News. December More Confusion at DVS. Regulatory News. inside. MADA has communicated their concerns and are waiting to hear back from DVS.

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1 News December 2018 Regulatory News More Confusion at DVS Driver and Vehicle Services (DVS) just began enforcing a littleknown rule regarding documentation requirements for titling and registering motor vehicles. Simply put, unless the Minnesota title application is accompanied by proper proof of identity, the state may not title and register the vehicle. So, what qualifies as proper proof of identity? A Minnesota Driver s license, ID Card, or permit that is current or not expired more than one year will satisfy the rule. So too will a driver s license, ID Card, or permit that is current or not expired more than one year from another state, the District of Columbia, a U.S. territory, or a Canadian province or territory. If the customer does not have one of these forms of identification, the individual must provide an alternative primary document that contains the full name and date of birth of the applicant. The rule specifically states what documents qualify as a primary document. For example, a valid and unexpired non-u.s. passport will satisfy the rule if it has a Form I-94 attached or contains an unexpired I-551 stamp. This sudden and unannounced enforcement of the rule, a rule that historically has gone unenforced, has led to confusion amongst Minnesota dealers and their customers. Since there is no rule limiting to whom a motor vehicle can be sold (in fact, there s no requirement the purchaser needs to have a valid driver s license), dealers were unaware of the proof of identity document requirements when registering and titling a motor vehicle. As a result, dealers have been caught off guard by the agency s new policy and are concerned about how it will impact pending vehicle sales or leases to customers who won t meet the newly-enforced title and registration document requirements. More DVS Confusion... continued on page 2 inside New MADA Officers 2019 Tax, Wage & Model Year Updates Leadership Changes in MN House MADA has communicated their concerns and are waiting to hear back from DVS. upcoming events jan 9 15 jan 16 jan 17 jan Dealership Customer Experience for Sales Win the Applicant Economy Webinar Leadership for Service Managers Certified Title visit for details, registration and a complete list of Upcoming Events and Training Scott Lambert, President., MN (651) FAX (651)

2 More DVS Confusion... continued from cover MADA has communicated their concerns via a letter to DVS Director Dawn Olson and are awaiting to hear: why the agency has not previously been enforcing this rule, how many registered vehicles in Minnesota are impacted, and whether pending transactions and active leases will be grandfathered in. Similar to MNLARS, MADA is disappointed that DVS continues to keep its stakeholders in the dark about agency policy and enforcement, and looks forward to receiving clear direction on the issue going forward. Dealers are advised to strictly follow Administrative Rule : Contact MADA General Counsel Dan Louismet with any questions: (651) louismet@mada.org. The Minnesota Automobile Dealers Association is a non-profit trade association dedicated to the progress of the retail auto industry in Minnesota. Chair Peter Kolar, Kolar Toyota, Duluth Vice Chair Steve Whitaker, Whitaker Buick GMC, Forest Lake Treasurer Gary Thibert, Thibert Chevrolet & Buick, Red Lake Falls Secretary Tom Leoard, Fury Auto Group, South St. Paul President Scott Lambert, MADA Legislative News Franchise Feature: Greater Transparency in Performance Standards While much of the focus of the recently enacted updates to Minnesota s Motor Vehicle Franchise Protection Law has been on warranty reimbursement, the bill contained five other provisions that benefit dealers. Section four of the bill puts more teeth in existing prohibitions on manufacturer behavior. More and more often, dealers are struggling to put pen to paper to figure out how the factory sets monthly sales targets. These targets are also supposed to treat dealers of the same-line make uniformly, but often don t appear to. To help figure out 1) how the numbers are calculated and 2) whether a dealer is being treated differently than his peers, this provision allows dealers to request their manufacturer provide the method for establishing the sales volume for receiving an incentive or rebate and the specific calculation for determining the required sales volumes of the inquiring dealer and that of any of the manufacturer s other Minnesota-franchised new motor vehicle dealers of the same line-make located within 75 miles of the inquiring dealer. To encourage the manufacturers to comply with this provision, a dealer is granted the ability to sue the manufacturer without showing harm if the manufacturer fails to respond to the dealer s request. If you believe your manufacturer isn t applying performance standards uniformly and would like to take advantage of this new provision, please reach out to MADA General Counsel Dan Louismet at louismet@mada.org for guidance. nue, MN Metro: Toll Free: FAX: Web site: December 2018 / Page 2

