Gugliotta will report to company CEO Aaron Krane and will be responsible for leveraging Drive Motors’ omnichannel car-buying tools for the largest auto finance sources and vehicle OEMs in the world.

“Drive Motors is solidifying its position as the leader of transparent car buying for auto dealers, and forging strategic partnerships is going to accelerate Drive’s sustained growth,” said Gugliotta. “I’m excited to join the executive team, and I’m proud to offer Drive the connections and expertise I’ve developed throughout my decades-long career.”

Gugliotta brings more than 20 years of experience in technology, automotive, and retail sales to the role. In 1996, he started at Lithia Motors, where he developed and scaled internet-marketing and ecommerce teams for more than a decade. He then spent more than half a decade leading growth efforts at Dealer.com, ultimately rising to the post of vice president of sales for Cox Automotive. Gugliotta then returned to Lithia to lead innovation and online sales strategy.

"We’re elated to welcome Chris to the team, given his deep vertical automotive expertise and his passion for delivering great consumer experiences with technology,” said Krane. “His experience is vast, spanning top dealer groups like Lithia, as well as top technology companies like Cox Automotive. That is clutch.”

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The upgraded warranty will cover Chevrolet and GMC vehicles for five years or 60,000 miles and Buick and Cadillac vehicles for six years or 70,000 miles. The standard bumper-to-bumper warranties offer three years or 36,000 miles for Chevrolet and GMC and four years or 50,000 miles for Buick and Cadillac.

Pricing would be set by the dealer, although GM has recommended a price range of between $1,000 and $2,000, depending on the model. The warranty also stays with the vehicle, even if there’s a change of ownership — which could increase its residual value, said Rita Kass-Shamoun, a GM spokesperson.

"We believe this could be a selling point from the original vehicle buyer to the second vehicle owner," said Kass-Shamoun. "We believe this will increase the residual value."

The new warranty isn’t like a dealer-offered service contract, as repairs are completed without the need for a claim to be filed. There also are no deductibles. The option also is included in the overall price of the vehicle and could be folded into a loan or lease.

"People who lease typically keep the vehicle for 24-36 months, so most of them are always covered by the base bumper-to-bumper limited warranty," said Ken Mac, director of Chevrolet, Buick, GMC, Cadillac Protection. "But if you buy, analysts say you’ll likely keep your new vehicle for over six years. This true extended warranty can keep the average customers covered for most if not all of the time they own their vehicle."

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Credit Union Land is a strange and wonderful place for dealerships that are able to crack the code. Credit unions are a tremendous resource that helps those dealers and F&I professionals sell more vehicles, sell more F&I products, and make more money.

If you have yet to crack the code, your local CU is a real thorn in your side. It’s an intractable, obstinate adversary that continually costs you thousands of dollars in blown sales, reduced grosses, and lost F&I product sales. Yet it doesn’t have to be that way.

In 1934, President Roosevelt signed the Federal Credit Union Act to help make credit available through a national system of nonprofit, cooperative credit unions. Credit unions are not-for-profit financial institutions that are owned by their members. That’s why credit unions will typically offer higher savings rates, lower fees, and lower rates on loans than for-profit financial institutions like banks. Unlike banks and other retail businesses, credit unions are focused on serving their members rather than maximizing profits — the antithesis of what most automobile dealers focus on.

It’s also why many dealers and credit unions constantly butt heads.

1. Understand the Code Behind the Code.
Edward Filene, considered to be the founding father of the American credit union, once said: “Credit unions are not for profit, not for charity, but for service.” This is why credit union members are some of the most loyal customers you will ever find. They love their credit union.

For a dealer, turning that local credit union from an adversary into an ally is going to be immensely more profitable for both the sales department and the F&I department than endlessly trying to beat their rate. That’s hard to do. Because they do offer consistently low-interest rates, especially to members who don’t have 800-plus credit scores.

Consumers today are infinitely better informed and more financially astute than they were 30 or 40 years ago. Not only do they often begin shopping for vehicles online, studies show consumers also research their financing options online. They can also calculate monthly payments, apply for financing, and make their car payment right on their phone. They also talk to their credit union and ask for their advice when it comes to buying a car and obtaining financing. They know their credit union is there to serve them, not sell them. So, they trust their credit union.

Car dealers, not so much.

2. Test the Limits of Loyalty.
Fortunately for us, when it comes to financing and interest rates, member loyalty to their credit union normally only extends up to about one-quarter of a point. Even long-term credit union members will compare multiple finance sources in an effort to obtain the best rate available when it comes to financing their new or used vehicle. Everyone wants to be an informed consumer and get a good deal.

The improved availability of credit information and the introduction of credit scoring has also made it faster, easier, and less costly for all lenders to gauge a consumer’s creditworthiness. With information on financing and interest rates readily available, every dealer and credit source has to offer competitive rates or risk alienating potential customers. There are basically five types of noncaptive finance sources that most dealerships work with:

• Superprime: These are usually nationwide banks and finance companies that target customers with credit scores of 781 to 850. While they have stringent lending requirements, they do offer auto approval programs with ultracompetitive rates.
• Prime: These finance sources have a relatively large geographical lending authority, target customers with credit scores of 661 to 780, and their rates are very competitive. They also typically allow paper buyers some flexibility with the tier level.
• Nonprime: These sources, which include most credit unions, are often regional and typically target customers with credit scores of 601 to 660. Credit unions are a great source for nonprime customers, as their rates are especially competitive.
• Subprime: These lenders focus on customers with credit scores of 501 to 600. Credit unions are also a possibility with subprime customers, especially if the customer is local and they have an existing relationship with the customer.
• Deep subprime: These are customers who have credit scores of 300 to 500 and are typically buy-here, pay-here customers. Unless the customer is already a member, they are probably not a good fit for a credit union.

With the manufacturer’s captive finance companies, there are plenty of finance sources available to dealers for those superprime and prime credit customers. It’s the nonprime and subprime customers for which most dealers want and need more finance sources, especially when it comes to used vehicles.

As it happens, these are precisely the customers who are also the sweet spot for most credit unions. In fact, in virtually every credit union’s charter, you will find this exact verbiage, since their mission is to “provide provident credit for people of modest means.” Credit unions were not created to provide cheap money for wealthy people with great credit. Those people can get money anywhere. A credit union’s mission is to provide low-cost, easy-to-obtain loans for people of modest means.

According to the National Credit Union Association, approximately 84% of credit unions are involved in some form of indirect lending, and another 8% are considering becoming involved. In a recent survey by TransUnion, credit unions ranked auto loans as their highest growth opportunity over the next 12 months. Members appreciate having their credit union available as an option when and where they need financing. If their credit union is an available source at the point of sale, it can be a win-win-win situation for you, your customer, and their credit union.

3. Get on the Phone.
So how do you turn those credit unions you compete against into reliable sources you can count on when you have a nonprime customer? Well, you can always contact Credit Union Direct Lending or Credit Union Direct Connect to see if the customer’s credit union is in CUDL’s or CUDC’s network. Failing that, you can determine whether they might have other credit unions in your area that are part of their network. If so, they’ve already done the heavy lifting in creating mutually beneficial relationships between dealers and those credit unions in their network.

If not, the first step is to start a relationship with that credit union. That means going to the credit union and meeting the people who work there. If you want to become a trusted partner, they first have to meet you face-to-face. If possible, open an account with the credit union. Contact the head of lending. Find out what’s important to the credit union.

Do NOT lead with increasing CU profits. If you lead with increasing their profit or more loan volume, that’s a non-starter with every credit union, because they are not-for-profit financial institutions. As the retired CEO of one of largest CUs in Texas explained in no uncertain terms, “I know of no credit union CEO who has profit or ROI in his or her annual performance or compensation plan.”

Rather, you need to find out what is important to the CEO. What is important to the credit union’s board? Is it membership growth? Protecting their members from being ripped off by unscrupulous dealers? Helping their members by offering added benefits, special pricing or discounts not available to non-credit union members?

Your focus and primary reason for meeting with the credit union CEO should be based on answering one question: “How can we work together to help your members get the car they want with the loan and the protections they need?”

Credit unions are not homogenous in their focus, their operations, or their priorities. You have to develop a personal relationship with the credit union CEO and the other credit union execs, as well as all the different stakeholders. Take them to lunch occasionally. Small spiffs or special pricing for credit union members is usually far more important, motivating and more effective in building that relationship than increasing the credit union’s profits.

Everyone at the credit union needs a face to put with the dealership, someone they know they can contact if they have an issue — especially those dealer haters at the credit union who could attempt to squelch a better relationship with your dealership. If a member ever has a problem with your dealership, they need to know whom they can call.

4. Earn Trust One Deal at a Time.
With any credit union, member satisfaction is vastly more important than generating additional revenue. Honesty, consistency and guaranteeing the credit union members will always be treated fairly by your dealership is the key to turning a credit union into a new finance source. For a credit union, becoming a trusted partner is not something you buy; it’s something you earn — one member, one transaction, one loan at a time.

The CEO’s greatest fear is that someone from the dealership is going to take advantage of his or her members by marking up the service contract or other F&I products by an exorbitant amount. This is especially true if the CU has recommended your dealership to its member. If that ever happens, there will be no second chances. If anyone at the dealership takes advantage of a member or the member has a bad experience, that relationship is over.

A credit union CEO cannot stand “noise” from the board or complaints from the organization’s members.

Any relationship a CU executive enters into with a dealer has to be sold to the board. It has to be viewed by all stakeholders as mutually beneficial. The CEO has to be able to go before the organization’s board, its staff, and its members and say, “Look what we did for our members.” It could be a one night each month for CU members, a special credit union hotline, a free lunch, or a door prize for the monthly chapter meeting. It could be providing the CU with ATM or deposit slips with a coupon on the back for a free car wash, oil change, or tire rotation.

And, yes, it also means you’re probably going to have to make some concessions for credit union members on F&I product prices. Your prices will need to be both fair and consistent for all members. You may not be able to mark up the interest rate, but you will be able to receive a flat — either a set dollar amount or a percentage of the amount financed. Bottom line, rather than make a lot of money on a few members, you’re going to make a little less money on a lot of members.

Cracking the code begins with first having a conversation with the CEO, building a relationship, and finding a middle ground that works for both parties. The credit union wants to retain the loan and protect its member. Your dealership wants to sell the car and make money on the financing by helping the CU’s members get the F&I products they need. How can we work together to help your members, the credit union, and the dealership?

As an F&I professional, you have a responsibility to your dealer, your customers, and all your finance partners to maintain ethical standards that are beyond reproach. The overriding consideration must be the development of a long-term, mutually beneficial relationship between all of your finance sources and the dealership.

In Credit Union Land, it’s not about the money. It’s about honesty, trust, transparency, and helping members.

What’s the secret code for developing a new finance source and creating a mutually beneficial relationship with a credit union? It’s answering that all-important question: How will this partnership with your dealership help their members?

Ron Reahard is president of Reahard & Associates Inc. and ranks among the industry’s leading F&I trainers, authors, consultants, and speakers. Contact him at ron.reahard@bobit.com.

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The company’s president, Ron Martin, said VisionTouch gives F&I professionals the ability to build their own sales presentation, including tools for video, photos, and brochures, and work with customers to electronically rate and contract the provider products, review the deal and the products, “touch” any product to add or delete with payment accuracy, then electronically sign the documents.

“VisionTouch gives the person handling the F&I transaction a tool to present products and esign documents no matter whether the customer is at the dealership or a remote location,” Martin said. “It is equipped to sign any laser form using our patent-pending vSignature technology. When we started VisionMenu 15 years ago, the ultimate goal was to take the process of F&I paperless. I am happy to say we have the technology to do that today.”

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Mechanic 2.0 provides a wide range of terms up to 10 years and 200,000 miles, depending on the vehicle and coverage level, and enables dealers to offer protection on multiple brands as well as components for hybrid and electric vehicles. Dealers can quickly generate digitally quoted service contracts using the most current pricing and loss ratio data available, leveraging more than 50 years of actuarial data and insights from protecting nearly 47 million vehicles, all according to Ash Bauer, senior vice president of Assurant Resource Automotive.

 “Consumers are using vehicles in new and different ways, and Mechanic 2.0 gives dealers the flexibility to offer service contracts that meet those changing needs,” Bauer said. “With a wealth of new term and mileage options, dealers can tailor solutions to meet most any customer demand.”

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“The startup environment is incredibly demanding and competitive, and we’ve been proud of the passionate team and loyal customers we’ve accumulated in these first few years,” said Eric Rea, CEO and co-founder of Podium. “As we have gone from working in a spare bedroom in an apartment to having local businesses connect with one in eight U.S. cell phone owners using Podium’s platform, we have had a long list of humbling moments. Earning a spot on this ranking is definitely one of those moments and we look forward to continued growth in years to come.”

Founded in 2014 and now working with more than 25,000 businesses to create over 4 million customer interactions a month, Podium has quickly become one of the fastest-growing SaaS companies in the U.S., executives said. The Forbes list adds to the tally of accolades the company has received in 2018, including a No. 13 ranking on the Inc.’s lists of fastest-growing companies and best workplaces and recognition in the annual SaaS Awards.

To see the full list of Forbes’ Next Billion-Dollar Startups for 2018, click here.

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Lightspeed EVO is an integrated dealer management solution designed to help dealers find and keep customers, streamline operations, and grow profitability. The integration of Black Book’s data is expected to help Lightspeed EVO users realize stronger profit potential with a more precise valuation process for trade-in motorcycle and powersports vehicles.

“We are excited to partner with Black Book to offer enhanced valuation data through our Lightspeed EVO platform,” said Kris Denos, vice president and regional manager of recreation and heavy equipment at CDK Global. “In addition to being a highly effective resource with the industry’s most precise valuations, with Black Book, our dealer customers will accelerate profit potential and grow strong relationships with customers through a less adversarial environment during the trade-in process.”

Jared Kalfus, executive vice president of revenue at Black Book, added: “A best-in-class powersports dealer management solution that combines technology such as Lightspeed EVO and the most precise vehicle values and insights from Black Book will foster a more productive dialogue for dealers and their customers. This combination will create a truly win-win scenario for both customers and powersports dealers leading to a higher level of trust, which ultimately will drive even more value for the Lightspeed EVO platform.”

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“Very few agencies were selected to join this testing group, and we’re honored Facebook thought of us and sought out our professional opinion on the quality of leads being provided by this ad type,” said Paul Potratz, the agency’s founder.

In order to be considered for the Facebook Alpha testing program, advertisers needed to be considered avid and proficient users of the platform for the purposes of advertising; generating above-average lead counts for their clients; as well as have a substantial number of clients on Facebook. Throughout the two-phase program, advertisers were expected to define what constitutes a qualified lead for their clients, then track their success rates for review by Facebook, as well as their overall experience utilizing the ad type, from creation to conversion, all according to the announcement.

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“DocuBizz is an innovative, cloud-based software that can easily save hundreds of hours per month at a typical dealership,” said Mike Esposito, Auto/Mate’s president and CEO.

“Integrating with Auto/Mate’s Accounting Suite was cost effective and allows us to offer our solutions to a wider base of auto dealers in the U.S.,” said Mads Toksvaerd, founder and CEO of DocuBizz. “Auto/Mate users can expect the same level of simplicity and time-saving features from our software as they currently experience from their DMS.”

When integrated into the DMS, the DocuBizz workflow solution offers such benefits to single and multi-location auto dealers as eliminating data entry for invoices, automatically matching POs to invoices, and making invoices available and easily searchable, all according to the announcement.

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ST. PETERSBURG, Fla. — In-dealership merchandising solutions provider LotMonkey has appointed automotive industry veteran Terry McSpadden as vice president of sales. McSpadden brings almost 30 years of automotive industry experience to LotMonkey, including working all retail positions at the dealership level in multiple markets across the US. McSpadden also has experience with instore sales and service marketing, sales teams, sales training curriculums and revenue for companies that include ELEAD1ONE, AMMS, C.A.R.S., and EasyCare.

As vice president of EasyCare’s Special Owner Services division, he was charged with developing a new division focused on organic growth, retention, and recapturing business for EasyCare agent clients and public dealer groups. Under his direction, the division grew revenue from zero to $11 million per year in just 4 years, all according to the announcement.

“We are extremely excited to have Terry join our team. He has a very strong record of building relationships, developing sales teams, and growing businesses within the automotive industry,” said LotMonkey CEO John Wingle. “His passion for the car business, matched by his desire to deliver services and products at the highest levels, contributes to his success. He will be an invaluable part of our team as we strengthen relationships with our automotive customers and continue to grow into new markets.”

“I am thrilled to join such an innovative and fast-growing company that helps make marketing and merchandising a breeze for auto dealers,” said McSpadden.

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Manheim has been enhancing its digital platforms, from OVE to RMS Automotive and Simulcast, all designed to give dealers a faster, easier and more efficient experience wherever and however they want to do business. The latest enhancements include the launch of the Manheim Express mobile app, and the forthcoming launch of a full-service concierge service, which will offer trained advisors to help dealers maximize vehicle listings and profitability.

“With wave after wave of enhancements, we are delivering a future-proof digital marketplace,” said Nick Peluso, president of Manheim Digital Marketplace and RMS Automotive. "We are committed to delivering an omni-channel marketplace that dealers can tap that offers the type of choices they need to compete and thrive in today’s fast-moving used vehicle marketplace.”  

Dealers are Increasingly embracing online inventory channels, recognizing they can move inventory faster online with 24/7 access to buyers and sellers. In fact, Manheim experienced significant digital acquisition growth with 45% of all vehicles sold to a digital buyer during the first half of 2018, up from 39% in 2017, executives said.

On OVE, Manheim’s leading open digital marketplace, Manheim has invested in a complete overhaul of the vehicle search experience, bringing faster performance and greater personalization. The site now learns from each user’s searches and purchases to present the most relevant set of results possible. Sellers will see a significantly improved selling experience in 2019 as well. Enhancements will cascade to other platforms in the Manheim Marketplace, including Manheim.com, and Simulcast in the coming months, all according to the announcement.

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The dealer-branded Key ID Bluetooth key fobs allow customers to instantly find their keys through the Maintain mobile app. Mileage beacons allow the app to automatically track and notify the customer of their maintenance status, safety recalls, and warranty status with up to 95% accuracy. This ensures that customers are aware of their maintenance needs and a built-in rewards program incentivizes them to return to their dealer for service, according to the company.

For dealers, the Maintain app and Key ID establishes a direct communication channel with customers via their mobile device which is far more effective than email or direct mail. Dealers communicate through this channel using easy to design, automated Smart Campaigns pushed directly into the Maintain mobile app. Smart Campaigns utilize vehicle data captured by the Maintain app and Key ID to ensure messages are only delivered to customers when they are most relevant, said Vero CEO Joe Annoreno.

“The Maintain app and Key ID addresses two pain points dealers shared with us,” Annoreno said. “Dealers asked for an affordable yet practical mobile app that enables them to push service and related messages to their customers and gives those customers valuable reasons for installing and keeping the app on their phones, including a lost-keys locator, a lowest gas-price finder and an easy to understand maintenance schedule.”

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“In marrying the GoldStar solution with a consumer-facing mobile app, our dealer and lender customers not only improve asset management and protection, but also can offer their consumers a significant value add — modern connected car benefits regardless of the vehicle make, model and year,” said Reggie Ponsford, senior vice president of sales at Spireon. “We have had a number of larger BHPH dealers piloting the GoldStar Connect solution in the past few months and seeing up to 90% consumer sell-through.”

With GoldStar Connect, consumers gain a host of added benefits with their car purchase, including enhanced safety and security, trip history, smart alerts, stolen vehicle recovery, and insurance discounts, according to the announcement.

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LOS ANGELES — RelayCars today announced the launch of its virtual reality application RelayCars Pro, an automotive sales platform. The new application offers a suite of services with an immersive approach to present cars to potential buyers, according to company officials. 

Powered by an expansive VR automotive asset library, the salesperson can place consumers in the driver’s seat of any vehicle through the virtual reality showroom.  With a database of thousands of vehicles that is constantly expanding, dealers are able to show car buyers a realistic view of a vehicle that may not even be physically on the dealership lot.

“At RelayCars, we are proud to offer a product made specifically for dealers that will continue to shape the future of selling cars,” said David Falstrup, RelayCars CEO.  “We have already found great success working with a large network of dealerships and look forward to bringing more businesses on board as our VR library grows and technology continues to advance.”

Recent automotive studies show that 80% of car shopping touchpoints between the initial research and visiting the dealership are digital.  As this digital trend continues to grow, RelayCars Pro allows dealership customers to get a 360-degree view of a vehicle’s interior and exterior, as well as explore different trims, colors, and videos of models.

Additionally, RelayCars Pro with “Commander” allows one or many users at a time to be guided by an agent, aiding in design reviews and research where buyers may not be centrally located. Commander option is available to work over a local area network or remotely over the internet with either one-on-one controls or with the agent controlling multiple headsets via a companion app running on any Android device. This option prompts salespeople with USPs that are unique to a vehicle model. A self-guided experience is also available, with a white label version of the application accessible on both iPhone and Android, requiring no headset.

RelayCars’ consumer application is also available now for free on iOS, Android, Oculus Go, Google Daydream, Samsung Gear VR, and Microsoft MR. It will also be available soon on Magic Leap.

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FT. WAYNE, Ind. — VisionMenu has rebranded to Vision Dealer Solutions, doing business as VisionMenu. The software solution provider also announced the release of a new remote sales tool designed to handle an entire deal electronically.

VisionTouch is a wireless solution that allows users to pull deals, create menus, and customize and present their menu, and generate PDF contracts. The tool can be loaded with brochures and sales videos, and allows for e-signing.

“VisionMenu is still our flagship product, but we are providing much more to our dealers than just a menu,” says Ron Martin, president of Vision Dealer Solutions. “In the last year we have added two new products: vSignature, which is an electronic signature tool, and Remote F&I, a tool that allows F&I managers to close F&I sales using the customer’s smartphone. 

“With all that we offer a dealer now, it just made sense for our brand to better describe who we are,” Martin added.

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Powered by Marketscan, a provider of data and calculations, Express Desking integrates directly into a dealership’s branded Express Storefront. Roadster officials said the new solution will begin rolling out to dealers in October.

“At Roadster, we are committed to bringing new levels of efficiency, transparency and coordination to the car buying process,” said Roadster CEO Andy Moss. “We designed our Express Desking solution to answer a need from dealers far and wide for a new, more effective and collaborative way to finalize deals. By showing multiple lease and finance options up front, our Express Desking solution will not only build trust between dealers and car buyers, but will help lead to a faster way of saying yes.”

