September 2014 MSADA Auto Dealer

September 2014 • Vol. 27 No. 9

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BOSTON, MAPERMIT NO. 216

MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109

autoD E A L E R

M A s s A c h u s E t t s

The official publication of the Massachusetts State Automobile Dealers Association, Inc

Making an Impact

Ta b l e o f C o n T e n T s

4 From the President: Inside the beltway

6 the roUndUP: The CfPb battle Continues

9 insUrAnCe: Using Total Rewards as a Recruitment Tool

10 troUBLeshootnG: no Right to Positive online Reviews

11 LeGAL: Massachusetts’s new Domestic Violence leave law: What Dealerships need to Know

12 AUto oUtLooK

14 Cover Story: Making an Impact

17 neWs From Around the horn

21 nAdA UPdAte: Urge Congress to Rescind flawed CfPb ‘Guidance’ on auto finance

23 insUrAnCe: are You Required to file a form 5500?

24 nAdA mArKet BeAt

www.msada.org Massachusetts auto Dealer SEPTEMBER 2014

The official publication of the Massachusetts State Automobile Dealers Association, Incs Ta f f D I R e C T o R YRobert O’Koniewski, Esq.

executive Vice [email protected]

Jean Fabrizio Director of administration

[email protected] Brennan, Esq.

Staff [email protected]

Marta Argueta-Guerraadministrative assistant/ Membership Coordinator

[email protected]

a U T o D e a l e R M a G a z I n eRobert O’Koniewski, Esq.

executive editorCatherine MacDonald

editorial [email protected]

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from the President4

SEPTEMBER 2014 Massachusetts auto Dealer www.msada.org

by Scott Dube, MSADA President

A

Inside the BeltwayBringing the grassroots to Capitol Hill

s auto dealers, our indus-try is regulated locally, by state authorities, and by the federal government. We all know that regulations, if done properly, can keep consumers and dealers safe, but without our constant input, stereotypes and easy scape-goating can get in the way of sound policy.

This month a delegation consisting of NADA Director Don Sudbay, MSADA Vice President Chris Connolly, Dealer Ray Ciccolo, Next Gen dealer representative, Emily Dube, Execu-tive Vice President Robert O’Koniewski, and me journeyed to Capitol Hill as a part of NADA’s annual Washington Conference.

The Washington Conference is a chance to make sure our rep-resentatives understand that we continue to struggle under the weight of a down economy, and that the policies they pursue should be focused on making it easier to do business, not harder. We aren’t seeking any special favors or privileges, just a level playing field.

Each year the same founding American principle is under at-tack: free enterprise. Of course, the scope of that problem is well beyond any one industry. We keep our punch list short and stick with making sure our legislators understand that tax increases and regulatory changes may seem copacetic while dreaming them up in the halls of power, but back in Lawrence or Northampton or Framingham the small businesses that make up the fabric of those communities are being tugged at the seams.

We’ll get into a little more detail about what these issues are in this month’s cover story and Bob’s column. As usual, unfor-tunately our dealer delegation has its work cut out for it as Con-gress continues to back initiatives such as the Consumer Finance

Protection Bureau and IRS is-sues, including the estate tax and elimination of LIFO. But we can never stop putting effort into making sure our representa-tives know who we are, what we

do, and how vital our contribution is to their districts and our communities.

We may not agree on every issue, but as we’ve seen proven during these past couple of years, when the chips are down the time put into establishing these relationships can really pay off.

All of this work is done for the benefit of our member deal-ers, who are working tirelessly day in and day out to make their businesses succeed. They’re putting food on the table for their families, and by extension are doing the same for as many as 50 men and women in their communities. They don’t all have time to make a trip down to Washington, and that’s why we feel privi-leged to speak on your behalf.

I’d also like to thank our Washington Conference dealer dele-gation for literally going the extra mile(s) to make sure our voice is heard. It can be a slog, especially given the nature of our Con-gress right now, but they remember who they’re putting in the time for. I hope you’ll join me in showing them our appreciation.

As a final note, I want to continue to stress the importance of your voice in this process. We make the trip down to DC so you don’t have to, but that doesn’t mean you shouldn’t pick up the phone and let your legislator know what issues you care about as an important economic engine in their community. Please let me or Bob know if you would like any talking points or other tips for representing our business.

t

MSADA

“Each year the same founding American principle is under

attack: free enterprise.”

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Name Contact TelephoneADESA Boston Chris Carli (508) 270-5403ADP Dealer Services Maria Trezza (973) 404-4466Albin, Randall & Bennett Barton D. Haag (207) 772-1981American Fidelity Assurance Co. Tom Trudell (413) 885-5477AutoAlert Don Corinna (949) 398-7008AutoRaptor (RAL) Howard L. Leavitt (401) 421-6533Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt Andron & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Blum Shapiro John D. Spatcher (860) 561-4000Boston Globe Mary Kelly (617) 929-8373The Boston Business Advisory Group Paul Cuomo (781) 681-1501 Vincent Saccone (781) 681-1519Burns & Levinson LLP Paul Marshall Harris (617) 345-3854Cars.com Heidi Allen (312) 601-5376 CitNOW Jack Gardner (617) 221-8008 Construction Management & Builders, Inc. Kate Sullivan (781) 246-9400CVR John Alviggi (267) 419-3261Dealermine Inc. Karen Parmenter (800) 304-3341 x5179 DealerDOCx Brad Bass (978) 766-9000 DealerTrack Ernest Lattimer (516) 547-2242Downey & Company Paul McGovern (781) 849-3100EasyCare New England Inc. Mike Douglas (770) 246-9724Ethos Group, Inc. Drew Spring (617) 694-9761F & I Resources Jason Bayko (508) 624-4344Federated Insurance John Ballard (859) 312-9896First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher & Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320GW Marketing Services Gordon G. Wisbach Jr. (781) 899-8509 Huntington National Bank John J. Marchand (781) 326-0823Key Bank James Q. Moretti (781) 558-5132KPA Rob Stansbury (484) 326-9765Leader Auto Resources, Inc. Brendan J. Murphy (518) 878-6341Lynnway Auto Auction Jim Lamb (781) 596-8500M & T Bank John Federici (508) 699-3576Management Developers, Inc. Dale Bosch (617) 312-2100MetroMedia Energy Timothy Teevens (800) 828-9427Micorp Dealer Services Frank Salkovitz (508) 832-9816Mid-State Insurance Agency James Pietro (508) 791-5566Mintz Levin Kurt Steinkrauss (617) 542-6000Murtha Cullina Thomas Vangel (617) 457-4000Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120Performance Management Group, Inc. Mark Puccio (508) 393-1400R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300Reflex Lighting Ping Weiner (617) 269-4510Resources Management Group J. Gregory Hoffman (800) 761-4546Reynolds & Reynolds Marc Appel (413) 537-1336Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301Samet & Company John J. Czyzewski (617) 731-1222Schlossberg, LLC Michael O’Neil, Esq. (781) 848-5028Sentry Insurance Company Eric Stiles (715) 346-7096Shepherd & Goldstein Ron Masiello (508) 757-3311Silverman Advisors, PC Scott Silverman (781) 591-2886Southern Auto Auction Tom Munson (860) 292-7500Sovereign Bank Richard Anderson (401) 432-0749Sun Trust Bank Michael Walsh (617) 345-6567 Target Dealer Services Andrew Boli (508) 564-5050TD Auto Finance BethAnn Durepo (603) 490-9615TD Bank Michael M. Lefebvre (413) 748-8272TrueCar Pat Watson (803) 360-6094 Wells Fargo Dealer Services Christopher Peck (508) 314-1283 Wicked Local Media Massachusetts Jay Pelland (508) 626-4334 Windstream Rick Caruth (978) 296-0313; (413) 977-6111 Zurich American Insurance Company Steven Megee (774) 210-0092

