Used Car News 7/6/15

ON THE WEB:

Young People Value Cars for Work, Life

Nearly all millennials agree that it is extremely or very important to have their own car to accomplish daily work and life tasks, according to a survey of customers of Enterprise Holdings.

Few Factor Credit into Purchase Decision

Just 42.74 percent of respondents that have purchased a car checked their credit score before purchase, and only 40.08 percent checked their full credit report, according to WisePiggy.com.

Toyota, Acura Retain

Their Values Best

Toyota and Acura took home the top prizes in the fifth annual Edmunds.com Best Retained Value Awards.

The awards recognize the brands and 2015 models that have the highest projected residual values after five years based on their average “cash” True Market Value (TMV) price during their first five months in the market.

Fans Go Bats for Used Car Giveaways

By Sheile McGrath

It’s a Saturday night at Dell Diamond in Round Rock, Texas, where the Triple Aleague Round Rock Express is squaring of against the Oklahoma City Dodgers.

Tension is rising and the crowd is going wild, but it’s not the ninth inning, and the bases aren’t loaded with two outs – in fact, there’s not a single player on the field.

It’s Win a Used Car Night, and one lucky baseball fan is about to get the keys to a brand-new-to-them used car.

cations for the Round Rock Express Baseball Club.

“This is definitely our wackiest night and promotion of the year,” said Jill Cacic, director of communi-

Minor league baseball teams are known for their crazy promotions, but nothing brings in the fans like a Used Car Night, according Continued on page 6

Supreme Court Upholds Disparate Impact, But Limits Its Use

While most people were paying attention to other U.S. Supreme Court rulings, one decision might have a big impact on auto finance.

The Justices ruled 5-4 to uphold disparate impact as a partial basis for claims of racial bias.

The case involved housing law, but legal experts believe it gives authority to regulators to pursue disparate impact claims in all financial transactions, including auto finance.

Disparate impact uses statistical models to show bias, even when information isn’t included in the application.

The Court limited the application of the disparate impact theory and directed courts to act promptly and “examine

with care” plaintif cases. The majority opinion made clear that a disparate-impact case cannot rely on statistics alone and that the accuser must also cite the specific policy that causes the disparate result, according to the Independent Community Bankers of America.

ICBA still disagrees with the decision overall.

“While the decision may thwart certain frivolous claims, the disparate-impact approach will promote litigation that would itself cause reputational damage, serious business disruption, and extraordinary financial expense—even when a lender eventually prevails,” said ICBA CEO Camden R. Fine.

CARS

ACURA REMARKETING

ALLY

AUDI FINANCIAL SERVICES

CHRYSLER CAPITAL

FORD CREDIT

GM FINANCIAL

HONDA REMARKETING

HYUNDAI MOTOR FINANCE

JAGUAR FINANCIAL SERVICES

KIA MOTORS FINANCE

LAND ROVER FINANCIAL SERVICES

LEXUS FINANCIAL SERVICES

MAZDA CAPITAL SERVICES

MITSUBISHI MOTOR CREDIT

SUBARU MOTORS FINANCE

SUBARU OF AMERICA INC

SOUTHEAST TOYOTA FINANCE/CENTERONE

TOYOTA FINANCIAL SERVICES

US BANK

US BANK VOLVO

VOLKSWAGEN CREDIT

VOLVO CARS FINANCIAL SERVICES

CarMax Sets New Sales Record for Quarter

CarMax Inc. set all-time records for quarterly sales and earnings in its latest quarter ended May 31.

Net sales and operating revenues increased to $4.01 billion.

Used unit sales in comparable stores increased 4.9 percent. Total used unit sales rose 9.3 percent.

Carmax CEO Tom Folliard said comparable store used unit sales benefited from a combination of factors, including improved conversion and continued growth in customer trafc.

Total wholesale unit sales increased 4.7 percent. Wholesale unit sales benefited from the growth of CarMax’s store base, partially ofset by a decline in its vehicle buy rate.

Other sales and revenues increased 14.3 percent yearover-year. Extended protection plan revenues rose 12.5 percent versus the prior year’s quarter, primarily due to the growth in retail unit sales. Net third-party finance fees were relatively flat compared with last year’s first quarter, reflecting the net effect of changes in mix among

providers and the overall increase in units sold.

Net earnings grew to $182 million.

Total gross profit increased 8.4 percent versus the same quarter of last year, to $543.8 million.

Used vehicle gross profit rose 8.3 percent, primarily driven by the 9.3 percent increase in total used unit sales.

Used vehicle gross profit per unit was relatively flat at $2,200 compared with $2,220 in the prior year period.

Wholesale vehicle gross profit increased 3.3 percent versus the prior year’s first quarter, driven by the 4.7 percent increase in wholesale unit sales. Wholesale vehicle gross profit per unit of $1,032 was similar to the $1,046 reported in the first quarter of fiscal 2015.

Other gross profit rose 18.7 percent largely due to the improvement in other sales and revenues.

CarMax Auto Finance (CAF) income increased 15.3 percent to $109.1 million.

The improvement was driven by an increase in average managed receivables and continued favorable loss

experience, partially ofset by a lower total interest margin percentage.

Average managed receivables grew 17.2 percent to $8.66 billion. Compared with the first quarter of fiscal 2015, SG&A expenses increased 11.6 percent to $349.8 million. The increase primarily reflected the addition of 16 stores since that time and a $7.9 million increase in share-based compensation expense, as well as higher variable selling costs associated with CarMax’s comparable store used unit sales growth.

SG&A per retail unit was $2,098 in the current quarter, up $51 year-over-year, of which $39 related to the increase in share-based compensation expense.

Carmax continues to expand.

The company recently celebrated the grand opening of its third and fourth stores in the Denver area and a key milestone of 150 stores nationwide.

CarMax’s Loveland store is the latest addition to the Motorplex at Centerra, the largest auto center in Northern Colorado. The Parker

store is located about half a mile west of the intersection at South Parker Road and Lincoln Avenue.

Each store will stock more than 250 used vehicles.

CarMax also ofcially

opened its first store in Rhode Island.

The used-car superstore is more than 15,000 square feet, occupies more than 8 acres and stocks more than 300 used vehicles.

Shoppers at CarMax.com Want Nissan Altimas

The Nissan Altima was the No. 1 choice for used car shoppers at CarMax for the second year in a row, according to the company’s 2015 Used Car Shopping Report. The data also indicates domestic models are gaining favor, with five of the 10 most purchased vehicles made by American manufacturers.

Results are based on more than 550,000 vehicle sales at CarMax’s more than 140 stores nationwide between March 2014 and February 2015.

New to this year’s Used Car Shopping Report is insight into desired add-on and upgrade features. The most popular add-on purchased by CarMax buyers was leather interior, based on CarMax sales data. According to a recent survey of more than 1,000 U.S. adults conducted by Ipsos Public Afairs on behalf of CarMax, there is also interest in convenience and entertainment or luxury upgrades, such as navigation systems and satellite radio.

While the Nissan Altima remained CarMax’s top selling car, the Chevrolet Malibu sped into the No. 2 spot, passing the Toyota Camry, which fell to No. 4. Honda had two cars in the top five, the Accord (No. 3) and the Civic (No. 5).

Ford continues to perform well, occupying four of the top 20 spots overall. Ford vehicles especially appeal to Gen Xers, who purchased Fords more than any other age group, earning three spots in that generation’s top 10 vehicles. Ford also scored with Millennials, though their model preferences differed. Older generations most often purchased Explorers, Escapes, and F150s, while Millennials purchased the Fusion and Focus.

The majority of domestic vehicles moved up in rank above foreign cars, compared to last year. Gen Xers purchased cars from American manufacturers more than any other age group – of the top 10 vehicles purchased, six were from domestic makers.

While leather interiors rank at the top of add-on features among overall CarMax buyers, the popularity of other features purchased at CarMax locations varies in diferent parts of the country. Remote start technology, which held the No. 1 overall spot last year, still sells the most in the colder climates of the Midwest and Northeast. Leather interiors are more in demand in warmer climates of the West and South.

CarMax also commissioned a sur-

vey with Ipsos Public Afairs that revealed consumers’ interest in vehicle convenience and entertainment or luxury upgrades. When asked if purchasing a used car were to make convenience upgrade features suddenly more affordable, just under a third of respondents (30 percent) said that they would be most interested in a navigation system, while one in five would opt for remote start (21 percent). Park assist is more popu-

lar among Millennials than Baby Boomers (14 percent vs. 9 percent). When it comes to entertainment or luxury upgrades, satellite radio and stereo systems were preferred by one in five (19 percent and 18 percent, respectively). Leather interior and sunroof followed in rank, with Millennials being more likely than Baby Boomers to opt for a sunroof. Nearly one in five Gen Xers (19 percent) were among those most likely to choose a video system .

