When a Car Dealer “Rips You Off” Who Should Be Held Responsible?

I receive a lot of emails, calls, and letters every week from victims of car dealers who were taken advantage of in buying, leasing, and servicing their cars. They mostly call to ask what they can do to get all or some of their money back. These “victims” fall into different categories:

(1)   The elderly, often widows.

(2)   The very young, usually buying their first car.

(3)   Those who don’t speak or understand English well, not born in this country.

(4)   The uneducated.

(5)   People with bad credit.

(6)   Everybody else

(1)   The elderly, especially widows, are the most victimized.  The reasons for this are that Florida, especially South Florida, is a “retirement” state. Baby boomers and pre-baby boomers make up a disproportionately large percentage of Florida’s population. Not only that, but life expectancies have soared in recent years…81 for a woman and 76 for a man. Men usually predecease their wives. Women’s role in the American culture is a great deal different than in the 1930’s and 1940’s. More often than not, the husband was not only the breadwinner, but the decision maker in the household. Widows of that era are often buying their first car today. Men and women in their seventies, eighties, and nineties (Yes, I have a lot of customers in their nineties) aren’t as sharp as they once were.  I’m 73 and I’ll be the first to admit this. In my opinion, men and women of my age, and older, are more trusting. We can’t forget the terrible disease, Alzheimer’s. Unless a court declares a person incompetent, a person with Alzheimer’s can legally buy a car in Florida and it happens all too often. This is one of the most despicable acts that some car dealers commit.

(2)   What chance does a teenager or kid in his twenties have when negotiating with a car salesman and his manager to buy a car? Usually it’s the parents who call me to tell me how their son or daughter was taken advantage of. I don’t tell them this, but what I’m thinking is “Why did didn’t they accompany them to the car dealership to advise them?”

(3)   South Florida is not only a retirement area, but it’s a haven for immigrants from Cuba, Haiti, and South and Central America. Many of these are first generation Americans who have a difficult time with English or can’t speak, read, or write English at all. These people are easy prey for unscrupulous car dealers. Can you imagine how difficult it would be for you to get a fair price on a car you were buying in a foreign country where you were did not speak or understand the language?

(4)   Let’s face it; there are too many Americans who never had the benefit of a proper education. We have too many high school dropouts and too many high school graduates who still can’t read or write as well as they must to function in our society. Lack of a good education is one of America’s most serious problems and we’re seeing other countries like China, Japan, Germany and India pass us by in educating their children. It’s almost criminal how the educated are exploited by car dealers’ advertising and sales tactics. How many car dealers’ TV advertisements have you seen that you laugh at, knowing that they are totally untrue, “bait and switch” to lure you into the dealership. You wonder who would believe that kind of nonsense.  The reason that car dealers keep running those ads is because they work.

(5)   There are always people with bad credit who have to buy a car, especially in today’s economy. In Florida, without an effective mass transit system, a car is virtually a necessity to get to your job or find a job, not to mention the doctor, school, or the pharmacy. People with bad credit are at the mercy of the car dealer. The main thing on these peoples’ minds is not how good a price or a car can I buy or how low an interest rate, but can they be financed? Knowing this, car dealers will charge whatever price and interest rate the lender will let them get away with. People with bad credit almost always pay dealers a higher profit than those with good credit.

(6)   The title to this article asks the question, “Who should be held responsible for car dealers ripping off customers?” For categories (1) through (5), the answer is our regulators and our lawmakers. But for the last category, “Everybody else”, it’s themselves. Of course, it goes without saying that the car dealers who do this are responsible too. But who doesn’t know that most car dealers do business this way? Who doesn’t know that car dealers perennially rank last on the annual Gallup “Honesty and Ethics in Professions” poll? I recently received an email from a woman who fell in none of the first 5 categories above. She was terribly victimized by a very unethical car dealer from whom she bought two used cars on the same night. Her email asked me for advice on what she should do. Of course the “horse was out of the barn” and this makes things more difficult. This woman did not ask for or receive a CarFax report on either used car. Nor did she take either car to her mechanic for approval. She clearly didn’t investigate the dealer for reputation. She didn’t check any sources like Consumer Reports for recommended used cars. She did not shop and compare prices for similar cars and the list of “did not’s” goes on. If you don’t do your due diligence when you buy a car you are equally culpable with the car dealer who took advantage of you. 

At this point, I will shamelessly plug my book, Confessions of a Recovering Car Dealer. I say “shamelessly” because 100% of the proceeds from my book go to charity. You can buy this book at www.Amazon.com. It will tell you everything you need to know about how not to be ripped off by a car dealer. Or, you can read my blog articles on this at www.EarlOnCars.com.

Dealing with the Dealer Fee - Earl Stewart User's Guide

 

Hopefully by now, all but my newest readers know about the infamous “Dealer Fee”. If you don’t know, it’s a hidden price increase on the car you purchase disguised to look like a federal, state, or local tax or fee. It’s actually 100% profit to the dealer. “Dealer Fee” is the most common name for this disguised profit, but it goes by many names such as doc fee, dealer prep fee, service fee, administrative fee, electronic filing fee, e-filing fee, tag agency fee, pre-delivery fee, etc. The names are only limited by car dealers’ imaginations. Almost all car dealers in Florida charge a Dealer Fee. The dealer fees range from around $700 to as high as $2,000!

This is the Florida law that is supposed to regulate the Dealer Fee: “The advertised price must include all fees or charges that the customer must pay excluding state and local taxes.” The law also requires that the Dealer Fee must be disclosed to the buyer as follows: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.”

