May 2021 - Greater Cincinnati Automobile Dealers Association

FCA employee-discount scheme a mystery

A salesman at a Detroit area dealership faces charges of defrauding the automaker of $8.7 million

DETROIT — Lori Naylor is still confused three years later.

She had just graduated from temporary status to full time at a Fiat Chrysler Automobiles axle plant in Michigan when she learned that her employee number had been used to get someone a family discount on a new vehicle without her permission.

She found out by checking an online portal for workers that showed her number was used on a deal at Parkway Chrysler-Dodge-Jeep-Ram in Clinton Township, Mich. To this day, she doesn’t know how.

“It feels like you’re violated, like someone got into your personal stuff,” Naylor, whose father was an auto dealer in Kentucky, told Automotive News. “It feels very corrupt.”

Naylor called the store and FCA to alert them of her discovery. She doesn’t know which salesperson had her information, but it turned out she wasn’t the only one to complain about someone at Parkway misusing employee discounts.

Federal prosecutors say Apollon Nimo, one of FCA’s top salespeople nationwide, had been selling employee discounts to customers for years in a scheme that bilked the automaker out of $8.7 million. That figure includes $700,000 in rewards FCA paid Nimo for the huge number of sales he was making, in addition to his compensation from the dealership.

Nimo, 34, was arrested April 30 on conspiracy and wire fraud charges, then released on bond. A preliminary exam is set for May 21

In the majority of transactions that prosecutors allege were fraudulent, buyers claimed to be the brother-in-law or sister-in-law of an FCA employee to get a 5 percent discount. The employee-purchase control numbers used in the deals were often bought and sold through private Facebook groups.

Authorities started looking into Nimo after FCA employees began complaining that their personal discount codes had been used without their consent, often at Parkway. In 2019, FCA gave investigators a list of 268 employee numbers that were reported as having been used without authorization. All of them were linked to sales made by Nimo from Feb. 21, 2016, to June 18, 2018.

Prosecutors say Nimo sold 250 vehicles in a single month last year — more than most FCA dealerships’ entire sales teams, a manager at a nearby competitor told investigators — and was continuing to falsify employee discounts until the time of his arrest.

Parkway’s general manager, Michael Riley, didn’t respond to requests for comment from Automotive News. The dealership has removed Nimo’s name and photo from the staff listing on its website. Stellantis, the company FCA merged into this year, has declined to comment beyond a statement noting that dealerships are independent businesses and saying it is “committed to preserving the integrity of our employee purchase programs and is cooperating with the U.S. attorney’s office.”

Parkway promoted itself numerous times on Facebook from 2016 through 2020 as FCA’s highest-volume dealership in the country.

Taking precautions

Some workers got hit repeatedly with fraudulent deals.

One Michigan employee, who asked to not be identified, said her number was used at a Detroit-area store five times from 2018 through 2020. She gave it out once for a legitimate deal at that dealership, then noticed later that more transactions popped up on her employee dashboard.

She called one of the customers who made a purchase with her discount. The man, who was listed in the deal as being her brother-in-law, told her he didn’t know a stranger’s personal information was used, saying that the salesperson had just informed him that he could get a discount.

“I don’t have a brother-in-law,” said the worker, who had a passcode added to her account to protect it after consulting with the automaker.

Naylor said she never bought a vehicle from Parkway or gave the store her employee number. Her husband once took their Dodge Durango to Parkway for airbag recall work, so she wonders if her information was retrieved somehow then. Or maybe using Ram’s website to configure a truck, which led to numerous follow-up calls from Parkway, played a role.

Looking back, Naylor still remembers feeling anxious after seeing that someone she didn’t know had gotten a family discount with her information. The online dashboard, she said, listed who bought the vehicle and the name of the dealership.

Naylor looked up her employee account after seeing a Facebook post about a worker at another FCA plant whose employee number had been stolen and used at Parkway. She didn’t believe it at first, only to discover the same thing had happened to her.

Having just graduated from temp status, she was concerned after remembering that FCA had sent a letter to workers saying they were responsible for the use of their numbers. Potential penalties for misuse include termination.

“I definitely did not sell mine, so something is really weird,” Naylor said.

Warning call

When Ken Thomas heard about the Nimo case, he brought his staff together for a team meeting.

Thomas, operating partner at Northland Chrysler-Dodge-Jeep-Ram in Oak Park, Mich., told his employees that he wouldn’t tolerate such behavior.

“Everybody understands that if I catch anyone doing it, I consider it fraud,” Thomas said. “It’s a fraud committed against me, it’s fraud committed against Chrysler, so I’m going to prosecute them. I’m going to fire them.”

