CATA News

Online shopping has redefined how business is done across sectors from consumer-packaged goods to real estate. The auto industry is no exception, as consumers and dealers increasingly move online.
 
Not to mention, recent public-health events are causing what was traditional showroom foot traffic to become dealership website traffic more than ever.
 
Current demands necessitate a digital strategy that goes beyond a simple online presence as we enter the era of the complete digital storefront.
 
Consumers are looking for a personalized, convenient, one-stop-shop experience. They don’t want to click through multiple pages to find relevant information about their next vehicle.
 
Modern online shoppers expect e-commerce to cater to them — not the other way around.
 
But what distinguishes the average dealer website from a complete digital storefront? Dealers who want to level-up their online customer experience should offer these six essential website components:

 

Website speed
Online attention spans are short. Shoppers have little patience when it comes to accessing information.
 
If a dealer webpage takes even a few too many seconds to load, the customer could already be browsing a competitor’s site.
 
Choose a vendor that consistently monitors speed index and First Contentful Paint (a metric for measuring load speed), and has cloud-based website hosting and third-party code integration standards.
 
Third-party code can greatly impact site-speed, increasing it up to 90%.  Ensuring a third-party provider complies with website integration APIs simplifies the processes of adding code to dealership websites. It is another step toward offering the fastest site possible.
 
Easier sorting and filtering
Dealer sites can offer a wide variety of information and inventory options, which sometimes makes it painstaking for shoppers to weed through multiple listings.
 
Improved inventory search sets that combine site wide free-text search and easy sorting and filtering create faster paths to content without page reloads, giving customers relevant information quickly and efficiently.
 
Customized inventory or service recommendations
Whether it’s in-store or online, shoppers want a buying journey that’s tailored to them and their various needs, whether sales- or service-related.
 
Dealer websites should provide custom inventory recommendations, along with slides, banners and coupons featuring relevant incentives and specials.
 
Consider targeting vehicle owners with service-related specials via slides and coupons.
 
Meet the car buyer or shopper where they are in their journey. A customer should feel like they are getting the same personal attention on a dealer website as they would at the store itself.

 

Positive customer reviews
Word-of-mouth stands the test of time. Testimonials play a vital role in a buyer’s decision, with 88% of consumers including some type of review into their final purchase decision.

To capitalize on this, leverage reviews as a selling tool via homepage integration for guaranteed visibility and instant validation.
 
Think of this as free advertising and a great way to showcase dealership staff performance. Bring the good of everything you do to the forefront, as well as proof of your consistent engagement with consumers through review responses.

 

Side-by-side vehicle comparisons
Customers want to feel confident in the dealership they choose for their next purchase. Dealers who are transparent with vehicle information establish a sense of shopper trust. By offering side-by-side vehicle comparison, a dealer not only satisfies a consumer’s need for information but makes the buying process fluid and simple. Comparison is a critical step on the path to purchasing. It always has been, even prior to shoppers going deep digitally. 

 

Website amplification

Traditionally, digital retailing leads have been used to bring informed and ready-to-buy shoppers into a dealership.

 

In today’s environment, dealers need to focus more on closing the deal online. By utilizing digital retailing, customers can view bank-supplied payments, evaluate trades and apply for credit without stepping foot in a dealership.

 

Shoppers who engage with digital retailing are six times more likely to purchase a vehicle. Today’s average shoppers visit over four websites during their buying process. Now, they have more time to spend online than ever before.

 

A shopper-centric experience that relates to customers’ personalized needs provides unmatched technologies and delivers information in an easily accessible way. Dealers who understand that are closer to providing the ideal online dealership experience, which now is an essential part of car shopping.

 

With so many businesses categorized as nonessential and thereby closed, there are fewer businesses for inspectors of the Occupational Safety and Health Administration to inspect. That means dealerships continuing to operate are bigger targets for inspectors.
 
Moreover, dealerships are relatively safe places for inspectors to visit.
 
Adam Crowell, the president and general counsel of CATA member ComplyNet, led an April 9 webinar, "Preparing Your Dealership for a Health & Safety Inspection," that walked dealers through what to expect if OSHA comes knocking. He noted that OSHA, already equipped with a $581 million budget for fiscal 2020, got $15 million more from the recent stimulus packages.
 
