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Saturday, December 22, 2007

Pitfalls to avoid when having your car serviced

Before I get into the pitfalls, it is important for you to understand how important it is to have your car serviced according to the manufacturer’s recommendations. The pitfalls and consequences of not doing so can be equal to or greater than those you might experience at the hands of an incompetent or unethical service department.

I strongly recommend that you have your car serviced and repaired by a franchised dealer of the make of your vehicle. I know that this statement, coming from a franchised car dealer, may be met with some skepticism. Listen to my reasons before passing judgment. Modern vehicles are highly complex computerized machines requiring very sophisticated diagnostic equipment and highly trained technicians. The evolution of new, expensive diagnostic equipment requires constant updating. The evolution of car technology requires continuing education of dealers’ factory trained technicians who attend many weeks of schools every year. Forty years ago, it was possible for a really good mechanic to fix anybody’s car. Those days are gone and your car needs a highly trained specialist with the very latest diagnostic equipment. It is impossible for an independent service company to be competent in servicing and repairing all makes of automobiles.

Carefully choose the dealership that will service your car. You do not have to take your car to the dealership that sold you the car for warranty repairs, as many believe. Every dealership of your make car will welcome your warranty and non warranty work. Do your homework on which dealer has the best service department. Every dealer is graded in customer satisfaction by the manufacturer. Ask to see a copy of his CSI (customer satisfaction index) scores. Check with the BBB and the County Office of Consumer Affairs.

When you take your car in for maintenance or repairs, always ask for an estimate. State law requires that a service department not exceed a written estimate by more than 10%. When paying your bill, scrutinize the detail to be sure that you know exactly what each charge means. Most service departments add a fee on top of everything else with various labels like “miscellaneous supplies”, “sundry supplies”, “environmental handling”, etc. This fee is simply a 5% or 10% charge tacked onto the total bill. If you object to this fee, which you certainly should, dealers will often waive it.

You will find that prices for maintenance like oil changes, alignments, tire rotation and balancing, etc. are usually priced competitively. Where you have to be careful is in the pricing of major repair items like transmission, engines, and air-conditioners. When quoted a price on a big repair, don’t be afraid to negotiate. If you let it be known that you are willing to take your car elsewhere (even if you’re bluffing), you can often negotiate the price down significantly.

You should always make an appointment before bringing your car in. Appointments should be scheduled at relative slow times and days. Avoid bringing your car in early on a Monday morning and other very busy times. You want the service advisor to spend as much time with you as is necessary. This will allow you to drive the car with the service advisor if necessary to identify a specific problem like a squeak, rattle or vibration. Pick your car up at a time when the service advisor or technician has time to road test the car with you again to be sure that the problem was fixed.

Don’t be shy about asking for a loaner car when you have to take your car back a 2nd or 3rd time for a repair that was not done properly. It’s the dealership’s fault and you should not be inconvenienced. On a comeback, always talk with the service manager directly. Also ask that they assign their best technician to the job.

As I have said in earlier columns, there is nothing more important than choosing the right dealership to do business with. No service department is perfect and never makes a mistake. What you want to find is that service department that, in addition to being competent, will fess up to their occasional mistakes, sincerely apologize and make them right.

Friday, December 14, 2007

The SubPrime Crisis and Car Sales

You have read a lot about the subprime crisis, especially if you invest in the stock market. All the talk so far has been about its effect on the housing market, which continues to decline, more so in South Florida than just about any other place in the USA.

Subprime loans are those made to those with poorer or lesser credit. When lenders get overly aggressive and careless in making these kinds of loans, it causes huge losses by the lenders, institutions that buy packages of these kinds of loans, and investors.

I can already see this affecting the retail automobile business. With the exception of a few imports like Honda, Toyota, and Hyundai, most car sales are way off. This is partly do to the plunge in the home building market, but it is also due to lenders tightening their credit reins which affect the subprime market first and most.

Those manufacturers of cars and dealers selling those makes whose sales are way off sometime resort to desperate measures to prop up their sales. The subprime customer is an “easy sale”. In fact, the subprime customer requires very little selling at all, just the ability to find someone to make him a car loan. The dealer can “sell” that kind of a customer any car at any price. The customer is just grateful that the dealer was able to get him financed. Dealers have a nickname for these kinds of customers…”Get-Me-Dones”.

There are a number of things that those with marginal or bad credit should be very careful of when buying a car. Oftentimes dealers will falsify credit applications in order to get the loans approved. The customer signs the credit application, testifying to the truth of all of the information. You are breaking a federal law if you obtain a loan by lying to the bank about your credit. More often than not, the car salesman or finance manager actually fills out the credit application and the customer just signs it. You should read your credit application very carefully and be sure that all of the information is accurate.

Another thing you should verify before signing a finance contract with a lender is that the options and accessories on the car you are buying have been accurately represented to the lender. Dealers will often represent to the lender non-existent accessories like leather, sunroofs, CD players, and even misrepresent the model of the car to make the bank think their collateral is worth more. This allows the dealer to obtain a larger loan than the bank should be making and also allows the dealer to make a larger profit.

You will notice more ads today aimed at those with credit problems. Dealers will advertise, “No credit-no problem” or “No credit application refused”. Another favorite is “We’re looking for good people with bad credit”. These ads are to target the desperate buyers who are easy to sell cars to and are likely to be very careless about verifying that their credit application is accurate. In fact, some buyers are desperate enough that they will join in the deception of the lenders.

The subprime crisis, which has been underway in the housing market for almost one year, is just getting started in the retail car market. There are a lot of bad subprime loans being carried by subprime lenders. They are already tightening up in their credit requirements and they are being much more careful about verifying the accuracy of credit applications and the accessories that are represented to be on the cars they finance. Lenders are calling the customers directly to ask them if they have leather or a sunroof on the car they just bought. More subprime lenders will be either going out of business or switching to conventional lending only.

All of this will hurt the sales of those makes and those dealers that have relied heavily on subprime customers. I wouldn’t advise you to buy stock in Ford, GM, Chrysler, or any other struggling auto manufacturer at this time. In my opinion, their sales will be dropping a lot more due to the subprime crisis.

Saturday, December 08, 2007

Consumer Reports is Your Best Friend in Choosing a Car

If you don’t already subscribe to Consumer Reports, you should. I have been a subscriber for as long as I can remember. I rarely buy any product without consulting this great magazine. I also subscribe to Consumer Reports online edition which is even more current than the regular magazine. I recently received their annual auto issue, which no car buying family should be without. All libraries would have this on hand.

Don’t be fooled by other magazines with similar names purporting to objectively analyze and recommend products. There is only one Consumer Reports. They do not accept any advertising and therefore are not beholding to any companies. They even go beyond this and will not allow a retailer or manufacturer to use the name Consumer Reports in their advertising. Even if Consumer Reports gives a product a great rating, that company cannot mention this in their advertising. If they do, they get sued by Consumer Reports. No other company goes this far and is this “squeaky clean”. J.D. Powers is a company that ranks and compares lots of products including cars, but they allow companies to use the JD Power name to advertise their products when they rated them good. You can understand why a consumer might be just a little more skeptical of J. D. Powers’ objectivity than Consumer Reports’.

I am not saying that Consumer Reports is infallible. They do make mistakes and they have been successfully sued by some companies that were affected by their mistakes in testing. But this is very rare. As a car dealer for almost forty years, I have not always liked what I read about all of the makes and models of cars I have sold, but I grudgingly had to admit that the reports were almost always accurate. In fact, the last issue of CR gave negative reviews to two models of the cars I now sell, Toyota. I have to confess that with some makes and model cars I have sold over the years, I was very thankful that the circulation of Consumer Reports is not very large. Their circulation is growing as consumers become more educated and sophisticated.

This annual auto issue should be a mandatory read before you buy your next used or new car. Here are some of the articles in this issue…Top Picks (the best new vehicles they have tested), Best and Worst (tells you the ones you definitely shouldn’t buy), Coming for 2008, Who Make The Best Cars (best manufacturers), Buy Better on the Web (The Internet is the best place to buy your next car), Reliability trends (repair histories on all makes and models), What’s Next in Auto Safety, and Used Cars, Best and Worst.

Consumer Reports also offers other car buying services like their “New Car Price Service” which discloses the actual cost to the dealers, rebate and incentive information, negotiating strategies, and their expert recommendations. They also offer a “Used Car Price Service” which provides an evaluation tool kit that helps you establish the right price for most used cars made from 1995 to 2005.

Reply to letter to the editor about my column, “Don’t take away grandma and grandpa’s freedom machine”

Thanks for your letter disagreeing with my column about seniors driving.

You write, “If you are no longer physically or mentally competent to drive, you are a danger to yourself and everybody else on the road.” I totally agree with that statement. This should apply to all ages and our state should be diligent about testing everybody’s mental and physical faculties before allowing them to have a driver’s license.

The media does seem to feature stories of older people involved in accidents. And some of them should not possess licenses. In fact, some of them don’t, like the 94 year old man I mentioned in my column. But, the fact is that younger people cause far more accidents than senior citizens. The proof of this is that insurance companies charge older drivers lower premiums than younger drivers. I’m not sure why media makes a bigger deal about old people causing accidents than young people. Maybe it sells more newspapers.

What motivated me to write my column were the unfeeling and selfish attitudes of a grandson and a stepson who didn’t want their grandmother/stepmother to lease a new car. This 90 year old woman is mentally acute and physically fit. She is perfectly capable of driving her car. In fact, as a footnote to my column, the stepson filed a complaint against me with a state agency that protects the elderly from abuse. The state sent an investigator and a police officer to interview the woman in her home and found her to be sharp as a tack, mentally and physically. In my opinion the grandson and the stepson were more concerned about depleting their inheritance than the well being of this nice, old woman.

