GENERATOR THE ISSUE 2, 2022–2023 A PUBLICATION OF THE GEORGIA AUTOMOBILE DEALERS ASSOCIATION POSITIONING FOR THE FUTURE OF EV MARKET GROWTH Member Spotlight WANDA CRONIC HOWELL OF CRONIC AUTO GROUP THE DELAY IN THE REVISED SAFEGUARDS RULE IS OVER — ARE YOU PREPARED?
Running a dealership comes with its share of uncertain terrain. But one thing is certain. Our Dealer Financial Services team is dedicated to being by your side with the resources, solutions and vision to see you through. Jim Yager jim.yager@bofa.com 770.774.4660 business.bofa.com/dealer Making business easier for auto dealers. Especially now. “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: | Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value | ©2022 Bank of America Corporation. All rights reserved. 4826555 08-22-0145 Running a dealership comes with its share of uncertain terrain. But one thing is certain. Our Dealer Financial Services team is dedicated to being by your side with the resources, solutions and vision to see you through. Jim Yager jim.yager@bofa.com 770.774.4660 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. 4826555 08-22-0145
GADA BOARD OF DIRECTORS EXECUTIVE COMMITTEE ISSUE 2, 2022–2023 TABLE OF CONTENTS THE Lehman Franklin Chair Charles Prater Chair-Elect Bo Scott Secretary/Treasurer William Strickland Immediate Past Chair Matthew Laughridge North Georgia Area Vice Chair Mike Domenicone West Georgia Area Vice Chair ©2023 The Georgia Automobile Dealers Association is proud to present The Generator as a benefit of membership in the association. No member dues were used in the publishing of this news magazine. All publishing costs were borne by advertising sales. Purchase of any products or services from paid advertisements within this magazine are the sole responsibility of the consumer. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of The Georgia Automobile Dealers Association or its publisher, The newsLINK Group, LLC. Any legal advice should be regarded as general information. It is strongly recommended that one contact an attorney for counsel regarding specific circumstances. Likewise, the appearance of advertisers does not constitute an endorsement of the products or services featured by The newsLINK Group, LLC. 4 Message From GADA Chairman Your Voice Matters Lehman Franklin, GADA Chairman 6 On My Mind Lea Kirschner, GADA President and CEO 8 Message From NADA Director NADA Notes Steve Middlebrooks, NADA Director 10 Headlights On the Law The 2023 Legislative Session: New Georgia Laws and More on the Way Ben Jordan, GADA General Counsel and Director of Governmental Relations 12 Insurance Insights Auto Dealership Loss Trends Shawn Presnell, Managing Director of Insurance Services 14 Member Spotlight Wanda Cronic Howell of Cronic Auto Group 18 How to Pay to Make It Go Away Recent Developments in Dealership Severance Agreements By Matthew Simpson and JonVieve Hill, Fisher Phillips 20 Positioning for the Future of EV Market Growth 24 Congratulations GADA! 2022 MarCom Awards Winner! 25 The Delay in the Revised Safeguards Rule is Over — Are You Prepared? By Hao Nguyen, Esq., Chief Legal Officer, ComplyAuto 28 The Right Time for a Risk Management Reset By Brandon Artigue, Director, Financial Risk Management, Truist Securities 30 Succession Planning for Dealers In an Evolving Business Environment By Bank of America Corporation 34 EVs & the Service Department By Justin Carr, Vice President, Warranty Processing Company District 1 Jason Denson Matt Laughridge Charles Prater District 2 Justin Fuller Bill Holt Bill Howell District 3 William Bridges Michael Domenicone Stacey Ellis Hodges Ted Hayes Ernest Hodge Austin Pugmire Ryan Regnier Bo Scott Valery Voyles District 4 Trey Dettmering Wanda Howell William Strickland District 5 Bill Gibbs David Jones Wesley Middlebrooks District 6 Jessica Clayton Emanuel Jones Dana McCracken District 7 Marsh Butler Jim Jackson Tim Redding, Jr. District 8 David Flowers Forest Hutchinson Al Park District 9 Mike Burch Mark Howell Chip O’Steen District 10 Lehman Franklin Chad Nesmith Spencer Thomas Heavy Trucks Director Rick Reynolds Public Group Representative Mike Sullivan Marsh Butler East Central Area Vice Chair David Flowers Southwest Area Vice Chair Chad NeSmith Southeast Area Vice Chair Steve Middlebrooks NADA Director GEORGIA AUTOMOBILE DEALERS ASSOCIATION 2060 Powers Ferry Road SE, Atlanta, GA 30339 (770) 432-1658 www.gada.com 3 THE GENERATOR
Your Voice MATTERS MESSAGE FROM GADA CHAIRMAN LEHMAN FRANKLIN GADA CHAIRMAN This year has been busy for me. Serving as your GADA Chairman and as a representative of District 160 of the great state of Georgia has allowed me to see both sides of the political process — as a car dealer advocating to address issues our industry faces and as an elected House member, having the ability to enact change — one could say things have come full circle. As Chairman of the Georgia Automobile Dealers Association, I was proud to be joined by my colleagues in the industry at our Dealer Day at the Capitol. That day gave us the opportunity to show our strong presence, showcase vehicles, and most importantly, interact with elected officials. I want to thank Speaker Burns, Lt. Gov. Jones and my many colleagues in the House and Senate for taking time out of their day to drop by the event. This sort