Vol. 33 No. 2 Meet IADA’s Current Chair Sean Grant A P u b l i c a t i o n o f t h e I l l i n o i s A u t om o b i l e D e a l e r s A s s o c i a t i o n
Located in Central Illinois, we serve the entire state. We specialize in automobile dealers in the following areas: Certified Public Accountants Memberships in: AUTOCPA Group The American Institute of Certified Public Accountants The Illinois CPA Society Serving more than 250 Automobile Dealers throughout the United States Woodward & Associates, Inc. 1707 Clearwater Avenue ·P.O. Box 1584 ·Bloomington, IL 61702 (309) 662-8797 ·Fax (309)662-9438 ·Email woodwardassoc@cpaauto.com ·http://www.cpaauto.com Dealership valuations Automobile dealer legal support Buy-Sells for dealerships LIFO inventory computations Financial statement analysis Corporation Income Tax returns Personal Income Tax returns CPA prepared financial statements Dealer estate planning Employee theft consulting Internal control studies and audits Profit consulting Training office managers/CFO’s 401K Audits
Julie a. Cardosi, esq. 3040 spring Mill drive, suite B springfield, iL 62704 (217) 787-9782 jcardosi@autocounsel.com www.autocounsel.com EXCLUSIVE. STRATEGIC. RESULTS. ConCentrations: Dealership Mergers & Acquisitions Dealership Franchise Law Business Litigation / Motor Vehicle Review Board Disputes Manufacturer / Franchisor Relations Business & Commercial Law Advertising Compliance Review Consumer Complaints Dealership Succession Add Points Real Estate Law Employment & Labor Law Federal & State Regulatory Compliance BaCkground: Principal, Private Law Firm Former, IADA Legal Counsel Former, Illinois Assistant Attorney General, Deputy Chief, Consumer Protection Division Drafted Illinois Motor Vehicle Franchise Act Amendments Creating Motor Vehicle Review Board Drafted Illinois Motor Vehicle Advertising Regulations Exclusively representing the unique business interests of automobile dealers for over 30 years. L A W O F F I C E O F J U L I E A . C A R D O S I , P . C .
CONTENTS Vol. 33 No. 2 Executive Director Joe McMahon / 217.753.0220 Illinois Automobile Dealers Association 300 West Edwards, Springfield, IL 62704 Chairman Mr. Sean Grant / 217.862.5300 Landmark Chrysler Jeep & Ford 2331 Prairie Crossing Dr., Springfield, IL 62711 Vice Chairman David Parkhill / 217.352.4275 Sullivan Parkhill Automotive 440 West Anthony Dr. Champaign, IL 61822 Secretary/Treasurer John Alfirevich / 708.429.3000 Apple Chevrolet, Inc. 8585 W. 159th St. Tinley Park, IL 60477 2022 OFFICERS ©2022 Illinois Automobile Dealer News | The newsLINK Group, LLC. All rights reserved. Illinois Automobile Dealer News is published four times each year by The newsLINK Group, LLC for the Illinois Automobile Dealers Association (IADA) 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 IADA, its board of directors, or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. The Illinois Automobile Dealer News is a collective work, and as such, some articles are submitted by authors who are independent of the IADA. While the Illinois Automobile Dealer News 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. Illinois Automobile Dealers Association 300 West Edwards Street Springfield, IL 62704 T 217.753.0220 • F 217.753.3424 IllinoisDealers.com 6 Executive Director Message IADA Makes It Easier to Send Your Managers to NADA Professional Series 8 Meet IADA’s Current Chair Sean Grant 11 Consultant’s Corner: Building Your Momentum to Pass Your Competition 12 Counselor’s Corner: Dealership Compliance with Updated Federal Safeguards Rule Required by December 9, 2022 — Don’t Wait to Get Your Information Security Program House in Order 16 About The Illinois Automobile Dealers Association Illinois Franchise Dealers Adapt, Evolve and Excel for Their Customers 19 Electric Vehicles Electric Vehicle Legislation Must Preserve State Vehicle Franchise Laws and Consumer Affordability 21 It’s Your Life: The Who, When, & How to Business Succession Planning 22 IADA’s Legislature & Regulatory Update 24 IADA Endorses ComplyNet to Help Dealers Safeguard Customer Information 25 $4,000 Electric Vehicle Rebate Program Opened July 1 26 Combating Catalytic Converter Theft
Baxter strives to retain top talent. He needed a system that employees could easily learn, to drive the high customer satisfaction that helps his dealership differentiate itself from online vendors. Baxter also wanted a DMS that was accessible offsite and on mobile devices, so he could run the business from anywhere. Thanks to the flexibility and ease of use of VUE DMS, his employees have become more productive. Between the improved workflows and mobile capabilities, the dealership has sped up the process between sales and F&I, dramatically decreasing delivery time and boosting customer satisfaction. EASE OF USE. CONSIDER VUE DMS. RECONSIDER What took me 3 minutes on VUE DMS used to take 45 minutes. Customers will remember that forever. That’s important for customer retention and satisfaction. Baxter Howell General Manager, Brad Howell Ford CONSIDER VUE DMS 866.928.3210 | VUEDMS .COM/ ILLINOIS
Executive Director Message JOE MCMAHON EXECUTIVE DIRECTOR Illinois Automobile Dealers Association Springfield, IL IADA Makes It Easier to Send Your Managers to NADA Professional Series We are excited to begin offering the NADA Professional Series right here in Illinois at our IADA office. We want to provide the most efficient and affordable way to offer this bestin-class training to your dealership managers without having to fly to other parts of the country and spend extra nights in hotels. • Take advantage of the absolute easiest and most affordable way to train your managers. • No expensive flights across the country - training locally right at your IADA office in Springfield. • NADA is providing their premier Professional Series trainer for our classes at IADA. The Series covers all parts of your dealership: • Office Management • Parts Management • Sales Management • Service Management The classes will be limited to 20 participants per category, so register now. Simply go to our IllinoisDealers. comwebsite to see registration information on the homepage. Classes are $2,995 for members – or get all NADA Professional Series classes and Academy Seminars for every employee at your store with an annual subscription, $699/month for the initial dealership, and $399/month for any additional dealership (12-month subscription required)! SCAN QR CODE TO REGISTER TODAY! 6
