February 2018 - Greater Cincinnati Automobile Dealers Association

The Reality of EVs

By Peter Welch, NADA, President & CEO

This is an incredibly exciting time to be in the transportation industry.

New cars and trucks are safer and more efficient than ever. Automakers are introducing new technologies every day and will be deploying scores of new models with technologically advanced drivetrains and other features in the coming years. Partnerships on highly autonomous vehicle deployment abound between technology companies and OEMs. And all of this is happening while we are seeing major advances in internal combustion engine (ICE) vehicles.

For nearly 30 years, automakers have spent billions of dollars on the development and deployment of battery electric (EV), hybrid, plug-in hybrid and fuel-cell vehicles. It started in 1990, when California adopted its zero emission vehicle (ZEV) mandate, requiring 2 percent ZEVs in 1998, 5 percent in 2001, and 10 percent in 2003 and subsequent model years.

Yet despite a variety of government incentives, take-up has been slow, with EVs representing only 0.6 percent of new-car sales nationally in 2017 and 2.6 percent of new-car sales in California.

There are a host of reasons why consumers aren’t buying EVs at the rate regulators have tried to force-feed them, including expense, range, recharging speed, residual value uncertainty, utility, performance and insufficient recharging infrastructure. Most Americans won’t consider a vehicle that compromises their convenience or current mobility needs, let alone pay more for one—especially when today’s advanced ICE vehicles and their hybrid variations present affordable and convenient alternatives.

However, the pendulum is beginning to swing in the other direction. In the past two years, EV sales increased significantly, and we expect those sales to increase sevenfold by 2027 to around 4 percent nationwide. In the next 10 years, the price of EV battery packs with ranges of 250 miles or more are expected to drop significantly, to $100 per kWh. This could, for the first time, put the cost of EVs on a price parity with ICE vehicles. And dozens of new EVs in popular segments like crossovers will be introduced in the next decade. Indeed, many traditional automakers have said they believe the future of the vehicle is “all electric.”

Local dealerships are excited about being a part of that future and know that replacing America’s fleet of 266 million ICE vehicles with EVs could be a sales bonanza unlike any the industry has ever seen.

But even as prices are coming down and other obstacles are being addressed, prospective customers continue to ask pointed questions about the practicality of owning an EV—especially questions about recharging access and recharging speed, because most Americans don’t have their own garage or a dedicated nightly parking spot. While owners of ICE vehicles and hybrids take refueling for granted, EV owners simply don’t have that luxury.

There are 168,000 filling stations across America—many with 10 or more pumps—that dispense 40 million fill-ups every single day, so you can quickly and easily extend your vehicle’s range, over and over again, without ever thinking about it. But battery technology and infrastructure are simply not widely ready for fast charging. That’s why the U.S. Department of Energy’s Office of Renewable Energy has identified “the ability to refuel quickly or to fast charge” as a critical obstacle to wider adoption of EVs.

Even in the face of these real-world realities, some say dealers should do more to push EVs on their customers. That’s not how it works. According to a recent survey by Cox Automotive, 74 percent of today’s vehicle buyers purchased the vehicle they selected online prior to visiting a dealership. Local dealers are merchants; they stock, sell and service what their customers want to buy, own and drive—and they always will.

As Automotive News publisher Jason Stein wrote from CES in January, we should be careful not to let the promise of new technologies get too far out in front of the actual consumer marketplace. If the automotive industry really wants to achieve wide-scale acceptance of EVs, the solution goes far beyond sales incentives and introducing new models. We need to face the gritty reality that widespread acceptance of EVs will require closing the gap between the pumps that refuel today’s cars and trucks and the plugs that will be needed to continuously and quickly repower the cars and trucks of tomorrow.

Auto Dealers Raise $60,000 for Cincinnati Children’s at this Year’s Auto Expo

The annual charity gala held at the opening night of the Cincinnati Auto Expo raised $60,000 for the child passenger safety program at Cincinnati Children’s. The 2018 REV IT UP!! Sneak Peek VIP Party was the 25th such event, organized by the Greater Cincinnati Automobile Dealers Associated and sponsored by the Enquirer.

