ISSUE 2, 2023‑2024 A PUBLICATION OF THE GEORGIA AUTOMOBILE DEALERS ASSOCIATION IN THIS ISSUE New Overtime Rules EPA Tier II Reporting for Dealers
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
GADA BOARD OF DIRECTORS EXECUTIVE COMMITTEE ISSUE 2, 2023‑2024 TABLE OF CONTENTS THE Charles Prater Chair Bo Scott Chair-Elect Marsh Butler Secretary/Treasurer Lehman Franklin Immediate Past Chair Matthew Laughridge North Georgia Area Vice Chair Mike Domenicone West Georgia Area Vice Chair ©2024 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. CHAIRMAN’S MESSAGE 4 Our Membership is Our Strength By Charles Prater, 2023-2024 GADA Chairman PRESIDENT’S MESSAGE 6 On My Mind By Lea Kirschner, GADA President and CEO MESSAGE FROM NADA DIRECTOR 8 NADA Notes By Steve Middlebrooks, NADA Director MEMBER SPOTLIGHT 12 Getting to Know Bill Howell of Billy Howell Ford HEADLIGHTS ON THE LAW 14 The “Old” Sales Tax Rules are Still Important By Ben Jordan, GADA General Counsel & Director of Governmental Relations INSURANCE INSIGHTS 16 How to Avoid Costly Mistakes By Shawn Presnell, Managing Director of Insurance Services 18 What Your Dealership Should Know and Do About the New Federal Overtime Rule By Tillman Coffey, Esq. and Timothy Scott, Esq., Fisher Phillips 22 Climbing the Automotive Industry Ladder of Success By Sharon Kitzman, Dominion DMS 24 Required vs. Voluntary Tier II Environmental Reporting For Auto Dealers By Chris Cleveland, CEO and Co-Founder, ComplyAuto 26 Structure Reinsurance To Get the Most From Your Warranty Programs By Truist Dealer Services 30 There Is No Time Like the Present By DSMA 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 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 Scott Pearson 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
CHAIRMAN’S MESSAGE OUR MEMBERSHIP IS OUR STRENGTH the QR code to register, or update your existing registration and confirm that you are ready to make your voice count. https://sos.ga.gov/ how-to-guide/how-guideregistering-vote In addition, please remember to support GADA’s political action committee, Committee of Automotive Retail Dealers (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. One more thought on the subject of elected officials: It is extremely important for dealers to initiate contact and stay connected with local lawmakers. I encourage you to get involved in grassroots efforts or even invite a legislator to visit your dealership to see your team of amazing employees in action. Finally, I would be remiss if I did not mention Lea and the incredible GADA staff. They work hard day in and day out to make sure that the franchised system and dealers are protected and promoted without fail. We all owe them a big debt of gratitude for the incredible job that they do. I hope you have a great summer! I look forward to seeing you at the next GADA event. Regards, Charles Prater Prater Ford GADA Chairman of the Board 2023-2024 CHARLES PRATER 2023-2024 GADA CHAIRMAN Dear GADA Members and Friends, Thank you for your support throughout my term as chairman. It has been the honor of a lifetime and something I will remember for years to come. Before I pass the torch, I want to take this opportunity to remind you that our association is only as strong as its membership. Each of you plays a vital role in making sure that GADA and the future of our industry are secure. I hope that you will continue to show up and engage at the numerous events we hold throughout the year. I challenge you to bring a friend to our next event. Maybe it is a less active member who will benefit from the connections that are made and strengthened, or maybe it is a fellow dealer who has not yet joined GADA. You can open the door for them so they can see the positive impact that GADA provides for its dealers and the industry. This year promises to be a decisive election year, and it’s more important than ever that our voices and votes are heard. We need to ensure that those who are elected are business‑friendly and understand the importance of our industry and the franchised system. I encourage you and your employees to ensure you are registered to vote. It’s easy to do and only takes a few minutes. Simply scan THE GENERATOR 4
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.
