PRSRT StandardU.S. Postage
PAIDDALLAS, TEXASPermit No. 2079
JULY 2012
inside
Anniversary Golf TournamentTRADE SHOW/AWARDS DAYSunday, September 9thIronwood Golf Club Fishers, IN
V i s i t u s a t w w w . i i a d a . c o m
O F F I C I A L V O I C E O F T H E I N D E P E N D E N T C A R D E A L E R I N I N D I A N A
CAR LINESINDIANA
page 14
see page 5
INDIANA’S ANDERSEN NAMED
NIADA 2012
ASSOCIATION
EXECUTIVE
OF THE YEAR25CELEBRATING 25 YEA
RS OF SERVICE
1987-2012
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Before motor vehicle dealers sell cars in
,QGLDQD��WKH\�PXVW�¿OH�D���������VXUHW\�bond with the Secretary of State’s Dealer
Division.
You’re not alone if you don’t know how
your bond works or why you need it in
the first place. To help alleviate some
of the mystery that surrounds bonding,
we’ll answer five frequently asked
questions Indiana auto dealers have
about surety bonds.
1. Why does the state of Indiana require auto dealers to buy surety bonds?$XWR�GHDOHU�ERQGV�SURYLGH�¿QDQFLDO�
guarantees to ensure dealers will manage
their businesses according to industry
regulations. If a dealer breaks the bond’s
terms, the bond amount can be used to
SD\�IRU�¿QHV��SHQDOWLHV��IHHV�DQG�RWKHU�costs assessed by the Secretary of State
relative to the violation.
2. How do surety bonds work?To put it simply, surety bonds bind
three parties together in contracts that
require a certain level of performance.
The principal is the auto dealer, who
purchases the bond as a guarantee of
future work performance. The obligee is
the party that requires the principal to
purchase a bond, which, in this case, is the
state’s Dealer Division. Finally, the surety
is the insurance company that guarantees
the bond.
,I�D�ERQGHG�SULQFLSDO�GRHV�QRW�IXO¿OO�the bond’s terms, the obligee can make
a claim against the bond to collect
reparation for damages. If the claim is
found to be valid, the surety will pay the
obligee. Unlike traditional insurance
policies, however, auto dealers are
expected to reimburse the insurance
company for any claims made against
a bond.
3. Who needs an Indiana auto dealer bond?
The following motor vehicle dealer
professions require an Indiana surety
bond as part of the licensing process:
�� $XWRPRELOLW\�GHDOHUV�� $XWRPRELOH�DXFWLRQHHUV�� &RQYHUWHU�PDQXIDFWXUHUV�� 'LVWULEXWRU�UHSUHVHQWDWLYHV�� 'HDOHUV�� 'LVWULEXWRUV�� )DFWRU\�UHSUHVHQWDWLYHV�� 0DQXIDFWXUHUV
�� 5HVHDUFK�DQG�GHYHORSPHQW�� 7UDQVIHU�GHDOHUV�� :KROHVDOH�GHDOHUV
4. How can I prevent claims against my bond?
To avoid having claims made against
your bond, simply comply with its
terms. As with any other legal contract,
you should fully understand the terms
you’re agreeing to before you sign it. The
contractual language used in Indiana
auto dealer bonds requires auto dealers
WR�FRPSO\�ZLWK�,QGLDQD�&RGH���������³&KDSWHU����5HJXODWLRQ�RI�9HKLFOH�0HUFKDQGLVLQJ�´�<RX�FDQ�¿QG�WKH�FRGH�LQ�its entirety at www.in.gov.
5. How do I get a surety bond?:KHQ�\RX�FRQWDFW�D�VXUHW\�SURYLGHU��
you’ll have to answer basic questions
about your professional work experience
DQG�SHUVRQDO�¿QDQFLDO�KLVWRU\��$XWR�GHDOHU�bond applications require applicants to
provide their social security number so the
surety can review their credit scores. If
your business has more than one owner,
WKH�¿QDQFLDO�FUHGHQWLDOV�RI�DOO�RZQHUV�ZLOO�be considered.
After you approve the quote, you’ll
probably be required to pay the full
premium up front. Sometimes surety
underwriters can offer premium
¿QDQFLQJ�WR�TXDOLI\LQJ�DSSOLFDQWV��2QFH�you’ve paid your premium, the surety
provider will execute your bond and send
it to you.
Surety bonds can be confusing, but with
a basic understanding of how they work,
you’ll be better prepared to get one when
it’s time to renew your Indiana auto
dealer license.
Answers to Top Five Questions About Surety Bonds
Q & A
BY DANIELLE RODABAUGHDANIELLE RODABAUGH IS A SURETY SPECIALIST AT SURETYBONDS.COM, A NATIONWIDE SURETY BOND PRODUCER THAT ISSUES AUTO DEALER BONDS IN ALL 50 STATES. SURETYBONDS.COM IS A PROUD MEMBER OF THE INDIANA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION.
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WHAT’S NEW
MAGAZINE CONTENTS
ADVERTISERS INDEX
03 Surety Bond Answers04 Dealer Plates in National Database06 The CarLawyer13 Associate Members/New & Renew14 IIADA Golf Tournament/Awards Day/Trade Show22 Compliance Overdrive
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
NIADA HEADQUARTERS:
Car Lines is published 10 times per year by the National In-dependent Automobile Dealers Association Services Corpo-ration, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 817-640-3838. Periodicals postage paid at Dallas, TX and at additional of!ces. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 6006-5203. The statements and opinions expressed herein are those of the individual authors and do not nec-essarily represent the views of Car Lines or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identi!cation as mem-bers of NIADA , does not constitute an endorsement of the products or services featured. Copyright © 2012 by NIADA Services, Inc.
EDITOR
Nieman Printing
IIADA OFFICE
ADESA ....................................... Inside Front CoverAlly ................................................................... 23AutoTrader.com .....................................Back CoverChase ................................................................16Dyer Auto Auction ............................................ 18Indiana Auto Auction ............................................3Kelley Blue Book ..................................................7Kesler-Schaefer Auto Auction ..............................9Manheim.com ........................... Inside Back CoverManheim Indianapolis ........................................12NIADA Certi!ed ..................................................19Nowcom ............................................................11Protective ..........................................................21United Acceptance .............................................17Voisys ................................................................26
inside
25CELEBRATING 25 Y
EARS OF SERVICE
1987-2012
DIRECTORDebbie AndersenP.O. Box 1393Crown Point, IN 46308Phone: (800) 310-3112Fax: (219) 663-5294
CHAIRMAN OF THE BOARDDave Allen (Crockett)
Fritz KreutzingerFritz AssociatesP.O. Box 168Fishers, IN 46038 Phone: (317) 842-2228Fax: (317) 842-7903
Tricia TrentTrent Auto Sales1327 N 6th Street Vincennes, IN 47591 Phone: (812) 882-3772Fax: (812) 882-1986
TREASURERBruce NortonDrive1USA1512 W 96th Avenue, Suite C Crown Point, IN 46307Phone: (219) 661-1000Fax: (219) 661-2950
Jennifer CottonDyer Auto AuctionP.O. Box 115 Dyer, IN 46113-0115 Phone: (219) 865-2361Fax: (219) 322-1761
Kim GrahamKim Graham, Inc.1648 A US 31 SGreenwood, IN 46143Phone: (317) 888-0100Fax: (317) 888-8900
Ed WhiteWhite’s Auto Sales1105 McKinley Avenue Rensselaer, IN 47978Phone: (219) 866-7553Fax: (219) 866-7256
Tony HoukKesler-Schaefer Auto Auction, Inc. 5333 W. 46h StreetIndianapolis, IN 46253Phone: (317) 297-2300(800) 959-5722
Tyler TrentTrent Auto Sales1327 N 6th Street Vincennes, IN 47591Phone: (812) 882-3772Fax: (812) 882-1986
Harold DreesH.T.D., Inc.200 E Main StreetThorntown, IN 46071Phone: (317) 402-2312Fax: (765) 436-7222
Tony Del RealDel Real Auto Sales3857 State Road 38 ELafayette, IN 47905Phone: (765) 446-9204Fax: (765) 446-9143
John StumpfGreater Kalamazoo Auto AuctionP O Box 697Schoolcraft, MI 49087Phone: (574)876.6145
Doug AlveyFirst Class Auto Sales, Inc695 W 900SHebron, IN 46341Phone: (219) 996-2600Fax: (219) 531-4628
Sharon BrennanFritz in Fishers8599 E 116th StreetFishers, IN 46038Phone: (317) 842-2228Fax: (317) 842-7903
Andrew J. InabnittApproval Auto Credit Inc.9825 Huggin Hollow Rd.Martinsville, IN 46151Phone: (317) 422-8001Fax: (317) 422-8020
David D. Baldwin IIBest Deal Auto Sales, Inc.1875 SR 8Auburn, IN 46706Phone: (260) 357-0099
Andy ZayZay Leasing & Rentals4957 N. BroadwayHuntington, IN 46750(260) 356-1588
Travis HuberThe Auto Store5474 US Hwy 6, Suite APortage, IN 46368Phone: 219-712.2944
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 #exibility 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.
Board of Directors
Indiana Dealer Plates Linked to National Database
Indiana auto dealer plates are now linked to the National Law Enforcement 7HOHFRPPXQLFDWLRQV�6\VWHP��D�QDWLRQDO�GDWDEDVH�IRU�ODZ�HQIRUFHPHQW�RI¿FHUV��6HFUHWDU\�RI�State Connie Lawson announced in May.
Linking Indiana auto dealer plates to the national database provides law enforcement nationwide with access to real-time information, greatly reducing the appeal of Indiana plates for illegal purposes.
“This is a huge step forward for our long-term security,” Lawson said. “By ensuring dealer plates can be tracked by local and national law enforcement agencies, we can better protect Indiana’s legitimate auto dealers and deter the theft of these plates for criminal use around the country.”
The measure was made in part in response to help eliminate past security issues involving Indiana dealer plates that have led to their misuse.
Previously, law enforcement outside the state could look up an individual’s personal vehicle information, but were unable to access Indiana dealer plate data. Now police and other law enforcement agencies can get information on metal dealer plates used for dealership business such as test drives as well as paper temporary plates issued when a vehicle is sold, allowing WKHP�WR�LQVWDQWO\�DFFHVV�GDWD�GXULQJ�URXWLQH�WUDI¿F�VWRSV�DQG�WR�VROYH�FULPHV�7KH�$XWR�'HDOHUV�6HUYLFHV�'LYLVLRQ�RI�WKH�6HFUHWDU\�RI�6WDWH¶V�RI¿FH�ZRUNHG�ZLWK�WKH�%XUHDX�
of Motor Vehicles and the Indiana State Police to link to the national database through the BMV and state police systems.
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Indiana’s Andersen named Executive of the Year
Debbie Andersen, executive director of the Indiana
Independent Automobile Dealers Association, was selected by
her peers as NIADA’s 2012 Association Executive of the Year.
Andersen, has headed the IIADA since 2001 after serving
six years as the association’s accountant, and has used her
EDFNJURXQG�DV�D�&3$�WR�SXW�,,$'$�LQ�D�VWURQJ�¿QDQFLDO�SRVLWLRQ�“The association was going through hard economic times,”
said 2011 Executive of the Year Jim Mitchell of Ohio, who
presented the award to Andersen during the 66th Annual NIADA
Convention & Expo at Caesars Palace in Las Vegas.
³%XW�WRGD\�LW�LV�RQ�VROLG�¿QDQFLDO�JURXQG�DQG�WKH�DVVRFLDWLRQ¶V�membership has grown to its highest level.”
The winner is chosen by the executives of the state independent
auto dealers associations nationwide.
“I’m very honored,” Andersen said, “because it’s a selection
by my peers, and to be honored by your peers, I think, is the
ultimate in respect.”
