CATA News

Zeigler Auto Group, which has a presence in Michigan, Indiana and Illinois, has been ordered to pay 214 employees a total of $85,111 in minimum wages and overtime back wages following an investigation by the U.S. Department of Labor.

Federal investigators determined that the dealer group failed to ensure that its commission-based sales consultants earned a $7.25 federal minimum wage at 13 stores in the three states, including five in Illinois.

Investigators noted violations involving 80 sales consultants specifically at 10 locations. The other 134 employees who did not receive wages for which they were entitled held different jobs than sales, the labor department said.

"Employees paid on commission basis must earn at least the federal minimum wage per hour of work completed. If they do not, employers must make up the difference," said Mary O’Rourke, Wage and Hour Division district director in Grand Rapids, Michigan.

"Our investigation ... (put money into the pockets of workers who were underpaid, and) levels the playing field for employers who play by the rules. Other employers in this industry should use this investigation as an opportunity to review their own pay practices and avoid similar violations," she said in a statement.

The federal agency found Zeigler violated the Fair Labor Standards Act when it:

 

• Failed to assure that sales consultants’ commissions covered at least the federal minimum wage for all the hours that they worked.

• Wrongly classified some salaried employees in their business development centers as exempt from overtime requirements, and then failed to pay them overtime despite their duties not qualifying for exemption.

• Failed to maintain accurate payroll records.

The investigation period covered February 2018 through August 2020, he told the Detroit Free Press. The findings were made public March 31. Federal authorities have been working with Zeigler Auto Group and confirmed the company has repaid the back wages and overtime, said Scott Allen, a labor department spokesman.

 

While 2020 sales were down 14.7% compared to 2019, sales in 2021’s first quarter were extremely strong, the National Automobile Dealers Association reported April 8. The seasonally adjusted annual rate for March was 17.75 million units, the second-highest March ever, coming in slightly behind the SAAR in March 2000, with the 2021 first quarter SAAR at 16.8 million units, up significantly from the first quarter of 2020 SAAR of 14.8 million units.

"The coronavirus pandemic definitely had an impact on vehicle sales in 2020. While demand was strong, inventory was challenging given manufacturing facility closures and the chip shortage that began to heat up at the end of the year," said NADA Chief Economist Patrick Manzi. "New light-vehicle sales in 2020 came to a close with 14.46 million units."

The NADA now estimates new light-vehicle sales will reach 16.3 million units for the year, up from the original 2021 sales forecast of 15.5 million units and a 12.7% increase compared to 2020 sales.

Average incentive spending per unit totaled $3,452, a decrease of $963 and $336 relative to March of 2020 and March of 2019, respectively.

As demand remains high for new vehicles, vehicle production continues to be negatively impacted by the shortage of microchips. Inventory at the end of the first quarter of 2021 was 12.8% lower than at the beginning of the year, resulting in fewer choices on dealer lots. At the end of the first quarter of 2021, industrywide supply fell to 39 days from 48 days at the quarter’s beginning. If sales remain strong in April without a significant boost of inventory, a decline in sales by late in the second quarter is expected due to low inventory levels.

In the first quarter of 2021, production also was impacted by a reduced supply of resins used in many automotive parts, as well as by severe winter storms that caused manufacturing closures. The chip shortage is extending into the second quarter and will cause further vehicle production losses; North American vehicle production is expected to total 15.8 million units in 2021.

"We expect that production shortages will continue to impact new-vehicle sales for at least the second quarter and likely spill over into the third quarter," Manzi said. "The longer these production disruptions linger, the longer it will take for automakers to rebuild inventories to levels necessary to meet demand, and the less likely it is that automakers will be able to make up sales lost to both retail and fleet customers."

Inventory shortages for new vehicles continue to support robust used-car sales and values alike. After moderating for the final months of 2020, used-vehicle prices began to climb in the first quarter of 2021. NADA anticipates used-vehicle market activity will remain elevated into the summer as the industry continues cope with new-vehicle production and inventory difficulties.

