I just received a letter and a follow-up phone call from an attorney who is representing a large group of buyers from one dealership who he is alleging was taken advantage of by a South Florida car dealer. He and his clients are readers of my column and he was asking my advice. All of these buyers are elderly. In fact, two have passed away since the lawsuit was filed. These buyers paid huge profits to this dealer, thousands of dollars more than an average profit on a new car which is typically under $2,000. These senior citizens came in to buy a car, but salesmen convinced them that leasing was a better option because they put so few miles on their cars (This is not true). This lawyer told me that, when he confronted the owner of the dealership, he admitted to making exorbitant profits on his clients and said, “It’s all legal and there is nothing you can do about it!”
It’s true that, when we get older, we drive less and put fewer miles on our cars. But that is not a good reason to lease a car instead of buy one. A car with fewer miles is worth more than one with a lot of miles, all things being equal. You have an advantage trading in a car that you own with low mileage. You will get a better trade-in allowance on your next purchase or you can sell it for more with low miles. In fact, you actually have a bigger advantage if you own a car with extraordinarily low miles. Leasing companies typically allow 10,000 or more miles per year, after which they add charge for each mile you have above that. If you put less than 10,000 miles per year on your car, they don’t “pay” you any money per mile. This lower mileage advantage goes to the leasing company.
After this dealer had given these customers a false reason convincing them they should lease instead of buy, he proceeded to get as much cash from these customers as he could squeeze out of them. If they were trading in a car, he undervalued the appraisal. He commanded large down payments (down payments are not normally necessary when leasing) with the excuse of “getting their payments down to what they could afford”. Remember that these customers came into the dealership with the mindset of buying, not leasing. They were prepared to make down payments, which are usually necessary on a purchase. They also had monthly payments in mind, based on purchasing. When you make a down payment on a lease and end up with a payment of about the same amount as if you purchased the car, you are paying the dealer a HUGE profit. After making a down payment and all of your monthly payments on a purchase, you own the vehicle. After making a similar down payment and similar monthly payments on a lease, you own nothing. What would have been equity in your car of thousands of dollars if you had purchased, was converted to profit for the dealer because you leased.
Don’t get me wrong, leasing is a viable alternative to buying but you must carefully analyze each option before you commit to one or the other. The best way to lease a car is to “buy it first”. I don’t mean that literally. But you should get your very best selling price on a car even if you would rather lease it. In past columns, I have told you how to get your best price. Decide first on the exact make, year, model, and equipment you want. Then, comparing “apples and apples”, get prices from at least three dealerships. Also, your Internet price is usually the lowest price. Don’t be fooled by “dealer fees”. Be sure you get an “out-the-door” price plug tax and tag only. Separate the shopping of the price on the car from your trade-in. Get at least three bids from other dealers of the same make to buy your trade-in. Offer the dealer you choose to buy your new car from the right of first refusal.
Now you have selected the dealer with the best price. Tell the dealer that you have changed your mind. You want to lease the car, not buy it. Tell him that you know that, when he calculates your lease payment, he should use your quoted price as the “capitalized cost” on the lease. This is the sum which, when applying the lease factor (interest rate) and residual value (what the lease car is estimated to be worth at the end of the lease), gives you your monthly payment. All lease companies also add something called a “lease acquisition fee”, as much as $800. This is just like a “dealer fee” and is profit for the leasing company and usually the dealer gets a piece of it. You may be able to negotiate that down, at least the dealer’s part of the profit. Now, tell him how many miles you typically drive and, if its more than the leasing company allows, include that extra cost into the lease so that you have no “surprises” at the end of the lease. Be sure that the dealer gets payments from several leasing companies. Different leasing companies offer different lease factors and sometimes different residuals. Your capitalized cost will remain constant, but you will choose the lease company with the highest residual and lowest lease factor which will result in the lowest payment.
I have one final warning about leasing. Just as a dealer will mark up the interest rate from the bank when you finance a car, a dealer will mark up the lease factor (interest cost) from the leasing company. Be sure that that the dealer has not done this on your lease contract. Agree to sign the lease contract only if the dealer will guarantee in writing that he has not marked up the lease factor that the leasing company charges.
Friday, June 29, 2007
Friday, June 15, 2007
When a Car Dealer Crosses the Line
Readers of this column know my thoughts about unethical advertising. I have written about advertising a very low price which is applicable to only one car that is always “gone” when you ask to see it. I wrote about advertising giant discounts on cars that are artificially marked up over MSRP. You have read several of my articles about dealer fees which are really just additional dealer profit, disguised as a federal, state, or local “official” fee. You probably know about “get em in the door” phrases like “no credit application refused” [They will accept a credit application from everyone, but they won’t approve everyone’s credit if they don’t like your application].
As bad and unethical as this kind of advertising is, it is not illegal and it is not an out and out lie. If a dealer made the above statements under oath, she would not go to jail for perjury. I was made aware of a direct mail advertisement recently that crossed over this line. It was a “personal letter” written by the general manager of a local dealership to owners of a particular make of car imploring those owners to sell their used car to this dealer. Several of my customers called me about this and some sent me the letter that they received.
This dealership’s general manager explained that she had stopped buying cars at the auto auctions to protect her used car customers from buying “Katrina flood cars”. Because she couldn’t buy cars from the auction, she therefore had to buy cars directly from the public. She also promised to pay “over book” for these cars because she was desperate for used cars. She didn’t comment about the higher price she would have to charge her used car customers for these cars that she paid so much money for.
I did a little checking on this and found out that this dealer rarely ever bought cars from the auction (just 5 so far in 2007). This general manager said that she normally bought over 200 cars a month from auctions. This is simply not so. This dealership doesn’t sell anywhere near 200 used cars per month and they trade in more used cars on their new cars than they can sell. In fact, they sell a lot of used cars at the auction because they cannot retail them.
The proof of the Katrina flood car problem was an article inserted in the envelope from a company named CarFax, whose business is researching the history of used cars for evidence of flood damage, collision, etc. My dealership and all responsible car dealerships screen all of their used cars with CarFax before they buy them or sell them to the public. The responsible auctions also screen their cars for problems like flood damage and do not sell cars like this at their auctions. If one should slip by the checks, the dealer could return the car to the auction.
This letter is simply a ploy to get you “in the door” based on a totally false premise. This general manager’s goal is to sell you a new or used car. They can and will offer you “over book” if you trade your used car in for new or used car because they can mark up the purchase price high enough to make it look like you are getting a great price for your trade-in. If you will not buy a car from them, they have no choice except to offer you as much below book for your car as they can get away with.
The bottom line is that the general manager of this dealership premeditatedly and deliberately made up a story to fool you and other potential car owners to come into her dealership. How can she get away with this? For one thing, direct mail advertising gets far less scrutiny than TV, radio, or newspaper. Also, because this is not directly an advertisement for new cars, the manufacturer will likely not get involved. The public who reads this letter doesn’t have the inside knowledge to know that they are reading a fairy tale written by a wicked queen that has a very bad ending.
As bad and unethical as this kind of advertising is, it is not illegal and it is not an out and out lie. If a dealer made the above statements under oath, she would not go to jail for perjury. I was made aware of a direct mail advertisement recently that crossed over this line. It was a “personal letter” written by the general manager of a local dealership to owners of a particular make of car imploring those owners to sell their used car to this dealer. Several of my customers called me about this and some sent me the letter that they received.
This dealership’s general manager explained that she had stopped buying cars at the auto auctions to protect her used car customers from buying “Katrina flood cars”. Because she couldn’t buy cars from the auction, she therefore had to buy cars directly from the public. She also promised to pay “over book” for these cars because she was desperate for used cars. She didn’t comment about the higher price she would have to charge her used car customers for these cars that she paid so much money for.
I did a little checking on this and found out that this dealer rarely ever bought cars from the auction (just 5 so far in 2007). This general manager said that she normally bought over 200 cars a month from auctions. This is simply not so. This dealership doesn’t sell anywhere near 200 used cars per month and they trade in more used cars on their new cars than they can sell. In fact, they sell a lot of used cars at the auction because they cannot retail them.
The proof of the Katrina flood car problem was an article inserted in the envelope from a company named CarFax, whose business is researching the history of used cars for evidence of flood damage, collision, etc. My dealership and all responsible car dealerships screen all of their used cars with CarFax before they buy them or sell them to the public. The responsible auctions also screen their cars for problems like flood damage and do not sell cars like this at their auctions. If one should slip by the checks, the dealer could return the car to the auction.
This letter is simply a ploy to get you “in the door” based on a totally false premise. This general manager’s goal is to sell you a new or used car. They can and will offer you “over book” if you trade your used car in for new or used car because they can mark up the purchase price high enough to make it look like you are getting a great price for your trade-in. If you will not buy a car from them, they have no choice except to offer you as much below book for your car as they can get away with.
The bottom line is that the general manager of this dealership premeditatedly and deliberately made up a story to fool you and other potential car owners to come into her dealership. How can she get away with this? For one thing, direct mail advertising gets far less scrutiny than TV, radio, or newspaper. Also, because this is not directly an advertisement for new cars, the manufacturer will likely not get involved. The public who reads this letter doesn’t have the inside knowledge to know that they are reading a fairy tale written by a wicked queen that has a very bad ending.
Friday, June 08, 2007
Should I Buy a Car or Have a Colonoscopy?
If you are over 55, you should have had a colonoscopy. If you haven’t, call your doctor because this could save your life. It did mine, but that’s another story. I had another colonoscopy yesterday and I have to tell you that it’s a very unpleasant experience, mainly from the mental anguish anticipation and the discomfort of the preparation the previous day. I had a lot of time to think about my procedure and I started thinking about how this experience parallels that of buying a car. It’s something you must do and has a very good benefit, but you dread the process.
This column, my 39th for Hometown News, has consisted mainly of suggestions and inside information that can make your new or used car buying experience less of a fearful occasion. If this is the first column of mine you have read, you can read all of them on my Blog, http://www.earlstewartoncars.com/. Some of the titles/subjects are “Always Get an Out the Door Price”, “Bait and Switch Advertising”, “Beware of Deceptive Internet Car Pricing”, “Beware of Direct Mail Car Advertising”, “Buying a Car When You Have a Credit Problem”, “Eight Steps to Ensure You Are Buying the Best Car for the Best Price”, “List Price and MSRP Might Not Be the Same”, “Negotiating to Buy a Car”, “Open Letter to Florida Car Dealers” (I, II, III, and IV), “Shop Your Financing and Trade”, “Should I Buy My Car at the End of the Lease?”, “Should I Lease or Buy my Next Car?”, “Should I Pay Cash or Finance My Next Car?”, “Should I Trade in My Old Car or Sell it Myself”, “Tell Your Car Dealer to be Nice”, “The Right Used Car is a Better Buy than a New Car”, “Translating Misleading Car Ads”, “What is the True Cost of that New Car?”, “What to do if You Are Treated Badly by a Car Dealer”, “When is a Car Sale Not a Car Sale?”, and “The Internet Price is the Lowest Price for a New Car”.
Almost every one of these articles originated from my customers’ and others’ experiences when buying cars from other car dealers. I get a lot of calls from people who have never bought a car from me. They call to tell me of their bad experience with another dealer and, when I get several calls on the same subject, I write a column on it. People often call me asking for advice or assistance after they have already bought, which is “closing the barn door after the horse is gone.” On more than one occasion I have called car dealers asking them to consider undoing a wrong they have caused one of their customers. I have to confess that I am “batting zero” on this effort. I won’t give up, however. I just made another call this afternoon on behalf of a customer whose installment sales contract, signed by her and the dealership had a higher interest rate than a second contract that the dealer sent to the lender. The customer told me she signed only one contract, the one she took home a copy of.
One thing that amazes me about these weekly columns that I have been writing for almost a year is that no car dealer has ever called me to complain or for any other reason. I have not been sued either. I think that says something about the truth of my articles. I’m not a lawyer, but I do know that you can’t successfully sue somebody for libel or slander if they write or say the truth. I know of one car dealer who threatened to cancel her advertising in the PB Post because she thought it owned the Hometown News. I am puzzled why not one single dealer would call me just out of curiosity. I don’t have a secretary and I don’t screen any of my calls…nor do any of my employees. They do know how successful my dealership is and how fast my sales are growing. They know that I am selling a lot of their former customers. Many of these new customers tell me how they told the other dealers why they chose to take their business elsewhere. I believe that before too much longer we will see some changes in the way other car dealers do business even if they refuse to call me, as I have repeatedly invited them to do. Sooner or later they will understand that treating your customers with courtesy and integrity is just plain good business.
I apologize for the 3 repeat columns. I am in the midst of move from to my new house and my computers have been out of commission until a few minutes ago. Next week I will be back in the swing of things with a fresh column.
This column, my 39th for Hometown News, has consisted mainly of suggestions and inside information that can make your new or used car buying experience less of a fearful occasion. If this is the first column of mine you have read, you can read all of them on my Blog, http://www.earlstewartoncars.com/. Some of the titles/subjects are “Always Get an Out the Door Price”, “Bait and Switch Advertising”, “Beware of Deceptive Internet Car Pricing”, “Beware of Direct Mail Car Advertising”, “Buying a Car When You Have a Credit Problem”, “Eight Steps to Ensure You Are Buying the Best Car for the Best Price”, “List Price and MSRP Might Not Be the Same”, “Negotiating to Buy a Car”, “Open Letter to Florida Car Dealers” (I, II, III, and IV), “Shop Your Financing and Trade”, “Should I Buy My Car at the End of the Lease?”, “Should I Lease or Buy my Next Car?”, “Should I Pay Cash or Finance My Next Car?”, “Should I Trade in My Old Car or Sell it Myself”, “Tell Your Car Dealer to be Nice”, “The Right Used Car is a Better Buy than a New Car”, “Translating Misleading Car Ads”, “What is the True Cost of that New Car?”, “What to do if You Are Treated Badly by a Car Dealer”, “When is a Car Sale Not a Car Sale?”, and “The Internet Price is the Lowest Price for a New Car”.
Almost every one of these articles originated from my customers’ and others’ experiences when buying cars from other car dealers. I get a lot of calls from people who have never bought a car from me. They call to tell me of their bad experience with another dealer and, when I get several calls on the same subject, I write a column on it. People often call me asking for advice or assistance after they have already bought, which is “closing the barn door after the horse is gone.” On more than one occasion I have called car dealers asking them to consider undoing a wrong they have caused one of their customers. I have to confess that I am “batting zero” on this effort. I won’t give up, however. I just made another call this afternoon on behalf of a customer whose installment sales contract, signed by her and the dealership had a higher interest rate than a second contract that the dealer sent to the lender. The customer told me she signed only one contract, the one she took home a copy of.
One thing that amazes me about these weekly columns that I have been writing for almost a year is that no car dealer has ever called me to complain or for any other reason. I have not been sued either. I think that says something about the truth of my articles. I’m not a lawyer, but I do know that you can’t successfully sue somebody for libel or slander if they write or say the truth. I know of one car dealer who threatened to cancel her advertising in the PB Post because she thought it owned the Hometown News. I am puzzled why not one single dealer would call me just out of curiosity. I don’t have a secretary and I don’t screen any of my calls…nor do any of my employees. They do know how successful my dealership is and how fast my sales are growing. They know that I am selling a lot of their former customers. Many of these new customers tell me how they told the other dealers why they chose to take their business elsewhere. I believe that before too much longer we will see some changes in the way other car dealers do business even if they refuse to call me, as I have repeatedly invited them to do. Sooner or later they will understand that treating your customers with courtesy and integrity is just plain good business.
