NEW J E R S E Y COAL I T I ON OF AU TOMOT I VE R E T A I L E R S Issue 1 | 2022 An Effort to Misguide Legislators Across the Country Wrongly Conflating EV Sales with Direct Sales:
RMG D R I V I N G D E A L E R P R O F I T A B I L I T Y
www.genovaburns.com Genova Burns LLC • Attorneys-At-Law Labor and Employment Law Commercial and Insurance Litigation Newark, NJ 973.533.0777 Jersey City, NJ 201.469.0100 Tinton Falls, NJ 732.758.6595 Camden, NJ 856.968.0680 New York, NY 212.566.7188 Philadelphia, PA 215.564.0444 Basking Ridge, NJ 973-387-7800 RepResenting new JeRsey’s Auto DeAleRships
EDITOR: BRIAN HUGHES PUBLISHED BY THE NEWSLINK GROUP, LLC 855.747.4003 ©2022 New Jersey Coalition of Automotive Retailers | The newsLINK Group, LLC. All rights reserved. The New Jersey Auto Retailer is published four times each year by The newsLINK Group, LLC for the New Jersey Coalition of Automotive Retailers (NJCAR) 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 NJ CAR, its board of directors, or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. The New Jersey Auto Retailer is a collective work, and as such, some articles are submitted by authors who are independent of NJ CAR. While NJ CAR 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. NJ CAR Executive Committee and Board of Trustees 2021-2022 NORTHERN REGION I (Bergen, Essex, Hudson, Passaic, Sussex) Joseph Agresta, Jr. Timothy Allocca John Fette Tim Hlavenka (Alt.) Guy Johnson William Kundert, Jr. (Alt.) Brian Lam Renee P. McGuire James Russomano Richard Selman (Alt) Todd Van Duren NORTHERN REGION II (Hunterdon, Morris, Somerset, Union, Warren) Scott Barna (Alt.) Bridget Beyer David Ferraez John Johnson, Jr. Sean Lyons (Alt.) Mark Montenero Edward J. Rossi (Alt.) Michael Salerno Thomas Stark William L. Strauss, III Steven Tilton CENTRAL REGION (Middlesex, Monmouth, Ocean) Robert Ciasulli Thomas Faragall Gary Foltz Elizabeth Giglio (Alt.) Adam Kraushaar Melissa Longo Shari Sandidge (Alt.) Anton Semprivivo David Wintrode, Sr. (Alt.) Jordan Wright SOUTHERN REGION (Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer, Salem) Russell Abate Jason Elkins (Alt.) Scott T. Harvey William Kassner (Alt.) Steven Kindle (Alt.) Judith Krupnick David Kull Peter Lanzavecchia (Alt.) Marcy Maguire Jim McCormick Robert D. McCormick Tina Wright CONTENTS NJ CAR BOARD OF TRUSTEES BY REGION Michael P. DiFeo........................................................................................................... Chairman James Curley, III................................................................................................... Vice Chairman Eric Nielsen....................................................................................................................Secretary Ronald E. Baus, Jr..........................................................................................................Treasurer Michael P. DeSilva............................................. Regional Vice President (Northern Region I) Andy Shapiro......................................................Regional Vice President (Northern Region II) Richard Malouf, Jr....................................................Regional Vice President (Central Region) Ed Barlow, III.........................................................Regional Vice President (Southern Region) Judith A. Schumacher-Tilton..................................................................... Budget Chairwoman Michael McGuire.............................................................NJ CAR Insurance Co. Ltd. Chairman Richard A. DeSilva, Sr..............................................................NJ CAR Services, Inc. President NADA Director for New Jersey Frank M. Pezzolla............................................................................Truck Committee Chairman Charles S. Miller.............................................................................................CAR-PAC President James B. Appleton.........................................................................................................President 6 Chairman’s Message MICHAEL P. DIFEO President's Message 10 JAMES B. APPLETON 12 NADA Director's Message RICHARD A. DESILVA, SR. 16 Navigating New Jersey’s Electric Vehicle Charging Landscape CHRIS DONNELLY 18 Wrongly Conflating EV Sales with Direct Sales: An Effort to Misguide Legislators Across the Country MAGDALENA PADILLA 26 The Future is Electric DANTE PILERI 28 NJ CAR Recognizes the Dealerships That Have Contributed to CAR-PAC 30 Thank You to Those Who Contributed to NADA PAC 32 FTC Strengthens Security Safeguards for Consumer Financial Information MICHAEL DACHILLE 34 NJ CAR Compliance Forms Series: Prior Use Disclosure Form And Prior Use and Damage Disclosure Acknowledgement Form GREYSON P. HANNIGAN, ESQ. 38 Acting With Urgency Against Cyber Threat to Auto Dealers STEPHEN MCLAUGHLIN 40 Using Diversity and Inclusion as a Competitive Advantage KERRI WISE N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 4 new jersey auto retailer
Can Your Family Wealth Management Plan Pass the 360° Stress Test? Kevin Ellman CFP, CEO and Paul D. Miller are proud to announce the publication of their latest book. Wealth Preservation Solutions, LLC. 45 Eisenhower Drive, Suite 550 Paramus, New Jersey 07652 wealthpreservationsolutions.com Contact Kevin Ellman CFP Tel: (201) 632-2022 Email: kellman@wpsllc.net A Personal Family Office Critical to the success of a Wealth Preservation and Succession Plan, is having a 360° Family Wealth Manager oversee and coordinate the diverse cast of professionals responsible for implementing a plan’s complex elements and techniques to achieve the desired results. Can your Family Wealth Management plan pass the 360° Stress Test? Call (201) 632-2022 to receive a complimentary copy of our new book. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Wealth Preservation Solutions, LLC is not affiliated with Kestra IS or Kestra AS. Investor Disclosures
