Vol. 33 No. 4 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 o m o b i l e D e a l e r s A s s o c i a t i o n Check out the new, interactive IllinoisDealers.com website! Automobile Dealer News
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 .
6 Executive Director’s Message 8 Consultant’s Corner 10 Counselor’s Corner Application of Federal Privacy Laws – Dealership Customer Records Subject to Subpoena – How Should the Dealership Respond? 12 Gerald Auto Group COVID, Community and Better Relationships 14 Honoring Our Own Servicemen This Veterans Day 17 Illinois Dealership Managers Supercharge Their Careers NADA Professional Series Offers Targeted Learning for Managers at the IADA Headquarters 20 Is Your Dealership Prepared to Deal with Cybercrime? Identify Threats and Build Defenses 24 Succession Planning for Dealers in an Evolving Business Environment CONTENTS Vol. 33 No. 4 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 12 Scan here to check out the new, interactive IllinoisDealers.com website! 20
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’s Message As Jamie Auffenberg passes the torch at the end of the year, we thank him for his outstanding contributions, noting he has served as the Illinois representative on the NADA board since 2010. On behalf of your IADA Board of Directors and staff, I want to take this opportunity to thank you for your ongoing support and trust in your state association, IADA. We work on your behalf in Springfield, and it has been a busy and productive year. It will continue to be challenging as we prepare to deal with a new group of legislators and elected officials in the coming year. As a brief recap, I was recently joined by IADA Vice-Chairman David Parkhill, Champaign; NADA Director Jamie Auffenberg, Shiloh; IADA Secretary/Treasurer John Alfirevich, Tinley Park; and IADA Legal Counsel Larry Doll as we attended the NADA Washington Conference. In Washington D.C., we joined hundreds of our counterparts from other states to urge members of Congress to oppose the Federal Trade Commission’s proposed advertising rules, which, if adopted, would add new layers of complexity and burdensome record-keeping requirements to all motor vehicle transactions. We thanked them for their support of LIFO reform and urged their support of legislation to deter catalytic converter theft. We recently concluded our inaugural NADA Professional Series in Illinois at our IADA office. It was a great way to offer this best-in-class training to dealership managers without having to fly to other parts of the country and spend extra nights in hotels. With the success of the classes, we plan to continue hosting the series at our IADA office in the future. We also hosted our first-ever President’s Club Dealer Appreciation event. We wanted to thank our President’s Club members and encourage all dealers to become more involved in our state and federal grassroots advocacy efforts. As Jamie Auffenberg passes the torch at the end of the year, we thank him for his outstanding contributions, noting he has served as the Illinois representative on the NADA board since 2010. We are excited to welcome incoming NADA Director Ryan Gremore, Normal, who will begin his term in January. Lastly, we are thrilled to present our new IllinoisDealers.com website and promotional videos highlighting the critical role our dealers play in the car buying process. If you have not viewed the new site yet, please do so. IADA is “member-driven,” so we always appreciate your membership and support! JOE MCMAHON EXECUTIVE DIRECTOR Illinois Automobile Dealers Association Springfield, IL 6 Automobile Dealer News illinoisdealers.com
Plan ahead for your dealership’s long-term legacy Setting up a succession plan is an important consideration for the future of your dealership. Now’s the time to think about your priorities, such as maintaining control, taxes, liquidity, employees and family. What would you like the power to do?® Learn more with our comprehensive overview of Dealer Financial Services Succession Planning at business.bofa.com/dealer. “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: | Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value | ©2022 Bank of America Corporation. All rights reserved. 4882341 05-22-0512 Plan ahead for your dealership’s long-ter l cy Setting up a succession plan is an important consideration for the future of your dealership. Now’s the time to think about your priorities, such as maintaining control, taxes, liquidity, employees and family. What would you like the po er t ® Learn more with our comprehensive overview of Dealer Financial Services Succession Planning at business.bofa.com/dealer. “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: | Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value | ©2022 Bank of America Corporation. All rights reserved. 4882341 05-22-0512
