2023 TIME Dealer of the Year Nominee Virginia PUB 3. ISSUE 3 2022 T H E O F F I C I A L P U B L I C A T I O N O F T H E V I R G I N I A A U T OMO B I L E D E A L E R S A S S O C I A T I O N Stephen Snyder Time and Ally Financial Nominate Virginia Beach Dealer
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. JL Winslow jl.winslow@bofa.com 804.489.5043 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 Ru ing a dealership co i f ncertain terrain. But one thing is certai . l i ncial Services team is dedicated to being by y r i ith the resources, solutions and vision to see you through. JL Winslow jl.winslow@bofa.com 804.489.5043 business.bofa.com/dealer aki i easi r l rs. s i “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
CONTENTS PUB 3. ISSUE 3 2022 @ 2022 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. 18 10 2 A Message From President and CEO Don Hall 4 A Timeline for Implementation New Clean Vehicles Tax Credit 6 Time and Ally Financial Honor Virginia Beach Dealer Stephen Snyder Wins National Recognition for Community Service and Industry Accomplishments 10 Capitalize on the Changing Structure of Auto Retailing Do I Stay in the Business or Exit? By Truist 13 All In 14 Succession Planning for Dealers in an Evolving Business Environment By Bank of America Corporation 16 FTC Safeguards Rule Compliance What You Need To Know By Hao Nguyen, Esq. General Counsel, ComplyAuto 18 5 Recruiting Strategies to Adopt Today By Madeline Cecil, Hireology 23 Driving Virginia's Economy Annual Contribution of Virginia's New Car Dealers 6 1
A large Virginia dealer, whom I respect very much, recently told me that if his manufacturer shifted to an “agency” model – whereby the dealer no longer holds inventory and simply takes a cut for final sale delivery – he’d take the deal. “If I can be guaranteed 11%, hell, if I could get 9% return,” he told me, “I’d do it in a heartbeat.” But here in Virginia, we aren’t taking the bait. We respect the manufacturers. But they are not committed to consumers and communities the way local dealers are. It is naïve to think the OEM who promises 11% today won’t micromanage the dealership down to 1.1% just a few years from now. So in 2023 in Virginia, auto dealers will draw a line in the sand. We are the first state in the nation to put forward a piece of legislation that will outline concrete protections for the franchise system and support consumer choice against Auto ManufacturerControlled sales models. As we have done many times before, Virginia dealers are leading the way with this bill. Nothing like it has been done in America. Our peers and counterparts are watching. The industry is watching, too. Our legislation will enforce dealer rights to the longstanding Virginia motor vehicle franchise system. It prohibits manufacturers from negotiating prices or terms of sale, selling new vehicles directly, withholding vehicle inventories from dealers, and designating dealers to be delivery agents. Why VirginiaWill Lead From the Front to Protect the Franchise System A Message From President and CEO Bill language also prevents manufacturers from amending a franchise agreement without dealer consent and stops them from creating an unregulated separate affiliate (at least 25% ownership) to sell new vehicles, as we have seen many traditional OEMs do with their EV lines. Our bill has been vetted by attorneys nationwide, and we believe we have an aggressive, strong piece of legislation to protect our industry. Like my friend, some dealers may think their manufacturer isn’t interested in controlling sales, in part because the OEM isn't using the term "agency." But the proposals they’re putting forth have all the nuances of an agency model – indeed, if it walks and quacks like a duck, it's a duck. After I explained this concept to my dealer friend, who thought the model was in his best interests, he flipped his position. You only have to look globally at the direction OEMs are taking. Most significantly, in Australia, Mercedes-Benz dealers have filed a $650 million lawsuit arguing they were forced to sign new agency model contracts that have dramatically reduced profits and hurt years of goodwill with customers. It is one of the most significant fights in franchise-law history. And so, in Virginia, we decided to start the fight before the manufacturers bring it to us. The purpose of our association’s founding in 1943 was to protect the rights of dealers and the consumers they serve. Eighty years later, we remain committed to upholding that mission. President and CEO Virginia Automobile Dealers Association DonHall vada.com 2
Congratulat ons VADA! 2022 Ma Com Aw rds Winner! Since its inception in 2004, MarCom Awards has evolved into one of the largest, most-respected creative competitions in the world. This year, there were over 6,000 entries from throughout the United States, Canada, and over 43 other countries in the competition. MarCom Awards is an international creative competition that recognizes outstanding achievements by marketing and communication professionals and recognizes the creativity, hard work, and generosity of industry professionals. Being a Gold Winner is a tremendous achievement symbolized by the intricately detailed MarCom statuette. The MarCom graces the trophy cases of some of the top business and communication firms in the world. MarCom’s Gold Award Award is presented to those entries judged to be among the most outstanding entries in the competition. Gold Winners are recognized for their excellence in terms of quality, creativity, and resourcefulness. To view this year’s winners, please scan the QR code. http://enter.marcomawards.com/ winners/#/gold/2022 We are very pleased to announce that the Virginia Automobile Dealers Association was awarded the MarCom Gold for print media.