ON MYmind When lawmakers and regulators are considering bills or rules that are potentially harmful to dealers, dealers turn to GADA. You may be upset, worried and sometimes even downright angry. Thanks to decades of hard work by dealers and association leadership, GADA has established strong connections and a solid reputation with many state legislators. Like operating your dealerships, it takes constant work and financial support for GADA to keep its mission to serve Georgia’s franchised dealers on a successful path. Every year, as part of our annual dues billing, GADA requests a minimum contribution to our political action committee, Committee of Automotive Retail Dealers, aka CARD. To be clear, annual dues are used to pay the operating expenses of GADA but dues are not, nor can they be used for, political contributions. Year to year, member participation in CARD ranges from about 30-50%. When there is a crisis, it seems more dealers contribute. Buy why wait for a crisis? With a constantly changing industry and unpredictable politics, 30-50% participation doesn’t cut it. A $500 contribution is a small price to pay to help defend against dangers to your livelihood. The need for 100% participation not only holds true for LEA KIRSCHNER GADA PRESIDENT AND CEO PRESIDENT’S MESSAGE THE GENERATOR 6
state matters but for federal issues as well. While GADA is hard at work here in Georgia, NADA is doing the same at the national level to protect the interests of franchised dealers. And just like GADA, NADA needs support through its political action committee, NADA PAC. Considering the stakes, EVERY Georgia franchised dealer should be contributing to CARD and NADA PAC. GADA also requests a contribution to another dedicated fund, known as the Dealer Advocacy Fund (DAF). This money helps to pay for expenses that are outside of routine operating costs that are not political contributions, such as public relations efforts, advertising and event sponsorships. If you haven’t already done so for 2024-2025, I urge you to support both CARD and the DAF. GADA also needs dealers to get involved. Make yourself known to lawmakers. Invite them to your dealerships to show them how important your business is to your local community and the Georgia economy. If you don’t know where to begin, we can help. Not only should you get to know your lawmakers but get to know other dealers too. Attend GADA events to learn about what GADA is doing for you — you might even enjoy yourself while getting an education! Lastly, stay connected. With the onslaught of emails and communications that you receive daily, I know that’s difficult to do. I, myself, long to control information overload. I recently pulled a list of email addresses that had unsubscribed to GADA emails and to be honest, I was disappointed to see a bunch of familiar names and addresses! You have my word … at GADA we strive not to overwhelm our members with emails so when we send out information, it’s because we think you need it. GADA is not your email enemy! If you are by chance someone that is not receiving GADA alerts and you want to be added to our email list, let us know at info@gada.com. Despite my desire to cut down the number of emails, please know that my door is always open for our members. Feel free contact me at leak@gada.com or by phone (770) 432-1658 with any questions, concerns or just to say hello. Thanks to decades of hard work by dealers and association leadership, GADA has established strong connections and a solid reputation with many state legislators. 7 THE GENERATOR
NADA NOTES MESSAGE FROM NADA DIRECTOR STEVE MIDDLEBROOKS NADA DIRECTOR Dear GADA members, GADA Board of Directors and staff, Before sharing the latest NADA news, I want to take a moment to thank you for the tremendous opportunity to serve on the GADA Board of Directors in various roles for the past 20+ years, as well as serving as your director on the NADA Board of Directors for the past several years. It has been an honor and a privilege to represent you, as I conclude serving as your NADA director effective June 30, 2024. Please know that both GADA and NADA work tirelessly to represent you, navigating many legislative, regulatory and franchise issues, the media, and the public. The following is an update on major NADA initiatives. EPA EMISSIONS RULE The Big Picture: The EPA’s final vehicle emissions rule, which solidifies GHG standards for model years 2027 through 2032, remains far too aggressive and far ahead of consumer demand. What’s Next: America’s franchised new car and truck dealers will continue to: • Promote electrification with billions of dollars in investments in facilities, training and inventory; • Urge the administration to track actual EV sales versus projections and make necessary adjustments to its de facto EV mandates to reflect actual consumer demand; and • Support Congressional Review Act resolutions or appropriations riders that would disapprove or prevent funding for the administration’s final rule. On May 1, CRA resolutions to undo the final rule were introduced by Sen. Pete Rickets (R-Neb.) and Rep. John James (R-Mich.). Why It Matters: Our experience working with consumers every day makes us highly skeptical that consumers will adopt EVs anywhere near the levels required. The charging infrastructure is not ready, the current incentives are not sufficient and high EV prices will price out millions of consumers, particularly low-income Americans, from the newcar market. FTC VEHICLE SHOPPING RULE The Big Picture: NADA’s aggressive legal and legislative strategy to stop the FTC’s Vehicle Shopping Rule from taking effect is progressing as planned. The Latest: In March, NADA and the Texas Automobile Dealers Association (TADA) filed the opening brief in support of our Petition for Review of the Vehicle Shopping Rule in the U.S. Court of Appeals for the 5th Circuit. The brief outlines the numerous reasons why the Vehicle Shopping Rule violates federal law and should be set aside. An additional six outside groups — including ATAE, NIADA, AFSA and the U.S. Chamber of Commerce — each filed amicus (friend of the court) briefs in support of the NADA/ TADA petition. The FTC’s delay of its own rule pending this judicial review remains in place. What’s Next: The FTC’s reply brief was due to the court on May 14. NADA and TADA’s brief in response to the FTC was due to the court on June 13. After that, the case will be assigned to a three-judge panel. NADA will then request oral arguments, which could take place as early as Summer 2024. In Congress … NADA continues to rally support for legislation — “FTC REDO Act” — that would nullify the rule and require the FTC to follow basic regulatory safeguards (the essential ones it failed to perform in the first place) before it could redo the rule. Additionally, NADA is seeking an amendment (called a “rider”) to a fiscal year 2025 appropriations bill THE GENERATOR 8