Consultant’s Corner Every dealership sells four different types of inventories: Parts, New Vehicles, Used Vehicles, and Labor Hours. That’s right – Labor Hours are one of your inventories, and a manager’s ability to understand them as a diminishing value resource will drive their effectiveness as a manager. Once it is understood that Labor Hours are a perishable inventory, they are better equipped to manage a Service Department for maximum profitability. Without a grasp on Labor Hours, it is almost impossible to be strategic, negatively affecting a manager’s ability to make great decisions. Service is an increasingly important part of a profit formula so let’s take a deeper look into Labor Hours as an inventory. Think of your technician’s time as a block of ice over a floor drain. For every unit of time sold, you are chipping away at that block of ice, leaving any unsold time to melt away. If you are not effectively managing your technicians’ time, your most precious commodity is going right down the drain. Several factors go into managing your technician’s time inventory: • Service scheduling • Advisor sales ability • Work mix and dispatching • Parts availability • Lack of accountability and goals DAN HAHN DIRECTOR OF FIXED OPERATIONS Brown & Brown Dealer Services For more information, please contact Francis Fagan with Brown & Brown Dealer Services at 312-608-4979 or francis.fagan@bbrown.com. Francis is the Regional Training Director for Illinois and Indiana. At Brown & Brown Dealer Services, we emphasize training. Visit our website for our training calendar and to meet our nationally renowned trainers — www.bbdealerservices.com. While those are just a few, let’s look closer at the last point. When it comes to goals, there is often a disconnect between leadership and technicians. Dealers can avoid this by establishing individual production goals for each one of their technicians. This starts by having a conversation with each technician about what their personal goals are. The goal must be reasonable and should be based on their past production numbers. For example, let’s say your technician made $67,500 last year and has set a goal of $75,000 this year. You can simply divide their annual goal by their pay rate to determine the hours they need to produce that year. Divide that by the number of weeks, then divide that by the number of days. This will give you their daily production goal. $75,000 (goal) ÷ $30.00 (pay rate) = 2500 (annual labor hour goal) 2500 ÷ 52 weeks = 48 hours (weekly goal) 48 Hours ÷ 5 working days = 9.6 hours (daily goal) Once the goal is established, it’s vital that you check in with each technician daily and review their individual results versus their goal. Helping them identify and remove the barriers to their success. The daily check-in is as much about building a relationship as it is about managing their performance. Having a goal to manage them makes the accountability part of your job that much easier. 8 Automobile Dealer News illinoisdealers.com
We’re more than a financial partner. We’re an invested one. True relationships matter. We don’t take this lightly. The best are built on a deep understanding of your short- and long-term goals and always backed by thoughtful, strategic advice in support of your vision. With full-service financial solutions and a deep bench of industry expertise, we’ll build a team around your organization to focus on your success. So, let’s drive further—together. To learn more, visit us at Truist.com/DealerServices. © 2022 Truist Financial Corporation, Truist, Truist purple and the Truist logo are service marks of Truist Financial Corporation. All rights reserved. Truist Securities is the trade name for the corporate and investment banking services of Truist Financial Corporation and its subsidiaries. Securities and strategic advisory services are provided by Truist Securities, Inc., member FINRA and SIPC. | Lending, financial risk management, and treasury and payment solutions are offered by Truist Bank. | Deposit products are offered by Truist Bank, Member FDIC.
Counselor’s Corner JULIE CARDOSI Law Office of Julie A. Cardosi, P.C. Application of Federal Privacy Laws – Dealership Customer Records Subject to Subpoena – How Should the Dealership Respond? It is not uncommon for a dealership to receive a subpoena commanding production of customer records or information. With the presentday labyrinth of federal, state and local laws governing the privacy of customer information, how does the dealership respond? Working with legal counsel, dealerships should understand how to respond when they receive a subpoena for customer records and information. They should know what the governing privacy laws are, what privacy rights those laws seek to protect and how those laws may apply when a subpoena is received. There are several privacy-related federal and state laws that protect customers’ privacy rights and information in their transactions with a dealership. This article focuses on several federal laws in the context of the dealership’s receipt of a subpoena. First, the Gramm-Leach-Bliley Act (“GLBA”) requires financial institutions – including auto dealerships – to safeguard the confidentiality of customer information. 15 U.S.C. § 6801, et seq. Dealerships are subject to the requirements of the GLBA and the Safeguards Rule, as recently amended,i to protect the security and privacy of customer financial information. The GLBA mandates an “affirmative and continuing obligation” to respect and protect the security, integrity and confidentiality of customer information. Under the GLBA, notices must be provided to customers regarding the dealership’s collection and information-sharing policies, and customers must be able to opt out if they do not want their information shared with nonaffiliated third parties. The GLBA limits only the disclosure of “nonpublic personal information,” which essentially includes any personally identifiable information about a customer, created through utilization of personally identifiable information that is not publicly available. The GLBA allows for certain exceptions for providing information for which the customer cannot choose to opt out. The Right to Financial Privacy Act (“RFPA”) affords customers the right to be informed by the government before it obtains nonpublic information. 