Monday, September 26, 2022

A Salute to WPLG TV South Florida & Investigative Reporter, Jeff Weinsier

Regular readers of my column know that I often blame Florida’s regulators, like our Attorney General, Ashley Moody, and our Florida legislature/lawmakers for allowing the rampant and obvious deceptive, unethical, and often illegal advertising and sales practices of most car dealers. I’m probably remiss in not pointing to the media. How often have you seen a news story on TV, read an article in the newspaper, or heard one on the radio about a local car dealer doing anything wrong?

We know the reason our politicians and regulators give bad car dealer behavior a pass. It’s called “follow the money”. A politician can’t get elected without the support/money from car dealers, their associations, and their PACs, Political Action Committees. “Money, the root of all evil” is also why the media looks the other way to car dealer bad behavior, especially the localmedia. You can understand this by noticing the number of car dealer and auto manufacturer ads you see and hear daily, maybe even more than attorney ads. Without this major source of advertising revenue, most TV, radio stations, and newspapers would have a difficult time surviving.
The link at the beginning of this article is the second one in, what I hope will be, a series of news stories about South Florida’s car dealers and their unprecedented bad behavior. No other state in America equals the extremely deceptive advertising and sales practices of Florida dealers, especially South Florida. Most car dealers in all 50 states leave a lot to be desired in the way they treat customers. I cite the Gallup annual poll on Honesty and Ethics in Professions to prove my statement.
When WPLG investigative reporter, Jeff Weinsier, interviewed me several weeks ago about car dealers’ bad behavior regarding leasing customers exercising their option to purchase their leased car, I told him this. “I’ve been interviewed many times by local TV, radio, and newspapers and their editors always reject the stories that speak badly of local car dealerships. In fact, I cited a case with WPLG a few years ago. Their investigative reporter, preceding Jeff Weinsier, spent almost two days with me. She attended a speaking engagement I made at a Rotary Club and spent the day at my car dealership in North Palm Beach. Her editor pulled her story because it negatively reflected on South Florida car dealerships, one of WPLG’s major sources of adverting dollars.
You’ve heard the term “The Fourth Estate”, meaning the press. America’s free press is as equally important as our government…the Congress, Senate, and the Executive branch. Journalism is supposed to be among the noblest of professions. They’re certainly among the most powerful because out constitution protects them from our government! No other country allows their press to say and write anything they like. But we are a capitalist society and money is the Achilles heel of the American free press. Even I find it hard to argue against a newspaper or TV stations right to choose financial survival above journalistic ethics.
So, I applaud WPLG, channel 10, and Jeff Weinsier for nobly going forth to tell the truth about South Florida car dealers. Their effort will certainly cost them a large amount in car dealer advertising revenue. When you tell the truth and aren’t afraid to face severe consequences, you’re displaying the courage that gave America’s free press the reputation of the best on the Planet.
If other media were to follow their lead, it would have a huge positive impact on buying or leasing your next vehicle. If you didn’t already know, you would be forewarned about what to expect in the car dealership. But, even more importantly, our politicians and regulators would change their “hear no evil, see no evil, do no evil” policy to car dealers. Why? Because you and all consumers are mostly also voters. When Jeff Weinsier and WPLG had the courage to shout, “The Emperor has no clothes”, this becomes an opportunity to garner more votes by giving the voters what they demand…honesty and ethics with Florida car dealers.

Monday, September 19, 2022

Are the Devils You Know (Car Dealers) Better than the Devils You Don’t (Car Manufacturers)?

Car dealers have been the retailing arm for auto manufacturers for over 100 years. Auto manufacturers needed dealers to grow as rapidly as they have, beginning with Henry Ford and the Model A. Henry’s invention of assembly line production allowed him to build far more cars than he could possibly sell from his manufacturing facilities, and it would have been too expensive and cumbersome to build his own network of retail outlets, hence the birth of the franchised auto dealer.

