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SEE WHAT’S IN STORE FOR

ALSO Compliance OverdrivePLUS Economic Outlook

M I S S I S S I P P I I N D E P E N D E N T A U T O D E A L E R S A S S O C I A T I O N

SPARK PLUG

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PRSRT StandardU.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

Insurance Options Now in Place for Mississippi Dealers

JAN

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2012

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http://www.lafcaa.com/

JANUARY/FEBRUARY 2012 T H E S P A R K P L U G

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BHPHNews

What’s in Store for 2012

WHAT’S IN STORE FOR YOUR STORE IN 2012? If it’s anything like 2011, it should be another good year to be in the Buy Here-Pay Here industry. The coming year will not be without its challenges, though. In fact, there are certain areas of the industry that could be more challenging than ever.

To get an idea of what to look forward to in 2012, we first need to review how 2011 treated the BHPH world. It was probably the weirdest year I can remember in the 15-plus years I’ve been in the business. Tax season was sporadic at best, which pretty much set the tone for all facets of the business for the rest of the year.

From a profitability standpoint, the dealers I have the distinct privilege of working with enjoyed an 11 percent overall increase in 2011 versus 2010. This increase was due mostly to the rightsizing of operations. Dealers focused on their entire operations, from top to bottom, on cutting the fat and running their operations based on the cash they were generating instead of relying on lines of credit.

I expect this focus to continue in 2012. Though funding sources have become more readily available, most dealers will be focusing again on generating the capital necessary to run their businesses from their businesses. As always, there will be dealers looking to grow aggressively through borrowing, and rates will continue to make this a very viable option. I don’t see rates rising drastically in the coming year, so it will still be a good time to borrow.

Having said that, I still see it being more difficult to secure new lines of credit in 2012. It’s going to take some patience and the willingness to educate some institutions about our industry.

Our dealer clients saw sales volume increase by almost 6 percent in 2011 despite

a sporadic tax season. Not a record-setting year by any means, but this was driven more by cash management. Dealers seemed to want to sell what their cash flow dictated rather than sell as much as possible. We all know we can sell as many vehicles as we want or have the financial resources to in this industry. There doesn’t seem to be a lack of customers needing or wanting what we have to offer.

The same will hold true for 2012. We should have the customers in the market to sell as much as we want. The biggest question will be inventory availability. Now, I’m normally a glass-half-full kind of guy, but when it comes to this, I think the glass may be half empty. Even though the prices somewhat leveled off the last half of last year, the numbers seem to be dwindling even more than usual.

Portfolio performance in 2011 included some stabilization from a dollar-loss standpoint, but from a number-loss standpoint, there was a slight increase or worsening in 2010. This was driven by a couple of factors, beginning with the need for inventory. Some dealers accelerated their repo times when a desirable unit was involved. This also helped stabilize the dollar losses, as vehicles were repossessed earlier and in better condition and thus earned higher recovery amounts.

The other factor was a renewed focus on underwriting and the overall collection process. Dealers remained more disciplined in both areas, seeking quality over quantity.

There will be more of the same this year. Dealers have seen the error of their past ways and are enjoying the spoils of their more disciplined labor. I expect the average charge-off to remain essentially the same and the number as a percent of sold to remain higher than in past years,

and collections dollars to improve as well as overall collection effectiveness.

The biggest thing to affect our industry in 2012 will come from the compliance front. The Consumer Finance Protection Act was signed in July 2010, establishing the Consumer Finance Protection Bureau. The rules of the Act were to have been drafted by August 2011, so we were hoping to know what kind of field we will be playing on. But, as with most things in our government, the rules are behind schedule. In the interim, I have already heard from a few dealers who have received a letter from the FTC – the Bureau’s governing body – informing them of pending audits.

That has dealers debating whether to remain in the industry, and is causing some who are looking at getting into the industry to delay their entry until the rules are set. This act and bureau are going to separate the men from the boys, so to speak. The dealers who are trying to the best of their ability to do the right things will survive, while those who operate in the gray areas will fall by the wayside. And the waysiders are going to cause the cost of doing business to increase for everyone else.

So here is the best advice I can give to dealers, as well as those wanting to get into the business in the coming year: Don’t wait. Don’t wait to get compliant. Don’t wait to spend a little money to do so. Don’t wait to review all processes and procedures. Don’t wait to review all expenses. Don’t wait to review all of your employees. Don’t wait to train. And definitely don’t wait to sell cars, collect money, and make money.

THE DEALERS WHO ARE TRYING TO THE BEST OF THEIR ABILITY TO DO THE RIGHT THINGS WILL SURVIVE, WHILE THOSE WHO OPERATE IN THE GRAY AREAS WILL FALL BY THE WAYSIDE.

BY BRENT CARMICHAELEXECUTIVE CONFERENCE MODERATOR

NCM ASSOCIATES INC.