12 U.S.C. §3401, et seq. The RFPA protects customer records, maintained by dealerships, from improper disclosure to officials or agencies of the federal government. The RFPA also prohibits dealerships from disclosing to the federal government records, without the government first notifying the customer and allowing for passage of a prescribed waiting period. Importantly, the RFPA only applies to the federal government. The RFPA does not apply to requests made by state or local government or private parties. Under the USA Patriot Act, the government is permitted to obtain personal information about a customer without the customer knowing or obtaining consent from the customer. The Patriot Act requires financial institutions, including auto dealerships, to report a suspicious transaction or activity without notifying the customer. 10 Automobile Dealer News illinoisdealers.com
The foregoing federal laws evolved to govern and protect customer financial privacy through legal requirements and standards, aided by technological and other procedural protocols. Notably, other federal and state laws may obligate dealerships to prohibit disclosure of certain information or redact information pursuant to a subpoena or other disclosure. When the dealership receives a subpoena, it should confer with its legal counsel to determine if a governmental authority issued the subpoena. Governmental authority for purposes of the laws discussed above, however, does not include state or local government. If a governmental authority issued the subpoena, then the RFPA applies, and the burden is on the government authority that issued the subpoena to provide notice to the dealership’s customer and produce a certificate of compliance with the RFPA to the dealership to allow the dealership to comply with the subpoena. By contrast, if the subpoena is issued by a state or local government authority, then the GLBA applies. As a matter of cautious due diligence, the dealership should consider first asking the state or local governmental authority for permission to contact the dealership’s customer and give the customer a reasonable opportunity to object to the subpoena through seeking to have it quashed, before providing the customer’s information. Finally, if a dealership receives a private or third-party subpoena issued by a court, the GLBA applies. Whether notice to the customer is first required under the GLBA is unclear. The subpoena may fall within the “judicial process” exception. The dealership should again consult with legal counsel and may consider requesting from the subpoena issuer the right to notify the customer and provide a reasonable opportunity to quash before producing the customer information. When complying with subpoenas, be mindful of your legal obligations to protect and preserve the privacy of customer information, as this will enable the dealership’s compliance with the subpoena without exposing the dealership to liability to the customer for improper or unauthorized disclosure. i See Dealership Compliance with Updated Federal Safeguards Rule by Dec. 9, 2022 – Don’t Wait, by Julie A. Cardosi, Esq., July 22, 2022, IADA News Magazine, Pub. 12 2022, Issue 2. 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. 11
Gerald Auto Group: COVID, Community, and Better Relationships Since the mid-1930s, the Gerald Auto Group, with locations in North Aurora, Naperville, Countryside, and Matteson, has always been committed to its customers from both a business and a philanthropic perspective. The Gerald family, now with its third generation at the helm, has expanded its service to the community in ways it never expected. According to Gerald Auto Group's marketing manager, Suzie Gonnermann, COVID triggered a renewed promise to neighbors of the company’s 11 dealerships. “Because Gerald has been in this community for so long and has so much repeat business, we have become a trusted neighbor,” says Gonnerman. “When COVID struck, we knew we had an opportunity to really serve our community, whether or not they were ever going to become a customer.” Caring for neighbors during COVID With most people staying at home, the Gerald staff became concerned about the safety of customers and the maintenance of their vehicles, especially those deemed essential workers, and had to function above and beyond the call of duty. Staff also realized that with no maintenance, warranties might become void. So, all Gerald brands and dealerships implemented the Gerald Mobile Service Team, a completely contactless vehicle pick-up and drop-off service. Then, when customers were interested in purchasing a vehicle but didn’t want to come 12 Automobile Dealer News illinoisdealers.com
