OFFICIAL PUBLICATION OF THE GREATER LOS ANGELES NEW CAR DEALERS ASSOCIATION PUB. 11, ISSUE 1 | GLANCDA.ORG YOU’RE INVITED! GLANCDA MEMBER LUNCHEON & ANNUAL MEETING
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 businesses • Trust Agreements including lifetime benefit trusts • Gift and Estate Tax planning Tax • Property Tax planning, audits, and appeals • Federal estate and gift tax controversy audits • 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 of automobiles • Manufacturer audit disputes • Hearings before the AQMD, RWQC and OSHA Real Estate • Dealership site acquisition and dispositions • Lease agreements • Lender Opinion Letters Employment Practices • Wage and hour class action lawsuits • Private Attorneys General Act (PAGA) claims • Arbitration Agreements • Employer Handbooks and Employer Compliance Procedures Ferruzzo & Ferruzzo, LLP began providing legal representation to new car and truck dealers over 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 25 attorneys, we provide a spectrum of legal services to support every aspect of running and owning your new car and/or truck dealership. We have practice groups in each area of the law that service the needs of you and your dealership.
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 Brad Mugg Rinaldi Halim Charles Ma Peter Browning GLANCDA BOARD OF DIRECTORS ©2024 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 Driving Positive Change and Prosperity By Howard Tenenbaum, GLANCDA President 08 | Getting to Know New GLANCDA Board Member Charles Ma 11 | You’re Invited! GLANCDA Member Luncheon & Annual Meeting 12 | Ask Alison Controlling Your Dealerships’ Healthcare Costs By Alison McCallum, EPIC Insurance Brokers and Consultants 15 | Congratulations, Pete Smith! 16 | Getting to Know New GLANCDA Board Member Peter Browning 18 | Control What You Can By Justin Carr, Vice President, Warranty Processing Company 20 | How to Build a Consumer-Friendly Service Experience That Is Efficient By Sharon Kitzman, Dominion DMS 22 | Buy-Sell: Identifying Unique Considerations When One Party Is a Foreign Entity By Alysha Webb, Editor, Scali Rassmussen, Getting to Go! 700 North Central Avenue, Suite 320 Glendale, CA 91203 213-748-0243 | fax 213-748-0245 4
A Better Core in 2024 DominionDMS.com (866) 928-3210 1515 South Federal Highway, Suite 406 Boca Raton, FL 33432, USA SCHEDULE YOUR DEMO Discover how VUE By Dominion DMS gives your dealership: Hearing the cries of the automotive community, we developed a brand new cloud core DMS, called VUE. This software is flexible, efficient and innovative. Schedule a demo and upgrade to a Better Core in 2024. EFFICIENCY INNOVATION FLEXIBILITY SAVINGS Personalization, Engagement, and Speed – the holy trinity of an amazing customer experience. Being a cloud-core DMS and using agile development methodologies means that we can keep dishing out top-notch solutions for our dealers and partners. Dominion DMS is easy to learn and simple to use. You have easy access from any web connection and you get to choose the apps you want and need to drive your success. Behold, VUE! Waving a magic wand to make DMS core fees vanish into thin air. Franchise dealerships can now save while still enjoying our best in class accounting, parts, sales, and service modules.
