April SDADA Column

The theme of this column is government regulation and how it continues to impact every facet of our business.  You will find below three more intrusions: one in advertising, one in service and one in the finance office.

In March, I attended an NADA Public Affairs meeting that really got my attention. In addition to the Tesla discussion (see my column in last month's SDADA bulletin), we learned that the Consumer Finance Protection Bureau (CFPB) has indirect lending through dealerships square in its bull's-eye. With the way the profits are distributed in most new vehicle stores, that should scare the hell out of us!

Lat month, the CFPB released a bulletin that claims indirect lending through dealerships may result in minorities paying more for auto loans. Though dealers are exempt from CFPB oversight, auto lenders are not. So the CFPB’s guidance could drastically change how auto finance sources compensate dealers for arranging auto loans. In other words, banks could get rid of finance reserve.

It would be very interesting to see the methodology by which the CFPB has come to this conclusion. They are not accusing anyone of intentional discrimination. The CFPB issued its guidance based on a theory called disparate impact. If minorities end up paying more for credit than non-minorities in the same credit tier, then it is considered unintentional discrimination. But how does CFPB determine disparate impact exists in today’s marketplace?

Disparate impact can only be proven through a statistical analysis of past transactions, but the CFPB has not revealed how it is conducting its analysis or what data it’s relying upon. There is also no indication that the Bureau has studied how moving to a “flat fee” compensation method would impact the marketplace.
We know that dealer-assisted financing—which is optional—increases access to and reduces the cost of credit for millions of Americans. Our customers overwhelmingly choose dealer-assisted financing because it’s convenient and competitive.

Before this consumer-friendly model is disrupted, the CFPB should explain how it is conducting its analysis. The Bureau also should demonstrate the effect flat fees would have on today’s intensely competitive auto financing market.

The regulatory beast that is the federal government continues to extend its ugly tentacles into every facet of our business and our lives. This is an issue that’s not likely to go away, so stay tuned.

FTC Staff Revises Online Advertising Disclosure Guidelines 

Our second example of intrusive government regulations is the Federal Trade Commission's release of a  new guidance for mobile and other online advertisers that explains how to make disclosures clear and conspicuous to avoid deception. Updating guidance known as Dot Com Disclosures, which was released in 2000, the new FTC staff guidance, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, takes into account the expanding use of smartphones with small screens and the rise of social media marketing. It also contains mock ads that illustrate the updated principles. Like the original, the updated guidance emphasizes that consumer protection laws apply equally to marketers across all mediums, whether delivered on a desktop computer, a mobile device, or more traditional media such as television, radio or print.

Connecticut Body Shop Faces More Than $50,000 in OSHA Fines

Finally, if you don't do what "Big Brother" wants you to, this is what happens. Hoffman Auto Body Shop has been cited by the U.S. Department of Labor’s Occupational Safety and Health Administration for nine alleged violations of workplace safety standards at its Connecticut Avenue facility in East Hartford. The auto body repair shop faces proposed fines of $54,300. OSHA’s Hartford Area Office began their inspection on Dec. 6, 2012, to verify correction of hazards cited during a 2011 inspection. In the 2012 inspection, OSHA identified hazards similar to those cited during the 2011 inspection. Specifically, equipment and materials, some of it flammable, were stored near paint spray booths and electric panels. The stored materials limited access to extinguish potential fires, presented fire and shock hazards and impeded cleaning around the booths, which allows potentially combustible materials to accumulate.

Charred to Perfection

In the spring of 2007, we did a backyard project that included a new wood fired pizza oven. I love outdoor cooking so this addition was right in my wheelhouse. I couldn't wait to start making pizza in the new oven...and so I did.

Looking back now, I made some awful pizza. The fact that people ate it and I actually got some positive reinforcement is a testimony to making them wait to eat and serving lots of beer while they're waiting!

My last several efforts, however, have shown some real promise. I recently made six pizzas for my daughter's 17th birthday party. Teenagers will eat ANY pizza (including the frozen stuff served on a cardboard crust), so I let their compliments go in one ear and out the other.

But I ate a couple slices and they were pretty good (if I say so myself!). I am becoming particularly fond of the chicken pesto we now make.

Since a picture is worth a thousand words, I thought I would post some photos of the most recent effort:

This is a photo of several crusts ready to go. I tried several different recipes (including a whole wheat crust) before I finally landed on this more traditional recipe. The secret here is the flour. My crusts were always tough and chewy until I bought Antico Molino Caputo pizza flour. It is used in most Pizza Napoletana restaurants. This special finely ground flour yields a tasty crisp crust with a moist interior.

The next important ingrediant is a hot oven. You can see my fire here is about 800 degrees. I like to cook in a 700 degree oven. That will cook the pizza in 90-120 seconds. It takes a good hour to 90 minutes to get the oven to this temperature. The roof of the oven is white and the flame will peek out the top of the mouth of the oven. This fire is ready to go!

Here is a cheese pizza (the kids' favorite) cooking. It needs to be turned about 4 times during the 90-120 seconds that it is cooking. I like to finish the pie off with the "Jimi Hendrix" method. I take the pizza peel and "Kiss the Sky" (hold it about 5 inches from the top of the oven) to brown the cheese across the entire pie.

