that should not be overlooked. It is true that there are not as many vehicles going across the block these days, but it is still an effective source. The positive to vehicle volumes at auction being down is that they are becoming very competitive with one another for dealer business. Some auctions are even waiving buy or post sale inspection fees. There is no better time to expand your horizons and check out as many auctions as travel and expense will allow.

When shopping for a new or additional auction sources, do not limit yourself to just the large national auctions. Independent auctions are becoming very aggressive in going after dealer business as well. I may be a little old fashioned, but have always preferred the independent auction as they seem to provide better service and an overall buying and selling experience.

I also recommend utilizing the World Wide Web in aiding in the search for an auction honey hole. Most auctions, national and independent, are posting most, if not all, of their upcoming sale vehicles, but post-sale information as well. Most are utilizing Smart Auction, Open Lane, and or OVE for the posting. These are also great resources for the dealer to not only purchase vehicles from the comfort of their office but also to research what auctions have available to know where your next auction visit needs to be. You might just stumble on an auction you weren’t even aware existed.

A final basic in the kissing of inventory acquisition would be dealer trades. New car sales are down so this is not the source it once was, but still should not be overlooked. It won’t fill the overall need, but still could fill a partial need. I think the key here is personal contact with the dealer. I’m seeing too many buyers just calling the dealer asking what they have instead of taking the time to actually visit the dealers.

Not necessarily a basic, but a stone that should not go unturned would be the private seller. Craigslist, eBay, newspapers and auto magazines are all sources to find vehicles. I, too, used to turn my nose up at this stone feeling it wasn’t worth the time and effort, but with today’s economic challenges, there are sellers out there who simply need the money to get by and are far more reasonable in their expectations. Will it fill the lot? No, but it could fill part of it and that is what counts.

As for how to KISS the what and how to acquire inventory, I think it comes down to two very simple questions. How much do you have in the bank account? And how much of that are you willing to spend? There still is enough inventory available as long as you are willing to pay for it. Values are a little out of control right now but have seemed to have leveled off a little in the last month.

Finding the right inventory for the right price is still possible. The key will be not to overthink and, thus, overcomplicate it. If you focus on the basics and keep it simple, you will be working smarter and not harder.

Brent Carmichael Executive Conference Moderator NCM Associates [email protected]

Inventory Acquisition 101

BY BRENT CARMICHAEL

When shopping for a new or additional auction sources,

do not limit it to just the large national auctions. Independent

auctions are becoming very aggressive in going after

dealer business as well. I may be a little old fashioned, but

have always preferred the independent auction as they

seem to provide better service and an overall buying and

selling experience.

No need to overthink and thus overcomplicate things.

IndustryNews

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Kelley Blue Book Warns of Fake Website ScamDealers Want Better Auto Transport Options from Auto Auctions

Results from ShipCarsNow’s 2011 survey of independent and franchise auto dealers show dealers want more auto transport options when buying vehicles online from wholesale auto auctions.

Preliminary results show the number of dealers who buy pre-owned vehicles via online auction is steadily increasing year over year, and those auctions are increasingly located farther away from the dealership. More dealers report they are expanding their search for wholesale autos nationwide. In 2009, 75 percent of dealers reported they usually sourced inventory within 50 miles of their dealership and only 14 percent were shopping as far away as 500 miles or more. In ShipCarsNow’s 2011 dealer survey, 35 percent of dealers reported they shop nationally and more than half of the survey respondents said they planned to buy more inventory online in 2011 compared to 2010.

So, what does this mean for online and simulcast auto auctions? ShipCarsNow reports 63 percent of dealers surveyed said they think online auto auctions should improve transportation options. Almost half said they would purchase more vehicles online if auctions improved auto transport services and increased reliability of condition reports. Suggestions that ranked highest included providing the transportation cost before or during the bidding process and the ability to see discounts for multiple vehicle shipments, as well as the ability to combine vehicles with other dealers’ for economies of scale. Dealers also reported they’d like to see multiple auto transport bids, and that price and reliability are key requirements for any auction offering auto shipping services.

So, what is the bottom line? Like any savvy consumer, auto dealers want options. They want to shop where they want, and when they want. They want vehicles delivered safely, timely and economically. And they want the transaction process to be intuitive and hassle-free. Innovative auto transport companies and online auto auctions need to collaborate to develop the tools and services that dealers need.

For more information about ShipCarsNow’s 2011 Dealer Survey, visit www.ShipCarsNow.com; the complete survey report will be available soon.

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 .

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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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