PUB. 10, ISSUE 2 | GLANCDA.ORG OFFICIAL PUBLICATION OF THE GREATER LOS ANGELES NEW CAR DEALERS ASSOCIATION WENDY LUCKO and PRISCILLA ENGLERT TRAINING THE AUTO TECHNICIANS OF TOMORROW
• Business Transactions • Buy-Sell Agreements • DMV, BAR and other governmental approvals • Lender flooring and capital loan agreements • Entity formation and structure • Shareholder Agreements • Manufacturer approvals and relations • NMV non-profit association representation Estate Planning • Succession planning for business continuation • Family estate planning (wills and trusts) Tax • Property tax planning, audits and appeals • Federal estate and gift tax controversies with IRS • EDD audits BUSINESS LAW | LITIGATION | ESTATE PLANNING | REAL ESTATE | TAX | EMPLOYMENT PRACTICES FERRUZZO & FERRUZZO, LLP | A Limited Liability Partnership, including Professional Corporations 3737 Birch Street, Suite 400, Newport Beach, California 92660 | PH: (949) 608-6900 | ferruzzo.com Business Litigation • Consumer Legal Remedies Act lawsuits • Sales and Service Agreements • Disputes before the CA New Motor Vehicle Board • Consumer claims regarding the sale/lease of autos • Manufacturer audit disputes • Hearings before the AQMD, RWQC and OSHA Real Estate • Dealership site acquisitions and lease agreements • Lender opinion letters • Relocations Employment Practices • Arbitration agreements • Wage and hour class action lawsuits • Private Attorneys General Act (PAGA) claims Ferruzzo & Ferruzzo, LLP began providing legal representation to new car and truck dealers nearly four decades ago. Over the course of that time, one of the central goals of the firm has been to remain rooted in our client relationships. With the strength of over 20 attorneys, we provide a spectrum of legal services to support every aspect of running and owning your new car and/or truck dealership. Each member of our team is available to service the needs of you and your dealership.
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Originally founded in 1907, the Greater Los Angeles New Car Dealers Association provides valuable educational and philanthropic benefits to the Los Angeles Community. The Association believes that involvement with local charitable organizations makes a positive difference for everyone involved. We are GLANCDA PRESIDENT Howard Tenenbaum Keyes Automotive Group VICE PRESIDENT Jeanne Brewer Acura of Glendale SECRETARY/TREASURER Evan Ellis Fiat and Alfa Romeo of Glendale IMMEDIATE PAST PRESIDENT David Ellis Ellis Family Stores - Glendale GLANCDA DIRECTORS Tim Smith Pete Smith Ian Thomas Robb Hernandez Matt Browning Brad Mugg Rinaldi Halim GLANCDA BOARD OF DIRECTORS ©2023 Greater Los Angeles New Car Dealers Association | The newsLINK Group, LLC. All rights reserved. Los Angeles Dealer is published four times each year by The newsLINK Group, LLC for GLANCDA and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and dealer education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of GLANCDA, 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. Los Angeles Dealer is a collective work, and as such, some articles are submitted by authors who are independent of GLANCDA. While GLANCDA 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. 06 | President’s Message Membership Update By Howard Tenenbaum, President 08 | Training the Auto Technicians of Tomorrow 10 | Getting to Know Priscilla Englert Automotive and Toyota T-TEN Instructor at Citrus College 14 | Getting to Know Wendy Lucko Automotive Technology Instructor — CTE Division, Pasadena City College 17 | Congratulations GLANCDA! 2023 Hermes Awards Winner! 18 | GLANCDA’s Workforce Development Efforts and Events 20 | How Car Dealers Shaped Los Angeles and the Auto Industry 24 | Ask Alison By Alison McCallum, EPIC Insurance Brokers and Consultants 26 | EVs and the Service Department By Justin Carr, Vice President, Warranty Processing Company 28 | Planning for Dealership Succession Dividing Multiple Dealerships Amongst Family By Duncan Moseley, Managing Director, Business Transition Advisory Group, Truist Wealth 700 North Central Avenue, Suite 320 Glendale, CA 91203 213-748-0243 | fax 213-748-0245 4
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
PRESIDENT’S MESSAGE Howard Tenenbaum GLANCDA President We have arrived at the halfway mark of 2023, and I hope that all our dealer members are having success! The work of our association is ongoing, and when we are united as a collective group, new car dealers in Los Angeles County can all continue to grow and thrive. As of writing this, we have almost 100 dealership rooftops that have renewed their membership for 2023, and we hope the remaining dealerships consider doing the same. The benefits of membership far outweigh the annual cost of $100 and, more importantly, give our businesses the best chance to navigate the rules and regulations that exist at the city, county, state and federal levels. Membership with a trade association gives all the dealers a voice with our elected officials, and we need your participation. A list of current members is on our website at www.glancda.org. Renewing is easy, and the deadline to do so is coming soon. Reach out to our Executive Director, Bob Smith, who is more than happy to meet and share in detail some of the efforts currently underway. The annual meeting for members on November 15 will feature information that will benefit all dealer members and an inspirational message given by Father Greg Boyle of Homeboy Industries. In addition, the Los Angeles Auto Show is scheduled to run November 16-27, and GLANCDA will continue to promote the event by providing a ticket package to new car dealer members. You won’t want to miss out on this great opportunity that you can share with employees and customers to see many of the new cars in the marketplace in one location, the Los Angeles Convention Center. Our dealers have been engaging in meetings with state elected officials to help provide strength to the protections of the franchise system, and those meetings will continue until the end of the legislative session. Also, workforce development events are being planned for the fall that will bring student technicians and dealership hiring representatives together to look at available career opportunities. We look forward to seeing you there! Keep your eyes open for more information and have an enjoyable and productive summer! Howard Tenenbaum President Membership Update 6
