Sign the Petition!

Monday, April 28, 2008

WHAT MAKES A CAR SALESMAN TICK

A car salesman calling himself “Alex S” posted a comment on my Blog recently. You can read his comment and my response by clicking on my Blog, http://www.earlstewartoncars.com/ and going to my article, “The No-Dealer-Fee “Fat Lady” Hasn’t Sung Yet.”

I’ve reproduced his posting and my reply below because the comments of this car salesman are very revealing of what goes on inside the heads of many car sales people today.

I often am accused of calling car dealers and car sales people “crooks” or just plain “evil”. I certainly don’t mean to. I don’t believe that most people in the retail auto business are dishonest any more than I believe that about lawyers or politicians. Of course, there are a few that are just plain bad.

“Amoral” is a better way to describe the mindset of those in the retail car business who cause the huge problem we have today with the way car buyers are treated. A person who is amoral is one who is not admitting of moral distinctions or judgments; neither moral nor immoral. When you read the words of “Alex S” below you can see that he does not believe what he does to sell a car is deceptive, immoral or unethical. I’m sure you know others like Alex. If somebody challenges their behavior, it’s never their fault. In Alex’s case, he blames me and he blames and his customers for the negativity surrounding car dealers and car salesmen.

(my comments in caps)

Earl Stewart:THANKS VERY MUCH FOR YOUR POSTING. PLEASE EXCUSE THE "ALL CAPS" BUT THIS WILL DIFFERENTIATE YOUR WORDS FROM MINE. I'VE CHOSEN TO ADDRESS YOUR POSTING PARAGRAPH BY PARAGRAPH. FIRST, LET ME CONGRATULATE YOU FOR HAVING THE COURAGE, NOT ONLY TO RESPOND TO MY BLOG, BUT NOT TO CHOOSE TO BE ANONYMOUS. YOUR POSTING IS VERY INTERESTING BECAUSE IT SPEAKS FOR MOST FLORIDA CAR DEALERS. AS YOU POINT OUT, YOU AND MOST OF THOSE EMPLOYED IN THE RETAIL AUTO BUSINESS ARE NOT "CROOKS". A MINORITY ARE, BUT THE MAJORITY ARE SIMPLY ASSESSING THE DEALER FEE BECAUSE "THAT'S THE WAY ITS ALWAYS BEEN DONE" AND NOT TAKING TIME TO THINK OUT WHY IT'S BAD FOR THE CONSUMER.

Alex S: I work at a dealership in sawgrass(i wont mention the name because i dont have the authority to). Over the past few days I have noticed the quantity of my complaints over dealer fees have gone up, so I investigated and found your site. I respect what you are doing and can completely understand what it is that you are doing. I always disclose the dealer fees to my clients during me negotiations, i don't say plus fees i tell them plus dealer fees of XXX.

Earl Stewart: I'M VERY GLAD TO HEAR THAT MY ANTI-DEALER FEE EFFORTS ARE SPREADING AROUND THE STATE. I'M HAPPY TO HEAR THAT YOU TOTALLY DISCLOSE THE DEALER FEE TO ALL OF YOUR CUSTOMERS. UNFORTUNATELY, MOST SALES PEOPLE DO NOT. VIRTUALLY ALL SALES PEOPLE DO NOT USE THE COMPLETE TERM "DEALER FEE" [OR WHATEVER THEIR PARTICULAR DEALERSHIP CHOOSES TO CALL IT], BUT SIMPLY SAY "FEES". THIS LEADS THE CUSTOMER TO BELIEVE IT IS AN "OFFICAL FEE", FEDERAL, STATE, OR LOCAL.

Alex S: What it boils down to for me is that "profit" is not a dirty word. Dealer fees are an essential part of profit. Car sales are all a game, the customers goal is to spend as little as possible where as my goal is to make as much as possible. If both parties can come to a happy agreement, then it is all for the better. I read your previous article and people feel they are being robbed, that is simply not the point, No salesman has ever held a customer down and made them sign, if you dont like the way we do business then leave.

