News November 2015

MADA News inside Two Laws Effective 1/1/16 Annual Meeting and Luncheon Set for Disclosing Open Recalls th December 4 Customer Consent to Text The time of year has come again. MADA will gather with dealers from across Minnesota to review the year, celebrate the auto business and get ready for the year ahead. The MADA Annual Meeting and Luncheon will be held on Friday, December 4, at the Minneapolis Hilton. In addition to the MADA Annual Report, upcoming events members will be treated to videos, awards and our famous interactive survey. The luncheon’s keynote speaker is Dave dec MN New Auto Buyer Anderson, President of Dave Anderson’s LearnToLead, an 4 Minneapolis international sales and leadership training company. With a long dec MADA Annual Meeting career in the auto business, this talented speaker and author writes 4 Minneapolis a monthly leadership column for two national magazines. jan Title Basics Join us before the Annual Meeting for a special 12 seminar offered by Foresight Research, How to Minneapolis Influence the MN New Buyer, and to peruse the jan Certified Title MADA Foundation’s Silent Auction. 12 Minneapolis Sign up today at http://bit.ly/MADA-amtg and plan to Dave Anderson, come to this signature industry event. LearnToLead visit www.mada.org Gold Sponsors: for details, registration and a complete list of Upcoming Events and Training

Scott Lambert, Executive Vice President • 200 Lothenbach Ave. • West St. Paul, MN 55118 • (651) 291-2400 • 1-800-652-9029 • FAX (651) 291-2894 Legal News Metrowide Recycling Mandate Begins on 1/1/16 By January 1, 2016, owners of commercial property in the seven-county metro area will need to make sure their buildings have recycling services along with garbage collection. The new law applies to most commercial buildings that have service for four cubic yards (or more) of trash per week, and requires that a minimum of three material types be collected for recycling. The law does not specify which type of materials be recycled and may include: • Paper: Office paper, cardboard, newspaper etc. • Glass: Container glass • Plastic: Identified by the Society of Plastics (SPI) code, ranging from 1 to 7. • Metal: Aluminum, tin-coated steel, ferrous, non-ferrous • Organics: Food waste and non-recyclable paper - does not include yard waste • Other recyclables that may require specialized collection, such as textiles Single-sort (collecting multiple recyclable material types in one container) meets the requirement as long as three or more materials are collected. The Minnesota Pollution Control Agency has created a resource webpage with detailed information about the new requirement, which you can find on its website: http://bit.ly/MADA-PCA Many cities and counties also offer assistance to business owners, sometimes in the form of financial support, to set up new or improved collection systems. There are also several local resources for signage and training, including the Recycling Association of Minnesota and Rethink Recycling. All of these resources, and more, can be found on the Minnesota Pollution Control Agency’s Commercial Recycling page http://bit.ly/MADA-recycle. Questions can also be directed to Emily Barker, [email protected] or (651) 757-2030.

visit us online at www.mada.org

The Minnesota Automobile Dealers Association is a non-profit trade association dedicated to the progress of the retail auto industry in Minnesota. President Greg House, House Chevrolet, Stewartville President-Elect Mike Saxon, Inver Grove Ford Lincoln, Inver Grove Heights Treasurer Rick Jensen, Jensen Motors, Inc., New Ulm Secretary Michael Stanzak, Key Cadillac, Inc., Edina Executive Vice President Scott Lambert, MADA Executive Vice President

200 Lothenbach Avenue • West St. Paul, MN 55118 Metro: 651-291-2400 • Toll Free: 800-652-9029 FAX: 651-291-2894 • Web site: http://www.mada.org

