Monday, October 19, 2020

DON’T GET “SLAM DUNKED” BY A CAR DEALER


Back in the day when I was an evil car dealer, I had a monthly “Slam Dunk Club” for my salespeople. To join the club, you had to make at least a $4,000 profit on a customer. This is about three times the normal profit. The salesman got a $500 bonus on top of his 25% commission of $1,000. He also got a gift certificate to Ruth’s Chris steakhouse with his significant other for a free dinner. Some of my salesmen would “score” slam dunks every month and some several. Others rarely did.

You should know that no two customers pay the same price for the same car in the same car dealership in the same time frame. Each customer pays the highest price his or her salesperson can “extract”. When a Toyota dealer looks at his financial statement at the end of the month and sees his profit per new Camry was $1,500, it doesn’t tell the full story. That $1,500 is the average of all the Camrys he sold with profits per car sold ranging from as much as $10,000 to as little as $100.

You’d think that a car dealer would want all his salespeople to sell all his cars for very high profits like $4,000 or higher. You’d be wrong. The reason is that all people aren’t equal when it comes to education, intelligence, experience in car buying, and negotiating skills. A smart, highly skilled negotiator would never pay a car dealer a $4,000 profit; if the salesman wouldn’t budge on the price, the car dealer would lose a sale. He would rather have a lesser profit than no sale at all…” a half a loaf is better than none”. Dealers study each salesman’s profits on all the cars he sells each month to be sure that he has some very high profits and some very low ones. This is a “healthy pattern” because it ensures the dealer that this salesman is making as much money on each customer as that customer as that customer’s negotiating/buying skills will tolerate. If a dealer sees that a salesman’s monthly profit pattern is in too narrow a range, he’s “not asking for all the money” and/or “he’s walking customers at too high a profit”. Car dealers all believe that you can’t ask for too high a profit on a car because you can always reduce the price before the customer leaves. Most car dealerships instruct their sales people to “start the asking price at above MSRP”.

Those readers of this column who’re familiar with my weekly radio show, EarlOnCars, Saturday mornings 8-10, know about my weekly mystery shopping report. [Tru Oldies 95.9 FM & 106.9 FM WIRK-HD3] My undercover shopper visits a different car dealership each week and goes through the motions of buying or leasing a car. I report everything that happens, naming names and dealerships, and we add that dealer to our “Recommended List” or “Don’t Buy from this Dealer List”. You can read all the mystery shopping reports in my archive at www.EarlOnCars.com. The latest shopping report was my inspiration for this column. You can click on this link to read the entire report.

The salesman who greeted the mystery shopper made every attempt to get my shopper to BUY TODAY, even to the extent of taking the new Camry home to show her husband and even to the husband’s workplace. This, of course, is to be sure that the buyer doesn’t have time to shop and compare the price he quoted. He quoted her an out-the-door price of $28,804. The salesman and the manager assured her that this was a very low price and guaranteed that it was lower than any of the competitive Toyota dealers would offer.

When my shopper refused to listen to them and wouldn’t make a buying decision that same day, they asked her to wait a minute and they’d be back with a lower price...in their words “an even sweeter deal”. They came back with an out-the-door price on the same new Camry of $23,254! THIS PRICE IS $5,550 LESS than the first price they gave her. My mystery shopper left the dealership at that point.

This was, tactically, a very poor way to “sales manage the deal”. A savvier sales manager would have negotiated the price down slower, in small increments. When you drop your price too fast, you can scare the prospective customer away. The customer will think, “if he can drop the price $5,500 this fast, how much more can he drop the price?” The price was a very low price, only about $100 profit to the dealership…a GREAT price. The dealers only hope of increasing his profit was to charge her a high interest rate in the finance office and/or sell her warranties, GAP insurance, and maintenance plans. Or, sneak in some hidden fees on the real papers she signs, because all she’s been shown so far were “worksheets”, not legal documents.

Of course, the best protection against being “slam dunked” is to never buy a car on the first day you begin shopping and always get competitive out-the-door prices from at least three different car dealers.

Monday, October 12, 2020

EARL ON CARS’ VOLUNTEERS ASSISTING CAR BUYERS



I’m very excited to announce a major enhancement to our Earl on Cars weekly radio show andwww.EarlOnCars blog. Effective immediately, we’re forming a cadre of volunteers, an army of educated, informed listeners to Earl On Cars radio show and readers of www.EarlOnCars blog to assist car buyers who need help avoiding being taken advantage of (ripped off) by car dealers.

