PUB. 4 2023 ISSUE 4 TIME and Ally Financial Honor Martinsville Dealer Barry Nelson THE OFFICIAL PUBLICATION OF THE VIRGINIA AUTOMOBILE DEALERS ASSOCIATION
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© 2023 Virginia Automobile Dealers Association (VADA) |The newsLINK Group, LLC. All rights reserved. Virginia Auto Dealer is published four times each year by The newsLINK Group, LLC for VADA and is the official publication for the association. The information contained in this publication is intended to provide general information for review and consideration. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your specific circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the association, its board of directors, or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. Virginia Auto Dealer is a collective work, and as such, some articles are submitted by authors who are independent of VADA. While VADA and the newsLINK Group encourage a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact The newsLINK Group at 855-747-4003. A MESSAGE FROM PRESIDENT AND CEO, DON HALL 4 With Elections Over, Dealers Have an Obligation: Educate and Support 6 TIME and Ally Financial Honor Martinsville Dealer Barry Nelson Wins National Recognition for Community Service and Industry Accomplishments 9 A New Data Partner: Cross-Sell 10 6 Drivers To Keep Your Dealership’s Team Engaged in Times of Change By Don Geletko and Jeremy Spidell, Truist Leadership Institute. Brought to you by Truist Dealer Services. 13 Great Customer Experiences ... By Dealertrack 14 Virginia’s Elections and Outlook For Dealers By Ralston King, VADA VP of Legislative Affairs 16 Tax Bulletin: YearEnd Planning By Councilor, Buchanan & Mitchell, P.C. CPAs & Business Advisors 18 VUE Points Podcast 19 Save the Date Hampton Roads International Auto Show 19 Save the Date Virginia International Auto Show 20 Virginia Dealer Deal Roundup 2023 A Look at Retail Auto Merger and Acquisition Activity in Virginia in 2023 22 Leadership 23 Thank You VADA Allied Members 24 Thank You VADA Program Partners 26 Economic Impact Report 30 Registration is Open VADA ‘24 6 10 14 CONTENTS Pub. 4 2023 Issue 4 Virginia Automobile Dealers Association vada.com 3
oOne of the many things I’m grateful for as we start 2024: that we live in a country where we can have free and open elections. After the November election, I reminded our members that the Virginia Automobile Dealers Association is a nonpartisan organization that supports, financially and ideologically, both political parties. In our 75-year history, we have a flawless track record of working across the aisle to support the interests of a pro-business, pro-dealer climate and opposing those issues that run counter to our pursuit. Our issues are not ones that make big headlines because they are ones that are supported by almost every politician in Virginia: a strong economy. A favorable business and tax environment. A market that is fair to consumers, dealership employees and dealership leaders. How we reach those outcomes can vary, and there will be discussions, but these are not single-party issues. Post-election, there are a total of 49 new faces in the General Assembly: 33 in the House of Delegates and 16 new Senators. When the General Assembly convenes at noon on January 10, 70 of the 140 members will have served less than four years. And so, it is our obligation to enlighten the newly-elected members of the legislature on the franchise system. What can you do? 1. Reach out to your legislators. Educate them on the franchise system. If they are members of a party that you, personally, traditionally do not support, that is all the more reason to pick up the phone and set up a meeting. 2. Give to the VADA Political Action Committee. Many new legislators took on heavy expenses from their campaigns, and our support goes a long way toward helping them focus on issues and retire those debts. Money doesn’t buy votes, but it does give us access to talk about the important issues impacting the auto industry. Reach out to Ralston King, our VP of legislative affairs, at rking@vada.com or me for assistance setting up these meetings. In a time of divisive politics, Virginia dealers should lead and show our citizens that we can, do and should work across the aisle and reach a consensus on issues that matter. With Elections Over, Dealers Have an Obligation: Educate and Support A MESSAGE FROM PRESIDENT AND CEO, DON HALL Support the Virginia Auto & Truck Dealers PAC at vadapac.com. 4 Virginia Auto Dealer
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.