Purchasers still eligible to claim Clean Vehicle tax credit if they entered into a written binding contract to purchase a new qualifying clean vehicle before this date, but did not yet take possession of vehicle 2022 Before AUGUST 16 2032 DECEMBER 31 07 Clean Vehicle tax credit program ends Vehicles not eligible for tax credit if any critical minerals contained in battery are extracted, processed or recycled by a “foreign entity of concern” 2025 JANUARY 1 05 Value of Clean Vehicle tax credit can be transferred to the dealer by the purchaser; dealer then obtains reimbursement from IRS Vehicles not eligible for tax credit if any battery components are manufactured or assembled by a “foreign entity of concern” 2024 Starting JANUARY 1 01 NEW CLEAN VEHICLES TAX CREDIT A Timeline for Implementation 06 2023 JANUARY 1 OEM Clean Vehicle tax credit unit cap eliminated Revised tax credit created: • Base credit amount of $3,750 if critical mineral requirement is met • Additional $3,750 if battery component requirement is met • No credit allowed for vans, SUVs, pickup trucks with MSRP >$80,000; other vehicles with an MSRP > $55,000 • No credit if MAGI > $300,000 (married filing jointly); MAGI >$225,000 (head of household; MAGI>$150,000 (single) • For EV credits to be available, dealers required to report designated information to buyer and IRS Section 45W takes effect for commercial motor vehicles primarily propelled by a battery that is capped at $7,500 (Class 1-3) or $40,000 (Class 4-8) • The $7,500 or $40,000 tax credit is limited to the lesser of 15% or the vehicle’s cost (30% if not powered by gas or diesel) or the incremental cost of the vehicle, as compared to a comparable vehicle powered by gas or diesel • Vehicles must have a battery w/15kWh capacity (heavy) or 7kWh capacity (light); vehicle must be subject to depreciation, among other things 04 Source: NADA Clean Vehicle tax credit limited to vehicles final assembled in the U.S., Canada or Mexico 2022 Effective AUGUST 16 IRS required to issue guidance on critical mineral and battery component requirements 03 2022 By DECEMBER 31 02
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.
The nomination of Stephen Snyder, president of Checkered Flag Motor Car Company in Virginia Beach, Virginia, for the 2023 TIME Dealer of the Year award was announced by TIME. Snyder is one of a select group of 48 dealer nominees from across the country who will be honored at the 106th annual National Automobile Dealers Association (NADA) Show in Dallas, Texas, on Jan. 27, 2023. 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. Snyder was chosen to represent the Virginia Automobile Dealers Association in the national competition – one of only 48 auto dealers nominated for the 54th annual award from more than 16,000 nationwide. “The automotive business has afforded me the opportunity to make a difference in the lives of my family, customers, employees and the broader community,” nominee Snyder said. “I recognize the responsibility I have in employing a diverse staff, giving them upward mobility and long, successful careers.” A 1981 graduate of the University of Virginia in Charlottesville, Snyder followed the same path as his father, Ed Snyder, into the retail automotive industry. His dad was the visionary auto dealer who founded Checkered Flag Motor Car Company in 1964 and brought brands MG, Jaguar, Austin-Healey and Toyota to American car buyers. “My career began at an early age,” Snyder said. “Our family conversations always found room for ‘car talk,’ and my summers were filled with various jobs at the dealership.” After college, Snyder joined the family business full-time and attended the NADA Academy to further refine his skills in dealership management. In 1987, he became general manager of Checkered Flag Hyundai and filled other roles in the dealership until 2009, when he was named president of the Checkered Flag dealership group. TIME AND ALLY FINANCIAL HONOR VIRGINIA BEACH DEALER Stephen SnyderWins National Recognition for Community Service and Industry Accomplishments vada.com 6
Today, Checkered Flag operates eight dealerships in the greater Hampton Roads region of Virginia, representing 17 different brands. His two sons, William and Benjamin, are the next generation to enter the family enterprise. And his family has a long history of serving customers in the area, as his great-grandfather founded L. Snyder’s Department Store in Norfolk, Virginia, in 1894. Snyder built on his family’s legacy and charted his own course for the company, bringing it forward as the auto industry continues to evolve. “We’ve incorporated best practices and perspectives related to inclusion and diversity,” he said. “In the past 10 years, I’ve seen huge changes as the once maledominated automotive industry shifted to support gender equality and racial diversity. Our top product specialists and the majority of our service managers are women.” In addition, he is committed to employee retention and growth, meeting with his management team annually to identify employees with great potential and to create a plan to help them move forward in their careers. Philanthropy is also a cornerstone of his brand. “Over the past 58 years, my family, the company and our employees have donated millions of dollars to a wide range of charities,” Snyder said. “We feel it is our job to encourage any fundraiser who approaches us and say yes to them, to keep them incentivized in their