Earl Stewart On Cars

Car Dealers’ Bogus Lowest Price Guarantee

2012-01-30T13:32:00.001-05:00

On my weeklyradio show, I introduce myself as “the recovering car dealer”. I say this because many years ago I employedmany of the same unethical and deceptive advertising and sales practices as alot of dealers do today. For a lot of reasons I won’t go into now, I finally“got it right” and in many ways, like a recovering addict, I’m preachingintegrity like an addict preaches sobriety. At an AA meeting what lendscredibility and authenticity to the message is that it’s coming from those whohave “been there and done that”. Unless you've hit the bottom and struggledback to sobriety, you can’t really assure another addict that it can be done.An ex drunk or drug addict also knows all of the “tricks of the trade”. Heknows how he deluded himself into believing he was not addicted. He knows howhe rationalized his behavior as being acceptable and how he blamed his familyand friends for not understanding him.

Years ago, Iadvertised a $500 lowest price guarantee. I did this for several years but Ionly paid the $500 out once. It wasn’t because nobody ever beat my price. It’simpossible for any retailer to always have the lowest price. I began to feelnervous because I never did pay out the guarantee. I was the first car dealerthat I know of to come up with this idea. I wasn’t sure how the regulatorswould look upon a guarantee that was never paid out. The regulators know thatcar dealers are competitive and that no one dealer always sells his cars forless than his competition. If that were true, there would be only one cardealer of each make in a market. I instructed my sales managers to be sure andpay the $500 to anyone who bought a car from another car dealer because he beatour price. It was only after practically threatening my managers that wefinally paid just one $500 guarantee.

What Ilearned from this experience is that it’s against “the nature of the beast” fora car salesman, manager, or dealer to admit that they lost a sale to acompetitor. They will rationalize, ignore, or even lie to avoid confessing thatthey lost the sale. My lowest price guarantee was actually fair by today’sstandards. We had a printed guarantee form that showed our price and left ablank for the other dealer’s price. We kept a copy and gave a copy to theprospective customer. Our conditions were that the customer return with asigned buyer’s order from the competitor and allow us the right of firstrefusal. This is what makes paying this guarantee virtually impossible. Nocompetitor is going to give a prospective customer a final price knowing thatthe customer will take it back to the other dealer for a chance to beat hisprice.

Today, thesedealers with the lowest price guarantees have raised the ante to as much as$3,000 or, if you can beat their price, will give you the car free! And they’veadded another condition which makes it totally impossible for you to ever earntheir guarantee. In the fine print, this condition is “dealer reserves the right to purchasethe exact vehicle the competitive dealer offers to sell for a lower price fromthat dealer”. What thismeans is that unless the dealer’s competitor agrees to help the customer “steal”the business from him by selling that same car to him, the dealer offering theguarantee is under no obligation to honor that guarantee. Take it from a guywho has been a car dealer for 44 year. If a competitor called me and said, “Earl, I’ve got Mr. and Mrs. Jones in myshowroom. They’re the folks that you gave a price of $19,766 on this VIN numberCamry. I can’t beat that price, so please sell me that same car for the sameprice so that I can sell it to Mr. and Mrs. Jones. If you don’t, they’ll buythe car from you and I’ll have to pay Mr. Jones my $3,000 lowest priceguarantee. And I know you wouldn’t want that to happen to me, your competitor.What do you say, Earl?”

The realreason for the lowest price guarantee is to catch car shoppers off guard. Theyassume that the prices they are being quoted are the lowest in the market. Orelse, how would that dealer dare to offer $3,000 if they beat his price or evenpay for the car? By assuming that they are getting a good price they are lesslikely to shop and compare it. Repeat after me: “I SWEAR NEVER TO BUY A NEW CARWITHOUT SHOPPING AND COMPARING THE PRICE WITH AT LEAST THREE CAR DEALERS”.

Do you agreewith my premise that it’s impossible for any retailer to always have the lowestprice? Then it would logically follow that dealers offering this guarantee willhave paid out a few. I have a guarantee for those dealers. Mr. Dealer, prove that you’ve paid your cash guarantee to a customer who beat your price on a new car sale andbought the car from your competitor, and I’ll donate $500 to your favoritelegitimate charity. To prove this, all of the paperwork will be submitted to anarbitration board of three CPA’s, one chosen by you, one by the customer, andone by me. To avoid you “setting me up” this offer is restricted to sales fromthe date of this column, 1-30-12, backone year.

Ways Dealers and Manufacturers Deliberately Distort Selling Prices

2012-01-23T11:35:00.004-05:00

Before 1958, there was nosuch thing as a manufacturer’s suggested price (MSRP) on cars. We can thank thelate Senator Mike Monroney for changing this with what has become known as theMonroney Label. Congress passed this into law on July 7, 1958 with severepenalties for violating the law. A dealer or manufacturer found guilty ofremoval or alteration of the label can be fined up to $1,000 and/or imprisonedfor up to one year. It may be removed only by the purchaser for the vehicle.

The purpose of the Monroneylabel was to give consumers the ability to compare prices between differentdealerships on the same make, model and equipped car. If you were shopping fora new Chevy Impala with power steering, power brakes, AC and other specifiedoptions, you could compare “apples and apples” at several different Chevroletdealerships and make your buying decision on which gave you the biggest discountfrom MSRP.

Unfortunately, like so manywell intended consumer laws, this law is no longer enforced. I do a weeklymystery shopping investigation of competing car dealers in South Florida and Iknow of at least one dealer that removes his Monroney labels and replaces thenwith his own retail price. The regulators don’t know about this and they don’tseem to care. Virtually all of the dealers add their own label next to theMonroney label to artificially increase the suggested retail price by thousandsof dollars. The dealer label is disguised to resemble the Monroney label and,being adjacent, many customers assume it’s the official MSRP. More often thannot, customers never look at the Monroney label on the car they buy. This meansthat you probably can’t shop and compare the car you want by discounts from theretail asking price which is what the U.S. Congress intended with the Monroneylabel.

But what about comparing thedealers’ profits by measuring his markup above cost? You can find out what theinvoice is on the car you want to buy very easily. This information isavailable on the web and, strangely enough, many car dealers will gladly showyou their car’s invoice. The reason the dealer will willingly show you hisinvoice is because it does not reflect his true cost. In fact, it reflectsthousands of dollars in profit on the average. This is where the manufacturersjoin the conspiracy. The manufacturers add thousands of dollars to theirdealers’ invoices which they subsequently “kick back” to the dealers monthly.You probably have heard the term “holdback” which was the original 1%, 2% or 3%that is added. There are many other additions now including advertising fees,dealer prep fees, interest fees, and extra holdbacks on port installed accessories.The biggest item that dealers get back monthly is “dealer cash” which is asecret rebate on different models that the consumer doesn’t know about. I’veseen dealer cash rebates as high as $10,000. In fact, there’s a dealer cashrebate known as the “stair step incentive” which can pays the dealer as much ashundreds of thousands of dollars every month. He gets paid an amount per carretroactively on every car he sells in one month if he hits his salesobjective. Theoretically, a dealer can sell one car, at or below his invoice,and make an effective profit of tens of thousands of dollars…even hundreds ofthousands!

As if all of the above isn’tenough, I haven’t even mentioned dealer fees or dealer “packs”. If you readthis column or know me you know that my war against the dealer fee has beengoing on for 14 years. The dealer fee is just more profit to the dealer that hesurprises you with when you sign your paperwork to take delivery of the car. Itvaries from a low of around $500 to high of $2,500, but there is no legal capin many states.

I normally wouldn’t mentionthe dealers “pack” because it’s not something that affects the MSRP or iskicked back from the manufacturer to the dealer. A caller to my radio show lastSaturday brought this up and I’m covering it in an abundance of caution just incase others would like to understand it. However, it possibly could affect theprice you pay for the car, but not in the same way distorting the sticker priceand the invoice does. A “pack” is an amount the dealer subtracts from theprofit a salesman makes on a car he sells. A typical pack would be $700. Asalesman sells you a car on which the dealer makes a profit of $1,700 butbefore he pays his salesman the typical 25% commission, the dealer subtracts thepack. The salesman is paid 25% of $1,000, not $1,700 saving the dealer $175 insales commission expense. Years agopacks were used by dealers to trick their sales people into thinking they wereearning a higher percent commission than they really were. Since then, federalwage laws have been passed that require full disclosure of packs so that salespeople do know exactly what their percentage is. However, I’m sure that thereare some dealers still ignoring the law and tricking their sales people just liketheir customers. But, packs continue to exist even though there is no goodreason for them. One could argue that the salesman will sell the car for morewith a pack than without one, but the dealer and the sales managers generallyset the price, not the salesman.

What does all this mean foryou when you buy your next new car? Nothing more than what I’ve already warnedyou about in previous columns. Pay no attention to dealer advertised prices,window sticker prices, or dealer invoices. Never make a buying decision on thesize of a discount from “retail” or markup over “invoice”. Make your buyingdecision by picking the lowest selling price from at least three differentdealers on the exact same make, year, model, and accessorized vehicle. Separateyour trade-in valuation and financing from the purchase transaction and get atleast three bids on both of these too.

Don’t Pay for Nitrogen In Your Tires

2012-01-16T11:24:00.003-05:00

It’sbad enough that gas stations now make you pay to inflate your own tires withair. But at least you are getting what you paid for…air which does what it’ssupposed to do and that is to keep your tires inflated.

Manycar dealers are now charging customers to fill their tires with “pure”nitrogen. They tell you that nitrogen does not leak from your tires as quicklyas air and this means that your tires will stay properly inflated longer beforeyou have to add more nitrogen (and pay the dealer for this). What the dealersdon’t tell you is that the air that is already in your tires is mostly nitrogenanyway. In fact, 78% of the air you breathe is nitrogen. Oxygen represents only12% of the air. The rest of air includes carbon dioxide and other inert gases. I’mnot sure what the purity of the nitrogen is that they pump into your tires for$199 (this is not a typo…one hundred and ninety-nine dollars for filling fourtires full of mainly air). But, you can be assured that the purity of thenitrogen is not 100% and is probably closer to the 78% that regular airconsists of.

Evenknowing all of the above, I have to admit that I was curious about whether ornot nitrogen could prolong tire live and improve fuel economy because I knewthat NASCAR drivers used nitrogen filled tires and I heard that Volvo’s camefrom the factory with nitrogen in their tires. I have a BS in Physics from the University of Florida and a Master of Science fromPurdue and these kinds of things interest me. So, to find out for myself, mydealership conducted an experiment. We have a fleet of rental cars and wefilled two tires of each car with pure nitrogen and 2 tires with regular air.Over the course of many weeks, we measured the pounds of inflation in thenitrogen and air filled tires. There was no difference in the inflations of thenitrogen v. s. the air filled tires. If there is no difference in theinflation, there can be no benefit from nitrogen of better gas mileage or fueleconomy.

Youmay have read my column last week, “Beware the Phony Monroney”. In that columnI warned you about car dealers that add a window sticker designed to lookexactly like the federally mandated Monroney sticker. This is where you shouldlook for dealer installed accessories and additional dealer markups over MSRP.Often these accessories have a high price but a very low cost. In the case ofnitrogen in four tires selling for $199, this is exactly the case. Since air isalready 78% nitrogen, it costs virtually nothing to extract nitrogen from theair. To be generous, let’s say the dealer’s cost is $10 including labor. Thatis a 2000% markup when he charges $199.

Justwhen I thought I’d seen it all, I actually saw window stickers on a car todayfrom another dealer who had actually modified the Monroney label to shownitrogen filled tires. To do this, the dealer actually had to remove the real Monroneylabel, make the modification showing the nitrogen tires, and re-paste theMonroney label to the window. Federal law requires that a Monroney label not beremoved until the vehicle is delivered to the customer. It also requires that itnot be modified. This new vehicle was one we had traded for from another dealerand still had the counterfeit Monroney and the modified real Monroney attachedto the window. The modified Monroney looked so authentic, that one of mytechnicians and my service manager inquired of Toyota about the necessity of our carryingnitrogen tanks so that we could refill these tires with Nitrogen. If this couldfool a Toyotadealer’s technicians and service manager, it might fool you too.

Thisparticular dealer also had another charge added to the counterfeit Monroneysticker, a $4,995.00 “Market Value Adjustment”. Most prospective customersthink that this is part of the manufacturer’s recommended retail price. Theyeither end up paying too much money for the vehicle or think they are gettingmore for their trade-in or a bigger discount than they really are. It’s easy toallow someone an extra $5,000 on their trade-in when you have already markedthe car up an extra $5,000 over sticker price.

Will TrueCar.com Change the Way You Buy a Car in the 21st Century?

2012-01-09T12:03:00.000-05:00

There’s anew company, TrueCar.com, that was started a little over a year ago by a bright,young entrepreneur named Scott Painter. Scott reminds me a little of Steve Jobsand Bill Gates because he’s extremely bright, ambitious and successful and he’sa “college dropout”. He studied political science and systems engineering at WestPoint for three years where he was elected class president. Then he won ascholarship to the University of California, Berkeley, where he studiedeconomics for two years. Before he entered West Point, he joined the army andserved as a “Spanish Interrogator” for the 82^nd Airborne. TrueCar.comis the last of 35 companies that Steve Painter has started. He started hisfirst business when he was just 14 years old, “Scott’s Auto Detailing Service”.

I signed upwith TrueCar.com less than a year ago. Their concept is unique and frankly kindof frightening. I had to think about it for a while before I agreed tobecome a TrueCar dealer. For starters, TrueCar charges the dealers $299 forevery new car and $399 for every used car they sell under their program. Allother lead generators for dealerships like AutoByTel, Cars.com, and AutoTradercharge a much smaller amount for each lead they give you and/or charge amonthly fee. TrueCar also requires access to your dealership’s computeraccounting system because they must verify if you sold a car under theirprogram and the price for which you sold it. This way, they know they will getpaid by the dealer and that the dealer charged the TrueCar customer the agreedupon price. Finally, TrueCar pits dealers in all of their marketplaces againsteach other by posting their agreed upon prices on TrueCar’s website and allowingcustomers to choose the lowest price. This has the effect of forcing any dealerwho wishes to participate to post a price that is lower than their competitors’or the lowest price they can post.

TrueCar’ssales are soaring. Last year their dealers sold about a quarter million cars.Last month they sold about 30,000 compared to 18,096 in June. With car dealers therelationship with TrueCar is a “love-hate”. They love TrueCar because, if theypost a price lower than the other dealers in their market, they sell a lot ofcars. They hate TrueCar because, if you don’t post the lowest price, yourcompetitor sells all the cars. Many dealers simply drop their TrueCaraffiliation because they don’t want to or cannot sell their cars for such asmall profit.

TrueCar notonly has a very smart CEO in Scott Painter, but private investors who put up$35.5 million in 2010. You won’t find too many people who will invest that kindof money in a company that doesn’t have a good chance of succeeding. In fact, ScottPainter has raised almost $1.25 Billion dollars including all 35 startups. Theinvestors in TrueCar must have liked his track record of success in theprevious 34. As a car dealer, I’m afraid of TrueCar but as an investor, I lovethem. In fact, I tried to invest in TrueCar but was unable to find an avenue. Icontacted Merrill Lynch and was told that there were no investment options availableto the public.

Anotherreason that I’m reasonably certain that TrueCar will succeed is thehysterically negative reactions from car dealers, car manufacturers, statelegislatures, state attorney generals, and TrueCar competitors. If you don’talready know it, car dealers have a lot of money and invest heavily in PAC’sand their dealer associations to get politicians elected. The National AutoDealers Association, NADA, is very powerful, well financed and has greatinfluence in Washington D.C. State dealer associations are also very powerful.Colorado has already banned TrueCar from doing business and Washington isconsidering it. Car manufacturers are concerned because they fear for theprofitability of their dealers. On the one hand, they like dealers to sell carsat low prices because they sell more cars that way. On the other hand, theyworry if they sell cars too cheaply because it might cause dealers to go out ofbusiness. Honda has instructed dealers that posting prices on TrueCar is aviolation of their contractual agreement with Honda. Honda has a provision thatprohibits a Honda dealer from advertising a new car below dealer invoice. Thestates and the attorney generals are attacking TrueCar on flimsytechnicalities. One technicality is that they are violating state dealerlicense laws. This is patently absurd since many companies are providing cardealers with leads and charging for it but they just don’t do it as well asTrueCar. Another technicality is that some states ban third parties fromgetting commission for referring a buyer to a car dealer. Very few states havethis law and this is simply a bad law and could be easily overturned as beingunconstitutional. Competitors to TrueCar are also bad-mouthing TrueCar to theirdealers. I won’t name any names, but one very large lead provider has been veryvocal in providing its dealers with all of the negative hoopla surroundingTrueCar. I don’t blame them because TrueCar is threat to them just like it isto us dealers. Isn’t it amazing that the one entity that not considered by thedealers, manufacturers, state legislatures or an attorney general is the car buyer?No one is has asked what is best for the consumer. I guess that’s becauseconsumers don’t have powerful paid lobbyists.

The onlygroup that is truly thrilled about TrueCar is the consumer, the car buyer. Ifyou haven’t heard of them before now, just click on their website, www.TrueCar.com and pretend to be buying a car. Injust a few minutes, you’ll fully understand why car buying will never be thesame again. The last huge impact on buying of cars was the advent of theInternet. Dealers and manufacturers reacted the same way they’re reacting toTrueCar. In fact, even today some dealers will refuse to quote you a price overthe Internet. Most dealers now understand that the Internet is the wave of thefuture. About one-third of all cars sold are sold over the Internet today andthis percentage will approach 100 within the next 10 years, especially with theadvent of TrueCar.

TrueCar hasessentially “perfected” the Internet purchase for the car buyer. BeforeTrueCar, dealers could still “play games” with the Internet buyer by addingdealer and doc fees, switching the buyer to another car at a higher profit, andvarious other tricks of the trade. TrueCar knows the exact car their customersbuy and the exact profit the dealer makes. Why? This is because they haveaccess to the dealer’s financial records through his data management system(DMS). This access is a condition of being a certified TrueCar dealer. If a cardealer charges the customer a higher profit than he agreed to, TrueCar knowsit. If the dealer sells the customer a different car, TrueCar know it. TrueCarwill drop the dealer from their certified dealer list in their market if theydon’t play by the rules. There are two reasons for dropping the dealer. Firstthey are cheating TrueCar’s customer and secondly they are cheating TrueCar whodoesn’t get paid their $299 on a new car or $399 on a used.

Some cardealers will simply not be a part of TrueCar, but you can be sure that ifanother dealer of the same make is a certified member, his prices are lower. Istrongly suspect that some dealers will actually collude with their competitorsand “fix prices” artificially high. Of course this is a serious violation of aFederal law, the Sherman Anti Trust Act.

Now, I’m notsaying that TrueCar is the only way you should ever buy a car. I even have an“ax to grind” with TrueCar. I don’t like the way they allow their dealers tonot include dealer fees and doc fees in their quoted prices. They do requirethe dealer to disclose them separately, but you have to look in the fine printat the bottom of the quotation to find this. I don’t charge a dealer fee but acompeting Toyota dealer can show a TrueCar price that is lower than mine whichis actually higher than mine when you add back his dealer fee. If the carshopper doesn’t notice the fine print, he could end up going to the dealershipwith the higher price. In fact, TrueCar ranks the prices on their websitewithout including the dealer fee. This is very wrong of TrueCar and I intend tocall them on this. I also think that you should always get at least two otherbids besides the TrueCar bid and give the other dealers a chance to beat theTrueCar price. Finally, you should always get three bids on your trade-in andfinancing. TrueCar can only guarantee that you get the lowest price on your newor used car. It can’t help you if you allow the dealer to undervalue yourtrade-in or overcharge you for financing.

MINIMIZING THE PAIN OF HAVING YOUR CAR SERVICED

2011-12-19T11:20:00.006-05:00

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

(1) Choose thedealer with the best service department. Remember that you don’t have tohave the same dealership service your car that sold you your car. You probablybought your car from the dealer who gave you the best price. You should haveyour car serviced at the dealer who can best maintain and repair your car. Theprice of service is important, but secondary to the quality of the service andrepairs. Do a little research. Ask friends and neighbors who drive your make ofcar. Check with the BBB and the County Office of ConsumerAffairs. Ask the service manager at thedealership to show you his factory score on CSI (customer satisfaction index).Every manufacturer surveys dealers’ service customers and ranks that dealer byhow well he treats his customers.

(2) Establish apersonal relationship with your service advisor. The personin the service drive who writes up your repair order is very important. Be sureyou get a good one. He should be knowledgeable, attentive to your needs,promptly return phone calls, and recommend only necessary services. You mightnot find this person on your first visit, but if you aren’t comfortable withthe person you are dealing with, ask for one with whom you are. When you makean appointment to have your car serviced, always ask for that serviceadvisor.

(3) Don’t pay the“gotcha”, miscellaneous supplies fee. Almost all car dealers tack on a phony fee when you pay yourbill which is simply more profit to the dealer, but is disguised by variouslabels. It is also sometimes called “environmental impact fee”, “sundry shopsupplies” 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 salesdepartment tacked on to the price they quoted you on the price of the car. Mostdealers will waive this fee if you complain about it, especially if youthreaten to call the BBB, their manufacturer, or the Florida Attorney General’soffice.

(4) Always roadtest your car, preferably with the technician. If you brought your car in for adrivability problem such as a noise, vibration, or pulling to the right orleft, don’t accept the car back until you ride in the car with the technicianor service advisor and confirm that the problem has been remedied. I alsorecommend that you drive the car with the service advisor to demonstrate theproblem when you bring it in. Experiencing what you experience alwayscommunicates your problem more accurately than listening to your description ofthe problem.

(5) Ask for awritten estimate of the total cost of repairs and maintenance. Florida law requiresthat the dealer give you a written estimate. By law, they may not exceed thisby more than 10%.

(6) Make an appointmentahead of time. You should insist on making an appointment and you should try tomake that appointment at a time when the dealer’s service department will beleast busy…typically the middle of the afternoon on weekdays or Saturday andSunday. Avoid the 7:30-8:00 morning rush. When your service advisor has writtenup your repair order, ask him how long it will take. After he tells you, askhim to let you know ahead of time if, for any unforeseen reason, your car willnot be ready in the promised time. Often times when you call a service departmentthey will tell you to “bring the car in anytime” or “come right over”. Serviceadvisors will tell you this because they are either too busy or too lazy totake the time to make a proper appointment. When they tell you this, tell themthat your time is very valuable and that you insist on an appointment at a timewhen they can get you in and out quickly. Always write down the name of theperson that gave you the appointment.

(7) Shop andcompare high cost repair prices. Most service departments are competitive on maintenance items likeoil changes, wheel alignments, and tire rotations. However, the costs of majorrepairs can vary considerably. If you are looking at an air-conditioner,transmission, or engine repair that can cost several thousands of dollars, getbids from more than one service department. Often just suggesting that you willdo this will keep the cost down from the dealership you prefer.

(8) Introduceyourself to the service manager. This falls along the same philosophy as developing a goodpersonal 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 mightearn you a slightly higher level of treatment from those that work for him.

Do What You Know Is Right

2011-12-12T11:12:00.000-05:00

For the last10 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 religiousalthough it does incorporate advice which can be found in all of the differentreligions. I like it because it helps to kick my day off positively. In fact Ishare it with some friends, family and employees…those that I think would enjoyit. This morning there was a phrase that inspired this column… “Without judgment as to whether it isdifficult or easy, popular or unpopular, do what you know is right.” Ihighlighted this phrase before I forwarded it.

My lastpost was entitled “The Dealer Fee Revisited”. If you’re a new reader or ifyou missed my last column, please read it before you read further.

More thanone-third of the new and used cars I sell now are sold over the Internet. Asyou know, online sales are surging for all products and will soon dwarf salesfrom brick and mortar stores. Prospective customers surf the web to researchwhich specific car they want to buy and then they contact various dealers viaemail to find out who will offer them the best price. I wrote another columnentitled “The Internet is the Lowest Price for a New Car”. The reason theInternet offers the lowest price is because car dealers have only one chance tosell you a car when you contact them online. You can shop a dozen car dealersonline in less time than it takes to visit one car dealership in person. Eachdealer knows that if his price is higher than one of the other dealers, the prospective customer will move on and hewill lose the sale.

The bigproblem that I used to encounter was the “infamous dealer fee”. I don’t charge a dealer fee because I believeit is unfair and deceptive. I wouldquote my best price but the other dealers would usually beat it because theycould add hundreds of even thousands of dollars to the price they quoted ourprospective customer. To solve my problem, I “mystery shopped” all of mycompletion and learned the amount of their dealer fees. Now, whenever aprospective customer asks me for my best prices on a specific car via email, Ialways include a list of the dealer fees that all of my competitors charge ontop of that price that they quote this same customer. This enables the customer to make an informeddecision on who really has the lowest price. Without this information, a customer would pay, on average, about $900more. This is the average dealer fee in my market. Some are well over $1,000. Ifyou would like to see how I do this, click on www.EarlStewartToyota.com and thenclick on “Request a Quote” on the left.

I’ve beeninforming my prospective customers of what the other dealers add in the form oftheir dealer fee to the prices they quote for over two years. Before I begandoing this, I discussed it with two Toyota representatives who were responsiblefor dealer sales in my market. I did this because I knew that the other dealerswould be upset about this even though I was doing what was best, not only forme, but for Toyota buyers. Both of these Toyota representatives told me thatthey thought I was doing the right thing.

A couple of weeks ago another Toyotarepresentative told me that he thought I should stop disclosing the amount ofthe dealer fee for other Toyota dealers but that there was no problem if Idisclosed the dealer fee amount for non-Toyota dealers. When I asked why, hesaid that I was “disparaging” other Toyota dealers by revealing their dealerfees. Of course, I responded, “How can the truth or a fact be disparaging?” Istill 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 dealersmust sign that establishes what he can ethically and legally advertise.Violations lead to huge fines which can be in the hundreds of thousands ofdollars. I told him that the TDACapplied only to advertising, not a salesman responding to a customer’s requestfor a price on a specific car. I said that if Toyota wanted me keep otherdealers’ dealer fees secret from my Internet customers it would follow that I mustdo the same for customers who phone or come into my dealership asking forpricing information.

As I writethis article, I’m waiting for clarification from Toyota on all of the above. Ihave received a written notice from the independent company in Birmingham,Alabama that administers the TDAC saying that my request to continue informingmy customers of dealer fees was denied even though it had been approvedpreviously. However, when I called thecompany supervisor last week I was told that a letter had been mailed to ToyotaMotor Sales in California asking for a ruling on whether this issue was coveredby the TDAC. The supervisor told me that I would be notified as soon as aresponse was received. As of this moment, I’ve heard nothing.

Hopefullynow you can understand my title to this article, “Do What You Know Is Right”and the quote from my Daily Motivator, “Withoutjudgment as to whether it is difficult or easy, popular or unpopular, dowhat you know is right.” It’s very difficult for me as a Toyotadealer to oppose Toyota and taking this stance does not make me very popularwith Toyota but I did what I know is right. I hope that Toyota doesn’t also rule that thisarticle and my blog also come under the jurisdiction of the Toyota DealerAdvertising Covenant.

Status of the Dealer Fee As of December 2011

2011-12-05T11:58:00.001-05:00

A local attorney emailed me yesterdaymorning, asking me to send him the various articles I’d written on the infamousDealer Fee. He is trying a case in Akron, Ohio and wanted to research thisissue. I've written so many articlesover the years that I sent him seven and also my blog address, www.EarlStewartOnCars.com, so thathe 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 afterthey bought a new Toyota and drove it home. They wanted to know what they could do about it. They asked if they hadany legal recourse. They had not responded to an advertisement on a specificcar, which is the case with most buyers, so they had no legal recourse. Theyhad recently moved to Florida from California (where they do have a good dealerfee law) and were amazed how Florida had such a weak law and that even that wasnot regulated.

These two occurrences made me realizethat I can’t be quiet on this subject, just because things have gotten betterin my local market. The number of dealers in my market charging the dealer feehas abated by four…Royal Palm Toyota in the Wellington area, Palm Beach Toyotain West Palm Beach, Treasure Coast Toyota in Stuart, and Delray Toyota have alleliminated their dealer fees. I call this the “domino effect” taken from DwightD 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, youknock over the first one, and what will happen to the last one is the certaintythat it will go over very quickly. So you could have a beginning of adisintegration that would have the most profound influences.”

Why only Toyota dealers? That’sbecause of the economic impact that my dealership, which does not charge adealer fee, has had on each of them. I’ve grown from the second smallest Toyotadealership in Palm Beach, Martin, and St. Lucie Counties to the number one, byfar. My dealership is in Lake Park which has a population of only 9,000. Infact 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 togrow Earl Stewart Toyota to number one was to sell into the other Toyotadealers’ markets.

The 21^st century consumer is farmore intelligent and discriminating than most dealers give them credit for. Ifyou arm the consumer with information, they usually make the right buyingdecision. I’ve done a good job of arming the Toyota buyers in my market withthat information, but I can’t quit now. The word must be spread throughoutFlorida and the other states in the USA that still have ineffective consumerlaws 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 thedealer fee. It’s been reported on CNN, Fox, ABC, the Wall Street Journal, NY Times, USA Today and many other nationalmedia.

The reason the dealer fee is such abad thing lies in one undisputable and fundamental right of the consumer. Thatis the right to be told the true andfull price of any product or service before committing to purchase it. Irecently bought a Samsung refrigerator from Lowe’s. I researched it in Consumer Reports and it was the #1ranked side-by-side refrigerator. ConsumerReports also indicated what I could expect to pay for this model. I expectedto 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 eventhe delivery and installation were both included in the advertised price. If Ihad bought a car in Florida, the chances are about 99% that there wouldbe a “surprise charge” anywhere between $500 and $2,500 (or maybe higher).

Our Florida law on this subjectrestricts the dealer to not advertising a price that does not include thedealer fee. First of all, the law is not enforced at all. On any given day Ican show you many examples of car dealers who simply ignore this law. Sometotally ignore it, some simply note in the fine print that the price quote inthe large print is plus a dealer fee and do state the amount. Some don’t evenstate the amount. Many display a small innocuous number by the price, likeSTK#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 arriveare slim and none. What you can buy is another stock # car which may be exactlythe same, but, because it wasn’t the specific advertised car, the dealer canlegally add any amount to the price that he calls his dealer fee. Florida lawcalls 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” isjust the most common one. There are dozens of different names because Floridalaw 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 arejust a few. Sometimes the dealers will have two or three “dealer fees”. Apopular 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 thatthis should be disclosed because it is considered a dealer fee, but many justignore that. The legal disclosure on the buyer’s order should be: “This charge represents costs and profits tothe dealer for items such as inspecting, cleaning, and adjusting vehicles andpreparing documents related to the sale”.

What happens most of the time tocustomers is that they don’t have a chance to learn about the dealer fee untilthey get into the F&I office also known as the finance office or businessoffice. This is when the dealer tries to make another profit by selling youproducts like warranties and marking up the bank’s interest rate. Let me beclear, a fair profit is a good thing and you should consider buying warrantiesor 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 alarge number of documents with lots of fine print that you must sign. On one ofthese, if you’re lucky, you will finally learn of the marked up electronicfiling fee, doc fee, dealer prep fee, or whatever else the dealer decides tocall it and how much he decides to charge you. As often as not, you willbelieve these fees are legitimate federal, state or local taxes or fees. Youmay not even notice them at all until you get home when it’s too late. Or youmay believe that you have to pay these fees and everybody charges them sowhat’s the harm?

Help me spread the word. Just say noto the dealer fee! Always get a competitive out-the-door price and shop andcompare. If the dealer insists on adding a dealer fee, just be sure it’sincluded in the out-the-door price and compare it with at least two otherdealers’ prices. Write your legislator and tell him how you feel about thedealer 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 undercontrol. It’s limited to $65 and every dealer calls it by the same name andcharges the same thing. The California car buyer know what’s he’s paying forthe car before he commits.

North Palm Beach “Takes the Fifth” On Police Abuse of Power Incident

2011-11-28T09:40:00.001-05:00

...or "It Takes a Village to Take the Fifth"

Regular readers of my columnare familiar with the saga of my being reported to the Florida Highway Safetyand Motor Vehicle department, FHSMV, as a mentally or physically incompetentdriver. I became aware of this approximately two weeks after I was ticketed forspeeding by a North Palm Beach policeman. The letter I received from the FHSMV startedout, “This agency has receivedinformation expressing concerns about your ability to drive safely. Please callthe driver license office below to set up an appointment to take the vision,written, driving (in traffic) and hearing examinations.”

I looked into this andlearned that this “information expressing concerns about my ability to drive”was reported to the FHSMV under a little know Florida law, 322.126(2), (3), whichallows “any person” to confidentially report any other Florida driver asunable to drive safely and be held harmless from all civil or criminalliability even if the report was malicious in intent. I subsequently started apetition at www.DumbLaw.org to changethis law. I’ve also met with two Florida legislators, Democrat Irv Slosberg ofBoca Raton and Republican, Pat Rooney of Palm Beach Gardens to ask theirassistance to change this law in Tallahassee. Both strongly support my positionand have agreed to help me.