In a recent report from the California Bureau of Automotive Repair, the demand for auto technicians in our state has nearly doubled from 136,503 in 2020 to 258,000 in 2021. Only 48,000 training programs were completed in 2020. By 2025, it is projected that demand in California for new automotive, diesel, and collision technicians is expected to rise to 797,530. And, as of November 2022, there are over 1,500 open technician positions across Southern California. That is a grim reality for some business owners to face, and it could have devastating effects if not addressed. The current labor shortages and the projected need for qualified technicians has pushed us to ask hard questions. How did this happen? Why is there a technician shortage? What are we going to do to turn around this looming problem? There are a number of factors contributing to this problem. Here are a few of them to consider: • Negative industry perception can be a problem. Society holds an outdated perception that this is a dirty, unprofessional career. This couldn’t be farther from the truth and part of this stigma leads back to the way technicians present themselves. It is important that dealerships and shop owners start to hold technicians to a higher standard. They need to ensure technicians are being professional, staying up-to-date on training, and wearing a clean uniform. Technicians are smart, welltrained individuals, and we need to shine a light on that. • Work environment is important and has become a much bigger factor when it comes to people pursuing job opportunities. Potential employees want to work at places where they can feel like part of a family. They want to be able to walk in to work each morning and love what they do, not dread it. Making sure that your technicians feel appreciated goes a long. Additionally, as our workforce changes, dealers and shops should be prepared for the employees of tomorrow. Having restroom facilities to accommodate all employees seems like a simple thing, but it is often overlooked. Employees with families often benefit from flexible schedules. Offering mental healthcare in your benefits package goes a long way in building a caring company culture. You may not be in a place to implement all of these suggestions right now, but you should still be asking the question, “Is my business ready?” • A lack of promoting the industry furthers the problem. For decades, students who have struggled academically were the ones that teachers encouraged to get involved in the trades. This is an awful precedent to set for TRAINING the Auto Technicians of Tomorrow 8
those working in the automotive industry. Guidance counselors and instructors seem to be stuck in an outdated mindset that if you go to college and go on to get a corporate office job, then you will be successful. This train-of-thought needs to change. People just assume auto technicians will always be around when their car breaks down, but if we don’t start promoting this as a viable career option, it is possible that someday, there will be no one left to fix our cars. Choosing to become a technician is an excellent career choice. The pay is great and upward movement within companies is a very real possibility. GLANCDA understands this issue and is doing their part to help. Through GLANCDA’s philanthropic giving, the organization continues to elevate the importance of workforce development and training opportunities available throughout the greater Los Angeles region. “GLANCDA and its member dealers have long been dedicated supporters of growing the automotive workforce in the Los Angeles region, and it is now more important than ever to help support the training for the next generation of auto technology workers,” said Bob Smith, Executive Director of GLANCDA. “We’re very excited to introduce these kids and students to the many exciting opportunities available in the auto industry.” Each year, GLANCDA hosts the Career Fair and Career Pathways event during the first two public days of the auto show. Attendees of the career event have the opportunity to engage with exhibitors who are focusing on electrification, culture, future mobility, and connectivity. As dealers, you can be a part of the solution. Did you know that the students that attend these events come prepared to talk to you, the exhibitor, about their future career? They are ready to be interviewed for a job and hopefully they leave with a job offer in hand. Actively participating in career events is a great way to recruit and hire well-trained auto technicians that are excited to make a difference. In addition, GLANCDA works closely with local colleges to ensure that lines of communication are open and a constant stream of students are ready for a new and exciting career as a technician. There are opportunities for you to support these colleges as they visit local high schools and recruit potential students. From setting up booths to providing swag and snacks, these seemingly easy actions make a difference. And who knows, your contribution could be opening the door for countless potential technicians. We recently sat down with two incredible women whom GLANCDA works closely with: Priscilla Englert of Citrus College and Wendy Lucko of Pasadena City College. We hope you enjoy reading the following stories and learning more about their journey to teaching and training the technicians of tomorrow as well as learning more about the colleges they work at and the degrees that are offered. GLANCDA would like to thank Priscilla and Wendy for their time and hope that their stories inspire you to get involved in training the future generation. EPIC is proud of its partnership with more than 300 California dealerships and is the CNCDA’s only licensed broker for Health Insurance and Workers’ Compensation. As the dealers’ consultant, experience what EPIC can do for you today, including: • A team producing real results and decades of experience with dealerships and their specific needs • Proprietary Workers’ Compensation and specific insurance products tailored for dealerships • Full compliance, along with audit and claims management EPICBROKERS.COM ©2023 Edgewood Partners Insurance Center. All rights reserved. | CA License: 0B29370 LEARN MORE ABOUT OUR SERVICES BY CONTACTING: Alison McCallum (949) 422-6431 alison.mccallum@epicbrokers.com Eric Kitei (949) 228-2779 eric.kitei@epicbrokers.com 9
