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DEALER NEWSPRSRT Standard

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PAIDDALLAS, TEXASPermit No. 2079

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ALSO Economic Outlook PLUS Compliance Overdrive

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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] NEW JERSEY DEALER NEWS 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 OPIN-IONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF NEW JERSEY DEALER NEWS OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVER-TISERS, OR THEIR IDENTIFICATION AS MEMBERS OF NIADA, DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SER-VICES FEATURED. COPYRIGHT © 2011 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

FOR INFORMATION ON HOW TO BECOME A MEMBER, PLEASE CONTACT PAULA FRENDEL (855) 694-2324 [email protected] www. newjerseyiada.org

WHAT’SNEW

MAGAZINECONTENTS

ADVERTISERSINDEX

INSIDE

06 Hiring Smarter12 Economic Outlook14 Compliance Overdrive

ADESA ....................................................................7AutoTrader.com ...................................... Back CoverAuto Use ..............................................................10Manheim.com .............................. Inside Back CoverProtective ...............................................................5SmartAuction .........................................................9TD Auto Finance ...........................Inside Front CoverUnited Acceptance ...............................................11

R A2Z EDUCATION SERIES - AutoZoneEducating the independent dealer to deliver the highest quality service levels to your customers, manage your shop efficiently, train your technicians and maximize profits.niada.tv

R TURBO TIPS – Cars.comProvides Independent Dealers with practicable and actionable tips to help you sell more cars now! niada.tv

R NIADA Mobile Get access to Manheim and Independent run lists, Vehicle History Reports, Guide Books and much more. Free VIN Scanner when you sign up!!! Available for Android and iPhone devices. Niada.gigglepop.com

The National Auto Auction Association (NAAA) recently issued notice to its members to be on the alert for digital odometer tampering. The NAAA has received reports of digital odometer tampering through the use of odometer mileage programming devices. Since odometers do occasionally malfunction, manufacturers provide legitimate repair facilities security codes to use with authorized odometer mileage programming devices. The NAAA indicates the codes may have been compromised, allowing non-authorized devices to be manufactured and sold online.

The NAAA further reports that the National Highway Traffic Safety Administration (NHTSA) is familiar with the practice and has been in contact with auto manufacturers about the issue.

The NAAA recommends its member auctions be on alert for potential mileage discrepancies that crop up between time of check-in and sale and between time of assignment and delivery to the auction, as this could be an indication that the vehicle was tampered with to decrease its value and provide a fraudulent benefit to the ultimate buyer of the vehicle.

Individuals with information concerning odometer fraud schemes are encouraged to contact the NHTSA’s Office of Odometer Fraud at 202-366-5953. Complaints concerning a single vehicle should be reported at the state level.

Digital Odometer Tampering

NIADA Association Executive Counsel would like to thank Stars GPS and ServNet for sponsoring the OK City meeting held this past October.

T H A N K Y O U

General Motors and RelayRides, the world’s first peer-to-peer carsharing marketplace, recently announced an exclusive relationship that will allow millions of GM vehicle owners to leverage the OnStar system to rent out their idle cars through the RelayRides marketplace.The program, which will launch in early 2012, is GM’s first large-scale involvement in carsharing and is aimed at making it easier for those without a vehicle to access temporary, affordable and reliable transportation in a Chevrolet, Buick, GMC or Cadillac.RelayRides allows vehicle owners to choose to rent out their idle vehicles, with the owner controlling the rates and availability of the car. RelayRides provides an online marketplace and a $1 million insurance policy to make the transaction safe and convenient.Through innovative technology integration, RelayRides will leverage OnStar to allow RelayRides borrowers to unlock GM cars with their mobile phones. For vehicles that are not OnStar enabled, RelayRides must install a small device in the car to provide convenient access to borrowers. The integration makes all eligible OnStar vehicles immediately “RelayRides ready” without having to install additional hardware.This RelayRides mobile application is planned for early 2012. General Motors Ventures LLC is in advanced discussions with RelayRides about an investment in the company as part of GM’s overall commitment to addressing urban mobility issues.

General Motors Enters Carsharing Business

The NIADA Certified Pre-Owned Program was standardized in November 2010 to reflect a 12-month, 12,000-mile, comprehensive $0 deductible warranty, and now that we have close to 12 months under our belts we have the remarkable research to show the impact it has had on dealers. It was already proven that adding a Certified program to a dealership could turn the inventory quicker and make the dealer more money. But there was little research showing how much it could impact an independent used car dealer.

