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Saturday, May 12, 2007

Open Letter to Florida Car Dealers V

Ethical Car Dealers Attract the Best Customers

Dear Florida Car Dealer:

In past columns I have “confessed” to advertising and employing sales tactics in years past that I am not proud of today. I hasten to say that I never did anything illegal, but 20 to 40 years ago my ethical standards were a lot lower than they are today. I evolved and my customers evolved. Consumers today are far better educated, informed, and demanding than those of three decades back. As my business practices, sales tactics, advertising, and I as an individual improved, I noticed a very interesting, positive parallel improvement in the kind of customers my company was attracting. It was a sort of a “push-pull” phenomenon. I needed to get better to meet the expectations of my customers and, as I improved, I attracted a better kind of customer.

Today, my customers are smarter, more affluent, better educated, and “nicer”. There’s a good reason for this. For one thing, my advertising is totally ethical and honest. I don’t advertise used cars for $99, I don’t advertise that, if you buy vehicle you can get a second one free, and I don’t advertise a car below cost knowing that there is only one available which is next to impossible for the customer to buy. When you advertise like this, you attract people who are uneducated, gullible, naive or expecting “something for nothing”. The smart, fair dealing customers who know that “there is no such thing as a free lunch” buy their cars from me. I don’t surprise my customers with a dealer fee/doc fee ranging up to $1,000 which is nothing more than profit to you. In fact, many of my customers were almost yours, until you tried to “slip in” your dealer fee. A lot of my service customers used to be your service customers until they discovered that you charge an extra 5% or 10% on their service bill and tried to justify it by calling it “sundry supplies”, “shop supplies” or “environmental impact fee”.

So, you ask, what’s so great about having smart, educated, affluent, and nice customers? Well, for one thing, I don’t get sued like you do and I don’t get nasty letters from the BBB, County Office of Consumer Affairs, and Florida Attorney General’s Office. The last time I was sued was about 7 years ago. Ironically, my customer’s lawyer sued me because I settled a dispute with his client (my customer). After he wrote me a letter saying he was suing me I called his customer on the phone, drove out to her home, sat down with her and her husband at her kitchen table and settled our differences over a cup of coffee. This lawyer sued me because I had deprived him of the fee he would have charged her if he could have sued me. It’s an ongoing saga after all these years. It’s too long a story to tell here, but I will write a column about it one day. I’m guessing that the car dealers who read this column (and I know you do) have at least a half dozen lawsuits going on all of the time.

Another great thing about having nicer, smarter, more affluent customers is that they treat my employees and me with courtesy and respect, just like we treat them. I love to walk into my dealership because customers smile and wave and even stop me to tell me how well they were treated. Customers, who don’t see me in person, know that all they have to do is pick up one of four red phones located in the showroom, service drive, next to the service cashier, and in the body shop to be in immediate personal contact with me. I even give my customers my business card with my home phone number and my cell phone number. Most of the calls that I get are complimentary, just like my personal encounters. You wouldn’t do what I do because you couldn’t. Your secretary screens your phone calls and you wouldn’t dare give your home or cell phone number to a customer. By the way, if you aren’t familiar with my dealership, I probably sell a lot more cars than you do…I average about 475 a month. I have a lot more customers than you, so it’s not like I’m a little rural car dealer who can get away with what I do because I have so few customers.

Here’s another benefit of having such nice, intelligent customers. They don’t have unrealistic expectations like your customers. Remember that you probably tricked your customer into coming in with your advertising. If it worked and your customer bought a car from you thinking that you really could give him $10,000 minimum trade allowance on his car which was really worth only $500, you have reinforced his unrealistically high expectations. In his future dealings with you, he will continue to believe that he can get “something for nothing”. When you finally have to tell him “no”, he’s going to be mad, maybe even sue you.

There are other benefits, too numerous to mention, of having such happy, nice customers. Wouldn’t you like to come to work in that environment? Just think, no more law suits, no more nasty letters from governmental agencies, no more threats from the factory about your customer satisfaction index, and you could walk right through your service department or through your showroom without fear of being accosted by an irate customer. If you would like to give this a try, I would love to discuss it with you personally at any time. This is my 5th open letter to car dealers in this newspaper and I have yet to receive the first phone call…just a few nasty, anonymous emails. Maybe you will be the first to call.