I apologize for the 3 repeat columns. I am in the midst of move from to my new house and my computers have been out of commission until a few minutes ago. Next week I will be back in the swing of things with a fresh column.
Monday, June 04, 2007
TIPS ON NEGOTIATING TO BUY A CAR
Buying a new or used car is one of the last bastions of the negotiated price. In some countries, negotiation is fairly common in stores, but in America most 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 is 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 after 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 do what the car salesman does, but in reverse…”start low because you can always go higher”. If the salesman accepts 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 his offer was high.
(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 first 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 and 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 the 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 some of the shrewdest, experienced negotiators anywhere. But, if you will follow my advice above, you should be able to hold your own and maybe even get a great deal.
As I have said in previous columns, the best way to buy a new or used car is 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 after 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 do what the car salesman does, but in reverse…”start low because you can always go higher”. If the salesman accepts 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 his offer was high.
(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 first 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 and 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 the 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 some of the shrewdest, experienced negotiators anywhere. But, if you will follow my advice above, you should be able to hold your own and maybe even get a great deal.
The Owner of the Car Dealership is Accountable
Congress passed a law a few years ago that really shook up publicly owned companies. It’s called Sarbanes-Oxley, named after the Congressmen who sponsored the bill. Basically this law says that the CEO and other high echelon management of a public owned company cannot get of the hook from wrong doings because he claims he didn’t know what his employees were doing. I believe the same rules should apply to all businesses, even if their stock is not publicly held. The boss should always be held accountable for the actions of his employees and this should apply especially for car dealerships.
Most of the employees that the customer comes into contact with in a car dealership are paid on commission. Those employees get a percentage of the profit that the company makes on the transaction. Car sales people, service sales people (also called service advisors or assistant service managers), parts sales people, and the mechanical technicians who work on your car are mostly all paid on commission. This method of pay tilts the relationship between the customer and employee in somewhat of an adversarial manner. The employee wants the profit to be as high as possible but the customer wants it to be low. In a car dealership that has talented, fully engaged, and ethical management, this potentially adversarial relationship is kept in a fair balance. Without the oversight of upper and middle management and careful hiring practices, some employees will exploit a customer to increase his commission.
What brought the subject of this column to mind was a call I received yesterday from a 78 year old widow from Ft. Pierce. She called to thank me for writing my column and to tell me that she wished she had read some of my columns before she bought her 2005 used Mazda. This was the first car she had bought on her own. Her husband had always taken on this responsibility. She paid the dealership a huge profit on her purchase. She was sold a maintenance package that she believed cost only $25 but it really was $2,500. She was rushed to sign the papers at night because the dealership was closing. In the morning, when she realized the mistake, she drove back to the dealership and asked to back out the sale but was told it was too late. She was told she had signed all the papers and that they had already sold her trade-in even though she had not given them the title. When she asked to speak to the General Manager, three different employees identified themselves as the General Manager. I get a lot of sad calls like this.
The owner of that dealership should know what’s going on. I’m giving him the benefit of the doubt by saying that he doesn’t know because if he does know it’s even worse. The owner should look at the big picture and the long term view of his business. You can take advantage of customers and benefit in the short run, but you eventually “pay the piper” when your bad reputation spreads far enough. Most of the bad things I hear about car dealers from their customers are not illegal things. They are simply unethical and not the way one human being should treat another. Refusing to refund the money of an elderly, widow after she realized that she had been taken advantage of is not illegal, but it sure “stinks”. Jim Press is the top executive for Toyota over all of North America and he is also the only non-Japanese to occupy a place on Toyota’s board of directors. He was quoted in the book, The Toyota Way by Jeffrey Liker, as saying “It’s what you do for a customer when you don’t owe him anything that is the true measure of character. It’s like sticking up for somebody who can’t defend himself”. I really like this quote and I have it engraved on a plaque which I give out each month to the employee who wins the “Above and Beyond Award”. This award goes to our employee who does something for her customer above and beyond what the customer would have expected.
If you have a bad dealing with your car dealership, do your best to contact the owner. This is impossible with publicly held dealerships like AutoNation and United Auto Group, but you should be able to talk to their General Managers. If it’s privately owned dealership, don’t give up until you see the owner.
Most of the employees that the customer comes into contact with in a car dealership are paid on commission. Those employees get a percentage of the profit that the company makes on the transaction. Car sales people, service sales people (also called service advisors or assistant service managers), parts sales people, and the mechanical technicians who work on your car are mostly all paid on commission. This method of pay tilts the relationship between the customer and employee in somewhat of an adversarial manner. The employee wants the profit to be as high as possible but the customer wants it to be low. In a car dealership that has talented, fully engaged, and ethical management, this potentially adversarial relationship is kept in a fair balance. Without the oversight of upper and middle management and careful hiring practices, some employees will exploit a customer to increase his commission.
What brought the subject of this column to mind was a call I received yesterday from a 78 year old widow from Ft. Pierce. She called to thank me for writing my column and to tell me that she wished she had read some of my columns before she bought her 2005 used Mazda. This was the first car she had bought on her own. Her husband had always taken on this responsibility. She paid the dealership a huge profit on her purchase. She was sold a maintenance package that she believed cost only $25 but it really was $2,500. She was rushed to sign the papers at night because the dealership was closing. In the morning, when she realized the mistake, she drove back to the dealership and asked to back out the sale but was told it was too late. She was told she had signed all the papers and that they had already sold her trade-in even though she had not given them the title. When she asked to speak to the General Manager, three different employees identified themselves as the General Manager. I get a lot of sad calls like this.
The owner of that dealership should know what’s going on. I’m giving him the benefit of the doubt by saying that he doesn’t know because if he does know it’s even worse. The owner should look at the big picture and the long term view of his business. You can take advantage of customers and benefit in the short run, but you eventually “pay the piper” when your bad reputation spreads far enough. Most of the bad things I hear about car dealers from their customers are not illegal things. They are simply unethical and not the way one human being should treat another. Refusing to refund the money of an elderly, widow after she realized that she had been taken advantage of is not illegal, but it sure “stinks”. Jim Press is the top executive for Toyota over all of North America and he is also the only non-Japanese to occupy a place on Toyota’s board of directors. He was quoted in the book, The Toyota Way by Jeffrey Liker, as saying “It’s what you do for a customer when you don’t owe him anything that is the true measure of character. It’s like sticking up for somebody who can’t defend himself”. I really like this quote and I have it engraved on a plaque which I give out each month to the employee who wins the “Above and Beyond Award”. This award goes to our employee who does something for her customer above and beyond what the customer would have expected.
If you have a bad dealing with your car dealership, do your best to contact the owner. This is impossible with publicly held dealerships like AutoNation and United Auto Group, but you should be able to talk to their General Managers. If it’s privately owned dealership, don’t give up until you see the owner.
Saturday, May 12, 2007
Open Letter to Florida Car Dealers V
Ethical Car Dealers Attract the Best Customers
Dear Florida Car Dealer:
In past columns I have “confessed” to advertising and employing sales tactics in years past that I am not proud of today. I hasten to say that I never did anything illegal, but 20 to 40 years ago my ethical standards were a lot lower than they are today. I evolved and my customers evolved. Consumers today are far better educated, informed, and demanding than those of three decades back. As my business practices, sales tactics, advertising, and I as an individual improved, I noticed a very interesting, positive parallel improvement in the kind of customers my company was attracting. It was a sort of a “push-pull” phenomenon. I needed to get better to meet the expectations of my customers and, as I improved, I attracted a better kind of customer.
Today, my customers are smarter, more affluent, better educated, and “nicer”. There’s a good reason for this. For one thing, my advertising is totally ethical and honest. I don’t advertise used cars for $99, I don’t advertise that, if you buy vehicle you can get a second one free, and I don’t advertise a car below cost knowing that there is only one available which is next to impossible for the customer to buy. When you advertise like this, you attract people who are uneducated, gullible, naive or expecting “something for nothing”. The smart, fair dealing customers who know that “there is no such thing as a free lunch” buy their cars from me. I don’t surprise my customers with a dealer fee/doc fee ranging up to $1,000 which is nothing more than profit to you. In fact, many of my customers were almost yours, until you tried to “slip in” your dealer fee. A lot of my service customers used to be your service customers until they discovered that you charge an extra 5% or 10% on their service bill and tried to justify it by calling it “sundry supplies”, “shop supplies” or “environmental impact fee”.
So, you ask, what’s so great about having smart, educated, affluent, and nice customers? Well, for one thing, I don’t get sued like you do and I don’t get nasty letters from the BBB, County Office of Consumer Affairs, and Florida Attorney General’s Office. The last time I was sued was about 7 years ago. Ironically, my customer’s lawyer sued me because I settled a dispute with his client (my customer). After he wrote me a letter saying he was suing me I called his customer on the phone, drove out to her home, sat down with her and her husband at her kitchen table and settled our differences over a cup of coffee. This lawyer sued me because I had deprived him of the fee he would have charged her if he could have sued me. It’s an ongoing saga after all these years. It’s too long a story to tell here, but I will write a column about it one day. I’m guessing that the car dealers who read this column (and I know you do) have at least a half dozen lawsuits going on all of the time.
Another great thing about having nicer, smarter, more affluent customers is that they treat my employees and me with courtesy and respect, just like we treat them. I love to walk into my dealership because customers smile and wave and even stop me to tell me how well they were treated. Customers, who don’t see me in person, know that all they have to do is pick up one of four red phones located in the showroom, service drive, next to the service cashier, and in the body shop to be in immediate personal contact with me. I even give my customers my business card with my home phone number and my cell phone number. Most of the calls that I get are complimentary, just like my personal encounters. You wouldn’t do what I do because you couldn’t. Your secretary screens your phone calls and you wouldn’t dare give your home or cell phone number to a customer. By the way, if you aren’t familiar with my dealership, I probably sell a lot more cars than you do…I average about 475 a month. I have a lot more customers than you, so it’s not like I’m a little rural car dealer who can get away with what I do because I have so few customers.
Here’s another benefit of having such nice, intelligent customers. They don’t have unrealistic expectations like your customers. Remember that you probably tricked your customer into coming in with your advertising. If it worked and your customer bought a car from you thinking that you really could give him $10,000 minimum trade allowance on his car which was really worth only $500, you have reinforced his unrealistically high expectations. In his future dealings with you, he will continue to believe that he can get “something for nothing”. When you finally have to tell him “no”, he’s going to be mad, maybe even sue you.
There are other benefits, too numerous to mention, of having such happy, nice customers. Wouldn’t you like to come to work in that environment? Just think, no more law suits, no more nasty letters from governmental agencies, no more threats from the factory about your customer satisfaction index, and you could walk right through your service department or through your showroom without fear of being accosted by an irate customer. If you would like to give this a try, I would love to discuss it with you personally at any time. This is my 5th open letter to car dealers in this newspaper and I have yet to receive the first phone call…just a few nasty, anonymous emails. Maybe you will be the first to call.
Sincerely,
Earl Stewart
Dear Florida Car Dealer:
In past columns I have “confessed” to advertising and employing sales tactics in years past that I am not proud of today. I hasten to say that I never did anything illegal, but 20 to 40 years ago my ethical standards were a lot lower than they are today. I evolved and my customers evolved. Consumers today are far better educated, informed, and demanding than those of three decades back. As my business practices, sales tactics, advertising, and I as an individual improved, I noticed a very interesting, positive parallel improvement in the kind of customers my company was attracting. It was a sort of a “push-pull” phenomenon. I needed to get better to meet the expectations of my customers and, as I improved, I attracted a better kind of customer.
Today, my customers are smarter, more affluent, better educated, and “nicer”. There’s a good reason for this. For one thing, my advertising is totally ethical and honest. I don’t advertise used cars for $99, I don’t advertise that, if you buy vehicle you can get a second one free, and I don’t advertise a car below cost knowing that there is only one available which is next to impossible for the customer to buy. When you advertise like this, you attract people who are uneducated, gullible, naive or expecting “something for nothing”. The smart, fair dealing customers who know that “there is no such thing as a free lunch” buy their cars from me. I don’t surprise my customers with a dealer fee/doc fee ranging up to $1,000 which is nothing more than profit to you. In fact, many of my customers were almost yours, until you tried to “slip in” your dealer fee. A lot of my service customers used to be your service customers until they discovered that you charge an extra 5% or 10% on their service bill and tried to justify it by calling it “sundry supplies”, “shop supplies” or “environmental impact fee”.
So, you ask, what’s so great about having smart, educated, affluent, and nice customers? Well, for one thing, I don’t get sued like you do and I don’t get nasty letters from the BBB, County Office of Consumer Affairs, and Florida Attorney General’s Office. The last time I was sued was about 7 years ago. Ironically, my customer’s lawyer sued me because I settled a dispute with his client (my customer). After he wrote me a letter saying he was suing me I called his customer on the phone, drove out to her home, sat down with her and her husband at her kitchen table and settled our differences over a cup of coffee. This lawyer sued me because I had deprived him of the fee he would have charged her if he could have sued me. It’s an ongoing saga after all these years. It’s too long a story to tell here, but I will write a column about it one day. I’m guessing that the car dealers who read this column (and I know you do) have at least a half dozen lawsuits going on all of the time.
Another great thing about having nicer, smarter, more affluent customers is that they treat my employees and me with courtesy and respect, just like we treat them. I love to walk into my dealership because customers smile and wave and even stop me to tell me how well they were treated. Customers, who don’t see me in person, know that all they have to do is pick up one of four red phones located in the showroom, service drive, next to the service cashier, and in the body shop to be in immediate personal contact with me. I even give my customers my business card with my home phone number and my cell phone number. Most of the calls that I get are complimentary, just like my personal encounters. You wouldn’t do what I do because you couldn’t. Your secretary screens your phone calls and you wouldn’t dare give your home or cell phone number to a customer. By the way, if you aren’t familiar with my dealership, I probably sell a lot more cars than you do…I average about 475 a month. I have a lot more customers than you, so it’s not like I’m a little rural car dealer who can get away with what I do because I have so few customers.
Here’s another benefit of having such nice, intelligent customers. They don’t have unrealistic expectations like your customers. Remember that you probably tricked your customer into coming in with your advertising. If it worked and your customer bought a car from you thinking that you really could give him $10,000 minimum trade allowance on his car which was really worth only $500, you have reinforced his unrealistically high expectations. In his future dealings with you, he will continue to believe that he can get “something for nothing”. When you finally have to tell him “no”, he’s going to be mad, maybe even sue you.
There are other benefits, too numerous to mention, of having such happy, nice customers. Wouldn’t you like to come to work in that environment? Just think, no more law suits, no more nasty letters from governmental agencies, no more threats from the factory about your customer satisfaction index, and you could walk right through your service department or through your showroom without fear of being accosted by an irate customer. If you would like to give this a try, I would love to discuss it with you personally at any time. This is my 5th open letter to car dealers in this newspaper and I have yet to receive the first phone call…just a few nasty, anonymous emails. Maybe you will be the first to call.
