Monday, July 07, 2008

BAIT & SWITCH ADVERTISING

(READ THE FINE PRINT)

All car dealers pay the manufacturers the same prices for their new cars. Dealers will lead you to believe that volume dealers pay less, but this is not true. So, when a car dealer advertises a price for a new car in the newspaper, he has no price advantage over his competition.

Virtually all of the prices for new cars you see advertised in the newspaper are so low that it would be impossible for a dealer to remain in business if he sold more than a very few cars at that price. The reason for this is that, if a dealer advertised realistic prices with a reasonable profit built in, another dealer would advertise a lower price. The dealer who advertised a realistic price is actually helping his competitor sell a car.

Most of the new car prices advertised in the newspaper are below the dealers actual cost. He protects himself by selling very few at this price and counting this loss as a cost of advertising. Next to an advertised car you will see some letters and numbers like, #5632A. That is the “stock number” of the car being advertised. This is all that the dealer does to tell you he has just one at this price. The chances are that if you are not the first person in the dealership on the morning of the ad, this car will be gone.

Look for these two fine print disclosures at the bottom of the ad: (1) Price good on date of publication only. (2) Price good with copy of this ad only. These are just two more ways the dealer can avoid selling you the car at the advertised price.

If you read my last column, you understand about “dealer fees”. These fees are additional dealer profits ranging from $500 to almost $1,000 that are added to the agreed upon price of the car by most dealers in Florida. Florida law requires that this dealer fee be included in the advertised price. When the salesman tells you the advertised car has been sold but he has another one “exactly like it”, he can legally add back on that dealer fee.

As you can guess, the salesman’s commission on an advertised car is either zero or very small. Having a very small incentive to sell an advertised car, he will most likely encourage you to buy any other car.

My recommendation to you is to ignore advertised new car prices. If you must respond to an ad car, call the dealership first and ask if the car is still available. If the answer is no, you have saved yourself a lot of time and aggravation. If the answer is yes, ask if they will hold the car for you. If you have to, offer to give them your credit card for a deposit to hold the car. If they won’t hold the car, save yourself the wasted trip.

The only way to get the best price on a new car is by getting competitive bids from at least 3 car dealers for the exact same year, make, model, and accessorized car with the identical MSRP. You can do this on the Internet, by phone, or in person. Use Consumer Reports magazine, the Internet (www.edmunds.com and www.kbb.com are two excellent free sources of information), or even your local library.

13 comments:

  1. Earl Stewart - Michael Lloyd,

    About Bait and Switch Advertising:

    I requested I Price Quote for 2009 CAMRY LE with Leather and Sunroof. Your Price Response was for 2009 CAMRY LE with Manual Transmission, which is NOT available in your lot, I found out later is also NOT available in the Entire FIVE STATES OF TOYOTA SOUTHEAST REGION.

    It does not take much to understand that you wanted to show me an ATTRACTIVE PRICE to get me in the door: Just to BAIT and SWITCH me.

    Your Email is full of warnings about Dealer Fees, Documentation Fees, Fine Printings and Disclosures. Funny how, in your quote you have your own disclosure: This configuration is not regularly stocked, please ask for details.

    I requested another quote for the 2009 CAMRY LE. At time, I had to request the vehicle equipped with Automatic Transmission or I would have gotten the same Bait and Switch Price Quote for a hypothetical car you don’t have for sell.

    Again, I received another Email filled of warnings about Dealer Fees charges imposed by your competitors. You even mentioned names such as Palm Beach Toyota and Royal Palm Toyota disclosing their Dealer Fees and Documentation Fees, calling them Bogus Fees.

    You are playing the Buyer’s Advocate in order to convince me that you are the best. You would be better off playing your real role in the deal, the SELLER, better yet Devil’s Advocate!

    THIS IS NOT MY FIRST RODEO. I have received quotes from four Toyota Dealers in black and white. I called every single one to find out their Dealer Fee and/or Documentation Fees. I did add up these Fees to their Prices. Guess what?

    YOUR PRICE WAS THE HIGHEST PRICE QUOTE in Palm Beach County. If these dealers buy cars for the same price as you say, why is your price the highest in Palm Beach County? Is it fair to say: EARL STEWART TOYOTA has its OWN BOGUS FEE BUILT IN THE PRICE?

    All I can say is: IT WAS A PLEASURE NOT DOING BUSINESS WITH YOU!

