SPRING 2023 THE SAN DIEGO INTERNATIONAL AUTO SHOW IS BACK! OFFICIAL PUBLICATION OF THE NEW CAR DEALERS ASSOCIATION SAN DIEGO COUNTY
• Business Transactions • Buy-Sell Agreements • DMV, BAR and other governmental approvals • Lender flooring and capital loan agreements • Entity formation and structure • Shareholder Agreements • Manufacturer approvals and relations • NMV non-profit association representation Estate Planning • Succession planning for business continuation • Family estate planning (wills and trusts) Tax • Property tax planning, audits and appeals • Federal estate and gift tax controversies with IRS • EDD audits BUSINESS LAW | LITIGATION | ESTATE PLANNING | REAL ESTATE | TAX | EMPLOYMENT PRACTICES FERRUZZO & FERRUZZO, LLP | A Limited Liability Partnership, including Professional Corporations 3737 Birch Street, Suite 400, Newport Beach, California 92660 | PH: (949) 608-6900 | ferruzzo.com Business Litigation • Consumer Legal Remedies Act lawsuits • Sales and Service Agreements • Disputes before the CA New Motor Vehicle Board • Consumer claims regarding the sale/lease of autos • Manufacturer audit disputes • Hearings before the AQMD, RWQC and OSHA Real Estate • Dealership site acquisitions and lease agreements • Lender opinion letters • Relocations Employment Practices • Arbitration agreements • Wage and hour class action lawsuits • Private Attorneys General Act (PAGA) claims Ferruzzo & Ferruzzo, LLP began providing legal representation to new car and truck dealers nearly four decades ago. Over the course of that time, one of the central goals of the firm has been to remain rooted in our client relationships. With the strength of over 20 attorneys, we provide a spectrum of legal services to support every aspect of running and owning your new car and/or truck dealership. Each member of our team is available to service the needs of you and your dealership.
© 2023 New Car Dealers Association® San Diego County (NCDA) | The newsLINK Group, LLC. All rights reserved. San Diego Dealer is published four times each year by The newsLINK Group, LLC for the NCDA and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your specific circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the NCDA, 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. San Diego Dealer is a collective work, and as such, some articles are submitted by authors who are independent of the NCDA. While San Diego Dealer 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. INTERIM CHAIRMAN VINCENT CASTRO.......................DISTRICT 2 SECRETARY/TREASURER JOHN SEGAL..................................DISTRICT 3 BOARD MEMBERS JENIFER BALL…............................DISTRICT 6 MATT CRANDALL…....................DISTRICT 2 PAUL DYKE…................................DISTRICT 4 CHRIS GEORGE.............................DISTRICT 4 SCOTT KIEFNER….......................DISTRICT 2 JASON MOSSY…...........................DISTRICT 5 ERIC TRACY......….........................DISTRICT 1 JUSTIN TRUE............................….DISTRICT 5 NCDA STAFF DEAN MANSFIELD PRESIDENT SCOTT WEBB DIRECTOR OF MARKETING AND OPERATIONS DIANA SILVA ACCOUNTING AND ADMINISTRATION MANAGER CLAUDIA OLVERA MEETING AND FACILITIES COORDINATOR ROBERT HEINTZ CALIFORNIA SALES TRAINING ACADEMY INSTRUCTOR Contents 10065 Mesa Ridge Court San Diego, CA 92121-2916 Tel: (858) 550-0080 Fax: (858) 550-9537 ncda.com 4 The San Diego International Auto Show is Back! 10 Meet Assemblymember David Alvarez 12 Ask Alison By Alison McCallum, EPIC Insurance Brokers and Consultants 15 Succession Planning For Dealers in an Evolving Business Environment By Bank of America Corporation 18 First Aid Kits Regulations & Good Practice By Celly Services, Inc. (CSI) 20 Save the Date NCDA Golf Tournament + Annual Meeting & Luncheon 22 California Changes COVID-19 Isolation Requirements What Do Employers Need to Know? By Benjamin M. Ebbink, Partner, and Abby Harrington Putzulu, Associate, Fisher Phillips 24 San Diego Outlook 15 22 PUBLICATION 11 2022-2023 | ISSUE 2 NCDA.COM 3
The San Diego International Auto Show is Back! After a two-year hiatus due to the COVID-19 pandemic, it was with great anticipation and excitement that we opened the doors to another successful San Diego International Auto Show on December 30. Based on attendance and media coverage, we weren’t the only ones excited to be back! The public answered the call and filled the convention center during all four days of the show to check out all-new vehicle debuts, comparison shop various makes and models, learn about the latest new technology and even take test drives. Headlining the show were a wide variety of debuts and new releases seen for the first time by San Diegans at the auto show. These vehicles epitomize our trademark slogan, “Where the cars are the stars,” and seeing them ranks number one on the list of reasons consumers attend the show. While crossovers and SUVs were king, San Diego debuts represented a variety of key market segments, including EVs, hybrids, sports cars, pickups, and sedans. Among the debuts on hand were: • 2023 Chevrolet Blazer EV • 2023 Chevrolet Corvette Z06 • 2023 Chevrolet Equinox EV • 2023 Dodge Hornet • 2023 Ford Escape ST • 2024 Ford Mustang • 2023 Ford Super Duty • 2023 Honda Accord • 2023 Honda Civic Type R • 2023 Honda Pilot • 2023 Kia EV6 GT • 2023 Lexus RX • 2023 Mitsubishi Outlander PHEV • 2023 Nissan Ariya • 2023 Nissan Z • 2023 Toyota bZ4X • 2023 Toyota Crown • 2023 Toyota GR Corolla Rally Concept • 2023 Toyota Prius Prime • Toyota Tundra Trailhunter Concept Over four busy days, the San Diego Convention Center was transformed into the continued on page 6 The public answered the call and filled the convention center during all four days of the show to check out all-new vehicle debuts, comparison shop various makes and models, learn about the latest new technology and even take test drives. 4 SAN DIEGO DEALER
