ATLANTA — Franchise dealers now view the pre-owned market more optimistically than the new-vehicle market, according to a new sentiment index from Cox Automotive.

The finding speaks to the current shift of car buyers with prime and subprime credit toward the used market. The shift comes as the average new-vehicle loan payment reached a record $504, about a $139 difference from the average used-vehicle loan payment, according to a recent Experian Automotive finding.

Franchise dealers also have a markedly more optimistic view than their independent counterparts, as tracked by the Cox Automotive Sentiment Index, which debuted earlier this month.

The index covers the third quarter and reports data gathered from 1,033 dealer respondents during a survey between July 31 and Aug 7. The survey also included responses about the second quarter.

Dealers were asked to rate their sentiment on a scale of zero to 100, where zero is poor, 50 fair, and 100 good.

Franchise dealers rated the used-vehicle sales environment as 68 on average,  down from 70 in the second quarter. Independent dealers rated their sentiment as 53, up from 50 in the second quarter. Franchise dealers rated their used-vehicle inventory as 55, while independents rated it at 47.

Sentiment about new-vehicle sales was less optimistic. Franchise dealers rated sentiment at 57, and rated their sentiment about new vehicle inventory levels at 56.

Dealers haven't sounded the alarm about credit availability among their customers, but the issue is more acute with independent dealers. Franchise dealers listed credit as the eighth highest factor that's holding back their business, while independent dealers ranked it third. The top concerns were market conditions for franchise dealers and limited inventory for independent dealers.

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iA Financial Group is one of Canada's largest publicly traded companies. Its directors reported direct written premiums of $197 million Canadian ($160 million USD) from its vehicle warranties business. The addition of DAC in the United States more than doubles that, bringing combined premiums on a similar basis to approximately $405 million USD.

“Having built a solid presence in personal insurance in the U.S. and after close consideration of strategic opportunities to enlarge our U.S. footprint, we have chosen to make our next move in the automobile warranty market,” said Yvon Charest, president and CEO of iA Financial Group. “This is a business where we have built tremendous know-how and experience over the last 20 years in Canada, which we now want to leverage in the larger U.S. market.”

The transaction is expected to close in the fourth quarter, subject to usual regulatory approvals in Canada and the U.S.

According to iA Financial Group officials, the acquisition will be financed from cash on hand and reduce the company’s solvency ratio by approximately eight percentage points. It is expected to modestly increase the company’s earnings per share in 2018 and will contribute 5 cents per share in 2019.

SouthwestRe was founded in 1985 by current CEO Jim Smith, considered one the most prominent and knowledgeable figures in the reinsurance industry. It was one of the first companies to reinsure dealer obligor business into a producer-owned reinsurance company (PORC), and launched one of the industry’s first risk retention programs.

DAC has provided administrative and underwriting services to the vehicle service contract industry since 1977, when was formed by Ohio automobile dealers and their associates. The company was officially established in March 1980 when parent company Dealers Alliance Corp. purchased the Mahoning Insurance Co., which was incorporated in Ohio in 1935, from Youngstown Sheet and Tube.

In 2004, both Dealers Alliance Corp. and DAC were purchased by DAC Financial Holdings Inc., whose business model focuses primarily on reinsurance. Smith serves as the company’s chairman of the board, while Kristen Gruber has served as president since 2014.

In an exclusive interview with F&I and Showroom, Smith said the move made sense for both sides. “Our Industry has seen a number of high-profile transactions by private equity firms, but we have always felt the best strategic move would be by an insurance company. When we started discussions with Industrial Alliance, we quickly realized that we had the infrastructure they were looking for to expand in the U.S. We feel that this is not a short-term relationship but one we are in for the long haul.”

Mike Stickney, president of iA American, added: “The U.S. market for extended warranties is about $15 million or 10 times that of Canada. It is very fragmented with significant opportunity for growth and consolidation. With our solid track record in the extended warranty business in Canada together with the established presence of DAC in the U.S., we look forward to this chapter in our U.S. expansion with great anticipation.”

In an April 2016 report, investment bank Colonnade estimated the F&I products market to be a $77 billion industry, with retail sales of vehicle service contracts estimated at $28 billion in 2014.

An earlier version of this story described iA Financial as Canada's largest publicly traded company. F&I and Showroom regrets the error. 

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WILKES-BARRE, Pa. — Used-vehicle service contract provider GWC Warranty today announced the appointment of Brian Stach as the company’s new chief revenue officer. He is charged with overseeing all of GWC Warranty’s field sales operations, including a nationwide team of area vice presidents, dealer consultant, and trainers.

Stach brings more than 15 years of management experience, having spearheaded results-driven initiatives for companies such as CareerBuilder, Yahoo!, and DialogTech. He most recently served as vice president of sales for Internet Brands.

“Brian is a proven leader with a long track record of fostering highly engaged, successful sales teams focused on flawless execution and best-in-class customer service,” said GWC Warranty President and CEO Rob Glander. “Because of this, we believe that Brian is an ideal fit to lead GWC Warranty’s talented, industry-leading sales team.”

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WASHINGTON, D.C. — In a 32-page staff report published on Sept. 19, the House Financial Services Committee charged the Consumer Financial Protection Bureau (CFPB) with failing to “fully and adequately investigate” the Wells Fargo fraudulent account scandal, and, instead, settled with the bank for less than 1% of the bureau’s own estimate of Wells Fargo’s statutory monetary penalty.

Chaired by Jeb Hensarling (R-Texas), the committee’s latest charges are based on an internal CFPB memo it obtained on Sept. 5 as part of its review of the bureau’s handling of the Wells Fargo investigation. Dated July 12, 2016, the “Recommendation Memo,” which the committee alleged was withheld by the CFPB for more than a year, laid out the bureau’s case against Wells Fargo and sought authorization to enter into settlement negotiations with the bank.

“The CFPB’s handling of this matter and its refusal to fully comply with the Congressional subpoena are a slap in the face to millions of Americans who were harmed by Wells Fargo and further evidence of the CFPB’s unaccountable structure and leadership,” said Hensarling. “The premature suspension of its investigation means that the CFPB also potentially lost the opportunity to discover recently revealed instances of further consumer harm.”

The committee said the memo calls into question the accuracy of the CFPB Director Richard Cordray’s testimony before Congress, adding that the committee is unable to complete its investigation of Wells Fargo’s fraudulent account scandal because the director “remains in default of the committee’s April 2017 subpoena.”

“Furthermore, in records discovered by the committee and made public in the report, Director Cordray, other senior CFPB officials, and CFPB oversight attorneys appear to have deliberately withheld the Recommendation Memorandum and other key records in response to the committee’s records requests and subpoenas,” the committee stated, in part. “Some CFPB officials even appear to have taken affirmative steps to attempt to conceal the Recommendation Memorandum’s existence from the committee.”

In September 2016, Wells Fargo revealed that its employees may have created more than two million accounts without customer approval. The number of accounts has since reached 3.5 million, the bank said on Aug. 31.

That revelation came on the heels of the bank’s July 27 announcement that 570,000 car buyers “may have been harmed” due to issues related to auto collateral protection insurance policies (CPI) sold between 2012 and 2017. Officials said approximately $64 million in cash remediation would be issued to consumers in the coming months, along with $16 million of account adjustments.

Within days of that announcement, The New York Times reported that the bank was facing new charges that it failed to properly compensate car buyers who purchased GAP coverage through Wells Fargo Dealer Services and paid off their loans ahead of schedule. According to the report, the GAP issue was uncovered in the course of an external inquiry ordered by the Federal Reserve Bank of San Francisco, where Wells Fargo is based. In a statement sent to the newspaper, however, spokeswoman Jennifer Temple said the company “discovered issues related to a lack of oversight and controls” during an internal review.

“We are reviewing our practices and actively working with our dealers and have already begun making improvements to the GAP refund process,” Temple’s statement read, in part. “If we find customer impacts, we will make customers whole.”

Citing the CFPB’s Recommendation Memo, the committee charged that the bureau could have uncovered the CPI and GAP refund issues if it hadn’t rushed to settle with Wells Fargo. “By causing our investigation to attempt to resolve this matter, we risk failing to identify similar sales-integrity issues involving other products or developing theories for why the practices identified may violate other laws within the bureau’s authority,” reads the CFPB memo, in part.

“The Legal Division perceives optical and legal risks in advancing only UDAAP (unfair, deceptive or abusive acts or practices) claims for conduct that may also violate other federal consumer financial laws, but we (and the Legal Division) believe those risks are outweighed by the benefits of proceeding quickly,” the memo continues. “… Given the seriousness of the violations we have identified, and the significant penalties associated with them, we see little upside to continuing our investigation in hope that we might find more.”

In September 2016, the CFPB announced its $100 million with Wells Fargo, the largest fine the bureau had ever imposed. The bank, which did not admit to any wronging, also agreed to pay $50 million to the city and the county of Los Angeles, where the unauthorized accounts were first uncovered by the Los Angeles Times in 2013, and $35 million to the Office of the Comptroller of the Currency.

The committee, however, said the CFPB’s Recommendation Memo shows that the bureau estimated the bank’s potential liability for a statutory monetary penalty could have exceeded $10 billion.

“At a minimum, information revealed in the Recommendation Memorandum does not corroborate Director Cordray’s congressional testimony that the CFPB conducted an ‘independent and comprehensive investigation’ of Wells Fargo and also raises questions as to the accuracy of the director’s testimony before the Senate Banking Committee on September 20, 2016, before this committee on April 5, 2017, and in his June 14, 2017, letter to Chairman Hensarling in response to the committee’s June 2017 Interim Staff Report,” the committee stated.

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WASHINGTON — The U.S. Department of Justice (DOJ) announced that CitiFinancial Credit Company, as successor to CitiFinancial Auto Corp., has agreed to pay $907,000 to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by repossessing 164 cars owned by SCRA protected servicemembers without first obtaining the required court orders.

During the investigation, the DOJ’s investigators learned that CitiFinancial conducted repossessions without court orders even when CitiFinancial had evidence in its own records suggesting that a borrower could be a protected servicemember. In several cases, loan servicing notes indicated that CitiFinancial was informed that the borrower was in military service or had received orders to report for military service. CitiFinancial, nevertheless, continued repossession efforts and eventually succeeded in repossessing the servicemembers’ vehicles, according to Associate Attorney General Rachel L. Brand.

“Members of our armed forces make extraordinary sacrifices in order to protect and defend our nation, and they should be able to serve actively without fear that their legal rights will be violated,” Brand said. “This settlement provides financial relief and credit repair assistance to the servicemembers whose vehicles were repossessed by CitiFinancial. The enforcement of federal laws protecting current members of the armed services, veterans, and their families continues to be an important priority for this Department of Justice.”

“The men and women who serve in the armed forces deserve to have us protect their backs while they selflessly protect us,” added U.S. Attorney John Parker. “This conduct clearly fell short of that and I'm grateful we were able to repair some of that harm.”

This settlement resolves a suit filed by the DOJ in the Northern District of Texas and covers vehicle repossessions that occurred between 2007 and 2010. CitiFinancial Auto Corp. originated and serviced these auto loans until 2010, when operations and assets were sold to Santander Consumer USA Inc.

In February 2015, the Department entered a settlement with Santander that provides servicemembers with more than $10.5 million in compensation for repossessions that violated the SCRA. As part of the investigation of Santander’s repossession practices, the Department learned that CitiFinancial sold Santander the right to collect debts owed by servicemembers after their cars had been repossessed by CitiFinancial in violation of the SCRA.

The SCRA protects servicemembers against certain civil proceedings, including vehicle repossessions, affecting their legal rights during active military service. The SCRA requires a court to review and approve any repossession if the servicemember took out the loan and made a payment before entering military service. The court may then delay the repossession or require the lender to refund prior payments before repossessing.

The court may also appoint an attorney to represent the servicemember, require the lender to post a bond with the court and issue any other orders it deems necessary to protect the servicemember. By failing to obtain court orders before repossessing vehicles owned by protected servicemembers, CitiFinancial prevented servicemembers from obtaining a court review of whether these repossessions should be delayed or adjusted to account for their military service.

This agreement further compensates servicemembers for their losses by requiring CitiFinancial to pay $5,000 to each impacted servicemember, in addition to the Santander settlement. CitiFinancial must also pay $10,000 to one affected servicemember who did not receive partial compensation through the Santander settlement.

In addition, CitiFinancial will pay $500 per account to compensate borrowers for any lost equity, with interest, and must take steps to repair the credit of all affected servicemembers. An independent settlement administrator will contact servicemembers in the coming months to finalize individual settlements at no cost to the servicemembers, according to the DOJ.

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IRVINE, Calif. — Hyundai Capital America, which does business as Hyundai Motor Finance, Kia Motors Finance, and Genesis Finance, has joined the AutoGravity car-shopping and financing platform.

Beginning in the state of California, financing through Hyundai Capital America is now accessible to AutoGravity users searching for financing for a Hyundai, Kia or Genesis. Since the platform's launch in the summer of 2016, more than 700,000 consumers have downloaded the AutoGravity app.

“With the growing number of consumers embracing AutoGravity, as well as the seamless integration of AutoGravity with dealer process, we felt that this was the perfect opportunity to test the platform,” said Hyundai Capital President and CEO Ross Williams.

AutoGravity uses proprietary technology to connect car shoppers, lenders and dealers through a digital marketplace. The firm collaborates with leading banks and captive finance sources like Hyundai Capital America to empower its users with convenience, transparency and choice while sending ready-to-buy customers to the dealership.

“AutoGravity brings the car financing experience into the Digital Age, where today’s consumer wants to find it: in the palm of their hand,” said AutoGravity founder and CEO Andreas Hinrichs. “With the addition of Hyundai Capital America, we can offer our users even more finance choices, making that drive off the dealership lot even more rewarding.”

The AutoGravity app is available for download from the Apple App Store and the Google Play store. AutoGravity is also available as a mobile-responsive web app at www.autogravity.com.

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SAN FRANCISCO — Shoppers on Jumpstart Automotive Media’s portfolio of automotive websites are showing greater interest in the luxury sport, coupe, luxury sport sedan, and large SUV categories.

Between July and August, shopper interest in the luxury sport and coupe segments grew 28% and 15%, respectively. Interest in the luxury sport sedan and large SUV segments grew 14% and 12%, respectively. Leading the way, however, were the alternative fuel and subcompact SUV/CUV segments, which realized 40% and 34% growth in shopper interest during the same period.

In the luxury sport category, the Jaguar F-Type realized a 51% increase in shopper interest so far this year, while interest in the BMW Z4 has grown 28%. For Coupes, interest in the Toyota 86 rose 44% between July and August — a category the brand hasn’t led since its Scion FR-S coupe led the way in the first quarter of 2016.

“This is the second straight month where Toyota has been a headliner in shopper interest for its vehicles in certain categories, with its C-HR subcompact crossover making the largest jump in interest for its segment in June,” said Colin Thomas, senior analyst of strategic insights for Jumpstart. “The brand has done a remarkable job with vehicles recently, tapping into key performance and design attributes that shoppers are seeking today.”

In the large SUV segment, interest for the Chevrolet Tahoe grew 26% from July to August, while interest in the Ford Expedition has grown 44% so far this year.

Jumpstart analyzes share of shopper interest regularly to gain insight into what consumers are considering when researching their next vehicle purchase, as well as how long it takes them to make a decision and how media influences their shopping process. These insights are based on the shopping patterns of more than 17 million in-market auto shoppers who are researching vehicles across the company’s portfolio of automotive publishers.

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The Old Glory Relay is comprised of more than 70 teams of veterans and their supporters completing assigned daily relay legs while carrying a single American flag more than 4,600 miles across the country. The Relay is a one-of-a-kind experience filled with unity, patriotism and pride. The final stretch crosses the Florida Panhandle before finishing in Tampa, home of Team RWB’s National Firebase, with a Retreat Celebration at the Westfield Brandon mall.

“We are extremely proud to partner with TrueCar for the Old Glory Relay and their DrivenToDrive program,” said Dan Brostek, marketing director of Team RWB. “During the Relay, one van becomes the centerpiece for hundreds of amazing stories from individuals across the country, and I can think of no better way to reward a deserving veteran than to present them with a van of their own.” 

As one of the key sponsors for the Old Glory Relay, TrueCar has equipped Team RWB with a van that will be traveling alongside relay participants as they make their way across the country. At the end of the cross-country journey, TrueCar and an honored guest, Retired Sergeant First Class Cory Remsburg, will present one deserving veteran with a new van similar to the one that followed the relay teams across the country. Active members of the military, veterans or immediate family members can enter to win the van at truecar.com/driventodrive.

“We are humbled to be a part of such an inspiring event that empowers and unifies these heroes from across the country,” said Lucas Donat, TrueCar’s CBO. “All of us at TrueCar have been touched by the veterans in our lives, and we are committed to helping the men and women of our military regain the independence and freedom many of them have lost in service by dedicating ourselves to helping them get back behind the wheel.”

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Preferred LeaseCare offers dent-and-ding repair with a $1,000 hail deductible benefit, windshield repair, interior/exterior repair, and key replacement during the term of the lease — all with no aggregate limits. The program also offers a lease-end benefit of up to $2,000 with no single event limit, covering excess wear items such as worn tires and wheels, exterior scuffs, bumpers, missing parts, and more.

“We believe this product is a game changer for lease customers because this program allows a consumer to keep their vehicle in the great condition they desire while they drive and offers a great lease-end benefit,” said RoadVantage CEO Garret Lacour. “Innovation is the engine of our success and offering a ‘Better Customer Experience’ is our passion. As the fastest growing provider of F&I programs, this new offering is just another example of ‘how and why.’”

Preferred LeaseCare is available to agents and dealers in most states across the country. For more, visit www.roadvantage.com.

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AUSTIN, Texas — CarStory, the automotive AI platform from Vast, unveiled CarStory Insights, a new feature designed to predict when cars will sell and for how much.

CarStory Insights builds on 12 years of data and analytics expertise. Combining this with AI and machine learning, the feature alerts dealers to issues on their lot before they cost them profits. For the first time, dealers can use the power of AI to sell cars at the right time, for the right price, maximizing inventory turn and profit, all according to Vast CEO John Price.

“With CarStory Insights, dealers can stop guessing and start knowing,” Price said. “It not only predicts which vehicles will cut into your profits, but also gives recommendations on what steps to take next. There is nothing else like it on the market today.”

An expansion of CarStory’s proven analytics and AI platform, Insights was designed to constantly analyze a dealer’s lot to provide timely alerts, accurate sales predictions, and smart pricing recommendations. Instead of scanning historical automotive data to make inferences on sales, Insights uses predictive analytics to see the trends that are coming. As a result, dealers are empowered to make more intelligent sales decisions, increasing their efficiency by eliminating the need to constantly monitor the market, according to the company.

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Consumers who visit a Gubagoo-powered dealership website using their desktop or mobile device can access and submit a credit prequalification form while in a live chat. The dealer will receive rich data relating to the consumer’s credit score and outstanding vehicle loans, and can tailor their sales response to suit the consumer’s automotive needs and budget and also prioritize lead follow up, said Brad Title, CEO of Gubagoo.

“Car buyers will now find it easier to pre-qualify for a car loan while shopping online for their next vehicle,” Title said. “It is a win-win for both car buyers and dealers in terms of convenience and time saved. We expect that car dealers who use our solution will see a dramatic increase in the number of qualified leads they receive.”

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Like all software solutions built by Gubagoo, the technology is designed for dealers, with simplicity and power in mind. Outbound Texting also centralizes texting so that dealer managers can more effectively ensure compliance and managerial oversight, according to Gubagoo CEO Brad Title.

“Today, it’s all about the convenience of your communication with consumers,” Title said. “But it’s also a balancing act with efficiency and time: Getting back to consumers quickly and establishing a positive expectation is critical as the sale moves forward. Our solution opens up a new channel of communication for dealers and consumers — ultimately helping to improve customer loyalty and drive more sales.”

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According to the firm, a record 61.02% of prime consumers chose used vehicle loans, up 1.12 percentage points from a year ago. In the superprime category, a record 44.32% of superprime customers took out used-vehicle loans, 1.06 percentage points higher than a year ago. The shift comes as new-vehicle loan payment reached a record $504, about a $139 difference from the average used-vehicle loan payment.

"One of the trends that we've consistently seen is all-time highs and record-highs of prime-plus consumers who are choosing a used vehicle," said Melinda Zabritski, senior director of financial solutions at Experian Automotive, adding that the gulf between payment amounts has played a major role in the new-to-used shift.

The used-vehicle market, however, wasn’t the only solution for car buyers seeking payment relief. Loan terms, which continued to stretch during the period, were also a go-to option in the second quarter.

According to Experian, the 61- to 72-month term band did lead the way in the second quarter, accounting for 40.4% of all new-vehicle loans. However, the 73- to 84-month and 85- to 96-month bands showed the largest growth.

The share of loans in the 73- to 84-month range increased 1.22 percentage points from a year ago to 32.5%, while the 85- to 96-month band increased 0.3 percentage points to 32.5%. Zabritski noted that a majority of loans in the latter range were primarily clustered around 85 months.

Also reaching a new record was the balance of outstanding loans, which increased from $1.027 trillion in the year-ago quarter to a new high of $1.1 trillion. The new high was achieved as delinquencies, which have caused a slight tightening in underwriting standards in recent quarters, showed some improvement.

According to Experian Automotive, the 30-day delinquency rate inched down 0.02 percentage points to 2.2%, while the 60-day rate increased slightly by 0.05 percentage points to 0.67%.

The improvement in delinquencies didn’t translate into a loosening of credit standards, however, with the share of subprime lending in the second quarter dropping from 21.46% in the year-ago quarter to a near-record low of 20.57%. Deep subprime also showed no improvement, falling 0.08 of a percentage point to a near low of 3.98%.

"The last time deep subprime was below 4% for a Q2 period was way back in 2012, and it was 3.77%," Zabritski noted. "The all-time Q2 low was seen back in 2011. It was about 3.64%, but, again, we're still near historic lows for deep subprime in the total loan market."

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NEW YORK — Auto loan defaults in increased nine basis points from July to August, the largest month-over-month increase since December 2011, according to the S&P/Experian Consumer Credit Default Indices.

Despite the drop, the auto loan default rate remains low relative to historical levels. In fact, the rate is closer to levels recorded one year ago. The same is true for the composite rate for overall consumer defaults and first mortgage defaults, both of which increased three basis points from July.

“Overall, consumer credit defaults show no reason for alarm,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Defaults on first mortgages are flat to down while defaults on auto loans have risen slightly in recent months. Consumer credit defaults on bank cards continue their upward creep since the end of 2015 despite a recent drop. The combination of an improving labor market, low inflation, and low interest rates are the principal factors behind currently favorable consumer credit conditions.”

The bank card default rate fell 12 basis points from July to 3.19% — the lowest level since December 2016. Bank cards were the only loan type to register a decrease in August.

Out of the five major cities analyzed by S&P/Experian, three registered increases in their default rates in August. New York recorded the largest increase, up 13 basis points from July to 0.95%. Los Angeles reported a rate of 0.66% for August, up three basis points from the previous month. Chicago came in at 0.94%, up four basis points from July.

Dallas reported a decrease of three basis points from the previous month to 0.74%, while Miami’s rate fell 10 basis points from July to 1.13%.

“Some future developments could affect consumer credit defaults: Auto sales have fallen since December 2016 and are down 11%. Declining auto sales and the normal end-of-model year push to make room for new cars may encourage easier credit conditions and raise concerns about future defaults,” Blitzer noted. “Hurricane damage in Houston and across Florida is creating substantial financial stress. The impact on mortgages on damaged or destroyed homes is not yet clear. Job losses and rising spending needs could lead to increased consumer credit defaults in coming months.”

