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Visit Our Website
www.IllinoisDealers.com
Join our mailing list!
Do you know of other member dealership employees who should be receiving the IADA Electronic Bulletins? Let us know! Send an email to Meghan Sander (msander@illinoisdealers.com), Director of Communication, with the contact information of people who should be on our distribution list.
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2014 IADA OFFICERS
Chairman
Mike Mangold
Mangold Ford
Eureka
Vice Chairman
Dave Taylor
Taylor Chrysler Dodge & Jeep, Inc.
Bourbonnais
Treasurer
Sam Roberts
Roberts Motors, Inc.
Alton
Secretary
Jack Schmitt
Jack Schmitt Chevrolet
O'Fallon
President
Peter Sander
IADA
Springfield
IADA Staff Contacts:
Ph# 1-800-252-8944
Pete Sander
President
Ext. 103
psander@illinoisdealers.com
Larry Doll
Legal
Ext. 105
ldoll@illinoisdealers.com
Mark Harting
Administrative Services
Ext. 110
mharting@illinoisdealers.com
Mike Healey
Member Services
Ext. 107
mhealey@illinoisdealers.com
Joe McMahon
Legislative
Ext. 113
jmcmahon@illinoisdealers.com
Meghan Sander
Member Communications
Ext. 109
msander@illinoisdealers.com
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Your
IADA
Partner
Moving Vehicle Registration Into The Future
(click logo for more details)
Upcoming Webinars
October 30th
Jodi Kippe & Kara Perkins
CPAs: Back Office Consolidation for Multi-Location Dealer Groups (12 PM CST)
Click here to register!
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October 28th
Peter Nyvall
HRM Weekly - Using Toolkits in both the New and Old HRM (12 PM CST)
Click here to register!
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October 27, 2014 Vol 2013, Issue 43
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NADA/IADA ILLINOIS DEAC EVENT
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 The Illinois DEAC Team and IADA hosted its first DEAC Event on October 1st in Springfield for contributors of DEAC. The day began with a Luncheon at the Illinois Governor's Mansion, followed by a tour and Getaway Reception at The Abraham Lincoln Presidential Museum and Library. Members of the President's Club were recognized including: Jamie Auffenberg, Bill Abbott, Michael Auffenberg, Bob Federico, Ray Green, Joe O'Brien, Jack Schmitt, and Susan Langheim. Two additional dealers have recently joined the President's Club: Dave Taylor and Gary Knight.
 The Illinois DEAC Event day was made complete by speaker, Bob Mallon. Bob is a former owner of Mallon Ford, Tacoma, who has served as WSADA President, is a past President of NADA, served 30 years as the NADA Director for Washington State, and is founder and Chairman of the National Automobile Dealers Charitable Foundation.
We were thrilled to have him join us for this event!
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NADA'S CHAIRMAN COLUMN: NADA'S SOLUTION REDUCES FAIR CREDIT RISKS
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By Forrest McConnell / NADA Chairman
Oct. 23, 2014
When I met with the Automotive Press Association in Detroit earlier this month, I had one goal in mind: inform the journalists and industry executives about how the real dealer franchise system works and set the record straight. There's been a lot of misinformation reported in the news lately about the business model of new-car dealerships.
The fact of the matter is that the dealer retail network is the most competitive, cost-effective and pro-consumer model for buying and financing vehicles.
Fierce competition between local dealers in any given market drives down prices for car buyers both in and across brands. If a factory owned all of its stores it could set prices and car buyers would lose virtually all bargaining power and would be stuck paying the full sticker price. And dealer-assisted financing-which is always optional-provides car buyers with competitive rates on auto financing, which are frequently more affordable than what car buyers can get from a bank or credit union. But the federal government is trying to take away the right of car buyer's to get discounted rates from dealers.
In March 2013, the Consumer Financial Protection Bureau-without prior notice or public comment-issued 'guidance' on indirect auto lending that pressures finance sources to compensate dealers with a flat fee. The CFPB claims that negotiated interest rates between dealers and their customers can create a significant risk of unintentional 'disparate impact' discrimination.
The National Automobile Dealers Association strongly opposes discrimination in any form and fully supports the efforts of the CFPB, the Department of Justice, the Federal Trade Commission and other federal agencies to eliminate it from the marketplace. However, it is essential that the government address this issue in a way that will effectively address fair credit risks while preserving competition in the marketplace.