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largest new vehicle showroom in San Diego County. It was incredible to see the sheer number of people attending each day. The exhibit halls and test drives were full of new car buyers who were there to comparison shop for a new vehicle purchase or lease — which ranked number two on the list of top reasons to attend the show. While visiting manufacturer exhibits, engaging with product specialists and taking test drives, consumers were adding vehicles to their consideration lists and making purchase decisions right then and there. That means good things for San Diego County new car dealers because auto show attendees told us that no form of advertising influences more new vehicle purchases in San Diego County than the auto show — not TV, not radio and not even digital. Exhibitor feedback on site reflected the impressive attendee turnout and excitement. Manufacturer representatives we spoke to were surprised and impressed by the crowds returning to the San Diego International Auto Show. More than one mentioned that they were understaffed to manage the volume of consumer inquiries. Others noted that they wish they’d had more exhibit space for additional vehicles to better reflect the interest of car buyers on site to comparison shop. As our auto show Chairman and Premier Automotive’s Vince Castro put it: “The San Diego Auto Show blew away my expectations. I saw large crowds that were thirsty to see the latest cars they couldn’t see on dealers’ lots, and they were hungry for information. In my 35 years of seeing auto shows, I don’t recall seeing large groups consistently gather around the exhibitors’ podiums, listening to their presentations. The need for our future buying guest to experience all the senses the show presented was never more evident than in the shows ride and drives which, again, were consistently full to drive vehicles they couldn’t even see on dealers’ lots, especially the EVs.” When it comes to EVs, this year’s San Diego Auto Show delivered with 30 different EV models on display or available for a test drive. Survey results confirmed that the San Diego Auto Show will lead San Diego’s transformation to an all-electric future as the largest and most important EV event continued from page 4 “For busy moms like me, the auto show is a wonderful no‑pressure way to comparison shop. It’s how I picked my previous vehicle.” 6 SAN DIEGO DEALER
in San Diego County. Nearly 60% of San Diego Auto Show attendees are considering the purchase or lease of a plug-in vehicle, and that number jumps to almost 80% for those who test-drove an EV at the show. And of those who test-drove an EV, for half of them it was their first time behind the wheel of an electric vehicle. It’s clear that nowhere else will EV automakers be able to engage and influence more consumers considering an EV purchase, as well as those on the fence and/ or skeptical of EVs. Consumers were not restricted to static vehicles and displays as they shopped for their next new vehicles. Twenty-five percent of show-goers took advantage of the opportunity to experience the technology and real-world performance attributes of the gasoline and electric cars, trucks and SUVs available in manufacturer ride and drives. Brands providing outdoor test drives this year included Audi, Chevrolet, Ford and Volkswagen. Plus, Camp Jeep, a perennial favorite, brought their largest and most exciting off-road course to the show this year. As dealers, you all know how influential a test drive can be, and for those who test-drove a vehicle at the show, it was by far their number one reason for attending the San Diego Auto Show. Our attendee survey also demonstrated that consumers are vocal when it comes to brands not represented at the show. More than half of our attendees indicated that a brand’s absence will affect their consideration of that brand. They tell us again and again that vehicles they can’t see at the show are pushed further down, and often entirely off, their consideration lists in favor of vehicles that are present on the show floor or in test drives. The seeds planted at the auto show continue to bear fruit throughout the year and extend well beyond the walls of the convention center, as San Diego Auto Show attendees are considered experts within their peer groups. In fact, 61% of San Diego Auto Show attendees give car-buying advice more than twice a year, while 21% offer advice more than six times in a year. “I purchased a Kia Niro plug‑in. Being able to sit in it and see it at the auto show is the reason I bought it two weeks after the show!” NCDA.COM 7
Feature attractions that also add value and drive show attendance were popular once again this year. Electric Avenue was a hub for all things electric and featured a variety of plug-in and fuel cell vehicles from Chevrolet, Hyundai, Kia, Toyota, Volkswagen and Volvo. Several manufacturer product specialists were on hand to answer questions about EV ownership, and companies in the energy and charging space rounded out the exhibit. Nissan returned to sponsor our Military Appreciation program, which included the distribution of thousands of complimentary tickets to active and recently retired military personnel from their San Diego “Seeing the cars in person, sitting in them, and being able to discuss with the representatives was a better experience than talking to a car salesperson on a lot. They literally are there to chat and give information rather than sell you a car on the spot to make a quota. My husband and I have already decided on our next car based on the auto show.” stores, in addition to supporting our military discount offers. The GoldenBoy Mobility Zone featured a wide variety of accessible vehicles and adaptive equipment to help those with physical challenges, and the San