Earl Stewart

Friday, May 04, 2007

Top 10 Ways to Get Shafted by a Car Dealer

(1) Believe the newspaper and TV ads. It never ceases to amaze me how outrageous and unbelievable the car dealers’ claims are. Just when I think that they can’t get any worse, I see one that tops them all. Last month, one dealer was advertising in the newspaper and TV that if you bought one vehicle from him you got a second for nothing. The “facts and fine print” would reveal that the first vehicle was a very expensive one with a huge markup of over $6,000 and the second vehicle was only the “use” of one for two years... a lease. My father always said, “If it sounds too good to be true, it probably isn’t true”. Astoundingly, the general manager of this dealership had the unmitigated gall to say on TV, “This is not a gimmick”!
(2) Buy a car on impulse on the first day you start shopping. Can you believe that this is the way most people buy cars? It truly is. There is something about a new car that excites people and appeals to them on an emotional level. People let their feelings short circuit their logical thought processes. Overcome that emotion that tells you that you must drive home that shiny new car right now. Go home and think about it. Talk it over with your spouse and friends. Research the model of car you looked at and the price on the Internet. Always drive the car you chose before you sign any papers. You should take at least a week or two in the decision making process before you buy a car.
(3) Trade your old car in to the dealer you buy from without shopping its value. Most people have no idea what their trade-in is worth when they come in to buy a new car. They rely entirely on the appraisal by the selling dealer. The dealer can make it appear that he is giving you a lot of money for your trade by taking some of the high markup on the new car and showing it as part of the appraisal value. Check Kelly Blue Book ( and on the Internet. Get at least 3 bids from other dealers of the same make for your trade. Make the purchase of the new car and the sale of your trade two separate transactions. Remember that you do get a sales tax break by trading in your car to the dealer you buy from.
(4) Use the dealer’s financing without checking with your bank or credit union. Shop for the best price on your financing just like you shop for the best price on your trade-in and the best price on new your car.
(5) Believe it when they say “This low price is good today only”. This is one of the favorite ruses used by car sales people and dealers. In 99% of the cases, you can buy that car for the same or an even lower price later. The only time that you can’t is when factory incentives expire on a certain date, typically at the end of the month. If that is the claim, demand to see the written factory incentive by the manufacturer.
(6) Agree to “Make me a written offer with a deposit and I will submit it to my manager”. This is S.O.P at most car dealerships. This is to get you psychologically engaged in the buying process. Once you have signed a buyer’s order and written out a check, you will remain in the dealership for a while and are more likely to buy. The salesman knows that. Insist on getting their best price on the car you have selected. You should never make the first offer. Once you have their price, compare it with at least 3 other prices from other dealers on the same make and model.
(7) Agree to "Why not take this new car home and see how you like it?". This is the famous “puppy dog” technique so named because once you take a puppy dog home overnight, who has the heart to return it the next day? You, your neighbors, and friends will see that shiny new car parked in your driveway. It sure looks good! How can you explain to anybody that you didn’t buy it?
(8) Commit to “I’ll buy the car if you can get my monthly payments below $___.__” Most of us tend to think in terms of our monthly budgets. We might feel that we can afford a new car as long as it costs us less than $350 per month, but there is a big difference between $350 per month for 36 months and $350 per month for 72 months. I recommend that you finance a car for no more than 42 months, preferably 36.
(9) Believe “You have my word on that.” Be absolutely sure that every promise or commitment made to you by your sales person is in writing and signed by a manager. That salesman may not work there when you have occasion to ask for that “free loaner car” that he promised you anytime you bring your car in for service.
(10) Accept that “All dealers charge a dealer fee and we can’t remove it from the invoice.” In fact, all dealers do not charge a dealer fee. I don’t. But unfortunately most do charge this “gotcha” ranging from $495 to $1,000. It is true that Florida law (which should prohibit dealer fees entirely) requires that the dealer fee appear on all invoices. If you charge just one customer a dealer fee, you must charge everybody. The state legislators, in their infinite wisdom, decided if a car dealer is going to take advantage of even one buyer, he must take advantage of all of the buyers….never discriminate. But the loophole in this stupid law is for you to demand that the dealer reduce the price of the car by the amount of the dealer fee, making it a wash.