CAR OWNERS AGAINST DECEPTIVE DEALERS

Regular readers of this column/blog know that I’ve been “fighting the good fight” against car dealers’ deceptive sales practices and advertising many years. Besides this column, I also warn and advise my radio listeners every Saturday morning and every weekday how not to be “ripped off” by car dealers’ deception. Many of you have seen my TV advertisements calling for making the dealer fee illegal. I even took the fight to our Florida legislature when I testified against the dealer fee in front of the Senate Commerce commission.

I’ve made some progress but it’s been an uphill battle. The auto dealers have powerful lobbying groups that make it almost impossible to get any car consumer protection legislation passed. Our state regulators are sadly deficient in regulating our current laws and responding to consumer complaints. I see illegal advertisement running consistently on TV and radio and in our newspapers. The media is reluctant to expose the illegal and unethical advertising and sales practices because car dealers are among their largest advertisers.

I believe the only way to get the attention of our politicians, regulators and the media is by organizing the car owners of Florida and having their voices heard. Therefore I recently announced on my radio show that I would like to form an organization tentatively named C.O.A.D.D., Car Owners Against Deceptive Dealers. The response from my radio audience has been very positive and many listeners have already volunteered to become a part of COADD. Below, I’ll describe my vision of this car owner activist consumer group. If you have an interest of being a member or even on our board of directors, please contact me.

COADD would include members from Palm Beach County north through the Treasure Coast, including Martin and St. Lucie Counties. Eventually I envision growing south through Broward and Counties and eventually becoming statewide. COADD will be a nonprofit corporation controlled and operated by Florida car owners. No car dealers could be members and certainly not on the board of directors, but honest, ethical car dealers would be allowed in an honorary capacity as consultants. I would be the first of these dealers to serve.

I’ve been approached by one of Palm Beach County’s most prestigious law firms that is seriously considering helping COADD get formed as a nonprofit. A member of this firm would also sit on our board of directors. Once we are formed and have a bank account, I will contribute $10,000 to help us begin operations.

The first task of COADD should be to develop a car dealer code of ethics regarding their advertising and sales practices. All car dealers in Palm Beach, Martin, and St. Lucie Counties would be asked to sign a covenant stating that they would abide by these ethical rules. Those dealers who agree would become honorary members of COADD and could use this in their advertising. Of course, their advertising and sales practices would be regularly monitored to ensure compliance.

The next task of COADD would be enforce the code of ethics with all car dealers in our area, including those who refuse to sign the covenant. I suspect that there will be many car dealers that, at first, will refuse to sign, but I also suspect that growing pressure will force most to join. Those dealers that violate the code will be sent a certified warning for the first offense and given a reasonable time to comply. If they don’t comply, COADD will advise our regulatory agencies, of the violation(s). Which agencies will be notified will depend on the seriousness of the violation and can include the County Office of Consumer Affairs, Department of Motor Vehicles, and the Attorney General’s Office. Honorary dealer members that violate the code will be suspended and banned if they refuse to comply.

Raising funds is always a challenge for nonprofits. Once we begin to make an impact and are able to recruit more car dealers as associate/honorary members, COADD will charge them an annual fee for membership. This should be a significant source of revenue. Another task of COADD will be to help car owners who have been taken advantage of in buying or servicing their cars. This could also be a source of revenue because many victims would be willing to make a contribution if COADD successfully resolve their problems and saved them money. Nonprofit fund raising is not my field of expertise but there must be other sources of local, state, and federal funds for nonprofits that provide a valuable service to their communities. For membership in COAD, there would be a reasonable annual fee. Members would be give educational materials on how buy a car and service a car without getting ripped off and would be able to identify themselves to dealers with their membership card or even a pin. If a dealer attempted to take advantage of a member, she would have the full force of COADD’s support to defend her.

Equally important to funding is getting started with a good, strong, involved board of directors. Among South Florida’s greatest resources are highly qualified retires...Men and women who formerly owned or operated large and small companies, occupied high government and military posts, college presidents, and well known celebrities. High energy, high intelligent people like this love to lend their expertise to worthwhile nonprofit organizations and most of them have several horror stories to share about being mistreated by car dealers.

After I help fund and organize COADD I see my continuing role an advisor and publicist. I will use my radio show, blog, newspaper column, and local “celebrity status” to continually endorse and promote our organization. What I ask from you is to join our group as a member or, if qualified and willing to donate your time, as a board member. If you know somebody who would make a good board member, please let me know. I cannot overemphasize how important having the right mix of people on the organizing board of directors is.

Driving Your Car Using a Cell Phone

There’s nothing new about the controversy over using your cell phone while driving your car. It all began with a movement to require you to use a hands-free device so that you didn’t have to hold your phone to your ear while you conversed. Next it evolved to the fact that, hands-free device or not, simply talking on your cell phone is unsafe. Now the big drive is against texting, which is obviously something that requires your hands and eyes.

Now, I fear this thing is about to go “over the top”. It has just been reported (I read it in Automotive News and New York Times) that one of the cellular carriers, T-Mobile, has developed a technology that makes it impossible for you to use your cell phone while driving your car! In fact, they’re selling that app to users for $4.99 per month. Concurrently with this technological breakthrough, Ray LaHood, the chairman of NHTSA (National Highway Transportation Safety Association) is strongly advocating Federal regulation of the use of cell phones in cars. This means that our government, either thorough regulators or the legislature, could require all wireless carriers to make it impossible for you or me to use our cell phones while driving.

Now, I don’t want to turn this blog/column into a political commentary…we have too much of that already. I mentioned this subject on my weekly radio show last Saturday and received some rather strongly worded emails. Here’s an example:

I was listening 1-22-11 to Seaview radio and heard you posing a hypothetical question about the government shutting down cell phones in moving cars. Your wife then asked for comments and gave out the 877 # twice. Being a carefull [sic] driver, I pulled into a parking lot and called immediately but was told there was only a minute left and there was no way I would be able to express my opinion on air! So, you pose a STUPID, PARANOIA-induced question, ask for comments but cut the show off??? Wow! Well. Here's my answer anyhow: STOP trying to scare people about the government possibly doing something unlikely somewhere in the future!!! WHAT is wrong with you? Still upset McCain did not win? Get over it. The government is NOT the evil entity you put forward, sir. The government is We, the People.

Have we reached a point where we can’t be publically critical of our government? I hope not because there are a lot of countries in the world where that is exactly the case and I wouldn’t want to live in Iran or even China.

I’m 70 years old and lived about half of my life without a cell phone. I can tell you that the quality and productivity of my life has increased exponentially as a result of the cell phone, not to mention the smart phone and PC. I accomplish a large amount of work and personal related tasks everyday using my cell phone including the time I spend in my car. I’m a very safe driver, although my wife and my sons will tell you I drive too fast. Ever since the “safe driver” addendum to licenses came out, I’ve had that stamp on my license and I’ve never been involved in a traffic accident.

But forget about my personal experience, the percentage of traffic accidents, injuries and deaths has declined steadily for at least the past 50 years which includes the period of time we’ve had cell phones in our cars. Now I’m not going to argue that we couldn’t reduce accidents even more if we didn’t use our cell phones, but the same principal applies to lot of things we Americans like to do. Between 1919 and 1933 our government made it illegal to make, buy or sell alcohol in the USA. You know how that turned out. The only people who benefited from that moronic experience were guys like Al Capone and Bugsy Siegel. In fact, guys like them are probably already designing something that will override the device that T-Mobile invented to neuter our cell phone while driving.

I would love to hear what readers of this column and blog have to say about their freedom to use their cell phones while driving their cars. And I will close with this personal message to Ray LaHood….”I’ll give you my cell phone when you take it from my cold, dead hands” (For those nut-jobs who may be reading this, I’m just kidding!).

Auto Manufacturers Partly to Blame for Dealers’ Deceptive Car Pricing

For many years manufacturers have employed a device called “stair-step incentives” to motivate their dealers to sell more cars. A stair-step incentive is bonus money paid directly to the dealer to reward him for selling a certain quota of cars within a certain period of time, typically one month. The number of cars in the quota is decided upon by the manufacturer and is a higher number than the dealer would normally sell.