Diego Automotive Museum brought an incredible array of classic cars to the show. Sunday’s Family Day offered free admission to all children 12 and under to enjoy the many kid-friendly activities at the show. And if people didn’t attend the show (and they missed a great one!), it wasn’t for lack of exposure. This year’s media coverage of the show was phenomenal, with local media outlets providing outstanding coverage throughout the entire run of the show. The San Diego Auto Show has always enjoyed a great relationship with local media, who understand that supporting the dealer community through auto show coverage parlays into success throughout the year for all concerned. Our hats are off to KNSD, KUSI, KFMB, NFMB, KGTV, KSWB, XEWT, Cox, KBNT, Audacy, iHeart, LMA, Uniradio, Radio Latina, and media sponsor, the San Diego Union-Tribune for your continued support. “We ended up making a purchase decision by comparing only the brands that attended.” 8 SAN DIEGO DEALER
OUR SERVICES • Illness and Injury Prevention • Safety Inspection and Training • Spill Prevention Control and Countermeasures Plan • Newsletters on Emerging EPA/OSHA Issues • Hazardous Waste Management • Hazardous Waste Cost Recovery • Haz Mat Release Response • Respiratory Protection • Representation in OSHA Enforcement Cases • Phase I Environmental Assessment • Regulatory Permits and Reporting Celly Services, Inc. • Sam Celly, BChE MChE JD • Certified Safety Professional • sam@cellyservices.com • (562) 716-6100 WHY CHOOSE US We provide specific solutions for dealerships through comprehensive site analysis, employee training, and newsletters. We are available online, onsite and on the phone to answer questions and solve problems. We provide perspective and experience that is unmatched in the industry. ABOUT CSI CSI is an employee-owned EHS consulting firm based in California with Certified Safety Professionals on staff. Today, we have hundreds of satisfied auto dealership clients in California, Arizona, Hawaii, Nevada, Idaho, Texas and Washington. WE HELP DEALERSHIPS NAVIGATE COMPLIANCE With over 35 years in the automotive EHS business, we understand compliance in California. From proactive management to oil rebates, we can help you stay ahead of ever-changing regulations and keep your employees safe.
Meet Assemblymember DAVID ALVAREZ Assemblymember David Alvarez was elected to the California State Assembly in June of 2022 to represent the 80th Assembly District in San Diego County. Assemblymember Alvarez is a small business owner and has served for 15 years in government, including eight years as a San Diego City Councilmember. A proud advocate of the underserved in San Diego, his previous successes include building parks, libraries, and fire stations in neighborhoods that did not have them. Assemblymember Alvarez is Chair of the Joint Legislative Audit Committee and serves on the following legislative committees: Aging and Long-Term Care, Business and Professions, Military and Veterans Affairs, Rules, Joint Legislative Audit Subcommittee on the Selection of the State Auditor, and the Select Committee on California-Mexico Bi-National Affairs. Assemblymember Alvarez is also a member of the CSG West Border Legislative Conference and the Colorado River Forum. During his brief time in office, Assemblymember Alvarez has supported historic investments in both K-12 and higher education, increasing childcare funding, economic relief for working families, and investments in housing and critical infrastructure improvements. He was able to secure $25 million in state funding for a new state-of-the-art Cinematic Arts Library in east Chula Vista which will include the expansion of San Diego State University’s Film School, bringing four-year and graduate degrees to South County and planning for a future university in Chula Vista. David was born and raised in Barrio Logan. David and his wife, Xochitl, a lifelong educator also from the area, are raising their daughter and son in the community they grew up in. He most recently volunteered on the boards of the Kim Center for Gender Equity, Camarada, the San Diego Coffee Training Institute, Circulate San Diego, and his children’s school PTA. 10 SAN DIEGO DEALER
Lance, Soll & Lunghard, LLP | CPAs & Advisors | lslcpas.com | (714) 672-0022 Brea Sacramento “We have a fantastic relationship with the LSL team. They keep our interests top of mind and maintain a positive reputation in the industry.” Santa Ana -Craig Whetter, President, David Wilson Automotive Group (relationship since 1983) Donald Slater, CPA Automotive Services Partner donald.slater@lslcpas.com Mike Mangold, CPA Automotive Services Partner mike.mangold@lslcpas.com David Myers, CPA Automotive Tax Partner dave.myers@lslcpas.com The Fisher Phillips Automotive Dealership Team has represented automobile and other vehicle dealers and dealer groups nationwide for over half a century. When you call us for advice, you instantly tap into decades of experience dealing with your industry and the resources of a firm exclusively devoted to labor and employment law. You won’t have to explain what F&I managers do or how service technicians are paid. Our long and close association with the retail automobile industry uniquely positions us to help you solve your employee problems with minimal disruption. Workplace Solutions for Employers 4747 Executive Drive, Suite 1000, San Diego, CA 92121 | 858.597.9600 fisherphillips.com NCDA.COM 11
