FALL 2023 OFFICIAL PUBLICATION OF THE NEW CAR DEALERS ASSOCIATION SAN DIEGO COUNTY GETTING TO KNOW NCDA INCOMING CHAIRMAN CHRIS GEORGE
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. CHAIRMAN CHRIS GEORGE…........................DISTRICT 4 VICE CHAIRMAN JOHN SEGAL….............................DISTRICT 3 SECRETARY/TREASURER JUSTIN TRUE…............................DISTRICT 5 BOARD MEMBERS JENIFER BALL…...........................DISTRICT 6 MATT CRANDALL…...................DISTRICT 2 PAUL DYKE...................................DISTRICT 4 BANU GREWAL...........................DISTRICT 3 SCOTT KIEFNER..........................DISTRICT 6 JASON MOSSY.............................DISTRICT 5 MEGAN QUEZADA.....................DISTRICT 2 NATHAN THOMPSON...............DISTRICT 1 ERIC TRACY.................................DISTRICT 1 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 14 10 PUBLICATION 11 2022-2023 | ISSUE 4 6 Chairman’s Letter Ensuring a Bright Future for Our Industry By Chris George 8 Getting to Know NCDA Incoming Chairman Chris George 10 NCDA Golf Tournament & Annual Meeting/Luncheon 12 Introducing New NCDA Board Members 12 New Associate Member NitroFill 13 New Website Allows Consumers To Lodge Privacy Violation Complaints Online By One S. Choi, Associate, Scali Rasmussen PC 14 Meet Assemblywoman Laurie Davies 16 Ask Alison By Alison McCallum, EPIC Insurance Brokers and Consultants 18 County (CUPA) Inspector Coming Are You Ready? By Sam Celly, BChE MChE, JD CSP, Celly Services, Inc. 21 San Diego Auto Outlook 4 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
As your incoming Chairman of the New Car Dealers Association Board of Directors, I am honored and excited to serve the San Diego County new car dealer community over the next year in this new role. During my time on the Board of Directors so far, I’ve seen firsthand just how valuable our association is and how much work is done on behalf of dealers. San Diego County’s franchised new car dealers are confronting a future of unprecedented change as we face new and ongoing challenges related to the franchise system, regulatory compliance and shifting consumer demands, just to name a few. We operate complex businesses, and the New Chairman’s Letter Ensuring a Bright Future for Our Industry By Chris George Car Dealers Association remains at the forefront of the issues and challenges confronting us today and into the future. If you don’t already, I strongly recommend you take time to connect with representatives from your district. It is imperative that we stay engaged with our local officials so they continue to understand the importance of your business to the region’s economy and the vital role your dealership plays in the short and long-term economic health of their districts. Planning is well underway for the 2024 San Diego International Auto Show, which will take place December 29-January 1 at the San Diego Convention Center. The auto show truly is our best opportunity of the year to engage with the car-buying public as they explore the many makes and models available in the market. After two years without an auto show, our attendee survey confirmed just how much influence the show continues to have on consumer purchase decisions. By a wide margin, attendees rank the auto show as more important than any other marketing channel when it comes to choosing which vehicle to buy. And as we move toward an all-electric future, the auto show will only increase in importance to dealers, as the attendee data related to EV interest and intention reveals. It’s also important to remind ourselves that the auto show is the primary revenue generator for the association as a whole and funds the many wonderful benefits we’ve come to enjoy and expect. As such, it is imperative that dealers fully support the show by ensuring as many brands as possible are on display. I look forward to representing our association and collaborating with my fellow board members, the NCDA staff and the nearly 120 San Diego County franchised new car dealer members to ensure a bright future for our industry. I encourage you to reach out to me or any of the NCDA board members with any challenges or ideas you might have. Sincerely, Chris George Chairman 6 SAN DIEGO DEALER
Jon Taffer Business Expert and Executive Producer of Bar Rescue Danica Patrick Former Racecar Driver, Author, Broadcaster, Podcast Host and Entrepreneur Kurt Warner Hall of Fame Quarterback and Philanthropist 500+ EXHIBITORS 90+ WORKSHOPS NEW SCHEDULE! MEET OUR MAIN STAGE SPEAKERS NADASHOW.ORG REGISTER TODAY! A NIGHT UNDER THE SPHERE THURSDAY, FEBRUARY 1 7–10PM JOIN US FOR THE NADA SHOW 2024 WELCOME RECEPTION FEATURING POSTCARD FROM EARTH
