Searching for the Right Shade of Gray

So yesterday I had my appointment with the Gensler guy. That is the company that General Motors has contracted with for their facility image program. I had been dreading this day since I had committed the $10,000 to pay for him to come and "consult". I didn't sleep the night before his visit.

He was professional and a very nice gentleman who was just doing the job he is paid to do. He turned out to be a great resource for me as we visited. In fact, he agreed with many of the points I make below. He made what was a painful meeting, tolerable.

I put a very significant part of my net worth into a state-of-the-art dealership facility in 1996. I built it to General Motors specifications. I built a facility that would serve my customers well, that my employees could be proud of and that would represent General Motors in a first class manner. I have made several changes over the past fifteen years to keep the store updated. In the past eight years, GM has taken away Oldsmobile and Pontiac and refused to give me GMC to help to compensate for the loss of the other two. And then there is the small matter of them going bankrupt and the effect that had on my business.

I am not interested in having General Motors tell me how to manage or "brand" my facility. They want to manage every aspect of my facility - from the color of the bathroom tile to what I have hanging in my personal office to what kind of light fixtures I have in my showroom. What works in Chicago, Miami and Los Angeles does not work in Chamberlain/Oacoma, South Dakota. I agree with AutoNation Inc. CEO Mike Jackson who says, "When they're telling me the color of the toilet paper in the restroom, I'm saying, 'You've gone too far.'"

There is nothing wrong with the gray tile in my store. It is a shade or two darker and a bit smaller than the tile that GM and Gensler's extensive research has proven will cause everyone entering my showroom to grovel for a new GM vehicle. But I'm willing to take my chances with the type and color that I have as it is easy to keep clean, offers reasonable traction and serves my customers' needs just fine. I guess I am unreasonable in that I don't want to rip out over 3,000 square feet of perfectly good tile!

GM's branding initiative would not allow customers to be able to see into my personal office unless I furnish it with GM-approved furniture, paint, floor covering and art on the walls. The family photo I have hanging in my office would have to come down as would my college diploma and the overhead photo of my dealership! My customers would not be allowed to see into our conference room which means my salespeople would not be able to see customers on my showroom floor if they are in a meeting.

General Motors wants me to replace the window frames that they required (and for which I paid extra money) when I built the facility. They are currently a "General Motors blue", but now they want a silver color. Needless to say, the cost for this change will run in the tens of thousands of dollars. And yet, I have never had a customer tell me that they wouldn't buy a car from me because my mullions were blue! (I have, however, had customers tell me that they wouldn't buy because GM went broke and took taxpayer money.)

This is just the kind of dealership re-branding exercise that HUMMER dealers were forced into shortly before that brand was consigned to the ash heap of history. In the past ten years, Pontiac, Oldsmobile, Hummer, Saturn, Mercury, Plymouth and Daewoo have all been lain to rest leaving a wake of empty dealership facilities and countless dealers who are still paying the construction debt!

I am pretty sure I know my customers and my retail market better than General Motors since only four different people employed by GM have ever stepped foot in my store over the past 15 years and no one has been here in the past two years. That number would have been two except for turnover of GM personnel.

I have an obligation to offer my customers have a clean, inviting, facility staffed by friendly, concientious employees. But I have concerns about the "bricks and mortar" business model, especially in the rural areas. Many customers are a long ways down the path to purchase before they ever step foot into my facility. I need to see a clear path to return on investment for every dollar I spent on my facility.

I like the looks of the big blue entry element that you see at many Chevrolet dealerships (see photo above). This is the iconic image that GM wants to promote for the Chevrolet brand. It is their "golden arches". I would consider doing that if I was allowed to use local suppliers and contractors (my customers!).

I think many of the other brand elements are just plain ugly. I don't like the blond, maple laminate tops on all my desks and counter tops. I don't want to buy them at any price but especially at the inflated price that GM has negotiated for their "partners", the dealers.

General Motors would have you believe that this is a volunteer program and that they are helping to pay for the upgrades. Let me call "bullshit" on that one. What they will do is sell a car to you for $500 more than the dealer who is in compliance with their Essential Brand Elements program. Dealers who are in compliance get $500 for each vehicle invoiced to them on a quarterly basis. If I'm not compliant, I am at a $500 disadvantage on each new vehicle in a business where people will drive 100 miles to save $50.

