Sunday, July 29, 2007
Dear “Anonymous”,
Thanks for your multiple (9) comments on several of my Blog articles yesterday. I noticed that all of these were sent between 1:43 PM and 2:26 PM Saturday. I say “thanks” because your disingenuous comments were quite transparently those of a particular ex-salesman now employed by another local Toyota dealer. In other words, you are no longer anonymous and judging from the time you spent writing email this Saturday afternoon (the busiest day and time for a car dealership), you aren't very busy selling cars. I’m sorry that you could not fit into our culture, but I think you have found a dealership where you should fit quite nicely. If you have a chance, read the parable, The Scorpion and the Frog. Let me know which of the two characters you most closely identify with. Lastly, “Mr. Anonymous”, if would like to speak directly to this “old man” or meet with me personally, you know that I don’t screen my calls, you have my cell phone number, and you know where you can find me.
Friday, July 27, 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.
Friday, July 20, 2007
Bigotry and Car Dealerships
Obviously bigotry exists world-wide among some employees of all businesses and some of their customers, not just in car dealerships. I have to confess that I have underestimated the problem over the years. I was born in 1940 and grew up among lots of prejudice and bigotry. Through education and legislation there were lots of improvements in our society. Up until a few short years ago, I thought we were coming very close to a virtually prejudice free society. I think I may have been overly optimistic.
A few years ago I established a firm policy at my dealership that all phone calls would be put through directly to the person being called. This included me. Nobody in my company has a secretary that screens her calls. The telephone receptionist will not ask you whose calling or what the nature of your call is. She will simply put the call straight through. If an employee is not in the dealership, the call is automatically transferred to his cell phone. After this, I added four red phones strategically located for maximum access to my customers. One is outside in the service drive. One is in the service customer waiting lounge, right next to the cashier. One is on the receptionist’s desk right in the middle of our showroom. The last red phone is in our body shop waiting room. There is a sign next to each phone, with my picture, that says to pick up the phone if we have not exceeded your expectations.
I think you will agree that this gives my customers better access to the owner and managers of my business than any other business you know of. So what has all that got to do with the subject of this article, “Bigotry in Car Dealerships”? Because I am “in the trenches”, I can tell you that a disproportionate number of complaints come from minorities and those who speak English with an accent. I estimate that about 20% of my customers fall into this category, but customer complaints from this group are more than 50%. For a while, I thought that this some kind of fluke. Then I even considered whether minorities and people whose primary language was other than English just complained more. But that simply is not logical. I finally decided that it was a communication problem. These people were unable to make themselves clearly understood by my employees and visa versa. But, I’m not sure that is the entire reason.
You may have seen my latest TV advertisement in which I speak Spanish with English subtitles (http://www.youtube.com/watch?v=DnrNYDI18VM). As you know the Hispanic population of South Florida is among the largest in the USA. Most of these Hispanic Americans are fluent in English and watch conventional English speaking TV channels. The reason I did the commercial in Spanish was to signal my respect for their culture. If you have traveled abroad, you know that most foreigners speak English in addition to their native tongue. But, when you address them in their own language, even a few simple phrases, this pleases them very much that you would go to this trouble. In the TV ad I simple say that I admire and respect the positive impact that Hispanics have on our culture and economy and I invite them to visit our dealership. I added the English subtitles because the vast majority of the viewers don’t speak Spanish and I wanted them to understand the purpose of my advertisement.
The ad began running a week ago and I have been surprised and shocked by the negative phone calls and emails I have received. There have not been a lot, but they have come in steadily every day. There are more people in South Florida than I realized who resent Hispanics. They tell me that they are insulted that I would allow a Spanish language ad to run on the TV set in their living room and that they would never buy a car from me. Some miss the point of the commercial entirely and tell me that “those Hispanics should learn to speak English!” I can’t figure out why they think Hispanic people are watching WPTV Channel 5 news if they don’t understand English. I also hear a lot of people who say they can’t stand the phone recordings that say “touch one for English”, etc. I don’t quite see how that relates to my TV ad. Perhaps the most disturbing phenomenon has been comments from friends of mine who feel strongly that the only language that should be permitted to be spoken in America is English.
