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Sunday, January 25, 2009

Car Dealers’ Only Thing to Fear is Fear Itself

Believe it or not, I hate to brag, but it was baseball player Dizzy Dean who said, It ain't braggin’ if you can back it up”. I’ll add to Dizzy’s sage observation the fact that bragging isn’t bad if there is a good reason to do so. My good reason is that car dealers are afraid. They are afraid to abandon their dealer fee because it would hurt them financially. Car dealers are afraid to not run bait and switch advertisements because they fear that prospective car buyers won’t respond to honest advertising. Car dealers are afraid to make themselves readily accessible to their customers because they fear being overwhelmed by complaints. Car salesmen are afraid to give the real price to their prospective customers for fear the prospect will shop and compare his price with the competition.

Well “listen up” car dealers! Earl Stewart Toyota has grown from one of the smallest car dealerships in Palm Beach County in one of the smallest towns, Lake Park [population of 9,080 as of 2004] to the #1 retailer of autos of all makes in Palm Beach County. Earl Stewart Toyota is the largest seller of new Toyotas from Orlando to Coconut Creek [south of Ft. Lauderdale], the 11th largest in the Southeast USA (out of 172), and 59th largest in the USA (out of over 1,300). The way my dealership was able to accomplish this was by putting our fears aside and doing business the way we knew, in our hearts, was right. As most everyone knows, up until about 5 years ago, my dealership charged a dealer fee too. Dropping that “extra profit” was one of the scariest business decisions I ever made.

How does a little car dealer in a little town earn so many customers? By doing those things that most other car dealers are afraid to do…don’t charge a dealer fee, don’t advertise cars that you won’t sell for that price, quote your best out-the-door price to any prospective customer who asks and encourage that prospective customer to shop and compare. We treat each customer with integrity, courtesy, and respect. We encourage total unfettered communication with our customers by not screening any phone calls and having a live person taking calls 24/7…no answer machines. Even I, the owner, take all calls directly and I don’t have a secretary. Talking about scary, how about my giving my home telephone number to all of my customers, printed on my business card!

This all sounds simple, doesn’t it? I agree, but why do so few car dealers get it? Why do they see the incredible growth and success of doing the business the way we do and still stick to their old ways? The answer for most dealers has to be “fear”. I hear some car dealers who say, “Sure, easy for him to do business that way because he sells Toyotas. He wouldn’t be so successful selling Chevys”. Well, of course I couldn’t sell as many Chevrolets as I sell Toyotas. But I measure my success against those who sell Toyotas or equally good product like Honda. I’ve grown from the smallest volume Toyota store in Palm Beach County to the largest. All the Honda dealers used to outsell me and now I outsell them all. I wasn’t even top 300 of Toyota dealers nationally and now I’m #59. If a Chevrolet dealer did business like I do, I can absolutely guarantee him he would sell at least twice as many Chevrolet as he is now.

During this severe economic crisis, Americans have been more prone than ever before to deal with those they trust. That’s why they are buying American treasury notes and bonds at unprecedented levels. They aren’t buying bank stocks or most other stocks because they don’t trust those who run these companies. This phenomenon is known in Wall Street as “a flight to quality”. It could perhaps be more accurately described as a “flight to trust”. Buyers are driving from all over Florida and beyond because word of mouth has spread that they will be treated with integrity, courtesy, and respect at my dealership. In the worst economic recession since the ‘30’s my dealership is growing its market share by leaps and bounds. I have to admit that this has even exceeded my expectations. I never dreamed that I would one day be the largest retailer of automobiles in Palm Beach County.

Any car dealer with enough courage can follow my proven formula and increase his volume and profitability. With business so bad for so many car dealers you would think they would have nothing to lose by giving it a try, except their fear.

Monday, January 12, 2009

Application for Auto Czar Position

Open Letter to Barack Obama

Cc: Barney Franks

Dear Mr. President [Written while still President-elect],

I just read that U.S. House Rep. Barney Franks was sponsoring a bill to address the auto crisis which would call for an “Auto Czar” to facilitate the recovery of the American auto industry. I’m applying for this position and explaining why I may be qualified for this important task.

