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Monday, March 02, 2015

Why You Almost Never Read the Truth About Car Dealers in Local Newspapers

Update: The following post was submitted to The Hometown News to run on March 6th, but was rejected for the following reasons: "We cannot be a platform for criticizing other newspapers or media outlets. We hope you understand our position in this matter.Please re-submit a column that offers car-buying advice, car maintenance or the like."

If you’re reading this article in the Hometown News (which you aren't; please refer to update), you’re very fortunate to be reading a local newspaper that has the courage and journalistic integrity to print the truth about car dealers and to recognize our rights of free speech. In contrast, The Palm Beach Post has repeatedly refused run this weekly column. In the recent past, I’ve even met privately with the publisher of the Palm Beach Post. I was told that he would love to publish my weekly column but he feared he would lose most of his local car dealer advertisers. The sad fact is that car dealers are among the largest advertisers (if not the largest) in local newspapers. As you know, with the historic rise of digital media, print newspapers are on the “endangered species list” and the loss of their largest advertisers would likely result in bankruptcy.

Last week I was approached by an advertising salesperson for the PB Post to run an advertisement. I don’t do a lot of print advertising because newspaper circulations have dropped precipitously. But she offered me a large discount and I agreed to run an ad in last Friday’s paper. The ad I submitted was a column that I’d already run in the Hometown News and my blog, www.EarlStewartOnCars.com. I figured that as long as I was paying for it they wouldn’t refuse to print my advertisement. I was wrong.

I’ve reproduced the email exchange between me and Sharon Garden, the Palm Beach Post advertising salesperson here, and below that, I’ve displayed the advertisement that they refused to print. They claimed that the denial was because the “copy submitted for the vehicle profile promoting the 2015 Toyota Camry does not meet the standard for promoting the 2015 Toyota Camry adjacent to the promoted vehicle profile vehicle.” If that’s true, then I challenge the Palm Beach Post to allow me to run that same advertisement alone without the “Toyota Camry promotion”.  Email from Palm Beach Post sales representative Sharon Garden:

“Good morning, I have been advised that the copy submitted for the vehicle profile promoting the 2015 Toyota Camry does not meet the standard for promoting the 2015 Toyota Camry adjacent to the promoted vehicle profile vehicle.

The Friday Vehicle Profile special feature is comprised of the top half page telling the story about the featured vehicle. The bottom portion of the Vehicle Profile special feature is the half page ad space promoting the sale of the featured vehicle. A dealer can put additional vehicles in the ad promoting the sale of vehicles. The copy below does not meet the ad format of this Vehicle Profile special feature. 

If you would like to send me an edited version of instructions for creating an advertisement that reflects the nature of the article, I would be happy to assist you.

The online portion of the vehicle profile is still in production this morning. I will send you a copy for your review as soon as it is out on proof.

Thank you for the opportunity to serve you.

Regards,

Sharon”
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Open Letter to Florida Car Dealers, Part II: Stop Your Bait and Switch Advertising!

Dear fellow car dealer, in case you missed my last letter to you on “dealer fees”, you can find it on my blog, www.earlstewartoncars.

The subject of this letter is the ads most car dealers run which are designed to motivate prospective car buyers to come into their dealerships believing that they can buy or lease a vehicle for less than they really can. These ads appear in newspapers, direct-mail, TV, radio, and the Internet. If you are one of the few car dealers who do not do this, I know you will enjoy reading this column and agree with me.

One of the most common lures is advertising the new vehicle below your cost. You spend thousands of dollars advertising monthly and consider losing a little money on one or two cars as part of your advertising budget. The problem is that you deliberately limit the number of cars you will sell at this price and you do this in a deceptive manner. One way this is done is to show a stock number next to the price of the car. This translates into there being only one car available at that price. 

Another technique is to use the phrase “other cars available at similar savings”. First of all, how do you define “similar”? Secondly, Florida law requires that you include “dealer fees” in all advertised prices, but not in cars that are sold for “similar savings”. Adding back that dealer fee can turn a “loss leader” back into a profit.

Another trick is to show huge discounts from “list” when list is defied in the fine print as including “dealer installed” options. By simply marking up whatever options you choose to install on an advertised car, you can generate as much markup as you like. 

Bait and switch is also aimed at monthly payments. By disclosing in the fine print that a very, very high credit score is required to qualify for an advertised low payment, lease or purchase, you limit the possible buyers that can qualify to a very small percentage of the population. The vast majority that cannot qualify ends up with a much higher payment and higher profit to you. 

A favorite deception is to advertise very large “minimum trade-in allowances”. I have seen trade-in “minimums” as high as $15,000. These ads are clearly aimed at prospects from the lower economic strata that are currently driving older cars and may be less sophisticated and informed buyers. A smart buyer knows that you cannot possibly allow someone $15,000 on a trade-in worth $250 unless you make back that deficit in additional markup on the car you are selling. 

Another deception aimed at the lower economic, less educated portion of our society is the “no credit, no problem” ad. Having bad credit or no credit most definitely is a problem. It might not be a problem for you but it is for the person with the bad credit and it is for the bank that will refuse to finance that person. Another version of this trick is “no credit application refused”. A sophisticated buyer knows that all you are saying is that you will allow anyone to fill out a credit application and you might even agree to submit it to a lender. But you are not telling him that her credit application will be refused if her credit is too bad or not sufficient. 

There are other examples that I could cite and there will be new ways that many dealers will come up with to lure buyers into their dealerships. As I said in my last letter, I am asking you to voluntarily stop this form of advertising before the regulators make you stop. I am not suggesting what you are doing is illegal, but I am saying that it is not right. I am also saying that it is bad business. If I can’t get your attention by asking you to treat your customers with respect and consideration, how about if I tell you that you can sell more cars and make more money if you do? You are successful in luring lots and lots of people into your dealership, but you sell only a small portion of these people cars. Those you don’t sell are probably angry at you when they learn they cannot buy the car for the price they believed. Even the ones you do sell may be angry because they had to pay you more money than they wanted. Unhappy customers don’t come back and they tell their friends. You have to spend more and more on advertising because your repeat and referral business is so bad. This is not good for your bottom line and your manufacturer is probably “on your back” because your customer satisfaction rating is so low. If you would like to discuss this with me, please call or email me. My numbers and addresses are below. 

Sincerely,


Earl Stewart,

561 844-3461
Email: earl@estoyota.com

2 comments:

  1. I wanted to say thank you Earl! Your honesty about dealer fees saved me over $1!950 in fees today. I was at a dealership in Delray and pulled up your forum learned a thing or two quickly. Our salesman and manager both really did like the insinuation of deception and legality of dealer fees in the state of Florida. In the end I got my vehicle for what I wanted with no kind of dealer fees. Thank you for helping out us "little guys"

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  2. Dear Bobbie and Lisa, thanks so much for sharing your difficult but victorious experience with the car dealer's dealer fee. This brings happiness to my heart knowing that my efforts are helping people like you. After I finish typing this response, I'm driving to Boynton Beach to speak to the Valencia Reserve Men's Club. I continue to spread the word as to how to avoid being taken advantage of by car dealers.

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