quest to improve the lives of others.” Checkered Flag has been a major supporter of An Achievable Dream Academies and Access College Foundation, both providing educational assistance to at-risk youth. Snyder, along with Checkered Flag, leads Hampton Roads as one of the major contributors to the United Way of South Hampton Roads. Snyder also donates matching funds, up to $25,000, to the Eastern Virginia Medical School, a public medical school in Norfolk, to fund scholarships, curriculum enhancements, research equipment and more. He is on the board of trustees for the school. He also serves on the board of trustees for the Virginia Aquarium & Marine Science Center Foundation in Virginia Beach. The Snyder family has long supported the organization and has set up a $2 million endowment fund to provide free admission to active-duty military members and their families for perpetuity. “We’ve made substantial impacts in community health, education and environmental stewardship by providing time, money and awareness for hundreds of local charities and causes,” Snyder said. “We also encourage volunteerism among our staff by giving them paid time off to support local nonprofits, whether they are building playgrounds, cleaning up waterways or reading to the blind.” continued on page 8 7
continued from page 7 Other organizations his company supports include Salvation Army Hampton Roads, Virginia Beach 4-H; Horizons Hampton Roads; Norfolk Botanical Garden; and Recovery for Life in Virginia Beach, to name a few. His team also manages annual food and toy drives across his dealerships. 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 a charity donated by Ally. In its 12th 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, highlighting the philanthropic contributions and achievements of TIME Dealer of the Year nominees. “For over 50 years, TIME has been committed to recognizing the impact of automotive dealers on their communities with the TIME Dealer of the Year award," said Edward Felsenthal, editor-in-chief and CEO of TIME. "We are proud to continue the legacy of honoring these works of service with our partners at Ally.” Doug Timmerman, president of dealer financial services at Ally, said, “Auto dealers across the country who are nominated for this award each year are committed to not only doing it right and leading in a rapidly changing automotive industry but to strengthening their communities through giving back. The TIME Dealer of the Year program celebrates dealers who are the role models of the retail auto industry for their continuous efforts to lift up and support their employees, customers and communities.” Snyder and his wife, Anne, have two sons. He was nominated for the TIME Dealer of the Year award by Don Hall, president and CEO of the Virginia Automobile Dealers Association. About TIME TIME is the 99-year-old global media brand that reaches a combined audience of more than 100 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’s 360° suite of products and platforms for storytelling 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, an industry-leading web3 division, an award-winning branded content studio, the website-building platform TIME Sites and more. About Ally Financial Ally Financial Inc. (NYSE: ALLY) is a digital financial services company committed to its promise to "Do It Right" for its consumer, commercial and corporate customers. Ally is composed of an industry-leading independent auto finance and insurance operation, an award-winning digital direct bank (Ally Bank, Member FDIC and Equal Housing Lender, which offers mortgage lending, point- of-sale personal lending, and a variety of deposit and other banking products), a corporate finance business for equity sponsors and middlemarket companies, and securities brokerage and investment advisory services. Our brand conviction is that we are all better off with an ally, and our focus is on helping our customers achieve their strongest financial well-being, a notion personalized to what is important to them. For more information, please visit www.ally.com and follow @allyfinancial. 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. vada.com 8
FEBRUARY 17-19, 2023 greater richmond convention center virginiaautoshow.com
Capitalize on the Changing Structure of Auto Retailing The auto retail market has remained strong in recent years – despite a turbulent economy – leaving many dealers in a surprisingly secure position. While that may be welcome news today, it’s only natural to wonder what tomorrow might hold for your dealership. You’ll need to adapt to keep up with recent technologies converging on the business. That includes retooling the services you offer and training your staff as more electric vehicles (EVs) become available. Servicing automated vehicles will add even more complexity and require additional skills. Don’t forget the rise in online customer shopping and buying. There’ll be more rebuilding needed to restructure your entire sales process from top to bottom using the latest technology. These changes will all require investment, management time, and organizational energy. Larger dealership groups with more scale and greater access to capital should have no problem making these changes, but such opportunities could present significant challenges for smaller dealers. This combination of capital needs and major technology-driven change in a fragmented industry like auto retailing creates