Sincerely,
Earl Stewart
Friday, May 04, 2007
Top 10 Ways to Get Shafted by a Car Dealer
(1) Believe the newspaper and TV ads. It never ceases to amaze me how outrageous and unbelievable the car dealers’ claims are. Just when I think that they can’t get any worse, I see one that tops them all. Last month, one dealer was advertising in the newspaper and TV that if you bought one vehicle from him you got a second for nothing. The “facts and fine print” would reveal that the first vehicle was a very expensive one with a huge markup of over $6,000 and the second vehicle was only the “use” of one for two years... a lease. My father always said, “If it sounds too good to be true, it probably isn’t true”. Astoundingly, the general manager of this dealership had the unmitigated gall to say on TV, “This is not a gimmick”!
(2) Buy a car on impulse on the first day you start shopping. Can you believe that this is the way most people buy cars? It truly is. There is something about a new car that excites people and appeals to them on an emotional level. People let their feelings short circuit their logical thought processes. Overcome that emotion that tells you that you must drive home that shiny new car right now. Go home and think about it. Talk it over with your spouse and friends. Research the model of car you looked at and the price on the Internet. Always drive the car you chose before you sign any papers. You should take at least a week or two in the decision making process before you buy a car.
(3) Trade your old car in to the dealer you buy from without shopping its value. Most people have no idea what their trade-in is worth when they come in to buy a new car. They rely entirely on the appraisal by the selling dealer. The dealer can make it appear that he is giving you a lot of money for your trade by taking some of the high markup on the new car and showing it as part of the appraisal value. Check Kelly Blue Book (kbb.com) and Edumnds.com on the Internet. Get at least 3 bids from other dealers of the same make for your trade. Make the purchase of the new car and the sale of your trade two separate transactions. Remember that you do get a sales tax break by trading in your car to the dealer you buy from.
(4) Use the dealer’s financing without checking with your bank or credit union. Shop for the best price on your financing just like you shop for the best price on your trade-in and the best price on new your car.
(5) Believe it when they say “This low price is good today only”. This is one of the favorite ruses used by car sales people and dealers. In 99% of the cases, you can buy that car for the same or an even lower price later. The only time that you can’t is when factory incentives expire on a certain date, typically at the end of the month. If that is the claim, demand to see the written factory incentive by the manufacturer.
(6) Agree to “Make me a written offer with a deposit and I will submit it to my manager”. This is S.O.P at most car dealerships. This is to get you psychologically engaged in the buying process. Once you have signed a buyer’s order and written out a check, you will remain in the dealership for a while and are more likely to buy. The salesman knows that. Insist on getting their best price on the car you have selected. You should never make the first offer. Once you have their price, compare it with at least 3 other prices from other dealers on the same make and model.
(7) Agree to "Why not take this new car home and see how you like it?". This is the famous “puppy dog” technique so named because once you take a puppy dog home overnight, who has the heart to return it the next day? You, your neighbors, and friends will see that shiny new car parked in your driveway. It sure looks good! How can you explain to anybody that you didn’t buy it?
(8) Commit to “I’ll buy the car if you can get my monthly payments below $___.__” Most of us tend to think in terms of our monthly budgets. We might feel that we can afford a new car as long as it costs us less than $350 per month, but there is a big difference between $350 per month for 36 months and $350 per month for 72 months. I recommend that you finance a car for no more than 42 months, preferably 36.
(9) Believe “You have my word on that.” Be absolutely sure that every promise or commitment made to you by your sales person is in writing and signed by a manager. That salesman may not work there when you have occasion to ask for that “free loaner car” that he promised you anytime you bring your car in for service.
(10) Accept that “All dealers charge a dealer fee and we can’t remove it from the invoice.” In fact, all dealers do not charge a dealer fee. I don’t. But unfortunately most do charge this “gotcha” ranging from $495 to $1,000. It is true that Florida law (which should prohibit dealer fees entirely) requires that the dealer fee appear on all invoices. If you charge just one customer a dealer fee, you must charge everybody. The state legislators, in their infinite wisdom, decided if a car dealer is going to take advantage of even one buyer, he must take advantage of all of the buyers….never discriminate. But the loophole in this stupid law is for you to demand that the dealer reduce the price of the car by the amount of the dealer fee, making it a wash.
(2) Buy a car on impulse on the first day you start shopping. Can you believe that this is the way most people buy cars? It truly is. There is something about a new car that excites people and appeals to them on an emotional level. People let their feelings short circuit their logical thought processes. Overcome that emotion that tells you that you must drive home that shiny new car right now. Go home and think about it. Talk it over with your spouse and friends. Research the model of car you looked at and the price on the Internet. Always drive the car you chose before you sign any papers. You should take at least a week or two in the decision making process before you buy a car.
(3) Trade your old car in to the dealer you buy from without shopping its value. Most people have no idea what their trade-in is worth when they come in to buy a new car. They rely entirely on the appraisal by the selling dealer. The dealer can make it appear that he is giving you a lot of money for your trade by taking some of the high markup on the new car and showing it as part of the appraisal value. Check Kelly Blue Book (kbb.com) and Edumnds.com on the Internet. Get at least 3 bids from other dealers of the same make for your trade. Make the purchase of the new car and the sale of your trade two separate transactions. Remember that you do get a sales tax break by trading in your car to the dealer you buy from.
(4) Use the dealer’s financing without checking with your bank or credit union. Shop for the best price on your financing just like you shop for the best price on your trade-in and the best price on new your car.
(5) Believe it when they say “This low price is good today only”. This is one of the favorite ruses used by car sales people and dealers. In 99% of the cases, you can buy that car for the same or an even lower price later. The only time that you can’t is when factory incentives expire on a certain date, typically at the end of the month. If that is the claim, demand to see the written factory incentive by the manufacturer.
(6) Agree to “Make me a written offer with a deposit and I will submit it to my manager”. This is S.O.P at most car dealerships. This is to get you psychologically engaged in the buying process. Once you have signed a buyer’s order and written out a check, you will remain in the dealership for a while and are more likely to buy. The salesman knows that. Insist on getting their best price on the car you have selected. You should never make the first offer. Once you have their price, compare it with at least 3 other prices from other dealers on the same make and model.
(7) Agree to "Why not take this new car home and see how you like it?". This is the famous “puppy dog” technique so named because once you take a puppy dog home overnight, who has the heart to return it the next day? You, your neighbors, and friends will see that shiny new car parked in your driveway. It sure looks good! How can you explain to anybody that you didn’t buy it?
(8) Commit to “I’ll buy the car if you can get my monthly payments below $___.__” Most of us tend to think in terms of our monthly budgets. We might feel that we can afford a new car as long as it costs us less than $350 per month, but there is a big difference between $350 per month for 36 months and $350 per month for 72 months. I recommend that you finance a car for no more than 42 months, preferably 36.
(9) Believe “You have my word on that.” Be absolutely sure that every promise or commitment made to you by your sales person is in writing and signed by a manager. That salesman may not work there when you have occasion to ask for that “free loaner car” that he promised you anytime you bring your car in for service.
(10) Accept that “All dealers charge a dealer fee and we can’t remove it from the invoice.” In fact, all dealers do not charge a dealer fee. I don’t. But unfortunately most do charge this “gotcha” ranging from $495 to $1,000. It is true that Florida law (which should prohibit dealer fees entirely) requires that the dealer fee appear on all invoices. If you charge just one customer a dealer fee, you must charge everybody. The state legislators, in their infinite wisdom, decided if a car dealer is going to take advantage of even one buyer, he must take advantage of all of the buyers….never discriminate. But the loophole in this stupid law is for you to demand that the dealer reduce the price of the car by the amount of the dealer fee, making it a wash.
Monday, April 30, 2007
MY TRIBUTE TO THE GREATEST “CAR GUY”
Jim Moran died at 88 on Tuesday morning, April 24, 2007. Jim Moran is a common, Irish name but this Jim Moran was a very uncommon Irishman. He was the founder of the JM Family in Deerfield Beach which is made up of several companies, the largest being Southeast Toyota. They distribute new Toyotas to all the dealers in the southeast USA. His company was just ranked the 18th largest privately owned company in America. He was a multibillionaire when he died.
I first met Jim Moran at a meeting for Pontiac dealers in Ft. Lauderdale over 40 years ago. Jim had recently moved down from Chicago where he had sold Courtesy Ford, which he built to become the largest Ford dealership in the world. Previously he had done the same with a Hudson dealership. Jim grew up in Chicago. His parents were poor but he worked hard at various jobs, saving his money until he could buy a Sinclair gas station. He began selling a few used cars from his gas station and that’s what motivated him to buy a small Hudson dealership.
The reason Jim moved to Florida in the early sixties, was his doctor telling him that he had cancer and as little as six months to live. After he sold his Ford dealership and moved to Florida, he found out his doctor was mistaken. So, Jim got back into the car business. First he bought a small Pontiac dealership in Homestead. He soon sold that for a nice profit and built the biggest Pontiac dealership in the USA in Hollywood, Florida. He set his sights on his next project to be the first Volkswagen dealership on Miami Beach. Back in the sixties, the VW franchise was the most profitable franchise around. Volkswagen turned him down, so he took the money he had planned to invest in the VW dealership, $100,000, and bought a distributorship for a Japanese car that very few people had even heard of, named Toyota. The rest is history.
Some will say that Jim Moran was just plain lucky. Nobody wanted a Toyota distributorship in the sixties. The quality of Toyotas at that time was terrible and big American cars dominated the market. He may have been lucky, but he was also very, very smart, worked very hard, and I have never known anyone so focused on success. Beyond this, he was blessed with the God given talents of extreme charisma and the ability to find, train, and motivate great people to work for him. He built a network of dealers to sell Toyotas in Florida, Georgia, Alabama, South Carolina, and North Carolina. He also built a support structure for the dealers including a finance company, insurance company, car accessory company, JM Lexus (the largest Lexus dealership in the world) and a port preparation company. His other companies are now nationwide and service all makes of cars, not just Toyota.
I like to think I had a special relationship with Jim Moran. We were both “just a couple of Pontiac dealers” when we met. I bought my Toyota dealership in North Palm Beach/Lake Park in 1975. Those were the “wild and wooly days” in the car business. Jim Moran was an advertising genius as well as a car genius. His marketing and advertising techniques were copied by the Japanese to increase the sales of Toyotas in the rest of the USA when they realized that Southeast Toyota was outselling every other region. The “Toyotathon” was invented by Jim Moran. Top Toyota Japanese management had huge respect for Jim Moran. “Moran san”, they called him. He coached them on styling and designing Toyotas to suit American taste. He often flew to Tokyo in his private Gulfstream IV or V Jet to meet with the top management of Toyota. Jim Press, the highest ranking American in Toyota and the only non-Japanese member of Toyota’s board of directors was sent to work for Jim Moran at Southeast Toyota while he was being groomed for top management. It is a fact that Jim Moran positively and significantly affected the success of Toyota in America.
This is one of literally hundreds of eulogies that will be written about this man. Most will paint him to be perfect, a man for all seasons, and all things to all people. They will write about his charitable contributions, his family, and all of them good things he did during his life, which were significant. Because I knew Jim for a longer time than most and because I knew him very early in his career, I have a different perspective. Back in those days, the rules of the game were a little looser than they are today. There were fewer laws and regulations. It was the Wild, Wild West when it came to marketing cars. Jim Moran was blessed with incredible talents, including charisma, drive, and intelligence. He was the most competitive man I have ever known, the Michael Jordan or Tiger Woods of the car business. Like all great performers, he loved doing what he did better than anything…yes anything. Everything else in this great man’s life was secondary to his becoming the very biggest and best Hudson Dealer, Ford Dealer, Pontiac Dealer, Lexus Dealer, or Toyota Distributor in the world. Underneath the smooth facade was always the rough, tough Chicago Irishman. I don’t believe it is possible to be the best in the world at anything unless you are blessed, or is it cursed, with this kind of focus and ambition.
The last conversation I had with Jim Moran was his phone call to me about a year and a half ago. He had heard that I had just recovered from colon cancer surgery and called to ask how I was doing and wish me well. He reminded me about his doctors in Chicago telling him that he had cancer and as little as six months to live more than 40 years ago. He congratulated me on my dealership’s great increase in sales since I moved into my new, much larger dealership. Then he said to me, “Earl, I’ve been telling to build that new dealership for the last ten years!” We both laughed.
I am proud and lucky to have known Jim Moran. I learned a huge amount from him and I would have to say that he had a greater influence on my business life than anyone except my father.
I first met Jim Moran at a meeting for Pontiac dealers in Ft. Lauderdale over 40 years ago. Jim had recently moved down from Chicago where he had sold Courtesy Ford, which he built to become the largest Ford dealership in the world. Previously he had done the same with a Hudson dealership. Jim grew up in Chicago. His parents were poor but he worked hard at various jobs, saving his money until he could buy a Sinclair gas station. He began selling a few used cars from his gas station and that’s what motivated him to buy a small Hudson dealership.
The reason Jim moved to Florida in the early sixties, was his doctor telling him that he had cancer and as little as six months to live. After he sold his Ford dealership and moved to Florida, he found out his doctor was mistaken. So, Jim got back into the car business. First he bought a small Pontiac dealership in Homestead. He soon sold that for a nice profit and built the biggest Pontiac dealership in the USA in Hollywood, Florida. He set his sights on his next project to be the first Volkswagen dealership on Miami Beach. Back in the sixties, the VW franchise was the most profitable franchise around. Volkswagen turned him down, so he took the money he had planned to invest in the VW dealership, $100,000, and bought a distributorship for a Japanese car that very few people had even heard of, named Toyota. The rest is history.
Some will say that Jim Moran was just plain lucky. Nobody wanted a Toyota distributorship in the sixties. The quality of Toyotas at that time was terrible and big American cars dominated the market. He may have been lucky, but he was also very, very smart, worked very hard, and I have never known anyone so focused on success. Beyond this, he was blessed with the God given talents of extreme charisma and the ability to find, train, and motivate great people to work for him. He built a network of dealers to sell Toyotas in Florida, Georgia, Alabama, South Carolina, and North Carolina. He also built a support structure for the dealers including a finance company, insurance company, car accessory company, JM Lexus (the largest Lexus dealership in the world) and a port preparation company. His other companies are now nationwide and service all makes of cars, not just Toyota.
I like to think I had a special relationship with Jim Moran. We were both “just a couple of Pontiac dealers” when we met. I bought my Toyota dealership in North Palm Beach/Lake Park in 1975. Those were the “wild and wooly days” in the car business. Jim Moran was an advertising genius as well as a car genius. His marketing and advertising techniques were copied by the Japanese to increase the sales of Toyotas in the rest of the USA when they realized that Southeast Toyota was outselling every other region. The “Toyotathon” was invented by Jim Moran. Top Toyota Japanese management had huge respect for Jim Moran. “Moran san”, they called him. He coached them on styling and designing Toyotas to suit American taste. He often flew to Tokyo in his private Gulfstream IV or V Jet to meet with the top management of Toyota. Jim Press, the highest ranking American in Toyota and the only non-Japanese member of Toyota’s board of directors was sent to work for Jim Moran at Southeast Toyota while he was being groomed for top management. It is a fact that Jim Moran positively and significantly affected the success of Toyota in America.