Under the law, the FHSMVkeeps secret the name of the informant. However, after a little detective work,I came up with a “person of interest” or suspect. He is a North Palm Beachpoliceman, the same one who ticketed me for speeding two weeks before Ireceived the letter from the FHSMV. It turns out that this officer’s wife hadbeen recently employed by me at my Toyota dealership. For what I believed weregood reasons, I was forced to terminate her employment. She subsequently suedme under the EEOC for wrongful termination and my insurance company settled thecase. I was also able to learn from the FHSMV that the informant was a“professional” meaning a police officer or doctor. Since my doctor agreed togive me a letter stating that I was 100% mentally and physically capable ofdriving a car, that left a policeman. The only policeman that I’d had anydealing with in quite some time was this North Palm Beach policeman. Finally, Idid take and pass all of the required driving tests…written, eye test, hearingtest, driving in traffic and driving on a special course. In fact, I not onlypassed, I passed with flying colors. My hearing and eyesight (20/20 withglasses) were perfect. I completed all of the driving tests without a singlemistake and I missed only one question on the test (I could have passed missingup to10). These findings prove that the “person” who reported me to the FHSMV waseither mistaken or not telling the truth. Since we know that the “person” was aprofessional, it would seem unlikely that he was mistaken.

Feeling that the abovecircumstantial evidence uncovered by my detective work was overwhelming, I decidedto confront the Village of North Palm Beach. Through my attorney, I spoke with thevice Mayor who agreed to talk to the chief of police. When I didn’t hear backfor a while, I was told that the matter was being discussed with the“collective bargaining” entity for the police department, the PBA. Afterseveral weeks, the North Palm Beach town attorney wrote me a letter stating thetown’s position on my allegations. This is the pertinent part of the letter:

“With respect to theletter Mr. Stewart received from the Department of Highway Safety and MotorVehicles (“DMV”) requesting that he appear for re-examination, Section322.126(3), Florida Statutes, states that any report regarding a licenseddriver’s mental or physical disability to drive is confidential and exempt fromdisclosure pursuant to Florida Public Records Law. The Florida Legislature hasexpressly determined that such reports shall not be disclosed or used for anypurpose other than determining the qualification of a person to operate a motorvehicle on the highways of this state. As such, no civil or criminal action maybe brought against any physician, person or agency who reports a potentialdisability to the DMV, nor shall any such report be used as evidence in anycivil or criminal trial or in any court proceeding. 322.126(3) & (4),Florida Stat. (2011). See also Duckworth v. State, 923 So. 2d 530 (Fla. 4^thDCA 2006). The Florida Legislature has clearly determined that the overridingpublic interest in ensuring that all licensed drivers possess the requisiteability to operate a motor vehicle trump any concerns raised by licenseddrivers regarding the circumstances surrounding the filing of such a report.

In light of the foregoing, even ifthe Village possessed information regarding a medical report filed with the DMVconcerning Mr. Stewart, the Village is prohibited from disclosing theinformation set forth therein. Additionally, neither your client nor theVillage can utilize the report as evidence in any criminal or civil proceedingsunrelated to Mr. Stewart’s qualification to operate a motor vehicle.

Should you have anyquestions relative to the foregoing, please to not to hesitate to contact me.

Sincerely Yours,

Village Attorney”

After reading the above, Ithink you can appreciate my title to this article, North Palm Beach “Takes the Fifth” on Police Abuse of Power Incident. Most people understand that peopleaccused of a crime in America can elect to “refuse to answer on the groundsthat it might tend to incriminate them”. If you feel the same way I do about this, “taking the fifth” it’s just anotherway of saying “I’m guilty but you’ll have to prove it without mycooperation”.

I’m betting that this policeofficer has never filed another report under this statute before in the remotechance that he believed in good faith that the driver lacked the physical ormental qualifications to drive. It’s a shame, arguably disgraceful, that lawenforcement in North Palm Beach allows its officers to quench their personalagendas by abusing their official position and then hiding behind a statute’sconfidentially provisions. I’m sure that the confidentially provision was notmade part of the stature by the legislature to allow police officers to filereports in bad faith and with no objective basis.

My attorney tells me that, inspite of this statute, I have grounds to sue on the basis that this Floridastatute is unconstitutional and that a judge could overturn this part of thelaw. But I don’t want to sue the town ofNorth Palm Beach, the cop that reported me, or anybody else. What I do want isfor the town and the police officer to do the right thing which is to sincerelyapologize. I would also like the town to take the necessary precautions to seethat this never happens again to anybody else driving through the Village of NorthPalm Beach.

Caveat Emptor and Car Dealers: You Can Fool Some People All the Time

2011-11-21T10:21:00.001-05:00

Almosteveryone has read Abraham Lincoln’s popular saying, “You can fool some of thepeople all of the time, and all of the people some of the time, but you can’tfool all of the people all of the time.” I think Abe meant this to be apositive assertion that government may get away with deceiving us for a while,but in the long run, truth justice and the American way will prevail…and Ithink he was right.

However, itdoesn’t work that way with unethical car dealers and car buyers. It always hasbeen “caveat emptor”, or “buyer beware when it comes to buying or servicing acar. Unfortunately for a buyer to “beware” he must be “aware”…that is to sayeducated, mature, sophisticated and experienced. This excludes a very largesegment of our population including the very young, the very old, theuneducated, those with low I.Q.’s and those not proficient in the Englishlanguage. Is this one reason why our regulators and elected politicians don’tseem to care or take action with respect to the rampant unfair and deceptivesales practices of a large number of Florida car dealers? Most electedofficials and regulators are lawyers and are highly educated and sophisticated.They don’t have a problem buying or servicing a car. In fact, the car dealerthat tries to take advantage of a lawyer, regulator, or politician is askingfor trouble.

I’ve beenwriting this column/blog and broadcasting my radio show, Earl Stewart on Cars,for about four years. I sometimes feel that I’m “preaching to the choir” whenit comes to advising people how to avoid getting ripped off by a car dealer.You, my readers and listeners, largely fall into the category of the educatedand sophisticated, “aware” buyer. Most of you aren’t taken advantage of whenyou buy or service your car because you won’t allow it. Unfortunately, thereare enough uneducated, naive, and otherwise vulnerable consumers to feed thoseunethical car dealers who prey on the defenseless among us. All you have to dois read some of the car ads in the Saturday (the biggest selling day for mostcar dealers) auto classifieds. To the educated, sophisticated buyer, these adsare actually funny if you can forget the fact that so many fall prey to themand are taken advantage of by the dealers. For example, it’s hard for you or meto believe that anybody would respond to an advertisement without reading thefine print. Many dealers today are advertising prices that, when you read thefine print, are understated by many thousands of dollars. When you or I see adealer stating that the car price is plus “freight”, we are educated enough tounderstand that the law requires that the freight cost be already included inthe price. A shrewd buyer knows that “dealer list” is not the same thing asMSRP and that a large discount from “dealer list” means absolutely nothing. Weknow that the “lowest price guarantee’ is worthless if the dealer reserves theright to buy the car from the other dealer that offers a lower price.

There arethose who argue that all buyers have the responsibility to guard againstunethical sellers, to take care of themselves. In fact, that’s the literaltranslation of the Latin legal term “caveat emptor”…let the buyer beware.That’s sounds good, but what about the elderly widow whose husband recentlydied and who never had to make a the decision on a major purchase in her entirelife? What about the young person just out of school with no experience in thereal world? How about the immigrant who struggles with English? Should we beconcerned about our underprivileged classes who often drop out of schoolbecause they have to go to work to support themselves or their family? You andI know lots of good people who, for one reason or another, simply can’t copewith a slick car or service salesman.

My bottomline is this, since we can’t rely on our regulators and politicians to protectthose who “can be fooled all the time”, maybe we owe it to society toprotect these folks. If you know someone who is thinking about buying a car orhas a service problem with her car and you feel she may not have the ability tofend for herself with the car dealer, offer your support. If you’re one of thepeople who needs support, ask someone who can go “toe to toe” with a car dealerto come with you when you are car shopping. By the way, nobody, sophisticatedor not, should car shop alone. Two heads are always better than one and it’salways a good idea to have a witness to what was said during a negotiation. And,of course, if you don’t have the time to help a person or you’re that person,you can always call me…I’m always here for you.

Why New Car Tires Wear Out So Fast

2011-11-12T09:47:00.001-05:00

The tires that came with your last new car were not designedby Michelin, Goodyear, Bridgestone or any other tire manufacturer. They weredesigned by the manufacturer of your car. If your new car came with a set of Michelins,Michelin made the tire but they made it to the specifications set by your car manufacturer.These tires are referred to as OEM (original equipment manufacturer).

Furthermore, your manufacturer does not warranty the tireson your new car even though he tells you that you have a “bumper to bumper”warranty. The last time I checked, my tires were between my front and rearbumpers. Even though GM designed the tires on your Chevrolet, they have noresponsibility if they are defective. The tire manufacturer bears thatresponsibility.

The OEM tires that came with your car can’t be replaced(which is a good thing) after they’ve worn out. And they will wear out muchsooner than they should. This is because virtually all auto manufacturersspecify very soft rubber which means they wear out too fast. Why would themanufacturer do that? They want that new car to have the smoothest ridepossible, even at your expense of having to buy a new set of tires at half themileage you should have to. When you test drive that brand new car and it ridesvery, very smoothly you’re more likely to buy it. You’ll find out how fast thetires wear out much later, and when you do you’ll blame it on the tire maker.

By the way, another way the car makers delude you intothinking your ride is very smooth is by recommending low tire inflation. The numberyou see on your door jamb or in your car’s owner’s manual is the carmanufacturer’s recommended air pressure. The number on your tire is the tiremaker’s recommendation. The number on the door jamb is the minimum and thenumber on the tire is the maximum. There’s typically a 10 pounddifference. I recommend you try themaximum and, if the ride’s too rough, split the difference. You’ll not only getlonger tire wear but better gas mileage.

I can’t prove it, but I suspect another reason automanufacturers design their own tires is to cut costs. By cutting a few cornersin the design and specifications, they can increase their profit and/or cut theoverall car price. If there purpose was to design a better tire, why wouldn’tthey make these OEM tires available for the car owner to buy after the firstset wears out? Many car owners “think” they’re replacing their Firestones orMichelins that were on their new car with the same tire, but they’re not. Thetire might be the same size and look the same, but it’s a different modelnumber.

One thing you should look for on your first set ofreplacement tires is the “tread wear index” which is molded into the side ofyour tires. This number will be 200 to 800. Your OEM tires will have a lowernumber because their made of softer rubber. If the tires that came on your carhad a 200 tread wear index and you replaced them with 400, you should get twicethe mileage on your second set of tires. The car might not ride as smoothly,but most people can’t even notice. And to my way of thinking, cutting you tirescost in half is pretty good compensation for a slightly rougher ride.

When replacing your tires, don’t get enamored by a sexybrand name. Brands aren’t always built on quality but also on advertising.Also, a famous brand tire makes all different kinds of tires to many different designsand specifications. Just because it’s a “Michelin” doesn’t necessarily man it’sa good tire. If Michelin made that tire for an auto manufacturer who designedthe tire with only two things in mind…low cost and soft ride, you didn’t get avery good tire. My recommendation is to check Consumer Reports for the besttire replacements. You’ll find tire brands recommended that you may never haveheard about. The Japanese and Chinese make some very good tires but they havefunny sounding names and you don’t see them advertised heavily on TV.

Hold Accountable Whistle Blowers with Malicious Intent

2011-10-31T13:17:00.002-04:00

GetBad Drivers off our roads, but not good ones you dislike

I don’t mean to sound like a broken record (or should I saydefective audio chip) these days. Thisis the 4^th article I’ve written on the subject of Florida’s dumb law(see www.DumbLaw.org), 322.126(2), (3). Thisis the law that allows “any person” to report in confidence any Floridadriver as being physically or mentally impaired and be held harmless from anycivil or criminal liability even if it can be proven it was done with maliciousintent.

No one is a greater advocate than I for removing bad driversfrom Florida’s roads. I see them daily and am convinced that they areresponsible for a large percentage of highway deaths, injuries, property damageand soaring insurance rates. But I’m also a strong advocate of the facts thatthe end doesn’t always justify the means and that everyone should be heldaccountable for their wrongful acts.

Last Friday, I had a very productive meeting withRepresentative Irving Slosberg of Florida’s 90^th district in BocaRaton. He impressed me very much with his openness to my suggestions. Iconversed with him and his two aides for about 45 minutes. His office is at 9045 La Fontana Boulevard,Suite 117. When I walked in the front door there was no one in the frontoffice. I heard a dog barking in the back and Irv came out with his dog,Soldier, a fine looking Terrier, on a leash. He asked me if I like dogs andsaid, “Very much”. Soldier joined the meeting and anybody who loves dogs thismuch has to be a good guy. I alsolearned that I didn’t even need an appointment because Irv Slosberg has an opendoor policy. Anybody who needs help can just walk into his office at any time.This is very rare for a politician and, before I left, I told Irv that weneeded more guys like him in Washington D.C.

During our conversation he called one of the higher ups ofthe FHSMV (Florida Highway Safety and Motor Vehicle department). This FHSMVperson was aware of me and told Irv Slosberg that he was the fourth callerabout the “Earl Stewart’s problem”. This person, not surprisingly, was not atall sympathetic to my position. He pointed out that the informants were notanonymous as I had incorrectly stated, but were “only” confidential. He isexactly correct, there is a shade of difference between the definitions ofconfidential and anonymous. Because the FHSMV knows the name of the informantbut won’t tell anybody else, including the accused, the informant isconfidential. Anonymous would mean thatnot even the FHSMV would know the name of the informant. Of course, the neteffect is exactly the same because the informant is held harmless even if themotive for turning in a driver was purely malicious. It makes no difference ifthe FHSMV knows the identity of the informant if they will not tell anybodyelse…not the accused, not the accused’s lawyer, the police, or even ajudge. And, if through a fluke, theidentity was known and it could be proven the intent was malicious, theinformer is held harmless from civil suit or criminal liability.

Representative Slosberg was incensed when I explained to himwhy I believed that I knew the person who had informed on me did so for revengeand why I’m 99.9% sure that I know who he is. He agrees with me that this isthe part of the law that must be changed. A person who takes it upon himself totry to have another’s driving privileges revoked must be held accountable ifthis is done falsely and with malicious intent.

However, Irv Slosberg did not think that my going publicwith my opposition to this bad law was a good idea. He felt that the morepeople who know about this law, the greater the potential for abuse. I have to agree with him that more awarenessof this bad law will generate more abuse. But I can’t agree that this justifieskeeping quiet about it. In fact, if more people like me are willing to stand upand be counted, we may be able to expedite changes in this law. This law hasbeen on the books too long, seventeen years, and the reason it’s been there solong is that people only became aware of the law when they fell victim to it.Most of the victims never responded to the letter from the FHSMV and continueto drive their cars, but now with no license and no insurance. Theydon’t speak out because of the same reason they don’t take the driving,written, hearing, and eye tests…fear. Who wouldn’t be afraid of even the remotest chance to lose their drivingprivileges? Why not gamble that apoliceman will never stop you especially since most people have never beenstopped before…especially if you’re a good driver. Would you take a chance thatsome FHSMV bureaucrat may mistakenly fail you in some part of the test if youdidn’t have to? God knows government bureaucrats make lots of mistake…we readand hear about them in the new every day. The letters from the FHSMV are mailedout regular mail, not certified as they should be. Who’s to say your letterwasn’t lost in the mail? In fact, I’m certain that some letters are lost in themail and some letters are accidentally thrown out, what with all of the junkmail we receive nowadays. This means that there are probably also lots ofdrivers without licenses that don’t even know that their licenses aresuspended.

Please sign my petition at www.DumbLaw.org.Next Tuesday, I will be taking my driving, written, eye, and hearing tests and,of course, I will pass them all and retain my license. Don’t sign this to helpme, but sign this petition for those who can’t or won’t stand up because they’reafraid. Sign this petition because this law is un- American because the stateshould not protect someone when they maliciously attack another by concealingtheir identity and shielding them from all civil and criminal liability.

Sun Sentinel Defends a Dumb Law

2011-10-24T09:43:00.001-04:00

I’ve written two blog articles on thesubject of Florida’s dumb law allowing “any person” to anonymously report youor me as an “impaired drivers”. Perhaps the worst part of this dumb law is thateven if it can be proven the report was unfounded and had malicious intent, theinformer is indemnified from all civil or criminal liability. Why am I writing a third column on thissubject? It’s because the Ft. Lauderdale SunSentinel published a headline article in its Sunday, 10-23-11, editionsupporting this law and the AP picked up the story, a release of which waspublished in the Monday, 10-24-11 edition of the Palm Beach Post and many other newspapers nationwide. I suspect thatthese articles were the result of press releases by the Florida Highway Safetyand Motor Vehicle department, FHSMV, who enforces this dumb law. You can readthe article by clicking on the link, www.FHSMVDumbLawArticle.com.

I’m asking you to sign an electronicpetition to change this law to remove the anonymity and “hold harmless”sections. Please click on www.DumbLaw.org.Below, I’ve addressed various omissions, misunderstandings, and distortions ofthe article from the Sun Sentinel. I’msure that when you’ve read both the article and my comments you will agree thatthis law needs to be changed.

(1) It acknowledges that “most of the drivers losttheir privileges because they didn’t submit detailed medical informationrequested by the state to show they are still able to drive.” What theydon’t do is drill down and ask the question, WHY don’t drivers submittheir medical information? Is it always because they know for certain that themedical information would have resulted in a license suspension? Or is it oftenbecause they are simply afraid and unsure? My personal situation is a good example.When I first got the letter from the FHSMV, I was concerned that I might fail ahearing test. I’m a former hunter and I have high frequency hearing loss in myleft ear. It wasn’t until I read the Florida Driver’s Handbook that Idiscovered that a driver’s license cannot be revoked for being hard of hearingor even deaf. Supposing I had been too afraid to take a hearing test and chosenot to respond to the letter with the following reasoning…If I drive carefully,the odds are 99.9% that I will never be stopped by a policeman and asked toshow my driver’s license? I can probably keep quiet about the letter, keep ondriving, and nobody will ever be the wiser. The worst case scenario is I getstopped sometime in the future, and they cite me for driving with a suspendedlicense. I claim that I never got the letter asking me to take the test whichwas sent by regular mail, not certified. I’ve had the benefit of years ofdriving that I would otherwise have lost and I can, even then, agree to takethe test and hope I pass it. The alternative to this is to respond immediatelyand risk taking the test and losing my driver’s license. Think for a minuteabout how terrifying it is to lose your right to drive a car in Florida. Duringthis Great Recession it was shown that many people choose to have their homeforeclosed on rather than their car repossessed. Keeping their car allowsthem to get to drive to work ,the doctor, the pharmacy, the grocery store, etc.and continue with their lives. They can sleep and live in their car which is ahardship, but at least they can still have a life.

(2) The article acknowledges that this is a “little-knownlaw”. But this front page article and other recent media attentionwill soon make this a “well-known law”. Up until now only 11% of anonymousinformants have been non professionals (regular people, not doctors andpolice). What will happen when every “person” which is the other categoryspecified in the law who can make an anonymous report learns of this law? Whathappens when angry neighbors, divorce litigants, estranged spouses, politicalopponents, jilted lovers, disgruntled and fired employees, businesscompetitors, pranksters and sociopaths (Psychologists say that 1% of thepopulation are born sociopaths and 10% more become so because of theirenvironment) learn about this perfect tool for revenge onsomebody they don’t like?

(3) The article points out that 42% of anonymousinformants are cops. Several questions occur to me that the media has leftunanswered. Why would a policeman waste the time of filing a report to theFHSMV instead of taking immediate action to remove an impaired driver from theroads? Police take drunk drivers off the road immediately, why not legallyblind drivers? Why does a cop want to remain anonymous and immune from civil orcriminal liability? The answer to this question might be frightening. Acop isn’t afraid to “look you in the eye” when he gives you a speeding ticket,makes you take a breathalyzer or blood alcohol test, and cites you for DUI.He’s not anonymous and he faces civil and criminal liability if he carelesslyand/or maliciously does any of these things. Unfortunately in our society,instances of police brutality, sexual harassment, and other police abuses ofpower are not uncommon. Some police forces are requiring video cameras beplaced on squad cars and even then, we’re discovering cops who take advantageof civilians because they have the power to do so. Is it so farfetched to thinkthat a cop who has been “smarted off to” by a traffic offender might get evenwith him by reporting him as impaired driver…especially since he remainsanonymous and is immunized from all civil or criminal liability? When a cop ordoctor makes the anonymous complaint, there is no investigation of thecomplaint as there is if a non professional is the informant. The personreported is ordered to immediately take driving, written, eye, and hearing tests.In my personal situation, I suspect a policeman as being the anonymousinformant. Of course I can’t prove it and, if I could, I could take no actionagainst him. My reasons for my suspicion are that I was ticketed for speedingwhile driving in the right hand (slow) lane while cars passed me on the left.The cop was annoyed at me because I didn’t pull over right away. I didn’t pullover immediately because there was no safe place to pull over and I was drivingwith the windows up and while conversing on my cell phone and simply didn’tnotice him at first. I got the letter from the FHSMV in the mail a couple ofweeks after I was ticketed. At this time I learned that this policeman wasmarried to an ex employee of mine that I had fired and who subsequently sued mefor firing her. I’m not just a good driver; I’m an excellent driver with 20-20vision, adequate hearing, fast reflexes, and a sharp mind. I’ve never had atraffic accident but I admit that I do drive slightly over the speed limit asdo most drivers. Whoever reported me clearly did it for malicious reasons.

(4) The AARP in the past has opposed age basedadditional road testing for drivers according to this article. I have some contactsin Tallahassee that spoke to me off the record Legislators tried toget age based testing into the law but AARP stopped this dead in its tracks.However, the FHSMV is proceeding to do this in spite of it not being in thelaw. They have taken it upon themselves to send out letters to all of thoseseniors who have reached 70 who have also not renewed their license in personin the past 5 years. They have renewed by mail on online. In my opinion, ifthis is true, it is a serious violation of the law by a state agency.

If you agree with me,please click on www.DumbLaw.organd sign my petition.

Good People Make Good Car Dealerships

2011-10-17T12:28:00.000-04:00

In my columns over the years, I've always advocated carefullychoosing the car dealership that you buy your vehicle from or allow to serviceit. I still believe this is important. In fact, I recently published a list ofdealers that I recommend you buy your car from and a list that I recommend youavoid. We've all visited a restaurant or retail store and had a terribleexperience with a waitress, sales person, or other employee and never returned.Yet, we’ll friends recommending the same store that we swore never topatronize. We condemned an entire company because of one person.

I also wrote a column a couple of years ago in which Isuggested that you carefully choose the individual who advises you andsells you service on your car. Theseindividuals are really commissioned sales people who sell you service just likecar sales people sell you cars. Unfortunately most dealerships call themsomething else like “assistant service manager” or service advisor. In mydealership we used to call them Assistant Service Managers because that’s theterm that Toyota uses. We now call them “service advisors” because too manypeople thought they were dealing with the service manager. In all candor, I’dfeel more comfortable naming them what they are, “service sales people” and I maymake that change.

As I was rereading this old column, it occurred to me thatthe same recommendation applies to all companies, not just car dealerships andit applies to all departments in a company. Whichever car dealership youchoose, take the time to pick and choose those individuals you deal with. Cardealerships, just like other organizations, are nothing more than the sum oftheir parts…their people. You should get to know the person who sells youservice and, if you don’t like him, ask for another person to handle yourservice requirements. You should also meet and cultivate a manager in theservice department.

The same holds for the sales department. When you buy a car,don’t settle for the first salesman who approaches you. For example, if you’rea woman you may feel more comfortable dealing with another woman. Or, if yournative language is Spanish or Cajun, you may feel more comfortable with one whocan converse with you in your native tongue. Don’t be shy about asking anddon’t feel bad about hurting the feelings of the first sales person. Anautomobile is the 2^nd largest purchase most people make and it’svery important that you feel comfortable with the person selling it to you. Furthermore,if after dealing with your sales person for a while, you think you made a badchoice, ask to speak to the sales manager or general manager. Believe me, carbuyers hold all the cards in today’s shaky economy and no sane sales manager isgoing to lose a sale because a prospective customer doesn’t like or trust thesales person she’s dealing with. He will handle your sale personally or chooseanother sales person you do feel good about.

Car dealerships have other departments including parts, financeand insurance, accounting, and some have body shops. My same recommendationapplies to all departments. A word of caution, when you ask to speak to amanager, be sure you’re really are truly speaking to one. Car dealerships arenotorious for calling rank and file employees managers to trick the customer.

My purpose in writing this column is in realization of thefact that there are no perfect companies, especially car dealerships and thatincludes mine. I employ 130 individuals and I would be less than candid if Ididn’t say I have a few rotten apples in my barrel. Unfortunately, I don’t knowwho they are and finding them is a continuous work in progress. The same thingapplies to all companies including car dealerships. In my list of recommendeddealers, there are some employees of those dealerships who would take advantageof you but most would not. In those dealerships that I recommend you don’t buyyour car from, there may be a few honest, courteous employees. Then there areall the dealerships that I don’t put in either category. Your odds of finding theright individual are much better if you patronize a good company or cardealership, but don’t totally let your guard down.

Just stay away fromthe ones that I recommend you don’t deal with. In every organization there’s atipping point. A great company reaches a critical mass of good employees and astheir reputation grows, more good employees from other companies seek to beemployed there. Honest, hardworking, courteous people enjoy working in anenvironment where others are like them. The same holds true for evildealerships and bad companies (those on my “don’t buy” list). A good personwith a conscience has a very difficult time functioning in an environmentwhere, from top management all the way down, the design is to trick and takeadvantage of customers. These few good people don’t last long in evildealerships and flee to a place where they can treat their customers in amanner that lets them sleep at night.

Your Angry Neighbors (or anybody else) Can Cause You to Lose Your Right to Drive!

2011-10-10T16:36:00.000-04:00

www.DumbLaw.org

I wrote another column on this subject last March and anupdate a few weeks ago, but it really came home to roost personally in the lasttwo weeks. Just when you think our state government can’t pass a dumber law,you find one that sets a new record. This is the law that allows the FloridaHighway Safety and Motor Vehicle department (FHSMV) to force you to takewritten, driving, hearing and eye examinations based on any person whosays you are an impaired driver. No evidence is required, just the say-so ofany person in the USA. As if this isn’t dumb enough, the informant remainsanonymous and is indemnified from any civil or criminal liability. This meansthat if you don’t like the way Florida Governor Rick Scott is doing his job,all you have to do is download a form from the FHSMV website (www.flhsmv.gov/ddl/faqmed.html),fill it out, and email it to Tallahassee. He will be investigated as to hisdriving impairment and can be required to take a written, driving, eye, andhearing exam. If you wanted to “rub it in” you could voluntarily dispense withyour granted anonymity and tell the Governor that you did this just because youdon’t like him and he could not prosecute you criminally or sue you in a civilcourt.

Somebody turned me in and I will be going through these variousdriving tests. I strongly suspect that I know the identity of the person whoturned me in. This person bears a personal grudge against me and knows that I’ma perfectly good driver without any “impairment”, but I have no choice but to followthe dictates of the FHSMV with great inconvenience and embarrassment. The changes I wish to make in the law are tohold accountable people who maliciously turn in others. I should be ableto sue this person in a civil count for libel. And I certainly should be ableto learn the identity of that person under my constitutional right toface my accuser. Dictatorships like Iran and communist countries like China,not democracies like us, encourage anonymous informants to accuse their fellowcitizens without proof and punish the accused, allowing them no means ofrecourse or retaliation against their accuser.

If all of the above isn’t enough to anger or frighten youabout this law, how about this? More than ten thousand such letters were mailedout by the FHSMV last year and more than seven thousand Florida drivers losttheir licenses. Most of those who lost their right to drive were never tested.They simply chose not to show up and their licenses were automatically revoked.I’ve spoken to some of these drivers who called me as a result of this blog andmy radio show. Their reasoning is that if they don’t show up and just keepdriving, there is a very small chance of them ever being stopped by apoliceman. Many never have been stopped because they are very good drivers. Ifthey should be stopped, they can claim they never received the letter (It isn’tmailed certified). However, if they do take the test, there’s always a chancethey may flunk something. Older drivers haven’t taken any kind of a writtentest in decades. It’s a little scary. Or how good is their hearing or eyesight?How good does the DHSMV expect their hearing and eyesight to be? There’snothing in the letter to tell the recipient what criteria for hearing or eyesightis expected. What 70 year old hears and sees as well as she did 50 years ago?They reason that if they take the chance and fail, they are in far worse shapethan if they simply gamble and continue to drive with no license. Why this allshould anger and frighten you, is that all of these thousands of drivers withno licenses also have no insurance. What happens if one of them is involved inan accident with you?

Some of you may have seen the TV converge on my personalsituation. As I type this article, I’mawaiting a call from a major national news organization. All of the journalists thatI’ve spoken to are equally aghast at this very bad Florida law. I discussedthis twice on my Saturday radio show and my listeners were shocked that such alaw could have been passed. By bringing this bad law out into the “cold lightof day” through this blog and the media we can collectively change it.

I’m asking you and anybody you know to send an email to MyDriversLicense@ESToyota.comand state “Name and hold accountable those who would take away my right todrive” or whatever you would like to say in your own words. You can also faxthis to 561 858-0746. I would especially like to hear from anybody that hasreceived one of these letters from the DHSMV. Most importantly, please sign mypetition at www.DumbLaw.org. I willforward all of your emails, faxes, and our signed petition to our Floridalegislators as well as member of the Executive branch, including Rick Scott. Iwonder if anybody will report him as an impaired driver…I certainly hope not.Oh, just in case you missed the website where you can download that form toreport people, it’s www.flhsmv.gov/ddl/faqmed.html.

Grandma's and Grandpa's "Freedom Machine"

2011-10-03T14:20:00.004-04:00

I wrote this columnfour years ago but a recent incident made it very personal. Last Thursday, Ireceived a letter from the Florida Highway Safety and Motor Vehicle Department(FHSMV). It said that “This agency has received information expressingconcerns about your ability to driving safely. Please call the driverlicense office below to set up an appointment to take the vision, written,driving (in traffic) and hearing examinations. This came as a total surpriseand I was very skeptical because I’m in excellent physical and mental health.My vision, hearing, and reflexes are more than adequate to drive a car. I havean “safe driver” stamp on my license and I’ve never had a traffic accident. I’min the process of investigating this bizarre occurrence and my preliminaryfinding show that the FHSMV is not being forthright in their letter. Infact, letters are mailed to all Florida residents who turn 70 and renew theirlicenses online or by mail. After 80 these letters are mailed every other year.Testing based strictly by age is prohibited by law. Our legislatorsattempted to pass such a law but it was defeated by strong lobbying by theAARP. I will write a column on this when I have all the facts.

You may have read in thenewspaper a couple of weeks ago about a 94 year old man who hit a woman ridinga bicycle. It wasn’t the man’s fault; the woman, in her fifties, ran a stopsign. They put the old man in jail overnight and he was given probation becausehe was driving with no license. It had been taken away because he failed hisdriver’s test. He said he had to drive because he had to take his wife to thedoctor and pick up medicine for her.

There is another reason thata lot of younger people don’t seem to understand why this old man still owned acar. If you are one of these people, think back to the first time you everdrove a car. Think back to the time you owned your first car. Can you recallthat wonderful feeling of FREEDOM? No longer did Mom or Dad have to take you toschool, to work, to the store, or to a friend’s house. Or, you didn’t have totake the bus, the street car, or impose on a friend who already owned a“freedom machine”. If you are a guy, do you remember how you felt when youfirst picked your girlfriend up at her home in your very own car? I don’t knowabout you, but I still feel a tingle when I think about it. I really can’t thinkof a more memorable experience in any young person’s life. Your first kiss isprobably a close second [My first car was a 1951 Pontiac Chieftain & myfirst kiss was from Mary Ann Riggle during a “spin the bottle game”].

If you are one of thoseyounger people who curse at that gray haired driver in front of you because sheis driving too slowly, just remember that she is probably a safer driver thanyou. Newspapers like to feature stories of senior citizens having accidents andquestioning their mental and physical faculties for driving but insurancecompanies charge senior citizens lower premiums than you. That means they havefewer accidents and cause fewer injuries. Admittedly that is partly because weseniors drive fewer miles but it’s also because most of us drive slower andmore carefully than you.

My Uncle Charlie died eightyears ago. He was 94. My Aunt Marion died within a year of Uncle Charlie. Theylived in the same very modest, small house on Valencia Drive in West Palm Beachfor fifty years. But they always owned a Cadillac and it was always parkedoutside in their driveway. Up until the time they were in their late eighties,the highlight of their week was to take a Sunday drive in their shiny Cadillac.Uncle Charlie always drove. When his eyesight got too bad to drive, he stillkept that Cadillac in their driveway, always clean and shiny. His eyesight wasstill good enough so that, from his rocking chair in his living room, he couldsee that big Cadillac sitting outside (and so could his neighbors).

My father died when he was 86and he drove a Pontiac TransAm up until the very last. He had cataracts removedfrom both eyes and back then, you had to wear “coke bottle” style glasses tosee after this operation. He had no peripheral vision and there were a lot ofscrapes, dings, and dents that appeared on both sides of that TransAm. ThankGod he never had a serious accident. I saw Dad every day and I would see thatthe dents and scratches were regularly repaired. He always said he didn’t knowwhere they came from and I never questioned him about that. Maybe I was wrong,but I didn’t have the heart to ask him not to drive anymore. I knew howimportant that car was to Dad and I knew how devastating it would be to him ifhe couldn’t drive anymore.

