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IIADA Golf Tournament- Awards Day-Trade Show

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information or call

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SEPTEMBER/OCTOBER 2011 C A R L I N E S

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THANK YOU FOR HOSTING OUR RECENT

MEBERSHIP DRIVES!

Chances are your business has a business plan, a plan that describes your products, distributions

channels, marketing strategy, and revenue goals, among other things. A business plan helps you maximize the profitability of your business.

Whether you are aware of it or not, you also have a business succession plan for your business. A business succession plan is a roadmap for the transition of ownership and management of your business following disability, retirement, or death. While a business plan maximizes the profitability of your business, a well-crafted business succession plan maximizes the value of your business at the time of transition.

The challenge is, in the absence of thoughtful planning, the value of your business at the time of transition is likely to be much less than you hoped. Also, without a well-planned transition, there is a risk your business interest will end up in the hands of someone other than intended.

TRIGGERING EVENTSEvents such as disability, retirement, and

death are often referred to as triggering events. That’s because these events are so dramatic they trigger change, planned or unplanned. Understanding the natural consequences of these triggering events is often a prime motivator in developing a formal business succession plan.

Disability: The occurrence of a long-term disability – a disability lasting six months or more – that affects a small business owner impacts not only the financial well-being of the owner’s family but also the continuity of the business. In many cases, the owner is also a key employee. If an owner becomes unproductive due to disability, there may be insufficient cash flow to continue his or her salary. Even if the business is financially able to continue salary, court cases have held that, in the absence of a pre-disability salary continuation plan, payments to disabled owners may be considered non-deductible dividends rather than deductible compensation.

But, even deductible salary continuation payments to a disabled business owner are likely to create a strain on the business in the long-term. Healthy business owners may become resentful as they search for a replacement for their disabled colleague

while struggling to grow the business in his or her absence. If it becomes apparent that the disabled owner is unlikely to return to work or return to work at full strength, the healthy parties may negotiate a purchase of the disabled owner’s interest. Unfortunately, a disabled owner with dwindling resources is hardly in a position to drive a hard bargain. And, the healthy owners may face difficulties getting financing for the buyout if revenues are down.

Retirement: The retirement of a small business owner creates parallel concerns. Unless a pension, profit-sharing, or 401(k) plan is in place, the owner cannot count on an employer-sponsored retirement plan as a source of retirement income. Also, because the net worth of many business owners is tied up in their business, the owner may be unlikely to have substantial personal savings and investments to rely on in retirement. Consequently, it is often necessary to sell the business to achieve retirement income goals.

Unfortunately, although small businesses are often cash cows while the owner is healthy and working, finding a buyer that understands the business well enough to continue it profitably and pay fair market value for it can be a challenge.

Death: Upon the death of a business owner, the business interest becomes a probate

asset similar to marketable securities, real estate, and household items. If the owner has a will, the business interest passes to the named beneficiary or as part of the residual estate. If the owner lacks a will, the business interest passes to his heirs under the laws of intestacy. A common disposition pattern calls for a portion of all property to pass to the surviving spouse and children.

One concern is that, following the death of an owner, surviving family members usually need cash, not stock certificates evidencing ownership in a small business that probably does not pay dividends to inactive shareholders. Again, finding a qualified buyer – one with financing or cash who is willing to pay a fair price – may be difficult.

Bottom Line: Whether the transition is triggered by disability, death, or retirement, in the absence of a formal business succession plan, the “plan” is uncertain income continuation for the owner or his or her heirs, uncertain tax consequences to the business, and diminished business value.

0200138-00001-00, Ed 04/2011, Exp 10/22/2012Provided courtesy of Prudential. For more information, contact Kerri Allard, a financial professional associate with The Prudential Insurance Company of America’s agency located in Marlborough, Mass. She can be reached at 508-382-4929.

Small Business Financial Tune-Up: Business Succession Plan

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C A R L I N E S SEPTEMBER/OCTOBER 2011

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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] LINES IS PUBLISHED 10 TIMES PER YEAR BY THE NATIONAL INDEPEN-DENT 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 6006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE IN-DIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF CAR LINES 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 © 2011 BY NIADA SERVICES, INC.

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

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MAGAZINECONTENTS

ADVERTISERSINDEXADESA.................................................................................. 11AutoTrader.com ..................................................... Back CoverCars.com ..................................................... Inside Back CoverChase ................................................................................... 17Dyer Auto Auction ................................................................. 3Indiana Auto Auction .......................................................... 16Kesler-Schaefer Auto Auction ..................................................9Manheim.com ..................................................................... 14Manheim Indianapolis ......................................................... 20Protective .................................................... Inside Front CoverSmartAuction ..........................................................................5TD Auto Finance .................................................................. 13United Acceptance .............................................................. 15

Board of DirectorsIIADA EXECUTIVE DIRECTORDebbie AndersenP.O. Box 1393Crown Point, IN 46308Phone: (800) 310-3112Fax: (219) [email protected]

BOARD OF DIRECTORS

Dave Allen (Crockett)CHAIRMAN OF THE BOARD

Fritz KreutzingerVICE PRESIDENT Fritz AssociatesP.O. Box 168Fishers, IN 46038 Phone: (317) 842-2228Fax: (317) [email protected]

Tricia TrentSECRETARYTrent Auto Sales1327 N 6th Street Vincennes, IN 47591 Phone: (812) 882-3772Fax: (812) [email protected]

Bruce NortonTREASURERDrive1USA1512 W 96th Avenue, Suite C Crown Point, IN 46307Phone: (219) 661-1000Fax: (219) [email protected]

Jennifer CottonDyer Auto AuctionP.O. Box 115 Dyer, IN 46113-0115 Phone: (219) 865-2361Fax: (219) [email protected]

Kim GrahamKim Graham, Inc.1648 A US 31 SGreenwood, IN 46143Phone: (317) 888-0100Fax: (317) [email protected]

Ed WhiteWhite’s Auto Sales1105 McKinley Avenue Rensselaer, IN 47978Phone: (219) 866-7553Fax: (219) [email protected]

Tony HoukKesler-Schaefer Auto Auction, Inc. 5333 W. 46h StreetIndianapolis, IN 46253Phone: (317) 297-2300(800) [email protected]

Tyler TrentTrent Auto Sales1327 N 6th Street Vincennes, IN 47591Phone: (812) 882-3772Fax: (812) [email protected]

Harold DreesH.T.D., Inc.200 E Main StreetThorntown, IN 46071Phone: (317) 402-2312Fax: (765) [email protected]

Tony Del RealDel Real Auto Sales3857 State Road 38 ELafayette, IN 47905Phone: (765) 446-9204Fax: (765) [email protected]

John StumpfElkhart Public Auto Auction1201 N. NappaneeElkhart, IN 46514Phone: (574)264-0148

