December 2016 SDADA Column

Red sky at night, sailors' delight.
Red sky at morning, sailors take warning.
- from an ancient rhyme often repeated by mariners

It's almost morning in the Trump administration and I see a red sky!

Tax reform is a recurring threat in DC. Every politician that runs calls for tax reform and every incumbent up for reelection calls for tax reform. It's a standard line in every candidate's stump speech. There's been much lip service paid to the topic and very little elbow grease expended.

That could be changing. It would appear that the Republican Congress and the Trump administration are both serious this time - as in they want real tax reform!

House Ways and Means Chairman Kevin Brady (R-Texas) released a "Tax Reform Blueprint" in July 2016 that outlined the general provisions of a comprehensive tax reform package. When the new Congress convenes in January, the House Ways and Means Committee, the Senate Finance Committee, and the Trump Administration will begin developing the actual text for a tax reform bill.

Here's where it gets complicated...One of the provisions included in the Tax Reform Blueprint, the “Border Adjustment Tax” (BAT), has generated significant concern among several industries, including the automotive sector.  The BAT is not a tariff.  Tariffs are taxes imposed on specified imported products (e.g., the 25% chicken tax imposed on the import of light pickup trucks since 1963).

The House Republican proposal (including the BAT) would modify business income taxes in several ways: reduce the rate from 35% to 20%; accelerate depreciation schedules, eliminate all interest deductions; exempt the cost of exported goods from the taxable receipts subject to income tax (they would be taxed in the jurisdiction in which they were sold); and disallow the cost of any imported goods as a deductible business expense.

I Shot an Arrow Into the Air...

After my failed elk hunt of 2013, I would have to wait for nine years to apply for a Black Hills Firearms elk tag. In an effort to get another chance in the Black Hills a bit sooner, I wanted to try archery again. I had owned a bow back in the early nineties but really never spend enough time with it to become proficient.

I bought a PSE bow on eBay in the summer of 2015. I started practicing in September of 2015. I did hunt a bit in 2015 but had a busy schedule during the deer rut and did not get out enough to really see the traffic patterns. I was not very confident with my shot either - maybe 30-35 yards.

This year, I made a commitment to practice as much as possible in September. I spent a half hour each evening that I could and fired 20-25 shots. I was confident up to 45 and would take a shot up to 50 yards.

I got out to watch the deer a bit in September and early October. I knew where they were moving and what was out there.

As the calendar moved into late October, I was getting out for an hour each evening. I saw deer and was getting close to does. I had does within 20 yards. But I did not see any bucks.

Finally, I saw a nice whitetail buck one evening. I saw him several times over the next week and got to within 70 yards of him. But I could not get within a reasonable range.

I started to panic a bit because we had a trip to Spain-Portugal planned for November 3-13 and that was supposed to be peak rut. I'd only have a couple days left to hunt when we returned before the rifle season started and then the rut would be over and the bow hunting would become much more difficult.

I did not get close to anything before our trip. We returned on a Sunday and I was exhausted on that Monday. On Tuesday, I went to Omaha for the Creighton-Wisconsin basketball game and returned home about 2:30 AM.

I had three days left. I had to go to my stores in Winner and Mission on Wednesday and teach religious education that evening. And now the forecasters were predicting a winter storm for Thursday/Friday. My window of opportunity was quickly closing - and fast!

2016 Knust Kronicle

2016 Knust Kronicle

Merry Christmas & Happy New Year from the Knusts!

Click here to see the 2016 Knust Kronicle

You can find previous Knust Kronicles and Christmas letters here.

November 2016 SDADA Column

The ground beneath me still quakes from the aftershocks of the 2016 presidential election. Donald J. Trump delivered the most improbable of election victories in United States history as he completely shocked pundits, media and other experts.

Now the business of governing begins. What does that mean for Americans? What does that mean for car dealers?

Fortunately for businesses, Trump will be working with a Republican majority in both the House and the Senate. He should have a decent chance to advance some of his agenda.

He is likely to seek vast cuts in regulations that have hampered the small businesses across our country. This bodes well for car dealers.

Trump has said he would dismantle Dodd-Frank Wall Street regulation. Hopefully, that means he is likely to reel in the Consumer Finance Protection Bureau. Regardless, the environment is right for NADA's S 2663, our next effort to tame the CFPB, to be passed.

He has indicated a desire to revise our tax system to make our business tax rate more competitive to keep jobs in America, create new opportunities and revitalize our economy. Again, this likely will serve for small businesses well.

NADA's agenda should find a more favorable environment across the regulatory agencies in DC. That should mean less government in our dealerships.

Hopefully, Trump can focus on those issues that will find some consensus in Congress. There are many issues that both sides agree need attention. Mr. Trump, stay with those....and relinquish your Twitter account!

October 2016 SDADA Column

Virtually every dealer, manager or salesperson I know has been put in the position of having to
explain to a customer that one vehicle, with the same MSRP as the identical vehicle sitting next to it, costs $4,000-5,000 more than the other one. Or they have sold vehicles at a significant loss at the beginning of the month in an effort to hit an objective that will allow them to perhaps(!) break even on vehicles they sell at the end of the month.

Manufacturers do not understand the disruption, confusion and malaise they cause with such ridiculous incentive(?) programs. They do permanent damage to their brand, customer-dealer relations and dealer-manufacturer relations.

The NADA Board of Directors had an extended discussion about this topic at our most recent meeting. The frustration, anger and distrust came quickly to the surface as we talked. There was a wide variety of ideas to deal with it but there was not any consensus. Of course, our anti-trust attorney kept the discussion on track and us out of trouble!

The topic is on the agenda for the next board meeting but I'm not confident that NADA is in a great position to really do anything significant (other than have the discussion with the manufacturers) about this issue.

