Pub. 17 2018-2019 Issue 4

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 11 new jersey auto retailer W W W . N J C A R . O R G LEGAL TRENDS  continued on page 12 be understood that current attitudes on unwanted or degrading communications are much more discerning than in past years and cannot be tolerated. Of course, it goes without saying that unwanted physical contact must be avoided. This is a topic that should receive bold-lettered emphasis in the dealer employee manual. 4. The Stubborn Persistence of Regula- tory Overreach, Despite Encourag- ing Actions Although the past two years have seen reductions in federal regulations and regulatory enforcement, dealers are still burdened with too many unnecessary and redundant regulations. Nevertheless, all businesses, including dealerships, must carefully comply with all regulatory requirements, even as state and federal automobile associations work with gov- ernment to untangle and reduce wasteful regulatory burdens. 5. Why National Politics Still Threat- ens America’s Dealers Unfortunately, national political events and divisions lurk as threats to the nation’s economy and to the business of the country’s car dealers. It is no stretch to observe that such divisiveness can reach into the retail automotive business and negatively affect the bottom line. Most Americans hope that this kind of political gamesmanship will end soon, but there is little reason to believe that the warring parties will reconcile as the 2020 election cycle nears. 6. What American Dealers Need to Know About “Trade Wars” For as long as a generation, American trade deficits and imbalances have been debated. In addition, the Chinese have pilfered hundreds of billions of dollars’ worth of ultra-valuable intellectual property, including computer software and hardware. To try to remedy such embedded problems, the Trump adminis- tration has, among other things, imposed widespread tariffs. The idea is that, to be effective, American actions had to impose high costs and high risk to induce changes toward fairness. How does all this affect dealers? The bottom line is that, while coercive measures are occur- ring, costs for dealers tend to rise, and purchases by consumers tend to sink. At this time, the near-term negative impact has been minimal, and there is significant hope (even expectation) that the “trade war” will be resolved favorably and soon. Let’s hope so, because extended battles over trade would be harmful to many busi- nesses, but especially to dealers. 7. The Brave New Cyber World This topic is already the #1 issue for many dealers and other businesses. Hackers and identity thieves have made the cyber world a dangerous place. America’s auto dealers need to take advantage of the opportuni- ties and benefits of this fast-moving infor- mation age. Marketing and selling online are not optional facets of dealerships any- more; they are absolute necessities. With all this in mind, dealers need constant vigilance and updating in everything that is computerized. 8. Threats to the Auto Dealer Franchise Model The success of the franchised auto deal- er business has attracted the attention of enormous potential competitors: Wal- mart, Amazon and others. Even state franchise laws are under attack by Tesla and others. For the sake of America’s consumers, as well as safety and fairness in the marketplace, dealers need to stay vigilant through their state associations and the NADA to ward off interlopers who would advantage themselves for profits at the expense of consumers. As in past years, factories continue to try to take steps that would erode dealer businesses to increase their own profit- ability. New Jersey ranks as the best, or at the very least, one of the best, in its State franchise law. At all times, NJ CAR staff are on the lookout for developing areas of concern that need legislative attention. 9. Elusive CSI: What Does It Mean and Is It Valid? Measuring the effectiveness of CSI is elusive. That’s because the “science” behind such measurements is hardly scientific or reasonably accurate. The trouble is that factories rely upon CSI to assess dealer performance, even estab- lishing benchmarks for benefits such as bonuses and allocations. Dealers need to stay vigilant about the fairness of such measurements, and to challenge their franchisors when appropriate. 10. Marketing and Advertising in an Age of the Internet and Social Media Plaintiffs’ lawyers and state consumer af- fairs entities are on the lookout for dealers who might overstep applicable regulations. Dealers must make sure their websites are updated regularly and social media is used effectively. Dealers must also have knowl- edgeable and experienced professionals making sure that legal lines are not crossed to limit legal challenges, and the potential for damages and harmful publicity. 11. Recalls Recalls continue to be announced and it will likely continue for years to come. With a heightened emphasis on safety concerns, recalls are announced due to an abundance of caution. Dealers need to aggressively pursue their rights, vis- à-vis their franchisors, when recalled models cannot or should not be sold. Dealers should not bear the expense of f loor planning for those models that cannot be retailed and they must advocate for their customers whose cars become subject to recall. 12. Franchisor “Programs” – Factory Control Over Dealers For dealers, factory “programs” usually offer enticing “carrots,” but sometimes the “stick” can be costly. Factories con- sistently strategize to bend the dealers’ activities and expenses toward what fac- tories hope to achieve – mainly their own sales and profits. Often, such programs do well for dealers in a cost/benefit anal- ysis, but dealers should be wary and study the specifics of such programs. 13. “Subscription” and Other Initiatives by Franchisors to Trespass on Retail The NADA and state associations are studying various “subscription” initia- tives to determine whether such programs are actually stealth ways for the auto franchisors to conduct sales directly with consumers. For example, when a manu- facturer tries to capture direct consumer business by offering an opportunity to possess and use a vehicle that can be “traded up” every few months, such packages may attract many willing retail customers. “Subscription” may be a very good idea, but it is important that the franchised auto dealers remain the ones who do the retailing. 14. Legacy and Succession: Avoid The Legal Nightmare This topic is an all too frequent problem for dealers and their families. Dealers should make sure they assure a smooth and seamless passage of the dealership to the person or persons apt to follow them in the business. The failure to plan can leave surviving spouses and other heirs with expensive and agoniz- ing intra-family disputes. Every dealer