Monday, January 15, 2018

Bait and Switch Advertising

All car dealers pay the manufacturers the same prices for their new cars. Large volume dealers will lead you to believe that they pay less, but this is not true. So, when a car dealer advertises a price for a new car, he has no price advantage over his competition. This isn’t the case with most other products. Large volume sellers like Amazon, Walmart, Target, and Costco can negotiate much lower prices from the manufacturers than smaller “mom and pop” stores. Protective car dealer franchise laws lobbied into law in all 50 state legislatures require auto manufacturers to sell their cars to all their dealers at the same price.

Virtually all the prices for new cars you see advertised are so low that it would be impossible for a dealer to remain in business if he sold more than a very few cars at that price. The reason for this is that, if a dealer advertised realistic prices with a reasonable profit built in, another dealer would advertise a lower price. The dealer who advertised a realistic price is helping his competitor sell a car.

Most of the new car prices you see advertised are below the dealers actual cost. He protects himself by selling very few at this price and counting this loss as a cost of advertising. Next to an advertised car you will see some letters and numbers like, #5632A. That is the “stock number” of the car being advertised. This is all that the dealer does to tell you he has just one at this price. The chances are that if you are not the first person in the dealership on the morning of the ad, this car will be gone. Often these cars never existed, but you are told that the vehicle was sold.

Look for these two fine print disclosures at the bottom of the ad: (1) Price good on date of publication only. (2) Price good with copy of this ad only. These are just two more ways the dealer can avoid selling you the car at the advertised price.

If you’re a regular reader of my column, you understand about “dealer fees”. These fees are additional dealer profits ranging from $700 to over $2,000 that are added to the agreed upon price of the car by virtually every car dealer in Florida. They’re generally more than one dealer fee. “Dealer Fee” has become a generic term for phony fees like electronic filing fee, notary fee, doc fee, tag agency fee and many more. Florida law requires that this dealer fee be included in the advertised price. When the salesman tells you the advertised car has been sold but he has another one “exactly like it”, he can legally add back all of his dealer fees.

As you would guess, the salesman’s commission on an advertised car is often either zero or very small. Having no or a very small incentive to sell an advertised car, he will most likely encourage you to buy any other car.

My recommendation to you is to ignore advertised new car prices. If you must respond to an ad car, call the dealership first and ask if the car is still available. If the answer is no, you have saved yourself a lot of time and aggravation. If the answer is yes, ask if they will hold the car for you. If you must, offer to give them your credit card for a deposit to hold the car. If they won’t hold the car, save yourself the wasted trip.

The only way to get the best price on a new car if you’re dealing directly with car dealers is by getting competitive bids from at least 3 car dealers for the exact same year, make, model, and accessorized car with the identical MSRP. You can do this on the Internet, by phone, or in person. The Internet is likely to give you the lowest price. UseConsumer Reports magazine, the Internet www.edmunds.com and www.kbb.com are two excellent free sources of information), or even your local library. There are two other great ways to buy online, www.TrueCar.com and www.CostoAuto.com.

Monday, January 08, 2018

Dear South Florida car dealer:

You’ve probably heard of Earl Stewart Toyota, located in Lake Park, FL but you might think we’re located in North Palm Beach. We exercise “poetic license” and use North Palm Beach as our location because Lake Park is such a small town, population 8,155 as of 2017, few people know where it’s located. Last year, 2017, Earl Stewart Toyota sold 3,349 new cars and 1,934 used… 5,283 total vehicles!

As a car dealer in a large metro area like West Palm Beach or Delray, you must at least be curious how a car dealer in a small town with a population of just over 8,000 (including those too young and too old to drive) can sell more cars than you. In fact, for the last 14 years, Earl Stewart Toyota sold more vehicles than any new car dealership on Florida's east coast between Orlando and Broward County.