the perfect conditions for consolidation. If you’ve ever thought about acquiring other businesses or selling and transitioning your own, now’s the time to consider your options. Take advantage of the thriving buy-sell market Start by analyzing the state of play with mergers and acquisitions in auto retailing. Buy-sell activity in the auto retail market is booming right now. Dealership profitability continues to outperform expectations, and there’s plenty of available capital to put to work for your business. Public dealership companies want to expand, family offices are looking for investment opportunities, and private equity (PE) firms like the high rates of return on equity in the auto industry. Blue sky values remain high for top franchise brands, with sales volume – a driver of brand value – pushing the leading premium and mainstream brands above their competitors. Import brands are favored over domestic brands, and buyers today are more comfortable with longer payback periods following acquisitions. “We’re seeing more and more private equity, family office, and institutional investment in the automotive retail business, which for decades was closed to outside capital,” explains James Taylor, head of Automotive at Truist Securities. “As we move forward, we're going to see even more of this type of capital infusion. Businesses will likely stay private, but the capital will be coming in from outside the automotive industry.” Consolidation will continue as dealerships expand through acquisitions, and outside investors move more capital into the business. As the size and scale of a dealership offers even greater competitive advantages, the number of owners may decline faster than the historical 2% annual rate. Consider transitioning your business. Do I stay in the business or exit? By Truist
Are you ready to take stock of the future you’ve envisioned for yourself and your dealership? Start by asking these questions: • Do you want to continue working as much as you are today? • Are there other projects you would prefer to be working on right now? • How will potential disruptors – like EVs, automated vehicles, and digital experiences – affect your business strategy and desire to continue in the industry? • Are your plans for the future dependent upon the value of your real estate holdings? • Should you stay and expand your business, by acquiring additional franchises/locations that would provide economies of scale and contribute to your bottom line? • How would taking on private capital partners affect the future of your dealership? A transition decision is a major one. Considering opportunities and long-term plans now will help you and your business prepare for shifts in the economy later. Think about the future of your dealership While planning your next steps, be sure to offer suggestions to help guide the direction of your business after you’re gone. There are plenty of ways your company can still support your employees, your community, and – depending on how you structure your exit – even you after the transition. Make sure your family is equipped to handle a transition In an industry where privately-owned dealerships are largely comprised of family-owned and operated businesses, family transitions are common. Do you view your business as a legacy for your children and grandchildren? Would you like to see your heirs working in the company that you built? What if your children aren’t interested in running the business? What if they need more experience or don’t have the necessary skill set to be successful owners/operators? You might have many reasons to avoid planning a family succession. Maybe the planning cost is too high, or you don’t want to give up control. Maybe you’d rather not think about your own mortality. Families that successfully integrate the next generation into the business start the process early, providing support, education, and experience. If you’d rather not burden your heirs with costly litigation, unexpected taxes, and contentious relationships, or if you don’t want to leave them a failed business, plan ahead. Manufacturers are more likely to approve a family transition if comprehensive planning has taken place well in advance. Taxes are an especially important consideration for any transition plan. Tax regulations that specifically apply to family-owned businesses could reduce or eliminate certain discounts and deductions which affect transfer value, so be sure to consult your tax advisors before finalizing any transition plans. What happens when your heirs refuse to run the business When keeping your business in the family isn’t an option, consider selling it to private or public groups to secure funding for the next stage of your life. Privately-owned dealership groups are looking to add additional franchises to complement their own dealerships. They have the experience, staff, and organizational skills to take over your business with relatively little disruption. Private dealers that have strong track records often receive manufacturer approval with ease, simplifying the closing process. Family offices that aren’t currently in the automotive sector have emerged as a non-strategic investor group. Family offices evaluate investment opportunities based on long-term viability. They want to diversify their holdings and collect a solid return on their investments. They’re able to identify with a single sector business as well as the family aspects of auto retailing. Not quite ready to exit the business? Want to take equity continued on page 12 11
