2nd Quarter 2014, Volume 56, Issue 2
T H E O F F I C I A L P U B L I C AT I O N O F T H E O R A N G E C O U N T Y AU TO M O B I L E D E A L E R S A S S O C I AT I O N
Dealer Day
A BIG
SUCCESS!
HOW THE FRANCHISE
SYSTEM BENEFITS
CONSUMERS
OCADA 50TH ANNUAL
GOLF TOURNAMENT
THE FALLACY OF FLATS
FER R UZ Z O LLP
FER RUZZO & F ER R UZ ZO
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AT T O R N E Y S A T L A W | Our Practice Is Rooted In Strong Relationships
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Negotiation of computer hardware and software systems
Real estate and flooring loan transactions
Negotiation of Management employment
agreements and Management buy-ins
Customer Dispute Resolution including lemon law claims
Represents Dealers before the DMV & on protests
before the State of California New Motor Vehicle Board
Represented Dealerships in 10% of all Arbitrations in
California after GM & Chrysler Bankruptcies
All Attorney’s are members of National Association of
Dealer Counsel
When the time arises to talk about dispute
resolution, litigation, or transaction services
TOM FERRUZZO AV PREEMINENT® HEADS THE FIRM’S
BUSINESS group, a 40-year merger and acquisition practice that
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have ranged from the purchase of 31 chemical companies across
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JIM FERRUZZO AV PREEMINENT® MANAGING PARTNER on the
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Ferruzzo & Ferruzzo LLP
JAMES BARONE AV PREEMINENT® has a practice that consists
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not have the luxury of in-house counsel. He provides advice with regard
to a wide variety of legal matters that arise in both sophisticated and
day-to-day business operations. With over 30 years of legal experience,
Jim personally negotiated and successfully closed dealership transactions
with both private and public companies involving an aggregate of $3
billion in sales and an aggregate enterprise value in excess of $1 billion.
GREG FERRUZZO Head of the FIRM’S CIVIL LITIGATION team has been
with Ferruzzo & Ferruzzo since 1993. His primary focus has been civil
litigation and arbitrations for the Firm’s automobile dealership clients.
During this time, he has practiced in the area of civil litigation in both the
state and federal courts, which include successful jury trials, six successful
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New Motor Vehicle Board. He represents a variety of business clients in
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CONTENTS
PRESIDENT’S MESSAGE
OC AUTO INDUSTRY FAST FACTS
2013 ORANGE COUNTY AUTOMOBILE
INDUSTRY PROFILE
HOW THE FRANCHISE SYSTEM BENEFITS CONSUMERS
OCADA LEGISLATIVE LUNCHEONS
DEALER ALERT
DEALER DAY A BIG SUCCESS
2014 OCADA-PAC HONOR ROLL
OCADA
50TH ANNUAL GOLF TOURNAMENT
OC Dealer is a publication of Media
Communications Group and is the of ficial
publica t ion of Or ange Coun t y Au tomobile
Dealers Association. OC Dealer is published 4
times per year by Media Communications Group.
The statements and opinions expressed herein
are those of the individual authors and do not
necessarily represent the views of OC Dealer,
or its publisher Media Communications Group.
Any legal advice should be regarded as general
information. It is strongly recommended that one
contact an attorney for counsel regarding specific
circumstances. Likewise, the appearance of
advertisers does not constitute an endorsement
of the products or services featured by Media
Communications Group.
MANY THANKS TO OUR 5OTH ANNUAL OCADA GOLF
TOURNAMENT SPONSORS
MEET YOUR CANDIDATE PAT BATES FOR
SENATE DISTRICT 36
13
TECHNOLOGY COMPETITION
THE FALLACY OF FLATS
BEWARE OF CLAIMS THAT FLAT FEES ELIMINATE A DEALER’S
RISK OF VIOLATIING FAIR CREDIT LAWS
CA OSH APPEALS BOARD DECISION: EYE-WASH
STATIONS IN PARTS DEPT.
ORANGE COUNTY AUTO THEFT ADVISORY COMMITTEE
6
AN INTERVIEW WITH BRUCE HAMLIN
4 Calendar of Events
6 President’s Message
11 OCADA Welcomes Our New Dealer and
OC DEALER is a Publication of the Orange
Associate Members
County Automobile Dealers Association
Protect
Your Franchise – Support the
3737 Birch St., Suite
220
OCADA-PAC!
Newport Beach, CA 92660
19th Annual OCADA Automotive Technology
www.ocada.org
Competition
Phone: 949-428-5050
Fax: 949-428-5054
OCADA Annual Meeting
14
OCADA ANNUAL MEETING
Visit us Online!
12
13
14
OCADA
www.OCADA.org
3
Calendar of Events
BOARD OF DIRECTORS
PRESIDENT
Cliff Allen
Allen Cadillac GMC and Hyundai
VICE PRESIDENT
Allen Moznett
Toyota of Orange
TREASURER
John Oh
Lexus of Westminster
IMMEDIATE PAST PRESIDENT
Paul Conant
SEPTEMBER 9-10, 2014
NADA Washington Conference
Washington, DC
SEPTEMBER 16-17, 2014
Service Advisor Training Seminar
Presented by: Jeff Cowan
National University, Costa Mesa
OCTOBER 3, 2014
OCADA Annual Meeting & Auto Show Preview
Anaheim Convention Center, Anaheim
OCTOBER 2-5, 2014
Orange County International Auto Show
Anaheim Convention Center, Anaheim
Norm Reeves Honda Huntington Beach
DIRECTORS
Bruce Hamlin
Guaranty Chevrolet
K.C. Heidler
Kia Depot
Tom’s Truck Center
Michael Kitzmiller
Ford and Mazda of Orange
James Renick
Renick Cadillac Subaru
David Simpson
Simpson Buick GMC
Simpson Chevrolet of Garden Grove
EXECUTIVE
DIRECTOR/SECRETARY
John Sackrison
© 2014 Orange County Automobile Dealers Association | The newsLINK Group, LLC. All
rights reserved. OCDealer is published four times each year by The newsLINK Group,
LLC for the OCADA and is the official publication for this association.The information
contained in this publication is intended to provide general information for review and
consideration. The contents do not constitute legal advice and should not be relied on
as such. If you need legal advice or assistance, it is strongly recommended that you
contact an attorney as to your specific circumstances. The statements and opinions
expressed in this publication are those of the individual authors and do not necessarily
represent the views of the OCADA, 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. OCDealer is a collective work and as such some articles are submitted by authors that are independent
of the OCADA. While OCDealer 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 from OCADA or The newsLINK Group, LLC. For further information, please
contact The newsLINK Group, LLC at: 855-747-4003.