I don’t want to get political on this. I can’t afford to take sides in a political debate because I’m a businessman. My goal in advertising in Spanish is to sell more Toyotas. Toyota happens to be the number one choice of Hispanics in America. A higher percentage of Hispanics drive Toyotas than non-Hispanics. Toyota ran the very first Spanish speaking spot in the Super Bowl. The vice president of Marketing responsible for this was James Farley who now heads the Lexus division of Toyota. He sent me an email when he saw my Hispanic ad, congratulating me and telling me that the feedback he received from his Spanish Super Bowl ad was that it made the Hispanic community very proud and increased their trust in Toyota.
I won’t ramble on or draw any kind of a conclusion because understanding why some human beings fear, dislike or distrust other human beings because of their language, country of origin, religion, or color of their skin will be debated and discussed for many years to come. Draw your own conclusions from my observations in this article and please remember that all I want to do is sell as many Toyotas as I can and make my customers (all of my customers) as happy as I can.
A few years ago I established a firm policy at my dealership that all phone calls would be put through directly to the person being called. This included me. Nobody in my company has a secretary that screens her calls. The telephone receptionist will not ask you whose calling or what the nature of your call is. She will simply put the call straight through. If an employee is not in the dealership, the call is automatically transferred to his cell phone. After this, I added four red phones strategically located for maximum access to my customers. One is outside in the service drive. One is in the service customer waiting lounge, right next to the cashier. One is on the receptionist’s desk right in the middle of our showroom. The last red phone is in our body shop waiting room. There is a sign next to each phone, with my picture, that says to pick up the phone if we have not exceeded your expectations.
I think you will agree that this gives my customers better access to the owner and managers of my business than any other business you know of. So what has all that got to do with the subject of this article, “Bigotry in Car Dealerships”? Because I am “in the trenches”, I can tell you that a disproportionate number of complaints come from minorities and those who speak English with an accent. I estimate that about 20% of my customers fall into this category, but customer complaints from this group are more than 50%. For a while, I thought that this some kind of fluke. Then I even considered whether minorities and people whose primary language was other than English just complained more. But that simply is not logical. I finally decided that it was a communication problem. These people were unable to make themselves clearly understood by my employees and visa versa. But, I’m not sure that is the entire reason.
You may have seen my latest TV advertisement in which I speak Spanish with English subtitles (http://www.youtube.com/watch?v=DnrNYDI18VM). As you know the Hispanic population of South Florida is among the largest in the USA. Most of these Hispanic Americans are fluent in English and watch conventional English speaking TV channels. The reason I did the commercial in Spanish was to signal my respect for their culture. If you have traveled abroad, you know that most foreigners speak English in addition to their native tongue. But, when you address them in their own language, even a few simple phrases, this pleases them very much that you would go to this trouble. In the TV ad I simple say that I admire and respect the positive impact that Hispanics have on our culture and economy and I invite them to visit our dealership. I added the English subtitles because the vast majority of the viewers don’t speak Spanish and I wanted them to understand the purpose of my advertisement.
The ad began running a week ago and I have been surprised and shocked by the negative phone calls and emails I have received. There have not been a lot, but they have come in steadily every day. There are more people in South Florida than I realized who resent Hispanics. They tell me that they are insulted that I would allow a Spanish language ad to run on the TV set in their living room and that they would never buy a car from me. Some miss the point of the commercial entirely and tell me that “those Hispanics should learn to speak English!” I can’t figure out why they think Hispanic people are watching WPTV Channel 5 news if they don’t understand English. I also hear a lot of people who say they can’t stand the phone recordings that say “touch one for English”, etc. I don’t quite see how that relates to my TV ad. Perhaps the most disturbing phenomenon has been comments from friends of mine who feel strongly that the only language that should be permitted to be spoken in America is English.
I don’t want to get political on this. I can’t afford to take sides in a political debate because I’m a businessman. My goal in advertising in Spanish is to sell more Toyotas. Toyota happens to be the number one choice of Hispanics in America. A higher percentage of Hispanics drive Toyotas than non-Hispanics. Toyota ran the very first Spanish speaking spot in the Super Bowl. The vice president of Marketing responsible for this was James Farley who now heads the Lexus division of Toyota. He sent me an email when he saw my Hispanic ad, congratulating me and telling me that the feedback he received from his Spanish Super Bowl ad was that it made the Hispanic community very proud and increased their trust in Toyota.
I won’t ramble on or draw any kind of a conclusion because understanding why some human beings fear, dislike or distrust other human beings because of their language, country of origin, religion, or color of their skin will be debated and discussed for many years to come. Draw your own conclusions from my observations in this article and please remember that all I want to do is sell as many Toyotas as I can and make my customers (all of my customers) as happy as I can.
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