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Monday, January 29, 2018

Earl’s Top Ten Suggestions How NOT to Get Ripped Off by A Car Dealer


1. There are only two reason you should physically visit a car dealership during the car buying process…to test drive and take delivery of the vehicle you’ve selected. When you visit a car dealership to get pricing and information, you lose control. The car sales people and managers are very good at what they are trained and paid to do…sell you a car TODAY at the HIGHEST PRICE.

2. The best online tools to ensure you get a low, transparent, honest price are www.CostcoAuto.com and www.TrueCar.com. Both online buying services require their certified dealers to offer you a low out-the-door price plus government fees only. Their dealers are not permitted to add dealer installed accessories and “dealer fees” to the quoted price.

3. Always use Consumer Reports, www.ConsumerReports.org, to select the best make and model. Consumer Reports extensively tests all new and used cars for safety, reliability, maintenance and repair costs, cost of insurance, customer complaints, fuel economy, and resale value. They list the best and worst new and used cars.

4. Never finance your car with the dealer without first checking and comparing the rate and terms with your bank or credit union.

5. Finalize your purchase toward the end of the month. Yes, car dealers almost always cut their prices toward the end of the month. The last day of the calendar month is a great time to get an even lower price than you were offered earlier. But, be sure you’ve spent ample time selecting the right car at the lowest price available before the end of the month.

6. Never buy a used car without a CarFax or AutoCheck report, checking the VIN for recalls on www.SaferCar.gov, and having the car thoroughly checked by an independent mechanic.
7. When you make the decision to buy a car, devote at least a week or two to the process. A car is one of the most expensive purchases you’ll ever make. Don’t let your excitement and emotion force you into rushing such an important financial commitment.

8. Always take an extensive test drive in the actual vehicle you’ve decided to purchase. Driving around the block isn’t adequate. No two cars are the same, even two of the same year, make and model. Drive the car under the same conditions that you drive your car daily, over the same roads and highways.

9. Ignore all car dealer and car manufacturer advertising. Car dealers and manufacturers advertise prices to “get you in the door”. These prices are usually understated with fine print conditions that raise the price by hundreds or thousands of dollars.

10. Car dealers make more money after they sell you the car in the “business” or “Finance and Insurance (F&I) office than they did when they sold you the car. My fourth suggestion is to never finance with the dealer unless you check and compare with your bank or credit union. But, even if you don’t finance with the dealer, you will still find yourself in the “F&I” office ostensibly to “sign all of the paperwork”. This isn’t just to “sign the papers”, it’s to sell you extra products and services you probably do not need. Some examples are extended warranties or service contracts, prepaid maintenance, GAP insurance, road hazard insurance, etc. Sometimes these extras are included in your finance contract without your knowledge. Be sure that you buy no extras that you’re unaware of or don’t completely understand and need.

Monday, January 22, 2018

Don't Pay Car Dealers for Nitrogen in Your Tires

It’s bad enough that gas stations now make you pay to inflate your own tires with air. But at least you’re getting what you paid for…air which does what it’s supposed to do and that is to keep your tires inflated.

Many car dealers are now charging customers to fill their tires with nitrogen instead of air. They tell you that nitrogen does not leak from your tires as quickly as air and this means that your tires will stay properly inflated longer before you must add more nitrogen (and pay the dealer for this). What the dealers don’t tell you is that the air that is already in your tires is mostly nitrogen anyway. In fact, 78% of the air we breathe is nitrogen. Oxygen represents only 12% of the air. The rest of air includes carbon dioxide and other inert gases. I’m not sure what the purity of the nitrogen is that they pump into your tires for $199 (this is not a typo…one hundred and ninety-nine dollars for filling four tires full of mainly air). But, you can be assured that the purity of the nitrogen is not 100% and is probably closer to the 78% that regular air consists of.

Even knowing all of the above, I have to admit that I was curious about whether or not nitrogen could prolong tire live and improve fuel economy because I knew that NASCAR drivers used nitrogen filled tires and I heard that Volvo’s came from the factory with nitrogen in their tires. I have a BS in Physics from the University of Florida and a Master of Science from Purdue and these kinds of things interest me. So, to find out for myself, my dealership conducted an experiment. We have a fleet of rental cars and we filled two tires of each car with pure nitrogen and 2 tires with regular air. Over the course of many weeks, we measured the pounds of inflation in the nitrogen and air-filled tires. There was no difference in the inflations of the nitrogen v. s. the air-filled tires. If there is no difference in the inflation, there can be no benefit from nitrogen of better gas mileage or fuel economy.

Consumer Reports also conducted a test on nitrogen in tires vs. air. The bought samples of virtually every tire sold in the USA, filled half with nitrogen and the other half with air. The let the tires sit for one year and then checked the air pressure vs the original. There was virtually no difference in air pressure. Consumer Reports conclusion was that nitrogen won’t hurt your tires, but you shouldn’t waste your money. Air is just as good.

