AutoDealer Issue 11 Nov_Interactive

OFFICIAL PUBLICATION OF AADAISSUE 11 DECEMBER 2015HAS THE RETAIL COUNTERFEIT PARTSAUTO STORE RUN THE FIGHT CONTINUESITS RACE?WHY DIGITAL SHOWROOMSARE THE FUTURE THE TAX CONVERSATION WHY THE LUXURY CAR TAX SHOULD GO INTRODUCING JAMES GOODWIN NEW ANCAP CEOwww.automotivedealer.com.au YOUR BIGGEST FAULT? NOT FINDING THE FAULT!PRINT POST 100019106

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CONTACT AADA WELCOME Australian Automotive Dealer AssociationP.O. Box 4530Eight Mile Plains, QLD 4133 CONTENTS ISSUE 11 DECEMBER 2015CONTACT AUTOMOTIVE DEALER WELCOMELevel 1, 350 South Rd From the AADA Chairman ……………………………………………………………………………………………..…………. 4Hampton East, VIC 3188 From the AADA CEO ................................................................................................................................... 4ABOUT US Issue No. 11 December 2015 FEATURES Has the Retail Auto Store Run Its Race? ............................................................................................... 5-6PUBLISHER: AADA Takata Future Up In The Air ..................................................................................................................... 13 Counterfeit Crackdown Leads To Recall ........................................................................................ 14 – 15MANAGING EDITOR: The National Conversation On Tax .......................................................................................................... 16Luke Prendergast Is Your Goodwill Under Threat? ............................................................................................................... 17 What Is The Value Of Your Dealership’s Goodwill? ..........................................................................18 -19ART DIRECTOR: Vergil Dela Cruz Introducing James Goodwin – New ANCAP CEO ............................................................................. 20-21 Product Recall Obligations In Australia ............................................................................................ 24-25ADVERTISING MANAGER: Geoff Vine Misleading? Or Misunderstood? .............................................................................................................. [email protected] Longer Ownership Cycle Threatens Sale .............................................................................................. 27Mobile: 0413 854 779 Cyber Security – How Secure? ................................................................................................................ 28 Failure To Find The Fault Is Your Biggest Fault .................................................................................... 29PRODUCTION MANAGER: Stace Nagle The Future Is Electric And Driverless – And It’s Nearly Here ........................................................ [email protected] FCAI Welcomes New Helmet Laws ......................................................................................................... 33 V8 Supercars – 2015 Stocktake, 2016 Reload .................................................................................. 34-35Phone (03) 9576 9944 | Fax (03) 9576 7277 How To Avoid A Post-Christmas Tax Hangover ............................................................................... 36-37 Safest Used Cars Revealed ..................................................................................................................... 38AUTOMOTIVE DEALER Dealer Profitability Figures Rebound...................................................................................................... 40DELIVERY/CHANGE OF ADDRESS Don’t Miss the AADA Study Tour To NADA ............................................................................................. 41(03) 9576 9944 or Call for AADA Speakers ........................................................................................................................... [email protected] Earn Five Times As Many Reviews With Snap21 ................................................................................... 43 Cheaper Euro Imports On The Way ........................................................................................................ [email protected] POLICY Are Your Contracts Fair? ........................................................................................................................... 6EDITORIAL & ADVERTISING OFFICE Improved Flexibility For Small Business Restructuring ..................................................................... 7-8Lvl 1, 350 South Rd, Hampton East, VIC 3188 AADA Represented At Queensland Parliament Committee Hearing Into Lemon Laws .................. 10 Greens Carbon Emissions Standards Bill Referred to Committee ............................................... 11-12DISTRIBUTION: 4,751 PROFILENo responsibility is accepted by the publisher Cars, Community And Charity: The Beric Lynton Way .................................................................... 22-23for the accuracy of information containedin advertisements in the Automotive Dealer SALES & MARKETINGmagazine. Publication of any advertisement does Upcoming Models .................................................................................................................................... 45not constitute endorsement by the publisher Market Trends: Strong New Car Sales Keep Record In Sight ............................................................. 46of any product, nor warrant its suitability. The Number 1 Advertising & Marketing Campaign In 2015 ................................................................ 47Advertisements are published as submitted by Increase Your Sales Productivity And Rock The Lot! ............................................................................ 48advertisers. WORKPLACE RELATIONSCOPYRIGHT What Are The National Employment Standards? ............................................................................ 50-51No part of this magazine may be reproduced The Importance Of Having A Written Harassment, Bullying And Discrimination Policy ................... 52without the publisher’s written permission. EDITORIALCONTRIBUTORS New Player To Drive Digital Transformation ......................................................................................... 53The views expressed in Automotive Dealer by ATO: Get Onto Superstream .................................................................................................................... 54external contributors and advertisers are notnecessarily those of AADA. STAY IN TOUCH WITH AADA ON LINKEDIN AND TWITTERShare your Simply search our name the next time you’re on LinkedIn and find us on Twitter usingthoughts with us. @AADA_ASN. Be a part of our social channels and connect with like-minded Dealers, share your opinions andGot a question, comment or learn about pressing industry issues as they happen.want to tell us your theory onthe meaning of life? Write to usat [email protected]. Letters must beaddressed to the editor andshould be short and sweet(no more than 150 words).

WELCOME Australian Automotive Dealer AssociationFROM THE AADA CHAIRMAN Terry Keating This country sets very high standards for the question - and also encourage your road safety, and let’s hope those who try customers to ask the question. AADA Chairman to undermine those standards are brought Finally as 2015 draws to a close we to account very promptly. At AADA we anticipate another record year for new carIt hardly seems like three months since our totally endorse and support the actions of sales. We trust you will be able to enjoyAugust convention in Melbourne. FCAI in bringing this matter to the public’s your share of the incremental volume.As the final results became available they attention. On behalf of the directors on our AADAconfirmed what was apparent to all of us The whole genuine/non-genuine parts and board we wish you all a safe and happyin attendance - that this year was by far accessories issue is a big priority for us at festive season and a prosperous 2016.the best in recent years - and I believe the AADA. It is simply too easy for repairers,potential content for 2016 will warrant your especially unethical panel repairers, to fitserious consideration to attend next year. counterfeit parts and pass them off as theYou might have seen recent press coverage real deal. Insurance companies, of course,of “shonky” alloy wheels literally falling should be as concerned as we are. Afterapart in a regulated 50kph test over a pot- all they are a party to the “right to repair”holed test track in Victoria. The wheels are accord that was signed recently. Thischeap aftermarket offerings and the road accord gives repairers the right to use non-tests prove the benefit of fitting genuine genuine parts provided there is full and fairalloy wheels. Sure, the counterfeit wheels disclosure to the customer.are cheaper, but if they fracture at 50kph I imagine the average motorist who pays forimagine what might happen at 100kph. comprehensive vehicle insurance expects any repairs to be done with genuine new parts. Next time you pay a premium, askFROM THE AADA CEO Bruce McDonald One factor is clear. You can influence your We all know about the importance of online dealership reputation, and indeed you can customer reviews and word-of-mouth AADA CEO attempt to manage it. But you can never recommendations in influencing purchase control it. decisions. Decisions based upon reputation.REPUTATION. It’s a powerful factor that Who owns your reputation? NOT YOU! So, how would you describe the reputation impacts your success. Others, primarily customers and those who of your dealership? Professional? Customer-Every business, and especially your have an involvement with you and your centric? Friendly? When was the last timedealership, has a reputation - regardless of dealership, own your reputation. These you asked people what their opinion of yourwhere you’re located, your dealership’s size, people define your reputation by what they dealership was? In many instances every dayhistory or structure. say about you. That’s why it’s so critical the attitude and behaviour of your staff willBut do you understand enough about what to make sure your actions clearly and have an effect on your reputation. So whatyour dealership’s reputation actually is and consistently demonstrate your character. do they think your dealership’s reputation is?the factors that drive it? It’s impossible to But people don’t just keep their opinions As Henry Ford said in times past: “You can’tmeasure, but your sales and profit results to themselves. They never have. People build a reputation on what you are going toeach month are affected – significantly - by share their experiences and opinions with do.”your reputation. Which means it’s probably colleagues. Increasingly, this sharing is done So, as another calendar year comes to aworth allocating some quality time to think online. Which means your reputation can be rapid close, what are you doing right nowabout it. enhanced - or damaged - almost instantly. An to build your positive reputation in 2016? online comment by a disgruntled customer is Before somebody does it for you! a clear and present danger to your reputation and must be addressed. Quickly.4 | DECEMBER 2015 | automotivedealer.com.au

FEATURES Australian Automotive Dealer AssociationHAS THE RETAIL AUTOSTORE RUN ITS RACE?For as long as there have been cars, there Consumers have become far more savvy and by 2013, with the trend continuing upwards. have been car Dealerships. But will that willing to shop around. Nearly 90 per cent of How long until Dealers and OEMs decide it always be the case? With the rising costs potential car buyers visit Dealer and OEM is not worth the millions of dollars required of meeting manufacturers’ requirements, not websites in the early stages of their search. A to maintain and upgrade large showrooms to mention the expense of prime commercial third use comparison and review sites. Plenty and lots, if they can better serve the customer real estate, are we approaching a time when – usually women – use social networking sites via a combination of digital experiences and the bricks and mortar showroom Dealership to gauge others’ experience with a Dealer. a reduced physical presence? Those who is no more? Buying a car used to be all about the car. Now don’t adapt could well go the way of Borders Like so much else these days, the retail it is all about the customer. What do customers bookstores, which disappeared almost auto industry is experiencing a shift online. want? Mobility. The ability to access anything overnight. According to a 2014 study conducted by and everything at the touch of a button or It has already begun. McKinsey & Company, roughly 500,000 cars swipe of a screen, no matter where they In the United States which, along with Europe, are traded on eBay Motors’ website every year. are. The future of car sales lies in an omni- has experienced a 15 per cent drop in the AutoScout24, Europe’s largest online auto channel approach incorporating digital into number of Dealerships in the past five years, store, receives over 300 million virtual visits a marketing strategy aimed at providing the the emphasis is increasingly on developing per month. More than a third of customers say customer with the best experience. a flagship store in city centres, or even a they would consider buying a car online. Take a look at other retail businesses. High completely digital retail store. Where’s Tesla’s Once upon a time, prospective buyers would Street shops are struggling against online showroom? Entirely online. make an average of five visits to Dealerships stores that don’t have the expensive overheads Audi has opened digital showrooms in prior to purchasing. In some areas and brands, associated with a premium physical presence London and Beijing. The Audi City Dealership that is down to just one. Customers now come and the need to stock the store. It happened to in London is the smallest Audi Dealership in into Dealerships with their research done. the electronics and publishing industries; why the UK, but has proved enormously popular. They know what is available and they know will it be any different for car Dealers? Despite just 420 square metres of display what they want, which means the role of the Online retail sales grew globally from just four space and only four models on display, the Dealer must shift from that of information- per cent of all purchases in 2009 to 15 per cent store received 50,000 visits in its first year supplier to experience-broker. automotivedealer.com.au | DECEMBER 2015 | 5

FEATURES / POLICY Australian Automotive Dealer Associationof operation and sold seven cars per week. buyers first-time Audi drivers. Because they providing the complete brand experience. InGet this: half of those buyers did so without can see so well what their finished product will Australia, this could also mean pop-up storesa physical test-drive, such is the virtual look like, these buyers pay on average 120 per in suburban shopping centres.experience provided. cent of the retail price due to their uptake of This time next year, online will account forA customer relations manager guides optional extras. 50 to 60 per cent of automotive sales leads,customers through the brand and helps them So not only does downsizing have the potential compared with 15 per cent just a year ago.build their car digitally from hundreds of to dramatically reduce costs, but embracing In the US and Europe, manufacturers aremillions of potential configurations. They the digital age can also drive higher gross preparing to spend from $500 million to $5can see their virtual car, real-size, on a digital returns. Combine the two and it’s happy days billion over the next 12 months to embracescreen ‘powerwall’. (It doesn’t have to be a for your bank manager. the shift, with up to 30 per cent of the spacepowerwall; Nissan personalises the experience Market research consultants Frost & Sullivan in traditional Dealerships set to be devoted tousing tablets.) predict car makers will open around 100 technology.The new approach has proved ridiculously city flagship stores globally by the end of the What are you going to do? Will you thrive orsuccessful, resulting in a 60-70 per cent decade, taking the car-buying experience die? Are you Borders or Audi?increase in new car sales, with 75 per cent of to the buyer, aiming to be a one-stop shopARE YOUR CONTRACTS FAIR?AADA joins the Australian Competition the contract is worth up to $300,000 in a single meets the prescribed threshold. A guide to and Consumer Commission (ACCC) year or $1 million if the contract runs more the UCT protections can be found on the in urging Dealers to closely review the than a year. Australian Consumer Law website: http://standard form contracts they use when dealing Previously, standard form contracts offered www.consumerlaw.gov.au/content/the_acl/with other businesses. little to no opportunity for the responding downloads/unfair_contract_terms_guide.PDF.Over the next 12 months we will transition party to negotiate the terms.to a new law that offers small businesses AADA has advocated on behalf of its members For further information we highly recommendprotections against unfair ‘take it or leave it’ throughout the parliamentary process of this reading ‘Australian Consumer Law – Whatcontract terms offered by larger companies. Bill and provided a submission to the Senate Dealers Need to Know and Do’ on the HWLThe law will take effect on 12 November 2016. Economics Legislation Committee. We also Ebsworth Lawyers website. This articleThe Treasury Legislation Amendment (Small provided submissions to the Small Business, provides a clear overview of the rights andBusiness and Unfair Contract Terms) Bill Competition and Consumer Policy Division responsibilities for motor vehicle Dealerssupplements the existing law protecting regarding the Treasury consultation paper and regarding UCT protections.consumers. ACCC Deputy Chair, Dr Michael the exposure draft legislation.Schaper, says the new law will redress The amendments to the Bill mean it now may While the Bill has AADA’s support, the UCTimbalances disadvantaging small businesses. cover more contracts involving franchised protections should have been enhanced forCourts will be able to declare void unfair terms new car Dealers. AADA encourages business generally by extending the provisionswithin standard form contracts. Dealers to familiarise themselves with the to include contracts between franchisors andThe law applies to standard form contracts Unfair Contract Terms (UCT) protections, franchisees regardless of the definition inbetween businesses where one of the particularly when entering contract the proposed legislation of a small businessbusinesses employs fewer than 20 people and negotiations involving at least one party that contract. AADA will continue to advocate for greater protections for small businesses in contract negotiations. AADA maintains its position that the Unfair Contract Terms Bill should apply to all business-to-business standard form contracts, with the exception of a publicly- listed company that has the capacity and resources to deal with such matters in its own right. Please note that this article should not be a substitute for legal advice. For legal advice please contact your preferred, qualified legal professional.6 | DECEMBER 2015 | automotivedealer.com.au

POLICY Australian Automotive Dealer AssociationIMPROVED FLEXIBILITY FOR SMALLBUSINESS RESTRUCTURINGAs part of the 2015-16 Budget, the Federal materials for the Tax and Superannuation Laws Under current laws, restructuring requires Government committed to providing Amendment (2015 Measures No. 6) Bill 2015: business assets to be transferred from one greater flexibility for small businesses Small Business Restructure Rollovers. entity to another, such as from a company towhen changing their legal structure. To this a trust, and significant income tax liabilitiesend, the Treasury has released an Exposure This Bill will amend the Income Tax may arise. The impact of these liabilities onDraft and accompanying explanatory Assessment Act 1997. The date of effect for the cash flow and available capital may create an amendment will apply to transfers of assets impediment to restructuring. Currently, roll- occurring on or after 1 July 2016. over relief is available in limited circumstances for business restructures. The amendments make it easier for small The Growing Jobs and Small Business business owners to restructure by allowing package in the 2015-16 Budget introduced a them to defer gains or losses that would roll-over to allow small businesses to change otherwise be made from transferring business legal structure without attracting Capital assets from one entity to another. The new Gains Tax (CGT) liability at that point. These small business roll-over is in addition to roll- amendments seek to provide further flexibility overs currently available where a sole trader or for small business owners by extending the partner in a partnership transfers assets to, or roll-over to apply to gains and losses arising creates assets in, a company in the course of a from the transfer of CGT assets, depreciating business restructure.

