SPRING 2024 OFFICIAL PUBLICATION OF THE NEW CAR DEALERS ASSOCIATION SAN DIEGO COUNTY The San Diego International Auto Show Where the Cars Are the Stars®
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 businesses • Trust Agreements including lifetime benefit trusts • Gift and Estate Tax planning Tax • Property Tax planning, audits, and appeals • Federal estate and gift tax controversy audits • 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 of automobiles • Manufacturer audit disputes • Hearings before the AQMD, RWQC and OSHA Real Estate • Dealership site acquisition and dispositions • Lease agreements • Lender Opinion Letters Employment Practices • Wage and hour class action lawsuits • Private Attorneys General Act (PAGA) claims • Arbitration Agreements • Employer Handbooks and Employer Compliance Procedures Ferruzzo & Ferruzzo, LLP began providing legal representation to new car and truck dealers over 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 25 attorneys, we provide a spectrum of legal services to support every aspect of running and owning your new car and/or truck dealership. We have practice groups in each area of the law that service the needs of you and your dealership.
Anticipate every turn In an industry that’s always evolving, your dealership can rely on our Dealer Financial Services team’s 90 years of experience to see what’s around the corner, forward-thinking insights to prepare you, and technology to keep you ahead of the curve. What would you like the power to do?® Bob Ludwig, robert.ludwig@bofa.com business.bofa.com/dealer ©2023 Bank of America Corporation. All rights reserved. DFS-699-AD 5949042 Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value “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, derivatives, 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., which is a registered broker-dealer and Member of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. is a registered futures commission merchant with the CFTC and a member of the NFA.
© 2024 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 ERIC TRACY........................... DISTRICT 1 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 NATHAN THOMPSON............ DISTRICT 1 NCDA STAFF SCOTT WEBB PRESIDENT 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 8 18 Publication 12 | 2023-2024 Issue 2 | Spring 6 LETTER FROM THE PRESIDENT Driving Engagement at the Auto Show 8 The San Diego International Auto Show Where the Cars Are the Stars® 13 NEW ASSOCIATE MEMBER American Fidelity 14 Ransomware Costs Businesses Record-High $1 Billion in 2023 Your 5-Step Plan to Prevent Attacks in 2024 By Fisher Phillips 16 Safe Driving at Work By Sam Celly, BChE MChE, JD CSP, Celly Services Inc. 18 Redefining What It Means To Be a Supercar in an Electrified Era Bridging the Divide: Plans for Manufacturers to Satisfy Car Enthusiasts and Dealers By Alysha Webb, Editor, Scali Rassmussen, Getting to Go! 19 Ask Alison: Is Your Dealership Compliant? By Alison McCallum, EPIC Insurance Brokers and Consultants 20 San Diego Auto Outlook First Quarter 2024 4 SAN DIEGO DEALER
A Better Core in 2024 DominionDMS.com (866) 928-3210 1515 South Federal Highway, Suite 406 Boca Raton, FL 33432, USA SCHEDULE YOUR DEMO Discover how VUE By Dominion DMS gives your dealership: Hearing the cries of the automotive community, we developed a brand new cloud core DMS, called VUE. This software is flexible, efficient and innovative. Schedule a demo and upgrade to a Better Core in 2024. EFFICIENCY INNOVATION FLEXIBILITY SAVINGS Personalization, Engagement, and Speed – the holy trinity of an amazing customer experience. Being a cloud-core DMS and using agile development methodologies means that we can keep dishing out top-notch solutions for our dealers and partners. Dominion DMS is easy to learn and simple to use. You have easy access from any web connection and you get to choose the apps you want and need to drive your success. Behold, VUE! Waving a magic wand to make DMS core fees vanish into thin air. Franchise dealerships can now save while still enjoying our best in class accounting, parts, sales, and service modules.
