Monday, October 22, 2012

10 New Year’s Resolutions for Car Dealers in 2013

It’s hard to believe that we’re approaching the end of 2012. The older I get, the faster the time flies. This might be wishful thinking, but here’s another list of recommended ways that dealers should change for the better in the coming year. I know a lot of car dealers read my blog, my column, and listen to my radio show. You dealers should understand and  take responsibility for the fact that we rank ethically last among all professions, tied with politicians, lobbyists, and lawyers.

(1)   Eliminate your dealer fee. We had shown some progress in dealers eliminating their dealer fees in Palm Beach County. Palm Beach Toyota and Royal Palm Toyota dropped their dealer fee three years ago and Treasure Coast Toyota eliminated there’s two years ago. This was due, not to a “moral revelation” by the dealer or legislative action but economic pressure. Palm Beach Toyota, Royal Palm Toyota and Treasure Coast Toyota are my three nearest competitors. But unfortunately, all three of these dealers recently reinstated their dealer fee. In fact, Royal Palm and Palm Beach increased their dealer fee to $999. The only additional costs passed to your customer should be federal, state, or local taxes and/or fees like Florida sales tax. This is the generally accepted practice in retailing all other products and services. A price is quoted to your customer when you communicate a price in any fashion including advertising a price in the newspaper, radio or TV, painting a price on a windshield or sign, saying a price over the phone or in person, or giving a price over the Internet. Your “dealer fee” is profit for you. It is not a “fee” and it should be included in your price.

(2)   The buck stops with you. You are responsible for the actions of your employees. Your salesmen, service technicians and service advisors are virtually all paid on commission. If you do not police your people and hire ethical people your customers will be taken advantage of. If you are an absentee owner, as most owners of car dealerships are in South Florida are, you have to have someone running your store that knows and cares about what is happening to your customers. Your ignorance of the mistreatment of your customers is no more an excuse than being ignorant of a law when you break it. You may think you know how your employees are treating your customers, but I promise you that you don’t unless you communicate directly with some of them. You cannot rely exclusively on reports from your managers to tell you the truth.

(3)    Don’t advertise a car at a price that you don’t want to sell it for. If you advertise a car for a specific price, you should be willing and able to sell that car to as many customers as respond to the ad. If you run out of stock, give the customer a rain check. Also, pay your salesmen a commission on the ad cars. Now most of you don’t pay a salesman a commission if he sells the ad car. What do you think that salesman is going to tell the customer who comes in on the ad? If you run out of that model, you should give your customers a rain check. When you don’t do that, it’s called “bait and switch”.

(4)   Don’t insist or encourage your customers to buy and take delivery of their car on the same day. This is called a “spot delivery” in the trade. There are lots of thing bad about this. A car is the 2nd largest purchase a person makes. The customer should be allowed time to reflect and think about this decision. Cars are often spot delivered when the credit has not been approved, especially nights and weekends when the banks are closed. Customer often have to be called back to sign another contract at higher payments, higher interest, and/or higher down payments. This is sometimes done deliberately because customers are often too embarrassed to tell their friends that they really haven’t bought that shiny new car they were showing off. Attorneys in other states have filed class action suits against car dealers and attorneys in this state are working on doing the same. 

(5)   Give customers who are” just looking” a price when they ask for it. It’s insulting to today’s sophisticated buyers to be told when they ask for the price that they can buy the car for, that they have to make an offer in writing with a deposit first. It’s also insulting when you tell the customer that you won’t give her a price until she’s “ready to buy”. Can you imagine being told this by a salesman at Best Buy when you asked the price of 50” Plasma TV? Your salesmen won’t give prices to your customers because they are afraid the customer will compare his price with the competition. This is what the free market place is all about! Customer should shop and compare. If you treat your customers with respect, integrity, and courtesy, they will return to you an offer you the right to meet or beat a lower price.

(6)   Don’t advertise discounts from “dealer list” price. When you mark up the manufacturer’s list price by thousands of dollars and then advertise a discount, you are misleading you customers. The federal government has a law that every new car displays a “Monroney label” [named after the U.S. senator who sponsored this bill] on the window when it is sold. The reason for this law is to give car buyers a fair, even basis for comparing prices between different dealers. By confusing your customers between “dealer’s list” and “manufacturer’s list” you are circumventing the law.

