INSIDE: • What Chrysler’S Bankruptcy Means to Dealers • NADA Pushes to Stabilize Industry • Beacon Hill Update

MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109 FIRST CLASS MAIL M a s s a c h u s e t t s US POSTAGE PAID BOSTON, MA PERMIT NO. 216

autoDEALER May 2009 • Vol. 22, No. 3 The official publication of the Massachusetts State Automobile Dealers Association, Inc Expressway Toyota Building on Success International LoneStar “Truck of the Year”

INSIDE: • What Chrysler’s Bankruptcy Means to Dealers • NADA Pushes to Stabilize Industry • Beacon Hill Update

M a s s a c h u s e t t s

autoDEALER

The official publication of the Massachusetts State Automobile Dealers Association, Inc S t a ff Directory

Robert O’Koniewski, Esq. Interim Executive Vice President [email protected] t A B l e o f C o n t e n t s Irene Varao Director of Administration [email protected] Laura Desmond 4 From the President: The Franchised Automobile Dealer Foundation Director [email protected] 6 Political Action: Beacon Hill Update Tricia White Accounting and Membership Manager [email protected] 8 Cover Story: Mike Nixon Expressway Toyota AYES State Manager [email protected] 10 THE TRUCK CORNER: Sam Poikail Information Technology & ATD Convention Report Membership Information Manager [email protected] 13 LEGAL: Bankruptcy and Tom Nash the Low-Hanging Fruit Brothers Robert Boch and Richard Boch Jr. Editorial Coordinator [email protected] ACCOUNTING: ”Trust is Not an Internal Control” Karen Kast-McBride 14 Administrative Coordinator [email protected] 15 PROFILE: MSADA Director Gary Beard Amy Copithorn Administrative Assistant 16 AYES: Dealers Continue Support, Students Compete in NYC [email protected] 18 INSURANCE: Employment Practices Subscriptions provided annually to Massachusetts dealers. All address changes 19 NEWS From Around the Horn should be submitted to: MSADA by e-mail: [email protected] 23 CALENDAR Postmaster: Send address change to: 25 NADA Update: Working to Stabilize the Industry One McKinley Square, Sixth Floor Boston, MA 02109

Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.

www.msada.org Massachusetts Auto Dealer MAY 2009 4 from the President

by James G. Boyle, President, MSADA

ATTENTION: Obama’s Auto Task Force The Franchised Automobile Dealer - The Automaker’s Lifeline R ight now the survival of our industry is in the hands represent, dealers act as an extension of the manufacturer. They of a group of people who collectively have very little support the manufacturers’ efforts by providing, at virtually experience with the U.S. auto industry. As bankruptcy deals no cost to the manufacturer, a vast distribution channel that and business models are structured through unprecedented allows for the efficient flow of product to the public. political pressure imposed by the Obama administration, the The relationship between the dealer and manufacturer Auto Task Force that the president has convened to oversee is mutually beneficial. The dealer’s significant investment the restructuring of GM and Chrysler is setting the stage for allows the manufacturer to spend its resources on research and eliminating entire swaths of dealers across the country, with development of product while the dealer spends its resources on apparent little regard for the economic impact such actions sales, marketing, and customer handling. Each group benefits will have on small businessmen and women, their employees, from the other and neither could afford all the expenses of the and the communities they serve. total value chain. Automakers spend their resources efficiently Somewhere, somehow the administration and the task force on manufacturing, and dealers spend their capital efficiently on have it fixed in their mind that our dealer body is part of the serving the consumer. The independent franchised dealer body cause of GM and Chrysler’s problems. In fact, without dealers is the lifeblood of the automaker. While the retail consumer is these companies would be nothing. the dealer’s customer, the dealer is the manufacturer’s only The independently owned and independently financed customer. franchised automobile dealer network is a critical asset to the In November of 2007 I had the opportunity to go to Japan auto manufacturers. U.S. auto dealers have $233.5 billion as a member of Toyota’s National Dealer Council to meet invested in their businesses. Dealers’ investment represents with the Toyota Board of Directors and voice our concerns more capital than the total industrial assets of any of the about the future. We selfishly wanted all of Toyota’s resources world’s largest automakers. This capital is supplied by 20,700 focused on the United States market, the number one market in independent dealerships that nationally employ and train the world. The Toyota Board members were keenly aware of over 1.1 million people. The dealer body is not owned by the the political uncertainty coming to Washington in the coming manufacturer but is independent and self financed. It serves as year and feared protectionism and overzealous regulations the link between the assembly line and the consumer. on emissions and potential labor issues. The Toyota Board Far from being a burden to the manufacturers whom they reminded us that “even Toyota has limited resources” and that

MAY 2009 Massachusetts Auto Dealer www.msada.org MSADA 5

“Communities all over Massachusetts rely on dealerships

to act as a major employer and tax Msada Board by James G. Boyle, President, MSADA Barnstable County base and to support local teams Gary Beard, Dick Beard Chevrolet Berkshire County and charities. If dealerships go, [Open] Bristol County Shawn O’Hara, O’Hara Mazda their shoes will not be filled in Essex County William DeLuca, Woodworth Motors Ann Regan Flynn, Regan Ford, Inc. these economic times.” Franklin County Steven Lorenz, Don Lorenz, Inc. Hampden County Jack Sarat, Jr., Sarat Ford Toyota must carefully plan its global strategy. Hampshire County At the reception after the meeting, I had a conversation with a Toyota [Open] Vice President, Mr. Uranishi. He explained all the current opportunities Middlesex County in Brazil, Russia, India, China, etc. and went on to ask my why Toyota James Boyle, Tuck’s Trucks should have to risk dealing with all the complexity in Washington and Chris Connolly Jr., Herb Connolly Motors the fifty State Houses. My answer was simple and is as true today as it Scott Dube, Bill Dube Hyundai was then: The Dealer Network, which is the very best in the world. He Norfolk County couldn’t argue; he knew I was right. Toyota and every other manufacturer Jack Madden, Jr., Jack Madden Ford would have to spend 10 times what they spend on manufacturing to get Mike Shea, South Shore Chrysler the distribution network we offer for free. We need to continually share Plymouth County that story in Washington and on Beacon Hill. John Santilli, Sr., The Nissan Center United States dealers have invested over $233 billion with a “B” of Suffolk County their own money to build the world class distribution channel for all Robert Boch, Expressway Toyota manufacturers. If a dealer wants to close the business, it should be Worcester County up to that dealer to decide -- not the manufacturer and certainly not Joel Baker, Baker Cadillac government. This country doesn’t need fewer dealerships; it needs more Medium/Heavy-Duty Truck Dealer entrepreneurs who seek the reward for the financial risk they willingly Director-at-Large make. We entrepreneurs are the best hope for recovery. Richard Witcher, Minuteman Trucks, Inc. MSADA is leading the way on this debate and is meeting with legislators to remind them how valuable dealers and car sales are to this Immediate Past President Dana S. Goodfield, Dana Automotive economy. Communities all over Massachusetts rely on dealerships to act as a major employer and tax base and to support local teams and charities. NADA Director If dealerships go, their shoes will not be filled in these economic times. Raymond Ciccolo, Village Auto Group (If you desire additional information on this topic, please review the Officers Casesa Shapiro Group report at NADA.org.) President, James G. Boyle t Vice President, John Santilli, Sr. Treasurer, Steven Lorenz Clerk, Jack Madden, Jr.