PRESIDENT’S MESSAGE Dear GLANCDA members, I hope this message finds you well. As we continue to navigate the ever-evolving landscape of the automotive industry, I’m excited to share some important updates and upcoming events with you: 1. Our annual member luncheon is fast approaching, scheduled to take place at the Universal Sheraton on March 27. We have a fantastic lineup planned, including an inspirational keynote address by Father Greg Boyle of Homeboy Industries, as well as a roundtable discussion led by industry experts on the most pressing topics facing our members. Additionally, we will be honoring LA CarGuy Mike Sullivan with the GLANCDA lifetime service award — a welldeserved recognition for his contributions to our community. 2. Advocating for our dealers remains a top priority for GLANCDA. We continue to engage with elected officials at both the state and federal levels, championing the issues that matter most to our members. Whether it’s supporting favorable legislation or opposing measures that could adversely affect our industry, we are committed to being a strong voice for our community. GLANCDA remains committed to addressing the shortage of service technicians through our workforce development initiatives. On March 12, we hosted a job fair and career information event at the Glendale Civic Auditorium, specifically tailored for area high school and community college auto tech students. Furthermore, we held the anticipated high school auto tech competition, with the written portion kicked off at Longo Lexus on March 16. These efforts are crucial in nurturing the next generation of automotive professionals. I want to take a moment to express my gratitude to all our members who faithfully support GLANCDA through their membership dues. Your contributions enable us to provide valuable resources, networking opportunities and advocacy efforts on behalf of the automotive industry. To those who have not yet joined us, I encourage you to reach out and learn more about the benefits of membership. Together, we can continue to drive positive change and prosperity within our industry. Thank you for your continued support. Sincerely, Howard Tenenbaum GLANCDA President Howard Tenenbaum GLANCDA President Driving Positive Change and Prosperity 6
GETTING TO KNOW NEW GLANCDA BOARD MEMBER Charles Ma Charles Ma is a seasoned automotive professional with a three-decade-long career in the dynamic world of the automotive industry. He is currently the general manager of Kia of Alhambra, which is a part of Wondries Automotive Group. Throughout his career, he has demonstrated leadership and looks forward to bringing his extensive knowledge and experience to help GLANCDA and the industry move forward. The following are excerpts from our conversation. 8
Why did you choose this line of work as a career? I am the first generation of my family in this industry. My father owned a restaurant and I learned a lot from him about customer service and hospitality. When I was going to college, I was studying hospitality, but I fell in love with automobiles and motors, especially V-8s. I started thinking about how to get into this business and I thought working at a dealership would be my path. So, I applied at Bob Wondries Ford as a sales associate, was hired and worked there for quite some time. I was a top salesperson. I followed the owner’s lead, his purpose to serve the community and mindset of giving back. He was shaping the next generation of leaders, and I was fortunate to be part. It will be 30 years this March since I chose this line of work and I still have a passion for automobiles. I have been with Wondries Automotive Group for 23 of those years. What do you think are the biggest issues facing the auto industry today and what can be done to address these issues? High-interest rates and inflation are common issues that dealers face nationwide. We are offering a decent amount of our product at MSRP or below. We are also working on finding price value used cars, meaning cars that are inexpensive but reliable and maybe slightly older. This can help keep payments lower for our customers. Crime is a troubling issue that we are trying to deal with locally. Recently, a liberal California law was passed that has led to an increase in crime — if stolen property is less than a $950 value, it only carries a misdemeanor charge. Just turn on the news or watch a YouTube video and you will see the many smash-and-grabs that are happening. Within the last 18 months at our dealership, we have had employees robbed at gunpoint, multiple cars stolen and tools stolen from our lot. It seems to be one incident every two months. We are located in the city of Alhambra, right outside of Los Angeles, and it has been a safe community. I have worked in this city the last 24 years and there has been very little crime, but that seems to be shifting a little bit. We have hired security guards who are on shift 20 hours per day and installed HD cameras to help deter the crime before it happens. What can be done to address these issues as an association? I look forward to getting involved with the GLANCDA board and lobbying for important issues in the near future and connecting with automotive professionals in the greater Los Angeles area. What are three pieces of advice you would share with the next generation of dealers? 1. Serve with a community mindset. During the time I was a sales associate, I would assist customers who were new immigrants with the language barrier. They might have trouble writing checks or paying their bills. I offered them additional assistance. I also would go and help them if their vehicle broke down. Grassroots efforts are important as well. We assisted Alhambra High School in getting a new scoreboard with some donations from the dealership and our employees. We also opened up the dealership for students in need of a place to do schoolwork after school. The owner provides drinks and snacks. It’s important to always serve the community. 2. Adapt to the current and future business climate to stay relevant. We are rapidly transitioning to EV, especially in California. It used to be about the ICE engine and MPG, but now it’s all about watts, charging stations and the range. You need to stay relevant and up to speed with the newer technology. 3. Get trained. There is a lot of information that we can pass down to the consumers and training for yourself and employees is key in understanding how this business is transitioning. 9
