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CATA Bulletin
December 18, 2017

 

2018 Illinois DOC fee maximum is $175.94

December 15, 2017

The maximum amount that Illinois dealers can charge in 2018 for documentary preparation fees is $175.94, the Illinois attorney general’s office announced Dec. 13.
The $3.78 increase over the 2017 maximum fee reflects a 2.2 percent rise in the federal Consumer Price Index for the 12-month period ending Nov. 30. The index is tracked by the U.S. Department of Labor. As always, the DOC fee is taxable and must be substantiated upon request by the attorney general’s office.
The CATA is developing a poster about the DOC fee that dealer members can display. On the poster, the DOC fee amount is left blank for dealers to fill in; any amount up to the maximum allowed may be charged, but all customers should be charged the same amount. Systematically charging one group but not another — all males but no females, for instance — could bring charges of profiling.
Two copies of the poster will be mailed to dealers later this month. For limited additional copies, call the CATA at (630) 495-2282.
IMPORTANT: The new maximum fee cannot be charged before Jan. 1.
 
 

2017 year-end holiday, pay issues

December 15, 2017

Franczek Radelet P.C., the CATA’s labor relations counsel, has summarized the upcoming holiday and holiday pay issues in the collective bargaining agreements with Mechanics Local 701 and Teamsters Local 731 Garage Attendants.
 
Mechanics Local 701 
Recognized Holidays 
• Day before Christmas: Saturday, Dec. 23 (observed)
• Christmas Day: Monday, Dec. 25 
• New Year’s Day: Monday, Jan. 1, 2018 
 
Eligibility for Holiday Pay 
Unless excused by the employer, employees must work their regularly scheduled day immediately before and after a holiday in order to receive holiday pay. Probationary employees are not eligible for holiday pay within the first sixty (60) work days of their employment. 
Amount of Holiday Pay 
Holiday pay for Journeymen Technicians is eight hours times the JT hourly rate noted in Appendix 1 of the Standard Automotive Agreement. Other Technicians receive eight hours times their applicable hourly pay rate. Employees who are employed on a four, 10-hour workday schedule should receive 10 hours of pay. 
Holiday Falling within a Vacation or on a Scheduled Day Off
Employees on vacation or where the holiday falls outside their regular workweek (e.g., Day Before Christmas for an employee on a Monday through Friday work schedule) are given a choice between an extra day’s pay or an extra day off with pay. This choice must be communicated by the employee to the employer at least three days before the holiday.
Substitute Another Day in Lieu of Day Before Christmas
A dealership and its employees may agree to substitute another day and choose to work on the Day before Christmas. Holiday overtime premiums are not applicable to any hours worked on the Day before Christmas Day. 
Teamsters Local 731
Recognized Holidays 
• Day before Christmas: Saturday, Dec. 23 (observed)
• Christmas Day: Monday, Dec. 25 
• New Year’s Day: Monday, Jan. 1, 2018 

Eligibility for Holiday Pay 
Employees who have passed their probationary period and regularly work a full workweek are eligible to receive holiday pay if they work their regularly scheduled full day immediately before and after the holiday. If these conditions are satisfied, employees must be paid even if the holiday falls outside of their regular workweek, e.g., Day Before Christmas for an employee on a Monday through Friday work schedule. 
Amount of Holiday Pay 
Holiday pay is the number of straight-time hours the employee normally works in one full day times the employee’s standard hourly rate. Accordingly, employees who regularly work eight-hour days should receive eight hours of pay. 
 
Substitute Another Day in Lieu of Day Before Christmas 
Dealerships can substitute another day in lieu of treating the Day before Christmas as a holiday. In that case, holiday pay will not be applicable if employees work on the Day before Christmas. 
 
Additional questions can be posed to attorneys at Franczek Radelet. Contact Terry Creamer, (312) 786-6157 or tc@franczek.com; Chris Johlie, (312) 786-6152 or caj@franczek.com; or Dave Radelet, (312) 786-6190 or dpr@franczek.com.
 
 

New programs help dealers appeal to buyers

December 15, 2017

The percentage of subprime auto loans saw a big decline in the third quarter despite growing concerns that auto dealers and banks are writing too many loans to borrowers with checkered credit histories, according to new data.
In fact, Experian says the percentage of loans written for those with subprime and deep subprime credit ratings fell to its lowest point since 2012.
"The market turning more prime is an encouraging trend. It indicates that industry professionals are using data and analytics as part of the lending process, and consumers are taking a more active role in managing their credit before buying a car," said Melinda Zabritski, Experian’s senior director of automotive finance.
Overall, 25.67 percent of the auto loans written in the third quarter were for borrowers with subprime or deep subprime credit ratings. By comparison, just over 62 percent of the loans written last quarter were for borrowers with prime and super prime credit scores, according to Experian. 
 