Chairman’s MESSAGE | BY Michael P. DiFeo Earlier this year, Bill S1031 was introduced in the New Jersey Legislature. The bill would require licensed dealerships to report their documentary preparation fees (Doc Fees) to the Attorney General’s office. Subsequently, the fees would be posted on the websites maintained by the Department of Law & Public Safety and the Division of Consumer Affairs. As you know, Doc Fees are professional service fees charged by dealers to complete dozens of administrative tasks required by regulators and finance sources to process a new or used car deal. As you can see by the accompanying list of services on page 8, dealers save consumers valuable time and aggravation of getting on the phone, online or physically standing in line to complete the necessary tasks. While the State of New Jersey does not regulate the amount of Doc Fees, and this bill does not propose regulating the Doc Fees Under Scrutiny in Trenton CHAIRMAN'S MESSAGE continued on page 8 amounts either, their disclosure is already regulated in two ways. N.J.A.C. 13:45A-26BN.2(b) requires dealers to clearly disclose all pre-delivery service fees (including Doc Fees) on the Retail Order Form. N.J.A.C. 13:45A-26A.5 requires dealers to include their Doc Fee in any motor vehicle price advertising. These regulations ensure consumers know up-front what they will be paying (in detail) at the point of purchase. While S1031 may seem duplicative, NJ CAR didn’t oppose the legislation, preferring to show our elected officials that the industry supports transparency. At the same time S1031 was pending in the Senate Transportation Committee, NJ CAR began to hear whispers of possible legislation to impose a cap on Doc Fees. The Coalition has been aggressively making the case to elected officials that this is unnecessary. N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 6 new jersey auto retailer
Running a dealership comes with its share of uncertain terrain. But one thing is certain. Our Dealer Financial Services team is dedicated to being by your side with the resources, solutions and vision to see you through. John Kratsch john.r.kratsch@bofa.com 862.485.4467 business.bofa.com/dealer Making business easier for auto dealers. Especially now. Chris McCawley christopher.mccawley@bofa.com 267.675.0151 “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 • May Lose Value • Are Not Bank Guaranteed. ©2021 Bank of America Corporation. All rights reserved. 3656605 11-21-1445
CHARIMAN'S MESSAGE continued from page 6 The State of New Jersey does not regulate the professional service fees charged by lawyers, accountants, doctors, contractors, landscapers, barbers or dozens of other regulated professions serving the public. One of the primary benefits of a free market is that informed consumers can shop for the best deal. Dealers are already required to disclose their Doc Fees in two ways, with a possible third required disclosure if S1031 eventually becomes law. The 500+ franchised new car and truck dealerships in New Jersey provide consumers with fierce inter-and intra-brand competition for sales and service. Doc Fee disclosures give car buyers ample opportunity to shop around and get the best deal on the vehicle they want and the Doc Fee they’ll pay. NJ CAR conducted a Doc Fee survey in midFebruary, with 175 dealerships (35% of all dealers) participating. The survey found that 43% of respondents (75 dealers) had a doc fee between $400 and $500, and nearly 80% had a doc fee in the $300- $600 range. A small percentage reported a doc fee below $300 or greater than $600. Hudson, Union and Morris counties had the highest average Doc Fee, while Cumberland, Cape May, Camden and Gloucester counties had the lowest averages. Government should not cap what a business charges for the professional services it provides. A cap on what dealers can charge for a Doc Fee doesn’t come with a cap on the cost of providing those services. Inevitably, a government mandate that caps Doc Fees will force some dealers to charge higher prices for the vehicles they sell to cover their costs and earn a fair return on their investment. DOC FEE DISCLOSURES GIVE CAR BUYERS AMPLE OPPORTUNITY TO SHOP AROUND AND GET THE BEST DEAL ON THE VEHICLE THEY WANT AND THE DOC FEE THEY’LL PAY. N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 8 new jersey auto retailer
President’s MESSAGE | BY JAMES B. APPLETON The Franchise System Benefits Consumers — The Direct Sales Model Does Not N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 10 new jersey auto retailer
FRANCHISE DEALERSHIPS PROVIDE CONSUMERS WITH FIERCE INTER- AND INTRA-BRAND PRICE COMPETITION AND PREVENT MANUFACTURER MONOPOLIES. THEY OFFER READY ACCESS TO WARRANTY, RECALL AND GENERAL REPAIR SERVICE AND GENERATE GOOD-PAYING, LOCAL JOBS (MANY OF WHICH DON’T REQUIRE A COLLEGE DEGREE) THAT CAN’T BE OUTSOURCED. The Direct Sales model is WRONG FOR CONSUMERS. New Jersey has been at the forefront of this fight for several years, but direct sales fights continue to rage all over the country, as you will see in our featured story from this issue of New Jersey Auto Retailer. Initially, it was just Tesla, but now Rivian, Lucid and other startups are taking up the mantle and trying to gain special consideration from Legislatures coast to coast. Even some legacy automakers are toying with the idea of breaking off their EV product into standalone companies. Direct sale advocates have long said franchised dealers are unwilling or unable to sell EVs and that EV startups with direct sales are the only ones giving consumers the convenience of online vehicle purchasing. Neither of these assertions are true. Franchised dealers currently offer more than 40 vehicles with a plug, and dozens more are coming in the next few years. They also offer the consumer f lexibility to complete their retail purchase online if the consumer prefers a remote or digital experience. The network of 500+ franchised new car and truck dealerships in New Jersey represents a $34.6 billion industry and directly employs nearly 36,000 men and women, supporting an additional 34,000 jobs in the Garden State. Franchise dealerships provide consumers with fierce inter- and intra-brand price competition and prevent manufacturer monopolies. They offer ready access to warranty, recall and general repair service and generate good-paying, local jobs (many of which don’t require a college degree) that can’t be outsourced. They contribute billions of dollars in tax revenue and other benefits to the State and local economies. Factory-direct sales are simply an attempt to monopolize the electric vehicle (EV) market, eliminate competition and limit access to independent warranty and safety recall services. NJ CAR has been communicating this message through a variety of paid and earned media campaigns targeting New Jersey’s elected officials and the public at large for more than a year. NJ CAR staff and dozens of dealers have participated in more than 100 Zoom calls and in-person meetings over the past 14 months, meeting with virtually every legislator to ensure the industry’s message stays in front of the State’s decisionmakers. We have been proactive in our efforts, rather than reactive, and we are committed to staying one step ahead of Tesla, Rivian, Lucid and the other advocates for direct sales, including some legacy automakers that have begun to explore the possibility of factory-direct sales of EVs and autonomous vehicles. For instance, Ford Motor Company recently announced it was spinning off its electric vehicle operation into a company separate from its legacy business. After receiving massive pushback, the company dialed back the spinoff talk and announced an internal separation of the EV business as its own unit under the Ford umbrella, but you can’t put the toothpaste back in the tube. And, as of this writing, it is unclear how this decision will impact Ford’s franchisees. Direct sales advocates have said the unique nature of this evolving technology requires a factory-toconsumer direct sale. The fact is vehicles have been evolving for more than a century, and there is absolutely no reason to abandon the franchise system that has served consumers AND auto manufacturers well for all that time. Consumers want convenient access to service. They want a strong local business that employs their neighbors and is active in the community. They want hearty competition on pricing for sales and service. The franchise system meets those needs. The direct sales model does not. N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 11 N J C A R . O R G new jersey auto retailer