What is your educational background? Degrees or certifications? I attended Northern Virginia Community College in 1992 and 1993. I am also a proud graduate of the National Automobile Dealers Association (NADA) Academy in 2022. I have not only invested time in mastering the technical and business aspects of the automotive business but also actively participated in the NADA Political Action Committee (PAC). My commitment to industry and advocacy highlights my dedication to shaping policies that impact the automotive community. Tell us about your family. I have been married to my lovely wife, Janet, for 21 years. We have one daughter, Julia, who is a first-year student at the University of Southern California. Do you have any hobbies outside of work? I like snowboarding at Big Bear and Mammoth, going to the gym and reading books, specifically on leadership and cooking. EPICBROKERS.COM ©2024 Edgewood Partners Insurance Center. All rights reserved. | CA License: 0B29370 EPIC Insurance Brokers & Consultants is proud of its partnership with more than 300 California dealerships and is the CNCDA’s only licensed broker for health insurance and employee benefits. As the dealers’ consultant, experience what EPIC can do for you, including: • A team producing significant results with decades of experience understanding the specific needs of dealerships • Fully insured and unique alternative funding options to best fit your needs and generate the best possible costs • Full compliance services and HR support for your team LEARN MORE ABOUT OUR SERVICES BY CONTACTING: Alison McCallum (949) 422-6431 alison.mccallum@epicbrokers.com 10
GLANCDA Member Luncheon & Annual Meeting On March 27, the GLANCDA Member Luncheon & Annual Meeting will be held at the Sheraton Universal Hotel, Universal City, CA. We are excited to see everyone and catch up with old friends and make new ones. Attendees will include industry partners, local, state and federal elected officials along with our dealer members. This annual event is an important one for our industry. We will feature information that will benefit all dealer members. There will also be the opportunity to talk with elected officials and share thoughts about the current state of the industry: the good, the bad and what is needed. The need for new car dealers to work together and have a collective voice with our elected officials has never YOU’RE INVITED! been greater. We need you there. The strength of our association lies in member engagement. We are also excited to hear an inspirational message from Father Gregory Boyle of Homeboy Industries. GLANCDA has a 20-year partnership with this amazing organization. For those of you who are not familiar with Homeboy Industries, they were started by Father Boyle in 1988 as a way of improving the lives of former gang members in East Los Angeles. It has evolved into the largest gang intervention, rehabilitation and re-entry program in the world. Father Boyle will be sharing his touching and often-times humorous journey to help people in need who have been left behind with no hope. His tireless efforts have positively impacted individual lives, families and the community not only around the city of Los Angeles but throughout the world. You won’t want to miss it! Current GLANCDA members that are up to date on dues receive two seats for each dealer member. Contact Natalie to confirm your dealership’s membership status at (916) 239-4099. Sponsorship opportunities are also available. 11
these projected costs do not materialize, yet there is downside protection if they do. Captive Insurance programs can also mitigate individual client risk. Emerging providers in many markets can also help lower healthcare access costs. These providers offer innovative solutions to avoid shifting towards even higher deductibles and increased cost-sharing. By partnering with such providers, dealerships can provide their employees with more affordable healthcare options without compromising the quality of care. Managing eligibility and contribution strategy is another critical opportunity in controlling healthcare costs. Implementing eligibility and contribution management strategies won’t lower per-employee costs but can reduce overall employer spending. By carefully evaluating eligibility requirements and contribution structures, dealerships can optimize their healthcare plans and ensure that they are not overpaying for coverage. It is essential to work with an innovative broker who possesses the knowledge, access and market clout to educate your dealership about these available options. Continued on page 14 CONTROLLING YOUR DEALERSHIPS’ HEALTHCARE COSTS With record-breaking general inflation rates, the specter of significant medical insurance cost increases has been looming over employers and individuals alike. Many dealerships are grappling with medical insurance cost increases that are dramatically higher than what they experienced during the years of COVIDdriven cost suppression. It is crucial for dealerships that are facing unaffordable increases in their medical insurance costs to explore various strategies to mitigate their financial burden. One common approach used by insurance providers is to project high expected trends in healthcare costs even though this inflation may not necessarily materialize. With large trend rates impacting renewal costs, dealerships should closely examine alternative funding options — especially those where maximum costs are capped. Under these programs, the dealership is not responsible for paying excessive amounts if Ask Alison By Alison McCallum, EPIC Insurance Brokers and Consultants 12
Anticipate every turn In an industry that’s always evolving, your dealership can rely on our Dealer Financial Services team’s 90 years of experience to see what’s around the corner, forward-thinking insights to prepare you, and technology to keep you ahead of the curve. What would you like the power to do?® John Alexander, john.f.alexander@bofa.com business.bofa.com/dealer ©2023 Bank of America Corporation. All rights reserved. DFS-699-AD 5949042 Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, derivatives, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc., which is a registered broker-dealer and Member of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. is a registered futures commission merchant with the CFTC and a member of the NFA.