Doug AlveyFirst Class Auto Sales, Inc695 W 900SHebron, IN 46341Phone: (219) 996-2600Fax: (219) [email protected] Sharon BrennanFritz in Fishers8599 E 116th StreetFishers, IN 46038Phone: (317) 842-2228Fax: (317) [email protected] Andrew J. InabnittApproval Auto Credit Inc.9825 Huggin Hollow Rd.Martinsville, IN 46151Phone: (317) 422-8001Fax: (317) 422-8020

David D. Baldwin IIBest Deal Auto Sales, Inc.1875 SR 8Auburn, IN 46706Phone: [email protected]

Andy ZayZay Leasing & Rentals4957 N. BroadwayHuntington, IN 46750(260) [email protected]

Mark HockettIndianapolis Car Exchange5161 S. Indianapolis Rd.Whitestown, IN [email protected]

INSIDE 6-7 IIADA Annual Golf Tournament & Awards Day Info 8 The CARLAWYER 12 Independent Auctions: The Dealer’s Friend

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www.stopcurbstoning.com

A Used Car Field Guide for Detecting Collision Repair

It used to be fairly easy to spot the signs of a collision repair: overspray, bad color matching, and misaligned body panels. Now, with computers assisting with everything from frame straightening to color matching, it’s a lot harder to tell if a vehicle has been in a collision, especially if the repair was done well.

That’s great if you want your car �xed after an accident. But it makes things hard if you’re looking for a good used car.

NOTE: We’re not saying to avoid any car that’s had bodywork. A vehicle that’s been properly and professionally repaired after a minor fender-bender could be a terri�c bargain. We are saying to watch for disparities between what a seller says and what his or her vehicle shows.

Of course, no one can catch all the bad cars. That’s why an inspection by a trusted, experienced mechanic, along with a

vehicle history report form a service like AutoCheck, are absolutely vital steps to take before payingmoney for any used car from a private party.

However, here are some quick, simple things you can watch for when you’reout looking at cars. One element on your side is simple greed: curbstoners want to maximize their pro�ts. After all, they only need to fool a buyer long enough to collect the cash. So, curbstoned cars rarely get top-notch repair treatment.

At A GlanceA walk around the vehicle in good light will often disclose whether or not a body panel has been replaced or repainted. Look at thecar from several angles to make sure the color matches across all the body panels.

Look also at the re�ections in the paint – factory paintwork is mirror-smooth, even when dirty or dinged up. Signs of repair often reveal themselves in a slightly rippled re�ection, or a re�ection that doesn’t exactly line up across two body panels. Be sure to look at re�ections from several angles.

If the car is so dirty that you can’t see re�ections, you might need to ask for the car to be washed. While you’re sighting down the sides of the car, check to make sure the body panels all �t �ush, and that the gaps between the panels are even from top-to-bottom and side-to-side.

Good places to look for paint overspray or excess paint include:

Around electrical conduits in door jambs

Near door, hood, and trunk hinges

On window and door seals

Around seals and �ttings in the engine compartment �rewall

Along the trim pieces inside wheel wells

Sun damage typically affects large body surfaces like hoods and roofs. When you see small patches of peeling clear-coat, especially in corners and other hard-to-reach areas, they may indicate a poorly prepped paint job.

At the same time, beware of too-perfect paint. Even a garaged, well-cared-for used vehicle will have small paint chips and even minor dings. If the chin fascia beneath the front bumper is pristine, it may have been recently replaced or repainted.

We know that used auto buyers today must navigate a minefield of unscrupulous sellers and haphazardly repaired vehicles. Among the worst offenders are “curbstoners” – unlicensed individuals who buy and sell used cars to make a quick buck from unwary victims.

That is why we put together a handy guide to help used auto buyers detect collision repair. “A Used Car Field Guide for Detecting Collision Repair,” is an online booklet full of useful tips for spotting subpar repair work, ensuring there are no disparities between what a seller says and what the vehicle shows.

To access the booklet, visit stopcurbstoning.com.

The Manheim Used Car Market Report (UCMR) is the definitive source of information and trends that shape wholesale

and retail used vehicle markets. The 2011 Mid-Year Report strives to help readers navigate an automotive industry facing rapid change. NIADA members may download a FREE copy of the Mid-Year UCMR via the instructions below. And new for 2011 – the Mid-Year UCMR is now available via iPhone, iPad and Android devices at no additional charge in addition to being available via the traditional .pdf format.

Free Mid-Year Used Car Market Report

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Free Mid-Year Used Car Market Report

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Welcome back to our monthly collection of selected legislative and enforcement highlights,

and a recap of some of the many auto sale and financing suits we track each month. Remember, what we report here is not every recent development, just ones that we think are of particular interest to auto dealers, and note that this column does not offer legal advice. You should consult your dealership lawyer with any legal questions.

We include items from other states. Why? We want you to be able to see new legal developments and trends. Also, another state’s laws might be a lot like your own state’s laws – if AGs or plaintiffs’ lawyers are pursuing particular types of claims, those laws and claims might soon appear in your state. As always, though, there is no substitute for checking with your own lawyer before you rely on anything we report or if you have any questions.

FEDERAL LAWOn June 20, the Federal Reserve Board

issued a proposed rule under Regulation B clarifying that motor vehicle dealers subject to the board’s jurisdiction are not required to comply with certain data collection requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act until it issues final regulations to implement the Dodd-Frank requirements. The board believes implementing rules are needed to ensure data are collected and reported in a consistent and standardized way. The Dodd-Frank Act amended the Equal Credit Opportunity Act to require creditors to collect and report information concerning credit applications made by women- or minority-owned businesses and by small businesses.

Although the Consumer Financial Protection Bureau generally will have the authority to issue rules to implement this ECOA provision, the board retains authority to issue rules for certain motor vehicle dealers. The CFPB previously announced creditors are not obligated to comply with the data collection requirements until the CFPB issues rules to implement the law. Consistent with

the CFPB’s determination, the board is issuing a proposed rule to clarify this approach also applies to dealers subject to the board’s jurisdiction.

On June 15, the Office of the Comptroller of the Currency announced it has imposed a $2-million civil penalty against JPMorgan Chase Bank, N.A. related to the marketing and sale of a credit protection product by Chase Auto Finance. Chase Auto allegedly used written scripts together with high-pressure sales tactics that included statements that were materially false, deceptive, or otherwise misleading in violation of the Federal Trade Commission Act. The bank will also take remedial actions to correct the violations.

On June 13, the Federal Reserve Board adjusted Regulation Z (TILA) and Regulation M (Consumer Leasing Act) by increasing the dollar threshold for exempt consumer credit and lease transactions. Effective July 21, the Dodd-Frank Act amends TILA and the CLA to expand consumer protections by increasing the thresholds for exempt consumer credit transactions and consumer leases from $25,000 to $50,000. In addition, the act provides that, on or after Dec. 31, these thresholds must be adjusted annually by any annual percentage increase in the consumer price index. Based on these most recent adjustments, the protections of TILA and the CLA generally will apply to consumer credit transactions and consumer leases of $51,800 or less in 2012.