Seeking to do more for neighbors in need, Doug Gerald contacted Hesed House in Aurora, a non-profit the company had supported for a long time, to see what was needed for clients and staff of the homeless shelter. to the dealership, the sales staff coordinated test drives at home. Finance managers also made “house calls” to fill out paperwork. Seeking to do more for neighbors in need, Doug Gerald contacted Hesed House in Aurora, a non-profit the company had supported for a long time, to see what was needed for clients and staff of the homeless shelter. His call was timely because the facility needed professional cleaning, meals, personal protection equipment, and blankets – all of which the Gerald Auto Group provided at once. “The constant support from Gerald during COVID provided vital goods and services for our most vulnerable neighbors and helped maintain stability during an otherwise very uncertain time,” explains Lauren Jernigan, Division Director of Development for Hesed House. When regular patrons of the Batavia Farmers Market stayed home, endangering the stability of the market and its vendors, the Gerald staff picked up and delivered bags of fresh food to online market customers. When the Aurora Interfaith Food Pantry saw an increase in need for its services during COVID, Gerald dealerships set up displays encouraging customers to purchase preassembled bags of food, which were then delivered in a large van to clients of the food pantry. In addition, many other non-profits saw a drop in support during COVID due to the inability to hold in-person events, including Little Friends of Naperville. Gerald stepped in and helped coordinate small, outdoor backyard barbeque fundraisers and supplied food and other items to help offset the cost. After one backyard event, a new donor pledged $250,000 to Little Friends. Creating better relationships When supply chain issues first began to change the availability of vehicles, it was tough. “For the first six months, customers were frustrated, and rightfully so,” says Gonnerman. Shortly thereafter, the staff shifted from a defensive position to a customer-focused position. “We are very honest and straightforward with customers and tell them exactly what we are experiencing,” explains Gonnerman. “We stay in touch with regular phone calls, update them, and have conversations about things other than vehicles. I think we actually have better relationships with customers now because of the transparency.” Post-COVID, Gerald continues to be creative and fluid with its community support and reaping the benefits of what it learned during this tough time for many. 13
Chris Baxendale, Phillips Chevrolet Chris Baxendale, Sales Specialist, and a seven-year Phillips Chevrolet team member served in the Air Force National Guard for six years, a successful move he had seen his older sister make. Initially, Chris joined the Guard as a way to pay for his college education but learned so much more that was equally valuable. After basic training, he served one weekend a month at the Will Rogers Air National Guard Base in Oklahoma City. While there, he specialized in satellite wideband telemetry followed by a specialty in ground radio, and prepared himself for deployment if called. “I really learned a lot that you can’t learn in school,” Chris says. “The training, structure, teamwork, technical skills, and meeting people from all over the country was very different from a traditional education.” At Phillips Chevrolet, Chris has earned an Elite status for sales volume and customer service. “Serving in the Air Force National Guard prepared me for success in automotive sales by helping me keep a cool head for anything that comes at me,” Chris explains. Our Own Servicemen This Veterans Day For those who think Veterans Day is another bank holiday, or just a day to celebrate the service of a bygone generation, they haven’t met our IADA members and employee veterans who are working on the front lines of the auto industry today. To hear their stories is to appreciate what they (and other veterans) have done for our safety and our country. Please meet these veterans we have the honor of featuring this month: John Hopkins, Truck Centers, Inc. John Hopkins, CEO of Truck Centers Inc., was one of the very last men drafted into the U.S. Army in 1972 out of Ferguson, MO. He went to Fort Leonard Wood, MO for basic and advanced infantry training where he became a Combat Engineer/Bridge Builder. After deployment to Europe, he was asked to be the Legal Clerk for the 547th Engineering Battalion in Darmstadt, West Germany, where he served with 1,200 soldiers from several different units. He reported to both the captain and his superior, the lieutenant colonel, working with military justice and serving as a court reporter for courts-martial. He credits his knuckle-rapping high school teacher at Rosary High School in Spanish Lake, MO, with earning this position. She forced him to learn to type – eventually at 52 words per minute. His oldest child, Katie Hopkins, was born in Wiesbaden, West Germany at the Air Force Hospital after a harrowing ride in the back of a van with an Army doctor who had HONORING 14 Automobile Dealer News illinoisdealers.com