[email protected]

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T H E S P A R K P L U G JANUARY/FEBRUARY 2012

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INSIDE

BOARD OF DIRECTORS

MAGAZINECONTENTS

ADVERTISERSINDEX

06 Economic Outlook09 Video Marketing12 Dealer Pre-licensing Seminars14 Compliance Overdrive

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATIONWWW.NIADA.COM • WWW.NIADA.TVNIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR [email protected] SPARK PLUG IS PUBLISHED BI-MONTHLY BY THE NATIONAL INDPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE (817) 640-3838. PERIODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF THE SPARK PLUG, THE MISSISSIPPI INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION, OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF NIADA, DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. COPYRIGHT 2011 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED.STATE MAGAZINE MGR./SALES Troy Graff • [email protected] Andy Friedlander • [email protected]/PRODUCTION MGR. Christy Haynes • [email protected] Nieman Printing

MIADAOFFICE1705 OLD WHITFIELD ROAD, SUITE APEARL, MS 39208PHONE: 601-939-9866 Email: [email protected] Site: www.mississippiiada.com

ADESA ....................................................................5AutoTrader.com ..................................... Back CoverFirst Consumers Financial ......................................7LA’s 1st Choice Auto Auction ....... Inside Front CoverSmart Auction ............................ Inside Back CoverUnited Acceptance ................................................9West Insurance .....................................................8

Chairman of the BoardLester R. Howell301 Clinton BlvdClinton, MS 39056601-924-3718

PresidentJimmy BolingP.O. Box 1271Grenada, MS 38901662-227-5637

Vice President Aaron Williams1428 Mississippi Dr.Waynesboro, MS 39367601-735-3916

SecretarySteven Watkins 5660 I-55 South Byram, MS 39272601-923-8600

TreasurerMadalene Daniell1500 Broadway Dr.Hattiesburg, MS 39402601-264-2210

WHAT’SNEWR A2Z EDUCATION SERIES - AutoZoneEducating the independent dealer to deliver the highest quality service levels to your customers, manage your shop efficiently, train your technicians and maximize profits.niada.tv

R TURBO TIPS – Cars.comProvides Independent Dealers with practicable and actionable tips to help you sell more cars now! niada.tv

R World Automobile Auctioneers Championship Live online coverage of the event begins at 11 am ET on Friday, March 3O, 2012 and is free for all online viewers. visit www.niada.com and click on the “EVENTS” tab or call (303) 807-1108.

MIADA’s Monthly District MeetingTHE NEXT DISTRICT MEETING WILL BE HELD at Long Beach Auto Auction at 6:30 p.m. on Jan. 17. The evening meal will be provided by Long Beach Auto Auction.

All dealers from the area will enjoy a wonderful evening meal and MIADA will give them an update on legislation and regulatory changes and illegal activities in the state affecting local dealers.

For additional information and to make reservations to attend, please contact the MIADA office at (601) 939-9866.

An Insurance Option for Mississippi DealersYOUR MISSISSIPPI INDEPENDENT AUTO DEALERS ASSOCIATION has heard your request for an insurance option for dealers. MIADA and Bryson Insurance Company have come together to provide Mississippi dealers with competitive insurance products in garage liability, garage keepers open, garage legal liability, workers’ compensation, dealer bond, homeowners fire and windstorm hospitalization.

Find contact information and more details on page 11.Once again, your association is working for YOU!

EDUCATION … STAYING INFORMED

MIADA Education Update WITH TODAY’S ECONOMIC ISSUES, AND AS NEW REQUIREMENTS AND REGULATIONS

come our way, never has it been more important to stay informed. In the real estate business, the most important things are “location, location, location.” In our industry it needs to be “education, education, education.”

MIADA’s primary role is helping keep Mississippi dealers informed. We do this through our monthly eight hour pre-licensing dealer education class, our Spark Plug magazine, state and national conventions, our website – mississippiiada.com – our dinner and informational district meetings offered around the state. Our MIADA office is available to answer your dealer questions at 601-939-9866, or come by and see us at 1705-A Old Whitfield Road in Pearl, Miss.

Can you continue to grow your business in 2012? Yes is the answer to the question, but only with new ideas, industry-preferred provider contacts, regulatory information and more education from your state and national associations. Stay informed and keep your business profiting in 2012 with the help of your Mississippi Independent Auto Dealers Association.

BY LESTER HOWELL, 2011-2012 MIADA CHAIRMAN OF THE BOARD

New vAuto Tool Blends AutoTrader, Manheim ToolsVAUTO HAS INCORPORATED THE DATA TOOLS of AutoTrader.com and Manheim in Provision, its new used car inventory management tool, designed to give dealers a comprehensive way to find used cars to stock at the right price.

The company’s first major product introduction since it was bought by AutoTrader last year, Provision blends the resources of AutoTrader and Manheim to help dealers tackle the three “W’s” of inventory management: What cars to stock, what to pay and where the car can be found.

