Monday, January 14, 2019

Car Dealer Don’t Trust You: Their CUSTOMERS!



I’m always amazed by the way car dealers who use deceptive advertising and unethical sales tactics rationalize their behavior by blaming you, their customer. The following is a direct quote from an anonymous car dealer’s email I received in response to one of my columns in this newspaper:

“I don't think you would make any of these comments if you sold fords in a non-metro market. How do you expect dealers to change when consumers think they should pay less than dealer cost for a car and then walk into any other form of retail store and pay what they are asking?? Your ideas are noble but there are other dealers who have tried 'your' methods who are no longer in business.”

This dealer is saying that his customers are so ruthless and cunning that they won’t buy a car unless they can buy it below his cost, and his only solution is to trick them into thinking that they are buying it below his cost, like tacking on a “dealer fee” to the price they quoted the customer. He also goes on to say that my “ideas are noble” but I can’t possibly be successful, and I will go broke trying. I truly appreciate his concern and I want to assure him, if he is reading this article, that my business is doing well.

This attitude is a prevailing part of the culture in many car dealerships. Many dealers, dealer managers, and sales people don’t trust their customers (how paradoxical!). They don’t even like their customers. A very common expression among car dealers and their sales staff is “Buyers are liars”. This means that a prospective customer will not tell you the truth about the condition of his trade-in, he will lie to you about the price he got from your competitor, and he is likely to remove those new tires that were on his trade-in when the dealer appraised it when he comes in to pick up his new car.

There are also a lot of dealerships where used car buyers and people with bad credit are held in especially low esteem. They have nicknames for people with bad credit like “slugs” and “roaches”. Apparently dehumanizing these unfortunate members of our society with derogatory labels makes it easier to treat them so shabbily. People with bad credit are targeted with direct mail, TV and digital advertisements making absurd promises that convince prospective customers that they can finance a car no matter how bad their credit. In some dealerships applicants are coached on how to falsify credit application and pay records. In some cases, the applicant may not even know he is signing a false credit application which is federal offence. In most cases the credit is refused and the applicants are not even given the courtesy of a return phone call to tell them this.

I don’t claim to be a psychologist (and I don’t even play one on TV), but I’ve read articles explaining how humans will stereotype other people in a fashion that falsely justifies their negative behavior toward those same people. We see this with racism and even in wars. If you make yourself believe that car buyers are out to take advantage of you, “buyers are liars”, you can’t feel guilty about tricking them into paying a dealer fee. If you trick a “roach” or a “slug” into coming in to buy a car on credit when they probably can’t, why should you feel guilty? After all, roaches and slugs don’t have feelings.

What these kinds of dealerships don’t understand is that you must trust a person first before you can expect her to trust you. You must treat a person with respect before you can expect that person to respect you. Somebody has got to go first. My experience over the past 50+ years as a car dealer is that 99.9% of my customers are good people who I can believe and trust. Those are pretty good odds and I just assume that every customer I’m dealing with is part of that 99.9%. Once in a great while I get burned, but the loss from that one in a thousand that takes advantage is far out-weighed by the other 999 who respond positively to my trusting them and treating them with courtesy and respect.

Monday, January 07, 2019

QUICK REFERENCE GUIDE: DON’T GET RIPPED OFF BY A CAR DEALER



1. Choose the exact vehicle you want to buy or lease before you discuss price. Research this carefully and take your time. Consumer Reports is your best guide. Test drive the exact year, make and model vehicle for several hours, at least. Do not discuss price at this stage under any circumstances.

2. Go online to find your lowest price. The 2 best resources arewww.TrueCar.com and www.CostcoAuto.com. There’s no charge from TrueCar but you must be a paid member of Costco.

3. You should also check the best price with at least 3 dealerships. Deal only with their Internet departments. Insist on an out-the-door price plus GOVERNMENT FEES only. Beware of hidden fees by various names, collectively referred to as “dealer fees”. Beware of DEALER installed options added to the quoted price.

4. Shop and compare interest rates and terms with your bank and your credit union. Never rely on dealer financing without comparing it with your bank or credit union.

5. Get the true value of your trade-in by pretending that you want to sell to dealers who sell the same make as your trade. CarMax is also a good place to bet a bid on your trade-in. Remember to deal with the used car manager of the dealership and tell him you are selling your car and do not want to buy another.