NEWS BRIEFS

Transporters Team up

ShipCarsNow and Ready Auto Transport are joining forces to provide multi-modal transportation to vehicle shippers.

This combination of truck and rail service will increase carrier capacity and create transportation efciencies for U.S. Manheim auto auction customers and other wholesale vehicle shippers.

The companies’ combined logistics process uses a combination of truck and rail transport, which provides a more economical and efficient way to move larger volumes of automobiles.

WhannTech Partners with vAuto

VAuto Genius Labs and the Whann Technology Group (WTG) have completed an integration that allows dealers to research and purchase vehicles from independent auctions on the WTG Simulcast platform.

The WTG Simulcast platform encompasses 120 independent auctions across the country, providing wholesale buyers with remote access, remote bidding, streaming audio and video for each auction lane.

The integration gives wholesale buyers on the WTG Simulcast platform instant access to AuctionGe-

nius’ “heads-up” display, which provides vehicle history reports, vehicle condition information and the latest valuation information to help buyers make informed purchase decisions.

Through this partnership, dealers can research and bid on vehicles from some of the nation’s leading independent auction groups, including Alliance Auto Auction, Brasher’s Auto Auction and Dealer’s Auto Auction and locations such as Columbus Fair Auto Auction and Greensboro Auto Auction.

Feds Finalize Diversity Rules

Federal agencies issued a final interagency policy statement establishing joint standards for assessing the diversity policies and practices of the entities they regulate.

Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) required the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp., the National Credit Union Administration, the Ofce of the Comptroller of the Currency, and the Securities and Exchange Commission to establish an Ofce of Minority and Women Inclusion (OMWI) at each agency to be re-

sponsible for all matters relating to diversity in management, employment, and business activities.

The Dodd-Frank Act also instructed each OMWI director to develop standards for assessing the diversity policies and practices of the agencies’ regulated entities.

The final standards are generally similar to the proposed standards.

They provide a framework for regulated entities to create and strengthen their diversity policies and practices.

These practices include their organizational commitment to diversity, workforce and employment practices, procurement and business practices, and practices to promote transparency of organizational diversity and inclusion within the entities’ U.S. operations.

GM, GM Financial Debt Returns to Investment Grade

Fitch Ratings has raised the credit ratings of both General Motors and GM Financial to investment grade. With this upgrade, the corporate credit ratings for GM are now investment grade with all major rating agencies.

The new GM corporate and GM Financial credit ratings assigned by

Fitch are BBB with a “stable” outlook. Each credit rating is one level higher than the previous GM and GM Financial ratings of BB+, which were assigned by Fitch in August 2012 and August 2013, respectively.

Byrider Moves into New Jersey

A new J.D. Byrider dealership is open at 1225 Route 9 North in Old Bridge, N.J.

The new location is the first J.D. Byrider dealership in New Jersey, and it is the first dealership for new franchisee Jay Brichke.

The 11,000-square-foot location will ofer used-car sales and nine service bays. The dealership will also create approximately 25 new jobs.

With the Old Bridge location, J.D. Byrider has opened a total of five new dealerships in 2015.

The company now has 168 locations in 34 states.

Published By General Media LLC

USED CAR NEWS (ISSN 1555-7413) is published at 24114 Harper, St. Clair Shores, MI 48080

Phone: 586-772-5200 or 800-794-0760 Fax: 586-772-9400 www.usedcarnews.com

Charles M. Thomas - Founder (1947-2002) Lynda R. Thomas, Publisher Colleen Fitzgerald, General Manager

Editorial: Ted Craig, Managing Editor Jeffrey Bellant, Staff Writer

Contributing Writers: Ed Fitzgerald, Jenny King, Sheila McGrath Columnist: Tony Moorby

Used Car News is published the first and third Monday of each month.

Subscribers: We print advertisements as sent to us by auctions and other advertisers. It is not possible to verify the correctness of listed vehicles in auction ads. Most lists are partial and all lists are subject to last minute changes by auto auctions, so before travelling a long distance for a particular auto auction event, contact the auction by telephone for a fax of vehicles in the sale.

Used Car News assumes no guarantees or liabilities concerning the accuracy of

Advertising: Shannon Colby, Account Manager Megan Frump, Account Manager Marie Hingst, Account Manager

Circulation: Helen Thomas

Production: Josie Godlewski, Media Manager Tim Montie, Graphic Designer

any advertisements. All Rights Reserved. Reproduction in any form is prohibited without the written consent of the publisher.

OUR ADVERTISING APPROVAL POLICY

Please submit clear, legible copy. Payments from first time advertisers must accompany the insertion order. Distribution is guaranteed by U.S. Postal Carriers. The advertising reservation deadline is 5:00 p.m. Friday, 10 days prior to the issue date. Camera ready ads must be received by noon on Monday prior to the issue date.

Kia Jumps Ahead in Annual Quality Rankings

Quality begets loyalty.

A study by J.D. Power found that 55 percent of consumers stay with a brand if they experience no problems in the first 90 days. That falls to 46 percent with three or more problems.

While this proves loyalty is hard to both gain and lose, the diference is major, said Renee Stephens, vice president of U.S. automotive quality at J.D. Power.

“That can mean millions of dollars to the manufacturers,” Stephens said.

The company poised to gain market share today is Kia, which ranked as the most reliable mainstream brand in J.D. Power’s 2015 Initial Quality Study.

The study examines problems experienced by vehicle owners during the first 90 days of ownership. Initial quality is determined by the number of problems experienced per 100 vehicles (PP100), with a lower score reflecting higher quality. Porsche finished first overall, with 80 PP100. Kia was second at 86.

The industry averaged 112 PP100 compared with 116 PP100 in 2014.

One of the biggest surprises of this was the failure of the Japanese brands to keep up with the overall industry.

Toyota and Honda both ranked

as above average. However, Toyota finished behind Kia, Hyundai and Chevrolet while Honda, at 111 PPV, was just above the industry average.

“This is a clear shift in the quality landscape,” Stephens said.

It wasn’t all bad news for the Japanese manufacturers. Infiniti made major strides in the rankings, finishing fifth overall.

Technology continues to have the biggest impact on the quality rankings.

Entertainment and connectivity systems remain the most problemprone area for a third consecutive year, with voice recognition and Bluetooth pairing continuing to top the problem list.

The majority of models included in the study that have voice recognition systems experience 10 or more PP100 related to this feature. The number of owners who indicate having voice recognition in their new vehicle has increased to 67 percent in 2015 from 57 percent in 2013.

The best news for manufacturers about this year’s survey is how many of the top ranked vehicles were newly launched.

Vehicles often face the biggest quality challenges during the first few years after introduction.

Equifax Expands Access to Thin Files

Equifax Inc. is working with Credit Builders Alliance (CBA), an organization focused on assisting nonprofits whose missions’ are to help struggling households build credit.

The two entities are working to serve the almost 26 million Americans considered “credit invisible.”

Through the agreement between Equifax and CBA, missionfocused nonprofits will be able to report loan data directly to Equi-

fax, expanding its database to include financial information that would help consumers with thin or no files build credit.

Equifax is also expanding its partnership with the National Independent Automotive Dealership Association for providing data for the latest edition of the NIADA Quarterly Business Confidence Survey, which presents independent dealers’ sentiment on the current state of the industry.

THE EASIEST WAY TO SELL A SERVICE CONTRACT

Introducing the GWC Warranty iPad App, the fastest and easiest way to sell a GWC service contract. With educational videos and an interactive coverage selection tool, the GWC App can sell the service contract for you. With just a few taps, the GWC App allows you to educate, rate and submit service contracts, all from the palm of your hand.

Download the GWC Warranty iPad App in the Apple App Store today.

Baseball – Continued from page 1

to the teams that hold them. This season, the Birmingham Barons, the San Antonio Missions and the Gary Southshore Railcats are a few of the other teams holding the promotion. Some have held Used Car Nights for 20 years.

Mike Ferko, director of production with the Birmingham Barons, said the Barons resurrected the promotion last year after holding it several times in the past.

“That night was always one of their bigger nights of the season,” Ferko said. “The chance for someone to spend $7 on a ticket and have a chance to take home a used car is more than worth it – it adds to the overall fan experience.”