When Andersen took on the executive director job, she knew
from her stint as IIADA’s accountant that getting association’s
¿QDQFLDO�KRXVH�LQ�RUGHU�ZRXOG�EH�KHU�¿UVW�RUGHU�RI�EXVLQHVV�³,�NQHZ�,�ZDV�JHWWLQJ�LQWR�D�ELJ�¿QDQFLDO�PHVV�´�VKH�VDLG��
³7KDW¶V�ZK\�,�ZDV�EURXJKW�LQ�WR�EH�WKH�&3$�LQ�WKH�¿UVW�SODFH��7KH\�ZHUH�YHU\�¿QDQFLDOO\�FKDOOHQJHG��:KHQ�WKH�H[HFXWLYH�GLUHFWRU�resigned, I thought, ‘Yeah, I’d kind of like to do that.’ And I truly
enjoy it.”
Andersen cut the association’s expenses and began using
fundraising events to increase revenue without raising the
members’ dues.
“We cut expenses immediately, and you look for other sources
of income,” she said. “It sounds simple, but we had to be creative.
We had to think outside the box. Dues was not the place to go.
We needed to raise money but we didn’t want to do it on the
backs of the dealers. And, of course, we also slashed expenses. I
didn’t spend if they didn’t have it.”
Growing up in the Detroit area, Andersen has been around
the car business and car people her entire life. While attending
Northern Michigan University, she worked on the assembly line
for Federal Mogul, a major parts supplier to auto manufacturers.
“I worked my way through college working in automotive
factories,” she said. “We made all the plastic parts, like the dash,
on injection molding machines. They came off the assembly line
and you had to trim all the plastic off of them.”
Andersen said the biggest step she has seen IIADA take during
her tenure has been in its relationship with the state government.
“We have grown tremendously in recognition within the
VWDWH�JRYHUQPHQW�´�VKH�VDLG��³2XU�VWDWH�RI¿FLDOV��IURP�WKH�governor to the secretary of state to the director of the bureau
of motor vehicles, all look to the association now for advice and
suggestions, which was not the case when I came on board 11
years ago.
“That is huge. That’s probably the thing I’m most proud of.”
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The CARLAWYER ©
C O N T I N U E D O N PAG E 8
Here’s our monthly collection of selected
legislative and regulatory highlights, and
a recap of some of the many auto sale and
¿QDQFLQJ�ODZVXLWV�ZH�IROORZ�HDFK�PRQWK�5HPHPEHU��ZKDW�ZH�UHSRUW�KHUH�LV�
not even close to being every recent
GHYHORSPHQW��:H�VHOHFW�WKRVH�ZH�WKLQN�DUH�important or interesting to car dealers.
Note that this column does not offer legal
advice. You should consult your dealership
lawyer with any legal questions.
:H�LQFOXGH�LWHPV�IURP�RWKHU�VWDWHV��:K\"�:H�ZDQW�\RX�WR�EH�DEOH�WR�VHH�QHZ�legal developments and trends. Also,
another state’s laws might be a lot like
your own state’s laws – if AGs or plaintiffs’
lawyers are pursuing particular types of
claims, those laws and claims might soon
appear in your state.
As always, though, there is no substitute
for checking with your own lawyer before
you rely on anything we report or if you
have any questions.
FEDERAL LAW0RVW�RI�WKH�IHGHUDO�QHZV�WKLV�PRQWK�
GHDOV�ZLWK�WKH�&RQVXPHU�)LQDQFLDO�Protection Bureau.
Liability of service providers: 2Q�$SULO�����WKH�&)3%�UHOHDVHG�%XOOHWLQ���������FODULI\LQJ�WKDW�VXSHUYLVHG�¿QDQFLDO�institutions can be held responsible for
the actions of service providers with
which they contract and recommending
WKDW�VXSHUYLVHG�¿QDQFLDO�LQVWLWXWLRQV�WDNH�steps to ensure business arrangements
with service providers do not present
unwarranted risks to consumers.
Those steps include conducting
thorough due diligence to verify that
the service provider understands and
is capable of complying with the law;
requesting and reviewing the provider’s
policies, procedures, internal controls
and training materials to ensure the
provider conducts appropriate training
and oversight of certain employees;
including in the contract with the provider
clear expectations about compliance and
FRQVHTXHQFHV�IRU�YLRODWLQJ�FRPSOLDQFH�related responsibilities; establishing
LQWHUQDO�FRQWUROV�DQG�RQ�JRLQJ�PRQLWRULQJ�to determine whether the provider is
complying with the law; and taking prompt
action to address fully any problems
LGHQWL¿HG�WKURXJK�WKH�PRQLWRULQJ�SURFHVV�Bureau targets discrimination:
2Q�$SULO�����WKH�EXUHDX�DQQRXQFHG�LW�ZLOO�XVH�³DOO�DYDLODEOH�DYHQXHV´�WR�SXUVXH�discrimination cases against creditors.
&DOOLQJ�GLVFULPLQDWLRQ�³WKH�PDUNHW¶V�VLOHQW�SLFNSRFNHW�´�&)3%�GLUHFWRU�5LFKDUG�&RUGUD\�HPSKDVL]HG�KLV�DJHQF\�ZLOO�SXUVXH�cases not only based on evidence of overt
discrimination and disparate treatment,
but also based on the sometimes
controversial legal theory of disparate
impact.
&DVHV�EDVHG�RQ�GLVSDUDWH�LPSDFW�WDUJHW�D�³IDFLDOO\�QHXWUDO�SROLF\�FULWHULRQ´��OLNH�]LS�FRGHV��WKDW�KDV�D�GLVSURSRUWLRQDWH�adverse impact on one or more people on
a prohibited basis, such as by sex or race.
&RQVLGHULQJ�VXFK�IDFWRUV�FDQ�EH�LOOHJDO�LI�WKH�creditor lacks a legitimate business need for
considering the factor or could achieve its
legitimate goals as well by means that are
less disparate in their impact.
Patrice Ficklin, assistant director of the
&)3%¶V�2I¿FH�RI�)DLU�/HQGLQJ��UHSHDWHG�&RUGUD\¶V�ZDUQLQJ�DERXW�WKH�EXUHDX¶V�intention to pursue cases against creditors,
using a disparate impact theory. She said the
EXUHDX¶V�SULRULWLHV�ZRXOG�LQFOXGH�DXWR�¿QDQFH��
To arbitrate or not to arbitrate:
2Q�$SULO�����WKH�EXUHDX�DQQRXQFHG�it had launched a public inquiry into
KRZ�FRQVXPHUV�DQG�¿QDQFLDO�VHUYLFHV�companies are affected by arbitration
DQG�DUELWUDWLRQ�FODXVHV��7KH�&)3%¶V�authority to study arbitration agreements
in consumer contracts derives from
WKH�'RGG�)UDQN�$FW�DQG�LQFOXGHV�WKH�authority to ban their use should it
deem such a prohibition appropriate.
The bureau requested comments on
the prevalence of arbitration clauses
LQ�FRQVXPHU�¿QDQFLDO�SURGXFWV�DQG�services; what claims consumers bring
LQ�DUELWUDWLRQ�DJDLQVW�¿QDQFLDO�VHUYLFHV�companies; if claims are brought by
¿QDQFLDO�VHUYLFHV�FRPSDQLHV�DJDLQVW�consumers in arbitration; how consumers
and companies are affected by actual
arbitrations; and how consumers and
companies are affected by arbitration
clauses outside of actual arbitrations. The
FRPPHQW�SHULRG�HQGHG�-XQH����
LITIGATIONSeparate arbitration agreement
unenforceable where related RISC contained merger clause and no reference to arbitration agreement:
A car buyer signed an arbitration
agreement, a retail installment sales
contract and a security agreement in
connection with her purchase. The
arbitration agreement provided that all
claims or disputes between the parties
were to be resolved through arbitration.
The retail installment contract contained
a merger clause, stating that the contract
sets forth the entire agreement between
the parties.
T H I S C O LU M N D O E S N O T O F F E R L E G A L A DV I C E . YO U S H O U L D C O N S U LT YO U R D E A L E R S H I P L AW Y E R W I T H A N Y L E G A L Q U E S T I O N S .
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The buyer sued the dealership,
alleging negligent misrepresentation,
general negligence and violations
of state law. The dealership moved
to compel arbitration, but the trial
FRXUW�GHQLHG�WKH�PRWLRQ��7KH�&RXUW�RI�$SSHDOV�RI�0LVVRXUL�DI¿UPHG�
Because the retail installment
contract contained a merger clause
and did not incorporate or reference
the arbitration agreement, the retail
installment contract superseded the
arbitration agreement. As such, there
was no effective agreement to arbitrate.
-RKQVRQ�Y��-)�(QWHUSULVHV��//&�������0R��$SS��/(;,6������0R��$SS��0DUFK������������
Perfected security interest effective against defrauded vehicle purchasers: Individuals
ERXJKW�D�PRWRUF\FOH�RQ�&UDLJVOLVW��$W�the time of the sale, a bank was listed
DV�OLHQKROGHU�RQ�WKH�WLWOH�RQ�¿OH�ZLWK�WKH�%XUHDX�RI�0RWRU�9HKLFOHV��7KURXJK�a series of deceptive transactions, the
seller possessed a title in his name
that did not list the bank as lienholder.
It was that title he tendered to the
buyers.
:KHQ�WKH�EX\HUV�DWWHPSWHG�WR�get a new title, they discovered the
deception. They sued the bank to get
clear title to the motorcycle, arguing it
was the bank’s action that allowed the
seller to acquire the deceptive title, and
they were, therefore, not in wrongful
possession of the motorcycle. The trial
court granted summary judgment for
WKH�EDQN��DQG�WKH�,QGLDQD�&RXUW�RI�$SSHDOV�DI¿UPHG��GHWHUPLQLQJ�WKDW�WKH�trial court did not err in concluding the
bank had a perfected security interest
in the motorcycle. Dawson v. Fifth
7KLUG�%DQN�������,QG��$SS��/(;,6������,QG��$SS��0DUFK������������
Finance company had permissible purpose to access car buyer’s credit report even though dealer applied for credit without buyer’s consent: A car buyer went
to a dealership to buy a car and signed
a purchase order. She never signed a
credit application and instead told the
GHDOHUVKLS�VKH�ZRXOG�REWDLQ�¿QDQFLQJ�from her credit union.
Nevertheless, the dealership
applied for credit on her behalf with
VHYHUDO�¿QDQFH�FRPSDQLHV��2QH�RI�those companies declined to extend
credit to her after accessing her credit
report. She sued the dealership, a
FUHGLW�UHSRUWLQJ�FRPSDQ\��WKH�¿QDQFH�company that denied her credit and
VHYHUDO�RWKHU�¿QDQFH�FRPSDQLHV�IRU�YLRODWLQJ�WKH�)DLU�&UHGLW�5HSRUWLQJ�$FW��among other laws.
7KH�WULDO�FRXUW�JUDQWHG�WKH�¿QDQFH�company’s motion to dismiss, and the
8�6��&RXUW�RI�$SSHDOV�IRU�WKH�6L[WK�&LUFXLW�DI¿UPHG��7KH�FDU�EX\HU�DOOHJHG�WKH�¿QDQFH�FRPSDQ\�YLRODWHG�WKH�)&5$�by accessing her credit report without
KHU�ZULWWHQ�DXWKRUL]DWLRQ��7KH�DSSHOODWH�court found there were no facts in
KHU�FRPSODLQW�VKRZLQJ�WKH�¿QDQFH�company had reason to believe she
GLG�QRW�ZLVK�WKH�GHDOHUVKLS�WR�¿OH�DQ�application on her behalf. Therefore,
KHU�DOOHJDWLRQV�XQGHU�WKH�)&5$�ZHUH�LQVXI¿FLHQW��:HOOV�Y��&UDLJ��/DQGUHWK�&DUV��,QF��������8�6��$SS��/(;,6��������WK�&LU���:�'��.\���$SULO�����������
Vehicle loan not subject to Pennsylvania Motor Vehicle Sales Finance Act: An individual bought
a motorcycle from a dealership and
DUUDQJHG�IRU�¿QDQFLQJ�IURP�D�EDQN�WKDW�ZDV�D�VXEVLGLDU\�RI�D�¿QDQFH�company related to the manufacturer
of the motorcycle. The buyer signed a
promissory note showing the bank as
the lender.