NADA Director’s MESSAGE | BY RICHARD A. DESILVA, SR. NADA Chairman Paul Walser recently authored an article regarding NADA’s efforts to find relief for the many dealers that rely upon the Last-In, First-Out (LIFO) accounting method for their new vehicle inventories. Below is an edited version of the article. New vehicle inventories dwindled as the pandemic lingered and worsened as the persistent worldwide microchip shortage impacted vehicle manufacturing. With inventories still a fraction of what they have been for many dealers, those that rely on LIFO now face significant “LIFO recapture.” Dealers using LIFO will face higher income taxes through no fault of their own. NADA has been working diligently for more than a year to obtain LIFO relief and highlight planning strategies, under current law, that could potentially mitigate LIFO recapture for some dealers. In November 2020, NADA petitioned the Department of the Treasury to use authority under a never-before-used section of the Internal Revenue Code (section 473) to grant LIFO relief when dealerships found it difficult or impossible to replace its inventory due to a “major foreign trade interruption.” NADA has met with Treasury four times in the past year, coordinated its advocacy with several other industry groups, and provided data demonstrating the relationship between the pandemic and the unprecedented nature of the inventory decline. To date, Treasury has failed to act on NADA’s petition. Fortunately, there has been a success in promoting bipartisan congressional efforts to convince Treasury to grant relief. Twenty Senate Democrats sent a letter and 92 Democrat and Republican Representatives sent another letter to Treasury Secretary Janet Yellen, in November 2021, urging her to issue LIFO relief. Treasury explained in a recent letter to Congress that to obtain LIFO relief, “businesses with global supply chains would need to demonstrate that the decrease in the closing inventory… is directly and primarily attributable to the foreign disruption in the supply chain.” The Alliance of Automotive Innovators backed up NADA's LIFO request with a letter to Treasury documenting that the unavailability of foreign microchips has delayed or reduced OEM production and prevented the OEMs from sending dealers the necessary vehicles to replenish inventory. NADA followed up with a letter to Treasury on January 24, 2022, explaining that Treasury’s condition for relief has been met and LIFO relief should be granted to dealers in advance of the 2021 return filing deadline. On February 4, 2022, Senate Democrats (19 signers of the first letter) sent a second, stronger letter to Secretary Yellen urging her to grant LIFO relief no later than Feb. 15, 2022. When Treasury did not act, 32 Senate Republicans sent a similar letter on February 18, 2022. It’s now up to Treasury to act. This extraordinary congressional support for LIFO relief is important to NADA’s regulatory advocacy but will also be critical if we need to seek a legislative solution quickly. While there is no “silver bullet” to avoiding the adverse tax consequences of LIFO recapture under current law, the accounting firm Crowe has created several informational sheets for NADA that highlight ways to mitigate the consequences, one of which can be found at crowe.com/insights/considerationsfor-dealers-facing-significant-lifo-recapture. Dealers who rely on LIFO may also want to consider changing to the Inventory Price Index Computation (IPIC) accounting method, which would allow dealers on LIFO to combine their new, used, and parts inventories. This could be advantageous, but dealers are encouraged to work with their tax professionals, as mitigating LIFO recapture depends on a taxpayer’s individual facts and circumstances. LIFO relief has been (and will continue to be) a top priority for NADA. The Association will continue to seek temporary deferral of LIFO recapture to provide dealers an opportunity to replenish inventory during a normal business cycle. Now is not the time to take working capital out of dealerships. Not only are we major employers, but we also generate significant tax revenue and contribute to local communities, which is critical as our industry continues to lead the economic recovery. NADA Continues the Fight for LIFO Relief N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 12 new jersey auto retailer
AUTOMOTIVE ADVISORS PROFESSIONALISM • QUALITY • RESPONSIVENESS Our team has over 30 years of extensive knowledge and experience with the automotive industry. Our firm provides individual attention to each client, helping to maximize their bottom line. • Financial Reporting • Tax Planning • LIFO Inventory Application • Performance Benchmarking Please contact one of our partners. Daniel J. Ferrari, CPA Amy M. Dillon, CPA John J. Entz, CPA 2755 Philmont Avenue, Ste 210 Huntingdon Valley, PA 19006 215-914-1400 www.danferrari.com We navigate you forward. Arent Fox’s Automotive Group drives innovative strategies. Our cutting-edge, national practice advises leading dealers and dealer groups as the industry faces unprecedented changes and disruptions. We are here to guide you through this crisis and the next one. Smart In Your World arentfox.com N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 13 N J C A R . O R G new jersey auto retailer
It’s Time to Plan for What Comes Next Bellavia Blatt has over 35 years of experience representing automobile dealers nationwide and is recognized as an industry expert in automotive succession and estate planning. Proper planning is necessary to preserve wealth, ensure the transition of ownership, control and management of the business and to maintain the successful operation of your dealership for future generations. Our attorneys will provide guidance and counsel to help you navigate the complexities involved in planning, including dealing with the factory to understand the unique requirements and approval process.
