ISSUE 4, 2023 14 TIME And Ally Financial Honor Roseville Dealer for 2024 35 Control What You Can Official Publication of the California New Car Dealers Association CALIFORNIA
Business Transactions • Buy-Sell Agreements • DMV, BAR, and other governmental approvals • Lender flooring and capital loan agreements • Entity formation and structure • Shareholder Agreements • Manufacturer approvals and relations • NMV non-profit association representation Estate Planning • Succession planning for businesses • Trust Agreements including lifetime benefit trusts • Gift and Estate Tax planning Tax • Property Tax planning, audits, and appeals • Federal estate and gift tax controversy audits • EDD Audits BUSINESS LAW | LITIGATION | ESTATE PLANNING | REAL ESTATE | TAX | EMPLOYMENT PRACTICES FERRUZZO & FERRUZZO, LLP | A Limited Liability Partnership, including Professional Corporations 3737 Birch Street, Suite 400, Newport Beach, California 92660 | PH: (949) 608-6900 | ferruzzo.com Business Litigation • Consumer Legal Remedies Act lawsuits • Sales and Service Agreements • Disputes before the CA New Motor Vehicle Board • Consumer claims regarding the sale of automobiles • Manufacturer audit disputes • Hearings before the AQMD, RWQC and OSHA Real Estate • Dealership site acquisition and dispositions • Lease agreements • Lender Opinion Letters Employment Practices • Wage and hour class action lawsuits • Private Attorneys General Act (PAGA) claims • Arbitration Agreements • Employer Handbooks and Employer Compliance Procedures Ferruzzo & Ferruzzo, LLP began providing legal representation to new car and truck dealers over four decades ago. Over the course of that time, one of the central goals of the firm has been to remain rooted in our client relationships. With the strength of over 25 attorneys, we provide a spectrum of legal services to support every aspect of running and owning your new car and/or truck dealership. We have practice groups in each area of the law that service the needs of you and your dealership.
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CONTENTSISSUE 4, 2023 7 PRESIDENT’S MESSAGE A Prime Time for New Car Sales? By Brian Maas, President, California New Car Dealers Association 10 2023 Officers and Directors 12 CNCDA Political Action Committee 2023 Chairman’s Club 14 TIME and Ally Financial Honor Roseville Dealer for 2024 Steve Pleau Wins National Recognition for Community Service and Industry Accomplishments 21 AB 473 Empowers Dealers to Push Back Against Unlawful Manufacturer Programs By Anthony Bento, CNCDA Chief Legal Officer ©2023 California New Car Dealers Association (CNCDA) | The newsLINK Group, LLC. All rights reserved. The California New Car Dealer Quarterly is published four times each year by The newsLINK Group, LLC for the CNCDA and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and dealer education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your specific circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the CNCDA, its board of directors, or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. The California New Car Dealer Quarterly is a collective work, and as such, some articles are submitted by authors who are independent of the CNCDA. While the California New Car Dealer Quarterly encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at 855.747.4003. California New Car Dealers Association 1517 L St. Sacramento, CA 95624 www.cncda.org (916) 441-2599 Staff Brian Maas President Michael Walsh, MBA Chief Financial Officer Anthony Bento Chief Legal Officer Autumn Heacox Director of Communications & Marketing Cathy Mason Director of Operations Rebecca Matulich Director of Education & Events Kenton Stanhope Director of Government Affairs Crissy Hodgson Senior Staff Counsel Andrea Daugherty Political Engagement Manager Lauren Johnston Membership Manager Liza Hernandez Staff Accountant Stacey Barawed Administrative Coordinator McKenna Bediamol Administrative Coordinator 14 29 24 The California New Car Dealers Association Is Excited To Publish Our 2023 Legislative Summary! 26 The Value of Membership 29 ASK ALISON The Facts About Potential California Long-Term Care Legislation By Alison McCallum, EPIC Insurance Brokers and Consultants 32 Thank You 2023 Sponsors 34 Control What You Can By Justin Carr, Vice President, Warranty Processing Company 38 CNCDA 2023-2024 All Upcoming Events Cover photo credit: Anthony Bento, CNCDA Chief Legal Officer