Dear Dealer Members, This issue of San Diego Dealer highlights our premier event, the San Diego International Auto Show, “Where the Cars are the Stars.®” I want to take this opportunity to offer a big “thank you” to the manufacturers and dealers who helped make this year’s show so successful. The 2024 edition of the San Diego Auto Show drew enthusiastic crowds that engaged with exhibitors throughout all four days of the show (Dec. 29-Jan. 1). This year’s show featured a wide variety of vehicles on display from more brands than last year, as well as 20 debuts and new releases, a record 35 plug-in vehicles, outdoor test drives of both gas, hybrid and electric vehicles, and an all-new, indoor EV test track. Letter From the President Driving Engagement at the Auto Show Scott Webb, President, NCDA An increasing number of dealer ad associations, dealer groups and individual dealerships have stepped up to support the show, and all benefitted from engagement with the thousands upon thousands of car buyers who have shown no lack of interest in auto shows. Our post-show survey of attendees and non-attendees alike offers valuable audience insights that reflect the incredible influence the San Diego Auto Show has on car shoppers. It also documents how absent brands are truly missing out as car buyers replace their offerings on consideration lists with vehicles that are on display and available for test drives at the show. On a related note, the biggest ask from current and prior attendees is that they want to see more brands at the show. Not only is the auto show the most effective opportunity for automakers and dealers to engage consumers and influence vehicle purchase decisions, it’s also the primary fundraising mechanism for the New Car Dealer Association. With that, I urge you to review the data presented in this issue, and to consider the unbeatable marketing opportunities at the show as you have discussions with automakers and your fellow dealers about future marketing initiatives. Best regards, Scott • 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
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
The San Diego International Auto Show Where the Cars Are the Stars® 8 SAN DIEGO DEALER
We’re excited to report that the 2024 San Diego International Auto Show was another tremendous success, drawing thousands upon thousands of car buyers to the San Diego Convention Center during its four-day run (Dec 29-Jan 1). As the second edition of the show since the COVID-19 hiatus, the San Diego Auto Show provided an enhanced attendee experience by adding brands/vehicles (Subaru, Cadillac and Mazda) and bringing new attractions to the show floor (Nissan Arriya EV Test Track), plus, a record number of EVs and plug-in vehicles for consumers to experience in a variety of different ways. During the show, the San Diego Convention Center was transformed into the largest new vehicle showroom in California. Attendees flooded the show floor to check out all-new vehicle debuts, comparison shop various makes and models, learn about the latest new technology and even take test drives/ rides of new models. And compare they did, with attendees sitting in an average of 12 vehicles while at the show and ranking number two on the list of top reasons to attend the show. Spend some time on the show floor and it becomes clear why auto show attendees tell us that no form of advertising influences more new vehicle purchases than the auto show — not TV, not radio and not even digital. While visiting manufacturer exhibits, engaging with product specialists and taking test drives, car buyers were adding vehicles to their consideration lists and making purchase decisions right then and there. Need more convincing of the power of auto shows? Look no further than these key stats from our post-show survey: • For 60% of our audience, attending the auto show influenced which brand/vehicle they might buy. • More than 50% of attendees added a brand to their consideration lists as a result of attending the show. • 60% of attendees confirmed that a previous vehicle purchase was influenced by attending the San Diego Auto Show. Epitomizing our trademarked slogan, “Where the cars are the stars,” San Diegans saw a wide variety of debuts and new releases for the first time at the show. Ranked as the number one reason consumers NCDA.COM 9
attend the San Diego Auto Show, these debuts represented a variety of key market segments, including EVs, hybrids, crossovers, sports cars, pickups and sedans. Among the debuts on hand were: • 2024 Chevrolet Blazer EV • 2024 Chevrolet Corvette E-Ray • 2024 Chevrolet Equinox EV • 2024 Chevrolet Silverado EV • 2024 Chevrolet Traverse • 2024 Ford F-150 • 2024 Ford Ranger • 2024 Honda Prologue • 2024 Hyundai Kona Electric • 2024 Hyundai Santa Fe • 2024 Kia EV9 • 2024 Kia Sorrento • 2025 Kia Sorrento PHEV • 2024 Lexus GX 500 • 2024 Lexus TX • 2024 Nissan Frontier Hardbody • 2025 Toyota Camry • 2025 Toyota Crown Signia • 2024 Toyota Tacoma • 2025 Volkswagen ID. Buzz Consumers were not restricted to static vehicles and displays as they shopped for their next new vehicles. Dealers know how influential test drives can be, and for those who test-drove a vehicle, it was their number one reason for attending the San Diego Auto Show. Brands offering outdoor test drives this year included Audi, Chevrolet, Ford and Kia. New for this year was the Nissan EV Test Track, which provided a thrilling EV ride experience right on the show floor. And speaking of EVs, this year’s San Diego Auto Show was fully