№ 3 CATA Announces 2023-2024 Executive Board PUB 1. ISSUE 1. 2023 № 7 80 Chicagoland New-Car Dealers Raise Nearly $50K for USO Illinois During the 10th Annual Barbecue for the Troops
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©2023 The Chicago Automobile Trade Association | The newsLINK Group, LLC. All rights reserved. CATA Up To Speed is published four times each year by The newsLINK Group, LLC for the Chicago Automobile Trade Association and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and 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 circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the Chicago Automobile Trade Association, 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. CATA Up To Speed is a collective work, and as such, some articles are submitted by authors who are independent of the Chicago Automobile Trade Association. While CATA Up To Speed 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. 4 CATA’s Future is Bright Greetings CATA Members! By Jennifer Morand, Co-President, CATA 6 A Year of Many Accomplishments By J.C. Phelan, CATA Chairman 2022-2023 8 CATA Announces 2023-2024 Executive Board Names First-Ever Chairwoman; Reappoints Four Members to the Board of Directors 9 CATA Annual Meeting & Golf Outing Recap 10 CATA Donates $1,500 to Violet Foundation for Pediatric Brain Cancer 11 CATA Awards the 2023 Spirit of Carol Cooling Scholarship to John Hersey High School Student 12 80 Chicagoland New-Car Dealers Raise Nearly $50K for USO Illinois During the 10th Annual Barbecue for the Troops 14 CATA Member Portal Stay Connected 16 Why Wait? How Evaluating Your Dealership Can Help Your Business. By Maxime Théorêt, CPA and Managing Partner & Jennifer Rafael, Vice President and Partner at DSMA 18 Partnerships Help Dealers Succeed By Sharon Kitzman, Dominion DMS 20 EVs and the Service Department By Justin Carr, Vice President, Warranty Processing Company 22 Compliance Auditing Evaluating Who Should Be in Charge of Internal Audit Processes By Joel Kansanback, Executive Vice President, Brown & Brown Dealer Services CONTENTS 10 8 CATA UP TO SPEED 3
I wanted to take the opportunity to introduce myself. My name is Jennifer Morand, Co-President of the CATA along with Dave Sloan, who earlier this year announced his plans to retire in spring 2024. I am beyond fortunate for Dave Sloan, our current board members, and outgoing Chicago Auto Show Chairman Kevin Keefe, who have chosen me to serve in this prestigious role. That said, I am not new to the CATA or the automotive industry. Prior to this role, I served as the Director of Public Relations and Social Media for the CATA for more than a decade. I look forward to bringing my background and skills into this new role as President of the CATA and General Manager of the Chicago Auto Show. I’m thrilled to introduce this new quarterly magazine, CATA Up to Speed, which is designed to be yet another resource to enhance your membership of the CATA. As a CATA dealer member, you and your dealership have access to a variety of vital resources to support your business, including dealer point-of-sale forms, legal services, employee relations and HR consultation, legislative support, educational resources and seminars, fun networking events, complimentary meeting/staff conference and training space, dealership listing and new and used vehicle inventory posting on DriveChicago.com, Chicago Auto Show perks and discounts and in-store signage and materials to help you run your dealership efficiently and effectively. All of this and so much more are available to dealers included in their CATA membership. Beyond serving this powerful, charitable dealer community, I get the honor and privilege — along with Executive Vice President of the CATA Chris Konecki and seven additional dynamic team members — of producing the largest and best auto show in the country, the Chicago Auto Show. We’ve been hard at work to maintain relevancy in a time where the impact of auto shows is questioned, and I can honestly say that the future is bright for the Windy City show. Needless to say, this is great news for the local dealer community as the Chicago Auto Show directly impacts consumers, piquing interest and — most importantly — driving sales back to the dealership. Heading into 2024, we’re on track to win brands back to the show and hope to maintain, and even add, to the total number of indoor test tracks we had in 2023 (which was a record-breaking seven!). Leading the way to the 2023 Chicago Auto Show was a new event, Chicago Drives Electric. We launched this event in the fall of 2022 with the intent of enticing consumers to learn about and test drive the latest EVs, hybrids and plug-in hybrids. The event was held at the CATA HQ, and its success was overwhelming. Overnight, we filled up all test drive slots, and media came out in droves to cover the event generating exposure. The branding and excitement carried over to the Chicago Auto Show, in the form of a 100,000 square foot indoor EV track. We plan to hold Chicago Drives Electric once again this fall, September 28-October 1, due to its success. Another event we were excited about was the 10th year of the USO Barbecue for the Troops. Last year, we hit the $1 million dollar milestone for the total amount raised since the event’s inception. On Saturday, July 15, more than 80 Chicagoland new-car dealers fired up their grills to host USO Barbecue for the Troops fundraisers. All of the funds raised stayed local; it was donated directly to the USO Illinois. We look forward to another great year. Please don’t hesitate to get in touch with an idea, suggestion, feedback or just to say hello. We value you and your membership with the CATA! Best Regards, Jennifer Morand Co-President, CATA CATA’s Future is Bright Greetings, CATA Members! “As a CATA dealer member, you and your dealership have access to a variety of vital resources to support your business …” № 1 4 CATA UP TO SPEED