GETTING TO KNOW PRISCILLA ENGLERT AUTOMOTIVE AND TOYOTA T-TEN INSTRUCTOR AT CITRUS COLLEGE Priscilla attended Mark Keppel High School in the Alhambra Unified School District. During this time, she took afternoon classes in the Regional Occupational Program (ROP), where she focused on learning all she could about automobiles. In these afternoon classes during her junior and senior years, she was modifying her first car, a 1966 Mustang, to make it go faster with every sticker that she got from car shows. “The ROP kept me out of trouble and fueled a passion for learning more about how to work on cars,” Priscilla recalled.
The summer after she graduated high school, she began taking classes at Citrus College and declared her major in Automotive Technology. During her two years at Citrus College, Priscilla worked as an entry-level technician at All-Car Specialist, Inc., an independent shop in the San Gabriel Valley, where Paul Brow and his wife Cheryl Brow ran a fast-paced, professional establishment. They were instrumental in instilling a strong work ethic in Priscilla at the early age of 18. Shortly after, Priscilla graduated with her Associate in Automotive Technology and had accumulated enough units to transfer to California State University Los Angeles (CSULA) with mentoring and guidance from her instructors: Dennis Korn, Jim Lancaster, Dave Brown, and Jeremy Clark. While attending CSULA, she began working with the Society of Automotive Engineers (SAE) teams and became the SAE Electric Porsche Team Captain, Supermileage team member, SAE Secretary, and would assist in the Mini Baja Team build. True to her style, Priscilla always kept busy; in addition to attending classes and working as a technician, she could often be found attending SAE competitions and “track days” with whatever daily car she was driving at the time. Shortly after graduating from CSULA with a Bachelors in Industrial Technology with an emphasis in Manufacturing Design, she landed her first job as a Design Engineer and designed internal combustion engine pistons for race teams and enthusiasts. After a few years, Priscilla went back to school at the University of La Verne to complete a teaching credential program and get her Master’s Degree in Education. With her newfound skills, she worked as a high school automotive technology teacher at Bonita High School in La Verne and did that for 10 years. She then applied for a full-time position at Citrus College. She has been an Automotive and Toyota T-TEN instructor at Citrus College since the Fall of 2019. Priscilla finds joy in bringing her passion for cars and the industry to the table and sharing it with her students. She is driven by student success and will always do her best to keep the student’s best interests at heart. She believes that 11
hard work pays off in one way or another, in always doing the right thing even when no one is looking and paying it forward because life is too short. She hopes the strong example she sets every day helps inspire her students to be better and paves the way for the next generation of auto techs. “I’m very fortunate to be in the position I am in, and I try not to take that for granted. There were always a lot of people on my side, and with me, there will always be at least one more person my students can count on to be on theirs,” Priscilla said. In her free time, Priscilla enjoys adventuring with her family and watching them grow, thrive and become what they want to become. She always looks for opportunities to make their lives full and enjoys creating new experiences with them. About Citrus College Citrus College is located in Glendora in the foothills of the San Gabriel Mountains, approximately 25 miles northeast of metropolitan Los Angeles. The college has the distinction of being the oldest community college in Los Angeles County and the fifth oldest in the state. Citrus College was founded in 1915, with an enrollment of 27 students, under the leadership of Dr. Floyd S. Hayden, who helped bring the community college movement to California. From 1915 to 1961, the college was operated by the Citrus Union High School District. In July 1961, the Citrus Community College District was created to include the Azusa and Glendora Unified School Districts. In 1967, the district expanded to include the Claremont, Duarte, and Monrovia school districts. Today, Citrus College occupies a 104-acre campus. The Automotive Technology program offers full-time employment as an entry-level service technician during the student’s second year of training. The industry supports these programs with donated equipment, tools, service manuals, teaching aids, and textbooks. Specialized training classes are also available if students wish to upgrade or hone skills for job advancement and a pay increase. Business partnerships with the Automotive Service Council (ASC) and Toyota/Lexus ensure that students work with an array of vehicles and state-of-the-art equipment. Students practice live work in addition to classroom learning. The Automotive Technology Program at Citrus College is also certified by NATEF and is held to rigorous academic standards. All full-time instructors have worked in the automotive industry