charged with a record 35 different EV models on display and/or available for test drives/rides. That’s 40% more manufacturer EVs than appear at highly touted, EV-only events, and confirmation that the San Diego Auto Show will continue to lead San Diego’s transformation to an all-electric future as the largest and most important EV event in the region. Survey results indicate that more than half of San Diego Auto Show attendees are considering the purchase or lease of a plug-in vehicle, and that number jumps to almost 70% for those who test-drove an EV at the show. And of those who test-drove an EV, it was the first time behind the wheel of an electric vehicle for 40% of them. It’s clear that nowhere else will EV automakers and dealers be able to engage and influence more consumers considering an EV purchase, as well as those on the fence and/or skeptical of EVs. Knowing that many consumers have questions about EV ownership and are interested in comparing EVs side-by-side, Electric Avenue returned as a hub for all things electric and featured a variety of plug-in vehicles from Cadillac, Ford, Hyundai, Kia, Mazda, Mitsubishi, Subaru, Toyota and Volkswagen. Several manufacturer product specialists and volunteers from the Electric Vehicle Association were on hand to help consumers understand the EV value proposition, and companies in the energy and charging space rounded out the exhibit. The seeds planted at the auto show continue to bear fruit throughout the year and extend well beyond the walls of the convention center, as San Diego Auto Show attendees are considered experts within their peer groups. In fact, two-thirds of San Diego Auto Show attendees give car-buying advice two or more times a year, while 21% offer advice more than six times a year. While consumers are excited to see the wide variety of vehicles and brands on display, our attendee survey also demonstrates that they’re vocal when it comes to brands not represented at the show. More than half of auto show attendees indicate that a brand’s absence will affect their consideration of that brand. Through comments in the survey, car buyers tell us again and again that vehicles they can’t see at the show are pushed further down and often entirely off of their consideration lists in favor of vehicles that are present on the show floor or in test drives. 10 SAN DIEGO DEALER
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With growing inventories and increased sales competition, the San Diego Auto Show is prepared to help dealers move the sales needle. To incentivize absent brands to return to the San Diego Auto Show, we’ve developed affordable, turn-key packages for OE regions and dealer groups that maximize ROI and minimize extra work. These packages can include everything from exhibit space, carpet and branded exhibit properties, to vehicle prep & logistics, product specialists and leadgeneration equipment/ software. And support isn’t limited to static displays, as we can deploy resources for dealersupported ride and drive programs as well. Honda, Mitsubishi and Stellantis dealers have utilized many of these services over the past two shows, with great success. To enhance the show-going experience for attendees, feature attractions were popular once again this year. The GoldenBoy Mobility Zone featured a wide variety of accessible vehicles and adaptive equipment to help those with physical challenges, and the San Diego Automotive Museum brought an incredible array of impressive cars to the show. The all-new Adventure Van Basecamp included a variety of custom van conversions from the top upfitters in the industry. Sunday’s Family Day offered free admission to all children 12 and under to enjoy the many kid-friendly activities at the show. Nissan returned to sponsor our Military Appreciation program, which included the distribution of thousands of complimentary tickets to active and recently retired military personnel from their San Diego stores, in addition to supporting our military discount offers. And if people didn’t attend the show (and they missed a great one!), it wasn’t for lack of exposure. Media coverage of the show was exceptional, with local media outlets providing outstanding coverage throughout the entire run of the show. The San Diego Auto Show has always enjoyed a great relationship with local media, who understand that supporting the dealer community through auto show coverage parlays into success throughout the year for all concerned. Thank you to all of our valuable media partners for your continued support. 12 SAN DIEGO DEALER
American Fidelity provides employer cost-savings solutions and supplemental insurance benefits to the automotive industry. Acting as an extension of the human resources department, we educate, enroll and support the development of robust, competitive insurance packages — all while ensuring seamless administration and employee satisfaction. As experts in employer benefit solutions, our salaried account managers deliver year-round support, help employers overcome benefit administrative challenges and always offer a different perspective — a different opinion. To learn more, contact Senior Account Executive Evan Archer at (619) 743-3850 or evan.archer@americanfidelity.com, or visit americanfidelity.com. New Associate Member EPICBROKERS.COM ©2024 Edgewood Partners Insurance Center. All rights reserved. | CA License: 0B29370 EPIC Insurance Brokers & Consultants is proud of its partnership with more than 300 California dealerships and is the CNCDA’s only licensed broker for health insurance and employee benefits. As the dealers’ consultant, experience what EPIC can do for you, including: • A team producing significant results with decades of experience understanding the specific needs of dealerships • Fully insured and unique alternative funding options to best fit your needs and generate the best possible costs • Full compliance services and HR support for your team LEARN MORE ABOUT OUR SERVICES BY CONTACTING: Alison McCallum (949) 422-6431 alison.mccallum@epicbrokers.com NCDA.COM 13