3 MADA News Much to Celebrate at the Main Event Over 300 MADA members gathered in Bloomington on December 7, 2018 to celebrate the industry at The Main Event. Kolar Chevrolet Buick GMC Cadillac was honored for 50 continuous years in the business. A new round of Community Heroes were recognized for their generous contributions to the areas they serve, including: Lenzen Chevrolet-Buick of Chaska, Miller Auto & Marine of St. Cloud, Minnesota Motor Company of Fergus Falls, Papik Motors of Luverne, and Village Automotive Group of Wayzata. MADA was also pleased to welcome Automotive News Publisher Jason Stein with his insights on where automotive retailing is headed. Thanks to everyone who made the day such a success! MADA News New Officers MADA s December Board of Directors meeting is a transitional moment for the Association with new members and officers elected. MADA Executive Committee now includes: CHAIR Peter Kolar Kolar Toyota Duluth VICE CHAIR Steve Whitaker Whitaker Buick GMC Forest Lake TREASURER Gary Thibert Thibert Chevrolet & Buick Red Lake Falls SECRETARY Tom Leonard Fury Automotive Group South St. Paul IMM. PAST CHAIR Michael Stanzak Key Cadillac Edina PRESIDENT Scott Lambert Thank you also to Michael Saxon of Saxon Auto Group in Inver Grove Heights for his many years of service on the MADA Board, including as its chair. His term representing District 7 has expired, and Tom Leonard of the Fury Auto Group has been elected to succeed him. December 2018 / Page 3

4 Legal News Social Security Wage Base and Tax Rates for 2019 Time to take notice of the annual payroll adjustments that come with the new year. The Social Security Administration announced the wage base for social security payroll taxes for calendar year The following table shows the rates and bases applicable for 2019 and 2018 respectively: WAGE BASE EMPLOYEE TAX EMPLOYER TAX Old Age, Survivors, Disability Tax Medicare Part A $132,900 $128, % 6.20% All Wages No Limits All Wages No Limits 1.45% 1.45% Medicare Tax for High Earners Continues in 2019 The 0.9% Medicare Tax which first went into effect in 2013 continues in Employers are required to withhold the tax on earnings over $200,000 during each calendar year. Even though an employer s obligation to withhold begins at $200,000, employees may owe more or less tax depending on their filing status. There s no employer match to this tax. Minimum Wage Goes Up January 1 to $9.86 Minnesota dealers are subject to both State and Federal minimum wage laws and are required to pay the minimum wage most favorable to their employees. Since August 2014, the Minnesota rate has been higher and is now adjusted for inflation. The inflation adjusted rate effective January 1, 2019 is $9.86 per hour. For youths who are 17 years old and younger, the adjusted minimum wage goes to $8.04 per hour. The law provides a lower minimum wage for new employees under the age of 20 during the first 90 days of their employment. This temporary youth minimum wage rate also adjusts to $8.04 per hour on January 1. Vehicle Old-Age Exemptions Minnesota Used Car Warranty Law A variety of exclusions are provided in Minnesota s Used Vehicle Warranty Law, including one for vehicles that are eight years of age or older as calculated from the first day in January of the designated model year of the vehicle. On January 1, 2019, model year 2011 vehicles turn eight years old and are exempt from the law. Minnesota Used Car Damage Disclosure and Branding Laws These laws only apply to vehicles that have a manufacturer s designated model year equal to or greater than the fifth calendar year immediately preceding the current calendar year. On January 1, 2019, model year 2014 and newer vehicles will be covered and older will be exempt. Odometer Disclosure Requirements The Federal Odometer Regulations contain an exemption from the disclosure requirements for vehicles that are ten years old or older. The Minnesota Department of Public Safety administers the exemption on a calendar year basis. Effective January 1, 2019, model year 2009 vehicles turn ten years old and will be exempt. December 2018 / Page 4

