Leo Durocher is often quoted as saying “Nice guys don’t win ball games” [He later denied ever saying this]. But this expression is quoted often too justify aggressive, rude, exploitive and unethical business practices. A surprisingly large number of otherwise intelligent business leaders actually believe this saying. This is especially prevalent in the retail car business. I’m a member of an organization called a “20 Group”. This group of car dealers (about 20, hence the name) meets for 3 days 3 times a year to compare business practices and financial results. Our members are from all over the USA. The majority of the members of this group think my way of doing business is not smart. Most Florida dealers I know don’t understand or agree with my business practices.
This column is not a forum to celebrate my accomplishments or for trying to sell you a Toyota, but to share my knowledge with you about how to buy your next car or have your car serviced without being taken advantage of. With that said, I tell you that my Toyota dealership sold more new Toyotas last year than any other Toyota dealership between Orlando and Ft. Lauderdale. We are the currently ranked #50 out of more than 1,600 Toyota dealerships nationwide and we are #10 in the SE USA. Of course I’m proud of that accomplishment, 33 years in the making. After all, my dealership is in Lake Park, which many of you may not have even heard of. I always mention North Palm Beach in mentioning my dealership’s location because we are on the city limit of Lake Park and North Palm Beach. Our population in Lake Park in northern county is much less than that of West Palm Beach and Delray. We just aren’t “supposed to” sell more cars than the dealers from the “big city”.
Was it Will Rogers who said, “It ain’t braggin’ if it’s so”? I’m not sure if I agree with that and I always feel a little funny about tooting my own horn. The reason I’m writing about my dealership’s accomplishment is not because of what we did but how we did it. We were able to accomplish this truly amazing feat by being “nice guys” and we did win in spite of what Leo Durocher may have said. What most other car dealers can’t understand is how we can be so successful without advertising the way they do. By that I mean we virtually never advertise cars, prices, special sale events [Once last year we did advertise a sale on new Priuses because we temporarily had an oversupply]. If you have seen my ads, you know how I advertise. It’s all about my direct personal access via my red phone, my decrying the dealer fee and calling for it being made illegal, and telling you that you will always be treated with integrity, respect, and courtesy in my dealership.
Our sales practices and our service practices are like our advertising. We truly walk the talk. I have four red telephones located in the service drive, customer waiting lounge, show room, and the body shop. Beside the red phone is a sign with my picture saying, “The buck stops here. If we have not exceeded your expectations, pick up this red phone and be directly connected to me, the owner”. These red phones immediately ring my cell phone which I have with me 24/7 [I turn it off when I go to sleep at night]. I invite all of my new customers to a reception every two months, speak to them, and give each one my business card with my home telephone number. We don’t have secretaries in my company and we don’t have voice mails. No employee, including me, has their calls screened. In fact, if the person you are calling is out of the dealership, the call is directly connected to her cell phone. My instruction to all of my employees is “If the customer thinks she is right, take care of the problem”. The important thing about this philosophy is not debating who is right. The important thing is what our customer believes. Our motto is “It’s what you do for your customer when you don’t have to that is the true measure of character…like sticking up for somebody that can’t defend himself”.
There is another reason that I’m “bragging” in this column. Other businesses and especially other car dealers are sitting up and taking notice. Hopefully we will see some of them change their business practices like dropping the dealer fee and changing their bait and switch advertising tactics. If you’re a car dealer reading this column, give me a call and let’s talk. I want to tell you how much better you will do by treating your customers the way your mother probably told you you should. Not only will your business do better but you will sleep a lot better at night.
Saturday, May 31, 2008
Saturday, May 24, 2008
STOP COMPLAINING ABOUT GAS PRICES
“God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and the wisdom to know the difference.” Whether you think our gas prices are soaring because of a conspiracy by the giant oil companies, speculators on Wall Street, OPEC, or plain old supply and demand, there’s not much you or I can do about it, other than vote for the candidates of our choice and pray. I thought it may be useful to suggest some things you can do about lowering your total cost of fuel even if you can’t lower gas and oil prices.
(1) Burn the lowest octane fuel you can in your car without causing a ping or a knock. Even if your car’s owner’s manual recommends high test, there’s a good chance you can drop down one or even two grades of octane and your engine will run just fine. There are a lot of factors that affect how your car runs on a particular grade of fuel like ambient temperature and ethanol content. You can even experiment by mixing octanes in your tank. Buying the lowest octane will save you several cents a gallon.
(2) Keep your tires inflated 2 or 3 pounds over the manufacturer’s recommendation and check their pressure at least once a month. You may get a little harder ride but you will improve your gas mileage by about 5%.
(3) Check the Internet for the lowest priced gas station in your neighborhood. My favorite Web site is http://gasprices.mapquest.com/. This site shows prices for all of the gas stations near your zip code from lowest to highest. It also shows a map with the location, name and address of the gas station. I just checked the prices from my zip code, 33403. The lowest price for regular was $3.84/gal for a Circle K on Military Trail and the highest was $4.25/gal for Sunoco in Palm Beach. That’s 41 cents per gallon difference! You can save $8.20 on a 20 gallon fill up!
(4) Drive slower. Do you remember how they lowered the speed limit on the turnpike during our last energy crunch to 55 mph? This was to save gasoline because you burn a lot more fuel at 70 mph than you do at 55.
(5) Learn how to drive your car for maximum fuel efficiency. It’s not uncommon for one of my customers to complain that they are not getting the gas mileage on their particular model Toyota that the EPA sticker on their car when they bought it says they should. We always check the mileage by having one of our technicians drive the car and measure the mileage. Usually the technician gets as good or getter gas mileage than the EPA mileage. This is simply because he is an expert at driving cars for maximum fuel efficiency. One of my technicians, Rick Kearney, tell our customers that the best thing they can do to improve their gas mileage is to “reach down and take the brick out of their shoe”. He suggests that you imagine there is an egg between your foot and the gas pedal. Anticipate stops and curves so that you don’t have to brake, but just take your foot off the gas pedal. For longer stops like waiting for a bridge to go up and down or a train to go by, turn off your engine.
(6) Check your wheel alignment and rotate and balance your tires every 6 months or 5,000 miles, which ever first occurs. The less friction between your tires and the road, the better your gas mileage will be. With all the potholes and road construction we have in South Florida, you can know your front end out of alignment without even realizing it. Just because you can’t notice a pull to one side doesn’t always mean your alignment is right. Misaligned wheels prevent your tires from rotating smoothly over the road surface. Rotating and balancing your tires assures even wear and smooth surface for your tires to roll on.
(7) Riding a bicycle and walking is good for your health. When was the last time you walked anywhere? When was the last time your road a bicycle? Here’s a great way to save gas and improve your health at the same time.
(8) Take the bus or the train. I always get angry when I see a Palm Tran bus on the road because there are usually very few people on board. I think I read that they average about 20% occupancy. That’s a huge waste of taxpayers’ money. South Floridians just prefer the convenience of their own cars, but for the sacrifice of a little convenience think of all the gas dollars you can save. Tri-Rail not only will save you lots of gas money but the aggravation of fighting the traffic on I-95 or the turnpike.
(9) If you decide to purchase a hybrid vehicle (or any fuel efficient model), be very careful not to fall victim to price gouging. Many car dealers take advantage of sky-high gas prices by charging a large premium over the MSRP of hybrids and fuel efficient vehicles. These "market value adjustments" amount to thousands of dollars and unfairly victimize consumers.
(1) Burn the lowest octane fuel you can in your car without causing a ping or a knock. Even if your car’s owner’s manual recommends high test, there’s a good chance you can drop down one or even two grades of octane and your engine will run just fine. There are a lot of factors that affect how your car runs on a particular grade of fuel like ambient temperature and ethanol content. You can even experiment by mixing octanes in your tank. Buying the lowest octane will save you several cents a gallon.
(2) Keep your tires inflated 2 or 3 pounds over the manufacturer’s recommendation and check their pressure at least once a month. You may get a little harder ride but you will improve your gas mileage by about 5%.
(3) Check the Internet for the lowest priced gas station in your neighborhood. My favorite Web site is http://gasprices.mapquest.com/. This site shows prices for all of the gas stations near your zip code from lowest to highest. It also shows a map with the location, name and address of the gas station. I just checked the prices from my zip code, 33403. The lowest price for regular was $3.84/gal for a Circle K on Military Trail and the highest was $4.25/gal for Sunoco in Palm Beach. That’s 41 cents per gallon difference! You can save $8.20 on a 20 gallon fill up!
(4) Drive slower. Do you remember how they lowered the speed limit on the turnpike during our last energy crunch to 55 mph? This was to save gasoline because you burn a lot more fuel at 70 mph than you do at 55.
(5) Learn how to drive your car for maximum fuel efficiency. It’s not uncommon for one of my customers to complain that they are not getting the gas mileage on their particular model Toyota that the EPA sticker on their car when they bought it says they should. We always check the mileage by having one of our technicians drive the car and measure the mileage. Usually the technician gets as good or getter gas mileage than the EPA mileage. This is simply because he is an expert at driving cars for maximum fuel efficiency. One of my technicians, Rick Kearney, tell our customers that the best thing they can do to improve their gas mileage is to “reach down and take the brick out of their shoe”. He suggests that you imagine there is an egg between your foot and the gas pedal. Anticipate stops and curves so that you don’t have to brake, but just take your foot off the gas pedal. For longer stops like waiting for a bridge to go up and down or a train to go by, turn off your engine.
(6) Check your wheel alignment and rotate and balance your tires every 6 months or 5,000 miles, which ever first occurs. The less friction between your tires and the road, the better your gas mileage will be. With all the potholes and road construction we have in South Florida, you can know your front end out of alignment without even realizing it. Just because you can’t notice a pull to one side doesn’t always mean your alignment is right. Misaligned wheels prevent your tires from rotating smoothly over the road surface. Rotating and balancing your tires assures even wear and smooth surface for your tires to roll on.
(7) Riding a bicycle and walking is good for your health. When was the last time you walked anywhere? When was the last time your road a bicycle? Here’s a great way to save gas and improve your health at the same time.
(8) Take the bus or the train. I always get angry when I see a Palm Tran bus on the road because there are usually very few people on board. I think I read that they average about 20% occupancy. That’s a huge waste of taxpayers’ money. South Floridians just prefer the convenience of their own cars, but for the sacrifice of a little convenience think of all the gas dollars you can save. Tri-Rail not only will save you lots of gas money but the aggravation of fighting the traffic on I-95 or the turnpike.
(9) If you decide to purchase a hybrid vehicle (or any fuel efficient model), be very careful not to fall victim to price gouging. Many car dealers take advantage of sky-high gas prices by charging a large premium over the MSRP of hybrids and fuel efficient vehicles. These "market value adjustments" amount to thousands of dollars and unfairly victimize consumers.
CAR LEASING BOOBY TRAPS
This is the third article I’ve written on leasing, but I felt it was time because car dealers are resorting more than ever before to leasing advertising. This is simply because it’s easier to offer a low monthly payment with a lease ad than with a purchase ad.
(1) You owe the bank or leasing company for damage beyond “normal wear and tear” and excess mileage. The danger here is because many people return their car to the dealership after the lease expires without getting signed, written verification of what damage exists on the car and what mileage is on the odometer. Return lease cars commonly sit on the car dealer’s lot for weeks or even months before the bank or leasing company gets around to picking the car up to send it through the auction. Anybody might be driving that lease car in the interim. It could be an employee of the dealership. A returned lease car with a full tank of gas can be a big temptation. In many dealerships the accounting for returned lease cars is very sloppy. Remember, the car does not below to the dealership, but to the bank or leasing company. The dealer doesn’t even have insurance on this car. The insurance may even still be in your name. A return lease car can easily be stolen and no one would even notice. I have heard many horror stories of customers who received bills from their leasing company weeks after returning their lease car for thousands of dollars in damage and excess mileage that they say they were not responsible for. Your only protection is to be sure that a representative of the dealership fills out, with you, a complete return lease inspection form which notes all damage, the estimated cost of repair and the mileage. As an extra precaution, I recommend taking pictures of your lease return car. Be sure that this is signed by the dealership representative and you get a copy.
(2) A lease ad with a large down payment and short term. Most lease ads you see on TV or read in the newspaper have a large down payment hidden in the fine print. A down payment of $4,000 is typical. Ironically one of the biggest reasons people lease cars is to avoid laying out more cash. Dealers do this because a cash down payment on a lease is “leveraged” compared to a down payment on a purchase. A $4,000 down payment on a lease will reduce the monthly payment much more than on a purchase. Also, watch out for shorter lease terms such as 24 months compared to 36 or 48 which are normal. Remember, when buying a car, your monthly payments are paying for the “whole car”. When leasing, you are only paying for a small part of the car…the time you use it. A 24 month lease requires less of a down payment to lower the monthly payment than a 36 month lease or 48 month lease. You can actually lease a car for “zero dollars per month” if you put up a large enough down payment. The banks call this a “one-pay lease”. All you are doing is making all of your lease payment up front and, to a lesser extent; this is what you’re doing when a dealer sneaks in a large lease down payment in the fine print.
(3) Low mileage allowance. Be sure you know exactly how many miles are allowed in your lease contract. By restricting the number of miles you are allowed, the dealer can quote a lower monthly payment. I’ve seen lease ads with as low as a 7,500 annual mileage allowance and a 25 cent per mile penalty. Most people drive a lot more miles than this. If you missed this in the fine print and are a fairly typical driver who puts 15,000 miles a year on your car, you would get a surprise bill from the leasing company of $5,625 at the end of a 36 month lease!
(4) The Lease Acquisition Fee and the Dealer Fee. If you thought you were going to avoid the infamous “license to steal”, the dealer fee, by leasing your car you are wrong. The dealer will also charge this sneaky fee on a lease [which goes by at least 22 names according to the Florida Senate Investigative Report]. Furthermore, the banks or leasing companies all charge their version of the dealer fee commonly referred to as the “Lease Acquisition Fee” or “Bank Fee”. It’s fairly common for the bank or leasing company to kick back half of this to the dealer. This charge averages about $800 or $900.
(5) The Lease Disposal Fee. It would almost be funny if it weren’t so deceptive. The bank is charging you an extra fee for leasing you the car and then hitting you again for taking the car back. They certainly incur a cost for doing the lease and for taking the lease back, but his is called business overhead expense and should be included in their price which is your lease payment. The motive behind all of this, of course, is the same motive behind the dealer fee…it allows the “illusion” of a lower price than you are actually paying.
(6) Higher Insurance Costs. Typically you are required by the bank or leasing company to carry more insurance on their lease car than you might normally buy if you purchased your car. Furthermore, the cost of the insurance is simply higher on lease cars. That may be because insurance companies know that people are not as careful driving a lease car [belonging to the bank] than they are their own car.
(7) Higher Credit Requirements. Another reason dealers advertise lease payments is that most of those who respond to the ad cannot qualify to lease a car and the dealer then tries to sell them the same car. Of course the payments are much higher, but the dealer accomplished his purpose…”he got you in the door”. If you have a Beacon score below 720, which most people do, you can forget about leasing that car for advertised payment. You may be able to lease it at a higher payment if you have a 680+ Beacon, but many people don’t and cannot lease a car at all.
