GNYADA May 2017 Newsletter

GM’s RSI Revision Doesn’t Go Far Enough 14

As a result of the Beck Chevrolet decision, General Motors informed its New York dealers that it will alter the Retail Sales Index (RSI) performance measurement. After reviewing the announced changes, concerns remain about whether these changes are suf- ficient enough to make the RSI calcu- lation a fair measurement of dealers’ sales performance. In the Beck case, GM used Beck’s RSI calculation to threaten termina- tion of the franchise. However, the court, upholding New York’s Franchise Law, found that GM’s RSI formula was not a reasonable sales performance formula, because it failed to account for regional brand- bias in local markets. GM has advised dealers that, starting with the first quarter of 2017, it would measure dealers’ market share against same brand dealers within the same Designated Market Area (DMA). According to GM’s notice, there are ten DMAs which encom- pass New York State. With this new method, dealerships will be assigned The FTC’s “Red Flags Rule” requires dealerships to institute and enforce an Identity Theft Prevention Program (ITPP). A critical part of any dealer- ship's ITPP is a procedure for flag- ging counterfeit drivers’ licenses. To uncover a phony ID that may be used in a transaction, dealers should: 1. Examine IDs for peeling corners, distorted fonts or images, or unreflec- tive holograms; each of these can be evidence of a falsified document. 2. Make sure the face on the ID 15

ships, there will always be some ranked at or near last. The Dealer Sales and Service Agreement makes no mention of requiring dealers to achieve a cer- tain ranking. Thus, there is no con- tractual basis by which GM can judge performance based upon RSI ranking in the DMA. The new formula does not account for shopping patterns in a dealer- ship’s market, which create unique sales challenges. The use of DMAs does not remove the faulty results of measuring dealers against the performance of same brand dealers in other parts of the State. (Some of the DMAs include areas outside of NY.) GNYADA recommends that GM dealers should contact GM and go on-record about any known issues with their assigned APR/AGSSA and other unique market circumstances out of their control, which can impact new vehicle sales. The Association thanks Richard Sox, Esq. from Bass Sox Mercer for this article. n n n ple, someone purchasing a car should know the names of their lenders or former employer. This is info that would appear on a credit check, but not in someone’s wallet, hence the “out-of-wallet” name. If a dealer determines that someone is attempting a transaction using a phony driver’s license, (s)he is advised to contact law enforcement. For further questions regarding institut- ing a Red Flags Rule Policy at your deal- ership, contact Susan Bieber at 718.746.5900 or susan@gnyada.com.

a new RSI and a ranking comparing their performance to the average mar- ket share for the brand in the DMA. Before taking adverse action against a dealership based upon its new RSI calculation, GM “may” take into account additional factors such as: assigned territory (APR/AGSSA); overall registration effectiveness of the brand in the assigned territory; proximity of an OEM manufactur- ing facility; construction at the dealership roadwork near the dealership; any other issues brought to GM’s attention by the dealer. Despite these changes, there continue to be several fundamental problems with the new RSI measurement: Dealers continue to be measured against an average market share. By definition, not all dealers can be at or above 100% RSI. Ranking dealers’ RSI continues to result in a faulty conclusion. Within a finite number of dealer- n n n n n n matches the face that’s in your store. If the buyer’s age doesn’t seem con- sistent with their driver’s license’s date-of-birth (or if they don’t look anything like their license) request a second form of ID for confirmation. 3. Any alarms from a credit report- ing company (freeze notices, active duty alerts, inconsistent spending pat- terns, etc.) should be taken seriously. 4. Administer an “out-of-wallet” test if an ID feels suspicious. For exam- n n

Four Tips to Reveal a Counterfeit ID

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • May 2017

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