I see a lot of younger people who don’t have the respect for their elders that I did when I was young. I hope you’re not one of them. Many young people today seem oblivious to the fact that they too will be old one day (if they’re lucky). They stereotype all senior citizens as a bunch of doddering old f---s who are mentally and physically incompetent. We old folks are not much different that you young whippersnappers…some of us are sharp and some of us aren’t.

Saturday, December 01, 2007

2008 New Years Resolutions for Car Dealers

Last year I wrote a list of ten recommended resolutions too, but it appears that most of the car dealers missed that column. Things have not improved. This year’s list is modified and enhanced.

(1) Don’t surprise your customers with a Dealer Fee. Since last year the heat has been turned up on dealers who add this dealer profit onto the price, disguising it as an official fee. The Florida senate recently completed an investigation of this practice and made recommendations to the Florida legislature to pass a law capping or eliminating dealer fees. Just last week a class action suit was certified by the court against a Jacksonville dealer. Both of these events will likely have severe consequences on dealers who charge dealer fees and this applies to most every car dealer in Florida.
(2) Don’t advertise a price on a car that you won’t sell. How would you feel if you went into Best Buy to purchase a flat screen plasma TV only to find out that there was only one being sold at the advertised price? You would be angry, wouldn’t you? Do you think your customers feel any differently when you advertise a very low price on a car in the newspaper and you have just one car which is never available? You also don’t pay your salesman a commission if they sell this car. Even if the car is there, how anxious will your salesman be to show your customer that car.
(3) Don’t mark your cars up over MSRP. The Monroney label is a federal sticker required to be on every new car you sell. When you add thousands of dollars to a “phony Monroney” you are tricking your customer. You make him believe he is getting a bigger discount than he really is. You can also trick him into thinking he is getting a bigger trade-in allowance than he really is.
(4) Don’t lie to people with no credit or bad credit. This is just like taking advantage of a child or a handicapped person. You are kicking someone while they’re down. There are a lot of people out there who have bad credit. When you advertise that “no credit application is refused” or “no credit and bad credit and are no problem” you are simply lying. You do this because if you fool enough people, you can find some that will squeak by on credit approval. Or you will surprise the person with a huge down payment and/or interest rate. Some of you even lie, or encourage your customer to lie, on their credit application. This is a federal crime.
(5) Don’t include used cars in your new car ads. You advertise new cars and current model used cars together in your ad which is seemingly a new car ad. In the very fine print, you have a disclosure that says “some cars may be pre-owned”. Of course you can price a used car much lower and trick the customer to come in thinking he can buy a new one for that.
(6) Don’t take advantage of the elderly. Most of the calls I receive complaining about being scammed by a car dealer are from the elderly, especially widows. Widows often left the car buying up to their husbands and have never bought a car on their own. Last week I got a call from a widow who bought a new Honda only to discover that the car had been previously totaled and sold at a salvage auction. When she complained, they took all the original paperwork back (all the evidence) and replaced the car with a lower priced model. How would you like it if your mother, grandmother or your widow was taken advantage of like this?
(7) Make yourself totally accessible to your customers. You might think you know what is going on in your dealership, but you haven’t a clue unless you communicate regularly with your customers. You might be a good person who means well, but when most of your employees are paid on commission you have to keep a very close watch on them and your customers. I don’t have a secretary, nobody screens my phone calls, and I give my business card with my home and cell phone numbers on it to all of my customers. I probably sell more a lot more cars than you...about 450 a month. If I can be totally accessible to all of my customers, why can’t you?
(8) When you quote a customer a price for service, don’t surprise him at the cashier with a “sundry supplies fee”. Some dealers call it a “hazardous waste disposal fee” and some call it a “miscellaneous supplies fee”. It’s just more profit to you and you calculate this by simply tacking on 5% or 10% of the bill when your customer is paying at the cashier.
(9) Don’t hide big down payments in the fine print. You advertise very low monthly payments on purchase or leases buy in the fine print which is often readable only with a magnifying glass, you require a large down payment. $4000 or more is common.
(10) Don’t surprise your customers with “dealer installed accessories”. Don’t advertise a low price with a disclaimer in the fine print that the price will be increased by whatever accessories you chose to add at to the car at whatever price you decide to charge for those accessories.

Saturday, November 24, 2007

Grandma’s and Grandpa’s “Freedom Machine”

You may have read in the newspaper a couple of weeks ago about a 94 year old man who hit a woman riding a bicycle. It wasn’t the man’s fault; the woman, in her fifties, ran a stop sign. They put the old man in jail overnight and he was given probation because he was driving with no license. It had been taken away because he failed his driver’s test. He said he had to drive because he had to take his wife to the doctor and pick up medicine for her.

There is another reason that a lot of younger people don’t seem to understand why this old man still owned a car. If you are one of these people, think back to the first time you ever drove a car. Think back to the time you owned your first car. Can you recall that wonderful feeling of FREEDOM? No longer did Mom or Dad have to take you to school, to work, to the store, or to a friend’s house. Or, you didn’t have to take the bus, the street car, or impose on a friend who already owned a “freedom machine”. If you are a guy, do you remember how you felt when you first picked your girlfriend up at her home in your very own car? I don’t know about you, but I still feel a tingle when I think about it. I really can’t think of a more memorable experience in any young person’s life. Your first kiss is probably a close second [My first car was a 1951 Pontiac Chieftain & my first kiss was from Mary Ann Riggle during a “spin the bottle game”].

If you are one of those younger people who curse at that gray haired driver in front of you because she is driving too slowly, just remember that she is probably a safer driver than you. Newspapers like to feature stories of senior citizens having accidents and questioning their mental and physical faculties for driving but insurance companies charge senior citizens lower premiums than you. That means they have fewer accidents and cause fewer injuries. Admittedly that is partly because we seniors drive fewer miles but it’s also because most of us drive slower and more carefully than you.

My Uncle Charlie died eight years ago. He was 94. My Aunt Marion died within a year of Uncle Charlie. They lived in the same very modest, small house on Valencia Drive in West Palm Beach for fifty years. But they always owned a Cadillac and it was always parked outside in their driveway. Up until the time they were in their late eighties, the highlight of their week was to take a Sunday drive in their shiny Cadillac. Uncle Charlie always drove. When his eyesight got too bad to drive, he still kept that Cadillac in their driveway, always clean and shiny. His eyesight was still good enough so that, from his rocking chair in his living room, he could see that big Cadillac sitting outside (and so could his neighbors).

My father died when he was 86 and he drove a Pontiac TransAm up until the very last. He had cataracts removed from both eyes and back then, you had to wear “coke bottle” style glasses to see after this operation. He had no peripheral vision and there were a lot of scrapes, dings, and dents that appeared on both sides of that TransAm. Thank God he never had a serious accident. I saw Dad every day and I would see that the dents and scratches were regularly repaired. He always said he didn’t know where they came from and I never questioned him about that. Maybe I was wrong, but I didn’t have the heart to ask him not to drive anymore. I knew how important that car was to Dad and I knew how devastating it would be to him if he couldn’t drive anymore.

You may have heard of George Greenberg a. k. a. the “Mayor of Clematis”. He died a few months ago at the age of 91. He owned Pioneer Linens on Clematis Street in West Palm Beach, a store founded by his father, Max, in 1912. George and I were close friends and I delivered a eulogy at George’s funeral at the request of his grandson and daughter. George always drove an old Buick station wagon, although he was a wealthy man and could have bought any car he wanted. A couple of years ago, George finally treated himself to a new Mercedes Benz SLK-Class convertible! Boy did George look good in that car and he was always smiling when he drove it! When he was diagnosed with brain cancer and given only months to live, he finally had to stop driving his freedom machine. His grandson drove him to our monthly dinner at Carmine’s Ocean Grille and picked him up. It never was the same for George after that.

At my Toyota dealership in North Palm Beach, we have a lot of older customers. It’s just the demographics of northern Palm Beach County. My average customer is 55 and I have lots of customers in their seventies, eighties, and nineties. Maybe it’s because I’m a senior citizen too, but I especially like talking to my older customers and I’ve become personal friends with some. I can tell you from personal experience how important their cars are to them in their latter years. During your middle years when you have so much more going on in your life, your car becomes more utilitarian and you take it for granted. But when you retire and your life is not as hectic your car returns to the importance it had when you were sixteen…your “freedom machine”.

We recently leased a new Camry to one of our very good customers. This was the third car that she got from us over the last seven years and she had just turned 90. One of my managers, who has worked for me for 20 years and is a neighbor of hers, handled the lease. About a month after she took her new Camry home, her Grandson learned of the transaction and demanded that we rescind the lease. When we spoke to our customer, she let us know that her Grandson was very upset with her for leasing the car. He didn’t think she should be driving a car anymore and that she wouldn’t live long enough to make all the payments on a 4 year lease. We offered to refund all of the profit on the lease (about $850), but the Grandson insisted that we take the lease car back. This would cost my company thousands of dollars because of the depreciation a car takes on as soon as it is titled as a used car.

Yesterday afternoon my customer’s Grandson and Stepson visited me in my office. They continued to demand that I rescind the lease [Only the leasing company, Southeast Toyota Finance can rescind the lease] and absorb the thousands of dollars in depreciation on 1 month old used car. They suggested that I may have broken laws by exploiting the elderly and that if I did not succumb to their demands they would sue me. They had already called Toyota to complain about my actions. Not so politely, I asked them to leave my office.

This experience troubled me for the rest of the day and even last night and is what inspired this column. Now I understand why I was so angry at the actions of my customer’s Grandson and Stepson. They didn’t seem to understand how much that car meant to their Grandmother/Stepmother’s happiness and what an important thing her “freedom machine” was to her. I have to wonder how much of their ire was due to genuine concern for her or the potential financial impact on her estate. Her Grandson told me that she had put only 1,500 miles on her last car and what does she need a new car for? He just doesn’t get it! A new car is a lot more than just a way to get to the drug store. To a senior citizen it’s a source of pleasure, pride, and comfort, knowing that it’s in their driveway for everyone to see and it’s there if they need it.

