Monday, May 16, 2022

If You’re Driving a Leased Car, You May Have a “Happy Ending” Surprise




Leasing has become more and more popular, and today about a third of the cars on the road are leased. If you leased your car two or more years ago, the leasing company didn’t know what was going to happen to the price of new and used cars as the result of the COVID pandemic.
 
The main variable that determines the size of your monthly lease payment is the depreciation of the vehicle you’re leasing. The total depreciation is calculated by subtracting the estimated value of the leased car at the end of the lease from the cost of the new vehicle. To some extent, leasing companies must “look into their crystal balls” and estimate what the market value of the new car they lease you will be worth as a used car in 3 or 4 years. There are guidebooks for residual values based on historical supply and demand for different makes and models of vehicles. But these studies didn’t anticipate the Covid pandemic and resulting surge in demand and supply chain stoppage that sharply reduced supplies, especially of vehicles.

Consequently, depending on when you leased your vehicle and what make and model you leased, the actual market value may be thousands of dollars higher that your option to purchase it. Many people who lease cars never knew they have an option to purchase it at the anticipated residual value. Most people, if they did know, don’t exercise this option. People generally lease new vehicles because they like to drive a new car every 3 or 4 years and aren’t used car buyers.
 
Today, you should check the residual value of your lease that is on your lease contract. It’s not prominently displayed and will require some searching on your part. You should then compare this amount with the current market wholesale value of your leased vehicle. It’s easy to get this today because of the huge demand and low supply of used cars. All car dealers are frantically looking for and buying used cars. New companies have sprung up during the pandemic to exploit the high demand and low supply of used vehicles. Some of the new ones are www.WeBuyAnyCar.com, www.Carvana.com, and www.Vroom.com. www.CarMax.com has always been a good place to sell your used car. Include the used car lot for the dealer that sells the make you’re leasing. Get at least three bids to maximize the price you’ll get. You might be able to buy your leased car for thousands of dollars less than what you can immediately resell it for.
 
The biggest problem you’ll encounter is buying your leased car back from the leasing company at the promised option price. This is because you must go through a franchised dealer for the make of car you leased even though you’re buying it back from the leasing company. There are some leasing companies that will sell you your car back directly, but most require you go through a franchise car dealer for that make.
 
Almost without exception, the car dealer will try to add profit for himself to your purchase option price, amounting to thousands dollars. You should object strongly, check with other dealers of your make to see if they will be honest with you and call the leasing company directly. The leasing company, even if they won’t buy it directly, can direct you to a dealer who won’t take advantage of you.
 
Recently, lessees in South Florida have sued two dealers, Gunther Volkswagen, and Brickell Motors for adding profit for themselves to the purchase option prices in their lease contracts. This was reported last month by investigative reporter, Jeff Weinsier, for WPLG, Channel 10 in Ft. Lauderdale. The attorney representing the two lessees is asserting the law that states you cannot charge anything extra for an off-lease car that’s not in the initial lease agreement. The two attorneys suing these dealers are Josh Feygin and Jonathan Kane in case you have a problem with your option to purchase.
 
Thousands of unwary lessees are returning lease cars to dealers and leasing companies daily and losing the large profit opportunity, thousands of dollars, because they didn’t know or remember they have an option to purchase their lease vehicles at the end of the lease. Please spread the word if you have a friend who’s leasing.

Monday, May 09, 2022

Your Advocate Alliance


https://JoinYAA.com

Helping You Buy a Car Without Being Ripped Off

I’ve been writing this column and doing a weekly radio show for about 20 years. I often wonder why more people and groups don’t join in to help car buyers buy, lease, and maintain their cars without being taken advantage of. Whenever someone new comes along, I welcome them with open arms, and I congratulate Ray and Zack Shefska for co-founding this group in 2019. Their timing couldn’t have been better…pre-covid and the onset of the greatest auto dealer feeding frenzy, exploiting their customers in over 100 years.

I stumbled across YAA when a regular viewer and listener to my radio show on www.YouTube.com/EarlOnCars, Donavan from West “By God” Virginia contacted me. He’s one of our show’s regular and best-informed callers/posters. He had high praise for YAA and soon I received more emails and posts from educated consumers who were members of YAA.
YAA has a highly educated and competent staff of people including Arash Sohelli, PhD and software developer who was also a cofounder. Other staff members specialize in areas like negotiating and pricing, but most of the expertise comes from input of members, real life experiences. YAA reports on dealer’s pricing, sales, and advertising tactics nationwide. There are helpful videos and you can report your personal experiences with dealerships which appear for all members’ perusals.