www.msada.org Massachusetts Auto Dealer MAY 2009 6 Political Action 2009-10 Legislature Takes First Steps by Robert O’Koniewski, Esq. MSADA Executive Vice President, and Director of Legal & Government Affairs

ow that the snow has finally melted and of the joint committee. The Legislature’s joint Spring has jumped upon us, the Massa- committees consist of 11 House members and N chusetts General Court has shaken off its six Senators.) winter doldrums and rushed headfirst into a new legislative session. The session lasts two years, Bring Your Issues to and this time around the House of Representa- tives almost immediately confronted a change in the Table leadership. On April 15, your Association convened a In March, the Massachusetts House of Rep- gathering of Essex County member dealers and resentatives elected a new speaker, Robert De- key managers at the Allenhurst Restaurant in Leo (D-Winthrop) to replace Sal DiMasi, who Danvers to meet with Rep. Speliotis and discuss resigned the speakership and his state represen- several issues of importance to dealers. Deal- tative seat. The election of Speaker DeLeo put ers focused primarily on the so-called “right to an end to the never-secret jockeying to replace repair” legislation, which we successfully beat DiMasi by DeLeo and his rivals for over the last back in the 2007-08 session but has been re-in- two years. troduced. With the election of a new speaker goes the se- This bill, under the guise of servicing cars and lection of an entirely new leadership team, from trucks, would require automobile manufacturers assistant leaders to chairman to vice chairman. to release proprietary, trade secret information to Of the 160 representative seats, the Democrat aftermarket parts companies, including the disclo- majority party has almost 50 paid leadership sure of sensitive vehicle security information. We slots to fill. (By contrast the Republican minority see this bill as the first step of getting the camel’s party has five paid leadership slots to fill.) nose under the tent in an effort to take warranty One such leadership posting that dealers work away from dealerships and to erode dealer- should be interested in is the chairmanship of the ships’ parts sales. The aftermarket parts compa- Joint Committee on Consumer Protection and nies are funding this effort, using the independent Professional Licensure. The new House chair- repairers as their “front” to convince legislators man of this committee is Rep. Ted Speliotis, a that the dealers and their OEMs are in a grand Democrat from Danvers. Rep. Speliotis is actu- conspiracy to prevent repairers from being able to ally in his second stint as a representative. He fix cars and trucks properly. Independent repairers originally served from 1979-1986, left to work already do more than 75 percent of the non-war- for his alma mater, Northeastern University, and ranty repair work, but to listen to them one would was elected again in 1996. This chairmanship think dealers and the OEMs seek their complete is his first leadership posting during his tenure removal from the industry. on Beacon Hill. (Senator Michael Morrissey, a Chairman Speliotis heard directly from deal- Quincy Democrat, returns as the Senate chair ers, their GMs and service managers how this

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legislation is not about fixing cars but clunkers” proposal. Other groups such as Jack Madden Ford; Essex County Di- getting more money into the pockets the Retail Association of Massachusetts, rector Bill DeLuca, Woodworth Motors; of the aftermarket parts companies, ul- Associated Industries of Massachusetts Jim Hurrell, MSADA legislative agent, timately to the economic detriment of and numerous chambers of commerce and me. consumers. Additionally, he received also opposed the tax increase. At the top of the list for discussion valuable information as to the capital ex- Although some legislators saw merit to were the elimination of the statutory re- penditures and training costs all dealers the MSADA idea, House leadership ulti- quirement for the used vehicle log, affec- need to invest in the dealership in order mately was more interested in grabbing tionately referred to as the “police book”; not only to meet the obligations of their the low hanging fruit offered by a tax hike. continued improvements to the lien re- franchise agreement but also to be com- House leaders anticipate the increase will lease and titling process, especially as it petitive and proficient in the after-war- bring in an additional $900 million. They relates to lenders whose business model ranty repair industry. At this MSADA will need it, because once the tax increase consists of ignoring the law; and devel- legislative meeting, Chairman Speliotis was passed, the House went on to add an- oping regional, cross-border reciprocity saw the other side of this fight from your other $600 million to its original bottom for electronic vehicle registration (EVR). colleagues in his district. line. They now acknowledge that “dismal The Committee has scheduled a June economic projections will likely derail “Tax increases of $900 million, 2 public hearing on the “right to repair” the House budget.” legislation, but this may be moved to For the sales tax hike to become law, an additional $600 million July or later. We will provide more de- it would need to be included in the final in spending, $1 billion less tails as this fight unfolds. budget document that gets sent to the in revenue to begin with, governor in anticipation of the start of threatened gubernatorial House Budget – the 2010 fiscal year on July 1, 2009, and then signed by the governor. The Senate vetoes – stay tuned for the Sales Tax Increase has not indicated what its position may rest of this story.” On May 1, the House of Representa- be on a sales tax hike, but the governor tives passed its version of the state’s indicated during the House debate that Registrar Kaprielian, a former legislator, $28 billion FY2010 budget, on a 137-19 he would veto the tax increase. Adding recognizes the role that association’s play vote. (Three Democrats joined all 16 Re- an additional twist to this plot, as the in the political arena. She has committed publicans in voting against the spending House was winding down its delibera- to working with us to achieve solutions plan.) The House budget plan is notable tions, the Governor and Senate leaders to the concerns we have raised and to ef- in that it includes a provision to increase announced that they were ratcheting fect, where practical, the alternative poli- the state’s sales tax to 6.25 percent from downward by $1 billion the anticipated cies we have proposed to address those the current 5 percent. The tax hike was revenue amount the Commonwealth will problems. passed on a 108-51 vote, with 35 Demo- have available for FY2010. Most importantly, these meetings pro- crats joining the 16 Republicans in op- Tax increases of $900 million, an addi- vide your leaders an opportunity to share position. tional $600 million in spending, $1 bil- with the registrar their insights as to how MSADA opposed the sales tax hike, ar- lion less in revenue to begin with, threat- the RMV’s laws and policies are playing guing in a letter to the House legislators ened gubernatorial vetoes – stay tuned out in practice. In addition to members that the appropriate action to spur an eco- for the rest of this story. calling their county directors directly, I nomic revival would be to temporarily cut receive a number of calls each week from the tax to 3 percent through to December MSADA Quarterly members who need assistance from the 31, 2009, before allowing it to go back RMV. Your Association exists to assist up to 5 percent. In addition to the letter, Meeting with RMV you. If a situation arises in which you feel Jim Hurrell, your MSADA legislative On April 21, members of your Associ- you may have hit a road block with an agent, and I met with Rep. Jay Kaufman ation’s leadership met with RMV Regis- agency like the RMV, please do not hesi- (D-Lexington), House Chairman of the trar Rachel Kaprielian in another of the tate to contact the Association’s office or Joint Committee on Revenue, to discuss quarterly meetings she has committed to one of your directors. We are here to help our sales tax proposal and other legisla- having with us. Those who attended were you. tive issues such as the federal tax credit MSADA President Jim Boyle, Tuck’s t for new-vehicle sales and a state “cash for Trucks; MSADA officer Jack Madden,

www.msada.org Massachusetts Auto Dealer MAY 2009 8 Cover Story Heavy Traffic Expressway Toyota Goes with the Flow by Brian Filipiak

While it’s often the nifty gadgets, safety features, and gas mileage of a vehicle that serves as key selling points these days, brothers Robert Boch and Richard Boch Jr. — owners of Expressway Toyota — say the $13M renovation of the dealership has attracted more potential buyers with its new-and- improved curb appeal beside the Interstate 93 corridor. The two-floor dealership, located on Morrissey Boulevard in Dorchester, now stands a little over 30-feet high on a footprint of 2.3 acres. Two years ago, it stood a story shorter and about half its current size.