T TIME and Ally Financial Honor Martinsville Dealer The nomination of Barry Nelson, dealer and President at Nelson Ford Mazda in Martinsville, Virginia, for the 2024 TIME Dealer of the Year award was announced by TIME. Nelson is one of a select group of 49 dealer nominees from across the country who will be honored at the 107th annual National Automobile Dealers Association (NADA) Show in Las Vegas, Nevada, on Feb. 3, 2024. The TIME Dealer of the Year award is one of the automobile industry’s most prestigious and highly coveted honors. The award recognizes the nation’s most successful auto dealers who also demonstrate a longstanding commitment to community service. Nelson was chosen to represent the Virginia Automobile Dealers Association in the national competition — one of only 49 auto dealers nominated for the 55th annual award from more than 16,000 nationwide. “Seeing the personal and professional growth of our company’s team members has been undeniably the most rewarding aspect of my career,” nominee Nelson said. “We started at very humble beginnings, and as we scaled to new heights, witnessing the progress of our team was invigorating.” After graduating from George Washington Carver High School in Martinsville in 1975, Nelson started working at his family’s Ford store in Basset, Virginia, which was owned by his father, G.R. Nelson. “I learned the car business from the ground up and worked in every position at the store,” he said. “My on-the-job training in each department gave me the necessary insights and operational experience to manage a dealership and eventually lead our auto group.” Nelson and his father began to expand their business footprint by adding franchises and acquiring stores. Today, Autos by Nelson encompasses multiple new-car dealerships in Virginia, representing Chevrolet, Ford, GMC, Honda, Kia, Mazda, Subaru and Toyota. “The key to our success is our team members, who consistently strive to be better,” he said. “I am also thankful for the great mentors who have helped me along the way. Through hard work and determination, we have achieved so much, and we continue to grow.” As a longtime member of his community, Nelson’s passion for sports drives his philanthropic giving. He coached American Legion Baseball for 16 years and continues to donate to the Martinsiville Community Recreation Association in support of the baseball program. He is also a board member and local supporter of the Fellowship of Christian Athletes. “Coaching and mentoring young people has given me a platform to positively affect their lives in ways that I would not have been able to otherwise,” he said. Nelson was also instrumental in creating the Patrick & Henry Community College (PHCC) baseball program, where he was a coach for five years, as well as leading the charge to build Hooker Field, a turf field used by PHCC baseball and the Martinsville Mustangs, a local team that competes in the Coastal Plain League. “The program I founded has led to a vast expansion in opportunities for athletes and for the college,” he said. “PHCC has now grown to become part of the National Junior College Athletic Association (NJCAA), which has brought hundreds of studentathletes to the school and has helped increase enrollment.” Beyond athletics, Nelson has worked with the Martinsville Henry County Chamber of Commerce and the Henry County Industrial Development Authority to attract businesses and jobs to the area. Barry Nelson Wins National Recognition for Community Service and Industry Accomplishments 6 Virginia Auto Dealer
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ABOUT TIME TIME is the 100-year-old global media brand that reaches a combined audience of over 120 million around the world through its iconic magazine and digital platforms. With unparalleled access to the world’s most influential people, the trust of consumers and partners globally, and an unrivaled power to convene, TIME’s mission is to tell the essential stories of the people and ideas that shape and improve the world. Today, TIME also includes the Emmy Award®-winning film and television division TIME Studios; a significantly expanded live events business built on the powerful TIME100 and Person of the Year franchises and custom experiences; TIME for Kids, which provides trusted news with a focus on news literacy for kids and valuable resources for teachers and families; the award-winning branded content studio Red Border Studios; an industryleading web3 division; the website-building platform TIME Sites; the sustainability and climate action platform TIME CO2; the new e-commerce and content platform TIME Stamped, and more. ABOUT ALLY FINANCIAL Ally Financial Inc. (NYSE: ALLY) is a financial services company with the nation’s largest all-digital bank and an industry-leading auto financing business, driven by a mission to “Do It Right” and be a relentless ally for customers and communities. The company serves more than 11 million customers through a full range of online banking services (including deposits, mortgage, point-of-sale personal lending and credit card products) and securities brokerage and investment advisory services. The company also includes a robust corporate finance business that offers capital for equity sponsors and middle-market companies, as well as auto financing and insurance offerings. To learn more, please visit www.ally.com and follow @allyfinancial. For more information and disclosures about Ally, visit www.ally.com/#disclosures. For further images and news on Ally, please visit media.ally.com. ABOUT THE NADA SHOW The annual NADA Show brings together more than 20,000 franchised dealers and their employees, industry leaders, manufacturers and exhibitors to learn about the latest auto industry tools, trends, products and technologies. “Giving back to the community has been an honor,” he said. “Hopefully, our contributions will empower our community for generations to come.” Dealers are nominated by the executives of state and metro dealer associations around the country. A panel of faculty members from the Tauber Institute for Global Operations at the University of Michigan will select one finalist from each of the four NADA regions and one national Dealer of the Year. Three finalists will receive $5,000 for their favorite charities, and the winner will receive $10,000 to give to charity, donated by Ally. In its 13th year as exclusive sponsor, Ally also will recognize dealer nominees and their community efforts by contributing $1,000 to each nominee’s 501(c)3 charity of choice. Nominees will be recognized on AllyDealerHeroes.com, which highlights the philanthropic contributions and achievements