This law is very weak and almost never enforced. When enforced, it isn’t enforced by the letter of the law; it is done so as to “accommodate” the car dealers. The law is “weak” because it requires only that the dealer fee be included in the “advertised” price. The word “advertised” is narrowly interpreted to mean a specific car shown in a newspaper, TV, radio, or online ad, but, what about when you get a price on the phone, online, or from the salesman? You don’t find out about the Dealer Fee until you’re in the business office signing a bunch of papers. The dealers get around advertisements very easily by including a “number” in the fine print. This number is their stock number that designates one specific car. When you respond to the ad, this car is no longer available (sales people are usually not paid a commission for selling the “ad car). The advertisement might say “many more identical cars are available.” It’s true that identical cars are available for sale, but they are not available for sale at the sale price because they are not the advertised stock number car. If you buy one of those “exact same cars” you will pay from $700 to $2,000 more.

The reason I’m told that the law is rarely enforced is that the Florida Attorney General’s office is understaffed and too busy enforcing other Florida laws. I’m also told that Florida car buyers don’t file very many complaints against car dealers for violating the Dealer Fee law. I don’t believe that there can be too many other infractions of the law that take more money annually from consumers than dealer fees take from car buyers. Just one car dealer selling 1,000 cars a year and charging a $1,000 dealer fee is taking a $1 million annually from car buyers.  Most car dealers in South Florida well a lot more than 1,000 cars annually and many charge more than $1,000 dealer fee. I believe that the reason more complaints aren’t filed on the dealer fee is because most car buyers don’t know that they are being duped. They either don’t notice the fee or assume it’s an official federal or state fee. Dealer often tell their customers that all dealers charge it and that it’s required by law.

The Attorney General also “accommodates” the dealers by not interpreting the law the way it was intended. For example, the law says that the dealer fee must be included in the advertised price. The Florida Senate has ruled that the law requires that the fee be “included” rather than “specifically delineated.” But the Attorney General allows car dealers to advertise car prices without including their dealer fee in the price if they mention their dealer fee in the fine print. They also allow car dealers to simply state in the fine print that they have a Dealer Fee but not even mention the amount. To me they are simply allowing the car dealers to break the law.

Lastly, the required disclosure of the Dealer Fee on the vehicle buyer’s order or invoice is confusing, misleading, and incorrect: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.” It should not say “costs” because any cost that you pass along to the customer in the price of a product is pure profit. A dealer can pass along his utility bills, sales commissions and advertising if he wants to and call it a “dealer fee”. It should not say “inspecting, cleaning, and adjusting vehicles” because all car dealers are reimbursed by the manufacturer for “inspecting, cleaning, and adjusting vehicles”.  

So, what should you do when you are confronted by a car dealer with the “Dealer Fee”?  Besides “LEAVE”, here are some suggestions that may help you:

(1) Make it clear from the very beginning that all prices you discuss must be “out-the-door” prices. This way you don’t care if the dealer fee added up front because you will shop and compare their bottom line price with at least 3 competing car dealers. Ideally you should require that they include tax and tag in that price. If you don’t they might try to slip in something they call the “electronic filing fee” or “e filing fee” and trick you into believing it’s part of the license tag and registration.

(2) The dealer will often tell you that all car dealers charge Dealer Fees and that they are required by law to add the dealer fee on every car they sell. Simply tell them that you know this is not true and you can cite me and other car dealers like CarMax who do not charge a dealer fee. Print out a copy of this article, show it to them, and tell them that you know that there is no law that says he must charge you a dealer fee.

(3) As long as you and the dealer understand that the out-the-door price is the price you will shop and compare with his competition, you don’t need to be concerned whether there is a dealer fee showing on the vehicle buyer’s order. To be competitive, the dealer can simply reduce the price by the amount of his Dealer Fee and the bottom line is what you are comparing.

(4) Be aware that dealers usually do not pay their sales people a commission on the amount of their dealer fee. In fact, dealers often misinform their sales people just like they do their customers. The salesman who tells you that the all dealers charge Dealer Fees and that the law requires everyone pay a dealer fee may actually believe it. Sale people who understand that the Dealer Fee is simply profit to the dealer will be resentful of not being paid their 25% commission on it. A $1,000 dealer fee costs the salesman $250 in commission.

(5) When you respond to an advertisement at a specific price for a specific model car, object when the dealer adds the dealer fee. Unfortunately, the law allows him the loophole of claiming that the ad car is a different stock number, but you might be able to shame him into taking off the dealer fee. If you raise a “big enough stink”, the dealer would be smart to take off the dealer fee than claim that technicality, especially if you were to advise the local TV station or newspaper.

I hope that these suggestions help you and I hope that you will file a complaint with the Florida Attorney General, Pam Bondi. If enough consumers (who are also voters) let our elected officials know how they feel about the Dealer Fee, it will bring positive results.

Car Dealers’ Latest Dirty Little Secret

The “Electronic Filing Fee” aka Dealer PROFIT

Taken from an actual dealer’s buyer’s order

Florida Sen. Joe Negron is leading an effort to roll back about $12 of the cost of registering a car in Florida. He says this will save Floridians about $230 million a year. This is to bring back the tag registration cost back to where it was about 4 years ago, when the legislature raised it because of the bad economy.

What Sen. Joe Negron and, apparently, the rest of the Florida legislature either doesn’t know (or care) about is that, at about the same time, car dealers began passing along and marking up an expense to car buyers. This is increasing their profits far more than the $230 million a year that reducing tag registration fees will save.

This increased profit to car dealers is generally called the “Electronic Filing Fee or E-Filing Fee”, but there are other names that dealers use, just as they do for the infamous “dealer fee” like “dealer services”. Car dealers used to process the tag and registration required on new and used cars themselves. About 4 years ago they began outsourcing this to companies that can do this work cheaper than they can themselves. The typical cost of this outside service is only $10 or $12. So, not only did the car dealers reduce their expense, they passed along the reduced expense to you, the car buyer! But wait, there’s more! Car dealers are also markinging up this reduced expense up and passing this along to you too! I’ve seen Electronic Filing Fees marked up to $598…that’s a 5,980% markup!