(8) No Hybrid Tax Incentive. The IRS offered a tax incentive to buy a hybrid car. All hybrids except Toyota have those in effect now. Because Toyota sells so many hybrids, 80% of all hybrids, their tax incentives expired. If you lease a hybrid, the tax incentive does not go to you; it goes to the leasing company because they are the legal owner of the car.
(9) No Tax Advantage to Leasing. This is not really a “booby trap” but a lot of people lease cars thinking they can write of the lease payment faster than they can depreciate a car if they buy it. This is not so. Check with your accountant.
The only real advantage I see to leasing over buying is protecting yourself against, or even taking advantage of, unexpected depreciation of the vehicle. When a bank or leasing company establishes a lease payment for a particular model car, the single biggest variable is what that car is going to be worth at the end of the lease. They can’t know and they have to guess. If they guess high and the car is worth a lot less at the end of the lease, you have no obligation and the bank suffers a big loss when they sell it at the auction. This happens more often than you might think. If you had bought the car, you would be the one to worry about the expectedly low trade-in value when you bought your next car. On the other hand if the bank guesses that the value of your lease car is lower than what the market value really is, you have an option to purchase that car at this low price. Even if you don’t want to keep the car, you can buy the car at this below market option price, sell it to the dealer for the true higher value, and pocket the difference.
(1) You owe the bank or leasing company for damage beyond “normal wear and tear” and excess mileage. The danger here is because many people return their car to the dealership after the lease expires without getting signed, written verification of what damage exists on the car and what mileage is on the odometer. Return lease cars commonly sit on the car dealer’s lot for weeks or even months before the bank or leasing company gets around to picking the car up to send it through the auction. Anybody might be driving that lease car in the interim. It could be an employee of the dealership. A returned lease car with a full tank of gas can be a big temptation. In many dealerships the accounting for returned lease cars is very sloppy. Remember, the car does not below to the dealership, but to the bank or leasing company. The dealer doesn’t even have insurance on this car. The insurance may even still be in your name. A return lease car can easily be stolen and no one would even notice. I have heard many horror stories of customers who received bills from their leasing company weeks after returning their lease car for thousands of dollars in damage and excess mileage that they say they were not responsible for. Your only protection is to be sure that a representative of the dealership fills out, with you, a complete return lease inspection form which notes all damage, the estimated cost of repair and the mileage. As an extra precaution, I recommend taking pictures of your lease return car. Be sure that this is signed by the dealership representative and you get a copy.
(2) A lease ad with a large down payment and short term. Most lease ads you see on TV or read in the newspaper have a large down payment hidden in the fine print. A down payment of $4,000 is typical. Ironically one of the biggest reasons people lease cars is to avoid laying out more cash. Dealers do this because a cash down payment on a lease is “leveraged” compared to a down payment on a purchase. A $4,000 down payment on a lease will reduce the monthly payment much more than on a purchase. Also, watch out for shorter lease terms such as 24 months compared to 36 or 48 which are normal. Remember, when buying a car, your monthly payments are paying for the “whole car”. When leasing, you are only paying for a small part of the car…the time you use it. A 24 month lease requires less of a down payment to lower the monthly payment than a 36 month lease or 48 month lease. You can actually lease a car for “zero dollars per month” if you put up a large enough down payment. The banks call this a “one-pay lease”. All you are doing is making all of your lease payment up front and, to a lesser extent; this is what you’re doing when a dealer sneaks in a large lease down payment in the fine print.
(3) Low mileage allowance. Be sure you know exactly how many miles are allowed in your lease contract. By restricting the number of miles you are allowed, the dealer can quote a lower monthly payment. I’ve seen lease ads with as low as a 7,500 annual mileage allowance and a 25 cent per mile penalty. Most people drive a lot more miles than this. If you missed this in the fine print and are a fairly typical driver who puts 15,000 miles a year on your car, you would get a surprise bill from the leasing company of $5,625 at the end of a 36 month lease!
(4) The Lease Acquisition Fee and the Dealer Fee. If you thought you were going to avoid the infamous “license to steal”, the dealer fee, by leasing your car you are wrong. The dealer will also charge this sneaky fee on a lease [which goes by at least 22 names according to the Florida Senate Investigative Report]. Furthermore, the banks or leasing companies all charge their version of the dealer fee commonly referred to as the “Lease Acquisition Fee” or “Bank Fee”. It’s fairly common for the bank or leasing company to kick back half of this to the dealer. This charge averages about $800 or $900.
(5) The Lease Disposal Fee. It would almost be funny if it weren’t so deceptive. The bank is charging you an extra fee for leasing you the car and then hitting you again for taking the car back. They certainly incur a cost for doing the lease and for taking the lease back, but his is called business overhead expense and should be included in their price which is your lease payment. The motive behind all of this, of course, is the same motive behind the dealer fee…it allows the “illusion” of a lower price than you are actually paying.
(6) Higher Insurance Costs. Typically you are required by the bank or leasing company to carry more insurance on their lease car than you might normally buy if you purchased your car. Furthermore, the cost of the insurance is simply higher on lease cars. That may be because insurance companies know that people are not as careful driving a lease car [belonging to the bank] than they are their own car.
(7) Higher Credit Requirements. Another reason dealers advertise lease payments is that most of those who respond to the ad cannot qualify to lease a car and the dealer then tries to sell them the same car. Of course the payments are much higher, but the dealer accomplished his purpose…”he got you in the door”. If you have a Beacon score below 720, which most people do, you can forget about leasing that car for advertised payment. You may be able to lease it at a higher payment if you have a 680+ Beacon, but many people don’t and cannot lease a car at all.
(8) No Hybrid Tax Incentive. The IRS offered a tax incentive to buy a hybrid car. All hybrids except Toyota have those in effect now. Because Toyota sells so many hybrids, 80% of all hybrids, their tax incentives expired. If you lease a hybrid, the tax incentive does not go to you; it goes to the leasing company because they are the legal owner of the car.
(9) No Tax Advantage to Leasing. This is not really a “booby trap” but a lot of people lease cars thinking they can write of the lease payment faster than they can depreciate a car if they buy it. This is not so. Check with your accountant.
The only real advantage I see to leasing over buying is protecting yourself against, or even taking advantage of, unexpected depreciation of the vehicle. When a bank or leasing company establishes a lease payment for a particular model car, the single biggest variable is what that car is going to be worth at the end of the lease. They can’t know and they have to guess. If they guess high and the car is worth a lot less at the end of the lease, you have no obligation and the bank suffers a big loss when they sell it at the auction. This happens more often than you might think. If you had bought the car, you would be the one to worry about the expectedly low trade-in value when you bought your next car. On the other hand if the bank guesses that the value of your lease car is lower than what the market value really is, you have an option to purchase that car at this low price. Even if you don’t want to keep the car, you can buy the car at this below market option price, sell it to the dealer for the true higher value, and pocket the difference.
Monday, April 28, 2008
WHAT MAKES A CAR SALESMAN TICK
A car salesman calling himself “Alex S” posted a comment on my Blog recently. You can read his comment and my response by clicking on my Blog, http://www.earlstewartoncars.com/ and going to my article, “The No-Dealer-Fee “Fat Lady” Hasn’t Sung Yet.”
I’ve reproduced his posting and my reply below because the comments of this car salesman are very revealing of what goes on inside the heads of many car sales people today.
I often am accused of calling car dealers and car sales people “crooks” or just plain “evil”. I certainly don’t mean to. I don’t believe that most people in the retail auto business are dishonest any more than I believe that about lawyers or politicians. Of course, there are a few that are just plain bad.
“Amoral” is a better way to describe the mindset of those in the retail car business who cause the huge problem we have today with the way car buyers are treated. A person who is amoral is one who is not admitting of moral distinctions or judgments; neither moral nor immoral. When you read the words of “Alex S” below you can see that he does not believe what he does to sell a car is deceptive, immoral or unethical. I’m sure you know others like Alex. If somebody challenges their behavior, it’s never their fault. In Alex’s case, he blames me and he blames and his customers for the negativity surrounding car dealers and car salesmen.
(my comments in caps)
Earl Stewart:THANKS VERY MUCH FOR YOUR POSTING. PLEASE EXCUSE THE "ALL CAPS" BUT THIS WILL DIFFERENTIATE YOUR WORDS FROM MINE. I'VE CHOSEN TO ADDRESS YOUR POSTING PARAGRAPH BY PARAGRAPH. FIRST, LET ME CONGRATULATE YOU FOR HAVING THE COURAGE, NOT ONLY TO RESPOND TO MY BLOG, BUT NOT TO CHOOSE TO BE ANONYMOUS. YOUR POSTING IS VERY INTERESTING BECAUSE IT SPEAKS FOR MOST FLORIDA CAR DEALERS. AS YOU POINT OUT, YOU AND MOST OF THOSE EMPLOYED IN THE RETAIL AUTO BUSINESS ARE NOT "CROOKS". A MINORITY ARE, BUT THE MAJORITY ARE SIMPLY ASSESSING THE DEALER FEE BECAUSE "THAT'S THE WAY ITS ALWAYS BEEN DONE" AND NOT TAKING TIME TO THINK OUT WHY IT'S BAD FOR THE CONSUMER.
Alex S: I work at a dealership in sawgrass(i wont mention the name because i dont have the authority to). Over the past few days I have noticed the quantity of my complaints over dealer fees have gone up, so I investigated and found your site. I respect what you are doing and can completely understand what it is that you are doing. I always disclose the dealer fees to my clients during me negotiations, i don't say plus fees i tell them plus dealer fees of XXX.
Earl Stewart: I'M VERY GLAD TO HEAR THAT MY ANTI-DEALER FEE EFFORTS ARE SPREADING AROUND THE STATE. I'M HAPPY TO HEAR THAT YOU TOTALLY DISCLOSE THE DEALER FEE TO ALL OF YOUR CUSTOMERS. UNFORTUNATELY, MOST SALES PEOPLE DO NOT. VIRTUALLY ALL SALES PEOPLE DO NOT USE THE COMPLETE TERM "DEALER FEE" [OR WHATEVER THEIR PARTICULAR DEALERSHIP CHOOSES TO CALL IT], BUT SIMPLY SAY "FEES". THIS LEADS THE CUSTOMER TO BELIEVE IT IS AN "OFFICAL FEE", FEDERAL, STATE, OR LOCAL.
Alex S: What it boils down to for me is that "profit" is not a dirty word. Dealer fees are an essential part of profit. Car sales are all a game, the customers goal is to spend as little as possible where as my goal is to make as much as possible. If both parties can come to a happy agreement, then it is all for the better. I read your previous article and people feel they are being robbed, that is simply not the point, No salesman has ever held a customer down and made them sign, if you dont like the way we do business then leave.
Earl Stewart: I CAN'T TELL YOU HOW OFTEN I'VE HEARD OTHER DEALERS USE THE SAME PHRASE, "PROFIT IS NOT A DIRTY WORD". THIS PHRASE IS A STRAW DOG JUST LIKE "WE DON'T WANT GOVERNMENT TO TELL US HOW TO PRICE OUR CARS". MY DEALERSHIP IS VERY PROFITABLE AND I DON'T CHARGE DEALER FEES. I'M IN BUSINESS TO MAKE A PROFIT AND I WOULDN'T BE IF I THOUGHT "PROFIT WAS A DIRTY WORD". I'M NOT CRAZY ABOUT YOUR DESCRIPTION OF "ALL CAR SALES BEING A GAME". IT'S THE 2ND BIGGEST PURCHASE A CUSTOMER MAKES IN HIS LIFE. IF IT'S A GAME, IT'S A VERY SERIOUS AND IMPORTANT ONE. USING YOUR ANALOGY, I ONLY WANT BOTH TEAMS TO BE FULLY INFORMED OF THE RULES OF THE GAME...HENCE FULL DISCLOSURE OF THE PRICE OF THE CAR WHICH SHOULD INCLUDE EVERYTHING EXCEPT TAX AND TAG. THIS FULL DISCLOSURE SHOULD NOT COME "AFTER THE FACT" BUT FROM THE FIRST TIME A PRICE IS QUOTED IN ADVERTISING, VERBALLY, ON A WINDSHIELD OR SIGN, OR OVER THE INTERNET. YOU SAY "NO ONE HAS EVER HELD A CUSTOMER DOWN AND MADE HIM SIGN". MAYBE NOT LITERALLY, BUT I KNOW OF LOTS OF CUSTOMERS THAT WERE FIGURATIVELY "HELD DOWN". I'VE TALKED WITH ELDERLY WIDOWS IN THEIR EIGHTIES AND NINTIES WHO WERE KEPT IN A CLOSING OFFICE FOR HOURS WHEN THEY ASKED FOR THEIR CAR KEYS TO GO HOME. I ALSO KNOW OF CUSTOMERS WHO DON'T UNDERSTAND OR READ ENGLISH WELL, YOUNG, UNSOPHISTICATED FIRST-TIME BUYERS, AND BUYERS WHO ARE UNEDUCATED AND/OR JUST NOT VERY SMART WHO HAVE BEEN TAKE GREAT ADVANTAGE OF.
Alex S: People do not walk into an electronics store and fight about the price they pay for a $5000 flat screen tv. They dont walk into the grocery store and argue about the price of a pound of apples. I guess what i am trying to get at is if you are in a comfortable place with a calm attitude the dealer fee should not be a deal breaker for anyone. Talk to the dealer sales associate about it. Believe me when i say this, most sales people dont recieve compensation from the dealer fee, but i still need to collect it.
Earl Stewart: ANOTHER THING THAT DOESN'T HAPPEN WHEN YOU SHOP CIRCUIT CITY, BUY RITE, AND BEST BUY TO GET THE LOWEST PRICE ON A 50 INCH PANASONIC TV IS NOT BEING SURPRISED AT THE CASHIER THAT THE "BEST PRICE" IS NOT REALLY THE BESTS PRICE BECAUSE BEST BUY HAS A $350 "DEALER FEE". YOU DON'T HAVE TO HAGGLE WITH CIRCUIT CITY BECAUSE YOU'VE HAD THE OPPORTUNITY TO FAIRLY COMPARE THEIR PRICE WITH THEIR COMPETITION. THIS OPPORTUNITY IS BEING DENIED CAR BUYERS IN FLORIDA. YOU ARE RIGHT ABOUT CAR SALESMEN NOT BEING PAID ON THE DEALER FEE. THIS MAKES THE SALESMAN VERY RELUCTANT TO DEDUCT THE AMOUNT OF THE DEALER FEE FROM THE PRICE OF THE CAR DURING NEGOTIATION. IF YOUR DEALER FEE IS $999 AND YOU DEDUCT IT FROM THE PRICE, YOU ARE COSTING YOURSELF $250 [ASSUMING A 25% COMMISSION]. THE SALESMAN ALSO TELLS THE CUSTOMER HE CANNOT REMOVE THE DEALER FEE BECAUSE HE IS REQUIRED BY LAW TO CHARGE ALL CUSTOMERS THE SAME DEALER FEE.
