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Monday, December 19, 2011

MINIMIZING THE PAIN OF HAVING YOUR CAR SERVICED


The pain of buying a used or new car may be greater than the pain of having it serviced, but you need to have it serviced far more often than you have to buy a car. Below, I am listing eight suggestions to make your visit to your car dealer’s service department as pleasant as possible.

(1)   Choose the dealer with the best service department. Remember that you don’t have to have the same dealership service your car that sold you your car. You probably bought your car from the dealer who gave you the best price. You should have your car serviced at the dealer who can best maintain and repair your car. The price of service is important, but secondary to the quality of the service and repairs. Do a little research. Ask friends and neighbors who drive your make of car. Check with the BBB and the County Office of Consumer Affairs.  Ask the service manager at the dealership to show you his factory score on CSI (customer satisfaction index). Every manufacturer surveys dealers’ service customers and ranks that dealer by how well he treats his customers.
(2)   Establish a personal relationship with your service advisor. The person in the service drive who writes up your repair order is very important. Be sure you get a good one. He should be knowledgeable, attentive to your needs, promptly return phone calls, and recommend only necessary services. You might not find this person on your first visit, but if you aren’t comfortable with the person you are dealing with, ask for one with whom you are. When you make an appointment to have your car serviced, always ask for that service advisor. 
(3)   Don’t pay the “gotcha”, miscellaneous supplies fee. Almost all car dealers tack on a phony fee when you pay your bill which is simply more profit to the dealer, but is disguised by various labels. It is also sometimes called “environmental impact fee”, “sundry shop supplies” and many others. The cashier just adds a percentage ranging from 5% to 10% to your bill. This is no different than the “dealer fee” that the sales department tacked on to the price they quoted you on the price of the car. Most dealers will waive this fee if you complain about it, especially if you threaten to call the BBB, their manufacturer, or the Florida Attorney General’s office.
(4)   Always road test your car, preferably with the technician. If you brought your car in for a drivability problem such as a noise, vibration, or pulling to the right or left, don’t accept the car back until you ride in the car with the technician or service advisor and confirm that the problem has been remedied. I also recommend that you drive the car with the service advisor to demonstrate the problem when you bring it in. Experiencing what you experience always communicates your problem more accurately than listening to your description of the problem.
(5)   Ask for a written estimate of the total cost of repairs and maintenance. Florida law requires that the dealer give you a written estimate. By law, they may not exceed this by more than 10%.
(6)   Make an appointment ahead of time. You should insist on making an appointment and you should try to make that appointment at a time when the dealer’s service department will be least busy…typically the middle of the afternoon on weekdays or Saturday and Sunday. Avoid the 7:30-8:00 morning rush. When your service advisor has written up your repair order, ask him how long it will take. After he tells you, ask him to let you know ahead of time if, for any unforeseen reason, your car will not be ready in the promised time. Often times when you call a service department they will tell you to “bring the car in anytime” or “come right over”. Service advisors will tell you this because they are either too busy or too lazy to take the time to make a proper appointment. When they tell you this, tell them that your time is very valuable and that you insist on an appointment at a time when they can get you in and out quickly. Always write down the name of the person that gave you the appointment.
(7)   Shop and compare high cost repair prices. Most service departments are competitive on maintenance items like oil changes, wheel alignments, and tire rotations. However, the costs of major repairs can vary considerably. If you are looking at an air-conditioner, transmission, or engine repair that can cost several thousands of dollars, get bids from more than one service department. Often just suggesting that you will do this will keep the cost down from the dealership you prefer.
(8)   Introduce yourself to the service manager. This falls along the same philosophy as developing a good personal relationship with your service advisor. It can’t hurt to know the “boss”. If you are on first name basis with the service manager, it just might earn you a slightly higher level of treatment from those that work for him.

Monday, December 12, 2011

Do What You Know Is Right


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. 

Monday, December 05, 2011

Status of the Dealer Fee As of December 2011


A local attorney emailed me yesterday morning, asking me to send him the various articles I’d written on the infamous Dealer Fee. He is trying a case in Akron, Ohio and wanted to research this issue.  I've written so many articles over the years that I sent him seven and also my blog address, www.EarlStewartOnCars.com, so that he could read all of them if he chose.  Later that afternoon, I received a call from a young couple in Ft. Lauderdale who had just discovered they had paid $1,248 in dealer fees after they bought a new Toyota and drove it home.  They wanted to know what they could do about it. They asked if they had any legal recourse. They had not responded to an advertisement on a specific car, which is the case with most buyers, so they had no legal recourse. They had recently moved to Florida from California (where they do have a good dealer fee law) and were amazed how Florida had such a weak law and that even that was not regulated.