Earl Stewart: I CAN'T TELL YOU HOW OFTEN I'VE HEARD OTHER DEALERS USE THE SAME PHRASE, "PROFIT IS NOT A DIRTY WORD". THIS PHRASE IS A STRAW DOG JUST LIKE "WE DON'T WANT GOVERNMENT TO TELL US HOW TO PRICE OUR CARS". MY DEALERSHIP IS VERY PROFITABLE AND I DON'T CHARGE DEALER FEES. I'M IN BUSINESS TO MAKE A PROFIT AND I WOULDN'T BE IF I THOUGHT "PROFIT WAS A DIRTY WORD". I'M NOT CRAZY ABOUT YOUR DESCRIPTION OF "ALL CAR SALES BEING A GAME". IT'S THE 2ND BIGGEST PURCHASE A CUSTOMER MAKES IN HIS LIFE. IF IT'S A GAME, IT'S A VERY SERIOUS AND IMPORTANT ONE. USING YOUR ANALOGY, I ONLY WANT BOTH TEAMS TO BE FULLY INFORMED OF THE RULES OF THE GAME...HENCE FULL DISCLOSURE OF THE PRICE OF THE CAR WHICH SHOULD INCLUDE EVERYTHING EXCEPT TAX AND TAG. THIS FULL DISCLOSURE SHOULD NOT COME "AFTER THE FACT" BUT FROM THE FIRST TIME A PRICE IS QUOTED IN ADVERTISING, VERBALLY, ON A WINDSHIELD OR SIGN, OR OVER THE INTERNET. YOU SAY "NO ONE HAS EVER HELD A CUSTOMER DOWN AND MADE HIM SIGN". MAYBE NOT LITERALLY, BUT I KNOW OF LOTS OF CUSTOMERS THAT WERE FIGURATIVELY "HELD DOWN". I'VE TALKED WITH ELDERLY WIDOWS IN THEIR EIGHTIES AND NINTIES WHO WERE KEPT IN A CLOSING OFFICE FOR HOURS WHEN THEY ASKED FOR THEIR CAR KEYS TO GO HOME. I ALSO KNOW OF CUSTOMERS WHO DON'T UNDERSTAND OR READ ENGLISH WELL, YOUNG, UNSOPHISTICATED FIRST-TIME BUYERS, AND BUYERS WHO ARE UNEDUCATED AND/OR JUST NOT VERY SMART WHO HAVE BEEN TAKE GREAT ADVANTAGE OF.

Alex S: People do not walk into an electronics store and fight about the price they pay for a $5000 flat screen tv. They dont walk into the grocery store and argue about the price of a pound of apples. I guess what i am trying to get at is if you are in a comfortable place with a calm attitude the dealer fee should not be a deal breaker for anyone. Talk to the dealer sales associate about it. Believe me when i say this, most sales people dont recieve compensation from the dealer fee, but i still need to collect it.

Earl Stewart: ANOTHER THING THAT DOESN'T HAPPEN WHEN YOU SHOP CIRCUIT CITY, BUY RITE, AND BEST BUY TO GET THE LOWEST PRICE ON A 50 INCH PANASONIC TV IS NOT BEING SURPRISED AT THE CASHIER THAT THE "BEST PRICE" IS NOT REALLY THE BESTS PRICE BECAUSE BEST BUY HAS A $350 "DEALER FEE". YOU DON'T HAVE TO HAGGLE WITH CIRCUIT CITY BECAUSE YOU'VE HAD THE OPPORTUNITY TO FAIRLY COMPARE THEIR PRICE WITH THEIR COMPETITION. THIS OPPORTUNITY IS BEING DENIED CAR BUYERS IN FLORIDA. YOU ARE RIGHT ABOUT CAR SALESMEN NOT BEING PAID ON THE DEALER FEE. THIS MAKES THE SALESMAN VERY RELUCTANT TO DEDUCT THE AMOUNT OF THE DEALER FEE FROM THE PRICE OF THE CAR DURING NEGOTIATION. IF YOUR DEALER FEE IS $999 AND YOU DEDUCT IT FROM THE PRICE, YOU ARE COSTING YOURSELF $250 [ASSUMING A 25% COMMISSION]. THE SALESMAN ALSO TELLS THE CUSTOMER HE CANNOT REMOVE THE DEALER FEE BECAUSE HE IS REQUIRED BY LAW TO CHARGE ALL CUSTOMERS THE SAME DEALER FEE.

Alex S: If you find the need to rush out after the sales associate has informed you of a dealer fee, you didnt want to be there in the first place. Buying a car should be a pleasent experience.