never delivered a baby. Fortunately, after arriving at the hospital in time, he didn’t have to. Today, Katie is Truck Centers President and COO, and brother Justin is the EVP of Sales. “Serving in the military provided the greatest lessons learned in my entire lifetime, and I am so thankful I was given the chance to serve,” John says. “So many incredible blessings.” In October, he had the privilege of hosting the Vietnam Traveling Memorial Wall at his dealership in Troy, IL for the public to remember and honor those who served and weren’t able to come home. Dustin Hightower, Apple Chevrolet For those who think Veterans Day is another bank holiday, or just a day to celebrate the service of a bygone generation, they haven’t met our IADA members and employee veterans who are working on the front lines of the auto industry today. Dustin Hightower, General Manager and three-year employee of Apple Chevrolet, grew up with his dad’s revered legacy as a Vietnam War Army veteran. After high school and seeking a way to pay for college, Dustin enlisted in the U.S. Marine Corps to take advantage of the GI Bill. He served in the Marine Reserves for six years followed by a one-year tour of duty in Iraq in 2005. His unit arrived shortly after the famous battle of Fallujah. When asked, he describes it as “the best of times and the worst of times.” The brotherhood he experienced in the Marines is hard to describe, he says. Despite the heat and stress, his unit formed a close bond and deep friendships. “This experience really shifted my perspective on my whole life,” he explains. Every year, as many members of his fellow Marines as possible, reunite in Tulsa where they gather to reminisce and honor a fallen friend who hailed from Tulsa. 15
Illinois Dealership Managers Supercharge Their Careers NADA’s Professional Series Offers Targeted Learning for Managers at the IADA Headquarters NADA is known for offering premier educational and professional development opportunities for dealership employees at every level of their career. One of NADA’s most popular programs — the Professional Series — is designed specifically for new functional managers. The Professional Series helps managers attain proficiency in a particular department and give attendees the tools they need to run a profitable department. In September, the Illinois Auto Dealers Association hosted Professional Series classes for 55 department managers. Attendees included new and high-potential department managers. The series held over eight days in Springfield and included modules covering the Sales, Office, Parts and Service departments. The students returned in October for a Leadership class that provided them the skills needed to lead their teams. Each NADA Professional Series is comprised of four instructional modules: • Core Competencies (Parts, Sales, Service or Office) – two-day class • Leadership Foundations – two-day class • Human Resources Foundations – Self paced, online • DMS Applications – Self paced, online Attendees had great things to say about the class, particularly the convenient class location and shorter curriculum, which allowed them to get in-depth training while fitting into their busy automotive retail lifestyles. “I came in thinking I had a decent knowledge of accounting and processes, but listening to Georgia and her explanations for things was an eye opener on items I never thought of or thought I understood but really didn’t,” said Kelly, an office manager with 20 years in the automotive industry. “I have been to many classes during my career and this one was of the best. I’m excited to take what I learned back to my dealership.” Said Ashley, Parts & Service Director with 16 years in the Automotive Industry. Students also had high praise for instructor Georgia Munson. “I have only been a parts manager for three months. Georgia and this class have given me a great understanding of my role, and the proper tools to run a great Parts Department,” said Greg, a parts manager with 19 years in the automotive industry. Due to the overwhelming response, the Illinois Auto Dealers Association will be hosting another round of Professional Series classes next September. For the full class schedule or to register, visit www.nada.org/professionalseries. For more information, contact academyinfo@nada.org or call 800.557.6232 and ask to speak to an Academy Coordinator about the NADA Professional Series. 17
CVR: THE EVR SOLUTION BUILT FOR YOUR CDK DMS THE BEST CUSTOMER VEHICLE REGISTRATION EXPERIENCE IN ILLINOIS CVR is the only choice for automotive dealers who demand an EVR solution with a flawless, robust and secure integration to the CDK DMS. Unlike our competitors, we’ve partnered with the IADA to deliver a faster and more efficient titling and registration process. Your customers won’t have to do anything after the sale except drive away happy in a fully registered vehicle. We’ve also teamed with Automotive Titling Corporation (ATC), to offer a full in or out-of-state solution that creates an integrated, 50-state workflow within your CDK DMS. The strongest integrations and solutions available for your DMS are here right now. To learn more and get started, email a CVR representative at cvr-il@cvrconnect.com or call 800.333.6995 © 2022 CVR. All Rights Reserved. 22-4261 SPEED/ACCURACY No more rekeying of data BETTER PROTECTION Safer consumer data CUSTOMER SUPPORT The finest in the industry INTEGRATION Connect with your DMS We also work with the IADA to provide compliance and training webinars to keep your staff up to date. As the builders of the first EVR for use in Illinois over 20 years ago, not only have we learned how to do this right, we know from experience how to treat you right. That’s why we’re committed to innovation while continuing to provide the most complete account service and customer support in the industry.