Ask Alison By ALISON MCCALLUM EPIC Insurance Brokers and Consultants Are you sure your dealership is in compliance? Have you received an IRS 226J letter? IRS Penalties for ALEs (Applicable Large Group Employers) not offering Affordable Health Coverage. BACKGROUND As the IRS continues to actively enforce the employer shared responsibility payments and associated employer reporting requirements, we are reminded that the employer mandate under §4980H of the ACA (Affordable Care Act) remains in effect and requires compliance to avoid potential penalties. ALEs who fail to comply with §4980H offer of coverage requirements may face penalties for full-time employees who enroll in subsidized coverage through a public Exchange. Q:Is Your Dealership an ALE? A: Status as an ALE is determined based on data from the previous calendar year, regardless of the employer’s group health plan year. It doesn’t matter whether the employer exceeded 50 FTEs (Full-Time Eligible Employees) in any given month, but whether the employer averaged 50 or greater FTEs over all 12 months of the previous calendar year. Important to note if a Multi Dealership Group: When more than one entity is involved due to common ownership or shared services (e.g., a controlled group or affiliated service group under §414 rules), the entities must aggregate FTEs to determine the average for the previous calendar year. If the combined entities average 50 or greater FTEs (an “aggregated ALE group”), then each entity is an ALE, subject to §4980H offer of coverage requirements and §6056 employer reporting requirements for the following calendar year. Q:What Are the §4980H Offer of Coverage Requirements? A: The offer of coverage requirements for ALEs under §4980H are as follows: • §4980H(a) — ALEs must offer minimum essential coverage (MEC) to at least 95% (or all but five, if greater) of full-time employees and their dependent children each month. An offer of coverage is not required for spouses. • §4980H(b) — ALEs must offer coverage that provides minimum value AND is affordable to all full-time employees each month. There is not a 5% “margin of error” for §4980H(b) requirements like there is under §4980H(a). 12 SAN DIEGO DEALER
Penalty calculation = §4980H(b) penalty for each full-time employee who is not offered minimum-value, affordable coverage who enrolls through a public Exchange and qualifies for a premium tax credit. YEAR §4980H(A) §4980H(B) 2015 $2,080 ($173.33/mo.) $3,120 ($260/mo.) 2016 $2,160 ($180/mo.) $3,240 ($270/mo.) 2017 $2,260 ($188.33/mo.) $3,390 ($282.50/mo.) 2018 $2,320 ($193.33/mo.) $3,480 ($290/mo.) 2019 $2,500 ($208.33/mo.) $3,750 ($312.50/mo.) 2020 $2,570 ($214.16/mo.) $3,860 ($321.66/mo.) 2021 $2,700 ($225/mo.) $4,060 ($338.33/mo.) 2022 $2,750 ($229.16/mo.) $4,120 ($343.33/mo.) 2023 $2,880 ($240/mo.) $4,320 ($360/mo.) If you are not sure your dealership is in compliance and have concerns about penalties, fines, or have not had a compliance audit done in the last year, EPIC will perform a compliance audit at no cost to NCDA members. EPIC ranks among the top 15 retail insurance brokers in the United States and is the largest insurer of auto dealers in the state. Alison McCallum has been in the employee benefits industry for over 20 years and personally works with more than 60 Southern California Dealerships. She is a Principal with EPIC Insurance Brokers and Consultants, the only NCDA-licensed broker. With this partnership, EPIC offers unique services available to NCDA dealer members at no cost. If you have questions or would like further information, please feel free to contact her at (949) 417-9136 or alison.mccallum@epicbrokers.com. Q:How Do You Determine Affordability? A: Affordability is generally determined by applying the applicable affordability percentage, which changes yearly, to an individual’s household income. If the employee contribution for the lowest-cost minimum value plan for self-only coverage does not exceed the applicable affordability percentage of the employee’s household income, the coverage is affordable. However, because an employer will not typically know household income, the employer is protected from any potential penalties under §4980H(b) so long as the coverage is affordable under one of three safe harbors. Employers may use any of the affordability safe harbors for any reasonable category of employees, provided the safe harbor applies on a uniform and consistent basis for all employees in a category. The affordability safe harbors are as follows: • Federal poverty level (FPL) safe harbor: Employee contribution for single, minimum value coverage does not exceed the applicable affordability percentage of FPL for a single individual. • Rate of pay safe harbor: Employee contribution for single, minimum value does not exceed the applicable affordability percentage of hourly rate x 130 (or monthly salary). • Form W-2 safe harbor: Employee contribution for single, minimum value coverage does not exceed the applicable affordability percentage of the employee’s Box 1 wages. Q:How Much Are the §4980H Penalties (Employer Shared Responsibility Payments)? A: §4980H(a) — If the employer fails to offer MEC to at least 95% (or all but five, if greater) of full-time employees, a penalty will apply if any full-time employee enrolls through a public Exchange and qualifies for a premium tax credit. The penalty is multiplied by the total full-time employee count minus the first 30, regardless of how many employees were offered coverage. Penalty calculation = (full-time employee count – 30) * §4980H(a) penalty. §4980H(b) — If the employer satisfies §4980H(a) requirements, they may still owe a penalty for any full-time employee who is not offered minimum-value, affordable coverage if that employee enrolls through a public Exchange and qualifies for a premium tax credit. This penalty applies on a per-employee basis rather than against the total full-time employee count. NCDA.COM 13
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. Bob Ludwig robert.ludwig@bofa.com 949.287.0635 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 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. Bob Ludwig robert.ludwig@bofa.com 949.287.0635 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