Earl Stewart: WOULDN'T YOU "RUSH OUT" OF BEST BUY IF THE CASHIER ADDED A $350 DEALER FEE TO THE $3,995 ADVERTISED PRICE OF YOUR PANASONIC PLASMA TV? AS FAR AS CAR BUYING BEING A PLEASANT EXPERIENCE, TRY THIS EXPERIMENT...WITHOUT REVEALING YOU ARE A CAR SALESMAN, ASK THE NEXT 10 PEOPLE YOU SEE OUTSIDE YOUR DEALERSHIP IF THEY CONSIDER BUYING A CAR A "PLEASANT EXPERIENCE". I WROTE A POSTING FOR THIS BLOG ENTITLED "WOULD YOU RATHER BUY A CAR OR HAVE A COLONOSCOPY"? CAR DEALERS ARE ONE OF THE FEW RETAILERS THAT HAVEN'T ENTERED THE 21ST CENTURY. THEY ARE GOING TO HAVE TO IF THEY ARE GOING TO SURVIVE AND COMPETE. ALex, IN THE 21ST CENTURY, "THE CUSTOMER IS KING"...WAKE UP AND SMELL THE COFFEE.

Alex S: As a last note, if you walk into a dealship expecting to be ripped off, no matter how good of deal you actually get, it will never be good enough. If you walk in expecting to be treated right, you will probably leave happy everytime.

Earl Stewart: ARE YOU SUGGESTING THAT CAR BUYERS SHOULD SHOULD NOT BE WARY OF OVER-PAYING WHEN BUYING A CAR? IN THE SECOND PARAGRAPH OF YOUR POSTING YOU ADMITTED THAT "YOUR GOAL WAS TO MAKE AS MUCH PROFT OFF THAT CUSTOMER AS POSSIBLE". YOU ARE SUGGESTING THAT IF THE CUSTOMERS WEAR ROSE TINTED GLASSES, TRUST YOU TO GIVE THEM A GOOD PRICE, THEY WILL LEAVE HAPPY. ALEX, THE ONLY CUSTOMERS THAT "LEAVES HAPPY EVERY TIME" AFTER OVER PAYING FOR A CAR ARE THE THOSE WHO WERE DECEIVED.

Monday, April 14, 2008

TOP 10 WAYS TO GET SHAFTED BY A CAR DEALER

(1) Believe the newspaper and TV ads. It never ceases to amaze me how outrageous and unbelievable the car dealers’ claims are. Just when I think that they can’t get any worse, I see one that tops them all. Last month, one dealer was advertising in the newspaper and TV that if you bought one vehicle from him you got a second for nothing. The “facts and fine print” would reveal that the first vehicle was a very expensive one with a huge markup of over $6,000 and the second vehicle was only the “use” of one for two years... a lease. My father always said, “If it sounds too good to be true, it probably isn’t”. Astoundingly, the general manager of this dealership had the gall to say on TV, “This is not a gimmick”!
(2) Buy a car on impulse on the first day you start shopping. Can you believe that this is the way most people buy cars? It truly is. There is something about a new car that excites people and appeals to them on an emotional level. People let their feelings short circuit their logical thought processes. Overcome that emotion that tells you that you must drive home that shiny new car right now. Go home and think about it. Talk it over with your spouse and friends. Research the model of car you looked at and the price on the Internet. Always drive the car you chose before you sign any papers. You should take at least a week or two in the decision making process before you buy a car.
(3) Trade your old car in to the dealer you buy from without shopping its value. Most people have no idea what their trade-in is worth when they come in to buy a new car. They rely entirely on the appraisal by the selling dealer. The dealer can make it appear that he is giving you a lot of money for your trade by taking some of the high markup on the new car and showing it as part of the appraisal value. Check Kelly Blue Book (kbb.com) and Edumnds.com on the Internet. Get at least 3 bids from other dealers of the same make for your trade. Make the purchase of the new car and the sale of your trade two separate transactions. Remember that you do get a sales tax break by trading in your car to the dealer you buy from.
(4) Use the dealer’s financing without checking with your bank or credit union. Shop for the best price on your financing just like you shop for the best price on your trade-in and the best price on new your car.
(5) Believe this, “This low price is good today only”. This is one of the favorite ruses used by car sales people and dealers. In 99% of the cases, you can buy that car for the same or an even lower price later. The only time that you can’t is when factory incentives expire on a certain date, typically at the end of the month. If that is the claim, demand to see the written factory incentive by the manufacturer.
(6) Fall for this, “Make me a written offer with a deposit and I will submit it to my manager”. This is S.O.P at most car dealerships. This is to get you psychologically engaged in the buying process. Once you have signed a buyer’s order and written out a check, you will remain in the dealership for a while and are more likely to buy. The salesman knows that. Insist on getting their best price on the car you have selected. You should never make the first offer. Once you have their price, compare it with at least 3 other prices from other dealers on the same make and model.
(7) Follow this advice, “Take this new car home and see how you like it.” This is the famous “puppy dog” technique so named because once you take a puppy dog home overnight, who has the heart to return it the next day? You, your neighbors, and friends will see that shiny new car parked in your driveway. It sure looks good! How can you explain to anybody that you didn’t buy it?
(8) Agree to this, “I’ll buy the car if you can get my monthly payments below $___.__” Most of us tend to think in terms of our monthly budgets. We might feel that we can afford a new car as long as it costs us less than $350 per month, but there is a big difference between $350 per month for 36 months and $350 per month for 72 months. I recommend that you finance a car for no more than 42 months, preferably 36.
(9) Believe the salesman when he says, “You have my word on that.” Be absolutely sure that every promise or commitment made to you by your sales person is in writing and signed by a manager. That salesman may not work there when you have occasion to ask for that “free loaner car” that he promised you anytime you bring your car in for service.
(10) Fall for this, “All dealers charge a dealer fee and we can’t remove it from the invoice.” In fact, all dealers do not charge a dealer fee. I don’t. But unfortunately most do charge this “gotcha” ranging from $495 to $1,000. It is true that Florida law (which should prohibit dealer fees entirely) requires that the dealer fee appear on all invoices. If you charge just one customer a dealer fee, you must charge everybody. The state legislators, in their infinite wisdom, decided if a car dealer is going to take advantage of even one buyer, he must take advantage of all of the buyers….never discriminate. But the loophole in this stupid law is for you to demand that the dealer reduce the price of the car by the amount of the dealer fee, making it a wash.