This is one of literally hundreds of eulogies that will be written about this man. Most will paint him to be perfect, a man for all seasons, and all things to all people. They will write about his charitable contributions, his family, and all of them good things he did during his life, which were significant. Because I knew Jim for a longer time than most and because I knew him very early in his career, I have a different perspective. Back in those days, the rules of the game were a little looser than they are today. There were fewer laws and regulations. It was the Wild, Wild West when it came to marketing cars. Jim Moran was blessed with incredible talents, including charisma, drive, and intelligence. He was the most competitive man I have ever known, the Michael Jordan or Tiger Woods of the car business. Like all great performers, he loved doing what he did better than anything…yes anything. Everything else in this great man’s life was secondary to his becoming the very biggest and best Hudson Dealer, Ford Dealer, Pontiac Dealer, Lexus Dealer, or Toyota Distributor in the world. Underneath the smooth facade was always the rough, tough Chicago Irishman. I don’t believe it is possible to be the best in the world at anything unless you are blessed, or is it cursed, with this kind of focus and ambition.
The last conversation I had with Jim Moran was his phone call to me about a year and a half ago. He had heard that I had just recovered from colon cancer surgery and called to ask how I was doing and wish me well. He reminded me about his doctors in Chicago telling him that he had cancer and as little as six months to live more than 40 years ago. He congratulated me on my dealership’s great increase in sales since I moved into my new, much larger dealership. Then he said to me, “Earl, I’ve been telling to build that new dealership for the last ten years!” We both laughed.
I am proud and lucky to have known Jim Moran. I learned a huge amount from him and I would have to say that he had a greater influence on my business life than anyone except my father.
AUTO BUYING PROGRAMS AT WHOLESALE CLUBS
Everyone is familiar with wholesale warehouse-style buying clubs. The stores always resemble warehouses and skimp on the typical amenities you find in a conventional retail department store. The products are often sold in bulk which sometime requires you to buy a lot more than you might need. Usually you have to help yourself and there are no sale people to assist you. The brands and products they buy change often because they buy large quantities of a particular brand when they can buy it a low price. You pay an annual fee to be a member. Some of the more popular and wider spread wholesale clubs are Costco, Sam’s Club, and BJ’s Wholesale Club.
In general, this concept works and prices are generally lower at these kinds of stores. It is easy to see how wholesale clubs can afford to sell products cheaper than conventional department stores. But most wholesale clubs have begun to branch out into other areas that are outside their original concept. One of these relative new areas is an “auto-buying service”. Unfortunately for the consumers, wholesale clubs are unable to buy cars from the manufacturers in bulk and pass along the savings to their customers like they do rice and TV sets. What the wholesale clubs do is sign agreements with car dealers like me who are supposed to sell you cars at a very low price. The car dealers pay the wholesale clubs a monthly fee for the privilege of being the exclusive dealer of that make authorized to sell cars to their members. The fee the dealer pays the wholesale warehouse increases their cost of sales to wholesale club members, but the theory is that the referral of members will increase their volume to more than offset this fee.
I am signed up with one local wholesale club and am in discussions with another. What disappoints me about these programs is that many wholesale club members buy cars from the dealer associates based on their trust in the wholesale club. The problem with this is that many dealers often do not abide by the prices they are supposed to quote. Dealers are supposed to have one person designated as the wholesale club member contact. But what often happens is that the first salesman who sees the wholesale member enter the showroom handles the sale. Salesmen are paid on commission and will mark up the price as far as they can get away with. Because wholesale clubs have hundreds of dealers and thousands of club members, it is impossible to police what is happening on the showroom floors during the sale to club members.
What all this means is that, just because you are a member of a wholesale club with an auto-buying program, don’t relax your vigilance when buying a car…even if it’s from the dealer endorsed by your wholesale club. There is a lot of due diligence that you must do before you pay a dealer for a new or used car. The most important is shopping and comparing prices on the same year, make, and model car you have decided on. You should get at least 3 “bids” and the Internet is the easiest place to do this. You should shop your financing separately and choose the dealer’s financing only if it is lower or competitive. You should shop the value of your trade-in separately, getting at least three bids on its value. When you have done all of this homework and preparation, only then venture into the dealership recommended by your wholesale club. Hopefully, the price from this recommended dealer will be lower, but I’m betting in most cases it won’t be. The wholesale clubs will show you statistics about the savings the club members have realized by using their recommended dealers, but these savings are from lots of people who did not do their homework, especially with competitive comparison of prices.
When you enter a dealership recommended by your warehouse club, insist on speaking to their designated representative. If he is off that day, come back when he is there. If you get an uneasy feeling about the price you are quoted or anything else regarding your visit then contact your wholesale club immediately and report it. Some wholesale clubs are taking steps against dealer fees, but some are not. The price that you and the wholesale club think you are paying often does not include the dealer fee which can range up to $900 or more. If your club does not insist that its dealers include their dealer fee (simply additional profit for the dealer) in their club pricing, they should.
In general, this concept works and prices are generally lower at these kinds of stores. It is easy to see how wholesale clubs can afford to sell products cheaper than conventional department stores. But most wholesale clubs have begun to branch out into other areas that are outside their original concept. One of these relative new areas is an “auto-buying service”. Unfortunately for the consumers, wholesale clubs are unable to buy cars from the manufacturers in bulk and pass along the savings to their customers like they do rice and TV sets. What the wholesale clubs do is sign agreements with car dealers like me who are supposed to sell you cars at a very low price. The car dealers pay the wholesale clubs a monthly fee for the privilege of being the exclusive dealer of that make authorized to sell cars to their members. The fee the dealer pays the wholesale warehouse increases their cost of sales to wholesale club members, but the theory is that the referral of members will increase their volume to more than offset this fee.
I am signed up with one local wholesale club and am in discussions with another. What disappoints me about these programs is that many wholesale club members buy cars from the dealer associates based on their trust in the wholesale club. The problem with this is that many dealers often do not abide by the prices they are supposed to quote. Dealers are supposed to have one person designated as the wholesale club member contact. But what often happens is that the first salesman who sees the wholesale member enter the showroom handles the sale. Salesmen are paid on commission and will mark up the price as far as they can get away with. Because wholesale clubs have hundreds of dealers and thousands of club members, it is impossible to police what is happening on the showroom floors during the sale to club members.
What all this means is that, just because you are a member of a wholesale club with an auto-buying program, don’t relax your vigilance when buying a car…even if it’s from the dealer endorsed by your wholesale club. There is a lot of due diligence that you must do before you pay a dealer for a new or used car. The most important is shopping and comparing prices on the same year, make, and model car you have decided on. You should get at least 3 “bids” and the Internet is the easiest place to do this. You should shop your financing separately and choose the dealer’s financing only if it is lower or competitive. You should shop the value of your trade-in separately, getting at least three bids on its value. When you have done all of this homework and preparation, only then venture into the dealership recommended by your wholesale club. Hopefully, the price from this recommended dealer will be lower, but I’m betting in most cases it won’t be. The wholesale clubs will show you statistics about the savings the club members have realized by using their recommended dealers, but these savings are from lots of people who did not do their homework, especially with competitive comparison of prices.
When you enter a dealership recommended by your warehouse club, insist on speaking to their designated representative. If he is off that day, come back when he is there. If you get an uneasy feeling about the price you are quoted or anything else regarding your visit then contact your wholesale club immediately and report it. Some wholesale clubs are taking steps against dealer fees, but some are not. The price that you and the wholesale club think you are paying often does not include the dealer fee which can range up to $900 or more. If your club does not insist that its dealers include their dealer fee (simply additional profit for the dealer) in their club pricing, they should.
Saturday, April 14, 2007
HOW TO COMMUNICATE BEST WITH YOUR CAR DEALER
As many of you know, I communicate directly with my customers. Some would say to a fault. I don’t have a secretary or administrative assistant. My dealership’s telephone receptionist never asks the caller “who’s calling” or “may I ask the nature of your call?” and she puts my calls (and the calls to all my employees) right through. If I am not in my office, she puts them through automatically to my cell phone…7 days a week. I also have four red phones in four locations of my dealership…the showroom floor by the receptionist, the service customer waiting lounge, outdoors in the service drive, and in the body shop waiting lounge. Each phone has a picture of me with the message, “Customer Hotline To Earl Stewart. The Buck Stops Here. Have We Not Exceeded Your Expectations? Please Let Me Know. Simply Pick Up The Receiver And Wait For Me To Answer.” As if all this wasn’t enough, I put my home telephone number and cell phone number on my business cards and pass them out to my new customers at our bimonthly New Owners Dinner.
I say all this, not to brag (or maybe just a little). It might surprise you that I am not deluged with phone calls. I get quite a few, but considering I sell 400-500 cars a month and service thousands of cars each month, I doubt if I average more that 25 calls per day. Most of them are positive, complimentary calls. I believe one reason for this is that my employees are motivated to work harder to satisfy my customers because they know, if they don’t, I’m going to hear about it very quickly. Another reason is that my customers are remarkably respectful of the fact that they can call me and do not take advantage of it. Frankly, my wife, Nancy, was very nervous about this when I first started passing out my business card with my home telephone number. Would you believe that I don’t get more than 5 or 6 home calls a week? When you extend your trust to people, they almost always respect that and do not take advantage.
Of course, you are not going to find a lot of car dealers who do what I do. But here is how you can improve your communications in other ways that will allow you to get problems solved and promises kept. Always ask for the business card of every person you deal with. If they don’t have a card, be sure to get their name. This improves your service right away because the person is no longer anonymous. Ask the person for his cell phone number. There was a time when it was considered wrong to call someone on his cell phone, but that was before cell phone rates became so cheap and the cell phone became universal. If this is a critical person you are dealing with, ask for his home telephone number too. Here is a little trick that I use when I do this. I always start out by giving them my cell phone and my home phone number. Then I say “and may I have yours?” I can’t remember ever having been refused. If someone you are doing business with refuses to give you his cell or home phone number, maybe you should wonder why.
Also, make it a point to be introduced to this person’s manager. Get the manager’s business card and as many contact numbers as he is willing to share with you. When you do this, you have put the salesman or service advisor on notice that if he doesn’t return your phone calls you will be calling his boss. If you really want to have an edge, ask to meet the general manager and/or owner of the dealership. Get his telephone numbers. Now you will have everybody’s attention when you come into the dealership to transact business.
If you are a “computer person”, collect email addresses from everybody you deal with. Email is not as timely as a telephone, but it has the advantage over the telephone because it is “on the record”. When you make a request of a person by email, he can’t deny it because you have a copy of the message. I know that with Microsoft Outlook email, I get an acknowledgement every time somebody opens an email that I sent them. Furthermore you can copy as many people as you like with an email. You can send copies that the primary recipient knows about or make them blind copies that he can’t tell were sent. Someone is a lot more likely to act on your request when he knows that it is a matter of record and his boss was copied with the email.
If you can force yourself into the habit of getting names, telephone numbers, and email addresses from everybody you deal with and their managers, conducting business with your car dealer (or any other business) will be much smoother and trouble free.
I say all this, not to brag (or maybe just a little). It might surprise you that I am not deluged with phone calls. I get quite a few, but considering I sell 400-500 cars a month and service thousands of cars each month, I doubt if I average more that 25 calls per day. Most of them are positive, complimentary calls. I believe one reason for this is that my employees are motivated to work harder to satisfy my customers because they know, if they don’t, I’m going to hear about it very quickly. Another reason is that my customers are remarkably respectful of the fact that they can call me and do not take advantage of it. Frankly, my wife, Nancy, was very nervous about this when I first started passing out my business card with my home telephone number. Would you believe that I don’t get more than 5 or 6 home calls a week? When you extend your trust to people, they almost always respect that and do not take advantage.
Of course, you are not going to find a lot of car dealers who do what I do. But here is how you can improve your communications in other ways that will allow you to get problems solved and promises kept. Always ask for the business card of every person you deal with. If they don’t have a card, be sure to get their name. This improves your service right away because the person is no longer anonymous. Ask the person for his cell phone number. There was a time when it was considered wrong to call someone on his cell phone, but that was before cell phone rates became so cheap and the cell phone became universal. If this is a critical person you are dealing with, ask for his home telephone number too. Here is a little trick that I use when I do this. I always start out by giving them my cell phone and my home phone number. Then I say “and may I have yours?” I can’t remember ever having been refused. If someone you are doing business with refuses to give you his cell or home phone number, maybe you should wonder why.
Also, make it a point to be introduced to this person’s manager. Get the manager’s business card and as many contact numbers as he is willing to share with you. When you do this, you have put the salesman or service advisor on notice that if he doesn’t return your phone calls you will be calling his boss. If you really want to have an edge, ask to meet the general manager and/or owner of the dealership. Get his telephone numbers. Now you will have everybody’s attention when you come into the dealership to transact business.
If you are a “computer person”, collect email addresses from everybody you deal with. Email is not as timely as a telephone, but it has the advantage over the telephone because it is “on the record”. When you make a request of a person by email, he can’t deny it because you have a copy of the message. I know that with Microsoft Outlook email, I get an acknowledgement every time somebody opens an email that I sent them. Furthermore you can copy as many people as you like with an email. You can send copies that the primary recipient knows about or make them blind copies that he can’t tell were sent. Someone is a lot more likely to act on your request when he knows that it is a matter of record and his boss was copied with the email.
If you can force yourself into the habit of getting names, telephone numbers, and email addresses from everybody you deal with and their managers, conducting business with your car dealer (or any other business) will be much smoother and trouble free.
Friday, April 06, 2007
CLASS ACTION SUES S.C. DEALERS ABOUT DEALER FEE
The Tallahassee law firm of Myers & Fuller is representing several car dealers that have been named as defendants in a class action suit along with almost every other new car dealer in the state of South Carolina related to the charging of dealer fees aka documentary fees, dealer prep, etc.
The plaintiff’s lawyers representing the class of consumers who are bringing the lawsuit claim that “the placement of such fees on a dealer’s buyer’s order or invoice is deceptive in that it implies that the fee is separate and distinct from the general overhead that car buyers expected to be included in the sale price for a car and that such placement suggest that the fee is mandatory”.
Readers of this column have seen several articles I have written about or mentioned dealer fees. Virtually every car dealer in Florida charges a dealer fee although it may carry some other label, like documentary fee or dealer prep fee. Several states have made this illegal and it looks like South Carolina may be next.
A particularly onerous part of the dealer fee is that dealers are legally required to “charge every customer this fee if he charges just one customer”. I supposed the lawmakers were well intentioned when they made this ruling, but like so many other well intended lawmakers, they inadvertently “bit the car buyer right in the butt”. I think their reasoning when they passed this law was to prevent car dealers from discriminating against the less informed and sophisticated buyers. In hindsight we can see how stupid this law is because it allows the car dealer to charge everybody the dealer fee, including the informed, sophisticated buyer.
Because virtually all car dealers in Florida charge this fee (My dealership is the only one I know that doesn’t), the car dealer overcomes objections to the dealer fee by saying “this is a fee that all Florida car dealers charge”. What is a car buyer to say? He has been told that everybody charges it and that it is illegal for the dealer to take it off his buyer’s order or invoice.
