Friday, March 07, 2008

A Victorious First Step toward Outlawing the Dealer Fee

My appearance before the Florida Senate Commerce Committee went quite well last Tuesday, March 4.

The Senators allowed me all the time I needed to make my presentation. I gave them copies of newspaper ads illustrating my objections to the dealer fee and copies of my presentation.

Many of the Senators on the committee asked me questions which were very supportive and positive.

Several representatives from the Florida Automobile Dealers Association [FADA] testified, including dealers Chris Craft from Tallahassee and Herb Yardley from Stuart and Ted Smith the President of FADA. The committee was negative toward most of their testimony and this was reflected by the Senators’ questions. Several Senators challenged the speakers on their misstatements of fact and obvious contradictions.

The Senate committee is preparing a bill which will be sent to the House for endorsement and then to Governor Crist to be signed into law. I don’t expect anything drastic like making dealer fees illegal but I do feel that there will be a lot more disclosure required and I do feel there will be a lot more enforcement of the existing and new law. This is not to say that I will settle for this kind of compromise, but it’s a first step of a long journey until we outlaw the Dealer Fee.

But we have to keep the pressure on because in Tallahassee (just like Washington D.C.), “the squeaky wheel gets the oil”. Bills have a way of dying a natural death before they can become law. It’s a long, rocky road between the Senate Commerce Committee and Governor Crist’s office. I will continue to push, with your vital support, for the outlawing of the Dealer Fee, this license to steal from Florida’s car buyers.

Please call [and encourage others to call] our “NO DEALER FEE HOTLINE”, 1-800 909-9879 and visit our Web page www.NoDealerFee.com.

Below are my comments to Senator Alex Diaz de la Portilla and his committee.

Comments to Florida Senate Commerce Committee
Tuesday, March 4, 2:30 PM, Tallahassee


My name is Earl Stewart. I was born in Ft. Lauderdale, FL in 1940. I graduated from PBHS in 1958, University of Florida in 1963, BS Physics, and Purdue University, 1964, MSIA. I worked for Westinghouse for four years as an Electronics Engineer. I jointed my father in business in 1968. He founded Stewart Pontiac in West Palm Beach in 1937. I’ve been primarily in the retail automobile business for the last 40 years. I’m currently the sole owner and general manager of Earl Stewart Toyota in North Palm Beach and have been in the same location for the last 33 years. My three sons are employed in my business and my wife, Nancy, is also involved part time.

I’ve been a member of the SFADA and the FADA for my entire career and have serviced as a director for both organizations and on the Executive committee of FADA. I am currently chairman of the board of FLADCO, a Florida dealer-owned cooperative buying company.

(1) What’s bad about the dealer fee?

(a) In most cases the customer either does not know he paid the dealer fee or believes it is some kind of federal, state, or local “official fee”.
(b) In practice dealers do not include the dealer fee in the price of the car that is quoted to the customer. It isn’t included in Internet quotes and also not in verbal quotes over the telephone or in person.
(c) Although Florida law says that the dealer fee must be included in the advertised price, this is not happening in most cases. In the first place, there is virtually no enforcement of this part of the law. I’ve shown Senators Jeff Atwater and Alex Diaz de la Portilla copies of auto classified ads flagrantly violating this part of the law addressing dealer fees. Those dealers who do technically comply, get around it in practice by what I call “the old stock number trick” [Explain].
(d) There is no cap on the dealer fee and each dealer chooses whatever fee he likes. There is no one name for the fee. The Senate Investigative Report discovered 22 names and they only scratched the surface.

(2) Why the existing Dealer Fee Law is a Bad Law?

(a) It is written in such a way that dealers’ legal counsel have advised them “If you charge one customer a dealer fee, you must charge all customers the same fee”. Now, when the rare very astute consumer questions the legitimacy of the dealer fee, the sales person is instructed to reply, “All dealers charge this fee” and “We are required by law to charge everybody this same fee”.
(b) There is a provision that a “group ad” does not have to include the dealer fee in the advertised price. The argument for the exception to this part of the law on advertised prices is that it would be “too confusing” to list all of the different prices resulting from different dealer fees by different dealers.
(c) The law does not address ads which show discounts from MSRP instead of an actual price. Because the MSRP is standardized, a discount from MSRP is no different than a quoted price.
(d) The law allows dealers to advertise just one car at the advertised price. Dealers don’t disclose this by using an obscure alpha numeric code, usually included along with all of the listed options and accessories. This, unknown to the reader of the ad, is a “stock number” which means that the dealer is advertising only this one car at the price which includes the dealer fee. A typical stock number looks like this…#A23554B. The ads often also say, “12 more models available at this price”. But the other models are not the advertised car and now the dealer can add the dealer fee on top of the advertised price. Car salesmen are not paid a commission on this advertised car. Car salesmen work on 100% commission and have no incentive to sell an advertised car. In fact, their incentive is to be sure that you buy a different car. The odds of a customer actually being able to buy an advertised car are “slim and none”.