6. Once you’ve determined the dealership that apparently has the best price, visit that dealership to confirm things are on the “up and up”. If they try to add anything to their quoted price except FEES THEY MUST PAY TO THE GOVERNMENT which can only be sales tax and license plate, LEAVE. Offer this dealer your trade-in if he will match your best price and your financing if he can beat your bank or credit union. One caveat on the trade-in…Florida and most states offer a sales tax savings for the trade-in allowance. Be sure that your third-party trade-in offer allows for this.

I guarantee you that if you follow these six simple rules, you will never again be ripped off by a car dealer.

Monday, December 17, 2018

How Much Is That Auto in the Window?


I ran across an article from a couple of years back that appeared in the Wall Street Journal about car dealer practices that aren’t very consumer friendly. The author, Charles Passey, interviewed me for the piece.
Mr. Passey asked me to supply him with examples of car dealers’ worts practices. I sent him copies of invoices, buyer’s orders, dealer addendum labels, and names of people I knew around the US who were experts on unfair and deceptive advertising by car dealers. It was important to me because having what I’ve fought against for so many years written about by a national publication adds credibility. Not only does the Wall Street Journal have the largest circulation of any newspaper in America, but it’s also arguably the most respected daily publication. 
One might ask, why don’t local newspapers write stories about car dealers’ unfair and deceptive sales and advertising? The answer, like so many, is “follow the money”. Every local newspaper has an auto advertising section with most of, if not all of the dealers in that market. Newspapers seem to be the advertising choice of many dealers, although TV and online have definitely cut into their revenue in large metro markets. TV ads are so expensive that most dealers have no choice but to use the newspaper and online. Car dealers are the single largest source of ad revenue in many newspaper markets. 
Now I know that journalistic ethics require a separation between the news, editorial, and advertising departments. But that’s the way it used to be. Today local newspapers and even some national ones are struggling for survival. Ethics go out the window when it comes to survival. Would you steal food for your child if you believed you had no other recourse?
Another reason that I’m encouraged by this Wall Street Journal article is that every auto manufacturing executive reads this newspaper every day, especially articles about automobiles. Also, most car dealers also read the Wall Street Journal. Reading a negative report about deceptive car dealer sales practices in a highly respected national newspaper has got to get their attention. Many manufacturers and most car dealers seem to be in denial about how they endeavor to trick their customers with misleading, false ads and sales practices.
I have to believe the auto industry will awaken one day and realize that almost all other retailers in the 21st century have left car dealers in the dust. Most car dealers are still employing the “get ‘em in the door any way you can and make as big a profit as you can get away with” shabby tactics that were common practice fifty years ago. Most manufacturers and some dealers are beginning to realize that car dealers are held in the lowest esteem of any other retailer. Car sales and service complaints top the list and car dealers rank dead last or close to it in the annual Gallup poll, HONESTY AND ETHICS IN PROFESSIONS, along with Congressmen, lobbyists, and lawyers. 
I tell manufacturers and my fellow dealers that if we don’t regulate ourselves, you can bet the government will step in and do it for us. Federal Trade Commission is conducting hearings all around America asking for input about unfair and deceptive trade practices by car dealers. If the government steps in like they did with our nation’s banks, car dealers and manufacturers can expect to be up to their eyeballs in expensive regulations, red tape, and bureaucracy.

Monday, December 10, 2018

Anatomy of the Dealer Fee: Car Dealers’ Dirty Little Secret



Car dealers hide virtually all the profit they make when they advertise or quote you a price on a car.

By adding a phony fee (usually disguised as a government fee) after you’ve committed to buy the vehicle, they can advertise or quote you a price lower than they or another dealer can afford to sell the car for…usually below their true cost. The term “Dealer Fee” has become generic like Kleenex for tissue. Car dealers began changing the name from “dealer fee” to less recognizable names, as you’ll see in the example below. Some car dealers are even advertising “We Do Not Charge A Dealer Fee” because they’ve changed the name to Electronic Filing Fee, Tag Agency Fee, Doc Fee, etc.

Last week on my radio show we mystery shopped a Honda dealer in Pompano, Florida. My shopper responded to an online advertisement for a 2009 Honda Civic for $6,998. The salesman informed the shopper that there were some additional “fees” he must pay including a “Dealer Administrative Fee” of $799, “UCI” (Used Car Inspection Fee) of $1,495 and unnamed “Taxable Fees” of $200.50. The dealership increased the advertised price by $2,499.50.

The Florida law addressing dealer fees and the regulation and enforcement are “jokes”. The current Florida Attorney General, Pam Bondi, “looks the other way”. Governor Rick Scott also does not consider this massive deception of Florida car buyers an issue. Hopefully the newly elected AG, Asley Moody and Governor, Ron DeSantis will do the right thing by strengthening and enforcing the laws of Florida addressing the blatant car dealer deception.

