Issue 2 • 2025 AADA Convention 2025 A Week to Remember CHAIRMAN’S MESSAGE A CALL TO SERVE, A TIME TO CELEBRATE
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5 PRESIDENT’S MESSAGE Evolving Customer Service Key Trends Shaping Dealer Success in 2025 By Greg Kirkpatrick, President, AADA 6 CHAIRMAN’S MESSAGE A Call To Serve, A Time To Celebrate By Roger Smart, Chairman, AADA 8 AADA Convention 2025 A Week to Remember 11 Thank You to Our 2025 Convention Sponsors 12 Thank You to Our 2025 Convention Speakers 13 Reset and Retool: Dealers Meet 2025 With Resilience Tariffs and Their Impact on the Economy Will Test Dealers’ Resilience By Truist Dealer Services 16 Ransomware A Response Plan Is Essential for Auto Dealers By Bank of America 19 Is Fraud About Good and Bad People — Or Pressure and Opportunity? By Paula Mashburn, CPA, CFE, Partner, HHM CPAs, Dealership Specialist 20 Driving Hunger Out of Arkansas AADA and the Arkansas Hunger Relief Alliance 21 Federated Insurance® Launches Risk Management Academy 21 Upcoming Events 22 Arkansas Auto Outlook Second Quarter 2025 ©2025 The Arkansas Automobile Dealers Association (AADA) | The newsLINK Group LLC. All rights reserved. Arkansas Auto Dealer is published four times per year by The newsLINK Group LLC for AADA 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 AADA, 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. Arkansas Auto Dealer is a collective work, and as such, some articles are submitted by authors who are independent of AADA. While a first‑print policy is encouraged, 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 Arkansas Auto Dealer
PRESIDENT’S MESSAGE The automotive retail landscape continues to transform at an unprecedented pace, and customer service expectations are evolving alongside these changes. As dealers adapt to these new consumer preferences, the following are some critical customer service trends dealers need to understand. DIGITAL-FIRST, BUT HUMAN-CENTERED EXPERIENCES As technology redefines the way consumers interact with car dealerships, AI chatbots, immersive VR or AR experiences, and data analytics prominently shape customers’ expectations. While these tools are valuable, the most successful dealerships are balancing digital efficiency with genuine human connection. Every day, dealers are reminded that while technology is helpful in getting customers to the store for initial inquiries and appointment scheduling, it remains critical to maintain live agent availability for complex questions — 61% of vehicle shoppers still prefer calling after online research. TRANSPARENT, REAL-TIME COMMUNICATION Customers expect more than periodic updates; they crave real-time insights into the service progress of their vehicles. Transparency has become non-negotiable across all customer touchpoints. For example, dealers are using tools such as 1) text message updates during service appointments with photos and progress reports, 2) clear, upfront pricing with no hidden fees, 3) proactive communication about delays or changes, and 4) digital service appointment scheduling with real-time availability. STREAMLINED, EFFICIENT INTERACTIONS It is clearer than ever that consumers want dealership visits to be quick, efficient and engaging. The days of lengthy, complicated processes are ending as customers demand convenience comparable to other retail experiences. Some areas that dealers are improving upon include digital paperwork completion before arrival, express service lanes for routine maintenance, mobile payment options and contactless transactions, and streamlined financing processes with online pre-approval. PROACTIVE SERVICE DELIVERY One of the biggest changes for improving customer service is, ironically, in the dealership service department, where proactive customer service anticipates needs and addresses issues before they become problems. Leading dealers are shifting from reactive to predictive service models. Maintenance reminders and scheduling notifications are now the norm, along with seasonal service recommendations and even mobile service. LOOKING FORWARD These trends reflect a fundamental shift toward customer-centricity that goes beyond traditional automotive retail. Dealers who embrace transparency, leverage technology thoughtfully and maintain genuine human connections will thrive in this evolving landscape. The most successful dealerships in 2025 will be those that view customer service not as a cost center, but as their primary competitive advantage. By staying ahead of these trends, our members can build stronger customer relationships, increase retention and drive long-term profitability. Greg Kirkpatrick President, AADA EVOLVING CUSTOMER SERVICE Key Trends Shaping Dealer Success in 2025 5 Arkansas Auto Dealer
