open road louisiana

• PROVISIONING: NEW SCIENCE OF USED CARS• CASH IS KING IN BUY HERE-PAY HERE• COMPLIANCE OVERDRIVE

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PRSRT StandardU.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

JUNE/JULY 2012

L O U I S I A N A I 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

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

OPEN ROADGet ready for 2012

Miss-Lou Convention August 2-5

in New Orleans

739 Canal at Bourbon Street New Orleans, LA 70130

Toll-Free: 888-696-4806 • Direct: 504-962-0500www.astorneworleans.com

THE PLACE TO MEET.

LOCATIONLocated at the corner of world famous Canal and BourbonStreets, the Astor Crowne Plaza is poised to offer our gueststhe best of both worlds — the Old World allure of theFrench Quarter, with its elegant Creole restaurants, world-renowned art galleries and antique shops — and the bustleof Canal Street, New Orleans’ Champs-Elysées and down-town shopping thoroughfare. Just 25 minutes from theLouis Armstrong New Orleans International Airport.

AT A GLANCE• Recent award-winning $11 million renovation

of all rooms, meeting space, public areas• Executive Level with Club Lounge• 693 luxurious guest accomodations• 33 elegantly appointed suites

MEETING FACILITIES & SERVICES• 32,000 square feet of versatile public function space• Elegant ballrooms hosting events for as many as 800 guests with

exterior balcony access over Canal, Bourbon and Iberville Streets• State of the art audio visual and communications services

are available• 24-hour Business Center with complimentary internet• Full VIP concierge services

ALL ROOMS & SUITES FEATURE• Executive work desks with two dual-line phones, modem

and/or high-speed internet• Coffeemaker with complimentary coffee and tea• Complimentary weekday USA TODAY® newspaper• Crowne Plaza Sleep Advantage® amenities•Valet service• Makeup mirror; hairdryer• Plush custom-made mattresses • Foam and feather pillows • Digital alarm clock/radio and CD player• Iron and ironing board• Individual climate control• Electronic door locks• In-room safes• 37” HD Flat Screen Television with pay-per-view movies

and premium cable/satellite service

DINING & ENTERTAINMENT• Dickie Brennan's Bourbon House Restaurant & Oyster Bar

a New Orleans fine dining experience!• 24 hour in-room dining and service• Cocktail Lounge

SURROUNDING ATTRACTIONS• Harrah’s Casino •World renown antique shops• French Quarter and Bourbon Street• Aquarium of the Americas and Insectarium• National D-Day Museum• The Children’s Museum• Upscale shopping at Canal Place• The Riverwalk Mall• Louisiana Superdome & New Orleans Arena• New Orleans Museum of Art• Audubon Zoo

RECREATION• Outdoor pool and gardens• On-site fitness center• Golf courses nearby• Boating on Lake Pontchartrain• Charter fishing• Tennis courts nearby• A wide array of scheduled tour options

The Astor Crowne PlazaWelcomes the MISS-LOU Independent Dealers

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JUNE/JULY 2012 T H E O P E N R O A D

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w w w . l o u i s i a n a i a d a . c o m

WHAT’S NEW

MAGAZINE CONTENTS

ADVERTISERS INDEX

04 Provisioning: Used Car Science06 Cash is King in BHPH08 Go All In on Service16 MISS-LOU Convention

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] Open Road 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 the Open Road or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute anendorsement of the products or services featured. Copyright © 2012 by NIADA Services, Inc. All rights reserved.

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

LIADA OFFICE

ADESA .................................................................9Ally ....................................................................11Auto Portfolio Services ......................................15AutoTrader.com .....................................Back CoverBerkshire Risk .................................................. 14First Consumers Financial ................................ 12LA’s 1st Choice Auto Auction ... Inside Front CoverManheim.com .................................................... 5Manheim New Orleans ............... Inside Back CoverNIADA Certified ..................................................18Nowcom ............................................................. 7United Acceptance ............................................13Voisys ................................................................22

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ADESA Shreveport7666 Greenwood RoadShreveport, LA 71119318-938-4400 Phone318-938-7623 Faxwww.adesa.comSale Wednesday at 9 am

Alexandria Auto Auction515 N 3rd StreetAlexandria, LA 71301318-484-9672 Phone318-484-9699 Faxwww.alexandriaauction.comSale Tuesday at 5:30 pm

Greater Shreveport-Bossier 1315 Grimmett DriveShreveport, LA 71107318-221-3362 Phone318-221-3372 Faxwww.gsbautoauction.comSale Tuesday at 6 pm

Insurance Auto Auction29000 Frost RoadLivingston, LA 70754225-686-9197 Phone225-686-8197 Fax www.iaai.comSale Monday at 9 am

Louisiana 1st Choice Auction18310 Woodscale RoadHammond, LA 70401985-345-3302 Phone985-343-5735 Faxwww.lafcaa.comSale Tuesday at 8:30 am

Long Beach Auto Auction8494 County Farm RoadLong Beach, MS 39560228-452-2030 Phone228-452-9588 Faxwww.lbautoauction.comSale Wednesday at 1:30 pm

Manheim Houston14450 West RoadHouston, TX 77041281-890-4300 Phone281-890-7953 Faxwww.manheim.comSale Tuesday at 9 am

Manheim Mississippi7510 U S Highway 49 Hattiesburg, MS 39402601-268-7550 Phone601-579-7202 Faxwww.manheim.comSale Thursday at 9 am

Manheim New Orleans61077 St. TammanySlidell, LA 70460985-643-2061 Phone985-643-2122 Faxwww.manheim.comSale Wednesday at 9 am

Manheim Pensacola6359 North W StPensacola, FL 32505850-484-7100 Phone850-857-0173 Faxwww.manheim.comSale Tuesday at 10 am

Mid-South Auction1657 Old Whitfield RoadJackson/Pearl, MS 39208601-956-2700 Phone601-956-5603 Faxwww.midsouthaa.comSale Tuesday at 9 am

Mike McTurner Dealers 136 Gregory DriveMonroe, LA 71202318-343-8200 Phone318-343-8259 FaxSale Tuesday at 10 am

Mike Pedersen’s LakeCharles Auto Auction2435 E Broad StreetLake Charles, LA 70601337-433-8664 Phone337-436-7197 [email protected] Wednesday at 5:30 pm

Oak View Auto Auction13451 Florida BlvdBaton Rouge, LA 70815225-272-5139 Phone225-272-5314 Faxwww.oakviewautoauction.comSale Friday at 10 am

LIADA AUCTION MEMBERS

PRESIDENTClint BlakeyBlakey Auto Plex, LLC3601 Benton RoadBossier City, LA 71111Clintblakey@blakeyautoplex suzuki.com318-469-6007 cell318-213-3131 phone318-550-0084 fax

VICE PRESIDENTPhilip CrainRide Time LLC319 North 3rd StreetMonroe, LA [email protected] phone318-410-9289 fax

PRESIDENT EMERITUSJ.L. RichardP.O. Box 481Carencro, LA [email protected] phone337-896-6278 fax

