WE ARE A STRONG COLLECTIVE VOICE, DEDICATED TO ADVANCING THE AUTOMOTIVE INDUSTRY IN WEST VIRGINIA. inside: WVADA ANNUAL DEALER FAMILY CONVENTION REGISTER TODAY! PLANNING FOR DEALERSHIP SUCCESSION DIVIDING MULTIPLE DEALERSHIPS AMONGST FAMILY
Driving excellence in all we do. 304-624-5564 www.tetrickbartlett.com T&B Tetrick & Bartlett, PLLC is an accounting and consulting firm serving clients throughout West Virginia. We are dedicated to providing our automobile dealer clients with professional, personalized services and guidance in a wide range of financial and business needs.
WE HAVE West Virginia COVERED! In Business in West Virginia For Your Business for 30 years Responsible Attorney, Johnnie E. Brown www.pffwv.com Beckley 304-254-9300 | Charleston 304-344-0100 | Martinsburg 304-260-1200 | Morgantown 304-225-2200 WHEN IT COMES TO BEING LEGALLY COMPLIANT AND AGGRESSIVELY DEFENDED, YOU HAVE A CHOICE. WHY NOT CHOOSE A LAW FIRM THAT KNOWS YOUR INDUSTRY AND IS FOUNDED IN WEST VIRGINIA WITH FOUR OFFICES COVERING EACH REGION OF THE STATE TO PROTECT YOU? OUR FOUNDING MEMBERS AND ATTORNEYS LIVE IN THE COMMUNITIES WE SERVE. PULLIN, FOWLER, FLANAGAN, BROWN & POE, PLLC KNOWS WEST VIRGINIA AND WEST VIRGINIA’S AUTOMOBILE DEALERS. WE HAVE West Virginia COVERED! In Business in West Virginia For Your Business for 30 years Responsible Attorney, Johnnie E. Brown www.pffwv.com Beckley 304-254-9300 | Charleston 304-344-0100 | Martinsburg 304-260-1200 | Morgantown 304-225-2200 WHEN IT COMES TO BEING LEGALLY COMPLIANT AND AGGRESSIVELY DEFENDED, YOU HAVE A CHOICE. WHY NOT CHOOSE A LAW FIRM THAT KNOWS YOUR INDUSTRY AND IS FOUNDED IN WEST VIRGINIA WITH FOUR OFFICES COVERING EACH REGION OF THE STATE TO PROTECT YOU? OUR FOUNDING MEMBERS AND ATTORNEYS LIVE IN THE COMMUNITIES WE SERVE. PULLIN, FOWLER, FLANAGAN, BROWN & POE, PLLC KNOWS WEST VIRGINIA AND WEST VIRGINIA’S AUTOMOBILE DEALERS.
©2023 West Virginia Automobile Dealers Association (WVADA) | The newsLINK Group, LLC. All rights reserved. The WVADA News is published four times each year by The newsLINK Group, LLC for the WVADA and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the WVADA, 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. The WVADA News is a collective work, and as such, some articles are submitted by authors who are independent of the WVADA. While the WVADA News encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at 855.747.4003. 10 22 25 CONTENTS 6 President’s Message Supporting and Advocating for West Virginia 10 WVADA Annual Dealer Family Convention 12 A Delay in the Safeguards Rule, But Dealers Should Not Wait 16 Counselor’s Corner 18 By the Numbers Hiring Your Minor Children for Summer Jobs 20 Planning for Dealership Succession Dividing Multiple Dealerships Amongst Family 22 WVADA VIP Charity Gala Night 25 Good News Mountaineer Garage A Program to Get Behind 26 2023 West Virginia Auto Show and VIP Charity Gala 27 The West Virginia Auto Show 28 In the Community wvcar.com 4
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PRESIDENT’S MESSAGE JARED WYRICK SUPPORTING AND ADVOCATING FOR WEST VIRGINIA T his year is off to a great start! WVADA had many successes on the legislative front. We passed six out of seven of our bills, and we defeated the Right to Repair bill. The one bill that we did not get across the finish line was our franchise bill, S.B. 462 — modifying certain guidelines for motor vehicle dealers, distributors, wholesalers, and manufacturers. Our franchise bill passed out of the Senate unanimously and passed out of the House Judiciary Committee with only one “no” vote. The one “no” vote was from Delegate Evan Hansen, D-Monongalia. Delegate Hansen viewed the elimination of the right of first refusal (ROFR) language as discriminatory. Obviously, discrimination is not the intent of eliminating ROFR, and we are committed to working with several members of the House to make sure that we achieve a compromise that works in the best interest of all parties. However, the bill ultimately died on the House Calendar on the second reading. The good news is that Deputy Speaker Rohrbach and Speaker Hanshaw have assured me that our franchise bill will run earlier next year on the House calendar to ensure passage. WVADA Bills — Passed and Completed Legislative Action • S.B. 151 — Levying tax on pass-through entity’s income (Completed Legislative Action — Awaiting Governor Signature) This bill allows pass-through entities to elect to be taxed at the entity level and to provide a refundable tax credit to owners or members of an electing pass-through entity on their individual tax returns. This would allow state income tax for partnerships and S corps to be paid at the entity level — allowing for a deduction at the federal level. Pass-through entities are such that the income “passes through” for tax purposes to the owners in relative shares of their ownership so that the income is taxed on the individuals’ personal income taxes. This bill allows entities to make an irrevocable (for the taxable year) election that all income be taxed at the entity level. A nonrefundable credit would be allowed to the individual owners for the tax on the income taxed at the entity level to avoid double taxation on those individuals’ personal income taxes. A similar credit is also available to individual owners based on their proportion of tax paid to another state at the entity level. • S.B. 335 — Modifying the State Police rule relating to modified vehicles’ inspections (Completed Legislative Action — Awaiting Governor Signature) This is a bill of authorization that amends a current rule regarding modified vehicle inspections. This change deletes the requirements that require a fender to cover the entire width of the tire of a modified vehicle. continued on page 8 wvcar.com 6
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 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
continued from page 6 This idea was generated by several dealers who are unable to retail modified vehicles due to stringent inspection rules. Now that the legislature has changed the annual vehicle inspection process from annually to every two years, beginning Jan. 1, 2024, the State Police will have to promulgate a new rule relating to the state vehicle inspection process. The State Police have agreed to work with WVADA in putting forth a rule that will not restrict a dealer’s ability to retail modified vehicles. • S.B. 455 — Modifying certain used car restrictions (Completed Legislative Action — Awaiting Governor Signature) This bill eliminates several restrictions placed on DUC dealers. The idea behind this bill came about due to inventory levels. Some dealers who have a D and DUC license were unable to stock both lots with inventory and often elected to move all vehicles to one lot. The current code still required both lots to be open and staffed regardless if the lot was empty. • H.B. 2310 — Providing the DMV authority to develop an “Antique Fleet” program (Completed Legislative Action — Awaiting Governor Signature) This bill included several different provisions than those originally introduced. This bill created an antique fleet program, changed the state inspection process from annually to every two years beginning Jan. 1, 2024, and created an exemption for national fleet vehicles from the state inspection process and personal property taxes for vehicles that are registered in WV, but do not have vehicles domiciled in WV. • H.B. 2530 — Extending expiration of temp registration plates from 60 to 90 days (Signed by the Governor — Effective May 7, 2023) Under the “State of Emergency Executive Order,” everyone may recall that the DMV extended temp tags from 60 to 90 days. Upon the ending of the State of Emergency, temp tags revert back to 60 days. WVADA and the DMV put forth a bill that would make temp tags good for 90 days on a permanent basis. • H.B. 2506 — Creating a title clearinghouse (Signed by the Governor — Effective Feb. 1, 2023) This bill allows the DMV to establish a clearinghouse for non-resident businesses to utilize an electronic registration process. Every non-resident business would be entitled to the statutory title fees, adding millions of extra revenue to the state road fund annually. I can’t thank our members enough for their support in getting these bills passed, and I would say passing six out of seven bills and defeating the Right to Repair bill is quite successful. We will continue to work on franchise bill S.B. 462 to make sure all parties are satisfied, so it can be passed next year. In addition, the West Virginia Auto Show at the Charleston Coliseum & Convention Center was a huge success, and once again, it’s all thanks to our members. We are looking forward to more of the exciting upcoming events, especially the multi-state convention in June. We hope to see you there! Jared Wyrick wvcar.com 8
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.