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Brian Maas, President California New Car Dealers Association PRESIDENT’S MESSAGE A Prime Time for New Car Sales? Dear Members and Friends, I hope this issue of California New Car Dealer Quarterly finds you well as we navigate the evolving landscape of California’s automotive industry. I want to bring your attention to a recent development prompting discussions at the state and national levels and raising concerns within our community. As many of you may be aware, Hyundai has announced a partnership with Amazon to sell vehicles via a digital storefront, allowing buyers to complete the entire car shopping and buying process via the Amazon platform. While innovation and adaptation are crucial in our industry, the potential impact of this offering needs to be critically evaluated. With this development, I want to reassure you that CNCDA is actively engaged in understanding the nuances of this program. Anthony Bento, CNCDA’s Chief Legal Officer, and I attended the launch of the pilot program at the LA Auto Show last month, and we are committed to learning more about its intricacies. Our proactive approach is to get the information needed to navigate this development and act on behalf of 7 California New Car Dealer Quarterly
our members at the legal, regulatory or state and federal government levels to ensure your business is safeguarded. Hyundai’s collaboration with Amazon raises significant legal and process questions, with few answers yet available. Recently, CNCDA met with Hyundai’s Chief Marketing Officer (alongside NADA and other Auto Trade Association Executives nationwide) to ask program, logistical, legal and simple process questions. Unfortunately, very few concrete answers were offered, thus proving the intricacies of the program haven’t been fully vetted or tested. This potentially creates an incredibly confusing (and potentially illegal) vehicle purchasing process. As our association protects the interests of our members, we will engage in continued conversations surrounding these major uncertainties and implications. Let’s not forget dealers provide a comprehensive car-buying experience, with expert guidance on a range of features that consumers can readily access (which Prime delivery teams cannot replicate). the value of the in-person support and guidance that local dealerships expertly provide. CNCDA’s mission is to promote and advocate for the protection of our dealers. Last year, we successfully championed AB 473, a franchise bill designed to prevent manufacturers from circumventing their own franchised partners. This legislative victory ensures that our dealers are protected from potentially unfavorable practices by manufacturers. Moving forward, we will keep our members informed, leverage the protections afforded by AB 473 and work diligently to safeguard the interests of our members. Thank you for your continued trust and commitment to CNCDA. We will navigate these challenges together, emerging stronger and more resilient as an association. Cheers, Brian Maas President, CNCDA Let’s not forget dealers provide a comprehensive car-buying experience, with expert guidance on a range of features that consumers can readily access (which Prime delivery teams cannot replicate). The speed, convenience and education of getting features customers desire are better facilitated at a local dealership, where our members have established trust and rapport with their customers. We also anticipate return and warranty issues being a major source of confusion for customers with this new online purchasing process. The complexities of navigating concerns through a digital platform will present major challenges for consumers, highlighting 8 California New Car Dealer Quarterly
2023 Officers and Directors EXECUTIVE COMMITTEE Tony Toohey Chairman Auburn Toyota David Simpson Secretary-Treasurer GMC Cadillac of Buena Park John Oh Immediate Past Chairman Lexus of Westminster Rick Niello Region 1 Vice President The Niello Company Jessie Dosanjh Region 2 Vice President Stevens Creek Chevrolet Cheryl Bedford Region 3 Vice President Sunset Auto Center Bruce Hamlin Region 4 Vice President Guaranty Chevrolet Motors, Inc. Robb Hernandez Region 5 Vice President Camino Real Chevrolet 10 California New Car Dealer Quarterly
DIRECTORS Randy Denham SJ Denham, Inc. Taz Harvey Dublin Mazda Matthew Hall AutoNation Western Region Rick Niello The Niello Company Tony Toohey Auburn Toyota Jessie Dosanjh Stevens Creek Chevrolet Ryan Fitzpatrick Coliseum Lexus of Oakland Dave Moeller City Toyota Mark Normandin Normandin Chrysler Jeep Dodge Ram Cheryl Bedford Sunset Auto Center Cliff Cummings Toyota of San Bernardino Bill Hatfield Hatfield Buick GMC Ellena Sweet Fresno Acura Bruce Hamlin Guaranty Chevrolet Motors, Inc. Greg Kaminsky Toyota of El Cajon John Oh Lexus of Westminster David Simpson Simpson Chevrolet of Irvine Jared Hardin Hardin Buick GMC Anne Boland Bob Smith BMW Matt Browning Browning Automotive Group Rinaldi Halim Los Angeles Chrysler Dodge Jeep Ram Sal Gonzales Culver City Volvo Robb Hernandez Camino Real Chevrolet Devinder Singh Bains Turlock Chrysler Dodge Jeep Ram Region 1 Region 2 Region 3 Region 4 Region 5 11 California New Car Dealer Quarterly
