WINTER 2022 SAN DIEGO DRIVES Gives San Diego New Car Dealers an Edge OFF ICIAL PUBL ICAT ION OF THE NEW CAR DEALERS ASSOCIAT ION SAN DI EGO 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.
NCDA STAFF DEAN MANSF I ELD PRES I DENT SCOT T WEBB D I REC TOR OF MARKE T I NG AND OPERAT I ONS D I ANA S I LVA ACCOUNT I NG AND ADMI N I STRAT I ON MANAGER CLAUD I A OLVERA MEE T I NG AND FAC I L I T I ES COORD I NATOR ROBERT HE I NTZ CAL I FORN I A SALES TRA I N I NG ACADEMY I NSTRUC TOR © 2022 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. CHAIRMAN RON FORNACA . . . . . . . . . . . . . . . . . . . . . . . . . D I STR I C T 6 VICE CHAIRMAN DAVE MCCRACKEN . . . . . . . . . . . . . . . . . . .D I STR I C T 3 SECRETARY/TREASURER JOHN SEGAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . D I STR I C T 3 PAST CHAIRMAN V I NCENT CASTRO. . . . . . . . . . . . . . . . . . . . D I STR I C T 2 BOARD MEMBERS CHR I S BAKER…. . . . . . . . . . . . . . . . . . . . . . . . D I STR I C T 1 J EN I FER BAL L…. . . . . . . . . . . . . . . . . . . . . . . D I STR I C T 6 MAT T CRANDAL L…. . . . . . . . . . . . . . . . . D I STR I C T 2 PAUL DYKE…. . . . . . . . . . . . . . . . . . . . . . . . . . . D I STR I C T 4 CHR I S GEORGE . . . . . . . . . . . . . . . . . . . . . . . . .D I STR I C T 4 SCOT T K I EFNER…. . . . . . . . . . . . . . . . . . . . D I STR I C T 2 JASON MOSSY…. . . . . . . . . . . . . . . . . . . . . . D I STR I C T 5 ER I C TRACY. . . . . .…. . . . . . . . . . . . . . . . . . . . . D I STR I C T 1 JUST I N TRUE . . . . . . . . . . . . . . . . . . . . . . . .….D I STR I C T 5 Contents 10065 Mesa Ridge Court San Diego, CA 92121-2916 Tel: (858) 550-0080 Fax: (858) 550-9537 ncda.com 2 Two San Diego Dealerships Named Best Dealership to Work For 4 MarCom Award 6 SAN DIEGO DRIVES Gives San Diego New Car Dealers an Edge 10 Over-Sharing in the Workplace? Why Your Company May Need a TikTok and BeReal Policy Fisher Phillips 14 New Laws in the Works for Vehicle Data Access Christian Scali and Janae L. Hill Scali Rasmussen 16 2023 NADA Show 18 Refrigerant Recycling Requirements for Motor Vehicles Under Clean Air Act (CAA) Sam Celly, BChE, MChS, JD, Certified Safety Professional, Celly Services, Inc. 22 San Diego Auto Outlook 2nd Quarter 2022 14 18 PUBLICATION 11 2022-2023 | ISSUE 1 NCDA.COM 1
Two San Diego Dealers Named BEST DEALERSHIPS TO WORK FOR Automotive News recently announced its annual list of the 100 best dealerships to work for, and two Kearny Mesa dealers made the list. Coming in at number 16 is Volkswagen of Kearny Mesa (Steven Taylor, GM), with Kearny Mesa Toyota (Gary Palmer, GM) landing at number 28. Congratulations to both dealerships on their accomplishments! 2 SAN DIEGO DEALER
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Congratulat ons NCDA! 2022 Ma Com Aw rds Winner! Since its inception in 2004, MarCom Awards has evolved into one of the largest, most-respected creative competitions in the world. This year, there were over 6,000 entries from throughout the United States, Canada, and over 43 other countries in the competition. MarCom Awards is an international creative competition that recognizes outstanding achievements by marketing and communication professionals and recognizes the creativity, hard work, and generosity of industry professionals. Being a Gold Winner is a tremendous achievement symbolized by the intricately detailed MarCom statuette. The MarCom graces the trophy cases of some of the top business and communication firms in the world. MarCom’s Gold Award Award is presented to those entries judged to be among the most outstanding entries in the competition. Gold Winners are recognized for their excellence in terms of quality, creativity, and resourcefulness. To view this year’s winners, please scan the QR code. http://enter.marcomawards.com/ winners/#/gold/2022 We are very pleased to announce that the New Car Dealers Association San Diego county was awarded the MarCom Gold for print media.