One of my sons just called me to double check on the correct time for him to come over for Thanksgiving dinner today. I told him that I was writing this column and we discussed the subject. I also told him that I hoped that neither he, nor his two brothers would ever take away my “freedom machine”.

Thursday, November 15, 2007

Avoiding the Minefield of Fine Print in Car Ads

I wrote a column for this paper on September 7 entitled “Quick reference Guide to Fine Print in Car Ads”. Since then dealers have come up with so many more gimmicks and trickery that I felt compelled to write another column adding the latest bait and switch fine print disclaimers. All of these are taken directly from the PB Post auto classified section. You will probably need a magnifying glass to read some of these. I do.

Several of the fine print disclaimers you will read below are illegal under Florida law but the dealers constantly run them with impunity. For example, Florida law requires that the advertised price of the car must include all charges except for sales tax and license tag. The dealer fee must be included in the advertised price and some dealers either are ignorant of this law or just ignore.

I don’t understand why the Florida Attorney General’s office ignores this. In fact, I don’t understand why the local newspapers that run these ads don’t take a stand. I guess Bill McCollum and Tom Giuffrida don’t read my column.

Smart buyers read the fine print What do you suppose motivates this dealer to hide this sentence in the fine print of his very deceptive newspaper ads? Is this just a very bad joke on his customers? Does he think that the customer will forgive him for being baited and switched because he has also included this sarcastic phrase?

Some vehicles listed may be pre-owned This dealer will have used cars mixed in among the new cars that he has advertised. Unless you can read the fine print, you don’t find out until you come into the dealership.

“$1,000 cash offer” paid out in any form or combination of forms I’m not exactly sure what the dealer intends to communicate here, but interpreting this literally means he can pay you with a credit toward the purchase of another car, in extended payments over time, or maybe even in shiny beads and trinkets like we used when we bought Manhattan from the Indians.

Must take delivery today To get the advertised price you have to drive it home the same day. If you take delivery you also have to sign all of the papers including finance arrangements. This precludes you from doing any do diligence in getting competitive bids on the car you’re buying, the interest rate and trade in allowance.

Price includes $2,000 cash or trade equity This simply means that the price that you can read in the full sized print has been reduced by $2,000. If you find and can read the fine print, it tells you have to pay an extra $2,000 above the advertised price.

Hazardous Waste Disposal Fee This is just one of many phony fees you can be charged in dealers’ service departments. Other names dealers dreamed up for this extra, surprise profit to the dealer are shop supplies, miscellaneous supplies, and sundry supplies. This fee added by taking a percent of your total service bill up to 10%. If you take issue with this charge, there is a good chance the dealer will waive it.

700 miles per month This is a limitation on the number of miles you can accumulate on your lease car without paying a penalty at the end of your lease. The amount of miles allowed varies but they usually are much less than an average driver drives. If you average 15,000 miles per year, your penalty on a 36 month lease with a 700 mile per month limit and a $.25 per mile penalty would be $4,950!

Offers may be cancelled at any time without notice This is pretty self explanatory if you can read the fine print. If the dealer decides that he doesn’t want to honor the price offered in the his ad, he can just say “I changed my mind”.

Very short lease term & high down payment Nothing sells cars like low monthly payments. A car dealer can make a monthly lease payment as low as he wants by reducing the number of months of the lease and increasing the down payment. I’m looking at an ad in the PB Post right now advertising an SUV for $19,999 or just $199 per month. In the fine print it says 27 month lease and $3,000 down plus a $799 dealer fee.

Plus dealer installed options The price you see advertised in the paper is not the full price. This loophole allows the dealer to tack on thousands of dollars in overpriced accessories to the price that was advertised.

With approved credit The lease payment or purchase payment you see advertised is based on someone with very, very good credit. Sometimes the ad will specify a minimum Beacon score of 750 or even 760. An almost negligible percent of people have a credit score that high. This payment gets you in the door and then they tell you your credit isn’t good enough to qualify for that payment.

Advertised offer good on select in-stock vehicles only Dealers often advertise just one car at a price below their cost. They don’t pay the salesman a commission if he sells that vehicle. The chances of that car being available for you to buy are “slim and none”. Even if the car was still there, the salesman would do everything in his power to sell you a different car that he could earn a commission on.

Owner Loyalty Rebate Manufacturers offer special cash rebates to current owners of their car. These rebates are not available to you if you don’t currently own that particular make of car. For example, if you own a Honda, and want to buy a Toyota, you don’t qualify for a Toyota loyalty rebate. That price you see advertised won’t be available.

Military Rebate If you are on active duty in the US Armed Forces you qualify for this rebate. Of course the price you read in the paper already discounts the price by this amount and the dealer increases it if you are not a “soldier”.

College Graduate Rebate If you have graduated from an accredited 4 year college within the last six months, you qualify for this rebate. And the price in the paper is discounted by this amount.

Dealer Loyalty Rebate To qualify for this rebate that is already taken out of the advertised price you must have bought a car from this particularly dealer within the last year.

Price …plus, tax, tag, and fees The red flag word here is “fees”. The fees these dealers refer to is a “dealer fee” which is synonymous for dealer profit. Most people think it’s a federal or state tax of some kind. It’s nothing more than more money for the dealer that is not disclosed in the price of the car.

Offers expire date of publication or may be cancelled at any time without notice This simply means that the prices, payments, etc. you have read have no validity whatsoever. The prices are not good tomorrow, but they aren’t even any good today because the dealer can cancel the offer without notice.

Not responsible for typographical errors This is just one more way for a dealer to explain why they can’t sell you the car for the advertised price…We don’t have to honor that price because it was a “typographical error”.

Vehicle Art for illustrations only. This means that that car you are looking at with the really great looking wheels might not have those wheels on the one you buy. Or, maybe it doesn’t even have that sunroof you see in the picture.

Minimum trade based on dealer list price The dealer list price is not the same thing as the manufacturer’s suggest price. Dealers add markups to the Monroney label also known as MSRP or manufacturer’s suggested retail price. They label this markup (often on a sticker designed to imitate the official federal Monroney label). Dealer markups of $3,000 and much more are common on such “counterfeit Monroney” labels. In this case, the dealer has marked up the MSRP far enough so that he can offer a minimum $10,000 trade-in allowance.

Offer not available on advertised cars Folks, it’s hard to believe that even a car dealer would have the unmitigated gall to print an offer in his newspaper advertisement with an asterisk that referred to fine print saying it doesn’t apply to any cars in this advertisement.



My advice to you is to ignore all car dealers’ newspaper advertising. Most car ads are designed to “get you in the door” so that they can sell you some other car than the one advertised so that they can make more money. If you must respond to a dealer’s newspaper ad, please be sure you break out your magnifying glass and carefully read the fine print.

Friday, November 02, 2007

Results of Florida Senate Dealer Fee Investigation

An attorney, Renee Gordon, from the committee formed by Senator Ken Pruitt to investigate fees that car dealers add to the prices of their cars in Florida sent me a copy of this study last week. You can access this study directly by clicking on this Web link, http://www.earlstewart.com/ and then “Results of Florida Senate Dealer Fee Investigation” in red.

(1) The report defines these dealer fees as a “discretionary charge that represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles, and preparing documents related to the sale.” My argument with this definition is that when a business charges a customer for a business expense/cost, that charge becomes a profit to the business. Why is it necessary to use the phrase “costs for items such as inspecting, cleaning, and adjusting vehicles, and preparing documents related to the sale?” Once a customer pays the business for these costs, that payment becomes profit to the dealer. This profit is no different than the markup included in the price of the product the business is selling. And this is exactly where the dealer fee should be, included in the price of the car as part of the profit margin.
(2) All new car manufacturers that I know of reimburse the dealers for “such items as inspecting, cleaning, and adjusting new vehicles”. Charging the customers for this doubles the profit to the dealer for these items. This senate study notes that Florida law “prohibits dealers from charging customers for any pre-delivery service required by the manufacturer, distributor, or importer, for which they are reimbursed by the manufacturer, distributor, or importer.” Since all new cars dealers are reimbursed, why is this part of the disclosure that the dealer must print on his buyer’s order?
(3) The study says that the dealer fee varies among customers of the same dealership. And in a footnote, the study says “as with all charges imposed by the dealer, this fee may be negotiable.” This contradicts my understanding of the regulations on dealer fees. My understanding is that if the dealer elects to charge a dealer fee, he must charge every customer the exact same dealer fee. It is my understanding that if he removes the dealer fee from one transaction, he exposes himself to the liability of having to refund the dealer fee to all of his past customers. The way a dealer can get around this is to lower the price of the car by the amount of the dealer fee, but leave the dealer fee on the buyer’s order.
(4) The Florida Automobile Dealers Association is quoted in the study as saying that the dealer fee must be included in all advertising. This is not being done and, in fact, the rules leave “what is advertising” up to subjective interpretation. For example, prices on the Internet do not have to include dealer fees. Take a look at any South Florida newspaper, read the fine print, and you will see many ads excluding dealer fees from the advertised prices.
(5) FADA, the Florida Automobile Dealers Association spokesman told this study that a reason for the dealer fee was because manufacturers had reduced dealers’ profit margins. The fact is that manufacturers have no say so as to a dealer’s profit margin. A dealer may charge his customer any price he decides for a new car. A manufacturer can set the suggested retail price of a car, but it’s exactly that…suggested. In the first place most dealers would be thrilled to sell all of their cars at the MSRP and many dealers add price addendums beside the Monroney label marking the MSRP up.
(6) The study said that the state had no record of complaints on the dealer fee because they don’t separately categorize such complaints! This kind of makes me wonder how they do categorize complaints or do the sort them at all! There are two reasons why there aren’t more complaints. The first is that many car buyers don’t even know that they did pay a dealer fee and the second is that almost all dealers charge a dealer fee and tell the customers that they cannot remove the charge by Florida law.
(7) The study says that dealer fees in Florida range from $189 to $699. This is based on a very small sample (67 responses) from well over 1,000 car dealers in Florida. I know of several car dealers in Palm Beach County that charge over $699 in fees. At least one local dealer charges two fees…a $699 dealer fee and a $199 doc fee totaling $898. My guess is that the dealers with the higher dealer fees opted not to fill out and return the survey.