At the Round Rock Express event, fans sign up for the chance to win a car when they get to the game, and winners are chosen in drawings held between innings. The team’s promotion crew and the night’s sponsor, the Nyle Maxwell Family of Dealerships, decorate the cars and plan plenty of on-field antics to make sure the fans get fired up before the drawing.

“We do a theme with each car,” said Steve Laukhuf, who handles the promotion for the Nyle Maxwell group. They’ve given away 75 cars over the last 16 years.

“We look for things that are unique and diferent. We’ve given away a Mercedes, a ’73 flatbed pickup, low riders, hot wheels. You

name it, we’ve done it.”

Eight years ago, they painted a Mystery Machine to look just like the van from the Scooby Doo cartoons.

“I still see that thing driving around,” Laukhuf said.

Cacic said they get all kinds of reactions from the winners, but most are happy.

“One year, the car broke down right before it was to go around the warning track, so the grounds crew pushed it out onto the field and then pushed it back in the shed,” Cacic said. “To say they won a Mystery Machine or a minion-mobile is really funny. Some fans have been upset they won a certain car over another, but most are just happy to hear their name called.”

Laukhuf said on Used Car Night they give away one car from each of the four stores in the dealership family. The giveaways are usually cars they acquire on trade-in that they wouldn’t be able to sell. They make it clear to fans at the stadium that the cars they’re giving away wouldn’t pass muster on their lots, he said.

It’s not just the team and the winners who benefit from a Used Car Night. The sponsors get something out of it, too. They’re always getting comments from people in the community, Laukhuf said, and people remember the promotions when they’re in a Nyle Maxwell store.

Cox Auto Buys Dealertrack

Cox Automotive Inc. and Dealertrack Technologies Inc. have entered into a definitive merger agreement.

Cox Automotive will acquire Dealertrack in an all-cash transaction valued at $4 billion. The acquisition is subject to a minimum tender of at least a majority of the outstanding Dealertrack common shares and is expected to close in the third quarter of 2015.

The Dealertrack Board of Direc-

tors has unanimously approved the acquisition and recommends that Dealertrack stockholders tender their shares in favor of the transaction.

The transaction is fully financed and is not subject to a financing condition. The acquisition will be funded through an existing bank facility, a new $1.85 billion bank term loan and a $750 million common equity investment from BDT Capital Partners.

NATIONAL QUALITY DEALER

SOUTH CAROLINA WOMAN WINS NATIONAL QUALITY DEALER AWARD

By Jeffrey Bellant

LAS VEGAS – South Carolina’s Darla Booher, owner of Deal Depot, became the second woman to win the National Quality Dealer of the Year award here during the National Independent Automobile Dealers Association’s annual convention at Caesar’s Palace.

Booher, a buy-here, payhere dealer, bested 19 other state quality dealer candidates for the top honor.

Judges at Northwood University select the winner.

“Our National Quality Dealer of the Year for 2015 has provided a superior level of service to (her) customers, the community and the industry,” said Steve Jordan, NIADA’s executive vice president. “(She) has gained an exceptional reputation – not only with her customers and staff – but throughout the community and within the industry itself.”

Booher has been in the car business for 27 years, working for both franchise and independent dealers. She has held positions in sales and sales management, in F&I and served as a general manager.

In 2001, she used her savings, credit cards and a personal loan to open her own business in Greer, S.C.

“She opened her store with a 12-vehicle inventory, one employee and a whole lot of prayers,” Jordan said.

Booher’s marketing tagline is: “I wouldn’t sell you a car that I wouldn’t put my grandchildren in.”

Jordan said that Booher has made education a foundation for her success and she has taken various franchise management courses and twenty

groups. She also became a

groups. She also became a NIADA Certified Master Dealer in 2007.

“God is great and God is always on time,” Booher said as she accepted her award.

“My journey to get here has been marked with much evidence of the power and love of God. I hope that winning this award will bring glory to him.

“It’s with gratitude to the NIADA and the judges of Northwood University that I humbly accept this award. I am honored to be selected from an accomplished group of nominees and I’m honored to represent the (Carolinas) IADA tonight, as well. This award means so much to me.”

Booher went on to say that she wants to leave the industry “stronger and brighter.”

tions like the Sertoma Club, Greer Relief, Greer Community Ministries, Leadership Greer and the Greer Chamber of Commerce.

Booher was also involved in the planning, fundraising and construction of a safe playground park later named Kids Planet.

She has also served on the Carolinas IADA board for

Vice President. Booher also credited a past National Quality Dealer for motivating her to achieve the honor.

“I was so inspired by Ray Lyle when he won it,”

Booher said. “He has been one of my mentors. When he won the National Quality Dealer of the Year, it inspired me.

corner. He’s always been there with assistance and to lead me and guide me.

“I just aspired to make him proud and to win it myself one day.”

Booher said she couldn’t wait to go back into her community and share it with them.

“I just hope that winning this award helps me do more

four years, currently serving spired me. “He’s always been in my this award helps me do more in my community.”

open and ready to embrace

She said a dealer should be open and ready to embrace change and to face the challenges of the industry or be left behind.

NIADA HONORS INDUSTRY VETERANS

“As I reflect on the changes I’ve seen and been a part of for the past 27 years, I’m reminded of how far we’ve come,” Booher said.

“As I reflect on the chang-

She said if members of the NIADA continue to work together for the good of the industry, there is no limit to the good they can do.

Booher also thanked one mentor, Billy McCullough, who provided her with her first 12-car inventory. She said he acts today as her “friend, confidant, sounding board and, sometimes, my therapist.”

She also thanked her team members and said how much she loved them and coming to work every day.

Like other National Quality Dealers, Booher has also placed an emphasis on giving back to her church and community.

She supports organiza-

By Jeffrey Bellant

LAS VEGAS – Retired

Black Book executive Ricky Beggs and Ken Shilson, founder of the National Alliance of Buy-Here, PayHere Dealers, were presented with the highest honors from the National Independent Automobile Dealers Association during the group’s recent convention.

Beggs and Shilson received the NIADA Ring of Honor, presented this year by Steve Jordan, NIADA’s executive vice president.

“These are men and women who have dedicated their careers to the industry, always giving their time and their resources to improve the image of the auto industry and assisting its dealers,” Jordan said.

Beggs retired from Black Book as senior vice president earlier this year following a 33-year career. He gave thanks to the industry and its members and said he was honored to be one of

the Ring of Honor winners.

Beggs said that in 1994, one of the first recipients of the Ring of Honor award was Black Book’s president at the time, Gene MacDonald.

“It’s really quite an honor to receive this award after he did,” Beggs said. He said he’s learned the business by being in the field, side by side dealers in the auction lanes.

“I’ve just learned so much from you,” Beggs said. “I’ve always thought that the dealers in this industry are the greatest entrepreneurs in the world.”

Shilson, who is also president of Subprime Analytics in Houston, has provided NIADA with buy-here, payhere benchmarks and loss metrics over the years. He is a pioneer in IRS-approved tax strategies for buy-here pay-here dealers.

“I am deeply honored,” said Shilson. “I want to tell you how much I appreciate this honor and how grateful

I am for (receiving this).

“But I’m equally grateful for the working relationship that we’ve had between NIADA and NABD.

“That relationship needs to continue and to grow, because we face some very important challenges ahead.

“I’m confident, as we work together, that we’ll meet those challenges. I vow to work closely with NIADA to do just that.”

NextGear Capital is known for providing dealers with the flexibility they need to manage their business… and keep the ball rolling!

What will we be known for next?

Check out our feats of flexibility series online to find out!

FTC Mulls Electronic Notifications

The Federal Trade Commission recently handled its first title pawn case and is considering making it easier for buy-here, pay-here dealers to meet regulatory requirements.

Following a public comment period, the FTC approved final consent orders with two car title lenders that the agency alleged failed to disclose important conditions and financing information about their title loans.

Under the consent orders, First American Title Lending and Fast Cash Title Pawn are prohibited from failing to disclose all the qualifying terms associated with obtaining a loan at its advertised rate and what the finance charge will be after an introductory period ends; and from misrepresenting any material terms of its loan agreements.

First American is also prohibited from stating the amount of any down payment, number of payments or periods of repayments, or the amount of any payment or finance charge without clearly and conspicuously stating all the terms required by the Truth in Lending Act and Regulation Z.

These cases were the first two car title loan cases for the agency, and are part of the FTC’s ongoing efort to protect consumers in the short-

term lending and auto marketplaces.

Meanwhile, the FTC has proposed an amendment to its rules under the Gramm-Leach-Bliley Act to allow auto dealers to provide online updates to consumers about their privacy policies as opposed to sending yearly updates by mail.