Once a customer is ready to discuss deal terms, the solution enables sales agents to work side-by-side with their customer to review lease and finance options and structure the customer’s deal. This includes being able to calculate dozens of customer payment menu options with standard and non-standard terms, and communicate those terms in real-time with sales managers via instant message.

While maintaining control and visibility over all deal activity, sales managers can then review the deal terms, remotely unlock codes, override the deal or give agents their approvals. This in turn frees up desk managers to focus on higher value tasks like coaching their sales teams, while giving sales agents the ability to build a direct relationship with their customer. But the benefits don’t stop there. Express Desking also helps speed up the sales process by giving sales agents the ability to draft a consistent first pencil without having to start from scratch with every new adjustment.

In addition, Express Desking empowers sales teams to give their customers more options to secure financing with OEM-sponsored finance sources and independent banking institutions. It also lets consumers save, compare and conveniently share deal options with others via text and email to ensure they are comfortable with the options presented.

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The Stevie Awards for Great Employers program was designed to recognize the world’s best who help to create and drive great places to work. Named for the Greek word meaning “crowned,” the Stevies received more than 550 nominations this year from organizations in 21 nations for consideration in a range of human resources-related categories. AUL Corp. was nominated in the Employer of the Year category for “Other Industries,” for which it won Gold, and in the “Insurance Industry” category, winning Bronze.

“Since AUL’s founding in 1990, we have dedicated ourselves to establishing a culture of excellence, teamwork and integrity,” said AUL President and CEO Jimmy Atkinson. “To be honored by the Stevie Awards, with two wins no less, is a tremendous validation of our hard work and the quality of our people.”

“The reason AUL is the premier vehicle service contract in the United States is simple. AUL fosters a culture where our people come first — a culture of caring,” added Helen Van Deren, the company’s HR manager. “From providing leading benefits packages to encouraging personal time off and enriching professional and educational development, AUL truly believes that thriving employees go above and beyond to ensure a thriving business. These awards are further validation of our core convictions.”

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“TSI Auto Solutions is excited to partner with an employee-owned, industry veteran like NCM that’s as dedicated to clients’ success as we are,” said Jane Ravenshaw, president of TSI. “Together, I’m confident we will expand our current services and develop new products to give OEMs and their dealers the data and intelligence they need to optimize profitability.” 

NCM and TSI stated an intention to conduct “business as usual” in the coming months; any merger activities will be done with the utmost care to minimize client impacts.

“First and foremost, I’m thrilled to welcome TSI associates to the NCM family. Jane and I are truly excited about our new partnership and the opportunities it will create for our associates, and especially for our clients,” said NCM President and CEO Paul Faletti Jr. “Our portfolio of reporting and analytical options will only grow and improve from here, and I know our OEM and dealer clients will appreciate having tools designed to help them make better, more informed decisions based on data to drive performance.”

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According to the firm, the average annual percentage rate for new-vehicle financing in September was 5.8%. That’s up from 4.8% in September 2017 and 4.1% five years ago. Interest rates have stayed above 5% for eight months now, mirroring APRs seen prior to the Great Recession.

"The trickle-down effect of elevated interest rates really started hitting car shoppers in September," said Jeremy Acevedo, Edmunds' manager of industry analysis. "While new vehicle prices continue to rise, favorable credit offerings are growing increasingly more difficult to come by. Buying conditions are far less amenable for consumers than they were before, which might come as a shock for shoppers coming back to the market for the first time in a few years."

According to Edmunds, the average down payment for a new vehicle soared from $3,817 in September 2017 to $4,198. Five years ago, the average down payment was $3,555.

Additionally, the availability of zero percent finance offers dropped from 10.1% in September 2017 to 5.6% last month — the lowest September level since 2005. Average loan terms also contracted from 69.4 months in September 2017 to 68,7 months this past September — the lowest level this year.

Edmunds experts added that the Federal Reserve’s interest rate hike last month is a harbinger of worsening market conditions heading into the fourth quarter.

“The higher Fed effective rate means we can expect to see interest rates continue to inch up as we head into the rest of the year,” said Acevedo. “While strong economic factors like low unemployment rates and high consumer confidence have helped sustain healthy sales levels so far amid less favorable conditions, cheap and easy credit is really what shoppers zero in on when purchasing a new vehicle. As credit offerings grow more rigid for consumers, automakers are facing increased pressure on new vehicle sales through the end of the year."

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The last time Black Book’s key index reached 116 was in October 2016. What’s more, the Index was up for all segments, ranging from a 0.26% increase for small pickups to a 1.82% increase for sporty car. The five segments that drove up the firm’s September index were:

1. Compact Crossover/SUV: +0.89% MOM
2. Mid-Size Crossover/SUV: +0.89% MOM
3. Compact Car: +0.89% MOM
4. Full-Size Pickup: +0.73% MOM
5. Mid-Size Car: +0.64% MOM

“The Index ratings over the last few months are a clear indication of the strength that has been present throughout the used-vehicle market in 2018,” said Anil Goyal, executive vice president of operations for Black Book. “What’s interesting this month is the broad strength in the market across all vehicle segments. It is unlikely for the Index to maintain this upward momentum, as we get to the end of the year when typical depreciation patterns are expected to set in.”

The Index dates back to January 2005, when Black Book published a benchmark index value of 100.0 for the market. During 2008, the index dropped by 14.1%. It then dropped by 6.4% in 2016 before rising from 113.3 to 123.0 by the end of 2011 as the economy picked up steam and used vehicle values rose. It continued to remain relatively stable, rising slightly until May 2014. That’s when the index peaked at 128.1.

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SOUTHFIELD, Mich. — Branded audio system volumes in new vehicles are expected to grow from just under 12.4 million units globally in 2018 to 14.7 million units in 2023, according to new vehicle production forecasts for these systems from business information provider IHS Markit.

A recent IHS survey confirms consumer demand for these systems remains high, with more than half of respondents indicating preferences to have a brand-name car audio system in their next new vehicle. Five key automotive markets were covered in the analysis, including the U.S., Japan, China, Germany, and the United Kingdom. Among survey respondents, 73% indicated that a brand-name audio system would influence their vehicle purchase decision. In addition, 54% of those respondents that wanted a branded audio system wanted it to be standard on their vehicle.

When asked about what features customers were willing to pay for, brand was a much more powerful feature, with 33% of respondents noting they would be willing to incur the cost — second only to 360-degree sound — which 34% of respondents agreed to pay for. Slightly more than half of all respondents globally would prefer to have some sort of branded audio solution in their vehicle.

“There also seems to be a lack of understanding on what constitutes a premium system,” said Brad Gottschalk, automotive audio analyst at IHS Markit and the report’s co-author. “Customers seem to equate quality with brand, rather than specific individual features.”

Responses from more than 5,000 vehicle owners across the regions indicating an intention to purchase a new vehicle within the next 36 months were analyzed and reviewed in the 2018 Automotive Premium Audio Consumer Analysis.

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DALLAS, TX, October 1, 2018 — DealerSocket Inc. reached a major milestone this week. The 17-year-old software maker announced that more than 100 million vehicles have been sold through its software platforms since its founding.

“DealerSocket has helped facilitate 100 million sales, and we’re excited to make an even bigger impact in the future,” said DealerSocket CEO and President Sejal Pietrzak. “For the past 17 years, our customers have relied on us to be their trusted advisor and partner working with them to achieve their goals. DealerSocket's software continues to help our dealers reach more customers and sell more vehicles, as evidenced by this important milestone.”

Since co-founders Jonathan Ord and Brad Perry founded the company out of their garage, DealerSocket has grown to multiple offices and more than 1,000 employees. DealerSocket’s software started with one product, its CRM system, and now offers an integrated suite of products for automotive dealers. That suite includes a CRM platform that includes desking and service tool, its DealerFire website builder and digital marketing solution, Precise Price digital retailing platform, Revenue Radar equity mining tool, Inventory+ inventory management system, and its DMS for the independent market (iDMS).

“DealerSocket has always been focused on helping dealers succeed in a rapidly-changing industry,” said DealerSocket co-founder and chief product officer Brad Perry. “The way customers interact with dealerships has evolved significantly in the last 17 years, and I’m proud of how DealerSocket continues to innovate and enhance our software products to meet the needs of our customers.”

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IRVINE, Calif. — Kelley Blue Book reported the estimated average transaction price for U.S. light vehicles was $35,742 in September 2018. New-vehicle prices increased by $687 (2%) from September 2017, while remaining essentially flat (-0.4%) from last month.

“While September sales are expected to decline, average transaction prices remained strong, rising 2% year-over-year,” said Tim Fleming, analyst for Kelley Blue Book. “With interest rates on the rise and manufacturer incentives at a healthy level, thanks to tighter production, monthly payments for consumers are immediately impacted. If gas prices stay high in the fourth quarter, affordability will likely be a concern for new-car buyers and could lead to fewer sales at year-end.”

American Honda and General Motors were the strongest performers with help from redesigned models and the strength of trucks and utility vehicles. Also among the top three performers, Ford Motor Company’s average transaction prices grew by 3% in September 2018. Lincoln rose 12%, thanks to the Navigator, which was up 33%. The Ford brand also reported a good month, up 3%. The new Expedition had the biggest month for Ford, increasing 16%, while Mustang improved 9% on a high sales mix of the Mustang GT.

Among the major manufacturers, Volkswagen Group reported the only year-over-year decline, falling 1%, as Volkswagen’s 2% gains were offset by Audi’s 4% decline. Volkswagen’s improvement was largely due to the Tiguan, with its share of sales doubling since its redesign. Audi had a lot of new models in its lineup last year, which is contributing to this year’s declines, analysts noted. The Q5, Audi’s top seller, was down 2%.

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The saying says something like “Experience is the best teacher.” That usually means that the pain of the experience — touching the hot stove — is something you’ll remember. Wouldn’t it be swell if you could get someone else to experience that pain, and learn from that someone’s experience?

We’ve got that sort of deal in this month’s issue. Here are three cases involving arbitration, each one containing a different lesson for dealers.

Lesson No. 1: Beware Multiple Transactions.

When a dealer and a buyer “unwind” a transaction because financing cannot be provided or for other reasons, lots of documents are created. Unless the dealer has a procedure in place to handle the proper “undocumentation” of such transactions, bad things can befall the dealer. One of those bad things is the loss of the dealer’s ability to compel the buyer to arbitrate her claims.

On March 15, 2017, Miashonae Willis signed a retail installment contract and conditional delivery agreement with Setjo LLC, d.b.a. Kia of Bedford (Ohio), in order to buy a car. Apparently, the income information on Willis’s financing application was not complete, so Setjo required her to return the car.

When she returned the car on April 8, 2017, Setjo offered Willis a different car with different financing terms. Willis’s financing was not approved for the second car, and Setjo took back that car as well. Willis signed an arbitration agreement in connection with the April 2017 transaction; she did not sign an arbitration agreement in connection with the March 2017 transaction.

Willis sued Setjo, claiming that the March 2017 retail installment contract violated the Truth in Lending Act. She also alleged that she was fraudulently induced into signing the April 2017 arbitration agreement and that Setjo waived its right to enforce the arbitration agreement. Setjo moved to dismiss or, in the alternative, to stay the action pending arbitration.

First, the federal trial court found that Setjo had not waived its right to enforce the arbitration agreement and that Willis’s execution of the arbitration agreement was not fraudulently induced. Then the court addressed Setjo’s argument that the April 2017 arbitration agreement applied retroactively to the March 2017 agreements.

The arbitration agreement stated that it applied to all claims arising from the purchase and financing of the vehicle and “any document or relationship established in this transaction or related transactions regardless of whether the transactions were consummated.” Setjo argued that the March 2017 agreements were “related transactions” covered by the April 2017 arbitration agreement.

The court disagreed. The court found that the April 2017 transaction was separate and independent from the March 2017 transaction. The March 2017 contracts were executed and “voided,” and the vehicle covered by those contracts was returned to Setjo, before the arbitration agreement was ever signed. There was also no evidence that Willis or Setjo intended for the March 2017 agreements to be subject to a later-signed arbitration agreement.

Therefore, the court concluded that the TILA claims arising from the March 2017 transaction were not arbitrable. The court also concluded that all claims arising from the April 2017 transaction (which the court did not identify) were subject to arbitration and were, therefore, dismissed. The TILA claim arising from the March 2017 transaction was stayed pending the completion of the arbitration.

How would your documents perform under an analysis like this?

Lesson No. 2: Beware Dueling Arbitration Clauses.

It isn’t uncommon for several documents used in the sale and financing of a vehicle to contain arbitration clauses. What happens if those clauses differ from each other?

Shaina Stanley sued A Better Way Wholesale Autos Inc., for violating the Truth in Lending Act and Connecticut’s Unfair Trade Practices Act by charging her for several services in connection with her used-car purchase that were not properly disclosed to her and that she did not want. Better Way moved to compel arbitration before the American Dispute Resolution Center.

The parties’ purchase order provided that binding arbitration shall be provided by ADRC. The parties’ installment contract provided that Stanley may choose the American Arbitration Association or any other organization to conduct the arbitration, subject to Better Way’s approval.

Prior to suing, Stanley submitted a demand for arbitration to AAA seeking damages from Better Way. AAA advised Better Way’s counsel that Better Way was required to submit its consumer agreement for expedited review and to AAA’s database and was required to pay fees associated with those submissions, as well as filing fees and a deposit for the arbitrator. Better Way failed to pay the required fees after numerous requests, so AAA closed the arbitration and requested that Better Way remove AAA’s name from its arbitration provision due to its failure to comply with AAA’s policies.

The federal trial court found that the arbitration provisions in the purchase order and the retail installment contract must be read together because the documents were executed on the same day and related to the same purchase transaction. The court noted that because the two documents provided by Better Way named two different arbitration organizations, that conflict must be construed in Stanley’s favor.

Because Stanley submitted an arbitration demand to AAA, the court concluded that AAA is the proper arbitration panel. However, because Better Way failed to pay required fees, it waived its right to arbitrate. Therefore, the court denied Better Way’s motion to compel arbitration.

Go check your deal documents and count the arbitration clauses they contain. If you get to “more than one,” go talk to your lawyer.

Lesson No. 3: Arbitrators May Make Decisions You Don’t Like.

Some say that using an arbitration clause in connection with selling and financing a vehicle is a good way to avoid fronting courts that may be hostile to car dealers. Arbitrators can be hostile too!

Shannon Gause bought a used 2004 Cadillac SRX from A Better Way Wholesale Autos Inc. Afterward, Gause learned that Better Way had failed to disclose to her that the vehicle was a manufacturer buyback. Gause brought an arbitration claim against Better Way.

The arbitrator concluded that Better Way violated state laws and regulations by not disclosing, on a windshield sticker or other conspicuous display and in the purchase order, the vehicle’s status as a buyback. The arbitrator awarded Gause $1,279 in compensatory damages, $5,000 in punitive damages, and $10,817 in attorneys’ fees and costs for Better Way’s violation of the Connecticut Unfair Trade Practices Act.

After a court confirmed the award, Better Way appealed, claiming that the punitive damages award constituted a manifest disregard of the law. The Appellate Court of Connecticut disagreed and affirmed the award.

The appellate court began by noting that an award of punitive damages under the CUTPA is discretionary. The appellate court then stated that the arbitrator concluded that Better Way’s failure to notify Gause of the buyback status of her car constituted a per se violation of the CUTPA and that Better Way agreed with the arbitrator’s conclusion.

The arbitrator also noted that Better Way restricted Gause from testing the vehicle, induced her to execute the purchase documents before inspection, and attempted to deliver a vehicle that failed to meet safety standards. Given the extent of Better Way’s actions, which the arbitrator concluded constituted a “reckless indifference of [Gause’s] rights,” the appellate court found that the arbitrator was justified in awarding punitive damages.

Arbitration isn’t a failsafe against being hit with punitive damages or outsized awards to car buyers — you still must avoid business practices that an arbitrator would not find offensive.

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. ©CounselorLibrary.com 2018, all rights reserved. Single print publication rights only, to Auto Dealer Today (10/18). HC No. 4817-1508-4148

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SACRAMENTO — Gov. Jerry Brown rejected a bill lobbied for by the state dealer association and unanimously passed by the California State Legislature, returning AB 2107 without his signature due to modifications the legislation called for in the way auto manufacturers reimburse dealers for warranty and recall repairs.

The wide-ranging bill was designed to strengthen and update California’s new motor vehicle franchise laws in nine specific areas. Gov. Brown, whose veto of the bill was unexpected, laid out his concerns for one of those provisions in a letter to members of the California State Assembly, which had passed the bill by a 77-0 vote on Aug. 30.

“Under current law, manufacturers are required to reimburse dealers for warranty and recall repairs at a ‘reasonable’ rate negotiated between the two parties,” Brown wrote, in part. “This framework appears to be working reasonably well and I see no reason to adopt the rather complicated formula authorized in this bill — with perhaps unintended consequences.”

The bill would have clarified what “reasonable” means and established a process for how a dealer can demonstrate the retail rates for parts and labor and be reimbursed at those rates for warranty work. It would have also defined how the factory can respond to a request for retail rates, including guidelines and timelines.

Brian Maas, president of the California New Car Dealers Association, said there is nothing complicated about the formula, noting that it is included in state statutes for more than half the country. “You take recent repair orders that are qualifying, and you establish a retail labor rate,” he said. “And we use the manufacturers [time allowances] to calculate how much dealers are going to get paid.

“Frankly, it’s not all that complicated,” Mass added. “It’s detailed, for sure. It goes on for a few pages. It’s specific, for sure. But it’s not unprecedented, and is based off the successful work of dealer associations across the country that worked with their respective state legislatures.”

The legislation would also have established protections for dealers pursuing this newly established retail reimbursement on warranty process from adverse actions and penalties from the manufacturer, including assessing surcharges, limiting vehicle or parts allocation, and conducting retaliatory audits.

“If you read the governor’s detailed message, he assumes warranty reimbursement rates are negotiated between manufacturers and dealers. That’s not our dealers’ experience,” Maas said. “The manufacturers decide what they’re going to pay. The dealer has two choices: They can either take it or they can try and challenge them with a protest or a court action. So that’s why we think, respectfully, the governor just missed this one.”

The legislation would also have expanded the types of protests dealers can file with the state’s New Motor Vehicle Board regarding manufacturer encroachment. It would also have deemed a facility upgrade requirement as unreasonable if a facility was modified in the last 15 years, and builds upon existing law requiring that all performance standards be reasonable with a dealer’s demographics, market characteristics, allocation, local and state economic circumstances, and historical performance of the line-make.

Additionally, the bill would have allowed dealers to select their own digital service vendors, restricting manufacturers from selecting specific vendors for their dealers to use. It also restricts a manufacturer’s ability to force dealers to repair a vehicle that a dealer is not allowed to sell or lease.

The legislation would have also preserved the state’s existing statutory disclosure dealers are required to give to consumers when a non-OEM endorsed F&I product is sold, thereby prohibiting OEMs from instituting their own disclosure form as General Motors did last summer. The bill also clarifies that treating dealers differently when providing financing or advancing money because the dealer sold a non-approved product is prohibited.

Stripped from the approved legislation, however, was a proposed statewide ban on automakers engaging in direct-to-consumer sales. The language would have modified the state’s existing guideline, which states that an automaker can’t compete against a same-brand dealership within a relevant market area.

Another provision stripped from the bill earlier this summer would have banned automakers from offering subscription programs unless they use their dealers to operate them.

Particularly disappointing to Maas regarding Gov. Brown’s veto is the bill would have reinstated a provision regarding manufacturer export policies. The state currently prohibits manufacturers from imposing chargebacks and other penalties when a dealer is unaware of an intended exportation or resale of a vehicle and authorizes associations to file protests with the New Motor Vehicle Board to enforce California law on manufacturer export policies. Maas said that authority is set to expire on Jan. 1, 2019, which means the association will have to go back to the legislature to have that provision reinstated.

As for the bill, Maas said the association is now working with its author to decide when and how they’re going to reintroduce it. More than likely, that will happen after Gov. Brown’s term ends on Jan. 1, 2019. “They’ll be another governor of California,” he said, “and we’re going to work hard to put this bill on the next governor’s desk.”

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BOSTON — Boston Volvo Cars, part of Ray Ciccolo’s Village Automotive Group, has moved to a new state-of-the-art dealership showroom located adjacent to its previous home. The dealership held a grand opening last Thursday to commemorate its new location.

In a unique vertical showroom design, the new store utilizes three floors of the building, occupying 42,000 of the total 71,300 square feet. A service intake area is located on the basement level  and can be accessed through the rear of the building, while the main showroom is located at street level with additional showroom space on the second level. The vehicle service area remains at the previous location.

In the early 20th century, this Allston area was known as Boston’s Auto-Mile, or “Truck Mile” to some, as International Harvester manufactured trucks and other machinery. Boston Volvo Cars’ move returns the historic commercial building to its original use as an automobile showroom. The stately brick building was built in 1925 and served as headquarters for International Harvester and New Balance in the following decades. As Boston Volvo’s new home, the building underwent an adaptive-reuse project to preserve its red brick façade with architectural details of its original 20th-century commercial character.

“In 1963, our original Volvo showroom was bare-bones and simple. Just as 21st century Volvos have transformed from solid and boxy to sleek and stylish, so has their flagship home in Boston,” said Ray Ciccolo, president and founder of Village Automotive Group. “We wanted to create an interior that combines beautiful Swedish simplicity with unique functionality. While our home has changed, you can still expect the same family-owned dealership and service.”

Boston Volvo Cars’ new facility will accommodate changes in the automotive industry and provide customers with better access and flow for more convenience, including updated amenities in customer waiting areas. Village Automotive has been implementing green initiatives at many of their dealerships, and the new Boston Volvo Cars store is no exception with 285 solar panels, seven EV charging stations, high-efficiency windows, and sustainable building products.

Village Automotive Group worked with Boston’s Arrowstreet and CM&B of Danvers, Mass., for the store’s architectural needs and construction, respectively. This project demonstrates how a long under-utilized, but architecturally and historically significant building can be rehabilitated in a sensitive manner.