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“The place was … tired,” Robert Boch said, selecting carefully the adjective used to describe the pre-renovated state of his dealership, which the Boch brothers bought in 1992. “There’s also an initiative on Toyota’s part to have franchisees up- graded every ten or so years.” Heavy Traffic The original dealership—built in the early 1960s—was long overdue for a serious facelift. And so, much like a clas- sic car engine in need of restoration, the old-fashioned, if not outmoded, Express- An architectural rendering by Livermore Edwards and Associates, who designed the renovation way Toyota underwent a major overhaul to maximize visibility from I-93. that involved the flattening of the original building and the construction of a state-of- amount held before in the service area— But the move to more economical prac- the-art facility. and the expansion of the showroom as the tices isn’t quite finished as Boch plans to central improvements to the dealership. modify his boiler/chiller system to meet Building on Success “Customers should feel comfortable, the standards of the Environmental Pro- Despite what sounds like the type of all- and the new showroom emits a more re- tection Agency in order to recycle used out remodeling that would hinder day-to- laxing atmosphere,” Boch said of the main motor oil for heating, which he estimates day business operations, Expressway Toy- component to the dealership’s aesthetic would save $45,000 per year— just call it ota managed to remain open throughout makeover, which—with its floor-to-ceil- Expressway Toyota’s domestic answer to the renovation. The multi-million-dollar ing windows and rooftop skylights—al- fuel-efficiency. project, headed by Lee Kennedy Co.—a lows sunshine to flood the open room. Boston-based contracting firm—was di- Spanning out from the showroom is a Expanding the Market vided into two phases, Boch explained. waiting area with cushy seats and a 42- However, while he continues to pursue The first phase, with cars moved to inch high-definition television affixed to a further enhancements, Boch recognizes nearby satellite lots, broke ground on one black-paneled wall. Just behind the living that the largest benefit gained from the of the dealership’s former parking areas in room-like setting sits a mini-food court renovation resides in the dealership’s big- October 2006, and included the develop- dubbed the “Camry Café,” where coffee time boost in visibility. ment of a high-end parts and service de- brews and the smell of fries wafts through “We’ve always had great location, but partment, capped with rooftop parking. the air towards the consultant booths situ- now we have a larger presence,” Boch Upon completion of phase one in the ated along the opposite side. said of the Route 93 traffic that passes by summer of 2007, the forty-year-old main “We tried to accommodate our customers the store. building was demolished and replaced and staff as best we could,” Boch said of Since the conclusion of the full-scale with a spacious reception area and show- the dealership redesign, which also created renovation, Boch has calculated the divi- room, a much-needed improvement over additional employment, from 48 workers dends as monthly sales have trended up- its cramped predecessor, Boch said. two years ago to 83 and counting. ward so far, despite the current economic From preconstruction to the finishing In fact, it’s difficult to pinpoint any climate. Just as important, however, the touches applied last year, the entire reno- shortcomings within the dealership—from dealership has also seen its market expand vation process was carried out in roughly modern conference rooms with wireless beyond its typical clientele. 18 months with only the slightest of hitch- Internet access, to security monitors, to “We usually sell throughout Boston, es, such as the construction crew hitting a numerous break rooms spread throughout Dorchester, Quincy and other neighbor- seawall during foundation drilling. the two-story structure, it’s all covered. ing cities, but now we’re penetrating fur- The end result: a 44,000-square-foot Nearly every creature comfort not found ther south, into Randolph, Holbrook, and dealership with the roominess of a Toy- in the original dealership was incorporated Weymouth,” Boch said, sitting forward in ota Sequoia—a far cry from the 24,000- into the new one; and just about every ame- his chair, looking at the showroom where square-foot building that preceded it. nity that was in the pre-renovated Express- a handful of customers had just funneled way Toyota has received significant up- through the double-doors. “I only wish we Upgrading Comfort grades. Even the urinals now use water-free had done this years ago.” Among the upgrades, Boch cites the in- technology that saves thousands of gallons t creased bay capacity to 32 stalls—twice the of water each month, Boch explained.

www.msada.org Massachusetts Auto Dealer MAY 2009 10 the TRUCK corner ATD Convention Report Despite Economic Changes, ‘Fundamentals of Business Are Enduring,’ says ATD Chairman

Amidst one of the worst U.S. economic downturns Treadway pointed to several indicators that suggest resulting in a decline of commercial truck sales, the a brighter market may be coming: interest rates are chairman of the American Truck Dealers (ATD) com- friendlier; consumer and corporate purchasing power mended his fellow dealers for attending its annual has improved; wage pressures have eased; and driver convention in Washington, D.C., April 18–21. turnover rates have been cut in half. by Dick “Those of you here today have chosen ‘to keep Although “the world is changing,” and the future your oars in the water’ despite the rip tide that is rag- is unknown, Treadway urged his fellow dealers to Witcher ing through our industry,” said ATD Chairman Kyle remember the fundamentals of the business, such as Dick Witcher, the dealer Treadway and president of Kenworth Sales Co. in “the customer is king” and “quality sells” and “peo- principal at Minuteman Salt Lake City. ple do business with people they like.” Trucks, Inc., serves on the MSADA Board of In remarks to attendees at the 46th annual ATD In response to the current economic conditions, Directors as the Medium/ Convention & Expo, Treadway encouraged dealers ATD has set up a free, confidential, one-on-one con- Heavy-Duty Truck Dealer to maintain a positive attitude and prepare for a sales sulting “hotline” to help dealers handle financial and Director. recovery. operational challenges, Treadway said. “We need to stay close to our customers, close to Founded in 1970, the ATD division of the National our suppliers, even close to our competitors, to keep Automobile Dealers Association is the only organi- a pulse on the market,” Treadway said. “The key zation representing dealers selling new medium- and word here is ‘relationships.’ Are you building or rein- heavy-duty trucks in the United States. More than forcing the links between you and the folks who can 2,200 members of ATD receive full association ser- change your destiny?” vices from NADA.

Memphis Truck Dealer Richard Sweebe Wins Top Industry Honor Richard Sweebe, president and CEO of Diamond Companies in Memphis, Tenn., won the “Truck Dealer of the Year Award,” sponsored jointly by Heavy Duty Trucking magazine and the American Truck Dealers (ATD). Sweebe, one of six nominees, received the award at the opening general session of the 46th annual ATD Convention & Exposition in Washington on April 18. One of the six nominees was Massachu- setts dealer Christine Alicandro, dealer principal and CEO of Marty’s GMC/Buick/Pontiac/Isuzu in Kingston. Candidates were selected for business excellence, industry participation and outstanding civil accomplishments by a panel of professors from Richard Sweebe accepts the ATD Dealer of the Indiana University’s Kelley School of Business. Year Award in Washington.

MAY 2009 Massachusetts Auto Dealer www.msada.org the TRUCK corner MSADA 11

(L.-R.) Richard Sweebe, president and CEO of Diamond Companies in Memphis, Tenn with James L. Hebe SVP of Commercial Trucks Sales, Marketing, Dealer Operations and Pricing; John Whitnell Vice President of Dealer Operations; and Jack Saum Sr. of Beltway International LLC with the award for commercial truck of the year.