Meanwhile my advice to Florida car buyers is this: Be aware that all car dealers (except me) charge hidden fees by various names. The only legitimate fees that should be added to the price of a car are Florida sales tax and Florida license tag and registration. These are government fees paid to the state of Florida. With this awareness, demand an out-the-door price from your car dealer which includes all charges except GOVERNMENT FEES. Compare this price with at least two of that dealers’ competitors. Be sure you’re comparing “apples and apples” …same year, make, model, accessories and the same MSRP. NEVER be switched to a different vehicle. This is car dealers’ favorite trick, so they can raise their price. Also, never be switched from a purchase to a lease; or from a lease to a purchase. If you prefer a lease, in addition to comparing “apples and apples’, be sure your down payment, all up-front out-of-pocket cash requirements, length of lease, and annual mileage allowance are identical when comparing lease payments.

Monday, December 03, 2018

Why Do Car Dealers Lie about their Prices?

You probably already know that you can’t buy a new or used car for the advertised price; the out-the-door price always ends up thousands of dollars higher. Car dealers are the only retailers that routinely trick their customers like this, at least to the degree that car prices are understated.

Have you ever wondered why virtually all car dealers do this? Imagine that you owned a Ford, Honda, Chevrolet, or Toyota dealership in Southeast Florida. Each of these car brands has as many as 20 dealers and no fewer than 12 selling the IDENTICAL product. Toyota has 19 car dealerships between Ft. Pierce and Key West. Every Toyota dealer pays Toyota the exact same price for their cars; but Toyota dealers don’t sell those cars to their customers for the exact same price. They mark up each car as much as they can…the highest price that the customer will pay. If a Honda dealer sells 25 identical Honda Accords in a given month, the likelihood is that each sold for a different price; the typical variation in profits on the identical vehicle can range from a few hundred to a few thousand dollars.

Let’s say you owned a Honda dealership. The Honda manufacturer gives you a quota…a minimum number of Hondas you must sell monthly and annually to fulfill your contract allowing you to sell Hondas and often to receive volume cash bonuses. The only way you can do this is to price your Hondas “competitively”. But, you also must maintain a high enough markup on each Honda, so that your dealership remains profitable. This is the “Catch 22” and dilemma of all car dealers. A South Florida Honda dealer has EIGHTEEN other Honda dealers advertising the same cars he sells. If you advertise a Honda Accord for a higher price than most other Honda dealers, you won’t sell enough to meet your quota; if you advertise that Honda Accord for a lower price you’ll sell lots of Accords, but you’ll lose money on every car.

Therefore, all Honda dealers and all car dealers of all makes see only one viable course of action. Advertise their cars at a very low price, lower than their competition (and lower than they can or will sell the car for), so that the customers will come in to buy. Once the customer is in the dealership, the “games begin” to raise the advertised price to a price as profitable to the dealer as he can negotiate. The tools the dealers use to accomplish this are many…hidden profits (aka dealer fees) disguised as government fees, dealer pre-installed accessories, and switching the customer to a different vehicle or a lease rather than a purchase.

Car dealers see themselves as having no choice but to sell cars this way if they’re to remain in business. They blame their actions on the auto franchise system and there is some truth to this. Apple sells you iPhones directly, but Toyota cannot sell you a Toyota directly; car manufacturers MUST sell through their dealers. This system is mandated and entrenched by state law in all 50 states. The manufacturers created the dealer franchise system in the early twentieth century because they couldn’t sell their cars fast enough directly. Once a critical mass of dealers was created by the auto manufacturers, the dealers organized and lobbied their state legislatures to created laws protecting their franchises from the manufacturers. The main reason they did this was because the manufacturers were granting franchise agreements to too many dealers…” over-dealering”. Too many car dealers selling the same car in a market creates too much competition because it drives the prices down. Unfortunately for the dealers, there were (and are) already too many. Today, car dealers are overprotected, enjoying exclusive markets with state laws making it almost impossible to control, much less, eliminate even the most “problem” car dealers.

The auto franchise system is over 100 years old and obsolete, but it’s entrenched and will remain for the foreseeable future. New vehicles will, one day, be sold online directly by the manufacturers and maybe even through Amazon or Walmart. Vehicles will be built to order and delivered within a week. The price you see will be the price you pay, and you will be able to return the car for a full cash refund if you change your mind. Service, maintenance, and repairs on modern vehicles is minimal. Separate service centers will still exist to handle this need. Service centers will also have new vehicles of each model for you to inspect and test drive. Tesla is doing today exactly what I described, except for the one-week delivery time and unconditional moneyback guarantee.