Tommy Struchen and his team service about 450 vehicles a month. To move all these cars through the dealership efficiently, he needed to streamline communications between dealership employees as well as with customers. With VUE, the Service team can communicate immediately with other employees within the DMS. Technicians can take notes and send them to their advisors, so there is no miscommunication about the repair orders. When advisors inspect vehicles, technicians can see what tickets are assigned to them and appropriately plan for it in real time. EASE OF USE. CONSIDER VUE DMS. RECONSIDER Since the install, processes have been a lot more seamless. From technicians to service advisors to including even the parts department. It made everyone’s job so much easier. Tommy Struchen Service Manager, Mack Grubbs Hyundai CONSIDER VUE DMS 866.928.3210 | VUEDMS .COM/NEW- JERSEY
Electric Vehicles (EVs) and hybrid EVs have been steadily growing in popularity over the past decade, especially in the last two years, as talks of climate change, sustainability, and environmental stewardship come to the forefront. Many car manufacturers are already making plans to expand their plug-in offerings or are going all-electric, mandating that dealerships adopt EV charging infrastructure as a result. Navigating the new electric vehicle charging landscape in New Jersey can be overwhelming. NEW JERSEY’S EV FRONTIER The State of New Jersey has ramped up its efforts to address electric vehicle adoption and meet infrastructure needs as a part of its 2019 Energy Master Plan. The Energy Master Plan sets out a wide range of targets for EV starting in 2025 — just three short years away. The goal is to have 330,000 Plug-In EVs on the road, 400 DC Fast Chargers in at least 200 locations, and 1,000 Level 2 Chargers installed by 2025. In response to these aggressive goals, incentive programs have been created to encourage car buyers and commercial facilities alike to adopt EVs and expand the charging infrastructure necessary to power the EV f leet. GIVING NJ’S EV INFRASTRUCTURE A BOOST If New Jersey is to have any chance of hitting its EV goals, they need to make it easy and affordable for this initiative to be adopted statewide. New Jersey’s public utilities have begun implementing their own EV infrastructure programs designed to provide rebates toward behind-the-meter and/or pole-to-meter service construction to accommodate EV charging equipment. (This means covering the cost of any excavation work, running conduits and wiring, service panels, junction boxes, etc.) Each electric utility offers its own unique program and restrictions. Programs that are currently up and running include PSE&G and Atlantic City Electric. JCP&L and Orange & Rockland will be launching soon. Then there are state-funded programs that can help cover the cost of the charging equipment itself. These can be used in conjunction with the public utility rebates. The New Jersey Department of Environmental Protection (DEP) offers the It Pay$ to Plug In program, where they provide grants to help pay for EV chargers. By Chris Donnelly Navigating New Jersey’s Electric Vehicle Charging Landscape The DEP recently announced a $4 million round of competitive grants for installing 24/7 public Direct Current (DC) Fast Chargers in community settings, meaning where people live and work. The application portal opened on March 14, 2022, and will close on May 13, 2022. You can learn more about the DEP’s grant opportunities on their Drive Green website at nj.gov/dep/ drivegreen/. WHAT DEALERSHIPS NEED TO KNOW When it comes to electric vehicle infrastructure solutions, having a basic knowledge of the overall process, as well as funding opportunities, can help owners make the best-informed decisions for their dealerships. Some EV infrastructure projects can be more labor-intensive and construction-heavy than others. In the end, it all has to do with electricity. A common commercial building’s electric service system is 120/208 volts(v). This is fine if installing a Level 1 charger (120v), but typically commercial spaces install Level 2 or DC Fast Chargers due to faster-charging speeds. A Level 2 charging port needs 208v to 240v to power. A DC Fast Charge unit needs 208v or 480v. This is where a service or equipment upgrade could come in, which can be tricky to manage between the utility and your township. It is critical to first determine if there is adequate power to the building when considering an EV infrastructure project. It’s important for both the dealership’s utility and contractor to work together on a game plan if there isn’t enough power coming in for any future EV plans. Your contractor should work to assess your current power supply capabilities, identify any room for energy efficiency improvements, plan out the best layout and best hardware options to meet your financial and operational requirements (Level 2 & DC Fast Charging), and apply for any available rebates. N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 16 new jersey auto retailer
Having an energy-efficient dealership is an added bonus because it’ll help lower the energy load on its own, making some room for the additional demand of adding EV chargers. Dealerships can utilize their local public utilities energy efficiency programs, like Direct Install, to upgrade outdated lighting to LEDs and retrofit any inefficient HVAC equipment using state incentives and on-bill repayment options. IN THE EV FAST LANE Getting ahead of the EV race, especially while recovering from the COVID-19 pandemic, is a better strategy for dealerships in the long run. For example, Brogan Cadillac of Totowa approached Donnelly Construction about wanting to adopt electric vehicle charging for their facility over a year ago. Even with due diligence and foresight from Donnelly’s project planning team, construction was at the mercy of long product lead times due to supply chain issues. According to TJ Ely, Jr., President of Brogan Cadillac, if your dealership has a deadline on when to install EV chargers, you really can’t wait until the last minute to