November 2015 / Page 2 Legal News Collecting Insurance Information for DVS Effective January 1, 2016, Minnesota DVS is information in a blank space. Similarly, dealers required to collect no-fault insurance information. may handwrite the insurance information on The new law broadly applies to applications existing Minnesota titles if they’re used as the for title, registration and re-registration which title application. It’s also acceptable to submit a are submitted to DVS on or after January 1 - photocopy of the customer’s vehicle insurance regardless of the date of vehicle sale. card along with the transfer. Dealers will need to collect and submit the: Customers who are self-insured or have a policy • insurance company name, “pending” should use “999” for the insurance policy number and the title application date as the • insurance policy number, and policy expiration date. • policy expiration date. The new insurance requirements apply to self- The Application to Title/Register a Vehicle has propelled vehicles, motorcycles, and mopeds. been reformatted to accommodate the collection Pull-behind trailers are exempt. of insurance information. According to DVS, the revised PS-2000 form will be posted to their MADA Services will begin selling the new Title website on November 30. Application forms in December. Dealers may use up their existing supply of title applications and handwrite the insurance

Legal News Disclosing Open Recalls Each year, millions of vehicles become subject to recalls to their used vehicle customers. One safety recalls, but a relatively small percentage of the triggers for the FTC is dealers that hold of these recalls involve “stop operation” or “stop themselves out as “inspecting” or “certifying” their sale” notices. used vehicle inventory. The apparent Agency view is that such a representation is misleading if the Dealers understand that they can’t sell new dealer fails to disclose open recalls. vehicles with open recalls. Their obligation selling used vehicles with open recalls is less clear. No “The FTC is focusing on practices specific law regulates the sale of used vehicles by dealers who don’t disclose open with open recalls; however, factory requirements recalls....” could come into play with used vehicles of their own line. Concerns over possible liability in the The best disclosure to use is the official recall event of an accident also come into play. clearinghouse at www.safercar.gov. Dealers may wish to obtain a report on all of their used vehicles MADA staff has heard informal reports that the and provide a copy to customers upon delivery. Federal Trade Commission is taking an interest in the issue. The FTC is focusing on possible Dealers with questions should contact General deceptive and misleading advertising and trade Counsel Jim Schutjer at the MADA office. practices by dealers who don’t disclose open

November 2015 / Page 3 Legal News Obtain Consent for Marketing Text Messages The Federal Communications Commission issued purpose. There was some suggestion by FCC a “Declaratory Ruling” last summer designed to commentators that if there’s an app available for a rein in robocalls and autodialed marketing text smart phone - even though it’s not installed - that messages. With landlines seemingly fading away, Dealers can protect themselves by regulation of unwanted calls and texts is moving to our smart phones. The FCC uses a law called obtaining “express written consent” the Telephone Consumer Protection Act as the the phone may have the “capacity” to autodial and basis to protect consumers from unwanted calls therefore fall within the purview of the regulations. and texts but at the same time allow businesses to communicate with their customers. The issue is controversial. Not all commentators agree with the expansive definition of autodialers. At first blush, the Ruling last summer wouldn’t The few courts that have examined the issue appear to have much impact on dealers. It only tend to take a more practical view and are less applies to calls or texts made from “automatic likely to see a message initiated by a human as telephone dialing systems.” Dealers wouldn’t autodialed. consider smartphones or CRM systems that they employ as meeting the definition. The Dealers can protect themselves by obtaining communication process isn’t automatic. It requires “express written consent” from their customers human intervention. Dealers aren’t blasting to receive marketing calls and texts. The consent their customers. They’re typically responding to must be unambiguous and include the dealership requests for information or carefully targeting name and customer’s phone number where they messages to their existing customer base. may be contacted. Giving consent cannot be a condition of purchase. However, the National Automobile Dealers Association advises that the FCC Ruling takes The FCC ruling is here: http://bit.ly/FCC_TCPA a very expansive view of regulated systems. Regulated autodialers only need the “capacity to store or produce, and dial random or sequential numbers” even if not presently used for that

MADA News MADA Dues Billing Coming 2016 MADA annual dues invoices are in the mail. MADA is committed to supporting its members with expertise on the most current developments in the legislative, regulatory and legal spheres. Our legal guidance, information services and lobbying work, both state and national, help you gain the edge you need to survive and thrive. Your dues are an important recommitment to the information and assistance we are here to provide. We hope you feel we have earned your support. The 2016 invoice will look a bit different. The dues billing has been integrated into our overall accounting and membership management systems. The billing will appear on a MADA Services Invoice. Please call on us if you have any questions or concerns.