out of your company? Family office investors usually allow nextgeneration dealers to remain minority partners while providing you with liquidity immediately at favorable valuations. Private equity firms are increasingly moving into the dealership market in pursuit of promising returns. PE buyers are often willing to accept longer payback periods, particularly when investing in premium franchise segments. The key to a successful PE acquisition is securing experienced management to lead the dealership/ dealer group after the acquisition. PE firms typically retain dealership managers as minority partners to run the business and smooth the transition process, which helps secure manufacturer approval. Public groups need to grow to meet investor expectations. They’re expanding their territories, shoring up existing footprints, and using their scale to invest in new technologies. Ready to leave your company, but don’t have a succession plan in place yet? Public companies might be a good fit for you and your business. They have leadership experience and performance records that can help secure manufacturer approval for your transition deal. Create an active succession plan Are you a seller, buyer, or shareholder in today’s market? If meeting looming technology changes head-on is a challenge that excites you, consider acquiring another dealership. Investing in a company that aligns with your goals can be a prudent and lucrative decision. Growth through strategic purchases of complementary franchises and/or dealer locations can improve your economies of scale, making major expenditures and improvements more cost efficient. continued from page 11 That can boost profits and business value, setting you up for even greater opportunities in the future. Make a decision Should you stay or should you go? It’s a complex decision. Dealership valuation, franchise multiples, manufacturer approval, legacy, and succession considerations all come into play. Preparing for an eventual transition early on – putting your personal finances in order, preparing the business, and maximizing your company’s value – will help ensure the integrity of your dealership and your retirement funding. Do you want to stay in the business, or are you ready to move on? Your options are plentiful. Talk to your Truist relationship manager about what’s best for you and your dealership, and they can schedule a confidential discussion on your options with the Truist Securities Automotive Retail Team. Go to truist.com for more information. 801.676.9722 | 855.747.4003 sales@thenewslinkgroup.com ARE YOU READY FOR GROWTH? ADVERTISE IN THIS MAGAZINE AND GET YOUR BRAND IN THE HANDS OF YOUR TARGET MARKET. vada.com 12
SCAN ME VADA.COM/CONVENTION June 19-22, 2023 The Greenbrier White Sulphur Springs, WV "Change: Our Opportunity, not Our Enemy" These Dealer Leaders Are All In … Are You? Our PAC’s All In campaign is raising money to help elect dealer-friendly candidates in next year’s General Assembly races when every state House and Senate seat is up for grabs. We extend a sincere THANK YOU to these dealers for pledging their support to the Virginia Automobile Dealers Political Action Committee. Pohanka Automotive Group $58,500 Sheehy Auto Stores $33,000 Jim Koons Management Company $30,000 Berglund Automotive Group $26,500 Loyalty Automotive $21,500 Carter Myers Automotive $14,500 Country Chevrolet $11,575 Lindsay Automotive Group $11,500 Malloy Automotive Group $11,500 Ted Britt Ford Lincoln $11,500 Southern Auto Group $10,750 Battlefield Automotive $10,000 Flow Motors $10,000 Hyman Bros. Automotive Group $10,000 Charlie Obaugh Chevrolet Buick GMC Kia $6,500 Rosenthal Automotive $6,500 Aschenbach Auto Group $5,000 Give now and see more detail of these group donations at vada.com/pac22. Whitten Brothers, Inc. $5,000 Beach Ford, Inc. $5,000 Karen Radley Acura VW/ Radley Chevrolet $4,000 RK Chevrolet/Subaru/ GM Commercial Business Elite $3,000 Groups giving at least $2,000 Alexandria Volkswagen Beyer Automotive Group Checkered Flag Motor Car Co. David R. McGeorge Car Co., Inc. Duncan Ford Chrysler Dodge Jeep Huber Motor Cars Johnson Family Chevrolet Purvis Ford Lincoln Groups giving at least $1,500 Cavalier Ford Lincoln Duke Automotive Hall Automotive, LLC Harvey's Chevrolet Cadillac Buick Kern Motor Co. Magic City Ford Lincoln Isuzu McDonough Toyota Ourisman Automotive of Virginia Priority Auto Group Richmond Ford Lincoln Robert Woodall Chevrolet Buick GMC Cadillac Hyundai Nissan Shelor Motor Mile Steven Nissan Strosnider Chevrolet Suttle Motor Corp. Terry Volkswagen Subaru
Succession Planning for Dealers in an Evolving Business Environment By Bank of America Corporation vada.com 14