Recently, 2023-2024 NCDA Chairman Chris George and a few of the NCDA Board members had lunch with Senator Toni Atkins. The Senator asked the group a refreshing question, “What are we doing in Sacramento that drives you crazy?” The resounding answer was that California’s laws and regulations, and the OEM’s overreach of both, create opposition instead of the support that dealers need. As Chairman, Chris is ready to address these issues. When asked about his plans, he said, “I’m going to work on relationships to find common ground for all the stakeholders. The Government and the manufacturers are stepping more and more into operations with good intentions, but adverse results affect the environment at the store level. Dealers want to be good partners for the OEM; we need each other. The objective should be mutually the protection and promotion of free enterprise and a partnership promoting the welfare of each other. Win-win.” “All the laws and regulations in California are an attack on small businesses,” Chris stated. He believes that as the State increasingly gets out of its lane and drifts into the business community, the State’s bubble of power gets bigger and the dealer’s ability to conduct efficient business shrinks. “There is a tendency for humans to want to expand beyond our roles; it’s the same for businesses, organizations and government.” Abraham Kuyper, former Prime Minister of the Netherlands and philosopher, has had a major influence on Chris’s beliefs toward the roles of State, family, church, business and education. Kuyper taught that we all live and exist in different spheres and that the spheres can interact and stay separate — there are different areas of responsibility Getting to Know NCDA Incoming Chairman Photos: Chris George and his wife Debbie along with his racing bike, his favorite hobby. Chris George 8 SAN DIEGO DEALER
given to govern in the home, church, business and government. Kuyper’s vision was that all arenas are responsible for their own flourishing; without exerting power over other spheres in their core responsibilities. He labeled this Sphere Sovereignty. Chris plans on building relationships, communicating options where we are more aligned, yet providing solutions for working together instead of adhering to party lines without proper vetting. Sharing principles of Sphere Sovereignty, in his position as NCDA Chairman, during the upcoming year for the betterment of dealers and the association. “NCDA and its members exist to protect businesses, provide jobs and be a resource and partner in our communities.” He continued, “As the State government grows in power and control, and factories continue to expand their jurisdiction from production and support, wanting to control operations and retailing jeopardizes the free enterprise system; it breaks down the other spheres despite best intentions.” When asked about NCDA membership, Chris posed the question, “Are you conservative or progressive? Then what are you conserving or advancing? I hope it to be the preservation of what each of us has been given by God: Life, Liberty and Property.” As a proponent of private business, small government and individual rights, Chris wants members to help make change: “We need to be a ‘Bright Light,’ and we need engaged members who will come alongside. I am of the opinion, as written many years ago in the Declaration of Independence if we preserve life, liberty and property, economics will naturally begin to right-size itself.” “NCDA offers invaluable resources to its members; being engaged helps to make strong relationships in business, provides opportunities to meet with elected officials and helps strengthen the community,” Chris stated and went on to pose the question, “How effective will members be in five years? How engaged will the dealer body be in the next five years around the issues that affect our industry?” He continued, “If we treat our situation like it is currently being treated, or we treat it like our political system, we’re in trouble. As a country, state, community, city, or industry, we get exactly what we vote for. Unless we change, the results will not.” In his own words, Chris is a show me, don’t tell me kind of guy. He leads by example and is hopeful that his views on private business, small government and individual rights will guide his Chairmanship and the association to a better tomorrow. A place where the norm between industry and State is one of communication, cooperation and mutual understanding, as opposed to the current day where cultural power is wielded for its own sake. NCDA.COM 9
NCDA Golf Tournament & Annual Meeting/Luncheon THANK YOU TO ALL OF OUR SPONSORS AND PARTICIPANTS FOR MAKING THIS SUCH A WONDERFUL ANNUAL EVENT! 10 SAN DIEGO DEALER
NCDA.COM 11
Introducing New NCDA Board Members NATHAN THOMPSON GENERAL MANAGER AUTONATION SUBARU CARLSBAD Nathan has spent the majority of his life in the North County San Diego area. He has been at the same dealership for over 15 years, representing the Subaru brand, where he has held every position within the sales side of the business. Nathan is a 2022 graduate of the NADA Dealer Academy. Nathan has a growing family with his partner and two young daughters. He enjoys hiking, biking and beach or pool days with the family. He is also an avid car enthusiast with an ever-changing collection of sports, muscle and exotic cars. MEGAN QUEZADA GENERAL MANAGER BMW/MINI OF ESCONDIDO Megan started her career in automotive in 2010 in Orange County. Megan graduated from the NADA Dealer Academy in 2018 and has had various roles within Penske BMW/ MINI dealerships. Most recently, she moved to San Diego County in April 2022. She is married with one son and enjoys spending time with family by the beach. BANU GREWAL GENERAL MANAGER KEARNY MESA HYUNDAI Banu is originally from India and has