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/CALIFORNIA
After almost two years of brainstorming between the leadership teams of the New Car Dealers Association San Diego County and The San Diego Union-Tribune, San Diego DRIVES launched just over six months ago, creating an exciting new digital platform that transformed how San Diego new car dealers could buy used cars from private parties and sell new and used vehicles to retail customers. This new platform, available only to NCDA members, was built to enable San Diego County’s new car dealers collectively to capture a much larger percentage of private party vehicle acquisitions and make it effortless for consumers to search new and pre-owned vehicle inventories. On the vehicle acquisition front, San Diego DRIVES appeals to consumers as a trusted single point of contact to reach many dealers at once: “Why go to just one dealer when up to 100 can compete to give you the best offer?” Consumers post their vehicles on the platform, providing photos and vehicle data that enable participating dealers to make informed decisions and submit offers. Within 24 hours, consumers are provided the best offer and are connected directly with the “winning” dealer to transact should the offer be accepted. In the eyes of a consumer, this provides a significant competitive advantage over traditional and online used car retailers, which are limited to just a single offer each. As for selling new and pre-owned inventory, San Diego DRIVES aggregates new and pre-owned inventory from each participating new car dealer in San Diego County, providing one-stop shopping for car buyers. Clicks on dealer listings go directly to the dealer’s website, with a UTM code to facilitate attribution, so there’s no middleman manipulating leads. The site will automatically update available inventory from dealer sites on a daily basis. As a valuable member benefit, NCDA members can join the platform for FREE; there are no subscription fees, and dealers only pay a flat $300 for each vehicle purchased using the platform. During those first six months, the San Diego DRIVES platform has achieved some notable results. INSIDE THE NUMBERS In the first six months, 82 local dealerships have opted-in to have their new and used inventory syndicated and hosted on the San Diego Drives platform, where consumers can shop for a car in one convenient location. WEBSITE TRAFFIC Since the launch of the platform and through the strategic marketing efforts of both teams, 242,747 new users have visited San Diego Drives. Equally impressive, the platform’s bounce rate is an exceptional 22.74%. As you all know, this is a leading indicator that our marketing and targeting efforts are strategically placed to “auto intenders” and that the user experience is easy to navigate on all devices. See Google Analytics Snapshot: SAN DIEGO DRIVES Gives San Diego New Car Dealers an Edge 6 SAN DIEGO DEALER
Image A: Image B: Image C: Continued on page 9 Of the 242,747 visitors to the platform, our participating dealers’ inventory has appeared in 2,487,559 search impressions on the platform. This has translated to 6,715 visitors to the VDP pages of our participating dealers’ websites. The platform is built with full transparency, with each car having a UTM, or Urchin Tracking Module, a simple code that is attached to the URL to generate Google Analytics data. This allows our local dealers to see the traffic and post-click attribution in their own Google Analytics accounts. This is automatically included with each car in our feed as part of the service. AUCTION NUMBERS & FEEDBACK In our private auction for NCDA members, 305 cars have been submitted by local residents for our dealerships to bid on. Of these 305 cars submitted, we have had over 712 bids on the platform, and 56 cars have been purchased. Feedback from consumers has been quite positive, with numerous users reaching out and sharing how thankful they are that we offer this as a community service. The consensus is that it is simple and convenient to post their car and simplifies the process without having to drive all over town to field offers. MARKETING STRATEGY The San Diego DRIVES marketing plan leverages the established resource of SanDiegoUnionTribune.com, the largest local news website in San Diego County, with over four million unique users every month. In addition, the San Diego DRIVES marketing budget includes an estimated $100,000 per month in media, with the following assets driving traffic for our local San Diego County dealers. See details and strategy below. 1. Local television. See image A. 2. Local radio See image B. 3. Streaming audio (Pandora, Spotify, iheart) See image B. 4. Connected Streaming Television. See image A. 5. Programmatic digital (Behaviorally targeted to auto intenders in San Diego) 6. Search Engine Marketing and Search Engine Optimization. 7. Social channels. 8. Email and newsletters 9. Print (Weekly advertisements in San Diego Union-Tribune, and Direct Mail). 10. Premium placements on SanDiegoUnionTribune.com, are not available through programmatic efforts. See Image C. NCDA.COM 7
Photos are vehicles purchased by San Diego County new car dealers using the San Diego DRIVES platform. 8 SAN DIEGO DEALER