By keeping track of when our dealers register their vehicle as certified on NAC’s turnkey Express Lane system, compared to the date the vehicle is retailed, the NIADA Certified Pre-Owned program found that dealer’s inventory is turning on an average of 21 days. We have also were able to determine dealers are getting an average profit of $2,062.28 per unit.

It is great having this information proving there is a program out there that can help the independent dealer sell more cars and make more money.

The NIADA Certified Pre-Owned Program

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The Rebirth of New Jersey Independent Auto Dealers Association

My name is Paula Frendel and I am proud to announce that I am NJIADA’s new executive director. I am writing to the independent dealers in New Jersey to advise each of you of the importance of the resurgence of the New Jersey Independent Automobile Dealers Association (NJIADA). For too many years, N.J. independent dealers have been without a strong state association. This is no longer the case; my goal is to rebirth NJIADA and bring it to the next level.

NJIADA provides an opportunity and a challenge. In 2011, we have the chance to continue growing and building toward an even better 2012. I have more than 20 years experience in the mortgage banking industry. I have witnessed all of the ups and downs of our economy and have what it takes to survive and stay on top. There are many tools out there to assist us in our growth. It is key that we acknowledge our need to utilize them.

Why is it critical for independent dealers to join and support a state association? Because no dealer can fight alone; the need for a strong collective voice cannot be ignored. It is time for the rest of the New Jersey independent dealers to become unified and begin implementing the many benefits and programs NJIADA has available to them.

With NJIADA membership, one receives discounts valued at thousands of dollars to local auctions and services plus representation, publications, and professional development. Our membership programs help dealers save money through access to insured warranty and service agreements, online marketing and advertising of inventory, vehicle history report discounts, networking with dealers nationwide, discount automotive guide book subscriptions, discounts on state-approved business forms, standardized dealer accounting software, annual college scholarships for family, NJIADA insurance, prescription drug discounts, savings on shipping services, hotel and car rental discounts, telephone and utilities savings, vehicle transportation services, marketing supplies and printing services, enhanced merchant credit card and check systems, discounts on GPS tracking systems for Buy Here-Pay Here dealers and discounts for DRIVEPUR protection system, the self-cleaning anti-bacterial treatment for your car. NJIADA membership also gives you a membership to the National Independent Automobile Dealers Association.

The first thing I thought of about NJIADA was, “Why would an independent dealer choose not to join our association?” It was mind-boggling to me that anyone wouldn’t join. It came to me that the only reason must be if someone was not truly aware of all of the benefits and support that the association has to offer.

With new auto sales starting to bounce back, used sales should continue to be stronger than ever. NJIADA has the ability to offer dealers one of the fastest growing segments in the used market through its relationship with NIADA.

The first task on my agenda is to have all independent dealers who are reading this article to become members of the association. If you are not a member, try us out! If you are a member, then help spread the word. Success starts with involvement. Tell other independents who are not members they should join.

We also have publications to keep members updated in the industry, including Used Car Dealer magazine, Annual Used Car Industry Report, IRS Audit Technique Guide for Independent Used Car Dealers, NIADA Standardized Dealer Accounting Manual, legislative alerts and NIADA Annual Buyers Guide. Also, members can receive professional development through our certified master dealer program and dealer education training videos. They can receive valuable educational opportunities with over 450 hours of dealer education on NIADA.tv and education and networking at NIADA’s annual convention and expo.

We have the tools to give you success and we will make your success our goal. If you are not a member yet or have any questions, please contact me at [email protected] or 855-694-2324. Let’s start our engines and enjoy the ride to success by making NJIADA a strong state association.

Paula FrendelNJIADA Executive Director

The first thing I thought of about NJIADA was, “Why

would an independent dealer choose not to join our

association?” It was mind boggling to me that anyone

wouldn’t join. It came to me that the only reason must be if someone was

not truly aware of all of the benefits and support that the

association has to offer.

WE HAVE THE TOOLS TO GIVE YOU SUCCESS AND WE WILL MAKE YOUR SUCCESS OUR GOAL. If you are not a member

yet or have any questions, please contact paula@newjerseyiada.

org or 855-694-2324. Let’s start our engines and enjoy the ride

to success by making NJIADA a strong state association.