(7)   Don’t advertise lease payments that require large down payments hidden in the fine print. Most people lease cars to minimize their monthly payment. When your customer comes in on the ad finds out she has to pay $4,000 cash down to get the lease payment you advertised, it’s just plain wrong. There are some dealers who actually advertise prices with a qualification that the customer pays an additional sum first to get the advertised price.

(8)   Do not advertise that you can get anybody financed no matter how bad their credit. This is not true and just plain cruel, especially during these terrible economic times with very tight credit.

(9)   Don’t guarantee the lowest price with qualifications that cannot be met. Your qualifications are usually that you “reserve the right to buy the other car from the other dealer who beat your price” and that the customer must have a signed buyer’s order from the other dealership. You know that the other dealer will never agree to sell you that car and you also know that the chances of the customer getting out of the dealership with a signed buyer’s order without taking delivery are slim and none. Dealers reading this, I dare you to show me evidence that you have honored your guarantee with just one customer. I’ll make you a bet that you have never honored that guarantee.

(10)                       Don’t offer a minimum $10,000 [or some other high number] for every trade-in. Sometimes these ads, say “if you can push, pull, or drag your old car in we will give you at least $10,000 toward the purchase of a new car. You then mark up the new car so high; you are not really offering the customer anything more than the wholesale value, if that. 


  1. Wow! What a negative smear on your competitors. I would never buy a car from someone who does business by attacking other local businesses.

    Shame on you, Earl. And I think we'd all like to know where you're getting this information. This feels like a political campaign. And no one likes a political campaign.

    I've worked in this industry for years. I am not in your market, but I was cruising around to see how other dealers are running blogs. I would never run a blog that attacks a business that employs other local people. Jobs are hard to come by these days, and this is a bad way to gain business for your people.

    Customers can see right through this kind of crap.

  2. Dear "Anonymous Car Dealer",

    Nice try "Anonymous", but you can't trick me like you can your customers. You aren't a car BUYER; you’re a car DEALER or work at a car dealership. If I'm wrong, identify yourself and I'll publically apologize to you.

    If you don't respond and continue to hide your identity, you're confessing to me and my blog readers that you are the exactly type of unethical car dealer that I was writing about.

    You dislike me because smart and informed customers are buying their cars from me and not you and your ilk. You are left to depend on selling cars to the very young and old, the uneducated, English language impaired, and other victims that are easily fooled by your unfair and deceptive advertising and sales tactics.

  3. I am 100% sure I said work in the business. And I also KNOW FOR A FACT that you loaf the front of your deals.

  4. Dear anonymous,

    You did say that you worked in the "this industry", but that's a broad term encompassing manufacturers, parts suppliers, distributors as well as dealerships.

    You accused me of "loafing the front end" of my deals". I've been a car dealer for 44 years and I've never seen that term before and have no idea what you're accusing me of.

    You also say that you “know this for a fact” but you also said you're not located in my market and know about me only from my blog. Whatever it is you claim you know about "loafing" how do you know anything about me for a fact from reading my blog?

    Why do you refuse to identify yourself? My cell phone number is 561 358-1474 and you know my name is Earl Stewart. I'm not afraid of you knowing my name and number. What frightens you so much about identifying yourself and giving me a call?

  5. 1. That was a typo. I meant to say "loading", and I am sure you knew what I meant. i know you know what that means!
    2. I know because I used to work for you. Also the reason why I am not going to identify myself.
    3. I am in Las Vegas on business. That's why I am showing up in your stat counter from another area.

  6. Dear disgruntled ex-employee,

    Why didn't you just say that you used to work for me instead of obfuscating about "working in the industry"? Did you think that fact would diminish your credibility?

    I can understand that you're angry if I fired you. I hope that things worked out for you with your next job(s).

    I didn't know what the term "loading" the front end is either. Are you referring to a "pack". A pack is what dealers add to the cost of a car to adjust the sales people's commission to an acceptable percentage and to establish an acceptable profit when they sell the car. If that's what you're referring to, why did you bring it up. This is commonplace in with car dealerships and always has been.

    I still don't know why you won't identify yourself. You gave the reason that you used to work for me. Why would that make you afraid to reveal your identity?


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