Official Publication of the Montana Auto Dealers Association Auto Dealer PUB. 2 – 2022 – ISSUE 2 JAMES JOHNSON Time Dealer of the Year Nominee
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©2022 The Montana Auto Dealers Association (MTADA) | The newsLINK Group, LLC. Al l rights reserved. The Montana Auto Dealers Association is publ ished annual ly each year by The newsLINK Group, LLC for the MTADA and is the official publ ication for this association. The information contained in this publ ication is intended to provide general information for review, consideration and dealer education. The contents do not constitute legal advice and should not be rel ied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your specific circumstances. The statements and opinions expressed in this publ ication are those of the individual authors and do not necessari ly represent the views of the MTADA, its board of directors, or the publ isher. Likewise, the appearance of advertisements within this publ ication does not constitute an endorsement or recommendation of any product or service advertised. The Montana Auto Dealers Association is a col lective work, and as such, some articles are submitted by authors who are independent of the MTADA. Whi le the Montana Auto Dealers Association encourages a first-print pol icy, in cases where this is not possible, every effort has been made to comply with any known reprint guidel ines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publ isher at 855.747.4003. CONTENTS 28 40 6 MONTANA AUTOMOBILE DEALERS ASSOCIATION EVP’S MESSAGE 8 ASSOCIATE MEMBERS 10 JAMES JOHNSON: TIME DEALER OF THE YEAR NOMINEE 14 A VISIT WITH JIM SEWELL, GENERAL COUNSEL TO MONTANA AUTOMOBILE DEALERS ASSOCIATION 17 DEALER LAW CHANGES HISTORY 20 MTADA 5TH ANNUAL TRAP SHOOT 22 HIRING IN THE AUTO INDUSTRY: IT'S A PUDDLE, NOT A POOL 23 THANK YOU 2022 CONVENTION SPONSORS 24 MTADA 108TH ANNUAL FAMILY CONVENTION 28 DEALER TITLE ONLY GOES DIGITAL 30 NADA URGES FTC TO WITHDRAW PROPOSED SWEEPING NEW RULE AFFECTING MOTOR VEHICLE DEALERS 31 HAROLD MILDENBERGER CELEBRATION OF LIFE 32 DRIVING MONTANA'S ECONOMY 33 A TIMELINE FOR IMPLEMENTATION: NEW CLEAN VEHICLES TAX CREDIT 34 FTC SAFEGUARDS RULE COMPLIANCE: MORE OF A TRICK AND HARDLY A TREAT 37 SUCCESSION PLANNING FOR DEALERS IN AN EVOLVING BUSINESS ENVIRONMENT 40 THE SECRET TO CONTROLLING DEALERSHIP EXPENSES 42 PRINT AND MULTI-GENERATION COMMUNICATION 4
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MONTANA AUTOMOBILE DEALERS ASSOCIATION EVP’S MESSAGE BRUCE KNUDSEN EXECUTIVE VICE PRESIDENT GOVERNMENT RELATIONS BKNUDSEN@MTADA.COM I 406.461.7680 Bruce Knudsen Executive Vice President The past couple of years have been interesting for auto dealerships. From the COVID-19 pandemic to inventory constraints to global supply chain issues, we have all had to adapt, regroup and change our ways of dealing with issues. But we’ve taken these issues head-on and dealt with them with dignity, grace and the camaraderie that exists within the auto industry. With all that said, not wanting to ask, “What’s next?” doesn’t seem so unreasonable. But whatever does happen next, I’m certain the MTADA will see it through, and with grateful hearts. Moving on, I’d like to thank everyone who attended the MTADA 108th Annual Family Convention held in Billings in June. We all had a lot of fun, were able to network and meet with like-minded individuals and share our experiences. I’m happy to announce that the 109th Annual Convention will be held in Big Sky on June 22-25, 2023. It will be nice to see everyone again. Hotel reservation info will go out soon. I want to remind you that the FTC’s Safeguards rule is now in effect, and dealers MUST comply with this federal requirement by December 9 of this year. The Safeguards Rule requires financial institutions under FTC jurisdiction to have measures in place to keep customer information secure. It creates significant technical and administrative compliance requirements for dealers and others, like internal penetration testing, vulnerability assessments, data encryption, security awareness training, and the performance of written risk assessments. Apparently, the implementation of the Safeguards rule was not enough for the FTC, and now they are at it again with a new UDAP rule. This proposed rule includes a prohibition on add-on charges that do not provide value to the customer, new record retention requirements for