This program is not really about facility upgrades at all. If it were, the payouts would be tied to the cost of doing the upgrades themselves and not to the number of vehicles purchased from GM during the program.

This pricing scheme violates South Dakota franchise laws which prohibit multi-tier pricing. It also violates franchise laws in about 35 other states as well. Why are those laws not being enforced? Well if it is within my power, we will soon start enforcing them in South Dakota.

If you live in a small rural community that is fortunate enough to have a dealership contributing to your local economy, you too should wonder why those laws are not being enforced. This practice is the greatest threat there is to the franchised automobile network. If you don't like the idea of traveling 100 miles plus to have your car serviced, you might ask why laws are being ignored.

So I am left with the question of what kind of return I would get on a $350,000-400,000 investment into a highly specialized facility in a rural area in central South Dakota. I tried to complete that calculation. You can see what my calculator thought of it!

Chrysler Dealers' Case Moves Forward

It will be interesting to see if this gives this case some traction. The U.S. Court of Federal Claims denied the government's motion to dismiss dealers lawsuit against the U.S. Treasury Department alleging the government violated the Constitution in taking their store franchises. These dealers who were terminated during Chrysler's 2009 bankruptcy. The lawsuit contends that the Obama administration violated the Fifth Amendment, which says private property shall not "be taken" for public use "without just compensation". Details can be found here.

February 2012 SDADA Column

I am just back from the convention in Las Vegas. It was truly a great convention. You’ve heard of the idiom of someone wearing their heart on their sleeve – well, that’s the automotive industry. Dealers were there in huge numbers tipping off their view that the automobile industry is well on the way to recovery.

Workshops were well attended, the Expo floor was buzzing and there were great comments about the general sessions. I saw several South Dakota dealers at the convention and I know there were several others there that I did not see. I hope all of you had a great convention.

However, I believe one of the primary functions of the NADA convention is to stay close to those issues that threaten dealers and to fight for those of them who cannot stand up to fight for themselves. We, as dealers, have a great many serious challenges barreling toward us. So, despite the jovial the mood at the Convention, we must be vigilant.

On a personal note, I was really moved by Aron Ralston, who had to amputate his right arm with a knife to free himself from a boulder after a hiking accident. His autobiography “Between a Rock and a Hard Place” was the subject of the film “127 Hours.” I highly recommend both.

I really enjoyed former President George W. Bush’s speech as well. He told several humorous anecdotes about himself, even poking fun at his tendency to mangle certain phrases. But it was his compassion, sincerity and his love for our country that really struck me. It will be interesting to see how the historians treat “W” in 20-30 years.

Facility Image Programs Study Released

Glenn Mercer’s report on facility image programs was released shortly after the convention opened. You can find an executive summary and the full report on the first page at nada.org.

I found Mercer’s methodology to be sound and the report is written in a manner that makes it interesting to read. (I took it to bed one night thinking it would put me right to sleep and ended up reading the entire report in about 45 minutes.) His conclusions can be boiled down to three primary issues.

He believes that it is incumbent upon OEMs to provide dealers with more persuasive business cases for investment in facilities. The cost of these programs is needlessly high and he recommends individual OEMs and their dealers to work together to tackle cost issues and he encourages OEMs to revisit again how they “tier” their programs to make them more affordable for the smallest rural stores. And finally, he recommend to both OEMs and dealers alike to jointly tackle the issue of whether the dealerships we are building today are going to be the successful dealerships of tomorrow.

Whether you have recently done a facility upgrade, are currently engaged in one, are considering one or have no plans for one, I encourage you to read at least the executive summary. It is a very in-depth analysis of a topic that very directly affects every new car dealer.

Arizona Repeals California Fuel Economy Rules

You’ve probably seen the photos of an angry looking Arizona governor Jan Brewer having a “discussion” with President Obama recently (would have loved to have been a fly on the Air Force One wing for that “discussion”). She recently has taken on the public workers union in her state with a package of legislation that is more extensive than similar efforts in Wisconsin last fall.

NADA praised the Arizona governor’s move last month to repeal its adoption of California’s fuel economy program, which duplicates existing federal mandates, calling it “a victory for consumers.” Arizona is the first state to repeal adoption of California’s fuel economy law. “These duplicative rules would have made it more expensive for working men and women to find affordable transportation,” NADA said in a statement to the press. “Duplicative state-based fuel economy programs like those in California hurt consumers by limiting vehicle choice without providing commensurate environmental benefits. With two distinct federal standards already imposed by the Environmental Protection Agency and the Department of Transportation, these rules were unnecessary. Auto dealers in Arizona and across the nation support fuel economy increases under a single, national fuel economy standard.”