The FTC announced its second auto dealer roundtable, to be held on Aug. 2-3, at the St. Mary’s University School of Law in San Antonio, Texas. Topics will include credit to members of the military, discrimination and consumer financial literacy. For more information, visit http://www.ftc.gov/bcp/workshops/motorvehicles, and to submit a comment, visit https://ftcpublic.commentworks.com/ftc/motorvehiclesroundtables2.

LITIGATIONFinance Company’s Litigation Activity

Waived Right to Arbitrate: After a finance company repossessed a vehicle, the owner sued the finance company for imposing hidden finance charges, failing to notify borrowers about their rights upon

repossession, unlawfully pursuing debts, and engaging in unfair and deceptive practices. The finance company removed the case to federal court, filed its answer, and, after some discovery had occurred, moved to compel arbitration under the arbitration clause in the buyer’s order. The U.S. District Court for the District of Maryland concluded the finance company waived its right to arbitrate, noting it moved to compel arbitration six months after suit was filed and five months after filing an answer, and it engaged in discovery, including exchanging hundreds of pages of documents, serving and responding to interrogatories, and taking the car owner’s deposition. See Rota-McLarty v. Santander Consumer USA, Inc., 2011 U.S. Dist. LEXIS 57059 (D. Md. May 26, 2011).

Motion to Redeem Vehicle Prevents Automatic Stay from Terminating: During his Chapter 7 bankruptcy proceeding, a vehicle owner moved to redeem his auto. The court granted the motion, requiring the owner to pay the redemption amount within 45 days. When he failed to pay, the finance company repossessed the vehicle. The owner claimed the finance company violated the automatic stay, and the finance company moved for summary judgment, arguing that the owner’s failure to pay the redemption amount ended the automatic stay. The U.S. Bankruptcy Court for the Eastern District of Kentucky denied the motion, finding that, by moving to redeem, the owner performed his required obligations to prevent the automatic stay from ending. See In re Baer, 2011 Bankr. LEXIS 1790 (Bankr. E.D. Ky. May 12, 2011).

Transfer of RISCs to Unlicensed Investor Void: A dealership sold its retail installment contracts to a pool of investors but continued servicing the contracts. Eventually, the dealership was unable to make payments under the agreement with the investors and sold the contracts to a finance company. When the dealership and its owners filed for bankruptcy, the trustee sought to recover payments from the debtors to the investors made within 90 days of the bankruptcy filing as a preferential transfer. The bankruptcy court ruled in favor of the trustee, and the U.S. District Court for the Southern District of Texas affirmed. The court

BY T O M H U D S O N A N D N I K K I M U N R OThe CARLAWYER

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found that transfer of the contracts was void because the investors were not properly licensed as required by the Texas Finance Code. Because no transfer of the contracts occurred, the investors were mere unsecured creditors of the debtors, and the transfer of money constituted a preferential transfer. See Waite v. Cage, 2011 U.S. Dist. LEXIS 57324 (S.D. Tex. May 27, 2011).

Vehicle-Secured Loan Not Subject to Pennsylvania Motor Vehicle Sales Finance Act: A bank loaned money to an individual to buy a motorcycle. When the individual defaulted, the assignee of his note and security agreement repossessed the motorcycle and sent the individual notice of its intent to sell the property after 10 days. The individual filed a class action against the lender and the assignee, claiming they failed to provide him with proper notice of disposition. The defendants moved to dismiss the suit, and the U.S. District Court for the Eastern District of Pennsylvania granted the motion. The individual argued the notice was deficient because the Pennsylvania Motor Vehicle Sales Finance Act requires 15 days’ notice before the sale of a repossessed vehicle. The court found the transaction involved a direct loan from the lender, not a retail installment contract

subject to the MVSFA. The court also rejected the individual’s argument that 10 days’ notice was unreasonable under the Uniform Commercial Code. See Hudson v. Eaglemark Savings Bank, 2011 U.S. Dist. LEXIS 49505 (E.D. Pa. May 9, 2011).

Seller of Illinois Vehicle Not Liable for Fraud for Failing to Investigate Title History: Individuals bought a vehicle from a dealership. It turned out the vehicle had been repurchased by the manufacturer because it did not conform to the manufacturer’s warranty. The individuals sued the dealership for violations of the Illinois Consumer Fraud and Deceptive Business Practices Act on the theory that the dealership allegedly “omitted, suppressed and/or concealed” the material fact that the vehicle had been repurchased by the manufacturer, with the intent to induce them to purchase the vehicle. The dealership argued that, at the time of the sale, it had no knowledge of the buyback, it did not omit, suppress, and/or conceal that information, and it did not have the intent to induce the individuals to accept and rely on the misrepresentations and/or omissions as alleged in the complaint. The dealership moved for summary judgment, and the trial court granted the motion, holding that the individuals failed to show the required elements of common law

fraud and failed to establish that the fact allegedly concealed was, in fact, known to the dealership at the time of the sale. The Appellate Court of Illinois affirmed, holding that the individuals failed to prove an affirmative misrepresentation by the dealership. The dealership had based its knowledge on the title presented to it, which was what the Secretary of State of Illinois directs the seller to do and which was also the practice in the automobile industry. Moreover, the appellate court held the dealership was not required to investigate the title history because it is not common practice to do so in the automobile industry. See Dawson v. Schmitt Ford Inc., 2011 Ill. App. LEXIS 1222 (Ill. App. May 27, 2011).

So there you have it! Stay legal, and we’ll see you next month.

Tom ([email protected]) and Nikki ([email protected]) are partners in the law firm of Hudson Cook LLC. Tom is the author of several books, are available at www.counselorlibrary.com. Tom is also the publisher of Spot Delivery®, a monthly legal newsletter for auto dealers, and the Editor in Chief of CARLAW®, a monthly report of legal developments in all states for the auto finance and leasing industry (not to be confused with the book). Nikki is a contributing author to the F&I Legal Desk Book and frequently writes for Spot Delivery. Spot Delivery, CARLAW and the books are produced by CounselorLibrary.com LLC. For information, call 410-865-5411 or visit www.counselorlibrary.com. Copyright CounselorLibrary.com 2011, all rights reserved. Single publication rights only, to the Association. (7/11). HC# 4852-7461-5049.

BY TOM HUDSON AND NIKKI MUNRO

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A Dealis a Deal?B Y Z U R I C H F I N A N C I A L S E R V I C E S G R O U P

NEW FEDERAL AND STATE CONSUMER LAWS ARE PASSED

EVERY YEAR, SO IT IS IMPORTANT TO UNDERSTAND

AND EDUCATE DEALERSHIP

PERSONNEL ON HOW TO COMPLY.This Loss Prevention Bulletin is provided for informational purposes only. Please

consult with qualified legal counsel to address your particular circumstances and needs. Zurich is not providing legal advice

and assumes no liability concerning the information set forth above.