CHAIRMAN’S MESSAGE As chairman of AADA, one of the privileges of the role is being able to chair the Nominations Committee. This committee is responsible for overseeing the selection of a proposed slate of officers and directors to serve during the 2025-26 term. AADA members are invited to submit recommendations for nominees. We are seeking nominations for the following positions: Treasurer; Regional Director for Region 1; Regional Director for Region 2; four Directors at Large; and one ATD Representative. Your input is vital to ensuring strong leadership for our association. Please review the list of dealers retiring from the board and nominate those you believe will best represent your interests. We encourage active and interested dealers to become involved, and if you wish to do so, please let us know. The Committee’s recommendations will be presented to the board of directors for approval at the fall board meeting in October. Additionally, we invite you to nominate an individual or company for the Felix G. Smart Lifetime Achievement Award. This prestigious award is not presented annually but only when there is a truly deserving recipient who has made a profound and lasting impact on the automobile industry in Arkansas. It is also an award I am particularly proud of, as it’s named after my great-grandfather. Please email both nomination forms to Katrina Burnett at kburnett@arkautodealers.com by Oct. 6, 2025. We look forward to receiving your nominations and appreciate your commitment to helping shape AADA’s future. Roger Smart Chairman, AADA A CALL TO SERVE, A TIME TO CELEBRATE 6 Arkansas Auto Dealer
AADA CONVENTION 2025 A Week to Remember 8 Arkansas Auto Dealer
A WARM WELCOME AND HOSPITALITY TO START THE WEEK Guests kicked off the week with a warm welcome at registration and a lively reception that set the tone for an unforgettable event. Our dealers were treated to an evening of fantastic hospitality, as different vendors rolled out delicious dinners paired with plenty of laughs and networking. ENERGIZING BUSINESS AND MAGICAL EVENINGS The next morning started bright and early with breakfast, followed by a business meeting where speakers delivered valuable insights that energized all attendees. Our chairman, Roger Smart, along with upcoming Chairman Michael Dickerson, made important announcements that set the course for an exciting year ahead. 9 Arkansas Auto Dealer
Dinner that evening was pure magic — dining under the stars with live tunes filling the air, a crackling bonfire warming the night and sticky-fingered smiles thanks to gooey s’mores. ADVENTURES AND EXPLORATION Thursday morning offered something for everyone. Some chased that little white ball on the lush Buffalo Ridge Golf Course. Others took in the wonders of nature on the Wildlife Tram Tour through Dogwood Canyon, spotting elk, buffalo, longhorns, waterfalls and charming bridges with water flowing under them. Thrill-seekers enjoyed an exciting golf cart tour through the cave, adding a unique adventure to the day before dinner. A GRAND FINALE TO REMEMBER The grand finale? The Chairman’s Dinner at Arnie’s Barn, where dealers gathered for an evening filled with breathtaking views of the Cathedral and the excitement of special giveaways — a perfect tribute to the dealers who are truly the heart of AADA. Throughout the convention, there was plenty of fun for the entire family, with engaging activities and events designed to keep all ages entertained and connected. We can’t wait to do it all again at our 2026 AADA Convention at Big Cedar Lodge on July 21-24, 2026! 10 Arkansas Auto Dealer
PREMIER SPONSOR GOLD SPONSORS SILVER SPONSORS PLATINUM SPONSOR Thank You TO OUR 2025 CONVENTION SPONSORS 11 Arkansas Auto Dealer
Thank You TO OUR 2025 CONVENTION SPEAKERS DAVE CIAMBELLA President and CEO, Rawls Group Succession: Perpetuating Your Legacy PAULA MASHBURN, CPA CFE Partner, HHM CPAs LEE FERGUSON CPA Partner, HHM CPAs Tax & Fraud: Strategies to Strengthen Internal Controls, Minimize Fraud Exposure, & Optimize Tax Outcomes JOE MOWRY Managing Director, Stephens Inc. What You are NOT Hearing Everywhere ... Debt & Private Markets & A Taste of Aftermarket KEVIN HORN Partner, Tax, Forvis Mazars JON GEE Partner, Tax, Forvis Mazars Top 10 Impactful Tax Planning Items for Dealerships 12 Arkansas Auto Dealer
RESET AND RETOOL: DEALERS MEET 2025 WITH Resilience Tariffs and Their Impact on the Economy Will Test Dealers’ Resilience By Truist Dealer Services For auto retail dealers hoping for a return to normal conditions and predictability in 2025, disruption has once again taken the driver’s seat. As trade dynamics shift and their impact on the economy remains unclear, auto retailers will need to call upon their adaptability to adjust to a new set of conditions. Strong profit growth since 2019 and resilience through COVID suggest that dealers are ready to reset and retool to address today’s market. Thankfully, dealer average profitability has stabilized at nearly double the rate achieved in 2019. The most successful auto retailers will be able to maneuver to build value without shortchanging growth strategies or slowing their work. As you reset your plans for the coming years, consider the following industry trends. CONSUMER DEMAND WILL CARRY ON Auto retail demand depends on the strength of the consumer, and by most measures, the U.S. consumer is relatively healthy. Savings rates are up, as are wages. Consumer spending patterns haven’t changed. Auto financing is holding strong. The percentage of people not paying their credit card bills is low. Taken together, consumer measures point to steady demand for vehicles. Additionally, millennials and Gen Z are entering their prime years for buying cars and trucks, surpassing the baby boomers as drivers of demand. Consumers have adjusted to vehicle prices that have risen 30% over the past seven years, with a marked increase in new, used and