November 2015 / Page 4 Released by: Minnesota Auto Outlook Minnesota Automobile Dealers Association Covering the Minnesota automotive market Data thru September 2015

Minnesota New Retail Car and Light Truck Registrations Most Recent Two Months YTD thru Sept.* YTD Market share (thru Sept.*) 8/14 & 8/15 & % % 9/14 9/15* change 2014 2015 change 2014 2015 change Industry Total 37,943 40,745 7.4% 159,264 159,034 -0.1% 13,863 13,002 -6.2% 60,420 54,429 -9.9% 37.9 34.2 -3.7 Light Trucks 24,080 27,743 15.2% 98,844 104,605 5.8% 62.1 65.8 3.7

Japanese Brands 14,096 14,680 4.1% 56,079 55,283 -1.4% 35.2 34.8 -0.4 Toyota 5,208 5,381 3.3% 20,241 19,698 -2.7% 12.7 12.4 -0.3 Honda 3,658 3,615 -1.2% 14,687 14,062 -4.3% 9.2 8.8 -0.4 Nissan 2,046 2,286 11.7% 8,451 8,754 3.6% 5.3 5.5 0.2 Other 3,184 3,398 6.7% 12,700 12,769 0.5% 8.0 8.0 0.0

Domestic Brands 19,365 21,482 10.9% 83,358 85,054 2.0% 52.3 53.5 1.2 7,834 8,706 11.1% 33,637 35,590 5.8% 21.1 22.4 1.3 Ford 6,677 7,487 12.1% 28,906 29,071 0.6% 18.1 18.3 0.2 4,839 5,260 8.7% 20,674 20,222 -2.2% 13.0 12.7 -0.3 Other 15 29 93.3% 141 171 21.3% 0.1 0.1 0.0

European Brands 2,137 2,042 -4.4% 9,567 8,832 -7.7% 6.0 5.6 -0.4 Volkswagen 1,060 1,021 -3.7% 4,660 4,329 -7.1% 2.9 2.7 -0.2 BMW 545 456 -16.3% 2,356 2,007 -14.8% 1.5 1.3 -0.2 Mercedes 320 321 0.3% 1,540 1,384 -10.1% 1.0 0.9 -0.1 Other 212 244 15.1% 1,011 1,112 10.0% 0.6 0.7 0.1

Korean Brands 2,345 2,541 8.4% 10,260 9,865 -3.8% 6.4 6.2 -0.2 Brands included above: Domestic Brands: GM (Buick, Cadillac, Chevrolet, and GMC), Ford (Ford and Lincoln), Chrysler (Chrysler, Dodge, Jeep, and Ram). Japanese: Toyota (Toyota, Lexus, and Scion), Honda (Honda and Acura), Nissan (Nissan and Infiniti), Other (Mazda, Mitsubishi, and ). European: VW (Audi, , Porsche, and Volkswagen), BMW (BMW, Rolls Royce, and ), MB (Mercedes Benz and smart), Other (Alfa Romeo, , Ferrari, Fiat, Jaguar, Land , Lotus, , and Volvo). Korean: Hyundai and Kia. *Figures for September 2015 were estimated by Auto Outlook. Data Source: IHS Automotive.

Percent Change in Three Month Moving Average of Percent Change in State and U.S. New Retail Registrations versus Same Period Year Earlier New Retail Light Vehicle Markets YTD ‘15 thru September* vs. YTD 14 12.4% 15.0% 11.3% 8.5% 10.0% 6.5% 4.7% -9.9% 5.0% 2.6% 2.7% State 5.8% 0.0% -1.3% -5.0% -2.7%

% change vs. year earlier -5.5% -10.0% -7.0% -6.6% Cars -4.1% Trucks -15.0% U.S. 13.3% -20.0% Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15* Last month in period -15.0% -5.0% 5.0% 15.0% 25.0%

The graph above provides a clear picture of the trending direction of the state market. It shows the year-over- The graph above compares the change in new retail car and light year percent change in the three month moving average of new retail light vehicle registrations. The three truck registrations in both the area and U.S. markets. month moving average is less erratic than monthly registrations, which can fluctuate due to such factors as *Figures for September 2015 were estimated by Auto Outlook. the timing of manufacturer incentive programs, weather and title processing delays by governmental agencies. Data Source: IHS Automotive. *Figures for September 2015 were estimated by Auto Outlook. Data Source: IHS Automotive.

