AIADA Aug/Sep2012

• CURBSTONING: WHAT’S BEING DONE• GET YOUR SHIPPING IN SHAPE• COMPLIANCE OVERDRIVE

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AUGUST/SEPTEMBER 2012PRSRT Standard

U.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

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

ALABAMAI N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I A T I O N

T H A N K Y O U T O N Y E . W I L K E R S O N F O R 4 0 Y E A R S O F S E R V I C E • A I A D A40

Farewell from the Executive DirectorPage 3Tony E. Wilkerson is retiring as executive director of the Alabama Independent Automobile Dealers Association.

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Tony E. Wilkerson is retiring as executive director of the AIADA

As this August-September issue reaches you, I will be retiring as executive director of the Alabama Independent Automobile Dealers Association.

I have been affiliated with the Alabama IADA for 40 years and I have had the privilege of being its executive director for the past 35. My wife, Rose Alayne, and I have traveled to state exec and NIADA events across the U.S. representing Alabama IADA over the years and we’ve had the opportunity to meet some wonderful people.

Not many men are blessed to be able to say they spent most of their career doing what they loved doing (most of the time). I have had the incredible opportunity to work with many of the finest people I have ever met, both here in Alabama and across the nation, within my association affiliations. Such has been my tenure with Alabama IADA.

Rose Alayne and I take with us treasured and valued friendships from among the meetings and association memories from these years.

Rose Alayne will continue to be at the auctions in Birmingham each Wednesday. I am looking forward to lowering my golf handicap with some great friends, in addition to fishing and hunting with my son, son-in-law and six grandchildren and spending time with my wife of 40 years.

We will continue to care for our special-needs daughter, Mandy, who is 34 years old, and Rose-Alayne’s sister, Susan, who is 50 and has Down Syndrome, so our traveling is not for great distances or long periods of time these days. Nevertheless, our dependent ones have taught us much about life values and ourselves, and we will remain faithful

in our care to provide for them wherever our new endeavors take us.

I have been blessed with good health and a precious family from a wonderful Heavenly Father who is and remains a priority in all I have done and will do in the future. My eternal destination is secure. We will all play to the audience of One at the end of our lives, and we will all give an account of our relationship with His Son, Jesus Christ.

Everything on earth is temporal blessing given us to be stewards of within an eternal influence and perspective, whether at home or in our business or in our relationships with others. Such is my consideration in all I attempt to do.

I am and have been blessed by the Lord and the many lives that have helped shape and influence me in positive ways throughout my years with AIADA. The outstanding association staff, board and legal counsel have been a great, valued support to this association and to myself, enabling my efforts to lead the association and help dealers whenever possible.

Judy Benton has been an indispensable asset to me and this association. She will continue to anchor and serve the association during the transition period.

Knowing it has been a privilege to use my abilities and relationships to serve Alabama dealers and the automotive industry, I wish continued success to Alabama IADA and its leadership decisions in the future. May God bless each of you.

Tony E. Wilkerson

Farewell from the Executive Director

T H A N K Y O U T O N Y E . W I L K E R S O N F O R 4 0 Y E A R S O F S E R V I C E • A I A D A40

Tony Wilkerson and Rose Alayne Wilkerson.

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A I A D A AUGUST/SEPTEMBER 2012

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PRESIDENTRandy Burns [email protected]

PRESIDENT ELECTCharles MoringMidland [email protected]

VICE PRESIDENTTodd [email protected]

SECRETARY/TREASURERRex [email protected]

CHAIRMAN OF BOARDKen [email protected]

DIRECTORS Barry SearcyMuscle [email protected]

John DunnSylacaugajohndunnauto@charter internet.com

Lance [email protected]

Willie [email protected]

Tommy [email protected]

John [email protected]

Paul [email protected]

Robert Case [email protected]

Tim [email protected]

Wayne [email protected]

Chad [email protected]

Corey BraxtonBirmingham, AlAuto Professional Car Sales

Association AttorneysGalese & Ingram PC John Martin Galese & Jeff Ingram

EXECUTIVE COMMITTEE

WHAT’S NEW

MAGAZINE CONTENTS

ADVERTISERS INDEX

03 Farewell From Executive Director10 Formula for Summer Selling12 Curbstoning: What’s Being Done18 Mobile Ads a Must for Dealers30 Compliance Overdrive

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATIONWWW.NIADA.COM • WWW.NIADA.TVNIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR [email protected] Alabama Independent Automobile Dealers Association is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817) 640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of AIADA or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2012 by NIADA Services, Inc. All rights reserved. Visit the NIADA Web site at www.niada.com.STATE MAGAZINE MGR./SALES Troy Graff • [email protected] Andy Friedlander • [email protected]/PRODUCTION MGR. Christy Haynes • [email protected] Nieman Printing

AIADA OFFICE120 VULCAN ROAD • BIRMINGHAM, AL 35209PHONE: (205) 942-1000 FAX: (205) 942-3565WEBSITE: WWW.ALABAMAIADA.COMTO BECOME A MEMBER OF AIADA, PLEASE CALL (800) 239-2423

ADESA .................................................................5Ally ....................................................................17AutoTrader.com .................................... Back CoverChase ..................................................................8Kelley Blue Book .................................................7Manheim.com ....................................................13Manheim Nashville ....................Inside Back CoverNIADA Certified ..................................................22Nowcom ............................................................15Protective ............................................................9STARS GPS ........................................................18Sterling Credit ............................ Inside Front CoverUnited Acceptance .............................................19Voisys ................................................................26Westlake Financial .............................................11

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Sirius XM Satellite Radio is America’s satellite radio company. Independent dealerships can now offer a free SiriusXM three-month trial on all pre-owned vehicles with factory-equipped satellite radio. In addition to selling your customers a quality vehicle, you’ll be giving them the opportunity to enjoy satellite radio. And there’s no cost to your customer. Visit www.siriusxm.com/niadaprogram to enroll your dealership today!

NIADA Member Health Plans, administered by JLBG Health, bring you choice and flexibility when designing your personal health plan while providing potential savings of thousands of dollars annually. To review the plan details and receive an instant online rate, visit www.NIADAHealthPlans.com or call 1-888-308-9340. AFC Offers Expanded Financing for RV Dealers

Floorplan provider Automotive Finance Corporation (AFC) has expanded its inventory finance product offerings to include more options for recreational vehicle dealers.

AFC said its RV inventory financing includes no restrictions on the type of RV unit a dealer can purchase – no make, model or year constraints.

“Many providers only finance a dealer’s new RV inventory,” AFC director of business development Neill Waters said, “and we consequently saw many RV dealers seeking financing that better met their used RV purchasing needs.”

AFC will advance 100 percent of an RV dealer’s auction purchases at more than 1,000 AFC-approved auctions, and the company’s financing gives dealers an extended time to pay off their units on floorplan for used inventory purchased from auction or taken in on trade. AFC’s RV financing applies to used motorhomes, travel trailers, fifth-wheel campers and other towable units.

I N D U S T RY N E W S

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In January 2013, county license plate issuing officials will have access to a new online insurance verification system developed by the Alabama Department of Revenue (ADOR) that will allow them, as well as Alabama law enforcement, to immediately verify the insurance status of a vehicle at any time.

“By working with the insurance community, other Alabama agencies and county governments, we have delivered a web service system that will accomplish real time insurance verification,” state revenue commissioner Julie P. Magee said. “The system – the Online Insurance Verification System, or OIVS – is needed to meet the new requirements of Alabama’s mandatory liability insurance law that will become effective January 1, 2013.”

The new requirements of the law, Act 2011-688, mandate that the ADOR have an online system in place by January 1, 2013, that can verify evidence of a vehicle owner’s liability insurance coverage. Under the new requirements, a vehicle owner will not be allowed to register a vehicle or renew a registration unless the insurance status of the vehicle can be verified using OIVS or unless the vehicle owner can provide proof of insurance to the license plate-issuing official at the time of registration or renewal.

Proof of insurance documents include the vehicle owner’s insurance card, current declaration page of the owner’s liability insurance policy or other such documents substantiating liability insurance coverage.

Electronic versions of proof documents may also be accepted by county license plate-issuing officials. Emails sent by the owner’s insurer, computer printouts from an owner’s insurer, electronic images provided by an owner’s insurer on the vehicle owner’s cellular phone, laptop or other portable electronic device meet the evidence of insurance requirements, according to the ADOR.

Ten Alabama counties are currently piloting the OIVS: Covington, Elmore, Henry, Houston, Jefferson, Limestone, Mobile, Shelby, Tuscaloosa and Winston.

“Alabama averages more than 4 million vehicle registrations each year that are subject to the mandatory liability insurance requirements, and this system will give both state and local motor vehicle administrators and law enforcement the ability to fulfill the requirements of Alabama’s mandatory liability insurance law,” Magee said.

“Various studies have indicated there is a valid concern among motorists nationwide that many of the drivers on the road are uninsured. That poses a huge risk to other drivers who are following the law. This system should also greatly reduce the risk of the drivers dropping insurance coverage once they have registered their vehicles.”