Is Your Dealership Prepared to Deal with Cybercrime? Identify threats and build defenses Cybercrime poses a constant threat to businesses and their customers, with criminals committing fraud by stealing identities or using phishing to illegally gain access to a company’s computer network. In recent years, cybercriminal attacks have caused major consumer information breaches at retailers, social media platforms, and credit information providers. Seventy-four percent of companies have been the targets of attempted or actual payments (check, wire, or ACH) fraud. The pace of attack increased in 2020, with two-thirds of companies reporting an increase in fraud attempts since the COVID-19 crisis began.2 And anti-fraud professionals are almost unanimous in predicting an increase in fraud in 2021.2 Cybercrime attacks – from ransomware to payments fraud – show no sign of going away. “Many dealers don’t think hackers are looking at them,” explains Erik Nachbahr, Certified Information System Security Professional (CISSP) and President and Founder of Helion Technologies, an IT/cybersecurity services provider exclusively serving the needs of auto and heavy truck dealers. “Dealerships are increasingly a target of cyber threats with their high volume of large dollar transactions and lack of digital security.” As criminals develop more sophisticated cybercrime techniques and states implement stricter consumer privacy legislation, cybersecurity and data protection should be top priorities for dealers. That means heightened security to ensure data privacy, combat potential attacks, and mitigate losses. According to the 2021 IBM/Ponemon “Cost of a Breach Report,” it takes an average of 287 days to identify and contain an attack. Data breaches that took longer than 200 days to identify and contain cost an average of $4.87 million, while those that took less than that cost an average of $3.61 million. Lost business accounted for 38% of the overall cost, including increased customer turnover, lost revenue from system downtime, and additional marketing expenses to overcome damage to the business’s reputation.3 Key Dealership Cybercrime Threats Dealerships generally have a complex technology architecture that makes cyberattack protection challenging. “Many dealership computer systems have hardware added in a one-off manner, are built without a complete system plan, and utilize older, outdated software. In some cases, they underpower their virus protection by using freeware software. Further, weak security protocols that allow user account sharing can undermine a dealer’s business,” Mr. Nachbahr explains. Increasingly sophisticated ransomware attacks targeting dealerships are on the rise. “These criminals know dealerships have money and are aware of dealer vulnerabilities. That makes dealerships a lucrative target,” continues Mr. Nachbahr. “The attacks aren’t typical automated intrusions; they are enterprise-grade attacks, with live hackers combing through a dealer’s systems. Because dealers have many, disparate components and don’t tend to use standard protocols, once their systems are exploited, the breach is difficult to fix.” Other cyber threats focus on personally identifiable information (PII) which can be stolen and resold to bad actors. Forty-four percent of data breaches included customer PII, making it the number one type of data stolen.3 Dealerships regularly handle vast amounts of PII, particularly financial information, so it’s no wonder they’re an attractive cybercrime target. In today’s environment, protecting dealership computer systems and their customer data is essential. “As cybercriminals are becoming increasingly adept, more dealers are realizing an attack could be a ‘business-ender.’ Forward-thinking dealers are investing in technologies that protect against these full-scale attacks. Information technology security is now being viewed as a priority, not simply an expense to be controlled,” states Mr. Nachbahr. By Erik Nachbahr, President and Founder, Helion Technologies 20 Automobile Dealer News illinoisdealers.com
Continued on page 22 The Cost of Cybercrime The likelihood that a business will experience financial damage after a cybercrime attack is rising quickly. The average cost of downtime from a ransomware attack has doubled over the past year to $274,200.4 The average downtime is now 19 days, a three-fold increase from 2019.2 Direct economic losses are compounded by lost revenues from operational disruptions, brand reputation damage, and decreased customer loyalty. A 2021 IBM/Ponemon Institute survey found that a data breach costs U.S. businesses an average of $180 for each accessed/stolen record containing customer PII.3 For dealerships with thousands of records, the damage can add up quickly, not to mention the impact on customer relationships. A Ping Identity consumer attitude survey reported that 25% of respondents would stop using a business after a data breach.6 The potential for cybercrime to inflict direct losses, reputational damage, and customer loss highlights the importance of making data security and cyberfraud defense a priority. A salesperson responded to a phishing email, opening a malicious file with ransomware and providing cybercriminals access to that computer. The salesperson did not suspect an intrusion. Once behind the firewall, the hackers were able to access the dealership’s entire system and servers. The hackers used the compromised computer to probe the network, looking for vulnerabilities to lock up the dealership’s computer operations. The criminals were able to shut down the dealership’s systems for over a week – asking for payment in bitcoin to relinquish control of the systems. All of the dealership’s servers and emails and one-third of their 300 computers were inoperable. They chose not to pay the