of grassroots advocacy is important to the future of our industry. We are in a unique position to speak with authority as to what our industry is facing. Automotive retailing is one of the most heavily regulated businesses in America. To ensure the decisions made at a state level are fully informed, dealers need to educate lawmakers about our industry, the benefits of the franchise system and our contributions to our communities. One of the most effective ways to educate lawmakers is to invite them to your dealership for a visit, tour, and discussion. When elected officials learn about your business first-hand, they become better informed about how their votes affect your business, employees, and customers. Dealers can also advocate for dealer legislative priorities at a district office meeting with the lawmaker or by attending events like Dealer Day at the Capitol. Your voice is needed, and it matters. Another way to get involved is to donate to the CARD of Georgia, which was established to promote and directly support legislators concerned with the welfare of the automotive industry. To find out more and contribute, please visit www.gada.com/advocacy. It has been an honor to serve as your Chairman this year, and I hope you will reach out to me if you have any questions or concerns. I am always happy to help. Sincerely, Lehman Franklin GADA Chairman THE GENERATOR 4
Jeffrey Wolters District Manager 9000 Cameron Parkway Oklahoma City, OK 73114 800-654-8489, Ext. 2602 americanfidelity.com We know the automotive drill: High stakes. High pressure. High sales goals. That’s why you need a partner who can keep the pace, reduce the headaches, and simplify [employee benefits and administration]. With our year-round benefits enrollment, we’re there on your schedule for your people. So you can focus on your team’s high performance. For insider knowledge, consider American Fidelity for a different opinion. Help is here. • Strategic Voluntary Benefits • Cost-Management Benefits Solutions • Employee Benefits Education Automotive professionals deserve a specialist. SB-30819-0117 American Fidelity Assurance Company EMPLOYER BENEFIT SOLUTIONS FOR AUTOMOTIVE
ON MYmind Dear GADA Members and Friends, 2023 has been another busy year for GADA. Since the first hybrids hit the market over a decade ago, Georgia’s franchised dealers have been building expertise in new technologies. Georgia’s collective of innovative dealers and certified technicians are dedicated to helping consumers find the right vehicle for their lifestyles, as well as keeping vehicles safe and reliable. Dealers are optimistic about the growth of the alternative fuel market over the past couple of years. From research and development to design, hundreds of billions of dollars have been invested into increasing production and infrastructure. As the market transitions, Georgia dealers will rise to the occasion. We are looking ahead to the next election year, and it’s more important than ever that our voices and votes are heard. Please remember to support GADA’s political action committee, CARD. CARD supports state legislators interested in the welfare of franchised dealers and supports candidates from both major political parties. I urge every dealer to consider giving at the highest level (Chairman’s Club; $2,500+). Your CARD contributions go toward helping your business. And good news to contributors: corporate checks are accepted! To learn more about CARD, click the Advocacy link on our website or contact us at legislative@gada.com. Finally, I encourage you to attend and/or send employees to the events GADA plans throughout the year, including education courses, dealer meetings, the annual convention, and more. The goal of all GADA events is to provide information and valuable face time with each other, GADA staff, lawmakers and supporters of franchised dealers. Please don’t hesitate to reach out to me, the GADA staff, or your Board representative with questions and feedback. Lea B. Kirschner, Esq. GADA President and CEO LEA KIRSCHNER GADA PRESIDENT AND CEO Dealers are optimistic about the growth of the alternative fuel market over the past couple of years. THE GENERATOR 6
We’re more than a financial partner. We’re an invested one. True relationships matter. We don’t take this lightly. The best are built on a deep understanding of your short- and long-term goals and always backed by thoughtful, strategic advice in support of your vision. With full-service financial solutions and a deep bench of industry expertise, we’ll build a team around your organization to focus on your success. So, let’s drive further—together. To learn more, contact Jason W. Smith, head of Dealer Commercial Services, 407-237-4011 or Jason.w.smith@truist.com. Truist.com/DealerServices © 2022 Truist Financial Corporation, Truist, Truist purple and the Truist logo are service marks of Truist Financial Corporation. All rights reserved. Truist Securities is the trade name for the corporate and investment banking services of Truist Financial Corporation and its subsidiaries. Securities and strategic advisory services are provided by Truist Securities, Inc., member FINRA and SIPC. | Lending, financial risk management, and treasury and payment solutions are offered by Truist Bank. | Deposit products are offered by Truist Bank, Member FDIC.