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Officials said the decision to move into a new space was based on the company’s strong growth over the last year and its desire to establish a permanent Hearst Autos presence in Atlanta. The interior was designed to cultivate a sense of creativity and community among Hearst Autos’ teams and the Chamblee community. Embracing local artists and shops and the city’s heritage, the company commissioned local artist Yoyo Ferro to paint a custom mural in the reception and kitchen areas, and employees collaborated on Atlanta-inspired conference room names.

The overall idea of the new office space was to create an innovative and inspiring environment that will continue to foster the company’s unique culture and attract Atlanta’s best and brightest talent, according to Hearst Autos CPO Josh Searcy.

“Rearchitecting the Car and Driver shopping experience is at the heart of everything we’re doing right now at Hearst Autos,” Searcy said. “The more we can nurture collaboration within our teams and continue to keep employees inspired, the more we can optimize the consumer journey — for enthusiasts and in-market consumers alike — across every touchpoint. We believe our new Atlanta office really embodies the innovative spirit of Hearst Autos.”

The company is scheduled to officially move into its new space this Thursday, Sept. 21.

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“AFC is committed to helping our customers finance the best inventory possible as quickly and as easily as possible,” said Jim Money, president of AFC. “Partnering with TradeRev will give dealers access to more vehicles across the growing digital marketplace. And this promotion will allow them to experience the speed, convenience and power of TradeRev with the same confidence and value of AFC’s physical auction financing.”

AFC is a business unit of KAR Auction Services Inc., which holds a 50% stake in TradeRev. When dealers use TradeRev, they have access to real-time bidding auctions that run the freshest franchise trades. AFC financing is fully integrated into the TradeRev app, so dealers can immediately begin the financing process as soon as auctions are won. With thousands of North American dealers utilizing TradeRev, more than 500,000 dealer auctions have been launched through the mobile app, generating over 8 million dealer bids, all according to the company’s executive vice president, Keith Crerar.

“AFC is one of the largest providers of independent dealer inventory financing in North America, so this partnership marks a significant milestone in the digitization of automotive sales,” Crerar said. “Digital dealers can source cars better, faster and cheaper on TradeRev’s digital platform and seamlessly finance vehicles won at rates unmatched anywhere else in the industry.”

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AUBURN HILLS, Mich. — Rich Lalonde’s Summit Place Kia of Waterford, the selling import in the state, has moved into a new state-of-the-art facility there.

The new facility, located across the street from The Palace at Auburn Hills, opened on Monday, Sept 11. This is the second new facility for Summit Place Kia dealerships, the group opening a new facility for its Kia store in Clinton Township last year.

“We are located 4200 Interpark Drive, right across the street from The Palace at Auburn Hills,” said LaLonde said. “Although a certain sports team might have recently left the area, Summit Place Kia is genuinely excited to be making its arrival.” 

The 27,000-square-foot facility sits on 10 acres and has the capacity to sell and service more than 500 cars per month. It features a giant indoor showroom, state-of-the-art customer lounges and an advanced service facility featuring the latest diagnostic and repair equipment.

In 2013, the dealerships sold more than 600 new cars. New-car sales have grown year over year by more than 65%, with sales reaching 2,600 units in 2016.

Lalonde said the new facility brings 60 immediate jobs, 40 more in the coming months.  

“We can now offer our customers the ideal location,” LaLonde said. “We are just a mile from Interstate 75, which makes Summit Place Kia in Auburn Hills easily accessible to anyone in the area. It has been a long, two-year process and we’ve jumped through a few hoops to get to where we are, but we think it’s been worth it — and once our customers see our new headquarters, they will, too.”

With two Detroit-area locations in Clinton Township and Auburn Hills and a third location in Grand Rapids, Summit Place Kia offers the area’s largest selection of both new Kias and pre-owned vehicles.

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You see cases like this one, occasionally. A car buyer buys a car, decides there’s something wrong with it and demands his money back. Nothing unusual there — except when the

buyer has kept the car for two years and rolled up 43,000 miles on the odometer.

How much nerve does it take to claim that you’re entitled to all your purchase price back after that much mileage? What’s a court supposed to do with a case like this?

This Is a Salvage

Essa Lee bought a used Toyota Highlander from Hudson Toyota (no relation to the author) for $21,641. Lee obtained a “clean” title to the Highlander from the New York State Department of Motor Vehicles.

Lee drove the Highlander 43,000 miles during the two years he owned it. When Lee tried to renew the Highlander’s registration, the DMV told Lee that it could not renew the registration due to a salvage notation in the vehicle history.

The DMV issued Lee a salvage title. Lee told Hudson about the salvage title and traded in the used Highlander for a new one. Hudson assessed the trade-in value of the used Highlander at $14,700.

Lee sued Hudson for damages of $18,355, the amount that he had paid Hudson to date. Lee claimed that Hudson hid the fact that the old Highlander was a salvage vehicle.

The court construed Lee’s complaint to allege breach of contract, common law fraud, and violations of New Jersey’s Consumer Fraud Act. Hudson moved for summary judgment.

The trial court granted Hudson’s motion. In rendering its decision, the court addressed the responsibility of a plaintiff in a lawsuit to prove his case. According to the trial court, Lee presented no evidence that Hudson was aware of the salvage notation when it sold Lee the used Highlander. The trial court also found that Lee presented no evidence of damages. No evidence? No case. Lee appealed to the Superior Court of New Jersey’s appellate division.

The appellate court affirmed the trial court’s grant of summary judgment to Hudson. The appellate court agreed with the trial court’s finding that Lee failed to show evidence of damages. Under the CFA, a plaintiff must show that he suffered either an out-of-pocket loss or a loss in value due to the defendant’s unlawful conduct.

Bad Math

As the appellate court explained in a decision that could serve as a law school primer, Lee sought a full refund of the old Highlander’s purchase price, which was not the correct measure of damages. The correct measure of damages was the difference in value between the vehicle as Hudson represented it to Lee and the vehicle as it was in fact. However, the appellate court continued, Lee did not demonstrate that the old Highlander was worth less when Hudson sold it to him than what he paid for it.

According to the appellate court, Lee also did not demonstrate that Hudson valued the old Highlander incorrectly as a trade-in, especially because Lee drove it 43,000 miles. Because Lee did not demonstrate that he suffered any loss either when he bought the old Highlander or when he traded it in, his CFA claim failed, as did his breach of contract and common law fraud claims.

Every rare now and again, the law, and the judges who interpret it, make some sense.

Thomas B. Hudson is a partner in the firm of Hudson Cook LLP, publisher of Spot Delivery, and the author of several widely read compliance manuals. Contact him at tom.hudson@bobit.

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Augmented reality is making a mark on the automotive industry as it connects the real world with a virtual one. As the technology continues to become more widespread, dealers have an opportunity to consider how the technology will resonate in their businesses.

You may benefit from using AR in your sales, service and technician training efforts. With AR offering wide-ranging benefits, dealers and managers should understand the innovation and its advantages to be better prepared for the advanced technology.

Layers of Intrigue

AR works by bringing all relevant information about a process, procedure or product directly to the end user by displaying it in the user’s field of view on the actual product. With AR, real and virtual worlds connect to make everyday work more efficient and customer interaction more effective.

A user can simply point the camera of their mobile device at a designated area of the product — in this case, a vehicle — with repair instructions, connectors and wiring harnesses, component locations and other data superimposed on the engine, dashboard or anywhere else on the vehicle.

The technology presents the opportunity for dealerships to improve the customer experience of shopping for a new vehicle or automotive accessories. Physical dealerships can be enhanced with a virtual showroom with the introduction of AR. Shoppers can virtually view vehicles they are considering for purchase, in the exact trim they are interested in.

With the ease of accessing the app, the sales force can easily overlay various features and upgrades onto vehicles to help customers visualize available options. Customers can see options like a bedliner, roof rack, running boards, splashguards and more with AR.

Augmented Estimates

In the service department, AR can help bridge the gap to simplify communication between customers and service center professionals. With such complex systems and equipment in vehicles, there is the potential for misunderstanding or confusion when technical repairs are explained. With AR, a technician can superimpose a visual of the repair onto the vehicle to provide clarity. This tool helps technicians address customer concerns quickly and effectively, while building rapport and trust.

After a customer is aware of the repair needed, AR can help to cut down on the time required to complete the fix. With AR, the technician can get on-demand knowledge by augmenting information about the product at the time it’s needed, making them more efficient.

Technicians can find necessary components faster with the visual aid in a complex vehicle system. Once a technician can target the area and focus on the repair needed, the vehicle can be fixed faster to increase both customer satisfaction and service center efficiencies.

For technicians in training, AR provides an advanced method of education by combining multiple learning styles to help them understand and process the information. Training exercises in AR are extremely visual and incorporate auditory elements. Using the technology, the process is automated and would ensure that all technicians in the dealership receive the same standard of training.

Interest in AR in the North American automotive industry continues to grow. As dealers implement the technology and see its benefits, its prevalence will continue to spread and become more familiar.

Rob Butz is director of business development for the technical information services at Bosch Automotive Solutions. Contact him at rob.butz@bobit.com.

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If you want to increase your vehicle service contract penetration while simultaneously reducing reinsured VSC loss ratios, package the deal with a dealer-branded prepaid maintenance plan or sell (or gift) it separately to VSC buyers.

Selling or gifting a PPM to a customer is the best complement to any VSC. PPM incentivizes motorists to have their vehicles serviced at the dealership, which establishes a pattern and makes those customers more likely to return to the dealership for needed repairs covered by the VSC.

Vehicles receiving routine maintenance more frequently under PPM use should suffer fewer mechanical issues. By helping reduce claims against reinsured or direct business VSCs, PPM use contributes to a lower loss ratio.

The Winning Combination

Our data shows that dealers using this strategy increase VSC sales by 10% and enjoy an 8% reduction in VSC loss ratio, on average.

The value of vehicle service contracts and their mechanisms are well understood. However, PPMs work in different ways to drive service volume and retention. PPMs are prepackaged and often include discount-priced bundles of various routine maintenance services. Most dealers build their plans around an oil change, a tire rotation, an alignment or other wear-and-tear items.

Here’s how this combination helps create these results:

• Every VSC provider requires the policyholder fulfill the vehicle’s proper maintenance to ensure the VSC still covers necessary repairs during mechanical failure. In other words, failure is not due to neglect by the motorist.
• Dealer-branded PPMs keep customers returning to their dealership for routine services covered by the plan. Benefits encourage plan holders to visit the dealership more often than they would otherwise. This habit extends to the motorist using the VSC at the dealership, solidifying a stronger retention relationship.

The average price of a VSC is widely varied, based on named peril or exclusionary coverage, and range between $1,000 and $3,000. Add a PPM plan that raises the total price by $150 or more, but helps ensure cover-ability at the time of loss. With the right PPM, the customer also has a digital record of the maintenance services performed, to help validate their value if their VSC claim is denied due to a rejection on based on lack of routine maintenance.

Data shows that dealerships using a retention plan specifically designed and managed to retain customers enjoy an 85% first-year retention rate and a 65% rate in the second and third years. Also, these dealers report PPM use contributes to a $70 increase per repair order in customer-pay. On average, users use plan benefits at least four times a year.

Not Created Equal

Not every maintenance plan delivers these benefits, notes Scott Smith, dealer principal for Automotive Associates of Atlanta, a premier, privately owned, six-store automotive group. He dropped OEM and other third-party providers’ maintenance programs because those plans did not lock the consumer into using the issuing dealership for service.

“Those other plans give consumers too much flexibility in where those plans can be employed — we wanted a program that makes sure those customers service back here,” he told me.

A PricewaterhouseCoopers report notes that dealers have some or all control of their insurance products claim processing — especially for VSC and maintenance plans — and can leverage that accessibility to drive customer loyalty.

“Efficient claims processing, coupled with an effective fraud control, can contain costs, increase loyalty, and cement long-term partnerships with the dealer,” the report noted, in part. “This is especially important for products where dealers own the risk, such as in reinsurance programs.”

Given how PPMs sold in F&I (or in service) benefit the dealership, the PPM has replaced GAP and other ancillary products as the second-most purchased product behind service contracts. PPM use offers the customer and the dealership a mutual benefit and does not rely on a loss to trigger the coverage. It is proactive coverage that helps both.

The data show that customer use of a dealer-branded PPM when packaged with the sales of a VSC promotes a 10% increase in VSC sales. Because the customers possessing both products maintain their vehicles better, their service contract claims are less, which is great news for VSC loss ratios. Preventive maintenance helps in any insurance environment! 

Ryan Williams is president of Fidelis PPM and a 20-year veteran of the auto retail and service industry. Email him at ryan.williams@bobit.com.  

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AutoGravity was also earned “Best Mobile App” and “Most Unique and Artistic Content” awards for its user-friendly digital media content. The program was sponsored by F&I Express.

“This was a remarkable win for the AutoGravity team,” said Andy Hinrichs, founder and CEO of AutoGravity. “We are honored to be recognized by our peers and fellow industry leaders for our work driving the innovation and digitization of the car shopping and financing journey.”

The F&I Digital Media Awards is designed to honor companies and individuals driving innovation in the digital F&I space. Finalists were evaluated by a panel of judges to determine category winners and the overall grand prize.

“The importance of technology in transforming the auto financing experience cannot be understated,” said Hinrichs. “AutoGravity is committed to providing an unmatched digital experience for our users, our lenders and our dealership partners. This award reinforces our momentum towards becoming the industry standard for digital car shopping and financing.”

For more on the F&I Digital Media Awards, visit www.fidigitalmediaawards.com. For more on AutoGravitiy, visit www.autogravity.com.

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Leek will be responsible for leading the entire InterActiveTel organization, as well as maintaining business development partnerships and driving the adoption of InterActiveTel’s suite of communication products.

Leek comes to InterActiveTel with more than 20 years industry experience. During his 15 years with Dominion, Leek rose through the ranks quickly in a variety of roles.  After exceeding goals as a salesperson and then as the director of sales at Autobase (div. of Dominion), Leek was asked to lead the AutoRevenue and AVV sales teams after the companies united in 2011.

Leek continued his rise within Dominion, serving as vice president of CRM before being promoted to vice president of sales. Prior to his time with Dominion, Leek worked at both ADP and Newgen Results.

“We could not be happier to have someone with Bill’s character and reputation on board,” said InterActiveTel CEO Jack Behar. “With his wealth of expertise in everything from CRM to call tracking to data mining, Bill really understands what information a dealership needs to make the most informed decisions to benefit the customers. This is a huge win for us.”

InterActiveTel offers custom communication applications that enable dealers and CRM partners to offer call capture and recording from their phone system. Additional features of the system include sentiment analysis, key phrase spotting, and reports in order to follow up with customers quickly and consistently to win the sale. For more, visit www.interactivetel.com.

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When combined with offline Client Command proprietary data, the Client Command Active Shoppers Network becomes a dealer’s most powerful source for automotive shopper data, both inside and outside of their dealer management system, according to Greg Geodakyan, the company’s CPO.

“We want to continue to be the industry leader when it comes to identifying active shoppers and feel the best way to do so is to use our own shopper data backed by information from over a billion devices,” Geodakyan said. “With the announcement that Dataium in-market shopper data is no longer available, our clients are the only ones in the market who can say with 100% confidence that they have the most efficient and precise way of reaching in-market shoppers. If it’s not backed by Client Command’s Active Shoppers Network, it’s guessing, at best.”

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An expert in client engagement with nearly 20 years’ experience in automotive retail and digital marketing, Gottschalk was key to expanding FordDirect’s online initiatives. During his tenure, he oversaw a variety of digital marketing services and helped create a comprehensive web presence for dealers to digitally update their existing practices.

Gottschalk has been brought on to help manage and develop impactful communications with dealers and create new enterprise strategies and solutions for LotLinx, according to the company’s president, Eric Brown.

“John has a deep understanding of the industry and a strong track record of delivering innovative solutions which accelerate inventory turn,” Brown said. “John has worked directly with the country’s top dealers, manufacturers, agencies [and] vendors and is highly respected by all. We’re excited to add someone of his caliber to the team.”

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What does this mean?

As the parts department is viewed as a necessary component of fixed operations, and typically employs a formulaic profit margin, dealers and controllers are more focused on vehicle sales and variable operations and do not question the details of fixed operations, especially the parts department. Many do not have a significant understanding of the parts department, how the inventory and billing systems are set up and managed, or how it really works, so questioning the process is unlikely.

Dealers are more likely to know the age of the used cars on the lot, but not the obsolescence of the parts carried in the parts inventory. Many know how many deals went unclosed on the sales floor from the last weekend, but have no idea how many lost sales have happened over the last six months in the parts department.

This is significant. While we trust our parts department to properly manage their areas of responsibility and serve the best interests of the dealership, there may be instances of mismanagement, unforeseen circumstances that affect overall sales, and missed opportunities to cut costs or better manage your inventory. As a best practice, there should always be internal controls in place to review and understand cost areas, like parts, and a means to identify problem areas before they start to cost you money and cut into your profits.

Start reviewing the inventory turns in the parts department. Some DMS providers may be able to put some key indicators on your “dashboard” that pertain to the parts department for your daily review alongside your new- and used-vehicle sales. If this is not available, take a look at the monthly analysis on a regular basis. At a minimum, dealers and controllers should be aware of several key performance indicators with regards to inventory turns:

1. Gross Inventory Turnover

Gross turnover is represented by the ratio of the cost of goods sold, to the average inventory value, over a certain period of time. To calculate gross turnover, divide the cost of goods sold by average inventory value. If, for example, the cost of goods sold is $750,000, and the average inventory value over 12 months is $125,000, the gross turnover ratio would be 6.0, or six times per year.

Using this “gross turns” method represents all parts inventory, including special orders and emergency purchases, so it doesn’t give a true picture of the parts departments’ efficiency — the return on the investment of the parts department isn’t truly calculated using this method. We suggest using another measurement, “true turns,” as well.

2. True Turnover

True turnover or “true turn” represents a clearer picture of the return on investment of the parts inventory. It is the best indicator on how the managed inventory is meeting the needs of the customers, whether they be counter retail, wholesale or service customers, since it uses only parts sold from stock to calculate the true turn of the inventory.

Gross turns include emergency purchases, which may fill an immediate need, but in the long run increase the acquisition costs of parts, reduce your earned discount amount and does not add to your return reserve you are earn from the manufacturer. Therefore, parts sold from stock generate higher gross profit margins, which translates to higher net profits. True inventory turns, consequently, are a good measure of how profitable the dealership’s inventory investment really is.

The preferred formula for calculating the true turn is to multiply the stock order performance (percentage) by the gross turnover. To calculate your stock order performance, divide your stock order purchases by your total purchases.

A parts department that has stock order purchases of $400,000 out of a total inventory of $500,000 is said to have a stock order performance of 80%. Hence, you could calculate true turns either by dividing $400,000 (stock orders) by $125,000 (average inventory value) to get a true turn of 3.2. Or you could multiply 80% (stock order performance) by 4.0 (gross) turns to get the same number: 3.2.

Although you do not have to calculate this ratio yourself — your DMS should be able to calculate it for you — it is a good idea to understand where the numbers come from and what they mean.

Aim for a stock order performance of 75% to 85% for weekly stock order deliveries and 85% to 95% for daily stock order deliveries. A good ratio to have as your true turn is six or more with a daily stock order and four to five with a weekly stock order.

3. Fill Rate

Fill rate is an important metric because it tells you the sales that come from your inventory vs. all the requested parts. For example, if you had a demand for a part 100 times and you can go to the bin and pull that part without having to order is 80 times, you have a fill rate of 80%. It is recommended that you have a fill rate of at least 90% in your parts department.

Knowing these numbers, what can a dealer or controller do? To begin, make sure that the parts manager has policies and procedures in place that ensure the on-hand counts recorded in you DMS are correct. They should be spot-checking bins on a regular basis to keep an accurate and perpetual inventory year-round, not just annually. Ask your parts manager if lost sales are being recorded properly — and review together what is a “lost sale” so there is no doubt.

Review the monthly analysis with the parts manager and address any areas that need to be improved. Are the true turns within an acceptable guideline? What is the fill rate? Review stocking levels and phase-in and phase-put criteria that is set up in the DMS. Do these need to be tweaked?

It is also recommended that the controller review the parts inventory investment amount (the “parts pad” amount) to the general ledger on a monthly basis, noting any variances that occur from work in progress, unposted transactions such as invoices, appreciation and depreciation, and in-transit parts. If a significant variance still exists, it should be investigated and a physical inventory should be done by an outside vendor. 

Jill Pastore is a senior at Citrin Cooperman, a full-service accounting, tax and consulting firm. Contact her at jill.pastore@bobit.com.  

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At a time when powerful new tools and technologies are making it possible to manage and leverage the vast amounts of data generated in an increasingly digital world, the emerging field of data analytics is making important inroads in a wide range of industries. The automotive industry is one of the places where data analytics is making a particularly significant impact.

In fact, in the wake of the late-2000s recession, OEMs and dealerships have been proactive about using sophisticated data analysis to gain a better understanding of both their customers and their own operations, leading to new insights and, ultimately, new efficiencies.

Whether it’s optimizing operations or maximizing marketing, data analytics has the potential to deliver a significant bottom-line impact for a segment of business that is responsible for close to 80 cents of every dollar of revenue for many dealerships.

Insights and intelligence

The best fixed operations data analytics solutions can sift through an enormous amount of data — including detailed information on parts, services, customers and operations — to identify hidden connections, reveal subtle patterns, and transform raw data into usable and actionable intelligence.

Predictive analytics use past information and key performance indicators (KPIs) to make informed predictions and provide specific and strategic recommendations. Decisionmakers can use that information to structure programs and practices to meet customer satisfaction, reduce waste, and introduce new efficiencies.

For OEMs and dealerships, that impacts staffing and service specifics (making it easier to turn a single service visit into a pattern of repeat business) and efficient inventory management (ensuring that the right parts are available when a customer is ready to buy). Inventory improvements alone can have a dramatic, even transformative financial impact.

For example, one prominent OEM recently saved nearly $80 million in recent years by optimizing its port-installed parts and accessories inventory to reduce wasted space and cut back on avoidable losses to aging and obsolescent parts. In your dealership, having the right parts in stock 30 days after a new-car purchase is critical due to the high volume of parts and accessories being purchased then. Predictive analytics makes that possible, recommending daily inventory specifics months in advance.

This newfound ability to make sense of available data also gives OEMs and dealerships a better understanding of customer purchase patterns, preferences and priorities. That information facilitates the creation of personalized and strategically timed marketing and promotional initiatives that are extremely effective at driving business, building brand loyalty and shaping customers’ service habits. It also enables dealerships to provide a highly personalized service and sales experience. Vehicle- and customer-specific data can be leveraged to unlock new sales and service opportunities.

Platforms and Possibilities

While no two data analytics systems are exactly alike, the best provide customized and user-friendly solutions designed specifically for fixed operations applications. Disparate DMS data feeds are integrated into a unified web-based platform, which decisionmakers can access via a visually dynamic and intuitive virtual dashboard.

Users can review a wide range of metrics, including detailed sales trends in individual product categories; inventory, parts and pricing information; service and operations data; and information about customer loyalty and retention. To ensure data integrity, the best providers have quality control resources in place to “clean” and audit raw data.

The ability to view KPIs and assess performance in the context of historical trends and predetermined benchmarks is a profound change for an industry which has traditionally been challenged by the sheer complexity and diversity of its operations. Data analytics turns that complexity from a liability into an opportunity. For OEMs and dealerships, the power to leverage the fixed operations data they are already gathering to realize improved performance and profitability is the very definition of a difference-maker.