AssociAte MeMber Directory

MSada BoaRd Barnstable County

Gary beard, Dick beard ChevroletBerkshire County

brian bedard, bedard brothers auto sales Bristol County

Richard Mastria, Mastria auto GroupEssex County

William Deluca III, Woodworth Motors John Hartman, Ira Motor Group

Franklin CountyJay Dillon, Dillon Chevrolet

Hampden CountyJack sarat, Jr., sarat ford

Hampshire Countybryan burke, burke Chevrolet

Middlesex CountyChris Connolly, Jr., Herb Connolly Motors

scott Dube, bill Dube Hyundaifrank Hanenberger, MetroWest subaru

Norfolk CountyJack Madden, Jr., Jack Madden ford

Charles Tufankjian, Toyota scion of braintreePlymouth County

Christine alicandro, Marty’s buick GMC IsuzuSuffolk County

Robert boch, expressway ToyotaWorcester County

steven sewell, Westboro Mitsubishisteve salvadore, salvadore auto

Medium/Heavy-Duty Truck Dealer Director-at-Large

[open]Immediate Past PresidentJames G. boyle, Tuck’s Trucks

NADA DirectorDon sudbay, Jr., sudbay Motors

OFFICERsPresident, scott DubeVice President, Chris Connolly, Jr.Treasurer, Jack Madden, Jr.Clerk, Charles Tufankjian

MSADA

On the eve of the thirteenth anniversary of the September 2001 terrorist attacks on our soil, a delegation of Massachusetts dealers and Associa-tion staff traveled to Washington, DC for NADA’s annual legislative and regulatory conference. For many of us, the events as they unfolded in 2001 while we were attending that year’s Washington Conference seem like they happened yesterday, and several speakers referenced memories of that tragic day 13 years ago in their remarks.

Since then, the political atmosphere in DC seems to have devolved into a citywide, perpetual gripe session, with all branches of government do-ing their part to keep the dysfunction going.

What would our annual Washington Conference be without Democrats complaining about Republi-cans, Republicans complaining about Democrats, and everyone bemoaning the fact that nothing can get done because, depending on the issue, the House, the Senate, or the White House do not want to get to a solution?

In recent years “gridlock” and “hyper-partisan-ship” seem to be the two terms that have become permanently attached to descriptions of “the fed-eral government,” and with them come the in-fighting, name calling, and pouting exhibited by our elected officials we’ve come to expect in our visits and the speeches we hear.

But when your audience is a group of small busi-nessmen and women who have given up time from their dealerships and families to fly to Washington to discuss issues important to their stores and getting the economy going in a positive direction, the politi-cal fighting in the sandbox we see firsthand appears rather immature, unprofessional, and tiresome.

What we do know, however, is that the Obama Administration, supported by its Congressional party members, seems to take great joy in continu-ally rolling out more anti-business proposals that make it increasingly difficult for small businesses, just like your dealerships, to succeed in a challeng-ing economy. Hence, the even greater need to go before our elected officials and inform them of our concerns and desires. Without our input, our es-teemed members of Congress, if left to their own devices, could find a way to pour more gasoline on the fire.

This year’s MSADA contingent traveled to Washington DC on September 9-10 to participate in NADA’s 39th Annual Washington Conference. Our delegation included MSADA President Scott Dube (Bill Dube Hyundai); Vice President Chris Connolly (Herb Connolly Motors); Massachu-setts NADA Director Don Sudbay (Sudbay Auto Group); our past NADA Director and current dealer Ray Ciccolo (Village Auto Group) and his daughter, Michelle; our Next Gen dealer represen-tative, Emily Dube (Bill Dube Hyundai); MSADA legislative agent Jim Hurrell; MSADA staff attor-ney Peter Brennan; and me.

Dealers from across the country use the annual Washington Conference to meet with their Sena-tors and Representatives to discuss various legisla-tive and regulatory issues affecting their dealership operations. This is also a chance for dealers to see their legislators in the halls of power where they conduct their business, in contrast to the usual dis-trict functions like chamber of commerce rubber-chicken luncheons and ribbon cuttings.

NADA, as part of the festivities, schedules

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the roundup

by Robert O’Koniewski, Esq. MSADA Executive Vice President

The CFPB Battle Continues

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MSADA

politicians and commentators to provide attendees with a flavor of the current situ-ation in Washington and what may be in store for us prospectively. This year’s crop of speakers included Rep. Mike Kelly (R-Pennsylvania), who is a dealer himself; Sen. Jerry Moran (R-Kansas); Rep. Steny Hoyer (D-Maryland), who is the House Minority Whip; Rep. Marlin Stutzman (R-Indiana), who has sponsored legisla-tion to reform the CFPB finance guidance process; Rep. Jamie Herrera Beutler (R-Washington), who addressed the NextGen Reception; and political analyst Charlie Cook, whose insights and prognostications received everyone’s rapt attention.

Once on Capitol Hill, we engaged our Congressional members in dealer dialogue on such issues as the Consumer Financial Protection Bureau (CFPB), which is our number one priority, the proposed repeal of LIFO, treatment of the estate tax, and open recalls on rental vehicles. During our two days in DC we met with Rep. Stephen Lynch (D-South Boston), Rep. Jim Mc-Govern (D-Worcester), Rep. William Ke-ating (D-Bourne), Rep. Michael Capuano (D-Somerville), Rep. Katherine Clark (D-Melrose), and staff members for Rep. John Tierney (D-Salem) and Rep. Niki Tsongas (D-Lowell). We are familiar faces for them all, as we make the effort to sit down with them regularly back home in Massachu-setts as well.

Moving forward, we need to keep in mind that for two days we were only a handful of people going door to door to visit our elected representatives in Wash-ington. Back home, however, we are an association of 420 members, whose deal-erships employ on average 50 men and women, and who are responsible for al-most 20 percent of the Commonwealth’s retail economy.

As we ask dealers to get more engaged in contacting their Congressmen and local legislators, we ask that you not be shy and let others carry the load. All dealers - big and small, domestic makes and foreign - are in the same boat. If we give the members

of Congress a free ride and do not engage them on the issues, they will think we have no problems. The same is true when we are fighting for or against certain laws on Beacon Hill. In the future, please heed the call from your Association to contact your elected officials when such an issue arises.

No one knows your business better than you. Whether we are in DC or on Beacon Hill at the State House, it is extremely helpful to our lobbying efforts for legisla-tors to see their constituents face to face and receive a perspective they don’t have in the normal course of their activities. That knowledge needs to be conveyed to your legislators in an environment and manner they understand, hence our trips to Washington and our Dealer Days on Bea-con Hill.

Lobbying for H.R. 5403The main topic of conversation with our

Congressional members at the Washington Conference was resolution of the CFPB’s efforts to alter the manner in which dealers assist their customers in obtaining financ-ing for their vehicle purchases.

As you may recall, in 2013 the CFPB issued guidance that threatens to eliminate dealers’ flexibility to discount the interest rate offered to consumers to finance vehi-cle purchases. The CFPB is attempting to change the $905 billion auto loan market and limit market competition without prior public comment and without analyzing the impact of its guidance on consumers.

With the CFPB’s actions likely to raise the cost of credit for car buyers, members of Congress are seeking to pass H.R. 5403, legislation introduced by Reps. Stutzman and Ed Perlmutter (D-Colorado), which would rescind the CFPB’s flawed auto fi-nance guidance and require the CFPB to follow a transparent process, which would include public participation, when issuing any future auto finance guidance.

We requested our Congressmen, each one a Democrat, to sign on to H.R. 5403 as a co-sponsor. As we go to press, 97 House members (62R, 35D) have signed

on or indicated they will sign on to the bill when Congress returns from its recess on November 12. Of our nine Congressmen, Stephen Lynch is the lone co-sponsor, thus far. The members of Congress are now home for the election recess. We ask that you either try to meet with your member or call him or her at his or her local district and ask them to sponsor H.R. 5403.

