Rosen Automotive Group Stays Compliant

It’s well known that compliance has changed the game over the years, and Saul Rosen has been around long enough to see compliance go from a non-issue to a presiding force in the industry. Rosen, who’s been a dealer for over 30 years and is the dealer principal of Rosen Automotive Group, said, “Almost everything that exists today [compliance-wise] didn’t exist when I started.”

Today, he has a nine-dealership group based in Gurnee, Ill., to keep compliant. With two Kia, two Nissan, Hyundai, Honda, Mazda and Suzuki franchises, there’s plenty to keep him busy. While some dealers might stick their heads in the sand when they hear the word “compliance,” Rosen’s stayed proactive and implemented the necessary measures to ensure his dealerships maintain compliance with the gamut of rules and regulations that affect the automotive retail industry. He said, “We’ve obviously – as compliance requirements have changed – strengthened what we do on a more formalized basis.”

The first step to maintaining compliance is being well-informed. Rosen keeps up-to-date on compliance issues thanks to the dealer associations he’s part of, including the Illinois Automobile Dealer Association, Chicago Automobile Trade Association (Gurnee is about 40 miles north of Chicago), and Wisconsin Automobile and Truck Dealer Association (two of the Rosen stores are in Milwaukee, Wis., about 50 miles north of Gurnee).

Rosen Honda
Rosen Honda in Gurnee, Ill., is one of nine dealerships making up Rosen Automotive Group, owned by Saul Rosen, a veteran dealer who's always had his eye on compliance. To ensure compliance across his entire operation, he has compliance audits performed at all his dealerships monthly.

“Usually the heads-up [for compliance-related issues] comes from the dealer associations, and then I try to follow through with my attorney to make sure we’re complying,” he said. He acknowledged the importance of having an attorney well-versed in compliance issues specific to the automotive industry to avoid the legal landmines that face today’s dealers, adding, “It didn’t used to be [that important], but it is today.”

The “best thing” he’s done to maintain compliance was hire an outside consultant to perform monthly and quarterly compliance audits at his dealerships. At first, he tried to handle compliance internally. However, he said, “Internally, we just weren’t getting done what I felt we needed to get done.” He attempted to hold his staff accountable for compliance by monitoring deals, but said it was “hit and miss,” which was unacceptable.

Part of the problem was that the everyday issues arising in a dealership often require immediate attention, and sometimes compliance takes a backseat to such issues. Rosen acknowledged, “The car business gets wild sometimes. You do [the work that’s] in front of your face.” So a few years ago, he decided to bring in a third party to keep his team on task and the dealership out of hot water.

Jeff Doran, president of Great Lakes Dealer Services, visits each of the dealerships about twice a month to audit about 10 percent of Rosen Automotive Group’s deals, and Rosen is now happy with the compliance level in his dealerships. He said, “I have found that by going to an outside contractor to get the audits done monthly, they’re objective. It’s black and white, and our compliance now is up to 100 percent, where we were touch-and-go on some things before.”

Doran checks deals for all the required documents like  proof of license or IDs, privacy notices, Red Flags, window stickers, waivers stating the dealership offered all F&I products to the consumer, credit applications and arbitration agreements (except Wisconsin, where such agreements aren’t allowed). Rosen added, “And of course, the employees know he’s going to check them [and that] obviously changed behavior.”

Saul Rosen"We've obviously - as compliance requirements have changed - strengthened what we do on a more formalized basis."

- Saul Rosen, dealer principal
Rosen Automotive Group

In addition to the compliance audits, Doran handles compliance training at Rosen Automotive Group—both for new hires and short refresher training sessions for finance managers. When a new finance manager starts working at one of the nine Rosen Automotive Group dealerships, Doran goes over exactly how a deal bag should look (including all the documents that should be included and how they are to be completed) and several other compliance issues, including things like handling cash deals, Red Flags requirements, etc.

He said, “There’s a lot to it. Initially when they start, you sit down with them, explain it to them and give them something in writing [to clarify] exactly how we do it.” He also makes sure to “pay a little more attention” to a store with a new hire because at some point they’re likely to make a mistake, but for the most part Doran said it usually doesn’t take new hires too long to figure the processes and procedures out.

Another task of his is to make sure all finance managers are certified by the Association of Finance and Insurance Professionals (AFIP). “Some people come in and they’re [already] certified. If they’re not certified, then we get them certified … It’s a lot of hard work for the people that have to do it.” Once they’re signed up, they get a manual, which Doran estimated was five to six inches thick. Then, they get time to study on their own before they’re put through a college-type course. Last comes the test for certification, and to achieve certification, managers must score 80 percent or better.

Rosen recalled the reaction among employees when he first required the AFIP certification for all sales and finance managers at his dealerships. He said, with a laugh, “When they saw the initial book [for certification], they all had heart attacks.” However, he took the stance that “it was a non-negotiable” for his managers, so naturally, they complied.

The brief refresher courses on compliance topics are incorporated into the monthly meetings Doran has with managers, and he typically determines what topics to cover based on any recent errors the managers have made or questions they’ve asked. “You can always find two or three minutes every month to talk about something, and the truth of the matter is, when you’re going through the deal bags, that’s going to tell you what direction you need to go.”

Rosen Nissan
Rosen Nissan in Gurnee, Ill. (one of two Nissan stores in the Rosen Automotive Group), typically sells between 165 to 185 vehicles a month. Jeff Doran, president of Great Lakes Dealer Services, audits approximately 10 percent of those deals (and all other Rosen Automotive deals) for compliance. He also helps train new finance managers at all the Rosen stores.

Doran works mainly with the 15 finance managers in the Rosen organization, and both he and Rosen agree on the importance of keeping an eye on compliance on a regular basis. Doran said, “It’s something you have to be vigilant about … You’ll slide if you’re not watching it.”

When it comes to compliance, it’s no secret that technology can be a big asset. The Rosen dealerships utilize DealerTrack for help with Red Flags compliance (a huge issue in and of itself), which Rosen complimented. “They’re very helpful on ID matches, Red Flag issues, Red Flag questions. They have a nice process with follow-up questions, and they have a very nice process to help you comply because it’s not easy, to be honest with you.”

One manual aspect of the Red Flags Rule, which Doran works closely with the controller on, is annual reporting. The reports contain information about the dealerships’ Red Flags policies and procedures, staff members having been trained on the processes, how any Red Flags the dealerships had (if any) and how they were handled, quarterly reviews of the Red Flags process, etc. When making and reviewing the reports, Doran said, “What we’re looking for is continuous improvement. Where did we screw up? What was right? What was wrong? What we’ve found is that if the policies are followed, we feel pretty comfortable that we’re doing a real good job with Red Flags.”

In fact, both Doran and Rosen are confident that Rosen Automotive Group does an excellent job complying with all the legal issues that concern dealers. Doran said, “If you walk in and grab a deal bag and start to go through it, looking at the paperwork, it’s tight. Rosen [Automotive Group] is a very well-managed company. It’s extremely well-managed. They dot the I’s, they cross the T’s and they do it the right way. I would say in terms of professionalism they’re atop the heap. I’d put them up against anybody, and from a production point of view, they’re extremely strong.”

Vol. 7, Issue 9