- Due to the compliance issues being spotlighted by the Consumer Financial Protection Bureau’s (CFPB) and the changing trends in the industry, it has never been more vital for dealers to remain educated and updated on current industry movements – no matter the size of their dealership.
- With an abundance of information out there that dealers need to know, it’s important that they take advantage of the different resources for training and regulation updates provided to them.
- Continuing a journey of lifelong learning and improvement can help dealers stay profitable.
Special Feature by Lori Kahre, Nextgear Capital
In today’s world, education is more important than ever for dealers. Due to the compliance issues being spotlighted by the Consumer Financial Protection Bureau’s (CFPB) and the changing trends in the industry, it has never been more vital for dealers to remain educated and updated on current industry movements – no matter the size of their dealership.
One valuable educational resource for dealers to take advantage of is the different state and national associations. A glimpse at the CIADA though shows the limited participation of dealers in state associations, with just over 1,400 members in a region that comprises more than 7,000 independent dealers.
“One thing we hear quite often is that dealers don’t have time to go to different events hosted at either the state or national level,” said John Brown, executive director of Carolinas Independent Automobile Dealers Association (CIADA). “However, dealers can’t afford to not stay abreast of what’s happening in the industry.”
With an abundance of information out there that dealers need to know, it’s important that they take advantage of the different resources for training and regulation updates provided to them.
State and national associations like the NIADA provide many different educational opportunities for dealers – usually for free! For example, the Georgia Independent Automobile Dealers Association (GIADA) provides workshops on compliance and best practices for dealers – at no charge to its members.
“If you want to make it long-term in this industry, it’s important to stay ahead of the game,” said Billy Graham, owner of Graham Auto Sales in Loganville, GA. “The state and national associations are there to aid dealers in learning best practices to ensure that dealers are successful.”
Many state associations are advocates for training. For example, the CIADA requires its members to receive six hours of training per year – much of which is provided for free.
“The whole idea behind training is to make sure our dealers are engaged because laws always change, and our dealers need to know what is going on,” said Brown.
At the national level, the NIADA provides resources such as its Certified Master Dealer (CDM) course, taught by NIADA director of dealer development Joe Lescota. Through this program, dealers gain invaluable knowledge about their business practices and increasing the bottom line.
“My own experience over 30 years tells me there are too many dealers who do not understand their own finances,” said Lescota. “They can tell if they have made a profit or a loss but they do not know how they got there. Profit margins are so slim today that any mistake a dealer makes could be deadly on the bottom line. So this program helps dealers understand and spend a lot of time on profit and finances.”
2. Regulatory changes
According to the South Carolina Department of Consumer Affairs, the top three reported dealership violations in Q1 of 2015 included issues with closing fees, failure to list all disclosures and too small of advertising font. These regulatory issues are not going away, which means it’s imperative for dealers to stay updated.
“The Federal Trade Commission (FTC) and CFPB have changed the rules of the game and will continue to do so,” said Brown. “In today’s world, the FTC and CFPB don’t have to show up on your lot anymore. They can find your dealership on the internet and see if you’re being compliant. That’s why it’s so vital for our dealers to remain educated.”
To assist dealers with the different changes, state associations have begun sponsoring classes to provide information and awareness on the changing regulations being passed down by the CFPB and FTC. In Georgia, the GIADA provides free compliance workshops for its members.
“Educating dealers on these issues is important because laws change on a yearly basis,” said Graham. “In some cases, a dealer might be doing something that they don’t even realize isn’t compliant. If they aren’t informed and educated, the impact could be the loss of thousands of dollars in profits.”
The NIADA recognizes the need to inform dealers about compliance. At its annual convention this month in Las Vegas, there will be five breakout sessions dedicated solely to compliance and regulatory issues. Additionally, the NIADA will host a Regulatory and Legislative Update during one of the convention’s general sessions.
“Education is one of the fundamental pillars of a good compliance management system,” said Shaun Petersen, regulatory counsel for the NIADA. “The NIADA is committed to providing dealers with the resources they need to establish a culture of compliance.”
The core of the automotive industry is simple: buy product for less, sell it for more. However, no dealer wants to leave untapped cash flow on the table. Therefore, it’s important for dealers to continue a journey of lifelong learning and improvement.