and are ASC Master Technicians that have partnered with business leaders in the community to provide paid internship opportunities for students. The program currently offers the following degrees and certificates: • A.S. in Automotive Technology • A.S. in Medium and Heavy-Duty Diesel Truck Technology • Automotive Maintenance and Light Repair • Automotive Research and Development • Automotive Service, Diagnosis and Repair — Master Technician • Automotive Service, Diagnosis and Repair — Toyota/Lexus/ Scion Technician • Automotive Service, Diagnosis and Repair — Undercar Drivetrain Specialist • Automotive Service, Diagnosis and Repair — Underhood Specialist • Clean Energy and Vehicle Electrification Technology • Diesel Engine Service, Diagnosis and Repair Technician • Medium and Heavy-Duty Truck Service, Diagnosis, and Repair Master Technician • Stationary Power Generation Service, Diagnosis and Repair Technician To learn more about Citrus College and the programs that are offered, please visit citruscollege.edu. 12
Celly Services, Inc. • Sam Celly, BChE MChE JD • Certified Safety Professional • sam@cellyservices.com • (562) 716-6100 ABOUT CSI CSI is an employee-owned EHS consulting rm based in California with Certi ed Safety Professionals on sta . Today, we have hundreds of satis ed auto dealership clients in California, Arizona, Hawaii, Nevada, Idaho, Texas and WHY CHOOSE US We provide speci c solutions for dealerships through comprehensive site analysis, employee training, and newsletters. We are available online, onsite and on the phone to answer questions and solve problems. We provide perspective and experience that is unmatched in the industry. Washington. • Illness and Injury Prevention • Safety Inspection and Training • Spill Prevention Control and Countermeasures Plan • Newsletters on Emerging EPA/OSHA Issues • Hazardous Waste Management • Hazardous Waste Cost Recovery • Haz Mat Release Response • Respiratory Protection • Representation in OSHA Enforcement Cases • Phase I Environmental Assessment • Regulatory Permits and Reporting With over 35 years in the automotive EHS business, we understand compliance in California. From proactive management to oil rebates, we can help you stay ahead of everchanging regulations and keep your employees safe. WE HELP DEALERSHIPS NAVIGATE COMPLIANCE OUR SERVICES
GETTING TO KNOW WENDY LUCKO AUTOMOTIVE TECHNOLOGY INSTRUCTOR — CTE DIVISION, PASADENA CITY COLLEGE 14
In 2009, she moved the whole automotive department to a new building across campus, all while pregnant! She taught part-time at night for Cypress College, which gave her her first opportunity to teach. That gave her that taste of making that difference and exciting students. In turn, some of the best Deans and faculty would mentor and help her develop lesson plans and set objectives. She commuted for two years until her daughter, Sophia, came along in 2013. She also taught at Rio Hondo in between that time and also got to know those instructors well. By then, it was time for PCC to open a full-time position as it needed someone to help rebuild and grow its program. Wendy took the job and is currently the Automotive Technology Instructor — CTE Division. Wendy has served on the board of California Auto Teachers (CAT) as Vice President, President, Conference Coordinator, and Past President — it’s a 10-year term. She also is the Vice President of Automotive Service Council of California (ASCCA) Foothill Chapter 5 and helps with planning events and training for their members. As a technician, she has Wendy Lucko has been active in the automotive industry before she even finished her formal automotive training; she worked at the local auto parts store, which now is Hanson’s (HMC, Hanson - Merrill Corporation). She went from driver to customer sales and got to know all the local shops personally. This is how she scoped out and found her first job in a shop. In school, she was pushed by her teachers and mentors to meet certain expectations, which prepared her to be a technician. Knowing that being female was not going to make it easy, they expected more from her, and it paid off. After wrenching at several independent shops, there was an opening at Pasadena City College (PCC) for a Shop Foreman; newly divorced and looking for structure, she took the job — that led her to think about teaching as a new way of making a living. This would allow her to work with her hands and use her curiosity to help diagnose car issues. 15
About Pasadena City College Pasadena Community College (PCC) was founded in 1924 with a student enrollment of 267. Created in response to the community’s need for higher education facilities, Pasadena Junior College, as it was originally named, was first established on the Pasadena High School campus. It was one of the earliest junior colleges in the Southwest United States. Today, PCC is recognized as one of the best community colleges in California. Whether students are looking for a fast-track career, want to transfer to a four-year university, earn credits while in high school, or enhance their skills in the workforce, PCC gives them the opportunity to reach their educational goals at a price that works. PCC offers flexible schedules and programs with smaller class sizes of 20 students or less. The top-notch faculty supports and guides students on their journey toward their next step in life. The PCC Automotive Technology Program is committed to producing entry-level automotive technicians. Paired with general education units and students graduate with an Associate in Science Degree in All Automotive Systems. The All Automotive Systems Certificate of Achievement is a broad certificate, offering a strong foundation in the major concepts and skills of automotive technology. Upon successful completion of the curriculum, graduates receive one year of industry credit toward their ASE credential. The program has National Automotive Technicians Education Foundation (NATEF) Student Certification Exams that are part of the