ransom, but instead took the next month to rebuild their systems completely. How could this cyberattack have been prevented? • Through employee education on the hazards of downloading unsubstantiated files or clicking on suspicious links; • With proper web filters and controls to block hazardous links; or • By implementing fraud software to quickly find, mitigate, and recover information compromised by fraud and ransomware attacks. Limiting Primary Fraud Threats When it comes time to address criminal activity targeting payments, banking transactions, customer data, communications, and computer systems, it is important to analyze both non-cyber and cyberfraud. Equally important is identifying the sources of threats – internal and external – and dealing with each accordingly. Simple protection measures along with insurance for business crime, cybercrime, or data breaches can dampen losses. Measures to limit risks include: Employee education is the top method for lowering the risk of fraud in general, and cyberfraud in particular. A company culture that values overall fraud prevention sends a powerful signal to employees. Employee education about fraud awareness is one of the best ways to get started. Fraud barriers include: • Clearly defined fraud prevention roles and responsibilities for you and your employees • Separation of duties, checks and balances, and multifactor authorizations for funds transfers • Secured computers with password protection, changed periodically • Restricted user account access to individual owners with no shared access • Web filters and controls that block clicks on potentially fraudulent links Check and wire fraud are the top two payment fraud threats for any business. Sixty-six percent of companies reported that check payments were subject to fraud, and 39% were victims of wire fraud attempts.1 Dealership payment volumes – both paper and electronic – make an attractive target for fraud. Implementing a few simple, inexpensive processes can protect your dealership. • Use positive pay services. You’ll be able to verify the authenticity of checks by looking over the issue date, check number, amount, and payee name to catch check fraud. • Protect check stock with dual authorization before use. • Authentication is further enforced through online banking platforms which require additional authentication for wire transfers through assigned user ID and password logins, requestor authentication, and dual approvals. 21
“Phishing attacks are one of the most common and damaging ways for hackers to access your systems,” Mr. Nachbahr explains. “Your employees should be the frontline defense against attack – your ‘human firewall’. Ongoing employee training, education, and support allows them to recognize social engineering attacks and thwart costly episodes before they begin.” Preventative measures include: • Web filters and controls that restrict access to phishing links • Multi-factor authorizations for wire transactions • Limits on payment amounts that a single employee can authorize • Cloud backup for restoration following a malicious software attack • Intrusion detection software to identify suspicious network activity Synthetic identity fraud is another risk to dealers today. Imposters use fake information to create fictitious identities, combining stolen identity information to create new credit files. These new synthetic identities allow criminals to qualify for a loan to buy vehicles, putting dealerships at risk for losses. Background checks verifying customer identity offer the best protection. When cyber fraud does penetrate a dealership, speed is the key to mitigating its impact – the faster an attack in progress can be detected and stopped, the less its damage. Quick detection and speedy remediation deploys an entire set of technologies, processes, and expertise – including digital forensics, threat hunting, malware reverse engineering, and technical surveillance countermeasures – that most dealers don’t have. Mr. Nachbahr explains, “Dealers need a Security Operation Center (SOC) to monitor the network 24/7/365 looking for signs of malicious behavior. Tools like advanced endpoint threat protection and security information event management (SIEM) allow security professionals to sift through and correlate data and identify suspicious patterns of behavior so they can shut down the attack early and limit damage to the dealer.” “Dealers are quickly recognizing the need for a SOC, but security professionals with the training and certification to run the centers are hard to find. Most dealers are turning to outsourcing to protect their business.” Cyber Liability Insurance Cyber liability insurance protects your dealership when cybercrime happens. “Many dealers don’t think cybercrime will happen to them and are not prepared when it does,” explains J. Travis Johnson, Auto Dealer Practice Leader at McGriff Insurance, a subsidiary of Truist Insurance Holdings, Inc. “Due to their systems and transaction levels, dealers are one of the many low-hanging fruits for cybercriminals. While some OEMs do require cyber liability insurance, dealers who aren’t required to purchase policies typically don’t think the premium money spent is worth it. Not realizing the overall benefit of a cyber liability policy is relatively inexpensive when compared to the damage a cyberattack can cause.” Dealerships interested in cyber insurance policies undergo an extensive cyber risk review that rates them on existing cybersecurity vulnerabilities and defenses in place. Your level of cybersecurity preparation determines your premiums. Some of the coverages include the cost of identifying where the attack came from, making ransom payments, paying rewards for informants, repairing or replacing computer hardware, and potential court costs. If an attack happens, most insurance carriers offer a 24/7 on-call teams to advise you on next steps and help you get the problem resolved as quickly as possible so you can get up and running again. Continued from page 21 Phishing and social engineering attacks scam employees into believing an email is from a reputable company or dealership employee. The recipient then reveals sensitive information, passwords, and credit card or account numbers. Phishing emails can appear to be from the dealership owner, ordering large sums to be wired to external accounts, which then vanish moments after the transfer. Phishing emails entice unsuspecting employees to download innocent looking files or click on malicious links and infect computers with spyware, viruses, or ransomware. 22 Automobile Dealer News illinoisdealers.com