“This is a business intelligence breakthrough for the automotive industry, made possible through our alliance with AutoTrader.com and Manheim,” vAuto founder Dale Pollak said. “Provision brings game-changing insights and tools to help dealers efficiently and effectively know what vehicles to stock, what to pay and where to find them—all with a real-time, precision approach.”

Provision allows dealerships to set targets for used inventory value, age, turn rates and gross profits. The tool then conducts a seven-point diagnostic test for all available used units, basing the test on supply and demand in the market. It also offers recommendations on pricing based on market response, reconditioning costs and the dealer’s profit goal and can check auction run lists.

Pollak said automatic transport scheduling with vendors will be offered in the future.“Provision goes a long way to eliminating the ongoing pain of used vehicle sourcing and management

challenges at dealerships,” Pollak said. “We’ve built a bridge between the top retail and wholesale marketplaces and made it easy to cross.”

“It’s a perfect blend of our people and respective market intelligence, technologies and resources to create a win-win for everyone,” Manheim president Sandy Schwartz said. “Provision will be a transformative force for the industry.”

For more information, visit www.vauto.com/provision.

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EconomicOutlook

The U.S. economy appears to be at an economic crossroad: to the right lies recovery and prosperity and to the left awaits a second recession, a plummeting stock market and rising unemployment. With current economic data that points in the direction of each of these paths, it becomes difficult to predict which outcome is more likely for the United States in the coming months.

In its most recent release, the Bureau of Economic Analysis announced an advance estimate of 2.5 percent for the third quarter U.S. gross domestic product. This follows an even weaker second quarter GDP, which settled at a lowly 1.3 percent. Inflation increased in September to 3.9 percent. This is combined with gold and silver prices that are again on the rise after sliding directly following the United States’ credit downgrade. Together these metrics suggest higher inflation in the U.S.’s future.

Key September/October DataPositive Signs

U.S. productivity remains among the highest in the world, while U.S. non-financial corporations’ cash reserves remain at nearly $2 trillion. The October Conference Board Global Leading Economic Indicators Report shows the U.S. and China increased by 0.2 percent and 0.5 percent, while Europe decreased by 0.6 percent. Though automobile, SUV and light truck sales were down 1.7 percent in September relative to August 2011, they were up 9.9 percent relative to September 2010.

Monthly total light vehicle sales have exceeded one million units for the past seven months. Personal disposable income is up 3.2 percent relative to September 2010 and now sits at $968.3 billion. Construction spending increased further in September and is now 48 percent higher than January 2011.

Negative SignsThe unemployment rate remained unchanged

at 9.1 percent in September as nonfarm payroll employment increased by 103,000 and private sector employment increased by 91,000. Oil prices climbed in October, surpassing $90 a barrel. Housing starts slid for the second straight month. Consumer confidence dropped considerably in October, reaching its lowest level since March 2009.

Current IssuesIn all my years in the retail auto industry and of

all the things I’ve experienced in selling vehicles, I’ve found the most impactful way to generate more sales is to follow up with guests who do not purchase the first time they visit your dealership.

That’s right. Study after study (I do a lot of them) clearly has shown that a typical retail dealership, whether franchised or independent, only effectively manages to achieve a 25 percent “be-back” rate of guests who leave without making a purchase on their first visit. That says 75 percent of the guests are not returning to that dealership to make a purchase.

Yet studies clearly show that guests who do return to gather more information or to re-evaluate their first visit are closed 50 percent of the time versus a 19 percent rate on initial visits. So the real question is, why are these high-percentage closing rate types of potential customers not returning?

The answer is … they were never asked to return. No one ever followed up with them. Over the years, I have been able to track many of these guests with a follow-up call regarding their initial visit. In more than 80 percent of the cases, when I ask, “Has anyone contacted you since your visit to the dealership?” the answer is an emphatic “NO.”

I wanted to put some teeth into my research in an attempt to determine the financial impact should a dealership develop and implement a

consistent (consistency is essential) follow-up procedure for guests who do not make an initial purchase. I selected a dealership averaging 49 retail used vehicle sales per month and turning its used vehicle inventory a minimum of four times per year.

With a clear focus on getting more guests back into the dealership for a “second shot,” the management team agreed to practice a very rigid and dedicated system of having managers follow up with the guests rather than the sales team – just for a controlled benchmark; the sales staff got the deal if the returning customer made a purchase.

Here are the results: Management involvement improved the return rate of guests from 25 percent to 34 percent within seven days, leading to a 31.5 percent increase in the effective closing rate. That led to a 30 percent increase in the used vehicle inventory turn rate. By getting management involved in the follow-up process, monthly used vehicle sales went from 49 retail units to 64 by month’s end, generating an additional $31,105 in gross and reducing operating expenses by approximately $2,795.

All because management got more involved in the follow-up process of guests who visited the dealership but did not make a purchase on that initial visit.

What would happen if your management team and sales team followed up, followed up, followed up and followed up?

Two Very Important Words:

B Y D R . T I M O T H Y N A S H A N D J O E L E S C O T A

Follow up!