Neetu Seth is founder of NITS Solutions and an expert in helping automotive clients navigate the intersection of big data, technology and marketing. Email her at neetu.seth@bobit.com.

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U.S. Transportation Secretary Elaine Chao released a new set of voluntary federal guidelines for autonomous vehicles on Sept. 12 — a move the Trump administration said will make federal regulatory processes "more nimble to help match the pace of private sector innovation."

The guidance, which replaces Obama administration policy released a year ago, provides a voluntary framework for manufacturers and other stakeholders as autonomous vehicle technologies continue to evolve for testing and deployment. The guidelines will not be enforced, but autonomous vehicles found to have a defect will be subject to safety recall like other vehicles.

The released document also “revises unnecessary design elements from the safety self-assessment” found in the previous guidelines, the National Highway Traffic Safety Administration said in a released statement. The Obama administration’s policy included vehicle performance guidance that used a 15-point safety assessment system. 

The new guidelines do, however, recommend that all design decisions be tested, validated and verified as individual subsystems and as part of the entire vehicle architecture. Manufacturers are "encouraged to document the entire process: all actions, changes, design choices, analyses, associated testing, and data should be traceable and transparent,” the document said.

The guidance addresses a range of subjects, including crash avoidance, human-machine interface, validation methods, vehicle cybersecurity, post-crash automated driving system behavior, data recording, consumer education, and the role of state governments.

“The new Guidance supports further development of this important new technology, which has the potential to change the way we travel and how we deliver goods and services,” Chao said. “The safe deployment of automated vehicle technologies means we can look forward to a future with fewer traffic fatalities and increased mobility for all Americans.”

Chao unveiled the policy guidelines during a press conference at an autonomous vehicle testing facility in Ann Arbor, Mich. They will be updated again next year to keep pace with innovation. NHTSA is part of the Department of Transportation.

The new NHTSA guidance drew both praise and criticism.

“We fully support the new guidance which is extremely well thought out, clarifying, and in alignment with the collaborative approach at the American Center for Mobility,” said John Maddox, CEO of the American Center for Mobility. “I believe that issuing guidance rather than specific regulation is most certainly the best approach, especially as the development of these technologies is rapidly evolving.”

But Consumers Union, the policy and mobilization division of Consumer Reports, viewed NHTSA’s revised policy as a means for the federal agency to weaken oversight of automated vehicles.

“This is a clear step backward for consumer safety that sends a troubling message about the Transportation Department’s priorities under the new administration,” said David Friedman, director of cars and product policy and analysis for Consumers Union. “On the same day that the NTSB announced Tesla’s Autopilot system played a ‘major role’ in a May 2016 fatal crash, Secretary Chao indicated that the Department will go easy on automakers, and that it will expect them to do less to verify the safety of emerging automated vehicle systems.”

Friedman served as NHTSA deputy administrator and as acting administrator during part of the Obama administration.

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Manheim and ADESA reopened their Florida auction facilities last Tuesday, as Hurricane Irma moved north toward Tennessee.

Manheim opened most of its 11 Florida auctions on Tuesday. The auctions will offer select digital sales, said Lois Rossi, a Manheim spokesperson.

ADESA also opened its five Florida auctions last Tuesday. ADESA Ocala is operating with limited staff, and was expected to have a consignment sale this past Friday.

In Georgia, Manheim's three auctions — Manheim Atlanta, Manheim Georgia, and Manheim Metro Atlanta — remained closed last week but were offering digital sales. ADESA Atlanta is open.

Manheim has also been working to fully restore business operations at its three facilities in the Houston area — Manheim Houston, Manheim South Houston, and Manheim Texas Hobby — following Hurricane Harvey. To help dealers, Manheim-owner Cox Automotive is waiving storage fees, providing transportation assistance, and giving time extensions to purchased products, Rossi said.

The company has also been communicating with clients that its facilities are open and directing them to digital channels when needed.

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As many as 400,000 vehicles in Florida will need to be replaced as a result of Hurricane Irma, including as many as 11,000 fleet vehicles, according to Cox Automotive.

When added to the damage inflicted by Hurricane Harvey in southeastern Texas, Smoke estimates that as many as 1 million vehicles will need to be replaced as a result of the two storms.

Much of Hurricane Irma's damage came in the southwest Florida, including the Florida Keys, Fort Myers, and Tampa. Commercial fleets likely suffered the brunt of the storm's impact, as larger rental operators mostly moved their vehicles into parking garages to protect them from the wind and rain.

"We were able to move most of the units to cover and they weren't damaged or flooded out," said Lisa Martini, an Enterprise spokesperson. "That made a big difference for us."

Hertz also saw minimal damage to its rental fleet in Florida, said Karen Drake, a spokesperson for Hertz Holdings.

Enterprise has reopened most of its Florida offices, except for those in Naples and Key West, where it operates airport rental facilities at Key West International Airport and Florida Keys Marathon Airport. Enterprise plans to reopen its Naples location on Thursday.

Unlike Hurricane Harvey, which caused heavy flooding, Hurricane Irma damaged vehicles with high-speed winds and heavy rainfall. And the storm's move north along the Gulf Coast side of the state likely resulted in a lesser impact on commercial vehicles, said Jonathan Smoke, Cox Automotive's chief economist.

"Hopefully with the significant preparation time, the losses will be to the low end of the range," Smoke said. "The westward track helped to avoid more damage in Orlando, which is home to more than a third of the total fleet in Florida."

Vehicles in Georgia, Alabama, and South Carolina saw only a "small amount of damage," Smoke said.

In Texas, Hurricane Harvey likely damaged between 320,000 and 580,000 vehicles with fleet making up between 12,000 and 21,500 units. Enterprise Holdings reported it had lost 3,000 rental vehicles, while Hertz reported a loss of 500 units in Texas.

Rental operators began shipping thousands of units into Texas following the storm to meet demand for insurance replacement vehicles. Enterprise sent 17,000 vehicles to the state, the company announced.

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“This was a remarkable win for the AutoGravity team,” said Andy Hinrichs, the company’s founder and CEO. “We are honored to be recognized by our peers and fellow industry leaders for our work driving the innovation and digitization of the car shopping and financing journey.”

The F&I Digital Media Awards honors companies and individuals driving innovation in the digitization of automotive finance and insurance. Finalists were evaluated by a panel of judges to determine category winners and the overall grand prize.

“The importance of technology in transforming the auto financing experience cannot be understated,” said Hinrichs. “AutoGravity is committed to providing an unmatched digital experience for our users, our lenders and our dealership partners. This award reinforces our momentum towards becoming the industry standard for digital car shopping and financing.”

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As part of ASI’s Smart Autocare suite of F&I offerings, TruGAP offers terms and benefits unique to the category. Like most GAP products, TruGAP promises to cover the difference between net payoff and primary carrier settlement in the event of theft or total loss. But the coverage does not take into account the condition of the vehicle at time of claim, eliminating a provision that can greatly reduce the GAP payout issued to customers.

Aside from a maximum of $125,000 financed amount or retail value, ASI set aside underwriting standards that could disqualify customers, limit claim amounts or result in chargebacks. TruGAP has no maximum claim amount or loan-to-value limit and will even pay up to $1,000 against each customer’s insurance deductible. A “Plus” version, where available, adds a $1,000 incentive to buy their next vehicle from the selling dealer.

Michael Moretz, ASI’s senior vice president of sales and marketing, said he fully expects TruGAP to create a new industry standard, eliminating the exclusions and other unpleasant surprises customers too often encounter when attempting to cash in their GAP coverage.

“TruGAP is going to be a market-changer,” Moretz said. “At every turn, it keeps the dealer out of court, prevents confrontations in the finance department, and encourages — rather than damages — the opportunity for repeat and referral business.”

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Care Free VSC joins ASI’s lineup of Smart Autocare products and offers terms ranging from 24 months to 60 months from date of sale, all with unlimited miles. The product can be applied to any vehicle up to two model-years old with less than 18,000 miles on the odometer. Every contract sold includes a “disappearing deductible” of $100 for repair work completed outside the selling dealer’s facility.

Each Care Free VSC is bundled with a maintenance component designed to cover brake pads and rotors, battery, wiper blades, wheel alignment, diagnostics and fluids, as well as shop supplies — a cost that is not covered by most service contracts. Available in some states, a “Plus” version of the VSC adds oil changes every 5,000 miles (or the manufacturer-recommended interval), tire rotation every 12,000 miles, up to $50 a day in rental reimbursement, trip interruption, and a road club benefit, which includes coverage for lockout, towing, tire, battery and more.

ASI’s senior vice president of sales and marketing, Michael Moretz, described Care Free VSC as a “targeted” service contract offering, designed to pick up where the factory warranty leaves off and help dealers retain more service customers from new-car sales.

“Most service contract products are less consumer-driven and more focused on long-term profits,” Moretz said. “With Care Free VSC, the dealer may opt for higher gross profit, higher retention or higher penetration rates for the F&I manager.”

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AUSTIN, Texas — F&I program provider RoadVantage is donating to the industry a series of F&I product videos designed to educate consumers before they enter the F&I office. The videos can be downloaded for free by clicking here.

Dealers and agents can post the videos on their websites, or play them in their waiting rooms to raise consumer awareness of the different F&I products and the value they provide vehicle owners. And because the videos aren’t brand specific, dealers who offer products from multiple providers or change suppliers never have to switch out a video or stop using the series altogether.

“Our philosophy at RoadVantage is ‘A Better Customer Experience,’ and we are just talking about our products and claims service. We believe the entire industry benefits when dealers get involved with educating consumers about the value F&I products bring to the table,” said RoadVantage CEO Garret Lacour. “But we don’t just want dealers who offer our products to benefit, we want every dealer to have the ability to offer professional, high-quality video content for the F&I products they offer. That’s why we decided to go this route with our videos, and why we are offering them free of charge to everyone who wants to use them.”

The video series covers tire-and-wheel protection, dent and ding, windshield repair, key replacement, interior and exterior protection, theft, total coverage, GAP, and vehicle service contracts. To access the videos, click here.

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IRVING, Texas — F&I products provider Nobilis Group announced the company will sponsor a book signing with Baseball Hall of Famer Ivan “Pudge” Rodriguez during Industry Summit 2017. The event will be held Sept. 11–14 at the Gaylord Texan Resort & Conference Center in Grapevine, Texas, near Dallas.

Following his induction to the National Baseball Hall of Fame in July, Rodriguez, a 14-time Major League All-Star and 2003 World Series champion, released his first book, “They Call Me Pudge.” Widely regarded as one of the best all-around catchers in baseball history, Rodriguez won 13 Gold Gloves, seven Silver Slugger awards and the 1999 American League MVP award over his 20-year career with six different teams, including the Texas Rangers, where he made his Major League debut in 1991.

Rodriguez will sign complimentary copies of his new book during Industry Summit 2017 from 11:00 a.m.–12:30 p.m. on Thursday, Sept. 14, for the first 150 Industry Summit attendees to visit the Nobilis VIP Lounge, located in Grapevine 1 on Level 3 of the Gaylord Convention Center.

“For decades, baseball fans around the world have admired Pudge for his drive and tenacity,” said Troy Good, president and CEO of Nobilis Group. “He made it to the big leagues in 1991, which is the same year we got our start, and just as Pudge defended home plate in an all-star manner, our AutoBodyGuard products protect a vehicle’s appearance with the same level of excellence.”

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“The integration of Concierge Chat into our Next Gen websites further builds upon the fully responsive platform we’ve developed to allow dealers to connect with their customers no matter how they shop,” said Max Steckler, vice president of product management at CDK Global. “As the industry continues to be flooded with standalone product innovation while lacking best-in-class integration, the creation of Concierge Chat is just one example of how CDK is meeting the challenge and enabling end-to-end automotive commerce via an open exchange.”

CDK Next Gen Websites were designed to provide a mobile-first experience with modern, cutting-edge designs across platforms and devices, speed and efficiency, and better SEO performance. In addition, they adapt to target audiences through personalized experiences, and integrate with state-of-the-art engagement and conversion tools that aid in bridging the online and instore experiences.

The deep integration of Concierge Chat with the CDK platform will allow its customers to use ActivEngage’s professionally managed chat service to drive qualified sales opportunities into the dealership, according to ActivEngage CEO Todd Smith.

“CDK Global recognizes the power of giving consumers the opportunity to interact with dealers in real time via messaging solutions like chat, text, or social media,” Smith said. “Our partnership with CDK Global will allow our company to share new innovations that will help consumers navigate the purchasing journey more effectively, while creating better results for the dealer.”

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IRVINE, Calif. —New-vehicle sales through August have fallen 2.8% from the year-ago period to 11,308,631 units, according to Kelley Blue Book’s Monthly Light Vehicle Sales Report for August.

The month of August posted a seasonally adjusted annual rate (SAAR) of 16 million, compared to 16.9 million in August 2016. This was the lowest SAAR for the month of August in four years. The lone bright spot so far in 2017 have been large vehicles.

Out of the 22 vehicle segments tracked monthly by Kelley Blue Book, only 10 posted higher sales numbers compared to the first eight months of 2016. Of those 10, large vehicles commanded eight of those spots.

As for cars, every single segment posted year-over-year declines in sales through August.

The firm noted that retail demand for crossovers continues to grow, with the segment accounting for six of the 10 segments to post year-over-year sales gains. The segment also posted some of the highest sales gains, with subcompact SUV/crossover sales rising 10.9% from a year ago and luxury compact SUV/crossover sales rising by 20.7%.

Retail demand for more fuel-efficient alternative-fuel vehicles has also been on the upswing this year. Electric vehicles posted the highest percentage growth in sales among all vehicle segments tracked. However, the total number of vehicles in this class that have been sold so far this year is still a relatively small drop in the overall new-vehicle sales bucket.

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IRVINE, Calif. — Income development company SouthWest Dealer Services (SWDS) has acquired Spokane, Wash.-based Evergreen Dealer & Insurance Services (Evergreen). Financial terms of the transaction were not disclosed.

A subsidiary of global holdings company Spencer Capital Holdings Ltd. (SCH), SWDS’s acquisition of Evergreen allows the firm to expand in existing markets and enter into new ones. It also brings additional scale, resources, and a broader solutions portfolio to both firms’ dealer clients, officials said.

“We understand that no two markets are the same, and neither should our services be. That’s why we seek out companies that specialize in their craft and understand the region in which they operate,” said Ryan Hoff, vice president of mergers and acquisitions for SWDS. “Evergreen’s reputation for stellar customer service, tailored products and long-term partnerships in Washington made them a natural fit, and will fuel the development of our company as an industry leader.”

The acquisition of Evergreen complements SCH’s existing portfolio of insurance-related companies. Dealers will realize increased access to products and services across the SCH platform, notably Spencer Re, a reinsurance firm focused on U.S. auto dealers, and USA Risk Group, an independent captive insurance provider.

“The acquisition allows us to capitalize on the wave of industry consolidation taking place among auto dealers, expand geographically and maintain the level of local support that our dealers are accustomed to,” said Larry Pomarico, executive vice president of sales for SWDS.

SWDS boasts more than 330 employees and more than 650 dealers across 16 states. There will be no personnel changes as a result of the merger, officials said.

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NAPA, Calif. — F&I product provider AUL Corp. today announced the executive promotions of Bryan Nieves to vice president of national accounts and Henry Paoli to national sales manager.

Nieves previously served as the company’s national accounts manager, a role in which he successfully cultivated long-term relationships with dealers, finance sources, and agents over his 20-year tenure with AUL, the company noted. According to Jason Garner, senior vice president of sales and business development, Nieves was the driving force behind AUL’s Preferred Partner Lending Program and Reinsurance Initiative.

Paoli promotion from business development manager was the result of his ability to forge new relationships and generate results, the company said. While continually growing AUL’s agent client base, he remains focused on the long-term health of a client relationship vs. a short term gain. According to Garner, “It is this type of leadership style that represents the AUL Way.”

Prior to joining AUL Corp., Paoli spent more than nine years as regional sales manager for GE Capital and more than 23 years as a Major in the U.S. Army Reserves.

“Both Bryan and Henry continue to excel in their positions while embodying the values to which AUL Corp. continually strives to uphold,” Garner said. “We are so pleased to announce their promotions and anticipate there will be more exciting announcements to come as a result of these two individuals’ efforts and work ethic.”

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TAMPA, Fla. — Manheim has closed its Puerto Rico facility and will close four of its Florida auctions on Friday ahead of Hurricane Irma's expected landfall in Florida over the weekend, according to the company.

Prior to the arrival of the Category 5 storm, Manheim plans to close locations in Fort Lauderdale, Fort Myers, Palm Beach, and Lakeland. Manheim Caribbean will be closed until further notice. The Fort Lauderdale location offers about 2,500 units for sale each week.

The company is encouraging clients to retrieve purchased vehicles, and will shift auction sales to digital platforms.

"During severe weather conditions such as Hurricane Irma, Manheim proactively plans and prepares to protect the safety of our team members, clients, and locations," said Mark Ford, vice president for the Southeast. "This includes encouraging clients to retrieve their purchased vehicles at our locations prior to Friday to avoid any possible damage and moving physical sales to digital channels such as OVE (Online Vehicle Exchange) for safety reasons."

KAR Auction Services doesn't maintain any auction facilities in South Florida. It's southernmost ADESA location is in Sarasota. A spokesman from the South Florida Auto Auction of Fort Lauderdale said he was too busy to discuss any precautions.

Hurricane Irma battered Puerto Rico on Wednesday after striking the northern Lesser Antilles and Virgin Islands with 185-mile-per-hour winds. The storm is headed toward the Dominican Republic and Cuba. It's expected to reach the Florida Keys on Saturday, reports the Washington Post.

"We are proactively communicating with our clients about the status of our operations and their vehicles and are helping to direct them to other Manheim digital channels for their vehicle needs," said Tim Janego, vice president for Manheim's East region.

A week ago, Manheim closed three Houston-area auctions ahead of Hurricane Harvey.

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There are few things that frustrate me more than hearing a client that made four to 10 times what they spent on marketing say that they can’t spend any more! What? You spent $2,500 and made $25,000 in gross profit, but the owners have given you a budget? This make no sense at all!

When you “budget” your marketing, you are apparently saying that your marketing programs aren’t working. In many cases, that may be true. That’s why it’s important to track everything you do in marketing. If it’s not working, you shouldn’t be doing it! If it is working, you should be doing more of it!

Step 1: Know Where the Money Goes.

John Wanamaker, one of the pioneers of marketing, once said, “Half the money I spend on advertising is wasted, the trouble is I don’t know which half.” Advertising was hard to track over 100 years ago when Mr. Wanamaker made this statement, but in today’s world, there’s no excuse for not knowing which of your marketing programs are working. Today we have computers, tracking phone numbers, great CRMs, trackable websites, and many fantastic lead providers that will all help you track your advertising investment.

Yes, I said advertising investment! Great marketing is not an expense; it’s an investment, an investment that should always return multiples of the amount of money invested. It has been said that, over many years, the stock market has returned an average of 7% annually. Based on that, if you have $10,000 invested in the stock market, your return on that “investment” is about $58.34 per month. If you invest that same $10,000 on marketing and generate four to ten times the amount invested, your return will be $30,000 to $90,000 per month.

Granted, the gross profit made on sales doesn’t all go directly into your pocket, but I promise you, you’ll have a lot more left than $58.34. Let’s say you invest $10,000 in a marketing program. With the leads generated you sell 20 vehicles at an average gross profit of $2,500 for a total of $50,000. If you pay out 30% of that money in commissions that’s $15,000. Let’s say that there are other expenses that add up to another 10% or $5,000. So, you made $50,000, invested $10,000 in the marketing program, paid out $15,000 in commissions, and paid out another $5,000 in other expenses. That leaves you with $20,000! I’m a business owner too and I know that much of the profit from incremental sales goes straight to the bottom line and into my pocket. That’s the great thing about owning a business.

Step 2: Know Your Numbers.

Now that you have a better understanding of marketing as an investment, you must start treating it like you would any other investment. You must know your numbers! What gets measured, gets managed! If a department head wants to spend money on a marketing campaign, give it to them, but make sure they know that you will want the numbers after the campaign. And the most important numbers are the amount invested and the return on that investment. In other words, what did we spend and how much gross profit was created from sales to the leads generated. The cost per lead and the cost per vehicle sold is not important. The only important factor is the multiple of money spent to gross profit generated.

That brings up another important point: You invest money to generate leads. How well are those leads being worked? Are your people following up on every lead until they “buy or die?” Watch for future articles on how to best track these important items.

You should also realize that selling more vehicles using Investment Marketing will cause logistical challenges. You will need to buy more vehicles, you may burn out some of your people, and you will need to decide what to do with all the extra money you’re making. Some of that money should be invested in training your people. That’s another investment that will pay big dividends! Your lead providers likely have some great training material that is there for the asking.

Start treating your marketing as an investment and enjoy the dividends! Good luck and good selling!

Denny Long is president of Credit Mail Experts and ranks among the industry’s leading experts in direct mail and subprime marketing. Email him at denny.long@bobit.com.

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Industry Summit 2017 (Sept. 11-14) is quickly approaching. American Financial & Automotive Services' John Vecchioni, the conference’s master of ceremonies, explains why it’s the premier event in the F&I industry. Don’t miss John when he takes to the stage on Sept. 14 for F&I Think Tank’s Shark Tank, a session featuring the who’s who of F&I trainers.

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ALEXANDRIA, Va. — August sales at America’s 9,600 international nameplate franchises fell 2.6% from a year ago and are down 1.4% on a year-to-date basis, with brands like Hyundai (down 25.5% from last August) and Nissan (down 14.8%) taking the biggest hits, according to the American International Automobile Dealers Association (AIADA).

International nameplate franchises accounted for 55.5% of all new-vehicle sales in August, down from 58.5%. According to the trade group, the declines were the result of Hurricane Harvey, which left a large swath of Texas underwater during the last week of August.

"Hurricane Harvey took a toll on August auto sales, but we expect this trend to be short lived," said AIADA President Cody Lusk. "As cleanup continues and consumers find themselves in the market for new vehicles, dealers are optimistic that the industry will close out the remaining months of 2017 on a high sales note."

Early estimates put the number of damaged cars between 500,000 and one million, with Cox Automotive Chief Economist Jonathan Smoke noting last week that the storm could have delayed between 20,000 and 40,000 new-vehicle sales in Texas alone. September, he added, is likely to register a boost in sales as a result.

“The process will last months, pushing higher sales in the region in Q4,” Smoke said last week in a statement issued to F&I and Showroom. “We are looking at impact to full-year SARR; initial estimates indicate a potential net improvement on full-year sales once replacement sales pick up in earnest.”

According to AutoData Corp., the seasonally adjusted annual rate (SAAR) for August was 16.14 million units, compared to 17.22 million units in August 2016. Unadjusted for business days, sales of all brands were down 1.9% from last August and 2.7% on a year-to-date basis. Industrywide, approximately 1.5 million vehicles were sold in August, up from about 1.4 million in July but down by 29,275 units from a year ago.

Despite the month's challenges, AIADA officials said several international brands finished the month on a high note, including Subaru (up 4.6% from last August), Toyota (up 8%), Volkswagen (up 9%), and Volvo (up 4.1%).

International auto sales in the United States totaled 822,952 vehicles in August, down from 828,772 in July but up from 816,332 vehicles in June. Asian brands occupied 46.3% of the August auto market, down from 49.6% in July and down from 46.8% in August 2016. Overall, Asian nameplate dealers sold 686,824 vehicles in August, a 2.9% drop from August 2016.