NADA Notes MESSAGE FROM NADA DIRECTOR STEVE MIDDLEBROOKS NADA DIRECTOR The NADA Show will take place in Las Vegas on February 1–4, 2024. Stay tuned for registration information. As always, NADA is putting together another stellar lineup of speakers, workshops, exhibitors and much more. I look forward to seeing many of you at the biggest industry event of the year. NADA continues to monitor activity in Washington, D.C. I recently attended the NADA Board of Directors Legislative Committee and visited members of our Georgia delegation on Capitol Hill. NADA’s top priorities are: OPPOSING THE OVERREACHING FTC “VEHICLE SHOPPING RULE” WHICH WOULD COMPLICATE VEHICLE SALES AND HARM CONSUMERS. The Federal Trade Commission (FTC) proposed a “Vehicle Shopping Rule” that would overwhelm car buyers and small businesses with additional paperwork and needlessly lengthen the sales process. The rule was proposed without credible data-driven analysis or the necessary time for public comment to avoid unintended consequences to consumers and small businesses. Congress should use its oversight authority and “power of the purse” to reign in the FTC to ensure this rule-making process does not negatively impact consumers and small businesses. PASSING THE BIPARTISAN “SUPPLY CHAIN DISRUPTION RELIEF ACT” DUE TO THE PANDEMICRELATED INTERRUPTION OF AUTO PRODUCTION (H.R. 700/S.443), otherwise known as LIFO Relief. Vehicle assembly plants around the globe ceased or slowed production during the pandemic, drastically reducing new vehicle inventory. With no way to replenish vehicle inventory, dealers using the last-in-first-out (LIFO) method of accounting are facing major unanticipated tax liability due to circumstances beyond their control. Last Congress, this legislation unanimously passed Senate on Dec. 22. However, time ran out before the previous House bill, which had 175 House cosponsors could be considered. Members of Congress should cosponsor the “Supply Chain Disruption Relief Act” to allow businesses on LIFO extended time to replace vehicle inventories as pandemic-related global disruptions and reduced auto production made it nearly impossible to replenish new vehicle supply. THE GENERATOR 8
Thank you to those dealers that participate in the political process, both at the state and federal levels. Dealer involvement is critical to both GADA and NADA efforts to represent and support franchise dealers. It is never too late to participate. I encourage you to reach out to your Congressional representatives and contribute to political action committees. Your connection to lawmakers makes a difference! I also encourage all dealers to take advantage of NADA membership. Visit www.nada.org and check out all that NADA has to offer. I am proud and honored to represent Georgia dealers and welcome your feedback anytime. You may contact me at smiddlebrooks@heywardallen.com or 706-215-4284. ► Dealer involvement is critical to both GADA and NADA efforts to represent and support franchise dealers. SUPPORTING CATALYTIC CONVERTER ANTI-THEFT LEGISLATION (H.R. 621/S. 154). Catalytic converters are being stolen at increasingly higher rates due to their valuable metals, such as rhodium, platinum and palladium. The bipartisan “Preventing Auto Recycling Theft Act” (H.R. 621/S.154) would help law enforcement combat this crime by providing a national framework that would mark catalytic converters, establish federal criminal penalties, and create a more transparent market that deters its theft. Members of Congress should cosponsor the PART Act to address the growing national problem. On-Site & Off-Site Title Clerk Staffing Same or Next Day Turnaround Reduce Title Clerk Costs Full Time Coverage | No Down Time Reduce Late reas Tanya Vartanian 9 THE GENERATOR
The 2023 Regular Session of the Georgia General Assembly concluded on March 30, 2023. The good news for franchise dealers is that no legislation passed that would threaten the dealership franchise system in Georgia. Indeed, no bill to expand factory “direct” sales was introduced. One bill that did pass and will impact Georgia’s dealers is Senate Bill 146, which concerns electric vehicle charging. This bill was authored by Senator Steve Gooch (R-Dahlonega) and sponsored in the House by Rep. Rick Jasperse (R-Jasper). This piece of legislation establishes a tax and regulatory framework for the maintenance and retail sale of electricity for battery-electric vehicles in Georgia. Specifically, this bill permits the retail sale of electricity by the kilowatt hour for purposes of charging an EV. The bill also tasks the Georgia Department of Agriculture with regulatory oversight of EV charging stations, similar to the role it plays for gasoline pumps by requiring that charging stations be registered with the Department of Agriculture, employing inspectors to ensure charging stations accurately report the amount of electricity delivered to vehicles, and setting rules for the advertisement of electricity to be sold. Finally, this bill imposes an excise tax on the electricity sold to customers when charging their electric vehicles, and the rate imposed will be based on a gasoline equivalency. For dealerships, this bill means you may charge customers by the unit of electricity for charging their EVs (under current law, retailers can only charge for the time associated with the charge). It also means dealers will come under the regulatory purview of the Department of Agriculture for their EV chargers, just as they are for any gasoline pumps on their premises, and dealers will be required to maintain records of electricity sold to customers for purposes of EV charging. The regulatory and taxation portions of Senate Bill 146 take effect on Jan. 1, 2025, so dealers and other businesses have over one year to prepare. Before then, we anticipate regulations will be adopted by the Department of Agriculture and potentially by the Department of Revenue to provide additional guidance for how these new systems will work. In the meantime, dealers are encouraged to start reviewing their EV charging practices and notify any third-party vendors that the rules for charging will soon change. HEADLIGHTS ON THE LAW The 2023 Legislative Session New Georgia Laws and More on the Way BEN JORDAN GADA GENERAL COUNSEL & DIRECTOR OF GOVERNMENTAL RELATIONS THE GENERATOR 10