advertisements, training materials and marketing, and specific disclosure requirements for a vehicle’s “offering price,” and optional add-on products. However, the FTC fails to provide sufficient support to justify its sweeping set of proposed duties and restrictions. And finally, as I told you in my last message, EV production has kicked into high gear, and the market is increasing; EV sales have picked up momentum. Although adoption will be uneven throughout the States, manufacturers are shifting their focus away from combustion engines. On a national level, there will be a great deal of money for building charging stations so drivers can take road trips and have plentiful choices about where to charge their vehicles. And the good news is, state agencies have submitted a final plan to the Federal Highway Administration that will allocate $43 million in federal funds to establish an EV charging station program in Montana. EV charging stations will be required to provide 150 kilowatts to a single vehicle along with universal Combined Charging Systems (CCS), a standard for charging electric vehicles. The plan also requires that stations be within one mile of amenities like restrooms and restaurants that will be available for drivers to use while their vehicles are charging. If you want to read more about this program, go to https://deq.mt.gov/energy/Programs/fuels. As always, it is my pleasure and privilege to represent you. Remember, when association members stick together and pool our resources, I am certain we can continue to prosper no matter what situations are thrust our way. Best, 6
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ASSOCIATE MEMBERS ADS Of Montana www.adsfi.com Ally Financial www.ally.com Auto Auction of Montana/MTADA www.autoauctionmt.com BMO Harris Bank N.A. www.bmoharris.com/main/personal Carbon Offset Company carbonoffsetcompany.org Comply Auto complyauto.com Cox Automotive www.coxautoinc.com DAA Northwest magauctions.com Dealer Development Systems dealerdevelopment-inc.com Dealer Vault www.dealervault.com Dominion DMS www.drivedominion.com EBMS www.ebms.com Eide Bailly, LLP www.eidebailly.com EMC Insurance Company www.emcins.com Federated Insurance www.federatedinsurance.com First Call Computer Solutions firstsolution.com First Interstate Bank (Billings) www.firstinterstatebank.com First Security Bank Helena www.ourbank.com GP Capital Partners, LLC www.gpcapital.com It Starts With Me itstartswithme.com Junkermier, Clark, Campanella, Stevens, PC www.jccscpa.com MOSS ADAMS, LLP www.mossadams.com/home PartsEdge, Inc. www.partsedge.com Sentry Insurance Company www.sentry.com Toyota Financial Services www.toyotafinancial.com/us/en.html US Bank Dealer Commercial Services www.usbank.com/vehicle-loans/autoloans.html Valley Bank of Helena www.valleybankhelena.com Whitehall's Alpine Distributing www.alpinebg.com Winn-Marion Companies www.winn-marion.com Wipfli, LLP www.wipfli.com
To browse the winning issue, please scan QR code. To see the list of winners on The Communicator Awards website, please scan QR code. Congratulations! 2022 COMMUNICATOR AWARD WINNER! MTADA We are very pleased to announce that the Montana Auto Dealer magazine earned the Award of Distinction for an association magazine. The Award of Distinction is presented for projects that exceed industry standards in quality and achievement and represents the best in marketing and communication. https://tinyurl.com/magazine-association https://montana-auto-dealer.thenewslinkgroup.org/ pub-1-2021-issue-2/ This past year marked the 28th year of The Communicator Awards. This distinguished award is dedicated to recognizing excellence, effectiveness, and innovation across all areas of communication; they are the leading international awards program honoring talent in this highly acclaimed field. The Communicator Awards receives almost 5,000 entries from companies, agencies, studios, and boutique shops of all sizes, making it, globally, one of the largest award shows of its kind. They honor work that transcends craft; work that makes a lasting impact and provides an equal chance of winning to all entrants regardless of company or agency size and project budget. The goal is to reward excellence. The Awards provide winners and their clients the recognition they deserve and give communications and creative professionals proof and validation that their work is highly regarded by their peers within the industry.