implement a plan. Ongoing supply chain issues have been affecting industries across the board, including New Jersey’s major utilities. A new transformer was needed to help supply more power to Brogan, with the equipment lead time being 45 weeks, delaying their installation. What should have been a four-month construction project turned into seven. However, not every electric vehicle charger installation requires heavy behind-themeter work or service upgrades. At Wholesale Auto Supply (WASCO) in South Hackensack, Donnelly was able to install two Level 2 chargers at their facility, as well as upgrade all of their lighting, in less than three months from the initial site assessment to final installation. Wholesale Auto had enough power supply to match the demands of their chargers and the perfect layout to install. No additional excavation work or “heavy lifting” was needed. Wholesale Auto Supply will also be participating in PSE&G’s EV charger program, which will cover all construction-related costs (labor, wiring, and conduit) for their new EV chargers. According to Andrea Karsian, CEO of WASCO, because the company had the extra capacity on their existing service to handle the installation of Level 2 chargers, the company was able to avoid any major construction work, making installation quick and seamless. New Jersey’s EV landscape is everchanging and adapting to the times. Working with a top-performing contractor who has your best interest in mind and strong programmatic relationships can help ensure the best return on investment. Chris Donnelly is Vice President of Business Development at Donnelly Construction. Founded in 1977, Donnelly Construction is a leading general contractor, construction manager, and property developer headquartered in Wayne, New Jersey. Chris can be reached at 862.400.6106 or, via email, at cdonnelly@donnellyind.com. IF NEW JERSEY IS TO HAVE ANY CHANCE OF HITTING ITS EV GOALS, THEY NEED TO MAKE IT EASY AND AFFORDABLE FOR THIS INITIATIVE TO BE ADOPTED STATEWIDE. N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 17 N J C A R . O R G new jersey auto retailer
For more than 100 years, auto manufacturers have used franchisees to distribute their products to consumers. The franchise model provides many benefits to consumers, including inter and intra-brand price competition and ready access to warranty, recall, and general maintenance service. Electric Vehicle (EV)-only manufacturers have long claimed that their EVs must be sold directly to consumers because franchised dealers were either unwilling or unable to sell EVs. In 2021, EV-only manufacturers repeated these claims in legislatures across the country. Their claim ignores the reality at thousands of showrooms across the country and hundreds right here in New Jersey. The fact is franchised dealers currently offer more than 40 models with a plug, and that number will be 140 in the next few years. While many states (including New Jersey) incentivize consumers to purchase an EV, the vehicles continue to sell across the country, as you can see in the chart below, from the U.S. Department of Energy (updated in June 2021). Note that New Jersey sits behind only California, Florida, Texas, Washington, and New York in total EV sales. Wrongly Conflating EV Sales with Direct Sales: By Magdalena Padilla An Effort to Misguide Legislators Across the Country Notes: Only all-electric vehicles (EVs) are included in this chart; plug-in hybrid electric vehicles (PHEVs) are not included. Registration counts are approximate. California had approximately 425,300 light-duty electric vehicle registrations in 2020, but the chart is cut off at 60,000 to make it easier to see the other states. Worksheet available at afdc.energy.gov/data Last updated June 2021 Source: Vehicle registration counts derived by the National Renewable Energy Laboratory with data from Experiean Information Solutions N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 18 new jersey auto retailer
Status of NJ's New Car and Truck Industry Motor Vehicle Franchise Model Direct Sales Model Consumers have an advocate against OEMs on safety and recall issues YES NO Consumers have an immediate partner to make OEMs accountable YES NO Consumers benefit when dealers compete YES NO Dealers compete on pricing for sales & service YES NO Consumers' purchases align with local jobs and local interests YES NO Employ 36,000+ New Jersey residents YES NO Generate $36 billion in sales YES NO Represent over 500 local rooftops YES NO Large network of factory-authorized sales and service points YES NO Support local charities, internships, and employment programs YES NO Complete solution for consumer's needs (sales, trade-ins, on-the-spot financing, large parts inventory, complete maintenance, warranty and recall repair) YES NO Assume advertising, building and personnel costs YES YES Tesla Claims Reality Independent Dealer Locations can only be achieved in direct sales. In a franchise system, Tesla could determine locations. Large inventories are unsuitable for Tesla. In a franchise system, Tesla could dictate inventory sizes. Only direct sales allow for high-volume, fast-paced sales. In a franchise system, Tesla could mandate the training and staff for its sales standard. Franchised dealers would not know how to profit from a Tesla, because they profit from ancillary services (trades, financing, service contracts, parts, services). In a franchise system, franchise candidates determine the risk of investing, but would look to Tesla to provide the franchise proposition. Franchised dealers selling EVs conflict with ICE vehicles. In a franchise system, Tesla could establish exclusive dealerships. Franchised dealers rely on advertising. In a franchise system, Tesla could continue to rely on its brand recognition or engage in conventional advertising as competition increases. Franchised dealers profit from mark-ups. In a franchise system, Tesla dealers would want to succeed! Currently, Tesla’s mark-ups go directly to Tesla. A CRITICAL FIGHT WORTH HAVING Despite franchised car and truck dealers’ role in the sale of the full