4
OCADA
Interesting OC Auto Fact:
OC Auto Dealers employ more than
11,600 individuals with a total payroll
of $614 million annually
every turn.
Reach
OC
car
buyers
Reach OC car buyers
at at
every
turn.
every
turn.
print to online to mobile media, our
ising vehicles fire on all cylinders.
ork of websites and newspapers
he most in-depth coverage relevant to
County communities.
From print
to online
media,
ourno one beats our lineup of advertising opportunities.
From print
to onlineto
to mobile
mobile to special
events,
Contact
ustargeting
today about
packages targeting the consumers you want to reach.
advertising
vehicles
firecustomized
on all cylinders.
customized
package
rs you want to reach:
Special Advertising Supplement
ative
adnetwork
units
Our
of websites and newspapers
Los Angeles Times Certified Pre-Owned Vehicles. Publishes March 12, space closes March 3.
le provide the most in-depth coverage relevant to
Orange County communities.
activation
LA Times Signature Events
Print And Digital
om publications
• Festival of Books
•
Los
Angeles
Times
Create a customized package targeting
• The Envelope Screening Series
• you
Dailywant
Pilotto reach:
consumers
• The Taste
•
Huntington
Beach
Independent
• Innovative ad units
• Laguna Beach Coastline Pilot
• Mobile
• Event activation
• Custom publications
To advertise or more information, contact Kevin Davis
at 714-966-7503 or kevin.davis@latimes.com
ertise in this section,
Kevin Davis at 714.966.7503
To advertise in this section,
n.davis@latimes.com
contact Kevin Davis at 714.966.7503
or kevin.davis@latimes.com
PRESIDENT’S MESSAGE
PRESIDENT CLIFF ALLEN
As we celebrated the 50th
Anniversary of the OCADA Golf
Outing in June, I noticed something
throughout the day that you don’t
often see, especially amongst
fierce competition, and that is
true camaraderie. I saw the same
camaraderie and cohesiveness
as a band of Orange County
dealers joined other dealers
from around the state to meet
with our legislators at Dealer
Day in Sacramento. While fierce
competition is not unusual, our
unique ability to play and work
together makes all the difference
when our industry faces a
challenge.
Recently there has been a lot of
discussions about the automotive
franchise system in the media and
6
OCADA
I am sure you have been asked
about it by a neighbor or friend.
While our franchise system has
been around for more than
100 years, it has changed and
adapted to meet the needs of
our consumers and manufacturer
partners. It will continue to evolve
to best serve those needs and will
thrive because it is the best way to
sell and service vehicles – period!
We provide competition,
convenience and advocacy for our
consumers. The manufacturers
benefit by outsourcing their retail
network and capitalize on our local
market knowledge, community
connections and the personal
pride we share in providing a great
sales and service experience for
our friends and neighbors in our
communities. Equally important
is the BILLIONS of dollars we
save them with the investments
we make in real estate, facilities,
inventory, staff, training, and the
liabilities we take on in navigating
a myriad of complex federal, state
and local laws and regulations.
What we do is costly, complex and
challenging and it cannot be done
over the internet or through factory
owned stores. While each of us
knows these challenges and why
the franchise system works, NADA
has put together a series of both
written and video materials that are
a great resource for us to reference
the next time the media or a
neighbor has a question about the
automotive franchise system. We
have included one example in this
newsletter and would encourage
you to visit NADA.org/getthefacts
for more great information on why
the franchise system is the best way
to sell and service vehicles.
Let’s continue to play and work
together, so we can remain united
when facing the challenges ahead!
PASSIONATELY SERVING
THE AUTOMOTIVE INDUSTRY
Located in Newport Beach, MLG is Orange County’s
premier boutique business law firm. We offer gifted
legal counsel that is solution-based and designed
to optimize your bottom line.
MLG has become well-known in the automotive
industry for business transactions and automotiverelated disputes. We have litigated cases against
nearly every automotive manufacturer, and have
been involved in structuring some of the most
significant automotive transactions to date.
Whatever your business needs may be, MLG is
uniquely positioned to provide you with exceptional
counsel. We look forward to serving you well.
Jonathan A. Michaels
Michaels Law Group, APLC
2801 W. Coast Highway, Suite 370
Newport Beach, CA 92663
Web: MichaelsLawGroup.com
Phone: 949.581.6900
OCADA
7
$&35*'*&%16#-*$"$$06/5"/54
50th Anniversary
1964-2014
“Value for your money, quality for your time”
10
OCADA
OCADA
11
Assemblyman Tom Daly
Dealers and Elected
Officials
Break Bread and
Discuss Issues
Assemblywoman
Sharon Quirk-Silva
Assemblyman Don Wagner
14
OCADA
TRADE UP TO
HIGH PERFORMANCE
THE OPTIMIZED VEHICLE REGISTRATION SOLUTION
99.5%
MORE DEALS ARE PROCESSED WITH FEWER ISSUES
+ With the industry’s highest rate of DMV compliance (99.5%), dealership partners’
paperwork is no longer audited by the DMV.
