TELL THE FTC: NO MORE CAR DEALER JUNK FEES!

We have until January 8th, 2024 to submit comments to the FTC about proposed rules to BAN CAR DEALER JUNK FEES. Please visit https://www.regulations.gov/document/FTC-2023-0064-0001 to be heard!

Monday, June 29, 2009

The Internet Price is the Lowest Price for a New Car

Ten years from now, I believe that at least 75% of all new cars will be purchased over the Internet. Right now it is less than 20%. The reason is simply that that Internet price is usually your lowest price and more and more car buyers are figuring that out every day. Dealers must give their best price to a prospect inquiring over the Internet because that dealer probably will have only that one chance to sell the car. If they try “the old negotiating game” the Internet prospect will simply choose the lowest price from several other quotes he gets. When my friends ask me to advise them on how to get the best price on a new car, I always tell them to use the Internet. If they ask me for the best price on my product, Toyota, I give them my Internet price.

I am not suggesting that you don’t visit your local dealer to see, touch, smell, and drive the new vehicles you are considering. This is very important. You can’t make a valid, final decision on which new vehicle is best for you by solely reading data and looking at pictures on the Internet, Consumer Reports, or any other source. Research of that nature is important, but you should finalize your decision with visits to the dealers to actually experience the vehicle.

Once you have made your final decision on the year, make, model, color, and accessories, you are ready to sit down at your PC and choose the dealer from whom you will buy this specific vehicle. If you are not handy with a PC, ask a friend or relative who is. First, go to the manufacturer’s Web site like www.ford.com, www.toyota.com, www.chevrolet.com, etc. You will be able to type in your zip code to find all of the dealers of that make within a given radius, usually about 40 miles, giving you 3 or 4 dealers. To expand the radius, choose another zip code further from yours. The dealers within your radius will show their Web site addresses. Click on their Web site and ask for a quote on the specific car you have selected. Most Web sites have a page for what is called a “quick quote”. You type in the year, make, model, color, and accessories. It will also ask you for your name, telephone number, address, if you have a trade (check “no”), whether you are ready to buy now (yes), and other questions. All you really need to fill out is year, make, model, and accessories and your email address. If you prefer not to be contacted by phone, don’t fill in the phone number. If they require it before you can submit your request, type in any 10 digits so that the Web page will allow you to. If you can’t find a “quick quote” page, just email your request to their Internet sales department.

Depending on your PC and typing skills this whole process should take less than half an hour. Think of all the time, gasoline, shoe leather, and especially aggravation you are saving compared to visiting as many dealerships in person. The time it will take to get back quotes varies from dealership to dealership. You may get some back within a few minutes, some will take a few hours, and some may take a day or two. Believe it or not, some might not respond at all. There are even a few dealers who will not quote a price on the Internet, but try to lure you into their store with false promises. Ignore them. I recommend that you get a minimum of 3 valid price quotes on your specific vehicle. It’s so easy to get quotes, why not get a half dozen or so? You are not necessarily even limited by driving distances. If the best price is from a dealer who is too far away, show that quote to a dealer nearer you and ask him if he will match it.

There are some things that you must be careful about. Be sure that that the price you get is an “out the door” price. That is a price which excludes only federal, state, and local fees and taxes which are usually just for tax and tag. Most dealers in Florida tack on a fee or fees of their own which are variously referred to as “dealer fee”, “delivery fee”, “documentary fee”, etc. This is illegal in many states, but not in Florida. These fees vary from around $500 to $900. Be sure that this fee which is just profit to the dealer is included in your “out the door” price. Also be absolutely certain that you are comparing “apples and apples”. When you select your low bid, double check that this dealer is quoting you on the same year, make, model, and accessories as the other dealers. A good double-check is to compare the MSRP. The MSRP, manufacturer’s suggested retail price, will be identical on identically equipped cars of the same model and year. Also, be sure that the car you have the price on will be there when you come in. Give them deposit on your credit card to hold the car for you.

Internet car buyers are the wave of the future. The retail car business is going through rapid changes and the old fashioned, price-haggling way of buying cars is slowly but surely becoming obsolete. If you haven’t already, now is the time to join the ranks of the smart, sophisticated car buyers.

Monday, June 22, 2009

CASH FOR CLUNKERS LEGISLATION IS A WASTE OF TAXPAYERS' MONEY

Once again our Congress and Senate have proven that they are out of touch with reality or, perhaps more likely, simply inclined to pass any legislation that will get them reelected.

The “Cash for Clunkers” bill passed the House and the Senate and awaits President Obama’s signature. It is supposed to be help energy conservation because it will take higher gas mileage vehicles off the road. It’s also supposed to help our floundering economy because it will incentivize owners of “clunkers” to buy new cars. When the driver of a clunker, defined to be a vehicle with relatively poor gas mileage and worth up to $4,500, trades it in he gets a voucher for either $3,500 or $4,500. Then the dealer must scrap that vehicle.

Here’s why our politicians are out of touch with reality. Our country is in the worst economic condition since the Great Depression. The most severely affected are those at the lower end of the economic spectrum. Arguably even more important than housing to this class of people is transportation [you can sleep in your car]. It’s not possible for many to get to work without a car. It’s not even possible for many to look for work without car. How about taking your children to school or getting to a doctor or hospital? These are the people who buy “clunkers” because they don’t have the credit to buy anything more expensive. Or, maybe they can’t get any credit at all and can afford only cars cheap enough to afford to buy for cash.