spectrum of clean vehicles (EVs, HEVs, and PEVs), an effort has been undertaken to marginalize their contribution. Some EV-only manufacturers have been knocking on legislators’ doors across the country, asking them to change state laws to suit their direct-sales business model. In the last year, they have lobbied legislatures across the country to legalize the direct sale model for EVs. Encouraged by the prospect of a sales model that will increase their shareholders’ profits, some legacy original equipment manufacturers (OEMs) are analyzing the prospects Source: MK&A, 2017 of similar transitions for themselves. This is a critical fight worth having, and dealerships must remain engaged to ensure any legislation that would undercut their franchise(s) is defeated. New Jersey already authorizes direct selling for EVs, but only for Tesla. In 2015, New Jersey enacted special legislation that allowed an EV-only manufacturer, licensed by the New Jersey Motor Vehicle Commission (NJMVC) on or prior to January 1, 2014, to sell directly to consumers. This legislation is only applicable to Tesla since they were the only EV-only manufacturer licensed by the NJMVC at the time. Tesla went on to seek similar special legislation from other states. But Tesla's claims for direct sales are based on fiction. WRONGLY CONFLATING continued on page 20 The direct sale model is not a requirement for EVs. It is, however, harmful to New Jersey’s consumers and economy. Put simply, no components in an EV require that the car be sold using the direct sale model. It is a choice made by OEMs. All EVs can currently be sold throughout the country under the laws that exist today in every state. Some OEMs want the laws to change to favor their profit-centered choice despite the negative consequences to consumers and local economies. The direct sales model does not favor the consumer. In contrast, the franchise model is consumer-centric, as you can see in the following graphic: N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 19 N J C A R . O R G new jersey auto retailer
NEW JERSEY PUTS MONEY BEHIND ITS AGGRESSIVE EV GOALS & CAL-LEV MANDATES New Jersey Governor Phil Murphy’s EV goals need a committed partner, and the state’s 500+ franchised new car and truck dealerships are ALL IN on EVs. Their dealerships are where these sales occur, where the transition from an internal combustion engine to an EV is encouraged, where the relationships are made to address an EV consumer’s unique needs. New Jersey’s franchised dealers have helped the state in its goal of registering 330,000 EVs in New Jersey by 2025. The State’s Charge Up New Jersey EV incentive program is intended to boost EV adoption among New Jersey consumers by offering a best-in-the-nation incentive of up to $5,000 off a qualifying EV. The $300 million program launched in 2020 is expected to provide $30 million per year for 10 years. To date, two years of the program have been completed, and legislation providing funding for the third year of EV incentives is forthcoming. According to data available on the Charge Up New Jersey website, as of March 7, 2022, New Jersey’s retail automotive industry has assisted the State in providing consumers with $53 million EV, HEV, and PHEV purchase incentives. To date, 17 different brands (including 16 utilizing the franchise model, noted in BOLD) have participated in the incentive program, including: Another year of incentives is anticipated by the summer, and more automakers (and models) will be entering the EV market. New Jersey’s dealers are eager to continue participating in the Charge Up New Jersey EV incentive program and showcase and sell all existing and soon-to-be-introduced EV models. New Jersey dealers should contact their manufacturers NOW to encourage them to release inventory to New Jersey in anticipation of the next round of best-in-the-nation EV incentives and consumers’ increasing appetite for more options. EVs do not need the direct sale models to be sold. They need to be made available, and they need to be competitive, just like dealers. BMW Chevrolet Chrysler Ford Honda Hyundai Jeep Wrangler Kia Mercedes-Benz Mini Cooper Mitsubishi Nissan Subaru Tesla Toyota Volkswagen Volvo Source: Auto Outlook, based on registration data provided by Experian Automotive. Some figures are estimated. Source: Auto Outlook, based on registration data provided by Experian Automotive. Some figures are estimated. NEW JERSEY’S EV, PLUG-IN HYBRID, AND HYBRID SALES ARE GROWING As you can see in the accompanying graphs, New Jersey sales of EVs and plug-in hybrids have nearly tripled since 2018 and more than doubled from 2020 to 2021 alone. Sales of hybrid vehicles were relatively f lat from 2010 until 2018 but more than doubled from 2020 to 2021. This upward trajectory clearly illustrates that these vehicles are being successfully sold using the franchise model. WRONGLY CONFLATING continued from page 19 N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 20 new jersey auto retailer
Existing EV Incentives (As of 3/21/22) Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Louisiana Maine Maryland Massaschusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina Ohio Oklahoma Oregon Pennsylvania Rhode Island Tennessee Texas Utah Vermont Virginia Washington Wisconsin Wyoming No Incentives Kansas Kentucky North Dakota South Dakota West Virginia Tesla Locations (Sales or Show Galleries Only; As of 3/21/22) Arizona California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Maryland Massachusetts Michigan Minnesota Mississippi Missouri Nevada New Jersey New Mexico New York North Carolina Ohio Oklahoma Oregon Pennsylvania Rhode Island Tennessee Texas Utah Virginia Washington Wisconsin Direct Sales Legislation Introduced In 2021 Connecticut Georgia Kansas Massachusetts Nebraska Nevada New York Ohio South Carolina Texas Vermont Washington Wyoming Alaska Washington Oregon Idaho California Nevada Utah Arizona New Mexico Colorado Montana Hawaii N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 22 new jersey auto retailer