attended college at Fresno State University, where he studied Business Administration. Banu commenced his automotive career at a Honda dealership in Fresno in 1998 as a salesperson. He then moved to San Diego in 2002 and went to work for Sunroad Auto Group at their flagship dealership, Pacific Honda. Banu has held various positions with the group and is now General Manager at Kearny Mesa Hyundai. Banu is married with a son and daughter and enjoys traveling and spending time with his family. New Associate Member NitroFill is the world’s leading manufacturer of nitrogen generation and inflation equipment and has been a premier provider of tire-related supplemental products for the automotive market for close to 20 years. NitroFill offers a pre-loadable Tire Protection Benefit program, which provides consumers with Tire Repair and Replacement Coverage and unlimited Roadside Assistance, along with a substantial customer retention and marketing program tailored to the dealer. Through our Tire Protection Benefit program, NitroFill adds and supports over half a million new members annually. Our continued growth is the result of superior products and service, fast claims response and overall attention to customer and dealership needs. Jason Scheiner Territory Manager jscheiner@nitrofill.com Cell: (858) 583-3484 | Office: (954) 970-1691 | www.nitrofillus.com 12 SAN DIEGO DEALER
California became the first U.S. state to enact a comprehensive consumer privacy law when it introduced the California Consumer Privacy Act in 2018 (CCPA), which California voters amended by passing the California Privacy Rights Act of 2020 (CPRA). The CPRA created the California Privacy Protection Agency (CPPA), a state government agency vested with administrative authority to implement and enforce the CCPA, as amended by the CPRA. The Agency’s final regulations to implement the CPRA amendments, which took effect Jan. 1, 2023, were approved with immediate effect on March 29, 2023. On July 6, 2023, the CPPA rolled out its soft launch of a new online complaint system, which is currently active on the CPPA’s website. The new electronic complaint form gives consumers, afforded the protections of the CCPA, the ability to lodge both sworn and unsworn complaints alleging possible violations of California privacy laws. In addition to the consumer’s contact information, the online complaint system requires the consumer to answer seven questions. The first question requires the consumer to check boxes describing what the complaint is about, with the option to check multiple boxes. These options include the rights to delete, correct, limit or opt out of information-sharing practices, as well as options for violations such as businesses making it “unclear” as to how a consumer can submit a privacy request. The second question requires the consumer to fill out information about the business the consumer is alleging has violated the CCPA. The third option asks whether the consumer is a California citizen or not, but makes it clear that the consumer does not need to reside in California to submit a complaint. The fourth and fifth questions require the consumer to provide more information about the allegations and provides the option for attaching supporting documents, such as a screenshot of correspondence between the consumer and the allegedly infringing business. The sixth question asks whether the consumer has contacted the business about the possible violation of privacy rights, and the last question asks whether the complaint being lodged is sworn or unsworn. The International Association of Privacy Professionals (IAPP) reported that CPPA Special Advisor Elizabeth Allen disclosed at the CPPA’s July 14, 2023 board meeting that the new online complaint system received 13 complaints since its soft-launch, that 54% of the complaints received were sworn, 54% of the complaints submitted were by California residents and the right to limit the use of sensitive personal information was the most frequently alleged violation of the CCPA. The CPPA intends to use the data it collects from these complaints to bring enforcement actions and to learn what rules and regulations of the CCPA are most commonly violated. Now, in addition to filing a consumer complaint form against a business/company with the California Attorney General’s Office, consumers also have the option of filing a more streamlined complaint directly with the CPPA, the agency directly responsible for handling allegations of violation of the CCPA. The implementation of this new online system is further evidence of California’s continued commitment to giving consumers more control over their personal information gathered from them during interactions with commercial business, making compliance with CCPA and the CPPA’s recent rollout of the online complaint system an increasingly important concern for businesses. Contributed by Scali Rassmusen | Scalirasmussen.com Recognized as California’s top boutique automotive law firm, their automotive industry clients include franchised dealership groups, independent auto dealerships, auto dealer associations, automotive internet marketing companies, automotive advertising agencies, finance companies and providers of after-market automotive products and services. New Website Allows Consumers To Lodge Privacy Violation Complaints Online By One S. Choi, Associate, Scali Rasmussen PC NCDA.COM 13