Alex S: If you find the need to rush out after the sales associate has informed you of a dealer fee, you didnt want to be there in the first place. Buying a car should be a pleasent experience.
Earl Stewart: WOULDN'T YOU "RUSH OUT" OF BEST BUY IF THE CASHIER ADDED A $350 DEALER FEE TO THE $3,995 ADVERTISED PRICE OF YOUR PANASONIC PLASMA TV? AS FAR AS CAR BUYING BEING A PLEASANT EXPERIENCE, TRY THIS EXPERIMENT...WITHOUT REVEALING YOU ARE A CAR SALESMAN, ASK THE NEXT 10 PEOPLE YOU SEE OUTSIDE YOUR DEALERSHIP IF THEY CONSIDER BUYING A CAR A "PLEASANT EXPERIENCE". I WROTE A POSTING FOR THIS BLOG ENTITLED "WOULD YOU RATHER BUY A CAR OR HAVE A COLONOSCOPY"? CAR DEALERS ARE ONE OF THE FEW RETAILERS THAT HAVEN'T ENTERED THE 21ST CENTURY. THEY ARE GOING TO HAVE TO IF THEY ARE GOING TO SURVIVE AND COMPETE. ALex, IN THE 21ST CENTURY, "THE CUSTOMER IS KING"...WAKE UP AND SMELL THE COFFEE.
Alex S: As a last note, if you walk into a dealship expecting to be ripped off, no matter how good of deal you actually get, it will never be good enough. If you walk in expecting to be treated right, you will probably leave happy everytime.
Earl Stewart: ARE YOU SUGGESTING THAT CAR BUYERS SHOULD SHOULD NOT BE WARY OF OVER-PAYING WHEN BUYING A CAR? IN THE SECOND PARAGRAPH OF YOUR POSTING YOU ADMITTED THAT "YOUR GOAL WAS TO MAKE AS MUCH PROFT OFF THAT CUSTOMER AS POSSIBLE". YOU ARE SUGGESTING THAT IF THE CUSTOMERS WEAR ROSE TINTED GLASSES, TRUST YOU TO GIVE THEM A GOOD PRICE, THEY WILL LEAVE HAPPY. ALEX, THE ONLY CUSTOMERS THAT "LEAVES HAPPY EVERY TIME" AFTER OVER PAYING FOR A CAR ARE THE THOSE WHO WERE DECEIVED.
I’ve reproduced his posting and my reply below because the comments of this car salesman are very revealing of what goes on inside the heads of many car sales people today.
I often am accused of calling car dealers and car sales people “crooks” or just plain “evil”. I certainly don’t mean to. I don’t believe that most people in the retail auto business are dishonest any more than I believe that about lawyers or politicians. Of course, there are a few that are just plain bad.
“Amoral” is a better way to describe the mindset of those in the retail car business who cause the huge problem we have today with the way car buyers are treated. A person who is amoral is one who is not admitting of moral distinctions or judgments; neither moral nor immoral. When you read the words of “Alex S” below you can see that he does not believe what he does to sell a car is deceptive, immoral or unethical. I’m sure you know others like Alex. If somebody challenges their behavior, it’s never their fault. In Alex’s case, he blames me and he blames and his customers for the negativity surrounding car dealers and car salesmen.
(my comments in caps)
Earl Stewart:THANKS VERY MUCH FOR YOUR POSTING. PLEASE EXCUSE THE "ALL CAPS" BUT THIS WILL DIFFERENTIATE YOUR WORDS FROM MINE. I'VE CHOSEN TO ADDRESS YOUR POSTING PARAGRAPH BY PARAGRAPH. FIRST, LET ME CONGRATULATE YOU FOR HAVING THE COURAGE, NOT ONLY TO RESPOND TO MY BLOG, BUT NOT TO CHOOSE TO BE ANONYMOUS. YOUR POSTING IS VERY INTERESTING BECAUSE IT SPEAKS FOR MOST FLORIDA CAR DEALERS. AS YOU POINT OUT, YOU AND MOST OF THOSE EMPLOYED IN THE RETAIL AUTO BUSINESS ARE NOT "CROOKS". A MINORITY ARE, BUT THE MAJORITY ARE SIMPLY ASSESSING THE DEALER FEE BECAUSE "THAT'S THE WAY ITS ALWAYS BEEN DONE" AND NOT TAKING TIME TO THINK OUT WHY IT'S BAD FOR THE CONSUMER.
Alex S: I work at a dealership in sawgrass(i wont mention the name because i dont have the authority to). Over the past few days I have noticed the quantity of my complaints over dealer fees have gone up, so I investigated and found your site. I respect what you are doing and can completely understand what it is that you are doing. I always disclose the dealer fees to my clients during me negotiations, i don't say plus fees i tell them plus dealer fees of XXX.
Earl Stewart: I'M VERY GLAD TO HEAR THAT MY ANTI-DEALER FEE EFFORTS ARE SPREADING AROUND THE STATE. I'M HAPPY TO HEAR THAT YOU TOTALLY DISCLOSE THE DEALER FEE TO ALL OF YOUR CUSTOMERS. UNFORTUNATELY, MOST SALES PEOPLE DO NOT. VIRTUALLY ALL SALES PEOPLE DO NOT USE THE COMPLETE TERM "DEALER FEE" [OR WHATEVER THEIR PARTICULAR DEALERSHIP CHOOSES TO CALL IT], BUT SIMPLY SAY "FEES". THIS LEADS THE CUSTOMER TO BELIEVE IT IS AN "OFFICAL FEE", FEDERAL, STATE, OR LOCAL.
Alex S: What it boils down to for me is that "profit" is not a dirty word. Dealer fees are an essential part of profit. Car sales are all a game, the customers goal is to spend as little as possible where as my goal is to make as much as possible. If both parties can come to a happy agreement, then it is all for the better. I read your previous article and people feel they are being robbed, that is simply not the point, No salesman has ever held a customer down and made them sign, if you dont like the way we do business then leave.
Earl Stewart: I CAN'T TELL YOU HOW OFTEN I'VE HEARD OTHER DEALERS USE THE SAME PHRASE, "PROFIT IS NOT A DIRTY WORD". THIS PHRASE IS A STRAW DOG JUST LIKE "WE DON'T WANT GOVERNMENT TO TELL US HOW TO PRICE OUR CARS". MY DEALERSHIP IS VERY PROFITABLE AND I DON'T CHARGE DEALER FEES. I'M IN BUSINESS TO MAKE A PROFIT AND I WOULDN'T BE IF I THOUGHT "PROFIT WAS A DIRTY WORD". I'M NOT CRAZY ABOUT YOUR DESCRIPTION OF "ALL CAR SALES BEING A GAME". IT'S THE 2ND BIGGEST PURCHASE A CUSTOMER MAKES IN HIS LIFE. IF IT'S A GAME, IT'S A VERY SERIOUS AND IMPORTANT ONE. USING YOUR ANALOGY, I ONLY WANT BOTH TEAMS TO BE FULLY INFORMED OF THE RULES OF THE GAME...HENCE FULL DISCLOSURE OF THE PRICE OF THE CAR WHICH SHOULD INCLUDE EVERYTHING EXCEPT TAX AND TAG. THIS FULL DISCLOSURE SHOULD NOT COME "AFTER THE FACT" BUT FROM THE FIRST TIME A PRICE IS QUOTED IN ADVERTISING, VERBALLY, ON A WINDSHIELD OR SIGN, OR OVER THE INTERNET. YOU SAY "NO ONE HAS EVER HELD A CUSTOMER DOWN AND MADE HIM SIGN". MAYBE NOT LITERALLY, BUT I KNOW OF LOTS OF CUSTOMERS THAT WERE FIGURATIVELY "HELD DOWN". I'VE TALKED WITH ELDERLY WIDOWS IN THEIR EIGHTIES AND NINTIES WHO WERE KEPT IN A CLOSING OFFICE FOR HOURS WHEN THEY ASKED FOR THEIR CAR KEYS TO GO HOME. I ALSO KNOW OF CUSTOMERS WHO DON'T UNDERSTAND OR READ ENGLISH WELL, YOUNG, UNSOPHISTICATED FIRST-TIME BUYERS, AND BUYERS WHO ARE UNEDUCATED AND/OR JUST NOT VERY SMART WHO HAVE BEEN TAKE GREAT ADVANTAGE OF.
Alex S: People do not walk into an electronics store and fight about the price they pay for a $5000 flat screen tv. They dont walk into the grocery store and argue about the price of a pound of apples. I guess what i am trying to get at is if you are in a comfortable place with a calm attitude the dealer fee should not be a deal breaker for anyone. Talk to the dealer sales associate about it. Believe me when i say this, most sales people dont recieve compensation from the dealer fee, but i still need to collect it.
Earl Stewart: ANOTHER THING THAT DOESN'T HAPPEN WHEN YOU SHOP CIRCUIT CITY, BUY RITE, AND BEST BUY TO GET THE LOWEST PRICE ON A 50 INCH PANASONIC TV IS NOT BEING SURPRISED AT THE CASHIER THAT THE "BEST PRICE" IS NOT REALLY THE BESTS PRICE BECAUSE BEST BUY HAS A $350 "DEALER FEE". YOU DON'T HAVE TO HAGGLE WITH CIRCUIT CITY BECAUSE YOU'VE HAD THE OPPORTUNITY TO FAIRLY COMPARE THEIR PRICE WITH THEIR COMPETITION. THIS OPPORTUNITY IS BEING DENIED CAR BUYERS IN FLORIDA. YOU ARE RIGHT ABOUT CAR SALESMEN NOT BEING PAID ON THE DEALER FEE. THIS MAKES THE SALESMAN VERY RELUCTANT TO DEDUCT THE AMOUNT OF THE DEALER FEE FROM THE PRICE OF THE CAR DURING NEGOTIATION. IF YOUR DEALER FEE IS $999 AND YOU DEDUCT IT FROM THE PRICE, YOU ARE COSTING YOURSELF $250 [ASSUMING A 25% COMMISSION]. THE SALESMAN ALSO TELLS THE CUSTOMER HE CANNOT REMOVE THE DEALER FEE BECAUSE HE IS REQUIRED BY LAW TO CHARGE ALL CUSTOMERS THE SAME DEALER FEE.
Alex S: If you find the need to rush out after the sales associate has informed you of a dealer fee, you didnt want to be there in the first place. Buying a car should be a pleasent experience.
Earl Stewart: WOULDN'T YOU "RUSH OUT" OF BEST BUY IF THE CASHIER ADDED A $350 DEALER FEE TO THE $3,995 ADVERTISED PRICE OF YOUR PANASONIC PLASMA TV? AS FAR AS CAR BUYING BEING A PLEASANT EXPERIENCE, TRY THIS EXPERIMENT...WITHOUT REVEALING YOU ARE A CAR SALESMAN, ASK THE NEXT 10 PEOPLE YOU SEE OUTSIDE YOUR DEALERSHIP IF THEY CONSIDER BUYING A CAR A "PLEASANT EXPERIENCE". I WROTE A POSTING FOR THIS BLOG ENTITLED "WOULD YOU RATHER BUY A CAR OR HAVE A COLONOSCOPY"? CAR DEALERS ARE ONE OF THE FEW RETAILERS THAT HAVEN'T ENTERED THE 21ST CENTURY. THEY ARE GOING TO HAVE TO IF THEY ARE GOING TO SURVIVE AND COMPETE. ALex, IN THE 21ST CENTURY, "THE CUSTOMER IS KING"...WAKE UP AND SMELL THE COFFEE.
Alex S: As a last note, if you walk into a dealship expecting to be ripped off, no matter how good of deal you actually get, it will never be good enough. If you walk in expecting to be treated right, you will probably leave happy everytime.
Earl Stewart: ARE YOU SUGGESTING THAT CAR BUYERS SHOULD SHOULD NOT BE WARY OF OVER-PAYING WHEN BUYING A CAR? IN THE SECOND PARAGRAPH OF YOUR POSTING YOU ADMITTED THAT "YOUR GOAL WAS TO MAKE AS MUCH PROFT OFF THAT CUSTOMER AS POSSIBLE". YOU ARE SUGGESTING THAT IF THE CUSTOMERS WEAR ROSE TINTED GLASSES, TRUST YOU TO GIVE THEM A GOOD PRICE, THEY WILL LEAVE HAPPY. ALEX, THE ONLY CUSTOMERS THAT "LEAVES HAPPY EVERY TIME" AFTER OVER PAYING FOR A CAR ARE THE THOSE WHO WERE DECEIVED.
Monday, April 14, 2008
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”. Astoundingly, the general manager of this dealership had the 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 this, “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) Fall for this, “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) Follow this advice, “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) Agree to this, “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 the salesman when he says, “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) Fall for this, “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 this, “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) Fall for this, “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) Follow this advice, “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) Agree to this, “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 the salesman when he says, “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) Fall for this, “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.
Saturday, April 05, 2008
The No-Dealer-Fee “Fat Lady” Hasn’t Sung Yet
My last column, “The Dealer Fee, Bestiality, and Politics” voiced my concern for the success of our efforts to end or better regulate the car dealers’ license to steal, the infamous Dealer Fee. What a difference a day (or two) makes!
On March 25th Daniel Vasquez, consumer reporter for the Ft. Lauderdale Sun Sentinel, wrote a great column about the Dealer Fee and its unfairness to the car buyer. You can read this column by clicking on www.SunSentinel.com and then enter “Daniel Vasquez” in search, and then “Little-understood fees can add to a new car's bottom line.” There was a huge, supportive email response to this column. Mr. Vasquez listed the email addresses and phone numbers for Senator Alex Diaz de la Portilla, the chairman of the Senate Commerce committee [Contact Senate Commerce Committee Chair Alex Diaz de la Portilla at: portilla.alex.web@flsenate.govor call 850-487-5109 or 305-643-7200.]
On Thursday afternoon, April 3, I was driving my wife, Nancy, to Tampa for some minor surgery on her foot. Just before we arrived I received a call on my cell phone from Patricia Gosney, Senator Diaz de la Portilla’s assistant in Tallahassee. She told me that “somebody had showed the Senator a copy of my article” and she and the Senator were concerned because I had said that I was unable to contact him”. She asked me why I had said that and I explained that I had left several email and voice mail messages for the Senator and he had not returned any of them. Patricia did acknowledge that the Senator does receive “thousands” of emails and that it’s impossible to read all of them [One wonders, since most politicians do get lots of email, why they don’t let it be known that there will be no response or simply see to it that all emails are responded to?]. Patricia also told me that she was sure that I had not called the Tallahassee office. To which I responded that I’d called the Miami office and left unreturned voice mails. She said that she would look into that but she knows nothing about the Miami office. We agreed that from now on I would call Patricia in Tallahassee and she was kind enough to give me her email address which she told me she always responds to.