At my dealership I began using a registration service company named Title Tech in 2009 and they charge me $10 to prepare the tag, registration, and title work for each new customer.  This saves me considerable time and money from doing it myself. In the past  always absorbed the higher expense  and I don’t pass along the reduced cost to my customers either. It’s adding “insult to injury” to mark up this cost and pass it along to you.

The word “fee” is almost always used by dealers when they are trying to disguise additional profit or to pass along an expense to you (which is the same thing as additional profit). When car buyers are lucky enough to even notice the Electronic Filing Fee, they usually assume it’s a tax or fee charged by the state, federal, or local governments.  They do the same thing with the dealer fee under its various other names like documentary fee.

Florida law considers the Electronic Filing Fee to be the same thing as a Dealer Fee and requires that it be disclosed and used by car dealers as such. The language Florida requires for disclosure is “This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale”. The law also requires that the Electronic Filing Fee be included in all advertised prices. Unfortunately most dealers are ignoring this law just as they do with the additional profit they make with the Dealer Fee.

Dealers almost never include their Dealer Fees or Electronic Filing Fees in their advertised price which is a flagrant violation of Florida law. If they even mention that they have a dealer fee, they will say in the fine print something like “prices plus tax, tag, and fees”. A few dealers will disclose in the fine print, “plus tax, tag, and $999.95 dealer fee”. The Florida Senate says “The law requires that the fee be included rather than “specifically delineated” in the advertised price.” Most car dealers’ advertising is done on TV and the fine print disclosure is literally unreadable.

The other loophole permitted by Florida law is to allow the dealers to offer only one car with the dealer fee included in the price. That would not be so bad if the dealer clearly communicated this to the buyer. But dealers use something I call   “the old stock number trick”.  Every car in a dealer’s inventory is assigned a stock number for accounting purposes. A typical stock number is something like “A25771”. Dealers will put their stock number for that particular advertised car in the fine print at the bottom of the ad or elsewhere. Even if a customer sees the stock number, they have no way of knowing what it means. When the prospective buyer responds to the advertisement, the salesman tells him that the advertised car was sold but, “not to worry”, he has several more “just like it”. Yes, he does have several more identical cars in terms of model, accessories, and MSRP. But, because they have different stock numbers, the law now permits him to add his extra profit to the advertised prices disguised as Dealer Fee and Electronic Filing Fee.

It’s an affront to the car buyers of Florida that their Attorney General and their legislature allow this to continue. Car dealers have powerful lobbying groups and they clearly communicate to Pam Bondi, the AG, and the legislature that they better not mess with their Dealer Fees and Electronic Filing Fees.

Another reason you don’t hear much about this atrocity on consumers is that the media has assumed their “Hear no evil, see no evil, speak no evil” stance. The TV, newspapers, and radio are deathly afraid of losing car dealers’ advertising. Car dealers are the largest local advertisers. Some of you may know that my wife, Nancy, and I were recently fired from our weekly consumer advice radio show on Seaview radio which we had done for almost 7 years. This was because of dealer threats to cancel their advertising.  When I reported this attack on free speech to the Palm Beach Post, they refused to run the story or even allow me to purchase an advertisement that states the truth.

What can you and I do about this when we have such powerful institutions as the media, Attorney General, and Florida Legislature siding with the car dealers against you, the consumers? The answer is MAKE SOME NOISE! “We, the people” support, not only the media, but the politicians. Without our viewing, listening and readership the media can’t sell advertising and without our dollars and votes, politicians can’t get elected. Call, write, or email your local newspaper, radio and TV station, and local senator and representative. Tell them you’re tired of them kowtowing to the car dealers and the Florida Automobile Dealers Association. Demand that the laws on the Electronic Filing Fee and the Dealer Fee be enforced. Tell them “We’re mad as hell and we won’t put up with it anymore!”

Open Letter to the Owners of SeaView Radio: Please Bring Back Earl Stewart on Cars

Mr. Jim Martin and Ms. Tricia Woods  

SeaView Radio; Station WSVU  

8895 N. Military Trail Suite 206 C

Palm Beach Gardens, FL 33410

Dear Jim and Tricia,

As you know, on October 22, Chet Tart, General Manager of WSVU (SeaView) radio in North Palm Beach/Palm Beach Gardens visited me in my office and told me that you had ordered him to cancel “Earl Stewart on Cars” which had been airing on SeaView Radio for about seven  years.

Every Saturday morning Nancy and I gave advice to huge number the car owners of South Florida who called our show for advice. Nancy focused on giving advice to women who have become a powerful economic force in car buying, leasing and servicing but who are treated by car dealers with less respect than men. We were unique in that we “told it like it is”, naming car dealers who wronged car buyers. Our show, Earl Stewart on Cars, provided a community service to the south Florida area and was, in many people’s opinion, the most important show on SeaView. 

As you know, in all the years that we were on the air, neither SeaView nor Nancy and I were sued by any car dealer for what we said to our audience. This indisputable fact speaks volumes. Any lawyer will tell you that the truth is the perfect defense against libel and slander. Every week, we implored car dealers and employees of car dealerships to call into our show and have their fair say. I promised to allow them to speak as long as they wished and encouraged then to tell me if I said anything that was untrue. Only a very few dared call to criticize us but a few car dealers did call to compliment us. I always said that there are honest, ethical car dealers, albeit too few. I kept a list of recommended car dealers and a list of those I don’t recommend. I used the information from my weekly shopping report to decide.