SECRETARYDanny MooreD Moore Auctioneers15481 Airline HwyBaton Rouge, LA [email protected] cell225-752-8630 phone225-752-8907 fax

TREASURERDino TaylorFreedom Motors, Inc.601 Trenton StreetWest Monroe, LA [email protected] phone318-340-9489 fax

Doug PerryDoug Perry Wholesale Cars734 Bayou Shores DriveMonroe, LA [email protected] phone318-343-8611 fax

Scott LedetLedet’s Auto SalesP.O. Box 1505Gonzales, LA [email protected] phone225-644-2419 fax

Steve TaylorCar Town of Monroe, Inc319 North 3rd StreetMonroe, LA [email protected] phone318-324-1075 fax

Michael McCainMagic Motors7960 Florida BlvdBaton Rouge, LA [email protected] phone225-456-2134 fax

BOARD OF DIRECTORS

LOUISIANA INDEPENDENT AUTO DEALERS ASSOCIATION15481 AIRLINE HIGHWAY BATON ROUGE, LA 70817TOLL FREE: 1-800-960-5423 LOCAL: 225-275-8088FAX: 225-275-6889

The best way to stay compliant and to learn from the best in the business is to attend this year’s MIS-LOU convention that will take place August 2-5 in New Orleans, Louisiana. A fun time will be had by all. Additional information can be found on page 16 in this issue. Please contact me if you have further questions or to sign up.

Kevin Rembert(800) [email protected]

Message From the Executive Director

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.

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These days, dealers are looking for every edge to find quality inventory for their lots. Americans are holding onto their cars longer than ever, causing higher prices at auction and a smaller crop of quality vehicles on which dealers can bid.

According to a new study by R.L. Polk, length of vehicle ownership recently hit an all-time high: 71 months for new vehicles and 50 months for used cars and trucks. The study also noted that people holding onto their cars longer has resulted in decreased used-vehicle supply.

In this crowded marketplace, you need to assess your strategy for long-term success if you want to outperform your goals and beat the competition. To help, consider this new method dealers are using to better evaluate and acquire in-demand units others might pass up. It’s called provisioning.

What Is Provisioning?Provisioning is defined as the efficient

allocation of resources to achieve a successful mission. To be clear, the mission for dealers is to operate a financially successful used car operation.

Put simply, for your business to thrive, you need to know what cars to buy, what to pay for them and where to find the right units for your inventory. Provisioning is a new way for dealers to set their used vehicle strategy (size of inventory investment, ROI/turn expectations) and efficiently pursue the vehicles necessary to execute their plan successfully.

Provisioning is like a science because it provides a methodical approach to buying used vehicles. It helps evaluate certain types of information vital to the success of your used car business.

What types of information?Demand: The number of people

in your area searching online for a specific vehicle.

Interest: The average conversion

rate from search results pages to vehicle details pages for a vehicle in your area.

Volume: The number of units recently sold in your area.

Market days supply: The current available supply of similarly configured vehicles and the rate at which such vehicles have been sold over the past 45 days.

Profitability: The spread between average asking price and wholesale price – the auction price vs. list price in your market.

Availability: The number of units currently available at auction.

Experience: The success of your recent sales for a specific make/model.

Analyzing that information on your own isn’t easy. But technology and tools can help you determine the types of vehicles that will deliver the best return on investment every month, giving you a huge advantage on your competition.

What to Pay and Where to Find ItOnce you determine the cars that sell

fast in your market, you’ll want to make sure you pay the right price for them. At auction, there aren’t too many obvious deals these days, but you can still find gems with a little guidance.

Many dealers rely on professional buyer solutions like those by vAuto, for example. Those services use in-market data to help determine which units are worth your investment. They can even help you identify the price point at which a vehicle will get the most attention, get you the profit you need and cover your reconditioning costs so you still hold gross.

If you’re a dealer in the Northeast in the winter, you might have difficulty finding enough SUVs to keep your inventory fully stocked. Similarly, a dealer in the South probably can’t find enough convertibles in the summer months. Wherever you are, there’s inevitably a shortage of certain cars in

demand. So it can pay to look outside your immediate area for quality inventory.

Use online auctions to help keep your lot full of vehicles you know will sell. Online auctions can be some of the best places to find cars at good prices without the hassle of waking up early, checking pages of run lists and elbowing past other dealers to find your spot in the lane. Instead, sit back with your coffee and bid from the comfort of your home or the office.

How to Reduce Acquisition RiskOf course, if you bid online, you won’t

be able to “kick the tires” and inspect the vehicles in person, so you’ll especially need to consider the condition and history of those vehicles. Otherwise you might end up paying too much for a car that seems perfect but has reported damage or another incident that could affect its retail value.

The key is knowing the cars with good service histories that merit your bids, since those vehicles often sell for better prices.

Many successful dealers run a vehicle history report on every car they consider buying as part of their standard procedure to assess a vehicle’s condition and spot any related acquisition risks. Whether through online auctions or in-person trades, this triage ensures the dealer and his buyers feel more confident that the inventory placed on the lot will turn fast and make top dollar.

With declining supply and increasing demand for quality vehicles, there is little room to make acquisition mistakes on vehicles you “had a feeling about” but didn’t take the time to carefully vet. Provisioning helps you avoid these mistakes and turns your ability to efficiently and effectively evaluate and acquire used vehicles into a competitive advantage.

BY DALE POLLAK AND CHAD GOODSON

The New Science of Used Vehicle Sourcing & SalesU S E O N L I N E AU C T I O N S T O H E L P K E E P YO U R LO T F U L L O F V E H I C L E S YO U K N OW W I L L S E L L .

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U S E O N L I N E AU C T I O N S T O H E L P K E E P YO U R LO T F U L L O F V E H I C L E S YO U K N OW W I L L S E L L .

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The two keys to Buy Here-Pay Here are risk management and cash management. Both, as always, are hot topics. More so now with everything that is going on in the automotive industry and the economy in general.

But cash – and the availability or the management thereof – seems to be on everyone’s mind, and in some cases closing their doors.

Cash is not as available as it was this time last year. The good news is it is still available, which isn’t true in some other unfortunate industries. It’s just not as easy to find or secure, not to mention afford, since the rates we enjoyed a year ago are no longer there.

Local banks and credit unions appear to be the best sources for lines of credit. The large regional and national banks still seem to be staying out of the car business. Local banks and credit unions have smaller organizational charts and usually less turnover, leading to a more stable decision-making future.

The three necessities to securing a line with those sources are patience, persistence and preparation. The days of simply walking into a bank and securing a line of credit on a handshake and a promise to pay are long gone. Local banks and credit unions have learned from the mistakes of the regional and national banks and have become smarter and more sophisticated in their approval process.

Patience is needed because local banks and credit unions need a complete education on our industry. Not everyone is familiar with what we do and how we do it. In some cases, it can be hard to convince a bank to loan money to a business that will in turn extend credit to someone who has shown little ability to repay it. They need a K-through-12 to make their decision and continuing education after the line is secured.