A government imposed flat fee model wouldn't benefit consumers because it would eliminate their ability to get a rate discount on their auto financing. Under the current system, dealers have an incentive to select lenders that offer them low wholesale buy rates and dealers frequently have to discount the APRs they offer their customers to earn their business. This dynamic drives down rates for our customers. If the CFPB were to succeed in getting the industry to shift to an across-the-board flat fee compensation system, dealers' incentive would shift to choosing lenders that pay them the highest flat fee, which in turn would frequently result in higher APRs for consumers.
A mandatory flat fee compensation system also would fail to remove the fair credit risks that a dealer is exposed to when it lacks a legitimate business explanation for earning different amounts in its credit transactions.
Fortunately, NADA has identified a way forward that addresses both fair credit and competition considerations.
Last January, the association developed the NADA Fair Credit Compliance Policy and Program that provides a dealer with an optional mechanism to promote compliance with fair credit laws. The program was released in partnership with the American International Automobile Dealers Association and the National Association of Minority Automobile Dealers.
The voluntary program addresses fair credit risks by ensuring that the amount of dealer reserve earned in a transaction is supported by a legitimate business reason. A dealer following the program sets a standard starting point for dealer reserve that it includes in its credit offers to consumers and only deviates from that rate for predetermined, legitimate business reasons. These include the presence of a monthly budget constraint, a more competitive offer and inventory reduction considerations. The dealer documents each pricing decision so that it can demonstrate that it was based on a legitimate, non-discriminatory factor. The NADA program fully incorporates the program created by the Department of Justice for two auto dealerships in 2007 to resolve fair credit cases.
By creating this structure and supporting it with appropriate training and oversight, the NADA program provides a mechanism for addressing fair credit concerns at the consumer, dealer and lender levels.
Last month, Marlin Stutzman (R-Ind.) and Reps. Ed Perlmutter (D-Colo.) introduced H.R. 5403, a bipartisan bill that would nullify the CFPB's 2013 auto lending 'guidance.' The bill would require new CFPB guidance involving auto financing to be transparent and open to public participation. Already 118 Members of Congress (46 Democrats and 72 Republicans) in the U.S. House of Representatives have committed to cosponsor or are cosponsors of this important measure. For more information, visit www.nada.org/cfpb.
The NADA Fair Credit Compliance Policy & Program presents the industry with a realistic and effective means of addressing fair credit risks at all levels and in a manner that preserves robust competition in the marketplace. The federal government should encourage its broad adoption.
McConnell is a Honda/Acura dealer in Montgomery, Ala. NADA represents nearly 16,000 new car and truck dealerships with about 32,000 domestic and international franchises.
McConnell spoke at IADA's 2014 Spring Dealer Conference at the Atlantis Resort in Paradise Island, Bahamas. |
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LEGAL REMINDER: ADVERTISING REGULATIONS
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The Attorney General's Office has indicated that it is citing dealers who offer free lifetime warranties to vehicle buyers for violations of the free gift rule. If a lifetime or extended warranty is a third-party product, and not part of a manufacturer program, then you may not offer the warranty as a free product or advertise it in a manner that could create confuse the customer. A lifetime warranty is not as obvious a violation of the free gift rule as offering free oil changes or a T.V. to all vehicle purchasers, but the Attorney General's Office will treat third -party lifetime warranties in the same manner. Going forward, it appears as though the only way the Attorney General's Office will permit dealers of offer lifetime vehicle warranties is if the dealers include the price of the warranty in the offer.
The Attorney General's Office also indicated that it has seen an uptick of limited rebate violations. A dealer is not permitted to deduct the value of a rebate from the price of a vehicle unless the rebate is available to all customers. If the rebate is limited to a select group 1st time buyer, owner loyalty, recent graduate, etc.) the rebate must be shown separately as an additional discount from the total price that is available only to certain customers.
If you have any questions about these or any other advertising regulations, please contact IADA at (217) 753-0220 or ldoll@illinoisdealers.com. |
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STATE AUTOMOBILE FRANCHISE LAWS LEVEL THE PLAYING FIELD BETWEEN DEALERS AND MANUFACTURERS
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John Kerr's op-ed critical of state automobile franchise laws misses a core reason of why franchise laws exist. They level the playing field between dealers and manufacturers because dealers are prohibited by antitrust laws from negotiating freely with auto makers ("Tesla Breaks the Auto Dealer Cartel," Sept. 17).