The CFPB is not going anywhere in this current political environment. Its back door challenge to dealer’s auto finance activities will significantly limit the mar-ket competition that frequently provides customers a lower interest rate than those offered by banks or credit unions. Deal-ers need to be engaged in this fight or this overzealous regulator, which answers to no one, will continue to run roughshod over our industry.

Tesla SJC Decision Goes Against MSADA

On September 15 the Massachusetts Supreme Judicial Court issued its deci-sion in the Tesla litigation, Massachusetts State Automobile Dealers Association v. Tesla Motors, ruling the MSADA and the named dealers in the litigation did not have the requisite standing to bring suit against Tesla Motors and Tesla Motors MA pursu-ant to MGL Chapter 93B, the auto dealer franchise law.

At the time the lawsuit was filed, we challenged the legality of Tesla’s efforts to open and operate an unlicensed, manufac-turer-owned new-car “gallery” located in the Natick Mall, which was set up in Sep-tember 2012 prior to any licensed “stores” later approved by the Town.

The immediate practical results of the decision are the following:• Tesla’s store presently in the Natick Mall

will continue to operate.• According to the court, only a dealer or

dealers affiliated with a manufacturer through a franchise agreement can sue a manufacturer for violations of Chapter 93B, thereby leaving the Massachusetts Attorney General as the only party under

the roundup


8

the statute who could sue a dealer, man-ufacturer, or distributor for an alleged violation of the statute should no direct affiliation exist with a challenging party. (So, hypothetically, if GM were to open a factory-owned Cadillac “store” across from a Lincoln dealership, the Lincoln dealer could not file suit to attempt to stop that activity; only another Cadillac dealer or the AG would have standing to do so.)

• Notwithstanding the extensive re-write of Chapter 93B that became law in 2002, which included a factory store prohibi-tion throughout the Commonwealth no longer limited to the existence of an affiliated dealer in the relevant mar-ket area, there is now a “standing” gap that could potentially allow existing and prospective manufacturers conducting business in Massachusetts to pursue a similar Tesla-like model as a result of the Court’s decision.

• Unfortunately, the Court failed to recog-nize the significance of the 2002 amend-ment to the factory store prohibition and instead focused on the fact that all of the other amendments to Section 4 of Chap-ter 93B related solely to the relationship between a manufacturer and its affiliated dealers.Your Association leadership is assess-

ing the decision’s impact and reviewing prospective options. (The SJC is the court of last resort in Massachusetts; thus, the decision cannot be appealed further.)

The Tesla saga began in the Spring of 2012 when the Town of Natick contem-plated, and ultimately approved (but never issued), a Class 1 license for Tesla. Not-withstanding the Town’s lack of license issuance, on September 28, 2012, Tesla Motors moved forward with its plans for a “dealership” in the Mall and held a grand opening for its mall store, claiming it was only displaying product and conducting no sales activity.

After further investigation and due dili-gence on our part, on October 16, 2012, MSADA filed a civil action against Tesla Motors and Tesla Motors MA in Norfolk

County Superior Court, seeking a tempo-rary restraining order and a preliminary injunction to cease the companies from operating an unlicensed, manufacturer-owned new car “dealership” in the Natick Mall, located in the Town of Natick. At that time, the Town allowed Tesla to es-tablish a “gallery” in the Mall, provided sales activity did not occur there; under the Town’s by-laws, auto sales were pro-hibited from the Mall and its surrounding environs.

Tesla Motors and Tesla Motors MA claimed to operate a non-sale showroom where interested consumers could view a Tesla S model and obtain more informa-tion about the companies’ products. How-ever, MSADA contended this was a sham, that the Tesla parties were operating an unlicensed new car “dealership” where sales activity was occurring that is in fact owned and operated by the manufacturer in violation of the Massachusetts Auto Dealer Franchise Law, MGL Chapter 93B, as well as the dealer licensure stat-ute, MGL Chapter 140, Section 58, and the consumer protection laws.

On October 25, 2012, in Norfolk Coun-ty Superior Court in Dedham, attorneys for the MSADA argued our request for a preliminary injunction regarding Tesla’s allegedly illegal, company-owned store operating at the Natick Mall.

Unfortunately, the court issued a denial of our injunctive request on November 16, 2012. The judge ruled not on the merits of Tesla’s alleged violations of the Chapter 93B, dealer licensure, and consumer pro-tection laws but on the narrow, technical issue of whether MSADA and the plaintiff dealers had standing to sue for the injunc-tive relief against Tesla. The judge ruled that we and the dealers did not possess the requisite standing under the franchise law. He based his reasoning on a require-ment developed prior to 2002 in the Beard Motors, Inc. v. Toyota Motor Distrib., Inc. case that a dealer could only sue an affili-ated manufacturer under Chapter 93B.

We then filed an appeal of the Superior Court’s decision with the Massachusetts

Appeals Court. In October 2013, the Commonwealth’s highest court, the Su-preme Judicial Court, after reading the parties’ briefs, took the appeal from the appellate court’s docket and decided to hear the case directly itself.

The SJC hearing occurred on May 5, 2014, and its decision was issued on Sep-tember 15.

While this court process was running its course, by December 2012 Tesla Motors and Tesla Motors MA re-applied for and received from the Town of Natick a class 1 dealer license to operate a “dealership” at a site in downtown Natick. In late 2013, citing a lack of sales activity and adequate foot traffic at that downtown site, Tesla applied for permission to open a store in the Mall. Since there was a zoning by-law in place prohibiting auto sales in the Mall and the surrounding contiguous property, a warrant was presented at town meeting to alter the zoning overlay to allow for car sales at the Mall. Town Meeting ultimate-ly approved this zoning by-law change.Tesla has moved into a site at the Natick Mall and continues to operate there.

Internet Sales 20 Group (IS20G)As we were going to press, your Associ-

ation engaged in a unique partnership op-portunity when it joined with Sean Brad-ley and Dealer Synergy to put on the Inter-net Sales 20 Group Boston at the Newton Marriott on September 22-24.

Approximately 150 attendees, which included dealer principals (many of them Toyota store owners in the New England region), GMs, sales managers, BDC and Internet sales directors, heard from a score of speakers who provided a three-day boot camp on how dealers can improve their Internet footprint, on-line reputation, and sales potential and close rates. Although the days were long, the knowledge that these Internet professionals shared with their colleagues provided attendees a po-tential leg-up on their competitors.

Check out our October magazine for more on this event.

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MSADA

For some, a job is just a job, but for engaged, productive employees, a job is so much more. Engaged employees are looking for a job that has the whole package: a well-paying, flexible job that includes benefits and work-life balance. “Total Rewards” are the tools available to employers that can attract, motivate, and retain employees. Total rewards are grouped into 5 sections:1. Compensation2. Benefits3. Work-Life balance4. Performance and Recognition5. Development and Career Opportunities

The package should be adapted to your specific dealership needs and unique cul-ture and employee set. The program often results in satisfied, engaged, and produc-tive employees, which in turn increases performance, results, and thereby profit.

Review the following sections of total rewards before putting together your own program:

Compensation: Compensation is comprised of four

main parts: fixed pay, variable pay, short-term incentive pay, and long-term incen-tive pay. By utilizing all parts of compen-sation, you positively reinforce employee efforts, incentivizing them to work hard by providing them with additional pay. The four parts of compensation are de-fined as:1. Fixed Pay: The base pay of compen-sation, fixed pay does not vary with per-formance or results and is determined by your dealership’s pay structure. 2. Variable Pay: A one-time payment, variable pay is often a bonus, and must be re-established and re-earned every time it has been won. 3. Short-Term Incentive Pay: This vari-able pay is highly focused and based solely on performance over a period of

one year or less. 4. Long-Term Incentive Pay: This vari-able pay extends over a period longer than a year, and includes forms of pay such as stock options, performance shares, perfor-mance units, and cash.