While there are many considerations in running a thriving dealership, one of the most important — and often overlooked — is developing and maintaining a succession plan. A strategy that allows for the transfer of ownership to the next round of leaders — whether family members, a trusted partner or an outside buyer — will position you and your business for future success. WHY NOW? Having a succession plan is important for many reasons; however, in today’s environment, there are three crucial reasons that rise above the rest: 1. There’s a lot of buy/sell activity in the industry and accelerated consolidation. If your long-term plan is to exit the industry, you should consider the current market valuations and buyer interest. 2. The U.S. is on the verge of material changes in tax laws that could affect your finances and the value of your business if passed on to future generations. The estate and gift tax exemption, currently at a historic high of $12.06 million per person or $24.12 million per married couple, will drop by half in 2026 when the current tax law lapses. It could drop even faster if Congress passes a new law before 2026. Succession Planning For Dealers in an Evolving Business Environment By BANK OF AMERICA CORPORATION 3. The market, labor costs, supply chains and other factors influencing dealerships continue to fluctuate. As the pandemic brought home to us, every business needs a plan in place in case top leadership can’t run day-to-day operations. CONSIDER YOUR PRIORITIES To begin the succession planning process, you need to identify your goals. Perhaps you’d like to sell — to family, management or a third party — to generate liquidity. You may also want to maintain some level of control of the business, particularly during a transition, if you’re gifting or selling the business to family members or selling to trusted employees. Or, you may want to step away completely and allow a third party to take over. In addition to identifying your goals, it’s important to consider how your decision will affect employees and the community to assess whether your actions align with your goals. Finally, you’ll want to consider the financial implications of your decision, whether it’s reducing the amount of taxes you pay or generating liquidity for future needs. IDENTIFY KEY PLAYERS One of the most critical succession planning decisions is determining the organization’s future leadership. While it can be difficult and NCDA.COM 15
emotional to talk with family and key managers about the future, it’s an essential piece of the process. An honest talk about your goals and theirs will help clarify your options and develop a more realistic succession plan. Facilitating the process will be two crucial teams: internal and external. Your internal team will consist of key family members, senior dealership managers, your banker, lawyer and accountant. Your external team will consist of advisors who think broadly and are strategic and defensive, like a transition attorney, estate lawyer, investment bank and appraiser or auditor. MAXIMIZE THE VALUE OF YOUR DEALERSHIP Once your team is in place, you’ll want to get your documents in order. These include: 1. Financial and business information: You should pull out your business’s financial statements and consider conducting an audit if you plan to sell the dealership. An audited statement is a more powerful statement to share with a prospective buyer. 2. Updated appraisal: An appraisal will compare your business to other dealerships, their gross margins and growth rate. Key metrics are important, whether you’re selling or benchmarking the success of your business for future managers. 3. Strategic plan: It’s an excellent time to create or update the strategic plan for your dealership. It will help you look at your dealership in the context of how the industry is changing and evolving. Opportune times to update your strategic plan include any time you experience changes in your family situation or senior management team. Initiating a succession plan can be emotional, and the process will take time. However, once you get started, you’ll find relief in clarifying your goals, understanding the intent of your family and senior managers and creating strategies that maximize the value of your business and legacy. © 2023 Bank of America Corporation One of the most critical succession planning decisions is determining the organization’s future leadership. EPIC is proud of its partnership with more than 300 California dealerships and is the CNCDA’s only licensed broker for Health Insurance and Workers’ Compensation. As the dealers’ consultant, experience what EPIC can do for you today, including: • A team producing real results and decades of experience with dealerships and their specific needs • Proprietary Workers’ Compensation and specific insurance products tailored for dealerships • Full compliance, along with audit and claims management EPICBROKERS.COM ©2023 Edgewood Partners Insurance Center. All rights reserved. | CA License: 0B29370 LEARN MORE ABOUT OUR SERVICES BY CONTACTING: Alison McCallum (949) 422-6431 alison.mccallum@epicbrokers.com Eric Kitei (949) 228-2779 eric.kitei@epicbrokers.com 16 SAN DIEGO DEALER