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TIME And Ally Financial Honor Roseville Dealer for 2024 STEVE PLEAU WINS NATIONAL RECOGNITION FOR COMMUNITY SERVICE AND INDUSTRY ACCOMPLISHMENTS The nomination of Steve Pleau, CEO and dealer principal at Future Ford Lincoln of Roseville in Roseville, California, for the 2024 TIME Dealer of the Year award was announced recently by TIME. Pleau is one of a select group of 49 dealer nominees from across the country who will be honored at the 107th annual National Automobile Dealers Association (NADA) Show in Las Vegas, Nevada, on Feb. 3, 2024. The TIME Dealer of the Year award is one of the automobile industry’s most prestigious and highly coveted honors. The award recognizes the nation’s most successful auto dealers who also demonstrate a long-standing commitment to community service. Pleau was chosen to represent the California New Car Dealers Association in the national competition — one of only 49 auto 14 California New Car Dealer Quarterly
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dealers nominated for the 55th annual award from more than 16,000 nationwide. Additionally, Steve will act as the association’s nominee as CNCDA celebrates 100 years of protecting and promoting CA’s franchised new car dealer members. “What truly fills me with pride is witnessing our employees’ growth and progression within the organization,” nominee Pleau said. “Knowing that I’ve played a role in their development and career advancement is immensely satisfying.” A 1969 graduate of California State University, Sacramento, where he earned a BS in Business Administration, Pleau always knew he wanted to be a car dealer. His father, Gene Pleau, acquired a Ford dealership in Sacramento in 1963, and Pleau was introduced to the industry at a young age. During his teenage years and early 20s, he washed cars, maintained the lot, managed parts inventory and assisted in the service department. When he later transitioned into a sales associate role, he realized he had a knack for selling and forging relationships with customers. “It was during those formative years that I knew I wanted to be a part of this fiercely competitive yet immensely rewarding industry, following in my father’s footsteps,” Pleau said. “My dad’s dedication and hard work paved the way for our family’s automotive legacy.” After college, Pleau, who also served in the California National Guard from 1968-1974, started his career at the dealership full-time. He rose to General Sales Manager and in 1981, took a leap of faith and opened his own store, Future Ford of Roseville. “Armed with an extensive skillset, in-depth knowledge of the Ford product line, and a profound understanding of the value of treating customers and employees like family, I embarked on this entrepreneurial endeavor,” he said. “I owe much of my career growth to my father’s invaluable mentorship and the many roles I undertook in all departments at his dealership, which laid a solid foundation.” Pleau began to grow his footprint and acquire dealerships in northern and central California. Today, the Future Automotive Group encompasses 14 new-car dealerships with 23 franchises and three commercial fleet service centers, employing more than 1,300 Californians. His son, Geoff, is the next generation to carry on the family legacy. One of Pleau’s proudest moments came in 2018 when he was inducted into the Ford Dealer Hall of Fame, becoming the sixth inductee to receive this prestigious 17 California New Car Dealer Quarterly
honor from Ford Motor Company. “This recognition stands as a highlight of my career, symbolizing the culmination of years of hard work, dedication, and a genuine passion for the automotive industry,” he said. “I share it with my team of hardworking, competent colleagues who have provided me with invaluable support and inspiration over the years.” In the area of community and civic service, Pleau focuses on activities that have a significant impact locally. He believes it is a privilege and duty to give back to the communities that his dealerships serve and that have been integral to his success. He is currently on the board of the Greater Sacramento Economic Council, a publicprivate partnership that promotes economic development, job creation, sustainability, equity and competitiveness in the region. “Whether a company is looking to relocate, expand or build, our experts are ready to assist them by navigating and identifying solutions to meet their business goals,” Pleau said. “As a founding board member, I have spent countless hours helping businesses and supporting the local economy.” Future Automotive Group also encourages its employees to be good corporate citizens and to give back to the organizations and causes that mean the most to them. The company supports time off for community service and donates to many charities and nonprofits, fostering their social responsibility. In addition, Pleau’s dealerships and his customers join him in supporting Shriners Children’s Northern California through a biannual toy drive; local food banks by holding canned food drives; the American Cancer Society’s Making Strides Against Breast Cancer of Sacramento by organizing events and fundraising activities and by wearing pink during October, Breast Cancer Awareness Month. “I am also actively involved in supporting public and private schools, as well as their athletic programs,” he said. “On a personal level, my wife and I recently donated $1 million to the University Foundation at Sacramento State, our alma mater, to help build a new health and wellness facility.” Pleau added, “By giving back and investing in the betterment of our society, I aim to ensure that future generations can enjoy the same opportunities that have enabled me and my dealerships to flourish over the years.” A 18 California New Car Dealer Quarterly
