SUMMER 2023 OFFICIAL PUBLICATION OF THE NEW CAR DEALERS ASSOCIATION SAN DIEGO COUNTY CNCDA DEALER DAY: SAN DIEGO COUNTY DEALERS MEET WITH STATE LEGISLATORS
AD PLACEMENT • 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.
AD PLACEMENT THE FIRST DMS WITH A $0 CORE FEE. EVERYTHING YOU NEED, NOTHING YOU DON’T. INTRODUCING CLOUD-NATIVE FLEXIBILITY SECURITY & CUSTOMIZATION AN AVERAGE OF $6,500 IN SAVINGS PER MONTH DominionDMS.com
© 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 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 10 20 PUBLICATION 11 2022-2023 | ISSUE 3 5 Meet Senator Catherine Blakespear 6 All Cookies Are Not Created Equal: FTC Cracks Down on Targeted Advertising Without User Consent By Chris Cleveland, ComplyAuto 8 Lights On! Vehicle Repair Voucher Program 10 Employers Beware: “There Is No AI Exemption to the Laws on the Books”... 4 Steps To Consider When Using AI in the Workplace By Fisher Phillips 14 Ask Alison By Alison McCallum, EPIC Insurance Brokers and Consultants 16 CNCDA Dealer Day: San Diego County Dealers Meet with State Legislators 18 Changes To Hazardous Waste Disposal Fee For California Dealerships By Sam Celly, BChE, MChE, JD, CSP, Celly Services, Inc. 20 Clean Cars 4 All Program 22 The Secret To Controlling Dealership Expenses By Sharon Kitzman, Dominion DMS 24 The Right Time for a Risk Management Reset By Brandon Artigue, Director, Financial Risk Management, Truist Securities 29 San Diego Auto Outlook 4 SAN DIEGO DEALER
Meet Senator Catherine Blakespear Catherine Blakespear was elected in 2022 as the State Senator for the 38th district, which represents northern San Diego County and southern Orange County. Catherine previously served eight years in local government, six years as the Encinitas Mayor and two years on the Encinitas City Council. As mayor of Encinitas, Catherine made her city the first in the County to deliver 100% renewable power and passed a tough climate action plan to reduce emissions. Catherine has been a champion of women’s reproductive rights since before entering public life and is proud to have been 100% prochoice, 100% of the time. In the state Senate, Blakespear is Chair of the Transportation Subcommittee on LOSSAN Rail Corridor Resiliency and Vice Chair of the Joint Legislative Audit Committee and the Joint Committee on Fairs Allocation and Classification. She also sits on the Senate committees for Governance and Finance, Housing and Transportation. Catherine’s priorities include reducing human suffering by helping our unhoused neighbors to become housed, stabilizing our warming climate, increasing transit options, strengthening the economy, fighting gun violence, building more affordable housing and creating more opportunities for every California family to thrive. Catherine lives with her family in Encinitas. NCDA.COM 5
All Cookies Are Not Created Equal: FTC Cracks Down on Targeted Advertising Without User Consent By Chris Cleveland, ComplyAuto With the proliferation of consumer personal data laws and cookie consent banners, the Federal Trade Commission (FTC) is ramping up its crusade against businesses in the name of consumer protection by wielding its very broad authority under Section 5 of the FTC Act. Section 5 prohibits “unfair or deceptive acts or practices in or affecting commerce” and has been a driving force of the FTC since its inception in 1914. As you can imagine, Section 5, originally empowering the FTC to prevent unfair methods of competition, has changed significantly with the passage of time and evolving business practices. The advent of collecting consumer data for the purposes of cross-contextual behavioral advertising proved to be another watershed moment that adds an arrow to the FTC’s growing quiver. The recent FTC cases against GoodRx and BetterHelp are canaries in the coal mine that we should all listen to because dealerships across 6 SAN DIEGO DEALER
the country engage in similar behavior. We will briefly discuss these cases below. For more information about these and other FTC enforcement actions, please visit their library at https://www.ftc.gov/ legal-library/browse/cases-proceedings. The FTC lawsuit against GoodRx alleges that the company integrated third-party tracking tools from Meta (Facebook), Google and other advertisers and shared user health data with them for advertising purposes without the user’s consent (also known as “retargeted advertising” as defined below). Additionally, GoodRx used the personal health information to target users with advertisements itself and failed to limit third-party use of their information. According to the FTC, this violated Section 5. “Retargeted advertising” allows businesses to display advertisements to users who have previously interacted with their website or have shown interest in their products or services. This is a widely used marketing tool because it increases the touch points with that user and makes the user more likely to convert into a sale. BetterHelp met the same fate at the hands of the FTC for performing similar acts. Brushing aside the more obvious concerns of making false claims and deceptive marketing (BetterHelp said it was “HIPPA Certified” and had seals implying its