Time and Ally Financial have honored James Johnson as MTADA’s nominee for the 2023 Time Dealer of the Year. Presently, he is the dealer for High Plains Motors in Wolf Point and Glasgow Auto Sales in Glasgow, Montana. The Time Dealer of the Year award is one of the automobile industry’s most prestigious and highly coveted honors, and recipients are among the nation’s most successful auto dealers. James recently discussed his life, career, the auto industry, and his family. After graduating from high school – where he was voted “Most Likely to Be a Car Dealer” by his senior class – he attended Montana State UniversityNorthern, where he received degrees in Autobody and Automotive Technology. He also has his real estate and broker’s licenses. He dreamed of someday owning a body shop and perhaps a used car dealership. Although he did not grow up in a dealership environment, he had three uncles and two cousins who worked in the used car business. “My family was full of business people,” he explained. “Both of my grandfathers were businessmen, and my parents had their own businesses.” And he aspired to also – one day – own his own business. While he attended college, he worked in the body shop for Rathert-Fox Ford on weekends and during the summer months. It was here that he really gained an appreciation for the dealership setting. However, he still wanted to further his education, and he interned at State Farm Insurance during the summer of his junior year. As part of obtaining an “A” grade in Auto Shop Management class, he interviewed with the corporate headquarters of General Motors in Detroit, MI. He was offered a job but decided it didn’t exactly fit into his career path. He envisioned a career that would allow him to stay in and around Montana, so he continued to work for State Farm, though now as a paid employee. That particular 13-year career garnered him promotions and the opportunity to live in three different states while keeping him relatively close to Montana. James’s career has been impacted by some amazing individuals. In the fall of 2002, he moved back to Wolf Point, where he worked beside his father, Gary, in the State Farm agency. “My Dad was a great businessman. I always joked with my friends that he was the mayor because he knew everyone in northeastern Montana.” Now that he was back in Wolf Point, James was asked to sit on the board of the Missouri River Development Corporation. His work centered on bringing new businesses to the area and helped preserve the established businesses. When he worked with this particular group, he became friendly with Mr. Marvin Presser. “Marvin and I would have great conversations about Wolf Point, Fort Peck Lake and the car business,” James said. “As we visited, I realized I might be able to obtain that dream I’d had years before to be in the car business.” And one day, they struck a deal. On July 2, 2007, his 35th birthday, James made a leap of faith – leaving the known to begin a new adventure. He partnered with Marvin and his son, Jeff, and joined High Plains Motors. “Marvin taught me everything he knew about the business,” James said. “And in the fall of 2011, I was named dealer by General Motors.” Marvin passed away in 2015, and James declared, “He left us with a great business and many life lessons to live and teach others.” James’s leap of faith continued. At the end of 2019, he’d heard that the Newton Brothers from Glasgow, MT, wanted to sell their dealership. Using the business acumen obtained from his father and Marvin, James approached the brothers about the sale, and in March 2020, Jeff Presser, Paul Wemmer and James made an offer. “We took over operations,” James said, “and I was named dealer in May 2021.” His senior class had it correct: “Most Likely to Be a Car Dealer,” indeed. James sees some dominant trends in the next 5 to 10 years in the auto industry. “Everyone is talking about the electrification of the auto industry. We are definitely going to see that segment grow, but I think we will also see some JAMES JOHNSON TIME DEALER OF THE YEAR NOMINEE 10
additional alternative power sources.” He believes the problems of “range anxiety” need to be addressed before any alternative power becomes mainstream. Regarding life lessons, the industry and all he has learned and seen, James shared three ideals he learned that he could pass along to someone he may mentor. “My personal mantra,” he acknowledged, “is to work hard, study hard and have fun.” He tries hard to pass these thoughts on to his children, his friends and the people he works with in his business and the community. Looking back over the last year, James reflected on one accomplishment of which he was especially proud. In May 2021, he and his business partners Paul Wemmer and Jeff Presser purchased the Chevy, Buick and GMC dealership in Glasgow, MT. “When we bought it,” James said, “it had a zero new or used car inventory. Paul is the GM of that store, and he has made it into a thriving car dealership in a time when getting inventory has been really hard.” James asserts that the community is “super happy” to have the dealership in their area, and he is proud to keep those buying dollars in northeast Montana. Being honored with the Time Dealer of the Year nomination means a lot to James. “This award has been given to a lot of great Montana Auto Dealers before me,” he smiled, “and that means I need to keep living to the high standards set by guys like Joe Billion, Don K and Craig Tilleman.” Part of the nomination pertains to giving back to the community and any civic or charitable organizations to which he may contribute. James works with the Wolf Point Lions Club, the Wolf Point Chamber and has served as Council President at First Lutheran Church. He also has fulfilled various leadership roles with MTADA. “My parents live a life of service, and