CASH FOR CLUNKERS LEGISLATION IS A WASTE OF TAXPAYERS' MONEY

Once again our Congress and Senate have proven that they are out of touch with reality or, perhaps more likely, simply inclined to pass any legislation that will get them reelected.

The “Cash for Clunkers” bill passed the House and the Senate and awaits President Obama’s signature. It is supposed to be help energy conservation because it will take higher gas mileage vehicles off the road. It’s also supposed to help our floundering economy because it will incentivize owners of “clunkers” to buy new cars. When the driver of a clunker, defined to be a vehicle with relatively poor gas mileage and worth up to $4,500, trades it in he gets a voucher for either $3,500 or $4,500. Then the dealer must scrap that vehicle.

Here’s why our politicians are out of touch with reality. Our country is in the worst economic condition since the Great Depression. The most severely affected are those at the lower end of the economic spectrum. Arguably even more important than housing to this class of people is transportation [you can sleep in your car]. It’s not possible for many to get to work without a car. It’s not even possible for many to look for work without car. How about taking your children to school or getting to a doctor or hospital? These are the people who buy “clunkers” because they don’t have the credit to buy anything more expensive. Or, maybe they can’t get any credit at all and can afford only cars cheap enough to afford to buy for cash.

If this legislation works the way the politicians say they want it to, it will remove most clunkers from the road and drive up the prices of those few remaining to make them unaffordable to those that have no other transportation option. Of course, a lot of the economically challenged are already driving clunkers. The new law doesn’t permit them to use the $3,500 or $4,500 voucher to buy a nicer, more reliable used car. They may only buy a much more expensive new car. Unfortunately, most people with bad or no credit who are forced to drive a clunker, won’t be able to get financed on a new car even with the $3,500-$4,500 down payment.

Logic dictates that no one would have his vehicle scrapped for a $4,500 voucher if was worth more than $4,500. But, who is to say what a clunker is really worth? I can tell you from my 40+ years in the retail auto business that you can show a used car to five different used car managers and get five different opinions as to what it’s worth. I advise consumers to shop their trade-in to at least three different car dealers before they accept a trade-in allowance from the dealer they buy from. Typically you will see a $2,000 to $5,000 difference between the 3 professional opinions. I see nothing in the legislation to control this variable. I can guarantee you that there will be thousands of vehicles scrapped that are worth more than the voucher amount. How will you feel knowing that you paid $4,500 of your tax dollars to scrap a car that had a market value of $6,000?

To the extent that lower gas mileage vehicles are taken off the roads, this is good. But energy conservation is not our country’s top priority right now. We need to think about cutting our 10%+ unemployment in half. Scrapping the only cars that many of our unemployed can afford to buy and driving up the prices of those that remain is not the right way to go about this.

The car dealers love this because of the general lack of understanding of this new law will likely drive potential buyers into their showrooms. You can argue that this is good because it will stimulate new car buying. But, is it good to stimulate the economy through deception? I’m already getting solicitations from marketing companies with all sorts of cute ideas about how to exploit this legislation. You can expect to see an advertising media blitz on “Cash for Clunkers”.

I will end this column on a positive note. One Congressman who voted against this legislation is Tom Rooney from my district, the 16th. There are always a few who vote their conscience and not what will get them reelected. Unless we recognize and vote for guys like Tom Rooney, this endangered species will vanish.

A Victory for Florida Car Buyers In The War Against the Dealer Fee!

A watershed event for South Florida car buyers occurred June 1, 2009. Two large car dealerships, Palm Beach Toyota and Royal Palm Toyota, eliminated their dealer fees. For those who may not know what a “dealer fee” is, it’s an extra charge which is added to the price of the car in addition to the price you are originally quoted. In the case of these two dealerships, it was $899. You can learn all you ever wanted to know about the dealer fee by reading my articles on http://www.earlstewartoncars.com/ or just Google “Earl Stewart” and “Dealer Fee”.

This is a victory for the car buyers of South Florida because they spoke with their pocket books and wallets and two car dealerships listened. When I eliminated my dealer fee about six years ago, I was one of the smaller car dealerships in Palm Beach County and the smallest seller of Toyotas. Today I’ve grown to be, not just the #1 seller of Toyotas but also the largest seller of any make car in Palm Beach County. This growth could not have occurred just in my immediate market area. Earl Stewart Toyota is located in Lake Park on the border of North Palm Beach, a much smaller population area than the three other Toyota dealerships south of me. The growth came from customers in the central and southern county who travelled many miles to buy from me.

As many of you know, I’ve fought against the dealer fee for several years. My column in Hometown News, http://www.earlstewartoncars.com/, my Saturday morning talk show on Seaview AM 960, my TV advertisements, public speaking engagements all over Palm Beach County, and my lobbying efforts in Tallahassee have all been focused on eliminating the dealer fee in Florida. Isn’t it interesting that where my political efforts to change the law have so far failed, the free marketplace efforts are winning, albeit slowly? By educating you, the car buyer, to what the dealer fee is and why it’s bad, you’ve spoken out with your checkbooks and done something that the politicians were afraid to do.

I congratulate Palm Beach Toyota and Royal Palm Toyota for their decision to eliminate their dealer fee. It took a lot of courage, especially during these severe economic times, to eliminate an extra $899 profit per car sold which was going right to the bottom line. But now, by including all profits in the prices you’re quoting your customers you’re not only doing the right thing but you’re giving your prospective customers the ability to shop and compare your price with your competition. You may make less per car but you will sell more cars.

I expect this trend to continue. There are two more dealerships in Palm Beach County that do not charge dealer fees. Mullinax Ford opened just last year on Northlake Blvd. [only about a mile from my dealership] and North Palm Beach Mercedes opened just this year [about 2 miles from my dealership]. General GMC Truck in West Palm Beach also doesn’t charge a dealer fee. Mullinax has three more Ford dealerships in central Florida and does not charge dealer fees at these locations either. North Palm Beach Mercedes also owns Palm Beach Mercedes [In West Palm Beach] which does charge a dealer fee…go figure!

I encourage the Penske Auto Group, a public company traded on the NYSE, to consider eliminating their dealer fee for all of their franchises. Penske Automotive Group still adds a dealer fee to the Mazdas and Nissans that they sell from their Royal Palm location that also sells Toyotas. This move would give you a “leg up” on your competition that charges a dealer fee. You can be the first to do the right thing for Mazda and Nissan buyers in Palm Beach County. I do not believe that the Penske Auto Group has eliminated the dealer fee on their Toyota dealership in Orlando either, Central Florida Toyota. This would be a smart move to capture sales from the other Toyota dealers in that market that do.

Readers of the Hometown News and http://www.earlstewartoncars.com/, please call my NO DEALER FEE HOTLINE, 1 800 909-9879 and voice your opinion on eliminating the dealer fee in Florida. I collect these voice mail messages which are transferred to computer audio files and forwarded to our Florida legislators. Messages relating personal and specific experiences with the dealer fee are especially valuable.

CAR DEALERS CAN’T INTIMIDATE ME

As many of my readers know, I’ll never win a popularity contest among Florida car dealers, much less ever get elected as an officer of the FADA [Florida Automobile Dealers Association]. Some of you may have read how certain car dealers attempted to band together in such a fashion as to exert economic harm on my business. This failed and so will the latest attempt at making me go away, a series of business and personal lawsuits by Ed Morse.

For those who aren’t regular readers of my blog and this column, Ed Morse Honda ran a radio commercial last year accusing me of deceiving my customers. In the lawsuit he said that I “hid my dealer fee” in the car prices that I quoted to my customers. There are few things in my life more precious to me than my reputation. This attack on my integrity left me no choice but to sue Ed Morse Honda for slander and violation of the Unfair and Deceptive Trade Practices Act. My opinion is that Ed Morse got it exactly backwards as to who is deceiving their customers. I include all of my profits and costs in the prices that I give my customers. Ed Morse Honda, on the other hand, does not. Like most other car dealerships on Florida, if you ask the salesman for the price of the car in person, on the phone, or over the Internet you will get a price excluding a “dealer fee”, “doc fee, “dealer prep” or an extra charge by some other creative name.

The radio commercial he ran obviously didn’t make me back off on what I believe to be right. His countersuit against my company didn’t work either. Now, he has filed two personal lawsuits against me for defaming Ed Morse Honda and his lawyers in my blog. You can access my blog by clicking on www.EarlStewartToyota.com. The specific articles that I have been sued about are “Ed, You Went Too Far This Time”, “Why My Lawsuit Against Ed Morse Honda Is Important To You”, and “Ed Morse Sues Earl Stewart for Defamation”. I would like to hear back from you if you think that I wrote something that was not true.

Interestingly, I wrote another column for my blog and the Hometown News recently about my conversations during a lunch I attended in Washington D.C. with Bob Woodward, the Pulitzer prize journalists for the Washington Post. You can read this by clicking on http://oncars.blogspot.com/2009/04/conversation-with-bob-woodward-about.html. The main point I wanted to make when I wrote this was that Bob Woodward told me and the 8 other Toyota dealers at this luncheon that he believed the biggest threat to the USA and the World was that “he fears that the media is failing to fulfill its vital role to report all of the news and their opinions fearlessly, completely, honestly, and ethically.”

