Monday, June 26, 2017

EARL STEWART QUOTED IN CURRENT FORBES MAGAZINE



You can also access the article below by going to: www.ForbesOnDangerousAutoCrashParts.com


Widespread Use Of Uncertified "Grey Market" Parts For Car Repairs May Undermine Crash Safety

by Diana Hembree

Aftermath of a crash
After a car crash, car repair and body shops often install “aftermarket” or “knock-off” replacement parts that are cheaper than the original parts, saving consumers lots of money. The Insurance Information Institute reports that aftermarket parts have saved consumers more than $2.2 billion in repair costs since 2010. The bad news: The bulk of these parts are not certified for quality and safety.

Knock-off parts purchased on the so-called “grey market” aren’t really an issue when it comes to fenders, grills and other cosmetic features that don’t affect safety. But structural parts like hoods and bumpers are another matter, according to the Insurance Institute for Highway Safety. If those parts aren’t up to standard, the cheap car repair could come at a very high price.

“I refuse to use aftermarket parts,” says Florida car dealer Earl Stewart, a consumer advocate based in North Palm Beach who has worked in body shops for the last 47 years. A poorly made part, he says, “can make the difference between airbag deployment and someone’s head going through the windshield.”

Controversy over aftermarket parts safety
Unless you've been hanging around repair shops lately, you may not have heard of aftermarket parts and OEMS. Here's a quick review: Some replacement parts come from Original Equipment Manufacturers, or OEMS, which use carmaker specifications to create a blueprint so their copy will be identical to the "genuine" parts from the carmaker. Aftermarket auto parts are copies of an original part. Some are certified for quality by a non-profit organization, and others aren’t.

The safety of aftermarket parts became a hot issue in 2010, when Consumer Reports reported computer-simulated crash tests from Ford showing that knock-off bumpers and radiator parts could cause the airbag system to malfunction.

Here’s how it’s supposed to work: An impact on the bumper sends vibrations through the vehicle body to the airbag sensors, which then trigger the airbag to deploy if necessary. In one Ford Mustang test, the magazine noted, the original Ford bumper was one piece made from “ultra-high-strength steel.” The aftermarket copy, in contrast, was created from two pieces of weak steel that were spot-welded together. The weaker bumper sent a different signal to the sensors, a potentially dangerous scenario.

Amid growing concerns about the safety of aftermarket replacement parts, an independent non-profit called the Certified Automotive Parts Association (CAPA) stepped forward to certify the structural auto parts.

CAPA’s goal is to provide high-quality alternatives to both shoddy knockoffs and expensive car company brand parts. “What’s different about us is that we don’t have any vested interest in the sale of these parts,” says CAPA executive director Jack Gillis. “The heart of our program is the public interest.”

Proven parts
CAPA puts the parts through a rigorous testing process, including crash-testing for car bumpers. A video on CAPA’s website shows an uncertified bumper exploding in a crash while a CAPA-tested bumper survives unscathed:

Gillis says the exploding bumper underscores the need for certification. “Some of these replacement parts look really great, and even an industry professional can’t tell the difference by looking at them,” he says. “Only testing will reveal whether they’re as safe and durable as the original and perform the way they’re supposed to.”

CAPA, which also tests cosmetic auto parts, has certified about 20 percent – or 85 million certified parts -- of all the replacement parts on the market.

To receive the certification, a manufacturer first has to pass a detailed inspection of its factory and manufacturing process. If that happens, the manufacturer can submit replacement parts to CAPA for a battery of different tests, all of which are available to the public. The nonprofit's tests have found everything from corrosion problems and substandard metal to missing hood reinforcement plates.

Monday, June 19, 2017

Your Car Insurance Company Hates Earl Stewart Toyota's Body Shop

This article was written by Alan Nappier, my Body Shop manager. I’ve owned and operated body shops for over four decades…at one time I owned five! I’ve never had a body shop manager as qualified as Alan and never had one that put the customer first 100% of the time the way Alan does. By putting the customer first, I mean considering the customers’ needs above those of the insurance company that pays us for repairing the customer’s car. Please read what Alan has to say carefully:


So, you had an accident and called your insurance company to report it and things seemed to be going pretty smoothly….. Then you told them you were taking your car to Earl Stewart and everything started getting weird…. The claims adjusters’ demeanor inexplicably just changed…. And NOT for the better!! Suddenly they’re telling you they that have a perfect shop in mind for you that will get your car in and out in a hurry and the whole process will be effortless for you. Yep, it’ll be such a great experience, you’ll be GLAD you had an accident. You thank them politely and tell them you’re just more comfortable repairing your vehicle at Earl Stewart, where you bought the car and know and trust the people.