International LoneStar Named ATD Commercial Truck of the Year American Truck Dealers (ATD) named the International 42-wide bunk with a one-piece spring mattress. The living area is LoneStar the first “ATD Commercial Truck of the Year.” defined by optional hardwood flooring or carpeting and driver’s seat The announcement was made during ATD’s 2009 Convention & with an optional massage feature. Automotive-style features include: Exposition in Washington. LoneStar was one of five nominees for Standard ABS, roll stability, traction control and Bluetooth integra- the new award. The other nominees were: Freightliner Cascadia, tion for hands-free phone use. The truck can be equipped with 42 Kenworth T660, Mack Titan, and Peterbilt Model 386. different accessories, ranging from lights to shift knobs to chrome. The LoneStar was chosen by a judging panel of journalists from ATD announced in October, 2008, that it will recognize the best leading truck publications in North America. It was chosen because medium- and heavy-duty trucks by current model year sold in the of its design, innovation, quiet cab, and space utilization, said past United States each year with an award. The award, “ATD Commer- ATD Chairman George Grask, who announced the first annual win- cial Truck of the Year,” will be presented each year at the annual ner during a luncheon at the Gaylord National Resort & Conven- ATD Convention and Exposition in April. tion Center. Beginning in 2010, there will be two awards: one for the heavy- The LoneStar provides driver comfort, serviceability and aerody- duty truck (Class 8) and one for the medium-duty truck (Class 3-7). namics that deliver improved fuel economy. Inside, the LoneStar Judging criteria for the award include innovation, design, fuel econo- offers a work environment that converts to a living space. A fold- my, driver and owner satisfaction, ease of maintenance and safety. down Murphy bed-style bunk allows conversion from a sofa to a full t

www.msada.org Massachusetts Auto Dealer MAY 2009 MADCF Golf Day 2 0 0 9 DRIVERS WANTED Join your fellow dealers and associates for a terrific day of golf Friday August 14, 2009 Registration & Lunch: 12 noon Proceeds TEE TIME 1:30 pm benefit the Massachusetts Wayland Country Club Automobile 121 Old Sudbury Road, Wayland Dealers Price includes great golf, fabulous awards, priceless camaraderie and a tasty lunch and dinner Charitable Foundation CONTACT: Laura Desmond (617) 451-1051, ext. 219 — [email protected] MSADA LEGAL 13 by Attorneys Scott Silverman and Josie Martinez Bankruptcy and the Low-Hanging Fruit 13 What the recent news from Chrysler and GM means for dealers

Thoughts on the Chrysler for bankruptcy. All the hope (realistic or “Chrysler dealers Bankruptcy delusional) of a Chrysler/Fiat entity may not overcome the stigma associated with should find out Now that Chrysler is in the realm of the events that culminated in the bankrupt- bankruptcy, from a dealer’s perspective, cy. The reality is that finance companies very quickly if they there are three critical issues to consider. will focus their concerns amid fear on the First, unfortunately the normal protec- notion that the collateral supporting their will be getting the tions of our franchise statute that provide loans and lines of credit have irreparably dealers significant protections against plummeted. But for some governmental short end of the whimsical and unilateral terminations by intervention, finance companies will like- manufacturers may not apply. Despite the ly make the logical decision to issue mass bankruptcy stick.” various “Kum Ba Yah” speeches and pro- termination letters. paganda, it will be shocking if Fiat does Perhaps the biggest issue is the public dealers should pay close attention to what not take advantage of the bankruptcy pro- perception resulting from what is unfold- is unfolding with Chrysler and its dealers DRIVERS cess to pick and choose what assets, con- ing. “Bankruptcy” carries a connotation -- GM may not be far behind and dealers tracts, and -- more importantly -- which that a company is finished – we know that may have a better sense of what the future dealers it wants to see in the new Fiat/ is simply not true. Those looking to liqui- holds rather than it be a complete and total Chrysler entity. Chrysler dealers should date Chrysler’s assets to make money in mystery. find out very quickly if they are part of the short-term are thankfully not behind GM and Chrysler dealers alike need to the long-term plan, or if they will be get- the wheel, and under new leadership at band together to have a chance at protect- ting the short end of the bankruptcy stick. the company we can fully expect to see ing each other’s assets by supporting the Word has already leaked that only 75 per- a resurgence somewhere down the line. NADA effort. It’s in times like these that WANTED cent of Chrysler dealers may continue to NADA and MSADA become more valu- Join your fellow dealers and associates for a terrific day of golf exist under the new Fiat entity. GM Dealer Reduction able than they ever could be when the sail- Second, each Chrysler dealer is likely ing is smooth. Given the overall state of owed a significant amount of money by Attempts the industry, it would be all too easy for Chrysler. In its initial pleadings, Chrys- Manufacturers never invested in a manufacturers to pick off dealers on an ler has expressed its intent to pay these dealer network. Instead, they set up the individual basis. Both associations have pre-petition claims. However, this request system in which individual entrepreneurs the resources to make sure your interests may not be honored by the bankruptcy would invest millions of dollars of their stay in full view of those making the big court for a whole host of reasons. There personal funds to provide a system for the decisions. have been plenty of discussions about ev- distribution and servicing of their prod- Get involved, stay involved and don’t eryone involved needing to “take a hair- ucts. This was the justification for every turn a deaf ear. Your future may depend cut” and only this process will determine state legislature to enact laws to protect on it. how this will actually play out. Despite those investments. t earlier representations, now it appears that Today, many of those investments are at Chrysler will “only pay incentives to those a great risk. If GM files for bankruptcy as dealers that they believe have value to the Chrysler did, this will be true ten-fold as acquiring company.” Moreover, at least 25 these protections will be moot. As we’ve percent of sales incentive at the time of fil- said in the past, dealers need to do every- ing will not be paid at all. thing in their power to avoid being easy Third, but most important, will be the targets as franchise agreements come un- domino effect that now extends to floor der review. Every ‘t’ should be crossed plan lenders. Floor plan lenders for Chrys- and ‘i’ dotted, and any deviation from your ler dealers (who were already feeling in- agreement should be carefully examined secure) could not have been comforted so that you can position yourself to fend Scott Silverman and Josie Martinez are attorneys for McCarter & English, LLP. when hearing that Chrysler would be filing off any accusations going forward. GM