in order to deny the FTC funding for fiscal year 2025 to enforce the Vehicle Shopping Rule. Why It Matters: The Vehicle Shopping Rule is terrible for consumers and contains draconian penalties for dealers. Complying with it will add massive amounts of time, complexity, paperwork and cost to car buying and car shopping for tens of millions of Americans every year. SO-CALLED “RIGHT TO REPAIR” LEGISLATION The Big Picture: NADA is working diligently to prevent so-called “right to repair” legislation from advancing in Congress and will vigorously defend dealers should such legislation gain momentum. What’s New and What’s Next: In November 2023, a so-called “right to repair” bill was reported out of the House Subcommittee on Innovation, Data and Commerce despite numerous bipartisan concerns about the legislation. NADA, alongside ATAEs and directors, has been engaged in educating members of Congress about the true nature of this legislation, which would require OEMs to provide any third party remote, bidirectional access to all vehicle-generated data “without restrictions or limitations” — including data unrelated to the servicing of the vehicle. Why It Matters: The information independent repair shops need to repair vehicles — including service information, tool information and training data — is readily available to independent repair shops. But so-called right-to-repair legislation has little to do with repairing vehicles; instead, it compels OEMs to provide any aftermarket parts manufacturer with the information necessary to produce or offer their own compatible aftermarket parts — including safetycritical parts. Passage of this bill would create significant privacy, cybersecurity, automotive safety and IP concerns. HYUNDAI/AMAZON The Big Picture: NADA has been persistently engaged with the Hyundai National Dealer Council, Amazon and Hyundai since the announcement of the HyundaiAmazon pilot program for vehicle marketing and shopping. What’s New and What’s Next: NADA’s immediate engagement prompted Hyundai to quickly clarify to its dealers that while the pilot program would allow marketing and listing of Hyundai vehicles on the Amazon platform, vehicle sales would continue to take place at Hyundai dealerships. 9 THE GENERATOR
At the request of the Hyundai Dealer Council and Hyundai, NADA’s focus has been on assisting the Hyundai Dealer Council in its efforts to address all questions and concerns about this pilot program and larger partnership. NADA is aware that these discussions between the Hyundai Dealer Council working group, Amazon and Hyundai are continuing in good faith. Why It Matters: The poor wording and rollout of the Hyundai-Amazon announcement in November understandably resulted in a wave of inaccurate reporting as well as deep concern across the auto industry (both dealers as well as other automakers) about the program and its potential ramifications for Hyundai dealers as well as dealers of other brands. FORD The Big Picture: NADA continues to communicate dealer concerns with Ford, especially as it relates to Model e and the improvement of their working relationship with their U300 dealers, formerly known as Select Dealers. And NADA will continue to request that Ford consider adjusting the Model e program based on current EV market adoption realities. What’s New and What’s Next: In January 2024, Elena Ford visited NADA HQ in Tysons, Virginia, for a day‑long discussion on dealer concerns, dealer training and federal policy actions that impact dealer and OEM operations. The NADA meeting with Ford to discuss the dealer attitude survey results was held in May. Why It Matters: In late 2022, Ford announced the Model e program aimed at setting new standards for dealers to qualify to sell and service Ford’s EV vehicles. This program not only mandated EV-related infrastructure at dealerships, but also obligated dealers to spend money on new software systems, training expenses and in-store technology. Ford’s own estimates put this cost at well over $1 million for many dealers. Also included in the Model e program were mandates to change a dealer’s sales process, service process, inventory stocking strategy, job requirements and qualifications. Since the announcement date, Ford has suffered an endless wave of dealer dissatisfaction based on the cost, complexity and, in some cases, adjudicated illegality of the Model e program. HONDA/SONY — VW/SCOUT The Big Picture: NADA has met with and continues to communicate with leaders of both Honda and VW to express dealer concern that each may be attempting to implement a direct‑sales retail model for its new brands. What’s New and What’s Next: Although neither company has yet to publicly announce its distribution channel for the newly created brands, NADA will continue to proactively discuss this topic with each company and respond accordingly once a public statement is made by either regarding the distribution channel for these brands. Additionally, NADA had a meeting with VW in early April, and asked for introductions to the U.S. Cupra team to discuss their planned market entry as reported in Automotive News. Why It Matters: In late 2022, Volkswagen Group announced the rebirth of the Scout brand, designed to be an all-EV SUV/Truck brand. No distribution method was specified at the time, nor has one been announced or specified since. In January 2023 at the Consumer Electronics Show (CES), Sony announced a new car brand, built in partnership with Honda. There was no discussion of dealers being allowed to sell these vehicles, but the initial conversation left open the possibility that dealers would be allowed to service them. Any direct-sales model would, to say the very least, undermine any automaker’s relationship with its franchised dealers, all of whom have made significant investments in their current and future brands. I will close with the same message you’ve heard me say many, many times — please get involved in local and state politics; “know” your local legislative representatives; support GADA with your presence and your checkbook; and be an active member and supporter of NADA. You will be making a wise “investment” in your future. All my best. God Bless, Steve Middlebrooks Heyward Allen Cadillac GMC Buick Toyota Athens, Georgia THE GENERATOR 10