Continued from page 12 Early engagement with such a broker can help minimize disruption and ensure that dealerships are steered toward the optimal solution that meets their specific needs. EPIC offers comprehensive solutions, market influence and expansive resources to guide dealerships toward the most suitable healthcare options. By leveraging their expertise, your dealership can make informed choices to balance budgetary and employee satisfaction. If you would like more information or a review of your current benefits/ costs, EPIC will provide details to GLANCDA members at no cost. 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 80 California Dealerships. She is a Principal with EPIC Insurance Brokers and Consultants. 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 DID YOU KNOW? Enjoy your association news anytime, anywhere. Scan the QR code to visit our online publication to stay up to date on the latest association news, share articles and read past issues. los-angeles-dealer.thenewslinkgroup.org 14
Congratulations to long-time GLANCDA Board member Pete Smith for being a TIME Dealer of the Year nominee at the recent National Auto Dealer Association meeting in Las Vegas. This honor went out to 50 deserving dealers throughout the country, and Pete represented the Greater Los Angeles New Car Dealer Association. CONGRATULATIONS Pete Smith! “We have a fantastic relationship with the LSL team. They keep our interests top of mind and maintain a positive reputation in the industry.” —Craig Whetter, President | David Wilson Automotive Group (relationship since 1983) Donald Slater, CPA, Partner Assurance & Advisory donald.slater@lslcpas.com Adam Odom, CPA, Partner Assurance & Advisory adam.odom@lslcpas.com David Myers, MST, CPA, Partner Tax & Advisory dave.myers@lslcpas.com LSL | CPAs & Advisors | Brea, Laguna Hills, Sacramento & Santa Ana, CA | The Woodlands, TX | lslcpas.com/automotive | 714.672.0022 15
GETTING TO KNOW NEW GLANCDA BOARD MEMBER Peter Browning is a thirdgeneration dealer. His grandfather, Richard Browning, founder of the Browning Automotive Group, began his automotive career in 1934 when he joined the used car department of C. Stanlee Martin Oldsmobile in Long Beach, CA. Between 1934 and 1960, he worked in all departments, eventually becoming part owner and general manager. In early 1960, he purchased the entire dealership and re-named it Dick Browning Oldsmobile. The business continued to operate successfully as an exclusive Oldsmobile dealership in Long Beach from 1960 until 1980. With space limitations from business increases and an aging facility, the decision was made to relocate to an entirely new facility in the then-new Cerritos Auto Square in late 1980. Upon relocation to Cerritos, the business name became Browning Oldsmobile-Isuzu. The Cerritos Auto Square became one of the premier auto sales locations in the United States shortly after opening in 1980, and Browning Oldsmobile Isuzu enjoyed great success. The opportunity to represent Dodge in Cerritos resulted in the opening of Cerritos Dodge in 1984. The group was also privileged to be one the first Acura dealers in the United States with the opening of Cerritos Acura in 1986. Although the Oldsmobile-Isuzu franchises have been replaced by Mazda, the Browning Mazda, Cerritos Acura and Cerritos Dodge franchises continue to operate successfully in the Cerritos Auto Square. With the death of the founder, Richard Browning, in 1991, ownership of the Browning Automotive Group passed on to his son, Kent Browning, who has been with the Browning Automotive Group since 1975. The Browning Automotive Group of today consists of 14 franchises in 7 locations, employing over 700 professionals. Peter Browning is the vice president of the Browning Automotive Group. We recently had a chance to talk with Peter about his career and the industry. The following are excerpts from our conversation. Why did you decide to follow in your grandfather and father’s footsteps and join the family business? I was 12 years old when I had my first job at the dealership. My father didn’t want me sitting around all weekend, and he said, “You’re coming to work with me, and we’re going to put you to work.” I spent four summers at the location in Cerritos, stocking and ordering parts. Eventually, I was helping with used cars: preparing them for auctions and their acquisitions. I got my feet wet early on in the business. Peter Browning 16
I wasn’t initially too hot on joining the family business; I think it was the hot summers that got to me. I went to college, and I was in a completely different line of work for about 15 years. It came time for my father to decide what he was going to do. He came to me and said, “The leadership is moving on or passing on. I’m going to sell it if you don’t want to join. What do you want to do?” I looked at what I was doing, and I thought maybe it’d be time for a change, so I took on the challenge and joined the family business. That was in 2017 and I have really enjoyed my work. What do you think are the biggest issues facing the auto industry today? Overregulation of the sales process, in California particularly. We have a more difficult time with employment-related rules and regulations that we have to follow. We have special laws regarding class action lawsuits that employees can bring against employers, and at times, it is difficult to follow the letter of the law. These laws don’t just affect this industry but a lot of retail and restaurant industries