FACTS

It should be no surprise to you how many federal consumer laws and regulations affect the typical

automobile dealer. The Truth in Lending, Equal Credit Opportunity and Fair Credit Reporting acts are all too familiar. The same is true of regulations Z and B and the various Federal Trade Rules, including the Used Car Rule. Then, of course, there are state unfair business practice acts, common law fraud, misrepresentation and improper disclosure to consider.

The fact is you must be more careful than ever to ensure a deal is put together the right way. As the stack of paperwork that must be signed by your customer grows, so does the opportunity for mistakes and mistakes can cost you money – perhaps far more money than you realize. The winter issue of The Specialist reported a recent fraud and failure-to-disclose situation where a dealer’s customer was awarded $218,000 in punitive damages (not insurable in many states) as the result of a lawsuit involving damage disclosure. The customer was told the vehicle was “in perfect condition,” “had never been wrecked” and was a “one-owner vehicle.” Evidence later proved none of these assertions were true. Take appropriate measures to protect your dealership from damage disclosure and truth in lending complaints and lawsuits.We offer the following suggestions:

MANAGEMENT ISSUES• Provide extensive training to sales and F&I personnel on all consumer laws.• Have legal counsel review all sales, leasing and other applicable documents for compliance with federal, state and local laws.• Implement a vehicle sales checklist to establish standard procedures for staff.• Have customer sign or initial forms as needed.• Establish policies to address ethical business practices and ensure your management team abides by them.

TRADE-INS• Perform a title search to verify mileage, past ownership and lien holders.• Develop and use a seller’s disclosure, customer title disclosure and trade-in certification or equivalent forms to document mileage, prior damage, airbag deployment, salvage vehicles, frame damage, etc.• Odometers must be inspected carefully for rollback, replacement or tampering.• Vehicle appraisers (and managers) must be diligent in evaluating trade-ins and determining prior damage manager.

AUCTION VEHICLES• Use a title search firm or state agencies to check vehicle history.• Deal with auctions that guarantee the title is free and clean.• Don’t purchase vehicles with prior frame damage.

RETAIL TRANSACTIONS• In conjunction with legal counsel, consider developing and implementing a buyer’s arbitration agreement requiring the customer to seek relief through an arbitration process in lieu of litigation. We neither recommend nor disfavor arbitration agreements. This is a business decision that only you and your advisors can make. Note: as of Jan. 1, 1999, the American Arbitration Association (AAA) will not administer an arbitration proceeding if the signed agreement does not meet minimum standards established by its National Disputes Advisory Committee. The AAA’s Consumer Due Process Protocol includes a statement of 15 principles intended to protect consumer rights.• To avoid being held financially responsible to a creditor deemed unsecured by a bankruptcy court, process the title work promptly to ensure timely perfection in all cases within 20 days after the vehicle is delivered.• If the customers’ creditworthiness is questionable, delay the delivery as the 20 days noted above does not begin until the vehicle is delivered.• Be very cautious with deals involving out-of-state paperwork or missing titles, it may be difficult to process the necessary title paperwork• Videotape the sales transaction in the business office, but only after the customer (and your employee) voluntarily agree to be videotaped. Consult your legal counsel to determine how long the tape should be kept and the potential risk of not taping or saving all transactions. While videotaping can be a good idea, it isn’t one you should proceed to undertake without careful thought of all ramifications. New federal and state consumer laws are passed every year, so it is important to understand and educate dealership personnel on how to comply. Your legal counsel and auto dealer associations are excellent resources for keeping appraised of these new regulations. Contact your local Zurich account executive for additional information on how these laws affect your business. If you have any questions or comments, contact your Zurich account executive or the Loss Prevention Department at 800-821-7803.

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Independent Auctions: The Dealer’s FriendBY JOHN POTEET, MANAGING PARTNER, LOUISIANA’S 1ST CHOICE AUTO AUCTION

More than half of the 316 auto auctions in the National Auto Auction Association

(NAAA) are independently owned and operated. Those 176 independents make up the largest group of auctions in the NAAA and include some of the most innovative, creative entities in the industry. When it comes to customer service and dealer responsiveness, this group is second to none.

Independent auctions are very similar to independent dealers because they are often family-owned businesses and may have only one location. Yet, no matter how large or small, they understand – just as independent dealers do – the importance of customer service. When dealers visit an independent auction, they are often dealing with the owner of the business; that can make a difference in how quickly issues are resolved because owners know how important it is for an independent to get things done effectively and efficiently.

Many dealers believe independent auctions may not have the technology or the products of a chain auction, but that’s far from the truth. The services offered by independent auctions rival the latest in auction offerings by the large chains. Independents offer the basic services a dealer would expect from an NAAA auction, and most offer other services such as reconditioning, mechanical work, and transportation. In addition, many offer live simulcast sales, Internet sales through OVE, SmartAuction, or OpenLane, post-sale inspections, and array of floor planning services including MAFS, AFC, and DSC among others.

The influence of independent auctions is felt throughout the industry. Owners and managers play pivotal roles in arbitration standards, industry legislation, electronic condition reports, and NAAA standards for certification. The impact of independents is so significant 10 of the last 15 and four of the last five NAAA presidents have come from independent auctions.

Louisiana’s 1st Choice Auto Auction sums up the independents devotion to service with one Cajun French word, “lagniappe.” Pronounced LAN-yap, it means that little something extra you get when doing business with a merchant. The auction adopted this philosophy when it opened for business in 2002 to convey to dealers they were more than customers, they are special. Managing Partner John Poteet also believes outstanding service begins with outstanding people, and the tradition of lagniappe is perpetuated by the employees’ drive to go above and beyond the customers’ expectations.

An important component of Louisiana’s 1st Choice Auto Auction’s success is the commitment to the latest and best technology for their dealers. Many independent auto auctions in the NAAA are on the cutting edge of auction technology which enhances the customer experience, even when the dealer can’t see the technology in action. This goes from the latest in auction software to implementing platforms such as Auction Pipeline, AWG simulcast, Auction Access, and social networking sites such as Facebook and Twitter. As technology advances, independents are searching for better and faster ways to please their customers and make their employees more efficient.

Of course, as dealers become more technologically sophisticated, auctions must respond to their needs. For example, Louisiana’s 1st Choice Auto Auction offers free Wi-Fi for dealers enabling them to use their wireless devices to get the latest information regarding in-sale vehicle information. Another important tool for buyers is the ability to buy online with a simulcast auction. However, sellers can also utilize simulcast to sell vehicles. This is a great feature allowing remote repping for dealers and institutional sellers who cannot attend the auction.

According to Poteet, dealers can still buy and sell in the lanes as always, but at Louisiana’s 1st Choice, they also have the options of using simulcast, or buying and selling 24/7 with OVE, OpenLane, SmartAuction, and Auction Pipeline. This choice of buying and selling platforms is unique to independent auctions and gives dealers a greater opportunity to conduct business than any other venue.