Now it seems like the adjuster is downright angry with you and the real pressure tactics start!! They start making vague yet ominous sounding statements about Earl Stewart Toyota, almost as if they’re letting you in on a dirty little secret….. “We can’t guarantee their work….” “We’ve had problems with that shop….” “They charge more than we allow for repairs and you will have to pay out of pocket…” “If you take it to our shop, you won’t have to wait for an adjuster…” “They ignore our estimates…” The list goes on and on, but, they’re planting their seeds of doubt…. And now you’re concerned and thinking “Earl Stewart Toyota must have done something to cause this hostility by my insurance company…”, after all, your insurance company only has your best interest in mind…..

Well, you’re right, we DID do something to cause your insurance company to hate us and I’d like to tell you what….. We actually had the audacity to tell your insurance company something that they’re not used to hearing…. “NO!!” and they reacted like any spoiled 3 year old would who’s never heard the word before.

But wait, you’re still “in good hands” right? Wrong!! Your insurance company will instruct “their” repair facility to install untested aftermarket crash parts on your vehicle, even knowing that these parts can absorb crash energy differently and affect the timing of your air bag deployment, resulting in possible death and serious injury.

Here’s the really crazy thing…. The insurance company’s “approved” repair shop will do it!! Do you see what’s going on here? Everybody’s making out like Jesse James!! The insurance company is saving money, the body shop is making money, and you? You’re getting scammed!! Your insurance company has been provided with countless documents, provided by the vehicle manufacturers that state that these “cosmetic crash parts” are actually “designed and tested as part of the overall vehicle and may help send impact energy to the SRS sensors. In addition, some of these parts may help GM, Chrysler, Ford, Toyota, for Nissan vehicles comply with several Federal Motor Vehicle Safety Standards (FMVSS) including hood intrusion in the passenger cabin, preservation of proper door operation following a collision and proper airbag function.

You may be thinking “Well, if these parts are that bad, surely there’s a law against using them without my permission…” You’re right again!! Florida statute 626.9743 states “An insurer may not require the use of replacement parts in the repair of a motor vehicle which are not at least equivalent in kind and quality to the damaged parts prior to the loss in terms of fit, appearance, and performance.” Sounds like an open and shut case, eh? The law doesn’t say “if the insurance company believes they’re the equivalent”. It doesn’t say anything about “if the insurance company hopes they’re the equivalent”. The insurance companies need to prove these cheap parts are the exact equivalent to the original factory parts to be in compliance with the law or stop mandating their use. Right? I thought so too….

So, I wrote a letter to the Florida Office of Insurance Regulation!! Went right to the top, straight to Commissioner Kevin McCarty (well, his office anyway…. he’s got “people” for that…). After much arm twisting via the Florida CFO’s office, the FL OIR begrudging agreed to “investigate” our concerns. After a couple of months, we received their response “We have concluded our investigation and found no violation of the Florida Insurance Code.”, and my favorite part….“Generally speaking, the burden of proof that an aftermarket part is not of like kind and quality or as safe as an OEM part rests with the one making that assertion, as opposed to one having to prove that the aftermarket part is of like kind and quality and as safe as OEM.” Huh?? That one left me scratching my head. Why have a consumer protection law at all then? Your insurance company can mandate the usage of any part they desire, so long as it looks the same. Nobody really complains though because, as they say, “dead men tell no tales…”The jury’s still out on this one, but rest assured WE WILL NOT USE AFTERMARKET PARTS TO REPAIR YOUR VEHICLE.! (p.s. Also check out Title 49, Chapter 301 Subchapter II Sec. 30122 "Making Safety Devices and Elements Inoperative" in the Federal Code-you can Google it).

How about used crash parts then?? Your insurance estimator will tell you “they’re factory original parts taken off of a car that’s just like yours”. Really? Was your car damaged so severely that it was deemed a total loss and ended up in a junk yard? The car they want to cannibalize to get your replacement parts was. We won’t even know if the donor car was damaged in an accident, a flood or even a fire and quite frankly, we don’t care-WE’RE NOT GOING TO USE THESE PARTS EITHER!!