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MEMBER SPOTLIGHT to their plan. Bill revised the accounting department to plan and got it back on track. Shortly after that, a need arose for someone to fill the parts manager position. Bill rose to the occasion, took on the position and learned what he needed to do so the department could continue to run smoothly. All this happened before Bill turned 21 under the careful guidance of his father. Because of his lack of experience and young age, Bill had to prove himself to some of the long-time employees and management. Working in the parts department did just that; he earned their respect and found his place in the company. From there, Bill worked in every department, learning, gaining experience and eventually, he took over the business. Today, Bill’s son, Matthew, is a third-generation dealer. He is learning under his father’s tutelage and working in every department, just like Bill had done. Bill’s sister, Brenda, also works at the dealership. It’s fair to say that Billy Howell Ford is a family affair. “When I first started working with my father, he was my dad who then became my partner, my best friend and ultimately, my mentor,” Bill recalled. “Our relationship is quite special. We’re very different individuals. I’m very driven and hard-charging; he’s very laid back and the most compassionate person I’ve ever met. We complemented each other fantastically. I thought it could not get any better, but then my son came in and we had three generations working here. Now, I’m the mentor, the father and the partner. It is fantastic.” Bill Howell is the president of Billy Howell Ford. Born in Memphis, Tennessee, Bill grew up around the auto industry. His father, Billy, worked for Ford Motor Company. At the age of 10, the family moved to Farmington Hills, a suburb of Detroit just minutes away from the birthplace of Ford Motor Company. The family lived there until Jan. 1, 1976, when they relocated to Roswell, Georgia, where they found a community that the entire family calls home to this day. His father opened Billy Howell Ford that same year. Bill attended Georgia State University while working for U.S. Steel. Upon receiving his accounting degree, he planned to continue working for the company and was on a management track. At the same time, his father needed to replace the controller at his dealership, and Bill, at the age of 20, decided to join the family business. He started with the title of vice president and filled in as the interim controller. The dealership had been purchased under the Ford Dealer Development program which comes with stringent controls — Ford has a redbook, and everything has to be done according Getting to Know Bill Howell of Billy Howell Ford THE GENERATOR 12
Family means everything to Bill. “I am pretty fortunate that my immediate family lives literally within a few short miles from each other — my mother, Cecilia, whom I speak with almost every day, my father, two sisters, all my nieces and nephews, my grandniece and grandson,” Bill said. “The relationships I’ve built with my family are my biggest career and life accomplishments.” Acquiring and training a great team is key to any success. Bill’s motto is the same as the day he started, “When you come in to work, you sell cars, make friends and have fun. And if we do that, we’ll make all the money.” Bill encourages his staff to do their jobs purposefully and be passionate about them. “The enemy of great is good” and “Walk with purpose” are sayings that can often be heard within the walls of the dealership. Along with the daily encouragement to be better, Bill believes in having fun and can often be found in the parking lot having foot races with his employees or playing a game of basketball with them. Bill is proud of the camaraderie his staff has formed through all of the hard work and fun. Recently, Bill and his wife, Jennifer, took a trip to Palm Springs. While there, the hotel they stayed at offered guests the opportunity to check out a puppy for an hour or two, just for fun. This got Bill’s curiosity up, and he started asking the hotel management questions. The answer inspired Bill to try something new at his dealership: Partnering with the Humane Society, puppies are fostered at the dealership and made available to guests to play with, go for a walk or just snuggle, and hopefully, if all goes well, an adoption — the puppy gets their “furever home.” “Buying cars can be stressful, and spending time with a dog is calming. I want our customers to have that option,” Bill said. Billy Howell Ford has a fenced-in grass area that can be seen from Bill’s office and a doghouse in the showroom where customers can get to know the furry friend. The hotel that inspired this idea has helped hundreds of dogs get adopted, and Bill hopes that this will achieve the same results. How fantastic is that? Even with the many challenges facing the industry today, Bill stays steady. “I’ve been doing this since 1986 and the issues today are the same issues we dealt with back then,” he said. “We all want to increase volume, increase customer satisfaction, grow revenue, decrease expenses and ultimately make more money. It is just that simple.” Bill is a huge advocate of the franchised system. “We are still selling