I was encouraged by these statements by the senate committee: “There is enough ambiguity in current law to allow that the consumers may not be specifically aware that the pre-delivery service fee is imposed, and the amount of the fee, prior to receipt of the Buyer’s Order. The law requires the fee to be “included” rather than “specifically delineated” in the advertised price. Furthermore, the fee is not required to be delineated on the dealer window sticker.”

Also, “Should the Legislature choose to address the issues identified in this report, it may consider expanding the notice requirements for the dealer imposed pre-delivery service fee, or, as other states have done, impose a cap on such fees.”

The ball is in your court now. You are the car buyers and you are the ones that are being deprived of full information on the prices of the cars you are buying. You are being lured into car dealerships by a car advertised at one price and when you come in, you are told that that car is no longer available but there are several more “just like it”. The only problem is that Florida law now allows the dealer to add their dealer fee to those cars “just like” the advertised car because they were not advertised. This is “bait and switch” pure and simple. No dealer in Florida should be allowed to quote a price on a car to any customer unless it is an “out the door price” plus tax and tag only.

If you agree with me, call, write or email your legislator and tell him so. If you remain silent, the chances are the Florida legislature will do nothing.

Friday, October 26, 2007

Nitrogen Scam Foisted on Palm Tran

I’m rerunning below the column I wrote last year about Nitrogen because it came to my attention that the Palm Beach County bus system, Palm Tran, was planning on investing over $80,000 for equipment to fill their bus’ tires with Nitrogen.

I wrote County Commissioner, Karen Marcus, an email explaining why this was a mistake and I sent her a copy of the column which you can read below, if you missed it last year. Below is a copy of my email:

Good morning, Mrs. Marcus,

Gary Todd, a friend of mine, told me this morning that Palm Tran had spent $65,000 on Nitrogen tire inflation systems purportedly to improve fuel economy and tire life in Palm Beach County buses.

I Googled the news article in last Friday’s PB Post and it gave as a reason for this decision to spend taxpayers’ money that “NASCAR and commercial and military aircraft” use Nitrogen in their tires.

NASCAR and commercial and military airplanes use Nitrogen in their tires for entirely different reasons than reducing tire wear and increasing fuel economy. Race cars and landing airplanes are subjected to extremely high temperatures never experienced in car or bus tires. Airplanes also experience extremes in atmospheric pressure which car and bus tires don’t.

I’ve attached a column that I wrote for the Hometown News last year, “Don’t Pay for Nitrogen in Your Tires”. I wrote this article to benefit those who might persuaded to pay for Nitrogen instead of free air [which is already 78% Nitrogen] to put in their tires. I even considered doing this for my customers at my Toyota dealerships and for my rental car fleet until I did some research on the pros and cons. I even bought canisters of Nitrogen and ran pure Nitrogen alternatively with air in my rental fleet for a period of time. The bottom line is that there is no measurable difference in fuel economy or tire wear with air v. s. Nitrogen.

Please read my article and feel free to call me to discuss this at any time. My cell number is 561 358-1474. I wouldn’t expect you to take my word for cancelling this expenditure, but if you instruct Palm Tran to conduct an actual test of fuel economy and tire wear with and without Nitrogen, I think they will come to the same conclusion as I.

Best wishes,
Earl


There was an article in the October 25th Wall Street Journal which concluded that Nitrogen was of no useful, measurable benefits to fuel economy, safety, or tire life. It concluded that if the Nitrogen was free, no harm can result from using it.

CNN recently ran a story exposing the Nitrogen scam you can see the video clip on this story by clicking on http://www.cnn.com/video/#/video/tech/2007/10/26/hunter.check.your.tires.cnn?iref=videosearch. The article discussed a study that Consumer Reports did on the effectiveness of Nitrogen in tires and interviewed the CR tester. Consumer Report filled a large number of tires of all makes and models, half with air and half with pure Nitrogen. After one year, there was only a 1.3 pound pressure difference in the tires filled with air and Nitrogen. The obvious conclusion was that Nitrogen for your tires is a waste of money.

Costco is often cited as a reason to buy Nitrogen for your tires. When you buy a set of tires from Costco, they fill the tires with Nitrogen free. When you bring your car back to Costco’s auto service center, they will top off your tires with Nitrogen for you free. I can understand Costco’s motive in this because I also operate an automotive service center and I also sell tires. All auto service center operators want to give their customers a good reason for bringing their cars back to them regularly for service. Why? Because we want to sell you more services. Need I say more?

Here's the original posting:

Don’t Pay for Nitrogen in Your Tires

It’s bad enough that gas stations now make you pay to inflate your own tires with air. But at least you are getting what you paid for…air which does what it’s supposed to do and that is to keep your tires inflated.

Many car dealers are now charging customers to fill their tires with “pure” nitrogen. They tell you that nitrogen does not leak from your tires as quickly as air and this means that your tires will stay properly inflated longer before you have to add more nitrogen (and pay the dealer for this). What the dealers don’t tell you is that the air that is already in your tires is mostly nitrogen anyway. In fact, 78% of the air you breathe is nitrogen. Oxygen represents only 12% of the air. The rest of air includes carbon dioxide and other inert gases. I’m not sure what the purity of the nitrogen is that they pump into your tires for $199 (this is not a typo…one hundred and ninety-nine dollars for filling four tires full of mainly air). But, you can be assured that the purity of the nitrogen is not 100% and is probably closer to the 78% that regular air consists of.

Even knowing all of the above, I have to admit that I was curious about whether or not nitrogen could prolong tire live and improve fuel economy because I knew that NASCAR drivers used nitrogen filled tires and I heard that Volvo’s came from the factory with nitrogen in their tires. I have a BS in Physics from the University of Florida and a Master of Science from Purdue and these kinds of things interest me. So, to find out for myself, my dealership conducted an experiment. We have a fleet of rental cars and we filled two tires of each car with pure nitrogen and 2 tires with regular air. Over the course of many weeks, we measured the pounds of inflation in the nitrogen and air filled tires. There was no difference in the inflations of the nitrogen v. s. the air filled tires. If there is no difference in the inflation, there can be no benefit from nitrogen of better gas mileage or fuel economy.

You may have read my column last week, “Beware the Phony Monroney”. In that column I warned you about car dealers that add a window sticker designed to look exactly like the federally mandated Monroney sticker. This is where you should look for dealer installed accessories and additional dealer markups over MSRP. Often these accessories have a high price but a very low cost. In the case of nitrogen in four tires selling for $199, this is exactly the case. Since air is already 78% nitrogen, it costs virtually nothing to extract nitrogen from the air. To be generous, let’s say the dealer’s cost is $10 including labor. That is a 2000% markup when he charges $199.

Just when I thought I’d seen it all, I actually saw window stickers on a car today from another dealer who had actually modified the Monroney label to show nitrogen filled tires. To do this, the dealer actually had to remove the real Monroney label, make the modification showing the nitrogen tires, and re-paste the Monroney label to the window. Federal law requires that a Monroney label not be removed until the vehicle is delivered to the customer. It also requires that it not be modified. This new vehicle was one we had traded for from another dealer and still had the counterfeit Monroney and the modified real Monroney attached to the window. The modified Monroney looked so authentic, that one of my technicians and my service manager inquired of Toyota about the necessity of our carrying nitrogen tanks so that we could refill these tires with Nitrogen. If this could fool a Toyota dealer’s technicians and service manager, it might fool you too.

This particular dealer also had another charge added to the counterfeit Monroney sticker, a $4,995.00 “Market Value Adjustment”. Most prospective customers think that this is part of the manufacturer’s recommended retail price. They either end up paying too much money for the vehicle or think they are getting more for their trade-in or a bigger discount than they really are. It’s easy to allow someone an extra $5,000 on their trade-in when you have already marked the car up an extra $5,000 over sticker price.

Friday, October 19, 2007

Always get an “Out the Door” Price (originally posted 4/23/06)

Many states have laws prohibiting car dealers from adding “fees” onto the prices they quote you. Unfortunately, Florida is not one of these states. The state law in Florida requires only that the dealers disclose on the buyers’ order that this additional charge is not a local, state, or federal fee, but is actually just profit to the dealer.

Almost every car dealership in Florida has this extra profit printed on their buyer’s order, under an assortment of labels like “Dealer Fee”, “Doc Fee”, and Dealer Prep”. You will not see it on the car’s price sticker you will probably not hear any verbal disclosure by the sales person or manager, unless you ask. If you ask, you will be told that “all other dealers charge this” and this is “almost” true.

Florida law also requires that when a dealer has this additional profit printed on his buyer’s order, he must not delete it for some customers and charge it to others. The only way he can effectively eliminate this extra profit is by reducing the quoted selling price of the car by this amount, but keep the dealer fee amount that is printed on the buyer’s order. This is rarely done because dealers do not pay their salesmen or managers a commission on the dealer fee. If you demand the price be reduced to compensate for the dealer fee, it cuts the salesman’s commission. Dealer fees range from $500 to $900 and a typical salesman’s commission is 25%, costing the salesman $125 to $225.

Florida law requires that a dealer include the dealer fee in the price of an advertised car. This is often ignored by dealers advertising on the Internet and in direct mail because it is below the “radar screen” of the Attorney General’s office. In newspaper, TV, and radio ads one car is advertised at a low price with a seemingly innocuous designation like “#1234B” (the stock # of the car) all there is to tell the buyer that only one car is available at this price. Another common tactic is a fine print disclosure at the bottom of the ad reading “price good on date of publication only”. The odds of being able to buy one of these cars at the advertised price are not good. Not only is there only one car with the price good for just one day, but the salesman receives no commission or a much smaller commission if he sells you this car.