Students interested in studying the automotive industry can contact Dr. Timothy Nash at [email protected] for information about Northwood’s programs

Dr. Timothy Nash, an associate professor in Economics, Business and Public Policy, heads specialty programs, including Automotive Aftermarket and Automotive Marketing, for Northwood University.

Joe Lescota is chairman of the Automotive Marketing Department at Northwood University and the instructor for the NIADA Certified Master Dealer program.

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MIADA & NIADA: Protecting Us from Excessive RegulationsI BELIEVE independent automobile dealers are among some of the most freedom-loving people in America. They love what they sell, love the people they serve and give freely to those in need.

The dealers I know love what they do. They enjoy every aspect of their industry … well, almost very aspect.

When we began Daniell Motors in 1978, we typed out a bill of sale (on a manual typewriter), transferred a title to the new owner and exchanged keys for a check. Those were the days! Now we find ourselves mired in more paperwork than we ever could have imagined 30 years ago. We often say, “If all we had to do was sell cars, it would be great.”

So what is the problem and how can we stay compliant while minimizing a future of bureaucratic burdens?

The United States ranks No. 9 in the 2011 Economic Freedom Index calculated by The Wall Street Journal and the Heritage Foundation. When it comes to fiscal soundness and openness to trade and investment, government size, business and labor regulation, property rights, corruption, monetary stability and financial competition, we are falling further behind other nations every year. Note business regulation and you see our issue – we are fighting just to do business.

I don’t know about you, but we are busy finding and reconditioning inventory, continuing customer service, maintaining our floor plan, paying bills and selling a few cars along the way. But who is watching out for new legislative regulations that can have unintended consequences – consequences that can minimize our ability to complete a credit report or sell a car?

There must be a legislative watchman for the independent automobile dealer. Our watchman is MIADA for Mississippi and NIADA for our industry on the national level. Without their oversight of proposed legislation and their warnings, we would already be far more restricted in our daily business activities. We would be juggling even more bureaucratic burdens – if you can imagine more.

It is a team effort to stay free of excessive compliance burdens. The most effective way to be a part of our industry’s team is through membership in our Mississippi and national independent dealer associations. If you are not a member, join today. The yearly membership fee of $250 covers both Mississippi and national membership. MIADA and NIADA are a vital foundation to doing business as a freedom-loving Mississippi car dealer in 2011.

BY MADALENE DANIELL

MADALENE DANIELL IS VICE PRESIDENT OF DANIELL MOTORS

INC., IN HATTIESBURG, MISS., AND TREASURER OF MIADA

AFTER PERSISTENT REQUESTS DURING the past year from NIADA, our state executive offices and dealer members across the country, CARFAX recently revised its television commercial campaigns.

The latest changes to the campaign were made in August and have been running throughout the fall and winter. Of the notable changes, CARFAX removed the word “Free” from the commercial voiceover, and also removed the phrase “from a reputable dealer.” The revised commercials can be viewed at http://www.youtube.com/user/Carfax

CARFAX is also in the process of testing an entirely new commercial campaign, with a tentative release date of April 2012. NIADA and its dealer members will be active participants in the critical commercial testing phase.

CARFAX also created a new NIADA liaison and client manager position to better assist NIADA, the state association executive offices and individual dealer members. Kathy Collins, the association’s point person with CARFAX, is already hard at work reaching out to several of our state affiliates on some new and exciting partnership initiatives for 2012.

Kathy has set up a new network of CARFAX regional contacts to handle dealer complaints about particular CARFAX VHR discrepancies. If you have questions or issues with any CARFAX reports, please call your state executive office, which will have the new regional and state contact information readily available.

You Demanded and CARFAX Listened: Ad Campaign Changed

IndustryNews

IF YOU HAVE QUESTIONS OR ISSUES WITH ANY CARFAX REPORTS, PLEASE CALL YOUR STATE EXECUTIVE OFFICE, WHICH WILL HAVE THE NEW REGIONAL AND STATE CONTACT INFORMATION READILY AVAILABLE.

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SAFEPAK CORPORATION, MAKER OF ELECTRONICALLY monitored deposit stations and ATM security products for banks, is entering the car business with a new line of electronic key control products aimed at dealerships.

SafePak’s Electronic Key Control Systems, priced from $1,995 up, can handle from five to 500 keys. The KeyStations range from from simple wall-mount and countertop varieties to vault-like free-standing kiosks for maximum key security.

SafePak featured its systems at the the recent International Autobody Congress and Exposition and the SEMA show, and the response led the company to add more key control products, SafePak president Buzz Siler said.

“We looked at all the competition’s products in this key management field and saw a huge gap,” he said. “We decided that, with the right investment in the latest technology, we could offer every feature that they did, but at much lower prices.”

Siler previously created the first remote access key dispenser for Cendant/Avis/Budget, a rental kiosk and lock dispenser for the self-storage industry and specialized key dispensers for the aviation and hotel industry.

For more information, visit http://safepakcorp.com/key-control.