Think about the courage it took for Bob Woodward and Carl Bernstein to break the Watergate exposé of corruption in the Nixon administration. It was not only the courage of these two young reporters but the courage of the Washington Post editor, Ben Bradley, and the owner, Katherine Graham. There are few rights more precious than our first amendment rights which expressly prohibits the United States Congress from making laws "respecting an establishment of religion or that prohibit the free exercise of religion, infringe the freedom of speech, infringe the freedom of the press, limit the right to peaceably assemble, or limit the right to petition the government for a redress of grievances.

In the past 15 years the Internet has become a very powerful means of freedom of thought and opinion, gradually replacing newspapers. Newspapers have come under great pressure, initially from the electronic media, then the Internet, and finally this severest of all recessions. Today, it’s a lot more difficult for a newspaper editor or publisher to stand up like Ben Bradley and Katherine Graham did and go head to head with the executive branch of the United States Government. Threats of lawsuits and threats of advertisers are far more fearful when you are struggling to keep your newspaper afloat.

Even though I don’t get paid for it, I consider myself a journalist as well as a car dealer. I have written my blog, a weekly column in the Hometown News, and hosted a weekly talk-show on Seaview AM 960 [9-10 am every Saturday; stream it online at www.SeaviewAM960.com] for several years. I frequently speak to groups at public libraries, schools, civic clubs, and condo associations. I’m even looking for a publisher for my book which would be based on the hundreds of blog articles and Hometown News articles I’ve written over the years. Because I derive my income from my dealership and don’t accept pay for my writing, public speaking, or radio shows, I feel I have even more credibility and freedom from economic influences.

No lawsuits will ever stop me from freely expressing my opinion, especially when it comes to doing right by Florida car-buyers. I speak the truth, not only as I see it, but as the vast majority of car buyers see it. They have listened to and put their faith in me. Anytime I’m out in public, shopping, eating at a restaurant, pumping gas, or just walking down the street, people come up to me and thank me for spreading my message. They have also responded by entrusting me with their car purchases, making me the largest volume car dealership in Palm Beach County. I was honored by Toyota to be one of just 12 dealerships in the USA ranked by volume and customer satisfaction.

However, I do have a way that Ed Morse [and any other car dealer who charges a dealer fee] can stop me. I want an honest, acceptable answer to this simple question. “Why don’t you include your dealer fee in the price you quote your customers?” I won’t be the judge of whether your answer is honest and acceptable; your customers will. A third-party, independently selected research firm will survey a randomly selected, statistically significant number of your customers. They will judge whether your answer to my question is honest and acceptable. If a majority of your customers vote for you, I will withdraw my lawsuit, publically apologize to you, and donate $100,000 to your favorite charity. If your customers don’t agree that your reply was honest and acceptable, I will continue my lawsuit and you must consent to allow me to publically reveal the results of the survey.

ADVICE TO DRIVERS OF CHRYSLER & GM VEHICLES

There’s a lot of media coverage and concern about the fate of General Motors and Chrysler and about the UAW workers and their families. There’s even concern about car dealers and their employees and families. But what about you, if you are driving a Jeep, a Pontiac, a Dodge truck, a Hummer, a Saturn or any other GM or Chrysler product?

You have to face the fact that your vehicle has plunged in value. This is because the demand for products of these two manufacturers has plunged, especially for those makes that have been discontinued like Saturn or Pontiac. The value has also plunged because tens of thousands of Chrysler and GM vehicles will be dumped on the market by the thousands of dealerships closing and the banks that have seized the inventories of failed and canceled dealerships. It’s also because lenders are afraid to finance GM and Chrysler products. They have drastically raised their credit standards and down payment requirements. This makes it very difficult for most people to buy a GM or Chrysler product, even if they wanted to.

I’ll give you the good news first. If you are lucky enough to be leasing your GM or Chrysler vehicle, you are in the best shape of anybody. This is because you have no liability for the likely plunge in resale value of your vehicle. The resale value of your vehicle is the problem of the leasing company or bank who owns your vehicle. The GM or Chrysler model you are now leasing will be worth many thousands of dollars less than the leasing company thought when you leased it [Unless you leased it very recently which is unlikely because GM and Chrysler virtually eliminated leases when the economic crisis hit]. Actually, you are enjoying the benefits of their mistake one, two, or three years ago. That was when they grossly overestimated the “residual value”, or the estimated value, of your lease vehicle at the end of the lease. But I must warn you that the leasing company will be trying very hard to trick you into buying the car for the inflated value or to have you extend your lease. They do not want to have you turn that vehicle back in because they may lose $10,000 or more when they are forced to sell it the auto auction. Another warning is to be especially careful when you turn your car in to the dealer. Demand a thorough inspection report, detailing the condition of your vehicle’s interior, exterior, and mileage. Be sure you and a representative of the dealership sign off on this report and you keep a copy. Ideally, you should also take photos of the interior and exterior. Leasing companies are charging for “above normal wear and tear” as never before. They are overcharging on virtually all lease turn-ins unless you protest with documentation.

What do you do if you own your GM or Chrysler vehicle? The best solution for you is to keep it for as long as you can. The longer you own any automobile, the lower the average annual depreciation. The largest amount of depreciation for a new automobile is in the first year of ownership. Each year, the amount of deprecation gets less and eventually it almost stops. If you take really good care of your car, getting all factory recommended maintenances and washing and waxing it regularly, you will get good value out of your purchase and will enjoy reliable transportation, even if you won’t sporting the latest model on the block.

But, if you decide you must buy another vehicle, be prepared to get far less for your GM or Chrysler vehicle as a trade-in or selling it yourself. If you do trade it in, be very careful of those dealers who promise high trade-ins or “minimum” trade-ins. These are simply illusions made possible by artificially inflating the price of the new vehicle they are selling to show you an artificial “over allowance” for your trade-in. You’re better off just to “bite the bullet” and sell your trade in for what it’s worth. Just be sure not to sell it or trade it for less than it’s worth. You can do this by getting at least 3 bids on your vehicle. Call three used car managers at 3 dealerships that sell your make. Tell them you want to sell your car [do not mention that you are going to buy another]. Drive to each of these three dealerships and get their bid for your car. Now you’re prepared to buy the car of your choice. If the seller doesn’t match your highest bid, sell it to the highest bidder [Take into account the fact that you lose your sales tax deduction by not having a trade-in if you sell your car outright].

When you decide which make car to buy, you should consider makes with established higher resale values. You can get this information from Consumer Reports or online at www.kbb.com and www.edmunds.com. You don’t want to put yourself right back into the same position you started. Too many people fall for buying a vehicle because the selling price is the lowest or the rebates are the highest. The initial price you pay for car is only one component of the true total cost. In fact, highly discounted cars and cars with big rebates depreciate much faster.

I’ll finish with some more good news. You don’t have to worry about your warranty coverage, servicing for your vehicle, or spare parts availability. The government and existing laws will see to this. You may experience less convenience if your dealer is one of those who will be closing his doors. It would be a good idea to find out which GM and Chrysler dealers will be around in the future. Things are pretty chaotic now, but this news should be made public before much longer. Right now, GM is not revealing the names of the dealerships they have canceled. If you own a make that has been canceled like Pontiac or Saturn, other GM dealers will be able to service and perform warranty work for you.

ANSWERS TO TOP 10 DEVIOUS STATEMENTS MADE BY CAR SALESMEN

(1) “I’ll give you the price only if you’ll commit to buy today.”

Your answer: I’ll ask you once more for your best price. There are 3 car dealerships that sell this same make within a half-hour drive of here. If I don’t get your best price right now, I’ll walk out of your showroom and you’ll never see me again.

(2) “I’m sorry, but we just sold that car we advertised, but we have others just like it”.

Your answer: I know that Florida law now allows you to add your $899 dealer fee to the advertised price, because, technically, I’m not buying the advertised car. I also know that you can now legally add “dealer installed options” to the low ad price. However, if you do not sell me the car I came in to buy for the advertised price, I will walk out that door and you will never see me again.

(3) “This price is good for today only”.

Your answer: I don’t believe you and I won’t make my decision to buy today. I want to shop and compare your price with your competition and, if yours is the best price, I will call you to see if I can buy it for that price. If you tell me that I can’t, I’ll buy it from your competitor.

(4) “This price is so low that I’m willing to guarantee it or pay you $1,000 [or some other amount] if you can find a better one”.

Your answer: First of all, no retailer can always have the lowest prices. If they did, they could not make a profit and remain in business. I’ll bet you can’t give me the name of just one customer that you paid your $1,000 guarantee to. I also know that you ‘reserve the right to buy the exact car from the dealer that I say has the lower price.’ What makes you think that I would believe your competitor would sell you that car so that you could steal his customer?” You must think I’m really stupid and I don’t want to buy a car from somebody who thinks his customers are stupid.

(5) “I can give you this price only if you take a car from my present inventory. If I have to order a car or dealer-trade a car, the price will be higher.”

Your answer: My car is very important to me. I want the exact color and accessories that will satisfy me and not a compromise. I will buy the car from you only if you agree to get me the exact car I want at the price you just quoted me. If not, I’ll bet that your competitor will.

(6) “I can’t give you this price in writing unless you will give me a deposit”.

Your answer: I know that Florida law allows you to keep my deposit if I change my mind about buying. I also know that you do not want to commit to a price in writing because I might show your price to your competitor who may beat it. That’s the risk you have to take if you want my business. If you do, you have a chance at my buying a car from you. If you don’t, you have no chance because you will never see me again.