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Dear Dealer, As my term in office as 2022-2023 CATA Chairman comes to an end and I take over responsibilities for the 2024 Chicago Auto Show, I would like to reflect on the CATA’s many accomplishments during the past year. After two years of COVID, 2022-2023 brought some normalcy back to the CATA. However, we were not bereft of challenges. On the legal front, we remain hopeful that the legal challenge to Rivian, filed several years ago, will ultimately prevail. We are also extremely supportive of the State of Illinois’ efforts to uphold the recent warranty modifications which have been challenged in a lawsuit filed against the state by Volkswagen Group of America, Inc. The CATA recently responded to a discovery request in this matter. The CATA also responded to a discovery request in the dealer suit brought against Ford Motor Company challenging the legality of Ford programs involving the sale and distribution of electric vehicles. Finally, the CATA determined that, in the interest of dealer unity, it would set forth a generous proposal to settle its ongoing litigation with a group of dealers who defected from the New Car Dealer Committee to strike their own agreement with Local 701. That litigation has now been settled, and the CATA has invited each of those dealers to rejoin the CATA and hopefully avail themselves of the benefits the CATA provides. I think we know that the Chicago Auto Show is the financial engine that drives many of the CATA activities. The 2023 Auto Show was a greatly enhanced version of the two previous COVID-impacted shows, with increased exhibit space (back to both the North and South halls in McCormick Place), a wellattended and profitable ($2.6 million) First Look for Charity, seven indoor test tracks and four outdoor test drive opportunities and greatly expanded media and social media coverage. Leading the way to the 2023 Chicago Auto Show was a new event, Chicago Drives Electric, held last fall, also with terrific media coverage and available test drives for consumers. This event was so well received by OEMs and customers that it will be repeated this year at the end of September. The CATA Media Strategy Committee directs approximately $500,000 in CATA funding per year, with extraordinary enhancements provided by our media partners, toward the Chicago Auto Show, Chicago Drives Electric, BBQ for the Troops, DriveChicago.com and other worthwhile events. The CATA Civic and Dealer Relations Committee continued with the 16th year of the Chicagoland Dealers Care program, with continued CATA funding and CATA contributions to dealer-sponsored charity events in the community, and with the 10th BBQ for the Troops, which has to date raised over $1 million for the USO. The CATA Government Relations Committee directs the approximate $130,000 the CATA annually contributes to state and local officials, as well as the funds that NADA annually contributes to federal officials representing Illinois. The Committee also monitors pending bills in the Illinois legislature and consults with our Springfield Lobbyist, Scott Marquardt, to take appropriate action as needed. The Committee works hand in hand with NADA, attending the annual NADA Washington Conference, meeting with Congressmen and encouraging dealers to contribute to NADA PAC. The CATA Drive Chicago Committee is in the midst of a major restructuring of the DriveChicago website in its efforts to maintain DriveChicago as the definitive website for vehicle purchases in the Chicagoland area. The CATA Finance, Pension, Audit and Compensation Committee has worked diligently to find ways to increase CATA revenues and decrease costs, ensuring that the CATA remains a dominant source of dealer benefits in the future. The reduced Board of Directors size and reduced number of staff have led to cost efficiencies and better A Year of Many Accomplishments № 2 6 CATA UP TO SPEED
management. Aligned in this mission, the CATA Member Benefits Committee continually researches and vets allied companies in an effort to provide worthwhile programs and cost efficiencies to CATA members and to the CATA itself. The CATA Employee Benefits Committee continually seeks out new ways to provide benefits to all CATA members at reasonable costs. To that end, the Committee is examining alternative roles that the CATA can play in providing the important member benefits. The CATA provides a list of current Approved Member Partners and Recommended Providers that can be found at www.CATA.info. The CATA Nominating Committee recently reached out to the entire dealer body, and will continue to do so, to seek out qualified hand raisers to serve on the CATA Board of Directors. The Committee is dedicated to choosing knowledgeable candidates of the highest integrity to serve on the CATA Board. My appreciation goes out to the 13 members of the CATA Board of Directors who served so diligently this past year; to the CATA staff, especially Jen Morand, who completed her first year as CATA Co-President; Dave Sloan, who will be serving his final year in 2023-2024 as CATA Co-President; and Chis Konecki, who serves as Executive Vice President and is so knowledgeable about the Chicago Auto Show. Also, I am grateful for the continued wise counsel provided by our longtime General Counsel, Dennis O’Keefe. I congratulate Kelly Webb Roberts on her election as CATA Chairwoman for 2023-2024. Kelly comes from a great automobile family, is extremely able and dedicated, and will provide strong leadership during the upcoming year. Sincerely, J.C. Phelan CATA Chairman 2022-2023 CATA UP TO SPEED 7
Kelly Webb Roberts of Webb Automotive Group was recently elected as the 20232024 Chicago Automobile Trade Association (CATA) Chairwoman and the 2024 Chicago Auto Show Co-Chairwoman, making her the first female to hold that position. Webb Roberts will lead a board of 12 dealers and succeeds J.C. Phelan, who is serving as Chairman of the 2024 Chicago Auto Show. Webb Roberts comes from a multi-generation automobile family and presides over five dealerships with her family. Webb Roberts was named one of Automotive News’ 40 Under 40 in 2017 and is involved with the General Motors Women’s Retail Network. With the Webb Auto Group, she actively supports Making Strides Against Breast Cancer with the American Cancer Society, Ann and Robert H. Lurie Children’s Hospital, the Alzheimer’s Association, USO and Toys for Tots, in addition to numerous local community organizations. “The CATA’s unwavering commitment to excellence in automotive retailing has been its core value for more than a