Like most states, South Dakota has a law on the books that specifically deals with this topic (my emphasis added):

South Dakota Speed Goats

After several years of threatening an antelope hunt, and a couple years of applying for tags, Alex and I finally got tags for a 2016 South Dakota antelope hunt. We had applied for Butte County tags because the number of tags was great and we could stay in our cabin.

Butte County borders Wyoming on the west and sits just north of the Black Hills. The Belle Fourche River winds through the middle of the county. There is some irrigated hay and corn along the river but it is almost completely pasture land when you get away from the river. Cattle (mostly black angus) outnumber humans 5 to 1 in Butte County (50,000 to 10,000).

Since neither of us had ever hunted antelope before, the research began shortly after notification that we had gotten tags. Butte County had two antelope units and I found that there was plenty of public land and walk in access for us to hunt in the unit for which we had tags.

We couldn't hunt the opening weekend because I planned to attend the 2016 Ryder Cup in the Twin Cities. So we made plans for the second weekend of the season. We drove out to the hills on Thursday evening after work and got in late Thursday night.

On Friday morning, we took off early for southern Butte County. We were a 45-minute drive from our destination. Armed with GPS and Google maps on the iPad, we were set. Our entire weekend hunt would be in the shadow of Bear Butte.

Bear Butte could be seen throughout our hunt.

We found some Bureau of Land Management (BLM) land that looked good to us and parked the truck. We loaded up our gear and walked about 2 1/2 miles and sat on hills looking out over the flat area adjacent to the Belle Fourche river. We would sit for a half an hour and then move on to another hill.We saw nothing. So about 10 AM we headed back to the truck to find a new area to hunt.

September 2016 SDADA Column

Our South Dakota delegation (Chairman Dutch VanSanten, NADAPAC Chairman Bruce Eide, NextGen delegate Bryan Boocock, and Myron) just returned from the NADA Washington Conference. I got a bit different view of the event this year as Legislative Affairs Chairman.

We are very fortunate to have two Senators (Thune and Rounds) and a Congresswoman (Noem) who understand and support small business issues. I can assure you that this is not universal. As I visit with directors from others states, they are increasingly frustrated with their representation and how Washington works (or doesn't work!).

At last year's conference, we focused on urging support for H.R. 1737, which nullifies the CFPB’s flawed auto finance guidance, requires the agency to study the true impact on consumers before issuing new guidance, places provisions for a public comment period and requires the CFPB to consult with the agencies that currently share jurisdiction over the indirect auto finance market.

After the Washington Conference last fall, the bill passed by a veto-proof majority vote of 332-96; including 88 Democrats! Once again, dealers got it done.

This year, we had over 300 dealers and ATAEs take to the Hill to advocate for S.B. 2663, the companion bill for H.R. 1737 on the Senate side. We urged support for and action on the bill.

Like H.R. 1737, the bill was written on a bipartisan basis and it deserves bipartisan support. But whether a Democrat or Republican, both have recognized a simple truth: Every consumer deserves access to competitive financing and great rates when they buy a new car or truck.

NADA hopes to get it passed in a "lame duck" session after the election. There are a lot of groups betting against the dealers. We'll see what happens!

August 2016 SDADA Column

I believe the next fight coming between the automobile industry and federal regulators is on the fuel economy front. The battle will be over whether to relax the Obama administration’s future mileage targets. While the direct combatants may be the feds and the OEMs, the dealers (and our customers) will be in the crossfire.

The Wall Street Journal reported last month that government regulators said that U.S. auto makers aren’t on track to meet the administration’s fuel-economy standards, but added that the "industry does have the technical ability to meet them" even in the face of cheap gasoline prices.

Last November, the New York Times suggested the reason there aren't more electric cars on the road is because that car dealers won't sell electric cars. We have not hit Obama's goal of 1 million electric cars on the road because of the nation's car dealers.

I'm guessing that you're like me in that you just want to sell whatever your customers want to buy. If there was an overwhelming demand for electric vehicles, dealers across the country would be stocking more of them and selling more of them. But there isn't and we're not! We know that the competitive forces among OEMs compel them to do the same thing - build the vehicles customers want to buy.
My real concern in this upcoming fight is the plight of the light duty truck - specifically the pickups our South Dakota customers drive on a daily basis.  They need a full size truck to do their work. It is work station, an implement, an office and perhaps, even their family vehicle.

While I hope I'm wrong, I don't believe we will see a full-size pickup that will get 50 miles per gallon anytime soon. If we do, I just hope that the OEMs that I represent can offer one!

In the mean time, we do not want the federal regulators to handicap ag producers, working people, outdoorsmen and other truck buyers by downsizing and depowering their pickups.

Having Husker Genes

I grew up in a Husker house. Anyone who did knows what I mean by that. My Dad, "Husker Harry" as he was known to his friends, was born and raised in Howells, NE and found his way to Lincoln in the 1954 where he earned degrees in business administration and "Husker Fever". It was a virulent strain of the fever with which attempted to afflict everyone around him!

Harry, Alex and me at Notre Dame vs. Nebraska game in 2001

I think I first realized the consequences of this Husker affliction when I was a young boy and went pheasant hunting with him. South Dakota pheasant hunting is a whole different tradition (which I have discussed before) but my Dad liked to mix them - Husker football and SD ringnecks.

Dad would walk through the corn fields in pursuit of the "wiley ringneck" with headphones on so he could listen to the Husker football game. Now, I'm talking about the early version of radio headphones that were the size of shoe boxes on each side and weighed about 10 pounds. He never hit many pheasants with those on but he never MISSED a Husker touchdown. We'd be walking through the field and, all of a sudden, he would start whooping it up, celebrating the latest Husker venture into the end-zone.

I was ten years old in 1970 when the Huskers made a big trip to the west coast to play the USC Trojans. Dad and Mom invited some friends to our house to listen to the game on the radio. The game started at like 9 pm Central Time and Dad told me I could sit up with them and listen to it. We sat around the kitchen table as the reception faded in and out (needless to say, out at the most inopportune moments!) into the wee hours of the next morning. It was a classic and ended in a 21-21 tie.