When Ford, Gm, and Chrysler built dealership net works all over the USA, they had total control over their dealers. The car dealers were only able to sell cars under the terms and conditions of short-term contracts named “franchise agreements”. These contracts were very short-term and one-sided, favoring the manufacturers. Manufacturers could cancel a dealer’s contract for almost any reason and the dealers had virtually no legal recourse. Manufacturers could add as many dealerships in each geographic area as they wanted, and this put extreme financial pressure on the dealers. Dealers were given unrealistically high quotas of numbers of cars they must sell each month. If they failed to meet their quota, their franchise was cancelled and they went out of business, bankrupt in most cases.

But the dealers fought back by forming dealer associations and lobbying their state legislators to make laws protecting them from their manufacturers. The car dealers in each state became one of the largest employers and taxpayers. The state politicians realized that this meant car-dealer support was necessary for their reelection. Slowly, but steadily, laws were passed in all 50 states making it impossible for auto manufacturers to cancel their dealers’ franchise contracts. These state franchise laws made it virtually impossible for auto manufacturers to control their dealers. Originally dealership franchises were one year in length. This evolved to two years, then six years, and today are mostly perpetual. Manufacturers can’t tell a dealer how he can advertise, price his cars or service or what disreputable sales tactics he employs to sell cars. If a dealer chooses to sell his franchise to someone else, the manufacturer had very little say as to who that can be.

However, the manufacturers retain one significant power over their dealers. Because the manufacturer builds the cars, they can build and offer as many as they want to all of their dealers. By flooding any given market with too many cars, each of their dealers has little choice but to accept and buy all the cars they’re “offered” by their manufacturer. If a dealer declines to accept and buy all the new vehicles his manufacturer asks him to, his competitor dealers selling the same make will accept them. Because there’s such a large proliferation of models, colors, and options on every make of car, the car dealer with the smallest selection loses sales to his competitor with the larger inventories.

This artificial condition of too-large inventories should be good for you, the car-buyer. In fact, it is for the educated, sophisticated consumer who can see through and overcome car dealers aggressive and deceptive sales practices and advertising. However, for the average buyer, this artificially over-inventoried situation orchestrated by the manufacturers, forces car dealers to “do whatever it takes” to sell their over-supply of cars. “Whatever it takes”, unfortunately translates into what you know car dealers are guilty of today, bait and switch advertising and unfair and deceptive trade practices. The proof of this is Gallup’s annual poll on Honesty and Ethics in Professions, conducted every year since 1977. In each of those 45 years, car dealers have ranked last or next to last of all businesses.

The last 2 ½ years and the advent of the Covid pandemic drastically reduced the artificially high auto inventory standard. Today, car dealers have virtually no inventories and prices have soared to historic highs along with car dealer profits. The law of supply and demand worked perfectly. Car dealers’ average profit per car soared from around $1,500 per car to about $10,000 per car. The new car volume has shrunk slightly but the leap in profits more than overcame this. Car dealers are higher profits in their new car departments than ever before in their history. Manufacturers also raised their prices to their dealers by virtually eliminating dealers cash incentives as well as customer incentives. Don’t think that the auto manufacturers and dealers don’t look at the Covid Pandemic as an economic blessing in disguise. You can be sure that manufacturers and dealers are thinking about the future and how they can maintain the obscenely high profits per car as they are enjoying today.

The obstacle to achieving a lower supply of cars promoting a higher price and profit per sale is competition…the consumer’s best friend. The manufacturers are as insanely competitive as their dealers. Ford wants to outsell Chevrolet, Honda wants to outsell Toyota, etc. By building as many cars as they can and forcing them on their dealers, they hope to outsell their competition. Dealers, on the other hand, would prefer not to return to the days of breaking even and often losing money in their new car departments. Many of them might even like to retail their products with honesty and transparency, not having to sell as many cars as the manufacturer, subtly but forcibly, requires the dealers to buy from them.