European brands sold 136,128 vehicles in August, up from 126,157 in July but down from 137,773 sold in August 2016. European brands held 9.2% of the U.S. auto market in August, up from 8.9% last month and 9.1% in August 2016. Overall, August auto sales for these brands were down 1.2% from last August.

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NEW YORK — Automotive merchandising solutions provider SpinCar announced that Eric Cotter, an accomplished product executive with a long history of success in the automotive industry, has joined the company as chief product officer. Cotter said he will be responsible for leading product development as well as ensuring that current products continue to lead the way in innovation.

“The automotive retail industry has seen a drastic evolution in price and market transparency over the past 15 years, but most shoppers still struggle to discover the key insights they need to complete a transaction online. The linchpin in this equation is helping dealerships effectively merchandize the appropriate vehicle features and condition, allowing shoppers to gain confidence they have chosen the right vehicle,” said Cotter. “I am confident SpinCar is primely positioned to own the lion’s share of this process across the shopping experience. I couldn’t be more excited to lead the company to a solution that finally delivers the consumer confidence required to unlock a true online transaction.”

Cotter recently co-founded CompetitorPro, a competitive intelligence tool for car dealers, along with Steve Greenfield, formerly of Cox Automotive. Prior to that, he served as vice president of product at TrueCar, where he was responsible for developing consumer and dealer products for TrueCar’s used car shopping and trade-in experiences. He has also served in leadership roles with Credit Union Direct Lending (CUDL) and Kelley Blue Book.

“It is my pleasure to welcome Eric to SpinCar. We’re building a world-class vehicle merchandising platform and are thrilled to have someone with Eric’s product experience as a driving force behind this initiative,” said Devin Daly, the company’s co-founder and CEO. “He has a proven track record of delivering superior products that produce business success and will be critical as we continue to develop our solution.”

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With this upgrade, personnel engaging customers will never need to disengage from them — if only momentarily — to capture and secure personal data, according to Traffic Control’s co-founder, Brendan Hurley.

“For Traffic Control users, this integration speeds up the sales process, secures sensitive customer data in the Cloud and then auto-populates Traffic Control so that information is always readily accessible for working the deal or following up,” Hurley said.

Acuant’s data capture and auto-fill technology was designed to provide for mobile photo-capture simplicity and speed, eliminating data-entry errors and creating a secure digital record that reduces the risk of information exposure to the public. With Traffic Control’s mobile app upgraded with this technology, there is no longer the liability risk associated with paper driver’s license photocopies or scans left in copiers or scanners, said Yossi Zekri, CEO of Acuant.

“Every second eliminated from processes that involve a customer’s decision and buying process aids in increasing sales conversion rates. Today’s customers not only value high tech and efficient processes but they demand them,” Zekri said. “Acuant also allows for a worry-free transaction; with driver’s license data securely stored, customers are free to focus on the test drive and evaluating options and not wondering who has access to their private information.”

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HOUSTON — Auto auctions there are currently assessing the impact of Hurricane Harvey and hope to resume full business activity this week.

ADESA Houston, which is located in the northeastern section of the city, was "not severely impacted by flooding" but closed its doors during the storm. Vehicle inventory is "dry and ready for sale," and the auction will reopen once roads are clear and employees can safely return to work, said KAR Auction Services COO Paul Lips.

With 13 nearby auctions in Texas, Oklahoma, and Louisiana, ADESA will be able to move needed inventory into Houston to meet demand, officials said.

"We have had conversations with some rental, fleet, and auto-finance customers who have talked about moving additional cars into the area to meet the anticipated increase in demand," Lips said. "Our ADESA auctions are well positioned to take on this additional inventory.

Manheim also closed its three Houston-area auctions, which include Manheim Houston, Manheim Texas Hobby, and Manheim South Houston. The auctions will remain closed this week while the company assesses damage, said Nick Boris, Manheim's vice president for the Central Region.

While the physical auctions were closed, Manheim held digital sales at its Houston and Texas Hobby locations, officials said.

"Instead of preparing for sales next week, we’re taking care of our people, assessing our clients' inventory and proactively communicating with dealers about the status of our operations and their assets," Boris said.

Manheim's Atlanta-based Human Resources team is providing resources and information to employees affected by the storm about the company's Cox Employee Relief Fund that offers financial assistance for unexpected needs after a natural disaster. Manheim is owned by Cox Automotive.

Independent auctions were also gearing up to restart sales. America's Auto Auction in southern Houston opened last Wednesday. Auction managers canceled the Aug. 31 Thursday sale, but plan to run vehicles tomorrow. There was no flooding at the facility, said General Manager Rob Frazier.

Houston Auto Auction could not be reached for comment.

Market watchers have projected that the storm destroyed up to 1 million vehicles.

The devastation should create strong demand for replacement vehicles, especially pickup trucks and work vans needed by contractors who will aid in the recovery efforts in the impacted areas, said Tim West, Black Book's vice president of North American auctions.

Auctions in the area could also see additional fleet vehicles, as companies may look to terminate their leases early and send vehicles to auctions during an expected surge in demand, West said.

"I think there's going to be a lot of pressure in certain segments with the pickups and work van segment," West said. "Fortunately, we're in the midst of a record year for lease terminations and low-mileage clean vehicles coming off leases. It’s a catastrophic event but the industry is in a pretty strong position with supply for the demand."

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The winners of the 2017 FIDMAs are:

Category No. 1: Best Product-Specific Digital Media

• Axiom: “Key Replacement”

Category No. 2: Best General Education Digital Media

• Justin Gasman, McCaddon Cadillac Buick GMC: “Car-Buying Advice”

Category No. 3: Most Unique and Artistic Content

• AutoGravity: “How It Works”

Category No. 4: Best Website Feature

• GWC Warranty: “Video Carousel”

Category No. 5: Best Mobile App

• AutoGravity: “How It Works”

Serving as judges for this year’s contest were:

• Gregory Arroyo, editorial director, F&I and Showroomand Auto Dealer Today
• Brian Crisorio, vice president of marketing, United Development Systems (UDS)
• David Gesualdo, publisher, F&I and Showroomand Auto Dealer Today
• Brian Reed, president and CEO, F&I Express
• Michael Tuno, president, ARMD Resource Group and World Class Dealer Services

“Congratulations to each of our winners, and thanks to everyone who entered,” said Tariq Kamal, associate publisher of F&I and Showroom and Auto Dealer Today. “The F&I Digital Media Awards were designed to honor innovation in the auto finance space, and these videos, website features and mobile apps prove that innovation is happening at the product provider and dealership levels.”

To watch the videos submitted by all 13 finalists, click on the “Finalists” tab at the contest’s website. Industry Summit will be held Sept. 11–14, 2017, at the Gaylord Texan Resort & Convention Center in Grapevine, Texas, near Dallas, and the awards ceremony will be held on Wednesday, Sept. 13.

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HOUSTON — Ford, Toyota, Nissan, and other automakers have made cash donations and other contributions to help the victims of Hurricane Harvey in south Texas and other Gulf Coast areas, the automakers have announced.

Ford will raise $3.5 million for affected communities, first responders, dealership employees and their families. Ford Fund will give $500,000 to the American Red Cross, Salvation Army, and other agencies.

Ford is also offering a Texas Is Family assistance package for customers who lost a vehicle, which includes the below-invoice price offered to Ford employees and payments deferred until next year. First responders are eligible to receive a special discount toward the purchase of any Ford or Lincoln vehicle. Read a full breakdown here.

Toyota will provide contributions, vehicles, in-kind, and volunteerism worth $3 million. The contributions, which will include used vehicles, will go to the St. Bernard Project and American Red Cross. Read a full breakdown of the donations here.

Nissan will donate $150,000 and $100,000 in matched employee contributions to the American Red Cross, as well as providing 20 Titan pickups to humanitarian relief organizations in the Gulf Coast region. Nissan Motor Acceptance Corp. and Infiniti Financial Services will also offer payment deferrals and extensions to those in a FEMA-designated disaster area.

The FCA Foundation will donate $200,000 to several organizations, including Americares, First Response Team of America, and Team Rubicon. Fiat Chrysler's empolyee volunteer program is also working with Disaster Relief at Work to collect cleaning supplies at the company's Auburn Hills headquarters. An employee initiative to gather toiletries, clothing and other supplies has begun.

Volkswagen's foundation will donate $150,000 to the American Red Cross for operations in Texas and other Gulf Coast states. Volkswagen will also match any employee donations.

Subaru is donating $100,000 to the American Red Cross in addition to its annual $100,000 donation to the organization. Subaru has also promised to donate vehicles to the Red Cross at a later date to help in recovery efforts. Employee donations will be matched $2 to every $1 given.

Volvo Car USA is making employee pricing available to residents in the area, as well as an additional $1,000 discount off any Volvo vehicle. A portion of each sale will be donated to Houston Texan J.J. Watt's YouCaring Houston Flood Relief Fund.

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HOUSTON — Group 1 Automotive Inc. announced it has completed a preliminary assessment of damages across its Texas dealerships in the aftermath of Hurricane Harvey. Despite damage to some facilities and inventory due to record-breaking flooding in the region, preliminary assessments indicate all facilities are intact and fully operational.

Group 1’s Houston stores reopened on Wednesday, Aug. 30; the company’s Beaumont stores reopened the following day. Total damages associated with the storm are estimated at approximately $15 million. This amount includes insurance deductibles for damaged inventory and facilities, disaster pay for employees, and financial support for team members whose homes flooded.

In a statement, the company’s directors emphasized that their top priority is supporting their nearly 3,000 employees in the greater Houston and Beaumont areas of Texas. Approximately 500 associates suffered significant property losses from flooding and storm damage, and the company is assisting these employees by providing disaster pay and further financial support from the Group 1 Foundation, according to Earl J. Hesterberg, Group 1’s president and CEO.

“Our top priority is supporting our employees in the areas affected by Hurricane Harvey. The size and scope of this disaster is almost beyond comprehension and the losses many of our employees and their family members have suffered is staggering. Our hearts go out to all of those affected by this devastating storm,” Hesterberg said. “Beyond helping our employees, we are also moving quickly to get our stores fully online to support the community’s needs for replacement vehicles.”

The Houston and Beaumont stores were reopened thanks to “extraordinary efforts” by employees, Hesterberg added, noting that more than 98% of the company’s 15,000 units in those stores were protected, allowing the company to begin serving customers who need replacement vehicles and service.

“The company’s third-quarter results will be impacted by both the non-recurring costs highlighted above, as well the impact of the business disruption for an entire week across the Houston region, which represents Group 1’s largest revenue-generating market,” Hesterberg noted.

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IRVINE, Calif. — Kelley Blue Book put August’s estimated average transaction price for light vehicles at $34,648. That’s up $243, or 0.7%, from August 2016 and up a slight 0.5% from July.

Despite the industry managing a near 1% increase, the firm noted, August revealed mixed average transaction prices across the major manufacturers.

“However, we should note that this is far lower than the 2% to 3% gains in the first half of the year, and prices moved downward in key segments such as full-size trucks and midsize cars,” said Kelley Blue Book analyst Tim Fleming. “With incentives still averaging more than 10% of transaction prices, Kelley Blue Book sees clear signs of pressure on new-car pricing in what is the first down year of sales since the recession.”

Fiat Chrysler’s average prices climbed more than 6% in August, helped by a strong sales mix of Ram trucks. The average transaction price for the Jeep brand also increased 6%, with the new Compass leading the way with an 8% year-over-year increase. 

Hyundai-Kia’s transaction prices were up nearly 2% in August, with Hyundai up 3%. Although the Elantra increased 3%, the average transaction price gains at Hyundai are largely due to a smaller sales mix of their smaller cars. Kia was down 1%.

Nissan North America registered a near 2% gain in its average transaction price, with Infiniti’s average price down 1% and Nissan up 2%. The Rogue, Nissan’s best seller, increased 2%. It’s best performer was the Armada, which registered a 13% increase in its average transaction price amid big sales increases.

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This year marked the 10th annual Fast 50 event and the first entry for Alpha Warranty Services.

“In a state that is growing faster than any other, the companies in this room are the fastest of them all,” said Donnie Welch, publisher of Utah Business magazine. “Each of you are expanding and contributing to the vibrancy of our economy.”

To read the full list of honorees, click here.

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SANTA MONICA, Calif. — After months of speculation, former TrueCar CEO Scott Painter unveiled his latest venture: Fair, a new mobile app that allows customers to shop, get approved for financing, and pay for a car right on the phone. The app is now available in the Apple App Store.

Fair is a collaboration between Painter and auto finance legend Georg Bauer, who built the financial services business for Tesla Europe and is credited with creating the first leasing program back in the ‘80s. The two executives today launched Fair in the greater Los Angeles area. The app will be rolling out to the rest of California by the end of the year before expanding into other select markets in 2018.

Fair’s technology allows a customer to get a pre-owned car with just a driver’s license and a bank account, according to the startup. The apps fully digital transaction process eliminates the need for customers to physically sign numerous documents when they get a car, which can save hours at the dealership.

Fair was also designed to free consumers from the long-term commitment of a loan or lease while providing benefits of car ownership that are missing from existing ride- and car-sharing options, the company said. Fair customers can drive their cars for as long as they wish, and return them with just five days’ notice. A limited warranty, routine maintenance, and roadside assistance come standard with every Fair car.

“Even with these added benefits, Fair guarantees that a customer can’t get a better payment with a comparable loan or lease,” the company said, adding that it plans to offer insurance options in the future.

Fair’s digital sales process also provides multiple benefits for participating dealers, the company noted. It offers access to new, in-market customers on top of a dealer’s existing client base. Unlike lead-generation websites or apps, Fair charges no fees to the dealer for the transactions it generates. By eliminating the time minimum customers must keep their cars, Fair also creates the potential for increased transactions for dealers.

Fair is able to offer these benefits because of the app’s ability to use available pricing and depreciation data to determine which cars make economic sense in the model. Combined with digital consumer information and mobile technology, Fair is able to leverage this data to accurately predict the financial implications of pairing a given consumer with a specific car.

Painter is a serial entrepreneur and investor who has started dozens of disruptive companies to improve the car buying experience, including TrueCar and CarsDirect.com. Scott started this new venture to bring fairness to the process of getting a car, the company said.

Bauer has more than 30 years of experience shaping financial services for leading car companies on a global scale and is widely recognized as an innovative leader in auto finance. Aside from his work at Tesla, he served as CEO of Global Financial Services for BMW Group as well as CEO of Mercedes-Benz Credit in the U.S.

Painter and Bauer founded Fair in 2016 to put all aspects of the car-buying process in an end-to end digital consumer experience. With a few quick taps in the Fair app, customers can get instantly prequalified and select from a range of cars tailored to their budget. They can pay for the car they want directly in the app and drive away — or even get it delivered to their home.

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HOUSTON — While market watchers agree that Hurricane Harvey’s impact stretches beyond the Houston-area automotive business, estimates on exactly how many vehicles will need to be replaced vary between half a million and million vehicles.

Earlier this week, Cox Automotive Chief Economist Jonathan Smoke estimated that the storm, which made landfall along the southeast coastline of Texas on Aug. 25, took out a half a million vehicles. On Thursday, Black Book analysts said that number could be as a high as a million.

“Black Book expects the impact of the hurricane to have far-reaching effects, not only on Houston-Area automotive businesses, such as dealerships and wholesale auctions, but also throughout the South and Midwest,” the company said on Thursday, noting that early reports put the number of dealerships impacted in the Greater Houston area at more than 500 stores. “Somewhere between 500,000 and a million vehicles will have to be replaced in the area. We believe there is enough new inventory in the U.S. to supply consumers’ needs and the timing may actually be good with new-car stores looking to deplete the 2017 models at model-year changeover.”

Forecasts remain fluid, however, with Harvey coming ashore near the Texas-Louisiana border on Wednesday after swinging out into the Gulf of Mexico. AccuWeather called the storm “the costliest and worst natural disaster in American history,” and estimated its impact on the nation’s gross domestic product to be $190 billion. The GDP currently stands at $19 trillion.

With Texas being the auto industry’s second largest market behind California — the state accounting for 14% of U.S. truck sales — Black Book said the market should be strong for both new and used vehicles, especially pickup trucks and SUVs, in the coming month as residents in the affected areas begin replacing damaged vehicles.

The new-vehicle seasonally adjusted annual rate (SAAR), which has been on the decline this year, should also see a lift.

“Online buying will be a significant ingredient in the dealers’ ability to source vehicles since they don’t have a local option,” Black Book said. “The inventory will come from many other parts of the U.S., with cars and trucks being transported to the affected regions.”

Cox Automotive revised its August forecast of 16.6 million SAAR to 16.3 million, noting that between 20,000 and 40,000 new-vehicle sales could be delayed in Texas based on Harvey’s impact so far. September is likely to register a mild boost in sales as a result.

“The process will likely last months, pushing higher sales in the region in Q4,” read a statement from Cox Automotive’s Smoke. “We are looking at impact to full-year SAAR; initial estimates indicate a potential net improvement on full-year sales once replacement sales pick up in earnest.”

Since the storm came ashore, Dealer.com websites in the affected markets have experienced an almost 40% drop in shopping activity compared to the previous weekends in August. Dealer.com, according to the Cox Automotive, powers more than 60% of dealer websites.

Activity on Dealertrack’s credit application platform also dropped roughly 80% in the affected areas. Since most cars are financed, the firm believes that points to an 80% drop in business since the storm came ashore last Friday.

Houston ranks eighth in registered vehicles with 5.6 million units in operation — the market accounting for 2.3% of U.S. total sales, according to Cox Automotive estimates.

When Hurricane Sandy struck the Northeastern United States in October 2012, New York’s designated market area (DMA) experienced a 49% increase in new-vehicle sales the following month. The sales spike lasted two months, according to Cox Automotive. The uptick was less dramatic for used vehicles, the firm noted. This was due to tight supply of recent new vehicles following the Great Recession, which limited the potential for used-vehicles to fill the need.

Pricing trends should follow suit; Cox noting that wholesale prices strengthened in the three months following Sandy.

The Houston designated market area, the seventh largest by population in the United States, claims a vehicle ownership rate of 94.4%. That’s higher than New York’s 71% ownership rate when Sandy struck in 2012 and the current U.S. rate of 91%.

“Given what we know so far and recognizing that the effects of the flooding are still ongoing, Houston looks bad. Considering Katrina damage and Sandy damage, and comparing vehicles in operation in Houston, and taking into account vehicle dependency and what the damage in Houston looks like from the reporting, we estimated the range to between 300,000 and 500,000,” Smoke said. “If Houston indeed lost 300,000 vehicles, it’s sobering to note that the entire Houston DMA has seen 325,000 new-vehicle sales in the last 12 months.”

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SAN FRANCISCO — Entry luxury sedans have experienced a recent surge in shopper interest, at least across Jumpstart Automotive Media’s portfolio of automotive websites.

The media, insights and marketing solutions provider reported that the share of interest for entry luxury sedans increased 9% from a year ago. However, with similar segments like midsize and midsize luxury sedans also drawing interest, loyalty for entry luxury sedans fell has fallen 9% from a year ago.  

“As interest grows in this segment, there’s also competition from other cross-shopped segments that is diminishing loyalty for entry luxury sedan shoppers,” said Aline Hilsabeck, senior director, strategic insights & analytics at Jumpstart, adding that loyalty for entry luxury sedans fell four 4% from the first to second quarters.

The firm pointed to the bevy of new vehicles and model options in those segments as the reason for the drop in loyalty. New model reveals, such as the Honda Accord, are generating renewed excitement for the midsize sedan category, which was once arguably the most popular segment for shoppers before SUVs and Crossovers lured more of the American shopper interest.

Midsize sedans also have the highest number of hybrid models, which are also drawing consumer interest. According to the firm, midsize sedans registered shopper growth of 37% on a year-over-year basis across its automotive websites.

“All the varying vehicle sizes, as well as alternate fuel options, are giving today’s shoppers a tremendous amount of options to choose from,” Hilsabeck said. “This certainly explains why there is a lot of interest for entry luxury, but why it’s also seeing some of the biggest increases in cross-shopping today.”

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The Inc. 5000 outlines the fastest-growing privately held companies from across the country that demonstrate the highest revenue growth over a three-year period. Previous winners have included companies the likes of FitBit, Zappos and Pandora.

The award joins a growing number of accolades Client Command has amassed this year. The company has experienced tremendous success, with revenue growth of 132% over the last three years, a staff that has more than quadrupled in size in the past two years, and the need to increase their office space from 4,800 sq. ft. to 13,200 sq. ft. earlier this year.

“We are so honored to be included in this year’s Inc. 5000 list of fastest-growing companies,” said Charles Darwin, COO of Client Command. “But even more than the accolades, we’re excited to bring the automotive industry top of the line marketing solutions. We share this award with each of the customers who have brought us to this point.”

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“Adding the Kelley Blue Book Instant Cash Offer to our ShowroomXpress experience will enable dealers to change the way they retail cars with a few lines of code,” said Bruce Thompson, CEO and founder of Pearl Technology Holdings. “While we believe our dynamic widget is the most powerful automotive express retail initiative in the industry, the missing element was a credible and instant offer for a consumer’s vehicle. Instant Cash Offer provides that with the added benefit of the trusted Kelley Blue Book brand.”

ShowroomXpress was designed to display six real payments from any lender to consumers in less than three seconds. Both purchase and lease offers are displayed, allowing the consumer to configure their transaction and pick the ideal payment they want, creating a system that functions as a real-time mobile desking tool, according to the provider. 

“One of the most important elements of any vehicle transaction is the value of the trade-in,” said Damon Bennett, senior director of syndication for Kelley Blue Book. “Monthly payment, taxes and equity are factors directly impacted by the value of a customer’s trade-in vehicle. The challenge with any customer shopping for a real payment online is determining a real amount for the current vehicle that the dealer will honor. … Pearl is on the cutting edge with its ShowroomXpress system, and we are very pleased to be working with the Pearl team on this initiative.”

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SAN CLEMENTE, Calif. — Jonathan Ord, DealerSocket’s CEO for the last 17 years, is stepping into a new role within the company he co-founded in 2001 with CPO Brad Perry. Replacing him as CEO is Sejal Pietrzak, who also holds the title of president.

According to the company, Ord is not retiring. Instead, he selected Pietrzak to replace him as the firm’s chief executive so he could pursue other entrepreneurial interests. He will remain a strategic investor in the company and will be an active member of the company’s board of directors.

“I am particularly excited to support Sejal and DealerSocket’s leadership as a continuing investor and board member,” said Ord. “My interactions with Sejal have made it abundantly clear to me that she is the right CEO moving forward, as DealerSocket continues to scale and innovate.”

Pietrzak spent the last 12 years in various leadership roles at ACTIVE network, which makes software that helps web users find and register for events online. She most recently served as the software firm's chief administrative officer. Pietrzak also held leadership roles at Wells Fargo & Co., the U.S. Chamber of Commerce, and Boston Consulting Group.

“I begin my tenure with a company that is in a position of strength,” Pietrzak said. “By staying true to DealerSocket’s high standards and commitment to customer success, I’m confident we will continue to deliver significant value to our customers and win new opportunities in the market.”

In May 2014, DealerSocket entered into a strategic investment partnership with equity firm Vista Equity Partners, which also owns ACTIVE Networks.

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NAPA, Calif. — AUL Corp. was named as one of the “Best Places to Work in the North Bay” for the fourth year in a row by the North Bay Business Journal. The selections were based upon more than 8,200 anonymous employee surveys and a review by the editorial staff of employee comments.

“We are honored that our employees have endorsed AUL and allowed us to be the recipient of this prestigious award for the fourth year in a row. We work hard to put our employees first, so we find this award particularly gratifying,” said Jimmy Atkinson, president and CEO of AUL Corp. “From its inception, AUL was about two things: providing a great place to work and being the very best at what we do in the industry. We graciously accept this award as recognition that we are on the right path to achieving those goals.”