century. Franchised, new-car dealers are a driving force for local communities, both economically and philanthropically. Our dealerships provide meaningful employment, offer support to local charities and civic organizations and keep the state of transportation moving forward,” said Webb Roberts. “The CATA, one of the oldest and largest metropolitan dealer associations in the nation, brings our dealerships together with a collective voice and provides resources to help dealers run more effectively. As the Chairwoman of the CATA, I am honored to lead and champion our collective efforts towards continued growth and success.” Additional executive board officer announcements include the following: Vice Chairman Jason Roberts, Advantage Acura of Naperville, Advantage Chevrolet in Bolingbrook, Advantage Chevrolet in Bridgeview, Advantage Chevrolet in Hodgkins and Advantage Toyota in Calumet City; Treasurer Ryan Kelly, Kelly Nissan; and Secretary Steve Phillipos, Chevrolet of Homewood and Ford of Homewood. David Sloan and Jennifer Morand remain the association Co-Presidents and Chicago Auto Show Co-General Managers. As part of the CATA elections, incumbents Dan Heller (Heller Ford, El Paso; Heller Lincoln Chrysler Dodge Jeep Ram, Pontiac), Steve Phillipos, Dan Marquardt (Marquardt Buick GMC of Barrington), and Kelly Webb Roberts (Webb Chevrolet, Oak Lawn; Webb Chevrolet, Plainfield; Genesis of Highland, Indiana; Webb Hyundai of Highland, Indiana; and Webb Hyundai of Merrillville, Indiana) return to serve another three-year term. « № 3 CATA Announces 2023-2024 Executive Board Names First-Ever Chairwoman and; Reappoints Four Members to the Board of Directors 8 CATA UP TO SPEED
CATA Annual Meeting & Golf Outing Recap On Tuesday, June 13, the CATA Annual Golf Outing welcomed more than 300 members to Cog Hill Golf & Country Club for an afternoon of networking, enjoyment and, of course, a round of golf. The day began with a networking reception followed by the annual meeting, hosted over lunch. After lunch, golfers hit the links and played through the rainy, windy weather to wrap up 18 holes just in time for the 19th Hole Happy Hour. Sponsors covered the courses, providing drinks and conversation throughout the day as golfers made their way around. Prizes were awarded to those who were having an exceptional golf day: № 4 • Longest Putt winners: • Tyler Kelly • Greg Luzinski • Bill McSkimming • Longest Drive winners: • Jim Gosnell • Brian Hernandez • Kyle Sherman • Closest to the Pin winners: • Ivan Mahanic • Keith Malachuk • Ryan O’Reilly • Scramble winners: • Course 1: Sam Barakat, Jason Beane, Joe Komendanchik and Ivan Mahanic • Course 2: Ryan Kelly, Trevor Kelly, Tyler Kelly and Guest • Course 3: Mike Eul, Don Mullen, Mike Ruhland and David VanFleet • Putting Contest finalist: Steve Serfrano Thank you to our sponsors who made this golf outing possible. Platinum • ABC 7 Chicago • Effectv • NBC 5 & Telemundo Chicago • Vitu Gold • Autotrader/Kelley Blue Book • Brown & Brown Dealer Services • Powering Chicago • Protective • Reynolds & Reynolds • Road Dealer • S & S Automotive • South Chicago Auto Auction Silver • Accurate Office Supply • ACV Auctions • Assured Partners • Automotive Internet Media • Automotive Risk Management Partners • Bank of America Merrill Lynch • Brightline Dealer Advisors • Cars.com • Dynatron • Financial Renaissance • Hillstrom Select Marketing Group • Illinois Recovery Group • Littler Bronze • Better Business Bureau • ComplyNet • Cumulus Chicago • Novella • Pure Cars • Solar One • The Redmond Company • Truist — Regional Acceptance • Utility Management Group • Walsh Long & Company, Inc. • Zurich CATA UP TO SPEED 9
CATA Donates $1,500 to Violet Foundation for Pediatric Brain Cancer The CATA recently donated $1,500 to the Violet Foundation for pediatric brain cancer. The donation came via the CATA’s Chicagoland Dealers Care program in conjunction with a $10,000 donation by Napleton’s Countryside Mazda. Through Chicagoland Dealers Care, the CATA matches up to $1,500 of a member dealer’s donation to local charitable organizations. The Violet Foundation was established in fall 2022, just months after the Napleton family lost three-year-old Violet Napleton to brain cancer. In the last six months, the foundation has raised just over $1M to provide funding to pediatric brain cancer research, clinical trials and treatment options. Additionally, the foundation distributes small grants to support families with children who are being treated for pediatric brain cancer. “We are so grateful that CATA has supported Violet Foundation,” said Steve Napleton, President of Napleton’s Countryside Mazda and Co-Founder of the Violet Foundation. “More children die of brain cancer than any other type of cancer, and the standard of care for some has barely changed in 60 years. The support of CATA and its members can make a meaningful difference in the advancement towards a cure.” The CATA has been a longtime supporter of local nonprofit organizations like the Violet Foundation. Since its inception in 2008, the grassroots Chicagoland Dealers Care program has donated more than $125,000 to local charitable organizations. Additionally, since 1992, the association has raised more than $60 million for Chicago-area charities during the annual First Look for Charity black-tie event, traditionally held the evening before the Chicago Auto Show opens to the public. “The CATA’s Chicagoland Dealers Care program was designed to help our member’s donation dollars go further and highlight the wonderful work they are doing in their communities,” said CATA Chairman J.C. Phelan. “In this case, we are also honored to help spread the word about the charitable work this foundation is doing. They sprang into action last fall following Violet’s passing and the entire Napleton family hasn’t stopped working to help others facing their same battle — it’s incredible.” « For more details on the Chicagoland Dealers Care program, please visit www.chicagolanddealerscare.com. To learn more about Violet Foundation for Pediatric Brain Cancer, visit www.violet-foundation.org. № 5 “In the last six months, the foundation has raised just over $1M to provide funding to pediatric brain cancer research, clinical trials and treatment options.” 10 CATA UP TO SPEED