Later that season, Dad and Mom took me to the Nebraska-Oklahoma game in Lincoln. We were guests of then Husker head coach, Bob Devaney. We stayed where the Huskers players stayed the night before the game and I remember what a thrill is was to see those guys walking through the lobby. I still have the sweatshirt (though it is closer to pink now than it is "scarlet"!), game program and ticket stubs from that weekend.

The Huskers won a hard-fought battle over the Sooners that day, 28-21. But the outcome wasn't decided until the final play, when Husker defensive back Jim Anderson picked off Jack Mildren's heave aimed for Jon Harrison in the end zone.

Nebraska finished 10-0-1, its first undefeated regular season since 1965, and ranked No. 3 in both wire service polls, behind two unbeaten and untied teams: No. 1 Texas and No. 2 Ohio State. The UPI didn’t conduct a poll after bowl games, so Texas was its national champion for 1970.

Notre Dame upset Texas 24-11, and Stanford staged a fourth-quarter comeback to defeat Ohio State 27-17. Nebraska learned of the latter result during the Orange Bowl’s pregame warmups.

The Huskers took care of business with a fourth quarter rally over the LSU Tigers in the Orange Bowl that night and captured their first national title. My Dad smiled for a month about that.

Then, after running the table on the first 10 games, Nebraska’s 1971 season came down to a single game at Owen Field in Norman, OK on Thanksgiving Day. The #1 Cornhuskers played #2 Oklahoma in what still is regularly regarded as college football’s "Game of the Century".

Both teams entered the game undefeated and untied. Nebraska had the nation’s top-ranked defense. Oklahoma had its most productive offense.

The cover of Sports Illustrated (Nov. 22, 1971) published the week of the game included photographs of Nebraska linebacker Bob Terrio and Oklahoma running back Greg Pruitt, nose-to-nose, beneath the headline: "Irresistible Oklahoma Meets Immovable Nebraska.’’

My family was in Omaha for Thanksgiving that year where we celebrated with my Dad's family. We all gathered at my Uncle Ron (Dad's younger brother) and Aunt Diane's house for Thanksgiving meal and then the football feast. I was impressed with the fact that they had a "Go Big Red" toilet in their basement complete with Husker toilet paper! There must have been 25-30 Knusts packed in to that basement for the game. I took a front row seat with my cousins.

Nebraska's Johnny "The Jet" Rodgers opened the scoring less than four minutes into the first quarter with a 72-yard punt return, As Lyell Bremser shrieked from the radio "Holy Moly! Man, woman and child did that put them in the aisles!", bedlam broke loose in the Knust basement. There were high fives everywhere. I knew it was a big deal when my 70+ year-old grandmother was jumping up and down in the back of the room.

The game was one great play after another. The highlights can be seen below and the entire game can be seen here. (The old ads are worth a look!) Nebraska won 35-31 as Jeff Kinney scored the winning touchdown on a 2-yard plunge, the 12th play of the championship drive, with 1:38 remaining. 

The two teams went on to crush the state of Alabama in their bowl games. Nebraska won its second consecutive national championship by beating Alabama, 38-6, in the Orange Bowl. The Sooners crushed Auburn, 42-22, in the Sugar Bowl.

Those fifteen months, starting with the Huskers tie with USC on September 19, 1970 and culminating with that win over Oklahoma on Thanksgiving Day, 1971 pretty much cemented my life -long affinity for Nebraska football. 

Like everything else he did, my Dad rooted for the Huskers with passion and enthusiasm. The quickest way to have him befriend you was to pledge loyalty to the Cornhuskers. I have said many times that if we didn't watch the Huskers on Saturday, we didn't get to eat dinner. If they lost, it wasn't served!!

Harry's last Husker Game with daughter Sarah

Over the years, Dad and I made many pilgrimages to Memorial Stadium together. Often we would introduce someone new to the pageantry of Nebraska football. Our last trip together came in October of 2010 to see the Huskers beat Missouri 31-17. He made Husker fans out of my wife, Judy, and all three of our kids.

Husker football is certainly one of "Husker Harry's"legacies. I'm happy to have his Husker genes!

Going Deep

It was the bottom of the 17th inning, scored tied at 31-31, bases loaded and two men out. Suddenly, in deep left center field, a light began flashing. It was completely dark in the backyard field except for the light mounted on the house behind home plate. The flashing light in the outfield was a distraction to the hitter who was digging in for the critical at bat. At first no one noticed, but eventually, that light (in combination with my mother's calls) drew everyone's attention.

I don't remember how that game turned out. I don't even remember if I got to play until "the end" - perhaps because it is scrambled with so many other memories of summer evening neighborhood wiffle ball games, which were a nightly ritual in my neighborhood growing up.

I was reminded of such summer activities as I recently read Harper Lee's classic "To Kill a Mockingbird". While there are many complex and serious themes in that book, the tales of summer antics and playing outdoors until dark reminded me of my favorite childhood games.

Though my neighborhood had a vacant lot suitable for ball games, it was not mowed sufficiently most of the time and it did not have any (yard) lights (for those late night, extra inning classic that occurred at least six nights each week!). So we played most of our games at "Hutmacher Field", which was the largest backyard in the neighborhood.

Shaped a little like old Polo Grounds in New York (very short distances to the left and right field walls, and an unusually deep center field), it was a classic ball park. Just like every classic old ball park, it had its own characteristics.

Polo Grounds

There was a five foot drop off a retaining wall behind first base (which led to more slides into first), a cottonwood tree belt line created the boundary behind third base (sometimes a high fly to right field didn't come down!) and "the wall" in center field was a drainage ditch (leaving us to trust the outfielder's call as it got dark!). Visiting players were consistently flummoxed by the grounds rules!