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AB 473 Empowers Dealers to Push Back Against Unlawful Manufacturer Programs By Anthony Bento, CNCDA Chief Legal Officer The California New Motor Vehicle Board plays a key role in adjudicating disputes between dealers and manufacturers. The Board is authorized to adjudicate disputes involving franchise termination, modification and warranty reimbursement. The Board can further adjudicate disputes involving manufacturer performance standards and chargebacks or disapprovals. Dealers file “protests” with the Board to compel manufacturers to follow California franchise law. After the dealer files a protest, the Board may order a mandatory settlement conference. If a settlement cannot be reached, an administrative law judge may oversee litigation that culminates with a proceeding akin to a trial. At this proceeding, evidence is presented by both the dealer and manufacturer. Following the proceeding, the judge will issue a proposed decision. The Board may adopt, modify or reject the proposed decision. The Board offers several advantages when compared to litigation in state Superior Court. First, although the process is not swift, it is generally less expensive, complicated and time-consuming when compared to ordinary court proceedings. Second, administrative law judges on the Board often have subjectmatter expertise on dealer franchise law, which means dealer counsel may need to spend less time educating the judges about the relevant law. Third, many protest rights contain a burden-shifting provision that requires the manufacturer to demonstrate that their action complies with the law. Finally, the Board itself includes dealer members who understand the need for fair rules governing automotive franchise relationships. While 21 California New Car Dealer Quarterly
EPIC is proud of its partnership with more than 300 California dealerships and is the CNCDA’s only licensed broker for Health Insurance and Workers’ Compensation. As the dealers’ consultant, experience what EPIC can do for you today, including: • A team producing real results and decades of experience with dealerships and their specific needs • Proprietary Workers’ Compensation and specific insurance products tailored for dealerships • Full compliance, along with audit and claims management EPICBROKERS.COM ©2023 Edgewood Partners Insurance Center. All rights reserved. | CA License: 0B29370 LEARN MORE ABOUT OUR SERVICES BY CONTACTING: Alison McCallum (949) 422-6431 alison.mccallum@epicbrokers.com Eric Kitei (949) 228-2779 eric.kitei@epicbrokers.com Unfortunately, while the Board has jurisdiction to adjudicate disputes involving key aspects of California franchise law, its authority is limited. For example, California law restricts the ability of manufacturers to impose more than one facility upgrade requirement every 10 years. Prior to 2024, a dealer seeking to enforce this law against a manufacturer operating an unlawful facility upgrade requirement would be required to file a lawsuit in state Superior Court, because the Board lacked the judication to hear the dispute. To address these limitations, CNCDA worked tirelessly to make sure that our 2023 franchise bill (AB 473) included authority for the Board to hear additional types of disputes. Effective Jan. 1, 2024, the Board now has the authority to hear protests involving the vehicle and parts allocation, facility upgrade requirements and unlawful competition. Dealers who would like to learn more about these new protest rights are encouraged to contact our legal hotline at (916) 441-2599. Also, look out for information to register for an upcoming franchise law webinar, which will be held in mid-2024. Finally, look for an updated copy of CNCDA Franchise Law Manual on our website (www.cncda.org) under the ‘CNCDA Comply’ tab later in 2024. A these dealer members cannot participate in protests filed by other dealers, their perspective helps the public members of the Board and staff understand the need for the consistent application of state franchise law. 22 California New Car Dealer Quarterly
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THE CALIFORNIA NEW CAR DEALERS ASSOCIATION IS EXCITED TO PUBLISH OUR 2023 LEGISLATIVE SUMMARY! Our Legislative Summary discusses important legal developments for dealers related to the California Legislature’s 2023 session. It is now available for our members to download at www.cncda.org/comply. A 24 California New Car Dealer Quarterly