BenefitsBenefits are defined as “programs that

an employer uses to supplement the cash compensation that employees receive,” (AWLP.org). Benefits can be broken into three elements:

1. Social insurance, which includes un-employment, workers compensation, so-cial security, and occupational disability.

2. Group insurance, which includes med-ical, dental, vision, prescription drug, men-tal health, life insurance, AD&D insurance, disability, retirement, and savings.

3. Pay for time not worked, which in-cludes paid work time (breaks, clean-up time, uniform changing time), and paid away from work time (vacation, compa-ny holidays, and personal days).

Work-Life BalanceWork-life balance is a less structured

concept referring to a set of philosophies and policies that allow employees to have a healthy balance between work and home. These practices are not set in stone and vary between workplaces. The five main criteria for a work-life balance are:1. Workplace flexibility varies based on the dealership and the employee. While some employees may need to vary their schedules to miss traffic or pick up their children from school, others may prefer to have certain days or times off. In es-sence, workplace flexibility is adapting to individual needs. 2. Paid and unpaid time allows employ-ees to meet their personal needs, some-times using paid time off or vacation or allowing them to take unpaid time off as the need arises.3. Health and well-being offers employ-ees things like health club memberships,

smoking cessation programs. 4. Caring for dependents not only refers to caring for your children, but also to partners and family members.5. Community involvement allows for employees to do good things for the community. Some dealerships provide employees with one day off per year to volunteer at a place of their choice.

Performance and RecognitionPerformance refers to more than re-

views or guidelines. By aligning indi-vidual, team, and organizational goals, performance can lead to success for the dealership as a whole. Performance in-cludes: performance planning, perfor-mance, and performance feedback.

Recognition can be both formal and informal, but should happen immediately after the fact, and works best when per-sonalized to the awardee.

Development and Career Opportunities

Development and career opportunities refers to employee development that al-lows them to not only perform better in their current position but also prepares them for future roles.

Career opportunities include: learning opportunities, coaching and mentoring, and advancement opportunities.

Every total rewards strategy should vary based on the individual dealership. Currently, the best employees are look-ing for more than just a good salary, and keeping them engaged will help avoid the cost of new hires with the use of a total rewards program.

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wwww.msada.org Massachusetts auto Dealer SEPTEMBER 2014

by Kathyn CarlsonUsing Total Rewards as a Recruitment Tool

MSADA insurance

Kathryn Carlson is the ViCe President for KPa’s hr ManageMent ProduCts. do you haVe questions about how to iMPleMent a total rewards systeM at your dealershiP? ContaCt [email protected] or (484) 326-9765.

MSADAtroubleshooting10


All business owners know how costly a negative review can be, whether that review comes from the internet, a news-paper, or word of mouth. To a franchise new-car dealer, the impact of a negative review can be more devastating than to an average business. The average con-sumer may only buy ten cars in their lifetime. If a negative review dissuades a consumer from visiting your dealership once, then the odds suggest you will lose them as a potential customer for life.

According to Google’s Digital Drives Auto Shopping study, released in No-vember of 2013, a whopping 95% of consumers do research online before purchasing a new automobile. With al-most all new car buyers heading online before choosing a dealership, the impact of a negative dealership review on Deal-erRater, Yelp, or similar site has the real potential to depress sales in a crowded marketplace.

Our dealer members and their general managers understand the danger of a negative review. They conduct business in such a way that customers enjoy their car-buying and servicing experience and recommend the dealership to oth-ers, in-person and online. Alarmingly, maintaining a high level of customer satisfaction may no longer be enough to generate positive online ratings.

In a troubling decision, the United States Court of Appeals for the Ninth Circuit (San Francisco) recently upheld

a district court decision and ruled, in Levitt v. Yelp! Inc., that leading ratings website Yelp can force businesses to pay to have any positive customer-submitted reviews posted on their Yelp page.

The plaintiffs in Levitt are a collection of similarly aggrieved small businesses, including a furniture restoration busi-ness, an animal hospital, an auto body repair shop, and a dentistry office. Dr. Tracy Chan, the dentist, alleged that, shortly after she declined to purchase advertising from a Yelp sales representa-tive, nine five-star ratings were removed from her Yelp page, causing her over-all rating to plummet from five stars to three.

Out of fear, Dr. Chan purchased the advertising package, and her ranking increased as the positive reviews were restored. Several months later, Yelp again contacted Dr. Chan and asked if she would be interested in an increased advertising package. When Dr. Chan de-clined to upgrade her advertising pack-age, her Yelp ratings tanked once more.

Regarding Dr. Chan’s accusations, the Court stated, in its decision, “Chan al-leges no independent barrier to the rat-ings – manipulation of which she com-plains, and as there is no allegation that Yelp’s advertising services are, objec-tively, worthless... any implicit threat by Yelp to remove positive reviews absent payment for advertising was not wrong-ful within the meaning of the extortion statutes.”

Yelp has faced accusations of ratings tampering for years and continues to deny the practice. In a post on the Yelp official blog on the day of the decision, the company’s Senior Director of Liti-gation stated, “For years, fringe com-mentators have accused Yelp of altering business ratings for money. Yelp has never done this, and individuals making such claims are either misinformed, or more typically, have an axe to grind.”

Notwithstanding Yelp’s official com-

ments, one imagines that some at the company must have been relieved when the Court asserted that, even if the plain-tiffs’ allegations were true, Yelp’s busi-ness practices would not rise to the level of extortion, stating, “We conclude, first, that Yelp’s manipulation of user reviews, assuming it occurred, was not wrongful use of economic fear.”

Although Yelp has been quick to highlight the decision as proof that the site is unbiased and its actions legal, the Court made it clear that, while Yelp may not have committed extortion, dif-ferent claims could be viable, stating, “We emphasize that we are not holding that no cause of action exists that would cover conduct such as that alleged, if adequately pled. But for all the reasons noted, extortion is an exceedingly nar-row concept as applied to fundamen-tally economic behavior. The business owners have not alleged a legal theory or plausible facts to support the theories they do argue.”

Under the ruling, other causes of ac-tion against Yelp, such as defamation, are certainly possible and may have some chance of success. Additionally, small businesses in other states who are facing the same shakedowns may be able to look to their state laws for relief.

While Yelp may have escaped liabil-ity in Levitt, the company is now facing a shareholder class action for allegedly misleading investors as to the veracity of the reviews posted on its site and the processes it uses to post reviews. Stay tuned.

If you require any additional informa-tion regarding the legal issues surround-ing online reviews or any other issue, please contact Robert O’Koniewski, MSADA Executive Vice President, [email protected] or Peter Bren-nan, MSADA Staff Attorney, [email protected] or by phone at (617) 451-1051.

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Staff attorney, MSaDa

By Peter Brennan, Esq.

No Right to Positive Online Reviews


MSADA Legal 11

Domestic violence, unfortunately, is a problem that faces many individuals in Massachusetts. Many of those individuals, of course, also are employees. Some may be your employees. Therefore, you need to know about Massachusetts’s new domestic violence leave law.

On August 8, 2014, Governor Deval Patrick signed into law An Act Relative to Domestic Violence. While geared largely toward the criminal justice system, the new law also impacts most Massachusetts dealers and other employers. Specifically, the law requires Massachusetts employers with more than 50 employees (1) to per-mit employees impacted by domestic vio-lence to take 15 days of unpaid leave in any 12-month period and (2) to notify employ-ees of their rights and responsibilities under the law.

Which Employees Qualify? An em-ployee is eligible for domestic violence leave if he or she (1) is a victim of abusive behavior (or his or her family member is such a victim), and (2) is using the leave from work for purposes closely related to the abusive behavior, including obtaining medical attention or counseling, securing housing, attending court proceedings, and obtaining other victims’ services. This is by no means an exhaustive list; so long as the purpose for the leave appears reasonably related to the abusive behavior, you should assume that the employee is eligible. Per-haps obviously, if your employee is the one engaging in the abusive behavior, he or she is not eligible for domestic violence leave for such purposes.