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ORLANDO, Fla. — Organizers of the annual Industry Summit announced that the Compliance Summit portion of the agenda will feature two panel discussions staffed by dealer counsel and senior dealership managers. The event, which also includes onsite Automotive Compliance Education (ACE) certification, the inaugural Technology Challenge, and the co-located P&A Leadership Summit, will be held Oct. 8–10 at the Caribe Royale Orlando in Orlando, Fla. Registered attendees are welcome at any session.

Compliance Summit will begin with breakfast at 8:00 a.m. on Monday, Oct. 8, followed by “In Time of Peace, Prepare for War,” a keynote address by Terry “The Regulator” O’Loughlin, formerly of the Florida attorney general’s office, and “GAP, Spats, and Wiretaps: The Compliance Year in Review,” hosted by attorney Jim Ganther of Mosaic Compliance Services.

The first dealer panel, “The Bridge to Compliance: How to Build a CMS,” will begin at 11:35 a.m. Moderator Gil Van Over of ACE will be joined by Jim Cochran of Hendrick Automotive Group, attorney Randy Henrick of Mosaic, and Jodi Nicholson, financial services support manager for The Suburban Collection, which operates dealerships in the Midwest and Southern California. The group will offer a crash course in dealership compliance management system construction — including the core components of training, auditing, and complaint response — to the specifications set forth by the federal government.

The second panel, “Where the Rubber Meets the Road,” starts at 3:05 p.m., sandwiched by “How to Vet and Work With Compliant Providers,” a featured presentation by attorney and F&I product expert Robert Steenbergh, and “Is It Compliant?,” an open forum among Compliance Summit attendees and speakers.

“Where the Rubber Meets the Road” will be moderated by Tariq Kamal, associate publisher of F&I and Showroom and Auto Dealer Today magazines, and staffed by Lori Church, attorney and director of compliance for John Elway Dealers, Jason Heard, general manager of Lee’s Summit (Mo.) Honda and an ADT columnist, and Sue Wilke, finance director at RocketTown Honda and RocketTown Chrysler Jeep Dodge Ram in Lompoc, Calif. The panel’s goal is to share hard-won advice for successfully implementing and enforcing new processes and controls, including credibility-building, ownership buy-in, and advanced auditing and coaching techniques, among other topics.

“Effective compliance education and training can be found at the intersection of the theoretical and the practical,” said David Gesualdo, show chair and publisher of F&I and ADT. “We appreciate all our speakers for their dedication to compliance and contributions to our event, but we owe a special debt to those who take time away from their dealership work to share their insights and strategies with our attendees.”

Registration for Industry Summit 2018 is open at the event’s website. Click here to RSVP for ACE certification on Tuesday, Oct. 9, for no additional charge.

To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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WASHINGTON, D.C. — The Federal Reserve approved on Wednesday its third interest rate hike this year, increasing its target range for the federal funds rate a quarter percentage point to 2% to 2.5%. While expected, the increase is likely to put more pressure on the U.S. automobile business.

Citing the same factors he listed when the Fed approved its last rate hike in June, Federal Reserve Chairman Jerome Powell said Wednesday’s decision is the best way the Fed can promote an environment in which every America has the opportunity to succeed.

“Our economy is strong. Growth is running at a healthy clip. Unemployment is low, the number of people working is rising steadily, and wages are up. Inflation is low and stable,” he said. “All of these are very good signs. Of course, that’s not to say that everything is perfect. The benefits of this strong economy have not reached all Americans.”

The hike, however, will further exasperate the growing affordability problem in the auto industry. In an analysis issued shortly after the Fed’s decision, Cox Automotive Chief Economist Jonathan Smoke noted that the “best available” 60-month new-vehicle loan rates reported earlier this week by Bankrate were already up about 75 basis points compared to a year ago. That amount of inflation alone would translate into 2% higher payments, he said.

“The increase would turn a $500 loan payment into $510 a month, which may not seem significant,” Smoke said. “Over a 60-month loan, however, the price is up $600 over the same purchase last year.”

Things aren’t likely to get better for consumers or the industry, he added, noting that the seven increases over the last 22 months have already changed the market from one that had peak new-vehicle sales two years ago to one that now has peak used-vehicle sales.

The rate hike was the eighth since 2015, and the Federal Reserve isn’t done. It signaled it will raise the cost of borrowing again in December, with more hikes expected in 2019. And although Powell said the gradual return to normal is helping to sustain the strong economy “for the longer-run benefit of all Americans,” Smoke said there are limits to what consumers can afford.

“By necessity, the higher rates are forcing consumers toward vehicles that will deliver the payment that works,” he said. “As a result, the new-vehicle market is challenged by affordability, and, ironically, the most affordable and most popular vehicles are imported and face the threat of new tariffs which will drive their prices higher.”

Powell noted that household spending and business investment are expanding at a brisk pace, and the overall growth outlook remains favorable. He added that the Federal Open Market Committee’s projection for growth of real GDP is 3.1% this year and 2.5% next year.

Job gains averaged 185,000 per month over the last three months, well over the pace needed in the long run to provide jobs for new entrants to the labor force, Powell said. The unemployment rate stood at 3.9% in August and has been near that level since April.

“Smoothing through month-to-month variations, the labor force participation rate remains about where it was in late 2013 — a positive sign given that the aging of our population is putting downward pressure on participation,” Powell said. “We expect the job market to remain strong.”

He added that the FOMC’s projections for the unemployment rate this year is 3.7%, and a bit lower than that in 2019.

Overall consumer prices, as measured by the price index for personal consumption expenditures, increased 2.3% over the 12 months ending in July, while the price index, which excludes the prices of energy and food, rose 2% over the same period.

“The FOMC seeks, and expects to see, inflation remaining near our 2% longer-run objective on a sustained basis,” Powell noted. “At any given time, inflation may be somewhat above or below 2%. For example, the recent rise in oil prices has pushed inflation a little above 2%, but we expect this to be transitory, as is reflected in our projections.”

Powell added that projections for both the overall and core inflation measures remain very close to 2% across the whole projection horizon.

“Readers of the FOMC statement likely noted that the committee dropped a sentence that indicated that ‘the stance of monetary policy remains accommodative,’” Powell said. “This change does not signal a change in the likely path of policy; instead, it is a sign that policy is proceeding in line with our expectations. We still expect, as our statement says, ‘further gradual increases in the target range for the federal funds rate,’ and this expectation is reflected in the projections that I just discussed.”

For car buyers, that means prices won’t get any better, especially with higher interest rates, coupled with higher production costs from tariffs, putting upward pressure on vehicle prices, noted Charlie Chesbrough, Cox Automotive’s senior economist.

“Another rate increase is expected in December, so monthly payments are likely to follow,” he said. “In addition to rising prices and payments, inventory levels are in a better condition this year than last, leading automakers to keep incentive spending in check.

“This combination of factors is likely pricing some buyers out of the market and may be leading other shoppers to buy now rather than wait,” he added. “These buying conditions are likely to continue to deteriorate and suggest next year’s vehicle market will be under even more pressure.”

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ORLANDO, Fla. — Automotive Compliance Education (ACE) will offer onsite Product Specialist certification to attendees of the upcoming Industry Summit and P&A Leadership Summit, organizers announced. The co-located events will take place Oct. 8–10, 2018, at the Caribe Royale Orlando in Orlando, Fla.

Dealers, F&I professionals, agents, and other industry members who would like to participate in ACE certification are invited to RSVP by clicking here. The three-hour-plus review and exam will begin at 8:00 a.m. on Tuesday, Oct. 9.

Attendees of both events also are welcome at Compliance Summit, a full day of compliance training and education to be held on Monday, Oct. 8. Speakers include ACE’s executive director, Gil Van Over, attorneys James Ganther and Robert Steenbergh, attorney and former Florida dealer regulator Terry O’Loughlin, and Florida Automobile Dealers Association chief Ted Smith, as well as two hard-hitting panel discussions staffed by dealership counsel and personnel.

On Wednesday, Industry Summit offers a full day of advanced F&I training from award-winning and nationally recognized trainers.

“F&I and compliance are inextricably linked, and you will not find a better training event — with more qualified instructors — than you will find at Industry Summit and PALS,” said David Gesualdo, show chair and publisher of F&I and Showroom and Auto Dealer Today. “Every dealership needs a compliance strategy, just as every dealership needs an efficient and productive F&I department. Our event is a means to both ends.”

Registration for Industry Summit 2018 is open at the event’s website. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

Industry Summit 2018 will be held Oct. 8–10 at the Caribe Royale Orlando in Orlando, Fla. Photo courtesy Caribe Royale

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Digital Air Strike recently became a member of the Motor Dealers’ Association of Canada and will be attending the Western Canadian Dealer Summit Nov. 1–3 in Las Vegas. Canadian dealerships are using Response Path to connect with consumers on social media, sell vehicles on Facebook Marketplace, and engage consumers 24/7 on all platforms including their website, Facebook Messenger, and via text message, according to Alexi Venneri, Digital Air Strike’s co-founder and CEO.

“We are excited to be partnering with so many other dealerships in Canada,” Venneri said. “It’s great that our solutions are providing such tremendous value for thousands of dealerships and businesses in North America. Our AI intelligent messaging solution adapts to different languages and communication styles and is truly helping businesses worldwide provide better customer service while also streamlining their operations.”

Digital Air Strike’s AI-powered intelligent messaging solution, Response Path, is also used by businesses in the United States, Canada, Barbados, France, Ireland, Netherlands, Philippines, United Kingdom, Trinidad and Tobago, Brazil, Chile, Mexico, and the United Arab Emirates.

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CHARLOTTE, N.C., — Sonic Automotive announced that co-founder B. Scott Smith is stepping down as CEO and president of the company. Smith, who spent more than 21 years as a director and executive officer, will remain with the company to ensure a smooth leadership transition.

Succeeding Smith as CEO is brother David Bruton Smith. Jeff Dyke, who has served as Sonic's executive vice president of operation since 2008, will serve as president.

"Sonic Automotive is a fantastic company run by thousands of fantastic employees to whom I am deeply grateful for their hard work and dedication," said B. Scott Smith. "It has been a pleasure and great privilege to lead the company. I am excited to move into a different role that will allow me to spend more time with my family, and I am also committed to help David, Jeff and our other teammates with a smooth transition."

David Smith served as the public dealer group's executive vice chairman and chief strategic officer. Over his more than 20 years with the company, he has held several other executive leadership roles, including executive vice president, senior vice president of corporate development, vice president of corporate strategy, and dealer operator and general manager of several of the group's dealerships.

After working at AutoNation for nine years, Dyke joined Sonic in 2005 as vice president of retail strategy — a position he held until April 2006. He was then promoted to division vice president for Sonic's Eastern division, a position he held until he was promoted to COO of Sonic's Southeastern division in March 2007. He remained in that role until his promotion to his current position as executive vice president of operations.   

"I am grateful to Scott for his many years of outstanding service and leadership. He has been instrumental in charting our course and helping to build one of the nation's largest automotive retailers," said O. Burton Smith, Sonic's founder and executive chairman. "At the same time, we have a very talented executive leadership team, and we are confident that David's and Jeff's deep knowledge of our businesses, commitment to our culture, and focus on value creation for stockholders have prepared them well."

William I. Belk, the company's lead independent director, added, "This announcement is the result of our planned succession process being implemented. The company's independent directors have strong confidence in David and Jeff. We also are appreciative of Scott's great work over the past two decades and know his continued role as an advisor to David, Jeff and the rest of the leadership team will be invaluable."

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IRVINE, Calif. — Vehicle intelligence provider Spireon has published “Impound Storage Fees, a Billion-Dollar Problem,” billed as the first report of its kind to address the costs to consumers, dealers, and lenders associated with vehicle impounds.

Based on data collected from the nearly 4 million vehicles connected to Spireon’s NSpire IoT platform and nationwide database of impound lots, the study says about 76,000 vehicles are impounded each day nationwide. Of these, approximately 44% remain on an impound lot for four days or more, and some 22% stay even longer, at 15 days or more. Based on average daily storage fees, vehicle impounds cost U.S. consumers, dealers, and lenders an astonishing $3.04 million each day, which equates to $1.1 billion per year.

“On average, only 31% of dealers are notified by the impound lot within a reasonable one to two days, and typically it can take anywhere from three to 16 days to receive notice,” said Brian Deeley, director of product management at Spireon. “The reality is that impound isn’t a static problem. The information dealers need to combat it, including the latest impound lot locations and faster impound notifications, is dynamic. Only with timely access to accurate information can dealers put a dent in escalating costs.”

The Spireon report highlights the five states with the highest incidence of impounding, and the vehicle models most frequently impounded. Additionally, the data reveals average storage fees and recovery costs by region. Survey data collected from 280 automotive dealers supplements the vehicle insights provided through Spireon’s NSpire platform.

To learn more, download the full report here.

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ATLANTA — September’s new-vehicle sales pace is expected to rise to 17.1 million units, according to Cox Automotive. If realized, the firm’s forecast would be an improvement over August’s 16.6 million sales rate. The gain, however, might be misleading, Cox’s Senior Economist Charlie Chesbrough said.

The firm noted that September’s total sales volume should decline nearly 60,000 units from last month nearly 100,000 units compared to September 2017, which benefit from a sales lift from replacement demand and delayed purchases following Hurricane Harvey in August 2017.

“Year-over-year comparisons are challenging in September, as the industry realized record sales levels last year,” said Chesbrough. “With one less selling day this September and due to seasonal adjustment factors, the sales pace will actually show an increase, despite significant volume declines.”

Vehicle sales reached an all-time high in September 2017 and bested the previous two Septembers by nearly 80,000 units. A large decline from last September’s unnaturally high level is expected, and recent storms and flooding in the Southeast will only contribute to weak volumes.

Including fleet sales, Cox Automotive’s September forecast puts new-vehicle sales at 1.41 million units, which would be down 100,000 units, or 7.2%, from September 2017. Compared to August, sales would be down 4.3%.

And despite the decline in sales volume, one less selling day this September vs. last September should cause the sales pace to rise, the company noted. It’s why the firm put September’s SAAR at 17.1 million, which would be down from last September’s record 18.1 million pace.

“A record SAAR in September is very unlikely,” the firm noted. “Sales will need to post 90,000 units above forecast to beat last year’s record,” the firm noted. “Without massive incentives and promotions, a record is not expected.”

The company added that talk of tariffs as well as rising interest rates may be having some pull-ahead impact in the market. “Auto buyers, concerned about the likelihood of higher vehicle prices over the course of the year may be buying sooner than they had originally planned, supporting the higher sales pace.

“Although the market and buying conditions are strong, risks are also rising. Additional interest rate hikes are expected, which will cause a buyer’s monthly payment to increase,” the firm noted. “And previous years of aggressive leasing is now creating a major headwind. Millions of gently-used, high-content vehicles have been returning to dealer lots. Off-lease vehicle volume is expected to peak in 2019, and many potential new-vehicle buyers will be drawn to this value alternative.”

Most manufacturers are expected to post sales declines. Jeep is expected to perform well, as demand for rugged crossovers fits well with their portfolio. Ford and GM are likely to see some larger declines as aging product in some segments, poor car sales, and tighter incentives hold them back.

Most vehicle segments should see declining sales vs. last year. Car share may make a modest improvement as higher prices in the used market coupled with newer high-volume products from Honda and Toyota could support new sales.

Looking further ahead, Cox Automotive forecasts a slowing sales pace over the remaining months of the year as buying conditions deteriorate due to higher interest rates and elevated gasoline prices. Steel and aluminum tariffs may also be negatively contributing to sales activity, forcing automakers to hold incentive activity at more modest levels.

“Product costs are rising as a result of higher metal prices, and margins are being negatively impacted,” the firm added. “With less profit margin available, tighter and targeted incentive activity is required. Days supply is also in a relatively stable position, allowing for more pricing discipline.”

The growing volume of gently-used vehicles, which are selling at a 30% to 50% discount to their new versions, also pose a real threat to stronger new-vehicle sales volumes. Despite these headwinds, Cox noted that economic conditions for vehicle buyers remain favorable with strong consumer confidence level and decades-low unemployment rates.

The overall demand for transportation also remains high. Higher interest rates and new trade tariffs are also not chasing away buyers, the firm noted.

Cox’s forecast for full-year auto sale is 16.8 million units, which would be down from 2017’s 17.1 million-unit total.

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Credit Union Land is a strange and wonderful place … for dealerships that are able to crack the code. Credit unions are a tremendous resource that helps those dealers and their F&I professionals sell more vehicles, sell more F&I products, and make more money.

For other dealers, that %*&$#@! local credit union is an intractable, obstinate adversary that continually costs them thousands of dollars in blown sales, reduced grosses, and lost F&I product sales. Yet it doesn’t have to be that way.

In 1934, President Roosevelt signed the Federal Credit Union Act to help make credit available through nonprofit, cooperative credit unions. Because credit unions are not-for-profit financial institutions owned by their members, they typically offer higher savings rates, lower fees, and lower rates on loans than for-profit financial institutions, like banks. Unlike banks and other retail businesses, their focus is on serving their members, rather than maximizing profits — the antithesis of what most automobile dealers focus on.

It’s also why many dealers and credit unions constantly butt heads.

With all that in mind, here is a four-step process you can implement today to turn your local CU from foe to friend:

1. Understand the Code Behind the Code.

Edward Filene, considered to be the founding father of the American credit union, once said that “Credit unions are not for profit, not for charity, but for service.” This is why credit union members are some of the most loyal customers you will ever find. They love their credit union.

For a dealer, turning that local credit union from an adversary into an ally is going to be immensely more profitable for both the sales department and the F&I department than endlessly trying to beat their rate. That’s hard to do. Because they do offer consistently low interest rates, especially to members who don’t have 800-plus credit scores.

Consumers today are infinitely better informed and more financially astute than they were 30 or 40 years ago. Not only do they often begin shopping for vehicles online, studies show consumers also research their financing options online. They can also calculate monthly payments, apply for financing and make their car payment right on their phone. They also talk to their credit union and ask for their advice when it comes to buying a car and obtaining financing. They know their credit union is there to serve them, not sell them. So they trust their credit union.

Car dealers, not so much.

2. Test the Limits of Loyalty.

Fortunately for automobile dealers, when it comes to financing and interest rates, member loyalty to their credit union normally only extends up to about one-quarter of a point. Even long-term credit union members will compare multiple finance sources in an effort to obtain the best rate available when it comes to financing their new or used vehicle. Everyone wants to be an informed consumer and get a good deal.

With information on financing and interest rates readily available, every dealer and credit source has to offer competitive rates or risk alienating potential customers. Captives are a reliable source of financing for prime and superprime customers. It’s the nonprime and subprime customers for whom most dealers want and need more finance sources, especially when it comes to used vehicles.

As it happens, these are precisely the customers who are also the sweet spot for most credit unions. In fact, in virtually every credit union’s charter you will find this exact verbiage, since their mission is to “provide provident credit for people of modest means.” Credit unions were not created to provide cheap money for wealthy people with great credit. Those people can get money anywhere. A credit union’s mission is to provide low-cost, easy-to-obtain loans for people of modest means.

According to the National Credit Union Association, approximately 84% of credit unions are involved in some form of indirect lending, and another 8% are considering becoming involved. In a recent survey by TransUnion, credit unions ranked auto loans as their highest growth opportunity over the next 12 months.

Members appreciate having their credit union available as an option when and where they need financing — at the dealership. If their credit union is an available source at the point of sale, it can be a win-win situation for your dealership, their member and the credit union.

3. Get on the Phone.

So how do you turn those credit unions you compete against into reliable sources you can count on when you have a nonprime customer? Well, you can always contact Credit Union Direct Lending or Credit Union Direct Connect to see if their credit union is in CUDL’s or CUDC’s network. Failing that, you can determine whether they might have other credit unions in your area that are part of their network. If so, they’ve already done the heavy lifting in creating mutually beneficial relationships between dealers and those credit unions in their network.

If not, the first step is to start a relationship with that local credit union. That means going to the credit union and meeting the people who work there. If you want to become a trusted partner, they first have to meet you, the dealer principal, face-to-face! Contact the credit union CEO or the head of lending to schedule a time when you meet face-to-face and find out what’s important to them.

Do not lead with increasing CU profits! If you lead with increasing their profit or more loan volume, that’s a non-starter with every credit union, because they are not-for-profit financial institutions! As the retired CEO of one of largest CUs in Texas explained in no uncertain terms, “I know of no credit union CEO who has profit or ROI in his or her annual performance or compensation plan.”

Rather, you need to find out what is important to the CEO. What is important to the credit union’s board? Is it membership growth? Protecting their members from being ripped off by unscrupulous dealers? Helping their members by offering added benefits, special pricing or discounts not available to nonmembers?

Your focus and your primary reason for meeting with the credit union CEO should be based on answering one question: “How can we work together to help your members get the car they want with the loan and the protections they need?” With credit unions, it’s not about the money. It’s about the relationship and how that relationship will benefit their members.

Credit unions are not homogenous in their focus, their operation, or their priorities. As the dealer, you have to develop a personal relationship with the credit union CEO and meet the other credit union execs, as well as all the various stakeholders. Take them to lunch occasionally. Small spiffs, special pricing, and sale days for credit union members are going to be far more important, motivating, and effective in building that relationship than increasing the credit union’s profits.

Everyone at the credit union needs a face to put with the dealership, someone they know they can contact if they have an issue — especially those dealer haters at the credit union who could attempt to squelch a better relationship with your dealership. If a member ever has a problem with your dealership, they need to know whom they can call. It should be someone they have confidence in and will take care of their members and fix the problem. There is no one better at that than the owner of the dealership.

4. Earn Trust One Deal at a Time.

With any credit union, member satisfaction is vastly more important than generating additional revenue. Honesty, consistency and guaranteeing the credit union members will always be treated fairly by your dealership is the key to turning a credit union into a new finance source. For a credit union, becoming a trusted partner is not something you buy; it’s something you earn — one member, one transaction, one loan at a time.

The CEO’s greatest fear is that someone from the dealership is going to take advantage of their members by marking up the service contract or other F&I products an exorbitant amount. Especially if they have recommended your dealership to their member. If that ever happens, there will be no second chances. If anyone at the dealership takes advantage of a member, or the member has a bad experience, that relationship is over.

A credit union CEO cannot stand “noise” from the board or complaints from their members. Any relationship they enter into with any dealer has to be viewed by all their stakeholders as mutually beneficial. The CEO has to be able to go before the CU board, their staff, and their members and say, “Look what we did for our members.” It could be a monthly credit union member’s night, a special CU hotline, or lunch or a door prize for their monthly chapter meeting. It could be providing the CU with ATM or deposit slips with a coupon on the back for a free car wash, oil change, or tire rotation.