Saturday, April 05, 2008

The No-Dealer-Fee “Fat Lady” Hasn’t Sung Yet

My last column, “The Dealer Fee, Bestiality, and Politics” voiced my concern for the success of our efforts to end or better regulate the car dealers’ license to steal, the infamous Dealer Fee. What a difference a day (or two) makes!

On March 25th Daniel Vasquez, consumer reporter for the Ft. Lauderdale Sun Sentinel, wrote a great column about the Dealer Fee and its unfairness to the car buyer. You can read this column by clicking on www.SunSentinel.com and then enter “Daniel Vasquez” in search, and then “Little-understood fees can add to a new car's bottom line.” There was a huge, supportive email response to this column. Mr. Vasquez listed the email addresses and phone numbers for Senator Alex Diaz de la Portilla, the chairman of the Senate Commerce committee [Contact Senate Commerce Committee Chair Alex Diaz de la Portilla at: portilla.alex.web@flsenate.govor call 850-487-5109 or 305-643-7200.]

On Thursday afternoon, April 3, I was driving my wife, Nancy, to Tampa for some minor surgery on her foot. Just before we arrived I received a call on my cell phone from Patricia Gosney, Senator Diaz de la Portilla’s assistant in Tallahassee. She told me that “somebody had showed the Senator a copy of my article” and she and the Senator were concerned because I had said that I was unable to contact him”. She asked me why I had said that and I explained that I had left several email and voice mail messages for the Senator and he had not returned any of them. Patricia did acknowledge that the Senator does receive “thousands” of emails and that it’s impossible to read all of them [One wonders, since most politicians do get lots of email, why they don’t let it be known that there will be no response or simply see to it that all emails are responded to?]. Patricia also told me that she was sure that I had not called the Tallahassee office. To which I responded that I’d called the Miami office and left unreturned voice mails. She said that she would look into that but she knows nothing about the Miami office. We agreed that from now on I would call Patricia in Tallahassee and she was kind enough to give me her email address which she told me she always responds to.

I asked Patricia to apologize on my behalf to Senator Diaz de la Portilla for expressing doubt about his strong support because of the breakdown of communications between us. Some of my concern was because of a conversation that I had with Senator Ken Pruitt’s Tallahassee assistant, Ann, about a week ago. She told me she would try to get some information on the progress of the Senate bill from the staff of Senator Diaz de la Portilla and when she did not get back to me, I assumed there was no progress. Ann had told me, that because there was no House sponsor of a sister bill, there was no chance of ever getting a law passed this year. Fortunately we now know Ann was mistaken.

The good news is that Patricia assured me that Senator Alex Diaz de la Portilla is solidly behind passing some legislation to better regulate the dealer fee. There is no longer a SB 954, the original shell bill for the Dealer Fee. The Senator has modified an existing bill, SB 2150 to include Dealer Fee regulations. And the really good news is that there is also a simultaneous House bill on this subject, HB 827. If you read my last column, you will know that his was why I was so concerned that there is no way we could get a bill through the legislature this year. Now we have a better chance.