Visits from OSHA often are prompted by complaints by employees, and employers cannot retaliate against workers who report unsafe conditions. Upon their visit, OSHA compliance officers will present their credentials, including a photo ID and serial number. They will explain why a business has been selected for inspection and what its scope will entail.
 
"Keep in mind, if they are doing an inspection, they’re not just going to be looking at COVID-19 violations; they’re going to be looking for other things, too. And they’re not going to ignore things that they ultimately see," Crowell said.

Before any inspection, employers should review their written hazard communications plan, train workers exposed to hazardous chemicals, make sure several items are posted — an OSHA employee rights poster and an OSHA 300a, which summarizes any workplace injuries — and that the OSHA 300s and 301s, incident reports log of all injuries, is maintained.
 
"For franchised dealers," Crowell said, "the majority of violations involve hazard communication, followed by respiratory protections and some other general requirements. But hazard communication is always the most important.
 
"Employees have a right to know what sorts of chemicals they are exposed to that are hazardous, and they have a right to know how to respond to those: how to read a safety data sheet, what sort of personal protective equipment do they have?"

 

The OSHA general duty clause states that employers have a general duty to furnish each employee a workplace to that is free from recognized hazards that are likely to cause death or serious physical harm, including:
 • Personal protective equipment standard
 • Respiratory protection
 • Eye and face protection
 • Hand protection
 • Sanitation
 
The now-ubiquitous face coverings are meant to protect others from COVID-19, but they offer limited protection for the person wearing one. The N95 respirators provide air filtration but can become hot and stuffy and therefore could require a medical evaluation to determine a person’s fitness to wear one. Otherwise, the use could lead to a fall that triggers a workers’ comp issue. Neither protection should replace social distancing practices.
 
If a business requires its employees to wear a face mask, Crowell said the employer probably should provide them.
 
During the walk-around procedure, the employer has the right to be represented by someone who could need up to an hour to reach the business. Employers also can demand that the compliance officer obtain an inspection warrant before entering the worksite.
 
Should an inspection occur, employers should establish that they take worker health and safety seriously, and offer examples of social distancing measures they are taking during the pandemic — spreading out technicians, working staggered shifts, placing marks on the floor where people can stand, having hand sanitizers throughout the business, and more.
 
Dealers should conduct an inventory of all on-site chemicals, as they could be using chemicals not used before the pandemic.
 
Inspectors also are entitled to consult privately with a reasonable number of employees. "It’s going to be during that time that they’re going to start asking the employees questions about health and safety — whether or not there is hazard communication training, what is an SDS (safety data sheet), can you show me where the safety data sheets are ultimately kept?" Crowell said.
 
There are four OSHA citation levels: Other than Serious, Serious, Willful, and Repeat. The first two can carry fines up to $13,000 per violation; the latter two, nearly $135,000. There is no limit to how far back OSHA can look, so an offense committed today would be a repeat offense if the same matter was cited against the business 20 years ago.

 

Television and radio stations throughout Illinois are uniting in a statewide fundraising drive — Illinois Broadcasters Uniting Against Hunger — to combat hunger and food bank shortages in the wake of the COVID-19 pandemic. The fundraising goal is $1.5 million.
 
The Chicago Automobile Trade Association on April 8 donated $15,000 to the cause. Representatives of the CATA said the gift is just a natural extension of the good work the auto dealers do in their communities throughout the year.
 
Illinois broadcasters, in partnership with Feeding Illinois and the Illinois Broadcasters Association, encourage their viewers and listeners to contribute monetary donations that will go a long way to bolster dwindling food supplies at area food banks. Corporations and individuals looking for a way to make a difference in the lives of neighbors experiencing food hardship can contribute at feedingIllinois.org/unite or by texting FEEDIL to 91999.
 
"Illinois broadcasters have joined together during these extraordinary times," Illinois Broadcasters Association Board Chairman John Idler said. "The need to shore up food supplies and help feed the hungry has never been greater. The IBA has a long tradition of rallying our members in times of crisis. We have never been prouder to serve the people of Illinois."
 
Television and radio stations throughout the state of Illinois continue to broadcast stories underscoring the urgent need for food during the ongoing COVID-19 crisis. The goal of Illinois Broadcasters Uniting Against Hunger is to raise awareness and dollars so food banks can purchase the food they need to adequately serve the hungry in their local communities.