fleet sales that have carried over from 2024 into the first part of 2025. STRENGTH IN THE USED CAR MARKET OFFERS GOOD NEWS FOR DEALERS There’s been a surge in used car demand, and we can expect even more as the year unfolds. For some time now, we’ve seen that consumers are especially interested in buying late-model used cars and trucks, keeping these values high. Higher new car prices, combined with rising insurance premiums for more expensive vehicles, nudge more buyers toward the used vehicle market. With the threat of expanding tariffs, inflation or supply chain disruptions, new car prices will be pressured further, pricing more customers out of the new car market and driving them to buy used. Enterprising dealers are already starting to get ahead of the demand surge by boosting their strategies to acquire used vehicles. Dealers can look to gain a competitive edge by sourcing a favorable mix of cars at an attractive price and marketing them to consumers who have become more accustomed to purchasing in the used car market. Combining vehicle sales in a hot and profitable used market with financing or protection products will provide even more support for dealer margins. 13 Arkansas Auto Dealer
PRICING TRANSPARENCY BENEFITS BUYERS AND DEALERS ALIKE The spike in digital shopping and purchasing has catalyzed the longer-term shift toward more transparent pricing. Retailers have tried to make it easier for customers to see exactly what a vehicle will cost them so they can determine how it will fit within their budget. That transparency applies to used car trade-ins as well. With a better understanding of the value of their current vehicle, consumers know in advance how much they can contribute toward their next car purchase. Clearer and more precise, “no-haggle” pricing also helps dealers consistently protect their margins. These policies build trust in the buying process, which bolsters consumer relationships that extend beyond the initial sale, ideally into servicing. EVs PERSIST, ESPECIALLY IN 12 STATES EV sales will continue to grow, albeit not at the pace some predicted a few years ago. Currently, buyers of commercial vehicles (e.g., Amazon vans) are the fastest adopters of EVs. Over time, we expect this trend to drive down EV prices, which will encourage more widespread adoption. Hybrid vehicles, including plug-in hybrids, are a popular alternative that helps bridge the move to fully electrified vehicles, which we expect to represent 40% of the market within the next five to 10 years. Continued headwinds to EV adoption include lagging development of charging infrastructure, consumer anxiety around trip planning due to battery range and subpar battery performance in cold climates and disaster situations (e.g., floods, hurricanes and evacuation scenarios). The used car market for EVs has been marginal at best, but some 70% of EV buyers report plans to purchase another one. In fact, 92% of EV owners in a recent survey by Global EV Alliance said they would never own another internal combustion vehicle.1 The interesting growth story will be in the 12 states phasing in EV vehicle mandates starting in 2026, 2027 or 2028. Given the current climate, we can expect many of those requirements to be reduced or rescinded, but California, Colorado and possibly Oregon are expected to stick to their commitments. These mandates will require much of the EV and hybrid output to be directed to states with EV mandates, leaving a shortage of those vehicles in the remaining states. SERVICE BUSINESS RISES AS A ROBUST CENTER OF PROFIT AND CASH FLOW The service business is driving profitability and boosting cash flow to a greater degree than many people anticipated. It’s true that vehicles are better built than they were just 10 to 15 years ago — and last longer — but they still need service and parts throughout their extended lifespans. And OEMs will have warranty issues and recalls that require servicing, a meaningful source of revenue, particularly for dealers who maximize their warranty reimbursement rates. An invigorated used car market closely links customer acquisition and rising service needs as a vehicle ages. Focusing on reaching the rising number of used car customers and fulfilling their needs could add critical service volume. Also, contrary to expectations, EVs are contributing to added profitability due to higher average costs for service visits. OEMS ARE PRODUCING AT OPTIMAL LEVELS TO DRIVE ORGANIC GROWTH While many dealers should see solid, organic growth in the coming years, with variation based on brand and individual store performance, the trade policy uncertainty adds a few twists to the story. If the economy avoids a downturn and tariff issues don’t flare up, demand for new and used cars, along with a more normalized market, bodes well for profitability. Manufacturers are building for overall market demand rather than production capacity. Our data shows that the sweet spot for a healthy margin on new car sales is a 65- to 75-day supply of vehicles, and April 2025 closed with a 66-day supply — 16 days lower than a year ago.2 (Compare that to the 110- to 115-day supply in 2019.) At the low end of the ideal new vehicle supply range, dealers enter the summer with inventory levels that should help protect margins. We expect total dealership profit to stabilize at around 