Sean Grant, IADA’s current chair, is a second-generation dealer and IADA member. Landmark Automotive, a Ford dealership in Springfield, Illinois, was started by Sean’s father, William Grant, Jr., in 1975. The company now has six dealerships that mainly sell domestic brands, and under Sean’s leadership, Landmark has continued its steady growth in sales and customers. Sean was born in June 1971, and he began selling cars after high school during the summers. Sean received his Bachelor’s degree from the University of Kentucky, then attended NADA Academy and graduated in 1995. Sean’s biggest mentor was his father. He was originally a banker who never sold a car in his life until he bought a dealership as an investment. “It’s been a good one,” said Sean. “My father was honest. You could take every word he said to the bank, no pun intended. He taught me that if we take care of our customers and employees, everything else will fall into place. You have nothing to manage or calculate if you don’t have customers, and you also have to take care of your employees. The two go hand in hand.” Over a career that spans 30 years, Sean has worked in every department within the dealership and knows what it is like to work in each position. He is now the dealer principal and president. Sean said, “It’s an exciting business. Every day is different, which keeps it fun. When you enjoy doing something, it doesn’t feel like work. I am very lucky to be able to say that. Some people can’t find that niche on their own.” Sean has three pieces of advice for other dealers, and younger colleagues looking to make the automobile industry a career: 1. Honesty is the best policy. 2. Take care of your customers 100% after the sale. 3. Lead by example. Don’t expect others to do anything you won’t do. In addition to being an IADA member, Sean has also been a member of NADA’s President’s Club for seven years. He thinks it is important to support dealership associations on both a state and national level so the associations can protect dealership interests. Being an association member has been important to Sean. “You get a front-row seat on issues that directly affect car dealers in Illinois,” said Sean. “You can give your money, time, or both to make changes that help fellow Illinois dealers. I try to do both. Right now, that means holding franchise laws high and strong. I also think it’s fun to meet other car dealers. We learn from each other, and we network. That’s a big benefit being directly involved with the association.” As Sean thought about the benefits of his IADA and NADA memberships, he said, “There are lots of benefits to being involved. Some people don’t have the time or capacity, but it only takes a little time, and I’ve seen many positives.” Sean first got involved as a leader within the association because he wanted to help fellow dealers. “I want to protect our franchise laws so that our franchises continue to be involved in selling vehicles. Dealerships provide a huge amount of support to our local communities. We hire employees and pay taxes that support our local communities, and we make charitable contributions to not-for-profit organizations like the Boys and Girls Club. I’ve been on the board of directors for that organization for more than 20 years.” Meet IADA’s Current Chair Sean Grant 8
Even though most retailers are trying to benefit from implementing “The Amazon Way” and selling direct to consumers, Sean thinks applying that model to car sales is a mistake. “A car is the second-most important investment most people will make in their lives. They ought to see it and drive it to make sure they want it. People need a relationship with their local car dealer. That way, someone can help them with their trade-in and after the sale. People remember the service after the sale. Take that away, and they won’t be happy down the road,” said Sean. As the IADA chair, Sean has a long-term goal of digitizing titles in the state. “I want to help the state move to digitized titles. It won’t happen this year, but it would be awesome if it happened in two or three years. I want to get the process started. Pressing a few keys is much easier than signing and mailing a document. Digital titles will be cheaper and faster to create, allowing people to transfer titles more easily.” Joe McMahon, IADA’s executive director, is working with the secretary of state’s office on this project, which will eventually have to be passed by the Illinois Legislature. One of IADA’s biggest goals is to help protect the franchise system. The race for secretary of state is important for accomplishing that goal because the incumbent is retiring, and the right person will be able to help the industry and customers. Sean sees a need for new blood and new ideas. He encourages IADA members to consider the candidates carefully and then vote. Other important issues facing the dealership industry are electrification and autonomous driving. EVs are already here. “We will have the F-150 Lightning here soon,” said Sean. “The federal government wants the country to switch because they want to get off oil and gas and go electric. There are astronomically big federal subsidies for states, companies and customers to turn the industry over to electric. It’s an investment to buy a charging station for a dealership, but quicker charging will be a game-changer as the technology gets better. It takes three minutes to fill up with gas. The dealership charger we have takes 12 hours to recharge a Tesla, but some chargers can already do the same thing in 40 minutes.” Sean thinks the technology for autonomous driving is still many years out. “If you are driving a car faster than 60 miles per hour, most people want to have their hands on the wheel controlling it,” he said. Sean wants IADA to be an effective voice for members, and he wants to protect member interests. “The easiest way to transition to electric vehicles is to go through the franchise system. The infrastructure is already in place, and we have the tools and technology we need to provide customers with positive experiences. The current laws support our model, and over time, companies that sell directly will learn that the car business has more to do than selling cars. You also