My advice is not to pay much attention to advertised car prices. Do your shopping on the Internet or by telephone. Insist on an “out the door” price including everything except sales tax and license tag. If buying a new car, get several “out the door” prices quoted on the exact same year, make, model, and accessorized car. Two very good free Web sites to get information on dealer costs and fair retail prices are http://www.kbb.com/ and http://www.edmunds.com/. Consumer Reports is also an excellent source of product information and pricing information, but there is a fee for their Web site.

Friday, October 12, 2007

Earl Stewart Is Responsible for Car Dealers’ Bad Reputation?

The private feedback I get from other car dealers who read this column, listen to my radio talk show at 9 AM every Saturday on www.SeaviewAM960.com, or see my advertising [view all my TV commercials at www.YouTube.com/EarlStewartToyota] is that I am causing damage to their reputations. Let me hastily add that they won’t state this publicly. No car dealer has ever written a letter to the editor of Hometown News. They will post negative statements on my Blog, www.EarlStewartOnCars.com, but always anonymously. I’ve had only one call to my radio show from a car dealer and he wanted to remain anonymous.

First let me say that I have been doing my Hometown News column for less than two years and my Blog for about the same time. My advertisements against the dealer fee and such have only been running for 3 to 4 years. My radio show is less than a year old. Given this, how did car dealers earn such a bad reputation before I started talking about it?

I’ve been a car dealer since 1968 and I can never remember car dealers not having a bad reputation. Comedians joke about car dealers as much as they joke about lawyers and politicians. In fact, car dealers have even had movies made about their slimy way of doing business. Two of them are Cadillac Man, starring Robin Williams and Used Cars starring Kurt Russell. I’ve always been acutely aware of the generally bad image that car dealers have. That may be because I wasn’t always in the car business, although my father was a car dealer. I studied Physics in college, earning my BS from the University of Florida and my MS from Purdue. My first real job was as an Electronics Engineer for Westinghouse Electric Corporation. I had those early years working outside the car business to give me a better real life perspective when I came to work for my father in 1968.

Surely other car dealers are aware of their generally bad reputation. How do you suppose they think it came about? Can they believe that our reputation is a mistake and that most car dealers really treat their customers with integrity, courtesy, and respect? Do they believe that customers are simply not telling the truth about their bad experiences with car dealers? Anybody who has ever been to a party or other social event has to have overheard at least one horror story about someone buying a car or having their car serviced.

I’m going to assume that car dealers really did know that they had a bad reputation even before Earl Stewart came along. I think they are simply angry at me because I’m calling more attention to a problem that everybody already knows about. And they’re mad because I’m offering advice to customers about how to avoid the pitfalls in buying a car and having a car serviced. But the biggest reason they are furious with me is that they see my business growing relative to theirs. They see their customers coming to my dealership to buy their next car because they know they will be treated with respect, courtesy, and integrity.

I had one anonymous email from a dealer say that “the only reason I have four red phones around my dealership that customers can call me directly on is because I don’t trust my employees”. My answer to him was “the only possible way I would dare to have four red phones that customers can call me directly on seven days a week is because I do trust my employees”. Think about this. My dealership sells 400 to 500 cars every month and services thousands more, making it one of the largest car dealerships in the World. If my employees did not take very good care of all those customers, how could I possibly personally answer all those complaints? The fact is that the reason other dealers don’t allow customers to have direct contact with them is because they are afraid. In every organization there is a mentality of “never let the boss hear a complaint”. Of course, that could be a good thing if she never heard a complaint because all of her customers were happy. But 40 years of experience has taught me that the normal way that the boss never hears the complaints is by not allowing the customers access to the boss.

That’s your problem, Mr. Car Dealer. You think (or maybe you just want to think) your employees are doing a good job satisfying your customers because you don’t hear any complaints. Or maybe you think you are doing a good job in this category because the factory customer satisfaction surveys look good. Have you read the expose in Automotive News about how car dealers routinely rig customer satisfaction surveys? Salesmen offer customers a free tank of gas if they will bring them their “blank” survey so the salesman can fill it out themselves. Or, the salesman gives the manufacturer a phony email address so that the survey comes to a PC at the dealership instead of to the customers. There are lots of tricks like this to make a dealer’s customer satisfaction score look a lot better than it really is.

The only accurate way to measure customer satisfaction is by measuring how many customers who buy a car from you buy their next car from you…customer loyalty. In your service department how many customers bring the car they bought from you back to you for service…customer retention. Toyota has told their dealers that they will begin to measure customer satisfaction in this manner in 2008. My customer loyalty and customer retention is very, very high. If you are one of those car dealers who thinks everything is hunky dory, maybe you better take a look at these two numbers.

Friday, October 05, 2007

Earl Stewart on CNN Today - Friday 10/5

Check out Earl Stewart's interview with Susan Candiotti tonight during Wolf Blitzer's Situation Room. Between 7 - 8 PM EST.

Maybe Your Car Dealer is a Good Guy

I wrote the article below last year. It advises you what to do if you have a problem with a car dealership. I decided to run this article again after a conversation with Ted Smith, the president of the Florida Automobile Dealers Association.

Ted and I spoke the other day after he was called by a local reporter for the Palm Beach Post who is writing an article about me. This reporter told Ted that his research so far had found me to be a good and honest car dealer. Ted responded that, if he checked out any car dealer as carefully, this reporter would find that most car dealers are good and honest people too. I believe that.

The reason that car dealerships have a bad reputation, in general, is not because of direct dealings with the owners or general managers of the dealerships. It is though dealings with those employed by the owner/GM. This is why I give the advice you will read below about taking your complaint as high up the ladder of command as you can.



What to do if you are Treated Badly by a Car Dealer

Hopefully the sales or service experience with your car dealer went well. But, sometimes they don’t. Now what? The advice I give you applies to all business transactions, not just car dealerships.

Your first step should be to communicate your complaint ASAP to the General Manager or, preferably, the owner. Be sure that you are talking to the real owner or the real general manger. A General Manager is over all employees in the entire company. A general “sales” manager is not a General Manager. If you can’t reach the owner (Many car dealerships are either publicly owned or owned by absentee owners), ask to see the General Manager. Often times the owner or General Manager is not aware of everything that goes on with all of their customers and employees. They might have new employee that should not have been hired or received inadequate training. Or, they may simply have a “rotten apple” that should not be working there. The ease and speed with which you can meet and speak to a General Manager or an owner is a pretty good measure of the integrity of the company as whole. If the owner or General Manager cares enough about her customers to allow total access, it is probably a very good place to do business. In fact, it is a good idea to find this out before you do business.

If you cannot reach the owner or General Manager, contact the manufacturer who franchises the dealership. Car dealers have a contract with the manufacturer called a franchise agreement and this contractual agreement requires that they treat their customers with courtesy, efficiency and integrity. Most manufacturers have a customer hotline that allows you to call and register a complaint directly. The owner or General Manager of the dealership will be made aware of your complaint. As you might guess, the manufacturer has quite of bit of clout with their dealer. If a dealer does not live up to his side of the contract, his franchise could be canceled or not renewed.

The third step I recommend, if numbers one and two don’t work, is to contact a consumer agency like The Better Business Bureau or the County Office of Consumer Affairs. These agencies will send your complaint to the dealership and request a written reply. No car dealership or business wants an unanswered complaint in the file of a governmental or private consumer agency.

Your last resort is to contact an attorney. I list this last because hiring an attorney just about eliminates the possibility that you can quickly, amicably and inexpensively resolve your differences with the car dealer. Be very careful which attorney you choose. Try to choose one that is primarily interested in helping you and not in generating large fees for himself. Under the Florida Unfair and Deceptive Trade Practices Act, an attorney is entitled to his fees and costs from the defendant in a lawsuit if he wins. These fees can be much larger than the amount of your claim, motivating an unethical attorney to spend more time than is needed and dragging out a case to generate more fees than are necessary. This can be very dangerous for you because the car dealer’s attorney’s fees run roughly parallel to your lawyer’s and you can be held liable for those if you lose the case.

Hopefully you never have to resort to the final step of hiring a lawyer. In trying steps one, two, and three try to present your complaint as concisely and politely as possible. You have every right to be angry when you are taken advantage of, but try to let your anger subside before you speak to or write to someone about your problem. We all react negatively to someone who is profane, raises his voice, or is sarcastic. Your goal of communicating and resolving your complaint is best reached by communicating clearly, politely and concisely.

Friday, September 28, 2007

Senate Investigates Florida Car Dealer Fees

I just learned last week that Florida State Senator, Ken Pruitt, has called for an investigation of the propriety of fees charge by dealers to car buyers that are not federal, state, or local fees. If you are interested in viewing the information posted on the official state Web site on this subject, click on http://www.flsenate.gov/Publications/2008/Senate/reports/Workprogram/pdf/workprogram.pdf and then click on “Commerce” on the left side of the page. I salute Ken Pruitt for this effort. Senator Pruitt, as you probably know, is the President of the Florida Senate, a very powerful position. You should feel very pleased that our State government has taken the first step toward making the dealer fee illegal in Florida as it is in several other states.

If you are a reader of my weekly column in the Hometown News, a reader of my Blog, http://www.earlstewartoncars.com/, or a listener to my weekly radio show [9 AM every Saturday on Seaview AM 960], you already know all about dealer fees. If not, dealer fees are profit for the car dealer disguised as an official fee. The disguise consists of naming this profit documentary fee, doc fee, dealer prep fee, pre-delivery fee, dealer fee, etc. Some dealers use a combination. These fees vary from as little as $500 to nearly $1,000. In fact, there is no legal limit on the amount of these fees. Theoretically a dealer could charge you $10,000 or more!