Under the proposed revision, auto dealers would be able to provide consumers with the privacy policy solely online, as long as the company notifies consumers on a yearly basis that the policy is viewable online. The rule change would require this notification to be part of some other legally required document.

The revised rule still would require dealers to provide consumers with a written copy of the notice upon request. In addition, if a dealer’s privacy policy has changed since a consumer was last provided a written notice, the consumer must be provided a copy of the new policy in writing. Dealers who share consumers’ personal data with third parties in a way that requires a consumer to have the ability to opt-out would not be allowed to provide their privacy policy only online.

The amendments also include clarifications to the language of the rule to reflect the Commission’s authority under the Act.

Dealership Pays for Bad Ads

A New Jersey dealership settled claims that its stores engaged in unconscionable commercial practices and deceptive advertising practices in their advertisement and sale of new and used vehicles.

Under the terms of the final consent judgment Bergen Auto Enterprises LLC, which does business as Wayne Mazda and Wayne Auto Mall Hyundai, has agreed to pay $135,000.

tactics by featuring motor vehicles in advertisements that were not actually available for purchase or lease.

The dealerships also allegedly failed to disclose to customers that some used motor vehicles had previously been used as rental vehicles and/or had sustained significant prior damage.

As part of the settlement, Bergen Auto Enterprises must pay $135,000.

“I

The Office of the Attorney General and Division of Consumer Affairs filed suit in August 2014, alleging in its five-count complaint that Bergen Auto Enterprises had violated the Consumer Fraud Act and Motor Vehicle Advertising Regulations, among other things, by engaging in “bait and switch”

The settlement is comprised of a civil penalty of $109,595.45 and $25,404.54 for reimbursement of the state’s attorneys’ fees and costs.

The settlement also includes a $50,000 suspended civil penalty, which will be vacated after one year if Bergen Auto Enterprises does not violate the terms of the judgment.

Tow Firm Sold Cars without License

Pennsylvania recently fined a towing company for selling used cars without a license.

advertised and ofered for sale used motor vehicles without a license.

The state’s Bureau of Consumer Protection’s Harrisburg ofce filed an Assurance of Voluntary Compliance (AVC) involving Matthew B. Oakes, who did business under Oakes Auto.

Oakes Auto is a York County towing business, but Oakes also sold,

In Pennsylvania, it is unlawful for a person to be a motor vehicle salesperson without a license from the State Board of Motor Vehicle Manufacturers, Dealers, and Salespersons.

Oakes did not hold such a license but still sold or ofered to sell vehicles on Craigslist.

Man Faces Prison for Auction Fraud

A Newark, N.J., man was sentenced to state prison for using false identities and nearly $340,000 in counterfeit or bad checks to buy 19 cars from an online auto auction company.

Keith L. Hutcheson Jr. was sentenced to seven years in state prison after pleading to seconddegree theft by deception and thirddegree forgery.

Hutcheson was required to enter a civil consent judgment to pay $212,000 in restitution to the auto auction company, Copart Inc. The company previously recovered a number of the vehicles, which reduced the amount of restitution owed.

The case was referred to the Attorney General’s Ofce by the New Jersey Motor Vehicle Commission, which received a complaint from Copart.

The state’s investigation revealed

that from September through December 2013, Hutcheson used the aliases of “Mark Hooper” and “Bassem Wallace” to purchase 19 cars online from Copart. com, including seven Mercedes Benz vehicles, a Porsche and a BMW. He paid for the cars with counterfeit or bad checks totaling $339,782, including a check for $199,023 for multiple vehicles that purportedly was issued by a car dealership.

Many of the cars were salvage or storm-damaged vehicles. Hutcheson arranged for the vehicles to be transported to New Jersey, where he resold a number of them in cash sales to unsuspecting buyers.

Hutcheson was arrested by detectives of the Division of Criminal Justice on May 13, 2014, on charges of theft by deception and identity theft.

KAR IT Shared Services Wins Award

KAR Auction Services Inc. announced that the company’s IT Shared Services (KAR ITSS) team has earned an Honorable Mention in the 2015 HP Discover Awards for Customer Excellence.

KAR ITSS was one of the few

companies selected out of more than 70 nominations to be recognized for the innovative, resultsdriven IT solution they developed and implemented with HP’s software. KAR ITSS developed a suite of automated smoke test scripts.

Insurer Returns Corvette

Allstate Insurance and a usedcar dealer have reunited a woman with her once stolen 1972 Corvette Stingray.

Terry Dietrich bought the car when she was 19 using money from her first job to make a down payment. Just six months later, the car she called her ‘first love’ was stolen.

Dietrich never knew what happened to her beloved sports car.

This past fall, a North Carolina car dealer purchased the car and found the vehicle identification number in the window didn’t match up with the original VIN imprinted on the car. Police were notified and were able to trace the car back to a police

report in 1972.

The car belonged to Allstate Insurance for all these years after the claim was paid of shortly after the car was stolen.

For the loyal customer, her first love was closer than it had been in more than four decades and she reached out to her original Allstate agency owner who has since retired.

After months of work behind the scenes by employees at Allstate and government ofcials in both Georgia and North Carolina, a new title was issued and the original Allstate agent was able to drive the car up Dietrich’s driveway.

Man Runs Tracker on Wood Fuel

HOLLAND, Mich. (AP) _ Instead of measuring miles per gallon like most motorists, Zeeland Township resident Don Mannes measures mileage by miles per pound of wood burned.

Two miles per pound of wood burned on average, Mannes said.

Mannes, the owner of a modified 1995 Geo Tracker, can run his small green sport-utility vehicle by using nothing but carbon monoxide and hydrogen gas created by burning wood in a specially modified assembly on the back of vehicle, The Holland Sentinel reported.

Joining approximately 50 other owners across the country that operate wood-gas powered vehicles, Mannes’ vehicle is his first attempt at such a contraption, a so-far successful ``test-bed.’’

“What got me started was getting calls of people burning leaves in neighborhoods,” said Mannes, who serves as the Zeeland Township Zoning administrator. “I got to thinking that there’d probably be a

better way to burn (wood) without smoke. So I got on the Internet and learned about gasification.

“The further I got into it I found out they were running cars on wood before World War II.”

With a bevy of containers, Menards PVC piping and a few other homemade devices attached to the rear and engine compartment of his Tracker, Mannes’ wood-gas powered vehicle capitalizes upon heat, wood and then gas.

Sticking a blowtorch into a reservoir piled with wood and starting a fire in a large reservoir, called a double-wall reactor, mounted to the rear of the vehicle starts the process. As the wood burns, generating heat that approaches 2,600 degrees after about four minutes, carbon monoxide and hydrogen gas is piped through four heat exchangers and then into a barrel filled with straw or hay.

The straw or hay within the barrel is the final ``purification’’ step before it is pumped to the engine.

State Says Sheriff Rigged Used Vehicle Bids

JACKSON, Miss. (AP) - Alcorn County Sherif Charles Rinehart was indicted on charges that he conspired with the owners of a usedcar dealership to falsify documents and steer business to them.

A grand jury charged Rinehart, along with used-car dealers Teddy C. Null and Pamela D. Null, with five counts of conspiracy and five counts of submitting false documents to a government. All are felonies.

State Auditor Stacey Pickering said Rinehart and the Nulls worked together between 2012 and 2015 to submit false quotes for six vehicles. The sherif ’s ofce won approval from county supervisors to purchase all six from Cars for Less, the Nulls’ business, paying $68,250.

Rinehart continues to act as sherif. His term ends in January, and voters will choose his successor in November.

Pickering said Mississippi law does not provide for the suspension of an elected ofcial who is indicted.

Rinehart and the Nulls were

scheduled to be arraigned July 1.

In each case, investigators said Rinehart submitted quotes from other used-car dealers showing that the Nulls’ business was ofering a lower price.

In Mississippi, a government agency can make a purchase between $5,000 and $50,000 with at least two written bids. But Pickering said that in this case, the Nulls were making up fake bids from other local used car dealers, so that Cars for Less always ofered the best price.

Pickering released documents showing the competing quotes were generally in the same format and used the same typeface as the Cars for Less quotes.

Pickering also said that supervisors didn’t realize they were buying vehicles with salvage titles, meaning they had been seriously damaged before the Nulls repaired them at their body shop. The auditor said investigators are trying to determine whether the Nulls were repairing the vehicles with stolen parts.

Mississippi Department of Corrections records show Teddy Null served about six years in prison after he was sentenced in 2002 for charges including operating a chop shop, possession of stolen or altered vehicle parts and receiving

stolen property. Pamela Null served about three years in prison after she was sentenced in 2005 for conspiracy, receiving stolen property and forgery.