have to provide service after the sale. Customers who don’t get the service they need will be upset, and they will stop buying cars unless they can get service. Direct-sales companies will be forced to do more if they want to survive.” During the next 3-5 years, Sean expects to see lower inventories and more BEVs. “Dealership consolidation will continue because of the economies of scale,” he said. “It’s going to be like the farming industry. You don’t see 10-acre farms anymore, and there are fewer farmers than there were 20-30 years ago. It will be the same for dealers.” When Sean summarized his plans as chair for the coming year, he said, “I will support and back our franchise system 100% for our community, employees and customers. I would encourage all dealers to not only be a member, but an engaged member. If you’re not, please join our crusade to help our industry now and for the future.” Sean and his wife, Taryn, have two children: Aislyn (16) and Aidan (13). “They’re great children,” said Sean. “I’m very fortunate.” Sean plays golf, and enjoys traveling to coastal areas and states in the Western U.S. such as Arizona and Nevada, follows the University of Illinois basketball team and plays basketball in the driveway with his son. The IADA is fortunate to have Sean Grant as its board chair, and we look forward to helping him achieve his vision for us and the industry. I want to protect our franchise laws so that our franchises continue to be involved in selling vehicles. Dealerships provide a huge amount of support to our local communities. We hire employees and pay taxes that support our local communities, and we make charitable contributions to not-for-profit organizations like the Boys and Girls Club. 9
JOEL KANSANBACK Brown & Brown Dealer Services Consultant’s Corner Currently, a lot of your competitors are complacent, selling only the inventory that comes to them. Not driving orders. Not aggressively buying used cars. They stopped all branding advertising and maybe all their advertising completely. Their outsized grosses and record profits have literally made them fat, happy and complacent. The very best retailers are not just being aggressive now, they are thinking ahead. When the market normalizes, and grosses come back to earth, they want to be in position. What does that look like? The right number of employees with the right pay plans. Maintaining traditional best practices of regular training, daily huddles, and CRM utilization. A complete sales process that includes a walk-around and demo, regardless of whether the unit was an order. If you care anything about market share, consider that now is the time to pass the dealers that have traditionally been ahead of you. If At Brown & Brown Dealer Services we put the emphasis on training. Visit our website for our training calendar and to meet our nationally renowned trainers at http://www.bbdealerservices.com. Contact Francis Fagan with Brown & Brown Dealer Services at 312-608-4979 or ffagan@bbins.com. Francis is the Regional Training Director for Illinois and Indiana. Building Momentum to Pass Your Competition you can have more order units in the pipeline, if you can reach customers higher up in the sales funnel, you can pass them up. Additionally, if they let off the gas on strategic brand advertising and market positioning, you will be uniquely positioned not only to pass them but to step on their throat when they are most vulnerable. Now is the time to pass. If you have questions about how to strategically reach customers higher up in the sales funnel and how to have an effective branding campaign that won’t break the bank and is guaranteed to drive car sales, ask your BBDS representative for more information. 11
JULIE CARDOSI Law Office of Julie A. Cardosi, P.C. Counselor’s Corner As auto dealers have likely been made aware through recent news sources, such as Automotive News, and various other automotive industry trade publications, last fall the federal Trade Commission (“FTC”) finalized its amendments to the 2001 Safeguards Rule under the Gramm–Leach–Bliley Act (“GLB”). These rule changes followed a prolonged regulatory process that sought to strengthen security for consumer financial information in the wake of the increased incidence of data breaches. By way of background, the Safeguards Rule was enacted to implement the GLB. Auto dealerships, considered “financial institutions” under the GLB due to the offering of credit transactions, have always been subject to the Safeguards Rule and required to assess the risk to the security and privacy of consumer financial information, maintain a program to secure that data, regularly monitor and update that program, and designate who is responsible for the program. The amended Rule contains several major changes and new requirements and specific criteria that auto dealers must satisfy. Dealers and financial institutions and their vendors are urged to prepare now and begin implementing the changes called for by the amended Rule well in advance of the December 9, 2022 deadline. The updated Rule requires dealerships to address specific areas in their security program risk assessment and produce a written report of the assessment. It further requires that each safeguard Dealership Compliance with Updated Federal Safeguards Rule Required by December 9, 2022 – Don’t Wait to Get Your Information Security Program House in Order 12