97.5%
MORE DEALS ARE PROCESSED ELECTRONICALLY
+ 97.5% of new deals are eFiled — the highest rate in the industry and 11% more
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SCHEDULE YOUR DEMO TODAY!
1-877-DMV-DESK • WWW.DMVDESK.COM
* Based on monthly reports provided by the California DMV. ** Based on California DMV penalty reports for all dealerships during the Fiscal Year 2012-2013.
DEALER ALERT
50.2%
Of Auto Show attendees
intend to purchase a new vehicle
in the next 12 months
Get these buyers to your booth, in your vehicles and
out to your dealership by asking your manufacturer to:
ØBring a Concept - #1 Consumer Draw
ØHost a Ride & Drive - Over 50% test drive a car at the show
ØIntro a Vehicle - This gets the media’s and consumer’s attention
The show is October 2nd-5th, so the clock is ticking to
16 OCADA
maximize
your opportunity with the Auto Show’s car buyers!
Dealer Day
A BIG Success!
Special Thanks to the Chairman’s Club Delegation
Who Joined us for CNCDA’s Dealer Day 2014!
Left to Right: Craig Whetter, Wilson Automotive Group; Paul Conant, Norm Reeves Honda Huntington Beach; Frank
Romano, Wilson Automotive Group; Valerie Romero, Tustin Toyota; Senator Mimi Walters, 37th Senate District; Scott
Paul, Jaguar Land Rover Mission Viejo; Dermot Brennan, Jaguar Land Rover Mission Viejo; David Wilson, Wilson
Automotive Group
Left to Right: Bruce Hamlin, Guaranty Chevrolet; Craig Whetter, Wilson Automotive Group; Frank Romano, Wilson Automotive Group;
K.C. Heidler, Kia Depot; Paul Conant, Norm Reeves Honda Huntington Beach
Left to Right: John Sackrison, OCADA; Cliff Allen, Allen Cadillac GMC
& Hyundai; Senator Mark Wyland, 38th Senate District; Stephen
Brown, Jaguar Land Rover Mission Viejo; Dermot Brennan, Jaguar
Land Rover Mission Viejo, Tom Ferruzzo, Ferruzzo & Ferruzzo, LLP.
OCADA
17
18
Cliff Allen
Roberta Hardin
Al Parajeckas
Paul Conant
AJ D’Amato
Mike D’Amato
Mark Dershem
Bruce Hamlin
K.C. Heidler
Mike Kitzmiller
Paul Lunsford
Pat Lustig
Bob Miller
James Renick
David Simpson
Paul Swim
David Wilson
Derrick Van Nieulande
Fred Angiuli
Jim Graham
Todd McNitt
Bill Selman
Ephraim Barcelo
Jon Gray
Jim Miller
Frank Shaygan
Norris Bishton
Matt Gunderson
Preston Minor
Damon Shelly
Frank Busal Jr.
Eric Hardin
Matt Moloci
Ahmad Soleman
Jeff Cappo
Dennis Hardin
Brad Mugg
Jim Speck
Sean Clancy
Jared Hardin
Frank Murphy
Penny Spellens
Matt Crandall
Roger Hogan
John Oh
Tim Tauber
David DeLillo
Dick Hsu
Mark Parkinson
Alex Tissot
Wayne Doddridge
Sam Klein
John Patterson
Gary White
Aaron Duport
Richard Landfield
Bill Piercey
Omar Z
Rick Evans
Paul Liu
RJ Romero
Todd Zaciek
Tom Ferruzzo
Daniel McKenna
George Saad
OCADA
OCADA
19
OCADA 50th
Annual Golf
Tourna
T
he 50th Annual OCADA Golf Tournament was a great day of golf enjoyed by all. Golfers arrived at the Mesa Verde Golf Course on a beautiful Monday morning and set off for a day of golfing, contests, and
festivities. Dealers and guests enjoyed reconnecting with old friends
and participating in all of the fun sponsored activities out on the course.
20
OCADA
After the tournament was finis
anticipated lawn bowling and
emony was action packed. G
while our emcee and chairma
announced the winners of the
ament
shed, guests gathered on the green for the much
d helicopter drop. The dinner and awards cerGuests walked away with over $10,000 in prizes
an, Al Parajeckas kept the crowd entertained as he
e tournament.
OCADA 50th Annual Golf Tournament
Winners Sheet
SCRAMBLE – Dealer Flight
SCRAMBLE –Associate/Guest Flight
1ST John Yakel
1ST Steve Gordon
1ST Garrett Herzog 1ST Caroll Unpingco
1ST Dan Leatherman 1ST Bob Koontz
1ST Craig Silva 1ST Alex Trachtman
Score: 56
Score: 60
2nd John Oh 2nd Bob Ludwig
2nd Brock Palmer 2nd Dan Palmer
2nd Bill Masciello 2nd Steve Bader
2nd Jeff Robinson 2nd Phil Gross
Score: 58 *Card-off
Score: 64
3rd James Renick
3rd Nick Telliard
3rd Leigh Silver
3rd MacKever Tedford
Score: 58
3rd Scott Swearingen
3rd Lewis Fisher
3rd Scott Mahl
3rd Craig Mosgowsky
Score: 65
Longest Drive
Dealer
Craig Silva
Associate/Guest
Andy Lewis
Ladies
Dana Cox
Straightest Drive
DealerSimpson Chevrolet
Associate/Guest Craig Silva
Ladies
Carol Unpingco
Closet to the Pin
Dealer
Don Lucarelli (6’10”)
Associate/Guest David Caso (6’10”)
Highest Scoring Team Overall
Fred Lopez
Troy Lopez
Brenda & Beverly
Score: 77
OCADA
21
Stop letting your
write-offs ride off.
Is your dealership taking advantage of all the tax deductions
and deferrals it’s entitled to claim? From new tangible
property regulations to changing state and local tax incentives,
opportunities abound for you to keep more of your money—and
accelerate your dealership’s cash flow.