Pickering said it’s unclear whether Rinehart, who isn’t seeking reelection, derived any personal benefit from the alleged scheme.

“We do expect during the prosecution to find the answer to that question,” he said.

Rinehart faces a separate demand letter from the auditor’s ofce that charges he misspent almost $152,000 out of various jail funds.

After interest and investigation charges, Pickering is demanding

Rinehart personally repay $181,000. The auditor said investigators haven’t found any embezzlement there so far, only mismanagement.

Pickering said the charges grew from an earlier investigation that led to the indictments of County Supervisor Jimmy “Dal” Nelms, a county purchasing clerk and three vendors. Those men have pleaded not guilty. He said that Monday’s indictments are not related to the corruption case that ensnared former Corrections Commissioner Chris Epps, though Pickering has previously said Alcorn County is a focus of further investigation in the prison contracting scandal.

Serious Shoppers Use Smartphones

Car shoppers using smartphones to access Edmunds.com are just as likely – if not more likely – to engage in serious shopping behaviors than visitors using desktop computers, laptops and tablets, according to Edmunds.com.

Even though smartphone users spend less time on Edmunds than wired users, the company reports that they view as many or more pages during that time, and they’re more likely to focus their research on specific vehicles.

Seventy-nine percent of smartphone users on the site research at least one specific vehicle model during their time on the site. Smartphone users view local inventory listings at rates more than 30 percent higher than their wired counterparts.

Edmunds’ analysis also examined the shopping preferences of both iOS and Android smartphone users, finding the most popular automotive brand on both operating systems is Toyota.

Auto Fees Fill Budget Hole

BATON ROUGE, La. (AP) – Car buyers and motorists seeking a copy of their driving records will pay higher fees to help balance Louisiana’s annual budget.

While the focus of the Legislature’s recent financial debate was largely on taxes, lawmakers with little fanfare or attention also voted to raise at least $104 million annually from changes to licensing and application fees, permitting charges, rental rates, late fees and penalty fines.

Most of the money raised was poured into the budget to help stop cuts to public colleges and health services in the fiscal year that began July 1. Other dollars will stay with the agencies that oversee the individual programs subject to the higher fees and penalties, to help ofset reductions to their general state financing.

Gov. Bobby Jindal’s administration hasn’t shown any resistance to the fee hikes passed in the just-ended legislative session. The Republican governor has supported fee increases if agencies say they only cover the cost of providing the service for which a fee is charged.

Lawmakers echoed similar sentiments as they approved the bills, saying many of the state’s fees haven’t been increased in decades.

“We have historically provided services to the people of this state for much less than what it costs to do them. Now, we’re in a budget crunch,’’ said Sen. Danny Martiny,

R-Kenner, during Senate debate on one of the largest fee hikes.

Of the dollars generated, about $60 million annually will come from a $50 fee increase on car buyers and sellers.

The car-buying fee drew the most debate.

The fee hike, tucked into a bill by Rep. Sherman Mack, R-Livingston, will increase from $18.50 to $68.50 the title fee paid when a person buys a new or used car and the salvage title fee when a wrecked vehicle is deemed a total loss and either disassembled or sold. It also will bump from $15 to $65 the permit that allows a towing company or repair facility to sell vehicles abandoned by their owners.

The changes were to take e July 1.

Supporters said the increase will keep the state and other taxpayers from bankrolling the processing of those vehicle title registrations and transfers.

“We are not charging the true cost of things. We’re subsidizing on the backs of other people,’’ said Sen. Conrad Appel, R-Metairie.

Bill opponent Sen. Karen Carter Peterson, D-New Orleans, objected to filling budget gaps “on the backs of the poor people of the state.”

“We have raided funds and reserves from all these di cies and then we come back and tax them, and we’re doing it on the backs of people and we think they’re not paying attention,’’ Peterson said.

Ford Eyes Car Sharing

NEW YORK (AP) – Ford is following the ride-sharing craze, launching its own pilot program in six U.S. cities and in London.

Under the program, customers who finance their vehicles through Ford Motor Credit will be able to rent their vehicle to pre-screened drivers for short-term use.

This will help to defray some monthly vehicle ownership costs.

“As most vehicles are parked and out of use much of the time, this can help us gauge our customers’ desires to pick up extra cash and keep their vehicles in use,’’ David McClelland, Ford Credit vice president of marketing, said in a written statement.

Ford Motor Co. said that 14,000 customers in the U.S. will be invited to participate, along with 12,000 in London.

U.S. customers will partake through ride-share company Getaround, while London customers will use easyCar Club.

The program is being offered through November to Ford Credit

customers in Chicago, Washington D.C., Portland, Ore. and California locations including Berkeley, Oakland and San Francisco.

The ride-sharing industry is showing strong growth and more traditional auto companies are clamoring to get aboard.

Avis spent $491 million two years ago to buy Zipcar, tapping into strong demand for short-term car rentals in urban areas.

Enterprise runs CarShare and Daimler AG runs Car2Go in multiple European and U.S. cities.

The number of users has doubled over six years, according to the Transportation Sustainability Research Center at the University of California.

While it is tiny compared with the traditional car rental industry, annual revenue has reached about $400 million, researchers found.

Ford also said that it has a new electric bicycle, the MoDe: Flex.

It’s the automaker’s third eBike, following the MoDe:Me and MoDe: Pro that launched in March.

Chase is your source for quality, selection and value.

When you’re searching for a wide variety of the right vehicles for your customers, look to a nationwide industry leader. Look to Chase.

Chase is your source for:

A broad range of vehicle makes and models — from economy to luxury — upstream and through preferred auctions nationwide.

Convenient online and in-lane vehicle availability with on-site Chase remarketers.

Put Chase to work for you.

Visit ADESA.com and Manheim.com.

Your Source. Chase.

1Subaru, the Subaru logo, and Subaru Motors Finance are trademarks of Subaru of America, Inc. (“Subaru”) and any use by Chase Bank USA, N.A. (“Chase USA”) and JPMorgan Chase Bank, N.A. (“Chase”) is under license. Retail / Loan accounts are owned by either Chase or Chase USA and lease accounts are owned by Chase.

2Jaguar and Land Rover, their respective logos, and the financial group names (Jaguar Financial Group and Land Rover Financial Group) are trademarks of Jaguar and/or Land Rover and any use by Chase is under license. Retail/Loan and lease accounts are owned by Chase.

3The tradename “Mazda Capital Services” as well as the Mazda and Mazda Capital Services logos are owned by Mazda Motor Corporation or its affiliates and are licensed to Chase. Retail/Loan and lease accounts are owned by Chase.

© 2014 JPMorgan Chase Bank, N.A. Member FDIC. All rights reserved. (14-221) 06/14

Fire Trucks Prove Hot Item

Missouri dealer Chris Exposito attended a liquidation sale at the Defenbaugh estate in Shawnee, Kan., earlier this year and came away with 42 collectible cars – and nine vintage fire trucks. And one motor coach.

For Exposito, owner of Wholesale Car Outlet Sales in Kansas City, picking up “classic” cars was not an unusual move. The fire trucks, from 1937 to 1955 models, were a departure.

In the car business, both as a newcar dealer and used-car specialist, for decades, Exposito figured the fire trucks were worth the efort. They were flat-bedded to the lot on U.S. 40.

“I sold the cars at the Mecum auction in Kansas City in April,” he said.

By late June five of the nine fire trucks had found new homes. Wholesale Car Outlet Sales staf member Dan Hampton said the used trucks have drawn attention –though much of it in the sharing of stories from men who recalled similar equipment and have stopped by or called just to chat.

That has been part of the fun, Hampton said.

“There has been a lot of personal interest in the fire trucks,” he said.

“They are most likely to wind up in the local towns where they were in service,” Exposito said.

Each is priced at $5,000. They are not in running condition.

posito paid for the nine trucks. Each will be sold as-is.

They still are in their 90-day grace period in inventory, Hampton said in June, and even if they sit for a while longer they are good for business.

The sales professional said Wholesale Car Outlet keeps anywhere from 80 to 120 cars on the lot. Buy-here, pay-here dealers are among Wholesale’s best customers.

Hampton said a 1929 Chevrolet sedan – a “revenuer” style once favored for government service – recently added more curb appeal. He described the Chevy as “gorgeous,” with its dark-green paint and straight-six engine.

The car once belonged to the Missouri Department of Revenue, he said.

Exposito said the Defenbaugh collection included a 1996 Chevrolet SS Impala, a 1957 Chevrolet 283 four-barrel, a 1951 Ford coupe with flathead engine and a 1988 Corvette. Defenbaugh typically bought cars with very low mileage.