they taught me that,” James emphatically stated. “All I can do is try to pass that along to my kids.” James is an active member of MTADA and knows how important and beneficial membership can be. He explained his take on the two most beneficial attributes: “One, the association is a sounding board for the automotive profession and its peers. And two, it offers the industry a platform to protect and promote itself locally, statewide and nationally.” As a car dealer, James described his all-time favorite vehicle. “Early this spring,” he said, “I got my hands on a 2022 C8 Corvette. Boy, I’ll say, after owning and driving that car, it is my all-time favorite car to drive. I have always wanted a ‘63 split-window Vette because of the styling, but I’m sure the ‘63 just does not drive like the C8.” He paused, then said, “Most of the time, you’ll see me driving a K3500 Silverado with a Duramax (diesel engine).” James and his wife Michelle have two children – a daughter, Kaylee and a son, Aaron – and two Wirehaired Pointing Griffon dogs, Camo and Chevy. Family is everything to James. “The best days are when I sit down in the evening and reflect on the things that were accomplished, knowing we moved forward with the business and my family,” he said. Continued on page 12 11
“I seem to have aha moments every week,” he continued, “but the things that have defined me are being able to successfully run this business and still have time with and for my family. Work/life balance is often hard for people in the automotive business. I get evenings and weekends with my wife and kids, and that is important to me.” James married Michelle in the fall of 2004. She wanted to spend more time with the children, and after stepping away from a lucrative job at the Wolf Point Federal Credit Union that she’d managed for 10 years, she purchased a local shopping paper – Free Trader – in 2015. “Her paper is still one of the best places to sell a vehicle, even in today’s digital world,” James stated proudly. “When we purchased the dealership in Glasgow, she came to work with me as the comptroller, and it has been great to have her involved in the business.” About his children, James said, “Kaylee is a Junior at Wolf Point High School. She was recently inducted into the National Honor Society, where I had the pleasure of giving the keynote address. She is active in all three sports seasons, but tennis is her real passion. Aaron is a seventh grader in Wolf Point. He’s a busy kid who has a lawn business in the summer that helps pay for his love for hunting, fishing and riding motorcycles.” As a family, his favorite way to spend any free time is when he and Michelle can watch the kids in sports; he calls it “very fun.” His hobbies include hunting and fishing as a family, and they “really enjoy watching and hunting behind our two dogs in the fall. Our favorite times and cherished moments often happen at or on Fort Peck Lake.” In conclusion, he said, “As an Auto Dealer, I just want to sell products that are dependable and make people smile.” Continued from page 11 12
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14 A VISIT WITH JIM SEWELL GENERAL COUNSEL TO MONTANA AUTOMOBILE DEALERS ASSOCIATION R. J. “Jim” Sewell, Jr., a Deer Lodge native and fifth-generation Montanan, graduated from Carroll College in 1968 and served in the U.S. Navy in 1968 and 1969. He joined Smith Law Firm, P.C., in the private practice of law upon receiving his law degree from the University of Montana in June 1971 and acquired the firm in 1992. He began his automobile dealers’ legal work in the late 1970s and has been general counsel to the Montana Automobile Dealers Association since 2004. He was elected to the National Association of Dealer Counsel (NADC) board of directors in April 2015 and served as a board member for six years. In addition to the NADC, Sewell is a member of the State Bar of Montana and the National Association of Dealer Counsel. He is admitted to practice before the state and federal courts of Montana, the Ninth Circuit Court of Appeals and the United States Supreme Court. Sewell became “of counsel” to Smith Law Firm, P.C., Oct. 1, 2015, when Craig D. Charlton acquired the firm. He continues to serve as general counsel to Montana Automobile Dealers Association and represents many of Montana’s automobile dealers. MTADA recently interviewed Jim about the dealership industry in Montana as it relates to state laws. Why are dealer laws important? Individual dealers have no economic power whatsoever over the manufacturers. Robust national protection was never developed even though there is a seldom-used national dealer day in court law. Since the 1930s or 1940s and after the war, the manufacturers have been very heavy-handed in doing business with dealers. They get away with it because all the cards are in their hands. The only way to give dealers a modicum of protection is to have laws that protect them. All the states have developed more and more statutes to deal with bad conduct by the OEMs. The first laws to protect dealers may have been passed as late as 1946 or 1947. Some state laws are stricter than others, but they are all based on a similar framework. How have dealer laws developed over the years? Have they become more or less effective about protecting dealers? They are much more effective than when I started in the late 1970s. However, dealers still don’t have equal bargaining power because OEMs always develop new tactics. It’s like putting your finger in the dike and having a leak spring somewhere else. If regulations stop inappropriate conduct in one area, OEMs figure out another way. Why should dealers be engaged in the association and ongoing legislative efforts? If you want your children and grandchildren to be dealers, you need to participate in keeping the OEMs in check. Dealers who act by themselves are largely ineffective in dealing with the OEMs. That means dealers have to act as a body to protect themselves. They need a concerted group effort to right the wrongs. What’s the most notable change to MTADA dealer law starting in 2005 and ending with the 2021 session? I think the biggest change is in warranty reimbursement laws, processes and procedures. Dealers now get paid for OEM warranty work on the same terms they do repair work for you and me. That’s the most important thing that’s happened in the 40 years I’ve been doing this. What other changes are notable? Montana’s second most important legislation was a data bill that followed Arizona’s lead and NADA’s suggestions. All the dealers use a computer system for their books and records. When you walk into a dealership, the dealer takes