4% of sales — twice the historical pre-COVID levels. BRAND DYNAMICS ARE SHIFTING, AND VALUE OFFERINGS ARE EMERGING Brand value is typically quite stable, something retailers can take as a given. However, recently, Nissan, Chrysler, Dodge, Jeep and Ram have dropped in blue-sky multiple values. Subaru and Ford are down as well, while Toyota has increased significantly. Besides several outstanding products that generate high-volume sales, Toyota now offers a hybrid-heavy lineup to better meet shifting demand, along with a transparent dealer-manufacturer relationship that provides a clear rationale behind their strategy. These factors combine to bring Toyota to a premium brand value level. Mazda, Volvo and Audi blue-sky values are recovering from recent slippage, with Honda moving up as well. Chevrolet, on the other hand, has never lost ground but is enjoying rising brand value based on a superior product mix and go-to-market strategy. Each brand’s strategy in handling tariffs and vehicle affordability pressure in the current market could lead to additional shifts in brand value. For example, Ford has stated they will raise prices on all vehicles produced in Mexico, while Toyota has stated they will not raise prices because of tariffs, instead absorbing a 21% hit to next year’s profits. When it comes to affordability, some brands are introducing value platforms to maintain vehicle affordability and market share in the face of cost increases from tariffs or inflation. Look at the F-100 version of Ford’s F-150 or the Enterprise Edition of the Dodge Ram. These are stripped-down, commercial-looking vehicles with a few nice features in the interior to link to the more expensive offering. They allow a buyer to access a brand where they might otherwise be priced out and keep the brand top of mind with the customer. 14 Arkansas Auto Dealer
M&A SURGES TO EVEN HIGHER LEVELS We anticipate even more dealer transactions this year than we saw in 2024, one of the top three years from a volume standpoint. The forces driving M&A to new highs in recent years are still in play, bolstered by new geographic trends. • Dealers are sitting on capital amassed through the COVID-19 boom times, and they’re motivated to grow. In this consolidating market, they can see the urgent need to scale for maximum efficiency. • Both international and large domestic institutional investors have renewed their interest in automotive retail. A number of financial investors, including marquee private equity firms and family offices, see opportunities in franchised auto retail and are pursuing dealership investment strategies. • Leadership teams are stronger. After years of struggle to fully staff management positions, most owners finally have capable executive teams to facilitate efficient expansion. • Technology supports the efficient addition of locations. While dealers have traditionally aimed to scale for five to 10 stores in a specific market, technology now enables multi-store efficiency gains beyond a contiguous geographic area. In response to that new capability, we’re seeing a definite trend toward less-localized growth, with dealership expansions finding scale in systems and processes. • Less favored markets are in. California, Minnesota, Illinois and the Northeast are now becoming M&A targets. Reduced dealership values in California make it an enticing market for M&A value investors. Thirty-nine million Californians still need to buy and service vehicles. MARKET CONDITIONS OFFER AN IDEAL WINDOW TO MONETIZE YOUR BUSINESS If you’d rather go than grow, now should provide ample opportunity to make your exit. With M&A activity having accelerated to an even higher level, owners who choose an off-ramp rather than facing the challenges of another business reset will have an opportunity to move on. With growth-minded dealership groups coming off strong-performing years and capital available for promising acquisitions, you couldn’t ask for a better time to explore offloading nonstrategic stores or putting your transition plans into motion. WHAT MAKES A DEALERSHIP ATTRACTIVE FOR ACQUISITION? Stores with specific strengths will command a premium in the rush to snap up solid auto dealerships. Whether they’re private investors, growth-focused auto retailers or other interested parties, buyers are looking for stores with the characteristics that pair maximum potential for continued growth and profitability with the resilience to handle market shifts and downturns. That translates to strong service retention rates following vehicle sales, fully staffed and highly capable management teams, desirable brands and updated facilities that meet manufacturer standards for image and capacity. Businesses that know how to tap the potential of F&I programs to generate profits will have an edge. Dealers who deferred capital investment, or can’t meet these buyer expectations for any reason, will have to sell their stores at a discount. RESET TO MEET TODAY’S MARKET AND CONTINUE BUILDING VALUE The year ahead holds promise for dealers who can adapt, retool and seize opportunities that emerge. Truist’s knowledgeable Dealer Services team is here to help you make the most of what the auto retail market offers. Count on our experience, insight and strategic support to help you every step of the way. To learn more, visit www.truist.com/dealerservices. This document is being furnished to senior management of existing or prospective investment banking clients of Truist Securities Inc. for information purposes only and may not be reproduced or redistributed to any person outside of their company. © 2025 Truist Financial Corporation. Truist and Truist Securities 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 management and payment services are offered by Truist Bank. | Deposit products are offered by Truist Bank, Member FDIC. 1. Global EV driver survey 2024, Global EV Alliance, December 2024. 