At the macro level, GDP was anticipated to grow at an annualized rate of 6% in the first quarter of 2021, according to the Federal Reserve Bank of Atlanta. The NADA anticipated that real GDP for the 2021 would reach 6% to 6.5%. In the labor market, initial jobless claims have fallen below 1 million per week, but remain at historically high levels. According to the Bureau of Labor and Statistics March jobs report, 916,000 jobs were added and revisions upward were made to January and February reports. 

As vaccinations continue, jobs gains are expected in the second quarter of the year with more Americans returning to daily life. At franchised new-car dealerships, employment totaled 1,077,900 at the end of 2020, a strong improvement after bottoming out in April 2020 at 888,000. The NADA anticipates pent-up demand for travel and services spending as the economy reopens; the savings Americans have built during the pandemic will also play a role, but will not be a major driving factor of economic expansion.

"The economy continues to show strong signs of recovery from the coronavirus pandemic," said Manzi. "The widespread dissemination of the COVID-19 vaccine and the stellar new light-vehicle sales in March are reasons to be optimistic for the remainder of 2021."

 

Legislation to repeal the $10,000 cap on the value of traded-in vehicles passed out of the Illinois Senate on March 10 and awaits further consideration by the House.

Senate Bill 58 has added seven House co-sponsors but has not been called for a second vote. The deadline to pass a third reading in the House is May 28, days before the General Assembly is scheduled to adjourn its spring session. It then would have to be considered by the Senate.

Supporters of the measure should contact their state representatives to appeal for its passage.

 

Capping the trade-in credit increases the cost of new vehicles and used vehicles bought at retail. Votes thus far on SB 58 have been unanimous in support, and Gov. J.B. Pritzker has voiced his backing. The cap took effect in 2020 following moves to find funding for Pritzker’s multibillion dollar state capital infrastructure plan.

 

Under SB 58, infrastructure projects would instead be funded, in part, by increasing the sales tax charged in private vehicle sales. For instance, the current $390 sales tax on a 1-year-old vehicle sold privately for less than $15,000 would increase to $465. If the same vehicle sells for $15,001-$20,000, the sales tax would be increased from $750 to $850. The tax rates for private transactions haven’t changed in more than 30 years, and the modest increases are much less impactful than a trade-in credit cap, which costs consumers hundreds of dollars and harms dealers state-wide.

If the General Assembly passes the legislation, the change to restore the full trade-in allowance on First Division vehicles would take effect 120 days after the governor signs the bill. As currently written, the trade-in credit cap exempts Second Division vehicles. 

 

According to the Illinois Vehicle Code, a First Division vehicle is designed for carrying not more than 10 persons. A Second Division vehicle is designed to carry more than 10 persons; be used for living quarters; pull or carry freight, cargo or implements of husbandry; or be a First Division vehicle remodeled for use and used as a Second Division vehicle.

 

The Illinois General Assembly’s House of Representatives has days to advance legislation that would increase the booked time of repairs of vehicles under manufacturer warranty.

Legislation that originates in the House must clear that chamber by April 23 and then move to the Senate. House Bill 3940 was placed on the calendar for a second reading on April 8. Legislation must pass three readings in each chamber.

Dealers and their technicians should contact their representatives and urge support of the bill.

The legislation would amend the Illinois Motor Vehicle Franchise Act to define and expand upon how vehicle manufacturers are required to compensate franchised dealers for labor and parts associated with warranty work. It also would make changes to manufacturer calculations for time allowances for repair work, and guarantee compensation for vehicles under warranty equal to work performed out of warranty. 

Mechanics Local 701, the union representing area technicians at dealerships, is working with the CATA to advance the legislation. Technicians say many warranty jobs just can’t be performed in the booked time allowance, meaning they sometimes work without compensation.

Under House Bill 3940: "Adequate and fair compensation requires the manufacturer to pay each dealer no less than the amount the retail customer pays for the same services with regard to rate and time. Any time guide previously agreed to by the manufacturer and the dealer for extended warranty repairs may be used in lieu of actual time expended. In the event that a time guide has not been agreed to for warranty repairs, or said time guide does not define time for an applicable warranty repair, the manufacturer’s time guide shall be used, multiplied by 1.5."