Mark Your Calendar: NADA-Google Learning Hub Series at No Charge to Members!

NADA University and Google are presenting a series of four webinars, offered at no charge to NADA and ATD members only. The first webinar, “The Smartphone Revolution,” is activated on-demand for members in Learning Hub, in the Internet category. Next up is “The Google+ Project for Dealers,” to be presented live on February 29. Other dates and topics to be announced later.

January 2012 SDADA Column

You may have seen NADA in the news recently at a public hearing on proposed fuel economy rules for model year 2017-2025 passenger cars and light-duty trucks. NADA urged federal agencies (EPA and NHTSA) to properly consider the rising consumer cost of new vehicles.

According to EPA and NHTSA, the cumulative cost of all of their fuel economy rules will raise the average price of a vehicle by $3,200. Initial analysis from new research, conducted by NADA, indicates the federal government’s estimate of $3,200 may be substantially underestimated and the actual cost to consumers may be as high as $5,000. NADA’s study will be released in several weeks.

I think most dealers agree that we just want to sell the vehicles that our customers want to drive at the best possible prices. The vehicles that will conform to these proposed new rules WILL NOT be the vehicles that our South Dakota farmers and ranchers want to drive and certainly the prices will be much higher.

We all want fuel efficient vehicles but our customers have to be able to afford them. If they can’t, they won’t buy them and will continue to drive the vehicles they have. Stay tuned. There will be much more to come on this topic.

IT Committee Highlights Important eContracting Information for 2012

As you probably know if you visit this column on a regular basis, I have had the privilege of chairing the NADA IT Committee for the past two years. It has been a very interesting and educational two years for me. Our final IT project as a committee was to compile a summary of common features and frequently asked questions about eContracting that dealers can review as they evaluate the services available from third party vendors and lenders.

eContracting is the electronic exchanging of documents between a dealer and lender. It provides an opportunity to enhance the customer sales experience while reducing the time and effort of completing the sales contract. More and more lenders are initiating efforts to offer dealers eContracting alternatives and soon it will be the standard by which dealers complete the sales process.

Questions included in the summary are: "What additional equipment and computer applications would be needed for the F&I office?" and "How long will it take for the dealership F&I team to become proficient with the eContracting process?" You can access these resources at http://www.nada.org/Technology/eContracting/. I encourage you to check it out!

Three Reasons to be Optimistic about 2012 Sales

Last month I read a story that made me even more optimistic about this year. It was about a young woman in Bakersfield, Calif., who recently got a job as a cashier and receptionist at a Mazda/Mitsubishi dealership. Within a few months Jade Tolentino was promoted to an accounts payable position and – after putting it off for quite some time – bought a new SUV using her employee discount and today’s incredibly low finance rates. When asked why she did it, the 24-year-old said “it was a step I felt I needed to take.” Translation: this is one example of pent-up demand – and it’s pent-up demand that’s expected to drive up sales this year.

Thankfully, stories like hers are becoming more common these days, as dealerships begin hiring again and consumer spending picks up. Both trends are good news for our industry, and enough reason for NADA Chief Economist Paul Taylor to forecast that we will sell about 1 million more cars and trucks in 2012 than we sold in 2011. Paul is predicting sales of more than 13.9 million units this year, driven by three factors: aging vehicles, affordable credit and aggressive incentives.

Altogether, these three “A’s” have the potential to make 2012 a much better year, Dr. Taylor says. As we know, more consumers are shopping out of necessity to replace their old cars and trucks. Interest rates on new car loans are at historic lows. And both domestic and international auto manufacturers are preparing to wage an aggressive battle to capture U.S. market share by rebuilding their inventories and offering competitive sales incentives. A decline in gasoline prices could also push car buyers to consider a wider range of vehicles in different segments.

If Paul’s forecast is correct—and he has a very good track record for accuracy—dealers and consumers could be in for a very good year, with stories like Jade’s being repeated all over the country—a reminder to us all that the American dream of owning a car, one of the most important factors in sustaining employment, is still alive and well.

December 2011 SDADA Column

There is a story about an optimist who fell from the top story of a skyscraper and as he passed the fourth story, he was overheard muttering, "So far, so good!"