    ReplyDelete
  2. DEAR ANONYMOUS,

    THANKS FOR YOUR COMMENTS AND ALLOWING ME THE OPPORTUNITY TO RESPOND. I WILL RESPOND IN ALL CAPS TO DIFFERENTIATE MY RESPONSE FROM YOUR POSTING.


    Earl Stewart - Michael Lloyd,

    About Bait and Switch Advertising:

    I requested I Price Quote for 2009 CAMRY LE with Leather and Sunroof. Your Price Response was for 2009 CAMRY LE with Manual Transmission, which is NOT available in your lot, I found out later is also NOT available in the Entire FIVE STATES OF TOYOTA SOUTHEAST REGION.

    It does not take much to understand that you wanted to show me an ATTRACTIVE PRICE to get me in the door: Just to BAIT and SWITCH me.

    Your Email is full of warnings about Dealer Fees, Documentation Fees, Fine Printings and Disclosures. Funny how, in your quote you have your own disclosure: This configuration is not regularly stocked, please ask for details.

    YOU REALLY ANSWERED YOUR OWN QUESTION. I FULLY DISCLOSE IN MY PRICE QUOTES [IN FULL SIZED TYPE...NOT FINE PRINT] THAT SOME EQUIPMENT CONFIGURATIONS ARE NOT READILY AVAILABLE IN THE SOUTHEAST USA. SOUTHEAST TOYOTA IS A PRIVATE OWNED TOYOTA DISTRIBUTORSHIP WHICH ORDERS CARS FROM JAPAN THAT EXCLUDE A FEW EQUIPMENT CONFIGURATIONS. BECAUSE WE SELL CARS OVER THE INTERNET OUTSIDE OF THE SOUTHEAST, WE QUOTE PRICES ON ALL EQUIPMENT CONFIGURATIONS AND DISCLOSE THAT IT MAY NOT BE AVAILABLE IN THE SOUTHEAST. IF A CUSTOMER WERE WILLING TO WAIT A LONG TIME, WE COULD OBTAIN ANY EQUIPMENT CONFIGURATION MADE BY TOYOTA. IF WE WANTED TO "BAIT AND SWITCH" AS YOU SAY, WE WOULD NOT DISCLOSE IN OUR PRICE QUOTE THAT THIS CONFIGURATION WAS NOT AVAILABLE.

    I requested another quote for the 2009 CAMRY LE. At time, I had to request the vehicle equipped with Automatic Transmission or I would have gotten the same Bait and Switch Price Quote for a hypothetical car you don’t have for sell.

    Again, I received another Email filled of warnings about Dealer Fees charges imposed by your competitors. You even mentioned names such as Palm Beach Toyota and Royal Palm Toyota disclosing their Dealer Fees and Documentation Fees, calling them Bogus Fees.

    You are playing the Buyer’s Advocate in order to convince me that you are the best. You would be better off playing your real role in the deal, the SELLER, better yet Devil’s Advocate!

    THIS IS NOT MY FIRST RODEO. I have received quotes from four Toyota Dealers in black and white. I called every single one to find out their Dealer Fee and/or Documentation Fees. I did add up these Fees to their Prices. Guess what?

    YOUR PRICE WAS THE HIGHEST PRICE QUOTE in Palm Beach County. If these dealers buy cars for the same price as you say, why is your price the highest in Palm Beach County? Is it fair to say: EARL STEWART TOYOTA has its OWN BOGUS FEE BUILT IN THE PRICE?

    All I can say is: IT WAS A PLEASURE NOT DOING BUSINESS WITH YOU!

    I DON'T BELIEVE THAT YOU ARE BEING HONEST ABOUT MY PRICE BEING HIGHER THAN ALL OF THE OTHER DEALERS. I THINK YOU ARE A SALESMAN OR SALES MANAGER FROM ANOTHER TOYOTA DEALERSHIP TRYING TO MAKE ME LOOK BAD. IF MY PRICES WERE HIGHER THAN ALL OF THE OTHER DEALERSHIPS IN PALM BEACH COUNTY, WHY AM I SELLING FAR MORE CARS THAN ALL OF THEM...DELRAY TOYOTA, PALM BEACH TOYOTA, AND ROYAL PALM TOYOTA? FURTHERMORE, I SHOP THE PRICES AT ALL OF MY COMPETITION REGULARLY AND ALWAYS KEEP MY PRICES LOWER. BUT, LET'S ASSUME FOR THE PURPOSES OF DISCUSSION THAT Y0U ARE TELLING THE TRUTH. OK, YOU ASKED FOR MY BEST PRICE ON A CAMRY, I GAVE IT TO YOU. YOU GOT PRICES FROM THE OTHER THREE DEALERS, CALLED THEM TO FIND OUT THAT ROYAL PALM TOYOTA AND PALM BEACH TOYOTA ADD $899.50 TO THEIR INTERNET QUOTED PRICE AND THAT DELRAY ADDED $749 TO THEIR'S. THEN YOU SAY THEIR PRICES WERE STILL LOWER THAN MINE, SO YOU BOUGHT A CAR FROM ONE OF THEM. THAT'S "ALMOST" THE WAY THE FREE MARKETPLACE IS SUPPOSED TO WORK. YOU SHOP AND COMPARE PRICES AND CHOOSE THE LOWEST. I SAY "ALMOST" BECAUSE YOU HAD TO CALL THE OTHER DEALERS TO FIND OUT WHAT THEIR HIDDEN FEES WERE. YOU MAY NOT HAVE KNOWN TO DO THAT HAD I NOT WARNED YOU IN MY PRICE QUOTE.