cars 95% of the same way we have since I started in the business, and the reason why is that it works,” Bill stated. The recent push from manufacturers to have more control of the customers is a concern, but as Bill astutely states, “These are our customers, we live with these people, they are our friends and neighbors. Manufacturers are experts at building cars — we are experts at taking care of the customers and retailing them.” Bill wants to protect the traditional way of doing business. Being involved with GADA is an important part of protecting the franchised system. Billy Howell Ford has been a member since 1977, and Bill is on his second round of serving on the board. GADA takes an active role in advocating for dealers and protecting the franchised system. “A few years back, Rivian had plans to retail directly to customers in Georgia, which would have been bad for the franchised system and consumers. GADA stood up and fought for dealers and consumers, and they won,” Bill recalled. “That is just one of the many ways that the association helps.” The fellowship of being a GADA member and a dealer is an honor reserved for a few. “I wish that all car dealers would realize that we’re all in this together. This is the world’s greatest fraternity, made up of a very small group of people, and together we are stronger,” Bill said. “Mustang” Sally, from the Humane Society of Forsyth County, fostered at Billy Howell Ford while she is looking for her furever home. 13 THE GENERATOR
HEADLIGHTS ON THE LAW THE “OLD” SALES TAX RULES ARE STILL IMPORTANT BEN JORDAN GADA GENERAL COUNSEL & DIRECTOR OF GOVERNMENTAL RELATIONS Sometimes in the law, like in life, “what is old is new again.” GADA has received several questions recently about sales and use tax, particularly on parts used in vehicle repairs. Although most vehicle sales and leases are now subject to TAVT, not sales tax, the “old” sales tax rules still apply to many dealership transactions, particularly in the service department. Hopefully this article will help when questions arise. THE BASICS Parts Purchased for Resale (Not Taxable). Sales tax does not apply to a dealer’s purchase of motor vehicles, parts, and other resale items sold by a motor vehicle dealer when a properly executed Certificate of Exemption (Form ST-5) is provided to the supplier or manufacturer. Rule 560-12-2-.09 (2)(c). Parts and Labor Itemized Separately. When parts or accessories are installed in a motor vehicle owned by the customer, and the charge for installation or repair labor is itemized on the dealer’s invoice separately from the charge(s) for the parts or accessories, the charge(s) for labor are not subject to sales and use tax. The charge for parts and tangible accessories in a non-warranty repair are taxed to the customer. If the charges for labor and parts or accessories are not itemized on the dealer’s invoice, the entire amount charged to the customer is taxable. Rule 560-12-2-.09 (6)(a). THE GENERATOR 14
Parts Used To Restore Vehicles To Salable Condition (Not Taxable). Parts used to repair or restore a used vehicle to a salable condition are not subject to sales and use tax when purchased by the dealer, since they are purchased for resale. The tax collected at the time the used motor vehicle is sold will include the value of the parts installed. However, consumable supplies, such as cleaners and waxes used in the reconditioning of a motor vehicle for sale, are subject to sales and use tax. Rule 560‑12-2-.09 (6)(b). WARRANTIES AND MAINTENANCE AGREEMENTS The tax rules concerning parts on warranty repairs and service agreements can seem more complex. This is the topic on which GADA has received the most questions. Parts Used in Factory Warranty/Retail Dealer Warranty (Not Taxable). When a motor vehicle is sold at retail, a warranty from the manufacturer or retail dealer is often included in the selling price … When repairs are made under such warranty, no tax is due since a manufacturer’s or retail dealer’s warranty was part of the sales price of the motor vehicle when originally sold. Rule 560-12-2-.09 (6)(c). How does this apply if a third party makes the repairs under the factory/dealer warranty? The Rule states that the customer is not taxed regardless of whether the manufacturer or retail dealer makes the repairs or whether they pay someone else to make the repairs. Rule 560-12-2-.09 (6)(c). Parts Used in Extended Warranty or Maintenance Agreement (Taxable). The sale of an extended warranty or maintenance agreement is not taxable to the customer provided that the charge for such warranty or maintenance agreement is itemized on the dealer’s invoice to the customer. That said, “The parts associated with repairs pursuant to such agreements are subject to sales and use tax.” Rule 560-12-2-.09 (6)(d). Specifically, the dealer is liable for use tax on the repair parts based on the dealer’s cost. But what if the dealer charges a third-party for the repairs? According to the Rule, “In the event the dealer charges a third party for the repair, the dealer must charge sales tax to the third party… as would apply to any other retail sale.” Rule 560-12-2-.09 (6)(d). This article is for informational purposes only and is not intended to be legal advice. Dealers are advised to seek advice from dealership legal counsel or other competent professionals concerning individual dealership operations. The presentation of this article is not intended to encourage concerted action among competitors or any other action on the part of dealers that would in any manner fix or stabilize the price or any element of the price of any good or service. 15 THE GENERATOR