purported compliance with HIPPA, but no government agency or third party ever reviewed its practices for compliance), we are going to focus on the retargeted advertising aspect of the complaint. BetterHelp had a banner at the bottom of every page on its website, which stated: “We use cookies to help the site function properly, analyze usage, and measure the effectiveness of our ads. We never sell or rent any information you share with us. Read our Privacy Policy to learn more.” BetterHelp then went through two significant changes in this banner, but neither one of them informed visitors that it would use and disclose their health information for advertising or that third parties would be able to use the visitors’ information for their own purposes. BetterHelp used and disclosed this information through various means, including “web beacons” (specifically pixels) placed on various pages on its website. Information was shared with third parties such as Facebook, Snapchat, Criteo and Pinterest to carry out this advertising. Like GoodRx and BetterHelp, dealerships often use cookies for retargeted advertising with companies such as Google and Meta through one of the many digital advertising vendors. The lesson here — dealerships should implement comprehensive privacy policy disclosures and a well-designed cookie consent banner to avoid the FTC’s scrutiny. For dealerships that want to avoid becoming the FTC’s next example, they must begin obtaining proper consent for the use and sharing of cookies that collect and track a prospective finance or lease customer’s online information and browsing history (and for those of you wondering, yes, the federal Gramm-Leach Bliley Act defines non-public personal information to include cookies and similar technologies). To state the obvious, this is an action based on federal law, so dealerships in all states (even those without comprehensive privacy laws) must prioritize protecting user data by updating their privacy policies with comprehensive disclosures, a cookie use policy, and a compliant cookie consent banner. For example, a well-designed cookie banner is a crucial tool for dealerships to obtain users’ informed consent for the use of online tracking in connection with retargeted advertising. However, poorly designed cookie banners can do more harm than good if they are implemented to confuse or trick consumers into consenting to online tracking (often referred to by regulators as “dark patterns”). Unfortunately, many vendors offer cookie banners that don’t actually work and may inadvertently allow cookies and other tracking technologies to deploy before the user has a chance to consent. In short, online privacy disclosures and cookie consent management should be a top priority for any risk-averse dealership. Updating privacy policies with comprehensive disclosures and implementing a compliant cookie consent banner can help defeat claims, similar to those brought against GoodRx and BetterHelp, and protect the dealership from other novel privacy allegations like we have seen with the recent uptick of state and federal wiretapping lawsuits stemming from online tracking activities. If you do not currently have a solution that provides you either of these things, ComplyAuto will be happy to assist you build a privacy policy that is unique to your dealership and a cookie consent banner that fulfills all state and federal requirements in our Privacy Rights Management system. If you would like to learn more, contact us at info@complyauto.com. This article should be used as a compliance aid only and though its accuracy has been made a priority, it is not a substitute for professional legal advice. Each dealer should rely on their own expertise when using it. ComplyAuto, LLC is a RegTech company offering cloud-based software that helps dealerships enhance their compliance capabilities while becoming more efficient and cost-effective. ComplyAuto uses data analytics and AI to provide real-time automated compliance decisions, performing tasks that would normally require manually-intensive processes and human intelligence. NCDA.COM 7
For many motorists in San Diego County, a broken taillight or turn signal can mean choosing between an auto repair or buying groceries for their families. It can also spark a downward economic spiral that could lead to multiple tickets, confrontations with law enforcement, and even vehicle impoundment. Lights On! disrupts that downward spiral and builds goodwill between police, automotive repair shops and the communities they serve. Lights On! is a new program that will allow law enforcement officers in San Diego, Chula Vista and National City to hand out repair vouchers to drivers with burned-out bulbs, instead of citations. These vouchers lead to safer cars on the road, help heal police and community relations, and, by avoiding tickets, prevent a ripple effect that can seriously affect the financial stability of low-income drivers. HOW DOES IT WORK? 1. Participating law enforcement officers hand out vouchers to drivers with burned-out headlights, taillights, brake lights, or turn signals. 2. Drivers redeem the vouchers at a participating auto shop where the driver’s bulb problem is fixed at no cost to them (up to $250). 