Thursday, September 26, 2013

September 2013 SDADA Column

As that great American philosopher Mike Tyson said, "Everyone has a plan until they get punched in the
mouth". Sometimes things don't work out like they are supposed to. Despite our plans and intentions, life gets in the way and screws things up.

As many of you know, I had a deal to sell my stores. My stores were not for sale. But someone came to me early this year and offered me a deal that I felt was good for me and my family. So I pursued it. We signed an asset purchase agreement, got approval from the factories and had everything ready to close. Four days before the closing date, my buyer pulled the plug on the deal.

I will spare you all the bloody details but suffice it to say that it was quite a blow. My wife, Judy, and I had mentally transitioned to the next stage - though we did not know what that was. It was tough on the emotions to reel that back in and start over again.

But we have done it because that's what dealers do - we adapt and adjust. I am happy to be a car dealer. I have never seen myself as anything but a car dealer - and that's a good thing - because it looks like that is where I'll be and what I'll do for some time yet!

Perhaps the most difficult part of the decision making process was idea of missing out on the relationships with those of you in the South Dakota car industry. Judy and I have made some wonderful friends through the years and the thought of falling away from those friendships was the "dark side" for us. We are pleased that since we are staying in the business, we do not have to worry about keeping in touch with our friends in the auto industry!

I believe this is an appropriate time to thank you for the opportunity of representing you on the NADA board. I and am proud to serve as the South Dakota director. Representing my fellow dealers has been the most noteworthy privilege of my automobile career. I look forward to working with each of you in that capacity going forward.

Washington Conference
I just returned from Washington where I was part of the South Dakota delegation to this year's NADA Washington Conference. We had a great group: Scott Peterson, Trace Beck, Bruce Eide and our Next-Gen dealer, Nick Prostrollo joined Myron and me.

We heard an impassioned speech from Senator Ted Cruz on the funding of ObamaCare and shutting down the federal government. Karl Rove added an interesting political perspective to those issues. Rep. Cathy McMorris Rodgers (R-Washington) also addressed the group and answered questions (sort of) on those two topics.

We heard from several other speakers but what struck me about those three Republican speakers was that on the two key issues of the day, ObamaCare and the federal budget, there was absolutely no consensus on what to do. If fact, it would best be characterized by saying they were "all over the board". It did not instill confidence that we were going to be resolving either of these two issues anytime soon!

Our primary issue as we visited the Hill was trying to protect our financing model. The assault by the Consumer Finance Protection Bureau on the dealer financing model is not justified in any way and we sought to carry that message to our South Dakota elected officials. Senator Thune agreed to sign the Portman-Shaheen letter to the CFPB asking for some insight as to their methodology. While our visit with Senator Johnson was more productive that in the past, I don't know that we moved the needle much.

I enjoyed my time with my fellow dealers in DC. Our association is fortunate to have great leadership - Scott, Trace and Bruce did a superb job. Myron always represents us well and is so respected among his peers. Nick did a great job of offering the NextGen perspective - I was grateful to have him join us.

FTC Announces Advertising Enforcement Actions Against Dealers
The FTC issued a press release Sept. 3 stating that it has entered into proposed consent orders with a Cleveland dealership and a Baltimore area dealership for alleged advertising violations that appeared on their respective websites. In the former case, the FTC alleged that the dealer advertised that particular Ford models are available at a specific dealer discount when “in fact, once consumers reach the dealership, they find out that [the dealership] has failed to disclose that the specific discounts are available for some, but not all, of the Ford models advertised.”

In the latter case, the FTC alleged that the dealer advertised specific dealer discounts and prices as being generally available to consumers when “in fact, once consumers reach the dealership, they find out that there are significant restrictions on obtaining the advertised discounts or that the advertised discounts are not available in full.” In particular, the FTC alleged: “In numerous instances, the advertised discount and price are subject to various qualifications and restrictions … for example, being a member of the military, being a recent college graduate, possessing a bank account at a particular bank, or owning a vehicle that has a lien on it. In numerous instances, even if consumers meet all of these qualifications or restrictions, they cannot obtain the advertised discount and price.”

The FTC alleged that these are deceptive practices which violate Section 5 of the FTC Act. In the proposed consent orders, the dealerships (which neither admit nor deny the alleged violations) agree to several provisions such as avoiding certain advertising representations, retaining their ads and promotional material for 5 years, and filing compliance reports with the FTC. The FTC’s press release, which contains links to its complaints, the proposed consent orders and the ads that gave rise to these actions, is available here: