Building on Our Past Successes Why Dealerships Should Use Market Sales Data Protect Your Dealership From Fraud and Cyber Threats
304-624-5564 www.tetrickbartlett.com Driving excellence in all we do. Tetrick & Bartlett, PLLC Certified Public Accountants Consultants 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.
DILIGENT DECISIVE DETERMINED More than 35 years of dedicated service! Our nationally recognized automotive dealership attorney group specializes in West Virginia’s franchise law and regulatory compliance. Areas of expertise: • Consumer Litigation • Advertising • Employment • Manufacturer Disputes • Buy-Sell Transactions • Dealership Industry Compliance CALL TODAY! 304.344.0100 Or scan the QR code for more information. We will help YOU through any legal, regulatory and legislative challenge. JOHNNIE BROWN jbrown@pffwv.com
©2024 West Virginia Automobile Dealers Association (WVADA) | The newsLINK Group LLC. All rights reserved. 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. WVADA News is a collective work, and as such, some articles are submitted by authors who are independent of the WVADA. While 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. Contents PRESIDENT’S MESSAGE 6 BUILDING ON OUR PAST SUCCESSES By Jared Wyrick, President, WVADA SAVE THE DATE 8 CASINO ROYALE WVADA VIP Charity Gala COUNSELOR’S CORNER 10 THE ADVENTURE OF BUY-SELL By Johnnie Brown, Esq., Pullin, Fowler, Flanagan, Brown & Poe PLLC BY THE NUMBERS 14 CASH MANAGEMENT By Tasha Sinclair, CPA/ABV, Principal, Tetrick & Bartlett PLLC SAVE THE DATES! 16 MOTOR VEHICLE & TITLE REGISTRATION SEMINAR 17 WHY DEALERSHIPS SHOULD USE MARKET SALES DATA By Cross-Sell 2024 ISSUE 3 6 24 Jared Wyrick President Haley Justice Communications & Events Director WEST VIRGINIA AUTOMOBILE DEALERS ASSOCIATION 1618 Kanawha Blvd. E. Charleston, WV 25311 Phone: (304) 343-4158 wvcar.com MEET OUR TEAM 20 WEST VIRGINIA AUTO OUTLOOK 24 PROTECT YOUR DEALERSHIP FROM FRAUD AND CYBER THREATS Learn About the Latest Fraud and Cyber Threats, How To Defend Against Attacks and What To Do if You’re a Victim of Cybercrime By Truist Dealer Services 28 IN THE COMMUNITY 33 WVADA PREFERRED PARTNER PROGRAMS 34 EXECUTIVE COMMITTEE, BOARD OF DIRECTORS AND DIRECTORS AT LARGE Elaine Justice Office Administrator Jo Barker Office Administrator WVADA NEWS 4
Anticipate every turn In an industry that’s always evolving, your dealership can rely on our Dealer Financial Services team’s 90 years of experience to see what’s around the corner, forward-thinking insights to prepare you, and technology to keep you ahead of the curve. What would you like the power to do?® Marisa Carnevale-Henderson, marisa.carnevale-henderson@bofa.com business.bofa.com/dealer ©2024 Bank of America Corporation. All rights reserved. DFS-699-AD 5949042 Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value “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, derivatives, 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., which is a registered broker-dealer and Member of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. is a registered futures commission merchant with the CFTC and a member of the NFA.
PRESIDENT’S MESSAGE As summer has come to a close and we look ahead to the next few months and upcoming year, I wanted to take a moment to discuss some of the important initiatives that we will be focusing on. This next year, we will be placing a heavy emphasis on education. Our goal is to ensure that each of you is equipped with the latest industry knowledge and best practices. This will not only enhance your operations but also position us to continue our advocacy work effectively. Your engagement will be crucial as we navigate the evolving landscape of our industry. With that said, we will be sending out several surveys to all members. These surveys are vital tools that will allow us to collect data and insights directly from you — the heartbeat of the automotive industry in West Virginia. I cannot stress enough how important your participation will be. The more comprehensive our data, the stronger our case when we present our findings to legislators and other stakeholders. Thanks to your support and active participation, we’ve achieved significant victories in recent years, including increased doc fees, updates to franchise laws and adjustments to the antiquated B&O tax. This next year, while we will continue to monitor legislative activities closely, our focus will be on consolidating these wins and ensuring their proper implementation. We believe that a strategic, measured approach will best serve our members as we build on our past successes. Lastly, I’m pleased to announce that we will be compiling and distributing a comprehensive WVADA directory at the end of the year. This directory will provide you with key information and contact details of fellow dealers, industry partners, legislators and other important connections. Thank you for your continued dedication and support. Your active participation in our educational initiatives, events and legislative efforts is what makes WVADA strong. Together, we can ensure that our industry continues to thrive in West Virginia. Jared Wyrick President, WVADA Building On Our Past Successes WVADA NEWS 6
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SAVE THE DATE SPONSORSHIP OPPORTUNITIES AVAILABLE! FEBRUARY 20, 2025 Contact Haley Justice for more information at hjustice@wvcar.com. WVADA VIP CHARITY GALA https://wvcar.com/wp-content/uploads/2024/08/2024-Gala-2.pdf 8 WVADA NEWS
© 2024 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. 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, visit us at Truist.com/DealerServices.
COUNSELOR’S CORNER This will not be your typical issue of “Counselor’s Corner.” I will not be writing about distinct legal issues or updating you about burdensome laws and regulations. Instead, I wish to deliver a slightly different message and provide some constructive guidance about buying or selling a motor vehicle dealership. I have been doing buy-sell transactions for over 15 years and have been involved in 40 to 50 dealerships being bought and sold across the eastern United States. In the past five years, we have seen a significant increase in the buy-sell market. The particulars of any Letter of Intent, Definitive Purchase Agreement, Real Estate Purchase Agreement and ancillary documents are all subject to negotiation to fit each transaction’s unique situation. That said, the goal of this article is to provide you with a general understanding of the process and to highlight issues for you to consider along the way. Obviously, depending on whether you are a buyer or seller, certain aspects and positions are going to be more important than others. Regardless of which role you occupy, I hope this “Counselor’s Corner” will make the journey a little less stressful by showing you what lies ahead. To begin, be careful about relying on the national publications for multiples to determine a Blue-Sky number for your dealership. While they admittedly are a guide, they do have limitations. If you read the fine print, those published multiples are for dealerships that would sell at levels not commonly seen in West Virginia. Usually, but not always, the initial transaction document is a Letter of Intent. It should state that it is non-binding. It should also have provisions related to confidentiality and bind the seller to no further negotiations for a specified period of time as the definitive purchase agreement is negotiated. One common discussion is how detailed a Letter of Intent should be. It is important to always negotiate the price of assets for inclusion in the Letter of Intent. Articulating terms of how the parties determine the price of new cars, fixed assets and Blue-Sky numbers are key. If amounts can be agreed upon, it will prevent disagreements or other losses of momentum during the purchase agreement negotiations. Having these terms decided early also helps to prevent misunderstandings during the initial period when the parties are attempting to build trust. The Adventure of BUY-SELL By Johnnie Brown, Esq. Pullin, Fowler, Flanagan, Brown & Poe PLLC WVADA NEWS 10
Turning to the Asset Purchase Agreement, there are several significant topics you should consider: 1. Assets a. New Cars: Determining what is being paid for new cars is very important. Generally, a buyer will negotiate a price below or at triple net pricing, further reduced by floorplan financing credits and advertising. While commonly accepted, this can leave the selling dealer with a deficiency in the floor plan balance, depending on how many units are on the lot or in transit. During COVID, this was not a significant issue as inventories were sparse, but as the industry gets back to its pre-COVID inventory levels, this is the significant negotiating point that a dealer on either side of the transaction needs to consider. A seller should attempt to hold as close to the invoice minus holdback as much as possible. On the other hand, a buyer will certainly wish to have all the credits on a purchased unit. b. Used Cars, Service Loaners, Demonstrators: Sellers should consider whether they have an additional dealership to which used cars can be transported if a purchase price agreement cannot be reached with the buyer. If you do not own an additional dealership, then the buyer will have additional leverage on used car prices. Service loaners also need to be addressed. Various manufacturer programs will impact the price paid for service loaners. If the service loaners are titled in the dealership’s name, they are considered used cars, and prices will need to be negotiated accordingly. On the other hand, if not titled, they may be considered new cars and will be priced as such with some deduction for mileage. Importantly, the buying dealer does not wish to be without service loaners on day one of operations, and usually, these matters can be worked out by reasonable parties. c. Furniture, Fixtures and Equipment (FFE): Commonly, this asset category is all the furniture, office equipment, special tools, lifts, EV chargers, shop service equipment and everything related to the service department, and, if applicable, the body shop. I caution any selling dealer to be careful about agreeing to the price of depreciated value as most dealers have their furniture, fixtures and equipment depreciated near zero, although the FFE’s value is much more. Any relatively modern dealership will have hundreds of thousands of dollars in furniture, fixtures and equipment. The parties can generally agree upon a price to be paid for the FFE but may negotiate a provision to retain an appraiser to determine fair market value. d. Parts: The primary issue here is to determine what inventory is current and what is obsolete. Usually, the parties negotiate the time frame when a part will no longer be considered current (typically 12 to 18 months) and if non-returnable parts will be considered obsolete. The purchase price is usually at wholesale after an appraisal, but the parties can agree upon a price to avoid the cost of a parts appraisal. A dealer also needs to think about non-manufacturer parts and whether they will be purchased at dealer cost or a negotiated price after an inventory, which usually occurs the day before closing. Obviously, in the latter situation, the buyer has the leverage and if an amount can be negotiated in the purchase agreement, then disagreements can be avoided at the closing table. e. Assumption of Contracts: This can be particularly important for the selling dealer as many contracts do not allow for termination, even if the dealership is sold. This is particularly prevalent with dealer management systems, and I would encourage discussions with the buying dealer on whether these contracts can be assumed or perhaps some price agreed upon if not. Importantly, consider negotiating an addendum to your dealer management system contract so that in the event of the sale, the contract may be terminated with no penalty or at a significantly lower price. f. Intellectual Property: Discussions will need to be held about ownership and transfer of websites, phone numbers, etc. Does the selling dealer keep the dealership name or sell to the buying dealer? The point is that IP concerns need to be considered so that practical operational issues do not arise post-closing. 2. Representation and Warranties: It is difficult to provide too much in detail here due to the practical constraints of this article, but when negotiating warranties and representations, parties need to be thinking about how the representation is presented and, interestingly, how the word “knowledge” is defined for the party making the representations. Also, the seller must decide who will make the representations, the selling entity only or also the dealer principles. Warranties and representations will substantively address a party’s authority, clear title to assets, current litigation, tax liabilities, environmental issues, employees, employee benefit plans, working condition of assets and brokers, etc. 3. Indemnity: Indemnification is important for both parties; the buyers want unlimited indemnity from a seller while the seller is attempting to limit the length and scope of indemnity. Considerations can be made to what is referred to as a “basket.” This basically means that indemnification obligations do not accrue on behalf of any party until a certain agreed-upon amount of loss has occurred, for example, $10,000. Ultimately, dealers can negotiate caps on indemnity, limit timeframes for indemnity claims and establish procedures for handling indemnification requests. 4. Miscellaneous Considerations: These may include termination provisions, contingencies to close, deposits, escrow, allocation of the purchase price, confidentiality of the agreement and provisions to prohibit additional WVADA NEWS 11
negotiations by the seller until the agreed upon closing date passes. 5. Contemporary Close: If real estate is purchased, whether initially leased or purchased at closing, there should be provisions related to the requirements that the dealership and real estate closings must be contemporaneous or both transactions are voided. 6. Real Estate Agreement: In the real estate agreement, you will articulate a legal description of the real estate and set forth the proration of taxes, utilities, environmental investigations, inspections, expenses and transfer taxes. The latter is one of the most expensive items that occurs at closing. An average transfer tax for a West Virginia dealership can amount to tens of thousands of dollars. The parties need to negotiate who will pay these transfer taxes and fees. 7. Conditions for Closing: The purchase agreement will address certain conditions that are to be met before closing. For example, whether representations and warranties remain true and correct, approval by the manufacturer, financing obtained by the buying dealer, whether the buyer has been licensed by the Department of Motor Vehicles or the State Motor Vehicle Commission, execution of a dealer sales and service agreement, and whether any necessary third-party consents have been obtained. Once a definitive purchase agreement is signed, it generally takes 90 to 120 days to close. On the buyer’s side, there is significant required due diligence to perform regarding the seller’s dealership assets and financials, along with the real estate due diligence. A buyer is also focused on obtaining financing, floorplan and manufacturer approval. A seller, on the other hand, is focused on providing all the documents, keeping the transaction confidential until closing and trying to address the multiple vendors contracts that have to be addressed. There are a lot of moving parts. After manufacturer approval is received, closing can normally take place within two weeks. During this time frame, there is a whirlwind of activity between the buyer and the seller as details are being completed for lenders, manufacturers and other third-party vendors. The parties will need to be prepared to sign various documents at closing that may include a bill of sale, a deed or lease agreement, promissory notes, consulting or employment agreements, corporate resolutions, an assignment and assumption agreement, various representation letters and a post-closing agreement. The parties will also likely provide certificates of good standing/existence, updated schedules for the purchase agreement and closing notices to the manufacturer(s). As you can see, a buy-sell is quite an adventure. Sellers need to understand that even though the dealership may be sold, it is not uncommon that the three to six months post-closing will be rather busy wrapping up closing business details, working with state agencies to close various accounts, and perhaps handling consumer warranty issues and other matters that arose prior to closing. Further, manufacturers routinely do not release open accounts to the selling dealer for three to four months post-closing. This is normal and expected. I hope you find this article useful if you are considering such a significant decision. As always, the Association and I stand ready to assist you with any legal questions that may arise and help you stay in compliance with our challenging legal and regulatory system. “ The particulars of any Letter of Intent, Definitive Purchase Agreement, Real Estate Purchase Agreement and ancillary documents are all subject to negotiation to fit each transaction’s unique situation. WVADA NEWS 12
BY THE NUMBERS Cash Management By Tasha Sinclair, CPA/ABV Principal, Tetrick & Bartlett PLLC We’ve all heard the saying “Cash is King.” Have you considered the cash balance of your dealership may actually be costing you? If your working capital exceeds the manufacturer standards and debt covenant requirements, you may be paying unnecessary floorplan interest. In today’s interest rate environment, a little effort in managing cash flow can result in significant savings. For example, $1 million in excess operating cash from flooring units unnecessarily would cost the dealership $70,000 in one year at 7%. By maintaining a lean cash position and efficiently managing cash flow, you can reduce borrowing and related interest costs. Efficient cash flow management requires diligent adherence to sound business processes and management of the whole balance sheet. Every car dealer knows inventory management is vital in controlling floorplan interest. The following are a few suggestions for managing the remainder of the balance sheet and cash flow: • Manage the timing of floorplan payoffs, customer lien payoffs, and tax and title payables with the funding of the deal. Deals should be funded within 3-5 business days if all paperwork is completed accurately and in a timely manner. Most liabilities associated with a deal can be paid after the deal is funded without risking noncompliance. Continual review of contracts in transit and related liabilities will reveal if there are issues with following proper procedures in F&I. • Review factory receivables for incentives and warranty claims weekly. Are claims taking longer than they should to be paid? Are incentives being written off because of lack of follow-through? Remember, every dollar in a receivable is a dollar not available to pay down debt and reduce interest costs. • Take advantage of vendor discounts and avoid paying late fees and interest. Many vendors offer an early payment discount or charge interest at a high rate if payment isn’t made on time. Determine credit card balances are paid in full and on time each month. • Make all payroll tax, sales tax and pension payments on time and accurately. Penalties and interest charges by taxing authorities are expensive and should be avoided. • Lastly, take advantage of the floorplan offset accounts. Many lenders allow the dealer to “offset” 50% of their floor plan balance in this account, usually earning interest at the floor plan rate. These accounts are highly liquid and can be transferred to the operating bank account quickly if needed. If you have floorplan debt, determine the minimum cash balance with which you can operate and use the guidelines above to reduce debt and interest costs. Tasha Sinclair, CPA/ABV, is a principal of Tetrick & Bartlett PLLC and has been providing accounting, tax, valuation and consulting services to automobile dealers since 2002. Tetrick & Bartlett PLLC currently serves over 50 dealers in West Virginia, Virginia, Ohio and Pennsylvania, and is a member of the AutoCPA Group, a nationwide organization of CPA firms specializing in services to automobile dealers. Tasha can be reached at tsinclair@tb.cpa or (304) 624-5564. 14
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Motor Vehicle & Title Registration Seminar https://wvcar.com/wp-content/ uploads/2024/07/2024-October-Seminars.pdf TUESDAY, OCT. 1 Vienna Grand Pointe Conference Center 1500 Grand Central Ave. Vienna, WV 26105 WEDNESDAY, OCT. 2 Charleston Charleston Coliseum 200 Civic Center Dr. Charleston, WV 25301 THURSDAY, OCT. 3 Beckley Beckley-Raleigh County Convention Center 200 Armory Dr. Beckley, WV 25801 TUESDAY, OCT. 8 Wheeling Wheeling Country Club 906 Oglebay Dr. Wheeling, WV 26003 WEDNESDAY, OCT. 9 Martinsburg Hilton Gard Inn 65 Priority Dr. Martinsburg, WV 25401 THURSDAY, OCT. 10 Bridgeport Bridgeport Conference Center 300 Conference Center Way Bridgeport, WV 26330 SAVE THE DATES! If you have not already registered for the seminars, please do so as soon as possible. There are important updates to VRS concerning the integration of a new web-based hard plate system that will be discussed, as well as other information about vehicle titling, registration, transfer limitations and many more dealership titling and registration issues. Scan the QR code for the registration form. WVADA NEWS 16
Why Dealerships Should Use Market Sales Data By Cross-Sell In the competitive world of automotive sales, data is king. We say this a lot, but it’s true! Market sales data, in particular, holds immense value for dealerships. For car dealerships, market data can provide insights into industry trends, consumer preferences and sales performance. It can help dealerships identify areas of strength and weakness and make informed business decisions. But how can dealerships effectively utilize this data? How can it be turned into actionable strategies that drive sales and improve operations? In this article, we will explore why dealerships should use market sales data. We will share how this data can be analyzed and applied to enhance dealership competitiveness and success. Whether you’re a dealership owner, a sales manager or involved in strategic planning, this guide will provide valuable insights to help you navigate the data‑driven landscape of automotive sales. THE COMPETITIVE EDGE OF DEALERSHIP MARKET SALES DATA In today’s digital age, data is a powerful tool. For dealerships, market sales data can be a game-changer. This data can reveal industry trends and consumer behavior. It can help dealerships understand what customers want and how their preferences are changing. WVADA NEWS 17
By analyzing this data, dealerships can stay ahead of the curve. They can anticipate market shifts and adjust their strategies accordingly. In essence, market sales data gives dealerships a competitive edge. It enables them to make data-driven decisions that can enhance their sales performance and boost their market share. HOW SALES PERFORMANCE ANALYSIS BOOSTS DEALERSHIP SUCCESS Sales performance analysis is a key aspect of utilizing market sales data. It involves examining past and current sales figures to assess the dealership’s performance. This analysis can highlight areas of strength and weakness. It can reveal which strategies are working and which ones need improvement. By understanding their sales performance, dealerships can set realistic sales targets. They can also develop effective strategies to achieve these targets. In short, sales performance analysis can significantly boost a dealership’s success. It provides valuable insights that can drive sales growth and profitability. SALES ANALYSIS: TURNING DATA INTO STRATEGY Sales analysis is more than just crunching numbers. It’s about turning raw data into actionable strategies. By analyzing market sales data, dealerships can gain a deeper understanding of their business. They can identify patterns, trends and opportunities. This information can then be used to inform decision-making. It can guide everything from marketing campaigns to inventory management. In essence, sales analysis turns data into strategy. It empowers dealerships to make informed, data-driven decisions. IDENTIFYING TRENDS AND CONSUMER PREFERENCES Market sales data can reveal important trends. These trends can provide insights into consumer preferences and behaviors. For instance, data might show a growing preference for electric vehicles. Or it might reveal a trend towards certain vehicle models or features. By identifying these trends, dealerships can tailor their offerings to meet consumer demand. They can stay ahead of the curve and maintain a competitive edge. SETTING REALISTIC SALES TARGETS Sales targets are crucial for any dealership. They provide a clear goal to strive for. Market sales data can help set these targets. It can provide a realistic picture of what can be achieved. By setting realistic sales targets, dealerships can avoid disappointment and maintain motivation. They can also better manage their resources and plan for the future. PRICING STRATEGIES INFORMED BY DATA Pricing is a critical aspect of dealership operations. It can significantly impact sales and profitability. Market sales data can inform pricing strategies. It can reveal what consumers are willing to pay for certain vehicles or features. By using data to inform pricing, dealerships can maximize their profits. They can also ensure their prices are competitive and attractive to consumers. INVENTORY MANAGEMENT OPTIMIZATION Inventory management is another area where market sales data can be invaluable. It can help dealerships optimize their inventory to meet market demand. For example, data might show a high demand for certain vehicle models. Or it might reveal a surplus of certain vehicles in the inventory. By using this data, dealerships can adjust their inventory accordingly. They can ensure they have the right vehicles in stock to meet consumer demand. REAL-TIME DATA FOR AGILE DECISION-MAKING In today’s fast-paced market, agility is key. Dealerships need to be able to adapt quickly to changes. Real-time market sales data can provide this agility. It can allow dealerships to make quick, informed decisions. With real-time data, dealerships can stay on top of market trends. They can respond swiftly to changes in consumer behavior or market conditions. QUICK ADJUSTMENTS TO SALES TACTICS Sales tactics are not set in stone. They need to be flexible and adaptable. Real‑time market sales data can inform these adjustments. It can reveal what’s working and what’s not. For example, if a certain sales tactic isn’t yielding results, the data will show this. Dealerships can then adjust their tactics accordingly. ENHANCING CUSTOMER TARGETING AND PERSONALIZATION Personalization is key in today’s market. Consumers expect tailored experiences and offerings. Market sales data can enhance this personalization. It can provide insights into individual consumer preferences and behaviors. With this data, dealerships can target their marketing efforts more effectively. They can tailor their offerings to meet individual consumer needs. PREDICTING MARKET CONDITIONS AND PLANNING FOR THE FUTURE Market sales data is not just about the present. It’s also about the future. Dealerships can use this data to predict future market conditions. They can plan their strategies accordingly. This foresight can give dealerships a competitive edge and help them stay ahead of the curve. BENCHMARKING AND COMPETITIVE ANALYSIS Benchmarking is a crucial part of any business strategy. It involves comparing your performance to that of your competitors. Market sales data can facilitate this benchmarking. It can provide insights into how your dealership stacks up against others. With this information, dealerships can identify areas for improvement. They can strive to outperform their competitors. WVADA NEWS 18
SALES FORECASTING AND MARKET SHARE INSIGHTS Sales forecasting is another key aspect of dealership operations. It involves predicting future sales based on past data. Market sales data can inform these forecasts. It can provide insights into potential market share gains or losses. With accurate sales forecasts, dealerships can plan their inventory and marketing strategies more effectively. They can ensure they’re meeting consumer demand while maximizing profitability. CONCLUSION: THE POWER OF DATA‑DRIVEN DEALERSHIPS In today’s competitive automotive market, data is power. Dealerships that leverage market sales data can gain a significant advantage. They can make informed decisions, optimize operations and improve customer satisfaction. Ultimately, they can increase their profitability and market share. Embracing a data-driven approach is no longer optional for dealerships. It’s a necessity for survival and growth in the modern automotive industry. EMBRACING MARKET SALES DATA FOR DEALERSHIP GROWTH Market sales data can be a game‑changer for dealerships. It can provide valuable insights that drive growth and success. By understanding market trends, consumer behavior and sales performance, dealerships can enhance their strategies. They can better meet the needs of their customers and stay ahead of the competition. The potential benefits of using market sales data are immense. From improved sales forecasting to effective pricing strategies, the opportunities are endless. NEXT STEPS FOR IMPLEMENTING SALES DATA ANALYSIS So, how can dealerships start leveraging market sales data? The first step is to invest in a robust data analysis system. This system should be capable of collecting, analyzing and interpreting large volumes of sales data. It should provide real-time insights that can inform decision-making. Next, dealerships should train their staff on how to use this system. They should also develop a culture of data-driven decision-making. With these steps, dealerships can unlock the full potential of market sales data. To learn more about how Cross-Sell can help your dealership, please visit www.cross-sell.com. To access the WVADA Cross‑Sell website, please scan the QR code. https://www.cross-sell.com/wvada It's easy to donate your car, truck, van, or fleet vehicles and help a West Virginia family get back on the road to work. GOOD NEWS MOUNTAINEER GARAGE GoodNewsMountaineerGarage.com 304.344.8445 1.866.Givecar The program is being presented with financial assistance as a grant from the West Virginia Department of Health and Human Resources registered with the West Virginia Secretary of State's Office. GOOD NEWS MOUNTAINEER GARAGE GoodNewsMountaineerGarage.com 304.344.8445 1.866.GIVECAR 1.866.448.3227 The program is being presented with financial assistance as a grant from the West Virginia Department of Health and Human Resources registered with the West Virginia Secretary of State’s Office. CHARLESTON I MASONTOWN WVADA NEWS 19