HOW TO AVOID COSTLY MISTAKES INSURANCE INSIGHTS SHAWN PRESNELL MANAGING DIRECTOR OF INSURANCE SERVICES Owning and operating an auto dealership today presents several challenges. Each year, these challenges increase with new regulations and rising operational costs. It is important to remember that you must not short-cut your loss prevention efforts. Plaintiff attorneys are always looking for that next big case. You don’t want to be a target! See if you can check all the boxes below: Dealerships should carefully consider policies regarding permissible use of company vehicles. MVRs should be obtained prior to hiring employees in positions that involve driving. Customers should not be allowed to enter the service department. All sales of manufacturer buybacks must be clearly disclosed, in accordance with applicable law. New vehicle damage should be properly disclosed to the customer prior to the sale. Work done on customers’ cars involving any drivability or safety issues should be checked by a second technician or supervisor. Keys to vehicles must be kept secure and key fobs should not be released until sale has been completed. These procedures may seem ordinary or simple to you, but they may not be common practice even in your own dealership. Following these guidelines could save your dealership a costly liability claim: • Employees with unacceptable driving records who are allowed to drive dealership or customer vehicles put your dealership at great risk. Even minor accidents can end up costing tens of thousands of dollars. Real Claim Example: The dealership shuttle driver was out, and a customer needed a ride home. The dealership allowed a porter to drive the customer home and was involved in a wreck, causing serious injury. This porter had an unacceptable driving record that was not known until the time of the accident. This was a $200,000+ claim! • It is important to limit the driving exposures in your dealership. This includes only allowing specific management to drive company vehicles. We suggest restricting use of company vehicles. Real Claim Example: A GSM was allowed to take a dealership pickup truck on vacation. While on vacation, the employee was involved in an accident with the company vehicle, resulting in serious injuries to the other driver. The claim was settled for over $150,000! • Customers should not be allowed in the service department. Many minor slip and fall claims exceed $25,000 in medical costs. Taking the necessary precautions, such as not allowing customers in your service department, may avoid this type of claim. Real Claim Example: A police officer needed to look at a customer vehicle on the back lot. Rather than bring the officer around the dealership they directed the police office through the service department where he slipped on transmission fluid and was injured. This ended up being a $100,000+ claim. • Georgia law requires a dealer to provide the customer with a particular form when selling a manufacturer buyback vehicle to the first retail customer after buyback. Real Claim Example: The dealership sold a manufacturer buyback and did not properly disclose it THE GENERATOR 16
to the customer. The claim was settled for close to the amount of the vehicle! • Under Georgia law, if a new vehicle incurs paint damage that exceeds $500 and/or damage that costs 5% or more of MSRP to fix, such damage must be disclosed prior to delivery. Even if damage does not meet this statutory threshold, it is advisable to disclose known prior damage. Real Claim Example: A sales manager wrecked a demonstrator vehicle. He did not want the dealership to be aware of the accident, so he had the vehicle fixed. The vehicle was sold without disclosing the damage. The customer became aware of the prior damage and sued the dealership. A violation of this law is a per se violation of the Georgia Fair Business Practices Act, which allows for treble damages. • Completed operation claims can become your largest exposure, so it is critical to have procedures in place, such as another technician or supervisors checking any drivability or safety repairs. Real Claim Example: A customer had a vehicle in for repair and the dealership did not properly tighten the lug nuts. Due to a technician’s failure to properly tighten the lug nuts, the customer ended up in an accident. If another technician or supervisor had checked this job, the issue would have been caught and resolved. Tragically, the customer was seriously injured in this accident. This was a major liability claim! • Vehicle thefts continue to increase across the U.S. In the last several years, vehicle theft has increased by roughly 25%. This, combined with the increased value of vehicles, makes this a significant loss to auto dealerships. It is up to each dealership to tighten up vehicle security with well-functioning key machines. It is important not to provide key fobs to customers on test drives and to wait to deliver the keys to the customer once the sale has been completed. In addition, dealerships should be compliant with federal Red Flags Rule and have identity verification procedures in place. Real Claim Example: A customer had purchased a “high-end” used vehicle. The dealership failed to address typical red flags, such as the request to deliver the vehicle to an address other than the address on the driver’s license and inadequate proof of insurance. This claim cost the dealership over $100,000. 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 P&C Account Executive Atlanta/North GA (770) 570-8212 | felixj@gada.com DAVID CREW P&C Account Executive Middle/South GA (470) 303-9051 | davidc@gada.com 17 THE GENERATOR
You may have heard about the so‑called new “overtime” rule, which the U.S. Department of Labor announced on April 23. You also may have heard that the new rule will require employers to increase the annual salary paid to certain employees. And you may already know that employees who are not now eligible for overtime pay under the “old rule” may be eligible for OT under the new rule, if it survives legal challenges. What you probably want to know now is how the new rule could affect your dealership. You have come to the right place. Spoiler Alert: The rule change should have minimal impact on most dealerships — but you should still take this opportunity to review the new requirements and how they might impact your business. Here’s what you need to know and what you should do before the effective dates. CHANGES IMPACT WHITE-COLLAR EXEMPTIONS ONLY Review the current overtime rules. This is a good starting place for understanding what the new rule does and does not change. Federal law (and many state laws) requires most