You may have heard of GeorgeGreenberg a. k. a. the “Mayor of Clematis”. He died a few months ago at the ageof 91. He owned Pioneer Linens on Clematis Street in West Palm Beach, a storefounded by his father, Max, in 1912. George and I were close friends and Idelivered a eulogy at George’s funeral at the request of his grandson anddaughter. George always drove an old Buick station wagon, although he was awealthy man and could have bought any car he wanted. A couple of years ago,George finally treated himself to a new Mercedes Benz SLK-Class convertible!Boy did George look good in that car and he was always smiling when he droveit! When he was diagnosed with brain cancer and given only months to live, hefinally had to stop driving his freedom machine. His grandson drove him to ourmonthly dinner at Carmine’s Ocean Grille and picked him up. It never was thesame for George after that.

At my Toyota dealership inNorth Palm Beach, we have a lot of older customers. It’s just the demographicsof northern Palm Beach County. My average customer is 55 and I have lots ofcustomers in their seventies, eighties, and nineties. Maybe it’s because I’m asenior citizen too, but I especially like talking to my older customers andI’ve become personal friends with some. I can tell you from personal experiencehow important their cars are to them in their latter years. During your middleyears when you have so much more going on in your life, your car becomes moreutilitarian and you take it for granted. But when you retire and your life isnot as hectic your car returns to the importance it had when you weresixteen…your “freedom machine”.

We recently leased a newCamry to one of our very good customers. This was the third car that she got fromus over the last seven years and she had just turned 90. One of my managers,who has worked for me for 20 years and is a neighbor of hers, handled thelease. About a month after she took her new Camry home, her Grandson learned ofthe transaction and demanded that we rescind the lease. When we spoke to ourcustomer, she let us know that her Grandson was very upset with her for leasingthe car. He didn’t think she should be driving a car anymore and that shewouldn’t live long enough to make all the payments on a 4 year lease. Weoffered to refund all of the profit on the lease (about $850), but the Grandsoninsisted that we take the lease car back. This would cost my company thousandsof dollars because of the depreciation a car takes on as soon as it is titledas a used car.

Yesterday afternoon mycustomer’s Grandson and Stepson visited me in my office. They continued todemand that I rescind the lease [Only the leasing company, Southeast ToyotaFinance can rescind the lease] and absorb the thousands of dollars indepreciation on 1 month old used car. They suggested that I may have brokenlaws by exploiting the elderly and that if I did not succumb to their demandsthey would sue me. They had already called Toyota to complain about my actions.Not so politely, I asked them to leave my office.

This experience troubled mefor the rest of the day and even last night and is what inspired this column.Now I understand why I was so angry at the actions of my customer’s Grandsonand Stepson. They didn’t seem to understand how much that car meant to theirGrandmother/Stepmother’s happiness and what an important thing her “freedommachine” was to her. I have to wonder how much of their ire was due togenuine concern for her or the potential financial impact on her estate. HerGrandson told me that she had put only 1,500 miles on her last car and whatdoes she need a new car for? He just doesn’t get it! A new car is a lot morethan just a way to get to the drug store. To a senior citizen it’s a source ofpleasure, pride, and comfort, knowing that it’s in their driveway for everyoneto see and it’s there if they need it.

One of my sons just called meto double check on the correct time for him to come over for Thanksgivingdinner today. I told him that I was writing this column and we discussed thesubject. I also told him that I hoped that neither he, nor his two brotherswould ever take away my “freedom machine”.

Rebuilding Car Dealers’ Character

2011-09-26T12:29:00.003-04:00

At a recent lunch between a group of Wall Street JournalReporters and the new dean of the Harvard Business School, Nitin Nohria, hespoke on “changes in business education and how to teach character-building.”He said that “ethics” were the centerpiece of Harvard’s recent curriculumoverhaul. Of course, a lot of this was fueled by the financial meltdown thatthe USA entered around 2006-7. The meltdown has been largely attributed togreed, lack of ethics, and illegal acts by businesses. Before the meltdowncompanies like Enron, AIG, and Lehman Brothers were considered role models forbusiness students. Now, these companies and many more are held in no higherregard than politicians, lawyers, and car dealers (not necessarily in thatorder).

One of the WSJ reporters asked if it wasn’t too late tochange a person’s “moral compass” by the time he’s going to graduate school. Thedean responded that he didn’t believe that but believed that morals andcharacter are a lifelong development. I totally concur because I grew mycharacter in a positive way after I was out of school. I had a good foundationfrom my parents but there’s nothing like life’s school of hard knocks to joltsome sense into you. I half jokingly refer to myself as a “recovering cardealer” because I began positively adjusting my character and my moral compassconsiderably when I reached my mid fifties. People ask me all the time, whatspurred this change. First, I tell them it’s a work in progress and I’llcontinue to try to get better until the day I die. Then I tell them there is noone thing that brought this about. You can take your pick…Maturity, my sons andwife becoming part of my business, grandchildren, a near death experience withcolon cancer, the realization that treating my customers with courtesy,respect, and integrity was actually better for business than the old way.

Abraham Lincoln said that people think that the real test ofa person’s character is how they deal with adversity. I’ve been hearing a lotof excuses from dealers who say that they can’t stop charging the dealer feebecause business is so bad. If they stop charging it, they would go out ofbusiness and just think of the number of innocent employees would be unemployed!I’m sure that rationale is why a lot of car dealers add thousands of dollars tothe MSRP of their advertised cars so that they can trick their customers intobelieving they’re getting a large discount. Or why dealers charge customerstwice for freight and even mark up the license registration electronic filingfee. But the dean of Business at Harvard thinks the biggest reason for thecollapse of morals and ethics in business is “power”. LordActon (1834-1902), British historian, said “Power tends to corrupt and absolutepower corrupts absolutely”. This explains why we have so many corruptpoliticians, lawyers, and, yes, car dealers. Being able to handle power in ahumble fashion is the truest test of character.

Unfortunately, car dealers fly much lower onthe radar than the Exxon’s, Lehman Brothers, and AIG’s of the world. There aremore than 10,000 car dealerships in the USA and most of them operateindependently. For this reason, laws controlling them and regulations are a stateissue. California, for example has good laws and regulations protecting carbuyers but Florida does not. Some attempt has been made to bring Federalregulation to bear through the Federal Trade Commission, but powerful dealerlobbyists like the National Automobile Dealers Association (NADA) have foughtthat successfully so far.

The only advice I can give you at this timeis “don’t take it lying down”. The only way to get the attention of ourpoliticians and regulators is to make lots of noise. This is why I write thisblog, my newspaper column, and do my weekly radio shows. If a car dealer wrongsyou, call the Department of Motor Vehicles, the Count Office of ConsumerAffairs, the Attorney General’s Office, and/or the manufacturer. Put yourcomplaint in writing. And of course, you can always email or call me and I willmake your message known.

BUYERS ARE LIARS!

2011-09-19T10:35:00.001-04:00

I’m always amazed by the way car dealers who use deceptiveadvertising and unethical sales tactics rationalize their behavior by actuallyblaming you, their customer. The following is a direct quote from an anonymous cardealer’s email I received this morning in response to one of my recent columnsin this newspaper: “I don't think you would make any of these comments if you sold fords ina non-metro market. How do you expect dealers to change when consumers thinkthey should pay less than dealer cost for a car and then walk into any otherform of retail store and pay what they are asking?? Your ideas are noble butthere are other dealers who have tried 'your' methods who are no longer inbusiness.” This dealer is saying that his customers are so ruthless andcunning that they won’t buy a car unless they can buy it below his cost and hisonly solution is to trick them into thinking that they are buying itbelow his cost, like tacking on a “dealer fee” to the price they quoted thecustomer. He also goes on to say that my“ideas are noble” but I can’t possibly be successful and I will go broketrying. I truly appreciate his concern and I want to assure him, if he isreading this article, that my business is doing very nicely.

This attitude is actually a prevailing part of the culturein many car dealerships. Many dealers, dealer managers, and sales people don’ttrust their customers (how paradoxical!). They don’t even like theircustomers. A very common expression among car dealers and their sales staff is“Buyers are liars”. This means that a prospective customer will not tell youthe truth about the condition of his trade-in, he will lie to you about theprice he got from your competitor, and he is likely to remove those new tires thatwere on his trade-in when the dealer appraised it when he comes in to pick uphis new car.

There are also a lot of dealerships where used car buyersand people with bad credit are held in especially low esteem. They havenicknames for people with bad credit like “slugs” and “roaches”. Apparentlydehumanizing these unfortunate members of our society with derogatory labelsmakes it easier to treat them so shabbily. People with bad credit are targetedwith direct mail and newspaper ads making absurd promises that convinceprospective customers that they can finance a car no matter how bad theircredit. In some dealerships applicants are coached on how to falsify creditapplication and pay records. In some cases the applicant may not even know heis signing a false credit application which is federal offence. In most cases the credit is refused and theapplicants are not even given the courtesy of a return phone call to tell themthis.

I don’t claim to be a psychologist (and I don’t even playone on TV), but I have read articles explaining how humans will stereotypeother people in a fashion that falsely justifies their negative behavior towardthose same people. We see this with racism and even in wars. If you makeyourself believe that car buyers are out to take advantage of you, “buyers areliars”, you can’t feel guilty about tricking them into paying a dealer fee. Ifyou trick a “roach” or a “slug” into coming in to buy a car on credit when theyprobably can’t, why should you feel guilty? After all, roaches and slugs don’thave feelings.

What these kinds of dealerships don’t understand is that youmust trust a person first before you can expect her to trust you. You have totreat a person with respect before you can expect that person to respect you.Somebody has got to go first. My experience over the past 40+ years as a cardealer is that 99.9% of my customers are good people who I can believe andtrust. Those are pretty good odds and I just assume that every customer I amdealing with is part of that 99.9%. Oncein a great while I get burned, but the loss from that one in a thousand thattakes advantage is far out-weighted by the other 999 who respond positively tomy trusting them and treating them with respect.

The Lemon Law... Your Nuclear Option

2011-09-12T12:04:00.001-04:00

Lemon lawsare state laws which give rights to purchasers of new vehicles if they findthat they have bought a car with a defect that cannot be fixed in a timelyfashion by the dealer or the manufacturer. Every states lemon law is somewhatdifferent but they all have a lot incommon and are aimed at the same result. Most car buyers have misconceptions ofthe lemon law. These are some the most common ones: The car owners think theyare going against their car dealer when they are really going against theircar’s manufacturer. If you prevail it costs the car dealer nothing. Themanufacturer pays. The law applies only to cars purchased as new, not used. Ifyou win a lemon law dispute, the manufacturer or dealer does not simply replaceyour car with a brand new on. The amount of credit you win toward a replacementvehicle is arrived at by deducting a charge for the usage of your lemon carbased on time and mileage.

The completelemon law process is a difficult and time consuming task for all concerned…you, the car dealer, and the manufacturer. It’s difficult for you because thelaw requires specific and extensive documentation. You must have allowed yourdealer to try to fix the problem at least three times and you must havedetailed written documentation of this. You must be sure that your complaint isclearly spelled out by the dealer on your repair order and that his failure tofix it is also a matter of written record. After three times, you must notifythe manufacturer by certified letter that you are invoking the lemon law. Nowthe manufacturer has one last chance to fix your car. At this time, themanufacturer may take your car to another dealer who he feels is more competentin repairing your car. If the fourth attempt to fix your car fails, your caseis assigned to a board of arbitrators. Their ruling is final. This entire processusually takes a very long time. A time of several months is not uncommon.Meanwhile, you’re saddled with a car that has a problem nobody can fix.

When youformally invoke the lemon law with your certified letter, you sever allcommunications with the manufacturer other than formal, legal communications asdictated by the law. The manufacturer considers you a legal adversary and theirattorneys consider anything they say to you as something that can be usedagainst them in the arbitration. At this point they are legally barred fromfixing your car or talking to you about fixing your car.

All of theabove is why I advise that you use the lemon law only as a last resort…thenuclear option. Put emotion aside andfocus on what your purpose should be which is to have a car that you can drivewithout the problem that has been driving your crazy since you bought it. Yourpriority should not be to punish the dealer because as I already said, hesuffers nothing from your winning a lemon law decision. You are punishing themanufacturer to some extent, but this is “business as usual” to allmanufacturers who fight (and usually win) thousands of lemon laws annually.What I’m suggesting is that you might want to consider giving the dealer andmanufacturer a little more time to fix your car after the first three attempts.If they look like they are sincere and trying hard, it could save you a lot of timedriving your broken car (not to mention the mental anguish) compared to waitingmonths for the lemon law process to work itself out.

I’m notsaying that you shouldn’t tell the dealer and manufacturer that you will invokethe lemon law if you have no other choice. You definitely should do that. Youshould let both the dealer and the manufacturer know in no uncertain terms thatyou have meticulous documentation of their failed efforts to fix your car, youhave familiarized yourself completely with the specifics of your state’s lemonlaw, and you will not hesitate to invoke it if you are left no other choice.This will instill a sense of urgency to fix your car ASAP if it’s within theirabilities. The reason is the dealer and the manufacturer want to keep you as acustomer. In fact, the dealer may stretch to give you a better deal on a newcar to replace yours than you would ever otherwise have gotten. He can’t dothat once the lemon law has been invoked because he would be trading in a“lemon”. A “legal lemon” has the same stigma as a flood car or totaled car thathas been rebuilt. The manufacturer not only wants to keep you as a customer butwants to avoid the cost of arbitration (the manufacturer is responsible for allof the costs), the cost of disposing of a lemon, and the cost of the damage totheir reputation by chalking up another lemon laws loss in the record books.For more information about the lemon law, Florida residents can call the lemon law hotline, 800321-5366 or you can click this link: http://www.myfloridalegal.com/lemonlaw.

That Brand New Car May Need a Wheel Alignment

2011-08-29T11:48:00.002-04:00

I wrote another article on wheel alignments a short time ago. If you’re not conversant with wheel alignments, this is a good article to read and you can find it here. Also, this is a great video on YouTube, http://www.tirekiller.com/.

Most everyone thinks of a wheel alignment as a maintenance item which is the owner’s responsibility that you don’t need to worry about when you first buy the car…at least not until you drive into a pothole, notice a pull to the left or right, or uneven tire wear. Unfortunately most car manufacturers and dealers also look at alignments the same way.

A few months ago, I invested in a new state-of-the-art wheel alignment machine. Older wheel alignment machines require a lot of time and labor to measure the wheels for proper alignment. In fact, it actually takes almost as long to determine if your car’s wheels are out of alignment as it does to also actually correct the alignment. Because of this, most service departments (independents and dealers) will charge you the same just to “check” your alignment as to actually correct it. The cost of 4-wheel alignments averages between $70 and $100. Beware of very low priced alignments. These may be just for the front end of your car and/or by older or obsolete alignment machines. I invested in my new state-of-the-art alignment machine because it allows me to check an alignment in less than 10 minutes which permits me to check a customer’s alignment at no charge.

Now, I check the wheel alignments on every car that comes into my service drive. I also check all of my company cars including my parts delivery trucks my service courtesy vans, my new car demonstrators and my used cars. I do this for the same reason that you should check the wheel alignment on your car, even if it’s brand new. As I explained in my earlier article, a car’s wheel out of alignment is like high blood pressure…often times there are no symptoms. And, just like high blood pressure can be fatal to you, misaligned wheels can be fatal to your tires.

The reason that I’m writing this article so closely on the heels of my last wheel alignment article is because of the astounding data I’ve been able to collect since I began checking every car coming through my service drive (about a hundred each day) for alignment. About one car out of every four that I checked is out of alignment which didn’t surprise me that much. Industry data supports this. But what did surprise me is the fact that about one out of four new cars is also out of alignment! I’m defining a new car as one under one year old or 20,000 miles. My thoughts on this are that some cars may actually be misaligned before they leave the manufacturer and some may have their wheels knocked out of alignment loading and unloading them on ships, trains, and trucks between the manufacturer and the dealer. Of course new cars are also driven by the dealer on road tests, demonstration rides and traded back and forth between dealers. As you can see there are lots of reasons a “new car” can need a wheel alignment.

Because a new car has so few miles on it, it’s impossible for you to notice the misalignment from uneven tire wear. As I explained in my earlier article, the only other tangible symptom for misalignment is pulling to the left or right. But all it takes is two adjustments on two different wheels to be out in opposite directions to cancel each other out in which case there is no revealing pull to left or right.

Now here’s the shocking facts I discovered when I began checking the wheel alignment on all new cars that come through my service drive. Before I purchased my new state-of-the-art Hunter alignment machine, I checked and aligned a new car only when the customer complained of a pull or uneven tire wear. The average number of alignments I checked and fixed each month was only “seven”. Now that I’m checking the measurements on all new cars, I’m aligning an average of forty-six, an increase of 650%! This means that for every wheel alignment I corrected, there were six more that were not detected and fixed. Many of my customers ended up paying for an alignment that should have been covered by their warranty and many may have had to replace their tires sooner than they should have.

It pains me to admit that I haven’t been checking my customers’ new car for alignments before a few months ago, but I really had no choice for two reasons. I couldn’t afford to pay a technician the lengthy labor time required with my old alignment machine and the manufacturer would not pay for an alignment check or alignment on a new car unless the customer complained of a pull or uneven tire wear. This is common practice with most, if not all, manufacturers and I believe it’s a huge mistake. You would think that the manufacturer of the car would understand the technical fact that a car’s wheels can be out of alignment without showing tire wear or pulling. Selling a customer a new car with wheels that are misaligned and not allowing that car to be aligned under warranty is simply not right. The consequences of this can not only be very expensive for the customer, but a potential safety issue as well.

My advice to you is to demand that the dealer and manufacturer who sold you your car prove to you that your wheels are aligned properly as soon as possible after you buy the car. Make this a written condition of the purchase. Ideally all new cars should have their alignments checked just before they are delivered to the customer. Many dealers might encounter a problem with reimbursement by the manufacturer for doing this and that’s why it’s not already being done.

Don’t Be “Flipped” to a Lease

2011-08-22T11:16:00.000-04:00

One of the most popular weapons in car dealers’ arsenals is the infamous “lease flip”. This is car dealer jargon for switching a customer who originally intended to buy a car to leasing the car.

Of course the motivation to do this is more profit for the dealer and a bigger commission to the salesman. That’s not to say that leasing a car is always more costly than buying one, but it can be if you’re not careful. And not being careful is exactly what happens when a purchase intender becomes a lessee.

Here’s how it happens. You come into the dealership to buy a car. You may have seen the dealer’s advertisement in the newspaper or TV for a particular model. More than likely you are prepared to make a down payment and/or trade in your old vehicle. You have a monthly payment in mind because almost everybody has a budget and we usually translate most purchases into whether or not we can fit them into our monthly budgets. You negotiate the best price you can to buy the car, or maybe the sale price is good enough.

Now the salesman or more often the F&I manager/business manager tells you what your monthly payment will be. Let’s say that you have a trade-in worth $15,000 and aren’t going to put any cash down. The F&I [Finance and Insurance] manager tells you your monthly payment will be $427 per month. But that’s way more than you can afford and you tell him you can’t buy the car because you can’t afford that big a payment. He asks you how much you can afford and you tell him it must be under $350 per month. Now he has you set up perfectly for the “lease flip”.

“Mrs. Smith, I think I have just the right thing for you. What would you say if I told you that you can drive that new car home today for just $349 per month?” You say, “With glee, you say we have a deal!” Guess what? You’ve just been flipped. If you had bought the car at the advertised price or negotiated a very good price, the dealer probably would have made about $1,000 profit. and the salesman would have made about a $200 commission. Not that you’ve let yourself be flipped to lease, the dealer could be making $15,000 and the salesman could be making a $3,000 commission!

I’m not exaggerating. I get calls weekly from victims of lease flips. Many of the callers are elderly and many of them are widows who never bought a car before, but had relied on their husbands. There’s no law that limits the profit that a dealer can make when he sells or leases a car. $10,000, $15,000, and even $20,000 profits are made and usually on leases. The dealers can do this by using the trade-in as a capital cost reduction on the lease but allowing less for the trade than it is actually worth. In the example above, your trade-in may be worth $15,000 but you were allowed only $5,000 to reduce the capitalized costs of the lease. Also, the dealer could have raised the price of the car you negotiated or the sale price to MSRP or even 110% of MSRP which is allowable by the leasing companies.

By manipulating the number of months of the lease and the down payment [capitalized cost reduction], a dealer can give you as low a payment as you ask for and still make an exorbitant profit. Most buyers are so focused on monthly payments that they don’t carefully analyze what they are agreeing to and signing. The shorter the number of months of a lease, the greater impact the down payment has on the monthly payment. A $5,000 down payment reduces the monthly payment on a 36 month lease by $139 per month, $208 on a 24 month lease, and $417 on 12 month lease.

Incredibly many victims of the lease flip, never thought about the fact that after the 12, 24, or 36 month term of the lease, they own nothing. After 36 months, a car with a good resale value should be worth about half of what you paid for it. Many people who have never leased before think they can bring their lease car back early if they want. Leasing is not renting and you can bring your car back early only if you make all of the remaining lease payments. If you had bought the car for $30,000 and financed it for 36 months, you would have about $15,000 in equity at the end of 36 months and no monthly payments. You were building equity with every monthly payment in the purchase but you were building zero equity with your 36 lease payments.

As I said before, don’t let this frighten you from ever leasing a car. Leasing can be a good choice and sometimes the best choice. You can find six articles I’ve written for Hometown News and for my blog at www.EarlStewartOnCars.com. “Lease a New Car before You Buy It”, “Car Leasing Booby Traps”, “Be Very Careful When Leasing a Car”, “The Lease Acquisition Fee…the Bank’s Gotcha”, “Buy or Lease Your Car at the Right Time of Year”, and “Should I Buy or Lease My Next Car?”

THE TEN COMMANDMENTS

2011-08-15T09:13:00.001-04:00

HOW THOU SHALL TREAT THY CUSTOMER

I composed these ten “commandments” for my car dealership. They didn’t come to me in a vision or on a mountain top, but evolved over forty-three years as a car dealer. Most of them evolved over the past decade which is why I refer to myself often as a “recovering car dealer”. But just like the biblical Ten Commandments, they don’t do any good unless people know, understand, and apply them. In my dealership, all of my managers and other employees know that we must “walk the talk”.

(1) Do whatever our customer asks if she believes she’s right. It’s not important whether our customer is right or wrong, only if she honestly believes she’s right.

(2) Do what is right for the customer even if you don’t have to. Just because we’re not required by law or contract to do the right thing is no excuse.

(3) If your supervisor is not available, then you do what is the right thing for our customer. All Earl Stewart Employees are empowered to spend or do whatever is necessary to do the right thing by a customer. If in 20-20 hindsight you should err, you will not be held to blame because you acted in good faith to make our customer happy.

(4) Always answer all phone calls, emails, texts, and messages of any kind from our customers ASAP. Nothing angers a customer (or me) more than a delayed or no response from us.

(5) All Customers must be treated with courtesy and respect at all times. Just because you judge a customer to be unreasonable is no excuse not to treat that custo9mer with courtesy and respect. If you are incapable of dealing with a particular customer, involve your supervisor or me.

(6) You will always tell our customers the truth, the whole truth, and nothing but the truth. I believe in giving every Earl Stewart employee a second chance except when it comes to dishonesty.

(7) Your first loyalty is to our customer, not to Toyota. In the rare case where a dispute arises between our customer and Toyota over warranty coverage, for example, we advocate for our customer. We argue and present the facts on behalf of our customer but abide by Toyota’s decision.

(8) You must personally take ownership of our customer’s problem. This means that if you are the first person to learn of a customer’s complaint or problem, you have the responsibility to stay on top of its resolution until you personally verify that the issue has been resolved. Don’t just refer or delegate the problem to someone else even it’s outside your department.

(9) Promise our customer less than you will deliver. Always be conservative when making promises to your customers. Over estimate the time of a service or the date of arrival of the new car they ordered. Under-promise and over-deliver.

(10) Trust your customer as much as you hope he will trust you. We’ve all been burned by trusting someone who disappointed us but that’s a very small percentage. The fastest way to earn trust is to trust the person you want to trust you. Somebody has to go first. Let it be us.

EIGHT STEPS TO ENSURE THAT YOU ARE BUYING THE BEST CAR FOR THE BEST PRICE

2011-08-08T15:53:00.003-04:00

(1) Consumer Reports Subscribe to Consumer Reports, go to the library and read past issues, or check out Consumer Reports online. There are other objective sources of information on cars, but this is the best. They accept no advertising from anybody and their sole goal is rigorously and objectively testing merchandise that consumers buy. You can very quickly find the best make car for the model and style you want to buy. Consumer Reports rates cars by performance, cost of operation, safety, and frequency of repair.

(2) Test Drive the car you have chosen This step requires that you visit a car dealership. Remember that this doesn’t have to be the dealership you buy it from. You obviously must see, touch, feel, and drive the car that you think you want to buy. A new car is a very personal thing and just because Consumer Reports loved it doesn’t mean that you will. Be sure that you test drive the car at all speeds in all road types that you normally drive. Drive it in the city but also on the expressway.

(3) Carefully choose the accessories you want There are some accessories that enhance the value of your car and some that don’t or may even lower it. Generally speaking you should accessorize a car comparably to its class. If you are buying a lower priced economy car, you should not load it up with leather seats and an expensive sound system. If you do, you won’t recoup much of what you spent on these accessories in its resale value. On the other hand, if you are buying a luxury car, don’t skimp on items people look for in luxury cars like a navigation system or a moon roof.

(4) Carefully choose your car’s color Color is more important in determining a car’s resale value than accessories. If you want to maximize the trade-in value of this car, choose a popular color. White, silver, black, and beige are the 4 most popular colors. Sports cars and convertibles are exceptions and red is often the most popular color. The difference in trade-in value between the right color and the wrong color can be several thousands of dollars.

(5) Arrange your financing Now that you know exactly what kind of a car you are going to buy, you can check with local banks and credit unions to find the best interest rate. Don’t commit until you have chosen the dealer you will buy from. Manufacturers sometimes offer very low special rates and dealers can sometimes offer a lower rate than your bank or credit union.

(6) Shop your trade-in If you are trading in a car, take it to 3 dealerships for the same make and ask them how much they will pay you for your car. A Chevy dealer will pay more for a used Chevy and a Toyota dealer will pay more for a used Toyota. If you live near a CarMax store, get a price from them too. They have a reputation of paying more money for trade-ins than most dealers. Don’t commit to the highest bid, but give the dealer you buy from a chance to beat that price.

(7) Shop for the best price on the Internet Go to the manufacturer’s Web site. The addresses are all very intuitive. Toyota is www.toyota.com and Chevrolet is www.Chevrolet.com. You can type in your zip code and get the Web sites of all of your local dealers. Depending on how far you are willing to drive to pick up your new car, request price quotes from as many dealers as you like, but be sure you get at least 3 quotes. When you have chosen the lowest price, verify that this price is “out-the-door” with only tax and tag added.

(8) Offer your favorite, or nearest, dealer the right to meet this price. If you have been dealing with one dealership for a long time and have had good experiences with their service department, you should give them a chance to meet your lowest Internet price. Of course, you can take your new car to them for service even if you don’t buy it from them.

You will notice that there were no steps listed above which suggested that you look in your local newspaper’s auto classified section, watch car dealer’s TV ads, or believe their direct mail “too good to be true” offers. When you fall for this, the dealer is in control. When you follow my eight steps, you are in total control.

Car Dealers Exploiting the Elderly

2011-08-01T09:57:00.001-04:00

I wrote this column over four years ago, but it’s more important and timely today. Not a week passes without at least two or three elderly people contacting me about being victimized by a South Florida car dealership. These are usually pre Baby Boomers in their seventies, eighties and nineties. I’m happy to say that I have a high rate of success if I’m contacted soon after the purchase, within a few days. The first thing I do is contact the dealership’s owner. With publically owned dealerships like AutoNation (Maroone), Penske Automotive, and Sonic, and Group One I have to contact the real General Manager. I emphasize “real” because sales managers will often try to foist themselves off as the General Manager, but they are only in charge of the car sales departments and are really “general sales managers”. In the rare occasions I strike out, I have no alternative but to contact the Florida Department of Motor Vehicle, DMV which is the best governmental agency to keep a car dealer on the straight and narrow.

I use the term “car dealer” often in my columns and I want to make it clear that I am not trying to get personal. I could use the terms “car salesman” or “car sales manager”, but the dealer is the boss and I firmly believe the placard Harry Truman had on his desk, “The buck stops here”. The guy that owns the place is responsible for the actions of his employees. Just because he doesn’t know that there are some salesmen or managers taking advantage of his customers, is no excuse.

When I became a senior citizen I truly began to see the world in a different light. I have been a car dealer for over 40 years, but I have seen my own business through the eyes of a senior citizen for only the last few. One thing that has helped this awareness has been my relative new public persona, brought on by my TV commercials. Seeing me on TV (and also reading this column) precipitates a lot of phone calls, emails, and letters from seniors in Palm Beach, Martin, and St. Lucie counties. Some of these are very complimentary. Many of them are also calls for help or advice from those who were taken advantage of when they bought their car.

I get more calls from widows than any other single category. In my dealership last Friday, I was introduced to a widow in her seventies who had come in to buy a car with her nephew. She had never bought a car before. Her husband had always handled this responsibility. He passed away 2 years ago. She was very wise to bring along her nephew to assist her in her first car purchase.

I am learning as I approach 70 that I’m not quite as sharp in some areas as I once was. My memory is not as good and I am not as fast as I used to be. This is not to say that I am not as smart as I was when I was younger. In fact, I’m a lot smarter. There was a great article in the February 16 Wall Street Journal entitled “The Upside of Aging”. It explained how recent scientific studies have proven that even though certain mental abilities like memory and reaction times regress as we age, other more important mental abilities like judgment, empathy, vocabulary, and semantic memory more than offset the negatives. Semantic memory is the recollection of facts and figures from your field of endeavor or hobby and is most robust in seniors. If you would like to read this article just click on The Upside of Aging or send me your email address or fax number and I will send it to you.

Buying the right car at the right price is no easy task. There are a lot of variables like trade-in allowances, monthly payments, discounts, interest rates, lease or buy, finance or pay cash, and all that I just mentioned has to do only with the cost of the car. What about which is the best make and model for you? This process should take lots of time in the study and preparation but too often purchases are made in just a few hours with little or no preparation.

The reasons why the elderly are so often targeted and exploited by car dealers (and other businesses) are many and complex. For one thing, there are just a lot of elderly people living in Palm Beach, Martin, and St. Lucie Counties. When a reporter asked John Dillinger why he robbed banks, Dillinger replied, “Because that’s where the money is”. Even though most senior citizens are smarter than ever, I believe that we are perceived by many as not being so smart. We are looked upon as easy prey. Also, I think that we pre-baby boomers grew up in a more trusting, family oriented time and we sometimes trust others more than we should.

In summary, if you are a pre-baby boomer like me, take extra precautions before you enter a car dealership. Do your homework carefully. Never, never make a rush decision. Do not buy that car on the same day you come into the dealership. Go home, discuss it with friends and family, and sleep on it. And if you call me, please call me before you buy the car, not after it’s too late.

Out-of-Align Wheels: The Silent Killer

2011-07-25T10:20:00.003-04:00

Estimates on the number of cars on the road right now that need an alignment range from as low as 25% to as high as 75%! Even if you have the best tires and vehicle that money can buy, all it takes is a little pothole or curb to cost you a new set of tires. This can cost you anywhere from $300 to over $1,000. If you live in an area with unpaved roads or lots of roads in need of repair and being repaired (Like South Florida) you’re especially vulnerable to potholes and other road obstacles that can knock your front and rear wheels out of alignment. One of my “favorite” ways to misalign my wheels is curbs…I can’t seem to avoid them when I’m parking, especially backing into a parallel parking place.

Most people know that if their car is pulling to the left or right, they need an alignment. Most also know that if they see wear on the edges of their tires, they may have an alignment problem (It could also be under inflated tires). But what most people don’t know is that your wheels can be badly out of alignment with no symptoms whatsoever. It’s like high blood pressure and that’s why I used the phrase “silent killer” in the title of this article. Some people can tell their blood pressure is high from headaches or dizziness, but most feel no difference. Most people learn that they have hypertension only when their doctor measures their blood pressure. Unfortunately many never find out until it’s too late.

Last year I had to replace a nearly new set of tires which had only about 5,000 miles on them (it cost me over $1,000) because all four of my wheels were out of alignment. There were no symptoms whatsoever. My car didn’t pull, my steering wheel was perfectly straight, and I saw no abnormal tire wear. I brought my car in for its routine 5,000 mile service and when my technician put it up on the lift to rotate and balance my wheels and tires, he found that the inside of all four of my tires was severely worn. When you have offsetting misalignment on opposing wheels, there is no pull and when the wear is only on the inside of the tire, it’s invisible until the car is up on a lift. I had my car aligned only a few months ago but I knocked it out of alignment again without even realizing it.

Aligning the four wheels of your car, like everything else, is a lot more complicated than it used to be. Cars shocks’ and suspensions are more complex today. When most cars had rear wheel drive, aligning was simple. Now we have mostly front wheel drive and even some all-wheel drive cars on the road. We no longer do just “front end” alignments we have to align all four wheels. In the “old days” service departments routinely checked the alignment for all cars that drove in. There was a simple machine built into the service drive that registered the measurements when you drove over the track. Some service department still use these dinosaurs but they are not naccurate on today’s cars. Nowadays, many alignment machines are so complex that it takes almost as long to measure your alignment as to adjust it. For this reason many service departments will charge you the same to measure your alignment as they do to actually align it even if the measurements find it is perfectly in adjustment. There are newer, very expensive machines that will quickly measure alignments but most service departments don’t have these.

There are three basic measurements that must be exactly right for your tires to be in align, castor, camber, and toe-in. This website links to a video that gives a very clear, easy to understand explanation of these measurements, www.TireKiller.com. The video was produced by the manufacturer, Hunter, who is the largest and best manufacturer of alignment machines in the world.

When you buy a new or used car, you should insist that the dealer check the alignment. A new car can be knocked out of alignment in many ways. Transporting the car to the dealer from the manufacturer and driving it on or off a ship, truck, or train can do it. A technician can do it during a pre-delivery road test or a car salesman or prospective customer might during a test drive. Remember that a demonstration drive in a new or used car won’t necessarily reveal any symptoms like a pull or abnormal tire wear. Many manufacturers will allow one alignment under warranty for a short time and mileage period (like 1 year or 20,000 miles), but some will only permit the dealer do check your alignment if you complain about a pull or abnormal tire wear. Manufacturers consider alignment a maintenance item that is your responsibility. This is why it’s important to be sure your new car is aligned when your car is still within the alignment warranty time and mileage.

When the service department measures your alignment, be sure that they use the latest equipment. A modern alignment machine is computerized, measures all four wheels, requires that your car be elevated on the lift, and the technician must be fully trained. And they are very expensive, about $60,000 for a state-of-the-art machine. Many independent service departments and some dealers can’t afford these. You should ask for a copy of the computer printout showing the specific measurements before and after your alignment. You should have your alignment checked every time you bring your car in for service, approximately every 6 months or 5,000 miles. If you hit a curb, pothole or other obstacle in the road or notice abnormal wear on the edge of your tires, bring it in for an alignment check immediately.

The Internet Price is the Lowest Price for a New Car

2011-07-18T11:41:00.001-04:00

Ten years from now, I believe that at least 75% of all new cars will be purchased over the Internet. Right now it is less than 20%. The reason is simply that that Internet price is usually your lowest price and more and more car buyers are figuring that out every day. Dealers must give their best price to a prospect inquiring over the Internet because that dealer probably will have only that one chance to sell the car. If they try “the old negotiating game” the Internet prospect will simply choose the lowest price from several other quotes he gets. When my friends ask me to advise them on how to get the best price on a new car, I always tell them to use the Internet. If they ask me for the best price on my product, Toyota, I give them my Internet price.

I am not suggesting that you don’t visit your local dealer to see, touch, smell, and drive the new vehicles you are considering. This is very important. You can’t make a valid, final decision on which new vehicle is best for you by solely reading data and looking at pictures on the Internet, Consumer Reports, or any other source. Research of that nature is important, but you should finalize your decision with visits to the dealers to actually experience the vehicle.

Once you have made your final decision on the year, make, model, color, and accessories, you are ready to sit down at your PC and choose the dealer from whom you will buy this specific vehicle. If you are not handy with a PC, ask a friend or relative who is. First, go to the manufacturer’s Web site like www.ford.com, www.toyota.com, www.chevrolet.com, etc. You will be able to type in your zip code to find all of the dealers of that make within a given radius, usually about 40 miles, giving you 3 or 4 dealers. To expand the radius, choose another zip code further from yours. The dealers within your radius will show their Web site addresses. Click on their Web site and ask for a quote on the specific car you have selected. Most Web sites have a page for what is called a “quick quote”. You type in the year, make, model, color, and accessories. It will also ask you for your name, telephone number, address, if you have a trade (check “no”), whether you are ready to buy now (yes), and other questions. All you really need to fill out is year, make, model, and accessories and your email address. If you prefer not to be contacted by phone, don’t fill in the phone number. If they require it before you can submit your request, type in any 10 digits so that the Web page will allow you to. If you can’t find a “quick quote” page, just email your request to their Internet sales department.

Depending on your PC and typing skills this whole process should take less than half an hour. Think of all the time, gasoline, shoe leather, and especially aggravation you are saving compared to visiting as many dealerships in person. The time it will take to get back quotes varies from dealership to dealership. You may get some back within a few minutes, some will take a few hours, and some may take a day or two. Believe it or not, some might not respond at all. There are even a few dealers who will not quote a price on the Internet, but try to lure you into their store with false promises. Ignore them. I recommend that you get a minimum of 3 valid price quotes on your specific vehicle. It’s so easy to get quotes, why not get a half dozen or so? You are not necessarily even limited by driving distances. If the best price is from a dealer who is too far away, show that quote to a dealer nearer you and ask him if he will match it.

There are some things that you must be careful about. Be sure that that the price you get is an “out the door” price. That is a price which excludes only federal, state, and local fees and taxes which are usually just for tax and tag. Most dealers in Florida tack on a fee or fees of their own which are variously referred to as “dealer fee”, “delivery fee”, “documentary fee”, etc. This is illegal in many states, but not in Florida. These fees vary from around $500 to $900. Be sure that this fee which is just profit to the dealer is included in your “out the door” price. Also be absolutely certain that you are comparing “apples and apples”. When you select your low bid, double check that this dealer is quoting you on the same year, make, model, and accessories as the other dealers. A good double-check is to compare the MSRP. The MSRP, manufacturer’s suggested retail price, will be identical on identically equipped cars of the same model and year. Also, be sure that the car you have the price on will be there when you come in. Give them deposit on your credit card to hold the car for you.

Internet car buyers are the wave of the future. The retail car business is going through rapid changes and the old fashioned, price-haggling way of buying cars is slowly but surely becoming obsolete. If you haven’t already, now is the time to join the ranks of the smart, sophisticated car buyers.

Nobody Knows What Your Used Car Is Worth

2011-07-08T13:11:00.000-04:00

A lot of people think that all used cars have a specific value and they can learn this by looking it up in the “Blue Book” or some other used car wholesale book. Nothing could be further from the truth. The wholesale books that dealers use and those that are available online to consumers have varying degrees of accuracy, but you can’t rely on a book tell you the best price at which you can sell or trade in your car. The most accurate book is the Manheim Auto Guide because it’s based on the latest wholesale auctions nationwide and it’s updated weekly and daily online. The least accurate book is the NADA guide which relies solely on surveys sent to dealers. The dealers exaggerate the wholesale value of their make to make it easier to take in trades.

All of the wholesale books, except NADA, are based on prices of cars sold at auction. However, you must understand that those prices don’t give you an accurate price that you should expect for your trade. A car sells at an auction for the price offered by the highest bidder if the seller chooses to accept that bid. I often don’t sell my used cars to the highest bidder that week because I might get a much higher price the next week. Lots of things affect the level of prices at a car auction…the weather, holidays, bribing the auctioneer and bribing the buyers. On a cold, rainy day when few dealers show up to buy or sell cars, prices are lower as well as shortly before and after holidays. Sometimes it happens that a buyer “greases the palm“ of the auctioneer so that he “doesn’t hear” (fast gavel) the higher bid from another dealer who bids higher than the dealer who has let the auctioneer know the price at which he wants to buy the car. Sometimes the sellers pay the buyers cash under the table to bid an unrealistically high price for their car. A car doesn’t even have to go through the auction block for the owner to believe it was “sold at the auction”. Buyers and sellers can make a deal before it goes “through the block”…very cozy, only one bidder. Why would they do that? Often the buyers and sellers are employed by the dealer who actually owns the car. The used car manager or wholesale buyer employed by the dealer might pay $2,000 too much for a car if he can earn $500 cash in his pocket from the seller. His boss, the dealer, is never the wiser. Let me hasten to add that the Manheim auctions are very careful to police these kinds of shenanigans and never encourage them. However, as in every large organization (Manheim is the auto auction in the world), there are a few rotten apples.

OK, then if the books are wrong and the auctions are wrong, then surely the car dealer must know the value of my trade-in….WRONG AGAIN. I have a little “test” on used car appraisal knowledge that I administer to my sales managers from time to time. By the way, my managers are among the most knowledgeable and competent anywhere. This isn’t just my opinion but that of all of their peers in this market. My test goes like this. Without prior notice I randomly select a car from among the 100 or so that come into my service department each day. I ask each of my 8 mangers individually to appraise this car for what they think the current wholesale market value is. They keep their appraisal secret from the others and write it down on a piece of paper and hand it to me. I’ve been doing this for 30 or more years and I’ve never had a variance in appraisals of less than $3,000. Some have been greater than $10,000! The reason I do this is to remind all of my mangers of exactly what I’m explaining in this article….Nobody knows the exact value of a used car. That’s important to my managers because under appraising a used car can cost us a sale. Over appraising a used car can cost us a wholesale loss at the auto auction. Therefore we always check and recheck our appraisals and go so far as to call other dealers and even put cars on Ebay. Another good reason not to accept only one dealer’s appraisal is that dealers will often knowingly undervalue your trade-ink, especially if you’ve negotiated a very low price for your new car. The dealer vernacular for his is “stealing the trade”.

Now that we’ve established that nobody has any idea what your trade-in is worth, what does that mean to you? It means you should stop worrying about getting an accurate appraisal because there’s no such thing. However, what you should positively insist on is getting the highest appraisal. In fact, you should hope that the guy who gave you the highest appraisal was very inaccurate and made a huge mistake that will cost his dealership a large wholesale loss at the auction. You accomplish this by never accepting only the appraisal by the car dealer from whom you’re buying your next car. Before you allow him to appraise your car, you should get at least two other bids from dealers of the make of car you are buying. For example, a Ford dealer will usually appraise a Ford for more than a Honda dealer because more people wanting to buy a used Ford will shop the larger selection at a Ford dealer. Deal directly with the used car department at these other dealerships. Tell the used car manager that you need to sell your car for cash and that you’re getting two more bids from two other dealers. If you have the time to get more than two more bids it’s even better. Another good place to get a bid on your used car is from CarMax, the largest retailer of used cars in the world. They buy lots of cars directly from owners even when they don’t buy a car from CarMax. Their prices are sometimes higher than dealers will offer you.

After you determine the highest bidder, if it’s not the dealer from whom you’re buying, give him the right of last refusal. If he can match the price from his competitor, you save the sales tax on the price of your trade.

I’m Sorry, but Your Car Is out of Warranty

2011-06-27T14:20:00.000-04:00

Most everyone has heard these words, “I’m sorry but you’ll have to pay for this repair because your car is out of the manufacturer’s warranty”. What should you do say or do? Obviously, we’re not talking about cars that are “way out” of warranty. A ten year old vehicle with 200,000 miles that has a 3 year or a 36,000 warranty will not be repaired free by your dealer or manufacturer. However, for cars those that are “close” to being within the warranty time and mileage there is a good chance that you can persuade the dealer/manufacturer to pay at least a portion of the cost of repair. This article is designed to tell you how best to do accomplish this.

The easiest way to have your car repaired at no cost is if you initially brought the vehicle in for a problem while it was still under warranty, the dealer “attempted” to fix it, but did not. When the problem resurfaces, as long as you have in writing and on the record that this happened, you should have no problem getting your car repaired at no charge.

To the lesser degree that your car is out of warranty, the greater is your chance of having the factory authorize a “goodwill” repair. Goodwill is what they call all repairs made at no charge when the car is out of warranty. If you car is only 5 miles out of warranty, this should be very easy to have approved. The further out of warranty, the more difficult this is and the less likely that you will have 100% of the cost paid by the manufacturer. For example, a car that’s 3,000 miles out of a 36,000 mile warranty may be granted just 50% of the cost of the repair under goodwill.

It’s important to understand that the dealer often has no say in whether an out of warranty car can be repaired under goodwill. A good dealer should support your request for goodwill because he gets paid by the manufacturer for doing the repair and this make his customer happy. A bad dealer might not support your goodwill request because he would like to charge you more for the repair than the warranty will allow. A dealer can charge you anything he wants for parts and labor but the factory allows him only his approved warranty labor rate, markup on parts, and time to complete the repair. If a dealer is reluctant to support your request for goodwill, be sure to take your request all the way to top. Take it to the service manager, then to the general manager, and then to the owner. If the dealer won’t support you, try taking it to another dealer who will. It’s very important that you have the support of the dealer when you take your request to the manufacturer. Without it, it’s highly unlikely you will get help.

Some dealers are granted the authority to make goodwill adjustments directly as well as making decisions as to whether a repair should be covered under warranty. This can be good and bad. As I said earlier, a dealer can have an ulterior motive for not want to repair you car under warranty…he can make more money if he makes you pay. A dealer who is authorized to make warranty/goodwill decisions is so authorized because he has kept his warranty and goodwill costs low. This is bad for the customer if the way he has kept them low is by denying legitimate claims to make himself look good in the eyes of the factory. To some service managers, it’s more important to be popular with the factory than with the dealer he works for. You want a service manager who works for a good dealer and whose loyalty is with that dealer who will be for his customers.

Manufacturers and dealers will favor those customers who have bought cars from them and had their cars serviced with them. The dealer/manufacturer has your entire sales and service history on their computer. If you have bought 2 or more cars of this make and had them serviced regularly by the dealers of that make, they will “stretch” on the warranty coverage and goodwill.

When asking for repairs for your car that is out of warranty, be courteous, factual, and as brief as possible. Never threaten to take your business away, sue, or call the media. Never raise your voice or curse. Dealership and factory employees are just like you…they tend to respond more positively to someone who is courteous and rational. You should put your request in writing, email or regular mail. If things are moving too slowly, it’s a good idea to call the factory 800 customer assistance number. Your request will be referred back to the dealer, but it’s good to be on record with the factory.

When encountering difficulties, go on your PC and Google your repair problem. Google will direct you to chat rooms and other sources of information about people who have the same problem. You will be amazed at the number of people who have had the same problem. Sometimes even your dealer may not be aware that this repair is common among owners of the year, make and model. Knowing this gives you a strong psychological advantage.

When you Google your repair problem, you may find out that the manufacturer has issued a notice to their dealers about this problem. This kind of notice is referred to as TSB or Technical Service Bulletin. Sometime s TSB will authorize the dealer to repair the car under warranty but only if the customer asks! You may even learn that this repair is covered under a recall campaign, but the dealer should have now that when he checked your VIN in his computer.
The bottom line is don’t just take “no” for an answer. Go through the steps that I’ve covered above and you should have a pretty good chance of getting at least some of your repair paid for by the manufacturer.

I Prefer my Customers’ Complaints to Compliments

2011-06-20T14:08:00.002-04:00

The July 2011 edition of Consumer Reports has a great article entitled, “What’s wrong with customer service?” Consumer Reports conducted a survey to find “the customer-service problems that infuriate people most.” The number one complaint is “Can’t get a human on phone”. One of the pieces of advice in the article was to contact the CEO’s office of the company that is giving you the problem. They say that “They want their problem solved before it reaches them. But when top executives hear from an unhappy customer, they’ll often be sure that person receives a response”.

Of course getting the CEO of any company on the phone is easier said than done. I agree that top executives “want their problems solved before it reaches them”, but that sword cuts both ways. Often employees “protect” their top executives and, of course, protect themselves at the same time by not allowing customers to climb into the ivory tower.

It ‘s unfortunately true that the owners and top executives of businesses often care more about customer satisfaction than many of those who report to them. This is true because owners and top executives’ careers and fortunes are more directly related to their company’s overall success. They are also more likely to see the big picture of how important their company’s brand image, largely dependent on customer satisfaction, is critical to its success. Last but not least executives have far more power to remedy a customer complaint than their subordinates.

The problem is that most owners and executives exist in a “Disney World” created for them by their subordinates in which all of their customers love their company. They rarely, if ever, hear from or even see any of their customers. After all, why take the time when everything is humming along marvelously? What they do see and hear are reports from their subordinates telling them how happy their customers are. They read these reports on their computers and it’s reinforced verbally in management meetings. The only thing they hear from their customers is what their underlings what them to see and hear. This policy is easy to understand. Nobody likes to hear complaints or be shouted at but we all love to hear compliments. The subordinate is well aware that his boss looks at a customer complaint as a failure by that subordinate. What better way to make himself look better for his next evaluation than to allow his boss to hear no complaints from angry customers?

There is only one way that a boss can find out what’s really going on and that’s by communicating directly with his customers…not reading reports or speaking to just those customers his employees allow to pass through their filter. An owner or CEO has to make himself totally accessible to his customers. Every customer must be able to contact him for whatever reason. Now this is too frightening for most top executives to even contemplate. I have to confess that it even frightened me when I first tried it. Needless to say, I was highly advised not to do such a thing by virtually everyone who worked for me. But looking back on that move several years ago, it was the best business decision I ever made. It not only caused my customers’ satisfaction to soar, but it raised my company’s sales and profits to record levels. It has made my car dealership the largest in Palm Beach County, Florida, 7th in the Southeast USA and 31st in America.

It all started with one red phone that I placed in the center of my dealership’s showroom. Next to the red phone (inspired by the Kennedy-Khrushchev red phone of cold war fame), is a sign with my picture on it that says “CUSTOMER HOTLINE to Earl Stewart. The buck stops here. Have we not exceeded your expectations? Then please let me know. Simply pick up the receiver and wait for me to answer.” This worked so well that over the years I added three more red phones. They’re located next to the service cashier, in the service drive, and in the body shop. When anybody picks up the receiver, they are automatically connected to my cell phone, no dialing required. I carry my red cell phone with me seven days a week and turn my phone off only when I go to bed at night. I have a special ring for hotline calls so that I can prioritize answering them. This includes while I’m at a restaurant eating or in the shower (yes I will get out of the shower to answer a hotline call. I’ll even answer my hotline when I’m in my boat fishing.

Probably the most common question I get is “How many calls do you get every day?” I get surprisingly few when you consider the size of my company. I have tens of thousands of customers but I average about only a half dozen calls each day. Many of my hotline calls are “I just wanted to see if you would really answer” and I also get compliments on my hotline. I believe that the reason I get so few calls is that the red phone has become a deterrent to making my customers unhappy or failing to resolve a problem when it occurs. When one of my employees sees a customer walking toward one of the red phones, he will do everything possible to make that customer happy.

I take direct communication with my customers to an even higher level. I give all of my customers my business card with my home and personal cell phone numbers. My wife, Nancy, got very nervous when we first added the home number, but we were both pleasantly surprised how respectful and trusting our customers are. We get very few calls at home, but when we do, we are glad the customer called because it’s usually very important. I also expand direct customer communication to all of my employees. No manager in our company has a secretary or assistant to take his calls…all calls go directly to him. Our telephone receptionist never asks, “May I say who is calling?” or “May I ask the nature of your call?” If that employee is not in, the call is automatically put through to his cell phone. But wait, there’s more! We have a real live person answering our phone after hours, 24/7, and if there’s an emergency, the person in my company that can handle it is contacted…even in the middle of the night. If it’s not an emergency, the message is given to the appropriate employees via email.

I’ve learned more about my business from my customers in the last ten year than I learned in the 40+ years that I’ve been a car dealer. When my customers call me with a complaint they are often apologetic because they are so unused to speaking with the owner of a business. I always say, “Please don’t apologize. I should be thanking you for taking your time to call me. You’re allowing me to correct a process and/or coach an employee in my company to ensure that this same thing doesn’t happen to another one of my customers. The only complaint that I fear is the one that I don’t hear because I’m helpless to correct the process or employee who was

Always Get It in Writing

2011-06-13T10:34:00.000-04:00

Many readers of this column call me for advice and to tell me horror stories about their dealing with unethical car dealers. Of course it would be much better had these readers called me before they bought the car.

I have written over 200 columns for Hometown News and given advice on a variety of subjects which should make your car buying, or servicing, experience safer and more pleasant. There is one piece of advice which, if strictly followed, would eliminate over 90% of the problems car buyers have with car dealers. That advice is “always insist that all promises and commitments made by the car sales person or sales manager are put in writing”. The written commitments should be signed by the sales person/manager and you and you should retain a copy.

These are just some examples of promises made by sales people and sales managers that were not kept: (1) Sign the contract, drive the car home, and if you change your mind within three days you can bring the car back and we will refund all of your money. [When the customer brought the car back, the salesman claimed he never said any such thing] (2) After signing a 36 month lease, the salesman assured this customer that, if she got tired of this car in less than 36 months, she could just bring it back anytime. [Of course the leasing company didn’t agree with the salesman on this]. A customer was promised that she would be able to get free loaner cars anytime she brought her car in for service. [The service department didn’t know anything about this. They don’t offer free loaners]. The business manager, also known as the F&I manager, told the customer that the warranty/extended service contract he was selling her covered 100% of anything that went wrong with her car. [When she came in for a brake job, the service manager showed her the fine print in the warranty contract that said maintenance items were not covered]. The salesman told the customer not to trade his car in on the new car because he owed way more on the car than it was worth. He told him to just let the bank take her old car back and because she was making her payments on time on her new car it wouldn’t harm her credit rating. [I don’t think this requires any explanation]. Customers are promised that they can bring their car back after they buy it and have CD players, leather, running boards, and floor mats, and other accessories installed as part of the deal. When they come back, none of the managers knows about this and the salesman can’t be found or doesn’t “remember”. I could list dozens more of these anecdotes.

You have very little chance when it’s your word against the salesman’s or sales manager’s. You have even less of a chance if it’s two against one. Do not be timid about asking that everything you are promised is put into writing. If the salesman objects to this or hesitates, you have to ask yourself why? Another reason for having all promises committed to writing is that the salesman or sales manager may not work at that dealership anymore when you come back to collect on his promise. He may have actually been sincere, but now he’s gone. Will his replacement believe you?

It’s a good idea to carry a note pad with you when you are negotiating to buy a car. I wrote a previous column entitled “Never Go Car Shopping Alone”. When you have an ally with you, she can take notes while you are negotiating. Also, if you do forget to commit a promise to writing, your credibility is enhanced when it’s two against one instead of “he said/she said”. When you are signing the final documents, you have your complete set of notes detailing promises, assurances, and commitments by the salesman. Then, all you have to do is have these signed by both parties and be sure that you get a copy.

Should I Buy An Extended Warranty?

2011-05-30T10:51:00.000-04:00

“Should I buy an extended warranty?” on my new or used car is one of the most common questions I get asked. Extended warranties are also referred to as extended service contracts. This article is how I answer this frequent question.

An extended warranty is simply a warranty that kicks in after the manufacturer’s warranty expires. But, extended warranties are never as comprehensive as the manufacturers’. A manufacturer’s warranty on a new car is about as close to a “bumper to bumper” warranty as you can get. However, even a l manufacturer’s warranty is not truly bumper to bumper because the tires are never included. The tire warranty is offered by the tire manufacturer A extended warranty is far from a complete bumper to bumper warranty but many car salesmen and finance managers will say their extended warranty is bumper to bumper…this is not true.

When the dealer (or anyone else) tries to sell you an extended warranty they will focus on all of the things that the warranty covers, but typically avoid telling you those items the warranty doesn’t cover. My first piece of advice is to determine exactly what is not covered by this warranty. Today’s automobile contains more computer hardware and software than it took to put a man on the moon. Computer modules are very expensive to replace and are usually not covered by extended warranties. Navigation systems are very expensive and usually not covered. Sometimes some or all of the air-conditioning system is not covered and this is another very expensive item to repair and replace. The more expensive a part of your car is to fix or replace, the less likely it is to be covered by the extended warranty.

All extended warranties cover the power train which consists of the engine lower block, drive shaft, and rear axle. It essentially covers the parts lubricated by your engine oil. These components rarely ever fail and, if they do, it’s caused by lack of maintenance or abuse, in which case the warranty won’t cover the repairs anyway. You’ll see a lot of dealers advertising a“free lifetime warranty” with every car they sell. These are power train warranties and they are free because they are virtually worthless.

If you decide to buy an extended warranty, be sure you know the company that stands behind the warranty. Check out the company’s financial stability. It’s not uncommon for warranty companies to go broke and you’re stuck with a worthless warranty. Many manufacturers offer extended warranties and these are generally safer bets than independent companies. If the dealer is selling his own warranty, be sure that he is financially strong and that you don’t have to bring your car back to the dealer anytime you have a repair covered by the warranty. You should have the right to have your car repaired by any service department in North America.

If you ever receive a solicitation to buy an extended warranty in the mail, by email, or by telephone ignore it. Ninety-nine percent of these are scams. The warranties are overpriced and cover virtually nothing that might need repairs, usually just a power train warranty. The companies offering them are likely to be gone when you try to make a claim. These companies (many seem to be based in Las Vegas) buy mailing and email lists from the various states’ departments of motor vehicles. They know your name, address, when you bought your car and the make and model from this data. They know when your car will be out of the manufacturer’s warranty by how long you’ve owned it. A lot of these solicitations appear to be coming from the manufacturer, but manufacturers never solicit their owners for extended warranties. The envelope and letters are made to look very official and threatening giving you only a few days to act before it’s too late.

I still haven’t answered your question about whether or not you should buy an extended warranty. You know to be very careful about which warranty and who you buy it from. I look at an extended warranty just like I look at an insurance policy. In fact, we’re lucky in Florida because automotive extended warranties are regulated by the state insurance commission. The rates are approved and registered with the state. In most states, the dealer can charge anything he can get for an extended warranty. In Florida you can also cancel an extended warranty you haven’t used anytime in the first 60 days. My philosophy is to buy insurance on something that I either couldn’t afford to fix or replace or if it would put a financial hardship on me if I did. I carry fire and flood insurance on my home based of this philosophy. I don’t buy an extended warranty on my iPhone because I can afford to buy another one of mine broke. I also recommend you consider buying an extended warranty if it will bring you “piece of mind”. This varies based on the personality of each individual. Whatever you decide, just remember that most insurance companies make lots of money. This is because they always take in a lot more money in premiums than they pay out in claims. When you buy an insurance policy, you’re betting against the house and in the long run you will always lose. But if you got peace of mind because you protected yourself against a loss that would have severely tapped your financial recourses, it’s worth it.

Don’t be “Spotted", "Puppy-Dogged", or "Yo-Yo'ed"

2011-05-23T11:21:00.003-04:00

One of the most common unethical (and some say illegal) sales practices of car dealers is the infamous “spot delivery”. If you’ve bought a car in Florida (and most states), you probably have been spotted, puppy dogged, and yo yo’ed. Upwards of 60% of all car sales in Florida are spotted.

A “spot” is short for “spot delivery” which is literally translated into delivering your new or used car purchase immediately, “on the spot”. The spot occurs as soon as you’ve picked out your car and signed all of the papers. The car dealer has a lot of reasons to do this. The biggest reason is that so you can’t change your mind about buying that car. Legally, a contract is more binding when the seller and buyer have exchanged “consideration”. Your consideration to the dealer was paying him for the car which includes down payments, a trade-in, and a contract promising to make monthly payments. The dealer’s consideration to you is the car which becomes consummated when you drive it home.

Another part of why you won’t change your mind is that you will take the car home, park it in your drive way, and tell your neighbors, friends, and relatives that you just bought a new car. You’ll probably also brag about the fact that you have good credit, got a great price, a low interest rate, and a low down payment. Everybody will envy you because you can afford that new car, were so smart to negotiate such a good price, and had such good credit that you got the lowest interest rate and down payment. When you fall into this trap, you’ve just been “puppy dogged”. Have you ever bought a puppy for your kids and brought it home from the pet store? Your kids play with the new puppy and take it over to their friends’ houses to brag and tell them what great parents they have. What are the odds that you’re going to snatch that puppy out of your child’s arms and take it back to the pet store…even if it poops on your carpet?

As if all that isn’t enough, the dealer has another reason to spot deliver your car. If you traded in your old car, you can’t compare the price you paid for your new car because you no longer have your trade-in. Dealers have a vernacular for this too. It’s called “de-horsing”. In fact, a dealer will often de-horse a prospect before she picks out a new car and/or signs the papers. He will give her a demo to drive home just so that he can keep her from comparing the trade-in allowance on her old car.

In fact, the delivery consideration and the puppy dog are such strong tools to keep you from bringing the car back, the dealer needs an “ace in the hole” just in case he wants you to bring the car back. This could be because he wants or needs you to pay more for the car, pay a higher interest rate or down payment, or have a cosigner on the installment sales contract. The dealer’s ace in the hole is another contract known as the “yo yo” or rescission agreement. This piece of paper which you might not even remember signing says that you have to bring your new car back if the dealer cannot find a lender who will approve your credit, down payment, interest rate, and/or amount financed. A yo yo goes out and back and of course rescission means the contract is canceled. The yo yo agreement says that if you refuse to bring the car back, the dealer can repossess the car and charge you a high fee for its usage until you do bring it back, like 50 cents a mile and $50 a day plus his costs of recovery. If the dealer did not have this agreement signed, you could keep the car and make your monthly payments to the dealer at terms and conditions you originally signed. Dealers won’t do this because they don’t get all of their money up front as they do when they sell the finance contract to the bank. They also don’t like it because they assume the credit risk if the buyer defaults.

An interesting question to ponder is whether the dealer knew in advance that he could not find a lender who would finance your car with such a low down payment, such a low interest rate, for that little number of months. Why would he do such a terrible thing? Well he may think that you will fall in love with that car so deeply that you will agree to pay him more profit in terms of higher interest and down payment. He might know that you won’t want to suffer the embarrassment of telling your family, friends, and neighbors that your credit isn’t as good as you told them it was and you really aren’t so smart that you negotiated such a low price and down payment.

There’s even a good argument to be made for the fact that the spot delivery is illegal and perhaps even criminal because it’s a violation of the Federal Truth in Lending Act (TILA). Without getting too technical, the signing of the yo-yo agreement violates TILA because it means that the dealer is not the actual creditor. The finance contract you and he signed is almost meaningless and used only to take you out of the market. The only meaning is that you may have the option of signing a new contract but this one might be for more money down, a higher interest rate and/or longer terms. If you’re interested in the legal specifics of why the spot delivery and yo yo agreement are illegal and possibly criminal, click on Link to Ingalsbe Memo. This legal memo was written by an attorney, Raymond Ingalsbe, who is an expert on car dealers’ illegal practices. He has practiced law in Palm Beach County for over 40 years and sues only car dealers. He even helps train other lawyers how to sue car dealers. In fact, he sued me several time before I cleaned up may act and entered my phase as a “recovering car dealer”.

The bottom line is that you should not allow yourself to be spot delivered. Whether it’s illegal or not, it’s certainly not a smart move for the buyer. You wouldn’t move into a new home before the bank approved your mortgage would you? When you drive that new or used car home, be sure that your credit has been approved by the lender for all terms and conditions such as interest rate, number of months, down payment, and who signed the contract (is a consigner required). If that means waiting a few days, that’s good too because it allows you time to think over a very important decision. Buying a new car is the second largest purchase most people make in their lives and should never be rushed.

Ten Tips on Buying the Right Used Car

2011-05-16T14:10:00.001-04:00

I sell new and used cars, but if I was not a car dealer and I needed to buy a car, I would buy a used one instead of a new. This is because a used car is a better value. You get more for your money due to avoiding the initial rapid depreciation of a new car. I use the term “used car” in this article because I despise mumbo jumbo euphemisms like “pre-owned”. A used car is a used car is a used car.

(1) Never buy a used car without a CarFax report. The dealer should provide you with one at no charge because any dealer worth his salt runs a CarFax report on every used car he trades in or buys to protect him. Simply don’t buy a used car from anybody that does not give you this report. CarFax reports now have, not only the information about collision damage, floods damage, previous odometer reading, and title issues, (all obtained from insurance records) but also the mechanical repair history (obtained from dealer records).

(2) Have your car inspected by an independent mechanic. Insist on having the used car you are thinking about buying inspected by your mechanic, not affiliated with the dealer. This should cost you no more than $150 and will be money well spent. The mechanic should look, not only for mechanical issues, but body and flood damage. If the mechanic finds some minor things that need fixing, insist that the dealer take care of these and include it in the price he already quoted you. If the dealer won’t allow this, don’t buy from him.

(3) Consult Consumer Reports, www.KBB.com, and www.Edmunds.com. These sources have complete information on the safety, reliability, maintenance cost, and even what a fair price is to pay for any used car. Consumer Reports lists the “Best and Worst Used Cars”. This is great guide and don’t ever buy a used car that’s on the “worst list”.

(4) A Certified Used Car is only as good as the dealer who sold it to you. All manufacturers sponsor “certified” used cars of their make. The main reason for this is that they like to sell the dealer warranties that the dealer then marks up and sells to you. A secondary reason the manufacturers do this is to enhance the resale value of their make car. This helps them sell more new cars because of the higher trade in value and the higher residual values on cars they lease enhance their profits. You can buy a warranty for used car even if it’s not certified, but in a certified used car it’s usually included in the price (which makes the price higher). One good thing about manufacturers’ certified programs is that sometimes the manufacturer will offer you lower financing rates. Certified used cars require that the dealer inspect all critical parts of the car and fill out a checklist that is anywhere from 75 to 150 items. That’s all well and good but how carefully is this inspection being done and by whom? You should ask to see a copy of the check list and ask about the qualification of the mechanic who performed and signed the inspection. All too often, the dealer assigns the lowest priced mechanic he has to perform these checks. It’s questionable whether he even performs all of them. A red flag is if you notice a straight line drawn through all of the check boxes instead of them being checked off individually.