    PROVE ME WRONG IN MY ALLEGATION THAT YOU ARE LYING ABOUT MY PRICE BEING HIGHEST. POST ON THIS BLOG THE PRICES YOU GOT FROM MY DEALERSHIP, PALM BEACH TOYOTA, ROYAL PALM TOYOTA, AND DELRAY TOYOTA. THAT WAY READERS OF THIS BLOG CAN CHECK THE HONESTY OF YOUR STATEMENT BY REQUESTING PRICE QUOTES FROM ALL FOUR DEALERSHIPS TO VERIFY YOUR NUMBERS. IF YOU BOUGHT A NEW 2009 CAMRY, HOW ABOUT TELLING THE READERS OF THIS BLOG THE VIN AND TAG NUMBER FROM YOUR NEW CAR? YOU CAN'T TO THIS BECAUSE YOU'RE LYING.

    I'LL BET YOU $1,000 DONATED TO YOUR FAVORITE CHARITY THAT YOU CAN'T PUT YOUR MONEY WHERE YOUR MOUTH IS.

    ReplyDelete
  3. Listen, Earl will make a fight out of everything you say. He is never wrong and will lie to prove it. I just don't understand how so many people get sucked into his media. Earl will debate you on anything you say because he has the power to choose what customers read on this blog and what they listen to on his library tours and radio show. He has the power of the media. He is making up for years of disservice to the community. Don't take my word for it. Call the city of Lake Park and see how much they like Earl. You'll see.

    ReplyDelete
  4. Dear Anonymous,

    OK, you've exposed me!

    I confess that the reason I'm outselling all of the other Toyota dealers in this market [top 3% in the USA], am regularly invited to speak as a consumer advocate before public and private organizations, have the most popular local radio talk show in this maket, and am regularly featured in a very positive light by the media is because of a "VAST RIGHT-WING CONSPIRACY" orchestrated by me.

    The thousands of Toyota buyers who have chosen me over my competition are really stupid people and you are the only one smart enough to figure this out. Please don't tell anybody else!

    ReplyDelete
  5. PRIUS DEAL

    Dealers are getting on average 6 Prius/month. You are selling the PRIUS for MSRP / NO dealer fee, this is great!

    I’ve heard that you are taking deposits, building up a waiting list over 200 customers!

    Considering 200 customers divided by 6 or 8 Prius per month inventory, does it mean I have to wait over 2 years before my dream come true?

    What if I am looking for a specific trim level, package, exterior/interior color, does it mean I have to wait several years before getting my car?

    What If I die before my turn comes up, can I assign a beneficiary to get my deposit back?

    Do you offer some sort of life insurance protection plan?


    Whatever the average deposit is times 200 customers, adds up a good chunk of change. What’s wrong with that?

    What if I pay everything upfront, do I get to go up on the list?


    THIS IS A GREAT DEAL. PLEASE, SIGN ME UP FOR THIS POTLUCK DEAL!

    Life is what happens to you while you're busy making plans for the future. John Lennon

    ReplyDelete
  6. Dear Anonymous Prius prospect,

    All Toyota dealers are not allocated the same number of Priuses per month by Toyota. Your assumption that my dealership and other Toyota dealerships are receiving 6-7 Priuses per month is incorrect.

    Toyota allocates every model based on a mathematical formula known as "turn and earn". This simply means that the faster a particular dealer sells specific models from those in his inventory, the faster Toyota ships him replacement models. Therefore the dealer who sells a model faster over time receives more and more of that model.