www.msada.org Massachusetts Auto Dealer MAY 2009 14 ACCOUNTING MSADA Trust is Not an Internal Control Rationalization – Fewer employ- herself to employee theft or fraud. There is by ees means more work for those fortunate to no substitute for internal controls. This is keep their jobs. However, those employees especially true in today’s economy in which Frank (usually) do not view themselves as fortu- shrinking profits and tightening credit make nate. They see two things: 1) more work and it more difficult to absorb substantial losses. O’Brien 2) less pay. Oh, and by the way, the dealer is Question #3: Are duties properly segre- often viewed as someone who doesn’t need gated? The key issue to remember with seg- Frank O’Brien is a principal at O’Connor & Drew, to worry about finances. Regardless of the regation of duties is to segregate the cus- P.C and is director of the truth, that’s the perception. tody of the asset from the ability to post to internal audit and fraud division. Opportunity – Lack of segregation accounting. Examples include: of duties leaves the dealer exposed. It doesn’t • The employee who receives the cash With the automotive industry engulfed in matter how long employees have been with should not post to accounting. the heart of our country’s economic crisis you or how much you trust them. In fact, it • The authorized check signers should not and the prospects of the Big Three still un- is usually the trusted employees that perpe- open the bank statement. certain, dealers nationwide have tightened trate the largest frauds. We investigated two • The cash sales clerk should not send out their belts and cut expenses. Who can blame frauds in recent years in which both employ- the receivables statement. them? It is the prudent business decision, ees (an employee of fifteen years and a rela- • The service advisor should not collect given the circumstances. In fact, for many tive of the dealer) allegedly stole hundreds of cash receipts for repair orders. dealers it is a matter of survival. thousands of dollars. • The accounts payable clerk should not Chances are we will be well into 2010 be- have access to open purchase orders. fore this economic decline turns around. So What’s a dealer to do? Question #4: When the lack of personnel So what are you supposed to do? Should dealers are cutting expenses to bring their causes functions to overlap, what controls you hire those recently released employees stores into the black, or at least break even. should be implemented? back to mitigate these risks? Absolutely not. This means cutting employees; as we all The dealer or a member of senior man- It is important, however, for dealers to un- know, the largest single expense on a deal- agement should review the bank reconcilia- derstand the risks involved in your current ership’s income statement is compensation tion on a monthly basis. business model so that you can properly (the benchmark being about 40 percent be- The dealer or a member of senior man- equip yourselves to combat those risks. fore taxes and benefits). agement should receive the bank statement Herein lies the problem Internal controls are key unopened and review canceled checks for authorized signatures and proper vendors. The problem with reducing your employ- Proper internal controls are essential in The dealer or a member of senior man- ee numbers is that it becomes more difficult all businesses -- big or small, profitable or agement should review the payroll register to properly segregate duties, exposing the unprofitable, prosperous economy or reces- on a weekly basis. dealer to employee theft or fraud. Compound sion. It is even more important in the auto- The internal auditor or outside CPA firm that with additional hours worked, and de- motive industry in which 12% of the em- should perform transaction testing of the creased compensation as commissions and ployees have criminal records. That is why cash receipts and disbursements functions, bonuses follow the downward trend of the criminal background checks are so vitally as well as internal control testing of other diminishing gross profits, and we are faced important. key accounts. with a situation in which all three elements Question #1: Are background checks and Who is watching your assets? of the fraud triangle are present: drug tests performed for all potential hires? Question #5: If the answer is your chief financial officer, Motivation – Reduced compensa- Question #2: Who has control of your controller, office manager, general manager, tion puts a strain on personal finances, es- checkbook? If the answer is anyone but or any departmental manager, then the ques- pecially after the employee has grown ac- yourself, you have a problem. The major tion becomes, who is watching them? customed to a certain lifestyle. There is also misconception for small business owners is These are all questions to ponder as you the possibility that a spouse working in an that because they trust certain employees, it adjust your business models and face the unrelated industry loses his/her job, placing is not necessary to implement and enforce challenges ahead. Taking the necessary steps an even greater burden of the economic sta- the proper controls. Usually, those employ- now could prevent your company from suf- tus of the family. Also, don’t forget about ees are ones with the most authority and fering substantial losses down the road. the risk of addiction, over which the dealer access. The business owner misplaces trust has no control. as an internal control and exposes himself/ t

MAY 2009 Massachusetts Auto Dealer www.msada.org MSADAMSADA PROLeFgalILE 15

Decades-Old Letter Inspires Dealer to Take Director Role Gary Beard hopes to help others band together in tough times Gary Beard wasn’t exactly gunning for a position on the Moving Up the Ladder MSADA Board of Directors. Running a dealership and serving as president of the Chevy ad group of New England didn’t leave room Beard started out as nearly all sons of dealers do. “I started out for much else. washing cars,” he said. “I worked my way up from there.” But in 2008, Beard took a position on the MSADA board – the Beard attended Northwood University in Michigan, where he third generation of his family to do so, as he recently discovered. received a degree in automobile marketing. His youngest son, An- Like many dealerships, Beard Chevro- drew, just graduated from Northwood’s Florida campus. By Tom Nash let is a family business – started in 1941 Angelo Salvadore, of Salvadore Chrysler Dodge Chevrolet in by Beard’s grandfather, Earle. Beard Gardner, got his start as a mechanic with Dick Beard’s dealership has childhood memories of following his father, Dick, to meetings in Barre. Salvadore worked at the Beard dealership for 20 years, when he served as a director for the MSADA. What Beard did not until it was relocated to the Cape in the 1980s. He sold used cars know, however, was that his grandfather had served in the posi- in central Massachusetts for ten years before taking on the store in tion as well. A recently found letter from MSADA Executive Vice Gardner. President Bill Plunkett, dated June 13, 1951, revealed his name as Salvadore said Gary Beard has carried on his father’s straightfor- a director. ward approach to business. The letter had floated between various dealerships over the years, “Everybody has their job to do, and if you do that, then you were and it was given to him only recently. treated well,” he said of his 20 years at the dealership in Barre. “I “I knew my father was a director,” Beard said, “but this was such really enjoyed working there. If he didn’t relocate and buy another a strange occurrence. dealership, I’d probably still be there.” “When I saw (the letter), I said ‘If the opportunity comes up, Salvadore also remembers the young Gary Beard playing at the I gotta do it.’ I probably wouldn’t have done it if I hadn’t seen it.” family’s camp on Queen Lake, recalling the youngster’s passion for motorcycles and off-road biking. “The only way that a group like us can get something Banding Together accomplished is to For Beard, taking on the role of an band together. One MSADA director has put him in a posi- or two lone dealers tion to help dealers during tough times. “We’ve been through many downturns won’t get anything in the past; they’re always a little differ- done.” ent,” Beard said. “Four dollar gas has made this different. Imports have taken a stronghold in the market. If you’re in a small market, it’s tough. On the Cape, I’m in the right town.” Along with McCarter & English attorney Scott Silverman, Beard has spearheaded efforts to form a dealer group to advocate their side as GM considers how to slash costs. “We want to make sure we have our voices heard,” Beard said. “There have been a number of dealers in this state raising their hands and saying they want in.” As Beacon Hill considers its own budget issues, including legislation that could dramatically alter dealers’ revenue, Beard says it’s important for all members to press their representatives to avoid hurting businesses. “The only way that a group like us can get something accomplished is to band together,” Beard said. “One or two lone dealers won’t get anything done.” t

www.msada.org Massachusetts Auto Dealer MAY 2009 16 AYES Auto Dealers Continue Support for AYES in ’09 As dealers continue to make staffing changes based on economic factors, do they have a need to make adjustments in their service departments? When sales are down, it means people are fixing and doing repairs to make their cars last longer -- “One of the best and this means service bays are filled and ways to fill the service is steady. Massachusetts was dealership need one of the early pioneers of the Automotive for entry-level Youth Education technicians is System (AYES) that began in 1995, but the through a ‘farm program really began to grow when a state league’ such as the field manager was hired in 2002. AYES program.” Prior to 2002, Massachusetts had – Mike Nixon, seven AYES schools AYES state manager that lacked guidance and direction. Today there are 15 AYES schools with an education track to follow, and the program may soon grow to 20 schools stretching from Cape Cod to the Berkshires. We are one of the top five states with intern placements, that adds up to around 100. The AYES program is a win-win for the dealers and the schools, which serves as a way to place the students for the schools as well as a means for the dealers to hire an entry-level intern with the skills to be productive in the automotive industry. A Valuable Partnership The program is managed by MSADA staff member Mike Nixon, who logs 40,000 miles a year servicing the 15 schools. The AYES program has many pieces to the model, Mike Nixon expands the basic model to offer more to the schools and to show value.

To discuss how your dealership can get involved in AYES, contact:

Mike Nixon, AYES State Manager [email protected] 617-451-1051 ext. 227 (office) 978-996-2234 (cell)

MAY 2009 Massachusetts Auto Dealer www.msada.org MSADA 17 Auto Dealers Continue Support for AYES in ’09 Mass. Students Find Success at National Tech Competition Evidence of the success of the AYES program came at the 2009 National Automotive Technology Competition held in New York City, where two students from Smith Vocational and Technical High School in Northampton placed tenth out of 39 teams.