I discuss this in a recent television ad you can view at http://www.youtube.com/watch?v=JeIuFEMgWJs

Florida law currently has some regulation on dealer fees. The amount of the fee must be printed on the buyer’s order, next to the real fees, like sales tax and licenses. Next to the dealer fee must be printed “These charges represent costs and profit to dealer”. This statement is misleading because it says costs and profits. Obviously, when the dealer charges you money to cover some of his expenses, you are increasing his profits. The statement should be, “These charges represent profit for the dealer” period. You know how many pieces of paper are involved in buying a car…lots and lots. A car buyer cannot possibly read every document he signs [unless he is a retired lawyer with nothing but time on his hands]. In my experience, most buyers are not even aware that they paid a dealer fee. It is buried in the morass of legitimate local, state, and federal fees.

Another element of Florida law is that the dealer fee must be included in the price of a specific advertised car. This law is simply being ignored by many car dealers. If you doubt this, just pick up a copy of any local Florida news paper and read the fine print in the car ads. In my local paper, The Palm Beach Post, about half the ads do not include the dealer fee in the price. But, even if it is included, it’s still a “gotcha”. That’s because dealers will advertise just one, or maybe two, cars at that price. That number that you see next to the picture of the car is the stock number of one particular vehicle. You have two chances of buying that particular car…slim and none. In the first place there’s only one or two of these cars and in the second place the salesman is typically paid no commission for selling this car. How can you believe him when he says, “That car has been sold”? If you don’t believe him what is there you can do about it? The salesman will tell you that he can show you one exactly like it. The only problem now is that the dealer can legally add the dealer fee to the advertised price you are expecting because it was not the advertised car. Of course, that’s the whole idea behind the ad.

Another Florida law associated with dealer fees is that the dealer must charge every customer the dealer fee if he charges just one customer. This is a really stupid law that probably was well intended when it was passed. It’s stupid because it provides the dealer with an excuse when the occasional astute car buyer spots the fact that the dealer fee is really only more profit for the dealer and not an official fee. The salesman tells the objecting customer, “I’m sorry but Florida law prohibits us from removing the dealer fee from our invoice”. This is only technically true because the salesman can always decrease the price of the car by the amount of the dealer fee which is perfectly legal. This almost never happens because salesmen are not paid on the profit the dealer realizes from the dealer fee. They typically earn 25% of the profit on the car. If the salesman reduces the price of the car by the amount of the dealer fee, 25% of that amount comes out of his pocket.

Now, I have a confession to make. I know of only one other dealer in South Florida that doesn’t charge a dealer fee…Sawgrass Ford. Since I stopped charging a dealer fee several years ago my business has soared. I’m making less on each car but I’m selling a lot more cars. I have a huge competitive advantage over virtually every car dealer in Florida. My confession is this. I truly have mixed emotions [Like seeing your mother-in-law drive your new Lexus Ls 460 over a cliff] about Ken Pruitt and his Senate Committee succeeding in making dealer fees illegal. On the one hand, I know it’s the right thing to do because the dealer fee is a deceptive sales practice. On the other hand, banning the dealer fee removes a great competitive advantage.

Friday, September 21, 2007

Positive Backlash to Negativism on Hispanic TV Commercial

I wasn’t going to write another column about the TV commercial that I did a couple of months ago in which I spoke Spanish with English subtitles but recent developments changed my mind.

I aired the commercial on English speaking TV channels, not Hispanic. Just in case you were out of the country or were somehow totally incommunicado for the past two months, there was a hue and cry to this ad like I’ve never seen to any commercial I’ve done in my 40+ years as a car dealer. It started with lots of very negative phone calls to me and the TV channels. One TV channel, fearing controversy, initially refused to run my commercial, but recanted when I threatened them with exposing their refusal to run my ad to their competition and the FCC. The negative groundswell grew to emails and letters. I have to admit that during the first two or three weeks, I began to doubt that I was doing the right thing. Almost every call, email, or letter threatened me with boycotting my dealership. After all, I’m a car dealer and my commercial was meant to help me sell more Toyotas, not make a political statement.

The negativism grew so intense that the media picked up on it. The Ft. Lauderdale Sun Sentinel did a feature story on this, documenting a lot of the negative ads. The Palm Beach Post followed suit with a similar story. Channel 5 TV ran several news stories. Fox News interviewed me and this was carried on the network, nationwide, as well as XM and Sirius worldwide. Magazines, the Internet chat groups, blogs, World Net Daily, YouTube, and about every other kind of media jumped on this story.

That’s when the “positive backlash” began. What I had hoped for actually came to pass. The “silent majority” that we always hear about suddenly found their voice. The average American is a good person without prejudice and has lots of common sense, but she doesn’t get motivated enough from a TV commercial to make phone calls or send emails. The average American does get motivated when she sees someone being unjustly accused of being a traitor, called vulgar names, and being threatened with boycotts to his business. These good folks rallied to my support and now I am getting a steady flow of emails, blog postings, and phone calls supporting my Hispanic TV ad. The negative comments have died off to an occasional whimper.

Ironically, my initial motivation was only to sell more Toyotas. Not only did I do this [Last month I sold 375 new Toyotas, one of the best months in my 32 years as a Toyota dealer], but I got a bonus. That was a much better understanding of what makes us Americans tick. Don’t get me wrong. I was always proud to be an American, but after so many people sprang to my defense, after I was so viciously attached because of my Hispanic TV commercial, I was even more proud. Americans like to root for the underdog and they believe in standing up for what’s right. When they saw me being piled on by a bunch of nuts and bigots (not all of them were of this ilk; a few were simply uninformed or misunderstood my ad). 99% of Americans understand that we are all immigrants; we only differ in how long ago we, our parents, grandparents, et al were fortunate enough to find sanctuary in the land of the free and the home of the brave.

Friday, September 14, 2007

When a Car Dealer Crosses the Line II

This is a follow-up on my last column which exposed a direct mail scam by a local car dealer. After the General Manager of this dealership mailed this letter out a short time ago, some recipients sent me copies. They either recognized that it was phony or they wanted my opinion. I did some research which proved that the claims this General Manager was making were false and discussed this in my last column.

After I wrote my last column, a customer sent me another letter he received from a different General Manager of a different car dealership which was the exact same letter as the first dealership mailed out. For clarification, I will repeat the text of both, identical letters below:

Dear ______,

You are receiving this letter because I have some very timely and important information about your vehicle. As General Manager of [Name of Dealership], I am making a personal appeal to purchase your vehicle. Because of a unique wholesale market condition, I have allocated additional funds and I am now in the position of being able to offer you over book value for your vehicle—whether you trade it in or I purchase it outright. My dilemma simply means that right now your vehicle is worth more than it was last month. Here’s why:

Normally, we purchase over 200 pre-owned vehicles per month at nationally recognized automotive auctions. Unfortunately, flood damaged Katrina vehicles (see enclosed article) are currently showing up at these auctions. I simply will not allow my auction buyers to risk our reputation by inadvertently purchasing one of these units and reselling it to one of our customers. Therefore, I have put a moratorium on any auction purchases until I am confident flood damaged vehicles are properly disclosed to our wholesale buyers.

This is a straight forward, genuine appeal to purchase your vehicle. I need local vehicles with local histories—vehicles with a pedigree so to speak. As always, [Name of Dealership] will pay off your trade balance as part of any final retail transaction. My purchase offer is in addition to all [Name of make of car] incentives, should you decide to maximize your market timing. But hurry, my appraisers have from now until the close of business, 6:00PM [Date] to extend thee purchase offers. Call me at [Dealership number] to receive a no obligation, written trade or purchase estimate.

Sincerely,

[Signature of General Manager]

As I said this exact letter was mailed out by two dealerships within 10 miles of each other. One was a Ford dealership and one was a Toyota dealership. One is owned by a public corporation and one is owned by a local person. There is no affiliation between the two. Obviously this direct mail scam is being sold to car dealers by some unscrupulous marketing company. Neither of these dealerships sells even close to 200 used cars a month and there would be no reason in the world for them to purchase “over 200 pre-owned vehicles per month at nationally recognized automotive auctions”. There are very likely lots of other dealerships sending out this same letter. If you receive the letter above, throw it in the trash. It is absolutely and shamelessly false.

Letters of this nature are peddled to dealers with promises of how many “suckers” they will bring into the dealers’ showrooms. Oftentimes they have a guarantee of a certain minimum percentage…3% would be a very effective mailer. The direct mail marketing company would guarantee that if the 10,000 mailers didn’t bring in at least 300 potential victims, they would run another promotion free. Dealers usually count on selling about one out of every five prospects, which means that this mailer could result in about 60 sales resulting from this lie.
You may ask how car dealers get away with something like this. The answer is that direct mail usually falls beneath the “radar” of the regulators. When you consider all of the deceptive advertising out there, the regulators have a hard enough time keeping the TV, radio, and newspaper advertising clean, advertising that is very visible to all. Only the unfortunate addressees usually see the direct mail advertising. My advice to you is to ignore all direct mail advertising unless you have personal knowledge of the integrity of the company

Friday, September 07, 2007

QUICK REFERENCE GUIDE TO FINE PRINT IN CAR ADS

If you look down at the bottom of virtually every car advertisement in your local newspaper, you will see some fine print. Sometimes you literally cannot read the print because it is so small. The disclaimers you read below were taken from today’s PB Post. I didn’t make any of these up. Basically what these disclaimers do is to totally negate the validity of all of the prices and payments the car dealers are advertising. The prices and payments are always much higher when you factor in the almost invisible fine print.

Combining a very short lease term with a high down payment. Nothing sells cars like low monthly payments. A car dealer can make a monthly lease payment as low as he wants by both reducing the number of months of the lease and increasing the down payment. I’m looking at an ad in the PB Post right now advertising an SUV for $19,999 or just $199 per month. In the fine print it says 27 month lease and $3,000 down plus a $799 dealer fee.

"Plus dealer installed options" The price you see advertised in the paper is not the full price. This loophole allows the dealer to tack on thousands of dollars in overpriced accessories to the price that was advertised.