Continued from page 7 Considine & Considine is a full service public accounting firm offering professional and personalized services to business and professional practice owners in the areas of audit, taxation, accounting, estate and retirement planning. Philip Smith, CPA Considine & Considine 8989 Rio San Diego Drive, Suite 250 San Diego, CA 92108 619-231-1977 x103 www.cccpa.com prs@cccpa.com Let us help guide your business development. ORGANIC SEO Organic SEO results have been impressive in the short period of time since launching at the end of April. The SEO results can be attributed to our platform being associated with The San Diego Union-Tribune’s authority in the Google Algorithm. This is more keyword optimizing to come, but the team is excited for this early success that will ultimately benefit the San Diego dealers. • Sell My Car at Auction San Diego, Page 1, Position 3 • New Cars for Sale in San Diego, Page 1, Position 9 • New 2022 Cars for Sale San Diego, Page 1, Position 2 • New SUVs for Sale San Diego, Page 1, Position 9 • Best Dealerships in San Diego, Page 1, Position 5 • 2022 Pickups for Sale San Diego, Page 1, Position 2 • New 2022 SUVs for Sale San Diego, Page 1, Position 3 • San Diego Car News, Page 1, Position 1 • New 2023 SUVs for Sale San Diego, Page 1, Position 1 How can our members participate on the platform? Auction: There’s no charge for NCDA dealers to shop and bid on cars in private auctions. Dealers only pay a $300 transaction fee if you are the winning bidder and you and the seller complete the transaction after the inspection. No sale, no fee to you. To register for bidding, call the San Diego DRIVES customer service team at 619-674-7652 or email drives@sandiegouniontribune.com. They will issue you a private username and password to log in and bid. Inventory: New and used Inventory is hosted on the platform for the community to shop at no charge. This is a member benefit from NCDA to our members. To have your new and pre-owned inventory appear on San Diego DRIVES, simply opt-in by filling out a simple form at https://www.sandiegouniontribune.com/ sdtncdadealeroptin. If you have questions, call the San Diego DRIVES customer service team at 619-674-7652 or email them at drives@sandiegouniontribune.com. Advertising: To increase the traffic of leads to your VDP pages, email, phone and/or foot traffic, over and above the organic traffic from the platform, San Diego DRIVES now offers two options: 1. AUTOMOTIVE BRAND SPONSORSHIP Only two dealers are able to sponsor per brand. • Your digital ad units will have premium placement, adjacent to the brand/make search you are sponsoring • Your organic inventory will be featured and prioritized to the top of search results over other dealerships. 50,000/MONTH IMPRESSIONS GUARANTEED ON THE PLATFORM, INCLUDING: • Premium placement on SanDiegoUnionTribune.com, behaviorally targeted for auto intenders, sports, business + geo targeting by ZIP code. • Your inventory featured on special Home Page inventory placements. 2. FEATURED DEALERSHIP POSITION • Your dealership will be promoted as ‘featured dealership’ on the homepage of the platform. • 25,000 impressions guaranteed on the platform, including SanDiegoUnionTribune.com, behaviorally targeted for auto intenders, sports, business + geo targeting by ZIP code. With any questions, reach out to Howard Kurtz at howard.kurtz@sduniontribune.com or 619-293-1431, or our customer service team at San Diego Drives at 619-674-7652, or email drives@sandiegouniontribune.com. NCDA.COM 9
By now, many of us have seen a TikTok video filmed at someone’s workplace – a “day in the life” video, someone complaining about their coworkers, supervisors, or customers, or someone talking about an unrelated subject while at the office. And a relatively new platform, BeReal, goes a step further by encouraging users to provide an unfiltered view into their “real” everyday life at random moments throughout the day. Of course, such organic social media clips can be a valuable tool that helps market your brand and build stronger employee relationships – but where do you draw the line? These posts might include employees performing their duties during a meeting with co-workers or at a workstation, which raises privacy and confidentiality concerns. Moreover, employees flocking to social media to discuss their bosses and general work experiences – positive or negative – could lead to other troubles. When these videos go viral, employees may become unofficial spokespersons for your organizations, influencing the conversation about work norms and creating trends that impact employers globally. With these changing dynamics, you may want to set new guidelines for social media use while ensuring your policies don’t run afoul of employment and labor laws. Here are four tips for updating your social media policies to reflect this modern era and stay on top of the latest developments. 