North Dakota South Dakota Kentucky West Virginia Texas Oklahoma Nebraska Minnesota Wisconsin Michigan Iowa Missouri Illinois Indiana Ohio Arkansas Mississippi Alabama Louisiana Georgia Florida North Carolina South Carolina Virginia Pennsylvania New York Maine Kansas New Hampshire Massachusetts Rhode Island Connecticut New Jersey Delaware Maryland Tennessee Vermont N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 23 N J C A R . O R G new jersey auto retailer
Accountants & Management Advisors to the Auto Industry since 1954 “We cover all the bases.” Financial Reporting & Projections/Forecasts Lifo Inventory Applications Tax & Estate Planning & Reporting Cash Management & Budgeting Performance Evaluation Cost Analysis Buy/Sell Agreements & Succession Planning Mergers & Acquisitions Internal Control Design The Northbrook Corporate Center • 1210 Northbrook Dr., Suite 140, Trevose PA 19053 Contact Hugh Whyte, Randall E. Franzen, Kenneth Mann, Robert P. Seibel or Robert S. Kirkhope: 215-355-8000 voynowbayard.com V O Y N OW B A Y A R D W H Y T E A N D C OM PA N Y , L L P C E R T I F I E D P U B L I C A C C O U N T A N T S V O Y N OW B A Y A R D W H Y T E A N D C OM PA N Y , L L P C E R T I F I E D P U B L I C A C C O U N T A N T S The Northbrook Corporate Center • 1210 Northbrook Dr., Suite 140, Trevose PA 19053 Contact Hugh Whyte, Randall E. Franzen or Kenneth Mann: Financial Reporting & Projections/Forecasts Lifo Inventory Applications n Tax & Estate Pla nin Cash Management & Budgeting n Performance Evaluation Cost Analysis n Buy/Sell Agreements & Succession Planning Mergers & Acquisitions n Internal Control Design 215-355-8000 n voynow ayard.c m Accountants & Management Advis rs to the Auto Industry since 1954 V O N B A Y E D OM P N Y , L I I E U O T A N N C O Y , , o t e, R ndal E. r zen enn th ann: F p & jection /F t I o y & st t Pla i g h e t t n rf m e E aluati i l i t l i 1 0 n y o r co ccountants & agement isors o e to Industry nce 1954 A PA Y, LLP CERTIFIED PUBLIC ACCOUNTANTS
WILFREDO FERNANDEZ, CPA Partner, Co-Leader Automotive Dealerships Services wfernandez@citrincooperman.com 973.218.0500 ELLEN KERA, CPA Partner, Co-Leader Automotive Dealerships Services ekera@citrincooperman.com 914.949.2990 How we connect to the heart of the matter, with the strategic ability to plan and put ideas into practice, is what sets us apart and lets our dealership clients know they are in good hands. Start your journey towards excellence by contacting us today. Focused on the bottom line.
Increasing awareness of environmental issues caused by vehicles is one of the primary factors driving the growth of the global zero-emission vehicle (ZEV) market. As a result, reducing carbon emissions from vehicles has been identified as one of the key strategies in limiting climate change. Within the transportation sector, more than half of greenhouse gas emissions come from passenger cars, medium- and heavy-duty trucks, and light-duty trucks, including sport utility vehicles, pickup trucks, and minivans, according to estimates from the EPA’s Inventory of U.S. Greenhouse Gas Emissions 1990-2019. Electric vehicles (EVs) are an excellent solution to these problems since they do not emit pollutants, and many use renewable energy sources, such as solar, to power up. This reduction in environmental pollutants leads to cleaner air and fewer health problems. EVs also contribute to savings on fuel and maintenance. EVs have become increasingly appealing to environmentallyconscious consumers, with an increasing number factoring sustainability — specifically clean, electric, software-connected vehicles — into their buying decisions. This led to a jump of 43% (nationally) in EV sales in 2020. EV sales nearly more than doubled in New Jersey from 2020 to 2021. Auto manufacturer-prioritization of ZEVs has seen rapid adoption from some of the largest automakers across the globe. In January 2021, General Motors announced it would sell only zero-emission vehicles by 2035. The bold pronouncement made major news in the U.S. and around the world. Since that time, the industry has seen a surprising number of manufacturers following suit. • Carmakers worldwide will spend more than $268 billion through 2030 developing new electrified passenger vehicle models. Nine manufacturers have already announced plans to spend over $22 billion to open new or renovated plants in the U.S. to build EVs in five states. • Between 2021 and 2023, the number of battery-electric (BEV) and plug-in hybrid (PHEV) passenger vehicle models available to U.S. consumers will increase from 64 to 82. • Bloomberg estimates that at least two-thirds of global car sales will be electric by 2040. Automakers committed to zero-emission lines collectively own a large percentage of the U.S. market. Their switch to EVs will significantly impact emissions and vehicle trends in the U.S. EVs have become a priority for an increasing number of consumers and an even higher priority for automakers. Many car dealers are embracing the EV transition, and the excitement is warranted. Though there are unresolved questions about inventory management, sales and service training, and the impact on revenue generated through F&I and fixed operations, OEM commitment to producing EVs and demand by sustainability-conscious businesses and consumers alike gives dealers reason to embrace the evolution. NEW JERSEY ELECTRIC VEHICLE INCENTIVE PROGRAMS New Jersey is leading the way on EV adoption on the East Coast, with a goal of registering 330,000 EVs in the State by 2025. This goal aims to reduce emissions from the transportation sector and help reach the goals of New Jersey’s Energy Master Plan and the Global Warming Response Act. For more information about New Jersey’s EV incentive programs, visit njcleanenergy.com/ev. Dante Pileri is Vice President and General Manager in Zurich North America’s Direct Markets, East Division. He can be reached at 609.949.2100 or, via email, at dante.pileri@zurichna.com. By Dante Pileri The Future is Electric N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 26 new jersey auto retailer