Ransomware Costs Businesses Record-High $1 Billion in 2023 Your 5-Step Plan to Prevent Attacks in 2024 By Fisher Phillips 2023 was the most devastating year yet for ransomware attacks, with businesses forking over $1 billion in ransom payments for the first time ever — and 2024 is expected to be even worse. Beyond the payments, the average cost of each ransomware attack last year was over $5 million. Given these unprecedented statistics, ransomware attacks could be the largest looming threat to your business in 2024. This insight provides a clear five-step plan to help you lower the odds of falling prey to a costly attack. The Basics • Ransomware is malicious software that blocks access to computer systems or files until you pay a sum of money to the cybercriminals who have infiltrated your business. They gain access by exploiting system vulnerabilities (sometimes through a third party or vendor that has access to your system) or by luring your employees into clicking on links or attachments or responding to phishing emails or “smishing” texts (phishing through SMS texts). • The $1.1 billion tally of ransoms paid in 2023 was particularly shocking because it nearly doubled the $567 million in ransoms paid out in 2022. • Not including the payouts, the average cost of a ransomware attack — including detection and escalation, notification, post-breach response and lost business — rose to $5.13 million in 2023, which represents a 13% increase from 2022. • Federal and international law enforcement have deployed extensive efforts to minimize ransomware attacks on a global scale. In fact, the FBI and UK National Crime Agency made headlines as they implemented “Operation Cronos” and disrupted one of the world’s most potent ransomware attackers. • Despite law enforcement’s efforts to smother these cyber threats, experts project an increase in cyber syndicates in 2024. Allan Liska, threat intelligence analyst at cybersecurity firm Recorded Future, commented, “A major thing we’re seeing is the astronomical growth in the number of threat actors carrying out ransomware attacks.” Recorded Future reported 538 new ransomware variants in 2023. 5-Step Plan for Businesses to Prevent Costly Ransomware Attacks in 2024 1. Provide Updated Cybersecurity Training You should provide updated and robust cybersecurity training to all your employees (including very busy executives) on an annual basis. According to the 2023 Cost of Data Breach Report (CODBR), phishing and compromised credentials were the most common 14 SAN DIEGO DEALER
initial attack vectors for data breaches, demonstrating that threat actors still count on a shortfall in employee oversight to gain access to valuable, confidential data. The latest data from the CODBR also suggests that cybersecurity training is a wise investment for employers. In 2023, organizations with a high level of employee training that suffered a data breach incurred a significantly lower-than-average cost in managing and responding to the data breach incident. On average, data breaches cost $770,000 less for organizations with a high level of employee training and $640,000 more for organizations with low levels of employee training. This data underscores the importance of ensuring that all employees with access to sensitive data are familiar with the basic principles of data security. Make sure to train them to understand the red flags that will help them detect phishing emails and other common tactics used to compromise credentials. 2. Maintain and Test Your Incident Response Plan Create, maintain and exercise a data security incident response plan (which addresses all data security incidents, not just those rising to the level of a reportable data breach under applicable law), resiliency plan and associated communications plan. The response plan should include response and notification procedures for ransomware incidents. You should also ensure that your incident response plan is regularly tested and updated, as cyberthreats are quickly evolving. Engage in what is called a “tabletop exercise” at least annually, which is like a fire drill but for data security. According to the 2023 CODBR, employers who maintained an incident response team and plan were able to identify and contain data breaches an average of 54 days (19.4%) faster than employers who did not maintain an incident response strategy. Lower identification and containment times provably lower the cost of a potential breach, as breaches with identification and containment times under 200 days cost organizations 23% less in 2023 than organizations who took longer to identify and contain data breaches. 