Well, what about Earl Stewart overcharging for labor??? THAT sounds pretty shady….. let’s talk about it…. I recently had my lawn mower repaired and it cost me $65 per hour and having an electrician fix my air conditioning at home cost me $75 per hour (plus gas & travel time), plumbers and a/c repairmen are $100+ per hour. If you have mechanical work on your car, it’s liable to cost you anywhere from $100 to $200+ per hour, depending on the repair shop and type of car.

The insurance companies feel that $42 an hour is more than fair to have your collision damaged vehicle repaired and they won’t pay a dime more. If you want to repair your vehicle here, they will tell you that you’ll have to pay the difference out of pocket OR, well….. they know a guy…… Ironically, back in the early 70’s, when Allstate and Sears were all part of the same company, Sears wouldn’t repair your toaster for less than $12 an hour while at the same time Allstate wouldn’t pay more than $7 an hour to have your vehicle repaired. Hilarious, ain’t it? Back in the 60’s, the insurance industry running roughshod over the repair industry was so pervasive and blatant that the Kennedy Administration tackled them before they even got started on the Mafia!!! (see 1963 Consent Decree-Google is your friend) What the insurance industry is doing to the repair industry is a clear violation of antitrust laws and we are part of a class action lawsuit to try to put a stop to it. WE WILL NOT MAKE YOU PAY THE DIFFERENCE IN LABOR RATES!!

Then we get to “charging for supplies and labor operations not customarily charged for in the market area”. This basically means that because they’ve been able to badger, coerce and intimidate some repair shops into not charging for certain supplies and labor operations necessary to return your car to pre-accident condition, they should not have to pay it to anybody whether they ask for it or not. Your insurance company won’t dispute that the materials are being used or the labor operations performed, nor will they dispute the necessity. Their only problem is having to pay for it because at some point, long ago, somebody “cut a deal” to get more business sent their way and it then became the “new norm” for every shop. We will never charge for a labor operation or supplies that cannot be verified. WE WILL NOT MAKE YOU PAY THE DIFFERENCE.

Now you’re probably saying “I never get into accidents so I can’t believe I’m still reading this. Can this guy just get to the point??” and the answer is “YES! Yes I can!!” Please don’t fall victim to your insurance companies scare tactics! The top 5 insurance companies spent over $4,000,000,000 (yep, that’s $4 BILLION) last year to convince you that they’re good guys so that you will buy their product (GEICO alone spent over $1 Billion if that tells you anything). Sometimes, there’s not enough perfume to cover up a smell and not enough lipstick to pretty up a pig and this is one of those times.

Please go to some consumer websites and check out how these insurance companies perform once you’ve had to turn in a claim (a.k.a. became an expense to them). Also keep in mind, the shops that enter into these unholy alliances with the insurance companies see them as their #1 priority and best customer and they will do whatever they are told to stay in their good graces. The insurance company feeds the shop lots of work and the shop does what they’re told to keep the repair cheap. It’s a marriage made in Hell. The repair shops that participate in this fraud are just as, or maybe even guiltier than the insurance companies. They should know better, but, it’s all about the money (insert photo of pigs at trough HERE) ;)

If you have already had your vehicle repaired at one of these direct repair shops and you’re not exactly sure how your car was repaired, bring it by with the invoice and the final estimate and we’ll be glad to take a look at it for you. If the vehicle has not been repaired properly, we’ll point out the deficiencies so that you can return to the shop for corrective repairs. If they repaired your car with aftermarket or junkyard parts, you may be entitled to higher than normal diminished value compensation. WHAT?? Your insurance company didn’t tell you that your car is worth less now and you’re entitled to additional compensation?? You might want to contact Gordon and Doner, they have a division that can handle that for you. If your insurance company has pressured you to not have your car repaired at Earl Stewart Toyota, please email me the details at alann@estoyota.com or Mr. Stewart at earl@estoyota.com and share the gory details.

Earl Stewart Toyota will repair your vehicle properly, per the manufacturers’ recommendations and only with new OEM crash parts. We will guarantee our paint, our workmanship AND the OEM replacement crash parts, for as long as you own your car. That’s right, I said AND THE PARTS!! The manufacturers’ warranty for replacement parts is 12 months or 12K miles. Earl Stewart Toyota will pick up the warranty after Toyota’s warranty expires, this includes parts, materials and any necessary labor to paint and install the failed part. Everything!! If we are unable to convince your insurance company to pay in full for the properly repaired property damage, with your written permission we will initiate action on your behalf to recover the funds. Ultimately, it is YOU who are responsible for ensuring your vehicle is repaired properly. You already had an accident; don’t let your insurance company force you into making a mistake.