:KHQ�WKH�EX\HU�IHOO�EHKLQG�RQ�KLV�payments, the bank repossessed the
motorcycle. It then sent the buyer a
notice stating it planned to sell the
PRWRUF\FOH�VRPHWLPH�DIWHU����GD\V��7KH�EX\HU�¿OHG�D�FODVV�DFWLRQ�DJDLQVW�WKH�bank, arguing the bank’s notice of the
proposed sale violated the Pennsylvania
0RWRU�9HKLFOH�6DOHV�)LQDQFH�$FW�The trial court granted the bank’s
PRWLRQ�WR�GLVPLVV��DQG�WKH�8�6��&RXUW�RI�$SSHDOV�IRU�WKH�7KLUG�&LUFXLW�DI¿UPHG��7KH�DSSHOODWH�FRXUW�IRXQG�WKH�096)$�did not apply to the buyer’s contract
ZLWK�WKH�EDQN��7KH�096)$�LPSRVHV�repossession notice requirements only
when a motor vehicle is the subject of
an installment contract. The appellate
court found the promissory note was
not an installment contract because it
was not a contract for the retail sale of a
motor vehicle.
7KH�EX\HU�DUJXHG�WKH�096)$�DSSOLHG�WR�WKH�WUDQVDFWLRQ�XQGHU�D�³GUDJJLQJ�WKH�ERG\´�WKHRU\��LQ�ZKLFK�D�SURPLVVRU\�note and bill of sale are collapsed
into a single transaction because the
GHDOHUVKLS�³GUDJV´�WKH�FXVWRPHU�WR�
D�VSHFL¿F�OHQGHU�SUH�VHOHFWHG�E\�WKH�dealership. The appellate court declined
to apply that theory to the transaction.
Hudson v. Eaglemark Savings Bank,
�����8�6��$SS��/(;,6��������G�&LU���(�'��3D���0DUFK������������
Breach of warranty claim fails when buyer’s order limited warranties to those contained in document and plaintiff relied on representations made outside of contract: An individual bought a
XVHG�FDU�IURP�D�GHDOHUVKLS��:KHQ�WKH�car encountered mechanical problems
that could not be permanently repaired,
the buyer sued the dealership, alleging
it violated Texas’ Deceptive Trade
Practices Act, breached the express and
implied warranties in the buyer’s order
and committed fraud and negligent
misrepresentation.
The buyer’s order the individual
signed contained a provision limiting
warranties to those expressly made
in the buyer’s order and disclaiming
all implied warranties and any prior
written or oral representations. The
buyer’s order did not contain any
express warranties relevant to the
individual’s claim.
7KH�8�6��'LVWULFW�&RXUW�IRU�WKH�Southern District of Texas granted
summary judgment for the dealership,
holding that the buyer failed to show
reliance on any representations
contained in the buyer’s order and that
she was barred, based on the disclaimer
in the buyer’s order, from relying on
any representations made outside of the
FRQWUDFW��3HQQLQJWRQ�Y��&DU0D[�$XWR�6XSHUVWRUHV��,QF��������8�6��'LVW��/(;,6��������6�'��7H[��0DUFK������������
So there you have it! Stay legal, and
we’ll see you next month.
BY THOMAS B. HUDSON AND NICOLE FRUSH MUNROTOM ([email protected]) AND NIKKI ([email protected]) ARE PARTNERS IN THE LAW FIRM OF HUDSON COOK, LLC. TOM IS THE AUTHOR OF SEVERAL BOOKS, AVAILABLE AT WWW.COUNSELORLIBRARY.COM. TOM IS ALSO THE PUBLISHER OF SPOT DELIVERY®, A MONTHLY LEGAL NEWSLETTER FOR AUTO DEALERS, AND THE EDITOR IN CHIEF OF CARLAW®, A MONTHLY REPORT OF LEGAL DEVELOPMENTS IN ALL STATES FOR THE AUTO FINANCE AND LEASING INDUSTRY. NIKKI IS A CONTRIBUTING AUTHOR TO THE F&I LEGAL DESK BOOK AND FREQUENTLY WRITES FOR SPOT DELIVERY. SPOT DELIVERY, CARLAW AND THE BOOKS ARE PRODUCED BY COUNSELORLIBRARY.COM LLC. FOR INFORMATION, CALL 410-865-5411 OR VISIT WWW.COUNSELORLIBRARY.COM. COPYRIGHT COUNSELORLIBRARY.COM 2011, ALL RIGHTS RESERVED. SINGLE PUBLICATION RIGHTS ONLY, TO THE ASSOCIATION. (4/12) HC# 4815-1804-1615.
C O N T I N U E D F RO M PAG E 6 | The CARLAWYER
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$OPRVW����SHUFHQW�RI�FDU�EX\HUV�VDLG�social media aided their shopping process
and a similar number said online reviews
affected their choice of dealers according
to a new study by the automotive social
media and reputation management
company Digital Air Strike™.
'LJLWDO�$LU�6WULNH�VDLG�WKH������$XWRPRWLYH�'HDOHUVKLS�6RFLDO�0HGLD�DQG�2QOLQH�5HSXWDWLRQ�6WXG\��FRPSOHWHG�LQ�$SULO��LV�WKH�¿UVW�DXWRPRWLYH�VSHFL¿F�VWXG\�WR�DQDO\]H�WKH�XVH�RI�VRFLDO�media and review sites by car buyers
during the dealership selection process
while concurrently auditing how car
dealerships engage with consumers on
these sites.
The study measured usage trends on
Facebook, Twitter and Google+ while
identifying the top four dealership review
VLWHV�±�(GPXQGV��&DUV�FRP��<HOS�DQG�*RRJOH�5HYLHZV�±�EDVHG�RQ�FRQVXPHU�XVH�DQG�WUDI¿F�
7KH�FRQVXPHU�VWXG\�VXUYH\HG�����car buyers who purchased a vehicle in
WKH�ODVW�VL[�PRQWKV�DQG�IRXQG�WKDW����percent of consumers said social media
sites helped their vehicle purchase
GHFLVLRQ�DQG����SHUFHQW�RI�FDU�VKRSSHUV�said dealership reviews impacted
which dealership they visited when
shopping for a vehicle. Fifty percent said
UHYLHZV�DI¿UPHG�WKHLU�RULJLQDO�FKRLFH�RI�GHDOHUVKLS��ZKLOH����SHUFHQW�VDLG�WKH\�either selected a dealership based on the
reviews or changed their choice after
reading reviews on multiple dealerships.
The dealership audit, which included
����DXWRPRWLYH�UHWDLOHUV�DURXQG�WKH�nation, compared engagement levels
IURP�����GHDOHUVKLSV�WKDW�PDQDJHG�WKHLU�VRFLDO�PHGLD�PDUNHWLQJ�LQ�KRXVH�ZLWK�����WKDW�XVHG�D�YHQGRU�WR�PDQDJH�WKHLU�social media sites and online reputation.
,W�VKRZHG����SHUFHQW�RI�WKRVH�KDQGOLQJ�LW�LQ�KRXVH�GLG�QRW�UHVSRQG�WR�QHJDWLYH�
RQOLQH�UHYLHZV��DQG����SHUFHQW�GLG�QRW�respond to positive reviews.
,Q�DGGLWLRQ�����SHUFHQW�RI�GHDOHUV�PDQDJLQJ�VRFLDO�PHGLD�LQ�KRXVH�XWLOL]HG�³FURZG�VRXUFLQJ´�WHFKQLTXHV��FRPSDUHG�WR����SHUFHQW�RI�WKRVH�ZLWK�D�VRFLDO�media partner, and dealers using outside
vendors had more than double the
number of followers on the top two social
media sites.
³7KLV�JURXQG�EUHDNLQJ�VWXG\�KLJKOLJKWV�the importance of social networks
and review sites in the car buying
SURFHVV�´�'LJLWDO�$LU�6WULNH�FR�IRXQGHU�$OH[L�9HQQHUL�VDLG��³'HDOHUV�ZKR�ZRUN�with a social media partner can gain a
VLJQL¿FDQW�DGYDQWDJH�IURP�LQFUHDVHV�in consumer engagement and related
ZHEVLWH�WUDI¿F�´For more information, visit www.
digitalairstrike.com or www.facebook.
com/digitalairstrike.
STUDY: Most Car Buyers Use Social Media V I S I T W W W. D I G I TA L A I R S T R I K E . C O M O R W W W. FAC E B O O K . C O M / D I G I TA L A I R S T R I K E .
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CARFAX Helps TV Station Take Aim at CurbstonerEditor’s note: Curbstoning – sales
of vehicles by unlicensed dealers – is a national problem that takes advantage of consumers and takes money away from state and local governments as well as legitimate dealers. This report from Memphis television station WMC-TV exposing a local curbstoner and explaining the issue to the public is a direct result of the commitment of vehicle history UHSRUW�SURYLGHU�&$5)$;�WR�¿JKWLQJ�curbstoning.
“We brought the issue to the station’s attention,” CARFAX public relations manager Chris Basso said. “Tennessee is one of the biggest hotbeds for curbstoning, but it’s a nationwide problem. Whenever we hear about curbstoners in a particular area, we work to get the word out about the potential problems with the cars these people are selling and how to avoid them.
“Most curbstoners are selling cars reputable dealers won’t touch – cars with hidden damage or rolled-back odometers or such – because they’re trying to make a quick sale. Anyone buying a used car needs to be wary of not only the car but of who they’re buying it from.”
Basso said CARFAX has contacted other media outlets, including stations in Nashville and Phoenix, with similar tips, as part of the company’s ongoing efforts to help educate and warn consumers and dealers about emerging issues involving used cars in their area.
By Andy WiseAction News 5/WMC-TV
A police report revealed a car buyer
intends to press theft charges against the
son of a woman who is fronting used car
sales from her home for a dealership, a
SUDFWLFH�FDOOHG�³FXUEVWRQLQJ�´%LOO�6XOOLYDQ�¿OHG�D�FRPSODLQW�ZLWK�WKH�
*HUPDQWRZQ��7HQQ���3ROLFH�'HSDUWPHQW�RQ�0D\�����7KH�FRPSODLQW�DOOHJHG�KH�JDYH��������WR�7KRPDV�&ROHPDQ��VRQ�RI�'HERUDK�&ROHPDQ��WR�SXUFKDVH� three vehicles.
:KHQ�WKHLU�GHOLYHU\�ZDV�GHOD\HG��
6XOOLYDQ�SUHVVXUHG�&ROHPDQ�WR�SURGXFH�WKH�FDUV¶�VDOHV�GRFXPHQWV��2QFH�&ROHPDQ�¿QDOO\�SUHVHQWHG�WKH�VDOHV�GRFXPHQWV��Sullivan said they revealed something else.
³7KH�FDUV�ZHUH�QHYHU�SXUFKDVHG�E\�WKHP�RQ�P\�EHKDOI�´�6XOOLYDQ�VDLG��³7KH\�ZHUH�SXUFKDVHG�E\�VRPHERG\�HOVH�´
According to the sales documents, that
³VRPHERG\�HOVH´�ZDV�7KH�$XWR�&RQQHFWLRQ��DQ�DXWR�GHDOHUVKLS�DW������(��%URDGZD\�6W��LQ�:HVW�0HPSKLV��$UN�
Sullivan’s police report alleged
&ROHPDQ�SRFNHWHG�KLV��������DQG�QHYHU�purchased any cars with his money.