There’s a free membership available and a paid one. YAA also sells extended warranties for vehicles. They say they derive all their revenue from these to sources. I checked out their pricing on their new car warranty for a new Camry and compared it with the warranty from my warranty company. It was considerably lower than mine, but at the time I’m writing this column, I haven’t had a chance to fairly compare the coverages of these two extended warranties. I will do this and report back to you.

I have a good feeling about YAA and I’m hoping we can work together and grow together to help you, the car buyers of America. You’ll be hearing more about YAA this Saturday morning on my radio show between 8 and 10am EST. You can view it at www.YouTube.com/EarlOnCars,www.Facebook.com/EarlOnCars, or www.StreamEarlOnCars.com. You can listen on radio at TuneIn radio.
 
I’m inviting Ray and/or Zack Shefska to call my show this Saturday. The show's number is 877-960-9960, so please give us a call to discuss!

Monday, May 02, 2022

Open Letter to Auto Manufacturers:


I Feel Your Pain

I’m sure you read the April 11 Op-Ed in our auto industry trade journal, Automotive News. You were probably as shocked as I, when you read it. However, you were shocked by the fact that the Automotive News dared to reveal our industry’s dirty little secret in writing, not about the facts of the article, entitled No room for predatory fees, racism in retail, but about the fact that our trade journal dared speak the truth. In the highly unlikely event that you didn’t read this op-ed, just click on this link, www.AutoNewsOpEdPredatoryFees.com.
 
Kudos to Keith E. and K.C. Crain, Auto News editor emeritus and publisher. You’re shining examples of what journalism should be, speaking the truth no matter what the consequences. The Automotive News derives virtually all its revenue, advertising, and subscriptions, from auto manufacturers, auto suppliers, and auto dealers. You “bit the hands that feed you”.
 
I’m unsure of how many of you know me. I’ve been a car dealer since 1968, including franchises for Pontiac, Mazda, Toyota, Peugeot, Fiat, and even Checker. I currently have only one dealership, Toyota in North Palm Beach, FL. In addition to my dealer hat, I wear the hat of consumer advocate for car-buyers. You can check out my credentials at www.EarlOnCars.com or read my book, Confessions of a Recovering Car Dealer (available on Amazon). If you Google Earl Stewart, you’ll find I’m quoted often by media, Wall Street Journal, Associated Press, Auto News, CNN, CBS, NBC, FOX, etc. I’m pretty sure that I’m quoted so often because I’m easily reachable by cell phone and not afraid to speak my mind (like the recent Auto News Op-Ed).
 
I understand why auto manufacturers have not been more proactive in pushing their dealers to “clean up their act”, but I’m sure that most folks outside our industry don’t understand. As auto manufacturers know, car dealers have actively lobbied in laws through their state legislatures protecting them against you, their manufacturer. When the auto franchise system began, car dealers existed at the whim of the manufacturer. The manufacturer said “jump” and the dealer said, “how high?” You could cancel a dealer’s franchise and replace him or eliminate the franchise entirely for almost any reason. Now, it’s virtually impossible for you to replace or cancel a dealership franchise. The verbiage you use is, “we can’t tell our dealers what to do because they’re independent businessmen”.
 
There’s another reason why your dealers treat their customers so badly that they rank last in the Gallup annual poll on Honesty and Ethics in Professions. Many of your largest volume dealers are also some of the most dishonest and deceptive. Most auto executives’ compensation and promotions are tied to auto sales volume. There are few industries that are more competitive. All auto makers fiduciary responsibility to their shareholders is higher sales volume and profits. You rely heavier on your big volume dealers to make this happen. You’re afraid to “bite the hands that feed you”.
 
There’s a third reason why you auto manufacturers have “sat on your hands”, watching your franchised dealers embarrass themselves and the entire auto industry. That reason is that the retail auto business has become so dominated by dealers that employ unethical, deceptive, and even dishonest advertising and sales practices that most want-to-be honest dealers feel compelled to compromise their integrity to survive. A franchised dealer selling Fords or Hondas in his marketplace believes that he cannot advertise prices that are substantially higher than his competitors. His competitor is advertising Fords or Hondas for thousands of dollars less than you (and he) can afford to sell one for. Customers attracted by his advertisements pay hundreds or thousands of dollars in addendums to the MSRP, hidden fees, and junk dealer-installed accessories. The educated consumers who catch this deception, can’t even get a final, official lowest price unless they buy the car then. There’s no other retail product that refuses to give their potential buyers a firm, out-the-door price. This deprives car buyers of their basic, American, economic right to shop and compare product prices.
 