5 Reported registrations at the end of 2017 appear to be negatively impacted by implementation of the state s new vehicle titling and registrations system (MNLARS). This has likely resulted in underreporting of registrations during these months and has led to declines in year-over-year new vehicle registrations. Future data updates released by IHS Markit should address the apparent shortfall in reported registrations. Minnesota Auto Outlook Covering the Minnesota automotive market Data thru October 2018 Minnesota New Retail Car and Light Truck Registrations Most Recent Two Months YTD thru Oct. YTD Market Share 9/17 & 10/17 9/18 & 10/18* % change YTD '17 YTD '18 % change change Industry Total 35,549 34, % 177, , % Cars 8,221 6, % 45,148 35, % Light Trucks 27,328 27, % 132, , % Japanese Brands 12,929 12, % 64,016 61, % Honda 3,534 3, % 17,417 17, % Nissan 1,627 1, % 8,908 7, % Toyota 4,781 4, % 22,382 20, % Other 2,987 3, % 15,309 16, % Domestic Brands 18,615 17, % 92,727 92, % FCA (excl. FIAT) 4,908 5, % 24,245 26, % Ford 5,783 5, % 28,608 27, % General Motors 7,922 7, % 39,676 38, % Other % % European Brands 1,889 2, % 9,948 11, % BMW % 1,867 2, % Mercedes % 1,636 1, % Volkswagen 1,133 1, % 5,193 5, % Other % 1,252 1, % Korean Brands 2,116 2, % 10,777 10, % % change vs. year earlier Percent Change in Three Month Moving Average of New Retail Registrations versus Same Period Year Earlier 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% -20.1% -10.2% 1.0% 6.5% 1.4% -1.4% 0.7% -4.4% 2.6% 0.6% 0.3% Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Last month in period -2.4% Oct- 18* State U.S % Cars Trucks -12.6% Released by: Minnesota Automobile Dealers Association Brands included above: Domestic Brands: GM (Buick, Cadillac, Chevrolet, and GMC), Ford (Ford and Lincoln), Chrysler (Chrysler, Dodge, Jeep, and Ram). Japanese: Toyota (Toyota, Lexus, and Scion), Honda (Honda and Acura), Nissan (Nissan and Infiniti), Other (Mazda, Mitsubishi, and Subaru). European: VW (Audi, Bentley, Porsche, and Volkswagen), BMW (BMW, Rolls Royce, and MINI), MB (Mercedes Benz and smart), Other (Alfa Romeo, Aston Martin, Ferrari, Fiat, Jaguar, Land Rover, Lotus, Maserati, and Volvo). Korean: Hyundai and Kia. *Figures for October 2018 were estimated by Auto Outlook. Data Source: IHS Markit. The graph above provides a clear picture of the trending direction of the state market. It shows the year-overyear percent change in the three month moving average of new retail light vehicle registrations. The three month moving average is less erratic than monthly registrations, which can fluctuate due to such factors as the timing of manufacturer incentive programs, weather and title processing delays by governmental agencies. *Figures for October 2018 were estimated by Auto Outlook. Data Source: IHS Markit. Data Information Percent Change in State and U.S. New Retail Light Vehicle Markets YTD 18 thru October* vs. YTD % 6.0% -50.0% -25.0% 0.0% 25.0% 50.0% The graph above compares the change in new retail car and light truck registrations in both the state and U.S. markets. Figures for October, 2018 were estimated by Auto Outlook. Data Source: IHS Markit. All data represents new vehicle retail registrations in Minnesota and excludes fleet and wholesale transactions. Reported registrations at the end of 2017 appear to be negatively impacted by implementation of the state s new vehicle titling and registrations system (MNLARS). This has likely resulted in under-reporting of registrations during these months and has led to declines in year-over-year new vehicle registrations. Future data updates released by IHS Markit should address the apparent shortfall in reported registrations. Data Source: IHS Markit. December 2018 / Page 5