WVADA Annual DEALER FAMILY CONVENTION JUNE 19–22, 2023 The Greenbrier Resort White Sulphur Springs, WV REGISTER TODAY! Held alongside KADA, MADA, and VADA. We hope to see you and your family at the Greenbrier Resort. Dealers and Sponsors scan the QR code and click on the 2023 Registration tab. https://wvcar.com/2023-convention The rooms at Greenbrier are sold out. Please call Haley at 304-343-4158 for room accommodations. wvcar.com 10
SPONSORSHIPS & EXHIBITOR SPACE AVAILABLE SIGN UP TODAY! Scan the QR code and click on the Sponsorship 2023 or Exhibitor 2023 tab to learn more. https://wvcar.com/2023-convention Haley Justice will email the invoice to you after the online form has been completed. If you have any questions, please contact Haley at hjustice@wvcar.com or 304-343-4158. Issue 1, 2023 11
A Delay in the Safeguards Rule, But Dealers Should Not Wait By HAO NGUYEN, ESQ., ComplyAuto I n this article, we discuss the Federal Trade Commission’s (“FTC”) delay of the effective date of the revised Safeguards Rule (“Rule”) and its practical impact on your dealerships. We will then explain why you should not wait to implement data protection and cybersecurity safeguards at your dealership because the FTC will still come after you under another section of the FTC Act that gives them broad authority. Safeguards Rule — Some Requirements Delayed Until June 9, 2023 The FTC gave dealers across the country an early Christmas present when it announced on Nov. 15, 2022, that it is extending the deadline for the Rule by six months. However, it is important to note that this extension only affects some of the requirements and will make them effective on June 9, 2023. Specifically, the provisions that have been extended to June include the following: • Designating a qualified individual to oversee the information security program; • Completing written risk assessments; wvcar.com 12
• Monitoring the access and use of sensitive customer information; • Completing a penetration test & vulnerability scan; • Encrypting systems containing customer information; • Training employees on security awareness; • Conducting Vendor & Service Provider risk assessments; • Implementing MFA on all systems containing customer information; and • Creating and updating a device and systems inventory. Notably, the provisions that have not been delayed (and never were) are: • Creating a written Information Security Program (ISP) for your organization; • Obtaining signed contracts from your vendors (“Service Providers”) who collect customer information, promising to implement reasonable safeguards; • Periodically assessing your Service Providers to ensure that they have reasonable safeguards in place; and • Implementing a system capable of detecting attacks and intrusions on your network. Dealers Should Not Wait to Implement Safeguards Rule Solutions On paper, the delay sounded good. However, once you dig into the details, the delay is not as good. Because some aspects of the Rule still became effective in January, dealers should not take this delay for granted. This is the time to press on in reinforcing their data protection and cybersecurity practices. Why? Firstly, completing all requirements of the Rule can be timeconsuming because so many players are involved. You will need to coordinate with the vendor to oversee compliance (like ComplyAuto), the dealership staff, any Service Providers they work with (to complete their requirements), and potentially your IT company or Managed Service Provider. Unless you are working with an efficient and responsive team, natural bottlenecks may arise as one party waits on the other. Secondly, you should not “miss the forest for the trees,” meaning that the FTC should not be the main reason why your dealership is establishing these data protection and cybersecurity protocols. Yes, we want to fulfill these requirements to keep the federal government at bay, but I would argue that the main focus should be to prevent data breaches and ransomware attacks! Think about the different forms of damage to your organization that could arise as a result of a data breach or ransomware attack: • Reputational damage: Dealerships are pillars in their community and word of a data breach will spread quickly. Additionally, vendors may be wary about working with you in the future. • Data breach mitigation: Depending on the level of your cybersecurity coverage from your insurance company (or lack thereof), you could be paying out of pocket for forensic professionals to “stem the bleeding”, so to speak, and try and recover what you can. • Dealership downtime: You can bet that your dealership will suffer significant delays as you try to survey the extent of the breach and work through the mitigation efforts. • Data recovery: If it was a ransomware attack that resulted in the loss of employee, customer, and dealership information, the road back to where you started will be a long one. Think of all the information that existed prior to the attack that you will now need to rebuild from scratch. • Consumer protection efforts: Depending on the extent of the breach, you may be legally responsible for the cost of providing identity theft protection measures to all of the consumers who suffered a release of their information. • State and federal penalties: Suffering a breach does not earn you any pity from the government. State and federal enforcement officials will come shortly thereafter to “pour salt in the wound” in the form of heavy fines and penalties. • Class action lawsuits: Always a significant concern for dealers is a class action lawsuit by harmed individuals who had their information either stolen or released. FTC Using its Broad Authority Under Section 5 for Cybersecurity Concerns Section 5 of the FTC Act prohibits “unfair or deceptive business practices in or affecting commerce.” Given that this clause has been around since 1914, it is safe to say that the authors did not consider cybersecurity during the time that it was drafted. Nevertheless, as a Nobel Prize laureate once said, “the times they are a-changin’” and the FTC has wielded this section as a sword to strike down businesses who have displayed poor cybersecurity practices. This has become such an issue that Brad Miller, Chief Regulatory Counsel at NADA, spoke about this during one of the educational seminars at the Dallas convention. Defining false data security or privacy representations under both “unfair” and “deceptive” terms of art since 2002, the FTC has negotiated consent agreements since then with most This is the time to press on in reinforcing their data protection and cybersecurity practices. Issue 1, 2023 13
Matt White | 304-633-5467 matt@carsignment.com J.C. Spearry | 216.213.0242 JC@Carsignment.com Is your online inventory retail ready? We build dealers an online inventory presence that attracts & engages buyers at lightning speed! Call 304-633-5467 for a FREE digital marketing audit! www.carsignment.com Full service automotive digital marketing agency since 2005 businesses, as many of them never wanted to test its authority over regulating cybersecurity. It was not until 2012 when a private company that had been the victim of a cyber-attack three times moved to dismiss the FTC’s lawsuit, stating that it had no authority, rather than enter into a settlement. Going all the way up to the Third Circuit, the court affirmed that the FTC does in fact have the authority to regulate cybersecurity based on factors I won’t bore you with here. Since then, there have been no direct challenges to the FTC’s authority over a business’s cybersecurity practices under this broad Section 5 and the FTC continues to use it repeatedly and effectively: • Consent order with an education technology provider for alleged poor data security practices that exposed sensitive information about millions of customers and employees. Specifically, it did not require employees to use MFA, stored information insecurely, and failed to provide adequate security training to employees. — January 2023 • Consent order with an online alcohol marketplace (and its CEO, personally) over allegations that its security failures led to a data breach, exposing the personal information of approximately 2.5M consumers. Specifically, it did not require employees to use MFA, did not limit employees’ access to personal data, failed to monitor security threats, and stored information insecurely. — January 2023 • Consent order with an online customized merchandise platform that failed to implement reasonable security measures and failed to adequately respond to several security breaches. Specifically, it stored SSNs and passwords in readable text, did not require employees to use MFA, retained data longer than was reasonably necessary, and covered up major data breaches. — June 2022 With the Safeguards Rule and the looming Motor Vehicle Trade Regulation Rule that the NADA is actively opposing, we believe that automotive retail is squarely in the sights of the new FTC commissioners. It is imperative that dealers continue in their efforts to expeditiously comply with all the new requirements of the Rule to achieve full compliance by the new deadline. If you’re feeling behind or overwhelmed, we’re here to help. Send us a message at info@complyauto.com or visit our website at www.complyauto.com to learn more about our “one-stop-shop” solution for the Safeguards Rule and our Compliance Guarantee. This article should be used as a compliance aid only and though its accuracy has been made a priority, it is not a substitute for professional legal advice. Each dealer should rely on their own expertise when using it. wvcar.com 14
Reliability is important. Equal Housing Lender. ©2021 M&T Bank. Member FDIC. CTD-903 210908 V1 Providing stability to auto dealerships since 1951. From the people closing the deal to the vehicles themselves, dependability is everything in the auto industry. Which is why dealers choose to work with M&T Bank for the long haul. Through the industry’s highs and lows, our clients have come to rely on our steady support. We’ve learned the ins and outs of the business along the way, enabling us to deliver the right products - from floor plan to construction financing, merchant services to purchasing cards, and investment management to 401(k) advisory and wealth planning. It’s this dependability that helps dealers like you do what they do best - run their businesses. That’s what understanding what’s important is all about. Get in touch with M&T today. Timothy Flynn Dealer Commercial Services tflynn2@mtb.com 412-398-7655 mtb.com/dealerservices
COUNSELOR’S CORNER By JOHNNIE BROWN, Esq. A fter a winter issue break, Counselor’s Corner is happy to be back to address a few pressing compliance issues. This may be a review for some, but the following issues reflect circumstances that I am finding more common. A quick refresher may alleviate some future legal claims. Obviously, the goal is to provide an excellent customer experience for those buying motor vehicles and for us to make sure we are compliant with state and federal regulations. Selling “As-Is” In West Virginia In 2019, our legislature passed West Virginia Code §46A-6-107, which allows West Virginia motor vehicle dealers to sell certain types of vehicles “as-is.” Importantly, there are limitations, and specific disclosure requirements are required to be met, otherwise the “as-is” sale is void. In order for a vehicle to be eligible to sell “as-is,” it must fit into one of five categories: (1) the vehicle must be inoperable and a total loss; (2) the vehicle is custom built or modified for show purposes or racing; (3) vehicle is sold for less than $4,000.00; (4) the vehicle is driven for more than 100,000 miles; or (5) the vehicle is seven years of age or older. Just a couple of clarifications, you can have a vehicle that is less than seven years old but as long as it has been driven more than 100,000 miles it will qualify. The seven years is determined by looking at the model year of the vehicle and using January 1 of that model year as its so-called “birth date.” For example in the model year 2023, only vehicles that are a 2016 model year are eligible for the seven years of age or older eligibility. Once a vehicle is eligible, please understand that there are specific disclosure requirements, including a statutorily defined disclaimer on the “front page of the contract of sale.” The disclaimer must be in 12-point boldface type, the heading must be in 16-point extra boldface type, and it also must be boxed. We recommend that both the buyer and the co-buyer initial within this disclosure box. The buyer and the co-buyer must acknowledge that they have received a vehicle history report, such as Carfax or Autocheck, and the dealer must disclose any defects or malfunctions disclosed by the prior owner or discovered on inspection. This latter point emphasizes the need for a process in which the prior owner completely discloses to the current dealer prior defects and malfunctions so that proper documentation may be provided to a future “as-is” customer. The buyer does have a right of recession for three days based upon significant mechanical issues or issues which existed at the time of sale, but only if the vehicle was sold under the price, mileage or age eligibilities. Consequently, the three-day right of recession is limited to those occasions. Last, please make sure that you are using the proper Buyer’s Guide and completing it correctly. Likewise, you must use proper “as-is” disclaimer forms and confirm that your West Virginia Motor Vehicle Purchase Agreement is compliant for an “as-is” vehicle. Motor Vehicle History Reports Unfortunately, I am seeing more and more instances where, despite procedures in place, a motor vehicle history report is not provided to a consumer. While there are no specific state statute or regulation that requires a dealer to use or provide a motor vehicle history report, such as Carfax or Autocheck, to a consumer, I believe that over the years, the practice has become industry standard for all pre-owned motor vehicles. wvcar.com 16
Unfortunately, we all know that motor vehicle history reports have limitations and that things can be missed or reported after a motor vehicle has been sold. Motor vehicle history reports have been known to change from the time dealer acquires a motor vehicle to when it is sold. First, please reinforce the procedure to provide a motor vehicle history report to all consumers on pre-owned motor vehicles, and make sure that the motor vehicle history report is current with the date of sale. If there are any negative deficiencies or events noted within the history report, they should be highlighted and the consumer should initial each highlighted item so that no confusion arises later that such information was disclosed. Also, I recommend either the use of a separate form or that a dealer creates a stamp that can be placed on each motor vehicle history report. I have used Carfax as an example here as it has the largest market share. I recommend that this disclosure read as follows: ATTENTION!!! This Carfax is for informational purposes only. We make no representations concerning the accuracy or completeness of this Carfax report. Carfax controls all content contained within this report and not this dealer. An automobile can be involved in an accident and Carfax not have it recorded. Most used cars have had paint work or some repair. You should rely upon your own inspection of this motor vehicle. We encourage you to carefully look over the motor vehicle. We have performed a West Virginia motor vehicle safety inspection to place a proper inspection sticker on the car. Please initial here to confirm that you have read this statement. Voluntary Protection Products Disclosures One of the more common issues we see is a consumer alleging that they were not informed that they purchased a particular voluntary protection product or that they were required to purchase it. Unfortunately, this is where documentation becomes so important. If you are using a menu selling system, screenshots can be printed and the customer initializes those items which they wish to purchase. We should have systems and training in place in which any voluntary protection product is clearly disclosed on the bill of sale and the retail installment contract. There should also be a separate document within the retail file specifically disclosing the voluntary protection product, its terms and conditions, pricing, and language reflecting that the purchase of the product is not required in order to obtain credit. As all of you are aware, there are current proposed FTC regulations that would significantly change how voluntary protection products are sold and likely significantly impact the ability to sell these products to the consumer. On the other hand, and as stated above, we want every customer to have an excellent experience and do not wish them to go away from the dealership thinking that they purchased something that they were unaware of or were somehow misled. It is so important to have proper signatures and proper disclosure procedures in place. Customer Relation Management (CRM) Notes Interestingly, customer relationship management systems, and the notes kept within, have become helpful in recent consumer complaints. CRM procedures can document conversations with a consumer about the motor vehicle post-sale and particularly any mechanical or service issues. Having a good CRM or business development center which handles these types of communications and recording of them can be helpful when disagreements arise about the purchase of a motor vehicle or subsequent service issues. I encourage us to use this tool not only as a way to develop customer relations, but to also provide an accurate record to assist us with consumer complaints. Recalls Recalls are becoming more and more common in the automotive industry. I wish to reiterate and emphasize our responsibility as it relates to the sale of new and used motor vehicles with an open recall. A new car may not be sold with an open recall. While this can create expense as it sits on your floor plan, there is federal law that does allow a dealer to recover the floor plan interest on the motor vehicle due to an open recall which the manufacturer simply cannot resolve or provide the needed part. There is no prohibition to selling a used car with an open recall. However, I encourage judgment to be used in this situation. If the used car