Tuesday, May 30, 2017

EIGHT CAR BUYING STEPS

Buy the Best Car for the Best Price

  1. Consumer Reports Subscribe to Consumer Reports, go to the library and read past issues, or check out Consumer Reports online. There are other objective sources of information on cars, but this is the best. They accept no advertising from anybody and their sole goal is rigorously and objectively testing merchandise that consumers buy. You can very quickly find the best make car for the model and style you want to buy. Consumer Reports rates cars by performance, cost of operation, safety, and frequency of repair.                                                         
  2. Test Drive the car you have chosen This step requires that you visit a car dealership. Remember that this doesn’t have to be the dealership you buy it from. You obviously must see, touch, feel, and drive the car that you think you want to buy. A new car is a very personal thing and just because Consumer Reports loved it doesn’t mean that you will. Be sure that you test drive the car at all speeds in all road types that you normally drive. Drive it in the city but also on the expressway.
  3. Carefully choose the accessories you want There are some accessories that enhance the value of your car and some that don’t or may even lower it. Generally speaking you should accessorize a car comparably to its class. If you are buying a lower priced economy car, you should not load it up with leather seats and an expensive sound system. If you do, you won’t recoup much of what you spent on these accessories in its resale value. On the other hand, if you are buying a luxury car, don’t skimp on items people look for in luxury cars like a navigation system or a moon roof.
  4. Carefully choose your car’s color Color is more important in determining a car’s resale value than accessories. If you want to maximize the trade-in value of this car, choose a popular color. White, silver, black, and beige are the 4 most popular colors. Sports cars and convertibles are exceptions and red is often the most popular color. The difference in trade-in value between the right color and the wrong color can be several thousands of dollars.
  5. Arrange your financing Now that you know exactly what kind of a car you are going to buy, you can check with local banks and credit unions to find the best interest rate. Don’t commit until you have chosen the dealer you will buy from. Manufacturers sometimes offer very low special rates and dealers can sometimes offer a lower rate than your bank or credit union.
  6. Shop your trade-in If you are trading in a car, take it to 3 dealerships for the same make and ask them how much they will pay you for your car. A Chevy dealer will pay more for a used Chevy and a Toyota dealer will pay more for a used Toyota. If you live near a CarMax store, get a price from them too. They have a reputation of paying more money for trade-ins than most dealers. Don’t commit to the highest bid, but give the dealer you buy from a chance to beat that price.
  7. Shop for the best price on the Internet Go to the manufacturer’s Web site. The addresses are all very intuitive. Toyota is www.toyota.com and Pontiac is www.pontiac.com. You can type in your zip code and get the Web sites of all your local dealers. Depending on how far you are will to drive to pick up your new car, request price quotes from as many dealers as you like, but be sure you get at least 3 quotes. When you have chosen the lowest price, verify that this price is “out-the-door” with only tax and tag added. There are two third-party sources for getting a low, transparent price from a dealer in your market area, https://www.costcoauto.com/, and www.TrueCar.com.
  8. Offer your favorite, or nearest, dealer the right to meet this price. If you have been dealing with one dealership for a long time and have had good experiences with their service department, you should give them a chance to meet your lowest Internet price. Of course, you can take your new car to them for service even if you don’t buy it from them.
You will notice that there were no steps listed above which suggested that you look in your local newspaper’s auto classified section or online ads, watch car dealer’s TV ads, or believe their direct mail “too good to be true” offers. When you fall for this, the dealer is in control. When you follow my eight steps, you are in total control.

Monday, May 22, 2017

Dealing with the Dealer Fee: Earl Stewart’s User’s Guide


Hopefully by now, all but my newest readers know about the infamous “Dealer Fee”. If you don’t know, it’s a hidden price increase on the car you purchase disguised to look like a federal, state, or local tax or fee. It’s 100% profit to the dealer. “Dealer Fee” is the most common name for this disguised profit, but it goes by many names such as doc fee, dealer prep fee, service fee, administrative fee, electronic filing fee, e-filing fee, tag agency fee, pre-delivery fee, etc. The names are only limited by car dealers’ imaginations. Almost all car dealers in Florida charge a Dealer Fee. The dealer fees range from around $700 to as high as $2,000!

This is the Florida law that is supposed to regulate the Dealer Fee: “The advertised price must include all fees or charges that the customer must pay excluding state and local taxes.” The law also requires that the Dealer Fee must be disclosed to the buyer as follows: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.”