(7) “What will you pay for this car today? Or, make me an offer on this car and I’ll take it to my manager for approval”.

Your answer: This is not a game that we’re playing. I’m about to make the 2nd largest purchase of my life. If I was shopping for a TV set and the salesman said that to me, I would walk out without another word and buy from his competitor. And that’s exactly what I’m about to do to you unless you give me your best price in writing.

(8) “We cannot quote you a price over the phone”.

Your answer: It makes no sense to me that I should have to drive 10 miles and back to your dealership just so that you can tell me the price of the car I want to buy. I can get prices on the Internet so why can’t I get them on the telephone? I think the reason you want me to drive to your dealership is so that you can pressure me into buying today without competitive shopping. If you won’t give me your best price right this minute, you will never hear from me again because I will buy from your competitor.

(9) “I’m sorry but the owner isn’t available right now and we are not allowed to give out his cell phone number”.

Your answer: If the owner of this dealership is too busy to speak to his customers than I’m too busy to buy my next car from him.

(10) “The reason that this $749 item labeled dealer fee [or doc fee, dealer prep, handling fee, admin fee, pre-delivery fee, etc] was not included in the price that I quoted you is because it is ‘to cover our costs of inspecting, cleaning, and adjusting vehicles and preparing documents for sale’.”

Your answer: The price quoted to a customer for any product should include all of the costs of the seller. Furthermore, I know that the manufacturers of all cars reimburse their dealers for “inspecting, cleaning, and adjusting vehicles”. I also know that now you’re going to tell me that you must charge me your dealer fee because you charge all customers this same fee. But, I also know that you can deduct the amount of your fee from the price you quoted me and leave the dealer fee on the buyers’ order which will have the same net effect of removing it. If you do not agree, I will walk out of your dealership and never return.

A Conversation with Bob Woodward about Integrity in the Media

Seven other Toyota dealers and I spent several hours with the renowned Washington Post reporter, Bob Woodward, on Sunday, April 18th. We met at the Newseum in Washington D.C. and then had lunch together at the Capital Grille next door. This once in a lifetime experience was my reward for being one the top Toyota dealers in the USA, measured by both sales and customer satisfaction. In addition to this experience, we spent 4 ½ days in Washington D.C. seeing the sights, luxuriating at the Four Season’s Hotel, and eating at other great restaurants.

Just in case you’re too young to remember Watergate, Bob Woodward and another young reporter at the Washington Post, Carl Bernstein, were the reporters that broke the most important political story of the 20th century which led to the resignation of President Richard Nixon. Bob Woodward has written several books, won the Pulitzer prize, and is generally regarded as the #1 investigative reporter and political author in the world.

Now what on Earth can my conversations with Bob Woodward have to do with car dealerships? I’m glad you asked! As you know, I have been on a crusade for many years to make the dealer fee illegal in Florida. In addition to the dealer fee issue, I write this column, a blog [www.EarlStewartOnCars.com], and host a weekly radio show [Seaview AM 960] campaigning for truth, ethics, and legality in advertising and selling cars. The main reason my message is so slow to reach the public is the refusal or reluctance of the great majority of the media to report the story.

Why won’t many newspapers and radio and TV stations report rampant unfair and deceptive trade practices by many car dealers in Florida? It’s the economy, stupid! Car dealers are responsible for about 20% of total retail sales. As a group, they are often the largest single buyer of advertising in the media. When the media runs a negative news or editorial piece about car dealers, they risk losing that advertising revenue. Newspapers are going out of business daily. Many of our largest newspapers, the NY Times for example, are teetering on bankruptcy and local newspapers are even more severely affected.

During my lunch with Bob Woodward, he asked each of us what we considered the single most important threat to the United States and the world. My answer was “radicals inciting terrorism and the threat of a new world order”. Another Toyota dealer was afraid of “hyperinflation brought on by this Administration’s out of control spending”. After hearing all of our greatest fears, Bob Woodward told us his greatest fear affecting the USA and the world. He fears that the media is failing to fulfill its vital role to report all of the news fearlessly, completely, honestly, and ethically. We Americans take a lot of things for granted and I’m afraid that a free, open, and honest media keeping our government and corporations honest is one of them. Most of the world doesn’t have a free press and it’s no coincidence that those parts of the world without it also don’t have freedom.

Newspapers like the Hometown News and radio stations like Seaview AM 960 should be admired and respected for having the journalistic ethics and courage to allow me to express my opinions about unfair and deceptive trade practices in the retail car business. My local newspaper, the Palm Beach Post, is not so inclined. For fear of losing the advertising business of local car dealers, they refuse to run any news or op ed article with my name in it. This is not just my “opinion”. PB Post reporters have said “off the record” that they cannot get permission from their editors to do stories about my company or me. I know one former PB Post reporter who quit his job for this very reason. When I finally realized that the PB Post had put a “black out” on any news about me or my company, I met personally with the former publisher, Doug Franklin, and he confirmed that he could not risk losing car dealer advertisers by reporting my views or even running positive news articles about me. I do have to give him credit for being candid about this. He equates the financial survival of the PB Post with maintaining sufficient advertising revenue. Survival is our strongest instinct. It’s a very rare person or company that will put ethics ahead of survival. Would you?
So there you have it. What do you think is the greatest threat to the USA and the rest of the world? I’m inclined to agree with Bob Woodward. Who is going to keep our politicians, Wall Street, corporations [including car dealers] honest and ethical if they know that nobody will ever learn about their shenanigans in the media?

*Ed Morse Sues Earl Stewart for Defamation!

Those of you who read either my blog [www.EarlStewart.com], my column in Hometown News, or listen to my radio show [Stream it Saturdays, 9-10 am at www.SeaviewAM960.com] know that I’m rarely at a loss for words! But when I got the letter from Ed Morse’s lawyers a few days ago, telling me that Ed Morse is suing me personally for defamation, I was temporarily speechless. However, words and phrases soon begin to float through my mind… like” unmitigated gall”, “chutzpah”, “You can’t make this stuff up”, “stranger than fiction” and “Fools Rush in”.

As I write this column I haven’t been served with the lawsuit but the letter from Ed’s lawyer said that the lawsuit will be based on two of my articles that appear in this blog. One is “Ed you went to far this time” and the second is “What my lawsuit against Ed Morse Honda means to you”. If you haven’t already read these, please do. It will give you a better understanding and appreciation of this article.

For those new readers, let me briefly recap the events that brought us to this point. Around mid 2008, Ed Morse Honda ran a radio commercial accusing me of deceiving my customers because I “concealed a dealer fee” in the price of my car. Now, if you don’t already know, I do not charge a dealer fee. In fact, I’m one of the very few dealers in Florida that doesn’t. Ed Morse Honda does charge a dealer fee and the amount is $699. A dealer fee is just profit to the dealer that is not included in the price quoted to their customer. Ed Morse Honda’s radio commercial raised a lot of concern among my customers, prospective customers, not to mention my friends and family. This is not to say that those who know me, feared that I was doing anything wrong, but when you’re publically accused on the radio of deceiving your customers it’s a matter of concern.

There are few things more important in life to me than my reputation. My business and I, personally, are known for our reputation of integrity and we’re both held to a higher standard in our community than other car dealers and dealerships because of this. I had no choice but to defend this attack by Ed Morse’s radio commercial and my defense was a lawsuit against Ed Morse Honda for slander.

Now, let’s get back to this most recent development of Ed Morse suing me for defamation. The reason that I was at a temporary at a loss for words when I received the notice, is because I could not believe it. At first, I thought it might be a joke! After I realized that it wasn’t a joke, I was still speechless because I had no understanding of why Ed Morse would do this. Gradually I began to formulate some theories on motives for this seemingly irrational act.

Theory number one is that Ed Morse doesn’t really believe that I’m serious about my lawsuit against him for slander and that my having to spend some more money to also defend against his lawsuit will “make me go away”.

Ed, read my lips: I’m not going away!

It isn’t about money; it’s about my reputation. I’ve stated publically that 100% of the proceeds that I receive from my lawsuit will be donated to charity. Ed’s flimsy attempt to frighten me off has had the opposite effect. Now, Ed Morse has impugned my reputation again.

Theory number two is that Ed Morse’s law firm is **“running amok”. Most lawyers make their money by billable hours and some lawyers feel that the more animosity they can stir up between their clients, the more money they can make. Ed Morse owns about a dozen car dealerships and, especially in today’s economy, has his hands full. I don’t need to tell you that most car dealerships are in crisis mode these days and owners are very busy doing damage control most of the time. Maybe Ed simply hasn’t looked at our dispute closely enough. Ed, if that’s the case I strongly advise you to learn all of the facts about my lawsuit against you and your new lawsuit against me. You’re obviously a smart businessman. You haven’t grown to be one of the largest dealership groups in the USA by accident. Frankly, I don’t know how you can efficiently manage 12 dealerships all over Florida at the same time. My hat’s off to you! I have my hands full just staying on top of my one dealership in North Palm Beach.

My final theory is that Ed Morse is reacting out of anger, ego, and not logic. Now, Ed, himself, may not be guilty of this, but maybe one of his senior managers is. Too large an ego has gotten lots of powerful men in big trouble. “Pride goeth before the fall”.