with state laws regarding TOPs. According to the Department of Revenue: • TOPs may not be used for test drives, for employee use or for transporting vehicles from one location to another. • Dealers may only issue a TOP to a consumer that purchased the vehicle from that dealer. TOPs must not be sold or issued outside of a retail sale. • When a vehicle owner requests the cancellation of a TOP or the TOP must be canceled, Form MV-300 should be used and submitted to the County Tag Office. Please ensure cancellation to avoid misuse. • The Department of Revenue can impose fines and other penalties on dealers that abuse TOPs or allow the abuse of TOPs. Be sure to stay tuned for more on these topics as we gear up for the 2024 legislative session. ► ISSUES ON THE HORIZON: DEALERS PLATE AND TEMP PERMITS (TOPs) One legislative issue on the immediate horizon concerns the use of dealer license plates and the misuse of temporary operating permits (TOPs). According to media reports, Georgia TOPs are being sold by licensed dealers outside of retail sales. Those TOPs are then used for avoidance of taxes and tolls and in criminal enterprise. Because of these reports, GADA anticipates legislators will hold meetings this summer to discuss potential changes to laws and regulations regarding TOPs and dealer plates. Although we suspect these problems primarily involve the used car market, Georgia’s franchise dealers should take the time to ensure compliance Charitable Giving and Community Involvement INFORMATION REQUESTED! We want to celebrate you and all the good work you do! We would love to see and learn more about the efforts you make to give back to your local communities. Please send photos and descriptions of your charitable giving and local community involvement to legislative@gada.com. 11 THE GENERATOR
GADA Insurance Services has a comprehensive database of Property & Casualty claims information and loss trends in Georgia. We have seen that losses are on the rise in Georgia and want to make our dealers aware of these loss trends and how to prevent them from happening to your dealership. AUTO ACCIDENTS • Auto accidents are the loss leader for many dealerships. At-fault rearend collisions make up more than 50% of auto accidents from dealership employees. • In most auto accident claims, the BI (bodily injury) loss paid exceeds the PD (physical damage) loss on the vehicle. Lawsuits for BI are on the rise and even minor auto accidents with limited BI can be expensive! Ways to avoid rear-end collisions: • Look farther up the road to spot traffic stopping long before the vehicle in front of you slams on its brakes. This gives you time to stop, along with the cars behind you. • Check your mirrors more often. This will alert you to someone riding too close to you and give you a warning to leave more space in front of you. You might be better off letting that tailing vehicle pull around and pass you. • Stay focused on driving and do not become distracted. Limit your cell phone use. • As you slow to stop, look for an escape route to be able to get out of the way of a vehicle behind you that is not paying attention. Make sure your brake lights are working properly. Leave extra space between you and the vehicle in front of you. AUTO THEFT • Most auto thefts are the result of dealerships not following sound procedures in the areas of key control, dealing with wholesalers, and verifying the identity of customers. • Key control is both securing keys in a secure device but also keeping keys out of the hands of potential thieves and keeping them secured while not being used. AUTO DEALERSHIP LOSS TRENDS INSURANCE INSIGHTS SHAWN PRESNELL MANAGING DIRECTOR OF INSURANCE SERVICES THE GENERATOR 12
• Theft of vehicles by wholesalers who get into financial trouble can become an area for potential risk. • Identity theft is on the rise both in metro and nonmetro areas. Ways to avoid auto theft: • Keys to dealership and customer vehicles should be secure when the keys are not being used. No keys should ever be left unattended on a desk! Key machines are a better solution than a key board. With key swapping, it is important not to provide keys to prospective buyers. With the salesperson in the vehicle, the customer does not need to have possession of your keys. • Many times, wholesalers get into financial hardship and may attempt to get a dealership to surrender the vehicle and title before payment has been made or cleared. We have seen dealerships incur losses in the hundreds of thousands of dollars in this area! • Identity theft is on the rise. It is important that your salespeople and managers be trained to spot an altered ID or driver’s license. Remember if something seems too good to be true, it probably is the case. Driver’s license scanners can help prevent false identity. Be very cautious of out-of-state deals if the customer is not willing to come to your dealership to pick up the vehicle. EMPLOYMENT PRACTICE LIABILITY (EPL) • Discrimination, harassment, and wrongful termination claims are again on the rise. • Most EPL claims are against managers and occur following termination. • Following the law for FMLA and ADA is critical to keep your dealership from having an EPL claim. PLEASE CONTACT US IF WE CAN HELP ANSWER ANY SPECIFIC INSURANCE QUESTIONS: • If your dealership employs 50 or more employees, you are subject to FMLA. If your dealership employs 15 or more employees, you are subject to ADA laws. • Most of these claims can be avoided or minimized by following sound business practices with employees and managers. Ways to avoid EPL claims: • Train all managers on employment practices to include best practices for hiring and termination procedures. This should be done with all new managers when they are hired and updated training annually. • Develop proper hiring and termination procedures. Check with a labor attorney if in doubt. Document employees’ deficiencies “in writing” along the way and make sure that they are aware that they are not meeting expectations. • Have a no-tolerance “sexual harassment” and “discrimination” policy and enforce it. • Thoroughly investigate all complaints and take appropriate action. • Make sure that your dealership’s no-harassment and no-discrimination policy is in writing, is signed by all employees and is clear about reporting a complaint. Lawsuits are on the rise, and you need to make sure that your dealership is avoiding potential exposures in the best way possible. Please do not hesitate to contact me or any member of my insurance team if we can be of any assistance or answer specific insurance questions. ► Shawn Presnell Managing Director of Insurance 678-428-9247 | shawnp@gada.com Felix Jackson GDIC Account Executive, Atlanta/North GA 770-570-8212 | felixj@gada.com David Crew GDIC Account Executive, Middle/South GA 470-303-9051 | davidc@gada.com Lawsuits are on the rise, and you need to make sure that your dealership is avoiding potential exposures in the best way possible. 13 THE GENERATOR