 

By Patricia Kelly, Senior Counsel, Better Business Bureau of Chicago

The BBB continues to work on behalf of dealers through the BBB/CATA advertising review program to maintain a level playing field in these trying times for all dealers. The introduction of the coronavirus into our society has created enormous challenges for dealers and businesses of all kinds. We hope that our efforts can assist in providing fairness for dealers in the current environment.
  
The BBB has recently seen a few issues that are troublesome. We want to point these out to dealers so they can avoid practices that may confuse or deceive consumers and negatively impact the marketplace.
  
We hope that dealers will avoid these advertising practices as they proceed in the coming weeks.
  
Dealers should avoid any claims that suggest or imply the dealer has any special affiliation with any government program or manufacturer program to assist consumers. Dealers must avoid any implication that such programs are, in fact, dealer programs. If any program is advertised, the correct source of the program should also be advertised. 
  
We recently have seen dealers advertising that "we" will make consumers’ monthly lease or loan payments for a period of time when the programs are manufacturer programs or lender programs. In fact, dealers are prohibited from making consumers monthly payments under Rules 475.530, Rebates, and 475.590, Gifts and Free Offers, of the Illinois Administrative Rules on Motor Vehicle Advertising.
 
Dealers also should avoid any claims involving making consumers’ monthly payments under any programs that involve dealer money for the same reasons.
  
Related to this is the avoidance of any implication that a dealer has a status related to any government or manufacturer program that is different than any other dealer. 
  
Other practices to avoid are the creation of any dealer program offering to assist victims of COVID 19, or their families, based on the sale, lease or financing of any vehicle as well as the trade-in.  Nor should any dealer program offer to assist first responders, police, fire or medical professionals plus any other kind of hospital staff. 
 
Finally, dealers should not tie any charitable contribution to the sale, lease or financing of any vehicle to a consumer.
  
The BBB hopes the next weeks and months play out for dealers in a way that is as beneficial as possible.  We understand how difficult the current environment is and would like to assist as much as possible.

 

A CATA member dealer was featured this month on the 10 p.m. TV news for running a sale and sending a direct mail piece that allegedly violated the Illinois Consumer Fraud Act and the Illinois Administrative Rules on Motor Vehicle Advertising.
 
Time and time again, the Illinois attorney general’s office has expressed concern that out-of-state companies peddling their products and services to Illinois dealers are only marginally knowledgeable of — and poorly motivated to comply with — Illinois laws. Oftentimes, an ad that ultimately runs is different or less complete than what was presented to and approved by the dealer.
 
Moreover, when these companies provide their own personnel to conduct sales, there is little or no control over the representations those people make to customers. Nonetheless, the dealer is ultimately liable for any false or misleading statements they might make.
 
No dealer wants his reputation besmirched by careless statements, so the CATA urges all dealers to exercise a very high degree of caution if they choose to deal with out-of-state vendors.

During the current shelter-in-place rules, dealers are increasingly providing paperwork and delivering vehicles at customer’s residences, often at the suggestion or urging of the manufacturers.
 
To avoid the implications of both federal and Illinois 72-hour cooling-off laws, it is imperative that the agreement to purchase, including all terms, be completed online or on the phone, and that the delivery of the paperwork and/or the vehicle is viewed as subsequent to the sale and done solely as a "courtesy" to the purchaser.
 
Accordingly, dealers should confirm that their digital programs contemplate a final sale. After full agreement by both parties online or on the phone, dealers should not attempt to "upsell" the customer on any additional items when delivering the paperwork and vehicle, as that "upsell" could in itself trigger the 72-hour cooling off period on the entire transaction.

William Koloseike, 92, founder of the Bill Kay Auto Group, died March 6 at his home in Naperville.
 
A veteran of the U.S. Marine Corps, Mr. Koloseike graduated from Loyola University and took a dealership sales position. He opened his first dealership in 1969 and expanded to nine stores in Illinois and Arizona before retiring in 2002.
 
Known as a tough but generous man, Mr. Koloseike volunteered for the Family Focus organization; and he worked with the Ignation Volunteer Corps, a Jesuit ministry. He was instrumental in the construction of St Aloysius Gonzaga Secondary School in Nairobi, Kenya. It is the world’s first high school for AIDS orphans.
A supporter of many charities and nonprofits, including Leo High School, Mr. Koloseike was honored by the school as a distinguished alumnus and Man of the Year in 2009.
 
Mr. Koloseike was a longtime member of Naperville Country Club. He was an avid traveler and active in many sports including golfing, skiing, scuba diving and hunting. His sense of adventure led him to actions ranging from riding motorcycles to zip lining to traveling across the country via RV.
 