POLICY Australian Automotive Dealer Associationassets, trading stock or revenue assets between satisfies the maximum net asset value test at • the transferor, transferee and the ultimateentities as part of a small business restructure. the time of the transfer. These entities may owners of the assets transferred areThere are two types of entities that may be access the roll-over in relation to CGT assets Australian residentseligible for the roll-over. The first is those that satisfy subsection 152-10(1A) or (1B) ofthat are small business entities in the income the Income Tax Assessment Act 1997, which • the transfer does not have the effectyear in which the transfer takes place and relate to passively-held assets that are used by of changing the ultimate economicthat satisfy the maximum net asset value test. the small business entity in their business. ownership of the asset or assetsAn entity will be a small business entity if it The requirements for roll-over relief will be transferred, andcarries on a business and the combined annual available under the following circumstances1 :turnover of the entity and other entities that • the transferee is not an exempt entity or aare affiliated or connected with it is less than • the transferor transfers a CGT asset or all complying superannuation entity, or none$2 million. of its business assets that are CGT assets, of the transferees are exempt entities orThe entity must also satisfy the maximum net depreciating assets, trading stock and complying superannuation entities.asset value test, which requires the sum of the revenue assetsnet values of the entity’s CGT assets, together Further information is available on thewith the net values of CGT assets of other • the transferor chooses to apply the roll- Treasury website. AADA supports theentities that are affiliated or connected with over Government’s commitment to reducingit, to be less than $6 million. This first kind compliance costs and red tape, and increasingof entity may access the roll-over in relation • the transaction is a restructure that has flexibility for Australia’s small business sector.to CGT assets that are assets of the business the effect of changing the type of any or AADA has provided a submission to thecarried on by the small business entity. all of the entities and/or the number of Treasury in support of these amendments.The second kind of entity that might be entities through which all or part of theeligible for the roll-over is one that is an business is operated 1Explanatory Materials, Tax and Superannuationaffiliate of, or is connected with, a small Laws Amendment (2015 Measures No. 6) Bill 2015:business entity for the income year that • no consideration is provided for the Small Business Restructure Rollovers 2015. transfer www.autoreminder.com.au Extended Warranties Reminders Surveys Campaigns Loyality Programs Business [email protected]

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POLICY Australian Automotive Dealer AssociationAADA REPRESENTEDAT QUEENSLANDPARLIAMENTCOMMITTEE HEARINGINTO LEMON LAWSAADA CEO Bruce McDonald position that current consumer protections vehicle Dealers at a competitive disadvantage represented the retail automotive under the Australian Consumer Law are relative to Dealers in other states and industry at a recent Parliament adequate. territories. Such a law would fail to recogniseCommittee hearing into proposed ‘Lemon Mr McDonald told the Committee AADA the national consumer market in whichLaws’. members have made significant investments in distributors and Dealers operate.The Legal Affairs and Community Safety staff and facilities, including specialised tooling Participants to the hearing represented a rangeCommittee met at the Queensland Parliament and country-specific diagnostic equipment. of industry associations, legal advisory bodies,House on October 9 to conduct a public Motor vehicle Dealers compete fiercely for consumer groups and lobby groups, who eachhearing into the consumer protections and high customer satisfaction ratings in sales and provided a submission to the Committee.remedies for buyers of new motor vehicles. service in order to retain their franchises. Mr McDonald was joined in presenting to theMore specifically, motor vehicles with AADA supports the current national and Committee by Tony Weber, Chief Executivenumerous severe defects that reoccur despite consistent generic approach to consumer of the Federal Chamber of Automotivemultiple repair attempts, or where defects have protection and guarantees. It avoids regulatory Industries, and MTA Queensland Generalcaused a new motor vehicle to be out of service duplication and inconsistency through Manager Kellie Dewar.for a prolonged period of time, i.e. a ‘lemon’. industry-specific regulation, and enhances AADA will contribute to work with theseFollowing AADA’s submission to the productivity. fellow automotive industry associations inCommittee in October, Mr McDonald Mr McDonald said enactment of Queensland advocating in the best interests of the industry.attended the hearing to present the case for the industry-specific laws such as those under On November 30, the Committee reported tofranchised new vehicle dealer network. This consideration could lead to unintended the Queensland Parliament, recommendingsubmission is available to read on the AADA consequences and place Queensland motor uniform national laws.website. Mr McDonald restated AADA’sYOUR FIRST CHOICE IN DISTRIBUTORS OF:VEHICLE WASH SYSTEMS MACNEILAutomatic - Soft Foam Brite - Rollover MachinesHigh Volume Conveyor Wash Systems PH: (02) 9757 4700Touch-less Automatic MachinesIn-Bay Self Serve High-Pressure Wash Systems www.goodsight.com.auNational Service & Support email: [email protected]

GREENS CARBON EMISSIONSSTANDARDS BILL REFERREDTO COMMITTEEBy the time you read this article a parliamentary committee will have reported back to the Senate on a Greens party Bill regarding fuel efficiency in new cars. The Motor Vehicle Standards (Cheaper Transport) Bill 2014, introduced by then Greens leader Christine Milne in June 2014, was referred to the Environment and Communications Legislation Committee in August for inquiry and report by 25 November 2015. The policy rationale of the Bill, as stated in the explanatory memorandum, “seeks to improve the fuel efficiency of new cars purchased in Australia to reduce costs to motorists, reduce FRANCHISE DEALERS LET ME HELP YOU SELL MORE VEHICLESJohn HughesWe are expanding our sub-prime finance company Sovereign Credit andinvite enquiries from established franchised dealers.We offer lower rates than our competitors and fast and efficient service.If interested ring me on 08 9415 0100or email [email protected] 77089 890 326 Australian Credit Licence 392266

POLICY Australian Automotive Dealer Associationemissions into our atmosphere, promote Additionally, AADA advised the Committee chargeable vehicles exceeds the vehicle carbonstrong trade ties, reduce dependence on that the imposition of emissions standards emissions standard.imported oil and provide future jobs for the in Australia by direct reference to EU or US The vehicle carbon emissions standard will,automotive parts and services industry”. standards should be treated with caution, as from 2017 to 2020, be 130g CO2/km andAADA does not support this Bill and the methodology and assumptions on which beyond that 95kg CO2/km. The amount ofwill continue to advocate on behalf of the those standards are based are specific to those charge will depend on the extent to whichfranchised new vehicle Dealer network. countries. a vehicle’s CO2 emission exceeds the vehicleAADA provided a submission to the The Bill aims to set carbon emissions emission standard.Committee on 18 September, raising a number standards for new passenger vehicles and light For vehicles exceeding the standard by moreof concerns with the Bill. AADA believes the commercial vehicles from 2017 (phased-in) than 1g CO2/km but no more than 2g CO2/policy rationale of the Bill is broad, ambitious, to align with the existing EU 2020 standard km the charge will be $7 + [(Excess – 1g CO2/ambiguous and contradictory. AADA by 2023. The commencement of the vehicle km) x $20 per g CO2/km)]. Exceeding thedrew the Committee’s attention to a lack of carbon emissions standard is intended to standard between 2g to 3g CO2/km will resultconsultation by the promoters of the Bill with coincide with the cessation of automotive in a charge of $27 + [(Excess – 2g CO2/km)the automotive industry in Australia. manufacturing in Australia. x $35 per g CO2/km)]. Finally, exceeding theAADA criticised the poor drafting of the Bill, The vehicle carbon emissions standard will vehicle emission standard by more than 3g willwhich would include in the definition of a apply to a person who sells 1,000 or more new be charged at $62 + [(Excess – 3g CO2/km) xmotor vehicle, categories for motorcycles and vehicles during a year and applies to passenger $135 per g CO2/km)].mopeds. It is also unclear whether the Bill and light commercial vehicles that are AADA awaits the release of the Senatewill impose emission standards and apply manufactured in or imported into Australia Committee report.charges for non-compliance on the authorised and are sold as new vehicles during that year.dealer network in Australia rather than the The person must pay a charge for the year ifmanufacturer of the product. the average specific emissions of CO2 of the GERMAN TECHNOLOGY Developed for Australian conditions fuchs.com.au LUBRICANTS. T E C H N O L O G Y.12 | DECEMBER 2015 | automotivedealer.com.au PEOPLE.

FEATURES Australian Automotive Dealer AssociationTAKATA FUTURE UP IN THE AIRThe future of troubled airbag manufacturer Mazda, Mitsubishi and Fuji Heavy Industries $A340 million. Its share price has dropped Takata is in doubt after Honda, Toyota (the maker of Subaru) also considering phasing 40 per cent since Honda announced it was and Nissan dropped the Japanese out their use of Takata airbags. dropping it as supplier.company as a supplier. American regulators have ordered Takata to Despite the massive hit the company isDefective inflater and propellant devices meant phase out ammonium nitrate as a propellant expected to survive, depending on how quicklyTakata had to issue a recall affecting tens of in its inflaters unless it can prove it is safe. it can find a new propellant. Airbags constitutemillions of cars all over the world. It is the Ammonium nitrate can destabilise and even about 40 per cent of Takata’s sales, but salesbiggest safety recall in automotive history. cause the device to explode, blasting metal of products such as seatbelts should provideThe three auto giants announced they were fragments into the cabin like shrapnel. Eight enough of a cushion.abandoning Takata in early November, with people have died and more than 100 have been Another concern for Takata is the potentialother Japanese manufacturers including injured in such malfunctions. lawsuits it faces on top of the cost of servicing The National Highway Safety Administration the recall, changing its propellant and the loss also fined Takata a record $US70 million of custom. The company has set aside 68 billion ($A99 million), compounding the losses yen ($A780 million) to fund the recall, but incurred by the recall of millions of vehicles. A still expects to make a profit this year, albeit a further $US130 million ($A184 million) fine quarter of its original forecast of 20 billion yen hangs over its head should it fail to meet its ($A230 million). commitments. The defect has caused the recall of more than The company reported a loss last financial year 30 million vehicles in the US alone, with of 29.5 billion yen, which equates to around millions more worldwide from more than 20 brands.A new approachto F&I Traininghas arrivedAllianz Advantage F&I TrainingAcademy Realise outstanding F&I growth and success through an industry specific competency training program that delivers real-world training as well as a nationally recognised formal qualification. Log on to allianzadvantage.com.au to find out more and enrol.Large General Insurance Company of the Year 2013 Australian Insurance Industry Awards.Allianz Australia Insurance Limited ABN 15 000 122 850.

FEATURES Australian Automotive Dealer AssociationCOUNTERFEIT CRACKDOWNLEADS TO RECALLNews Limited parts via the online auction site eBay after he Health riskCarsGuide Team bought them from a supplier in China. Greg Patton, Chief Executive of the Motor “It’s made me more alert. It’s never going to Traders Association, said the fake parts were aContributor happen again, that’s for sure,” says Mr Gaal. health risk. Mr Gaal says while he only sold 10 sets of “It’s truly deadly stuff. The disregard theseAcrackdown on counterfeit parts has led counterfeit brake pads (from a batch of 40 people have for public health is shocking.” to an unprecedented recall of bogus sets) he believes a lot of other independent The counterfeit brake pads are sold in brake pads that contain asbestos. workshops are likely to have been caught out imitation Toyota packaging for about a quarterThe brake pads – which are supplied in what by the scam. of the price of the genuine parts.appears to be genuine Toyota packaging “A lot of smaller workshops buy stuff online In addition to public safety, Toyota isand are designed to fit Toyota HiLux utes like me … there is a strong possibility there are concerned about the health of more thanand Hiace vans – were bought online by an more (counterfeit brake pads with asbestos) 5,000 mechanics at its Dealerships acrossindependent workshop. out there,” he said. Australia – and more than 100,000 mechanicsIt is the first time a recall has been issued for a Asbestos brake pads were banned from at independent workshops – who may comecounterfeit car part. Australia in 2004 after the material was linked across a car fitted with counterfeit brake pads.The move by the Australian Competition to lung cancer. Mr Patton, whose association representsand Consumer Commission (ACCC) follows independent automotive mechanics anda spate of issues with counterfeit and non- Toyota shocked repairers, said it was “bitterly disappointinggenuine parts that don’t meet basic quality Toyota Australia Corporate Manager, Wayne that private importers of these goods would bestandards. Gabriel, says the company was shocked to prepared to put people’s lives at risk”.In the past few months Toyota has taken discover the bogus parts. The discovery follows Toyota’s Federal Courtaction against suppliers of fake airbags, while “Not only have Toyota customers unwittingly case two months ago against importers ofan independent test of aftermarket wheels has bought counterfeit brake pads, but their safety counterfeit airbag parts, which were likely torevealed several safety concerns. has been put at serious risk,” he says. fail in a crash. According to an urgent Dealer “We are pleased with the supplier’s swift action bulletin obtained by News Corp Australia,Asbestos in brake pads and we will continue our ongoing work to Toyota has “serious concerns about the safetyThe ACC has ordered Western Sydney stamp out counterfeit parts that put customers’ of these parts” after internal testing in Japansupplier Westend Spares to contact all safety at risk.” found there were four ways they could fail tocustomers who bought the counterfeit parts Toyota believes the same supplier is selling deploy an airbag in a crash.and refund the cost to them. other counterfeit parts including spiral cables, A Dealer bulletin issued at the time saysThe owner of Westend Spares, Andrew Gaal, water pumps and wheel bearings. there is a “high likelihood of insufficientsaid he was shocked to learn the brake pads he conductivity to support airbag deploymentbought online from China were found to becounterfeit and contain asbestos.Mr Gaal, who told News Corp Australia hisfather died from asbestos poisoning in 2008,said he took immediate action once he wasnotified about the dangerous parts.“This subject is close to my heart because myfather passed away from asbestosis, so I gotin contact with the people we sold them tostraight away, (we’re) giving them a full refundand getting the pads back so they can bedestroyed,” said Mr Gaal.The independent mechanic said he sold the