This law is very weak and almost never enforced. When enforced, it isn’t enforced by the letter of the law; it is done so as to “accommodate” the car dealers. The law is “weak” because it requires only that the dealer fee be included in the “advertised” price. The word “advertised” is narrowly interpreted to mean a specific car shown in a newspaper, TV, radio, or online ad, but, what about when you get a price on the phone, online, or from the salesman? You don’t find out about the Dealer Fee until you’re in the business office signing a bunch of papers. The dealers get around advertisements very easily by including a “number” in the fine print. This number is their stocknumber that designates one specific car. When you respond to the ad, this car is no longer available (sales people are usually not paid a commission for selling the “ad car). The advertisement might say “many more identical cars are available.” It’s true that identical cars are available for sale, but they are not available for sale at the sale price because they are not the advertised stock number car. If you buy one of those “exact same cars” you will pay from $700 to $2,000 more.

The reason I’m told that the law is rarely enforced is that the Florida Attorney General’s office is understaffed and too busy enforcing other Florida laws. I’m also told that Florida car buyers don’t file very many complaints against car dealers for violating the Dealer Fee law. I don’t believe that there can be too many other infractions of the law that take more money annually from consumers than dealer fees take from car buyers. Just one car dealer selling 1,000 cars a year and charging a $1,000 dealer fee is taking a $1 million annually from car buyers. Most car dealers in South Florida well a lot more than 1,000 cars annually and many charge more than $1,000 dealer fee. I believe that the reason more complaints aren’t filed on the dealer fee is because most car buyers don’t know that they are being duped. They either don’t notice the fee or assume it’s an official federal or state fee. Dealer often tell their customers that all dealers charge it and that it’s required by law.

The Attorney General also “accommodates” the dealers by not interpreting the law the way it was intended. For example, the law says that the dealer fee must be included in the advertised price. The Florida Senate has ruled that the law requires that the fee be “included” rather than “specifically delineated.” But the Attorney General allows car dealers to advertise car prices without including their dealer fee in the price if they mention their dealer fee in the fine print. They also allow car dealers to simply state in the fine print that they have a Dealer Fee but not even mention the amount. To me they are simply allowing the car dealers to break the law.

Lastly, the required disclosure of the Dealer Fee on the vehicle buyer’s order or invoice is confusing, misleading, and incorrect: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.” It should not say “costs” because any cost that you pass along to the customer in the price of a product is pure profit. A dealer can pass along his utility bills, sales commissions and advertising if he wants to and call it a “dealer fee”. It should not say “inspecting, cleaning, and adjusting vehicles” because all car dealers are reimbursed by the manufacturer for “inspecting, cleaning, and adjusting vehicles”.

So, what should you do when you are confronted by a car dealer with the “Dealer Fee”? Besides “LEAVE”, here are some suggestions that may help you:

  • Make it clear from the very beginning that all prices you discuss must be “out-the-door” prices. This way you don’t care if the dealer fee added up front because you will shop and compare their bottom line price with at least 3 competing car dealers. Ideally you should require that they include tax and tag in that price. If you don’t they might try to slip in something they call the “electronic filing fee” or “e filing fee” and trick you into believing that it’s part of the license tag and registration.
  • The dealer will often tell you that all car dealers charge Dealer Fees and that they are required by law to add the dealer fee on every car they sell. Simply tell them that you know this is not true and you can cite me and other car dealers like Mullinax Ford, OffLeaseOnly.com and Earl Stewart Toyota that do not charge a dealer fee. Print out a copy of this article, show it to them, and tell them that you know that there is no law that says he must charge you a dealer fee.
  • If you and the dealer understand that the out-the-door price is the price you will shop and compare with his competition, you don’t need to be concerned whether there is a dealer fee showing on the vehicle buyer’s order. To be competitive, the dealer can simply reduce the price by the amount of his Dealer Fee and the bottom line is what you are comparing.
  • Be aware that dealers usually do not pay their sales people a commission on the amount of their dealer fee. In fact, dealers often misinform their sales people just like they do their customers. The salesman who tells you that the all dealers charge Dealer Fees and that the law requires everyone pay a dealer fee may believe it. Sale people who understand that the Dealer Fee is simply profit to the dealer will be resentful of not being paid their 25% commission on it. A $1,000 dealer fee costs the salesman $250 in commission.
  • When you respond to an advertisement at a specific price for a specific model car, object when the dealer adds the dealer fee. Unfortunately, the law allows him the loophole of claiming that the ad car is a different stock number, but you might be able to shame him into taking off the dealer fee. If you raise a “big enough stink”, the dealer would be smart to take off the dealer fee than claim that technicality, especially if you were to advise the local TV station or newspaper.