curricula, which helps with the mastery of the National ASE test. With a strong Automotive Advisory Board & Automotive Service Council of CA (ASCCA) membership, PCC offers an excellent opportunity for career placement. The program and instructors meet strict industry standards and are NATEF/ASE certified in MAST (Master Automotive Service Technician) & MLR (Maintenance & Light Repair). The program currently offers the following degrees and certificates: • All Automotive Systems • Electrical Systems Technician • Engine Performance Technician • Powertrain Technician • Undercar Technician • Associate in Science Degree To learn more about PCC and the programs that are offered, please visit pasadena.edu. been going to Chapter 5 meetings since her 20s. She is a member of Sports Car Club of America (SCCA) — Cal Club and enjoys weekends at Buttonwillow and working race events. She enjoys going to El Mirage, CA, for the Southern California Timing Association (SCTA)-BNI meets as she’s a Miler’s member and enjoys land speed racing with all its grassroots building. She has worked at events such as Bonneville Speed Week and Formula E for the two years that it was here in Long Beach. Her heart is in this industry, and she works across all campuses and groups to try to make this industry stand out and be proud of the hard work it takes. 16
Congratulations GLANCDA! To view this year’s winners, please scan the QR code. https://enter.amcpros.com/hermes/ winners/ 2023 Hermes Awards Winner! Hermes Creative Awards honors the messengers and creators of the information revolution. Armed with their imaginations and computers, Hermes winners bring their ideas to life through traditional and digital platforms. Each year, competition judges evaluate the creative industry’s best publications, branding collateral, websites, videos, and advertising, marketing, and communication programs. We are very pleased to announce that the LOS ANGELES DEALER magazine was awarded the Hermes Honorable Mention for print media.
GLANCDA’s Workforce Development Efforts and Events New car dealerships in California continue to experience a shortage of qualified technicians in their service departments. There are now over 5,000 positions that need to be filled, which averages to over four per new car dealership rooftop. GLANCDA is dedicated to putting time, effort and resources to work in partnership with local high schools and community colleges that offer automotive technology programs for their students. Careers within this space are becoming more lucrative every year, and we know that the employees of tomorrow are ready for what is to come. For the first time since late 2019, GLANCDA hosted the high school student technician competition in April in two phases on separate Saturdays. Phase one was a written test that covered the areas that ASE uses to certify technicians. There were over 75 students from 11 different schools; it was hosted by Longo Toyota on Saturday, April 1. The top two students from each school moved on to the hands-on workstation portion of the competition on Saturday, April 29, at Cerritos College. Every workstation had a judge that is currently an instructor at the area community college programs in Los Angeles County. The top teams were awarded tools that were provided by Snap On. The event was a big success. There were over 75 in attendance, including 25 volunteers. The winning team was from Van Nuys High School. Many thanks to Longo Toyota and Cerritos College for helping make these events happen. GLANCDA will continue to host networking opportunities and career fairs so that student technicians and dealership representatives can work together to build a strong network of service centers for many years to come. In November, the association has plans to once again host an event at the L.A. Auto Show on the opening Friday of the show (November 17). In 2022, over 800 students, faculty members, and dealership employees came to the event that was hosted over two days; we hope to exceed those numbers. 18
Schools involved include: Cerritos College Citrus College Rio Hondo College LA Trade Tech Pasadena College Pierce College East Los Angeles College College of the Canyons Artesia High School Downey High School California Job Challenge Academy Canyon High School Saugus High School Sylmar High School California High School Nogales High School Rowland High School Van Nuys High School
How Car Dealers Shaped Los Angeles and the Auto Industry Early Dealership Service Department, Ralph Hamlin Collection, Seaver Center as featured in Driving Force: Automobiles and the New American City 1900–1930. Recently retired GLANCDA Director Darryl Holter of Felix Chevrolet has a book out that discusses the origins and early years of retail automotive here in Los Angeles. Los Angeles is widely recognized as the capital of automotive culture. The city — surrounded by miles of superhighways, crushing smog and traffic — is an originating point for global trends, and a place for automotive groups to connect individually and collaborate collectively. Just how and why did LA become a city of cars? The well-researched and illustrated book, Driving Force: Automobiles and the New American City 1900–1930 by Darryl Holter and Stephen Gee seeks to answer that question. In the book, Holter states that a combination of key factors were the catalyst of LA’s automotive obsession. Unlike other large cities in the U.S., a majority of LA’s colonization and industrialization, began late in the 19th century, concurrent with the expansion of the automobile. “Both came of age at the same time, they sort of grew up together, and their relationship was intertwined,” Holter explains. The mild climate of Southern California allowed cars to be used year-round — this was a boon for dealers and an attractive market attribute for consumers in the early years of automobiles. And, unlike New York or Chicago, where trains cut across the city as well as commuting to the outskirts of town, the fixed rail system in LA was set up mainly to move people back and forth from work in the center of town to their residences in the suburbs. The car offered the freedom to travel at will. The varied geography of Los Angeles — inland valleys, coastal plains, low mountains, steep passes and a long seacoast — and the residential and commercial development of it, lent itself to the car and vice versa. “The automobile allowed people to go farther away from the center, higher into the hills, closer to the desert, closer to the 20