MEMBER SPOTLIGHT Wanda Cronic Howell is the President and Dealer of The Cronic Automotive Group, a family-owned business consisting of three car dealerships in Griffin — Cronic Chevrolet Buick GMC, Cronic Nissan, and Cronic Chrysler Jeep Dodge Ram. Wanda grew up in the automobile industry and has been involved in the business full-time since 1985. She holds a master’s degree in business education from The University of South Carolina and an undergraduate degree in American Studies from Sweet Briar College in Virginia. She is an Atlanta native and is married to Lee N. Howell. Together, they have three grown daughters. We recently sat down with Wanda and talked with her about her life, the industry, and being a member of GADA. The following are excerpts from our conversation. We would like to thank Wanda for her time and hope you enjoy getting to know her better. Do you have any hobbies outside of work? My family and I do a lot of historical traveling. We’re not big on just going to the beach. We like to go see the sights, museums, churches, art galleries and things like that. I always laugh and say my husband and I never saw a ruin we didn’t like to walk through; whether it’s Mayan or Roman or Greek, we are all over it. My favorite place I’ve visited is Italy; it’s wonderful. We truly enjoyed Scotland as well — the castles, the Loch Ness Monster, and the many myths are very interesting. I also volunteer with three women’s groups — two chapters of the American Business Women’s Association (ABWA) and the Business Women’s Fayette & Coweta Counties (BWFC); I really enjoy it. I’ve been the Education Chair for the ABWA Griffin Chapter for 30 years, and we have awarded over $150,000 in scholarships to local women, both young and returning to school. It’s a very worthwhile goal to see women improving themselves. Wanda Cronic Howell of Cronic Auto Group THE GENERATOR 14
Are you a first-generation dealer, or has your family been in the business for a while? If so, how long? I am a second-generation dealer. My father came to Griffin, GA, in 1975 and became a Chevrolet dealer. I joined him 10 years later in 1985 and remember serving Coca-Cola at our grand opening. I started on the sales floor; my father felt it was very important that I learned how hard it is to sell cars. I also helped with advertising and public and community relations. When I started, I had experience in retail, but it was fashion retail, so it was a different sell. It was a challenge. In retail, if someone comes into a clothing store, they can buy what they want to buy. But auto sales, with the financing fees and such, are much different. So many times, people want a vehicle they can’t buy straight out, so it’s a whole different range of helping them. In 1996, we bought the Chrysler Jeep Dodge Ram dealership right across the street from our Chevrolet dealership. I was the dealer there, and it was kind of like a learning lab for me because my father would come over to oversee and guide me. When my father passed away in 2003, I became the dealer because I was his successor on the other lines, including Nissan. What are the issues facing the auto industry? I think the threat to the franchise system is the biggest issue — from the direct sales model or the agency model. This issue was kicked off a few years ago, with Tesla challenging the franchise model. The loss of the franchise system could be very damaging to auto dealers and the consumer. It’s a lose-lose. Not to mention our employees who are supporting their families and the local economy; the direct sales model has the possibility of taking it down in a 15 THE GENERATOR
way we don’t want, and can’t possibly foresee all of the repercussions. The consumer now has the ability to negotiate anywhere in the U.S. for a vehicle, and we deliver them. The opportunity to shop very competitively and get the best deal would stop if we were to go to a direct sales model, an agency model. There would be one price selling, and it would become a monopoly. How do you think the industry will change in the next 3-5 years? I think we’re going to be responding to all this electrification that the manufacturers are encouraging us to get ready for. It’s incumbent upon each of us to be positive about the changes that are ahead. A lot of it’s going to depend, though, on the charging station infrastructure, and I don’t think the infrastructure is in place at this point. There are also issues with the batteries; they don’t do as well in We’re always the first people that are asked to support Little League and youth sports, Boy Scouts and Girl Scouts, Kiwanis, Rotary, and activities at local schools. The impact that local dealers make on communities is noticeable. We live in and are involved in our communities as opposed to a company that has 50 dealerships throughout the U.S., headquartered in New York or somewhere, and nobody can get to them and ask them to engage. Being involved in the local community makes a really big difference. How long have you been a GADA member, and why did you get involved in the association? I’ve been a member since I started in the industry in 1985, and my dad had been a member since 1975. He was a longtime board member of GADA representing District 4, and I’m now serving on the board in the same position he was in. He set a good example. What do you see as the benefit of being an association member? How has membership benefited you specifically? The opportunity GADA provides to connect with leaders from all over the state is really invaluable. When we’re at meetings, getting to talk and learn so much from fellow dealers, it really helps. As relationships grow, you can call fellow dealers and ask for advice. Representing the interests of the new franchise and new car dealers is probably the biggest