Meet Assemblywoman Laurie Davies Assemblywoman Laurie Davies represents the 74th Assembly District, which includes the communities of southern Orange County, such as Dana Point, Laguna Niguel, San Clemente and San Juan Capistrano, plus the communities of northern San Diego County, such as Camp Pendleton, Oceanside and Vista. Laurie Davies is a small business owner and former Mayor who was elected to the State Assembly in 2020 and reelected in 2022. Laurie serves on the following Assembly committees: Military (Vice Chair), Accountability, Transportation, Communications & Conveyance, Governmental Organization and Water, Parks & Wildlife. Originally from Wisconsin, after graduating from high school and saving enough money to buy a Cutlass Supreme, Laurie moved to Southern California to attend Cal State Long Beach. Like so many, Laurie packed up everything and headed west in pursuit of the California Dream. After earning her degree, Laurie planted roots in Orange County, where she worked locally in the restaurant and hospitality sector. Two decades ago, she launched a small business specializing in weddings and special events that she successfully still operates today. Over the course of nearly the last 20 years as an entrepreneur and small business owner, Laurie became active in the community. In recognition of her involvement in the community, she was awarded the Melvin Jones Fellowship Award from the Lions Club. Laurie was first elected to the Laguna Niguel City Council in 2012. She was appointed Mayor in 2015 and reelected in 2016. During her time on the Council, Laurie served as a Board Member on the Transportation Corridor Agency, Chaired the League of Cities Committee on Transportation, Communication and Public Works, and was elected to the OCTA. Laurie served the Board of the Association of California Cities Orange County as President. Laurie lives in Laguna Niguel with her husband, Neil. Assemblywoman Laurie Davies meets with NCDA Board Members. 14 SAN DIEGO DEALER
AD PLACEMENT
Ask Alison By ALISON MCCALLUM EPIC Insurance Brokers and Consultants integration. The table below shows the payroll tax impact on individuals earning greater than $153,164 next year. *Assuming the contribution percentage remains 0.9% CALIFORNIA STATE DISABILITY INSURANCE The California SDI program provides short-term Disability Insurance (DI) and Paid Family Leave (PFL) wage replacement benefits to eligible workers who need time off work. Employers with employees working in California may participate in the State plan or apply for approval to provide a voluntary plan to employees. Employees may be eligible for SDI if they are unable to work due to a non-work-related illness or injury, pregnancy or childbirth. To be eligible, individuals must be employed or actively looking for work at the time the disability begins and have earned at least $300 from which disability insurance deductions were withheld during the base period. Benefits for the state plan are funded through employee payroll deductions at a rate of 0.9% in 2023. The taxable wage limit in 2023 is $153,164 with a maximum annual withholding for an employee being $1,378.48. Starting in 2024, the taxable wage limit maximum cap for payroll deductions will be eliminated, meaning that all wages will be subject to the 2024 contribution rate with no annual maximum. The 2024 contribution rate has not been announced and may be less than, equal to, or greater than 0.9%. VOLUNTARY DISABILITY PLANS Employers may offer a state-approved voluntary plan (VDI) to employees instead of State Disability Insurance. Voluntary programs must meet a specific set of requirements and be approved by the California Employment Development Department (EDD). VDI program requirements include: • Written approval from the majority of employees eligible for coverage • Cannot cost employees more than SDI • Provide all the same benefits as SDI plus at least one that is better • Allow employees to reject the VDI plan and choose SDI coverage CALIFORNIA WILL ELIMINATE THE STATE DISABILITY WAGE CAP IN 2024 Starting in 2024, the wage cap for California State Disability Insurance (SDI) payroll deductions will be eliminated. Eliminating the wage cap will result in higher taxes and payroll deductions for individuals earning greater than $153,164 (the 2023 wage cap) per year. BACKGROUND Starting in January 2024, as part of California Senate Bill 951 (SB 951), all wages earned will be subject to state disability payroll deductions. This new measure is intended to help pay for California state-mandated disability insurance, which will increase the average weekly wage replacement to between 63% and 90% (varying on an individual’s average weekly wage) starting on Jan. 1, 2025. To fund the increased benefit amount, the state is removing the wage cap on contributions to the state insurance disability fund effective Jan. 1, 2024. With the California SDI wage ceiling eliminated, high-earning employees ($153,164 for 2023) will face higher payroll taxes. To mitigate the increased tax impact, employers have the option to offer voluntary disability insurance (VDI) to replace state disability insurance. For certain employee populations, a VDI plan can be less expensive than the state plan allowing employers to pass on lower tax contribution rates and/or wage ceilings (subject to approval). Employees not impacted by SB 951 will also see the value of a lower contribution percentage, increased benefits and seamless administrative EMPLOYEE EARNINGS $100,000 $200,000 $200,000 $300,000 $300,000 $400,000 $400,000 2023 Contributions $900 $1,378 $1,378 $1,378 2024 Contributions* $900 $1,800 $2,700 $3,600 Difference $0 $422 $1,322 $2,222 16 SAN DIEGO DEALER