This year’s party set records in attendance and funds raised. Over 500 automobile dealers, their employees, and other guests attended the event, with 100% of their ticket price going directly to benefit the Comprehensive Children’s Injury Center (CCIC) at Cincinnati Children’s. These funds will go to provide car seats for children in the Greater Cincinnati with special needs and/or financial hardships.

Tim Timmerman and Jennifer Fritsch, radio personalities at WKRQ, served as the Honary Chairpersons for the event. The check was presented by representatives of GCADA including Dan Kommeth and Charlie Howard. Also present were Larry Brueshaber and Dr. Victor Garcia, who helped to form the initial partnership between GCADA and Cincinnati Children’s in 1993.

In the 25 years since, this partnership has expanded into a year-round public safety initiative known as Safe Travel For Kids!! that promotes proper use of child passenger safety seats to keep children as safe as possible in the event of an automobile accident. GCADA will celebrate National Child Passenger Safety Month in September with the annual car seat giveaway sponsored by Evenflo, PSAs and public outreach activities.

Ask Yourself These 7 Questions To Find Out If You Are Ready For A Harassment Complaint

Hardly a day passes anymore without some famous (or infamous) person being accused of or admitting to engaging in inappropriate sexual conduct. In many of these situations, the conduct is so egregious that one could reasonably conclude that the offenders (alleged or admitted) had to have known that their conduct was not only inappropriate but, in many situations, unlawful. 

Perhaps a more accurate conclusion is that those who engaged in this conduct simply believed that they were “above the law.” In other words, they believed that, because of their fame, money, and power, the unwritten societal rules of acceptable conduct and the written rules (laws) related to workplace conduct did not apply to them. And, even if the rules did apply, they picked vulnerable victims who likely would be afraid to complain—until now. 

Dealership Community Not Immune From Sweeping Harassment Movement

Naturally, the rich and famous do not have a monopoly on the arrogance or ignorance that often leads to harassment problems. In fact, these problems have been prevalent in a number of industries for years, and the retail automotive industry is no exception. Recent notable cases include a $2 million settlement by a New Mexico dealership following allegations that its lot manager subjected coworkers to shocking comments and unwanted touching; a Texas jury’s award of more than $625,000 to an aftermarket sales manager based on evidence that her finance director repeatedly asked her on dates, hugged her, and made suggestive comments; and $540,000 awarded by a Massachusetts jury to a finance manager based on evidence she was subjected to inappropriate behavior—including sexually suggestive jokes made during sexual harassment training—and the dealership’s failure to properly investigate or take appropriate action.

Not unlike the recent news stories, the named offender in each of these cases was someone in a position of authority over the victims. And, like the situations involving celebrities, the histories of the dealership managers showed a pattern of inappropriate conduct that had gone either unreported or unchecked.

But just as not everyone in the entertainment business or politics is a harasser, neither is every dealership owner, manager, or employee. Quite the contrary, very few in dealership management would ever think about or consider engaging in harassing conduct, nor would anyone have reason to expect them of such behavior.

Even so, the fact that it hasn’t happened at your dealership does not mean that it won’t happen, even if your dealership feels like everyone is part of one big family. For this reason, you should take steps to prevent harassment and be prepared to address issues immediately and effectively if a problem does arise.

Ask Yourself These 7 Questions

With the topic of harassment so prevalent in the news, there is no better time to determine what steps you need to take to prevent harassment at your dealership and how prepared you are should someone make a harassment complaint. The following questions are designed to help you evaluate yourself and test your preparedness.   