of TIME Dealer of the Year nominees. “At TIME, we are proud to uphold the decades-long tradition of honoring automotive dealers who make a positive impact and show dedication to their communities through our TIME Dealer of the Year award,” said TIME CEO Jessica Sibley. “We are excited to keep this tradition of applauding these community contributions together with our partners at Ally.” Doug Timmerman, President of dealer financial services at Ally, said, “Auto dealers nominated for the TIME Dealer of the Year award have demonstrated an unwavering commitment to not only the industry but to their respective communities through volunteerism, sponsorships and supporting charitable causes, no matter the market climate. Whether their clients are purchasing a first car or upgrading for a growing family, these selected dealers have successfully extended their relationships beyond the showroom and have been steadfast in driving their communities forward.” Nelson was nominated for the TIME Dealer of the Year award by Don Hall, President and CEO of the Virginia Automobile Dealers Association. Barry and his wife, Patti, have two children. 8 Virginia Auto Dealer
AAfter many years of VADA providing subscription vehicle registration data to Virginia dealers, we have changed the way we provide this information going forward. Cross-Sell, which publishes the Cross-Sell Report, has provided new and used vehicle registration data reporting to thousands of dealers across the country since 1989. They've worked with Virginia dealers since 1998. Dealerships, both small and large, use Cross-Sell vehicle data to determine the top-selling makes, models and segments within their market using interactive heat mapping tools, zip code breakdowns and dealer summaries. Over the past few years, Cross-Sell not only developed the ability to instantly email reports after the data is processed each month but also created an online interface that allows dealers to analyze, filter, print and download the specific data or reports that you need. A New Data Partner: Cross-Sell As of September 1, VADA no longer produces these reports and instead directs all registration report inquiries to CrossSell. To ease the transition, Cross-Sell is offering a free trial month to all VADA dealer members of its premium product, Cross-Sell Interactive. The tool allows you to drill down geographically into your local market at a ZIP code level and create custom areas to monitor specific trends that you care about — on-demand, within 24 hours of the data being delivered by the DMV. This tool also allows historical trend analysis so you can see your performance versus your market. For more information, visit www.cross-sell.com/vada to chat with a dedicated representative, email info@cross-sell.com or call (800) 369-5870. Automobile dealerships are complex businesses with unique legal problems requiring highly specialized knowledge and skills. Our nationally recognized law firm provides comprehensive legal expertise for auto dealers. Scan For Specialized Auto Dealer Law Information mbhylaw.com/areas-of-practice/auto-dealer-law/ 11350 Random Hills Road Suite 700 Fairfax, Virginia 22030 (703) 352-1300 (office) (703) 352-1301 (facsimile) mbhylaw.com Brad D. Weiss Barrett Charapp Beaty Travis F. Salisbury vada.com 9
T 6 Drivers To Keep Your Dealership’s Team Engaged in Times of Change By Don Geletko and Jeremy Spidell, Truist Leadership Institute. Brought to you by Truist Dealer Services. The Truist Leadership Institute has dedicated more than a decade to researching and measuring the effect of engagement on workplace performance. Don Geletko, Senior Leadership and Business Advisor, and Jeremy Spidell, Director of Client Engagement at Truist Leadership Institute, share how building a more engaged workforce is especially important when conditions in the industry and overall economy are changing. Automotive dealers are experiencing changes and challenges on many fronts. On the labor front, recordhigh numbers of workers have quit their jobs in recent years in search of better opportunities, better pay and better benefits. Dealerships need to continue attracting and retaining talented workers while providing them with the technical and management skills they need to succeed. The industry’s shift toward digital buying and the continued expansion to electric vehicles only add to the new skillsets that dealers will require in the future. In this challenging environment, it’s more important than ever that dealers focus on recruiting quality candidates, retaining key performers and developing workers’ talents. Building engagement with your employees and their teams is a key element in making this effort a success. What Makes Engagement So Important? Research shows that engaged employees are dedicated, enthusiastic, immersed, passionate and proactive. And when it comes to working hard, they go above and beyond. Plus engaged workers are often more resilient and respond better to the stress of change, whether in the workplace or in the world beyond. Top dealership groups outperform on engagement1 % of receiving positive responses from employers Employer practice and policy All dealerships that made the Best Dealerships to Work For List All dealerships not on the list Leadership 99% 90% Corporate culture and communications 99% 89% Role Satisfaction 99% 92% Work environment 99% 91% Relationship with supervisor 99% 93% Training, development, and resources 99% 89% Pay and benefits 97% 83% Overall engagement 99% 91% Survey average 99% 90% 10 Virginia Auto Dealer
Engagement doesn’t just happen. It is usually the result of an intentional strategy. Dealers can raise workers’ engagement levels by focusing on the six drivers of engagement: • Connectedness • Importance • Control • Competence • Clarity • Fairness While each driver has its role, they’re all interrelated and additive — getting the engagement you want comes from working on all six in concert. Learn more about each one and the actions you can take to keep your dealership team engaged. 1. Connectedness: “I belong.” Connected employees know they are part of a team. They trust the people they work with and feel supported by managers and company leadership. Their managers value their abilities, strive to provide what’s needed to grow and develop their skills and trust them to successfully perform their jobs. Research shows that employees’ perception of a company’s executive leadership has roughly the same impact on engagement as their perception of an immediate manager. As a leader, staying connected means listening and being tuned in to what workers need while providing clear guidance on their job goals and honest feedback on their performance. Action: Stay visible to employees through meetings, social gatherings, email and dealership visits. Make a point of connecting with employees even when there’s nothing new to report. 