Monday, September 26, 2011

Rebuilding Car Dealers’ Character

At a recent lunch between a group of Wall Street Journal Reporters and the new dean of the Harvard Business School, Nitin Nohria, he spoke on “changes in business education and how to teach character-building.” He said that “ethics” were the centerpiece of Harvard’s recent curriculum overhaul. Of course, a lot of this was fueled by the financial meltdown that the USA entered around 2006-7. The meltdown has been largely attributed to greed, lack of ethics, and illegal acts by businesses. Before the meltdown companies like Enron, AIG, and Lehman Brothers were considered role models for business students. Now, these companies and many more are held in no higher regard than politicians, lawyers, and car dealers (not necessarily in that order).

One of the WSJ reporters asked if it wasn’t too late to change a person’s “moral compass” by the time he’s going to graduate school. The dean responded that he didn’t believe that but believed that morals and character are a lifelong development. I totally concur because I grew my character in a positive way after I was out of school. I had a good foundation from my parents but there’s nothing like life’s school of hard knocks to jolt some sense into you. I half jokingly refer to myself as a “recovering car dealer” because I began positively adjusting my character and my moral compass considerably when I reached my mid fifties. People ask me all the time, what spurred this change. First, I tell them it’s a work in progress and I’ll continue to try to get better until the day I die. Then I tell them there is no one thing that brought this about. You can take your pick…Maturity, my sons and wife becoming part of my business, grandchildren, a near death experience with colon cancer, the realization that treating my customers with courtesy, respect, and integrity was actually better for business than the old way.

Abraham Lincoln said that people think that the real test of a person’s character is how they deal with adversity. I’ve been hearing a lot of excuses from dealers who say that they can’t stop charging the dealer fee because business is so bad. If they stop charging it, they would go out of business and just think of the number of innocent employees would be unemployed! I’m sure that rationale is why a lot of car dealers add thousands of dollars to the MSRP of their advertised cars so that they can trick their customers into believing they’re getting a large discount. Or why dealers charge customers twice for freight and even mark up the license registration electronic filing fee. But the dean of Business at Harvard thinks the biggest reason for the collapse of morals and ethics in business is “power”. Lord Acton (1834-1902), British historian, said “Power tends to corrupt and absolute power corrupts absolutely”. This explains why we have so many corrupt politicians, lawyers, and, yes, car dealers. Being able to handle power in a humble fashion is the truest test of character.

Unfortunately, car dealers fly much lower on the radar than the Exxon’s, Lehman Brothers, and AIG’s of the world. There are more than 10,000 car dealerships in the USA and most of them operate independently. For this reason, laws controlling them and regulations are a state issue. California, for example has good laws and regulations protecting car buyers but Florida does not. Some attempt has been made to bring Federal regulation to bear through the Federal Trade Commission, but powerful dealer lobbyists like the National Automobile Dealers Association (NADA) have fought that successfully so far.

The only advice I can give you at this time is “don’t take it lying down”. The only way to get the attention of our politicians and regulators is to make lots of noise. This is why I write this blog, my newspaper column, and do my weekly radio shows. If a car dealer wrongs you, call the Department of Motor Vehicles, the Count Office of Consumer Affairs, the Attorney General’s Office, and/or the manufacturer. Put your complaint in writing. And of course, you can always email or call me and I will make your message known.

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