1. Ensure Policies Reflect Recent Trends In the early days of widespread social media use, your policies may have simply prohibited employees from using company equipment to post non-work-related content online and required work posts to be business appropriate. But social media use is rapidly evolving in new ways that you may not have anticipated when your policies were first drafted. What should you know about current trends as you consider policy changes? For one thing, TikTok has quickly grown in popularity over the past two years with more than a billion monthly active users – which means your employees are likely using the platform and are probably doing so during work hours. The app allows users to upload videos from five seconds to 10 minutes. TikTok then filters videos through their feed using an algorithm and shares them with other users. These videos may receive millions of views, comments, likes, and shares. While TikTok is popular, it’s obviously not the only platform featuring employees on the job. Unlike TikTok – where users are hoping to go viral – the BeReal app takes a less sensational approach. BeReal doesn’t have filters, hashtags, or even followers. To view someone’s BeReal, you have to request to be their friend. The app encourages users to provide an unfiltered view into their “real” everyday life. Each day at a different time, the app simultaneously notifies all users to “BeReal” and share a photo within two minutes, regardless of their location. The camera on the app will then take a photo of the user with the front-facing camera while also taking a photo on the back camera, creating a BeReal snapshot to share with friends. This app can be potentially problematic for employers. Many times, BeReal alerts occur during work hours, so users end up taking pictures of their workplace or work area. Because BeReal is shared among friends, the app may create a sense of safety, and users might forget to censor confidential information. Moreover, while BeReal doesn’t have the same “viral” nature as TikTok, that doesn’t stop users from sharing their posts beyond the app on other platforms. Over-Sharing in the Workplace? Why Your Company May Need a TikTok and BeReal Policy By Fisher Phillips 10 SAN DIEGO DEALER
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 This trend illustrates that the new generation of workers values the transparency these apps provide, with many not considering that their candid photos may also reveal company information. 2. Strike a Balance Before you decide to curb all TikTok and BeReal posts from the workplace, you should recognize that such posts can pay dividends. Employees who are active on social media may be more equipped to understand the social pulse of the company’s customer base. Additionally, allowing employees to contribute to companysponsored social media posts shows that the company trusts them, which can increase confidence and make employees feel valued. Furthermore, social media networking may help employees collaborate, share ideas, and solve problems. This can lead to better employee engagement and retention. Moreover, utilizing social media in the workplace can make the company more desirable to potential applicants, particularly Gen Z and millennial job seekers. Social media is here to stay, and employers should recognize that policies barring all forms of social media use in the workplace may be unrealistic. In fact, about 72% of respondents to a 2021 Pew Research Center survey said they use some form of social media and 77% of respondents to an earlier survey reported using social media regardless of whether their employer had a policy in place. While not every company can allow on-the-job posts, those with flexibility might want to dedicate resources to creating a mutually beneficial, collaborative policy around social media use in the workplace. For example, allowing employees to share their experiences with your company through social media may promote transparency and provide job seekers with credible information on what it’s really like to work for your business. 3. Address the Potential Pitfalls While employers may benefit from employees’ on-the-job social media posts, you should address potential dangers, including legal and business concerns. Of the many legal concerns, the most glaring are privacy protections and confidentiality. As employees capture authentic moments during the workday for BeReal or post TikTok “day in the life” videos, they frequently walk around the workplace, recording If you already have a solid employee handbook, a good place to start is by reminding employees that your existing policies still apply when using social media platforms. Continued on page 12 NCDA.COM 11
offices, conference rooms, common spaces, the cafeteria, and more. The videos may inadvertently capture confidential information, such as audio of an internal meeting, the image of a client’s name, or a trade secret. Confidentiality issues also arise with employees who work remotely. For example, employees may take a video of their innovative at-home workspace while a Zoommeeting is in progress or while their computer screen displays proprietary information. You should also be cognizant of how allowing employees to post on the job can potentially harm your organization’s reputation. TikTok and BeReal attract users who want to be authentic rather than staged, heavily filtered, or otherwise unauthentic. Thus, employees who choose to post on these platforms do not shy away from capturing the “realness” of their job. This, in turn, can lead to your employees sharing information that negatively affects the company, such as human resources concerns (including allegations of unprofessional comments made by colleagues), complaints about working conditions, and products liability issues. All of these discussions raise reputational and legal concerns that you should consider. 