(5) Money Back Guarantee. A lot of dealers advertise that if you change your mind about the car you bought you can bring it back and exchange it for another. This is a worthless guarantee. You can be sure that they will pick the car and the price of the car they will exchange it for and will end up making an additional profit. CarMax has a reasonable guarantee which refunds all of your money within five days with restriction that the car is returned in the same condition that it was sold. CarMax is a good place to buy a used car.

(6) Contact the previous owner of the car. The previous owner of the used car should be happy to talk to you. Insist that the seller provide you with his telephone number. If the dealer sold the car to that owner as a new or used car and serviced it, ask if you can see the service file.

(7) Test drive the car just as you will be driving it later. Simply taking the car for a spin around the block with the salesman is not enough. I recommend that you drive the car in the manner and places that you will be driving it when you own it. Take it out on the expressway if you do a lot of higher speed driving. You should drive the car for at least a few hours at all the same speeds, conditions, and on the same roads that you normally experience. Park the car, back it up, and take a friend for ride to get their opinion. You don’t want to have any surprises when you bring it home for keeps.

(8) The Internet is the best place to shop for your used car. Most dealers today display all of their used car inventory right on their website along with the prices. These prices are pretty close to the real price you will pay. The dealer knows that he won’t get many responses if he overprices his used cars. Shopping on the Internet give you ample opportunity to compare the same or similar used cars with lots of different dealers. As always, call the dealer before you come in to confirm the Internet price is an out-the-door price without a dealer fee, doc fee, dealer prep, etc.

(9) Commit all of the dealer’s promises to writing. Take notes of everything the salesman and sales manager promises you such as “we’ll fix that CD player if you’ll bring your car in next week” or “if you ever have a problem with the car we’ll give you a free loaner when you come in for service”. Make those notes part of the buyer’s order and be sure that a manager signs it. It’s also a good idea to always shop with a friend. In a “He said she said” situation, two people trump one.

(10) Get at least three bids on financing. Know what your lowest interest rate is for the year, make, and model car you’re buying. Get quotes from your bank or credit union and at least one other bank in addition to the rate your dealer offers you. If you do use your dealer’s financing, be sure you know and understand everything that’s included in your finance contract. You will be offered products like warranties, GAP insurance, maintenance, road hazard insurance, etc. It’s illegal for a dealer to tie your acceptance for financing or interest rate to your buying a warranty or any other product.

A Topsy Turvy Car Market

2011-05-09T12:05:00.000-04:00

Every now and then something comes along and disrupts the normal ebb and flow of the markets. It happened back in 2008 to the world financial markets. This was brought on by a lot of manmade factors like unrestricted extensions of credit and lack of enforcement of regulations on Wall Street and Banks. In the last quarter of 2009, the famous “Cash for Clunkers” program disrupted car markets, new and used, and this was also manmade program by our government. It artificially stimulated new car sales for a short period and also had the effect of raising the prices of used cars.

Now we have both manmade and God made events disrupting the car markets. Political unrest in the Middle East has driven up the price of oil along with increased consumer demand as we emerge from the recession. But we also have an “act of God” event which was the catastrophic earthquake-tsunami that devastated Japan last month. Not only has production of cars built in Japan been disrupted, but the lack of parts manufactured in Japan has interfered with the production of cars all over the world, including the USA. We can expect a severe shortage of economy cars until the end of this year.

This couldn’t have happened at a worse time for the American car buyer because she was just getting back on her feet after three years of the greatest recession since the Great Depression. There is large pent up demand from consumers who have delayed buying that new or used car in 2008, 2009, and 2010. When car buyers delayed their purchases, there were fewer used cars traded in. You put high demand together with a low supply and every economist will tell you that spells soaring prices.

The good news is that prices are soaring only on fuel efficient cars, not gas guzzling trucks, vans, and SUV’s. In fact, prices on those are actually declining. Some more good news is that used car values have never been higher. If you’re driving a fuel efficient car now, it has actually appreciated in value since the beginning of this year. For example a 2008 Ford Fusion, rose $1,800 to $11,375 between January and May. Incredibly, the average value of a hybrid car such as a four-door Toyota Prius jumped $3,775 to $17,040 in those four months.

What does all of this mean to you? First, it means that if you’re thinking of trading in an economy car, you have something that the car dealer wants very much to add to his used car inventory. He will allow you a lot more money for it today then he would a few months ago. But don’t just settle for one dealer’s opinion on the price of your trade. Get at least three bids. Pit one used car manager against the other. If you’re driving a Honda Civic, visit at least two other Honda dealers (A Honda dealer will pay more for a used Honda than another brand) besides the one from whom you’ve decided to buy your new Honda. If there’s a CarMax used car outlet in your area, get a bid on your used Honda Civic from them too. When you’re getting these competitive bids, tell the used car managers that you are not buying a new or used car, but just want to sell your old one. Do not rely on the “book value” of your used car. When the market moves this fast on used cars, the books are way behind the market.

If you’re not in the market for a car but you own an economy car that you can get by without, you should consider selling it now at the peak of the used car market. The largest wholesale seller of used cars in the world, the Manheim Auto auction has an index (like a stock index) and it’s at an all time high since they began the index in 1995. Selling your used car now would be like selling your stock on October 9, 2007 when the Dow was at 14,164. I can’t promise you that used car prices won’t go higher for a few more weeks, but I can promise you that they won’t go much higher and that they will come down significantly from here. You can’t time the exact high or low of any market. There’s a saying on Wall Street…”Pigs get fat but hogs get slaughtered”.

We’ve talked about buying and selling used cars, but what about buying a new one? I’ve always preached that you should be careful in buying a new vehicle and it’s even more important now than ever before. You are in the driver’s seat in selling or trading your used car, but the dealer is in the driver’s seat in selling you the new one. If you don’t have to buy a new car in the next few months, don’t. New car prices will be coming down toward the end of end of this year. Manufacturers are reducing and removing incentives on new cars now but the y will be back. Dealers are holding out for more profit now on economy cars, but they won’t be later this year.

If you have to buy a new car, get at least three competitive bids on the new car as well as your trade-in and financing. Watch out for “addendum stickers”. Dealers are marking up the MSRP of new cars by thousands of dollars. Be sure that the discount you’re offered is off the MSRP and not off the “dealer list” which is MSRP plus another profit markup and over priced dealer installed accessories.

Your best price on new or used car is the Internet price. You can get this price and shop as many dealers as you want without ever having to leave your home or office. Consumer Reports, USAA, AAA, Capital One OverStock.com, Bank of America, and American Express have car buying services operated by company named Zag. They pit dealers against one another for competitive bids and give you access to the lowest price on a specific car in your market.

Dealer or Independent: Who Should Service My Car?

2011-05-02T12:20:00.000-04:00

Should I, or must I, take my car back to the dealer for service? I can answer the 2nd half of that question easily. No, you do not have to take your car to the dealership’s service department for maintenance or repairs unless the repairs are covered under your car’s warranty. Be advised that the manufacturer has the right to take into consideration how well you maintained your car in accordance with his recommendations spelled out in your owner’s manual when approving warranty repairs. If you do choose an independent service facility, be sure that they perform the maintenance as recommended in your owner’s manual. Also, be sure that you keep a record of that maintenance.

Whether you should is more complicated. The fact that most new car buyers (about 75%) don’t bring their cars back to the dealer for service is a huge problem for all manufacturers and car dealers. It’s a problem for manufacturers because they can lose the parts sales which include oil filters and oil. The profit margin on auto parts is much higher than on the car itself. If you added up the price of all the parts in your car (twenty to thirty thousand), the total would be many times the price you paid for your car. It’s also a problem for dealers. The retail markup on an auto part is at least 40% and your car’s markup is less than half of that. The average dealer makes more money selling parts than he does cars and he also makes more money selling the labor to service and repair cars than he does selling cars. In most dealerships, the new car department loses money or makes relatively little. The parts and service departments are the real money makers. Finally, a customer who does bring his back to the dealer for service is twice as likely to buy his next car from that dealer.

The reasons that car buyers don’t usually bring their cars back to the dealer for service is very simply price and convenience. Independent service facilities and fast-lube shops are more plentiful than dealers and there’s usually one closer. Why drive 20 miles to your dealer for an oil change when there’s a Jiffy Lube around the corner. Prices are usually less at independent service facilities. Independents have lower overheads and usually don’t use factory parts. Non factory parts, often manufactured overseas are usually less expensive than original factory parts. Independents also don’t have to pay their technicians as much as dealers do.
To combat this problem, many manufacturers are offering free maintenance on new cars for two years and even longer. The idea is to get the new car buyer into the habit of coming back to the dealer. The dealer also has the opportunity to sell the free service customer some services that aren’t included in the free maintenance package. Dealers are also offering such things as free oil changes and a very few even offer free tires and batteries as long as the customer has all of her factory recommended service done by him.

I know I still haven’t answered the question of whether you should bring your car back to the dealer. The answer is that it depends on the dealer’s service department. Most car dealers have better trained technicians and more and better diagnostic equipment than the average independent. Furthermore the dealer’s technicians are specialists in his brand of car. A Ford dealer’s technician knows more about Fords than a Chevrolet dealer’s technician and more than the average independent technician. For this reason I usually recommend that you bring your car to a dealer of that brand for more expensive, difficult repairs. A good independent technician can change the oil and rotate and balance the tires on any car. But he can’t always diagnose a transmission problem and, if he could, might not have the specialized tools needed to fix it.

If the dealer of your brand is not price competitive, by all means check out the independent service companies. But, be sure that their technician, sometimes the owner is the technician, has the proper training. He should have certifications in the National Institute for Automotive Service Excellence, ASE. There are ASE certifications for all components of the car, including air-conditioning, engine, and transmission. Ask to see his certification and be sure that it’s up to date. Check the company out with the BBB, the County Office of Consumer Affairs, and the Attorney General’s office. Ask for the names of references from existing customers. Be sure that he is bonded so that in the event you have a claim against him, he has to pay. Find out how long he has been in business.

Two thing to be on the guard against (for both dealers and independents) is the “up-sell” and hidden charges. When you see an ad for a $16.95 oil change, you can be assured that you won’t leave that service department paying only $16.95. The oil change includes a “free inspection” which means the commissioned technician and service advisor will look for anything else that may need maintenance or fixing on your car. Just be sure what they recommend is really needed and the safest way is to take it somewhere else for a second opinion. Also, watch out for that hidden, extra charge at the bottom of your service invoice. It goes by many different names. Some of the most common are Sundry Supplies, Environmental Impact Fee, Hazardous Waste Disposal Fee, and Supplies and Small Tools. This is nothing more than profit to the dealer and is calculated by adding a percent of the total invoice usually five or ten percent. Almost all dealers and Independents add this charge that should be made illegal. My advice is to refuse to pay it and in most cases they will agree to remove it from your bill.

What You See Isn’t Always What You Get with Businesses... Especially Car Dealers

2011-04-25T09:40:00.000-04:00

There’s a new catch phrase among businesses, “Reputation Management”. In fact, auto manufacturers are advising their dealers on ways to improve Internet surveys that are springing up all over. Probably the biggest one is Google that displays customers’ reviews of virtually every business. The manufacturers’ advice is to solicit as many happy customers as possible to overwhelm the negative reviews that are posted. There are also companies that specialize in doing exactly this…contacting large numbers of customers and persuading them to post positive reviews for a particular business. The theory is that a happy customer is less likely to respond to a survey than an unhappy one. That’s not entirely true. The fact is that a very happy customer is just as inclined to respond to a survey as a very unhappy one. The customers that are less inclined to respond to surveys are those that are “sort of” happy or “sort of” unhappy. The honest way to get lots of positive surveys is to make more customers very happy.

There was an interesting column in last Sunday’s NY Times by “The Haggler” entitled “A Customer Who’s Always Satisfied”. The reporter discovered that companies were hiring a company named “Homestead Technologies” (owned by Intuit) that sold a special software program to businesses that wanted to improve their reputations. This software program was comprised of a website template that companies filled out with customers’ names and positive reviews. The way the reporter discovered the scam was that some companies weren’t changing the names in the template. This fake name was “Lucas Fayne” and when the reporter Googled that name, he found that Lucas had given very positive Internet reviews to more than 50 roofing companies all over the USA. Each review said the same thing! There are many companies like that selling their deceptive services to companies that treat their customers badly but want to have good reviews anyway. One tipoff is finding one company that has an extraordinarily large number of reviews compared to their competition.

Another common scam by car dealers is to make their surveys look good is by making up customers’ email addresses. Rather than report a customer’s real email address, the dealers make one up using free email services like Hotmail and Yahoo. The survey from the auto manufacturer comes to the dealership address and then the salesman or sales manager fills out the survey. A variation of this scam is for the dealer to give incorrect email addresses to the manufacturer for customers he knows are dissatisfied. Some manufacturers police this by determining what computer the survey originated from by identifying the IP address. For example, my PC’s IP address is 66.176.54.44. If Toyota found out that hundreds of customer surveys were coming from that address, they might be a little suspicious. But most dealers are way ahead of the manufactures on this. There is software obtainable on the Internet that disguises the IP address of your PC.

Less sophisticated car dealers resort to simple bribery. “When you get your survey from the manufacturer, bring it into the dealership in blank and we’ll give you a free tank of gas”.

My dealership’s rating by the Better Business Bureau is A+ which is the highest rating obtainable. I don’t advertise this or mention it to my customers because it really doesn’t mean anything to me. Why? Because many dealers have high rating by the BBB that clearly don’t deserve it. Businesses pay dues to be members of the BBB and the BBB is hard pressed to give a bad rating to the people that pay their salaries. The businesses and dealers who “don’t join” the BBB are the ones who get the lower ratings. After this was exposed by the press recently, the BBB is claiming to come up with a more honest approach to rating companies.

One might ask, how does “reputation management” by bribery and deception continue to propagate when it’s so painfully apparent? The answer is “money” and corporate bureaucracy. The CEO of a large business including auto manufacturers probably would like their dealers to treat their customers with courtesy, respect, and integrity. He thinks that the best way to accomplish this is to incentivize and measure his subordinates, all the way down the long line, by how good the customer’s surveys look. When a vice president’s annual bonus or chances for promotion hinge on customer satisfaction scores, he’s not going to investigate the accuracy of good surveys too closely. His philosophy is to get those customer satisfaction scores up “any way you can”. I can remember one occasion when I questioned a particular dealer’s scores because they were a perfect 100%. I think you can agree that no one or no company is perfect and that dealer wasn’t either, as it turned out.

What the manufacturers and the dealers should understand it that it’s not the customer satisfaction scores that make or break you…it’s the individual customer. The power of one very happy customer is almost beyond imagination and so is the power of one unhappy customer. I liken a customer’s experience to a “pebble dropped into an infinite pond”. The ripples go on forever. You can fool a lot of people for a short time with phony scores on the Internet, the manufactures’’ surveys, or the BBB. But when you trick a customer into doing business with you and you don’t live up to the score, she will never return and she will tell all of her friends.

Gas Price Gouging Is Illegal, Why Not Car Price Gouging?

2011-04-11T10:55:00.000-04:00

Florida Statute 501.160 states that during a state of emergency, it is unlawful to sell, lease, offer to sell, or offer to lease essential commodities for an amount that grossly exceeds the average price for that commodity during the 30 days before the declaration of the state emergency, unless the seller can justify the price by showing increases in its prices or market trends. Examples of necessary commodities are food, ice, gas, and lumber. As I write this article, gasoline prices are very near or have already exceeded $4.00 per gallon. Oil has surged to over $107 a barrel. Middle Eastern and North African countries are in turmoil. Japan has suffered a huge earthquake/Tsunami disaster temporarily slowing supplies of Japanese fuel efficient cars, especially the number one volume hybrid vehicle in the USA, the Toyota Prius. The global economy is still struggling to come back from the worst recession since the Great Depression and home foreclosures and unemployment in the USA are at historic highs. Doesn’t it seem like the above qualifies as an “emergency”? If gasoline is a “necessary commodity”, doesn’t it stand to reason that what you put the gasoline in, your car, is also necessary? What good is affordable gas if you can’t afford to buy a car? As always happens when gas prices rise, car dealers jack up the price of fuel efficient cars. Up to a point this is understandable and a result of the rules of the free market place…supply and demand. But at a certain level, it crosses the line between understandable economics and enters the arena of greedy price gouging. I believe the line should be drawn at the manufacturer’s suggest retail price of the vehicle. This window sticker is officially called the Monroney label. It’s required by federal law that every new vehicle has the manufacturer’s suggested retail price displayed on the window of the vehicle up until the customer takes delivery. Not to do so subjects the dealer to a $10,000 fine. We can thank Senator Mike Monroney of Oklahoma for this law passed in 1958 (the year I graduated from Palm Beach High School). Every car dealer knows that he can very rarely sell any of his cars for as much as the manufacturers’ suggested retail price. Common practice is to discount new car by hundreds or thousands of dollars below the MSRP. Therefore I think drawing the line between a fair profit and price gouging profit at the MSRP is very fair to the car dealers. But many dealers don’t stop there. They add something commonly known as an “addendum sticker” next to the official Monroney sticker. This dealer sticker is usually designed to exactly resemble the Monroney sticker. Most customers looking at it assume it to be the Monroney sticker. But, what it is truly is the dealer’s way of raising the price of the car above the manufacturer’s suggested retail. There are two approaches the dealers take to marking up the MSRP. The most common is by adding “dealer accessories”. These are items like pin stripes, glass etching, nitrogen in the tires, door edge guards, paint sealant, fabric protection, undercoating, road assistance, etc. A package of these virtually worthless items is typically priced at couple of thousand dollars when their true value is less than $100. The second ploy is a price markup called a “market adjustment”, ADM (additional dealer markup), “Dealer Adjustment Addendum”, or some other euphemism. One of the best examples of price gouging can be seen with the Toyota Prius. A few months ago, they were being sold at, or only slightly above, dealer’s invoice. Toyota was even offering the dealers and customers added incentives to further reduce the price. Now, given the rising gas prices and the earthquake/Tsunami in Japan, you are hard pressed to find a dealer who will sell you a Prius that’s not priced thousands over MSRP! The irony is that the number of Priuses available for sale will be only temporarily interrupted. In fact, Japan will definitely increase their exports of Priuses to the USA because their domestic economy has suffered such a blow. I really don’t expect the Florida legislature to pass a law making it illegal for car dealers to price-gouge. I can’t even get them to pass a law eliminating or controlling the dealer fee. But what you can do is be very aware of what is going on now with respect to insane markups on fuel efficient cars. By doing so, you can avoid being a victim and buy the fuel efficient car of your choice at a reasonable price. This shortage of economy cars is only temporary. Waiting a few weeks and getting at least 3 competitive bids when you do decide to buy can save you thousands of dollars.

Eight Rules to Follow For a Good Service Experience

2011-04-04T11:17:00.001-04:00

You buy a car only once every 4 or 5 years, but you should service your car at least two or three times a year. Car dealers make more money from servicing and repairing cars than selling them. The man who takes your order you when you drive into a service lane is paid on commission just like the salesman who sold you your car. His title may be service advisor, service writer, or assistant service manager, but he’s really a salesman. The more service or repairs he sells you, the more money he earns. Follow these eight easy to follow rules and you will not get “taken to the cleaners” and still get the service necessary to keep your car running well. (1) Always ask for a written estimate. Florida law gives you the right to receive a written estimate for your service and repairs. If the estimate exceeds the actual amount by greater than 10%, you don’t have to pay that overage. Be sure that you get a written, not verbal estimate. If you’re contacted later and told there is additional work that should be done, ask that they put that in writing too. If you’re not in the dealership, ask them to text or email this before you approve it. (2) Insist that the technician or service advisor test drives your car with you. If you have a drivability problem, meaning squeaks, rattles, pulling, vibration, inadequate braking, etc., always insist that you accompany the tech (preferably) or service advisor on a test drive so that he can be an eye witness to your complaint. Repeat this test drive after the work has been completed. Descriptions of drivability problems are often miscommunicated verbally and in writing. The service advisor and the technicians will usually not offer the test drive because it’s time consuming and they’re both paid on commission. It’s up to you to insist. (3) Request the best technician to work on your car. Most service departments have several techs who can work on your car. Some are better than others, just like doctors, lawyers, and hair stylists. Why should your car be repaired or serviced by the guy that happens to be waiting for the next job? The first time you visit a service department, ask who their top tech is. He usually has been working their longer, attended more schools, and holds more ASE certification ratings. The service advisors and the service manager know exactly who these guys are and usually will be glad to tell you, especially if it determines whether or not they will keep you as service customer. (4) Request the best service advisor. You choose your service advisor pretty much the same way you choose your technician…experience, training, certifications, etc. There’s an additional measurement that’s very important with a service advisor…customer satisfaction score. All manufacturers that I know of, grade service advisors on how well they individually treat their customers. The sum of these scores is the dealer’s scorecard to the factory and very important to him. You have to ask for this score, it’s not usually made public. Once you’ve picked your technician and service advisor, you’re going to have to make an appointment to be sure that they are available on the day and time you bring your car in. Having both of them handle your service will require some flexibility on your part and may require longer for the work to be completed. But this is a small price to pay for the work to be done right the first time and for the work to be something that was truly necessary. (5) Get competitive estimates on repair work. Repair work is work that you don’t regularly require…your air conditioner, radio, or transmission is broken is what you have to be careful about. Dealers typically price oil changes, tire rotations and balance, and front end alignments competitively. Repair work, because you’re not familiar with the price is where you have to watch out. When you get your first estimate on an expensive repair, get at least two more from two other service departments. Often times, the mere act of shopping the original price will cause the first estimator to lower his. In fact, if you feel comfortable with your service department that gave you the first estimate because you like the tech and the service advisor, offer to let them repair your car if they will meet the lower price. (6) Know which maintenance is recommended by your car’s manufacturer. If you don’t read anything else in your car’s owner’s manual, read what the manufacturer recommends for maintenance. Service departments typically recommend far more maintenance than the manufacturer does. Usually they don’t tell you this unless you ask, hoping that you will assume that their recommended maintenance is the same. Manufacturers will usually say that for extreme or unusual operating conditions (stop and go driving, very high or low temperatures, etc), additional maintenance may be required. You must be the judge of this, but for a rule of thumb you can’t go too far wrong following the manufacturer’s recommendations. (7) Have your car’s VIN checked occasionally for manufacturer’s bulletins. Every dealer should run your vehicle’s vehicle identification number at least once a year to be sure there are no outstanding recall campaigns or technical advisory bulletins. In fact, if you require a repair, you should always ask them to check to see if it may be covered by the factory when it would otherwise be out of warranty. Sometimes dealers are prohibited by the manufacturer from telling their customer about a bulletin unless the customer asks. There are so many of bulletins that come out all of the time that many dealers are overwhelmed. If you are having your car fixed at an independent shop, you should be very careful about this because independent shops would have no knowledge of these. (8) Don’t take no for an answer when your car is out of warranty. If your car is just one day or one mile out of warranty, it will usually be covered anyway. This principle applies to a few hundred miles and a few months too. But you have to ask and often insist. Performing free work out of warranty is referred to as “goodwill”. Some dealers have the ability to do this and all manufacturers do. If the dealer tells you “no”, ask him to contact the factory service representative.

Emotion Is Your Enemy When Buying a Car

2011-03-28T12:35:00.000-04:00

It’s hard to believe, but a high percentage of people will buy a new or used car on the first day they go car shopping. Many buyers never even compare prices with other dealers or research the car for safety, fuel economy, reliability, maintenance costs or resale value. If you’re a reader of this blog/column, you know that the car purchase process should take weeks. You must not only choose the best car to meet your needs, but you must choose the best price by getting at least three competitive quotes. The best price must include your trade-in and your financing interest rate. Since the terrible tragedy befalling Japan, tsunami-earthquake-nuclear reactor damage, panic buying of Japanese cars has been ignited. People are frightened that that new Honda, Nissan, Mazda, or Toyota they’ve been thinking about buying won’t be available if they don’t rush out and buy it today. Nothing could be further from the truth. In the first place, most Japanese brands that are bought in the USA are also built in North America and countries other than Japan. Parts for these cars are also mainly manufactured here. Of course there will be interruptions and slower production of a few models such as the Honda Fit and the Toyota Prius, but these will be only temporary. If there’s a shortage of the specific model you want to buy, wait a few weeks and there will be larger inventories and selections than ever before! Why? Japan’s economy and consumers have suffered a terrible economic blow. When manufacturing is reestablished and parts are full available again, there will be virtually no domestic buyers and Japan can only export what they make. Waiting to buy that Japanese car that is in short supply for a few weeks can save you thousands of dollars. Did you know that emotion can be the car dealer’s enemy sometimes and this can work to your benefit? There are two forces that have the net effect of driving car dealers and their salesmen and managers into an emotional frenzy. One is the “end of the month” and the other is the “stair-step incentive system”. It might sound like an old wives tale or an urban legend to be debunked by Snopes, but car dealers do sell cars for less at the end of a month. This is for a variety of reasons: (1) Dealers and manufacturers concentrate their advertising of sales and specials in the 2nd half of the month. (2) Manufacturers’ and dealers’ rebates and incentives typically expire at the end of the month. (3) Salesmen and sales managers are usually paid bonuses which culminate at the end of the month. Salesmen are paid volume bonuses and just one car sale can mean $1,000 or more on the last day of the month. (4) Manufacturers “live for market share” and sales numbers are widely publicized at the end of each month. Ford wants to outsell GM, Honda wants to outsell Toyota, etc. Stair step incentives are the most popular way that manufacturers motivate their dealers to sell more cars. An example would be a dealer earning $500 for each car he sold in a given month, but not until he sold the number of cars in his objective that was set by the manufacturer…say 250 cars. If the dealer sells 249 cars in the month, he earns zero incentive money. If he sells 250, he earns $125,000! Now, I think you can understand why you, a customer for that 250th car at midnight on the last day of the month might be able to negotiate a pretty good price. In fact, it would actually pay the dealer to “give’ you the car. Of course, it isn’t only the 250th buyer, but all buyers that the dealer believes may help him hit his objective. At the beginning of the month, it’s too soon to know if a particular sale will be the pivotal one. You’re probably reading this article close to the beginning of April. This gives you 3 or 4 weeks before the end of the month to do your homework and choose the right car. You have plenty of time to get three prices on the car you want to buy as well as on your trade-in and financing. Now, the fun part is to wait until the last day of the month and visit the dealer who gave you the lowest price earlier in the month. There’s a very good chance that you can negotiate a better price by hundreds if not thousands of dollars. Your emotion is the enemy when you buy a car, but the dealer’s emotion can be your friend.

The Media and the Tragedy in Japan

2011-03-14T12:07:00.002-04:00

There they go again! Déjà vu from the BP oil spill (anybody seen an oil slick lately?) and the Toyota “sudden acceleration” recalls (Did you read that Toyota was exonerated and the cause was driver error?).

The earthquake and subsequent tsunami in Japan last week were, unquestionably, a terrible tragedy. The Japanese Prime Minister said it was the worst crisis to beset Japan since WWII. Certainly, that statement is a fact – not since its near destruction has a greater disaster befallen Japan. I was born in 1940 and I have a vivid recollection of how Japan literally rose, over the years, from the ashes of complete devastation topped off by the Hiroshima and Nagasaki nuclear blasts. There are no more resilient, resourceful or intelligent people on the Planet than the Japanese. They will be back, better than ever, far sooner than anybody expects.

This column/blog is named “Earl Stewart on Cars” and I’m a Toyota dealer. So, forgive me if I focus more on the impact on Japanese auto manufacturing. Other aspects of this tragedy will be addressed by other writers, but I will address the business aspect and the car business aspect in particular. I will not be the first; many newspapers and web sites, including the Wall Street Journal and the New York Times have done so already.

I’ll start the discussion with the model car that Japan exports more of to the USA than any other, the Toyota Prius. There was absolutely no damage to the Prius plant from either the tsunami or the earthquake. Furthermore, thanks to the Japanese “just in time” parts supply manufacturing process; virtually all of the Prius’ suppliers lie safely and closely to the Prius plant.

The Prius plant and most other auto manufacturing plants were closed right after the earthquake and tsunami but most all of them are scheduled to open on March 16. There have been concerns expressed about transporting cars to the ports because of possible damage to the ports, railroads and highways. My view is that a Japanese manufacturer wouldn’t announce that they were commencing production on March 16th unless they knew they could get the cars to the port. Japan auto manufacturers won’t be building cars for domestic consumption for quite a few months due to the blow to their economy and the domestic consumer. They have only one choice which is to export. Prius is the largest selling car in Japan. With domestic consumption at a virtual standstill, the USA and the rest of the world can expect to receive record volume shipments of Priuses.

The media would have you believe that the supply of Japanese produced cars will dry up overnight, but the exact opposite is most likely to occur. That’s not to say that Priuses are going to be in large supply in the next few weeks or months. But this is due to high gas prices and the crisis in Libya, Egypt, and maybe even Saudi Arabia. All hybrids and fuel efficient cars are in short supply now. Ironically, the Japan crisis will work to increase supplies and lower prices as more cars are exported to the USA from Japan.

Lastly, although the Japan-bashers hate to admit it, even if Japan never exported one more car to the USA, it wouldn’t be a big obstacle for most Japanese car makers, especially Toyota. Most Japanese car brands build most of their cars sold in the USA in North America and use domestic parts suppliers. The average Toyota has more parts built in the USA than any other car sold in America including the Ford F-150. The Toyota Camry is the “most American car” you can buy. When you hear these redneck bigots making disparaging remarks about the Japanese and extorting their dimwitted friends to “buy American” made trucks and cars, they are really saying buy a Toyota Tundra not a Ford F-150 or a Toyota Camry not a Chevrolet Malibu.

Florida’s Orwellian Attack on the Elderly

2011-03-07T12:31:00.001-05:00

I couldn’t believe the article I read in last Sunday’s Sun Sentinel (March 5, 2011) reporting that Florida took away the driver’s licenses of 7,719 residents based on 9,105 anonymous accusers!
This is the result of a Florida policy allowing anybody to notify the state if they believe a person is mentally or physically incapable of safely driving their vehicle. The informant can obtain a form from the Florida Department of Highway Safety and Motor Vehicles or download the form from the Internet. The informant is anonymous and is not required to have proof that there is anything causing the driver they are turning in to drive unsafely. Not only does the informant remain anonymous, but should the victim of the informant feel or even prove that that the report was made carelessly or maliciously, “no civil or criminal action may be brought against any person who provides the information.”

Once the informant has made his report, investigators who work for the state make contact with the driver and submit their findings to a medical review section in Tallahassee. Investigators may interview family members, neighbors, or the driver’s physician as part of the investigation. The drive may be asked to submit a medical report from their physician or they may be required to report to a driver license office for retesting. How much confidence do you have in state investigators? I know that the ones who investigate children abused in foster homes haven’t been doing too good a job lately.

What this all means is that, if you don’t like the way somebody drives or even if you just don’t like somebody period, you can turn them in to the state and hope that their driver’s license is revoked. Almost 9 times out of 10, driver’s licenses are revoked on the basis of these reports so the odds are pretty good for the informants. But even if the driver’s license isn’t revoked, think of the aggravation, embarrassment and time consumed by these drivers to fight to keep their licenses. Clearly, most of those reports are made against the elderly and the elderly are often more vulnerable and less equipped to do battle with the state or he accuser.

Have you ever been driving and gotten angry because the driver in front of you was going too slowly? Maybe you’re late for something and the drivers in the left and right lanes won’t get out of your way. This can make anybody angry to the point where you might curse, blow your horn or flash your lights. I’m sure that many cases of violent road rage start with this scenario.
It’s very easy to obtain a person’s name and address once you know their license tag number. I wonder how many reports are made to Florida’s Department of Highway Safety and Motor Vehicles as a result of angry drivers in a hurry. You don’t even have to be angry at a person’s driving to report them. You might just have had an argument and decided this is a great, completely safe way to get even without the other person ever finding out.

I completely understand that we have lots of impaired drivers who shouldn’t be on the road. That’s why we require that drivers take driving tests periodically. I would fully support requiring older drivers to take more frequent hearing, vision, and driving tests. But I can’t believe that we have a system allowing anybody to anonymously inform on another with no responsibility or recourse. If a person has reasonable evidence to think another driver is impaired to the point he can’t drive safely, he should report him, but not anonymously. Everybody should have the right to face his accuser. The accused should also have the right to sue or prosecute the accuser if it can be proven the accusation was made carelessly or maliciously.

If you agree with me, contact your local state senator and representative and let them know how you feel about this Orwellian assault on Florida’s elderly drivers.

The Fine Print in a Car Ad

2011-02-28T09:39:00.001-05:00

There ought to be a law against advertising any product, especially cars, while concealing information in the fine print which completely negates the material facts advertised in the bold print, especially price.

Electronic media ads are the worst offenders. The way the fine print disclosure is shown on TV is a joke. It’s literally impossible to read the fine print due to the blurred, small size and the very short length of the time it’s displayed. Radio “fine print” is equally ludicrous. It’s often read at high speed like an “auctioneer on amphetamines”, at a very low volume, and often at the beginning of the commercial so that listeners don’t even know that it’s part of the advertisement.

What do our lawmakers and regulators think when they see these TV ads and listen to the radio ads? The lawmakers either don’t care that misleading ads are routinely deceiving the public or they’ve been paid off by industry lobbyist to look the other way.