The knowledge and science explosion combined with the Covid pandemic has thrust the world into an accelerated change unprecedented in human history. The auto industry, manufacturing, and retail is right up there at the peak of this change. The vehicles and how they will transport us in 20 years will bear little resemblance to today. Will GM, Toyota, Honda, Ford, and all the manufacturers be selling to us directly like Tesla does today? Will car dealers be extinct?

In my opinion, car dealers could be a better answer than buying directly from the factory. This probably surprises many of my regular readers who know what I think about today’s car dealers. I’ve also spoken highly of Tesla and their factory direct policy of selling their cars. I feel this way only because to the lack of honesty and transparency by most car dealers. They’ve made the buying experience a nightmare for most buyers. I liked the Tesla buying experience (I bought one for my wife, Nancy, and me) and almost all Tesla buyers compliment the no hassle, no haggle fully transparent buying experience.

Most people don’t know that Tesla marks their cars up above their cost much higher than any other auto manufacturer. They can do this because they have very little competition. They dominate the EV market and, if you want the best EV and a pleasant buying experience there’s no one else you can buy from. Tesla has virtually no competition. Competition is usually a buyer’s best friend.

It should be the same way with car dealers because they are extremely competitive. The reason car dealer competition is NOT the car buyers’ best friend is that car dealers are unregulated and uncontrolled and that they are, to some extent, forced into this M.O. by their manufacturers forcing them to buy more inventory than the can sell in a fully transparent an honest matter. Again, I reiterate that this is normal times, pre-covid and, hopefully, post-covid.

My recommended solution to the problem is to require our regulators to enforce the laws on the books against unfair and deceptive trade practices and for our federal and state law makers to pass any additional necessary laws to protect car buyers from predatory car dealers. This solution gives car buyers all the benefits of strong competition keeping car prices down without the fear of high pressure, dishonesty, and lack of transparency.

Monday, August 29, 2022

Car Dealers & Buggy Whips

We car dealers have had a pretty good “run for our money”. The first car dealership was established in 1897 by William E Metzger, but didn’t only gained momentum after Henry Ford figured out how to mass produce cars in 1908 with the Model T. That’s 114 years ago. My father, Earl Stewart Sr., born in 1892, started his dealership in 1937. I started in business with him in 1968 at Stewart Pontiac Co. in West Palm Beach, FL. Today, my family and I operate a Toyota dealership in North Palm Beach. 
Car dealerships today were “frozen in time” as retailers about 80 years ago after powerful and wealthy car dealerships, their lobbying associations, political action committees, and dealer associations got franchise laws imbedded in the laws of all fifty states. These franchise laws protected car dealerships from their manufacturers as well as state and federal laws and regulation. Therefore, buying a car is unlike any other retail experience. Only a franchised new car dealer can legally sell you a car. Auto manufacturers are not allowed to sell directly to the public. Car dealers can and do set the price of new cars at any price they decide. Each vehicle is sold at the highest price a car dealer can “get away with” and no two buyers pay the same price for the same car. The Gallup annual poll on Honesty and Ethics in Professions have ranked car dealerships last (or next to last) for the last 47 years. 
You’ve probably heard the expression, “I’d rather have a root canal than visit a car dealership”. Despite this common view of the car buying experience, car dealers have grown in number and prospered as never before, thanks to their invulnerability due to state franchise laws and their lobbying prowess. It took the 21st century quantum leap in technology…the Internet, super-quantum computing, artificial intelligence, Metaverse, etc. to precipitate the decline and fall of car dealerships. 
Ten years ago, who would have believed battery technology would make the combustion engine obsolete and today California will allow only the sale of all electric vehicles in 2035! Autonomous vehicles will be on the scene faster than we saw electric vehicles. The car I’m driving now, a Tesla model S, Plaid, has fully autonomous capability built into its software. Of course, fully autonomous vehicles aren’t legal today and the technology isn’t perfected, but it will be very soon. 
Technology isn’t the only thing that’s changing at warp speed. We humans are getting smarter and smarter. We prioritize things differently than we did in the 20th century. When I was growing up in, the 1950’s and ‘60’s, there were few things more important than cars…the faster the better. I couldn’t wait to get my driver’s license and then couldn’t wait to have my own car. Today, most people born after 1980 don’t fall in love with cars their cars; they look at them more as “a way to get from point A to point B”. Time is very important to us today and the idea of a 2 hour round trip commute every day is bad. Spending over $40,000 on car that we use only about 10% of the time we’re making payments on it is a bad idea.
Fast forward to 2040. Virtually all vehicles are all electric and totally autonomous. They require virtually no maintenance. No one owns a vehicle; they only pay for the time they use a vehicle. Think “Uber or Lyft” today, only with every vehicle on the road being just like Uber or Lyft. It’s time to go to work, school, or anywhere. You choose the app on your smartphone to summon the vehicle of your choice…an SUV, van, sports car, luxury car, or a ride share, economy car. You enter your destination the cost goes to your credit card and the vehicle arrives within one minute. You get into the vehicle, and it takes you to your destination at a higher speed and a shorter time than can imagine today. Why? Because all vehicles are autonomous, and they all travel on the expressways and roads at the same high speed...100 mph or more. It’s also far safer than you’re driving today. It’s already been proven that computers can drive cars safer than humans. Computers don’t drink and drive, use their cell phones for texting, or eat their lunch while their driving. Your cost of transportation will be only small fraction of your total cost of owning a car…including maintenance, repairs, insurance, depreciation, collision repair, interest expense, etc. 
Maybe the best part of this whole scenario is that you’ll never have to walk into a car dealership again. 😊