Car dealers are a pretty optimistic lot. We can go several days without selling anything but each morning starts with the thought that “today we’ll sell ten cars”. That’s why I enjoy the company of fellow dealers. There is always a “silver lining”.

Search “car dealer optimism” on Google and you’ll find dozens of recent stories about dealers’ optimism for the 2011 year end. I’ll suggest that we are always optimistic. It only makes news when others think we should be optimistic.

2012 Convention on Pace to Be Biggest Since 2008

Expect that optimism to carry over this February, too, when we head to Las Vegas for the NADA/ATD 2012 Convention & Expo. If the last few months of 2011 are any indication, we have a lot to look forward to in 2012. The Expo is sold out. Convention attendance is up, which means the 2012 convention is shaping up to be one of the biggest in recent memory.

This convention will mark the first time NADA and its American Truck Dealers (ATD) division will host a combined event for car dealers and heavy- and medium-duty truck dealers. And early interest is off the charts. For the first time since the economic collapse of 2008, we’re on pace to draw more than 20,000 attendees.

As always, we’ll have a host of dynamic speakers, including Chrysler’s Sergio Marchionne; Aron Ralston, the climber who inspired the Oscar-nominated film “127 Hours”; and, our keynote speaker, former President George W. Bush. NADA University is offering more than 50 workshops, with two full workshop sessions beginning Friday, Feb. 3. And J.D. Power and Associates will again co-host Friday night’s Welcome Reception. We’ll also crown a new TIME Dealer of the Year and announce the winners of the ATD Commercial Truck of the Year and ATD/Heavy Duty Trucking Truck Dealer of the Year awards.

It’s going to be quite an event – and not just because it’s Super Bowl weekend! Hotel rooms are filling up quickly. In fact, seven hotels have already sold out. So if you haven’t done so already, make your plans today to attend by visiting www.nadaconventionandexpo.org. There’s no better place to take the pulse of our entire industry. And chances are the outlook will be … optimistic!

New Tools Make it Easier than Ever to Plan Your NADA 2012 Experience

NADA has several new tools to make the most of your experience at the 2012 NADA Convention & Expo. Here are a few:

• Follow convention news and updates on our new blog at http://nadaconvention.blog.com.

• Follow convention activities on Twitter, Facebook and Linked In.

• Create an action plan with myNADAplanner, an online scheduler that allows you to connect with exhibitors, search workshops and speakers and schedule franchise meetings.

• Download the NADA 2012 mobile app for iPhone or Android. Sync your app with myNADAplanner and carry your personalized schedule in the palm of your hand.

NADA Continues to Vigorously Defend Dealer-Assisted Financing Model

The Federal Trade Commission (FTC) conducted its third and final Motor Vehicle Dealer Roundtable on Nov. 17 in Washington, D.C. The FTC is examining what, if any, actions it should initiate to further protect consumers in the area of vehicle financing. The actions it may pursue include rulemaking, enforcement, and consumer and business education. As with the two prior FTC roundtables in Detroit and San Antonio, NADA representatives provided a vigorous defense of the dealer-assisted financing model and provided extensive information to correct and rebut a series of misstatements made about various dealer practices. NADA also underscored that, despite repeated requests for empirical information from the FTC, the consumer group allegations of dealer misconduct were anecdotal and unsupported by current and reliable data demonstrating that they are widespread.

November 2011 SDADA Column

Do you think you could sell a full-size pickup that got 50 miles per gallon? How much could you sell a truck like for? Could you get $75,000? $90,000? Would South Dakota farmers and ranchers be lining up to buy that truck?

I believe most dealers just want to be able to sell their customers a vehicle that fits their needs at the best price possible. The Obama administration has estimated the proposed 54.5 mpg by 2025 mandate will add an additional cost of between $3,100 and $3,600 to the price of a new vehicle (that is in today’s dollars). I wonder if that additional cost will be the same on a full-size pickup as it is on a compact car.

It seems like just yesterday we were talking about the new fuel economy standards for Model Years 2012-2016. But the Obama administration, driven to act by California, is particularly motivated to get the next round of standards done three years before they are required to do so.

This latest proposal – 54.5 mpg by 2025 – is raising some eyebrows. Most automakers have, in principle, agreed to the plan. But it’s far from the finish line. And if a growing number of members of Congress have their way, the administration’s efforts could be put on hold.