These two occurrences made me realize that I can’t be quiet on this subject, just because things have gotten better in my local market. The number of dealers in my market charging the dealer fee has abated by four…Royal Palm Toyota in the Wellington area, Palm Beach Toyota in West Palm Beach, Treasure Coast Toyota in Stuart, and Delray Toyota have all eliminated their dealer fees. I call this the “domino effect” taken from Dwight D Eisenhower’s famous quote, “Finally, you have broader considerations that might follow what you would call the 'falling domino' principle. You have a row of dominoes set up, you knock over the first one, and what will happen to the last one is the certainty that it will go over very quickly. So you could have a beginning of a disintegration that would have the most profound influences.

Why only Toyota dealers? That’s because of the economic impact that my dealership, which does not charge a dealer fee, has had on each of them. I’ve grown from the second smallest Toyota dealership in Palm Beach, Martin, and St. Lucie Counties to the number one, by far. My dealership is in Lake Park which has a population of only 9,000. In fact I advertise being in North Palm Beach (on the border with Lake Park) because most people don’t know where Lake Park is. The only way I was able to grow Earl Stewart Toyota to number one was to sell into the other Toyota dealers’ markets.

 The 21st century consumer is far more intelligent and discriminating than most dealers give them credit for. If you arm the consumer with information, they usually make the right buying decision. I’ve done a good job of arming the Toyota buyers in my market with that information, but I can’t quit now. The word must be spread throughout Florida and the other states in the USA that still have ineffective consumer laws and regulation. This blog is read on the Internet all over the world. National news stories have been written and talked about my battle against the dealer fee. It’s been reported on CNN, Fox, ABC, the Wall Street Journal, NY Times, USA Today and many other national media.

The reason the dealer fee is such a bad thing lies in one undisputable and fundamental right of the consumer. That is the right to be told the true and full price of any product or service before committing to purchase it. I recently bought a Samsung refrigerator from Lowe’s. I researched it in Consumer Reports and it was the #1 ranked side-by-side refrigerator. Consumer Reports also indicated what I could expect to pay for this model. I expected to and did, in fact, but it for slightly less than Consumer Reports suggested and Lowe’s advertised.  Of course I did have to add sales tax but even the delivery and installation were both included in the advertised price. If I had bought a car in Florida, the chances are about 99% that there would be a “surprise charge” anywhere between $500 and $2,500 (or maybe higher).

Our Florida law on this subject restricts the dealer to not advertising a price that does not include the dealer fee. First of all, the law is not enforced at all. On any given day I can show you many examples of car dealers who simply ignore this law. Some totally ignore it, some simply note in the fine print that the price quote in the large print is plus a dealer fee and do state the amount. Some don’t even state the amount. Many display a small innocuous number by the price, like STK#123B. This means that there is only one car advertised at this price. STK# stands for stock number. Your chances of buying this one car when you arrive are slim and none. What you can buy is another stock # car which may be exactly the same, but, because it wasn’t the specific advertised car, the dealer can legally add any amount to the price that he calls his dealer fee. Florida law calls for no cap to the amount of a dealer fee…it’s left up to the dealers’ gall and imagination.

Of course the name “Dealer Fee” is just the most common one. There are dozens of different names because Florida law also does not specify one. This would make it too easy for the consumer. Dealer Prep, Doc Fee, Notary Fee, Pre-Delivery Fee, and Administrative Fee are just a few. Sometimes the dealers will have two or three “dealer fees”. A popular one now is to mark up the electronic filing fee. This costs the dealer $12 and the dealers can mark that up as much as he wants to. The law says that this should be disclosed because it is considered a dealer fee, but many just ignore that. The legal disclosure on the buyer’s order should be: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale”.

What happens most of the time to customers is that they don’t have a chance to learn about the dealer fee until they get into the F&I office also known as the finance office or business office. This is when the dealer tries to make another profit by selling you products like warranties and marking up the bank’s interest rate. Let me be clear, a fair profit is a good thing and you should consider buying warranties or letting the dealer sell you a warranty if he is competitive in his pricing. But, what else happens in the F&I office is that you are confronted by a large number of documents with lots of fine print that you must sign. On one of these, if you’re lucky, you will finally learn of the marked up electronic filing fee, doc fee, dealer prep fee, or whatever else the dealer decides to call it and how much he decides to charge you. As often as not, you will believe these fees are legitimate federal, state or local taxes or fees. You may not even notice them at all until you get home when it’s too late. Or you may believe that you have to pay these fees and everybody charges them so what’s the harm?

Help me spread the word. Just say no to the dealer fee! Always get a competitive out-the-door price and shop and compare. If the dealer insists on adding a dealer fee, just be sure it’s included in the out-the-door price and compare it with at least two other dealers’ prices. Write your legislator and tell him how you feel about the dealer fee. Call your local newspaper and TV station and tell them the same thing. We need laws like they have in California that keep the dealer fee under control. It’s limited to $65 and every dealer calls it by the same name and charges the same thing. The California car buyer know what’s he’s paying for the car before he commits.