Monday, August 15, 2022

Chat with Earl on Cars In-Person at your Group

If you’re a regular reader of this column or a regular listener to our live radio weekly talk show, we thank you very much. However, we believe that our advice to you “regulars” is like “preaching to the choir”. Nancy, Rick, Stu, and I often comment during the radio show (Earl on Cars; 8-10 am EST Saturdays) that we learn as much from our callers/texters that they learn from us. Our regular listening and reading audience are mostly smart, savvy consumers. In fact, that’s why we formed, a group of educated consumer volunteers to advise those less informed in their communities about how to buy, lease, maintain, and repair their vehicles without being taken advantage of.
This column is just another attempt to reach those who most need our and your help when “dealing with car dealers”. Our followers know that car dealers have been ranked last or next to last since 1977 on the Gallup annual poll on Honesty and Ethics in Professions (Google it for more details).
Before the COVID pandemic, the “Earl on Cars” team was “on the road”. We regularly spoke at public libraries, service clubs like Kiwanis and Rotary, public schools, women’s and men’s clubs, condominium groups, seniors’ associations, and just about any group that needed our help. With the pandemic more under control, we’ve begun venturing out again. Last week we spoke before the Wellington, FL Rotary club and we’ve accepted an invitation to speak at the Computer Club of Valencia Falls in Delray on February 9. I, Nancy Stewart (my wife and co-host of Earl on Cars), and Rick Kearney (Certified Diagnostic Master Auto Technician) comprise our public speaking team.
We would love to hear from your group if you’d enjoy having us as guest speakers. We typically offer advice on how buy or lease a vehicle as well as maintain and repair it without being taken advantage of by a car dealer. There’s no charge, of course. We offer our advice to your group, just as we do in this column and our radio show (we’ve been doing this for about 20 years). In full transparency and disclosure, I’ve owned a Toyota dealership since 1975, but our advice is purely as consumer advocates to help your group. I promise we will, in no way, endeavor to “sell you a car”.
We’re accepting speaking engagements in South Florida for the remainder of 2022 and all of 2023. Naturally, we can’t accommodate every request, so we’ll be more likely to accommodate the earlier requests. Please call 561 612-6606, and give my assistant, Diane Dorsey, the complete information for the speaking engagement. This should include the time and date (if possible, one or more alternatives), name and location of your group, contact information, approximate number of attendees, and any specific auto topics you’d like us to focus on. The time length of our speaking engagements typically vary from 30 minutes for luncheon meetings to an hour.
We hope to meet and talk with you and your group in the near future.