WEST VIRGINIA AUTO OUTLOOK In-depth analysis of the current and historical trends of vehicle sales across the state of West Virginia. DATA SOURCE: REPORT SPONSORED BY: Source: Cross-Sell Interactive New Retail Sales Only, Fleet Sales Removed Q3 '23 VS Q3 '22 13.47% -9.01% 50.96% -22.57% Q4 '23 VS Q4 '22 Q1 '24 VS Q1 '23 Q2 '24 VS Q2 '23 WEST VIRGINIA QUARTERLY NEW LIGHT VEHICLE REGISTRATIONS PERCENT CHANGE VS YEAR EARLIER New vehicle registrations in the state increased by more than 50 percent in Q1 ‘24 compared to Q1 ‘23. Q2 ‘24 declined by 22 percent compared to Q2 ‘23; however, it saw more than 15 percent increase over Q1 ‘24. PERCENT CHANGE IN NEW AND USED VEHICLE REGISTRATIONS YTD ‘24 thru July vs YTD ‘23 January-July DATA SOURCE: www.cross-sell.com WEST VIRGINIA AUTO OUTLOOK NEW VEHICLES ALL USED VEHICLES 3-YEAR-OLD OR NEWER USED VEHICLES 4- TO 6YEAR-OLD USED VEHICLES 7- TO 10YEAR-OLD USED VEHICLES 33.38% 68.18% 20.71% 27.83% -2.30% In-depth analysis of the current and historical trends of vehicle sales across the state of West Virginia. WEST VIRGINIA NEW LIGHT VEHICLE REGISTRATIONS 2022 - YTD 2024 2022* 2023 2024** The West Virginia used vehicle market grew by more than 33 percent in the first half of this year compared to this timeframe last year. As shown on the graph to the side, the three year old or newer market had the biggest growth with more than 68 percent increase, this consists of model years 2021 or newer. *Historical data for West Virginia began mid-year 2022; Jul-Dec 2022 New vehicle registrations are on track to reach about 75K in the state for this year. This would be an almost 16 percent increase compared to 2023. 32,015 64,785 37,543 **January 2024 - July 2024
Source: Cross-Sell Interactive New Retail Sales Only, Fleet Sales Removed WEST VIRGINIA NEW CAR AND LIGHT TRUCK REGISTRATIONS SECOND QUARTER ANNUAL TOTALS Registrations Market Share (%) Registrations Market Share (%) Q1 '24 Q2 '24 % Change Q1 '24 Q2 '24 Change 2022 2023 % Change 2022 2023 Change TOTAL 14,893 17,233 15.71 32015 64,785 102.36 Jul-Dec Jul-Dec Toyota 2635 2907 10.32 17.69 16.87 -0.82 6547 12549 91.68 20.45 19.37 -1.08 Ford 1774 2129 20.01 11.91 12.35 0.44 3676 7459 102.91 11.48 11.51 0.03 Chevrolet 2191 2682 22.41 14.71 15.56 0.85 4599 9672 110.31 14.37 14.93 0.56 Subaru 1412 1659 17.49 9.48 9.63 0.15 3246 5383 65.83 10.14 8.31 -1.83 Kia 1043 1041 -0.19 7 6.04 -0.96 2175 4305 97.93 6.79 6.65 -0.14 GMC 602 751 24.75 4.04 4.36 0.32 1266 2605 105.77 3.95 4.02 0.07 Honda 867 1019 17.53 5.82 5.91 0.09 1414 3388 139.60 4.42 5.23 0.81 Jeep 531 747 40.68 3.56 4.33 0.77 1669 2825 69.26 5.21 4.36 -0.85 Hyundai 684 806 17.84 4.59 4.68 0.09 1623 3286 102.46 5.07 5.07 0 Ram 462 514 11.26 3.1 2.98 -0.12 1150 1942 68.87 3.59 3 -0.59 Nissan 747 767 2.68 5.02 4.45 -0.57 1569 3427 118.42 4.9 5.29 0.39 Mitsubishi 391 400 2.30 2.63 2.32 -0.31 805 1857 130.68 2.51 2.87 0.36 Volkswagen 234 302 29.06 1.57 1.75 0.18 528 887 67.99 1.65 1.37 -0.28 Mazda 164 180 9.76 1.1 1.04 -0.06 226 586 159.29 0.71 0.9 0.19 MercedesBenz 128 104 -18.75 0.86 0.6 -0.26 272 579 112.87 0.85 0.89 0.04 Tesla 102 111 8.82 0.68 0.64 -0.04 155 243 56.77 0.48 0.38 -0.1 Buick 107 97 -9.35 0.72 0.56 -0.16 310 593 91.29 0.97 0.92 -0.05 Dodge 111 249 124.32 0.75 1.44 0.69 319 638 100.00 1 0.98 -0.02 Lincoln 72 66 -8.33 0.48 0.38 -0.1 91 185 103.30 0.28 0.29 0.01 Lexus 122 128 4.92 0.82 0.74 -0.08 191 442 131.41 0.6 0.68 0.08 Volvo 78 62 -20.51 0.52 0.36 -0.16 139 232 66.91 0.43 0.36 -0.07 BMW 84 93 10.71 0.56 0.54 -0.02 127 270 112.60 0.4 0.42 0.02 Audi 76 85 11.84 0.51 0.49 -0.02 193 372 92.75 0.6 0.57 -0.03 Cadillac 59 66 11.86 0.4 0.38 -0.02 124 221 78.23 0.39 0.34 -0.05 Acura 59 64 8.47 0.4 0.37 -0.03 48 135 181.25 0.15 0.21 0.06 Land Rover 33 45 36.36 0.22 0.26 0.04 44 107 143.18 0.14 0.17 0.03 Wagoneer 32 40 25.00 0.21 0.23 0.02 132 186 40.91 0.41 0.29 -0.12 Chrysler 35 54 54.29 0.23 0.31 0.08 110 238 116.36 0.34 0.37 0.03 Rivian 13 2 -84.62 0.09 0.01 -0.08 0 10 0 0.02 0.02 MINI 7 7 0.00 0.05 0.04 -0.01 6 24 300.00 0.02 0.04 0.02 Genesis 7 12 71.43 0.05 0.07 0.02 13 22 69.23 0.04 0.03 -0.01 INFINITI 7 3 -57.14 0.05 0.02 -0.03 9 15 66.67 0.03 0.02 -0.01 Alfa Romeo 4 3 -25.00 0.03 0.02 -0.01 2 3 50.00 0.01 0 -0.01 Porsche 7 9 28.57 0.05 0.05 0 8 41 412.50 0.02 0.06 0.04 Jaguar 6 13 116.67 0.04 0.08 0.04 19 21 10.53 0.06 0.03 -0.03 Fisker 2 4 100.00 0.01 0.02 0.01 0 0 0 0 0 0 INEO 2 1 -50.00 0.01 0.02 0.01 0 0 0 0 0 0 Maserati 1 0 -100.00 0.01 0 -0.01 1 2 100 0 0 0 DETAILED RESULTS FOR ALL BRANDS IN WEST VIRGINIA MARKET BRAND REGISTRATIONS The table below shows a new light vehicle (car and light truck) registrations in West Virginia. Figures are shown for the First and Second Quarters of 2024, and annual totals in 2022 and 2023. Historical data for West Virginia begins mid-year (July) in 2022. www.cross-sell.com
Source: Cross-Sell Interactive New Retail Sales Only, Fleet Sales Removed www.cross-sell.com ACURA Registrations Increased by More Than 21 Percent for Seven Brands; Toyota WV Market Share Exceeded 17 Percent BRAND SUMMARY PERCENT CHANGE IN BRAND REGISTRATIONS YTD ‘24 THRU JULY VS. YTD ‘23 (TOP 30 SELLING BRANDS IN WV) TESLA GENESIS JAGUAR LINCOLN LAND ROVER VOLKSWAGEN MAZDA BMW VOLVO LEXUS HONDA DODGE KIA CADILLAC GMC FORD CHEVROLET RAM TOYOTA AUDI HYUNDAI JEEP SUBARU NISSAN MITSUBISHI MERCEDES CHRYSLER WAGONEER BUICK FORD WEST VIRGINIA AND SURROUNDING STATES MARKET SHARE YTD ‘24 THRU JULY (TOP 15 SELLING BRANDS IN WV) CHEVROLET TOYOTA SUBARU KIA GMC JEEP HONDA RAM NISSAN HYUNDAI VOLKSWAGEN MITSUBISHI MAZDA DODGE WEST VIRGINIA VS. KY, OH & VA 155.36% 136.04% 120.00% 90.91% 76.77% 54.24% 24.60% 20.66% 20.61% 18.80% 16.26% 14.61% 7.99% 2.37% 0.74% -0.68% -1.54% -1.72% -6.96% -8.93% -10.55% -11.68% -15.01% -17.37% -18.19% -18.59% -25.07% -25.50% -26.45% -39.89% 12.29% 11.5% 15.09% 11.62% 17.28% 12.23% 9.63% 5.11% 6.45% 6.67% 4.28% 2.83% 4.15% 3.49% 5.98% 12.83% 3.03% 2.15% 4.54% 4.32% 4.65% 5.56% 1.67% 2.26% 2.43% 0.53% 1.07% 2.39% 1.12% 0.97%