“I was partially involved in his buying some earlier cars,” Exposito said.

Among the four yet to be sold at the end of June was the oldest fire truck: a 1937 GMC.

Should the remaining trucks fail to move, there are ways to renew interest, said David Adrian of Adrian Associates, a Detroit-area public relations firm.

“The dealer might want to invite members of the local fire department to stop by,” Adrian suggested. “They could talk about or demonstrate new versus older equipment.”

That was not the case for the cars, Exposito said. Ron Defenbaugh, whose Defenbaugh Industries included trash services, kept his collection in a 40,000-square-foot garage on his estate. Poor health sidelined him in 2007, Exposito said, but he continued to have the cars maintained, with engines started periodically and oil changes every two years.

It would be good for television news, he suggested.

In the meantime, Hampton is enjoying his encounters with visitors attracted to the site by the fire trucks.

Initially Exposito went to the sale to bid on behalf of several dealers but wound up as the sole buyer.

Hampton did not know what Ex-

And because they don’t run, they are not going anywhere until the right buyer comes along.

CFPB Prepares to Oversee Auto Finance Firms

The Consumer Financial Protection Bureau published a rule that will allow the agency to supervise larger nonbank auto finance companies for the first time.

The CFPB also released the examination procedures that examiners

financial laws, including the Equal Credit Opportunity Act, the Truth in Lending Act, the Consumer Leasing Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act’s (Dodd-Frank Act) prohibition on unfair, deceptive, or

minor changes.

The final rule broadens the category of transactions involving asset-backed securities that are not counted toward the 10,000 transaction threshold. It also makes a minor modification to the definition of refinancing for the purpose of the threshold.

“Auto loans and leases are among the most signifcant and complex fnancial transactions in a typical consumer’s life.”

Richard Cordray

will use to ensure that auto finance companies are following the law.

“Auto loans and leases are among the most significant and complex financial transactions in a typical consumer’s life,” said CFPB Director Richard Cordray.

Currently, the Bureau supervises auto financing at the largest banks and credit unions. This rule extends that supervision to any nonbank auto finance company that makes, acquires, or refinances 10,000 or more loans or leases in a year.

Under the rule, those companies will be considered “larger participants,” and the Bureau may oversee their activity to ensure they are complying with federal consumer

abusive acts or practices.

Under the final rule, which was proposed in September 2014, the Bureau estimates that it will have authority to supervise about 34 of the largest nonbank auto finance companies and their afliated companies that engage in auto financing. These companies together originate around 90 percent of nonbank auto loans and leases, and in 2013 provided financing to approximately 6.8 million consumers. The final rule also defines additional automobile leasing activities for coverage by certain consumer protections of the Dodd-Frank Act.

The Bureau is finalizing the rule largely as proposed, with

To coincide with this new authority, the Bureau has also updated its Supervisory and Examination Manual to provide guidance on how the Bureau will monitor the bank and nonbank auto finance companies that it supervises. Examiners will be assessing potential risks to consumers and whether auto finance companies are complying with requirements of federal consumer financial law.

In related news, the CFPB sued Security National Automotive Acceptance Co. for aggressive debt collection tactics against service members.

In a complaint filed in federal court, the CFPB alleges that the company used a combination of illegal threats and deceptive claims in order to collect debts. The CFPB is seeking compensation for harmed

consumers, a civil penalty, and an order prohibiting the company from committing future violations.

“Security National Automotive Acceptance Company took advantage of military rules to put enormous pressures on service members to pay their debts,” Cordray said. “For all the security they provide us, service members should not have their financial and career security threatened by false information from an auto loan company.”

SNAAC is an Ohio-based auto finance company that operates in more than two dozen states and specializes in lending to service members. It lends money primarily to active-duty and former military to buy used motor vehicles.

The CFPB alleges that the company violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibitions against unfair, deceptive, and abusive acts and practices by using aggressive collection tactics that took advantage of service members’ special obligations to remain current on debts. Both active-duty and former servicemembers could encounter trouble with the company if they missed or were late on payments. Once consumers defaulted, they became subject to repeated threats to contact their chain of command.

Can

someone, for the love of profitability, tell me how to turn more of my subprime apps into cash?

Dealers Settle Case with State for $13.5 Million

The New York Attorney General announced a multimillion-dollar settlement with three car dealerships that returns more than $13.5 million in restitution to consumers and concludes an investigation into these dealerships for alleged unlawful sale of credit repair and identity theft prevention services, and other “after-sale” items to 15,000 consumers.

The Attorney General claims that these items added more than $2,000 in hidden costs and fees onto the sale or lease price of a single vehicle in some cases.

The three dealerships involved in the settlement were Paragon Motors of Woodside, Inc., d/b/a Paragon Honda; Worldwide Motors Ltd., d/b/a Paragon Acura; and Civic Center Motors Ltd., d/b/a White Plains Honda. The Paragon dealerships, which are jointly owned, claim to be the largest combined Honda dealership in the country.

Under a consent order agreement signed by the company, they will also pay $325,000 in penalties, fees and costs to New York State.

“When consumers shop for a car, they deserve to be dealt with honestly and fairly – and not to be misled by auto dealers who use deceptive tactics to fleece their own customers,” said Attorney General

Eric T. Schneiderman. “New York consumers must beware: Car dealerships sometimes pad their pockets by charging for worthless aftersale items, which inflate the price of their car. These items are often ones that consumers don’t need, did not ask for and often are not even told about. Businesses need to make a profit to survive, but it’s illegal to do so by duping consumers.”

This settlement is part of the attorney general’s wider initiative to end the practice of “jamming,” unlawfully charging consumers for hidden purchases by car dealerships.

As part of the wider investigation, the state’s Consumer Frauds Bureau recently obtained a consent order that shut down Credit Forget Inc. (CFI), a New York company that sold the unlawful credit repair and identity theft prevention services to car dealerships. The dealerships turned around and sold those service contracts at a higher price. It is a violation of state and federal law to charge upfront fees for services that promise to help consumers restore or improve their credit, and contracts that violate the law are void.

Besides the Paragon dealerships, the Attorney General’s Ofce reached a $41,000 settlement with

L.I. Autoworld, Inc., d/b/a Generation Kia in Bohemia, Sufolk County, after an investigation found the company fraudulently sold CFI services and other after-sale products. As part of that agreement, reached earlier this year, Generation Kia, made $16,000 in payments reimbursing 24 consumers.

company made of consumers related to the unlawful CFI contracts they sold. In addition, the company paid more than $20,000 in restitution to a dozen other consumers who were subjected to deceptive business practices.

Generation Kia also paid a $5,000 penalty. The settlement requires

GE-UCNad_3Q-2015.pdf 1 6/26/15 7:02 AM

That restitution is profits the

Continued on next page

Settlement

Generation Kia to stop using deceptive and misleading sales tactics and to provide documents and disclosures required by law, including the itemization of the cost of after-sale items in sale and lease agreements.

“A car is one of the biggest purchases many consumers make and we must do everything we can to protect them from unscrupulous auto dealers,” said Department of Consumer Afairs Commissioner, Julie Menin.

“DCA has taken an innovative and aggressive approach, investigating dealers’ relationships with banks, creating a safe, afordable and transparent auto loan, and obtaining restitution for consumers harmed by predatory actors. We’re thankful to the Attorney General for his hard-hitting actions against businesses that are deceiving New York City consumers.”

The Attorney General’s investigation into the three Paragon dealerships found that, between 2010 and 2014, they used deceptive sales tactics, including charging consumers for credit repair services and other “after sale” items without their knowledge or by misrepresenting that the services were free.

The Paragon dealers, all of which are owned by the same individuals, claim to sell or lease approximately 1,000 new and used vehicles a month.

According to the investigation, and starting in at least March 2010, Paragon entered into an arrangement with CFI to sell its customers CFI’s credit repair and identify theft protection services.

Every time Paragon charged a consumer for these services they violated state and federal laws banning upfront fees for these services.

The agreement requires Paragon to pay $6 million into a restitution fund administered by a third-party administer to be distributed to Paragon consumers with CFI contracts and to provide each of the about 15,000 consumers with a $500 “settlement card” that can be used toward a new car, repairs or accessories.

– Continued from prior page

The Attorney General’s investigation found that Paragon used fraudulent, deceptive, and illegal methods to sell the approximately 15,000 CFI contracts to consumers.