MANY DEALERS BELIEVE

INDEPENDENT AUCTIONS MAY NOT HAVE THE

TECHNOLOGY OR THE PRODUCTS OF A

CHAIN AUCTION, BUT THAT’S FAR FROM

THE TRUTH. THE SERVICES OFFERED BY INDEPENDENT

AUCTIONS RIVAL THE LATEST IN AUCTION OFFERINGS BY THE

LARGE CHAINS. --- JOHN POTEET, MANAGING PARTNER,

LOUISIANA’S 1ST CHOICE AUTO AUCTION

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What can a used dealer to do add revenue in these challenging economic times? Surveying dealers

at the recent NIADA convention in Las Vegas, we found many different approaches to this challenge of growing profits in a challenging economy.

Many of the dealers we spoke with were selling service contracts, warranties, gap insurance, and credit insurance, all reputable products sold to the customer who is already purchasing a vehicle.

Vehicle rental is an often overlooked program that can actually bring customers in who would otherwise not have a reason to set foot on your sales lot. Many of the dealers we spoke with at the convention that did offer rentals said it had been the difference between them surviving the tough economy of the last several years and often made the difference between the dealer principals drawing a paycheck or not.

Adding a rental operation several years ago has become one of the smartest moves Joe Baldwin ever made. The owner of Baldwin Motor cars in Lafayette, Ind., bought a

Rent-A-Wreck franchise in 2000 while his retail market was still strong. At times as the market has weakened, he said, his rental operation, which he operates from the same facility as his Buy Here-Pay Here store, has kept the business a success.

“Without the rental business, I would be out of business by now,” Baldwin said. “I guarantee it.”

Wayne Webb, a consultant with Peer Group Resources Inc., which organizes 20 Groups for rental car operations, said by adding rental franchises to their operations, dealers have increased traffic by as many as 150 potential customers per month with only 25 rental units.

Baldwin’s rental fleet represents the bulk of his inventory. He typically keeps 60 rental units and as few as 15 retail units.

“When I first bought the rental franchise people laughed,” Baldwin said. “They told me I was never going to make any money with it.”

His goal was an extra $5,000 a month. The rental operation earned Baldwin $100,000 in the first year. Baldwin said his key to success was buying the right inventory.

Rent-A-Wreck franchisees stock their own inventory, and more than 100 of their nearly 200 franchisees also are dealers.

Mel Morris started a sales and service operation in Canton, Mich., prior to buying a Rent-A-Wreck franchise in 1992. He runs Canton Auto Sales, Mel’s Auto Clinic and Rent-A-Wreck from of the same building.

“When business is good you’re selling a car every day, repairs are up and most of the rental fleet is out,” he said. “All aspects of the business feed into each other.”

The increased traffic from the rental operation brings more opportunity to sell autos. He also rents a lot of vehicles to people awaiting repairs, which allows him to bid on any of their future repair jobs.

“It all works together. Customers come in to rent a car, see the cars I have for sale and end up buying one from me at a later date,” Morris said.

For more information about Rent-A-Wreck, or to find out about adding a rental franchise to your dealership, contact Andrew Iatridis at 469-939-6132 or [email protected].

Used Dealers Add Rental Franchise to Supplement Business

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ProconGPS Acquires Repo Patents

ProconGPS, Inc., a global leader in mobile resource management solutions, has announced the

acquisition of the patents governing the repossession of automobiles in the vehicle finance industry from CalAmp Corp. of Oxnard, Calif. The intellectual property relates to methods and systems that apply GPS technology, cellular networks and information systems to monitor loan status for a default condition on a vehicle and enable tracking to aid the confiscation and repossession process for dealers and finance companies.

“ProconGPS, Inc. is continuing to invest in its portfolio of intellectual properties and solutions for vehicle finance, fleet

management, new auto dealers and overall asset tracking,” said Brian Boling, CEO of ProconGPS Inc. “As the world’s largest subprime vehicle finance asset tracking company, we recognized the need to add these patents to our existing intellectual property specific to financial services and the repossession process our customers use on a daily basis. The method patents involved are all about our core deliverable; risk mitigation. As we continue to witness the significant costs and efficiency advantages our customers gain using our services, ProconGPS, Inc. is committed to continuing the growth of this exciting Vehicle Finance GPS Tracking industry.”

AS WE CONTINUE TO WITNESS THE SIGNIFICANT COSTS AND EFFICIENCY ADVANTAGES OUR CUSTOMERS GAIN USING OUR SERVICES, PROCONGPS, INC.

Learn More

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C A R L I N E S SEPTEMBER/OCTOBER 2011 w w w . i i a d a . c o m

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FACTS

The 3 Dimensions of Mobile Marketing for Dealers

need a proven search marketing strategy to successfully capture the attention of this massive audience and sell more vehicles. If you’re an independent dealer, you need to know the three dimensions of mobile marketing.

1ST DIMENSION - YOUR MOBILE WEBSITE

You need a mobile website to stay competitive in today’s used vehicle marketplace. Why? Customers expect you to have one. A recent survey showed 88 percent of mobile phone users said they’d be more likely to buy a vehicle from a dealer with a mobile website. Having a mobile website can significantly increase your ability to engage potential customers and sell autos. However, not having one can seriously limit your ability to compete with tech-savvy dealers.

When it comes to the design of your mobile website, simplicity is crucial. It should have minimal words and pictures. Then, visitors will feel comfortable browsing your inventory on their phones. Try using touchable text and large buttons. That’ll make it easier for visitors to ‘thumb-surf ’ through

your site and contact you. Don’t hide critical information such as your phone number or email address in a graphic. Remember, visitors are likely to abandon your mobile site if they can’t easily access information they want.

If you have a mobile website but don’t feel like you’re getting enough value yet, it may pay to consider mobile marketing resources such as those offered by AutoRevo. The company’s proven techniques help dealers boost online response rates so they can sell more. For example, some dealers use AutoRevo mobile tools to help sell inventory on Facebook Marketplace or eBay. Other dealers like to track performance metrics of their mobile website and paid search campaigns to help identify areas of their business that need improvement.

2ND DIMENSION – WHY LOCAL SEARCH IS VITAL

Now that you know how valuable your mobile website can be, it’s time to start promoting it. Then, Internet search engines and more shoppers can find you online. Focus on local search marketing – it’s your best opportunity to see results fast.

Did you know researchers saw a 500-percent increase in mobile searches from 2008-2010? Not surprisingly, they found Google to be the most frequently used search engine. So make sure your dealership and mobile website are visible on Google Places. Then, shoppers can find you faster.

Luckily, claiming your business listing with Google Places is a free, straightforward process – just follow the instructions online at google.com/places. To help shoppers find your mobile site while searching, you’ll want to use keywords on Google Places such as: used cars, your city, your dealership name, and, for franchise dealers, your OEM affiliation. Also, include your local phone number and a link to your mobile website.

You can add up to 10 photos and five videos on Google Places. Use these as opportunities to show customers why your dealership is the best place to buy. For example, the logo used by Carfax Advantage Dealers helps them stand out and build confidence with online buyers. It shows shoppers that every auto sold comes with a free Carfax Vehicle History Report. The power of a trusted brand can give you an edge over other dealers in your area.