Continued on page 16 The best business relationships have a personal element. down your name, address, and whatever is on your driver’s license. They also pull up your credit report. Everything gathered goes into the data management system. When a dealer uses their system, gets data out in a specific format or allows another vendor to pull information because they are putting a sales or service promotion together, the data management companies charge huge fees to extract the data. When dealers stop using their system because of the fees, they make it hard for dealers to get their own data out of the DMS by charging more fees. Everyone wants customer data. But who owns it? The statute was designed to make it clear that the data in the DMS belongs to the dealer and the management system has no interest in the data itself. It provides that the data belongs to the dealer, and no DMS provider has the right to take it away or charge exorbitant fees to the dealer just because it is stored electronically. As a result, these companies can no longer charge large fees or limit access. There are a few data management system providers, but two of the biggest companies are Reynolds and Reynolds and CDK Global. After the Montana bill passed, the two companies sued Arizona for any number of what they felt were constitutional violations. Arizona and its dealers won, and they won again on appeal in the Ninth Circuit Court of Appeals in San Francisco. Then both companies gave up on their fight. So we know our framework is constitutional and fair, directly protects dealers and makes it clear dealers own the data. Most states will probably enact something very similar to the laws in Arizona and Montana. I think agency questions are coming up later. One of the big deals about the agency relationship is similar to the question settled by the data law: who owns the customer and the data? Answering that question will be the next big thing between dealers and OEMs. However, it is helpful that we have the data law. Another important change for dealers was doing away with the manufacturer’s right of first refusal. According to the manufacturer’s sales and service agreement, it used to be possible to block a dealer if they decided to sell, which meant a manufacturer could prohibit a dealer from selling to a long-term employee or family member. If a dealer had two or three franchises and found a buyer, but one of the manufacturers had a right of first refusal, the manufacturer could also insist on buying one of the dealerships. Minus one dealership, the dealer could then lose the entire sale. In the last session, provisions were made about dispute resolutions between dealers and manufacturers. It used to be that the major way to deal with a manufacturer was to file a lawsuit, but nothing prevented the manufacturer from dragging you off to federal court. Things move more slowly in federal courts than state courts, and the slow pace favors manufacturers. Also, it is ungodly expensive to litigate in federal court, especially in Montana, which has a limited number of federal courts. The state’s only federal courts are in Helena, Missoula, Billings, Great Falls and Butte. Thanks to work done in the last session, dealer law now has a provision to prevent cases from dragging out. Dealers can request the manufacturer engage in mediation within 60 days or so. If mediation fails, the dealer can send the case to the Montana Department of Justice as an administrative law proceeding. That way, the dealer doesn’t have to worry about getting dragged off to federal court. The whole process is streamlined and inexpensive. It provides an avenue for the dealer to use in response to what a manufacturer has proposed or done. Most of the changes I’ve discussed all happened in the last 10 years. What is the greatest challenge to the franchise system? The greatest challenge is the advent of buying and marketing vehicles electronically, including EVs in general. EVs are certainly at the tip of the spear as far as what the next big issue will be because the current administration strongly emphasizes the subject. But out-of-state companies and Montana dealers have marketed vehicles across state lines over the internet for some years now. Montana is already using federal money to install charging stations up and down the highways, and the association recently had a summit on charging stations in Helena. Legislators, representatives from the power industry and Tesla representatives all showed up at the capital. Everyone had a chance to see and drive EVs such as the Ford Lightning and Ford Mustang, and the event was a hot topic in the trade press. What’s the agency model being promoted by manufacturers? Manufacturers are promoting an agency model in Australia and Europe that would be bad news for American consumers because it is a recipe for price fixing. It allows manufacturers to require selling all vehicles at the same price. But those prices won’t be lower. When the OEMs set the price, they will set it as high as they think they can get away with. The OEMs are never happy with their share of the pie. They always want more. Tesla uses a kind of agency model because it has no dealers; however, the agency model is not prevalent in the U.S. apart from Tesla. The dealer model is the opposite of the agency model. OEMs can’t set the price. They can suggest a price, but the dealer who owns the vehicle looks at competitive and market 15