• Covered employees must be given a written document that outlines their benefits • Must be offered to all eligible California employees of the employer. A separate program must be maintained for each FEIN with employees in California. • Must be updated to match any increase in benefits that SDI implements because of legislation or approved regulation The EDD will first grant conditional approval, pending submission of a security deposit based on the amount of the employer’s previous year’s taxable wages and the annual payroll deduction percentage (0.9% in 2023). Once an employer’s VDI is approved, they are no longer required to send State disability payroll deductions to the state, but rather the funds should be placed in a separate trust fund to pay their employees’ disability and paid family leave claims. An assessment paid to the state based on employees’ taxable wage amount is still required annually. NEXT STEPS FOR EMPLOYERS Work with your EPIC team to determine if a VDI plan is a good fit for your organization/employees: • Do you have a highly-paid workforce that will be adversely affected by the removal of the wage cap on SDI contributions? • Is your disability and PFL incidence rate low that would allow for a lower contribution rate or wage cap than SDI? • Is your company prepared to assist in funding the VDI plan in the event employee contributions are not sufficient to pay claims and administrative costs, especially in the early years? • Are you working with an STD claims administrator that can also manage a VDI plan or will you need to find a new or separate vendor? • Is your benefits/financial team equipped to take on the additional administrative and financial reporting responsibilities required by the EDD? • Does your company operate under a single FEIN within California? Employers with multiple FEINs must maintain separate plans for each FEIN including separate bonds and bank accounts. If you would like more information on this change, EPIC will provide details to NCDA San Diego 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 San Diego 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. • Labor Relations • Employee handbooks • Employment Law Counseling and Litigation • HR Policies and procedures • Independent contractor issues • OSHA Compliance and defense • Purchasing or selling a dealership • Staffing and contingent workers • Workers’ Compensation • Wage and hour law A driving force in labor and employment law for more than 70 years. Fisher Phillips brings valuable legal counsel to NCDA members. Our labor and employment law firm offers auto dealerships the following services: fisherphillips.com 4747 Executive Drive | Suite 1000 | San Diego, CA 92121 NCDA.COM 17
BACKGROUND In 1993, CalEPA created the Certified Unified Program Agency (CUPA) which is a local agency certified by CalEPA to implement and enforce six state hazardous waste and hazardous materials regulatory management programs. CUPA inspectors enforce hazardous waste, storage tank and emergency preparedness regulations, amongst others. In our observation, the enforcement level varies from county to county and even inspector to inspector; however, the level of enforcement is up significantly, with many paying penalties for violations. We discuss some recent CUPA violations issued via a Notice of Violations (NOV). Needless to say, any NOV issued must be abated within the stipulated time and the county inspector must be informed in writing. As part of the preparation for the annual CUPA inspector visit, we have noted some common CUPA violations. We will discuss this during our visit to clients as well. Dealership management must go through the listed items below and undertake remedial steps. Common CUPA inspection items are as follows: California Environmental Reporting System (CERS): All facilities with hazmat in excess of 55 gallons, or 200 cu. ft. of compressed gas, must report hazmat on CERS (state portal) and update annually. This reporting is similar to the federal Tier II reporting requirements but more expansive. CERS includes items as follows: • Keep inventory, facility maps and the emergency contact list with cell number to respond to a hazmat emergency, including after hours. Preferably, the contacts must be aware of hazmat and its location on the lot. Contact living close is preferable as well. • Maintain a copy of the CERS plan and ensure all managers have read the plan and know its location. • Train employees on an emergency response plan (CERS report) and seek written acknowledgment from employees. • Train employees on spill response and provide spill kits. Spill kits (multiple) must be located in the shop and in the bulk oil tank storage