In many instances, the investigation showed, Paragon simply charged consumers for the credit repair services and concealed that they were charging consumers. In others instances, Paragon allegedly falsely told consumers, who said they did not need or want the services, that the services were free.

Some consumers were sold the services without their knowledge despite the fact that they had excellent credit.

In addition to charging consumers for credit repair and identity theft prevention services without their knowledge or consent, the Paragon dealers added on charges for other after-sale items, like tire protection and Lo-Jack, without clearly disclosing what they were charging for such items.

The costs of these items were often bundled into the vehicle sale price and not separately itemized.

As a result, often unbeknownst to the consumer, the price of the car stated on purchase and lease documents was inflated by the amount of these after-sale items.

The Attorney General’s investigation further found that the dealerships failed to provide required disclosures, such as a consumer’s rights to cancel the credit repair services contract.

In addition, the dealerships sometimes negotiated purchase and lease terms with consumers in Spanish and then only provided contracts and documents in English.

The ofce is continuing to investigate other New York auto dealers that sold or sell after-sale services, including Manfredi Auto Central LLC on Staten Island, which allegedly sold more than 1,400 CFI contracts.

The Attorney General filed a motion to compel documents from Manfredi, after it refused to comply with an investigatory subpoena.

CFPB – Continued from 21

In many other instances, the company exaggerated the consequences of not paying. Thousands of people were victims of the company’s aggressive tactics.

The CFPB believes that the company routinely exaggerated the potential impacts on servicemembers’ careers of remaining delinquent. The company told customers that their failure to pay could result in action under the Uniform Code of Military Justice, as well as a number of other adverse career consequences, including demo-

tion, loss of promotion, discharge, denial of re-enlistment, loss of security clearance, or reassignment. In fact, these consequences were extremely unlikely.

The CFPB also claims SNAAC buried a provision within the fine print of contracts saying that it could contact commanding ofcers about service members’ debts. The company would repeatedly contact commanding ofcers to disclose the debts in an efort to force payment, and suggest the service members were in violation of military law.

RETAIL MARKETS

IDAHO

Kyle Durham, manager, Dale’s Auto Sales, Boise, Idaho:

“We’ve been in business since 1973. The store was started by my dad, Dale Durham.

“We have just one location. We keep about 45 vehicles on the lot. That’s been pretty steady.

“We buy a lot of cars of the street – about 30 percent. We’ll get 10 percent from trades and the rest we’ll buy from auctions. That’s typical.

“We sell, on average, 15 to 18 cars a month.

“Our average retail price is about $10,600. It’s crept up. It used to be $8,000. You could see it creep up over the past five years.

“Our average model year is 2006. Average mileage is 95,000 miles.

“You’re just seeing a lot of cars with (high mileage). The newer cars for us are getting so expensive. If you get a car to compete in the two- to six-year-old mar-

ket, it just doesn’t work for where I’m at.

“We are split about 30 percent each – cars, trucks and SUVs. It’s always been that way. We’ve always stayed in all those (areas). So 60 to 65 percent of our inventory has always been four-wheel drive trucks and SUVs.

“We’re very heavy in domestic vehicles.

“Reconditioning costs are about $700 on average. We’ll always have a safety check. We look at tires and do a detail. We’ll also look at upholstery work and mechanical. Recon has gone up about $100 to $120 per car since last year. Labor is a big part of the cost. Tires are the most expensive part by a landslide. We try and have over 80 percent (tread) on a car. But it’s a car-by-car basis. I will not put brand new tires on a 140,000-mile car. We do some work on site. The rest we will farm out. I don’t have a service facility.

“For advertising I’ll use an older publication called American Classifieds. We

also use digital through our website, Cars.com and carsforsale.com. Most of our money is put into our website and Cars.com.

“I recently sold a 2012 Audi diesel SUV. I sold it for $45,000. It was a regular customer who asked me to find the car. But that was something that I would never buy on spec for the lot.

“Going through the recession was terrible. But the economy is moving. It’s coming back.”

MONTANA

Jeremy DeBorde, president/CEO, J&D Auto, Helena, Mont.:

“I’ve been in business for 20 years.

“I have two locations, both in Helena, about a quarter mile apart. We bought the second lot to expand. They started of as diferent lots, but they are now similar (in inventory). One store is smaller. Total (inventory) at both lots is about 140 vehicles.

“They are buy-here,

pay-here.

“Both stores together sell about 45 to 50 per month on average.

“Our average retail price is about $10,000.

“It’s probably 10 percent better than last year. I attribute it to working harder and using new technology.

“All of our cars – or about 90 percent – come from new-car dealers. During the recession, getting those trades was tough for a while. All the newcar dealers were selling all they could just to keep their doors open. Business has started to (improve) for them because now they are starting to flood me with their trade-ins. We also buy 5 percent of the streets. We get very few from the auctions.

“Our average model year is 2005. Average mileage is right around 120,000. We try to stay in that market.

The lower-mileage cars are very tough to get.

“Cars are probably 40 to 50 percent of our inventory.

SUVs are about 25 to 30 percent and trucks are about 25 percent. I’m not afraid of getting trucks. Where we live, you have to have a pickup, even when the economy was bad.

“We carry domestics more than imports. We carry about 70 percent domestics.

“We spend about $500 to $600 on reconditioning. That’s for a full vehicle inspection, detail and any mechanical work. Costs have gone up about 20 percent from last year.

“We advertise through Facebook, Craigslist, some radio and a little bit in the newspaper. We used to do everything through the paper, now it’s 80 percent Internet. Our strongest (Internet response) has been through Craigslist.

“We recently sold a 2005 Hyundai Tiburon. It was right at 100,000 miles. We got $5,995.

This year has been excellent. It’s been one of our better years.”

WHOLESALE MARKETS

ILLINOIS

Larry Hero, general manager, America’s Auto Auction-Chicago, Crestwood, Ill.:

“The auction has been located here for 13 years. America’s Auto Auction has owned it (for almost) five years.,

“We have six lanes.

“We’re (running) approximately 800 to 1,000 units per week. It’s about the same as our prior year.

“Our sales percentage was doing well up until the beginning of June. We were in the mid-50s to low 60s. June dropped of a little bit. It’s one of our slower months.

“The number of dealers in the (physical) lanes is between 450 to 575.

“Retail has been a little quiet in (mid-June). We noticed that the dealer that used to buy four or five at a time is now buying two or three.

“It is a little slower than usual, but the big factor in our market has been the

weather. We haven’t had a spring or a summer yet, not a consistent amount of nice weather.

“We have had a lot of rain and storms for June. It hasn’t really gotten very warm. So it has kind of hindered the retail buyer from coming out to the dealerships.

“We’re basically a 60-40 sale: 60 percent of our vehicles are fleet and repos and 40 percent are our new-car dealer trades business. We used to be more of a 70-30 sale but we’re trying to get to a 50-50 sale (fleet to dealer trades). Dealer consignment is a business America’s Auto Auction Group really believes in and we do, too.

“We’ve transformed our auction to be more of a dealer auction and that’s worked out well for us. We love fleet business and we love the repo business, but it’s good to have a good mix.

“We have some very loyal customers in the fleet business and repossession business. We have Santander

as one of our major (consignors). We have BB&T Regional, GE Remarketing and ARI.

“Our average price is approximately $5,200 on the consignment (side). Our fleet’s a little higher. Fleet is in the mid-$6,000s.

“The price hasn’t really changed from last year.

“We use AWG for online (selling). We also use Auction Pipeline.

“We do an in-op sale every week before our normal sale. We run about 30 to 35 units.

“We also have a monthly recreational sale, which is a boat and RV sale. We kick that of at noon on the second Wednesday of the month.

“The (online) buying habits in the fleet lanes have been great.

“The lower-end cars have really struggled in recent sales. A lot of dealers have been looking for that retailready unit that they can process in 24 hours and get it on their front lines.”

NEBRASKA

Ryan Durst, vice president, Lincoln Auto Auction, Waverly, Neb.:

“Sales are great. We’re ahead of last year by about 3 percent. I didn’t think we’d be ahead of last year since we had such a great year (in 2014).

“We’re 90 percent dealer consignment and new-car (trades) and I think all of our new-car stores are doing more business, getting more trades and selling more cars.

“The second part of that is we’re doing better at our jobs by getting more cars and being more aggressive. We’re going after the guys who have cars and want to sell cars. We’re not going for the guys that bring 10 and sell one. We’re getting ones who bring five and sell four or five.

“The economy seems to be picking up and doing better. That seems to be helping the independent guys, too.

“Fleet business is good. It’s probably a littler bet-

Compiled by Jeffrey Bellant

ter volume than last year. We’ve picked up a few new accounts within the last few months: It’s some repo and fleet stuf from the Midwest region.