Persistence is needed because the

days of lending institutions seeking out beneficiaries of their generosity have just about ended, especially to those dealing with subprime clientele. BHPH dealers have to be willing to go door-to-door and sell our business to lenders. In most cases, it will take knocking on more than one door. And once in the door, it will take more than one cast to reel them in.

Preparation is the determining factor to success, initially and in the future. Because banks and credit unions have become more sophisticated in their decision-making, BHPH dealers have to provide more sophisticated information to them. Performas, financial statements and cash-flow analysis are a few examples of data that needs to be provided up front to obtain a line and on an ongoing basis once a line is secured.

The key to maintaining a good relationship with a capital source is providing as much information in the beginning as possible and to keep doing so on a regular basis so they never have to ask for anything. Full and accurate disclosure is paramount. Put yourself on the other side of the desk. What would like to know if it was your money? In this instance, there really is no such thing as too much information.

Having all the access in the world to capital will be worthless unless you know how to manage it. In today’s tight credit market, BHPH dealers have to manage not only their credit lines, but cash in general. Not understanding how to manage available cash has closed more BHPH dealers’ doors than any other cause. It is that important.

The best tool to effectively manage cash is common sense. Don’t spend what you don’t have. Too many dealers feel the need to live the lifestyle. Success can breed contentment and contentment can breed laziness, which usually leads to failure.

A cash-flow model helps keep

common sense at the forefront. The model can be very detailed or simplified to cover the basic cash-in, cash-out categories. Either way, it should show a one-, three- and possibly five-year analysis, and should be updated at least annually or when there has been a change to the overall business model.

Adding a location, an increase or decrease in ACV, or even a change in underwriting standards can impact cash needs. The model should be realistic. Pie in the sky and wishful thinking serve no purpose.

Having the model is only the first step. Having the discipline to manage to it is the challenge. Without it, a dealer might as well have the “sell some cars, collect some money” business plan and hold on for dear life – a plan that is not used by successful BHPH dealers.

The model should be looked at on a monthly basis and compared to actual performance. That way, adjustments can be made immediately to either the model or the personnel in charge of managing to it.

Cash is king in our business. Not only the availability of it, but the effective management of it as well. There are BHPH dealers who operate without the need of a credit line because they understand how to manage cash. There are BHPH dealers who operate within credit lines effectively because they understand how to manage cash. But there are too many dealers experiencing capital reductions and, in some cases, all-out line calls because they don’t understand how to manage cash.

Having the patience, persistence and preparation to obtain and secure cash, then the discipline to manage it, will take a load off your mind and help keep your doors open.

BY BRENT CARMICHAELEXECUTIVE CONFERENCE MODERATORNCM ASSOCIATES [email protected]

Cash Is King in Buy Here-Pay HereCA S H I S K I N G I N O U R B U S I N E S S . N O T O N LY T H E AVA I L A B I L I T Y O F I T B U T T H E E F F E C T I V E M A N AG E M E N T O F I T A S W E L L .

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C O N T I N U E D O N PAG E 10

For independent dealers, having a service department isn’t something that should be taken lightly.

Not all dealerships offer service – it isn’t for everybody – but for those that do it should be an integral part of the business, used to give the dealer an opportunity to attract, retain and better understand customers.

Joe Lescota, the NIADA’s new director of dealer development, said he knows many dealers who lose money in the service department because the money that comes in through service goes into one big pot.

“There’s a whole process in operating a service department,” said Lescota, the longtime instructor for NIADA’s Certified Master Dealer program. “Dealers think they are selling service when what they’re really doing is selling time.

“A dealership only has so many hours in the day to operate. So a dealer should take the number of techs he has and multiply that number by the number of hours in operation. So a dealer might have 80 hours a day of time to sell. From a profit standpoint, it doesn’t matter if the dealer is changing oil or dropping an engine.”

Doug and Nyla Borgmann, owners of Creighton Auto, Inc., in Creighton, Neb., manage to keep their mechanic and their body man pretty busy, which is good for their business.

That means doing repairs for everyone, not just customers.

“Offering service works for us,”

Doug Borgmann said. “We advertise on our store sign. Service accounts for between 25 and 30 percent of business. Our mechanic has been with us since the early 1980s. He’ll retire in four or five years and that has me worried. Replacing him will be hard. Our body man has been with us for about three years. Before getting him, we had a hard time getting someone full time to do our body work.”

J.R. Westbrook, owner of Tyro Auto Sales in Bay City, Texas, has been offering service at his store since 1971. He does outside work in addition to working on the cars of customers, but he doesn’t advertise. He depends on word of mouth.

Westbrook has kept his technician for years, operating on the theory that it’s easier to keep the person you have happy than go out and find new people.

Staff is a key component to offering a good service department.

Getting good help was one of the reasons Randy Yates, owner of Yates Motors in Gering, Neb., closed his service center.

Yates is a third-generation dealer. His lot has been around for 66 years, and for much of that time, it offered service. Eventually, though, it wasn’t worth the trouble.

“We got rid of our old service center, must be around nine years ago,” Yates said. “It was hard getting and keeping good people. I’d train people and they would get the skills they needed to do the job. But then they’d go to

dealerships, often franchise operations, that would pay better wages and I’d have to start the process all over again.”

Yates said he realized he was better off if he stuck to what he did best – sell cars. Now he sends his cars to be fixed by people who do what they do best – repair and recondition cars. By letting the work get done by specialists, he doesn’t have to bother with the hassle of hiring and training technicians, then replacing them as they leave his business.

Yates said he ended up spending a lot of time trying to drum up business for his mechanics instead of selling cars.

“If the mechanics aren’t busy all the time, then they aren’t making as much money as they could be,” Yates said. “It finally came to the point where it became too much work for me to find work for them and for myself. Now I have less headaches just selling the cars and farming any mechanical work out.”

He also didn’t have to keep up with the expense of getting new equipment all the time. For one thing, the types of tools a service provider must own has changed dramatically. Gone are the days when a mechanic could do all his work with a lift and some wrenches. Cars now are computerized, and dealers and shop owners have to invest their own money in the purchase of scanners and other electronic devices used to communicate with a vehicle’s electronics.

Lescota said Yates’ situation reflects a reality of operating a service department – it’s not easy. But, he

A Service Department Can Be a Big Edge for Dealers Willing to Make the Commitment

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added, the payoff can be tremendous when the job is done right.

“It’s always a challenge to get good technicians,” Lescota said. “So I suggest that dealers go the technical schools and start grooming technicians before they even graduate. Also, you have to give someone a reason to stay at your dealership.”

Usually that means giving them enough to do. As Yates discovered, if technicians don’t have enough to do, they’ll go somewhere where their skills will be in more demand.

It might also mean giving them more money. After all, technicians have to eat too, Lescota said.

“When I hear that a dealer can’t keep a technician, my thoughts first run to him not getting either enough work or enough money,” Lescota said. “And you can’t cheat on the equipment. It’s the cheap man who pays the most for things. By trying to save money on new equipment needed to work on today’s computerized cars, a dealer will end up having to spend a lot of money trying to keep technicians.