Source: Cross-Sell Interactive New Retail Sales Only, Fleet Sales Removed TOP SELLING MODELS IN EACH SEGMENT IN WEST VIRGINIA - NEW RETAIL LIGHT VEHICLE REGISTRATIONS (YTD 2024 THRU JULY) Compact Cars Mid-Sized Cars Large Cars Luxury Cars Make Model Registrations % MS Segment Make Model Registrations % MS Segment Make Model Registrations % MS Segment Make Model Registrations % MS Segment Toyota Corolla 336 34.9 Toyota Camry 599 25.2 Subaru Impreza 168 24.1 Acura Integra 32 12.6 Toyota Corolla Hybrid 137 14.2 Kia Forte 376 15.8 Subaru Legacy 158 22.6 Acura TLX 20 7.9 Volkswagen Jetta 94 9.8 Honda Civic 240 10.1 Honda Civic 119 17 MercedesBenz E-Class 20 7.9 Mitsubishi Mirage 79 8.2 Hyundai Elantra 223 9.4 Kia K5 109 15.6 MercedesBenz C-Class 15 5.9 Toyota Corolla Hatchback 78 8.1 Nissan Sentra 196 8.2 Hyundai Sonata 80 11.5 Lexus IS 350 14 5.5 Sporty Cars Minivan Compact SUV Small SUV Make Model Registrations % MS Segment Make Model Registrations % MS Segment Make Model Registrations % MS Segment Make Model Registrations % MS Segment Dodge Challenger 144 14.6 Kia Carnival 176 31.83 Chevrolet Trax 973 8.41 Chevrolet Trailblazer 578 20.75 Subaru WRX 143 14.5 Toyota Sienna 133 24.05 Subaru Forester 910 7.87 Ford Bronco Sport 438 15.72 Ford Mustang 133 13.5 Honda Odyssey 106 19.17 Subaru Crosstrek 898 7.77 Jeep Compass 312 11.2 Dodge Charger 125 12.7 Chrysler Pacifica 57 10.3 Toyota RAV4 711 6.15 Kia Seltos 310 11.13 Chevrolet Corvette 77 7.8 Chrysler Pacifica Plug-In Hybrid 20 3.62 Toyota RAV4 Hybrid 642 5.55 Mitsubishi Outlander Sport 176 6.32 Full-Sized SUV Compact Pickup Full-Sized Pickup Make Model Registrations % MS Segment Make Model Registrations % MS Segment Make Model Registrations % MS Segment Subaru Outback 916 11.6 Toyota Tacoma 901 33.5 Chevrolet Silverado 1500 1429 32.1 Ford Explorer 555 7.03 Chevrolet Colorado 376 14 Ford F-150 1122 25.2 Toyota 4Runner 472 5.9 Ford Maverick 359 13.4 Toyota Tundra 689 15.5 Honda Pilot 340 4.31 Nissan Frontier 275 10.2 GMC Sierra 1500 639 14.3 Toyota Grand Highlander 326 4.13 Jeep Gladiator 237 8.8 Ram 1500 444 10 BEST SELLERS IN PRIMARY SEGMENTS Chevrolet Silverado 1500 Retains Top Spot in West Virginia New Vehicle Market MODEL RANKINGS The table below shows the top five selling models during the first seven months of this year in 11 segments. In addition to unit registrations, it also shows each model’s market share in its respective segment. SMALL CARS MID-SIZE & LARGE CARS LUXURY CARS COMPACT/MIDSIZE PICKUP FULL SIZE PICKUP COMPACT SUV FULL SIZE SUV LUXURY MID-SIZE SUV www.cross-sell.com TOYOTA TACOMA CHEVROLET SILVERADO 1500 TOYOTA COROLLA TOYOTA CAMRY ACURA INTEGRA MERCEDES GLE-CLASS SUBARU OUTBACK CHEVROLET TRAX
Auto dealerships are attractive targets for fraud and other cyber threats. Adopt the mindset of a tech-savvy criminal and it’s easy to see why — dealerships have sizable deposit balances, make frequent high-dollar transactions (i.e., ACH, checks and wire transfers), and have numerous employees who use systems with sensitive customer data. Dealer management systems contain a treasure trove of information that hackers can sell or use to commit other crimes: social security numbers, bank account information, credit applications and scores, and insurance data. And auto dealers’ information technology systems often lack the latest firewalls, updates and security patches, giving criminals an easy path to cyber fraud. Given the sluggishness of digital security measures adoption, hackers know the odds of a successful cyberattack on a dealership are high. Roughly half (47%) of dealers surveyed lack confidence in their level of cybersecurity protection.1 Similarly, 46% said their dealership had experienced a cyberattack in 2023 that negatively impacted business operations or finances.2 With threats so prevalent, dealers must work to better understand the complex fraud and cyber threat landscape — and adopt proactive strategies to effectively mitigate their risk. UNDERSTAND THE VARIED THREAT LANDSCAPE Although many types of fraud pose risks for auto dealers, payments fraud is most common. Four out of five organizations reported an attempted or completed payments fraud in 2023 — a 15% increase from 2022.3 Of those, 65% involved checks, making checks the most fraud-prone form of payment. ACH debits were next at 33%, while fraudsters used wire transfers (24%), commercial credit cards (20%) and ACH credits (19%) somewhat less often. Business email compromise (BEC) is the primary source of attack for payments fraud.3 Relying on social engineering attacks, scammers trick employees into providing sensitive information, making fraudulent payments or opening email attachments that contain malware. Criminals can then enter a system and gain access to sensitive data or impersonate another member of an organization. Regularly review your online user entitlements to make sure rights are legitimate and appropriate. All users do not need access to everything, particularly personally identifiable information such as your customers’ social security numbers. Accounts payable and treasury teams are primary marks for BEC since they manage and approve outgoing payments. Protect Your Dealership From Fraud and Cyber Threats LEARN ABOUT THE LATEST FRAUD AND CYBER THREATS, HOW TO DEFEND AGAINST ATTACKS AND WHAT TO DO IF YOU’RE A VICTIM OF CYBERCRIME By Truist Dealer Services WVADA NEWS 24
Regardless of the method, it’s important to uncover and remedy a problem as quickly as possible. Fraud doesn’t always trigger immediate alarm bells, but the longer it’s left undetected, the higher risk it presents. A recent survey showed that organizations identified 31% of reported fraud incidents within one to four weeks, while 22% took a month or more to discover.3 Early detection is important, but preventing fraud and cybercrimes from happening in the first place is ideal. All major dealer management systems provide a daily reconciliation module, which is an effective tool to catch fraud faster. As an example, it recently took a dealer 45 days to identify a fraudulent attack, which could have been found in 10 minutes if they had reconciled their account. SHORE UP YOUR DEFENSES Auto dealers, like all businesses who handle consumer financial data, must comply with the Federal Trade Commission’s Safeguards Rule, which took effect in 2023. Your defensive actions should align with the security measures you’ve already taken for compliance with the Safeguards Rule. Consider people, processes and technology to create a comprehensive plan. People are your first line of defense. Make employee education a top priority. Train all staff to recognize the latest social engineering schemes and follow these security basics: • Don’t open suspicious emails or unexpected email attachments. • Be cautious when sharing personal or dealership information online. • Conduct online business via secure networks and internet connections only. • Verify any suspicious requests that purportedly come from staff, vendors, suppliers or other business partners. • Design financial process tasks to maintain strict segregation of duties — the staff member who initiates a task should never be the same one who approves it. Processes to safeguard company finances are another critical defensive measure. Start with the payment methods you choose. When possible, replace checks with a more secure medium, including credit cards, ACH and Real-Time