7KH�FDUV�WKH�&ROHPDQV�FODLPHG�WR�KDYH�purchased with his money, Sullivan said,
were actually cars they sold on behalf of
7KH�$XWR�&RQQHFWLRQ�³&RUUHFW�´�6XOOLYDQ�DFNQRZOHGJHG��³7KH\�
VSOLW�WKH�SUR¿WV�´7KH�$FWLRQ�1HZV���,QYHVWLJDWRUV�
SLQSRLQWHG�'HERUDK�&ROHPDQ�DV�D�curbstoner when the vehicle history
WUDFNHU�&$5)$;�ZDUQHG�WKDW�XQOLFHQVHG�or unforthcoming auto dealers have agents
SRVLQJ�DV�SULYDWH�VHOOHUV�RQ�&UDLJV/LVW�DQG�LQ�FODVVL¿HG�DGV�³6RPHZKHUH�EHWZHHQ����DQG����SHUFHQW�
RI�>DXWR�VDOHV@�FODVVL¿HG�DGV�DUH�EHOLHYHG�WR�EH�FXUEVWRQHUV�´�&$5)$;¶V�&KULV�%DVVR�VDLG��³7KHVH�DUH�GHDOHUV�SRVLQJ�DV�SULYDWH�sellers who are selling cars that have a lot of
KLGGHQ�SUREOHPV�´&ROHPDQ�KDV�SRVWHG�QXPHURXV�OLVWLQJV�
IRU�XVHG�FDU�VDOHV�RQ�&UDLJV/LVW��DOO�IRXQG�while running searches based on her
cellphone number.
.D\FH�:\DWW�RI�$UOLQJWRQ��7HQQ���DQVZHUHG�RQH�RI�&ROHPDQ¶V�DGV�IRU�D������1LVVDQ�0D[LPD��WKLQNLQJ�&ROHPDQ�ZDV�the vehicle’s private owner putting it up
for sale.
6KH�PHW�&ROHPDQ�DW�&ROHPDQ¶V�home. That’s where the car was stored,
:\DWW�VDLG�After taking a test drive and negotiating
the deal – but failing to run a vehicle
history report or to have the car inspected
±�:\DWW�SDLG��������IRU�WKH�FDU��DFFRUGLQJ�to the paperwork.
,W¶V�ZKHQ�&ROHPDQ�KDQGHG�:\DWW�WKH�
WLWOH�WKDW�:\DWW�UHDOL]HG�VRPHWKLQJ�ZDV�XS�³,�JRW�WKH�WLWOH��DQG�LW�VDLG��µ7KH�$XWR�
&RQQHFWLRQ�¶�´�:\DWW�VDLG�The dealership, owned by Jimmy Smith,
is licensed with the Arkansas State Police
to sell used cars in Arkansas.
But according to the records of the
7HQQHVVHH�0RWRU�9HKLFOH�&RPPLVVLRQ��7KH�$XWR�&RQQHFWLRQ�LV�QRW�OLFHQVHG�WR�VHOO�FDUV��new or used, in Tennessee.
,W�ZDVQ¶W�ORQJ�XQWLO�:\DWW�VWDUWHG�KDYLQJ�WURXEOH�ZLWK�WKH�0D[LPD��7KH�³6HUYLFH�(QJLQH�6RRQ´�OLJKW�VWD\HG�RQ��7KH�UDGLR¶V�power switch malfunctioned. The brakes,
pads, rotors, spark plug and oxygen sensor
had to be replaced.
She nearly paid as much to repair the car
as she did to buy the car.
If she had run a vehicle history report,
she would have discovered The Auto
&RQQHFWLRQ�KDG�'HERUDK�&ROHPDQ�FXUEVWRQH�:\DWW�D�FDU�WKDW�KDG�EHHQ�LQ�DQ�DFFLGHQW�LQ�0LFKLJDQ�1HLWKHU�&ROHPDQ�QRU�7KH�$XWR�
&RQQHFWLRQ�GLVFORVHG�WKH�DFFLGHQW WR�:\DWW�³6R�LW¶V�EHHQ�ZUHFNHG�´�:\DWW�VDLG��³,�
cried and cried and cried about it, but I had
to do what I had to do. I didn’t have a way
RXW�RI�LW�´An undercover producer of The Action
1HZV���,QYHVWLJDWRUV�DQVZHUHG�RQH�RI�&ROHPDQ¶V�DGV�IRU�D�9RONVZDJHQ�-HWWD��7KH�WHVW�GULYH�UHYHDOHG�WKH�³6HUYLFH�(QJLQH�6RRQ´�OLJKW�ZDV�RQ�³7KDW¶V�EHFDXVH�LW¶V�GXH�IRU�DQ�RLO�
FKDQJH�´�&ROHPDQ�VDLG�WR�RXU�SURGXFHU��$�&$5)$;�UHSRUW�UHYHDOHG�QRWKLQJ�RI�concern with the vehicle’s history.
%RWK�WKH�-HWWD�DQG�D�&DGLOODF�&ROHPDQ�was selling outside her home had Arkansas
GHDOHU�WHPSRUDU\�WDJV��:KHQ�RXU�SURGXFHU�DVNHG�DERXW�WKH�RXW�RI�VWDWH�WDJV��&ROHPDQ�admitted she was selling the vehicles for
7KH�$XWR�&RQQHFWLRQ�³>7KH@�EXVLQHVV�LV�RYHU�LQ�$UNDQVDV��DQG�
it just saves all the [document] fees, and it
VDYHV�PH�DERXW���������������GROODUV�SHU�FDU�´�VDLG�&ROHPDQ��ZKR�LV�DOVR�QRW�OLFHQVHG�to sell automobiles in Tennessee, according
to state records.
C O N T I N U E D O N PAG E 1 2
U N L I C E N S E D O R U N FO R T H C O M I N G D E A L E R S H AV E AG E N T S P O S I N G A S P R I VAT E S E L L E R S O N I N C L A S S I F I E D A D S .
IN_0712.indd 10 6/20/12 11:03 AM
IN_0712.indd 11 6/20/12 11:03 AM
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$FFRUGLQJ�WR�WKH�7HQQHVVHH�&RGH�$QQRWDWHG�������������³LW�LV�XQODZIXO�IRU�any person to engage in business … as a
motor vehicle dealer [or] motor vehicle
VDOHVSHUVRQ�����ZLWKRXW�¿UVW�REWDLQLQJ�D�OLFHQVH�DV�UHTXLUHG�LQ�WKLV�SDUW�´³7HQQHVVHH�ODZ�VD\V�WKDW�LI�\RX�VHOO�PRUH�
WKDQ�¿YH�YHKLFOHV�LQ�D�\HDU��\RX�KDYH�WR�KDYH�D�GHDOHU¶V�OLFHQVH�´�%DVVR�VDLG��³7KHVH�are people who are skirting that law,
selling hundreds of cars without getting a
dealer’s license, costing the state and local
GHDOHUV�KXQGUHGV�RI�WKRXVDQGV�RI�GROODUV´�in tax revenue.
&ROHPDQ�UHIXVHG�WR�DQVZHU�TXHVWLRQV�ZKHQ�FRQIURQWHG��6PLWK�DJUHHG�WR�DQ�RQ�camera interview, then abruptly canceled
the interview the next day.
2Q�WKH�SKRQH��KH�VDLG�&ROHPDQ�³LV�P\�agent. She sells cars for me. Sometimes
it’s from her own driveway. Sometimes it’s
from a [drug store] parking lot. She’s just
WU\LQJ�WR�IHHG�KHU�NLGV�´Germantown police department records
revealed another car buyer reported
&ROHPDQ�LQ�'HFHPEHU�������According to the complaint, the buyer
EOHZ�WKH�ZKLVWOH�RQ�&ROHPDQ�DIWHU�KH�VDLG�he witnessed her and her son altering
D�WHPSRUDU\�GULYH�RXW�WDJ�RQ�D�YHKLFOH��&ROHPDQ�WROG�WKH�SROLFH�RI¿FHU�ZKR�ZURWH�
the report that she sold the car on behalf of
6WDU�$XWR�0DUW��LQ�&ROOLHUYLOOH��7HQQ�³1R��VLU�´�6WDU�$XWR�0DUW�RZQHU�'DYLG�
)OHPLQJ�VDLG��³6KH¶V�QHYHU�VROG�IRU�PH��Never had a salesman’s license here. Never
DQ\WKLQJ�´Germantown police determined there
ZDVQ¶W�HQRXJK�HYLGHQFH�WR�FKDUJH�&ROHPDQ�with a crime and decided it was a civil issue.
³,W¶V�D�ORVH�ORVH�VLWXDWLRQ�ZLWK�FXUEVWRQLQJ�´�%DVVR�VDLG��³7KH�VWDWH�ORVHV�money. The [licensed] dealers lose money
and the consumer gets ripped off.
³,I�\RX¶UH�ORRNLQJ�RQOLQH��HVSHFLDOO\�WKURXJK�VLWHV�OLNH�&UDLJV/LVW��\RX�UHDOO\�need to be careful about what you’re
EX\LQJ�´&ROHPDQ¶V�FXUEVWRQLQJ�RSHUDWLRQ�PD\�
be in violation of a Germantown city
RUGLQDQFH�WKDW�SURKLELWV�³UHFHLYLQJ�SHUVRQV�at a residential property for the purpose
of buying, selling, ordering or picking up
SURGXFWV�LQ�FRQQHFWLRQ�ZLWK�D�EXVLQHVV�´³&RGH�FRPSOLDQFH�KDV�KDG�FRQWDFW�ZLWK�
>&ROHPDQ@�LQ�WKH�SDVW�´�VDLG�6WDFH\�(ZHOO��spokesperson for the city of Germantown.
³:H�GLG�SURYLGH�QRWLFH�IRU�XQOLFHQVHG�YHKLFOHV�LQ�WKH�VWUHHW�LQ�1RYHPEHU�RI������EXW�KDYH�QRW�KDG�DQ\WKLQJ�YHKLFOH�UHODWHG�since. In addition, there is no business
OLFHQVH�IRU´�&ROHPDQ¶V�DGGUHVV��
C O N T I N U E D F RO M PAG E 10 | CARFAX Helps TV Station Take Aim at Curbstoner
Used car dealers have become less
aggressive in bidding for inventory at
wholesale auctions in recent weeks, Black
Book vice president and managing editor
5LFN\�%HJJV�VDLG�Beggs noted that the retail market
has backed off slightly and dealers have
gotten less aggressive with bidding
activity for the latest model years. Every
car segment showed rate of decline and
only two truck segments – compact
689V�DQG�IXOO�VL]H�FURVVRYHUV�±�ZHUH�XS�LQ�0D\��³:KLOH�WKHUH�DUH�VHDVRQDOLW\�WUHQGV�
currently taking place in the retail
markets, we’re starting to see hesitance
RI�GHDOHUV�WR�UH¿OO�XVHG�FDU�DQG�WUXFN�LQYHQWRU\�´�%HJJV�VDLG��³6RPH�RI�WKH�rental companies are pushing a few more
models into the market with a lesser
GHPDQG�IRU�WKH�����V�DQG������PRGHOV��thus getting less aggressive bidding
DFWLYLW\�IRU�WKH�ODWHVW�PRGHO�\HDUV�´��
I N D U S T RY C O R N E R
Rising Sales Lift Floorplans5LVLQJ�8�6��QHZ�DQG�XVHG�DXWR�VDOHV�
KDYH�ERRVWHG�GHDOHUVKLS�SUR¿WV�LQ������and are strengthening already solid
SHUIRUPDQFH�RI�GHDOHU�ÀRRUSODQ�DVVHW�EDFNHG�VHFXULWLHV��WKH�¿QDQFLDO�UDWLQJV�service Fitch reported.
'HDOHU�ÀRRUSODQ�DVVHW�SHUIRUPDQFH�has been solid this year, with most
trust performance metrics at some of
the strongest levels seen in the sector.