How is this possible? The answer is that Earl Stewart Toyota is selling cars to your customers in your town…Deerfield, Delray, Boca Raton, Boynton, Lake Worth, West Palm Beach, Palm Beach Gardens, Riviera Beach, Wellington, Stuart, Ft. Pierce, Port St. Lucie, Melbourne…in fact all over the state of Florida. Your next question must be “why is this happening?”

All car dealers claim to be honest, transparent, and to “love" their customers. This is clearly not so because the Gallup Organization in its annual poll since 1977 has ranked car dealers last, or almost last, in their “Honest and Ethics in Professions” poll, http://news.gallup.com/poll/1654/honesty-ethics-professions.aspx. At this dealership, they walk the talk.

1. Earl Stewart Toyota posts the lowest out-the-door price on every new and used car.

2. The prices Earl Stewart Toyota's customers are quoted by its sales people and advertisements are the same as its lowest online price.

3. Earl Stewart Toyota does not add dealer fees to the posted, quoted prices. As you know, the dealer fee is the generic term for the hidden profit you add to the price of your cars. You use lots of names to disguise it like electronic filing fee, processing fee, notary fee, doc fee, tag agency fee, dealer services fee, etc. Earl Stewart Toyota's prices are our lowest and out-the-door, adding only what it pays the state of Florida for the sale tax and license plate/registration. 

4. Earl Stewart Toyota does not pre-install dealer installed options or accessories and add these to its advertised prices. All options and accessories on cars it sells you are factory installed, unless you ask for them to install a special option after you buy the car. 

5. Earl Stewart Toyota sells you the car that you came into buy, and does not try to switch you to another car with more profit.

6. Earl Stewart Toyota gladly gives you its lowest price on any car you choose to buy and encourages you to shop and compare its price with the competition. They don’t try to switch you to leasing because dealers make more money leasing. The price its customers pay if they lease is the same price and profit to them if they buy.

7. Earl Stewart Toyota doesn’t ask its customers to trust them without reciprocating that trust. If the customer changes her mind for any reason after the purchase, they offer a100% unconditional moneyback guarantee for one week. This is a full cashback offer, not a “credit” on another car. There are no conditions and no fine print, the customer doesn’t even have to tell them why he/she changed her mind.

8. Earl Stewart Toyota offers real online, one-click Amazon-like car buying. A customer doesn’t even have to come into the dealership or talk to a salesman. They offer free delivery anywhere in Florida. The customer can pay with his credit card, bank transfer, or finance. 

9. Earl Stewart Toyota is the only car dealership I’m aware of that does not take away the customer’s right to sue the dealership if he/she feels she has a reason. All other dealers have an arbitration agreement in the fine print of their vehicle buyers order. This requires customers to waive their constitutional right to their “day in court”. An arbitration agreement requires that any dispute be resolved by a team of lawyers or retired judges. This “team” is chosen by the car dealer and their decisions often favor the car dealer. This is further evidence that Earl Stewart Toyota trusts its customers as much as they ask their customers to trust them. 

10. At Earl Stewart Toyota, there are no automated answer machines, secretaries, or anything else shielding anyone from direct access by all customers. One again, how can one expect customers to trust them if we don’t return this trust. My personal cell phone number is 561 358-1474 and every one of my customers has this number. All my managers…service, sales, body shop, parts, finance, and accounting make their cell phone numbers available to all our customers. We also have five RED PHONES strategically located around my dealership. My customers can pick up any of these phones and be automatically connected to my cell phone. We do this because we know we’re far from perfect and we do make mistakes; but what makes us different from other car dealerships is that our customers can always reach the person in charge who can make it right.

There, Mr. Car Dealer, you now have the 10 secrets to Earl Stewart’s success. All you must do is put them in place and be sure they are followed by your employees. If you do this, you’ll be able to sell as many cars as I do, or maybe even more! Excuse me if I don’t look worried, because it requires a lot of courage, trust, moral integrity, transparency, and HARD WORK.



Yours truly,

Earl Stewart