Florida did pass one law to protect the consumer against the dealer fee. This law says that the dealer must include the dealer fee in advertised prices (The price a salesman quotes you is not considered an “advertised price”). Many dealers don’t know about the law or simply ignore it. You can pick up the PB Post any weekend and find several car ads with prices that do not include the dealer fee. In the fine print at the bottom of the ad, it will say “plus dealer fees” or in some cases tell you the amount of the dealer fee. Florida law also provides a loophole in this law, which was the subject of my last column. The loophole is that dealer group ads don’t have to abide by the law!
Dealers who do understand the law and wish to abide by it have figured out a way to get around it. They simply pick one car of a particular model and advertise that price including the dealer fee. You don’t know that there is only one car available with the dealer fee included in the price. The only disclosure is a number along side the car like #2668A which is supposed to let you know that this is the only car available with the dealer fee included in the price. That innocuous number is the stock number of that particular car. There is usually another “gotcha” which is “price good on date of publication only” in the fine print. The ad often says something like “25 others available and similar savings”. The reason it says “similar” and not the “same” is because they add the dealer fee to the prices of the others. The chances are that the car they advertised is not the right color and equipment for you and, even if it were, the chances that they will have it there when you arrive are slim and none. If the odds aren’t already stacked totally against you, the sales people are often not paid any commission or a very small commission on all advertised cars. How easy do you think it will be to buy that advertised car from a salesman who can make a lot more money by selling you one without the dealer fee included?
The class action suit in South Carolina is symptomatic of the rising consumer awareness around the country. Today’s consumers are more educated and sophisticated than ever before. They are also less tolerant of being taken advantage of. Call me a “cockeyed optimist”, but I think it won’t be long before we see a law in Florida to protect car buyers from the dealer fee.
The plaintiff’s lawyers representing the class of consumers who are bringing the lawsuit claim that “the placement of such fees on a dealer’s buyer’s order or invoice is deceptive in that it implies that the fee is separate and distinct from the general overhead that car buyers expected to be included in the sale price for a car and that such placement suggest that the fee is mandatory”.
Readers of this column have seen several articles I have written about or mentioned dealer fees. Virtually every car dealer in Florida charges a dealer fee although it may carry some other label, like documentary fee or dealer prep fee. Several states have made this illegal and it looks like South Carolina may be next.
A particularly onerous part of the dealer fee is that dealers are legally required to “charge every customer this fee if he charges just one customer”. I supposed the lawmakers were well intentioned when they made this ruling, but like so many other well intended lawmakers, they inadvertently “bit the car buyer right in the butt”. I think their reasoning when they passed this law was to prevent car dealers from discriminating against the less informed and sophisticated buyers. In hindsight we can see how stupid this law is because it allows the car dealer to charge everybody the dealer fee, including the informed, sophisticated buyer.
Because virtually all car dealers in Florida charge this fee (My dealership is the only one I know that doesn’t), the car dealer overcomes objections to the dealer fee by saying “this is a fee that all Florida car dealers charge”. What is a car buyer to say? He has been told that everybody charges it and that it is illegal for the dealer to take it off his buyer’s order or invoice.
Florida did pass one law to protect the consumer against the dealer fee. This law says that the dealer must include the dealer fee in advertised prices (The price a salesman quotes you is not considered an “advertised price”). Many dealers don’t know about the law or simply ignore it. You can pick up the PB Post any weekend and find several car ads with prices that do not include the dealer fee. In the fine print at the bottom of the ad, it will say “plus dealer fees” or in some cases tell you the amount of the dealer fee. Florida law also provides a loophole in this law, which was the subject of my last column. The loophole is that dealer group ads don’t have to abide by the law!
Dealers who do understand the law and wish to abide by it have figured out a way to get around it. They simply pick one car of a particular model and advertise that price including the dealer fee. You don’t know that there is only one car available with the dealer fee included in the price. The only disclosure is a number along side the car like #2668A which is supposed to let you know that this is the only car available with the dealer fee included in the price. That innocuous number is the stock number of that particular car. There is usually another “gotcha” which is “price good on date of publication only” in the fine print. The ad often says something like “25 others available and similar savings”. The reason it says “similar” and not the “same” is because they add the dealer fee to the prices of the others. The chances are that the car they advertised is not the right color and equipment for you and, even if it were, the chances that they will have it there when you arrive are slim and none. If the odds aren’t already stacked totally against you, the sales people are often not paid any commission or a very small commission on all advertised cars. How easy do you think it will be to buy that advertised car from a salesman who can make a lot more money by selling you one without the dealer fee included?
The class action suit in South Carolina is symptomatic of the rising consumer awareness around the country. Today’s consumers are more educated and sophisticated than ever before. They are also less tolerant of being taken advantage of. Call me a “cockeyed optimist”, but I think it won’t be long before we see a law in Florida to protect car buyers from the dealer fee.
A LOOPHOLE IN THE DEALER FEE LAW
If you are a reader of my columns, you know all about the “dealer fee” scam perpetrated on car buyers in Florida and other states where it is still legal. This fee ranges from $495 to $995 and even higher. It is profit to the dealer but is printed on the buyer’s order, disguised as a “fee” meant to be confused with legitimate state, local, and federal fees, like sales tax and license fees.
Virtually every dealer in Florida adds a dealer fee to the price he quotes you on the car. In fact, when questioned, many dealers’ justification is that “all dealers in Florida charge a dealer fee”. Strange as it may seem, Florida law prohibits a dealer from removing the dealer fee from the price he gives a customer. If he charges one person a dealer fee, he must charge all people. This is also the rationale you might hear if you object which, is “Florida law will not allow me to remove the fee”. The way to counter this objection, when haggling about the dealer fee, is to tell the salesman to reduce the overall price by the amount of the dealer fee and leave the dealer fee alone.
The only control placed on dealer fees by Florida law is for advertised prices. This law says that an advertised price must include the dealer fee. Dealers get around this by advertising just one vehicle at an advertised price with “many more at similar savings”. If the one car that is advertised is already sold, the dealer can sell you one just like it and add back the dealer fee.
Unfortunately, I recently discovered that there is a loophole to this sole law to protect the car buyer from dealer fees. The loophole is that lease payments and prices advertised by multiple dealers in the same ad do not have to include the dealer fee. This means that if a manufacturer advertises a price on a new car listing several dealers, the dealer fee can be excluded. When I inquired about this, I was told that this is to permit manufacturers and distributors to advertise the same car priced from multiple dealerships. I was told that they cannot include the dealer fee because each dealer fee is usually different. That doesn’t sound like a very good excuse to me. Ads including multiple dealerships usually include the names, phone numbers, addresses, and Web site URL’s of each dealer. Why not list each dealer’s “dealer fee”? You know the answer as well as I…they don’t want you to know there is a dealer fee, much less the amount of the dealer fee.
The reason for the law requiring that advertised prices include the dealer fee is very clear. It is to prevent the consumer from being fooled into coming in on a low price and then charged a higher one. If that principle applies to one dealer’s ad, why doesn’t it apply to multiple dealers advertising in one ad? To comply with the same law applying to one dealer, all multiple dealer ads would have to say is “price plus tax, tag, and dealer fee” and beside each dealer’s name list his particular dealer fee. This would also encourage dealers to lower their dealer fees and even eliminate them entirely.
Because I don’t charge a dealer fee, when my dealership is included in an ad with seven other South Florida dealerships, I have the lowest price but the reader of the ad cannot know that. The ad says “plus tax, tag, and dealer fees” in the fine print at the bottom of the ad, but does not disclose the amount of the dealer fees for each dealer. The uninformed prospective car buyer can pay up to $995 more for that advertised car than he would pay at my dealership because the dealer fee amounts are not disclosed. Does that sound right to you?
Virtually every dealer in Florida adds a dealer fee to the price he quotes you on the car. In fact, when questioned, many dealers’ justification is that “all dealers in Florida charge a dealer fee”. Strange as it may seem, Florida law prohibits a dealer from removing the dealer fee from the price he gives a customer. If he charges one person a dealer fee, he must charge all people. This is also the rationale you might hear if you object which, is “Florida law will not allow me to remove the fee”. The way to counter this objection, when haggling about the dealer fee, is to tell the salesman to reduce the overall price by the amount of the dealer fee and leave the dealer fee alone.
The only control placed on dealer fees by Florida law is for advertised prices. This law says that an advertised price must include the dealer fee. Dealers get around this by advertising just one vehicle at an advertised price with “many more at similar savings”. If the one car that is advertised is already sold, the dealer can sell you one just like it and add back the dealer fee.
Unfortunately, I recently discovered that there is a loophole to this sole law to protect the car buyer from dealer fees. The loophole is that lease payments and prices advertised by multiple dealers in the same ad do not have to include the dealer fee. This means that if a manufacturer advertises a price on a new car listing several dealers, the dealer fee can be excluded. When I inquired about this, I was told that this is to permit manufacturers and distributors to advertise the same car priced from multiple dealerships. I was told that they cannot include the dealer fee because each dealer fee is usually different. That doesn’t sound like a very good excuse to me. Ads including multiple dealerships usually include the names, phone numbers, addresses, and Web site URL’s of each dealer. Why not list each dealer’s “dealer fee”? You know the answer as well as I…they don’t want you to know there is a dealer fee, much less the amount of the dealer fee.
The reason for the law requiring that advertised prices include the dealer fee is very clear. It is to prevent the consumer from being fooled into coming in on a low price and then charged a higher one. If that principle applies to one dealer’s ad, why doesn’t it apply to multiple dealers advertising in one ad? To comply with the same law applying to one dealer, all multiple dealer ads would have to say is “price plus tax, tag, and dealer fee” and beside each dealer’s name list his particular dealer fee. This would also encourage dealers to lower their dealer fees and even eliminate them entirely.
Because I don’t charge a dealer fee, when my dealership is included in an ad with seven other South Florida dealerships, I have the lowest price but the reader of the ad cannot know that. The ad says “plus tax, tag, and dealer fees” in the fine print at the bottom of the ad, but does not disclose the amount of the dealer fees for each dealer. The uninformed prospective car buyer can pay up to $995 more for that advertised car than he would pay at my dealership because the dealer fee amounts are not disclosed. Does that sound right to you?
Saturday, March 24, 2007
Consumer Reports is Your Best Friend in Choosing a Car
If you don’t already subscribe to Consumer Reports, you should. I have been a subscriber for as long as I can remember. I rarely buy any product without consulting this great magazine. I also subscribe to Consumer Reports online edition which is even more current than the regular magazine. I recently received their annual auto issue, which no car buying family should be without. All libraries would have this on hand.
Don’t be fooled by other magazines with similar names purporting to objectively analyze and recommend products. There is only one Consumer Reports. They do not except any advertising and therefore are not beholden to any corporation. They even go beyond this and will not allow a retailer or manufacturer to use the name Consumer Reports in their advertising. Even if Consumer Reports gives a product a great rating, that company cannot mention this in their advertising. If they do, they get sued by Consumer Reports. No other company goes this far and is this “squeaky clean”. J.D. Powers is a company that ranks and compares lots of products including cars, but they allow companies to use the JD Power name to advertise their products when they rated them good. You can understand why a consumer might be just a little more skeptical of J. D. Powers’ objectivity than Consumer Reports’.
I am not saying that Consumer Reports is infallible. They do make mistakes and they have been successfully sued by some companies that were affected by their mistakes in testing. But this is very rare. As a car dealer for over forty years, I have not always liked what I read about all of the makes and models of cars I have sold, but I grudgingly had to admit that the reports were almost always accurate. I have to confess that with some make and model cars I have sold over the years, I was very thankful that the circulation of Consumer Reports is not very large. Their circulation is growing as consumers become more educated and sophisticated. It’s not as easy as it once was to sell a Yugo to most consumers.
This annual auto issue which is on the newsstands now should be a mandatory read before you buy your next used or new car. Here are some of the articles in this issue…Top Picks (the best new vehicles they have tested), Best and Worst (tells you the ones you definitely shouldn’t buy), Coming for 2008, Who Make The Best Cars (best manufacturers), Buy Better on the Web (The Internet is the best place to buy your next car), Reliability trends (repair histories on all makes and models), What’s Next in Auto Safety, and Used Cars, Best and Worst.
Consumer Reports also offers other car buying services like their “New Car Price Service” which discloses the actual cost to the dealers, rebate and incentive information, negotiating strategies, and their expert recommendations. They also offer a “Used Car Price Service” which provides an evaluation tool kit that helps you establish the right price for most used cars made from 1995 to 2005.
Don’t be fooled by other magazines with similar names purporting to objectively analyze and recommend products. There is only one Consumer Reports. They do not except any advertising and therefore are not beholden to any corporation. They even go beyond this and will not allow a retailer or manufacturer to use the name Consumer Reports in their advertising. Even if Consumer Reports gives a product a great rating, that company cannot mention this in their advertising. If they do, they get sued by Consumer Reports. No other company goes this far and is this “squeaky clean”. J.D. Powers is a company that ranks and compares lots of products including cars, but they allow companies to use the JD Power name to advertise their products when they rated them good. You can understand why a consumer might be just a little more skeptical of J. D. Powers’ objectivity than Consumer Reports’.
I am not saying that Consumer Reports is infallible. They do make mistakes and they have been successfully sued by some companies that were affected by their mistakes in testing. But this is very rare. As a car dealer for over forty years, I have not always liked what I read about all of the makes and models of cars I have sold, but I grudgingly had to admit that the reports were almost always accurate. I have to confess that with some make and model cars I have sold over the years, I was very thankful that the circulation of Consumer Reports is not very large. Their circulation is growing as consumers become more educated and sophisticated. It’s not as easy as it once was to sell a Yugo to most consumers.
This annual auto issue which is on the newsstands now should be a mandatory read before you buy your next used or new car. Here are some of the articles in this issue…Top Picks (the best new vehicles they have tested), Best and Worst (tells you the ones you definitely shouldn’t buy), Coming for 2008, Who Make The Best Cars (best manufacturers), Buy Better on the Web (The Internet is the best place to buy your next car), Reliability trends (repair histories on all makes and models), What’s Next in Auto Safety, and Used Cars, Best and Worst.
Consumer Reports also offers other car buying services like their “New Car Price Service” which discloses the actual cost to the dealers, rebate and incentive information, negotiating strategies, and their expert recommendations. They also offer a “Used Car Price Service” which provides an evaluation tool kit that helps you establish the right price for most used cars made from 1995 to 2005.
Open Response to Al Sammartino: Nitrogen Filled Tires
This is my letter in reply to Al Sammartino’s letter to the editor of the Home Town News questioning the accuracy of my recent column, “Don’t Pay for Nitrogen in Your Tires” which ran in the March 2nd newspaper.
Dear Mr. Sammartino,
Thanks for your letter which raises some good questions. I will address the specific points made by you, but rather than turn this into a boring scientific, academic debate, I also have an interesting proposal for you. You and I will each fork over $10,000 to be held in escrow by an independent third party. We will select an impartial, qualified tester of tires like the American Automobile Association or the New England Technical Institute. We will ask this organization, using scientific method, to determine whether or not nitrogen filled tires cause a car to get better gas mileage and longer tire wear than tires filled with air. If the results are that nitrogen filled tires are proven to give statistically significant better gas mileage and wear, my escrow check will be donated to your favorite charity. If not, my favorite charity is the Salvation Army. Please call me on my cell phone, 561 358-1474 so that we can get started. It’s a win-win. Money goes to charity either way and one of us is going to learn something he didn’t know.