ocean,” Holter explains. “And that, of course, meant that real estate could be developed there.” The growing film industry prospered as well, using automobiles to scout and shoot in varied locations — urban, suburban, rural, mountainous, seaside, riverside, desert and ranch — all within easy reach of the city. The arrival of the car meant that filmmakers and actors no longer needed to carry their equipment or wear their costumes on the train or streetcars. “Hollywood made the car, and the car made Hollywood,” Holter says. But, the main focus of the book is on how L.A. became the epicenter of the automotive market, and the local dealer was crucial. Holter attributes that to one main reason. “It was these really local entrepreneurs, bankers and car dealers, local risk takers, who provided the critical link between the carmakers and buyers,” he says. “It was the dealers who found ways, through trial and error, to put people behind the wheel, and eventually convinced them that the car was a necessity and not just a luxury.” These early dealers and many of their creative innovations are still in practice today. Primary among these were the independent car dealership franchise, the used-car market and dealer-sponsored service centers. But conceivably, the most profound idea was that of hard goods financing: making a large purchase on credit. Prior to the automobile, the concept of an accessible and increasingly necessary category of commercial goods — one within reach of the common person, but which couldn’t readily be purchased outright — didn’t exist. “Neither the factories nor the banks or the finance companies offered retail credit in these early years. So, the dealers, because they wanted to sell cars on their own, started to experiment with paying on running credit by accepting down payments and promissory notes,” Holter says. Even more fascinating is the pattern Holter uncovers between retail establishments and the early broadcast industry. L.A. dealers were among the first owners of local radio stations such as KFI and KNX. “These stations were launched primarily as a way of selling cars,” Holter says. “These dealers became wealthy so quickly that they were seeking the next groundbreaking technology, looking for the next investment,” Holter says. “That’s the type of entrepreneurs they were.” This book holds a large amount of contemporary importance, as today, consumers and automakers debate the validity of the franchise dealer system. “I think that some of the same factors that caused direct sales approaches to fail more than a century ago may still prevent high volume manufacturers from really being able to go totally direct,” he says. According to Holter, these include personal contact in sales and negotiations, as well as plans for delivery and repairs. “Things like that,” he says, “I don’t think are handled well by the internet.” One might add that the unfair, Darryl Holter, GLANCDA Director 21
be it fixed pricing, allocations and other deceptive practices, that OEMs have granted to the stores they own in the recent past, is one of the main reasons for the establishment of the franchise dealer system in the first place. Holter goes on to say that the story of the car’s emergence, and the ensuant global domination, speaks volumes to our current shifting environment, and the potential for unanticipated consequences of new inventions — like functional AI. “It’s a reminder of how we have changed society and how hard it would be for people to give up those changes,” Holter says. “But it’s also a reminder that if you create the right technology at the right price, the impact can be enormous.” To learn more about the early history of automobiles in Los Angeles or to purchase Driving Force: Automobiles and the New American City 1900–1930, please scan the QR code or visit your local bookstore. The 1919 Los Angeles Auto Show, Ralph Hamlin Collection, Seaver Center as featured in Driving Force: Automobiles and the New American City 1900–1930. https://www.amazon.com/ Driving-Force-AutomobilesAmerican-1900-1930/ dp/1626401233 22
Leverage forward thinking insurance solutions to reduce your costs and boost your dealership’s recruiting efforts. The health insurance industry is seeing some of the highest renewal increases in recent history. Has your broker shown you alternative funding options and financials to reduce costs while maintaining the highest level of coverage for your employees? T he Great Resignation changed the landscape, elevating employees’ demands and shifting how you recruit talent. In an environment where 90% of organizations are trying to fill open positions, the competition for talent is fierce. Forward-thinking insurance strategies can be a powerful differentiator, helping your dealership demonstrate its commitment to your employees while being effectively managed to cover and control your operational costs. Potential employees are demanding benefits packages that meet their needs in the “new normal” and go beyond the basics. They want a program that not only gives them and their families coverage for their physical health, but they also desire a package that will cover their emotional, financial and even digital health. A solution is a customized strategy that meets the needs of your employee demographics while managing medical cost inflation and relieving your HR team to focus on employee recruiting and engagement. Consider the following solutions: • Alternative funding options to reduce costs. There are many options