3. Implement Artificial Intelligence or Automated Cybersecurity As ransomware gangs continue to rely on new strains of malware and other new technologies to infiltrate valuable data, you should familiarize yourself with the latest defense and detection technologies to develop more proactive cybersecurity systems. For example, using artificial intelligence (AI) and automation across cybersecurity threat detection and response tools can help analysts detect new threats faster and more accurately than ever before. These technologies have already proven effective for employers who fell victim to data breaches in 2023. In fact, the 2023 CODBR found that employers that extensively used AI or automated cybersecurity systems saved nearly $1.8 million in data breach costs and enjoyed accelerated data breach identification by over 100 days, on average. 4. Secure and Encrypt Data Stored in the Cloud Due to the increased number of remote workers, many employers have implemented cloud-based storage and systems into the workplace over the past several years. Given this rise in popularity, threat actors have consistently targeted these stockpiles of valuable data, including employee and consumer personally identifiable information (PII). In 2023, in fact, 82% of all data breaches involved cloud-based data, and these breaches involved higher costs and longer identification and containment times. To reduce risk, you should require multifactor authentication for employees to gain access to company networks. You should also create and maintain secure, offline and encrypted backups of your data and regularly test those backups. Moreover, you should choose strong cloud providers that adhere to strict security protocols and standards, such as the implementation of DevSpecOps application development. 5. Engage Counsel to Ensure Regulatory Compliance Businesses across the country continue to face increased data privacy requirements thanks to a wave of new laws cropping up state by state. For example, The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) may impose federal sanctions on companies that facilitate ransomware payments to a sanctioned person, even if the ransomware victim was unaware of the sanction nexus. Failure to comply with such regulations proved costly for employers impacted by data breaches in 2023. According to the 2023 CODBR, organizations with low levels of regulatory compliance suffered an average cost of $5.05 million per data breach, a whopping $1.04 million more than organizations with high levels of regulatory compliance. Fortunately, you can easily avoid this unnecessary cost by engaging knowledgeable counsel before a breach occurs to not only ensure compliance with data privacy regulations but also to put yourself in the best position to minimize such threats. Conclusion Fisher Phillips will continue to monitor further developments in this area, so scan the QR code to subscribe to Fisher Phillips’ Insight system to stay up-to-date. If you have any questions regarding how cybersecurity threats could impact your organization or best practices for addressing those threats, please consult your Fisher Phillips attorney, the authors of this Insight or a member of Fisher Phillips’ Data Security and Workplace Privacy Practice Group. https://www.fisherphillips.com/en/Subscribe.html NCDA.COM 15
Background: Millions of workers drive or ride in vehicles to work, and some of us must drive as part of a work activity. According to the U.S. Bureau of Labor Statistics, transportation accidents accounted for more than 2,000 fatalities in 2022. Transportation fatal occupational injuries are almost three times the next nearest cause. According to the National Institute for Occupational Safety and Health (NIOSH), the total cost of motor vehicle crashes to U.S. employers is over $39 billion annually, with an average cost of $75,000 per non-fatal injury and ten times that at $751,000 per fatality. All workers are at risk of crashes, whether driving is the main or incidental job duty. Qualifications: All employees driving dealership vehicles must have a valid state driver’s license and provide DMV records to their HR manager. Based on the driving record, the employer may deny driving privileges. Any changes to the driving record, such as a speeding ticket or DUI, must be communicated to your manager immediately. Your Mindset: Before getting in front of the driving wheel, ask yourself if you are ready to drive in a safe manner. Have you had a good night’s sleep? Are you rested and fully alert to drive a vehicle? Is there any mental anguish that is disturbing you and compromising safe driving? Your ability to drive safely is best answered by you. If you are not ready, let your manager know and do not drive a vehicle. Safety Checks: Before entering the vehicle, always walk around the vehicle. Are the tires properly inflated? Are there any visible fluid leaks? Are the front and rear windows clean? Are there any loose packages or items on seats or dash? These can become flying projectiles during turns or if the vehicle is suddenly halted and can distract you from emergency maneuvers. Check the glove box for company papers, including insurance papers. Keep an “Accident To-Do List” that includes emergency phone numbers. The list is a ready referral of the information you must gather if you are involved in an accident. Once seated, start the vehicle and check: Are the wipers working properly? Are there any fault messages on the dashboard? Dealer drivers must ensure all in the vehicle are belted. Do not move the vehicle until all are secured. Infants and children must be secured per state law in infant car seats or boosters as selected and installed by the parents. Traffic Laws: All employees must follow the mandated traffic laws, such as staying within speed limits, wearing seat belts and following the prohibition of texting and talking on the cell phone. • Do not drive