(3) What is my true motivation for opposing the Dealer Fee?

(a) I strongly believe that I’m doing the right thing. The dealer fee is a profit to the dealer…pure and simple. The law alludes to it covering certain costs of the dealer and requires that the dealer so state next to his dealer fee, but this is fallacious. When a customer pays me a sum to cover one of my expenses, she is increasing my profits. Saying that a customer should pay for a dealers cost of paperwork or preparation of the car is no different than saying the customer should pay the salesman’s commission, the dealer’s advertising, or part of his power bill. Any business’s overhead costs should be priced into the price of its product…not passed along to their customer separately from the pricing of their product.
(b) Because all car dealers have different dealer fees and some range up to at least $1,000, we cannot compete fairly on a level playing field. I am unable to advertise prices because those dealers who have dealer fees can understate their real price, knowing that they can add their dealer fee on at the last minute. For example, a Toyota Yaris with an MSRP of $15,145 has a profit to the dealer of only $584. Al Hendrickson Toyota in Coconut Creek, FL has a $999 dealer fee. This dealer can advertise a new Yaris for below his cost and make better profit than I can if I advertised and sold the car at MSRP.
(c) Our customers should have the right to shop and compare prices of cars just like they do TV’s, refrigerators, computers, or any other product. The Monroney label made a standardized MSRP the law for new car manufacturers over 50 years ago. The purpose for this law was to give the consumer the ability to accurately compare prices between different car dealers. If a car buyer is considering a Chevrolet Impala with a specific MSRP, he can shop for the dealer who gives him the biggest discount. Now, with virtually every dealer adding a dealer fee of a different amount, the intent of this federal law is circumvented.
(d) I would be less than honest if I didn’t confess that I’m benefiting from the positive publicity I get by opposing the dealer fee. If I’m not successful, I’m still a winner because the car buyers of Florida do agree with me. Any dealer could achieve the same status as I by unilaterally giving up the dealer fee.
(e) Car dealers rank among the most vilified businesses and professions. Along with lawyers and politicians, we are commonly ridiculed by comedians like Jay Leno and David Letterman. My sons will take over my business one day and I have four grandchildren who may continue it even further. My oldest son, Earl III, told me something a few years ago that I will never forget. He said that he enjoyed working for me and he enjoyed his job very much but what was most important to him was that he was proud to tell his son, Jake, my grandson, what he did for a living.

13 comments:

  1. Have you ever heard Earl Stewart speak in person. He sounds like he has a mental issue. Is he retartded or is it from years of inbreeding? Enquiring minds would like to know.

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  2. Joan Bedford, R.N.March 13, 2008 1:43 AM

    As a caregiver to developmentally challenged children, I would like to point out the cruel and insensitive remarks by the previous commentator. It is typical of a bully-type mentality and has no place in the enlightened time in which we live. It is a shame that someone who feels so threatened by positive actions by this maverick car dealer would resort to exploiting outdated characterizations of the suffering countless children endure to make his point.

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  3. Ms. Bedford (if you are really Ms. Bedford and not a plant of Earl Stewart),

    No one is calling developmentally challenged persons retards except yourself. See as soon as I said retarded you automatically assumed that I was talking about developmentally challenged persons. I was talking about Earl Stewart. As far as your maverick comment; Mr. Earl Stewart is not a maverick he is a maggot sucking on the flesh of innocent customers. The sooner everyone can see it, the better off. If he ever wins this dealer fee issue, he won't, but if he ever does you will not be able to negotiate a price on a new car. YOU WILL BE AT THE MERCY OF EARL STEWART. NOT GOOD!!!!!!!!!!!!