For example, a dealer who would normally sell 150 cars in one month might be given a quota of 200. If he hits his quota, he earns $250 retroactively on all 200 (or more) cars he sells that month, or $50,000+. If he sells only 199 or less, he earns nothing! It’s easy to understand why this would strongly motivate any car dealer to “do whatever it takes” to try to sell his quota.

Unfortunately “whatever it takes” sometimes translates into “irrational and crazy pricing” and those are the words of Mike Jackson, the CEO of AutoNation (the largest retail chain of car dealers in the USA}. He spoke before the World Automobile Congress recently and announced that he will make it his mission to end stair-step incentives by auto manufacturers.

At first, one might ask what’s wrong with incentivizing a car dealer to sell lots of cars by paying him a large bonus. The answer is that there’s nothing wrong with the concept, just with how the concept is applied. In my example above, the dealer gets $250 per car. If he got $250 every time he sold a car in that month, he would be inclined to discount each car by up to $250. But, the dealer only earns that $250 per car if he sells at least 200 cars and that’s more than he would normally sell. You can understand how the very first customer of the month might get a different price from the last customer, especially if the last customer was buying the 200th car! How can a car dealer tell a customer at the first of the month that this is the best price and give him his best price when even the dealer doesn’t know what he can afford to sell the car for? On the last day of the month, it’s perfectly feasible for a dealer to sell a car thousands of dollars below his cost if that’s the sale (200th car) that will allow him to hit his $50,000 bonus.

It might seem at first that this can be a great opportunity for the car buyer…just come in at the end of the month and buy the last car a dealer must sell to hit his quota. This does happen but the car buyer cannot plan for it any better than the car dealer can. The dealer may not hit his quota at all or he may have hit it earlier in the month. These stair-step incentives are secret incentives and aren’t advertised by the dealer or the manufacturer. In fact, usually the salesmen don’t even know about them. But the managers who control the price that is given to the customer do.
This kind of incentive makes it even more mandatory to do comparison price shopping. If you want to buy a new car or truck, you should shop and compare prices with no less than three other dealers of the same make. But, you have no way of knowing which dealers will make their stair-step bonus that month. The dealers that know they have no chance to sell their quota will maintain their normal pricing. Those that are committed to reaching their quota number (and believe they will) can discount their cars substantially more than the other dealer(s). The dealer that believes he can’t hit his quota can give you his lowest price but it won’t be as low as the dealer who will hit his quota.

The stair-step incentives favor larger volume dealers because they can earn larger bonuses. Imagine two dealers selling the same make of car the first of whom is a small dealer with a quota of 50 cars and the larger dealer has a quota of 500 cars. The first dealer earns $12,500 when he hits his quota but the larger dealer earns $125,000! Assume both dealers are “stretching” to hit their quotas in the last week of the month. Which dealer will likely offer you the best price? It’s pretty obvious that the larger dealer can literally give away one or more cars in order to earn his $125,000 bonus. This sort of thing is why the president of AutoNation referred to stair-step incentives as “irrational and crazy pricing”. And I wholeheartedly agree.

Caveat Emptor and Car Dealers

You Can Fool Some People All the Time

Almost everyone has read Abraham Lincoln’s popular saying, “You can fool some of the people all of the time, and all of the people some of the time, but you can’t fool all of the people all of the time.” I think Abe meant this to be a positive assertion that government may get away with deceiving us for a while, but in the long run, truth justice and the American way will prevail…and I think he was right.

However, it doesn’t work that way with unethical car dealers and car buyers. It always has been “caveat emptor”, or “buyer beware when it comes to buying or servicing a car. Unfortunately for a buyer to “beware” he must be “aware”…that is to say educated, mature, sophisticated and experienced. This excludes a very large segment of our population including the very young, the very old, the uneducated, those with low I.Q.’s and those not proficient in the English language. Is this one reason why our regulators and elected politicians don’t seem to care or take action with respect to the rampant unfair and deceptive sales practices of a large number of Florida car dealers? Most elected officials and regulators are lawyers and are highly educated and sophisticated. They don’t have a problem buying or servicing a car. In fact, the car dealer that tries to take advantage of a lawyer, regulator, or politician is asking for trouble.

I’ve been writing this column/blog and broadcasting my radio show, Earl Stewart on Cars, for about four years. I sometimes feel that I’m “preaching to the choir” when it comes to advising people how to avoid getting ripped off by a car dealer. You, my readers and listeners, largely fall into the category of the educated and sophisticated, “aware” buyer. Most of you aren’t taken advantage of when you buy or service your car because you won’t allow it. Unfortunately, there are enough uneducated, naive, and otherwise vulnerable consumers to feed those unethical car dealers who prey on the defenseless among us. All you have to do is read some of the car ads in the Saturday (the biggest selling day for most car dealers) auto classifieds. To the educated, sophisticated buyer, these ads are actually funny if you can forget the fact that so many fall prey to them and are taken advantage of by the dealers. For example, it’s hard for you or me to believe that anybody would respond to an advertisement without reading the fine print. Many dealers today are advertising prices that, when you read the fine print, are understated by many thousands of dollars. When you or I see a dealer stating that the car price is plus “freight”, we are educated enough to understand that the law requires that the freight cost be already included in the price. A shrewd buyer knows that “dealer list” is not the same thing as MSRP and that a large discount from “dealer list” means absolutely nothing. We know that the “lowest price guarantee’ is worthless if the dealer reserves the right to buy the car from the other dealer that offers a lower price.

There are those who argue that all buyers have the responsibility to guard against unethical sellers, to take care of themselves. In fact, that’s the literal translation of the Latin legal term “caveat emptor”…let the buyer beware. That’s sounds good, but what about the elderly widow whose husband recently died and who never had to make a the decision on a major purchase in her entire life? What about the young person just out of school with no experience in the real world? How about the immigrant who struggles with English? Should we be concerned about our underprivileged classes who often drop out of school because they have to go to work to support themselves or their family? You and I know lots of good people who, for one reason or another, simply can’t cope with a slick car or service salesman.

My bottom line is this, since we can’t rely on our regulators and politicians to protect those who “can be fooled all the time”, maybe we owe it to society to protect these folks. If you know someone who is thinking about buying a car or has a service problem with her car and you feel she may not have the ability to fend for herself with the car dealer, offer your support. If you’re one of the people who needs support, ask someone who can go “toe to toe” with a car dealer to come with you when you are car shopping. By the way, nobody, sophisticated or not, should car shop alone. Two heads are always better than one and it’s always a good idea to have a witness to what was said during a negotiation. And, of course, if you don’t have the time to help a person or you’re that person, you can always call me…I’m always here for you.

Pitfalls to Avoid When Having Your Car Serviced

Before I get into the pitfalls, it is important for you to understand how important it is to have your car serviced according to the manufacturer’s recommendations. The pitfalls and consequences of not doing so can be equal to or greater than those you might experience at the hands of an incompetent or unethical service department.

I strongly recommend that you have your car serviced and repaired by a franchised dealer of the make of your vehicle. I know that this statement, coming from a franchised car dealer, may be met with some skepticism. Listen to my reasons before passing judgment. Modern vehicles are highly complex computerized machines requiring very sophisticated diagnostic equipment and highly trained technicians. The evolution of new, expensive diagnostic equipment requires constant updating. The evolution of car technology requires continuing education of dealers’ factory trained technicians who attend many weeks of schools every year. Forty years ago, it was possible for a really good mechanic to fix anybody’s car. Those days are gone and your car needs a highly trained specialist with the very latest diagnostic equipment. It is impossible for an independent service company to be competent in servicing and repairing all makes of automobiles.

Carefully choose the dealership that will service your car. You do not have to take your car to the dealership that sold you the car for warranty repairs, as many believe. Every dealership of your make car will welcome your warranty and non warranty work. Do your homework on which dealer has the best service department. Every dealer is graded in customer satisfaction by the manufacturer. Ask to see a copy of his CSI (customer satisfaction index) scores. Check with the BBB and the County Office of Consumer Affairs.

When you take your car in for maintenance or repairs, always ask for an estimate. State law requires that a service department not exceed a written estimate by more than 10%. When paying your bill, scrutinize the detail to be sure that you know exactly what each charge means. Most service departments add a fee on top of everything else with various labels like “miscellaneous supplies”, “sundry supplies”, “environmental handling”, etc. This fee is simply a 5% or 10% charge tacked onto the total bill. If you object to this fee, which you certainly should, dealers will often waive it.