Last month, NADA applauded the bipartisan efforts of Congress members who sent a letter to the chairmen of the powerful House appropriations committee and the House appropriations subcommittee asking them to give the Environmental Protection Agency a one-year “time out” from their work on fuel economy standards for 2017-2025 and prevent California from implementing its “patchwork” fuel economy regulations. Members of Congress asked for support of an amendment by U.S. Reps. Steve Austria, R-Ohio, and John Carter, R-Texas. That letter and recent oversight hearings featuring several prominent House members, including Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, have ramped up pressure on the administration to justify its cost assessment of its proposed fuel economy rule.

NADA thinks it’s entirely too early to be talking about fuel economy proposals that won’t even be acted on until 2015. We’re backing a more practical approach that will allow us to learn from the current standards and see how consumers in the marketplace react to them. That’s why we support the Austria-Carter amendment, which seeks to ensure the impact of these rules on jobs, consumer choice and vehicle costs are properly evaluated. The amendment would also achieve one of NADA’s top regulatory priorities by temporarily returning rulemaking authority to the National Highway Traffic Safety Administration (NHTSA), the only agency required by law to consider the economic and safety impact of fuel economy increases.

Since this issue could severely affect our ability to provide our customers with the cars and trucks they need and can afford, our goal is to have regulators address legitimate questions about cost and affordability. With the help of Congress, we just might get that chance.

Take a Look at What’s New on NADA University

Have you browsed through Learning Hub and Resource Toolbox lately? NADA University is constantly enriching both centers with new content. Newly added online courses in Learning Hub include “Creating a Special Finance Operation” in the “Sales/Leasing/Finance” category, and “Overcoming Obsolescence” and “Unlocking Frozen Capital” in the “Parts” category. “Phone Fundamentals: Use Them or Lose Customers” is coming this month to NADA U’s new “Fundamentals” category. In Resource Toolbox, there’s a wealth of new entries under “Industry Information,” including NADA 20 Group’s Dealership Performance 2011 vs. 2010 and a SEMA study on “Influence of Accessories on New Vehicle Sales.” There’s also a new “Tip of the Week” category focusing on building strong customer and workplace relationships. Our new Driven Management Guide, A Dealer Guide to Federal Excise Tax Compliance, is also coming soon.

Watch New ‘Dealer Pain Points’ on NADAuniversityblog.com

NADA University continues to add to the popular “Dealer Pain Points” series. Look for these new videos and accompanying information: “Supersize Service Sales,” “Process Makes Perfect,” “Are You the Best-Kept Secret in Town?” and “Magic of Disappearing Profits.” All of these videos are in the “Service” category. In “Parts,” find “The High-Wire Act in Parts,” “Hide and Seek: A Costly Game,” and “Bermuda Triangle Swallows Parts Profits.”

October 2011 SDADA Column

Stephen Wade has spoken several times in the past two weeks about the NADA-commissioned independent study on factors that drive return on investment, specifically as it relates to facilities. Currently, there is considerable “buzz” in the automotive press about this study which is expected to be completed by year-end.

Manufacturers often justify image programs on the grounds that “the store image must support the brand” and “customers expect all our stores to offer a similar look and feel.” But there’s little hard evidence of the return on investment of such spending, to either the OEM or the dealer. As a result, we dealers make facility investment decisions based on subjective factors, such as opinions and personalities, which – as you know – is no way to run a business.

NADA expects the study’s findings to be of use to dealers and OEMs alike, by moving the facilities debate away from opinion and assertion and more toward facts and data. Hopefully, the results of this study will put dealers like you and me in a better position to make informed, rational decisions about our facilities.

NADART

I just returned from Washington, DC (for the second time in five weeks - lucky me!) where I attended my first NADART Board of Directors meeting. I was just elected to this board in September.

NADART provides full service, low cost retirement plans - including 401(k), pension and profit-sharing options with available features such as automatic enrollment, Roth contributions, new comparability consulting and a low cost, flexible fee structure. NADART has offered retirement plan solutions to NADA members since 1957.

Recently, the scope of NADART’s business has expanded beyond the auto industry and it now provides retirement plan services to a wide variety of small businesses and organizations, as well as many larger businesses. Employers choosing a NADART employee retirement plan receive exceptional value at a low cost.