B Y C H A D G O O D S O N , P R O C E S S I M P R O V E M E N T M A N A G E R , C A R F A X

Did you know there are about 300 million mobile phones in the U.S. active today? That’s practically

one for every American. We rely on smartphones to help do our jobs, keep up with current events and shop for things like used autos. Indeed, phones today can do almost anything and are the constant center of attention for many of us.

The prominence of our phones provides greater opportunity for dealers to reach potential customers more efficiently and effectively. However, you

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Important: When it comes to search marketing, it’s important to avoid duplicate content between your main and mobile websites. Otherwise, it could have a negative impact on your search rankings. In other words, don’t run your mobile website on the same exact URL as your main website.

Try using variations like: m.yourdealership.com, mobile.yourdealership.com or yourdealership.mobi to make your mobile URL appear different to the search engines. Without a unique web address, your mobile site runs the risk of penalty for duplicate content by Google.

3RD DIMENSION – QR CODES AND THE FUTURE

If you’re ready to try something new, tell your marketing team to include a Quick Response (or QR) code with your next newspaper or print advertising opportunity. It can instantly turn an offline consumer into an online shopper.

Today, QR codes are one of the hottest trends in mobile marketing. These black and white barcodes are generally the size of postage stamps, and link users to mobile websites. You simply scan a barcode with your smartphone from a printed piece and are sent to a specific mobile website. It’s great for marketing because it’s a curious way to get consumers to interact with your dealership.

A relatively new technology, QR codes saw a reported 1,200-percent increase in scanning from July to December 2010. This fast and engaging marketing method could be the way you take business to the next level.

Most of us couldn’t get through the day without our smartphones or mobile devices. Yet many independent dealers haven’t even attempted to reach this massive mobile audience. With so much opportunity out there, you need the right mobile marketing strategies in place to engage a greater number of shoppers and sell more vehicles.

TO HELP SHOPPERS FIND YOUR MOBILE SITE WHILE SEARCHING, YOU’LL WANT TO USE KEYWORDS

OnStar FMV (For My Vehicle), the first out-of-the-box application of OnStar’s “blue button” automotive safety and security services that can work on 90 million older vehicles, went on sale July 24 and can be preordered at Best Buy stores nationwide.

Packing OnStar’s industry leading technology into a rearview mirror, OnStar FMV sells for $299.99, plus $75 for installation. Service plans for OnStar FMV start at $18.95 a month, or $199 a year.

“Since we announced OnStar FMV at the Consumer Electronics Show in January, thousands of people have signed up to be notified when this innovative product is ready to buy,” said OnStar President Linda Marshall. “Now, through Best Buy, they can enhance their Fords, Toyotas, Chryslers and other brands with the power of OnStar.”

As OnStar’s strategic retail partner for OnStar FMV, Best Buy offers on-site installation through its network of more than 1,000 auto bays nationwide staffed by more than 1,400 Mobile Electronics Certified Professionals at Best Buy, including nearly half of the 194 MECP Master installers in the world. More than 90 percent of surveyed Best Buy customers said their auto installation was “done right the first time.”

OnStar FMV provides the same core features as the OnStar service built into new Chevrolet, Buick, GMC and Cadillac vehicles from General Motors: Automatic Crash Response, Turn-by-Turn Navigation, Hands-Free Calling, Stolen Vehicle Location Assistance, Emergency Services, and Roadside Assistance.

Other retailers now offering or soon to offer OnStar FMV include Car Toys, Crutchfield, Fry’s Electronics, Al & Ed’s Autosound and P.C. Richard & Son. Customers can find out if OnStar FMV is compatible with their vehicle through an online Vehicle Selector. More information is available through Best Buy or OnStar.com.

OnStar Now Available for Non-GM Autos

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For an annual membership investment of only $265, which includes an NIADA membership, you get a $2,600 Auto Auction Coupon Book and a whole lot more!

• $2,600AutoAuctionCouponBook

• LowcostLiabilityandLotCoverageInsurance

• MedicalInsurance

• CarLinespublication

• UpdatesonchangesinLawandRegulations

• AnnualConventions

• DealerBondasrequiredbyTheIndianaSecretaryofState

• Assistancewithinternalbusinessproblemsandcustomerrelations

• PrescriptionDrugCard

• National“Skip”Program

• NationalIndependentAutomobileDealersAssociationMagazine

• NationalIndependentAutomobileDealersAssociationScholarshipFund

• ServicesofRegisteredLobbyistsontheNationalandStateLevels

• UsedCarDealerMagazine

Paymentby:CheckVisaMasterCardCreditCardNumber:______________________________ExpirationDate:__________________________________Signature:________________________________________

By completing this form, I am consenting to and giving IIADA/NIADA Inc., its affiliates and subsidiaries, my permission to Ship Address contact me and provide information to me at the mailing and email addresses, telephone and fax number(s) I have provided.

Note:25%ofduesarenon-deductible

FORIIADAUSEONLYDuesPaid________________________________________CouponBook_______________District_____________________________________________________________________PacketSent_______________________________________

DealershipName______________________________________

DealerPlate#__________________________________________

MailAddress__________________________________________

ShipAddress__________________________________________County________________________________________________

City/State/Zip_________________________________________

Phone____________________Fax_________________________

E-mail_________________________________________________

Owners(PleasePrint)_________________________________

RecommendedBy_____________________________________

Joining IIADA entitles you to the following benefits.Don’t pass up the opportunity to receive the best treatment by joining our association.

Do the math...It Pays to Belong

IIADA MEMBERSHIP BENEFITS

MEMBERSHIP APPLICATION

PLEASEMAILORFAXMEMBERSHIPAPPLICATIONTO:IIADA • PO Box 1393 • Crown Point, IN 46308

Phone: (800)310-3112 • Fax: (219)663-5294 [email protected]

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For an annual membership investment of only $265, which includes an NIADA membership, you get a $2,600 Auto Auction Coupon Book and a whole lot more!

• $2,600AutoAuctionCouponBook

• LowcostLiabilityandLotCoverageInsurance

• MedicalInsurance

• CarLinespublication

• UpdatesonchangesinLawandRegulations

• AnnualConventions

• DealerBondasrequiredbyTheIndianaSecretaryofState

• Assistancewithinternalbusinessproblemsandcustomerrelations

• PrescriptionDrugCard

• National“Skip”Program

• NationalIndependentAutomobileDealersAssociationMagazine

• NationalIndependentAutomobileDealersAssociationScholarshipFund

• ServicesofRegisteredLobbyistsontheNationalandStateLevels

• UsedCarDealerMagazine

Paymentby:CheckVisaMasterCardCreditCardNumber:______________________________ExpirationDate:__________________________________Signature:________________________________________

By completing this form, I am consenting to and giving IIADA/NIADA Inc., its affiliates and subsidiaries, my permission to Ship Address contact me and provide information to me at the mailing and email addresses, telephone and fax number(s) I have provided.