Lawyers will tell you that “the truth is an ironclad defense against defamation, libel, or slander.” When these two lawsuits go to trial, a jury of our peers will look at the evidence. It’s likely that most of those jurors will have driven to the courthouse in cars they bought in Florida. It’s also highly likely that all or most of the jurors paid a dealer fee when they bought their car. Some or all of them may not have even realized that the extra amount they had to pay for their car was just additional profit to the dealer. Because of this and the arguments presented by Ed’s and my lawyers, the jury will form an opinion on whether or not the dealer fee is deceptive to car buyers. That belief will dictate whether or not they believe that I am telling the truth or that Ed is telling the truth. “May the “honest” man win.”

*As lawyers would say, “in an abundance of caution” I ran this column by my lawyers and there are some clarifications that they felt were necessary. I refer to Ed Morse, Ed, and “he” in this column, but Ed, personally, isn’t suing me [Although, I am personally being sued]. My lawyer was very nervous about my using the term “running amok”. The word was in use in India during the British Empire, originally to describe an elephant gone mad, separated from its herd, running wild and causing devastation. I want to make it abundantly clear for the record that I in no way intend to compare Ed’s lawyers with “mad elephants”. I believe that journalists are allowed literary leeway for humor, exaggeration and satire. I also do not know that Ed’s lawyers are stirring things up between Ed and me for monetary gain, but not knowing his lawyers, I can’t rule out the possibility.

JOB LOSS, CAR PAYMENT PROTECTION SCAM

Desperate economic times make for desperate sales and advertising tactics and that’s what we are seeing today with the promise that you “don’t have to worry about losing your job” if you buy a new car.

First you heard about this from Hyundai. About three months ago they began advertising that if you buy a new Hyundai and then you lose your job and can’t make the payments…NO PROBLEM! Guess what? It worked! Hyundai sales rose 20% while all other car manufacturers’ sales are plummeting. Seeing this, AutoNation, the largest publicly owned car dealer group in the USA, jumped on the bandwagon [In Florida, AutoNation chose to name most of their dealerships “Maroone”. I guess there’s a certain stigma associated with public companies vs. locally owned]. Not to be outdone, GM and Ford joined the party recently. If Hyundai can fool that many people, maybe we can too!

I contacted the Texas company that was underwriting the payment protection plan for Hyundai. I found out that this was nothing new, the company had been peddling this “get ‘em in the door” scam to car dealers for years. What they have been selling and what they sold Hyundai is like an insurance policy. But, it’s not an insurance policy. It’s kind of like those “credit default swaps” you’ve been reading about so much lately. They should be regulated but they are not. Hyundai, AutoNation, GM, and Chrysler are paying a “premium” for the highly unlikely event that one of their car buyers loses her job. This cost is included in the price of every car they sell, even for those buyers who have no concern about losing their job. Maybe they’re retired! Maybe they paid cash for the car! That’s just one more thing that stinks about this ruse. Every by buyer, whether they need or want payment protection, is subsidizing, by the higher price they pay for the car, those who think they need job loss protection.

There’s a lot more wrong with this deceptive promise of guarding you against job loss. Even though it does not qualify as an insurance product, it is underwritten just like it was. As you hear repeated so often these days…”The devil is in the details”. I went to the General Motors Web site which was advertising their payment protection plan and finally got to the “devil and his details”…SEVEN pages of fine print! It was worse than reading a health or life insurance policy. This column doesn’t have space for me to list and explain all of the exclusions, qualifications, and other loopholes. I can best explain it this way. You have heard the insurance term “pre-existing condition”. That means that if you have a particular illness, your health insurance or life insurance policy does not cover you. Well, if you are in danger of losing your job, your chances of having Hyundai, GM, or Ford take care of your car payments if you do lose it are slim and none.

This advertisement is very similar to the ads you have seen and heard that tell you that you can buy a car even though you have bad or no credit. These ads exploit car buyers’ fears. Often times prospective car buyers have exaggerated negative feelings about their credit status. Even in today’s economy, a few people with low Beacon scores can qualify a large down payment and are willing to pay a very high interest rate. Or, the dealers will sell the person a cheap used car for cash down payment she saved. The problem is that for every person with bad credit that can buy a car, the ads bring in at least 25 more that are disappointed and embarrassed when they can’t qualify. A lot of car dealers won’t even show you a car until they run a credit check on you. They don’t want to “waste their time”. This kind of advertising is like casting a net to catch fish. You catch lots of fish with every cast, but only a small percentage of “keepers”. In my opinion, this kind of advertising is unconscionable.

Slim Chance for Outlawing Dealer Fee or Bestiality in Florida

Just about one year ago I wrote a column entitled, “The Dealer Fee, Bestiality, and Tallahassee Politics.” You can read that column by clicking on my blog, www.EarlStewartOnCars.com. The timing had to do with the 2008 Florida legislature being in session. The 2009 legislative session is in process and it’s time for another progress report on capping the dealer fee or making it completely illegal in Florida.

Last Saturday’s PB Post carried a column by Frank Cerabino, “Put teeth into ending abuse of animals”. In my opinion, Frank Cerabino is one of the funniest writers on the Planet and if you want some belly laughs, you can read his column online by clicking on www.PBPost.com. The theme of his article is how ridiculous our Florida lawmakers are to not be able to pass a “no-brainer” law like making it illegal for humans to have sex with animals. Florida is one of 16 states in the Union without such a law!

Although, Frank Cerabino raises the possibility that there are some Florida lawmakers who may be blocking such a law from passing, this is only Frank’s acerbic sense of humor talking. The real reason this law does not get passed is from lack of lobbyist support. Unlike Insurance Companies, Trial Lawyers, and the Florida Automobile Dealers Association, The SPCA, Society for the Prevention to Cruelty to Animals, is very poorly funded. They cannot afford to support Florida politicians’ elections, making large campaign contributions to gain access and influence. There can be no other possible serious explanation for such a bill not passing our legislature last year and apparently not going to pass again this year.

Legislators will tell you that each Senator and House Representative is allowed only a very few bills [about 5] to sponsor. This number is a small fraction of the total number of issues and causes that are requested by citizens to be considered as new laws or changes in existing ones. The bottom line is that time constraints on the number of actual bills that get drafted, then get sponsors by both the Senate and the House, then pass successfully through committees, and finally get to the governor’s desk are a tiny fraction of the number that are needed and requested.

So, which bills never even get drafted, or never get a sponsor by both the House and Senate, or get knocked down or delayed by committees, and or lastly don’t get signed by the Governor? The answer is those bills that don’t have the financial support of strong lobbying groups. The sad fact is that very good causes can fall by the wayside year after year because of the cold hard reality of Florida politics.

But there is a big difference between those of us who intensely believe that that the dealer fee should be made illegal and those who intensely believe that bestiality should be made illegal. Of course, the obvious reason is that animals cannot make their voices heard in Tallahassee [Although, Frank Cerabino did suggest that we round up the sheep for a march on the capital]. The car buyers can make themselves heard. In the short run, the powerful lobbying organization, the Florida Automobile Dealers Association, can cause delays as they did this year and last. Write your local newspapers, radio stations, and TV stations. Call your legislators. Call my “No Dealer Fee Hotline”, 800 909-9879. I will email your recorded voice mail to Tallahassee. The voice of the people cannot be ignored over the long run and we must never give up. In the long run we will prevail.

TOP TEN CAR AUTO AD SCAMS

I could write a “Top 50 Auto Ad Scams” because the ingenuity for deception in “getting car buyers in the door” is virtually limitless. However, I chose to concentrate on the ten most popular with South Florida dealers. Just beware that there are many more schemes than these I list.

(1) Discount from Dealer List. Anytime you read or see a car advertised with a large discount, determine whether that discount is from the MSRP [manufacturer’s suggested retail price] or the dealer’s retail price. An all too common practice is for a dealer to mark up his cars thousands of dollars over the MSRP and call it “dealer list” so that he can show huge discounts that aren’t real.

(2) Prices exclude “impossible” rebates. Manufacturers often offer cash rebates to customers who qualify for special reasons. Some of these are being on active duty in the U.S. military. This rebate can be as much as $1,500. If you graduated from an accredited university within the past 6 months you can qualify for $500 to $1000 from some manufacturers. There is a customer “loyalty” rebate which affords you $1,000 or more if you are own the same make car that you are buying. There’s a similar for lease customers. There’s even a “Farm Bureau” rebate which qualifies you for $500 if you are a farmer. Dealers are actually combining all of these rebates and deducting them from advertised prices of their cars. Of course, what are the odds that any customer would simultaneously qualify for all of these rebates? The average reader of these ads qualifies for none of the rebates.

(3) Lease payments based on large down payments. Virtually every lease payment advertisement requires a large down payment which is concealed in the fine print. Most people lease because they want to lay out as little cash as possible. If they had $4,000 cash to spend, they would probably opt for a purchase. Those that fall for this trick often end up leasing the car at the full retail. Leasing companies will allow dealers to lease cars for “only” up to 110% of capitalized cost. When you make a down payment, this reduces the net capitalized cost which allows the dealer to sell your contract to the leasing company.

(4) Lowest Price Guarantee. This guarantee is absolutely worthless. If you read the fine print, you will note that it says that “the dealer reserves the right to buy the car from the other car dealer [his competitor] at the same price his competitor quoted you”. No car dealer is going to accommodate his competition so that they can steal away his customer. Of course the other fact that makes this guarantee worthless is that it requires that you prove the lower price by presenting a buyers’ order from the other dealer signed by a manager. I know of no car dealer [besides me] who will give a signed copy of the vehicle buyers’ order to a customer unless they drive the car home or make a substantial, non refundable deposit.