I hope that these suggestions help you and I hope that you will file a complaint with the Florida Attorney General, Pam Bondi. If enough consumers (who are also voters) let our elected officials know how they feel about the Dealer Fee, it will bring positive results.

Monday, May 15, 2017

10 Costs Comprising the TOTAL PRICE of a Car

Understanding and calculating the TOTAL PRICE of a car is very complicated and time consuming. The average price of a new car is about $40,000, but when you add all the other costs associated with the car and multiply this by all the cars you will buy in your lifetime, you’re talking hundreds of thousands of dollars. This means that you should make the effort and take the time to fully understand the Total Price of the next car you buy.

Car dealers and car manufacturers advertise car prices that are only a small fraction of the true cost of the car. When you’re comparing advertised prices from different dealers and different makes and models of cars, you have virtually no valid information on making the right purchase decision. Dealers almost always advertise a price that is substantially lower than you can buy their car. If they don’t do this, their competitor will, and they will lose the sale.

Manufacturers almost never advertise the other costs associated with their cars, unless the car happens to have a low cost in that category. For example, Subaru has a low cost of depreciation, but you’ll never see a Chrysler ad about depreciation cost. The fine print in every manufacturer’s ad stipulates that the dealers can add dealer installed accessories and dealer fees.

Below I’ve listed all the costs totaling the TRUE TOTAL COST of the cars you buy.

(1) Selling price of car

(2) Trade-in allowance

(3) Interest cost of financing

(4) Finance “products”.

(5) Depreciation

(6) Insurance

(7) Maintenance

(8) Repairs

(9) Dealer Installed Accessories

(10) Dealer Fees

Selling Price of Car. Determine the lowest selling price of the car you want to buy as follows: Check with these two 3rd party car buying services, www.TrueCar.com and https://www.costcoauto.com. Then take the lowest price of the two and shop it with at least three dealers on the exact same make, model, accessories and MSRP as the car you priced with TrueCar and Costco.

Trade-in Allowance. Keep the sale of your trade-in separate from your purchase transaction. The dealer you buy your car from will try to pay you less for your trade-in than it’s worth; or he will delude you into believing he’s giving you a good price by overcharging you on the car you’re buying. Get purchase offers on your trade-in from the used car departments at three dealers who sell the make of car you are driving. Make an appointment with the used car manager and simply explain that you want to sell your car, but make it clear you aren’t buying another. Also, tell him you are getting competing bids from two other dealers. When you make the final decision on the dealer you will purchase your car from, offer him the right to match or beat your best price offer. Remember that Florida and other states offer you sales tax exemption on the amount of your trade-in allowance.

Interest Cost of Financing. Car dealers make more money financing cars and selling warranties and other “finance products” than they do on the actual sale of the car. Check with your bank and credit union. Credit unions offer lower rates than most banks. You can join some credit unions for a relatively modest annual fee. Also, consider the dealer’s interest rate if it is a subsidized low rate offered by the manufacturer of the car.

Finance Products. There’s pressure by the federal agency, the CFPB, Consumer Finance Protection Bureau, on car dealers about charging exorbitant interest rates to minorities. Many dealers have resorted to shifting their finance profits to products and services added into the retail installment sales contract. Oftentimes these products and services aren’t properly disclosed to the buyer. Carefully read your installment sales contract before you sign it to be sure that there are no warranties, prepaid maintenance agreements, road hazard insurance, roadside assistance, LoJack, or anything else added to the finance cost of your car that you haven’t agreed to buy.

Depreciation. All different makes and models of cars depreciate at different rates. The differences are substantial and can amount to thousands of dollars. The selling price of a Subaru and a Chrysler can be the same, but the Chrysler will depreciate thousands more than the Subaru. You can research depreciation online at www.ConsumerReports.com, www.Kbb.com, www.Edmunds.com, and www.ALG.com.

Maintenance. The cost of maintenance for cars has dropped precipitously in the past ten years. Cars are built better and require far less maintenance, like oil changes, than ever before. The cost is so low that most manufacturers are offering free maintenance in first 2 or 3 years of ownership. However, if you keep your car longer, the cost of maintenance naturally increases. Consumer Reports is, by far, your best source of information on maintenance and repairs of all makes of used and new cars.