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Running a dealership comes with its share of uncertain terrain. But one thing is certain. Our Dealer Financial Services team is dedicated to being by your side with the resources, solutions and vision to see you through. John Alexander john.f.alexander@bofa.com 213.621.8724 Liane Low-Bevett liane.low-bevett@bofa.com 925.692.7088 business.bofa.com/dealer Making business easier for auto dealers. Especially now. James Diedrich james.a.diedrich@bofa.com 916.326.3103 Bob Ludwig robert.ludwig@bofa.com 949.287.0635 “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: | Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value | ©2022 Bank of America Corporation. All rights reserved. 4826555 08-22-0145
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ASK ALISON The Facts About Potential California Long-Term Care Legislation State-managed Long-Term Care (LTC) programs are a focus of many state legislatures, including California. In December 2022, California released the results of an LTC Task Force feasibility study and intends to release an actuarial study in January 2024. While no legislation has been introduced in California yet, employers and employees should be aware of its potential. Considering LTC as a voluntary benefit for employees can be an important value-add for employer-sponsored benefit packages. On Aug. 23, 2023, the California Department of Insurance (CA DOI) released a statement confirming that, as of the present time, the state has not implemented a new payroll tax to fund a state-mandated LongTerm Care program. Additionally, the CA DOI warns consumers that communications from third parties about the necessity to purchase an individual Long-Term Care policy in the immediate future to avoid a By Alison McCallum, EPIC Insurance Brokers and Consultants 29 California New Car Dealer Quarterly
payroll tax due to new requirements is both false and misleading. Three Distinct Ways To Help Your Dealership Navigate LTC 1. The Human Perspective: Planning for LTC needs is an important component of a sound financial plan. 2. The Employer Perspective: Considering a voluntary benefit offering of LTC Insurance is a relevant benefit decision for a number of reasons. Many organizations have adopted a people-first culture, and end-stage care is a significant concern that employees are facing for themselves and often for their parents. Employer-sponsored LTC Insurance can be issued without the employee being subject to underwriting. Underwriting might preclude individuals with adverse health history from obtaining coverage. Employer-sponsored Long-Term Care Insurance is often less expensive than individually obtained coverage and is generally portable in the event of a change in employment. Employerfunded LTC Insurance is a low-cost, highly valued incentive that can be a differentiator in attracting and retaining valued employees. 3. The Legislative Perspective: While relatively low in cost, whether funded by the employer or employee, LTC Insurance may help employees and their families avoid a potential new payroll tax and improve their coverage for LTC needs as compared with state-provided benefits. 30 California New Car Dealer Quarterly
IT’S ABOUT THE CONTACT US TODAY TO PLACE YOUR ANNOUNCEMENT AD Call 801-676-9722 or scan the QR code to fill out the form. Place QR Code Here Employees are motivated when they are recognized and feel valued. It’s about… ▷ Who to congratulate ▷ Who to acknowledge ▷ Who to thank for a job well done This magazine is a great platform to celebrate your team’s accomplishments! California has established an LTC Task Force to investigate options for designing and implementing a public LTC option. At this juncture, the task force has completed its feasibility study. Legislation has yet to be introduced. We expect that we will see a bill introduced at some point in the future. If the state decides to move forward with a public option and if that legislation mirrors other state legislation, it will require a payroll tax and limited exemptions for opting out; however, actual details remain to be determined. No action is required by California employers at this time. It is imperative to note that while EPIC provides updates on how legislative activity around LTC has transpired in each state as we are aware, in no way does that mean that legislation has passed, nor do we know if, how or when that will happen. We are following developments with the CA LTC Task Force and any potential legislation. We recommend that you take the time to get educated about this sensitive topic. If you would like more information, EPIC will provide details to members at no cost. A EPIC ranks among the top 15 retail insurance brokers in the United States and is the largest insurer of auto dealers in the state. Alison McCallum has been in the employee benefits industry for over 20 years and personally works with more than 60 California Dealerships. She is a Principal with EPIC Insurance Brokers and Consultants, the CNCDA’s health and workers comp. insurance broker. With this partnership, EPIC offers unique dealership expertise and services available to dealer members at no cost. If you have questions or would like further information, please feel free to contact her at (949) 417-9136 or alison.mccallum@epicbrokers.com. 31 California New Car Dealer Quarterly