2. Consumers Face Challenges as New-Vehicle Inventory Drops 7.4% in April Amid Tariff Uncertainty, Cox Automotive, May 15, 2025. We anticipate even more dealer transactions this year than we saw in 2024, one of the top three years from a volume standpoint. 15 Arkansas Auto Dealer
RANSOMWARE A Response Plan Is Essential for Auto Dealers By Bank of America High-profile cyber incidents have highlighted the need for auto dealerships to prepare for the impacts due to loss of critical services and theft of sensitive data. Here are some factors to consider when creating an incident response plan. KEY TAKEAWAYS • Auto dealerships are facing an increasing number of cyberthreats that can debilitate operations and compromise customer and financial data. • Creating a ransomware response plan is a critical piece of any dealership’s preparedness. • By implementing basic controls and best practices, an incident response plan can improve security for dealerships, even those with limited IT and cyber defense budgets. When a software and applications vendor was compromised by ransomware in June 2024, thousands of auto dealerships felt 16 Arkansas Auto Dealer
the effects. Essential management systems became inaccessible, sales and financing transactions went manual or stopped, and sensitive customer and business data was compromised. By one estimate, auto dealerships lost over 50,000 new vehicle sales and suffered over $1 billion in damages in the month after the incident was reported.1 Although this was an “upstream” incident that began with a critical service provider, the ransomware event highlighted the elevated risk auto dealerships face. A 2024 study found that 35% of surveyed dealers had dealt with some type of cyber incident in the past year. What’s more, ransomware was rated as the most serious cyberthreat these businesses face.2 In this environment, every dealership needs a plan for what they must do if they’re targeted. WHY A RANSOMWARE RESPONSE PLAN IS ESSENTIAL Even dealerships that lack the resources to hire security professionals or invest in advanced controls can greatly improve their defenses by constructing a response plan that includes proactive measures such as data protection, raising employee awareness and implementing core best practices. A plan that outlines how a business can prepare against cybersecurity threats and respond to incidents can help limit the damages related to loss of data and operations. It can also improve the chances of avoiding many types of incidents, including ransomware. The following guidelines can help dealerships create a response framework that can be tailored to their specific organization and capacity for planning. KEY ELEMENTS OF A RANSOMWARE RESPONSE PLAN Ransomware response depends on a timely assessment of a live incident’s severity and impact, clearly defined roles and reactions and a thorough investigation to ensure the threat is neutralized and operations can be brought back to a secure state. To be effective, your strategy must be in place before an incident occurs. Here’s how to get started. BEFORE AN INCIDENT 1. PREPARE • Educate key personnel regarding current cyber-risks and objectives of cybercriminals. • Appoint the most qualified individual to lead the creation, implementation and updating of the response plan. Alternatively, you can supervise a contract with a professional security vendor that creates the response plan. • Conduct a company risk assessment and be sure to include data inventory. • Create and maintain encrypted, offline or immutable backups of essential company and customer data. • Implement strong protections around identity and access management, such as multifactor authentication on all devices that can access company networks. • Formulate, test and continuously evolve the response plan. It should identify stakeholders and their roles, communication tactics and off-network channels, reporting procedures required by regulatory bodies or local law enforcement, and criteria for restoration of safe states. 2. BACKUP AND TEST • Regularly confirm the integrity of backups. • Do not look at backups as the “last line of defense.” No backup method is 100% cybersecure, and stealthy bad actors can corrupt backups even before they launch ransomware. DURING AN INCIDENT 3. DETECTION AND ASSESSMENT • Use security tools to monitor network traffic for evidence of an adversary’s presence or movement and issue alerts. • Assess which systems are easily compromised by ransomware and isolate them. Coordinate a shutdown of all devices that cannot disconnect from the affected systems. • Reset all credentials and passwords connected to affected systems. 4. COMMUNICATION AND REPORTING • Inform all internal teams and stakeholders on a preselected communication channel to ensure individuals essential to the response are engaged. • As needed, report the incident to affected third parties or vendors that assist your dealership with security and incident response. • Notify cybersecurity agencies and/or local law enforcement to maintain regulatory compliance and to receive additional assistance or guidance. • Communicate with third parties and clients to ensure they have not experienced financial impacts after the incident. 17 Arkansas Auto Dealer