According to the Insurance Research Council, Alabama’s uninsured motorist rate is estimated to be 22 percent, ranking sixth among states for the highest percentage of uninsured drivers.

Real Time Insurance Verification Coming To County Tag Offices

T E N A L A B A M A C O U N T I E S A R E P I LO T I N G T H E OV I S

SPECIAL RECO GNITIO N AND APPRECIATION

TO OUR 2012 CONVENTION SPO NSO RS!!!

DIAMOND PLATINUM SPONSORS

ABC BIRMINGHAM DEALER FUNDING LLC MANHEIM NASHVILLE

PLATINUM SPONSORS ADESA BIRMINGHAM

GOLD SPONSORS

A.R.A. GPS SYSTEMS INC DEALERS AUTO AUCTION OF HUNTSVILLE

FRAZER COMPUTING TEBO FINANCIAL SERVICES

SILVER SPONSORS

AIM ALLIANCE INSPECTION MANAGEMENT ASC WARRANTY

AUL CORPORATION AUTO DATE DIRECT

BAMA AUTO AUCTION CHASE AUTO FINANCE

CENTRAL MISSISSIPPI CREDIT CORPORATION DEALERSHIP CAPITAL PARTNERS LLC

GOLDSTAR GPS INSURANCE AUTO AUCTIONS INC.

KELLEY AUTO AUCTION MARKONE FINANCIAL

MAZY B INC/STAR SENSOR GPS MICROBILT CORPORATION

PERFORMANCE GROUP/SPONSORED BY PASSTIME PERITUS PORTFOLIO SERVICES

SIMMONS NAMEPLATE & DESIGN SPARTAN FINANCIAL PARTNERS

STARS GPS WAYNE REAVES COMPUTER SYSTEMS INC

BENEFIT PROVIDER

WOODALL & HOGGLE INSURANCE AGENCY

OTHERS WHO DONATED DOOR PRIZES & MONEY

DIAMOND PLATINUM SPONSORSABC BIRMINGHAM

DEALER FUNDING LLCMANHEIM NASHVILLE

PLATINUM SPONSORSADESA BIRMINGHAM

GOLD SPONSORSA.R.A. GPS SYSTEMS INC

DEALERS AUTO AUCTION OF HUNTSVILLEFRAZER COMPUTING

TEBO FINANCIAL SERVICES

SILVER SPONSORSAIM ALLIANCE INSPECTION MANAGEMENT

ASC WARRANTYAUL CORPORATIONAUTO DATE DIRECT

BAMA AUTO AUCTIONCHASE AUTO FINANCE

CENTRAL MISSISSIPPI CREDIT CORPORATIONDEALERSHIP CAPITAL PARTNERS LLC

GOLDSTAR GPSINSURANCE AUTO AUCTIONS INC.

KELLEY AUTO AUCTIONMARKONE FINANCIAL

MAZY B INC/STAR SENSOR GPSMICROBILT CORPORATION

PERFORMANCE GROUP/SPONSORED BY PASSTIMEPERITUS PORTFOLIO SERVICES

SIMMONS NAMEPLATE & DESIGNSPARTAN FINANCIAL PARTNERS

STARS GPSWAYNE REAVES COMPUTER SYSTEMS INC

BENEFIT PROVIDERWOODALL & HOGGLE INSURANCE AGENCY

OTHERS WHO DONATED DOOR PRIZES & MONEY

MANHEIM NASHVILLEMAZY B INC/STAR SENSOR GPS

GALESE & INGRAMRONNIE ELLISON

LITTLE’S AUTO SALES

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Today’s tires are engineering marvels, improving performance and fuel economy, even if they tend to be largely ignored by motorists.

That’s also a problem that can turn a tire into a killer.

A new government study warns that as many as one in 20 crashes could be linked to tire-related problems, with underinflated tires posing an especially high risk of causing a problem.

“Tire problems are inherently hazardous to vehicle safety,” said the report by the National Highway Traffic Safety Administration, which based its study on crashes covering a three-year period from 2005 to 2007.

The report found underinflation was the biggest problem, with tires 25 percent below their rated pressure three times more likely to be involved in a crash.

Part of the problem is that a low tire reduces the vehicle’s stability even under ideal conditions, and it makes it significantly more difficult for a driver to maintain control in bad weather or during emergency maneuvers, such as swerving to avoid an obstacle in the road.

Problems also can result from worn tires, especially those that have gone bald or have damage to the tire that could lead to a catastrophic blowout.

The study noted that tire problems, in general,are more likely to lead to accidents in bad weather.

Industry officials say the study underscores the need to properly maintain tires, repairing or replacing those that are damaged while always keeping tires at the proper inflation.

That message should weigh doubly on the minds of consumers these days because properly inflated tires also deliver significantly better fuel economy. A low tire can reduce mileage by as much as 5-10 percent, according to various estimates.

Regulators and industry officials alike have been paying more attention to tire safety since the recall of 13 million tires used on the Ford Explorer a decade ago.

That has led many manufacturers to adopt more advanced TPMS technology, such as the kind that will be available on the 2013 Nissan Altima, that provides specific inflation information on each individual tire.

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The Federal Trade Commission announced an enforcement action against and a proposed settlement agreement with a franchised car dealer for allegedly violating the FTC Privacy Rule and the FTC Safeguards Rule and engaging in an unfair or deceptive act or practice (UDAP).

The enforcement action alleges that as a result of the dealership’s failure to implement reasonable security measures to protect its customers’ personal information – including names, addresses, social security numbers, birthdates and driver’s license numbers – the personal information of 95,000 consumers was made available on a peer-to-peer (P2P) network.

P2P file-sharing software can present significant data security risks, due in part to the fact that once a file has been shared to a P2P network, it can be viewed or downloaded by any computer user with

access to the network and it generally cannot be permanently removed from the network.

In addition to the data security violations, the FTC alleged the dealership engaged in a UDAP violation by misrepresenting in its privacy notice the measures it takes to protect customer information from unauthorized access. The proposed consent order between the parties contains, among other elements, a requirement that the dealership undergo data security audits by independent auditors every other year for 20 years.

In conjunction with its announcement, the FTC posted a blog item on the topic of P2P file sharing software. It is essential that dealers review this information, consider threats that may arise from P2P software when assessing the adequacy of their customer information safeguards and adjust their customer information security program accordingly, and ensure

the representations in their privacy notices are consistent with their customer information security practices.

In addition, it is essential that dealers protect customer information against this threat regardless of where it arises in the dealership, even in non-finance and non-lease transactions that might not be covered by the FTC Privacy or Safeguards rules.

In a related FTC enforcement action against a debt collector, the FTC used its UDAP enforcement authority to address the company’s exposure of hospital patient information that allegedly resulted from the installation of P2P file-sharing software on the company’s computer system.

The FTC announcement said this was the agency’s first action charging an auto dealer with violations of the Gramm Leach Bliley Act, which was implemented by the FTC Privacy and Safeguards Rules.

FTC Takes Action Against Dealer

AC T I O N FO C U S E S O N C U S T O M E R I N FO R M AT I O N M A D E AVA I L A B L E O N P 2 P N E T WO R K S

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Formula for Selling in the Dog Days of SummerThe dog days of summer are here.

The time to make hay while the sun was shining has come and gone.

The typical Buy Here-Pay Here dealer will sell 40-45 percent of his annual units in the first three months of the year. He will also realize about the same percentage of his annual profit in those three months.

So if you got off to a slow start in 2012, the dog days of summer could be the only way to salvage your year. Because we all know the last three months are not time to try to make your year.

Being able to sell in the dog days is really no different than selling in the heydays. The same four key ingredients to selling are the same. The only difference is the focus has to be there.

In the heydays, selling is pretty easy. Customers have money. You have inventory. All is right with the world. But come the dog days, customers have less money. And they seem to be harder to find.

The first, and most important, of the key ingredients to selling in the dog days is training. Well-trained salespeople can sell any time of year. You should always be training your staff, always honing their skills. Both phone training and basic sales skills training should be done weekly, at a minimum.

Work with staff on overcoming objections – role-playing is a good way to accomplish that. When it comes to phone training, work on how to set effective appointments. Lot traffic is at a premium during the dog days, so your people had better know how to effectively handle it.

The second ingredient is appearance. Now, I’m not necessarily talking about your employees’ appearance, which should always be neat and professional, but your overall lot appearance. The No. 1 reason customers list as the reason they come in is “drive by.” So if that is the case, why wouldn’t you want

your lot to look the best in town?The lot should always be neat and

orderly, not with vehicles facing all four directions of the compass and then some. Vehicles should be spaced evenly, with a good mix of colors and styles.

A lot party or lot rodeo should be done at least once a week, if not more. It will really go a long way to making your lot look fresh. You should consider the vehicles on your lot your mannequins and treat them the way fine department stores treat theirs. Keep them fresh, neat, clean and always ready to sell. That goes for overall lot appearance as well. A fresh coat of paint and some weed killer can do wonders.

