Exploring the legality of Hyundai and Amazon’s new partnership with attorney Len Bellavia

Starting next year, Hyundai dealers will be able to sell vehicles through the Amazon platform with other brands set to follow. Joining us on today’s show to discuss this partnership and what it could mean legally for dealers is Len Bellavia, founding partner of the law firm of Bellavia Blatt, PC also known as DealerLaw.com.

Key Takeaways:

1. Bellavia first addresses the potential legal issues with the Hyundai-Amazon partnership, questioning whether it violates state franchise laws. He emphasizes the need for legal scrutiny, especially since the partnership is still in its early stages and may not have been thoroughly vetted for compliance with these laws.

2. Bellavia and Fitzpatrick discuss the complexities of automotive transactions compared to typical Amazon purchases. How will Amazon’s model handle aspects like trade-ins and financing, which are integral to car buying but not addressed in their platform? Bellavia points out that the simplicity of Amazon’s model may not translate well to the nuanced process of buying a car.

3. There are significant concerns about how this partnership could affect dealers, particularly around issues like pricing, financing, and profit structures. Bellavia suggests that the Amazon-Hyundai model might undermine traditional dealership operations, potentially reducing dealers’ profits and leaving them with limited roles.

4. The idea of purchasing a vehicle with the same ease as ordering everyday items could be a significant draw. However, this initial appeal could be overshadowed by potential long-term implications. If the dealership network becomes economically unsustainable due to this new sales model, it could lead to serious challenges in after-sales services and support. Consumers could face difficulties in getting their vehicles serviced and maintained.

5. Bellavia suggests that a successful transition to online car sales via platforms like Amazon requires the active involvement of various stakeholders. This includes not just the dealers and manufacturers like Hyundai but also state dealer associations and the National Automobile Dealers Association (NADA). Bellavia argues that such collaboration is crucial to ensure that the new sales model is not only legally compliant but also beneficial to all parties involved, including consumers.

“In one respect, it’s great that Amazon, the online leader in retail sales is getting involved. The problem is in its execution. So the devil is in the details and it could portend major problems for franchise dealers, or maybe after this pilot project the kinks will be worked out.” — Len Bellavia

The Secrets Behind Dealership Franchise Law

The Secrets Behind Dealership Franchise Law

My full conversation with Leonard A. Bellavia – Sr. Partner at Bellavia Blatt, PC is now LIVE:

— Automotive franchise laws: why they exist and will they go away?
— Consumer-friendly auto brands
— Dealers’ top legal concerns
— Will Tesla ever franchise? (?!)

How to avoid fraudulent warranty reimbursement – Attorney Len Bellavia

How to avoid fraudulent warranty reimbursement – Attorney Len Bellavia

For years, dealers have been challenged with receiving fair compensation for retail warranty reimbursement. However, nowadays, franchised dealers in all states are protected. On today’s CBT Now, Lenord Bellavia, Founding Partner of Bellavia Blatt,  joins us to break down what this means for the industry.

According to Bellavia, “Dealers should pay attention to the reimbursement rates as it correlates to revenue streams.” But, dealers are front-end centric, meaning they always worry about sales. Therefore, based on how the industry continues to evolve, the fixed operations sector has driven the entire business overhead expeensives. Bellavia says, “This is what dealers call shop absorption, where the back end of the business drives the overhead.” Furthermore, Bellavia believes “Dealers get grossly underpaid for their parts and labor under warranty.”

Reasonable compensation

When sitting down with dealers to outline what they’re leaving on the table, most dealers believe they’re missing out on a few couple of dollars or percentages in labor rates. However, Bellavia asserts, “When translated into real dollars, it’s typically between $200,000 and $300,000 annually in revenue opportunities. However, manufacturers hold dealers to rigorous standards regarding supporting updates and working capital. According to Bellavia, manufacturers set up departments at the OEM level to analyze warranty claims to receive kickbacks, but “Those submissions must be strictly focused on.” He continues, “If dealers submit 100 consecutive repair orders and one isn’t appropriate for the batch, the OEM will reject it and postpone it by a month or two. Which leads to possible lost revenue of several thousand dollars.”