-- Paula Frendel

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6

A Strong Dealership Starts with the Right People

As the saying goes, you only have one chance to make a good first impression. For car dealers, that means hiring the right staff – people who can make the buyer feel at ease – to interact with the public as sales people and service staff.

Maurice Van Collie started his Detroit-area dealership back in 1958. He’s semi-retired now, but when he wanted a salesman, he asked his colleagues if they knew a salesman who still wanted to sell but maybe didn’t want to be in a high-pressure environment.

If he needed someone to work in the service department, he’d call up a local high school shop teacher and ask if he knew any bright kids looking for some work and experience. He’d then give the youth the opportunity to get real-world experience until he’d decide to go on to greener pastures. Then Van Collie would start the process all over again.

But the days when a dealer could take such a relaxed attitude are gone. Hiring has become more complicated – and more dangerous. These days, having a plan in place when it comes time to hire a new employee is imperative. A bad hire is an expensive mistake to live with.

Case in point: Hussein “Sam” Mahrouq, owner of an Automax dealership and a Dollar Rent A Car Sales franchise in Arlington, Texas, can testify to what a bad hire can do to an operation in only a few days.

As part of a Texas program to offer customers incentives to buy clean-running newer cars in order to get more polluting older vehicles off the road, Mahrouq’s dealership performs emissions tests on its cars. One employee, though, decided doing all those tests was just too much work and signed off on a number of vehicles without actually doing the inspections. He was caught and fired. But the Texas attorney general’s office sent a letter to Mahrouq a year later saying it had discovered the clean scans. The result was a $50,000 fine.

Mahrouq said he spoke with an attorney and was told he had a very good chance of beating the charge in court, but between legal costs and the bad publicity that would accompany a lengthy court battle he would be better off paying the fine and working to get his side of the story out to the public.

That one bad hire, in just three weeks, cost Mahrouq $50,000 in fines and a lot of bad publicity a year after the fact. All that despite the fact the problem was discovered by the dealership and the employee was fired.

Mahrouq said he has hiring procedures in place. He does a drug test and a criminal background check, but when you run a small operation, it can be difficult to make sure someone is squeaky clean.

“We care about things like auto theft,” Mahrouq said. “This guy did have the proper license needed for doing scans. We found out the ‘clean’ scans were done over three days during the three weeks he worked for us. All that damage done in three days.”

Old-school dealers like Van Collie operated in different times. Dealers who work like that these days are asking for trouble. The best way for a dealer to protect himself is to have procedures in place and to be careful. A mistake can end up costing a dealer money, or even his dealership.

Know What You WantJoe Lescota, chairman of the automotive

marketing department at Northwood University and instructor for the NIADA’s Certified Master Dealer program, said hiring starts with a plan. The dealer needs to know what he wants and what type of person fits in the dealership’s environment.

“A dealer has to ask questions like, ‘What’s our philosophy?’” Lescota said. “If you want to run a high-pressure sales operation, then you have to hire a person who fits that mold. If you want to hire a low-pressure operation you have to find the right person for that kind of environment. It’s complicated. If you hire the wrong person and they don’t work out, you have to start the interview process all over again. And who wants that?”

So, Lescota said, have a structured process in place for hiring. There should be at least three interviews per post. If there are three finalists, that means there should be nine interviews.

Give the appropriate staff a say in who’s hired

If you’re hiring someone for the service department, the head of service should participate in the process, not just the general manager or owner. When hiring someone for the sales department, the head of sales should be there.

That way no one can say they were “stuck” with someone the big boss hires, which in and of itself can go a long way toward making sure a hire works out. And if that person doesn’t work out, management can be held responsible.

“The third interview should take place during a meal,” Lescota said. “One, it’s a relaxed atmosphere. You can see them interact with the wait staff. Is the potential hire friendly and outgoing? That should tell you something about the person in question. Do they order a couple of scotches during the middle of the day? That’s a clue to that person’s personality and work habits. How much of your money do they spend during the lunch? Do they get the most expensive thing or do they get a burger and soup? These are all clues that help you make the right decision.”

Avoiding the wrong things is as important as doing the right things

People rarely check references, Lescota said, and he doesn’t understand why.

“Not to check references is nuts,” Lescota said. “If I learn someone I want to hire was fired or left a position, I will check his resume and see if there are gaps in his employment record. If you don’t question those gaps, you could be missing something, like the person was in prison or in rehab.”

Employers often don’t give drug tests, and Lescota believes that is a huge mistake. His response to someone who says he is a teetotaler and has never taken an illegal drug in his life and says he’s offended by the mere notion of having to take a drug test – tough.