Rather than attempt to call or write you on this subject, I’ve chosen my blog, http://www.earlstewartoncars.com/ as the means of communicating this message. This is because I understand that you must be overwhelmed with requests for positions in your administration. Secondly, I believe that the Internet is a powerful tool that you recognize and accept a major one for communications in the 21st century. As you know, it was instrumental in the fund raising for your successful election…something that had never before occurred in a Presidential election.

Below I list a brief summary of my qualifications. Your staff can “Google me” for more information and, of course, I will furnish them with all additional information that they require.

(1) I’m 68 years old and have been an automobile dealer since 1968. I’ve been a dealer for Pontiac, Mazda, Peugeot, Lancia, Fiat, Checker, and Toyota. I’ve also owned and operated rental companies and independent used car lots. I’ve all my dealerships except for my Toyota which I’ve owned and operated since 1975.

(2) About ten years ago I “saw the light” about how customers [and employees] should be treated. I refer to myself as a “recovering car dealer”. This is a plus for my resume because I was actually a part of what is wrong with the present auto manufacturing and selling systems today.

(3) I’m in good health [had a bout with colon cancer in 2005 but am 100% cancer free now] and currently very active in my business which has grown to become one of the largest Toyota dealerships in the USA.

(4) I graduated from the University of Florida in 1963 with a BS, majoring in physics with a minor in mathematics. I earned my Masters of Science degree in Industrial Administration from the Krannert School at Purdue in 1964.

(5) In recent years I’ve assumed the role of a consumer advocate for car-buyers in Florida and nationwide. As you know, the image of the car dealer has not been exemplary [tarnished much as that of politicians and lawyers] and I’ve taken on the mission to “clean up our act”. I host a local weekly radio talk show and write a weekly column for a local newspaper advocating these positions. I also regularly speak at public libraries, civic groups, condominium associations, schools, retirement clubs, etc. on this subject.

(6) I have no “skeletons in my closet” and welcome a thorough vetting of my past.

(7) My only motive is to help our country with our economic crisis. I agree to serve at zero monetary compensation and aspire to no further political office.

(8) I understand and support our nation’s need for energy independence and for our global need to reduce carbon emissions in the atmosphere. My Toyota dealership is the largest retailer of hybrid vehicles in the USA except for California. Last year we ranked #12. I accomplished this by selling my hybrid vehicles at lower prices even when demand exceeded supply and afforded many dealers the opportunity to charge premium prices.

(7) My business is a family one including my three sons who are ready, willing, and able to run my business if you select me as your Auto Czar. As a matter of fact, my three sons voted for you. However I must confess that my wife, Nancy and I voted for John McCain. I only mention this because our family believes in freedom of expression and choice even within the confines of our own family. One of my favorite quotations is that of F. Scott Fitzgerald who said, “The test of a great mind is the ability to hold two opposed ideas at the same time and still retain the ability to function”. I think you agree with this because of the way you are welcoming suggestions from both sides of the aisle, the only qualification being “will it work?”

In summary, I have a unique perspective over those who may be considered for the position of Auto Czar. My primary concern is for our country’s car buyers followed by the car dealers and manufacturers. All three concerns are very important, but it’s the American citizen who relies on his automotive that will drive the future success of the manufacturers and dealers.

Respectfully yours,

Earl Stewart

Saturday, January 03, 2009

10 New Years Resolutions for Car Dealers in 2009

2008 was the worst economic year for auto dealers in my memory and I’ve been a dealer for over 40 years. I say that because I don’t want those dealers who read this to think I’m “kicking them while they’re down” by preaching redemption. I’m suggesting these resolutions because they can help these dealers survive these bad times and prosper even more when business returns to normal.

(1) Quoting prices to your customers. Always quote your customers the full, out-the-door price. The only additional costs passed to your customer should be federal, state, or local taxes and/or fees like Florida sales tax. This is the generally accepted practice in retailing all other products and services. A price is quoted to your customer when you communicate a price in any fashion including advertising a price in the newspaper, radio or TV, painting a price on a windshield or sign, saying a price over the phone or in person, or giving a price over the Internet. Your “dealer fee” is profit for you. It is not a “fee” and it should be included in your price.