4. Set Realistic Parameters With these benefits, risks, and (pop) cultural considerations in mind, what should your modern social media policy include? If you already have a solid employee handbook, a good place to start is by reminding employees that your existing policies still apply when using social media platforms. For example, an equal employment and harassment-prevention policy would cover discriminatory or bullying behavior towards colleagues whether online or in person. You should remind employees whom they should contact when they have a workplace concern. Additionally, let employees know that confidentiality policies apply when sharing content, so their computer screens and documents should not be visible in the background. However, depending on the nature of your business and your employees’ roles, you may want to create a more targeted policy on social media use. For instance, you may have different risks to manage if you encourage employees to engage with your brand, employ a younger workforce, or otherwise have a strong social media presence. As you likely know, your policy should be in writing and followed consistently. Where to go from there is more complicated. The explosion in social media use has only highlighted how regulating employee speech is difficult, nuanced, and occasionally backfires. But, of course, there are still some best practices. Consider taking these five steps: • Develop policies in collaboration with legal counsel, HR, technology, communications, and diversity, equity, and inclusion (DEI) teams. Be sure the policy matches the company’s voice and recognize that this is not a onetemplate-fits-all exercise. • Use plain language and examples. “Do not share client information, even if their name is covered” is more helpful than “Posting client information will subject employees to discipline up to and including termination.* • Keep up with guidance from the National Labor Relations Board (NLRB) – which is subject to change. Note that blanket bans on discussing wages or complaining about supervisors or working conditions are not permissible under federal labor law. The Trump administration issued an employer-friendly rule to evaluate whether a policy interferes with employees’ rights to organize and engage in protected concerted activity. However, that ruling is potentially on the chopping block in a pending NLRB case. If the NLRB reverts to the prior, more restrictive evaluation, policies currently compliant could suddenly run afoul of the National Labor Relations Act (even in non-unionized work settings). This includes seemingly benign provisions about “respectful” content and limits on who is authorized to speak to the media. • Confirm applicable state laws. There is a legislative trend to prohibit employers from requiring employees to engage with social media as a condition of employment or even to ask for their social media usernames as part of a job application. • Develop a plan for consistently responding to policy violations. Two employees violating the same rule, in the same way, should not be treated differently based on whether they tripped the algorithm and went viral. Relatedly, consider the reputational risk of a too-harsh response – someone fired for social media content may likely use the same platforms to discuss their termination. Conclusion If you have questions regarding your social media policy, contact your Fisher Phillips attorney, the authors of this Insight, or any attorney on our Data Security and Workplace Privacy Team. We will continue to monitor developments in this area, so ensure you are subscribed to Fisher Phillips’ Insight System to get the most up-to-date information. The authors wish to thank LawClerks TaricMansour and Jazmin Luna for their work co-authoring this Insight. * This section has been edited to reflect the automotive industry. To see the orignal post, pleasevisit: https://www.fisherphillips.com/news-insights/over-sharing-iworkplacecompany-may-need-tiktok-bereal-policy.html Continued from page 11 12 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 CONCERNED WITH THE COST, COMPLIANCE AND SERVICING OF YOUR DEALERSHIPS’ INSURANCE? EPIC CAN HELP WITH YOUR BENEFIT AND BUSINESS INSURANCE NEEDS • CNCDA's only licensed broker for Health and Business insurance • The largest insurer of auto dealers in the state • The only broker with proprietary products specific to dealerships • 15TH largest brokerage firm in the nation We know dealerships have specific needs and issues, we are here to help. Please contact us for a free evaluation of your insurance and HR/compliance packages. © EDGEWOOD PARTNERS INSURANCE CENTER | CA LICENSE 0B29370 EPICBROKERS.COM Alison McCallum 949.417.9136 alison.mccallum@epicbrokers.com Eric Kitei 949.417.9145 eric.kitei@epicbrokers.com NCDA.COM 13