0RQWKO\�SD\PHQW�UDWHV�DUH�HOHYDWHG�above historical levels, dealer inventory
agings are very low and dealer defaults
are at record lows for most of the trusts.
Given the favorable conditions
currently supporting U.S. auto
dealership networks, Fitch’s outlook for
both asset and ratings performance in
�����LV�VWDEOH��The report also discusses the health
RI�8�6��DXWR�GHDOHUVKLSV�LQ�������including sales levels, expenses and
SUR¿WDELOLW\��DORQJ�ZLWK�GHWDLOLQJ�RWKHU�¿QDQFLDO�GHDOHU�PHWULFV�DQG�RYHUDOO�industry health.
7KH�UHSRUW��³8�6��'HDOHU�)ORRUSODQ�$%6��5REXVW�'HDOHUV�LQ������´�LV�DYDLODEOH�DW�ZZZ�¿WFKUDWLQJV�FRP���
Pace of Dealers Adding Inventory Slows
IN_0712.indd 12 6/20/12 11:03 AM
JULY 2012 C A R L I N E S
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w w w . i i a d a . c o m
Absolute Surety, LLCBlair AshtonP.O. Box 547898Orlando, FL 32854Phone: 855.689.5106
Affordable Computer SystemsIvan Dalewww.acsds.com
800-488-9992
AFCRyan Lewis317.453.1172
Auction AccessRobinson Adams InsuranceDealer BondsTom AdamsDebbie Thompson800-239-1327
Automotive Credit Corp.Tony Stallworth26261 Evergreen Road, Ste. 300South!eld, MI 48076
888-268-1400
Auto Services Co., Inc.Susan WilliamsClayton Morgan800-442-7116
AutoStarSolutionsEdward ViatorPhone: 817.439.6164
autostarsolutions.comautostarsolutions.com
Auto ZoneKevin Kravig317.681.4273
BidzpinShawn Foster1281 Winhenstschel Blvd.West Lafayette, IN 47906Phone: 765.479.0191
Briggs Insurance AgencyTim Briggs4000 W. Lincoln Hwy.Merrillville, IN 46410
219-769-4840
Cars.com175 W. Jackson Blvd., 8th FloorChicago, IL 60604dealers.cars.com800-298-1460
CAR Financial Services, Inc.Thomas Lloydwww.car!nancial.com
!nancial.com859-630-2606
Carsforsale.comAaron OestreichPhone: 605.306.3302
sale.comWebsite: Carsforsale.com
Chase Custom FinanceDon Williams and Mike Smith317-523-4273
Clear Choice Merchant ServicesReno, NVLaurie Gruen, Corporate Analyst, ext. 6881
choice.com
Lorraine Onesian, VP Business Developmen ext. 6880
choice.comwww.myclearchoice.com866-779-4787
Consolidated Automotive Services of IndianaChris Walsh59 East Main Street, Suite NNashville, IN 47448(812) 988-8300
services.com
Consumers InsuranceMike Hogan7830 Edge Manor Ct.Indianapolis, IN 46239317.450.9946
CVR Computerized Vehicle RegistrationJohn Roeder636.447.8351
Dealer TrackDiane Zewalk115 Pohesanut Drive Suite 201Groton, CT 06340
860.448.3177
Diamond Warranty Corp.Jim Limongelli9 N Main StreetPittston, PA 18640800.384.5023
Diversi!ed Marketing Strategies, Inc.Andrea Pearman1330 Arrowhead Ct.Crown Point, IN 46307(219) 226-0300
Donn Wray Attorney at LawStewart & Irwin, P.C.251 E. Ohio St., Suite 100Indianapolis, IN 46204
317-639-5454
Drive1USABruce Norton1512 W. 96th Ave., Suite CCrown Point, IN 46307
219-661-1000
Envirotest SystemsJennifer Kharchaf1171 Breuckman Drive, Suite BCrown Point, IN 46307
888.240.1684
Express Motor Vehicle AdministrationDoug Pillow3960 Southeastern Ave.Indianapolis, IN 46203Phone: 317.322.0020
Frazer Computing, Inc.Michael Frazerwww.frazercomputing.com888-963-5369
GoldStar GPSMark Behne2035 Lakeside CentreKnoxville, TN1-866-655-8825
GWC WarrantyCarmie Fruits, Indiana Representative
-warranty.com317-374-6271
Sales SupportP. O. Box 68Avoca, PA 18641-0068800-482-7357, ext. 767
Heritage-Crystal CleanJim Skelton2250 Point Blvd. Ste. 250Elgin, IL 60123(847) 836-5670
-clean.com
Heritage Financial Acceptance Corp.Curt Holmes121 S. Main StreetElkhart, IN 46516
www.heritageacceptance.net
Insurance ProfessionalsMike Lee317-432-1092
Keystone Insurers GroupFor All Your Insurance NeedsLori Simpson
888-826-0079
Kincaid InsuranceDan Kincaid321 Main StreetRockport, IN 47635812.649.5739
Lincolnway Insurance ServicesDealer Bonds & Garage KeepersGregg St. Germain336 E. Lincoln Hwy.Schererville, IN 46375
insurance.com219.865.2227
Nationwide AcceptanceSub-Prime Financingwww.nac-loans.comBonnie Herden773-777-7600, ext. 1295
Penn Warranty Corp.Jude TumaMichael Roe1081 Hanover St.Wilkes Barre, PA 18706www.pennwarranty.com
pennwarrantycorp.com800-356-9441
Preferred Warranties, Inc.Gregg Reidenbach260-341-6675Guy Loef"er313-283-0114
800-548-1121
Reliable Auto FinanceBrian Chisholm954 28th St. SWGrand Rapids, MI 49509
!nanace.comwww.reliableauto!nance.com
Russel Kobel Insurance100 Tower Drive Suite 120Burr Ridge, IL 60527 708.935.6509
SEAL FINANCEJudy Terrell3830 E. Southport Road # 200Indianapolis, IN 46237
317-497-0473
Security Auto LoansJoe Ruhland4900 Hwy 169 N., Suite 205New Hope, MN(763) 559-5892Joe Ruhland
Sentry InsuranceRandy Dombrowski
sentry.com715-346-7272Mike Donovan
615-210-6344
Shirer Insurance ServicesAuto Owners-Dealer Bonds400 N. Main St.Crown Point, IN 46307Troy and Mari Shirer
219-663-7274
Smart AuctionJeff Kubickiwww.smartauction.biz
auction.biz812-455-7967
Surety Bonds.comMike Patzius1200 Rogers St., Suite CColumbia, MO 65202
Triumph ConsultingJack Haworth1606 N. Delaware St.Indianapolis, IN 46202800-875-3137www.triumphconsulting.net
Vehicle Acceptance Corp.Joyce Butler12800 N. Meridan St. Ste. 400Carmel, IN 46032317.844.2599
VideoTirekicker.comJohn Commorato2413 N. MeridanIndianapolis, IN 46208(317) 466-0321
Wingham & AssociatesGary WinghamP.O. Box 1723Richmond, IN 47375(765) 977-3902
WORKS24Mark Hersch3508 French Park Drive, Suite 1Edmond, OK 73034
440.832.0445
Zurich Insurance Co.800-728-6049
ASSOCIATE MEMBERS IIADA Associate Membership is available to automotive related businesses. Please call 800-310-3112 for more information on Associate Memberships or see our Associate Membership Application in this issue.
18th and Main Autos*Stan HunleyLafayette
Autorama*Bill WareBeech Grove
C. Begley Auto Sales*Charles BegleySpencer
Carsforsale.com*Aaron OestreichSioux Falls
Greenwell Auto Sales*Ron GreenwellMuncie
Integrity Auto Sales*Anthony Dixon Sr.Brownsburg
J & Steve Auto Sales*Steven CarterIndianapolis
Munoz Auto Center*Benito MunozFrankfort
Rocky’s Auto Sales*Rocky StevensonLouisville
AAA AutomotiveWillie WrightHighland
Affordable Auto RentalRichard ShafferSouth Bend
Approval Auto CreditAndrew InabnittMartinsville
Autobarn Sales & LeasingDarlene P"eddererFrancesville
Car Stop of Terre HauteJohn EllisTerre Haute
Corporate Fleet ManagementMarcus DodrillMadison
Cruisin Auto SalesMarc GrayMadison
Curtis Auto SalesRobert CurtisIndianapolis
Del Real Automotive GroupTony Del RealFrankfort
East 30 Motor Co.Mike AdamsNew Haven
First Class Auto SalesDoug and Tina AlveyHebron
Gerton Auto SalesJohn GertonMt. Vernon
H & H Auto SalesAtom HilsmeyerThorntown
H.T.D.Harold DreesThorntown
Mike’s Auto SalesScott KidwellIndianapolis
Rodriguez Auto SalesHenberto RodriguezIndianapolis
Time MotorsRobin RedmanEvansville
Thank you for your membership in Indiana’s trade association for INDEPENDENT DEALERS
The following members have joined* or renewed their membership since our last issue of Car Lines.
A S S O C I AT I O N U P DAT E S
IN_0712.indd 13 6/20/12 11:03 AM
C A R L I N E S JULY 2012
14
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Participants’ Names:
1._____________________________________________________________________Company_________________________________________________________
2._____________________________________________________________________Company_________________________________________________________
3._____________________________________________________________________Company_________________________________________________________
4._____________________________________________________________________Company_________________________________________________________
No. of golfers_____________________ @ $ 95 _______________________________Total Enclosed_____________________________________________________
_____Check or money order included
TOURNAMENT-AWARDS DAY-TRADE SHOW
5HJLVWUDWLRQ�)HH�������SHU�SHUVRQ�����%UHDNIDVW�DQG�UHJLVWUDWLRQ���D�P�'LQQHU�DIWHU�JROI�LQFOXGHG������7HDP�$ZDUGV�WR��VW���QG�DQG��UG�SODFH��ORQJHVW�GULYH��FORVHVW�WR�WKH�SLQ��
ORQJHVW�SXWW������*ROI�FKDLUPHQ���)ULW]�.UHXW]LQJHU�DQG�'DYH�$OOHQ
IIADA GOLF
_____Visa _____ MasterCard Card No._________________________________________________Expiration Date_________________________________________
Name on Card (please print)_________________________________________________Address of Cardholder___________________________________________
Phone____________________________________________________________Card Holder’s Signature__________________________________________________
Participants’ Company:
25CELEBRATING 25 YEA
RS OF SERVICE
1987-2012
PLEASE REGISTER EARLY TO RESERVE YOUR PLACE!! !
IN_0712.indd 14 6/20/12 11:03 AM
JULY 2012 C A R L I N E S
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Platinum – �������,QFOXGHVSponsorship of dinner and driving range Outing registration for foursome
Diamond – �������,QFOXGHVSponsorship of breakfastOuting registration for foursome
Gold – �������,QFOXGHVSponsorship of a beverage cartOuting registration for twosome
Silver- $ 600 IncludesSponsorship of closest to the pin, longest putt or longest drive
%URQ]H�²� ������,QFOXGHVSponsorship of golf hole
______ 3ODWLQXP�������� ______ 'LDPRQG��������� ______ *ROG�������� ______ Silver $600 ______ %URQ]H������ ______ Total
YES! WE WANT TO BE A SPONSOR FOR THE IIADA 25TH ANNIVERSARY GOLF TOURNAMENT-AWARDS DAY-TRADE SHOW. PLEASE INDICATE THE SPONSORSHIP OF CHOICE.