I’ve often said on our radio show that I know, to a great extent, “we’re preaching to the choir” by offering advice to our listeners. Many have been listening to “Earl on Cars” radio and reading www.EarlOnCars.com blog for years. They often call and text the show with great advice and suggestions. We’re going ask this vast, untapped, new source of wisdom and expertise in car-buying to volunteer to help the less. We’re asking those informed and educated listeners and readers to volunteer to help those “less informed” in car buying skills.

If you consider yourself an educated consumer when it comes to buying a car, and are willing to volunteer your services, please text us at 772 497-6530 or call us any Saturday morning between 8 and 10 at 877 960-9960. We’ll screen those that we don’t know as to their ability to help others in car-buying. You can choose your level of commitment by being accessible via only email, text, phone calls, or in person accompanying those in need to the car dealership.

We’ll post the names and contact information of all qualified volunteers online at www.EarlOnCars.com, and announce them regularly on our Saturday radio show. Of course, I and all members of our Earl on Cars team will be readily available to our volunteers for advice. Since we’ve expanded our radio snow online to Facebook, YouTube, Twitter, Periscope and Instagram, we’re reaching all over the United States (and beyond). We’d love to have volunteers from as many locations as possible.

Monday, October 05, 2020

Competition is Car Dealer’s Kryptonite




Every week, for approximately the last 20 years, I’ve been writing a blog like this to help my readers buy a car without being ripped off by car dealers. I’ve also written a book on the subject (Confessions of a Recovering Car Dealer, available on Amazon) and I have a two-hour, weekly radio show on the same subject.

This morning, as I sat down, brainstorming this week’s topic, I began to think that I’m “over-complicating” things for my readers. This column will follow the KISS principle of communications…KEEP IT SIMPLE, STUPID! Car dealers are very powerful and smart at what they do, but they have a weakness, just like the one Superman had…KRYPTONITE! Kryptonite saps all the strength from Superman. COMPETITION saps all the strength from Car Dealers.

All new car dealers, selling the same make of car, pay the same price to the manufacturer as all other dealers. A dealer selling 1,000 cars per month pays the same price per car as the dealer selling 10 cars per month. All new Hondas are the same, as are all new Fords, Chevy’s, Toyotas, etc., and all with identical costs. They’re like the commodities gold, silver, and copper…an ounce of pure gold should cost the same no matter where you buy it. The only difference between new cars and other commodities like gold and silver, are that other commodity prices are readily available to buyers while CAR DEALERS WON’T TELL YOU THEIR TRUE PRICES until you’ve bought the car.

But you can render a car dealer helpless and unable to resist giving you an honest price with CAR DEALER KRYPTONITE…aka COMPETTION. When a car dealer knows that you’ll be getting out-the-door prices from at least two other car dealers for the exact same new car you plan to buy, YOU LEAVE HIM NO CHOICE BUT TO GIVE YOU HIS LOWEST PRICE.

It’s truly that simple, but it’s not easy because the car dealer will try every trick in his bag to avoid giving you his lowest price. I always recommend buying your car online and avoiding face-to-face contact during the buying process. Car dealer are pros and masters of intimidation and manipulation. They can’t practice this as effectively via email or text. I’d also minimize the use of the telephone. Make it crystal clear in all your communications with the dealer that you want their out-the-door price which is the amount you can write your check for and drive the new car home.

Monday, September 28, 2020

Minimize the Risk of Servicing Your Car During the Covid Pandemic


One of the most frequent questions I get on my radio show [Earl Stewart on Cars, Saturdays 8-10 AM EST 95.9 FM, 106.9 FM; www.StreamEarlOnCars.com] is “How can I be sure I’m servicing my car properly when I’m afraid to drive my car into the service department for fear of Covid?”

Following are some tips to be sure that your car is getting the right care and not expose you to the Covid virus:


- If you’re concerned about maintaining your car’s warranty, call your dealership’s service department and explain your concern. All makes recommend that you follow the recommend service in our owner’s manual, but it’s very, very rare that warranty repairs are denied because of being late or even missing a recommended service. To do so would require proof that neglect specifically caused a repair…running low or out of oil for example. Call your service department and explain your concern and they’ll likely understand your delaying a service. Also, most service departments provide for “pick-up and delivery” service at an additional charge. The single most critical thing you should watch is your oil level. You want to be sure your oil level doesn’t drop far enough to cause engine damage. I you can’t do this yourself, please have someone do this at lease every 6 months or 5,000 miles.