  1. Does your dealership’s culture tolerate harassing behavior?
    One of the most effective ways of avoiding harassment claims is to foster a workplace culture of zero tolerance for harassment or anything resembling harassment. That culture is set by the words and, more importantly, the actions of those at the very top of the chain. Common excuses like “boys will be boys,” “he was only kidding,” “they were just blowing off steam,” or “this is car business” are not acceptable, no matter who’s involved. A culture in which employees feel safe to voice their concerns is likely to have fewer harassment issues and makes your dealership an attractive place to work.
  2. Do you have a comprehensive no-harassment policy written for your dealership?
    Even if you have the right culture, you still need a policy that prohibits all forms of unlawful harassment, not just sexual harassment. The policy should also include examples of the types of conduct that may constitute harassment. Anyone who still believes that providing employees with information of this nature serves only to educate them on “how to sue you,” probably also believes that women working in dealerships do so at their own risk. If management is concerned about employees learning what constitutes improper conduct, perhaps they could shift their focus to ensuring that improper conduct does not occur.

    The no-harassment policy should have a clear reporting procedure that includes options for alternative ways of reporting concerns. The goal is to make it as easy as possible for an employee to report concerns so that ownership, top level management, or human resources can respond appropriately. Many policies instruct employees to report concerns to a direct supervisor to preserve some sacred chain of command. If that is your policy, you may want to ask yourself if you really want your frontline managers to be the ones fielding harassment complaints without guidance or training. How do you know that they will do it correctly? What training have they had? What if the manager is the problem? To reduce these risks, a better option may be to have a policy that directs employees to report to a higher level of management and includes further reporting options if the employee believes that the dealership’s initial response was inadequate.

    Your policy also should set forth what the dealership will and will not do when responding to a complaint of harassment. Employees should know that the dealership will conduct a thorough and proper investigation and then take appropriate disciplinary action based on the findings. Remember, your employees are watching and will evaluate your commitment to a harassment-free workplace by your actions, not the words in the policy. 

  3. Do you have a no-retaliation policy?
    The same laws that make discrimination and harassment unlawful also make it unlawful to retaliate against employees who oppose conduct they reasonably believe to be unlawful or participate in an investigation or proceeding related to a complaint. Retaliation claims are popular; in each of the last several years there were more retaliation claims filed with the EEOC than any other type. A retaliation claim can survive even when the basis of the underlying complaint does not. Dealership policy and actions should state clearly that employees who make complaints of this nature will be protected from retaliation and that those who retaliate are subject to discipline, up to and including discharge.
  4. Are your employees aware of your no-harassment policy?
    It goes without saying that your policy, no matter how well-written, will not be effective or provide optimal benefits for either the employees or the dealership unless your employees know about it, what it says, and understand what it means. The employee handbook is the most common means of providing the no-harassment policy to employees. Some employers also provide a stand-alone version of the policy to employees during orientation. 

    Taking time to go over the policy in detail at the time of hire can and should provide benefits later. Policy awareness and understanding is especially important for management personnel who act on behalf of the dealership and whose actions (or inactions) could, in some situations, create liability for the dealership. In many cases, the same managers charged with abiding and enforcing these policies have never bothered to read them. To determine how much your managers know, surprise them with a pop quiz on the no-harassment policy during the next manager meeting. Hopefully, you will be pleasantly surprised.

  5. Have your managers received no-harassment training recently (or at all)?
    Providing no-harassment training to managers educates them on the policy, the types of conduct that is prohibited, their obligations, and what to do if they become aware of harassment, but it also sends a message that ownership is serious about its commitment to zero tolerance. Of course, the training cannot simply be a check-the-box exercise—all dealership management must walk the walk after talking the talk. Again, actions speak louder than words, especially in this context. The cost of bringing in an individual qualified to present the training is relatively insignificant when compared to the costs, disruption, and reputation damage that could result from a harassment lawsuit.
  6. Do you have someone trained to investigate a harassment complaint?
    Many dealerships do not. Instead, the task of investigating a harassment complaint often is left to an ill-equipped manager with no specific training on the proper way of conducting and documenting a harassment investigation. Other times the task is assigned to the human resources manager, if there is one, and sometimes even they have had no formal training on investigation.