available with very minimal risk to your dealership that can reduce premiums significantly while not reducing, and many times increasing, the benefit coverage to your employees • Managing escalating pharmacy costs to offer candidates more coverage options • Developing professional benefits communications to share with potential employees early in the recruiting process • Navigating complex and everchanging human resource compliance requirements If you would like to discuss alternative funding options and how they can benefit your dealership, EPIC has a track record with proven results. If you would like to learn more, EPIC will provide information and case studies to GLANCDA members. EPIC ranks among the top 15 retail insurance brokers in the United States and is the largest insurer of auto dealers in the state. Alison McCallum has been in the employee benefits industry for over 20 years and personally works with more than 60 Southern California Dealerships. She is a Principal with EPIC insurance Brokers and Consultants, the CNCDA’s only licensed employee benefits broker. With this partnership EPIC offers unique dealership expertise and services available to GLANCDA dealer members at no cost. If you have questions or would like further information, please feel free to contact her at (949) 417-9136 or alison.mccallum@epicbrokers.com. Ask Alison By Alison McCallum, EPIC Insurance Brokers and Consultants 24
Running a dealership comes with its share of uncertain terrain. But one thing is certain. Our Dealer Financial Services team is dedicated to being by your side with the resources, solutions and vision to see you through. John Alexander john.f.alexander@bofa.com 213.621.8724 business.bofa.com/dealer Making business easier for auto dealers. Especially now. “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: | Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value | ©2022 Bank of America Corporation. All rights reserved. 4826555 08-22-0145
Change is tough, but a lot of good can come from it. We’ve seen this repeatedly as disruptors redefine and restore balance to industries. EVs will cause a big shift, complete with changes to policy and procedure. However, as electric vehicles go mainstream, there will still be plenty to do in dealership service departments. EVs need maintenance and repairs despite dealer concerns that EVs require less maintenance than other vehicles because they have fewer parts and no need for engine-oil changes or regular service visits. For many dealerships, the service department’s bread-andbutter revenue mainly comes from work involving alignments, brakes, electrical systems, suspensions and tires. So it will help worried dealers to remember what’s on EVs: brakes, electrical systems, tires, steering systems and suspensions. Lube, oil and filter services have been the entry point for most service departments. Still, because EV batteries are heavy, EVs weigh more than otherwise similar vehicles with gas-powered engines. The weight wears out tires faster. Since EV tires need to be rotated and replaced more often, tire maintenance and replacement will be the new entry point for EVs. Additionally, EV repairs are usually expensive. History tells us that new technologies need an iron-out period, and EVs are no exception. Components break, and batteries have issues. As the vehicles evolve, there will be new opportunities for service. Starting with Ford, manufacturers seem to be giving the impression that they want to copy Tesla’s methods for handling repairs and eliminate the labor rate or parts markups they currently pay when dealers are involved. Doing so would increase their control and improve their bottom line, so manufacturers are putting requirements in place regarding the repairs a dealer can do. For example, Ford won’t allow dealer service departments to fix certain vehicles without having a specific equipment set. It will be interesting to see how this power play ends. We know dealers must protect the value of their service departments, and we also know that dealers understand service better than the manufacturers do. What are the first steps in finding a better solution? Recognize what the market is today and how it affects you. Also, continue planning for the future by getting clients in the door to repair and service their vehicles, and give them the best experience possible. A general manager may not have an expert to explain why a cost-cutting decision in the service department is a mistake, and it’s easy to miss important variables that drive revenue in the service department when you make decisions from 30,000 feet. Getting parts will continue to be a problem, and some repairs will take longer than others. As a dealer, do what you can to control processes, training and oversight. If you don’t have the bandwidth, find a strong partner who can fill in the gaps and work closely with your team. People are trying to automate the warranty process. It is nice when you can get simple repairs handled, but not everything is cookie-cutter. Your bread-and-butter comes from a few areas. One is maximizing the bigger repairs and understanding how to get the most out of that newly acquired labor rate or parts mark-up percentage increase. Another is creating efficiencies and processes that benefit the entire service department team. Education is still the key to growth and progress in service departments. By Justin Carr, Vice President, Warranty Processing Company EVs and the Service Department 26