“If someone doesn’t have a substance abuse problem, they having nothing to lose by taking a test,” Lescota said. “If someone has a problem, then that test can save a dealership a lot of money.

Substance abusers tend to be people who will steal from a dealership. I don’t care if a potential hire’s feelings might be hurt by a drug test.”

Lescota said all a dealer has to do is imagine what would happen to his dealership if a salesperson high on drugs took someone for a test drive and there was an accident.

Jan Kelly, president of Kelly Enterprises, a Vancouver, Wash.-based consulting company that advises motor vehicle dealers, agrees.

“If nothing else, a dealership should have a drug policy as part of its anti-theft efforts,” Kelly said. “In the old days, management might be shocked that staff might want to use drugs, but in this day and age, they shouldn’t be surprised.”

Kelly said another mistake dealers make is hiring just anybody to fill a position.

“Too many dealers are too quick to fill a position with a body instead of talent or even potential talent,” Kelly said. “It’s important to have processes in place when hiring. Conflict occurs between owners and staff over processes that aren’t clear or pay plans that are constantly being changed. If you want to drive a top sales person away from your dealership, the best way is to change the pay plan.”

Have clear, defined job descriptions and procedures so hires and management know what to expect

There are three things dealers should do, Kelly said, when preparing to hire someone. First, have a detailed job written description prepared. Just as important is to have a way to measure how well that job is being done. Finally, have a plan in place for training the person to do the job he is being hired for.

It’s not the fault of the new hire if he or she doesn’t really know what that job entails.

Personality profiles really workKelly and Lescota are both big fans of personality

profiles. The forms aren’t that expensive and there are ways to order them via the Internet. The person filling out the form answers hundreds of test questions that tell the prospective employer the type of personality the potential hire has.

“People say they can fool the tests,” Lescota said. “All that shows is that person is deceptive. But this is important. Once you hire someone, you’re stuck with them.”

Kelly said knowing a potential hire’s personality is important because a dealership needs a mix of types. She said there are four basic personality types for employers to look at.

There’s the steady-Eddie type, which makes up about 57 percent of the population. Those, she said, are plodders. They don’t like change, and are very dependable and loyal. They’ll also hold a grudge.

Then there are the drivers. They make up about 5 percent of the population. They are go-go-go types – but a little goes a long way.

There are the analytical types, who constitute about 17 percent of the population. Kelly calls them bean counters, which is valuable, but they don’t want to talk to people. They can be trained to do so, but for them it can almost be torture.

HiringNews

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“ONE WAY OF KNOWING IF A DEALERSHIP IS ATTRACTIVE TO FEMALE EMPLOYEES IS TO SEE IF WOMEN FEEL COMFORTABLE SHOPPING AT THE LOT”

Finally, there are the interactive people, about 21 percent of the population. These people can talk to others, but they’re the types who run late and never quite finish what they’re doing – something always seems to come up.

“You won’t want a whole team of steady-Eddies,” Kelly said. “They will need a whole bunch of attaboys to keep them motivated. It can be exhausting. You will want a blend of types. One analytical is all right. A couple of egomaniac guys will be competitive and that’s not bad. If you have a couple of driven people, be prepared to tell them that things will be done your way.”

Don’t forget to hire people who can sell to women

Jody DeVere, CEO of the website Ask Patty, said women influence upwards of 70 percent of all car sales. Dealers who hire people who can’t sell to women are really doing themselves no favors.

“One of the challenges dealers have is they don’t get enough women applying for jobs,” DeVere said. “Many employees come to the business through family or Northwood [University]. But if dealers want to make the experience better for women, many of whom have children, have things like flex scheduling and good benefit packages.”

A dealer doesn’t always have to go to the same well to get sales staff. One place they can look for sales staff is the real estate business. Realtors are used to working nontraditional hours and are skilled at listening to customers and what they want.

One way of knowing if a dealership is attractive to female employees is to see if women feel comfortable shopping at the lot, DeVere said. If women feel comfortable shopping there, it often means that the environment is inviting for women to work at the dealership.

Women, DeVere said, are good at listening. Their sales skills tend not to be hard-sell. Not all customers want to deal with a woman salesperson, and that’s OK. But having women on staff can be a great benefit to dealers.