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FIRST-AID KITS: Regulations & Good Practice By CELLY SERVICES, INC. (CSI) Background: On Oct. 15, 2022, the American National Safety Institute (ANSI) specifications for First-Aid kits changed. (This article discusses the changes to the ANSI specifications for first-aid kits.) Both California and Federal regulations mandate employers ensure ready and adequate availability of first-aid supplies. The regulations differ, and we discuss the differences here. CAL/OSHA: California regulations mandate that a first-aid kit approved by a consulting physician be available on the premises for every working person on the job. A consulting physician is a medical doctor who is well versed with dealership operations and has knowledge of typical hazards and accidents on the job (Ref: T8CCR3400 (a) and (b) and (c)). Fed-OSHA: Regulations state that an employer must have “adequate first-aid supplies … readily available,” although specific first-aid supplies are not listed. Fed OSHA has referred employers to ANSI as the source of guidance for the minimum requirements for first aid kits and supplies; it does so in Appendix A to 1910.151. On April 15, 2022, ANSI approved ANSI/ISEA Z308. 1-2021, effective Oct. 15, 2022, the sixth revision to the voluntary industry consensus standard since its inception in 1978 (Ref: 29CFR1910.151(b)). New requirements for both Class A and Class B First Aid kits include more hand sanitizer (thanks to COVID-19) and a foil blanket since it serves multiple purposes, such as emergency waterproofer, windbreaking wrap, and treating hypothermia. Additionally, Class B kits now require specific types of tourniquets to prevent blood loss, distinct from those used for drawing blood. Splints are also a requirement for Class B kits. Employers may adopt the ANSI standard or request their local occupational injury clinic to provide a list of items for the first-aid kit. They should, however, be selected only upon completion of a hazard assessment of the work environment by a person competent in first-aid and knowledgeable of the hazards specific to that workplace. Hazard assessment involves reviewing workplace hazards, typical injuries that have occurred (see Log 300) or could occur at the workplace, and the availability of the supplies necessary to respond to those injuries. Risk assessment includes looking at Bureau of Labor Statistics (BLS) or OSHA injury data. The physician at the local clinic responding to occupational injuries can also be a source of guidance. 18 SAN DIEGO DEALER
CLASS A VS. CLASS B Class A kits have contents capable of responding to most common workplace injuries, including minor burns and eye injuries. Class B kits treat injuries in densely populated areas and high-risk environment workplaces such as factories, foundries, and warehouses. ANSI Standard Class A: Required Min. Fill Z308.1‑2021 (eff. Oct. 15, 2022) 16 Adhesive Bandage 1x3 in. 1 Adhesive Tape 2.5 yd. (Total) 10 Antibiotic Application 1/57 oz. 10 Antiseptic 1/57 oz. 1 Breathing Barrier 1 Burn Dressing (Gel Soaked) 4x4 in. 10 Burn Treatment 1/32 oz. 1 Cold Pack 4x5 in. 2 Eye Covering w/Means of Attachment 2.9 sq. in. 1 Eye/Skin Wash 1 fl. oz. (Total) 1 First-Aid Guide 10 Hand Sanitizer 1/32 oz. (increased as of Oct. 2022) 2 Medical Exam Gloves 1 Roller Bandage 2 in. x 4 yd. 1 Scissor 2 Sterile Pads 3x3 in. 2 Trauma Pads 5x9 in. 1 Triangle Bandage 40x40x56 in. 1 Foil Blanket 52x84 in (added as of Oct. 2022) ANSI Standard Class B: The Type B kit has a Splint and Tourniquet added to the list above, with an increased number of supplies listed for Type A. Type of First-Aid Kit Containers • Type I containers are used in stationary indoor settings. No rough handling. • Type II containers are used in portable indoor settings. No rough handling. • Type III containers are used for mobile, indoor/outdoor settings. • Type IV containers are used for portable use in outdoor settings where rough handling is a factor. Commentary: Management should make prudent decisions on the number and location of the first-aid kits. While the regulations are silent on the number of kits, employers must consider whether multiple kits are needed based on facility layout, number of employees and access to the kits during the work day. Distance from the clinic must also be part of the decision-making process. Get at least one kit for every 40 employees. First, keep in mind that all areas of employment should have access to kits. For example, if one department is open on a Saturday, a kit must be available to employees in that area. Secondly, these kits are subject to pilferage and abuse. To avoid pilferage, the first-aid kit may be placed in the office or the open view of the manager. If an employee is observed using multiple bandages more often than others, the employee can be counseled on safety and proper work procedure to avoid slicing his/her hand multiple times a day! Ensure access is not compromised, i.e., kits must remain completely accessible when employees are present. • Inspect and refill First-Aid kits monthly. • Keep a written log. Discard expired items promptly. • Disinfect cabinet surfaces frequently. • Ensure labeling and markings are legible and permanent. • Check that each kit and its location are visibly marked. • Place signs at a conspicuous location that indicate the locations of First-Aid kits on site. Conclusion: First-Aid kits will help reduce the severity of an injury. However, proper use of tourniquets and splints would require medical knowledge such as that from an MD or RN, which may not be available at most places of employment. An employee certified in first-aid may be an option. Employers who choose not to have first-aid kits violate the law and risk losing productive time when employees must rush to the local drug store for a bandage every time they incur an injury. Note: Ref: Information from www.osha.gov and www.dir.ca.gov were used to prepare this newsletter. DISCLAIMER: The contents of this newsletter are for informational purposes only and are not considered legal advice. Employers must consult their lawyer for legal matters and EPA/OSHA consultants for environmental, Health & Safety. The article was authored by Sam Celly of Celly Services, Inc., who has been helping automobile dealers in Arizona, California, Hawaii, Idaho, Nevada, New Mexico, New York, Texas, and Virginia comply with EPA and OSHA regulations for over 35 years. Sam is a Certified Safety Professional (No. 16515) certified by the National Board of Certified Safety Professionals. Sam received his BE (1984) and MS (1986) in Chemical Engineering, followed by a J.D. from Southwestern University School of Law (1997). Sam is a member of the American Chemical Society (No. 31176063), American Industrial Hygiene Association (No. 124715), and National Association of Dealer Counsel (NADC). Sam also serves on the Board of the Orange County American Industrial Hygiene Association and CA Industrial Hygiene Council (CIHC). Our newsletters can be accessed at www.epaoshablog.com. Your comments/ questions are always welcome. Please send them to sam@cellyservices.com. NCDA.COM 19