The CATA presented the 2023 Spirit of Carol Cooling Scholarship to John Hersey High School graduating senior Maya Wasilewski. The CATA established the Spirit of Carol Cooling Scholarship, a $1,000 grant now in its 10th year, to honor Carol Cooling, a Hersey alumna and long-time NBC 5 Chicago Special Events Director who died of cancer. Cooling worked closely with the CATA as a producer of the live productions of NBC’s Chicago Auto Show TV special, which won several Emmy Awards over the years. The CATA and Cooling developed a friendship that went far beyond the production of the specials. When Cooling passed in 2013, the CATA wanted to keep her spirit alive by creating a scholarship that would allow her impactful legacy to live on. The scholarship is awarded to a Hersey High School student that highlights the positive spirit of Cooling. “It is our absolute honor to present an award that helps carry on the legacy of such a remarkable woman and friend to an outstanding and inspirational student,” said Dave Sloan, Co-President of the CATA and Co-General Manager of the Chicago Auto Show. The Hersey High School scholarship committee selected Maya Wasilewski as the recipient of the Spirit of Carol Cooling Scholarship because she embodies many of the characteristics used to describe Cooling. Wasilewski is a leader among her peers. Meaghan Waller, a counselor at John Hersey High School, states, “As well as maintaining high standards in academics, Maya has enrolled in several Hersey and community programs that would keep a small army busy.” She continued, “I truly find myself fortunate that I have been able to get to know such a fine young person.” Maya is a very committed student who finds great importance in giving back to her community and making her school a better place. Inside the Hersey school walls, Wasilewski is the captain of the varsity cheerleading team, a peer tutor, a biology aide, and a leader of gym class. Not to mention, she is a member of the World Language Honors Society and National Honors Society. In her time outside of school, Wasilewski finds great importance in giving back to her community. She is involved in several volunteer service programs, including Service Over Self (SOS) and Feed My Starving Children, and works to facilitate elementary school fun fairs. Recently, Wasilewski designed and facilitated an event where students wrote Valentine’s Day cards for the children at Northwest Community Hospital. “I am beyond grateful for the opportunity to apply and receive this award in Carol Cooling’s memory,” said Wasilewski. “Heading into college, Carol’s legacy is one that I will continue to apply in my life. I think what stuck out to me the most was the positivity she employed wherever she went. She was very passionate when it came to work, so without a doubt, I will continue to appreciate her by displaying that same passion for my work.” Wasilewski recently graduated from Hersey High School and will be attending the University of South Alabama to pursue her passion for business. « CATA Awards the 2023 Spirit of Carol Cooling Scholarship to John Hersey High School Student № 6 CATA UP TO SPEED 11
№ 7 Recently, the Chicago Automobile Trade again partnered with United Service Organizations (USO) Illinois to host the 10th Annual USO Barbecue for the Troops fundraiser. More than 80 local, new car dealerships rallied their communities to host fundraising events which featured everything from patriotic ceremonies, classic car shows, live music, games for kids of all ages and of course, barbecues. To date, this year’s fundraiser has brought in nearly $50,000 for the USO, and online fundraising efforts will continue throughout the summer. Since the program’s inception, CATA dealers have rallied to raise more than $1 million to support USO programs and services with more than 600 fundraisers taking place. “New-car dealers are pillars of their communities, and so it makes a lot of sense for the dealers to rally their neighbors for this grassroots fundraiser, all in support of local troops and their families,” said Kelly Webb Roberts, Chicago Automobile Trade Association chairwoman. “Last summer, we achieved a major fundraising milestone, and we look forward to adding to that running total with this year’s barbecue.” “The support of service members’ hometown communities and local newcar dealerships has allowed USO Illinois to positively impact more than 300,000 service members and their families annually through hundreds of programs and services as well as our 10 USO Centers across Illinois,” said Christopher Schmidt, USO Illinois Executive Director. “Neighbors helping neighbors through initiatives like Barbecue for the Troops makes communities even stronger, and joining your local dealership for their BBQ in July is a great way to get involved! From the USO Illinois and all those who serve our nation, we thank all of the participating dealers and their communities for the generous support,” Schmidt continued. This anniversary year is a special time to recognize and thank the dealerships who have participated every year over the last 10 years: • Apple Chevrolet • Arlington Heights Ford • Evanston Subaru • Haggerty Buick GMC • Hennessy’s River View Ford • Ray Chevrolet • Raymond Chevrolet • Raymond Kia • Wickstrom Auto Group And to welcome our first-year participants: • Acura Highland Park • Ettleson Cadillac Buick GMC • Fox Ford Lincoln of Chicago • Hawk Nissan of St. Charles • Thomas Chrysler Dodge Jeep Ram The CATA and USO are already planning for next year. The USO Barbecue for the Troops fundraising events will take place at local, new car dealerships on Saturday, July 13, 2024. For more information on the CATA, visit www.cata.info. For more information on the USO Illinois, please visit https://illinois.uso.org/. « 80 Chicagoland New-Car Dealers Raise Nearly $50K for USO Illinois During the 10th Annual Barbecue for the Troops 12 CATA UP TO SPEED
CATA UP TO SPEED 13