    Because my dealership established the policy of not marking Priuses up over MSRP back in 2001 when the Prius was first introduced, we have steadily earned a bigger portion of Toyota Prius production than almost any other Toyota dealership. We are shipped and sell more Priuses and other hybrid Toyotas than all dealers in the USA except California. Virtually all other dealers mark their Priuses up over MSRP by thousands of dollars...plus a dealer fee.

    You are right that many dealers receive only 6 or 7 Priuses per month, but my dealership receives and sells, on the average, over 50 Priuses per month.

    Your wait for a new Prius with my dealership would be 4-6 months depending on the color, accessories, etc that you prefer. We require a $2,500 deposit which is refundable if you change your mind. The deposit is required to separate the serious buyers from those who would just "clutter" the waiting list.

    We don't move anyone to the "top of the list", no mater who they are or how much money they offer to pay. We have had some people suggest this, but this is not the way we do business.

    ReplyDelete
  7. Earl Stewart…

    Backing up the posting ...

    You could not handle the truth posted in your blog yesterday and you immediately erased my posting twice.

    I have your Email offer in writing and I would like to remind you:

    About your Bait offer for a vehicle not available for sale within the entire Southeast Region in order to Bait and Switch me.

    I complained about your offer and this was your answer I received in writing from your dealership: yeah for some reason our quick quote response system usually sends a quote based on the most basic way you can get a vehicle equipped – Followed by your posted answer: SOUTHEAST TOYOTA IS A PRIVATE OWNED TOYOTA DISTRIBUTORSHIP WHICH ORDERS CARS FROM JAPAN THAT EXCLUDE A FEW EQUIPMENT CONFIGURATIONS. BECAUSE WE SELL CARS OVER THE INTERNET OUTSIDE OF THE SOUTHEAST, WE QUOTE PRICES ON ALL EQUIPMENT CONFIGURATIONS AND DISCLOSE THAT IT MAY NOT BE AVAILABLE IN THE SOUTHEAST. IF A CUSTOMER WERE WILLING TO WAIT A LONG TIME, WE COULD OBTAIN ANY EQUIPMENT CONFIGURATION MADE BY TOYOTA.

    Both statements: Camry LE is manufactured in America. Is clear your attempt of Bait and Switch your customers.

    CHAPTER I--FEDERAL TRADE COMMISSION
    SUBCHAPTER B--GUIDES AND TRADE PRACTICE RULES
    § 238.0 Bait advertising defined.
    Bait advertising is an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser. The primary aim of a bait advertisement is to obtain leads as to persons interested in buying merchandise of the type so advertised. No act or practice should be engaged in by an advertiser to discourage the purchase of the advertised merchandise as part of a bait scheme to sell other merchandise.

    About your False and Misleading Statement: The camry le doesn't come with leather as an option but we can have the factory leather installed which i have included in the price quote.

    My response to your Email: This is clearly unfair and deceptive misrepresentation of the product you are trying to sell. You CANNOT install FACTORY LEATHER, unless you ship the vehicle back to the factory plant to install the leather, which you cannot do it. Why are you offering me something you know you will not do it?

    Authority: 15 U.S.C. 45, 46.
    Source: 61 FR 51583, Oct. 3, 1996, unless otherwise noted.
    § 24.0 Scope and purpose of guides.
    It is unfair or deceptive to misrepresent, directly or by implication, the kind, grade, quality, quantity, material content, thickness, finish, serviceability, durability, price, origin, size, weight, ease of cleaning, construction, manufacture, processing, distribution, or any other material aspect of an industry product.

    ReplyDelete
  8. Dear Anonymous,

    I exposed you for what you are. Your posting are clearly without merit or facts and intended solely to falsely impune my company and me.

    If you want a dialog with me, you will have to come out from under your rock and face me like a man. You can always reach me by phone or in person. I have nothing to hide but you obviously do.

    ReplyDelete
  9. Earl Stewart,

    I am all confused now. Your propaganda says you do not gauge prices for the Toyota Prius. I am looking for a Toyota Prius model 1224 package 2 with leather. I found a used one in your website - 2007 Prius package 2 with leather for $29,300.00.

    The MSRP for a brand new 2008 Prius package 2 equipped with leather, mats/trunk mats and Toyoguard Protection Plus is 26,722.00 according to www.buyatoyota.com website.

    If it is true that you don’t charge over MSRP, could you explain how come you are asking $29,300.00 for a USED 2007 Prius package 2 with leather, 17679 miles, stock number P1901?