Payments (RTP®). And always store checks safely, even canceled checks. If your dealer management systems have the capability, moving to Integrated Payables is another way to reduce financial risk. Integrated Payables allows you to streamline the payments process by sending all vendor payments in a single, secure electronic file to the bank, saving you from having to upload multiple files. As the bank distributes the payments based on predefined criteria, it can flag potentially fraudulent transactions. (Note: Seek expert help to ensure smooth platform integration with dealer management systems.) Others target legitimate, outsourced service providers or vendors to get into an organization’s systems or pose as a new vendor to obtain fraudulent payments. Synthetic fraud based on false identity is an increasing threat as well. Be Alert to Synthetic Fraud Synthetic fraud is on the rise at auto dealerships, up 38% in 2023.1 Criminals use stolen or “synthetic” identities to facilitate vehicle theft by securing approval for a loan in someone else’s name. Synthetic fraud combines information available for purchase with stolen or falsified documents to “prove” an identity. Don’t let today’s decisions lead to surprising repercussions. RECOGNIZE COMMON RISKS QUICKLY Auto dealers identified email phishing, including BEC, as the most prevalent cyber threat in 2023.1 Other top threats dealers experienced in 2023 included (in descending order): 1. Ransomware. 2. Infection by PC viruses and malware. 3. Theft of business data. 4. Criminals enter email and systems using stolen or weak passwords. WVADA NEWS 25
Follow these safety guidelines when making wire transfers: • Don’t rely on emailed or faxed instructions alone. Always obtain voice verification from an authorized person, at a known phone number, to confirm wire instructions. • Implement dual controls before approving a wire transfer, have one person receive the instructions, and another authorize the release. • Use the bank’s wire template for repetitive transactions. • Be suspicious of urgent requests. Scrutinize ACH payments: • Verify authenticity and ownership of bank routing and account numbers. • Perform daily reconciliation on ACH debit accounts. • Separate file processing from file creation and maintenance. • Restrict access to payment data forms and records. • Use Truist ACH Fraud Control to set parameters for allowed transactions and receive daily activity reports. Designate specific bank accounts for distinct types of transactions. Segregating accounts makes it easier to spot suspicious activity. You can block wire and ACH activity on accounts not designated for those purposes. Technology is the third part of your cybersecurity program. Reduce the risk of fraud activity and cybercrime by following these technology best practices: • Keep technology systems, devices and software updated with the most current security protections. Install patches and updates as soon as they are available. • Regularly back up dealership data and store backups securely. • Limit access to devices and sensitive data to authorized individuals. • Use single sign-on systems (SSO). • Mandate the use of strong passwords and two-factor authentication. • Establish a cyberattack response plan. • Get cyber insurance and work with your insurance provider to further reduce risk. CREATE AND PRACTICE AN INCIDENT ACTION PLAN Designate an incident response team to develop and maintain your response plan. The team should extend beyond your IT department and include senior managers, as well as essential staff from key operational areas. Make sure you know who you’ll contact for external resources and expertise. Your go-to list could include: • Cyber incident response experts. • Communications and public relations professionals. • Data forensics experts. • Data privacy legal counsel. • Your cyber insurance broker. • Other professionals as needed. Once your plan is complete, remember to keep a copy offline — a cyberattack could lock you out of computer files and systems. Don’t just file your plan and then forget about it. Test it with practice runs that simulate various incident scenarios. Conduct periodic cyberattack drills that provide team members an opportunity to practice their response steps. This kind of “dry run” improves familiarity with response procedures, can help you identify potential barriers to execution and can uncover gaps in the plan. It can also reduce stress levels after an actual incident, helping you act more quickly and effectively. Use these simulated incidents to update and improve your response plan. ACT IMMEDIATELY WHEN AN ATTACK OCCURS Fast action is important if your dealership undergoes a significant cyberattack. This incident to-do list can help you move from problem to solution as quickly as possible. 1. Activate your incident response team — Make sure that the individuals designated with oversight duties are all on board. a. Consult your insurance broker to discuss insurance policy incident notification requirements. Your insurance broker can work with your cyber insurance carrier to outline the appropriate first steps and the optimal process to engage carrier-approved vendors. This ensures you’ll have the right resources charging the right rates and that you’re adhering to insurer terms and conditions, so you receive your full policy benefits. b. Engage your legal team. Some dealers will involve approved breach counsel at the onset to determine appropriate actions that fulfill legal obligations, manage potential liabilities and prepare for the possibility of future litigation or regulatory investigation. 2. Conduct a thorough damage assessment and implement the appropriate response plan. a. Identify the threat and try to isolate affected systems to prevent further damage. Resolve the vulnerability that allowed the incident, if possible. b. Preserve and document evidence related to the incident so it will be available for future prosecution or law enforcement purposes. In your haste to restore data, take care not to destroy evidence that could help identify the attackers and be used in their prosecution. c. Decide how to address the most urgent priorities, such as mitigating the impact of the incident, repairing systems, restoring data and strengthening security. 3. Work closely with your forensic investigation firm and other incident response experts to assist with the negotiation process, prepare for secure and lawful WVADA NEWS 26
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