2. Importance: “My work is meaningful.” Employees who find meaning in their work are more engaged. They understand how their job has a positive impact on people’s lives, and they can see where their contributions support your dealership’s goals and purpose. The sales you make and the service your dealership provides allow your customers access to the fundamental need of transportation — getting people to work, helping them get their kids to school, enabling them to go shopping and providing a means for people to socialize. For many dealerships, this is the core component of their purpose, the core reason for being and the source of their positive impact on the world. One southeast dealer regularly reminds his team, “We’re not just selling someone a car. We’re actually helping improve how they live.” Engaged employees find merit in the work they do and look to align their work values with their personal values. Demonstrating your business’s purpose and framing the way your dealership does business in terms of its meaning to your community allows employees to see your values in action and embrace them. Action: Elevate your dealership’s purpose and its goals. Make them visible and communicate them often through internal meetings and informal one-on-one discussions and externally in social media, in the press and in your marketing and online presence. 3. Control: “I have a choice.” Engaged employees need the right amount of control and autonomy to understand the work that needs to be done, have the independence to do it the way they see fit and have the responsibility to do it correctly. Control that leads to success builds confident employees who can take on more, including charting their career path to places they feel most comfortable going and where they can excel. For managers, the trick is to find the right amount of control that each person needs and seek each employee’s input on decisions that affect them. Employees who have more control tend to be more open about any obstacles they’re facing and that leaves them more willing to come up with solutions rather than waiting to be told what to do. And when it comes to team settings, employees who feel they have more control over their work can perform with less contention over job boundaries and roles. Action: Match the right person to the right job, give them control to perform and set clear expectations for success and accountability. 4. Competence: “I am capable. I am the right person for the job.” Engaged employees should be well-suited for the job they are assigned and have the skills and talents needed to meet challenges and complete their work. Carefully matching workers to the right jobs helps them get satisfaction from doing what they do best. Be clear about opportunities for growth and skill development and give employees input into crafting vada.com 11
their job. Could the job be better structured to align with their strengths? Are there strategies to move the job in that direction? Managers with a growth mindset understand that mistakes happen when trying something new, and they let employees learn and grow from those missteps. That may often mean reframing mistakes as challenges to be overcome and growth opportunities to be gained. Action: Excellence at matching worker talents with task requirements should be a core skill for you and your management team. Make learning and employee growth a priority. 5. Clarity: “I know where I stand.” Engaged employees know the “why” behind decisions made and understand the contributions they must make to help the team reach its goals. This is especially important in unsettled times, when workers may wonder if they’ll still have a job and are struggling to see the big picture. Leadership and managers who communicate honestly and regularly about the challenges the business is facing and how the dealership plans to adapt and respond can reduce uncertainty and resulting anxiety. If there’s nothing new to report, say that, and let your staff know that when there’s news, they’ll hear it from you first. You can use the time to ask for ideas and solutions from your workforce. You may come up with solid input from employees who know your business and see things you don’t. Plus, you’ll show them you’re listening and reinforce the value they bring in helping your dealership devise answers and succeed. Employees will feel a measure of control, even when conditions are unsettled. Action: Communicate clearly and honestly about the challenges your business faces and your plans to address them. Solicit input from employees who know the business and are dedicated — like you — to its success. 6. Fairness: “I am treated with respect.” Employees feel respected when the workload is evenly distributed and their work is compensated fairly, yet there can often be different perceptions among leaders, managers, employees, and their peers about whether those two conditions are met. Discussions around assignments and compensation can be some of the trickiest to conduct, and confrontation-adverse leaders who shy away from these communications usually find that issues fester and grow. Managers who are attentive to balanced assignments and appropriate pay stay ahead of situations by informing employees about why decisions were made and when — or if — they expect things to change. If there’s a path to increase employee pay with greater contributions to the business, help them understand what they need to do and when they can expect to be rewarded. Action: Pay close attention to work/pay alignment and communicate about it openly, broadly and frequently. 1 Moore, C.J., The pandemic exposed what dealership employees value, Automotive News, October 17, 2022. Truist Bank, Member FDIC. ©2023 Truist Financial Corporation. Equal Housing Lender. READY TO START YOUR JOURNEY TO GREATER ORGANIZATIONAL ENGAGEMENT? There are many elements to increasing engagement. The Truist Leadership Institute team can help you identify where you are in the journey, accurately measure the gaps that you can address, and advise you on actions to take to develop a highly engaged workforce. 12 Virginia Auto Dealer