I asked Patricia to apologize on my behalf to Senator Diaz de la Portilla for expressing doubt about his strong support because of the breakdown of communications between us. Some of my concern was because of a conversation that I had with Senator Ken Pruitt’s Tallahassee assistant, Ann, about a week ago. She told me she would try to get some information on the progress of the Senate bill from the staff of Senator Diaz de la Portilla and when she did not get back to me, I assumed there was no progress. Ann had told me, that because there was no House sponsor of a sister bill, there was no chance of ever getting a law passed this year. Fortunately we now know Ann was mistaken.
The good news is that Patricia assured me that Senator Alex Diaz de la Portilla is solidly behind passing some legislation to better regulate the dealer fee. There is no longer a SB 954, the original shell bill for the Dealer Fee. The Senator has modified an existing bill, SB 2150 to include Dealer Fee regulations. And the really good news is that there is also a simultaneous House bill on this subject, HB 827. If you read my last column, you will know that his was why I was so concerned that there is no way we could get a bill through the legislature this year. Now we have a better chance.
Later that same afternoon, Thursday, April 3, shortly after the call from Patricia, Senator Jeff Atwater called me to assure me of his unswerving support of the anti Dealer Fee legislation. I hadn’t spoken to Senator Atwater in a long time. He explained how busy all of the legislators are and I know how busy Jeff is. I see his commercials on TV all the time. I like the one where he stares sternly at the evil insurance company executives and tells them how he will not stand still for their inhumane treatment of Florida’s insured. In fact, it reminds me a little bit of my TV commercial against the Dealer Fee.
Here is the language that was added to the existing bill, SB 2150 as of Thursday, April 3:
(6) "Advertised price" means the price as expressed in any statements that are transmitted orally, through written material, or through electronic means, or any illustration that is disseminated to the public or affixed to a motor vehicle and that is used in selling a motor vehicle or otherwise used to induce a person to enter into any obligation related to the motor vehicle.
And (a) The advertised price must include all costs, fees, or charges that the customer must pay, excluding, state and local taxes, tag fees, registration fees, and title fees.
And (b) When two or more dealers advertise jointly, with or without participation of the franchisor, the advertised price must include the highest price of the vehicles being offered consistent with paragraph (a), or specify the price for each vehicle, respectively.
And (20) Fail to attach a conspicuous label to the window of a motor vehicle specifying any charge for predelivery services if the motor vehicle under consideration by a prospective purchaser is available for physical inspection by the purchaser. The label must include the following disclosure: "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." This requirement does not apply to the sale of motorcycles.
If you are reading this on my Blog, you can click on www.sb2150c2.html. If you are reading this in Hometown News, paste www.FLSenate.gov in your browser and then enter SB 2150 in the bill search on the left. Then click on “sb2150c2.html”. All of the read words with the lines through them are redacted language from the previous, weaker Dealer Fee law and the green words are new language. The first part of the bill is not about the Dealer Fee. Near the bottom of the bill is where you will find the Dealer Fee changes and additions.
I’m very encouraged by what I read. Even though it’s obvious that there will be no attempt this year to make the dealer fee illegal or, unfortunately, even put a cap on it, these are major improvements. The first big improvement is in defining the word “advertising” [Kind of like…”it depends on what the definition of what the word is, is”] If this bill becomes law, dealers must include their dealer fee in prices quoted to customers by word of mouth, on signage, and on the Internet. That means when you ask a salesman what the price of the car is he would have to quote you the full price, including his dealer fee and only excluding tax and tag.
Also, when several dealers of the same make advertise the same cars in one ad [most commonly sponsored by the manufacturer or distributor], the price must include the “highest price” taking into account each dealer’s Dealer Fee. In other words, if there were seven dealers advertising in one ad with seven different dealer fees ranging from $389 to $999, the price must include $999. In my opinion, this will have the effect of eliminating price advertising of this nature. The dealers won’t like this one bit because it removes the only advantage the dealer fee offers them which is hiding it from the customer.
And the final improvement is the requirement that the each dealer’s dealer fee be posted on the window of the car with a statement that "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." I like the idea that the Dealer Fee must be posted on the window but I don’t like the language that is supposed to be a disclosure. The disclosure should be “This charge represents PROFITS TO THE DEALER”…short and simple…end of conversation! “Costs” reimbursed to a retailer by the customer are PROFITS. Using the word “costs” is a shrewd attempt to disguise what is clearly profit to the dealer and only profit to the dealer. Furthermore, every manufacturer already generously reimburses their dealers for “inspecting, cleaning, and adjusting new vehicles”. Charging the customer for this is “double dipping”. Even if the manufacturer did not reimburse dealers for this, what is the logic of charging a customer separately for a car dealer’s costs of doing business? If a dealer is justified in charging you separately [on top of the price of the car] for washing it first, why shouldn’t he charge you separately for the salesman’s commission, his advertising and why not his phone and light bill?
We need to keep the pressure on our legislators. We are making progress only because of your grass root support, the Florida voters. Nothing matters more to a politician than votes and nothing matters more to the media than what interests their audience. The media is giving strong support to our cause now. This is a Quinella that the politicians cannot ignore…the media teamed with the voter.
Call my NO DEALER FEE HOTLINE, 800 909-9879 and record your opinion against the Dealer Fee. Your recording will be sent to Tallahassee. Keep yourself up to date on our progress by reading my blog, www.EarlStewartOnCars.com. You’ll also find lots of information on www.EarlStewart.com, www.YouTube.com/EarlStewartToyota.com, and on my Saturday morning talk show from 9-10 which you can stream by clicking on www.SeaviewAM960.com. You can read media coverage of our work by clicking on www.EarlStewartToyota.com and then click on “In the News”.
On March 25th Daniel Vasquez, consumer reporter for the Ft. Lauderdale Sun Sentinel, wrote a great column about the Dealer Fee and its unfairness to the car buyer. You can read this column by clicking on www.SunSentinel.com and then enter “Daniel Vasquez” in search, and then “Little-understood fees can add to a new car's bottom line.” There was a huge, supportive email response to this column. Mr. Vasquez listed the email addresses and phone numbers for Senator Alex Diaz de la Portilla, the chairman of the Senate Commerce committee [Contact Senate Commerce Committee Chair Alex Diaz de la Portilla at: portilla.alex.web@flsenate.govor call 850-487-5109 or 305-643-7200.]
On Thursday afternoon, April 3, I was driving my wife, Nancy, to Tampa for some minor surgery on her foot. Just before we arrived I received a call on my cell phone from Patricia Gosney, Senator Diaz de la Portilla’s assistant in Tallahassee. She told me that “somebody had showed the Senator a copy of my article” and she and the Senator were concerned because I had said that I was unable to contact him”. She asked me why I had said that and I explained that I had left several email and voice mail messages for the Senator and he had not returned any of them. Patricia did acknowledge that the Senator does receive “thousands” of emails and that it’s impossible to read all of them [One wonders, since most politicians do get lots of email, why they don’t let it be known that there will be no response or simply see to it that all emails are responded to?]. Patricia also told me that she was sure that I had not called the Tallahassee office. To which I responded that I’d called the Miami office and left unreturned voice mails. She said that she would look into that but she knows nothing about the Miami office. We agreed that from now on I would call Patricia in Tallahassee and she was kind enough to give me her email address which she told me she always responds to.
I asked Patricia to apologize on my behalf to Senator Diaz de la Portilla for expressing doubt about his strong support because of the breakdown of communications between us. Some of my concern was because of a conversation that I had with Senator Ken Pruitt’s Tallahassee assistant, Ann, about a week ago. She told me she would try to get some information on the progress of the Senate bill from the staff of Senator Diaz de la Portilla and when she did not get back to me, I assumed there was no progress. Ann had told me, that because there was no House sponsor of a sister bill, there was no chance of ever getting a law passed this year. Fortunately we now know Ann was mistaken.
The good news is that Patricia assured me that Senator Alex Diaz de la Portilla is solidly behind passing some legislation to better regulate the dealer fee. There is no longer a SB 954, the original shell bill for the Dealer Fee. The Senator has modified an existing bill, SB 2150 to include Dealer Fee regulations. And the really good news is that there is also a simultaneous House bill on this subject, HB 827. If you read my last column, you will know that his was why I was so concerned that there is no way we could get a bill through the legislature this year. Now we have a better chance.
Later that same afternoon, Thursday, April 3, shortly after the call from Patricia, Senator Jeff Atwater called me to assure me of his unswerving support of the anti Dealer Fee legislation. I hadn’t spoken to Senator Atwater in a long time. He explained how busy all of the legislators are and I know how busy Jeff is. I see his commercials on TV all the time. I like the one where he stares sternly at the evil insurance company executives and tells them how he will not stand still for their inhumane treatment of Florida’s insured. In fact, it reminds me a little bit of my TV commercial against the Dealer Fee.
Here is the language that was added to the existing bill, SB 2150 as of Thursday, April 3:
(6) "Advertised price" means the price as expressed in any statements that are transmitted orally, through written material, or through electronic means, or any illustration that is disseminated to the public or affixed to a motor vehicle and that is used in selling a motor vehicle or otherwise used to induce a person to enter into any obligation related to the motor vehicle.
And (a) The advertised price must include all costs, fees, or charges that the customer must pay, excluding, state and local taxes, tag fees, registration fees, and title fees.
And (b) When two or more dealers advertise jointly, with or without participation of the franchisor, the advertised price must include the highest price of the vehicles being offered consistent with paragraph (a), or specify the price for each vehicle, respectively.
And (20) Fail to attach a conspicuous label to the window of a motor vehicle specifying any charge for predelivery services if the motor vehicle under consideration by a prospective purchaser is available for physical inspection by the purchaser. The label must include the following disclosure: "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." This requirement does not apply to the sale of motorcycles.
If you are reading this on my Blog, you can click on www.sb2150c2.html. If you are reading this in Hometown News, paste www.FLSenate.gov in your browser and then enter SB 2150 in the bill search on the left. Then click on “sb2150c2.html”. All of the read words with the lines through them are redacted language from the previous, weaker Dealer Fee law and the green words are new language. The first part of the bill is not about the Dealer Fee. Near the bottom of the bill is where you will find the Dealer Fee changes and additions.
I’m very encouraged by what I read. Even though it’s obvious that there will be no attempt this year to make the dealer fee illegal or, unfortunately, even put a cap on it, these are major improvements. The first big improvement is in defining the word “advertising” [Kind of like…”it depends on what the definition of what the word is, is”] If this bill becomes law, dealers must include their dealer fee in prices quoted to customers by word of mouth, on signage, and on the Internet. That means when you ask a salesman what the price of the car is he would have to quote you the full price, including his dealer fee and only excluding tax and tag.
Also, when several dealers of the same make advertise the same cars in one ad [most commonly sponsored by the manufacturer or distributor], the price must include the “highest price” taking into account each dealer’s Dealer Fee. In other words, if there were seven dealers advertising in one ad with seven different dealer fees ranging from $389 to $999, the price must include $999. In my opinion, this will have the effect of eliminating price advertising of this nature. The dealers won’t like this one bit because it removes the only advantage the dealer fee offers them which is hiding it from the customer.
And the final improvement is the requirement that the each dealer’s dealer fee be posted on the window of the car with a statement that "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." I like the idea that the Dealer Fee must be posted on the window but I don’t like the language that is supposed to be a disclosure. The disclosure should be “This charge represents PROFITS TO THE DEALER”…short and simple…end of conversation! “Costs” reimbursed to a retailer by the customer are PROFITS. Using the word “costs” is a shrewd attempt to disguise what is clearly profit to the dealer and only profit to the dealer. Furthermore, every manufacturer already generously reimburses their dealers for “inspecting, cleaning, and adjusting new vehicles”. Charging the customer for this is “double dipping”. Even if the manufacturer did not reimburse dealers for this, what is the logic of charging a customer separately for a car dealer’s costs of doing business? If a dealer is justified in charging you separately [on top of the price of the car] for washing it first, why shouldn’t he charge you separately for the salesman’s commission, his advertising and why not his phone and light bill?
We need to keep the pressure on our legislators. We are making progress only because of your grass root support, the Florida voters. Nothing matters more to a politician than votes and nothing matters more to the media than what interests their audience. The media is giving strong support to our cause now. This is a Quinella that the politicians cannot ignore…the media teamed with the voter.
Call my NO DEALER FEE HOTLINE, 800 909-9879 and record your opinion against the Dealer Fee. Your recording will be sent to Tallahassee. Keep yourself up to date on our progress by reading my blog, www.EarlStewartOnCars.com. You’ll also find lots of information on www.EarlStewart.com, www.YouTube.com/EarlStewartToyota.com, and on my Saturday morning talk show from 9-10 which you can stream by clicking on www.SeaviewAM960.com. You can read media coverage of our work by clicking on www.EarlStewartToyota.com and then click on “In the News”.
Saturday, March 29, 2008
The Dealer Fee, Bestiality, and Tallahassee Politics
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Friday, March 07, 2008
A Victorious First Step toward Outlawing the Dealer Fee
My appearance before the Florida Senate Commerce Committee went quite well last Tuesday, March 4.
The Senators allowed me all the time I needed to make my presentation. I gave them copies of newspaper ads illustrating my objections to the dealer fee and copies of my presentation.
Many of the Senators on the committee asked me questions which were very supportive and positive.
Several representatives from the Florida Automobile Dealers Association [FADA] testified, including dealers Chris Craft from Tallahassee and Herb Yardley from Stuart and Ted Smith the President of FADA. The committee was negative toward most of their testimony and this was reflected by the Senators’ questions. Several Senators challenged the speakers on their misstatements of fact and obvious contradictions.
The Senate committee is preparing a bill which will be sent to the House for endorsement and then to Governor Crist to be signed into law. I don’t expect anything drastic like making dealer fees illegal but I do feel that there will be a lot more disclosure required and I do feel there will be a lot more enforcement of the existing and new law. This is not to say that I will settle for this kind of compromise, but it’s a first step of a long journey until we outlaw the Dealer Fee.
But we have to keep the pressure on because in Tallahassee (just like Washington D.C.), “the squeaky wheel gets the oil”. Bills have a way of dying a natural death before they can become law. It’s a long, rocky road between the Senate Commerce Committee and Governor Crist’s office. I will continue to push, with your vital support, for the outlawing of the Dealer Fee, this license to steal from Florida’s car buyers.
Please call [and encourage others to call] our “NO DEALER FEE HOTLINE”, 1-800 909-9879 and visit our Web page www.NoDealerFee.com.
Below are my comments to Senator Alex Diaz de la Portilla and his committee.
Comments to Florida Senate Commerce Committee
Tuesday, March 4, 2:30 PM, Tallahassee
My name is Earl Stewart. I was born in Ft. Lauderdale, FL in 1940. I graduated from PBHS in 1958, University of Florida in 1963, BS Physics, and Purdue University, 1964, MSIA. I worked for Westinghouse for four years as an Electronics Engineer. I jointed my father in business in 1968. He founded Stewart Pontiac in West Palm Beach in 1937. I’ve been primarily in the retail automobile business for the last 40 years. I’m currently the sole owner and general manager of Earl Stewart Toyota in North Palm Beach and have been in the same location for the last 33 years. My three sons are employed in my business and my wife, Nancy, is also involved part time.