You will find that prices for maintenance like oil changes, alignments, tire rotation and balancing, etc. are usually priced competitively. Where you have to be careful is in the pricing of major repair items like transmission, engines, and air-conditioners. When quoted a price on a big repair, don’t be afraid to negotiate. If you let it be known that you are willing to take your car elsewhere (even if you’re bluffing), you can often negotiate the price down significantly.

You should always make an appointment before bringing your car in. Appointments should be scheduled at relative slow times and days. Avoid bringing your car in early on a Monday morning and other very busy times. You want the service advisor to spend as much time with you as is necessary. This will allow you to drive the car with the service advisor if necessary to identify a specific problem like a squeak, rattle or vibration. Pick your car up at a time when the service advisor or technician has time to road test the car with you again to be sure that the problem was fixed.

Don’t be shy about asking for a loaner car when you have to take your car back a 2nd or 3rd time for a repair that was not done properly. It’s the dealership’s fault and you should not be inconvenienced. On a comeback, always talk with the service manager directly. Also ask that they assign their best technician to the job.

As I have said in earlier columns, there is nothing more important than choosing the right dealership to do business with. No service department is perfect and never makes a mistake. What you want to find is that service department that, in addition to being competent, will fess up to their occasional mistakes, sincerely apologize and make them right.

Foolish Reasons for Choosing Your Next Car

JD Power just came out with the results of their annual survey, “2010 Customer Retention Study”. This measures the likelihood that those driving a particular make car will buy another of the same make. I like this study because it sorts through all the many, many reasons people may consider and gives us the bottom line. Obviously, having a high probability of repeating with the same car manufacturer is very important to the success of that manufacturer.

The manufacturers with the highest probability of owners making their next purchase another of the same make are Ford and Honda. Sixty-two percent of Ford and Honda drivers will buy another. On the bottom of the list is SAAB with only “four percent” willing to buy another SAAB. The industry average is forty-eight percent.

Just below Ford and Honda on the top of the list are Toyota, Lexus, and Hyundai with sixty percent. And just above SAAB on the bottom of the list are Jaguar, Dodge, and Chrysler with sixteen, twenty-two, and twenty-four percent respectively. There’s only one GM make above the average and that’s Chevrolet with fifty-two percent.

There’s a second part to this survey that shocks me and those are the specific reasons most people have for choosing which make they buy and why they stay with that make or buy a different one.

There are nine reasons people buy a particular make and do or do not repeat with that make. The number one and two reasons are “seating arrangements” and “look/style”! In the lower half of reasons are “quality”, “fuel economy”, and “resale value”! It’s hard for me to understand why somebody would make the second largest investment of his life based on “looks/style” over safety, quality, fuel economy and resale value. But it’s true and the JD Power Company is a highly reliable and accurate surveyor.

Don’t be an average car buyer and make your purchase based largely on the color or the styling of the car. People who purchase cars for frivolous reasons probably haven’t done their homework and don’t know the important facts about the make they have decided upon. They also are inclined to buy a car too fast, based on only emotion. This means they usually overpay for the car. There’s no one a car dealer likes more than someone who “falls in love” with that shiny red convertible on the showroom floor and wants to drive it home ‘today’! There is no excuse for this especially in today’s “Age of Information”. With just a few clicks of your mouse you can access everything you could possibly want to know about every make of car sold in the USA.

The top reasons that you should consider when buying another car are quality, safety, reliability, resale value, and fuel economy. You can compare all makes of cars in all of these categories just by clicking on www.kbb.com (Kelly Blue Book) or www.Edmunds.com. You can also find this information in Consumer Reports magazine on online at www.ConsumerReports.com.

The Cheapest Cars Can Cost Too Much!

This column was inspired by a news article in the PB Post on Monday, November 29 entitled “Cash-strapped county spending $9 million on cars”. The article went on to say “one recent county purchase was a new $28,000 2010 Ford Taurus SEL for County Commissioner Pricilla Taylor.

After I shook my head to ask why on Earth would the PB County government would be spending $9 million to buy new cars for themselves in these direst of economic times, I then thought “how dare they” spend taxpayers’ money for buying the wrong cars too!

It’s a really bad idea to buy last year’s model new car when you can buy the current model. This is especially so of the Ford Taurus because the 2010 is virtually identical to the 2011 and they are priced nearly the same. Car dealers will advertise last year’s model for less money, but if you negotiate you can buy the current model for the about the same price as the old model. This is especially true in today’s economic climate, a buyers’ market. Sometimes the manufacturers will offer special incentives to help the dealers clear out last year’s model, but the amount of the incentive can’t come close to covering the extra depreciation you experience buying a one year old car. When time comes to trade that car in or sell it, nobody cares when you bought your car; they care only what the year on your title says.

Palm Beach County and most governmental agencies buy their cars at special fleet prices offered by the manufacturers. They don’t pay retail. But the fleet prices for the 2010 and 2011 Taurus would have been almost the same. Fleet pricing sounds like a good deal for the governments but it isn’t really. The manufacturers sell cars to fleets like the government and big rental companies at drastically reduced prices, often less than they sell cars to their own dealers. In fact, manufacturers will sometimes actually sell cars to large fleets for less money than it costs them to build the cars. Why, you ask, would they ever do such a thing? It’s less costly for a manufacturer to lose a few hundred dollars on a few thousand cars than have to close down shifts or entire manufacturing plants and reopen them at a later time. They have to pay UAW workers whether they’re building cars or not and the cost of shutting down and reopening plants is huge. Ford, GM, and Chrysler sell fleets anywhere from a one-quarter to one-third of all the cars they build.

This all brings me to the second big mistake Palm Beach County made when they bought a 2010 Ford Taurus for Mrs. Taylor. It’s “Economics 101” that when you flood the market with a product at below market prices, you drive down the resale value of the product. Why are diamonds so expensive? It’s not because they’re so pretty because a cubic zirconium is just as pretty. It’s because the number of diamonds on the market is controlled and limited by a giant cartel, DeBeers. If they didn’t do this, your diamond ring would plummet in value. Ford sells thousands of Taurus’s to governments and large rental companies at greatly discounted prices. When these large fleets buy new cars, they dump their old cars on the market at auto auctions. It’s all a matter of supply and demand. Selling too many Taurus’s over too short a time drives down the price. This also affects the unsuspecting retail buyer who buys and sells just one car at a time.

If you need proof of all of the above, just click on www.ALG.com/FleetResidualValues. ALG is Auto Lease Guide which is the “bible” for how fast cars depreciate. Every bank, car dealer, and leasing company relies on ALG to set their prices on leasing. The residual value is the estimated value of new car 1, 2, 3,, 4, or 5 years hence. The residual is expressed as a percent of the cars original cost. A car with a 4 year residual of 25% would depreciate twice as fast as one with a 50%. If you go to the above website, you’ll find that the Ford Taurus has a very low residual. In fact it’s rated with only 2 stars, with 5 stars being the best. An example of a car with a 5 star residual is the Honda Accord. Honda sells very few cars to large fleets, about 8% of their total production. The Honda Accord’s purchase price is about $2,000 more than the Ford Focus, but after looking at the difference in deprecation, is a much better buy.

The moral to my story is to be smarter than the Palm Beach County government and don’t just buy the “cheapest” car you can find. Never buy last year’s model new car when you can buy the current year and always check the projected resale/residual value of the new car you want to buy.

Your Car’s Oil Pan: Its “Achilles Heel”

The container that holds your engine oil underneath your car is made of very thin, sheet metal often aluminum. Because the bottom of the oil pan is so thin, the opening that technicians use to drain your oil cannot hold very many threads. The oil plug which is removed and replaced every time your oil is changed clings to those few threads. The reason for this is that manufacturers try to make your car as light as possible so that they can meet their fuel economy requirements (CAFE) and, of course, the less metal there is in a part the cheaper it is. It might sound unreasonable to think how little it would cost to have an oil pan that was just one-quarter inch thicker, but multiply this by tens of thousands of parts on a car and pretty soon you’re talking lots of weight and lots of money.