But there’s a larger reason why car dealers get away with their deceptions. That is “because they can”. Auto manufacturers realize they’re stuck with the dealer franchise system and “if you can’t beat ‘em, join ‘em”. Auto manufacturers have huge political lobbying clout and, when you add the car dealers and their associations’ money, state and federal politicians have no choice but to “play ball”. There are about 17,000 franchised car dealers. They have enormous lobbying power nationally through NADA, the National Auto Dealers Association, and they also have enormous lobbying power in all 50 state legislatures. The political donations that Big Auto and Car Dealers give politicians make the NRA look small by comparison.

Monday, November 26, 2018

Out-of-Alignment Wheels: The Silent Killer

Estimates on the number of cars on the road right now that need an alignment range from as low as 25% to as high as 75%! Even if you have the best tires and vehicle that money can buy, all it takes is a little pothole or curb to cost you a new set of tires. This can cost you anywhere from $300 to over $1,000. If you live in an area with unpaved roads or lots of roads in need of repair and being repaired (Like South Florida) you’re especially vulnerable to potholes and other road obstacles that can knock your front and rear wheels out of alignment. One of my “favorite” ways to misalign my wheels is curbs…I can’t seem to avoid them when I’m parking, especially backing into a parallel parking place. 

Most people know that if their car is pulling to the left or right, they need an alignment. Most also know that if they see wear on the edges of their tires, they may have an alignment problem (It could also be under inflated tires). But what most people don’t know is that your wheels can be badly out of alignment with no symptoms whatsoever. It’s like high blood pressure and that’s why I used the phrase “silent killer” in the title of this article. Some people can tell their blood pressure is high from headaches or dizziness, but most feel no difference. Most people learn that they have hypertension only when their doctor measures their blood pressure. Unfortunately many never find out until it’s too late. 


Last year I had to replace a nearly new set of tires which had only about 5,000 miles on them (it cost me over $1,000) because all four of my wheels were out of alignment. There were no symptoms whatsoever. My car didn’t pull, my steering wheel was perfectly straight, and I saw no abnormal tire wear. I brought my car in for its routine 5,000 mile service and when my technician put it up on the lift to rotate and balance my wheels and tires, he found that the inside of all four of my tires was severely worn. When you have offsetting misalignment on opposing wheels, there is no pull and when the wear is only on the inside of the tire, it’s invisible until the car is up on a lift. I had my car aligned only a few months ago but I knocked it out of alignment again without even realizing it. 

Aligning the four wheels of your car, like everything else, is a lot more complicated than it used to be. Cars shocks’ and suspensions are more complex today. When most cars had rear wheel drive, aligning was simple. Now we have mostly front wheel drive and even some all-wheel drive cars on the road. We no longer do just “front end” alignments we have to align all four wheels. In the “old days” service departments routinely checked the alignment for all cars that drove in. There was a simple machine built into the service drive that registered the measurements when you drove over the track. Some service department still use these dinosaurs but they are not naccurate on today’s cars. Nowadays, many alignment machines are so complex that it takes almost as long to measure your alignment as to adjust it. For this reason many service departments will charge you the same to measure your alignment as they do to actually align it even if the measurements find it is perfectly in adjustment. There are newer, very expensive machines that will quickly measure alignments but most service departments don’t have these. 

There are three basic measurements that must be exactly right for your tires to be in align, castor, camber, and toe-in. This website links to a video that gives a very clear, easy to understand explanation of these measurements, www.TireKiller.com. The video was produced by the manufacturer, Hunter, who is the largest and best manufacturer of alignment machines in the world.

When you buy a new or used car, you should insist that the dealer check the alignment. A new car can be knocked out of alignment in many ways. Transporting the car to the dealer from the manufacturer and driving it on or off a ship, truck, or train can do it. A technician can do it during a pre-delivery road test or a car salesman or prospective customer might during a test drive. Remember that a demonstration drive in a new or used car won’t necessarily reveal any symptoms like a pull or abnormal tire wear. Many manufacturers will allow one alignment under warranty for a short time and mileage period (like 1 year or 20,000 miles), but some will only permit the dealer do check your alignment if you complain about a pull or abnormal tire wear. Manufacturers consider alignment a maintenance item that is your responsibility. This is why it’s important to be sure your new car is aligned when your car is still within the alignment warranty time and mileage.