And yes, it also means you are probably going to have to make some concessions for credit union members on F&I product prices. Your prices will need to be both fair and consistent for all members. You may not be able to mark up the interest rate, but you will be able to receive a flat — either a set dollar amount or a percentage of the amount financed. Bottom line, rather than make a lot of money on a few members, you’re going to make a little less money on a lot of members.

Cracking the code begins with first having a conversation with the credit union CEO, building a personal relationship and finding a middle ground that works for both parties. The credit union wants to retain the loan and protect their member. You want to sell the car, but your dealership needs to make money on the financing and by helping their members get the F&I products they need. How can we work together to help your members, the credit union, and the dealership?

No matter how big or small your dealership, as a dealer, you must always demonstrate ethical standards that are beyond reproach. The overriding consideration in every customer interaction and business transaction must be the development of a long-term, mutually beneficial relationship built on trust, integrity, and mutual respect.

In Credit Union Land, it’s not about the money. It’s about honesty, transparency, and a commitment to helping their members.

What’s the secret code to developing a new finance source and creating a mutually beneficial relationship with a credit union? It’s answering that all important question: How will this new partnership with your dealership help their members?

Ron Reahard is president of Reahard & Associates Inc. and ranks among the industry’s leading F&I trainers, authors, consultants, and speakers. Contact him at ron.reahard@bobit.com.

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SUNNYVALE, Calif. — Payment services provider PayNearMe has launched an expanded system designed to accept cash, debit, credit and ACH payments. The update also brings new features such as payment reminders and mobile wallet integration.

The PayNearMe system was initially designed to accept cash from underserved consumers for online goods and services at more than 27,000 retail locations nationwide. PayNearMe was designed to greatly reduce the expense and operational challenges of accepting cash while providing consumers a fast, easy way to make payments.

With the launch of new payment capabilities, merchants can now securely accept and manage all types of payments, driving more on-time payments, and the mobile-first design offers a simple and intuitive user experience that makes paying faster and more convenient, according to the company.

“PayNearMe has consistently delivered innovative yet simple payment solutions to address lenders’ most pressing needs,” said Danny Shader, CEO of Handle Financial and founder of PayNearMe. “Today, we are introducing the industry’s first complete payment platform, putting cash, debit, credit, and ACH all together in one single trusted platform, along with payment reminders and mobile wallet integration. It has never been easier for lenders to process all of their payments while delivering an outstanding mobile-first experience to their customers.”

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IRVINE, Calif. — Southern California automaker Karma has expanded its luxury electric vehicle experience to three new cities, including Seattle, Chicago, and Westlake Village, Calif., the company announced. The expansion will increase Karma’s footprint to 15 dealerships.

Executives said the move into new markets is part of the company’s strategic vision led by Karma’s CEO, Dr. Lance Zhou.

“We’ve continued to partner with best-in-class dealers in key markets to serve our luxury customers,” Zhou said. “Each of the new dealerships have rooted history in the luxury automotive segment and will contribute to our continued growth in the U.S. market.”

Karma Seattle is set to open in the Bellevue area next month. Karma Chicago will join the locally renowned Hawk Auto Group and Southern California’s Rusnak Automotive Group will add Karma Westlake to its family of highline stores.

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WILMINGTON, N.C. — Used-vehicle auctions have started resuming regular business hours following the effects of Hurricane Florence, which had less of an impact on the U.S vehicle market than hurricanes Harvey and Irma in 2017.

Manheim Wilmington is reopening on Friday, Sept. 28, after closing operations last week in preparation of Hurricane Florence, according to Tim Janego, Manheim's regional vice president of the Northeast region. However, parts of Wilmington remain submerged, with some waterways still rising, according to The Herald Sun.

Manheim is operating regular business hours for its other locations in North Carolina and South Carolina. It also previously shifted in-lane sales to digital sales at Manheim North Carolina in Kenly; however, the auction has resumed regular business hours, according to Janego. Manheim Statesville and Manheim Charlotte in North Carolina and Manheim Darlington in South Carolina maintained regular business hours during the hurricane.

The area of Carolinas affected by Hurricane Florence is less densely populated than storms that reached Texas and Florida last year.

“We have not heard of any significant damage caused by Florence at major auto auctions in the area,” said Anil Goyal, executive vice president of operations at Black Book.

An estimated 20,000 to 40,000 vehicles could be lost due to flooding in the Carolinas, according to Cox Automotive.

Hurricane Florence was similar to Hurricane Harvey in terms of establishing record-setting rainfall. However, Florence was more accurately predicted, which resulted in more successful advance warnings and evacuations. Even though the number of damaged vehicles from Hurricane Florence is relatively low, it creates an immediate demand for a replacement vehicle, Goyal said.

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RICHMOND, Va. — Cox Automotive confirmed this week reports that COO Mark O’Neil plans to retire in February 2019. He’ll exit about four years after Cox’s acquisition of Dealertrack, a company he led as CEO for almost two decades.

News of O’Neil’s retirement plans was first reported by Automotive News on Sept. 24. In the article, O’Neil says Cox is “in a really good spot” and that it’s “a good time to let the next generation of leaders take over and execute the game plan.”

The executive currently works in Richmond, Va., and turned 60 this year. According to the Automotive News report, O’Neil plans to spend more time with his family, travel, and give back to the community.

“I’ve enjoyed being a part of the auto retailing business for over 30 years, from my time at CarMax, to leading Dealertrack and now Cox Automotive," O'Neil said in a statement issued to F&I and Showroom. "It’s been a fun journey and I can’t wait to see how Cox Automotive continues to transform the way the world buys, sells owns and uses cars."

O’Neil began his career in the business in the late ‘80s, serving as president of Pennsylvania-based Ertley MotorWorld. He also co-founded and led the development and rollout of CarMax Inc. There was also that year-long sting early last decade when he served as president and COO of online auto sales site Greenlight.com.

In August 2001, O’Neil was named CEO of Dealertrack — a title he held until Cox Automotive completed its acquisition of the tech firm in October 2015. And since being named executive vice president and COO of Cox Automotive in March 2016, O’Neil has served as the company’s digital evangelist.

O’Neil last spoke to F&I and Showroom for a June 2017 article. It was a conversation in which the executive laid out his vision of the future of automotive retailing. He also offered a glimpse at the sales and F&I tools Cox Automotive is developing to pave the way to the industry’s Digital Age.

“So instead of thinking of it as pure digital, it’s kind of an interesting twist. Think about it as connected retail. You’re leveraging the optimal components that are done digitally,” he said. “I mean, filling out a credit app, whether you want to get up at seven in the morning, do it at 11 at night, or do it on your lunch break, being able to do it at your convenience makes a lot of sense. And you ought to be able to do that electronically.

“It’s almost like what Best Buy and Home Depot are doing, where you do all the ordering and comparing and paying for the product online, but you actually go to the store to physically pick it up because you want it sooner or it doesn’t lend itself to shipping,” he added. “When it comes to auto retailing, I think that’s probably the way to think of it.”

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SAN FRANCISCO — Jumpstart Automotive Media released the results of a joint study with research firm Ipsos. “Today’s Auto Buyer and the Digital Retailing Experience” considers the points of view of consumers and dealers to better understand the shopping journey and reveal how digital and mobile strategies have changed the consideration, negotiation, and buying processes.

While recognizing that the car-buying process still carries an air of frustration and distrust, researchers sought to identify opportunities to make the buying process more satisfying all around. Areas of focus include:

• How consumers select a dealership: Analysts found dealers believe their reputations and prior positive experiences are what bring consumers in the door. However, the most influential factors in consumers’ selection of a dealership are, by far, a low price and having the right inventory. In fact, consumers (495) were almost twice as likely as dealers (24%) to identify the “lowest price” as the more influential between those two factors.

• Where shopping and research begins: Consumers spend an average of nine hours researching online before walking into a dealership, visiting an average of seven automotive sites, including manufacturer, dealer, and third-party websites. But the report found dealer websites are far more influential than even dealers themselves perceive. While dealers assume that consumers start their research on other sites, visiting the dealer website closer to the purchase, customers surveyed commonly stated that they use the dealer website very early in their shopping process.

• Closing the gap on price differences: Consumers prefer to do the majority of fact-finding online, and face-to-face communication becomes increasingly important to them at the end of the process, analysts said. More than three-quarters (76%) of consumers think they will get a better price by negotiating in person as opposed to online.

“The art of a successful car deal is aligning customer desires, such as a fair price and a smooth, quick transaction, with dealer expectations that leverage their solid reputations,” said Libby Murad-Patel, vice president marketing and strategic insights for Jumpstart. “This report goes into great detail in the motivations and beliefs of both sides, while offering actionable strategies for dealers to attract and better serve today’s auto buyers.”

“Like every other industry we study, digital content and communications have fundamentally altered the auto buying and selling process,” said Michael Baer, senior vice president at Ipsos. “Consequently, the dealership experience is completely changed from what it once was — consumers are visiting fewer of them, are doing their research in advance, and are visiting them better prepared for negotiations. There’s an emerging need for dealers and manufacturers to rethink and redesign the dealership experience and the role of dealers and salespeople to better fit consumers’ needs and expectations.”

To review the complete report, click here.

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Nissan North America is the first to make customer enrollment in myCarfax part of the CPO purchase process. Service reminders and recall notices sent to the customer through myCarfax help ensure those vehicles are cared for by the selling dealer’s service department.

“Our goal with the myCarfax app is to increase the value of our CPO program to our customers along with allowing us to enhance the overall customer experience,” said Michael Verpoort, senior manager of certified pre-owned sales for Nissan.

Through this enhanced partnership, Nissan and Infiniti CPO buyers also receive free copies of their vehicle’s Carfax Vehicle History Report and Carfax Buyback Guarantee certificate from the dealer. Since 2012, certified Nissan and Infiniti dealers are required to run a Carfax Report on all CPO-eligible vehicles, which must qualify for the Carfax Buyback Guarantee. All Nissan and Infiniti CPO vehicles also are listed for sale with free Carfax Reports on carfax.com.

According to the automaker, more than 70% of all Nissan and Infiniti dealerships are part of the myCarfax Service Shop program. Maintenance work performed by participating dealers is reported to Carfax and easily accessible through the myCarfax app.

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ACV Auctions was selected because of its outstanding work culture, community involvement, benefits, open workspace, investment in technology for its employees, and special events like in-office professional massages, monthly birthday celebrations and more. Further consideration was given to ACV because of the company’s rapid growth in its industry and high sales accomplishments since 2017, all according to the announcement.

“We’re thrilled to be recognized for the great culture that our team helps make possible here at ACV,” said CEO George Chamoun. “ACV is built on a foundation of trust and transparency. We’re growing over 400 percent a year and adding 20–30 teammates a month. We all get our hands dirty. As we grow, it’s imperative to us that we continue to foster an environment of mutual respect and collaboration, where our employees know they make a difference, and that their work is appreciated. We’ve found the best way to do that is to hire happy, enthusiastic people, who want to grow with us, and it hasn’t failed us yet.”

The gold, silver and bronze winners were presented with their awards at a gala ceremony at the Marriott Marquis Hotel in New York City Friday, Sept. 21. More than 550 nominations from organizations in 21 nations were submitted for consideration this year, and more than 60 professionals worldwide participated in the judging process.

“The judges were extremely impressed with the quality of entries we received in the third annual Stevie Award for Great Employers. The dedication the Stevie Award finalists have to making workplaces great for employees was evident in every nomination,” said Michael Gallagher, president and founder of the Stevie Awards.

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IRVING, Texas —DealerSocket today announced the launch of Engine 6, the software provider’s next generation DealerFire website platform. The new site builder tool is being initially offered to independent and buy-here, pay-here dealers (BHPH).

With Engine 6, DealerSocket simplifies the design and upkeep of a dealer’s website. It also empowers dealers with easy to use website functionality, allowing them to manage lead-generating content in real time to create better websites that attract more customers.

“We speak with so many independent dealers who spend a disproportionate amount of time making changes to their site or paying technical resources to do it for them,” said Brad Perry, co-founder and chief product officer of DealerSocket. “DealerSocket wanted to make the design and implementation as easy as possible for our customers. Engine 6 is our way of taking something traditionally complex and expensive and making it simple yet powerful.”

The upgraded website builder tool offers drag-and-drop functionality that eliminates the need for coding. The solution also is optimized for mobile so it operates extremely fast on mobile devices for a frictionless research experience. It also features a multi-device preview mode, allowing users to view the website across multiple device categories, including desktop, laptop, tablet, and mobile.

The new website builder tool also is equipped with smart forms, allowing dealers to build their own lead forms quickly, complete with more than 40 smart fields in DealerSocket’s library and with a single mobile-friendly interface with lead route management.

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WASHINGTON, D.C. — The Federal Trade Commission (FTC) issued a reminder that, starting today, consumers who are concerned about identity theft or data breaches can freeze their credit and place one-year fraud alerts for free.

Under the new Economic Growth, Regulatory Relief, and Consumer Protection Act, consumers in some states — those who previously had to pay fees to freeze their credit — will no longer have to do so. The new law also allows parents to freeze for free the credit of their children who are under 16, while guardians, conservators, and those with a valid power of attorney can get a free freeze for their dependents.

In addition, the new law extends the duration of a fraud alert on a consumer’s credit report from 90 days to one year. A fraud alert requires businesses that check a consumer’s credit to get the consumer’s approval before opening a new account.

As part of its work to implement the new law, the Federal Trade Commission has updated its IdentityTheft.gov website with credit bureau contact information, making it easier for consumers to take advantage of the new provisions outlined in the law.

To place a credit freeze on their accounts, consumers will need to contact all three nationwide credit bureaus: Equifax, Experian, and TransUnion. Whether consumers ask for a freeze online or by phone, the credit bureau must put the freeze in place within one business day. When consumers request to lift the freeze by phone or online, the credit bureaus must take that action within one hour. If the request is made by mail, the agency must place or lift the freeze within three business days.

To place a fraud alert, consumers need only contact one of the three credit bureaus, which will notify the other two bureaus, according to the FTC.

“Credit freezes and fraud alerts are two important steps consumers can take to help prevent identity theft,” the regulator stated on its website. “Identity theft was the second biggest category of consumer complaints reported to the FTC in 2017 — making up nearly 14 percent of all the consumer complaints filed last year. Consumers who believe they have been the victim of identity theft can report it and receive a personalized recovery plan at IdentityTheft.gov.”

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DealShield, which has covered 1.3 million vehicles to date, is available at more than 100 U.S. auction locations, including 71 Manheim locations and a growing number of Independent auctions. With the DS360 guarantee, dealers can purchase a vehicle at a participating auction. If it doesn't meet their expectations, they can return it to any location in the DealShield network for a full, hassle-free refund — no arbitration required and no questions asked, according to company officials.

“Dealers tell us they love that DealShield provides a truly hassle-free return experience and gives them the confidence to expand how and where they buy, as well as take chances on riskier inventory that could help grow their businesses,” said Brett Woods, interim vice president of assurance at Cox Automotive. “The new option to extend the return window to 30 days makes clients more resilient, giving them more flexibility to get vehicles frontline ready and make the right decision for their dealerships.”

Having nine extra days on the clock is a significant advantage for clients, particularly those who may want to use the added time to see how a vehicle performs on their lot. If it does not attract consumer interest before the 30 days are up, dealers can easily return the vehicle and quickly redeploy that capital to acquire another unit.

DS360 subscribers can also extend their protection window even further when they transport their purchases with Ready Logistics through a partnership solution called “Ready. Set. Pause.” The program is designed to enable dealers using both the DS360 guarantee and Ready Logistics’ full-service transportation to effectively stop the clock on their days of coverage while a vehicle is in transit — giving them even more time and reasons to be confident in their purchase.

“What makes us really excited about this extended guarantee is that it was truly driven by requests from our dealer clients,” said Stu Dressler, interim leader and senior director of operations at DealShield. “They have seen so much success with the original product that they were invested in helping us evolve it to be an even better fit for how they conduct business and the growth they’ve experienced.”

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LAS VEGAS — On Saturday, Sept. 29, Barrett Jackson will auction the last vehicles owned, titled, and registered to Burt Reynolds, the recently departed star of such classic car movies as “Smokey and the Bandit,” “Hooper,” and “The Cannonball Run,” at the Mandalay Bay Resort in Las Vegas, capping a three-day auction event.

“We all miss Burt. He was a true Hollywood legend,” said Laura Dotson, co-owner of American Auctioneers. “His family is moving forward with the auction, just as Burt would have wished. As he would say, ‘The show must go on!’”

The event is expected to attract collectors and enthusiasts as well as celebrities, friends, and family members, some of whom will gather onstage at the auction to take part in a tribute to the late actor.

Vehicles to be auctioned include recreations of Reynolds’ signature Pontiac Firebird Trans Ams from “Smokey and the Bandit” and “Hooper” as well as a heavily modified and customized Chevrolet Silverado pickup that served as the official “Indy Hauler” at the 64th annual Indy 500 in 1990.

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“We’re thrilled to have Dennis join the team in this role. His background and experience as a leader in automotive retail and the F&I space makes him a great fit to lead our clearFI efforts,” said Kumar Kathinokkula, COO of F&I Admin. “He will be a key driver behind our clearFI sales, marketing, positioning, and, of course, product roadmap. Dennis is a strategic addition to our team and we’re looking forward to leveraging his skillset across all aspects of our retail solutions.”

As director of F&I retail solutions, Maurer will be responsible for the day-to-day operations, sales, and marketing of the clearFI platform. Using real-time updates and a robust library of dashboards and reports that draw on both DMS and provider data, clearFI was designed to deliver actionable intelligence to fit each role in the F&I value chain. Maurer has over 15 years of product and marketing management experience. His expertise extends to areas such as F&I solutions, go-to-market strategy, sales enablement, and software development.

Most recently, Maurer served as product manager at CDK Global, a leader in automotive commerce software and services. He has worked with many of the largest automotive groups in North America, leading the way in optimizing operational efficiencies and building processes to increase revenue.

“I’m excited to become a part of F&I Admin. This is a talented group of people who are deeply invested in improving solutions for the industry and I’m looking forward to being an integral part of that,” Maurer said. “The clearFI platform in particular meets a common dealer and agent need that’s been overlooked for a long time now, so it’s going to have a big impact on the market going forward.”

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“By recognizing the creative opportunities available when working collaboratively and communicating openly, Potratz is able to provide our clients with the utmost satisfaction — as well our its employees,” said Paul Potratz, the company’s founder. “We’re so proud to be named to this year’s list, and we plan on maintaining the company culture we’ve cultivated. Thank you for your recognition to Entrepreneur magazine.”

“Great company cultures don’t happen by accident. They happen because leaders understand how to create excellent working environments, and how to make everyone share the same mission,” said Jason Feifer, editor in chief of Entrepreneur. “Our 2018 Top Company Cultures list is a great celebration of companies that are doing it right, and should serve as inspiration for everyone who leads a team.”

The full list, presenting a total of 150 companies categorized as small, midsize or large companies is available on Entrepreneur.com.

“Becoming a Top Company Cultures winner isn’t something an organization can buy,” said Doug Claffey, CEO of Energage. “It’s an achievement organizations have to work for. Based on our decade of research, we have come to view workplace culture is the only remaining sustainable competitive business advantage. Great strategies can be copied, but culture cannot.”

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WASHINGTON, D.C. — The Federal Trade Commission has taken a bite out of a major issue for F&I offices. The regulator announced this week that operators of websites that sold fake pay stubs and other financial documents used to facilitate identity theft and other frauds have agreed to permanently shut down their businesses as part of separate settlements with the Federal Trade Commission.

In separate cased filed by the FTC, the commission alleged that Katrina Moore, Steve Simmons, and George Jiri Strnad II and their affiliated companies operated websites that sold customers a variety of fake financial documents, including pay stubs, income tax forms, and medical statements.

“The sale of fake documents makes it easy for identity thieves and scammers to ply their trade,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “This action demonstrates the FTC’s determination to stop those who help people to commit identity theft and fraud.”

Identity theft was the No. 2 category of consumer complaints reported to the FTC in 2017, accounting for nearly 14% of all consumer complaints received by the regulator last year. Credit card fraud was the most common type of identity theft reported by consumers in 2017, followed by tax fraud.

The complaint against Moore and her business, Innovative Paycheck Solutions, alleges that she promoted the sale of a variety of financial documents on her website, FakePayStubOnline.com. In addition to fake paystubs, the business sold bank and profit-and-loss statements. The site stated that the documents looked authentic and sold for as little as $40 for a fake paystub to more than $150 for fake tax returns. The site offered to customize documents and to edit real bank statements.

The FTC alleged that Simmons and his business, Integrated Flight Solutions LLC, operated the NoveltyExcuses.com website from 2013 until October 2017. It sold a variety of financial, identity, and medical documents, including pay stubs, auto insurance cars, utility and cable bills, doctor’s excuses, and medical absence reports for $19.95. Like Moore’s website, Simmons’ NoveltyExcuses.com advertised that the documents were fake but looked authentic, claiming the documents were “Proven to Work!”

From about 2014 through March 2018, Strnad operated similar websites, including PayStubDirect.com and PaycheckStubOnline.com. The sites offered fake paystubs, tax forms, and bank statements, according to the FTC’s complaint. Strnad also operated iVerifyMe, a website that sold job verification services, the FTC charged. As with other defendants, Strnad’s website advertised that the documents were fake but look “authentic.” At the same time, his iVerifyMe site advertised it could verify the employment claims made using the fake paystubs offered from his other websites.

The sites offered by the defendants claim that the fake documents were for “novelty” and “entertainment” purposes but failed to clearly and prominently mark such documents as being for such purposes, the FTC charged. They also did not state on the documents themselves that they were fake, according to the complaints. The commission charged the operators with violating the FTC Act’s prohibition against unfair practices.

As part of the proposed settlement with the FTC, Moore is permanently prohibited from advertising, marketing, or selling any fake documents or services and providing any means to others to make misrepresentations about an individual’s identity, finances, residency, taxes, or employment. She also agreed to pay $169,000, all of which is suspended due to her inability to pay.

In his proposed settlement, Simmons agreed to similar prohibitions and to pay $15,000, which has also been suspended due to his inability to pay. The full amount will become due if either defendant is later found to have misrepresented their finances.

Strnad agreed to similar conduct restrictions in his proposed settlement and to pay $133,777.