The “Best Places to Work” competition has been held by the North Bay Business Journal for 12 years, recognizing companies that excel in quality, professionalism, respect, fairness, pride and camaraderie, as reported by employees. The publication noted that the average employee satisfaction score was higher this year than last year, and that the winning companies represent nearly 17,000 employees.

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“Soft pull technology is an enormously powerful tool for generating leads and improving the sales process. It can be utilized in so many different platforms: in your showroom, on your website, on your social media platforms, and in email marketing campaigns,” Palmer said. “It’s a foolproof and low-cost way to supercharge lead generation and increase profits.”

Palmer’s session, “Soft Pull Technology: Best Practices for Both Digital Marketing and Showroom Traffic,” will begin at 2:15 p.m. on Wednesday, Sept. 13, as part of the Special Finance portion of the Industry Summit agenda. He will discuss how the technology works, how to use it effectively and compliantly, and how it can power a dealership’s lead-generation efforts and improve the sales process.

“We are counting on John to demystify the technology and tell us how it works in the real world,” said David Gesualdo, show chair and publisher of F&I and Showroom and Auto Dealer Today. “In an aggressive subprime segment, advanced technology represents a competitive advantage.”

Registration for Industry Summit 2017 is open at the event’s website. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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DALLAS — Organizers of the sixth annual P&A Leadership Summit have announced the formation of a special session featuring attorneys Matthew Bartle and David Marcus. The pair will address recent General Motors directives requiring dealers to disclose to consumers the sale of non-GM parts and service contracts.

“There can be little doubt GM is trying to bully dealers into promoting a factory-branded VSC to the exclusion of aftermarket VSCs,” Bartle said. “The big question is whether and to what extent GM can be stopped.”

Bartle and Marcus are partners in the Kansas City, Mo.-based law firm of Bartle & Marcus LLC. Their session, “The GM Mandate: Legal and Practical Responses,” will begin at 4:20 p.m. on Wednesday, Sept. 13. They are expected to discuss the contents and legal implications of two bulletins and a letter attributed to Alan Batey, GM’s executive vice president and president for North America. The factory appeared to threaten dealers who fail to disclose the sale of non-GM parts and service contracts with a $500-per-vehicle fine, loss of access to incentive programs, and even termination of the dealer’s franchise agreement.

“Thanks to Matthew and David’s availability and fortuitous timing, we are able to offer an informed response to this surprising development,” said David Gesualdo, show chair and publisher of P&A magazine. “We anticipate a full room and a highly engaged audience.”

Registration for Industry Summit 2017 is open at the event’s website. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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SAN FRANCISCO — Among the findings in “The Long Run: Why Constant Brand Presence Matters” — a new report from Jumpstart Automotive Media that analyzed more than 4,000 dealership digital marketing campaigns — is that, on average, longer campaigns generate higher click-through rates, resulting in a lower cost per lead.

Jumpstart’s analysts divided the campaigns into durations of one month, two months, three months, and four months or more, then calculated the average click-through rate (CTR), cost per visitor and cost per visit. The longest-lasting campaigns delivered an average CTR of 0.08% compared to 0.06% for campaigns in the one-month group. The four-month group also enjoyed the lowest cost per visitor ($7.55) and cost per visit ($3.71), a significant improvement over the one-month group’s per-visitor ($30.58) and per-visit ($17.34) costs.

“While it can be tempting to try and drive immediate ROI through short-flighted campaigns, data reveals that longer campaigns see higher click-through rates,” the report states, in part. “This translates to lower costs per visits and visitor.”

Additional insights from the Jumpstart analysis include:

• A majority of auto shoppers begin researching with three brands, two body styles, and three models in mind.
• Ninety-three percent take approximately four months or less — start to finish — to research and purchase their next vehicle, and 68% are done in just one month.
• Eighty-four percent of shoppers say that online research impacted their choice of vehicle.

To read the full text of the report, click here.

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SUGAR LAND, Texas — Wyatt Wainwright, who lives about 20 miles southwest of Houston, said he found out in the middle of the night about orders to evacuate his home.

“We are struggling with the evacuation right now,” said Wainwright, president of the Houston Automobile Dealers Association, which represents 175 dealerships in the metro Houston area located in the wake of the Hurricane Harvey. “There are large scale mandatory and voluntary evacuations going on right now. We don’t know where we can go to escape. I don’t know how I could drive three miles right now without getting blocked.”

The NADA Foundation has mobilized its emergency relief fund to assist dealership employees who have been impacted by personal property damage caused by the hurricane and flooding.

“There’s still 20 to 30 inches of rain that still has to pass through. We are not even near to the peak flooding yet,” Wainwright added. “A big issue we haven’t faced yet are rivers and streams that have yet to overflow. There is so much more of this to go which is the problem.” 

Dealership employees affected by the flooding can apply for financial assistance. (Lost wages or commissions are not eligible for reimbursement from the fund.)

The NADA Foundation is also calling on dealers and dealer association groups to donate online to its Emergency Relief Fund.

Checks can be made payable to Emergency Relief Fund, c/o NADA Foundation, 8400 Westpark Drive, MS 7, Tysons, VA 22102. For more information, call 703.821.7102.

Source: NADA

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DULUTH, Ga. — Craig Monaghan will step down as Asbury Automotive Group’s president and CEO on Jan. 1, 2018, the company announced last week. He will stay on with the group as vice chairman of the board under the company’s 2018 annual meeting of stockholders, and will serve as a non-executive special advisor to the company until he retires on April 30, 2019.

Succeeding in Monaghan is David W. Hult, who has served as Asbury’s executive vice president and COO since November 2014. The more than 30-year automotive retail veteran will also join the company’s board of directors.

"We are thankful to Craig for his dedication to Asbury since originally joining the company in 2008," said Thomas C. DeLoach Jr., chairman of the Asbury’s board of directors. "Craig is responsible for significant growth and value creation at the company, and we appreciate his willingness to continue to serve Asbury in a transitional role following his retirement as president and CEO. David has already contributed greatly to the growth of the company, and the board is unanimous in its belief that David is the ideal next chief executive for Asbury."

Hult has held senior management positions with large public and private automotive retail organizations, including RLJ McLarty Landers Automotive Holdings, Group 1 Automotive and Penske Automotive Group. He now takes over one the largest automotive retail and service companies in the United States. The Fortune 500 company operates 80 dealerships, consisting of 96 franchises, representing 29 domestic and foreign brands.

"I am excited to lead the company and our 8,000 associates and look forward to driving further growth for the company,” Hult said. “I want to thank the board of directors of the company for providing me this opportunity. 

“Craig has served as a wonderful mentor since I joined the company,” he added. “I look forward to his continued advice and counsel as we work to ensure a smooth and successful transition."

Monaghan added: "I am delighted that the board has promoted David to president and CEO of the company.  I look forward to continuing to work with him to execute Asbury's business strategy and deliver long-term value to stockholders and other stakeholders."

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DALLAS — After more than a decade with Santander Consumer USA, Jason Kulas has stepped down from his role as the finance source’s president and CEO to pursue other opportunities, according to a company press release.

Kulas was named CEO in July 2015. He then added the title of president after the departure of Jason Grubb in February 2016. Succeeding Kulas as president and CEO is Scott Powell, the finance source’s board of directors announced today. He will maintain his title of CEO of Santander Holdings USA Inc. (SHUSA) and as Santander Group’s United States country head.

"Scott's depth of experience makes him the right person to continue SC's evolution and to sustain its long-term performance," said the company’s Chairman Bill Rainer. "Scott's role as both SHUSA CEO and SC CEO will position SC to grow, to strengthen its commitment to customers and to progress toward operating at major financial institution standards. As we welcome Scott to his new role, the SC Board also thanks Jason Kulas for his service to SC, and wishes him well."

Rainer noted that Powell has led significant changes across Santander's U.S. business, including improving the financial performance of Santander Bank, leading SHUSA's efforts to have its capital plan approved after passing the Federal Reserve's capital stress test, and overseeing the work that led to the termination last week of SHUSA's 2014 Written Agreement with the Federal Reserve.

Powell was appointed CEO of SHUSA in 2015 and has served on SC's board of directors since 2016. He brings extensive auto and risk management experience from more than three decades working in retail banking, risk management and consumer and auto lending. Prior to joining Santander, Powell held a variety of senior roles at JPMorgan Chase & Co., including head of banking and consumer lending operations, CEO of consumer banking and retail investments, head of retail lending, head of Chase Auto Finance, and chief risk officer of consumer lending. He also spent 14 years at Citigroup and its predecessors in a variety of senior risk management roles.

“I look forward to leading the Santander Consumer team,” said Powell. “My focus will be on strengthening the company's financial and operational performance, delivering returns for all shareholders, improving risk management and putting our customers at the center of everything we do. That includes a focus on continuing to deliver value for Chrysler, a key part of Santander Consumer's business."

The finance source also announced that appoint of SHUSA COO Mahesh Aditya to Santander Consumer’s board of directors. Aditya has extensive experience in consumer lending and risk management. Prior to joining Santander, he was chief risk officer of Visa Inc. He also spent 17 years at Citibank, and held senior operations and risk positions with JPMorgan Chase and Capital One. 

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IRVINE, Calif. — Dealership buy/sell activity during the first half of 2017 reveals a notable willingness by auto dealers to take on minority and majority equity partners, according to analysis from the Blue Sky Report from Kerrigan Advisors. The report also shows that buy/sell activity through the first half of 2017 remained high. Kerrigan Advisors expects activity in the second half of the year to surpass the first half, resulting in the fourth year of more than 200 buy/sells.

“2017 is on pace to be a record year for equity partner investment structures,” said Erin Kerrigan, founder and managing director of Kerrigan Advisors. “We think this shift in buy/sell activity is mostly due to the increasing size and complexity of the dealership groups coming to market. In addition, dealers are attracted to the opportunity to remain involved in the business post-transaction, while also taking some chips off the table.”

Key data and analysis from the first half of 2017 includes:

• 101 dealership buy/sell transactions completed in the first half of 2017, compared to 106 transactions during the first half of 2016.
• Multi-dealership transactions represented 25% of completed transactions in the first half of 2017.  Those transactions saw a 23% rise in the number of franchises represented per transaction.
• Public retailers increased spending 61% in the first half of 2017, compared to the first half of 2016.
• Domestics’ share of the buy/sell market remained at 44%, while nonluxury imports saw their share of the buy/sell market increase to 39%.
• Toyota, Honda and Subaru dealerships enjoy high buyer interest, with consistently high profitability
• Amongst the publics, Lithia and Penske have acquired 21 US dealerships
• The private sector acquired 93% of the franchises sold
• Dealership real estate prices and rents rose slightly as compared to 2016

“We see resilience in the buy/sell market,” continued Kerrigan. “Even though SAAR is down, it remains within a historically high range. Auto sales in the first half of 2017 were actually 5% higher than the trailing five-year average, and dealerships remain highly profitable.” 

The report identifies three key trends moving forward into Q3 and Q4 of 2017:

• Dealers take on majority and minority capital partners
• Reinsurance profits increasingly factor into buy/sells
• Retiring key operators prompt some dealers to sell 

“One of the more interesting trends we see moving into Q3 and Q4 of 2017 is retirement-driven transactions, but not necessarily in the way you think,” said Ryan Kerrigan, managing director of Kerrigan Advisors. “When a key lieutenant retires, that’s prompting some older dealers to sell, versus finding a replacement. As a result, the retirement of key management, in combination with the aging of the dealer body, is increasingly prompting older dealers to sell.”   

To download the full report, click here. 

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The auto industry is just beginning to adjust to a post-peak SAAR reality. In this environment, some dealers may be tempted to put their faith in overall economic confidence and key projections pointing toward stronger auto sales beyond 2017. Regardless of whether consumer demand rebounds, dealers need to think beyond new car sales and growth and consider the service department’s potential to drive revenue and growth.

Untapped opportunity in the service department is abundant. With fewer than one in three service visits taking place at dealerships in the U.S., according to J.D. Power, dealers have a compelling opportunity to engage customers beyond the initial sale. Here are three ways to do exactly that:

1. Educate the Customer.

It is the dealer’s responsibility to educate and engage customers in all facets of the dealership, including service. According to the Cox Automotive 2017 Car Buyer Journey, less than half of new-car buyers and only one-fourth of used-car buyers are aware of the service capabilities available at the dealership at the time of purchase or lease.

Introducing customers to the service department not only results in a more positive experience, but also makes customers more likely to return for their service needs as well as when they are ready to purchase their next vehicle.

2. Invest in the Right Technology.

Customers today are looking for technology enhanced experiences that provide value, convenience, and trust. Investing in the right technology can help you deliver on all three throughout the customer journey.

Through the proper utilization of an integrated CRM, you can start connecting with customers before it’s time for service. The CRM should be used to book the first service appointment at the time of vehicle purchase. This approach creates a connected customer experience that will help grow customer loyalty and as a result drive fixed ops revenue by tying the experience together from the start.

3. Schedule Appointments Online.

Another vital service feature dealers should invest in to boost revenue is online scheduling capabilities. New Xtime research shows that 23% of online customers schedule their visits outside of the business hours of a dealership. If you don’t have online scheduling capabilities, these customers are likely lost to a competitor who does. By meeting customers where they are at the time they wish on their device of choice, you can deliver the flexibility and convenience that customers desire and that your dealership will benefit from.

For dealers implementing online scheduling, education is once again critical to getting your customers to utilize it. A Cox Automotive report found that while 76% of customers who scheduled service appointments online would be willing to do so again, 45% of customers are not taking advantage of online scheduling because they did not know it was an option. By simply enhancing communication efforts, you can set the stage for service department growth.

The bottom line for dealers in this post-peak SAAR environment comes down to creating a seamless customer experience that transcends the point of purchase. Re-engaging customers beyond the initial sale through superior communication and innovative technology will allow for a more simplified, convenient, and connected experience, ultimately driving retention and revenue on both sides of the dealership. In a challenging sales environment, now is the time for dealers capitalize on the white space in the service department.

Jim Roche is senior vice president of marketing and managed services for Xtime (div. Cox Automotive). Email him at jim.roche@bobit.com.

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In the last few years, auto sales have been going up steadily. Almost 17.5 million vehicles were sold last year. The total sales for 2016 add up to a whopping $995.6 billion. Growth may have slowed, but the outlook for the industry is still positive. It’s no wonder many entrepreneurs are exploring options to open a dealership or expand an existing network of rooftops across state borders.

If you’re considering these opportunities, it’s worth analyzing the market to determine the most appropriate location for your new dealership. NADA’s annual industry report is a great resource to help you make an informed choice. Let’s take a closer look at five states that are among the nation’s best, according to NADA Data.

1. Oklahoma

Oklahoma remains one of the top states for running a successful car dealership. In 2016, vehicle dealers’ sales averaged $172,677, which is the highest number nationwide.

In terms of startup and operation expenses, the state offers some of the best conditions in the U.S. as well. To get licensed, Oklahoma dealers have to pay a $200 licensing fee per location. They need to get a $25,000 surety bond for a used or wholesale dealer license, which is a rather low amount.

The average weekly earnings of dealership employees in 2016 were $1,012, which is below the national average of $1,122. The average payroll of a new car dealership was $2.96 million, which is also below the national average of $3.88 million.

These stats make Oklahoma a prime location for your new dealership. Just make sure you remind your customers that it’s illegal to read comic books while driving in the state.

2. Florida

In 2016, Florida auto dealers made sales for $90,053 on average. This is one of the highest sales levels in the country, making the state an attractive location for your new dealership.

The startup costs for dealerships in the state are rather low too. You have to cover a $300 licensing fee. You will need to obtain a $25,000 surety bond for all types of licenses, which is one of the lowest bond amounts in the country.

Dealership employees got paid an average of $1,155 per week in 2016, which is a bit above the national average. Still, due to its considerable size and good economic situation, Florida is a top choice for starting a car dealership this year.

3. Arizona 

The average sales made by a dealership in Arizona in 2016 amounted to $90,666. The startup costs in Arizona are slightly higher than in other places, but are still manageable.

The licensing fee is $100, and you also need to pay $50 per branch, $15 filing fee, and $22 criminal records check fee.

The surety bond requirement for Arizona car dealers is to post a $100,000 bond for selling new and used vehicles. The amount is significantly lower for brokers, wholesale auto auction dealer, and wholesale motor vehicle dealers, who need only post $25,000.

Dealership employees in Arizona earned an average of $1,138 per week, which is close to the national average, and they live in one of the few states that doesn’t get snow.

4. Nevada

Nevada dealerships on average made sales of $86,152 in 2016. The startup costs in Nevada are similar to those in Arizona.

The application fee for newly established dealerships is $126. Dealers have to post a $100,000 bond for most license types. The bond requirement is only $10,000 for dealers of utility or boat trailers below 3,500 weight, and $50,000 for those who sell utility or boat trailers above 3,500 pounds.

Employees in Nevada car dealerships made an average of $1,267 per week. The average annual payroll is thus rather high: $6.05 million per dealership. Even though the payroll costs may be higher in Nevada, the business opportunities are worth the try.

5. California

In 2016, a car dealership in California made on average $89,865, which is among the country’ top yearly sales. Launching a vehicle sales business in the state is not costly either.

The annual licensing fee is $175. Plates cost $57 each. The auto dealer bond requirement is $50,000.

Last year, dealership employees in California earned an average of $1,254 weekly, which is above the national average. The average annual payroll was $5.78 million per dealership, which is also a rather high figure for the country.

Despite the higher employment costs, California remains one of the best states to run a dealership. It’s also one of the most progressive states in terms of electric vehicles and self-driving cars, so the opportunities for expanding your business with the rise of innovative technologies are abundant.

Which are the best states to open a car dealership in 2017 in your opinion? We’d love to know your ideas, so please share them in the comments below. And remember, whichever state you choose, you still need to undergo a licensing and bonding procedure to ensure your legal compliance.

Vic Lance is the founder and president of Lance Surety Bond Associates and an expert in helping auto dealers get licensed and bonded. Email him at vic.lance@bobit.com.

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Rasmussen, previously a partner at Arent Fox LLP, is highly regarded for the breadth and depth of his industry knowledge and experience in representing major players in car, truck, bus, and motorcycle sales, finance, and technology. 

“Bert’s addition represents a milestone in the expansion of the firm’s practice, which now includes 13 lawyers in five offices,” said Christian Scali, principal of the Scali Law Firm and F&I and Showroom contributor. “He shares our vision of the future — to develop an automotive law practice that can attend to and satisfy the full spectrum of client needs.”

At the Scali Law Firm, Rasmussen reunites with his former colleagues from Manning, Leaver, Bruder & Berberich, Christian Scali and Robert Daniels, as well as with Melanie Joo from Arent Fox. In representing the California New Car Dealers Association (CNCDA) as a client, Rasmussen also previously worked with Monica Baumann during her tenure as CNCDA’s director of legal and regulatory affairs.

“Rejoining Chris, Bob, Melanie and Monica was clearly a great opportunity,” said Rasmussen. “Collectively, our attorneys possess the knowledge and experience to provide our clients with unparalleled breadth and depth of legal representation.”

Scali added: “We are absolutely delighted that Bert is joining us. He was a wonderful colleague when we worked together previously, and it will be terrific to work with him again.”

Rasmussen has delivered critical litigation wins for clients on matters ranging from franchise disputes, such as franchise terminations, dealership sale disputes, and breach of contract matters, to name a few. At the same time, Rasmussen regularly counsels and represents clients on buy-sell, real estate, franchise, and regulatory matters.

Additionally, Rasmussen is certified as a franchise and distribution law specialist by the State Bar of California. He has received the AV Peer-Review Rating by Martindale-Hubbell. A prolific author on issues of importance to the dealer community, his books, which have been published by the National Automobile Dealer Association (NADA) and the California New Car Dealers Association, include “A Dealer Guide to the FTC Red Flags and Address Discrepancy Rule.” He also has been published in many dealer and professional publications.

Rasmussen obtained his bachelor’s degree from University of California, Los Angeles, and graduated cum laude from Loyola Law School in 1982. Prior to entering private practice, he served as associate general counsel to a publicly traded international pharmaceutical company.

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“Consumers today are accustomed to an always-on environment, and dealerships need to adapt to meet those demands if they hope to deliver superior customer service,” Roche said. “Online scheduling is a highly effective way to meet customers on their terms.”

Roche also pointed to a Cox Automotive report which found that, while 76% of customers who scheduled service appointments online would be willing to do so again, 45% of customers who did not take advantage of online scheduling did not know it was an option.

For dealers seeking to combat sluggish sales by expanding their fixed operations, these findings underscore the growing importance of online scheduling in delivering a connected ownership experience, Roche added.

“Fixed operations remains a huge growth potential for dealers — and ever more important in light of slowing sales momentum. When service is seen as a seamless extension of the dealership experience, it creates an opportunity to develop repeat customers in the service bay, and texting becomes a way of keeping them engaged, loyal, and driving revenue.”

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DALLAS — Lincoln newest Lincoln Experience Center, which opened there on Aug. 24, is part of the brand’s increased focus on a suite of enhanced client experiences called The Lincoln Way, which includes services like national pickup and delivery and pilot programs such as At-Home Test Drive and Lincoln Chauffeur.

Located at the site of The Star in Frisco, corporate headquarters and practice facility for the National Football League’s Dallas Cowboys, offers consumers the opportunity to learn about the brand in a comfortable, luxurious environment. It also serves to strengthen the company’s connection to the Dallas-Fort Worth area — the No. 2 fastest growing luxury market in the nation, officials said.

“We’re continuing to personalize the experiences of our clients,” said Lincoln President Kumar Galhotra. “Our exceptional vehicles are now matched with world-class service.”

The luxury brand opened its first Lincoln Experience Center in July 2016 at Fashion Island in Newport Beach, Calif. Since then, more than 82,000 guests have visited the location.

Citing industry statistics, company officials said California is the fastest growing luxury market.

The Lincoln Experience Center at The Star offers a plush, luxurious space for potential clients to learn about the brand at their own pace. Guests can relax in the connectivity lounge, discover the design inspiration behind Lincoln cars and SUVs, and customize their perfect vehicle. The latest products, including the all-new 2018 Navigator, are also on display.

Should visitors be interested in a test drive, a host at the Lincoln Experience Center will arrange a personalized test drive experience at their convenience. If guests are interested in purchasing a Lincoln, the host will make a personal introduction to the dealer most convenient for them.

According to officials, “The Lincoln Way” builds off the company’s success in China, where the idea originated. Lincoln is the best-selling luxury brand there with 32,558 vehicles sold in 2016, a near threefold increase over 2015.

In 2016, Lincoln launched nationwide pickup and delivery service, making the brand the only luxury automaker to provide valet service as standard across all 2017 nameplates. Pickup and delivery is on track to complete more than 50,000 rides by the end of 2017, according to officials.

Currently, Lincoln is testing an at-home test drive program in Houston and Dallas. Prospective clients can schedule a test drive online and have the vehicle brought to their home.

The manufacturer is also piloting a chauffeur service in San Diego and Miami. The program provides clients with a carefully screened driver when needed — allowing them to enjoy being a passenger from the safety and comfort of their own vehicle. The chauffeur can assist with other errands while clients attend to their engagements.

The Lincoln Way supports the success of Lincoln Black Label, which provides personalized shopping with dedicated personnel in the showroom, online, or remotely in locations convenient for customers. Owners enjoy privileges ranging from extended premium service and maintenance coverage to anytime car washes, annual detailing, and a Culinary Collection membership that provides access to a curated list of restaurants from coast to coast.