Through Chet Tart and your advertising salesmen, you have been threatened often over the years by car dealers. They called Chet Tart and they told your advertising salesmen that they would either cancel their advertising unless you got rid of Earl Stewart on Cars, or that they would never advertise unless you did so. Chet would tell Nancy and me about these threats, but he also always told us that he supported and defended us and that he thought that our show was an asset to SeaView and to our community. He bragged about our very strong ratings; sometimes we were actually the #1 radio show in the South Florida market for our time slot and demographic. We were almost always in the Top Ten. Advertisers clamored to be on our show because of its strong ratings.

Although we paid for separate advertisements on SeaView, we never paid for our show, “Earl Stewart on Cars”. I told Chet, that we did not want our show to have the stigma of an infomercial. All of the other talk shows on SeaView either pay for their air time or are responsible for bringing in advertisers. We did neither. Chet even agreed to pay us a token amount for the show, even if it was only $1.

Jim, you’ve been in the broadcasting business a long time, just like I’ve been in the car business a very long time. We’re about the same age. I’m not saying that older business owners are always smarter than the younger ones, but I honestly believe that oftentimes we are wiser. Wisdom comes with experience and we’ve both had a lot of that. One thing that experience has taught me is that when I make a mistake, I shouldn’t be afraid to admit it. I found that is not only better for my business but better for my brand image because it earns the respect of my employees and my customers. 

I sincerely and respectfully believe that you made a mistake in canceling our show. I’m basing my opinion, not on the fact that I believe it was ethically wrong although I do, but because it is economically wrong. It would be easy for me to say that you should reinstate our show because our show was a strong benefit to the community and you should not cave in to threats by car dealers who are a problem for the community. But, I’ve owned and operated businesses for 46 years and there are times when you have to put survival first and principle second. This is probably one of those times for SeaView. I’m well aware that SeaView is struggling financially and you owe its survival, not just to yourself but the other stockholders and SeaView’s employees and their families. I’ve experienced similar situations with companies I’ve owned and operated. Survival trumps principle.

This is why I’m asking you to consider that cancelling our show is a bad economic decision for SeaView for the following reasons: (1) Earl Stewart on Cars had a lot of listeners and our audience was growing regularly. Chet, Nancy and I discussed syndication of the show on several occasions and most recently we discussed expanding the show to two hours from one. (2) The public and especially our listeners don’t like what you did to Nancy and me. Since I’ve gone public with our being “fired”, the response has been huge and totally in our support. They don’t understand that you feel you had to do this and, let’s face it, some in your organization don’t understand it either (although they are afraid to say so). This negative PR is very bad for business. (3) Most South Florida Car dealers don’t like me. It’s a distinct possibility that most of them who told Chet Tart or your salesmen “Fire Earl Stewart and I’ll advertise on your station” were lying to you. They may have been telling you this just to get back at me. It will be interesting to see how many car dealers Chet and your sales force are able sign up now that I’m gone. Wouldn’t it be tragic if you lost your best talk show and didn’t get any advertising from those dealers who told you they would come back!  Clearly, the best management decision for SeaView in the long run, is to reinstate “Earl Stewart on Cars”.  

You’ve already received a letter from my attorneys telling you that if you don’t bring back my show, I “will be left with no choice but to pursue whatever legal remedies are available to me.” Believe me, Jim, when I tell you that nobody hates litigation and lawyers more than Nancy and me. Litigation is always a last resort with me. If this was just about SeaView and Earl and Nancy, we would have just shaken off the hurt and surprise and walked away. But it’s about tens of thousands of loyal “Earl Stewart on Cars” listeners who rely on our show every week for advice on “how not to get ripped off by unethical and dishonest car dealers”. We can’t let them down and we won’t.

Please call me so that we can meet personally and privately to resolve this…just you, Tricia, Nancy and me.  My office number is 561 844-3461 and my cell phone number is 561 358-1474. We’ll all apologize to each other and work together to make SeaView Radio one of the leading radio stations in the market.

Sincerely,

Earl Stewart

Earl and Nancy: Fired from Radio Show...

...Raising Issues of Journalistic Ethics and Censorship

 Last Tuesday Earl Stewart on Cars, my weekly radio show which ran on Seaview Radio in North Palm Beach for nearly 7 years, was abruptly canceled.  Ed Morse Honda had threatened to cancel his advertising on Seaview unless Nancy and I were fired. One of the Seaview broadcasters (William is a pseudonym)  sent me an e-mail which you can read below with my response. I chose this as the clearest way to explain both my position and those of the Seaview owners and management. Read both sides and you be the judge. If you agree with me, please email or voice your views to the Seaview executives for the reinstatement of Earl Stewart on Cars.

Seaview Executive Contact Information:

Chet Tart, general manager

561 378-5503

Chet@seaviewradio.com

Jim Martin, owner

941 855-1111 or 207 767-1294

Intermartbc@comcast.net 

Tricia Woods co-owner

swfradio@aol.com

Email Exchange with "William":

William: Earl...although we only met twice, I really enjoyed meeting you, and I really like you.    And I understand your frustration and anger at Seaview for what they did.   I saw Chet Tart just a short time after he met with you as I was in the station to do my show that night.  I can tell you that he was not happy about what had happened, although he knew it was the right decision for the station.   This email is between you and me....Chet has no idea I'm sending it.   So this is not his point of view. 

Earl: I agree that Chet was not happy about firing me and he told me that last Tuesday afternoon in my office. He told me that “the owners of Seaview, Tricia and Jim” had made the decision and he had no other choice. However, although I believe Chet told you that firing Nancy and me was the right decision to make, I don’t believe that he truly believes that. Chet is “following orders”. At this stage of his life, he can’t afford to be job hunting. 

William: I'd just like to give you some thoughts that you may not have considered.    While I was not here when you started your show, I believe that it started out as a consumer friendly show, with helpful hints on car buying and maintenance, and other auto news.  I enjoyed listening to it.  Over time, you got into your "secret shopper" thing, and I think that Seaview probably didn't recognize it as the danger that it was. 