New Laws in the Works for Vehicle Data Access Senator Earl Carter announced he would form a bipartisan congressional caucus on vehicle data access. The caucus will be formed to address policy issues related to the access, use, and control of data generated by telematics programs and other vehicle monitoring systems. These programs use GPS and other systems to monitor drivers’ mileage and driving habits. Based on Sen. Carter’s press release, the caucus will draft legislation regarding users’ access to collected data and protecting that data from “bad actors.” The sale and exchange of such data, primarily from insurance companies, has increased dramatically in recent years. While there is no draft legislation at this time, the caucus is gaining supporters such as the American Rental Car Association, National Consumers League, Automotive Recyclers Association, the Automotive Service Association, and the NAFA Fleet Management Association. Dealers should be on the lookout for new legislation and contact their U.S. House of Representatives legislators to weigh in on this topic. Given the importance of vehicle-generated data and its potential uses for dealers and others: everything from monitoring and recommending maintenance/repairs to using data tomaintain high-quality used inventory and creating personalized extended warranty packages based on actual driving patterns, dealers should be active participants in this discourse. Christian Scali Founder and Managing Shareholder Scali Rasmussen Janae L. Hill Associate Scali Rasmussen Contributors 14 SAN DIEGO DEALER
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Since July 1992, regulations promulgated under the Clean Air Act (CAA) require that motor vehicle air conditioning refrigerant be recycled. In 2006, auto dealers in the San Francisco area were penalized for violations arising under this act. Serious penalties and legal drama followed. We must note that these CAA regulations are federal and applicable to all auto dealers in the U.S. and not to San Francisco dealers alone. To achieve compliance with this regulation, dealers must act as follows: • Clean Air Act Section 609 Technician Certification Program: All employees working on A/C systems must be trained and tested by a program approved by the EPA on how to properly recover and recycle refrigerant (such as Freon 12, HFC-134[a] or any other EPA approved refrigerant). • Clean Air Act Section 609 Approved Equipment: Section 609 mandates that technicians must use EPA-approved equipment to perform refrigerant recovery and recycling. (For a list of approved equipment, go to epa.gov/mvac/ section-609-certified-equipment.) All shop employees repairing/servicing/diagnosing or working in any way on A/C systems must receive training and a certificate from an EPA-approved training program. (The list of training programs is available at epa.gov/mvac/ section-609-technician-training-and-certification-programs.) We note that training programs on A/C systems provided by auto manufacturers are a requirement to repair and service automobiles, but they do not in any shape or form help in compliance with this law. Training programs provided by other government bodies, such as the South Coast Air Quality Management District, also do not help achieve compliance with this law. The training program undertaken by the employees must be on the EPA-approved list. We recommend that you do not allow any employee without training to work on A/C repair or service unless the employee has provided management with a copy of certification from an EPA-approved body. A copy of the certificate should be retained under a file marked “Air Quality,” with a copy sent to Human Resources (Business Office) for retention in the employee file. Refrigerant Recycling Requirements For Motor Vehicles Under Clean Air Act (CAA) By Sam Celly, BChE, MChS, JD, Certified Safety Professional, Celly Services, Inc. 18 SAN DIEGO DEALER
IMPORTANT: you may need to keep a copy of the certification three years beyond the date of departure of the tech! Straight Talk On Refrigerant Recycling Training THE LAW: Federal law prohibits releasing CFC-12 into the atmosphere. The prohibition on venting Freon-12 into the atmosphere has been in effect since 1992. This 1992 regulation established standards for equipment that recovers and recycles CFC-12 refrigerant from motor vehicle air conditioners, rules for training and testing technicians to handle this equipment, and record-keeping requirements for service facilities and refrigerant retailers. Another rule published in May 1995 established a standard for equipment that recovers but does not recycle CFC-12 and training and testing technicians to handle this equipment. APPROVED EQUIPMENT: Technicians repairing or servicing vehicle air conditioners must use either recover/ recycle or recover-only equipment approved by the EPA. The EPA-approved recovery/recycling equipment cleans the refrigerant so that oil, air, and moisture contaminants reach acceptably low levels. TECHNICIAN TRAININGAND CERTIFICATION: Technicians who repair or service CFC-12 and HFC-134a motor vehicle air conditioners must be trained and certified by an EPA-approved organization. R-1234yf is now the choice of refrigerant for newmodels of automobiles. As of Jan. 1, 2018, technicians must show their certification card to purchase R-134a and R-1234yf refrigerant in quantities of two pounds or more. Training programs must include information on the proper use of equipment, the regulatory requirements, the importance of refrigerant recovery, and the effects of ozone depletion. To be certified, technicians must pass a test demonstrating their knowledge in these areas. RECENT HAPPENINGS: EPA has started rigorous enforcement against dealers and fined dealers $20,000+ for having noncertified technicians work on automobile air-conditioning systems. Technicians are required to