- Online Owner Forums: Every make car has large numbers of owners who “gather on the Internet” to trade ideas and problems. If your car has a particular problem, noise, rattle, fuel consumption or anything at all that is worrisome, the odds are almost 100% that some people in a chatroom have discussed it and offered solutions. For example, you might have 2016 Honda Accord that stalls at stoplights. Just Google, “2012 Honda Accord stalling at stoplights” and you’ll be amazed at the amount of useful information you’ll see.

- Another way to learn if you have a serious or minor problem, is to describe it carefully to the service advisor or technician that normally works on your car. You can do this by phone, text, or email and be sure to include pictures and audio recordings from your smartphone. Given a good description, especially with audio and video, a good tech can usually give you a diagnosis by phone.

- If your “Check Engine Light” comes on, it’s usually nothing serious. In fact, about half the time it’s because your gas cap isn’t tight enough! Almost all “check engine light” warnings are related to excessive emissions, and this is rarely a serious problem requiring immediate service. You can decode your “check engine light” yourself with a code-reader. The highest rated and best seller on Amazon is the Autophix OBD2 Scanner Enhanced OM126P for $49.99, free one day delivery. Rick Kearney, the technician on my radio show, recommends Auto Zone, Advanced Auto Parts, and O’Reilly’s for a FREE code check. Don’t go to Pep Boys, they’ll charge you.

- If you must take your car to a service department, ask them ahead of time to describe their precautions against Covid. EVERYONE should be PROPERLY wearing a mask, social distancing should be being enforced, hand sanitizers and hand washing stations should be readily available. Your car should be DE sanitized before it’s returned. The tech who was inside your car and the person that returns your car should be wearing masks. Especially careful companies are testing their employees (and even their family members) for Covid periodically.


One thing to remember is that you and your family’s lives are far more important than buying or servicing your car. This pandemic will pass, things will greatly improve, and the day will come when you can safely service and buy a car again. Better safe than sorry.

Monday, September 21, 2020

Template for Buying a Car Online Avoiding Dealer Deceptions

                                                 

On my radio show, “Earl on Cars”, I feature a mystery shopping report of different South Florida car dealerships. Every week (for over 17 years) we’ve visited different car dealers, pretending to buy a car, and reporting on live radio what really happened. We name the dealerships and those salespeople we dealt with. In the past we’ve responded to “too good to be true” advertisements and exposed the dealers’ deceptions. We thought that, by showing you the “tricks up dealers’ sleeves”, we could help you avoid them. Now, we think we’ll try a different approach, more beneficial to you. We’re demonstrating the best way to buy the car of your choice at a low price without deception. All our mystery shopping reports are available online at www.EarlOnCars.com 


Below are the mystery shops of four Ford dealerships in South Florida. The very best way to get the best price on the next car you buy is to compare your out-the- door price on the same car with at least 3 car dealerships. Competition is your best friend and car dealers’ worst enemy. Below is a clear example of exactly what you should do the next time you buy a car.  

 

9-17-2020 Mystery Shop: Multiple Ford Dealers: Mullinax Ford, Al Packard Ford, Wayne Akers Ford, and Advantage Ford Report: 

 I began my mission with a Google search: “Ford dealers near me”. On the search results page, the four closest Ford dealers were Mullinax Ford in Lake Park, Advantage Ford in Stuart, Al Packard Ford in West Palm Beach, and Wayne Akers Ford in Lake Worth.  

My next step was to visit each of their web sites to find my desired vehicle: a new 2020 Ford Explorer XLT with an MSRP of $38,170. Three listings had links that were labeled to imply that clicking it would reveal a price for the listed vehicle. Wayne Akers Ford’s read, “Get Today’s Price”; Mullinax’s said, “Get Today’s Out-the- Door Price”. Al Packer’s was “Get Today’s PACKER e-Price”. Only Advantage Ford’s listing implied the online price was the price; their link read simply, “I’m Interested.” 

 In every case, the links opened “lead forms” - forms on which I was supposed to provide my nameemail addressphone number, and any comments or questions. I learned my lesson from last week’s mystery shop and the deluge of phone calls that I received (and am still getting) taught me.  I put in all zeroes for my phone number, and only gave my email address. Next time, I won’t use my personal email address, but another I can get free from Google, MS Outlook, Yahoo, etc. Where possible, I indicated that I only wanted to communicate via email. In the comments sections, I stated that I wanted to receive an out-the-door price on the listed Explorer, with an explanation of all fees. Since the prices weren’t revealed by clicking the “Get My Price” buttons, I assumed that I would be receiving emails with their best prices.  


