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Thursday, February 18, 2010

The Dealer Fee... “Whatever?”

My column this week is a reaction to an article that appeared in this week’s edition of The Automotive News. For those of you “not in the business”, The Automotive News is the premier trade publication for the automobile industry. It is read by manufacturers, distributors, dealers, and everyone else associated with the car business.

The headline of the article, “Document Fee Began with a Lie, ‘Inventor’ Says,” grabbed my attention (to say the least). However, the neutral stance toward the nefarious “doc fee” that the publication seemed to take is what prompted my reply.

Below is the text of my email to the author, Edward Lapham, followed by the original article printed in the Automotive News.

Good morning, Ed. J

I was very surprised to read your commentary in this morning’s Automotive News, but I enjoyed it very much.

You may have heard of me. I’m the dealer in Florida who is championing making the doc fee (aka dealer fee, prep fee, etc.) illegal. I’m one of the few dealers who don’t charge such a fee which has grown enormously since Mr. Fashjian “invented” this concept in 1967. There’s a Mazda dealer in Delray, FL and a Nissan dealer in Ft. Pierce who charge $1,549 for dealer fees. The average fee in my market is over $750.

You can check me out on my website,
www.earlstewarttoyota.com or my blog www.EarlStewartOnCars.com.

In your article, you say:

“We know that consumer advocates, assistant attorneys general and investigative reporters from TV networks consider the "doc fee" to be a consummate evil that some dealers use to gouge a little more profit out of poor, defenseless, unsuspecting customers. Dealers, who have had their gross margins eroded by factory pricing and Internet-savvy consumers, consider the doc fee to be manna from heaven that lets them squeeze a little more profit out of every deal. Whatever. “
I guess “whatever” means that Automotive News takes no editorial position on this. I can certainly understand why since most car dealers, the vast majority of your subscribers and advertisers, engage in this “questionable” practice.

I’m guessing that you consider this a “whatever” because there’s a split on opinion between consumer advocates, assistant attorneys general and investigative reporters from TV networks and car dealers. Have you wondered how car buyers feel about it? Why doesn’t Automotive News engage a pollster to measure the sentiments of car owners and prospective car buyers about doc fees/dealer fees?

Since you consider the current status this a draw (whatever), maybe the customer can be the tie breaker.

Sincerely,

Earl Stewart



EDWARD LAPHAM
Document fee began with a lie, 'inventor' says
Edward Lapham Automotive News -- February 15, 2010 - 12:01 am ET
COMMENTARY

Edward Lapham is executive editor of Automotive News.

I had an intriguing conversation with John Fashjian last week. He told me that three years ago, he sold his Framingham Chrysler dealership in Framingham, Mass., and moved to Florida.

More significantly, Fashjian matter-of-factly said he's the guy who invented the document fee.Of course, there is a difference of opinion about the add-on charge.We know that consumer advocates, assistant attorneys general and investigative reporters from TV networks consider the "doc fee" to be a consummate evil that some dealers use to gouge a little more profit out of poor, defenseless, unsuspecting customers.

Dealers, who have had their gross margins eroded by factory pricing and Internet-savvy consumers, consider the doc fee to be manna from heaven that lets them squeeze a little more profit out of every deal.

Whatever.

Here's how Fashjian said it started. In 1967 he was sales manager at Bancroft Motors in Worcester, Mass., selling Datsuns for next to no profit. For example, he remembers that the Datsun B1200 stickered at $1,962.50, and customers tried to get him down to $1,900. The way Fashjian told it, he decided that bumping the price up to a rounder number would help with negotiations and -- since he wasn't a math major -- would make figuring the 3 percent Massachusetts sales tax easier because there were no personal computers or pocket calculators back then. So he arbitrarily added $12.50 to every sticker, which bumped the price to $1,975. Then Fashjian told customers that since Datsuns are imported, the fee was to cover the cost of going to the port and taking care of the documentation.

And they bought it!

That $12.50 seems anemic by today's doc fees, which Fashjian said net some dealers up to $1,000 or more. It's a great tale. And, you know, I thought about running Fashjian's picture with this column. But the next thing you know, somebody might put it up in the post office. Or the Automotive Hall of Fame.

4 comments:

  1. Sometimes...... I'm just blown away by the completely cavalier attitude displayed by industry and political "leaders" when complete fraud, theft and outright lying are brought to their attention.
    The fact that Edward Lapham executive editor The Automotive News which is a premier trade publication for the automobile industry considers a lie told to customers in his industry a "whatever", or a non issue tells me how much of an uphill battle you have been fighting Earl.

    Note; Politicians cannot exist without businesspeople.
    So it's no wonder that Politicians get away with lying, stealing and fraud when some of the very roots of the economic machine(businesspeople)brush off a civilization destroying concept such as a known lie to steal from their customers.
    Someone might explain to Mr. Lapham that when property transfer is secured based on a complete lie that that is considered; that it is, fraud and stealing.

    Possibly Mr. Lapham doesn't care.

    Possibly the automotive industry needs a new premier trade publication.

    ReplyDelete
  2. Hi, Fred,

    I haven't heard from you in some time. I hope things are going well for you.

    You couldn't have said it better about unethical practices being "winked at" by THE trade publication of the auto industry. Automotive News is the official newspaper for auto dealers, auto manufacturers, and auto suppliers.

    I've sent two emails to Edward Lapham, the author of the article and received no reply. I'm told that he's on vacation. I copied Keith Crain, the publisher of Automotive News, so I know they are aware of a pending issue.

    They know me well and know that I won't go away. I will insist that the Automotive News take a strong editorial policy against the dealer fee/doc fee.

    Stay tuned.

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  3. Earl, dont you charge like $710.00 for something called Toyota Gaurd? A coat of wax?~!!! ..what is that?

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  4. Hi Anonymous :) It's called ToyoGuard and it retails for $699. I'm not sure exactly what's included because I don't stock any new vehicles with it. It's an accessory package offered in the southeastern U.S. I'll order a car with it at the request of a customer, and sometimes we'll get one in on a dealer trade. In that case we will not charge the customer for it.

    ReplyDelete

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