The commission voted 5-0 to approve the three complaints and stipulated final orders. The FTC filed the proposed order with Moore in the U.S. District Court for the District of Oregon, Portland Division, and the proposed order with Strnad was filed in the U.S. District Court for the Southern District of Texas, Houston Division.

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NEWARK, N.J. — Software provider Lightyear Dealer Technologies, doing business as DealerBuilt, has entered into a settlement agreement with the New Jersey state regulators to resolve an investigation into a cybersecurity lapse that allowed access to a company database containing personally identifiable information of customers and employees at more than 100 dealerships nationwide, including four dealerships located in the state.

The security lapse was exposed in 2016 when a security researcher accessed unencrypted files containing names, addresses, Social Security numbers, driver’s license numbers, bank account information and other data belonging to thousands of individuals, including at least 2,471 New Jersey residents, according to Attorney General Gurbir Grewal and the Division of Consumer Affairs.

“Through this settlement, New Jersey is holding DealerBuilt accountable for a security lapse that exposed sensitive personal data belonging to thousands of our residents and untold numbers of consumers nationwide,” said Attorney General Grewal. “As a result of our negotiations, DealerBuilt has agreed to implement comprehensive cybersecurity protocols to better protect consumers in all states against the threat of identity theft or other cybercrimes.”

DealerBuilt agreed to create an information security program to be implemented and maintained by a chief security officer with appropriate background and experience in information security. The company also agreed to maintain and implement encryption protocols for personal information stored on laptops or other portable devices or transmitted wirelessly, as well as add and update policies that define which users have authorization to access its computer network.

Additionally, the tech firm must maintain enforcement mechanisms to approve or disapprove access requests based on those policies, as well as maintain data security assessment tools, including vulnerability scans. The company also agreed to an $80,784 settlement amount.

“Data breaches like this are a sobering reminder of what can happen when companies fail to adequately protect the sensitive data they collect and store electronically,” said Paul R. Rodriguez, acting director of the Division of Consumer Affairs. “As this settlement demonstrates, New Jersey stands ready to vigorously enforce the laws that protect consumers from the risk of having their most personal information exposed.”

Through its investigation, the division found that in April 2015, a misconfigured file synchronizing program allowed unauthorized access to a database containing encrypted files back up by approximately 130 of DealerBuilt’s client dealerships nationwide, including at least four in New Jersey.

According to the regulators, sometimes between Oct. 29 and Nov. 3, 2016, a security researcher was able to access the DealerBuilt database and downloaded files from five of those dealerships, including Winner Ford in Cherry Hill, N.J.

Upon learning of the vulnerability on DealerBuilt’s systems, the security researcher published an online article drawing attention to the fact that the files were backed up and stored without adequate security protocols in place. The revelation prompted the Division of Consumer Affairs’ investigation into whether DealerBuilt was in violation of the New Jersey Consumer Fraud Act and Identity Theft Prevention Act.  

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Kahu was designed to turn any vehicle into a connected car, empowering dealers to view and manage vehicles from their desktop, tablet or smartphone. New features include streamlined portfolio and inventory management, account transfer for seamless dealer trades, mobile views of inventory age, new test drive analytics, and more.

“While U.S. auto sales have remained steady in 2018, the market continues to consolidate as dealer groups seek greater efficiencies and new opportunities to grow profits,” said Sunil Marolia, vice president of product management for Spireon. “And although the latest release of Kahu has been enhanced for dealer groups, independent dealers can also benefit from the streamlined operations, increased sales effectiveness, reduced risk, and increased customer loyalty generated by Kahu. Once dealers have the power of Kahu driving their business, they can’t imagine running it any other way.”

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DealerSocket has been hiring and training additional customer success managers and customer service engineers nationwide to support the company’s thousands of dealer customers. The firm has also invested in redeploying its customer success managers in the field. The goal of the customer success managers are to ensure dealers are utilizing DealerSocket's software to its full potential and to be their trusted advisors, officials said.

“We’ve intensified our focus on delivering top-level customer service, including answering questions and supporting our customers, which our customers deserve,” said DealerSocket COO Jose Arcilla. “The best way to ensure our customers are well cared for is to demonstrate our customer-centric approach in everything we do at DealerSocket.”

DealerSocket also made significant investments in its phone support teams and technology. Company officials said the firm has reduced call center wait times down to an average of less than a couple of minutes before a call is answered.

Additionally, DealerSocket has made significant investments in self-service support by enhancing its DealerSocket University, which provides easy hands-on training for the company’s products.

“DealerSocket is fully committed to our customers. We are investing in all aspects of our support model as well as in our software to continue to build innovative functionality to serve our dealers," said Sejal Pietrzak, president and CEO of DealerSocket. “Our goal is to always be our customers’ trusted advisor, and we do that by providing outstanding service and understanding that every action we take benefits our dealers and helps them become more successful.”

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LAWRENCEVILLE, Ga. — Black Book  (div. of Hearst) today announced that its History Adjusted Valuations (HAV) data and resources will be integrated into an interface with software provider defi SOLUTIONS.

History Adjusted Valuations are a VIN-specific, analytics-driven resource that delivers Black Book’s most precise vehicle valuations. defi SOLUTIONS becomes the first loan origination platform to include Black Book’s HAV data feed. Users benefit by identifying undesirable deals prior to the origination process. They can also improve advance amounts to minimize future loss severity, prevent dealer fraud, pinpoint active loans in collections/servicing, and use HAV to set floors more accurately when remarketing.

“defi SOLUTIONS has always strived to be a pioneer and innovator in loan origination solutions,” said defi SOLUTIONS CEO Stephanie Alsbrooks. “In continuing this trend, we’re proud to offer Black Book’s unique History-Adjusted Valuations, a first-of-its-kind resource to help automotive professionals further pinpoint the most accurate value of a vehicle.”

Even with the use of vehicle history reports, automotive professionals are still reliant on making an unscientific, educated guess as to the impact a vehicle’s history has on its value, which often leads to mistakes in the valuation process. HAV helps automotive professionals remove the guesswork involved by providing access to a more precise value on each individual vehicle.

“Having the most precise, accurate value possible is extremely critical during the loan origination process,” said Jared Kalfus, executive vice president of revenue at Black Book. “The ability to establish the right value at the time of origination has several spillover effects, such as loss reduction and healthy long-term portfolio expansion potential for each lender.”

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ORLANDO, Fla. — Organizers of the annual Industry Summit announced the lineup for the first-ever Technology Challenge, a new feature at the upcoming 2018 event. Industry Summit will be held Oct. 8–10 at the Caribe Royale Orlando in Orlando, Fla., with Technology Challenge set to begin at 1 p.m. on Tuesday, Oct. 9. 

Set to compete in the inaugural Technology Challenge are:

• 700Credit
• AutoFi
• Axiom
• Darwin Automotive
• DealerSocket
• Dealertrack
• Reahard & Associates
• SAVY Driven by EasyCare
• TecAssured
• Your Dealer Experience

The companies, which represent a cross-section of dealership digital sales and F&I providers, will be randomly assigned one of 10 rapid-fire time slots. Each will have 10 minutes to make their case for the most compelling and practical technology available to dealers today. Attendees who watch all 10 presentations are invited to submit an electronic vote for their favorite, with the winner to be announced at the Industry Summit Honors on Wednesday afternoon.

Voters will be automatically entered into a drawing for a bespoke suit or sportcoat from ChalkMark Custom Clothing. Two lucky winners will meet with tailor Greg Smith onsite to be measured and select from a wide range of premium materials and styles.

“Whether they are designed to close deals, deliver the car, improve sales or service retention, or streamline a laborious dealership process, dealers are increasingly demanding solutions designed for tomorrow’s customer, today,” said David Gesualdo, show chair and publisher of F&I and Showroom and Auto Dealer Today. “Technology Challenge is the perfect showcase.”

More information about Industry Summit 2018, including the full agenda, is available at the event’s website. Click here to register by Sept. 20 and enjoy a $100 early-bird discount.

To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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This award comes on the heels of Podium being ranked No. 13 on the Inc. 5000 list of America’s fastest-growing companies for 2018 and being named the 2018 “Best SaaS Product for Small Business/SMBs” by The SaaS Awards.

“The power of the cloud has transformed the way people do business and we are honored to be recognized by Bessemer Venture Partners, Forbes and Salesforce Ventures for our innovative technology solutions that benefit both local businesses and their end-consumers,” said Eric Rea, CEO and co-founder of Podium. “We help any businesses with a physical location improve their customer interactions and drive purchase decisions better than anyone, and this award is a testament to the talent and hard work of our team in creating our platform.”

As part of the rigorous selection process for the Forbes 2018 Cloud 100, Bessemer Venture Partners received submissions from the top cloud startups. The Forbes Cloud 100 judging panel, including top public cloud company CEOs, reviewed the data to select, score and rank the top 100 cloud companies from all over the world. The evaluation process involved four factors: market leadership (35%), estimated valuation (30%), operating metrics (20%), and people & culture (15%).

“For the past three years, the Cloud 100 list has identified the top cloud companies that are reshaping their respective industries,” said Alex Konrad, Forbes editor of The Cloud 100. “I am consistently impressed by the caliber of companies honored on the Cloud 100 list. It is an exciting time to be a cloud company and founder.”

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Eckert has served as a senior executive of SouthwestRe for the past 14 years and is a veteran of more than 40 years in the insurance and allied industries. During his tenure with the company, SouthwestRe has grown into one of the service contract industry’s leading service contract administrators and marketing entities.

SouthwestRe and affiliated companies were acquired in January 2018 by iA Financial Group of Canada, one of the largest F&I providers for Canadian automobile dealerships. Mike Stickney, iA Financial’s executive vice president of U.S. development and president of IA American Casualty Insurance Holdings Inc., will assume Eckert’s role on Oct. 1.

“The employees, agents, and clients of SouthwestRe are grateful for Eddie’s thoughtful and seasoned leadership. iA is particularly thankful for Eddie’s valuable contributions and steady hand during this transitionary period,” Stickney said. “I look forward with great enthusiasm to working closely with all SouthwestRe employees to build upon a great foundation.”

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“This is an exciting opportunity. We realized the value we could add to our clients after a successful joint project earlier this year. Given the increasing demand for digital marketing and new media creative solutions, it is no surprise they’ve grown significantly over the past few years. This acquisition truly makes us the marketing authority for all marketing spend within a dealership,” said Affinitiv COO Adam Meier.

Affinitiv offers automotive OEMs, dealer groups, and individual dealerships a complete view of customers: from market entry to point-of-sale, their first service appointment to major maintenance needs and beyond, executives said.

Caldwell & Kerr Enterprises partner, Paul Caldwell, said, “I’ve always known that our company had the potential to lead the automotive marketing industry, and I could see we needed the right partner to get us there. Affinitiv makes this a certainty with their breadth of client relationships and complementary solutions.”

Ensuring a true end to end marketing option for dealerships nationwide, the combined company will pair consultative planning with its unique digital, data and omnichannel marketing capabilities. This data-driven and consultative approach ensures that the most effective, accurately targeted omnichannel strategies are implemented, with an acute focus on specific client objectives, all according to the announcement.

“Our new amplified capabilities will help our clients extend their digital reach, better connect with new and existing customers, plus enjoy stronger campaign results than ever before,” said Scot Eisenfelder, CEO of Affinitiv. “We’re thrilled to have yet another way to enhance our client’s marketing initiatives.”

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“Kimoby allows dealers to communicate more effectively with service customers by leveraging their customers’ preferred communication channel,” said Mike Esposito, president and CEO of Auto/Mate Dealership Systems. “Texting in particular allows dealers to have a written record of messages sent and received, improves customer perception of their brand and provides valuable insights to improve marketing and operations efficiencies.”

“The integration with Auto/Mate’s Fixed Ops Suite was quick and inexpensive,” said Alex Wojcik, vice president of sales and co-founder Kimoby. “We appreciated the process, as keeping integration costs low allows us to keep our product more affordable for dealers and brings a new range of communication options. The Kimoby platform also supports mobility for iOS and Android to provide more flexibility and functionality for dealership personnel.”

Auto/Mate’s integration program, Open/Mate, is based on open standards, allowing third-party vendors to easily integrate with the DMS. The Kimoby platform can send out such automated service-customer texts as appointment reminders, missed appointment notifications, service introductions, recall campaigns, and more, all according to the announcement.

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OLATHE, Kan. — To celebrate five years serving the online and on-the-lot inventory management needs of franchised and independent auto retailers, Lotpop has will host its first annual Dealer Workshop Oct. 16–17 at the Kansas City Auto Museum in Olathe, Kan., co-sponsored by Strong Automotive Merchandising.

Attendees will take a deep dive into inventory processes, internet processes, and marketing, and the founder of Lotpop, LotScore, and producer and instructor for Lotparty video podcasts, Jasen Rice, will had a team of Dealer Workshop instructors at this October event. Rice is a former dealership internet manager and a performance manager for vAuto.

The first annual Dealer Workshop is offered for a short time at no cost to current or previous Lotpop or Strong Automotive clients, according to the announcement.

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Steve Kerr first joined the NBA’s Golden State Warriors as head coach in 2014. He instantly recognized the sloppiness of the team and began teaching them fundamental passing skills. Kerr forced his team of highly paid professionals through rudimentary passing drills better suited for grade-school children. It must have looked like a scene lifted right out of “Hoosiers.”

Although new light-vehicle sales came in at more than 8.6 million vehicles for the first half of 2018, the auto retail industry may soon face headwinds from rising interest rates, higher fuel prices, and tariffs. We are already seeing signs that car sales have started cooling off the second half of the year.

Adversity forces us to get back to the basics of running a dealership. By mastering the fundamentals of new inventory management, as well as forecasting and tracking, you can help avoid trouble in a flat market.

1. Fast Break: New-Inventory Management

New inventory is the largest liability for a dealership. An average dealership holds $5 to $7 million worth of new inventory; bigger metro stores can hold up to $20 million.

When you take as many vehicles as the factory offers, you may soon realize your floorplan went from an income to an expense. As the market cools down, your aging inventory becomes a problem, and your month’s supply increases. The knee-jerk reaction is to stop taking vehicles from the factory, which could mean the loss of floorplan and advertising credits.

Yet keeping inventory too long can result in unnecessary losses and additional expenses, from advertising to interest charges to commissions and bonuses.

Based on the NADA’s 2017 “Annual Financial Profile,” the retail net profit per new vehicle retailed has slid to an average loss of $421, an increase from an average loss of $217 in the previous year. As a result, pressure to reduce your selling expenses is even more critical today to remain competitive.

The best way to handle your new inventory is with knowledge and awareness, not with more pricing rules. Start by asking your team the following questions:

• How many times are you turning the new inventory?

• What percentage of our inventory is aged?

• Which model is causing the most pain?

• Which model lines have the highest month’s supply?

Finally, what is your optimal monthly supply? With these numbers in black and white, you can begin to balance your inventory and achieve the results you expect.

2. Slam Dunk: Forecasting and Tracking

Focusing on the basics can also deliver more accurate forecasting. Follow the simple yet valuable exercise of building a monthly plan. Such a plan will show you how many new cars you can sell based on your inventory and historical sales performance.

First, run a new inventory report and identify your age and month’s supply by model line. Likewise, pull a three-month sales report to see how many of each model line you sold, the front profit per vehicle retailed, and the total back PVR to identify your unit and gross targets.

Once you collect the data, you can determine:

• The number of units you can move based on your three-month plan and current inventory levels.

• Whether PVRs have to increase (or decrease) to achieve your goals.

• Who will keep track of this report daily.

• How the report will be used to enhance productivity and track follow-up activity.

• An accurate forecast you can share with your marketing agency or in-house team.

To stay in the game when costs increase and profits decrease, you can’t ignore the fundamentals of running a dealership. The knowledge you need to help you stay on top of your inventory and sales forecasts is already in your DMS, waiting to be tapped.

By the way, Steve Kerr’s Golden State Warriors and Gene Hackman’s Hickory High didn’t just master the basics. They went on to become champions.

Pedram Faed is the CEO and co-Founder of MBTN Solutions, a company that provides software to automotive dealers to improve their operational efficiency.

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According to the announcement, the F&I Resources team, including Principals Jason Bayko and Bob Hunter, will become part of Brown & Brown’s auto, RV, and powersports practice, which operates under the leadership of Mike Neal, president of the company’s Brown & Brown Kentucky subsidiary.

“Jason and Bob have grown F&I Resources to be a best-in-class operation delivering sales performance training and warranty insurance products for their dealer partners,” said Neal. “The F&I Resources team will provide additional expertise to our growing platform in this space and establish a base for operations in the Northeast. We are confident that this will complement and enhance our existing operations.”

F&I Resources was founded in 1993 as a provider of F&I sales training and F&I products. The firm generates $10.5 million in annual revenue and serves dealers in the Northeast and Mid-Atlantic states.

Through its subsidiaries, Brown & Brown Inc. offers a range of insurance products and related services, including risk management and third-party administration. Serving business, public entity, individual, trade and professional association clients nationwide, Brown & Brown is ranked by Business Insurance magazine as the sixth largest independent insurance intermediary in the United States.

“I could not be more excited to become a part of Brown & Brown and their sales culture,” said Bayko. “We are now well positioned to grow by having access to additional insurance products, giving us a unique value proposition for our dealer partners.”

Hunter added: “Brown & Brown’s culture, which is focused on clients and teammates, is a perfect match for us. Joining our company with Brown & Brown will provide us the opportunity to enhance our relationships with our valued customers through additional product offerings and training. I want to take this time to thank our dedicated, talented and long-term team members and our clients for their past and continued support.”

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LOS ANGELES — Automotive virtual reality experience provider RelayCars announced a series of updates and a host of new features, including updated visual enhancements, optimizations, and custom showrooms, all designed to provide the most immersive and accurate experience available for those looking to get a detailed look at their potential new car.

Citing recent studies showing the majority of purchasers would rather research cars online than speak with a salesperson and will through up to four phases of online research before physically going out to look at cars, executives said RelayCars allows car buyers to explore vehicles from the comfort of their homes with no headset required.

The VR library includes almost every car and truck on the market since 2015, giving users an up-to-date view of the latest cars in a realistic environment. Other updates include new perspective controls to ensure best view of the vehicles; asset optimizations to reduce download times; and a “Featured Vehicles” section that is continuously updated to highlight a curated collection of cars, all according to the announcement.

“At RelayCars, we are constantly evolving our products to reflect the most current, up-to-date technology and features available on the market,” said RelayCars CEO David Falstrup. “We are excited to present this new range of updates that will further enhance our user experience.”

RelayCars is available as a free download on iOS, Android, Oculus Go, Google Daydream, Samsung Gear VR and Microsoft MR.

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COSTA MESA, Calif. — In-car multimedia technology, perennially the leading source of complaints among new-vehicle owners, is still a sore spot for customer satisfaction, but is improving. According to the J.D. Power 2018 Multimedia Quality and Satisfaction Study, the number of reported problems with in-car audio, communication, entertainment and navigation (or “ACEN”) technologies has decreased for a third consecutive year, with several technology standouts emerging among manufacturers.

The study measures the experiences and opinions of vehicle owners regarding the quality, design and features of their ACEN system in the first 90 days of ownership. Multimedia system quality is determined by the number of problems experienced per 100 vehicles (PP100), with a lower score reflecting higher quality. Vehicles built by Ford and Lincoln earned the top spots in three of eight categories, including mass-market mid-size and large car, while BMW and Kia claimed two categories apiece and Porsche notched a win in the premium compact category.

“In-car multimedia has been a problematic category for automakers for several years, as ever-more elaborate navigation, voice recognition and entertainment systems have proliferated in vehicles of every type,” said Brent Gruber, senior director of automotive quality at J.D. Power. “While the area is still the leading cause of new-vehicle complaints — with voice recognition technology continuing to lead the way as the number one complaint for a sixth consecutive year — we are seeing some serious improvement across the board, with some manufacturers really raising the bar on delivering quality multimedia technology experiences for their customers.”

Data for the annual Multimedia Quality and Satisfaction Study is derived from each year’s J.D. Power Vehicle Quality Survey. The data is augmented with supplier sourcing information where available, which affords multimedia suppliers with a comprehensive view of the overall multimedia industry, as well as the performance of individual products and systems, and problems that owners experience.

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ORLANDO, Fla. — Organizers of the annual P&A Leadership Summit announced that Lee Bowron of Kerper and Bowron and Allstate Dealer Services’ Ben Woods will team up to present a session dedicated to rising GAP losses at the 2018 event. Co-located with the annual Industry Summit for the sixth consecutive year, PALS will be held Oct. 8–10 at the Caribe Royale Orlando in Orlando, Fla.

“This issue weighs heavily on the minds of executives in the P&A segment and will continue to do so until the numbers improve,” said David Trinder, CEO of F&I Administration Solutions and chair of the PALS advisory board. “This session presents a rare opportunity to get up to speed and prepare for the work that lies ahead.”

The 55-minute session, “Rising GAP Losses: 2018 Update,” will begin at 11:30 a.m. on Wednesday, Oct. 10. Bowron and Woods first teamed up to tackle the topic at last year’s event.

“GAP losses continue to remain high as the industry seeks to adapt to the significant loss trends experienced over recent years,” said Woods, who serves as loss modeling manager for Allstate Dealer Services. “I’m excited to be back with Mr. Bowron to present an update on residual values, total loss frequency, and other factors impacting GAP losses.”

The staple F&I product has been plagued by declining residual values, multiplying total losses, and riskier financing. Bowron and Woods pledged to deliver an update on those factors as well as a forecast for GAP losses going forward.

“We look forward to discussing the latest developments in GAP,” said Bowron, co-founder of the actuarial firm of Kerper and Bowron. “We will be examining some of the structural changes in the underlying auto insurance and repair industries which have and will continue to impact GAP going forward.”

More details about the 2018 P&A Leadership Summit, including the full agenda, will become available in the weeks ahead. Click here to register now. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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ORLANDO, Fla. — David Pryor, CMO of Safe-Guard Products International, will tackle the subject of digital retail in a general session for P&A Leadership Summit and Industry Summit attendees in Orlando next month, organizers announced. The events will be held Oct. 8–10 at the Caribe Royale Orlando, with Pryor set to take the stage at 4:20 p.m. on Wednesday, Oct. 10.

“Digital retail has the potential to disrupt our industry, the biggest change to F&I since the introduction of menu-based selling, maybe bigger,” Pryor said. “You owe it to yourself and your clients to be aware of what this means for your business and the future of our industry.”