5. CONTAINMENT AND REMEDIATION • Disable any system involved in the initial breach, as well as connected systems that malicious actors could use to access other parts of the company network or data systems. • Analyze network traffic and endpoints for evidence of the malicious actors’ persistence. Remediate vulnerabilities. • Rebuild the systems that are most critical to business operations. • Reset passwords and permissions. AFTER AN INCIDENT 6. RECOVERY AND RESPONSE PLAN UPDATE • Complete a thorough forensic analysis of the incident and document all steps taken to eliminate the ransomware or remove footholds the threat actor established. • Confirm that backups remain uncorrupted and don’t contain malicious payloads. Restore affected systems. • Inform all relevant third parties and oversight agencies of the steps taken and the removal of the threat. • Make improvements to company systems based on forensics. • Continue to maintain vigilance. Update security systems regularly and adapt employee training to reflect lessons learned. To learn more, visit business.bofa.com. “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, derivatives, 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., which is a registered broker-dealer and Member of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities Inc. is a registered futures commission merchant with the CFTC and a member of the NFA. 1. Anderson Economic Group, “Dealer Losses Due to CDK Cyberattack Reach $1.02 Billion.” 2. CDK Global, “The State of Dealership Cybersecurity 2024.” ADVERTISE HERE! RESERVE YOUR SPOT TODAY! 801 676 9722 sales@thenewslinkgroup.com RESEARCH SHOWS: • The average ROI for print advertising is around 130%. – Electro IQ • 56% of consumers trust print marketing more than any other advertising method. – AllBusiness.com • Print media has a 90% brand recall rate, the highest among all advertising channels. – Sonder & Tell Don’t just take our word for it! PRINT ADVERTISING isvital for success. 18 Arkansas Auto Dealer
IS FRAUD ABOUT GOOD AND BAD PEOPLE — OR PRESSURE AND OPPORTUNITY? By Paula Mashburn, CPA, CFE Partner, HHM CPAs, Dealership Specialist If you’ve worked in a dealership for any length of time — especially if you’re responsible for the bookkeeping — you’ve probably heard these famous last words: “I never would have expected that from him.” “She seemed like the most honest person here.” After two decades in this industry, both from inside dealerships and as a CPA and certified fraud examiner specializing in auto retail, I’ve seen internal fraud play out far too often. And it almost always catches everyone by surprise. Why? Because fraud isn’t just about “bad” people. It’s about circumstances — the perfect storm of pressure, rationalization and opportunity. THE FRAUD TRIANGLE: WHERE FRAUD REALLY STARTS Let’s look at the classic Fraud Triangle. This way of thinking about fraud says it takes three things to make an honest person do something dishonest: 1. Pressure: A need, want or crisis. Maybe their child is sick, and they can’t afford medicine. 2. Rationalization: The mental game that makes it seem “OK.” “They don’t pay me enough — so it’s only fair.” Or my personal favorite, “Other honest people would do the same thing if they were in my situation.” 3. Opportunity: This is the real difference maker, and it’s on us as business owners and managers. It’s the environment that allows someone to take cash or assets, and it goes undetected. This could be weak internal controls, a lack of oversight or one person controlling the books with no checks and balances. I’ve learned that pressure can make good people do things they would never “normally” consider. Rationalization gives them a reason. But fraud can’t happen unless they see opportunity. Take this to heart: A tremendous amount of internal dealership fraud goes unreported, and you never hear about it unless it’s through the grapevine. Most people who have stolen from a dealership weren’t “bad” people. Even those who have taken millions were trusted employees, even admired, by their co-workers. That’s why it hurts — and shocks — when the truth comes out. GOOD PEOPLE, BAD MOMENTS Let’s get real. Imagine a loyal employee whose child is incredibly sick. Medical bills are piling up, and there’s no help in sight. 19 Arkansas Auto Dealer