The updated Rule requires dealerships to address specific areas in their security program risk assessment and produce a written report of the assessment. Julie A. Cardosi is Principal of the private firm, Law Office of Julie A. Cardosi, P.C., of Springfield, Illinois. She has practiced law for over 35 years and represents the business interests of franchised motor vehicle dealers throughout Illinois. Formerly in-house staff legal counsel for the Illinois Automobile Dealers Association, she concentrates her private practice in the areas of dealership compliance matters, transfers of ownership, mergers and acquisitions, franchise law, commercial real estate transfers, and other areas impacting day-to-day dealership operations. She has also served as former Illinois Assistant Attorney General and Deputy Chief of the Consumer Fraud Bureau of the Attorney General’s Office. The material discussed in this article is for general information only and is not intended as legal advice and should not be acted upon as such. Dealers should consult their own private legal counsel for application to their specific circumstances. For more information, Julie can be reached at jcardosi@autocounsel.com, or at 217-787-9782, ext. 1. plan must address several specific items, including without limitation: access controls; data inventory and classification; encryption; secure development practices; authentication; information disposal procedures; management, testing, and incident response; and measures to monitor the effectiveness of the safeguard plan, required employee training, and services from external third-party providers. To assist dealers’ understanding of how the amended Rule affects their business operations, the following summarizes some of the more significant changes to the Safeguards Rule so that dealerships can evaluate and prepare to modify their existing programs. These include required written risk assessments, certain program changes, written incident response plans, the designated “Qualified Individual” and related requirements. The dealership’s information security program under the amended Rule must be based on a written risk assessment. This written assessment includes criteria to evaluate and categorize identified security risks or threats; to assess the integrity, confidentiality and availability of information systems and customer information which includes the proper controls in place to identify security risks or threats; and a description how identified risks will be mitigated and addressed by the information security program. Using these criteria, dealerships must assess reasonably foreseeable security risks to the security of customer information which could occur with the unauthorized disclosure, use, destruction and other security threats to this information and establish and implement proper safeguards. The amended Rule requires certain program changes necessitating certain elements be included within the dealership’s safeguard program. This extends to encrypting customer information held or transmitted by the dealership and implementing a process for authentication requiring at least two factors from the following: knowledge authentication (e.g., password), possession factors (e.g., token), or inherence factors (e.g., biometric). A written incident response plan must also be established and implemented to ensure both response to and recovery from a security incident and the plan is required to embody several aspects ranging, without limitation, from the response plan goals to reporting and response functions related to security incidents. Additionally, another significant change in the amended Rule relates to accountability. While the current Rule allows dealerships to designate one or more employees to be responsible for the information security safeguard program, the amended Rule requires the designation of a single “Qualified Individual,” as defined, along with periodic reports to the boards of directors or governing bodies of the dealership entity. The amended FTC Safeguards Rule raises the stakes for dealership owners and managers, by requiring direct involvement from senior leadership in safeguarding customer data. In the event of a data breach or incident, failure to comply with the new requirements will provide a clear basis for a federal enforcement action and may support costly civil lawsuits. Dealerships should take action now to be in compliance by the deadline and on an ongoing basis. There are additional changes under the amended Rule and therefor, it is important to consult with the dealership’s legal counsel and technology vendors to ensure application of the amended Rule in its entirety is addressed and all necessary steps are being taken to fully satisfy compliance obligations. 13
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ABOUT THE ILLINOIS AUTOMOBILE DEALERS ASSOCIATION Illinois Franchise Dealers Adapt, Evolve and Excel for Their Customers MISSION STATEMENT The Illinois Automobile Dealers Association is an organization of 700 franchised new car and truck dealers representing 2,000 franchises. IADA was founded in 1920 with the purpose of promoting an ethical, favorable business climate, and to serve the common needs of its members through services, education, and representation. IADA is dedicated to helping its members realize the full potential of their individual dealerships, while providing the kinds of services and support that only a strong, central organization can generate. LEADERSHIP For over a century IADA has been representing Illinois dealers in Springfield, our state's capital, on legislative and regulatory issues. We focus on the issues that will improve the dealerships bottom line. Our dedicated staff works from the IADA headquarters, conveniently located directly across the street from the State Capitol. The primary responsibility of IADA is to represent automobile and truck dealers in the Illinois General Assembly and before the various state regulatory agencies. The mission will always be to aggressively promote the interests of dealers by educating and persuading policymakers to make probusiness decisions to promote prosperity and opportunity for the Illinois dealer industry. 2022 brings on a new chapter for IADA, with Joe McMahon taking over as the Executive Director. Joe has had the privilege of representing the Illinois dealership industry at the State Capitol as the IADA Director of Legislative Affairs for the past 37 years, so the transition to assuming the responsibilities as the Executive Director has been very seamless. LEGISLATIVE REPRESENTATION The primary function of the Association is to provide a strong presence and advocacy at the Illinois State Capitol and at regulatory agencies when lawmakers/bureaucrats are establishing rulemaking and legislating the selling 16