conditions before setting the price they want for that car. There is plenty of competition to force prices down because there are franchised new car dealers throughout the state. OEMs want to fix the retail price and control the margin. They also want to own the customer data. As it is now, the customer is the dealer’s customer. How did the dealer get the customer? They did it by offering a vehicle for the right price, developing a personal relationship with the customer, providing excellent service when necessary, providing a loaner and likely washing the repaired car after the repairs are done. All the personal customer service-type work would go out the window with the agency model because the dealership becomes just the delivery location. The dealer’s opportunity to develop a personal relationship with the customer would be very limited in that circumstance because they would only be doing deliveries. There are other issues with the agency model that the OEMs never talk about. For example, what happens to used cars? Nobody goes into the showroom to buy a car without a trade-in. What’s going to happen to the trades? Will the dealer have to buy them from the OEM for an OEM-fixed price? Who is to say the OEM price on a trade vehicle will interest the dealer? The more important question is how can the dealer stay in business with no cars to sell if all they do is make deliveries for a fee set by the OEM? The agency model appears to be inappropriate in the state of Montana. Dealers in large cities might sell enough cars at $100 per car to stay in business, but if a small city in Montana only sells a few cars in the same amount of time, that’s not enough money to keep the doors open. The trade press I’ve read states the agency model would make more money for the OEMs, plus they would own the customer data. I’ve already talked about the fact they want to control the data. But I don’t see the agency model going anywhere here. It may, but I don’t see it. Does the agency model have any benefits for dealers? Zip. Zero. None. And there’s no benefit for the consumers either. They won’t necessarily be able to get a good deal on their trade and will have to pay a fixed price. Prices stay artificially high when manufacturers control the price. Think about an Apple iPhone. Would the high-end models cost $1,000 if they were sold through distribution? Using an agency model, manufacturers hope to reduce the number of dealers by 5-6% each year, depending on the market. That reduction means 5-6% of service departments go away yearly, too. Sometimes Teslas need service. If you have one that needs repairs, where do you have to take it? Do they give you a loaner? Do you have to travel a substantial distance for warranty work? I heard an anecdotal story about someone with a Tesla that needed service. The car was put on a flatbed truck and hauled to a service center. It was gone for some time, and the owner was left without a car. Repairs on a Tesla are different from taking a vehicle into your local dealership’s service center at 8 a.m., getting a loaner car to use during the day, and picking your vehicle up at 5 p.m. What would you say to customers who like buying a car without haggling over the price? Are there hidden harms they should be aware of? Paying fixed prices means spending more money than you need to. If you are not price conscious and want a particular car, you will have to pay the price. However, customers will pay the price if the value is there for them. One example of that was mid-engine Corvettes. Initial buyers had to pay a premium if they wanted one that was just off the line. How can dealers reward loyal customers if they can’t give them a discounted price? Loyalty doesn’t have much to do with discounted prices. It has to do with how businesses take care of you. Are you somebody who is treated with respect? Do they know you by name? There was a show called Cheers (1982-1993). The theme song talked about a place you can go where everybody knows your name. You don’t go to the local bar for the cheapest beer; you go there for the people who know your name. You may not get the cheapest deal at your local dealership, but you will get a good one and feel respected and appreciated there. The best business relationships have a personal element. Price has something to do with making a sale, but when you see a customer over the life of their car ownership, you will see them when their car needs service and repairs, not just when they need to buy another car. Agency models overseas differ between brands. For example, Mercedes and Honda have different programs. Which are the best or worst? The agency model is so new overseas that manufacturers are testing the water to see what they can get away with. Manufacturers such as Mercedes might test out one plan in some nations, another plan in other nations, and the third plan for Germany. I see some references to the “light” version of the agency model, where the dealer is involved to some degree, but the references aren’t particularly relevant to us yet. I don’t know the details about how the plans differ. How do franchises work with an agency model? What’s the difference between a traditional franchise and a franchise that uses an agency model? Never say never, but the combination doesn’t seem practical. In a rural state like Montana, we don’t want to give manufacturers more power than they have now and turn dealers into delivery places. What can dealers do to protect their livelihood in the future? Get involved with the association. Your livelihood depends on it. Continued from page 15 16