Smith Voc. Tech. students Matt Clark (left) and Joe Tanguay (right) at the National Auto Tech Competition in New York City.

The students, Matt Clark and Joe Tanguay, along with instructor Jonathan Yourga, worked as Team Mazda. In eleven years of competition, it’s Massachusetts’ third best showing. Among other prizes, the students received several scholarship Matt Clark offers from schools across the country. works under the hood during the National Auto Tech Key points for a school to be part of the AYES Competition in New York City. program and AYES Massachusetts • NATEF Preparation For • Curriculum The Schools • End of Program Testing Matt Clark and • Instructor Technical • Donations Joe Tanguay of Training • Job Shadowing Team Mazda • Intern/Mentor Training • Student Tech Competition finishing up as a judge makes the rounds.

www.msada.org Massachusetts Auto Dealer MAY 2009 18 INSURANCE MSADA Employment-Related Practices Wrongful Termination • Discrimination • Sexual Harassment Pick up a newspaper on any given day and you’ll see headlines involving dis- Commitment crimination or harassment. Claims result- By Steven Megee - Consult with legal counsel to develop ing from employment-related practices are Steven Megee is regional sales manager at the Framingham Regional Office for a discrimination/harassment policy. serious issues in many industries. Zurich North America Commercial’s - Demonstrate management’s commit- All businesses should have an anti-dis- Programs & Direct Markets’ business unit. ment to that policy. crimination/harassment program. This - Maintain confidentiality and proper includes proper hiring and termination protected. Even the hiring managers may documentation. procedures and a “zero tolerance” policy have no real need for that type of informa- relative to discrimination or harassment tion. Follow-up of any form. The execution of such a - Make sure that all positions have a The program must offer the employee program offers protection for your busi- complete, written job description. alternate avenues of making a complaint ness. In at least one case, the U.S. Court - Provide new employees with an em- known. Consider implementing a hot line of Appeals for the Eleventh Circuit ruled ployee handbook that clearly describes: number for employees to call to report in favor of the employer because it had • benefits complaints. Vendors provide this service “developed and promulgated an effective • work rules and regulations through independent, unbiased counsel- and comprehensive anti-sexual harass- • wage and salary policies ors. ment policy.” • performance review procedures This is advantageous because it: How do you protect yourself from public • employee responsibilities scrutiny and unnecessary litigation? You – offers employees confidentiality when can start by developing an antidiscrimina- Education reporting incidents; tion/harassment program. Here are some – encourages employees to report inci- Employees must receive adequate train- suggested guidelines: dents immediately; ing on harassment and discrimination is- – lessens employees’ fears of retalia- sues (courts have ruled that training pro- tion. Hiring grams must be “well-known to employ- All written procedures, from initial - Establish policies prohibiting discrimi- ees”), including: complaint to resolution, must be followed nation or harassment of any kind. – definitions of harassment by the employer. - Require applicants to complete a full – notification of zero tolerance policy If the program is established as outlined employment application; never hire on the – procedures for complaint investiga- above, it becomes incumbent upon the spot. tion, remedial action and follow-up employee to utilize the procedural mecha- - Eliminate questions (interview and ap- Managers must be thoroughly trained on nisms established by the company. plication) dealing with age, race, marital how to handle harassment/discrimination Termination procedures must be com- status, handicap, health or ancestry. complaints. plied with by all parties, and thorough - Conduct the most extensive back- New employees should receive state and documentation is critical. ground investigation allowed by law. federally-mandated safety training before (Smaller companies can retain a vendor to performing any work activities. t provide this service.) - Implement a drug screening program. Be sure to check any legal requirements before implementation. MSADA Member Counsel Services - Remember that information obtained As a MSADA member, if you have a legal question regarding your employ- by employers on employment applications ment practices, contact attorney and MSADA EVP Robert O’Koniewski by is protected by federal privacy regulations. phone at 617-451-1051 or by email at rokoniewski @msada.org. Specifically, non-public personal information such as social security numbers are

MAY 2009 Massachusetts Auto Dealer www.msada.org from Around 19 NEWS the Horn MSADA

BOSTON CAMBRIDGE Prime Motor Group President Lone Cambridge Dealership Talks to NECN Profiled David Rosenberg, president of Westwood-based The Cambridge Chronicle recently spoke with the only dealer- Prime Motor Group, recently spoke to cable news ship in the city about how it’s faring amid falling revenues and network NECN in their studio, bringing viewers constant talk of GM bankruptcy. up to speed on how the struggles of the Big 3 are Andrew Bellizia, president of Cambridge Honda Chevrolet, told affecting dealers. the paper that like most dealers, he’s struggling. He has cut 16 Founded in 2007, the Prime Group has 14 deal- positions in the past three months. erships in Massachusetts, New Hampshire and Maine. According “The domestics took too long to read the buyer’s needs and to numbers supplied to the network, its total revenue in 2008 was wants and basically provided the wrong product at the wrong $504 million with 14,127 units sold. time,” Bellizia told the paper. Rosenberg said he was confident that GM would survive its fi- He noted that with gas prices still relatively low, some who had nancial struggle, adding that Chrysler’s situation seemed less en- abandoned larger vehicles are returning to them. couraging. “There is some desire for the newer models of the domestic “If you have the right franchise in the right location, you’re go- automobiles, but the lion’s share of the buying is still for an SUV ing to survive,” Rosenberg said. continued on next page

www.msada.org Massachusetts Auto Dealer MAY 2009 20 NEWS from Around the Horn

Lone Cambridge Dealership Profiled from previous page or a truck,” Bellizia said. “Prior to this people who wanted one, even if their lifestyle didn’t require it, drove the market.”

BOSTON Dealers Reflect onGlobe Troubles The Boston Business Journal, reporting on the Boston Globe’s battle with the New York Times Co., recently spoke to Ernie Boch Jr. about his feelings toward the long-established paper. “We’ve been in the Globe for over 50 years, and you know, they had their moment. In the 1980s, you had to be in the Globe if you wanted to sell cars. They were very expensive and arrogant. Now readership is going down and down and they’re less and less relevant.” Neal Bocian, who plans media for Herb Chambers, said he is making plans for the possible demise of the Globe. The company has cut its advertising from seven pages a week to one and a half. “I would take that money and I would move it over to other media Web sites,” Bocian told the Journal. “It’s sad, from a journalistic standpoint, when a paper goes out of business.”

WEST SPRINGFIELD Balise Honda Clears Zoning Hurdle The Springfield City Council and mayor recently approved a zoning change that will allow Balise Motors to build a 600-vehicle dealership that has been in planning stages since last year. Save the Date Mayor Edward Gibson told “It’s nice to see at the Springfield Republican the project will be a boon for the least a single blossom city by increasing jobs and tax in the business world. revenue. “It’s nice to see at least a It shows there is a single blossom in the business light at the end of the world,” Gibson told the paper. “It shows there is a light at the tunnel.” end of the tunnel.” – Springfield Mayor Edward Gibson

CHESHIRE Bedard Brothers Open Chevrolet Store Early last month, the Bedard Brothers opened a Chevy point in Cheshire, replacing the showroom that they had kept at North Adams since buying it in 2007. A new Dodge-Jeep-Chrysler showroom is being built across the street, which they plan to open by Summer. The two buildings together will total more than 16,000 square feet.