of motor vehicles in Illinois. Our focus is to provide the lawmakers and staff with the correct facts when making important decision/votes regarding the motor vehicle franchise industry. We are continuously testifying before legislative committees and providing industry information when deemed necessary. During the past several years, our legislative office has enjoyed much success in our efforts, such as: • Passing one the strongest warranty laws addressing parts reimbursement, time standards and labor rates compensation for dealers in the country. • Several major amendments to the Illinois Motor Vehicle Franchise Act which balances the power between auto manufactures and franchised dealers. • Preserving many attempts to repeal the Illinois Sunday Closing law on vehicle sales. Maintaining the current law is a priority for employees at Illinois dealerships. • Establishing and preserving the Documentary Service Fee levies on vehicle sales. • Eliminating Illinois onerous $10,000 Sales Tax Cap on vehicle trade–ins. • Extending the driveaway permits to 90 days instead of 30 days. • Preserving the Dealer’s Retailers Discount Rate they receive for collecting and remitting Illinois sales tax. • IADA is in involved daily in all facets of the political and bureaucratic process when it comes to regulating new car dealers and the industry. LEGAL REPRESENTATION IADA provides legal counsel and financial assistance through a Legal Defense Fund to assist in judicial and regulatory proceedings that affect the franchised new car and truck retailing industry. Currently, our industry faces attacks on our long-standing franchise laws as several unregulated companies are trying to sell new vehicles directly without being properly licensed. Many more unregulated companies from around the world are waiting and hoping to sell vehicles in Illinois without independently licensed dealers and without proper oversight from the state. Our manufacturers are already leading the way with some of the most advanced, high-tech electric and ICE vehicles, and new cars and trucks are sold through franchised dealers because the business model benefits consumers, local communities and manufacturers. All companies should have to abide by the same laws. Because these companies are operating in violation of our current laws regulating vehicle sales, IADA has filed a complaint against these improperly licensed companies and the State. The IADA Legal Defense Fund, with support from NADA and the Peoria Metro New Car Dealers Association, is funding this complaint and IADA has commissioned a statewide campaign explaining the huge benefits that franchised dealerships provide to their local communities and most importantly their customers. INFORMATION RESOURCE By forging relationships with the news media, IADA is an information resource, delivering a strong message that the retail automotive industry is one of Illinois’ most important economic engines. Illinois franchised dealers create over 92,000 jobs, generate $34.4B in sales, pay $2.5B in payroll and $2.3 B in state sales tax. Fifteen percent of all state and local tax revenue comes from dealerships. IADA serves as a prime source of information for members, delivering brief and concise IADA Bulletins and other correspondence to keep dealers abreast of important industry matters and provide necessary information concerning current laws and regulations affecting the automobile industry. DEALERSHIP MEMBER PROGRAMS Using the significant group buying power of Illinois automobile dealers, IADA provides very competitive in-house programs and has negotiated discounted rates for services offered by distinguished companies that are officially recommended by IADA. This business model keeps membership dues low and returns dividends to members in the form of lower prices on products and services they use every day. One of the premier programs that IADA delivers is the partnership program with CVR. With the IADA headquarters also across the street from the Illinois Secretary of State office (the state’s license and title branch), a large part of the IADA staff works on behalf of the dealerships to process and deliver their title transactions each day. This 21-year partnership with CVR has helped to revolutionize the title and registration process for dealers, and with the Association involvement and influence, R&D improvements and legislative/rule enhancements are continually made. BENEFITS OF THE FRANCHISED DEALER SYSTEM Motor vehicles are highly regulated products that require licensing, insurance and financing. These vehicles also must meet numerous environmental and safety standards. All 50 state legislatures have enacted laws governing the sale and servicing of cars, which is usually done by franchised new-car and -truck dealerships. These franchise laws not only protect consumers, but also govern the relationship between dealerships and manufacturers. Continued on page 18 17
Simply put, new cars and trucks are sold through franchised dealers because the business model benefits consumers, local communities and manufacturers. CONSUMERS BENEFIT Consumers benefit from the franchised dealership business model. When local dealerships of the same brand compete for a customer’s business, prices drop. Dealers also compete on financing, where they have access to multiple lenders nationwide that are all trying to outbid each other. This competition benefits consumers, who usually don’t have access to or the time to pursue such an array of lenders. And dealers compete on service and parts, providing consumers with access to professional and certified repairs virtually anywhere at any time. Consumers also benefit when dealerships take on warranty and recall work. That’s because dealerships get reimbursed by the manufacturers for performing warranty and recall repairs, which enables dealers to make warranty and recall repairs at no cost to their customers and makes dealers strong advocates for their customers. LOCAL COMMUNITES BENEFIT With franchised dealerships, vehicle manufacturers gain a free distribution channel for their products. Local dealerships have invested more than $200 billion in land, buildings and infrastructure to sell and service vehicles. New-vehicle dealerships have transformed over time from corner lots adjacent to service stations into multimillion-dollar facilities with modern amenities, focused on customer satisfaction. DEALERSHIP MODEL CONTINUES TO ADAPT AND EVOLVE As auto retail evolves to a more data driven, tech-centric marketplace, Illinois dealerships are on the cutting edge as they adapt to succeed. Our dealers are exceptional at competing for customers and profit in an ever-changing retail climate while building profitable, valuable businesses for the future. With new technology platforms, drivetrains and new forms of vehicle ownership, the dealership business model of tomorrow will continue to evolve, and our dealers will continue to provide the best vehicle buying experience for their customers. What starts as a problem can end in possibility. It’s all in how you see it. Visit wipfli.com/dealerships. CHANGES PERSPECTIVE EVERYTHING. Continued from page 17 18