The final reason that your dealers are out of control and invulnerable is their enormous lobbying power. We hear a lot about “Big Insurance” and the NRA, but car dealers (17,968 as of 2022, most of whom are millionaires), their PAC’s, and their state and national associations pack enormous financial clout. Elected and appointed state regulators and legislators know better that do go after franchised car dealers.
 
So, here’s my suggestion to you auto manufacturers. You’re all very smart men and women and you know that your industry is going through enormous changes like EV’s and autonomous vehicles. But the biggest change that doesn’t get as much press is the cultural and educationalchanges in your customers. Tie this to the information explosion with the Internet, the Cloud, quantum computing and AI. I know you’ve sensed this which has accelerated in the past 2 ½ years with the COVID pandemic and soaring demand and affluence of your customers. Yes, your profits and your dealers’ profits have NEVER been greater, but the buyers’ ire over being taken advantage of has never been greater either. We’re hearing a lot more about bad car dealers than ever before. Some of you have publicly spoken out and I salute you for that. I’ll bet a lot of you watch the financial news on CNBC. I’ve seen Jim Farley, Bob Carter and other top auto executives apologetically commenting about the behavior of their dealers. You won’t admit this, but most of you have wondered if auto manufacturers will one day sell directly to the consumers like Tesla does. All fifty states have laws against this that were lobbied in by your dealers, and that’s why you haven’t done it a long time ago. If Elon Musk figured out a way to sell direct, I’m betting that you’re working on a plan of action now. Elon was telling the truth when he was quoted as saying he “never had a pleasant experience buying a car”.


Earl Stewart

Monday, April 25, 2022

Open Letter to Car Dealers

“VENDITOR CAVE!” (Seller Beware)


Dear Car Dealer:

We’ve all heard the popular legal expression “Buyer Beware” or “Caveat Emptor” in Latin. In the 21st century we’re seeing a renaissance of educated consumers, regulators, legislators, and media. Most of you know me, and most of you don’t like me. You’ve probably read articles about me in your weekly trade journal, Automotive News. One of my favorite articles was entitled, “Do-Gooder or Pariah” way back in October of 2008. This month, Automotive News’ featured Op-ed on the Opinion page was entitled NO ROOM FOR PREDATORY FEES, RACISM IN RETAIL. Virtually every auto manufacturer and car dealer in the World reads this weekly newspaper. The dirty little secret that the Gallup annual poll on Honesty and Ethics in Professions has been trying reveal for 45 years is finally being exposed by your very own trade journal. Car dealers have ranked last, or next to last, out of all businesses in this Gallup poll since 1977.
 
Just in the past month, two longtime and large dealer groups, Napleton and Koons have been charged and exposed by federal and state regulators. As I write this article, car dealers and auto manufacturers are making record profits by charging thousands of dollars more for each new and used car you sell. Selling cars for thousands of dollars above MSRP isn’t illegal, but it’s called the attention of the federal and state regulators, media and even some auto manufacturers about the things you’ve always been doing that are either illegal, unethical, or immoral.
 
In fairness, I must add that there are a few (very few) car dealers that do treat their customers with honesty and transparency. Many “want-to-be” be honest dealers feel as if they’re forced into lowering their standards to compete and survive. I hear, “If my competitors are advertising cars below the true price that they’ll sell them for, how much business will I attract if I don’t do the same?” These “want-to-be” honest dealers are almost as frustrated as I that our state regulators, legislators, and auto manufacturers won’t enforce the basic rules of honesty and ethics.
 
Well, Mr. Dealer, the “worm has turned”. The manufacturers are worried about their dealers’ terrible reputation with their customers. They also see the amazing success of Tesla, the only auto manufacturer that sells directly to their customers. Elon Musk was recently quoted as saying that, before he started Tesla, he had “never had a pleasant experience with an auto dealer.” Federal and state regulators are beginning to take notice and action, as you’ve seen with the charges against the very large Napleton and Koons dealer groups. Even the media is gathering the courage to speak out. TV, newspaper, and radio which were the dealers’ main choice for advertising are no longer. It’s mostly digital. Newspapers, radio, and TV stations no longer must fear being boycotted by dealers’ advertising when the media speaks honestly about their illegal, unethical, or immoral behavior.
 
It's a good time to change the way you’re doing business. You’re making higher profits than you’ve ever made. Charge as much as you want for a car, but don’t add hidden “junk fees” and worthless add-on, (dealer installed accessories). Give your customer the honest out-the-door price. Allow your customer to take your best price and shop and compare it with your competition. If you don’t do it now, you’ll never do it. If you don’t clean up your act, you’ll see the day that the dealer franchise system is replaced by the manufacturers selling directly to your customers, just like Tesla does.