Marketing is the next key ingredient. Again, with traffic being at a premium, this is the time when repeat and referral programs really pay dividends. It’s a good time of year to focus on referrals, not just with your customer base but with outside companies and people as well. If you are not already paying referrals to non-customers, it’s something you should seriously consider. I can assure you some, if not all, of your competitors are.

Marketing also extends to your web presence. Make sure your website is up to date, especially if you are displaying inventory. I was on a dealer client’s website the other day and he had pictures of some of his inventory with snow on it.

In addition to the inventory, make sure all other aspects of your site are up to date. That includes any advertised specials, about us sections and employee introduction sections. You wouldn’t want someone calling or coming in asking for someone or something that is no longer there.

The last key ingredient in the dog days selling formula is advertising. In this very competitive industry, advertising in some form or fashion is

almost a must. The thing that makes advertising effective is reaching the right folks with the right message.

The two most popular media are, of course, television and radio. There is a thought people watch less television and listen to more radio in the summer, but that is just not the case. Studies have shown television viewing doesn’t drop off at all during the summer, and the same goes for radio listening.

The important thing to remember about advertising on both those media is to remember you are not your customer, so don’t advertise to yourself. Chances are your customers watch different television stations and listen to different radio stations than you do, so make sure the stations you are on are the ones your customers are watching and listening to. Customer surveys from new and existing customers are the best way to gauge their entertainment preferences. Simply put, just ask.

As with marketing, your web presence is also a way to advertise. The use of your website, as well as Facebook and even Twitter can be ways to get your message out. I wouldn’t necessarily count on those selling more cars, but they are perfect ways to advertise new inventory or special sales promotions.

The formula for selling in the dog days is the same as selling in the heydays. It just takes a little more attention to detail. There are usually fewer opportunities in the dog days, so capitalizing on them is much more important.

Remember, the two most important ingredients in the formula are the two most inexpensive. Hopefully, you have the right mix of all the ingredients to keep the dogs at bay.

BY BRENT CARMICHAELEXECUTIVE CONFERENCE MODERATORNCM ASSOCIATES [email protected]

B E I N G A B L E T O S E L L I N T H E D O G DAYS I S R E A L LY N O D I F F E R E N T T H A N S E L L I N G I N T H E H E Y DAYS .

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CARFAX Helps TV Station Take Aim at CurbstonerEditor’s note: Curbstoning – sales

of vehicles by unlicensed dealers – is a national problem that takes advantage of consumers and takes money away from state and local governments as well as legitimate dealers. This report from Memphis television station WMC-TV exposing a local curbstoner and explaining the issue to the public is a direct result of the commitment of vehicle history report provider CARFAX to fighting curbstoning.

“We brought the issue to the station’s attention,” CARFAX public relations manager Chris Basso said. “Tennessee is one of the biggest hotbeds for curbstoning, but it’s a nationwide problem. Whenever we hear about curbstoners in a particular area, we work to get the word out about the potential problems with the cars these people are selling and how to avoid them.

“Most curbstoners are selling cars reputable dealers won’t touch – cars with hidden damage or rolled-back odometers or such – because they’re trying to make a quick sale. Anyone buying a used car needs to be wary of not only the car but of who they’re buying it from.”

Basso said CARFAX has contacted other media outlets, including stations in Nashville and Phoenix, with similar tips, as part of the company’s ongoing efforts to help educate and warn consumers and dealers about emerging issues involving used cars in their area.

By Andy WiseAction News 5/WMC-TV

A police report revealed a car buyer intends to press theft charges against the son of a woman who is fronting used car sales from her home for a dealership, a practice called “curbstoning.”

Bill Sullivan filed a complaint with the Germantown (Tenn.) Police Department on May 23. The complaint alleged he gave $4,500 to Thomas Coleman, son of Deborah Coleman, to purchase three vehicles.

When their delivery was delayed,

Sullivan pressured Coleman to produce the cars’ sales documents. Once Coleman finally presented the sales documents, Sullivan said they revealed something else.

“The cars were never purchased by them on my behalf,” Sullivan said. “They were purchased by somebody else.”

According to the sales documents, that “somebody else” was The Auto Connection, an auto dealership at 1419 E. Broadway St. in West Memphis, Ark.

Sullivan’s police report alleged Coleman pocketed his $4,500 and never purchased any cars with his money. The cars the Colemans claimed to have purchased with his money, Sullivan said, were actually cars they sold on behalf of The Auto Connection.

“Correct,” Sullivan acknowledged. “They split the profits.”

The Action News 5 Investigators pinpointed Deborah Coleman as a curbstoner when the vehicle history tracker CARFAX warned that unlicensed or unforthcoming auto dealers have agents posing as private sellers on CraigsList and in classified ads.

“Somewhere between 80 and 90 percent of [auto sales] classified ads are believed to be curbstoners,” CARFAX’s Chris Basso said. “These are dealers posing as private sellers who are selling cars that have a lot of hidden problems.”

Coleman has posted numerous listings for used car sales on CraigsList, all found while running searches based on her cellphone number.

Kayce Wyatt of Arlington, Tenn., answered one of Coleman’s ads for a 2001 Nissan Maxima, thinking Coleman was the vehicle’s private owner putting it up for sale.

She met Coleman at Coleman’s home. That’s where the car was stored, Wyatt said.

After taking a test drive and negotiating the deal – but failing to run a vehicle history report or to have the car inspected – Wyatt paid $3,500 for the car, according to the paperwork.

It’s when Coleman handed Wyatt the title that Wyatt realized something was up.

“I got the title, and it said, ‘The Auto Connection,’ ” Wyatt said.

The dealership, owned by Jimmy Smith, is licensed with the Arkansas State Police to sell used cars in Arkansas.

But according to the records of the Tennessee Motor Vehicle Commission, The Auto Connection is not licensed to sell cars, new or used, in Tennessee.

It wasn’t long until Wyatt started having trouble with the Maxima. The “Service Engine Soon” light stayed on. The radio’s power switch malfunctioned. The brakes, pads, rotors, spark plug and oxygen sensor had to be replaced.

She nearly paid as much to repair the car as she did to buy the car.

If she had run a vehicle history report, she would have discovered The Auto Connection had Deborah Coleman curbstone Wyatt a car that had been in an accident in Michigan.

Neither Coleman nor The Auto Connection disclosed the accident to Wyatt.

“So it’s been wrecked,” Wyatt said. “I cried and cried and cried about it, but I had to do what I had to do. I didn’t have a way out of it.”

An undercover producer of The Action News 5 Investigators answered one of Coleman’s ads for a Volkswagen Jetta. The test drive revealed the “Service Engine Soon” light was on.

“That’s because it’s due for an oil change,” Coleman said to our producer. A CARFAX report revealed nothing of concern with the vehicle’s history.

Both the Jetta and a Cadillac Coleman was selling outside her home had Arkansas dealer temporary tags. When our producer asked about the out-of-state tags, Coleman admitted she was selling the vehicles for The Auto Connection.

“[The] business is over in Arkansas, and it just saves all the [document] fees, and it saves me about $1,500-$1,600 dollars per car,” said Coleman, who is also not licensed to sell automobiles in Tennessee,

U N L I C E N S E D O R U N FO R T H C O M I N G D E A L E R S H AV E AG E N T S P O S I N G A S P R I VAT E S E L L E R S I N C L A S S I F I E D A D S .

C O N T I N U E D O N PAG E 1 4

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according to state records. According to the Tennessee Code

Annotated, 55-17-109, “it is unlawful for any person to engage in business … as a motor vehicle dealer [or] motor vehicle salesperson ... without first obtaining a license as required in this part.”

“Tennessee law says that if you sell more than five vehicles in a year, you have to have a dealer’s license,” Basso said. “These are people who are skirting that law, selling hundreds of cars without getting a dealer’s license, costing the state and local dealers hundreds of thousands of dollars” in tax revenue.

Coleman refused to answer questions when confronted. Smith agreed to an on-camera interview, then abruptly canceled the interview the next day.

On the phone, he said Coleman “is my agent. She sells cars for me. Sometimes it’s from her own driveway. Sometimes it’s from a [drug store] parking lot. She’s just trying to feed her kids.”

Germantown police department records revealed another car buyer reported Coleman in December 2010.

According to the complaint, the buyer blew the whistle on Coleman after he said he witnessed her and her son altering a temporary drive-out tag on a vehicle. Coleman told the police officer who wrote the report that she sold the car on behalf of Star Auto Mart, in Collierville, Tenn.

“No, sir,” Star Auto Mart owner David Fleming said. “She’s never sold for me. Never had a salesman’s license here. Never anything.”

Germantown police determined there wasn’t enough evidence to charge Coleman with a crime and decided it was a civil issue.

“It’s a lose-lose situation with curbstoning,” Basso said. “The state loses money. The [licensed] dealers lose money and the consumer gets ripped off.

“If you’re looking online, especially through sites like CraigsList, you really need to be careful about what you’re buying.”

Coleman’s curbstoning operation may be in violation of a Germantown city ordinance that prohibits “receiving persons at a residential property for the purpose of buying, selling, ordering or picking up products in connection with a business.”

