CATA News

 The commitment of local dealerships to their communities remains unprecedented during the coronavirus pandemic. As the globe endures COVID-19, dealer philanthropic efforts have been a bright spot in how the country is banning together to ride the wave into calmer waters.
 
Local dealerships have supported their communities in a variety of ways, such as offering the loan of cars and trucks for the delivery of groceries, medical supplies and prescriptions; donating and delivering meals to medical professionals at local hospitals; offering free oil changes and select services to first responders; and sanitizing vehicles for any local resident at no charge. WGN-TV on April 29 aired a four-minute segment of goodwill efforts by two area dealerships.

 

The CATA wants to highlight what dealers are doing to support their local communities, including first responders, charitable organizations and families, during this difficult time. Tell us about your experience and your staff, community and store.
 
Stories and any video links should be sent to Jennifer Morand, the CATA’s director of public relations and social media, at jmorand@drivechicago.com.

Cody Lusk, the president and chief executive of the American International Automobile Dealers Association, reflected April 28 during his Beltway Talk podcast on how the industry is weathering the storm by pulling together.
 
"This industry is so competitive. It’s one of the most competitive and cutthroat industries from a day-to-day standpoint," he said. "But when the industry is threatened, it really pulls together.
 
"And it’s been fantastic to see what the dealers do in their communities, how they’ve rallied around their first responders, the workers, the hospital nurses and doctors. They are sending food, providing cars.
 
"I think you’ve seen the state and metro associations, the national associations all coming together; the manufacturers doing their part; the other partners in the industry doing what they can because we all know we have to pull together to save this industry, to keep it moving forward so that we can live to fight another day."
 
Lusk pointed to how the industry’s actors united in advance of the Paycheck Protection Program rollout to help dealers. The economic relief is administered through the Small Business Administration, and a number of dealers did not have a SBA code number.

 

"The AIADA worked with the National Automobile Dealers Association to get codes to enable our members to access this capital when it became available, because we knew there was not going to be near enough, the supply was not going to meet the demand. And it didn’t."

 

Lusk said that, in fairness to the SBA, the agency was faced with processing about 20 years’ worth of loan applications in just two weeks.
 
To help jump start the industry, Lusk ruminated about a sequel to the Cash for Clunkers program. But whereas the 2009 version incentivized consumers to trade in older vehicles that obtained poor mpg, a follow-up in 2020 might try to motivate consumers with older vehicles to trade for a model with more safety features.
 
"We’ll be supportive of that, but we want the industry to work together," he said. "We all need to coalesce around one thing that we’re pushing for that we can all support.
 
"We’re one step closer to the other side, and we’re going to get through this together."

 

The CATA board of directors voted in April to reduce the board’s head count from 15 to 13 over a two-year period.
 
Directors said they reasoned that most dealers would prefer to focus on their business concerns in the current climate rather than mount a campaign to get elected to the board. The board contracted from 18 directors following the Great Recession in the 2000s.
 
"The first reduction to 14 members takes place this year. That means that this year we have no incumbent directors ineligible for reelection," CATA President David Sloan wrote in an April 29 letter to member dealers. "With that in mind, and due to the unique conditions brought on by the pandemic, the Nominating Committee determined that it will not present additional nominations for Director. (There is, however, an additional process for any interested dealer to gather petition signatures to be placed on the ballot, so please contact me if you are interested.)
 
"Next year, when the Board further reduces to 13 members, and there are only three incumbents, we plan to return to the practice of nominating five or more candidates for four vacancies, assuming business conditions have returned to normal."
 
A director can serve up to three three-year terms on the board.
 
"A smaller Board will bring cost savings to the CATA, and it better reflects the current size of our dealer body," Sloan said in the letter.

 

The CATA board of directors voted in April to reduce the board’s head count from 15 to 13 over a two-year period.
 
Directors said they reasoned that most dealers would prefer to focus on their business concerns in the current climate rather than mount a campaign to get elected to the board. The board contracted from 18 directors following the Great Recession in the 2000s.
 
"The first reduction to 14 members takes place this year. That means that this year we have no incumbent directors ineligible for reelection," CATA President David Sloan wrote in an April 29 letter to member dealers. "With that in mind, and due to the unique conditions brought on by the pandemic, the Nominating Committee determined that it will not present additional nominations for Director. (There is, however, an additional process for any interested dealer to gather petition signatures to be placed on the ballot, so please contact me if you are interested.)
 
"Next year, when the Board further reduces to 13 members, and there are only three incumbents, we plan to return to the practice of nominating five or more candidates for four vacancies, assuming business conditions have returned to normal."
 
A director can serve up to three three-year terms on the board.
 
"A smaller Board will bring cost savings to the CATA, and it better reflects the current size of our dealer body," Sloan said in the letter.

 

Selden Fox, a CPA firm and a CATA allied member, has published a news article on the best practices for using the funds received from the Paycheck Protection Program in order to be eligible for the loan forgiveness. Of utmost importance for the loan forgiveness is the documentation you collect on the expenses incurred during the eight-week period following receipt of the loan.
 