I’ve been a member of the SFADA and the FADA for my entire career and have serviced as a director for both organizations and on the Executive committee of FADA. I am currently chairman of the board of FLADCO, a Florida dealer-owned cooperative buying company.
(1) What’s bad about the dealer fee?
(a) In most cases the customer either does not know he paid the dealer fee or believes it is some kind of federal, state, or local “official fee”.
(b) In practice dealers do not include the dealer fee in the price of the car that is quoted to the customer. It isn’t included in Internet quotes and also not in verbal quotes over the telephone or in person.
(c) Although Florida law says that the dealer fee must be included in the advertised price, this is not happening in most cases. In the first place, there is virtually no enforcement of this part of the law. I’ve shown Senators Jeff Atwater and Alex Diaz de la Portilla copies of auto classified ads flagrantly violating this part of the law addressing dealer fees. Those dealers who do technically comply, get around it in practice by what I call “the old stock number trick” [Explain].
(d) There is no cap on the dealer fee and each dealer chooses whatever fee he likes. There is no one name for the fee. The Senate Investigative Report discovered 22 names and they only scratched the surface.
(2) Why the existing Dealer Fee Law is a Bad Law?
(a) It is written in such a way that dealers’ legal counsel have advised them “If you charge one customer a dealer fee, you must charge all customers the same fee”. Now, when the rare very astute consumer questions the legitimacy of the dealer fee, the sales person is instructed to reply, “All dealers charge this fee” and “We are required by law to charge everybody this same fee”.
(b) There is a provision that a “group ad” does not have to include the dealer fee in the advertised price. The argument for the exception to this part of the law on advertised prices is that it would be “too confusing” to list all of the different prices resulting from different dealer fees by different dealers.
(c) The law does not address ads which show discounts from MSRP instead of an actual price. Because the MSRP is standardized, a discount from MSRP is no different than a quoted price.
(d) The law allows dealers to advertise just one car at the advertised price. Dealers don’t disclose this by using an obscure alpha numeric code, usually included along with all of the listed options and accessories. This, unknown to the reader of the ad, is a “stock number” which means that the dealer is advertising only this one car at the price which includes the dealer fee. A typical stock number looks like this…#A23554B. The ads often also say, “12 more models available at this price”. But the other models are not the advertised car and now the dealer can add the dealer fee on top of the advertised price. Car salesmen are not paid a commission on this advertised car. Car salesmen work on 100% commission and have no incentive to sell an advertised car. In fact, their incentive is to be sure that you buy a different car. The odds of a customer actually being able to buy an advertised car are “slim and none”.
(3) What is my true motivation for opposing the Dealer Fee?
(a) I strongly believe that I’m doing the right thing. The dealer fee is a profit to the dealer…pure and simple. The law alludes to it covering certain costs of the dealer and requires that the dealer so state next to his dealer fee, but this is fallacious. When a customer pays me a sum to cover one of my expenses, she is increasing my profits. Saying that a customer should pay for a dealers cost of paperwork or preparation of the car is no different than saying the customer should pay the salesman’s commission, the dealer’s advertising, or part of his power bill. Any business’s overhead costs should be priced into the price of its product…not passed along to their customer separately from the pricing of their product.
(b) Because all car dealers have different dealer fees and some range up to at least $1,000, we cannot compete fairly on a level playing field. I am unable to advertise prices because those dealers who have dealer fees can understate their real price, knowing that they can add their dealer fee on at the last minute. For example, a Toyota Yaris with an MSRP of $15,145 has a profit to the dealer of only $584. Al Hendrickson Toyota in Coconut Creek, FL has a $999 dealer fee. This dealer can advertise a new Yaris for below his cost and make better profit than I can if I advertised and sold the car at MSRP.
(c) Our customers should have the right to shop and compare prices of cars just like they do TV’s, refrigerators, computers, or any other product. The Monroney label made a standardized MSRP the law for new car manufacturers over 50 years ago. The purpose for this law was to give the consumer the ability to accurately compare prices between different car dealers. If a car buyer is considering a Chevrolet Impala with a specific MSRP, he can shop for the dealer who gives him the biggest discount. Now, with virtually every dealer adding a dealer fee of a different amount, the intent of this federal law is circumvented.
(d) I would be less than honest if I didn’t confess that I’m benefiting from the positive publicity I get by opposing the dealer fee. If I’m not successful, I’m still a winner because the car buyers of Florida do agree with me. Any dealer could achieve the same status as I by unilaterally giving up the dealer fee.
(e) Car dealers rank among the most vilified businesses and professions. Along with lawyers and politicians, we are commonly ridiculed by comedians like Jay Leno and David Letterman. My sons will take over my business one day and I have four grandchildren who may continue it even further. My oldest son, Earl III, told me something a few years ago that I will never forget. He said that he enjoyed working for me and he enjoyed his job very much but what was most important to him was that he was proud to tell his son, Jake, my grandson, what he did for a living.
The Senators allowed me all the time I needed to make my presentation. I gave them copies of newspaper ads illustrating my objections to the dealer fee and copies of my presentation.
Many of the Senators on the committee asked me questions which were very supportive and positive.
Several representatives from the Florida Automobile Dealers Association [FADA] testified, including dealers Chris Craft from Tallahassee and Herb Yardley from Stuart and Ted Smith the President of FADA. The committee was negative toward most of their testimony and this was reflected by the Senators’ questions. Several Senators challenged the speakers on their misstatements of fact and obvious contradictions.
The Senate committee is preparing a bill which will be sent to the House for endorsement and then to Governor Crist to be signed into law. I don’t expect anything drastic like making dealer fees illegal but I do feel that there will be a lot more disclosure required and I do feel there will be a lot more enforcement of the existing and new law. This is not to say that I will settle for this kind of compromise, but it’s a first step of a long journey until we outlaw the Dealer Fee.
But we have to keep the pressure on because in Tallahassee (just like Washington D.C.), “the squeaky wheel gets the oil”. Bills have a way of dying a natural death before they can become law. It’s a long, rocky road between the Senate Commerce Committee and Governor Crist’s office. I will continue to push, with your vital support, for the outlawing of the Dealer Fee, this license to steal from Florida’s car buyers.
Please call [and encourage others to call] our “NO DEALER FEE HOTLINE”, 1-800 909-9879 and visit our Web page www.NoDealerFee.com.
Below are my comments to Senator Alex Diaz de la Portilla and his committee.
Comments to Florida Senate Commerce Committee
Tuesday, March 4, 2:30 PM, Tallahassee
My name is Earl Stewart. I was born in Ft. Lauderdale, FL in 1940. I graduated from PBHS in 1958, University of Florida in 1963, BS Physics, and Purdue University, 1964, MSIA. I worked for Westinghouse for four years as an Electronics Engineer. I jointed my father in business in 1968. He founded Stewart Pontiac in West Palm Beach in 1937. I’ve been primarily in the retail automobile business for the last 40 years. I’m currently the sole owner and general manager of Earl Stewart Toyota in North Palm Beach and have been in the same location for the last 33 years. My three sons are employed in my business and my wife, Nancy, is also involved part time.
I’ve been a member of the SFADA and the FADA for my entire career and have serviced as a director for both organizations and on the Executive committee of FADA. I am currently chairman of the board of FLADCO, a Florida dealer-owned cooperative buying company.
(1) What’s bad about the dealer fee?
(a) In most cases the customer either does not know he paid the dealer fee or believes it is some kind of federal, state, or local “official fee”.
(b) In practice dealers do not include the dealer fee in the price of the car that is quoted to the customer. It isn’t included in Internet quotes and also not in verbal quotes over the telephone or in person.
(c) Although Florida law says that the dealer fee must be included in the advertised price, this is not happening in most cases. In the first place, there is virtually no enforcement of this part of the law. I’ve shown Senators Jeff Atwater and Alex Diaz de la Portilla copies of auto classified ads flagrantly violating this part of the law addressing dealer fees. Those dealers who do technically comply, get around it in practice by what I call “the old stock number trick” [Explain].
(d) There is no cap on the dealer fee and each dealer chooses whatever fee he likes. There is no one name for the fee. The Senate Investigative Report discovered 22 names and they only scratched the surface.
(2) Why the existing Dealer Fee Law is a Bad Law?
(a) It is written in such a way that dealers’ legal counsel have advised them “If you charge one customer a dealer fee, you must charge all customers the same fee”. Now, when the rare very astute consumer questions the legitimacy of the dealer fee, the sales person is instructed to reply, “All dealers charge this fee” and “We are required by law to charge everybody this same fee”.
(b) There is a provision that a “group ad” does not have to include the dealer fee in the advertised price. The argument for the exception to this part of the law on advertised prices is that it would be “too confusing” to list all of the different prices resulting from different dealer fees by different dealers.
(c) The law does not address ads which show discounts from MSRP instead of an actual price. Because the MSRP is standardized, a discount from MSRP is no different than a quoted price.
(d) The law allows dealers to advertise just one car at the advertised price. Dealers don’t disclose this by using an obscure alpha numeric code, usually included along with all of the listed options and accessories. This, unknown to the reader of the ad, is a “stock number” which means that the dealer is advertising only this one car at the price which includes the dealer fee. A typical stock number looks like this…#A23554B. The ads often also say, “12 more models available at this price”. But the other models are not the advertised car and now the dealer can add the dealer fee on top of the advertised price. Car salesmen are not paid a commission on this advertised car. Car salesmen work on 100% commission and have no incentive to sell an advertised car. In fact, their incentive is to be sure that you buy a different car. The odds of a customer actually being able to buy an advertised car are “slim and none”.
(3) What is my true motivation for opposing the Dealer Fee?
(a) I strongly believe that I’m doing the right thing. The dealer fee is a profit to the dealer…pure and simple. The law alludes to it covering certain costs of the dealer and requires that the dealer so state next to his dealer fee, but this is fallacious. When a customer pays me a sum to cover one of my expenses, she is increasing my profits. Saying that a customer should pay for a dealers cost of paperwork or preparation of the car is no different than saying the customer should pay the salesman’s commission, the dealer’s advertising, or part of his power bill. Any business’s overhead costs should be priced into the price of its product…not passed along to their customer separately from the pricing of their product.
(b) Because all car dealers have different dealer fees and some range up to at least $1,000, we cannot compete fairly on a level playing field. I am unable to advertise prices because those dealers who have dealer fees can understate their real price, knowing that they can add their dealer fee on at the last minute. For example, a Toyota Yaris with an MSRP of $15,145 has a profit to the dealer of only $584. Al Hendrickson Toyota in Coconut Creek, FL has a $999 dealer fee. This dealer can advertise a new Yaris for below his cost and make better profit than I can if I advertised and sold the car at MSRP.
(c) Our customers should have the right to shop and compare prices of cars just like they do TV’s, refrigerators, computers, or any other product. The Monroney label made a standardized MSRP the law for new car manufacturers over 50 years ago. The purpose for this law was to give the consumer the ability to accurately compare prices between different car dealers. If a car buyer is considering a Chevrolet Impala with a specific MSRP, he can shop for the dealer who gives him the biggest discount. Now, with virtually every dealer adding a dealer fee of a different amount, the intent of this federal law is circumvented.
(d) I would be less than honest if I didn’t confess that I’m benefiting from the positive publicity I get by opposing the dealer fee. If I’m not successful, I’m still a winner because the car buyers of Florida do agree with me. Any dealer could achieve the same status as I by unilaterally giving up the dealer fee.
(e) Car dealers rank among the most vilified businesses and professions. Along with lawyers and politicians, we are commonly ridiculed by comedians like Jay Leno and David Letterman. My sons will take over my business one day and I have four grandchildren who may continue it even further. My oldest son, Earl III, told me something a few years ago that I will never forget. He said that he enjoyed working for me and he enjoyed his job very much but what was most important to him was that he was proud to tell his son, Jake, my grandson, what he did for a living.
Wednesday, March 05, 2008
Senate Commission on Dealer Fee
My appearance before the Senate Commerce Committee went quite well yesterday.
The Senators allowed me all the time I needed to make my presentation. I gave them copies of newspaper ads illustrating my objections to the dealer fee and copies of my presentation.
Many of the Senators on the committee asked me questions which were very supportive and positive.
Several people from the Florida Automobile Dealers Association testified, including dealers Chris Craft and Herb Yardley and Ted Smith the President of FADA. The committee was negative toward most of their testimony and this was reflected by their questions. Several Senators challenged the speakers on their misstatements of fact and obvious contradictions.
The Senate committee is preparing a bill which will be sent to the House for endorsement and then to Governor Crist to be signed into law. I don’t expect anything drastic like making dealer fees illegal but I do feel that there will be a lot more disclosure required and I do feel there will be a lot more enforcement of the existing and new law.
Please check out the article that appeared in today's Sun-Sentinel about yesterday's hearing:
Senate panel takes up crusade against auto dealership fees
By Joshua Hafenbrack
Tallahassee Bureau
March 5, 2008
TALLAHASSEE
In South Florida car dealer Earl Stewart's ubiquitous TV ad testimonials, he likes to point out he doesn't charge "dealer fees." He even started a radio show and a blog to rail against the fees charged by many of his competitors in Palm Beach and Broward counties.They're the often-hidden costs — running $500 or more in many cases — tacked onto a car's price once customers are hauled into a back office to fill out financing papers.Now Stewart's fight against dealer fees has moved to the state Legislature, with a Senate committee agreeing Tuesday to craft consumer protections that would require greater transparency about the fees that usually aren't included in price quotes or Internet advertising.Testifying before the Senate Commerce Committee, Stewart, who owns a Toyota dealership in North Palm Beach, said dealer fees are meant to obscure a car's real price from customers and pad dealers' profit margins."It prohibits the legitimate dealer from competing on a level playing field," said Stewart, a Fort Lauderdale native whose family has been in the car business in South Florida since 1937.After hearing testimony from South Florida car dealers on both sides of the issues, the Senate panel moved to draft legislation to require dealers to disclose dealer fees in their cars' sticker prices.This approach doesn't go as far as 13 other states that have capped dealer fees, with limits ranging from $45 to $250, according to Senate investigators.Herbert Yardley, whose owns Massey Yardley Chrysler Jeep in Plantation, said the $599 dealer fee he charges is just one part of arriving at a car's overall price, a process he described as an "art, not a science." "I don't know that the state does belong in pricing," Yardley told senators. "Please let pricing be an individual issue."Josh Hafenbrack can be reached at jhafenbrack@sun-sentinel.com or 850-224-6214.
The Senators allowed me all the time I needed to make my presentation. I gave them copies of newspaper ads illustrating my objections to the dealer fee and copies of my presentation.
Many of the Senators on the committee asked me questions which were very supportive and positive.
Several people from the Florida Automobile Dealers Association testified, including dealers Chris Craft and Herb Yardley and Ted Smith the President of FADA. The committee was negative toward most of their testimony and this was reflected by their questions. Several Senators challenged the speakers on their misstatements of fact and obvious contradictions.
