Challenging Times

Mobility Dealers Point Out Issues Affecting the Auto Access Industry

Even if you had not picked up the newspaper or turned on your television set, it wouldn’t be hard to tell that, like a bad battery, the economy is in need of a boost. Simply driving up to the local gas station, shopping for groceries or hearing talk of impending job cuts would send out a clue.

The economic downturn has caused many to scale back on major purchases. And the auto access industry has not been exempt from feeling the economic blow. Like everyone else, this industry is, of course, dealing with the rising cost of doing business, which is being affected by the Internet, the prices of fuel and food, and the affordability of the vehicles themselves.

Right now business is unsteady all over the country, says Marcus Smith, president of Access Vans and secretary of the National Mobility Equipment Dealers Association’s (NMEDA) board of directors. Smith, who says he sits on several boards and is a member of many organizations, described business as being like a roller coaster across the country.

“People don’t want to spend money for whatever reason,” says Smith, who operates an auto access business in Grosse Tete, La. “Prices have gone up for your utilities, and certainly your gas and diesel has skyrocketed. I’m sure that has a lot to do with it. I’m sure all of that adding up has a part to play in it.”

Many people with disabilities require vehicles that accommodate wheelchairs. Those vehicles tend to be SUVs, pickup trucks, minivans or vans, and so one could assume that those vehicles, especially when carrying power wheelchairs or scooters as cargo, take more gas, says Lori Benner, president of the Association for Driver Rehabilitation Specialists (ADED).

“The upkeep of those vehicles in addition to the fuel cost could be a barrier,” Benner said.

The rising costs of fuel and food are certainly causing people to get rid of bigger vans (which makes them less valuable) to purchase smaller, more cost-efficient ones, says Bill Siebert, president of NMEDA’s board of directors and who is also a mobility dealer with multiple stores. Although Siebert hasn’t noticed a decrease in the sale of adaptive automotive vehicles in the Midwest, he has noticed that people are keeping vehicles longer by repairing them instead of trading them in for new ones.

The struggling economy, with its higher prices for fuel, food and other necessities, is one of the major challenges facing today’s mobility dealers. But it’s not the only one.

Dealers: Purchasing Vehicles Via the Internet Hurts Consumers & the Industry

Though dollars are being stretched thin, Smith hopes that this doesn’t leave the door open for more unsuspecting consumers to be tempted to work with Internet dealers. Aside from the economic downturn, one major issue that the adaptive automotive industry is dealing with is dealers who sell directly to consumers via the Web.

“The problem is what it’s doing to the end-user,” Smith says. “These vans are not like a television, a CD or tools.”

Smith said one of his clients went to a Web site to do research and was tricked into buying a vehicle that did not fit his needs. Once the van was delivered to his home, he discovered that some of the features of the van did not work. Fortunately, his client was wealthy enough to buy the van that he needed. But others won’t be so lucky.

“Most of the time our clients only have the resources to buy one unit,” Siebert says, “and they don’t have the resources to go back and trade it in to get something different to meet their needs.”

More than half of the people who purchase an adapted van are new to the situation, says Mark Lore, president of Ride Away, which has 11 locations from Maine to Tampa, Fla. These consumers have not had access to the industry, industry organizations or industry leaders.

“And as much as an automobile is not an impulse buy, in a way, it is when you need it,” Lore says.

However, the dealers interviewed for this article said this type of transaction should be made face to face. They believe that when consumers are purchasing a specialty vehicle from a dealer, it’s important that dealers assess the person’s abilities, disabilities and learn how they travel, where they go, who goes with them and what their family atmosphere is like.

“There are a lot of things that you should take into consideration when you’re doing an evaluation on a person,” Smith says. “You’re building a vehicle to fit a person and that person’s disabilities. I’ve been in this business for 25 years, and to this day, I don’t know how you can do that on a telephone or on the Internet.”

Some Internet dealers may tell purchasers that the vehicle will not need any adjustments or that the vans will never break, but this is far from the truth, said the dealers interviewed for this article.

“As a company, we wrestle when a consumer buys a vehicle over the Internet and brings it in to do repairs,” says Lore, who is also a NMEDA committee member and who sits on the board at the Moore Center and the New Hampshire Charitable Foundation.

“We’ve always been the type of company that just fixed it to take care of the customer,” he says. “But now we’re kind of wrestling with the decision because our ultimate survival depends on a customer voting with their wallets that good local service is worth it to them.”

When something does go wrong with their adapted equipment, accessible vehicles cannot be simply taken to a local mechanic, these dealers said. They added that adjustments or repairs should be made by a qualified trained technician for that particular product. It’s a requirement of NMEDA dealers who participate in the association’s Quality Assurance Program (QAP) to send technicians to be certified for the particular equipment that they service and install, Smith says.

It has been the goal of NMEDA to warn consumers of the perils of purchasing a vehicle through the Internet, Siebert says, adding that it’s important for consumers to understand that purchasing a vehicle from the Internet is unlike buying a regular commodity. “Before purchasing a vehicle, consumers need to ask: 1. Can it be serviced in their area? 2. Is it the right fit for them? 3. Is this a purchase that will have them financially strapped?” Siebert suggests.

Often, people purchase a van from the Internet and then take it to a local dealer. From a liability standpoint, the local dealer may not want to work on the vehicle, Siebert points out.

“The minute you work on a vehicle, you assume the responsibility for it, and if you didn’t sell it, you have no profit margin in what you do to repair or even evaluate that vehicle,” Siebert says. “Not knowing how it was constructed can be very detrimental to a business.”

Some people have no discretion about what they sell over the Internet and may not necessarily sell items that are sold in a shop, Siebert says. NMEDA urges consumers to follow the Internet buying guidelines posted on its Web site, which aim to ensure that they get the right equipment. Otherwise, they may end up with something that doesn’t meet their needs.