as well. We have to deal with the electrification push. While I’m all for electrification, we are getting the car ahead of the horse and pushing products that the market isn’t ready for. The government is telling the market what to do without finding adequate support to help get it done. Dealers are all-in, but we need to get the infrastructure in place first. What can be done to address these issues as a dealer? Working with fellow dealers to present a united front when dealing with legislators, regulators and manufacturers is a must. Dealers also need to do their research and adopt inventive practices in the fixed ops departments in order to deal with the challenges that servicing battery electric vehicles (BEVs) presents. What can be done to address these issues as an association? It’s important that we learn from each other and have clarity in our positions regarding threats facing dealers. Providing informational resources in regard to legislation is essential. I don’t know everything about every piece of legislation or regulation that’s pending or has passed, as is the case with many dealers. The association is a great resource to understand what’s coming and what we can do to dampen the blow, so to speak, because laws and regulations keep coming. Part of staying ahead is developing relationships with legislators and regulators so they can understand our experience and how things can be done differently to try to achieve their goals. The association is excellent at this. At the end of the day, dealers provide a valuable service to their constituents and create a lot of jobs and tax revenue. What do you see as the benefit of being a GLANCDA member, and how has membership benefited you? We’ve mentored and employed several techs trained in GLANCDA-sponsored programs. Finding qualified individuals, especially in the service technician arena, is difficult because you have to develop those skills, and you can’t always develop them in-house. And sometimes you need something off the shelf that you can plug in, so that’s been a great program. What advice have you received that has helped you get to where you are today? Your employees and your associates are your greatest assets — if you take care of them right, they’ll take care of the business and make everything run a lot smoother. Empower them to be able to make decisions so that they can help pull the business forward. Sometimes, it’s very difficult when working with the manufacturers. There are a lot of directives and things that have to be done. Realize that they are trying to run their business too. We should be partners in this together, working with them to help them understand the difficulties that they’re putting us in so we can improve programs together in a way that everybody achieves their goals. Upwards of 95% of every issue is due to a lack of communication What is your educational background? Degrees or certifications? I have a master’s degree in economics and graduated from the NADA Dealer Academy in 2019. Tell us about your family. I have a seven-year-old daughter, Evie. She keeps me on my toes and is the light of my life. Do you have any hobbies outside of work? I enjoy hiking and the outdoors. I like to cook. I also play guitar — I get together with friends sometimes and we jam out. 17
Control What You Can In business, as in life, there are some things you can control and others you can’t. However, there are many controllable aspects of your dealership. For example, you can control how you spend your time, allocate your resources, respond to challenges and obstacles, and the suppliers you choose as partners to propel your success. Cycles Are Inevitable The automotive industry goes through cycles just like other industries. In 2019, dealers sold over 17 million vehicles. In 2020, it was less than 14.5 million vehicles. The number fell even lower in 2022 to less than 13.9 million. We’ve seen this before and know sales and service will pick up. The best thing you can do is get deep processes in place so your dealership can grow when sales rebound. A finely tuned service department can pick up the dealership. Warranties matter because they impact service revenue. When fewer vehicles are fixed, maximizing the profit margin for each repair is more important than ever. Payroll and Process Hold Hands This is worth discussing. If you make the process efficient now, you can keep your overall payroll smaller and may not need to hire anyone later. Having your house in order helps you avoid having to hire unneeded staff during the rebound, which can maximize your margin of profitability. Why Dealers Need a Warranty Service Partner No matter how successful you think your dealership is, you can strengthen it by looking at processes and training employees. Employees should know what matters and how they contribute to the dealership’s success. Understanding their role helps them to feel part of the bigger picture. This strengthens your culture and can help reduce turnover. Dealers who ignore issues with efficiency or timeliness hurt their dealerships in multiple ways that can affect their dealership’s longevity. First, managers need to know which processes are working or failing. Revenue can decrease if a manager cuts costs without understanding which costs grow revenue. For example, a manager might not realize a highly paid employee’s value in lifting the entire service department and training younger, less experienced employees. Being well-paid doesn’t equal being