Do your homeworkJanel Bryan, manager of Auto Brokers in

Englewood, Colo., has been hiring staffers in one capacity or another for 20 years. She’s used the services of a staffing agency and agrees that going through references is just common sense.

Bryan said a criminal check means more than checking for felonies. She also checks driving records. Her dealership specializes in taking customers to auctions and picking out a car there. That means her sales people spend a lot of time driving customers to and from auctions. Poor driving habits, as reflected in the records, mean huge potential dangers to customers and the dealership, not to mention increased insurance costs.

“I am a detail-oriented person,” Bryan said. “I’ll even look at shoes and socks when giving an interview. If someone is applying for a sales job, is he wearing the appropriate kind of shoes? Are they shined? Are his socks dress socks, or is he wearing sweats? Even if someone is wearing jeans, you can tell if that person takes pride in his experience.”

HiringNewsC O N T I N U E D F R O M P A G E 6

Records Retention Guidelines

The beginning of the tax year usually triggers a mad scramble to locate all of the necessary documents to prepare tax returns.

If you retain absolutely all of your records, you might be faced with the monumental task of sorting through the mountains of paper to locate the documents you actually need. One occasionally needs to clear away unused items, but tossing the wrong paper or deleting a necessary data file can have dire consequences, especially for a business.

When disposing of documents, you may want to consider shredding.

W H E N YO U E S TA B L I S H A R E C O R D S R E T E N T I O N P O L I C Y, S O M E T H I N G S T O C O N S I D E R A R E :

• Is there a legal requirement for keeping the document?• Could the item serve any other purpose after it is used for its intended purpose? Would the

documents be needed to support or oppose a position in an investigation or litigation? Could the document support a tax deduction?

• What is the consequence of not being able to locate the document?• Can the item be reliably reproduced if needed?• How long should documents be retained?• Keep any document related to pending or threatened litigation until the matter is settled and

all appeals are exhausted.

Here are some general rules for how long to keep other records:One year: Duplicate deposit slips, I-9s (after termination), receiving sheets.Twenty-five months: Customers’ credit applications that were denied.Three years: General correspondence, employment applications, expired insurance policies,

petty cash vouchers.Four years: Freight bills; inventory lists; invoices; bank deposit slips, reconciliations, statements,

canceled checks; contracts – purchase and sales; depreciation records (retention begins after expiration); employee expense reports.

Five years: OSHA logs; photostat, carbon or other facsimile copies of each odometer mileage statement issued or received. Auction companies are required to keep records of the “most recent owner,” presumably the seller, as well as the name of the buyer, the vehicle identification number and the odometer reading on the date the auction company took possession of the motor vehicle.

Six years: Employee payroll records (W-2, W-4, annual earnings records – retention begins after termination).

Seven years: Accident reports; general ledger; accounts payable and receivable ledgers; bank statements; checks (most); contracts and leases (expired); electronic funds transfer documents; employee personnel records (after termination); expense analyses; product, materials and supplies inventories; notes receivable ledgers; purchase orders and time books and cards.

Eleven years: Worker’s compensation documents.Twenty years: Real estate records.Indefinitely: Accountants’ audit reports; cash books; account charts; construction documents;

important correspondence; deeds, mortgages, bills of sale and titles; depreciation schedules; financial statements; general ledgers; journals; licenses; loan documents; minute books of directors and stockholders, including by-laws and charter; property appraisals; articles of incorporation; by-laws; tax returns and worksheets and trademark registrations.

Employee records should be retained for the length of the employee’s tenure with the company, plus at least the statute of limitations period. Employment records may contain sensitive information and should be stored in a secure area. Immigration and Naturalization Services’ I-9 forms should be kept separate from active employee files to avoid discrimination claims.

A copy of each version of employment and training manuals should be kept with the dates that version was in use.

A D D I T I O N A L I N F O R M A T I O N R E G A R D I N G B U S I N E S S R E C O R D S R E T E N T I O N C A N B E F O U N D A T

W W W. I R S . G O V/ P U B / I R S - P D F/ P 5 8 3 . P D F . P E R S O N A L R E C O R D S R E T E N T I O N I N F O R M A T I O N

C A N B E L O C A T E D A T W W W. I R S . G O V/ P U B / I R S - P D F/ P 5 5 2 . P D F .

IndustryUpdate

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Most dealers follow Federal Trade Commission happenings to get the latest on legal compliance. But the FTC also works to protect businesses in their role as consumers.