3. Lights On! reimburses the auto shop for their costs. WHAT’S REQUIRED OF PARTICIPATING REPAIR SHOPS? • Auto shops must be full-service repair providers. • Auto shops are to service anyone who arrives at their facility with a Lights On! voucher in as timely a manner as possible and with no appointment required. • Auto shops agree to conduct no up-selling at that time. • Lights On! covers all bulb repairs up to $250, including jobs that require additional labor or expensive bulbs, at predetermined rates. • Upon completing the repairs, auto shops mail the invoice, voucher and customer survey to Lights On! and are reimbursed within seven days. The Lights On! program is not intended to be a sales opportunity; although not something Lights On! can promise, numerous participating auto centers have told us that their involvement in Lights On! has translated into increased business. The Lights On! program is solely for the purpose of serving our communities. Involvement in Lights On! is a simple process for dealers. All you need to do is replace or repair a bulb and Lights On! will cover your costs. For more information and/or to sign up as a participating repair facility, please review the Lights On! Partnership Agreement (scan the QR code) and Customer Engagement Guide. https://na2.documents.adobe.com/public/ esignWidget?wid=CBFCIBAA3AAABLblqZhDpCO1LWz0AknHFU9obZz0b7S_ EpiiW0Wvm1_KZtmPeC0t67j42uCEBTYYXRsHRtOA* You may also visit the Lights On! website (lightsonus.org) and/or contact Strategic Communications Officer Ashley Bailey at abailey@sandiego.gov. Lights On! Vehicle Repair Voucher Program 8 SAN DIEGO DEALER
AD PLACEMENT 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
NCDA.COM 11 Given the myriad of ways artificial intelligence is now being used to streamline business processes, it’s no surprise that federal agencies are scrutinizing potential employment-related biases that can arise from using artificial intelligence (AI) and algorithms in the workplace. Indeed, the Equal Employment Opportunity Commission (EEOC) Chair Charlotte Burrows recently called AI advancements a “new civil rights frontier.” Recently, she joined the leaders of several other agencies to announce their joint position on the use of AI, as well as their commitment to education and enforcement efforts. The agency leaders made clear that while we may see new laws and regulations addressing AI use, existing civil rights laws already govern how these new technologies are used. “There is no AI exemption to the laws on the books,” noted Lina Khan, Chair of the Federal Trade Commission (FTC). So, what does this mean for employers? The time is ripe for you to review your policies and practices and consider performing an AI audit to flag and address potential biases in your systems. Here are four important steps you should consider taking when using AI in the workplace. 1. RECOGNIZE THE UPTICK IN WORKPLACE AI USE AND POSSIBLE ENFORCEMENT EFFORTS First, let’s define a few terms. The use of AI generally means a computer is doing tasks that are typically performed by an employee. Algorithms are rule sets for computers based on patterns, which may be used, for example, in software programs for sales and marketing, as well as recruiting efforts. In fact, a recent FP Flash Survey showed that employers most commonly use AI for HR recruiting (48%), followed by sales and marketing (46%). Other popular uses include operations and logistics (32%), customer service (24%) and finance and accounting (24%). The survey results showed that a solid number of employers are using AI — and that number will grow in 2023. The overwhelming majority of employers said their use of AI has been Employers Beware: “There Is No AI Exemption to the Laws on the Books”... 4 Steps To Consider When Using AI in the Workplace By Fisher Phillips
effective — and by far, the key benefit has been increased efficiency. Businesses also report improved accuracy and cost savings. You should note, however, that federal enforcement agencies are keenly aware of the uptick in AI popularity. “We have come together to make clear that the use of advanced technologies, including artificial intelligence, must be consistent with federal laws,” said EEOC Chair Burrows. 2. CONSIDER CONDUCTING AN AUDIT TO IDENTIFY AND ADDRESS POTENTIAL BIAS While many excellent tools are available for streamlining recruiting and other workplace processes, relying on such technology to make employment decisions might unintentionally lead to discriminatory employment practices. Although we’re sure to see new laws at the federal, state and local level regarding the use of AI in the workplace, federal authorities have stated that existing laws already apply to potential AI biases. “There are very important discussions happening now about the need for new legal authorities to address AI,” Burrows said on a press call, as reported by Law360. “But in the meantime, I want to be absolutely clear that the civil rights laws already on the books govern how these new technologies are used in the meantime.” So, you should be sure to review your recruiting and other workplace tools for possible bias before