Security Is Key as SafePak Adds New Product for DealersINDEPENDENT DEALERSHIPS NATIONWIDE contribute every day

to their communities but often go unrecognized for their community support. While many participate through special projects, others provide sponsorships and financial contributions, or lead innovative community improvement activities.

The NIADA/ Manheim National Community Service Award was created to honor those independent dealerships. Nominees must be members in good standing of the National Independent Automobile Dealers Association and nominations may be made by the dealership, a community business or organization, the state independent automobile dealers association, a community member or even a loyal customer.

Five finalists will be selected, and the winning dealership will be named June 13 at the Leadership Awards Banquet during the Annual NIADA Convention & Expo in Las Vegas. Manheim representatives will present the award, along with a $5,000 check made payable to the dealership’s chosen charity (which must be classified as a charitable organization under section 501(c)(3) of the Internal Revenue Code).

The nomination form can be found by clicking on “Manheim Dealer’s Edge” under the “Services” tab on NIADA.com. Please submit the form, along with the required nomination packet contents, by April 1 to the Community Service Award Selection Committee, NIADA, 2521 Brown Blvd., Arlington, TX, 76006. For additional details please contact Georgia Brown at (800) 756-4232.

NIADA/ Manheim National Community Service Award 2012

IndustryAwards

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VIDEO MARKETING HAS THE ABILITY to boost your local search ranking and drive quality traffic, via the social community, back to your website. There is a huge market on video distribution sites like YouTube and Vimeo just waiting to be tapped.

Take a look at some of these quick and simple ways your dealership can get started with video marketing:

Testimonials: These are a great way to promote your dealership – real people from the community expressing a positive opinion about their experiences. Think of it as online word of mouth, which is always the best advertising. A simple 20-40 second video of various interviews placed on your website, blog, social media and video distribution sites will give potential customers another reason to trust your services. People want real-life examples. Testimonials give them that. When the new owner drives away singing your praises, ask if he’d like a picture on his phone to share with his Facebook friends.

How-to videos: Interested consumers

are searching online for videos to help them solve their problems. Think vehicle safety or enhanced performance tips, maybe a short clip on installing child safety and booster seats or the importance of proper tire pressure. Short videos like these are great ways to give your dealership the reputation of wanting to help people without asking for anything in return. Like the old adage says: Give in order to receive.

Interview the dealer: Record a short welcome message from the dealer or general manager. Include local involvement, which can help the community relate to your dealership through a personal connection, not just the business one. Remember to keep it short and sweet to keep your viewers engaged and wanting more.

Incorporating video on your website, utilizing keyword strategy and distributing throughout the web will boost your overall search ranking. Successful dealers evolve with the times – in order to stay ahead of the game it is imperative to maximize your online visibility and reputation by becoming an active part of the social media community. You can start by capitalizing on the value in video SEO.

BY CHRIS MARENTISCHRIS MARENTIS IS THE FOUNDER/CEO OF GENNEXT MEDIA, AN

INTERACTIVE MEDIA AND MARKETING COMPANY, AND CREATOR

OF THE SUREFIRE SOCIAL LEAD GENERATION MARKETING SYSTEM.

FOR MORE INFORMATION, CALL (703) 896-7688, EXT. 111.

MarketingNews

Creating Serious Buzz with Video Marketing

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Records Retention GuidelinesTHE BEGINNING OF THE TAX YEAR usually triggers a mad scramble to locate all of the necessary documents to prepare tax returns.

If you retain absolutely all of your records, you might be faced with the monumental task of sorting through the mountains of paper to locate the documents you actually need. One occasionally needs to clear away unused items, but tossing the wrong paper or deleting a necessary data file can have dire consequences, especially for a business.

When disposing of documents, you may want to consider shredding.When you establish a records retention policy, some things to consider are:

• Is there a legal requirement for keeping the document?• Could the item serve any other purpose after it is used for its intended

purpose? Would the documents be needed to support or oppose a position in an investigation or litigation? Could the document support a tax deduction?

• What is the consequence of not being able to locate the document?• Can the item be reliably reproduced if needed?• How long should documents be retained?• Keep any document related to pending or threatened litigation until the

matter is settled and all appeals are exhausted.

Here are some general rules for how long to keep other records:One year: Duplicate deposit slips, I-9s (after termination), receiving sheets.Twenty-five months: Customers’ credit applications that were denied.Three years: General correspondence, employment applications, expired

insurance policies, petty cash vouchers.Four years: Freight bills; inventory lists; invoices; bank deposit slips,

reconciliations, statements, canceled checks; contracts – purchase and sales; depreciation records (retention begins after expiration); employee expense reports.

Five years: OSHA logs; photostat, carbon or other facsimile copies of each odometer mileage statement issued or received. Auction companies are required to keep records of the “most recent owner,” presumably the seller, as well as the name of the buyer, the vehicle identification number and the odometer reading on the date the auction company took possession of the motor vehicle.

Six years: Employee payroll records (W-2, W-4, annual earnings records – retention begins after termination).