Of course when I look at "Hutmacher Field" now, it's not nearly as big as I remember it when I was 10 years old.  The entire area between second base and the center field "wall" is now occupied by a blue spruce tree that no 10 year-old could ever appreciate then but that every South Dakota adult marvels at now! In its day, though, "Hutmacher Field" was a very spacious ball park. Like Polo Grounds, it served double duty as a football field in the fall.

Our neighborhood was full of ball players - both boys and girls. Some were regulars, other played only when there was nothing else to do. But the core of both teams remained pretty consistent.

Just like Major League Baseball teams, we played virtually every night. Our games, however, rarely went just nine innings. Often we would play a doubleheader and sometimes, as more players joined, we would play tripleheaders! I am certain that we played as many games in June-August as those big leaguers played in April-September.

There were no umpires. Get in the box and swing the bat. Swing and miss three times and go sit down. Breaks evened themselves out over the course of the summer. There were no adults to interfere or hand out participation trophies. We learned how to work it out and get along or the game would disintegrate.

Evenings in late June and early July were particularly busy as the summer solstice offered us daylight until almost 10 pm. Games lasting 25-30 innings were common then. BONUS BASEBALL! I still think of the wiffle ball season starting to wind down when I hear the dry, undulating buzz of the cicadas in late July and August.

It seemed like my Mom broke up every game. Though I know this wasn't true, her beckoning from the back door of our house in left center field was pretty hard to ignore - though I did my best!. I had determined that I could get in at least 2 innings from the first call to the "there's gonna be hell to pay" final summoning.

As I look back fondly at these summer games, I realize how lucky we were back then that there was no X-Box, Facebook or Snapchat. We had sweat, grass stains and mosquitoes instead! How lucky we were!

July 2016 SDADA Column

In late June, I attended the seventh annual year executive forum sponsored by NADA and the
American Financial Services Association (AFSA) where we discussed legislative, regulatory and operational challenges facing auto dealers and finance sources.

Executives from virtually every major finance company and major bank in the nation engaged in indirect auto financing attended the forum along with a dozen or so dealers from the NADA board. There were representatives from the American International Automobile Dealers Association, National Association of Minority Automobile Dealers, and Automotive Trade Association Executives in attendance as well.

While there were several presentations and discussions during the event, it was Consumer Financial Protection Bureau (CFPB) Director Richard Cordray's comments to the group that stuck me.

As he reviewed the bureau’s activities in the area of vehicle financing, he insisted on calling our retail discounting of interest rates a "dealer markup" and suggested several times that some type of "flat rate" compensation to dealers was a preferred model. While it was not a surprise to hear this, it was frustrating to see and hear how narrow-minded he still was on this issue.

A survey of those in attendance revealed that top concerns for finance sources include exams and enforcement actions, cybersecurity, compliance, changes in vehicle values and hiring, training and retaining employees.

Dealers are most concerned with new regulations from the FTC and CFPB, existing regulations and compliance, and hiring, training and retaining employees. New opportunities focused on technology improvements and mobile financing options for lenders, and leasing and e-contracting for dealers.


House Again Rebukes CFPB Over Its Flawed Auto Finance Guidance 

By a bipartisan vote of 260-162, the House of Representatives passed an amendment offered by Rep. Frank Guinta (R-N.H.) that would nullify the Consumer Financial Protection Bureau's (CFPB) flawed auto finance guidance by preventing the CFPB from spending any funds to enforce the guidance. The amendment was added to the fiscal year 2017 Financial Services appropriations bill (H.R. 5485) on the House floor. This House action is another rebuke of the CFPB's auto finance guidance, which threatens a consumer's ability to receive a discounted auto loan from a dealer. This is the first time Congress has used the appropriations process to rein in the CFPB. Nineteen Democrats and 241 Republicans voted for the amendment.

Last November, the House passed Rep. Guinta's bill, H.R. 1737, by a bipartisan vote of 332-96. This bill would nullify the CFPB's 2013 auto finance guidance and establish a transparent process with public participation to determine future auto finance guidance. In contrast, the CFPB issued the flawed 2013 guidance without any public comment or transparency, and the agency admitted it has failed to study the impact of its guidance on consumers.

Economic Analysis Reaffirms That State Franchise Laws Lower Prices, Benefit Consumers 

Retail prices for new cars are lower for consumers because of state franchise laws, according to a new economic analysis from the Phoenix Center for Advanced Legal and Economic Public Policy Studies.

The analysis, “State Automobile Franchise Laws: Public or Private Interests?” found that state franchise laws serve to foster intense competition among franchised new-car dealers, which “demonstrably lowers prices for consumers” and “alter[s] the way consumers buy cars and service in a positive way.”

“Franchise laws do not limit competition or lead to higher prices,” said study co-author and Phoenix Center Senior Fellow Professor T. Randolph Beard. “In fact, all the evidence suggests that there is intense competition leading to very low margins on new car sales.”

The Phoenix Center study came in response to recent scrutiny of state franchise laws by the Federal Trade Commission (FTC) and others, and the suggestion that these laws are outdated. The study concluded, however, that state franchise laws are indeed still very beneficial to consumers.

“When selling an automobile-service bundle, our analysis indicates that franchised auto dealers have a better incentive with respect to consumer desires than car manufacturers,” said study co-author and Phoenix Center Chief Economist Dr. George S. Ford. “As such, it is not unreasonable for state legislatures to choose a market design that best serves their constituents in the form of local auto franchise laws.”

June 2016 SDADA Column

Do Americans know how lucky they really are? They have Uncle Sam to protect them from themselves.

The Federal Trade Commission has proposed a survey of consumers regarding their experiences trading in, buying and financing vehicles at dealerships. The commission will conduct 40 interviews with consumers that are 90 minutes in length.

In 2015, there were over 38 million used vehicle transactions and over 17 million new vehicle transactions in our country. The FTC will conduct 40 interviews and will then have a complete understanding of the automotive market in America!