“Code compliance has had contact with [Coleman] in the past,” said Stacey Ewell, spokesperson for the city of Germantown. “We did provide notice for unlicensed vehicles in the street in November of 2010 but have not had anything vehicle-related since. In addition, there is no business license for” Coleman’s address.

C O N T I N U E D F RO M PAG E 1 2CARFAX Helps TV Station Take Aim at Curbstoner

Report Shows Auto Credit Loosening Average credit scores for consumers buying a vehicle have dropped to

near prerecession levels in the first quarter of 2012, Experian Automotive reported.

According to Experian’s quarterly automotive credit analysis, the average credit score for financing a new vehicle dropped six points to 760 and fell four points to 659 for used vehicles. For comparison, average credit scores for the first quarter of 2008, just before the economy sagged, were 753 for new vehicles and 653 for used.

Lenders continued to set favorable terms for consumers during Q1 of 2012. Interest rates were lower and loan terms longer than in the first quarter last year, giving consumers access to potentially lower monthly payments. The average interest rate dropped to 4.56 percent for new vehicle loans and 9.02 percent for used, while the average loan term increased by one month for both new (64 months) and used (59 months) vehicles.

“Our report shows automotive lending is as healthy as it’s been since the market bottomed out in 2008,” Experian director of automotive credit Melinda Zabritski said. “With consumers doing a good job of paying back loans on time and the percentage of dollars at risk reaching its lowest point in six years, lenders are able to extend terms and provide lower rates.

“This thawing of the credit pipeline has been good for everyone, from consumers to lenders to automotive.”

The analysis also showed an increase in the average amount financed, which rose $589 to $25,995 for new vehicles and $411 to $17,050 for used vehicles.

Pace of Dealers Adding Inventory Slows Used car dealers have become less aggressive in bidding for inventory at

wholesale auctions in recent weeks, Black Book vice president and managing editor Ricky Beggs said.

Beggs noted that the retail market has backed off slightly and dealers have gotten less aggressive with bidding activity for the latest model years. Every car segment showed rate of decline and only two truck segments – compact SUVs and full-size crossovers – were up in May.

“While there are seasonality trends currently taking place in the retail markets, we’re starting to see hesitance of dealers to refill used car and truck inventory,” Beggs said. “Some of the rental companies are pushing a few more models into the market with a lesser demand for the 2012s and 2011 models, thus getting less aggressive bidding activity for the latest model years.”

I N D U S T RY C O R N E R

Rising Sales Lift FloorplansRising U.S. new and used auto sales have boosted dealership profits in 2012

and are strengthening already solid performance of dealer floorplan asset-backed securities, the financial ratings service Fitch reported.

Dealer floorplan asset performance has been solid this year, with most trust performance metrics at some of the strongest levels seen in the sector. Monthly payment rates are elevated above historical levels, dealer inventory agings are very low and dealer defaults are at record lows for most of the trusts.

Given the favorable conditions currently supporting U.S. auto dealership networks, Fitch’s outlook for both asset and ratings performance in 2012 is stable.

The report also discusses the health of U.S. auto dealerships in 2012, including sales levels, expenses and profitability, along with detailing other financial dealer metrics and overall industry health.

The report, “U.S. Dealer Floorplan ABS: Robust Dealers in 2012,” is available at www.fitchratings.com.

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Rent-A-Wreck of America, a franchise company with more than 150 used car rental locations throughout the U.S., is now offering NIADA members a $1,000 discount off the purchase of a franchise.

Rent-A-Wreck, an endorsed NIADA National Member Benefit Partner, has extended its commitment to independent dealers by pledging to contribute $1,000 to the dealer’s state association or the national association for every franchise sold to an NIADA member.

Since 1973, Rent-A-Wreck of America has offered used car dealers a franchise they can operate at their existing retail sales lot to bring extra revenue and additional foot traffic with little additional overhead.

“Our franchise brings used car dealers everything they need to become a player in their local car rental marketplace,” Rent-A-Wreck of America vice president of operations Michael DeLorenzo said. “We have financing, insurance, a global reservation system and a comprehensive and sophisticated training system that makes car rental a near turnkey opportunity for a used car dealer.

“Rent-A-Wreck is a great brand with a long and successful history with used car dealers. Our franchisees who are used car dealers see the benefit of additional cash flow and profits from rentals, but also see that the increased foot traffic helps them sell more cars as well.”

Rent-A-Wreck franchise owners receive access to a fleet leasing and purchase program that includes access to closed factory sales, a reservation system connected to multiple global booking channels, online travel agencies, rentawreck.com and 1-800 telephone reservations, point of sale integration with the reservation system, a comprehensive training program in pre-open and post-open phases, a dedicated area representative for recurrent and ongoing needs, insurance and more.

For more information, visit www.rentawreck.com/NIADA or call (469) 939-6132 to speak to a company representative.

Rent-A-Wreck Offers $1,000 Off a Franchise

E X T E N D E D C O M M I T M E N T

Black Book is predicting an additional 900,000 used vehicles will hit the market in 2012 – the effect of a hot new-car market – calling the massive influx a “glaring reason” for the drop in used prices that has already begun.

What’s more, if the new car market gets even hotter in 2013, used prices will fall further, the company said.

Black Book cited an outside prediction putting total new vehicle sales for 2012 (retail and non-retail) at 14.2 million units, which would be an increase of 1.5 million units over last year.

Black Book’s Ricky Beggs said 60 percent of those additional new vehicle sales are likely to have a trade-in attached, putting 900,000 additional used cars into the market.

“Almost a million more used vehicles will be added to the industry this year as a result of more trade-ins on new car sales,” Beggs said. “This is a significant driver of lower prices, combined with additional rental cars being sold at auction and dealers preparing for the coming 2013 models.”

So how big an impact does 900,000 additional used units make?Consider: Three years ago, 750,000 units were taken out of the used vehicle

market thanks to the so-called “Cash for Clunkers” program, and Black Book noted, “At the time, the auto community thought that would have a profound impact on the industry. By comparison, this year the industry will be adding 900,000 vehicles into the system, which is a glaring reason why prices are falling.”

Continuing a trend of softening prices, Beggs said in his June 18 report “Beggs on the Used Car Market” that the week ending June 15 showed car segment prices dipping $31 on average, with only one segment showing an increase. The downturn in truck prices was even steeper ($60).

Black Book said used car prices will continue to decline “well into next year assuming 2013 SAAR increases further.”Sales Projections

There are likely to be 4.43 million used sales in June, according to data from CNW Marketing Research. That would be down from 4.49 million used sales in June 2011 and up from 4.31 million in May, the firm said.

CNW said the “true delivery rate” for used sales – similar to the seasonally adjusted annualized rate often used by analysts in discussing new vehicle sales – was 40.19 million in June, down from 43.58 million in May.

CNW said the true delivery rate has stayed above 40 million for every month of 2012 except March, when it dropped to 38.54 million.

The latest forecast from J.D. Power and Associates’ Power Information Network and LMC Automotive projected 994,800 new car retail sales in June, a 15 percent rise from June 2011 after adjusting for one more selling day in June 2012. The resulting SAAR would be 11.9 million.

Analysts are expecting 1.27 million total new vehicle sales in June (retail and non-retail), which would be up 16 percent over June last year. That would translate to a total SAAR of 13.9 million.

The firms said the projections for June were based on the first 17 selling days of the month.

For the rest of 2012, LMC held its total new sales forecast at 14.5 million and kept its retail projection at 11.6 million.

“Despite a rising level of uncertainty with the economic recovery, consumers remain resilient in their willingness to purchase new vehicles,” LMC Automotive senior vice president of forecasting Jeff Schuster said.

“Concerns regarding the macro-economic environment and another potential summer slowdown have increased, but we expect the sales pace to remain strong and stable throughout the second half of the year.”

BY JOE OVERBY EDITOR, AUTO REMARKETING

Black Book: More Used Cars Will Cause Price Drop

C O N T I N U I N G A T R E N D O F S O F T E N I N G P R I C E S

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Mobile Advertising a Must for Car DealersAccording to sales statistics for the

first quarter of 2012, shipments of desktop and laptop PCs fell another 5 percent, and tablets and smartphones are cannibalizing PC sales by 50 percent.

Just another reason for car dealerships to optimize websites for mobile devices and include mobile advertising in their monthly budget.

Many mobile users are cruising classified sites and social media sites from their smart devices. Therefore, it is imperative for car dealers to get inventory on all of those sites, such as Craigslist and Backpage. Those classified sites are growing rapidly with inventory and shoppers, and since posting on

them is free, the return on investment is phenomenal.

In its Internet and American Life Project, in a study called “Americans and Their Cellphones,” the Pew Research Center found mobile phones have become a nearly ubiquitous tool for information-seeking and communicating – 83 percent of American adults own some kind of cellphone – and they have an impact on many aspects of their owners’ daily lives.

Cellphones are useful for quick information retrieval, so much so that their absence can cause problems. More than half of all adult cell owners had used their phone at least once to get information they needed right

away. More than one fourth said they experienced a situation in the previous month in which they had trouble doing something because they did not have their phone at hand.