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  4. Mr. Stewart,

    You made a comment that you were one of only two dealerships in the district that has not been written up by Toyota for infractions on the Toyota survey system. You made an implication that all the other dealerships were cheating on the scores and they got in trouble for this. Well sir, this is a lie. The most of the other dealerships were warned by Toyota between early last year and the year before on the practices of getting good survey scores. Since then Toyota has relaxed these restrictions. So what a dealer would have been in trouble for then is not neccessarily so today. I applaud your effort on trying to bash other dealerships to make yours look better, but I have to tell you that makes you look real shady. The main problem is that the customers can't see it. Your service department is yellow for the year and red this month. You will be red by months end and have a chance of being red for the year. I know you will say that everyone is cheating and you are not, but how can you be so sure? Why are you the only dealer that doesn't cheat? Why can't other dealers get SPSI without cheating? You don't even know if your service advisor are cheating or not. You have some real dirt bags out there in your drive. They cheat, but are still to stupid to get the customer to give you good SPSI. The main reason is the way that customers are treated at your dealership. Even if you offer them goods in return for a good survey they still can't do it because they are so upset with your service department.

    I would like to ask you another question. If you are on such a high horse and are so customer friendly then why do you offer customers items not recommended by Toyota?

    I know you will answer these questions like you always do. You will make something up about how great you are compared to everyone else and how great your dealership is or all the good things you do in the world. Well let me tell you one thing. There are many dealerships in this area that take care of the customers and keep them coming back. You are not some wonder dealer stepping out of the dark to save the industry. That started years ago with new and younger dealers wanting to get away from all the bad press your generation has given the car industry.

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  5. People get annoyed with you because of this high and mighty attitude that you have. How great your dealership is versus the rest. You are dead last in customer satisfaction for service for the month and for the year. Why is this? I thought you were the great Earl Stewart with the red phone and every customer leaves happy and never gets a bad deal. Guess not huh. It seems to me that you really are human and you hire people that really do the wrong thing by the customer. Oh yeah, you don't cheat on the survey scores like everyone else in the world does, right? This must be it. Poor Earl Stewart. He doesn't play on a level field because dealers charge fees and cheat on survey scores. Poor Earl Stewart, the only good dealer. What a joke. I hope you tell the people on your blog, your radio show and your library tour that you really are a joke and that your service department really is as shady as I have been telling your readers for months now.

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  6. Hey Earl, Great job on the 85 in SPSI for service. You must feel great being last in customer satifaction. Got to go, I have to take care of customers. Probally some from your store seeing that your service department is doing a great job running them off.

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  7. I am an Earl Stewart employee and I have to say I am laughing my ass off reading these GMs from other stores write this stuff!!! It's not like anyone reading this web page has any idea or care about what their talking about. Well go ahead anyway and get it off your chest!!! as far as earl goes - "high and mighty" i don't know about that. A little crazy - maybe - but definitely a TRUE BELIEVER. as far as the dealership goes - we are definitely better than most and CLEARLY head and shoulders above these other clowns on So FLA!!! EST ROCKS!!!!!

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  8. I was talking to Earl, not the people on the block you moron. I can tell you work at Earl Stewart Toyota. By the way "EST Rocks", what are you in high school?

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  9. Why you are a quite a fan of this web site! You must have made it one of your "favorites"

    Yes EST Rocks and it is totally awesome!!!

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  10. Rock on, man. You are knarly. EST is number one.

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  11. So the service managers at the other Toyota dealer are a a little miffed that all his good people have come over to the 'light side of the road.' yeah, you know who you are....you lost all of your good writers. You should have treated them better.

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  12. O.K. Here is the TRUTH for those of you that really want to hear it.
    #1. I have never met Mr. Stewart or purchased anything from his dealership so I have absolutely no axe to grind, but although now retired, I owned several new car dealerships for over twenty years.
    #2. disregarding service or whatever, what Mr. Stewart is saying about dealer fees is 110% correct & truthful; most customers will bargain like crazy during the negotiating process only to relax & let their guard down immediately after a price is ageed upon. Then they allow themselves to get absolutely skinned with these kinds of "fees" & other add-ons when they walk into the finance office. The business is so competitive that virtually the only profit made on some sales is made after the sale in the finance office. that is the reason a lot of dealers want to be allowed to charge this "fee" just to get into the customer's pocket. This is the old plaid jacket slick sales guy, you saw in the old movie "Used Cars", ...not the way today & tomorrow's sucessful dealerships will be run. There will assuredly always be problems with any business that involves "horse trading" your old whatever for a new whatever, especially one with a thousand moving parts that you will probably own for several years. But, I think the fact that through thick & thin for over fifty years Steward Toyota is still here when the average life of a small business is ten years, means they are probably doing things pretty well.

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  13. Joan Bedford, R.N. said...March 29, 2008 3:30 PM

    To the insensitive commentor: you cannot justify using a derogatory remark like that. Just because you directed it at Earl Stuart doesn't lessen the hurt that term itself generates. The same can be said of racially inflammatory terms. You are a mean person. Why don't you go kick a dog or something and make yourself feel better?

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