(5) Only one car available at ad price. When you are reading a newspaper ad, you will often see a strange number next to the advertised car. If you are watching the ad on TV or listening on radio, the number will be unreadable or undecipherable as is the fine print. An example is STK #T91832. This is the stock number of the car and means it is the only car of that model and accessories you can buy at the advertised price. They don’t say “only one car available at this price” because you would realize that the chances of that car being there [or sold to you if it is there] are very slim. Don’t be misled if the ad also says “many more identical models available at this price”. Florida law requires that dealers include the dealer fee in their advertised price. But if that specific stock number car is unavailable, they can add their dealer fee to the price of an identical car. This scam is why I continue to lobby Tallahassee to require that all profits to the dealers be included in all prices whether advertised, verbal, or on the Internet.

(6) Advertised price is “plus dealer installed accessories”. All this means is that the price you see is not the price you get. Dealers love to add their accessories to their cars because they can set any price they want and drastically increase their profit margins. A dealer charging you $299 for pin stripes and floor mats would have a real cost of about $100, allowing him a 300% margin.

(7) Lease payment based on unrealistically low mileage allowance. All leasing companies limit the number of miles you can put on their car without paying a penalty. This is because the higher the mileage, the lower the resale value and the leasing company has to sell their car at the end of the lease. The average American drives her car 15,000 miles per year. It’s very common to see mileage limits of 10,000 and even 7,500 miles per year with penalties of 25 cents per mile. For an average driver in a four year lease that would be a penalty of $7500! The dealers don’t get this money, the leasing company does, but the dealers do this so that they can advertise an unrealistically low lease payment.

(8) Lifetime Warranty. A lot of dealers are advertising these “lifetime warranties” on every car they sell. This is a very limited warranty which applies only to the cars powertrain. The term powertrain has different definitions as to which parts of the car it consists of. It typically means only those parts of the engine, transmission, drive shaft, and rear axle that are lubricated. These parts virtually never fail as long as you change your oil as prescribed by the manufacturer or by the issuer of the warranty policy. If you fail to change your oil as prescribed, the warranty is null and void. It’s a win-win for the car dealer. You have to come in to have your car serviced regularly so that he can make more profit and, if you do comply with this, there will never be a claim. Dealers do pay outside warranty companies for these warranties, but the cost to the dealer is minuscule, around $25. The low price the dealer pays the warranty issuer is further proof that the warranty is worthless.

(9) Purchase payments include “balloon payment”. How would you like to buy a new BMW 2009 328i for just $339 per month only to discover that your last payment was $12,983! Oh, and you also had to make an upfront down payment of $2,500. ALWAYS READ THE FINE PRINT!

(10) Internet Quotes Exclude “Dealer Fee”. The average “dealer fee” in South Florida is about $850. About 25% of car buyers are using the Internet to buy cars today. Almost 90% used the Internet for information about buying their car before going to the dealership. Virtually every car dealer in Florida charges a dealer fee and they all exclude that from the price you are quoted on the Internet. I spoke to a woman just the other day who drove all the way from Lakeland to West Palm Beach to pick up the new Infinity that she had purchased on the Internet. When she got to the dealer, he added an additional $695 for his dealer fee.

The Results are In...

TESTS SAY NITROGEN DOESN’T IMPROVE FUEL ECONOMY IN PB COUNTY BUSES

Regular readers of my column in Hometown News and my blog, www.EarlStewartOnCars.com may be tired of reading about nitrogen. This will be my 4th column in 3 years reaffirming that paying somebody to inflate your tires with nitrogen is waste of your hard earned money. Earlier columns are entitled “Don’t Pay for Nitrogen in Your Tires”, “Nitrogen and Shark Cartilage”, and “Nitrogen Scam Foisted on Palm Tran”.

What amazes me is how hard it is to put this nitrogen myth to rest. On my radio show last Saturday [Seaview AM 960 from 9-10 am], a caller told me she had paid a service department $8 per tire to fill her tires with nitrogen. She proceeded to tell me that she came back frequently to this service department so that they would add nitrogen to her tires “at no charge”. She was very happy with this arrangement. Her service department is the one that should really be happy! First they sold her a worthless product for $32 that might have cost them a total of $1.00. Secondly, they have her coming back to their auto service company regularly so that they can “inspect her vehicle” just in case there is further service she should pay them to do.

In my article, “Nitrogen Scam Foisted on Palm Tran” I asked Chuck Cohen, the Executive Director of Palm Beach County’s bus system, why he was spending $65,000 in taxpayers money for a worthless product. In email correspondence, Chuck of course disagreed with me. He told me that he would be testing the nitrogen in his bus’s tires to be sure that they did give them better fuel economy. The buses average about 4 miles per gallon of diesel fuel. I asked Chuck why he had to spend more tax payer’s money for tests when Consumer Reports had already conducted an extensive one year test of all makes of tires and come to the conclusion that nitrogen in your tires is no better than air. This is no surprise to those who know that air is comprised of 78% nitrogen.

Chuck Cohen’s assistant, Lorraine Szyms, sent me a copy of the final tests on Palm Tran’s tires on March 4. The tests were completed on January 30 by the Department of Mathematical Sciences Florida Atlantic University and Harold Herzlich of Herzlich Consulting, Inc. I’m not sure why it took so long for her to email me the test results. The test results are 8 pages long and you can read them in their entirety by clicking on this article on my blog, www.EarlStewartOnCars.com.

After reading through 8 pages of “techni-speak” by the FAU mathematics professors and Harold Herzlich, the fact that nitrogen was proven to be worthless for improving fuel economy was restated several times. The clearest phrase I could fine was, “From the previous data analysis we conclude that there is yet no observable effect in the fuel efficiency due to nitrogen tire inflation for the group of buses in this experiment”.

What concerns me is that there is clearly an effort under way to do more tests. Note the word, “yet” that Harold Herzlich used above. In the summary at the end of the test, it is stated, “Palm Tran is currently conducting further analysis using an electronic pressure sensor monitoring device that captures the tire pressure electronically”. The results of this testing should be completed by June 2009. Further more, Herzlich Consulting, Inc. is suggesting that they do more test too. This is no surprise, that’s how they make their money...doing testing.

It’s pretty obvious that the tests results are an embarrassment to Chuck Cohen and those “remaining members” of the Palm Beach County Commission who authorized the “Nitrogen Scam”. I guess they think if they can keep on testing, they never have to admit they were wrong. Other than the obvious problem with this scenario, is the additional cost of testing. I think that Karen Marcus and the “remaining” county commissioners owe it to the Palm Beach County taxpayers to draw the line and end this now. The taxpayers are already out $65,000 for the nitrogen apparatus. I want to know how much Palm Beach County paid FAU and Herzlich Consulting, Inc. for the first tests that proved nitrogen in their bus tires does not improve fuel mileage. I would also like to know how they chose Herzlich Consulting, Inc. Did they get competitive bids? Did they get bids from PBCC, FAU, and University of Florida? How much are these new tests with their “electronic pressure sensors” that Palm Tran itself is conducting costing us?

In case Chuck Cohen hasn’t been reading the newspapers or watching the news lately, our country is going through the greatest economic crisis since the great depression. It’s bad enough that his buses cost a $half-million each, get 4 miles to the gallon, and average less than 20% occupancy [it would be less expensive for the tax payers to pay “cab fare” for the handful of people riding Palm Tran]. Municipalities and counties are desperately looking for ways to cut spending so that they can continue to provide vital service to their citizen. We can’t afford to spend any more money to exonerate Chuck Cohen and the PB County Commission from another bad decision.

You can view the actual report here.

CAR BUYERS BEWARE OF “THE BOX”

OK, you’ve just bought that new or used car and the pressure is off…right? WRONG! The next step for the car dealer is to get you into the “box”. You won’t hear this word mentioned. It’s inside car dealer slang for the F&I office or the business office. This is the place that you sign all of those papers making the sale legal and final. But in addition to that, it’s also a very important profit center for car dealers. In many car dealerships it’s the most profitable department. It’s not uncommon for car dealers to make an additional $1,000 profit or more in “the box” on each car they sell.

Here’s how that profit is generated. First and usually foremost is making money on the interest they charge you. Essentially, they make money on “the spread” just like banks make money when they loan it. For example, a car dealer will borrow money from Bank of America for 4.9% and loan it to you for 7.9%, or whatever interest rate they can convince you to accept. The second way they earn that big profit in “the box” is by selling you “products” which are added to the price of the car you just bought. There are many products and some of the most common are extended service warranties, maintenance plans, road hazard insurance, GAP insurance, window etch, and LoJack.

The way you should protect yourself on the interest rate is to have already shopped your own bank or credit union and two other banks for the best interest rate you can qualify for. Never go into “the box” without knowing what the best rate other banks or credit unions will allow you. The best way to protect yourself against the products they will try to sell you is to completely understand each product. Do you want or need an extended warranty on your new car? If this product costs $1,900 for example, how long are you going to keep the car and how long are you likely to be driving it when it’s out of the manufacturer’s warranty? Ask the same questions of each product they try to sell you. If you are unclear on the merits of a product, do not commit. You can always go home and think about and seek advice from friends and advisors.