([FHOOHQW�VSRQVRUVKLS�RSSRUWXQLWLHV�DUH�DYDLODEOH�IRU�RXU���WK�$QQLYHUVDU\�*ROI� 7RXUQDPHQW�$ZDUGV�'D\�7UDGH�6KRZ�HYHQW��6HSW����������DW�,URQZRRG�*ROI�&OXE�LQ�)LVKHUV�
Market your company and support the Indiana Independent Automobile Dealers AssociationAll sponsors will be recognized at the tournament, on our website (iiada.com) and in our Car Lines publication
Payment by ______ Check ______ Visa ______ MasterCard ______
Credit Card Number_________________________________________________________________________ Expiration Date __________________________________
Contact Name:______________________________________________________________________________ Organizational Name:______________________________
Address:_____________________________________________________________________________________________________________________________________ City_____________________________________________________________________State___________________ Zip Code___________________________________
Phone __________________________________________________________________Signature____________________________________________________________
GOLF TOURNAMENTSPONSORSHIP OPPORTUNITIES
25CELEBRATING 25 YEA
RS OF SERVICE
1987-2012
PLEASE CALL 800.310.3112 OR EMAIL I [email protected] FOR DETAILS
IN_0712.indd 15 6/20/12 11:03 AM
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16
Formula for Selling in the Dog Days of SummerThe dog days of summer are here. The
time to make hay while the sun was shining
has come and gone.
The typical Buy Here-Pay Here dealer
will sell 40-45 percent of his annual units
LQ�WKH�¿UVW�WKUHH�PRQWKV�RI�WKH�\HDU��+H�ZLOO�also realize about the same percentage of his
DQQXDO�SUR¿W�LQ�WKRVH�WKUHH�PRQWKV�So if you got off to a slow start in 2012,
the dog days of summer could be the only
way to salvage your year. Because we all
know the last three months are not time to
try to make your year.
Being able to sell in the dog days is really
no different than selling in the heydays.
The same four key ingredients to selling
are the same. The only difference is the
focus has to be there.
In the heydays, selling is pretty easy.
Customers have money. You have inventory.
All is right with the world. But come the dog
days, customers have less money. And they
VHHP�WR�EH�KDUGHU�WR�¿QG��7KH�¿UVW��DQG�PRVW�LPSRUWDQW��RI�WKH�
key ingredients to selling in the dog days
is training. Well-trained salespeople can
sell any time of year. You should always
be training your staff, always honing their
skills. Both phone training and basic sales
skills training should be done weekly, at a
minimum.
Work with staff on overcoming objections
– role-playing is a good way to accomplish
that. When it comes to phone training, work
on how to set effective appointments. Lot
WUDI¿F�LV�DW�D�SUHPLXP�GXULQJ�WKH�GRJ�GD\V��so your people had better know how to
effectively handle it.
The second ingredient is appearance.
Now, I’m not necessarily talking about your
employees’ appearance, which should always
be neat and professional, but your overall lot
appearance. The No. 1 reason customers list
as the reason they come in is “drive by.” So if
that is the case, why wouldn’t you want your
lot to look the best in town?
The lot should always be neat and
orderly, not with vehicles facing all four
directions of the compass and then some.
Vehicles should be spaced evenly, with a
good mix of colors and styles.
B E I N G A B L E T O S E L L I N T H E D O G DAYS I S R E A L LY N O D I F F E R E N T T H A N S E L L I N G I N T H E H E Y DAYS .
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A lot party or lot rodeo should be done at
least once a week, if not more. It will really
go a long way to making your lot look fresh.
You should consider the vehicles on your lot
your mannequins and treat them the way
¿QH�GHSDUWPHQW�VWRUHV�WUHDW�WKHLUV��.HHS�them fresh, neat, clean and always ready to
sell. That goes for overall lot appearance as
well. A fresh coat of paint and some weed
killer can do wonders.
Marketing is the next key ingredient.
$JDLQ��ZLWK�WUDI¿F�EHLQJ�DW�D�SUHPLXP��this is the time when repeat and referral
programs really pay dividends. It’s a good
time of year to focus on referrals, not just
with your customer base but with outside
companies and people as well. If you are not
already paying referrals to non-customers,
it’s something you should seriously
consider. I can assure you some, if not all, of
your competitors are.
Marketing also extends to your web
presence. Make sure your website is up
to date, especially if you are displaying
inventory. I was on a dealer client’s website
the other day and he had pictures of some
of his inventory with snow on it.
In addition to the inventory, make sure
all other aspects of your site are up to date.
That includes any advertised specials, about
us sections and employee introduction
sections. You wouldn’t want someone
calling or coming in asking for someone or
something that is no longer there.
The last key ingredient in the dog days
selling formula is advertising. In this very
competitive industry, advertising in some
form or fashion is almost a must. The thing
that makes advertising effective is reaching
the right folks with the right message.
The two most popular media are, of
course, television and radio. There is a
thought people watch less television and
listen to more radio in the summer, but
that is just not the case. Studies have shown
television viewing doesn’t drop off at all
during the summer, and the same goes for
radio listening.
The important thing to remember
about advertising on both those media is
to remember you are not your customer,
so don’t advertise to yourself. Chances
are your customers watch different
television stations and listen to different
radio stations than you do, so make sure
the stations you are on are the ones your
customers are watching and listening to.
Customer surveys from new and existing
customers are the best way to gauge their
entertainment preferences. Simply put,
just ask.
As with marketing, your web presence
is also a way to advertise. The use of your
website, as well as Facebook and even
Twitter can be ways to get your message
out. I wouldn’t necessarily count on those
selling more cars, but they are perfect
ways to advertise new inventory or special
sales promotions.
The formula for selling in the dog days
is the same as selling in the heydays. It
just takes a little more attention to detail.
There are usually fewer opportunities in
the dog days, so capitalizing on them is
much more important.
Remember, the two most important
ingredients in the formula are the two
most inexpensive. Hopefully, you have
the right mix of all the ingredients to keep
the dogs at bay.
BY BRENT CARMICHAELEXECUTIVE CONFERENCE MODERATORNCM ASSOCIATES [email protected]
IN_0712.indd 17 6/20/12 11:17 AM
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18
w w w . i i a d a . c o m
At the recent National Alliance of Buy
+HUH�3D\�+HUH�'HDOHUV��1$%'��'HDOHU�$FDGHP\�LQ�/DV�9HJDV��1,$'$�DQG�1$%'�jointly announced the details of their
LQDXJXUDO�%+3+�&HUWL¿HG�0DVWHU�'HDOHU�training program, scheduled to be held in
September in Dallas.
Though NIADA has been conducting
LWV�VXFFHVVIXO�&HUWL¿HG�0DVWHU�'HDOHU�retail program for several years, this new
LQLWLDWLYH�PDUNV�WKH�LQGXVWU\¶V�¿UVW�%+3+�FHUWL¿FDWLRQ�SURJUDP�
At a very important time, during
which the BHPH industry faces many
challenging legal and regulatory issues,
WKLV�FHUWL¿FDWLRQ�SURJUDP�LV�GHVLJQHG�WR�KHOS�HVWDEOLVK�QHZ�RSHUDWLQJ�DQG�¿QDQFLDO�standards for industry leaders. Participants
in the inaugural training program must
meet certain operational standards,
including, but not limited to:
����Five years of successful operating
performance
����0HPEHUVKLS�LQ�JRRG�VWDQGLQJ�LQ�1,$'$��NABD or both
����+DYLQJ�D�FKLHI�FRPSOLDQFH�RI¿FHU����$I¿UPLQJ�WKDW�DOO�GHDOHUVKLS�RSHUDWLRQDO�
documents and transactional forms
have had a positive legal and compliance
UHYLHZ�IURP�D�TXDOL¿HG�DWWRUQH\����0DLQWDLQLQJ�¿QDQFLDO�VWDWHPHQWV�
prepared in accordance with generally
accepted accounting principles.
In addition, the dealer’s historical
performance must approximate the key
industry benchmarks published annually
by NABD and Subprime Analytics for
debt/equity ratio, allowance for bad
debts, average cash in deal, average gross
SUR¿W�SHU�YHKLFOH�VROG��DYHUDJH�SRUWIROLR�
delinquency, average net loss per charge off
and average default rate.
A complete copy of the most recent
BHPH industry benchmarks can be
downloaded free at www.subanalytics.com
or by obtaining a copy of NIADA’s Used
&DU�,QGXVWU\�5HSRUW�IRU�������IRU�PRUH�information, visit www.niada.com.
The eligibility criteria were established
with an emphasis toward encouraging
compliance with all industry laws and
UHJXODWLRQV��SUXGHQW�¿QDQFLDO�PDQDJHPHQW�and successful operating performance, and
sound systems and processes. Those traits
will distinguish graduates to both capital
providers and their industry peers.
The inaugural session is planned for
������GD\V�DW�D�WUDLQLQJ�VLWH�LQ�WKH�'DOODV�area to be announced in the near future.
The program goal is to provide training
B H P H C E R T I F I E D M A S T E R D E A L E R P RO G R A M S E T T O K I C K O F FBHPH Perspectives
Fastenal, a national distributor of industrial and construction supplies, has introduced an expense reduction program for auto dealerships to save owners time and money related to their shop supplies and essential tools.
The centerpiece is Fastenal’s FAST 6ROXWLRQV��LQGXVWULDO�YHQGLQJ�V\VWHP��7R�date, 8,000-plus machines have been installed to help organizations reduce supply consumption, move the cost of inventory to Fastenal, and increase worker productivity.
To access products, workers enter an ID code and a repair order number, then make a selection. If the request is authorized, the machine dispenses the product and automatically reports the details of the transaction, making workers accountable for what they use. Controls can also be established so that workers only have access to the products (and amounts) needed to do their jobs.
For more information, visit www.fastenal.com.
Fastenal Launches Expense Reduction Program
IN_0712.indd 18 6/20/12 11:03 AM
JULY 2012 C A R L I N E S
19
w w w . i i a d a . c o m
for outstanding operators in the BHPH
industry. As a result of the training and
their commitment to ethical practices and
high business standards, graduates should
become even more successful.
%HFRPLQJ�D�%+3+�&HUWL¿HG�0DVWHU�Dealer is recognition of a dealer’s dedication
to the industry and his or her record of
proven stability, reliability and ethical
business practices.
The instructors include several of the
nation’s leading experts and most successful
operators. The course curriculum provides
interactive training and networking and
will initially include:
����Economic overview, benchmarks and
trends
����Financial management, accounting,
taxes and metrics
����9HKLFOH�DFTXLVLWLRQ�DQG�UHFRQGLWLRQLQJ����.HHSLQJ�YHKLFOHV�UXQQLQJ�DQG�
customers paying
����Sales and marketing strategies
���� Underwriting best practices
����&ROOHFWLRQ�EHVW�SUDFWLFHV�����0D[LPL]LQJ�UHFRYHULHV����Legal and compliance
����Systems/processes/technology
����0XFK��PXFK�PRUHIt is contemplated that changes will
be made to the curriculum in the future
based on input from the participants. The
curriculum is designed for graduates to
enhance their management skills, improve
WKHLU�DGYHUWLVLQJ�DQG�¿QDQFLDO�PDQDJHPHQW��build more positive consumer relationships
and stay compliant.
Graduates will receive their BHPH
&HUWL¿HG�0DVWHU�'HDOHU�GHVLJQDWLRQ�DQG�XVH�RI�WKH�&0'�VHDO�IRU�D�SHULRG�RI����PRQWKV��(DFK�&0'�JUDGXDWH�PXVW�VXEVHTXHQWO\�REWDLQ�D�PLQLPXP�RI����FUHGLW�KRXUV�RI�1,$'$�1$%'�DSSURYHG�FRQWLQXLQJ�HGXFDWLRQ�GXULQJ�HDFK����PRQWK�SHULRG�LQ�
RUGHU�WR�UHWDLQ�WKH�GHVLJQDWLRQ��$W�OHDVW����hours of continuing education opportunities
will be offered throughout the year.