electrical current” and “significant risk of But there is no way of tracking them down alloy and raw material – but alloy wheelsairbag non deployment in an accident”. because most were imported from China by should be made solely from raw material toThe technical bulletin says the counterfeit independent distributors, some of whom pose guarantee their strength.part does not have gold plated connectors, the as private sellers on online auction websites. The black market in counterfeit wheels hascrimping of the cable is not strong enough and More than 500,000 wheels are imported from spiked in recent years because genuine partsit does not use copper wire as per the genuine China each year, but none are tested to see if are so expensive and most of the fakes can bearticle. The plastic locking tabs are also ‘poorly they meet Australian Design Rules, and the bought for just $250 each, or $1,000 for a setformed’ or misaligned. regulations are not enforced. of four.The genuine part costs about $300 wholesale, Recent testing carried out by the Federal A genuine replacement alloy wheel on a newwhile the fake part is estimated to cost as little Chamber of Automotive Industries (FCAI), Mercedes can cost up to $2,500 each – oras $50. as part of its ‘Genuine Is Best’ initiative, $10,000 for four. compared the performance of genuine An alloy wheel on a top-of-the-range ToyotaVigilance required Mercedes-AMG alloy wheels, against Yaris hatchback is $1000 — or $4000 for fourExperts say more needs to be done to stop counterfeit copies sold online by an Australian — but look-a-likes cost just $1000 for a set.dangerous car parts coming into the country. supplier. Not all Chinese-made wheels are of“Clearly whatever measures we have in place Conducted inside Holden’s top secret Land substandard quality. Holden and Ford noware not good enough, we’ve left the country Lang proving ground, the testing found the fit Chinese-made wheels to cars on theirwide open to this sort of dodgy behaviour,” imitation wheels cracked, with a chunk of the Australian production lines, but the wheels aresaid Peter Khoury, spokesman for the National rim breaking away, after hitting a pothole at tested to strict internal standards that exceedRoads and Motorists Association. just 50kmh. The genuine wheels ran through government requirements.“Now more than ever we need to make sure we the same test without incident. However, the majority of Chinese wheelhave the necessary laws and measures in place At the time of the testing, FCAI chief executive manufacturers supplying the spare partsto ensure that what comes to this country is and Genuine Is Best spokesperson Tony market have no quality control standards andsafe and suitable for our roads.” Weber said, “The easiest way to tell if a part is the Australian government does not test them.One Dealer speaking on condition of genuine is to purchase it through the vehicle “Some of the Chinese wheel suppliers mightanonymity said: “The problem is, we truly have manufacturer’s authorised supply chain.” put a ‘QC’ (quality control) sticker on it, butno way of knowing how many of these fake But not all counterfeit wheels buckle or have a that doesn’t mean it’s been tested. It just meansparts are out there – but we suspect there are chunk taken out of them. they’ve put a sticker on it,” says Ian Raymond,thousands, because they are quite a commonly Not all counterfeit wheels buckle or have a an expert wheel repairer.used part.” chunk taken out of them. “We’ve seen an increase in the number of Some develop subtle cracks near the centre damaged wheels coming to us for repair,” saysDodgy wheels of the wheel that initially can’t be seen by the Mr Raymond. “The number of counterfeitSafety experts believe there are also ‘tens naked eye. wheels on Australian roads would definitely beof thousands’ of counterfeit car wheels on Experts say most cheap or counterfeit wheels in the tens of thousands.”Australian roads that can buckle or break if from China are made from a blend of scrapthey hit a small pothole at suburban speeds. $tate Government Co$ting you Money? $$$ Wall Mount Unit: 71 key capacity. Recent Victorian Government Take Control today with the eziKey solution! legislation introduced an INCREASE in fines against businesses who • Secure key storage facility with smart software tracking activity elect not to nominate a driver for • Insurance compliant devices for key storage traffic offences! • Highly secure Fingerprint & Licence scanning technology • Define vehicle usage with accurate information and key movement The fines have been increased • Drivers held accountable and responsible for vehicle activity from $866 per offence to a • Desktop reporting tools identifying drivers for infringment notices whopping $2,952 with three • Reduce administration cost & time with desktop software consecutive offences attracting a • Save money on lost key replacement • Take control of your fleet of vehicles today FINE OF MORE THAN $17,000!TCO1169 Please email [email protected] or phone 1300 744 005 to book your free consultation today! www.ezikey.com

FEATURES Australian Automotive Dealer AssociationTHE NATIONAL CONVERSATION ON TAXTax. We all pay it. We all wish we didn’t. But your new in-ground swimming pool and tennis items. Is a LandCruiser a luxury car? A Tarago? If we all recognise it’s necessary to pay for our court. you just go by price, Toyota is Australia’s biggest communal needs such as roads, the police Why do we have a Luxury Car Tax but not a seller of luxury vehicles.force, fire brigade, hospitals, schools, etcetera. Luxury Boat Tax? Why do we have a Luxury CarOnce again tax is raising its head as an issue Tax but not a Diamond Tiara Tax? Where’s the What is the point?in our country, with the Federal Government Helicopter Tax? Is that fair? We don’t think so. The LCT was brought in to protect localconsidering raising the Goods & Services Tax For one, the threshold is too low. Is a $60,000 car manufacturers. How did that work out? With(GST) from 10 per cent to 15 per cent and really a luxury vehicle these days? Depending on vehicle manufacturing set to cease in this countrybroadening it to apply to pretty much everything extras, that can include tradesmen’s work vehicles by 2017, why should the LCT continue?we buy, including fresh food for the first time such as a Ford Ranger. Is a twin cab ute a luxury The Henry Tax review agreed with us.ever. car these days? “Because it is levied on a narrow base, the LCT isWhile AADA believes tax reform is necessary a higher-cost and less efficient method of raisingand welcomes the discussion, we are It’s an ‘absurd’ tax revenue than more broadly based taxes,” thedumbfounded as to why one particular tax Back in 2010 the Henry Tax Review report said.survives when it is clearly unfair, inequitable, recommended the LCT be abolished, stating that “The LCT is also arbitrary in its effect, in thatnarrow and discriminatory. “the LCT’s thresholds may not be an accurate it leads to taxpayers with the same economicWe’re talking about the Luxury Car Tax, which representation of luxury in the car market – for means paying different amounts of taxraises around half a billion dollars in government example, a seven-seater family vehicle and a depending on their taste.”revenue per year, or about 0.1 per cent of the total small sports car may both attract similar amounts According the Department of Treasury, about 10tax take. of LCT”. per cent of cars sold in Australia attract the LCT. Ken Henry, the former Treasury Secretary who Are one in 10 cars on our roads really luxuryWhy luxury cars? headed the review, called the LCT “absurd” and vehicles? We don’t think so.For every dollar over $61,884 that your car said it penalised “people on average means with a It’s time the Australian Government scrappedcosts ($75,375 for fuel-efficient vehicles), the preference for relatively expensive cars”. this unfair tax.government slugs you 33 per cent in Luxury Neither a family car like a Toyota Prado nor aCar Tax. It only applies to motor vehicles. Not to work vehicle come under our idea of ‘luxury’boats. Not to jewellery or real estate or art. Not to16 | DECEMBER 2015 | automotivedealer.com.au

IS YOUR GOODWILL UNDER THREAT? Vinesh George I entirely agree with BDO’s comments; franchisor in any franchise in any industry however manufacturers terminate or do provide for either compensation or the right Company Secretary not renew Dealer agreements in many to sell. and Legal Counsel, circumstances, not just limited to when a AADA Dealership business is subject to an external End of term policies appointment such as receivership. In each caseIn the previous edition of Automotive Dealer and at the stroke of a pen, the goodwill of the The only way to mitigate the threat of a ‘non- I discussed who owns the goodwill in Dealership is immediately diminished to nil. renewal’ is to attempt to discuss, negotiate and your Dealership and one way of protecting In some cases there may be very good reasons agree end-of-term policies and procedures goodwill. In this article I will discuss the for a termination or ‘non-renewal’, but it is with the franchisor/manufacturer. Some biggest threat to goodwill and how to mitigate questionable whether a Dealer should forfeit Dealer Councils may have an opportunity to that threat. millions of dollars in goodwill built up over discuss the issue when the Dealer Agreements End of term arrangements many years. are reviewed. The accountancy practice BDO recently One of the biggest weaknesses of the commented in Automotive Dealer that Franchising Code of Conduct (‘the Code’) for Many franchisors/manufacturers already “Dealership businesses are invested in, franchisees/Dealers is that it tacitly permits adopt best practice in relation to end-of- operated, traded and financed on the conduct that can lead to the immediate loss of term arrangements. Those franchisors/ assumption that there is a value attached to goodwill through ‘non-renewals’. manufacturers understand that the threat of goodwill, regardless of whether that value is dispute and litigation are reduced significantly notional or reflects an actual transaction”. Disclosure when fair procedures and policies allow a BDO go on to say, “Recently, we have The Code attempts to reduce the financial Dealer to recoup some of the goodwill value observed manufacturers terminate franchise impact of a ‘non-renewal’ by requiring of that particular Dealership by selling the agreements, as is their right under many franchisors to disclose the arrangements to business to the franchisor’s/manufacturer’s franchise agreements, when a Dealership apply at the end of the franchise agreement preferred new Dealer. business is subject to external appointment (item 18 of the Disclosure Document). such as receivership. In these circumstances Specific disclosures include whether a For more information, or if you have any any notional or actual value which might franchisor will pay compensation if a questions about this series of articles on goodwill, have attached to goodwill is immediately franchisee is not renewed, and whether you can contact Vinesh George by emailing diminished to nil.” a franchisee will have the right to sell the [email protected]. business at the end of the franchise agreement. I am yet to see a Disclosure Document by a

FEATURES Australian Automotive Dealer AssociationWHAT IS THE VALUE OF YOURDEALERSHIP’S GOODWILL? Mark Ward negotiated in an open and unrestricted market x Capitalisation rate (think multiple) between a knowledgeable, willing, but not = Enterprise value Partner, anxious buyer, and a knowledgeable, willing, - Surplus assets or operating investment BDO Automotive. but not anxious seller, with both parties at arm’s length. (the same thing but calculated aIn a previous edition of AADA’s Automotive different way) Dealer, BDO Automotive considered Lesson 1 – when engaging a valuer, make sure = Goodwill value. Dealership goodwill in the context of what they understand precisely what needs to be Looks easy enough, doesn’t it? Just apply the it is and who ‘owns’ it. In this article we turn valued, which is usually determined by the formula, right? Wrong! The skill of the valuer our mind to how a valuer might approach the purpose of the valuation. rests with their ability to logically determine valuation of Dealership goodwill. the very subjective components of future In the absence of a fair market transaction That sorted, the valuer should then turn his or maintainable earnings, capitalisation rate and occurring, the value of a Dealership’s goodwill her mind to what is the appropriate valuation surplus assets, or operating investment. is extremely subjective - nothing more than an methodology, which will include the following Let’s examine each of those components to opinion. commonly adopted approaches: understand just why they are so subjective: If ‘value’ is subjective, then that must mean - Future maintainable earnings (FME). the valuer will not get it wrong, right? Maybe, • Discounted future cash flows Logically, the starting point will be to but if the assumptions applied to calculate the review historical earnings; however history value are not supported by sound logic then • Capitalisation of maintainable earnings is not always an accurate indicator of the the valuer risks getting it wrong - very wrong! future. None of us has a crystal ball, but a Anyway, when we talk about value what • Asset-based valuation competent valuer should take account of a exactly are we referring to? Often we observe wide range of available data and their own parties to a value discussion are referring • Market-based valuation. industry expertise to form a view regarding initially to two different measures without the future. realising. Think of the differences in, for Save the long-winded explanation of each - Capitalisation rate. Typically reflects the example, enterprise value, fair market value, approach. Let’s turn our attention to the most market rate of return an investor would goodwill value and share value. Accordingly commonly applied valuation methodology expect to receive relative to the risk of a any discussion around value must begin by with respect to Dealership businesses: the Dealership investment. It will consider ensuring the parties agree on what specifically capitalisation of maintainable earnings (CME). issues such as industry and brand outlook, is being valued; a reference only to ‘valuing the The CME approach involves identifying a investor expectations, prevailing interest business’ will likely lead to confusion. maintainable earnings stream for a Dealership rates, quality of management and the Even when the parties agree on ‘what and multiplying this earnings stream by liquidity of the investment itself. As a specifically is being valued’, they still need an appropriate capitalisation multiple in guide, Dealership businesses are generally to contend with valuation terminology such order to calculate the Enterprise Value. Any considered to have a capitalisation rate of as surplus assets, operating investment, surplus assets, along with other market value between 20 and 30 per cent. There is some capitalisation rates, normalisation adjustments, adjustments, are added or deducted from science to calculating a capitalisation rate, minority discount, control premium, strategic the Enterprise Value in order to calculate the which we will explore in the next issue of value, etc. There is a lot to think about but notional goodwill value. Automotive Dealer. what exactly are these things and how do they - Surplus assets or operating investment. translate to valuing a Dealership? The maintainable earnings estimate may Most valuers will refer to the balance sheet Let’s assume you want to value the Dealership require normalisation adjustments for non- in order to identify surplus assets to be goodwill at fair market value. You have heard commercial, abnormal or extraordinary deducted from the enterprise value in order it quoted many times before, but in the interest events. to calculate goodwill. This is a perfectly of making sure we are all on the same page, reasonable approach; however sometimes fair market value is defined as a sale price Lesson 2 – understand the valuation identifying what is ‘surplus’ can be difficult, methodology adopted by the valuer and why especially for a valuer not familiar with they believe it to be the most appropriate. the industry. BDO’s preferred approach The CME approach is formula-driven and appears reasonably easy to follow, requiring the valuer to identify or calculate the following components: + Future maintainable earnings18 | DECEMBER 2015 | automotivedealer.com.au