When the service department measures your alignment, be sure that they use the latest equipment. A modern alignment machine is computerized, measures all four wheels, requires that your car be elevated on the lift, and the technician must be fully trained. And they are very expensive, about $60,000 for a state-of-the-art machine. Many independent service departments and some dealers can’t afford these. You should ask for a copy of the computer printout showing the specific measurements before and after your alignment. You should have your alignment checked every time you bring your car in for service, approximately every 6 months or 5,000 miles. If you hit a curb, pothole or other obstacle in the road or notice abnormal wear on the edge of your tires, bring it in for an alignment check immediately.

Monday, November 12, 2018

SHOULD I BUY A CAR OR HAVE A COLONOSCOPY?


If you’re over 55, you should have had a colonoscopy. If you haven’t, call a gastroenterologist, because this could save your life; It did mine, but that’s another story. I had another colonoscopy (about a half dozen, so far) a few days ago, and I must tell you that it’s a very unpleasant experience, mainly from the mental anguish, anticipation and the discomfort of the “preparation” the previous day. I had a lot of time to think about my procedure and I started thinking about how this experience parallels that of buying a car. It’s something you must do and has a very good benefit, but you dread the process.

If you need further proof that buying cars is an unpleasant experience, just read the latest Gallup Poll entitled HONESTY AND ETHICS IN PROFESSIONS. The Gallup organization has been taking this poll every year since 1977. Car dealers have ranked last, or nearly last, in every poll…FORTY-TWO YEARS! For the latest full year poll in 2017, click on
https://news.gallup.com/poll/1654/honesty-ethics-professions.aspx.

My newspaper columns and blog consist mainly of suggestions and inside information that can make your new or used car buying experience less of a fearful one. Some of the titles/subjects are “Always Get an Out the Door Price”, “Bait and Switch Advertising”, “Beware of Deceptive Internet Car Pricing”, “Beware of Direct Mail Car Advertising”, “Buying a Car When You Have a Credit Problem”, “Eight Steps to Ensure You Are Buying the Best Car for the Best Price”, “List Price and MSRP Might Not Be the Same”, “Negotiating to Buy a Car”, “Open Letter to Florida Car Dealers” (I, II, III, and IV), “Shop Your Financing and Trade”, “Should I Buy My Car at the End of the Lease?”, “Should I Lease or Buy my Next Car?”, “Should I Pay Cash or Finance My Next Car?”, “Should I Trade in My Old Car or Sell it Myself”, “Tell Your Car Dealer to be Nice”, “The Right Used Car is a Better Buy than a New Car”, “Translating Misleading Car Ads”, “What is the True Cost of that New Car?”, “What to do if You Are Treated Badly by a Car Dealer”, “When is a Car Sale Not a Car Sale?”, and “The Internet Price is the Lowest Price for a New Car”. You can read all my articles (hundreds) at www.EarlOnCars.com. You’ll find links there to listen to my live, weekly radio show (Saturdays 8-10 AM EST), my YouTube videos, Podcasts, Facebook, Twitter and a wealth of other information on “how not to get ripped off by a car dealer”.

Almost every one of these articles originated from readers of my column, callers to my radio show, and others’ experiences when buying cars from car dealers. I get a lot of calls from people who’ve never bought a car from me. They call to tell me of their bad experience with another dealer and, when I get several calls on the same subject, I write a column on it. People often call me asking for advice or assistance after they’ve already bought, which is “closing the barn door after the horse is gone.” On more than one occasion I’ve called car dealers asking them to consider undoing a wrong they have caused one of their customers. I must confess that my batting average on this effort is “below 300”. I won’t give up, however. One of my most recent calls was from a customer who was charged nearly a $1,000 in service work performed on her car when she had brought it in for a routine service that should have cost her less than $100. She called me for help and was forceful and diligent in following my advice. She got a complete refund on the “unasked for, unnecessary charges”.


One thing that amazes me about these weekly columns and my radio show is that I have been writing and airing for nearly 14 years is that no car dealer has ever called me to complain, or for any other reason. I’ve not been sued either. I think that says something about the truth of my articles. I’m not a lawyer, but I do know that you can’t successfully sue somebody for libel or slander if they write or say the truth. I’m puzzled why not one single dealer would call me just out of curiosity. I don’t have a secretary and I don’t screen any of my calls…nor do any of my employees. They do know how successful my dealership is and how fast my sales are growing. They know that I’m selling a lot of their former customers. Many of these new customers tell me how they told the other dealers why they chose to take their business elsewhere. I believe that before too much longer we will see some changes in the way other car dealers do business even if they refuse to call me, as I have repeatedly invited them to do. Sooner or later they will understand that treating your customers with courtesy and integrity is just plain good business.