Seven years: Accident reports; general ledger; accounts payable and receivable ledgers; bank statements; checks (most); contracts and leases (expired); electronic funds transfer documents; employee personnel records (after termination); expense analyses; product, materials and supplies inventories; notes receivable ledgers; purchase orders and time books and cards.

Eleven years: Worker’s compensation documents.Twenty years: Real estate records.Indefinitely: Accountants’ audit reports; cash books; account charts;

construction documents; important correspondence; deeds, mortgages, bills of sale and titles; depreciation schedules; financial statements; general ledgers; journals; licenses; loan documents; minute books of directors and stockholders, including by-laws and charter; property appraisals; articles of incorporation; by-laws; tax returns and worksheets and trademark registrations.

Employee records should be retained for the length of the employee’s tenure with the company, plus at least the statute of limitations period. Employment records may contain sensitive information and should be stored in a secure area. Immigration and Naturalization Services’ I-9 forms should be kept separate from active employee files to avoid discrimination claims.

A copy of each version of employment and training manuals should be kept with the dates that version was in use.

A D D I T I O N A L I N F O R M A T I O N R E G A R D I N G B U S I N E S S R E C O R D S R E T E N T I O N C A N

B E F O U N D A T W W W. I R S . G O V/ P U B / I R S - P D F/ P 5 8 3 . P D F . P E R S O N A L R E C O R D S

R E T E N T I O N I N F O R M A T I O N C A N B E L O C A T E D A T W W W. I R S . G O V/ P U B / I R S - P D F/

P 5 5 2 . P D F .

IndustryUpdate

Learn More

WORL

D AUTOMOBILE

CHAMPIONSHIP

IN NOVEMBER, THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION (NHTSA) and the Environmental Protection Agency (EPA) issued a joint proposal regarding new fuel economy and greenhouse gas emission standards for passenger cars and light trucks for model years 2017 through 2025. The proposed Corporate Average Fuel Economy (CAFE) standards range from 40.1 mpg in model year 2021 to 49.6 mph in model year 2025.

Detailing the costs and benefits of the program, the proposal states, “The agencies estimate that fuel savings will far outweigh higher vehicle costs.” The report estimates the technologies required to achieve the fuel economy standards will add, on average, $2,000 to the cost of MY 2025 vehicles, while fuel savings are forecast to range from $5,200 to $6,600 over the life of the vehicles.

Based on those costs and savings, the proposal calculates it will take four years for a consumer purchasing a MY 2025 vehicle with cash to realize savings. Consumers financing a MY 2025 vehicle on a five-year loan are projected to realize a cash flow savings of about $12 per month during the loan period.

The proposed standards for MY 2017-2025 include new options for manufacturers to achieve compliance. Beginning with MY 2017, manufacturers will be able to generate fuel consumption improvement values for improvements in air conditioning system efficiency to comply with the CAFE standards. They will also be able to apply savings from “off-cycle” technologies such as solar panels on hybrids, adaptive cruise control or active aerodynamics. In addition, the proposal includes manufacturer incentives encouraging hybridization of full-size pickup trucks.

The agencies’ joint proposal was published in mid-November, and public comments will be accepted through mid-January. For more information, the rule and related documents can be accessed on the NHTSA’s CAFE website at www.nhtsa.gov/fuel-economy.

BY ADR STAFF

CAFE Standards Update

THE WORLD AUTOMOBILE AUCTIONEERS CHAMPIONSHIP will be webcast live this year for the first time, courtesy of NIADA.TV. The live webcast of the 2012 WAAC can be viewed in its entirety on the home pages of www.niada.tv, www.niada.com and www.waacnet.net . Coverage begins at 11 a.m. Eastern time on Mar. 30 and is free for all online viewers. Cheer on your hometown favorite auctioneers and ringmen, and catch all the fun and excitement of the 2012 World Automobile Auctioneers Championship at your leisure, exclusively on all three websites. For more detailed information please visit www.niada.com and click on the “Events” tab, or call (303) 807-1108.

World Automobile Auctioneers Championship

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M I A DA & B r y s o n D e a l e r P r o g r a m s

A n n o u n c e P r e f e r r e d P r o v i d e r P r o g r a m

Cliff Little, CICVP - Transportation / Dealer Programs

301 Newpointe DriveRidgeland, MS 39157PH: 800-530-7055Cell: 601-896-8834FX: 601-707-2070

INTRODUCTION

Over the last 20 years, I have provided insurance counsel and financial planning to hundreds of companies, both large and small, throughout the Southeast US.

I earned my BS degree from Mississippi State University and am a designated Certified Insurance Counselor by the Society of Certified Insurance Counselors.

Throughout the years, I have gained the knowledge and experience needed to advise my clients on their asset protection needs.