Companies with a retail presence are a favorite target of B2B con artists. Getting the inside scoop on how B2B scams work can help you shield your company from fraudsters in the future.

For example, the FTC just mailed out refund checks to small businesses ripped off by two telemarketing operations that allegedly tricked them into paying for business directory listings they didn’t order. By falsely claiming the business had already agreed to buy the listings, the defendants got people to pay money they didn’t actually owe.

OK, we’re not expecting the network to sign on for a season of CSI: Commercial Scam Investigators — though if you’re interested, have your people call our people — but a behind-the-scenes peek into how these scams operate can clue your dealership in on what to look for.

The Directory Listing Scam: In this operation, fraudsters contact businesses claiming to “verify” that a company wants to “renew” its listing. Of course, there is no existing listing — and maybe not even a real business directory — but the employee who picked up the phone doesn’t know that. Persuasive double-talkers bulldoze them into saying yes and often play back a tape of the call if the company complains. When a business

disregards the dunning letters, the bad guys up the ante by threatening to ruin their credit or take them to court. Read “Throwing the Book at Business Directory Scams” at http://business.ftc.gov/documents/alt024-throwing-book-business-directory-scams for steps to make sure your staff is wise to this scheme.

The Toner Phoner Flimflam: Every dealership needs office supplies, but you might not have a formal procurement process in place. So when supplies show up at the door, employees pay for them, assuming a colleague must have OKed the buy. The box contains unordered toner cartridges, or maybe it’s empty. Either way, the company is left holding the bag — and the bill. Share “Avoiding Office Supply Scams” (http://business.ftc.gov/documents/bus24-avoiding-office-supply-scams) with employees and follow the tips on streamlining and safeguarding your purchasing process.

The URL Hustle: “Your web address is about to expire if you don’t pay immediately to renew your registration.” That’s enough to send an online dealer into warp speed. Since the invoice emphasizes that time is of the essence, some businesses pay first and ask questions later. Of course, the invoice isn’t from the entities that really handle things like that. It’s from a fraudster, banking on the fact that companies with a web presence will be too busy to investigate. “The Dupe of URL”

(http://business.ftc.gov/blog/2010/09/dupe-url) suggests practices to reduce the risk of getting stung by a domain name scam.

The Charity Con: Dealerships often make it a point to support worthy causes in the community. So when a group claiming to help firefighters, veterans, police or kids asks a company to buy space in a calendar or publication, they’re happy to chip in. Of course, crooks cover their tracks by picking names confusingly similar to reputable charities, so it’s hard for businesses to find out they’ve been had. “Donating to Public Safety Fundraisers” (http://business.ftc.gov/documents/bus31-donating-public-safety-fundraisers) offers advice for making sure your donated dollars wind up with reputable groups.

Looking for more information on complying with the law and protecting your business from fraud? The FTC’s Business Center has a special portal for the automotive industry. Choose “Automobiles” from the “Selected Industries” tab at http://business.ftc.gov. What will you find there? Guidance on complying with the FTC’s Used Car Rule, updates on the agency’s motor vehicle roundtables, brochures and videos on avoiding a data security “oops” with customers’ financial information, and other publications on need-to-know topics written with a maximum of how-to and a minimum ho-hum.

FTC PERSPECTIVES

It’s Always Time to Be on the Lookout for Scams

B Y L E S L E Y F A I R

OK, WE’RE NOT EXPECTING THE NETWORK TO SIGN ON FOR A SEASON OF CSI: COMMERCIAL SCAM INVESTIGATORS — THOUGH IF YOU’RE INTERESTED, HAVE YOUR PEOPLE CALL OUR PEOPLE — BUT A BEHIND-THE-SCENES PEEK INTO HOW THESE SCAMS OPERATE CAN CLUE COMPANIES IN ON WHAT TO LOOK FOR.

L E S L E Y F A I R I S A S E N I O R A T T O R N E Y W I T H T H E F E D E R A L T R A D E C O M M I S S I O N S B U R E A U O F C O N S U M E R P R O T E C T I O N .

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Kelley Blue Book Warns of Fake Website Scam

Kelley Blue Book, a leading provider of new car and used car information is warning online car buyers of a scam using a fake Kelley Blue Book website. The scam attempts to solicit funds from buyers through an escrow-based, guaranteed buyer-protection program - something Kelley Blue Book does not offer.