Earl: My show started out 7 years ago and was, until my last show, a “consumer friendly” show, but it was never a “car dealer friendly” show. I think this is the false story you’re being fed by Chet and maybe others at Seaview who are desperately trying to hang onto their jobs. Sharing the truth can get them fired. You can ask any one of my regular listeners if my show was ever just “helpful hints on car buying, maintenance, and auto news”. You can also ask the Gary Todd or Dick Farrell, (I’ll provide you with their contact information if you like) who worked with Nancy and me at the very beginning what kind of a show it was at the beginning. They are no longer employed by Seaview and can freely tell you the truth. If you have the time, I’ll send you a recording from some of my old shows. They are every bit as objective and critical of car dealers as all of my recent shows. Yes, the mystery shopping report was not on the show from the beginning but it has been for several years. We tried it one time and it became hugely popular. Listeners would call in to complain when we didn’t have time to get to the mystery shopping report. 

William: See, there is a difference between an investigative reporter, and a personality that owns a business.   If the investigative reporter spills the beans on some bad practices of a business, he has no vested interest in it.   The station might take some heat for it, but they would have made their decision before it went on the air whether to do it or not. 

Earl: I should not be banned as a consumer advocate because I happen to own a car dealership. I totally divorce my “car dealer persona” from all of my consumer advocate rolls. My book, Confessions of a Recovering Car Dealer, my weekly blog, my weekly column for Hometown News, my continuous speaking tours at public libraries, Rotary and Kiwanis Clubs, Condo Associations, schools, churches, synagogues, and my former radio show. I rarely ever mention my car dealership and, when I do, it’s only when asked or to give full disclosure. I never, ever try to sell anybody a Toyota when I wear my consumer advocate hat. The media widely accepts my consumer advocate roll. Last week I appeared as a consumer advocate on national TV, ABC News regarding illegal and unethical car practices by car dealers. Over the years I’ve been quoted and appeared in any number of national medium…CNN, Fox News, Wall Street Journal, NY Times, USA Today US News and World Report, The Geraldo Rivera Show, as well as local TV and radio. You say “there is a difference between an investigative reporter and a personality that owns a business”. I totally agree, one difference is that an investigative reporter who also has owned and operated a business for 46 years knows a lot more about that business than an investigative reporter who never sold a car. That’s what makes me unique because I know where “all the bodies are buried”. In fact, I buried a few of those bodies myself and hence my book…”Confessions of a Recovering Car Dealer”. “I’ve been there and done that” and that’s why unethical dealers fear me so. If I wasn’t telling the truth, can you explain why, over seven years, not one single car dealer has sued me for slander? Furthermore, my dealership is a model of ethics and integrity among car dealerships. “Let him who is without sin cast the first stone, and he who lives in a glass house shouldn’t throw stones.” I must be without sin because I do live in a glass house and the car dealers of South Florida would be all over me like a cheap Kmart suit if I wasn’t practicing what I preach.

 William: With a show hosted by the most recognized car dealer in Palm Beach, you do have a vested interest.  When you say disparaging things about Ed Morse or another dealer, the implication is that a customer would never see those things happening at your dealership.  That may be true, but it's a viewpoint that certainly is biased.  It's human nature.  We all think our company is the best.  Yours probably is.  

Earl: I would be hypocritical not to admit that my radio show brought me tons of business. I’m not sure what you mean by saying that it may be true that my dealership doesn’t rip off customers like Ed Morse but that viewpoint is biased.” How can something be true and biased? Check your Webster’s. 

William: In your book, you mentioned that while you have tried hard over the years to weed out bad employees, every once in a while you find a bad one and you deal with it.   Now just think if Seaview had the owner of Ed Morse on the air talking about something bad that happened at your dealership.   I don't think you'd be happy.  You might even pull your ads.   I wouldn't blame you if you did.  I've had many advertisers over the years who pulled their ads because they didn't like what was on the air or in print.   When that happens, the station or paper in question needs to assess the situation and see if the person pulling their ads has a valid point.  If you had a column in the Palm Beach Post and you wrote negative things about Ed Morse Honda, I bet they'd have a word with you, too. 

Earl: I do have bad employees working for me. I have between 140 and 150 employees working for me and there are always a few rotten apples in a barrel that big. I encourage anyone to tell me about my rotten apples including callers to my radio show. If you were a regular listener, you would know that customers of mine will occasionally call in and criticize their treatment at my dealership. I encourage them to talk and explain in detail their bad experience. I then sincerely apologize and promise to investigate, make it right, coach the person(s) responsible and correct the processes that allowed it to happen. Many are amazed that I, not only allow, but encourage callers to criticize me and/or my dealership. People are also amazed that I regularly encourage car dealers and car dealership employees to call in. I promise to allow them all the time they need and not mute them, talk over them, or disconnect them. Some have taken me up on this but not too many. Not only is this the right thing to do, but it’s very good radio and builds my listener base. 

William: I did not hear what you said about Ed Morse Honda, but from your comment on facebook, it's obvious that you don't like their business practices.    Knowing you, I bet your instincts are correct.   But that doesn't mean that a radio station has to give you the podium to make negative comments about their other advertisers....the ones who pay the bills.   

Earl: I said very little about Ed Morse; it was a caller, Frank Nash, who called the show after Ed Morse Honda refused to sell him a new Honda at the advertised price. Ed Morse Honda also added the dealer fee to the price which is a violation of state law. If you would like to speak to Frank Nash, his phone number is XXX-XXXX (redacted). If Frank Nash or I slandered Ed Morse Honda, he has his remedy in the courts, but as you know “truth is the perfect defense against slander and libel”. I would agree that Seaview shouldn’t give me a podium to say negative things about a car dealer if they were untrue. But are you saying that they should censor my efforts to report illegal practices by a local car dealer? 