area, preferably yellow drums that are easily recognizable. Spill kits consist of absorbent snakes (help build a dike), absorbent pads and good old absorbent powder. Note that time is of the essence when combating oil spills. Label them in bold letters “Spill Kit,” and if the drum is not yellow, you may take a yellow can of paint and paint the lid yellow. • If the bulk oil tanks are in the shop area or in the drive area where they can be impacted by shop traffic, install bollards to protect them. Hazardous Material (and Waste) Storage Regulations: • Ensure ALL containers have lids and are labeled with their content. Ensure lids are secured on waste drums and/or fill ports on tanks are closed when not in active use. • Conduct WEEKLY inspections of hazardous waste storage areas. Keep logs for three years. Daily inspection may be necessary if the facility is subject to an SPCC plan. • Ensure drums that previously stored hazardous materials/waste are labeled “empty as of mm/dd/yyyy.” Once the container is reused for hazardous waste storage, remove the empty label/sign. • Brake fluid has different characteristics than used motor oil and, as such, should be disposed of as a separate hazardous waste stream. Similarly, contaminated gasoline must be stored and disposed of separately. • Ensure waste is not stored for more than 90 days. Observe the “Accumulation Start Date” on the waste label to ensure the 90-day storage clock is not exceeded. Contact the waste hauler to dispose of waste if the 90-day window is closing. Shop managers must keep the waste hauler and their rep’s phone number on their cell. • Ensure all hazardous material containers (oil quarts, coolant containers, etc.) are completely empty (drip-dry) prior to disposing in the trash. Aerosol cans, i.e., must also be completely empty. • Ensure all waste caddies are labeled for their content and disposition/disposal, i.e., “Waste Oil — Empty Daily” or “Waste Coolant — Empty Daily.” • Ensure all waste containers 55 gallons or greater have secondary containment. Also, ensure containment is kept clean. Waste Tank Structural Assessment (Title 22): Waste tanks need a structural assessment conducted by a registered Professional Engineer (PE) every five years. Facilities generating less than 1000 kg/ month of waste are exempt from this requirement. Keep the tank report accessible. Spill Prevention Control & Containment Plan: Facilities with petroleum products storage exceeding 1,320 gallons must have a current Spill Prevention Control & Countermeasure Plan (SPCC). Conduct DAILY inspections of the aboveground storage tanks. Maintain log(s) for a minimum of three years for recordkeeping. The plan must be renewed every five years. Waste Disposal Paperwork (and Manifest): Maintain all waste manifests for hazardous waste pick-up docs on site for three years. When a hazardous waste manifest is generated, copy the manifest and mail the copy to DTSC Generator Manifests, Department of Toxic Substances Control, P.O. Box 400, Sacramento, CA 95812. Once a signed copy is received from the TSDF, match the signed copy to the original manifest copy. The six-page manifest is expressly required for waste streams such as contaminated gasoline and waste brake fluid. County (CUPA) Inspector Coming: Are You Ready? By Sam Celly, BChE MChE, JD CSP, Celly Services, Inc. 18 SAN DIEGO DEALER
Used oil and used coolant are exempt from the six-page manifest process. To read the Hazardous Waste Manifest Information, scan the QR code. https://dtsc.ca.gov/ hazardous-waste-manifest-information UNIVERSAL WASTE CONSIDERATIONS Common Universal Waste: Includes any electronic device that is hazardous waste, such as computers, televisions, VCRs, stereos, copiers and fax machines. Other wastes such as household-type batteries, electric lamps, non-empty aerosol cans, cathode ray tubes and mercury switches are considered universal waste. Federal Exemptions: In 2011, the U.S. EPA created an exemption for businesses that generate a combination of hazardous waste (Resource Conservation and Recovery Act [RCRA] wastes) and universal waste in an amount of less than 100 kg/month. California has enacted regulations that require all facilities, without any exemptions, to recycle all universal waste. KEY PERSONNEL Service Manager: The Service Manager and other managers must be on top of environmental issues that arise in CUPA inspections. It is critical to establish processes as follows: • What are the duties of the management staff regarding hazardous waste compliance? • Who completed training on hazmat (including an annual refresher) and emergency response, and where are the documents maintained? Where is it kept for easy access? • Facility Inspection: The Service Manager or another department manager must accompany the inspector on the annual walkthrough. Notice of Violations (NOV), if any are issued, must be corrected in the established time frame. Who is responsible for completing the tasks noted on violations? The penalties occur when the NOV goes unanswered. Some dealerships change managers often, and new managers fail to address the pending violations in a timely manner. Establish a process that requires the General Manager to be copied on any violations that are handed to the dealership. The General Manager should monitor and ensure the correction of violations. CSI must be copied on the violation as well. 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. 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