Cellphones are important tools in emergency situations – 40 percent of cell owners said they found themselves in an emergency in which having their phone with them helped. Cell phones can help stave off boredom – 42 percent of cell owners used their phone for entertainment when they were bored.

Despite the advantages, some cellphone owners need an occasional break – 29 percent of cell owners turned their phone off for a period of time

D O N ’ T WA I T U N T I L 7 5 P E RC E N T O F YO U R W E B S I T E V I S I T O R S A R E U S I N G H A N D H E L D S .

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AUGUST/SEPTEMBER 2012 A I A D A

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just to get a break from using it. Even the advantages can cause frustration – 20 percent of cell owners experienced frustration because their phone was taking too long to download something, 16 percent had difficulty reading something on their phone because the screen was too small and 10 percent had difficulty entering a lot of text on their phone.

Cellphones can help prevent unwanted personal interactions – 13 percent of cell owners pretended to be using their phone in order to avoid interacting with people around them.

Text messaging and picture-taking continue to top the list of ways Americans use their mobile phones, with 75 percent of all cell owners using their phones for those purposes. Other relatively common activities include sending photos or videos to others (54 percent of cell owners do this) as well as accessing the Internet (44 percent)

Thirty-five percent of American adults own a smartphone of some kind, and they take advantage of a wide range of their phones’ capabilities. Nine of 10 smartphone owners use text messaging or take pictures with their phones, and eight in 10 use the phone to go online or

send photos or videos to others. Many activities — downloading apps, watching videos, accessing social networking sites or posting multimedia content online — are almost entirely confined to the smartphone population.

The statistics make it easy to see that mobile advertising is becoming increasingly important, and focusing on rich media advertising is even more important. Rich media ads offer more in-app interactivity via video, sound, gaming and so on.

The aesthetic value is an obvious advantage that will attract advertisers and ad creators. Furthermore, with the growing adoption of smartphones as the device of choice, rich media is the natural progression toward more engaging ads on free sites, which captures a captive audience. The engagement rates are as high as 33 percent on rich media ads.

If a car dealership depends on its web presence in any way, it’s important to start thinking about mobile now. Check how the website looks and works – or doesn’t – on mobile devices. Mobile Internet use is growing faster than anyone realizes.

Don’t wait until 75 percent of your website visitors are using handhelds. That’s like waiting until most of your backyard is

on fire before grabbing a water hose.

Start thinking now about how to make your website work hard for you on mobile devices, as well as getting ads developed for your dealership to run mobile campaigns. Mobile campaigns are used widely by manufacturers but can be brought to a local level with some geo-specific targeting. That means ads can be targeted to certain zip codes to run in your local area in order to attract more local business for your sales and service department.

Running coupon ads, loss leaders and teaser ads on mobile devices seem to be the most effective ways to attract local customers. The use of QR codes in paper advertisements can drive customers to either a mobile landing page or a video about your sales or service specials.

With the explosion of Internet video consumption, it is confirmed mobile video has largely been adopted. While video isn’t a huge focus for advertisers right now – many cite broadband and technology inadequacies as barriers – many static stats tell the story of video’s increasing importance for car dealers and salesmen.

BY DANI LUNSFORD

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Kelley Auto Auction celebrated the first anniversary of its dealer-only sale on Fridays. The auction still holds public sales on Tuesdays.

The Kelley Auto Auction Staff

I N D U S R T Y P H O T O S

ABC – ATLANTA444 Joe Frank Harris ParkwayCartersville, GA 30120Sale every Tuesday 6 p.m.& Friday 11 a.m.Phone: (770) 382-1010

ABC BIRMINGHAM1046 A.E. Moore DriveMoody, AL 35004Sale every Wednesday 12:30 p.m. Inops at 12 pmPhone: (205) 640-4040

ADESA ATLANTA AUTO AUCTION5055 Oakley Industrial Blvd.Fairbum, GA 30213Sale every Wednesday 10 a.m. & Friday 6:30 p.m.Phone: (770) 357-2277

ADESA OF BIRMINGHAM804 Sollie Dr.Moody, AL 35004Sale every Monday 6:30 p.m. & Wednesday 9 a.m.Phone: (205) 640-1010

ADESA KNOXVILLE1011 Adesa PkwyLenoir City, TN 37771Sale every Tuesday 6:30 p.m. & Friday 9:30 a.m.Phone: (865) 988-8000

ADESA OF MEMPHIS5400 Getwell Rd.Memphis, TN 38118Sale every Tuesday 9 a.m.Phone: (901) 365-6300

ALBANY AUTO AUCTION1421 Liberty Expressway SEAlbany, GA 31702Sale every Thursday 6:30 p.m.Phone: (229) 435-7709

AMERICA’S AUTO AUCTION6615 Mobile Hwy.Pensacola, FL 32526Sale every Tuesday 9:30 a.m.Phone: (850) 944-1945

ATLANTA AUTO AUCTION4900 Buffington Rd.Red Oak, GA 30272Sale every Thursday 9 a.m.Phone: (404) 762-9211

AUTO AUCTION OF MONTGOMERY6142 Troy HighwayPike Road, AL 36064Sale: every Thursday 10:00 a.m.Phone: (334) 288-3399

BAMA AUTO AUCTION4103 Gault Avenue SouthFt. Payne, AL 35967Sale: every Thursday 6:00 p.m.Phone: (256) 304-0947

BIRMINGHAM AUTO AUCTION125 Meadland CircleBirmingham, AL 35023Sale every Thursday 6 p.m.Phone: (205) 744-4030

CENTER POINT AUTO AUCTION100 13th Ct. NEBirmingham, AL 35215Sale every Monday 6 p.m.Phone: (205) 856-6527

CHATTANOOGA AUTO AUCTION2120 Stein Dr.Chattanooga, TN 37421Sale every Tuesday 10 a.m.Phone: (423) 499-0015

DEALERS AUTO AUCTION OF HUNTSVILLE26125 Hwy 72Athens, AL 35613Sale every Tuesday 9:30 a.m.Phone: (256) 232-0201

DEANCO AUTO AUCTION3664 South Oates St.Dothan, AL 36301Sale every Wednesday 10 a.m.Phone: (334) 792-1116

GEORGIA-CAROLINA AUTO AUCTION884 E. Ridgeway Rd.Commerce, GA 30529Sale every Wednesday 3 p.m. & Friday 6 p.m.Phone: (706) 335-5300

GEORGIA DEALERS’ AUTO AUCTION7205 Campbellton Rd.Atlanta, GA 30331Sale every Tuesday 10 a.m.Phone: (404) 349-5555

GREATER NEW ORLEANS AUTO AUCTION61077 St. Tammany Ave.Slidell, LA 70460Sale every Wednesday 9:30 a.m.Phone: (504) 643-2061

HIGHWAY 101 DEALERS AUTO AUCTION2100 Hwy. 101Rogersville, Al(256) 247-3600Sale Day – Thursday 10:30 a.m.

KELLEY AUTO AUCTION3485 US Hwy. 431Attalla, AL 35954Sale every Tuesday night Phone: (256) 538-9095

LONG BEACH AUTO AUCTION, INC.8494 County Farm Rd.Long Beach, MS 39560Sale every Wednesday 3 p.m.Phone: (228) 452-2030

LOUISIANA’S 1ST CHOICEAUTO AUCTION18310 Woodscale Rd.Hammond, LA 70401Sale every Tuesday 8:30 a.m.Phone: (985) 345-3302

MANHEIM CENTRAL FLORIDA9800 Bachman Rd.Orlando, FL 32824Sale every Wednesday 9 a.m.Phone: (407) 438-1000

MANHEIM NASHVILLE8400 Eastgate Blvd.Mt. Juliet, TN 37122Ford Factory Sale every other Monday 11 a.m.Open Sale every Wednesday 9 a.m.GM Factory Sale every other Thursday 10 a.m.Nissan Factory Sale once per month Friday 9 a.m.Phone: (615) 773-3800

MANHEIM MISSISSIPPI 7510 US Hwy. 49 NHattiesburg, MS 39402Sale every Monday 5 p.m. & Thursday 9 a.m.Phone: (601) 268-7550

MANHEIM METRO ATLANTA2244 Metropolitan Pkwy SWAtlanta, GA 30315Sale every Tuesday noonPhone: (404) 767-3652

MIDFIELD CAR AUCTION1468 Hartman Industrial Blvd.Midfield, AL 35228Sale every Wednesday and Saturday-6:30 p.m.Phone: 205-923-6535

PENSACOLA AUTO AUCTION401 West Burgess Rd.Pensacola, FL 32503Sale every Thursday 9:30 a.m.Phone: (850) 477-3063

SHOALS NORTH ALABAMAAUTO AUCTION651 Fairground RoadMuscle Shoals, AL(256) 381-2745Sale every Tuesday night @ 6:30 p.m.

SOUTH ALABAMA AUTO AUCTION LLC27472 Wilcox RoadRobertsdale, Al251-964-7012Sale Days – Tuesday & Thursday 6:30 p.m.Sat. Auction @ 11 a.m.