Another important tactic that I recommend is to never go into “the box” alone. If it’s just you and the F&I manager [often called business manager], and there is a dispute over what was said, it’s just your word against his. Also, having a friend or advisor present will usually be a deterrent to any attempted deception.

These are some of the kinds of deception you should be on the lookout for. Tying the sale of a product like an extended service contract to the interest rate or eligibility to have the bank finance your car is illegal. But this practice happens all too often behind the closed doors of the “the box.” The F&I manger may tell you that the bank “requires” you to buy the extended warranty, GAP insurance another product in order to protect the bank’s collateral. This is simply a lie and it’s illegal for banks or car dealers to do this. Another common form of deception is to simply not disclose the products or interest rate and have you sign the contract without reading it. There are a large number of documents to be signed after you buy a car. Buyers are often in a state of euphoria now that they have bought their dream car and are in too much of a hurry to sign everything and drive their new car home. The car dealer is required by law to give you a signed copy of the installment sales contract. Be sure you carefully read it and be sure have a copy. If you don’t get a copy, you may find that you signed a different contract than the one you read.

Extended service warranties, GAP insurance, and other insurance products are regulated in Florida unlike many other states. This affords you some degree of protection like being able to cancel an insurance product as long as you did not use it. You can do this in 60 days for a 100% cancellation. You don’t get the cash back and your monthly payment won’t go down however. But the amount is taken off the principal amount you are financing through the bank. You cancel insurance products after 60 days, but the cancellation is not pro rata and you pay a large penalty.

If you remember nothing else from this article please remember this one thing. Do not hurry the process of financing your car and signing the papers. Do not let the car dealer encourage you to sign anything you don’t understand. Time is on your side because it will allow you to think and to consult with others who can help you make your final decision. I get a lot of calls from victims of “the box” and the one thing they all have in common is that they let themselves be rushed into signing the documents so that they could drive their dream car home that same day.

New Look for Earl Stewart On Cars

Earl Stewart On Cars is two years, eight months, and four days old - it's time for a fresh look! The new logo is based on a photo of me in the SeaView 960 studios in Palm Beach Gardens. Please tell me how you like it (or if you don't). I want to make sure it is easy to read and navigate, so feel free to post your comments.

Earl

Oil Prices are Down.. But Gas is Going Up???

Just when we were getting used to cheap gas, higher prices are right around the corner.

On the front page of today’s PB Post business section you have another headline article explaining that gas stations are going out of business due to low margins and high costs. Fewer gas stations means less competition means higher gas prices.

You can read in this article that gas prices will rise to $2.50 before spring; who knows how high it will reach in the summer?

Here's the AP story that ran in this morning's Palm Beach Post:

http://hosted.ap.org/dynamic/stories/G/GAS_PRICES_UNHINGED?SITE=FLPAP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2009-02-15-21-07-33

Open Letter to President Obama re “Car Czar task force”

Dear President Obama,

I was disappointed to learn that you have decided not to appoint a single “car czar” to oversee the reorganization of our domestic auto manufacturers, but to appoint a “task force”.

You have my application for “car czar” and just in case it was misplaced, I’m enclosing another copy below. Please consider this as my new application for a member of your task force operating under Treasury Secretary Geithner and White House Economic Advisor, Lawrence Summers.

I can understand why you might be shy about making another major appointment after what you’ve been through with Timothy Geithner, Bill Richardson, Tom Daschle, Nancy Killefer, and Judd Gregg. However, rest assured there are no skeletons in my closet and I welcome a thorough vetting.


Application for Auto Czar Task Force Position
Open Letter to Barrack Obama
Cc: Treasury Secretary Timothy Geithner
Cc: Economic Advisor Lawrence Summers

Dear Mr. President [Written while still President-elect],

I just read that U.S. House Rep. Barney Franks was sponsoring a bill to address the auto crisis which would call for an “Auto Czar” to facilitate the recovery of the American auto industry. I’m applying for this position and explaining why I may be qualified for this important task.

Rather than attempt to call or write you on this subject, I’ve chosen my blog, www.EarlStewartOnCars.com as the means of communicating this message. This is because I understand that you must be overwhelmed with requests for positions in your administration. Secondly, I believe that the Internet is a powerful tool that you recognize and accept a major one for communications in the 21st century. As you know, it was instrumental in the fund raising for your successful election…something that had never before occurred in a Presidential election.

Below I list a brief summary of my qualifications. Your staff can “Google me” for more information and, of course, I will furnish them with all additional information that they require.

(1) I’m 68 years old and have been an automobile dealer since 1968. I’ve been a dealer for Pontiac, Mazda, Peugeot, Lancia, Fiat, Checker, and Toyota. I’ve also owned and operated rental companies and independent used car lots. I’ve all my dealerships except for my Toyota which I’ve owned and operated since 1975.
(2) I’m in good health [had a bout with colon cancer in 2005 but am 100% cancer free now] and currently very active in my business which has grown to become one of the largest Toyota dealerships in the USA.
(3) I graduated from the University of Florida in 1963 with a BS, majoring in physics with a minor in mathematics. I earned my Masters of Science degree in Industrial Administration from the Krannert School at Purdue in 1964.
(4) In recent years I’ve assumed the role of a consumer advocate for car-buyers in Florida and nationwide. As you know, the image of the car dealer has not been exemplary [tarnished much as that of politicians and lawyers] and I’ve taken on the mission to “clean up our act”. I host a local weekly radio talk show and write a weekly column for a local newspaper advocating these positions. I also regularly speak at public libraries, civic groups, condominium associations, schools, retirement clubs, etc. on this subject.
(5) I have no “skeletons in my closet” and welcome a thorough vetting of my past.
(6) My only motive is to help our country with our economic crisis. I agree to serve at zero monetary compensation and aspire to no further political office.
(7) I understand and support our nation’s need for energy independence and for our global need to reduce carbon emissions in the atmosphere. My Toyota dealership is the largest retailer of hybrid vehicles in the USA except for California. Last year we ranked #12. I accomplished this by selling my hybrid vehicles at lower prices even when demand exceeded supply and afforded many dealers the opportunity to charge premium prices.

(7) My business is a family one including my three sons who are ready, willing, and able to run my business if you select me as your Auto Czar. As a matter of fact, my three sons voted for you. However I must confess that my wife, Nancy and I voted for John McCain. I only mention this because our family believes in freedom of expression and choice even within the confines of our own family. One of my favorite quotations is that of F. Scott Fitzgerald who said, “The test of a great mind is the ability to hold two opposed ideas at the same time and still retain the ability to function”. I think you agree with this because of the way you are welcoming suggestions from both sides of the aisle, the only qualification being “will it work?”

In summary, I have a unique perspective over those who may be considered for the position of Auto Czar. My primary concern is for our country’s car buyers followed by the car dealers and manufacturers. All three concerns are very important, but it’s the American citizen who relies on his automotive that will drive the future success of the manufacturers and dealers.

Respectfully yours,

Earl Stewart

Maybe Your Car Dealer is a Good Guy

I wrote this article in October of 2007 and it ran again in 2008 after I received a phone call from Ted Smith, the President of the Florida Automobile Dealers Association, FADA. In Ted’s call, he told me that he knew most Florida car dealers and they were mostly honest, good people.

Accepting Ted Smith’s assertion and I know Ted to be a man of very high integrity, I still have this “axe to grind” with Florida car dealers. You do not make yourselves accessible to your customers. You rely on your managers, computers, and reports.

There is a Japanese phrase, “genchi genbutsu”, which translated literally means “go to the place and see”. Toyota Motor Corp. employs this principal. Even the Chairman of the Board of Toyota will often go into a manufacturing plant, walk out onto the floor, roll up his sleeve, and plunge it into an oil sump of a machine tool to find out why parts are not being milled to perfection. The Chairman of Toyota knows what’s going on and all his managers know that he knows this too. It keeps everybody on their toes!

This principal is why I have my red phones, give my home number to my customers, and don’t allow any call screening or automatic answer services in my dealership.


What to do if you are Treated Badly by a Car Dealer

Hopefully the sales or service experience with your car dealer went well. But, sometimes they don’t. Now what? The advice I give you applies to all business transactions, not just car dealerships.

Your first step should be to communicate your complaint ASAP to the General Manager or, preferably, the owner. Be sure that you are talking to the real owner or the real general manger. A General Manager is over all employees in the entire company. A general “sales” manager is not a General Manager. If you can’t reach the owner (Many car dealerships are either publicly owned or owned by absentee owners), ask to see the General Manager. Often times the owner or General Manager is not aware of everything that goes on with all of their customers and employees. They might have new employee that should not have been hired or received inadequate training. Or, they may simply have a “rotten apple” that should not be working there. The ease and speed with which you can meet and speak to a General Manager or an owner is a pretty good measure of the integrity of the company as whole. If the owner or General Manager cares enough about her customers to allow total access, it is probably a very good place to do business. In fact, it is a good idea to find this out before you do business.

If you cannot reach the owner or General Manager, contact the manufacturer who franchises the dealership. Car dealers have a contract with the manufacturer called a franchise agreement and this contractual agreement requires that they treat their customers with courtesy, efficiency and integrity. Most manufacturers have a customer hotline that allows you to call and register a complaint directly. The owner or General Manager of the dealership will be made aware of your complaint. As you might guess, the manufacturer has quite of bit of clout with their dealer. If a dealer does not live up to his side of the contract, his franchise could be canceled or not renewed.