Thomas said the automaker has a new system in place that requires workers to list eligible family members on their employee portals during an open- enrollment period that begins in January. After that, the automaker will make only one exception for the rest of the year. So if somebody forgets to add a son-in-law, for instance, Thomas said that person can be added, but no more.

Workers are allowed to give out six employee discounts to immediate family members per year. Dealerships are reimbursed for the 5 percent discounts.

Said Thomas: “It weakens the entire dealer body when you have anyone that’s cheating.”

Cincinnati Children’s donation sets GCADA record

(From left): GCADA President Trey Woeste. event emcees and WGRR-FM personalities Janine Coyle and Chris O’Brien, Duke Energy Convention Center GM Ric Boothe, The Porter Group Owner and Executive Real Estate Agent Tom Porter, Cincinnati Children’s Pediatric Trauma Fellowship Director Dr. Rebeccah Brown, Cincinnati Children’s Injury Prevention Coordinator Angela Campos and GCADA Executive Vice President Charlie Howard.

Greater Cincinnati Auto Dealers Assn. members raised an organizational-record $80,000 donation for the Cincinnati Children’s Comprehensive Children’s Injury Clinic that studies injury care, trains health professionals, improves community injury prevention programs and advocates for better local, state and national injury policy. 

The donation bolsters GCADA’s commitment to child passenger safety by enabling the CCIC to donate car seats and offer professional installation to Ohio, Kentucky and Indiana families in need.  

The fundraising effort was celebrated during the annual GCADA REV IT UP! VIP Party held on opening night of Cincinnati Auto Expo that was held May 5-9 in the Duke Energy Convention Center. 

The Expo is set to return to the venue Feb. 3-6, 2022.

– GCADA – 

 

‘Right to Repair’ Is Bad for Your Health

Do you want a PET scan from a machine with unauthorized adjustments?

By Tom Giovanetti, president of the Institute for Policy Innovation

Not long ago, a shade-tree mechanic with average skills could fix whatever was wrong with your car.

These days, cars are far more advanced. On-board computers allow cars to diagnose themselves for most common problems and make engines run more efficiently while squeezing out more power than ever before.

All this advanced technology has put the shade-tree mechanic pretty much out of business. Working on a car today requires advanced training and technical ability. The technology inside and outside the car consists of patented software, chip designs and proprietary systems. But the benefit to consumers has been enormous. These inventions are covered by patents to encourage and reward innovation.

American innovation is dependent on the protection of intellectual property. It encourages innovation by discouraging theft. But there are those who are philosophically opposed to intellectual property protection. Left-leaning public interest law firms and activist groups led by U.S. PIRG have been trying for years to undermine intellectual-property protection through “right to repair” campaigns in state legislatures. During this legislative session they
are pushing their anti-innovation agenda in the guise of a “right to repair” advanced medical devices.

In my state, Texas, Rep. Thresa Meza has introduced a bill this session titled the Medical Device Right to Repair Act. This bill would require manufacturers of highly advanced medical devices like MRI machines, CT scanners and PE-scan systems to disclose confidential and patented designand service information.

A “right to repair” sounds reasonable, but forcing manufacturers to disclose their proprietary technologies would erode the incentive for innovation and endanger patients. Today the Food and Drug Administration regulates and monitors medical-device safety. The FDA demands that original equipment manufacturers follow its guidelines regarding software updates, patches and more-comprehensive repair jobs. The uncertified third-party service providers who would conduct repairs if these bills pass aren’t regulated by the FDA. There’s no assurance they will follow FDA standards.

Forcing disclosure of these advanced medical technologies and opening them up to uncertified technicians may also represent a cybersecurity threat. You may be troubled by the idea that voting machines can be hacked, but what about opening up MRI machines and PET scanners? Patients could be endangered by sabotaged medical devices, but they might also suffer from malfunctions that cause inaccurate test results and thus unidentified medical problems. Such concerns also include direct theft of American innovation by bad actors seeking advanced U.S. technology, such as China.

“Right to repair” sounds sympathetic but it’s a wolf in sheep’s clothing. It’s not being pushed by small repair businesses but by ideological public-interest law firms and activists as an attack on intellectual property.

State legislators in Texas and elsewhere would be making a terrible mistake by falling for this bait and switch, risking the health of patients and opening up the medical device industry to dangerous and unfair vulnerabilities.

Regional auto shows still draw millions, are key to marketing

By Laurence Iliff

When former Chrysler Corp. President Bob Lutz intentionally drove the first Jeep Grand Cherokee through a plate-glass window at the 1992 Detroit auto show, the media stunt not only generated global headlines but also marked a new era.

Car shows were nearly a century old at the time, but the Chrysler marketing team helped push the perception that the annual expo was a major media event rather than what it always had been — mostly an opportunity for local dealers to get local consumers into shopping mode during January’s winter doldrums.