Yours truly,

Earl Stewart

Cell phone (561) 358-1474

Monday, April 18, 2022

OPEN LETTER TO ASHLEY MOODY


Dear Madam Attorney, General:

I write this open letter to you to call your attention to the recent actions by the Federal Trade Commission against the eight Napleton dealerships in FLORIDA, Illinois, Pennsylvania, and Missouri. The FTC accused the Napleton auto dealerships of taking $70 million in illegal fees from customers. The FTC in cooperation with state attorney generals, charged Napleton with sneaking illegal junk fees for unwanted “add-ons” onto customers’ bills and for discriminating against Black consumers by charging them more for financing. Of course, Napleton vehemently denied any wrongdoing and settled the FTC suit for $10 Million.

Madam Attorney General, the two Napleton dealerships in Florida, included in the charges and settlement, are Napleton Kia and Napleton Hyundai in Palm Beach County. As you may know, my wife, Nancy, and I host a weekly consumer-advocate 2-hour live talk show. It’s named “Earl Stewart on Cars” and airs on 95.9 FM and 105.9 FM 8-10 AM EST. Each week we “mystery shop” a different car dealership, mostly in Florida. Our last mystery shop was of Napleton Kia on Northlake Blvd. in North Palm Beach. We discovered that he is still, even after being charged by the FTC and settling, sneaking illegal junk fees for unwanted ‘add-ons’, onto customers’ bills, as well as displaying many other unfair and deceptive sales practices.

But my main reason for writing you is to let you know that the Napleton dealerships in Florida are only a few of the hundreds of auto dealerships that are getting away with unfair and deceptive trade practices in their advertising and sales tactics. I suggest you go online and choose a few dealerships at random. Send in your own mystery shoppers and try to buy a car at the advertised price. I’m sure you’re aware of Florida Statute 501.976 which states “The advertised price must include all fees or charges that the customer must pay…”. I believe that you will find very few car dealer ads that comply with this Florida law.


If you’ll click on my blog website. www.EarlOnCars.com, you can read hundreds of mystery shopping reports, most of which reveal unfair or deceptive acts or practices by car dealers.

I invite you to appear as my guest on Earl Stewart on Cars any Saturday morning or call the show (877 960-9960). Please feel free to call me anytime on my personal cell phone, 561 358-1474.

Yours truly,

Earl Stewart
Cell phone 561 358-1474

Monday, April 04, 2022

Avoid Six Pitfalls When Ordering a New Car Instead of Buying from Dealer’s Inventory

We’re into our third year of one of the most significant changes in human society, caused by the worldwide covid pandemic. The auto manufacturing and retailing businesses are just two entities that have been greatly impacted. New vehicles are in a shorter supply than ever before. Auto demand and prices are at historic highs, and dealers have virtually no vehicles in their inventories. If you can wait to buy a car, you should wait until prices come down. If you must buy a new car today, you’ll probably have to order it. If you buy today from dealers’ practically nonexistent inventories, you’ll have to pay thousands of dollars above MSRP and accept a car that doesn’t fully meet your needs or desires.

The smartest thing to do for those that must buy a new car now, is to order it from the manufacturer. The car you want most likely hasn’t been built yet and hasn’t been assigned a VIN (vehicle identification number). The dealer will most likely just take a deposit from you and the only paperwork you’ll receive, if any, will be a “worksheet” showing the price which should include all factory and dealer installed options dealer fees, and government fees. This worksheet probably isn’t a legal document and it’ll state this in the fine print…something like “This is a worksheet and not a legal vehicle buyer’s order”. This means that neither you nor the dealer has a legal obligation to enforce the purchase. You need a legal document that obligates the dealer to sell you the car at the agreed upon price but does not obligate you to buy.

These are the reasons that you should insist on a signed legal document, obligating the dealer:

  • Your new car may be sold to someone else when it arrives at the dealership. The price you negotiated to pay 3 months ago when you ordered your new car may be a lot lower than a customer who happened to be there when your car arrived on the car carrier. This means a bigger commission for the salesman a bigger profit for the dealer. Because new cars are in such short supply, you may find out that your new car was sold by “mistake” to somebody else. You should closely monitor the progress of your ordered new car. Insist that you are regularly updated on it’s progress. If it arrives when you’re unaware, the odds increase greatly that it may be “accidentally sold” to someone else at a much higher price.
  • The manufacture of your new car might be delayed indefinitely. With the microchip shortage and the wire harness shortage, it’s possible that some cars simply may not have the critical parts to manufacture.
  • The dealer may decide to raise the price of your car. Without a legal document to force the dealer to honor your price, he would certainly be tempted to raise it, if he could sell it to other customers for a lot more money.
  • Prices of new cars may drop, so you don’t want to be obligated to buy it above the current market price; but you want the dealer to be obligated to sell it.
  • You may find a better price from another dealer while waiting for your car to arrive. It might take months for your car to arrive, and this gives you lots of time to shop your price.
  • You might just change your mind about buying a car. Think about it…lots of things can change in the 3 to 6 months your may wait for your new car to arrive, like health or economic issues.
Get it in writing from your dealer that you can cancel your order and get your deposit back at any time for any reason and that the dealer cannot cancel the order and must honor the original price with respect to MSRP. If you negotiate a price under, at, or (most likely) over MSRP, the dealer is legally obligated to sell it to you at that price OUT-THE-DOOR PLUS GOVERNMENT FEES ONLY. It’s possible that the MSRP is raised by the manufacturer over which the dealer has no control. His cost goes up and it’s only fair that the dealer passes this along, But you also have the right to cancel the order if you choose to.

You might be thinking, “will a car dealer really agree to put all this ‘stuff’ in writing?” Most will because an ordered car is plus business. If you’re buying a new car from his very small inventory, he won’t budge an inch on his price way over MSRP because somebody will come in right after you and pay his price.




Monday, March 28, 2022

Shine the “Cold Light of Day” on Your Car Dealer


“I’m Mad as Hell and Not Going to Take it Anymore!”


I think you’ll agree with me when I say that bad things mostly happen when the perpetrators don’t think others will find out about it. We’re lucky we live in a country which makes a “thing” out of freedom of speech. Our media is free to say whatever they like and so are we. Some think we err on the side of too much freedom of speech and too much media. Even though I might agree, I’d rather have too much than too little.

I’ve been a car dealer for over half a century, and I can tell you that dealers’ lack of ethics and their preponderance of dishonesty hasn’t changed much since 1968. The Gallup Annual Poll on Honesty and Ethics in Professions backs me up on this, https://news.gallup.com/poll/388649/military-brass-judges-among-professions-new-image-lows.aspx. Car dealers have ranked at the bottom of this list since the first survey in 1977!

Sadly, bad behavior by car dealers isn’t trending any better for a variety of reasons. When bad behavior is readily allowed and unregulated for a long period of time it becomes the status quo. It has inertia…the tendency of an object in motion, to remain in motion. Think of driving on the typical expressway. No matter what the posted speed, the actual flow of traffic is at least 10 mph faster. Why? That’s for two reasons. The first is that every driver knows that they can “get away with” driving 10 mph over the speed limit. The second is that it’s somewhat dangerous to drive at or below the speed limit. All the other drivers will pass you, blow their horn, or nearly “rear-end” you. How many cars have you bought in your lifetime? How many of those purchases were a pleasant experience? If the Gallup poll is accurate, probably none of them.

This happens because our laws against false advertising and unfair and deceptive trade practices aren’t enforced. They’re not enforced because of the powerful lobbying influence of car dealers. It’s no coincidence that “lobbyists” sit at the bottom of the Gallup poll with car dealers. Almost all dealers are guilty of this bad behavior for the same reason that almost all motorist’s speed. If a car dealer did obey the laws when his competitors didn’t, he couldn’t effectively compete and eventually he’d be forced out of business.

The only way I know to change things is get the attention of our legislators and regulators by arousing the car-buyers who are also VOTERS. There’s only one thing that can influence a politician or a regulator more than a lobbyist with fat pockets for supporting their reelection. That’s you, the voter. Almost all voters have bought cars and most likely had nothing but bad experiences. We need to begin talking about this more. Here are some suggestions:

  • File your complaints against car dealers with your state’s attorney general or department of motor vehicles.
  • Contact your local media, especially those who feature consumers’ advocate journalists.
  • Check out this website, www.Markups.org. This is a new website that allows you to report your car dealers’ markups above MSRP and post a picture of their addendum label. I just learned about this and posted a $5,000 window sticker addendum used by Wallace Cadillac in Stuart, FL, https://markups.org/Cadillac/wallace-cadillac.html.

I think another reason why car dealers have been able to operate for so long “in the shadows” is that many car buyers don’t like to admit that they’ve been taken advantage of. We all want to believe that we made a good buy and, maybe even more importantly, we want our friends and neighbors to think so. By “shining the cold light of day” on car dealers’ bad behavior, more people will realize their friends and neighbors were also “screwed” and are also remaining silent.

Please help me end the silence.