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DALLAS — Pearl Technology Holdings LLC today announced that its ShowroomXpress platform  (SRX) has released a dynamic website widget that calculates and displays six different payments to vehicle shoppers in under 3 seconds.

According to the company, the new widget calculates payment to the dollar for both purchase and lease transactions and with built-in dealer finance mark-up. Payment calculations performed by SRX also include the customer’s trade-in value, sales tax, doc fees, F&I packages and OEM incentives.

“We believe our new dynamic widget will help dealers usher in a new era of auto retailing,” said Bruce Thompson, CEO and founder of Pearl Technology Holdings. “With a few lines of code, a dealer can immediately empower his website with real payments, allowing customers to desk their own transactions and pick their ideal payments and protection packages. The transaction terms can be saved and sent to dealership CRM tools, so it’s a seamless process to pick up the consumer record and finalize the transaction.”

Pearl’s SRX is an on-demand automotive retail platform that lets consumers take on the various elements of a vehicle purchase/trade-in process in their own way and at their own pace. The SRX widget operates within the search results page and vehicle details page levels of a dealer’s website and provides complete deal transparency for a consumer for any vehicle in a dealer’s inventory.

The addition of the widget to Pearl’s ShowroomXpress also transforms a dealership’s physical showroom into an express retail environment for walk-in customers, allowing salespeople to display real payments on every unit in inventory within seconds. The widget’s calculation engine is powered by a very robust desking tool that integrates with all U.S. auto lenders. 

“We believe consumers are looking for a much more transparent and efficient car-buying process and therefore created a tool that is easily installed on a website. It also has CRM integrations and very little training is necessary,” said Thompson. “Our dynamic widget is much more advanced than anything we see in the industry today.”

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DETROIT — In a pair of bulletins and a letter signed by its head of North American operations, General Motors (GM) issued a new set of dealer mandates that poses a serious threat to the aftermarket F&I product industry and has dealer trade groups scrambling for answers.

Dated Aug. 10, the letter states that GM dealers who sell non-GM-branded vehicle service contracts, parts and accessories must disclose that fact to their customers. In states like Mississippi and New York, similar disclosures are already required. The question is whether the penalties for noncompliance, including termination of a dealer’s franchise agreement, violate dealer-protection laws.

“If a non-Chevrolet, Buick, GMC or Cadillac vehicle service contract is sold to a customer, dealers must disclose to the customer that the service contract is not endorsed by GM. The disclosure requires an acknowledgment by the customer,” Alan Batey, GM’s executive vice president and president for North America, states in the letter obtained by F&I and Showroom magazine. “The failure to complete this required disclosure is a material breach of Article 5.1 of the Dealer Sales and Service Agreement (DSSA).”

Dealers on Hold

In addition to termination of their franchise agreement, GM dealers face a $500 penalty per vehicle, and could lose access to incentive programs such as GM’s Standards for Excellence and Essential Brand Elements. Noncompliance could also render a dealer ineligible for additional dealership opportunities.

The letter and bulletins don’t make clear whether the disclosure requirement applies to other F&I products. Also missing is the policy’s effective date and compliance deadline, which has been a source of dealer confusion.

General Motors officials did not respond to requests for comment.

The National Automobile Dealers Association reached out to GM within days of the new policy’s release, according to an Aug. 17 memo obtained by F&I and Showroom. Authored by Jim Moors, the association’s senior counsel, the memo questions whether GM’s disclosure form is consistent with the automaker’s DSSA and certain state laws that dictate disclosure content.

The memo also raises several questions, such as whether the disclosure is required in cases where a vehicle sold to a customer contains non-GM parts not installed by the selling dealer. It also points out that a number of states have enacted restrictions on manufacturers that attempt to influence which products its dealers sell.

“NADA believes that these requirements and the threatened sanctions may go beyond what appears to be required or authorized by the DSSA. It is also unclear exactly what products are subject to the disclosure requirements,” Moors’ memo states, in part. “While NADA cannot offer dealers legal advice, we strongly recommend you not take any action that indicates agreement with the new requirements without consulting with legal counsel.”

Preventive Measures

In 2014, dealer associations in Florida, Mississippi, New York, and Oklahoma successfully lobbied state lawmakers to pass measures prohibiting captives from pressuring dealers to sell only their F&I protections. But it wasn’t a complete victory for dealers in two of those states. The bills passed in Mississippi and New York include a requirement that F&I offices specifically disclose to customers whether or not they are purchasing F&I protections backed by their vehicle’s manufacturer.

In advance of the Mississippi bill’s effective date, the Mississippi Automobile Dealer Association (MADA) developed a one-sentence disclosure for its members. It requires that dealer have their customers initial the disclosure, signifying that they were advised — both verbally and in writing, as stipulated by the state’s updated Mississippi Motor Vehicle Commission Act — that the products they are purchasing are not provided or supported by a manufacturer or distributor.

“Disclosure to the buyer is already covered under the Mississippi franchise law,” Marty Milstead, president of the MADA, stated in an email to F&I and Showroom. “However, MADA is reviewing the bulletin over concerns of potential violations of the [law] with regard to the fines and penalties for not using the newly prescribed form.”

In New York, the disclosure isn’t mandated by the state, but a franchiser can require a dealer to make the disclosure in “a separate statement, acknowledged by the consumer.”

States like California and Ohio have statutes in place that prohibit manufacturers from discriminating against a franchisee for selling F&I products not approved, endorsed, sponsored or offered by the manufacturer. Brian Maas, president of the California New Car Dealers Association (CNCDA), said there is one exception: The statute does not prohibit a franchiser from requiring its dealers to disclose to customers whether or not a service contract is backed by the manufacturer. Maas, however, believes GM’s new disclosure form goes beyond what the statute allows, noting that this isn’t the first time GM has overstepped dealer franchise laws.

“This seems to be following a pattern from GM. I don’t know what’s going on in the Renaissance Center in Detroit,” Maas said, putting the association’s GM dealer count in the low hundreds. “Why they’re announcing all these policies that seem to make the relationship with their dealers more difficult boggles my mind.”

When automakers and their captive finance companies attempted to block the dealer-protection measures in Florida, Mississippi, New York and Oklahoma, they stood behind the Federal Trade Commission’s Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses, also known as the Holder Rule. Published in May 1976, it says a finance source that accepts assignment of an installment sales contract from a dealer can be held responsible if a customer who purchased ancillary products takes legal action.

The rule, however, was noticeably absent in GM’s bulletins. Instead, Batey’s letter opens with the automaker’s new disclosure policy regarding the sale of non-GM equipment, parts and accessories, and reminds dealers about the National Traffic and Motor Vehicle Safety Act. It states that a person may not sell a motor vehicle or motor vehicle equipment unless the vehicle or equipment complies with applicable federal safety law.

“In addition to potential violations of federal law, there are other consequences that can result from the installation of unauthorized, non-GM equipment on a GM vehicle,” Batey states in his letter. “First, unauthorized modifications or alterations to the vehicle are not covered under GM’s ‘bumper-to-bumper’ new-vehicle limited warranty, and may void existing warranty coverage. Second, unauthorized vehicle modifications are not permitted on most retail vehicles leased through GM Financial.”

Profit Play

As for the disclosure form, GM requires that it be presented and signed by the customer during the sales or service process. Dealers must also keep a copy of the form in the customer’s sale or service file, along with copies of the purchase order and/or bill of sale.

At the top of the form is a box dealers need to check if a non-GM service contract is sold. Below that is a paragraph that reads: “Buyer/Lessee acknowledges that the dealer is selling her/him a Non-GM Service Contract (not specifically branded Chevrolet, Buick, GMC or Cadillac Protection).” It then states that the buyer understands that GM is not responsible for any claims under the non-GM product, has no obligation in connection with the sale or use of the non-GM service contract, and that it may not be accepted by other GM dealerships.

Dealers are then required to list the name of the provider and the contract number. The non-GM parts and accessories disclosure appears below that. At the bottom of the form, the dealer must list the 17-digit VIN and the name of the sales or service representative, and have the customer sign and date.

“It is little more than a document attempting to scare a consumer away from a non-GM accessory or service contract, which may run afoul of a number of state laws that prohibit an OEM from discriminating against a dealer’s use of non-OEM products,” said Randy Henrick, vice president and compliance counsel for Mosaic Compliance Services LLC. “I know a number of auto dealer attorneys are considering a declaratory judgment action against GM on the basis that the consumer consent is little more than a document attempting to cause the consumer to refrain from buying a non-GM service contract and therefore improper conduct on GM's part.”

The fear among F&I product providers, many of which are conducting their own legal analysis of the new policy, is that other automakers will follow GM’s lead. Carl Woodward, a partner with accounting firm Woodward Associates, said GM’s policy is all about profit.

In an April 2016 report, investment bank Colonnade estimated the F&I products market to be a $77 billion industry, with retail sales of vehicle service contracts estimated at $28 billion in 2014. And according to the NADA, 41.9% of new vehicles sold have a VSC attached to the deal.

Woodward, whose firm services a number of GM dealers, said there are many reasons why dealers would choose to sell an aftermarket VSC. Dealers who reinsure their service-contract plan with a third-party administrator can offer more coverage for less — a point he said dealers should stress to consumers when presenting GM’s disclosure to customers. Dealer fees for captive reinsurance programs are often higher as well.

“I talked to at least 10 dealers, and their blood is boiling. My perspective is GM is doing this for a profit motive,” Woodward said, adding that he spoke to several GM dealers who were unaware of the new policy. “All GM should be worried about is making good cars priced reasonably and staying out of its dealers’ pockets.”

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In my conversations with dealers, I like to point out that every employee has the opportunity to boost their company’s performance — some by staying and some by leaving. We’ve all experienced the renewed energy that comes with a new hire. The right employee acquisition can bring a fresh perspective and a new set of skills that provide lift to an entire team. Though it may sound harsh to say, a team can sometimes get a similar boost when the right employee leaves. That’s because many dealerships are making human resource decisions based on technology needs, causing them to attract and retain the wrong talent.

Dealers frequently make hiring and retention decisions based on how well candidates know and understand their legacy systems. The reverse is also true — many dealerships avoid upgrading technology because their employees are comfortable with current systems.

It’s not hard to see how this line of thinking can negatively impact a dealership’s performance. When legacy systems begin to dictate human resource decisions, you are no longer running your business — your technology is running it for you. To break the cycle and to find out if it’s time for a technology change, ask yourself the following three questions:

1. Is Your Technology Easy to Learn?

If your systems are difficult to learn, you are more likely to make hiring and retention decisions based on familiarity with those systems. In doing so, you may be missing out on entire groups of qualified prospective employees.

Dealers should carefully evaluate whether their systems include user-friendly interfaces that make it easy for new users to get up to speed. They should also expect their technology partners to provide opportunities to learn their platforms. If your employees are spending time training each other on the use of technology, you may want to consider switching to a provider that offers more helpful training resources. Vendor-provided trainings generally save time and teach skills more effectively when compared to peer training sessions.

2. Is Your Technology Easy to Use?

Even as they force you to hire and retain the wrong employees, your outdated technologies are making it nearly impossible to attract and keep fresh, young talent. Many young industry professionals are evaluating potential employers based on their technology offerings and are less likely to accept employment offers from dealerships using older systems.

Even those that you succeed in attracting may not stay long if they feel they’re being held back by inefficient solutions. Because technologies impact employee satisfaction on a daily basis, they affect turnover rates in a significant way.

3. Does Your Technology Provide Efficient Workflows?

In addition to improving employee satisfaction, easy-to-use technologies enhance productivity and save money when it comes to IT management. According to one source, “U.S. companies are wasting $2 trillion using outdated technology that limits employee productivity.” With modern technologies, employees waste less time on manual processes and unnecessary workarounds and require fewer training and support resources.

If your dealership is like most, you probably spend a lot of time thinking about technology and about human resources. Chances are, however, you’re not spending enough time considering how these two important elements of your business interact. Outdated technologies often force dealerships to hire and hang onto the wrong employees for too long, while missing out on entire groups of qualified candidates.

Sharon Kitzman is the vice president and general manager at Dealertrack DMS. Email her at sharon.kitzman@bobit.com.

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The finalists for the 2017 FIDMAs are:

Category No. 1: Best Product-Specific Digital Media

• Axiom: “Key Replacement”
• Justin Gasman, McCaddon Cadillac Buick GMC: “What Is GAP?”
• Portfolio: “Prepaid Maintenance”
• Protective Asset Protection: “Powertrain Limited Warranty”
• Zurich: “Vehicle Service Contract”

Category No. 2: Best General Education Digital Media

• Justin Gasman, McCaddon Cadillac Buick GMC: “Car-Buying Advice”
• Justin Gasman, McCaddon Cadillac Buick GMC: “We Have the Best Videos”

Category No. 3: Most Unique and Artistic Content

• All finalists are eligible

Category No. 4: Best Website Feature

• GWC Warranty: “Video Carousel”
• Alpha Warranty: “DriveEasy Website”
• Darwin Automotive: “Remote Delivery”

Category No. 5: Best Mobile App

• AutoGravity: “How It Works”
• Axiom: “Imagine COVI”
• Dealertrack: “It’s Time to Buy a Car, and You’re Ready”

F&I Express would like to congratulate all the finalists who are at the forefront of moving the F&I industry forward,” said Brian Reed, CEO of F&I Express. “It is important to create engaging content to support dealership efforts, especially through a digital experience.”

To watch the videos, click on the “Finalists” tab at the program’s website. Industry Summit will be held Sept. 11–14, 2017, at the Gaylord Texan Resort & Convention Center in Grapevine, Texas, near Dallas, and the awards ceremony will be held on Wednesday, Sept. 13.

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Added to LotLinx TURN, a platform that provides dealers with metrics on shoppers targeted, total spend, sold VINS, conversions, and engagements on VDPs, VINdrop was created in response to the company’s internal research showing that dealers experience sales spikes in the final seven days of each month, particularly around holidays like Labor Day and Christmas.

“VINdrop enables marketers to laser-focus their efforts during peak periods of consumer shopping, and ensure their digital strategy is ‘firing on all cylinders’ to support incremental sales and vehicle turn,” the company stated in its press release.

The core of LotLinx’ technology platform is its VS - Omni-Channel campaigns, which identifies VIN-specific shoppers in a dealer’s market and delivers them straight to the dealer’s VDP. VINdrop was designed with the success of VS - Omni-channel in mind, officials said, but with the intentions of being used alongside traditional media, and with the ability to be customized for time-sensitive campaigns that deliver shoppers as quickly as they’re available and for as long as budget allows.

“The opportunity to combine LotLinx VS - Omni-Channel and VINdrop campaigns provides dealers with exciting new sales opportunities, enhancing their ability to make better marketing decisions and improve ROI on digital ad spend,” the company stated.

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“I am truly honored to be recognized as a top employer in Northeast Ohio,” said Kelly Price, CEO of NAE/NWAN. “We have built our company on providing innovative solutions to our clients. None of it would be possible, without the great team that we have built. Our team consistently strives to provide our customers and clients with excellent service each day.

“Part of our culture is an environment of constant gratitude, as our team works tirelessly at raising money for the Cleveland Christian Home, along with many other charities and organizations around Northeast Ohio and throughout the country,” Price added. “I believe this culture has shaped our company into the organization it has become today and I am grateful to my entire team for working together to making it happen.”

NorthCoast 99 is an annual recognition program that honors 99 great workplaces for top talent in Northeast Ohio. The program is presented by ERC and sponsored by such companies as Anthem Blue Cross & Blue Shield, CareerCurve, Cleveland Magazine, ERChealth, Frantz Ward LLP, Gino’s Awards, Oswald Companies, Staffing Solutions Enterprises, and Ultimate Software.

“We’re extremely honored to recognize the 2017 NorthCoast 99 winners,” said Pat Perry, president of ERC. “These organizations have earned the right to call themselves a great workplace by their dedication to attracting, supporting, retaining, and motivating their top performers. ERC developed the NorthCoast 99 program with the hopes of inspiring local leaders to promote the great workplace movement.”

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On the surface, the 2017 Dealers’ Choice Awards is basically a list: 34 categories, 63 winners, 99 awards. If one failed to read the rules or press surrounding the program, one might assume the publishers and editors of this magazine select each year’s first-place Diamond, second-place Platinum and third-place Gold award winners ourselves. One might even be moved to send critical emails to our staff in protest. (It happens.)

In truth, we are merely tabulators. The Dealers’ Choice Awards are decided by you, our readers, and any other dealer, dealership manager or staffer who completes each year’s online survey. If you have taken it yourself, you know it is no walk in the park. You must manually enter the name of each company you wish to honor in each category. You must then rate those companies on the value of their product or service, the quality of said product or service, the quality of each company’s customer service, and whether you would recommend them to another dealer.

Before you even get to the actual voting, you must identify yourself and list your contact information. We don’t rent or sell that data. We spot-check randomly selected surveys to be sure those voters truly belong to a dealership. Once all those phone calls have been made and we are satisfied that no malfeasance is afoot and our results are genuine, the tabulation process begins.

Because the votes are manually entered, they must be, for all intents and purposes, manually counted. Of course, the quality of the votes counts much more than the quantity, so we have to track the quality and referral scores as well — for every last company, in every last category. I assure you I wouldn’t wish that particular spreadsheet upon my worst enemy.

From the moment each year’s survey goes live to the moment the official results are announced, at least part of our workday is spent reading emails and taking phone calls about the awards. Most are curious, some are encouraging, and a few are hostile. We answer them all.

The marketing efforts that precede and promote the survey, the ceremony at Industry Summit, and the awards themselves are all paid for by the magazine. Accepting sponsorship dollars before the votes are counted would (and should) invite accusations of impropriety.

So why do we do it?

The simple answer is that we believe in the program. Your hardest-working and most valuable industry partners deserve to be recognized in these pages and at Industry Summit. So thank you for filling out this year’s survey and thank you in advance for participating in next year’s program. Your vote counts, and it means an awful lot to the companies and individuals you rely on to keep your organization firing on all cylinders. 

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Wouldn’t you agree that we salespeople are lay-downs for a sale? Wouldn’t you also agree we appreciate a super-talented salesperson who provides exemplary service when we purchase something? Fine dining, clothes, boats, houses … In fact, you get so excited that you offer them a job selling cars! Money always follows service.

Then answer me this: Why do we allow the consumer to be better-educated and have more product knowledge than we do? Isn’t our business a relationship business?

Fail to Disappoint

I have learned that it’s wise to underpromise and overdeliver. You can’t get far by disappointing people. Unfortunately, just as water follows the path of least resistance, many of your salespeople are doing the minimum when it comes to product knowledge, test rides and service walks.

Fish rot from the head down. Never become so complacent or internet-dependent that senior leadership falls asleep at the wheel. CSI hinges on performance attributes. I’ve heard that your charming character will sell you 30-plus vehicles a month, too.

A friend and mentor of mine used to say that better than 99.9% of people in our industry are high-quality professionals with nothing but the customer’s best interests in mind. But as with any industry or profession, a few bad apples take the benefit of the doubt from everyone else. Opinions are formed with the lowest common denominator as the norm.

Accountability standards must be established, maintained and tracked consistently within your team — regardless of its size.

Masters of Sales

When I was a salesman, I would have a dust cloth visible in my rear pocket when each guest picked up their new vehicle. I would hop in the passenger seat and tell them the first tank was on us. We would drive to the gas station down the road and I would hop out and start the pump.

With the handle locked in place and the gas flowing, I would walk to the front, look down the sides, pull out the dust cloth, and wipe a couple spots. Other people at the station would comment, “Hey, G.P., you sold another one!” The customer would be beaming. It was an enjoyable moment made even more memorable with a bit of flair and a clear demonstration of our high standard for service.

You have no doubt read that 10,000 hours of practice are required before one becomes brilliant at one’s chosen occupation. A similar effort should be applied to mastering all the minor things in your life. No task is too small to practice if it’s part of your day-to-day activities. 

We go to the doctor if we are injured or sick. We have a discussion and take their advice. Car buyers seek our counsel. So come on, folks, let’s put the “pro” back in our “pro”-fession. Our customers spend thousands and thousands of their hard-earned dollars on transportation. We owe them a productive experience.

Yes, becoming a master can be challenging. But we as an industry need to look at ourselves with both eyes wide open and all the competence and skill expected of a professional in all departments. 

G.P. Anderson is finance director of Thielen Motors Chevrolet Buick in Park Rapids, Minn., and a 25-year industry veteran. He is ACE- and AFIP-certified, a 2008 F&I Pacesetter and winner of the inaugural 2011 F&Idol contest. Email him at gp.anderson@bobit.com.  

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When it comes to disclosing warranty information in connection with the sale of a used vehicle, how far must a dealer go? Many consumers buy vehicles and, after the purchase, buy “add-ons.” Dealers who later sell these vehicles as used cars may face questions about the effect the add-ons have on the terms and conditions of the original factory warranty, and what a dealer’s duty is to determine whether installation of the add-ons results in restrictions or limitations of the factory warranty.

A recent Texas court grappled with these issues.

A consumer bought a used Dodge truck with a lift kit from a Ford dealership. The salesperson told the buyer that the lift kit was installed on the truck after it was manufactured. At the time of purchase, the buyer also received a buyer’s guide informing him that a manufacturer’s warranty came with the truck and instructing him to consult the warranty book about coverage.

When the truck experienced mechanical problems a month after purchase, the buyer went to a Dodge dealership for service. The dealership informed the buyer that the warranty did not cover the repairs due to a restriction.

The buyer paid for the repairs and sued the dealership where he bought the truck for violating the Texas Deceptive Trade Practices Act by failing to disclose the warranty restriction. The dealership moved for summary judgment, alleging that it had no knowledge of the warranty restriction because a Ford dealer cannot access the Dodge database.

The dealership also claimed that it informed the buyer of a possible restriction by telling him about the lift kit and referring him to the warranty book that stated that there was no coverage for parts installed after the truck left the manufacturing plant.

The trial court granted the dealership’s summary judgment motion, and the Texas Court of Appeals affirmed. The appellate court concluded that the dealership had no knowledge of the warranty restriction. Thus, there was no duty to inform the buyer about information of which the dealership was unaware. Moreover, the appellate court found that the dealership did not fail to disclose information regarding possible restrictions on the warranty.

But what if the selling dealer had been a Dodge dealership instead of a Ford dealership? In such a case, would the Dodge dealership be charged with the knowledge of whether the installation of the lift kit impaired the vehicle’s warranty — a warranty that a Dodge arguably ought to know about? Put differently, does the dealership’s warranty disclosure duty vary depending on the brand of the vehicle it is selling?

Courts frequently say that they have to try the case with the facts in front of them, so, at least for now, we don’t know how the court would rule on the altered facts. Food for thought, though, and perhaps reason enough for a sit-down with your legal beagle.

Thomas B. Hudson is a partner in the firm of Hudson Cook LLP, publisher of Spot Delivery, and the author of several widely read compliance manuals. Contact him at tom.hudson@bobit.com.

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SAN FRANCISCO — Roadster is on the move. The startup has secured additional funding and added the largest Toyota dealership in the world to its digital retailing platform.

The ecommerce solution provider today announced that Penske Motor Group’s flagship dealership, Longo Toyota, is now plugged into its Express Storefront ecommerce platform. The El Monte, Calif-based dealership this year celebrated its 50th consecutive year as the No. 1 Toyota dealership in the world.

“While buying a car is much more complicated than buying a toaster online, shoppers increasingly want a similar experience,” said Brendan Harrington, president of Longo Toyota, which averages 30,000 unit sales annually between its Toyota and Lexus stores. “With the help of Roadster’s technology, our sales team can help our guests configure their purchase either online or in-store, and have the vehicle washed and ready in less than two hours.” 