Survivors include sons Mark and William; daughters Judy and Nina; 10 grandchildren; and five great-grandchildren. Memorials appreciated to JDRF.

 

Participation in the 2020 Dealer Workforce Study, one of the automotive industry’s largest workforce studies, has been extended to May 1. Participate at nadaworkforcestudy.com.
  
Dealer participation in the NADA report is vital and allows the NADA to analyze and provide such valuable information. The annual report helps new-car and –truck dealers to fine-tune employee compensation and benefits, promote retention, and stay ahead of the demographic curve.
  
All participating NADA Members will receive a complimentary custom report for their store. This exclusive report will include a Workforce Management Scorecard that compares and ranks the participating dealership against peer-level dealerships on key metrics related to compensation, retention and turnover.
  
In addition, all participants will receive a complimentary electronic copy of the 2020 Dealership Workforce Study National & Regional Trends in Compensation, Benefits & Retention Report.

Participants also will be granted access for up to one year to the Database Search Tool where they will find all of the data submitted for each of the past workforce studies. Questions can be directed to workforcestudy@nada.org.

 

Following the massive $2.2 trillion CARES Act to provide direct cash payments to Americans and expand unemployment, signed March 27, Congress already is eyeing a "phase four" legislative package to respond to the coronavirus pandemic amid continuing signs of economic devastation and widespread job loss.
 
House Speaker Nancy Pelosi said March 30 that members of the House could do committee work remotely to have legislation ready to approve when congressmen return from recess in late April.
 
The first three phases passed in lightning speed — especially for Washington, D.C. — in March. A recap:
 
Phase 1
Targeted at slowing the spread of the virus, Phase 1 allocates a significant portion of the funds to the Department of Health and Human Services for vaccination research, CDC emergency funding, medical equipment, and grants for state, local, and tribal public health agencies and organizations. In addition, the bill provides $20 million to the Small Business Administration disaster loans programs to support the SBA’s administration of loan subsidies that will be made available to affected small businesses.
 
Phase 2
The bill’s main feature is federally mandated paid leave available for certain employees. Employers with less than 500 employees are required to provide two weeks of paid sick leave to any employee unable to work due to quarantine, isolation, coronavirus symptoms, or who are caring for someone in quarantine or isolation, or who has a child in schools that have been closed. Tax credits will be provided to the employer to offset these costs. Employees are further protected under the bill as they cannot be required to find replacements or use other paid time off. Also provides paid sick leave, free coronavirus testing, expanded unemployment benefits, and food insecurity measures.
 
Phase 3
The CARES Act (Coronavirus Aid, Relief, and Economic Security) carries a number of provisions. Among them:
• Allocates $500 billion for assistance to businesses, states, and municipalities, with no more than $25 billion designated for passenger air carriers, $4 billion for air cargo carriers, and $17 billion for businesses critical to maintaining national security
• Creates a $349 billion loan program for small businesses
• Provides $1,200 to Americans making $75,000 or less ($150,000 in the case of joint returns and $112,500 for head of household) and $500 for each child
• Expands eligibility for unemployment insurance and provides people with an additional $600 per week on top of the unemployment amount determined by each state
• Expands tele-health services in Medicare
• Provides the Secretary of the Treasury with the authority to make loans or loan guarantees to states, municipalities, and eligible businesses

 

"There’s so many things we didn’t get in any of these bills yet in the way that we need to," Pelosi said after Phase 3 was passed.

 

It is believed that one or more of the OEMs might have recently changed a stair-step dealer cash program to straight dealer cash. If that is accurate, the amounts paid to the dealer would become taxable by the state of Illinois.

Basically, dealer incentives are taxable unless they are contingent at the time of sale on making or having additional retail sales (common stair-step programs), or contingent on some other qualifier, such as the dealer meeting certain manufacturer required marketing standards, facility standards, or sales and service department goals (CSI).
  