“People like to work in comfortable environments and technicians are no different from anyone else. I always say if a dealer can’t keep good mechanics, it can usually be traced back to poor lighting, poor parts and poor work conditions. There’s a demand for technicians and they’ll go where they feel most comfortable.”

Having a service department is a full commitment, Lescota said. And getting good technicians is a competitive sport between dealers. Maybe that tech left to go to a franchise operation because the boss there promised to send him to an ASE-certified program, where the tech could improve his skill set. Independent dealers should consider similar actions.

Bill Elliff, owner of Elliff Motors in Harlingen, Texas, is an example of a dealer who is committed to his service department. His lot provides a full variety of services, and he long ago realized that in order to have a service department, he had to have enough service work to keep his employees busy.

To better service his customers, his dealership can do anything from changing oil to engine replacement. He owns a couple of lots with a total

of seven service bays and 10 people working them. He advertises in print and on the signage around his lots.

He said finding qualified people isn’t that hard. Finding qualified people who are dependable and can be counted on to show up on time ready to work every day is the tough part, Elliff said.

But the effort is worth it. By hiring the right people, a dealer can have a service department that drives potential customers to the store, Elliff said. While they’re getting their car worked on, many of his service customers will wander around the lot and take a look at inventory. Maybe that person is looking for something new, and if he sees something he likes that service customer can be converted into a vehicle customer.

Elliff estimates his service department accounts for about 20 percent of his total business. He said some of his fellow dealers don’t realize that a service department has to be able to make it on its own. It shouldn’t be a loss leader.

Additionally, he sees dealers actually short-changing themselves when it comes to pricing their cars. A dealer might, for example, put $100 worth of reconditioning in a car he bought for, say, $5,000. When it comes time to price the car, he’ll want $1,000 profit. So he’ll price the vehicle at $6,100, Elliff said.

That’s a mistake. Any work put into a vehicle using the dealership’s own service department should be reflected positively in the price of the vehicle. If $100 of work was put into the car, that should translate into adding, say, $200 to the back-end value of the vehicle. So that car should be priced at $6,200, not $6,100.

“As an owner, you have to put the money in to develop the infrastructure needed to run a good service department,” Elliff said. “That means having the latest diagnostic equipment. But if you charge right for your services, you will always come out ahead.”

Ultimately, having a good service department should mean more than another revenue source, Lescota said. By having a service department aimed at serving the public at large and not just his current customer base, Elliff is bringing in new potential buyers to look at his inventory.

He’s creating a captive audience.But a good service department can

do even more. When a customer brings in a car, a dealer can glean all sorts of information about the customer. It’s built-in market research.

“The smart dealer should now know all sorts of things about that customer,” Lescota said. “The dealer should know how that service customer uses his car. Does he baby it or does he really run it through the ringer and wear it out? With that knowledge, the dealer can better help the customer make an informed decision on the best vehicle to buy when it comes time to get another car.”

By having a complete service department, a dealer can get a customer used to bringing his vehicle to his dealership. Need an oil change? Bring the car to good old Joe’s. In an accident? Have the car towed to Joe’s. Need some engine work? Go to Joe’s.

“There comes a time in every car’s life when it becomes counter-productive to keep putting more money in that vehicle,” Lescota said. “If you have a good relationship with your customers, and they bring their cars to you for service, you can tell that customer when it’s time to get a new car.”

A service department can also help Buy Here-Pay Here dealers with their bottom line, Lescota said. It’s a rule of that segment of the used car business that when a car stops running, the payments stop coming.

If a dealer has a service department, the customer can bring the car in to get fixed and the cost of repairs can be added to the payment schedule. A customer might not have $300 on him right then and there, but he can usually make his payments if that $300 is spread out over the rest of the payment schedule.

“A good service department gives dealers control,” Lescota said. “It gives the customer a reason to keep coming back to you. But if you’re going to have a service department, you can’t go in half-hearted. As they say in poker, you have to go all in – but the rewards can be huge.

“These days, dealers need every edge they can get. Now more than ever, dealers who don’t keep up, fall behind and go out of business.”

BY JIM STICKFORD

C O N T I N U E D F RO M PAG E 8 | A Service Department Can Be a Big Edge for Dealers Willing to Make the Commitment | B AC K T O T H E B A S I C S : G O A L L I N

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M O N A RC H AU T O SA L E S OW N E R DAV I D L A N Z E R ( S E C O N D F RO M L E F T ) , W I T H S TA F F M E M B E R S ( F RO M L E F T ) A L E X B O D I FO R D , T E R RY L A N Z E R A N D R AYS H AW N J U M P E R .

Adding Rentals Can Help Drive Sales

David Lanzer sells used cars. That’s the primary mission of Monarch Auto Sales, the dealership he owns and operates in Greensboro, N.C.

But Lanzer also rents used cars through a franchise with Rent-A-Wreck, which, he said, fits neatly with mission No. 1.

“For the retail used car dealer, there’s so much synergy it’s not even funny,” Lanzer said. “Our rental customer is that same customer we end up selling a car to. They come to Rent-A-Wreck because their 14-year-old car with 250,000 miles on it just died and they’re stuck for a car.”

That makes the rental operation a magnet that attracts prime prospects for sales, and Lanzer said he takes full advantage of the opportunities it provides. Throughout the rental process, the dealer considers every rental customer to be a potential sales customer, too.

“We market car sales hard to every rental customer that walks in the door,” he said. “We make it clear that all of our cars are for sale, and we talk to our customers. We find out why they need to rent the car,

retail dealership, a big advantage given the current short supply and high price of quality inventory.

“The cars we fleet as rentals end up as perfect retail units for our customers,” he explained. “We fleet a 1-2 year old car, run it profitably in our rental fleet for 18 months to two years, then we’re left with a 4-5 year old car and those are very desirable and in short supply at the auctions now.”

Lanzer said the rental business does require a dealer to make some adjustments from the typical dealership model. For example, he said the typical dealer floor plan is for 90 days, while a typical rental floor plan is much longer – more like 12-36 months.

In 2011, 11.8 percent of National IADA members offered rental cars at their dealerships, down from 12.4 percent in 2010. Of those, 78.1 percent ran an independent rental operation while 21.9 percent – including Lanzer – worked through a franchise.

Lanzer said he prefers the franchise route because of the support offered.

“Rent-A-Wreck earns every dime of the royalties I pay them,” he said. “The systems they have in place to deliver reservations and market you on the Internet and travel websites, the support they provide you as a franchise on everything from your insurance to your financing, the legal stuff, the operations and business management software, coaching and the company sponsored dealer 20 groups – those are all things an independent would have to do for themselves on their own. “

Rent-A-Wreck is currently offering a $1,000 discount for state IADA members through the end of the year, and the company said it will donate $1,000 to the dealer’s state association for every franchise sold to an IADA member.

and we sell about 100 cars a year just to our rental customers. That sales volume has been consistent for us for years.