William: The good news is that in this age of new technology, you are not limited to licensed radio and TV stations, or newspapers, to get the word out.  You have a blog.  You have a website. You are on facebook.   You can do a "radio" show online and as a podcast.  Someone mentioned a national radio show.   I will tell you that everything you talk about EXCEPT the bad business practices of West Palm Beach car dealers is of interest to a national audience. 

Earl: William, bad business practices of WPB dealers may not be of interest to a national audience if that’s all they heard every week. But bad business practices by a local car dealer in Minnesota were of great interest to a national audience, ABC Lookout, with Brian Ross. I appeared on that expose and the show had very high ratings. You must know enough about what radio, TV, and all media audiences prefer to understand that “how to properly maintain your car” is trumped by “how not to get ripped off by your local car dealer”. Ask some of your friend what they think about their experiences with car dealers in buying and servicing. Answer this question…Why do car dealers perennially appear dead last on the Gallup “Honesty and Ethics in Professions” survey? There’s nothing the TV and radio audiences would rather see and hear than bad guys being exposed. 

William: Someone mentioned that you could buy the radio station.    Let's say you did want to buy a radio station here.    If you did, how many of your competing car dealers do you think would spend money with you?   Zero!   They wouldn't want to give you their money. 

Earl: Jim Martin and Tricia Woods have asked me to buy their station, but I declined. This may be one more reason they don’t want me on their station anymore. I declined because my objectivity would be questioned if I was the owner of the station that aired my views. I also declined because I know nothing about broadcasting and I didn’t like the potential ROI after looking at the financials. 

William: I think you have every right to say what you do about other dealers.  But there are consequences when you do that.   Nobody is under any obligation to give you the microphone or ink to do it.  If you want to continue doing this, you're going to have to find your own podium.  Fortunately, in this day and age, it's a lot easier. 

Earl: I’m not sure you’re right about there being no obligation by Seaview to allow my show to continue. My show is a community service show. The airwaves are owned by the people and the FCC and FTC have laws to protect the people. The FCC says that radio and TV stations must devote a certain amount of their use of the airwaves to serve the public and the FTC says that when groups of businesses conspire to harm or eliminate another business it is an illegal boycott. 

William: If you'd like to talk about this some more, I'd be happy to meet with you or talk on the phone.    If you don't like my message, I understand.  But you seem like a really great guy, and I wanted you to look at the entire picture.   I remember the times my heart was broken buy a girl who broke up with me.  It hurts.  But after a while, it makes you strong. 

Earl: I’ll be happy to meet with you or talk on the phone, but I’ll be very busy this coming week, as you can imagine. 

William: Try to hold back your anger, and rise above it.  Seaview is a great little radio station, and Chet has been great to me.   But the name Earl Stewart is better known in Palm Beach County than Seaview Radio.   I can't say that about William.    I think you can make this into a positive. 

Earl: Thanks for your advice on anger management but Chet will tell you that I wasn’t angry when he fired me last Tuesday. I’m disappointed in the owners of Seaview, but fully understood that Chet did what he had to do. If I were Chet Tart, I would have done exactly the same thing. I also think he’s “following orders” when he denies the truth of why I was fired. I’m getting feedback from my listeners who have called and spoken to Chet, Jim Martin, Mike Balsamo, and others that I’m lying about why I was fired. I believe that even Jim Martin may be misinformed and that Tricia Woods was the architect forcing Chet to fire me. You said in your email that the reason my show was canceled was that it had gradually become more and more anti dealer. This is not true. My show’s theme song is the theme from “The Good the Bad and the Ugly” (Nancy’s idea) and that’s what we do. We tell good stories about dealers when they happen albeit all too infrequently. What is true is that Seaview has found it difficult to sell advertising to car dealers for some time. Braman, Napleton, Arrigo, Schumacher, and Ed Morse have all threatened Seaview and most have canceled their ads. Ed Morse was the straw that broke the camel’s back. 

I believe that Tricia Woods made a very bad management decision. Looking at advertising revenue from one business group as the most important thing to the survival of Seaview is shortsighted. The heart of a radio station’s long run survival is their listener base. When the smoke settles the listeners will decide if Seaview survives. A lot of those listeners don’t like the way Seaview treated Earl and Nancy Stewart. As the word continues to get out, and this is my main mission over the next few months, more and more of Seaview listener will know the truth. Seaview’s listener base could be even further eroded should negative facts develop and be made public if litigation ensues.    

Fired!

Earl Stewart forced off the air at Seaview Radio by disgruntled competing car dealers who threated to pull their advertising if Stewart wasn’t muzzled

Earl Stewart, who has for the past seven years hosted the Seaview Radio show Earl Stewart on Cars with his wife Nancy Stewart – has been forced off the air by Seaview, bowing to threats from competing car dealers to pull their advertising from the station.  His show has been cancelled immediately, according to Seaview Station Manager Chet Tart.  The decision was made by Seaview owners Jim and Tricia Woods (correct?) in response to the threats to their advertising income.

Each Saturday from 9 – 10 a.m. on Seaview  (960 a.m., 95.9 FM and 106.9 FM), Stewart answered calls from listeners on everything from how to buy a car without getting ripped off, to how to service a car, get the most our of a lease, and other consumer oriented questions.  One of the most popular weekly segments is the “Mystery Shopper” where a listener visits a local car dealership and reports back to the audience on their experience.  From these experiences and listener feedback, the show developed a “good car dealer” and “bad car dealer” list.