Electric Vehicles Electric Vehicle Legislation Must Preserve State Vehicle Franchise Laws and Consumer Affordability By Jamie Auffenberg, Auffenberg Dealer Group, IADA’s NADA Director ISSUE The key to advancing consumer adoption of electric vehicles (EVs) is a strong partnership of vehicle manufacturers and retailers with a wide and competitive distribution network, which will help drive vehicle affordability and consumer demand. Based on the states’ interest to protect consumers, preserve price competition, support local jobs and provide local and state tax revenue, states have held the right to license and regulate the distribution, sale and service of vehicles within their state, including EVs. During consideration of legislation that would promote deployment of electric vehicles, Congress must preserve the states’ traditional role to license and regulate vehicle commerce, provide consumer protections and promote vehicle price competition within its borders. BACKGROUND Congress may consider legislation to encourage greater EV adoption this year as part of a scaled back “Build Back Better” agenda. Dealers are essential to promoting widespread consumer adoption of EVs and ensuring price competition and market success. There may be attempts to preempt state vehicle franchise laws that provide an efficient and cost-effective method for selling and servicing vehicles, based on the false premise that selling EVs is fundamentally different than selling internal combustion vehicles. For decades, state vehicle franchise laws have included important consumer protections and regulated the disparity in size and power between local dealers and multinational automakers to help level the economic playing field. With new risks and opportunities associated with EVs, the state regulatory frameworks that protect consumers are especially important as unproven startups, including overseas entrants, emerge in the U.S. auto market. KEY POINTS • Any EV legislation considered by Congress should preserve the states’ right to license and regulate the distribution of vehicles within its borders. These rights are reserved to the states under the 10th Amendment to the Constitution and help provide consumer protection, protect local jobs, and significant local and state tax revenue. • Franchised auto dealers with a wide distribution network under state vehicle franchise laws will be critical to the rapid adoption of electric vehicles. More than 16,000 U.S. franchised dealers, who use their own capital to invest in personnel, land, buildings, and vehicle inventory, create strong competition that makes vehicles more affordable for consumers – a critical element that is necessary for electric vehicles to gain greater consumer acceptance. • There is an important public policy rationale for Congress to preserve state vehicle franchise and licensing laws, as these laws are based on the states’ interest to provide consumer protection, vehicle price competition and convenient service networks to support vehicle owners especially for warranty and recalls. STATUS (as of 5-2-22) Provisions promoting the adoption of EVs were included in the Build Back Better Act (H.R. 5376) which the House passed in November. Congress must ensure that a state’s traditional role to provide consumer protections, and the licensing and regulation of vehicle commerce, including EVs, within its borders is preserved. 19
It’s Your Life: The Who, When, and How to Business Succession Planning be reserved for close family members, and generally only where the business owner or family does not need proceeds from the transfer to meet retirement or income needs. These transfers may be subject to gift or inheritance tax to the extent the value exceeds the owner’s available exclusions or lifetime exemption. If you are contemplating a gift, or a series of gifts, of your business interests, consult with your legal advisors to review the tax consequences and draft the appropriate estate planning documents. The best option for your business – whether it’s a sale, a gift, or a combination of the two – will depend on a variety of considerations and your individual circumstances. When you’re ready to put your plan in place or review an existing plan, your Federated Insurance® marketing representative may be able to refer you to an independent attorney who specializes in estate and business succession planning to help. This article is for general information and risk prevention only and should not be considered an offer of insurance or legal, financial, tax or other expert advice. The recommendations herein may help reduce, but are not guaranteed to eliminate, any or all losses. The information herein may be subject to, and is not a substitute for, any laws or regulations that may apply. This information is current as of its publication date and is subject to change. Some of the services referenced herein are provided by third parties wholly independent of Federated. Federated provides access to these services with the understanding that neither Federated nor its employees provide legal or other expert advice. All products and services not available in all states. Qualified counsel should be sought with questions specific to your circumstances. All rights reserved. By Federated Insurance A business succession plan is important to help ensure a smooth transition when you are no longer able to run your business. Many business owners think about what they would like to happen to their business but fail to actually put a succession plan in place. So how do you create a succession plan? One of the first questions that needs to be considered is who will take over your business? For some business owners, it might be a son, a daughter, or more than one child who has worked in the business and is ready and willing to step in at any time. Others may have a key employee with years of service who has expressed an interest in taking over someday. In any case, finding the right person is a very important decision. It