Also, Selden Fox created a set of PPP Forgiveness Planning worksheets to estimate a company’s loan forgiveness and to track expenses incurred, and a checklist of the information you will need to provide to present to the bank for loan forgiveness. In using the worksheets, consult with your professional advisors.

A number of large corporations and organizations — including Shake Shack and the Los Angeles Lakers, which both returned their loans — have come under fire for receiving cash from the Paycheck Protection Program. But new-vehicle dealerships mostly are eligible borrowers under the program.

 

"Each dealer has to perform his own good faith analysis based on the facts and circumstances relevant to his business at the time he applies," said Dennis O’Keefe, the CATA’s general counsel. "Unfortunately, the new May 7 deadline for ineligible borrowers to repay PPP funds suggests that the Interim Final Rule might have somehow modified the analysis in place when the loan application was filed."

 

Andrew Koblenz, the NADA’s executive vice president of legal and regulatory affairs, said that the fact that the CARES Act specifically replaced the traditional "no credit elsewhere" Small Business Administration loan test in favor of a "current economic uncertainty makes the loan request necessary to support the ongoing operations" test.

 

O’Keefe said: "So while the SBA and the Treasury Department might be backpedaling somewhat with their Interim Final Rule and FAQ, the FAQ specifically refers to ‘business owned by large companies’ who have adequate sources of liquidity, and goes on to provide an example of ‘public companies.’

 

"The majority of dealerships are neither businesses owned by large companies nor public companies, which would suggest that, for those dealerships, neither the FAQ nor the Interim Final Rule would modify the test originally set out in the CARES Act."

 

However,  O’Keefe further notes that Treasury Secretary Steve Mnuchin appeared to move the goalposts again with his April 28 comments that the government would undertake a "full review" of all loans that exceed $2 million. Part of this warning is likely meant to encourage large companies to return the funds (it apparently worked with Potbelly, Auto Nation, and Harvard, to name just a few); but these comments also further distance Treasury from the original intent of the PPP program, which was to quickly and without red tape get cash into the hands of as many small businesses as possible.

 

"Hard to tell day today if the goalposts are in their final position," O’Keefe said. "The bottom line is that each dealer needs to consult with his own financial and legal advisors as to how to proceed."

 

Hawk Volkswagen of Joliet, Bill Jacobs Volkswagen (Naperville), Jennings Volkswagen (Glenview), and Muller Volkswagen (Highland Park) were named members of Volkswagen’s 2019 Wolfsburg Crest Club, for extraordinary sales and customer experience efforts.

 

Winners of Honda’s 2019 President’s Award include Continental Honda in Countryside and Valley Honda in Aurora.

By John Fisher, CFP, Vice President, Wealth Management, GCG Financial

 

There are several 401(k) provisions that have been created as part of the CARES Act that you need to be aware of. Here is a brief overview of the provisions and a link that has the provisions in more detail for you.

 

Withdrawal Provisions (Coronavirus-Related Distribution up to $100,000)

• The maximum amount an individual can withdraw as a Coronavirus Related Distribution is $100,000. 

• 10% early withdrawal penalty tax is waived on "Coronavirus Related Distributions" from a retirement plan or IRA.
 ? Individuals can pay the income tax on the withdrawal ratably over 3 years. 
 ? The act allows individuals to repay amount distributed tax-free back to the plan. 
 ? Repayment will not be subject to retirement plan contribution limits.
 ? When participant repays the hardship distribution, they will need to file amended tax return.

 

Loan Provisions (increased to $100,000)
• Enhanced the plan loan provisions for a loan taken by an individual who meets the requirements for a "Coronavirus Related Distribution." 

• Participant who meets the requirements can take up to the lesser of 100% of their vested balance up to $100,000, for loans taken within 180 days of March 27, 2020.

• The Act also provides that for "qualified individuals" any repayment that would otherwise be owed on a plan loan through the end of 2020 may be delayed for up to one year.

 

Minimum Required Distributions (waived for 2020)
• Waives the required minimum distributions (RMD) from retirement plans and IRAs for 2020. 

• This applies to the RMD for 2020 but also to the RMD that is required to be taken before April 1, 2020, for individuals who turned 70½ in 2019.
 
Contact your record keeper or plan advisor for details.  We recommend that any withdrawals should be discussed with a participant’s accountant and financial advisor prior to taking such withdrawals.
 

What is a "Coronavirus-Related Distribution"? 

A "Coronavirus-Related Distribution" is a distribution taken prior to Dec. 31, 2020, for an individual who:
• Is diagnosed with COVID-19;
• Has a spouse or dependent diagnosed with COVID-19;
• Experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19; or
• Experiences other factors determined by the Treasury Secretary
 
The administrator of the plan can rely on an employee’s certification that the employee satisfies one of the conditions for a Coronavirus-Related Distribution.

 

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.