“I think it’s important that the end-user understands that service on your vehicle is just as important as price and color and all the things you look at when you buy something,” Siebert says.

Buying and selling vehicles on the Internet is a nation-wide concern, and many of automotive industry Web sites warn consumers of the problems connected with online purchasing. Smith says it’s important for those in the market for an accessible vehicle to go to the NMEDA Web site (www.nmeda.org) and look for a QAP dealer or at least a qualified NMEDA dealer.

“We’re trying to spread the word and educate people,” he says. “The Internet is a wonderful place to get information from, but it’s not the place to buy a specially equipped vehicle for a person with a disability.”

And from a dealer perspective, selling via the Internet without personally assessing the consumer’s needs can end up hurting the entire industry in the long run.

Staying Afloat While Still Providing Quality Service

In addition to coping with higher fuel prices and competition from Internet sales, dealers are trying to ensure that consumers receive quality service and get affordable vehicles, which can pose quite a challenge in tough economic times.

One way that Smith has tried to help consumers is by fighting for a sales tax exemption for adaptive equipment. Smith says he has lobbied in the state of Louisiana to have such equipment exempted from taxes and says that as long as consumers have prescriptions from a doctor or a licensed driver trainer evaluator, they should not be required to pay sales tax on the equipment — a move that provides at least a little consumer relief. His lobbying efforts have been based on his belief that people should not have to pay taxes on equipment that’s a necessity.

“These people don’t want the equipment that we’re putting on their vehicles,” he says. “It’s a necessity for them to get down the road. And I don’t think they should be taxed on it.”

There are a few local and municipality taxes that still exist, but Smith has been working with representatives in his area to have them amended.

Overall, higher-quality dealer service will be required because of the complexity of today’s vehicle wiring systems, Siebert says. Manufacturers are now faced with ensuring that mobility equipment will cohabitate with all of the wiring that’s already in the vehicles.

Lore agreed that the complexity of the electrical systems on today’s automobiles and the complexity of the electronic components that are being added often cause issues with either the vehicle or the equipment, making service an absolute necessity more than ever before.

The wiring in these vehicles has made the shade-tree mechanic obsolete and has required a higher level of sophistication, Siebert added.

“You’re not going to have mobility shops that just chop vehicles and stick stuff in them anymore,” he says. “They’re going to have to be high-tech shops that follow Federal Motor Vehicle Guidelines and Federal Motor Vehicle Safety Standards.”

Once again, NMEDA can help steer consumers in the right direction when they’re looking for these mechanics.

Before consumers purchase a vehicle, it’s a good practice to have the driver evaluated by a certified driver rehabilitation specialist. But if the economic outlook doesn’t change, it could affect the number of people who can afford to have the evaluations done. There’s also a certified driver rehabilitation specialist (CDRS) shortage, leaving some parts of the country underserved.

“Because of the economy, discretionary spending is down, and the coverage for these services is not like we would like it be,” Benner says.

She believes the answer is providing more financial support for individuals who need adaptive equipment.

A Higher Cost of Doing Business

The cost of doing business is definitely on the rise, Lore says. Mobility dealers, he says, are in fact small-scale car dealers, and in order to remain profitable, they need to make money on a low volume of sales. Most mobility dealers are only selling five to 10 vehicles a month, he says, but rent and employees still have to be paid on a low volume of sales.

The biggest challenge is to remain profitable and control expenses. The Internet also poses problems because not only are consumers purchasing vehicles from the ‘net, they’re also going online to find out the specific cost of a vehicle.

“So you have the escalating expenses of running a business tied in with, basically, what I consider to be downward price pressure from the Internet, so you can’t pass along your costs,” Lore says.

Last year, Ride Away’s revenue was up by 18 percent, but its profits were actually down.
“We’re selling more, but making less money because the consumers are coming in with prices from these companies that will sell a vehicle over the Internet without regard to service,” he says. “So the consumer has to be made aware as to the importance of service.”

Increased regulation and scrutiny from the government on how mobility dealers do business is also affecting the industry. Lore uses the privacy policy as an example. Recently, he says, Congress has enacted the call for the protection of a consumer’s private information. Lore says he has had to upgrade computer systems and credit card machines, employees have had to undergo ongoing training, and he’s had to purchase locking file systems.

“I know that’s important and that’s critical,” he says. “But as a car dealer, we are faced with taking a consumer’s private information in order to sell a car, and Congress has said that we have to have software installed to maintain the privacy of the customer.”

The three richest industries in the world are big oil, insurance and banking, Lore says, and their impact on a car dealer is tremendous.

Lore says he’s seen a lot of banks tighten up on who they’ll loan money to at the most favorable rates, and the length of loan terms have gotten shorter. Consumers who are lacking top-tier credit will pay higher interest rates and may not have access to longer-term loans that will allow them to have a monthly payment that they can afford. Some banks may even stop loaning money on accessible vans because they are finding that it is not within their charter.

“The bank we used primarily came to us and said, ‘We can no longer loan money on handicapped vans because the FDIC (Federal Deposit Insurance Corporation) is looking at our charter, and it was not in our direct line of doing business,’ so they’ve had to stop it,” Lore says. “It’s getting harder for a person without third-party funding to buy a vehicle, and we’re seeing that impact our business.”

Smith agrees that purchasing an accessible vehicle can be extremely difficult for a person without third-party funding sources.

“Basically, I do a lot of third-party funding, and that seems to be the business that we’re doing,” Smith says. “People aren’t really pulling money out of their pockets to pay for anything right now.”

This article originally appeared in the July 2008 issue of Mobility Management.

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