Kelley Blue Book warns that any escrow-based consumer-to-consumer service or buyer and seller protection program offered under its name is a scam. Car shoppers should be aware that imitation websites look similar to the actual kbb.com and they should be cognizant of the domain name (URL) and email address (view the actual address, not the display name) provided by the seller. Car shoppers that encounter this type of offer from online sellers are strongly urged to report the seller to the Internet Crime Complaint Center at www.ic3.gov .

For tips on how to protect yourself from phony online car-buying scams or fraudulent buyer protection programs, visit the FBI website at www.fbi.gov/news/stories/2011/august/car_081511/car_081511 .

The NIADA announced its 66th Annual Convention & Expo will be held June 11-14, 2012 – a week earlier than previously scheduled – at Caesars Palace Hotel and Casino in Las Vegas.

NIADA’s showcase event will offer an expanded dealer education program for 2012, including more sessions covering more topics than ever before, as well as an enhanced Expo featuring more companies representing all facets of the automotive industry. Expo exhibit dates are June 12, 13 and 14. The Convention, to be held for the third consecutive year at spectacular Caesars Palace, will kick off with activities beginning on Monday afternoon, June 11.

Online registration will open in December. Details will be available at NIADA.com. Rooms at Caesars Palace will be available at the discounted rate of $154 per night.

NIADA’s Annual Convention & Expo provides its members with an opportunity to network with their peers, participate in quality education sessions and gather valuable information they can take back and apply toward their dealerships’ success. Educational offerings will cover topics for both retail and Buy Here-Pay Here dealers. The event is also a gateway for vendors to build and foster relationships with dealers through the Expo, an industry marketplace of top-notch vendors showcasing their products and services and the benefits they can provide to dealers.

NIADA has held its Annual Convention & Expo since 1947 and has continued to flourish as the most sought-after and reputable used motor vehicle industry event for automobile dealers.

NIADA Annual Convention & Expo Set for June 11-14, 2012

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EconomicOutlook

The U.S. economy appears to be at an economic crossroad: to the right lies recovery and prosperity and to the left awaits a second recession, a plummeting stock market and rising unemployment. With current economic data that points in the direction of each of these paths, it becomes difficult to predict which outcome is more likely for the United States in the coming months.

In its most recent release, the Bureau of Economic Analysis announced an advance estimate of 2.5 percent for the third quarter U.S. gross domestic product. This follows an even weaker second quarter GDP, which settled at a lowly 1.3 percent. Inflation increased in September to 3.9 percent. This is combined with gold and silver prices that are again on the rise after sliding directly following the United States’ credit downgrade. Together these metrics suggest higher inflation in the U.S.’s future.

Key September/October DataPositive Signs

U.S. productivity remains among the highest in the world, while U.S. non-financial corporations’ cash reserves remain at nearly $2 trillion. The October Conference Board Global Leading Economic Indicators Report shows the U.S. and China increased by 0.2 percent and 0.5 percent, while Europe decreased by 0.6 percent. Though automobile, SUV and light truck sales were down 1.7 percent in September relative to August 2011, they were up 9.9 percent relative to September 2010.

Monthly total light vehicle sales have exceeded one million units for the past seven months. Personal disposable income is up 3.2 percent relative to September 2010 and now sits at $968.3 billion. Construction spending increased further in September and is now 48 percent higher than January 2011.

Negative SignsThe unemployment rate remained unchanged

at 9.1 percent in September as nonfarm payroll employment increased by 103,000 and private sector employment increased by 91,000. Oil prices climbed in October, surpassing $90 a barrel. Housing starts slid for the second straight month. Consumer confidence dropped considerably in October, reaching its lowest level since March 2009.

Current IssuesIn all my years in the retail auto industry and of

all the things I’ve experienced in selling vehicles, I’ve found the most impactful way to generate more sales is to follow up with guests who do not purchase the first time they visit your dealership.

That’s right. Study after study (I do a lot of them) clearly has shown that a typical retail dealership, whether franchised or independent, only effectively manages to achieve a 25 percent “be-back” rate of guests who leave without making a purchase on their first visit. That says 75 percent of the guests are not returning to that dealership to make a purchase.

Yet studies clearly show that guests who do return to gather more information or to re-evaluate their first visit are closed 50 percent of the time versus a 19 percent rate on initial visits. So the real question is, why are these high-percentage closing rate types of potential customers not returning?