These days, everyone talks about creating great customer buying experiences. What may be overlooked is that great buying experiences start with great selling experiences. The Cox Automotive 2022 Car Buyer Journey study found a strong correlation between the length of the buying process and customer satisfaction. It’s no surprise that the longer the process takes, the more satisfaction levels decline. By improving productivity and overall dealership operations, you can create better buying experiences that lead to increased customer satisfaction. When you put in place easy-to-use and connected technology at every step of the deal, you help move sales forward faster to please customers while also boosting productivity and therefore, profitability. Below are three areas where dealerships can drive productivity and operational efficiency, directly tied to customer satisfaction: DMS: The heart of the matter When you decide to streamline the buying process for customers you have to go to the heart of the matter: your DMS. This operational all-star is where all your customer data is stored and secured. It has to be easy to use and navigate to achieve the smooth workflows required to make buying a pleasure. A DMS that easily connects with all your systems reduces data re-entry and ensures increased accuracy to raise workflow standards and customer satisfaction. It all boils down to efficiency. When your team can efficiently access customer information and move customers along the purchase path faster, you get more satisfied customers out the door and more profit added to your bottom line. F&I: When every minute counts If the goal is to speed the deal process, those piles of paperwork need to be the first to go. Nothing brings down the excitement of a new vehicle purchase faster than mountains of paperwork, a seemingly endless contract review, and a monotonous signing process. With digital contracting and remote signing, the paper shuffle becomes an easy, digitized process that customers can even complete from home. All this saves time up front, allowing customers to review digitally, sign once, and then simply tap to append each signature thereafter. On the back end, the dealership benefits from the reduced risk of errors and elimination of missed signatures. Another way to save time is to avoid surprises during the tradein process. A trade-in titling solution that allows you to see title details ahead of accepting trades helps you avoid factors like undisclosed co-owners that can unwind deals and frustrate customers. Taking a trade-in with confidence and getting the title released faster also means more used inventory options for the next customers who shop your lot. End on a high note with accurate reg & title completion Handling each in-state customer’s registration and titling process before they drive off the lot is a great finishing touch that dealerships can provide. The knowledge that you’ve saved your customers from standing in line at the DMV leaves a great lasting impression! Dealerships can extend the same service for out-of-state customers with a 50-state electronic reg & title solution that calculates taxes and fees and provides the forms for any state. These solutions should include electronic checklists to ensure you collect only the information, documents and forms needed for a particular state and customer. The Dealertrack difference Backed by the power of Cox Automotive, Dealertrack’s advanced DMS, F&I, and comprehensive registration and titling solutions connect across dealership departments to speed deals and create great buying experiences. From our deep knowledge of the retail automotive industry and its challenges to proactive system support, we have your back so you can focus on what matters most: your customers. We are proud to be the exclusively-endorsed Reg & Title partner of the Virginia Automobile Dealers Association (VADA). Schedule a no-obligation call with Kim Haddaway, regional sales manager for Virginia, to discuss how Dealertrack solutions and support can drive operational efficiency for highly satisfied customers. Great customer experiences… Can be built into every vehicle deal
TThe 2023 Virginia election was the first election cycle with new district lines that were drawn under the redistricting process adopted by voters in 2020. This election already brought historic turnover, with numerous retirements and incumbents losing primaries. Democrats were able to maintain control of the Virginia Senate with a 21-seat majority. There will be 16 new faces in the Senate — nine Republicans and seven Democrats. The Republicans were able to pick up one seat in the Peninsula area, with Danny Diggs defeating Democrat Monty Mason. Democrats have secured 51 of the 100 seats in the House of Delegates, with one seat that is too close to call: Republican Kim Taylor and Democrat Kimberly Pope Adams out of the Petersburg/Dinwiddie area. It looks like it will be 51-49 or 52-48, with Democrats in control either way. Setback for Governor The results are a setback for Gov. Glenn Youngkin as he worked to flip the Senate and hold the House. He spent considerable time on the campaign trail, and his Spirit of Virginia PAC spent more than $15 million on House and Senate races. Youngkin’s strategy on abortion largely failed for suburban Republicans in contested races. The intent was to message from the front and propose a 15-week limit on abortions except for rape, incest and the life of the mother. Republicans hoped to campaign on a moderate compromise, but Democrats were able to capitalize on the proposal as a ban on abortion and position it as a first step to more abortion restrictions. This helped turn out the Democratic base. Governor Youngkin will now be handcuffed with pushing forward his agenda. He was hoping to flip the Senate and hold the House to push additional tax cuts and reform the Clean Economy Act as well as roll back the California Resources Board (CARB) regulations, which mandate all new cars, trucks and SUVs sold in Virginia will be zero emissions by 2035. A 25% increase in contributions from 2021 made this the most expensive fundraising effort for off-off year elections. Senate races spent $94 million, and $81 million was spent for House contests. In the end, there will be a total of 49 new faces in the General Assembly: 33 in the House and 16 in the Senate. In addition, 30 members were elected in the last four years. This means that 56% of the 140 members in the General Assembly have served less than four years. Impacts on Dealers Virginia's franchised new car and truck dealers are well-positioned as we head into the General Assembly session. While we do plan to pursue one change to the Virginia code to support our members (details soon to come), 2024 will not be as heavy of a legislative agenda for us as 2023, with our historic franchise legislation. As we have remained since our founding in 1948, the Virginia Automobile Dealers Association