is one of the same line make of new motor vehicles which you sell, then strong consideration has to be given to not selling that used motor vehicle until the recall is completed. However, every recall is not the same. Some relate to simple items and others are much more safety sensitive. Recalls that relate to safety-sensitive issues should not be sold if it endangers any consumer or the public. When we have used cars that are not of the line make for which we hold our sales and service agreement, these can become more difficult. Fortunately, there are governmental websites that clearly show if a vehicle has an open recall. Again, judgment must be used. If the recall is a safety-sensitive issue, then we need to exercise hesitancy and err on the side of not selling. Otherwise, a pre-owned car with a minor recall issue can be sold, but I would encourage it to be done with a proper disclosure form. The West Virginia Dealers Association does have a disclosure form for selling a used car with an open recall and, if you have not previously received it, do not hesitate to contact the Association or myself and we will provide it to you. The F&I office can create tremendous exposure for a motor vehicle dealer. I hope that this review and reminder of these commonly seen issues can assist you with your compliance efforts. As always, the Association is there to assist you and I encourage you to call with any compliance questions. Issue 1, 2023 17
BY THE NUMBERS I f you’re a business owner and you hire your children this summer, you can obtain tax breaks and other nontax benefits. The kids can gain on-the-job experience, save for college and learn how to manage money. And you may be able to: • Shift some of your high-taxed income into tax-free or low‑taxed income, and • Realize payroll tax savings (depending on the child’s age and how your business is organized). Plus, you can spend more time with your kids. A Legitimate Job If you hire your child, you get a business tax deduction for employee wage expenses. In turn, the deduction reduces your federal income tax bill, your self-employment tax bill (if applicable), and your state income tax bill (if applicable). However, for your business to deduct the wages as a business expense, the work performed by the child must be legitimate and the child’s pay must be reasonable. Let’s say you operate as a sole proprietor and you’re in the 37% tax bracket. You hire your 16-year-old daughter to help with office work on a full-time basis during the summer and parttime into the fall. Your daughter earns $10,000 during 2022 and doesn’t have any other earnings. You save $3,700 (37% of $10,000) in income taxes at no income tax cost to your daughter. She can use her standard deduction of $12,950 for 2022 to completely shelter her earnings. Your family’s taxes are cut even if your daughter’s earnings exceed her standard deduction. Why? The unsheltered earnings will be taxed to your daughter beginning at a rate of 10%, instead of being taxed at your higher rate. Hiring Your Minor Children for Summer Jobs By TETRICK & BARTLETT, PLLC wvcar.com 18
If you hire your child, you get a business tax deduction for employee wage expenses. How Payroll Taxes Might Be Saved If your business isn’t incorporated and certain other conditions are met, your child’s wages are exempt from Social Security, Medicare and FUTA taxes. Your child must be under age 18 for this to apply (or under age 21 for the FUTA tax exemption). Contact us for how this works. Be aware that there’s no FICA or FUTA exemption for employing a child if your business is incorporated or a partnership that includes nonparent partners. And payments for the services of your child are subject to income tax withholding, regardless of age, no matter what type of entity you operate. Keep Accurate Records Hiring your child can be a tax-smart idea. Be sure to keep the same records as you would for other employees to substantiate the hours worked and duties performed (such as timesheets and job descriptions). Issue your child a Form W-2. Contact us with questions about how these rules apply to your situation. Issue 1, 2023 19
PLANNING FOR DEALERSHIP SUCCESSION Dividing Multiple Dealerships Amongst Family By DUNCAN MOSELEY, Managing Director, Business Transition Advisory Group, Truist Wealth Middle-market business transitions are rarely simple, and family dealership transitions are among the most complex. Typically, a dealership begins after one family member opens a dealership and then decides to add more over time. Indeed, successful dealers say the best way to expand wealth in the industry is to increase the number of dealerships held. As the number of dealerships grows, so too does the number of family members involved in the business. An owner’s children may decide to work in the business, and some might even make it their career, while others may choose to work in another field. As their children become adults, dealership owners begin to wonder how they can plan for the succession of their business and the distribution of its assets amongst their children without risking the business itself or family relationships. When owners have multiple dealerships and several children working in the business, they ask, “Should I put my children in business together, should I separate the dealerships and divide them amongst my children, or should I just sell the business altogether?” When owners decide to keep the business, they want to know how to provide for their children with other careers. Take Marty, for instance. He started with one dealership and now has five, with a combined worth estimated at $150 million. Additionally, Marty owns the land where the dealerships are located, which is worth a combined $50 million. Outside the business, Marty has about $10 million in assets, including a $3 million home and a $3 million beach property enjoyed by the entire family. But most of his wealth — like the airplane available to all family members — is tied up in the business. wvcar.com 20
