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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.