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Control What You Can By Justin Carr, Vice President, Warranty Processing Company In business, as in life, there are some things you can control and others you can’t. However, there are many controllable aspects of your dealership. For example, you can control how you spend your time, allocate your resources, respond to challenges and obstacles, and the suppliers you choose as partners to propel your success. Cycles Are Inevitable The automotive industry goes through cycles just like other industries. In 2019, dealers sold over 17 million vehicles. In 2020, it was less than 14.5 million vehicles. The number fell even lower in 2022 to less than 13.9 million. We’ve seen this before and know sales and service will pick up. The best thing you can do is get deep processes in place so your dealership can grow when sales rebound. A finely tuned service department can pick up the dealership. Warranties matter because they impact service revenue. When fewer vehicles are fixed, maximizing the profit margin for each repair is more important than ever. Payroll and Process Hold Hands This is worth discussing. If you make the process efficient now, you can keep your overall payroll smaller and may not need to hire anyone later. Having your house in order helps you avoid having to hire unneeded staff during the rebound, which can maximize your margin of profitability. Why Dealers Need a Warranty Service Partner No matter how successful you think your dealership is, you can strengthen it by looking at processes and training employees. Employees should know what matters and how they contribute to the dealership’s success. Understanding their role helps them to feel part of the bigger picture. This strengthens your culture and can help reduce turnover. Dealers who ignore issues with efficiency or timeliness hurt their dealerships in multiple ways that can affect their dealership’s longevity. First, managers need to know which processes are working or failing. Revenue can decrease if a manager cuts costs without understanding which costs grow revenue. For example, a manager might not realize a highly paid employee’s value in lifting the entire service department and training younger, less experienced employees. Being well-paid doesn’t equal being overpaid. Second, dealers sometimes expand their payroll instead of maximizing their margin within the service department. Many people play a role in the life cycle of a warranty claim. Since people compensate for inefficiencies with workarounds, the results can affect the whole service department adversely. Hiring more people instead of improving the process costs you hard dollars and lets the service department continue to be 35 California New Car Dealer Quarterly
What the Right Partner Should Do A warranty partner can get receivables flowing and protect your dealership from audit problems, but they don’t just lift warranty claims. A good one boosts the service department by making it unnecessary for the service manager to spend time in the weeds. They also help the team work together more efficiently. Tech enablement is important on the fixed operations side of a dealership, but deep tribal knowledge and an equally deep understanding of data are also important. The warranty company helps the service manager focus on growth by fixing processes and providing insights and information. Owners and General Managers often don’t have a front-row seat to the intricate details that get and protect the money on a warranty repair. Although state laws are being implemented to combat dated factory policies, dealerships should not solely focus on getting a labor rate and parts markup increase. These types of increases will certainly help the bottom line, but are they being as impactful as they could be? Some dealers don’t maximize the warranty to include items like rentals, test drives, or any additional work that needs to be done so the repair is handled correctly the first time. They may skip signing and approving add-ons, which could ultimately result in you losing that money down the road. Sometimes employees leave items off claims because they don’t know how to get an advanced repair order paid. Teach them. Checks and balances in the warranty process are important to maximize repair orders. Adjustments that appear on the warranty