Pryor plans to discuss the current state of automotive digital retail, including its effects on the F&I process, where this rapidly evolving segment is headed, and the potential widespread adoption of digital sales and financing solutions and processes holds for all involved parties, including dealers, agents, and F&I product providers.

“Whatever the state of the economy or the retail market, digitization factors into every major decision made in our industry today, from the factory to the showroom and the F&I box,” said David Gesualdo, show chair and publisher of the Bobit group of dealer magazines. “We appreciate David for stepping up to tackle this important topic at a critical time.”

More details about the 2018 P&A Leadership Summit, including the full agenda, will become available in the weeks ahead. Click here to register now. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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Regional Acceptance officials said the finance source chose Dealertrack’s Accelerate Title to “maximize internal efficiencies, reduce processing costs, and provide dealers with optimal service in title turnaround.” The finance source currently serves dealers in more than 40 states with 30 regional business centers.

“Dealertrack’s Accelerated Title brings us the most advanced lender solutions in the market today,” said Fred Reherman, COO of BB&T Dealer Retail Services, Regional Acceptance Corporation, and BB&T Dealer Finance. “Entrusting Dealertrack to deliver speed, accuracy, and consistency to our vehicle payoffs was a clear choice, because the company exudes the same characteristics of honesty, integrity and mutual respect that are core to RAC.”

Through Accelerated Title, RAC can provide accurate payoff quotes to dealers via Dealertrack based on their preferred payment date. Accurate payments can also be made via a three-day ACH process that when cleared, triggers title release to the dealer.

Accelerated Title also provides dealers with title visibility to ensure the validity of the trade before a deal is finalized. It also provides 24/7 title tracking, reporting, and statements so clients know exactly what’s happening with every transaction.

“It is great to see RAC succeed with Accelerated Title,” said Todd Hutto, vice president and general manager of Dealertrack Lender Solutions. “Our goal is for Accelerated Title to expedite the titling process for dealers and lenders, creating efficiencies on both sides that help everyone work smarter and more profitably. RAC is already seeing positive results and we’re confident their efficiencies will get even better.”

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HOFFMAN ESTATES, Ill. and SAN JOSE, Calif. — CDK Global announced on Tuesday that startup AutoFi has agreed to consume digital retailing application programming interfaces (APIs) from the Fortellis Automotive Commerce Exchange platform. The company also confirmed that Equifax Inc., one of the inaugural publishers on Fortellis, will publish additional APIs for the open, secure and accessible global network for the automotive industry.

AutoFi joins Equifax Inc., SiriusXM, and Lyft as the first generation of developers on Fortellis, a technology platform designed to connect software developers, OEMs and dealers so they can leverage, build and integrate new solutions and workflows. The company made the announcement from the API: World conference and expo in San Jose, Calif., where CDK Executive Vice President and Chief Technology Officer Rajiv Amar spoke on Tuesday about opening the doors of automotive commerce.

“Finance and Insurance processes have always been a roadblock for dealers looking to provide a seamless digital and in-store shopping experience for their customers,” said Ron Frey, executive vice president and chief strategy officer at CDK Global. “This is another great example of how an open, secure and accessible platform can bring together developers of highly specialized offerings that enhance the auto retail experience across the industry.”

San Francisco-based AutoFi brings to Fortellis a fully-automated F&I platform designed to provide dealers with the ability to offer a digital shopping experience powered by real-time finance source connectivity and offers. By consuming APIs on the Fortellis platform, AutoFi can deliver its digital lending technology to dealers with a connection to multiple CDK products through the DMS, Connected Store, websites and desking solutions. The omnichannel integration enables dealers to offer their customers lending options through their websites and in-store via mobile tablets on the showroom floor, while also allowing dealers to support customers with their digital purchase over the phone when they are shopping at home.

“Our fintech expertise delivers transparency and convenience to the customer by moving finance further up in the shopping experience,” said AutoFI co-founder and CEO Kevin Singerman. “We see a tremendous opportunity to bring this experience to the auto industry through CDK and Fortellis.”

At the National Automotive Dealers Association (NADA) annual conference this past March in Las Vegas, Equifax announced it was one of the inaugural publishers to contribute APIs for the Fortellis Automotive Commerce Exchange platform — the firm having published two unique APIs for the platform in less than five business days.

Equifax has now added an additional API to enable developers to personalize their solutions to the consumer based on their credit profile and to help drive personalized experiences in areas such as payment calculators, incentive display, and personalized deal quotes online. Equifax previously published an API for InstaTouch, a solution designed to provide dealers with a frictionless digital retail experience. It works by identifying and authenticating consumers using their mobile device so their information can be prefilled with limited inputs.

“Innovation will come from partnerships in the ecosystem, and Equifax will continue to enable developers with our unique assets and capabilities via Fortellis to help fuel this innovation,” said Jennifer Reid, vice president of automotive marketing and strategy lead for Equifax’s U.S. Information Solutions (USIS). “Fortellis has made it easier than ever to bring developers and companies together to innovate for the benefit of dealers, OEM’s and other industry third parties, which will ultimately elevate the consumer experience.”

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There are thousands of dealers across the nation, but only a select few are operating at a high level. Some dealers are not equipped for volume, while others can flip inventory but can’t do it profitably. Only a small percentage of dealers consistently excel in both areas. Their sales managers and staff operate and execute like winners.

Since the NFL season is finally upon us, let us compare: Only 12 teams out of 32 will make the playoffs. Interestingly, a handful of teams tends to dominate the postseason picture. In the past 10 years, we have seen multiple playoff appearances by New England (eight times), Baltimore, Green Bay, and Seattle (six), Atlanta, Denver, and Pittsburgh (five), and New Orleans (four).

Why is this? Upon further review, each of these teams are similar in five very specific ways. Let’s explore how they can work together to help your dealership make a fourth-quarter push.

1. They Have an Identity.

Great NFL teams approach the game in a uniquely consistent way. Their identity is engrained in their schemes and play-calling. The Packers have always had a great quarterback, which allows them to operate a pass-heavy offense. Following Green Bay’s example, dealership sales consultants and managers must possess:

• Individual skills that match the demands of your process.

• The ability to work with others to execute with precision.

• An attitude that embodies the dealer’s identity, whether it’s low prices, a family atmosphere, or great service.

If your sales force does not complement your dealer’s identity, then the dealer has no defined offensive scheme, which hinders your play-calling.

2. They Have Effective Coaches.

The NFL has allocated coaches into certain areas of focus. Each team has a running backs coach, a receivers coach, a defensive backs coach, and so on. Each manager needs to coach their sales consultants on what they do well:

• If a manager is great at qualifying customers, they should train others on qualifying.

• If a manager is great at leases, they need to train on leasing.

• If a manager is great at handling phones, they need to train on phone ups and follow-up.

Basically, if your managers are not training on specific areas of focus, your sale consultants will remain one-dimensional.

3. They Play to Their Strengths.

Kansas City Chiefs running back Kareem Hunt can run between the tackles or bounce outside to catch a pass. Teams lacking a dynamic playmaker at that position must turn to a running-back-by-committee approach. The same is true in the showroom: Versatility creates options. Count the number of your consultants who:

• Can excel in several positions — a “plug-and-play” type.

• Specialize in one specific role.

• Are better off riding the bench.

Ideally, your playmakers will outnumber your specialists and backups. If that’s not the case, be sure the team you put on the field can handle any situation.

4. They Know When to Call Audibles.

Sales managers and sales consultants will always need to improvise and make judgment calls during negotiations. New England quarterback Tom Brady calls out several audibles at the line of scrimmage for one specific reason: He is reading the defense, looking for gaps along the line or in coverage. Sales and desking managers know that:

• No two deals are the same.

• It pays to stay alert and engaged.

• Controlling the process closes deals.

Good offenses take the yards they’re given. Great offenses chip away at their opponent’s defense and capitalize on their mistakes.

5. They Start With Good Scouting.

Talent is hard to come by. Some NFL teams build through the draft and others tend to rely on the free agent market. Both rely on good scouting. Here are two factors to consider the next time you have room on your depth chart:

• Look in-house first, because it’s easier to find a porter than a consultant, and it’s easier to find a consultant than a sales manager.

• Sit down and review the résumés, because automatically filtering candidates based on predetermined criteria is no way to find talent.

Dealership managers and HR directors need to explore new and creative avenues in finding and onboarding sales staff, including candidates who have never worked in a dealership.

The small percentage of dealers operating at a high level understand these areas of focus. They might not have mastered them all, but they are constantly working toward mastery, and that is what separates them from the rest. Follow their example to coach your team into a perennial contender.

Phillip Hellstrom is founder of Phelcan Group LLC and a 17-year automotive retail professional with expertise in sales training and customer relations. Email him at phillip.hellstrom@bobit.com.

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ATLANTA — Lower vehicle density will spare Hurricane Florence-affected areas from tallying total losses approaching those seen in Texas and Florida during last year’s hurricane season, predicted Jonathan Smoke, chief economist for Cox Automotive.

In a statement released at noon ET yesterday, Smoke acknowledged the “hard reality” of significant flooding and property loss faced by millions of residents from the Carolinas, Georgia, and Virginia, many of whom are now “thankfully” under mandatory evacuation. However, Smoke said he believed Florence’s impact on the automotive industry will be “manageable,” at least when compared with the devastation sown by Hurricanes Harvey and Irma in 2017.

“Vehicle density in current path, thankfully, is about half that of Houston. The broad possible impact path of Hurricane Florence from Savannah, Ga., to Norfolk, Va., encompasses a population of 10.2 million people and 3.9 million households. Thankfully, this is not as densely populated as some coastal regions,” Smoke said. “The broad area has a population density of 182 people per square mile, which is less than half that of the Houston DMA or the state of Florida, which were impacted by Hurricanes Harvey and Irma last year.”

Smoke noted that, with 9 million vehicles in operation, the path area’s vehicle density is 162 vehicles per square mile — significantly lower than Houston’s 326 vehicles per square mile and Florida’s 314.

“With the evacuation and other preparations taking place now, the impact should be less than what we saw in Houston last year,” he said. “North Carolina could lose 20,000 to 40,000 vehicles if Florence maintains its current path and remains a Category 4 or 5 hurricane given the likely damage from wind and flooding.”

The latest projections say Florence will approach the North Carolina coast and turn left toward South Carolina late Friday, making landfall sometime Saturday. At 150 miles wide and traveling at 130 miles per hour, Florence could cause 13-foot storm surges and drop 40 inches of rain, leading to catastrophic flash flooding.

“This is not going to be a glancing blow,” warned Jeff Byard, associate administrator of the Federal Emergency Management Agency, Wednesday morning. “This is going to be a Mike Tyson punch to the Carolina coast.”

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Executives said the addition of the $1,000 bonus certificate to the FCA DrivePlus Mastercard strengthens an already rich package of automotive rewards designed to help drivers with the cost of ownership and dealers to close more sales and increase customer loyalty. Cardholders can earn unlimited rewards on everyday purchases, with double reward redemption at FCA US dealerships toward a new vehicle down payment, Mopar service, repair, or accessory purchase.  

“DrivePlus offers industry leading rewards for our customers while helping dealers reach and retain new shoppers who will visit their showrooms again and again,” said Jeff Kommor, vice president of FCA US’s Sales & Fleet Operations division.

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On a year-to-date basis through May, the auto finance industry originated 10.2 million auto loans during through May totaling $230 billion, a 1.1 increase in accounts and a 3.2% increase in balances from the year-ago period. Auto loans made to customers with subprime credit accounted for 22.8% of all auto loan originated during the quarter and 18.1% of origination balances, down from 23.7% and 19% in the year-ago period, respectively.

"As further evidence of the strong automotive market that has been present ever since the end of the recession, total outstanding auto portfolio balances have now eclipsed the one-and-one-quarter-trillion mark, reaching $1.27 trillion," said Gunnar Blix, Deputy Chief Economist for Equifax. "While total originations are down slightly from the previous two years, clearly the solid economy continues to make shoppers comfortable in absorbing not only higher prices of vehicles, but also in larger balances on their loans."

The industry originated 2.33 million auto loans for consumers with subprime credit through May, a 2.5% decrease from the year-ago period. The total balance for these loans was $41.7 billion, a 1.8% decrease year over year.

Additionally, the average origination loan amount for all auto loans issued year to date through May was $22,946, a 2.55 increase from the year-ago period. The average subprime loan amount was $18,306 over the same period, a 0.82% increase from the prior-year period.

Equifax also reported that more than 1.67 million auto leases were originated through May totaling $27.2 billion. That’s in line with lease originations in the year-ago period, although the total balance of those leases was down 1.9% from the prior year. Subprime lease originations totaled 154,800, with the balance of those leases totaling $2.67 billion. Compared to a year ago, subprime lease originations were down 3.6% and balances were down 3.9%.

According to the firm, leases accounted for 14.1% of all auto loan accounts originated and 10.6% of total balances. The average origination balances for all auto lease issues through May was $16,325, a 0.89% decrease from the prior-year period.

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IRVING, Texas — DealerSocket recently announced the appointment of Gary Ito as CFO. He brings three decades of financial and accounting experience to the software firm.

Over the course of his 30-year career, Ito has worked at several global software and technology organizations, including both public and private equity-owned companies. He most recently served as CFO at Outmatch, a predictive analytics software organization focused on helping companies hire better talent and develop their employees.

“Gary’s extensive background and proven track record will be incredibly valuable to our company’s success,” said DealerSocket President and CEO Sejal Pietrzak. “His experience at several growing software companies, where he was instrumental in providing the finance vision, strategy, and leadership, will be a huge asset to DealerSocket as we continue to grow and further our mission to drive the future of automotive.”

Prior to Outmatch, Ito led finance and operations at SAP Ariba and was also the CFO of Quadrem. Ito began his career at Nortel, where he held a variety of finance and management positions in both North America and Asia for more than 18 years.

Ito will now lead DealerSocket’s finance and accounting teams and will be focused on driving revenue growth and expansion. He will also lead the vendor management organization and expand the company's partnerships through the DealerSocket Certified Partner Program. Ito will also work closely with the leadership team to identify new revenue opportunities, including leading the company’s mergers-and-acquisitions activities.

“DealerSocket is the industry leader in innovative software, and I’m excited to join such a strong and growing company,” said Ito. “DealerSocket has a customer-centric approach, and I look forward to working closely with our high-performing, talented team.”

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ATLANTA — According to data from the Q3 2018 Cox Automotive Dealer Sentiment Index, U.S. automobile dealers are more positive than negative in describing the current market in the third quarter but are fearful that proposed auto tariffs could hurt profitability. The results are based on a poll of 1,276 dealer respondents conducted from July 31 to August 18.

Only 11% of dealers believe auto tariffs on imported vehicles and parts would have a positive impact on their business, while 38% anticipate a negative impact. Fifty-one percent of dealers believe tariffs would have no impact. Franchised auto dealers are more pessimistic, with 56% suggesting new auto tariffs would impact their business negatively. Of the franchised dealers who feel negatively toward tariffs, 66% believe consumers will face higher prices on all new vehicles, not solely imports, as the market adjusts.

“Dealers continue to report strong market conditions in the third quarter, with few material changes in key performance indicators from the spring, when we reported record-high sentiment,” said Cox Automotive Chief Economist Jonathan Smoke. “While they are positive on today’s business, the new looming threat is the negative impact of proposed tariffs on imported autos and parts. And, for the first time, dealers indicate that limited inventory is the No. 1 obstacle holding back business.”

Derived from a survey Cox Automotive issues to a representative sample of franchised and independent auto dealers, the CADSI measures U.S. dealer perceptions of current retail auto sales and sales expectations for the next three months as “strong,” “average,” or “weak.” The quarterly survey also asks dealers to rate new-car sales and used-car sales separately, with a variety of key drivers including consumer traffic and inventory levels. Responses are used to calculate an index where any number over 50 indicates that more dealers view conditions as strong rather than weak. In the Q3 2018 survey, Cox Automotive also explored dealer expectations on the impact of proposed auto import tariffs on business profitability.

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ORLANDO, Fla. — Florida-based attorney and compliance expert James S. “Jim” Ganther will present the first workshop session at this year’s Compliance Summit, organizers announced. Compliance Summit is part of the annual Industry Summit, which will be held will be held Oct. 8–10 at the Caribe Royale Orlando in Orlando, Fla.

Ganther has agreed to take on several pressing dealership compliance issues, including the recent reinterpretation of the Military Lending Act and its effect on GAP sales, stepped-up regulatory actions at the state level following the “defanging” of the former Consumer Financial Protection Bureau (now known as the Bureau of Consumer Financial Protection), and often-ignored standards for employee privacy, including monitoring of phone and email communications. His session will begin at 10:35 a.m. on Monday, Oct. 8.

"What these three topics have in common,” said Ganther, “is they all contain traps for the unwary that most dealers are unaware of. And that lack of awareness can cost dealers in a very big way.”

David Gesualdo, show chair and publisher of F&I and Showroom and Auto Dealer Today, said much was being asked of Ganther, a regular and valued contributor to the event. “Jim’s experience in carlaw, dedication to preparation, and engaging stage presence make this a can’t-miss session. We appreciate his hard work and we look forward to his insights.”

Registration for Industry Summit 2018 is open at the event’s website. Register by Sept. 20 to enjoy a $100 early-bird discount. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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REDWOOD CITY, Calif. — Cox Automotive Inc. has released its “2018 Service Industry Survey,” a new report that documents and analyzes the results of a survey completed by 3,550 consumers and 404 franchise dealership employees. Directors said their goal was to explore the current state of the service market and help dealerships understand and capitalize on consumer patterns when it comes to their perception of the dealer service business.

NADA research indicates the service department now comprises 49% of a dealership’s gross profit. This marks a shift in the automotive industry since 2012, when service made up 45% of dealership gross profits. In addition to service’s profit driving potential, findings from the Cox study show that the service experience is integral to customer loyalty and repeat sales, as 74% of customers who visited the dealership in the last 12 months for service are likely to return to purchase their next vehicle — compared to only 35% of customers who did not visit for service.

“With dealerships seeing a near 10% increase in all U.S. service visits since 2015, fixed operations will drive profitability for the next several years,” said Jim Roche, vice president of marketing and managed services at Xtime, a Cox Automotive brand, and author of “Fast Lane: How to Accelerate Service Loyalty and Unlock Its Profit-Making Potential.”

“The opportunity is ripe for dealerships to capture more service market share, but they need a better understanding of how consumers think and act when it comes to the service department. The insights from this study will help dealerships shape their service strategies and ultimately, improve the overall customer experience which is the key to retention, loyalty, and profitable growth,” Roche added.

According to the study, dealership personnel will also need to consider enduring consumer misperceptions around the cost of dealer services. The study also provides insight into some of the challenges dealerships have on the horizon, such as capacity issues and factors impacting customer loyalty. According to the data, 86% of franchise dealerships are approaching full capacity for single shift shops, with an increasing volume of recalls complicating the task of balancing the shop schedule of manufacturer paid service work versus consumer pay service repair orders. Moreover, dealerships will need to find ways to demonstrate the value of the service department. While consumers are going ever further from home to purchase a vehicle, only one in three customers are willing to drive more than 11 miles for service, analysts found.

The complete 2018 Service Industry Study is available here.

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ERIE, Pa. — A Pennsylvania Chevrolet dealership has agreed to pay a $1.4 million fine and more than $737,000 in restitution to various financial institutions for falsifying loan documents in hundreds of transactions over a six-year period, the U.S. Attorney’s Office for the Western District of Pennsylvania announced on Friday.

As part of the agreement to end federal prosecution, David Hallman accepted responsibility for the bank fraud scheme his Hallman Chevrolet dealership engaged in between 2009 and 2015. The agreement requires the monitoring of the dealer’s conduct over the next four years and imposes other substantial obligations on the dealership and its owner.

“The perpetration of large-scale auto loan fraud schemes in western Pennsylvania must stop,” said U.S. Attorney Scott Brady. “The auto dealership industry is put on notice that substantial penalties await those who engage in such schemes. In addition to the combined fine and restitution exceeding $2 million, the Policies, Procedures, Compliance and Ethics program required by this agreement should serve as a template for responsible, ethical conduct within the industry.”

According to the regulator, Hallman Chevrolet manipulated bills of sale and bank lending contracts to hide from financial institutions the true source of customer down payments. The dealership employees coached customers to provide jewelry — most of which was low-value costume jewelry — to Hallman Chevrolet in exchange for the dealership making it appear as though they provided valuable down payments.

The scheme, which was uncovered by an FBI investigation, led financial institutions into making unsafe investment decisions by having under-collateralized assets and financially risky credit applicants. According to the U.S. Attorney, they were led to believe customers used their own money for the down payment and that they were more creditworthy. In reality, the financial institutions were unknowingly supplying their own loan funds to cover the fictitious down payments.

According to the U.S. Attorney’s Office, loan default rates for the institutions impacted by the scheme were more than double the industry standard. This was due to the fact that customers had paid no money of their own for the purchase of the vehicle and had little incentive, and no actual financial ability, to pay down the loan balance, the regulator said.

In all, Hallman conducted more than 600 separate sales through the falsification of down payments, with impacted financial institutions suffering losses of approximately more than $1 million.

The investigation into the scheme showed that Hallman failed to have in place a compliance program designed to prevent and detect violations of law. Since late 2017, the U.S. Attorney’s Office said, the dealership has substantially improved its compliance program, has trained employees and staff, and has taken steps to ensure compliance with the law.

As part of the deferred prosecution agreement the dealership entered into with the government, Hallman Chevrolet must engage in “a substantial corporate compliance and ethics program and a vigorous monitoring and audit regime” over the next four years. Additionally, Hallman will also be disgorged of any profits realized from the bank fraud scheme.

 If Hallman Chevrolet fails to abide by the terms and conditions of the agreement, the U.S. Attorney may seek to institute criminal proceedings against the dealership and may use against Hallman Chevrolet the stipulation of facts establishing its culpability in the bank fraud scheme as set forth in the agreement.

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ALBANY, N.Y. — The directors of Victory Suzuki of the Bronx and Victory Mitsubishi of Larchmont have agreed to a court order with the office of Barbara D. Underwood, attorney general of the State of New York. The order, which follows a December lawsuit that charged the dealership with “fraudulent, deceptive, and illegal” sales of a “bogus and unwanted” anti-theft product, enjoins the dealerships against said activity and calls for restitution to as many as 1,100 customers.