you use them and continue to do so periodically thereafter. Like hiring managers, AI algorithms do not intentionally screen out candidates based on a protected category, but the AI algorithm may unintentionally screen out a disproportionate number of qualified candidates in a protected category. This could happen, for example, if the screening is based on the qualities of the employer’s topperforming employees and if these workers are primarily from a specific demographic group. As another example, if your system automatically rejects candidates that live more than 20 miles from the worksite, you may be unintentionally limiting the ethnic and racial diversity of the candidates you consider, depending on the demographics of the area. Although many technology vendors may claim that the tool they have is “bias-free,” you should take a close look at what biases the technology claims to eliminate. For example, it may be focused on eliminating race, sex, national origin, color or religious bias, but not necessarily focused on eliminating disability bias. You should also review the vendor’s contract carefully (specifically the indemnification provisions) to determine whether your company will be liable for any disparate impact claims. Additionally, employers that use third-party vendors to conduct background investigations have certain obligations under the Fair Credit Reporting Act (which is enforced by the Consumer Financial Protection Bureau). “Technology marketed as AI has spread to every corner of the economy, and regulators need to stay ahead of its growth to prevent discriminatory outcomes that threaten families’ financial stability,” said CFPB Director Rohit Chopra in a statement. He added that the CFPB “will work with its partner enforcement agencies to root out discrimination caused by any tool or system that enables unlawful decision-making.” 12 SAN DIEGO DEALER
Thus, now is a good time to consider conducting an independent audit of your AI and algorithm-based tools to help eliminate any bias. 3. REVIEW THE WHITE HOUSE BLUEPRINT FOR AN AI BILL OF RIGHTS Last year, the White House Office of Science and Technology Policy released its “Blueprint for an AI Bill of Rights,” a non-binding 73-page whitepaper intended to support the development of policies and practices that protect civil rights and promote democratic values in the building, deployment and governance of automated systems. This blueprint includes five key principles to help protect Americans in the age of artificial intelligence, and employers would be wise to consider them when developing their own policies and practices. The blueprint is designed to support policies and practices to protect individuals’ rights in the development and use of automated systems. For businesses, however, this is a strong sign from the White House that it is taking artificial intelligence seriously. It is also an indication that future — and significant — legislation surrounding artificial intelligence will likely be proposed at the federal and state levels. Businesses should stay abreast of these developments to ensure that their practices are in compliance with applicable rules and regulations governing artificial intelligence. For more on this point, read our Insight about the five key principles you should incorporate. 4. MONITOR FOR NEW STATE AND LOCAL LAWS You should also note that states and localities are beginning to scrutinize the use of AI in the workplace. For example, a law that went into effect on Jan. 1, 2023, in New York City, requires employers to get a “bias audit” for all automated employment decision tools. This is an impartial evaluation by an independent auditor that tests, at minimum, the tool’s disparate impact upon individuals based on their race, ethnicity and sex. This law also contains strict notice and disclosure requirements. Additionally, there are currently proposed laws in California, Washington, D.C. and Colorado. You should anticipate that many other states and cities will adopt similar requirements for bias audits. CONCLUSION If you have questions about the best ways to maximize the value of AI in your workplace while reducing legal, ethical and reputational risks, contact your Fisher Phillips attorney, the authors of this Insight, or any attorney on our Artificial Intelligence Practice Group. We will continue to monitor further developments and provide updates on this and other workplace law issues, so make sure you are subscribed to Fisher Phillips’ Insight System to gather the most up-to-date information. 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. The time is ripe for you to review your policies and practices and consider performing an AI audit to flag and address potential biases in your systems. NCDA.COM 13