MAY 2009 Massachusetts Auto Dealer www.msada.org MSADA 21

AUBURN Bertera Nissan Gets Media Attention for Going Green WCVB-TV profiled Bertera Nissan recently as a business that has found an unusual way to save on heating bills: using motor oil that would otherwise get thrown away. Bertera’s Bruce Carr said the idea came when the dealership realized the 3,000 square-foot service center was costing them too much to heat. By filtering oil taken directly from cars and pumping it into a special furnace, the shop heats itself without any bills. “We’re just trying to be as efficient as possible as a business so for our waste disposal or any recycling we can do, it’s just good for the environment,” Carr told the network. Waste oil systems have become increasingly popular as dealers look for ways to cut costs and help the customer in the process. Carr said the shop changes the oil in about 400 cars every month, which he said is more than enough to keep the furnace running. The system costs around $8,000, which he said would pay for itself in a few years. Save the Date

Annual Meeting & New England International Auto Show Preview Night Tuesday, December 1, 2009 BOSTON CONVENTION AND EXHIBITION CENTER

www.msada.org Massachusetts Auto Dealer MAY 2009 22 NEWS from Around the Horn

SPRINGFIELD BRIDGEWATER Balise Closes Saturn Point and Miskinis Motors Vows to Keep Hampden Dodge Going According to a press release, Balise Motors recently shuttered The Brockton Enterprise reported that Miskinis Motors has its Saturn store in Springfield on request from GM. temporarily shuttered its service department and that its sales Employees have been offered other positions within the Balise team is available only with an appointment. Motor Group. Rumors that the Hampden Dodge, another Springfield point owned by Balise Buick/Pontiac/GMC since 2005, recently shut its doors as well. Trucks store was The deal- going out of busi- ership had a ness were refuted by 40-year his- president George An- tory, some- druk. thing Gen- “We’re walking eral Manager very conservatively,” Mark Richi Andruk said. “Now said was not what we’re hoping for lost on cus- are some loans that tomers. have come through

“We have ABC 40 reported on the dealership’s closing. with the stimulus heard some packages and things, Miskinis Motors President George Andruk stories from people who bought their cars here years ago, the and see where we’re spoke to the Brockton Enterprise in April first Challenger, the first Charger when they came out years ago,” going to wind up.” about pressing on in hard times. Richi told WWLP. Richi told the Springfield Republican the dealership had sold WESTBORO just 50 vehicles last month. Herb Chambers Opens His “I certainly don’t want to blame Chrysler,” Richi told the paper. “I know the Dodge product we have is fantastic.” 46th Store According to Balise, the 20 employees at Hampden Dodge have Amid reports of Herb Chambers’ constant expansion was news been given positions elsewhere within the group. of the opening of his 46th dealership, an Infiniti franchise in Westboro. Chambers told the Worcester Telegram & Gazette that despite the economy, he’s “insanely optimistic.” “This is an investment for the next 20, 30 years,” Chambers added. “We know this market is great. There are so many…young executives moving in that would be our customers for Infiniti.” The paper also reported that the showroom features 600-pound steel curtains that isolate each of its six cars. The dealership also contains an 18-car service bay. General Manager Dave Laliberte said there are 5,000 Infiniti owners within a 25-mile radius who will now have the dealership as a service option. “Service will do excellent immediately,” Laliberte said. “Sales, well, we’ll see what happens.” In addition to the new Infiniti point, a new BMW location in Sudbury was expected to open around the time Auto Dealer went Hampden Dodge GM Mark Richi talks to WWLP 22 about the to press. A new Mercedes dealership in Natick is still slated to store’s clsoing. open next year.

MAY 2009 Massachusetts Auto Dealer www.msada.org MSADA 23

BOSTON McCarter & English Talks to USA Today, Fox Business on Calendar GM Bankruptcy Saturday, May 9 • In Control Advanced Driver Training In a story that appeared last month outlining GM’s struggle North Andover, MA with possible bankruptcy, McCarter & English attorney Scott Sunday, May 10 Silverman gave his take on how dealers are being affected. • In Control Advanced Driver Training “(Dealers) are going to have to plan to operate without any Weymouth, MA expectation of when and if that money is going to come in the door,” Silverman told the paper. “It’s one issue of bankruptcy, Wednesday, May 13 • Lynnway Auto Auction, Lynn, MA but it’s usually a jaw-dropping one for dealers who are already • Southern Auto Auction, East Windsor, CT paper thin in the way they’re dealing with operations.” Among the hazards of a GM bankruptcy, Silverman added, Friday, Saturday May 16-17 was the possibility that rebates would go by the wayside and • In Control Advanced Driver Training Cape Cod Otis ANGB that warranty work would disappear. He also noted that GM Wednesday, May 20 • Southern Auto Auction, East Windsor, CT Lynnway Auto Auction, Lynn, MA

Wednesday, May 27 • Lynnway Auto Auction, Lynn, MA • Southern Auto Auction, East Windsor, CT Saturday, May 30 • In Control Advanced Driver Training Weymouth, MA

would likely attempt to terminate franchise agreements if they do file. Silverman also spoke on Fox News’ business channel at the end of April, outlining how dealers were walking a fine line between preparing for GM bankruptcy and trying to bring in business. COMING SOON Classified Advertising Send inquiries to [email protected]

www.msada.org Massachusetts Auto Dealer MAY 2009 24 NEWS from Around the Horn MSADA

NORWOOD go out with you, you feed animals at the zoo for a living!’ So he Boch’s Ferrari Point May Star in asks his brother, who runs the Ferrari/ Maserati dealership, for a job and he hires him.” Film The film is slated to begin filming in June. The Boston Herald reports that Ernie Boch Jr.’s Ferrari of New WORCESTER England may be appearing in the sequel to “Paul Blart: Mall Cop,” which was shot Harr Motor Group Discovers in Massachusetts and made $141 million in Twitter box office sales. Michael Gross, general manager at Harr Toyota Dodge Chrys- Boch told the Her- ler Jeep, has taken to the micro-blogging site Twitter to promote ald how the dealer- his dealerships’ promotions. ship may play a cen- The site, www.twitter.com, gives users a platform to post 140-char- tral role in the plot, acter messages. Users can “follow” each other and respond directly which will again star to each other. So far, Harr is approaching 2,000 followers. Kevin James. Gross recently used the site “One day this beau- to promote a Red Sox tickets tiful girl comes to the giveaway, available exclu- zoo and he asks her sively to those who had signed out,” Boch explained. on to receive Harr Group up- Kevin James as Paul Blart. “She tells him, ‘I can’t dates.