The Senate committee is preparing a bill which will be sent to the House for endorsement and then to Governor Crist to be signed into law. I don’t expect anything drastic like making dealer fees illegal but I do feel that there will be a lot more disclosure required and I do feel there will be a lot more enforcement of the existing and new law.
Please check out the article that appeared in today's Sun-Sentinel about yesterday's hearing:
Senate panel takes up crusade against auto dealership fees
By Joshua Hafenbrack
Tallahassee Bureau
March 5, 2008
TALLAHASSEE
In South Florida car dealer Earl Stewart's ubiquitous TV ad testimonials, he likes to point out he doesn't charge "dealer fees." He even started a radio show and a blog to rail against the fees charged by many of his competitors in Palm Beach and Broward counties.They're the often-hidden costs — running $500 or more in many cases — tacked onto a car's price once customers are hauled into a back office to fill out financing papers.Now Stewart's fight against dealer fees has moved to the state Legislature, with a Senate committee agreeing Tuesday to craft consumer protections that would require greater transparency about the fees that usually aren't included in price quotes or Internet advertising.Testifying before the Senate Commerce Committee, Stewart, who owns a Toyota dealership in North Palm Beach, said dealer fees are meant to obscure a car's real price from customers and pad dealers' profit margins."It prohibits the legitimate dealer from competing on a level playing field," said Stewart, a Fort Lauderdale native whose family has been in the car business in South Florida since 1937.After hearing testimony from South Florida car dealers on both sides of the issues, the Senate panel moved to draft legislation to require dealers to disclose dealer fees in their cars' sticker prices.This approach doesn't go as far as 13 other states that have capped dealer fees, with limits ranging from $45 to $250, according to Senate investigators.Herbert Yardley, whose owns Massey Yardley Chrysler Jeep in Plantation, said the $599 dealer fee he charges is just one part of arriving at a car's overall price, a process he described as an "art, not a science." "I don't know that the state does belong in pricing," Yardley told senators. "Please let pricing be an individual issue."Josh Hafenbrack can be reached at jhafenbrack@sun-sentinel.com or 850-224-6214.
Saturday, March 01, 2008
LET YOUR VOICE BE HEARD: OUTLAW THE DEALER FEE!
You can help us make the “DEALER FEE” Illegal in Florida.
If you call our No Dealer Fee Hotline, you can voice your opinion on the Dealer Fee, to the Florida Senate Commerce Committee.
They are conducting a hearing this Tuesday, March 4th, in Tallahassee to hear consumers views on whether this “license to steal” should be made illegal in Florida, as it has in 13 other states.
Click on http://www.nodealerfee.com/ for more information.
If you call our No Dealer Fee Hotline, you can voice your opinion on the Dealer Fee, to the Florida Senate Commerce Committee.
They are conducting a hearing this Tuesday, March 4th, in Tallahassee to hear consumers views on whether this “license to steal” should be made illegal in Florida, as it has in 13 other states.
Click on http://www.nodealerfee.com/ for more information.
PLEASE DIAL 1-800-909-9879
Friday, February 22, 2008
FLORIDA POLITICS AND DEALER FEES
Boy am I getting a fast-track political education! I reached the ripe old age of 67 remaining a political novice. Lots of friends and associates kid me about being so politically naive. It’s not that I don’t read a lot of newspapers and watch a lot of politics on the news. I haven’t missed a vote for a local, state, or national candidate since 1961 when I became 21. But voting was as far as I went for most of my adult life. I did start making political contributions when I became a director of the Florida Automobile Dealers Association (FADA) a few years back. I felt that as a director I had to set an example. I remember asking my fellow dealers why we were giving money to politicians whose political philosophies were anti-business and they answered “because he promised to help us”. How could I disagree with that logic? The car dealers contribute individually, to a national PAC (Political Action Committee), DEAC and to a state PAC, CAR PAC. FADA uses this money to contribute to the campaigns of those politicians who promise to help car dealers get their agenda enacted into laws in Tallahassee. The #1 agenda item in 2008 is SAVE OUR DEALER FEE. Monies raised from members’ dues and other fund raising methods pay the salaries of lobbyists who spend lots of time schmoozing, persuading, and influencing, by any legal means, the votes of Florida Senators and Representatives.
I guess you could call this period of time in my life, Politics 101. Now that I’ve taken a position against the FADA and begun advocating making the dealer fee illegal, I’m working on my advanced degree in Political Science. There’s no better teacher than experience and that is what I’m getting. I’ve been publically decrying the dealer fee for several years. I’ve told anybody who will listen that I think it’s wrong that Florida law allows and in some ways facilitates and legitimatizes car dealers in increasing the price (and his profit) on the price he quotes his customers in a manner that often goes undetected or assumed by the buyer to be an official fee.
I guess some of the folks who listened to what I had to say about the dealer fee called Ken Pruitt who is the President of the Florida Senate. Under the pressure of his constituents, he formed a committee to investigate the dealer’s fee. This was a bit awkward for Senator Pruitt because the FADA is a very big supporter of his. This was another lesson in my political education. No matter how much a politician accepts in contributions from an individual, company, or organization, the voice of his constituents will trump that influence. The Senate investigation was not a very good one. In fact, it relied heavily on the input of the FADA. The Senate committee did not talk to a single car buyer. Senator Jeff Atwater told me that he was quite disappointed with this obvious flaw in the methodology.
By the way, Senator Jeff Atwater has been “anointed” to be the next President of the Senate, replacing Ken Pruitt, if he wins re-election this year. The President of the Senate is arguably the most powerful politician in Tallahassee. Senator Atwater knows that he has his work cut out for him to win re-election. This is because we also elect the next President of the United States this November. Senator Atwater’s district is heavily Democratic but he’s a Republican. In presidential election years there is always a much larger voter turnout. Former Democratic state Senator Skipp Campbell is running for Jeff Atwater’s Senate seat. It’s going to be a very close race to see who gets elected, Jeff or Skipp. It might not take much to swing enough voters one way or the other. Virtually all registered voters buy cars and that means almost all of them pay a dealer fee if they buy their cars in Florida. I’ll just bet that if somebody let all of the voters in Jeff Atwater’s district know just what a rip off the dealer fee is, this might influence who they vote for in the next election. Jeff has appeared on my radio show, met with me in person, and talked to me often on the phone about this subject. He believes that the current law addressing the dealer’s fee needs to be changed. He strongly believes that there should be much better enforcement of the current law.
On the other hand, Skipp Campbell simply believes that the dealer fee should be made illegal…no ifs, ands, buts, or compromises. In a meeting with Skipp three weeks ago, he told me that, if elected, he would work hard to make the dealer fee illegal. This is in contrast to Jeff Atwater’s view that a compromise between the consumers and car dealers can be accomplished by modifying the existing law and improving its enforcement by the Attorney General’s Office. In my opinion this issue between the two candidates can be a great thing for the car-buyers of Florida.
We have another politician who has appeared on the scene, Senator Alex Diaz de Portilla from Miami. Senator Portilla is the chairman of the Senate Commerce Committee, addressing issues like the dealer fee that affects consumers. Senator Portilla’s committee held a hearing to discuss the Senate Report on the Dealer Fee on Tuesday, February 19. I sent the chairman and all the other senators on his committee lots of information including my postings from this blog on the dealer fee and dozens of emails I have received from car-buyers who consider the dealer fee a “license to steal”. Chairman Portilla called me after the hearing and told me that he decided to table the dealer fee issue until the next committee meeting on Tuesday, March 4 at 1:15 PM. That is this coming Tuesday. He tabled the dealer fee issue because there were no consumers there to argue against it. But, he told me, the room was full of car dealers and their lobbyist. FADA had rallied the troops to defend their precious dealer fee. Senator Portilla saw no sense in hearing only one side of the debate and tabled it until this Tuesday. He has agreed to meet with me personally on Thursday or Friday, February 28 or 29.
I’m writing this column on Friday, February 22 and it won't be read in The Hometown News until a week later. It will be posted here on EarlStewartOnCars.com today. That gives me 11 days until the next Commerce Committee hearing to rally some car-buyers to sit alongside FADA’s car dealers and lobbyists. Only the loud, honest, voices of the voter’s of Florida can trump FADA. Will we be successful?
You can help me by calling and/or emailing Senator Portilla and the members of his committee:
First Name
Last Name
Dst
City
Local Phone
Email Address
Victor
Crist
12
Tampa
(850) 487-5068
crist.victor.web@flsenate.gov
Alex
Diaz de la Portilla
36
Miami
(850) 487-5109
portilla.alex.web@flsenate.gov
Rudy
Garcia
40
Hialeah
(850) 487-5106
garcia.rudy.web@flsenate.gov
Charlie
Justice
16
St. Petersburg
(850) 487-5075
justice.charlie.web@flsenate.gov
Evelyn J.
Lynn
7
Daytona Beach
(850) 487-5033
lynn.evelyn.web@flsenate.gov
Steve
Oelrich
14
Gainesville
(850) 487-5020
oelrich.steve.web@flsenate.gov
Jeremy
Ring
32
Margate
(850) 487-5094
ring.jeremy.web@flsenate.gov
Burt L.
Saunders (B)
37
Naples
(850) 487-5124
saunders.burt.web@flsenate.gov
Gary
Siplin
19
Orlando
(850) 487-5190
siplin.gary.web@flsenate.gov
I guess you could call this period of time in my life, Politics 101. Now that I’ve taken a position against the FADA and begun advocating making the dealer fee illegal, I’m working on my advanced degree in Political Science. There’s no better teacher than experience and that is what I’m getting. I’ve been publically decrying the dealer fee for several years. I’ve told anybody who will listen that I think it’s wrong that Florida law allows and in some ways facilitates and legitimatizes car dealers in increasing the price (and his profit) on the price he quotes his customers in a manner that often goes undetected or assumed by the buyer to be an official fee.
I guess some of the folks who listened to what I had to say about the dealer fee called Ken Pruitt who is the President of the Florida Senate. Under the pressure of his constituents, he formed a committee to investigate the dealer’s fee. This was a bit awkward for Senator Pruitt because the FADA is a very big supporter of his. This was another lesson in my political education. No matter how much a politician accepts in contributions from an individual, company, or organization, the voice of his constituents will trump that influence. The Senate investigation was not a very good one. In fact, it relied heavily on the input of the FADA. The Senate committee did not talk to a single car buyer. Senator Jeff Atwater told me that he was quite disappointed with this obvious flaw in the methodology.
By the way, Senator Jeff Atwater has been “anointed” to be the next President of the Senate, replacing Ken Pruitt, if he wins re-election this year. The President of the Senate is arguably the most powerful politician in Tallahassee. Senator Atwater knows that he has his work cut out for him to win re-election. This is because we also elect the next President of the United States this November. Senator Atwater’s district is heavily Democratic but he’s a Republican. In presidential election years there is always a much larger voter turnout. Former Democratic state Senator Skipp Campbell is running for Jeff Atwater’s Senate seat. It’s going to be a very close race to see who gets elected, Jeff or Skipp. It might not take much to swing enough voters one way or the other. Virtually all registered voters buy cars and that means almost all of them pay a dealer fee if they buy their cars in Florida. I’ll just bet that if somebody let all of the voters in Jeff Atwater’s district know just what a rip off the dealer fee is, this might influence who they vote for in the next election. Jeff has appeared on my radio show, met with me in person, and talked to me often on the phone about this subject. He believes that the current law addressing the dealer’s fee needs to be changed. He strongly believes that there should be much better enforcement of the current law.
On the other hand, Skipp Campbell simply believes that the dealer fee should be made illegal…no ifs, ands, buts, or compromises. In a meeting with Skipp three weeks ago, he told me that, if elected, he would work hard to make the dealer fee illegal. This is in contrast to Jeff Atwater’s view that a compromise between the consumers and car dealers can be accomplished by modifying the existing law and improving its enforcement by the Attorney General’s Office. In my opinion this issue between the two candidates can be a great thing for the car-buyers of Florida.
We have another politician who has appeared on the scene, Senator Alex Diaz de Portilla from Miami. Senator Portilla is the chairman of the Senate Commerce Committee, addressing issues like the dealer fee that affects consumers. Senator Portilla’s committee held a hearing to discuss the Senate Report on the Dealer Fee on Tuesday, February 19. I sent the chairman and all the other senators on his committee lots of information including my postings from this blog on the dealer fee and dozens of emails I have received from car-buyers who consider the dealer fee a “license to steal”. Chairman Portilla called me after the hearing and told me that he decided to table the dealer fee issue until the next committee meeting on Tuesday, March 4 at 1:15 PM. That is this coming Tuesday. He tabled the dealer fee issue because there were no consumers there to argue against it. But, he told me, the room was full of car dealers and their lobbyist. FADA had rallied the troops to defend their precious dealer fee. Senator Portilla saw no sense in hearing only one side of the debate and tabled it until this Tuesday. He has agreed to meet with me personally on Thursday or Friday, February 28 or 29.
I’m writing this column on Friday, February 22 and it won't be read in The Hometown News until a week later. It will be posted here on EarlStewartOnCars.com today. That gives me 11 days until the next Commerce Committee hearing to rally some car-buyers to sit alongside FADA’s car dealers and lobbyists. Only the loud, honest, voices of the voter’s of Florida can trump FADA. Will we be successful?
You can help me by calling and/or emailing Senator Portilla and the members of his committee:
First Name
Last Name
Dst
City
Local Phone
Email Address
Victor
Crist
12
Tampa
(850) 487-5068
crist.victor.web@flsenate.gov
Alex
Diaz de la Portilla
36
Miami
(850) 487-5109
portilla.alex.web@flsenate.gov
Rudy
Garcia
40
Hialeah
(850) 487-5106
garcia.rudy.web@flsenate.gov
Charlie
Justice
16
St. Petersburg
(850) 487-5075
justice.charlie.web@flsenate.gov
Evelyn J.
Lynn
7
Daytona Beach
(850) 487-5033
lynn.evelyn.web@flsenate.gov
Steve
Oelrich
14
Gainesville
(850) 487-5020
oelrich.steve.web@flsenate.gov
Jeremy
Ring
32
Margate
(850) 487-5094
ring.jeremy.web@flsenate.gov
Burt L.
Saunders (B)
37
Naples
(850) 487-5124
saunders.burt.web@flsenate.gov
Gary
Siplin
19
Orlando
(850) 487-5190
siplin.gary.web@flsenate.gov
Sunday, February 03, 2008
MY CONVERSATION WITH SENATOR ATWATER ON THE DEALER FEE
Followers of this column know that I’ve been trying for several weeks to discuss the dealer fee issue with Senator Jeff Atwater, the next President of the Florida Senate. I was successful and I met with the Senator for nearly two hours on Saturday, January 26. Not only that, but he agreed to call in to my radio show [Seaview AM 960, WSVU airing Saturday mornings between 9 and 10] this Saturday, February 9].