The drop in subprime loans comes after months of warnings from critics that banks, auto finance companies and credit unions have issued too many loans to buyers who will be unable to repay them.
In the third quarter, there was a slight decrease in the percentage of loans 30 days overdue and slight increase in those that were 60 days delinquent.
 
Still, less than 1 percent of all loans were two months overdue, a level below historical averages.
 
Meanwhile, Experian says the average term for a new vehicle auto loan hit an all-time high of 69 months, thanks in part to a slight increase in the percentage of loans schedule to be repaid over 85 to 94 months.
 
"We’re starting to see some spillover to loans longer than 85 months," said Zabritski.
 
Overall, the average monthly payment for a new vehicle in the third quarter was $30,329, an increase of $291 from the third quarter of last year.
 
 

Big declines for subprime auto loans as term lengths hit record high

December 15, 2017

The percentage of subprime auto loans saw a big decline in the third quarter despite growing concerns that auto dealers and banks are writing too many loans to borrowers with checkered credit histories, according to new data.
In fact, Experian says the percentage of loans written for those with subprime and deep subprime credit ratings fell to its lowest point since 2012.
"The market turning more prime is an encouraging trend. It indicates that industry professionals are using data and analytics as part of the lending process, and consumers are taking a more active role in managing their credit before buying a car," said Melinda Zabritski, Experian’s senior director of automotive finance.
Overall, 25.67 percent of the auto loans written in the third quarter were for borrowers with subprime or deep subprime credit ratings. By comparison, just over 62 percent of the loans written last quarter were for borrowers with prime and super prime credit scores, according to Experian. 
 
The drop in subprime loans comes after months of warnings from critics that banks, auto finance companies and credit unions have issued too many loans to buyers who will be unable to repay them. In the third quarter, there was a slight decrease in the percentage of loans 30 days overdue and slight increase in those that were 60 days delinquent.
 
Still, less than 1 percent of all loans were two months overdue, a level below historical averages.
 
Meanwhile, Experian says the average term for a new vehicle auto loan hit an all-time high of 69 months, thanks in part to a slight increase in the percentage of loans schedule to be repaid over 85 to 94 months.
 
"We’re starting to see some spillover to loans longer than 85 months," said Zabritski.
 
Overall, the average monthly payment for a new vehicle in the third quarter was $30,329, an increase of $291 from the third quarter of last year.
 
 

Customers want knowledgeable salespeople: study

December 15, 2017

With all the hubbub about mobile technology replacing dealerships, one would think that parts of the experience, like pre-purchase test-drives and delivery walk-arounds, were fading into relics of the past.
 
Not so. It turns out car buyers really do need dealership salespeople, after all. At least that’s according to findings from the just-released J.D. Power and Associates U.S. Sales Satisfaction Index Study, an annual deep-dive into what makes for a satisfactory new vehicle sales experience.
 
While car buyers love to spend hours and hours researching vehicles and getting negotiation advice online, what makes them happiest is a combination of that research, accurate dealer website information, and a knowledgeable salesperson who helps answer questions and explain technology.
 
"Customers are preparing themselves online with the best information and negotiation tactics, they still prefer to interact with a salesperson or product specialist prior to buying a vehicle," said Chris Sutton, vice president of Automotive Retail Practice at J.D. Power. "Dealers can’t control a customer’s pre-purchase activities, but they should be prepared to positively influence areas that will affect a customer’s likelihood to buy as well as their level of satisfaction. An example is to post photos of actual inventory to their website or engage with shoppers via text messaging or phone calls. 
 
"Be sure that online specials are up to date and easy to access from the dealer’s site. These simple things go a long way toward earning a sale and satisfying a customer."
 
Let’s say you just purchased a brand-new vehicle. Super! Problem is, you can’t figure out how to work the thing, especially the wi-fi hotspot and wireless charging capability. That’s annoying — and reflected in the study as an increased need for in-person demonstrations. True, that’s always been important, but it now takes on added significance, as vehicles gain more complex technology-based features.
 
Indeed, J.D. Power reports that 41 percent of mass market buyers and 33 percent of luxury buyers want to learn about a vehicle’s features and controls during the delivery process. What’s more, 65 percent of shoppers who have a sales consultant show them how to use features on their personal smartphone say it was a "very effective" tool and subsequently are more confident using apps and websites for vehicle interaction and maintenance. 
 
Follow up post-purchase is also important: Just 32 percent of mass market buyers and 51 percent of luxury buyers receive a second follow-up explanation of vehicle features, even though that second "virtual tap on the shoulder" improves satisfaction by as much as 100 points (on a 1,000-point scale).
 
The study, in its 31st year, measures things like dealer personnel, delivery, deal-making, paperwork, dealership facility, and website quality. It’s based on responses from 28,989 buyers who purchased or leased their new vehicle in April or May 2017. The study is an analysis of the new-vehicle purchase experience and measures customer satisfaction with the selling dealer.
 