DEALER LAW CHANGES HISTORY • 2005. MTADA offered no legislation regarding the Montana Dealer Law during the 2005 session. The session concluded with a favorable resolution of most of the bills of general interest to the business community that MTADA took an interest in. • 2007. MTADA offered legislation to permit franchised dealers to display and sell new cars at out-of-county sales where the subject county has no franchised dealers and is part of the dealers’ “area of responsibility.” In 2007, Montana had 22 counties with no franchised dealer. MVD and the OEMs supported the proposal, which was enacted. Other legislation included: ᴏ 61-4-123(3)(b) was revised to permit vehicle storage on property owned, leased, or rented by a dealer that is not contiguous to the dealer’s established place of business. ᴏ MVD bill was enacted regulating automobile brokers with support from MTADA. It allows a joint commercial endeavor (Costco) display, limited to 90 days in any calendar year. • 2009. MTADA succeeded in amending 61-4-202: ᴏ The regulation of additional franchises by OEMs was modified; ᴏ It was required that incentives be paid within 30 days of receipt of the claim from the dealer. OEMs were prohibited from denying warranty claims based solely on a dealer’s incidental failure to comply with a specific claim processing requirement that does not put into question the legitimacy of the claim. ᴏ OEMs were prohibited from penalizing a dealer for a vehicle sold that ended up in a foreign country. A rebuttable presumption was added that the dealer did not know or could not have reasonably known that the vehicle would be shipped to a foreign country if the motor vehicle was titled in one of the 50 States. ᴏ OEMs were prohibited from adding fees or surcharges or raising prices in Montana to make up for the requirement that warranty parts and services be reimbursed at retail rates. ᴏ OEMS were required to compensate a dealer when an OEM dropped a line make. • 2011. MTADA offered no legislation regarding the Montana Dealer Law during the 2011 Session but, in conjunction with other business associations, took positions in opposition to anti-business bills. • 2013. MTADA succeeded in passing the following legislation during the 2013 Session: ᴏ Demo Plates were permitted to be used on service loaners. This language has now been replaced by the Loaner Plate authority passed during the 2019 Session. ᴏ 61-3-201(2)(c) was amended to allow a nonresident with a place of abode in Montana to register a vehicle here. ᴏ 30-11-705 was amended to require an OEM to repurchase special equipment and signs from a terminating dealer. ᴏ 61-4-207 was amended to provide that an OEMs desire for a reduced presence in the state is not a good cause for the termination of a dealer. ᴏ 61-4-208 was amended to prohibit an OEM from requiring that goods or services be purchased from its preferred vendor where the goods or services of like kind, quality and design are available from a vendor of the dealer’s choice. • 2015. MTADA offered no legislation regarding the Montana Dealer Law during the 2015 session. MTADA did cooperate with the MDV on a few revisions, particularly revising the requirement that dealers have actual possession of titles on used units before a sale. Copies are permitted. • 2017. MTADA succeeded in passing the following legislation during the 2017 Session: ᴏ The OEMs contractual right of first refusal was declared unenforceable in Montana. Continued on page 18 17
ᴏ The provision of the Dealer Law describing what constitutes “good cause” for the termination of a dealer in 61-4-207 was amended to require that the analysis of the subject dealer’s sales consider those metrics that are essential, reasonable and not discriminatory. Metrics must consider the franchisee’s local market variations beyond adjusting for the local popularity of general vehicle types. ᴏ Specific language was added to the Luxury Tax law provisions to exclude the motor vehicles or the sale, lease, rental, loan or providing of any item, product or service by a “Franchisee” as defined in 61-4-201(7). • 2019. The 2019 Session was a big success for MTADA and Montana dealers. Several “real-life” issues Montana dealers experienced over the prior few years were dealt with. Each change arose from circumstances where an OEM – or a third-party vendor aligned with an OEM – exerted economic power and employed heavy-handed tactics to take unfair advantage of several Montana dealers. These modifications address the following: ᴏ It was recognized that dealers collect information from their customers and store said information in electronic data management systems and that the manner in which third parties can access and use the information should remain with the dealer. ᴏ The OEMs obligation to a dealer whose franchise agreement is canceled was clarified by requiring that OEMs must repurchase signs and special tools. A payment timeline was added with financial penalties for nonpayment. Continued from page 17 ᴏ One modification added the retirement of the dealer to the circumstances where a manufacturer is required to honor the designation of a family member as successor dealer for the franchise. ᴏ The method used to set the warranty reimbursement rate was revised. The new provisions completely replace the prior language of the Code regarding warranty reimbursement. ᴏ The add-point provisions were further revised, limiting the frequency of add-point attempts, requiring that additional information on the new dealer be included in the notice and allowing a dealer who successfully objects to recover their costs and attorney fees. • 2021. MTADAs Legislative program for the 2021 Session included updates to the 2019 warranty laws. These laws allow the use of the dealers’ retail labor time guide, the issuance of loaner plates, and mediation and administrative hearings before the MVD for dealer/OEM disputes. These laws also authorize MTADA to act as the Plaintiff in general interest litigation against an OEM. ᴏ The resolution process for OEM/dealer disputes was changed. A mandatory mediation process was created as the first step to resolving any dispute between an OEM and a dealer. If unsuccessful, the next step is filing a petition with DMV following the same procedures used for dealer termination proceedings. The hearing officer’s decision is still subject to appeal to the state District Court and the Montana Supreme Court. 18