Regular readers please excuse a little recap to bring those up to date who aren’t aware of the dealer fee and the pending legislation. The dealer fee is a “license to steal”, made legal by a bad Florida law. A dealer fee goes by at least 22 different names, according to the State Senate Investigating Committee. Dealer fee, documentary fee, dealer prep fee, and administrative are just a few. The highest dealer fee I know of is $999 charged by a dealer in Coconut Creek (west of Ft. Lauderdale). The lowest I know of is $389 and the average is around $700. This “fee” is just dealer profit disguised to make people believe they are paying an official fee to state, local, or federal government. Lots of dealers omit this from their advertised price (which is illegal) and surprise those customers who happen to notice it in the paperwork when they take delivery. Most customers never notice the dealer fee at all. Those who advertise legally and do include the dealer fee in the price, generally advertise just one vehicle at that price. Unfortunately this specific car has always “just been sold” when you come in on the ad. But, they tell you, we have lots more just like it. The other cars might be just like it, but not the price. Now, the law allows the dealer to add the dealer fee to the price. Enough people have complained about this that Ken Pruitt, the current Senate President, formed a committee to investigate making the dealer fee illegal or capping it. This recommendation was sent to the legislature several months ago. You can read this report by clicking on http://www.earlstewart.com/.
In my meeting with Jeff Atwater I was quite surprised to learn that he knew virtually nothing about the dealer fee or the Senate Investigating Committee’s report. There are many, many issues that state senators must deal with and this is just one. Jeff Atwater has been spending a large amount of his time on insurance and property tax issues. I furnished him with lots of information including a copy of the Senate Investigating Committee’s report, copies of every auto classified ad in the PB Post on Saturday [with my annotations] , January 26, copies of dealer’s vehicle buyers’ orders disclosing their dealer fees, and copies of articles I had written on this subject for my Blog and Hometown News. With all modesty, I must say that I did a very good job of educating Jeff Atwater on why this dealer fee is so bad for Florida car buyers.
The Senator expressed surprise and disappointment with the lack of thoroughness of the Senate committee’s report. The committee worked hand in hand with the Florida Automobile Dealers Association (FADA) who is heavily lobbying the Florida legislature for the preservation of the dealer fee. I told Jeff Atwater that this was like “sending a rabbit after lettuce”. Furthermore, no one in the senate committee ever talked to a single consumer, a car buyer. How can a committee possible make an intelligent recommendation that will protect the rights of the consumer when they hear only the car dealer’s side of the story?
I showed Jeff Atwater quotes from the FADA magazine, Velocity, “Senator Atwater- to support his campaign for Senate because he has promised to help us again this year-goal is $50,000.” Dealers have already contributed $24,500. The FADA has listed the preservation of the Dealer Fee as their #1 agenda item…”The Senate’s threat to cap your dealership service fees could reduce your gross profit on each new and used vehicle”. And FADA is hiring new lobbyist. Quoting from Velocity, “HELP US HIRE A LOBBYING TEAM. The attack on your dealer service fee will require a TEAM of new lobbyists-those funds cannot come from our political action committee (CAR-PAC). Every dealer who charges a service fee should cut a healthy check payable to “FADA” for our legislative action fund. We will hire top-notch lobbyists with your contributions.”
It’s clear that the car dealers of Florida will fight tooth, nail, and wallet to preserve their Florida State “license to steal” aka the Dealer Fee. But the good news is that we have a huge opportunity to prevail with the help of Senator Jeff Atwater. What can you, the readers of this column and my Blog, do? Let Jeff Atwater know how you feel. Relate your experience with the dealer fee when you bought your last car. Most car buyers don’t even realize they paid a dealer fee but the chances are 99.9% that if you bought a car in Florida you paid one. You can email Jeff Atwater at Jeff@SenatorJeff.com and you can call him at 561 625-5102. If you email him, please cc me at earls@earlstewarttoyota.com. If you have a question you would like me to ask the Senator when he calls into my radio show this February 9 between 9:05 AM and 9:20 AM, please email it to earlstewart@seaviewam960.com or you can call me on my cell phone at 561 358-1474.
Regular readers please excuse a little recap to bring those up to date who aren’t aware of the dealer fee and the pending legislation. The dealer fee is a “license to steal”, made legal by a bad Florida law. A dealer fee goes by at least 22 different names, according to the State Senate Investigating Committee. Dealer fee, documentary fee, dealer prep fee, and administrative are just a few. The highest dealer fee I know of is $999 charged by a dealer in Coconut Creek (west of Ft. Lauderdale). The lowest I know of is $389 and the average is around $700. This “fee” is just dealer profit disguised to make people believe they are paying an official fee to state, local, or federal government. Lots of dealers omit this from their advertised price (which is illegal) and surprise those customers who happen to notice it in the paperwork when they take delivery. Most customers never notice the dealer fee at all. Those who advertise legally and do include the dealer fee in the price, generally advertise just one vehicle at that price. Unfortunately this specific car has always “just been sold” when you come in on the ad. But, they tell you, we have lots more just like it. The other cars might be just like it, but not the price. Now, the law allows the dealer to add the dealer fee to the price. Enough people have complained about this that Ken Pruitt, the current Senate President, formed a committee to investigate making the dealer fee illegal or capping it. This recommendation was sent to the legislature several months ago. You can read this report by clicking on http://www.earlstewart.com/.
In my meeting with Jeff Atwater I was quite surprised to learn that he knew virtually nothing about the dealer fee or the Senate Investigating Committee’s report. There are many, many issues that state senators must deal with and this is just one. Jeff Atwater has been spending a large amount of his time on insurance and property tax issues. I furnished him with lots of information including a copy of the Senate Investigating Committee’s report, copies of every auto classified ad in the PB Post on Saturday [with my annotations] , January 26, copies of dealer’s vehicle buyers’ orders disclosing their dealer fees, and copies of articles I had written on this subject for my Blog and Hometown News. With all modesty, I must say that I did a very good job of educating Jeff Atwater on why this dealer fee is so bad for Florida car buyers.
The Senator expressed surprise and disappointment with the lack of thoroughness of the Senate committee’s report. The committee worked hand in hand with the Florida Automobile Dealers Association (FADA) who is heavily lobbying the Florida legislature for the preservation of the dealer fee. I told Jeff Atwater that this was like “sending a rabbit after lettuce”. Furthermore, no one in the senate committee ever talked to a single consumer, a car buyer. How can a committee possible make an intelligent recommendation that will protect the rights of the consumer when they hear only the car dealer’s side of the story?
I showed Jeff Atwater quotes from the FADA magazine, Velocity, “Senator Atwater- to support his campaign for Senate because he has promised to help us again this year-goal is $50,000.” Dealers have already contributed $24,500. The FADA has listed the preservation of the Dealer Fee as their #1 agenda item…”The Senate’s threat to cap your dealership service fees could reduce your gross profit on each new and used vehicle”. And FADA is hiring new lobbyist. Quoting from Velocity, “HELP US HIRE A LOBBYING TEAM. The attack on your dealer service fee will require a TEAM of new lobbyists-those funds cannot come from our political action committee (CAR-PAC). Every dealer who charges a service fee should cut a healthy check payable to “FADA” for our legislative action fund. We will hire top-notch lobbyists with your contributions.”
It’s clear that the car dealers of Florida will fight tooth, nail, and wallet to preserve their Florida State “license to steal” aka the Dealer Fee. But the good news is that we have a huge opportunity to prevail with the help of Senator Jeff Atwater. What can you, the readers of this column and my Blog, do? Let Jeff Atwater know how you feel. Relate your experience with the dealer fee when you bought your last car. Most car buyers don’t even realize they paid a dealer fee but the chances are 99.9% that if you bought a car in Florida you paid one. You can email Jeff Atwater at Jeff@SenatorJeff.com and you can call him at 561 625-5102. If you email him, please cc me at earls@earlstewarttoyota.com. If you have a question you would like me to ask the Senator when he calls into my radio show this February 9 between 9:05 AM and 9:20 AM, please email it to earlstewart@seaviewam960.com or you can call me on my cell phone at 561 358-1474.
Monday, January 28, 2008
BEWARE OF DECEPTIVE INTERNET CAR PRICING
BULLETIN: Senator Jeff Atwater will call into my radio show this Saturday, February 9 at 9:05 AM. You can listen in at Seaview AM 960, WSVU. You can stream the show on the Internet by clicking on www.seaviewam960.com.
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 $699.95 for a “dealer fee” plus $199.95 for a “doc fee”. This totals $899.90 in a surprise price increase when you come into the dealership to pick up your car. The written warning you have is an asterisk denoting some fine print at the bottom of the Internet quote that says *plus tax, tag, and fees. The “fees” mean $899 in additional price and profit to the dealer on top of the price you were quoted. As if this practice isn’t bad enough, many people come in, sign the papers, and drive their new car home without even realizing that they paid an extra $899.90 because it is hidden in the voluminous paperwork that you sign rapidly in the dealer’s finance office.
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.
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 $699.95 for a “dealer fee” plus $199.95 for a “doc fee”. This totals $899.90 in a surprise price increase when you come into the dealership to pick up your car. The written warning you have is an asterisk denoting some fine print at the bottom of the Internet quote that says *plus tax, tag, and fees. The “fees” mean $899 in additional price and profit to the dealer on top of the price you were quoted. As if this practice isn’t bad enough, many people come in, sign the papers, and drive their new car home without even realizing that they paid an extra $899.90 because it is hidden in the voluminous paperwork that you sign rapidly in the dealer’s finance office.
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.
Sunday, January 13, 2008
SHOULD YOU BUY A CAR THROUGH A BROKER?
If you aren’t familiar with car brokers, they are third parties [mostly individuals but some companies] who act as an intermediary between you and the car dealer, supposedly to get you a better price than you would be able to obtain by yourself.
Most dealerships, including mine, deal with brokers. Virtually all brokers are paid a fee by the dealer and some also charge the customer…a “double dip” you might say. The fee the brokers charge range all over the map. I don’t remember paying a broker less than $500 and have paid up to $5,000. The charges to the customers range from $250 to $750. If the broker is charging you a fee, you can be almost certain he is also charging the dealer at least as large a fee.
Another way brokers do business is to actually buy the car and then sell it again to you. To do this they must have a dealer license; otherwise they would have to pay sales tax on the transaction. Buying the car allows them to mark the car up to you as their compensation. They may charge you a fee too.
As you can see, the price of going through a broker raises the price of the car that you buy. The only question is does it raise the price above what you could buy the car directly? The answer to this question depends entirely on your buying skills. If you are of average intelligence and follow the advice that I’ve given in these columns, you should be able to buy most cars at as low a price as a broker can. This means you will save anywhere from $500 to $5,500 in fees that you don’t have to pay. I don’t care what a broker may tell you, a dealer will always sell you the car at just as low a price as he charges a broker…if you are a skilled buyer and do your homework.
Of course there are reasons other than price that car buyers seek out brokers. As I’ve often said, buying a car can be a very unpleasant experience. One of my columns is entitled, “Should I Buy a Car or Have a Colonoscopy?” If you go about buying a car the right way, you minimize the unpleasantness. Don’t ever go into a dealership without doing your homework about the exact year, make, and model you want, accessorized exactly as you wish. Always get at least three competitive prices. If at all possible do your shopping in the comfort of your home on the Internet. If you’re not cyber savvy, ask for help from a friend, son or daughter, or grandchild who is. You will get your best price on the Internet without ever having to leave the comfort of your home. Two excellent Web sites you can consult are www.kbb.com and www.edmunds.com. They have vast amounts of free information on dealer cost, quality ratings, trade in values, etc.
A lot of people rely on their credit unions for advice on which dealer they should buy a car from. It sounds like a good idea because your credit union handles thousands of these transactions and has experience with lots of car dealers. I must warn you that there are employees in credit unions who are paid by the car dealers for referrals…not any different than a broker’s fee. Also many credit unions sell extended warranties on cars that they finance and they may refer you to dealers who agree not to offer to sell you their extended warranty. This is a potential conflict of interest. I advise you to get at least three competitive prices from three dealers, including the one that your credit union referred you too.
If you are accustomed to going through a broker to buy your cars, I suggest that on your next purchase that you also get prices directly from two other dealers. Compare those prices with your broker’s price and be sure you don’t pay him his fee unless you buy the car through him.
Most dealerships, including mine, deal with brokers. Virtually all brokers are paid a fee by the dealer and some also charge the customer…a “double dip” you might say. The fee the brokers charge range all over the map. I don’t remember paying a broker less than $500 and have paid up to $5,000. The charges to the customers range from $250 to $750. If the broker is charging you a fee, you can be almost certain he is also charging the dealer at least as large a fee.
Another way brokers do business is to actually buy the car and then sell it again to you. To do this they must have a dealer license; otherwise they would have to pay sales tax on the transaction. Buying the car allows them to mark the car up to you as their compensation. They may charge you a fee too.
As you can see, the price of going through a broker raises the price of the car that you buy. The only question is does it raise the price above what you could buy the car directly? The answer to this question depends entirely on your buying skills. If you are of average intelligence and follow the advice that I’ve given in these columns, you should be able to buy most cars at as low a price as a broker can. This means you will save anywhere from $500 to $5,500 in fees that you don’t have to pay. I don’t care what a broker may tell you, a dealer will always sell you the car at just as low a price as he charges a broker…if you are a skilled buyer and do your homework.
Of course there are reasons other than price that car buyers seek out brokers. As I’ve often said, buying a car can be a very unpleasant experience. One of my columns is entitled, “Should I Buy a Car or Have a Colonoscopy?” If you go about buying a car the right way, you minimize the unpleasantness. Don’t ever go into a dealership without doing your homework about the exact year, make, and model you want, accessorized exactly as you wish. Always get at least three competitive prices. If at all possible do your shopping in the comfort of your home on the Internet. If you’re not cyber savvy, ask for help from a friend, son or daughter, or grandchild who is. You will get your best price on the Internet without ever having to leave the comfort of your home. Two excellent Web sites you can consult are www.kbb.com and www.edmunds.com. They have vast amounts of free information on dealer cost, quality ratings, trade in values, etc.
A lot of people rely on their credit unions for advice on which dealer they should buy a car from. It sounds like a good idea because your credit union handles thousands of these transactions and has experience with lots of car dealers. I must warn you that there are employees in credit unions who are paid by the car dealers for referrals…not any different than a broker’s fee. Also many credit unions sell extended warranties on cars that they finance and they may refer you to dealers who agree not to offer to sell you their extended warranty. This is a potential conflict of interest. I advise you to get at least three competitive prices from three dealers, including the one that your credit union referred you too.
If you are accustomed to going through a broker to buy your cars, I suggest that on your next purchase that you also get prices directly from two other dealers. Compare those prices with your broker’s price and be sure you don’t pay him his fee unless you buy the car through him.
Saturday, January 05, 2008
SOMETIMES NICE GUYS DO WIN
Leo Durocher is often quoted as saying “Nice guys don’t win ball games” [He later denied ever saying this]. But this expression is quoted often too justify aggressive, rude, exploitive and unethical business practices. A surprisingly large number of otherwise intelligent business leaders actually believe this saying. This is especially prevalent in the retail car business. I’m a member of an organization called a “20 Group”. This group of car dealers (about 20, hence the name) meets for 3 days 3 times a year to compare business practices and financial results. Our members are from all over the USA. The majority of the members of this group think my way of doing business is not smart. Most Florida dealers I know don’t understand or agree with my business practices.