First adopted by San Rafael, Calif.-based Toyota Marin in July 2016, Roadster is now being used by 85 dealerships in 21 states and across 22 brands. One of the company’s most recent additions was Paragon Honda and Paragon Acura in Queens, N.Y., which added Express Storefront earlier this month.  

Roadster officials also revealed this week that the startup raised $7.25 million in additional funding from Palo Alto, Calif.-based venture capital firm Costanoa Ventures. The new funding round will be directed toward building more field teams, dealer support teams, and dealer success managers.

Through the Roadster Express Storefront, dealerships can offer their entire inventory of vehicles to consumers online. Consumers can design their deal anyway they want, whether it’s a cash, finance or lease purchase. They also have the option to select the finance source and finance incentive that fits their budget. Buyers can also take advantage of Kelley Blue Book's Instant Cash Offer if they have a trade-in and also purchase F&I products straight from the dealership’s website.

The platform is also designed to work as an in-store mobile app that allows tablet-equipped salespeople to guide customers through the Express Storefront buying process.

“Instead of being six to eight hours to buy a car, we're taking three to six hours out of that process,” said Roadster CEO Any Moss. “The consumers in some ways are less fatigued by the time they get to the F&I office, and all those things kind of contribute to maintaining or even increasing the sort of the back-end growth that you can expect on these kinds of transactions.”

Longo’s Harrington added: “As the largest volume automobile dealership in the world, guest experience and high efficiency are extremely important to us. We believe [Roadster] is the most modern and comprehensive solution on the market.”

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CINCINNATI — Swapalease.com released its quarterly lease trends report for the second quarter of 2017. The report shows that only three brands increased in search traffic from the first quarter. Infiniti, Ram and Chrysler saw a rise in search traffic by 10%, 5% and 3%, respectively.

Among domestic brands, GMC saw the largest decrease in the quarter for search traffic (-12%). A year ago, GMC’s brand searches were up by 14%, showing that consumers may be turning their attention elsewhere for leases. For European brands, Volkswagen saw the biggest dip in search traffic, decreasing by 11% compared with the first quarter. Not a single brand in the European category increased in search traffic this quarter. Within the Asian category, Acura performed the worst, decreasing in traffic by 11%.

Infiniti claimed its position as the largest share of overall traffic (10%). A year ago, it was Ram that boasted the most search traffic out of all categories.

The average monthly payment on a lease was registered at $474.39, a slight change from the first quarter, when the average payment was $436.35. BMW is currently the most expensive brand to lease with an average monthly payment of $862. Conversely, Volkswagen is the most inexpensive brand to lease with an average monthly payment of $318.

The report also shows that higher-priced leases (monthly payments above $500) saw increases in the second quarter compared with the first, possibly indicating continued strength in the economy.

“Our second quarter lease trends report shows that leasing remains strong in the automotive marketplace today, with increases in value of payment and number of leases in the driveways,” said Scot Hall, the company’s executive vice president. “We’re also seeing growth in SUVs, crossovers, and sports cars interest, which mirrors much of what is taking place in the broader automotive market today.”  

To read the full text of the report, click here.

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DALLAS — Startup Fastlane this week launched a new ecommerce platform for automotive dealerships. It offers dealers the ability to customize and brand their online car-buying experience, while providing customers with a start-to-finish purchasing process.

Dealers use Fastlane to showcase their inventory, help their customers pick out the car they want, and choose other purchase components such as financing, service contracts and insurance, officials said.

“Fastlane has taken online car-buying to the next level by letting dealers customize their online check-out flow,” said David Luce, Fastlane’s vice president of sales. “Other car-buying platforms have a cookie cutter check-out flow that cannot be changed. Fastlane recognizes that dealers in one market, such as New York, may sell cars differently from dealers in other markets, such as Georgia or California. Fastlane offers dealers a way to personalize the online car-buying experience to meet their customers’ needs, while adding value to the overall purchase experience.”

Brandon Hall, Fastlane’s CEO, added: “Fastlane is much more than a lead-generating tool for dealers. It is a complete car-buying system, with advanced features and customizability. The platform seamlessly walks customers through the many aspects of the buying process.”

Online shoppers who land on a dealer's website equipped with Fastlane's platform can pick out their vehicle, get a value for their trade-in vehicle, get pre-approved for financing and even educate themselves on F&I products and vehicle insurance. 

“Online car-buying certainly has its benefits, but that doesn’t eliminate the need for car owners to have a good relationship with a dealer. Our goal is to supplement current dealer operations by adding a unique customer experience through our online checkout," Hall said. "We are here to make online car buying advantageous for car dealers and customers alike by fostering new ways of engagement and creating a dynamic shopping experience for all parties. It’s the best of both worlds.”

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NORCROSS, Ga. — F&I product provider EasyCare announced the promotion of Rob Mirra to vice president of new business acquisition. Mirra’s new role will put him at the forefront of EasyCare’s new business-development efforts, including partnering with dealerships and dealer groups, vendors, and suppliers.

The executive is expected to leverage his decade of automotive experience, as well as skills gained in public service as a paratrooper in the U.S. Army and a police officer with the Newport News (Va.) Police Department to help dealers across the country achieve their objectives.

Mirra joined EasyCare in February 2016 as national director of new business after a successful 10-year run in automotive retail, including his position as national director of sales at Hyundai Motor Finance. He quickly proved to be adept at engaging dealers and building relationships, according to CEO Larry Dorfman.

“Rob’s prior experience gives him an edge. He understands what it takes to compete in today’s market and how partnering with EasyCare helps dealers reach their goals,” Dorfman said. “Over the past 18 months, he has proven that he lives the EasyCare culture of helping others succeed. As a result, the dealers who know and trust him have sought EasyCare out to be a part of their team. Rob’s a true leader; his passion and drive are something we are extremely fortunate to have on our executive leadership team.”

Mirra added: “I am grateful for the opportunities EasyCare has offered me and am eager to continue the momentum we have built over the past year. We have more work to do and more partnerships to build, and I can’t wait to get started.”

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As technology changes, so do customer expectations. Convenience and efficiency are the norm, and buyers want the instant gratification of a sale paired with high-level customer service. And that is not limited to ecommerce; it extends to the car-buying experience as well.

Limited Contact

On average, research shows that car buyers visit just 1.6 dealerships before making a purchase, so it is important to ensure the customer has a positive impression. With the implementation of big data and behavioral analytics, dealers are able to target who is most likely to buy and what they are looking for, ensuring each customer receives a personalized buying experience.

Consumers visiting a dealership today walk in armed with prior online research and knowledge. They are not looking to be educated upon arrival. Eighty-eight percent of car buyers have done research online before even setting foot in a dealership, and 79% expect the purchasing process to be completed in less than two hours. Everyone benefits from technology that provides customized selling points catered to each individual, resulting in a personal and efficient sales process.

Behavioral analytics for the automotive industry are now making their presence known by providing a dealer with detailed insights on each customer. This changes the game for a sales executive looking to close a deal.

New Sales Tool

Those over 25 years old make up the majority of the traditional car buyer market today. They tend to be wary of how much personal information is publicly available. They may use social media less frequently, share much less information on future purchases online, and respond more favorably to traditional marketing.

That is why behavioral analytics is so important for every dealership. Emerging technologies allow you to access social media feeds, purchase history, sociodemographic queues, and vehicle lifecycle information. In addition, the vehicle purchase experience can be further enhanced by producing a customized predictive marketing campaign that outlines all the benefits of the proposed offer, ensuring a smarter and more sophisticated sale.

By leveraging behavioral analytics and producing customized marketing campaigns, dealers can be certain they are giving their sales teams the best tools possible to understand each customer and produce a more substantial sale. The key to success in this evolving market is to not just sell cars, but to do everything smarter: think smarter, sell smarter, and predict smarter. 

Marco Schnabl is CEO of automotiveMastermind, a provider of predictive analytics and marketing automation technology for the automotive industry. Email him at marco.schnabl@bobit.com.

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In many dealerships, the hiring process is broken. The result is high turnover and mounting costs. In fact, the average dealer can incur up to $600,000 in turnover-related costs per year. You can do better. Let’s discuss five critical changes you can make to your recruiting and talent strategy that will give you a competitive advantage in your market.

1 Create a Well-Defined Hiring Process.

Candidate quality and candidate volume are two of the biggest problems dealers face. These metrics are a strong indicator of the strategies — or lack thereof — that dealers have in place to attract candidates. The best hiring process is both scripted and consistent, meaning the same interview questions and candidate assessments are used for all candidates. Most dealers have an ad hoc hiring process that’s no better than a coin flip.

In most dealerships, the hiring manager is responsible for sourcing and recruiting new talent. However, few dealers provide their hiring managers with guides and templates to help them effectively evaluate candidates. This lack of a defined process leads to poor hiring decisions, which, in turn, contributes to higher turnover rates.

2 Bring Your Career Site Into the 21st Century.

Your website is likely the first point of contact a prospective candidate has with your dealership. Without a site that is user-friendly and full of in-depth, easy-to-consume ­information about your business and employment ­opportunities, your dealership is behind the curve in the battle for talent.

A well-branded “career” site has a strong impact on the ability of job seekers to find the opportunity that fits their background and passion. It will positively influence their decision to fill out an application. The site should also be clean and easy to navigate on multiple devices.

At the same time, it’s important to show the dealership is interested in fostering the careers of job seekers by showcasing career development opportunities. Applicants want a clear picture of the dealership’s workplace culture. Your career site should include an explanation of the dealership’s history, leadership and community involvement, with a focus on your store’s unique position in the market.

These details help serious job seekers make better decisions about whether the role — and brand — are right for them.

3 Take a Mobile-First Approach to Hiring.

Mobile recruiting is no more a fad than mobile apps for car shopping. It’s a strategy you need to employ as soon as feasibly possible. According to recent research from Beyond.com, 77% of job seekers use mobile job search apps. Meanwhile, Pew Research found 53% of Americans between 18 and 29 years old have used their smartphones to search for jobs. On average, 70% of dealership applicants reached their store’s career site on a mobile device.

The trap that many business owners fall into when setting up a job application workflow is to require too many fields to be completed prior to submitting the app. You are basically asking the job seeker to recreate his or her résumé. That turns applicants off and crushes your conversion rate. Your application shouldn’t take more than two minutes to complete.

Finally, under no circumstances should you be requiring users to set up a “job seeker profile” before allowing them to apply for a job. What busy, successful person has time for that?

4 Strengthen Your Onboarding Process.

Once you reach a point where you’re finding the right people to staff your dealership, the top priority should be to retain them. Retention begins with a strong onboarding program, and getting your new hires up to speed as efficiently as possible is the goal. An employee onboarding program will not only make the hiring process seem like less of a “transactional” experience for the new hire, but will aid in making them more productive, faster.

The individual preparing to start their new position will feel as though the dealership is working hard to get them started off on the right foot. Their manager can get many of the clerical tasks out of the way prior to the employee’s first day. For starters, give your new hire the ability to complete their personal information forms, tax forms, I9 and other regulatory documents online before they arrive for their first day.

This point is also one at which initial training documents can be provided. When these steps can be completed from the comfort of home, the new hire can begin Day One with a clear head, focusing on being a productive member of the team.

5 Redefine Roles to Attract Top Talent.

Recent NADA data shows the average dealership turnover rate for sales associates is 72%. I believe compensation structure is at least partly to blame. The traditional dealership pay plan for sales is a 90-day draw period followed by a transition to a 100% commission structure. While that plan might have worked for previous generations, our own data shows that the incoming workforce demographic is far less likely to accept a position for which more than 50% of their earnings are tied to commissions.

The good news is that millennial consumers don’t want to buy cars the old way any more than millennial employees want to sell cars on full-commission pay plans. Considering a move from the traditional sales role to a “product specialist” structure has the potential to solve both issues. Product specialists assume the role of a trusted advisor who can use technology to help car buyers get their questions answered, making the car-buying process more transparent and less intense.

The retail automotive landscape is changing rapidly, and the pace of change is accelerating. Leading dealers are recognizing that sound people strategies can create a sustainable competitive advantage. Take a page from their book. Explore whether these tactics can propel your dealership operations to the next level.

Adam Robinson is the co-founder and CEO of Hireology and the author of “The Best Team Wins: Build Your Business Through Predictive Hiring.” Email him at adam.robinson@bobit.com.

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Over the past few years, we’ve seen some exciting advances in how virtual reality can affect the automotive industry. Until now, most of the VR resources have been focused on the marketing end of the spectrum. As I’ve discussed VR with manufacturers and dealers alike, some other areas have come about where virtual reality could prove to be a game-changer.

1 Visualizing Accessories

Dealers are currently looking at ways to show off add-on accessories to mirror the buyer’s preferences. The No. 1 problem in selling accessories remains the presentation of the accessory to the customer. Many dealers are still using old methods like brochures or websites to show optional accessories, and some take it one step further by equipping vehicles on the showroom floor with certain add-ons, but these efforts have failed to get customers in the dealership. Worse yet, 80% of them do end up buying accessories — just not at the dealership. 

VR provides a great new medium to help visualize and demo the accessories on the vehicle, while the buyer is still in the dealership. By making the process fun and engaging, sales members have a greater chance of selling customers on different accessory options.

Imagine having an accessory lounge with two to three VR stations. The customer could don a headset and be invited to experience the virtual showroom while they wait for their sales paperwork to be completed. They would get to select the right model and trim with options they selected for purchase, and then could add the OEM accessories available and see their tricked-out vehicle as it would appear in real life. 

The ability to visualize their own car with their preferred accessories has a huge impact on the decision-making process — not to mention it’s just a fun way to engage them while waiting for the deal to finish up. It allows them to get a real feel for the product, and brings in a sense of ownership leading to intent to purchase.

2 Vehicle Demos

Vehicle demos are one area where VR is going to change the way customers shop. VR won’t eliminate the need for a real test drive, but it could become an important part of the car-buying process.

Most consumers already shop online prior to even contacting a dealership. Many have already decided which make and model they want even before they set foot in the door. VR replaces some of those existing tools and makes the customer feel as if they’re in the actual vehicle. How’s that for a brochure killer?

A lot of research is centered on how to sell to millennials, and one thing is certain: They are moving away from interactive to immersive. Even websites are changing and being replaced by mobile apps. The next generation is post-web and pre-VR and it’s the perfect time for VR to take over as the next medium. VR enables users to actually be in the vehicle instead of being a mere observer. It gives buyers the ability to play around and control their experience as if it were a movie and they are the central character. This ability to personalize the experience is a big draw to car shoppers of all ages.

VR provides an unparalleled buying experience and early adopter dealers should advertise the availability of VR in their showroom as a reason for prospective customers to visit. They might increase showroom traffic — even if it’s only for the VR experience! 

3 Product Training

In one of the most forward-thinking conversations we’ve had with OEMs, some are looking to use virtual reality as a way to train salespeople and marketing teams on their vehicles before the model is even out of production.

The current model of product training is not working. It involves web-based training classes. That is an improvement over DVD-based training, but it still leaves much to be desired. Technology is moving so fast, sometimes cars are updated even while the manual is still being written.

With VR, you have a training product that can be updated remotely, and the dealer will always have the most current version available. Each and every major component can not only be visualized, but also animated and brought to life. It’s no longer something you view but a feature you can experience. 

These are just a few ways VR will affect almost every department in the dealership over the next few years. Manufacturers are already using virtual reality to entice and delight consumers at the top-most level; it is only a matter of time until the technology trickles down into every aspect of the sale. Stay tuned! 

Brian Wiklem is the director of CG and video production at izmocars, a provider of advanced digital solutions for dealers and manufacturers. Contact him at brian.wiklem@bobit.com.

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Two-time British Prime Minister Benjamin Disraeli famously said, “There are three kinds of lies: lies, damned lies, and statistics.” We hear a lot about fake news these days, because so much of it is. Both political parties, both sides of every debate, and both sides of the generation gap now have their own alternative facts, news sources and media, with questions, answers and coverage tailored to appeal to their specific audience. For some, we’ve had to dumb the news all the way down to 140 characters.

Most news today is not published or aired with the intent to inform. Its primary purpose is to promote someone’s agenda, reinforce a pre-existing narrative or belief, or generate a strong reaction in order to gain financially or politically. Often this is done using a portion of the truth, alternative facts or a witless tweet to reinforce another fabrication. This is then combined with an anonymous source and used as the basis for a sensationalist headline to grab the viewer’s attention, sell an ad, or garner an online click.

The International Federation of Library Associations and Institutions (IFLAI) recommends eight ways to spot fake news:

• Consider the source: Click away from the story to investigate the site, its mission, and its contact info.
• Read beyond: Headlines can be outrageous in an effort to get clicks. What’s the whole story?
• Check the author: Do a quick search on the author. Are they credible? Are they even real?
• Supporting sources: Click on those links. Determine whether the information given actually supports the story.
• Check the date: Reposting old news stories doesn’t mean they’re relevant to current events.
• Is it a joke? If it is too outlandish, it might be satire. Research the site and author to be sure.
• Check your biases: Consider if your own beliefs could affect your judgment.
• Ask the experts: Ask a librarian or consult a fact-checking site.

The Wall Street Journal recently ran a special section called “The Future of Transportation.” The cover story was “The End of Car Ownership.” In my opinion (or “IMO,” in textspeak), this is merely an outrageous headline written in an effort to get us to read the article. It falls into the “read beyond” category (or “BS,” in geezer-speak).

The premise of the WSJ article is that ride-sharing and autonomous vehicles are going to upend the decades-old model of individual car ownership, and we’ll all be sharing our Teslas or riding to work in a self-driving car. While that may be true in another 100 years, you’ll get my car keys when you pry them from my cold, dead hand.

However, the IFLAI recommendations would serve all of us well when we see headlines proclaiming the demise of the franchised automobile dealer, the fact that electric and driverless cars will soon rule the road, as well as the performance and profit statistics of other dealerships. The truth is, in our business, fake news and bogus statistics can entice you to buy products and services that you don’t need, that don’t do what they promise, or allow you to believe your performance is better (or worse) than it really is.

What Do You Bench?

We find a lot of dealers rightly question some of the F&I numbers they’re seeing from some of the top-performing dealer groups, especially when they see the eye-popping dollars per retail they’re achieving in F&I income. The most recent ranking from Automotive News Data reveals the Top 25 dealer groups averaged between $1,640 and $2,244 profit per vehicle retailed (PVR) in 2016. Impressive numbers, but for those dealers and F&I managers who are struggling every month to achieve a $1,200 PVR, this may appear to be fake news.

Let us consider the source, check our biases, and ask the experts. Certainly, your franchise, your location, your demographics and the F&I products you sell all play a role. But the fact is that there are many different ways dealers can and do produce F&I income at or above the $1,500-per-copy mark. You may not agree with how some of them do it. You might not want to do it that way at your dealership. But they don’t make these numbers up. I know, because some of them are our clients!

It is true that some of these dealers have the sales department include and sell one or more F&I products, such as an environmental protection package, in the initial payment quote from the desk. Other dealers pre-install a theft-deterrent product on every vehicle. They include the income in their F&I numbers, because F&I managers are expected to justify and sell the product (or upsell the optional cash benefit that goes along with it). Some dealers include a $500 to $800 doc fee, processing fee or accessory sales in their F&I numbers. Others administer their own F&I products.

While there are lots of ways dealers can and do achieve $1,500-plus PVR, most do it the old-fashioned way. They apply hard work, commitment and a genuine belief that these products provide real customer value. It starts with a trained F&I professional who is capable of convincing customers that, in their particular situation, these products would be especially important. The dealer also expects their F&I people to follow a proven process and continue to improve their performance every month.

As a dealer, improving F&I performance may first require raising your own expectations. If you don’t really believe $1,500 PVR is possible, or you only expect your F&I manager to do $1,000, that’s probably the best you’ll get. If your F&I manager only has to hit $1,000 to max out his or her pay plan, chances are that is the upper limit of what they will produce.

If you want to improve performance at your dealership, you have to instill the expectation of continuous improvement, and then implement a process to ensure it happens. Whatever you did last month, that is not going to be good enough this month. Whatever penetrations and dollars you do this month need to be better next month.

You can’t realistically expect anyone to double their numbers from one month to the next. But it is certainly not unrealistic to expect your sales and F&I managers to get 1% better every month. If your F&I department ran $1,000 PVR last month, expect $1,010 PVR this month and $1,020 next month.

Train Effectively

Once you have instilled the expectation of continuous improvement, you must implement a plan to make it happen. “Here’s where we are, here’s where we need to get to, and here’s how we’re going to get there.” That plan must begin with a comprehensive, needs-based approach with the focus on helping customers. And every F&I manager must attend the same initial training. Everyone on the team has to be on the same page, following the same plan.

More importantly, ask yourself whether that training is based on the company’s agenda (selling more of their product and increasing their income) or your agenda (helping your customers and increasing your income)? If your dealership is not selling that company’s service contract or GAP, how much quality training and help do you think your F&I people are really going to get to help them sell more of their competitor’s service contract or GAP?

In addition, for any training program to be truly effective, it has to be an ongoing process, not a one-time event. Implementing and maintaining an ongoing F&I training program is the key to continuously improving F&I performance and profits at your dealership.

This is where you have to establish realistic performance goals and expectations every month, with specific training assignments, role-play exercises, evaluation criteria, and progress mile-markers. Training has to be like brushing your teeth; something your people do every day. What are you doing today, to improve your skills for tomorrow? You can’t expect your F&I manager’s performance to improve without implementing a process to make it happen!

The only way I know how to legitimately achieve $2,000 PVR is to sell more F&I products and charge more for them. You cannot get to $2,000 by averaging one F&I product per customer and $1,000 profit per service contract. Top-performing F&I departments typically sell at least two products per vehicle, and that doesn’t include financing.

Running $2,000 per copy in F&I income requires good processes, high expectations, and ongoing training. The true value of implementing an ongoing training program in your dealership is that it instills the expectation of continuous improvement. With an ongoing training program, previously unattainable goals now become achievable. Complacency is not acceptable when continuous improvement is expected.

Performance doesn’t improve because you demand it. Performance improves when you implement a process to ensure it happens. That’s not fake news. That’s great news!

Ronald J. Reahard ranks among the industry’s leading trainers, authors, consultants and speakers and is president of Reahard & Associates Inc., winner of a 2017 Dealers’ Choice Award for F&I Training. Contact him at ron.reahard@bobit.com.

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The dealership, winner of DealerRater’s 2016 and 2017 Consumer Satisfaction Award, also agreed to change its advertising, sales, and leasing practices, including disclosing all costs and fees associated with the purchase or lease of a vehicle before consumers sign on the dotted line.

 “Consumers should be able to purchase a new car without having to worry about misinformation and hidden costs,” said Attorney General Porrino. “This settlement ensures that consumers will receive transparency and honesty from this dealership, as required by law.”

The settlement was announced three days after New York’s Nissan of Rochelle, located two hours north of Sansone, agreed to pay more than $298,000 to settle Attorney General Eric Schneiderman’s charges that it willfully defrauded 298 car buyers by tacking on a window-etch programs after customers agreed to a price for the vehicle and often without their knowledge.

In a consent order with the Division of Consumer Affairs, Sansone Hyundai and its directors agreed not to add and charge for aftermarket products, such as window etch and service contracts, without the consumers’ knowledge and/or authorization, or represent to consumers that certain dealer-installed options are mandatory when they’re not.

The New Jersey dealership also agreed not to sell consumers aftermarket products that overlap or provide similar benefits the consumer has already purchased through the lease and sale transaction; accurately reflect in leases the “gross capitalized cost” as required by the consumer leasing act; provide consumers with an opportunity to review all leases and/or sales documents and/or aftermarket contracts prior to signing; and not identify the advertised prices of vehicles by reference to the MSRP sticker, when the vehicle includes an addendum to the MSRP sticker that reflects a higher total price.