Ask Alison By ALISON MCCALLUM EPIC Insurance Brokers and Consultants Potential employees are demanding benefits packages that meet their needs in the “new normal” and go beyond the basics. They want a program that not only gives them and their families coverage for their physical health but they also desire a package that will cover their emotional, financial and even digital health. A solution is a customized strategy that meets the needs of your employee demographics while managing medical cost inflation and relieving your HR team to focus on employee recruiting and engagement. Consider the following solutions: • Alternative funding options to reduce costs. There are many options available with very minimal risk to your dealership that can reduce premiums significantly while not reducing, and many times increasing, the benefit coverage to your employees. • Managing escalating pharmacy costs to offer candidates more coverage options. • Developing professional benefits communications to share with potential employees early in the recruiting process. • Navigating complex and ever-changing human resource compliance requirements. If you would like to discuss alternative funding options and how they can benefit your dealership, EPIC has a track record with proven results. If you would like to learn more, EPIC will provide information and case studies 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 CNCDA’s only licensed employee benefits broker. With this partnership EPIC offers unique dealership expertise and 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. Leverage forward-thinking insurance solutions to reduce your costs and boost your dealership’s recruiting efforts. The health insurance industry is seeing some of the highest renewal increases in recent history. Has your broker shown you alternative funding options and financials to reduce costs while maintaining the highest level of coverage for your employees? The Great Resignation changed the landscape, elevating employees’ demands and shifting the way you need to recruit talent. In an environment where 90% of organizations are trying to fill open positions, the competition for talent is fierce. Forward-thinking insurance strategies can be a powerful differentiator, helping your dealership demonstrate its commitment to your employees while being effectively managed to cover and control your operational costs. 14 SAN DIEGO DEALER
AD PLACEMENT
CNCDA’s annual Dealer Day event is a once-a-year opportunity for San Diego County’s new car dealers to meet directly with key legislators in exclusive meetings and at social events. Throughout the day and into the evening, dealers were able to engage in the legislative process and influence policy decisions during personal interactions with legislators and their key staff members. In addition, all in attendance benefitted from legislative panel discussions and keynote speakers, as well as networking with dealer colleagues and officials from across the state. As such, it’s one of the most anticipated and significant events for NCDA-member dealers. San Diego County dealers had a strong showing at Dealer Day this year to support one of the most important dealer bills in recent history, AB 473 (Aguiar-Curry), the New Motor Vehicle Franchise Law Modernization and Protection Act. AB 473 levels the playing field by restoring the proper competitive balance between dealers and their manufacturers so that independent franchised dealers can continue to service the needs of their communities and customers. It also follows the tradition of similar bi-partisan franchise bills enacted in 2009, 2011, 2013, 2015 and 2019. As of publication, AB 473 has so far unanimously passed two committees (Assembly Judiciary and Assembly Transportation) as well as the California State Assembly itself. Those attending Dealer Day from San Diego County included: NCDA Board Members Paul Dyke, Chris George and Justin True; CNCDA Board Member Greg Kaminsky; NCDA President Dean Mansfield; and NCDA Director of Marketing and Operations Scott Webb. Organized by the California New Car Dealers Association, Dealer Day began with a Face the Dealers roundtable discussion, followed by a Meeting of the Members Issues Briefing and Luncheon. During the luncheon, CNDA leadership helped prepare dealers for their afternoon legislative appointments. Several pieces of legislation were identified as priorities by the CNCDA, and Kenton Stanhope, CNCDA’s Director of Government Affairs, explained why these bills are important to dealers. Perhaps the most meaningful aspect of Dealer Day was the opportunity for dealers to meet directly with the legislators who represent them. These meetings provided important personal interaction between legislators and dealers that helped build relationships and influence legislation. And after the formal meetings concluded, legislators and dealers met at a nearby restaurant to socialize over cocktails and dinner. Throughout the event, NCDA members were able to meet with several legislators and/or their senior staff members to discuss important legislation, in addition to sharing our Economic Impact Report to remind legislators how big an impact new car dealers have on San Diego County’s economy each year. CNCDA Dealer Day: San Diego County Dealers Meet with State Legislators Pictured above from L to R: El Cajon Ford’s Paul Dyke, Assemblymember Chris Ward, NCDA President Dean Mansfield, Team Kia/Mazda/Hyundai’s Chris George and Courtesy Chevrolet’s Justin True 16 SAN DIEGO DEALER
