Crain Automotive’s Recent Activities October 2006 Opened Crain Kia of West Little Rock. November 2006 Purchased Little Rock Dodge, renamed Crain Chrysler Dodge Jeep. Purchased Little Rock Dodge Truck Center, renamed Crain Chrysler Dodge Jeep. January 2007 Purchased Landers Ford, renamed Crain Ford University. Purchased Landers Ford North, renamed Crain Ford Jacksonville. Purchased Camper Capps in Little Rock, renamed Crain RV. Sold Crain Ford, renamed Landers Ford Lincoln Mercury. February 2007 Purchased North Point Hyundai North, renamed Crain Northland Hyundai. Purchased North Point Hyundai South, renamed Crain Southland Hyundai. Closed Crain Kia in Benton. April 2007 Closed Crain Suzuki. Source: Crain Automotive Holdings, the Arkansas Motor Vehicle Commission Crain Mitsubishi on Landers Road in Sherwood, just one of several Crain holdings. MICHAEL PIRNIQUE
Transcript
16 ARKANSAS BUSINESS MAY 7, 2007
Crain a total of $23,000 for the viola-tions, most of which are for violating advertising regulations.
Half of Crain’s violations were decided in December, when the AMVC fined Crain $5,000 for running ads on Sept. 1 in the Arkansas Democrat-Gazette that obscured what the “man-ufacturer suggested retail price” was.
“The issue there was the MSRP and list price,” said Greg Kirkpatrick, the AMVC executive director. “They are generally accepted as the same thing, and Crain was advertising an MSRP price and a list price as two different prices. … What they were calling a list price was a price after the vehicle had some add-ons.”
One ad, for example, featured a truck that had $15,000 worth of add-ons; Crain’s ad listed the truck’s MSRP as $15,000 more than the actual MSRP, he said.
“The commission’s view is if you’re going to sell a vehicle with all these add-ons, it’s got to be explained more clearly to the consumer that it’s not a manufacturer’s suggested price,” Kirkpatrick said.
Crain said one reason his company has been the favorite target of the AMVC is that his dealerships are more visible than others. He said every problem that led to a fine had been corrected.
Sexual Harassment AllegedMore exposure of Crain Automotive
also has been accompanied by more lawsuits.
Two former employees have sued Crain dealerships, one in 2005 and one last year, alleging they were sexually harassed while on duty.
Cynthia Maltbia filed her lawsuit in U.S. District Court in Little Rock in September 2005 and alleged that while working at Crain Chevrolet of Little Rock, she was subjected to unwelcome sexual advances, requests for sexual favors and other verbal and physical contact of a sexual nature. Maltbia said the alleged harassment came from the used car manager, who wasn’t named as a defendant in the lawsuit.
Maltbia is seeking at least $300,000 in damages. Her case is pending.
Jayla Collins alleged in her June 2006 lawsuit, also filed in U.S. District Court in Little Rock, that she was the victim of sexual harassment while working as a salesperson at Crain Mitsubishi in Sherwood. She alleged the harassment came from her supervisor, who wasn’t named as a defendant.
Collins is seeking an unspecified amount of damages and her case is pending.
Crain denied any wrongdoing and has vowed to fight the accusations.
“We, as a company, try to have the
very highest of standards of how we comply with any kind of laws, regula-tions or morality,” Crain said. “We believe that we’re always going to try to do what’s right.”
Crain said the company holds exten-sive training sessions that deal with how employees are expected to behave.
“In our view, we are in no way in violation of those issues, but people today tend to bring frivolous lawsuits, and because they do, we don’t have any choice but to defend us,” he said.
Crain said the company’s philoso-phy is to defend against frivolous law-suits vigorously or more will come.
“And so you may bring a $10,000 action against us, and we may be willing to spend $50,000 to defend it because we are going to defend any-thing that we believe that we’re not guilty [of].”
Crain is also defending itself against a lawsuit filed March 7 in Pulaski County Circuit Court that alleges Crain charged too much for document fees.
The two plaintiffs in the case, B. Shawn Travis and William Bainter, are seeking class-action status for their law-suit. When they financed the vehicles, through a Texas lender, the paperwork “says very clearly the documentary fee may not exceed $50. And they charged $199 in each of the plaintiff’s transac-tions,” said Marie-B Miller, a Little Rock attorney who is handling the case for the plaintiffs. “So it’s our position that Texas law has to be applied here. And in your transaction you have to abide by Texas law and you cannot charge more than $50.”
Crain doesn’t dispute the dealership
charged $199 in fees, but he said he thought it wasn’t violating any regula-tions.