Here is a pizza after about one minute in the oven. It is a little black on the near side (too many photos and not enough turning of the pie!). "Charred to Perfection."

Here is a chicken pesto pizza in the oven. Time to put the camera down and start spinning the pizza!

Here is a chicken pesto pizza still on the peel and ready to be sliced and consumed.

Here is another chicken pesto pizza. It has been sliced and it appears someone got a piece before I got my picture!

While I have found that red wines go pretty well with pizza (cab with cheese pizza, a big zin with pepperoni, pinot noir with the chicken pesto, etc.), nothing goes with pizza like beer. For me, the hoppier the beer, the better it compliments the pizza.

So after six years, many experiments and some undeserved compliments, my wood-fired pizza is finally ready for "prime time". I'm still making them wait and serving plenty of beer while they wait, but now the pizza is worth the wait as it is "charred to perfection"!

March SDADA Column

I hope you have been following the electric-car manufacturer Tesla Motors' battle with dealer associations in Massachusetts and Minnesota over its retail model. Tesla is aggressively lobbying policymakers, reaching out to fans to foster public support and even countering with its own franchise law proposals. 

The Minnesota Auto Dealers Association is opposing Tesla's market entry because the California-based automaker wants to sell cars directly to consumers without using local franchisees like other manufacturers do. The company plans to open a store at Mall of America and a service center in Edina, MN.

MADA recently recently withdrew a bill at the Minnesota Legislature that would have clarified the state's franchise law. Instead, it's now bracing for a court battle.

Do I think Tesla Motors will come to South Dakota to threaten our state franchise law? No, not yet. But the money they spend fighting franchise laws in other states could serve to weaken them and make all dealers more vulnerable. It is fair to assume that Tesla is not spouting positive remarks about franchised dealers as they attempt to dismantle our franchise laws. 

The franchised dealer model has been proven many times over to be the most efficient model for the sales and service of new vehicles. Dealers have been concerned about manufacturers and distributors owning dealerships for a long time. This makes publicizing the benefits of the franchise system a top priority for NADA and state dealer associations.

I hope you're following this because I can promise you that your manufacturer is!!
Dealer Operations Brings Many new Offerings
One of my committee assignments this year is Dealership Operations. Not only does Dealer Ops have perhaps the widest reach in NADA, it probably offers you the most direct value for your membership.

NADA University falls under Dealer Ops and NADA U has been busy! They are currently rolling out several new products and services that you need to be aware of:

NADA University Online Launches ‘My Career Path’ to Facilitate Training

The new “My Career Path” for dealership employees features job-specific training recommendations, links to relevant content from NADA University and tracking capabilities for a growing list of job positions. Career paths are organized into six areas of training, which includes core courses, dealership basics, marketing and operations, legal and regulatory, customer relations and employee relations. Career paths are now available for the general manager, new- and used-vehicle sales consultant, service advisor, F&I manager, service manager, sales manager and parts manager, with more on the way. Sign into www.NADAuniversity.com to take a look and begin.

Special Ops Training Programs in Academy, Allows Managers to ‘Zero In’ on Departments

If you are looking for top notch training for key personnel, NADA University has introduced an all-new Special Ops training program that allows dealership managers to hone their skills for specific departments by attending individual weeks of NADA-ATD Academy programs. The training focuses on the following areas of dealership operations: Financial Management; Fixed Operations I – Parts; Fixed Operations II – Service; Variable Operations I – Used vehicles; and Variable Ops II – New vehicles.

NADA U FUEL

NADA U Fuel is a private online community, is being launched by NADA University exclusively for the following NADA and ATD members: Academy students and alumni, 20 Group members and NextGen ATD members. The online community was created to enhance and expand the collaboration and idea-sharing that already exists among these groups. FUEL provides community members with instant access to peer discussions, subject matter experts and NADA University’s comprehensive education and training resources. It’s a way to exchange ideas and tips for doing business, discuss trends in the marketplace, resolve business problems, give and get advice and keep in touch. FUEL’s custom online platform is powered by DrivingSales, whose technology creates an individualized profile and view, displaying only the content that is relevant and useful to each user.

NADA U Enhances the HR Essentials Product, Adds it to the Learning Hub Premium Subscription

The HR Essentials management tools, with content powered by Bloomberg BNA, have proven invaluable to users over the years. Job Descriptions Online enables managers to customize job descriptions quickly and easily. The product contains descriptions for more than 100 dealership-specific jobs—and thousands of additional jobs. Recently, NADA University engaged Northwood University to review the dealership-specific jobs. Completely new and updated descriptions are now available in the online product. Coming soon, NADA U will add an entirely new feature to HR Essentials: Fast Answers™ Online provides fast and reliable answers to more than 2,400 questions on thousands of everyday HR topics. HR Essentials also includesPerformance Evaluations Online and HR Policy Handbooks Online. The package is included in the Learning Hub Premium Subscription. The package and the individual components are also available separately as an annual subscription.

NADA Members can log intowww.NADAuniversity.com or call (800) 557-6232 for more info on any of the services.