ACHIEVEMENTS

• Received several industry awards for demonstrating excellent proficiency in all lines of insurance and for proven success in superior customer retention

• Active participant in multiple Insurance Industry Loss Control and Employee benefit management seminars

• Appointed and currently serve on several industry and boards and advisory councils

PRODUCTS AND SERVICES

Bryson Services • Work Comp Exp Mod Audits • Coverage Analysis • OSHA Compliance Inspections • Claim Consulting • HR Practices Consulting

Bryson Commercial Lines• Property / Casualty • Workers Compensation• General Liability• Professional Liability• Pollution Liability• Commercial Auto• Bonding • Directors & Officers / EPLI

Bryson Employee Benefits• Group Plans• Retirement Plans (401 K)• Dental Plans• Occ / Acc Plans• Disability Plans• Keyman Life Plans• Estate Plans• Business Life• Individual Plans

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Full Name_______________________________________________________________

Address________________________________________________________________

City___________________________State__________________Zip________________

Phone______________________________Fax_________________________________

Email __________________________________________________________________

Business Name__________________________________________________________

Address________________________________________________________________

City___________________________State__________________Zip________________

Phone______________________________Fax_________________________________

Email __________________________________________________________________

Payment Method

___Check Enclosed ___Money Order ___VISA ___MC ___DISC ___AMEX

Account #________________________________________________________ Exp________________

Account Name____________________________________________________ Zip_______________

Registration Fee $_________________ + C/C Proc. Fee $ 3.50 = Transaction Total $___________________

Signature of Authorization______________________________________________________________________

Mississippi’s Used Auto Dealer Pre-licensing SeminarRequired by theDepartment of Revenue

Seminar Location:MIADA Home Office1705-A Old Whitfield RoadPearl, MS 39208Office: (601) 939-9866 Fax: (601) 939-9882

Seminar dates are as follows:

q January 21, 2012/ 8a.m.-5p.m. q February 18, 2012/ 8a.m.-5p.m. q March 24, 2012/ 8a.m.-5p.m.q April 21, 2012/ 8a.m.-5p.m. q May 19, 2012/ 8a.m.-5p.m. q June 16, 2012/ 8a.m.-5p.m.

Registration Fee - $175.00 Please submit registration with payment to MIADA at least seven days prior to the date of the seminar you plan to attend. Your seat will be reserved and certificates will be presented at the end of the seminar.Dealer Resource Manual - $75.00Late Registration Fee - $25.00 Late registrations are accepted the week before class and walk-ins are accepted on the morning of class. However, the late fee is applied to the original registration fee and certificates for walk-ins will be mailed out the following week. *On the day of the seminar, No checks will be accepted.*Transfer Fee - $50.00 If you wish to transfer your registration to another scheduled seminar date, a 72 hour notice is required and a transfer fee is applied.Cancellations - $50.00 All cancelations are to be made 72 hours in advance in order to receive a refund, minus the cancellation fee.*Please Note* Due to limited and reserved seating, we can not allow sit-ins. Also, if you have any disabilities that require you to bring an assistant, please let MIADA know at the time of registration so we can reserve adequate seating.

Aimee Smith Pruitt is MIADA’s Pre-licensing education specialist. With more than five years experience in pre-owned dealership management and more than four years in education development and instruction for MIADA, she is our greatest asset. She has made major contributions to the curriculum that was first offered in July 2007. Education class participants continually rate this class as superior.

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What is Your Agreement?

WHEN IT COMES TO THE AGREED-ON SALES finance terms between a dealer and a buyer, a lot of questions need to be addressed to avoid misunderstandings and, consequently, compliance and legal troubles for a dealership.

What is the “agreement?” Is it in the credit application, buyer’s order, conditional delivery agreement, trade-in summary, manufacturer’s warranty, retail contract, other documents, or in some combination of them? If the terms are found in many documents, how do you know which ones?

In short, if you can’t easily determine which documents comprise your complete sales financing agreement then you are going to have challenges enforcing it. If the terms of those documents don’t all agree with each other, you are also going to have challenges enforcing them.

A strategy to avoid confusion is to say one document comprises the entire agreement between the parties. For example, a retail installment sales contract (RISC) may include a provision (usually near the signatures) that the entire sales financing agreement between the parties is in the RISC. This makes the RISC the one and only document containing the entire and final terms of the transaction. This is a “merger” or “integration” clause because it merges or integrates all terms into one agreement. The advantage is that if there is litigation, the one and only document needed to interpret the rights and responsibilities of the parties is the RISC.

But a recent court decision highlights how the advantage of a merger clause can turn into a disadvantage. In Duval Ford v. Rogers (District Court of Appeals, Florida, 2011), the court held that a dealer could not enforce its arbitration provision in the buyer’s order. Why? Because the RISC included a merger clause, saying that it contained the entire agreement between the dealer and buyer. Since the arbitration provision wasn’t in the RISC (and wasn’t included by reference), it fell outside the terms of the agreement. This was a case in which the merger clause kept out terms the dealer wanted to be a part of the final agreement.