What is “Abusive Behavior?” The law’s definition of what constitutes “abu-sive behavior” is very broad. It includes both physical and mental abuse. If an em-ployee requests domestic violence leave, you generally should assume that the be-havior is sufficiently abusive, and permit the leave.

What Kind of Notice Must Employees

Give? The law says that employees must give “appropriate” notice to employers of their need for domestic violence leave, un-less a threat of imminent danger faces him or her. What is “appropriate” notice? The law doesn’t say. But so long as you can provide the leave without undue hardship to your business, you should. Moreover, if an unscheduled absence occurs, you cannot take negative action against the employee if he or she produces appropriate documenta-tion of the reason within 30 days.

Do You Need Just To Take Your Em-ployee’s Word? No. You can require em-ployees to provide appropriate documenta-tion of their need for leave. However, you must keep any such documentation confi-dential, and restrictions exist as to whom you may disclose such information. Addi-tionally, you may keep such documentation only for as long as necessary to determine whether your employee is eligible for do-mestic violence leave.

Can You Require Employees to Ex-haust Other Available Leave First? Yes. If your employee has other available forms of leave, like vacation, sick time, or per-sonal leave, you can require him or her to use up those forms of leave before using domestic violence leave.

What Happens When Your Employee Returns? When your employee returns from domestic violence leave, you must re-store him or her to his or her original job, or to an equivalent position, with equivalent pay.

Employers Cannot Interfere or Re-taliate. Like so many other employment-related laws, the Massachusetts domestic violence leave law contains an anti-interfer-ence and anti-retaliation provision, which means that your managers cannot interfere with an employee’s attempt to exercise his or her rights under the law or retaliate against him or her for doing so. The law specifically prohibits an employer from making an employee’s domestic violence

leave contingent on him or her having no contact with his or her abuser. You should train your managers on how the new law works, and their obligations under it.

Violations Can Be Very Costly. An employee who believes that his or her em-ployer has violated his or her rights under the law can bring a lawsuit under the same provision as other Massachusetts wage and hour violations. This means that employ-ees may recover treble damages for lost or unpaid wages and benefits. In other words, if a court found that your manager fired an employee in retaliation for using domestic violence leave law, and awards three years of back pay, that award would be multiplied by three. You also would have to pay the employee’s attorneys’ fees and costs.

When Should You Notify Your Em-ployees About Domestic Violence Leave? If you have not already done so, you should notify your employees about the new do-mestic violence leave law immediately. You should post such notice wherever you post your required employment-related notices and you should update your hand-books to include a domestic violence leave policy. If you would like a model notice/policy, at no cost, feel free to call us at the number below, and we will send you one.

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Massachusetts’s New Domestic Violence Leave Law: What Dealerships Need to Know

By Joseph W. Ambash and Jeffrey A. Fritz

Joe aMbaSh iS the Managing Partner anD Jeff fritz iS counSel at fiSher & PhilliPS, llP, a national labor anD eMPloyMent firM rePre-Senting hunDreDS of DealerShiPS in MaSSachu-SettS anD nationally. they May be reacheD at 617 722 0044.

12


AUtO OUtLOOK


13MSADA

1614


Making an Impact

COVER STORY

15MSADA


Every year, the MSADA dealer delegation makes an impor-tant journey to the nation’s capital. The mission: Ensure Mas-sachusetts legislators are aware of the most important issues

facing dealers so they can lend their support at the fed-eral level.

On September 9 and 10, MSADA President Scott Dube (Bill Dube Hyundai) joined MSADA Vice Presi-dent Chris Connolly, Mas-sachusetts NADA Director Don Sudbay, past NADA Director and current dealer Ray Ciccolo and his daugh-ter, Michelle, Next Gen dealer representative Em-ily Dube, MSADA legisla-

tive agent Jim Hurrell, MSADA staff attorney Peter Brennan, and MSADA Executive Vice President Bob O’Koniewski in Washington D.C. to represent Massachusetts dealers.

The group met with Rep. Stephen Lynch (D-South Boston), Rep. Jim McGovern (D-Worcester), Rep. William Keating (D-Bourne), Rep. Michael Capuano (D-Somerville), Rep. Kather-ine Clark (D-Melrose), and staff members for Rep. John Tier-

ney (D-Salem) and Rep. Niki Tsongas (D-Lowell). Dube said everyone was welcoming, interested, and recep-

tive to hearing from dealers.“It’s really important for them to hear from dealers exactly

how the work they do there in D.C. impacts us here in Mas-sachusetts,” Dube said.

This year, the dealer delegation’s focus was on three issues in particular. The top priority was urging members of Congress to cosponsor H.R. 5403. The legislation would rescind the Consumer Financial Protection Bureau’s flawed auto finance guidance and make the bureau more transparent and account-able when issuing future auto lending guidance. H.R. 5403 al-lows the CFPB to re-issue the auto guidance but requires prior notice, public comment, and full transparency of the CFPB’s methodology. The bill also requires the CFPB to consider the impact of its guidance on consumers

“What we’re trying to do is get the CFPB to conduct itself like any other regulatory body that we have in the U.S., mean-ing that when they put out new regulations that they have a comment period and then open hearings on it,” Dube said. “That was the piece de resistance of the entire two days. “

The dealer delegation had an advantage when presenting their points about H.R. 5403: The bill had just come out the day before the conference began.

“That gave us something to ask for that was very easy to

at the National Level

Making an ImpactMSADA’s dealer delegation makes the trek to D.C. to represent Massachusetts on the national stage

by Catherine MacDonald

Rep. Mike KellyR-Pennsylvania

An auto dealer himself, Kelly has been the U.S. Representative for Penn-sylvania’s 3rd Congressio-nal District since 2011.

Sen. Jerry MoranR-Kansas

The junior United States Senator from Kansas was elected Chairman of the National Republican Sena-torial Committee for the 113th U.S. Congress on November 14, 2012.

Rep. Steny HoyerD-Maryland

The House Majority Leader from 2007 to 2011, Hoyer had previously served as House Minority Whip from 2003 to 2007 and was re-elected to that post in 2011. These positions make him the second-ranking figure in the House Democratic Leadership hierarchy.

Rep. Martin Stutzman R-Indiana

A sponsor of the legisla-tion to reform the CFPB finance guidance process, Stutzman has been a mem-ber of the United States House of Representatives, representing Indiana’s 3rd Congressional District, since 2010.

Charlie CookPolitical Analyst

Cook writes election fore-casts and rankings in his own publication, The Cook Political Report, and in other media. He is a politi-cal analyst for the National Journal and, since 1994, with NBC.

16 Making an Impact16


MSADA

understand,” Dube said. “Plus, it was a short bill that didn’t require a lot of explanation.”

Also on the dealers’ agenda was urging Congress to ensure that any changes in LIFO and advertising deductibility do not nega-tively impact small business. Recently released tax reform pro-posals would repeal LIFO and significantly restrict the amount of advertising a dealership could deduct each year. Eliminating LIFO and limiting advertising deductibility would take working capital

away from dealerships that could otherwise be used to maintain or cre-ate jobs.

Lastly, the NADA sought to make it known that Senators should ad-dress the flaws in S. 921 prior to the bill moving forward. The bill would subject all rental cars

under open recall to grounding within 24-48 hours. The bill is over-ly broad since not all recalls require the drastic step of grounding.

For each of these items, Dube said the legislators the group met with were “very interested in our issues. They give us a good amount of time and attention.”

MSADA is always looking for additional dealers to join the del-egation. Besides putting in important face time, taking part in the D.C. trip allows dealers an inside peek at how issues at the congres-sional level affect them at home. They can also enjoy the compel-ling speakers at the conference. Dube said, “They always manage to get good speakers there for us to listen to,” adding that political analyst Charlie Cook was especially noteworthy this year.

It’s a big commitment on a dealer’s part to travel down to Wash-ington for two or three days and be away from their stores, and O’Koniewski says he is very appreciative of the time dealers set aside to make the effort.