Depending on the make and model of your car, you can expect the threads to wear out on your oil pan as early as 40,000 miles just from normal wear and tear. It can be sooner or later than that depending on how often you change your oil. The problem is that when this happens, there’s not a “safe” solution to the problem other than replacing your entire oil pan. This can cost anywhere from $150 to $350 depending on the make and model. There are lots of less expensive solutions some suggest like oversized plugs, rubber plugs, and re-threading but they are not 100% effective. If you gamble with one of these and the rubber plugs pops out, you’re looking at buying a new engine for thousands of dollars. In modern engines you have only a few “seconds” to stop an engine that loses its oil which is exactly what happens when the plug drops out.

As if this isn’t enough to concern you, the technician who changes your oil can easily strip the threads in the oil pan by over-tightening the oil plug. When this happens, you probably won’t know about it until you change your oil again and maybe not for several oil changes. Stripping threads isn’t necessarily an “all or nothing” event. Over tightening the drain plug slightly, repeatedly will cause the thread to wear out prematurely.

Each manufacturer has a specification for exactly how tight the oil plug must be in the oil pan. It’s measured in foot-pounds of torque and a typical spec would be 18 FP. If the plug isn’t tightened enough, it might fall out. This sometimes motivates the technician to over tighten the plug just to be safe. If the plug is too loose and falls out, it could cost him his job. To be sure that the oil plug is tightened exactly right, the technician must use a torque wrench which shows the foot-pounds of torque that the plug has been tightened to.

Believe it or not, many technicians still don’t use toque wrenches. Without one they are just “guessing” how tight your oil plug is. This is a good reason for you to be very careful who changes your oil. Don’t be shy and specifically ask the service department who changes your oil if their technicians use torque wrenches. It wouldn’t be bad idea to find out the manufacturer’s specification for torquing your oil drain plug. It shouldn’t be necessary if you have your oil changed by the dealer, but it might if you use an independent service company or quick-lube company.

The person who changes your oil is the lowest paid individual in that service department. He’s called a “lube tech” and it’s generally considered a starting position for an auto technician. The turnover in this position is usually much greater than for regular mechanical technicians. I’m sure why you can understand why this puts you at risk for not having the job done right.

Be very leery of advertising promoting cheap oil changes. It’s fine to save money having your car serviced, but you should be sure that the person working on your car knows what he’s doing and uses the proper tools. He must know the manufacturer’s specifications for tightening your particular oil plug and he must use a torque wrench. Ideally, you should find a trustworthy, knowledgeable lube technician and always have him perform all of your oil changes. That way, if there’s ever a question about who over-torqued or under-torqued your oil plug, there’s only one person who can be held to blame.

Chrysler and General Motors Must Build Better Mousetraps

I know of no one who hasn’t heard the famous quote by Ralph Waldo Emerson, “Build a better mousetrap and the world will beat a path to your door”. In fact, I know of no one who can disagree with this basic truism.

As you well know, our government decided to use our taxes to keep GM and Chrysler alive. Over a year and many billions of dollars later both companies are claiming to be profitable and are planning to sell stock so that they can pay back a portion of what they owe us taxpayers. Of course, we will never really know how much money we’ve really spent in this futile rescue attempt. The latest secret that was revealed is that the US Treasury is giving GM a pass on paying taxes for several years. This required a change in the law that was kept very quiet until this fact was needed to pump up the price of GM’s IPO stock price. Wall Street was naturally very impressed to learn that General Motors will not have to pay taxes on any of the first $45B they earn, unlike all of their competitors. Talk about a competitive edge! How do you think this makes Ford Motor Company feel after they refused to take a handout from the government like GM. Our government is rewarding bad behavior and punishing good.

Consumer Reports just announced their list of the most reliable new vehicles for the new model year. Do you think that anybody in Washington D.C. is concerned about the fact that Chrysler is ranked “dead last” in reliability out of 27 makes sold in this country? How about the fact that the highest ranking for any GM car is #17 for Chevrolet? Buick is 18th, Cadillac 19th, and GMC is 21st! Of course Honda and Toyota dominate the reliability survey as always. There’s not one single American owned company in the top 10, but Ford is #11.

Washington seems to think that they can solve any problem by throwing enough money at it. The only reason that GM and Chrysler’s balance sheets look better and they are showing a profit this year is because of all the taxpayer’s money and “smoke and mirrors” accounting. I’m not taking a political position here because there were lots of politicians from both sides of the aisle who pushed for the bailout.
Now that GM and Chrysler have their bailout money, they’re reneging on their agreement to build smaller more fuel efficient cars. They’re lobbying to defeat the next plateau in EPA fuel economy standards. About a year ago, GM and Chrysler signed a deal with the White House agreeing to boost fuel-economy standards nearly 35% by 2016 but that’s because they had to “go along to get along”, in other words get their billions in bailout money. They’re now lobbying heavily to defeat Washington’s efforts to continue to improve fuel economy after 2016 with a goal of 62 mpg by 2025. There is no opposition from Honda, Toyota or most other manufacturers on this because they have confidence that they can meet these fuel economy standards.
The simple facts are that it’s easier and cheaper to build lower quality cars and big gas guzzlers and sell them for too much money than it is to build fuel efficient cars, trucks, and vans. GM and Chrysler live or die on the price of gasoline. When gas prices are relatively low, they can sell enough Chevy Suburbans, Cadillac Escalades, RAM pickup trucks, and other gas guzzler models to be profitable. One of the reasons that GM and Chrysler made profits this year is relatively low gas prices. Everybody knows that it’s only a matter of time before oil and gas prices rise to record levels. Ten years from now we will look back fondly on $3 and $4 gasoline. When that happens, GM and Chrysler will go bankrupt again. There isn’t enough time for them to reengineer a new line of fuel efficient cars and trucks and, even if there were, they are so far behind in the quality game it wouldn’t make a difference.

The Chevrolet Volt is a PR stunt, nothing more. GM will build only 11,000 Volts next year and they will be sold in only 23 states, not in Florida. One reason that GM won’t build more Volts is that it costs more to build them than they can sell them for. The Volts sole purpose is to provide a halo effect around their line of low quality gas guzzlers.

Are you ready to bail out GM a second time and Chrysler a third time? I’m not.

Pontiac Dies at 84. October 31, 2010

Sunday, October 31 (Halloween) was the day all remaining Pontiac dealers’ GM franchises expired. Pontiac built their last car about one year ago. Most of you think of me as a Toyota dealer, but I got into this crazy business 42 years ago when I joined my father’s Pontiac dealership in West Palm Beach. My father got into the car business in 1926, but not as a car dealer. He worked for the factory, Oakland, in Pontiac, Michigan. That’s where and when Pontiac was born and was originally named the Oakland.

Dad decided he wanted to give retail a try and started the first Pontiac dealership in Palm Beach County in 1937. He borrowed $10,000 from my mother and she ran the accounting department (I guess she wanted to keep an eye on her investment). His sales department was a man named Harper Clark who went on to become the first Oldsmobile dealer in Palm Beach County. Dad’s service department was a guy named “Slim” Angevine. The first car my father sold was a 1937 Chieftain and the buyer was Annie Swann. She paid $936 for the car plus tax, tag, and a 50 cent “dealer fee”. My father bought this car back from Annie in the late sixties (for exactly what she paid for it new). We had the car restored to absolutely new condition (all original parts) and it sits in the place of honor on my Toyota showroom floor today.

A lot of people think I’m a typical foreign car dealer when I criticize General Motors and Chrysler for what I say led to their demise. But what many don’t know is that I have real soft spot in my heart for GM and especially Pontiac. I feel like I have a special insight into what happened with GM and Pontiac because I was “along for the ride”. I remember when Pontiac was one of the most exciting and sought after cars in the USA. When I joined Pontiac in 1968, we were number three in sales, behind Chevrolet and Ford. GM had over half of the US car market and feared an antitrust suit for running a monopoly.

Back then it was about styling and power. The Pontiac Trans Am and GTO were the kings of the road. Gas was cheap and nobody complained about quality because everything is relative. Nobody else was building a car that was any better, so who was going to complain. I remember finding an empty vodka bottle inside the door panel of a Pontiac Bonneville after the customer complained of a rattle. I remember a customer bringing a Le Mans convertible back after he bought it because he couldn’t find the switch to lower the top. After a careful inspection, we discovered the problem…Pontiac had forgotten to put the switch on the car.