CNCDA Dealer Day began with a Face the Dealers Roundtable Discussion. CNCDA President Brian Maas addressing dealers at the Meeting of the Members Issues Briefing and Luncheon. Toyota & Honda of El Cajon’s Greg Kaminsky with Hilary Haron of Haron Jaguar Land Rover Volvo Senator Brian Jones with Dean Mansfield, Paul Dyke and Justin True From L to R: Senator Brian Jones, Dean Mansfield, Assemblymember Laurie Davies, Paul Dyke and Justin True NCDA.COM 17
CHANGES TO HAZARDOUS WASTE DISPOSAL FEE FOR CALIFORNIA DEALERSHIPS As of Jan. 1, 2022, the hazardous waste Generator Fee has been repealed and replaced with a new Hazardous Waste Generation and Handling (GH) fee. Prior to Jan. 1, 2022, the hazardous waste generator fee was imposed on a tiered category basis. The state of California sent out the special notices on GH in December 2021 and August 2022. Effective Jan. 1, 2022, the hazardous waste generation and handling fee is imposed as a flat rate per ton or fraction of a ton on generators of hazardous waste for each generator site that generates five or more tons of hazardous waste at a site in California within a calendar year. Hazardous wastes typically generated at an automobile dealership and subject to this fee are: • Recycled hazardous waste • Non-manifested universal waste • Waste sent outside California for disposal • Used motor oil (except used oil collected from the public. See note below.) • Waste coolant (CA code 134), • Oily water (CA Code 223), and • Waste paper filters (CA code 352 or 223) • Waste brake fluid • Contaminated fuel If you are punching or crushing metal oil filters, under the Department of Toxic Substances Control (DTSC) guidelines you can dispose of them as scrap metal (through your hazardous waste hauler) and hence not be subject to this fee. If you decide to dispose of used metal oil filters as hazardous waste, those metal filters get added to your hazardous waste tonnage calculations. By Sam Celly, BChE, MChE, JD, CSP, Celly Services, Inc. GH FEES & FEE RETURNS: HOW CALCULATED & WHEN DUE The GH fee is calculated based on the total weight (measured in tons) of hazardous waste generated (produced or caused to be managed) from each site each calendar year. It is generally due regardless of the waste’s final disposition. Every generator that produces five tons or more of hazardous waste will pay the California Department of Toxic Substances Control (CDTFA) a GH Fee for each generator site for each calendar year, or portion thereof. Generators are required to report the amount of waste generated on a hazardous waste Generation and Handling Fee Return provided by CDTFA. Keep proper records to support tonnage of hazardous waste generated and handled at each site/location. DON’T KNOW YOUR TONNAGE? Please contact your dedicated waste hauler(s) to determine total tonnage. Once determined, please register online with CDTFA at https://onlineservices.cdtfa.ca.gov/_/ and complete the fee process. You are required to file your GH Fee Return electronically through the CDTFA online services. Maintain support documentation of fee completion for your records. Finally, we note that this is a tax/fee matter and you must consult your tax consultant on calculations and record retention requirements. GH fee payments and GH fee returns are both due by February 28 each year (RTC 43152.7) The fee is calculated based on waste generated in the prior calendar year (HSC 25205.5). Beginning Jan. 1, 2022, all GH fees are due according to the schedule in the table below, along with the GH Fee rates in 2022/23 for hazardous waste generated in Calendar Year 2021. RATE DUE DATES First Prepayment (50%) Nov. 30, 2022 (during reporting period) Final Payment Feb. 28, 2023 (after the reporting period) Base Rate: $ 0/Ton Less than 5 tons/year $49.25/Ton or fraction of a ton 5 or more tons/year 5 or more tons/year 18 SAN DIEGO DEALER
Note 1: Commencing on July 1, 2023, the Board of Environmental Safety will reset (increase) the annual GH Fee to correspond to the annual appropriation amount for Fiscal Year 2023/24, per Health & Safety Code section 25205.5.01. Beginning with FY 2024/25, the Board shall adjust the GH Fee for changes to the Consumer Price Index (CPI). Note 2: Please contact your waste hauler(s) for technical guidance on conversion of gallons of waste to tons. For example, 1 gallon of used oil is approximately 7.4 pounds. 10,000 gallons is 74,000 pounds. 2,000 pounds equals one ton. 74,000/2,000 = 37 tons. In summary, 10,000 gallons of used motor oil weigh approximately 37 tons! Note 3: GH Fees do not apply to used oil collected from the public by certified used oil collection centers. CONTACTS AT CDTFA Cathie Thomas at Cathie.Thomas@cdtfa.ca.gov, Kevin McCarley at Kevin.McCarley@cdtfa.ca.gov, and Yatoba Godina at Yatoba. Godina@cdtfa.ca.gov or call 800-400-7115. DISCLAIMER: The contents of this newsletter are for informational purposes only and are not to be considered legal advice. Employers must consult their lawyer for legal matters and EPA/OSHA consultants for matters related to 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 Orange County American Industrial Hygiene Association and on CA Industrial Hygiene Council (CIHC). Our newsletters can be accessed at www.epaoshablog.com. We welcome your comments/questions. Please send them to sam@cellyservices.com. REPORTING PERIOD PREPAYMENT DUE DATE RETURN & FINAL PAYMENT DUE DATE REPORT BASED ON HAZARDOUS WASTE GENERATED IN PRIOR REPORTING PERIOD Calendar Year 2022 Nov. 30, 2022 Feb. 28, 2023 Calendar Year 2021 Calendar Year 2023 Nov. 30, 2023 Feb. 28, 2024 Calendar Year 2022 Calendar Year 2024 Nov. 30, 2024 Feb. 28, 2025 Calendar Year 2023 ©Celly Services, Inc. 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 NCDA.COM 19