benefit. If we have a legal question, we’ve always been able to talk to the GADA legal counsel. And, of course, GADA helps with titling; they offer excellent training courses that we send our title clerks to. The association covers a myriad of aspects of the car business, not just protecting the franchise system; they have classes about and offer help on advertising practices, workers’ comp, and so much more. Wanda serving Coca-Cola at the grand opening in 1985 extremes of heat and cold, so there’s a lot to be determined. The switch to EV may not be moving as quickly as some of the manufacturers are projecting, but we need to prepare. Our Nissan store is already EV-ready because they had a big rollout years ago. We’ve sold and leased a lot of Nissan Leafs and had to have the charging stations and special booths in the service department where they can be worked on. We have the equipment for the Chevrolet Buick GMC store and have ordered the equipment for the Chrysler Jeep Dodge Ram store, which is currently undergoing a major renovation. Why are franchised dealerships important? Besides the benefit of competitive pricing for the consumer, the many people we employ, the boost to the local economy, and the commitment that the dealers make to their own individual communities is enormous. THE GENERATOR 16
Have you had any mentors along the way? What did you learn from them? My primary mentor in the car business was my father. He was an amazing world-class retailer and business owner. He trained me, by example, to treat people in a very fair, compassionate, and honest way. It’s a high standard that I always aspire to meet. I think that’s why we have such good community support and a great local customer base — because of being compassionate and concerned about our customer’s needs. When you mentor others, what are three pieces of advice you would share? 1. Hire the very best people you can. A lot of times, you hire people that are smarter than you are. And that’s good. Then you get out of their way and let them do their jobs. 2. Happy employees ensure happy customers. So, we can’t work on customer satisfaction until we work on employee satisfaction. Make sure you take good care of your employees. throughout the U.S. I have worked hard toward a diverse workforce and strive to make sure my practices, my activities, and my community involvement are inclusive, so I was very honored to receive that. This year, we won the Better Community award from the Business Women of Fayette and Coweta Counties, for our sponsorship and for helping them with their fundraising capacities. But I think the biggest achievement I take pride in is the thousands and thousands of dollars I’ve raised in local scholarships for young women in this community that are returning students to fund their college education. Any last thoughts? We are making the EV investment at our dealerships. It’s going to be costly, but it’s so important that we keep up-to-date for our customers. We always want to be part of the progress, the moving forward of our industry. We want to be in the forefront and stay positive, open, and receptive to change. ► 3. As a dealer, it’s important to be proactively involved. If there are problems or concerns, customers should feel like they can come and talk to you. Be proactive about their concerns. What is your biggest accomplishment? Have you won any awards? Last year, I won Buick GMC’s first National Diversity Equity & Inclusion award. I was one of two recipients Wanda and her father Elicia Threatt, ABWA Scholarship winner, with Wanda 17 THE GENERATOR
HOW TO PAY TO MAKE IT GO AWAY It may seem strange to some dealerships to pay an employee to stop working for them, but severance has become a standard part of many employee exit plans. A severance package provides departing employees some degree of financial stability as they transition to their next job while giving the dealership legal protection against allegations of wrongful termination and other claims arising during the former employee’s time with the dealership. In addition, a severance agreement typically includes protocols for how the former employee and dealership will act going forward, such as by including confidentiality, non-disparagement and no re-hire provisions. To be effective, a dealership must consider several factors when drafting compliant and enforceable severance agreements. 1. WHAT IS A REASONABLE SEVERANCE AMOUNT? There is no requirement to pay severance generally, and there is certainly no requirement as to the amount of severance a dealership must pay if it chooses to do so. Still, most employers tie severance to the employee’s position and tenure with the company. For example, a dealership may choose to pay two weeks of the employee’s average earnings per year of service. If the employee held a management or other key position, the dealership may choose to pay an additional amount. And, a dealership may modify its severance formula according to the reason for separation, such as whether for cause, reduction in force, voluntary resignation or retirement. The dealership must simply be able to provide a legitimate, business reason as to why one employee was offered a different severance package than another in order to defend against claims of discrimination or favoritism. 2. CAN AN EMPLOYEE SUE THE DEALERSHIP AFTER RECEIVING SEVERANCE? Most severance agreements include a general release precluding the former employee from suing the dealership over claims that may have arisen during the employee’s employment, including the separation itself. These releases must, however, include particular language. There are some claims that cannot be released in a private settlement, such as claims for unpaid wages under the Fair Labor Standards Act (FLSA). Likewise, other claims — such as those arising under the Age Discrimination in Employment Act (ADEA) and Older Workers Benefit Protection Act (OWBPA) — require a 21-day consideration period and a 7-day revocation period. Where the severance is being provided in connection with a group lay-off or exit incentive plan, the consideration period may be lengthened to 45 days. Dealerships should therefore consult with legal counsel when drafting release provisions. Recent Developments in Dealership Severance Agreements BY MATTHEW SIMPSON AND JONVIEVE HILL FISHER PHILLIPS THE GENERATOR 18