Marty has three children. Alton and Betty grew up working at the dealerships and want to continue working in the family business. While they have quite different personalities, neither can run the business alone. The third child, Carl, is happy with his own career outside the business. Marty’s total estate is $210 million, or $70 million per child. He has three goals: expanding the dealerships under the family name, giving each child a fair share of the wealth, and doing so in a way that maintains family harmony. However, accomplishing these goals may become complicated. For example: • If Marty divides his estate by three, there aren’t enough personal assets for Carl to receive an equivalent value to that of his siblings without including some business interest. • If all three children receive a third of the business assets, the dealerships may suffer if they disagree on business goals. Moreover, Carl may resent salaries paid to his siblings, and they may resent him for taking a third of the profits when he doesn’t contribute. • If Alton and Betty can’t run the business together, there isn’t an even number of dealerships to divide between them, and the dealerships may lose value by not being part of a larger group. • The airplane and beach home may present a source of conflict if certain family members lose access to an asset they’ve enjoyed for years. And so, Marty is left with two crucial questions: “How do I treat each child fairly? And does the division have to be equal to be fair?” Eight Key Points for a Succession Strategy 1. Interview your children to determine the intent and desires of each. Do they want to work in the business? Can they succeed together? Can they manage the business as a whole? 2. Educate your children about what it means to be in business together. 3. Explain how assets are not equal. Why might a fair share not be an equal share? Why is $20 million in cash not equivalent to a dealership valued at $20 million? 4. Set clear expectations on what your children must do to maximize the benefits of your plan. 5. Involve your children in the business so you can mentor them, assess their capabilities, and examine their ability to work together. 6. Guide your children on managing their own personal financial lives and assess their ability to use the business’s assets responsibly. 7. Set a plan for children not involved in the business. If your children can work together but don’t all want to work in the business, consider including the other children as non-voting owners, communicating clearly what they might receive based on your projected growth strategy. 8. Consider alternative ways to pass value to children who aren’t working in the business. You’ll need a different approach for a child who doesn’t want to be involved with the business or whose involvement would disrupt the family dynamics or the business. Consider options like a life insurance policy, a dividend recapitalization to extract value, selling a business asset (including one or more of the dealerships), or prolonging a growth strategy for the business to keep that child’s inheritance on par with the other children. Discuss your approach with your child, showing your commitment to a fair — but not necessarily equal — distribution to a child who has chosen to pursue other opportunities outside the business. What Are the Keys to Creating a Successful Plan? • Time: Allow enough time to prepare the proper strategy. A succession plan is neither created nor accomplished overnight. • Education: Ensure you and your children have a thorough understanding of the options available within your business and outside of it so you can structure an appropriate plan. • Communication: Set clear expectations for your children, make sure they understand your approach and get their buy-in at every step of the process. • Flexibility: Make your plan flexible enough to accommodate changes in your business operations, family dynamics, and personal goals of your children. The Truist Business Transition Advisory Group has helped many dealership owners prepare and successfully transition their businesses, breaking through roadblocks with an integrated approach that leads to success and peace of mind for owners and their families. Developing a transition that supports both the needs of your business and your family ensures your hard work will provide for generations to come. Ready to prepare your dealership succession strategy? Ask your relationship manager about how the Truist Business Transition Advisory Group can help you and your family prepare to successfully transition your dealership. Go to truist.com for more information. A succession plan is neither created nor accomplished overnight. Issue 1, 2023 21
WVADA VIP Charity Gala Night The WVADA VIP Charity Gala Night was held on Thursday, Feb. 2, 2023, at the Charleston Coliseum & Convention Center. Attendees had fun networking, enjoyed great food, and raised $32,000 for the Good News Mountaineer Garage. Proceeds from this event benefited them to help them fulfill their mission of creating economic opportunity by providing affordable and reliable transportation options to people in need. wvcar.com 22
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Brokerage | Leasing | Appraisal | Consulting 304-840-1781 | Quintie Smith at INVS@aol.com | 3818 MacCorkle Avenue SE Charleston, WV 25304 Office: 304-925-7000 | Website: realcorpinc.com An unmatched level of knowledge and experience in the real estate market. Commercial Real Estate wvcar.com 24