This survey is a repeat of the one the FTC conducted five years ago. That survey found no systemic problems with the auto-retailing sector. Processes have certainly gone to hell since that survey!

I know I can be a bit cynical but perhaps we should survey health care patients, attorney clients, insurance company customers, mobile phone customers, etc. Is there no room for improvement in any of these transactions? Some would suggest that market forces and competition would be very good at improving and streamlining the processes.

At some point, perhaps consumers must be responsible for their own choices. There are many options in  the marketplace. Consumers have control over where they buy. That can (and should) be the ultimate regulator!

A Peek Behind the CFPB Curtain

This "must see" video (http://goo.gl/Mcu0qe) takes a somewhat humorous look at the shenanigans going on with the CFPB in their attempt to regulate and punish those involved in auto finance lending. This is your government at work!

Supreme Court Issues Pro-Dealer Opinion in Service Writer Overtime Case 

The Supreme Court issued an opinion in Encino Motorcars v. Navarro, vacating a 2015 Ninth Circuit Court of Appeals decision that had held that dealership “service writers” are not covered by the federal “salesmen” exemption from overtime pay. In doing so, the Supreme Court expressly rejected a 2011 U.S. Department of Labor (DOL) interpretative regulation that service writers/advisors are not "salesmen" exempt from overtime. In particular, the Court faulted DOL for failing to give adequate weight to dealerships’ reliance interests during the rulemaking process, and for failing to provide a “reasoned explanation” for the abrupt change of policy. The Supreme Court’s decision requires the Ninth Circuit to reconsider its prior decision consistent with the language of the Fair Labor Standards Act (FLSA) without giving “controlling weight” to the DOL’s 2011 regulation.

In March 2015, the federal Ninth Circuit Court of Appeals ruled that service writers are not exempt from overtime as “salesmen.” That decision was based on the Ninth Circuit’s conclusion that preamble language found in a 2011 DOL rulemaking constituted an interpretation of the FLSA entitled to legal deference. Together with the state dealer associations covered by the Ninth Circuit, NADA filed an amicus brief in support of a certiorari petition with the U.S. Supreme Court. The Supreme Court granted “cert” in January and heard oral argument in April. Former Solicitor-General Paul Clement expertly (and successfully) argued on behalf of the petitioner with NADA’s amicus brief being cited several times during the argument and in the Opinion itself.

Overtime FAQ for Dealers

As I mentioned in this space last month, the U.S. Department of Labor (DOL) issued a rule that dramatically increases the salary and compensation levels that must be met in order for "white collar" dealership employees to be exempt from overtime. NADA has issued a new FAQ publication on the white collar rule's impacts on dealerships and their employees.

OSHA Issues New Injury and Illness Electronic Reporting Mandate 

Starting in 2017, certain dealerships must begin submitting employee workplace injury and illness records to the Occupational Safety and Health Administration (OSHA). All dealerships must maintain reasonable procedures by which employees can report work related injuries and illnesses promptly and accurately. The new reporting rule builds on existing mandates requiring dealerships with 10 or more employees to accurately record and post employee workplace injury and illness using OSHA Forms. In the future, these forms must be made available to OSHA and state labor inspectors upon request. Car dealerships with fewer than 250 employees at a single "establishment" are not required to submit forms to OSHA.

Slaying Mr. Jellyhead

Though I've had tags in the past, I had never killed a spring turkey. My first, and only, turkeys were harvested in the fall of 2014. Spring turkey hunting comes at a very busy time for me.

This year, I drew a prairie turkey tag for Brule County and an archery turkey tag. The plan was to kill a turkey with the shotgun with the first opportunity and bust out the bow if another opportunity presented itself.

Again, this spring was extremely busy. My opportunity to shoot a turkey was dwindling rather quickly. I had seen a few hens and a few jakes in the yard but other than one tom a week before the season opened - nothing.

On this morning, I came charging out the back door of the house to check on the mower before heading off to the store. It was about 8:45. I got two steps out the door and saw a jake and a tom close to the path on the ridge behind the house. They were just on the edge of the yard.

They heard me but didn't see me and I was able to get back before the door slammed. I went to the garage to get my gun and call. I worked the box call a couple times inside the house and the tom immediately swelled up like a balloon being inflated. He began strutting around and looking for that elusive hen he had heard. Little did he know that "she" was in the screen porch!

I went back through the house, out the garage door in the front of the house and around the north side of the house. I peeked around the back of the pizza oven in the back yard to see Mr. Tom still in strut mode, his his wattle was radiating Husker red and snood dangling from his light blue head, wiggling as if full of red Jello. I poked my gun around the corner of the fence and took aim.

Scene of the slaughter is edge of lawn directly behind 

The blast of my 10 gauge shotgun released a turkey load at about 35-40 yards. He jumped up and turned toward the draw following his companion, the jake. Did I get him?

As I walked toward where he went, I saw that I had drawn feathers from him. I walked about 20 yards past where I shot him to find a heap of turkey laying in the grass. He was 15-16 pounds. He had nice long spurs and a 8-9 inch beard. My first spring turkey!

I lugged him back to the house before fetching a camo vest to wear over my work clothes for a photo! I had him cleaned, in the fridge and was to the store by 9:30! Not s bad start to a beautiful spring morning!

April 2016 SDADA Column

Are you paying your service adviser overtime pay? If you don't know, it may be a good time to check.

The U.S. Supreme Court is checking. They took up that question last week (April 20) in the case of five dealership service advisers who sought overtime pay for their 55-hour workweeks. The ruling could have big implications us and how we pay our service advisers.

We have always assumed service advisers fall into the same category as dealership salespeople, mechanics and parts department workers, who are exempted from overtime pay requirements under the Fair Labor Standards Act. Many of our service advisers are paid commission.

But (surprise, surprise) the Obama administration has challenged that assumption. A California district court disagreed with the administration. But the 9th Circuit reversed that decision, breaking with previous appeals court decisions dating to the 1980s and paving the way for the Supreme Court to settle the dispute.