As I see it, there are two questions any dealer who does not currently sponsor a NADART plan might have. First, why should I offer a qualified retirement plan to my employees? The right employee retirement plan can help you attract and keep qualified employees and it can help secure your own retirement by building some net worth outside of the automobile business.

Secondly, why sponsor a NADART plan? NADART retirement plans are offered at costs that are much lower than competitors with comparable services. NADART services include 24 hour a day account access, on-site consulting service, complete plan administration services, low-cost educational workshops and a toll-free information hotline.

I’m sure some of you are using a plan offered by a customer or someone you know in your community. That’s what I did for some time. But I can assure you that it is worth your time to take a look at NADART’s programs. I saved a lot of money and my employees are “completely satisfied”(!) with NADART.

Approximately 2,000 automobile dealers and 90,000 participants use NADART for their retirement plan needs. If you have questions, call NADART at (800) 462-3278. If you know other small businesspersons who may considering sponsoring a qualified retirement plan for their employees, do them a favor and have them call that number. Please feel free to call me if I can be a resource in any way.

NADA, ATD Using Technology to Enhance Convention Experience

The NADA-ATD Convention is fast approaching and this year it will feature several enhancements to dealers’ convention experience, including:

- A NADA Convention and Expo Smartphone App that will put the entire convention website at your fingertips

- Interactive displays throughout the convention center that will allow you to search for workshops, franchise meetings and exhibitors using a quick and easy touch screen

- A Social Connection Zone featuring a high-end lounge with a social media wall, comfy chairs, coffee, free wireless Internet and recharging stations

- MyNADAPlanner, the convention tool that allows you to select workshops, note times of franchise meetings, schedule meetings with exhibitors and create a road map to the convention before even leaving the dealership

Convention registration is brisk, with five hotels already sold out. Remember to secure your airline reservations early. The convention coincides with the Super Bowl and that may make flights difficult. Register today at www.nadaconventionandexpo.org.

September 2011 SDADA Column

At our Washington Conference board meeting, the NADA IT committee introduced the all-new NADA mobile app for the iOS (iPhone and iPad). I am excited to roll this app out because of all the potential it offers for our organization. I envision the app as the mobile portal to all things related to the automotive world.

For those of you using the iPhone or iPad, I would ask that you download the app, use it and provide me with some direct feedback – positive and/or negative. The only way to get this app to work for our member dealers is make it work for them. That is why your feedback is so important.

For those of you on the Android OS, we hope to have that version available soon. I will certainly keep you updated on our progress.

To download the app, go to the iTunes app store and search for “NADA”. The free NADA app should appear at or near the top of the list. Just download it and put it to work.

I look forward to your feedback.

Washington Conference

Myron, John Hageman, Mark McKie, David Hersrud, Dan Jacobson and I attended the annual NADA Washington Conference. While nothing I experienced there disputed the notion that Washington is broken, there were some reassuring moments from some of the speakers we heard from. We heard from John Boehner, Speaker of the U.S. House of Representatives, and Sen. Lisa Murkowski (R-Alaska) among others, but I was most impressed by 30-year old Rep. Aaron Schock (R-Illinois) who spoke at our NextGen reception. He is a very impressive young man. I advise you to keep an eye out for that name; you will see more of him!

Election Time
At our recent board meeting, we elected Bill Underriner as chairman and Dave Westcott as vice chairman for 2012. Underriner is a Honda, Hyundai, Buick and Volvo dealer in Billings, Montana. He is serving as vice chairman this year. Westcott is a Buick-GMC and Suzuki dealer in Burlington, N.C. They will take office at the 2012 NADA-ATD Convention and Expo in Las Vegas, which runs Feb. 3-6. I look forward to working with both gentlemen.

NADA Convention 

Stay Connected with the NADA and ATD Convention on Facebook and Twitter There are now more ways than ever to "connect" with the 2012 NADA/ATD Convention and Expo, Feb. 3-6 in Las Vegas. "Like" the convention's Facebook page (http://www.facebook.com/nadaconvention) and follow convention news on Twitter (http://www.twitter.com/nadaconvention) to receive instant updates on speakers, registration, exhibitors, hotels and more. Plus, stay tuned for NADA's new smart phone app coming this fall, putting the entire convention at your fingertips. And don’t forget to check out MyNADAPlanner, the tool that allows you to select workshops, note times of franchise meetings, schedule meetings with exhibitors and create a road map for the convention before even leaving your dealership. Convention registration is now open online at www.nadaconventionandexpo.org.