“This is our fourth year with a GSA contract. We had a kind of small sale in May. Our next big one will be July 8 and we’ll probably have more than 125 units. The volume seems to be trickling in a little slower this year, but that usually means a longer season. Last year we had a sale in December which is kind of late.

“(Online) we get new bidders every week. It surprised me how active the Internet is on everything from as-is to the late-model stuf. We have Pipeline and Edge Simulcast. We’re the only auction in Nebraska that has SmartAuction, OVE and Openlane, as well.

“The $3,000 to $7,000 or $8,000 vehicle is our niche. We sell a ton of those.

“I think the general mood’s pretty good.”

CAR

FULLSIZE CAR

LUXURY CAR

MIDSIZE CAR

PICKUP

SPORTS CAR

VAN

ACTUAL WHOLESALE AND PROJECTED RESIDUAL VALUES

2013 MODELS

SOURCE: BLACK BOOK

2012 MODELS

2011 MODELS

2010 MODELS

One of my lovely daughters is getting married next month. While the engagement was announced some eighteen months ago, plenty

shut up and cough up!”

Our house was turned into mission control a year ago and we subsequently lost the use of the formal

Tony Moorby

• 40-year veteran of the industry

• President from 1997–2000 of ADT Automotive

• Served as ADESA’s executive vice president of sales and marketing

• Moorby & Associates 2006–present

• Awarded the Ring of Honor by NIADA

• NAAA Hall of Famer

of people told me how fast the big day would come around. It’s the sort of advice that gets largely ignored until you realize that the event is around the corner and planning activities reach fever pitch.

To be fair, I have had very little to do with the actual planning and conduct of the forces brought to bear to ensure a memorable day for all who attend. I was given some sage advice by a very close friend to, “Turn up,

DISCONNECTED JOTTINGS FROM TONY MOORBY INSURANCE

dining room, part of the family room, my small art studio and the garage has become the shipping and receiving dock.

The dining room currently houses place cards for the dinner attendees, slyly marked with diferent colored ribbons to indicate to the wait staf of the wedding breakfast whether the attendee will be having meat, fish or a vegetarian meal.

There are gift bags for attendees containing all kinds

CR R O O S S W D

By Miles Mellor

29. Reliable

30. They lift up cars

32. Mitsubishi sedan, no longer in production

35. Chrysler truck

36. Billionaire behind Tesla

37. Honda SUV

1. _____ GT3R

6. The Jetta competes with this Toyota model

10. Make a choice, with for

11. Lamborghini model

13. Ford crossover

14. Press rep.

16. Cause for switching gears, perhaps

17. 1998 Toyota

19. Tiny Toyota

22. Old British sports car

24. ____ pressure gauge

25. Saturn model

39. Nissan mini MPVs

42. “Top Gear” copresenter

45. Honda models

47. Serious driving offense, abbr.

49. December 31, e.g.

50. Protected name

51. Leave one road to join another, 2 words

Down

1. Former Formula 1 racing brand, created by a winning driver

2. Mph indicator

of goodies ranging from local favorite Goo Goo Clusters (a chocolate and nut confection held together by soft caramel) to hangover helpers, presumably as aids to those who over-indulge at the ensuing festivities.

There are a myriad of snacks, I assume just in case the banquet fare is insufficient, currently strewn around the dining room waiting to be packed in to twee little bags for delivery to the guests’ hotel rooms.

The family room has been the printing center, linked to my studio as it houses the computer printer. The master plan of invitees and responses takes the centerpoint as reference has to be constantly made to it and updates recorded.

My eldest daughter is a skilled administrator, thank goodness, and my wife a terrific supervisor. I would have lost track of the proceedings months ago.

In the meantime, interminable meetings have been held at the venue, the ca-

Sponsored

5. Up to this point of the year, fnancially, abbr.

6. Porsche model

7. 66, notably

8. Subaru 4-door

9. Grand ___

12. Clancy’s were black

15. Focus and Taurus

18. Dodge sedan

20. ____ drive, article

21. Eastwood movie featuring a car of the same name, 2 words

23. Fed. offce provider

26. Land of opportunity

27. Toward the stern

30. Traffc snarl-up

31. Buick luxury convertible

33. Hollywood’s city

34. Filling station fuid

35. Type of pitcher

38. Vehicle with a sliding door

terers, the hotel, with the wedding planner – yes, I thought we were doing that – and various other parties to whom we are becoming inextricably linked for the duration.

I used to own a wardrobe expansive enough to ensure that I didn’t wear the same things, in combination, for a year. At retirement, those were given to the charity shop – it’s amazing how many people I used to see attired in ADT Automotive apparel. I now own one suit, available for most circumstances of hatch, match and dispatch. My daughter assures me that I still need a new one as my girth has altered along with the passing years. I must say that I’ll need all the spit and polish I can muster to keep up with the beautiful outfits that the girls will be sporting. Even Stag and Hen nights

extend way beyond an evening at the pub and a nightclub these days; trips are made to exotic places to celebrate the upcoming nuptials and last in excess of a couple of days. Honeymoons used to only take that long; they now entail a trip half way around the world.

I used to think that showers referred to the weather and one’s bathing habits. Now we have wedding showers, bridesmaid showers, showers for this, showers for that, showers for showers; it’s a storm out there!

I’m sure everyone will appreciate all the eforts. I know from past experience that the easier a gathering appears is in inverse proportion to the amount of work that went into its production.

I wonder if my other two daughters will take a hint if I leave a ladder against their bedroom windows.

40. Slide on the road

28. Driver’s license is used as one

3. Dealer’s pride

4. Emissions watchdog

41. The U in UCN

42. Where a driver sits in trucks

43. Turn over, as an engine

44. Away from home

46. Resume, abbr.

48. Hospital professional, abbr. Across

AROUND THE BLOCK

NAAA GOES TO SCHOOL

Ellie Aycock Johnson, President of the National Auto Auction Association and general manager of Manheim North Carolina, attended the Mendenhall School of Auctioneering from June 6-14. Johnson was raised in an auctioneering family. Her father, Kenneth Aycock, was an auctioneer and founded the Aycock Auto Auction in Kenly, which is now Man-

heim North Carolina. She graduated with one of the highest grades in the auctioneering class on June 14. Johnson said she “wished she had made the journey many years ago.”

Compiled by Jeffrey Bellant

Auction Raises Money for Foundation

Andy Gabler of Lakeside Auto Sales in Erie, Pa., made the winning bid for a loaded polar white 2013 Mercedes C250W at this year’s charity auction during the National Independent Automobile Dealers Association convention.

He made a sizable contribution to the NIADA Foundation as well.

The vehicle was donated by Automotive Finance Corp., ADESA and Insurance Auto Auctions.

All three companies are subsidiaries of KAR Auction Services.

Gabler, who serves as NIADA’s Region I vice president, won a spirited bidding war with close friend Michael Mansour of the Car Connection in New Castle, Pa., with a bid of $27,500.

The Mercedes, which has an automatic package, leather, a glass sunroof, sport suspension and sport styling, including a rear-deck spoiler, will be shipped to Gabler’s dealership free by ADESA/AFC/IAA.

All proceeds from the auction ben-

efit the NIADA Foundation.

The Foundation spearheads the association’s commitment to charitable giving as well as awarding scholarships to deserving college-bound students across the United States and providing training and educational opportunities to automobile dealers and the general public.

Each year, the Foundation sponsors a student who has displayed outstanding abilities in education from each of the association’s four regions across the nation.

Five young men and women were named as the recipients of the NIADA’s 2015 Scholarship Awards during this year’s convention

Over the past three years, the ADESA/Automotive Finance Corp./ Insurance Auto Auctions-sponsored auctions at the NIADA Convention have raised a total of $69,700 for the NIADA Foundation.

During last year’s event, a 2011 BMW 328xi sold for $23,400.

We invite news items and top-quality photos from our readers to be considered for “Around the Block.” Please include the name of a contact person and a telephone number. Send items and photos to: Jeffrey Bellant. Mail: Used Car News, 24114 Harper Ave., St. Clair Shores, MI 48080. Fax: (586) 772-9400 e-mail: jeff@usedcarnews.com

When customers sell you to other customers, you’re doing something right. Sharing a passion for this business is what we’re all about. So we couldn’t have been more thrilled when we heard what David Kelleher did to help his friend Cass Burch reach his fullest potential: he flew to Cass’ store to sell him on the benefits of Ally SmartAuction®. Further proof that when you love what you do, it’s nothing short of contagious.