If this legislation works the way the politicians say they want it to, it will remove most clunkers from the road and drive up the prices of those few remaining to make them unaffordable to those that have no other transportation option. Of course, a lot of the economically challenged are already driving clunkers. The new law doesn’t permit them to use the $3,500 or $4,500 voucher to buy a nicer, more reliable used car. They may only buy a much more expensive new car. Unfortunately, most people with bad or no credit who are forced to drive a clunker, won’t be able to get financed on a new car even with the $3,500-$4,500 down payment.

Logic dictates that no one would have his vehicle scrapped for a $4,500 voucher if was worth more than $4,500. But, who is to say what a clunker is really worth? I can tell you from my 40+ years in the retail auto business that you can show a used car to five different used car managers and get five different opinions as to what it’s worth. I advise consumers to shop their trade-in to at least three different car dealers before they accept a trade-in allowance from the dealer they buy from. Typically you will see a $2,000 to $5,000 difference between the 3 professional opinions. I see nothing in the legislation to control this variable. I can guarantee you that there will be thousands of vehicles scrapped that are worth more than the voucher amount. How will you feel knowing that you paid $4,500 of your tax dollars to scrap a car that had a market value of $6,000?

To the extent that lower gas mileage vehicles are taken off the roads, this is good. But energy conservation is not our country’s top priority right now. We need to think about cutting our 10%+ unemployment in half. Scrapping the only cars that many of our unemployed can afford to buy and driving up the prices of those that remain is not the right way to go about this.

The car dealers love this because of the general lack of understanding of this new law will likely drive potential buyers into their showrooms. You can argue that this is good because it will stimulate new car buying. But, is it good to stimulate the economy through deception? I’m already getting solicitations from marketing companies with all sorts of cute ideas about how to exploit this legislation. You can expect to see an advertising media blitz on “Cash for Clunkers”.

I will end this column on a positive note. One Congressman who voted against this legislation is Tom Rooney from my district, the 16th. There are always a few who vote their conscience and not what will get them reelected. Unless we recognize and vote for guys like Tom Rooney, this endangered species will vanish.

Monday, June 15, 2009

A Victory for Florida Car Buyers In The War Against the Dealer Fee!

A watershed event for South Florida car buyers occurred June 1, 2009. Two large car dealerships, Palm Beach Toyota and Royal Palm Toyota, eliminated their dealer fees. For those who may not know what a “dealer fee” is, it’s an extra charge which is added to the price of the car in addition to the price you are originally quoted. In the case of these two dealerships, it was $899. You can learn all you ever wanted to know about the dealer fee by reading my articles on http://www.earlstewartoncars.com/ or just Google “Earl Stewart” and “Dealer Fee”.

This is a victory for the car buyers of South Florida because they spoke with their pocket books and wallets and two car dealerships listened. When I eliminated my dealer fee about six years ago, I was one of the smaller car dealerships in Palm Beach County and the smallest seller of Toyotas. Today I’ve grown to be, not just the #1 seller of Toyotas but also the largest seller of any make car in Palm Beach County. This growth could not have occurred just in my immediate market area. Earl Stewart Toyota is located in Lake Park on the border of North Palm Beach, a much smaller population area than the three other Toyota dealerships south of me. The growth came from customers in the central and southern county who travelled many miles to buy from me.

As many of you know, I’ve fought against the dealer fee for several years. My column in Hometown News, http://www.earlstewartoncars.com/, my Saturday morning talk show on Seaview AM 960, my TV advertisements, public speaking engagements all over Palm Beach County, and my lobbying efforts in Tallahassee have all been focused on eliminating the dealer fee in Florida. Isn’t it interesting that where my political efforts to change the law have so far failed, the free marketplace efforts are winning, albeit slowly? By educating you, the car buyer, to what the dealer fee is and why it’s bad, you’ve spoken out with your checkbooks and done something that the politicians were afraid to do.

I congratulate Palm Beach Toyota and Royal Palm Toyota for their decision to eliminate their dealer fee. It took a lot of courage, especially during these severe economic times, to eliminate an extra $899 profit per car sold which was going right to the bottom line. But now, by including all profits in the prices you’re quoting your customers you’re not only doing the right thing but you’re giving your prospective customers the ability to shop and compare your price with your competition. You may make less per car but you will sell more cars.

I expect this trend to continue. There are two more dealerships in Palm Beach County that do not charge dealer fees. Mullinax Ford opened just last year on Northlake Blvd. [only about a mile from my dealership] and North Palm Beach Mercedes opened just this year [about 2 miles from my dealership]. General GMC Truck in West Palm Beach also doesn’t charge a dealer fee. Mullinax has three more Ford dealerships in central Florida and does not charge dealer fees at these locations either. North Palm Beach Mercedes also owns Palm Beach Mercedes [In West Palm Beach] which does charge a dealer fee…go figure!

I encourage the Penske Auto Group, a public company traded on the NYSE, to consider eliminating their dealer fee for all of their franchises. Penske Automotive Group still adds a dealer fee to the Mazdas and Nissans that they sell from their Royal Palm location that also sells Toyotas. This move would give you a “leg up” on your competition that charges a dealer fee. You can be the first to do the right thing for Mazda and Nissan buyers in Palm Beach County. I do not believe that the Penske Auto Group has eliminated the dealer fee on their Toyota dealership in Orlando either, Central Florida Toyota. This would be a smart move to capture sales from the other Toyota dealers in that market that do.

Readers of the Hometown News and http://www.earlstewartoncars.com/, please call my NO DEALER FEE HOTLINE, 1 800 909-9879 and voice your opinion on eliminating the dealer fee in Florida. I collect these voice mail messages which are transferred to computer audio files and forwarded to our Florida legislators. Messages relating personal and specific experiences with the dealer fee are especially valuable.