Repairs. Repairs are usually mentioned together with maintenance, but I separate them because, even though repairs are required less frequently like maintenance, the actual cost of repairs are very high. This is because today’s cars consist of very high tech and complex computer systems which are often manufactured in modules. Repairs often involve the replacement of an entire computer module (not just a few parts), costing thousands of dollars. One again, I refer you to Consumer Reports for detailed information on repair costs. Their annual April Auto Issue is “worth its weight in gold” as source of buying information.

Dealer Installed Accessories. JUST SAY NO! With rare exceptions, all accessories installed by dealers on their cars before they are sold are vastly overpriced and have very little value or utility. Dealer installed accessories exist so that the dealer can add profit to the sale of the car above the advertised price. Examples of these overpriced accessories are Nitrogen in tires, LoJack, pinstripes, roadside assistance, and paint sealant.

Dealer Fees. Last, but certainly not least, are car dealers’ dirtiest little secret. Dealer fee is a generic name for all the bogus fees that dealers add to the advertised price of their cars. The thing they have in common is the word “fee” because it resonates as an “official” local, state, or federal fee. A few of the “creative” names for dealer fees are Electronic Filing Fee, Tag Agency Fee, Notary Fee, Handling Fee, Administrative Fee, Dealer Prep Fee, and Dealer Service Fee. The way to spot a real fee from a bogus fee is by determining if the dealer charged you sales tax on that amount. THERE IS NO STATE SALES TAX CHARGED ON GOVERNMENT FEES.

Monday, May 01, 2017

FREE LIFETIME ENGINE/POWER-TRAIN WARRANTIES ARE PHONEY-BALONEY, WORTHLESS COME-ONS

Car dealers will do almost anything to “get you in-the-door” to sell you a car, and one of their favorite tricks is a “free lifetime warranty” with every car they sell. I haven’t written about this before because I didn’t think anybody would believe a car dealer would give then anything of value free, but I was wrong!

I was recently shown a survey of South Florida car owners. The survey asked which features and benefits associated with the purchase of a car they considered to be the most valuable. To my amazement and disbelief, the number one and two items were free, lifetime engine and power-train warranties!

For clarification, the engine is part of the powertrain. the main components that generate power and deliver it to the road surface. This includes the engine, transmission, drive shaft, differentials, and the final drive (drive wheels). Essentially, these are all thelubricated parts of your vehicle. These parts are very important, and they are also very reliable and not likely to fail if properly maintained.

All engine/powertrain warranties, free or otherwise, have requirements that they be maintained, at least per the manufacturers’ recommendations. Many free warranties also have conditions that they be maintained even more frequently than the manufacturer requires. Most non-manufacturer engine and powertrain warranties (and all free nonmanufacturer) EXCLUDE SEALS AND GASKETS* which are the only parts that might wear out during any reasonable length of time. Some of these phony warranties have requirements that all maintenance and repairs be made at the dealership you bought the car from; some have requirements that you use a specific brand of oil. All of them require that you have detailed, written evidence of every single required maintenance that the fine print in the warranty requires. There are also other exclusions (“CYA” for the warranty seller) regarding how you use your car…do you tow a trailer, drive commercially, etc. A good tip for you regarding warranties, free or not, is to read the fine print which tells you what the warranty DOES NOT COVER. This is usually on the last page in fine print but what it does cover is on the front page in large, bold print.

Because there is virtually no warranty cost to auto manufacturers from repairing engine and powertrains that have been properly maintained, they offer much longer, higher mileage coverage on the engine/powertrain than the rest of the car. Hyundai and Mitsubishi warrantee their engine/powertrains for 10 years or 100,000 miles. Acura warrantees theirs for 7 years or 70,000 and most other manufacturers for 4 or 5 years and 50,000 miles. Remember that the manufacturers do cover gaskets and seals on their warranties, but the car dealers offering the free warranties do not. The only things that can fail on a well-maintained engine or powertrain are the seals and gaskets. If the manufacturer did not cover these, they would offer a lifetime warranty too.

When you see one of these car dealer advertisements offering you a FREE engine or powertrain warranty, ask him how much of adiscount from the advertised price he will give you if you decline the warranty; and/or ask him to show you proof of any warranty repairs his dealership has ever made on an engine or powertrain covered by their free warranty. I think we both know the answer to these questions…you won’t get a dime’s discount on the car and they’ve never spent a nickel on warranty repairs. The bottom line is that a free engine/powertrain warranty is just like free advice…it’s not worth anything.

*CORRECTION: It has come to my attention that not all of these warranties exclude seals and gaskets. In particular, Bev Smith Toyota and West Palm Beach Nissan both offer free lifetime powertrain warranties that do cover seals and gaskets.