“We do insurance replacement rentals where a customer will have just gotten into an accident, and before that customer is even in buying mode, we’re planting the seed that his rental is available for sale and finding out what he’s looking for in his next car. We’ll entice him with a rental ‘test drive,’ where we’ll put the cost of the rental toward the car if they wind up buying.”

Lanzer said the rental operation has also helped him with inventory for his

BY ANDY IATRIDIS ANDY IATRIDIS IS FRANCHISE DEVELOPMENT MANAGER FOR RENT-A-WRECK. TO CONTACT HIM OR GET INFORMATION ABOUT ADDING A RENT-A-WRECK FRANCHISE, CALL (469) 939-6132 OR EMAIL [email protected].

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N E W 2 0 G RO U P P RO G R A M

After repeated requests from its members, the National Independent Automobile Dealers Association has announced it is entering the 20 Group business.

NIADA CEO Michael Linn announced the NIADA 20 Group program, which will organize and moderate groups of independent auto dealers from around the country to meet and share new ideas and best practices.

Linn said the move is being made after repeated requests from within the group’s membership of nearly 20,000. Dealers have voiced a strong desire to share best practices and operational data between the various member sets.

“NIADA members have historically been a tight-knit group of dealers. Developing a 20 Group platform for them to facilitate ideas and compare operational practices is a natural extension of their close relationships,” Linn said. “Additionally, we have mounting feedback from dealers participating in existing

20 Group models who feel their best interests are being underserved or even ignored. One dealer told me she felt the escalating cost to participate in her current 20 Group was not worth the combative discussions she endures or the pressure she gets to conform to their benchmarks.

“For 66 years as a nonprofit trade association, NIADA has represented the voice of independent auto dealers and has found ways to help them improve their businesses. I can assure you NIADA and our 20 Group program will always put the needs of our dealers first. We will never sacrifice the quality or service we provide our dealers.”The NIADA 20 Group program will be under the direction of Joe Lescota, who was recently introduced as NIADA’s new Director of Dealer Development, effective June 1.

“Even the most successful independent dealers are constantly seeking new ways to improve their businesses,” Lescota said. “They

know the slightest change in sales, financing, service or operational policy can have a major impact on their profitability. Our 20 Groups will be a great way for NIADA dealers to stay on track because colleagues will be there to prod, poke and encourage improved performance. The new platform will match dealers of like size, sales volume and revenue mix for maximized compatibility. They will share ideas and best practices and learn from one another regardless of size or geographical region.

“No independent dealer is too large or too small to contribute, learn and benefit from the collaborative dialogue of a 20 Group discussion. Every one of our members is encouraged to participate.”

The first phase of NIADA’s 20 Group format will focus on independent auto retail operations. More information will be available at the NIADA Convention & Expo in June at Caesars Palace in Las Vegas.

NIADA to Launch New 20 Group Program

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Congratulations to the following independent dealerships for being nominated for this year’s NIADA/Manheim National Community Service Award.

Independent dealerships across the nation contribute to their communities every day but often go unrecognized for their community support. Many participate through special projects while others provide sponsorships or financial contributions, or lead innovative community improvement activities.

The winning dealership will be named June 13 at the Leadership Awards Banquet during the National Independent Automobile Dealers Association Convention and Expo in Las Vegas. Manheim representatives will present the award along with a $5,000 check payable to the dealership’s chosen charity.

Community Service Award Nominees

The 2012 nominees are:ERTLE BROTHERS DISCOUNT AUTO, STERLING, COLO.NOEGEL’S AUTO SALES, STARKE, FLA.SOUTHEAST CAR AGENCY, INC., GAINESVILLE, FLA.MATTHEWS MOTORS, CLAYTON, N.C.A-1 AUTO SALES OF DULLES, STERLING, VA.REEL’S AUTO SALES, ORWELL, OHIOBOURNE’S AUTO CENTER, SOUTH EASTON, MASS.FRAN MORELLI SALES & SERVICE, BROCKWAY, PA.ED HOLEWIAK’S AUTO SALES, SOMERSET, MASS.PREMIER MOTORS-LEASING, INC., HARDIN, KY.RON’S AUTO SALES, INC., LAWRENCEVILLE, GA.M&F AUTO SALES, ALBUQUERQUE, N.M.ALAMO VALLEY AUTO SALES, KALAMAZOO, MICH.SOUTH TACOMA AUTO SALES, INC., TACOMA, WASH.FAIRLY RELIABLE BOB’S, INC., BOISE, IDAHO

GAS PRICE SCENARIO $4.00 $4.50 $5.00

NADA Used Car Guide Chart I M PAC T O F T H E R I S I N G C O S T O F G A S O N U S E D V E H I C L E P R I C E S E X P E C T E D C H A N G E I N U S E D V E H I C L E P R I C E U N D E R C E R TA I N G A S P R I C E S C E N A R I O S

S O U RC E | NADA Used Car Guide

SEGMENT % $ % $ % $ INTERMEDIATE COMPACT 1.7% $179 6.0% $638 10.4% $1,102INTERMEDIATE MIDSIZE 0.8% $103 2.1% $262 1.8% $233NEAR LUXURY 0.3% $69 -0.2% -$38 -3.0% -$650LARGE CAR 0.3% $39 -0.3% -$34 -3.2% -$415COMPACT UTILITY -0.3% -$37 -2.8% -$408 -8.7% -$1,272LUXURY MIDSIZE -0.3% -$73 -2.9% -$751 -9.0% -$2,313MIDSIZE VAN -0.4% -$49 -3.2% -$453 -9.7% -$1,355MIDSIZE UTILITY -1.0% -$188 -6.4% -$1,144 -16.5% -$2,959LARGE PICKUP -1.5% -$275 -8.6% -$1,540 -21.3% -$3,817LARGE SUV -1.6% -$387 -8.9% -$2,148 -22.0% -$5,298

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If you are a small employer with fewer than 25 full-time equivalent employees who earn an average wage of less than $50,000 per year, and you pay at least half of employee health insurance premiums, there is a tax credit that can put money in your pocket.

The Small Business Health Care Tax Credit is specifically targeted to help small businesses and tax-exempt organizations. The credit can enable small businesses and small tax-exempt organizations to offer health insurance coverage for the first time. It also helps those already offering health insurance coverage maintain the coverage they already have.

Here is what small employers need to know so they don’t miss out on the credit for tax year 2011:

• Qualifying businesses calculate the Small Business Health Care Credit on Form 8941, Credit for Small Employer Health Insurance Premiums, and claim it as part of the general business credit on Form 3800, General Business Credit, which they would include with their tax return.

• Tax-exempt organizations can use Form 8941 to calculate the credit and then claim the credit on Form 990-T, Exempt Organization Business Income Tax Return, Line 44f.

• Businesses that couldn’t use the credit in 2011 may be eligible to claim it in future years. Eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014.

For tax years 2010 to 2013, the maximum credit for eligible small business employers is 35 percent of premiums paid. For eligible tax-exempt employers the maximum credit is 25 percent of premiums paid. Beginning in 2014, the maximum credit will go up to 50 percent of qualifying premiums paid by eligible small business employers and 35 percent of qualifying premiums paid by eligible tax-exempt organizations.