It is expected that some of these hours
can be earned by attending the NIADA
&RQYHQWLRQ�DQG�1$%'�WUDLQLQJ�HYHQWV��1$%'�ZLOO�KROG�DQ�(DVW�&RDVW�1DWLRQDO�%+3+�&RQIHUHQFH�LQ�$WODQWD�RQ�2FWREHU�������������7KH�%+3+�EXVLQHVV�UHTXLUHV�VSHFLDOL]HG�
training and this program offers advanced
sessions focused on achieving operating and
¿QDQFLDO�H[FHOOHQFH��2SHUDWRUV�ZKR�VWULYH�WR�distinguish themselves from their industry
peers are urged to participate.
2SHUDWRUV�LQWHUHVWHG�LQ�SDUWLFLSDWLQJ�FDQ�obtain an application by calling NIADA at
���������������RU�HPDLOLQJ�JHRUJLD#QLDGD�FRP��E\�FRQWDFWLQJ�1$%'�DW�����������������RU�E\�HPDLOLQJ�-RH�.HDUVH�DW�MRH#EKSKLQIR�FRP��6SDFH�LV�OLPLWHG��
.(11(7+ �6+,/621 � �&3$ � � ,6 �35(6,'(17 �2) �68%35,0(�$1$/< 7 ,&6 � �:::�68%$1$/< 7 ,&6 �&20� � �$ �&2168/7 ,1*�&203$1<�7+$7 �3529,'(6�3257)2/,2 �$1$/<6,6 �6(59,&(6 �$1'�&86720�&5(',7 �6&25,1*�62/87 ,216� �$1'� ,6 �35(6,'(17 �$1'�)281'(5�2) �7+( �1$7 ,21$/�
$// ,$1&( �2) �%8< �+(5(�3$< �+(5( �'($/(56� �:::�%+3+,1)2�&20� � �+( �&$1�%( �5($&+('�$7 �.(1#.(16+,/621 �&20� �83&20,1*�1$%'�C O N F E R E N C E S I N C LU D E T H E E A S T C OA S T B H P H C O N F E R E N C E AT T H E G E O RG I A I N T E R N AT I O N A L C O N V E N T I O N C E N T E R I N AT L A N TA O N
2&72%(5��� ��� � ����� � �)25�025(� ,1)250$7,21 � �9 ,6 ,7 �:::�%+3+,1)2�&20�25�&$// � ���� � ���� ����� ��
BY KENNETH SHILSON
IN_0712.indd 19 6/20/12 11:03 AM
C A R L I N E S JULY 2012
20
w w w . i i a d a . c o m
C O N T I N U E D O N PAG E 2 2
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.
³7KHUH¶V�D�ZKROH�SURFHVV�LQ�RSHUDWLQJ�D�VHUYLFH�GHSDUWPHQW�´�said Lescota, the longtime instructor
IRU�1,$'$¶V�&HUWL¿HG�0DVWHU�'HDOHU�SURJUDP��³'HDOHUV�WKLQN�WKH\�DUH�selling service when what they’re
really doing is selling time.
³$�GHDOHUVKLS�RQO\�KDV�VR�PDQ\�hours in the day to operate. So a dealer
should take the number of techs he
has and multiply that number by the
number of hours in operation. So a
GHDOHU�PLJKW�KDYH����KRXUV�D�GD\�RI�WLPH�WR�VHOO��)URP�D�SUR¿W�VWDQGSRLQW��it doesn’t matter if the dealer is
FKDQJLQJ�RLO�RU�GURSSLQJ�DQ�HQJLQH�´Doug and Nyla Borgmann, owners
RI�&UHLJKWRQ�$XWR��,QF���LQ�&UHLJKWRQ��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.
³2IIHULQJ�VHUYLFH�ZRUNV�IRU�XV�´�
'RXJ�%RUJPDQQ�VDLG��³:H�DGYHUWLVH�on our store sign. Service accounts
IRU�EHWZHHQ����DQG����SHUFHQW�RI�EXVLQHVV��2XU�PHFKDQLF�KDV�EHHQ�ZLWK�XV�VLQFH�WKH�HDUO\�����V��+H¶OO�UHWLUH�LQ�IRXU�RU�¿YH�\HDUV�DQG�WKDW�KDV�PH�ZRUULHG��5HSODFLQJ�KLP�ZLOO�EH�KDUG��2XU�ERG\�PDQ�KDV�EHHQ�ZLWK�XV�IRU�about three years. Before getting him,
we had a hard time getting someone
IXOO�WLPH�WR�GR�RXU�ERG\�ZRUN�´-�5��:HVWEURRN��RZQHU�RI�7\UR�
$XWR�6DOHV�LQ�%D\�&LW\��7H[DV��KDV�been offering service at his store
VLQFH�������+H�GRHV�RXWVLGH�ZRUN�LQ�addition to working on the cars of
customers, but he doesn’t advertise.
He depends on word of mouth.
:HVWEURRN�KDV�NHSW�KLV�WHFKQLFLDQ�for years, operating on the theory that
it’s easier to keep the person you have
KDSS\�WKDQ�JR�RXW�DQG�¿QG�QHZ�SHRSOH�Staff is a key component to offering
a good service department.
Getting good help was one of
WKH�UHDVRQV�5DQG\�<DWHV��RZQHU�RI�<DWHV�0RWRUV�LQ�*HULQJ��1HE���closed his service center.
<DWHV�LV�D�WKLUG�JHQHUDWLRQ�GHDOHU��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.
³:H�JRW�ULG�RI�RXU�ROG�VHUYLFH�FHQWHU��PXVW�EH�DURXQG�QLQH�\HDUV�DJR�´�<DWHV�VDLG��³,W�ZDV�KDUG�JHWWLQJ�DQG�NHHSLQJ�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
KDYH�WR�VWDUW�WKH�SURFHVV�DOO�RYHU�DJDLQ�´<DWHV�VDLG�KH�UHDOL]HG�KH�ZDV�EHWWHU�
off if he stuck to what he did best –
sell cars. Now he sends his cars to
EH�¿[HG�E\�SHRSOH�ZKR�GR�ZKDW�WKH\�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.
³,I�WKH�PHFKDQLFV�DUHQ¶W�EXV\�DOO�WKH�time, then they aren’t making as much
PRQH\�DV�WKH\�FRXOG�EH�´�<DWHV�VDLG��³,W�¿QDOO\�FDPH�WR�WKH�SRLQW�ZKHUH�LW�EHFDPH�WRR�PXFK�ZRUN�IRU�PH�WR�¿QG�work for them and for myself. Now I
have less headaches just selling the cars
DQG�IDUPLQJ�DQ\�PHFKDQLFDO�ZRUN�RXW�´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
ZLWK�D�OLIW�DQG�VRPH�ZUHQFKHV��&DUV�QRZ�DUH�FRPSXWHUL]HG��DQG�GHDOHUV�DQG�VKRS�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
UHÀHFWV�D�UHDOLW\�RI�RSHUDWLQJ�D�VHUYLFH�department – it’s not easy. But, he
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
IN_0712.indd 20 6/20/12 11:03 AM
IN_0712.indd 21 6/20/12 11:04 AM
C A R L I N E S JULY 2012
22
w w w . i i a d a . c o m
added, the payoff can be tremendous
when the job is done right.
³,W¶V�DOZD\V�D�FKDOOHQJH�WR�JHW�JRRG�WHFKQLFLDQV�´�/HVFRWD�VDLG��³6R�,�VXJJHVW�WKDW�GHDOHUV�JR�WKH�technical schools and start grooming
technicians before they even graduate.
Also, you have to give someone a
UHDVRQ�WR�VWD\�DW�\RXU�GHDOHUVKLS�´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.
³:KHQ�,�KHDU�WKDW�D�GHDOHU�FDQ¶W�NHHS�D�WHFKQLFLDQ��P\�WKRXJKWV�¿UVW�UXQ�WR�him not getting either enough work
RU�HQRXJK�PRQH\�´�/HVFRWD�VDLG��³$QG�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
WRGD\¶V�FRPSXWHUL]HG�FDUV��D�GHDOHU�will end up having to spend a lot of
money trying to keep technicians.
³3HRSOH�OLNH�WR�ZRUN�LQ�FRPIRUWDEOH�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
ZKHUH�WKH\�IHHO�PRVW�FRPIRUWDEOH�´Having a service department is a full
commitment, Lescota said. And getting
good technicians is a competitive sport
EHWZHHQ�GHDOHUV��0D\EH�WKDW�WHFK�OHIW�WR�go to a franchise operation because the
boss there promised to send him to an
$6(�FHUWL¿HG�SURJUDP��ZKHUH�WKH�WHFK�could improve his skill set. Independent
dealers should consider similar actions.
%LOO�(OOLII��RZQHU�RI�(OOLII�0RWRUV�in Harlingen, Texas, is an example
of a dealer who is committed to
his service department. His lot
provides a full variety of services,
DQG�KH�ORQJ�DJR�UHDOL]HG�WKDW�LQ�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
RI�VHYHQ�VHUYLFH�ED\V�DQG����SHRSOH�working them. He advertises in print
and on the signage around his lots.
+H�VDLG�¿QGLQJ�TXDOL¿HG�SHRSOH�LVQ¶W�WKDW�KDUG��)LQGLQJ�TXDOL¿HG�SHRSOH�ZKR�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,
(OOLII�VDLG��:KLOH�WKH\¶UH�JHWWLQJ�WKHLU�car worked on, many of his service
customers will wander around the lot
DQG�WDNH�D�ORRN�DW�LQYHQWRU\��0D\EH�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
DFFRXQWV�IRU�DERXW����SHUFHQW�RI�KLV�total business. He said some of his
IHOORZ�GHDOHUV�GRQ¶W�UHDOL]H�WKDW�D�VHUYLFH�department has to be able to make it on
its own. It shouldn’t be a loss leader.
Additionally, he sees dealers
DFWXDOO\�VKRUW�FKDQJLQJ�WKHPVHOYHV�when it comes to pricing their cars.
A dealer might, for example, put
�����ZRUWK�RI�UHFRQGLWLRQLQJ�LQ�D�FDU�KH�ERXJKW�IRU��VD\����������:KHQ�it comes time to price the car, he’ll
ZDQW��������SUR¿W��6R�KH¶OO�SULFH�WKH�YHKLFOH�DW���������(OOLII�VDLG�
That’s a mistake. Any work put
into a vehicle using the dealership’s
own service department should be
UHÀHFWHG�SRVLWLYHO\�LQ�WKH�SULFH�RI�WKH�YHKLFOH��,I������RI�ZRUN�ZDV�SXW�LQWR�the car, that should translate into
DGGLQJ��VD\�������WR�WKH�EDFN�HQG�value of the vehicle. So that car should
EH�SULFHG�DW���������QRW��������³$V�DQ�RZQHU��\RX�KDYH�WR�SXW�WKH�
money in to develop the infrastructure
needed to run a good service
GHSDUWPHQW�´�(OOLII�VDLG��³7KDW�PHDQV�having the latest diagnostic equipment.
But if you charge right for your services,
\RX�ZLOO�DOZD\V�FRPH�RXW�DKHDG�´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
GR�HYHQ�PRUH��:KHQ�D�FXVWRPHU�EULQJV�in a car, a dealer can glean all sorts
of information about the customer.
,W¶V�EXLOW�LQ�PDUNHW�UHVHDUFK�³7KH�VPDUW�GHDOHU�VKRXOG�QRZ�NQRZ�
DOO�VRUWV�RI�WKLQJV�DERXW�WKDW�FXVWRPHU�´�/HVFRWD�VDLG��³7KH�GHDOHU�VKRXOG�NQRZ�how that service customer uses his car.