Earl Stewart

Monday, August 08, 2022

Auto Sales Commissions: The Root of all Evil

Of course, the real quote from the Bible, Timothy 6:10, is “The love of money is the root of all evil”. If you don’t already know this, almost all car salespeople are compensated, almost totally, by a percentage of how much profit they make when they sell you a car. The average commission is about 25%. Virtually all car dealers are marking their cars up thousands above MSRP. With the average profit made on a car today being over $5,000, a salesperson earns about $1,250 for each car he sells. An average car salesman sells about 10 cars per month and a good car salesman will sell about 20. They’re earning $12,500 to $25,000 monthly.
As you know, auto sales dealerships are the only retail companies that allow their products’ markups to be determined by the salespeople. The upper management and owners of all other retail companies set the prices of their products to their customers. A car salesman is compensated and motivated to mark up the profit margin on the car he sells you “as much as he can get away with”. On any given day, the exact same MSRP, year-make-model car is sold at widely varying markups to different buyers. The shrewd, experienced negotiator-buyer might buy a new car close to MSRP, but a more gullible, inexperienced buyer could buy $10,000+ above MSRP. In today’s uniquely low supply, high demand automotive environment, car salespeople and dealers are making more money when they sell you a car than ever before in auto-retail history, about 100 years!

It's unethical, immoral and it should be illegal to sell the same product to every buyer at a different price determined by the buyer’s gullibility and inexperience. This is usually correlated to a buyers’ age, education, sophistication, and comprehension of the English language. Our civil rights laws protect certain classes of people against various kinds of discrimination. Interest rates on car loans are even covered by these laws; Why aren’t they also protected against outrageous markups on cars that are sold to others at much lower prices?
A car dealer that allows his salespeople to mark up each car he sells as high as he can get away with is guilty of discrimination, pure and simple. This needs to be codified into law by our lawmakers and enforced by our regulators. Ironically, our lawmakers and regulators are members of the privileged class that gets the lowest prices. In fact, one could make the argument that the unrealistically lower prices they’re able to command, may even cause other buyers to pay more. What kind of a “deal” do you think a governor, senator, or congressman gets when he or she buys a car, compared to your price? How about an Attorney General or the head of the County Office of Consumer Affairs?

All car dealers should be required by law to post the out-the-door price on every car they sell and sell every car to every customer at that price. The legal definition of the out-the-door price should be “a price with no added charges except government fees (sales tax and license plate). The governor of the state or the President of the United States should have to pay the same out-the-door price as you and me.

Monday, July 18, 2022

The Warranty on Your New Car May Be Less Than You Were Promised

There’s a very good chance that the warranty on your new car is for a shorter time than you thought. This likelihood is much greater since the COVID crisis precipitated the microchip and other parts shortages, limiting production while consumer demand and prices climbed to all-time highs.
The featured Op-ed story in a recent Automotive News (the auto industries trade journal) was entitled “Yes, a car must be delivered to count as sold.” What the editor of this op-ed was alluding to was that many car dealers are lying to their manufacturers about the number of cars they’re truly selling, in order to “earn” more production from the manufacturer than they are entitled to. All auto manufacturers calculate the number of cars they sell and ship to each dealer by the number of cars that dealer “sells”. The only way that a manufacturer knows that a car is sold by a particular dealer is when that dealer emails his retail daily reports (RDR’s) which include the customer’s name and VIN of the vehicle purchased. It’s important that dealers report sales every day for any vehicles he sells, because a replacement vehicle is then shipped immediately.
Most dealers, most of the time, have falsified these Retail Sales Reports to get new inventory ahead of their competitive dealers, especially with high demand/low supply vehicles… like the Corvette, Subaru WRX, and most hybrids. Most dealers have always reported these sold, whether they were or not as soon as they learned the VIN. This deception is motivated purely by greed to receive new cars the dealer is not entitled to because the factory believed the dealer was really selling and delivering them to a buyer. The car may not be truly sold for weeks or months after its reported sold to the manufacturer.
The big problem for the real car buyers with all of this is that the manufacturer began the “new car warranty clock” ticking as soon as they received the dealers bogus retail sales report. If you bought one of those, and it’s very likely you might have, your new car warranty will actually end days, weeks, or even months before what your new car warranty promises. If you had a transmission problem today and you supposedly had a 5 year/50,000-mile warranty, you’d have to pay out-of-pocket because the dealer had lied to his manufacturer about the true sale date, weeks, or months earlier.
Your best protection against this is to ask the dealer, before you pay for the car, to show you the dated retail sales report he sent to his manufacturer. That date should match the day you take your new car home. If it doesn’t, your options are several. You can insist that he correct this false report to show the current date. He may be reluctant to do this because the manufacturer will penalize his new car allocation based to bogus sales reporting. You can contact the manufacturer directly and expose the dealer’s deception. Of course, you can simply refuse to buy the car. A final option would be to get a written commitment from the dealer to repair anything that should have been covered by warranty that wasn’t because of his deception. Remember that this commitment would be good only for this specific dealer. If you were out-of-state and had to go do a different dealer, you’d be out of luck.

