2008 New Years Resolutions for Car Dealers

Last year I wrote a list of ten recommended resolutions too, but it appears that most of the car dealers missed that column. Things have not improved. This year’s list is modified and enhanced.

(1) Don’t surprise your customers with a Dealer Fee. Since last year the heat has been turned up on dealers who add this dealer profit onto the price, disguising it as an official fee. The Florida senate recently completed an investigation of this practice and made recommendations to the Florida legislature to pass a law capping or eliminating dealer fees. Just last week a class action suit was certified by the court against a Jacksonville dealer. Both of these events will likely have severe consequences on dealers who charge dealer fees and this applies to most every car dealer in Florida.
(2) Don’t advertise a price on a car that you won’t sell. How would you feel if you went into Best Buy to purchase a flat screen plasma TV only to find out that there was only one being sold at the advertised price? You would be angry, wouldn’t you? Do you think your customers feel any differently when you advertise a very low price on a car in the newspaper and you have just one car which is never available? You also don’t pay your salesman a commission if they sell this car. Even if the car is there, how anxious will your salesman be to show your customer that car.
(3) Don’t mark your cars up over MSRP. The Monroney label is a federal sticker required to be on every new car you sell. When you add thousands of dollars to a “phony Monroney” you are tricking your customer. You make him believe he is getting a bigger discount than he really is. You can also trick him into thinking he is getting a bigger trade-in allowance than he really is.
(4) Don’t lie to people with no credit or bad credit. This is just like taking advantage of a child or a handicapped person. You are kicking someone while they’re down. There are a lot of people out there who have bad credit. When you advertise that “no credit application is refused” or “no credit and bad credit and are no problem” you are simply lying. You do this because if you fool enough people, you can find some that will squeak by on credit approval. Or you will surprise the person with a huge down payment and/or interest rate. Some of you even lie, or encourage your customer to lie, on their credit application. This is a federal crime.
(5) Don’t include used cars in your new car ads. You advertise new cars and current model used cars together in your ad which is seemingly a new car ad. In the very fine print, you have a disclosure that says “some cars may be pre-owned”. Of course you can price a used car much lower and trick the customer to come in thinking he can buy a new one for that.
(6) Don’t take advantage of the elderly. Most of the calls I receive complaining about being scammed by a car dealer are from the elderly, especially widows. Widows often left the car buying up to their husbands and have never bought a car on their own. Last week I got a call from a widow who bought a new Honda only to discover that the car had been previously totaled and sold at a salvage auction. When she complained, they took all the original paperwork back (all the evidence) and replaced the car with a lower priced model. How would you like it if your mother, grandmother or your widow was taken advantage of like this?
(7) Make yourself totally accessible to your customers. You might think you know what is going on in your dealership, but you haven’t a clue unless you communicate regularly with your customers. You might be a good person who means well, but when most of your employees are paid on commission you have to keep a very close watch on them and your customers. I don’t have a secretary, nobody screens my phone calls, and I give my business card with my home and cell phone numbers on it to all of my customers. I probably sell more a lot more cars than you...about 450 a month. If I can be totally accessible to all of my customers, why can’t you?
(8) When you quote a customer a price for service, don’t surprise him at the cashier with a “sundry supplies fee”. Some dealers call it a “hazardous waste disposal fee” and some call it a “miscellaneous supplies fee”. It’s just more profit to you and you calculate this by simply tacking on 5% or 10% of the bill when your customer is paying at the cashier.
(9) Don’t hide big down payments in the fine print. You advertise very low monthly payments on purchase or leases buy in the fine print which is often readable only with a magnifying glass, you require a large down payment. $4000 or more is common.
(10) Don’t surprise your customers with “dealer installed accessories”. Don’t advertise a low price with a disclaimer in the fine print that the price will be increased by whatever accessories you chose to add at to the car at whatever price you decide to charge for those accessories.