While there are many considerations in running a thriving dealership, one of the most important – and often overlooked – is developing and maintaining a succession plan. A strategy that allows for the transfer of ownership to the next round of leaders – whether family members, a trusted partner or an outside buyer – will position you and your business for future success. Why now? Having a succession plan is important for many reasons; however, in today’s environment, there are three crucial reasons that rise above the rest. 1. There’s a lot of buy/sell activity in the industry and accelerated consolidation. If your long-term plan is to exit the industry, you should consider the current market valuations and buyer interest. 2.The U.S. is on the verge of material changes in tax laws that could affect your finances and the value of your business if passed on to future generations. The estate and gift tax exemption, currently at a historic high of $12.06 million per person or $24.12 million per married couple, will drop by half in 2026 when the current tax law lapses. It could drop even faster if Congress passes a new law before 2026. 3.The market, labor costs, supply chains and other factors influencing dealerships continue to fluctuate. As the pandemic brought home to us, every business needs a plan in place in case top leadership can’t run day-to-day operations. Consider your priorities To begin the succession planning process, you need to identify your goals. Perhaps you’d like to sell – to family, management or a third party – to generate liquidity. You may also want to maintain some level of control of the business, particularly during a transition, if you’re gifting or selling the business to family members or selling to trusted employees. Or, you may want to step away completely and allow a third party to take over. In addition to identifying your goals, it’s important to consider how your decision will affect employees and the community to assess whether your actions align with your goals. Finally, you’ll want to consider the financial implications of your decision, whether it’s reducing the amount of taxes you pay or generating liquidity for future needs. Identify key players One of the most critical succession planning decisions is determining the organization’s future leadership. While it can be difficult and emotional to talk with family and key managers about the future, it’s an essential piece of the process. An honest talk about your goals and theirs will help clarify your options and develop a more realistic succession plan. Facilitating the process will be two crucial teams: internal and external. Your internal team will consist of key family members, senior dealership managers, your banker, lawyer and accountant. Your external team will consist of advisors who think broadly and are strategic and defensive, like a transition attorney, estate lawyer, investment bank and appraiser or auditor. Maximize the value of your dealership Once your team is in place, you’ll want to get your documents in order. These include: 1. Financial and business information. You should pull out your business’s financial statements and consider conducting an audit if you plan to sell the dealership. An audited statement is a more powerful statement to share with a prospective buyer. 2.Updated appraisal. An appraisal will compare your business to other dealerships, their gross margins and growth rate. Key metrics are important, whether you’re selling or benchmarking the success of your business for future managers. 3.Strategic plan. It’s an excellent time to create or update the strategic plan for your dealership. It will help you look at your dealership in the context of how the industry is changing and evolving. Opportune times to update your strategic plan include any time you experience changes in your family situation or senior management team. Initiating a succession plan can be emotional, and the process will take time. However, once you get started, you’ll find relief in clarifying your goals, understanding the intent of your family and senior managers and creating strategies that maximize the value of your business and legacy. © 2022 Bank of America Corporation One of the most critical succession planning decisions is determining the organization’s future leadership. 15
Note: In November, the Federal Trade Commission announced a six-month extension, to June 9, on the deadline for companies to comply with some of the amendments to the FTC’s Safeguards Rule. This article was written prior to that announcement but still offers good insights about the changes. Please consult with your attorneys and IT teams for more on the rules. As we get closer to wrapping up 2022, it should come as no surprise by now that the Federal Trade Commission (FTC) remains active in directing its attention toward dealerships across the country. Aside from the Motor Vehicles Trade Regulation Rule that is taking up most of dealer attorneys’ attention as of late (as well as the National Automobile Dealers Association), another looming, and arguably just as important, regulation will come knocking at your showroom door come December 9 called the Gramm-Leach-Bliley Act’s revised Safeguards Rule. Oh yes, the Safeguards Rule. Dressed up as a set of consumer protection regulations (and for all intents and purposes, they are), the Safeguards Rule represents another arrow in the FTC’s quiver as it goes hunting for violating dealers. Having provided Safeguards Rule compliance services to over 6,000 dealerships of all sizes for over a year now, I can tell you now that the FTC should drop the bow and pick up a rifle because the concept of data protection in the automotive retail space likens dealerships to fish in a barrel more than deer in the great outdoors. Your IT orMSP company is not enough – ComplyAuto works with them A quick read of the regulations suggests that the Safeguards Rule is a set of data protection and cybersecurity requirements that all dealerships must follow by December 9. It is tempting to think that your IT company or Managed Service Provider (MSP) can