The third step I recommend, if numbers one and two don’t work, is to contact a consumer agency like The Better Business Bureau or the County Office of Consumer Affairs. These agencies will send your complaint to the dealership and request a written reply. No car dealership or business wants an unanswered complaint in the file of a governmental or private consumer agency.

Your last resort is to contact an attorney. I list this last because hiring an attorney just about eliminates the possibility that you can quickly, amicably and inexpensively resolve your differences with the car dealer. Be very careful which attorney you choose. Try to choose one that is primarily interested in helping you and not in generating large fees for himself. Under the Florida Unfair and Deceptive Trade Practices Act, an attorney is entitled to his fees and costs from the defendant in a lawsuit if he wins. These fees can be much larger than the amount of your claim, motivating an unethical attorney to spend more time than is needed and dragging out a case to generate more fees than are necessary. This can be very dangerous for you because the car dealer’s attorney’s fees run roughly parallel to your lawyer’s and you can be held liable for those if you lose the case.

Hopefully you never have to resort to the final step of hiring a lawyer. In trying steps one, two, and three try to present your complaint as concisely and politely as possible. You have every right to be angry when you are taken advantage of, but try to let your anger subside before you speak to or write to someone about your problem. We all react negatively to someone who is profane, raises his voice, or is sarcastic. Your goal of communicating and resolving your complaint is best reached by communicating clearly, politely and concisely.

Car Dealers’ Only Thing to Fear is Fear Itself

Believe it or not, I hate to brag, but it was baseball player Dizzy Dean who said, It ain't braggin’ if you can back it up”. I’ll add to Dizzy’s sage observation the fact that bragging isn’t bad if there is a good reason to do so. My good reason is that car dealers are afraid. They are afraid to abandon their dealer fee because it would hurt them financially. Car dealers are afraid to not run bait and switch advertisements because they fear that prospective car buyers won’t respond to honest advertising. Car dealers are afraid to make themselves readily accessible to their customers because they fear being overwhelmed by complaints. Car salesmen are afraid to give the real price to their prospective customers for fear the prospect will shop and compare his price with the competition.

Well “listen up” car dealers! Earl Stewart Toyota has grown from one of the smallest car dealerships in Palm Beach County in one of the smallest towns, Lake Park [population of 9,080 as of 2004] to the #1 retailer of autos of all makes in Palm Beach County. Earl Stewart Toyota is the largest seller of new Toyotas from Orlando to Coconut Creek [south of Ft. Lauderdale], the 11th largest in the Southeast USA (out of 172), and 59th largest in the USA (out of over 1,300). The way my dealership was able to accomplish this was by putting our fears aside and doing business the way we knew, in our hearts, was right. As most everyone knows, up until about 5 years ago, my dealership charged a dealer fee too. Dropping that “extra profit” was one of the scariest business decisions I ever made.

How does a little car dealer in a little town earn so many customers? By doing those things that most other car dealers are afraid to do…don’t charge a dealer fee, don’t advertise cars that you won’t sell for that price, quote your best out-the-door price to any prospective customer who asks and encourage that prospective customer to shop and compare. We treat each customer with integrity, courtesy, and respect. We encourage total unfettered communication with our customers by not screening any phone calls and having a live person taking calls 24/7…no answer machines. Even I, the owner, take all calls directly and I don’t have a secretary. Talking about scary, how about my giving my home telephone number to all of my customers, printed on my business card!

This all sounds simple, doesn’t it? I agree, but why do so few car dealers get it? Why do they see the incredible growth and success of doing the business the way we do and still stick to their old ways? The answer for most dealers has to be “fear”. I hear some car dealers who say, “Sure, easy for him to do business that way because he sells Toyotas. He wouldn’t be so successful selling Chevys”. Well, of course I couldn’t sell as many Chevrolets as I sell Toyotas. But I measure my success against those who sell Toyotas or equally good product like Honda. I’ve grown from the smallest volume Toyota store in Palm Beach County to the largest. All the Honda dealers used to outsell me and now I outsell them all. I wasn’t even top 300 of Toyota dealers nationally and now I’m #59. If a Chevrolet dealer did business like I do, I can absolutely guarantee him he would sell at least twice as many Chevrolet as he is now.

During this severe economic crisis, Americans have been more prone than ever before to deal with those they trust. That’s why they are buying American treasury notes and bonds at unprecedented levels. They aren’t buying bank stocks or most other stocks because they don’t trust those who run these companies. This phenomenon is known in Wall Street as “a flight to quality”. It could perhaps be more accurately described as a “flight to trust”. Buyers are driving from all over Florida and beyond because word of mouth has spread that they will be treated with integrity, courtesy, and respect at my dealership. In the worst economic recession since the ‘30’s my dealership is growing its market share by leaps and bounds. I have to admit that this has even exceeded my expectations. I never dreamed that I would one day be the largest retailer of automobiles in Palm Beach County.

Any car dealer with enough courage can follow my proven formula and increase his volume and profitability. With business so bad for so many car dealers you would think they would have nothing to lose by giving it a try, except their fear.

Application for Auto Czar Position

Open Letter to Barack Obama

Cc: Barney Franks

Dear Mr. President [Written while still President-elect],

I just read that U.S. House Rep. Barney Franks was sponsoring a bill to address the auto crisis which would call for an “Auto Czar” to facilitate the recovery of the American auto industry. I’m applying for this position and explaining why I may be qualified for this important task.

Rather than attempt to call or write you on this subject, I’ve chosen my blog, http://www.earlstewartoncars.com/ as the means of communicating this message. This is because I understand that you must be overwhelmed with requests for positions in your administration. Secondly, I believe that the Internet is a powerful tool that you recognize and accept a major one for communications in the 21st century. As you know, it was instrumental in the fund raising for your successful election…something that had never before occurred in a Presidential election.

Below I list a brief summary of my qualifications. Your staff can “Google me” for more information and, of course, I will furnish them with all additional information that they require.

(1) I’m 68 years old and have been an automobile dealer since 1968. I’ve been a dealer for Pontiac, Mazda, Peugeot, Lancia, Fiat, Checker, and Toyota. I’ve also owned and operated rental companies and independent used car lots. I’ve all my dealerships except for my Toyota which I’ve owned and operated since 1975.

(2) About ten years ago I “saw the light” about how customers [and employees] should be treated. I refer to myself as a “recovering car dealer”. This is a plus for my resume because I was actually a part of what is wrong with the present auto manufacturing and selling systems today.

(3) I’m in good health [had a bout with colon cancer in 2005 but am 100% cancer free now] and currently very active in my business which has grown to become one of the largest Toyota dealerships in the USA.

(4) I graduated from the University of Florida in 1963 with a BS, majoring in physics with a minor in mathematics. I earned my Masters of Science degree in Industrial Administration from the Krannert School at Purdue in 1964.

(5) In recent years I’ve assumed the role of a consumer advocate for car-buyers in Florida and nationwide. As you know, the image of the car dealer has not been exemplary [tarnished much as that of politicians and lawyers] and I’ve taken on the mission to “clean up our act”. I host a local weekly radio talk show and write a weekly column for a local newspaper advocating these positions. I also regularly speak at public libraries, civic groups, condominium associations, schools, retirement clubs, etc. on this subject.

(6) I have no “skeletons in my closet” and welcome a thorough vetting of my past.

(7) My only motive is to help our country with our economic crisis. I agree to serve at zero monetary compensation and aspire to no further political office.

(8) I understand and support our nation’s need for energy independence and for our global need to reduce carbon emissions in the atmosphere. My Toyota dealership is the largest retailer of hybrid vehicles in the USA except for California. Last year we ranked #12. I accomplished this by selling my hybrid vehicles at lower prices even when demand exceeded supply and afforded many dealers the opportunity to charge premium prices.

(7) My business is a family one including my three sons who are ready, willing, and able to run my business if you select me as your Auto Czar. As a matter of fact, my three sons voted for you. However I must confess that my wife, Nancy and I voted for John McCain. I only mention this because our family believes in freedom of expression and choice even within the confines of our own family. One of my favorite quotations is that of F. Scott Fitzgerald who said, “The test of a great mind is the ability to hold two opposed ideas at the same time and still retain the ability to function”. I think you agree with this because of the way you are welcoming suggestions from both sides of the aisle, the only qualification being “will it work?”

In summary, I have a unique perspective over those who may be considered for the position of Auto Czar. My primary concern is for our country’s car buyers followed by the car dealers and manufacturers. All three concerns are very important, but it’s the American citizen who relies on his automotive that will drive the future success of the manufacturers and dealers.

Respectfully yours,

Earl Stewart

10 New Years Resolutions for Car Dealers in 2009

2008 was the worst economic year for auto dealers in my memory and I’ve been a dealer for over 40 years. I say that because I don’t want those dealers who read this to think I’m “kicking them while they’re down” by preaching redemption. I’m suggesting these resolutions because they can help these dealers survive these bad times and prosper even more when business returns to normal.

(1) Quoting prices to your customers. Always quote your customers the full, out-the-door price. 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.

(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. 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.

(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 jus 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.

The Recession of Trust

There are dozens of theories about why the world finds itself in such a severe economic decline. I don’t say that lack of trust is what started the ball rolling but I firmly believe it’s what's keeping the ball rolling.