For purposes of this article, I had to choose a print ad because, like you, I can’t decipher the fine print in radio or TV ads. I chose this ad at random from lots of car dealer ads in the Palm Beach Post and the Fort Lauderdale Sun Sentinel on Saturday, February 26. This particular ad ran in both of these newspapers. It’s not the most deceptive ad, not the least…just a typical South Florida newspaper car ad with important facts hidden from the reader by putting them in the fine print. You can view the ad for yourself by clicking on www.AnatomyOfACarAd.com. You will see the ad as a whole and a blow-up of the fine print so that you can read it. What follows is an explanation of how the fine print would affect your decision to purchase if you were to read and understand what you read.

(1) Prices plus tax, tag, title, dealer installed options. All of the advertised prices are understated by accessories (options) that the dealer has chosen to add to the advertised car. These are typically low cost items to the dealer that are marked up to you, the customer by a HUGE margin. Examples are pin stripes, nitrogen in tires, glass etch, window tint, door edge guards, “protection packages”, paint sealant, fabric protections, road hazard assistance, etc. A typical markup from dealer installed options would cost the dealer under $100 and be priced to you well over $1,000.

(2) All rebates applied including owner loyalty, lease loyalty, & military rebates. Customer must qualify for all rebates & incentives. Dealer retains all rebates & incentives. The dealer keeps all rebates, even those you might have seen advertised by the manufacturer. You have to sign a form before purchase that assigns your rebates to the dealer. But the worst part of this is the assumption that you qualify for “owner loyalty”, “lease loyalty”, and “military” rebates. Loyalty rebates mean that you have to have purchased or leased that make car and trade it in to qualify. The odds are you drive another make. The military rebate is especially outrageous. It often amounts to $1,000 and only applies if you are currently on active duty in the US military. In other words, the prices that you read in this ad are understated by thousands of dollars in rebates that you very likely will not qualify for.

(3) All vehicles subject to prior sale. Must present ad at time of purchase to receive advertised offer. Offer expires date of publication. Notice in the main part of the ad, each advertised car has a number next to it. One example is STK#110272. This number is the stock number of one particular car and that is the only car available at that price. If the dealer tells you that car was “sold”, he’s not obligated to sell an identical car at the same price even if he has several. If he does sell you an identical car, he can now add his dealer fee. If you buy a car today and see it advertised for less tonight…that’s too bad. If you came in the next day on the ad, that’s too bad too.

(4) Dealer not responsible for typographical errors or omissions. Vehicle art for illustration only. Optional equipment or varying model may be shown. This essentially says that you cannot hold the dealer to anything you read or see pictured in the advertisement. He can say that the price was a “mistake” and that the truck with the luxury wheels and sunroof was “for illustrative purposes only”.

(5) Offers not in conjunction. Other restrictions apply. See dealer for complete details. If the dealer advertised 0% financing and no down payment, you can’t get both. “Other restrictions” means that just in case the dealer didn’t cover everything in the fine print there may be “other restrictions” that he can bring up later. When you come in to buy that new car or truck, he’ll give you those details.

(6) We will beat any local, valid, printed advertisement from another authorized Dodge, Chrysler, or Jeep dealer within the SE Business Center Zone on any new identically equipped in stock vehicle. If we fail to beat the price we will give you $1,000. Customer must present competitors ad at the time of purchase and supply accurate VIN number, competitor’s ad must be dated same day as the customers purchase excluding tax, tag, title, dealer-installed options. If we beat the competitor’s price you must buy the vehicle from Arrigo. Dealer reserves the right to purchase the vehicle from other dealer. The price guarantee doesn’t apply to “dealer installed options” which represent thousand(s) of dollars in profit to the dealer. The dealer reserves the right to purchase the exact car from his competitor. There’s zero chance that his competitor will sell him that car, lose the sale and give it to his competition.

(7) $3,000 cash or trade equity due at signing. This means that the price or lease payment you came in on requires you to give the dealer $3,000.

(8) Qualified Customers with a minimum 750 credit score. Most people don’t have that good a credit score and will be asked to make higher payments and/or put down a larger down payment.

The bottom line is that you should never buy a car in response to an advertisement. The deck is stacked against you and you can’t win the game. The only way to get a good price on a new or used car is to first decide on the exact year, make, and model and which options you want and compare prices with at least three dealers. Do the same for your trade in and for your financing.

Make “Black Box” Data Recorders Mandatory on All Vehicles

2011-02-21T11:43:00.004-05:00

Regular readers of this column and blog may be shocked to read about my advocating government intervention regarding equipment on new cars. I’ve come out against silly proposed government suggestions like installing a “noise maker” in hybrid vehicles so that they can be heard when running on batteries. I’m also against a device that will prevent your car from starting if your cell phone is turned on. I don’t even like the check engine light which is mandated by law to be sure your car isn’t leaking too many pollutants.

However, I’m totally in favor of requiring all auto manufacturers to install EDR’s (electronic data recorders) in all vehicles. Interestingly enough, many manufacturers have been doing this for a lot of years, but they kept it a “secret”. I can remember customers calling me to ask if there was an EDR in their Toyota. At first, I said no because Toyota had never told their dealers anything about this. When word finally leaked out, I learned that this EDR was for internal use only and in fact Toyota and the other manufacturers encrypted the data so that, if somebody found the black box, they couldn’t translate the information.

Why would manufacturers keep an EDR secret from their customers, the government, and everybody else? The answer is fear of litigation. Plaintiffs’ lawyers could use this information against the manufacturer in product liability claims and lawyers could also sue manufacturers for violation of their privacy rights.

I have no sympathy for a manufacturer who is afraid of the truth. If the EDR proves that there was a defect that caused the accident, so be it. The manufacturer is guilty and should pay damages. The unacceptable alternative is to not learn or hide the truth. What’s even worse is that the known cause of the accident may not be corrected so that future cars won’t have the same problem.

I also have no sympathy for privacy advocates who say “It’s my car and the black box belongs to me. I can determine who looks at the black box.” It might be your car, but the government can tell you how fast you can drive without imperiling the lives of others. They should also be able to find out to a certainty whether speeding or driver error caused you to injure or kill another person(s).

A fringe benefit of EDR’s would be a huge savings in the costs of litigation and insurance. A black box is like DNA in that the evidence is indisputable. I wonder if one of the reasons the black box is being stonewalled is the resistance of lawyers.

The National Highway Transportation Safety Association (NHTSA) issued regulations in 2006 regarding an EDR but without making it mandatory. In other words, the manufacturers can take it or leave it. This is nonsensical. What good is rule if you don’t enforce it? What could be more important than a device that will scientifically determine the cause of an accident…whether the accident was caused by driver error, vehicle defects, or highway design flaws? Who can possibly be against this? They estimate that the cost to the manufacturer would be only about 50 cents!

The EDR, black box, has been mandatory in airplanes for many years. Thousands of lives have been saved as a result of being able to determine the causes of airline accidents and instituting remedies in the form of design changes and improved training and safety regulations for flight crews. If we had had black boxes in cars as long as airplanes, the number of deaths and injuries prevented would be many times greater than that in airplanes simply because of the larger number of people who drive than fly and the greater number of accidents.

Ironically, the highly publicized recalls of millions of Toyotas worldwide, may have awakened the car manufacturers and the government to the necessity of EDR’s. One of the things that proved the innocence of Toyota against the charges of vehicle defects causing “sudden acceleration” was Electronic Data Recorders that were furnished to NHTSA and deciphered by Toyota. All of the EDR evidence proved that the accidents caused from the alleged sudden acceleration were driver error. Drivers either accidentally stepped on the accelerator instead of the brake or had the wrong floor mats placed incorrectly (sometimes two sets stacked on top of each other) in their vehicles.

Hopefully all manufacturers and our government will get the idea. That idea is the one our mothers taught us when we were children…honesty is the best policy” and as Dr. Martin Luther King often quoted, “The truth shall set you free”.

Ray LaHood, The Media & Congress Owe Toyota an Apology

2011-02-14T11:06:00.001-05:00

You may have seen it on TV or maybe even a newspaper that Toyota was exonerated from safety concerns about their electronic throttle controls. I say “may” have seen it because the media downplayed this just as badly as they hyped the lies about Toyota having unsafe cars.

The National Highway Traffic Safety Association (NHTSA) commissioned NASA to study whether or not any sudden acceleration problems could be caused by the electronic throttle control systems in Toyotas. This is the same system that most other manufacturers now use. Our nation’s top scientists studied this possibility for 10 months and concluded this month that there are no defects and Toyotas are perfectly safe to drive.

The conclusion is that most of those cases of “sudden acceleration” were the fault of the drivers, not Toyota, and the rest of them were lawyers and car owners trying to make a fast buck by suing Toyota. In the vast majority of the accidents, the driver mistakenly stepped on the accelerator thinking it was the brake. This sort of thing happens every day, especially in south Florida where a lot of elderly people who shouldn’t drive do. Other “sudden acceleration” accidents were caused by customer or dealers accidentally using the wrong floor mats in cars or stacking more than one set of floor mats on top of the other. The terrible case of the highway patrolman’s family killed driving a Lexus in Texas was the fault of the wrong floor mats. The media jumped all over this one even though it was proven that the dealer incorrectly installed truck all-weather floor mats “upside down” in this Lexus. These were the only deaths caused by any alleged sudden acceleration event.

Toyota, Toyota dealers and their employees, and Toyota customers have suffered financially and emotionally from the irresponsible acts and suspect motivations of Ray LaHood, the chairman of NHTSA, the Congress, and the media. Ray LaHood, on national TV, actually told all Toyota owners to pull their Toyotas over to the side of the road, get out of the car, and don’t drive it again. I can still remember the panic of my customers in my dealership on that day. The phones were ringing off the hooks and some of my customers were literally in tears.

Toyota had to recall millions of Toyotas at a cost of hundreds of millions of dollars. Millions of Toyota owners were fearful of their “lives”, even being afraid to drive their cars to the dealerships to have them “fixed”. For my customers who were terrified to drive their cars, I sent my technicians to their homes or brought them a free loaner car and took their car back to my dealership. Even after the cars were “fixed”, owners were fearful of driving them because of the pure speculation that there might be something wrong with the electronic throttle control too.

Every time someone claimed their Toyota had accelerated out of control, the media headlined and featured the accusation but when the allegation was proven fraudulent or mistaken, they failed to mention this at all or buried it on the back pages.

Congress dragged the president of Toyota USA , Jim Lentz, and the chairman of the board of Toyota, Akio Toyoda, in front of the TV cameras and utterly humiliated them. The worst of these political hacks were the Congressmen from the Detroit, Michigan districts, Bart Stupak, and John Dingell. There hidden agenda was clearly to build up GM, Chrysler, and Ford by tearing down Toyota.

Toyota had no choice but to apologize and confess to a crime they didn’t commit. It would have been suicidal for Toyota to blame their customers for the problems of sudden acceleration. This would have whipped Ray LaHood, Congress, and the media into an even greater feeding frenzy and may have even brought down Toyota as big and powerful as they are.

Toyota’s false confession is analogous to the large number of false confessions by accused criminals. Many innocent men and women confess every day to crimes they didn’t commit. The police interrogators make it sound as if they have no alternative. They tell the accused that they have more than sufficient evidence to convict. They go on to say that they can get the judge to go easy on them if they confess and save the taxpayers the cost of a trial. Sometime they promise no jail time and probation, but a very severe sentence of they don’t sign a false confession. This occurrence is so common, that courts have held that a confession by itself is not sufficient to convict. There must be enough evidence to substantiate the confession. The famous novelist, John Gresham, just wrote a book on this very topic, Confession, which is on the NY Times best seller list.

I’m not deluding myself to expect that Ray LaHood, Congress, or the media would ever do the right thing and publically apologize to Toyota. Admitting you’re wrong and sincerely apologizing takes class…and as the old Frank Sinatra song, “Style”, goes…”You either got or you haven’t got class”.

Mega Car Dealer Counter Attacks Palm Beach Post

2011-02-08T14:21:00.001-05:00

My weekly column/blog is usually devoted to advice and opinion but sometimes I have to report the news, especially when nobody else will.

Three Sundays ago, one of the larger car dealers in Palm Beach County, Ed Napleton, was arrested for DUI and jailed overnight. Napleton has several car dealerships in Palm Beach County, including Nissan, Hyundai, Kia, Chrysler-Dodge-Jeep, and Lincoln Mercury. Now, this isn’t the news I feel compelled to report because I don’t really consider this sort of personal tragedy news. What I do feel is newsworthy is that the Palm Beach Post did report it in their newspaper and website and in tabloid-like juicy detail. You can read their web posting at PBPostNapletonDUI and see if you agree.

They say that celebrities like Charlie Sheen, are fair game for this sort thing, but a local businessman who never even appeared on TV or had his picture in the paper?

What clinched the news worthiness of this column was the fact that Ed Napleton has retaliated against the PB Post by cancelling all of his advertising. This doesn’t sound very interesting unless you understand that Ed Napleton spends very large sums of money advertising in the Post and is their largest car dealer advertiser. In fact, he may be their largest advertiser period.

As you know, newspapers have seen better economic times. In fact, over the past several years many newspapers have closed up shop, many have declared bankruptcy, and most others are teetering on bankruptcy. The PB Post has been “hanging by a financial thread” for some time. Losing their largest advertiser can be a mortal blow to any newspaper and it may well be to the PB Post.

My first reaction when I read about Napleton’s unfortunate incident in the PB Post, was surprise that the Post would dare report such a thing about their largest advertiser. I was on the verge of changing my mind about them because I’ve always believed most newspapers covered up for car dealers, giving them a free pass for fear of losing them as advertisers. Now, I’m beginning to doubt that theory. Upon reflection, I think that reporting Napleton’s DUI was an accident that slipped under the radar of the PB Post’s executives. Why else would they fail to report on all of the obvious violations by Napleton’s dealerships’ advertising in their own newspaper? I’ve written about many of his violations of Florida’s Unfair and Deceptive Trade Practices Act and these deceptive ads appear almost daily in full page and color right in their own newspaper!
Or maybe it wasn’t that the Post’s editors missed this DUI story but that they just couldn’t resist a juicy story that would sell lots of newspapers. Whatever the case, things have got to be buzzing at the PB Post and I wouldn’t be surprised to see some “heads roll”. This is just a guess, but I have to believe that the advertising department has launched a major effort to regain their largest advertiser. It’s going to be very interesting to wait and see if Napleton begins to advertise again. And if he does, what sort of concessions the PB Post had to make to accomplish this.

In closing, I commend those few members of the media who do print and broadcast the whole truth in spite of consequences including advertisers who threaten to cancel or do cancel their advertising. The Hometown News is one of those newspapers and Seaview Radio is one of those radio stations. Steve Erlanger, the publisher of Hometown News, and Chet Tart the General Manager of Seaview Radio allow me my platform to “tell it like it is” about South Florida car dealers. I know that both of these men would enjoy a lot more revenue from local car dealers if they refused to let me tell the truth. That’s the way journalism used to be and that’s the way it should be.

CAR OWNERS AGAINST DECEPTIVE DEALERS

2011-01-31T10:40:00.000-05:00

Regular readers of this column/blog know that I’ve been “fighting the good fight” against car dealers’ deceptive sales practices and advertising many years. Besides this column, I also warn and advise my radio listeners every Saturday morning and every weekday how not to be “ripped off” by car dealers’ deception. Many of you have seen my TV advertisements calling for making the dealer fee illegal. I even took the fight to our Florida legislature when I testified against the dealer fee in front of the Senate Commerce commission.

I’ve made some progress but it’s been an uphill battle. The auto dealers have powerful lobbying groups that make it almost impossible to get any car consumer protection legislation passed. Our state regulators are sadly deficient in regulating our current laws and responding to consumer complaints. I see illegal advertisement running consistently on TV and radio and in our newspapers. The media is reluctant to expose the illegal and unethical advertising and sales practices because car dealers are among their largest advertisers.

I believe the only way to get the attention of our politicians, regulators and the media is by organizing the car owners of Florida and having their voices heard. Therefore I recently announced on my radio show that I would like to form an organization tentatively named C.O.A.D.D., Car Owners Against Deceptive Dealers. The response from my radio audience has been very positive and many listeners have already volunteered to become a part of COADD. Below, I’ll describe my vision of this car owner activist consumer group. If you have an interest of being a member or even on our board of directors, please contact me.

COADD would include members from Palm Beach County north through the Treasure Coast, including Martin and St. Lucie Counties. Eventually I envision growing south through Broward and Counties and eventually becoming statewide. COADD will be a nonprofit corporation controlled and operated by Florida car owners. No car dealers could be members and certainly not on the board of directors, but honest, ethical car dealers would be allowed in an honorary capacity as consultants. I would be the first of these dealers to serve.

I’ve been approached by one of Palm Beach County’s most prestigious law firms that is seriously considering helping COADD get formed as a nonprofit. A member of this firm would also sit on our board of directors. Once we are formed and have a bank account, I will contribute $10,000 to help us begin operations.

The first task of COADD should be to develop a car dealer code of ethics regarding their advertising and sales practices. All car dealers in Palm Beach, Martin, and St. Lucie Counties would be asked to sign a covenant stating that they would abide by these ethical rules. Those dealers who agree would become honorary members of COADD and could use this in their advertising. Of course, their advertising and sales practices would be regularly monitored to ensure compliance.

The next task of COADD would be enforce the code of ethics with all car dealers in our area, including those who refuse to sign the covenant. I suspect that there will be many car dealers that, at first, will refuse to sign, but I also suspect that growing pressure will force most to join. Those dealers that violate the code will be sent a certified warning for the first offense and given a reasonable time to comply. If they don’t comply, COADD will advise our regulatory agencies, of the violation(s). Which agencies will be notified will depend on the seriousness of the violation and can include the County Office of Consumer Affairs, Department of Motor Vehicles, and the Attorney General’s Office. Honorary dealer members that violate the code will be suspended and banned if they refuse to comply.

Raising funds is always a challenge for nonprofits. Once we begin to make an impact and are able to recruit more car dealers as associate/honorary members, COADD will charge them an annual fee for membership. This should be a significant source of revenue. Another task of COADD will be to help car owners who have been taken advantage of in buying or servicing their cars. This could also be a source of revenue because many victims would be willing to make a contribution if COADD successfully resolve their problems and saved them money. Nonprofit fund raising is not my field of expertise but there must be other sources of local, state, and federal funds for nonprofits that provide a valuable service to their communities. For membership in COAD, there would be a reasonable annual fee. Members would be give educational materials on how buy a car and service a car without getting ripped off and would be able to identify themselves to dealers with their membership card or even a pin. If a dealer attempted to take advantage of a member, she would have the full force of COADD’s support to defend her.

Equally important to funding is getting started with a good, strong, involved board of directors. Among South Florida’s greatest resources are highly qualified retires...Men and women who formerly owned or operated large and small companies, occupied high government and military posts, college presidents, and well known celebrities. High energy, high intelligent people like this love to lend their expertise to worthwhile nonprofit organizations and most of them have several horror stories to share about being mistreated by car dealers.

After I help fund and organize COADD I see my continuing role an advisor and publicist. I will use my radio show, blog, newspaper column, and local “celebrity status” to continually endorse and promote our organization. What I ask from you is to join our group as a member or, if qualified and willing to donate your time, as a board member. If you know somebody who would make a good board member, please let me know. I cannot overemphasize how important having the right mix of people on the organizing board of directors is.

Driving Your Car Using a Cell Phone

2011-01-24T09:41:00.003-05:00

There’s nothing new about the controversy over using your cell phone while driving your car. It all began with a movement to require you to use a hands-free device so that you didn’t have to hold your phone to your ear while you conversed. Next it evolved to the fact that, hands-free device or not, simply talking on your cell phone is unsafe. Now the big drive is against texting, which is obviously something that requires your hands and eyes.

Now, I fear this thing is about to go “over the top”. It has just been reported (I read it in Automotive News and New York Times) that one of the cellular carriers, T-Mobile, has developed a technology that makes it impossible for you to use your cell phone while driving your car! In fact, they’re selling that app to users for $4.99 per month. Concurrently with this technological breakthrough, Ray LaHood, the chairman of NHTSA (National Highway Transportation Safety Association) is strongly advocating Federal regulation of the use of cell phones in cars. This means that our government, either thorough regulators or the legislature, could require all wireless carriers to make it impossible for you or me to use our cell phones while driving.

Now, I don’t want to turn this blog/column into a political commentary…we have too much of that already. I mentioned this subject on my weekly radio show last Saturday and received some rather strongly worded emails. Here’s an example:

I was listening 1-22-11 to Seaview radio and heard you posing a hypothetical question about the government shutting down cell phones in moving cars. Your wife then asked for comments and gave out the 877 # twice. Being a carefull [sic] driver, I pulled into a parking lot and called immediately but was told there was only a minute left and there was no way I would be able to express my opinion on air! So, you pose a STUPID, PARANOIA-induced question, ask for comments but cut the show off??? Wow! Well. Here's my answer anyhow: STOP trying to scare people about the government possibly doing something unlikely somewhere in the future!!! WHAT is wrong with you? Still upset McCain did not win? Get over it. The government is NOT the evil entity you put forward, sir. The government is We, the People.

Have we reached a point where we can’t be publically critical of our government? I hope not because there are a lot of countries in the world where that is exactly the case and I wouldn’t want to live in Iran or even China.

I’m 70 years old and lived about half of my life without a cell phone. I can tell you that the quality and productivity of my life has increased exponentially as a result of the cell phone, not to mention the smart phone and PC. I accomplish a large amount of work and personal related tasks everyday using my cell phone including the time I spend in my car. I’m a very safe driver, although my wife and my sons will tell you I drive too fast. Ever since the “safe driver” addendum to licenses came out, I’ve had that stamp on my license and I’ve never been involved in a traffic accident.

But forget about my personal experience, the percentage of traffic accidents, injuries and deaths has declined steadily for at least the past 50 years which includes the period of time we’ve had cell phones in our cars. Now I’m not going to argue that we couldn’t reduce accidents even more if we didn’t use our cell phones, but the same principal applies to lot of things we Americans like to do. Between 1919 and 1933 our government made it illegal to make, buy or sell alcohol in the USA. You know how that turned out. The only people who benefited from that moronic experience were guys like Al Capone and Bugsy Siegel. In fact, guys like them are probably already designing something that will override the device that T-Mobile invented to neuter our cell phone while driving.

I would love to hear what readers of this column and blog have to say about their freedom to use their cell phones while driving their cars. And I will close with this personal message to Ray LaHood….”I’ll give you my cell phone when you take it from my cold, dead hands” (For those nut-jobs who may be reading this, I’m just kidding!).

Auto Manufacturers Partly to Blame for Dealers’ Deceptive Car Pricing

2011-01-17T11:45:00.000-05:00

For many years manufacturers have employed a device called “stair-step incentives” to motivate their dealers to sell more cars. A stair-step incentive is bonus money paid directly to the dealer to reward him for selling a certain quota of cars within a certain period of time, typically one month. The number of cars in the quota is decided upon by the manufacturer and is a higher number than the dealer would normally sell.

For example, a dealer who would normally sell 150 cars in one month might be given a quota of 200. If he hits his quota, he earns $250 retroactively on all 200 (or more) cars he sells that month, or $50,000+. If he sells only 199 or less, he earns nothing! It’s easy to understand why this would strongly motivate any car dealer to “do whatever it takes” to try to sell his quota.

Unfortunately “whatever it takes” sometimes translates into “irrational and crazy pricing” and those are the words of Mike Jackson, the CEO of AutoNation (the largest retail chain of car dealers in the USA}. He spoke before the World Automobile Congress recently and announced that he will make it his mission to end stair-step incentives by auto manufacturers.

At first, one might ask what’s wrong with incentivizing a car dealer to sell lots of cars by paying him a large bonus. The answer is that there’s nothing wrong with the concept, just with how the concept is applied. In my example above, the dealer gets $250 per car. If he got $250 every time he sold a car in that month, he would be inclined to discount each car by up to $250. But, the dealer only earns that $250 per car if he sells at least 200 cars and that’s more than he would normally sell. You can understand how the very first customer of the month might get a different price from the last customer, especially if the last customer was buying the 200th car! How can a car dealer tell a customer at the first of the month that this is the best price and give him his best price when even the dealer doesn’t know what he can afford to sell the car for? On the last day of the month, it’s perfectly feasible for a dealer to sell a car thousands of dollars below his cost if that’s the sale (200th car) that will allow him to hit his $50,000 bonus.

It might seem at first that this can be a great opportunity for the car buyer…just come in at the end of the month and buy the last car a dealer must sell to hit his quota. This does happen but the car buyer cannot plan for it any better than the car dealer can. The dealer may not hit his quota at all or he may have hit it earlier in the month. These stair-step incentives are secret incentives and aren’t advertised by the dealer or the manufacturer. In fact, usually the salesmen don’t even know about them. But the managers who control the price that is given to the customer do.
This kind of incentive makes it even more mandatory to do comparison price shopping. If you want to buy a new car or truck, you should shop and compare prices with no less than three other dealers of the same make. But, you have no way of knowing which dealers will make their stair-step bonus that month. The dealers that know they have no chance to sell their quota will maintain their normal pricing. Those that are committed to reaching their quota number (and believe they will) can discount their cars substantially more than the other dealer(s). The dealer that believes he can’t hit his quota can give you his lowest price but it won’t be as low as the dealer who will hit his quota.

The stair-step incentives favor larger volume dealers because they can earn larger bonuses. Imagine two dealers selling the same make of car the first of whom is a small dealer with a quota of 50 cars and the larger dealer has a quota of 500 cars. The first dealer earns $12,500 when he hits his quota but the larger dealer earns $125,000! Assume both dealers are “stretching” to hit their quotas in the last week of the month. Which dealer will likely offer you the best price? It’s pretty obvious that the larger dealer can literally give away one or more cars in order to earn his $125,000 bonus. This sort of thing is why the president of AutoNation referred to stair-step incentives as “irrational and crazy pricing”. And I wholeheartedly agree.

Caveat Emptor and Car Dealers

2011-01-10T11:07:00.000-05:00

You Can Fool Some People All the Time

Almost everyone has read Abraham Lincoln’s popular saying, “You can fool some of the people all of the time, and all of the people some of the time, but you can’t fool all of the people all of the time.” I think Abe meant this to be a positive assertion that government may get away with deceiving us for a while, but in the long run, truth justice and the American way will prevail…and I think he was right.

However, it doesn’t work that way with unethical car dealers and car buyers. It always has been “caveat emptor”, or “buyer beware when it comes to buying or servicing a car. Unfortunately for a buyer to “beware” he must be “aware”…that is to say educated, mature, sophisticated and experienced. This excludes a very large segment of our population including the very young, the very old, the uneducated, those with low I.Q.’s and those not proficient in the English language. Is this one reason why our regulators and elected politicians don’t seem to care or take action with respect to the rampant unfair and deceptive sales practices of a large number of Florida car dealers? Most elected officials and regulators are lawyers and are highly educated and sophisticated. They don’t have a problem buying or servicing a car. In fact, the car dealer that tries to take advantage of a lawyer, regulator, or politician is asking for trouble.

I’ve been writing this column/blog and broadcasting my radio show, Earl Stewart on Cars, for about four years. I sometimes feel that I’m “preaching to the choir” when it comes to advising people how to avoid getting ripped off by a car dealer. You, my readers and listeners, largely fall into the category of the educated and sophisticated, “aware” buyer. Most of you aren’t taken advantage of when you buy or service your car because you won’t allow it. Unfortunately, there are enough uneducated, naive, and otherwise vulnerable consumers to feed those unethical car dealers who prey on the defenseless among us. All you have to do is read some of the car ads in the Saturday (the biggest selling day for most car dealers) auto classifieds. To the educated, sophisticated buyer, these ads are actually funny if you can forget the fact that so many fall prey to them and are taken advantage of by the dealers. For example, it’s hard for you or me to believe that anybody would respond to an advertisement without reading the fine print. Many dealers today are advertising prices that, when you read the fine print, are understated by many thousands of dollars. When you or I see a dealer stating that the car price is plus “freight”, we are educated enough to understand that the law requires that the freight cost be already included in the price. A shrewd buyer knows that “dealer list” is not the same thing as MSRP and that a large discount from “dealer list” means absolutely nothing. We know that the “lowest price guarantee’ is worthless if the dealer reserves the right to buy the car from the other dealer that offers a lower price.

There are those who argue that all buyers have the responsibility to guard against unethical sellers, to take care of themselves. In fact, that’s the literal translation of the Latin legal term “caveat emptor”…let the buyer beware. That’s sounds good, but what about the elderly widow whose husband recently died and who never had to make a the decision on a major purchase in her entire life? What about the young person just out of school with no experience in the real world? How about the immigrant who struggles with English? Should we be concerned about our underprivileged classes who often drop out of school because they have to go to work to support themselves or their family? You and I know lots of good people who, for one reason or another, simply can’t cope with a slick car or service salesman.

My bottom line is this, since we can’t rely on our regulators and politicians to protect those who “can be fooled all the time”, maybe we owe it to society to protect these folks. If you know someone who is thinking about buying a car or has a service problem with her car and you feel she may not have the ability to fend for herself with the car dealer, offer your support. If you’re one of the people who needs support, ask someone who can go “toe to toe” with a car dealer to come with you when you are car shopping. By the way, nobody, sophisticated or not, should car shop alone. Two heads are always better than one and it’s always a good idea to have a witness to what was said during a negotiation. And, of course, if you don’t have the time to help a person or you’re that person, you can always call me…I’m always here for you.

Pitfalls to Avoid When Having Your Car Serviced

2010-12-20T09:22:00.000-05:00

Before I get into the pitfalls, it is important for you to understand how important it is to have your car serviced according to the manufacturer’s recommendations. The pitfalls and consequences of not doing so can be equal to or greater than those you might experience at the hands of an incompetent or unethical service department.

I strongly recommend that you have your car serviced and repaired by a franchised dealer of the make of your vehicle. I know that this statement, coming from a franchised car dealer, may be met with some skepticism. Listen to my reasons before passing judgment. Modern vehicles are highly complex computerized machines requiring very sophisticated diagnostic equipment and highly trained technicians. The evolution of new, expensive diagnostic equipment requires constant updating. The evolution of car technology requires continuing education of dealers’ factory trained technicians who attend many weeks of schools every year. Forty years ago, it was possible for a really good mechanic to fix anybody’s car. Those days are gone and your car needs a highly trained specialist with the very latest diagnostic equipment. It is impossible for an independent service company to be competent in servicing and repairing all makes of automobiles.

Carefully choose the dealership that will service your car. You do not have to take your car to the dealership that sold you the car for warranty repairs, as many believe. Every dealership of your make car will welcome your warranty and non warranty work. Do your homework on which dealer has the best service department. Every dealer is graded in customer satisfaction by the manufacturer. Ask to see a copy of his CSI (customer satisfaction index) scores. Check with the BBB and the County Office of Consumer Affairs.

When you take your car in for maintenance or repairs, always ask for an estimate. State law requires that a service department not exceed a written estimate by more than 10%. When paying your bill, scrutinize the detail to be sure that you know exactly what each charge means. Most service departments add a fee on top of everything else with various labels like “miscellaneous supplies”, “sundry supplies”, “environmental handling”, etc. This fee is simply a 5% or 10% charge tacked onto the total bill. If you object to this fee, which you certainly should, dealers will often waive it.

You will find that prices for maintenance like oil changes, alignments, tire rotation and balancing, etc. are usually priced competitively. Where you have to be careful is in the pricing of major repair items like transmission, engines, and air-conditioners. When quoted a price on a big repair, don’t be afraid to negotiate. If you let it be known that you are willing to take your car elsewhere (even if you’re bluffing), you can often negotiate the price down significantly.

You should always make an appointment before bringing your car in. Appointments should be scheduled at relative slow times and days. Avoid bringing your car in early on a Monday morning and other very busy times. You want the service advisor to spend as much time with you as is necessary. This will allow you to drive the car with the service advisor if necessary to identify a specific problem like a squeak, rattle or vibration. Pick your car up at a time when the service advisor or technician has time to road test the car with you again to be sure that the problem was fixed.

Don’t be shy about asking for a loaner car when you have to take your car back a 2nd or 3rd time for a repair that was not done properly. It’s the dealership’s fault and you should not be inconvenienced. On a comeback, always talk with the service manager directly. Also ask that they assign their best technician to the job.

As I have said in earlier columns, there is nothing more important than choosing the right dealership to do business with. No service department is perfect and never makes a mistake. What you want to find is that service department that, in addition to being competent, will fess up to their occasional mistakes, sincerely apologize and make them right.

Foolish Reasons for Choosing Your Next Car

2010-12-13T11:44:00.000-05:00

JD Power just came out with the results of their annual survey, “2010 Customer Retention Study”. This measures the likelihood that those driving a particular make car will buy another of the same make. I like this study because it sorts through all the many, many reasons people may consider and gives us the bottom line. Obviously, having a high probability of repeating with the same car manufacturer is very important to the success of that manufacturer.

The manufacturers with the highest probability of owners making their next purchase another of the same make are Ford and Honda. Sixty-two percent of Ford and Honda drivers will buy another. On the bottom of the list is SAAB with only “four percent” willing to buy another SAAB. The industry average is forty-eight percent.