 

The Illinois General Assembly’s House of Representatives has days to advance legislation that would increase the booked time of repairs of vehicles under manufacturer warranty.

Legislation that originates in the House must clear that chamber by April 23 and then move to the Senate. House Bill 3940 was placed on the calendar for a second reading on April 8. Legislation must pass three readings in each chamber.

Dealers and their technicians should contact their representatives and urge support of the bill.

The legislation would amend the Illinois Motor Vehicle Franchise Act to define and expand upon how vehicle manufacturers are required to compensate franchised dealers for labor and parts associated with warranty work. It also would make changes to manufacturer calculations for time allowances for repair work, and guarantee compensation for vehicles under warranty equal to work performed out of warranty. 

Mechanics Local 701, the union representing area technicians at dealerships, is working with the CATA to advance the legislation. Technicians say many warranty jobs just can’t be performed in the booked time allowance, meaning they sometimes work without compensation.

Under House Bill 3940: "Adequate and fair compensation requires the manufacturer to pay each dealer no less than the amount the retail customer pays for the same services with regard to rate and time. Any time guide previously agreed to by the manufacturer and the dealer for extended warranty repairs may be used in lieu of actual time expended. In the event that a time guide has not been agreed to for warranty repairs, or said time guide does not define time for an applicable warranty repair, the manufacturer’s time guide shall be used, multiplied by 1.5."

 

CATA webinar

"A review of the Illinois Motor Vehicle Advertising Regulations"

9:30-11 a.m. Tuesday, May 4

 

Join the Better Business Bureau of Chicago and Northern Illinois for a webinar that will review the state’s guidelines which must be adhered to when advertising the sale of vehicles. The BBB monitors all motor vehicle advertisements for their compliance with the regulations. Dealers whose ads are not compliant are notified, and if the ads are not corrected, a matter is forwarded to the attorney general’s office.

 

Some of the recent infractions the BBB has seen include:

 

• Offering free gifts and other incentives in relation to a vehicle purchase or lease.

• Including limited rebates, for which not all consumers qualify, in a vehicle’s selling price.

• Advertising specific trade-in allowances or a range of amounts for trade-ins.

• Comparing advertised prices to nationally recognized price guide books without identifying the books.

• Including any one of five "triggering terms" in an ad without also including other clear and conspicuous disclosures.

 

The 60-minute review will be followed by a 30-minute Q&A session. Register here for the webinar.

 

Highland Park Ford, McCarthy Ford (Chicago), and River View Ford (Oswego) are among the 2020 winners of Ford Credit’s Partners in Quality award for achieving high customer satisfaction and loyalty.

 

McGrath Acura of Westmont was named a member of Acura’s 2020 Precision Team, making the dealership a 19-year recipient of the award, and Arlington Acura in Palatine became a 10-year recipient of the award.

Honda’s 2020 President’s Award winners include Continental Honda in Naperville and Valley Honda in Aurora. It was Continental’s fifth consecutive win.

 

Muller’s Woodfield Acura is a gold medal winner of the Acura Environmental Leadership Award for reducing its energy consumption by 30%.

 

Norman Kraus, 87, whose Mopar fans knew simply as "Mr. Norm," as he and his dealership were synonymous with Dodge performance in the 1960s, died Feb. 26.

Mr. Kraus founded Chicago’s Grand Spaulding Dodge in 1962, just as the muscle car era was set to explode. The strategy was to focus on performance, and Grand Spalding Dodge quickly became the Mopar community’s prime source for all manner of go-fast parts. He would champion Dodge performance both on the street and at NHRA dragstrips.

As the muscle car era waned, Mr. Kraus sold Grand Spaulding Dodge in 1977, and the dealership closed for good in the 1980s. Mr. Norm still made the scene over the next several decades, appearing at car shows, races, and various automotive events.

Survivors include a daughter, Lori; sons Lee and Lyle; eight grandchildren; and four great-grandchildren. Memorials appreciated to the Wounded Warrior Project.