“It comes down to our contingent of dealers who are carrying the Massachusetts flag down to Washington every year on behalf of the Massachusetts dealers up here.”

Sudbay says he would especially encourage those dealers who have never visited their legislators in D.C. to attend the conference.

“I think it’s something that everybody should do at least once in their life, and this is a great opportunity,” Sudbay said. “Further, there’s strength in numbers. The more people we have the more they’ll listen to us.”

Dube, who has made the trek to D.C. four times, emphasized the impact dealers can have when they get involved. He said legislators want to do the right thing, but they need the information.

“If we don’t spend the time to educate legislators on this stuff, they’re operating in a vacuum,” Dube said. “You can’t depend on the people who might want these regulations to handicap us, to hamstring us. You can’t allow them to do all the talking.”

It’s invaluable for dealers to take the time to explain to legislators what the industry means to the economy – both on a state level and nationally.

“People start to take what we do for granted until they hear the numbers,” Dube said.

Another way dealers can be involved with their Congressmen locally is to schedule a dealership visit.

“I always encourage dealers to be open to the concept of host-ing a legislator,” O’Koniewski said. “It’s a great way of making an onsite connection without having to get on a plane.”

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from Around the HornNEWS

FRAMINGHAM

Herb Connolly Classic Golf outing Raises $200,000 For Charities in 15 Years

For 15 years, the Connolly Auto Group has held the Herb Con-nolly Classic Golf outing.

The 15th Annual event was held Friday, August 22, at the Framingham County Club, and raised $13,000 for Mt. Auburn Hospital’s Hoffman Breast Center.

“The golf event now has raised $200,000 with $100,000 go-ing to Mt. Auburn since my late mother Kathy Connolly’s cancer came back in 2006. She received great treatment there and got two really wonderful years of good health because if the Hoff-man Center before she succumbed to it at the end of 2008,” said Chris Connolly. ”It’s an honor for us to do for the hospital and I’m always humbled by their great work.”

The Hoffman Breast Center delivers comprehensive, patient-focused education, screening, and treatment of all aspects of

women’s breast health in a compassionate, professional, and sup-portive environment.

A maximum of 144 golfers (36 teams) participated in a Florida scramble. Afterwards, they were treated to a steak dinner and then could bid on items in a silent auction.

17


from Around the Horn18 NEWSRAYNHAM

Mastria Featured in GlobeRick Mastria, a third-generation automotive dealer,

was recently featured in The Boston Globe. The article detailed his family’s history in the business and the op-portunities that brought the dealer to where he is today.

Mastria became a dealer at 26, and when GM took an inter-est in his business things really took off. GM was looking to open a Saturn store in the area and was intrigued by Mastria’s record of customer satisfaction.

“They interviewed our cus-tomers and employees, then granted us the franchise and helped us build a facility on Route 44,” Mastria told the Globe. “It was an unbelievable awakening for us to be doing business in such a high-traffic area.”

“Everyone wanted to be the next Saturn,” says Mas-tria. “Before you knew it Honda (Silko), Chevrolet (Mc-Gee) and Chrysler (Classic) all built around us. Sudden-ly we had our own Auto Mile in Raynham.”

The real test came in late 2008 when GM filed for bankruptcy. “In June, we got a letter saying we were losing Saturn, Pontiac, and Cadillac,” he says. “All in one day. Fortunately we kept Buick and GMC, and GM rescinded its decision on Caddy almost immediately.”

With Saturn closed, Mastria found himself with an empty Saturn building. A local Mazda dealership be-came available and “it was a perfect fit.”

Today, Mastria runs the Raynham-based auto group that features the Buick, Cadillac, GMC, Mazda, Nissan, and Subaru brands.

NORWOOD

Madden Featured in GlobeJack Madden, who grew up in the auto dealer busi-

ness, was featured in The Boston Globe recently. The article detailed Jack Madden Ford’s roots (which

can be traced back to October 1954, when Jack’s father opened a Ford dealership in downtown Norwood on Washington Street) to where the company is at today: a fixture on Norwood’s Automile and features an average inventory of around 400 new cars and 200 used cars, em-ploys 85 people, and moves well over 2,000 cars per year.

Madden discussed how big changes in the market-place are a reality of the car business, and the biggest by far has been the internet. “A dealer has to be knowl-edgeable about search engine optimization and market-


19MSADAing as well as have an awareness of what opportunities are out there for him as well as his competitors. And I have plenty of competitors,” he told the Globe.

He also ex-plained that he strives for a warm, familiar atmosphere. It’s a multi-generational family business and Jack still has a brother and sister who work for the dealership. He also tries to remain as approachable as possible. “I have no problem giving out my cell number. Nobody calls me Mr. Madden. They call me Jack, and I’m happy to take calls myself from customers if they are having issues.”

From Jack’s 1957 Thunderbird prominently displayed in the showroom to the latest hybrids, the six-decades-old tradition of sell-ing Fords and sticking to what works is apparent at Jack Madden Ford. Likewise, Madden’s friendly and genuine approach to cus-tomer service has clearly trickled down to his employees, so it’s easy to believe him when he says, “I love the cars and I love the people.”

SUDBURY

19 Cars Gutted, damaged by Fire at Chambers dealership

A large fire at a luxury car dealership in Sudbury in the early morning of September 22 destroyed or damaged 19 cars, officials said.

Firefighters rushed to the Herb Chambers Land Rover dealer-ship on Route 20 at 1:07 a.m., the Sudbury Fire Department said in a statement.

“Crews had heavy fire showing from several vehicles upon arrival at the auto dealership,” said Fire Chief William Miles in a statement.

No one was in-jured in the fire.

Investigators have determined the fire started in a Jaguar and quickly spread to 18 other cars, including Jaguars, Range Rovers, Land Rovers, and Jeeps, causing an estimated $500,000 in damage.

from Around the Horn20 NEWS MSADA


On September 10 at Pride Chevrolet in Lynn, Paul Bertoli, Michael Iovanna, and Don Camp-bell hosted Republican gubernatorial candidate Charlie Baker and his running mate, former State Rep. Karyn Polito, who is vying for the lieutenant governor’s job. Over 60 members of the Lynn area business community attended to hear Baker and Polito speak on their plan to im-prove and grow the Massachusetts economy.

“Charlie and Karyn each have an extensive business background – Charlie in health care and Karyn in small business – and they‘get it’”, Campbell said. “They fully understand what small business owners and their employees go through every day, month to month, and year to year to try to be successful in an economy where we do not necessarily have the most business friendly environment working in our favor.”

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LYNN

over 60 Come out for Baker Event at Pride Chevrolet

MSADAnAdA Update by Don Sudbay

I want to personally thank our delegation that visited Washington in September for the Annual NADA Washing-ton Conference. Similar to last year, much of our time was devoted to the CFPB and how the agency’s onerous direc-tives can affect negatively our member dealers. Fortunately, as you will read below in Forrest McConnell’s remarks, there is a bipartisan bill that will hopefully make some headway to curb the CFPB’s misuse of power. The Massa-chusetts congressional delegation listened to our plea, and we hope to have some of these Congressmen and women on board as sponsors. Be assured, NADA is working very hard to preserve our ability to secure financing for our custom-ers at the lowest interest rates possible. Proposals that the CFPB have discussed will make it more costly for those customers to finance their vehicles.

A Special Note from NADA Chairman Forrest McConnell:

“A new bipartisan bill, which would nullify the Consumer Financial Protection Bureau’s flawed ‘guidance’ on indirect auto lending, has gained a lot of support in Congress from both sides of the aisle over a short period of time.

“Since its introduction on September 8, nearly 100 Demo-crats and Republicans in the U.S. House of Representatives have signed on as supporters of H.R. 5403, a bill sponsored by Reps. Marlin Stutzman (R-Indiana) and Ed Perlmutter (D-Colorado).