Additional information about eligibility requirements and calculating the credit can be found on the Small Business Health Care Tax Credit for Small Employers page of IRS.gov.

IRS Tax Tip: Claiming the Small Business Health Care Tax Credit

I N D U S T RY T I P S

Experian Automotive announced the launch of AutoCheck® Elite, a program that gives car dealers information and insights into the market, the vehicles and the people who buy them.

In addition to the vehicle history data of the original AutoCheck, AutoCheck Elite allows dealers to access reports providing in-depth insights into dealer sales performance, vehicle registrations and consumer demographics in their market. Dealers can use that information to evaluate their sales performance against the competition, track sales trends of the most popular makes and models, and better understand the consumers in their market.

And AutoCheck Elite dealers receive other features, including access to AutoCheck best practices training, a sales event marketing guide and enhanced showroom materials.

For more information, visit www.experianautomotive.com.

Experian Enhances Its AutoCheck ReportsV E H I C L E H I S T O RY

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THE PLACE TO MEET.















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MISS-LOU CONVENTION

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MISS-LOU CONVENTION FORM



THE PLACE TO MEET.















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MISS-LOU ANNUAL CONVENTION At

The Astor Crowne Plaza 739 Canal Street (at Bourbon)

New Orleans, LA 70130 AUGUST 2-5, 2012

PLEASE PRINT OR TYPE ALL INFORMATION:

FIRST NAME: ________________________ LAST NAME: _________________________

COMPANY NAME:___________________________________________________________

Email: ______________________________________________________________________

ADDRESS: __________________________________________________________________

CITY: ____________________STATE:______________ZIP-CODE___________________

TELEPHONE: _________________________CELL:________________________________

BADGE INFORMATION:

NAME: _________________________________________________________ ___MEMBER ___NON-MEMBER

NAME: _________________________________________________________ ___ MEMBER ___NON-MEMBER



_______PLEASE CHECK HERE IF YOU HAVE A DISABILITY AND MAY REQUIRE AN ACCOMMODATION.

YOU WILL BE CONTACTED TO DISCUSS YOUR SPECIAL NEEDS.

EARLY BIRD REGISTRATION (BEFORE June 1, 2012) REGISTRATION (AFTER June 1, 2012) ____ $300 COUPLE ____ $350 COUPLE ____ $200 SINGLE ____ $225 SINGLE

PLEASE MAKE CHECK PAYABLE TO MISS-LOU CONVENTION AND MAIL WITH THIS FORM TO: L.I.A.D.A. (225) 275-8088 15481 Airline Highway Baton Rouge, LA 70817

WHEN CAN WE EXPECT YOU TO ARRIVE?

THURSDAY _____FRIDAY _____SATURDAY_____

$119 FOR STANDARD ROOM RATE

***Reservations with the Astor Crowne*** Call this number:

(888) 696-4806 MENTION THAT YOU ARE ATTENDING THE

MISS-LOU CONVENTION!

MISS-LOU ANNUAL CONVENTION At

The Astor Crowne Plaza 739 Canal Street (at Bourbon)

New Orleans, LA 70130 AUGUST 2-5, 2012

PLEASE PRINT OR TYPE ALL INFORMATION:

FIRST NAME: ________________________ LAST NAME: _________________________

COMPANY NAME:___________________________________________________________

Email: ______________________________________________________________________

ADDRESS: __________________________________________________________________

CITY: ____________________STATE:______________ZIP-CODE___________________

TELEPHONE: _________________________CELL:________________________________

BADGE INFORMATION:


NAME: _________________________________________________________ ___ MEMBER ___NON-MEMBER



_______PLEASE CHECK HERE IF YOU HAVE A DISABILITY AND MAY REQUIRE AN ACCOMMODATION.

YOU WILL BE CONTACTED TO DISCUSS YOUR SPECIAL NEEDS.

EARLY BIRD REGISTRATION (BEFORE June 1, 2012) REGISTRATION (AFTER June 1, 2012) ____ $300 COUPLE ____ $350 COUPLE ____ $200 SINGLE ____ $225 SINGLE

PLEASE MAKE CHECK PAYABLE TO MISS-LOU CONVENTION AND MAIL WITH THIS FORM TO: L.I.A.D.A. (225) 275-8088 15481 Airline Highway Baton Rouge, LA 70817

WHEN CAN WE EXPECT YOU TO ARRIVE?

THURSDAY _____FRIDAY _____SATURDAY_____

$119 FOR STANDARD ROOM RATE

***Reservations with the Astor Crowne*** Call this number:

(888) 696-4806 MENTION THAT YOU ARE ATTENDING THE

MISS-LOU CONVENTION!

TENTATIVE AGENDA



THE PLACE TO MEET.















MIS

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L.I.A.D.A. (225)275-8088 • 15481 Airline Highway • Baton Rouge, LA 70817

$119.00 FOR STANDARD ROOM RATE

***Reservations with the Astor Crowne*** Call this number: (888) 696-4806

MENTION THAT YOU ARE ATTENDING THE MISS-LOU CONVENTION!

DEPARTMENT OF THE TREASURYIRS ENTERPRISE COMPUTING CENTERP.O. BOX 33116DETROIT, MI 48232-0116

Person to Contact:Dail Hughes, ID#02-37367Tax Law SpecialistTelephone Numbers:1(866)270-0733 option# 3 or(313)2346146Refer Reply to:SE: S:/FBSA:PO:DCC: CTRSG120487Date: April 5, 2012

Dear Sir or Madam,The Financial Crimes Enforcement

Network (FinCEN), via the Internal Revenue Service Enterprise Computing Center-Detroit (ECC-D), has received the Form(s) 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, dated February 27, 2012. We are unable to process the Form(s) 8300 because you did not submit the correct form version. FinCEN updates Bank Secrecy Act

forms approximately every three years and financial institutions must submit the most current version of a form. Please resubmit the form(s) as soon as possible and no later than 10 business days upon receipt of this letter. Failure to properly file a BSA form may result in fines or other penalties.

If you need to resubmit this form(s) on paper, please visit FinCEN’s website to obtain and download the most current version of the form: http://www.fincen.gov/forms/bsaforms/. Make sure that you mail the form(s) to the address identified in the “When and Where to File” section of the particular form. Do not mail the form(s) to the address at the top of this letter.

If you have any questions about this letter, please contact Dail Hughes @ 1 (866) 270-0733 option #3.

Thank you for your assistance.