YOUR AUCTION3010 Scherer Dr. NSt. Petersburg, FL 33716Sale every other Tuesday 11 a.m. – BirminghamThe Jim Burke Automotive GroupPhone: (800) 675-4444

AUCTION DIRECTORY

(COUPON BOOK IS AVAILABLE WHEN YOU RENEW YOUR MEMBERSHIP)

M E M B E R S H I P SAV I N G S

AUCTIONS PARTICIPATING IN THE 2012-2013 AIADA BENEFIT COUPON BOOK

1. ABC Birmingham $250.00 $250.00 2. ADESA Birmingham $1800.00 $1800.00 3. AMERICA’S AUTO AUCTION –Pensacola $500.00 $500.00 4. ANAHEIM AUTO AUCTION –Birmingham $600.00 $600.00 5. AUTO AUCTION OF MONTGOMER $600.00 $600.00 6. BAMA AUTO AUCTION – Fort Payne $600.00 $600.00 7. BIRMINGHAM AUTO AUCTION $100.00 $100.00 8. CITY AUTO FINANCE – Floor Plan Floor Plan Fee 9. DEALERS AUTO AUCTION OF HUNTSVILLE LLC $600.00 $600.0010. DEALERS AUTO AUCTION OF MURFREESBORO $600.00 $600.0011. DEALER’S AUTOMOBILE AUCTION OF MOBILE $600.00 $600.0012. DEALER’S AUTOMOBILE AUCTION MISSISSIPPI $600.00 $600.0013. DEANCO AUTO AUCTION - Dothan $600.00 $600.0014. DRIVER’S WAY AUTO AUCTION - Birmingham $225.00 15. FORT PAYNE AUTO AUCTION $200.00 $200.0016. HIGHWAY 101 DEALERS AUTO AUCTION $600.00 $600.0017. INSURANCE AUTO AUCTION- $50.00 each $150.00 (Huntsville, Birmingham & Dothan Locations)18. KELLEY AUTO AUCTION - Attalla $600.00 $600.0019. LONG BEACH AUTO AUCTION - Mississippi $100.00 $100.0020. LOUISIANA’S 1st CHOICE AUTO AUCTION $200.00 $200.0021. MANHEIM ATLANTA $750.00 $750.0022. MANHEIM GEORGIA $750.00 $750.0023. MANHEIM NASHVILLE $600.00 $600.0024. MANHEIM PENSACOLA $250.00 $250.0025. MIDFIELD CAR AUCTION $300.0026. MID SOUTH AUTO AUCTION Pearl, Mississippi $900.00 $900.0027. SHOAL’S NORTH ALABAMA AUTO AUCTION $600.00 $600.0028. TALLAHASSEE AUTO AUCTION $300.00 $300.00

BUY FEE OR SELL

TOTAL VALUE IS $ 13,825.00 $13,450.00

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John Rea (right), new general manager of ADESA Birmingham, with AIADA executive director Tony Wilkerson.

Earl Shear of Earl Shear Motor Co. in Opp, Ala., is longtime AIADA member and a dealer for 62 years. Shear started in car business at age 17 working in the parts department at Ellison and Graves Chevrolet for $30 per week. He worked there 12 years, then started his own used car business. In 1963, he purchased the Chevrolet dealership from Mr. Graves and was a Chevrolet dealer for nine years. Shear is 89 years old and still operates his used car lot in Opp.

Rex Ingram and his daughter, Jennie, with a poster honoring Ralph Smith, a longtime dealer in Montgomery. Ralph was in car business for 94 years before he passed away several years ago. His grandson now operates the business.

ADESA Birmingham I N D U S R T Y P H O T O S

John Rea has taken the position of general manager of ADESA Birmingham.

Rea began his career in the automotive industry in 1972 at the family-owned Rea Brothers’ Mid-South Auto Auction. In 1994, he joined ADESA Charlotte as fleet lease manager until moving to ADESA Austin in 1997 to serve as the auction’s general manager. In 2000, he returned to his family’s business.

Most recently, Rea was chief operating officer for Auction Software Inc., a company that provides operating systems for automobile auctions.

He is active in the industry and served as president of the National Auto Auction Association in 2008.

NEW GENERAL MANAGER FOR ADESA BIRMINGHAM

Today’s tires are engineering marvels, improving performance and fuel economy, even if they tend to be largely ignored by motorists.

That’s also a problem that can turn a tire into a killer.A new government study warns that as many as one

in 20 crashes could be linked to tire-related problems, with underinflated tires posing an especially high risk of causing a problem.

“Tire problems are inherently hazardous to vehicle safety,” said the report by the National Highway Traffic Safety Administration, which based its study on crashes covering a three-year period from 2005 to 2007.

The report found underinflation was the biggest problem, with tires 25 percent below their rated pressure three times more likely to be involved in a crash.

Part of the problem is that a low tire reduces the vehicle’s stability even under ideal conditions, and it makes it significantly more difficult for a driver to maintain control in bad weather or during emergency maneuvers, such as swerving to avoid an obstacle in the road.

Problems also can result from worn tires, especially those that have gone bald or have damage to the tire that could lead to a catastrophic blowout.

The study noted that tire problems, in general,are more likely to lead to accidents in bad weather.

Industry officials say the study underscores the need to properly maintain tires, repairing or replacing those that are damaged while always keeping tires at the proper inflation.

That message should weigh doubly on the minds of consumers these days because properly inflated tires also deliver significantly better fuel economy. A low tire can reduce mileage by as much as 5-10 percent, according to various estimates.

Regulators and industry officials alike have been paying more attention to tire safety since the recall of 13 million tires used on the Ford Explorer a decade ago.

That has led many manufacturers to adopt more advanced TPMS technology, such as the kind that will be available on the 2013 Nissan Altima, that provides specific inflation information on each individual tire.

Those Underinflated Tires Could Kill You

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The U.S. Supreme Court found in favor of the 2010 health care law, deeming the individual mandate to purchase health insurance unconstitutional under the commerce clause but upholding the mandate by now calling it a tax.

Because of the ruling, some of the key factors that will be taking place in the year and a half include:

Individual mandate: Starting in 2014, everyone in the United States must buy health insurance or be subject to a tax.

Those who cannot afford to buy health insurance – families at poverty level – will be subsidized by the government.

Families making more than $80,000 per year will not receive a subsidy. That provision was the heart of the lawsuit challenging the law. The individual mandate goes hand-in-hand with the next provision: guaranteed issue. Making everyone buy insurance stops people from buying it only when they become sick.

Guaranteed issue: Also starting in 2014, all health insurance companies must accept all applicants regardless of pre-existing conditions. NIADA members have access to guaranteed-issue, limited medical right now by visiting www.niadahealthplans.com.

Minimum essential coverage (MEC): The provision states the government will regulate what plans will cover and will not cover as a means to qualifying acceptable coverage. Having acceptable coverage means not facing fines or penalties.

It is expected the highest deductible will be $2,000 for an individual and $4,000 for a family. That, however, could jeopardize Health Saving Accounts (HSAs), which are linked to high-deductible health plans and are a popular option for the self-employed and for small businesses.

Health insurance exchanges: Each state will set up a health insurance exchange for consumers to shop for health plans. If they qualify, consumers will be able to receive subsidies through the exchange. NIADA members can Visit the NIADA Health Insurance Exchange right now to shop for rates from multiple carriers through www.niadahealthplans.com.

Additional questions on the law and how it will affect you? NIADA members can call the NIADA Member Health Plans hotline at 888-308-9340 or visit www.niadahealthplans.com.

BY TODD PAGE, JLBG HEALTHTODD PAGE IS VICE PRESIDENT OF JLBG HEALTH, THE ADMINISTRATOR OF NIADA MEMBER HEALTH PLANS.

What Health Care Ruling Means to You

V I S I T W W W. N I A DA H E A LT H P L A N S . C O M .

STARTING IN 2014, ALL HEALTH INSURANCE COMPANIES MUST ACCEPT ALL APPLICANTS REGARDLESS OF PRE-EXISTING CONDITIONS. NIADA MEMBERS HAVE ACCESS TO GUARANTEED-ISSUE, LIMITED MEDICAL RIGHT NOW BY VISITING WWW.NIADAHEALTHPLANS.COM.

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Bright to Head Northwood Auto Marketing Program

Elgie Bright has been named chairman of the Northwood University automotive marketing program, replacing Joe Lescota, who held the position since 2000. Lescota left the university in May to join NIADA as director of dealer development.

Bright, a graduate of Adrian College who earned a Master’s degree from Northwood, has more than 20 years of experience in the automotive retail, original equipment manufacturer and aftermarket industry.

Bright spent the past 12 years as a field district sales manager for General Motors, responsible for implementing market plans for assigned areas and meeting strategic growth initiatives. He also served as assistant manager for Art Moran Pontiac in Southfield, Mich., acting as liaison between the fixed operations department and General Motors.