is to calculate the appropriate operating applied to future maintainable earnings will we will dive deeper into the more technical investment, which puts to the side the deliver an enterprise value that represents four aspects of valuing a Dealership, including financing preferences of the owner and times the earnings. considering the capital asset pricing model as normalises the investment required for Again, referencing the formula under the a methodology to calculate the capitalisation things such as fixed assets, parts inventory, CME valuation approach, when we deduct rate, and our approach to calculating an equity in used vehicles and sufficient the operating investment (or surplus assets) appropriate operating investment. working capital. from the enterprise value we derive the notional value of goodwill. In our experience, We will also consider some common questionsLesson 3 – while the CME valuation approach the appropriate operating investment will raised with us, such as: before or after tax,is formula-driven, the components are very normally pencil out at one year’s profit, do different investor types apply differentsubjective.A competent valuer should therefore assuming a benchmark profit based on capitalisation rates, and does the brandform a logical view using their valuation turnover. influence the capitalisation rate or the futureexpertise and industry knowledge. Therefore, four times normalised annual maintainable earnings. profit, representing the Enterprise Value,Rules of thumb less one year’s profit (assuming a benchmark We will also provide an overview of our level of profit), representing the Operating observations in respect to Dealership valuesFor many years Dealers have referred to an Investment, approximates a goodwill multiple and transactions more generally.earnings multiple of, say, three, to arrive at a of three times earnings. This approach is nogoodwill value. This is a rule of thumb, not a replacement for a formal valuation but is For more information, or if you have anyformal valuation approach, but it will often commonly used to start a conversation. questions about this article, you can contactprove useful as a starting point and here is In the next edition of Automotive Dealer Mark Ward, Partner, BDO Automotive, bywhy: We have already established that an emailing [email protected] capitalisation rate for a Dealershipbusiness is, say, 25 per cent, which when CALL 18OO 3OO 311 ENDLESS POSSIBILITIES WITH PROMODEK STEP UP YOUR NEXT PROMOTION! CREATE A RAISED MODULAR PLATFORM OF ANY DESIGN, SIZE OR SHAPE.STRONG | EASILY TRANSPORTABLE | SIMPLE TO UPDATE INLAY GRAPHICS MAKE AN APPOINTMENT NOW! FOR A PRODUCT DEMONSTRATION IN YOUR DEALERSHIP IDENTITY MATTERS BRANDING SOLUTIONS WE BELIEVE IN THE POWER OF OUR EXCHANGEABLE DISPLAYS CONTACT TROY KNOX – BRAND MANAGER ON 0434 319 299 OR [email protected] automotivedealer.com.au | DECEMBER 2015 | 19

FEATURES Australian Automotive Dealer AssociationINTRODUCING JAMES GOODWIN– NEW ANCAP CEOThe Australasian New Car Assessment the world, and that’s always going to be the know about safety ratings and know about Program (ANCAP) announced James case.” ANCAP. Goodwin as its new CEO in September. “The industry is changing and consumerFrom our next edition James will contribute a His role as CEO expectation is changing. Everyone will do wellregular article, but we thought you might like James represented brands when he was with if the consumer stays as the key focus, whetherto get to know a little about the man and his the FCAI, working with Dealers on the move it’s ANCAP or whether it’s a Dealer. If we’reintentions first. to drive-away pricing, the advertising code and responding to what the consumer wants andJames joins ANCAP after working at the other consumer issues. At AAA he dealt with needs, we’ll be in a good situation. We need toAustralian Automobile Association as Director Dealers on competition issues and the right work with the brand and the Dealer to make– Government Relations & Communications, to repair issue. He will soon meet with AADA sure everyone’s got the resources throughoutas well as time as Acting Chief Executive. Prior CEO, Bruce McDonald, and tour showrooms the chain of buying a vehicle.”to that he worked for the Federal Chamber to further inform himself on the issues facingof Automotive Industries, so he has a solid Dealers. The AADA-ANCAP relationshipgrounding in the retail automotive industry. “I can see from the different sides – both the “I believe we’ve already got a positiveJames on: consumer advocate side of things as well as relationship – and I’d say it’s more than aThe role of ANCAP understanding the Dealer industry and the relationship, it’s a partnership. As with any“There’s been some talk about ‘why do we relationship the Dealers have with the brand as partnership we could always improve it.need ANCAP when the local manufacturing well. I have contacts and networks across that We’ve got a new leadership team at ANCAPindustry goes?’. ANCAP has always been about sector and I would like to build on that. and also at AADA, with new chairs and newthe local marketplace and not about the local “I see my role as a stakeholder relationship one CEOs, so I’d say it’s a good time to improveindustry. It’s always been assessing imported and improving those stakeholder relationships. communications; we can look at new ideasvehicles. If we improve the relationship ANCAP has and how we can partner together and improve“Six of the top 20 selling vehicles on sale in with all our stakeholders, with our member that relationship. Hopefully we will have anAustralia at the moment don’t have a Euro organisations, with government, with Dealers improved relationship, both for the consumerANCAP rating, so we can see we’ve got - both new and second-hand - and with the and for the Dealer.different market preferences to other parts of media as well, what we’re doing is actually “I see that ANCAP has a role as a resource helping the end consumer know about safety, to Dealers and that means we need to make sure the Dealers have got the resources and the knowledge they need to be able to inform20 | DECEMBER 2015 | automotivedealer.com.au

the consumer about safety. In that way we’re flow through into assisting the Dealer and the “I want to make sure that Dealers havegetting a better road safety outcome for the salesman in selling vehicles and selling that the information and the resources to talkwhole community. new safety technology. confidently with consumers about ANCAP,“ANCAP shouldn’t be a threat of any kind to “Dealers have a very important role to play and also about broader road safety and safetyDealers. It’s actually a resource. We see that in improving the vehicle fleet and, through technologies in vehicles.”people want to know about the safety rating of that, reducing the road toll. They may not seethe vehicle, so let’s make sure they’ve got that themselves immediately as doing that, but they Getting the message outresource and use it as a way of selling vehicles.” are part of that process. “We need to look at digital resources, onlineHow Dealers can use ANCAP “Here’s the stark reality: if you’ve got a five-star resources, as well as in-showroom material“Our research shows that 66 per cent of people car you halve the chance of serious injury and marketing material. Down the track,reference ANCAP ratings before buying a car, in a crash than if you were driving a three- with things like apps and QR codes, let’s seeand consumers rank safety as equal priority star. Dealers have a vital role in the chain if we can work together to improve people’swhen buying a new vehicle, equal with price. of improving the road safety outcome for knowledge of ANCAP, and also to make sureIt’s well-respected, so let’s see how that can Australia.” that people are confident that they’re getting the safest vehicle they can, and that they How ANCAP can help Dealers can get that information when they’re in the “We’re continually raising the safety bar. What showroom. it takes to get a five-star vehicle changes over “We know that the marketplace here is time as the vehicle fleet improves. So we need changing. From a consumer perspective, we’ve to make sure the Dealers and the sales staff got a lot more online and digital research. are aware of those changes, but also if they’re Dealers can look to embracing the online and selling an older vehicle, a second-hand vehicle, digital space, looking at social media.” in their showroom, that they’re aware of those AADA welcomes James into the role and looks differences and they’re comparing like for like. forward to his regular contributions to this publication.SAFETY SELLS.After walking your customers throughthe showroom, walk them through theupdated ANCAP website.The ANCAP website lists the safety ratingsfor more than one thousand different makes,models and variants with the ability to accesscrash test results, photos and videos all fromthe one screen.So if you’re looking to secure that next saleby impressing your customer with safetyinformation second to none, walk them through: ancap.com.au

PROFILE Australian Automotive Dealer AssociationCARS, COMMUNITY AND CHARITY:THE BERIC LYNTON WAYAADA has long advocated the need “I didn’t find all of the balls “It’s just nice to see that when you raise for Dealers to get involved in their exciting; I thought it would something there’s a benefit you can measurably communities, and few embrace be better to put our money see and other people can see.this better than the team at Bruce Lynton into creating our own, “We get a lot of requests. There are a lot ofAutomotive Group, led by Dealer Principal, choosing charities that meant great charities out there but unfortunately weBeric Lynton. something to the family and don’t have the ability to meet all those.”The company recently won the Motor Trades trying to have a fun party The ball raises on average $100,000 a year,Association Queensland Community Award, night for people to come with a peak so far of $220,000 when thein recognition of 15 years of hosting a charity along and enjoy themselves Lynton family donated a $60,000 car that wasball that has become a social institution on whilst raising money.” auctioned off for above-retail value on thethe Gold Coast, raising in that time more than Several different charities night.$1.6 million for several charities. have benefited over the “I’ve sold a couple of cars off it because peopleKnown colloquially as ‘The BMW Ball’, the years, with Cancer Council have come in and said, ‘Because you supportlavish black tie event is the Lynton family’s way Queensland and Guide Guide Dogs I want to buy my car here’. Couldof giving back to a community of which it has Dogs Queensland the I definitively say that I’ve sold X number ofbeen part for more than 40 years. It was Beric’s mainstays. This year those cars, or 100 or 200 cars? Probably not. It’sidea, after attending similar (lesser) events and two organisations shared about business, sure, but it’s also about athinking ‘we can do better’. more than $120,000 with family feeling that we’re doing something for“I just thought, ‘We’re spending a lot of money fellow charities Youngcare, a community we’ve been in for over 40 years,sponsoring all these different things’,” he says. Men of Business and latest and having an involvement and trying to help beneficiary, 4 ASD Kids. with change. With a three-course meal, “It’s a nice feeling to be able to give back. You six-hour beverage package, want the reward to be that you get a bit more charity auction and all-night business from it, yeah, but is it going to stop live entertainment, the Bruce Lynton Charity you from doing it at the end of the day? No.” Ball (to give it its official title) has become The Lyntons are, at 41 years, Australia’s one of the highlights of the Gold Coast social longest-serving BMW Dealer, and in 2015 calendar. Attendees are a mixture of clients, they celebrated 20 years as a Land Rover charity partners and Gold Coast locals who Dealer. Beric’s father, Bruce, began selling enjoy a dress-up for a good cause. Mayor of the cars on the Gold Coast in the late 1960s after Gold Coast, Tom Tate, was one of this year’s moving up from Sydney, and it’s been a family notable attendees. business ever since. “We get people who fly interstate for it now. “I washed cars as a 10-year-old, nine-year-old, There’s one lady I think who’s flown from then went to university and got a Commerce Melbourne 13 times. It’s a big event,” says degree, worked here during that, then started Beric. working here in ’94,” says Beric. The Lyntons don’t charge any administrative “You grow up (with it). It’s what you learn; it’s costs for running the event, which equates to what you know, it’s what you understand. It’s a a full-time job for one person for six months challenging industry, but in many respects it’s every year. rewarding.” “We just absorb that as our contribution to the The 41-year-old had a stint in Germany community. Our business really relies on the with BMW, became General Manager of the community supporting us. We need to support the community and we need to put back into it.22 | DECEMBER 2015 | automotivedealer.com.au

business in 1998, and was officially appointed service adviser being super-polite, or how a it’s also been great for business.the BMW Dealer Principal in 2003. sales person treats someone. It can be how the “I’ve driven BMWs since ’96 in productionFor him it’s a people business, which means receptionist talks to them, potentially the car- car racing, so it’s always been our brand thatlooking after staff as well as customers. cleaner who’s out the front washing the cars, we represent. People take notice of it, and you“We employ 170 people across everything that the technicians involved in doing the work and just don’t realise it. So we put that car on thewe’ve got now. It’s nice to see the employees completing it properly. It’s a team effort and showroom floor now, when we’ve got time.who respect and appreciate what you do for when the team achieves something like that, We’ve had customer drive days where I canthem, and you respect and appreciate what it’s great to recognise it. take them on a few laps, or they want to flingthey do for you. You get to meet a lot of great “I might get to stand up at the dinner in one of their BMWs or something around thepeople, both employees and customers.” Melbourne or Sydney and receive the award track and ask a few questions.”Beric says it’s important to give staff goals to and the accolades in front of my peers, but It’s also a way for employees to bond and learnstrive for, and to celebrate when achieving it’s a team effort, and every time we achieve more about the business. Some of the staffthem - such as last year’s Land Rover Dealer something like that we go out to dinner as a mechanics volunteer to help out on race daysof the Year (Metropolitan) award, one of a few team and celebrate. This year we took 65 of and the keen ones use the time to learn morethe Land Rover side of the business has won in them out to dinner for winning Land Rover about the business.recent years. Dealer of the Year. You’ve got to celebrate “I guess in a way it’s also a bonding session.“That’s a team effort; it takes every member those occasions. You’ve got guys and girls And the ones who have interest will talk to youof that team to achieve that. It’s not just sales who treat it as their own and care about every about work; they want to understand thingsresults; it’s based on customer satisfaction, it’s cent and every dollar and every customer. beyond what they may get to see.”on parts results, sales results - so many aspects. The employees make the business. If we’ve got As Beric says, happy employees make forIt takes every member of that team to achieve happy employees we’re going to have happy happy customers, which makes for a happyit. customers.” bottom line. The Bruce Lynton Automotive“Customer satisfaction isn’t just about a Another family passion is motor sport. Father, Group is a shining example of the benefits of Bruce, raced for many years, as has Beric over integrating staff, customers and community. the past 20 years. It’s a fun hobby for him, butTITANBEAT THE RUSH - CALL FOR A FREE DEMONSTRATION TODAY! MORE INFORMATION AT: WWW.TITANDMS.COM.AU PERTH SYDNEY 1/88 Walters Drive Private Box 30, Herdsman WA, 6017 12 Phillip Mall, Kendall St West Pymble NSW, 2073 Australia Titan DMSBRISBANE Australia P.O Box 513 Kippa-Ring QLD, 4021 Australia Ph:+61 07 3166 9907 Ph:+61 08 6467 7714 Ph:+61 02 9016 4139 [email protected]