“H.R. 5403, which is appropriately titled, Reforming CFPB Indirect Auto Financing Guidance Act, requires the CFPB to provide a public comment period before reissuing any guidance on auto finance. The bill also requires trans-parency and accountability from the agency by making pub-lic any studies, data, and analyses used to determine future guidance on auto finance.

“Dealer-assisted financing provides great value and com-petitive advantages, which save car buyers billions of dol-lars each year. And the proof is in the numbers. Compared to other lending sources, a large majority of car buyers choose

to finance their vehicles through new-car dealerships, which is always optional.

“Despite this fact, the CFPB is taking actions that will ultimately harm car buyers by reducing competition in the auto-lending marketplace.

“This controversy with the CFPB has been ongoing since March 2013 when the agency issued its ‘guidance,’ which took the wrong direction by attempting to eliminate the flex-ibility of new-car dealers to discount financing rates offered to their customers. Since then, the industry—from deal-ers to lenders—and Members of Congress have worked to bring greater transparency and accountability to the CFPB.

“Make no mistake. This issue is complex. But what NADA wants from the CFPB is quite simple and our mes-sage to the CFPB is this: Make sure you fully understand the industry you’re attempting to regulate before issuing guidance by allowing for feedback and public participation. Be aware that your actions can harm consumers rather than protect them. And car buyers should not be forced by a gov-ernment agency to lose their ability to negotiate discounted auto loan rates in dealer showrooms.

“Dealers should contact their Members of Congress and urge them to support H.R. 5403, the Stutzman-Perlmutter bill.

“For more information, visit www.nada.org/cfpb.”

NADA Statement on New NHTSA Search Tool for Vehicle Recalls

In response to the National Highway Traffic Safety Ad-ministration’s new Vehicle Identification Number (VIN) look-up tool for vehicle recall information, Forrest McCon-nell, chairman of the National Automobile Dealers Associa-tion and a Honda/Acura dealer in Montgomery, Alabama, issued the following statement:

“The new online look-up tool will help new-car dealer-ships identify whether a used car or light truck has an un-remedied safety recall prior to making a purchase or taking in a trade. It will also help dealerships to determine whether used vehicles in inventory are under recall and to provide used-car shoppers with useful safety recall information.

“To improve vehicle safety, NADA urges every car owner who receives a recall notice from a manufacturer to visit his or her local new-car dealership to have the vehicle inspect-ed, and if necessary, fixed at no charge. Historically, about 75 percent of all recalled vehicles get fixed. Our goal is to see 100 percent of those vehicles remedied.”

Dealers and consumers can access the new tool from NHTSA at www.safercar.gov/vinlookup.

Urge Congress to Rescind Flawed CFPB ‘Guidance’ on Auto Finance

don sudbay, President of sudbay autoMotiVe grouP, rePresents Msada MeMbers on the nada board of direCtors. he welCoMes your questions and ConCerns ([email protected]).


21

1522MSADA Accounting26 MSADA22


nAdA UpdateNew Dealership Valuation Guide Now

Available A “Dealer Guide to Dealership Valuation” is now avail-

able at NADA University Online. Written for NADA by Diane Anderson Murphy and Adam Sanders of the Moss Adams Valuation Services Group, the Driven Manage-ment Guide explains the process of valuing car and truck dealerships in a variety of contexts: buy-sell transactions, estate and gift tax settings, ownership succession planning and shareholder buy-in or buy-out. The guide discusses the main standards of value as well as the primary appraisal organizations and the due diligence process for dealership valuation. It explains how to estimate cash flow and dealer-ship value. Other topics addressed include special valuation considerations and the relevance of IRS Revenue Ruling 59-60.

The guide also offers strategies to maximize dealership value. The publication will help dealers understand this complex subject and enable them to assist professional ap-praisers in estimating dealership value.

Sign in to www.nadauniversity.com and search BM15 to access the new guide.

Third Annual Dealership Workforce Study Draws Significant Dealer Participation

More than 2,000 dealerships enrolled in the 2014 NADA Dealership Workforce Study, the third annual study of car and truck dealership compensation, retention, and turnover, hours of operation, work schedules, and employee benefits. Participants will soon receive a complimentary Basic Re-port that compares their individual dealership(s) to the re-gional and national industry, and a complimentary Industry Report providing an overall economic analysis and trends with data for all nine regions of the U.S. Participants may purchase specialty reports, including the Enhanced Report, which provides state and brand comparisons. Also available is the Compensation and Tenure Search Tool, offered as a bundle with the Enhanced Report for participants. With the Search Tool, users can find answers to ad hoc queries, in-cluding queries specific to their store or group. Users can search the entire Dealership Workforce Study database, which includes data from 930,000 payroll records and near-ly 7,000 rooftops. The Search Tool and the Industry Report are offered as standalone products for non-participants.

NADA Academy Expands Curriculum in 2015NADA-ATD Academy has expanded its curriculum. The

Dealer Candidate Academy (DCA) includes a mock 20 Group session so students can experience the benefits of the financial composite used in a non-competing peer setting. In the General Dealer Management (GDM) program, a 20 Group consultant takes students through a dealership visit,

demonstrating the benefits of in-dealership consulting. All classes—DCA, GDM and ATD—visit NADA’s Capitol Hill office for a legislative briefing. Finally, NADA University Online is integrated into the six-week Academy program, with completion of online courses, “Driven” guides and we-binars requisite to graduation.

In 2015, DCA classes start January 5, February 9, May 11, September 28, and October 5. GDM classes start January 12, February 16, May 18, June 15, September 14, and Oc-tober 19. ATD classes begin March 9, June 6, and Septem-ber 21. The GDM session for January is already closed, and prospective students for the February class are on a wait-ing list. The DCA program has a waiting list for January. Also available is the Special Ops program, which allows dealership managers to attend any of the first five weeks of the Academy program, which cover financial management, parts, service, pre-owned vehicles and new vehicles.

OSHA Repeals Dealer Recordkeeping Exemptions

The Occupational Safety and Health Administration (OSHA) repealed a number of industry exemptions from its mandate that employers with 11 or more employees keep a workplace injury and illness log, including one for car deal-ers that dates back to the 1980s. Effective January 1, 2015, car dealers must use OSHA Form 300 to record workplace injuries and illnesses. By February 1, 2016, they must also post an OSHA Form 300A summary of the workplace injury and illnesses that occurred in 2015. Dealers can access an

OSHA fact sheet on today’s rule and an online tool to train employees on how to fill out the newly required forms.

As a concession, the final rule contains a commitment by OSHA to review the efficacy of today’s changes in two years, the direct result of NADA’s unwavering opposition to the exemption repeal, first proposed by OSHA in 2011. Regulatory Affairs will soon issue an all-member FAQ on the topic. Questions can be directed to NADA Regulatory Affairs at 703.821.7040 or [email protected].

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Effective January 1, 2015, car dealers must use OSHA Form 300 to record workplace injuries and illnesses. By

February 1, 2016, they must also post an OSHA Form 300A summary of the workplace injury and illnesses that

occurred in 2015.

MSADA 23


MSADA insurance

Completing the Form 5500, as well as any required additional schedules, can be time-consuming and challenging. If the form is not filed timely and correctly, the end result could be expen-sive penalties for the employer. The following article provides some guidance on frequently asked questions regarding Form 5500 filing.

What is the Form 5500?The Form 5500 is an annual return/report required under the

Employment Retirement Income Security Act (ERISA). It reports information concerning the employee benefit plan, such as finan-cial condition, investments, fees, and operations, to the Internal Revenue Service (IRS), Department of Labor (DOL), and Pension Benefit Guaranty Corporation (PBGC).

Along with the Form 5500, the employer may also be required to file one or more attached Schedules depending on how the employee benefit plan is designed. Two common schedules are Schedule A (Insurance Information) and Schedule C (Service Pro-vider Information).