Data Information All data represents new vehicle retail registrations in Minnesota and excludes fleet and wholesale transactions.Please keep in mind that monthly registration figures can occasionally be subject to fluctuations, resulting in over or under estimation of actual results. This usually occurs due to processing delays by governmental agencies. For this reason, the year- to-date figures will typically be more reflective of market results. Data Source: IHS Automotive.

November 2015 / Page 5 Minnesota Auto Outlook Data thru September 2015

Minnesota New Retail Light Vehicle Registrations State Market Share for Top 15 Selling Brands Registrations Market share YTD ‘15 thru September* vs. YTD 14 YTD '14 YTD '15 YTD '14 YTD '15 thru Sep. thru Sep.* % change thru Sep. thru Sep.* TOTAL 159,264 159,034 0% 17.7 Acura 1,193 1,103 -8% 0.7% 0.7% Ford 17.6 Audi 1,288 1,225 -5% 0.8% 0.8% BMW 1,940 1,670 -14% 1.2% 1.1% Buick 3,011 2,961 -2% 1.9% 1.9% 15.9 Chevrolet Cadillac 1,089 967 -11% 0.7% 0.6% 14.9 Chevrolet 23,687 25,232 7% 14.9% 15.9% Chrysler 2,661 3,007 13% 1.7% 1.9% 11.2 Dodge 5,497 4,286 -22% 3.5% 2.7% Toyota 11.6 FIAT 212 162 -24% 0.1% 0.1% Ford 28,093 28,227 0% 17.6% 17.7% GMC 5,850 6,376 9% 3.7% 4.0% 8.1 Honda 13,494 12,956 -4% 8.5% 8.1% Honda 8.5 Hyundai 4,784 4,545 -5% 3.0% 2.9% Infiniti 652 589 -10% 0.4% 0.4% 5.1 Jaguar 48 47 -2% 0.0% 0.0% Nissan 4.9 Jeep 6,928 7,320 6% 4.4% 4.6% Kia 5,476 5,319 -3% 3.4% 3.3% 251 368 47% 0.2% 0.2% 5.0 Lexus 1,755 1,815 3% 1.1% 1.1% Subaru 4.8 Lincoln 813 861 6% 0.5% 0.5% Mazda 3,437 3,400 -1% 2.2% 2.1% 4.6 Mercedes 1,513 1,395 -8% 0.9% 0.9% Jeep 4.4 MINI 416 356 -14% 0.3% 0.2% Mitsubishi 1,637 1,505 -8% 1.0% 0.9% Nissan 7,799 8,142 4% 4.9% 5.1% 4.0 Other 168 123 -27% 0.1% 0.1% GMC 3.7 Porsche 215 235 9% 0.1% 0.1% Ram 5,588 5,628 1% 3.5% 3.5% 3.5 Subaru 7,618 7,895 4% 4.8% 5.0% Ram 3.5 Tesla 58 126 117% 0.0% 0.1% Toyota 18,486 17,864 -3% 11.6% 11.2% Volkswagen 3,157 2,871 -9% 2.0% 1.8% 3.3 Volvo 450 458 2% 0.3% 0.3% Kia 3.4

Data source: IHS Automotive. 2.9 Top ten ranked brands in each percent change category are shaded green. Hyundai 3.0 *Figures for September 2015 were estimated by Auto Outlook. YTD '15 thru 2.7 Sep.* Dodge 3.5 YTD '14 thru Sep.

2.1 This report is sponsored by the Minnesota Automobile Dealers Association Mazda 2.2 and produced by Auto Outlook (800-206-0102).

Auto Outlook, Inc. is not responsible for management decisions based on 1.9 the content of Minnesota Auto Outlook. Copyright Auto Outlook, October Chrysler 1.7 2015.