Under that kind of pressure, it’s human nature to look for solutions — even ones we’d otherwise call wrong. Add a powerful rationalization — “Anyone would help their child if they could” — and, if your accounting systems are soft enough, the only thing stopping a disaster is your controls, or lack thereof. SO … IS FRAUD ABOUT GOOD AND BAD PEOPLE? Here’s my challenge: Stop thinking in black and white or trusting your gut to know the difference. Instead, ask yourself if your dealership is a place where opportunity exists for fraud to thrive. If you focus only on the character of your people, you’re setting yourself up for that gut-punch, “I never would have expected it from her.” If you focus on eliminating opportunity, you protect your team — and your business. The following are the controls that matter: • Routine bank reconciliations performed daily and reviewed periodically by owners or executive managers. • Segregation of duties — even for a small staff. Get creative with rotation and cross-training. • Clear, enforced policies for recording, tracking and reconciling payments. • Following up when something seems off or the explanation sounds confusing. Communication and a little skepticism go a long way. I’ve investigated fraud losses in dealerships numerous times in recent years, even losses that ran into the millions. Improper or missing bank reconciliations, bottleneck employees and confusion over payments were almost always present. Fraud is possible when controls are missing, and opportunity opens the door. The rest is simply human nature, sometimes pushed to an extreme. FINAL THOUGHT — YOU HAVE THE POWER Don’t let “I never would have expected that from him” be the first sign you have a problem. Instead, get proactive about controls, foster a culture of transparency and remember: Given the right pressures and rationalizations, opportunity is all it takes for fraud to happen — even among the “good” ones. Ask yourself today, “If I were desperate, where does opportunity exist in my store?” DRIVING HUNGER OUT OF ARKANSAS AADA and the Arkansas Hunger Relief Alliance At the Arkansas Hunger Relief Alliance, we believe no Arkansan should go to bed hungry. Every day, we work with partners to expand access to nutritious food across all 75 counties through programs like No Kid Hungry Arkansas, SNAP and WIC Outreach, and the Arkansas Beef Project. This mission is only possible through strong partnerships. AADA has stepped up in a big way, supporting hunger relief with a donation presented last fall at Hug Chevrolet GMC in Charleston. “This gift demonstrates the power of community partnerships,” said Sylvia Blain, CEO of the Alliance. “Our friends at AADA are showing that business leaders can play a direct role in tackling hunger and improving the lives of our neighbors.” Arkansas’ auto dealers are pillars of their communities. Now, through this partnership, they’re also ensuring families have access to healthy food. To showcase this commitment, the Alliance and AADA will host a press conference on Thursday, Oct. 9, at Gwatney Buick Chevrolet in North Little Rock. Together, we’ll highlight the impact of this partnership and call on others to help drive hunger out of Arkansas. 20 Arkansas Auto Dealer
Upcoming EVENTS October 16, 2025 AADA BOARD OF DIRECTORS’ MEETING AND CHANGE OF OFFICERS LUNCHEON* 11:30 a.m.-2:00 p.m. AADA Office 600 Main St. North Little Rock, AR 72114 *By Invitation Only Late Spring 2026 REGIONAL MEETINGS July 21-24, 2026 2026 CONVENTION Big Cedar Lodge Federated Insurance® is excited to formally invite business owners in all industries to attend our complimentary two-and-a-half-day Risk Management Academy from Nov. 4-6, 2025. Led by risk management professionals, this session will be held at the Federated Insurance® Office in Owatonna, Minnesota. Often, business owners find themselves so busy in their company’s day-to-day operations that they have less time to focus on their business’s overall safety. This Risk Management Academy session can help business owners learn how to prevent losses impacting their bottom line by developing best practices for risk management, connecting with industry peers facing similar challenges and insurance professionals committed to helping owners, and applying what is learned to make a difference at their businesses. Building a culture of workplace safety starts with business leaders. Learn more and register now to attend this valuable academy and take risk management to the next level. To reserve your spot in the upcoming session, or for more information, please email federatedrma@fedins.com. FEDERATED INSURANCE® LAUNCHES RISK MANAGEMENT ACADEMY 21 Arkansas Auto Dealer
93,104 100,152 108,621 111,800 2022 Actual 2023 Actual 2024 Actual 2025 Forecast Second Quarter 2025 Released July 2025 Market Summary Forecast for State New Retail Light Vehicle Registrations DOWN 20.0% vs. ‘21 UP 7.6% vs. ‘22 UP 8.5% vs. ‘23 UP 2.9% vs. ‘24 Arkansas Auto Outlook Coverage of the Arkansas new vehicle market TM YTD '24 YTD '25 % Chg. Mkt. Share thru June thru June '24 to '25 YTD '25 TOTAL 49,527 58,952 19.0% Car 7,177 7,035 -2.0% 11.9% Light Truck 42,350 51,917 22.6% 88.1% Domestic 23,880 30,604 28.2% 51.9% European 2,626 2,912 10.9% 4.9% Japanese 17,114 17,723 3.6% 30.1% Other Asian 5,907 7,713 30.6% 13.1% Domestics consist of vehicles sold by GM, Ford, Stellantis (excluding Alfa Romeo and FIAT), Tesla, Rivian, and Lucid. Other Asian includes Genesis, Hyundai, Kia, and VinFast. Data sourced from Experian Automotive. The graph above shows annual new retail light vehicle registrations from 2022 through 2024, and Auto Outlook’s projection for 2025. Historical data sourced from Experian Automotive. FORECAST New Vehicle Registrations Predicted to Decline in 2nd Half of ‘25 Below is a list of five key trends and developments in the Arkansas new vehicle market: 1. The state market got off to a very good start in the first half of this year. New retail light vehicle registrations increased 19% during the first six months of 2025 versus a year earlier, well above the 6.4% improvement in the U.S. Some sales were undoubtedly pulled ahead as shoppers entered the market in advance of anticipated price increases due to tariffs. 