1. Advantage Ford Online I submitted my form, then for the heck of it, I tried their online chat, but their chat appeared to be nothing but another way to get me to give more personal information. I asked the chat agent about the Explorer, and the agent offered to get me the info, but then said she couldn’t find it, so she needed my email and phone number for her “team” to contact me. I gave her my email and waited. A few minutes later, I received an email from Jelisa with a price and sparse details. My price was $38,886, but the out-the-door was $42,636.99. This supposedly included all taxes and fees, but there was no itemized breakdown. No MSRP was indicated, but I was given a VIN. I searched their website for the VIN and identified a 2020 Ford Explorer XLT with an MSRP of $42,310… not the vehicle I wanted a price on. 


 2. Wayne Akers Ford Online. I got the fastest response from Wayne Akers. I received an email from Sabrika explaining that the Explorer I inquired about had been sold. She included two out-the-door quotes for two other Explorers… both quotes were sparse on details. No itemized breakdown of fees. No details about options or anything else. One was a used 2020 Explorer with an out-the-door price of $41,225. The only indication that it was used was the “U” at the beginning of the listing. I confirmed it was used by searching the VIN on their web site. The other one was another used 2020 Explorer with an out-the-door price of $37,704.  


3. Al Packer Ford Online. As I did with Advantage Ford, I tried Al Packer’s chat service. It was an identical experience. No help from the chat agent, who just wanted to collect my contact information. I did receive a few emails from Joe, though. The first one didn’t have a price quoteit was just an introduction. The next one was just as helpfulHe wanted to know if I had any questions about the Ford Explorer that I was interested in. I never got a quote. 


 4. Mullinax Ford Online I submitted my inquiry on Mullinax’s website. I received an auto response like Al Packer’s, but right after that, I received a price quote. This quote was the only one I received on the actual car I inquired about: a new 2020 Explorer XLT with an MSRP of $38,170. I emailed back to get an itemized breakdown and waited for a response. After 30 minutes, I still had no response, but I made up my mind to choose Mullinax anyway - they were the only one to quote me on the specific vehicle I wanted. They also had the lowest top line price - $33,833 and the promised No Dealer Fees. 


Mullinax Ford On-site Experience Inside the showroom, everyone wore masks. I asked the receptionist for a salesperson and said that I preferred a female associate if possible. I was told there was only one female salesperson and she was busy with a customer. Instead, she summoned Brian. Brian offered me an “air handshake” and chuckled. I told him about the Explorer and that I had received a quote online. He pulled up the vehicle record on the computer, then reported that it had just been placed into their loaner fleet. He said he had a different one to show me if I agreed. I said okay, assuming I was about to be switched to a more expensive model. Instead, I was surprised that he took me to the twin of my desired vehicle: same year, make, model, trim, and MSRP. Brian scanned my license with his phone, and we drove the vehicle out of the parking garage for a test drive. When we returned, Brian asked if I was ready to make a purchase today. I replied I would if the numbers looked good. We went inside. I was asked to wait while Brian got the sales figures. He returned with a worksheet with an itemized cost breakdown. The MSRRP was $38,170. Then Brian applied a $1,087 discount and a $3,250 rebate to get to a selling price of $33,833 (same as my online quote). He added $2,411 in taxes (the sales tax should have totaled $2,079.98, though I did not catch this at the time). He also added $311.50 for Tag & Registration. That was it. No other fees. I asked Brian if it was okay if I grabbed some lunch and thought things over. Brian did not seem to have a problem with that. He handed me my paperwork and said he’d look forward to my call.  


Epilogue What this mystery shop teaches us is that it doesn’t matter how sophisticated or methodical a consumer’s approach is, getting an out-the-door price quote is like pulling teeth. Despite the fancy web forms and chat services, the online experience can be just as frustrating as the traditional showroom visit. However, Mullinax stood out over the others. Except for the slow (no) response for the price breakdown over email and the incorrect sales tax calculation (this was either a mistake or a small hidden fee of $331. Because Mullinax advertise “No Dealer Fees”, they may rationalize that calling the hidden fee something else makes it OK)Mullinax came closest to a modern 21st century car buying experience we hoped to get. TrueCar average for this model is a bit lower than Mullinax’s selling price, coming in at $33,421 before dealer fees. However, with dealer fees averaging over $1,000 in our area, it’s likely that Mullinax has a lower actual price.