We’ve been helping businesses ease their tax burden for more than
a century. Put our knowledge to work for you.
W W W. M O S S A D A M S . C O M /A U T O M O T I V E
Tax
Audit
Fraud Detection & Prevention
Dealership Valuations
Management Succession
Ownership Transition
MANY THANKS TO OUR
50th ANNUAL OCADA GOLF TOURNAMENT SPONSORS
COCKTAIL RECEPTION &
LAWN BOWLING SPONSOR
RAFFLE PRIZE SPONSOR
DINNER SPONSOR
LUNCHEON ON THE GREEN
SPONSOR
DIAMOND SPONSOR
GOLF CART & GOODIE BAGS
SPONSOR
PLATINUM SPONSORS
BREAKFAST & DRIVING RANGE
SPONSOR
HELICOPTER DROP
SPONSOR
SPORTS BAR & $10K HOLE-IN-ONE
SPONSOR
MARGARITA BAR SPONSOR
MICRO-BREWERY BAR SPONSOR
TIKI BAR SPONSOR
GOLD SPONSORS
And many other sponsors…
SILVER SPONSORS
Bank of America Auto Group
Comerica Bank
Fisher & Phillips, LLP
Motor Trend Auto Shows
Sauers Lopez Construction, Inc.
GOLDEN TEE SPONSORS
Automotive Compliance Consultants
Benefit Compass Insurance Services
Edmunds.com
MyCustomerData.com
WEX, Inc.
$25,000 HOLE-IN-ONE SPONSOR
MOC Products Co., Inc.
LONGEST DRIVE SPONSOR
Dealer Protection Group
STRAIGHTEST DRIVE SPONSOR
CNCDA
CLOSEST TO THE PIN SPONSOR
CU Direct Corporation
REGISTRATION GIFT SPONSOR
ADP Dealer Services
SUNSCREEN SPONSOR
CVR - Computerized Vehicle
Registration
TEE SPONSORS
Callahan Thompson Sherman Caudill
Celly Services
US Bank Dealer Commercial Services
Wells Fargo Dealer Services
GREEN SPONSORS
Orange Line Oil
Reynolds & Reynolds
Your Success...
Is Our Success
For over 40 years we have been committed to our dealer clients
providing them with the highest quality tax, accounting, consulting,
and management support services in a timely, responsive manner.
With several years of dealership experience at the shareholder level,
our firm’s pro-active outlook, our business management and strategicplanning expertise, and our focus on the importance of tangible
results ensures that you have a partner on your team that will help you
optimize your business operations, minimize exposure to taxes, and
assist you with estate planning and dealer succession opportunities.
Let us be part of your team and see how we can make a difference.
1067 Park View Drive | Covina, CA 91724 | (626) 858-5100 | Fax (626) 332-7012
Dale E. Duncan, CPA
Shareholder
(626) 858-5100, ext. 226
dduncan@rogersclem.com
George R. Applebaum, CPA
Shareholder
(626) 858-5100, ext. 215
gapplebaum@rogersclem.com
Scott M. Biehl, CPA
Shareholder
(626) 858-5100, ext. 229
sbiehl@rogersclem.com
Andy R. Jones, CPA
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(626) 858-5100, ext. 237
ajones@rogersclem.com
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OCADA
Meet Your Candidate
Pat Bates for
Senate District 36
The 36th Senate District in Orange County includes the
South County cities of Aliso Viejo, Dana Point, Laguna
Hills, Laguna Niguel, Mission Viejo, San Clemente, San
Juan Capistrano and Rancho Santa Margarita.
Favorite Quote:
“There is no limit to what a man can do or where
he can go if he doesn’t mind who gets the credit.”
President Ronald Reagan
Personal:
Pat has two children and resides in South County with
her husband, John.
Biography:
Pat Bates has a well-earned reputation as one of
California’s most accomplished public servants.
She was the driving force behind Laguna Niguel’s
campaign for cityhood and became its first Mayor
upon the City’s incorporation in 1989. She served
four terms as Mayor and then continued serving as
a City Council Member until her election to the State
Assembly.
In 1998, Pat ran for the State Assembly and was
overwhelmingly elected by Orange and San Diego
County voters to the 73rd Assembly District. In the
Assembly, she served as Vice-Chair of the Assembly
Appropriations and Assembly Health Committee;
and was the founding Chair of the Republican
Women’s Caucus. While serving in the Assembly,
26
OCADA
Pat was appointed to the prestigious Little Hoover
Commission; and Governor Arnold Schwarzenegger
appointed her to serve on his historic California
Performance Review Commission – responsible for
providing recommendations on reforming State
Government and its operations.
As a State Legislator, Pat was widely regarded by
her colleagues as a proven consensus builder – able
to bring people together and get things done for
the good of the state and her district – and worked
diligently to make our communities safer and more
livable.
In 2006, Pat ran for the Board of Supervisors, defeating
an opponent who spent over $4 million, out spending
Pat by a near 3 to 1 margin. On January 9, 2007, Pat
was sworn-in as Supervisor by former State Education
Secretary and Senator Marian Bergeson.
As only the fourth woman ever elected to the
Board of Supervisors, Pat has worked diligently to
protect taxpayers and improve her County’s fiscal
outlook; create business friendly policies to attract
jobs; maintain high levels of public safety; shorten
the timeline for delivery of transportation projects;
implement pension and retiree medical liability reform
measures and protect our coastal environment.
To learn more about Pat Bates, candidate for the 36th
Senate District, please visit www.BatesforSenate.com.