can mean the difference between financial security and financial hardship for you, your family, and even your employees if your successor cannot keep the business operating successfully. Once you have identified who you would like to take over your business, the next step is to figure out the details, especially the “when” and the “how” of your transition plan. There are two ways ownership of a business could be transferred: by sale or by gift or inheritance. • Sale – A sale of the business can help provide the departing owner, or their family, with financial resources to meet ongoing income needs during retirement or after the death or disability of the owner. Document the future sale of a business using a written buy-sell agreement that outlines, among other things, when the sale will take place: at the owner’s death, disability, divorce, or retirement, the purchase price, and the terms of the sale. The sale is often funded with insurance on the life of the owner. • Gift or Inheritance – Transferring the business through a lifetime gift or by inheritance will most likely 21
A LETTER TO OUR DEALERS ABOUT IADA-CVR What We Get Accomplished with Your Support and Partnership IADA is as strong as our members, you! Thanks for your participation in our Association Programs, especially IADA-CVR, which allow us to achieve so many of these accomplishments for you. Product and transaction milestones/benefits • Fully integrated All-State solution with ATC • Increased customer ERT fee back to dealers • Data Images of all processed docs within each dealership's CVR system • SOS transaction report within each dealership's CVR system • Fast/secure/error-free • IADA University-Free training • IADA-CVR has processed more than 16 million applications for our IL dealers over the last 10 years Legislative accomplishments supported by dealer investment in CVR • IADA passed legislation addressing Lease tax reform. • IADA assisted passing legislation regarding warranty reimbursement increase. • IADA passed legislation restoring the full tax trade-in credit. • IADA passed legislation extending a 90-day driveaway permit. • IADA passed legislation to reduce SOS late fees. • IADA passed legislation to create a $20 Dealer reassignment title. • IADA passed legislation twice to raise the allowable doc. fee to $300 (adjusted annually based on CPI). • IADA passed legislation to allow dualing of multiple franchises under one roof. • IADA passed legislation preventing manufacturers from owning or operating dealerships in Illinois. • IADA passed legislation providing surviving dealerships with stronger termination rights. • IADA passed legislation exempting dealers from a rental tax when loaner vehicles are issued under provisions of a warranty or service contract. • IADA passed legislation to strengthen the IL Motor Vehicle Franchise Act (parts reimbursement at retail rate, double the time up to 30 days to file a protest, award expert witness fees). • IADA passed legislation to bring dealers of large truck components under the Motor Vehicle Franchise Act. • IADA defeated the Attorney General bill that would have required you to disclose your profit margin on all F&I contracts. • IADA defeated legislation that would have created an unfair Gross Receipts Tax. • IADA defeated legislation 5 consecutive years that would force dealers to open on Sundays. IADA Legislative & Regulatory Update 22
• IADA defeated legislation that would create a 3-day cooling off period for vehicles. • IADA defeated legislation that would create a “Used Car Buyer Protection Act.” • IADA passed legislation reducing manufacturers audit period from 18 to 12 months for all incentive and reimbursement claims. • IADA defeated legislation multiple times that would eliminate the dealer’s 1 ¾ % Retailers Sales Tax Collection Allowance. • IADA defeated a proposal to allow inaccurate accident information on all Carfax reports. • IADA passed legislation creating a $20 lien release title enabling dealers to complete the vehicle registration process quicker when a lender is slow delivering a certificate of title. There have been many recent challenges with SOS working with a short staff, navigating through the pandemic, causing many potential disruptions for our dealers. Through it all, only IADA & CVR worked to provide work arounds at every potential disruption to ensure that our dealers could still get their work processed efficiently for their customers. SPECIFIC TITLE & REGISTRATION ISSUES ADDRESSED: • Dealer transactions were being locked at 20 days if not completed - IADA worked around. • CVR worked with SOS to migrate to a more reliable VPN network to reduce any future connection disruptions. • IADA worked to increase the allowable ERT fee to $35. • IADA is working to eliminate the SOS late fees up to 45 days. Everything IADA does is with the intention of having a strong, unified voice for all our IL dealers. We do not “endorse” CVR – we “began this program in Illinois for our dealers and we are the “process”. We have been working with CVR to improve your title and registration process since the inception of the ERT process and we will never take your support and participation for granted! Zurich is the engine that turbocharges your F&I results. Our agility, experienced team, innovative mind-set, and industry knowledge accelerate your evolution and drive you toward a bright future. Let Zurich accelerate your growth and help protect your legacy. zurichna.com/dealer Contact Colleen Rogers at 708-846-9061 for more information. zurichna.com/dealer Get in the passing lane with Zurich Universal Underwriters Service Corporation (UUSC), an individual member company of Zurich in North America, is the issuing provider and administrator of Zurich’s vehicle service contracts in all states except Florida. In Florida, the issuing provider and administrator is Vehicle Dealer Solutions, Inc. (FL License #60132). In California and New York, UUSC operates under its d/b/a UUSC Service Company (CA License #0C17302). Undue reliance should not be placed on anything herein that might be considered to be a forward-looking statement possibly indicative of future events, trends, plans, developments, results or objectives. As statement such as those, by their nature, are subject to known and unknown risks, unforeseen developments and uncertainties. 23