under the influence of alcohol or drugs. Driving under the influence is illegal and prohibited. • Obey all speed limits and traffic signs and signals, such as stop, slow, yield, bicycle and pedestrian lanes and traffic lights. Reach a complete stop at stop signs. • Yield to other drivers who have the right of way at an intersection. • For children in the vehicle, you must use the appropriate child safety seat or booster seat for their age and weight. Be sure to ask the customer with a child to install their own seat in your vehicle. Do not do it for them, as this is a liability for your employer and you. • Keep a safe distance from other vehicles and pedestrians. • Always use your signals and mirrors when changing lanes or turning, even if there appear to be no other vehicles or pedestrians. • Yield to pedestrians and bicyclists, even when they are not on a crosswalk. • Always pull over to let emergency vehicles pass. • Do not pass a school bus with flashing red lights unless you are on the opposite side of a divided highway. Other Considerations: Following traffic laws is only the beginning. Also note the following: • When entering/exiting a vehicle, parking or pulling away, be aware of others and be cautious, especially in an active driveway. • While backing up, use your rear-view mirrors and turn your neck to ensure there is no traffic in your intended pathway. Safe Driving at Work By Sam Celly, BChE MChE, JD CSP, Celly Services Inc. 16 SAN DIEGO DEALER
• Keep a minimum of two-second distance from the vehicle in front of you. If the vehicle were to stop suddenly, you should have enough time to brake. Increase the distance to at least double (that is, four seconds) when at higher speeds and in conditions of rain, sleet, ice, snow, poor visibility and high winds to allow for more reaction time. • When an area is congested or has crowded conditions, slow down and exercise extra caution while driving. • Despite less traffic after dark, the death rate from accidents at night is three times higher. Lights from oncoming traffic, especially LED lights, can have a blinding effect, so slow down. Human vision diminishes with age, especially at night. When you can see only a few feet ahead, there is less time to react. • Stay alert to other drivers who may be driving at high speed or erratically. “Tolerate and separate” is the best policy. Remember, your objective is to get to your destination safely and on time. A driver may not be licensed to drive and, worse, may be under the influence of alcohol or other drugs. Stay alert and distance yourself. • Every year, hundreds die in road-rage-related accidents. When involved with possible rage, keep your cool and let the other driver(s) have their way. If they override your right of way, let them go to avoid a fender bender or worse. • Avoid aggressive driving and keep your cool in traffic! Be patient, stay calm and be courteous to other drivers. Do not take other drivers’ actions personally. • Reduce stress by planning your route ahead of time, even with automated mapping systems, and allow plenty of travel time. Take the maps and directions along. • Avoid distractions, such as loud volumes, adjusting the radio or other controls, eating or drinking and talking on the phone. Dual earphones are not permitted. If you have a hands-free device for your phone, you may use the phone only if the dealership policy permits. Talking on the phone while driving, even with a handsfree device, causes distraction, and hence it is a safety concern. Again, follow the dealership policy on cell phone use. • Be aware of your surroundings. Continually search the roadway to be alert to situations requiring quick action. If the vehicle in front slows down, you must slow down. If the vehicle ahead is a big truck, your frontal visibility is compromised. You must slow down and increase your distance. If possible, change lanes so you can see ahead. Scan your mirrors frequently. Watch out for animals, bicyclists, motorcyclists and/or pedestrians. Anticipate traffic issues and be ready to respond quickly. • Stop about every two hours for a break. Get out of the vehicle, stretch, take a walk and get refreshed. Set realistic goals for the number of miles you can drive safely each day. Accidents: Report all accidents to management immediately. If you have a cell phone, pull over safely and call your manager. Use your phone to document the accident details. The “Accident To-Do List” in the glove box may help you document as well. Do not be forthcoming in acknowledging your fault for the accident. During and immediately after an accident, your judgment is likely to be incorrect. Later investigation may show otherwise. Conclusion: Developing safe driving habits and following safe driving protocols help keep you and your vehicle safe and protect others’ lives, health and property. Driving safely is a condition of employment. Employees involved in at-cause accidents can be subject to disciplinary action up to and including termination. Safety is not only a personal responsibility but also a legal obligation! Note: There is a separate training memo for test drives. This is a general safe driving training course for all employees to take at work. DISCLAIMER: The contents of this newsletter are for informational purposes only and are not to be considered as 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 the Orange County American Industrial Hygiene Association and on the CA Industrial Hygiene Council (CIHC). Our newsletters can be accessed at www.epaoshablog.com. Your comments/questions are always welcome. Please send them to sam@cellyservices.com. NCDA.COM 17