is a nonpartisan organization that supports lawmakers on both sides of the aisle so long as they are pro-business and pro-dealer. Thanks to our strong political action committee and the support of many members, we have been able to support many candidates and lawmakers and show them the value of the franchise system and the work dealers do in their communities. Elections are over, but there is plenty more work ahead. How Dealers Can Help The time between the election and General Assembly — now — is an opportunity for the Virginia Auto & Truck Dealers PAC to help retire debt for many of these competitive races. Over $175 million was spent on this election cycle — an off-year election record! Many of these folks spent every penny trying to get elected, and we need to be there to support their effort in the future. This is also an opportunity for us to visit and get to know many of these new members. We must educate them on the auto franchise system and the benefits of a robust economy. Now is the time to contribute to the VADA PAC if you have not done so. Virginia’s Elections and Outlook For Dealers By Ralston King, VADA VP of Legislative Affairs 14 Virginia Auto Dealer
District 4 – Roanoke County, Montgomery County, Cities of Roanoke, and Salem Republican Dave Suetterlein defeated Democrat Trish White-Boyd (53.57%-46.22%) District 16 – Henrico County Democrat Schuyler VanValkenburg defeated Republican Siobhan Dunnavant (54.30%-45.51%) District 17 – Isle of Wight, Southampton, Brunswick, Greensville, Dinwiddie Counties, Cities of Suffolk, Franklin, Emporia and Chesapeake Republican Emily Brewer defeated Democrat Clinton Jenkins (52.54%-47.17%) District 22 – City of Virginia Beach Democrat Aaron Rouse defeated Republican Kevin Adams (54.78%-45.08%) District 24 – York and James City Counties, Cities of Newport News, Williamsburg, Poquoson Republican Danny Diggs defeated Democrat Monty Mason (51.18%-48.61%) District 27 – Stafford and Spotsylvania Counties, City of Fredericksburg Republican Tara Durant defeated Democrat Joel Griffin (48.35%-46.15%) District 30 – Prince William County, Cities of Manassas and Manassas Park Democrat Danica Roem defeated Republican Bill Woolf (51.51%-48.18%) District 31 – Loudoun County and Fauquier County Democrat Russet Perry defeated Republican Juan Pablo Segura (52.52%-47.26%) District 21 – Prince William County Democrat Josh Thomas defeated Republican John Stirrup (51.5%-48.3%) District 22 – Prince William County Republican Ian Lovejoy defeated Democrat Travis Nembhard (52.59%-47.19%) District 30 – Loudoun County and Fauquier County Republican Geary Higgins defeated Democrat Rob Banse (53.35%-46.48%) District 57 – Henrico County and Goochland County Republican David Owen defeated Democrat Susanna Gibson (51.16%-48.40%) District 58 – Henrico County Democrat Rodney Willet defeated Republican Riley Shaia (54.08%-45.81%) District 65 – Fredericksburg, Spotsylvania County and Stafford County Democrat Josh Cole defeated Republican Lee Peters (52.60%-47.07%) District 75 – Chesterfield County, Hopewell City and Prince George County Republican Carrie Coyner defeated Democrat Stephen Miller-Pitts (52.95%-46.78%) District 82 – Petersburg, Surry County, Dinwiddie County and Prince George County Republican Kim Taylor is up on Kimberley Pope Adams (50.32%-49.51%) but the election has not been certified as of this publication’s printing. District 84 – Suffolk, Isle of Wight County, Franklin City, Chesapeake City Democrat Nadarius Clark defeated Republican Michael Dillender (52.72%-47.10%) District 89 – Chesapeake City, Suffolk City Republican Baxter Ennis defeated Democrat Karen Jenkins (51.16%-48.57%) District 97 – Virginia Beach Democrat Michael Feggans defeated Republican Karen Greenhalgh HOUSE OF DELEGATES COMPETITIVE RACES VIRGINIA SENATE COMPETITIVE RACES vada.com 15
Tax Bulletin: Year-End Planning By Councilor, Buchanan & Mitchell, P.C. CPAs & Business Advisors Depreciation — Capital Asset Purchases Capital investments have long been a useful way to reduce income taxes, and the Tax Cuts and Jobs Act (TCJA) further enhanced this technique by expanding bonus depreciation. For qualified property purchased after Sept. 27, 2017, and before Jan. 1, 2023, businesses were able to deduct 100% of the cost of new and used (subject to certain conditions) qualified property in the first year that the property is placed into service. In 2023, the amount of the bonus depreciation began to decrease by 20% each year (80% bonus depreciation allowed for 2023, 60% allowed for 2024). Absent Congressional action, the deduction will be eliminated in 2027. Special rules apply to property with a longer production period. Qualified property includes computer systems, purchased software, vehicles, machinery, equipment, office furniture, land improvements and qualified improvement property (QIP). QIP includes most interior improvements (non-structural). Effective Jan. 1, 2022 under the TCJA, Section 163(j) business interest expense limitation calculation no longer allows for an add-back for depreciation, amortization and depletion to a company’s adjusted taxable income calculation. If a dealership has its business interest expense limited when including floorplan financing interest expense in the calculation, it is not eligible to take bonus depreciation in that tax year. The full amount of the floorplan financing interest expense will be deductible. Additionally, under the TCJA, Section 179 expensing (deducting the entire cost) is available for computer systems, purchased software, vehicles, machinery, equipment and office furniture, as well as several improvements to nonresidential real property, including QIP, roofs, HVAC and fire and security systems. Beginning Jan. 1, 2023, the maximum deduction is limited to the amount of income from the business activity or $1.16 million. The allowed deduction begins phasing out when the amount of eligible property placed in service exceeds $2.89 million. Beginning Jan. 1, 2024, the maximum deduction and phase-out amount will be $1,220,000 and $3,050,000, respectively. Credits Electric Vehicle Charging Equipment Credit For businesses that install new EV charging equipment after Dec. 31, 2022, the maximum credit is the lesser of 30% of the total cost or $100,000 per unit. However, there are new restrictions on eligibility, including that the charging equipment must be installed in lowincome communities or non-urban census tracts. In order to qualify for the full 30% credit, the project must pay the prevailing wage for labor and meet certain apprenticeship requirements. If it does not, the credit is limited to 6%. The amount of the credit reduces the depreciable basis of the EV charging equipment. New Clean Vehicle Credit The original user of a new, qualified plug-in EV or fuel cell electric vehicle (FCV) placed in service after April 17, 2023, is potentially eligible for up to a $7,500 credit. The vehicle must have a GVWR of less than 14,000 pounds, and the battery must have a capacity of at least sevenkilowatt hours. The taxpayer must acquire the vehicle for use or lease (not for resale). The amount of the credit reduces the basis of the vehicle. Vehicles must undergo final assembly in North America and meet critical mineral and battery component requirements. Vehicles that meet either the critical mineral or battery component requirements may be eligible for a $3,750 credit, while those that meet both may qualify for $7,500. There are caps on the MSRP for eligible vehicles ($80,000 for trucks, vans or SUVs and $55,000 for all other passenger vehicles), and high-income taxpayers will not qualify for the credit. 