6 Minnesota Auto Outlook Data thru October 2018 Minnesota New Retail Light Vehicle Registrations YTD '17 thru Oct. Registrations YTD '18 thru Oct.* % change TOTAL 177, ,923-1% Market share YTD '17 thru Oct. YTD '18 thru Oct.* Acura 1,040 1,161 12% 0.6% 0.7% Alfa Romeo % 0.0% 0.1% Audi 1,697 1,639-3% 1.0% 0.9% BMW 1,552 1,712 10% 0.9% 1.0% Buick 3,409 3,227-5% 1.9% 1.8% Cadillac % 0.5% 0.5% Chevrolet 28,239 27,119-4% 15.9% 15.4% Chrysler 3,029 1,977-35% 1.7% 1.1% Dodge 4,083 3,656-10% 2.3% 2.1% FIAT % 0.1% 0.1% Ford 27,711 26,533-4% 15.6% 15.1% Genesis % 0.1% 0.0% GMC 7,114 6,803-4% 4.0% 3.9% Honda 16,377 15,910-3% 9.2% 9.0% Hyundai 4,719 4,968 5% 2.7% 2.8% Infiniti % 0.4% 0.4% Jaguar % 0.1% 0.1% Jeep 10,071 12,907 28% 5.7% 7.3% Kia 5,956 5,503-8% 3.4% 3.1% Land Rover % 0.2% 0.2% Lexus 1,955 1,847-6% 1.1% 1.0% Lincoln % 0.5% 0.5% Maserati % 0.0% 0.0% Mazda 4,206 4,357 4% 2.4% 2.5% Mercedes 1,621 1,555-4% 0.9% 0.9% MINI % 0.2% 0.2% Mitsubishi 1,710 1,646-4% 1.0% 0.9% Nissan 8,237 6,908-16% 4.6% 3.9% Other % 0.0% 0.0% Porsche % 0.2% 0.2% Ram 7,062 7,812 11% 4.0% 4.4% Subaru 9,390 10,333 10% 5.3% 5.9% Tesla % 0.1% 0.4% Toyota 20,427 19,015-7% 11.5% 10.8% Volkswagen 3,212 3,664 14% 1.8% 2.1% Volvo % 0.3% 0.5% Top ten ranked brands in each percent change category are shaded green. *Figures for October 2018 were estimated by Auto Outlook. Data Source: IHS Markit. Chevrolet Ford Toyota Honda Jeep Subaru Ram Nissan GMC Kia Hyundai Mazda Volkswagen Dodge State Market Share for Top 15 Selling Brands YTD 18 thru October* vs. YTD YTD '18 thru Oct.* YTD '17 thru Oct. This report is sponsored by the Minnesota Automobile Dealers Association and produced by Auto Outlook ( ). Auto Outlook, Inc. is not responsible for management decisions based on the content of Minnesota Auto Outlook. Copyright Auto Outlook, November Reproduction, including photocopying of this publication in whole or in part, is prohibited without the express permission of Auto Outlook, Inc. Any material quoted must be attributed to Minnesota Auto Outlook, published by Auto Outlook, Inc. on behalf of the Minnesota Automobile Dealers Association and must also include the statement: Data Source: IHS Markit. 1.8 Buick Market Share *Figures for October 2018 were estimated by Auto Outlook. Data Source: IHS Markit. December 2018 / Page 6

7 Legislative News New House Leadership and Committee Structure Announced With Democrats winning control of the Minnesota House of Representatives during the 2018 Midterm Elections, they have announced new legislative leadership and committees for the upcoming session. Representative Melissa Hortman (DFL-Brooklyn Park) has been nominated by her DFL peers to serve as Speaker in 2019 with Rep. Ryan Winkler (DFL-St. Louis Park) chosen as Majority Leader. The past two years, Hortman served as House Minority Leader and oversaw the election efforts of the House Dems in One of her first official duties is the announcement of the committee structure and appointment of chairs, which were released in late November. In the upcoming biennium, there will be 35 committees and subcommittees. Speaker-Elect Hortman noted that several new areas of focus were added to give attention to issues that affect Minnesotans lives but which have not received enough consideration previously... in the areas of Energy and Climate, Housing, Greater Minnesota Jobs and Economic Development, and Criminal Justice Reform. MADA is wary about the new Energy and Climate Committee, chaired by Rep. Jean Wagenius (DFL-Minneapolis) and what proposals it may consider, such as California s zero-emission vehicle mandate. Other new chairs MADA will be interacting with include Transportation Finance & Policy Division Chair Frank Hornstein (DFL-Minneapolis) and Commerce Committee Chair Laurie Halverson (DFL-Eagan). Representative Hornstein previously chaired the committee in the and is expected to push for new transportation revenues. This will be the first time Rep. Halverson has held a gavel, but she has been a long-time champion of dealer issues, having carried MADA s 2014 bill to postpone implementation of the 10% biodiesel mandate and advocating on behalf of changes to the franchise law as a member of the Conference Committee on H.F Endorsed Service & Vendors Check Guarantee/Credit Card Processing FIS / Certegy Dealer Bond Program Ensure Agency Disability Income Insurance & Section 125 Cafeteria Plans American Fidelity Assurance Employee Placement Hireology F&I Products Protective Fleet Fueling Program SuperAmerica/Speedway Garagekeeper s Insurance Arthur Gallagher Group Health Insurance Blue Cross Blue Shield of MN Delta Dental Voya Life Hole-In-One Insurance Hole-In-One-USA Office Supplies Innovative Office Solutions Online Marketing Services Conversica Dealer LotLinx PureInfluencer Purple Cloud OSHA, EPA & DOT Compliance/Training ComplyNet Corporation Pre-Paid Legal, Jim Gavin Identity Theft Shield & Pre-Paid Legal Services Uniforms and Linen Services AmeriPride Linen & Apparel Services Warranty Reimbursement Bellavia Blatt Workers Compensation Ensure Agency Services News Coming Soon to an Inbox near You MADA Services is no longer sending invoices in the mail. We are sending invoices via . Please call MADA Services at with the address to which you would like your invoices sent. Thanks in advance for helping to make a smooth transition. MADA Services sells a wide variety of products directly to the dealers including business forms, clothing and promotional items. For a full review of options, contact your sales representative at or go to December 2018 / Page 7