L ast year, the CATA migrated to a new membership platform that allows for better communication with members and instant access to forms, event registration and vital dealer information. Gaining access to the portal is a snap for both CATA Dealers and Allied Members. Simply visit www.cata.info and click the Login button on the upper right corner. If you have never logged in or are unsure of your password, you can call the CATA at (630) 495-2282 and ask for Olivia. Features of the member portal include a digital membership directory, online event registration, access to free dealer forms, CATA news headlines, CATA Up to Speed publications, downloadable workplace posters and much more. CATA Member Portal Stay Connected № 8 Each Dealer and Allied Member will have one CATA employee assigned as the coordinator for the membership. This coordinator has the ability to extend membership access to additional employees, maintain the information specific to the membership and process due invoices. Our hope is that this Member Portal helps you stay connected and further demonstrates CATA’s commitment to excellence. « 14 CATA UP TO SPEED
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Why Wait? How Evaluating Your Dealership Can Help Your Business. By Maxime Théorêt, CPA and Managing Partner & Jennifer Rafael, Vice President and Partner at DSMA № 9 We all know someone who waited until the last minute to get a service they needed: car insurance, that warranty on their largest appliance, or a list of valuable items they would like insured in their home. And what did they wait for? A car crash, a fridge malfunction, or a flood. Well, we feel the same way about your dealership evaluation. The time to have it conducted is when things are going smoothly — we believe that there is no need to wait until an interested buyer knocks on your door (or your literal roof caving in) to know your business’ worth. So, let’s go through this question together: Why now? Your Dealership’s Biography Having a true thousand-mile view of your dealership’s financial health and capability can act as a dashboard for your business, help you know where you are now, and more importantly, where you are going (or can go). From the value of the brick & mortar to the KPIs that make up your dealership’s bottom line. A true deep dive under the hood allows you to diagnose areas that you may want to pivot (or preserve) to reach your business’s fullest potential. Waiting for your next 20 Group to know where you need to improve no longer needs to be the norm. Imagine a dedicated evaluation report with all the metrics to help you make informed decisions for the future with complete confidentiality. We’re living in an era where you can assess the health of your vehicle with a few touches on your infotainment system; assessing your dealership’s financial health can be just as efficient. No Surprises Assessing your business regularly is a lot like having your car serviced: no one wants unpleasant and costly surprises. A dealership evaluation is a preventive exercise that allows you to analyze areas of improvement and the good practices of your dealership. It’s an exercise that highlights performance but also areas where your business can do better. This in-depth analysis of your dealership’s activities also allows you to detect business trends that you may want to pursue or improve, especially if you feel short-changed by your fiscal year (we know you’re thinking of your tax return as you read this). In short, this one- to two-week exercise will allow you to take stock of your business from every angle. Be Better Equipped for Short, Medium, and Long-Term Planning Are you thinking of expanding your portfolio or maybe retiring? No matter what stage of your professional life you are in, an annual business valuation is an indispensable tool for clear and precise planning of your business activities. Anthony Codispoti, DSMA Manager of Valuations, notes that among the thousands of appraisals that have been performed over the past decade, there have indeed been several instances in which results showed a 20-30% difference in value from what a dealer thought their dealership was worth. Such a difference, whether higher or lower than expected, can paint a clearer picture of what your fiscal future will look like. So, whether you are creating a succession plan for the next generation or seriously thinking of business growth, both projects could be greatly enhanced with a little preparation — and additional information. Don’t Underestimate the Power of a Balance Sheet Thanks to the rising inflation rates, a clear and precise balance sheet of your business is crucial when negotiating. Indeed, dealership transactions can be quite complex, and the current economic climate (inflation, brink of recession, etc.) unfortunately further complicates negotiations. This is why a dealer in expansion mode should know their business inside and out. A balance sheet is your best asset when approaching investors and financial institutions in order to accomplish your next acquisition goal. In the same breath, a dealer wishing to sell will equally be much better equipped to deal with potential buyers when knowing the exact net worth of their business. Proactive + Prepared = Peace of Mind Don’t wait for a crash in the industry to act. By conducting a regular valuation of your dealership, you are being proactive. Such preparedness shows that you are ahead of the curve. Proper knowledge of your dealership’s accurate value will help you deal with various industry crises ... or, better yet, prevent them. And you know who loves to see that? Financial partners. Prepare for the Unexpected Although grim topics, when faced with a separation, divorce, or even death, dealers or their teams often find themselves completely rushed and in no state to evaluate their business. These unexpected events can occur at any time on a personal level and can greatly affect the day-to-day operations of your dealership. If this happens, having an accurate assessment of your business can help you maneuver challenging times and even protect your estate in the event of your death. Maximizing Your Dealership’s Value Lastly, you can’t grow your dealership without knowing its true value. Make sure you partner with experts who can appraise your dealership and give you an accurate representation of your business’s value on the market. So, we ask you again: What are you waiting for? « At DSMA, we have the certified staff and sophisticated tools to accurately value all vehicle dealerships, regardless of their market or location. We use QUOTUS™, a confidential and secure digital platform we’ve developed internally over the past few years, which allows us to evaluate a dealership in every respect — with the most precise data on the market. It is the most reliable automotive market intelligence in North America, which allows you to maximize the value of your dealership. This tool benefits not only automotive dealers but everyone in the motorcycle, heavy truck, agriculture, marine, and heavy vehicle industries. Please contact Jennifer Rafael, Vice President and Partner at DSMA at (312) 927.9561 or Jennifer.rafael@dsma.com or visit dsma.com to learn more. 16 CATA UP TO SPEED