FEATURES Australian Automotive Dealer AssociationPRODUCT RECALLOBLIGATIONS IN AUSTRALIA Evan Stents Dealer will ever take action to recall a vehicle safety defects can be unforeseen, and in those or a part independently of a manufacturer, cases manufacturers and suppliers need to Lead Partner, Dealers should understand their own understand their obligations to respond to Automotive Industry independent obligations. safety defects. Group | HWL Ebsworth Lawyers Safety defects Voluntary recalls Under the ACL, goods (such as motor Unless a manufacturer or Dealer (as aThe Volkswagen diesel emissions vehicles) are deemed to have a safety defect ‘if supplier) is compelled by the relevant reporting scandal provides a timely their safety is not such as persons generally are Commonwealth Minister to conduct a recall, opportunity to review product recall entitled to expect’. This means that whether there is no compulsion on a manufacturer orobligations as they relate to motor vehicles in a motor vehicle is considered to have a safety Dealer to do so (although there are mandatoryAustralia. defect will be considered on a case-by-case reporting obligations, which are discussedThis article is limited to product recall and basis. further on).reporting obligations in the context of safety The ACL sets out a number of relevant However, section 138 of the ACL makesdefects. This is not to suggest or imply that circumstances to take into account in manufacturers liable for loss or damagethe situation concerning Volkswagen diesel determining the extent of the safety of goods, suffered by an injured individual if aemissions amounts to a safety defect. including: manufacturer supplies goods , in trade orThe safety of consumer goods (including commerce, that have a safety defect and havetheir components) such as motor vehicles 1. the manner in which they have been caused injury. Manufacturers can also be liableand motor vehicle parts is regulated by the marketed, and the purpose of the good for loss or damage suffered by dependantsAustralian Consumer Law (ACL). Among of an injured person and for damage orother things, such as statutory warranties 2. packaging and the use of any particular destruction to other goods (for example,as to acceptable quality, the ACL imposes mark (for example, ‘Hazchem’ codes), and another motor vehicle damaged in a collisionobligations on suppliers and manufacturers of caused by a safety defect).consumer goods concerning product recalls. 3. instructions or warnings with respect to Dealers can only be liable under section 138Product recall obligations under the ACL also the use of the goods. to compensate individuals who suffer lossapply to Dealers, not just manufacturers, since and damage if the Dealer is deemed to be aDealers are usually the ‘supplier’ to consumers. More often than not, however, a safety defect manufacturer under the ACL. This will onlyAccordingly, whilst it might be rare that a will arise not because of the inherent nature occur if the Dealer itself directly imports the of a particular good (such as an automotive vehicle and the manufacturer of the vehicle has part), but because of a manufacturing, no Australian place of business. It would be production or design flaw. For this reason24 | DECEMBER 2015 | automotivedealer.com.au

very rare for this to occur. Mandatory reporting in case of actual death 2. disclosure to the public of the:Manufacturers and suppliers are strongly or serious injury (a) defect or dangerous characteristic of theencouraged by the ACCC to be proactive and If either a manufacturer or Dealer becomes motor vehiclestake steps voluntarily when it comes to safety aware of an actual death or serious injury (or (b) circumstances in which use of thedefects. In most cases the best course of action illness) and either: motor vehicles may be dangerousfor a Dealer will be to take steps in cooperationwith a manufacturer, subject to getting 1. considers that the actual death or serious 3. repair, replacement of the motor vehiclesappropriate legal advice, since manufacturers injury was caused, or may have been at the manufacturer’s cost, orare generally much better equipped to caused by a particular component. orcoordinate and conduct recall action. 4. refund of the purchase price of the motorA manufacturer or Dealer might decide 2. becomes aware that some other person vehicle.to take voluntary steps to conduct a recall considers that the actual death or seriouswhere, for example, they become aware of a injury was caused or may have been A Compulsory Notice can be issued to anymanufacturing or production error, or receive caused by the particular component, person, whether a manufacturer or Dealer,a complaint from a consumer and considers who has supplied goods of a particular kind.that a particular good: then the manufacturer or Dealer must, within A person who is issued with a Compulsory two days of becoming aware, report the Recall Notice must comply with the 1. may fail and cause injury, and/or component to the Commonwealth Minister. requirements of the notice; it is not a voluntary 2. does not comply with an applicable safety This is not a compulsory recall obligation recall. A failure to comply with a Compulsory but a compulsory reporting obligation. Recall Notice is an offence under the ACL. standard. (It is an offence under the ACL The reporting would likely lead to the If a person fails to comply with a Compulsory to supply a good which breaches a specific Commonwealth Minister making public Recall Notice they may not only be fined but safety standard, if there is one.) details of the affected component and may be liable for loss or damage suffered byIf either a manufacturer or Dealer decides to potentially, a compulsory recall (discussed another person by reason of a safety defect ofconduct a voluntary recall for a safety issue, below). the good the subject of the Compulsory Recallit must notify the relevant Commonwealth Notice.Minister within two days of that decision. The Recall GuidelinesCommonwealth Minister may then in turn The Australian Competition and Consumer Concluding remarkschoose to make details of the recall public Commission (ACCC) strongly encourages Safety defects and potential liability for themOnce the Minister is notified of a voluntary voluntary recall action in consultation with the are very serious matters. Dealers’ obligationsrecall, it is out of the manufacturer or Dealer’s ACCC and a ‘pre-planned’ recall policy. are also independent to their contractualcontrol as to whether or not the Minister To assist the conduct of voluntary recalls, the obligations to manufacturers under a Dealerdecides to make public the details of the ACCC has published ‘Consumer Product Agreement. Accordingly, if a safety defectvoluntary recall, for example, by requiring the Safety Recall Guidelines’. The Guidelines issue arises, you should act quickly and seekpublishing of a Safety Warning Notice. are not law, but are designed to help independent legal advice about both what yourWhether or not the Minister decides to do so manufacturers and suppliers plan for and obligations are and what course you shouldmay depend on the: respond to safety incidents and to comply take in cooperation with the manufacturer and 1. nature of the reported component and its with their legal obligations under the ACL. the regulator. defect or dangerous characteristic In this way, compliance with the Guidelines 2. detail of any recall plan of action the may assist to minimise exposure to liability manufacturer or supplier intends to associated with safety defects. implement, or Similarly, the Federal Chamber of Automotive 3. extent to which the manufacturer or Industries (FCAI) has also published a supplier has already given public notice of members’ Code of Practice for safety recalls. the defect or dangerous characteristic of the good (if applicable). Compulsory RecallsThere is no requirement under the ACL for the The Commonwealth Minister has the powerMinister to consult the manufacturer or the to issue a Compulsory Recall Notice under theDealer in respect of what action the Minister ACL. Whether the Minister decides to do soshould take (if any), such as whether or not may also depend on the factors listed above.to publish details of a voluntary recall or any If this occurs, the Compulsory Recall Noticesafety concern with a particular component. may require: 1. recall of the affected motor vehicles automotivedealer.com.au | DECEMBER 2015 | 25

FEATURES Australian Automotive Dealer AssociationMISLEADING? OR MISUNDERSTOOD?Thanks to the age-old stereotype of the ‘Latest Offers’ tab, you find the manual on section details what the car usually costs, and shonky used car salesman, car Dealers sale for $24,990 drive-away. This is where the ‘Latest Offers’ shows what you can save on have a tough time convincing the general supposed “games” come in. According to the particular vehicles at a particular time.public they are in fact on the up-and-up. And author, the ACCC should step in to “cut the Surely the article is not suggesting that Dealersit doesn’t help when a major news publication confusion”. would hold someone to the higher price if theyclouds the issue with confusion over advertised AADA fails to see the issue here. ‘Latest Offers’ failed to notice the ‘Latest Offer’ deal? Thatdrive-away pricing. means just that: specials. The ‘Build and Price’ would never happen.A major media outlet recently devoted an Surely car-makers don’t have to change thearticle to accusing auto brands of “playing entire website every time they have a model ongames with consumers” regarding the drive- special? That’s literally what the ‘Latest Offers’away price of their vehicles. tab is for!According to the story, the Ford website had The article implies that the auto industrythe Focus with a recommended retail price of is against publishing drive-away prices,$23,390. Via the ‘Build and Price’ section, you but that’s not true. AADA and Dealers arediscover that the drive-away price for a Focus totally supportive of it, and we thought it wasTrend manual is $27,176. important to clear that up.The author then points out that under the Boost your workshop’s profitability with quality Karmot products.AS SEEN AT THE AADA CONVENTION:••SRhitecrhpaFilFtoeurrCPrluastheeBrrake Tester • RSittecnhhCooj VileShpicrilnegHCooismtspressor •EACH OF THE ABOVE PRODUCTS PROVIDE A COST SAVINGS AND A POTENTIAL EARNINGS TO YOUR BUSINESS! SYDNEY: (02) 9622 7388Visit us online at: MELBOURNE: (03) 9800 1187 BRISBANE: (07) 3711 2544w w w. k a r m o t . c o m

LONGER OWNERSHIPCYCLE THREATENS SALEAUS study showing drivers are keeping consumers would like to upgrade their cars “very likely” or “somewhat likely” to buy a their cars for longer than ever has every three years or less and 75 per cent would new car from the Dealership that services their serious ramifications for new car sales be “very likely” or “somewhat likely” to trade current vehicle, and you see the importance offigures. in their vehicle today if their monthly payment maintaining a relationship and being proactiveA study conducted by AutoAlert showed that would remain about the same. in communications.Americans now keep their new cars for an Those numbers present Dealers with anaverage of 77.8 months (six and a half years). opportunity, provided they can meet that Why do drivers upgrade? The top motivatingUsed car owners keep theirs for 63.0 months, condition of keeping monthly payments the factorswhich means that, combined, American car same. Almost half (49 per cent) of respondentsowners go 67.9 months between buying cars. were not aware they were able to upgrade their • Better fuel-efficiency: 83 per centThose retention rates have grown dramatically current vehicle before the end of their loan or • Current vehicle needs too many repairs: 68since 2006: an increase of 26 months for new lease, while 69 per cent said it was importantcar owners and 25 months for used car buyers. for the Dealer who sold them their vehicle to per cent notify them when it was possible to upgrade • Additional safety features: 65 per cent.On the bright side without altering their monthly payments.The good news is that 63 per cent of Add that to the 57 per cent saying they wereKEy ManagEMEnt MadE SIMPlE with Getting a key is as easy as 1 2 3 the Secure Key Management System Save time, money and minimise frustration with 1 Insert your KEYTRACKER, one of the simplest and most cost effective key management systems currently personal colour available for keeping track of who has the keys coded access peg... at any time. 2 Twist to release The BenefiTs are simple... • No more lost keys, even for a few minutes the desired key... • Only authorised staff can access the board • Organised layout – all keys in one place 3 Remove key! • Ensures you always know who has the keys • Minimises opportunist theft Access peg cannot be • Secure Cabinet or Safe removed until key is • Rugged construction deters vandalism • Modular system with total flexibility to returned allow business growthThe system comes complete with Anti-Tamper Colour Coded Identification SystemSeals; Retention Pegs and Coloured/Numbered The Access Peg is engraved with the staff memberAccess Pegs, ready for immediate use. initials or number, enabling easy identification of who has the key. The Pegs come in 14 different colours which provides the ability to allocate a colour to a particular department or staff ranking.For a no oblIgatIon 30 DAY FREE TRIAL Call 1800 814 716 today …or for further information visit www.keytracker.com.au

FEATURES Australian Automotive Dealer AssociationCYBER SECURITY – HOW SECURE?Readers might be aware that many Connectivity helps with navigation, music, Public key infrastructure is a system used for major car companies are being sued in video streaming and remote control, but it secure banking transactions and is proposed California over deaths allegedly caused also makes vehicles vulnerable to cyber-attack. for automobiles as well, but currently Australiaby the lack of adequate safeguards for keyless Recent research showed that hackers can take has no guidelines in place regarding theignition systems. control of a vehicle remotely by taking over implementation of such a system on our roads.The suit alleges that 10 of the world’s major the steering wheel, accelerator, brakes, ignition The US and Europe do, but Dr Foo is notcar-makers are culpable in 13 carbon switch and more. impressed.monoxide poisoning deaths. Bentley, BMW, If the providers of remote security systems “The sheer amount of vehicles to be connectedFord, General Motors, Honda, Hyundai, can’t guarantee their integrity, customers poses safety concerns, along with privacy,Kia, Mercedes-Benz, Nissan, Toyota and will be reluctant to use them, meaning those security and scalability under different trafficVolkswagen were all named, potentially companies, and possibly Dealers, will miss scenarios,” he told the conference.involving tens of millions of cars. out on the recurring income from managing “The proposed systems in the US and EuropeThe lawsuit, filed on behalf of 28 plaintiffs, them. are too complex and pose potential risks foralleges that the keyless ignition systems fail It is a massive issue, considering the potential security and privacy flaws.to provide sufficient warning when a driver move to driverless cars and intelligent “What we need to be doing in Australia isexits the vehicle without pushing the ‘engine transport systems in the near future. developing a system that offers an acceptableon/off ’ button or equivalent. With the car still level of privacy, security and autonomy whilerunning, users are exposed to the deadly gas. Privacy, security, autonomy, flexibility being flexible enough to work effectively in a Queensland University of Technology complex environment.”How secure is cyber security? information security expert Dr Ernest Foo Dr Foo said that without appropriate levelsRegardless of whether or not you think drivers presented a paper on the subject at the 2015 of security, the public would not acceptshould be responsible for turning their own Australasian Road Safety Conference on the connected and autonomous vehicles.cars off or noticing when they are still running, Gold Coast in October. The worldwide issue was also addressed atthe case highlights just one potential pitfall The report, titled Security Issues for Future an international conference in Germany inwith cyber security systems. Intelligent Transport Systems, says the September. It’s something we simply must getIn another case, 13 auto-makers are suing to potential benefits of connectivity, such as right if we are to move into a new age withsupress research detailing the vulnerabilities traffic warnings and autonomous vehicles, confidence.of their keyless systems. Researchers from will not be realised without a secure system toRadboud University and the University allow the safe transfer of information.of Birmingham have published a reportdemonstrating weaknesses in such systems.In response, a group of manufacturers,including Volkswagen Group of America,Audi, Porsche, Bentley, Lamborghini, Fiat,Honda, Volvo and Maserati, are agitating fortheir technology to be protected by the DigitalMillennium Copyright Act, which wouldmake such research illegal.Keyless entry systems are supposed to protectvehicles from theft, but sophisticated hackershave shown they can steal a BMW 1M inunder three minutes without a sound or analarm going off.Security the key to connectivityWith more than 100 million ‘connected’cars expected to be on the road by 2020,cyber security is a huge issue for drivers,manufacturers and, by extension, Dealers.28 | DECEMBER 2015 | automotivedealer.com.au