provide you with all of the tools necessary for compliance, but contrary to popular belief, they are just one piece to the equation. The Safeguards Rule consists of both technical and non-technical requirements. Some of the nontechnical requirements that IT companies and MSPs may not be equipped to help you with are: • Creating an Information Security Program (and designating a “Qualified Individual”) • Creating required policies in the Incident Response Plan, IT Change Management Plan, and Data Retention Plan • Training all employees in security awareness that complies with applicable state and federal rules • Create written physical/ administrative and technical risk assessments • Overseeing and monitoring Service Providers in fulfilling their obligations • Annual reporting to the Board of Directors (or equivalent) ComplyAuto can help you in all of these areas and more. Some dealers are happy with their existing providers and ComplyAuto will work closely with them to help get your dealership in full compliance with the federal regulations. FTC Safeguards Rule Compliance What You Need To Know By Hao Nguyen, Esq. General Counsel, ComplyAuto ComplyAuto is a turnkey solution for Safeguards Rule compliance From the written policies for the organization to the multifactor authentication on all of the dealership’s devices, ComplyAuto also has the tools to resolve the technical requirements of the Safeguards Rule. By also doing it all ourselves in-house, ComplyAuto is now able to provide a more harmonious integration for the dealership so that it can view all of its services for Safeguards Rule compliance from a single dashboard. No multiple log-ins. No subcontractors giving you the runaround. The buck starts, and stops, with ComplyAuto. The Virginia Automobile Dealers Association has partnered with ComplyAuto to be able to offer our suite of tools to VADA dealer members for compliance with the Virginia Consumer Data Protection Act and the Safeguards Rule. In addition, you will have access to the following trainings at no additional cost: 1. Adverse Action Notices 2.Cash Reporting & Anti-Money Laundering (Form 8300) 3. Credit Score Disclosure (Risk Based Pricing) 4. Identity Theft Prevention (Red Flags) 5. OFAC Sanctions Compliance 6. Unfair and Deceptive Acts and Practices (UDAAP) VADA dealer members interested in learning more about their data privacy and GLBA Safeguards Rule compliance tools can contact us at info@complyauto.com or (661) 214-9760. Visit us at complyauto.com. vada.com 16
5 Recruiting Strategies to Adopt Today By Madeline Cecil, Hireology vada.com 18
Have you heard the saying that the definition of insanity was doing the same thing over and over again, but expecting a different result? So, we have to ask: are you running an insane recruitment strategy? It’s no secret that hiring is hard these days. Between the Great Resignation and today’s unprecedented talent shortage, there are plenty of obstacles to fill the open roles at your company. If you want to drive the applications, you need to meet your organization’s openings; you need to get creative with your recruiting strategies. Social media is your friend Social media is a tool that has certainly gotten a bad reputation in recent years. Instead of using it to compare how you’re doing to those with whom graduated high school, it can be extremely useful as a recruiting strategy. As with (mostly) anything on the Internet, the bigger the presence your brand has, the better – mainly because you’ll reach more potential applicants than if your profiles were limping along. To capitalize on this recruiting strategy, you’ll need to post timely happenings at your company, along with celebrating your employees; this will help establish your company culture online and give candidates a glimpse at what the environment is like before they even step through the door. Incorporating social media into your recruiting strategy can help in two ways. Firstly, you can monitor passive candidates who engage with your social media posts but don’t actually apply for a role and make the first move toward them. By determining how engaged these candidates are – and taking a quick look at their own profile to see if they’re open to offers – you can start the recruitment process by sending a simple message. Secondly, you can post your open roles on your profile for anyone who has been keeping an eye on their opportunity to get their foot in the door at your company. You can take this a step further by encouraging your employees to create their own posts to share with customized QR codes. Employee referrals If you’re not using your existing staff in your recruitment strategy yet, you’re missing out. Employees referred to their positions are, on average, hired faster, stay longer, and are more engaged than regular hires. In fact, recent data shows that 20% of new hires found their latest roles through a friend – aka they were referred. Now, adding an employee referral program to your recruiting strategy is easier than ever before. Some employee referral software allows you to create individual QR codes for each employee, making the tracking process a breeze even if your staff uses social media to recruit for you. You can even use the QR codes to gather referrals from your workers by using them in weekly presentations or posting signage around your workspace encouraging them to submit referrals. Read the 2022 Future of Hiring to see how the talent