Then, as you know, things changed. Do you remember the Arab oil embargo of the seventies? All of a sudden Americans were waiting in line for gas and many gas stations just didn’t have any gas at all. That GTO with dual 4-barrel carburetors and a supercharger that got 10 mpg (if you were lucky), suddenly was a problem. About the same time, Americans began noticing these strange little cars with funny names…Honda, Datsun, Toyota, and Mazda. This didn’t seem to worry Detroit because everybody knew that this “gas thing” was only temporary and there was an unlimited supply of oil under the ground. Also, these funny little cars really weren’t built all that much better but they sure did get a lot better gas mileage.

It was in 1970 that I first decided I better “hedge my bet” and I took on the Mazda franchise. I was the first Mazda dealer east of the Mississippi. We were building our Mazda dealership (actually renovating an old gas station) so I temporarily displayed a Mazda on my Pontiac showroom floor. One day, the Pontiac zone manager dropped in and walked up to me while I was standing in the Pontiac showroom. His words to me are indelibly engraved in my brain…”Get that goddamned ‘Jap car’ off my showroom”. The Pontiac manager’s name was Murphy (Murph) Martin and he personified GM’s arrogance and blindness toward the Japanese competition. I bought the Toyota franchise in North Palm Beach (Lake Park) in 1975 as a further hedge.

In the late nineties, the “handwriting on the wall” was transferred to my Pontiac financial statement. As fast as my Toyota dealership and Mazda dealerships made money, my Pontiac was losing it. We simply couldn’t compete with the Japanese cars fuel economy, quality, and price. I had a personal dilemma too. Often friends of mine would look me in the eye and say, “Would you recommend that I buy a Toyota or a Pontiac”. If I told my friend the truth, I was being disloyal to all of my employees at the Pontiac dealership. Pontiac and GM’s quality gap was huge with the Japanese imports. At my Toyota dealership we did practically no warranty work but at the Pontiac dealership we did a huge amount. Chuck Schumacher, the Buick dealer then and now, had been calling me every few months for a while asking if I would sell him the Pontiac franchise. He also had Oldsmobile and GMC truck and wanted to add Pontiac to the “family”. I turned him down for as long as I did for purely sentimental reasons. He finally “made me an offer I couldn’t refuse” and I sold him Pontiac.

The rest is history. The Japanese cars continued to improve (kaizen) their quality, their fuel economy (which was already far superior), and their styling and they even priced their cars lower than Detroit’s. GM, Ford, and Chrysler just never “got it’. They had their head in the sand and when they pulled their heads out it was too late.

My three sons (Stu, Jason, Josh) and my wife (Nancy) all work with me in my Toyota dealership and I try to remind them often that we must never underestimate our competition like Detroit did the Japanese car makers. You can bet we have our eyes on Hyundai. Toyota began to get a little arrogant and complacent not too long ago, but snapped back into reality recently with the “cold shower” of media and governmental attacks over the recalls. Looking back on that experience, I’m actually glad it happened. I’m not saying NHTSA, the media, and the politicians dealt fairly with Toyota…far from it. But what happened, humbled and frightened Toyota and made them realize that they could lose everything they had worked so hard for if they ever again became over confident and underestimated the competition.

You Should Be Concerned About Auto Fleet Sales

Fleet sales are to daily rental companies, commercial, and government agencies. These are volume sales, not usually one at time but up to “thousands” at a time. Rental and leasing companies hunkered down during the recession and stopped buying new vehicles. They hung onto their old vehicles just like many individuals did.
But, as a result of the recession and fewer new vehicles being sold and more people buying used car than new, the value of used cars has risen. The big fleet buyers see that as an opportunity to sell their current used cars at auctions and replace them with new. It’s truly a buyer’s market for fleet buyers. Not only can they sell their old fleet for more money, but they can replace those cars at unprecedented low prices from the manufacturers.

Large fleets have always been able to buy cars for less money than you can because they buy in much larger volume. In most cases, they deal directly with the manufacturer and often buy cars for less money than the dealers can buy them for. Sometimes the sales transaction “passes through” the dealer, but the price is often determined by the manufacturer and the special, low prices are only for fleet buyers. Dealers also sell directly to fleets and even when these prices are not subsidized by the manufacturer, they are lower than you can buy the car for.
Manufacturers will actually sell cars to fleets below their cost! This is especially true in these bad economic times. Desperate manufacturers like Chrysler and GM who have recently declared bankruptcy and are struggling for survival need to keep their plants running and need to present a positive picture to the public and their lenders (us taxpayers). It’s actually less expensive for a manufacturer to sell cars below their cost than to close the plant down. When Chrysler or GM closes a plant and lays off workers, they encounter huge expenses. They have keep paying the UAW workers even though they aren’t working and the cost of stopping and restarting the assembly lines is very large too. They would prefer to lose a few thousand on each car and pray that the economy gets better.

GM is getting close to an IPO, selling stock to us taxpayers so that they can pay back the government. To keep that stock price high, they want to be able to report higher sales. This is what the press focuses on and amazingly they never differentiate between retail sales and fleet. Last month (September) 39% of Chrysler’s sales were to fleets. 25% of GM’s and 29% of Ford’s were to fleets. Only 7% of Honda’s and 9% of Toyota’s were “reportedly” fleet. I say “reportedly” with respect to Honda and Toyota because some of their fleet sales go unreported. Dealers can sell cars to fleets but they get counted as retail. The industry term for these kinds of sales is “fleetail”. The dealers can collect retail incentive money on these which they can’t on “official” fleet sales. Also fleetail sales count as retail toward their sales quotas, contests, and sales awards. Dealers are inclined to sell fleetail cars at or even below cost because of this. We don’t know how many Honda and Toyota retail sales are truly retail and which are fleet/fleetail.
Here’s why these fleet sales are bad for you. All of these cars that are sold to Hertz, Avis, and the US Government don’t just “vanish into thin air”. They come back on the used car market through auto auctions all over the USA. If you bought a Ford Focus this year and Ford also sold 20,000 Ford Focuses to the fleets, Ford caused your Focus to depreciate at a much higher rate than it would have otherwise. This is simply the economic law of supply and demand. The more used Focuses that Ford sells at the Manheim auctions in 2013 (the same year you are ready to trade yours in for a new car) the lower the price they have to sell them for. The bottom line is that that new car could cost you an extra $2,000 based on the lowered trade-in value of your Focus.

My advice to you is to carefully consider the number of fleet/fleetail sales the various manufacturers are making when purchasing your next new car. Chrysler is clearly the leader in fleet sales and I would avoid Chrysler products like the plague unless I planned to never trade it in. I’d lease a Chrysler product if I absolutely had to have one. You aren’t responsible for selling the used car at the end of the lease. Of course you already paid for the high depreciation in your lease payments unless Chrysler over estimated the residual which is possible. Ford and GM are also big fleet sellers. A good guide to consult is the industry “bible” for future used car values, called residuals. This is the Auto Leasing Guide, ALG. Every dealer and manufacturer has one. You can ask your dealer to see his copy (If he won’t just email or call me). This guide is the best estimate of what a new car bought today will be worth in 1, 2, 3, 4, 5, or even 6 years.

Good People Make Good Car Dealerships

In my columns over the years I’ve always advocated carefully choosing the car dealership that you buy your vehicle from or allow to service it. I still believe this is important. In fact, I recently published a list of dealers that I recommend you buy your car from and a list that I recommend you avoid. We’ve all visited a restaurant or retail store and had a terrible experience with a waitress, sales person, or other employee and never returned. Yet, we’ll friends recommending the same store that we swore never to patronize. We condemned an entire company because of one person.

I also wrote a column a couple of years ago in which I suggested that you carefully choose the individual who advises you and sells you service on your car. These individuals are really commissioned sales people who sell you service just like car sales people sell you cars. Unfortunately most dealerships call them something else like “assistant service manager” or service advisor. In my dealership we used to call them Assistant Service Managers because that’s the term that Toyota uses. We now call them “service advisors” because too many people thought they were dealing with the service manager. In all candor, I’d feel more comfortable naming them what they are, “service sales people” and I may make that change.
As I was rereading this old column, it occurred to me that the same recommendation applies to all companies, not just car dealerships and it applies to all departments in a company. Whichever car dealership you choose, take the time to pick and choose those individuals you deal with. Car dealerships, just like other organizations, are nothing more than the sum of their parts…their people. You should get to know the person who sells you service and, if you don’t like him, ask for another person to handle your service requirements. You should also meet and cultivate a manager in the service department.