employers to: • Pay most employees at least minimum wage for all hours worked in a workweek; • Pay them an overtime premium for all hours worked over forty in a workweek; and • Maintain proper records of their hours worked and pay. Most of these laws, however, partially or completely exclude or exempt qualifying employees in certain job positions from some or all the requirements listed above. For example, qualifying dealership service technicians, service advisors, parts counterpersons and salespersons are exempt from the federal law’s overtime requirement, but they are not exempt from the law’s minimum wage and recordkeeping requirements. Importantly, and as explained in this article, the new rule does not apply to or impact partially exempt employees, even if they have a salary component in their pay plans. WHAT YOUR DEALERSHIP SHOULD KNOW AND DO ABOUT THE NEW FEDERAL OVERTIME RULE BY TILLMAN COFFEY, ESQ. AND TIMOTHY SCOTT, ESQ. FISHER PHILLIPS THE GENERATOR 18
The new rule will apply to and impact only employees who qualify for one of the complete exemptions known as the “white-collar” exemptions. These exemptions may be available to employees who primarily perform job duties that are executive, professional or administrative and who are paid on a “salary basis.” To meet the salary basis requirement, an employee must receive a predetermined annualized salary amount that is at least equal to the minimum salary required by law for a white-collar exemption — and that salary cannot be subject to deduction based on the quantity or quality of the employee’s work. Employees who do not satisfy both the duties and salary basis requirements do not qualify for a white-collar exemption, even if they earn at least the minimum salary amount. WHAT WILL THE NEW RULE DO? The sole focus of the new rule is the salary component of the white-collar exemptions. It increases the minimum annualized salary required to qualify for the white-collar exemptions. The current minimum annual salary amount required under federal law for white-collar exempt employees is $35,568 or $684 per week. Under the new rule, the salary requirement will be raised in two phases (if the rule is implemented as planned). On July 1, 2024, the minimum annual salary for white-collar exempt employees increases to $43,888 or to $844 per week. And it is scheduled to increase again on Jan. 1, 2025, to $58,656 or $1,128 per week (again assuming the rule is implemented as planned, despite legal challenges). The expected consequence of increasing the minimum salary requirement is that employees who currently are eligible for a white‑collar exemption no longer will be after implementation of the rule because their employers will not be able or want to pay the increased salary. Employees who lose the exemption will be entitled to overtime pay 19 THE GENERATOR
when they work more than 40 hours in a workweek, which is the reason the change is called the “new overtime rule.” THE GOOD NEWS FOR YOU The “good” news is that the change applies to the white‑collar exemptions only. The other “good” news for retail automotive dealerships is that the change may have minimal impact because you likely employ relatively few employees who qualify for one of these exemptions. More good news is that many of the dealership employees who qualify for a white-collar exemption may already receive a salary that exceeds the new minimums in the rule. Dealership positions that often qualify for a white‑collar exemption include general manager, department manager, controller and human resources manager. Additionally, you should note that in qualifying circumstances, the salary requirement may be satisfied with the receipt of a guaranteed draw. Of course, as with all wage and hour exemptions, eligibility for a white-collar exemption is determined on a case‑by‑case, employee-by-employee basis. Importantly, the rule change does not require dealerships to increase the salary amounts of any employee who does not qualify for one of the white-collar exemptions. For example, salespersons, service advisors, finance managers and parts persons who have a salary component in their pay plan are not impacted by this rule change because they do not qualify for one of the white-collar exemptions. WHAT SHOULD YOU DO? Even though the new rule does not create any new legal obligations for employers until July 1, 2024, at the earliest, the rule has and will bring attention to wage and hour law compliance issues. For that reason, we recommend taking the following steps: • Conduct a wage and hour audit to determine compliance with both federal and applicable state laws. Keep in mind that employers have the burden of establishing that every employee for whom an exemption is claimed qualifies for the exemption. The receipt of a salary, standing alone, does not qualify an employee for an overtime exemption. Likewise, as with all exemptions, the job title, the job description and a dealership’s longstanding pay practice (or that of its competitors) is not determinative as to exempt status. • Plan for the implementation of the higher salary requirement for your white-collar exempt employees. Determine if you must increase anyone’s salary to maintain the white-collar exemption and your options if an increase is required. CONCLUSION Because wage and hour issues are often more complicated than they appear, we recommend you consult with legal counsel with dealership experience to assist with compliance issues. Your Fisher Phillips attorney will be happy to assist. If you have questions, contact your Fisher Phillips attorney, the authors of this Insight or any attorney on our Auto Dealership Team. The new rule will apply to and impact only employees who qualify for one of the complete exemptions known as the “white‑collar” exemptions. THE GENERATOR 20
404.991.1957 jimrie@DLRdmv.com Jayson Imrie DLRdmv.com BEST-IN-INDUSTRY CUSTOMER SUPPORT! CONTACT ME FOR A DEMO TODAY! The nation's fastest growing out-of-state titling program is now available to South Carolina dealerships! THE WAIT IS OVER! ELIMINATE UNDER COLLECTIONS AND WRITE-OFFS CERTIFIED DMS INTEGRATION 24/7 CUSTOMER SUPPORT UNPARALLELED COMMUNICATION TOOLS 50 STATE FEES & FORMS SELF-SERVICE CHECKLISTS FULL SERVICE PROCESSING DUPLICATE TITLE GUIDES