In a truly free market, local new car and truck dealers, who have invested more than $200 billion in their land and facilities, would be able to collectively negotiate their contracts with manufacturers on pricing and distribution. However, dealers are prohibited from federal and state antitrust laws from doing this. In fact, dealer groups are under constant scrutiny of their compliance with state and federal antitrust laws-including major investigations by the U.S. Department of Justice in recent decades.
The automotive market is highly regulated at all levels-requiring licensing, insurance, financing, care of hazardous materials, all regulated by different bureaucracies. State legislatures passed franchise laws to remedy the antitrust harm against dealers and to help protect consumers. These laws also have the benefit of adding intra-brand price competition into the marketplace, adding extra consumer accountability on warranty and recall issues, and keeping local ownership of businesses on Main Street. And the franchise model is extraordinarily efficient at bringing cars to market with gross margins of less than 6%. It is an extremely competitive system that benefits consumers, manufacturers and local communities alike. |
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SPECIAL ALERT: IMPORTANT INJURY/ILLNESS RECORDKEEPING AND REPORTING WEBINAR
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This Wednesday, October 29, NADA and OSHA will present a 60-minute FREE webinar overview of critical new work-related injury/illness recordkeeping and reporting mandates for car and light-, medium-, and heavy-duty truck dealerships. All NADA/ATD members are encouraged to participate; register here.
As detailed in the NADA/ATD FAQ sheet, an OSHA rule issued last month removes a long-standing OSHA recordkeeping exemption for light-duty dealers, effective next year. The rule also mandates new serious injury reporting requirements for all dealers.
In addition to this week's webinar and to the NADA/ATD FAQ sheet, dealers are strongly encouraged to access OSHA's work-related injury/illness recordkeeping and reporting website for forms, instructions, tutorials, and handbooks designed to aid compliance.
Questions? Contact NADA Regulatory Affairs at 703.821.7040 or regulatoryaffairs@nada.org. |
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KPA NEWS
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Did you hear about the changes to OSHA Injury and Illness regulations? If you were a KPA client, you would have. In the past, new and used car dealerships have been exempt from completing and posting OSHA 300 Logs. However, effective January 1, 2015, a new rule will require that all dealers maintain an OSHA 300 log. Reporting requirements for serious injuries at all workplaces have also changed.
View the KPA client alert about the updated rules and attend the KPA Understanding New OSHA Injury Reporting Regulations webinar on Thursday October 2, 2014 to learn more.
KPA can help your dealership stay safe and compliant with OSHA regulations. Call Melissa Carron today to get started, Sales Development Coordinator | mcarron@kpa-online.com | Office: (303) 228-8771 | www.kpaonline.com. |
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WOMEN BUYERS FOCUS ON FEATURES, MEN FOCUS ON BRANDS
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Women are more interested in features when they buy a new car, while men focus on the vehicle brand. Women generally do more research and take longer to buy, 75 days versus 63 for men. Those are some of the findings from a new study of women shoppers by Kelley Blue Book. One reason for the longer research time: 58 percent of men feel confident when buying a car, but only 38 percent of women do. "We need to continue our focus on providing the proper tools and content to help shoppers narrow down
choices, therefore bringing balance and filling gender gaps in the car shopping experience," said Hwei-lin Oetken, vice president of market intelligence for Kelley Blue Book's KBB.com.
The study also found:
- Men are more likely to see their cars as tied to their image and accomplishments, women are more likely to see them as a way to get from point A to point B.
- Men, who tend to be more image-conscious, want trucks, coupes and luxury sedans; women, who tend to be more utility-minded, prefer non-luxury SUVs and sedans.
- Men like domestic trucks and European luxury brands because of their image; women prefer non-luxury Asian brands, which they view as more practical.
- Women value practical benefits like durability and reliability, safety and affordability.
- Men are more drawn to interior layout, exterior styling, technology and ruggedness.
- For men, a successful transaction means getting the best deal, but women are more
interested in getting the exact vehicle they want.
Source: Washington Auto New Automobile Dealers Association |
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OPPORTUNITY: ARE YOU CAPITALIZING ON THIS TREND?
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Consumers are spending more and more of their time on smart phones and tablets -- "seven times what they devote to reading magazines and newspapers combined" (Kiplinger 9/19). Mobile device ad spending will explode from $17 billion this year to $37 billion in 2016.
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