The same holds for the sales department. When you buy a car, don’t settle for the first salesman who approaches you. For example, if you’re a woman you may feel more comfortable dealing with another woman. Or, if your native language is Spanish or Cajun, you may feel more comfortable with one who can converse with you in your native tongue. Don’t be shy about asking and don’t feel bad about hurting the feelings of the first sales person. An automobile is the 2nd largest purchase most people make and it’s very important that you feel comfortable with the person selling it to you. Furthermore, if after dealing with your sales person for a while, you think you made a bad choice, ask to speak to the sales manager or general manager. Believe me, car buyers hold all the cards in today’s shaky economy and no sane sales manager is going to lose a sale because a prospective customer doesn’t like or trust the sales person she’s dealing with. He will handle your sale personally or choose another sales person you do feel good about.

Car dealerships have other departments including parts, finance and insurance, accounting, and some have body shops. My same recommendation applies to all departments. A word of caution, when you ask to speak to a manager, be sure you’re really are truly speaking to one. Car dealerships are notorious for calling rank and file employees managers to trick the customer.

My purpose in writing this column is in realization of the fact that there are no perfect companies, especially car dealerships and that includes mine. I employ 130 individuals and I would be less than candid if I didn’t say I have a few rotten apples in my barrel. Unfortunately, I don’t know who they are and finding them is a continuous work in progress. The same thing applies to all companies including car dealerships. In my list of recommended dealers, there are some employees of those dealerships who would take advantage of you but most would not. In those dealerships that I recommend you don’t buy your car from, there may be a few honest, courteous employees. Then there are all the dealerships that I don’t put in either category. Your odds of finding the right individual are much better if you patronize a good company or car dealership, but don’t totally let your guard down.

Just stay away from the ones that I recommend you don’t deal with. In every organization there’s a tipping point. A great company reaches a critical mass of good employees and as their reputation grows, more good employees from other companies seek to be employed there. Honest, hardworking, courteous people enjoy working in an environment where others are like them. The same holds true for evil dealerships and bad companies (those on my “don’t buy” list). A good person with a conscience has a very difficult time functioning in an environment where, from top management all the way down, the design is to trick and take advantage of customers. These few good people don’t last long in evil dealerships and flee to a place where they can treat their customers in a manner that lets them sleep at night.

Ten New Year’s Resolutions for Car Dealers in 2011

This is a modified version of the same column I wrote last year. Unfortunately it applies very well to this year for two reasons: (1) The economy has not improved as we had hoped and (2) Car dealers did not abide by my suggested new year’s resolutions for 2010. In fact, car dealers have gotten worse. For example, we now have Ft. Pierce Nissan and Delray Mazda-Kia (both owned by Mike Grieco) double-charging for freight on new cars in addition to their dealer fee. Napleton Nissan in Rivera Beach was also double charging for freight but recently stopped. Somebody once said that the best antiseptic was sunlight and that’s why I never give up on bringing things like this to the attention of my readers.

2009, with the exception for August [Cash for Clunkers] will go down as a 2nd bad year in a row for our economy and especially for car dealers. 2010 is has also been a very tough year for car dealers in Florida and especially on the Treasure Coast and Palm Beach County. 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) Eliminate your dealer fee. We’ve seen some progress in dealers eliminating their dealer fees in Palm Beach County. Palm Beach Toyota and Royal Palm Toyota dropped their dealer fee in June and Royal Palm Nissan dropped theirs in November. This was due, not to a “moral revelation” by the dealer or legislative action but economic pressure. Palm Beach Toyota and Royal Palm Toyota are my two nearest competitors. Six years ago, when I eliminated my dealer fee, Royal Palm Toyota did not exist and Palm Beach Toyota was outselling my dealership by a wide margin. Now I outsell both dealerships combined. Hopefully other dealers can learn from this economics 101 course, Ethical Business Practices Equal Increased Business. 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. You may think you know how your employees are treating your customers, but I promise you that you don’t unless you communicate directly with some of them. You cannot rely exclusively on reports from your managers to tell you the truth.

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

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

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

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

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

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

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

Nitrogen Scam and Cover-up by PB County Commission?

Regular readers of my blog and Hometown News column will know that I’ve been spreading the word about the “nitrogen in tires” scam for several years. My first column was “Don’t Pay for Nitrogen in Your Tires in early 2007. Subsequently I wrote “Nitrogen and Shark Cartilage”, “Nitrogen Scam Foisted on Palm Tran”, and most recently “Tests Say Nitrogen Doesn’t Improve Fuel Economy in PB County Buses”.

Just to bring new readers up to speed on this issue, I’ll summarize my position on the false claims that buying Nitrogen to put in your tires will improve your fuel economy, lengthen tire life, and improve your driving safety.

(1) Over three years ago, Consumer Reports magazine revealed the results of a yearlong test of the effectiveness of Nitrogen to improve fuel economy. They concluded that Nitrogen was worthless in improving fuel economy, tire wear, or safety.

(2) In 2007, Chuck Cohen, the executive director of the Palm Tran, the PB County bus system, announced that he was investing $60,000 of taxpayers’ money in equipment to put Nitrogen in all tires on his buses to “save the taxpayers” lots of money on diesel fuel and tires. He said that there was a study being conducted to judge whether this idea was a good one. When the results of the study were revealed about one year later, the conclusion 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 group of buses in this experiment.” It was after this that I wrote my last column on this subject.

(3) Astoundingly, when I followed up with Chuck Cohen do learn when he would stop wasting our money putting Nitrogen in his bus tires, he told me that he didn’t like the results of the test and was going to conduct another. He told me that he would make public the results of the second round of tests within the year. That was almost two years ago and no test results so far.

(4) Finally, my main interest in the Nitrogen scam is that so many car owners are paying car dealers to put Nitrogen in their tires. One dealer in Stuart actually was charging $199. Many dealers are adding Nitrogen to the price on the window sticker and many others are selling it in the service drive.

The thing that really angers me most about what Palm Beach County is doing is that it provides unscrupulous car dealers with an argument to sell Nitrogen to their unsuspecting customers. If the customer asks why she has to pay an extra $150 because the dealer added Nitrogen to the tires in the car she’s buying, the salesman simply says, “Do you think Palm Beach County would be using Nitrogen in their bus tires if it wasn’t a good idea?” By the way, the Palm Beach County Sheriff’s department opted not to use Nitrogen in their tires.

The local municipalities are nearly bankrupt and all of them are cutting back on city and county workers and services to us taxpayers. Recently Port St. Lucie laid off a large number of police officers. Why don’t they look inward and stop wasting our money on the Nitrogen scam?

“Tell- All” Book by Auto Czar, Steven Rattner

When I heard a few weeks ago that Steven Rattner was writing Overhall, “an insider’s account of the Obama Administration’s emergency rescue of the auto industry”, I couldn’t wait to read the book. It was supposed to be released by the publisher in October and I pre-ordered it on Amazon.com immediately. I was so excited when I got an email from Amazon telling me that the book had been released early and it came in the mail on Thursday, September 16. I began reading it immediately and finished it over the weekend.

What a letdown! I guess the purpose of this column is to save you $27 in the bookstore or $17.95 on Amazon. Do not buy this book unless you would like to read some cute quotations from President Obama like “Why should we save GM?” and “Why can’t GM build a Corolla”...Or from the President’s Chief of Staff, Rahm Emmanuel, “F**k the U.A.W.!”

The author, Steven Rattner, obviously had two reasons for writing this book. The first and most obvious was to make a lot of money and that goes without saying. The second one is pretty obvious too which is to tell the World how he singlehandedly saved the American auto industry.

When rumors began circulating over two years ago that the government was looking for an “auto czar’ to rescue Detroit, GM, Chrysler, and the UAW…not necessarily in that order, I jokingly sent my resume to President Obama. I had a hunch that they would pick somebody without a clue about auto manufacturing or retailing and that it would be a politically motivated choice. Boy was I right! Steven Rattner’s background is as a journalist for the NY Times, writer of Op-ed articles for various newspapers, investment banking, but his key endeavor was as a professional Washington D.C. insider and fundraiser for the Democratic Party. He dates back to Jimmy Carter, counts Al Gore as a close friend, and was a big fund raiser for Bill Clinton, Hillary Clinton, and, last but not least, Barrack Obama. His appointment as auto czar was to pay off a political I.O.U.