JENNIFER RAFAEL Vice-President, Midwest, USA Jennifer.Rafael@dsma.com 312.927.9561 Most Dealer Principals believe they know what their business is worth, but often miss important factors, such as intangible assets, add-back’s and profit opportunities, all of which can make a huge difference. Trust your valuation to the professionals at DSMA to help you: ABOUT DSMA 1500+ 1000+ $6B+ 400+ 97% 171 DAYS Dealership Valuations Combined Years of Experience Generated in Value Dealerships Sold Deals Sold at Asking Price or Greater On Average to Close a Deal TRUE AUTOMOTIVE SPECIALISTS WITH THE FACTS TO BACK IT UP DSMA is not a typical brokerage. DSMA is an Automotive Intelligence and M&A Advisory Service with In-House Essential Services, made up of our Acquisition Management, Legal, Financial, Operations and Marketing teams. DSMA’s unique approach to mergers & acquisitions is designed to offer maximum success and value to all our clients while ensuring the highest levels of confidentiality. Whether you’re the owner or the operator of a single point or a multi-national automotive group we have your best interests in mind. GET IN TOUCH WITH JENNIFER TODAY USA HEAD OFFICE 4851 Tamiami Trail North, Suite 200 Naples, Florida 34103 833.650.4188 USA@DSMA.COM CHICAGO REGIONAL OFFICE 200 S. Wacker Dr. Suite 3100 Chicago, IL, 60606 312.674.4556 DSMA.COM/MIDWEST REGIONAL OFFICES Calgary, AB Chicago, IL Las Vegas, NV Montreal, QC Nashville, TN New York City, NY Scottsdale, AZ St. John’s, NL Vancouver, BC 1. Understand the true value of your business through 33 key factors. 2. Understand where your business fits in the industry landscape. 3. Ask for our market intelligence report for timely updates on industry multiples. 4. Gain valuable insight into your financial health with a full KPI review. 5. Make informed and fast decisions about your selling timeframe. 6. Make smart choices to enhance your business value when you are ready to sell. 7. Strategic succession planning and advisory services. DSMA’s automotive specialist accountants have valued over 1,500 dealerships just like yours, and are the most trusted at hunting profit and creating accurate Valuations. Our experience and expertise means you can trust our numbers, just like lawyers, accountants, banks, OEM’s and other dealers do! Whether you’re thinking of selling now or in the next 5 years, you should know the True Value of your Business in today’s market. YOUR FUTURE INVENTORY ANALYSIS
Partnerships Help Dealers Succeed By Sharon Kitzman, Dominion DMS Ideally, vendors and businesses work together as partners. Having a genuine relationship and being able to problem-solve together is an advantage no matter what. The auto business is not exempt. Dealerships have done well during the last couple of years. But there’s a downside to good times: dealerships sometimes develop bad habits because it becomes so easy to wait for customers to come to them instead of going out and finding new ones. Without leadership and a good plan, teams can fall apart quickly. As John C. Maxwell said, “Teamwork makes the dream work, but the vision becomes a nightmare when the leader has a big dream and a bad team.” Having a vendor as an ally in business can play a crucial role in the success or failure of an organization. Organizations should work to strengthen their vendor relationships in the same manner that they focus on team development and fostering customer loyalty. Once your goals are set and your vendor has committed to working with you, it’s important to maximize the relationships so you continue to get the most out of your tools. Here’s how to keep relationships going so you see the best results. Team Training and Support Working with vendors to come up with a well-thought-out training plan for your team helps with integrating new products into your dealership. At times, it can be hard to implement new tools because daily routines are set, and everyone is pressed for time. That’s why it’s important to work closely with your vendor to set your team up for success. When possible, bring in a vendor representative to train and educate your employees. That way, everyone understands how to use the new product. Key Performance Indicators (KPIs) Vendors should provide you with KPIs. KPIs create targets for your teams to hit, milestones to track progress, and insights to help organizations make better decisions. Using feedback from KPIs will help you to continually improve performance. Communication Set up regular check-ins with vendors to talk about what’s working and what’s not. This is where you can get the help you need. A receptive vendor will use your feedback to improve its product, so be honest. It is also important to establish open channels of communication for your team to ensure everyone using the vendor tools knows how to get help if they need it. Long-Term Training Training is not simply finished after the initial setup. Follow-up training from your vendor is important because it allows your team to give feedback, get questions answered and allows for training as the product develops new features. You’ll keep your staff engaged and maximize the value of your dealership tools. A good vendor is there to help you achieve your goals, so make sure to stay on the same page, keep your communication going, and continue to look for ways tools can benefit your dealership. Having a great relationship with a vendor who has a vested interest in your business can prove to be beneficial in a number of ways. Cost Savings Being a good customer — with consistent orders and on-time payments — can lead to vendors offering volume discounts and having special deals. Timely Deliveries In order for you to meet your obligations and provide excellent customer service, you need to have the tools you need delivered on time. That’s what’s great about having a good relationship with your vendor, they will prioritize you. Vendors will deliver the goods ahead of time. In addition, they’ll make sure that you get the best training and will follow up. № 10 18 CATA UP TO SPEED