THURSDAY, Aug. 21- 5 p.m. Exhibitors set up – Grand Gallery7-10 p.m. Welcome Reception – Hospitality area, Grand Gallery

FRIDAY, Aug. 39-10 a.m. Coffee/refreshments – Hospitality area9 a.m.-4 p.m. Exhibitors display – Grand Gallery10 a.m. Golf tournament tee time – TPC Louisiana1-4 p.m. Carriage rides/French Quarter tour – Grand Gallery (1 p.m.)7-10 p.m. Mardi Gras party – Grand Ballroom C & D (light food, music- D.J., cash bar)10 p.m.-2 a.m. Hospitality area – Grand Gallery

SATURDAY, Aug. 49-10 a.m. Coffee/refreshments – Hospitality area10 a.m.-4 p.m. Exhibitors display – Grand Gallery11:30 a.m.-1:30 p.m. Lunch – Grand Ballroom C & D (lunch, giveaways, fundraising auction, speakers)1:30-3:30 p.m. LIADA board meeting – Grand Ballroom A, MIADA board meeting – Grand Ballroom B3:30-4:30 p.m. MISS-LOU Auction Group/Convention Committee meeting – Grand Ballroom A6-7 p.m. Grand Banquet cocktail hour – Hospitality area7-11 p.m. Grand Banquet dinner – Grand Ballroom C & D (dinner, music-band, drawing, cash bar) 8-11 p.m. Band (TBA)9:30-10:30 p.m. Cash/grand prize drawings10:30 p.m.-2 a.m. Hospitality area – Grand Gallery

SUNDAY, Aug. 59-10:30 a.m. Bloody Mary/light breakfast – Hospitality area

For additional information and to reserve space, please call the LIADA office at (225) 275-8088

Experian Automotive announced the launch of AutoCheck® Elite, a program that gives car dealers information and insights into the market, the vehicles and the people who buy them.

In addition to the vehicle history data of the original AutoCheck, AutoCheck Elite allows dealers to access reports providing in-depth insights into dealer sales performance, vehicle registrations and consumer demographics in their market. Dealers can use that information to evaluate their sales performance against the competition, track sales trends of the most popular makes and models, and better understand the consumers in their market.

And AutoCheck Elite dealers receive other features, including access to AutoCheck best practices training, a sales event marketing guide and enhanced showroom materials. For more information, visit www.experianautomotive.com.

Experian Enhances Its AutoCheck Reports

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NIADA has selected Warrantech, an AmTrust Financial Services company, to administer its all-new NIADA Certified Pre-Owned Vehicle Program.

The NIADA CPO Program is the premier certification option for independent automobile dealerships seeking to effectively compete in the certified pre-owned vehicle market.

Warrantech, a leading provider of extended service contracts for the automotive industry, will administer the plan, address all post-sale customer needs, and customize dealer and consumer marketing materials. The company will work closely with NIADA’s state affiliates to launch the program nationwide in May 2012.

“Our research is telling us that 65 percent of consumers begin their vehicle search looking for a certified pre-owned vehicle, and that number is growing,” NIADA CEO Mike Linn said. “NIADA is committed to helping our members give customers what they are looking for and offer a top-notch buying experience for car buyers in their communities. We see the NIADA CPO Vehicle Program as a primary way for NIADA members to further separate themselves from their competitors and give customers a better vehicle with additional peace of mind after the sale.”

With three unique plans under the NIADA CPO program, dealers will be able to select the option that is right for their market and their customer base. These options include:• A three-month/3,000-mile limited warranty that

includes 36 months/36,000 miles of engine and air conditioning component coverage.

• A six-month/6,000-mile limited warranty that includes 36 months/36,000 miles of engine and AC component coverage.

• A 12-month/12,000-mile limited warranty.The NIADA CPO limited warranty options

include coverage of engine, air conditioning, turbocharger or supercharger, automatic and manual transmission, transfer case, drive axle, steering components, select electrical components and seals and gaskets.

For more consumer choice and confidence, the NIADA CPO limited warranty options above can be supplemented by adding the extended NIADA Total Care or the NIADA Total Care Plus coverage, which includes front and rear suspension, brakes, fuel system, cooling system and additional electrical components.

“In re-tooling the NIADA CPO Program, we recognized independent dealer business models vary widely and that we had to offer additional CPO options to specifically meet the operational

demands of our dealers,” NIADA Chief Operating Officer Steve Jordan said. “Warrantech’s successful track record with independent auto dealers, varying product offerings, world-class claims operation, nationwide sales footprint and long term commitment to support the success of our dealer members made the partnership decision easy to make.”

In addition to the coverage, NIADA and Warrantech will provide dealers with comprehensive sales training on how to use the CPO program to sell more vehicles and extended service contracts, as well as marketing support that includes in-store signage and promotional materials.

“Warrantech is honored to have been selected by the 66-year old NIADA as its CPO program administrator,” Warrantech CEO Sean Stapleton said. “We applaud the time-honored tradition of excellence NIADA member dealers observe, including their adherence to a strict code of ethics. We feel that commitment mirrors Warrantech’s dedication to excellence and drive to provide superior products and continued quality customer service.”

For additional information regarding the NIADA CPO program please call (877) 310-0288 or email [email protected]

Warrantech to Administer New NIADA CPO ProgramI N D U S T RY N E W S

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Warrantech to Administer New NIADA CPO Program

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Louisiana’s 1st Choice Auto Auction Named Top Auction in Region for ARI

I N D U S T RY N E W S

I would like to congratulate three of our employees for their recent promotions at Louisiana’s 1st Choice Auto Auction.

Don Sistrunk has been promoted from auction manager to general manager, Bridget Higginbotham has been promoted from general sales manager to assistant general manager and Matt Alombro has been promoted from management development trainee to operations manager. All three have shown pride in their work, innovation and creativity in their jobs and a willingness to do what it takes to make our customers happy.

In short, they are successful, loyal employees and are representative of the type of people who work here. I am proud of them and their achievements and feel very good about entrusting them with the management of our auction.

Our success is dependent on good employees like Don, Bridget and Matt. Next month we will be celebrating 10 years in business and I couldn’t do it without them and all of the other great people working here. Once again, thank you and congratulations.

Please join us every Tuesday at 8:30 a.m. and find out why “Outstanding Service Begins With Outstanding People!”

“What is success? I think it is a mixture of having a flair for the thing that you are doing; knowing that it is not enough, that you have got to have hard work and a certain sense of purpose.”

– Margaret Thatcher

John PoteetManaging partnerLouisiana’s 1st Choice Auto Auction

10 YEARS and COUNTING…

Louisiana’s 1st Choice Auto Auction has been named the leading provider in its region for ARI®, a leading global fleet services provider specializing in complex car and truck fleets. ARI’s Vehicle Remarketing program annually awards auctions for outstanding performance. Each auction is measured on overall market performance, administration and communication. Benchmarking includes days to pick up, complete condition report, days to sell and receive funds, as well as retention against Black Book Commercial Index and compliance with company guidelines.

“We were thrilled to learn that we led our region for ARI in 2011, and I share this award with all the hard-working members of our staff here at Louisiana’s 1st Choice,” says John Poteet, managing partner. “We are fortunate to have an auction team that that not only takes pride in their work but shows innovation and creativity on the job along with a determination to make our customers happy. Their efforts produce excellent results for ARI week in and week out, and are directly responsible for our distinction as ARI’s 2011 Auction of the Year in Region 5.”