To properly create a submission, Bellavia’s highly skilled team takes 30 to 40 hours in the first step. Then, they have a quality control process that takes an additional ten hours to review possible mistakes that the manufacturers could see. Furthermore, according to Bellavia, “There are state statute exclusions that dealers are unaware of, which include batteries, maintenance, tires, and more that reduce the overall markup.”

All 50 states have legislation defining 150 qualifying repair orders, parts, and labor. Most dealers are aware of the legislation and are taking advantage of it. Still, those unaware of it need to learn they can resubmit a submission repeatedly for labor because retail labor increases annually.

Antitrust Suit Against CDK Global Advances

Antitrust Suit Against CDK Global Advances

We are pleased to report we have won a substantial victory allowing our national putative dealer class action case against CDK Global to proceed to trial. A federal judge allowed the dealer class action lawsuit to proceed against CDK Global alleging, the dealership management system giant colluded with a rival to reduce competition and boost prices for dealers.

A separate but related decision also dismissed CDK’s counterclaims, granting motion for summary judgement. Both decisions set the stage for the case to go to trial after a multiyear process.

See the article from the July 31st Automotive News by clicking below:

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Overcoming Manufacturer Efforts To Defeat Dealer Requests For Retail Reimbursement

Overcoming Manufacturer Efforts To Defeat Dealer Requests For Retail Reimbursement

Retail Warranty Reimbursement statutes have been passed by state legislatures in all fifty (50) states to protect the more than 17,000 franchised new car dealers in this country and to enforce their rights with respect to reimbursement at retail rates. Of course each state has its own unique considerations and state-specific provisions: however, the general intent and objectives of the statutes are to ensure fair and reasonable compensation for dealers for their parts and labor warranty claims. See e.g., NY CLS Veh &Tr § 465, Mass. Ann. Laws Ch. 93B § 9, Ky Rev. Stat. § 190.046, Nev. Rev. Stat. Ann. § 482.36385, A.R.S. § 28-4451.

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Leonard Bellavia, Esq. on CBT Automotive Network

How Car Dealers Can Structure Their Buy/Sell Deals for Maximum Success — Len Bellavia, Esq.

We know there are plenty of dealership buyers right now, and as we are all aware, it is a seller’s market. Brokers are constantly making inquiries and telling car dealers that they will never be able to get a better price than they can get right now. Today on Inside Automotive, we’re pleased to welcome back Len Bellavia, Esq., Founding Partner of the law firm of Bellavia Blatt PC, also known as DealerLaw.com, who has handled hundreds of dealership buy-sells. Bellavia joins us to share his creative ways of dealing with this topic, which has been on the minds of many dealers lately. Many dealership buyers in the market are private equity groups, family offices, and public companies with bottomless pockets. Every time one of these organizations buys a dealer group, they have to staff it. But with the current staffing challenges, it isn’t easy to find qualified operators. Sellers don’t always stay on after the transaction to consult. In fact, Bellavia believes the buy/sell market is at a “crossroads” because it’s tougher to convince sellers that the value of their dealerships is not the same as it was a year or two ago. There’s a “widening gap” between what buyers are willing to pay and what sellers expect. If you compound that problem with current economic conditions and OEM news, buyers are doing more sophisticated analyses of potential transactions. On the flip side, sellers are experiencing record profitability, and they are tempted to stay on the fence. However, sellers need to have a succession plan in place, says Bellavia. Because blue sky values are so high, qualified general managers are largely getting priced out of the market. They are no longer able to come to the table because dealer principals are paying closer attention to the “big money players.” But if the dealer principal isn’t quite ready to leave the business, the best course of action is to cultivate a young, talented manager and allow them to buy a piece of the dealership.