Don’t Think You Are Flying Under the Radar Headline-making data breaches typically occur at large, well-known companies, but that doesn’t mean your dealership can rest easy. Fraud criminals are constantly looking for the easiest marks, and sizeable transaction volumes combined with disparate systems make dealerships particularly vulnerable. Take protection measures seriously to avoid being a victim. Can I Afford to Ignore Cybercrime? A serious cybercrime attack can be crippling. A ransomed network, infected server, or compromised bank account can be as much of a disaster as a flood or fire. As more dealerships rely on digital customer interactions and transactions, the benefits of protecting your dealership, your data, and your finances from fraudulent activity have never been greater. Don’t Let Cybercriminals Steal Your Business Talk to your relationship manager or treasury consultant to discuss your business plans and your dealership’s fraud defenses, including ways to mitigate damages through McGriff Automotive insurance policies. Keep up with the digital buying transformation. Talk to your Truist Dealer Services Officer about how Truist can help you build out your digital buying journey. Go to Truist.com for more details. Sources 1. “2021 AFP Payments Fraud and Control Survey Report”, Association for Financial Professionals (AFP), 2021. 2. “Fraud in the Wake of COVID-19: Benchmarking report”, Association for Certified Fraud Examiners, 2020. 3. “Cost of a Data Breach Report 2021”, IBM/Ponemon Institute. 4. “Datto’s Global State of the Channel Ransomware Report”, 2020. 5. “Ransomware Demands continue to rise as Data Exfiltration becomes common, and Maze subdues”, Coveware, accessed 12/15/2020. 6. “2019 Consumer Survey: Trust and Accountability in the era of Data Misuse”, Ping Identity. 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
By Bank of America Corporation While there are many considerations in running a thriving dealership, one of the most important – and often overlooked – is developing and maintaining a succession plan. A strategy that allows for the transfer of ownership to the next round of leaders – whether family members, a trusted partner or an outside buyer – will position you and your business for future success. Why Now? Having a succession plan is important for many reasons; however, in today’s environment, there are three crucial reasons that rise above the rest. 1. There’s a lot of buy/sell activity in the industry and accelerated consolidation. If your long-term plan is to exit the industry, you should consider the current market valuations and buyer interest. 2.The U.S. is on the verge of material changes in tax laws that could affect your finances and the value of your business if passed on to future generations. The estate and gift tax exemption, currently at a historic high of $12.06 million per person or $24.12 million per married couple, will drop by half in 2026 when the current tax law lapses. It could drop even faster if Congress passes a new law before 2026. 3. The market, labor costs, supply chains and other factors influencing dealerships continue to fluctuate. As the pandemic brought home to us, every business needs a plan in place in case top leadership can’t run day-to-day operations. Consider Your Priorities To begin the succession planning process, you need to identify your goals. Perhaps you’d like to sell – to family, management or a third party – to generate liquidity. You may also want to maintain some level of control of the business, particularly during a transition, if you’re gifting or selling the business to family members or selling to trusted employees. Or, you may want to step away completely and allow a third party to take over. In addition to identifying your goals, it’s important to consider how your decision will affect employees and the community to assess whether your actions align with your goals. Succession Planning for Dealers in an Evolving Business Environment Finally, you’ll want to consider the financial implications of your decision, whether it’s reducing the amount of taxes you pay or generating liquidity for future needs. Identify Key Players One of the most critical succession planning decisions is determining the organization’s future leadership. While it can be difficult and emotional to talk with family and key managers about the future, it’s an essential piece of the process. An honest talk about your goals and theirs will help clarify your options and develop a more realistic succession plan. Facilitating the process will be two crucial teams: internal and external. Your internal team will consist of key family members, senior dealership managers, your banker, lawyer and accountant. Your external team will consist of advisors who think broadly and are strategic and defensive, like a transition attorney, estate lawyer, investment bank and appraiser or auditor. 24 Automobile Dealer News illinoisdealers.com
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