This column is not a forum to celebrate my accomplishments or for trying to sell you a Toyota, but to share my knowledge with you about how to buy your next car or have your car serviced without being taken advantage of. With that said, I tell you that my Toyota dealership sold more new Toyotas last year than the other Toyota dealerships in Palm Beach County, one in West Palm Beach and one in Delray. Of course I’m proud of that accomplishment, 33 years in the making. After all, my dealership is in Lake Park, which many of you may not have even heard of. I always mention North Palm Beach in mentioning my dealership’s location because we are on the city limit of Lake Park and North Palm Beach. Our population in Lake Park in northern county is much less than that of West Palm Beach and Delray. We just aren’t “supposed to” sell more cars than the dealers from the “big city”.
Was it Will Rogers who said, “It ain’t braggin’ if it’s so”? I’m not sure if I agree with that and I always feel a little funny about tooting my own horn. The reason I’m writing about my dealership’s accomplishment is not because of what we did but how we did it. We were able to accomplish this truly amazing feat by being “nice guys” and we did win spite of what Leo Durocher may have said. What most other car dealers can’t understand is how we can be so successful without advertising the way they do. By that I mean we virtually never advertise cars, prices, special sale events [Once last year we did advertise a sale on new Priuses because we temporarily had an oversupply]. If you have seen my ads, you know how I advertise. It’s all about my direct personal access via my red phone, my decrying the dealer fee and calling for it being made illegal, and telling you that you will always be treated with integrity, respect, and courtesy in my dealership.
Our sales practices and our service practices are like our advertising. We truly walk the talk. I have four red telephones located in the service drive, customer waiting lounge, show room, and the body shop. Beside the red phone is a sign with my picture saying, “The buck stops here. If we have not exceeded your expectations, pick up this red phone and be directly connected to me, the owner”. These red phones immediately ring my cell phone which I have with me 24/7 [I turn it off when I go to sleep at night]. I invite all of my new customers to a reception every two months, speak to them, and give each one my business card with my home telephone number. We don’t have secretaries in my company and we don’t have voice mails. Nobody, including me, has their calls screened. In fact, if the person you are calling is out of the dealership, the call is directly connected to her cell phone. My instruction to all of my employees is “If the customer thinks she is right, take care of the problem”. The important thing about this philosophy is not debating who is right. The important thing is what our customer believes. Our motto is “It’s what you do for your customer when you don’t have to that is the true measure of character…like sticking up for somebody that can’t defend himself”.
There is another reason that I’m “bragging” in this column. Other businesses and especially other car dealers are sitting up and taking notice. Hopefully we will see some of them change their business practices like dropping the dealer fee and changing their bait and switch advertising tactics. If you’re a car dealer reading this column, give me a call and let’s talk. I want to tell you how much better you will do by treating your customers the way your mother probably told you you should. Not only will your business do better but you will sleep a lot better at night.
This column is not a forum to celebrate my accomplishments or for trying to sell you a Toyota, but to share my knowledge with you about how to buy your next car or have your car serviced without being taken advantage of. With that said, I tell you that my Toyota dealership sold more new Toyotas last year than the other Toyota dealerships in Palm Beach County, one in West Palm Beach and one in Delray. Of course I’m proud of that accomplishment, 33 years in the making. After all, my dealership is in Lake Park, which many of you may not have even heard of. I always mention North Palm Beach in mentioning my dealership’s location because we are on the city limit of Lake Park and North Palm Beach. Our population in Lake Park in northern county is much less than that of West Palm Beach and Delray. We just aren’t “supposed to” sell more cars than the dealers from the “big city”.
Was it Will Rogers who said, “It ain’t braggin’ if it’s so”? I’m not sure if I agree with that and I always feel a little funny about tooting my own horn. The reason I’m writing about my dealership’s accomplishment is not because of what we did but how we did it. We were able to accomplish this truly amazing feat by being “nice guys” and we did win spite of what Leo Durocher may have said. What most other car dealers can’t understand is how we can be so successful without advertising the way they do. By that I mean we virtually never advertise cars, prices, special sale events [Once last year we did advertise a sale on new Priuses because we temporarily had an oversupply]. If you have seen my ads, you know how I advertise. It’s all about my direct personal access via my red phone, my decrying the dealer fee and calling for it being made illegal, and telling you that you will always be treated with integrity, respect, and courtesy in my dealership.
Our sales practices and our service practices are like our advertising. We truly walk the talk. I have four red telephones located in the service drive, customer waiting lounge, show room, and the body shop. Beside the red phone is a sign with my picture saying, “The buck stops here. If we have not exceeded your expectations, pick up this red phone and be directly connected to me, the owner”. These red phones immediately ring my cell phone which I have with me 24/7 [I turn it off when I go to sleep at night]. I invite all of my new customers to a reception every two months, speak to them, and give each one my business card with my home telephone number. We don’t have secretaries in my company and we don’t have voice mails. Nobody, including me, has their calls screened. In fact, if the person you are calling is out of the dealership, the call is directly connected to her cell phone. My instruction to all of my employees is “If the customer thinks she is right, take care of the problem”. The important thing about this philosophy is not debating who is right. The important thing is what our customer believes. Our motto is “It’s what you do for your customer when you don’t have to that is the true measure of character…like sticking up for somebody that can’t defend himself”.
There is another reason that I’m “bragging” in this column. Other businesses and especially other car dealers are sitting up and taking notice. Hopefully we will see some of them change their business practices like dropping the dealer fee and changing their bait and switch advertising tactics. If you’re a car dealer reading this column, give me a call and let’s talk. I want to tell you how much better you will do by treating your customers the way your mother probably told you you should. Not only will your business do better but you will sleep a lot better at night.
Saturday, December 22, 2007
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 2nd or 3rd time for a repair that was not done properly. It’s the dealership’s fault and you should not be inconvenienced. On a comeback, always talk with the service manager directly. Also ask that they assign their best technician to the job.
As I have said in earlier columns, there is nothing more important than choosing the right dealership to do business with. No service department is perfect and never makes a mistake. What you want to find is that service department that, in addition to being competent, will fess up to their occasional mistakes, sincerely apologize and make them right.
I strongly recommend that you have your car serviced and repaired by a franchised dealer of the make of your vehicle. I know that this statement, coming from a franchised car dealer, may be met with some skepticism. Listen to my reasons before passing judgment. Modern vehicles are highly complex computerized machines requiring very sophisticated diagnostic equipment and highly trained technicians. The evolution of new, expensive diagnostic equipment requires constant updating. The evolution of car technology requires continuing education of dealers’ factory trained technicians who attend many weeks of schools every year. Forty years ago, it was possible for a really good mechanic to fix anybody’s car. Those days are gone and your car needs a highly trained specialist with the very latest diagnostic equipment. It is impossible for an independent service company to be competent in servicing and repairing all makes of automobiles.
Carefully choose the dealership that will service your car. You do not have to take your car to the dealership that sold you the car for warranty repairs, as many believe. Every dealership of your make car will welcome your warranty and non warranty work. Do your homework on which dealer has the best service department. Every dealer is graded in customer satisfaction by the manufacturer. Ask to see a copy of his CSI (customer satisfaction index) scores. Check with the BBB and the County Office of Consumer Affairs.
When you take your car in for maintenance or repairs, always ask for an estimate. State law requires that a service department not exceed a written estimate by more than 10%. When paying your bill, scrutinize the detail to be sure that you know exactly what each charge means. Most service departments add a fee on top of everything else with various labels like “miscellaneous supplies”, “sundry supplies”, “environmental handling”, etc. This fee is simply a 5% or 10% charge tacked onto the total bill. If you object to this fee, which you certainly should, dealers will often waive it.
You will find that prices for maintenance like oil changes, alignments, tire rotation and balancing, etc. are usually priced competitively. Where you have to be careful is in the pricing of major repair items like transmission, engines, and air-conditioners. When quoted a price on a big repair, don’t be afraid to negotiate. If you let it be known that you are willing to take your car elsewhere (even if you’re bluffing), you can often negotiate the price down significantly.
You should always make an appointment before bringing your car in. Appointments should be scheduled at relative slow times and days. Avoid bringing your car in early on a Monday morning and other very busy times. You want the service advisor to spend as much time with you as is necessary. This will allow you to drive the car with the service advisor if necessary to identify a specific problem like a squeak, rattle or vibration. Pick your car up at a time when the service advisor or technician has time to road test the car with you again to be sure that the problem was fixed.
Don’t be shy about asking for a loaner car when you have to take your car back a 2nd or 3rd time for a repair that was not done properly. It’s the dealership’s fault and you should not be inconvenienced. On a comeback, always talk with the service manager directly. Also ask that they assign their best technician to the job.
As I have said in earlier columns, there is nothing more important than choosing the right dealership to do business with. No service department is perfect and never makes a mistake. What you want to find is that service department that, in addition to being competent, will fess up to their occasional mistakes, sincerely apologize and make them right.
Friday, December 14, 2007
The SubPrime Crisis and Car Sales
You have read a lot about the subprime crisis, especially if you invest in the stock market. All the talk so far has been about its effect on the housing market, which continues to decline, more so in South Florida than just about any other place in the USA.
Subprime loans are those made to those with poorer or lesser credit. When lenders get overly aggressive and careless in making these kinds of loans, it causes huge losses by the lenders, institutions that buy packages of these kinds of loans, and investors.
I can already see this affecting the retail automobile business. With the exception of a few imports like Honda, Toyota, and Hyundai, most car sales are way off. This is partly do to the plunge in the home building market, but it is also due to lenders tightening their credit reins which affect the subprime market first and most.
Those manufacturers of cars and dealers selling those makes whose sales are way off sometime resort to desperate measures to prop up their sales. The subprime customer is an “easy sale”. In fact, the subprime customer requires very little selling at all, just the ability to find someone to make him a car loan. The dealer can “sell” that kind of a customer any car at any price. The customer is just grateful that the dealer was able to get him financed. Dealers have a nickname for these kinds of customers…”Get-Me-Dones”.
There are a number of things that those with marginal or bad credit should be very careful of when buying a car. Oftentimes dealers will falsify credit applications in order to get the loans approved. The customer signs the credit application, testifying to the truth of all of the information. You are breaking a federal law if you obtain a loan by lying to the bank about your credit. More often than not, the car salesman or finance manager actually fills out the credit application and the customer just signs it. You should read your credit application very carefully and be sure that all of the information is accurate.
Another thing you should verify before signing a finance contract with a lender is that the options and accessories on the car you are buying have been accurately represented to the lender. Dealers will often represent to the lender non-existent accessories like leather, sunroofs, CD players, and even misrepresent the model of the car to make the bank think their collateral is worth more. This allows the dealer to obtain a larger loan than the bank should be making and also allows the dealer to make a larger profit.
You will notice more ads today aimed at those with credit problems. Dealers will advertise, “No credit-no problem” or “No credit application refused”. Another favorite is “We’re looking for good people with bad credit”. These ads are to target the desperate buyers who are easy to sell cars to and are likely to be very careless about verifying that their credit application is accurate. In fact, some buyers are desperate enough that they will join in the deception of the lenders.
The subprime crisis, which has been underway in the housing market for almost one year, is just getting started in the retail car market. There are a lot of bad subprime loans being carried by subprime lenders. They are already tightening up in their credit requirements and they are being much more careful about verifying the accuracy of credit applications and the accessories that are represented to be on the cars they finance. Lenders are calling the customers directly to ask them if they have leather or a sunroof on the car they just bought. More subprime lenders will be either going out of business or switching to conventional lending only.
All of this will hurt the sales of those makes and those dealers that have relied heavily on subprime customers. I wouldn’t advise you to buy stock in Ford, GM, Chrysler, or any other struggling auto manufacturer at this time. In my opinion, their sales will be dropping a lot more due to the subprime crisis.
Subprime loans are those made to those with poorer or lesser credit. When lenders get overly aggressive and careless in making these kinds of loans, it causes huge losses by the lenders, institutions that buy packages of these kinds of loans, and investors.
I can already see this affecting the retail automobile business. With the exception of a few imports like Honda, Toyota, and Hyundai, most car sales are way off. This is partly do to the plunge in the home building market, but it is also due to lenders tightening their credit reins which affect the subprime market first and most.
Those manufacturers of cars and dealers selling those makes whose sales are way off sometime resort to desperate measures to prop up their sales. The subprime customer is an “easy sale”. In fact, the subprime customer requires very little selling at all, just the ability to find someone to make him a car loan. The dealer can “sell” that kind of a customer any car at any price. The customer is just grateful that the dealer was able to get him financed. Dealers have a nickname for these kinds of customers…”Get-Me-Dones”.
There are a number of things that those with marginal or bad credit should be very careful of when buying a car. Oftentimes dealers will falsify credit applications in order to get the loans approved. The customer signs the credit application, testifying to the truth of all of the information. You are breaking a federal law if you obtain a loan by lying to the bank about your credit. More often than not, the car salesman or finance manager actually fills out the credit application and the customer just signs it. You should read your credit application very carefully and be sure that all of the information is accurate.
Another thing you should verify before signing a finance contract with a lender is that the options and accessories on the car you are buying have been accurately represented to the lender. Dealers will often represent to the lender non-existent accessories like leather, sunroofs, CD players, and even misrepresent the model of the car to make the bank think their collateral is worth more. This allows the dealer to obtain a larger loan than the bank should be making and also allows the dealer to make a larger profit.
You will notice more ads today aimed at those with credit problems. Dealers will advertise, “No credit-no problem” or “No credit application refused”. Another favorite is “We’re looking for good people with bad credit”. These ads are to target the desperate buyers who are easy to sell cars to and are likely to be very careless about verifying that their credit application is accurate. In fact, some buyers are desperate enough that they will join in the deception of the lenders.
The subprime crisis, which has been underway in the housing market for almost one year, is just getting started in the retail car market. There are a lot of bad subprime loans being carried by subprime lenders. They are already tightening up in their credit requirements and they are being much more careful about verifying the accuracy of credit applications and the accessories that are represented to be on the cars they finance. Lenders are calling the customers directly to ask them if they have leather or a sunroof on the car they just bought. More subprime lenders will be either going out of business or switching to conventional lending only.
All of this will hurt the sales of those makes and those dealers that have relied heavily on subprime customers. I wouldn’t advise you to buy stock in Ford, GM, Chrysler, or any other struggling auto manufacturer at this time. In my opinion, their sales will be dropping a lot more due to the subprime crisis.
Saturday, December 08, 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 accept any advertising and therefore are not beholding to any companies. 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 almost 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. In fact, the last issue of CR gave negative reviews to two models of the cars I now sell, Toyota. I have to confess that with some makes 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.
This annual auto issue 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 accept any advertising and therefore are not beholding to any companies. 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 almost 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. In fact, the last issue of CR gave negative reviews to two models of the cars I now sell, Toyota. I have to confess that with some makes 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.
This annual auto issue 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.
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