Redefining What It Means To Be a Supercar in an Electrified Era Bridging the Divide: Plans for Manufacturers to Satisfy Car Enthusiasts and Dealers By Alysha Webb, Editor, Scali Rassmussen, Getting to Go! As countries around the world move forward with plans to phase out the internal combustion engine, luxury and high-performance brands are coming to grips with perhaps the most significant change in automotive history: conversion to electric vehicles (EVs). The change brings feelings of frustration and grief, but also anticipation and excitement to manufacturers, dealers and customers alike. Many iconic brands have announced plans to move to fully hybrid and/or EV fleets (e.g., Lamborghini, Aston Martin, Rolls-Royce and Bentley). Ferrari has resisted pressure to phase out the internal combustion engine entirely, as it views this mechanical tableau as “an essential part of the company’s heritage.” But the company has committed to be carbon neutral by 2030, and no one can doubt its technical prowess and determination to do so. Ferrari currently offers a variety of plug-in hybrid models and plans to have its first EV by 2025. Dealers must adopt a multifaceted approach to deal with electrification. The infrastructure to sell and service EVs requires charging stations, EV parts, high voltage tools, new diagnostic and safety equipment, and technician and sales associate training. EVs generally have simpler drivetrains with fewer components prone to wear and tear compared to internal combustion engine vehicles. This leads to decreased service and maintenance needs, cutting into a significant revenue stream for dealers. Dealers must adjust their fiscal models to account for this change in departmental contribution. Dealers will need to develop the expertise to educate customers about the benefits, challenges and features of EVs, including addressing customer concerns about range, charging infrastructure and the overall EV ownership experience. For enthusiasts and customers, electrification represents a significant shift in the automotive landscape, impacting not only the technology used but also customer preferences that have been central to the identities of Ferrari and other luxury brands. Performance cars are known for their roaring engines, which enthusiasts often associate with power, performance and excitement. Many worry that this change could alter the emotional connection between drivers and their vehicles, potentially affecting the visceral thrill that accompanies driving a high-performance car. Despite these concerns, many see electrification in the luxury and performance space as a catalyst that will spark new forms of uniqueness to emerge. For example, last year, Ferrari filed a patent for a system that reproduces the sounds of an internal combustion engine that can be synced to the acceleration of the EV’s electric motor. Electric powertrains allow for novel design possibilities, increased interior space and advanced technologies. Brands can focus on pushing the boundaries of EV performance and redefining what it means to be a supercar in an electrified era. Scali Rasmussen, PC (SR) assists dealers of luxury and highperformance brands through this transformative period in the automotive industry. Through SR’s legal services, dealers can (1) maximize customer and dealer EV incentives available from governmental agencies and electric utilities; (2) negotiate EV infrastructure deals with manufacturers to prevent the dealer from paying more than is fair and required by law; (3) navigate through the EV infrastructure build-out process by dealing with various building codes and contractors; and (4) protect their overall investment from EV revenue changes by negotiating adjustments to capital requirements. 18 SAN DIEGO DEALER
Are you 100% sure your dealership is fully compliant and not at risk of significant penalties and fines? Compliance is a constantly moving target, and the penalties associated with non-compliance are very steep. When was the last time your dealership had a compliance audit? EPIC provides comprehensive consulting services and in-depth education regarding the ever-changing employee benefits compliance landscape. I work with our Compliance team, which continuously monitors critical federal legislative, regulatory and judicial developments to provide timely, practical guidance to our dealerships. We effectively guide dealerships through an array of complex compliance requirements. EPIC Ask Alison Is Your Dealership Compliant? By Alison McCallum, EPIC Insurance Brokers and Consultants strives to ensure that our clients thoroughly understand their compliance obligations by distilling complex information into easy-to-understand guidance that includes any required action steps. We aim to enable our clients to establish a compliant culture that minimizes exposure to penalties and plan audits. We are here to help identify and address your dealership’s compliance needs through: • Strategic Affordable Care Act (ACA) advice, including financial and administrative impact analysis. • Practical day-to-day ACA, ERISA, HIPAA, IRC, COBRA and insurance mandate guidance. • Client-specific planning, implementation, administration and remediation support as needed. • Tools and documents to address regulatory requirements. • Processes and procedures aimed at Department of Labor (DOL) audit avoidance, preparation and assistance. • Customized compliance-related employee communications. If you would like more information, or a compliance review, EPIC will provide details to NCDA San Diego members at no cost. 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 80 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. “We have a fantastic relationship with the LSL team. They keep our interests top of mind and maintain a positive reputation in the industry.” —Craig Whetter, President | David Wilson Automotive Group (relationship since 1983) Donald Slater, CPA, Partner Assurance & Advisory donald.slater@lslcpas.com Adam Odom, CPA, Partner Assurance & Advisory adam.odom@lslcpas.com David Myers, MST, CPA, Partner Tax & Advisory dave.myers@lslcpas.com LSL | CPAs & Advisors | Brea, Laguna Hills, Sacramento & Santa Ana, CA | The Woodlands, TX | lslcpas.com/automotive | 714.672.0022