"With approved credit". The lease payment or purchase payment you see advertised is based on someone with very, very good credit. Sometimes the ad will specify a minimum Beacon score of 750 or even 760. An almost negligible percent of people have a credit score that high. This payment gets you in the door and then they tell you your credit isn’t good enough to qualify for that payment.

"Advertised offer good on select in-stock vehicles only" Dealers often advertise just one car at a price below their cost. They don’t pay the salesman a commission if he sells that vehicle. The chances of that car being available for you to buy are “slim and none”. Even if the car was still there, the salesman would do everything in his power to sell you a different car that he could earn a commission on.

"Owner Loyalty Rebate". Manufacturers offer special cash rebates to current owners of their car. These rebates are not available to you if you don’t currently own that particular make of car. For example, if you own a Honda, and want to buy a Toyota, you don’t qualify for a Toyota loyalty rebate. That price you see advertised won’t be available.

"Price …plus, tax, tag, and fees". The red flag word here is “fees”. The fees these dealers refer to is a “dealer fee” which is synonymous for dealer profit. Most people think it’s a federal or state tax of some kind. It’s nothing more than more money for the dealer that is not disclosed in the price of the car.

"Offers expire date of publication or may be cancelled at any time without notice". This simply means that the prices, payments, etc. you have read have no validity whatsoever. The prices are not good tomorrow, but they aren’t even any good today because the dealer can cancel the offer without notice.

"Not responsible for typographical errors". This is just one more way for a dealer to explain why they can’t sell you the car for the advertised price…We don’t have to honor that price because it was a “typographical error”.

"Vehicle Art for illustrations only". This means that that car you are looking at with the really great looking wheels might not have those wheels on the one you buy. Or, maybe it doesn’t even have that sunroof you see in the picture.

"Minimum trade based on dealer list price". The dealer list price is not the same thing as the manufacturer’s suggest price. Dealers add markups to the Monroney label also known as MSRP or manufacturer’s suggested retail price. They label this markup (often on a sticker designed to imitate the official federal Monroney label). Dealer markups of $3,000 and much more are common on such “counterfeit Monroney” labels. In this case, the dealer has marked up the MSRP far enough so that he can offer a minimum $10,000 trade-in allowance.

My advice to you is to ignore all car dealers’ newspaper advertising. Most car ads are designed to “get you in the door” so that they can sell you some other car than the one advertised so that they can make more money. If you must respond to a dealer’s newspaper ad, please be sure you break out your magnifying glass and carefully read the fine print.

Monday, September 03, 2007

Earl Stewart's Response to Typical Critics of Spanish Ad

Dear E and M,

Thanks very much for voicing your opinion. Because your remarks are so typical of those who object to my Spanish-speaking TV commercial, I have taken the liberty of posting this email on my Blog, http://www.earlstewartoncars.com/. You might enjoy reading some of the postings.

E's & M's comments in blue italic:

We are offended by your Spanish TV commercial and believe the way you went about it is anti-American.We want to respond to some of your posted explanations for showing the commercial on ENGLISH TV:

I am truly sorry that I offended you. It was not my intent and I, too, believe strongly in what I have done and don’t believe I’m wrong…just as strongly as you take the opposite view.

You say you are not targeting Spanish speaking people, why he Spanish commercials then?If virtually all Hispanics living here in Palm Beach Co. are bilingual and fluent in both Spanish and ENGLISH, why the Spanish commercial?

There are four reasons why I chose to speak Spanish in my commercials on English speaking TV:

(1) The market research I did showed that most Hispanics living in Palm Beach County watch English speaking TV channels almost exclusively. This is because there are very few Spanish channels…only 6 in total in all of South Florida and they all originate from Miami. The programming on these channels is far inferior in quality and diversity to the dozens of English speaking channels. Bilingual Hispanic American citizens, just like you and I, prefer to watch better quality and more variety on their TV.
(2) Anyone who has traveled abroad will tell you that it is considered a sign of respect to address bilingual citizens of other countries (virtually all citizens of other countries are at least bilingual and most speak English) in their native tongue. Those Americans who travel abroad and “expect” everybody to be able to speak English is one of the reasons for the phrase “Ugly American”. By learning a few phrases in the language of the country you are visiting and attempting to speak it is a courtesy and a sign of respect.
(3) By speaking Spanish in my commercial, I was able to “cut the clutter” of the too large number of commercials that most people (including me) ignore. I mute out most commercials or change channels. I wanted to get peoples attention which is the primary goal of any advertiser.
(4) Ads on Spanish channels are much more expensive than ads on Palm Beach County channels because they all originate from Miami and cover a much large audience in all of South Florida. A 30 second commercial on a local PB County channel is about $350 compared to about $5,000 for a Spanish channel. I’m wasting my money by advertising to all of the Hispanics in Dade and Broward…especially when my market research has told me that most are watching English channels anyhow.

Hell yea, the commercial get's the attention of the illegal Hispanic's attention. You are speaking the language they want to ALWAYS speak.Funny how you may not have gotten their (Hispanic's) attention if you spoke ENGLISH, when you say most are fluent in ENGLISH?Also, why is there a vast audience on Spanish channels when you say most are fluent in ENGLISH - again because they don't want to speak the language of the USA - ENGLISH!!

I am not trying to advertise to illegal aliens if or no other reason than they can’t buy new Toyotas. They don’t even have driver’s licensees and they can’t afford to buy a new car. Illegal aliens comprise only a small fraction of the Palm Beach County Hispanic community.

Yes, America is the land of free enterprise and capitalism, but America is much more than that.As part of our identity, Border - Language - Culture, we feel you are helping to destroy it. Do you realize how important it is being united by one common language? We are not talking about what you speak or sing in church, your home, another country, but here, the USA as a united country?

Do you think we should pass a law making it illegal to speak another language except English except in church or another country? We are united in America by a lot of things, including our common language. Far more important than a common language is our freedom and freedom means our right to express ourselves freely without fear of oppression. If a free American citizen wishes to speak German, Italian, or Japanese to another person who welcomes this, she should be allowed to express herself in this manner even if you don’t like to listen to it.

You say in one of your post that there are very few illegal aliens (there not illegal immigrants, as immigrants are legal) and they can't buy cars - WHAT ARE YOU SMOKING????

What kind of a trite response is, “WHAT ARE YOU SMOKING????” Quit being cute and try to deal with the facts. In South Florida there are nearly two million American citizens of Hispanic descent, aka legal immigrants. These are the folks I’m advertising to. In South Florida, the best estimate of the number of Hispanics who entered illegally is less than 100,000. These illegal immigrants have very low paying jobs, no driver’s licenses, cannot obtain credit, and CANNOT BUY A CAR.

If you respect people by speaking in their native tongue, which should be insulting to those that have accepted America as their new identity, why did you disrespect us American's by showing the commercial on ENGLISH TV????? You can put your tongue on THIS!

First let me say that your vulgar references do not enhance the credibility of your argument. If you feel I have shown you a lack of respect by speaking Spanish in a 30 second TV commercial, I suggest that you look into your heart for the answer as to why you feel that the Spanish language is offensive to you.

You should thank about moving your business to where the national language is Spanish, as we want miss you, your business, or your commercial.There are always traitors to this country, and you always will be Earl.

My business is thriving. Last month I sold 477 cars, one of the best months in my 32 years as a Toyota dealer. My sales to Hispanics and non Hispanics has increased considerably since I began running my Spanish speaking TV ad. There is no reason for me to move the location of my dealership. In fact, I have just embarked on a major expansion…more than doubling my present size.

Once again, I won’t dignify your name calling with a reply, but I will say again that it does not enhance your credibility to our readers

Friday, August 31, 2007

OPEN LETTER TO CAR MANUFACTURERS

Customer satisfaction trumps sales volume

Dear car manufacturer,

Today all of the car manufacturers can’t stop talking about customer satisfaction, especially when it comes to satisfying the car buyer. They are aware, just as everyone is, that customers visiting car dealerships rank their treatment worse than just about any other retailer. The manufacturers have been aware of this problem for about 30 years. As a Pontiac dealer, I can still remember the first “CSI” surveys that were sent out. The surveys have changed quite a bit and the methodology has changed quite a bit, but essentially it’s the same. When somebody buys a car from a dealer, she is mailed a questionnaire, sometimes it’s emailed, and sometimes the customer is surveyed by phone. The same system is used for service customers. These surveys are scored for customer satisfaction and the dealerships are measured against each other. Typically a dealership is ranked numerically within his local market (about a 100 mile radius), region (geographic section of the USA like the Southeast) and the entire USA.

The problem has been that these surveys haven’t worked very well. Realizing this, the manufacturers have steadily increased the penalties to dealers with bad scores and rewards to dealers with good scores. The penalties can be quite severe, including a dealer’s franchise being terminated, putting him out of business. The rewards sometimes include cash, vacations trips, prestigious honor clubs and societies, and even priority consideration for another dealership location. Guess what? It’s still not working! The scores are getting higher and higher, but the customers are not getting happier and happier. How can that be, you say??!!

The dealers are finding ways to manipulate the survey scores to their advantage. The stakes are so high for a good customer satisfaction score, that “fixing the game” has become pretty much S.O.P. with many car dealerships. This is especially egregious because the honest dealers, who go about improving their scores “the old fashioned way”…treating his customer better, are made to look bad relative to those who are cheating on their scores. In fact, sometimes you actually see dealers who don’t treat their customers very nicely getting higher scores than those who do! As if this wasn’t bad enough, manufacturers sometimes “look the other way” when a large volume dealers has a “CSI problem”. In awards, contests, and honorary societies, the manufacturers sometimes award “discretionary” points to bring a large volume dealer’s percentage score up to an acceptable level. I don’t have to tell you how demoralizing this is to those honest dealers who earn their points fairly. This sends a dangerous message to all of the dealers when they see sales volume trumping customer satisfaction in the priorities of the manufacturers.