2. As discussed in the sidebar on the right, there is heightened uncertainty for the new vehicle sales outlook. At this point, it looks like the market will move lower for the rest of this year. Second half registrations are predicted to decline 10% compared to the same period in 2024. The market is expected to increase 2.9% for all of this year (see graph below). 3. Hybrid vehicle sales continue to move higher. Hybrid registrations increased 59% in the first half of this year, easily outpacing the overall market. Market share reached 9.7%. BEV market share was just 2.1% so far this year, up from 1.7% in the first half of 2024. 4. Hybrids accounted for 46% of Toyota registrations during the first six months of 2025. ICE powertrain share was 90% or higher for 19 of the top 30 selling brands (see page 7). 5. First half registrations increased by more than 30% for eight of the top 30 selling brands in the state: Lincoln, Buick, Cadillac, Tesla, Ford, GMC, Hyundai, and Kia. Primary Factors Driving the Arkansas New Vehicle Market As 2025 approached, the outlook for new vehicle sales was positive. Affordability was likely to improve due to lower interest rates and declining transaction prices. The economy was also in relatively good shape: GDP growth was solid, unemployment remained low, incomes were on the rise, and inflation was cooling. Add in pent-up demand resulting from deferred purchases during the pandemic and ensuing supply chain disruptions, and the stage was set for improving sales. But that clear road quickly turned bumpy. U.S. trade policy was abruptly and dramatically altered, throwing a wrench into a relatively stable economic environment. The global economy is intricately interconnected, and the introduction of this level of policy uncertainty has left both businesses and consumers partially paralyzed. This level of disruption is substantial and without historical precedence, which makes isolating the impact on new vehicle sales very difficult. Bottom line: Higher tariffs will likely lead to rising vehicle prices and in the short run, increasing inflation, lower economic growth, and stagnant household disposable income, all negatives for new vehicle sales. In addition, sales were pulled ahead this year as shoppers advanced purchases due to the anticipation of higher vehicle prices resulting from tariffs. New vehicle registrations in the second half of the year are projected to decline from the year earlier, but the situation is highly dynamic and subject to change, so stay tuned. t Released July 2025 Market Summary ns ansas Auto Outlook Coverage of the Arkansas new vehicle market TM YTD '24 YTD '25 % Chg. Mkt. Share thru June thru June '24 to '25 YTD '25 TOTAL 49,527 58,952 19.0% Car 7,177 7,035 -2.0% 11.9% Light Truck 42,350 51,917 22.6% 88.1% Domestic 23,880 30,604 28.2% 51.9% European 2,626 2,912 10.9% 4.9% Japanese 17,114 17,723 3.6% 30.1% Other Asian 5,907 7,713 30.6% 13.1% Domestics consist of vehicles sold by GM, Ford, Stellantis (excluding Alfa Romeo and FIAT), Tesla, Rivian, and Lucid. Other Asian includes Genesis, Hyundai, Kia, and VinFast. Data sourced from Experian Automotive. from cted to Decline in 2nd Half of ‘25 the f of 9% well ere t in ned t, it ear. omd to traoutBEV % in the or t of ac, Primary Factors Driving the Arkansas New Vehicle Market As 2025 approached, the outlook for new vehicle sales was positive. Affordability was likely to improve due to lower interest rates and declining transaction prices. The economy was also in relatively good shape: GDP growth was solid, unemployment remained low, incomes were on the rise, and inflation was cooling. Add in pent-up demand resulting from deferred purchases during the pandemic and ensuing supply chain disruptions, and the stage was set for improving sales. But that clear road quickly turned bumpy. U.S. trade policy was abruptly and dramatically altered, throwing a wrench into a relatively stable economic environment. The global economy is intricately interconnected, and the introduction of this level of policy uncertainty has left both businesses and consumers partially paralyzed. This level of disruption is substantial and without historical precedence, which makes isolating the impact on new vehicle sales very difficult. Bottom line: Higher tariffs will likely lead to rising vehicle prices and in the short run, increasing inflation, lower economic growth, and stagnant household disposable income, all negatives for new vehicle sales. In addition, sales were pulled ahead this year as shoppers advanced purchases due to the anticipation of higher vehicle prices resulting from tariffs. New vehicle registrations in the second half of the year are projected to decline from the year earlier, but the situation is highly dynamic and subject to change, so stay tuned. SCAN THE QR CODE TO GET THE FULL REPORT. https://arkansas-auto-dealer.thenewslinkgroup.org/ arkansas-auto-outlook-2025-issue-2/
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