I have a non-lawyer, non-regulator, simple man's question: If the service writers are on commission, how do you determine what time and a half is? Is it based on minimum wage or some kind of combination?

About that current vacancy on the court - yes, that could affect the outcome in this case. It raises the prospect of a 4-4 tie, which would keep things as they are. The good news for South Dakota dealers (for now): The 9th Circuit's ruling would apply only in its nine-state Western jurisdiction.

We can expect to hear a ruling this summer.

NADA 100

Next year, NADA celebrates its 100th anniversary with various events, including the NADA 100 convention in New Orleans.

The NADA story began when 30 dealers traveled to the nation’s capital in 1917 to persuade Congress not to impose a luxury tax on cars. They successfully argued that the automobile is a necessity of American life, not a luxury. From that group effort, NADA was born.

Since then, NADA has experienced many major milestones. And so have its dealers.

Each dealer’s story is an integral part of the NADA story, especially since so many generations of dealers have been steadfast NADA members. These stories range from store openings and mergers to dealers meeting with their members of Congress on Capitol Hill.

To learn more about these important dealer milestones, NADA has launched the “Share Your Story” contest. Dealers can submit photos, videos, newspaper clippings, print and digital ads, their own dealership histories or other memorabilia. If you participate in NADA’s “Tell Us Your Story” contest, you have a chance to win one of two an all-expense paid trips to the 2017 NADA 100 show in New Orleans. Ten runners up each will win VISA gifts cards worth $100.

One trait best describes NADA, its dealers and the franchised business system: the ability to adapt. Whether it’s dealing with economic curveballs or learning the latest digital technology, being adaptable has allowed this association and its members to thrive during the past 100 years. And it continues to propel us toward the future.

Looking back, it’s interesting to see just how much NADA has changed—and adapted—over the years.

South Dakota has several dealerships with a rich history. I hope they will consider partaking in this great event!!

Reviewing a Space City Classic

I have documented here before my tradition of attending college basketball's championship weekend. I have shared stories, tales and traditions from our group. Others have told our story as well - in several different newspapers  and on television. Even David Letterman gave us a cameo on his "Late Night" show back in 1996.

This year I attended my 35th consecutive Final Four in Houston, TX. There were six regulars and one new attendee in our group. Chris Korth, my Final Four partner on all thirty five, Emmet Kenney, attending his 25th, Calvin Rider (23rd), Bren Abbott (22nd), Matt Hesse (14th) and our new guy was Mark Wellmeyer who who attending his 2nd but his first with us. All totalled, this group had taken in 156 Final Fours.

A couple of the Houston media outlets found our three-plus decade Final Four quest to be a compelling story. On the Tuesday before the final Four, the Houston Chronicle published a story by sports reporter, Joseph Duarte, on Chris and me. He had conducted a phone interview of each of us the week before and asked for some photos of previous trips.

On Friday, just after we arrived in Houston, the local NBC affiliate, KPRC, interviewed us for their 10 PM news show. Our reporter, Laine Fritz, was on her fifth day on this job in Houston. She was a good sport as we got into the cocktails before she and her cameraman (woman), Simone Eli, arrived. When they left, we did not think we had given them much to work with. But she did a tremendous job of piecing a story together.

It was a fun way to start the weekend and it launched us into an extended round of reminiscing about March Madness past over dinner.

As for the games, Saturday delivered a pair of snoozers. In the first national semifinal game, Villanova thumped Oklahoma 95-51 in the most lopsided Final Four game of all time. Game two provided a little more drama as North Carolina whipped Syracuse 83-66 setting up a Villanova vs. North Carolina matchup in the Monday night title tilt.

While North Carolina was a 2.5 point favorite, the computer simulators had Villanova winning 50.1% of the games, North Carolina winning 49.9%. It looked like we could be in for a good championship game.

Well no one could have predicted what a tremendous game we would have. To say that Villanova won 77-74 in an instant classic would be a severe understatement. This was a great game from tip to buzzer. The quality of basketball was very high. Rather than try to detail all of the action in the final minute and a half, you can watch it below:

UNBELIEVABLE!!

Knowing that I had been to 35 Final Fours, almost immediately, the texts and calls from friends began asking me if this was the best game I've seen. That's an interesting question and I decided to reserve judgement until we get past the immediate drama and emotion. We live in a "Now" moment...every year we hear "this is the best tournament ever" because of the upsets...that happen every year.

Let me point out that I have seen some pretty good Final Four games. Even if we limit the choices to championship games only, I have seen some dramatic finishes.

1982 - North Carolina vs. Georgetown

1983 - North Carolina State vs. Houston

1985 - Villanova vs. Georgetown

1987 - Syracuse vs. Indiana

1989 - Michigan vs. Seton Hall

2010 - Butler vs. Duke

(Note that the first five of these games occurred in my first eight trips to the Final Four. Is there any wonder why I kept going back?!)

...and this list omits two overtime games and a couple of HUGE upsets that have taken place. There have been some truly remarkable games over the past thirty five years. 

Perhaps you can appreciate why I hesitate to call Villanova's win over North Carolina best I've ever seen. It is a classic and it will always be mentioned when the list of greatest games is being discussed. Kris Jenkins will always be remembered for that shot. Had he not made it though, it would be Marcus Paige's double clutcher that we would be talking about.

March 2016 SDADA Column

I recently returned from a pair of NADA committee meetings in Washington, D.C. Our Legislative Affairs Committee is preparing for a "full court press" (my March Madness reference) in the Senate on our bill limiting the CFPB's 2013 auto lending guidance. This bill was submitted in the Senate earlier this month by Sen. Jerry Moran (R-Kan.) after it passed in the house last November by a wide 332-96 margin. I can assure you that our committee is ready for this effort and we will prevail!