Before I address the points you made in your letter, I think it is only fair that the readers of my column and your letter know that you and I have met before. I was surprised that you didn’t mention that in your letter. I know that you will recall that the company owned by you, Coastal Automotive Equipment Sales, Inc. was an unsuccessful bidder three years ago when I was buying $250,000 worth of hydraulic lifts for my new service department. I only mention this in the interests of complete disclosure to our readers.
The first point I will address are your words “I’m not sure where Earl got his pricing”. This refers to my statement that car dealers were charging as much as $199 for nitrogen in four tires. I am enclosing a picture of a price sticker showing a $199 price from a dealer who may well be one of your nitrogen customers.
Dear Mr. Sammartino,
Thanks for your letter which raises some good questions. I will address the specific points made by you, but rather than turn this into a boring scientific, academic debate, I also have an interesting proposal for you. You and I will each fork over $10,000 to be held in escrow by an independent third party. We will select an impartial, qualified tester of tires like the American Automobile Association or the New England Technical Institute. We will ask this organization, using scientific method, to determine whether or not nitrogen filled tires cause a car to get better gas mileage and longer tire wear than tires filled with air. If the results are that nitrogen filled tires are proven to give statistically significant better gas mileage and wear, my escrow check will be donated to your favorite charity. If not, my favorite charity is the Salvation Army. Please call me on my cell phone, 561 358-1474 so that we can get started. It’s a win-win. Money goes to charity either way and one of us is going to learn something he didn’t know.
Before I address the points you made in your letter, I think it is only fair that the readers of my column and your letter know that you and I have met before. I was surprised that you didn’t mention that in your letter. I know that you will recall that the company owned by you, Coastal Automotive Equipment Sales, Inc. was an unsuccessful bidder three years ago when I was buying $250,000 worth of hydraulic lifts for my new service department. I only mention this in the interests of complete disclosure to our readers.
The first point I will address are your words “I’m not sure where Earl got his pricing”. This refers to my statement that car dealers were charging as much as $199 for nitrogen in four tires. I am enclosing a picture of a price sticker showing a $199 price from a dealer who may well be one of your nitrogen customers.
click on image to enlarge
Some of your statements about nitrogen are accurate. Nitrogen does expand less than air, very slightly less. The coeffient of expansion of nitrogen is about 20% less than that of air, but, of course air is 78% nitrogen. It is also true that filling a tire with nitrogen will reduce the amount of humidity inside the tire. Nitrogen molecules are larger than Oxygen molecules and will take longer to permeate the tire wall, but, as you know, 78% of air is already made of nitrogen. What all of your points citing the superiority of nitrogen don’t mention is that because air is already mainly nitrogen, the differences are so slight they can’t even be measured. As I said in my column, I tested tires nitrogen and with air in my rental fleet for many weeks and there was no measurable difference in inflation.
A good analogy to using nitrogen in your tires is those Olympic swimmers that shave their entire body with the hope of cutting off one one-hundredth of a second in a 200 meter race. I can see why NASCAR uses nitrogen in tires. Their cars run over 200 mph at extremely high temperatures and winners are measured in hundredths of seconds. A lot of people put nitrogen in their tires because they like to believe it helps, but I challenge anybody to show me a valid, scientific, independent study that proves nitrogen improves gas mileage or tire wear.
I don’t have a problem with you selling nitrogen to someone for a low price. My wife and I take a lot of vitamins and herbs that have never been proven to improve our health by medical science, but we are careful not to take any that can be harmful. We look at it this way. It might help, it can’t hurt, and the vitamins are cheap. The only thing that nitrogen can harm is the pocket book of the buyer and $199 for four tires filled with a gas that has never been proven to help gas mileage or tire wear is insane.
Sunday, March 18, 2007
MINIMIZING THE PAIN OF HAVING YOUR CAR SERVICED
The pain of buying a used or new car may be greater than the pain of having it serviced, but you need to have it serviced far more often than you have to buy a car. Below, I am listing eight suggestions to make your visit to your car dealer’s service department as pleasant as possible.
(1) Choose the dealer with the best service department. Remember that you don’t have to have the same dealership service your car that sold you your car. You probably bought your car from the dealer who gave you the best price. You should have your car serviced at the dealer who can best maintain and repair your car. The price of service is important, but secondary to the quality of the service and repairs. Do a little research. Ask friends and neighbors who drive your make of car. Check with the BBB and the County Office of Consumer Affairs. Ask the service manager at the dealership to show you his factory score on CSI (customer satisfaction index). Every manufacturer surveys dealers’ service customers and ranks that dealer by how well he treats his customers.
(2) Establish a personal relationship with your service advisor. The person in the service drive who writes up your repair order is very important. Be sure you get a good one. He should be knowledgeable, attentive to your needs, promptly return phone calls, and recommend only necessary services. You might not find this person on your first visit, but if you aren’t comfortable with the person you are dealing with, ask for one with whom you are. When you make an appointment to have your car serviced, always ask for that service advisor.
(3) Don’t pay the “gotcha”, miscellaneous supplies fee. Almost all car dealers tack on a phony fee when you pay your bill which is simply more profit to the dealer, but is disguised by various labels. It is also sometimes called “environmental impact fee”, “sundry shop supplies” 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 sales department tacked on to the price they quoted you on the price of the car. Most dealers will waive this fee if you complain about it, especially if you threaten to call the BBB, their manufacturer, or the Florida Attorney General’s office.
(4) Always road test your car, preferably with the technician. If you brought your car in for a drivability problem such as a noise, vibration, or pulling to the right or left, don’t accept the car back until you ride in the car with the technician or service advisor and confirm that the problem has been remedied. I also recommend that you drive the car with the service advisor to demonstrate the problem when you bring it in. Experiencing what you experience always communicates your problem more accurately than listening to your description of the problem.
(5) Ask for a written estimate of the total cost of repairs and maintenance. Florida law requires that the dealer give you a written estimate. By law, they may not exceed this by more than 10%.
(6) Make an appointment ahead of time. You should insist on making an appointment and you should try to make that appointment at a time when the dealer’s service department will be least busy…typically the middle of the afternoon on weekdays or Saturday and Sunday. Avoid the 7:30-8:00 morning rush. When your service advisor has written up your repair order, ask him how long it will take. After he tells you, ask him to let you know ahead of time if, for any unforeseen reason, your car will not be ready in the promised time. Often times when you call a service department they will tell you to “bring the car in anytime” or “come right over”. Service advisors will tell you this because they are either too busy or too lazy to take the time to make a proper appointment. When they tell you this, tell them that your time is very valuable and that you insist on an appointment at a time when they can get you in and out quickly. Always write down the name of the person that gave you the appointment.
(7) Shop and compare high cost repair prices. Most service departments are competitive on maintenance items like oil changes, wheel alignments, and tire rotations. However, the costs of major repairs can vary considerably. If you are looking at an air-conditoner, transmission, or engine repair that can cost several thousands of dollars, get bids from more than one service department. Often just suggesting that you will do this will keep the cost down from the dealership you prefer.
(8) Introduce yourself to the service manager. This falls along the same philosophy as developing a good personal 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 might earn you a slightly higher level of treatment from those that work for him.
(1) Choose the dealer with the best service department. Remember that you don’t have to have the same dealership service your car that sold you your car. You probably bought your car from the dealer who gave you the best price. You should have your car serviced at the dealer who can best maintain and repair your car. The price of service is important, but secondary to the quality of the service and repairs. Do a little research. Ask friends and neighbors who drive your make of car. Check with the BBB and the County Office of Consumer Affairs. Ask the service manager at the dealership to show you his factory score on CSI (customer satisfaction index). Every manufacturer surveys dealers’ service customers and ranks that dealer by how well he treats his customers.
(2) Establish a personal relationship with your service advisor. The person in the service drive who writes up your repair order is very important. Be sure you get a good one. He should be knowledgeable, attentive to your needs, promptly return phone calls, and recommend only necessary services. You might not find this person on your first visit, but if you aren’t comfortable with the person you are dealing with, ask for one with whom you are. When you make an appointment to have your car serviced, always ask for that service advisor.
(3) Don’t pay the “gotcha”, miscellaneous supplies fee. Almost all car dealers tack on a phony fee when you pay your bill which is simply more profit to the dealer, but is disguised by various labels. It is also sometimes called “environmental impact fee”, “sundry shop supplies” 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 sales department tacked on to the price they quoted you on the price of the car. Most dealers will waive this fee if you complain about it, especially if you threaten to call the BBB, their manufacturer, or the Florida Attorney General’s office.
(4) Always road test your car, preferably with the technician. If you brought your car in for a drivability problem such as a noise, vibration, or pulling to the right or left, don’t accept the car back until you ride in the car with the technician or service advisor and confirm that the problem has been remedied. I also recommend that you drive the car with the service advisor to demonstrate the problem when you bring it in. Experiencing what you experience always communicates your problem more accurately than listening to your description of the problem.
(5) Ask for a written estimate of the total cost of repairs and maintenance. Florida law requires that the dealer give you a written estimate. By law, they may not exceed this by more than 10%.
(6) Make an appointment ahead of time. You should insist on making an appointment and you should try to make that appointment at a time when the dealer’s service department will be least busy…typically the middle of the afternoon on weekdays or Saturday and Sunday. Avoid the 7:30-8:00 morning rush. When your service advisor has written up your repair order, ask him how long it will take. After he tells you, ask him to let you know ahead of time if, for any unforeseen reason, your car will not be ready in the promised time. Often times when you call a service department they will tell you to “bring the car in anytime” or “come right over”. Service advisors will tell you this because they are either too busy or too lazy to take the time to make a proper appointment. When they tell you this, tell them that your time is very valuable and that you insist on an appointment at a time when they can get you in and out quickly. Always write down the name of the person that gave you the appointment.
(7) Shop and compare high cost repair prices. Most service departments are competitive on maintenance items like oil changes, wheel alignments, and tire rotations. However, the costs of major repairs can vary considerably. If you are looking at an air-conditoner, transmission, or engine repair that can cost several thousands of dollars, get bids from more than one service department. Often just suggesting that you will do this will keep the cost down from the dealership you prefer.
(8) Introduce yourself to the service manager. This falls along the same philosophy as developing a good personal 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 might earn you a slightly higher level of treatment from those that work for him.
Sunday, March 11, 2007
The Lease Acquisition Fee…the Bank’s “Gotcha”
You may have read my columns denouncing the “dealer fee” which is a charge car dealers add to the price they have already quoted you on the car. They refer to it as a fee to fool you into thinking it’s a legitimate fee like sales tax or a license fee. What it is, is profit to the dealer. That’s exactly what banks and leasing companies do when they lease you a car. They most commonly label their “fee” the “lease acquisition fee”, but all it is is profit to the bank or leasing company, and in some cases a smaller portion is kicked back to the car dealer. This fee is also called by different names like “administrative fee”.
Yesterday I got a complaint letter from a customer in North Palm Beach who was a reader of this column. He had just discovered that he had paid an $895 “lease acquisition fee” when he leased his new Toyota from my dealership. I called him, apologized, and told him that I agreed with him that this was not the right thing for banks to do, but that they all did it. I also agreed with him that the “lease acquisition fee” should be disclosed and explained on the lease contract. It should be called “profit to the bank” and in cases where the dealer gets a portion of this fee, “profit to the bank and dealer”.
When a car dealer sells you a car, you expect him to make his profit by adding a markup to the wholesale price he paid the manufacturer. You expect and understand this. Therefore you can shop and compare prices between different dealerships. You expect a bank or a leasing company to make their lease profit by marking up the cost of their money during the time you drive their car. On a lease, it’s called a lease factor and on a purchase it’s called an interest rate. The bank owns the car because they bought if from the dealer. If you drive their car for 36 months, your monthly payments must cover their costs of depreciation, money, overhead and also pay them a profit. You expect and understand this. Therefore you can shop and compare lease factors and residuals. The residual establishes the cost of depreciation and the lease factor establishes the cost of money. The mark up over these two costs should be the profit to the bank. The “lease acquisition fee” does not appear on the contract. It is disclosed on a separate form which includes everything in the “capitalized cost” of the car you are leasing. Most people understandably think that the capitalized cost of the car is just for the car, not some extra profit for the bank.
I don’t know any bank or leasing company that does not charge a lease acquisition fee. This fact is often used to legitimize it. When a customer does object, the answer is “all banks charge this fee”. That doesn’t make it right! That’s the same explanation that car dealers give when they get caught charging their “dealer fee”. Just because almost everybody does something does not make it right. These fees vary over about the same range as dealer fees…from about $495 up to about $895.
Oh, there are some other fees that the banks and leasing companies charge you when you lease a car that you probably didn’t know about when you signed in. If you buy your car at the end of the lease, there is a “purchase option fee”. If you don’t buy it there is a “lease disposal fee”. These vary from $150 to $450. The bank knew in advanced that you were either going to buy the car or not buy the car at the end of the lease. Their efforts associated with your choice are simply the overhead cost of operating a leasing company and should be built into their rates. When you quote your customers a price and then increase the price after the purchase or lease where will it stop. How about a “fuel adjustment fee” because of rising gasoline prices or a “power fee” to help the banks pay their light bills?
Pricing of products should be transparent, up front, and not convoluted so that the consumer can easily shop and compare. Costs of doing business should be included in the pricing of products, not tacked on after the price is quoted and/or the contract is signed. Of course, that’s exactly why banks and car dealers have obscure fees like this, so you can’t easily shop and compare. Right now there isn’t much you can do about the lease acquisition fee except voice your opinion to your bank and your congressman.
Yesterday I got a complaint letter from a customer in North Palm Beach who was a reader of this column. He had just discovered that he had paid an $895 “lease acquisition fee” when he leased his new Toyota from my dealership. I called him, apologized, and told him that I agreed with him that this was not the right thing for banks to do, but that they all did it. I also agreed with him that the “lease acquisition fee” should be disclosed and explained on the lease contract. It should be called “profit to the bank” and in cases where the dealer gets a portion of this fee, “profit to the bank and dealer”.
When a car dealer sells you a car, you expect him to make his profit by adding a markup to the wholesale price he paid the manufacturer. You expect and understand this. Therefore you can shop and compare prices between different dealerships. You expect a bank or a leasing company to make their lease profit by marking up the cost of their money during the time you drive their car. On a lease, it’s called a lease factor and on a purchase it’s called an interest rate. The bank owns the car because they bought if from the dealer. If you drive their car for 36 months, your monthly payments must cover their costs of depreciation, money, overhead and also pay them a profit. You expect and understand this. Therefore you can shop and compare lease factors and residuals. The residual establishes the cost of depreciation and the lease factor establishes the cost of money. The mark up over these two costs should be the profit to the bank. The “lease acquisition fee” does not appear on the contract. It is disclosed on a separate form which includes everything in the “capitalized cost” of the car you are leasing. Most people understandably think that the capitalized cost of the car is just for the car, not some extra profit for the bank.
I don’t know any bank or leasing company that does not charge a lease acquisition fee. This fact is often used to legitimize it. When a customer does object, the answer is “all banks charge this fee”. That doesn’t make it right! That’s the same explanation that car dealers give when they get caught charging their “dealer fee”. Just because almost everybody does something does not make it right. These fees vary over about the same range as dealer fees…from about $495 up to about $895.