Just below Ford and Honda on the top of the list are Toyota, Lexus, and Hyundai with sixty percent. And just above SAAB on the bottom of the list are Jaguar, Dodge, and Chrysler with sixteen, twenty-two, and twenty-four percent respectively. There’s only one GM make above the average and that’s Chevrolet with fifty-two percent.

There’s a second part to this survey that shocks me and those are the specific reasons most people have for choosing which make they buy and why they stay with that make or buy a different one.

There are nine reasons people buy a particular make and do or do not repeat with that make. The number one and two reasons are “seating arrangements” and “look/style”! In the lower half of reasons are “quality”, “fuel economy”, and “resale value”! It’s hard for me to understand why somebody would make the second largest investment of his life based on “looks/style” over safety, quality, fuel economy and resale value. But it’s true and the JD Power Company is a highly reliable and accurate surveyor.

Don’t be an average car buyer and make your purchase based largely on the color or the styling of the car. People who purchase cars for frivolous reasons probably haven’t done their homework and don’t know the important facts about the make they have decided upon. They also are inclined to buy a car too fast, based on only emotion. This means they usually overpay for the car. There’s no one a car dealer likes more than someone who “falls in love” with that shiny red convertible on the showroom floor and wants to drive it home ‘today’! There is no excuse for this especially in today’s “Age of Information”. With just a few clicks of your mouse you can access everything you could possibly want to know about every make of car sold in the USA.

The top reasons that you should consider when buying another car are quality, safety, reliability, resale value, and fuel economy. You can compare all makes of cars in all of these categories just by clicking on www.kbb.com (Kelly Blue Book) or www.Edmunds.com. You can also find this information in Consumer Reports magazine on online at www.ConsumerReports.com.

The Cheapest Cars Can Cost Too Much!

2010-11-29T09:39:00.000-05:00

This column was inspired by a news article in the PB Post on Monday, November 29 entitled “Cash-strapped county spending $9 million on cars”. The article went on to say “one recent county purchase was a new $28,000 2010 Ford Taurus SEL for County Commissioner Pricilla Taylor.

After I shook my head to ask why on Earth would the PB County government would be spending $9 million to buy new cars for themselves in these direst of economic times, I then thought “how dare they” spend taxpayers’ money for buying the wrong cars too!

It’s a really bad idea to buy last year’s model new car when you can buy the current model. This is especially so of the Ford Taurus because the 2010 is virtually identical to the 2011 and they are priced nearly the same. Car dealers will advertise last year’s model for less money, but if you negotiate you can buy the current model for the about the same price as the old model. This is especially true in today’s economic climate, a buyers’ market. Sometimes the manufacturers will offer special incentives to help the dealers clear out last year’s model, but the amount of the incentive can’t come close to covering the extra depreciation you experience buying a one year old car. When time comes to trade that car in or sell it, nobody cares when you bought your car; they care only what the year on your title says.

Palm Beach County and most governmental agencies buy their cars at special fleet prices offered by the manufacturers. They don’t pay retail. But the fleet prices for the 2010 and 2011 Taurus would have been almost the same. Fleet pricing sounds like a good deal for the governments but it isn’t really. The manufacturers sell cars to fleets like the government and big rental companies at drastically reduced prices, often less than they sell cars to their own dealers. In fact, manufacturers will sometimes actually sell cars to large fleets for less money than it costs them to build the cars. Why, you ask, would they ever do such a thing? It’s less costly for a manufacturer to lose a few hundred dollars on a few thousand cars than have to close down shifts or entire manufacturing plants and reopen them at a later time. They have to pay UAW workers whether they’re building cars or not and the cost of shutting down and reopening plants is huge. Ford, GM, and Chrysler sell fleets anywhere from a one-quarter to one-third of all the cars they build.

This all brings me to the second big mistake Palm Beach County made when they bought a 2010 Ford Taurus for Mrs. Taylor. It’s “Economics 101” that when you flood the market with a product at below market prices, you drive down the resale value of the product. Why are diamonds so expensive? It’s not because they’re so pretty because a cubic zirconium is just as pretty. It’s because the number of diamonds on the market is controlled and limited by a giant cartel, DeBeers. If they didn’t do this, your diamond ring would plummet in value. Ford sells thousands of Taurus’s to governments and large rental companies at greatly discounted prices. When these large fleets buy new cars, they dump their old cars on the market at auto auctions. It’s all a matter of supply and demand. Selling too many Taurus’s over too short a time drives down the price. This also affects the unsuspecting retail buyer who buys and sells just one car at a time.

If you need proof of all of the above, just click on www.ALG.com/FleetResidualValues. ALG is Auto Lease Guide which is the “bible” for how fast cars depreciate. Every bank, car dealer, and leasing company relies on ALG to set their prices on leasing. The residual value is the estimated value of new car 1, 2, 3,, 4, or 5 years hence. The residual is expressed as a percent of the cars original cost. A car with a 4 year residual of 25% would depreciate twice as fast as one with a 50%. If you go to the above website, you’ll find that the Ford Taurus has a very low residual. In fact it’s rated with only 2 stars, with 5 stars being the best. An example of a car with a 5 star residual is the Honda Accord. Honda sells very few cars to large fleets, about 8% of their total production. The Honda Accord’s purchase price is about $2,000 more than the Ford Focus, but after looking at the difference in deprecation, is a much better buy.

The moral to my story is to be smarter than the Palm Beach County government and don’t just buy the “cheapest” car you can find. Never buy last year’s model new car when you can buy the current year and always check the projected resale/residual value of the new car you want to buy.

Your Car’s Oil Pan: Its “Achilles Heel”

2010-11-16T08:23:00.000-05:00

The container that holds your engine oil underneath your car is made of very thin, sheet metal often aluminum. Because the bottom of the oil pan is so thin, the opening that technicians use to drain your oil cannot hold very many threads. The oil plug which is removed and replaced every time your oil is changed clings to those few threads. The reason for this is that manufacturers try to make your car as light as possible so that they can meet their fuel economy requirements (CAFE) and, of course, the less metal there is in a part the cheaper it is. It might sound unreasonable to think how little it would cost to have an oil pan that was just one-quarter inch thicker, but multiply this by tens of thousands of parts on a car and pretty soon you’re talking lots of weight and lots of money.

Depending on the make and model of your car, you can expect the threads to wear out on your oil pan as early as 40,000 miles just from normal wear and tear. It can be sooner or later than that depending on how often you change your oil. The problem is that when this happens, there’s not a “safe” solution to the problem other than replacing your entire oil pan. This can cost anywhere from $150 to $350 depending on the make and model. There are lots of less expensive solutions some suggest like oversized plugs, rubber plugs, and re-threading but they are not 100% effective. If you gamble with one of these and the rubber plugs pops out, you’re looking at buying a new engine for thousands of dollars. In modern engines you have only a few “seconds” to stop an engine that loses its oil which is exactly what happens when the plug drops out.

As if this isn’t enough to concern you, the technician who changes your oil can easily strip the threads in the oil pan by over-tightening the oil plug. When this happens, you probably won’t know about it until you change your oil again and maybe not for several oil changes. Stripping threads isn’t necessarily an “all or nothing” event. Over tightening the drain plug slightly, repeatedly will cause the thread to wear out prematurely.

Each manufacturer has a specification for exactly how tight the oil plug must be in the oil pan. It’s measured in foot-pounds of torque and a typical spec would be 18 FP. If the plug isn’t tightened enough, it might fall out. This sometimes motivates the technician to over tighten the plug just to be safe. If the plug is too loose and falls out, it could cost him his job. To be sure that the oil plug is tightened exactly right, the technician must use a torque wrench which shows the foot-pounds of torque that the plug has been tightened to.

Believe it or not, many technicians still don’t use toque wrenches. Without one they are just “guessing” how tight your oil plug is. This is a good reason for you to be very careful who changes your oil. Don’t be shy and specifically ask the service department who changes your oil if their technicians use torque wrenches. It wouldn’t be bad idea to find out the manufacturer’s specification for torquing your oil drain plug. It shouldn’t be necessary if you have your oil changed by the dealer, but it might if you use an independent service company or quick-lube company.

The person who changes your oil is the lowest paid individual in that service department. He’s called a “lube tech” and it’s generally considered a starting position for an auto technician. The turnover in this position is usually much greater than for regular mechanical technicians. I’m sure why you can understand why this puts you at risk for not having the job done right.

Be very leery of advertising promoting cheap oil changes. It’s fine to save money having your car serviced, but you should be sure that the person working on your car knows what he’s doing and uses the proper tools. He must know the manufacturer’s specifications for tightening your particular oil plug and he must use a torque wrench. Ideally, you should find a trustworthy, knowledgeable lube technician and always have him perform all of your oil changes. That way, if there’s ever a question about who over-torqued or under-torqued your oil plug, there’s only one person who can be held to blame.

Chrysler and General Motors Must Build Better Mousetraps

2010-11-08T12:00:00.000-05:00

I know of no one who hasn’t heard the famous quote by Ralph Waldo Emerson, “Build a better mousetrap and the world will beat a path to your door”. In fact, I know of no one who can disagree with this basic truism.

As you well know, our government decided to use our taxes to keep GM and Chrysler alive. Over a year and many billions of dollars later both companies are claiming to be profitable and are planning to sell stock so that they can pay back a portion of what they owe us taxpayers. Of course, we will never really know how much money we’ve really spent in this futile rescue attempt. The latest secret that was revealed is that the US Treasury is giving GM a pass on paying taxes for several years. This required a change in the law that was kept very quiet until this fact was needed to pump up the price of GM’s IPO stock price. Wall Street was naturally very impressed to learn that General Motors will not have to pay taxes on any of the first $45B they earn, unlike all of their competitors. Talk about a competitive edge! How do you think this makes Ford Motor Company feel after they refused to take a handout from the government like GM. Our government is rewarding bad behavior and punishing good.

Consumer Reports just announced their list of the most reliable new vehicles for the new model year. Do you think that anybody in Washington D.C. is concerned about the fact that Chrysler is ranked “dead last” in reliability out of 27 makes sold in this country? How about the fact that the highest ranking for any GM car is #17 for Chevrolet? Buick is 18th, Cadillac 19th, and GMC is 21st! Of course Honda and Toyota dominate the reliability survey as always. There’s not one single American owned company in the top 10, but Ford is #11.

Washington seems to think that they can solve any problem by throwing enough money at it. The only reason that GM and Chrysler’s balance sheets look better and they are showing a profit this year is because of all the taxpayer’s money and “smoke and mirrors” accounting. I’m not taking a political position here because there were lots of politicians from both sides of the aisle who pushed for the bailout.
Now that GM and Chrysler have their bailout money, they’re reneging on their agreement to build smaller more fuel efficient cars. They’re lobbying to defeat the next plateau in EPA fuel economy standards. About a year ago, GM and Chrysler signed a deal with the White House agreeing to boost fuel-economy standards nearly 35% by 2016 but that’s because they had to “go along to get along”, in other words get their billions in bailout money. They’re now lobbying heavily to defeat Washington’s efforts to continue to improve fuel economy after 2016 with a goal of 62 mpg by 2025. There is no opposition from Honda, Toyota or most other manufacturers on this because they have confidence that they can meet these fuel economy standards.
The simple facts are that it’s easier and cheaper to build lower quality cars and big gas guzzlers and sell them for too much money than it is to build fuel efficient cars, trucks, and vans. GM and Chrysler live or die on the price of gasoline. When gas prices are relatively low, they can sell enough Chevy Suburbans, Cadillac Escalades, RAM pickup trucks, and other gas guzzler models to be profitable. One of the reasons that GM and Chrysler made profits this year is relatively low gas prices. Everybody knows that it’s only a matter of time before oil and gas prices rise to record levels. Ten years from now we will look back fondly on $3 and $4 gasoline. When that happens, GM and Chrysler will go bankrupt again. There isn’t enough time for them to reengineer a new line of fuel efficient cars and trucks and, even if there were, they are so far behind in the quality game it wouldn’t make a difference.

The Chevrolet Volt is a PR stunt, nothing more. GM will build only 11,000 Volts next year and they will be sold in only 23 states, not in Florida. One reason that GM won’t build more Volts is that it costs more to build them than they can sell them for. The Volts sole purpose is to provide a halo effect around their line of low quality gas guzzlers.

Are you ready to bail out GM a second time and Chrysler a third time? I’m not.

Pontiac Dies at 84. October 31, 2010

2010-11-01T11:37:00.001-04:00

Sunday, October 31 (Halloween) was the day all remaining Pontiac dealers’ GM franchises expired. Pontiac built their last car about one year ago. Most of you think of me as a Toyota dealer, but I got into this crazy business 42 years ago when I joined my father’s Pontiac dealership in West Palm Beach. My father got into the car business in 1926, but not as a car dealer. He worked for the factory, Oakland, in Pontiac, Michigan. That’s where and when Pontiac was born and was originally named the Oakland.

Dad decided he wanted to give retail a try and started the first Pontiac dealership in Palm Beach County in 1937. He borrowed $10,000 from my mother and she ran the accounting department (I guess she wanted to keep an eye on her investment). His sales department was a man named Harper Clark who went on to become the first Oldsmobile dealer in Palm Beach County. Dad’s service department was a guy named “Slim” Angevine. The first car my father sold was a 1937 Chieftain and the buyer was Annie Swann. She paid $936 for the car plus tax, tag, and a 50 cent “dealer fee”. My father bought this car back from Annie in the late sixties (for exactly what she paid for it new). We had the car restored to absolutely new condition (all original parts) and it sits in the place of honor on my Toyota showroom floor today.

A lot of people think I’m a typical foreign car dealer when I criticize General Motors and Chrysler for what I say led to their demise. But what many don’t know is that I have real soft spot in my heart for GM and especially Pontiac. I feel like I have a special insight into what happened with GM and Pontiac because I was “along for the ride”. I remember when Pontiac was one of the most exciting and sought after cars in the USA. When I joined Pontiac in 1968, we were number three in sales, behind Chevrolet and Ford. GM had over half of the US car market and feared an antitrust suit for running a monopoly.

Back then it was about styling and power. The Pontiac Trans Am and GTO were the kings of the road. Gas was cheap and nobody complained about quality because everything is relative. Nobody else was building a car that was any better, so who was going to complain. I remember finding an empty vodka bottle inside the door panel of a Pontiac Bonneville after the customer complained of a rattle. I remember a customer bringing a Le Mans convertible back after he bought it because he couldn’t find the switch to lower the top. After a careful inspection, we discovered the problem…Pontiac had forgotten to put the switch on the car.

Then, as you know, things changed. Do you remember the Arab oil embargo of the seventies? All of a sudden Americans were waiting in line for gas and many gas stations just didn’t have any gas at all. That GTO with dual 4-barrel carburetors and a supercharger that got 10 mpg (if you were lucky), suddenly was a problem. About the same time, Americans began noticing these strange little cars with funny names…Honda, Datsun, Toyota, and Mazda. This didn’t seem to worry Detroit because everybody knew that this “gas thing” was only temporary and there was an unlimited supply of oil under the ground. Also, these funny little cars really weren’t built all that much better but they sure did get a lot better gas mileage.

It was in 1970 that I first decided I better “hedge my bet” and I took on the Mazda franchise. I was the first Mazda dealer east of the Mississippi. We were building our Mazda dealership (actually renovating an old gas station) so I temporarily displayed a Mazda on my Pontiac showroom floor. One day, the Pontiac zone manager dropped in and walked up to me while I was standing in the Pontiac showroom. His words to me are indelibly engraved in my brain…”Get that goddamned ‘Jap car’ off my showroom”. The Pontiac manager’s name was Murphy (Murph) Martin and he personified GM’s arrogance and blindness toward the Japanese competition. I bought the Toyota franchise in North Palm Beach (Lake Park) in 1975 as a further hedge.

In the late nineties, the “handwriting on the wall” was transferred to my Pontiac financial statement. As fast as my Toyota dealership and Mazda dealerships made money, my Pontiac was losing it. We simply couldn’t compete with the Japanese cars fuel economy, quality, and price. I had a personal dilemma too. Often friends of mine would look me in the eye and say, “Would you recommend that I buy a Toyota or a Pontiac”. If I told my friend the truth, I was being disloyal to all of my employees at the Pontiac dealership. Pontiac and GM’s quality gap was huge with the Japanese imports. At my Toyota dealership we did practically no warranty work but at the Pontiac dealership we did a huge amount. Chuck Schumacher, the Buick dealer then and now, had been calling me every few months for a while asking if I would sell him the Pontiac franchise. He also had Oldsmobile and GMC truck and wanted to add Pontiac to the “family”. I turned him down for as long as I did for purely sentimental reasons. He finally “made me an offer I couldn’t refuse” and I sold him Pontiac.

The rest is history. The Japanese cars continued to improve (kaizen) their quality, their fuel economy (which was already far superior), and their styling and they even priced their cars lower than Detroit’s. GM, Ford, and Chrysler just never “got it’. They had their head in the sand and when they pulled their heads out it was too late.

My three sons (Stu, Jason, Josh) and my wife (Nancy) all work with me in my Toyota dealership and I try to remind them often that we must never underestimate our competition like Detroit did the Japanese car makers. You can bet we have our eyes on Hyundai. Toyota began to get a little arrogant and complacent not too long ago, but snapped back into reality recently with the “cold shower” of media and governmental attacks over the recalls. Looking back on that experience, I’m actually glad it happened. I’m not saying NHTSA, the media, and the politicians dealt fairly with Toyota…far from it. But what happened, humbled and frightened Toyota and made them realize that they could lose everything they had worked so hard for if they ever again became over confident and underestimated the competition.

You Should Be Concerned About Auto Fleet Sales

2010-10-25T10:14:00.001-04:00

Fleet sales are to daily rental companies, commercial, and government agencies. These are volume sales, not usually one at time but up to “thousands” at a time. Rental and leasing companies hunkered down during the recession and stopped buying new vehicles. They hung onto their old vehicles just like many individuals did.
But, as a result of the recession and fewer new vehicles being sold and more people buying used car than new, the value of used cars has risen. The big fleet buyers see that as an opportunity to sell their current used cars at auctions and replace them with new. It’s truly a buyer’s market for fleet buyers. Not only can they sell their old fleet for more money, but they can replace those cars at unprecedented low prices from the manufacturers.

Large fleets have always been able to buy cars for less money than you can because they buy in much larger volume. In most cases, they deal directly with the manufacturer and often buy cars for less money than the dealers can buy them for. Sometimes the sales transaction “passes through” the dealer, but the price is often determined by the manufacturer and the special, low prices are only for fleet buyers. Dealers also sell directly to fleets and even when these prices are not subsidized by the manufacturer, they are lower than you can buy the car for.
Manufacturers will actually sell cars to fleets below their cost! This is especially true in these bad economic times. Desperate manufacturers like Chrysler and GM who have recently declared bankruptcy and are struggling for survival need to keep their plants running and need to present a positive picture to the public and their lenders (us taxpayers). It’s actually less expensive for a manufacturer to sell cars below their cost than to close the plant down. When Chrysler or GM closes a plant and lays off workers, they encounter huge expenses. They have keep paying the UAW workers even though they aren’t working and the cost of stopping and restarting the assembly lines is very large too. They would prefer to lose a few thousand on each car and pray that the economy gets better.

GM is getting close to an IPO, selling stock to us taxpayers so that they can pay back the government. To keep that stock price high, they want to be able to report higher sales. This is what the press focuses on and amazingly they never differentiate between retail sales and fleet. Last month (September) 39% of Chrysler’s sales were to fleets. 25% of GM’s and 29% of Ford’s were to fleets. Only 7% of Honda’s and 9% of Toyota’s were “reportedly” fleet. I say “reportedly” with respect to Honda and Toyota because some of their fleet sales go unreported. Dealers can sell cars to fleets but they get counted as retail. The industry term for these kinds of sales is “fleetail”. The dealers can collect retail incentive money on these which they can’t on “official” fleet sales. Also fleetail sales count as retail toward their sales quotas, contests, and sales awards. Dealers are inclined to sell fleetail cars at or even below cost because of this. We don’t know how many Honda and Toyota retail sales are truly retail and which are fleet/fleetail.
Here’s why these fleet sales are bad for you. All of these cars that are sold to Hertz, Avis, and the US Government don’t just “vanish into thin air”. They come back on the used car market through auto auctions all over the USA. If you bought a Ford Focus this year and Ford also sold 20,000 Ford Focuses to the fleets, Ford caused your Focus to depreciate at a much higher rate than it would have otherwise. This is simply the economic law of supply and demand. The more used Focuses that Ford sells at the Manheim auctions in 2013 (the same year you are ready to trade yours in for a new car) the lower the price they have to sell them for. The bottom line is that that new car could cost you an extra $2,000 based on the lowered trade-in value of your Focus.

My advice to you is to carefully consider the number of fleet/fleetail sales the various manufacturers are making when purchasing your next new car. Chrysler is clearly the leader in fleet sales and I would avoid Chrysler products like the plague unless I planned to never trade it in. I’d lease a Chrysler product if I absolutely had to have one. You aren’t responsible for selling the used car at the end of the lease. Of course you already paid for the high depreciation in your lease payments unless Chrysler over estimated the residual which is possible. Ford and GM are also big fleet sellers. A good guide to consult is the industry “bible” for future used car values, called residuals. This is the Auto Leasing Guide, ALG. Every dealer and manufacturer has one. You can ask your dealer to see his copy (If he won’t just email or call me). This guide is the best estimate of what a new car bought today will be worth in 1, 2, 3, 4, 5, or even 6 years.

Good People Make Good Car Dealerships

2010-10-18T12:38:00.001-04:00

In my columns over the years I’ve always advocated carefully choosing the car dealership that you buy your vehicle from or allow to service it. I still believe this is important. In fact, I recently published a list of dealers that I recommend you buy your car from and a list that I recommend you avoid. We’ve all visited a restaurant or retail store and had a terrible experience with a waitress, sales person, or other employee and never returned. Yet, we’ll friends recommending the same store that we swore never to patronize. We condemned an entire company because of one person.

I also wrote a column a couple of years ago in which I suggested that you carefully choose the individual who advises you and sells you service on your car. These individuals are really commissioned sales people who sell you service just like car sales people sell you cars. Unfortunately most dealerships call them something else like “assistant service manager” or service advisor. In my dealership we used to call them Assistant Service Managers because that’s the term that Toyota uses. We now call them “service advisors” because too many people thought they were dealing with the service manager. In all candor, I’d feel more comfortable naming them what they are, “service sales people” and I may make that change.
As I was rereading this old column, it occurred to me that the same recommendation applies to all companies, not just car dealerships and it applies to all departments in a company. Whichever car dealership you choose, take the time to pick and choose those individuals you deal with. Car dealerships, just like other organizations, are nothing more than the sum of their parts…their people. You should get to know the person who sells you service and, if you don’t like him, ask for another person to handle your service requirements. You should also meet and cultivate a manager in the service department.

The same holds for the sales department. When you buy a car, don’t settle for the first salesman who approaches you. For example, if you’re a woman you may feel more comfortable dealing with another woman. Or, if your native language is Spanish or Cajun, you may feel more comfortable with one who can converse with you in your native tongue. Don’t be shy about asking and don’t feel bad about hurting the feelings of the first sales person. An automobile is the 2nd largest purchase most people make and it’s very important that you feel comfortable with the person selling it to you. Furthermore, if after dealing with your sales person for a while, you think you made a bad choice, ask to speak to the sales manager or general manager. Believe me, car buyers hold all the cards in today’s shaky economy and no sane sales manager is going to lose a sale because a prospective customer doesn’t like or trust the sales person she’s dealing with. He will handle your sale personally or choose another sales person you do feel good about.

Car dealerships have other departments including parts, finance and insurance, accounting, and some have body shops. My same recommendation applies to all departments. A word of caution, when you ask to speak to a manager, be sure you’re really are truly speaking to one. Car dealerships are notorious for calling rank and file employees managers to trick the customer.

My purpose in writing this column is in realization of the fact that there are no perfect companies, especially car dealerships and that includes mine. I employ 130 individuals and I would be less than candid if I didn’t say I have a few rotten apples in my barrel. Unfortunately, I don’t know who they are and finding them is a continuous work in progress. The same thing applies to all companies including car dealerships. In my list of recommended dealers, there are some employees of those dealerships who would take advantage of you but most would not. In those dealerships that I recommend you don’t buy your car from, there may be a few honest, courteous employees. Then there are all the dealerships that I don’t put in either category. Your odds of finding the right individual are much better if you patronize a good company or car dealership, but don’t totally let your guard down.

Just stay away from the ones that I recommend you don’t deal with. In every organization there’s a tipping point. A great company reaches a critical mass of good employees and as their reputation grows, more good employees from other companies seek to be employed there. Honest, hardworking, courteous people enjoy working in an environment where others are like them. The same holds true for evil dealerships and bad companies (those on my “don’t buy” list). A good person with a conscience has a very difficult time functioning in an environment where, from top management all the way down, the design is to trick and take advantage of customers. These few good people don’t last long in evil dealerships and flee to a place where they can treat their customers in a manner that lets them sleep at night.

BAIT & SWITCH ADVERTISING (Read the fine print)

2010-10-11T12:31:00.000-04:00

All car dealers pay the manufacturers the same prices for their new cars. Dealers will lead you to believe that volume dealers pay less, but this is not true. So, when a car dealer advertises a price for a new car in the newspaper, he has no price advantage over his competition.

Virtually all of the prices for new cars you see advertised in the newspaper 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 actually helping his competitor sell a car.

Most of the new car prices advertised in the newspaper 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.

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 read my last column, you understand about “dealer fees”. These fees are additional dealer profits ranging from $500 to almost $1,000 that are added to the agreed upon price of the car by most dealers in Florida. 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 on that dealer fee.

As you can guess, the salesman’s commission on an advertised car is either zero or very small. Having 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 have to, 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 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. Use Consumer Reports magazine, the Internet (www.edmunds.com and www.kbb.com are two excellent free sources of information), or even your local library.

Ten New Year’s Resolutions for Car Dealers in 2011

2010-10-04T13:19:00.001-04:00

This is a modified version of the same column I wrote last year. Unfortunately it applies very well to this year for two reasons: (1) The economy has not improved as we had hoped and (2) Car dealers did not abide by my suggested new year’s resolutions for 2010. In fact, car dealers have gotten worse. For example, we now have Ft. Pierce Nissan and Delray Mazda-Kia (both owned by Mike Grieco) double-charging for freight on new cars in addition to their dealer fee. Napleton Nissan in Rivera Beach was also double charging for freight but recently stopped. Somebody once said that the best antiseptic was sunlight and that’s why I never give up on bringing things like this to the attention of my readers.

2009, with the exception for August [Cash for Clunkers] will go down as a 2nd bad year in a row for our economy and especially for car dealers. 2010 is has also been a very tough year for car dealers in Florida and especially on the Treasure Coast and Palm Beach County. I’ve been a dealer for over 40 years. I say that because I don’t want those dealers who read this to think I’m “kicking them while they’re down” by preaching redemption. I’m suggesting these resolutions because they can help these dealers survive these bad times and prosper even more when business returns to normal.

(1) Eliminate your dealer fee. We’ve seen some progress in dealers eliminating their dealer fees in Palm Beach County. Palm Beach Toyota and Royal Palm Toyota dropped their dealer fee in June and Royal Palm Nissan dropped theirs in November. This was due, not to a “moral revelation” by the dealer or legislative action but economic pressure. Palm Beach Toyota and Royal Palm Toyota are my two nearest competitors. Six years ago, when I eliminated my dealer fee, Royal Palm Toyota did not exist and Palm Beach Toyota was outselling my dealership by a wide margin. Now I outsell both dealerships combined. Hopefully other dealers can learn from this economics 101 course, Ethical Business Practices Equal Increased Business. Quote your customers the full, out-the-door price. The only additional costs passed to your customer should be federal, state, or local taxes and/or fees like Florida sales tax. This is the generally accepted practice in retailing all other products and services. A price is quoted to your customer when you communicate a price in any fashion including advertising a price in the newspaper, radio or TV, painting a price on a windshield or sign, saying a price over the phone or in person, or giving a price over the Internet. Your “dealer fee” is profit for you. It is not a “fee” and it should be included in your price.

(2) The buck stops with you. You are responsible for the actions of your employees. Your salesmen, service technicians and service advisors are virtually all paid on commission. If you do not police your people and hire ethical people your customers will be taken advantage of. If you are an absentee owner, as most owners of car dealerships are in South Florida are, you have to have someone running your store that knows and cares about what is happening to your customers. Your ignorance of the mistreatment of your customers is no more an excuse than being ignorant of a law when you break it. You may think you know how your employees are treating your customers, but I promise you that you don’t unless you communicate directly with some of them. You cannot rely exclusively on reports from your managers to tell you the truth.

(3) Don’t advertise a car at a price that you don’t want to sell it for. If you advertise a car for a specific price, you should be willing and able to sell that car to as many customers as respond to the ad. If you run out of stock, give the customer a rain check. Also, pay your salesmen a commission on the ad cars. Now most of you don’t pay a salesman a commission if he sells the ad car. What do you think that salesman is going to tell the customer who comes in on the ad? If you run out of that model, you should give your customers a rain check. When you don’t do that, it’s called “bait and switch”.

(4) Don’t insist or encourage your customers to buy and take delivery of their car on the same day. This is called a “spot delivery” in the trade. There are lots of thing bad about this. A car is the 2nd largest purchase a person makes. The customer should be allowed time to reflect and think about this decision. Cars are often spot delivered when the credit has not been approved, especially nights and weekends when the banks are closed. Customer often have to be called back to sign another contract at higher payments, higher interest, and/or higher down payments. This is sometimes done deliberately because customers are often too embarrassed to tell their friends that they really haven’t bought that shiny new car they were showing off. Attorneys in other states have filed class action suits against car dealers and attorneys in this state are working on doing the same.

(5) Give customers who are” just looking” a price when they ask for it. It’s insulting to today’s sophisticated buyers to be told when they ask for the price that they can buy the car for, that they have to make an offer in writing with a deposit first. It’s also insulting when you tell the customer that you won’t give her a price until she’s “ready to buy”. Can you imagine being told this by a salesman at Best Buy when you asked the price of 50” Plasma TV? Your salesmen won’t give prices to your customers because they are afraid the customer will compare his price with the competition. This is what the free market place is all about! Customer should shop and compare. If you treat your customers with respect, integrity, and courtesy, they will return to you an offer you the right to meet or beat a lower price.

(6) Don’t advertise discounts from “dealer list” price. When you mark up the manufacturer’s list price by thousands of dollars and then advertise a discount, you are misleading you customers. The federal government has a law that every new car displays a “Monroney label” [named after the U.S. senator who sponsored this bill] on the window when it is sold. The reason for this law is to give car buyers a fair, even basis for comparing prices between different dealers. By confusing your customers between “dealer’s list” and “manufacturer’s list” you are circumventing the law.

(7) Don’t advertise lease payments that require large down payments hidden in the fine print. Most people lease cars to minimize their monthly payment. When your customer comes in on the ad finds out she has to pay $4,000 cash down to get the lease payment you advertised, it’s just plain wrong. There are some dealers who actually advertise prices with a qualification that the customer pays an additional sum first to get the advertised price.

(8) Do not advertise that you can get anybody financed no matter how bad their credit. This is not true and just plain cruel, especially during these terrible economic times with very tight credit.

(9) Don’t guarantee the lowest price with qualifications that cannot be met. Your qualifications are usually that you “reserve the right to buy the other car from the other dealer who beat your price” and that the customer must have a signed buyer’s order from the other dealership. You know that the other dealer will never agree to sell you that car and you also know that the chances of the customer getting out of the dealership with a signed buyer’s order without taking delivery are slim and none. Dealers reading this, I dare you to show me evidence that you have honored your guarantee with jus one customer. I’ll make you a bet that you have never honored that guarantee.

(10) Don’t offer a minimum $10,000 [or some other high number] for every trade-in. Sometimes these ads, say “if you can push, pull, or drag your old car in we will give you at least $10,000 toward the purchase of a new car. You then mark up the new car so high, you are not really offering the customer anything more than the wholesale value, if that.

Nitrogen Scam and Cover-up by PB County Commission?

2010-09-27T13:55:00.001-04:00

Regular readers of my blog and Hometown News column will know that I’ve been spreading the word about the “nitrogen in tires” scam for several years. My first column was “Don’t Pay for Nitrogen in Your Tires in early 2007. Subsequently I wrote “Nitrogen and Shark Cartilage”, “Nitrogen Scam Foisted on Palm Tran”, and most recently “Tests Say Nitrogen Doesn’t Improve Fuel Economy in PB County Buses”.

Just to bring new readers up to speed on this issue, I’ll summarize my position on the false claims that buying Nitrogen to put in your tires will improve your fuel economy, lengthen tire life, and improve your driving safety.

(1) Over three years ago, Consumer Reports magazine revealed the results of a yearlong test of the effectiveness of Nitrogen to improve fuel economy. They concluded that Nitrogen was worthless in improving fuel economy, tire wear, or safety.

(2) In 2007, Chuck Cohen, the executive director of the Palm Tran, the PB County bus system, announced that he was investing $60,000 of taxpayers’ money in equipment to put Nitrogen in all tires on his buses to “save the taxpayers” lots of money on diesel fuel and tires. He said that there was a study being conducted to judge whether this idea was a good one. When the results of the study were revealed about one year later, the conclusion was “From the previous data analysis we conclude that there is yet no observable effect in the fuel efficiency due to nitrogen tire inflation for group of buses in this experiment.” It was after this that I wrote my last column on this subject.