 

Highland Park Ford, McCarthy Ford (Chicago), and River View Ford (Oswego) are among the 2020 winners of Ford Credit’s Partners in Quality award for achieving high customer satisfaction and loyalty.

 

McGrath Acura of Westmont was named a member of Acura’s 2020 Precision Team, making the dealership a 19-year recipient of the award, and Arlington Acura in Palatine became a 10-year recipient of the award.

Honda’s 2020 President’s Award winners include Continental Honda in Naperville and Valley Honda in Aurora. It was Continental’s fifth consecutive win.

 

Muller’s Woodfield Acura is a gold medal winner of the Acura Environmental Leadership Award for reducing its energy consumption by 30%.

 

The family of renowned automotive enthusiast, racer, and entrepreneur John Weinberger has teamed with the TechForce Foundation to offer a series of scholarships to benefit students who aspire to follow in his footsteps. Applications must be submitted by April 30. 

The John Weinberger Driven to Care Legacy Scholarships support students with awards of up to $10,000 across a broad spectrum of automotive career disciplines: Automotive Engineering; Vintage Automotive Restoration; Automotive Dealership Management, Marketing and Communications; and Automotive Technician. 

The scholarship offerings reflect the interests, experiences, and expertise of the late John F. Weinberger, who lived in Naperville and in Austin, Texas. He was a legendary force in automotive circles who built Continental Motors Group — one of the nation’s largest dealership groups — and enjoyed a lifetime of driving, racing, and tinkering with cars.

Students who meet the following criteria are eligible for awards:

 

• SAE-Chicago section automotive students enrolled in the engineering program at the University of Illinois-Chicago or Northern Illinois University; 

• McPherson College (McPherson, Kansas) students pursuing historic automotive technology;

• Lyons Township (Illinois) High School automotive students enrolled in a post-secondary school to pursue a career in the automotive industry;

• Illinois or Texas students pursuing a career as an automotive technician and enrolled in any local community college that offers an automotive program or Universal Technical Institute;

• Northwood University students pursuing skills in car dealership management, marketing and communications.

The scholarships are offered in partnership with the TechForce Foundation, a nonprofit 501(c)(3) organization whose mission is to champion students to and through their education and into careers as professional technicians. To apply for one of the scholarships, visit www.DrivenToCare.org.

Recipients will be selected by TechForce representatives and a group of John’s "car buddies" in the Chicago and Austin areas known as the "lunch bunch."

"We want young people to dream what they want to dream," Lisa Weinberger, John’s wife, said about the creation of the scholarships. "John was able to turn his passion into his profession and was just so positive in everything he did. He measured success in smiles. He glowed. 

"I hope to see a glimmer of my husband in each and every one of these students. That would fill my heart with his light."

A respected and influential force in the industry, John Weinberger served several terms on the boards of the Chicago Automobile Trade Association, the Illinois Automobile Dealers Association, and the American International Automobile Dealers Association. He also enjoyed racing and earned numerous podium finishes while competing in Sports Car Club of America events during the 1960s. His exploits led to his induction into the Road Racers Drivers Club, where he joined an exclusive group of famed drivers. He also was a board member of the SCCA and an active member of various vintage racing clubs, including the Sportscar Vintage Racing Association, the Veloce Racing Association, the Vintage Sports Car Drivers Association, and Historic Sportscar Racing, LLC. 

He continued racing until the age of 84, even taking to the track after he died at age 88 on Sept. 12, 2020, as Lisa Weinberger took the wheel of the hearse to lead a first-of-its-kind, high-speed funeral procession around the Circuit of the Americas race track in Texas.

The scholarships continue John and Lisa’s history of giving back to the community, which began with the Continental Motors Group "Driven to Care" car giveaway program. The program has donated nearly 100 refurbished cars to deserving individuals who have overcome challenges such as homelessness, substance abuse, and physical abuse. 

"John wanted car dealers to be seen in a different light," said Lisa Weinberger. "If every dealer in the country followed his example of reaching out to the community, of mentoring young people, and of providing networking opportunities, we could change a lot of things for the better."

To learn more about John Weinberger and his history, visit www.johnweinbergerlegacy.com.