Vendor Support When issues arise, the vendor will be prompt in their responses. More than likely, they’ll go beyond the basics to address your problem and compensate you for your trouble. Customization As your vendor begins to understand your business, they can provide you with unique and customized products that can create a competitive advantage over other businesses in the marketplace. Customer Satisfaction A strong relationship with your vendor can also impact other relationships, that of your customers and your company. When you deliver goods and services on time and free from issues, your customer relationships will become stronger. This can foster loyalty and trust as they will feel that their money is well-spent. There is more to consider. Recent trends in the auto industry are affecting dealerships, and dealers will have to adapt. What are some of those changes? You already know about an increase in EV sales, but specifics are harder to find. How many will be built, and where will they be distributed? When will the national charging infrastructure become a reality? Additionally, What are the next steps in putting digital technology into ever-more-connected cars? How will tech partnerships with auto manufacturers affect product offerings and sales strategies, including the market for accessories? Also, what progress is being made on autonomous cars? Will interest rates continue to rise? How will that affect the drop in used car prices as market conditions stabilize and supply chains return to normal? What about the regulatory environment? Major changes in finance, insurance and lending have all taken place. How will dealers create a consistent sales experience for customers? Will they refine multi-channel coordinated marketing? Will they go to Gen Z’s current search engine favorite, TikTok? As the market changes, finding low-hanging fruit may be more difficult. Establishing and maintaining solid vendor relationships is vital. Now is the right time to return to selling basics — focusing on customer service while maintaining cost efficiency, quality and developing your market are key. That means using your DMS to give you the information about customers you need. NADA keeps statistics about many aspects of the auto business, but one of those statistics has to do with inventory. About 2% of the people in a dealer database return to the market every month, but that doesn’t mean they return to the dealership where they bought their last car. Very few customers are loyal to a specific dealer, but a good DMS can help you to identify helpful information about customers: When was the last time they did business, did they buy or lease? Pay cash? Buy insurance? What was their payment range? How do you track your customers who aren’t coming back to your dealership? The technology is now there to know when customers visit other dealers. Dealers can use that information to determine why their customers are going elsewhere and possibly find ways to bring them back. Google Analytics (GA3) is making way for a unified GA4 specification written by the Automotive Standards Council, due in November 2023. Also, you can look forward to tracking across all vendors and outcome-oriented conversion signals that replace clicks. With the pandemic over and concerns about disease fading, how is shared mobility developing? We know fewer people are currently buying new automobiles. Of those who do, they don’t often have much equity in their old one. Will younger people continue to avoid buying or driving cars, or will they finally decide that getting a license and having a car is worth the time and money? What will happen to the subscription-based services manufacturers are experimenting with? Some people are coming in to return leased vehicles and walking out with a substantial check instead of another leased vehicle. If fewer people are buying automobiles, that also means there are fewer used automobiles. Optimizing revenue streams has become critical to staying in business. Dealers and vendor partners both benefit from communicating ideas and solutions for the problems they see. It’s easy to spend time on administrative tasks instead of building relationships and talking with business partners is as important as any other task. Maximizing your vendor relationships will increase your return on your technology investments and keep your dealership ahead of the curve. Finding a balance is key. « Listen to our VUE Points podcast to stay up to date with news and current events related to the automotive software and retail industry. https://www.dominiondms.com/podcasts/ Sharon Kitzman leads the launch and long-term growth of Dominion DMS. Previously, she managed the strategic direction and product development for Reynolds & Reynolds and Dealertrack. Her experience spans every area of dealership software development, including sales, marketing, product lifecycle management, process re-engineering, OEM management, professional services, and customer services. Kitzman is a recognized leader in the automotive industry for her expertise in DMS technology. She received numerous accolades for her leadership, including Automotive News Top 100 Leading Women 2015 and 2020, Auto Remarketing Women in Retail 2021, and AutoSuccess Women at the Wheel 2021. She has a Bachelor of Business Administration from Ohio State University. CATA UP TO SPEED 19