Does he baby it or does he really run it
WKURXJK�WKH�ULQJHU�DQG�ZHDU�LW�RXW"�:LWK�that knowledge, the dealer can better
help the customer make an informed
decision on the best vehicle to buy when
LW�FRPHV�WLPH�WR�JHW�DQRWKHU�FDU�´By having a complete service
department, a dealer can get a
customer used to bringing his vehicle
WR�KLV�GHDOHUVKLS��1HHG�DQ�RLO�FKDQJH"�Bring the car to good old Joe’s. In an
DFFLGHQW"�+DYH�WKH�FDU�WRZHG�WR�-RH¶V��1HHG�VRPH�HQJLQH�ZRUN"�*R�WR�-RH¶V��³7KHUH�FRPHV�D�WLPH�LQ�HYHU\�FDU¶V�OLIH�
ZKHQ�LW�EHFRPHV�FRXQWHU�SURGXFWLYH�to keep putting more money in that
YHKLFOH�´�/HVFRWD�VDLG��³,I�\RX�KDYH�D�good relationship with your customers,
and they bring their cars to you for
service, you can tell that customer
ZKHQ�LW¶V�WLPH�WR�JHW�D�QHZ�FDU�´A service department can also
KHOS�%X\�+HUH�3D\�+HUH�GHDOHUV�ZLWK�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
JHW�¿[HG�DQG�WKH�FRVW�RI�UHSDLUV�FDQ�be added to the payment schedule.
$�FXVWRPHU�PLJKW�QRW�KDYH������on him right then and there, but
he can usually make his payments
LI�WKDW������LV�VSUHDG�RXW�RYHU�WKH�rest of the payment schedule.
³$�JRRG�VHUYLFH�GHSDUWPHQW�JLYHV�GHDOHUV�FRQWURO�´�/HVFRWD�VDLG��³,W�JLYHV�the customer a reason to keep coming
back to you. But if you’re going to have a
VHUYLFH�GHSDUWPHQW��\RX�FDQ¶W�JR�LQ�KDOI�hearted. As they say in poker, you have to
go all in – but the rewards can be huge.
³7KHVH�GD\V��GHDOHUV�QHHG�HYHU\�edge they can get. Now more than
ever, dealers who don’t keep up, fall
EHKLQG�DQG�JR�RXW�RI�EXVLQHVV�´�
BY JIM STICKFORD
C O N T I N U E D F RO M PAG E 21 | 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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Payment by: � �Visa �MasterCard Credit Card Number: ______________________________Expiration Date: __________________________________
______________________________________________________________________________________________
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It is important to me to be recognized as a professional! Enclosed are my annual dues of $275 to make sure that my business has all the advantages IIADA/NIADA Inc. provides to put me at the forefront of my profes-sion. By completing this form, I agree to abide by the Code of Ethics. Also, I am consenting to and giving ,,$'$�1,$'$�,QF���LWV�DIÀOLDWHV�DQG�VXEVLGLDULHV��P\�SHUPLVVLRQ�WR��XQWLO�,�JLYH�ZULWWHQ�QRWLFH�WR�GLVFRQWLQXH��FRQWDFW�PH�DQG�SURYLGH�LQIRUPDWLRQ�WR�PH�DW�WKH�PDLOLQJ�DQG�HPDLO�DGGUHVVHV��WHOHSKRQH�DQG�ID[�QXPEHU�V��,�have provided.
This is our personal invitation to you to join the State and NationalIndependent Automobile Dealers Professional Associations
Note: 25% of dues are non-deductible
Please send application
Indiana Independent Automobile Dealers Associations
The IIADA Has the Independent
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2012 IIADA MEMBER auction coupons
SAVE $100
3URJUDPV�IRU�([WUD�3UR¿W��'HDOHU�%RQG�DW�0HPEHU�5DWHV��'HDOHU�,QVXUDQFH��+HDOWK�,QVXUDQFH��)RUPV��)LQDQFLQJ��6RIWZDUH��,,$'$�+HOS�'HVN��1DWLRQDO�'HDOHU�1HWZRUN�6NLS�7UDFLQJ�&RQWDFWV��&ROOHJH�6FKRODUVKLSV��3UHVFULSWLRQ�'UXJ�&DUG��1DWLRQDO�'HDOHU�1HWZRUN
Publications��&DU�/LQHV�3XEOLFDWLRQ��8VHG�&DU�'HDOHU�0DJD]LQH��)HGHUDOO\�5HTXLUHG�6DIHJXDUGV�3ROLF\�'RFXPHQW��)HGHUDOO\�5HTXLUHG�5HG�)ODJV�5XOHV�3ROLF\�'RFXPHQWV��,56�$XGLW�7HFKQLTXH�*XLGH�)RU�WKH�,QGHSHQGHQW�8VHG�&DU�'HDOHU��&XUUHQW�,QGXVWU\�,QIRUPDWLRQ��/HJLVODWLYH�$OHUWV��1,$'$�$QQXDO�0DUNHW�$QDO\VLV
Professional Development��&HUWL¿HG�0DVWHU�'HDOHU�3URJUDP��)UHH�$FFHVV�WR�1,$'$�WY�7UDLQLQJ�DW�<RXU�%XVLQHVV��$FFHVV�WR�,QGHSHQGHQW'HDOHU�FRP�ZKHUH�GHDOHUV�JR�IRU�DQVZHUV��1,$'$�0HPEHUVKLS�DQG�:LQGRZ�'HFDO��,,$'$�³6\PERO�RI�,QWHJULW\´�/RJR�DQG�:LQGRZ�'HFDO� ��1,$'$�$QQXDO�&RQYHQWLRQ�DQG�7UDGH�6KRZ��&RGH�RI�(WKLFV
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For $275 You Get Membership In Both IIADA and NIADA
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w w w . i i a d a . c o m
BY CHIP ZYVOLOSKICHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.
:KHQ�,�DWWHQG�LQGXVWU\�HYHQWV��,�HQMR\�meeting dealers and hearing their takes
on current challenges and trends facing
the industry.
2QH�WRSLF�WKDW�KDV�FRPH�XS�UHFHQWO\�LV�leasing. I have heard a number of dealers
comment on how they would like to expand
their dealership and start leasing vehicles.
:KLOH�WKDW�PD\�VRXQG�OLNH�D�QDWXUDO�VWHS�LQ�growing a business, dealers must consider
the differences between selling and leasing.
7R�EH�FOHDU��E\�³OHDVH�´�,�PHDQ�D�FRQWUDFW�allowing a customer to use your vehicle for
D�SHULRG�RI�WLPH��PLQLPXP��IRXU�PRQWKV���At the end of the lease, the customer
returns the vehicle and doesn’t owe you any
more money as long as the vehicle has only
reasonable wear and tear and was driven no
more than the agreed mileage.
If there is an option to purchase, the
option price bears some relation to the
vehicle’s expected market value at the time
the option is exercised. In other words, the
lessee doesn’t have the option to purchase
IRU����EHFDXVH�WKDW�ZRXOG�UHDOO\�EH�D�VDOH��disguised as a lease.
Adding leasing to an independent
Look Before You Leasedealership might sound simple. You’re
already arranging loans and payments for
the vehicles you sell, so why not expand
\RXU�LQ�KRXVH�¿QDQFLQJ�WR�RIIHU�FXVWRPHUV�DQRWKHU�RSWLRQ"
But it’s not as easy as it looks. Here are key
areas to consider when making your decision.
Licensing:�0DNH�VXUH�\RXU�OLFHQVH�IRU�selling vehicles also allows you to lease
vehicles. Your current license might not be
EURDG�HQRXJK�WR�DXWKRUL]H�OHDVLQJ��Insurance: :KHQ�\RX�VHOO�D�FDU��WKH�WLWOH�
is transferred to the buyer. You focus on
UHFHLYLQJ�WLPHO\�SD\PHQWV�DQG�FRQ¿UPLQJ�WKH�EX\HU�KDV�VXI¿FLHQW�LQVXUDQFH�WR�SURWHFW�\RXU�security interest in the vehicle. You probably
have property and liability insurance to
protect your inventory and sales.
However, when a dealer leases a car, he
still owns it. If the vehicle is involved in an
accident, you might be subject to liability as
the owner. As part of researching a leasing
operation, meet with your legal counsel and
insurance carrier to make sure you protect
against liability exposure with appropriate
insurance coverage.
Pricing: Determining the sales price
of a vehicle is pretty straightforward. You
know your costs to purchase and prepare
WKH�YHKLFOH�IRU�VDOH��VDOHV�FRVWV�DQG�SUR¿W�margins, and sell the vehicle for more than
your costs. You know at the time of sale
whether you are making money on the deal.
:LWK�D�OHDVH��WKH�FDOFXODWLRQV�DUH�PRUH�complicated. It might be easy to determine
what the vehicle is worth today, but how
do you know what it will be worth when
the lease is up, say, two or three years from
QRZ"�7KDW�GHSHQGV�RQ�IDFWRUV�VXFK�DV�KRZ�many miles it will be driven and how well it
is maintained.
There are also unknown variables.
:KDW�LI�JDV�SULFHV�ULVH�GUDVWLFDOO\�DQG�WKH�YHKLFOH�LV�D�JDV�JX]]OHU"�7KDW�FRXOG�LPSDFW�the market value at the end of the lease
�UHVLGXDO�YDOXH���,Q�PRVW�FRQVXPHU�OHDVHV��the dealer is on the hook if the residual
value is less than predicted.
You won’t really know if you’re making
PRQH\�RQ�D�OHDVH�XQWLO�\RX�¿QG�RXW�KRZ�well you predicted the residual value. You
might be two or three years into the lease
SURJUDP�EHIRUH�\RX�UHDOL]H�\RX¶YH�VHW�\RXU�residual values too high – and by then it’s
too late.
Documentation and disclosures: You can’t just modify a retail sales contract
to make it a lease. If you are planning
to include leasing, you must make sure
your documents meet state and federal
consumer lease requirements.
7KH�IHGHUDO�&RQVXPHU�/HDVLQJ�$FW�DQG�LWV�LPSOHPHQWLQJ�5HJXODWLRQ�0�DUH�WKH�lease disclosure equivalents of the Truth in
/HQGLQJ�$FW�DQG�5HJXODWLRQ�=�IRU�FRQVXPHU�OHQGLQJ��5HJ�0�UHTXLUHV�GHDOHUV�WR�SURYLGH�D�JUHDW�GHDO�RI�VSHFL¿F�SULFLQJ�LQIRUPDWLRQ�LQ�OHDVH�FRQWUDFWV��0DQ\�VWDWHV�UHTXLUH�additional disclosures and consumer
protections. As part of your leasing startup,
you will need to create a unique document
set of disclosures and contracts.
Taxes: In a lease you retain ownership,
so you might roll your sales taxes to
purchase the vehicle into your costs and
lease calculations, but you might also
need to collect use or other taxes on the
payments throughout the lease term.
&RQWDFW�\RXU�DFFRXQWDQW�DQG�RU�WKH�VWDWH�to understand your tax obligations and
how they differ for leases.
Collections: If a buyer doesn’t make
timely retail contract payments, you can
repossess the car. Fear of losing the car can
help motivate a buyer into making past due
payments. In a lease, the lessee doesn’t own
the car and may expect to return it and walk
away at the end. That might make it a little
easier for the lessee to emotionally handle
repossession, but it might mean the lessee
isn’t afraid of having the car repossessed
and isn’t as motivated to make past due
SD\PHQWV��$V�ZLWK�D�¿QDQFHG�VDOH��RQFH�\RX�repossess a vehicle, the lessee has even less
motivation to pay any balance still due.
If a car is returned with wear or damage
beyond what’s agreed on in the lease, it
FDQ�EH�GLI¿FXOW�WR�FROOHFW�PRQH\�WR�FRYHU�those costs. You can use the lessee’s
damage deposit, so make sure you set it at
a practical amount – it might be the only
money you end up recovering for excess
wear and tear.
These are only some issues to consider
when starting a lease program. You can
identify more by simply reading a motor
vehicle lease contract.
The differences between selling
and leasing are dramatic and can’t
be overlooked. Your operations and
compliance can be affected by the type of
transaction, the vehicle
and the state in which you
are doing business.
C O M P L I A N C E OV E R D R I V E
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