Monday, June 27, 2022

Open Letter to Gov. Ron DeSantis

Dear Governor DeSantis,
You probably don’t know me, but I’m a native Floridian, born in Ft. Lauderdale in 1940. I’ve owned and operated Earl Stewart Toyota in North Palm Beach since 1975, after beginning in the car business as a Pontiac dealer in 1968. For about the last 20 years I’ve evolved into a consumer advocate for car-buyers, advising them how to buy a car in Florida without getting ripped off.
I became a consumer advocate for car-buyers because I came to realize that my chosen profession as a car dealer was regarded by the public as the most dishonest and unethical of all other professions. Governor, did you know that the Gallup Annual Poll on Honesty and Ethics in Professions has ranked car dealers at the bottom or next to the bottom for the past 48 years? The honesty and ethics of car dealers in our state, Florida, is the worst of all 50 states. Florida is the beast; South Florida is the “belly of the beast”.
Governor DeSantis, I challenge you to find one price advertisement for a new vehicle in Florida that is honest. In other words, one that allows you to buy the car for the ad price (excluding only the government fees of sales tax and license plate). If you can do this, I’ll write an apology to you and the car dealers that advertised those prices.
Only car dealers are allowed by Florida’s regulators to get away with this. All other retailers comply with Florida laws to advertise real prices without hidden fees or extra, undisclosed options. The two largest retailers in World, Walmart and Amazon comply. Check Florida Statute 501, section 976, actionable, unfair, or deceptive acts or practices and you’ll confirm that virtually all Florida car dealer price advertisements are illegal. They’re illegal, not only by Florida law but federal law, the FTC. The Federal Trade Commission prohibits any fine print that will serve to increase the advertised price.
Your Attorney General, Ashley Moody, should be acting against all car dealers violating Florida and federal laws. Other AGs in many other states are acting, including against Florida car dealers. Why do Floridians need to rely on an Attorney General from Arizona to discipline Ed Napleton, a Florida car dealer?

By the way, Governor, I’m a realist and pragmatist. I understand how politics work and I know what it takes to get elected. I have my problems with politics and politicians, but our system is the greatest on the Planet and every day I’m thankful to be an American. I think you’re missing a huge opportunity by not coming down on dishonest, unethical car dealers. Most voters’ own cars and must do business with car dealers regularly. Most voters also fear and/or despise their experience…” I’d rather have a root canal than buy a car”. If you became a champion for the car buyers of Florida and the nation, you’d garner a lot of admiration and thanks, maybe resulting in the casting of their votes for you for he next President of the United States.

Yours Truly,

Earl Stewart
The Recovering Car Dealer

*Note: This column appears in The Florida Weekly. The Hometown News, who publishes my regular column, refused to print this column, citing my references to politicians and car dealers.