I surprisingly agree with some of what he has to say in the book. He fully understands that General Motors and Chrysler dug their own graves by mismanagement and then tried to blame their woes on the great global recession. It’s his lack of understanding of business, capitalism, and the free market system which allows him to conclude that running a business badly is no reason for a company to fail.
He inexplicably thinks that the American auto industry is represented by GM and Chrysler. How can he believe that Ford, Toyota, Honda, Volkswagen, BMW, Mercedes, Hyundai, Nissan don’t represent the American auto industry far more importantly than GM and Chrysler? These other manufacturers build better cars according to all objective third parties like Consumer Reports and JD Powers. Many of these manufacturers build most of their cars in America using American part suppliers and American workers. You can argue that “the profits are sent overseas’, but the profits go to the stockholders. Any American can buy stock in Toyota or any other foreign owned company. The American car-buyer would get along just fine without GM and Chrysler products. As far as the United Auto Workers union is concerned, they would be forced to earn their money rather than “bask in the sun of entitlements” they demanded and received from GM and Chrysler.

Steven Rattner says there’s a good chance GM and Chrysler are going to survive but then again what else can he say? He hedges a bit on whether or not we taxpayers will get back all of the $80B we gave them. I can see why he’s nervous about that. About the time he was finishing his book, Ed Whitacre (GM CEO #3 in the last year and a half) said GM would sell their IPO stock before the election and raise enough to pay back all of the money owned the taxpayers. But GM CEO #4, Dan Ackerson, suddenly replaced Whitacre and now he says GM won’t be able to repay all of the money like Ed said and won’t be going public with the IPO this year after all.

Oh, I almost forgot. Steven Rattner suddenly resigned as Auto Czar when it was made public that his investment company, Quandrangle, is under investigation by the New York Attorney General. It seems that Rattner’s company had been making payments to an indicted intermediary, Hank Morris. Morris is an associate of the New York state pension plan and was helping Quandrangle raise money from the New York state pension plan. Maybe the taxpayers will have to bail out Rattner next?

CASH FOR CLUNKERS COVER UP?

“Cash for Clunkers” aka CARS, the government stimulus program for the auto manufactures and dealers last August was generally regarded as one of the more effective stimulus programs of the Obama administration. It cost us taxpayers $3 Billion but it sold almost one million new cars. There are arguments on how many extra new cars it sold and how many of those that were sold would have been sold eventually anyway. But, overall, it is generally considered a far more effective stimulus than TARP and certainly a lot less expensive.

What puzzles me is why there is so little media coverage of the fact that most customers who bought new cars under this program did not receive a fair trade-in for their clunker. There was a class action lawsuit filed in New York against one of the largest dealer groups in the country on this point and the Oregon Attorney General has ruled that all car dealers must pay their clunker customers what they received from the salvage yards to which they sold the clunker. Both of these incidences received virtually no national or local media coverage.

In my judgment, the clear intent of the Cash for Clunkers program was that the buyer should receive a trade-in allowance commensurate with the value of her clunker, just like a normal sale with a trade-in would. Unfortunately, the government did not make this abundantly clear and therefore most car dealers took advantage of this “loophole”. Most car dealers allowed hundreds of dollars less than they actually sold the clunkers to salvage yards for. Some dealers gave their clunker customers absolutely nothing for their trades.

I read in the auto manufacturer/dealer trade publication, Automotive News, that the average trade-in allowance estimate for clunkers was $75. Since the government did allow the dealer to keep $50 for administrative costs, this meant that the average clunker customer netted $25. I sold 286 new Toytota in the clunker program and my average sale to the salvage yards was for $445. If this average applied nationally to the one million clunkers, this would mean that car buyers under the clunker program were underpaid on their trade-ins by about $400 million.

One has to ask, why the media is ignoring this at least ethical violation which has cost American car buyers hundreds of millions of dollars. I can think of only one reason and that is the fact that car dealers and manufacturers are among the largest advertisers. Asking the same question of why the NHTSA doesn’t take action I can think of only one reason too. That is that the National Automobile Dealers Association, NADA, is a very powerful lobbying group. They are so powerful that they were able to at least temporarily halt the cancellation of GM and Chrysler dealers by GM and Ford which was mandated under the government bailout program.

The amount that a clunker was sold to a salvage yard for is a matter of public information and should be available from NHTSA under the Freedom of Information Act. If you bought a car under this program, you might be interested to know how much you should have received as a trade-in vs. how much you actually received. I’m working on accessing this information and I will advise all of my readers when I’m successful.

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.

The 4th step is to call the Florida Department of Motor Vehicles, DMV, and/or the Florida Attorney General’s office. These are extreme steps to be used for serious, even illegal, activities. The DMV has the power to suspend or cancel a dealer’s motor vehicle retail license, putting him out of business. The Attorney General’s Office can file criminal charges and assess large fines, even jail terms. The DMV phone number is (850) 617-2000 and the Attorney General’s phone number is 866-966-7226.

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, three and four 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.

Earl’s List of the Best and Worst Car Dealers: Treasure Coast to Northern Broward County

I must explain that those dealers listed as “Good Guys” are far from perfect. I urge you to shop and compare prices, stick up for your rights, and do your homework in preparing to buy. South Florida is the Sodom and Gomorrah of the retail car business. Listing the best dealers is like listing the most honest inmates in Attica or Leavenworth.

I arrived at my opinion of these dealers, the good and the bad, from my constant interaction with you, the car buyers of South Florida. You call my weekly Saturday morning talk show, Earl Stewart on Cars, my cell phone, you send me emails and you write me letters about your experiences in buying and servicing your cars. You post comments on my blog, www.EarlStewartOnCars.com.

This list is not static and I will vary it regularly, adding more “good guys” and dropping the undeserving from the list. Hopefully, I will not have to add to the “bad buy” list but I will if I have to. These dealerships are the worst of the worst and should be totally avoided at all costs. You would be better served to drive an extra 50 miles to buy the make car you seek than buy it from one of these dealers. In fact, you would be better served to buy a different make from a good dealer.

I know I’ve angered a lot of car dealers (so what else is new?) by leaving them off the “good guy” list and especially the bad guys. I urge those of you who are sincere to call me personally and I will be glad to discuss with you what your customers told me about you that led me to omit you from the “good guy” lists. The “bad guys” won’t call me because they know exactly what they are doing and how they are premeditatedly deceiving their customers.

If the make car you are seeking does not show a dealer, it’s probably because not many people by that make. I listed only the most popular. I suggest that you choose a dealer a “good dealer” who is listed that also sells your make. For example, Schumacher also sells Mitsubishi and Infiniti and he is listed as a good dealer for Chevy and Buick.

The Bad Guys:

West Palm Beach Kia in West Palm Beach
Arrigo Chrysler Jeep Dodge in West Palm Beach
Delray Mazda-Kia in Delray
Ft. Pierce Nissan in Ft. Pierce
Palm Beach Acura in West Palm Beach
Napleton Nissan in Riviera Beach
Napleton Hyundai in North Palm Beach and West Palm Beach
Napleton Kia in Riviera Beach
Napleton Lincoln in North Palm Beach
Napleton North Lake Suzuki in North Palm Beach
North Jeep in North Palm Beach
Northlake Dodge in North Palm Beach

The Good Guys:

Acura
Coggin Acura in Ft. Pierce
Phil Smith Acura in Pompano

BMW
Coggin Motor Cars in Ft. Pierce
Vista Motor Company in Pompano Beach

Chevy
Maroone in Greenacres/Lake Worth
Maroone in Delray
Schumacher in North Palm Beach

Buick
Schumacher in North Palm Beach
Schumacher in West Palm Beach

Cadillac
Wallace in Stuart
Maroone in West Palm Beach
Coral in Pompano

Ford
Mullinax in North Palm Beach
Maroone in Delray

Honda
Coggin Ft. Pierce
Delray Honda in Delray
Pompano Honda in Pompano

Hyundai
Wallace Hyundai in Stuart
Delray Hyundai in Delray

Lexus
JM Lexus Coral Springs
Palm Beach Lexus West Palm Beach

Mercedes
Mercedes of Delray in Delray
Mercedes Benz of Ft. Pierce in Ft. Pierce

Nissan
Wallace in Stuart
Maroone in Delray

Toyota
Because I own and operate a Toyota dealership in North Palm Beach, I don’t feel objective if I name myself to this list and I don’t want to be perceived as unfairly biased by eliminating some of my close competition from this list. Please feel free to call me personally (cell phone 561 358-1474) for advice on the Toyota dealers nearest you.