MTADA 5TH ANNUAL TRAP SHOOT MTADA held its 5th Annual Trap Shoot on September 6 at the Helena Trap Club. Attendees enjoyed an evening of competitive fun, food and networking. A big thanks to our sponsor, VITU. We hope to see you at our next event. For more information, please visit www.mtada.com. SPONSORED BY 20
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. Paul Cluff paul.cluff@bofa.com 208.908.2099 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 Ru ning a dealership c i r f ncertain terrain. But one thin i i cial Services team is dedicated t i i t resources, solutions and vision t . Paul Cluff paul.cluff@bofa.co 208.908.2099 business.bofa.com/dealer i i i l rs. . “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
It’s a PUDDLE, Not a POOL Hiring in the Auto Industry: By Joe Porter, National Sales Trainer, Assurant Fill vs. Fit for F&I Sometimes, the urgent need to fill a position can result in a rushed – and less than perfect – hiring process for your dealership. This can have lasting consequences for your organization and culture. Ask yourself this: is it worth meeting a hiring deadline and then having to go through the process again if things don’t work out? No matter how critical the need, finding the right person should always be priority number one. That’s why, to improve your odds in recruiting and hiring the right fit for your dealership, it takes a village. It Takes a Village at Your Dealership When it’s time to recruit for a position in the dealership, it’s easy for leadership to look for someone just like themselves. This can negatively affect the screening process. To avoid this common mistake, consider bringing along an indirect stakeholder with you when interviewing the person. If it’s for a salesperson, perhaps the office manager or F&I manager should be included. For a technician, maybe the used car manager or the shop foreman. If the job is for an office staff hire, consider the dealer or the F&I director. Indirect stakeholders have to live with this person, too, so they should have a say in the selection and can be very helpful in finding the right match. Take the Tour to Humanize the Dealership We normally reserve the tour of the dealership for people who buy a car. But at the end of every candidate’s interview, taking them on a tour can be a great selling point for your business. Show them around. Introduce them to associates as you traverse through the building. It humanizes the dealership for the candidate, and it will inspire them to not only want the job but also be a part of your team. Being greeted and encouraged by your team members will sell your organization for you. Like a test drive, the dealership tour gives the candidates a feel for what working at your dealership would entail. Measure Twice and Cut Once Selecting the right candidate is especially critical when it comes to training. If you spend the time and resources training people who end up being the wrong hire, it can disincentivize the dealership from investing in future training. Conversely, training can help ensure the success of your hires who are a good match. Train them properly. Show them the tools they’ll need to be successful. Train them on how to implement those tools flawlessly in the eyes of your customers. People don’t leave after receiving high-quality, comprehensive training. In measuring twice, make sure expectations and job descriptions leave no doubt as to what’s required of the role and how that relates to the team’s success. Talk to an Assurant expert or visit: automotivetrainingacademy.com. Joe Porter began his career in the automotive industry in 1996 selling vehicles in Ft. Myers, Florida. Over the next several years, Joe parlayed his sales success into leadership opportunities on the variable side of the business. He took on various leadership roles such as F&I manager, new car manager, and general sales manager. Joe became a general manager for the first time in 2000. In 2004, those successes led to Joe being recruited by General Motors to help launch their Standards for Excellence program in the southeastern part of the United States. In 2008, Joe moved to Gulf States Toyota to assist with their Signature program in Dallas, Texas. He was then promoted to district manager with the Gulf States Financial Services arm of the Freidkin Companies in 2011 for their Houston market, the largest market in their region. Among the industry certifications and recognitions Joe has attained throughout his career, it culminated in his being selected to speak at NADA 2022 in Las Vegas. He has conducted sales workshops for the NCADA, TADA, and is among the select trainers that facilitate the Assurant F&I weeklong course throughout the year. Joe also serves as a frequent workshop moderator for the Chrysler Minority Dealer’s Association. He is a graduate of the executive course at the Buckley School of Public Speaking, ACE Certified and AFIP Certified in F&I compliance. He and his wife, Wendy, reside in Conroe Texas. 22
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