overpaid. Second, dealers sometimes expand their payroll instead of maximizing their margin within the service department. Many people play a role in the life cycle of a warranty claim. Since people compensate for inefficiencies with workarounds, the results can affect the whole service department adversely. Hiring more people instead of improving the process costs you hard dollars and lets the service department continue to be inefficient. Increasing the profit margin is smarter than spending money unnecessarily; also, maximizing your margin when it is harder to make a profit will serve as preparation to grow profits more efficiently later. To improve how your dealership works, evaluate and improve the quality of your business decisions. Running a dealership is complicated. Getting knowledgeable and objective advice from outside the dealership can help you examine and improve your business’s processes. Your goal should be to capture every warranty dollar, but you must be granular to do that, and a general manager’s job is typically not granular in that department. Instead, hire a warranty company to act as your partner. What the Right Partner Should Do A warranty partner can get receivables flowing and protect your dealership from audit problems, but they don’t just lift warranty claims. A good one boosts the service department by making it unnecessary for the service manager to spend time in the weeds. They also help the team work together more efficiently. Tech enablement is important on the fixed operations side of a dealership, but deep tribal knowledge and an equally deep understanding of data are also important. The warranty company helps the service manager focus on growth by fixing processes and providing insights and information. Owners and general managers often don’t have a front-row seat to the intricate details that get and protect the money on a warranty repair. Although state laws are being implemented to combat dated factory policies, dealerships should not solely focus on getting a labor rate and parts markup increase. These types of increases will certainly By Justin Carr, Vice President, Warranty Processing Company 18
help the bottom line, but are they being as impactful as they could be? Some dealers don’t maximize the warranty to include items like rentals, test drives or any additional work that needs to be done so the repair is handled correctly the first time. They may skip signing and approving add-ons, which could ultimately result in you losing that money down the road. Sometimes employees leave items off claims because they don’t know how to get an advanced repair order paid. Teach them. Checks and balances in the warranty process are important to maximize repair orders. Adjustments that appear on the warranty schedule are not necessarily a bad thing. Imbalances are an opportunity to gain knowledge, fight for additional dollars and make corrections to processes or systems that improve efficiency. Too many dealers are submitting repair orders to the manufacturer before they are closed to the DMS system. Once they are paid, they are closed to the DMS for that amount. How can you ensure that you have collected every dollar in that process? What is your tool to monitor progress? In the previously mentioned scenario, there is nothing on the schedule that would show you that a rental was left off or a part was marked up incorrectly. It also creates risk and potential audit liability. Was a recurring problem not identified? Are you giving the manufacturer just reason to recapture your legitimate dollars stating that a repair didn’t follow policy and procedure? Be conscious that you are getting all the dollars the manufacturer will pay, and avoid closing repair orders after the manufacturer has released the credit statement. Audit each claim to ensure it complies with the policy and procedure, and nothing is missing. Ensure all codes are applied, identify and understand all variances before reconciling the differences and update everything daily. It is easy to keep a schedule clean and running clean when you touch it every day. When warranties fall behind, they become a mess. When that happens, the work it takes to clean them up is extremely time-consuming and can involve many staff. By controlling the things you can, you make it easier to achieve your goals and objectives. You also minimize the risks associated with uncertain or uncontrollable factors. The right warranty company can help you create a clean, complete process. Justin Carr is a VP at Warranty Processing Company, which recently relocated to Texas. Justin works with dealers nationwide to increase efficiency within service departments and educates dealer staff on why efficiencies matter. To learn more, please visit warrantyprocessing.com. 19