That disadvantage of a merger clause can be overcome with an adjustment to the clause. A variation of the single document approach is including in the RISC specific references to other documents saying they are also a part of the merged terms. Together, the RISC and the referenced documents describe the entire agreement between the parties.

For example, the RISC could say the parties signed a separate conditional delivery agreement, which is incorporated into and made a part of the RISC by reference. The RISC could also note that

warranty documents are provided separately, including the Federal Trade Commission’s used car window form. Incorporating other documents by reference allows the parties to agree that a specific set of documents comprise the entire agreement. If you use this approach, you need to make sure the RISC includes cross-references to all the separate documents you want included in your final agreement.

It may sound like you should incorporate everything by reference into the RISC – that way you have it all covered. Not so. Another recent Florida decision points out the potential danger of including other documents. In Cuello v. Maroone Honda of Miami (Cir. Court, 11th Judicial Cir., Florida, 2011), the court found it was inconsistent to have RISC terms that purported to be final but then have a separate conditional delivery agreement saying the terms might not be final. The court held that the inconsistency created a Truth in Lending violation and corresponding state statute violations.

One lesson from that case is that the documents you choose to represent the entire sales financing agreement need to be consistent with each other (though whether the RISC and conditional delivery agreement are truly inconsistent is controversial and a topic unto itself). The RISC should include a cross-reference and maybe even a brief explanation about the other specifically included documents so all parties understand that they work together and why.

Perhaps another lesson from the Cuello case is that dealers should carefully choose the documents they want to be enforced as part of the final sales financing agreement between the parties. For example, pre-closing documents may reflect incomplete terms or terms in flux due to information not yet available or in negotiation. They might not include additional warranty protection or service products a buyer decides to purchase at closing. Merging those documents and terms would potentially create confusion about the actual agreed-on final terms.

The market’s response to recent Florida cases is still being determined. For now, it is clear that in Florida, or any other state, the best course of action is to review and determine which documents are intended to be a part of your final sales financing agreement with a buyer and then confirm that your RISC and other documents make it clear.

BY CHIP ZYVOLOSKIChip Zyvoloski is a senior attorney

for indirect lending at Wolters

Kluwer Financial Services. For more

information, visit www.wolterskluwerfs.

com/indirect.

ComplianceOverdrive

November Class Butler, Ronald D. D&S Auto Sales Byrd, Genada Conerstone Autoplex Cooper, Troy Cox, Jason Cumberland, Karen K Classic Car Restoration Davis, Tim Davis Imports Dear, Cathy Cupstid Auto Sales Eiland Jr., Otha Lee C&G Wholesale Charles A Goudy Greer, Tommy G Greer’s Motor Sales Magee, Gregory T Oatis, Azri O Cars Auto Sales Porter, Ryan Rhino Used Cars Ramsey, Stanley Ramsey’s Auto Sales Rucker Jr., Robert R S & T Auto Skelton, Gina (h.shirley) Hwy 18 Motors Siddall III, Williams S WSS Enterprise Smith, Kenrick Stanley, Ron CNC Auto Sales LLC Stapp, Mark Hillside Motors Tyler, Felix EV Auto Ward, Ora October Class Adcock, Eric Ball, Billy E. Country Auto Sales LLC Benford, Dorothy Jazzy Auto Sales Boloni, Bogdan Florian Autobahn Imports Butler, Dennis K-B Used Cars Couch, Jeffrey Sirius Enterprises Fortenberry, Gerri Sue F & F Auto Sales Fortenberry, James Sheldon F & F Auto Sales Garner Jr., Joe Lavan Autobarn of Mississippi LLC Gibson, Clare P. Angels Truck Service LLC Gibson, Joseph Paul Angel’s Truck Service LLC Giglio, John J & J Used Cars Hardy, Lee Houston Attended class in March. Re-attending Harris, Sr., Johnathan J & J Auto Sales Harrison, William Popp’s Auto Sales Hopper, Derek E. Flywheel Motors Knight, Preston Biggers Knight Brothers Magee, Jr., E.W. Parker, Crystal HP Auto Sales Parkman, Melissa M4 Pre-Pwned Auto LLC Pozsonyi, Adriah Autobahn Imports Sarmiento, John Frank Nationwide Car Sales Shull, Trint Allan Trint’s Auto Sales Simmons, Chris G. A Car Lott LLC Stanley, Chris CNC Auto Sales Stidham, Brett Edward Angel’s Truck Service LLC Thompson, Christian Shelby Motors of Picayune Tutor, Carol S. S & B Auto Sales Walker, Daisy Marie Jak’s Auto Sales and Repair White, Shaunta White’s Auto Sales White, Tonia Professional Results LLC Morris, Kem Tracy Certified Motors Henderson, Jonathan Henderson Motors Lear, Carolyn D C.T. Auto Parts & Towing

CONGRATULATIONS TO THOSE THAT HAVE ATTENDED AND COMPLETED OUR PRE-LICENSING SEMINAR THAT IS REQUIRED BY THE DEPARTMENT OF REVENUE.

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