FAILURE TO FIND THE FAULT ISYOUR BIGGEST FAULTCar Dealers are in the customer service Just over 20 per cent of the 61,000 drivers per cent increase in customer retention has the business. As with any such enterprise, surveyed said their Dealer had given them same effect as decreasing costs by 10 per cent customer feedback is a vital tool in cause for complaint, and only 30 per cent of (E.Murphy & M.Murphy). Fifty-five per cent driving improvement and customer retention. these people were satisfied with the response. of customers would pay extra to guarantee Unfortunately for our egos, our greatest source The good news is nearly four in five drivers better service (Defaqto Research). Seventy of feedback is via complaints. On the bright said they had not had reason to complain. But per cent of buying experiences are based on side, complaints clearly highlight areas in 20 per cent is still a large number of dissatisfied how the customer feels they are being treated which we need work, but on the other hand, customers, especially when 70 per cent of that (McKinsey). A customer is four times more no-one really enjoys criticism. 20 per cent do not feel their issue is dealt with likely to defect to a competitor over a service- What do you think is the biggest complaint adequately. That’s 14 per cent of all Dealership related problem than if it were about price customers have about car Dealers? If you said clientele who not only have a complaint but are or product (Bain & Company). It takes 12 ‘failure to find the fault’, you’re right! A UK unhappy with Dealers’ response to it. positive experiences to undo the harm done by survey of more than 60,000 motorists has Then there’s this stat: for every customer one unresolved negative experience (Newell- found that a third of drivers rate franchised complaint there are 26 other unhappy Legner). Dealers’ inability to work out what is wrong customers who remain silent (Lee Resource). A global satisfaction survey conducted by with their car as their number one complaint Or this one: 96 per cent of unhappy customers Accenture found that poor customer service, about Dealers. don’t complain, but 91 per cent of these not price, is the main driver of customer Next on the list was unanswered phone calls, leave and never return (1Financial Training churn. The best customer is the one you nominated by 28 per cent of respondents as Services). Or this: a dissatisfied customer already have, as shown by figures that say the their biggest beef with Dealers. will tell between 9-15 people about their chances of selling to an existing customer The Driver Power 2015 study rated 31 Dealer experience, with 13 per cent telling more than are between 60-70 per cent, while for a new networks, with fault-finding being the 20 people. Happy customers who have their prospect the odds are between 5-20 per cent major issue for 22 of them. Other common issue resolved will tell 4-6 people (White House (Marketing Metrics). complaints were discourteous staff, cars being Office of Consumer Affairs). On the face of it these are not great figures; left dirty and unexplained charges. Statistic after statistic shows that it pays to however, they do represent an opportunity treat your customers’ concerns seriously and to set yourself apart from the pack. If you make your best effort to resolve them. A two can be in that 30 per cent of Dealers who deal successfully with complaints, you automatically put yourself well ahead of most of your competition. If you invest in quality service personnel you stand a great chance of resolving the biggest issue your customers have with you. And make sure you answer the phones! It is practically criminal neglicence to have customers – with all the choice available to them in the modern marketplace – calling you and not being able to get through. That is like hanging a sign on your door saying, “Meh. Whatever”. It does not inspire confidence or convey the impression that you are eager to attend to your customers’ needs – which you should be! You’re in the customer service business. Serve your customers well and they will return the favour. automotivedealer.com.au | DECEMBER 2015 | 29

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FEATURES Australian Automotive Dealer AssociationTHE FUTURE IS ELECTRIC ANDDRIVERLESS - AND IT’S NEARLY HERELast month we covered the completion plus Goulburn, Wodonga and Euroa on the plans to move towards driverless features with of Australia’s first ‘electric highway’, a Hume Highway between the two capital what it calls the Intelligent Driving System. It network of fast-charging stations for cities. The Tesla stations can recharge vehicles can already drive by itself in stop-start traffic,electric cars, between Perth and Margaret in just 20 minutes and are fully carbon- with technology to come that would give itRiver. It went live in June and other state offset. Caradvice.com.au recently tested the similar capabilities to the Model S. From there,governments are planning to follow suit. network, successfully driving from Sydney to Nissan hopes to have fully autonomous cars onThe first six of 12 planned fast-charging Melbourne using just the Superchargers to top the road by 2020.stations are operational on the route, allowing up.drivers of electric cars to recharge their Enjoy driving while you canvehicles to 80 per cent capacity in just 30 Tesla shows the way Driverless cars might seem like a novelty now,minutes. Tesla, which launched in Australia in but the time is rapidly approaching when theyThe Queensland Government is planning to December 2014, is very happy with the local are the norm and human driving might onebuild a similar network, although its use of response, culminating in its Model S being day even become illegal anywhere other thansolar power to charge vehicles would be an named Carsales Car of the Year in November. on designated racetracks.Australian first. The Queensland proposal is The Model S has some self-driving capabilities, Globally, 1.2 million people per year diefor 1,600km of the Bruce Highway, beginning being able to change lanes and respond to in road accidents, over 1,000 of those inin Townsville, with the eventual aim of hazards autonomously. Australia. Proponents of self-driving vehiclescovering the length and breadth of the state. Tesla has thrown down the gauntlet to point out that we would not accept this level ofTesla Motors is joining in, with plans to traditional car-makers, one that Nissan death from any other mode of transport. Canbuild its own network of ‘Supercharger’ recently took up when it unveiled its plans you imagine the outcry if 1,000 Australiansstations. It has five already in place at its at the Tokyo Motor Show. Nissan claims its died in aeroplane accidents every year? Or onDealerships in Sydney and Melbourne, electric car, the Leaf, is the most popular trains? electric car on the market, and announced Adelaide hosted the Southern Hemisphere’s32 | DECEMBER 2015 | automotivedealer.com.au

first on-road trial of driverless vehicles in early Research conducted by the OECD’s Rival mining giants BHP Billiton andNovember. It highlighted some bugs still to International Transport Forum suggests that, Fortescue are following suit, trialling driverlessbe ironed out but the Australian Driverless combined with public transport and ride- technology at their Pilbara sites.Vehicle Initiative, led by research group ARRB sharing, moving to a service-based driverless It all makes for an intriguing next few years.Group, is determined to prepare Australia for vehicle system could cut the number of cars onearly adoption of the technology. the road by 65 per cent in peak times and upARRB managing director, Gerard Waldron, to 90 per cent overall.says 90 per cent of car accidents are due tohuman error, highlighting the opportunity to Economic sensesave a million lives per year around the world Traffic congestion is expected to cost theby moving to self-driving vehicles. Australian economy $53 billion a year by 2031. Cutting that by 65-90 per cent would provide aEnvironmental benefits massive boost to productivity.As well as the human cost, cars of course are In addition, reducing road crashes by 90 permassive contributors to pollution. A move to cent will save most of the $27 billion per yearautonomous vehicles would likely mean an these cost the national economy.end to private vehicle ownership and could cut Fully automated driverless cars could alsothe number of vehicles on the road by up to increase the capacity of our roads, from 2,20090 per cent. Combined with a move to electric cars per lane per hour on highways to 12,000.vehicles, it would almost eradicate the impact With the world’s largest and fourth-largestof one of the biggest contributors to climate companies, Apple and Google, keen tochange. (Currently, light vehicles contribute 10 establish market dominance, who would betper cent of Australia’s carbon emissions.) against a similar rapid transformation such as the iPhone has done for communications in the past decade? Trucks are already there Driverless trucks are already a commercial reality, with mining giant Rio Tinto using remote-controlled trucks to move iron ore at its mines in the Pilbara. The company operates 69 driverless trucks at Yandicoogina, Nammuldi and Hope Downs 4. Able to run 24 hours a day, 365 days a year, each truck can save an estimated 500 work hours per year while also eliminating dangerous jobs and slashing costs.FCAI WELCOMES NEW HELMET LAWSThe Queensland Government has law requires riders to wear a helmet when introduced a new law requiring riders operating an ATV in a workplace. of all-terrain vehicles (ATVs) to wear According to the National Coronialhelmets on public roads. Information Database, injuries are the mostFarmers use ATVs such as quad bikes in common primary medical cause of death fortheir work and sometimes need to cross quad bike related fatalities (33 per cent). Ofpublic roads. In welcoming the law, FCAI those who died, 84 per cent were not wearingChief Executive Tony Weber said Australian a helmet. automotivedealer.com.au | DECEMBER 2015 | 33

FEATURES Australian Automotive Dealer AssociationV8 SUPERCARS- 2015 STOCKTAKE, 2016 RELOAD John Crennan discussed and debated, on everything from and just two from 2013. The Top 10 Club who gets paid what, to who should retire, all is extremely hard to break into. Of the 33 Motorsport Contributor the couldabeen scenarios and who were the different mainstream drivers who have lined main oxygen thieves in the season. up on the grid over a full season for the pastAt the time of going to print, the V8 Forgetting the official and non-official awards, three years, there have only been 13 drivers Supercars Racing Season had only one let’s take a look at some FACTS, with a brief figure in this elite performance band of the event remaining - at Homebush, during stocktake on V8 Supercars, as Season 2015 sport.the first weekend of December. nears its completion. Just as limited are the teams whose superiorOn the Monday evening following the Drivers performance has enabled them to also beHomebush race, the Series conducts its gala If getting a great mix of results and consistent Top 10 season performers at theevening, where officials, team executives, performance uplift across the ENTIRE 25 expense of so many others.drivers, media and assorted VIPs gather to drivers was a critical component of success, Drivers who consistently finish a seasoncelebrate successes or drown sorrows of the then the sport has some challenges. outside the Top 10 will always advance theseason that has just been. The question needs to be asked: Does the notion that if they were given the sameDuring the evening, recognition medals will Series need a wake-up call to realise the equipment/car as Jamie Whincup theybe handed out honouring 10 different areas drivers are the stars of this business? Drivers would always be on the podium and beof superior performance in categories such as hold the key to the success or otherwise of Championship contenders. Well you can driveMost Popular Driver, Champion Team Award, the entertainment package in this sport, but a horse and cart through that argument.the Young Gun Rookie, best presented Team is the Series doing the planning, strategising Whilst every driver in this year’s field of 25and, of course, the Championship Winner. and appropriately controlling the driver has a very special driving talent, the variationIn the days following it is a tradition of teams, component as comprehensively as it should? between top and bottom tier is considerable,crews, drivers and manufacturer mates to My fear is the Series is preoccupied with event particularly with race craft and avoidance ofgather privately in a much more informal management as its priority. self-harm over an entire race. For too long‘Mad Monday’-style chill-out, when the With one race to go, the Top 10 performing we have seen a situation in our sport wheremost colourful and imaginative awards get drivers look well set. Compare this year’s Top money and marriages of convenience often 10 with 2014 and there is only one change, come before raw talent. Every other elite sport operates on talent as the sole determinant for team selection.34 | DECEMBER 2015 | automotivedealer.com.au

My breakdown of Driver Competence/Talent debate, by the sport to elevate C Class teams would always show and promote twoLevels for the class of 2015 goes like this: into B and B Class into A, and have far more separate tables, outlining the resultsClass A = 4 influence/control over driver matters - like this throughout the year as below in the table:Class B = 11 year, with some regressive team decisions on (i) The Championship SeriesClass C = 10 driver substitutions. (ii) Premier Division 1Teams RELOAD FOR 2016 SEASON 2. All teams whose aggregate average pointsIn 2015, team ownership and investment in The most exciting feature of 2016 is to have in the year don’t meet a specific thresholdracing infrastructure centred around 10 racing four young, talented, fearless drivers aged 21- should be permitted eight additional testentities who, between them, fielded 25 cars on 25 - Chaz Mosert, Scott Pye, Cam Waters and days in the season, with the Series fullythe grid: three x 4-car teams, one x 3-car team, Scott Mc Laughlin - driving in A and B Class underwriting these test days for the teamsfour x 2-car teams and two x 1-car teams. winning potential teams. This is brilliant for and their drivers.If we were to take the 888 Team as the the sport, but must be backed up with another 3. V8 Supercars introduces and fully funds abenchmark over recent years, I likewise four young men and, hopefully, women biennial Driver Draft for 10 highly talentedconsider the sport also has three distinct layers entering the sport as mainstream drivers again Australian and NZ 17-21 year-olds whoof Team Competence and Capability, for a in 2017 and then again in 2018. A young talent will make up the V8SCA Series Academy.combination of reasons (not the least Budget bank ready for the main Series each year will V8 Supercars conducts the Draft andand Team Management): quickly remove any need for a driver salary allocates one Young Driver to each of theClass A = two teams covering six cars cap. But this won’t happen if this time next 10 Teams in V8 Supercars for a two-yearClass B = four teams covering 10 cars year we have another repeat of the crazy seat period.Class C = four teams covering nine cars. shuffle we are witnessing for 2016. The Academy Drivers all participate inHeroes Our sport appears set to see 40% OF ITS the eight test days and are guaranteed aOur Sport has only one ‘A Class’ fan hero who DRIVERS SHUFFLE TEAM SEATS in 2016! generous minimum number of laps at eachtotally dominates this space with Brock-esque Imagine for one moment if 40% of the players test, in two V8 Supercars that would bedistinction, passion and mass appeal. Craig in the AFL or NRL all moved to different owned by the Series, and the two best risingLowndes is the sport’s greatest asset. teams one season to the next... Some drivers stars participate in a minimum of two racesFor me there is only one other natural X-factor are now moving to their fifth different team! in the later part of the season.driver in the Series coming through the ranks This level of movement sends a poor message 4. Perhaps, however, the highest priority is towith film star qualities, who can attract new to driver-loyal fans. inject new blood/talent into the Board or,fans, increase race attendances and electrify SUGGESTIONS as this seems mission impossible, introduceTV audiences. That is Scott McLaughlin, who My four suggestions to the Series to break the a high-powered Marketing Subcommittee.seems a ready replacement for Lowndes when status quo and promote growth, add stronger If the Series can have a critically importanthe retires. fan interest and make a much-needed start for Technical Commission reporting to theThe Series desperately needs to devise a a more even competition: Board, it should likewise have a Marketingdeliberate strategy to develop, promote and 1. Introduce a Series Sub Division alongside Group of equal clout.grow young personalities and heroes on the Old saying: ‘Unless you make some changesgrid. It’s not hard. For our sport to reach its the existing Championship Series Premier nothing will ever change’. The Sport/Series istrue potential, we need, across all car brands, Division 1: All Non Factory Financially doing a commendable 8 out of 10 job, but ita minimum of five drivers with superstar Assisted Teams for 2016 (approximately would be great to see more change to unlockrecognition, displaying professional flair, A 15 cars). the Sport’s 10 out of 10 potential.Class driving talent, leadership and X-factor All media reports and official reportingcharismatic communication skills.All sports grow and thrive when RECOMMENDED TOP 10 RANKINGadministrators take the high ground with CHAMPIONSHIP SERIES OVER ALL *PREMIER DIVISION 1careful and fair-minded strategic planningdesigned to ‘even out’ the competition. The 1 M. Winterbottom M.Winterbottomlevel of dollars sports like the AFL invest in 2 C. Lowndes D. Reynoldsa well-structured levelling process with new 3 D. Reynolds S. Van Gisbergentalent is something our Series needs to do. 4 G. Tander F. CoultardI have a belief (and corresponding concern) 5 S. Van Gisbergen C. Mostertthat our sport is in status quo mode. There 6 F. Coultard W. Davisonis little or no investment, or even robust 7 J. Whincup J. Bright 8 S. McLaughlin S. Pye 9 C. Mostert D. Wood 10 J. Courtney N. Percat * No Manufacturer Financial Sponsorship automotivedealer.com.au | DECEMBER 2015 | 35