The Clean Cars 4 All (CC4A) Program was recently introduced from the Air Pollution Control District of San Diego County. CC4A provides monetary incentives of up to $12,000 to lower-income drivers living in disadvantaged communities who retire and scrap their older, highpolluting vehicles and then purchase new or used low-emitting (cleaner) vehicles. Local dealerships who sign up to participate will be eligible to sell cars through this program. As a reminder of how the program will work, lower-income owners of highpolluting vehicles will apply with the County to participate in the program. There are specific income and vehicle eligibility requirements that they must meet in order to be approved. Once approved, they can visit a participating dealer to apply their respective incentive to the purchase of a cleaner vehicle that must also meet certain eligibility requirements. Dealers would then be reimbursed for the rebate amount from the County. The graphic is a summary of the process as it is proposed. Clean Cars 4 All Program 1. PROGRAM APPLICANT DETERMINES ELIGIBILITY & APPLY Complete an application and determine eligibility of vehicle to retire 2. APPROVAL Program applicant is eligible and receives approval from the case manager to purchase or lease a replacement vehicle with help from incentive $ 3. CLEAN REPLACEMENT VEHICLE Buy or lease your new or used hybrid, plug-in or electric vehicle 4. PAYMENT TO CAR DEALER Car Dealer invoices the Air Pollution Control District for incentive amount, program participant pays the remaining balance for the vehicle If you would like to learn more about participating in this program, contact Eric Luther at eric.luther@sdapcd.org with the Air Pollution Control District. 20 SAN DIEGO DEALER
AD PLACEMENT 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
The Secret To Controlling Dealership Expenses By Sharon Kitzman, Dominion DMS One of the significant challenges of running any automotive dealership is moderating expenses. General managers and dealer principals are responsible for controlling many costs, including payroll, vehicle inventory, floorplan and parts inventory. Monthly bills add up, and there is less revenue to put toward necessary resources. A major opportunity for expense control may be the dealership’s software stack. According to the 2022 DMS Market Report by the Dealer Tech Nerd, the average franchise dealership spends $30,000 a month on software. With a mindset shift and careful evaluation, those costs can be reduced. A BREAKDOWN OF DEALERSHIP SOFTWARE COSTS Dealership software can be broken down into 29 categories. Here is an outline of the most expensive and necessary solutions for a typical franchise dealership: • The Dealer Management System or DMS is the core hub that connects all dealership data between departments and even multiple stores within a dealership group. The average monthly cost is $6,300. • Many areas of a business use Customer Relationship Management (CRM) tools to execute, track and analyze communications with customers and prospects, and maintain a historical profile of these interactions to help grow relationships. This software costs $2,000 per month. • Equity Mining software helps a dealer use customer information from a CRM and evaluate the revenue potential of a customer, considering trade-ins, future potential services, and more. This tool costs $2,000 per month. • Vehicle Inventory Management is software that holds the details for each vehicle on the lot, including owner history, the going market value, photos and more. This software averages $1,700 per month. Amounts vary by category, but all tools contribute to this significant monthly cost. Knowing the value of each tool will allow you to evaluate your needs and consider how you might reduce costs. HOW TO EVALUATE YOUR SOFTWARE INTEGRATIONS Take stock of the software vendors you use. Gather your contracts, invoices and any other information. The tools are likely integrated with your DMS. Here are some suggestions on how to evaluate them: • Take Note of Redundant Services: As tools evolve and update, the features between some of them can become similar. After several enhancements, the CRM you originally purchased to manage communications with your contacts may now be able to manage your website. This may no longer be necessary if you are also paying for a website maintenance tool. Do not immediately cut out every duplicative resource. Make sure any tool you decide to remove from your stack can be sufficiently replaced. Consider how much longer you have on individual product contracts. It may be financially beneficial to wait before ending your relationship with one or more of them. • Tie The Value of Each Vendor to Historical Revenue: Some software in your dealership may play a significant role in the success of your business, and others may have less of an impact. If you find some tools fall into the latter category, you may want to consider eliminating them. 22 SAN DIEGO DEALER