SAVE THE DATE NCDA Golf Tournament + Annual Meeting & Luncheon Monday, June 12, 2023 MADERAS GOLF CLUB 17750 OLD COACH ROAD POWAY, CA 92064 20 SAN DIEGO DEALER
CALIFORNIA CHANGES COVID-19 ISOLATION REQUIREMENTS California public health officials just issued updated COVID‑19 isolation guidance that, at first blush, seems to smooth the way for simpler workplace compliance obligations. But the Department of Public Health’s (CDPH) guidance, released March 3 and clarified through a series of FAQs updated, doesn’t completely change the way you should implement the new Cal/OSHA non-emergency COVID‑19 regulation at your workplace. While the first change that eliminates the testing requirement for those returning to work after five days will apply to your workplace, a second change related to potential shorter mask-wearing for such individuals will not impact the Cal/OSHA rules — for now. What do you need to know about the changes and what should you do? THE DETAILS AND TIMING By now, California employers are likely used to the ongoing saga of changing COVID-19 guidance issued by the state and how it impacts their operations. The most recent significant news of note occurred last month when the new Cal/OSHA COVID-19 regulation was approved and officially took effect. The rollercoaster continued on March 3 when CDPH issued a new updated Guidance on Isolation and Quarantine and a related updated State Public Health Officer Order. These new changes and documents went into effect on March 13. Employers had hoped that the February COVID-19 regulation would put an end to the constant shifts in the guidance they have endured the past three years. After all, unlike the ETS of years past, the nonemergency regulation is in effect until 2025. But there’s mixed news with this latest guidance. In an attempt to stay current with guidance, some — but not all — of the provisions of the non-emergency standard are written automatically to align with whatever the current CDPH guidance is at the time. Unfortunately, that automatic alignment only applies to one of the two changes announced by CDPH on March 3. WHAT’S CHANGING? AND DOES IT APPLY TO WORKPLACES? The updated CDPH guidance makes two changes to isolation requirements for individuals with COVID-19: 1. No More Testing Requirement at Day 5 for COVID‑19 Cases First, the CDPH guidance now eliminates the testing obligation that previously required a COVID-19 to test negative on Day 5 in order to leave isolation. The new guidance is now in line with federal CDC recommendations and provides that isolation can end after Day 5 if: • Symptoms are not present, or are mild and improving; AND • The individual is fever-free for 24 hours (without the use of fever-reducing medication). What Do Employers Need to Know? By BENJAMIN M. EBBINK, Partner, and ABBY HARRINGTON PUTZULU, Associate, Fisher Phillips 22 SAN DIEGO DEALER
Because this change is reflected as a change to the definition of “infectious period,” it automatically applies to the workplaces and the new Cal/OSHA non-emergency COVID-19 regulation. That’s because the new regulation definition of “infectious period” states that it applies “unless otherwise defined by CDPH regulation or order, in which case the CDPH definition shall apply.” Therefore, the new definition automatically applies to the Cal/OSHA regulation without any additional action necessary. The bottom line for employers is that if you have an employee who is excluded from work as a COVID-19 case, they now may return after Day 5 without a negative test as long as they are symptom-free (or any symptoms are mild and improving) and they are fever-free for 24 hours. 2. Reduced Masking with Two Sequential Negative Tests The second major change made by the updated guidance relates to face-covering requirements for COVID-19 cases. Under the previous guidance, those returning from COVID-19 isolation had to wear face coverings around others for 10 days. However, CDPH now says that they may remove their mask sooner than Day 10 after ending isolation if they have two sequential negative tests at least one day apart. (Close contacts must still wear face coverings for 10 days.) However, this change will not automatically apply to workplaces as they comply with the Cal/OSHA non-emergency COVID-19 regulation. That’s because the 10-day face-covering requirement is specifically written into the Cal/OSHA regulation without qualifying language that it will change with any changes made by CDPH. It would only apply to workplaces if it is formally amended by the Cal/OSHA Standards Board or the Governor takes some other form of extraordinary action. Cal/OSHA confirmed this with updates to their FAQs issued on March 13. Table 1 of the exclusion requirements for COVID-19 cases maintains the 10-day face-covering requirement with no reference to the CDPH guidance permitting reduced masking with two sequential negative tests. Therefore, employers should continue to require COVID-19 cases that return to the workplace to wear face coverings for a full 10 days until further notice. NEXT STEPS Effective March 13, California employers can allow COVID-19 cases to return to work after Day 5 without a negative test as long as they are