(2) The buck stops with you. You are responsible for the actions of your employees. Your salesmen, service technicians and service advisors are virtually all paid on commission. If you do not police your people and hire ethical people your customers will be taken advantage of. If you are an absentee owner, as most owners of car dealerships are in South Florida are, you have to have someone running your store that knows and cares about what is happening to your customers. Your ignorance of the mistreatment of your customers is no more an excuse than being ignorant of a law when you break it.

(3) Don’t advertise a car at a price that you don’t want to sell it for. If you advertise a car for a specific price, you should be willing and able to sell that car to as many customers as respond to the ad. Also, pay your salesmen a commission on the ad cars. Now most of you don’t pay a salesman a commission if he sells the ad car. What do you think that salesman is going to tell the customer who comes in on the ad? If you run out of that model, you should give your customers a rain check. When you don’t do that, it’s called “bait and switch”.

(4) Don’t insist or encourage your customers to buy and take delivery of their car on the same day. This is called a “spot delivery” in the trade. There are lots of thing bad about this. A car is the 2nd largest purchase a person makes. The customer should be allowed time to reflect and think about this decision. Cars are often spot delivered when the credit has not been approved, especially nights and weekends when the banks are closed. Customer often have to be called back to sign another contract at higher payments, higher interest, and/or higher down payments. This is sometimes done deliberately because customers are often too embarrassed to tell their friends that they really haven’t bought that shiny new car they were showing off.

(5) Give customers who are” just looking” a price when they ask for it. It’s insulting to today’s sophisticated buyers to be told when they ask for the price that they can buy the car for, that they have to make an offer in writing with a deposit first. It’s also insulting when you tell the customer that you won’t give her a price until she’s “ready to buy”. Can you imagine being told this by a salesman at Best Buy when you asked the price of 50” Plasma TV? Your salesmen won’t give prices to your customers because they are afraid the customer will compare his price with the competition. This is what the free market place is all about! Customer should shop and compare. If you treat your customers with respect, integrity, and courtesy, they will return to you an offer you the right to meet or beat a lower price.

(6) Don’t advertise discounts from “dealer list” price. When you mark up the manufacturer’s list price by thousands of dollars and then advertise a discount, you are misleading you customers. The federal government has a law that every new car displays a “Monroney label” [named after the U.S. senator who sponsored this bill] on the window when it is sold. The reason for this law is to give car buyers a fair, even basis for comparing prices between different dealers. By confusing your customers between “dealer’s list” and “manufacturer’s list” you are circumventing the law.

(7) Don’t advertise lease payments that require large down payments hidden in the fine print. Most people lease cars to minimize their monthly payment. When your customer comes in on the ad finds out she has to pay $4,000 cash down to get the lease payment you advertised, it’s just plain wrong. There are some dealers who actually advertise prices with a qualification that the customer pays an additional sum first to get the advertised price.

(8) Do not advertise that you can get anybody financed no matter how bad their credit. This is not true and just plain cruel, especially during these terrible economic times with very tight credit.

(9) Don’t guarantee the lowest price with qualifications that cannot be met. Your qualifications are usually that you “reserve the right to buy the other car from the other dealer who beat your price” and that the customer must have a signed buyer’s order from the other dealership. You know that the other dealer will never agree to sell you that car and you also know that the chances of the customer getting out of the dealership with a signed buyer’s order without taking delivery are slim and none. Dealers reading this, I dare you to show me evidence that you have honored your guarantee with jus one customer. I’ll make you a bet that you have never honored that guarantee.

(10) Don’t offer a minimum $10,000 [or some other high number] for every trade-in. Sometimes these ads, say “if you can push, pull, or drag your old car in we will give you at least $10,000 toward the purchase of a new car. You then mark up the new car so high, you are not really offering the customer anything more than the wholesale value, if that.