Oh, there are some other fees that the banks and leasing companies charge you when you lease a car that you probably didn’t know about when you signed in. If you buy your car at the end of the lease, there is a “purchase option fee”. If you don’t buy it there is a “lease disposal fee”. These vary from $150 to $450. The bank knew in advanced that you were either going to buy the car or not buy the car at the end of the lease. Their efforts associated with your choice are simply the overhead cost of operating a leasing company and should be built into their rates. When you quote your customers a price and then increase the price after the purchase or lease where will it stop. How about a “fuel adjustment fee” because of rising gasoline prices or a “power fee” to help the banks pay their light bills?
Pricing of products should be transparent, up front, and not convoluted so that the consumer can easily shop and compare. Costs of doing business should be included in the pricing of products, not tacked on after the price is quoted and/or the contract is signed. Of course, that’s exactly why banks and car dealers have obscure fees like this, so you can’t easily shop and compare. Right now there isn’t much you can do about the lease acquisition fee except voice your opinion to your bank and your congressman.
Car Dealers Exploiting the Elderly
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, 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.
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, 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.
Friday, February 23, 2007
Don’t Pay for Nitrogen In Your Tires
It’s bad enough that gas stations now make you pay to inflate your own tires with air. But at least you are getting what you paid for…air which does what it’s supposed to do and that is to keep your tires inflated.
Many car dealers are now charging customers to fill their tires with “pure” nitrogen. They tell you that nitrogen does not leak from your tires as quickly as air and this means that your tires will stay properly inflated longer before you have to add more nitrogen (and pay the dealer for this). What the dealers don’t tell you is that the air that is already in your tires is mostly nitrogen anyway. In fact, 78% of the air you breathe is nitrogen. Oxygen represents only 12% of the air. The rest of air includes carbon dioxide and other inert gases. I’m not 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 four tires full of mainly air). But, you can be assured that the purity of the nitrogen is not 100% and is probably closer to the 78% that regular air consists of.
Even knowing all of the above, I have to admit that I was curious about whether or not nitrogen could prolong tire live and improve fuel economy because I knew that NASCAR drivers used nitrogen filled tires and I heard that Volvo’s came from the factory with nitrogen in their tires. I have a BS in Physics from the University of Florida and a Master of Science from Purdue and these kinds of things interest me. So, to find out for myself, my dealership conducted an experiment. We have a fleet of rental cars and we filled 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 the nitrogen and air filled tires. There was no difference in the inflations of the nitrogen v. s. the air filled tires. If there is no difference in the inflation, there can be no benefit from nitrogen of better gas mileage or fuel economy.
You may have read my column last week, “Beware the Phony Monroney”. In that column I warned you about car dealers that add a window sticker designed to look exactly like the federally mandated Monroney sticker. This is where you should look 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 of nitrogen in four tires selling for $199, this is exactly the case. Since air is already 78% nitrogen, it costs virtually nothing to extract nitrogen from the air. To be generous, let’s say the dealer’s cost is $10 including labor. That is a 2000% markup when he charges $199.
Just when I thought I’d seen it all, I actually saw window stickers on a car today from another dealer who had actually modified the Monroney label to show nitrogen filled tires. To do this, the dealer actually had to remove the real Monroney label, make the modification showing the nitrogen tires, and re-paste the Monroney label to the window. Federal law requires that a Monroney label not be removed until the vehicle is delivered to the customer. It also requires that it not be modified. This new vehicle was one we had traded for from another dealer and still had the counterfeit Monroney and the modified real Monroney attached to the window. The modified Monroney looked so authentic, that one of my technicians and my service manager inquired of Toyota about the necessity of our carrying nitrogen tanks so that we could refill these tires with Nitrogen. If this could fool a Toyota dealer’s technicians and service manager, it might fool you too.
This particular dealer also had another charge added to the counterfeit Monroney sticker, a $4,995.00 “Market Value Adjustment”. Most prospective customers think that this is part of the manufacturer’s recommended retail price. They either end up paying too much money for the vehicle or think they are getting more for their trade-in or a bigger discount than they really are. It’s easy to allow someone an extra $5,000 on their trade-in when you have already marked the car up an extra $5,000 over sticker price.
Many car dealers are now charging customers to fill their tires with “pure” nitrogen. They tell you that nitrogen does not leak from your tires as quickly as air and this means that your tires will stay properly inflated longer before you have to add more nitrogen (and pay the dealer for this). What the dealers don’t tell you is that the air that is already in your tires is mostly nitrogen anyway. In fact, 78% of the air you breathe is nitrogen. Oxygen represents only 12% of the air. The rest of air includes carbon dioxide and other inert gases. I’m not 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 four tires full of mainly air). But, you can be assured that the purity of the nitrogen is not 100% and is probably closer to the 78% that regular air consists of.
Even knowing all of the above, I have to admit that I was curious about whether or not nitrogen could prolong tire live and improve fuel economy because I knew that NASCAR drivers used nitrogen filled tires and I heard that Volvo’s came from the factory with nitrogen in their tires. I have a BS in Physics from the University of Florida and a Master of Science from Purdue and these kinds of things interest me. So, to find out for myself, my dealership conducted an experiment. We have a fleet of rental cars and we filled 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 the nitrogen and air filled tires. There was no difference in the inflations of the nitrogen v. s. the air filled tires. If there is no difference in the inflation, there can be no benefit from nitrogen of better gas mileage or fuel economy.
You may have read my column last week, “Beware the Phony Monroney”. In that column I warned you about car dealers that add a window sticker designed to look exactly like the federally mandated Monroney sticker. This is where you should look 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 of nitrogen in four tires selling for $199, this is exactly the case. Since air is already 78% nitrogen, it costs virtually nothing to extract nitrogen from the air. To be generous, let’s say the dealer’s cost is $10 including labor. That is a 2000% markup when he charges $199.
Just when I thought I’d seen it all, I actually saw window stickers on a car today from another dealer who had actually modified the Monroney label to show nitrogen filled tires. To do this, the dealer actually had to remove the real Monroney label, make the modification showing the nitrogen tires, and re-paste the Monroney label to the window. Federal law requires that a Monroney label not be removed until the vehicle is delivered to the customer. It also requires that it not be modified. This new vehicle was one we had traded for from another dealer and still had the counterfeit Monroney and the modified real Monroney attached to the window. The modified Monroney looked so authentic, that one of my technicians and my service manager inquired of Toyota about the necessity of our carrying nitrogen tanks so that we could refill these tires with Nitrogen. If this could fool a Toyota dealer’s technicians and service manager, it might fool you too.
This particular dealer also had another charge added to the counterfeit Monroney sticker, a $4,995.00 “Market Value Adjustment”. Most prospective customers think that this is part of the manufacturer’s recommended retail price. They either end up paying too much money for the vehicle or think they are getting more for their trade-in or a bigger discount than they really are. It’s easy to allow someone an extra $5,000 on their trade-in when you have already marked the car up an extra $5,000 over sticker price.
Friday, February 16, 2007
BUYERS ARE LIARS!
I’m always amazed by the way car dealers who use deceptive advertising and unethical sales tactics rationalize their behavior by actually blaming you, their customer. The following is a direct quote from an anonymous car dealer’s email I received this morning in response to one of my recent columns in this newspaper: “I don't think you would make any of these comments if you sold fords in a non-metro market. How do you expect dealers to change when consumers think they should pay less than dealer cost for a car and then walk into any other form of retail store and pay what they are asking?? Your ideas are noble but there are other dealers who have tried 'your' methods who are no longer in business.” This dealer is saying that his customers are so ruthless and cunning that they won’t buy a car unless they can buy it below his cost and his only solution is to trick them into thinking that they are buying it below his cost, like tacking on a “dealer fee” to the price they quoted the customer. He also goes on to say that my “ideas are noble” but I can’t possibly be successful and I will go broke trying. I truly appreciate his concern and I want to assure him, if he is reading this article, that my business is doing very nicely.
This attitude is actually a prevailing part of the culture in many car dealerships. Many dealers, dealer managers, and sales people don’t trust their customers (how paradoxical!). They don’t even like their customers. A very common expression among car dealers and their sales staff is “Buyers are liars”. This means that a prospective customer will not tell you the truth about the condition of his trade-in, he will lie to you about the price he got from your competitor, and he is likely to remove those new tires that were on his trade-in when the dealer appraised it when he comes in to pick up his new car.
There are also a lot of dealerships where used car buyers and people with bad credit are held in especially low esteem. They have nicknames for people with bad credit like “slugs” and “roaches”. Apparently dehumanizing these unfortunate members of our society with derogatory labels makes it easier to treat them so shabbily. People with bad credit are targeted with direct mail and newspaper ads making absurd promises that convince prospective customers that they can finance a car no matter how bad their credit. In some dealerships applicants are coached on how to falsify credit application and pay records. In some cases the applicant may not even know he is signing a false credit application which is federal offence. In most cases the credit is refused and the applicants are not even given the courtesy of a return phone call to tell them this.
I don’t claim to be a psychologist (and I don’t even play one on TV), but I have read articles explaining how humans will stereotype other people in a fashion that falsely justifies their negative behavior toward those same people. We see this with racism and even in warfare. If you make yourself believe that car buyers are out to take advantage of you, “buyers are liars”, you can’t feel guilty about tricking them into paying a dealer fee. If you trick a “roach” or a “slug” into coming in to buy a car on credit when they probably can’t, why should you feel guilty? After all, roaches and slugs don’t have feelings.
What these kinds of dealerships don’t understand is that you must trust a person first before you can expect her to trust you. You have to treat 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 car dealer is that 99.9% of my customers are good people who I can believe and trust. Those are pretty good odds and I just assume that every customer I am dealing with is part of that 99.9%. Once in a great while I get burned, but the loss from that one in a thousand that takes advantage is far out-weighted by the other 999 who respond positively to my trusting them and treating them with respect.
This attitude is actually a prevailing part of the culture in many car dealerships. Many dealers, dealer managers, and sales people don’t trust their customers (how paradoxical!). They don’t even like their customers. A very common expression among car dealers and their sales staff is “Buyers are liars”. This means that a prospective customer will not tell you the truth about the condition of his trade-in, he will lie to you about the price he got from your competitor, and he is likely to remove those new tires that were on his trade-in when the dealer appraised it when he comes in to pick up his new car.
There are also a lot of dealerships where used car buyers and people with bad credit are held in especially low esteem. They have nicknames for people with bad credit like “slugs” and “roaches”. Apparently dehumanizing these unfortunate members of our society with derogatory labels makes it easier to treat them so shabbily. People with bad credit are targeted with direct mail and newspaper ads making absurd promises that convince prospective customers that they can finance a car no matter how bad their credit. In some dealerships applicants are coached on how to falsify credit application and pay records. In some cases the applicant may not even know he is signing a false credit application which is federal offence. In most cases the credit is refused and the applicants are not even given the courtesy of a return phone call to tell them this.
I don’t claim to be a psychologist (and I don’t even play one on TV), but I have read articles explaining how humans will stereotype other people in a fashion that falsely justifies their negative behavior toward those same people. We see this with racism and even in warfare. If you make yourself believe that car buyers are out to take advantage of you, “buyers are liars”, you can’t feel guilty about tricking them into paying a dealer fee. If you trick a “roach” or a “slug” into coming in to buy a car on credit when they probably can’t, why should you feel guilty? After all, roaches and slugs don’t have feelings.
What these kinds of dealerships don’t understand is that you must trust a person first before you can expect her to trust you. You have to treat 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 car dealer is that 99.9% of my customers are good people who I can believe and trust. Those are pretty good odds and I just assume that every customer I am dealing with is part of that 99.9%. Once in a great while I get burned, but the loss from that one in a thousand that takes advantage is far out-weighted by the other 999 who respond positively to my trusting them and treating them with respect.
Tuesday, February 13, 2007
Beware the Phony Monroney
“Phony Monroney” should not be confused with “Boney Maroney” (I got a gal named Boney Maroney. She’s as skinny as a stick of macaroni). That song was first recorded by Larry Williams during my high school years, 1956-1958. You will appreciate this lame attempt at humor only if you are about my age, 66.
The Monroney label is the window sticker that is mandated by federal law to be affixed to every new vehicle sold in the United States up until the time the new owner takes delivery. The name, Monroney, derives from Senator Michael Monroney’s law passed by Congress in 1958. Prior to the proposal of this bill, there was often a large discrepancybetween the showroom price and the actual price of a new vehicle. The fact was that existing price tags did not tell the full story. Most customer-quoted prices were for "stripped-down" models and did not include additions for preparation charges, freight charges, federal, state, and local taxes, or optional factory-installed equipment requested by the purchaser. These hidden charges were used by some dealers to increase the selling price while giving the new vehicle buyer an inflated idea of their trade-in allowance. This price confusion led to a slump in auto sales during the early 1950's. Senator Monroney's bill was designed to prevent the abuse of the new vehicle list prices, but would not, however, prevent dealers and buyers from bargaining over vehicle prices.
Well, as you might expect, car dealers have figured out a way to evade this very good law. An alarmingly large number of Florida dealers use a label that is designed to look almost identical to the official Monroney label. It has the same coloring, fonts, type size and layout. This “phony Monroney” is affixed right next to the genuine article. Unless you really look close and read all of the fine print, you will have no idea that you are looking at a counterfeit Monroney label. This phony Monroney includes extra charges to artificially inflate the manufacturer’s suggested list price, MSRP.
One of the most egregious of these charges is an addition of pure markup just for profit which has a variety of names. Some of these are “Market Adjustment”, “Additional Dealer Markup”, “Adjusted Market Value”, “ADM”, “Market Adjustment Addendum” and “Market Value Adjustment”. This is simply an amount that the dealer adds to the manufacturer’s suggested retail price. It is virtually always used in high-demand, low supply cars. I have seen these labels with charges as much as $10,000 added to the MSRP. Additions of $1,500 to $3,995 are common. Dealers also use the counterfeit labels to price dealer-installed accessories, which are OK, as long as the accessories are not marked up higher than the manufacturer marks them up.
When customers confuse the phony Monroney with the real one, this distorts their point of reference for comparing prices between different dealerships. One manufacturer’s Monroney labels are consistent. A 2007 Honda Accord with the same factory accessories will have the same MSRP at every Honda dealership you visit. But if dealers fool you into thinking their label is part of the Monroney, you are not comparing “apples and apples”. This can adversely affect a good buying decision in a number of ways. Some buyers focus mainly on how big a trade-in allowance they can get for their old car. If one dealer has the same car marked up $3,000 more than another dealer, he can offer you $3,000 more for your trade and still make the same profit as the other dealer. Some buyers focus on how big a discount they get from “sticker”. It’s easy to give a higher discount if you have artificially inflated the MSRP by thousands of dollars.
My advice to you is carefully inspect the sticker on the new car you are contemplating buying. Read it completely and especially the fine print. If there is a second label on the car, it is possible that it is fair. This would be for purposes of adding an item, installed by the dealer like floor mats or stripes, priced the same as the manufacturer charges. If that second label includes a markup over MSRP for no reason other than profit for the dealer, make sure that you adjust for that number in your comparisons for discounts and trade-in allowance. Some dealers also add a second markup to these labels and that is the infamous “dealer fee” also sometimes called “doc fee” and “dealer prep”. Some dealers do not put this on the phony Monroney but print it on their buyer’s orders and program it into their computers.