Beyond expense control at your dealership, consider why a particular tool is not benefitting your business. Is it not doing its intended job, or has your business changed in ways that make the tool no longer a good fit? Beyond expense control at your dealership, consider why a particular tool is not benefiting your business. Is it not doing its intended job, or has your business changed in ways that make the tool no longer a good fit? This is a great opportunity to involve your staff by discussing their usage of the software and how well they like it. If the general purpose of the software is valuable, but the current product does not provide a good experience for your staff, consider replacing the software with another vendor rather than removing it altogether. Replacing a key tool that the staff does not value with a better one could increase your revenue. • Consider How Efficiently the Software Works Together: Dealership software should be integrated in a way that can share data efficiently. Data typically flows through the DMS, so consider this during your evaluation. If your tools are not communicating with each other, that means some of your staff may need to log into different interfaces and move data manually. It could also mean you are not getting the complete picture of what is happening in your dealership. Your staff may spend more time dealing with the tools and less time bringing in revenue. Putting a focus on the integration of your software with your DMS can increase the efficiency of your dealership and offset costs. • Reduce Your Software Costs but Not the Value: Now that you have evaluated your software stack, chosen what software can be removed, and have a better picture of how your tools tie to overall revenue, it is time to take action. Talk to selected software vendors about finishing but not renewing contracts. Make sure your chosen tools integrate well with your DMS. This should not only reduce costs but make the combination of your chosen tools more valuable to the dealership. Consider what you can do with these savings to benefit your dealership even further. Can you upgrade any software that would increase productivity? Perhaps somewhere else in the dealership needs an increase in budget. Can these savings go towards increasing customer satisfaction? These are all possibilities that may not have been an option before. Good luck reducing your costs and increasing your profits! Sharon Kitzman leads the launch and longterm growth of Dominion DMS. Previously, she managed the strategic direction and product development for Reynolds & Reynolds and Dealertrack. Her experience spans every area of dealership software development, including sales, marketing, product lifecycle management, process re-engineering, OEM management, professional services, and customer services. Kitzman is a recognized leader in the automotive industry for her expertise in DMS technology. She received numerous accolades for her leadership, including Automotive News Top 100 Leading Women 2015 and 2020, Auto Remarketing Women in Retail 2021, and AutoSuccess Women at the Wheel 2021. She has a Bachelor of Business Administration from Ohio State University. Listen to our VUE Points podcast to stay up to date with news and current events related to the automotive software and retail industry. https://www.dominiondms.com/podcasts/ NCDA.COM 23
The past two years have seen auto retailers adapt to limited vehicle inventory and pandemic restrictions while driving profits to new heights. Now dealers face rising interest rates — a critical concern for an industry that relies on capital to fund operations and growth. For some, it’s time for a balance sheet review and risk management reset. CHANGING CONDITIONS DEALERS MUST WATCH The Fed (Federal Reserve) has already taken aggressive steps by raising rates to throttle persistent inflationary pressure in the U.S. In the past year, we’ve seen the Fed hike the shortterm rate by 3.00% (300 basis points). But with low inventory and reduced need for floor plan loans, many dealers haven’t yet felt the full impact of rising rates. 1-Month CME Term SOFR Since the Beginning of the Pandemic As you imagine what’s next for the economy and your dealership, the impact of rising rates comes into sharper focus. For instance, if vehicle supply and demand start to realign, higher inventory levels could mean more floor plan loans on balance sheets. As you look at business assets, the recent surge in inflation strengthening real estate values could provide an additional source of funds that you can tap into if needed. Unfortunately, when it comes to expansion and new construction, inflation will cut the other way by driving up building costs and the loans needed to finance them. The Right Time for a Risk Management Reset By Brandon Artigue, Director, Financial Risk Management, Truist Securities continued on page 26 24 SAN DIEGO DEALER
www.thenewslinkgroup.orgRkJQdWJsaXNoZXIy MTg3NDExNQ==