The fact is that the manufacturer’s focus on customer satisfaction surveys has intensified to the point where most manufacturers’ executives care more about the numbers than the customers. They tell the dealers to “get those numbers up” which doesn’t necessarily correlate with “treat your customers better”. In a recent Automotive News article, an independent survey company found that 36% of car buyers said the salesperson asked for a perfect score and were asked to allow the dealership to address problems and complaints internally, rather than report them to the automaker. There are also instances of offering a free tank of gas or other perk for a good survey or bringing the blank survey into the dealership for the salesman to fill out. One manufacture recently caught a lot of dealers who had furnished phony email addresses for their customers so that the customer satisfaction survey would come to the dealership instead of the customer’s home.

Here is my recommendation to the car manufacturers. You can keep the surveys, but let them be used only as an information tool for improving the way the dealers treat their customers…no penalties or rewards. Replace the surveys with the “proof of the pudding” for customer satisfaction which is how many customers who buy a car from this dealer come back to buy another from the same dealer? Also, what percentage of the customers return to that dealer for service after they buy their car? What more do you need to know? Customer loyalty is the bottom line, plain and simple. If you must use a survey, use an independent survey company who surveys the dealers’ customers when he doesn’t know who is being surveyed or when it’s being done. The hardest thing for a manufacturer to do is to make customer satisfaction to trump sales volume, not the other way around. The manufacturers will find, if they have the courage to do that, the will “have their cake and eat it too”.

Sincerely,

Earl Stewart

Friday, August 24, 2007

OPEN LETTER TO FLORIDA CAR DEALERS

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”, etc. This extra charge is printed on your buyer’s orders and is programmed into your computers. It has been made illegal in many states including California. You charge this fee to every customer and it ranges from a few hundred dollars to nearly a thousand. Florida law requires that, if you charge a dealer fee to any customer, you must charge all customers. It also 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 of 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 would not be true if you were to make the decision to not charge the dealer fee to anyone. 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 $895 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 law permits you 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 am well 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, 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.

Sincerely, Earl Stewart

Friday, August 17, 2007

HISPANIC TV AD CONTROVERSY CONTINUES

Readers of this column know that my main focus is on giving potential car buyers advice on how to buy the right car at the right price without being taken advantage of by a car dealer. I have deviated from this column format twice recently in response to the controversy associated with a TV advertisement I am running in which I speak Spanish, with English subtitles. Today’s column will vary again because the controversy continues. I am getting far more positive responses to my Spanish ad than negative, but the steady pace of negative calls and emails continues to surprise me. Many of the negative calls are anonymous which makes me suspect as to their motivation, sincerity, and integrity.

Whenever a caller or emailer identifies herself, I always respond. In the interest of getting my reasons out to others who may take issue with my Spanish-speaking TV ad, I am introducing three actual negative emails and my responses (spelling and grammatical errors intact):

(1) Dr. Mr. Stewart I could not believe seeing your commercial in Spanish with English subtitles. Why not move your business over there instead of here. I would not buy from you after seeing that commercial. Others agree with me. This is America, not some Third World Country. You are not doing them a favor either by catering to them. They need to conform to our customs, not us conforming to their thrid world culture. You should be ashamed of yourself

Dear Larry,

I sincerely apologize for having offended you with my Hispanic TV commercial. Please allow me to explain.

There seems to be a common thread within the comments objecting to my Spanish commercial on our local, English-speaking TV stations.

That thread, and common misunderstanding, is that I am targeting Spanish speaking people who, either understand no English, or understand it not very well. This simply is not correct. My market research found that the vast majority of Hispanics in Palm Beach County watch English speaking channels. These are the potential Toyota buyers I am targeting. It’s easy to understand why local Hispanics watch English speaking TV if you have ever watched the 6 Spanish channels (which all originate out of Miami). The programming is of inferior quality and there is very little variety. There may be a few Hispanics who watch English speaking TV to learn to speak English better. Do you really think my 60 second commercial is discouraging these few from learning English?

Virtually all Hispanics living in Palm Beach County are bilingual and fluent in both Spanish and English. They are also mostly American citizens like you and me, most are 2nd or 3rd generation Americans, have good paying jobs, and can afford to buy a new car. Those relatively few Hispanics who don’t speak English can’t afford to buy a car. Many are here illegally and don’t even have driver’s licenses.

The response from our local Hispanic community has been overwhelmingly positive. My commercial got their attention, where it may not have had I spoken in English. You can easily understand why it got their attention if you can imagine yourself living in another country watching TV in your 2nd language. Suddenly, “out of the blue” you are listening to a Toyota commercial in English. Virtually all Hispanics found this very positive and several have bought cars because of this ad and many more say they plan to.

I could understand why you would be angry with Channel 5 if they ran Hispanic programming at times when you wanted to watch TV, but why are you angry because I ran a 60 second commercial. I hate commercials (except my own, of course). I mute commercials, change the channel, or take the opportunity to run to the kitchen or bathroom. When I sometimes accidentally have to watch a commercial (can’t find my remote control fast enough). I see lots of really obnoxious commercials. Some are absolutely terrible! (There is one car commercial where a balding guy with a beard shouts at you). I see very deceptive commercials which are obviously designed to trick us into buying from them. How about the commercials for feminine hygiene products, hemorrhoid medications, or anti-flatulents? Why don’t these kinds of commercials upset you? Have you called or written any of these advertisers? If you did, I bet you didn’t get a response. In fact, I bet you can’t even talk to them like you can me.

Several critics have accused me of “being all about making money”. You folks that pride yourself on being better Americans than I should understand that America is the land of free enterprise and capitalism. With lots of hard work, every American has a shot at the “gold ring”. I won’t apologize to anybody for trying to make a profit in my business. Many of these Hispanics, who a lot of the anti-Hispanic commercial letter writers seem to resent, came to this country because they were fleeing the communist state of Cuba. Profits and making money are frowned upon by communists. In Cuba, it’s not “all about money”; it’s all about poverty except for the communist party leaders who live quite well.

F Scott Fitzgerald said that the true test of a great mind is being able to hold two opposing views in your mind at the same time. In past presidential elections, our country was virtually split down the middle. If you are a democrat do you really think that the half of the country that voted Republican is bad or stupid? I ask the same question of the Republicans. If you don’t agree with me, why must you hate me and threaten me. I respect your opinion even if I disagree; why can’t you respect mine?

(2) Dear Mr. Stewart

Maybe you need to talk to Tom McKenna of Seacoast Water in Stuart, who is being forced out of his business by his Hispanic landlord because he just wants tenants that appeal to Hispanics. Wake up and see what is happening in this country and you are a part of it. Sure you are entitled to your views, but you are going to lose alot of customers who do not share your views. Believe it or not, people are turning away from companies who are advertising in Spanish. America should come first and the language here is English, not Spanish.


Dear Laura,

I don't know the specifics of the matter with Tom McKenna and his lease. I believe that you are referring to a story in the PB Post. I am a businessman and I do know that a landlord cannot force a tenant "out of business". Tenants have rights just like landlords. A landlord can elect not to renew a lease, in which case that tenant would have to lease space elsewhere. He would still be in business but at a different location. Landlords have rights too. If a landlord believes that they can lease their property to another tenant that will enhance their profits, that is what free enterprise is all about…and America is all about free enterprise. In some countries, the government can tell businessmen who they can and cannot lease to or do business with.

I am in the process of expanding my Toyota dealership. I purchased the property next door to my property. On that property is a Cuban restaurant, El Colonial. Their lease in up next month and I will not be renewing it, but I am working with the owner, Jamie Gomez, so that he will have plenty of time to find a new location. Jamie and his father, Jose, operate the restaurant and are American citizens who came here from Cuba. By the way, Jaime watches English speaking TV, loves my commercials, and recently bought a new Toyota Land Cruiser from me.

PS: If you like Cuban food, this is one of the best. It's Zagat rated very high and my employees and I eat there often. I will continue to do so when they move.


(3) This is for Earl Stewart. I saw you add on TV the other night and must say I was skocked. An Add in spanish- due what you must. Not only will I not buy a X2 Scion from you but I will ask my friend and fellow employees not to by a car from you. Why should I push 1 for english and I don't need your ads in my face in spanish.

Dear Charlotte,

I am sorry that my Spanish language ad offended you and I’m sorry that you have chosen not to do business with my dealership again.

You may be surprised when I tell you that I believe English should be learned and spoken by all citizens of this country and that I don’t support amnesty for illegal aliens. I also don’t like the answer machines that say “touch 1 for English or Spanish”. When you call my dealership you never get an answer machine. Please feel free to call me and discuss this further at anytime. My calls are not screened and I am always available to everybody.

My innocent and only intent was to sell some more Toyotas and Scions to American citizens of South Florida who are of Hispanic descent.

I advertised on English-speaking channels, rather than Spanish for two reasons:

(1) The vast majority of American citizens of Hispanic descent living in South Florida speaks English and watches the same channels you and I watch. My ad was not aimed at illegal immigrants who are very few and can’t buy cars anyhow. Most can’t afford a car and, if they could, cannot buy a car without a social security number, drivers’ license, insurance, etc.
(2) The only Spanish channels shown in our area originate in Miami and because of their vast audience, are cost prohibitive for me to advertise on. I am paying $100 to $350 per ad and the Spanish channel, which all originate out of Miami and cover all of South Florida, cost about $5,000 for a 30 second spot. This is way over my allowable advertising budget.

You may wonder why I spoke in Spanish and there are also two reasons for that:

(1) It is a sign of respect when you speak to someone in their native tongue or the native tongue of their parents or grandparents.
(2) Speaking in Spanish on a 100% English TV channel “cuts the clutter”. It got your attention and the attention of many more. It was very controversial with lots of supporters and some detractors. This is the goal of any advertiser…to have his commercial noticed.

Best wishes,

EarlStewart