Note:25%ofduesarenon-deductible

FORIIADAUSEONLYDuesPaid________________________________________CouponBook_______________District_____________________________________________________________________PacketSent_______________________________________

DealershipName______________________________________

DealerPlate#__________________________________________

MailAddress__________________________________________

ShipAddress__________________________________________County________________________________________________

City/State/Zip_________________________________________

Phone____________________Fax_________________________

E-mail_________________________________________________

Owners(PleasePrint)_________________________________

RecommendedBy_____________________________________

Joining IIADA entitles you to the following benefits.Don’t pass up the opportunity to receive the best treatment by joining our association.

Do the math...It Pays to Belong

IIADA MEMBERSHIP BENEFITS

MEMBERSHIP APPLICATION

PLEASEMAILORFAXMEMBERSHIPAPPLICATIONTO:IIADA • PO Box 1393 • Crown Point, IN 46308

Phone: (800)310-3112 • Fax: (219)663-5294 [email protected]

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CarMaxAuctions

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DyerAutoAuction

GreaterKalamazooAutoAuction

GreaterRockfordAutoAuction

IndianaAuctionExchange

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IndianapolisCarExchange

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We have all heard the latest advertising strategy adopted by a growing number of auto dealers.

Refrains from “I’m online only,” and “…print advertising doesn’t work anymore” are fairly common. There are very compelling reasons to adopt this posture as a part of an overall marketing plan for a dealership. Data suggests most auto buyers use the internet to educate themselves about manufacturers, specific vehicles and pricing.

Many dealers report people to their showrooms come armed with printouts of vehicles available for sale at other dealers (even if those autos are from outside the market they are in), with the latest on rebates, trade-in values and anything else they can find online to aid in their attempts to drive the selling price downward.

A dealer who uses a website, dealer feeds and e-mail leads as their sole tools for selling vehicles is missing a large portion of the buying public. Industry reports show niche publications remain a viable and effective tool for driving traffic to lots – both franchise and independent.

The 2009 NIADA Used Car Industry Report, the 2008 Northwood Dealer Walk-in Study and the NADA Data Report show the Internet is the number one media source driving walk-in traffic. According to these studies, the next best driver of walk in traffic is not newspapers, radio, TV or direct mail.

The report discovered the most effective choice of media other than the Internet is classified magazines.

An advertising plan that combines Internet advertising and a classified magazine provides nearly 70 percent of all walk-in traffic generated by advertising. It is critical this migration of buyers from daily newspapers to niche publications that feature the inventories of local dealers be recognized by all size dealerships. If there is an automotive classified magazine in your market, you can be sure dealers using this marketing tool are enjoying excellent response to their printed message.

HOW DO WE KNOW THIS?Telephone call tracking reports, as well as

the significant number of copies of these print products that are picked up each and every week demonstrate the car-buying public rely on this form of advertising to help them in their decision-making process.

For example, in the Bay Area, there is a print product (Bay Classifieds) that moves more than 40,000 copies every week. This publication, available in thousands of locations, is gobbled up 52 weeks a year by people who make the conscious choice to look for the latest copy.

In the area around rural Oroville, Calif., Great Northern Wheels & Deals sees nearly 25,000 copies of its publication gobbled up each and every week. Throughout California, from the Recycler in Los Angeles to The Nickel in Redding, auto buyers consistently grab their copy of these publications.

If print is really dead, how do we explain this consistent demand from buyers for a print product that provides them with information from which they can make an informed buying decision? Shouldn’t we have seen an eroSion of demand for these products “…because everyone shops on the Internet?”

The publishers of these and other niche publications report strong demand for the products, and are proud of the product’s ability to generate e-mail leads, telephone calls and walk-in traffic. These print products provide dealers, large or small, the opportunity to tell a story about what makes their stores unique. Many dealers report customers walking onto lots with the print product in hand asking to see a particular car featured in a print ad. This is likely the best quality up a dealer can hope for.

Contrasting that type of potential buyer to some of the Internet leads dealers receive from all over the country, we can see the local buyer carrying a local publication and talking to a local dealer is what every dealer would like to have more of.

Kevin Aylmer is vice president for Target Media Partners and an IADAC associate member and supporter.

BY K E V I N AY L M E R

Is Automotive

Print Advertising Dead (or Dying?)

FACTS

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Affordable Computer SystemsIvan [email protected]

Ashton Agency, Inc. Bond Dept.Cheri White4100 Metric Drive, Suite 100Winter Park, FL [email protected] (fax)

Assurant Solutions, Inc.Todd [email protected]

Auction AccessRobinson Adams InsuranceDealer BondsTom AdamsDebbie Thompson800-239-1327

Automotive Capital Resources, LLCAron Epsteinautomotivecapitalresources.com877-228-8685

Automotive Credit Corp.Tony Stallworth26261 Evergreen Road, Ste. 300Southfield, MI [email protected]

Auto Services Co., Inc.Susan WilliamsClayton Morgan800-442-7116

Bowden & WoodCertified Public AccountantsMark A. Schaeffer, [email protected]

Briggs Insurance AgencyTim Briggs4000 W. Lincoln Hwy.Merrillville, IN [email protected]

Cars.com175 W. Jackson Blvd., 8th FloorChicago, IL 60604dealers.cars.com800-298-1460

CAR Financial Services, Inc.Thomas Lloydwww.carfinancial.comthomas.lloyd@carfinancial.com859-630-2606

Central State of OmahaGary White, Indiana Regional [email protected], ext. 3523317-289-1369

Chase Custom FinanceDon Williams and Mike Smith317-523-4273

Clear Choice Merchant Services – Reno, NVLaurie Gruen, Corporate Analyst, ext. [email protected] Onesian, VP Business Development, ext. 6880lorraine.o@myclearchoice.comwww.myclearchoice.com866-779-4787

The following businesses provide quality products and services to the automotive industry:

CN Design & MarketingTodd Rimer2701 Enterprise Drive, Suite 113Anderson, IN [email protected]

Diamond Warranty Corp.Jim Limongelli9 N Main StreetPittston, PA 18640800.384.5023

Donn Wray Attorney at LawStewart & Irwin, P.C.251 E. Ohio St., Suite 100Indianapolis, IN [email protected]

Drive1USABruce Norton1512 W. 96th Ave., Suite CCrown Point, IN [email protected]

Envirotest SystemsJennifer Kharchaf1171 Breuckman Drive, Suite BCrown Point, IN [email protected]

ETA Consulting, LLCFloor Plans, Sub-prime financing, VSC, GAP Bill Ecklorwww.etaconsultingonline.com260-415-9119

First Data/EMPS Credit Cards, Check Warranty, ATMJuergen [email protected]

Frazer Computing, Inc.Michael Frazerwww.frazercomputing.com888-963-5369

Guardian Warranty Co.Carmie Fruits, Indiana Representativecfruits@gu ardian-warranty.com317-374-6271Sales SupportP. O. Box 68Avoca, PA 18641-0068800-482-7357, ext. 767

Hoosier Business & Family InsuranceMike Lee and Monte [email protected]