Last week, one caller reported on a bad salesexperience at Ed Morse Toyota.  When the owner of Ed Morse heard about the unfavorable report on the radio show, he called the owners of Seaview Radio and threatened to pull his advertising from the radio station if Stewart’s show wasn’t cancelled.  He said that other car dealers would join him in this effort to silence Stewart by also pulling their ads from the Palm Beach Gardens-based radio station.  

Stewart has been a vocal advocate for consumer rights and has promoted changes in the way car dealers do business, leading a statewide effort to abolish or limit dealer fees in Florida, expose scams such as paying for nitrogen in tires, and more.  In September Stewart was featured on ABC Network news’ The Lookout as an honest car dealer commenting on unethical car deal techniques.

“It’s a sad day for consumers when a radio station cancels one of its most popular programs simply for telling the truth to the public,” Stewart said. 

Don’t Be “Flipped” to a Lease

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

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

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

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

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

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

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

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

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

Auto Buying Services Can Be a Safer Way to Buy

Auto buying services are flourishing because buying a car is something that the average person dreads more than a root canal or a colonoscopy! You may be familiar with AutoTrader.com, AutoByTel.com, Cars.com, Costco, Sam’s Warehouse, and TrueCar.com. There are thousands of local, private brokers who will buy a car for you for a fee. There are also a lot of other organizations that provide auto buying services for their members. AAA, American Express, Consumer Reports, PenFed, Nationwide, GEICO, USAA  are just a few.  

The first thing to remember is that all auto buying services are in the business to make a profit. They are all “middle men” that you and/or the dealers pay fees to. Paying a fee raises the cost of the car to the dealer.  That means that if you are a shrewd negotiator who really does their homework you should be able to buy a car for as low a price as any auto buying service and save the cost of the fee.

Realistically, very few people are that good at negotiating. Remember that car salesmen and managers are professional negotiators. This brings to mind the old joke…”When you sit down at a poker game and look all around the table but don’t see a sucker. You’re the sucker!” Besides lacking professional negotiation skills, few people have the “thick skin” to be able to deal with the game-playing and insulting shenanigans of car salesmen and their managers. In addition to the “pain” of buying a car is the inordinate amount of time it can take.

I consider local, individual brokers as being the least efficient and trustworthy of all auto buying services. Most auto brokers are ex car salesmen. They charge you a fee and they often charge the dealer a fee too. A private broker’s fee is usually much higher than a national auto buying services. At my dealership I’ve paid brokers several thousand dollars to his customer and had to charge a lot more for the car than if the customer had come to me directly. The broker probably charged the customer a fee too. There are a few brokers who are trustworthy and won’t gouge their customers, but they are few and far between.

As far as all of the national buying services, it’s still “buyer beware”. My two favorites are TrueCar.com and Costco, but even with these two you should never let your guard down. The Costco program is administered by a separate company from Costco that is licensed by Costco to use their name. TrueCar is owned by a group of private investors and is new on the scene but are growing very rapidly. I’m signed up with TrueCar and Costco and I’m also a member of the TrueCar national dealer council. I do business with Cars.com, AutoTrader, and Autobytel.

The auto buying services advise you or the dealer of the price you should pay for the car. But, you have to remember that they don’t come into the dealership with you when you actually purchase the car. Even though I don’t recommend local car brokers, this is one advantage they have over national auto buying services. A broker will go into the dealership with you to assist you in the buying process or actually to the buying himself. If he is honest and his loyalty is to you, not the dealer, he can protect you from being tricked into paying more than you were told the price was.

This is the biggest problem with national auto buying services. Every service will, or should, give you the name of the salesman in the dealership that administers their program. They usually have more than one person, and you should be sure that you deal only with their designated representative. All too often, members of auto buying services and companies just walk into the dealership and say “I’m a Costco member and I want to buy a car at the special Costco price.” The person you are talking to is likely a commissioned sales person and he’s also likely to say, “Sure, I’ll be happy to sell you a car at the Costco price.” Of course, what happens is he sells you the car at the highest price he can because he’s paid 25% of the total profit he makes on that car. Never deal with anyone else at a car dealership except the designated member of that car buying service.

You should also know the auto-service quoted out-the-door price of the car you’re buying before signing the papers or taking delivery. One of the reasons I like TrueCar.com is that they give you that price before you ever go into the dealership. Costco does not give you the price but they require the car dealer to give you an official Costco price sheet for the specific car you’re buying. Unfortunately this doesn’t always happen. I recently mystery shopped a Costco dealer and they did not show my mystery shopper the Costco price sheet, but they said it was.

My definition of an “out-the-door price” is one that excludes only government taxes and fees.  All too often, the car dealers add their own fees which they variously refer to as doc fees, dealer fee, prep fee, administrative fee, dealer handling fee, electronic filing fee, etc. One of my gripes with TrueCar.com is that they give you a “TrueCar Price” but below that in the fine print they say “Dealer’s Name charges a $XXXX.00 Documentary Fee.” Be sure that you read your auto buying services quoted price very carefully including the fine print.

Another common trick by dealers is to add “dealer installed accessories” to the price quoted by the auto buying service. My advice is to never buy a dealer installed accessory, only factory installed. There are always exceptions to this but be very careful when making one. Dealer accessories are typically low cost items, virtually worthless with hugely inflated prices. Examples are nitrogen in tires, paint sealant, fabric coat, pin stripes, VIN’s etched in glass, and roadside assistance.

If you cannot get the dealer to agree to the price that was given you by the auto-buying service, leave the dealership, call your auto buying service, and report that dealer. Usually there are other dealers in your area who are also affiliated with the same buying service and they may recommend one of them. The auto buying service is paid by the dealer and that can be a problem. They have to keep the dealers happy so that they can make money. They like to keep the car buyers happy so that they will come back and tell their friends. The wise auto-buying service will realize that the best long term strategy is to put the car buyer over the dealer. The auto buying service’s first loyalty should be to the car buyer, not the dealer. This means that services should police their dealers and cull out those dealers who try to take advantage of car buyers by raising the agreed upon prices.