“His long experience in various aspects of the automotive industry and his passion for helping students learn will maintain the quality and excellence of our automotive programs,” Northwood Academic Dean Dr. Lance Lewis said.

Former Ohio State football player Michael T. D’Andrea of Columbus, Ohio was named 2012 National Quality Dealer of the Year by the National Independent Automobile Dealers Association during NIADA’s 66th Annual Convention and Expo in Las Vegas.

In a ceremony televised live from Caesars Palace to an online audience of 150,000 viewers, D’Andrea was chosen from the 21 State Quality Dealers nominated for highest honor given to one of the NIADA’s 20,000 dealer members.

D’Andrea is co-owner of Miracle Motor Mart in Columbus, a dealership he founded in 1989 with 40 cars and $150,000 worth of inventory. Miracle Motor Mart now has two locations and 46 employees, and has a combined inventory of more than 400 vehicles.

NIADA National Quality Dealer candidates are judged on a variety of factors, including contributions to the automotive industry and community involvement. A panel of judges from Northwood University selects the

annual winner.NIADA chief executive officer Michael

Linn said D’Andrea “has provided a superior level of service for his customers, his community and his industry that is beyond reproach. He says his goal each and every day is, ‘God first, others second and myself last.’

“Giving back to the community has always been on the top of his list – supporting youth summer camps, working for his church, distributing food, clothing, toys, medical supplies and prayer to more than 700 families each year. It is an honor and a privilege to bestow this great award to a well deserving dealer, member and automotive professional.”

D’Andrea, who played linebacker for Ohio State from 1979-81, and his partner, Mark Meadows, are heavily involved in charity projects in Columbus, including the Run the Race Club, St. Paul’s Outreach, Catholic Youth Summer Camp and St. Patrick’s Youth Ministry.

D’Andrea said his business prides itself on “teamwork, loyalty, ethics and honesty,”

NIADA Names 2012 Quality Dealer of the Year

G I V I N G B AC K T O T H E C O M M U N I T Y H A S A LWAYS B E E N O N T H E T O P O F H I S L I S T

and said as the dealership has grown, “in that growth you’re almost forced to do more. You’re almost required to do more.

“I’m proud of NIADA’s commitment to encourage dealers to make a difference in their community. We have all been given a great gift of self-employment and being in a free country. … We have a great responsibility with all these gifts we have been given. Let us share them with our friends, our families and our community.”

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DEBORAH & LARRY CARTERA.R.A. GPS SYSTEMS INCNEWNAN, GA

JEFF HILLCARPROFORESTDALE

DAVID WILSONCARZ4YOU.COMROBERTSDALE

LARRY HALVERSONCENTRAL MISSISSIPPI CREDIT CORP.BRANDON, MS.