adhere to this training and certification diligently. Straight Talk For Technicians WHAT TECHNICIANS MUST DO: All techs must obtain a copy of their certification and forward it to the Service Manager. They should also provide a copy to the Business Office for retention in their employee file. Employees not certified must decline all A/C-related jobs and notify the dispatcher and the Service Manager of their inability to perform the work. Anyone working on A/C without certification violates Federal law and is subject to disciplinary action and perhaps termination from the dealership. If a technician loses their certificate card, they should immediately contact the issuance company to receive a new copy. If reissuance is impossible, the tech should retake the training from the list of EPAapproved training programs. HOW TO VERIFY CERTIFICATION: Only EPA-approved training programs are valid for this law. Training from the auto manufacturer or other government agencies such as SCAQMD is NOT valid for this law. (The list of EPA-approved training programs is available at epa.gov/ mvac/section-609-technician-trainingand-certification-programs.) Verify that the training certificate issued is from an agency on the approved list. If not, the tech must complete certification through an approved agency before working on any A/C-related job. FOR LUBE TECHs OR BODY SHOP TECHs: If you are a lube tech, there is a good chance that sooner or later, you will become a regular tech, so get your A/C training certificate now. Also, if you work in a body shop installing A/C hoses or condensers, it involves the refrigerant and hence requires certification. The language of federal law is very expansive. It states, “No person repairing or servicing motor vehicles for consideration may perform any service on a motor vehicle air conditioner involving the refrigerant.” All shop employees repairing/servicing/ diagnosing or working in any way on A/C systems must receive training and a certificate from an EPA-approved training program. NCDA.COM 19
OUR SERVICES • Illness & Injury Prevention • Safety Inspection & 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 & 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.
Plan ahead for your dealership’s long-term legacy Setting up a succession plan is an important consideration for the future of your dealership. Now’s the time to think about your priorities, such as maintaining control, taxes, liquidity, employees and family. What would you like the power to do?® Learn more with our comprehensive overview of Dealer Financial Services Succession Planning at business.bofa.com/dealer. “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: | Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value | ©2022 Bank of America Corporation. All rights reserved. 4882341 05-22-0512 Plan ahead for your dealership’s long-ter legacy Setting up a succession plan is an important consideration for the future of your dealership. Now’s the time to think about your priorities, such as maintaining control, taxes, liquidity, employees and family. What would you like the power to do?® Learn more with our comprehensive overvie i l Services Succession Pla ing at busine s.bof . “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: | Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value | ©2022 Bank of America Corporation. All rights reserved. 4882341 05-22-0512
119,841 139,335 125,500 132,900 2020 Actual 2021 Actual 2022 Forecast 2023 Forecast Covering Third Quarter 2022 Volume 22, Number 4 San Diego Auto Outlook Comprehensive information on the San Diego County new vehicle market Market Summary Domestics consist of vehicles sold by GM, Ford, Stellantis (excluding Alfa Romeo and FIAT), and Tesla. Data Source: AutoCount data from Experian. YTD '21 YTD '22 % Chg. Mkt. Share Sept. Sept. '21 to '22 YTD '22 TOTAL 110,369 94,409 -14.5% Car 33,928 27,727 -18.3% 29.4% Light Truck 76,441 66,682 -12.8% 70.6% Domestic 30,728 29,668 -3.4% 31.4% European 16,904 14,707 -13.0% 15.6% Japanese 52,177 39,259 -24.8% 41.6% Korean 10,560 10,775 2.0% 11.4% Forecast for County New Retail Light Vehicle Registrations The graph above shows annual new retail light vehicle registrations in 2020 and 2021 and Auto Outlook’s projections for all of 2022 and 2023. Historical Data Source: AutoCount data from Experian. DOWN 13.4% vs. ‘19 UP 16.3% vs. ‘20 DOWN 9.9% vs. ‘21 UP 5.9% vs. ‘22 There is cause for concern regarding the prospects for the San Diego County new vehicle market. Supply chain issues continue to limit inventories, inflation is surging, interest rates are moving higher, economic growth has turned negative, and consumer sentiment is weak. It’s a formidable list. But there are two key positives that will likely prevent deterioration in current sales rates and should provide a boost when supply issues abate and the economic picture brightens. Both are explained below. Positive factor #1 - Pent-up demand continues to grow. Contrary to what some analysts are saying, pent-up demand is NOT “vanishing” due to weakening affordability and economic conditions. In fact it’s just the opposite! Pent-up demand accumulates when new vehicle sales fall below baseline levels, which are a function of core factors, such as driving age population and vehicles in operation. Purchases are postponed and sales move below baseline