I am serving on the NADA Regulatory Affairs Committee for the first time. While this committee works hand-in-hand with Legislative Affairs on many issues, it is more focused on monitoring regulations and affecting change in regulatory agencies and Legislative Affairs is more focused on the same on the Congressional side.

Each year, NADA publishes "The Regulatory Maze", which documents all of the regulations an automobile dealership is subjected to in each department. It illustrates the mind-numbing challenge dealerships have to keep from running afoul of the federal regulatory process.

After sitting through a six-hour presentation of all the regulatory challenges we face, I had to wonder how any dealer can turn the key in the front door each morning without the benefit of a true compliance officer under his/her employ.

My suggestion to any small/medium dealer is to become familiar with the NADA Regulatory Affairs site. You need to log in to get all the guidance available. If you don't see what you need, give them a call at 800-252-6232. Please let me know if I can help direct you to the right department or person.

Let me finish by suggesting that even though you might not have a full-time compliance officer working for you, you have an incredibly talented staff at your trade association that has your back when it comes to the many threats from our federal government.

NADA Fair Credit Guidance

NADA has an optional program designed to strengthen a dealer's ability to comply with fair credit laws while preserving the competitive benefits of dealer-assisted financing.

In January 2014, the National Automobile Dealers Association (NADA), the American International Automobile Dealers Association (AIADA), and the National Association of Minority Automobile Dealers (NAMAD) released to their members the Fair Credit Compliance Policy & Program. The Fair Credit Compliance Policy & Program is an optional program that is designed to strengthen a dealership’s efforts to comply with fair credit laws.

You can find information on the program here.

Use myNADAPlanner for a Better Convention Experience

If you are planning to attend the 2016 NADA Convention and Expo, you should consider downloading the NADA Convention app. It is the best way to get the most out of your convention experience.

In addition to offering a complete convention schedule, it offers a list of exhibitors and workshops. The planner allows you to schedule your time to make the most of your convention experience. Social media is integrated with the app so you can see what others are doing or find interesting. All of this integrates across platforms (phone, notepad or desktop) to give you plenty of flexibility.

February 2016 SDADA Column

If you know me, you know of my interest in and passion for politics. I follow politics at all levels - whether local, state or national.  

My affinity for politics is what initially drew my interest in NADA. I have had the opportunity to serve on the NADA Legislative Affairs Committee in six of my eight years on the board. I have enjoyed that work immensely and have learned a great deal from the NADA Legislative Affairs staff.

NADA Chairman Jeff Carlson has appointed me as the chairman of the Legislative Affairs Committee for 2016. I am grateful for Jeff's confidence and I am looking forward to working with the tremendous Legislative Affairs staff at NADA in the coming twelve months. Our challenges are many. You have read about them in this space.

If you have followed this space, you know that we are defenders. We defending our business model, the franchise system, our product, our customers, general business practices and our OEMs. I never liked defending when I played sports, but I believe that I have gotten better at it. With practice comes proficiency!

"Offense wins games, defense wins championships"   -Coach Paul "Bear" Bryant

If it's true for football, perhaps it's true for politics!

I encourage you to contact me with ANY concerns, questions, thoughts or ideas you might have for NADA Legislative Affairs.


CFPB: Ready, Fire, Aim!

The House Financial Services Committee recently said the Consumer Finance Protection Bureau could be sending payments from Ally Financial’s $80 million settlement fund to non-Hispanic white borrowers because of a potentially unreliable race identification method. This, according to internal CFPB documents.

In fact, the administration is literally just making up victims to meet the number prosecutors announced in the settlement two years ago. The government has had to send out more than 400,000 queries to Ally borrowers asking them if they are black or Hispanic.

From Investors Business Daily:

Of course, it’s Obama and his race-mongers who are hurting consumers.

With their meritless discrimination cases, they are jacking up the cost of auto loans for average Americans — including minorities with good credit. And with their bogus payouts to phantom victims, they are also denying employees of Ally and these other auto companies, many of whom are minorities, tens of millions of dollars in pay raises and bonuses.

Meanwhile the racketeering agency has added Toyota Motor Credit to the list of auto lenders it has extorted (along with Ally, Fifth Third Bank and Honda Financial Services). The payments by these lenders now total over $112 million. We can look forward to seeing how the rest of this money will be distributed!

NADA Convention Fast Approaching 

Online registration for the 2016 NADA Convention & Expo in Las Vegas is open. As one of the most popular destinations in the country for meetings and conventions, several hotels in NADA’s convention block have already sold out.

Hotel rooms are still available in NADA’s block but they are going fast. The  convention—which runs from Thursday, March 31, through Sunday, April 3, 2016—will be held at the Las Vegas Convention Center. For more information or to register, visit www.nadaconvention.org.

January 2016 SDADA Column

I am listening to an Federal Trade Commission "Auto Regulation Workshop" as I write this column. This is a rather optimistic title for this "witch hunt".

The FTC has, in the past, shown they supported manufacturer direct selling. Of course this was only the personal opinion of staff - not an official position. 

So the FTC now conducts a "kangaroo court" with panels stacked against the dealers advocating for a demolition of the franchise system (and State Franchise Laws) and endorsing direct selling by manufacturers. 

They are featuring a parade of panelists that are testifying about how the dealers are getting rich ( "average dealership profits of over $1 million/year"), running monopolies within their local markets, adding cost as a middleman and generally doing all of this at the expense of both the manufacturer and the consumer.

The ultimate irony is that the general theme of the panelists is regulation (in the form of State Franchise Laws) is inefficient and adds cost to the distribution system. There has never been an administration that has introduced more regulations (at great cost to our nation's businesses) in the history of our country. But it is only these State Franchise Laws that add costs - none of the federal regulations are guilty of such a travesty!

We can expect the "findings" of this sham to be marched out as evidence that the franchise system is broken and that State Franchise Laws should be sacked. Elon Musk is smiling all the way to the bank.