Later that same afternoon, Thursday, April 3, shortly after the call from Patricia, Senator Jeff Atwater called me to assure me of his unswerving support of the anti Dealer Fee legislation. I hadn’t spoken to Senator Atwater in a long time. He explained how busy all of the legislators are and I know how busy Jeff is. I see his commercials on TV all the time. I like the one where he stares sternly at the evil insurance company executives and tells them how he will not stand still for their inhumane treatment of Florida’s insured. In fact, it reminds me a little bit of my TV commercial against the Dealer Fee.
Here is the language that was added to the existing bill, SB 2150 as of Thursday, April 3:
(6) "Advertised price" means the price as expressed in any statements that are transmitted orally, through written material, or through electronic means, or any illustration that is disseminated to the public or affixed to a motor vehicle and that is used in selling a motor vehicle or otherwise used to induce a person to enter into any obligation related to the motor vehicle.
And (a) The advertised price must include all costs, fees, or charges that the customer must pay, excluding, state and local taxes, tag fees, registration fees, and title fees.
And (b) When two or more dealers advertise jointly, with or without participation of the franchisor, the advertised price must include the highest price of the vehicles being offered consistent with paragraph (a), or specify the price for each vehicle, respectively.
And (20) Fail to attach a conspicuous label to the window of a motor vehicle specifying any charge for predelivery services if the motor vehicle under consideration by a prospective purchaser is available for physical inspection by the purchaser. The label must include the following disclosure: "This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale." This requirement does not apply to the sale of motorcycles.
If you are reading this on my Blog, you can click on www.sb2150c2.html. If you are reading this in Hometown News, paste www.FLSenate.gov in your browser and then enter SB 2150 in the bill search on the left. Then click on “sb2150c2.html”. All of the read words with the lines through them are redacted language from the previous, weaker Dealer Fee law and the green words are new language. The first part of the bill is not about the Dealer Fee. Near the bottom of the bill is where you will find the Dealer Fee changes and additions.

I’m very encouraged by what I read. Even though it’s obvious that there will be no attempt this year to make the dealer fee illegal or, unfortunately, even put a cap on it, these are major improvements. The first big improvement is in defining the word “advertising” [Kind of like…”it depends on what the definition of what the word is, is”] If this bill becomes law, dealers must include their dealer fee in prices quoted to customers by word of mouth, on signage, and on the Internet. That means when you ask a salesman what the price of the car is he would have to quote you the full price, including his dealer fee and only excluding tax and tag.

Also, when several dealers of the same make advertise the same cars in one ad [most commonly sponsored by the manufacturer or distributor], the price must include the “highest price” taking into account each dealer’s Dealer Fee. In other words, if there were seven dealers advertising in one ad with seven different dealer fees ranging from $389 to $999, the price must include $999. In my opinion, this will have the effect of eliminating price advertising of this nature. The dealers won’t like this one bit because it removes the only advantage the dealer fee offers them which is hiding it from the customer.

And the final improvement is the requirement that the each dealer’s dealer fee be posted on the window of the car with a statement that "This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale." I like the idea that the Dealer Fee must be posted on the window but I don’t like the language that is supposed to be a disclosure. The disclosure should be “This charge represents PROFITS TO THE DEALER”…short and simple…end of conversation! “Costs” reimbursed to a retailer by the customer are PROFITS. Using the word “costs” is a shrewd attempt to disguise what is clearly profit to the dealer and only profit to the dealer. Furthermore, every manufacturer already generously reimburses their dealers for “inspecting, cleaning, and adjusting new vehicles”. Charging the customer for this is “double dipping”. Even if the manufacturer did not reimburse dealers for this, what is the logic of charging a customer separately for a car dealer’s costs of doing business? If a dealer is justified in charging you separately [on top of the price of the car] for washing it first, why shouldn’t he charge you separately for the salesman’s commission, his advertising and why not his phone and light bill?
We need to keep the pressure on our legislators. We are making progress only because of your grass root support, the Florida voters. Nothing matters more to a politician than votes and nothing matters more to the media than what interests their audience. The media is giving strong support to our cause now. This is a Quinella that the politicians cannot ignore…the media teamed with the voter.
Call my NO DEALER FEE HOTLINE, 800 909-9879 and record your opinion against the Dealer Fee. Your recording will be sent to Tallahassee. Keep yourself up to date on our progress by reading my blog, www.EarlStewartOnCars.com. You’ll also find lots of information on www.EarlStewart.com, www.YouTube.com/EarlStewartToyota.com, and on my Saturday morning talk show from 9-10 which you can stream by clicking on www.SeaviewAM960.com. You can read media coverage of our work by clicking on www.EarlStewartToyota.com and then click on “In the News”.