“This court order is a victory for New Yorkers who were ripped off by these car dealerships,” Underwood said. “The dealerships’ deceptive conduct led consumers to sign contracts that did not reflect the negotiated sale terms, frequently including unwanted aftermarket add-ons that they did not agree to. My office will continue to protect New York’s consumers and ensure that car dealerships comply with state law.”

The genesis of the lawsuit was a complaint filed by a customer who had been charged $1,995 for “Etch Guarantee” and didn’t recall agreeing to the purchase. A refund was issued to that customer following an official inquiry. Officials say the investigation that followed found hundreds of car buyers were similarly charged in amounts as low as $129 and as high as $3,998, adding that, in some cases, the etching of the unit’s VIN onto window glass was never performed.

In a statement announcing the court order, Underwood’s office announced that the crackdown on the practice of "jamming," or payment packing, launched by former New York Attorney General Eric Schneiderman in 2015, has so far collected about $19 million in restitution and dealer fines on behalf of nearly 29,000 car buyers.

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Missing from the final bill, which was approved last Thursday by a 77-0 vote, were protections addressing future services and opportunities for automakers to serve customer directly. The legislation, AB 2107, now heads to Gov. Jerry Brown’s desk. He has until Sept. 30 to veto or sign the bill. If no action is taken, the legislation will take effect Jan. 1, 2019.

“Thanks to the stewardship of Assemblymember Reyes, the passage of AB 2107 is a huge victory for all Californians, local businesses and consumers alike,” said CNCDA President Brian Maas. “If signed by the Governor, the passage of this bill brings California’s new motor vehicle franchise laws further into the 21st century by establishing a level playing field between local independently-owned dealerships and multinational vehicle manufacturers.”

If enacted, the legislation will add further clarifications related to retail reimbursements on warranty work and customer retail pay. It will also expand the types of protests dealers can file with the state’s New Motor Vehicle Board regarding manufacturer encroachment; would deem a facility upgrade requirement as unreasonable if a facility was modified in the last 15 years; and builds upon existing law requiring that all performance standards be reasonable with a dealer’s demographics, market characteristics, allocation, local and state economic circumstances, and historical performance of the line-make.

Additionally, the bill allows dealers to select their own digital service vendors, restricting manufacturers from selecting specific vendors for their dealers to use. It also restricts a manufacturer’s ability to force dealers to repair a vehicle that a dealer is not allowed to sell or lease.

The legislation also preserves the state’s existing statutory disclosure dealers are required to give to consumers when a non-OEM endorsed F&I product is sold, thereby prohibiting OEMs from instituting their own disclosure form as General Motors did last summer. The bill also clarifies that treating dealers differently when providing financing or advancing money because the dealer sold a non-approved product is prohibited.

Stripped from the approved legislation, however, was a proposed statewide ban on automakers engaging in direct-to-consumer sales. The language would have modified the state’s existing guideline, which states that an automaker can’t compete against a same-brand dealership within a relevant market area.

Additionally, another provision was stripped from the bill earlier this summer that would have banned automakers from offering subscription programs unless they use their dealers to operate them.

“Franchise laws exist to govern the relationship between dealers and manufacturers, and California was overdue for significant improvements in the laws that will continue to protect dealers, their businesses and their customers,” Maas said. “We are pleased and encouraged that the California State Legislature unanimously agrees and supports our approach to improvements in California’s franchise laws.”

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HOUSTON — Completing a two-year, more than $6 million investment in sustainability and security enhancements, Manheim Texas Hobby clients and team members and the Houston community will benefit from improved conditions, reduced risks and peace of mind, directors announced.

Three key initiatives — a permeable paving system, water reclamation center, and site security upgrades — were backed by Manheim, the massive U.S. network of physical and digital wholesale vehicle auctions. Manheim Texas Hobby operates a 165-acre site located at 8215 Kopman Road, just minutes from the Houston airport and 40 miles from the coast. It counts 18 sale lanes and registration of more than 3,300 vehicles per week.

“Our innovative and creative solutions are as good for our clients and the environment as they are for our business,” said Darren Slack, general manager at Manheim Texas Hobby. “We’ve made sound investments that set us apart by bringing more value to our dealers and community.”

A $4.2 million TrueGrid permeable paving system and a recently added 15.25-acre lot expands capacity and provides a “cost-efficient and eco-friendly” alternative to concrete or asphalt. Made from 100 percent post-consumer recycled HDPE (high density polyethylene), it remains cooler than traditional surfaces and dramatically reduces the urban heat island effect. Most important in flood-prone Houston, the new paving system is completely permeable, so stormwater drains instantly, leaves no runoff and filters naturally to remove harmful hydrocarbons and pollutants which protects local aquifers.

A $250,000 Water Reclamation Center was designed to use 70% of the water generated by the detail shop. The reverse-osmosis system is expected to save the site 1.9 million gallons of water and $19,000 per year.

Finally, a $1.75 million security upgrade — with what has been touted as the most advanced camera system available, plus added steel plate gates and barriers around the property — enhances protection of client inventory. Upgrading and expanding coverage of the camera system installed in 2016, the new low-light, high-resolution wireless cameras operate on their own network, enabling real-time monitoring from anywhere of suspicious activity or potential storm damage.

“Leveraging innovations and technology, Manheim Texas Hobby is doing even more to support our clients and their inventory, metro Houston’s environment and this facility’s 260 team members,” Slack said.

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Based in Boston, iSeeCars aggregates all listings of new and used cars for sale onto one site, making it easier and much less time-consuming for consumers to find the best deals and save money. It leverages big data analytics powered by over 25 billion data points and uses proprietary algorithms to objectively analyze, score and rank millions of cars and tens of thousands of dealers, providing helpful insights and guidance to users to help find a good car at a good price from a trustworthy seller, all according to the announcement.

iSeeCars’ service caters to an in-market, low-funnel car shopping audience with unique tools such as its deal and price analysis that applies a mathematical approach to scoring and ranking the quality of cars, potential deals, and the dealers themselves. With this information consumers can make the right decision on the right vehicle without the hassle of gathering all the data points themselves, said Jumpstart CEO Nick Matarazzo.

“Jumpstart’s mission is focused on guiding the industry’s most qualified, engaged, in-market shoppers to the right car for them, and connecting our advertising partners to future prospects,” Matarazzo said. “Our advertising platforms, combined with the explosive growth in car shoppers leveraging iSeeCars and its unique data-driven offerings, will more closely connect consumers to the right research they need for their final purchase decisions.”

“We’re excited to be a part of the Jumpstart family of sites and to have access to some of the industry’s most innovative marketing programs available,” said Phong Ly, CEO and co-founder of iSeeCars. “Our data-driven approach to the shopping process has helped us solidify our footprint in the automotive marketplace, arming consumers with the right information they need to negotiate the best deal. Through our partnership with Jumpstart, we will be able to introduce and deliver deal transparency to a broader audience of car shoppers across the country.”

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When I visit or engage a dealership in some way, either as a consultant or as a customer, I check them out on social media. I want to see if I can get a feel for what they are all about and gauge the productivity of the service department before I get there.

This past week, I have been in several stores, but there was one that stood out. I have a friend who is one of their vendors. I asked him for an introduction to management. I purposefully did not research the dealership on social media because I wanted to try a little experiment. I wanted to see if my perception of the store would match what was being said about them on social media. So I went there without doing a “precheck.”

After meeting the parts, service, and general manager, doing a little observation and listening, I went home and checked them out on social media.

Guess what? My perception of the store matched what I found: This dealership is struggling in service. Overall customer satisfaction is down. A three-month audit shows their complaints are increasing. You can feel that there is something not quite right going on.

Comments and Star Ratings

I counted a total of 28 responses for the previous three-month period from two different social media sites. While there are more sites, I try to stick with the ones that most people are familiar with and that customers use most frequently.

The audit is simple. I pick a date, read the reviews, and categorize them by the comments and star ratings. I try not to make it complicated, but as many of you know, in our business, you can start analyzing anything all the way down to the beginning of time if you like.

I use three categories: “positive,” “neutral,” and “negative.” Within a few minutes, it is easy to spot trends, gather information about culture and personnel, and determine from the comments some of what is happening.

This dealership had 13 surveys in sales and 15 in service. Seventy percent of the surveys in sales were positive, zero were neutral, and 30% were negative. In service, it was 13% positive, 13% neutral, and 74% negative.

Since I am focused on fixed ops, that’s where I would dig in. From the comments, there are three main areas I would focus on if I were to train in this store:

• Poor scheduling and shop management: Clues to this problem can be found in comments like “three hours for an oil change” or “I had an appointment and it still took five hours” or “No one even started talking to me in the service drive for 15 minutes. I finally had to ask someone to help me.”

• Lack of communication: Comments like “They never called me back with an update, I always had to call them” or “They never even told me about (blank)” or “I did not even know about the (blank) until I asked them about it” are common.

• Poor attitude and low morale: Comments include “They are not very friendly” or “I didn’t feel welcomed” or “They don’t seem to want my business.”

When I walked out of that store, my perception as a trainer and consultant was that this dealership is struggling. Their image on social media confirmed it. My question to you is this: If I can get this kind of information and impression from one visit, what are your customers getting from their visits?

To be objective and effective in harvesting information from social media, you must look at the results differently. Use the reviews and comments to analyze your store from a 30,000-foot viewpoint, then narrow your focus to the people, processes, and profits that are falling short.

A word of caution when analyzing social media results and comments: Don’t get caught in the one-bad-customer trap. “But that was Bob Jones, and you know Bob Jones. Every time he comes in here, he is mad about something.”

This will lead you down the wrong path. Maybe Bob Jones is always angry about something, but are all your customers named “Bob Jones?” Nope. That’s why you tabulate the results without prejudice. Break down a three-month, six-month, or even longer period. Spot the trends, identify the problems, and create an action plan to correct them.

Leonard Buchholz is the founder of CarBizCoach. He helps dealers meet performance objectives in service sales, CSI, and profitability, and has extensive experience in evaluating fixed operations and providing corrective training and guidance. Contact him at leonard.buchholz@bobit.com.

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WASHINGTON, D.C. — A coalition of 14 state attorneys general called on the Consumer Financial Protection Bureau to continue protecting the rights of consumers against credit discrimination under the Equal Credit Opportunity Act (ECOA) — a sign that the fight over dealer participation might not be over.

In a letter issued to Acting Director Mick Mulvaney, the state regulators expressed concerns about part of a statement Mulvaney issued the day President Trump signed into law the resolution disapproving the bureau’s dealer participation guidance. They charge that the May 21 statement suggests that the bureau is considering “unlawfully refusing to protect residents of our states against credit discrimination.”

“Specifically, you stated that the CFPB ‘will be reexamining the requirements of the [ECOA],’” the letter states, in part. “Press reports indicate that your May 29 speech to the Women in Housing & Finance Inc. Public Policy Luncheon reiterated this statement and expanded upon it by suggesting that the CFPB is ‘no longer allowed’ to enforce ECOA’s prohibition against disparate impact discrimination with regards to auto lending.”

Of particular concern to the attorneys general, their letter notes, is the fact that state regulators share authority with the CFPB to enforce the CFPB’s regulations interpreting ECOA, and that “many of our states have stated antidiscrimination statutes modeled on ECOA.”

In Mulvaney’s May 21 statement, the acting director references “a recent Supreme Court decision” he said distinguishes “between antidiscrimination statutes that refer to the consequences of actions and those that refer only to the intent of the actor.”

“… In light the fact that bureau is required by statute to enforce federal consumer financial laws consistently, the bureau will be reexamining the requirements of the ECOA,” Mulvaney added.

In June 2015, the Supreme Court upheld the use of disparate impact in a Texas housing case involving the Texas Department of Housing and Community Affairs and The Inclusive Communities Project. The suit, filed in 2008, alleged that the Texas housing department caused segregated housing by allocating too many low-income housing tax credits to black inner-city neighborhoods and too few to predominantly white neighborhoods.

The complaint claimed that the department’s policies had a disproportionately adverse effect on minorities. Under the disparate impact legal theory, those policies could be in violation of the Fair Housing Act, even if their effects were unintentional. In its 5-4 ruling, the Supreme Court held that disparate impact claims “are cognizable under the Fair Housing Act.”

“A disparate impact claim relying on a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity,” retiring Justice Anthony Kennedy wrote in the court’s opinion. “Courts should avoid interpreting disparate impact liability to be so expansive as to inject racial considerations into every housing decision. These limitations are also necessary to protect defendants against abusive disparate impact claims.”

At the time, industry trade groups said that although the Supreme Court upheld the use of disparate impact, it did significantly narrow how the legal theory can be used. “Several important distinctions exist between the [FHA] and the ECOA, the statute under which the CFPB has authority to oversee auto lenders,” Chris Stinebert, president and CEO of the American Financial Services Association (AFSA), said at the time. “Specifically, the ECOA does not contain ‘effects’ language contained in other antidiscrimination statutes. The Supreme Court determined that the language contained in the FHA is equivalent to language found in other civil statutes that recognize disparate impact.”

Under the FHA, it is unlawful to “refuse to sell or rent … or otherwise make available or deny, a dwelling to a person because of race.” The ECOA, however, doesn’t include that phrase “otherwise make available,” which, according to Justice Kennedy, refers to the consequences of an action rather than an individual’s intent. The industry took that to mean the high court would have to go beyond its decision on the Texas housing case and find a new textual foundation for allowing disparate impact claims under the ECOA.

That interpretation is what the coalition believes Mulvaney’s May 21 statement referenced; their letter stating that his statement “relies on the observation that ‘a recent Supreme Court decision distinguishing between antidiscrimination statutes that refer to the consequences of actions and those that refer only to the intent of the actor.”

“But the majority in Inclusive Communities held that the ‘discrimination against’ provision of the FHA, which mirrors the language of ECOA, fell within the former type of statute,” the coalition’s letter states, in part. “Indeed, numerous courts have continued to recognize the validity of disparate impact claims under ECOA since the Supreme Court’s ruling in Inclusive Communities. As CFPB has no authority to overrule the Supreme Court’s interpretation of unambiguous text, any action to reinterpret ECOA not to provide for disparate impact liability could be set aside by a court as arbitrary, capricious, and otherwise not in accordance with the law.

“For the reasons stated above, we trust that CFPB’s reexamination will determine that ECOA provides for disparate impact liability,” the letter continues. “But the attorneys general will not hesitate to uphold the law if CFPB acts in manner contrary to law with respect to interpreting ECOA or to fulfilling its Congressional charge to ensure nondiscriminatory lending to the residents of our states.”

The letter is signed by attorneys general from North Carolina, California, the District of Columbia, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, and Virginia.

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Last year, only 10.4% of August auto sales had zero percent financing. Analysts note that these numbers are particularly uncharacteristic for this time of year, given that zero percent finance deals typically peak in August and September.

“August truly represents the month that we would have expected to see a turnaround in this trend if one was imminent," said Jeremy Acevedo, Edmunds' manager of industry analysis. "Moving forward, shoppers will likely need to do a bit more digging to find other ways to save on a new vehicle, because it looks like zero percent finance deals are going the way of the dodo."

Edmunds analysts note that higher interest rates continued to contribute toward the scarcity of zero percent finance deals in August. The annual percentage rate (APR) on new financed vehicles averaged 5.8% in August 2018 compared to 4.9% in August 2017 and 3.9% in August 2013. Inventory levels have also fallen to a level not seen since 2016, which Edmunds experts say is creating less of a need for automakers and dealers to pile on costlier incentives.

“Automakers have done a decent job this year at aligning inventory with demand, so there's no need for dealers to have a fire sale,” Acevedo said. “Manufacturers seem to be more comfortable with a longer sell-down period that leverages targeted incentives, instead of an aggressive ‘everything must go now’ mentality.”

Edmunds analysts noted that most automakers have pulled away from zero percent finance deals this year, with automakers such as Nissan and Toyota experiencing the sharpest decline. For Nissan, zero percent finance deals accounted for 13% of sales in August 2017. These deals only accounted for 4.8 percent of sales a year later. For Toyota, in August 2017, zero percent finance deals accounted for 21% of sales. In August 2018, these deals only accounted for 4.6% of sales.

“In a somewhat self-fulfilling manner, because fewer automakers are participating in these programs, there is less impetus for other automakers to participate to be competitive,” said Acevedo. “Sometimes incentives are a bit of a follow-the-leader game.”

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SOUTHFIELD, Mich. — Business information provider IHS Markit today announced the launch of the Market Performance Analysis Tool, the newest part of the company’s WorldView aftermarket online solution. This addition will allow aftermarket companies to analyze unit and dollar volume by product line and compare actual transaction pricing against competition — over time and by geographic regions — utilizing the same WorldView online system currently used to analyze vehicles in operation, original equipment research, and parts catalog coverage, the company announced.

Nearly $2 billion in annual sales transaction data from WHI Solutions (div. eBay) is incorporated into this solution from its Nexpart ecommerce solution across the U.S. and Canada. Monthly sales data from more than 18,000 users is normalized to the auto care industry ACES & PIES standards, making it easy to link to IHS Markit data and providing the user with easily recognizable product and brand nomenclature.

Users can compare brand or product line movement for a given time period and geographic region against the both the total units and dollars for that product line and/or a specific competitive set. Actual transaction prices are also included, allowing for competitive pricing analysis in order to make near real-time decisions based on what is happening in the marketplace. The database is updated monthly, all according to the announcement.

“This new offering fills a need in the marketplace to make decisions based on actual transactional sales data — specifically, a view of what is happening at the counter,” said Mark Seng, IHS Markit’s global aftermarket practice leader. “It also provides the aftermarket with key performance and competitive pricing metrics to help them make more informed category management decisions for their business.”

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Authors Ryan Hanlon and Don Ray, who serve, respectively, as Portfolio’s managing director and reinsurance consultant, said the report is intended to serve as a guide for dealers who are active in reinsurance or considering profit participation for the first time. The report avoids finance and accounting jargon to present a straightforward, accessible, easy-to-follow guide for those who are not already well-versed in finance or taxation.

“The demand for reinsurance education among dealers and agents has been steadily increasing, before and since tax reform became law,” Hanlon said. “We wrote ‘Opportunity at Risk’ to help introduce the concepts to those who aren’t well-versed in reinsurance and as a refresher for those who may already have some familiarity with reinsurance. Our goal was to help dealers avoid costly mistakes in today’s new taxation landscape.”

To download your free copy of “Opportunity at Risk: Reinsurance Meets Tax Reform,” click here.

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ORLANDO, Fla. — Organizers of the annual Industry Summit announced that famed dealership trainer David Lewis will deliver the keynote address at the upcoming 2018 event, set for Oct. 8–10 at the Caribe Royale Orlando in Orlando, Fla.

Lewis will deliver his speech at 9:10 a.m. on Wednesday, Oct. 10, setting the stage for a full day of advanced F&I training, starting with the annual Executive Panel and continuing with three sessions led by award-winning F&I trainers.

“It’s a wonderful opportunity to share my ideas and help these dealers and F&I managers grow their departments,” Lewis said. “To me, there’s nothing more exciting than sharing thoughts and processes people can take back to their stores and immediately see tangible and profitable results.”

Noting that his address will follow two days’ worth of events — including Compliance Summit, ACE compliance certification, the inaugural Technology Challenge, and the co-located P&A Leadership Summit, Lewis said he would strike at the heart of Industry Summit’s stated goal to “Protect the Future of F&I” by telling dealers and F&I professionals how to improve their per-copy average by $350.

“Front-end grosses are declining. We are in the midst of a very small sales recession. It is critical that dealerships pick up the lost revenue somewhere, and the easiest place to do that is in the F&I department,” Lewis said. “I’m going to share outside-the-box ideas that will allow your customers to want to purchase more products.”

Lewis began his career as an F&I manager and trainer more than 30 years ago, founding David Lewis & Associates in 1986 and crisscrossing the nation to deliver training to dealers and managers and staff in the sales, F&I, and service departments. He is the author of five books and the inventor of the concept of “Inspirational Selling,” a customer-friendly dealership experience that, in the 1990s, was ahead of its time.

“David Lewis’ credentials speak for themselves, and his topic is as timely as it is targeted,” said David Gesualdo, show chair and publisher of F&I and Showroom and Auto Dealer Today. “One sure way to ‘Protect the Future of F&I’ is to maximize productivity and profitability, and we couldn’t ask for a better way to kick off Day Three of Industry Summit.”

Registration for Industry Summit 2018 is open at the event’s website. Register by Sept. 20 to enjoy a $100 early-bird discount. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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SCHAUMBURG, Ill. — Tighter underwriting standards on the part of finance sources drove improvements in auto loan delinquency rates in the second quarter, but affordability remains a key concern, according to Experian Automotive.

According to the firm, 30-day delinquencies dropped to 2.11% of outstanding balances from 2.2% in the prior-year period, while the 60-day delinquency rate dropped to 0.64% of outstanding balances from 0.67% over the same time period. However, the industry saw average finance amounts and monthly payments reach new highs during the period.

“As we monitor the health of the automotive market, delinquencies are one of the most telling metrics. If this downward trend continues, it can be an encouraging sign,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions. “Moving forward, lenders will want to keep a close eye on car buyers’ payment performance.”

Average finance amounts continued to rise across the spectrum during the second quarter, with the average new-vehicle finance amount jumping more than $700 from the prior-year period to $30,958. As for used, the average jumped $520 from the prior-year period to $19,708. At the same time, the average monthly payment for a new-vehicle purchase increased $20 over the same period to a record $525, while the average payment for used increased by $13 to a record $378.

Experian also noted that 72 months remains the most common loan term for both new and used financing,

Also growing was the gap between new and used financing amounts, which widened by $147 in the second quarter. “For some consumers, that gap can mean the difference between buying a new or used vehicle,” the firm noted in its report.

Still, with outstanding loan balances increasing from $1.027 trillion in the prior-year period to a record $1.149 trillion, consumers seemed somewhat unfazed by the rise in loan amounts and monthly payments. However, the average interest rate for new and used increased 56 and 38 basis points to 5.76% and 9.40%, respectively.

The report also shows that consumers are increasingly looking to credit unions to secure vehicle financing; the segment realizing double-digit growth in new-vehicle financing (12.9%) and strong growth overall (4.9%). Credit unions also closed the quarter with a 21.3% share of the market in the second quarter. The only other lender type to experience growth was the captive finance segment, which grew 1.2 percent during the same time period.

Market share for banks dropped to 31.6% from 32.3% in the second quarter of 2017.