symptom-free (or any symptoms are mild and improving) and they are fever-free for 24 hours. However, despite other changes to the CDPH guidance, California employers should continue to require such employees to wear masks for a full 10 days (until further notice). ARE YOU IN COMPLIANCE? If you feel behind, don’t worry — Fisher Phillips can help. Fisher Phillips has prepared a completely new compliance packet for this new regulation, which includes everything you need to implement and comply with the new standard — including sample written IIPP procedures, template notices and other documentation, and training materials. If you are a current firm client, please contact your Fisher Phillips attorney to purchase the compliance packet. If you are not a firm client, you can email your purchase request to CalOSHAPackets@fisherphillips.com. CONCLUSION Make sure you are subscribed to Fisher Phillips’ Insight System to get the most up-to-date information. Fisher Phillips continues to monitor the rapidly developing COVID-19 situation and will provide updates as appropriate. If you have further questions on how to comply, contact your Fisher Phillips attorney, the authors of this Insight, or any attorney in any one of our six California offices. The Fisher Phillips Automotive Dealership Team has represented automobile and other vehicle dealers and dealer groups nationwide for over half a century. When you call us for advice, you instantly tap into decades of experience dealing with your industry and the resources of a firm exclusively devoted to labor and employment law. Our long and close association with the retail automobile industry uniquely positions us to help you solve your employee problems with minimal disruption. Call us today at 858.597.9600. NCDA.COM 23
129,282 145,998 131,911 138,300 2020 Actual 2021 Actual 2022 Actual 2023 Forecast Covering First Quarter 2023 Released April 2023 San Diego Auto Outlook Comprehensive information on the San Diego County new vehicle market Market Summary YTD '22 YTD '23 % Chg. Mkt. Share March March '22 to '23 YTD '23 TOTAL 33,813 33,984 0.5% Car 9,859 9,586 -2.8% 28.2% Light Truck 23,954 24,398 1.9% 71.8% Domestic 10,942 12,037 10.0% 35.4% European 5,288 5,222 -1.2% 15.4% Japanese 14,474 13,299 -8.1% 39.1% Korean 3,109 3,426 10.2% 10.1% Forecast for County New Retail Light Vehicle Registrations DOWN 9.3% vs. ‘19 UP 12.9% vs. ‘20 DOWN 9.6% vs. ‘21 UP 4.8% vs. ‘22 Domestics consist of vehicles sold by GM, Ford, Stellantis (excluding Alfa Romeo and FIAT), Tesla, Rivian, and Lucid. Data sourced from Experian Automotive. The graph above shows annual new retail light vehicle registrations from 2020 through 2022 and Auto Outlook’s baseline projection for 2023. Historical data sourced from Experian Automotive. Below is a review of key trends in the San Diego County new vehicle market. Results during 1Q 2023 County new light vehicle registrations increased by less than 1% during the first three months of 2023 vs. weak year-earlier levels. National retail market fell 1.0%. As shown on page 2, equivalent U.S. SAAR levels stayed below 15 million units, an indicator that county new vehicle sales remained subdued. 2023 Forecast According to the baseline forecast, registrations are expected to exceed 138,000 units this year, a 7% improvement from 2022. See sidebar to right for alternative upside and downside projections. Registrations are predicted to increase 7.3% from April thru December of this year versus the same period in 2022. Key determinants for the market During the past three years, the new vehicle market has been impacted by a series of speed bumps that have put the brakes on sales. The pandemic, supply chain issues, depleted inventories, rising interest rates, weakening consumer affordability, and concern over the banking system have pushed sales below trend levels. Despite this lengthy list, primary factors driving the market during 2023 are fairly evident. Following three years of below average sales, pent-up demand is at elevated levels as the volume of postponed purchases continues to grow. Weakening consumer affordability will hold back the release of pent-up demand, but improving vehicle inventories should be sufficient to push sales above current levels. Battery Electric Vehicle sales gains BEV market share in the county increased to 20.5% in the First Quarter of 2023, up from 14.2% a year earlier. Franchised dealership share of the BEV market improved by 13.4 share points so far this year (see page 4). Light truck sales There are signs that the climb in light truck market share could be reaching its peak. Light trucks (consisting of SUVs, pickups, and vans) accounted for 39.8% of the market in 2012, and increased to 70.9% last year. In the First Quarter of 2023, however, light truck share was up just one point versus year earlier. Brands that fared best in early 2023 Among the top 25 sellers in the county market, Chevrolet, Volvo, Hyundai, Tesla, and Land Rover had the largest percentage gains in the First Quarter of this year. Toyota, Tesla, Honda, Ford, and Chevrolet were market leaders. Top selling models in San Diego County Tesla Model Y, Tesla Model 3, Toyota RAV4, Toyota Tacoma, Honda Civic, Ford F-Series, Honda Accord, Chevrolet Silverado, Toyota Corolla, and Toyota Camry were the top 10 sellers so far this year. County economic conditions Total employment in the county was 1.55 million, just above pre-pandemic levels. Unemployment rate was 3.7% (see page 3). NEW VEHICLE MARKET FORECAST County Market Predicted to Increase 7.3% for Remainder of 2023 Outlook for San Diego County New Retail Light Vehicle Market Baseline scenario: 138,300 up 7.0% vs. ‘22 Alternative upside: 145,800 up 10.5% vs. ‘22 Alternative downside: 131,800 down 0.1% vs. ‘22 2023 Annual Forecast 24 SAN DIEGO DEALER
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