The Illinois Automobile Dealers Association (IADA) expanded its relationship with ComplyNet by announcing ComplyNet as IADA’s endorsed provider for solutions to help IADA’s dealers safeguard customer information. Earlier this year, IADA endorsed ComplyNet as IADA’s endorsed provider for environmental, health, and safety (EHS) compliance and risk mitigation solutions. “IADA members have taken the responsibility of protecting the customer information entrusted to their dealerships,” said Joe McMahon, Executive Director of IADA. “We endorsed ComplyNet because of their long-standing expertise and collaborative approach to guiding IADA members in this ever-changing cyber security climate in conjunction with the dealerships’ information technology professionals, and ComplyNet provides industry-leading solutions designed to prevent hackers and identity thieves from achieving success,” stated McMahon. “Cyber criminals are continually launching more sophisticated attacks, and appropriate safeguards must be deployed to combat attacks,” said Adam Crowell, President and General Counsel of ComplyNet. “ComplyNet will provide IADA members with best-inclass education, awareness, and tech-enabled solutions that intuitively guide IADA members to implementing, overseeing, and enforcing a robust information security program,” concluded Crowell. Throughout the United States, ComplyNet provides compliance solutions to thousands of dealerships using Compline’s ABLE platform, an end-to-end compliance management system that is extremely intuitive, easy to use and helps dealerships track their efforts and achieve regulatory goals. ABOUT IADA The Illinois Automobile Dealers Association (IADA) is the only trade organization representing all franchised car and truck dealers in Illinois. Since 1920, IADA has been dedicated to serving the car and truck dealers’ needs in Illinois. United through membership in IADA, members seek to achieve through “one voice” that which is impossible or too expensive to achieve alone. For more information, visit illinoisdealers.com or call 217-753-0220. ABOUT COMPLYNET Founded in 1994, ComplyNet is the automotive industry leader in end-to-end compliance and risk mitigation solutions, with expertise in the areas of Environmental Health and Safety (EHS), Sales and Finance (F&I), Privacy and Safeguards, and Human Resources (HR). ComplyNet combines intuitive software with auditing services to assist dealerships in achieving regulatory compliance goals, mitigating risks, and retaining talent. For more information, visit www.complynet.com or call 800-653-1869. IADA Endorses ComplyNet to Help Dealers Safeguard Customer Information 24
As of July 1, certain customers who purchase fully electric vehicles can apply to the Illinois Environmental Protection Agency (IEPA) for a $4,000 rebate ($1,500 for electric motorcycles). The rebate is not “cash on the hood” like a manufacturer rebate and some customers will not qualify for the rebate, so here is what dealers need to know: • The rebate applies only to purchases, not to leases. • The rebate is available only to customers who purchase from Illinois dealers and register their qualifying EVs in Illinois and maintain Illinois registration for at least 12 months. • The rebate can be used for the purchase of new and used vehicles, but only once for the lifetime of the vehicle and the rebate cannot exceed the vehicle purchase price. IEPA will create a database of VINs for which the EV Rebate has been claimed. • A customer who claims an electric vehicle rebate is ineligible to claim another rebate for 10 years. When applying for a rebate, the customer will be required to certify he or she has not received a rebate within the past 10 years. • The EV Rebate Program prioritizes awarding rebates to “low-income” purchasers (defined below). IEPA will prioritize low-income customers by issuing rebates starting 90 days after the July 1 effective date, first to qualifying low-income customers in the order in which applications are received and then, if there are still funds available, by issuing rebates to qualifying non-low-income customers in the order their applications are received. Customers must submit their applications within 90 days of the date of delivery (not the date the customer put down a deposit). If funds are not available during a 90-day cycle when a customer’s application comes up for review, then the application will be rejected. Rejected applications will not get carried over to the next cycle. • The program defines “low-income” customers as those whose income does not exceed 80% of the State median income as established by the U.S. Department of Health and Human Services. Currently, individuals earning up to $42,500 per year and couples earning up to $55,000 per year meet the definition of “low-income.” • There is no guarantee that a rebate application will be approved, but dealers can make a semieducated guess by checking the balance in the Electric Vehicle Rebate Fund, which is the funding source for the EV Rebate Program. The fund balance can be found on the Illinois Comptroller’s website at: https://illinoiscomptroller.gov. When the program opened, the Electric Vehicle Rebate Fund has a balance of $17,728,203.51, which is enough to fund 4,432 rebate applications. The Electric Vehicle Rebate Fund collects approximately $1 to $1.5 Million per year from fees, which would fund an additional 250-375 rebates per year after the initial balance is spent down. • Additional information, including a rebate application and a tally of rebates that have been awarded, can be found in IEPA’s Electric Vehicle Rebate Page at: https://www2.illinois.gov/epa/ topics/ceja/Pages/Electric-Vehicle-Rebates.aspx. A NOTE ABOUT ADVERTISING Dealers need to exercise caution if they elect to advertise the EV Rebate Program because some customers will not qualify for the rebate and customers who do qualify for the rebate will not know they qualified until up to 90 days after the purchase. IADA suggests that dealers who elect to advertise the rebate program treat it as a limited rebate. In other words, the EV rebate cannot be deducted from the advertised price. It must be shown as an additional discount that is available to qualifying customers. $4,000 Electric Vehicle Rebate Program Opened July 1 25
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