This morning I was on my treadmill trying to work off some our Christmas feast and watching CNBC. A General Motors commercial came on about their “Red Tag” sale. The announcer said that the price on the red tag is the price you pay”. He says that these are not just the lowest prices of the year but the lowest prices ever! Now, bear in mind that this is a General Motors TV advertisement, not a GM dealer advertisement. What the ad did not say was that the dealers charge an additional profit called a dealer fee, doc fee, dealer prep fee, or any other name they care to give this extra, after-the-fact profit.

In this morning’s PB Post there was a print GM factory ad for the same red tag sale. In the fine print there was a statement that the red tag price was plus tax, tag, and “dealer fees”. Now this same disclosure was probably on the TV ad too, but I don’t have time to read this with my magnifying glass which is what I have to use on the newspaper ads. The bottom line is that General Motors Corporation is lying to its customers when they say that the red tag price is the price you pay. The red tag price is not the price a Florida car buyer pays. In addition, she also pays any amount the dealer chooses to add to the red tag price which he can also name anything he wants. In Florida there is no limit on how much a dealer can charge for a dealer fee. I know of Florida dealers charging at least $1,000 and I know of one Georgia dealer charging $2,350! These two dealers happen to be Toyota dealers but I’ll bet there are GM dealers who have fees in that ballpark.

Have you noticed how many Wall Street people are going to jail lately? How about that Bernie Madoff? Not only did he carry off the biggest swindle in the history of the world, but he mainly swindled his friends and charities. The Investment Banks lost so much trust that they have had to convert to conventional banks. The public has lost so much trust in the government that anytime a government official goes on TV, the stock market drops. I actually heard a commentator on CNBC says that traders are making profit by shorting the market whenever Hank Paulson appears live on TV and then covering as soon as he’s off the air.

The banks don’t trust the borrowers and are afraid to lend money. They don’t believe the appraisals and they don’t believe the accuracy of the credit statement. The borrowers don’t trust government so, even those who are credit worthy, are afraid to borrow money for fear things will get much, much worse. We have lots of companies and individuals with large sums of cash just sitting by because they have no trust in our country’s future.

I can’t solve the problems of the world, but I can offer some very good advice to car manufacturers and dealers. When your customers trust you, they will part with their money and do business with you. Unfortunately, it’s not easy to restore trust. You can’t run an ad that says “Trust Me” when you’ve been lying to your customers for years. You can only earn back that trust a little bit at a time. The good news is that once you earn the trust of one customer he will tell a dozen or more of his friends. Trust grows exponentially. However trust requires sacrifice. You have to forego the “fast buck”. You can’t advertise a sale unless it’s real. That means you really are selling your cars for less than you did last week and it usually helps to have an honest reason for why you will do that. You need to quit charging that dealer fee and include all of your profit in the price you quote your customers. You need to give your customers your best price when they ask for it by email, over the phone, or in person. If they ask for copy of their paper work, the buyer’s order, give them a copy. Yes, they might use that to compare your price with the competition, but that is their right in our free marketplace. Never give a prospective customer a price below what you know is possible to bring him back and then try to raise it when she does [this is called the low-ball].

By just being honest, respectful, and courteous to each of your customers you will eventually win back their trust and when that happens there will be no more recession.

Get Ready for Round II

Round 2 has just started in my fight to make the dealer fee illegal in Florida. Last Thursday, I received a call from Carl Domino, House Representative from district 83 asking me to draft a dealer fee bill for him to consider sponsoring. He needs to have this by this January. My next step will be to get someone to sponsor the bill in the senate and I plan to ask Jeff Atwater who was just named president of the senate. Jeff Atwater was outwardly supportive of my position last year. Below are my comments when I testified before the Senate Commerce Committee last year. I will likely be making another appearance before this committee and the House committee soon

Comments to Florida Senate Commerce CommitteeTuesday, March 4, 2008, 2:30 PM, Tallahassee

My name is Earl Stewart. I was born in Ft. Lauderdale, FL in 1940. I graduated from PBHS in 1958, University of Florida in 1963, BS Physics, and Purdue University, 1964, MSIA. I worked for Westinghouse for four years as an Electronics Engineer. I jointed my father in business in 1968. He founded Stewart Pontiac in West Palm Beach in 1937. I’ve been primarily in the retail automobile business for the last 40 years. I’m currently the sole owner and general manager of Earl Stewart Toyota in North Palm Beach and have been in the same location for the last 33 years. My three sons are employed in my business and my wife, Nancy, is also involved part time.

I’ve been a member of the SFADA and the FADA for my entire career and have serviced as a director for both organizations and on the Executive committee of FADA. I am currently chairman of the board of FLADCO, a Florida dealer-owned cooperative buying company.
(1) What’s bad about the dealer fee?

(a) In most cases the customer either does not know he paid the dealer fee or believes it is some kind of federal, state, or local “official fee”.
(b) In practice dealers do not include the dealer fee in the price of the car that is quoted to the customer. It isn’t included in Internet quotes and also not in verbal quotes over the telephone or in person.
(c) Although Florida law says that the dealer fee must be included in the advertised price, this is not happening in most cases. In the first place, there is virtually no enforcement of this part of the law. I’ve shown Senators Jeff Atwater and Alex Diaz de la Portilla copies of auto classified ads flagrantly violating this part of the law addressing dealer fees. Those dealers who do technically comply, get around it in practice by what I call “the old stock number trick” [Explain].
(d) There is no cap on the dealer fee and each dealer chooses whatever fee he likes. There is no one name for the fee. The Senate Investigative Report discovered 22 names and they only scratched the surface.

(2) Why the Dealer Fee Law is a Bad Law?

(a) It is written in such a way that dealers’ legal counsel have advised them “If you charge one customer a dealer fee, you must charge all customers the same fee”. Now, when the rare very astute consumer questions the legitimacy of the dealer fee, the sales person is instructed to reply, “All dealers charge this fee” and “We are required by law to charge everybody this same fee”.
(b) There is a provision that a “group ad” does not have to include the dealer fee in the advertised price. The argument for the exception to this part of the law on advertised prices is that it would be “too confusing” to list all of the different prices resulting from different dealer fees by different dealers.
(c) The law does not address ads which show discounts from MSRP instead of an actual price. Because the MSRP is standardized, a discount from MSRP is no different than a quoted price.
(d) The law allows dealers to advertise just one car at the advertised price. Dealers don’t disclose this by using an obscure alpha numeric code, usually included along with all of the listed options and accessories. This, unknown to the reader of the ad, is a “stock number” which means that the dealer is advertising only this one car at the price which includes the dealer fee. A typical stock number looks like this…#A23554B. The ads often also say, “12 more models available at this price”. But the other models are not the advertised car and now the dealer can add the dealer fee on top of the advertised price. Car salesmen are not paid a commission on this advertised car. Car salesmen work on 100% commission and have no incentive to sell an advertised car. In fact, their incentive is to be sure that you buy a different car. The odds of a customer actually being able to buy an advertised car are “slim and none”.
(3) What is my true motivation for opposing the Dealer Fee?

(a) I strongly believe that I’m doing the right thing. The dealer fee is a profit to the dealer…pure and simple. The law alludes to it covering certain costs of the dealer and requires that the dealer so state next to his dealer fee, but this is fallacious. When a customer pays me a sum to cover one of my expenses, she is increasing my profits. Saying that a customer should pay for a dealers cost of paperwork or preparation of the car is no different than saying the customer should pay the salesman’s commission, the dealer’s advertising, or part of his power bill. Any business’s overhead costs should be priced into the price of its product…not passed along to their customer separately from the pricing of their product.
(b) Because all car dealers have different dealer fees and some range up to at least $1,000, we cannot compete fairly on a level playing field. I am unable to advertise prices because those dealers who have dealer fees can understate their real price, knowing that they can add their dealer fee on at the last minute. For example, a Toyota Yaris with an MSRP of $15,145 has a profit to the dealer of only $584. Al Hendrickson Toyota in Coconut Creek, FL has a $999 dealer fee. This dealer can advertise a new Yaris for below his cost and make better profit than I can if I advertised and sold the car at MSRP.
(c) Our customers should have the right to shop and compare prices of cars just like they do TV’s, refrigerators, computers, or any other product. The Monroney label made a standardized MSRP the law for new car manufacturers over 50 years ago. The purpose for this law was to give the consumer the ability to accurately compare prices between different car dealers. If a car buyer is considering a Chevrolet Impala with a specific MSRP, he can shop for the dealer who gives him the biggest discount. Now, with virtually every dealer adding a dealer fee of a different amount, the intent of this federal law is circumvented.
(d) I would be less than honest if I didn’t confess that I’m benefiting from the positive publicity I get by opposing the dealer fee. If I’m not successful, I’m still a winner because the car buyers of Florida do agree with me. Any dealer could achieve the same status as I by unilaterally giving up the dealer fee.
(e) Car dealers rank among the most vilified businesses and professions. Along with lawyers and politicians, we are commonly ridiculed by comedians like Jay Leno and David Letterman. My sons will take over my business one day and I have four grandchildren who may continue it even further. My oldest son, Earl III, told me something a few years ago that I will never forget. He said that he enjoyed working for me and he enjoyed his job very much but what was most important to him was that he was proud to tell his son, Jake, my grandson, what he did for a living.