The answer is … they were never asked to return. No one ever followed up with them. Over the years, I have been able to track many of these guests with a follow-up call regarding their initial visit. In more than 80 percent of the cases, when I ask, “Has anyone contacted you since your visit to the dealership?” the answer is an emphatic “NO.”

I wanted to put some teeth into my research in an attempt to determine the financial impact should a dealership develop and implement a

consistent (consistency is essential) follow-up procedure for guests who do not make an initial purchase. I selected a dealership averaging 49 retail used vehicle sales per month and turning its used vehicle inventory a minimum of four times per year.

With a clear focus on getting more guests back into the dealership for a “second shot,” the management team agreed to practice a very rigid and dedicated system of having managers follow up with the guests rather than the sales team – just for a controlled benchmark; the sales staff got the deal if the returning customer made a purchase.

Here are the results: Management involvement improved the return rate of guests from 25 percent to 34 percent within seven days, leading to a 31.5 percent increase in the effective closing rate. That led to a 30 percent increase in the used vehicle inventory turn rate. By getting management involved in the follow-up process, monthly used vehicle sales went from 49 retail units to 64 by month’s end, generating an additional $31,105 in gross and reducing operating expenses by approximately $2,795.

All because management got more involved in the follow-up process of guests who visited the dealership but did not make a purchase on that initial visit.

What would happen if your management team and sales team followed up, followed up, followed up and followed up?

Two Very Important Words:

B Y D R . T I M O T H Y N A S H A N D J O E L E S C O T A

Follow up!

Students interested in studying the automotive industry can contact Dr. Timothy Nash at [email protected] for information about Northwood’s programs

Dr. Timothy Nash, an associate professor in Economics, Business and Public Policy, heads specialty programs, including Automotive Aftermarket and Automotive Marketing, for Northwood University.

Joe Lescota is chairman of the Automotive Marketing Department at Northwood University and the instructor for the NIADA Certified Master Dealer program.

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Looking for Those Common Threads

Have you ever tried staring at a Magic Eye poster or book? At first glance, they look like complex, two-dimensional designs. However, if you view them in just the right way, images seem to pop out in 3D. But it can be a difficult task because the designs are intricate and sometimes overwhelming.

For those in the auto finance world, it’s easy to get the same feeling when looking at the vast number of regulatory changes taking place each year. With so much happening at once, it can be hard to see the big picture. That’s why it’s important to take a step back and look for the patterns.

So what have we been seeing in 2011? A common thread across recent laws and regulations is a strong focus on the credit decision process. Three areas in particular offer key examples of this:

Denial Notices: Section 1100F of the Dodd-Frank Act and its implementation regulations require disclosing a credit score and related information in adverse action notices when that information is used as part of the credit decision. The purpose is to encourage applicants to review credit report and credit score information to see if errors or inaccuracies are causing credit denials.

Risk-Based Pricing Notices: The federal risk-based pricing rule requires dealers, lenders and third-party providers to notify consumers when they receive materially less favorable credit terms than others based on consumer report information. The idea is to give consumers more information and prompt them to review their credit report information to confirm it is correct. It can also help consumers avoid unnecessarily accepting higher credit costs due to credit record errors and inaccuracies.

Privacy Disclosures: The new model privacy notices aim to create more consistency in how vendors, including dealers and lenders, present information. The disclosures are given at the beginning of the credit transaction process so consumers can choose a vendor with privacy disclosures most in line with their information-sharing preferences. The new form is required to be comprehensible to consumers, with a clear format and design; provide clear and conspicuous disclosures; enable consumers to easily identify sharing practices of a financial institution so they can compare privacy practices among financial institutions; be succinct; and use an easily readable type font.

In each of these cases, the laws and regulations focus on preventing consumer misunderstanding, controlling consumer information, encouraging review of credit records for errors and preventing fraud. These are all actions that take place when a consumer is completing a credit application and a credit decision is being made.

These new laws and regulations are aimed at helping borrowers and buyers be more informed at the front end of the credit process. Arguably, this also helps dealers and lenders prevent problems up front, a particularly important benefit during difficult economic times. It is better to have informed customers and accurate credit information at the time of the credit decision. Spotting issues after the sale will often be too late to avoid the losses they will bring.

Like those Magic Eye images, patterns across the regulatory environment aren’t always easy to see at first. But if you adjust your focus, you can train your eye to spot the common threads and see the bigger picture. This can ultimately lead to a better understanding of regulators’ key concerns and help your dealership maintain compliance.

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

ComplianceOverdrive

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