The information contained herein is offered as insurance Industry guidance and provided as an overview of current market risks and available coverages and is intended for discussion purposes only. This publication is not intended to offer legal advice or client-specific risk management advice. Any description of insurance coverages is not meant to interpret specific coverages that your company may already have in place or that may be generally available. General insurance descriptions contained herein do not include complete Insurance policy definitions, terms, and/or conditions, and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysis. Insurance brokerage and related services to be provided by Arthur J. Gallagher Risk Management Services, Inc. (License No. 0D69293) and/ or its affiliate Arthur J. Gallagher & Co. Insurance Brokers of California, Inc. (License No. 0726293). © 2022 Arthur J. Gallagher & Co. | GGB41888 In association with ajg.com The Gallagher Way. Since 1927. NJ CAR in partnership with Gallagher and AmTrust, offers the industry’s most comprehensive workers’ compensation program custom tailored to New Jersey Franchised Auto Dealers. One of the key benefits of the program is a generous dividend return of up to 25% of your policy premium —not a credit applied to future premiums — and is based on individual loss experience rather than group performance. In 2021, over $840,000 in dividends were paid out to program members for the 2019 policy period, the highest annual total to date. Other program benefits include: • Broker-friendly access: Dealerships don’t need to give up their existing relationship. • Industry-specific classification rules: premium reductions between 15%–20%. • Scheduled underwriting credits: up to 25%, based on individual dealers’ risk profile. • Collaborative claims advocacy: aggressive claims investigation and cost containment. • Access to NJ CAR’s Zero Injury Program: a proven industry loss prevention program. NJ CAR Workers’ Compensation Program Lowering costs for franchised auto dealers across New Jersey. For more information, please contact: Pattie Collins Gallagher Area Senior Vice President T: 732.837.9150 | E: Pattie_Collins@ajg.com Charles Russo NJ CAR Risk Management and Safety Specialist T: 609.883.5056, ext 314 | E: crusso@njcar.org Northern New Jersey $1,548,067 Returned South Jersey $490,488 Returned Central New Jersey $716,016 Returned
NJ CAR Recognizes the Dealerships That Have Contributed to CAR-PAC NJ CAR appreciates the support of the 312 dealers who contributed to CAR-PAC, the Coalition’s political action committee, between Jan. 1, 2021 and Dec. 31, 2021. CAR-PAC needs the contributions of ALL dealers to ensure it has the necessary financial resources to support candidates (on both sides of the aisle) who support the franchised retail automotive industry in New Jersey and ensure the dealers’ voice is heard in Trenton on a wide variety of important public policy issues. CAR-PAC has been (and will continue to be) very active in supporting the candidates who support our industry. The New Jersey Election Law Enforcement Commission (ELEC) rules allow contributions to a political action committee of up to $7,200 per business or jointly-controlled business. And, don’t forget, contributions can be made with corporate funds. If you have any questions regarding how much your dealership or dealership group can still contribute this election cycle, please contact Jim Appleton at 609.883.5056, ext. 330, or by email at jappleton@njcar.org. NJ CAR encourages those dealers who have not yet contributed to support CAR-PAC’s efforts on behalf of ALL New Jersey franchised automotive retailers. The following dealerships contributed to CAR-PAC between Jan. 1, 2021 and Dec. 31, 2021: N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 2 28 new jersey auto retailer Ace Ford Action Hyundai of Millville Acura of Denville Acura of Ocean Acura of Ramsey Acura Turnersville All American Ford in Point Pleasant All American Ford of Paramus All American Ford Subaru of Old Bridge All American Ford, Inc. All American Mazda in Brick Audi Meadowlands Audi Princeton Audi Turnersville Autoland Chrysler Jeep Dodge Ram Autoland Toyota Avalon Honda Baker Chrysler Jeep Dodge, Inc. Barlow Buick GMC-Manahawkin Barlow Buick GMC-Woodbury Barlow Chevrolet Bell Audi Bell Ford Bennett Chevrolet Bentley Parsippany Bentley Truck Services Logan Twp. Bentley Truck Services Maple Shade Benzel-Busch Motor Car Corp. Bill Vince’s Bridgewater Acura BMW of Atlantic City BMW of Bridgewater BMW of Ramsey BMW of Springfield BMW of Tenaf ly Boardwalk Acura Boardwalk Honda Bob Novick Auto Mall Bridgewater Kia Brogan Cadillac Company Buhler Chrysler Jeep Dodge Buick GMC of Mahwah Burke Motors, Inc. Burlington Chevrolet, Inc. Burlington Kia Burlington Volkswagen Burns Buick GMC Hyundai Burns Honda Cadillac of Mahwah Cambria Mack Campbell Freightliner Causeway Ford Lincoln Causeway Honda Causeway Hyundai Causeway Nissan Chapman Ford Lincoln Mazda Chevrolet of Jersey City Chrysler Dodge Jeep of Paramus Chrysler Jeep Dodge Ram of Englewood Cliffs Ciocca Chevrolet of Princeton Ciocca Subaru of Pleasantville Circle BMW Circle Infiniti Coast Cities Truck Sales, Inc. Coast Honda Coleman Buick GMC Cadillac Crown Cadillac, Inc. D & C Honda of Tenaf ly DARCARS Lexus of Englewood Dayton Toyota DCH Academy Honda DCH BMW of Bloomfield DCH BMW of Freehold DCH Brunswick Toyota DCH Freehold Toyota DCH Kay Honda DiFeo Kia Dodge Chrysler City Douglas Infiniti Douglas Volkswagen Dover Dodge Chrysler Jeep, Inc. Downs Ford East Coast Toyota Echelon Ford, Inc. Edison Nissan Elite Acura Elkins Chevrolet F.C. Kerbeck & Sons Family Ford, Inc. Fette Ford, Inc. Fette Infiniti Frank’s Truck Center, Inc. Franklin Sussex Auto Mall, Inc. Franklin Sussex Hyundai Fred Beans Hyundai of Flemington Fred Beans Nissan of Flemington Fred Beans Toyota of Flemington Freehold Buick GMC Freehold Dodge, Inc. Freehold Ford Freehold Nissan Freehold Subaru Fullerton Alfa Romeo Maserati Fullerton Automotive Corp. Fullerton Ford Gabrielli Kenworth of NJ Gabrielli Truck Sales
www.thenewslinkgroup.orgRkJQdWJsaXNoZXIy MTU2MTQwNg==