Who is required to file the Form 5500?Generally, all employers with 100 or more employees (at the

end of the year) who are participating in a welfare benefit plan that is covered by ERISA are required to file the Form 5500. Certain employers exempt from ERISA, such as public schools or govern-ment entities, are not required to file the Form 5500.

What is a Welfare Benefit Plan?A welfare benefit plan is an employer-sponsored plan that pro-

vides certain benefits, such as medical (including dental cover-age), surgical, or hospital care; benefits in the event of sickness, accident, disability, death, or unemployment; vacation benefits, apprenticeship or other training programs; or day care centers, scholarship funds, or prepaid legal services, to employees. The

Form 5500 is not necessarily required for all plans that provide welfare-type benefits.

When is the Form 5500 due?The Form 5500 is due the last day of the 7th month after the

plan year ends. For example, a plan sponsor with a plan year that ends on December 31, 2014, would be required to file the Form 5500 by July 31, 2015. The employer may file for a one-time ex-tension by completing Form 5558. The extension may not exceed the 15th day of the third month after the normal due date.

My employer has never filed a Form 5500. What do we do now?

Normally, the employer would be subject to a late penalty of $25 per day until the delinquent form is filed, up to a maximum of $15,000. The DOL may also assess civil penalties for the late fil-ing of up to $1,100 per day, with no maximum. The Department of Labor’s Employee Benefits Security Administration (EBSA) im-plemented the Delinquent Filer Voluntary Compliance Program in an effort to encourage employers to voluntarily comply and file overdue annual reports. Under this program, the employer would electronically complete the Form 5500, including all necessary schedules, for each year the employer is seeking relief and would mark the “DFVC” box in Part I, line D of the form (this option is available as long as the employer has not yet received notification of failure to file a timely annual report) .

The penalty for an employer with 100 or more participants at the beginning of the plan year would be reduced to $10 per day for each delinquent annual report filed not to exceed $2,000. If the employer is filing more than one delinquent annual report for the same plan, the maximum penalty is reduced to $2,000 for each report, not to exceed $4,000 for each plan.

Form 5500 filing can be a time-consuming process that, if not done, can result in expensive penalties for the employer. Ameri-can Fidelity Administrative Services understands the complexi-ties associated with the Form 5000 and can assist with Form 5500 preparation and filing services, including current as well as delin-quent plan year filings.

Some products and services may be provided by third party contractors or affiliated companies. AFAS does not provide tax or legal advice and, given the complexity of the Form 5500 fil-ing rules, we always recommend working with your own legal counsel to discuss how your plans could be affected and to review guidance provided by our AFAS consultants.

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Are You Required to File a Form 5500?

byKelli PersonetteKelli Personette is a health Care reforM Consultant with aMeriCan fidelity adMin-istratiVe serViCes (afas). her exClusiVe resPonsibility is helPing eMPloyers with health Care reforM and has oVer 15 years of exPerienCe in health Care ManageMent, PharMaCeutiCals, and Patient Care.

For August 2014 YTD, companies based in the Asia/Pacific re-gion also held the largest share of light-vehicle sales, in the U.S., at 46.2 percent, which was up from a share of 45.7 percent a year ago. The corresponding share held by companies based in North America was 45.2 percent, down from a share of 45.5 percent

24


oVerall There were 1.6 million light-vehicle sales in August 2014. This

sales figure was up 10.5 percent from July 2014, and it was up 5.4 percent from August 2013.

August 2014 YTD light-vehicle sales amounted to 11.1 mil-

lion, up 5.0 percent from a year ago. The Au-gust 2014 Seasonally Adjusted Annual Rate (SAAR) for light-vehicle sales was 17.5 mil-lion. This month marked the first time, this year, for a SAAR value to be recorded above 17 million.

In August 2014 YTD figures, car sales held a market share of 47.7 percent with sales up 80 basis points from a year ago. Correspond-ing figures for light trucks put the light-truck share at 52.3 percent with sales up 9.1 per-cent from a year ago.See Figure 1.

CoMPanies/brands

Companies with a geographic base in the Asia/Pacific region held the largest market share of light-vehicle sales for August 2014 at 48.2 percent of the market. This was fol-lowed by companies based in North America (Detroit 3 and Tesla Motors) at 43.6 percent and then companies based in Europe at 8.2 percent.

Review of New Light Vehicle Sales

nAdA Market BeatProduced by NADA’s Industry Analysis Group • Angela Lisulo, Economist


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Produced by NADA’s Industry Analysis Group • Angela Lisulo, Economist

MSADA

last year, and that for the Europe-based companies was 8.6 percent, down from a share of 8.9 percent last year.

All company categories by geographic bases – North America, Asia/Pacific and Europe – experienced growth in light-vehicle sales, in YTD terms, since last August with the Asia/Pacific region in the lead with growth of 6.2 percent.

Of the Detroit 3 companies, Fiat Chrysler experi-enced the most growth in August 2014 YTD sales, from a year ago, at 14.2 percent, followed by General Motors at 2.8 percent. Ford experienced a contraction in sales over the same period with sales down 40 basis points.

From the group of Asia/Pacific-based companies, Isuzu experienced the most growth in August 2014 YTD sales from last August at 71.0 percent, followed by Mitsubishi at 28.9 percent.

From the group of Europe-based companies, Audi experienced the most growth in August 2014 YTD sales from a year ago at 14.5 percent, fol-lowed by Porsche at 11.6 percent. See Figures 2, 3 and 4.

segMentsThe cross utility vehicle

(CUV) segment held the largest share of August 2014 YTD sales at 26.7 percent, up from a share of 25.2 percent last year. The middle CUV sub-segment held the largest share of this segment at 64.6 percent of CUV August 2014 YTD sales.

Apart from the CUV segment, the sport utility vehi-cle (SUV) and van segments were the only other seg-ments that experienced an increase in market share, in YTD terms, over last year. The rest of the segments have each experienced a decline in YTD market share over this period.

With the exception of the large car segment, all the segments experienced growth, in terms of YTD sales, with the SUV segment in the lead with the greatest change of 12.8 percent since last year.

The large car segment experienced a contraction of 10.3 percent in YTD sales since last year. The large car segment also held the least market share, of all the segments, of August 2014 YTD sales as well as Au-gust 2013 YTD sales with shares of 2.2 percent and 2.6 percent, respectively. See Figures 5 and 6.

nAdA Market Beat26

Power sourCeGasoline-powered light

vehicles held a market share of 93.4 percent of August 2014 YTD light-vehicle sales, which was up from a share of 93.3 percent a year ago.

The market share held by diesel-powered light vehicles was 2.9 percent, in YTD terms, which was up from a share of 2.7 per-cent last year.

The market shares held by electrics and plug-in hybrids each grew compared to last year, in YTD terms, while those for hybrids and light vehicles powered by natural gas and fuel cell technology each declined over the same period.

For the alternative power category, in August 2014, the following light vehicles were sold: 6,848 electrics, no units powered by fuel cell technology, 48,970 hybrids, 46 units powered by natural gas and 5,935 plug-in hybrids amounting to 61,799 light-vehicle sales.

The share held by the alternative power category was 3.7 per-cent of August 2014 YTD light-vehicle sales; this share was down from 3.9 percent last year.See Figure 7.

ModelsThere were three pickup trucks and two cars occupying the

highest five ranks of the best-selling light vehicles for August 2014 YTD.

The three leading pickup trucks were models from the Detroit 3 companies: Ford F-Series, Chevrolet Silverado and Ram pickup

ranking in first, second, and fourth place, respec-tively. The two leading cars were models from companies based in the Asia/Pacific region: Toy-ota Camry and Honda Accord, ranking in third and fifth place, respec-tively.

From the list of the 15 best-selling light ve-hicles for August 2014 YTD, seven out of 15 models were from com-panies based in the Asia/Pacific region while eight out of 15 models were from the Detroit 3 companies. See Figure 8.

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September 2014 MSADA Auto Dealer