shortage has created a new set of hiring best practices that will be table stakes in the years to come. Revisit your job descriptions Updating and modernizing your job descriptions can help bolster your existing recruiting strategies. You need to go back and look at what you’ve written to see if there are any changes you can make to drive more applicants to these roles. One simple way to start this process is to actually read the job description aloud. You can read this to yourself, but you might gather more insightful feedback from someone who is actually working in that position; in fact, you can ask them questions to craft a better description, like “Does that sound like a position you would apply for if you were on the market for a new job?” You still need to keep Search Engine Optimization (SEO) in mind when wordsmithing your new job description to reach the widest audience possible, but you need to make sure that it’s still written for people to understand. So yes, while there are tricks you can do – like rearranging segments of job posting – focusing on connecting the content with the applicants (and not the bots) will make the payoff for this recruitment strategy worth it. continued on page 20 19
Dig deep into what makes you unique What makes your business special? Do you have a smaller company size, where the boss knows everyone’s name and every birthday is a celebration? Do you offer great employee benefits like unlimited PTO or mental health days? Whatever makes your company different from everyone else in your area, define your unique selling points and market them everywhere. From your career site to every posted job, these unique aspects need to be mentioned. Recruitment strategies rely heavily on your company standing out to potential candidates; by digging deep into what makes your organization unique, you have a competitive advantage against some of the largest companies hiring in your area. Chances are, if the candidate was interested enough in what makes you unique or the title of your open job, one (or the other) will give the candidate the push they need to apply – and hopefully drive your next hire. In-person networking isn’t dead (yet) Guess what? Job fairs are still around – for good reason. Successful recruitment strategies don’t forgo these events, especially if they’re being held at a college or technical school that produces the type of talent you need to fill some of your persistently open roles. Events that let you network in person allow you to meet potential candidates face to face, an aspect of the recruitment process that has largely been missing since the beginning of the pandemic. Plus, you’ll often have the opportunity to beat your competitors to these fresh faces before they even start looking for a postgraduate role. If you’re attending job fairs that are outside of the education system, you have the chance to shorten the interview process if you have the time at the event. Bonus tip: Establish a mentorship program for the positions you desperately need filled. You’ll get help with your current workload while the mentee gets experience in the field and firsthand knowledge. These recruiting strategies should become the bread and butter of your enlisting efforts. The most important thing is that you meet potential applicants where they are, whether that’s online or in person. Hireology’s all-in-one platform has everything you need to attract, hire, and manage a modern workforce. Want to see just how easy recruiting can be? Go to https://hireology.com and let us show you how! continued from page 19 vada.com 20
Up to Save money to make money Manual registration and title processes can be inefficient and costly. The time and money you spend on maintaining copiers, printing, and handling documents, cutting paper checks for payoffs, and paying for postage and shipping negatively affect your bottom line. Moving to an electronic process can save the average dealership over $11,000 per month per rooftop in unnecessary costs. When you add in a manual F&I process that includes the cost of paper and ink for printing contracts and time spent handling paper documents, it creates even more opportunity to save on unnecessary costs. According to Cox Automotive’s recent auto weekly summary from Jonathan Smoke, tight supply and minimal improvement in production have limited the potential for new vehicle sales to grow and are driving prices higher and incentives lower, which is keeping demand in check. In today’s market, recouping the costs of manual processes helps protect your profitability. When inventory is limited, you can save money using electronic reg and title and digital F&I processes that reduce the costs associated with manual steps and paperwork by submitting transactions online. Dealertrack provides you with the tools to increase operational efficiency so you can funnel savings back into your dealership and bolster your bottom line. Dealers using Dealertrack solutions save on operational costs to grow revenue. Schedule no-obligation demos to learn how you can save on reg & title and F&I costs with Dealertrack solutions. 1 Based on industry standards for labor costs and Dealertrack and dealer customer data as of August 2022. Not a guarantee of actual savings. per month/ per rooftop1 $20k Average unnecessary costs in paper documentation and shipping and handling.1 ® Registration & Title Solutions
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