In the latest installment of its annual Power 300 issue, our sister publication Auto Remarketing launched a new feature to spotlight just a few of the companies on the list. In a Q&A format, AR goes behind the scenes with some of the leading companies in the used-car space.

Featured today is Hudson Cook chairman Tom Hudson.

Auto Remarketing: What regulatory question have you received from dealer clients most often this year, and how have you responded?

Tom Hudson: Discretion in dealer participation ranks at or near the top of the list. We recommend that dealers consider using the NADA program to document variations from the dealer’s “standard” markup. Advertising and the sale of ancillary products would run a close second and third, and with respect to those two topics, we are stressing that dealers need to master the existing requirements, most of which have been around for decades.

None of these topics involve new laws or regulations (although arguably the dealer participation has the CFPB stretching existing law past the breaking point). Rather, the CFPB, the FTC and AGs are aggressively enforcing existing law.

AR: What off-the-radar development happened during the first half of 2015 that the industry should be discussing but isn’t?

TH: The CFPB’s enforcement actions indicate that it will challenge car pricing in the BHPH business. BHPH dealers are not prepared for that.

AR: How close is the entire industry to taking compliance as seriously as it should?

TH: Most of the larger players are shaping up. Most of the smaller players still act like it’s the Wild, Wild West.

I visited a small dealership today, and the dealer asked me, “What’s this red flags stuff, anyway?” Most smaller dealers don’t know what they don’t know, and that’s dangerous.

AR: Simply, how much more difficult is it to be a dealer nowadays than it was just 10 years ago?

TH: After I gave a talk to a group of dealers a couple of weeks ago, one of them asked angrily, “You sound like I need to be a lawyer to run my business.” I replied that he was in one of the most highly regulated businesses in the U.S., and that he either needed to be a lawyer or hire one.

The problem is especially acute for smaller dealers. A dealer selling and financing 30 cars a month has the same compliance burden, or nearly so, as a dealer selling 300 cars a month. The cost of compliance will drive consolidation in the business, and many who do not get bigger will be driven out of business.

Other features in this special section include:
4 questions with NextGear’s Brian Geitner
4 questions with NADA Used Car Guide's Larry Dixon
4 questions with Infiniti CPO manager Sam Liang
4 questions with Black Book’s Anil Goyal
4 questions with Autotrader president Jared Rowe
4 questions with Geoff Parker of ADESA Cincinnati-Dayton