“It was financed with a Texas com-pany … and we were told by the finance company that was fine,” Crain said. “And that’s the question: Is it fine or not to do that in Arkansas? … And so we relied on something that some-body told us what we could charge, and that’s what we charged.”
That case is pending.
Used CarsCrain’s strategy of consolidating its
market is not unique. Car dealers pre-fer to own all the dealerships in a given area, said Dennis Jungmeyer, executive director of the Arkansas Automobile Dealers Association. That way, cus-tomers don’t have too far to travel to comparison shop.
Owning several new-car dealerships also helps Crain sell more used cars, which Jungmeyer said was the more profitable part of the auto business.
Crain wouldn’t discuss revenue or profit numbers. (Crain Management Group, which includes Crain Automotive as well as the Rimrockers basketball team and several radio stations, confirmed total revenue of $246.1 million in 2005.) Crain did say he sells more new vehicles than used ones, but his goal is to sell one used car for every new one.
“We’re close to that, but we’re not there yet,” he said.
And a new approach to that goal is on the Internet. Crain’s improved site — www.crainteam.com — allows Web shoppers to see multiple photos of many
used vehicles on Crain’s lot. Few sales are finalized on the Internet, but about 30 percent of vehicle buyers now start searching for new wheels on the Web.
“Instead of maybe having 100 used vehicles to choose from in one loca-tion, they may actually have 1,000 vehicles that they can choose from,” Crain said of the Internet site.
Other changes are taking place at the dealership.
In January, Crain bought Camper Capps at 9801 Interstate 30 in Little Rock, which was renamed RV Crain.
He said one reason he bought the dealership was to get the land so he can move the three dealerships on University Avenue to the new location on Interstate 30.
Crain said it could take up to two years to make the move, and then the Crain buildings on University could be converted to used-car sales.
Crain said he’s not done shopping for more dealerships.
“I think we’re always looking for ways to expand our business, especial-ly from a franchise point,” he said.
Motor Vehicle CommissionThe AMVC executive director, Greg
Kirkpatrick, said most disgruntled cus-tomers don’t bother to — or don’t know to — file a complaint with the commission. So he said it’s up to AMVC investigators to look into any matters — mainly advertising — they think blur the line into a violation.
The largest fine the AMVC has levied against Crain, $10,000, came in January. It involved Crain’s Chevrolet in Little Rock engaging in bait-and-switch advertising, the AMVC order said.
In August, an AMVC investigator went to Crain Chevrolet to follow up on a television advertisement that said the dealership had new and used vehicles for a $49 acquisition fee with payments as low as $99 a month and vehicles priced as low as $2,888.
The vehicle featured in the ad was a 2002 Chevy Cavalier. But when the AMVC investigator arrived on the lot, the sales associate said the only available Cavaliers were priced above $10,000.
About a week later, the same investi-gator went back to the lot after seeing a newspaper ad that offered the same deal and again featured the 2002 Cavalier.
When the investigator asked to see the car, he was told that it had been sold. He was shown the closest thing to the 2002 Cavalier, a 2004 model that was selling for $8,397.
Upon further investigation, the AMVC learned the 2002 Cavalier had been sold some weeks earlier, a viola-tion of the AMVC requirement that a dealer have a vehicle available at the time it is advertised.
Crain said the manager of the deal-ership didn’t realize the vehicle had been sold before the ad ran.
“We made a mistake,” Crain said. “So it was human error, really. It wasn’t like we did anything that I would call devious.” n
Crain: Car Company Confronts Complaints(continued from Page 1)
Crain Automotive’s Recent Activities
October 2006 Opened Crain Kia of West Little Rock.November 2006 Purchased Little Rock Dodge, renamed Crain Chrysler Dodge Jeep. Purchased Little Rock Dodge Truck Center, renamed Crain Chrysler Dodge Jeep.January 2007 Purchased Landers Ford, renamed Crain Ford University. Purchased Landers Ford North, renamed Crain Ford Jacksonville. Purchased Camper Capps in Little Rock, renamed Crain RV. Sold Crain Ford, renamed Landers Ford Lincoln Mercury.February 2007 Purchased North Point Hyundai North, renamed Crain Northland Hyundai. Purchased North Point Hyundai South, renamed Crain Southland Hyundai. Closed Crain Kia in Benton.April 2007 Closed Crain Suzuki.
Source: Crain Automotive Holdings, the Arkansas Motor Vehicle Commission
Crain Mitsubishi on Landers Road in Sherwood, just one of several Crain holdings.