GEORGE L COOKCOOK AUTO SALESGREENVILLE

WAYNE LAYTONCORNERSTONE INSURANCE GROUP INC.CHATTANOOGA, TN

ED FOYDEALERSHIP CAPITAL PARTNERS LLCMACON, GA

MIKE GENTRYGENTRY CAPITAL GROUP, LLCALBERTVILLE

GHASSAN DIB/MOJAHED DEEBINTERNATIONAL AUTOPLEX INC.PELHAM

JOE WILLIAMSJ W AUTO SALESBESSEMER

RAJAN PATELKINGS MOTORSADAMSVILLE

KENNETH WALTON/MANDY VINYARDMAIN STREET AUTOMOTIVEBIRMINGHAM

DUANE YESSICKRV COLLISIONTHEODORE

ROBERT W FLECK/CHAD MILESSPRINGHILL AUTO BROKERSMOBILE

JIM BRINKLEY, CONTACTSPARTAN FINANCIAL PARTNERSSPARTANBURG, SC

WILLIAM F HAMWFH ENTERPRISES LLC/dba/VALUE RIDEAUBURN

APRIL RENEWALSDINK TUCKERDAN TUCKER AUTO SALES INCBIRMINGHAM

GERALD M SMITHJERRY’S USED CARS LLCHANCEVILLE

JIMMY STILES/RICKY STILESJIMMY STILES USED CARSJASPER

TROY PAINTERP & P MOTORSALBERTVILLE

LANCE TURNERPEE WEE TURNER MOTORSANNISTON

RICKEY RILEYRICK’S AUTO SALESGADSDEN

MAY RENEWALSDONALD GANT/JENNIFER SMITHA & D MOTORS INCARAB

ANDREW FUSAIOTTIANDREWS IMPORTS INCMOBILE

GRACE & ROLAND WILSONB W’S AUTO SALESSUMMERDALE

PHILIP KNOXBAYOU MOTOR BAYOU LABATRE

HAMID BAGHAEIBEL AIR MOTORS INCMOBILE

GLORIA MAYFIELDBUDGET AUTO & TRUCKSUMMERDALE

E W CANADACANADA AUTO SALES INCBESSEMER

ERIC ADAMS, CONTACTCHASE CUSTOM FINANCEHOOVER

TONYA ABERNATHYCHATTANOOGA AUTO AUCTIONCHATTANOOGA

WILLIE J COLVIN, SRCOLVIN AUTO SALES & SERVICE LLCTUSCALOOSA

DARRYL FAIRCHILDCOTTAGE HILL MOTORSMOBILE

SHELIA CLARKCOUNTRY AUTO SALES LLCARAB

R H CULPEPPERCULPEPPER TRAILER SALES INCCULLMAN

GORDON DAVENPORTDAVENPORT MOTORSDECATUR

CONNIE WRIGHT, CONTACTDEALER FUNDING LLCATLANTA

DAVID ANDREWSDEALER’S AUTO AUCTION OF THE SOUTH LLCHORN LAKE, MS

JOHN TUCKERDOWNTOWN MOTOR CO INCTUSCALOOSA

MICHAEL & PAUL DUNNDUNN’S WHOLESALE AUTO SALES INCCOTTONDALE

RUSTY WHITENED WHITEN CARS INCBIRMINGHAM

CHAD TILLERYELLISON AUTO SALES INCJEMISON

FRANK POLHILLFRANKLIN AUTOMOTIVEBIRMINGHAM

RANDY CRUMPFRIENDLY AUTO SALES INCJASPER

GERAL TURNERG & R AUTO SALESHUNTSVILLE

JOHN MARTIN GALESE/JEFF INGRAMGALESE & INGRAM P.C.BIRMINGHAM

GENE MARSH/SHEILA MARSHGENE’S WHEEL & DEAL SALESARDMORE

LOWELL GILMORE/KAREN GILMOREGILMORE AUTO SALESGENEVA

KIM GOOD, CONTACTGWC WARRANTYWILKES-BARRE, PA

LARRY TEAGUEH & L MOTORSCEDAR BLUFF

TONY DRAKEHARVEST WHOLESALEATHENS

MARTY THOMASHOMETOWN AUTO SALESMERIDIANVILLE

ALVIN RICEI GOT A DEAL USED CARSBIRMINGHAM

JOHNNY DOUGLASJ D’S USED CARSSYLACAUGA

BETTY & RUDY KINGJACKSON USED CARS INCANDALUSIA

JIM WOODSJASPER AUTO SALESJASPER

JEFF DONALDSONJEFF’S CLASSIC MOTORSTUSCALOOSA

ROBERT JINRIGHT JRJINCO MOTORS INCPELHAM

MARK & MIKE COMPTONJUNIOR COMPTON MOTORS INCALBERTVILLE

KEITH KINGANKEITH KINGAN’S CLASSIC CARSMOBILE

PEGGY GILLILANDKELLEY CARS/DBA LAKESIDE AUTO SALESALBERTVILLE

TONY LEELEE’S AUTO SALES INCSELMA

LENN COSTNER, JRLENN COSTNER AUTO SALESALEXANDRIA

GERALD & JEROME LOGANLOGAN & LOGAN AUTO SALESHAMILTON

CHARLES & WENDY MCKENNAMCKENNA MOTOR COTARRANT CITY

CHARLES MORINGMIDTOWN MOTORSMIDLAND CITY

LARRY MORRISMORRIS AUTO SALESBIRMINGHAM

CHRISTIAN WORLEY, GMMOTORMAX OF MONTGOMERY INCMONTGOMERY

LARRY POLLARDPOLLARD MOTORSBRILLIANT

MARY BARNESREPTON USED CARS INCREPTON

RONNIE ELLISONRONNIE ELLISON AUTO SALES INCCALERA

BRIAN WITCHERSOUTH PARK AUTO SALESCULLMAN

FRANK DIGESUSOUTH PARKWAY MOTORS INCHUNTSVILLE

TOMMY & TONY MATSONT M CARS INCTALLADEGA

TERRY/RENEE/RANDY CULVERTERRY’S USED CARSSYLACAUGA

MORRIS TILLEY, EUGENE TILLEY, LINDA TILLEYTILLEY USED CARS INCALICEVILLE

RICHARD D. POSTMATOWN & COUNTRY AUTOSJACKSON

MONTY KLONARISTRANSOUTH REMARKETING INCMONTGOMERY

WAYLON/GREG/JEFF ADAMSTRIPLE A AUTO SALESMONTGOMERY

CHARLES BUTLER/MIKE BUTLERVALLEY MOTORS OF ATHENS INCATHENS

PAUL CLABORNWHOLESALECARS.COM CORPALBERTVILLE

ROGER & PAULA YERBYYERBY BAUER AUTO SALESBIRMINGHAM

RICKY & BILLY YOUNGYOUNG MOTORSBOAZ

JUNE RENEWALS

DENNIS RICHARDSON4 LANE AUTO SALES INCFOLEY

JIM PHILLIPSABC OF BIRMINGHAMMOODY

H. D. PAUL/VIVIAN PAULACTION AUTO SALESGROVE HILL

SCOTT GOVINAFFORDABLE USED CARS & TRUCKSHUNTSVILLE

SHAHID LATIFALABAMA AUTO GROUPMCCALLA

LES MCCOOK, EXE. DIREVTORAMERICAN RECOVERY ASSOCIATIONIRVING, TX

ANTHONY UNDERWOODANTHONY UNDERWOOD AUTOMOTIVEBESSEMER

ANDY WHARTONADVENTURE CHEVROLETREFORM

LOUIS E. FIKES/ELAINE FIKESAUTO DEPOT INCHAMILTON

LESTER AVERYAVERY AUTO SALES INCOXFORD

RICK TROTTERBUYER’S CHOICE AUTO SALES INCSYLACAUGA

CHARLES E CRAFT/STEPHEN CRAFTC. C. RYDER INCGADSDEN

CARY SEARSC. J. SEARS AUTO SALES INCMONTGOMERY

JERRY & SYLVIA SHEPPARDCAR CITY AUTO SALESBRUNDIDGE

TONY DAVISCAR COUNTRY INCGRAYSVILLE

CHRIS MULLINAX/TRACY MULLINAXCRM MOTORS INCHOOVER

SONNY & BILLY DAWSONDAWSON’S AUTO & TRUCK SALES INCBESSEMER

BOYD CHAMBLEEDIXIELAND AUTO SALESHORTON

STEVE BAILEYDON BAILEY AUTO SALESPHENIX CITY

MONICA CHATAGNIEREAN HOLDINGS LLCBIRMINGHAM

EARL LEEEARL LEE AUTO SALES LLCMT. OLIVE

KENNETH RANDALL WOODEARL WOOD USED CARSEUFAULA

EDWARD WALLER/DENNIS GRAYPINE CITY MOTORS LLCJACKSON

ERIC & JOE ELLIOTTELLIOTT BROTHERS AUTO SALES LLCATHENS

FARRELL ALFORDFARRELL ALFORD AUTO SALESALEXANDER CITY

DALE FARRISFARRIS AUTO SALESTUSKEGEE

DEL MILESFRANK MILES AUTO SALES INCJACKSONVILLE

J. GILBERT DYER, JRGIL’S AUTO SALESPHENIX CITY

H. M. FREEMANH. M. FREEMAN MOTORSGADSDEN

DANNY HANDHAND MOTOR CO LLCDOTHAN

WALTER J HUGHLEYHUGHLEY CAR SALESLAFAYETTE

JERRY GREENWOODJERRY GREENWOOD AUTO SALESANNISTON

JOHN H PIERCE JRLINDA PIERCE INC CHELSEA

BILLY LEVINSLEVINS AUTO & TRUCK SALESMONTGOMERY

WES MCCURRYMCCURRY MOTORSATHENS

RON & DEANNA NELSONNELSON WHOLESALE AUTOMOTIVE LLCWETUMPKA

P. K. BROOKS/ANITA WESTFALLP. K. BROOKS USED CARS LLCANNISTON

DONALD MATTOX/EDDIE PREUITTRIVER CITY AUTO SALESDECATUR

JIM SCHOCKSOUTH ALABAMA AUTO SALES INCMOBILE

TOMMY GREENESOUTHWEST AUTO SALESBIRMINGHAM

TYRONE BROWNT & L AUTO REPAIR AND USED CAR SALESWADLEY

ROBERT JAMESTEBO FINANCIAL SERVICES CANTON, OH

TIM DUKETIM DUKE AUTO SALES INCTRUSSVILLE

TONY DELCAMBRETONY’S QUALITY CARS LLCTHEODORE

GARY SKIPPERTUSCALOOSA WHOLESALETUSCALOOSA

MATT MILESVALUE AUTO MARTHEFLIN

BERT L HEMBREE JR/TIM THOMASTHE DRIVING FACTOR AUTO SALESGUNTERSVILLE

RICKY GILBERTWGH LEASING & SALES LLCLEESBURG

RONNIE WALDROPWALDROP MOTORS INCJASPER

WELCOME NEW MEMBERS AND RENEWALS

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26


BY CHIP ZYVOLOSKICHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.

When I attend industry events, I enjoy meeting dealers and hearing their takes on current challenges and trends facing the industry.

One topic that has come up recently is leasing. I have heard a number of dealers comment on how they would like to expand their dealership and start leasing vehicles. While that might sound like a natural step in growing a business, dealers must consider the differences between selling and leasing.

To be clear, by “lease,” I mean a contract allowing a customer to use your vehicle for a period of time (minimum: four months). At the end of the lease, the customer returns the vehicle and doesn’t owe you any more money as long as the vehicle has only reasonable wear and tear and was driven no more than the agreed mileage.

If there is an option to purchase, the option price bears some relation to the vehicle’s expected market value at the time the option is exercised. In other words, the lessee doesn’t have the option to purchase for $1 because that would really be a sale, disguised as a lease.

Look Before You LeaseAdding leasing to an independent

dealership might sound simple. You’re already arranging loans and payments for the vehicles you sell, so why not expand your in-house financing to offer customers another option?

But it’s not as easy as it looks. Here are key areas to consider when making your decision.

Licensing: Make sure your license for selling vehicles also allows you to lease vehicles. Your current license might not be broad enough to authorize leasing.

Insurance: When you sell a car, the title is transferred to the buyer. You focus on receiving timely payments and confirming the buyer has sufficient insurance to protect your security interest in the vehicle. You probably have property and liability insurance to protect your inventory and sales.

However, when a dealer leases a car, he still owns it. If the vehicle is involved in an accident, you might be subject to liability as the owner. As part of researching a leasing operation, meet with your legal counsel and insurance carrier to make sure you protect against liability exposure with appropriate insurance coverage.

Pricing: Determining the sales price of a vehicle is pretty straightforward. You know your costs to purchase and prepare the vehicle for sale, sales costs and profit margins, and sell the vehicle for more than your costs. You know at the time of sale whether you are making money on the deal.

With a lease, the calculations are more complicated. It might be easy to determine what the vehicle is worth today, but how do you know what it will be worth when the lease is up, say, two or three years from now? That depends on factors such as how many miles it will be driven and how well it is maintained.

There are also unknown variables. What if gas prices rise drastically and the vehicle is a gas-guzzler? That could impact the market value at the end of the lease (residual value). In most consumer leases, the dealer is on the hook if the residual value is less than predicted.

You won’t really know if you’re making money on a lease until you find out how well you predicted the residual value. You might be two or three years into the lease program before you realize you’ve set your residual values too high – and by then it’s too late.

Documentation and disclosures: You can’t just modify a retail sales contract to make it a lease. If you are planning to include leasing, you must make sure

your documents meet state and federal consumer lease requirements.

The federal Consumer Leasing Act and its implementing Regulation M are the lease disclosure equivalents of the Truth in Lending Act and Regulation Z for consumer lending. Reg M requires dealers to provide a great deal of specific pricing information in lease contracts. Many states require additional disclosures and consumer protections. As part of your leasing startup, you will need to create a unique document set of disclosures and contracts.

Taxes: In a lease you retain ownership, so you might roll your sales taxes to purchase the vehicle into your costs and lease calculations, but you might also need to collect use or other taxes on the payments throughout the lease term. Contact your accountant and/or the state to understand your tax obligations and how they differ for leases.

Collections: If a buyer doesn’t make timely retail contract payments, you can repossess the car. Fear of losing the car can help motivate a buyer into making past due payments.

In a lease, the lessee doesn’t own the car and may expect to return it and walk away at the end. That might make it a little easier for the lessee to emotionally handle repossession, but it might mean the lessee isn’t afraid of having the car repossessed and isn’t as motivated to make past due payments. As with a financed sale, once you repossess a vehicle, the lessee has even less motivation to pay any balance still due.

If a car is returned with wear or damage beyond what’s agreed on in the lease, it can be difficult to collect money to cover those costs. You can use the lessee’s damage deposit, so make sure you set it at a practical amount – it might be the only money you end up recovering for excess wear and tear.

These are only some issues to consider when starting a lease program. You can identify more by simply reading a motor vehicle lease contract.

The differences between selling and leasing are dramatic and can’t be overlooked. Your operations and compliance can be affected by the type of transaction, the vehicle and the state in which you are doing business.

C O M P L I A N C E OV E R D R I V E

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AIADA Aug/Sep2012

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Transcript of AIADA Aug/Sep2012