 

U.S. House committee debates electric car viability amid Trump mpg review

December 15, 2017

Lawmakers in the U.S. House of Representatives on Dec. 12 debated whether there is enough demand for electric cars to help automakers meet ambitious gas-mileage rules that require them to produce fleets that average more than 50 mpg by 2025.
The mileage rules, known as Corporate Average Fuel Economy and greenhouse gas emission standards, began taking effect with the 2017 model year. They call for ramping up from the current fleet-wide average of about 35 mpg for cars and trucks to an eventual goal of between 50 and 52.6 mpg by 2025. The goal was revised down from an initial target of 54.5 mpg.
 
The mileage rules were put in place in 2012 by former President Barack Obama’s administration, which argued that the lofty target was achievable and popular with drivers who were weary with gas prices that topped $4 a gallon at the time. Automakers have since argued that the rules are too stringent, and drivers have demonstrated in recent years that they are less interested in fuel-efficient cars and electric vehicles with gas prices that are now about $2.50.
The mileage rules that cover the model years 2021-2025 are currently under review by President Donald Trump’s administration. Debate over the rules in a House Energy and Commerce hearing turned to the popularity of electric cars and their impact on the overall fuel performance of automakers’ fleets — and whether car companies are building enough of them.
"Was it not assumed there would be a far higher penetration in the market of electric vehicles?" asked U.S. Rep. Debbie Dingell, D-Michigan.
"People keep making this comment that the companies aren’t building EVs, but is it not a fact that the customer is not buying EVs," she said. "They don’t believe that there is an infrastructure in place, and even the 13 states that have said mandates that should be putting them into their fleet are not buying them."
Dave Cooke, senior vehicles analyst of Union of Concerned Scientists’ Clean Vehicles Program, countered that the mileage rules were not initially intended to be contingent on driver acceptance of electric cars.
"There was little penetration of electrification assumed and 4.5 percent in California right now," he said, referring to that state’s percentage of electric car adoption, which is higher than the national average.
Mitch Bainwol, president and CEO of the Alliance of Automobile Manufacturers, which lobbies for major automakers, interjected with a reference to the much lower national electric car adoption rate: "But a half a point nationwide," he said.
Automakers sold 542,000 electric cars in 2016, according to a study conducted by the California-based electric vehicle infrastructure company known as ChargePoint. That was up from 408,000 in 2015, and just 73,000 in 2012.
John Bozzella, president and CEO of the Association of Global Automakers, which represents foreign-based car manufacturers, agreed that the viability of the future gas mileage rules will likely hinge on the number of electric cars that automakers are able to sell. 
 
"There is not a single gasoline-powered engine that meets those standards today," he said. "So I think we should be honest and straight-forward about the types of technology pathways we’re going to see (moving) forward: more electrification, more hybrids. Really, this is about not only making sure we get the assumptions right for innovators and investors, but also that the customer recognizes what the marketplace will look like and are prepared."
 
Cooke compared automakers resistance to the gas mileage rules to their opposition to federal mandates on auto safety. "When you look at testimony in front of House committees over the past 35 to 40 years, this is par for the course," he said. "Automakers routinely say ‘We can’t possibly hit that target’ and they are still standing."
Bainwol rejected the notion that automakers are opposed to increasing fuel efficiency.
 
"The premise that we’re going to halt progress is false," he said. "The only question here is the degree of the slope. And we want the slope of progress to be one that’s consistent with selling cars and encourage the fleet turnover."
 
When the mileage rules were first enacted, automakers lobbied for a mid-point review to ensure that the mileage rules were still feasible for the last four model years that are included in the mandate. That review was expanded to include the 2021 model earlier this year by the Trump administration.
 
The Obama administration rushed to finalize the stringent fuel economy rules ahead of schedule after Trump’s surprise victory in the 2016 presidential in the former president’s finalize days in office, in a decision that was later overturned by Trump. Automakers started lobbying the new president to reverse the Obama administration’s decision before he took office.
 
U.S. Rep. Fred Upton, R-Michigan, defended the review against charges that it is a thinly veiled attempt to stop progress toward reducing pollution from cars.
 
"When we worked with industry and the administration on establishing the time frame for mileage, we put in the provision that in 2018, a few years down the road, that there would be a look back," Upton said. "Can the industry actually make these changes at what hopefully what would be a reasonable price for consumers?"
 
Upton continued: "I wouldn’t say it was set in to halt the progress. It was to actually measure the science, the efficiencies and the new vehicles as to whether they would meet those."
 
The mileage increase as it stands now requires an average of over 35 mpg for 2017 models. The mileage rules call for automakers to achieve a fleetwide average mileage rate of more than 36 mpg for cars and trucks in 2018. The standard then increases to more than 37 mpg in 2019 and nearly 39 mpg in 2020.
 