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The Fallacy of Flats
Beware of Claims that Flat Fees Eliminate a
Dealer’s Risk of Violating Fair Credit Laws
By Paul D. Metrey, Chief Regulatory Counsel, Financial Services, Privacy, and Tax for the National Automobile Dealers Association
S
ince at least early 2013,
the Consumer Financial
Protection Bureau (CFPB
or Bureau) has exerted
substantial pressure on indirect
finance sources to change the
way they compensate automobile
dealers for originating credit
contracts with consumers. The
Bureau has taken this action based
on its belief that finance source
compensation policies that allow
dealers to exercise discretion in
determining the amount they
earn for originating consumer
credit contracts (known as “dealer
participation” or “dealer reserve”)
create a “significant risk” that
certain groups of consumers
(based on race, national origin, or
other prohibited factors) will pay
more dealer participation than
other groups of similarly situated
consumers, in violation of the
federal Equal Credit Opportunity
Act (ECOA).
Because the Bureau believes
that dealer pricing discretion is
the source of this fair credit risk,
the Bureau declares that finance
sources can take one of two actions
to address it. A finance source can
constrain dealer pricing discretion
by imposing a series of controls on
that discretion and monitoring the
dealer participation earned in the
credit contracts it purchases from
1
CFPB Bulletin 2013-02 (Mar. 21, 2013).
28
OCADA
dealers. Alternatively, a finance
source can forgo this process
by eliminating dealer pricing
discretion and compensating
dealers with “another mechanism,
such as a flat fee per transaction,
that does not result in
discrimination.”1
But if finance sources were to adopt
a flat fee pricing mechanism,2
would that indeed eliminate dealer
pricing discretion and the risk of
unlawful pricing disparities that the
Bureau maintains results from such
as discretion? For the individual
finance source that adopts a flat
fee policy, the CFPB states that
the answer is “yes.” However, for
the dealers who sell paper to that
finance source as well as to other
finance sources, the answer is
decidedly “NO.”
The reason flat fees would not
eliminate dealer pricing discretion
– even if every finance source were
to adopt them – is simple. Dealers
typically sell credit contracts to a
variety of finance sources, each
finance source would set its own
flat fee, and dealers would exercise
discretion in selecting the finance
source to which they would sell the
contract. Thus, far from eliminating
dealer discretion, flat fees would
merely shift the primary exercise
of that discretion from intrafinance source discretion (that is,
the discretion a dealer exercises in
determining how many basis points
to add to the wholesale buy rate
offered by a single finance source)
to inter-finance source discretion
(that is, the discretion a dealer
would exercise in determining
which flat fee amount to choose
from among the competing offers
it received from multiple finance
sources).
Flat fees therefore would not
eliminate dealer pricing discretion.
This in turn means that, to the
This approach should appeal not
just to dealers, but also to indirect finance sources and the CFPB as
they consider ways to address
fair credit risks at the retail level.
extent such discretion creates
a risk of discrimination to the
consumer, flat fees would not
eliminate that risk. And, if this risk
of discrimination exists for the
consumer, then a risk of liability
for that discrimination exists for
the dealer.3 Consequently, in
identifying the adoption of flat fees
as a silver bullet for eliminating fair
credit risk, the Bureau has come
up with a purported solution for
individual finance sources and
individual finance sources alone. It
has not come up with the solution
for the other two parties to an
indirect financing transaction – the
consumer and the dealer.4
Because dealer pricing discretion is
a feature of the indirect financing
market that cannot and will
not be eliminated by Bureau
pressure on finance sources, then
dealers, finance sources, and the
government should consider
ways to realistically and effectively
manage the pricing discretion
that dealers exercise. And this
should be done in a manner that
addresses the fair credit risk to
each of the three parties to an
indirect financing transaction (the
consumer, the dealer, and the
finance source) while preserving
the overwhelming consumer
benefits that result from a highly
competitive marketplace.
Fortunately, a tool exists that can
help accomplish this objective. It is
the NADA Fair Credit Compliance
Policy & Program. The NADA
program is modeled on a very well
thought out fair credit compliance
program contained in Department
of Justice consent orders with
two automobile dealers in 2007.
A dealer who adopts the NADA
program generally establishes
a pre-set standard dealer
participation rate (SDPR) that the
dealer (i) adds to the wholesale
buy rate offered by the finance
source to which the dealer will
assign the credit contract and (ii)
includes in the offer of credit to
the consumer. The dealer follows
this approach for all offers of credit
to consumers that involve dealer
participation. However, the dealer
can deviate downward from its
SDPR and offer the consumer
more favorable credit terms if any
of several allowable deviations
are present. One example of an
continued on page 30
A “flat fee pricing mechanism” generally refers to a finance source policy that compensates dealers for originating consumer credit contracts
with a flat dollar amount per transaction, a percentage of the amount financed, or another fixed formula for determining the dealer’s compensation. These policies do not permit dealers to exercise any form of pricing discretion, such as offering consumers a discounted annual percentage rate (APR) in order to earn their business.
2
3
As with finance sources, dealers are exposed to significant liability for ECOA violations.
A broad industry adoption of flat fees in response to pressure from the CFPB would also create the risk of steering consumers to high-cost
credit contracts, as dealers would be incentivized to sell their credit contracts to the finance source that offers the highest flat fee (which likely
would result in higher APRs being paid by consumers).
4
OCADA
29
continued from page 29
allowable deviation – each of
which consists of a good faith, procompetitive factor that is unrelated
to the consumer’s background and
therefore consistent with ECOA –
is lowering the SDPR to “meet or
beat” a competing offer that has
been presented to the consumer.
The dealership employee making
the credit offer records the
actual dealer participation rate
included in the credit offer and
the reason for any deviation from
the SDPR. The dealer also appoints
a program coordinator who
reviews the transaction to ensure
it was properly executed and
who otherwise conducts training,
oversight, and reporting to ensure
the dealer’s fair credit compliance
program is faithfully carried out.