Additionally, the high-risk tiers continued to feel the impact of tightening credit standards, with the percentage of both subprime and deep subprime falling below 19% of loan balances. On its own, deep subprime hit an all-time low of 3.54%, compared with 3.98% in the prior-year quarter. The pullback from the high-risk tiers caused average credit scores for new and used financing to rise from 714 and 652 in the year-ago period to 715 and 655, respectively.

“Having access to quality credit is something every consumer deserves, regardless of the type of financing used. As the cost of vehicles rises, lenders need to make sure they’re leveraging all available data so they can offer comprehensive financing options to all consumers,” Zabritski said. “Consumers can also take steps to make sure they’re financially ready when looking to buy a car. We’re seeing the positive trend of on-time payments, which is just one step toward improving credit scores.”

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Founders Pedram Faed and Ellison Kim said they identified three key areas inside of a dealership that most directly influence operational profits and efficiencies and set to work making reporting features that align with each.  

“I’ve worked in almost every position inside a dealership and know, first-hand, the pain points as well as the most effective areas to focus on,” said Faed, the company’s CEO. “Dealers need less reports and more action-led information. We used our 15 years of retail automotive experience to eliminate the analysis aspect of reporting and transform all of this data into powerful action-driven information giving dealers and their management teams a clear game plan.”

The application displays a detailed level of visibility and accuracy that surpasses what most DMS companies provide, Faed added, giving dealers greater insight into their inventory levels. The information can be accessed or shared with a single-click view and was designed to offer a more proactive approach to inventory management compared with current reactive inventory management products.

“Managing two stores with seven brands has been a challenge using the DMS reports. I can now see all seven brand’s inventory levels with one click and building a forecast for the brands is so easy,” said Amer Muhar, general manager for Gill Auto Group stores in Madera, Calif.

The MBTN Sales Forecasting and Tracking component enables dealers to develop robust model line forecasts, measure their performance in near real-time, notify sales team members with simple text notifications, and guide them to their goals. The solution connects seamlessly to the dealer’s DMS and requires no maintenance from the dealer, according to the provider.

“I thought their solution would only be beneficial for bigger stores, but we saw a 350% increase with a model line we were struggling with by having it in our forecast and seeing the progress every day,” said Jon Young, general sales manager at Windward Ford in Kailua, Hawaii.

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IRVINE, Calif. — The new tax law and improved economies of scale and scope are among the trends that drove a robust Buy/Sell market in the second quarter, according to Kerrigan Advisors’ second quarter “The Blue Sky Report.”

After a slow start to the year, the market saw 75 transactions completed in the second quarter — a 92% increase over the first quarter. With consolidators and publicly-traded auto retailers seeing increased earnings as a result of these factors, profitability at dealerships holding steady, and dealerships embracing innovative, profit-driving business models, the dealership buy/sell advisory firm predicts that 2018 will mark the fifth consecutive year of more than 200 transactions.  

“We estimate one in eight dealerships has changed hands since 2014, and we believe increasing consolidation means this number will only increase,” said Erin Kerrigan, managing director of Kerrigan Advisors. “Consolidators are leveraging significant opportunities to increase earnings with accretive acquisitions by achieving economies of scale and scope post-transaction.”

Kerrigan added that consolidators are also finding new ways to grow earnings by employing technology and streamlining their business models, changing their selling systems and introducing new products across their platforms. That’s in contracts to the ‘to-be-consolidated,’ which are squeezing more profit out of their existing business models.

“And both are being positively impacted by reduced taxes as a result of tax reform,” noted Ryan Kerrigan, managing director of Kerrigan Advisors.

The Kerrigans, however, note that while blue sky values remained high in the second quarter, they were below 2017 levels. Part of the reason is rising interest rates and floorplan cost increases. And despite a plateauing SAAR, The Kerrigan Index, which tracks publicly-traded auto retail companies, continues to rise — indicating that Wall Street believes that scale matters and that anticipated disruptions to auto retail will disproportionately benefit the largest dealership groups. 

According to the firm’s report, 114 buy/sell transactions were completed in the first half of 2018, up from 101 transactions in the prior-year period. Additionally, the number of franchises sold rose 22% over the first half of 2017.

The report also shows that the number of multi-dealership transactions increased to 33 in the first half vs. 23 in the prior-year period. The publics, according to the report, are tracking toward nearly $1 billion in U.S. acquisition spending in 2018, a level that would surpass all prior years with the exception of 2014. That’s the year Lithia Motors acquired DCH Auto Group.

Additionally, private dealership groups, according to the report, continue to represent the largest share of dealership acquirers, with only 22 of the estimated 192 franchises that changed hands in the first half of the year having been acquired by public companies.

The report also showed that dealership rents rose compared to 2017, with the average dealer now having a rent-to-gross-profit ratio of 11.2%, a 3.7% increase over 2017’s ratio.

The second quarter report also outlined three key trends Kerrigan Advisors anticipates will have a significant impact on the buy/sell market for the remainder of 2018 and into 2019. They include consolidators focus on geographic concentration, successful business models command higher blue sky values, and expense reduction becomes a major consolidation driver.

In addition to expense reduction and a focus on geographic concentration, the report emphasizes the importance of successful and innovative business models to increased valuations, citing the recent sale of Wilsonville Toyota and Wilsonville Subaru. Both dealerships effectively utilized a no-negotiation sales model, resulting in profitability far higher than industry standards.

“Buyers of dealerships today are students of auto retail.  Most spend their days and nights thinking of ways to enhance their business’ profitability and strategically drive earnings growth,” said Erin Kerrigan. “Acquisition opportunities that provide an expanding group with new strategies to grow earnings will command a premium in today’s buy/sell market.”

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Awards are based on a comprehensive online survey sent to readers of Auto Dealer Today and F&I and Showroom magazines. Throughout the month of May, thousands of dealers and dealership professionals voted by ranking their business partners based on the value of services provided, quality of customer service, and whether they would recommend the company to another dealer.

“Thank you to everyone who voted in this year’s Dealers’ Choice Awards. We are honored to receive the Diamond award for F&I Financing,” said PayLink Direct CEO Rebecca Howard. “At PayLink Direct, we pride ourselves on providing our clients with the tools they need to drive service contract sales and grow their businesses. To have dealerships nationwide recognize the value of our interest-free payment plan program and our exceptional team is extremely gratifying.”

This year’s award winners will be listed in a Special Awards Section in the Q4 edition of Auto Dealer Today. The awards will be presented to the winners during a ceremony at the Industry Summit October 8-10, 2018 at the Caribe Royale Orlando in Florida.

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Turner comes to LotLinx with a deep understanding of the automotive industry developed while working at Ford Motor Co. where he led key initiatives to grow the Lincoln brand during the past five years. His major contributions to Lincoln include leading the marketing team during the development of the company’s newest flagship SUV, the 2018 Navigator, developing and executing the go-to-market strategy for the 2017 Continental, and collaborating with dealers in the Pacific Northwest to grow sales and service market share and profitability.

As the top company in Crain’s Chicago Business “Fast 50” list, LotLinx added Turner to the team to accelerate business progress by growing the company’s portfolio of AI-based digital advertising solutions. In this role, he will lead the development and launch of new offerings, including some that are currently nearing completion.

“LotLinx’s revolutionary AI-based marketing solutions directly benefit dealerships in meaningful ways,” said Turner. “My objective is to deepen LotLinx’s roots as the leading innovator in automotive digital marketing by working with our team to develop and launch world-class products. Like so many other aspects of life and business, AI is critical to the future of marketing. It is thrilling to join LotLinx’s team of talented and driven people who are already experiencing tremendous success with this new technology.”

“Our goal is to always push forward and find new and exciting ways to help dealers allocate their ad spend for the right initiatives, in turn creating a massive improvement in their ROI,” said Lance Schafer, LotLinx’s general manager of product and technology. “Eric is the perfect person to spur innovation amongst our team and get in front of the dealers who use LotLinx AI to identify ways to continue helping them sustain success. His skills will be put to use early, as some of our newest offerings are ready to go to market very soon.”

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The firm noted that used-vehicle prices began showing strength in the middle half of 2017, and the trend has continued deep into this year’s summer selling season. Most of the segment’s strength has been driven by mainstream car growth, the firm noted, with passenger cars of all sizes experiencing sizable improvements this year.

Compact car prices are up 9.1% from January’s level, followed by midsize and large car gains of 7.3% and 7%, respectively. Mainstream utility prices have also shown significant movement, although not nearly at the same level as their car counterparts. For example, year-to-date compact utility prices have increased by 2.8%, while midsize utility price growth has reached 3.1%.

And while things are primarily positive on the mainstream side of the market, the large SUV segment has registered a 2.2% decline, which can be largely explained by a 28% increase in zero to five-year-old wholesale volume. Luxury segments are also not faring so well.

“Luxury segments are not enjoying the same trend as their mainstream counterparts, due in part to higher incentive spend on the new side of the market,” the firm noted in its report. “Nearly all luxury segments have experienced declines in 2018.”

Like the segment’s mainstream counterpart, luxury large utility prices have deteriorated the most and are down 5.6% from January’s level. Luxury compact utility prices are down 2% so far this year. Other luxury segment losses haven’t been as severe, and prices for the collective are down by roughly 1% year to date, according to the firm.

“There are few drivers behind the overall strength of the used market,” the firm said. “Two primary reasons are an increased dealer focus on used-vehicle operations and vehicle affordability.

“Used vehicles continue to gain popularity with consumers and dealers alike,” the firm added. “Consumers can save money buying a well-maintained, late-model used vehicle, while dealers can capitalize on used-vehicle sales where profit margins are higher than new-vehicle sales.”

With a 4% increase in overall wholesale auction volume for units up to five years old through July, consumers and dealers alike have a slew of late-model cars, SUVs and trucks to choose from — and for up to 50% or more off their original MSRPs.

The firm noted that many of the country’s top public dealership groups are capitalizing on this dynamic, and the benefits were apparent in their latest earnings reports, the firm noted.

In their second-quarter earnings reports, Penske Automotive Group, Group 1 Automotive, and Sonic Automotive Inc. each increased used-vehicle sales by sizable amounts, up 10%, 13%, and 17%, respectively. And while Lithia Motors Inc. and Asbury Automotive Group Inc. posted smaller gains of 4.4% and 7%, respectively, they were impressive nonetheless.

“Each dealer group credited increased used-vehicle operations for the increase in profits, and they continue to state plans for even bigger investments in used operations in the future,” the first stated in its report.

“While the used market is doing well, the year’s improvement highlights the need for stakeholders to maintain diligence in their understanding of market dynamics and trends expected in the future,” the firm added. “To that end, J.D. Power Valuation Services expects used-vehicle prices for units up to eight years in age to increase 1% in 2018 relative to 2017.”

The firm said negatives associated with weaker credit conditions, modestly higher incentives and yet another increase in used-vehicle are expected to be offset by positives associated with strong employment, home prices, driving demand, and continued increases in vehicle quality. Gas prices are expected to have a relatively neutral impact.

“Both mainstream and luxury segment prices are expected to be softer for utilities as more units return to the used market,” the firm noted. “Mainstream passenger car prices should continue to firm up as supply falls, while luxury prices will soften due to the increased competitive pressure associated with luxury utilities as well as mainstream cars whose prices are lower, yet whose design and optional equipment continues to push into luxury territory.

“Overall, 2018 should see used-vehicle prices rebound back to levels recorded two years ago, placing them 5% below the record high observed in 2014.”

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SACRAMENTO, Calif. — The California new-vehicle market declined for the fifth consecutive quarter during the period ending in June, providing further proof that the market has plateaued after several years of big increases.

New-vehicle registrations in the second quarter fell 1.1% from the year-ago period to 514,773 registrations. Year to date through June, new-vehicle registrations fell 2.2% from the year-ago period to 1.027 million, which is what the trade group predicted after new light vehicle registrations fell 3.4% from the year-ago period. The CNCDA predicts the market will end 2018 at around 2 million new-vehicle registrations.

“We are encouraged that California vehicle sales are on track to reach about 2 million for 2018,” said CNCDA Chairperson Taz Harvey of Dublin Mazda. “While the market continues to shift in types of vehicles sold, we are experiencing consistent buyer behavior geared more toward larger vehicles. This increased demand continues to demonstrate consumer interest in purchasing larger, more convenient, family-friendly vehicles to meet their transportation needs.”

According to the association, Trucks own 54.1% of the market, with first-half registrations climbing 5.6% from the year-ago period to 514.470. In contrast, first-half passenger car registrations fell 10.1% from the year-ago period to 512,826. The market’s first-half performance is on par with the rest of the country, which registered a 7.7% increase in light truck registrations through June and a 12.1% increase in passenger car registrations.

According to the CNCDA, the trend toward trucks is also reflected on the regional level — more so in Southern California, where light truck registrations increased 6.1% to 285,060 through June and passenger car sales decreased 11.1% to 300,791. In Northern California, first-half light truck registrations increased 3.7% to 161,994 percent, while passenger car registrations fell 10% to 137,584.  

The CNCDA’s report also showed that electric and plug-in hybrid vehicle segments continue to gain ground, with new-vehicle registrations increasing 10.2% in the first half compared to the prior-year period. Looking closer at the data, plug-ins and electric vehicle sales were both up more than 1.4 percent combined through June. Hybrid sales, however, continued their long downward trend, with first-half registrations inching down 0.4% from a year ago to 40,011.

By brand, sales increased by more than 10% for 6 brands, with Toyota once again leading the way a 17% share of the market in the first half and the Honda Civic coming in as the best-selling model with registrations totaling 43,857. On the truck side, the Ford F-Series led the way through June with registrations totaling 26,336.

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DRAPER, Utah — Dealertrack (div. Cox Automotive) announced the impending unveiling of a new office space supporting Dealertrack DMS based in Draper, Utah. The 112,000-square-foot facility will be home to over 500 team members with capacity to continue growing. Team members will begin occupying the building in early February 2019.

“We’ve been closely tracking Utah’s growth as a burgeoning technology hub, and our new office move is another milestone in our commitment to innovation within our state,” said Randy Kobat, senior vice president of Cox Automotive brands vAuto, HomeNet, Rebates & Incentives, and Dealertrack DMS. “As our growth continues, we wanted to expand our reach to better serve our clients and attract new employees. This new, state-of-the-art facility will also help the local economy, as we strive to give back to the ‘Silicon Slopes.’”

Executives said the building’s leading-edge infrastructure and first-rate amenities demonstrate Dealertrack’s commitment to attracting and retaining top talent in the state of Utah. New building features include dedicated meditation rooms, an onsite gym, open collaboration spaces, game rooms with gaming systems on each floor, electric vehicle charging stations, and state-of-the-art technology throughout the facility.

The new Dealertrack DMS facility will also host some additional teams from Cox Automotive’s fellow brands, including Xtime, a fixed ops software solution.

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“This integration allows Dominion Dealers to more easily use the VisionMenu suite of products,” said Ron Martin, president of VisionMenu. “Now, after creating the menu, users can build their own sales presentation of sales tools, videos, and brochures, then present or esign any document and store them in a secure location — keeping the entire process paperless.”

VisionMenu’s product suite includes VisionMenu, VisionReport, vRate, vContract, vSignature, Remote F&I, and Paperless Deal Jacket.

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ORLANDO, Fla. — Organizers of the annual Industry Summit announced that IAS will once again sponsor “Ask Frenchy,” a competition that will include five finalists personally selected by Eric “Frenchy” Mélon, the company’s president of sales and veteran F&I trainer. The event will be held Oct. 8–10, 2018, at the Caribe Royale Orlando in Orlando, Fla.

“‘Ask Frenchy’ has become a highlight of Industry Summit, and for good reason: It’s real, it’s challenging, and it’s an F&I training exercise you will never forget,” said David Gesualdo, show chair and publisher of F&I and Showroom and Auto Dealer Today magazines.

Dealers and F&I professionals are invited to click here to submit the most challenging question or objection a car buyer has posed to them. Winners will receive a complimentary show pass and accommodations at the Caribe Royale. They will also be invited to participate in a special session with Mélon at Industry Summit, set for 3:35 p.m. on Tuesday, Oct. 9.

“In our industry, we spend so much time working in our game that we rarely take the time to work on our game,” Mélon said. “The Industry Summit is a great time to work on your game, and I’m excited to hear the objections you’re getting every day. I’ll pick the toughest objections and share my thoughts in Orlando. See you there!”

Registration for Industry Summit 2018 is open at the event’s website. Register by Sept. 20 to enjoy a $100 early-bird discount. To discuss sponsorship and exhibition opportunities, contact David Gesualdo at (727) 947-4027 or via email.

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SACRAMENTO, Calif. — The state’s New Motor Vehicle Board sided with a California Chevrolet dealership in a case that calls into question the way automakers measure and enforce sales expectations, ruling that General Motors violated state statutes when it terminated Folsom Chevrolet’s franchise in late 2016.

The board ruled against GM’s use of a retail sales index (RSI) as bases for terminating Folsom Chevrolet’s franchise agreement, determining that the automaker’s reliance on the sales efficiency metric violated state law because it failed to account for a number of the dealership's market circumstances. The law firm representing the dealership, Scali Rasmussen, said the decision puts GM and all other manufacturers on notice.

“This decision is a phenomenal victory for all California dealers and will have ripple effects across the country,” said Christian Scali, the firm's founder and managing partner. “For example, this outcome provides not only a shield as used in this case but potentially a sword for recovery of damages caused by GM’s application of the faulty metric,”

Previous cases in other states have come out in favor of dealers facing termination over RSI and other metrics that fail to account for market nuances, most notably the 2016 case involving Beck Chevrolet in New York. But the Folsom Chevrolet case is the first in California to call the use of such metrics a violation of that state's vehicle code.

The sales efficiency metric divides the dealer’s reported number of retail sales by the number of expected sales and multiplies the outcome by 100. An RSI of 100 means the dealership made its expected sales number exactly, while a score of 50 means it made only half that number of its expected sales.

According to the ruling, Folsom’s RSI in 2013 was 40.9, leaving it with a rank of 129 of the 133 Chevrolet dealers in California. For 2014, the dealership’s RSI was 44.4, giving it a rank of 124 out of 128 California Chevrolet dealers.

In May 2015, GM notified the dealership it was in breach of its dealer agreement because it failed to hit its sales and customer satisfaction obligations. Folsom Chevrolet was then given an opportunity to raise its RSI and CSI scores between July 2015 and December 2015. The automaker, however, said Folsom failed to correct its sales or customer satisfaction deficiencies during the period. A notice of termination was issued to the dealership on Nov. 3, 2016. Folsom then filed its protest of the termination with the board seven days later.

According to its ruling, the board found that GM’s RSI failed to account for the “impact of circumstances unique to Folsom’s market, including demographics, geography, and brand preferences.” The board also noted that a GM expert said Toyota and Honda are stronger brands in the dealership’s area and agreed that “the more local the benchmark, the more sensitive it will be to local conditions.”

Accounting for brand bias by controlling for demographic variables of age, income, education level, and population density, as well as whether the dealership is in the five-county area, results in a reduction of the RSI requirement for Folsom of approximately 30%, the board noted in its decision.

“While it may be a legitimate concern that General Motors would like to measure its dealers in a uniform method across the country and manufacturers do have a legitimate interest in monitoring the sales outcomes and effectiveness of its dealerships and addressing weaknesses in its sales force, the General Motors RSI and the assigned [area of geographic sales and service advantage (AGSSA)] in this case are flawed,” the board said in its ruling, noting that the RSI overstates sales opportunity by assigning 100% of the registrations despite Chevrolet dealerships in California and in the Sacramento area make less than 41% of their sales within their AGSSA.

“RSI also does not include any calculation of the opportunity to sell outside Folsom Chevrolet’s AGSSA, and does not account for local conditions, such as demographics, market characteristics, and local economic circumstances,” the board stated in its ruling. “As for Folsom Chevrolet’s AGSSA, it was assigned an unfair AGSSA in size and distances of registrations from the dealership location, with required absorptions of portions of two poorly or underperforming terminated dealerships, the fact that it is part urban and part rural, and is an AGSSA which grew over 80% in registrations between 2010 and 2014.”

In a statement issued to F&I and Showroom, GM spokesperson Jim Cain said the automaker “strongly disagrees” with the board’s decision. He added that a decision to appeal the ruling will be announced at a later date.

“The Retail Sales Index is currently calculated in California and elsewhere is one of multiple metrics and other sources of information considered by GM in evaluating its dealers’ compliance with their obligations,” Cain said in an emailed statement. “There are no plans at this time to revise the RSI calculation for California dealers.”

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“We are pleased to be able to offer our dealers the next step in successful selling at their dealerships,” said Ken Tomaro, CEO of OptionSoft Technologies. “A growing number of consumers are educating themselves on all available information regarding vehicle purchases. Ninety percent of them are doing it online. Now they can actually complete the purchase and have the vehicle delivered to their home.”

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Executives said dealers using both Auto/Mate and ProMax solutions will benefit from the enhanced sales, lead, marketing and productivity management tools available through real-time data exchanges between the two systems.

“ProMax is a proven, award-winning company that designs software to give dealerships a competitive edge in a demanding market,” said Mike Esposito, president and CEO of Auto/Mate Dealership Systems. “Additionally, ProMax provides a variety of services to help dealers generate, follow up and market to leads, as well as tools and training to close customers for a complete front-end solution.”

“Auto/Mate customers that are used to a high level of customer service and support can expect the same stellar experience and ease of use with all of our ProMax solutions,” said ProMax CTO Darian Miller. “Additionally, we appreciate Auto/Mate’s low-cost integration process so that we don’t have to pass high integration and certification costs to our dealer customers.”

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PEBBLE BEACH, Calif. — The annual Concours d’Elegance classic car show in Pebble Beach, Calif., was the sight of a recordbreaking auction this weekend. A 1962 Ferrari 250 GTO, one of only 36 ever built and boasting an impressive résumé, was sold for $48.4 million, including auction fees, by RM Sotheby’s Monterey.

The seller was Numerix Software Chairman Greg Witten, who purchased the vehicle in 2000 for an estimated $10 million. The unit was the third of its kind to be built. In 1962, it won the Italian GT championship and was driven as a practice car by American racer Phil Hill before Sicily’s Targa Florio. It would tally at least 15 wins by 1965.

A 1963 250 GTO set the previous record with a $38.1 million auction sale in 2014. Vehicles have been known to sell for higher prices off the block; Sotheby’s reported that yet another 250 GTO sold for $70 million in a private transaction earlier this year.

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