Change is tough, but a lot of good can come from it. We’ve seen this repeatedly as disruptors redefine and restore balance to industries. EVs will cause a big shift, complete with changes to policy and procedure. However, as electric vehicles go mainstream, there will still be plenty to do in dealership service departments. EVs need maintenance and repairs despite dealer concerns that EVs require less maintenance than other vehicles because they have fewer parts and no need for engine-oil changes or regular service visits. For many dealerships, the service department’s bread-and-butter revenue mainly comes from work involving alignments, brakes, electrical systems, suspensions and tires. So it will help worried dealers to remember what’s on EVs: brakes, electrical systems, tires, steering systems and suspensions. Lube, oil and filter services have been the entry point for most service departments. Still, because EV batteries are heavy, EVs weigh more than otherwise similar vehicles with gas-powered engines. The weight wears out tires faster. Since EV tires need to be rotated and replaced more often, tire maintenance and replacement will be the new entry point for EVs. Additionally, EV repairs are usually expensive. History tells us that new technologies need an iron-out period, and EVs are no exception. Components break, and batteries have issues. As the vehicles evolve, there will be new opportunities for service. Starting with Ford, manufacturers seem to be giving the impression that they want to copy Tesla’s methods for handling repairs and eliminate the labor rate or parts markups they currently pay when dealers are involved. Doing so would increase their control and improve their bottom line, so manufacturers are putting requirements in place regarding the repairs a dealer can do. For example, Ford won’t allow dealer service departments to fix certain vehicles without having a specific equipment set. It will be interesting to see how this power play ends. We know dealers must protect the value of their service departments, and we also know that dealers understand service better than the manufacturers do. What are the first steps in finding a better solution? Recognize what the market is today and how it affects you. Also, continue planning for the future by getting clients in the door to repair and service their vehicles, and give them the best experience possible. A general manager may not have an expert to explain why a cost-cutting decision in the service department is a mistake, and it’s easy to miss important variables that drive revenue in the service department when you make decisions from 30,000 feet. EVs and the Service Department By Justin Carr, Vice President, Warranty Processing Company “Since EV tires need to be rotated and replaced more often, tire maintenance and replacement will be the new entry point for EVs.” № 11 20 CATA UP TO SPEED
Getting parts will continue to be a problem, and some repairs will take longer than others. As a dealer, do what you can to control processes, training and oversight. If you don’t have the bandwidth, find a strong partner who can fill in the gaps and work closely with your team. People are trying to automate the warranty process. It is nice when you can get simple repairs handled, but not everything is cookie-cutter. Your bread and butter comes from a few areas. One is maximizing the bigger repairs and understanding how to get the most out of that newly acquired labor rate or parts mark-up percentage increase. Another is creating efficiencies and processes that benefit the entire service department team. Education is still the key to growth and progress in service departments. When managers see markets drop, it’s easy to make hasty decisions without understanding the impact of that decision on the service department. Managers might think they can find cheaper ways to do things, but then receivables shrink or inefficiencies cut into profit margins. Claims fall, revenue decreases and management doesn’t get the same knowledgeable reporting. That’s why it is important to think about how decisions affect everyone down the line as well as planning for the future. Everything will fall into place if we make good moves that benefit everyone. The service department must ensure their people understand their role and do their jobs to legitimately maximize warranty dollars. If the department can structure itself properly, which includes processes and efficiencies, they will be ready for the future. That future includes a rebounding market. When that happens, you want to be ready to absorb the full level of profitability by making sure the service department can deal with increased work without hiring staff. Manufacturers always make changes, so you need to hire and retain staff with the knowledge to direct repair orders. A Service Manager, Technician, or Service Advisor like that can bring everyone else up. Even though it can be hard to find and hire staff with tribal knowledge, a lower-cost person doesn’t have the same skills. Skilled team players are expensive because they know their roles and what they should be doing. They stay in front, training and lifting the department. Hiring the right person or partner is like deciding whether to buy steak or jello. Jello costs much less, but it is no substitute for steak. If you end up hiring inexperienced staff in critical positions, in the absence of having a lot of senior people, it is easy for bad habits to spread. Then you have bigger problems to fix and miss out on the money you could have been earning. Cleaning up these types of internal messes pulls your critical team members down rabbit holes they shouldn’t be in. Although many dealers don’t have the time and money to train in-house, they can create partnerships by consulting and outsourcing with a good outside company that acts like a life coach and mentor for their business. The dealership can use a consulting company to keep employees on track and responsible, including new people. The consultants can do standin work when employees are gone, lift teams and keep them on track. The right company will actively find patterns of problems, spoon-feed dealers the information they need and give them options to improve. Dealers can then learn from the consultant’s processes and keep moving forward. With a nonbiased partner, you can find ways to help everybody and grow the service department. It’s important to know why you are doing something because you will get stuck or slide backward if you do things for the wrong reasons. Success comes from acting purposefully for all the right reasons. Although EVs are a big change, they offer dealers many new opportunities. « CATA UP TO SPEED 21
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