Under the current rules, automakers face fines of $5.50 for each one-tenth of a mile-per-gallon their average fuel economy falls short of the standard for a model year, multiplied by the total volume of vehicles sold. Automakers are allowed to purchase credits from other auto companies that have come in under the mileage requirements to cover pollution deficits.
 
 

12 ways to protect your dealership from a cyber attack

December 15, 2017

By Nic Connor, Shartega Systems, Inc.
 
A majority (81 percent) of cyber attacks are aimed at small and midsize businesses, which include most dealerships and dealer groups. Cyber criminals now view those businesses as easy targets compared to large companies with dedicated network security teams. You may ask the question, "How could a cyber attack affect my dealership?" Four ways could have a drastic effect:
 
1. Access to Customer Data — Keylogging
With Dealerships having access to their customers’ Personal Identifiable Information (PII), there are a couple ways cybercriminals could access your customers’ private data. Some dealers feel that their customer data is safe and secure within their Dealership Management System or Customer Relationship Management software. But while most DMS/CRM providers do have security practices in place to stop data breaches, they cannot stop cybercriminals from accessing the software if a cybercriminal has access to a dealership’s computers and an employee’s credentials. A hacking practice known as Keylogging can log the keystrokes from, say, your F&I managers to gain access to your customer data through credit bureau websites or to your DMS/CRM applications.       
2. Prevent Access to Dealership Computers — Ransomware
Ransomware is the most popular type of Cyber Threat in today’s news. Ransomware is a type of malicious software that is designed to block access to a computer system and encrypt all of the files until a sum of money is paid. If anyone at your dealership was to download a file infected with ransomware, it would block access to that computer, and it could spread the infection throughout the dealership to all computers. There have been reports of whole departments being shut down at dealerships due to ransomware. In general, small-to-medium businesses have been unable to perform business due to ransomware.  
3. Access to Dealership Bank Accounts — DNS Poisoning
A method called DNS Poisoning could grant a cybercriminal access to your bank accounts. DNS Poisoning can ultimately route users to the wrong website. There have been scenarios where the controller thought she was accessing the dealership’s bank’s website, but came to find out it was an exact replica of the website of the dealership’s bank which captured all of their logon information. The hacker then proceeded to initiate a wire transfer of $600,000!  Luckily, the bank called the controller to verify the transaction and it was stopped.  
4. Fraudulent Wire Transfers and Access to Dealer Owner Personal Information — Spear Fishing
A method called spear fishing could target the most top-level execs or owners at your dealership. Spear fishing is a targeted email attack that is directed at specific individuals or companies and is intended to gather intelligence or intellectual property.  There have been reports of controllers or CFO’s receiving emails from someone who appeared to be the business owner requesting a wire transfer. After multiple emails between the hacker and controller, the controller complied with the request and completed the transfer. Spear phishing emails have improved tenfold in just a few short years and are virtually impossible to detect by the untrained eye. 
In order to fully protect your dealership network from these threats, there are multiple layers of security and security practices that your dealership should be implementing. Please download the 12 Ways to Protect your Dealership from a CYBER ATTACK checklist, and start protecting your dealership today!
 
Editor’s note: Shartega Systems is a CATA Recommended Consultant.
 
 

Heed tips to avoid company-sponsored holiday party liability

December 15, 2017

An employer can be held liable for actions that occur during or as the result of your company-sponsored social event — particularly if alcohol is being served. It’s a concept known as social host liability, and it is recognized by many courts across the country. 
 
While each state’s laws differ, there are some general guidelines to follow to make sure the company’s holiday festivities are fun and safe, and don’t land the employer in court.
 
• Make sure employees understand attendance at the company-sponsored event is purely voluntary. Eliminate any perception that work is being conducted.
• Plan the menu carefully so as there aren’t a lot of salty foods. When people are thirsty, they naturally drink more.
• Don’t provide a self-serve bar for guests. Either serve the guests their drinks or hire a professional bartender who can recognize when someone has had enough.
• Opt for a cash bar instead of an open bar. Or limit the number of free drinks for each guest.
• Consider hosting the holiday party in the afternoon instead of the evening. People tend to drink less during the day.
• Arrange for designated drivers and/or provide alternative transportation. Don’t let anyone be talked into driving home when they have had a few too many.
• Make sure there are plenty of non-alcoholic beverages available for guests.
• Close the bar about an hour prior to the end of the party. As an alternative, provide a coffee and desert bar.
• Employers should not consume alcohol during the event. It is important for them to keep a clear head so prudent judgments can be made.
 
Business owners should remember that, even though it’s a party, it still is business-related. It should be managed with the same propriety used to manage the business every day. It is possible to host a fun holiday event, without exposing a business to potential costly liability.