Poteet notes Louisiana’s 1st Choice Auto Auction has been handling vehicles for ARI

since May of 2008, and has been consistently ranked among the top three auctions in its region. Poteet says that ARI runs vehicles every week at the auction and is frequently the focus of special promotions, including the auction’s annual Mardi Gras event and its popular “John Dough” program, where buyers earn “Dough” based on attendance and buying activity that can be used to purchase prizes at the auction’s anniversary and Christmas sales.

As Louisiana’s 1st Choice Auto Auction prepares to celebrate its 10th Anniversary in May, Poteet reports that the auction continues to attract larger consignments and more buyers to the auction lanes.

“Attendance at Louisiana’s 1st Choice Auto Auction has increased every year since we opened our doors in 2002, with a 10% increase over last year’s numbers alone,” said Poteet. “Our mission is to provide our valued customers with superior customer service that exceeds their expectations, and the Auction of the Year Award with ARI, coupled with increased activity in the auction lane, indicates that our efforts are being recognized.”

Concluded Poteet: “We like to say that superior service is our signature Lagniappe–a

Louisiana tradition that means a little something ‘extra’ that is not expected or demanded. We appreciate ARI’s recognition of our commitment to their business and our efforts on their behalf. Certainly this award from ARI is their Lagniappe to Louisiana’s 1st Choice Auto Auction!”

Independently owned and operated, Louisiana’s 1st Choice Auto Auction is located in Hammond, Louisiana. Led by managing partner John Poteet, the team of auction professionals serve the entire Gulf Coast Region and beyond. Dealers gather every Tuesday at 8:30 am in the lane and online to bid on a consignment of over 500 vehicles, including vehicles from CPS, Capital One Auto Finance, ARI, Emkay, Crescent Bank & Trust, Hancock Bank, North American Acceptance and a wide variety of dealer trades. Auction inventory is included on Auction Pipeline, where customers may view detailed condition reports, market report information and participate in online sales. Louisiana’s 1st Choice Auto Auction is a member of the National Auto Auction Association and is represented TPC Management.

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Protection Products Lead Accessory Sales

Spurred by economic conditions, lengthening car ownership cycles and a year filled with extreme weather, protection and convenience products were the hottest sellers among automotive accessories in 2011, according to the annual AOA Auto Accessories Trend Report released by izmocars.

The reports found that paint protection products ranked No. 1 for dealer profits, replacing upholstery in the top spot.

The izmocars report analyzed accessories sales data from dealerships across the country, highlighting the accessories that were most popular with consumers in 2011, as well as the categories that had the most traction across different U.S. regions and the vehicle models that attracted the highest volume of accessories sales.

“In spite of economic pressures – and the residual impacts of the tsunami [in Japan] – dealerships continued to generate solid profits from accessories sales in 2011,” izmocars vice president Sidney Haider said. “With improved new car sales on the horizon, dealerships that have cracked the code of selling accessories are in a unique sweet spot for 2012. And, as the economy has driven consumers to hold onto their vehicles for record lengths of time, dealers and OEMs should note a key trend that surfaces in this report: more and more car buyers are opting for protection products, reflecting an emerging new car buyer mindset focused on a longer vehicle life.”

The report is based on a diverse sampling of 150 dealerships that sold a total of $39 million in accessories in 2011. The average dealership generated more than $260,000 in annual sales of accessories to new car buyers, with an average of more than $475 in accessories sales per vehicle sold, an average gross profit margin of 45 percent and an after-commission net profit margin of 32.3 percent.

The full report is available at www.izmocars.com/trend-reports/aoa-2012.pdf.

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The concept or image of the “complaint department” isn’t anything new, and has provided fodder for jokes and comic strips over the years. But the decision by the Consumer Financial Protection Bureau (CFPB) to expand its consumer complaint system to include complaints regarding vehicle and consumer loans is no laughing matter.

If you haven’t been to the site yet, consider taking a look. The site, www.consumerfinance.gov/complaint, makes it very easy for anyone to register a complaint. It asks for a description of what happened, the desired resolution and the parties and products involved.

The CFPB’s decision to start accepting and reviewing complaints related to vehicle loans should get your attention for a few reasons. First and foremost, it signals that the CFPB is gaining momentum and is ready to try to identify

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

Reducing the Impact of Consumer Complaintsand resolve current problems in the industry – and to prevent future ones.

Second, the complaint process opens a whole litany of questions about how the CFPB will respond to complaints and how dealers will be involved. We don’t know much about the process yet, but hope the CFPB will provide more detail soon.

For now, the question all dealers should be asking themselves is, “How do I avoid complaints in the first place?”

It seems consumer finance complaints can originate in at least three ways:

• You did something wrong and the customer complains about it.

• The customer didn’t understand the agreement and thinks you did something wrong as a result.

• You did everything right, but the customer has unreasonable expectations and complains.

You can take steps to avoid or reduce the impact of all three scenarios, particularly when it comes to finance and insurance (F&I) processes.

You did something wrongCustomers should complain if you

misrepresent, overstate or lie about the products and services you provide or the nature, reason and amount of charges. If you are running your business that way – or you have a renegade employee who is committing such acts – you should expect whatever consumer complaints, lawsuits and/or criminal charges come your way.

The complaints and the liability they bring can be avoided if you run an honest and high-integrity business. You also need internal oversight, management and audit processes to help discover and eliminate any employee misconduct.

Customer didn’t understand Some reported court cases I’ve

read seem to be based on a lack of consumer understanding that spun out of control. The dealer didn’t necessarily do anything wrong, but the consumer seemed surprised at having to pay for cover insurance, or the gap amount, or having a vehicle repossessed, or any of a number of other predictable outcomes. The financing documents generally cover the fees, responsibilities and consequences, but the consumer didn’t

read or understand them until long after the documents were signed.

In one recent case, the consumer asserted he hadn’t read the retail sales contract or been given time to read it. He said he simply signed and initialed where he was told to. He later complained and sued regarding a number of obligations he hadn’t understood, and the lawsuit didn’t turn out well for the dealer.

One strategy to avoid this would be to take the time at closing to educate the consumer. You could point out key provisions of the documents, such as late payment provisions, failure to insure, and conditions of and consequences of default. You could emphasize the importance of reading the documents and asking questions before signing, and back it up with a willingness to give consumers time to read and ask basic questions.

The idea is, if you tell the consumer what happens on default, he or she is not surprised – and is less likely to complain – if the car is repossessed.

Customer is unreasonableThere will always be unreasonable

customers whose expectations far exceed the terms of your sales agreements, warranties and commercial reasonableness. With those folks, you might not be able to avoid complaints. However, a regulator is more likely to conclude that a complaint is unreasonable if its investigation shows you run an honest, high-integrity business, have compliant processes and documentation in place, work hard to educate customers and set appropriate expectations.

While you can’t always please everyone, running a high-integrity business and educating your customers will undoubtedly help prevent customer complaints. The more positive view is that you won’t just be avoiding complaints and mitigating reputational risk, you will be building customer satisfaction and retention.

Either way, it’s an investment well worth making.

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

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