levels due to economic declines or supply interruptions, exactly what is happening now. Baseline annual sales in the U.S. are roughly 15.5 million units and the average has been well below that level during the past three years and likely in 2023 as well. As shown on page 3, Auto Outlook estimates that 41,624 vehicle purchases have been postponed in the county since the onset of the pandemic, and this figure will continue to grow as sales remain subdued. Bottom line: these vehicle purchases have not vanished, they are being “stored up.” It’s the proverbial gas in the tank for when fundamentals improve. Positive factor #2 - Vehicle prices are poised to move lower when supply chain issues improve. The industry has a card up its sleeve to combat falling consumer affordability. Vehicle prices, which have increased sharply due to supply constraints, CAN move lower. It doesn’t happen often and it defies conventional wisdom, but these are NOT conventional times. The factors that resulted in the price increases during the past two years can be unwound. If demand weakens sufficiently, dealers can curtail the practice of selling vehicles at or above list price. In addition, manufacturers could easily dial up incentives, which have all but disappeared during the past year. And finally, production can be shifted away from higher margin, fully equipped vehicles to less expensive, lower-content models. Lowering prices is a natural weapon to combat falling demand and the industry definitely has this tool in it’s toolbox. FORECAST Supply Chain Issues Linger and Demand Softens; But Reasons for Optimism Outlook for San Diego County New Retail Light Vehicle Market Market is almost certain to improve in the Fourth Quarter of this year due primarily to weak results in 4Q ‘21 when inventory shortages were acute. Predicting the impact of supply chain issues has been difficult, to say the least. Lost production due to the microchip shortage during 2022 was significantly higher than expected at the beginning of the year. As a result, vehicle sales projections have been lowered during the year. Registrations for all of 2022 are now predicted to decline 9.9% from 2021. Demand is likely to soften due to deteriorating economic conditions, but pent-up demand and the ability for vehicle prices to shift lower are positives. Assuming supply chain issues ease during the next 12 months, Auto Outlook believes that the market will increase next year. It would likely take a severe economic downturn for the market to fall, while the chances for an upside surprise are above average. 22 SAN DIEGO DEALER
Continued on page 24 Page 2 San Diego Auto Outlook San Diego Auto Outlook Published by: Auto Outlook, Inc. PO Box 390, Exton, PA 19341 Phone: 610-640-1233 EMail: jfoltz@autooutlook.com Editor: Jeffrey A. Foltz Information quoted must be attributed to San Diego Auto Outlook, published by Auto Outlook, Inc. on behalf of the New Car Dealers Association San Diego County, and must also include the statement: “Data Source: AutoCount Data from Experian.” At Auto Outlook, we strive to provide sound and accurate analyses and forecasts based upon the data available to us. However, our forecasts are derived from thirdparty data and contain a number of assumptions made by Auto Outlook and its management, including, without limitation, the accuracy of the data compiled. As a result, Auto Outlook can make no representation or warranty with respect to the accuracy or completeness of the data we provide or the forecasts or projections that we make based upon such data. Auto Outlook expressly disclaims any such warranties, and undue reliance should not be placed on any such data, forecasts, projections, or predictions. Auto Outlook undertakes no obligation to update or revise any predictions or forecasts, whether as a result of any new data, the occurrence of future events, or otherwise. San Diego County New Vehicle Market Dashboard San Diego County New Vehicle Mark t D shboard Data Source: AutoCount data from Experian. SAAR estimates: Auto Outlook. COUNTY MARKET VS. U.S. San Diego County DOWN 14.5% U.S. DOWN 16.9% Source for county registrations: AutoCount data from Experian. U.S. figures estimated by Auto Outlook. MARKET PERFORMANCE DURING PAST TWO YEARS San Diego County Quarterly Registrations Seasonally Adjusted Annual Rate, Converted to Equivalent U.S. New Vehicle Market SAAR (millions of units) 9.8 14.3 15.4 15.7 17.7 15.0 13.6 14.7 14.2 13.4 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Millions % Change In New Retail Market YTD ‘22 thru Sept vs. YTD ‘21 New retail light vehicle registrations in San Diego County declined by 14.5% during the first nine months of this year versus year earlier, better than the 16.9% drop in the Nation. The graph on the left provides an easily recognizable way to gauge the strength of the county market. It shows quarterly registrations based on a seasonally adjusted annual rate. These figures are then indexed to SAAR sales figures for the U.S. new vehicle market. So just like in the national market, when the quarterly SAAR is above 17 million units, the county market is strong, 15 million is about average, and below 13 million is weak. Quarterly registrations stayed at or below 15 million units in each of the past five quarters. NCDA.COM 23
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