FEATURES Australian Automotive Dealer AssociationHOW TO AVOID A POST-CHRISTMAS TAXHANGOVERAaron StreetPartner - KPMGWith Christmas approaching, most Minor benefits Scenario one companies will be planning to The minor benefits exemption applies to An employer holds a staff Christmas party at reward their staff with a celebration benefits provided to each person and to each an inner-city restaurant, which costs $295 perand perhaps a gift to mark the end of the benefit. This means each employee and their person (including GST). The cost of benefitsyear. When planning such events it’s wise associates can be provided with food and drink provided to the employees and their partnersto consider the tax consequences associated to the value of less than $300 (GST inclusive), will be classified as a minor benefit, i.e. underwith such expenditure. Without doing so, and each employee and their associates can $300, and will be exempt from FBT (providedit’s possible to find the business hit with an receive a gift costing less than $300 (GST the benefits meet the ‘infrequent and irregular’unexpected FBT bill, which will really dampen inclusive), and the employer will not incur an requirement), but will be non-deductible forthe party spirit. To assist you in your planning, FBT liability. income tax purposes and no GST input taxwe’ve outlined the income tax, Fringe Benefits Minor benefits are still only permitted to be credits can be claimed.Tax (FBT) and Goods & Services Tax (GST) provided on an infrequent and irregular basis.consequences associated with entertainment Thus for any employees who regularly and/ Scenario twoand gifts. There are also some suggestions or frequently receive entertainment benefits, The employer had a particularly successfulof tax-effective strategies you may wish to the Christmas party may not qualify as a year and, in addition to the Christmas party,consider to assist in managing costs. minor benefit for them. Where the relevant decides to provide each employee with aAn unplanned expense from a Christmas expenditure constitutes entertainment - food hamper valued at $290. Further, as theparty is often the FBT payable by you as the importantly, if it is an exempt minor benefit - it employer feels that the success has largelyemployer. Generally, gifts, entertainment and will not be deductible for income tax purposes been driven by the Sales and Marketingother benefits provided to employees give and no GST input tax credits may be claimed. Department, each employee in thatrise to an FBT liability. For a Small Business An important proviso for the minor benefits department is also provided, on the same day,Employer (SBE), there is an effective 40 per exemption to apply to Christmas parties with a bottle of champagne valued at $80.cent added cost to provide a tax deductible is that the ‘50-50 split method’ for meal These gifts are unrelated to the Christmasbenefit that is subject to FBT, compared to a entertainment is not used. If the ‘50-50 party.non-deductible benefit that is exempt from method’ is used, all meal entertainment, The cost of the food hampers provided toFBT (37 per cent for a non-SBE). including the costs of the Christmas party, employees other than those in the Sales andThere are, however, various exemptions or need to be included in the calculation. Marketing Department will constitute minorreductions available to reduce the FBT liability, benefits and will therefore be exempt fromincluding: Some practical examples of how the FBT FBT because they cost less than $300 and there rules apply are no associated benefits. As the Australian • minor benefits, and Tax Office (ATO) accepts that gifts of food or • food and drink consumed on the drink that are not consumed immediately are employer’s premises.36 | DECEMBER 2015 | automotivedealer.com.au

not entertainment, the cost of the food hamper FBT. This FBT exemption does not apply for partners are also invited. The Christmas partywill be tax deductible and GST input tax tax-exempt employers. Accordingly, employers costs $295 per person. The cost of food orcredits, if applicable, would be available. may wish to consider holding their Christmas drink consumed by the employees and theGifts provided to the Sales and Marketing parties in-house on a working day so that FBT partners will not be subject to FBT, will beDepartment, however, will not be exempt will not be payable. The cost of the Christmas non-deductible for tax purposes, and no GSTfrom FBT because the cost of the food party in these circumstances will, however, be input tax credits are available.hamper and the champagne have to be non-deductible for income tax purposes andaggregated in deciding whether or not they no GST input tax credits will be available. It If the cost of an in-house Christmas party wereare minor benefits. As the aggregated cost is is also important to note that this exemption $310 per head, the amount for partners wouldmore than $300, the benefits will be subject does not extend to the partner and family of be subject to FBT, deductible for tax purposesto FBT. Tax deductions will be available, as the employee. Hence, if the partner and/or and GST input tax credits available, becausethe champagne and food hamper will not family attend, FBT may be payable on their the cost would be greater than $300 andconstitute entertainment, and GST input tax portion. hence would not constitute a minor benefit.credits will be available. However, if the food Scenario three However, being provided on business premiseshamper and the champagne were provided The employer decides to hold the Christmas on a working day, the amount for employeeson separate days for unrelated reasons party on their premises on a Friday evening would be exempt from FBT, non-deductible(e.g. Christmas bonus and bonus for best- and only employees are allowed to attend. for income tax purposes and no GST input taxperforming department) such that the benefits In these circumstances, the cost of food and credits available.are unrelated, both benefits would be exempt drink consumed at the Christmas party willfrom FBT as minor benefits. They would also be exempt from FBT, but is non-deductible For more information, or if you have anybe tax deductible and GST input tax credits for income tax purposes and there are no GST questions about this article, you can contactavailable. input tax credits available. Aaron Street at [email protected] orIn-house Christmas parties Scenario four Andrew Ward at [email protected],For most employers, the cost of food or drink The employer decides to hold a Christmas alternatively visit kpmg.com.auconsumed by employees on their business party on their premises on a Friday andpremises on working days is exempt fromControl theads on yourused carlistings.Our new Platinum Package gives you control over the ads on yourused car listing and gives you access to 100% of finance enquiries.All this capped at $39.95 for the lifetime of the listing. Smart listingswith CarsGuide puts the power in your hands.Call our Dealer Customer Service team on 1300 662 133 to find out more.

FEATURES Australian Automotive Dealer Association SAFEST USED CARS REVEALEDThe NRMA has released its ratings of the mean the difference between walking away safest used cars on the market, along from an accident or being killed. with findings that choosing a safer car “A driver of the worst vehicle rated is morecould reduce young driver fatalities by 60 per than six times as likely to be killed or seriouslycent. injured in the same crash as the same driver inResearch conducted by the Monash University the best vehicle,” he said.Accident Research Centre (MUARC),on behalf of the NRMA and the NSW Five-star rated used cars by class* 2006-2012 Toyota AurionGovernment, rated eight small car models, City cars 2005-2008 Mitsubishi 380including the Holden Cruze, Honda Civic, SUVsFord Focus, Volkswagen Golf and Jetta, as 2009-2013 Ford Fiesta 2006-2012 Mitsubishi Outlanderhaving ‘Excellent’ driver protection. Small cars 2006-2013 Holden CaptivaThe Ford Fiesta was the only light car to 2009-2013 Honda Civic 2006-2012 Mazda CX-7achieve the top rating, while nine medium 2006-201 Honda Civic 2005-2013 Nissan Pathfindercars achieved it, including the Audi A4, BMW 2001-2009 Peugeot 307 2002-2006 Honda CR-V3 Series, Honda Accord and Prelude, and 2007-2011 Subaru Impreza 2001-2007 Jeep CherokeeHolden Vectra. 2003-2009 Toyota Prius 2008-2013 Subaru ForesterThe Mitsubishi Outlander/Peugeot 407 was 2004-2009 Volkswagen Golf and Jetta 1995-2005 Nissan Pathfinder/Terrano/Regulusthe only compact SUV to earn the five-star 2009-2012 Ford Focus 2005-2008 Suzuki Grand Vitararating, although a host of vehicles achieved the 1997-2004 Volvo S40/V40 2004-2010 Ford Territoryrating in the medium and large SUV segments. Medium cars 1998-2005 Mercedes-Benz M-ClassThe Used Car Safety Ratings are based on data 2001-2008 Audi A4 2007-2013 Toyota Kluger/Highlandercollated by thousands of actual traffic accidents 1998-2006 Volkswagen Passat 2001-2013 BMW X5to determine how well each vehicle protects its 2005-2013 BMW 3-Series 2002-2005 Ford Exploreroccupants. 2003-2005 Holden Vectra 1999-2005 Jeep Grand CherokeeIn response to criticism of new car safety 1997-2002 Honda Prelude 2007-2013 Mitsubishi Pajerotesting by the Australian New Car Assessment 2003-2007 Honda Accord 2007-2013 Toyota LandCruiser 200 SeriesProgram (ANCAP) for not reflecting 1999-2004 Lexus IS 2003-2009 Toyota Pradoreal world conditions, the MUARC study 2007-2013 Mercedes-Benz C-Class Utessimulated an offset head-on collision between Large cars 2007-2013 Holden Commodore Utetwo different models to illustrate the difference 1996-2003 BMW 5-Series 2006-2011 Ford Ranger/Mazda BT-50in passenger protection between a 5-star rated 2008-2013 Ford Falcon 2006-2013 Mitsubishi Tritoncar and a 2-star vehicle. 2003-2006 Holden Statesman/Caprice 2005-2013 Nissan NavaraThe 5-star Cruze fared much better than 1996-2002 Mercedes-Benz E-Classthe 2-star Mitsubishi Lancer, which NRMA * NRMA’s buyer’s guide to used car safety ratings 2015-16vehicle safety expert Jack Haley said could38 | DECEMBER 2015 | automotivedealer.com.au

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FEATURES Australian Automotive Dealer AssociationDEALER PROFITABILITY FIGURES REBOUND Australian Dealers under pressure after kept the NP%S result the same. a drop in profitability in August would Victoria/Tasmania had a good result, with be relieved to see those figures rebound NP%S rising from 1.2% in August to 2.0% in in September. September. Likewise NSW/ACT, which saw A drop to 1.6% in net profit as a percentage a rise from 1.8% to 2.4%. South Australia/ of sales (NP%S) in August was followed by a Northern Territory fell from 2.0% to 1.9%. 2.3% result in September, compared to 2.4% Segments for the year to date (YTD). For the second month in a row, the luxury The Deloitte Dealer Profitability Report for segment led the way, with an NP%S of 2.8%. September showed that Queensland enjoyed It was the only segment to record a monthly the best month of any state, recording 3.2% result above its YTD figure of 2.6%. NP%S. That was thanks to a 14% rise in Next in line was the prestige segment at 2.4%, selling gross from the August result. followed by the volume segment at 2.1%. Western Australia is the state in the biggest Prestige had the greatest month-on-month trouble, with an NP%S in September of just growth of 0.8% compared to August. 0.3% - the same as the previous month. The overall sales and gross decreased from August to September, but an increase in selling grossadvancedprotection.com.au ENTERTAINMENTSENSORS SAFETY NAVIGATIONFOR INCREASED PROFITS CALL 1300 277 623 OR Email : [email protected]

DON’T MISS THE AADASTUDY TOUR TO NADAParticipants in the AADA Study Tour The 2016 NADA Convention will be held you can if you join our Study Tour! to the 2016 NADA Convention have in Las Vegas from 31 March to 3 April. In More than 17,000 delegates attended the 2015 a unique opportunity to spend some addition to the incredible array of workshops NADA Convention, which annually boasts intimate time with some of the US industry’s and seminars, AADA Study Tour participants some of the best keynote speakers you could biggest players. will also have access to an exclusive dinner hope to see. The AADA Study Tour to the NADA with outgoing NADA Chairman, Bill Fox, and In 2016, speakers include NFL champion Convention is the official study tour to the this will also feature a special presentation by a Peyton Manning, former White House adviser world’s largest gathering of automotive Deloitte panel. Karl Rove, former Vermont Governor and industry professionals and the only one Study Tour members will also be treated to a presidential candidate Howard Dean, and endorsed by NADA itself. private session with NADA University. We’d comedian Jeff Foxworthy. say you can’t buy that kind of experience, butCALL FOR AADA CONVENTION 2016 SPEAKERSPlans are under way for the 2016 AADA • Accounting change, reverting back to a Wednesday National Dealer Convention, which • Legal Compliance program of workshops. The event will run will once again be held in Melbourne • Inventory Management. from Tuesday, 6 September to Thursday, 8 following the success of the 2015 event. Proposals must be submitted no later than September, at the Melbourne Convention and With more than 1,000 delegates, the 2015 5PM Wednesday December 23, 2015. Exhibition Centre. Convention was a resounding success, and Workshops will run for 60 minutes. Each A special feature speaker will address local we need your help to ensure the 2016 event is workshop will be conducted twice (morning delegates on the Monday night prior to the even better. To that end, we’re inviting speakers and afternoon) on the day allocated. Convention. That speaker will be announced who would like to be a part of the exceptional See our website for an outline for submissions. in February. event to submit applications in the following AADA received exceptional feedback categories: regarding the 2015 Convention, which is why we’ve decided to hold the 2016 version in • Vehicle Sales Melbourne again. The plan is to hold the 2017 • Fixed Operations Convention in Sydney. • Advertising & Marketing • Social Media Back to the future • F & I The program for the 2016 Convention will • CRM • HR Management automotivedealer.com.au | DECEMBER 2015 | 41