You may have read my column last week, “Beware the Phony Monroney”. In that column I warned you about car dealers that add a window sticker designed to look exactly like the federally mandated Monroney sticker. This is where you should look for dealer installed accessories and additional dealer markups over MSRP. Often these accessories have a high price but a very low cost. In the case of nitrogen in four tires selling for $199, this is exactly the case. Since air is already 78% nitrogen, it costs virtually nothing to extract nitrogen from the air. To be generous, let’s say the dealer’s cost is $10 including labor. That is a 2000% markup when he charges $199.

Just when I thought I’d seen it all, I actually saw window stickers on a car today from another dealer who had actually modified the Monroney label to show nitrogen filled tires. To do this, the dealer actually had to remove the real Monroney label, make the modification showing the nitrogen tires, and re-paste the Monroney label to the window. Federal law requires that a Monroney label not be removed until the vehicle is delivered to the customer. It also requires that it not be modified. This new vehicle was one we had traded for from another dealer and still had the counterfeit Monroney and the modified real Monroney attached to the window. The modified Monroney looked so authentic, that one of my technicians and my service manager inquired of Toyota about the necessity of our carrying nitrogen tanks so that we could refill these tires with Nitrogen. If this could fool a Toyota dealer’s technicians and service manager, it might fool you too.

This dealer also had another charge added to the counterfeit Monroney sticker, a $4,995.00 “Market Value Adjustment”. Most prospective customers think that this is part of the manufacturer’s recommended retail price. They either end up paying too much money for the vehicle or think they are getting more for their trade-in or a bigger discount than they really are. It’s easy to allow someone an extra $5,000 on their trade-in when you have already marked the car up an extra $5,000 over sticker price.

Monday, January 15, 2018

Bait and Switch Advertising

All car dealers pay the manufacturers the same prices for their new cars. Large volume dealers will lead you to believe that they pay less, but this is not true. So, when a car dealer advertises a price for a new car, he has no price advantage over his competition. This isn’t the case with most other products. Large volume sellers like Amazon, Walmart, Target, and Costco can negotiate much lower prices from the manufacturers than smaller “mom and pop” stores. Protective car dealer franchise laws lobbied into law in all 50 state legislatures require auto manufacturers to sell their cars to all their dealers at the same price.

Virtually all the prices for new cars you see advertised are so low that it would be impossible for a dealer to remain in business if he sold more than a very few cars at that price. The reason for this is that, if a dealer advertised realistic prices with a reasonable profit built in, another dealer would advertise a lower price. The dealer who advertised a realistic price is helping his competitor sell a car.

Most of the new car prices you see advertised are below the dealers actual cost. He protects himself by selling very few at this price and counting this loss as a cost of advertising. Next to an advertised car you will see some letters and numbers like, #5632A. That is the “stock number” of the car being advertised. This is all that the dealer does to tell you he has just one at this price. The chances are that if you are not the first person in the dealership on the morning of the ad, this car will be gone. Often these cars never existed, but you are told that the vehicle was sold.

Look for these two fine print disclosures at the bottom of the ad: (1) Price good on date of publication only. (2) Price good with copy of this ad only. These are just two more ways the dealer can avoid selling you the car at the advertised price.

If you’re a regular reader of my column, you understand about “dealer fees”. These fees are additional dealer profits ranging from $700 to over $2,000 that are added to the agreed upon price of the car by virtually every car dealer in Florida. They’re generally more than one dealer fee. “Dealer Fee” has become a generic term for phony fees like electronic filing fee, notary fee, doc fee, tag agency fee and many more. Florida law requires that this dealer fee be included in the advertised price. When the salesman tells you the advertised car has been sold but he has another one “exactly like it”, he can legally add back all of his dealer fees.

As you would guess, the salesman’s commission on an advertised car is often either zero or very small. Having no or a very small incentive to sell an advertised car, he will most likely encourage you to buy any other car.

My recommendation to you is to ignore advertised new car prices. If you must respond to an ad car, call the dealership first and ask if the car is still available. If the answer is no, you have saved yourself a lot of time and aggravation. If the answer is yes, ask if they will hold the car for you. If you must, offer to give them your credit card for a deposit to hold the car. If they won’t hold the car, save yourself the wasted trip.

The only way to get the best price on a new car if you’re dealing directly with car dealers is by getting competitive bids from at least 3 car dealers for the exact same year, make, model, and accessorized car with the identical MSRP. You can do this on the Internet, by phone, or in person. The Internet is likely to give you the lowest price. UseConsumer Reports magazine, the Internet www.edmunds.com and www.kbb.com are two excellent free sources of information), or even your local library. There are two other great ways to buy online, www.TrueCar.com and www.CostoAuto.com.