16 Virginia Auto Dealer
Used Clean Vehicle Credit Beginning Jan. 1, 2023, the purchaser of a qualified used EV or FCV from a licensed dealer for $25,000 or less may be eligible for a tax credit equal to 30% of the purchase price with a maximum of $4,000. The vehicle must be purchased for use and not for resale. The vehicle must be at least two years old, weigh less than 14,000 pounds and have a battery capacity of at least seven kilowatt hours. High-income taxpayers will not qualify for the credit. Seller Reporting In order for vehicles to qualify for the new or used clean vehicle credits, sellers must meet certain reporting requirements. Sellers must furnish a report to the buyer at the time of sale and to the IRS that includes information such as dealer name, address, VIN, make, model, placed in service date and maximum credit. The reports for 2023 are due to the IRS by Jan. 15, 2024. Beginning Jan. 1, 2024, dealers must register with IRS Energy Credits Online in order to be able to submit the time of sale reports. The reports are due to the IRS no later than three calendar days from the date of sale. Advance Payments of Buyer Clean Vehicle Credits to Dealers Eligible buyers will also be able to elect to transfer the tax credit to the dealer beginning Jan. 1, 2024. Dealers must register to be able to submit the claims for advance payment. The advance payment request will be submitted with the time of sale report. The IRS intends to pay the advance payment claims to the dealers within 72 hours of the date when the time of sale report is submitted. Buyers, not dealers, would be responsible if the IRS determines that the buyer does not qualify. Businesses that acquire an EV or FCV may be eligible for a commercial clean vehicle credit with a maximum of $7,500 for vehicles under 14,000 pounds or $40,000 for all other vehicles. Plug-in electric vehicles under 14,000 pounds must have a battery capacity of at least seven-kilowatt hours, while those weighing 14,000 pounds or more must have a battery capacity of at least 15 kilowatt hours. The vehicles must be acquired for business use or lease (not for resale) and the vehicles must be depreciated. The credit would reduce the depreciable basis of the vehicle. There is no limit on the number of credits, but they are non-refundable. To read CBM’s full year-end tax bulletin, scan the QR code or call (301) 986-0600. https://www.cbmcpa.com/industries/automotivedealerships/2023-year-end-tax-bulletin-virginiaautomotive-dealerships/ Tax Planning and Preparation Cost Segregation Analysis Mergers and Acquisitions Audits, Reviews and Compilations Business Process Review Succession Planning About Us Councilor, Buchanan & Mitchell (CBM) has an experienced team of tax, personal financial planning and advisory professionals devoted to the automotive retail industry. Since 1921, we have specialized in new vehicle and heavy truck dealerships, as well as motorcycle and RV dealerships. Investment management, financial planning and retirement planning services are provided by May Barnhard Investments, a subsidiary of CBM. John R. Comunale, CPA Partner | Director of Automotive Dealership Services JComunale@cbmcpa.com Keith A. Laudenberger, CPA Partner | Director of Automotive Dealership Services KLaudenberger@cbmcpa.com our CPAs and advisors have been driving automotive dealership success. 301.986.0600 Councilor, Buchanan & Mitchell, P.C. CPAs & Business Advisors 7910 Woodmont Ave, Suite 500, Bethesda, MD 20814 https://www.cbmcpa.com For more than 100 years, Our Expertise LIFO Inventory Fraud Prevention Business Valuations Financial Planning Investment Management Services Retirement Planning vada.com 17
CONTACT US TODAY TO PLACE YOUR ANNOUNCEMENT AD Call 801-676-9722 or scan the QR code to fill out the form. Employees are motivated when they are recognized and feel valued. It’s about… ▷ Who to congratulate ▷ Who to acknowledge ▷ Who to thank for a job well done This magazine is a great platform to celebrate your team’s accomplishments! Place QR Code Here IT’S ABOUT THE Tune in to our podcast and get all the juicy details wherever you are. From engaging interviews to thoughtprovoking discussions, VUE Points with Sharon Kitzman has got you covered, ensuring you never miss a beat. Sharon Kitzman leads the launch and long-term growth of Dominion DMS. 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. LISTEN TO OUR VUE POINTS PODCAST TO STAY UP-TO-DATE WITH NEWS AND CURRENT EVENTS RELATED TO THE AUTOMOTIVE SOFTWARE AND RETAIL INDUSTRY. HTTPS://WWW.DOMINIONDMS.COM/PODCASTS/ ON THE GO? LISTEN HERE! PODCAST 18 Virginia Auto Dealer
JAN. 12-14, 2024 FEB. 16-18, 2024 Save the date vada.com 19