CLIMBING THE AUTOMOTIVE INDUSTRY LADDER OF SUCCESS BY SHARON KITZMAN DOMINION DMS In the auto industry, there is a gap between the number of women in leadership and those who buy cars. Maintaining that discrepancy is risky because it shows a lack of innovation when serving the market. Interestingly, women buy 62% of all vehicles today. Even if they don’t purchase directly, they influence 85% of car-buying decisions. Yet, while more women are in automotive leadership roles than ever, the statistics are still not great. According to Deloitte’s recent study, women account for 47% of the labor force but only 27% of the auto-industry workforce, even though those who do, really enjoy it (Women at the Wheel study). The 330 women surveyed, also in a study by Deloitte and Automotive News, have an average tenure of 15 years at the same company and over 26 years in the industry. More than 80% are senior managers (directors, vice presidents and other C-suite occupants), and almost 60% are in marketing, sales, operations or product development. In most industries, women prefer conducting business with other women. Whether it’s their banker, doctor, lawyer, psychologist or salesperson, most women want to deal with the same gender because they feel more heard than when dealing with a man. Even though most women have done their research, they want someone who can understand them and listen. Can a man do this? Absolutely! But sometimes, women need to see another woman in the business before they will walk through the door in the first place. So why are there not more women in our industry? From the day in 1882, when Bertha Benz became the first person to complete a long-distance automobile trip, women have popularized the automobile and staged and led many noteworthy developments. There are many reasons why the auto industry fits well with women, and perhaps we all need to do a better job of highlighting those: 1. It’s a great industry for a career change. Many people find the need to switch careers, and the auto industry is an exceptional place to land. For many women looking to return to the job market after a leave of absence, the auto industry has many soft-skill jobs that offer a solid career path, from accounting to finance and beyond. THE GENERATOR 22
2.The opportunity to learn new skills. The auto industry offers a wide range of positions, each requiring specific skills to be learned and mastered. 3.A wealth of lateral job moves. Not all job moves need to go straight up. The auto industry has many opportunities that zig-zag, yet they still allow for growth. 4.Charting a career path. The auto industry offers excellent opportunities for advancement. It’s a matter of being observant, asking questions and seeking out the opportunities that arise often in most dealerships. One of the best approaches to success in the auto industry is developing a strong network of allies, mentors and good people to know. And I think there’s no better industry than the automotive industry to start your network. Most dealer principals have more than one story about the people who taught them the business and set up their career trajectory for success within the business — and they typically want to return the favor. Another great source for your network is tapping into your vendor relationships, especially if you already work in the auto industry. Strong vendor partnerships are among the greatest strategic growth tactics and best practice resources available to nearly every industry, including the auto industry. By collaborating with suppliers and vendors, within the framework of a true partner relationship, you can multiply success and profits exponentially. And the best part? Everyone benefits. A genuine mutual relationship that promotes problem‑solving is an advantage for profit margins and creates a more productive and engaged organization that focuses on quality outcomes. While this should be a best practice for everyone, it’s especially important to women in the auto industry. As women in the auto industry, it’s important to identify what resources you need to do your job successfully, what resources influence your job area, and what resources can further your career and connect with them. Strong vendor relationships allow you to leverage your time, and strong mentor relationships give you the inside track on how to get things done. The future of women in the auto industry is strong; it won’t remain at 27%, and that’s a good thing. Study after study has shown the importance of gender diversity in all industries, including the auto industry. Companies with diverse management teams experience 19% higher revenue and are 70% more likely to enter new markets. Furthermore, diverse teams are 12% more productive. Better still, turnover goes down 45%. In the automotive industry, where technological advances and shifting consumer demands drive rapid change, embracing diversity and inclusion has never been more crucial. Sharon Kitzman leads the launch and long-term growth of Dominion DMS. Previously, she managed the strategic direction and product development for Reynolds & Reynolds and Dealertrack. Her experience spans every area of dealership software development, including sales, marketing, product lifecycle management, process re-engineering, OEM management, professional services and customer services. Kitzman is a recognized leader in the automotive industry for her expertise in DMS technology. She received numerous accolades for her leadership, including Automotive News Top 100 Leading Women 2015 and 2020, Auto Remarketing Women in Retail 2021 and AutoSuccess Women at the Wheel 2021. She has a Bachelor of Business Administration from Ohio State University. Sharon Kitzman is passionate about creating and nurturing partnerships within the automotive industry and regularly discusses the many vendor products and services within the auto industry on her VUE Points podcast. Scan the QR code to listen. https://www.dominiondms.com/podcasts/ 23 THE GENERATOR
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