Did Congress “Beat” a Confession out of Toyota with a Rubber Hose?

You may have read that in 25% of those cases involving innocent people imprisoned and later exonerated by DNA testing, those falsely imprisoned had “confessed” to a crime they did not commit. Since the discovery and implementation of DNA testing, hundreds of thousands of innocent men and women have been freed from our prisons, some on the verge of being executed. Unfortunately we will never know how many innocent people we have executed or how many are still in prison because there was no DNA evidence.

DNA testing of accused criminals is the result of applying the surging scientific knowledge we didn’t have only a few years ago. Analogous to DNA is the “black box” which used to be only in airplanes but now is being used increasingly in automobiles. This box contains scientific instruments that record the seconds and minutes before and after accidents. This black box can tell if the brake was applied and, if so, how long and how hard. It can tell us the same about the accelerator. Of course it can tell the speed, acceleration or deceleration and the direction the car is traveling.

Scientific tests like DNA have shown that, what we relied on most before for evidence, confessions and eye-witness accounts are extremely unreliable. How many innocent people were imprisoned or executed over the years by eye-witnesses or false confessions? We will never know.

If you’re a regular reader, you know where I’m going with this. The media has recently, but reluctantly, released the finding of the NHTSA that all of the black box tests on Toyotas so far have shown the crashes to be driver error. There is no evidence of any kind showing the electronic throttle controls or sticky accelerators to have caused one single crash or injury. In fact, the tests prove that the many drivers who swore their accelerators stuck and they could not brake to slow down or stop, never once applied the brake, clearly proving that they thought they were but instead were holding down the accelerator to the floor. I’m not suggesting that all of these drivers are lying so that they can sue Toyota, although there certainly some of that going on. I believe that these people firmly believe their foot was on the brake and not the accelerator the whole time. One woman was quoted as saying, I don’t care what the scientific evidence says, I know where my foot was. Similar statements have been made by eye-witnesses to crimes who were proven wrong by DNA tests.

All of this begs the question, why would Toyota or any innocent person or company confess to something they did not do. Back in the old days, that was an easy question to answer. Before we had the Miranda Act and before we videotaped confessions, all the cops had to do was “beat it out” of the accused. The cops can’t use rubber hoses anymore, but they can use psychological rubber hoses. They can make deals for shorter sentences or probation suggesting that if they are found guilty by a jury the sentence will be much, much worse. They can tell the accused that, if they don’t confess to this crime, the police will make a major effort to investigate them on a multitude of other possible crimes until they find something. The police can exert a large amount of duress without violating the rules. They can pretend that they have evidence they don’t, they can question an accused for long periods and repeatedly, they can suggest that they will let it be known on the street that the accused “ratted out” his friends, and they can shout and scream as much as they like. A big cop with a big gun can be pretty terrifying.

Scientific studies on false confessions have all come to the same conclusion. They all have one thing in common and that is a decision at some point during the interrogation process that confessing will be more beneficial to them than continuing to maintain their innocence. So there we have it. Jim Lentz, the President of Toyota Motor Sales, USA, Yoshi Inabla the President of Toyota of North America, and Akio Toyoda, the CEO of Toyota all felt they had far more to lose by telling the truth than by falsely confessing.

With the U.S. Congress and the National Highway Transportation Safety Association (NHTSA) fueled by a biased media on the attack, it would have been corporate PR hari kari for Toyota to blame their customers for the reported crashes. They had no choice but to apologize to Congress and the public and confess to a crime they didn’t commit because “confessing will be more beneficial to them than continuing to maintain their innocence”.

Now that Toyota’s innocence has been proven by scientific tests, you would think that somebody would apologize. Like Ray LaHood, chairman of NHTSA, who advised everybody driving a Toyota to “pull over to the side of the road and get out of the car”? How about Bart Stupak and John Dingell, the Congressmen from Michigan who are “in the tank” for the UAW who shouted at Jim Lentz to apologize to those families of those who his defective Toyotas had killed. The media will never apologize. In fact, they won’t even give the exoneration anywhere near the coverage they gave the erroneous allegations.

Journalistic Ethics in Car Advertising

Does a newspaper, TV or radio station have a social or ethical responsibility to screen out advertisement obviously designed to trick their audience? How about an illegal advertisement? Should a newspaper print an advertisement and accept payment for this ad knowing that the ad violates the Florida Unfair and Deceptive Trade Practices Act or the Federal Truth in Lending?

Back in the eighties, a magazine titled Soldier of Fortune regularly ran help wanted ads for people looking for “hit men” and assassins. The ads were worded in such a way that no one could miss their implication. “Ex Green Beret, trained to kill, will do anything for $5,000”. Bob Spearman was the friend of a good friend of mine. Bob hired two men to kill his wife, Anita, through a Soldier of Fortune advertisement. They successfully killed his wife Anita, but bungled the job so badly that they were caught and spilled the beans on Bob Spearman. He was convicted and sentenced to life in prison without parole. Should Soldier of Fortune Magazine been charged in this crime? They were sued and have since stopped running “murderer wanted” classified ads.

I’m writing this article on Monday, August 2nd and on page 8E of today’s PB Post is a full page color advertisement for Napleton Nissan VIEW AD HERE Napleton probably spends more money advertising in the PB Post than any other car dealer and may be the paper’s largest advertiser. This ad and many similar do it run over and over, not just in the PB Post, but other newspapers and local TV and radio stations. This ad says you can buy a new Nissan Altima for $99 per month. In the fine print it says that the $99 payment is “subsidized by the dealer for the first 6 months”. It doesn’t say how much it’s subsidized and it doesn’t suggest the “source’ of the subsidy. This is deceptive enough, but what really grabbed my attention is that nowhere in the ad does it state the interest rate (Annual Percentage Rate), the number of monthly payments, or the amount of the down payment. Federal law, Truth in Lending, Regulation Z, requires that when an advertiser quotes a monthly payment he must also disclose the interest rate, number of payments, and down payment. Otherwise, how would a prospective buyer have any idea how much she was paying? Here’s some icing on the cake, the ad also increases the advertised price for “freight” but doesn’t say for how much (In past ads it was shown as $750). Of course, Nissan includes the freight cost in the price of the car. When Napleton charges you for the freight, you have paid for the freight twice! This is a violation of the Florida Unfair and Deceptive Trade Practices Act.

I blasted Bill McCollum for not using his office as Attorney General to police and regulate ads like this. His excuse is that he doesn’t have the manpower to do so. OK, Bill, how about making it the responsibility of the media to refuse to print obviously illegal or deceptive advertisements? This reduces the manpower requirement because there are far fewer major media outlets than car dealers.

The media righteously declares that “it’s not their job” to act as a police force. I guess that’s the defense Soldier of Fortune Magazine used too. What gripes me is that the media enjoys special protection, rights, and privileges that other businesses don’t under our Constitution. This is because they are supposed to help protect us by telling the truth about crooked politicians, businessmen, and bad guys in general. Another nonsense excuse I hear from the media is that the advertising department is separate. The guys and gals in the news and editorial departments claim to have no knowledge of what’s going on. Of course they do know that they would be out of job if the advertising department didn’t sell a lot of advertising. How could they be expected to tell Ed Napleton to clean up his act when he’s one of their largest advertisers? Of course, the top management of a newspaper, the publisher, has authority over all departments, news, editorial, and advertising. That’s why I personally met with a recent past publisher of the PB Post and voiced my views. Privately and off the record, he confessed that the survival of the paper via ad revenues “trumped’ doing the right thing.

Do me a favor. Write a letter to the editor of your local newspaper and tell him your views on those illegal and deceptive car ads that he continues to run. Saturday is a good day to find the most ammunition.