C Virginia Dealer Deal Roundup 2023 A Look at Retail Auto Merger and Acquisition Activity in Virginia in 2023 Consolidation is everywhere in retail automotive — and Virginia is no exception. We've compiled a roundup of publicly announced dealer purchases and sales in Virginia during 2023 — meaning we are sharing news the dealerships chose to make public. There were several other deals that VADA is aware occurred, but those transactions have remained private. Kicking Off the Year as a Winner In January, Winners Circle Automotive Group bought Franklin Chrysler Dodge Jeep Ram and Franklin Chevrolet Buick GMC in southern Virginia, near the North Carolina border. The dealerships were renamed Winners Circle Chrysler Dodge Jeep Ram and Winners Circle Chevrolet Buick GMC. The acquisition followed an October 2022 purchase of a Hampton, VA, Mitsubishi store. Winners Circle also includes Stellantis and Nissan dealerships in Hampton and a Mazda store in Newport News. (Most of) Priority Goes to Lithia In June, Lithia Motors, Inc. bought a majority of Priority Auto Group — 14 dealerships — from Dennis Ellmer. The transaction did not include the group's two Lexus dealerships. Ellmer stayed on with Lithia and remains CEO of Priority. Koons to Asbury Automotive Jim Koons Automotive is being acquired by Asbury Automotive Group. At $1.2 billion, it’s one of the most sizable consolidations in retail auto history. Koons Automotive is the largest auto dealership in the Baltimore and D.C. region, with 20 dealerships, 29 franchises, six collision centers and 2,500 employees. Koons had $3 billion in revenue last year, making it one of the largest privately held companies in the state, according to Virginia Business magazine. Duluth, GA-based Asbury Automotive, a Fortune 500 company, operates 138 dealerships and 32 collision centers. It had $15.4 billion in 2022 revenue. Flow Grabs Umansky and Kia in C-ville In April, Flow Automotive Companies acquired Charlottesville’s Umansky Automotive Group dealerships, with locations for Honda, Toyota, Subaru, Mercedes-Benz, Chrysler, Dodge, Jeep and Ram. Then in July, Flow strengthened its presence in the market with the acquisition of Price Kia. Its footprint in the region today includes Audi, BMW, Chrysler, Dodge, Jeep, Ram, Honda, Mazda, MercedesBenz, Porsche, Subaru, Toyota and Volkswagen. The Kia dealership gave Flow another outlet for its community-minded approach to connect with residents. Flow has 53 franchises representing 26 brands. Hall Goes “Southern” In September, MileOne Autogroup, one of the largest privately owned dealership groups in the U.S., divested seven franchised dealerships in Chesapeake and Newport News. The sold stores were part of MileOne's Hall | MileOne Autogroup and include Hall Nissan Chesapeake, Hyundai Chesapeake, Chevrolet Chesapeake, Chrysler Dodge Jeep Ram Chesapeake, Acura Newport News, Hyundai Newport News and Ford Newport News. The buyer: Atlantic Coast Automotive, which does business as Southern Auto Group. The Hall stores all rebranded to Southern. Hall still maintains 11 locations in Virginia Beach, Elizabeth City and outside Charlotte. McGeorge Wraps 50+ Years in RVA In October, Murgado Automotive Group expanded into Virginia with the acquisition of Mercedes-Benz of Richmond and Mercedes-Benz of Midlothian from Rod McGeorge, grandson of David McGeorge. That deal came on the heels of McGeorge selling the nearby McGeorge Toyota to Northern Virginia’s Graham Ourisman Automotive. The transactions represent the end of the McGeorge family of dealerships, which began when David McGeorge opened Mercedes-Benz of Richmond in 1955. A Truckin’ Great Deal In the third quarter, K. Neal Truck and Bus Center acquired Powell’s Truck & Equipment, Inc. of Lynchburg, VA. Powell’s was founded in 1963 in central Virginia and was family-owned and operated for three generations. In 2001, Powell’s expanded to form Powell’s Idealease, a rental and leasing division. The company is a full-service dealership representing International Trucks and Isuzu. 20 Virginia Auto Dealer
CONTACT US TODAY! 801.676.9722 sales@thenewslinkgroup.com Your Customers Are Too. Advertising Space Available. QR Code Enjoy your association news anytime, anywhere. Scan the QR code to visit our online publication to stay up to date on the latest association news, share articles and read past issues. virginia-auto-dealer.thenewslinkgroup.org vada.com 21
VADA Executive Committee David Dillon Chair Southern Team Auto Group Dan Banister Vice Chair Banister Automotive Roger Keller Treasurer Sheehy Auto Stores Eley Duke Secretary Duke Automotive Don Hall President Liza Borches Immediate Past Chair Carter Myers Automotive Tim Pohanka Legislative Chair Pohanka Nissan Hyundai Chris Lindsay PAC Chairman Lindsay Automotive VADA Board of Directors John Altman Beyer Automotive Group William Baker Hall Automotive, LLC Daniel Banister Banister Nissan of Chesapeake Liza Borches Carter Myers Automotive Emily Marlow Beck Marlow Motor Co. Gardner Britt, III Ted Britt Ford Lincoln of Chantilly Andy Budd Country Chevrolet Harry Carrion Haley Automotive Mark Dalton Terry Volkswagen Subaru David Dillon Southern Team Auto Group Eley Duke Duke Automotive Eric Flow Flow Motors LEADERSHIP Don Hall Virginia Automobile Dealers Association Tanner Hulette Mechanicsville Toyota Cameron Johnson Magic City Ford Lincoln Isuzu Roger Keller Sheehy Auto Stores Steve Klimkiewicz Cavalier Ford Lincoln Ashton Lewis, Jr. First Team - Automotive Christopher Lindsay Lindsay Chevrolet Ross Luck Luck Chevrolet Thomas Mohr Highway Motors Michael Patrick Patrick GMC Dave Perno Loyalty Automotive Tim Pohanka Pohanka Nissan Hyundai Rachel Pullen Safford Brown Jake Sodikoff Steven Nissan Michael Suttle Suttle Motor Corp. Robbie Woodall Robert Woodall Chevrolet Buick GMC Cadillac Hyundai Nissan Virginia Motor Vehicle Dealer Board RJ Robinson Parks Chevrolet Ron Kody Richmond Ford Lincoln Thomas Bates RK Chevrolet Subaru M. Gardner Britt, Jr. Ted Britt Ford Lincoln Dennis Ellmer Priority Auto Group Geoffrey Malloy Malloy Automotive Group Daniel Banister Banister Nissan of Chesapeake VADA Group Self-Insurance Association Board of Directors Michelle Radley Radley Automotive Group Chris Brown Haley Automotive Burt Brenner Lindsay Lexus of Alexandria Penny Burch Magic City Ford Lincoln Isuzu Fred Kirschbaum Checkered Flag Motor Car Co. Chris Strosnider Strosnider Chevrolet Donald Hall Virginia Automobile Dealers Association Gerald Duncan Duncan Ford Chrysler Dodge Jeep Adam Johnson Johnson Family Chevrolet Thaddeus Nowak Ted Britt Ford Lincoln Ralph Mastantuono American Service Center Associates Rich Tritel Carter Myers Automotive Cole Balderson Ourisman Automotive of Virginia HRADA Officers Pat Fields President Wynne Ford Volvo Gerry Reust Vice President Cavalier Ford Heath Wynn Treasurer Hall Auto Group Mike Owen Secretary Southern Auto Group Rebecca Wilson Immediate Past President Checkered Flag Honda HRADA Board of Directors Jarryd Carver Winners Circle Auto Group Brian Clark Charles Barker MB Ken DeBerry Cavalier Mazda Tom Ellmer Priority Toyota Jim Hernandez Priority Honda Dave Lawson Classic Hampton Auto Mall Cameron Shaw Southern Chrysler Dodge Jeep Ram Larry Stevenson Classic Hampton Auto Mall Allied Member Bryan Dougherty ACV GRNCDA Board of Directors Keith Hightower Chairman Pearson Honda Zach Cochran Vice Chairman Whitten Brothers Harry Carrion Secretary/Treasurer Haley Automotive Michael Patrick Immediate Past Chairman Patrick Buick GMC Brenton Evans Audi Richmond Ed Hartoonian Hart Nissan Kayla Kody Richmond Ford RJ Robinson Parks Chevrolet
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