Fast-forward to the digital age. Even before the event-crushing arrival of COVID-19, auto manufacturers were cutting back on splashy auto show debuts, doubting their bang for their bucks and looking for ways to spark product attention online.

The media hot take in recent years has been to declare that the era of the public auto show is dead.

But nothing could be further from the truth.

All over the U.S., dealer associations and automakers are gearing up for dozens of auto expos in markets as modest as Charleston, W. Va., a metro area of just over 200,000 people, to Orange County, Calif., where more vehicles are sold than in 24 states individually.

Before the coronavirus halted consumer auto shows in March 2020, visitors were still flocking to convention centers and state fairs to comparison shop in what is often a combination of family fun and seat-of-the-pants research.

Foresight Research estimates that 11 million people attended U.S. auto shows during the 2018-19 season. Traditionally, the season has run from September to April. Those attendance numbers had held steady for several years until the pandemic canceled most 2020 events, said the Michigan-based data firm.

Show proponents say the reality of auto expos’ status lies in a difference of definitions. The narrative that the shows are dying is only true if they are defined as media events, say organizers, dealer associations and automakers that are still deeply invested in them. Only a handful of big shows, including Detroit, New York and Los Angeles, have had media-only days to generate industry news before opening to the public.

“Auto shows have had a lot of negative press, starting back with the pullout of the German luxury brands from Detroit” for the 2019 show, said Chris Stommel, president of Foresight Research, which has gathered show data since 2005.

“Some in the press have responded by calling the time of death on auto shows entirely,” Stommel said. “We take a completely different view. Auto shows continue to be an incredibly powerful experiential marketing channel and have not declined in the slightest from the consumers’ point of view.”

In fact, auto shows have a few unique things going for them in the coming months and years. One is the pent-up demand for real-life experiences after much of America has been cooped up trying to stay free of the coronavirus. Planners of events such as auto shows, boat shows and other experiential marketing say they can see demand rising as Americans get vaccinated.

In Minneapolis-St. Paul, consumers are now buying tickets for the Twin Cities Auto Show, which starts Saturday, May 15.

“The presales are right now four times what they would normally be,” said Scott Lambert, president of the Greater Metropolitan Auto Dealers Association of Minnesota, which produces the show. “People are ready to bust out of this pandemic.”

The show moved from its normal March dates at an indoor convention center to an outdoor show at the Minnesota State Fair Grounds in St. Paul. The later date allows more visitors to get vaccinated, and the outside venue favors social distancing and natural ventilation.

Last year, the show was closed after just six days because of the coronavirus outbreak. Lambert said 27 brands out of the usual 33 have returned this year and are adapting to the setting with tents as an alternative to their indoor displays.

The Milwaukee auto show was held last week at the Wisconsin State Fair Park, moving its dates and venue to have a combination of indoor and outdoor activities.

“It’s alive and well in terms of attendance,” said Jim Tolkan, president of the Automobile Dealers Association of Mega Milwaukee. “The automakers bring cars and displays to the show, and we bring people that are going to buy those cars.”

Small town, big event

Organizers stress that regional shows are not about media coverage. They are often major social events for small towns and cities. And they have a natural constituency of dealers, automakers and consumers coming together with products that are otherwise difficult to compare side by side.

“Some of those top-tier shows are media-driven shows,” said DeeDee Taft, who has been doing media promotion of auto shows at her own agency, Spin Communications, for more than 20 years. “The shows that are on a more regional level are designed for those regions. The manufacturer support is super important.”

One big incentive for automakers is that research indicates showgoers will add or subtract brands based on their show experience, said Steve Freeman, who has been producing auto shows for two decades and started his own firm, Steve Freeman Events, late last year.

Foresight Research has been gathering data on auto shows for more than 15 years, focused on how they drive retail sales at dealerships. Here are some key findings.

Visitor profile

  • The percentage of households attending shows that plan to purchase a new vehicle within 12 months has averaged about 70% over the past 5 years, about double the intention of the general population.
  • Show visitors consistently trend younger, more affluent, more multicultural and are more often owners of or intend to own luxury-brand vehicles compared with the general population in the same market.

Visitor motivation

  • Visitors are interested in both entertainment and shopping. About two-thirds are specifically interested in shopping.
  • Top messages influencing attendance by order of importance are to: see newly launched vehicles; have fun; comparison shop; see concept cars; learn about new tech features/EVs/AVs.


Visitor expectations

  • Showgoers expect auto shows to allow them to sit in vehicles, find a specific vehicle to experience, see a range of vehicles and find product specialists and printed brochures.
  • Future show interests include: more access to ride-and-drive, including simulators; information on EVs/AVs; a variety of information sources, including print, digital and video.