3. CAN DEALERSHIPS REQUIRE CONFIDENTIALITY AND NON‑DISPARAGEMENT PROVISIONS? Historically, one of the primary incentives for dealerships to offer severance has been to gain the former employee’s cooperation and goodwill postemployment. As a result, most severance agreements include confidentiality provisions prohibiting employees from disclosing the details of the severance and other confidential dealership information to others, as well as non-disparagement provisions prohibiting the employee from unfairly criticizing the dealership to customers, co-workers, or vendors, whether in-person or on social media sites such as Glassdoor. However, this year, the National Labor Relations Board (NLRB) issued a decision narrowing the scope of permissible confidentiality and non-disparagement provisions in severance agreements. The NLRB held that employees are entitled to, among other things, discuss terms and conditions of employment with others, even when doing so reflects negatively on the dealership. As a result, dealerships must be sure to narrowly tailor confidentiality and non-disparagement provisions so as to provide the dealership with the best protection available while not prohibiting employees from engaging in legally protected speech. Again, dealerships should consult with legal counsel before drafting such provisions. 4. WHAT HAPPENS IF THE EMPLOYEE BREACHES THE SEVERANCE AGREEMENT? As with any agreement, dealerships must also consider what will happen in the event the employee does not live up to the promises contained in the severance package. It can be difficult to prove damages in the event of a breach — particularly with respect to confidentiality and non-disparagement provisions — which prompts some dealerships to include liquidated damages provisions setting forth the specific monetary amount an employee will owe per breach. Likewise, there is a disincentive for dealerships to pursue claims for breach where the cost of attorneys’ fees will outweigh the potential recovery; as a result, most severance agreements provide for payment of attorneys’ fees in the event of a breach. Finally, some dealerships prefer the practical, business-minded approach of an arbitrator when resolving disputes over severance, and therefore include arbitrations provisions in their agreements. Finally, while severance agreements are often useful, they are not appropriate in every situation. For example, a dealership would not want to reward an employee’s misconduct by offering severance, nor would a dealership want to pay an employee for leaving to work with a competitor. In the event you have questions about whether severance is or is not appropriate — as well as what terms should or should not be included in a severance agreement — please contact legal counsel for guidance. ► 19 THE GENERATOR
POSITIONING FOR THE FUTURE OF EV MARKET GROWTH THE GENERATOR 20
Elon Musk recently commented that he couldn’t see his closest competitor in the EV market with a telescope. Those are admittedly bold words, and that kind of posturing is typical as the jockeying within the EV market heats up. But many dealers selling OEM brands think Mr. Musk doesn’t need a telescope; he needs a mirror. And since objects in mirrors can be much closer than they appear, he should put down his telescope and turn around instead. It’s true that from 2018–2020, approximately 80% of the EV market belonged to Tesla. But the market balance is shifting. It decreased to 71% in 2021 and 65% during the first nine months of 2022. The biggest market gains were for cars selling at less than $50,000. By 2025, experts like John Murphy, the Managing Director and Lead Auto Analyst at Bank of America Merrill Lynch, think Tesla’s market share will drop to the low teens. Other companies have been working on more than a dozen new options that will start selling within the next year. Experienced and powerful competitors such as General Motors, Ford and Mercedes-Benz are actively competing with Tesla. Registration data on a national level shows that their work is being rewarded, and people are buying new EV models from manufacturers other than Tesla. There’s a name for what Tesla has experienced: “firstmover advantage.” Michelle Craig, an Executive Analyst at Cox Automotive, said she always expected Tesla’s market share to go down at some point after the competition began to catch up with them. Tesla has revolutionized the auto industry by focusing on impressive battery power. Still, as she pointed out, people want the affordable, eco-friendly EVs that are starting to hit the market. They will appreciate the chance to buy those EVs from trusted manufacturers at a lower price than what Tesla currently offers. Tesla’s inadequate support system for auto repairs will also persuade customers to choose something other than a Tesla when they decide to buy or replace an EV. Even though Tesla has been dropping its price on some vehicles and plans to offer at least one more-affordable option soon, that still doesn’t solve the company’s biggest weakness: being unable to repair its vehicles quickly. It also doesn’t erase the fact that other manufacturers will compete head-to-head on aspects such as equal or better technology and production build. Legacy manufacturers have been preparing to capture market share in the EV race: • Ford sold 61,575 vehicles in the U.S. in 2022 and now plans to meet the demand by doubling its production target. What do customers want to buy from Ford? 21 THE GENERATOR