This is just another attack by the current administration and its legion of regulators who are bitter about the automobile dealers' success in earning a carve out of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010. The attacks by the Consumer Finance Protection Bureau over the past five years are similarly motivated.

I think it is appropriate to end this discussion with a reminder of the Tenth Amendment to the United States Constitution which states that the federal government possesses only those powers delegated to it by the United States Constitution. All remaining powers are reserved for the states or the people. 

That is the Federal Trade Commission you hear in that background muttering "Whatever!". 

Multi-Tier Pricing Strikes Again

You've probably seen the story about Napleton Automotive Group alleging FCA US offered dealers large sums of money to report unsold vehicles as sold. While there are many moving parts to this story and I don't care to opine on this until all the facts are out, it is illustrative of the fact that multi-tier incentives or bribing with "marketing incentives" causes problems for all involved.

It undermines the value of each brand, confuses consumers and now we see it leads to potentially scandalous and misleading reports hitting stock values. It is virtually impossible for dealers to offer transparency in their pricing to consumer if manufacturers will not do the same to their dealers. 

NADA Convention Registration Open 

Online registration for the 2016 NADA Convention & Expo in Las Vegas is open. As one of the most popular destinations in the country for meetings and conventions, several hotels in NADA’s convention block have already sold out. 

Hotel rooms are still available in NADA’s block but they are going fast. The  convention—which runs from Thursday, March 31, through Sunday, April 3, 2016—will be held at the Las Vegas Convention Center. For more information or to register, visit www.nadaconvention.org.

Hang Together? Or Separately?

"We must, indeed, all hang together or, most assuredly, we shall all hang separately."  

-Benjamin Franklin

If you're a student of the American Revolution, you will recognize the quote above. Franklin's message was that the signers of the Declaration (as well as colonists in general) had to help and support each other or they were doomed.

I believe that is much like a local community. If those of us in a community do not support our local businesses, we won't hang separately or be executed, but we are doomed.

If you live in a small town, you surely have been encouraged to “buy local.” But what, exactly, does "buy local" really mean? Certainly you are being encouraged buy groceries, hardware and clothing locally. But the higher the price of the items you buy locally, the greater the impact your purchase has on the local economy.

According to the website local-first.org, $73 of every $100 you spend returns to the community through avenues such as taxes (which support the local schools and teachers), payroll (which employees may again spend locally), and other expenditures (like support of local events, activities and organizations).

When you buy locally, businesses have the opportunity to create more jobs locally. Simple economics dictates that more local jobs means a greater demand for workers and thus higher wages and/or better benefits for everyone in the marketplace.

When you buy in Mitchell, Rapid City or Sioux Falls or online, none of the money spent stays in in our local community to pay taxes, payroll or any other expenditures. In other words, you are not supporting the local schools and teachers, local events, activities or organizations. 

"But I Can Save Money"

Can you save money? Are the goods or services you are buying really less expensive? Are they of the same quality? Did you consider the value of your time (driving or riding to another community)? Did you factor in the cost of your transportation (fuel, maintenance, depreciation of your vehicle, etc.)? Did you factor in the cost of shipping and handling (of an online order)?

My experience is that, if given the opportunity, local business owners do or would be willing to match the true cost of goods. To be fair, this should include some of the costs mentioned above. The question is, are you willing to give them that opportunity. Do you care enough about the future of our community to look at a transaction fairly and give the local vendor that opportunity?

I am not advocating feel-good, it's-worth-paying-more-for-local concept. I believe that if you do give the local businesses the opportunity to earn your business, you will be rewarded with better prices, better service and a better community. 

Proud to be Your Local Automobile Dealer

As an automobile dealer with stores in Chamberlain and Winner, I ask you to consider applying the logic above when you purchase your next vehicle. I would enthusiastically welcome the opportunity to help you find your next vehicle, get the financing package that fits your needs and provide service for your vehicle going forward. I believe we can bring value and enjoyment to your ownership experience.

Find the Right Vehicle...

The automobile world has changed drastically over the past 15-20 years. It used to be that you would have to go to the dealership to see a vehicle. The internet allows you to shop online for the right vehicle. Smart phones and tablets let you do that from virtually anywhere. 

It does not make sense for a small town dealership to stock hundreds of vehicles and pay the interest associated with stocking so many vehicles when we can have access to many more vehicles without the expenses. We have a network of dealer-partners across the Midwest with which we trade and buy cars, trucks and SUVs. This expands our "true" inventory exponentially. 

Our professional staff will find the new or used vehicle you are looking for. You won't have to drive all over looking for that "just right" automobile. You tell us what to find, and WE WILL FIND IT!!

...At the Right Price...

When you buy local at Harry K's, you will save money! Our prices will reflect lower costs and will

save you money when compared big city stores. Our overhead expenses (interest, taxes, facility, utilities, salaries, etc.) are much lower and we pass that savings on to our customers!

...And Payment...

At Harry K's, we have access to more than a dozen different financial institutions that specialize in automobile financing. We will shop these banks and pit them against each other to get you the best interest rate possible. 

We will use our buying power to help you get financed even if you have had some bad luck in your financial past. We will work hard to serve your financing needs because you're not just another customer, you're our friends and/or neighbor as well!

...And We'll Take Care of You Down the Road...

Our service professionals are training weekly so that they provide the best service for your vehicle. The value to you is that you can be assured that your vehicle will continue to perform at the highest level and when you come back to trade your vehicle, it retains the greatest value possible because we have a service record.

Growing Together

We believe that when businesses in the community thrive, the community thrives. Unlike big city businesses or dealerships, we are proud to give back to our community. We know the summer rec and swim team schedules because our sons and daughters play and swim on the teams. We are not just your local dealer, we are stakeholders in your community. Supporting your local dealer means supporting the small-town community.


You are more to us than a paycheck or a profit. You are our friends and neighbors. Give us a chance to earn your business. I believe you benefit and our community will benefit!