For the last 10 or 15 years I've subscribed to an online service, “The Daily Motivator”, which sends me a short email every morning except Sunday. It’s not religious although it does incorporate advice which can be found in all of the different religions. I like it because it helps to kick my day off positively. In fact I share it with some friends, family and employees…those that I think would enjoy it. This morning there was a phrase that inspired this column… “Without judgment as to whether it is difficult or easy, popular or unpopular, do what you know is right.” I highlighted this phrase before I forwarded it.
My last post was entitled “The Dealer Fee Revisited”. If you’re a new reader or if you missed my last column, please read it before you read further.
More than one-third of the new and used cars I sell now are sold over the Internet. As you know, online sales are surging for all products and will soon dwarf sales from brick and mortar stores. Prospective customers surf the web to research which specific car they want to buy and then they contact various dealers via email to find out who will offer them the best price. I wrote another column entitled “The Internet is the Lowest Price for a New Car”. The reason the Internet offers the lowest price is because car dealers have only one chance to sell you a car when you contact them online. You can shop a dozen car dealers online in less time than it takes to visit one car dealership in person. Each dealer knows that if his price is higher than one of the other dealers, the prospective customer will move on and he will lose the sale.
The big problem that I used to encounter was the “infamous dealer fee”. I don’t charge a dealer fee because I believe it is unfair and deceptive. I would quote my best price but the other dealers would usually beat it because they could add hundreds of even thousands of dollars to the price they quoted our prospective customer. To solve my problem, I “mystery shopped” all of my completion and learned the amount of their dealer fees. Now, whenever a prospective customer asks me for my best prices on a specific car via email, I always include a list of the dealer fees that all of my competitors charge on top of that price that they quote this same customer. This enables the customer to make an informed decision on who really has the lowest price. Without this information, a customer would pay, on average, about $900 more. This is the average dealer fee in my market. Some are well over $1,000. If you would like to see how I do this, click on www.EarlStewartToyota.com and then click on “Request a Quote” on the left.
I’ve been informing my prospective customers of what the other dealers add in the form of their dealer fee to the prices they quote for over two years. Before I began doing this, I discussed it with two Toyota representatives who were responsible for dealer sales in my market. I did this because I knew that the other dealers would be upset about this even though I was doing what was best, not only for me, but for Toyota buyers. Both of these Toyota representatives told me that they thought I was doing the right thing.
A couple of weeks ago another Toyota representative told me that he thought I should stop disclosing the amount of the dealer fee for other Toyota dealers but that there was no problem if I disclosed the dealer fee amount for non-Toyota dealers. When I asked why, he said that I was “disparaging” other Toyota dealers by revealing their dealer fees. Of course, I responded, “How can the truth or a fact be disparaging?” I still don’t have an answer to that question. The Toyota representative cited the Toyota Dealer Advertising Covenant, TDAC, as authority for his request to stop what I was doing. The TDAC is a contract that all Toyota dealers must sign that establishes what he can ethically and legally advertise. Violations lead to huge fines which can be in the hundreds of thousands of dollars. I told him that the TDAC applied only to advertising, not a salesman responding to a customer’s request for a price on a specific car. I said that if Toyota wanted me keep other dealers’ dealer fees secret from my Internet customers it would follow that I must do the same for customers who phone or come into my dealership asking for pricing information.
As I write this article, I’m waiting for clarification from Toyota on all of the above. I have received a written notice from the independent company in Birmingham, Alabama that administers the TDAC saying that my request to continue informing my customers of dealer fees was denied even though it had been approved previously. However, when I called the company supervisor last week I was told that a letter had been mailed to Toyota Motor Sales in California asking for a ruling on whether this issue was covered by the TDAC. The supervisor told me that I would be notified as soon as a response was received. As of this moment, I’ve heard nothing.
Hopefully now you can understand my title to this article, “Do What You Know Is Right” and the quote from my Daily Motivator, “Without judgment as to whether it is difficult or easy, popular or unpopular, do what you know is right.” It’s very difficult for me as a Toyota dealer to oppose Toyota and taking this stance does not make me very popular with Toyota but I did what I know is right. I hope that Toyota doesn’t also rule that this article and my blog also come under the jurisdiction of the Toyota Dealer Advertising Covenant.