    You are asking almost $3,000.00 over the MSRP of a Brand New 2008 Prius with the same equipment. Is this a mistake or a joke?

    Please, don’t tell me this price is negotiable, because your intention to catch somebody sleeping so you could profit thousands of dollars more than a brand new Prius will be undisputable.

    Plus, if this is the case you have no bearings to criticize any other Toyota dealer.

    ReplyDelete
  10. Dear "All Confused-Now Anonymous",

    Thanks for giving me a chance to reiterate my dealership's policy against price gouging. All other Toyota dealerships are marking up new Priuses OVER MSRP. The Toyota dealership in Stuart, FL...John Pierson's Toyota of Stuart, is marking new Priuses up over sticker by $4,995 and calling it a "Limited Production Adjustment". But that's not enough...then he marks them up another $399 for his dealer fee!

    At Earl Stewart Toyota, we sell all of our Priuses for the manufacturer's suggested retail price plus tax and tag only.

    The 2007 USED Prius you referred to is not listed on my Web site. It's listed on the auction site, Ebay. Our policy on pricing used cars is to mark them up a fair amount above what the wholesale market price is. Because of the high demand and low supply of fuel efficent cars, especially Priuses, the wholesale prices have climbed dramatcally.

    $29,300 is a fair price for a used Prius that you can take delivery on TODAY. The waiting list for a nw Prius is about 6 months. My dealership sold a used 2007 at the West Palm Beach Auto Auction last Thursday for $27,545. This was a Prius from my rental fleet with fewer options and accessories than the one I have listed on Ebay. Even if they were equipped the same, a $1,755 profit on a used Prius is not unreasonable.

    All other Toyota dealers in South Florida are making 2, 3, and 4 times that much selling new ones.

    ReplyDelete
  11. What a scammer you are Earl. you really think the public is totally brain dead, don't you?

    ReplyDelete
  12. Earl Stewart,

    Let’s see what you had to say:

    The first paragraph of your response highlights your daily accusations to other Toyota Dealers. Your punch line is designed to place yourself beyond suspicion to set you free as bird to practice your usual trick business.

    The second paragraph you emphasize the 07 Used Prius is not in your website but on Ebay trying to screen the following truth: The high miles 07 Prius is Earl Stewart’s vehicle for sell at $29,300.00.

    You had the guts to state $1,750.00profit on this vehicle.

    This is a 5,000 profit after all repair/reconditioning and certification cost and yet you call it a fair markup over wholesale price? Do you think people are stupid or what? BS baffles brains!

    You claim you don’t markup the new Prius, according to your own words:

    1 - To get a new Prius takes about 6 months.

    2 – Earl Stewart Toyota requires a minimum of $2,500.00 deposit to be in the waiting list.

    Now, as per inside source you have over 200 people in the waiting list for the Prius. 200 people times $2,500 is half million dollars in your bank averaging 6 months of free interest! How do you call this behind the scenes type of markup?

    Your predatory conduct attacking the image of other Toyota dealers is disgusting, Machiavellian, devious … don’t you have a mirror?

    ReplyDelete
  13. Dear "even more confused now", Anonymous,

    I can't tell you how much I appreciate you affording me this forum for explaining how my dealership sells more Priuses and other hybrids than any other in the USA [except California].

    I noticed in your last posting that you did not refute the fact that I sell new Priuses for thousands of dollars less than virtually all other Toyota dealers but you did mention that Prius buyers can wait up to 6 months for their Prius to arrive. The reason I have such a large waiting list is because of the HUGE savings Prius buyers get when they buy from Earl Stewart Toyota.

    You also mentioned the $2,500 deposit required. This is true and the purpose is to ensure that all buyers on the waiting list are serious buyers. By culling out those that are not, those who are have a realistic understanding of how long a wait there is. By the way, you "forgot" to mention that the customer's deposit is 100% refundable at any time for any reason.

    Your comment about all the interest I'm earning on a customer's deposit is laughable and, once again, affords me an opportunity to make my point to the readers of this blog. At today's money market rates, the interest I earn on a $2,500 deposit is about $6.00 a month. Assuming a 6 month wait for a Prius, that equals $36. Not let's compare that to the $4,995 [Limited Production Adjustment] markup over MSRP + the $399 Dealer Fee price gouging you get when you buy your new Prius from John Pierson's Toyota of Stuart. Which dealer to you think an informed buyer would choose?

    Are you even more confused now? Facts seem to have that effect on you.

    Please write another posting...my responses are are the best form of advertising I can do...and it's a lot less expensive than TV!

    ReplyDelete

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