The NADA Fair Credit Compliance
Policy & Program is not required,
and has not been adopted as a safe
harbor, by any federal agency. Its
adoption by a dealer is completely
optional. Nevertheless, NADA
believes the program provides a
dealer who adopts it with a viable
means of managing the dealer’s
fair credit risk – and, in turn, the
fair credit risk presented to its
customers – while allowing dealer
pricing discretion to be exercised in
a standardized manner that lowers
the cost of credit for consumers.
This approach should appeal not
just to dealers, but also to indirect
finance sources and the CFPB as
they consider ways to address fair
credit risks at the retail level.
With regard to flat fee
compensation programs, dealers
can enter into them and NADA
expresses no opinion as to the
relative merit of any particular flat
fee or other compensation program.
The decision to enter into any
compensation program, whether
involving dealer participation, a
flat fee, or another compensation
arrangement, is an individual one
that the dealer should make in
consultation with its legal counsel.
However, NADA cautions dealers
to be wary of any claims that
flat fee compensation programs
somehow eliminate the dealer’s
risk of violating fair credit laws. For
the reasons stated above, these
programs do not eliminate that risk
for dealers who sell their contracts
to multiple finance source partners.
And, because they do not eliminate
that risk, dealers who enter into flat
fee compensation arrangements
must decide how they will manage
that risk, much as the NADA Fair
Credit Compliance Policy & Program
sets forth an optional mechanism
for managing the fair credit risk
associated with the compensation
programs involving dealer
participation.
This article was prepared by Paul D. Metrey, Chief Regulatory
Counsel, Financial Services, Privacy, and Tax for the National
Automobile Dealers Association.
Welcome to OCADA’s
New Associate Members
Dealer Protection Group offers industry-specific customized insurance and surety products, loss-control solutions, F&I programs and
related services, personal lines of coverage, and employee benefit plans to help mitigate risk and protect business and personal assets.
Contact Jason Winzen at (949) 208-8563
Enlightened Energy Services is dedicated to helping commercial, hospitality and industrial clients reduce energy waste and save money
with the use of energy-efficiency technology. By combining our expertise in building technology and building construction with utility
company rebate programs and third-party financing, we deliver smart refrigeration, lighting and controller solutions you need to maximize your return on investment.
Contact Jeremy Morlas at (714) 422-7773
M. Park Maintenance provides landscape maintenance, tree trimming, water management, concrete pads and show case design for
street display for new and used cars. An all new trained staff serves auto dealers needs and a management team is available daily for dealer
inspection and supervision of all maintenance needs.
Contact Chuck Sargeant at (714) 504-5144
Shorebreak Energy Developers provides solar electric solutions and are a turn-key operation. Everything is done in-house, including
design, construction, engineering, analysis and financing, helping dealers save a significant amount of money on usage.
Contact Nicholas Style at (949) 606-9040
Tax & Financial Group is a full service financial firm that offers investment strategies, risk management, estate planning, health insurance,
group benefits, business succession and exit strategies.
Contact Andrew Balzerit at (949) 223-8100
WEX, Inc. is the leading provider of corporate payment solutions and fleet fuel cards, specializing in the auto industry.
Contact Deb Crowley at (562) 221-7132
30
OCADA
JUST PUT IT ON
THE COMPANY
CARD…NOBODY
WILL NOTICE.
THEY’RE WORRIED
ABOUT OVERTIME.
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What you don’t hear
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YOU’RE REALLY
SHOWING OFF
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ASSETS TODAY.
I NEVER WEAR
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GOGGLES. THEY
LEAVE A MARK.
The things employees say when you’re
not around can cause legal troubles
for you. Fisher & Phillips provides
practical solutions to workplace legal
problems. This includes helping you
find and fix these kinds of employee
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10/4/13 10:09 AM
OCADA
31
SALES CAMPAIGNS THAT WORK.
BUENA PARK, CA NISSAN DEALER
18
VEHICLES SOLD*
10,000 PIECES MAILED
1 WEEKEND EVENT
5
VEHICLES SOLD*
2,477 PIECES MAILED
2 WEEKEND EVENT
23
THE RESULTS SPEAK
FOR THEMSELVES.
ALHAMBRA, CA VOLKSWAGEN DEALER
VEHICLES SOLD*
15,000 PIECES MAILED
2 WEEKEND EVENT
13
6,000 PIECES MAILED
1 WEEKEND EVENT
*REPORTED SALES INCLUDE ONLY VEHICLES THAT CAN BE SOURCED DIRECTLY TO THE MAILER. ALL EVENTS OCCURRED IN APPROXIMATELY THE LAST 60 DAYS. SALES REPORTS ARE AVAILABLE UPON REQUEST.
Call Westates today at 800.884.5657 or 714.523.7600 and we
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32
VEHICLES SOLD*
OCADA
Crowe Horwath LLP is the one of the largest
public accounting and consulting firms in the
dealerships. As a trusted resource to the industry,
Crowe provides retail dealers with audit, tax,
ru
advisory, risk, and performance services.
pd
United States with a specialization in franchised
at
ed
Extensive Retail
Dealer Experience
Our clients cite our industry expertise as the
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number one reason for engaging Crowe. The value
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our relationships with industry stakeholders, our
ng
credibility with creditors, and our use of technology
are all reasons they give for staying with Crowe.
w
ai
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To learn more about our retail dealer services,
visit crowehorwath.com/dealerships, or
contact Ron Sompels at 813.209.2401
or ron.sompels@crowehorwath.com.
Audit | Tax | Advisory | Risk | Performance
The Unique Alternative to the Big Four ®
Crowe Horwath LLP is an independent member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath International is a separate and independent legal entity. Crowe
Horwath LLP and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath International or any other member of Crowe Horwath International and specifically disclaim any
and all responsibility or liability for acts or omissions of Crowe Horwath International or any other Crowe Horwath International member. Accountancy services in Kansas and North Carolina are rendered
by Crowe Chizek LLP, which is not a member of Crowe Horwath International. © 2014 Crowe Horwath LLP
RET15012
CA OSH Appeals Board Decision:
Eye-wash Stations
in Parts Dept.
