Is anyone experiencing a déjà vu moment? We may feel as if we are in the movie “Back to the Future.” Rather than traveling back to 1985, Marty McFly and Doc Brown set the DeLorean time machine to the 1970s.
My opening is not meant to be funny. This topic is very serious and may trigger a flashback for many readers.
The topic is compliance.
The message that dealers need to focus on compliance should be heard loud and clear. The current administration is clearly sending that message to dealerships nationwide. In June, the Federal Trade Commission (FTC) proposed the “Motor Vehicle Dealers Trade Regulation Rule,” which will allow the FTC to recover money when consumers are misled or charged without consent. The rule’s intent is to “protect consumers and honest dealers” by making the car-buying process clearer and more competitive.
RV dealerships are mistaken if they believe the upcoming changes and additions will not include them. The FTC rule will cover sales practices related to various transportation modes, as the “motor vehicle” definition includes autos, motorcycles, motorhomes, RV trailers and slide-in campers.
One might wonder what brought the sales practices issue back to the surface.
Many of us remember the start of this century, when the federal agencies announced their new goals, policies, fines and the businesses they were targeting. Back then, the RV industry still embraced the family values in which most dealerships were founded. Their F&I departments were mostly in their infancy stages.
Some family dealerships were 50-70 years old. Their businesses upheld the ideals of serving customers as if they were family members. Yes, the businesses made an honest profit. Most consumers understood the profit was necessary.
Twenty years ago, federal agencies mostly directed compliance regulations and policies toward the automotive industry. Most franchised auto dealers had already implemented compliance policies in the 1990s. Many employed one-price selling programs, using an F&I menu with full disclosures and a sales process to increase customer satisfaction.
In 2003, the Fair and Accurate Credit Transactions Act (FACT Act) was signed into law to combat identity theft. The rule morphed over the next five years to what most dealerships recognize as the FTC’s Red Flag Rule, which requires some businesses to create ID theft prevention policies. The Red Flag Rule was scheduled to be implemented by 2008 but
was delayed until 2011.
Before the Consumer Financial Protection Bureau (CFPB) was founded in 2011, many dealers practiced risk-based pricing to meet compliance guidelines.
During the period shortly after the Great Recession, most family RV dealerships changed sales practices. Dealerships implemented new policies and more. They understood the importance of protecting consumers and their positive buying experiences.
Many family RV dealerships raised the bar for customer service, including on-site staff training, from the dealer principal to the janitor. Besides the new policies to meet regulations, many included a customer resolution policy to add value to managing complaints
in a way that maintained positive customer experiences.
In addition to new consumer protection policies, the FTC implemented risk-based pricing rules for anyone extending credit. Although dealers were not required to comply with the policy, many embraced the philosophy surrounding their product sales and pricing.
Fast forward 10 years and the RV industry has experienced a complete 180. Most family dealerships are a relic of the past. The ones remaining still operate with their families’ founding values. The family dealerships now are watching the Wild West of the RV industry right in front of their eyes. The industry is transforming into another big-box retail machine without concern for customers—only profits, numbers and footprint.
In my 30-plus years working in the motor vehicle and recreational industries, my experience includes selling autos in the final days before manufacturers started using customer service index (CSI) rating systems. The auto industry implemented CSI as a way to change their practices. Auto manufacturers began requiring CSI systems as franchised dealers slowly enveloped the industry.
The change was welcomed by most.
Over the past five years, I’ve experienced too many “déjà vu” moments from that era. Recently, my eyes have seen nightmarish paperwork, including undisclosed fees, overpricing and, in some cases, even gouging. My ears have heard consumers’ nightmare stories about signing a credit statement only to see a payment notice when the consumer did not even know they had bought a camper. Other consumers told stories about being in a business office for more than two hours as they were pressured into buying products they did not want.
Among the new “customer service values” I heard about was a dealership requiring a qualified buyer to put down a deposit to demo a motorhome. After the consumer returned
to the dealership 15 minutes later, the dealer told the prospective buyer their deposit was deposited in the bank as they “demoed the motorhome.” The consumer finally received the deposit back three weeks later, but only after having to contact the dealership every day to refund it. Of course, the consumer bought a motorhome elsewhere because of this treatment—the motorhome they bought was bigger and more expensive.
Another longtime common practice creating chatter is the validity of rebates. Dealers offered a discounted price via a rebate, but only when the consumer financed the unit. The result created a higher cash buyer price. How does that work?
These are just a few horror stories good dealers hear from consumers nationwide. Normally, the locally owned family RV store with a few locations is not the culprit.
I believe government should stay out of businesses’ way and let them flourish. However, hearing and seeing what the RV industry has become in such a brief time is difficult. Despite the flack I might get, I say, bring on the regulations with accountability! These are good for the industry and its consumers.
I hope regulations can level the playing field and protect consumers and honest dealers while preserving the RV industry for generations to come.
Most RV dealerships’ ancestors began by renting a trailer and taking their families camping. After returning home, they started a business with two or three tent campers, selling and delivering them out of their home garage, while treating buyers like family. The RV industry was founded by and for families and should maintain these values as much as possible. If federal agencies must implement regulations to preserve this industry and history, so be it.
I am confident my thoughts are shared by many. Let’s hope we fast forward past the DeLorean and lasso in the industry’s Wild West days.
Greg Artman has been with Diversified Insurance Management, a Higginbotham Company, since 2005 as a regional manager, national training manager, VP and managing director. His experience also includes 17 years in the auto, motorcycle, marine and RV dealerships in various positions from sales to GM. Artman spends most of his time coaching, training and consulting dealers. His experience helps to implement best practices in today’s market space.