(3) Astoundingly, when I followed up with Chuck Cohen do learn when he would stop wasting our money putting Nitrogen in his bus tires, he told me that he didn’t like the results of the test and was going to conduct another. He told me that he would make public the results of the second round of tests within the year. That was almost two years ago and no test results so far.

(4) Finally, my main interest in the Nitrogen scam is that so many car owners are paying car dealers to put Nitrogen in their tires. One dealer in Stuart actually was charging $199. Many dealers are adding Nitrogen to the price on the window sticker and many others are selling it in the service drive.

The thing that really angers me most about what Palm Beach County is doing is that it provides unscrupulous car dealers with an argument to sell Nitrogen to their unsuspecting customers. If the customer asks why she has to pay an extra $150 because the dealer added Nitrogen to the tires in the car she’s buying, the salesman simply says, “Do you think Palm Beach County would be using Nitrogen in their bus tires if it wasn’t a good idea?” By the way, the Palm Beach County Sheriff’s department opted not to use Nitrogen in their tires.

The local municipalities are nearly bankrupt and all of them are cutting back on city and county workers and services to us taxpayers. Recently Port St. Lucie laid off a large number of police officers. Why don’t they look inward and stop wasting our money on the Nitrogen scam?

“Tell- All” Book by Auto Czar, Steven Rattner

2010-09-20T12:02:00.001-04:00

When I heard a few weeks ago that Steven Rattner was writing Overhall, “an insider’s account of the Obama Administration’s emergency rescue of the auto industry”, I couldn’t wait to read the book. It was supposed to be released by the publisher in October and I pre-ordered it on Amazon.com immediately. I was so excited when I got an email from Amazon telling me that the book had been released early and it came in the mail on Thursday, September 16. I began reading it immediately and finished it over the weekend.

What a letdown! I guess the purpose of this column is to save you $27 in the bookstore or $17.95 on Amazon. Do not buy this book unless you would like to read some cute quotations from President Obama like “Why should we save GM?” and “Why can’t GM build a Corolla”...Or from the President’s Chief of Staff, Rahm Emmanuel, “F**k the U.A.W.!”

The author, Steven Rattner, obviously had two reasons for writing this book. The first and most obvious was to make a lot of money and that goes without saying. The second one is pretty obvious too which is to tell the World how he singlehandedly saved the American auto industry.

When rumors began circulating over two years ago that the government was looking for an “auto czar’ to rescue Detroit, GM, Chrysler, and the UAW…not necessarily in that order, I jokingly sent my resume to President Obama. I had a hunch that they would pick somebody without a clue about auto manufacturing or retailing and that it would be a politically motivated choice. Boy was I right! Steven Rattner’s background is as a journalist for the NY Times, writer of Op-ed articles for various newspapers, investment banking, but his key endeavor was as a professional Washington D.C. insider and fundraiser for the Democratic Party. He dates back to Jimmy Carter, counts Al Gore as a close friend, and was a big fund raiser for Bill Clinton, Hillary Clinton, and, last but not least, Barrack Obama. His appointment as auto czar was to pay off a political I.O.U.

I surprisingly agree with some of what he has to say in the book. He fully understands that General Motors and Chrysler dug their own graves by mismanagement and then tried to blame their woes on the great global recession. It’s his lack of understanding of business, capitalism, and the free market system which allows him to conclude that running a business badly is no reason for a company to fail.
He inexplicably thinks that the American auto industry is represented by GM and Chrysler. How can he believe that Ford, Toyota, Honda, Volkswagen, BMW, Mercedes, Hyundai, Nissan don’t represent the American auto industry far more importantly than GM and Chrysler? These other manufacturers build better cars according to all objective third parties like Consumer Reports and JD Powers. Many of these manufacturers build most of their cars in America using American part suppliers and American workers. You can argue that “the profits are sent overseas’, but the profits go to the stockholders. Any American can buy stock in Toyota or any other foreign owned company. The American car-buyer would get along just fine without GM and Chrysler products. As far as the United Auto Workers union is concerned, they would be forced to earn their money rather than “bask in the sun of entitlements” they demanded and received from GM and Chrysler.

Steven Rattner says there’s a good chance GM and Chrysler are going to survive but then again what else can he say? He hedges a bit on whether or not we taxpayers will get back all of the $80B we gave them. I can see why he’s nervous about that. About the time he was finishing his book, Ed Whitacre (GM CEO #3 in the last year and a half) said GM would sell their IPO stock before the election and raise enough to pay back all of the money owned the taxpayers. But GM CEO #4, Dan Ackerson, suddenly replaced Whitacre and now he says GM won’t be able to repay all of the money like Ed said and won’t be going public with the IPO this year after all.

Oh, I almost forgot. Steven Rattner suddenly resigned as Auto Czar when it was made public that his investment company, Quandrangle, is under investigation by the New York Attorney General. It seems that Rattner’s company had been making payments to an indicted intermediary, Hank Morris. Morris is an associate of the New York state pension plan and was helping Quandrangle raise money from the New York state pension plan. Maybe the taxpayers will have to bail out Rattner next?

CASH FOR CLUNKERS COVER UP?

2010-09-15T14:08:00.000-04:00

“Cash for Clunkers” aka CARS, the government stimulus program for the auto manufactures and dealers last August was generally regarded as one of the more effective stimulus programs of the Obama administration. It cost us taxpayers $3 Billion but it sold almost one million new cars. There are arguments on how many extra new cars it sold and how many of those that were sold would have been sold eventually anyway. But, overall, it is generally considered a far more effective stimulus than TARP and certainly a lot less expensive.

What puzzles me is why there is so little media coverage of the fact that most customers who bought new cars under this program did not receive a fair trade-in for their clunker. There was a class action lawsuit filed in New York against one of the largest dealer groups in the country on this point and the Oregon Attorney General has ruled that all car dealers must pay their clunker customers what they received from the salvage yards to which they sold the clunker. Both of these incidences received virtually no national or local media coverage.

In my judgment, the clear intent of the Cash for Clunkers program was that the buyer should receive a trade-in allowance commensurate with the value of her clunker, just like a normal sale with a trade-in would. Unfortunately, the government did not make this abundantly clear and therefore most car dealers took advantage of this “loophole”. Most car dealers allowed hundreds of dollars less than they actually sold the clunkers to salvage yards for. Some dealers gave their clunker customers absolutely nothing for their trades.

I read in the auto manufacturer/dealer trade publication, Automotive News, that the average trade-in allowance estimate for clunkers was $75. Since the government did allow the dealer to keep $50 for administrative costs, this meant that the average clunker customer netted $25. I sold 286 new Toytota in the clunker program and my average sale to the salvage yards was for $445. If this average applied nationally to the one million clunkers, this would mean that car buyers under the clunker program were underpaid on their trade-ins by about $400 million.

One has to ask, why the media is ignoring this at least ethical violation which has cost American car buyers hundreds of millions of dollars. I can think of only one reason and that is the fact that car dealers and manufacturers are among the largest advertisers. Asking the same question of why the NHTSA doesn’t take action I can think of only one reason too. That is that the National Automobile Dealers Association, NADA, is a very powerful lobbying group. They are so powerful that they were able to at least temporarily halt the cancellation of GM and Chrysler dealers by GM and Ford which was mandated under the government bailout program.

The amount that a clunker was sold to a salvage yard for is a matter of public information and should be available from NHTSA under the Freedom of Information Act. If you bought a car under this program, you might be interested to know how much you should have received as a trade-in vs. how much you actually received. I’m working on accessing this information and I will advise all of my readers when I’m successful.

What to do if you are Treated Badly by a Car Dealer

2010-09-07T13:37:00.000-04:00

Hopefully the sales or service experience with your car dealer went well. But, sometimes they don’t. Now what? The advice I give you applies to all business transactions, not just car dealerships.

Your first step should be to communicate your complaint ASAP to the General Manager or, preferably, the owner. Be sure that you are talking to the real owner or the real general manger. A General Manager is over all employees in the entire company. A general “sales” manager is not a General Manager. If you can’t reach the owner (Many car dealerships are either publicly owned or owned by absentee owners), ask to see the General Manager. Often times the owner or General Manager is not aware of everything that goes on with all of their customers and employees. They might have new employee that should not have been hired or received inadequate training. Or, they may simply have a “rotten apple” that should not be working there. The ease and speed with which you can meet and speak to a General Manager or an owner is a pretty good measure of the integrity of the company as whole. If the owner or General Manager cares enough about her customers to allow total access, it is probably a very good place to do business. In fact, it is a good idea to find this out before you do business.

If you cannot reach the owner or General Manager, contact the manufacturer who franchises the dealership. Car dealers have a contract with the manufacturer called a franchise agreement and this contractual agreement requires that they treat their customers with courtesy, efficiency and integrity. Most manufacturers have a customer hotline that allows you to call and register a complaint directly. The owner or General Manager of the dealership will be made aware of your complaint. As you might guess, the manufacturer has quite of bit of clout with their dealer. If a dealer does not live up to his side of the contract, his franchise could be canceled or not renewed.

The third step I recommend, if numbers one and two don’t work, is to contact a consumer agency like The Better Business Bureau or the County Office of Consumer Affairs. These agencies will send your complaint to the dealership and request a written reply. No car dealership or business wants an unanswered complaint in the file of a governmental or private consumer agency.

The 4th step is to call the Florida Department of Motor Vehicles, DMV, and/or the Florida Attorney General’s office. These are extreme steps to be used for serious, even illegal, activities. The DMV has the power to suspend or cancel a dealer’s motor vehicle retail license, putting him out of business. The Attorney General’s Office can file criminal charges and assess large fines, even jail terms. The DMV phone number is (850) 617-2000 and the Attorney General’s phone number is 866-966-7226.

Your last resort is to contact an attorney. I list this last because hiring an attorney just about eliminates the possibility that you can quickly, amicably and inexpensively resolve your differences with the car dealer. Be very careful which attorney you choose. Try to choose one that is primarily interested in helping you and not in generating large fees for himself. Under the Florida Unfair and Deceptive Trade Practices Act, an attorney is entitled to his fees and costs from the defendant in a lawsuit if he wins. These fees can be much larger than the amount of your claim, motivating an unethical attorney to spend more time than is needed and dragging out a case to generate more fees than are necessary. This can be very dangerous for you because the car dealer’s attorney’s fees run roughly parallel to your lawyer’s and you can be held liable for those if you lose the case.

Hopefully you never have to resort to the final step of hiring a lawyer. In trying steps one, two, three and four try to present your complaint as concisely and politely as possible. You have every right to be angry when you are taken advantage of, but try to let your anger subside before you speak to or write to someone about your problem. We all react negatively to someone who is profane, raises his voice, or is sarcastic. Your goal of communicating and resolving your complaint is best reached by communicating clearly, politely and concisely.

Earl’s List of the Best and Worst Car Dealers: Treasure Coast to Northern Broward County

2010-08-23T13:00:00.003-04:00

I must explain that those dealers listed as “Good Guys” are far from perfect. I urge you to shop and compare prices, stick up for your rights, and do your homework in preparing to buy. South Florida is the Sodom and Gomorrah of the retail car business. Listing the best dealers is like listing the most honest inmates in Attica or Leavenworth.

I arrived at my opinion of these dealers, the good and the bad, from my constant interaction with you, the car buyers of South Florida. You call my weekly Saturday morning talk show, Earl Stewart on Cars, my cell phone, you send me emails and you write me letters about your experiences in buying and servicing your cars. You post comments on my blog, www.EarlStewartOnCars.com.

This list is not static and I will vary it regularly, adding more “good guys” and dropping the undeserving from the list. Hopefully, I will not have to add to the “bad buy” list but I will if I have to. These dealerships are the worst of the worst and should be totally avoided at all costs. You would be better served to drive an extra 50 miles to buy the make car you seek than buy it from one of these dealers. In fact, you would be better served to buy a different make from a good dealer.

I know I’ve angered a lot of car dealers (so what else is new?) by leaving them off the “good guy” list and especially the bad guys. I urge those of you who are sincere to call me personally and I will be glad to discuss with you what your customers told me about you that led me to omit you from the “good guy” lists. The “bad guys” won’t call me because they know exactly what they are doing and how they are premeditatedly deceiving their customers.

If the make car you are seeking does not show a dealer, it’s probably because not many people by that make. I listed only the most popular. I suggest that you choose a dealer a “good dealer” who is listed that also sells your make. For example, Schumacher also sells Mitsubishi and Infiniti and he is listed as a good dealer for Chevy and Buick.

The Bad Guys:

West Palm Beach Kia in West Palm Beach
Arrigo Chrysler Jeep Dodge in West Palm Beach
Delray Mazda-Kia in Delray
Ft. Pierce Nissan in Ft. Pierce
Palm Beach Acura in West Palm Beach
Napleton Nissan in Riviera Beach
Napleton Hyundai in North Palm Beach and West Palm Beach
Napleton Kia in Riviera Beach
Napleton Lincoln in North Palm Beach
Napleton North Lake Suzuki in North Palm Beach
North Jeep in North Palm Beach
Northlake Dodge in North Palm Beach

The Good Guys:

Acura
Coggin Acura in Ft. Pierce
Phil Smith Acura in Pompano

BMW
Coggin Motor Cars in Ft. Pierce
Vista Motor Company in Pompano Beach

Chevy
Maroone in Greenacres/Lake Worth
Maroone in Delray
Schumacher in North Palm Beach

Buick
Schumacher in North Palm Beach
Schumacher in West Palm Beach

Cadillac
Wallace in Stuart
Maroone in West Palm Beach
Coral in Pompano

Ford
Mullinax in North Palm Beach
Maroone in Delray

Honda
Coggin Ft. Pierce
Delray Honda in Delray
Pompano Honda in Pompano

Hyundai
Wallace Hyundai in Stuart
Delray Hyundai in Delray

Lexus
JM Lexus Coral Springs
Palm Beach Lexus West Palm Beach

Mercedes
Mercedes of Delray in Delray
Mercedes Benz of Ft. Pierce in Ft. Pierce

Nissan
Wallace in Stuart
Maroone in Delray

Toyota
Because I own and operate a Toyota dealership in North Palm Beach, I don’t feel objective if I name myself to this list and I don’t want to be perceived as unfairly biased by eliminating some of my close competition from this list. Please feel free to call me personally (cell phone 561 358-1474) for advice on the Toyota dealers nearest you.

Did Congress “Beat” a Confession out of Toyota with a Rubber Hose?

2010-08-16T13:57:00.001-04:00

You may have read that in 25% of those cases involving innocent people imprisoned and later exonerated by DNA testing, those falsely imprisoned had “confessed” to a crime they did not commit. Since the discovery and implementation of DNA testing, hundreds of thousands of innocent men and women have been freed from our prisons, some on the verge of being executed. Unfortunately we will never know how many innocent people we have executed or how many are still in prison because there was no DNA evidence.

DNA testing of accused criminals is the result of applying the surging scientific knowledge we didn’t have only a few years ago. Analogous to DNA is the “black box” which used to be only in airplanes but now is being used increasingly in automobiles. This box contains scientific instruments that record the seconds and minutes before and after accidents. This black box can tell if the brake was applied and, if so, how long and how hard. It can tell us the same about the accelerator. Of course it can tell the speed, acceleration or deceleration and the direction the car is traveling.

Scientific tests like DNA have shown that, what we relied on most before for evidence, confessions and eye-witness accounts are extremely unreliable. How many innocent people were imprisoned or executed over the years by eye-witnesses or false confessions? We will never know.

If you’re a regular reader, you know where I’m going with this. The media has recently, but reluctantly, released the finding of the NHTSA that all of the black box tests on Toyotas so far have shown the crashes to be driver error. There is no evidence of any kind showing the electronic throttle controls or sticky accelerators to have caused one single crash or injury. In fact, the tests prove that the many drivers who swore their accelerators stuck and they could not brake to slow down or stop, never once applied the brake, clearly proving that they thought they were but instead were holding down the accelerator to the floor. I’m not suggesting that all of these drivers are lying so that they can sue Toyota, although there certainly some of that going on. I believe that these people firmly believe their foot was on the brake and not the accelerator the whole time. One woman was quoted as saying, I don’t care what the scientific evidence says, I know where my foot was. Similar statements have been made by eye-witnesses to crimes who were proven wrong by DNA tests.

All of this begs the question, why would Toyota or any innocent person or company confess to something they did not do. Back in the old days, that was an easy question to answer. Before we had the Miranda Act and before we videotaped confessions, all the cops had to do was “beat it out” of the accused. The cops can’t use rubber hoses anymore, but they can use psychological rubber hoses. They can make deals for shorter sentences or probation suggesting that if they are found guilty by a jury the sentence will be much, much worse. They can tell the accused that, if they don’t confess to this crime, the police will make a major effort to investigate them on a multitude of other possible crimes until they find something. The police can exert a large amount of duress without violating the rules. They can pretend that they have evidence they don’t, they can question an accused for long periods and repeatedly, they can suggest that they will let it be known on the street that the accused “ratted out” his friends, and they can shout and scream as much as they like. A big cop with a big gun can be pretty terrifying.

Scientific studies on false confessions have all come to the same conclusion. They all have one thing in common and that is a decision at some point during the interrogation process that confessing will be more beneficial to them than continuing to maintain their innocence. So there we have it. Jim Lentz, the President of Toyota Motor Sales, USA, Yoshi Inabla the President of Toyota of North America, and Akio Toyoda, the CEO of Toyota all felt they had far more to lose by telling the truth than by falsely confessing.

With the U.S. Congress and the National Highway Transportation Safety Association (NHTSA) fueled by a biased media on the attack, it would have been corporate PR hari kari for Toyota to blame their customers for the reported crashes. They had no choice but to apologize to Congress and the public and confess to a crime they didn’t commit because “confessing will be more beneficial to them than continuing to maintain their innocence”.

Now that Toyota’s innocence has been proven by scientific tests, you would think that somebody would apologize. Like Ray LaHood, chairman of NHTSA, who advised everybody driving a Toyota to “pull over to the side of the road and get out of the car”? How about Bart Stupak and John Dingell, the Congressmen from Michigan who are “in the tank” for the UAW who shouted at Jim Lentz to apologize to those families of those who his defective Toyotas had killed. The media will never apologize. In fact, they won’t even give the exoneration anywhere near the coverage they gave the erroneous allegations.

Journalistic Ethics in Car Advertising

2010-08-02T12:50:00.003-04:00

Does a newspaper, TV or radio station have a social or ethical responsibility to screen out advertisement obviously designed to trick their audience? How about an illegal advertisement? Should a newspaper print an advertisement and accept payment for this ad knowing that the ad violates the Florida Unfair and Deceptive Trade Practices Act or the Federal Truth in Lending?

Back in the eighties, a magazine titled Soldier of Fortune regularly ran help wanted ads for people looking for “hit men” and assassins. The ads were worded in such a way that no one could miss their implication. “Ex Green Beret, trained to kill, will do anything for $5,000”. Bob Spearman was the friend of a good friend of mine. Bob hired two men to kill his wife, Anita, through a Soldier of Fortune advertisement. They successfully killed his wife Anita, but bungled the job so badly that they were caught and spilled the beans on Bob Spearman. He was convicted and sentenced to life in prison without parole. Should Soldier of Fortune Magazine been charged in this crime? They were sued and have since stopped running “murderer wanted” classified ads.

I’m writing this article on Monday, August 2nd and on page 8E of today’s PB Post is a full page color advertisement for Napleton Nissan VIEW AD HERE Napleton probably spends more money advertising in the PB Post than any other car dealer and may be the paper’s largest advertiser. This ad and many similar do it run over and over, not just in the PB Post, but other newspapers and local TV and radio stations. This ad says you can buy a new Nissan Altima for $99 per month. In the fine print it says that the $99 payment is “subsidized by the dealer for the first 6 months”. It doesn’t say how much it’s subsidized and it doesn’t suggest the “source’ of the subsidy. This is deceptive enough, but what really grabbed my attention is that nowhere in the ad does it state the interest rate (Annual Percentage Rate), the number of monthly payments, or the amount of the down payment. Federal law, Truth in Lending, Regulation Z, requires that when an advertiser quotes a monthly payment he must also disclose the interest rate, number of payments, and down payment. Otherwise, how would a prospective buyer have any idea how much she was paying? Here’s some icing on the cake, the ad also increases the advertised price for “freight” but doesn’t say for how much (In past ads it was shown as $750). Of course, Nissan includes the freight cost in the price of the car. When Napleton charges you for the freight, you have paid for the freight twice! This is a violation of the Florida Unfair and Deceptive Trade Practices Act.

I blasted Bill McCollum for not using his office as Attorney General to police and regulate ads like this. His excuse is that he doesn’t have the manpower to do so. OK, Bill, how about making it the responsibility of the media to refuse to print obviously illegal or deceptive advertisements? This reduces the manpower requirement because there are far fewer major media outlets than car dealers.

The media righteously declares that “it’s not their job” to act as a police force. I guess that’s the defense Soldier of Fortune Magazine used too. What gripes me is that the media enjoys special protection, rights, and privileges that other businesses don’t under our Constitution. This is because they are supposed to help protect us by telling the truth about crooked politicians, businessmen, and bad guys in general. Another nonsense excuse I hear from the media is that the advertising department is separate. The guys and gals in the news and editorial departments claim to have no knowledge of what’s going on. Of course they do know that they would be out of job if the advertising department didn’t sell a lot of advertising. How could they be expected to tell Ed Napleton to clean up his act when he’s one of their largest advertisers? Of course, the top management of a newspaper, the publisher, has authority over all departments, news, editorial, and advertising. That’s why I personally met with a recent past publisher of the PB Post and voiced my views. Privately and off the record, he confessed that the survival of the paper via ad revenues “trumped’ doing the right thing.

Do me a favor. Write a letter to the editor of your local newspaper and tell him your views on those illegal and deceptive car ads that he continues to run. Saturday is a good day to find the most ammunition.

NEGOTIATING TO BUY A CAR

2010-07-26T11:46:00.000-04:00

Buying a new or used car is one of the last bastions of the negotiated price. In some countries, negotiation is fairly commonplace in retail stores, but in America virtually all products are sold at a fixed price. Some of us are simply not comfortable negotiating and most of us are not very good at it.

As I have said in previous columns, the best way to buy a new or used car in on the Internet. You can do your research on which car is the best to suit your needs, get guidance on what kind of price you can expect to pay, and finally get quotes from several dealerships on that specific car. However, everybody is not “Internet savvy” and if you are not, you may find it necessary to walk into a car dealership and negotiate for the lowest price.

If you are not comfortable with negotiation, the best advice I can give you is to bring someone along with you who is. Car sales people and sales managers are trained experts in negotiation. This is how they make their living. Here are some tips for you if you decide that you want to negotiate the best price on a car.

(1) If you have a trade-in, keep that separate from the negotiation. Negotiate the best price on the car you are buying and then negotiate the best price you can get for your trade-in. Don’t fall for the old “over allowance” on your trade-in ruse. This is where the dealer makes up the price of car you are buying higher so that he can make you think you are getting more for your trade-in.

(2) Never buy a car on payments alone. Always negotiate the best price you can for the car you are buying and then calculate your best payment when you have negotiated for the best interest rate.

(3) Be sure you understand how the dealer arrived at his retail price. Federal law dictates that a Monroney label be affixed to every vehicle with a manufacturer’s suggested retail price. Many dealers mark that up with another label, often referred to as a “Market Adjustment Addendum”. This markup can be several thousands of dollars.

(4) Expect the first price you are given to be substantially higher than what you can buy the car for. Sales people and sales managers are trained to “start high because you can always come down”. Don’t be afraid to offer substantially less than the initial asking price. You should look at just like the car salesman does, but the reverse…”start low because you can always go higher”. If the salesman excepts your first offer, you probably offered too much. In fact, shrewd car sales people are trained to always ask for more money, even if the offer is good one. This is because they don’t want to “scare off the customer” by telegraphing to the customer that he “left some money on the table”.

(5) If the sales person asks you for a deposit before he will begin negotiating, determine whether the deposit is refundable. Florida law requires a nonrefundable deposit be disclosed in writing on the receipt. If this is printed on your receipt, insist that this be waived in writing on your buyer’s order. If the dealer will not agree to this, be warned that he may be able to keep your deposit if you change your mind about buying the car.

(6) Be prepared for a lot of “back and forth” when the salesman takes your offer back to the manager. When you get close to finding a mutually acceptable price, the manager himself will often come to talk to you. Don’t be intimidated stick to your guns even when they tell you this is “positively, absolutely the lowest price”. Even if you think you do have the lowest price, a great strategy is to get up, walk out of the showroom, and get into your car to drive away. This will often precipitate an even better price. When you try this, the worst case scenario is that you really do drive home, but you can always return and buy the car the next day for the last price they quoted you. They may tell you that you have to buy today, but nine times out of ten that is a bluff. The only exception is when there are factory rebates and incentive expiring.

(7) The last day of the month really is a good time to buy a car. The salesman’s bonus money is maximized, the factory incentives are in effect, the managers are desperate to make their quotas, and it is the one time of the month when the buyer has the best edge in negotiation.

Caveat emptor “let the buyer beware” could have been written specifically for what you can expect when you walk into a car dealership to negotiate the best price. You are up against experts who negotiate for living. But, if you will follow my advice above, you should be able to hold your own and maybe even get a great deal.

Government Mandated Closing of Dealerships

2010-07-20T13:19:00.001-04:00

As you probably already know, our government “strongly encouraged” General Motors and Chrysler Corp. to close over 2,000 car dealerships nationwide. South Florida was severely impacted by this as lots of Chrysler, Jeep, Dodge, Saturn, Pontiac, Hummer, Saab, and other GM and Chrysler stores were shut down or told they must by the end of this year.

Last Sunday, a report was released by the Special Inspector of the Troubled Asset Relief Program (TARP), Neil Barofsky, that said “tens of thousands of jobs were lost” as a result of closing over two thousand car dealerships. The report said, “It is not at all clear that the greatly accelerated pace of the dealership closings during one of the most severe economic downturns in our nation’s history was either necessary for the sake of the companies’ (GM and Chrysler) economic survival or prudent for the sake of the nation’s economic recovery”.

Now, my first question is why was it necessary for our government to conduct a study on whether or not closing over two thousand businesses nationwide would result in greater unemployment? My dealership employees 134 people and there are a lot of satellite businesses that rely on my business like parts suppliers, printing companies, janitorial services, etc. If I closed my dealership it would result in more than 134 people being unemployed. If you multiply that by 2,000 it results in at least 268,000 men and women without jobs. I wouldn’t have to conduct a study after I closed my car dealership to tell me what was going to happen to my employees.

Even now, the consequence of this mandate to close down 2,000+ car dealerships is not obvious to our government. The U.S. Treasury department in response to the results of this study said, they “strongly disagree” with the report’s conclusions. They go on to say that closing over 2,000 car dealerships “not only avoided a potentially catastrophic collapse” but also “saved hundreds of thousands of American jobs”. What I want to understand is how closing over 2,000 retail outlets for any product can help the manufacturer of that product. The more locations that a company can offer their product to the consumer, the more product they will sell. Starbucks is a great example of this. McDonalds is another.

Now remember that virtually all car dealerships are not owned by the manufacturers. They are owed by people like me or large companies like Auto Nation or Penske Automotive Group. Closing a retail outlet has very little short or intermediate term cost savings on the manufacturer, but it does reduce the number of cars it sells. There’s a good argument to be made for the negative long term impact of having too many retail outlets. Too many competitors can make it difficult for individual dealers to sell enough cars to maintain the necessary financial strength to compete effectively. The free marketplace tends to mitigate this negative effect because the stronger dealers will survive and the weaker perish. But in the short and intermediate term there was nothing to be gained by this government mandated closing of so many retail outlets for GM and Chrysler. And, it’s the short term that concerns us in this greatest recession since the Great Depression. In fact, this massive dealership closing is causing fewer GM and Chrysler products to be sold. Don’t you agree that McDonald’s would sell fewer hamburgers if it closed 2,000 franchises?

Now, everybody is talking about falling back into another recession. I can’t figure out how we can fall back into another recession when we haven’t come out of this one yet. Nationwide we’re still looking at 10% unemployment in round numbers. For a while everyone said that unemployment was a “trailing indicator”, meaning that everything was going fine and adding jobs would just happen last. Now the pundits are saying it’s not a lagging indicator but a “leading” indicator. That means that when people don’t have a job they don’t buy much. When the consumer stops spending, retail stores stop selling, and manufacturers stop making things.

The one thing that everybody can agree on is that unemployment is a very bad thing and for our government to have caused “tens thousands” of Americans to lose their jobs is also a very bad thing. The bottom line is that our government doesn’t know the first thing about how to run a private business and should keep its nose out.

“General” Bill McCollum; Shame on You!

2010-07-13T18:19:00.001-04:00

We elected Bill McCollum to be our Attorney General, the chief law enforcement officer in Florida. Unfortunately, it seems that the only thing he has on his mind is being Governor of Florida. His actions in the AG’s office have suggested that he’s had this on his mind since his first day on the job as Florida’s Attorney General. From the get-go, he chose businesses and individuals to prosecute based on how much publicity it would generate and not on the negative impact on Florida’s citizens. A good example was the large sums of money he spent on, what seemed like thousands of TV commercials paid for by us taxpayers, featuring himself as the “protector” of Florida’s children from child molesters. Our money would have been better spent had he featured pictures of convicted, freed sex offenders than himself.

If there was any question how bad Bill wants to be governor, all you have to do is turn on your TV. Within 2 minutes you’ll see Bill and Rick (Scott) calling each other crooks and liars in political commercials. Rick Scott, a very wealthy businessman, has spent about $15M so far and Bill is catching up fast. In fact, he has caught up so fast that the PB Post wrote an editorial accusing him of using illegal campaign fund raising tactics. Suing the U.S. government over the new Health Care bill passed by the House and Senate and signed into law by President Obama was pure grandstanding. Every legal scholar knows that it has no legal merit and the purpose is to garner votes for governor.

Of course, my axe to grind with Bill McCollum is his politically motivated decision to give car dealers who practice unfair and deceptive advertising and sales tactics a “free pass”. The strong lobbying groups, the Florida Automobile Dealers Association (FADA) and the South Florida Auto Dealers Association (SFADA) have always supported Bill McCollum as have many individual dealers. Do you really think that car dealers give large sums of money to Bill McCollum because they want to protect the citizens of Florida? This is partially true because they do want to protect some citizens…those who are car dealers. And they want to protect those car dealer citizens from having the Florida Attorney General enforce the laws of Florida, specifically the Unfair and Deceptive Trade Practices Act as it specifically pertains to car dealers.

If you live anywhere in Florida, all you have to do is pick up your local newspaper and take a look at the auto classified section. Saturday is the best day to look because almost every car dealer likes to advertise on Saturday. In these ads you will see many ads that are actually illegal. Dealers advertise prices that don’t include their dealer fee which is required by Florida law. They advertise prices that don’t include “freight” which is already included in the price of the car by the manufacturer. They deduct what your down payment must be from the “price” they advertise understating the price by $3,000 or $3,500. They also deduct rebates from the price that you can only qualify for if you are a recent college graduate, an active member of the military, or if you drive the same make of car that they sell. This is all clearly illegal but I know of no dealer who has been charged with any of this.

It’s not like Bill McCollum can’t easily check any newspaper in the state, even from Tallahassee. He can do this online or he has AG representatives in every major community in the state. Also, what I just described to you happens just as blatantly on TV, radio, and in direct mail advertisements. The electronic ads are even more flagrantly deceptive. The fine print on TV is illegible and is flashed on the screen for such short time that you couldn’t read it if it were legible. The verbal disclosure is almost comical. They use a subdued voice and speed up the tape with the obvious intent of making it unintelligible.

Car dealers know that they can run any kind of advertisement and use any kind of deceptive sale tactic they want without fear of prosecution. This encourages the “bad guys” to run even more illegal ads. Another negative consequence is that this “hear no, see no, speak no evil” policy of our Attorney General forces the “good guys” to advertise in ways that they don’t like but feel they must. Imagine for a minute that you are a Nissan dealer. Your closest competing Nissan dealer advertises cars below his cost. If you sell a car for the price he advertises you will lose thousands of dollars. The way he gets away with this is by adding back in $3,000 + $740 + $799 + $500 to the advertised price. The $3,000 is the down payment the customer must pay. The $740 is the freight that the manufacturer has already included in the price once. The dealer fee is required by law to be included in the price. The $500 is only if you are a graduate of a 4 year accredited college within the last 6 months. The price the prospective customer sees in the ad is understated by over $5,000! If the “honest dealer” advertises his car in the newspaper at a price that he can make a profit on, he will drive business to the dealer who knows he can advertise anyway he wants without fear of prosecution. So the “good guy” has no recourse but to become a “bad guy”. He rationalizes this by saying that survival is our strongest instinct.

General McCollum, I would be happy to discuss this with you by phone or in person. If I’m off base, please set me straight. One thing you might want to do is pick up a Saturday copy of the Ft. Lauderdale Sun Sentinel, PB Post, or Miami Herald and read through the auto classified ads. Let’s talk about those ads if you’re not too busy slinging mud at Rick Scott. By the way, I’m not a supporter of Rick Scott.
You might be pleasantly surprised how much you would impress Florida voters if you cleaned up car dealer advertising and sales practices so that Florida car buyers wouldn’t be terrified to enter a showroom, as most are today.