    Conducting a proper investigation is critical for protecting the individuals involved and the dealership. The failure to do so can create additional problems. In fact, the way a dealership responds to a complaint of harassment may have greater legal significance than the harassment itself. The law understands that an employer cannot control everything its employees do at all times but that it has complete control over how it responds to harassment issues. The importance of conducting a thorough and effective investigation cannot be overstated. You should not hesitate to seek guidance from your legal representative during this process.

  7. Are you willing to appropriately discipline the harasser?
    If the investigation establishes that an employee violated the harassment policy, are you willing to take the appropriate disciplinary action, up to and including termination? Is your answer the same regardless of who is involved? It should be. 

    While top performers may rightfully enjoy some benefits resulting from their successes, one of those benefits cannot be favorable treatment for harassment policy violations. Allowing any employee who violates the no-harassment policy to escape the appropriate consequences of their actions sends a loud and clear message about your real commitment to your policy and protecting your employees.

Are You Ready For 2018?

If, after conducting your self-audit, you believe that you are not as prepared as you should be to prevent harassment or respond to a harassment complaint, the start of the new year is a great time to get your house in order. Hopefully you’ll never have a harassment issue, but if you do, you’ll be glad you took these steps. 

For more information, contact the author at TCoffey@fisherphillips.com or 404.240.4222.

Greater Cincinnati Auto Dealerships Generated an Estimated $4.58 Billion in Sales Last Year

Greater Cincinnati franchised new motor vehicle retailers accounted for nearly 160,000 new and used cars sold in the region in 2017, contributing $4.58 billion in retail sales and $234 million in sales tax generated into the local economy, according to a new study conducted by the Greater Cincinnati Automobile Dealers Association (GCADA).

The industry’s economic impact statement was released today in advance of the Cincinnati Auto Expo, which opens Wednesday, February 7 and continues through February 11 at the Duke Energy Convention Center, and is presented by GCADA. The figures are calculated from recent surveys of GCADA.

The study shows that new vehicle sales accounted for $2.35 billion on the sale of 77,459 vehicles, while used vehicle sales totaled $1.39 billion on the sale of 80,520 vehicles. In addition to collecting sales tax, dealerships also paid $10.2 million in Commercial Activity (CAT) tax, $29.7 million in payroll taxes and $4.7 million in real estate taxes.

“The auto industry in Greater Cincinnati continues to be a major factor in the growth of our area’s economy,” said Charlie Howard, executive vice president of the Greater Cincinnati Automobile Dealers Association. “The economic impact study for our industry shows the support the dealerships give to the local communities and employees who contribute so much to the industry’s success.”

Greater Cincinnati dealerships employ nearly 5,700 workers, with an annual payroll of more than $230 million. In addition, area auto dealers spend $57.8 million in advertising.

The average profile of a new vehicle dealership and their economic impact in the Cincinnati region (including Hamilton, Butler, Warren and Clermont counties) is as follows:

  • Generated $55 million in total retail sales ($28.6 of that new vehicle sales)
  • Employed 69 Ohioans
  • Paid $3.7 million in employee wages
  • Collected and paid $2.9 million in state and local sales tax
  • Paid $362,563 in payroll tax
  • Paid $57,748 in real estate taxes
  • Paid $124,140 in Commercial Activity Tax
  • Spent $704,838 on advertising

The 2018 Cincinnati Auto Expo presented by the Enquirer and Cincinnati.com is slated for February 7-11 at the Duke Energy Convention Center, downtown Cincinnati. The Cincinnati Auto Expo is the area’s premier automotive industry event featuring the latest models of cars, trucks, SUVs, hybrids and crossover vehicles. Dealers from around the area will display their 2018 editions and will be available to answer any questions about the new vehicles.

Ringless Voicemail: Too Good to be True?