Illinois dealers must report taxable dealer incentives on Section 6, Line 1 of Form ST-556 as part of the sale of the vehicle reported on that return, one of several Illinois Revenue Department changes that took effect July 1, 2008.
• The changed regulations depict six distinct types of transactions; only No. 1 is taxable:

1. Taxable incentive payments [payment conditioned on the retail sale]: An automobile manufacturer offers a dealer incentive (sometimes referred to as "dealer cash") of $1,000 for each of a specific type of vehicle sold to a retail customer during March. A dealer sells that type of a vehicle to a retail customer for $38,000 during March. The retail sale of that vehicle qualifies the dealer for the manufacturer’s dealer incentive payment of $1,000. The purchaser pays the dealer $38,000 and the dealer receives $1,000 from the manufacturer. Since the $1,000 payment is conditioned only upon the sale of that vehicle and is not conditioned upon the sale of any other vehicle or vehicles, the taxable gross receipts received by the dealer for this sale are $39,000.

2. Nontaxable incentive payments [payment conditioned on the retail sale, but only after a certain number of sales have been made]: A manufacturer offers a dealer incentive payment (sometimes referred to as "dealer cash") of $1,000 for each of a specific type of automobile sold to a retail customer in March, but only if the dealer sells at least 15 of those types of vehicles during that month. A dealer sells that type of a vehicle to retail customer for $38,000 on March 25. The dealer had sold 14 of those types of cars earlier that month, and the March 25 sale qualified the dealer for the $1,000 manufacturer payment on that sale and each of the 14 previous sales. The gross receipts from the March 25 sale are $38,000 and the $1,000 manufacturer’s payment is not part of the dealer’s gross receipts from that sale. In addition, the $14,000 payment to the dealer for the sales of the previous 14 vehicles were contingent upon the sale of other vehicles and are not part of the gross receipts from the sales of those vehicles. If the dealer sold a vehicle on March 26 and qualified for another $1,000 manufacturer payment for that sale, the $1,000 manufacturer payment would not be part of the dealer’s gross receipts from that sale.

3. Non-taxable dealer hold-backs [payment not conditioned on the retail sale]: A manufacturer provides dealer hold-back payments to its automobile dealers of 3 percent of the invoice price of each vehicle purchased from that manufacturer. The dealer hold-back payments are paid to the dealer on a quarterly basis regardless of whether that dealer has sold at retail one or more of the vehicles it had purchased that quarter. The dealer purchases a vehicle from the manufacturer at the beginning of the month for an invoice price of $39,000 and then sells that car 10 days later at retail for $40,000. The manufacturer of that vehicle pays an amount to the dealer of $1,170 (3 percent of the invoice price of $39,000) at the end of the quarter as a dealer hold-back for that vehicle. Since the $1,170 hold-back payment to the dealer from the manufacturer is conditioned only on the purchase of the vehicle from the manufacturer (not on the subsequent retail sale of the vehicle), the taxable gross receipts received by the dealer for this sale are only $40,000.

4. Non-taxable [payment not conditioned on the retail sale]: A dealer normally offers a specific type of vehicle for retail sale for $40,000. The manufacturer agreed to pay an incentive to the dealer of $3,000 for each of those types of vehicles that the dealer purchased for resale from the manufacturer during a specified promotional period. After purchasing the vehicle during the qualifying period, the dealer offered the vehicle for sale at a reduced or discounted price of $37,000. A retail purchaser agrees to purchase the vehicle for $37,000. Since the $3,000 incentive provided to the dealer from the manufacturer is conditioned only on the dealer’s purchase of the vehicle from the manufacturer (not on the subsequent retail sale of the vehicle), the taxable gross receipts received by the dealer for this sale are $37,000.

5. Non-taxable performance bonus payments: A manufacturer establishes a performance bonus program for dealers who obtain a certain customer service index (CSI) score that demonstrates a substantial degree of satisfaction from their sales and service customers. Upon meeting such requirement, the automobile dealer will receive an incentive payment from the manufacturer calculated as 2 percent of the MSRP of the vehicles sold by that dealer during the incentive period. Because the bonus is contingent on the dealer meeting certain customer satisfaction goals as indicated by the CSI score, the manufacturer’s performance bonus would not be part of the gross receipts received by that dealer for the sales of those vehicles.

6. Non-taxable marketing or facility incentive payments: A manufacturer creates an incentive program for dealers who meet certain marketing standards or facility standards designed to increase sales and brand loyalty. Upon meeting such standards, the dealer will receive an incentive payment from the manufacturer calculated as a flat amount of $500 per vehicle sold by the dealer during the incentive period. Because the incentive is contingent on the dealer meeting certain marketing or facility standards set by the manufacturer, the $500 incentive payments would not be part of the gross receipts received by that dealer for the sales of those vehicles.