AD PLACEMENT Get compliant. Protect your bottom line. We make it simple for dealerships to navigate compliance With a combined 95 years of environmental health and safety compliance experience in automotive operations across the country, our Certified Safety Professionals (CSP) can help you reduce risk and increase profits. Permits and registrations — BAR, EPA, DIR Specialized employee training upon request from your dealership Online training program (elearning) Environmental Protection Agency compliance and environmental risk management DOT hazmat shipping certification Workplace health and safety compliance Environmental health and safety training Why choose us? Training We’ll help find a solution that works for you LET’S TALK! www.cellyservices.com 562.704.4000
129,281 145,995 131,908 143,600 2020 Actual 2021 Actual 2022 Actual 2023 Forecast Covering Second Quarter 2023 Released July 2023 San Diego Auto Outlook Comprehensive information on the San Diego County new vehicle market Market Summary Forecast for County New Retail Light Vehicle Registrations Domestics consist of vehicles sold by GM, Ford, Stellantis (excluding Alfa Romeo and FIAT), Tesla, Rivian, and Lucid. Data sourced from Experian Automotive. The graph above shows annual new retail light vehicle registrations from 2020 through 2022 and Auto Outlook’s projection for 2023. Historical data sourced from Experian Automotive. DOWN 9.3% vs. ‘19 UP 12.9% vs. ‘20 DOWN 9.6% vs. ‘21 UP 8.9% vs. ‘22 YTD '22 YTD '23 % Chg. Mkt. Share June June '22 to '23 YTD '23 TOTAL 67,696 71,367 5.4% Car 19,337 20,004 3.4% 28.0% Light Truck 48,359 51,363 6.2% 72.0% Domestic 21,385 25,922 21.2% 36.3% European 10,488 10,284 -1.9% 14.4% Japanese 28,761 27,989 -2.7% 39.2% Korean 7,062 7,172 1.6% 10.0% NEW VEHICLE MARKET FORECAST Recovery Gains Momentum; 2Q ‘23 Registrations Up 10.2% vs. 2Q ‘22 Below is a list of 10 key trends and developments in the San Diego County new vehicle market: 1. County new retail light vehicle registrations increased 5.4% in the first half of this year versus year-earlier levels. The U.S. market was up by 3.9%. 2. The pace of improvement should pick up steam in the second half of the year. The county market is predicted to increase 12.5% from July through December of 2023 versus weak results in the second half of 2022 when supply chain interruptions significantly impacted sales. 3. As shown on the graph below, registrations for all of this year are projected to exceed 143,000 units and improve 8.9% from 2022. 4. Light truck market share increased slightly from 71.4% during the first six months of 2022 to 72.0% this year. 5. Fueled by gains from Tesla, Domestic brand registrations were up 21.2% so far this year and market share reached 36.3%. 6. Battery electric vehicles accounted for 22.1% of the market in the first half of this year, up from 14.3% last year. 7. Brands with the largest percentage increases in registrations during the first six months of this year (among top 30 brands): Rivian, Tesla, Chrysler, Cadillac, Chevrolet, Honda, Genesis, Volvo, Audi, and MINI. 8. Three biggest segments in the county are Compact SUV, Luxury Compact SUV, and Small Car. 9. County market share leaders in the first half of 2023 were Toyota, Tesla, Honda, Ford, and Chevrolet. 10. Top ten selling vehicles in San Diego County market: Tesla Model Y, Tesla Model 3, Toyota RAV4, Honda CR-V, Honda Civic, Toyota Tacoma, Honda Accord, Chevrolet Silverado, Toyota Camry, and Ford F-Series. Outlook for next two years: New vehicle market predicted to improve, but sales should remain close to average levels A significant number of new vehicle purchases have been postponed since the onset of the pandemic in 2020. Estimated pent-up demand in the county market has reached 45,516 units, approximately 36% of average annual registrations (see page 3). It has been our contention that once vehicle production recovered, this “stored potential” would more than offset the drag on sales resulting from higher interest rates, a slowing economy, and weakening vehicle affordability. And the 10.2% year-over-year increase in 2Q registrations sends a strong signal that this is indeed the case. The market should have enough gas in the tank to move higher this year, with recovery almost certainly lasting into 2024. NCDA.COM 21
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 sourced from Experian Automotive.” 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 Market Dashboard 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) 17.7 15.0 13.6 14.7 14.2 13.8 14.3 14.8 15.6 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Millions Data sourced from Experian Automotive. SAAR estimates: Auto Outlook. COUNTY MARKET VS. U.S. San Diego County UP 5.4% U.S. UP 3.9% Data sourced from Experian Automotive. % Change In New Retail Market YTD 2023 thru June vs. YTD 2022 New retail light vehicle registrations in the county were up 5.4% during the first six months of this year, better than the 3.9% increase 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. Equivalent SAAR levels in the county increased from 14.8 million in the First Quarter of this year to 15.6 million in the Second Quarter. 22 SAN DIEGO DEALER