MAY 2009 Massachusetts Auto Dealer www.msada.org NADA Update by Ray Ciccolo 25 NADA Pushes on All Fronts to Correct Credit Situation, Stabilize Auto Industry NADA statement on impending Pontiac phase-out; Charter Dealer Executive Education class set to graduate from Babson; Auto voucher for veterans

Throughout April, NADA continued to push on numerous proudly represent the franchise. In addition, GM’s updated fronts to shore up the wholesale and retail auto credit situa- Viability Plan calls for a much more drastic dealership re- tion and to help stabilize the industry. In mid-April, NADA duction. GM says it will now aggressively move to eliminate met with GM’s Fritz Henderson and Mark LaNeve, and in over 2,600 (42 percent) of its dealerships by 2010. This is late April, association leaders met with President Obama’s an increased reduction of 500 dealers, and four years sooner autos task force. than the earlier plan. During that meeting, representatives of the administration In both cases, NADA will work closely with GM to ensure said they were considering ways to help dealers access mon- that dealers will be treated fairly and equitably. While NADA ey to buy vehicles for inventory through the Small Business understands the realities of the current marketplace, we also Administration. Dealers told the task force that increasing know that dealers didn’t cause the situation that GM finds it- the business-size standards and shifting to an employee- self in today. Dealers impacted by these decisions have been based size standard would help. Currently, SBA’s loan guar- good partners with GM and should be treated as such. anty program caps eligibility at $29 million in annual gross • The charter class of NADA’s Dealer Executive Edu- receipts, an amount that the majority of dealers surpass. “The cation partnership with Babson College, located outside mechanism they choose doesn’t account for the fact that cars Boston, is slated to graduate in July. The new MBA-like have gotten more expensive over time, but the returns don’t program focuses on leadership, management and entrepre- get larger,” says Andrew Koblenz, vice-president of NADA neurship, and it offers dealers and managers information to Legal and Regulatory Affairs. help survive the current challenging times. “Based on what’s A group of 35 U.S. senators, led by Sen. Jeanne Shaheen going on with the economy right now, the Babson program (D-N.H.) and including Massachusetts Senators Ted Ken- has prepared me,” says Chris Zammito, co-owner of Zammito nedy and John Kerry, also asked the Obama administration Automotive in Dartmouth, Mass. “You have to react to what’s to quickly expand dealers’ eligibility for SBA loans as well going on. What you’re doing today may not be what you have as to restore liquidity for retail auto and floor-plan lending. to do three months from now. It’s happening that quickly.” The letter was initiated by NADA. Babson is a leading provider of executive education and Dealers encounter two major stumbling blocks when try- management-development programs. Its MBA program has ing to push policymakers and legislators on liquidity restora- been ranked No. 1 in entrepreneurship for 13 consecutive tion. One is the lack of familiarity with the dealership busi- years by U.S. News & World Report. The charter class be- ness model. Most don’t know that dealers, not automakers, gan in March 2008. Students have completed five of the six pay to keep inventory, hence the great need for floor-planning one-week sessions, which are spaced about three months credit. apart and are held on the campus of the Executive Education The other is that securitized floor-plan loans don’t tend Center at Babson College in Wellesley, Mass. to experience defaults the way mortgages do. Among oth- Upon completion of the sixth session in July, the students er types of collateral, dealers’ personal and business assets will become the program’s first graduating class. NADA is back the loans. This is one point Koblenz made to a group now accepting applications for the next class which is set to of more than 20 capital and asset management firms in New begin in July. New details about the program, along with the York City this month. current brochure and application form, are available at www. DealerExecEd.org. In NADA news... The deadline for completing NADA’s Compensation Survey has been extended to May 30. Every other year, on NADA Statement on GM’s Pontiac Brand Phase-Out behalf of state and local dealer associations, NADA conducts and Revised Dealership Reduction Plan: a survey to collect compensation and benefits data. The data The announcement by General Motors that it will phase- are analyzed by geographic region, dealership sales volume, out Pontiac at the end of 2010 marks a sad day for the 80 and per capita income for the region. All information is year-old brand and especially, the 2,627 Pontiac dealers that continued on next page

www.msada.org Massachusetts Auto Dealer MAY 2009 26 NADA Update

from previous page opportunity to promote yourself as an “ENERGY STAR aggregated; no individual dealerships are identified. The Award Winner.” For an application and other information, analysis can only be as accurate—and useful to you—as the go to www.energystar.gov. responses we receive. Find out if your compensation and ben- Be sure to use the new Form I-9. If you’re hiring, you must efit packages are competitive enough to attract and retain the now use the revised I-9 Employment Eligibility Verification best possible staff to manage dealership departments, train form. The new form took effect April 3. The main changes employees, service cars and trucks, and sell the vehicles in to the form involve documents acceptable for identity and/or your showroom and on your Web site. Please participate in employment authorization. For example, all documents must the survey online at www.nada.org/survey. The results will now be unexpired; the Form I-688 Temporary Resident Card be published as an NADA Management Guide, Paying to and Forms I-688A and I-688B, Employment Authorization Motivate: Update ’09, which members will receive free in cards, are no longer acceptable; and foreign passports with late summer. certain machine-readable immigrant visas are acceptable. For Virtual and classroom seminars are a cost-effective way faster employment eligibility checks, employers are encour- to stay current on the most urgent issues facing dealers aged to use the Department of Homeland Security’s E-Verify today. program at www.dhs.gov/E-Verify . For more information, Key offerings for May/June include: go to www.nada.org/regulations . • “Decreasing Revenues, Rising Costs, and Shrinking Mar- • NADA AppraisalPRO, a new product from NADA gins,” May 27, 1–3 p.m.; Used Car Guide, provides dealers with the most com- • “Dealer Survival: Improving your Cash Flow in Tough plete view of their used-car market ever available in a Times,” June 18, 1–3 p.m.; single, affordable online tool. NADA AppraisalPRO in- • “Negotiating Techniques for Today’s Consumer,” June corporates the latest information and data from six industry 24, 1–3 p.m. ET. leaders: NADA Used Car Guide (Guide values); AutoTrader. These Webinars are offered at $199 per computer connec- com (retail asking prices); J.D. Power and Associates/Power tion. For more information, visit www.nada.org/seminars. Information Network (retail sales transactions); Manheim In addition to these, on June 4, 11, and 18, NADA and Market Report (auction sales transactions); vAuto (used- AutoTrader.com will offer their Spring 2009 Automotive In- vehicle market days supply); and Experian-AutoCheck (ve- ternet Marketing Webinar series. Learn more at www.nada. hicle history reports). org/springwebinarseries . NADA AppraisalPRO is available exclusively to dealer Honor vouchers from vets. U.S. veterans who lose the members of NADA and the National Independent Automo- use of one or more limbs or become totally blind are eli- bile Dealers Association at an annual subscription rate of gible for a one-time auto voucher worth $11,000 for the pur- $150 per month for unlimited lookups per site. chase of a new or used vehicle. For more, visit www.nada.com/appraisal. For the first Veterans may present dealers with Form 21-4502, which time, NADA’s member handbook is available online at includes instructions for both service members and retailers. www.nada.org/membership. The handbook includes depart- Dealers fill out the VIN and make/model and the veteran ment information and contacts. NADA has also mailed 2009 signs and dates it. The voucher amount cannot be shown as member packets to all members. The packets include an up- a down payment, but must be presented as a debt that the dated leadership brochure, which has contact information Department of Veterans Affairs owes. Reimbursements on for NADA’s leadership and Board of Directors; a database auto grants take about 10 days to three weeks to process. update form for member companies to update their contact Dealers may call their regional VA office or 800-827-1000 information; a NADA/ATD quick-reference benefits card; with questions. and a 2009 member window decal. For more information on The 2009 ENERGY STAR Small Business awards NADA membership, visit http://www.nada.org/membership deadline is fast approaching. If you’ve increased the en- or e-mail [email protected]. ergy efficiency of your business through upgrades or ener- t gy management improvements in the last two years and if you’ve used ENERGY STAR tools and resources to make these improvements, you should apply for a 2009 ENERGY STAR Small Business Award. The award is a great way for dealers to get recognition for energy improvements at their Ray Ciccolo, Village Auto Group, stores—and it shows their commitment to the environment. represents MSADA members on Winners will receive the following: a plaque to display at the NADA board of directors. their facility; public recognition via local news media; fea- He welcomes your questions and tured recognition on the ENERGY STAR Web site; and the concerns ([email protected]).

MAY 2009 Massachusetts Auto Dealer www.msada.org