By Michele Shuster & Josh Stevens, Mac Murray & Shuster LLP

You are running a special trying to clear out some inventory before you receive another shipment of the hottest new vehicles on the market. Direct mail is slow and emails keep getting caught in your customers’ junk boxes. With the prevalence of cell phones, you consider calls and text messages, but remember that without following well-developed compliance rules you could face steep damage awards of up to $1,500 per call under the Telephone Consumer Protection Act (“TCPA”). Then a miracle happens. You hear about a relatively new technology called ringless voicemail that allows you to deposit pre-recorded voicemail messages without ever calling customers, and the best part is that it promises to be 100% TCPA-compliant. As with all things that sound too good to be true, it very well may be.

Ringless voicemail allows a business to deposit a voicemail message into a recipient’s voicemail box without placing a traditional call to the recipient.  Rather, the technology links directly to the voicemail server for the recipient and the deposit occurs through an internet transfer. The recipient’s phone does not ring, but the recipient receives a voicemail alert in whatever fashion they have selected.

 Ringless voicemail providers argue that ringless voicemail may not qualify as a “call” under the TCPA because only calls to a telephone number “assigned to” the consumer’s telephone service are subject to liability. Ringless voicemail does not connect to the telephone number of the consumer, but rather the voicemail server of the consumer’s telephone carrier. Additionally, under prior Federal Communications Commission (“FCC”) precedent, voicemail services are not “common carrier” services like telephone calls, but “enhanced information services.” Courts have held that “information services” are exempt from Title II of the Telecommunications Act, and the TCPA specifically.

To date, neither the courts nor the FCC have issued guidance on whether ringless voicemail is a “call” to a cell phone.  However, twice in the past few years, ringless voicemail providers unsuccessfully petitioned the FCC to declare that ringless voicemail does not come under the TCPA. In August 2014, ringless voicemail provider VoApps filed a Petition for Declaratory Ruling seeking to clarify the applicability of the TCPA to ringless voicemail. The FCC solicited comments from the public and VoApps met with several senior FCC staff members and Commissioner O’Rielly.  A few days later, without explanation, VoApps withdrew its petition before the FCC ruled on it.  While no public information exists as to why the petition was withdrawn, it’shile no public information exists as to why the petition was withdrawn,  oicemail is a call or a prerecorded message to a cell  likely, that the FCC staff informally informed VoApps that the Commission would likely rule unfavorably on the Petition. 

Then in 2017, All About the Message, another ringless voicemail provider, filed its own Petition to the FCC for a Declaratory Ruling that the TCPA does not apply to ringless voicemail.  During the public comment period, commenters filed several thousand comments in opposition to the Petition. The Attorneys General of Kentucky, Massachusetts and New York, also filed comments taking the position that ringless voicemail is subject to the TCPA because it facilitates the delivery of a prerecorded message through the consumer’s cell phone even if the phone does not ring in the traditional sense.  After meeting with FCC staff, All About the Message, like VoApps before it, withdrew its Petition.

One may ask why, if the FCC has not taken a position on ringless voicemail, should a company be concerned about whether the TCPA applies?  When the FCC has issued an official interpretation of the TCPA, courts are generally required to defer to the FCC under the Hobbs Act; however, when the FCC has been silent on a question, courts are free to interpret the TCPA as they wish.  At this time, no court has had the opportunity to rule on whether ringless voicemail is subject to the TCPA. Also, likely due to the publicity received by the petitions, multiple states, including Florida and New Jersey, are considering bills to restrict ringless voicemail.

Given this regulatory uncertainty, and the potential high costs associated with TCPA violations, what is a business to do? First, seek counsel familiar with TCPA issues and the latest legal developments. Second, consider treating ringless voicemail as a “call” delivering a pre-recorded message for compliance with the TCPA and analogous state regulations. Third, be prepared to adequately respond to any complaints you receive. And, most importantly, always remember that the promise of 100% compliance may not be as clear cut as it first appears.

Mac Murray & Shuster LLP focuses on helping businesses comply with a broad range of regulatory demands including compliance with the TCPA and state consumer protection regulations. To learn more, visit www.mslawgroup.com or contact the authors: mshuster@mslawgroup.com; jstevens@mslawgroup.com.