Delivering a superior service experience is the goal of every business. To achieve this goal, dealers must build a service experience that is both efficient and friendly. Achieving this balance can be difficult, but with the help of some fantastic technology, it’s not impossible. In this article, we will explore the steps necessary to create a consumerfriendly service experience that is also efficient. The Check-in Process The check-in process is a crucial part of the overall customer service experience. It sets the tone for the entire service experience. As such, it is essential to get it right to deliver a truly consumerfriendly experience. By looking at other industries with check-in processes, we can learn from their operations and apply them to our own. My veterinarian reminds me of my appointment more frequently and in a fun and friendly way (think texts with dog emojis) than the appointments I have booked online for my car. The emojis might seem childish, but it makes me smile when I see the text, and I open the text to read the whole reminder. My dealership could do better with the appointment reminder process or the linkage between what I have already filled out online and the questions I am re-asked when I get into the service lane. This level of accessible customer service keeps me coming back. Similarly, the automotive industry could take a cue from the airlines and ensure they check in customers as quickly as possible. I know what you are thinking. Really, the airline industry? But take yourself back 10 years before the kiosks and bag drop, when everyone waited for a live person to help them. I remember my first kiosk experience with Delta, thinking, “This is never going to stick,” but now it is the rule, not the exception. The airlines invested in consumer apps to smooth processes and satisfy the desire for self-service. They also changed their operations, funneling the travelers to the kiosks the minute they walked in the door with a greeter. The key is providing an excellent checkin process, where your consumer can self-service the things that make sense, and your advisors use the data supplied by that consumer to check in quickly and efficiently. Waiting and standing in line is rarely an enjoyable experience and not one that consumers want to repeat. However, by providing a simple, efficient and friendly check-in process, you can start your service experience on a positive note. The Waiting Area One of the essential parts of creating a consumer-friendly service experience is ensuring your waiting area is as inviting and efficient as possible. There How to Build a Consumer-Friendly Service Experience That Is Efficient By Sharon Kitzman, Dominion DMS 20
are consulting companies that do this full-time for the medical industry. For example, having a quiet, safe and clean environment is essential. Even something as simple as comfortable chairs, bottled water and snacks can make a world of difference. Complimentary Wi-Fi is always appreciated to allow your customers to stay connected with their busy lives. Additionally, providing timely information about what is going on with their vehicle and pushing video content to the consumer’s device can keep them in the waiting area and not coming back to the drive to ask additional questions. Consider giving customers the option to upgrade additional repairs while they wait. A big plate glass window for added transparency will reassure the customer about the work being completed on their vehicle, avoiding questions regarding the services. Having a comfortable and productive waiting area will help ensure customers have a friendly automotive service experience. Overcommunicate Clear communication with consumers is critical to providing a friendly service experience. Technology can be used to streamline the process, as well as provide transparency throughout the duration of the service. A communication system that keeps customers informed throughout the process should be a priority. From the time of check-in, customers should be given an estimate that makes them aware of the approximate time and cost of their services. The estimate should list all the suggested services and the rough cost for completing each service. Upon the customer’s review and agreement, the customer will sign the document, ensuring there are no surprises once everything has been completed. Prices should never be a surprise, so communicating with the customer is vital for transparency. Plenty of research shows most consumers prefer text as the best way to reach them because it allows for concise yet detailed updates that won’t take too much of the consumer’s time. Through the use of text updates, customers will have the ability to stay on top of their service and make any necessary changes that they may require. I have witnessed certain regionally based demographic tendencies — think South Florida — where text is not always best. You know your client base! Transparency is also vital to providing a consumer-friendly service experience. It is essential to allow customers to view updates to their service or inform them of any changes that could impact the service’s completion. Good news can be delivered autonomously, as it won’t require any action from the customer. Bad news should always be delivered in person so that the customer can fully understand and respond to the issue. Finish Strong Completing the service experience in a consumer-friendly way is just as important as the beginning of the process. Ensure that the bill does not surprise the consumer and take payment their way. Offer payment options such as online, in an app, through SMS or at the cashier station. Use technology to allow the technician to show and tell what repairs were made to the vehicle and ensure the consumer knows what was done and why it was necessary. The client that brought the car in for service may have a partner, not with them, who wants to Sharon Kitzman leads the launch and long-term growth of Dominion DMS. Previously, she managed the strategic direction and product development for Reynolds & Reynolds and Dealertrack. Her experience spans every area of dealership software development, including sales, marketing, product lifecycle