8 ADVOCACY EXPERTISE EDUCATION COMMUNICATION nue, MN MADA NEWS DECEMBER 2018 MADA News Join MADA at the NADA Show If you are coming to the NADA Show in San Francisco next month, don t forget to join your Minnesota colleagues at MADA s reception. This year, we will be offering spectacular panoramas of the Golden City from The View, an elegant restaurant on the 39th Floor of the Marriott Marquis Hotel. Make sure to drop by at sunset, between 5:00-7:00 p.m., for appetizers, cocktails, and stunning scenery. More details can be found in the attached invitation. Thanks to Protective for its sponsorship of the 2019 reception. December Scott Lambert, 2018 / Page President 8., MN (651) FAX (651)

9 Upcoming Classes Register Today! Register online at OR contact Alice Morse Dealership Customer Experience for Sales WEBINAR: Win the Applicant Economy Leadership Training for Service Managers The Certified Title & Registration Program Putting Emotional Intelligence (EQ) to Work Title Basics 10:00 a.m. - 2:00 p.m. $199 per person - lunch included. 10:00 a.m. - 11:00 a.m. $59 per person 9:00 a.m. - 4:00 p.m. $209 per person - lunch included. Sales Tax 9:00 a.m. - 10:00 a.m. $129* New to Fleet 10:30 a.m. - 12:30 p.m. $129* Minnesota Titles and Transfers 1:00 p.m. - 3:00 p.m. $129* 9:30 a.m. - 11:30 a.m. $199 per person Wednesday, January 9, 2019 Tuesday, January 15, 2019 Wednesday, January 16, 2019 January 17, 2019 January 17, 2019 January 17, :00 a.m. - 11:00 a.m. $199 for first registrant, $179 for additional registrants from same rooftop. Tuesday, January 22, 2019 Tuesday, February 12, 2019, MN WEBINAR A link to access the webinar will be provided 48 hours prior to the webinar., MN 55118, MN *$387 for all classes, MN 55118, MN Service Advisor :00 a.m. - 3:00 p.m. $199 per person - lunch included. Wednesday, February 13, 2019, MN For Information on these classes or to register, online visit

10 DRIVE COMPETITVE ADVANTAGE DEALERSHIP CUSTOMER EXPERIENCE FOR SALES Auto dealerships can no longer compete on price alone in an age where consumers have the luxury of comparison shopping online. Customer experience has become the new competitive commodity. Gain the competitive advantage to increase sales and build loyalty with customers! Participants will learn skills to uncover customers' needs, deliver on customers' expectations, communicate effectively and professionally, and diffuse potentially unproductive situations. Additionally, attendees will gain: Understanding of the processes necessary to develop a culture that consistently drives exceptional customer service. Knowledge of how to recover effectively from a customer service failure and turn it into an opportunity to strengthen customer relationships....and more! REGISTER TODAY! For more information contact Alice Morse alice@mada.org OR Wednesday, January 9 10:00 a.m.- 2:00 p.m. MADA, MN Meet the Expert David Kelly Automotive Development Group (ADG) David is an accomplished sales executive offering 30 years of experience in sales and sales management. David is successful in leveraging customer and marketplace trends to shape custom strategies designed to grow sales volume, market share, and profits. He has a proven history of developing high performing teams and building strong bottom line results. INVEST IN YOU. INVEST IN YOUR INDUSTRY. INVEST IN SUCCESS.