The Monroney label is the window sticker that is mandated by federal law to be affixed to every new vehicle sold in the United States up until the time the new owner takes delivery. The name, Monroney, derives from Senator Michael Monroney’s law passed by Congress in 1958. Prior to the proposal of this bill, there was often a large discrepancybetween the showroom price and the actual price of a new vehicle. The fact was that existing price tags did not tell the full story. Most customer-quoted prices were for "stripped-down" models and did not include additions for preparation charges, freight charges, federal, state, and local taxes, or optional factory-installed equipment requested by the purchaser. These hidden charges were used by some dealers to increase the selling price while giving the new vehicle buyer an inflated idea of their trade-in allowance. This price confusion led to a slump in auto sales during the early 1950's. Senator Monroney's bill was designed to prevent the abuse of the new vehicle list prices, but would not, however, prevent dealers and buyers from bargaining over vehicle prices.
Well, as you might expect, car dealers have figured out a way to evade this very good law. An alarmingly large number of Florida dealers use a label that is designed to look almost identical to the official Monroney label. It has the same coloring, fonts, type size and layout. This “phony Monroney” is affixed right next to the genuine article. Unless you really look close and read all of the fine print, you will have no idea that you are looking at a counterfeit Monroney label. This phony Monroney includes extra charges to artificially inflate the manufacturer’s suggested list price, MSRP.
One of the most egregious of these charges is an addition of pure markup just for profit which has a variety of names. Some of these are “Market Adjustment”, “Additional Dealer Markup”, “Adjusted Market Value”, “ADM”, “Market Adjustment Addendum” and “Market Value Adjustment”. This is simply an amount that the dealer adds to the manufacturer’s suggested retail price. It is virtually always used in high-demand, low supply cars. I have seen these labels with charges as much as $10,000 added to the MSRP. Additions of $1,500 to $3,995 are common. Dealers also use the counterfeit labels to price dealer-installed accessories, which are OK, as long as the accessories are not marked up higher than the manufacturer marks them up.
When customers confuse the phony Monroney with the real one, this distorts their point of reference for comparing prices between different dealerships. One manufacturer’s Monroney labels are consistent. A 2007 Honda Accord with the same factory accessories will have the same MSRP at every Honda dealership you visit. But if dealers fool you into thinking their label is part of the Monroney, you are not comparing “apples and apples”. This can adversely affect a good buying decision in a number of ways. Some buyers focus mainly on how big a trade-in allowance they can get for their old car. If one dealer has the same car marked up $3,000 more than another dealer, he can offer you $3,000 more for your trade and still make the same profit as the other dealer. Some buyers focus on how big a discount they get from “sticker”. It’s easy to give a higher discount if you have artificially inflated the MSRP by thousands of dollars.
My advice to you is carefully inspect the sticker on the new car you are contemplating buying. Read it completely and especially the fine print. If there is a second label on the car, it is possible that it is fair. This would be for purposes of adding an item, installed by the dealer like floor mats or stripes, priced the same as the manufacturer charges. If that second label includes a markup over MSRP for no reason other than profit for the dealer, make sure that you adjust for that number in your comparisons for discounts and trade-in allowance. Some dealers also add a second markup to these labels and that is the infamous “dealer fee” also sometimes called “doc fee” and “dealer prep”. Some dealers do not put this on the phony Monroney but print it on their buyer’s orders and program it into their computers.
Saturday, February 03, 2007
Should I Buy a Car or Have a Colonoscopy?
If you are over 55, you should have had a colonoscopy. If you haven’t, call your doctor because this could save your life. It did mine, but that’s another story. I had another colonoscopy yesterday and I have to tell you that it’s a very unpleasant experience, mainly from the mental anguish anticipation and the discomfort of the preparation the previous day. I had a lot of time to think about my procedure and I started thinking about how this experience parallels that of buying a car. It’s something you must do and has a very good benefit, but you dread the process.
This column, my 39th for Hometown News, has consisted mainly of suggestions and inside information that can make your new or used car buying experience less of a fearful occasion. If this is the first column of mine you have read, you can read all of them on my Blog, www.EarlStewartOnCars.com. Some of the titles/subjects are “Always Get an Out the Door Price”, “Bait and Switch Advertising”, “Beware of Deceptive Internet Car Pricing”, “Beware of Direct Mail Car Advertising”, “Buying a Car When You Have a Credit Problem”, “Eight Steps to Ensure You Are Buying the Best Car for the Best Price”, “List Price and MSRP Might Not Be the Same”, “Negotiating to Buy a Car”, “Open Letter to Florida Car Dealers” (I, II, III, and IV), “Shop Your Financing and Trade”, “Should I Buy My Car at the End of the Lease?”, “Should I Lease or Buy my Next Car?”, “Should I Pay Cash or Finance My Next Car?”, “Should I Trade in My Old Car or Sell it Myself”, “Tell Your Car Dealer to be Nice”, “The Right Used Car is a Better Buy than a New Car”, “Translating Misleading Car Ads”, “What is the True Cost of that New Car?”, “What to do if You Are Treated Badly by a Car Dealer”, “When is a Car Sale Not a Car Sale?”, and “The Internet Price is the Lowest Price for a New Car”.
Almost every one of these articles originated from my customers’ and others’ experiences when buying cars from other car dealers. I get a lot of calls from people who have never bought a car from me. They call to tell me of their bad experience with another dealer and, when I get several calls on the same subject, I write a column on it. People often call me asking for advice or assistance after they have already bought, which is “closing the barn door after the horse is gone.” On more than one occasion I have called car dealers asking them to consider undoing a wrong they have caused one of their customers. I have to confess that I am “batting zero” on this effort. I won’t give up, however. I just made another call this afternoon on behalf of a customer whose installment sales contract, signed by her and the dealership had a higher interest rate than a second contract that the dealer sent to the lender. The customer told me she signed only one contract, the one she took home a copy of.
One thing that amazes me about these weekly columns that I have been writing for almost a year is that no car dealer has ever called me to complain or for any other reason. I have not been sued either. I think that says something about the truth of my articles. I’m not a lawyer, but I do know that you can’t successfully sue somebody for libel or slander if they write or say the truth. I know of one car dealer who threatened to cancel her advertising in the PB Post because she thought it owned the Hometown News. I am puzzled why not one single dealer would call me just out of curiosity. I don’t have a secretary and I don’t screen any of my calls…nor do any of my employees. They do know how successful my dealership is and how fast my sales are growing. They know that I am selling a lot of their former customers. Many of these new customers tell me how they told the other dealers why they chose to take their business elsewhere. I believe that before too much longer we will see some changes in the way other car dealers do business even if they refuse to call me, as I have repeatedly invited them to do. Sooner or later they will understand that treating your customers with courtesy and integrity is just plain good business.
This column, my 39th for Hometown News, has consisted mainly of suggestions and inside information that can make your new or used car buying experience less of a fearful occasion. If this is the first column of mine you have read, you can read all of them on my Blog, www.EarlStewartOnCars.com. Some of the titles/subjects are “Always Get an Out the Door Price”, “Bait and Switch Advertising”, “Beware of Deceptive Internet Car Pricing”, “Beware of Direct Mail Car Advertising”, “Buying a Car When You Have a Credit Problem”, “Eight Steps to Ensure You Are Buying the Best Car for the Best Price”, “List Price and MSRP Might Not Be the Same”, “Negotiating to Buy a Car”, “Open Letter to Florida Car Dealers” (I, II, III, and IV), “Shop Your Financing and Trade”, “Should I Buy My Car at the End of the Lease?”, “Should I Lease or Buy my Next Car?”, “Should I Pay Cash or Finance My Next Car?”, “Should I Trade in My Old Car or Sell it Myself”, “Tell Your Car Dealer to be Nice”, “The Right Used Car is a Better Buy than a New Car”, “Translating Misleading Car Ads”, “What is the True Cost of that New Car?”, “What to do if You Are Treated Badly by a Car Dealer”, “When is a Car Sale Not a Car Sale?”, and “The Internet Price is the Lowest Price for a New Car”.
Almost every one of these articles originated from my customers’ and others’ experiences when buying cars from other car dealers. I get a lot of calls from people who have never bought a car from me. They call to tell me of their bad experience with another dealer and, when I get several calls on the same subject, I write a column on it. People often call me asking for advice or assistance after they have already bought, which is “closing the barn door after the horse is gone.” On more than one occasion I have called car dealers asking them to consider undoing a wrong they have caused one of their customers. I have to confess that I am “batting zero” on this effort. I won’t give up, however. I just made another call this afternoon on behalf of a customer whose installment sales contract, signed by her and the dealership had a higher interest rate than a second contract that the dealer sent to the lender. The customer told me she signed only one contract, the one she took home a copy of.
One thing that amazes me about these weekly columns that I have been writing for almost a year is that no car dealer has ever called me to complain or for any other reason. I have not been sued either. I think that says something about the truth of my articles. I’m not a lawyer, but I do know that you can’t successfully sue somebody for libel or slander if they write or say the truth. I know of one car dealer who threatened to cancel her advertising in the PB Post because she thought it owned the Hometown News. I am puzzled why not one single dealer would call me just out of curiosity. I don’t have a secretary and I don’t screen any of my calls…nor do any of my employees. They do know how successful my dealership is and how fast my sales are growing. They know that I am selling a lot of their former customers. Many of these new customers tell me how they told the other dealers why they chose to take their business elsewhere. I believe that before too much longer we will see some changes in the way other car dealers do business even if they refuse to call me, as I have repeatedly invited them to do. Sooner or later they will understand that treating your customers with courtesy and integrity is just plain good business.
BEWARE OF DECEPTIVE INTERNET CAR PRICING
Last September, I wrote a column for this newspaper entitled “The Internet Price is the Lowest Price for a New Car”. If you missed that, you can read all of my columns at www.EarlStewartOnCars.com. Although, I still believe you can find your best price on the Internet, I thought that I should write another column to stress how careful you must be in determining whether or not you have a real, bottom line, out-the-door price.
The reason that a dealer always tries to post his lowest new car price on the Internet is simple. If he doesn’t the Internet shopper will simply ignore the price quote and buy from another dealer who has a lower price. A car dealer gets “just one chance” to sell you a car when he puts his price out on the Internet. The Internet is theoretically the purest and best form of a competitive marketplace, favoring the buyer. Think about it…if you wanted to take the time you could get a price quote from every Honda, Toyota, or Ford dealer in the USA! There are about 1,300 Toyota dealers in the USA. It might take you a while (about 8 days if you worked 8 hours a day and spent 3 minutes per email), but you sure would know who was selling your selected model Toyota for the lowest price.
Whether you are reading newspaper ads, watching TV ads, reading direct mail advertising, or surfing car a dealer’s Web site you have to be careful of deception. Internet advertising on car dealer’s Web sites and their Internet price quotes can be more deceptive than other media. This is because the Internet is the “new frontier”. Legislation has not caught up with the Internet like it has newspaper, TV, and radio advertising. A dealer can get away with a lot more on his Web site and price quotes than he can in a newspaper ad. Electronic media and newspaper advertising are also a lot more visible to the regulators than the Internet.
I’ll give you an example of the type of violation you must be wary of. There’s a car dealer in West Palm Beach who quotes prices to his customers over the Internet excluding $879.90 which are dealer fees. He also calls them doc fees, but they are simply profit for him. Furthermore, he excludes any “dealer installed option”. This means that he can charge you anything he wants for stripes, glass etching, floor mats, undercoating, etc. that he has pre-installed on the car. He does disclose in fine print the fact that he does charge doc fees and dealer installed options, but does not tell the amount of the charge. This is your “surprise” when you come into his dealership to take delivery.
Your defense against this sort of thing is to call those dealers who have given you the lowest price quotes on the vehicle you want to buy. Start with the lowest price and simply ask, “Is there anything else added to my price other than Florida sales tax and a state fee for a license tag or tag transfer?” If they do add something, find out specifically what they do add so that you know you have an “out-the-door”, bottom line price when you come in to take delivery. If they won’t give you a clear answer or are ambiguous, hang up and call the next dealer.
Dealers who advertise deceptively have the philosophy that all that counts with their advertising is to “get them in the door”. Another slang dealers use for this is “driving floor traffic”. They calculate that if they can trick enough people to come through the door, they will be able to fool a certain percentage of them. It’s like Abraham Lincoln said, “You may fool all the people some of the time, you can even fool some of the people all of the time, but you cannot fool all of the people all of the time.” Well these dealers don’t have to fool all of the people to make lots of money. All they have to do is fool some of the people all of the time and that’s exactly what their advertising is designed to do. Don’t be one of those who are fooled.
The reason that a dealer always tries to post his lowest new car price on the Internet is simple. If he doesn’t the Internet shopper will simply ignore the price quote and buy from another dealer who has a lower price. A car dealer gets “just one chance” to sell you a car when he puts his price out on the Internet. The Internet is theoretically the purest and best form of a competitive marketplace, favoring the buyer. Think about it…if you wanted to take the time you could get a price quote from every Honda, Toyota, or Ford dealer in the USA! There are about 1,300 Toyota dealers in the USA. It might take you a while (about 8 days if you worked 8 hours a day and spent 3 minutes per email), but you sure would know who was selling your selected model Toyota for the lowest price.
Whether you are reading newspaper ads, watching TV ads, reading direct mail advertising, or surfing car a dealer’s Web site you have to be careful of deception. Internet advertising on car dealer’s Web sites and their Internet price quotes can be more deceptive than other media. This is because the Internet is the “new frontier”. Legislation has not caught up with the Internet like it has newspaper, TV, and radio advertising. A dealer can get away with a lot more on his Web site and price quotes than he can in a newspaper ad. Electronic media and newspaper advertising are also a lot more visible to the regulators than the Internet.
I’ll give you an example of the type of violation you must be wary of. There’s a car dealer in West Palm Beach who quotes prices to his customers over the Internet excluding $879.90 which are dealer fees. He also calls them doc fees, but they are simply profit for him. Furthermore, he excludes any “dealer installed option”. This means that he can charge you anything he wants for stripes, glass etching, floor mats, undercoating, etc. that he has pre-installed on the car. He does disclose in fine print the fact that he does charge doc fees and dealer installed options, but does not tell the amount of the charge. This is your “surprise” when you come into his dealership to take delivery.
Your defense against this sort of thing is to call those dealers who have given you the lowest price quotes on the vehicle you want to buy. Start with the lowest price and simply ask, “Is there anything else added to my price other than Florida sales tax and a state fee for a license tag or tag transfer?” If they do add something, find out specifically what they do add so that you know you have an “out-the-door”, bottom line price when you come in to take delivery. If they won’t give you a clear answer or are ambiguous, hang up and call the next dealer.
Dealers who advertise deceptively have the philosophy that all that counts with their advertising is to “get them in the door”. Another slang dealers use for this is “driving floor traffic”. They calculate that if they can trick enough people to come through the door, they will be able to fool a certain percentage of them. It’s like Abraham Lincoln said, “You may fool all the people some of the time, you can even fool some of the people all of the time, but you cannot fool all of the people all of the time.” Well these dealers don’t have to fool all of the people to make lots of money. All they have to do is fool some of the people all of the time and that’s exactly what their advertising is designed to do. Don’t be one of those who are fooled.
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