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FEATURES / SALES AND MARKETING Australian Automotive Dealer AssociationCHEAPER EURO IMPORTS ON THE WAYThe European Commission’s new trade across a range of areas such as agribusiness, and investment strategy announced in services and high-value manufacturing. For October will result in cheaper European Australian consumers it could also delivercars for Australian motorists. reduced prices on a range of quality EuropeanThe EC is seeking authorisation from the goods, including cars,” Mr Robb said.European Union to negotiate a Free Trade “The EU bloc represents our second-largestAgreement with Australia. Federal Minister trading partner,with two-way trade exceedingfor Trade and Investment, Andrew Robb, $80 billion - more than 12 per cent of our totalwelcomed the announcement. trade.”“An FTA has the potential to unlock new The EU’s 28 member countries still need toopportunities and levels of market access agree for the bilateral negotiations to begin.UPCOMING MODELSAustralia can expect nearly 30 new car Alfa Romeo 4C roadster (November) Lexus GS (December) models to be released before the end of BMW 3-Series sedan and Touring (Q4) Lexus LX 570 (December) 2015, headlined by several models from BMW M3 and M4 (Q4) Mazda BT-50both BMW and Lexus. BMW 7-Series (November) Mercedes-Benz CLA 45 AMG ShootingThe BMW M3, M4, and 3-Series sedan and Ford Mustang (December) Braketouring version are all slated for release in the Ford Everest (November) Mercedes-Benz GLC (December)fourth quarter of the year, as is the Lexus ES. Jaguar XJ (November) Mercedes-Maybach S 600 (late)The Lexus GS and LX 570 are both set to come Jeep Grand Cherokee (update) (Q4) Mini Clubman (November)on the market in December and we can expect Lamborghini Aventador LP 700-4 Pirelli Mitsubishi Outlander PHEVto see the RC 200t before the end of the year Edition Mitsubishi Challengeras well. Land Rover Defender Celebration Nissan Navara single cab, king cab, dualNext year we can look forward to a handful Editions (November) cab/chassis (November)of new Audi and Mercedes-Benz models, Land Rover Defender successor (possibly Skoda Superb (possibly early 2016)with multiple releases also from Fiat, BMW, 2016) Toyota RAV4 (December)Holden, Jaguar, Jeep, Kia, Lexus, and Range Lexus RC 200t Volkswagen Transporter (T6)Rover. Lexus ES (Q4) Volvo V60 Cross CountryHere is the full list of models scheduled forrelease prior to the end of 2015 (as of going toprint):

SALES AND MARKETING Australian Automotive Dealer AssociationMARKET TRENDS: STRONG NEW CARSALES KEEP RECORD IN SIGHTArecord year of new car sales is still a SUVs have increased their share of the market captured 9 per cent of the market, Holden 8.6 strong possibility after new car sales rose to 35.2 per cent for the year to date, but the per cent and Ford 6.5 per cent. 3.4 per cent in October compared to the passenger car segment is still the largest, The top selling brands for October were:same time last year. accounting for 44.9 per cent of new car sales in Toyota (16,964), Hyundai (9,003), MazdaThe result means sales are up 3.6 per cent for 2015, and 43.3 per cent in October. (8,532), Holden (8,088), Ford (6,098), Nissanthe year and on track to top 1.1 million again. Passenger vehicle sales down (5,961), Mitsubishi (5,508), VolkswagenAustralia’s record new car sales year was 2013, Although passenger vehicles are still the (4,480), Subaru (4,112) and Honda (3,261).when sales totalled 1,136,227. biggest-selling segment, sales are falling, down Toyota, Holden, Ford and Nissan have soldWith two months left in the year, 2015 sales 13,000 on the same time last year. fewer cars for the year to date in 2015.were at 957,153, meaning Australians must Toyota on top The Ranger is easily the best-selling Ford andbuy just over 179,000 new cars in the last two Launched in October, the Toyota HiLux (3,339 is the only model from the brand that hasmonths of the year to set a new record. Sales sales) was the best-selling vehicle that month, reached five-figure sales for the year.for October were 94,321, so it is a distinct ahead of its stable-mate the Corolla (3,271). In WA and NT sales fallpossibility. third place, more than 600 units behind, was Sales rose in every state and territory, withSUVs lead the way the Hyundai i30 (2,669), followed by the Ford the exception of Western Australian andThe growth of the SUV market has been Ranger (2,597) and the Mazda3 (2,582). the Northern Territory, which respectivelythe main driver of sales, with a 20.5 per cent Rounding out the top ten were Holden experienced 10.5 per cent and 5 per cent dropsincrease in total SUV sales in October 2015 Commodore (2,243), Toyota Camry (2,141), in sales from October 2014. Tasmania sawcompared with October 2014. Small SUV sales Mazda CX-5 (2,037), Volkswagen Golf (1,705) the most growth, with sales up 15.5 per centwere up 37 per cent, medium SUVs up 20.1 and Toyota RAV4 (1,685). on the same time last year. Sales rose 10.3 perper cent and large SUVs 11.8 per cent. Overall, Toyota vehicles made up 18 per cent of sales, cent in the Australian Capital Territory, 7.4 persales of new SUVs are up 15.9 per cent for the almost twice that of the next best-selling cent in Queensland, 4.6 per cent in New Southyear to date – that’s an increase of more than brand, Hyundai (9.5 per cent). Mazda Wales, 3.7 per cent in Victoria, and 3.5 per cent46,000 vehicles. in South Australia.46 | DECEMBER 2015 | automotivedealer.com.au

THE NUMBER 1 ADVERTISING &MARKETING CAMPAIGN IN 2015 Dave Benson 2. No focus on it as the end of a transaction, but the start of a 3. No or flawed processes. friendship’. CEO/Sales Expert Reaching Your The benefits of referrals are massive! 3. Ask continually Potential The reality is in this world, if you want • Referrals save you money on advertising something you have to ask for it!Iwas in a training workshop recently when • More gross profit - a referred customer But 92 per cent of customers don’t get asked I was asked by a Dealer Principal, “What for a referral at any time in the sales process. advertising and marketing ideas do see see spends 13.2 per cent more than a non- Customers are willing to give a referral if you as the fastest and most economical way to referred customer get the first two ingredients right; it’s just our increase enquiry?” • Better closing ratio – 65 per cent of job to now ask them for a referral. While there were many great ideas I see referrals buy, compared with 20 per cent The best way to do this is by asking: working and could have shared, I stopped of new enquiries. myself from trying to give just another ‘silver • at time of sale bullet’ to magically increase sales in the short Based on this, I want to give you Three Keys • at time of delivery, and term. to Increase the Number 1 Advertising & • as part of your conversations when you The answer I had to give therefore was, Marketing Campaign in 2015 - Referrals “What are you currently doing to ensure are making your post-delivery contacts. you are maximising referral business in your 1. Give an experience Simply say, “Mr Customer, as you would dealership?” know, our business is based on referral You can continue to search for new ideas on No one refers someone to a dealership business. Is there a friend, family member, how to attract customers via spending on after receiving a terrible experience with neighbour or colleague who might be advertising and promotions, but do you really them. Whether it’s hotels, airlines, holiday interested in purchasing a vehicle in the do enough to maximise referral business and destinations or even just a recipe, people near future? I wouldn’t harass them, but leverage the relationships you build every day refer when they have had an outstanding just offer them the same great service that with customers? experience. That’s why your sales process and I provided you with.” From my 15 years in this industry, the reason entire delivery experience is so important to I encourage you this week to put these three we don’t do enough in this area is due to: get right. keys to referrals in practice to ensure we increase our sales result without spending an 1. High staff turnover 2. Build a friendship extra dollar! Great selling! People buy from people they like, trust, and respect. And they will only refer someone to you if they have a connection with you that goes beyond the transaction. Take a genuine interest in your customers and then say to them at delivery, ‘Mr Customer, I don’t see thisFIELDFORCE HELPSYOU SELL MORE PARTS. Increase Rep Performance Improve Customer Service Discover New Sales OpportunitiesGET STARTED TODAY! CALL US ON 1300 665 334  1300 665 334  myfieldforce.com.au  [email protected]

SALES AND MARKETING Australian Automotive Dealer AssociationINCREASE YOUR SALESPRODUCTIVITY AND ROCK THE LOT! Zach Klempf Twitter or some other hot social platform. referrals can be amazing for business, but Twitter is great for finding customers most sales reps are leaving money on the Contributor because you can do an advanced search by table by not taking advantage of these geolocation for tweets like, ‘Looking to sell potential sales. I recommend regularlyEvery salesperson is looking for that extra my Camry’. Twitter is an always-on, live following up with existing customers to askedge to hit their sales goal and land that big interest feed that can help you find people if they have referrals. Also, have the backbonus. But what sets the car sales Rock Star in your area talking about cars they want to of your business card advertise that youapart from the average Dealership sales Joe? buy or sell. are willing to pay a bird dog fee or serviceThe answer is productivity; the Rock Stars Facebook is another great resource where discount for them.are selling four cars on a Saturday when you can be active on various groups in Launching an email campaign to past clientsyou’re hustling to sell just one. your area and connect with car-buying is another great way to get referrals, as isEarn a spot on the sales stage with them by communities. For the more tech savvy using social media to reach your clients’following these five simple tips and rock sales rep, both of these sites have robust ad extended networks. This is another areayour Dealership revenue targets. platforms where you can promote yourself where a mobile CRM tool can set you apart.CRM. One of the biggest productivity or your Dealership. Facebook even has a Rock Stars are in it for the long haul andboosters in the industry is a good Customer feature where you can target similar people create a customer buying experience andRelationship Management (CRM) tool. to a list of old customer emails you may follow-up strategy where referrals keep newSadly, though, most sales professionals don’t have. prospects rolling in.use their CRM or don’t know how to use it Another great social media network to Use your time effectively. Effectivelyeffectively. take advantage of is LinkedIn. Do your planning how you spend your time versusCRM, when adopted and used with a social homework and spend some time researching just reacting to what is happening in thesavvy selling process, can shorten the sales your prospects on LinkedIn immediately Dealership on any given day is a much betterprocess and enhance the customer buying and you will get great information about way to use your time.experience. Customers appreciate the high who they are and where their interests lie. Think about what time of the day you maketouch and organized sales process that a For example, you look up John Smith on your calls to cold leads and ask yourselfstreamlined CRM tool delivers. LinkedIn and see he went to University of questions like, ‘Are they at work?’, ‘Are theyMany Dealerships have some type of CRM Melbourne, is a lawyer, and his firm is just where we can connect real time and talk,in place, but if they don’t you can buy five minutes away from your office. Now you or is email or social media a better way toyourself a personal CRM tool on the iTunes have snippets of information to focus your reach them?’, and ‘How can I reach out andor Google Play app store. Just make sure sales pitch to align with his buying personae. provide them with relevant information thatyou go with a mobile CRM tool instead of Be visible at the Dealership. This may seem will move them closer to purchasing?’a clunky enterprise-focused one, because like a no-brainer, but I have known many Certain times of the day are better forgoing back to your desk to enter information salespeople who take hour-long lunches cold calling than others. Pay attention toin the CRM while your connected customer offsite and then get upset when the rookie showroom traffic trends; ask prospects theiris waiting impatiently on the lot and surfing at the Dealership ups a lunchtime customer preferred time and method to reach them,competitor sites is not how the Rock Star car and closes a big front end deal! and use analytics and common sense to setsalesperson operates. With a mobile CRM Everybody wants their free time and family the best times to do cold calling. The sametool, you can pull up the information you time, but lunch hours, weekends, evenings goes for emails; customers get emails all dayneed while you have your hot prospect on and end of months provide high traffic long. Your email has to stand out and arrivethe lot and ready to buy. showroom selling opportunities. Rock Stars when they are free to read it.Social media. Let’s face it. It’s the 21st know the prime hunting hours and adjust Take your place on stage with the car salescentury and everyone uses Facebook, their schedules to be in position when Rock Stars by taking the pieces of my advice customers hit the showroom floor. that are most relevant to you and see how Get more referrals. Everyone knows much it improves your productivity. Every salesperson needs that extra edge in a competitive business like car sales and small productivity tricks can go a long way!48 | DECEMBER 2015 | automotivedealer.com.au

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WORKPLACE RELATIONS Australian Automotive Dealer AssociationWHAT ARE THE NATIONALEMPLOYMENT STANDARDS? Ted Kowalski a set of criteria of reasonableness set out in and must state those grounds in the written the NES. These include such things as the response. ‘Reasonable business grounds’ for Contributor employee’s role and level of responsibility; refusal could include matters such as: the needs of the workplace; whether theThe start of the Fair Work System in 2010 employee is entitled to be paid for overtime; • the requested arrangements are too costly saw the introduction of modern awards any risk to the employee’s health and safety • it’s impractical to change other employees’ and the National Employment Standards from working the additional hours; the(NES). The NES sets out 10 minimum employee’s personal circumstances, including working arrangements or hire newentitlements for all employees and must be family responsibilities; any notice given by the employees to accommodate the request, orread in conjunction with any relevant award/s employer for the need to work the additional • the request would result in a significantthat apply to those employees. hours; and the usual patterns of work in the loss of productivity or have a significantThe 10 minimum entitlements are: industry in which the employee works. negative impact on customer service. Requests for flexible working arrangements Parental leave and related entitlements • Maximum weekly hours An employee may request a change in his/her This provision allows an employee, including • Requests for flexible working working arrangements if the employee: a casual (female and/or male) with at least 12 months employment with their employer arrangements • is a parent having the responsibility for the prior to the expected date of birth or the date • Parental leave and related entitlements care of a child of school age or younger of adoption, to access unpaid maternity leave; • Annual leave paternity and partner leave and adoption leave. • Personal/carer’s leave and Compassionate • is a carer Parental leave can be taken when an employee • has a disability gives birth, or an employee’s spouse or de facto Leave • is 55 years of age or older partner gives birth, or an employee adopts a • Community service leave • is experiencing violence from a member of child under 16 years of age. • Long service leave The provision contains numerous procedural • Public holidays the family, or requirements, which detail rules concerning • Notice of termination and redundancy • provides care or support to a member of timelines for applying for parental leave; • Fair Work Information statement. evidence requirements; extending or reducingMaximum weekly hours his/her immediate family or household a period of parental leave; transfer to a safe job,The NES provides for a maximum of 38 because that member is experiencing and a return to work guarantee.ordinary hours to be worked per week and violence from their family. Annual leaveallows for reasonable additional hours, where Any request for flexible working arrangements The NES gives all employees an entitlementthose additional hours can be shown to meet must be in writing - setting out the details of to four weeks annual leave (five weeks for the change requested and the reasons for the change. The employer has 21 days to consider the request and must give a written response to the request. The employer may refuse the request only on reasonable business grounds50 | DECEMBER 2015 | automotivedealer.com.au