1.9 Reproduction, including photocopying of this publication in whole or in Buick part, is prohibited without the express permission of Auto Outlook, Inc. 1.9 Any material quoted must be attributed to Minnesota Auto Outlook, pub- lished by Auto Outlook, Inc. on behalf of the Minnesota Automobile Deal- 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 ers Association and must also include the statement: “Data Source: IHS Market Share Automotive.” Data source: IHS Automotive. *Figures for September 2015 were estimated by Auto Outlook.

November 2015 / Page 6 Member News Ken Evans has passed away. Ken was a long time Dodge dealer in Roseville. Endorsed Service & Vendors General Motors presented Papik Motors, Inc., Luverne with an Check Guarantee/Credit Card Processing award for 25 years as a Chevrolet, Buick, GMC and Cadillac FIS / Certegy dealer. Collections Springer Collections Steve Lillestol is proud to announce that Thief River Ford has Computerized Vehicle Registration opened a new Quick Lane Tire and Auto Center. CVR Dealer Bond Program Yarmon Ford in Paynesville has completed a 7,050-square- Ensure Agency foot expansion which includes an enlarged showroom, a new Dealership Marketing indoor service/vehicle delivery area, new office space, and a new Visible Customer customer lounge. Disability Income Insurance & Section 125 Cafeteria Plans Mel Carlson Chevrolet, Inc. is now doing business as Elizabeth American Fidelity Assurance Chevrolet, Inc. The store location in Truman, Minnesota remains F&I Products the same. Protective Fleet Fueling Program Kade Vershey is the new owner of Houston Ford in Pine River. SuperAmerica Group Health Insurance Richfield Bloomington Honda has built a new, expanded facility Blue Cross Blue Shield of MN and is now located at 501 West 77th Street, Richfield. Delta Dental ReliaStar Life Hole-In-One Insurance Hole-In-One-USA Lighting LED Supply Company Office Supplies Innovative Office Solutions OSHA, EPA & DOT Compliance/Training ComplyNet Corporation Pre-Paid Legal, Jim Gavin Identity Theft Shield & Pre-Paid Legal Services Uniforms and Linen Services AmeriPride Linen & Apparel Services ANNUAL MEETING & LUNCHEON Workers Compensation FRIDAY, DECEMBER 4, 2015 • 11:00 AM Ensure Agency

Guest Speaker: Dave Anderson President of LearnToLead, an international sales and leadership training and consulting company. Prior to beginning LearnToLead, Dave enjoyed an extensive and successful career in the automotive retail industry. MADA Services sells a wide variety of 11:00am Silent auction opens benefitting the MADA Foundation products directly to the dealers including $430 for a table of eight • $215 for 1/2 table • $60 per person business forms, clothing and promotional Register online at www.mada.org items. For a full review of options, contact your sales representative at 651-291-2400 or go to www.mada.org

November 2015 / Page 7 200 Lothenbach Avenue West St. Paul, MN 55118

ADVOCACY • EXPERTISE • EDUCATION • COMMUNICATION MADA NEWS • November 2015

FAQ

Q: A customer was making their way through our service drive and accidently ran into one of our new cars. The damage was pretty modest. Our cost to fix it was $900. My question involves disclosing the damage when we sell the car. I thought there was a $500 disclosure threshold. Is that correct? Do I need to disclose?

A: There is a specific Minnesota Statute that requires both a written damage disclosure and an oral disclosure for new vehicles and demos which were damaged and repaired. The law kicks in if your repair costs (subject to certain exclusions) exceed 4% of the vehicle purchase price or $500 - whichever is greater. There’s a common misconception among dealers that this means that $500 is the disclosure threshold. The statute has been around since the 1980’s when it was not uncommon to have new cars selling for $12,500. But consider a $30,000 MSRP new vehicle. Four percent equals $1200 which is the disclosure threshold because it is a higher figure than $500. IMPORTANT: This Minnesota Statute is not a safe harbor. In our example, even though the cost to repair of $900 is less than the $1200 threshold, MADA strongly advises dealers to disclose all but negligible repaired damage on new vehicles. The law in its entirety can be found at http://bit.ly/MADA-damage

Scott Lambert, Executive Vice President • 200 Lothenbach Ave. • West St. Paul, MN 55118 • (651) 291-2400 • 1-800-652-9029 • FAX (651) 291-2894