What is the “true” cost of that new car?

It is almost impossible for you to determine the true cost of a new car. This might sound crazy, but many dealers don’t know the true cost of their cars. The manufacturers and distributors invoice their dealers for an amount when they ship them a car that is almost always several hundreds of dollars more than the true cost. It’s fair to say that in virtually every case the “invoice” for a new car is much higher than the true cost. By true cost, I am referring to cost as defined by GAAP, generally accepted accounting principals.

You probably have heard about “holdback”. That is an amount of money added into the invoice of a car ranging from 1% to 3% of the MSRP which is returned to the dealer after he has paid the invoice. Some manufacturers include the cost of regional advertising in the invoice which offsets the dealer’s advertising costs. Another fairly common charge included in invoices is “floor plan assistance”. This goes to offset the dealer’s cost of financing the new cars in his inventory. Another is “PDI” or pre-delivery expense which reimbursed the dealer for preparing the car for delivery to you. I could name several more, depending on the manufacturer or distributor. Some of these monies that are returned to the dealer are not shown as profit on his financial statement and some are. Technically a dealer could say that the cost he showed you reflected all of the profit (by definition of his financial statement), but the fact would remain that more money would come to back to him after he sold you the car. To me, that’s called profit.

Besides holdbacks and reimbursements for expenses, you must contend with customer and dealer incentives when trying to figure out the cost of that new car. You will probably be aware of the customer incentives, but not the dealer incentives. Most dealers prefer and lobby the manufacturers for dealer rather than customer incentives just for that reason. Also, performance incentives are paid to dealers for selling a certain number of cars during a given time frame. These usually expire at the end of a month and are one reason why it really is smart to buy a new car on the last day of the month.

Last but not least, remember the “dealer fee”, “dealer prep fee”, “doc fee”, “dealer inspection fee”, etc. which is added to the price you were quoted by the salesman.. It is printed on the buyer’s order and is lumped into the real fees such as Florida sales tax and tag and registration fees. Most dealers in Florida (it is illegal in many states) charge this fee which ranges from $500 to $1,000. If you are making your buying decision on your perceived cost of the car, even if you were right, here is up to $1,000 more in profit to the dealer.

Hopefully you can now understand why it is virtually impossible to precisely know the cost of the new car you are contemplating buying. Most often the salesman and sales manager is not completely versed on the cost either. Checking the cost on a good Internet site like www.kbb.com or www.edmunds.com is about the best you can do. Consumer Reports is another good source. One reason that Internet sites don’t always have the right invoice price is that different distributors for cars invoice their dealers at different prices.

Do not make a decision to buy a car because the dealer has agreed to sell it to you for “X dollars above his cost/invoice”. This statement is virtually meaningless. As I have advised you in an earlier column, you can only be assured of getting the best price by shopping several dealers for the exact same car and getting an “out the door” price plus tax and tag only.

Pitfalls to Avoid When Having Your Car Serviced

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

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

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

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

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

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

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

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

BUY OR LEASE YOUR NEW CAR AT THE RIGHT TIME OF THE YEAR

The total cost of a new car consists of many factors including initial purchase price, maintenance and repairs, and insurance. One of the most often overlooked and biggest costs of owing a car is depreciation.  Some makes and models of cars depreciate more than others. By choosing the right make and model you can minimize depreciation. You can also minimize depreciation by properly maintaining your car, protecting it from the elements, and selecting the best color. One important factor in depreciation that is most often overlooked is the time of year that you buy or lease your car.

You should always buy your new car as soon as possible after that year model is introduced. Some would disagree, arguing that you can buy a car for less at the end of the model year. Even if this were so (and I don’t agree with this), the savings would not offset the increased cost of depreciation that you inherit by buying a new car that is a year old. If you follow the advice I have given in my previous columns on the smartest way to buy a new car, you can usually buy a new car for close to the same price at the beginning of the model year as at the end.

There was a time when virtually all makes of cars were introduced in the last quarter of the calendar year preceding the model year. If you bought a new model in September, you could be assured that you got it at the right time to minimize your depreciation. Nowadays, new models are introduced at almost any time and the introductions are nearly unpredictable. It’s not unheard of for a manufacturer to actually skip a model year entirely, selling last year’s model for another year. Or, sometimes a manufacturer will introduce a new model as much as two years before the calendar date of that model year. You should be sure you know exactly when that model year you are contemplating buying was introduced. You don’t want to buy a model year that was introduced 6 or 8 months ago

If you are leasing your car, you should also try to lease it as soon as possible after that year model is introduced. Also, when deciding on the length of the lease, your lease should end when the new model that you will lease or buy next is introduced. You don’t have to lease a car for a full one, two, three, or four years. You can lease a car for 39 months, for example, which may assist you in having your lease terminate at just the right time to buy or lease your next car.

Be sure you know how many more years the make and model you select will remain before it is replaced by a major model change. The life cycle of a particular model varies between manufacturers from as short as 3 years to as long as 6 or 7 years. Your car will retain its value considerably more if it is still within its current product cycle when you trade it in. You need to be especially wary when a specific model is discontinued entirely. Research this carefully and time your purchase or lease as early in the product cycle as possible.

 If you are buying a brand new model at the beginning of its product cycle, be sure that you are buying from a manufacturer that has a very good reputation for quality. You can get a pretty good idea of the quality of the new model by researching the reliability of the previous year model. It is true that a brand new model can experience some bugs during the early months of its first year. If you are nervous about this, it might pay to wait for 3 or 4 months after a brand new model is introduced to see if problems in the form of recall campaigns or otherwise do occur.