Electric vans, Mustangs and trucks. Car and Driver magazine named Ford’s Mustang Mach-E model the 2021 “Electric Vehicle of the Year.” It was number three in sales of electric sport utility vehicles. Ford unveiled the F-150 Lightning in May 2022, then took 200,000 reservations. Three-fourths of them were buyers who had never bought a Ford before. According to a survey conducted by Cox Automotive, respondents preferred the Ford F-150 to Tesla’s Cybertruck. They chose the Ford F-150 because of its price, driving performance, size and design. • Volkswagen is spending tens of billions to meet a goal: moving half its U.S. sales to EVs by 2030. The company plans to produce 1.5 million EVs by 2025 to meet new EU emission targets. • Hyundai’s award-winning IONIQ 5 has been named the Best Electric Vehicle by Cars.com in its Best of 2023 Awards. The IONIQ 5 surpassed all the 2023 EVs in the market tested by the company’s editorial team of expert car reviewers. Other manufacturers to consider are General Motors, Volvo and Xpeng. The Detroit Bureau expects a dozen or more all-electric pickups to be available by 2025. In addition to vehicles manufactured by Toyota, Hyundai and others, people will buy the Chevrolet Silverado EV, Ford’s F-150 Lightning, the GMC Hummer and Sierra SUV and the Ram 1500 EV. Don’t discount Chinese companies like Nio and Xpeng, even though they seem too unfamiliar for Americans to worry about. Elon Musk has said he considers his biggest competitors to be Chinese automobile manufacturers, even though (characteristically) he thinks everyone is so far behind Tesla that they are a “distant second.” But despite Tesla having an advantage in its worldwide Supercharging network, Consumer Reports rates it seventh on Advanced Driver Assistance Systems. (The best Driver Assistance systems in the U.S. were Ford BlueCruise and GM SuperCruise.) Also, the German Level 3 system made by Mercedes-Benz surpasses Tesla’s Level 2 system. Just how fast is the market for EVs growing? In 2011, manufacturers sold 45,000 vehicles globally. The number was 3.24 million in 2020. Experts think 27 million vehicles will be sold by 2030. Tesla has done well financially. In 2012, annual sales were $400 million. They were $31.5 billion in 2020. However, maintaining that growth may prove impossible as other companies get involved and make the investments necessary to meet their goals. The drop in Tesla prices was good news for prospective owners but bad for existing owners. After all, there’s nothing quite like seeing the value of an expensive vehicle drop 20% in one day. In addition, Tesla vehicles have had construction problems and stale designs, and the federal government has been investigating 16 Tesla crashes that involved Autopilot or Traffic-Aware Cruise Control. Having stores where people can bring their vehicles for service and repair is a big advantage for dealerships. Earthweb estimated 2.5 million Tesla vehicles on the road at the end of 2022. According to Electrek in an online article dated June 2022, Tesla had more than 673 stores and service centers and more than 1,372 mobile service vehicles. Although Elon Musk said about the same time that his goal was to improve service in North America, he hasn’t been able to close that gap adequately yet. The reality for many Tesla owners is that they might not be close to any service center or mobile service vehicle. Even if they are, they might have to wait weeks or months for service from an authorized center. Elon Musk hoped that Tesla vehicles would need so little service that the shortage of repair places would have been no problem, but it hasn’t worked out that way. For example, Tesla windshields crack like windshields in other cars, but nobody has them in stock for next-day repair. Tesla’s inadequate service network creates an opportunity for its competitors. According to Mark Reuss, GM’s president, GM dealers started repairing Teslas in 2021. Other companies are doing the same thing. There’s even a website (fixyourtesla.com) with a national directory of third-party Tesla service shops. The world is moving to electric vehicles, and that will change the automotive landscape, but Tesla doesn’t have a lock on what that future will be in terms of market share. Tesla benefited from U.S. prosperity and a lack of competition. Those days are done. Legacy vehicle manufacturers are finding ways to adopt Tesla’s best ideas without dismantling the dealership model that has been developed and proven over time. ► Tesla’s inadequate service network creates an opportunity for its competitors. THE GENERATOR 22
DRIVE SALES AND GEAR UP FOR GROWTH. PNC DEALER FINANCE GROUP | From floor plan and retail financing to treasury and wealth management, PNC’s specialized Dealer Finance group delivers a flexible, custom-built solution that drives sales and helps you move forward financially. With a complete range of personal and business banking and financial services — and the support of our dedicated relationship management team — we’re committed to making a positive difference for your business. Adrian Johnson Relationship Manager 478-319-1136 Deborah Tyndall Relationship Manager 404-216-9515 Matthew Francesconi Vice President 404-267-8860 Contact a PNC Relationship Manager today and shift your plans into drive. PNC and PNC Bank are registered marks of The PNC Financial Services Group, Inc. (“PNC”). Bank deposit, treasury management and lending products and services, foreign exchange and derivative products (including commodity derivatives), bond accounting and safekeeping services, escrow services, and investment and wealth management and fiduciary services, are provided by PNC Bank, National Association (“PNC Bank”), a wholly owned subsidiary of PNC and Member FDIC. Lending, leasing and equity products and services, as well as certain other banking products and services, require credit approval. ©2022 The PNC Financial Services Group, Inc. All rights reserved. CON LEND PDF 1221-060-1961002
Congratulat ons GADA! 2022 MarCom Awards Winner! Since its inception in 2004, MarCom Awards has evolved into one of the largest, most-respected creative competitions in the world. This year, there were over 6,000 entries from throughout the United States, Canada, and over 43 other countries in the competition. MarCom Awards is an international creative competition that recognizes outstanding achievements by marketing and communication professionals and recognizes the creativity, hard work, and generosity of industry professionals. Being a Gold Winner is a tremendous achievement symbolized by the intricately detailed MarCom statuette. The MarCom graces the trophy cases of some of the top business and communication firms in the world. MarCom’s Gold Award Award is presented to those entries judged to be among the most outstanding entries in the competition. Gold Winners are recognized for their excellence in terms of quality, creativity, and resourcefulness. To view this year’s winners, please scan the QR code. http://enter.marcomawards.com/ winners/#/gold/2022 We are very pleased to announce that the Georgia Auto Dealers Association was awarded the MarCom Gold for print media. THE GENERATOR 24
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