By Sam Celly, Celly Services, Inc.
B
ackground: Existing law
requires an employer to
provide eye wash stations
that comply with ANSI
standards. Eye wash stations must
be within 10 seconds walking
distance and not over 100 feet from
the potential point of hazard. Most
dealers have provided an eye wash
in the service department within
those stipulations.
Appeals Board Decision: The
CA OSH Appeals Board upholds
a lower Administrative Law
Judge’s (ALJ) decision
requiring that
eye wash
stations be provided where
employees are unloading and
opening boxes and containers of
hazardous materials. The Board
noted that leaks and spills occur
when packages are damaged
in transit and when employees
unpack shipping cases (Ref: 2013
CA OSHA App. Bd. Lexis 48).
Take Away: Parts department
employees open boxes of
hazardous materials, including
corrosive batteries, and stock them
on shelves in parts department.
Many times, used battery cores are
stored in parts as well. The battery
cores sometimes crack and leak
acid into the storage container.
Therefore, eye wash stations
must be installed within 100 feet
of hazmat handling and storage.
Dealers in other states may also
adopt this requirement regarding
eye wash stations.
MINIMUM PENALTY FOR
FAILURE TO REPORT
SERIOUS INJURY
Background: The
minimum penalty for
failure to report a serious
occupational injury, illness, or
accident to OSHA was increased
from $500 to $5,000. Both FedOSHA and Cal/OSHA require that
all serious injuries or fatalities to
employees from accidents related
to work be reported to the nearest
OSHA office even if the accident
34
OCADA
occurs on a weekend. A serious
injury or illness is defined as:
• Fatality, amputation,
disfigurement, or an incident
that leads to hospitalization of
an employee beyond 24 hours
(other than for observation).
(Cal/OSHA)
•
Fatality from a work related
incident or in-patient
hospitalization of three or more
employees as a result of workrelated incident. (Fed-OSHA)
The notification must be made
to the nearest Cal/OSHA or FedOSHA office by phone within 8
hours even if the injury or fatality
occurs on a weekend. The phone
number of the nearest Cal/OSHA
office is available on the labor law
poster placed on the employee
notice board. The Fed-OSHA
number is 1-800-321-OSHA (1800-321-6742). The law also
specifies that an employer, officer,
management official, or supervisor
who knowingly fails to report a
death to Cal/OSHA, or induces
another to do so, is guilty of a
misdemeanor punishable by up to
1 year in jail, a $1,500 fine, or both.
If the violator is a corporation or
LLC, the maximum fine is $150,000.
The law has provisions that require
Cal/OSHA to notify the appropriate
prosecuting authority when an
industrial accident results in a
serious injury, illness, or death.
Appeals Board Decision: Recent CA decisions have
eliminated the adjustments/reductions to this penalty by
the ALJ.
Take Away: An OSHA investigation following the
report of a serious injury is a certainty and detailed
description of the accident to OSHA may incriminate
the dealership leading to a criminal indictment. CSI,
therefore, recommends that the employer is well-served
by contacting their lawyer and being prepared for an
OSHA investigation following a serious injury. Train your
managers to report serious accidents to OSHA as required
under the circumstances listed above even if the accident
occurs after hours or on weekends. (Ref: T8CCR342 Ch.
3.2, AB 2837 & Labor Code 6423 and 29CFR1904.39(a))
Note: The contents of this article are merely for information only and not to be considered as legal
advice. Employers must consult their lawyer for legal matters and safety consultants for matters
related to safety. The article was authored by Sam Celly of Celly Services, Inc. who has been
helping automobile dealers comply with EPA & OSHA regulations since 1987. Sam received
Litigation Support & Expert Witness
Dealership Forensic Accounting
Valuations & Due Diligence
Mergers & Acquisitions
Embezzlement & Fraud Investigations
his BE (1984) and MS (1986) in Chemical Engineering followed by a J.D. from Southwestern
University School of Law (1997). Your comments/questions are always welcome. Please send
them to sam@cellyservices.com.
Let us Fix your Employee
Benefit Problems,
whether they be:
Cost
Employee Perception
Healthcare Reform
HR Compliance
Employee Communication
Health Risk Score
Call us for a Free consultation: 888.959.2869
35
OCADA
Your Dealership Compliance Partner
866.301.0593
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Our solution integrates with Reynolds CRM, Route One, Dealertrack and ADP.
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36
OCADA
Orange County Auto Theft
Advisory Committee
The top 5 Officers in Orange County receiving their awards at the Auto Theft Advisory Committee (ATAC) Vehicle Theft Recovery Officer of the Year awards ceremony.
O
n May 8th the OCADA proudly sponsored
the Annual Orange County Auto Theft
Advisory Committee (ATAC) Vehicle Theft
Recovery Officer of the Year Awards. The
event recognizes police officers with the most stolen
vehicle recoveries from each city culminating with
awards for the top 5 officers in the county. In 2013, 28
officers, representing almost every law enforcement
agency in Orange County, arrested a total of 186
vehicle theft suspects, and recovered 863 vehicles
exceeding a value of 5.25 million dollars (based on an
FBI average recovery value of $6,089 per vehicle)!
38
OCADA
This year’s recipients were:
1. Officer Kevin Flanagan - Anaheim Police
Department
2. Officer Tom Carney – Buena Park Police
Department
3. Officer Anthony “Tony” Reitz – Costa Mesa Police
Department
4. Officer Jose Herrera – Garden Grove Police
Department
5. Officer Scott Gump – Westminster Police
Department
In addition to sponsoring the event, OCADA presented
charitable contributions to the Boys & Girls Club of
America on behalf of the top five officers.