145,950 131,906 142,794 148,000 2021 Actual 2022 Actual 2023 Actual 2024 Forecast YTD '23 YTD '24 % Chg. Mkt. Share thru Mar. thru Mar. '23 to '24 YTD '24 TOTAL 34,011 35,561 4.6% Car 9,521 9,231 -3.0% 26.0% Light Truck 24,490 26,330 7.5% 74.0% Domestic 12,044 12,045 0.0% 33.9% European 5,222 5,176 -0.9% 14.6% Japanese 13,311 14,971 12.5% 42.1% Korean 3,434 3,369 -1.9% 9.5% Released April, 2024 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 2021 through 2023 and Auto Outlook’s projection for 2024. Historical data sourced from Experian Automotive. UP 13.0% vs. ‘20 DOWN 9.6% vs. ‘21 UP 8.3% vs. ‘22 UP 3.6% vs. ‘23 San Diego Auto Outlook Comprehensive information on the San Diego County new vehicle market FORECAST County New Vehicle Market Increased in 1Q ‘24 Primary Factors Driving the County New Vehicle Market » County unemployment rate was 4.7% in February and total employment exceeded pre-pandemic levels. » Growth in personal income has largely kept pace with inflation. Household wealth is at record-high levels. » Consumer confidence has fluctuated a bit over the past few months, but is well above the lows in 2022 when inflation concerns were paramount. » High interest rates continue to put a squeeze on affordability, but the prospects for lower rates later this year, falling vehicle prices, and strong wage gains should lead to improvement in the second half of 2024. » Pent up demand is the biggest positive for the county market. Auto Outlook estimates that nearly 50,000 new vehicle purchases have been postponed since the onset of the pandemic and ensuing supply chain issues. Below is a review of key trends in the San Diego County new vehicle market. Results during 1Q 2024 County new light vehicle registrations increased 4.6% during the first three months of 2024 vs. year-earlier levels. National retail market was up 6.9%. As shown on page 2, equivalent U.S. SAAR levels remained at 15 million units in the First Quarter of this year. 2024 Forecast According to Auto Outlook’s forecast, registrations are expected to approach 150,000 units this year and increase 3.6% from 2023. That projection is 12% higher than the total in 2022 when the market was significantly impacted by product shortages, but is still below the recent high of 159,567 units in 2017. Key determinants for the market The shaded box on the right reviews the primary forecast determinants. Pent-up demand is still significant and the county labor market is strong. Vehicle affordability is still a concern, but should improve as the year progresses. As pointed out in the previous release of Auto Outlook, barring any unforeseen negative shocks (such as the possible escalation of conflict in the Middle East), we think the new vehicle market could be stronger than expected in 2024. Tracking alternative powertrain sales County BEV registrations were up 14% in the First Quarter of this year versus a year earlier, and market share increased to 22.5%. Gains have levelled off during the past few quarters, however. Hybrid registrations exceeded 5,300 units in 1Q ‘24 and improved 52% versus year earlier. Plug in hybrid market was up 25% (see page 6). Brands that fared best in early 2024 Among the top 25 sellers in the county market, Lexus, Rivian, Toyota, Honda, and Audi had the largest percentage gains in the First Quarter of this year. Toyota, Tesla, Honda, Ford, and Chevrolet were market share leaders. Top selling models in San Diego County Tesla Model Y, Toyota RAV4, Honda CR-V, Tesla Model 3, Honda Civic, Toyota Camry, Toyota Corolla, Chevrolet Silverado, Ford FSeries, and Honda Accord were the top 10 sellers so far this year. First Quarter 2024 20 SAN DIEGO DEALER
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. KEY TRENDS IN SAN DIEGO COUNTY NEW VEHICLE MARKET COUNTY MARKET VS. U.S. San Diego County UP 4.6% U.S. UP 6.9% % Change In New Retail Market YTD 2024 thru March vs. YTD 2023 New retail light vehicle registrations in the county increased 4.6% during the first three months of this year vs. year earlier, just below the 6.9% improvement in the Nation. Data sourced from Experian Automotive. Data sourced from Experian Automotive. SAAR estimates: Auto Outlook. QUARTERLY RESULTS San Diego County Quarterly Registrations Seasonally Adjusted Annual Rate, Converted to Equivalent U.S. New Vehicle Market SAAR (millions of units) 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 were 15.0 million units in the First Quarter of this year, unchanged from 4Q ‘23. DOWN 0.2% % Change in registrations vs. previous quarter (1Q ‘24 vs. 4Q ‘23) 13.6 12.6 14.2 14.2 15.0 14.8 15.0 15.0 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Millions NCDA.COM 21
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