GOOD NEWS MOUNTAINEER GARAGE A Program to Get Behind G ood News Mountaineer Garage is a non-profit organization that began in 1999 when a group got together to plan a project to help West Virginians get on the road to independence. In most parts of West Virginia, not having a vehicle makes it difficult — and sometimes impossible — to hold a job. But it also limits access to the things we value, things like making it to the doctor when we’re sick, getting our kids to their baseball game, or buying groceries to feed our family. Many of us take these things for granted, but not everyone has that luxury. Good News Mountaineer Garage puts people on the road with the help of many individuals and organizations. We accept donations of vehicles that are repairable for a reasonable amount of money. These donated vehicles are then distributed to families with low income who need transportation to work. We also have a program dedicated to helping individuals through the process of applying for a loan, learning about credit, and purchasing a vehicle. If you are thinking about trading your vehicle for a new one, consider donating it to Good News Mountaineer Garage. If your vehicle is accepted, you will be eligible for a federal tax deduction and, possibly, a state tax credit. Scan the QR code to hear what Ron Wiles, Deputy Director of the nonprofit, has to say about what they do: https://www.goodnewsmountaineergarage.org This year’s WVADA Charity Gala proceeds were directed to this worthwhile program. WVADA has a long history of supporting this organization, and WVADA was pleased to do it again this year. Issue 1, 2023 25
32.6% 37.0% 30.4% 32.1% 36.9% 31.0% Dealers Agree on Value of Auto Shows BUILD CUSTOMER AWARENESS 38.9% 38.1% 23.1% No Impact DRIVE CUSTOMERS TO DEALERSHIPS INCREASE RETAIL SALES AT DEALERSHIPS DEALERS SAY THERE ARE NEGATIVE CONSEQUENCES FOR OEMS THAT LEAVE LOCAL AUTO SHOWS Leaving auto shows hurts customers awareness… …and drives down customer traffic, and… ...depresses retail sales. 8.5 Rating of the importance of local auto shows (out of 10) 8.0 Rating of the importance of local auto shows (out of 10) 7.9 Rating of the importance of local auto shows (out of 10) Significantly Hurts Customer Awareness Somewhat Hurts Customer Awareness No Impact Significantly Drives Down Customer Traffic Somewhat Drives Down Customer Traffic No Impact Significantly Depresses Retail Sales Somewhat Depresses Retail Sales 2023 West Virginia Auto Show and VIP Charity Gala “This year, our auto show and charity gala was hugely successful. It was held Feb. 2–5, 2023 at the Charleston Coliseum & Convention Center. We had a record turnout for the gala the night before and also during the car show with the attendance from the public. We’re back to our three-day event, and it was well received by everyone. It’s a pleasure to work on this event as it brings our community together, helps the dealers connect with new customers, and we get the opportunity to have a great time with family and friends while doing something wonderful for charity. I couldn’t be happier with the event. My thanks to all those that supported the show and gala and to those that worked so hard for the event to be successful.” Richard Stephens Richard Stephens is the owner of Stephens Auto Center in Danville, West Virginia. In 1975, Richard’s father bought the business and joined WVADA. Richard has been a secondgeneration dealer for about 25 years and has been the Chair of the annual WVADA Auto Show for most of that time. wvcar.com 26
The West Virginia Auto Show The West Virginia Auto Show was held Feb. 3–5, 2023, at the Charleston Coliseum & Convention Center. Attendees enjoyed looking at the fabulous new cars, trucks, and SUVs that were on display. This family-friendly event included train rides for the kids and fun for all ages. The Kanawha-Charleston Humane Association even brought a few furry friends looking for their forever home. Thank you to all of the exhibitors and sponsors who made this event possible. See you next year! Issue 1, 2023 27
IN THE COMMUNITY Dealerships are, in many cases, pillars of their communities and many have been in their local area for decades. Dealers are some of the most generous contributors to their local communities and WVADA is proud to highlight some of our members’ activities. After 30 years with Harry Green Chevrolet Nissan (and driving the Courtesy Van for the last 18), Sonny retired. If you’ve had the privilege of riding in the Courtesy Van with him or talking to him in the showroom, you know what a joyful spirit he has. We appreciate all his hard work over the years, and he will most certainly be missed! In addition, Joe will be retiring from the sales floor after 35 years and moving over to the Courtesy Van! Thank you, Sonny and Joe, for all your years with the dealership! You don’t get too many employees like our Service Director, Ron Byrd. We greatly appreciate your 39 years of service and all you’ve contributed to the dealership. Congratulations on your retirement! Congratulations to Janet Burton from Melrose Elementary School, January’s winner of WVVA and Cole Chevy’s Teacher Feature. WVVA and Cole Chevy are continuing to team up and recognize the best educators in Virginia and West Virginia. Each month, we bring you a “Teacher Feature”, and Cole Chevy presents the selected teacher with a check for $250. Andrew Matheny, VP of Sales & Community Outreach at Matheny Motors, and The Honorable Craig Blair, WV Senate President, officially cut the ribbon and opened the 2023 WV Auto Show. Thornhill Ford Lincoln partnered with the Love On project, which helps domestic violence victims and their children. They held a donation drive for the YWCA domestic violence shelters. Each person who donated was entered into a drawing for a $100 gift card. wvcar.com 28
Congratulations to Jeremiah Kiser and Timbrook Chevrolet for winning the 2022 Overall Dealership Performance for the fifth year in a row and Service Customer Satisfaction Awards, Bernie Nichols and Timbrook Honda of Winchester for winning the 2022 Sales Customer Satisfaction Award, and Dina Gilbert Wilson and Timbrook Kia for winning both the 2022 Fixed Operations Growth and Variable Operations Growth Awards. In February, River City Subaru donated 1,000 pairs of socks to the Huntington City Mission. They truly live up to their motto, “Subaru Loves to Help”! Chenoweth Ford in Clarksburg, WV was voted Best Service Department. They also received Best New Car Dealer and Best Used Dealer in Harrison County for the second year in a row as well as the Best Salesperson. Congratulations! Todd Judy Ford is always giving back to the community. They donated $5,000 to St. Jude Children's Hospital. Congratulations to our 2022 Myers Flyers winners! A total of 11 employees from our dealership, CMA’s Toyota of Martinsburg, were rewarded for their outstanding performance this past year. Issue 1, 2023 29
www.thenewslinkgroup.orgRkJQdWJsaXNoZXIy ODQxMjUw