When managers see markets drop, it’s easy to make hasty decisions without understanding the impact of that decision on the service department. Managers might think they can find cheaper ways to do things, but then receivables shrink or inefficiencies cut into profit margins. Claims fall, revenue decreases, and management doesn’t get the same knowledgeable reporting. That’s why it is important to think about how decisions affect everyone down the line as well as planning for the future. Everything will fall into place if we make good moves that benefit everyone. The service department must ensure their people understand their role and do their jobs to legitimately maximize warranty dollars. If the department can structure itself properly, which includes processes and efficiencies, they will be ready for the future. That future includes a rebounding market. When that happens, you want to be ready to absorb the full level of profitability by making sure the service department can deal with increased work without hiring staff. Manufacturers always make changes, so you need to hire and retain staff with the knowledge to direct repair orders. A Service Manager, Technician, or Service Advisor like that can bring everyone else up. Even though it can be hard to find and hire staff with tribal knowledge, a lower-cost person doesn’t have the same skills. Skilled team players are expensive because they know their roles and what they should be doing. They stay in front, training and lifting the department. Hiring the right person or partner is like deciding whether to buy steak or Jello. Jello costs much less, but it is no substitute for steak. If you end up hiring inexperienced staff in critical positions, in the absence of having a lot of senior people, it is easy for bad habits to spread. Then you have bigger problems to fix and miss out on the money you could have been earning. Cleaning up these types of internal messes pulls your critical team members down rabbit holes they shouldn’t be in. Although many dealers don’t have the time and money to train in-house, they can create partnerships by consulting and outsourcing with a good outside company that acts like a life coach and mentor for their business. The dealership can use a consulting company to keep employees on track and responsible, including new people. The consultants can do stand-in work when employees are gone, lift teams, and keep them on track. The right company will actively find patterns of problems, spoon-feed dealers the information they need and give them options to improve. Dealers can then learn from the consultant’s processes and keep moving forward. With a nonbiased partner, you can find ways to help everybody and grow the service department. It’s important to know why you are doing something because you will get stuck or slide backward if you do things for the wrong reasons. Success comes from acting purposefully for all the right reasons. Although EVs are a big change, they offer dealers many new opportunities. Justin Carr is a VP at Warranty Processing Company, which recently relocated to Texas. Justin works with dealers nationwide to increase efficiencies within service departments and educates dealer staff on why efficiencies matter. Since EV tires need to be rotated and replaced more often, tire maintenance and replacement will be the new entry point for EVs. 27
Planning for Dealership Succession DIVIDING MULTIPLE DEALERSHIPS AMONGST FAMILY By Duncan Moseley, Managing Director, Business Transition Advisory Group, Truist Wealth Middle-market business transitions are rarely simple, and family dealership transitions are among the most complex. Typically, a dealership begins after one family member opens a dealership and then decides to add more over time. Indeed, successful dealers say the best way to expand wealth in the industry is to increase the number of dealerships held. As the number of dealerships grows, so too does the number of family members involved in the business. An owner’s children may decide to work in the business, and some might even make it their career, while others may choose to work in another field. As their children become adults, dealership owners begin to wonder how they can plan for the succession of their business and the distribution of its assets amongst their children without risking the business itself or family relationships. When owners have multiple dealerships and several children working in the business, they ask, “Should I put my children in business together, should I separate the dealerships and divide them amongst my children, or should I just sell the business altogether?” When owners decide to keep the business, they want to know how to provide for their children with other careers. Take Marty, for instance. He started with one dealership and now has five, with a combined worth estimated at $150 million. Additionally, Marty owns the land where the dealerships are located, which is worth a combined $50 million. Outside the business, Marty has about $10 million in assets, including a $3 million home and a $3 million beach property enjoyed by the entire family. But most of his wealth — like the airplane available to all family members — is tied up in the business. Marty has three children. Alton and Betty grew up working at the dealerships and want to continue working in the family business. While they have quite different personalities, neither can run the business alone. The third child, Carl, is happy with his own career outside the business. Marty’s total estate is $210 million, or $70 million per child. He has three goals: expanding the dealerships under the family name, giving each child a fair share of the wealth, and doing so in a way that maintains family harmony. However, accomplishing these goals may become complicated. For example: • If Marty divides his estate by three, there aren’t enough personal assets for Carl to receive an equivalent value to that of his siblings without including some business interest. • If all three children receive a third of the business assets, the dealerships may suffer if they disagree on business goals. Moreover, Carl may resent salaries paid to his siblings, and they may resent him for taking a third of the profits when he doesn’t contribute. • If Alton and Betty can’t run the business together, there isn’t an even number of dealerships to divide between them, and the dealerships may lose value by not being part of a larger group. 28
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