The dealership must also comply with all applicable state and/or federal laws, rules, and regulations, including the Consumer Fraud Act, the Motor Vehicle Advertising Regulations, the Automotive Sales Regulations, and the Consumer Leasing Act, according to the consent order.

“Dealerships must fully disclose all costs and fees associated with the purchase or lease of a vehicle before consumers sign on the dotted line,” said Steve Lee, director of New Jersey’s Division of Consumer Affairs. “We will continue to enforce the laws and regulations in place to ensure consumers have the facts they need to make informed decisions.”

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DALLAS — Ever wonder how certain regulations governing the F&I process came to be, why there are so many unwritten rules, and why F&I managers do what they do? Organizers of Industry Summit 2017 have confirmed that legendary F&I trainer George Angus will be at F&I Think Tank to take attendees down F&I’s memory lane during a special lunchtime address.

Angus, referred to as the “Father of the F&I Menu,” will take to the stage just after 12:35 p.m. to deliver “F&I’s Past, Present and Future,” a session designed to entertain and educate F&I managers on the who, what, and why of F&I.

“George’s story begins in 1975, when only one out of 10 dealerships employed an F&I manager and payment packing was considered a technique, not a felony,” said Gregory Arroyo, show chair and editorial director of F&I and Showroom and Auto Dealer Today. “Yes, he’ll use some of F&I’s not-so-great moments from the past to entertain, but the point is to educate today’s crop of F&I pros on why they do the things they do.”

Angus, considered an authority on F&I process development, spent 17 of his more than 40-year industry career in retail automotive management positions. In 1994, he left retail to join the development team that created the original F&I menus in the early 1990s. Since then, Angus has trained thousands of F&I managers, presented at numerous industry events, including the magazine’s annual conference, and served as a consultant to leading F&I product providers and auto manufacturers.

Industry Summit 2017 is co-located with The Best Training Day Ever and includes F&I Think Tank, the Special Finance Conference, Compliance Summit and Automotive Compliance Specialist certification by Automotive Compliance Education. Attendees holding a full pass are welcomes to attend any session on the agenda, including ACE certification and BTDE, for no additional charge.

To register, visit the event’s website. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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July’s credit approval rate is already showing a decrease (68.8%) from the previous month. A year ago the approvals rate was just slightly higher, reaching 57.7%. Overall, this year’s credit approval numbers have been somewhat lower than in years past.

“Both the state of the economy and the increased number of applicants indicate that more consumers are ready to lease vehicles,” said Scot Hall, executive vice president of Swapalease.com. “Unfortunately, their credit doesn’t always reflect that readiness. As the economy continues to improve, giving more people the incentive to lease vehicles out of their reach, we expect to the number of declines to be higher than normal.”

Hall attributed the dip in lease credit approvals to a combination of factors, including a higher volume of lease applicants with less-than-stellar credit worthiness, and a higher number of applicants looking for vehicles in higher-priced categories. During this time of year, Swapalease.com also typically sees a dip in the approval ratings because students with lower credit scores are looking for vehicle leases entering the new college school year.

Swapalease.com matches a person wanting out of their existing vehicle lease contract with a car shopper looking to take over a short-term vehicle lease. The marketplace has thousands of cars and trucks available for transfer to anywhere in the continental U.S.

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Auto dealers today face numerous business challenges in their drive to stay afloat: a fast-evolving consumer, increased competition from new sources, and tighter margins on each deal, to name a few. California auto dealers must add to that list a wave of new employment laws and regulations that significantly impact how they manage the labor side of their business.

These new legal requirements not only increase the cost of labor and legal compliance, they create exposure to prohibitively expensive lawsuits from employees. The following six trends in employment laws, in particular, are revving up this increased risk of litigation for auto dealers across California.

1. Changes in the Interpretation of FLSA Exempt Classifications
The federal Fair Labor Standards Act (FLSA) excludes several types of auto dealership employees from its overtime requirements. Among them are those who are “primarily engaged in selling or servicing automobiles.”

For decades, auto dealers relied on guidance from the U.S. Department of Labor stating that service advisors were exempt from overtime requirements under that provision. In 2011, the federal agency reserved its position and said service advisors were entitled to overtime pay. Not surprisingly, employee lawsuits followed.

In January of this year, the Ninth District Court of Appeal issued a ruling in one of these lawsuits, Navarro v. Encino Motorcars, agreeing with the Department of Labor’s reversal. The court reasoned that the overtime exemption covers employees who sell cars or service them, but not those who sell services for cars.

The Navarro decision is in conflict with appellate decisions elsewhere in the country. It is not yet known whether the U.S. Supreme Court will step in to resolve the conflict. In the meantime, the Ninth Circuit’s decision is the law of the land in California, meaning that dealerships must comply with its terms or risk misclassification lawsuits from former or even current employees.

2. Rest Break Pay Requirements for Commissioned Salespersons
Only one month after the Navarro decision, auto dealers were hit with another compensation headache. In Vaquero v. Stoneledge Furniture LLC, a California court of appeal ruled that state law requires employers provide separate, additional pay to commissioned salespersons for the time they spent taking statutory rest periods required by California law.

In other words, unlike other tasks salespersons perform relating to their sales duties, rest breaks are not considered as paid by the commissions salespeople earn. This means dealerships must now track the amount of time salespeople spend each day taking statutory rest breaks and pay them separately for that time. Due to the numerous penalties that may be sought for rest break and pay violations, what may appear to be a small difference in pay can quickly become a costly ­mistake.

3. California’s Fair Pay Act
The California Fair Pay Act, which forbids employers from gender-based discrimination in compensation, has been significantly amended twice in the last two years. In 2016, the law was expanded to broaden its scope. Now, all employees who perform “substantially similar” work (even if they have a different title or position) are included when conducting a pay comparison to determine if there is a violation. The law was also expanded to include new recordkeeping requirements.

In 2017, the law was expanded again, this time to extend its application to pay disparities based on race or ethnicity. Employers with less gender or ethnic diversity in positions seen as traditionally dominated by white males are likely to see more agency action and employee litigation.

4. Local Ordinances on Minimum Wage and Sick Leave
More than a dozen municipalities in California — from Los Angeles to Berkeley to Pasadena to San Jose — are leading a national trend of setting local minimum wage requirements that are higher than those in national and statewide minimum wage laws. These local ordinances vary widely in terms of the hourly rates imposed, the employers to whom they apply, and their effective dates of application and future increases.

Dealers who own groups with operations in more than one of these municipalities (or any cities that join the trend in the future) must track their compliance with these requirements to avoid being hit with costly wage and hour litigation. In such cases, an employee will seek not only back wages but several types of derivative penalties that can easily exceed the amount owed in unpaid wages.

5. New Rules for Workplace Harassment Training
New California regulations went into effect on April 1, 2016, that raise the workplace harassment training and complaint procedure requirements applicable to all employers. Regulations previously in place required all employers with 50 employees or more to ensure that all their supervisors receive legally compliant training in various topic areas relating to workplace harassment.

The new rules now add to these content requirements by requiring that the training cover abusive workplace conduct, legal remedies available to harassment victims, supervisor obligations, and strategies to prevent and remedy harassment. In addition, auto dealers must comply with stricter recordkeeping requirements with respect to the harassment training they provide to their supervisors.

6. PAGA Representative Actions
California dealers also face the statewide trend of employees filing representative actions under the California Labor Code’s Private Attorneys General Act (commonly known as “PAGA”). Although the PAGA statute has been law since 2004, plaintiff’s attorneys only recently started to litigate these cases with force. This has been partly in response to a decrease in class-action opportunities due to many employers adopting arbitration agreements which include a ban on employee pursuing their wage-related claims as a class action lawsuit.

California courts have ruled that a PAGA action is not subject to these types of bans in arbitration agreements. In a PAGA action, the employee seeks to collect penalties on behalf of the state for a variety of wage and hour violations, with 25% of the penalties collected being paid to aggrieved employees as a “bounty hunter” fee. The potential exposure to PAGA penalties can be very significant for employers with a large workforce or substantial employee turnover, because they are calculated on a per-employee and per-violation basis.

Effectively responding to these and other changes in employee law requires that dealers devise a strategy that is not only compliant but business-smart as well. In many instances, small changes to existing policies or procedures may be all that is required to remain compliant. In other scenarios, it may be necessary to consider more drastic changes, such as restructuring compensation for certain employee groups, in order to avoid runaway increases in payroll costs or burdensome administrative processes.
Either way, it is essential that management partner with experienced counsel who understands the unique features and challenges of a dealership’s business.

Alejandro David Szwarcsztejn is an attorney at Carothers DiSante & Freudenberger LLP, a California statewide law firm focused on labor, employment and immigration. Email him at alejandro.david.szwarcsztejn@bobit.com.

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The combined company provides clients the benefits of an expanded team of over 100 EHS, F&I, and HR field experts located throughout the US who bring an average of over 15 years of regulatory experience. This superior knowledge base compliments the combined company’s online dashboards, SaaS-based data analytic solutions, and closed-loop audit processes, according to KPA CEO Vane Clayton.

“ACC and KPA share the vision and expertise to deliver effective dealership compliance solutions,” Clayton said. “We focus on a variety of industries, but we built our business on the automotive dealership market and feel we now have a national F&I compliance team and enhanced solution to increase the value we bring to our large dealer client base, with a comprehensive compliance solution.”

“Joining forces with the KPA team is a great move forward for ACC,” said Terry Dortch, ACC’s president and CEO. “Our vision has always been to provide a turnkey compliance solution for dealerships. The additional expertise, content, and development resources that KPA brings will result in an unmatched compliance program for the dealership client.”

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NEW YORK — AmTrust Financial Services Inc. today announced that Jackie Banks, an experienced F&I industry executive, has joined the company as vice president of reinsurance for its Special Risk division. She will be responsible for all aspects of reinsurance for the division, including sales support, training and development of staff, as well as general management responsibilities.

Banks joins AmTrust from Allstate Dealer Services, where she served as vice president of reinsurance sales and strategy. In that role, she directed all sales, training, and business development efforts related to reinsurance and other client participation programs. 

“We are very excited to welcome Jackie to our team at AmTrust,” said Stuart Hollander, president of the AmTrust Special Risk Division. “Not only will she bring a tighter focus and expertise to our reinsurance activities, she will also be a great role model for all our employees and clients who come into contact with her.”

Banks added: "I am thrilled to be part of the AmTrust team. My entire career after earning my CPA designation has been spent in the industry, and I look forward to continuing that tradition by providing best-in-class solutions to AmTrust's current and future clients.”

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CHICAGO — Subprime originations registered their first decline since 2012, according to TransUnion’s quarterly Industry Insights Report. It found that 4.63 million subprime consumers originated an auto loan or lease, personal loan, or credit card in the first quarter, down from 4.89 million in the first quarter of 2016.

The firm attributed the decline to a combination of factors, including funding issues among fintech finance sources and tightening underwriting standards due to the recent uptick in delinquencies. The latter is especially true in the auto finance industry, where the delinquency rate increased 10.8% from a year ago to 1.23% in the second quarter.

“Immediately following the recession, many lenders pulled back on subprime originations to control delinquency. As the economy recovered, lenders loosened their underwriting standards and allowed more subprime consumers greater access to credit,” said Ezra Becker, senior vice president of research and consulting for TransUnion. “It appears that this trend may now be changing, though it is a much different environment than what we observed just after the recession. The economy is performing well, and after several years of increased subprime lending, some lenders may simply be taking a pause.”

In the first quarter, subprime personal loan originations declined 10.6% year over year, compared to a positive annual growth rate of 11% in first quarter of 2016. This marked three straight quarters of year-over-year declines in originations, as more than 100,000 fewer subprime consumers opened a personal loan in 2017’s opening quarter vs. the year-ago period.

In the credit card segment, subprime originations declined by 1.8% to start 2017, the second consecutive quarter of decline. Since 2014, subprime originations had increased at a rapid rate, averaging a growth of 29.2% in the first quarters of 2014, 2015, and 2016. In this year’s opening quarter, subprime originations declined at nearly the same rate as total originations (down 1.9%).

As for the auto finance arena, the firm noted that the slight rise in delinquencies was expected after several years of finance sources offering more financing opportunities to nonprime consumers. Officials noted, however, that delinquencies remain at low levels.

Auto originations in the first quarter declined 2.9% from the year-ago period to 6.73 million, marking the third consecutive quarter of year-over-year declines in auto loan originations and the first decline in origination growth in any first quarter since 2010.

“Lenders have also raised concerns about the downward pressure on used-car values, and we are beginning to see this impact origination growth,” added Brian Landau, senior vice president and automotive business leader for TransUnion.

Despite this decline total auto balances reached a new high of $1.145 trillion in the first quarter — a 6.9% increase from the year-ago period.

“A combination of factors has influenced the decline in subprime personal loan originations. For example, fintech lenders faced funding challenges in Q2 2016,” said Becker. “After years of growth in auto lending for subprime consumers, not surprisingly we observed an uptick in auto delinquency. Higher delinquency rates have long been anticipated as the result of that credit expansion. The reduction in subprime auto lending is a natural reaction to the emergence of that increased delinquency.”

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SCOTTSDALE, Ariz. — CNA National Warranty Corporation (CNAN) is pleased to announce that Jim Lee has joined the company as its new chief information officer, effective Aug. 7.

“With a wealth of experience in both information technology and business leadership, Jim has the right combination of skills to help CNA National as we continue to enhance our IT delivery model and infrastructure,” said Joe Becker, president and CEO. “We are excited to have him join our team.”

Lee has more than 25 years of experience, including over a decade in executive-level roles. Most recently, Lee served as CIO and head of operations for Pacific Specialty Insurance Company, where he drove the transformation of the organization through technology. He also served as CIO for the North America region for Marsh Inc. and in leadership roles with IBM Business Consulting Services, Credit Suisse First Boston Asset Management, Morgan Stanley and UBS Global Asset Management.

“I’m excited to join CNA National at a time when the company is making a significant investment in technology to support its continuous growth,” Lee said. “I look forward to spearheading several strategic initiatives that will help our company and customers thrive in today’s ever-changing automobile industry.”

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TradeSight is designed to help finance sources analyze originations, current and future dealer partners, and performance of finance contracts booked through dealer partners. It works by combining Equifax consumer credit information with dealer and vehicle data from third-party data sources to enable Westlake and other auto finance sources to assess their dealer network and establish peer benchmarks to help evaluate dealers’ credit risk.

“We’re happy to use this new product to help us drive well-informed business decisions and develop and adjust strategies so we can more accurately understand the performance and behavior of our dealership network,” said Ian Anderson, group president of Westlake Financial. “Since TradeSight comes with detailed loan-level data and four years of history, Westlake was able to benchmark ourselves against our various competitors and adjust our go-to-market strategy as a result.” 

Equifax delivers a combination of data via TradeSight, including dealership names, firmagraphic information, purchased vehicle details and vehicle values, loan structure characteristics, and loan performance metrics. Additionally, the product provides pre-configured finance source categories such as bank, captive, credit union, finance company, buy-here, pay-here information and more.

“By providing comprehensive analytics from a single platform, TradeSight will help Westlake Financial continue to compete at a high level and establish even stronger relationships with dealers in order to profitably grow their portfolio,” said Lou Loquasto, vice president of auto finance and dealer vertical for Equifax.

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ALBANY, N.Y. — Nissan of New Rochelle will pay more than $298,000 to settle claims that the dealership willfully defrauded 298 car buyers of a total of $276,127 by tacking on a window-etch program that included a “Total Loss Protection” benefit after customers had agreed to a price for the vehicle and often without their knowledge or consent, Attorney General Eric Schneiderman announced this week.

In addition to refunding the cost of the product, which varied from $215 to more than $5,000 per vehicle, the dealership’s owners have agreed to pay the state $22,084 in penalties, fees and costs. They also agreed to “certain reforms” of the dealership’s sales and F& processes.

"Consumers should not have to worry that they are being scammed into adding on bogus products and services when they purchase a car,” Schneiderman said. “Buying a car is already a major investment for many families, and tacking on thousands of dollars extra can become a significant financial burden. I am pleased that we are able to return hundreds of thousands of dollars in restitution to the nearly 300 consumers who were scammed and defrauded.”

According to Schneiderman, his office’s investigation into the 2015 complaint revealed that the product, described as a window- and windshield-etch program backed by a $3,000 or $5,000 guarantee against theft, was deceptive or outright fraudulent on at least three counts — tacking on the cost of the product without customers’ knowledge being one of them.

The regulator also charged that conditions and limitations related to the guarantee made it “essentially worthless.” The regulator noted that only one car buyer was issued credit under the program. The attorney general’s investigation also revealed that the “etching” of each vehicle’s VIN was actually a sticker affixed to the inside of a door or doorjam, and in many cases was not performed at all.

As part of the settlement, Nissan of New Rochelle’s directors have agreed to include full disclosures and explanations for each product and express consent on the car buyer’s part before any products can be added to the deal, according to the regulator’s statement.

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DALLAS — Organizers of the upcoming Compliance Summit announced that Jim Ziegler, president of Ziegler SuperSystems, will deliver the event’s keynote address. Compliance Summit will be held Sept. 11–12, 2017, at Dallas’ Gaylord Texan Resort & Convention Center, as part of Industry Summit.

In his first-ever Compliance Summit appearance, Ziegler will present “The Shape of Things to Come” at 9:05 a.m. on Monday, Sept. 11.

“In articles, speeches and training sessions, Jim Ziegler has remained steadfast in his belief that transparency sells and dealers are responsible for uncovering and eliminating noncompliant practices at their stores,” said David Gesualdo, show chair and publisher of Auto Dealer Today and F&I and Showroom. “We are counting on him to get Compliance Summit started with a bang.”

Known to his fans and disciples as “The Alpha Dawg,” Ziegler’s 40-year career in the automotive industry began in retail and progressed rapidly. He is a nationally recognized trainer, writer, speaker and industry forecaster and has contributed to ADT and F&I, among other industry publications. Devoted readers know Ziegler has been a frequent critic of dealership personnel who flout the rules and regulations governing the sale and financing of vehicles.

“Compliance is nothing new to the Alpha Dawg. I’ve been talking about treating the customer right for 25 years,” Ziegler said. “I used to be the lone voice in the wilderness, and now I’m an elder statesman. But some things never change: Expect my usual, off-the-cuff, sometimes sarcastic, always irreverent style. And don’t ask a question if you don’t want to hear the answer.”

Registration for Industry Summit 2017 is open at the event’s website. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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DALLAS — The shifting strategies of auto finance sources will be the focus of F&I Think Tank’s opening session on Thursday, Sept. 14, when F&I trainers Tony Dupaquier and Shaka Dyson take to the stage for “Relationships Matter Again.” F&I Think Tank will be held as part of Industry Summit 2017 (Sept. 11–14) at the Gaylord Texan Resort & Convention Center in Dallas.

In 2017’s opening quarter, auto loan balances registered single-digit growth for the first time in four years and subprime auto financing fell to a 10-year low, making it clear underwriting standards are tightening once again. To Dupaquier, director of The Academy, and Dyson, founder and CEO of Dealer F&I University, that means relationships really do matter again.

“Tony and Shaka are going to translate what the current trends mean to the F&I office. They’ll also offer strategies for uncovering a finance source’s appetite and training the desk on proper deal structure,” said Gregory Arroyo, show chair and editorial director of F&I and Showroom and Auto Dealer Today magazines. “Their main message will be that a credit score, especially in today’s auto finance environment, is not F&I.”

Toward the end of the 50-minute session, which begins at 9:15 a.m. on Thursday, Sept. 14, the two trainers will engage the audience in an intelligence-sharing exercise. Attendees will gain insights on which finance sources are active and in what credit spectrum.

Dupaquier, who will also serve as the event’s emcee, worked every position in variable operations and is a former Nissan National Walk-Around Champion. He is considered one of the industry’s most forward-thinking F&I and sales trainers and consultants, and has been a featured speaker at the National Automobile Dealers Association’s annual convention, as well as numerous dealer 20 Group and dealer associations.

“There are still business managers and sales managers who don’t understand structure,” Dupaquier said. “The only thing they know is a credit score, but a customer with an 800 credit score doesn’t guarantee an approval if he or she doesn’t have money down and is on the wrong car.”

Dyson, who began selling cars in 1999 at age 21, describes himself as a “national recordbreaking F&I trainer” with more than 17 years of “true in-dealership experience.” Prior to founding his training firm in March 2016, he served as corporate finance director and trainer for Chicago’s Napleton Automotive Group — where he oversaw 26 finance departments and 58 finance managers during his three-year tenure with the group.

Dyson is also the founder of F&I 20 Group, a Facebook group for F&I managers that counts nearly 12,000 members. His main message will center on why F&I managers need to change their tune when it comes to finance source reps.

“Nothing will build you up among your sales staff faster than being able to get the most complicated deals done,” Dyson wrote in a January 2017 article in F&I and Showroom magazine. “To be known as the F&I guy or gal who can get anything bought is a fantastic reputation to have and one that will precede you. Who better to help in those endeavors than a bank rep?”

Registration for Industry Summit 2017 is open at the event’s website. Attendees who register by Aug. 11 will enjoy a $100 discount. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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AUSTIN, Texas — F&I product provider RoadVantage announced the promotion of Randy Ross from senior vice president of sales to president of sales, and the addition of two new members to its senior management team.

Ross, who joined the company five years ago, previously owned and operated Ross Chrysler Jeep Dodge in Boone, N.C., for nearly 15 years. He also cofounded Group 1 Automotive and served as dealer group’s platform president between 1997 and 2000.

"From the start, I have believed in the power of the mission here at RoadVantage,” said Ross, who also served as managing partner at Town North Nissan Mitsubishi, Elgin Ford, Round Rock Nissan in Austin Texas. "We have some of the most talented people in the industry, the most comprehensive products, and certainly the most amazing claims staff in the business. I am extremely proud at what we have accomplished so far, and with these two awesome additions, this is only the beginning of where we're going to take this company."

The company also announced that Keith Cooper, former senior vice president of sales at Innovative Aftermarket Systems (IAS), has been hired to replace Ross as the company’s new senior vice president of sales. He will spearhead the company's national sales efforts.

Prior to his tenure at IAS, Cooper served as the executive vice president and general manager at the Genesis Marketing Group. He also served as director of national sales for Gulf States Financial Services, president, COO and partner at Triple Protection Auto Care, and president and general manager for Walkaway USA Inc.

"This is an exciting next step for me, and I am beyond pleased to be joining RoadVantage,” Cooper said. "This is a company that values people, while ensuring they have the absolute best possible products on the market. I am truly excited to be a part of the next stage of their growth and evolution."

Joining the RoadVantage team in September as national vice president of sales is Steve Chandler. He most recently served as regional vice president at CNA National, where he was responsible for growth, management, and agent relationships for the company’s Western region of the United States. He and Brad Blizzard, the company’s other national vice president of sales, will report directly to Cooper.

Chandler’s industry career also includes stints as regional vice president at Protective Life, director of operations and marketing at Trend Personnel, and vice president of training services at EFG Companies.

"I have watched RoadVantage grow into a powerhouse in this market, and I am excited to be joining the team,” said Chandler. “This is an amazing opportunity, and I look forward to helping them continue this forward momentum."

Commenting on Ross’ promotion and his senior management team’s new additions, RoadVantage CEO Garret Lacour added: “There is a reason we are the fastest growing F&I company in the industry, and that's the people. We have an incredible team, and I know that Randy, Keith, and Steve are all going to do great things. We're just getting started."

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