WHEN YOU ENGAGE
WITH BKCG…
For E-LEND, a vital part of their
business is the ability to deliver
reliable and efficient solutions to their
customers, solving financial problems
through a positive experience. They
developed an innovative financing
platform for the automotive industry
connecting buyers and sellers
through a secure and streamlined
process. E-LEND delivers results to
their customers the same way BKCG
delivers legal representation to the
businesses they partner with.
“BKCG UNDERSTANDS WHAT IS
IMPORTANT TO OUR BUSINESS,
OUR UNIQUE COMPANY DYNAMICS
AND THEY REPRESENT US AS IF
WE ARE THEIR PARTNER, NOT
JUST A CLIENT.”
– Pete MacInnis, Founder, Chairman and
Chief Executive Officer, E-LEND
E-LEND has a longstanding working
relationship with BKCG as their
corporate legal firm and leverage
their superior litigation skills and
intimate knowledge of the automotive
industry. BKCG provides sound legal
advice on all aspects of corporate
law and acts with the clients’ best
interest in mind. E-LEND relies heavily
on BKCG’s honest and direct counsel
when it comes to legal matters
impacting their firm.
Call today and let us represent you
in your next corporate legal matter.
949.975.7500
■
www.bkcglaw.com
You’re not just
getting a law firm,
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OCADA
39
prsrt std
us postage paid
salt lake city, ut
permit no. 508
This magazine is designed and published by The newsLINK Group, LLC | 801.746.4003
In the Service of Orange County
FRIDAY, JAN. 17, 2014
WHEELS
Ford’s 20 1 5 F-1 50 pickup truck uses an aluminum alloy that trims its
weight by 700 pounds.
FORD MOTOR CO.
In the Service of Orange County
NOT LETTING UP
SUSAN
CARPENTER
STAFF
WRITER
W
ith the Detroit automakers riding high on 2013 sales figures that saw Ford, General
Motors and Chrysler all notching impressive gains for the year, the pedal is only being
pressed closer to the metal at the North American International Auto Show in Detroit
this week. From Ford to Kia to Volkswagen, the world’s largest automakers showcased innovative
new vehicles and concepts that are redefining the increasingly competitive automotive landscape.
201 5 FORD F-1 50
Imagine the starting lineup of
the Detroit Lions – or any other
NFL team, for that matter. Now
take away three of those players.
That’s how much weight Ford is
removing from its bestselling
F-150 pickup.
When it goes on sale later this
year, the 2015 F-150 will weigh up
to 700 pounds less than the outgoing model by sheathing its steel
frame in high-strength aluminum.
The truck’s cab, doors, hood –
they’ll all be made from a militarygrade aluminum alloy that, Ford
says, doesn’t just lighten the load
but makes it more dent-resistant
while simultaneously increasing
the truck’s acceleration, hauling
and stopping power.
It’s a claim that’s as hefty as the
truck itself. Range Rover has already tested the theory with its
2014 SUV, which lost a similar
amount of weight through aluminum. But the Ford F-150 is the
first mainstream vehicle to do so.
Ford’s F series pickups have been
the bestselling light vehicle in the
country for 32 consecutive years.
Making vehicles lighter is a no
brainer for a huge market segment that needs to make significant strides toward the government’s 54.5 mpg-by-2025 fuel
economy standard. The question
is how much cost it will add and
whether it will impact a truck’s
durability. The first answer is unknown, since Ford hasn’t announced the price. It has, however, put the aluminum-bodied version of the best-seller through
more than 10 million miles of testing, including a stint in the grueling Baja 1000 and multiple crosscountry hauls.
Shocking as the aluminum idea
WE’RE ACCELERATING.
ARE YOU?
VOLKSWAGEN
Volkswagen’s Beetle Dune Concept is a bug that’s offroad-capable. Showing “potential
for a new production version,” according to VW, it features a wider body, oversize wheel
housings and a rear spoiler that swivels to accommodate outdoor equipment.
S E E S H O W ● PA G E 2
RIDING THE LIGHTING
A family’s idea for a bike that
glows with customizable LEDs
started with a broken taillight.
BY SUMMER ROGERS
STAFF WRITER
From Orange County, through Los Angeles and across the Inland Empire,
the Register reaches an estimated 4.2 million readers every week, including
over 940,000 people shopping for a new or used car.
And with more custom print options, digital opportunities, and exciting
new creative solutions, we will connect you to consumers looking to buy.
PHOTOS: JOSHUA SUDOCK, STAFF PHOTOGRAPHER
Forrest Smith, center, and his sons Jack, 9, left, and Ben, 8, have been developing bike frames that light up.
Grow your business with us!
• Newspaper • Magazine • Digital • Mobile • Custom Options
One day in 2011, Forrest Smith’s then 7-year-old
son, Jack, said the darndest thing after his bike’s
taillight died: “I wish my whole bike could light up.”
That got Dad thinking, “Yeah, why doesn’t the
whole bike light
up?”
The 46-year-old
Costa Mesa resident
was aware of all the
accessories that can
be put on a bike to illuminate it, but
there was nothing
out there that used
the frame as part of
the lighting process.
So that was the The bike lights are activated with big, red buttons
plan.
Once the Long Is- on the frame.
land native had the
idea to create such a system, he had to see if it was
plausible.
“One of the guys who works for me, Ken Spaulding, is experienced with designing bike components, so I threw the idea out there and we started
messing around making different prototypes,” said
➜
CONTACT US AND
GET STARTED TODAY
S E E L I G H T ● PA G E 3
Lake Trout
ltrout@ocregister.com
714-796-3855
In the Service of Orange County
Currently, the OC Register and Press-Enterprise reach 2.1 million adults in the L.A. DMA. With the launch of the LA Register, we estimate we will reach 4.2 million in the next few months based on the circulation plan and the current Register readers
per copy based on Scarborough Research, based on past week print and online readership. This does not include Unidos, our Spanish Product, which is expected to reach an additional 323,000 Spanish Preferred residents in the L.A. DMA.
20879