Keystone Insurers GroupFor All Your Insurance NeedsMelanie [email protected]

Lincolnway Insurance ServicesDealer Bonds & Garage KeepersGregg St. Germain336 E. Lincoln Hwy.Schererville, IN [email protected]

Nationwide AcceptanceSub-Prime Financingwww.nac-loans.comBonnie Herden773-777-7600, ext. 1295

Penn Warranty Corp.Jude TumaMichael Roe1081 Hanover St.Wilkes Barre, PA 18706www.pennwarranty.commichael.roe@pennwarrantycorp.com800-356-9441

Plante & Moran, PLLCCertified Public AccountantsAuto Dealership Industry GroupJim [email protected] www.plantemoran.com248-223-3257

Preferred Warranties, Inc.Gregg Reidenbach260-341-6675Guy [email protected]

Russel Kobel Insurance100 Tower Drive Suite 120Burr Ridge, IL 60527 [email protected]

Scott Insurance GroupGarage, Bonds, HealthJohn [email protected]

Sentry InsuranceRandy [email protected] [email protected]

Shirer Insurance ServicesAuto Owners-Dealer Bonds400 N. Main St.Crown Point, IN 46307Troy and Mari [email protected]

Smart AuctionJeff Kubickiwww.smartauction.bizjeffrey.kubicki@smartauction.biz812-455-7967

Triumph ConsultingJack Haworth1606 N. Delaware St.Indianapolis, IN 46202800-875-3137www.triumphconsulting.net

Tri Vin Inc.Mike Audette115 Pohesanut Drive Suite 201Groton, CT [email protected]

Vehicle Acceptance Corp.Ted Martin317-844-2599

WORKS24Mark Hersch3508 French Park Drive, Suite 1Edmond, OK [email protected]

Zurich Insurance Co.800-728-6049

Johnny’s Auto Motor*Johnny YunIndianapolis

J R Auto Sales*Carlos TrujilloIndianapolis

Brownsburg Auto Sales*Ronald MartinBrownsburg

Small Town Auto Sales*J.J. ZeitzFortville

Tony’s Auto Sales*Tony WillowboughyNew Salisbury

Indiana Wholesale Dealers*Lance EzraHammond

Fritz AssociatesFritz KreutzingerFishers

Greer Auto SalesScott GreerDeMotte

H & H Auto Sales of CambyRex HattonCamby

Instant Auto FinanceTim RilandSouth Bend

Justice Auto CenterKen JusticeGreenwood

Kim Graham MotorsKim GrahamGreenwood

Lewis Motor SalesDave LewisLafayette

Oak MotorsBob OkeleyAnderson

RC LeasingRandy ChuppElkhart

N E W & R E N E W I N G M E M B E R SThe following members have joined* or renewed their membership since our last issue of Car Lines.

Snyder Auto SalesRichard HermaDeMotte

Spoors Auto SalesDan SpoorLaPorte

Bob’s 31 South Auto SalesBob HayesFranklin

Omni Auto SalesRobert WalczakWhiting

Mint Auto SalesSam KamdarFt. Wayne

Manheim Louisville Auto AuctionJohn DeckClarksville

AMS CarsAlex ShapiroIndianapolis

Whitewater MotorsGary RossWest Harrison

Key Auto SalesLarry KeySellersburg

The Car & Truck StoreMarlin MillerGoshen

Crews CarsRoger NeaweddeJeffersonville

Hot Wheels Car Truck & TrailerTom Conley

Sun MotorsFrank Roselli Jr.Brownsburg

AF Sales and ServiceIndianapolis

Southwest Auto SalesDeb CooperRoanoke

Jim Orr Auto SalesJim OrrMitchell

I I A D A A S S O C I A T E M E M B E R S

Thank you for your memberships in Indiana’s trade association forINDEPENDENT DEALERS

IIADA ASSOCIATE MEMBERSHIP IS AVAILABLE TO AUTOMOTIVE RELATED BUSINESSES. PLEASE CALL 800-310-3112 FOR MORE INFORMATION ON ASSOCIATE MEMBERSHIPS OR SEE OUR ASSOCIATE MEMBERSHIP APPLICATION IN THIS ISSUE.

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FREEDEALER EDUCATION ONLY ON NIADA.TV24/7

Watch where you

want......when you want

Sales • Operations • F&I • Remarketing •

Compliance • Legal/Regulatory

• Special Features • Industry Events

PLUS: Automotive Industry News &

Special Monthly Programs

www.niada.tv

As an attorney, I find that many people are surprised to learn I am also a magician. It’s a fun and challenging hobby that can offer good lessons. For example, you quickly learn that things

are not always what they seem. To master most techniques, you need to clearly understand what’s happening beyond the visual component.

This lesson also applies to regulatory compliance. For dealerships, it particularly rings true when it comes to relationships with third-party service providers and their products. A company might appear to be reputable on the outside, but it could be just an illusion.

There are risks involved with all third-party relationships, whether they involve backend products dealers sell to buyers, such as credit life insurance, GAP insurance, extended warranties or service contracts, or operational products dealers buy or license from third-parties, in-cluding consumer credit information, loan documents or software.

One risk with third-party relationships is whether the vendor un-derstands and satisfies its unique regulatory compliance requirements. As a dealer, do you understand where your responsibilities end and the vendor’s begin in terms of service, performance and providing any required disclosures? A vendor’s compliance failure may ultimately cause your dealership to be out of compliance too. So how do you pro-tect your dealership’s reputation and ensure your vendors understand and are focused on compliance? Here are some questions to consider in the due diligence process:

• Does the vendor stand behind its products and services with a warranty or other written representations?

• Does it have stable management and finances to support its obliga-tions to you and your customers?

• Does its business history suggest that it will be around several years from now to fulfill its promises?

• Does it have a customer service area that is responsive to customer questions and problems?

• Does it understand the laws and regulations that apply to its prod-ucts and services? For example, does it know whether its product is considered insurance in your state? If it is an insurance product, is the vendor licensed to sell that particular type of insurance in your state?

• Is the vendor current on law or regulatory changes that affect its products and services (are its marketing materials and customer contracts in compliance and up-to-date)?

• Is the vendor the subject of any complaints to regulators, investiga-tions, and/or is it involved in any serious litigation?

Dealers want to make sure their customers are getting the best ser-vice possible, and regulatory compliance issues can greatly impact that goal. Third-party providers may have relationships with hundreds or thousands of dealerships. Their offerings may include a number of products in multiple states, which can increase the chances for error or oversight.

In a regulatory environment that’s constantly changing, the dealer needs to confirm that its vendors are keeping up with state and federal laws. A third-party provider might say the magic words you want to hear, but it’s up to you to make sure it’s not hocus-pocus.

BY CHIP ZYVOLOSKI Chip Zyvoloski is senior attorney for indirect lending at Wolters Kluwer Financial Services. For more information, visit www.wolterskluwerfs.com/indirect.

What You See Isn’t Always What You Get

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