Covering Second Quarter 2023 Page 3 San Diego County New Vehicle Market Dashboard San Diego County New Vehicle Market Dashboard TRACKING ECONOMIC INDICATORS Up $0.57 vs. year earlier MAY 2022 SU MO TU WE TH FR SA 2.9% Monthly Unemployment Rates in San Diego County APRIL 2023 SU MO TU WE TH FR SA 3.3% MAY 2023 SU MO TU WE TH FR SA 3.5% Average Hourly Earnings for All Workers in County - May 2023 $36.76 Sources: Bureau of Labor Statistics, University of Michigan, and U.S. Bureau of Econ. Analysis. Estimated 45,516 new vehicle purchases will be postponed between 2020 & 2023 representing 36% of sales in an average year PENT-UP DEMAND Actual and forecast new retail light vehicle registrations versus hypothetical levels if pandemic and ensuing supply chain shortages had not occurred Data sourced from Experian Automotive. Projections: Auto Outlook. The county unemployment rate was less than 4% in May of this year. Wages were up versus year earlier. Consumer sentiment has stabilized and total household wealth increased in 1Q ‘23. 0.0 40.0 80.0 120.0 160.0 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 Quarters shown for each year Household Net Worth Trillions of $ (U.S.) 145000 146500 149400 155400 129281 145995 131908 143600 2020 2021 2022 2022 Hypothetical if pandemic did not occur Actual results and forecast University of Michigan Consumer Sentiment (U.S.) Key Values During Past 10 Years 10 year high - 101.4 (Mar. 2018) Most recent - 63.9 (June 2023) 12 month high - 67.0 (Feb. 2023) 10 year low - 50.0 (Jun. 2022) NCDA.COM 23
Covering Second Quarter 2023 Page 5 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 YTD '22 YTD '23 YTD '22 YTD '23 YTD '22 YTD '23 Hybrid BEV PHEV New vehicle registrations Franchised Direct Cleveland Area New Vehicle Market Dashboard Data sourced from Experian Automotive. Hybrid vehicle market share excludes mild hybrids. Vehicle Powertrain Dashboard Quarterly Alternative Powertrain Market Share (includes hybrid and electric vehicles) YTD Share by Engine Type (2022 and 2023, thru June) KEY FACTS • Battery electric vehicle market share increased from 14.3% in the first half of ‘22 to 22.1% in 2023, and improved from the First to the Second Quarter of this year. • The industry is almost singularly focused on growth in BEV sales and market share. As a result, sales gains for hybrids have been largely ignored, which should not be the case. Hybrid vehicles provide a valuable “bridge” as the industry transitions to BEVs. They have better fuel economy than ICE vehicles, reduced emissions, and are less costly than BEVs. • As shown above, hybrid vehicle market share in the county increased to 11.5% in the first half of this year. And 100% of hybrids were sold by franchised dealerships. • The graph on the left shows new vehicle registrations for Hybrids, BEVs, and PHEVs broken down by type of selling dealership. Franchised dealerships accounted for more than 59% of combined sales for all three alternative powertrain types. • Franchised dealership share of the BEV-only market increased slightly to 31.5% in the first half of this year. New Hybrid, BEV, and PHEV Registrations in San Diego County by Type of Selling Dealership - YTD 2022 and 2023 thru June The graph above shows new vehicle registrations for hybrids, BEVs, and PHEVs during the first six months of 2022 and 2023. Orange shaded areas represent vehicles sold by franchised dealerships and blue areas for direct sellers. Data sourced from Experian Automotive. 0.0% 6.0% 12.0% 18.0% 24.0% 30.0% Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Electric (BEV) Hybrid Plug In Hybrid (PHEV) YTD '22 YTD '23 Electric (BEV) 14.3% 22.1% Hybrid 10.5% 11.5% Plug In Hybrid (PHEV) 2.9% 3.4% 24 SAN DIEGO DEALER
Page 6 San Diego Auto Outlook -20.4% -9.8% -8.9% -8.5% -5.4% -0.4% 2.1% 2.4% 6.4% 8.2% 12.5% 15.1% -32.7% -25.3% -10.6% -9.9% -6.6% 2.3% 4.8% 8.6% 8.8% 10.0% -20.2% -11.2% -3.2% -0.3% 7.0% 7.9% 23.9% 24.7% 28.5% 35.3% 51.9% Nissan Subaru Infiniti Toyota Acura Hyundai Mitsubishi Kia Lexus Mazda Genesis Honda Alfa Romeo Jaguar Porsche Volkswagen Mercedes BMW Land Rover MINI Audi Volvo Ram Jeep Dodge Ford GMC Lincoln Chevrolet Cadillac Chrysler Buick Tesla BRAND SCOREBOARD Registrations Increased for 18 Brands in First Half of 2023 Percent Change in San Diego County New Retail Light Vehicle Registrations YTD 2023 thru June vs. YTD 2022 The graph below provides a comparative evaluation of brand sales performance in the San Diego County market. It shows the percent change in registrations during the first six months of this year versus year-earlier for each brand, organized by category (i.e., Domestic, European, and Asian). Although supply chain issues are easing, results for some brands have been impacted by restricted inventories during the past 18 months. Data sourced from Experian Automotive. Domestic Largest percent increases in first half 2023: Tesla and Buick European Brands Largest percent increases in first half 2023: Volvo and Audi Asian Brands Largest percent increases in first half 2023: Honda and Genesis NCDA.COM 25
www.thenewslinkgroup.orgRkJQdWJsaXNoZXIy MTg3NDExNQ==