Monday, April 24, 2017

Open Letter to Florida Car Dealers

I wrote this letter to Florida car dealers almost a decade ago and, so far, I’ve received no replies…at least from car dealers. But I’ve received thousands of replies from car buyers thanking me for taking a stand against the Unfair and Deceptive Trade Practice of dealer fees. I thought that I’d give it another try.

FRIDAY, AUGUST 24, 2007

SUBJECT: ELIMINATE THE DEALER FEE

Dear fellow Florida car dealer, I started in the retail auto business in 1968, about 39 years ago, and I have seen a lot of changes in the way we dealers sell cars and the expectations of our customers. My remarks in this column are made sincerely and with a positive intent toward you and your customers. I am not trying to tell you how to run your business; I am suggesting a change that will reward both you and your customers.

Virtually every car dealer in Florida adds a charge to the price of the cars he sells, variously referred to as a “dealer fee”, “documentary fee”, “dealer prep fee”, electronic filing fee etc. This extra charge is printed on your buyer’s orders and is programmed into your computers. It is regulated in many states including California. You charge this fee to every customer and it ranges from a few hundred dollars to several thousand. Florida law requires that you disclose in writing on the buyer’s order that this charge represents profit to the dealer. Florida law also requires that you include this fee in all advertised prices. You don’t always do this and you get around the law by limiting the number of advertised vehicles (as few as one).

The argument that I hear from most car dealers when I raise this issue is that the dealer fee is fully disclosed to the buyer on his buyer’s order. But, most car buyers are totally unaware that they are paying this. Who reads all the voluminous paperwork associated with buying a car? The few who notice it assume it is an “official” fee like state sales tax or license and registration fee. Those few astute buyers who do question the fee are told that your dealership must charge this fee on very car which is not true. These astute buyers are also told that all other car dealers charge similar fees. This is almost true, but, as you know, my dealership does not.

The reason you charge this fee is simply to increase the cost of the car and your profit in such a manner that it is not noticed by your customer. This is just plain wrong. Dealers will admit this to me in private conversations and some will admit that they have considered eliminating the fee as I have, but are afraid of the drastic effect to their bottom line. By being able to count on an extra $999 in profit that the customer is not aware of or believes is an “official fee”, you can actually quote a price below cost and end up making a profit. Or, if the price you quote the customer does pay you a nice profit, you can increase that by several hundred dollars.

This “extra, unseen” profit is even better for you because you don’t pay your salesmen a commission on it. That’s being unfair to your employees as well as your customers. When the rare, astute buyer objects to the dealer fee, the right thing to do would be to decrease the quoted price of the car by the amount of the dealer fee. This would have the same net effect of removing it. The salesman won’t permit this because he will lose his commission (typically 25%) on the decrease in his commissionable gross profit.

If you don’t know me, I should tell you that I don’t profess to be some “holier than thou” car dealer who was always perfect. Although, I never did anything illegal, when I look at some of my advertising and sales tactics 20+ years ago and more, I am not always proud. But, I have evolved as my customers have evolved. My customers’ expectations, level of education, and sophistication are much higher today. Your customers are no different. As I began treating my customers, and employees, better I discovered that they began treating me better. Yes, I used to charge a dealer fee ($495), and when I stopped charging it a few years ago, it was scary. But I did it because I could no longer, in good conscious, mislead my customers. Just because everybody else was doing the same thing did not make it right.

Now here is the good news. My profit per car did drop by about the amount of the dealer fee when I stopped charging it. But, when my customers realized that I was now giving them a fair shake and quoting the complete out-the-door price with no “surprises” the word spread. My volume began to rise rapidly. Sure, I was making a few hundred dollars less per car, but I was selling a lot more cars! I was, and am, selling a lot of your former customers. My bottom line is far better than it was when I was charging a dealer fee. You can do the same!

Why am I writing this letter? I’m not going to tell you that I think of myself as the new Marshall that has come to “clean up Dodge”. In fact, I’m aware that this letter is to some extent self-serving. Lots of people will read this letter to you and learn why they should buy a car from me and not you. And, I am also aware that most dealers who read this will either get angry and ignore it or not have the courage to follow my lead. But maybe you will be the exception. If you have any interest in following my lead, call me anytime. I don’t have a secretary and I don’t screen any of my phone calls. I would love to chat with you about this. My cell phone number is 561 358-1474.

Sincerely,

Earl Stewart