schedule are not necessarily a bad thing. Imbalances are an opportunity to gain knowledge, fight for additional dollars and make corrections to processes or systems that improve efficiency. Too many dealers are submitting repair orders to the manufacturer before they are closed to the DMS system. Once they are paid, they are closed to the DMS for that amount. How can you ensure that you have collected every dollar in that process? What is your tool to monitor progress? In the previously mentioned scenario, there is nothing on the schedule that would show you that a rental was left off or a part was marked up incorrectly. It also creates risk and potential audit liability. Was a recurring problem not identified? Are you giving the manufacturer just reason to recapture your legitimate dollars stating that a repair didn’t follow policy and procedure? Be conscious that you are getting all the dollars the manufacturer will pay, and avoid closing repair orders after the manufacturer has released the credit statement. Audit each claim to ensure it complies with the policy and procedure, and nothing is missing. Ensure all codes are applied, identify and understand all variances before reconciling the differences, and update everything daily. It is easy to keep a schedule clean and running clean when you touch it every day. When warranties fall behind, they become a mess. When that happens, the work it takes to clean them up is extremely time-consuming and can involve many staff. By controlling the things you can, you make it easier to achieve your goals and objectives. You also minimize the risks associated with uncertain or uncontrollable factors. The right warranty company can help you create a clean, complete process. A Justin Carr is a VP at Warranty Processing Company, which recently relocated to Texas. Justin works with dealers nationwide to increase efficiency within service departments and educates dealer staff on why efficiencies matter. To learn more, please visit warrantyprocessing.com. By controlling the things you can, you make it easier to achieve your goals and objectives. inefficient. Increasing the profit margin is smarter than spending money unnecessarily; also, maximizing your margin when it is harder to make a profit will serve as preparation to grow profits more efficiently later. To improve how your dealership works, evaluate and improve the quality of your business decisions. Running a dealership is complicated. Getting knowledgeable and objective advice from outside the dealership can help you examine and improve your business’s processes. Your goal should be to capture every warranty dollar, but you must be granular to do that, and a General Manager’s job is typically not granular in that department. Instead, hire a warranty company to act as your partner. 36 California New Car Dealer Quarterly
Is your business in the dark? ADVERTISE IN THIS MAGAZINE AND SHINE A LIGHT ON YOUR COMPANY. QR Code: website /ad-space CONTACT US TO LEARN MORE. 801.676.9722 • 855.747.4003 sales@thenewslinkgroup.com 37 California New Car Dealer Quarterly
We’re more than a financial partner. We’re an invested one. True relationships matter. We don’t take this lightly. The best are built on a deep understanding of your short- and long-term goals and always backed by thoughtful, strategic advice in support of your vision. With full-service financial solutions and a deep bench of industry expertise, we’ll build a team around your organization to focus on your success. So, let’s drive further—together. To learn more, contact Jason W. Smith, head of Dealer Commercial Services, 407-237-4011 or Jason.w.smith@truist.com. Truist.com/DealerServices © 2022 Truist Financial Corporation, Truist, Truist purple and the Truist logo are service marks of Truist Financial Corporation. All rights reserved. Truist Securities is the trade name for the corporate and investment banking services of Truist Financial Corporation and its subsidiaries. Securities and strategic advisory services are provided by Truist Securities, Inc., member FINRA and SIPC. | Lending, financial risk management, and treasury and payment solutions are offered by Truist Bank. | Deposit products are offered by Truist Bank, Member FDIC.
warrantyprocessing.com 303.795.0612 Flower Mound, TX Scan the QR to schedule a time to chat with an experienced agent. By providing the ultimate white-glove warranty administration service, our clients recoup the most dollars to help drive dealer receivables up. We successfully serve hundreds of dealerships and auto groups across all of North America. Established in 1986, Warranty Processing Company has the deepest pool of expertise covering the broadest set of manufacturing lines. We are ready to help you make money and control costs. WE’RE HERE! Let’s Talk. This magazine is designed and published by The newsLINK Group, LLC | 855.747.4003 1517 L Street Sacramento, CA 95814
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