Monday, January 08, 2018

Dear South Florida car dealer:

You’ve probably heard of Earl Stewart Toyota, located in Lake Park, FL but you might think we’re located in North Palm Beach. We exercise “poetic license” and use North Palm Beach as our location because Lake Park is such a small town, population 8,155 as of 2017, few people know where it’s located. Last year, 2017, Earl Stewart Toyota sold 3,349 new cars and 1,934 used… 5,283 total vehicles!

As a car dealer in a large metro area like West Palm Beach or Delray, you must at least be curious how a car dealer in a small town with a population of just over 8,000 (including those too young and too old to drive) can sell more cars than you. In fact, for the last 14 years, Earl Stewart Toyota sold more vehicles than any new car dealership on Florida's east coast between Orlando and Broward County.

How is this possible? The answer is that Earl Stewart Toyota is selling cars to your customers in your town…Deerfield, Delray, Boca Raton, Boynton, Lake Worth, West Palm Beach, Palm Beach Gardens, Riviera Beach, Wellington, Stuart, Ft. Pierce, Port St. Lucie, Melbourne…in fact all over the state of Florida. Your next question must be “why is this happening?”

All car dealers claim to be honest, transparent, and to “love" their customers. This is clearly not so because the Gallup Organization in its annual poll since 1977 has ranked car dealers last, or almost last, in their “Honest and Ethics in Professions” poll, http://news.gallup.com/poll/1654/honesty-ethics-professions.aspx. At this dealership, they walk the talk.

1. Earl Stewart Toyota posts the lowest out-the-door price on every new and used car.

2. The prices Earl Stewart Toyota's customers are quoted by its sales people and advertisements are the same as its lowest online price.

3. Earl Stewart Toyota does not add dealer fees to the posted, quoted prices. As you know, the dealer fee is the generic term for the hidden profit you add to the price of your cars. You use lots of names to disguise it like electronic filing fee, processing fee, notary fee, doc fee, tag agency fee, dealer services fee, etc. Earl Stewart Toyota's prices are our lowest and out-the-door, adding only what it pays the state of Florida for the sale tax and license plate/registration. 

4. Earl Stewart Toyota does not pre-install dealer installed options or accessories and add these to its advertised prices. All options and accessories on cars it sells you are factory installed, unless you ask for them to install a special option after you buy the car. 

5. Earl Stewart Toyota sells you the car that you came into buy, and does not try to switch you to another car with more profit.

6. Earl Stewart Toyota gladly gives you its lowest price on any car you choose to buy and encourages you to shop and compare its price with the competition. They don’t try to switch you to leasing because dealers make more money leasing. The price its customers pay if they lease is the same price and profit to them if they buy.

7. Earl Stewart Toyota doesn’t ask its customers to trust them without reciprocating that trust. If the customer changes her mind for any reason after the purchase, they offer a100% unconditional moneyback guarantee for one week. This is a full cashback offer, not a “credit” on another car. There are no conditions and no fine print, the customer doesn’t even have to tell them why he/she changed her mind.

8. Earl Stewart Toyota offers real online, one-click Amazon-like car buying. A customer doesn’t even have to come into the dealership or talk to a salesman. They offer free delivery anywhere in Florida. The customer can pay with his credit card, bank transfer, or finance. 

9. Earl Stewart Toyota is the only car dealership I’m aware of that does not take away the customer’s right to sue the dealership if he/she feels she has a reason. All other dealers have an arbitration agreement in the fine print of their vehicle buyers order. This requires customers to waive their constitutional right to their “day in court”. An arbitration agreement requires that any dispute be resolved by a team of lawyers or retired judges. This “team” is chosen by the car dealer and their decisions often favor the car dealer. This is further evidence that Earl Stewart Toyota trusts its customers as much as they ask their customers to trust them. 

10. At Earl Stewart Toyota, there are no automated answer machines, secretaries, or anything else shielding anyone from direct access by all customers. One again, how can one expect customers to trust them if we don’t return this trust. My personal cell phone number is 561 358-1474 and every one of my customers has this number. All my managers…service, sales, body shop, parts, finance, and accounting make their cell phone numbers available to all our customers. We also have five RED PHONES strategically located around my dealership. My customers can pick up any of these phones and be automatically connected to my cell phone. We do this because we know we’re far from perfect and we do make mistakes; but what makes us different from other car dealerships is that our customers can always reach the person in charge who can make it right.

There, Mr. Car Dealer, you now have the 10 secrets to Earl Stewart’s success. All you must do is put them in place and be sure they are followed by your employees. If you do this, you’ll be able to sell as many cars as I do, or maybe even more! Excuse me if I don’t look worried, because it requires a lot of courage, trust, moral integrity, transparency, and HARD WORK.



Yours truly,

Earl Stewart