management, process re-engineering, OEM management, professional services and customer services. Kitzman is a recognized leader in the automotive industry for her expertise in DMS technology. She received numerous accolades for her leadership, including Automotive News Top 100 Leading Women 2015 and 2020, Auto Remarketing Women in Retail 2021 and AutoSuccess Women at the Wheel 2021. She has a Bachelor of Business Administration from Ohio State University. understand what repairs were made. Lastly, follow up with the consumer one to two days after completing the service to ensure there are no lingering concerns. Following these steps will ensure consumers have a friendly and satisfactory service experience. Listen to our VUE Points podcast to stay up to date with news and current events related to the automotive software and retail industry. https://www.dominiondms.com/podcasts/ 21
In recent years, the U.S. auto retail sector has seen a growing number of foreign firms and individuals seeking to acquire dealerships here. Meanwhile, U.S. dealership groups are also starting to look across the border for acquisitions. In 2022, firms from Mexico, Canada, Vietnam and Finland, among others, were involved in several California dealership acquisition and establishment transactions. A dealership buy-sell transaction is remarkably complicated, involving legal, accounting, environmental, regulatory and many other layers. Having an attorney who can handle due diligence as well as licensing and permitting can resolve unique issues that some regulatory bodies may be encountering for the first time. Those skills allow the firm to provide superior customer service as well. But, it’s not enough to be experts in the U.S. distribution system. There are many intricacies of doing a deal where one party is not based in the U.S. A knowledge of the non-U.S. parties’ distribution systems is key. That allows acquisition experts to clearly explain the differences in both foreign and U.S. distribution systems. For example, foreign clients may want to tell investors that they will be up and running very quickly. However, that requires an extremely problem-free transaction process. The U.S. franchise system can be very difficult for a foreign buyer to navigate, especially if the potential non-U.S. buyer is private equity or a family office. It helps if the investor has a prior relationship with the auto manufacturer, who must approve the transaction. Chris Scali, founder and managing partner at Scali Rasmussen, PC, and an expert in this field, said, “We find most of our foreign clients already have dealerships in other parts of the world, and they are used to a certain way of doing business.” He continued, “It is very different than the way we do business here in the automotive sector. It is kind of an education for them, and I’ve noticed they appreciate that we have that knowledge and can explain the difference.” Having a local point of contact is important for any foreign entity looking to acquire automotive assets in the U.S. Most U.S. regulatory agencies want to work with an individual here who is at least nominally in charge, and they want that person to have a U.S. driver’s license and a social security number. Many foreign clients don’t have that person, and it can really slow down the process. Additionally, many foreign firms already have dealerships in other parts of the world and they are used to doing business a certain way, which is very different than the way business is conducted in the U.S. The process of buy-sell can be complicated and they most often need to be educated on the differences — specifically in California. “If you don’t do it right from the beginning,” says Bert Rasmussen, a franchised specialist under California law with Scali Rasmussen, “there is so much risk that the deadline will not be met. And then everybody gets disappointed, and sometimes bad things happen like an investor decides he has had enough.” Today, business model convergence is driving more crossborder activity. Companies in Mexico and Canada have been actively acquiring auto franchises here, but that wasn’t always the case. NAFTA has undoubtedly helped drive this activity, but the primary driving factor is more in terms of the relationship kind of approach. Changes in the European system have some foreign entities looking here as well. The proliferation of electric vehicle companies is also driving a lot of international automotive work. Some foreign EV makers are not looking to open dealerships. Instead, they are following Tesla and going with a storefront approach. That and the lack of an internal combustion engine — and the accompanying layers of approvals needed from the U.S. Environmental Protection Agency and, if they are selling in California, the Air Resources Board — makes market entry much smoother. There are virtually limitless opportunities to grow. Chris Scali and Bert Rasmussen are experts in buy-sell, working with international investors looking to enter the U.S. and have developed a network to help U.S. entities invest overseas. Scali Rasmussen has local business legal counsel throughout California to address your employment, cybersecurity, regulatory compliance, franchise, acquisitions, real estate needs and more. Please visit scalirasmussen.com to learn more. Buy-Sell: Identifying Unique Considerations When One Party Is a Foreign Entity By Alysha Webb, Editor, Scali Rassmussen, Getting to Go! 22
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