NADA has a great lineup of speakers for the event. President George W. Bush and Sergio Marchionne, chief executive officer of Chrysler Group, and chairman of Fiat Industrial S.p.A. are the scheduled keynote speakers for the convention. The inspirational address will be provided by Aron Ralston, who had to amputate his right arm with a knife to free himself from a boulder after a hiking accident. His autobiography “Between a Rock and a Hard Place” was the subject of the film “127 Hours.”

The 2012 convention, which runs Feb. 3-6 at the Las Vegas Convention Center, will mark the first time that the NADA and ATD conventions will be held together. The convention also includes workshop sessions, franchise meetings, hundreds of exhibits and a new Social Connection Zone. I believe that there is no other event that offers us dealers and our managers so much at one time in one location. Make plans to attend now!

August 2011 SDADA Column

I hope you saw the email from NADA chairman Stephen Wade to directors that I forwarded to Myron and asked that he send to SDADA members. The email indicated NADA has commissioned an independent study that will take an in-depth look at the issue of manufacturer facility image programs. This one resounding concern is heard over and over and from all parts of the country, regardless of dealership size or brand.

As Stephen Wade put it in his email to directors: “The perception today is that facility investment decisions dealers must make are often based on subjective factors: opinions, pressure and personalities, which is no way to guide such significant spending. NADA has undertaken this fact-based study to look closely at the various factors that drive the return on investment of facility programs, both positively and negatively, in order to move the facilities investment decision onto an informed, rational and fact-driven footing. In other words, we want to find out the truth so these important decisions can be based on facts, not perceptions. The study will be completed in the coming months, with a detailed White Paper by the end of the year.”

I have made my opinion on this issue well known in this space several times. I hope this is the first step for NADA to fully engage on this topic.

Dodd-Frank Law Takes Effect with Implications for F and I Office

It's hard to believe it's been a year since Congress passed one of the biggest regulatory overhauls our nation has ever seen. I'm talking about the so-called Dodd-Frank law (also known as the Wall Street Reform and Consumer Protection Act), which takes aim at lending standards that Congress members believe led to the financial crisis of 2008 and 2009.

Thanks to our successful grass-roots campaign in 2010, dealer-assisted financing was saved from additional federal oversight under the Dodd-Frank law. But auto loans, and more specifically the processes our F&I offices use to issue them, have been affected by the new law, which includes several provisions related to disclosure of credit terms and action a creditor must take when turning down a loan application.

Here are two big changes every dealer should know about and some ways NADA is helping us comply with these new rules.

1. New credit score disclosures for adverse action notices – Starting July 21, creditors who use a credit score in taking adverse action (such as turning down a request for credit) are required to include the consumer’s credit score in the notices they provide to customers. To help dealers comply with this new rule, NADA has updated its “Dealer Guide to Adverse Action Notices,” explaining when an adverse action notice must be issued, what the notice must say, when dealers can rely on a finance source’s notice and other important issues. This guide also includes a model adverse-action notice that NADA developed for dealerships based on the government’s model notice. To download the guide, sign in to or sign up for NADA University at www.NADAuniversity.com, select “Resource Toolbox,” then “Driven,” and “Legal/Regulatory.”

2. Changes to the Risk-Based Pricing Rule – Also included in the Dodd-Frank law were changes to the Federal Risk-Based Pricing Rule (RBPR), which requires dealers and other businesses that use credit reports and extend credit to consumers to provide a new notice, known as a Risk-Based Pricing Notice, to customers who receive credit on terms that are less favorable than the terms received by a “substantial proportion” of their other credit customers. (Note, however, that the changes to the RBPR do not affect dealers who issue Credit Score Disclosure Exception Notices in lieu of Risk-Based Pricing Notices.) NADA’s “Dealer Guide to the Risk-Based Pricing Rule” has been updated to account for these changes. To download the guide, sign in to or sign up for NADA University at www.NADAuniversity.com, select “Resource Toolbox,” then “Driven,” and “Legal/Regulatory.”

In addition to the guides, NADA University has produced a brief video on the changes featuring NADA attorney Brad Miller. You can also view the archived webinar “New Credit Score Disclosures for Adverse Action and Risk-Based Pricing Notices” at www.NADAuniversity.com in the Learning Hub under “Legal/Regulatory.”

KHOU Interview

So making it to 30 Final Fours is a news worthy event even in Houston!